1
EXHIBIT 99.1
AZURIX LOGO
Media Contact
Diane Bazelides
713 345 5209
Analyst Contact
Elizabeth Ivers
713 646 9531
AZURIX CORP. REPORTS THIRD QUARTER 1999 NET INCOME OF $18.8
MILLION AND $.16 PER SHARE AND DISCUSSES FINANCIAL OUTLOOK
COLIN F. SKELLETT ELECTED VICE CHAIRMAN
FOR IMMEDIATE RELEASE: Thursday, November 4, 1999
HOUSTON - Azurix Corp. (AZX) today reported consolidated revenues of
$170.5 million for the quarter ended September 30, 1999, and consolidated
net income of $18.8 million, or $.16 diluted earnings per share. Azurix
had no operations prior to the fourth quarter of 1998.
THIRD QUARTER 1999 RESULTS
--------------------------
Earnings before interest, taxes, depreciation and amortization, and
minority interest (EBITDA) for the current quarter were $76.2 million.
Earnings and revenues for the quarter reflect the continued strength of
Wessex Water, a full quarter of operations in Buenos Aires and North
America, and reduced general and administrative expenses.
"Since our public offering we have continued to pursue a strategy
which involves three product lines in the water and wastewater business:
resource development and management, operational services and residual
services," said Rebecca Mark, chairman and CEO of Azurix. "We have made a
number of acquisitions in support of this strategy, including our
operational services activities in North America and Mexico, the AMX water
resource development and management business in Brazil, the Madera water
bank project in California and the Lurgi Bamag process engineering
business with key operations in Germany, the UK and Brazil.
"By acquiring capabilities in one or more product lines, we are
establishing platforms to pursue both municipal and industrial customers
and to develop and expand into other selected products and capabilities.
As an example, we have established a strong platform in Mexico through our
investment in IASA, a water and wastewater company servicing more than two
million people in the Federal District of Mexico City. Through the
platform in place at IASA, we were able to expand our operational services
2
business in Mexico with new contracts to design, build, and operate
wastewater treatment plants in Leon and Torreon. This gives us a perfect
opportunity to expand this business segment in Mexico and pursue other
opportunities in the water value chain as well."
FINANCIAL OUTLOOK
-----------------
"The pipeline of private transactions and announced public tenders
that we are pursuing remains very strong, even though the timing of
certain transactions is unpredictable," Mark said. "We will focus more on
privately negotiated opportunities and less on the large public
privatizations, which we will only consider if our investment can return
significant value to our shareholders. With the uncertain timing of public
bids, we are ensuring that our operating and general and administrative
expenses are in line with our current investments."
Azurix anticipates that the fourth quarter 1999 EBITDA from its
existing businesses will be in the $72 million to $77 million range and
fully diluted recurring earnings per share from existing businesses will
be approximately $.09 to $.11. These forecasts reflect the reinvestment of
the company's earnings into corporate development expenses required to
create new businesses; the fourth quarter estimate also reflects
potentially higher interest costs. According to Mark, the company is
currently negotiating several transactions which could be completed this
year.
"The completion of both public and private transactions and
subsequent earnings will be largely dependent on timing," Mark said. "For
the year 2000, we expect our existing assets to continue their strong
performance, with these businesses generating EBITDA in the range of $370
million to $400 million and $.60 to $.70 earnings per share, prior to
corporate general and administrative expenses. These ranges will be
refined upon the finalization of the Wessex rate review later this month.
This creates a solid base from which we will reinvest earnings to identify
new acquisitions, develop new markets, and build information systems.
"We are investing in businesses which give us a competitive edge,"
Mark added. "The market opportunities continue to be very strong and we
believe our strategy will set us apart from others in the industry."
COLIN F. SKELLETT ELECTED VICE CHAIRMAN
---------------------------------------
Azurix also announced that the company's board of directors has
elected Colin F. Skellett vice chairman. Skellett, previously executive
director of technical and operating, environmental and safety services for
Azurix, will be responsible for overall global operations. Skellett will
continue to serve as Chairman of Wessex Water.
Azurix is a global company that owns, operates and manages water and
wastewater assets, provides water and wastewater related services, and
develops and manages water resources. The company's stock is traded on the
NYSE under the ticker symbol, "AZX."
3
This press release includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Although Azurix believes that its
expectations are based on reasonable assumptions, it can give no assurance
that these expectations will prove to be correct. Important factors that
could cause actual results to differ materially from the expectations
reflected in the forward-looking statements include, among other things:
political developments in foreign countries; the ability to enter new
water and wastewater markets in the United States and in other
jurisdictions; the timing and extent of deregulation of water and
wastewater markets in the United States and in other countries; regulatory
developments in the United States and in other countries, including tax
legislation and regulations; the timing and extent of efforts by
governments to privatize water and wastewater industries; the timing and
extent of changes in non-U.S. currencies and interest rates; the extent of
success in acquiring water and wastewater assets and developing and
managing water resources, including the ability to qualify for and win
bids for water and wastewater projects; the timing and success of efforts
to develop international water and wastewater infrastructure projects; our
ability to access the debt and equity markets during the periods covered
by the forward-looking statements, which will depend on general market
conditions and our credit ratings for our debt obligations; and other
factors identified in Azurix's reports filed with the Securities and
Exchange Commission.
4
Azurix Corp.
Financial Highlights
(Unaudited: In Millions, Except Per Share Amounts)
Quarter Ended Nine Months Ended
September 30, 1999 September 30, 1999
------------------ ------------------
Operating revenues $ 170.5 $ 418.7
Earnings before interest, taxes, depreciation and amortization,
minority interest and extraordinary loss $ 76.2 $ 201.0
Net income before non-recurring charges $ 18.8 $ 55.1
Non-recurring charges after tax $ - $ (6.8)
Net income $ 18.8 $ 48.3
Earnings per diluted share (before non-recurring charges) $ 0.16 $ 0.51
Earnings per diluted share before goodwill amortization (before
non-recurring charges) $ 0.21 $ 0.67
Earnings per diluted share (after non-recurring charges) $ 0.16 $ 0.45
Earnings per diluted share before goodwill amortization (after
non-recurring charges) $ 0.21 $ 0.61
Average number of common shares outstanding (diluted) 118.0 107.6
Consolidated Statements of Income
(Unaudited: In Millions)
Quarter Ended Nine Months Ended
September 30, 1999 September 30, 1999
------------------ ------------------
Operating revenues $ 170.5 $ 418.7
Operating expenses
Operations and maintenance 67.1 135.8
General and administrative 27.6 82.8
Depreciation and amortization 28.5 75.9
--------- ---------
Total operating expenses 123.2 294.5
--------- ---------
Operating income 47.3 124.2
--------- ---------
Other income (expense)
Equity in earnings of unconsolidated affiliates 0.4 0.9
Interest expense, net (20.2) (50.5)
--------- ---------
Income before minority interest, income taxes and
extraordinary loss 27.5 74.6
--------- ---------
Minority interest (0.5) (0.5)
Income tax expense 9.2 20.0
--------- ---------
Income before extraordinary loss 18.8 55.1
--------- ---------
Extraordinary loss, net of income tax benefit - 6.8
--------- ---------
Net income $ 18.8 $ 48.3
========= =========