Tag Archives: construction

PNM Resources’ (PNM) CEO Patricia Collawn on Q1 2016 Results – Earnings Call Transcript

PNM Resources, Inc. (NYSE: PNM ) Q1 2016 Earnings Conference Call April 29, 2016 11:00 am ET Executives Jimmie Blotter – IR Patricia K. Collawn – Chairman, President and CEO Charles Eldred – EVP and CFO Analysts Ali Agha – SunTrust Robinson Humphrey Anthony Crowdell – Jefferies & Co. John Barta – KeyBanc Capital Markets Lasan Johong – Auvila Research Consulting Operator Good morning and welcome to the PNM Resources First Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jimmie Blotter, Director of Investor Relations. Please go ahead. Jimmie Blotter Thank you, Rocco, and thank you everyone for joining us this morning for the PNM Resources First Quarter 2016 Earnings Conference Call. Please note that the presentation for this conference call and other supporting documents are available on our Web-site at pnmresources.com. Joining me today are PNM Resources’ Chairman, President and CEO, Pat Vincent-Collawn, and Chuck Eldred, our Executive Vice President and Chief Financial Officer, as well as several other members of our executive management team. Before I turn the call over to Pat, I need to remind you that some of the information provided this morning should be considered forward-looking statements, pursuant to the Private Securities Litigation Reform Act of 1995. We caution you that all of the forward looking statements are based upon current expectations and estimates and that PNM Resources assumes no obligation to update this information. For a detailed discussion of factors affecting PNM Resources’ results, please refer to our current and future annual reports on Form 10-K, quarterly reports on Form 10-Q, as well as reports on Form 8-K, filed with the SEC. And with that, Pat, I will turn the call over to you. Patricia K. Collawn Thank you, Jimmie. Good morning, everyone, and happy Arbor Day. Thank you all for joining us this morning as we report on the Company’s first quarter performance and take a quick look ahead. I’ll start on Slide 4 with a look at the numbers and our achievements from the first quarter. First quarter earnings were lower than last year but consistent with our expectations. Consolidated ongoing earnings were $0.13 per diluted share, compared with $0.21 per diluted share in the first quarter of 2015. In addition, today we are reaffirming our 2016 consolidated ongoing earnings guidance of $1.55 to $1.76 per diluted share. At PNM, concerted efforts to create a more favorable customer experience continue to pay off despite the challenges associated with high-profile filings such as our current rate proposal. J.D. Power reported the overall Customer Satisfaction Index reached a high point for PNM. I’m particularly proud of our customer service results which came in among the highest in our benchmark peer group. This achievement is the result of the effort and dedication of our employees from departments all across the Company who are focused on being responsive to and meeting the needs of our customers. Our Company has stayed the course, proactively communicating and sharing information that customers need the most. I’m proud of the work we have done. We know there is no silver bullet. It takes countless decisions being made every day on behalf of our customers. I’m confident our strategy is on target and we are doing the right things for our customers. I’m also pleased to say that TNMP has again been recognized by ENERGY STAR for the Company’s successful energy efficiency efforts. TNMP received the Partner of the Year Energy Efficiency Delivery Award for its high-performance Homes Program. The initiative promotes the construction of new ENERGY STAR certified homes and provides financial incentives and other assistance to homebuilders. This honor is on top of receiving ENERGY STAR’s Market Leader Award for the 11th consecutive year. So now let’s turn to Slide 5. Throughout the first quarter, we were preparing for the hearing of the New Mexico Public Regulation Commission regarding our $123 million general rate case. The hearing began on April 11 and after three full weeks of testimony it is scheduled to end today. As you all know, this filing is primarily driven by capital, the more than $650 million of investments we have made since our last rate increase to improve the electric service and better serve our customers. Our top priority is to achieve timely cost recovery to support strong credit metrics. I’m not going to speculate about the outcome. However, thanks to the knowledge and endless hours of preparation of our employees and our witnesses, we are confident that we presented a strong case. At this point, we anticipate a recommended decision by the Hearing Examiner in June with a final ruling by the Commission in July. We expect to implement new rates August 1. Part of our replacement power plant for BART includes adding a natural gas peaker on the San Juan site. On April 26, PNM filed an application for a CCN for an 87 million 80 MW facility. We hope to receive a procedural schedule in the next few weeks with the goal to have the facility online by June 2018 before the summer peak season. I’m also very pleased to say that on March 17, FERC issued an order approving the settlement in the PNM formula transmission rate case, which includes a 10% return on equity. On April 15, the Company made the final compliance filing for the rates that have already been in place. Going forward, rates will be updated annually on June 1, including this year. Over in Texas, on March 23, the PUCT approved TNMP’s most recent TCOS filing and new rates went into effect totaling $4.3 million annually. We plan to make our next TCOS filing in July with rates expected to go into effect in September. Now I’ll turn it over to our Chief Financial Officer, Chuck Eldred, for a more detailed look at the numbers. Charles Eldred Thank you, Pat, and good morning, everyone. I’d also like to say happy admin week for all the administrative assistance that help all of us in our daily work. So beginning on Slide 7, as Pat said earlier, we are reiterating our 2016 guidance of $1.55 to $1.76. As you know, this is a broader range than we typically provide because of our pending rate case at PNM. I want to remind you of the quarterly distribution of earnings that we provided to you when we issued the 2016 guidance. We have provided that information here for your reference. Because of the third quarter rate case implementation, we expect the second half of the year to have a higher percentage of our earnings than we normally see. With Q1 being 8% to 9% of our earnings for the year, our first quarter results of $0.13 is inside the guidance range for the quarter. Turning to Slide 8, let’s review the PNM’s load details. Load at PNM was down 1% compared to the first quarter of 2015. Residential was down but growth in the small commercial sector helps to offset that decrease. Industrial, although only a small portion of overall load, was down 7.2% between the periods. In this group, Intel is a large customer and they continued to show a decline on a year-over-year basis. As many of you are aware, they announced a major restructuring in their business during the first quarter earnings call. We are carefully monitoring the situation. We have received no communication from Intel that they plan to close this site. Our 2016 guidance range for the load of flat to down 2% considers sensitivities for changes to Intel’s load. We continue to see overall improved economic development efforts locally. This resulted in the Albuquerque Metro area having the best month for job creation in March on a year-over-year basis since May of 2007 at 1.6%. The bulk of that job growth was in private sector jobs. We anticipate that the increased focus on growing the private sector jobs will result in a more diverse and resilient economic base. We see some of the results of these efforts in our continued customer growth which is above forecast at 0.7%. Now moving to TNMP’s load on Slide 9, volumetric load for the first quarter of 2016 was down 1.6% compared to the first quarter of last year, but demand-based load was up 1.5% for the same period. Most of TNMP’s commercial and industrial customers are billed based on their peak demand, which is not reflected in the volumetric based load figures. This offsetting impact causes load in total to have a slightly positive financial impact for the quarter of about $0.005. Both volumetric and demand-based load were used to create a load forecast. We continue to expect load for the year to be at an increase of 2% to 