Covanta Holding Corp. (CVA) and New York City Department of Sanitation entered into a new agreement to transport and dispose municipal solid waste (:MSW). The agreement for 20 years also has two five-year options.
Per the agreement, Covanta aims to dispose of 800,000 tons of MSW per year using a multi-modal approach of barges and rail cars, thus eliminating the need of long-haul trucks.
The company will manage the transportation and disposal of waste for the Department of Sanitation from two marine transfer stations in Queens and Manhattan. The Queens transfer station is slated to commence its operation early in 2015 with the Manhattan station following suit in 2016 after the end of construction work by New York City.
Morristown, NJ-based Covanta plans to invest $110 million in equipment that would include barges, railroad cars and shipping containers. As per the New York City plan, this waste-to-energy (WTE or Energy-from-Waste/EfW) conversion will aid the city to meet the target of diverting 75% of solid waste from landfills by 2030.
Covanta is one of the world’s largest owners and operators of infrastructure for the conversion of WTE, as well as other waste disposal and renewable energy production businesses. The company conducts all of its operations through subsidiaries which are engaged predominantly in the businesses of waste and energy services.
Recently, the company acquired Camden Resource Recovery Facility from an affiliate of Foster Wheeler AG (FWLT) for $48.6 million. Covanta has 45 EfW facilities and this acquisition will expand its horizons beyond its presence in the Northeast and Mid-Atlantic. Covanta also expects the transaction to have a positive effect on its 2013 outlook.
Covanta made a comeback in the second quarter of 2013 with its top and bottom line beating our expectation. Its top line increased on the back of effective execution of organic growth programs like special waste and metal recovery, expansion of the Honolulu unit and contract additions.
Covanta currently carries a Zacks Rank #3 (Hold). Other companies that are currently well placed in the space include Zacks Ranked #1 (Strong Buy) stocks US Ecology, Inc. (ECOL) and Huaneng Power International, Inc. (HNP).
More From Zacks.com