Press Release

Ormat Technologies Reports Third Quarter 2019 Financial Results

ELECTRICITY REVENUES INCREASE 6.1% AND GROSS MARGINS EXPAND TO 32.5%; COMPANY RAISES 2019 REVENUE GUIDANCE TO UPPER END OF RANGE AND INCREASES ADJUSTED EBITDA GUIDANCE

Company Release - 11/6/2019 5:00 PM ET

RENO, Nev, Nov. 06, 2019 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc.1 (NYSE: ORA) today announced financial results for the third quarter ended September 30, 2019.

($ millions, except per share amounts)Q3 2019Q3 2018Change (%)
Revenues   
Electricity 124.0  116.9 6.1%
Product 43.0  48.4 (11.2%)
Other 3.5  1.2 203.0%
Total Revenues 170.5  166.5 2.4%
Gross Profit 55.5  48.8 13.7%
Gross margin (%)   
Electricity 35.4% 31.7% 
Product 27.8% 26.4% 
Other (9.3%) (89.0%) 
Gross margin (%) 32.5% 29.3% 
    
Operating income 38.7  25.9 49.5%
Net income attributable to the Company’s shareholders 15.6  10.6 47.5%
Diluted EPS$0.30 $0.21 42.9%
Diluted EPS W/O the impact of Puna2$0.35 $0.26  
    
Adjusted Net income attributable to the Company’s stockholders3 15.6  15.6  
Diluted Adjusted EPS3$0.30 $0.31  
    
Adjusted EBITDA3 85.5  75.6 13.0%
Adjusted EBITDA W/O the impact of Puna3 87.0  77.3 12.5%

“We continue to deliver on our stated goals of growing revenues and expanding gross margin,” commented Isaac Angel, Chief Executive Officer. “Total revenues increased 2.4%, driven by strong growth of 6.1% in our core Electricity revenues, which helped to offset both the lack of revenues from our Puna plant in Hawaii (which is preparing to re-start operations after the damage from the 2018 eruption of the Kilauea volcano), as well as the expected quarterly decline in our Product segment revenues. These strong results demonstrate the overall robustness of our Electricity segment and the benefit of our diversified portfolio of operations. Our gross margins also expanded on a year-over-year basis due to the positive impacts of our initiatives to improve plant-level efficiencies and to increase the geographic diversification of our Product segment into higher-margin territories.”

Mr. Angel continued, “The reconstruction efforts at Puna are on schedule and we expect our refurbishment activities will be completed by the end of the year, enabling us to deliver energy from the plant. All of our insurers have now started paying the costs to rebuild the damaged power plant equipment. However, certain insurers rejected our claim for business interruption coverage, and we have filed a lawsuit against these insurers. These lawsuits will not impact our plans for re-starting the Puna facility, and we expect to be able to sell the electricity produced at Puna as soon as the relevant permits required from local authorities for the operation of the substation and the transmission network upgrades being undertaken by our partners at Hawaii Electric Light Company (HELCO) are received.  These are expected by the end of Q1 2020, and so we expect to be able to bring the power plant back to operation promptly thereafter, and to gradually increase the power plant’s generating capacity as we complete wellfield drilling work, with a target of regaining full operation by the end of the second quarter of 2020.”

“In the product segment, we are working on new opportunities in New Zealand, Indonesia and the Philippines to diversify and grow our backlog.” continued Mr. Angel. “We remain on pace to meet our full-year targets in all segments and expect to continue our growth path in 2020”

FINANCIAL HIGHLIGHTS FOR THE THIRD QUARTER OF 2019

  • Total revenues of $170.5 million, up 2.4% compared to the third quarter of 2018;

  • Electricity segment revenues of $124.0 million, up 6.1% compared to Q3 2018, with the growth resulting from the commencement of commercial operation of the third phase of the McGinness Hills Complex in Nevada, which began in December 2018;