3% compared to 2015. As you read in many publications, this has been a warmer and drier winter than normal in Texas. As a result, the quarter to quarter load comparison has likely been skewed by this, particularly in the residential customers as this group is more sensitive to weather. This has been more than an offset in our results by the demand-based customers which are much less sensitive to weather changes. Turning to Texas economy, as we talked about on our last earnings call, it continues to be strong due to its diversified base. While Houston is feeling the impact of the low oil and natural gas prices, the state overall is diversified and this helps to compensate for the weakness in the energy sector. The Permian Basin which TNMP serves a portion of continues to show the most strength in the oil market. We saw that Chevron made an announcement this week that it plans to invest more heavily in this area even though they’ll be cutting costs in other areas. Several other economic factors in the state also continue to show strength, including increases in building permits and existing home sales to name a couple. We see the impact of the strong economy by way of continued higher than forecasted customer growth at 1.6% for the first quarter 2016. Now Slide 10, let’s review the drivers for PNM. We purchased 64 MW of Palo Verde Unit 2 leases in January of this year. The savings from the lease purchase offset by the additional depreciation results in a $0.03 improvement to earnings in the quarter. Outage costs were $0.02 higher. While San Juan had outages in the first quarter 2015 for the SNCR installation, which were not experienced in the first quarter this year, Four Corners had an extensive outage this year. In addition to the planned outages at Four Corners, San Juan Unit 3 had a 12 day unplanned outage. We had higher depreciation and property tax expense of $0.02 due to increased investments. Lower market prices for Palo Verde Unit 3 sales caused results to be $0.02 lower this quarter and interest expense also reduced earnings by $0.02 because of the additional long-term debt that PNM entered into in August of 2015. Load, AFUDC and Navopache FERC Generation contract, each caused results to be $0.01 lower than Q1 of 2015. We also recorded $0.01 in Q1 of 2015 for the cumulative reimbursement of prior year’s Palo Verde spent fuel storage cost that did not repeat in 2016. Now moving to Slide 11, we’ll review TNMP and Corporate drivers. At TNMP, rate relief in the TCOS filings was up $0.01 compared to the first quarter of 2015. Weather was down $0.01 and depreciation and property tax expenses were also higher by $0.01. At Corporate, we were up $0.02 compared to the first quarter of 2015. This change was driven by less interest expense because of the repayment of the 9.25% debt in May of last year and the incremental interest associated with a financing agreement with Westmoreland, offset by additional interest expense from higher short-term debt balances. On a side note, since Westmoreland took over the San Juan Mine on February 1, we have been very pleased with the operational performance of the mine. Thing are running smoothly and the transition has gone very well. Westmoreland taking over the mine has proven to be a great benefit to our customers as well and the associated cost savings helped to offset the rate request that we have before the Commission now. In conclusion, I want to reiterate that we are pleased with the progress so far in the rate case. As Pat indicated, we believe that we have presented a strong case during the hearings. We expect to receive the Hearing Examiner’s recommended decision in June and ultimately to implement new rates at PNM on August 1. As a result, we plan to update our current year guidance to potential earnings power schedules and capital spending forecast during our second quarter earnings call. This concludes my comments and I’ll turn it back over to Pat. Patricia K. Collawn Thanks, Chuck. We are pleased to say that the Company continues to perform well. Customer satisfaction is up. We are confident we presented a strong case to support our rate increase. We continue to execute our plan and manage our businesses effectively and responsibly, and at all times the focus is on our efforts to serve our customers with safe, reliable and environmentally sensitive energy at low prices. I’m also pleased to say that as Chairman of the New Mexico Economic Development Partnership, I’m in a position to see the fruits of all of the policy changes that Governor has made to make New Mexico a more business friendly state. Our pipeline is as robust as I’ve seen it in many years. Thank you for joining us today. Operator, let’s now open it up for questions. Question-and-Answer Session Operator [Operator Instructions] Our first question comes from Ali Agha of SunTrust. Please go ahead. Ali Agha As per the call, Chuck, you mentioned that in your guidance you’ve assumed that new rates go into effect August 1 of this year. Can you remind me, is there some flexibility for the Commission to delay that or push it back, and if so, remind me what the sensitivity is for every month in delay? Charles Eldred I don’t think we have provided that in the guidance of the sensitivity. While Jimmie is taking a look to see what the numbers are, legally they could delay the rate case, the Hearing Examiner or the Commission, up to October 1 of this year. But we’ve seen that the Hearing Examiner, although the one month of lag that you are aware of, has been very disciplined towards trying to stay to this current schedule. So if you looked at the sensitivities, the implementation on August 1, we dropped the earnings about $0.08, and then September 1 it drops down about $0.07, and then $0.06 in October of one implementation of those rates. So you can see that. Jimmie can lead you to the guidance information to give you more detail if you need to reference some of the previous slides that we’ve prepared on that. Ali Agha Right. And then secondly, so if this comes into effect August 1, I recall, I mean if the timeline is not that the San Juan retrofit rate increase should go into effect beginning in 2018, historically has there been any precedents when you’ve had two rate increases in New Mexico so close to each other and is that a concern from a regulatory approval process with two back-to-back rate increases? Patricia K. Collawn Ali, everybody understands that the next one on the primary drivers of that are the San Juan to BART settlement. And so that will have some normal capital spending into it. But I think everybody understands that these are special circumstances with the BART settlement here that state settle for regional haze and will help us with the clean power plant. So long answer, I don’t think it has any worries for us on that. Ali Agha Okay. And then last question, on the load trends, first in New Mexico, any sort of light at the end of the tunnel where we may reach an inflection point and start to see at least load flattening? There’s constant negative trends for the last several quarters, so let me start with that. Are you seeing anything that tells you we may have bottomed out here? Patricia K. Collawn I think I’ll kind of give you a high-level answer, Ali, and then I’ll let Chuck fill in. I think what we’re seeing is the economy is starting to turn around. Chuck mentioned we’ve seen the best job growth since 2007. And I think that you’re seeing most utilities are having negative usage per customer growth on the residential side. They just haven’t seen the customer growth. The job growth here is going to help us bring back the customer growth on that. And as I mentioned, our economic development pipeline looks very strong right now. So we are starting to see some of those turn around. Charles Eldred I mean the trends are beginning to reflect more of a flattening indication on load because what we are benefiting from in the small commercial and some of the growth is being offset by still some of the economic hardship in the area of Albuquerque. But again, we are beginning to see some flattening, hopefully not much of a decrease, but certainly even the sensitivities I mentioned with Intel are still within that zero to negative 2% guidance range that we gave you. Ali Agha Right. And Texas, I think it’s the first time, at least in the recent past, you’ve broken out this demand side and volumetric load trends, but you put them together and you come up to a negative number. I know you mentioned that weather normalization may have been a challenge here, but anything else that concerns you on Texas? I mean we haven’t