Orion Power Holdings Inc., a Baltimore-based electric power generating company, marked its initial quarter as a public company yesterday by announcing record earnings that exceeded expectations and forecasting strong growth this year.
In the three months that ended Dec. 31, Orion generated net income of $11 million, compared with $5 million in the last quarter of 1999. Earnings were 13 cents a share - nearly double the 7 cents a share forecast by analysts polled by research firm First Call/Thomson Financial. Revenue increased 184 percent, to $273 million from $96 million in the year-earlier period.
Orion went public in November, issuing 27.5 million shares at $20 each and bringing its total outstanding shares to 93.1 million.
Orion said the strong performance was driven by new acquisitions, cold weather and strong demand for electricity in its Midwest and Northeast service territories and said it expected earnings in 2001 to be about $1.15 a share - in line with analysts' expectations.
For the year, earnings excluding a one-time charge were $40 million, or 62 cents a share, compared with $6 million in 1999 as revenue soared more than 600 percent to $958 million. After the charge, Orion's net income was $29 million - equivalent to 44 cents a share.
"They've done pretty well because electricity prices are strong in the areas that they are serving, and they have not been affected so much by high natural gas prices because they also own hydro, coal and petroleum power plants," said Thorsten Fischer, an energy economist with Economy.com, a research and consulting company in West Chester, Pa. "They also grew very quickly, mainly through acquisitions.
"All in all, their outlook is very bright because they're going to bring some more power plants on line and demand for electricity is going to continue to increase," Fischer said.
The company pointed out accomplishments last year that included doubling the company's generating capacity to 5,400 megawatts through the acquisition of Duquesne Light Co. in the Midwest; adding 3,000 megawatts in developing projects from its acquisition of Columbia Electric Corp.; and taking ownership of power plants for the first full year in New York, where it supplies 20 percent of the city's electricity.
Orion also swelled its treasury by more than $450 million from its IPO and $1.7 billion in debt financing.
"2000 was a banner year for Orion Power," Orion President and Chief Executive Jack Fusco said during an analysts conference call yesterday. "We transformed ourselves from a start-up built from acquisitions to a mature power generation company with a recognized presence in the wholesale sector. We are pleased that our financial performance in the fourth quarter and for the full year reflects our emerging strength."
Fusco said Orion will seek to expand operations in the Midwest and desert Southwest.
Orion 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.
Orion's shares dropped 30 cents a share yesterday to close on the New York Stock Exchange yesterday at $23.65.