  • Electricity segment gross margin was 35.4% compared to 31.7% for Q3 2018. Excluding the impact from Puna, Electricity segment gross margin would have been 38.7% in Q3 2019 and 35.3% in Q3 2018;

  • Product segment backlog was approximately $167.0 million as of November 6, 2019;

  • Net income was $15.1 million in Q3 2019 compared to $10.1 million in Q3 2018, an increase of $5.0 million mainly due to an increase of $12.8 million in operating income partially offset by an increase of $8.4 million in income tax provision;

  • Net income attributable to the Company's stockholders in Q3 2019 was $15.6 million, or $0.30 per diluted share, compared to $10.6 million, or $0.21 per diluted share in Q3 2018;

  • Adjusted EBITDA increased 13.0% to $85.5 million from $75.6 million in Q3 20184. Adjusted EBITDA includes approximately negative $1.5 million and negative $1.7 million of Adjusted EBITDA related to Puna in Q3 2019 and Q3 2018, respectively. Adjusted EBITDA, excluding any impact from Puna, was $87.0 million in Q3 2019 and $77.3 million in Q3 2018;

  • The Company declared a quarterly dividend of $0.11 per share for the third quarter of 2019.

Recent Developments

  • Announced the commercial operation of the Hinesburg Battery Energy Storage System (Hinesburg BESS) under an agreement with Vermont Electric Cooperative (VEC).

  • Entered a partnership agreement with a private investor that acquired membership interests in the McGinness Hills phase 3 power plant to receive substantially all of the plant’s tax attributes for an initial purchase price of approximately $59.3 million.

2019 GUIDANCE

Mr. Angel added, “We are raising our 2019 Revenue guidance to the upper end of the range and increasing Adjusted EBITDA guidance. Excluding Puna, we expect full-year 2019 total revenues of between $731 million and $743 million, with Electricity segment revenues between $535 million and $540 million, and Product segment revenues between $185 million and $190 million.  Revenues from our energy storage services business are expected to be between $11 million and $13 million. We expect 2019 Adjusted EBITDA to be between $385 million and $390 million. We expect annual Adjusted EBITDA attributable to minority interest to be approximately $23 million. This guidance, with regard to revenues, Adjusted EBITDA and Adjusted EBITDA attributable to minority interest, excludes any contribution and/or impact from Puna.”

The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months ended September 30, 2019. However, the Company is unable to provide a reconciliation for its Adjusted EBITDA guidance range due to high variability and complexity with respect to estimating forward looking amounts for impairments and disposition and acquisition of business interests, income taxes expense related to still evolving effects of the tax law reform in the United States and other non-cash expenses and adjusting items which are excluded from the calculation of Adjusted EBITDA.

THIRD QUARTER 2019 FINANCIAL RESULTS (COMPARING THE QUARTER ENDED SEPTEMBER 30, 2019 TO THE QUARTER ENDED SEPTEMBER 30, 2018)

Total revenues for the quarter were $170.5 million, up 2.4% compared to the same quarter last year. Electricity segment revenues increased 6.1% to $124.0 million, up from $116.9 million last year. The increase was mainly attributable to the commencement of commercial operation of the third phase of the McGinness Hills Complex in Nevada, effective December 2018, which generated total complex revenues of $20.0 million for the three months ended September 30, 2019 compared to $12.8 million for the three months ended September 30, 2018. Product segment revenues decreased 11.2% to $43.0 million, down from $48.4 million in the same quarter last year. Other segment revenues were $3.5 million compared to $1.2 million in the same quarter last year. The increase was mainly driven by the start of operation of two storage energy facilities in the PJM market.

General and administrative expenses were $11.9 million, or 7.0% of total revenues, compared to $13.6 million, or 8.2% of total revenues. This decrease was mainly related to a decrease in professional fees.  

Net income attributable to the Company’s shareholders was $15.6 million, or $0.30 per diluted share, compared to $10.6 million, or $0.21 per diluted share.