seen a negative load number there forever I think as far as I can go. Charles Eldred A lot of it, and we mentioned a little bit about the weather being unusual that first quarter that we’re a little sensitive on the weather normalization in that calculation because it was a drier period in Texas, it created a little different kind of adjustment as you think about weather modernization, but we added the demand-based load because we consider that. We could see that with the AMI implementation, we’re getting more readings and shifting customers more to that demand based to be more reflective of the type of customers that they are and providing that tariff. So as we go forward, we’ll continue to incorporate the demand-based load and be more reflective of the expectations of the entire load projections with that consideration. But as I mentioned, the end result even this last quarter was about $0.5 million, so $500,000 benefit on an earnings basis as a result of the load in first quarter. Patricia K. Collawn Ali, I think a key number to look at on that Slide 9 is, our customer growth forecast is 1% and we are at 1.6%. So our territories in Texas are still growing. We don’t see anything and a quarter does not a trend make, just as we kind of good quarter we don’t call it an upswing on the low growth for just one quarter, especially when it was a leap year normalized and a weather normalized and heaven only knows what else in there, it kind of tops out. We’re not changing our forecast on Texas. Ali Agha Understood. Thank you. Operator Our next question comes from Ben [Budis] [ph] of Jefferies. Please go ahead. Anthony Crowdell It’s Anthony Crowdell. I don’t know how it came in as Ben, but that’s okay. I’ve been called worse. On Slide 11 you have $0.01 benefit for the Westmoreland financing agreement for the quarter. Is that something we can annualize and make it $0.04 to $0.05? And when I compare it to the Slide 14, potential earnings power, shouldn’t that offset some of the Corporate and Other because that looks like it has not changed, it’s still at a $0.06 to $0.04 loss? Charles Eldred I think I’ve talked about it even on the last call. The Westmoreland would be about $0.04 benefit to eastern Corporate and Other. So that’s a good indication of what you can expect going forward. We haven’t updated potential earnings power slide to reflect any incorporation of the Westmoreland loan. So we are really intending to wait to the rate case that we have all the information necessary to update the slide. In that point in time, we’ll include the Westmoreland loan. So we just don’t want to put pieces of information out there. We really want to give you more of a comprehensive view based on the major driver, which is the rate case at PNM, to give you a better reflection of how we see all these additional earnings and the impacts of the rate case to be incorporated into the earnings power slide. Anthony Crowdell Great. Thank you so much. Operator Our next question comes from John Barta of KeyBanc. Please go ahead. John Barta So I guess if we go back maybe a month ago, it seemed like ROE, PV2 and the Balanced Draft Technology were probably the most contentious pieces of that rate case. Just after three weeks of hearings, do you have a better feel on any of those items just from talking with the staff, et cetera? Charles Eldred John, we really don’t want to bring any color to the results of the discussions going on, but I think you’ve certainly pointed out some of the areas the intervenors have questioned, but we look at this as a capital rate case. It’s being litigated with the idea that we think we can build the right record on our capital investments as being prudent and reasonable for the utility to maintain the reliability of the business itself. So there is a lot of different factors, so ROE, depreciation, some of the capital items that you’ve mentioned that intervenors had questioned, but again we felt like our testimony and the record that we’ve built was very solid and well justified the Company’s position to recover those costs. John Barta Okay. And then just in Texas on the load growth, so it sounds like the volumetric percentage is going to transition more to the demand-based load over the coming years. Charles Eldred You see the split-out. We really have taken that in consideration because it’s becoming more of a driver as the automated meter reading gives us a more accurate indication of the type of customers, commercial, industrial and the type of demand that they have on the system. It’s more reflective of that now going forward. So you’ll see us evolve into adding that additional component to our load forecast. Again, no concerns about TNMP’s continued guidance in growth of 2% to 3%. Just want to give you another variable how we’re driving towards those numbers. Patricia K. Collawn It’s easier for us to split it out now that we have the data from the automatic meter reading because that’s how it’s billed, and so it just provides another level of transparency. John Barta Okay, thanks. And then have you disclosed how many megawatts in total is? Patricia K. Collawn No. John Barta All right, thank you. Operator Our next question comes from Lasan Johong of Auvila Research Consultants. Please go ahead. Lasan Johong Question on kind of looking forward, in your presentations you put out 2017, 2018, 2019 outlook, have you taken into consideration the changes in Texas potential ORDC regulations, shutting down of the coal plants, build up of solar, more wind power probably as well, and how does that affect – I mean has that all been taken into consideration in your kind of outlook, how are you incorporating that into your outlook? Patricia K. Collawn The nice thing for us now is that since we’re a T&D utility, that really only impact it would have is if energy prices get extremely high over there, I think you would see customers starting to conserve, so our volumetric load might fall. Customers in Texas have been pretty inelastic to price sensitivity there. Their rates for example in Texas are higher than in New Mexico but their usage is a lot more. On the solar side, we’re seeing some solar penetration in Texas but not a lot. Texas does not have net energy metering, and so the solar potential or the solar penetration in Texas has been low, we’re seeing more of it, but so far all of the growth we have seen has been able to overcome that. So the trends we pay more attention to in Texas are sort of the overall economy and particularly our service territory since we’re sort of around Dallas. We’re south and east of Houston in a petrochemical manufacturing area, refining area, and then more over kind of in West Texas. So the thing that drives our numbers is more those general economic positions. And in the outlook we’ve put forward in terms of earnings potential, we haven’t really seen anything that drives us to believe we’ll see a lot of macro changes in the economy. Lasan Johong And based on [indiscernible], any kind of mass migration in customer usage or patterns of switching for example, as prices go up and down, do you think there’s vulnerability with bigger players, such as yourselves relatively speaking, versus smaller players who are more nimble and take more market risk shall we say, you don’t see shifts in customer or switching? Patricia K. Collawn No, we don’t really see that impacting our piece of the business right now. I think obviously the Texas market is in a little bit of flux right now in terms of where they are going to go with their regional haze plans and their clean power plants in terms of where the generation mix is, but we don’t see anything to incorporate into our numbers. Lasan Johong And lastly, Texas has experienced some really bad weather as of late, tornadoes, hurricanes, hailstorms and such. Any impact? Patricia K. Collawn No. The really bad weather that you saw kind of missed our service territories. It was more in the Houston Metro which is center point. So we’ve had some outages and some impacts but nothing major for us. Lasan Johong Great, that’s fantastic. Thank you very much for your time. Operator This concludes our question-and-answer session. I’d like to turn the conference back over to Pat Vincent-Collawn for any closing remarks. Patricia K. Collawn Thank you. And again, thank you all for joining us today. We hope you have a wonderful rest of your day and a wonderful spring and we look forward to talking to you again on the second quarter call. Have a great day. Operator And thank you. Today’s conference has now concluded and we thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com . Thank you!

