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Waste-to-Energy facilities seem near recession proof amid COVID-19: Covanta CEO

Covanta CEO Stephen Jones joins Yahoo Finance’s On The Move to weigh in on how his company is faring amid the coronavirus crisis.

Video Transcript

ADAM SHAPIRO: You may not have heard of Covanta, but we sure need them. They're a waste management company. They take out the trash. And joining us now to discuss what's happened to that flow of trash and where it's headed is Covanta's CEO, Stephen Jones. He's joining us from New Jersey. Thank you so much for being here.

STEPHEN JONES: Thanks, Adam. Appreciate having me on the show.

ADAM SHAPIRO: So with all of us working from home in the tri-state area, essentially, what are you seeing with trash? Is it mostly picked up because we're at home, or is it dropping off, the flow?

STEPHEN JONES: Well, it's interesting, there's a lot of trash going to the curb these days, so residential trash is up, but commercial and industrial waste is down. So with the stay-at-home orders in place, you're seeing businesses not operating like they used to, and people have migrated to the home front. So I just put my trash out last night. It's probably triple what I normally put out.

JULIE HYMAN: Stephen, you guys don't just collect trash. You are a waste-to-energy company, so ideally you're converting that waste to energy. Is there a difference in commercial waste versus residential waste, and how efficient it is or how much energy it produces? And what does that process look like?

STEPHEN JONES: Yeah, that's a good question, Julie. No, it's similar. If you look at what's happened to our business during the pandemic, about 1.4 billion of our revenues comes from the waste side of our business. And then we also produce renewable power and we also reclaim metal. There's a lot of metal that comes through the waste stream. But out of that 1.4 billion in waste revenues, about 70% of that is residential waste or service fees that have largely been-- had no impact on the pandemic. About 30% of that number is commercial and industrial waste.

And so what we're required to do, since we're operating power plants, as you pointed out, is we need to go find hydrocarbon, right? So we need to go out and get residential waste to replace the commercial waste that's not showing up. And that's kind of the pocket switch that we've been involved in. It has some impact on us from a-- it's called tip fees. They're the fees that we get paid in order for the trucks to tip their waste into our energy from waste plants. Those tip fees have gone down a little bit, but this is a pretty resilient business. It doesn't get impacted like a lot of other businesses, like the airlines or hotels and things like that.

ADAM SHAPIRO: You know, it's interesting, people sometimes take for granted the men and women who help remove our waste, until they go on strike, and then we all need [INAUDIBLE] But let me ask you this. I know that there are safeguards in place before COVID-19 because you're handling waste, sometimes medical waste. Have you had to change the protocols because of COVID-19, or are they pretty much the same?

STEPHEN JONES: No, we have had to change them. These facilities, as you folks are pointing out, are essential services. So we operate 41 of these large plants around the world. And in all places, they've been essential services. They've been operating largely uninterrupted. But we've had to do more disinfecting, more PPE required for our employees. We've taken temperatures of employees when they come into the plant. So what's interesting is people are starting to talk about getting back to work. We've been at work the whole time, and it's required us to learn more about how to keep employees safe during this period of the pandemic.

JULIE HYMAN: Stephen, I also want to talk about medical waste because that's something you all also deal with. And I imagine that that balance has shifted, as well, because we have not been seeing the type of elective surgeries we were seeing previously.

STEPHEN JONES: That's exactly right. It's been interesting, going into the first-- well, ending the first quarter, our regulated medical waste business was up over 40%. And then as you look as we went into the first-- into the second quarter here, end of March and then into April, elective surgeries, doctors offices, tattoo parlors, those types of things have shut down. So even though there's more COVID waste that's out there, there's less other non-COVID regulated medical waste coming through the system.

And so we've actually-- we thought there'd be, like China saw, a large kick-up in regulated medical waste. But so far, coming to our facilities, it hasn't been as high as anticipated. I think as the doctors are starting to get back to work now and you're seeing the elective surgeries, we're going to start to see more regulated medical waste come through the system.

ADAM SHAPIRO: Stephen Jones is the CEO of Covanta. We hope you will come back, and we appreciate the job that you and your team do.

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