Diluted Earnings Per Share of $0.21 Adjusted EBITDA of $147 million at Covanta Energy Company Reaffirms Full Year 2006 Guidance

FAIRFIELD, NJ, October 30, 2006 - Covanta Holding Corporation (NYSE:CVA) ("Covanta" or the "Company") reported financial results today for the three and nine months ended September 30, 2006.  The Company is presenting comparative financial results on an as reported basis for the third quarter and a pro forma basis for the year-to-date.  The pro forma information was prepared as if the acquisition of Covanta ARC Holdings Inc. was consummated on January 1, 2005.  The Company believes that such presentation will assist in assessing Covanta's performance.

Third Quarter Results
For the three months ended September 30, 2006, total operating revenues were $311 million versus $301 million in the prior year. Net income was $31 million, or $0.21 per diluted share which compares with 2005 third quarter net income of $37 million, or $0.26 per diluted share. The results for the three months ended September 30, 2005 included an after-tax unrealized gain of $6.8 million or $0.05 per diluted share associated with the warrants received as part of the reorganization of a former subsidiary.

On higher revenue and solid operating performance at Covanta Energy Corporation ("Covanta Energy"), the Company's principal subsidiary, adjusted EBITDA grew 2% to $147 million. Covanta Energy's domestic waste and energy operating revenues grew 5% to $280 million driven primarily by higher energy rates, contractual service fee escalation and favorable scrap metal pricing.  International revenues of $28 million decreased approximately $4 million compared to the prior year primarily due to the sale of a small facility in China during the second quarter of 2006.

YTD 2006 As Reported Results versus YTD 2005 Pro Forma Results
For the nine months ended September 30, 2006, total operating revenues rose 5% to $951 million while net income was $94 million. Diluted earnings per share increased 64% to $0.64 driven primarily by strong operating performance and a lower effective tax rate. Covanta Energy's adjusted EBITDA grew 13% to $424 million resulting from higher revenues, strong operating performance and the successful execution of cost reduction initiatives.

 "We are very pleased with our continued strong operating performance", said Anthony Orlando, President and Chief Executive Officer. "Covanta's relentless focus on client service and operational excellence throughout the organization underpins our commitment to drive long-term shareowner value. Indicative of the outstanding service Covanta provides, our Lancaster County Pennsylvania client recently awarded us a Service Agreement extension," Mr. Orlando continued. "That is a credit to our dedicated employees and it buoys my optimism that Covanta's demonstrated operational expertise will enable us to capitalize on strategic opportunities to expand our business domestically and abroad."

2006 Guidance Reaffirmed
The Company is reaffirming its full year 2006 guidance on the following key metrics:

• Covanta Energy adjusted EBITDA in the range of $535 to $545 million,
• Covanta Energy free cash flow of approximately $235 million, and
• Diluted earnings per share of approximately $0.75.

Conference Call Information
Covanta will host a conference call at 8:30 am (Eastern) on Tuesday, October 31, 2006 to discuss its results for the three and nine months ended September 30, 2006.  Prepared remarks will be followed by a question-and-answer session.  To participate, please dial
(800) 946-0783 approximately 10 minutes prior to the scheduled start of the call.  If you are calling from outside of the United States, please dial (719) 457-2658.  The conference call will also be web cast live on the Investor Relations section of the Covanta website at www.covantaholding.com. 

A replay of the conference call will be available from 11:00 am (Eastern) on Tuesday, October 31, 2006 through midnight (Eastern) Tuesday, November 7, 2006.  To access the replay, please dial (888) 203-1112 or (719) 457-0820 and use the replay pass code: 3089448.  The web cast will also be archived on www.covantaholding.com.

Non-GAAP Measures
The information presented herein and in the exhibits attached includes non-GAAP financial measures, as defined by the Securities and Exchange Commission, relating to adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") and free cash flow.  These measures may be different from non-GAAP measures used by other companies.  The presentation of such non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with United States generally accepted accounting principles ("GAAP").  These non-GAAP financial measures should be read in conjunction with Covanta's financial information reported in accordance with GAAP.  Covanta uses these measures to provide additional ways of viewing aspects of its operations that, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting Covanta's business.  Reconciliations to the most directly comparable GAAP measure and management's reasons for presenting such information are set forth in the exhibits to this release. Included among the exhibits are calculations of Covanta Energy's adjusted EBITDA and calculations of Free Cash Flow, measurements that are not in accordance with GAAP.  Adjusted EBITDA is defined as, for any period, EBITDA plus additional items deducted from, or added to, net income, as defined in Covanta Energy's financing arrangements.  Covanta believes this financial measure is helpful in assessing the overall performance of its business, and is helpful in highlighting trends in its overall business because the items excluded in calculating adjusted EBITDA have little or no bearing on its day-to-day operating performance.  Adjusted EBITDA is also a significant criterion of performance-based components of employee compensation.   Free Cash Flow is defined as, for any period; cash flow provided by operating activities less purchase of property, plant and equipment.  Free Cash Flow is not a measurement of financial performance under GAAP and is used by management as an alternative measure of cash flow available for the repayment of debt and for investment in strategic opportunities.

About Covanta
Covanta is a New York Stock Exchange listed company engaging in waste disposal, energy services and specialty insurance through its subsidiaries. Covanta's subsidiary, Covanta Energy, is an internationally recognized owner and operator of waste-to-energy and power generation projects.  Covanta Energy's waste-to-energy facilities convert municipal solid waste into renewable energy for numerous communities, predominantly in the United States.

NOTE:  Covanta's charter contains restrictions that prohibit parties from acquiring 5% or more of Covanta's common stock without its prior consent.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute "forward-looking" statements as defined in Section 27A of the Securities Act of 1933 (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the "PSLRA") or in releases made by the Securities and Exchange Commission, all as may be amended from time to time.  Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Covanta and its subsidiaries, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.  Statements that are not historical fact are forward-looking statements.  Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words "plan", "believe", "expect", "anticipate", "intend", "estimate", "project", "may", "will", "would", "could", "should", "seeks", or "scheduled to", "proposed", or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions.  These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the "safe harbor" provisions of such laws.  Covanta cautions investors that any forward-looking statements made by Covanta are not guarantees or indicative of future performance.  Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to Covanta, include, but are not limited to, those factors, risks and uncertainties that are described in Item 1A of its Annual Report on Form 10-K for the year ended December 31, 2005, and in Item 1A of its Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, and in other securities filings by Covanta or its subsidiaries.   

Although Covanta believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any forward-looking statements.  Covanta's future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this press release are made only as of the date hereof and Covanta does not have or undertake any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.

Contact:
Gavin Bell
Covanta Holding Corporation

973-882-7107
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