Covanta Holding’s (CVA) Steve Jones on Q1 2016 Results – Earnings Call Transcript

Covanta Holding Corporation (NYSE: CVA ) Q1 2016 Earnings Conference Call April 27, 2016 8:30 AM ET Executives Alan Katz – Vice President-Investor Relations Steve Jones – President and Chief Executive Officer Brad Helgeson – Chief Financial Officer and Executive Vice President Analysts Tyler Brown – Raymond James Andrew Buscaglia – Credit Suisse Noah Kaye – Oppenheimer & Company Michael Hoffman – Stifel Scott Levine – Imperial Capital Dan Mannes – Avondale Partners Operator Good morning, everyone, and welcome to the Covanta Holding Corporation’s First Quarter 2016 Financial Results Conference Call and Webcast. This call is being taped and a replay will be available to listen to later this morning. For the replay, please call 877-344-7529 and use the replay conference ID number of 10084165. The webcast as well as the transcript will also be archived on www.covanta.com. At this time for opening remarks and introductions, I would like to turn the call over to Alan Katz, Covanta’s Vice President of Investor Relations, sir? Alan Katz Thank you and good morning. Welcome to Covanta’s first quarter 2016 conference call. Joining me on the call today will be Steve Jones, our President and CEO; and Brad Helgeson, our CFO. We will provide an operational and business update, review our financial results and then take your questions. During their prepared remarks, Steve and Brad will be referencing certain slides that we prepared to supplement the audio portion of this call. Those slides can be accessed now or after the call on the Investor Relations section of our website, www.covanta.com. These prepared remarks should be listened to in conjunction with these slides. Now on to the Safe Harbor and other preliminary notes. The following discussion may contain forward-looking statements and our actual results may differ materially from those expectations. Information regarding factors that could cause such differences can be found in the Company’s reports and registration statements filed with the SEC. The content of this conference call contains time-sensitive information that is only accurate as of the date of this live broadcast, April 27, 2016. We do not assume any obligation to update our forward-looking information unless required by law. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Covanta is prohibited. The information presented includes non-GAAP financial measures. Because these measures are not calculated in accordance with GAAP, they should not be considered in isolation from our financial statements, which have been prepared in accordance with GAAP. For more information regarding definitions of our non-GAAP measures and how we use them as well as the limitations as to their usefulness for comparative purposes, please see our press release, which was issued last night and was furnished to the SEC on Form 8-K. With that, I’d like to turn the call over to our President and CEO, Steve Jones. Steve? Steve Jones Thanks, Alan, and good morning everyone. For those of you using the web deck, please turn to Slide 3. We’ve had a good start to the year and we’re marking great progress on our key initiatives. In terms of financial results, Q1 adjusted EBITDA was $76 million, a decline of $3 million from Q1 2015, and free cash flow was a negative $5 million lower by $21 million. The decline in adjusted EBITDA was driven largely by the impact of lower year-over-year commodity prices, approvals for variable incentive compensation and lower energy revenues from our biomass facilities, partially offset by the positive impact of growth in our environmental solutions business. Free cash flow was impacted by these same factors as well as by higher maintenance CapEx as a result of increased scheduled maintenance activity in the quarter. Given the lower year-over-year power prices in 2016, note that we did more maintenance this year than last year. Our financial results were in line with expectations as of our last call and in last night’s press release we affirmed our guidance for 2016. In terms of our strategic initiatives, we continue to grow our environmental solutions business with another quarter of record revenue. We also acquired another small material handling facility in Augusta, Georgia earlier this month. This will support the profile waste programs at our Energy-from-Waste facilities in Florida, Alabama, and Virginia. We completed the first step in our China asset swap in sale and are now going through the process to complete this transaction, which is the sale of equity of CITIC. We still expect to complete this process by the end of this quarter. Our continuous improvement initiative is going well and we have uncovered a number of opportunities across the business. I continue to be impressed with the size of the projects that we’re working on in this area. We had a strong quarter operationally with boiler availability, energy production and metal recovery right on target. We’re also in the final weeks of our heaviest maintenance period of the year, and overall things are going very well. Now let’s move on to the markets and operations. I’ll start with the waste business. Please turn to Slide 4. Our North American Energy-from-Waste same-store volume was flat while pricing was higher by $6 million versus Q1 2015. This was driven primarily by the impact of profile waste. In March, we completed a full-year of service at the Queen’s MTS taking waste deliveries to our Niagara and Delaware Valley facilities via rail. This contract is going well and we continue to displace lower priced spot waste with New York City waste in these markets as the city ramps up volumes. Looking at our Covanta Environmental Solutions business, EfW profiled waste grew 16% this quarter compared with Q1 2015. We completed two acquisitions so far in 2016. And the integration in the materials handling facilities and services businesses that we acquired in 2015 has gone well in terms of both cost synergies and sales force integration. Now let’s move on to energy. Please turn to Slide 5. As many of you have likely seen, the power markets, particularly in the Northeast, we’re under significant pressure in the first quarter given the mild winter and low gas prices. Average market pricing for the quarter was $28 per megawatt hour. However, our full-year expectation is that the portfolio will likely still be around $50 per megawatt hour. Production was in line with expectations and there have been no changes to our outlook for the full year. We did hedge a bit more for this year and for 2017 as you can see in our energy portfolio detail on Slide 16. I’ll note that, as expected, earlier this month we shutdown all of our biomass facilities and don’t anticipate any additional biomass revenues for the remainder of the year. We’ll have some minimal carrying costs moving forward, which we included in our guidance. Note that we continue to look at options for these assets. Let’s spend a few minutes on the metals business. I’m now on Slide 6. Market pricing continued to have a significant impact on metals revenue year-over-year. The average price for the HMS number 1 Index was $158 per ton in Q1 versus $255 per ton in the same quarter last year. However, we’re starting to see some positive movements with recent HMS Index prices coming in above $200 per ton. Given the recent move in the markets, we now expect our average revenue per ton for ferrous to be between $80 and $90 for the full year. In terms of volumes, ferrous volumes increased by 9% this quarter as a result of new recovery systems that we installed in 2015. The impact of our Fairless Hills facility and more metal in the waste stream, which we believe was driven by lower market prices. This increase is after the effect of the cleaning process