Adjusted EBITDA5 was $85.5 million, compared to $75.6 million. The increase in Adjusted EBITDA is mainly related to the commencement of commercial operation of the third phase of the McGinness Hills Complex. A reconciliation of GAAP net income to EBITDA and Adjusted EBITDA is set forth below in this release.

DIVIDEND

On November 6, 2019, the Company’s Board of Directors declared, approved and authorized payment of a quarterly dividend of $0.11 per share pursuant to the Company’s dividend policy. The dividend will be paid on December 4, 2019 to shareholders of record as of the close of business on November 20, 2019.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Thursday, November 7, at 10 a.m. ET. The call will be available as a live, listen-only webcast at investor.ormat.com. During the webcast, management will refer to slides that will be posted on the website. The slides and accompanying webcast can be accessed through the News & Events in the Investor Relations section of Ormat’s website.

An archive of the webcast will be available approximately 60 minutes after the conclusion of the live call.

Investors may access the call by dialing:

Participant dial in (toll free): 1-877-511-6790
Participant international dial in: 1-412-902-4141 
  
Conference replay 
  
US Toll Free: 1-877-344-7529 
International Toll: 1-412-317-0088 
Replay Access Code: 10135777 

ABOUT ORMAT TECHNOLOGIES

With over five decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation (“REG”), with the objective of becoming a leading global provider of renewable energy. The Company owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on the Ormat Energy Converter – a power generation unit that converts low-, medium- and high-temperature heat into electricity. With 77 U.S. patents, Ormat’s power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 584 employees in the United States and 762 overseas. Ormat’s flexible, modular solutions for geothermal power and REG are ideal for a vast range of resource characteristics. The Company has engineered, manufactured and constructed power plants, which it currently owns or has installed to utilities and developers worldwide, totaling over 2,900 MW of gross capacity. Ormat’s current 917 MW generating portfolio is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe. Ormat expanded its operations to provide energy storage and energy management solutions, by leveraging its core capabilities and global presence as well as through its Viridity Energy Solutions Inc. subsidiary.

ORMAT’S SAFE HARBOR STATEMENT

Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to Ormat's plans, objectives and expectations for future operations and are based upon its management's current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties.

For a discussion of such risks and uncertainties, see "Risk Factors" as described in Ormat’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 1, 2019 and from time to time, in Ormat’s quarterly reports on Form 10-Q that are filed with the SEC.

These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Operations
For the Three- and Nine-Month Periods Ended September 30, 2019 and 2018
(Unaudited)

            
 Three Months Ended
September 30
 Nine Months Ended
September 30
 2019  2018  2019  2018 
            
 (In thousands, except per
share data)
 (In thousands, except per
share data)
Revenues:           
Electricity$123,978  $116,891  $395,965  $371,559 
Product 43,037   48,439   147,195   152,026 
Other 3,484   1,150   10,442   5,217 
Total revenues 170,499   166,480   553,602   528,802 
Cost of revenues:           
Electricity 80,124   79,845   231,442   234,563 
Product 31,073   35,669   114,495   106,968 
Other 3,807   2,174   12,844   7,645 
Total cost of revenues 115,004   117,688   358,781   349,176 
Gross profit 55,495   48,792   194,821   179,626 
Operating expenses:           
Research and development expenses 1,062   706   2,772   3,065 
Selling and marketing expenses 3,783   8,578   10,924   15,989 
General and administrative expenses 11,931   13,602   41,801   43,321 
Write-off of unsuccessful exploration activities    4      123 
Operating income 38,719   25,902   139,324   117,128 
Other income (expense):           
Interest income 482   214   1,195   516 
Interest expense, net (20,076)  (18,700)  (62,816)  (48,890)
Derivatives and foreign currency transaction gains (losses) 205   (383)  696   (2,511)
Income attributable to sale of tax benefits 4,056   4,066   16,457   14,983 
Other non-operating expense, net 244   309   1,362   7,662 
Income before income taxes and equity in           
losses of investees 23,630   11,408   96,218   88,888 
Income tax (provision) benefit (9,626)  (1,184)  (20,136)  (3,347)
Equity in losses of investees, net 1,085   (117)  3,334   1,481 
            
