Orion posts record earnings for quarter

Baltimore company notes boost from power plants it started this year

November 01, 2001|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

A month after announcing a planned merger with Texas-based Reliant Resources Inc., Orion Power Holdings Inc. posted record earnings in the third quarter yesterday, mostly with the help of its power plants that began operations this year.

The Baltimore-based electric power generating company reported net income of $64.9 million for the quarter that ended Sept. 30, far exceeding the $3.9 million it posted in the third quarter of 2000. Earnings per diluted share rose to 58 cents, compared with 5 cents in the comparable period last year.

Revenue for the quarter increased 7 percent to $367 million from $343 million a year ago. Orion executives said during a morning analysts conference that earnings expectations for the new year are very positive.

"Our entrepreneurial culture, diversified generation asset base and sound risk management practices have enabled us to achieve strong financial performance," said Orion President and Chief Executive Jack Fusco. "Our stellar results is a testament to our employees.

"Whether we go into it as an independent company or a merged company, the outlook for 2002 looks very good for Orion Power."

Orion officials said the sale of power in New York this winter will also help the company meet earnings expectations for its fourth quarter and its annual target of $1.15 per share. Orion expects to earn $1.50 per share for 2002.

"They've made several thoughtful acquisitions," said Andre Meade, an analyst with Commerzbank Securities. "They've spent the time to make sure the earnings for those acquisitions come in. They work on cost cutting. They didn't increase overhead expenses. They've been fairly conservative. They haven't told the Street enormous growth plans.

"Long and steady wins the race for Orion," Meade said.

Orion, which went public in November last year, announced on Sept. 27 that it will merge early next year with Reliant Resources to create the nation's second-largest independent power producer with more than 20,000 megawatts of electricity capacity in operation or under construction. Reliant will pay $26.80 a share for Orion, putting the value of the deal at $2.9 billion, and assume $1.8 billion in debt. The transaction is subject to regulatory approval.

The company also said it has received the final approvals needed to begin construction of Kelson Ridge Generating Station in Charles County; completed the purchase of a 250-megawatt power project near West Palm Beach, Fla., that will begin operation in 2004; and continued the application process to expand capacity and improve operations at the Astoria Generating Station in New York.

This year, Orion added 500 megawatt Ceredo Generating Station in Wayne County, W.Va., to its operations, as well as Astoria's Unit 2, which was not in operation in the third quarter of 2000.

Yesterday, shares of Orion rose 10 cents on the New York Stock Exchange to close at $25.81.

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