at Fairless, which reduces volume. Non-ferrous volume increased by 6% versus Q1 2015, also driven primarily by investments made to increase recovery at certain facilities, so overall metals volumes have been very good. Forward prices for – of recycled aluminum are holding steady and our outlook for the full year non-ferrous price is unchanged at approximately $600 per ton. While we’re still a ways off from historical averages, it’s encouraging to see some price support in the ferrous market. Now let’s move on to operating expense and CapEx. Please turn to slide seven. Total EfW maintenance spend in the quarter, including both expense and CapEx, was up 19% versus Q1 2015. As I mentioned, this increase was primarily the result of a relatively lighter outage scope in Q1 last year in an effort to capture higher power prices. Our outlook for the full year Energy-from-Waste maintenance spend is unchanged at $350 million to $370 million. We completed about a third of our total expected maintenance spend in Q1 and will complete another 30% in Q2, very much on track in terms of – we’re very much on track in terms of our full year maintenance spend. North American Energy-from-Waste other plant operations expenses were down 1% on a same-store basis this quarter compared with Q1 2015 primarily due to cost savings from our continuous improvement initiatives. We’ve been reducing the amount of fuel and other chemicals used in our processes and this has had a favorable impact on costs. This is a classic example of continuous improvement productivity. I’ll wrap up with some thoughts on our business outlook for the rest of this year and beyond. Our core business is running extremely well. While the commodity markets continue to be volatile, we’re focusing on things that we can control. We’re generating record revenue on profiled waste and continuing to build out our environmental solutions platform. Our continued improvement effort is moving ahead nicely. In terms of growth projects Dublin is coming along very well with construction approximately 60% complete. We’re currently installing the stoker, boiler and air pollution control equipment. We still expect to have first fire by this time next year and are on track for commercial operations by the fourth quarter of 2017. We also continued to look for other growth opportunities, both here in the U.S. and abroad. One of these, Perth, which we discussed a bit at our analyst day, is still in the development stage. We’re looking closely at the cost of construction and the contracts, and should come to a conclusion on whether we want to move ahead with this project in the next several months. There are a number of other opportunities that are in the pipeline for expansions, new builds and growth within the Environmental Solutions business. We’re off to a great start for the year and I continue to be excited about the avenues for growth that I see for this business. With that, I turn the call over to Brad to discuss the first quarter results in more detail. Brad Helgeson Thanks, Steve. Good morning, everyone. I’ll begin my review of our first quarter 2016 financial performance with revenue on slide nine. Revenue was $403 million, up $20 million versus Q1 2015. North America Energy-from-Waste revenue declined $5 million year-over-year on a same-store basis. Within that amount waste and service revenue increased by $5 million, with higher average revenue per ton driven by the continued growth of profiled waste volume, as well as contractual escalation. Energy revenue declined by $3 million and recycled metal revenue declined by $7 million, both driven by lower year-over-year market prices. North America EfW contract transitions were a net positive $3 million year-over-year, with two months of benefit from our Fairfax facility, now operating under a Tip Fee contract structure, partially offset by lower debt service revenue. Outside of North America EfW operations, the Environmental Solutions business was up $16 million primarily as a result of the acquisitions that we completed in 2015. All other operations netted to a $6 million increase, with higher year-over-year service fee revenue from the New York City MTS Contract, partially offset by lower biomass revenue. As Steve mentioned, we’re no lower operating any of the biomass facilities given the economics in the current energy price environment. Moving on to slide 10, adjusted EBITDA was $76 million in Q1 2016, compared to $79 million in Q1 2015. The year-over-year decline was driven by lower energy and recycled metal prices in the North America EfW portfolio, which reduced adjusted EBITDA by $10 million on a same-store basis. Contract transitions added $1 million to adjusted EBITDA in the quarter, with the Fairfax transition partially offset by lower debt service revenue. New business, including the New York City MTS contract, which commenced towards the end of the first quarter last year and acquisitions in the Environmental Solutions business, together added $8 million to adjusted EBITDA in the quarter. The other significant impact in the quarter when compared to the prior year was the relatively heavier scheduled maintenance outage calendar, which Steve discussed. Turning to slide 11, free cash flow was negative $5 million in the first quarter, compared to positive $16 million in the prior year. This was driven by the operational factors that impacted adjusted EBITDA in the quarter totaling $3 million, higher maintenance CapEx of $10 million year-over-year and higher cash payments for interest and taxes totaling $5 million. Cash flow from working capital was similar to the same period in 2015. The first quarter is often a seasonal low point for cash flow and free cash flow can sometimes be negative in a given quarter depending on maintenance activity, as we had this quarter, or working capital movements, as we’ve seen in the past. In any event, these are seasonal and timing factors and therefore nothing should be extrapolated from this for our full year outlook. Our expectations for full year free cash flow are unchanged as we affirmed in yesterday’s press release. Our growth investment outlook, which is detailed on slide 12, is unchanged for the year. We invested $14 million in organic growth projects in the first quarter primarily related to metal recovery systems and some investments in new equipment for the Environmental Solutions business. Investments in the infrastructure to support the New York City MTS contract and in the emissions control system at the Essex County facility are on track, as expected, as well as our Dublin spend this quarter. As Steve mentioned, the Dublin facility construction is progressing well. Turning to slide 13, I’ll quickly touch on our balance sheet and leverage ratios. Net debt increased in Q1 to $2.4 billion, versus $2.3 billion at the end of 2015, resulting from further drawdown of the Dublin facility project debt and seasonal revolver borrowings. The net-debt-to-adjusted-EBITDA ratio for Q1 was 5.7 times. As I’ve discussed in the past, we expect leverage to remain elevated until we begin to realize contribution from the Dublin project, after which we expect leverage to trend lower, as we seek to return to our long-term target of approximately four times. The calculation of the leverage ratio covenant under our senior secured credit facility was 3.1 times at March 31, versus the covenant limit of four times. Remember this ratio isn’t impacted by the increased leverage from Dublin as that non-recourse debt is excluded from the calculation during facility construction. So even though our consolidated metrics are elevated for the time being, we remain well within our debt covenants as we move through this period in our investment cycle. In conclusion, I’ll quickly reiterate the theme of Steve’s commentary. 