Orion Power Holdings Inc., an independent electric power generating company, announced yesterday that its third-quarter earnings surged, because of newly acquired plants in the Midwest and New York.
In the three months that ended Sept. 30, the Baltimore company generated earnings of $3.9 million, or 5 cents per share, a 44 percent increase from $2.7 million, or 13 cents per share, in the third period of 1999. Revenue increased 863 percent, to $343 million from $35.6 million in the third quarter last year.
Earnings per share dropped because Orion issued 27.5 million shares in its initial public offering Monday. Orion was valued at $1.9 billion after its stock was priced at $20 a share.
The company raised $550 million and netted $452 million in the IPO. Orion's shares dropped $1.88 a share to close at $18.13 on the New York Stock Exchange yesterday.
"The utility index was slightly up [yesterday], but Orion's stock lost 9 percent of its value," said Thorsten Fischer, an energy economist with Economy.com, a research and consulting company in West Chester, Pa.
"Obviously, the company has grown a lot over the year. But judging by the decline in price, the market is somewhat disappointed with the earnings being up almost 50 percent while revenue was up almost tenfold. The numbers are a little disappointing."
The company's gains were attributed to this being the first full year that Orion owned the power plants in New York, where it supplies 20 percent of the city's electricity. Also, the company took ownership of its Midwestern plants April 28.
The third quarter included approximately $30 million of pretax costs relating to a hedging program for Orion Power's Midwest business. This reduced net income by approximately $17.6 million, or 25 cents per diluted share. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $92.7 million in the quarter, compared with $17.4 million in the corresponding quarter of 1999.
The Baltimore company was formed in 1998 as a joint venture of Constellation Energy Group Inc., parent of Baltimore Gas and Electric Co., and Wall Street investment bank Goldman Sachs Group Inc. Two Japanese companies are also investors in Orion.
Orion has invested more than $3 billion in 80 power plants with a total capacity of 5,396 megawatts.