As we pondered the new normal and the disappointed anchors on CNBC this evening noting that we did not hit S&P 2,000 or Dow 17,000 (but there's always tomorrow); two headlines crept across the Bloomberg feed that could not have been more perfectly timed representatives of the new normal record highs in stocks:
- *COVANTA CUTTING JOBS
- *COVANTA TO BOOST CASH DIV TO 25C-SHR FROM 18C, EST. 18C
Here's a tip for management: as a cost-cutting initiative, maybe don't spend 'cash' on buybacks at record highs and invest in productive assets, instead. Of course, that's silly-talk in the world where work is punished; as CVA's stock is jumping after-hours.
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Here's the exuberant Press release...
Annualized Cash Dividend Rate Expected To Be Set At $1.00 Per Share Beginning September 2014
MORRISTOWN, N.J., June 9, 2014
MORRISTOWN, N.J., June 9, 2014 /PRNewswire/ -- Covanta Holding Corporation (NYSE: CVA) ("Covanta" or the "Company") today announced that it is implementing several initiatives to improve process efficiency and reduce ongoing expenses across its business. The Company also announced its intention to increase the quarterly cash dividend to $0.25 per share, starting with the dividend that is expected to be declared in the third quarter of 2014. The Company will host a conference call at 8:30 AM (Eastern) on Tuesday, June 10, 2014 to discuss these announcements.
Cost Saving Initiatives
The Company is targeting cost savings that would benefit Adjusted EBITDA by approximately $30 million in 2015. It is not expected that the initiatives will materially impact Adjusted EBITDA in 2014, as the costs of implementation will generally be offset by initial savings. The initiatives can be categorized under two broad themes:
1. Reducing costs of goods and services. This will be driven by:
o New strategic procurement practices to further leverage our scale and purchasing power; and
o A multi-year effort to increase labor efficiency during maintenance outages. This will be accomplished with a combination of best practices, enhanced planning and modest capital investments.
2. Reducing staff by improving process efficiency and implementing best practices including:
o Upgrading and leveraging existing IT systems to streamline processes; and
o Centralization and reorganization of certain overhead functions, including accounting, finance, and procurement.
Commenting on this announcement, Anthony Orlando, Covanta's President and CEO, stated, "We recently conducted an intensive review of our internal processes and practices across the entire business with the goal of delivering our world-class service with greater cost-effectiveness. As a result of this effort, we identified a number of meaningful initiatives that are being implemented over the remainder of this year. I'm confident these changes will deliver the targeted savings next year and we'll seek to increase the savings over time."
The Company announced the intention of its Board of Directors to increase the quarterly dividend to an annualized rate of $1.00 per share, beginning in the third quarter of 2014.
Commenting on this announcement, Brad Helgeson, Covanta's Executive Vice President and CFO, stated "Our Board's plan for the dividend underscores our collective confidence in the long-term stability of this business and its cash flow. The increased dividend would represent a modest increase in the cash payout ratio to approximately 50% of anticipated run rate Free Cash Flow. Our overall capital allocation policy remains unchanged, and we believe that this higher dividend will continue to afford us with ample flexibility to continue to invest in the business for long-term growth."
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We are sure all those soon-to-be-unemployed staff will rest assured that the company's stock price is up and they are contributing to the greater good of wealth effect generation in America...