2016 is off to a very strong start in the execution of our strategic, operating and financial objectives for this year and beyond. And with that, let’s open up the line for questions. Question-and-Answer Session Operator Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Tyler Brown of Raymond James. Please go ahead. Tyler Brown Hey. Good morning, guys. Nice start to the year. Steve Jones Thanks, Tyler. Tyler Brown Hey, Steve, so we’ve been working on continuous improvement now for the better part of a year. You guys have added some talent there to really drive the cadence. It sounds like you’ve been successful, but can you guys talk a little bit about what types of projects are in that opportunity stack? Secondly, maybe are those initiatives here in the beginning targeted at the Tip Fee fleet? And three, do you still believe that there’s annually maybe $10 million to $15 million of annual cost saves out there over the next couple of years? Steve Jones Yes. Sure, Tyler. We’re working on a number of different projects. I’d say the four biggest buckets are really around outage optimization because when you spend $350 million to $370 million a year on outages, I think there’s efficiency that can occur there. Stable operations, which is you’ve probably heard me talk about this before. This is basically having your best – it’s as if you had your best operator on your control board every minute of the day, and so we’re working on that. We’re looking at reagent optimization, which is really kind of the chemicals that we use in the plant, and then lastly, boiler fouling. All of those buckets are much higher benefits than I’ve been used to in the past. So, since we’re in early stages of continuous improvement, the returns are kind of bigger buckets of savings at this point. And it’s like some of these like stable ops, the savings in 2016, we’re looking at upwards to $1 million of savings in 2016, for example. And so we have about seven or eight people on the team right now. Some of those – most of those have black – folks are black-belt qualified already. And as we’re projecting out through 2016, we’re still seeing that $10 million to $15 million benefit rolling through the P&L. So things are go – been going very well from that perspective. It’s still early on realize that when you start these programs there’s a lot of data gathering and work that needs to be done. So I’d still say it’s early in the process, even though I’ve been talking about it for about a year. It’s still relatively early in the process, but I am very encouraged by the size of the projects that we’re uncovering. Tyler Brown Okay. Yes. Brad Helgeson Tyler. Tyler Brown Yes. Brad Helgeson Sorry. Just to answer I think one other part of your question. The focus here, certainly initially, is on the larger Tip Fee facilities. Steve Jones Yes. Good point. Brad Helgeson You’re right about that. Tyler Brown Okay, okay, great color. And then, Brad – excuse me – from a modelling – for modelling purposes, so as biomass completely shuts down in China, kind of eventually goes away, will the total plant operating expense X maintenance, will that actually decline sequentially, calling into a new baseline into Q2 or Q3? Brad Helgeson It should. Yes. Tyler Brown Okay. Brad Helgeson Yes. And that’s all – that’s all being equal. Yes. Tyler Brown Yes. Okay, perfect. And then just lastly under the current kind of knee-pool environment, can you guys talk even at a high level, about how we should be thinking about PPA expirations in 2017? And maybe what that looks like from an EBITDA headwind? Brad Helgeson Yes. I mean based on the forward prices that we observe in the market today up there, we’d expect a pretty meaningful hit to us. In 2017, as we’ve talked about in the past, we’re still a little bit away from it, but we’re probably in the $20 million to $25 million EBITDA impact next year. Tyler Brown Okay. All right. Perfect. Thank you very much. Operator And our next question comes from Andrew Buscaglia of Credit Suisse. Please go ahead. Andrew Buscaglia Hey, guys. Thanks for taking my question. Steve Jones Hey, Andrew. Andrew Buscaglia Can you touch on – you had some interesting commentary. It sounds like profiled waste in your Environmental Solutions group. Group is really starting to gain some traction. Can you talk a little bit about your expectations this year for further M&A growth on that side of things? And where you see that shaking up for the full year? Steve Jones Yes. So I mean, I’m really pleased with this business. It’s been growing well. You heard the profiled waste going into the Energy-from-Waste facilities is up 16% kind of year-on-year. That continues to be really nice growth. The Tip Fees in this area are better than municipal solid waste. We’ve talked about that before. You can get two times or three times higher Tip Fees, so we’ll continue to focus on this area. As we – as M&A going forward, we’re still looking for opportunities. With other calls on our capital and the fact that commodity pricing is low, we’re being careful on how we put our capital to use. But if we can find good opportunities that have the returns similar to the returns we’ve been getting on the assets we’ve already bought the businesses, we’ve already bought, we’ll certainly look at those. And quite frankly, one of the things, we grew quicker than I’d anticipated. Brad and I both have said, if you’d asked us a year-and-a-half ago, would we have had this many acquisitions so far. We wouldn’t have said this number. So one of the things I’ve really asked the team to look at is, let’s focus on integration as we go through 2016, and make sure that we’re getting all the benefits we can out of the assets that we – and the businesses that we’ve already bought. But we’re still looking in the market, to answer your question. Andrew Buscaglia Okay. Yes, that’s helpful. And then if you could just touch on the impairment charge in the quarter. You didn’t mention it, I don’t think in the prepared remarks, but are there any other things like that out there that you’re looking at that we could see in the future? Is there anything else that you’d like to talk about at this time? Steve Jones Well, if you look at – and – if you look at the impairment charge, it was related to an Energy-from-Waste facility where we basically have told the customer that we triggered a termination right. I don’t see a lot of those out there. In this particular case we really weren’t making that much money for the operating work that we’ve been doing. And one of the things I’ve been telling the team here is I’m not really worried about size. So having a certain number of Energy-from-Waste facilities isn’t important to me. It’s really about whether we’re getting paid for the work that we do. And I think in this case we, as a team, looked at this and said, we’re really not getting the kind of returns on the work that we’re doing there. So we triggered that termination right and then took the – and then the impairment occurred. So again, I don’t – there’s not a lot of those out there, but you’ll see us being kind of more rigorous as time goes on about whether we’re getting the right margins on the efforts that we put out there. Andrew Buscaglia All right. Thanks, guys. Steve Jones Sure. Operator And our next question comes from Noah Kaye of Oppenheimer & Company. Please go ahead. Noah Kaye Good morning. Maybe we can start with the pipeline of project opportunities. You mentioned Perth this morning and you talked about other projects in Australia before, China saying they’re going to build 300 new waste energy plants in the next several years, EU’s circular economy package and many member states having to move away from landfilling, it just seems like there’s a more supportive environment internationally at this point for waste energy facilities. And so I