Net income 15,089   10,107   79,416   87,022 
Net income attributable to noncontrolling interest 516   474   (3,927)  (7,276)
Net income attributable to the Company's stockholders$15,605  $10,581  $75,489  $79,746 
            
Earnings per share attributable to the Company's stockholders - Basic and diluted:           
Basic:           
Net Income$0.31  $0.21  $1.49  $1.58 
            
Diluted:           
Net Income$0.30  $0.21  $1.48  $1.56 
            
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:           
Basic 50,933   50,645   50,816   50,627 
Diluted 51,334   50,963   51,124   50,985 
            


CONDENSED CONSOLIDATED BALANCE SHEET
For the Periods Ended September 30, 2019 and December 31, 2018
(Unaudited)

 September 30, December 31,
 2019  2018 
      
  (In thousands)
ASSETS
Current assets:     
Cash and cash equivalents$97,602  $98,802 
Restricted cash and cash equivalents 82,435   78,693 
Receivables:     
Trade 139,226   137,581 
Other 18,482   19,393 
Inventories 39,324   45,024 
Costs and estimated earnings in excess of billings on uncompleted contracts 43,125   42,130 
Prepaid expenses and other 12,116   51,441 
Total current assets 432,310   473,064 
Investment in an unconsolidated company 73,714   71,983 
Deposits and other 21,078   18,209 
Deferred income taxes 131,820   113,760 
Property, plant and equipment, net 1,962,637   1,959,578 
Construction-in-process 352,013   261,690 
Operating lease right of use 58,170    
Financing lease right of use 18,046    
Deferred financing and lease costs, net 957   3,242 
Intangible assets, net 188,815   199,874 
Goodwill 19,933   19,950 
Total assets$3,259,493  $3,121,350 
LIABILITIES AND EQUITY       
Current liabilities:     
Accounts payable and accrued expenses$137,176  $116,362 
Short-term revolving credit lines with banks (full recourse)    159,000 
Commercial paper 50,000    
Billings in excess of costs and estimated earnings on uncompleted contracts 6,003   18,402 
Current portion of long-term debt:     
Limited and non-recourse:     
Senior secured notes 39,393   33,493 
Other loans 34,135   29,687 
Full recourse 76,572   5,000 
Operating lease liabilities 6,253    
Finance lease liabilities 3,191    
Total current liabilities 352,723   361,944 
Long-term debt, net of current portion:     
Limited and non-recourse:     
Senior secured notes 344,924   375,337 
Other loans 326,227   320,242 
Full recourse:     
Senior unsecured bonds 286,401   303,575 
Other loans 73,384   41,579 
Operating lease liabilities 17,698    
Finance lease liabilities 12,224    
Liability associated with sale of tax benefits 118,811   69,893 
Deferred lease income 43,264   48,433 
Deferred income taxes 86,475   61,323 
Liability for unrecognized tax benefits 15,053   11,769 
Liabilities for severance pay 18,570   17,994 
Asset retirement obligation 44,810   39,475 
Other long-term liabilities 5,400   16,087 
Total liabilities 1,745,964   1,667,651 
      
Redeemable non-controlling interest 8,741   8,603 
      
Equity:     
The Company's stockholders' equity:     
Common stock 51   51 
Additional paid-in capital 910,651   901,363 
Retained earnings (accumulated deficit) 480,879   422,222 
Accumulated other comprehensive income (loss) (10,848)  (3,799)
  1,380,733   1,319,837 
Noncontrolling interest 124,055   125,259 
Total equity 1,504,788   1,445,096 
Total liabilities and equity$3,259,493  $3,121,350 
      

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
Reconciliation of EBITDA and Adjusted EBITDA
For the Three- and Nine-Month Periods Ended September 30, 2019 and 2018
(Unaudited)

