HOUSTON (Reuters) - Water and wastewater treatment company Azurix Corp. said on Friday that Rebecca Mark had resigned as chairman and chief executive officer. It has been just over a year since the company went public. In that short time Azurix witnessed its stock fall to roughly a third of the price at which it was initially sold to investors.
Asurix's performance was in sharp contrast to the stellar performance of many water utility common shares, especially Water Industry Council member companies such as United Water and Elizabethtown water companies. Larry Chertoff, Executive Director of the WIC was quoted as saying that "the strongest private water companies seemed to participate most agressively in industry trade associations." "Perhaps," he mused, "because they believe they have a long-term position in the industry." Azurix is not a member of the Water Industry Council, trade association to the contract operations industry.
In an immediate effort to maintain direction for Azurix, it's president and chief operating officer John Garrison was appointed to succeed Mark as chief executive officer. Herbert Winokur, an Azurix director since 1999, will serve as interim chairman of the board.
"We are going to conduct a thorough review of all of our businesses, our cost structure and our strategy to determine how best to improve our financial performance and to maximize shareholder value," Garrison said in a statement.
In reporting a 69 percent decline in its second-quarter net income, Azurix blamed higher interest, depreciation and amortization costs stemming from acquisitions, as well as a 12 percent rate cut imposed in April on its British utility subsidiary, Wessex Water, by British regulators.
Separately, Houston-based energy company Enron Corp. said Mark had resigned as a member of its board. Enron set up Azurix in 1998 and spun it off by means of an initial public offering of stock at a price of $19 per share in June 1999. It still holds a stake of more than 30 percent in Azurix.
Azurix stock fell 15/16 to a new all-time low of 4-5/8 following news of Mark's resignation and the 69 percent decline in net income for this year's second quarter.
Net income, excluding one-time items, fell to $6.2 million, or 5 cents per share, from $20.2 million, or 19 cents per share, in the same period of 1999, but was in line with analysts' expectations, according to First Call/Thomson Financial.
Before she was appointed to head Azurix in 1998, Mark was in charge of Enron International which develops natural gas pipeline and power generation projects around the world.
Mark told Azurix stockholders in June that the company planned to shift its focus away from asset-ownership and more toward providing services to municipal and industrial customers, a move that she said would reduce Azurix's dependence on Wessex Water.
Second-quarter earnings before interest, taxes, depreciation and amortization rose to $70.7 million from $62.1 million, while revenues rose to $189.2 million from $131.3 million.
Azurix said it had lowered its expectations of earnings before interest, taxes, depreciation and amortization for the whole of 2000 to $270 million-$290 million from $310 million-$340 million and consequently did not expect any further increase in earnings per share during the remaining two quarters of this year.
The company's forecast corresponded to the First Call/Thomson Financial consensus forecast of earnings per share for the remainder of this year, which was recently downgraded from 4 cents to zero.