was wondering if, kind of in light of that, you could talk about maybe how you see the pipeline and the set of opportunities now versus a year or so ago? Steve Jones Yes. It’s interesting, there are some expansions in the U.S. and we’ve talked a little bit about those, there’s a couple of expansions around. But you’re right, Noah, the regulatory support and climate for energy from waste outside the U.S. is better than inside the U.S., and so there’s opportunities – I think at our Investor Day we talked about we like to do kind of a new plan every other year. We’re trying to get the pipeline filled from that perspective so we have Durham-York this year, Dublin next year, and then we’re looking at is Perth, we able to do Perth at returns that we think are reasonable based on the risk associated with the project. We’re going to be continuing to look at Australia. I mentioned China. The 13th five-year plan which came out a month or so ago was very supportive energy from waste, so there’s a number of opportunities there. We’ll look at the EU obviously, putting Dublin in the ground gives us a nice bulkhead to do other things in the EU. So we’re working on a number of projects. I’m a little reluctant to do project development in the public domain for competitive reason. So let’s assure we’ve got a lot going on. And I think in the past we were working a little bit, and maybe focused a little bit more on the kind of the transitions that were occurring in the U.S. Most of those were behind us so I think the team did a nice job here getting those transitions behind us and the mark-to-market behind us. So now we’re able to focus a little bit more on business development and growth. And you see that in energy from waste facilities, you’re also seeing that in the profile waste business. Noah Kaye Okay. Very helpful. And then maybe just a follow-up question for me on the profiled waste, again, really nice growth, 16% as you said year-over-year. Steve Jones Yes. Noah Kaye And it seems like more of the waste that you’re getting in that is really being driven by sustainability concerns from corporate participants. I was wondering if you could talk about that trend, maybe how you’re seeing the mix of profiled waste shift a little bit and some of the initiatives that you have to kind of keep that growing. Thanks. Steve Jones Yes. Sure. I’ve talked about this in the past. You’re seeing a lot of companies now want to go to zero waste to landfill. And then I mentioned even New York City, the mayor there has mentioned that. So that’s tending to drive the profiled waste business as companies try to meet their sustainability goals and zero waste to landfill goals. They’re coming to companies like Covanta in order to get a sustainable solution for their waste. And that’s continuing to grow. One of the things we’ve done around that is we’re building that business out. You’ve seen the growth associated with that. We’re adding sales people. We’ve got a much greater focus on that marketplace now. And we’re also working with our plant operations folks to be able to take that waste safely and reliably into our Energy-from-Waste facility. So there’s a lot of work underway. But a few years back, we saw this as a trend that’s occurring with corporations. And that’s what’s driving the U.S. really. It’s not government’s driving the U.S. in Energy-from-Waste, it’s corporations who want to not utilize landfills because, and you’ve heard me say this, putting your waste in landfills is not a great alternative. It creates a lot of greenhouse gas, a large greenhouse gas impact. And I think companies are really starting to embrace that and that’s driving the business. Noah Kaye Okay. Thanks so much. Appreciate it. Steve Jones Thanks, Noah. Operator And our next question comes from Michael Hoffman of Stifel. Please go ahead. Michael Hoffman Thank you, Steve and Brad, for taking my questions. Steve Jones Sure, Michael. Michael Hoffman On gross margins, you’ve had a mix shift because of profiled waste were mostly from energy solutions and contract revisions that have had the margins coming down. At what point do we see the benefit of six sigma, the mix shift having stabilized and this margin compression arrests? How do you see that time wise? Brad Helgeson Yes. It’s – hey, Michael. It’s Brad. Michael Hoffman Hi, Brad. Brad Helgeson It’s a difficult question to answer with precision just because there are a number of variables in play. So one of the variables being the rate at which we continue to add revenue that is service type revenue in the environmental solutions business. Commodity prices obviously impact that significantly. Commodity prices are come with 100% margin either for better or worse. Continuous improvement, we talked about a benefit which we baked into our guidance for this year of $10 million total between revenue and costs, though that’s likely to be more weighted towards cost and that’s something that we would expect to continue to grow over time. Certainly that’s our goal. But it’s something that’s very difficult to pinpoint that given all of those variables, that by the fourth quarter this year or second quarter of next year you’ll be able to really see continuous improvements specifically driving the margin from X to Y. Michael Hoffman Okay. I get all that. But you’re the quintessential modeler. You love doing this. So in your mind, when do you think you – if all things being equal, we live with the conditions you have for pricing in your metals, electricity, the mix you have today, this is a – the margin issue settles out here in this next 12 months? Steve Jones It’s another big factor actually, as I answered that question, that when you think about the consolidated total that will come into play later next year is of course the Dublin project… Michael Hoffman Dublin? Steve Jones Yes, which comes in at a very, very high margin, so that’ll be a significant mix shift. So you throw all that in the pot and stir it around, I would say that by the end of next year and certainly into 2018, you’re going to see a much different margin profile. Michael Hoffman Okay. So talked about capital and capital deployment. How would you frame the return characteristics of profiled waste spending and environmental solutions spending at this point in the cycle of that, the growth of those business? Brad Helgeson Yes. We look at whether we’re buying a $500,000 shredder in one of our new environmental solutions facilities or we’re investing in a new Energy-from-Waste facility. We look at the return in the same way, everything sort of needs to stack up to the same benchmarks. And so on that basis, we’re seeing the investments, both in the acquisitions. And then especially to the extent that there are opportunities for add on more organic growth-type investments into the businesses that we acquire, we’re looking at returns, cash-on-cash, IRR on the assets of low to mid-teens. And those – it’s still relatively early days. I want to give it that caveat. But I would say that the early returns are certainly favorable to our initial expectations in our models when we justified the investments. Michael Hoffman Okay. Thank you on that. And then on capital spending $86 million what’s in the cash flow statement on Page 7 of our PowerPoint. It’s – $36 million is maintenance. You get to Page 12, it talks about the growth. It shows $59 million, but if you do $36 million out of $86 million, that’s $50 million. So how do I reconcile what my modeling for that growth spending from a cash standpoint? Brad Helgeson Yes maybe rather than getting into it here, why don’t we – let’s take that offline and make sure we get the reconciliation exactly the way you want to look at it. Michael Hoffman Okay, great. Thank you very much. Brad Helgeson Thank you. Steve Jones Thanks, Michael. Operator And our next