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Azurix Corp. reported revenues of $183.7 million for the quarter ended Sept. 30 and a net loss of $3.6 million or $.03 loss per diluted share. These results include a non-recurring gain of approximately $2.5 million ($1.7 million, net of income tax) related to the sale of real estate by Wessex Water. EBITDA (earnings before interest, taxes, depreciation and amortization, minority interest and non-recurring items) was $57.5 million.
For the same period in 1999, revenues were $170.5 million; net income was $18.8 million, or $.16 per diluted share, and EBITDA was $76.2 million. Primary contributors to the difference in EBITDA, net income and earnings per diluted share were deterioration of the pound sterling in relation to the dollar, the Wessex rate cut and higher interest expense.
"Wessex outperformed our expectations in sterling terms again this quarter, but the further weakening of the pound negatively impacted Azurix's reported US dollar results," said John L. Garrison, president and CEO. "Although we have not made the progress in increasing revenues at Azurix Buenos Aires that we had planned, we are negotiating to ensure we receive the proper tariffs as specified in the terms of our concession contract. We also are seeking reductions in the required capital program commensurate with the revenues we are receiving and are continuing to negotiate claims against the province, which involve its failure to perform according to the terms of the contract."
The services business at Azurix North America continued to report double-digit revenue growth during the quarter as compared with the same period a year ago. Azurix North America is nearing completion of the Tolt water treatment facility for the City of Seattle, and a smooth startup is expected, both on time and on budget, before year-end.
"The EBITDA range of $270 to $290 million for 2000 that we previously announced was predicated on the sterling exchange rate continuing at $1.50 to one pound," Garrison said. "The further deterioration in the exchange rate to its recent level of $1.43 to one pound and the continued under performance of Buenos Aires make it likely that our EBITDA for the year will be in the range of $255 to $270 million. Given these conditions, we expect that there will be a loss per share in the fourth quarter."