We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for (i) termination fees, (ii) impairment of long-lived assets, (iii) write-off of unsuccessful exploration activities, (iv) any mark-to-market gains or losses from accounting for derivatives, (v) merger and acquisition transaction costs, (vi) stock-based compensation, (vii) gain from extinguishment of liability, and (viii) gain on sale of subsidiary and property, plant and equipment. EBITDA and Adjusted EBITDA are not a measurement of financial performance or liquidity under accounting principles generally accepted in the United States of America and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with accounting principles generally accepted in the United States of America. EBITDA and Adjusted EBITDA are presented because we believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of a Company’s ability to service and/or incur debt. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the three and nine-month periods ended September 30, 2019 and 2018.

 Three Months Ended September 30 Nine Months Ended September 30
 2019  2018  2019  2018 
            
 (in thousands) (in thousands)
Net income$15,089  $10,107  $79,416  $87,022 
Adjusted for:           
Interest expense, net (including amortization           
  of deferred financing costs) 19,594   18,486   61,621   48,374 
Income tax (benefit) provision 9,626   1,184   20,136   3,347 
Adjustment to investment in unconsolidated company:           
our proportionate share in interest, tax and depreciation and amortization 2,644   3,784   7,884   11,768 
Depreciation and amortization 36,365   33,687   106,982   94,983 
EBITDA$83,318  $67,248  $276,039  $245,494 
            
Mark-to-market gains or losses from accounting for derivatives (330)  (297)  (1,909)  1,202 
Stock-based compensation 2,228   3,559   7,231   7,382 
Insurance proceeds in excess of assets carrying value          (7,150)
Termination fee    4,973      4,973 
Merger and acquisition transaction cost 250   120   750   2,790 
Write-off of unsuccessful exploration activities          119 
Adjusted EBITDA$85,466  $75,603  $282,111  $254,810 
            
Puna's related EBITDA 1,490   1,650   (1,311)  (4,905)
            
Adjusted EBITDA excluding Puna's impact 86,956   77,253   280,800   249,905 
            

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
Reconciliation of Adjusted Net Income attributable to the Company's stockholders
For the Three-Month and Nine-Month Periods Ended September 30, 2019 and 2018
(Unaudited)

Adjusted Net Income attributable to the Company's stockholders and Adjusted EPS are adjusted for one-time expense items that are not representative of our ongoing business and operations. The use of Adjusted Net income attributable to the Company's stockholders and Adjusted EPS is intended to enhance the usefulness of our financial information by providing measures to assess the overall performance of our ongoing business.

The following table reconciles Net income attributable to the Company's stockholders and Adjusted EPS for the three-month and nine-month periods ended September 30, 2019 and 2018.

  

  Three Months Ended September 30 
  2019 2018 
        
  (in millions) 
Net income attributable to the Company's stockholders $15.6 $10.6 
        
One-timetermination fee    5.0 
        
Adjusted Net income attributable to the Company's stockholders $15.6 $15.6 
        
Weighted average number of shares diluted used in computation of earnings per share attributable to the Company's stockholders:  51.3  51.0 
        
Diluted Adjusted EPS  0.30  0.31 
        


1 Ormat Technologies, Inc. is also referred to herein as the “Company”, “Ormat”, “we” or “us”
2 Diluted EPS excludes $2.5 million and $2.6 million related to Puna in the three months ended September 30, 2019 and 2018, respectively
3 Reconciliation is set forth below in this release
4 Reconciliation is set forth below in this release
5 Reconciliation is set forth below in this release

 


Ormat Technologies Contact:

Smadar Lavi

VP Corporate Finance and Head of Investor Relations

775-356-9029 (ext. 65726)

slavi@ormat.com
Investor Relations Agency Contact:

Rob Fink

FNK IR

646-415-8972

rob@FNKIR.com


 

 

ormat_logo_RGB_blue.png

Source: Ormat Technologies, Inc.