question comes from Scott Levine of Imperial Capital. Please go ahead. Scott Levine Hey. Good morning, guys. Steve Jones Good morning, Scott. Brad Helgeson Good morning. Scott Levine Just running through the various assumptions for 2016 guidance and comparing them to what you had in your slides for the fourth quarter. It looks like, obviously, you’re raising the metals assumption for revenue by $5 million give or take. It looks like you’re leaving the energy revenue or the revenue assumptions and the pricing intact. Just wondering whether based on the 1Q results coming in relative to your expectations if we should be moving upwards in the range or whether there are some offsets that we should be taking into consideration? Just trying to – it’s pretty wide guidance expanse. Just trying to get your, some additional color behind where we should be favoring within the range, if you can provide it. Steve Jones Yes, on energy we’re slightly negative to where we were when we looked at the forward prices when we gave guidance. And that’s reflected in the updated. We didn’t update the overall ranges because the change isn’t, I think, significant enough to justify changing the range. But you can see that in our expectation for a lower market price. And also actual lower average hedge price for the balance of 2016. So I’d say prices overall have weakened by on the order of a few million dollars relative to where we were. But again, it’s still well within the range that we talked about. So not worth changing the outlook. Scott Levine Fair enough. Go ahead. Brad Helgeson I would just say that there’s the offsetting factor on the metals side of things. We did tweak the range there as well. And the two pretty much offset each other. Scott Levine And given where you’ve come in for Q1, should we, and the fact that you’re pulling forward some of the planned maintenance, any changes in seasonality we should expect for the second quarter or maybe as the year progresses, based on the way Q1 came in or not meaningful as well. Brad Helgeson Yes, not meaningfully. And when I say not meaningfully, I mean to put it in perspective, if we talk about a percentage one way or the other of our spend, on maintenance, it’s $4 million that could come right before a quarter end or after a quarter end. So there is going to be just natural variability. And I think our outlook for the first half is going to be consistent, generally consistent with history which has been 60% to 65% of our maintenance spend, both expense and capital in the first half. As Steve talked about and as you’ve seen in the numbers. Relative to last year, we had a little bit more of that in the first quarter, so we’ll have a little bit less probably in the second quarter. But again it’s really the – it’s the first half versus the second half that’s really what drives it. And again we’ll be in that 60% to 65% range. Scott Levine Gotcha. One last one, if I may, on environmental and profiled waste. Firstly, would you be willing to share, I don’t know if you shared, how large is the profiled waste business in terms of revenue at this point? Brad Helgeson Yes, we did about $80 million last year and we are targeting to do – and this is just profiled waste in the energy – into the Energy-from-Waste plants. We’re targeting to do close to $100 million this year, so about a 15% year-over-year increase. Scott Levine Got it. And then the acquisitions sheaf and then the latest purchase from U.S. Ecology, could you quantify the revenue earnings associated with that are they relatively small or any additional color there? Brad Helgeson Yes, they’re so small. I mean we haven’t talked about the individual contribution of any of these acquisitions. And these together were less than $10 million purchase price. I would say that the multiple that we have talked about that we’re achieving on these at least going into the investment of about seven times. I would say that’s a fair assumption on these as well. Scott Levine Very good. Thanks, Brad. Operator And our next question comes from Dan Mannes of Avondale Partners. Please go ahead. Dan Mannes Thanks. Morning, everyone. Brad Helgeson Morning, Dan. Steve Jones Good morning, Dan. Dan Mannes First a follow-up on guidance, kind of to follow-up on Scott’s question, maybe more on the metals side given that current HMS prices is above your annual rate, are you maybe being conservative in terms of maybe some slippage in pricing? I don’t know if you can talk through what you’ve baked into your guidance relative to where we are on spot HMS? Steve Jones So the HMS, when it printed, was it about 183, and then it’s trailed up from there. We’re watching, we don’t have a lot of visibility to far out. I mean you guys can look at the same numbers we can. There has been seasonality in the past, so the first quarters tended to be a little stronger. So we changed from 125 to 150 up to 150 to 175 as our estimate for the full-year. And we’ll kind of watch that as time goes on. And obviously it commences higher than that right now. And if the seasonality doesn’t occur, then yes, I think the numbers move up. But we don’t have a lot of visibility on where it’s going to head at this point. Dan Mannes Got it. And I know you obviously your whip solved [ph] there last year. So… Steve Jones Yes, exactly. Dan Mannes So the second thing is on New York City. Number one, is the initial MTS, is that – are you at the full run rate in the first quarter? Is there still a ramp? And secondly, could you give us any update on the Manhattan MTS? Steve Jones Yes, so 14 out of 15 boroughs are delivering waste now to the MTS and but we’re getting paid our full fee. So from an economics standpoint consider us fully ramped although the city is still doing some things around one of the burrows. And then on the Manhattan you know we’re still expecting probably late 2017, early 2018 is the current expectation. So not a lot has changed there, we still haven’t got our notice to, our kick off notice at this point, so we’re kind of watching the construction. You obviously can drive by the city is continuing to build that Manhattan MTS so it’s moving along. Dan Mannes Got it. And then my last question and this is a follow-up on a previous question about the impairment. When I look at the assets that you’ve generally repaired or shut down they’ve tended to be on the smaller side, 300 tons, 400 tons, 500 tons per day. I guess, obviously, is there – we know there’s a lot of economics of scale in waste to energy, but how much of this relates to the increased cost of running older facilities? And is there a risk that over time we’re going to see that threshold number move up from say 400 tons per day to 1,000 tons per day and maybe over time a larger number of your plants are at risk or am I maybe misreading this issue a little bit? Steve Jones I think you’re misreading a little bit. This is a smaller plant. We’re getting paid to operate the plant. We just weren’t making a lot of money on it and most of our, realize this too, most of our EBITDA comes from our top 15 or so plants. So some of these smaller plants they give us certain scale for procurement reasons and doing maintenance and it costs bigger fleet but they don’t have a impact on our financial results. Dan Mannes Understood. Thank you very much. Steve Jones Sure. Operator And this concludes our question-and-answer session. I’d like to turn the call back over to Mr. Jones for any closing remarks. Steve Jones Well, great. Thanks again for everyone participating in the discussion today. It’s always a pleasure to talk about the business and we look forward to speaking with all of you next quarter. So thanks again and have a great day. Operator And thank you, sir. Today’s conference has now concluded and we thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com . Thank you!