Ormat Technologies Reports 2015 Third Quarter Results

Total Revenues increase 16.1% to a quarterly record of $162.9 million;
 Adjusted EBITDA increased 14.3% to a quarterly record of $79.0 million;
 Company Increases Full-Year 2015 Total Revenue and Adjusted EBITDA Guidance

RENO, Nev., Nov. 03, 2015 (GLOBE NEWSWIRE) — Ormat Technologies, Inc. (NYSE:ORA) today announced financial results for the third quarter ended September 30, 2015.

Third Quarter Highlights and Recent Developments:

  • Total revenues increased 16.1% to a quarterly record of $162.9 million, compared to $140.2 million in the third quarter of 2014;
  • Product segment revenues increased 73.9% to $65.6 million, compared to $37.7 million in the third quarter of 2014;
  • Electricity revenues of $97.2 million, compared to $102.5 million in the third quarter of 2014;  reduction is mainly due to lower oil and natural gas prices offset by higher generation from new projects that came online;
  • The Company recorded income tax benefit that includes deferred tax asset and related expenses of $48.7 million relating to a new tax law in Kenya which extended the period of utilizing investment deductions for the Olkaria 3 power plant from five years to 10 years;
  • Total book equity exceeded $1 billion;
  • Net income attributable to the company’s shareholders of $72.1 million or $1.41 per diluted share; excluding the deferred tax asset and related expenses, net income was $23.4 million or $0.46 per diluted share compares to $16.5 million or $0.36 per diluted share in the third quarter of 2014;
  • Adjusted EBITDA increased 14.3% to a quarterly record of $79.0 million, compared to $69.1 million in the third quarter of 2014;
  • Declared a quarterly dividend of $0.06 per share for the third quarter of 2015;
  • Began commercial operation of Don A. Campbell Phase 2 geothermal power plant in Nevada ahead of schedule; and
  • Signed a collaboration agreement with Toshiba Corporation to develop strategic opportunities for collaboration in the areas of geothermal power generation systems and related equipment.

Isaac Angel, chief executive officer of Ormat, stated, “This was a very strong quarter for Ormat, as our balanced business model enabled us to deliver 16% revenue growth and a 14% improvement in Adjusted EBITDA, overcoming headwinds related to oil and natural gas prices impacting our electricity segment. Our Product Segment delivered another strong quarter as we benefited from new contracts, including the EPC contract related to a geothermal project in Chile as well as progress in the Sarulla project in Indonesia.

During the quarter our Don A. Campbell Phase 2 plant reached commercial operation, just 10 months after we broke ground and six months ahead of schedule, doubling the generating capacity of the geothermal complex. This expansion, along with the contribution of our McGinness Hills power plant, drove a 10% increase in power generation. We continue to improve construction lead time and expect an earlier completion of plant 4 at the Olkaria 3 complex, which was initially expected in mid-2016 and currently planned to be completed in the first quarter of 2016.”

“We recently announced our collaboration agreement with Toshiba, the world’s leading supplier of geothermal steam turbines, to develop strategic opportunities for collaboration in the areas of geothermal power generation systems and related equipment,” continued Mr. Angel. “We view this agreement as the next major step in our stated goal to expand our presence in the geothermal space and ultimately target the larger renewable energy market. This collaboration will expand our addressable market, create incremental growth opportunities and further strengthen our leadership position.”

Guidance

Mr. Angel added, “We increase and narrow the range of our 2015 total revenue guidance and increase the adjusted EBITDA guidance. We expect total revenue of between $570.0 million and 585.0 million, though the composition to be more heavily weighted towards our product segment. We expect to see stronger performance of our product segment and expect revenue to be between $195.0 million and $205.0 million. For the electricity segment, we expect revenues to be between $375.0 million and $380.0 million. The Electricity segment revenue guidance assumes the continued impact of low oil and natural gas prices, which translates to approximately $28 million reduction in revenues compared to last year. We expect 2015 Adjusted EBITDA guidance of $282.0 to $292.0 million for the full year, which is also impacted by current oil and natural gas prices. We expect annual adjusted EBITDA attributable to minority’s interest to be approximately $13.0 million.”

Third Quarter Financial Summary

Total revenues for the three months ended September 30, 2015 were $162.9 million, an increase of 16.1% compared to $140.2 million for the three months ended September 30, 2014. Electricity revenues were $97.2 million for the quarter compared to $102.5 million in the third quarter last year, with the decrease primarily related to lower oil and gas prices. Product revenues increased 73.9% to $65.6 million for the third quarter of 2015, from $37.7 million in the third quarter last year.

The decrease in the Electricity segment revenue was primarily attributable to lower energy rates under some of the PPAs that are impacted by oil and natural gas prices and a reduction in net gain on derivative contracts on oil and natural gas prices from $4.0 million in the three months ended September 30, 2014 to $0.4 million in the three months ended September 30, 2015. The decrease was partially offset by operations of the second phase of the McGinness Hills power plant in Nevada, which commenced commercial operation in February 2015 and drove overall generation increase to 10.0% quarter over quarter.

Income tax benefit for the three months ended September 30, 2015 was $38.2 million, compared to income tax provision of $6.4 million for the three months ended September 30, 2014. Income tax benefit for the three months ended September 30, 2015, includes a $48.7 million deferred tax asset and related expenses relating to the release of the valuation allowance for the additional 50% investment deduction for our Olkaria 3 power plant in Kenya based on amendments to the Kenya Income Tax Act that came into effect on September 11, 2015 and which extended the period to utilize such investment deduction from five years to ten years.

Ormat reported net income attributable to the company’s shareholders of $72.1 million, inclusive of the above deferred tax asset and related expenses, or $1.41 per diluted share in the third quarter of 2015 compared to $16.5 million or $0.36 per diluted share for the third quarter of 2014. Excluding the deferred tax asset and related expenses, net income attributable to the company’s shareholders was $23.4 million or $0.46 per diluted share compared to $16.5 million or $0.36 per diluted share in the third quarter of 2014.

Adjusted EBITDA for the three months ended September 30, 2015 was $79.0 million, compared to $69.1 million for the three months ended September 30, 2014 an increase of 14.3%. The reconciliation of GAAP net cash provided by operating activities and net income to EBITDA and Adjusted EBITDA and additional cash flow information is set forth below in this release.

On November 3, 2015, ORMAT’s Board of Directors approved a payment of a quarterly dividend of $0.06 per share. The dividend will be paid on December 2, 2015 to shareholders of record as of the close of business on November 18, 2015.

Webcast Conference Details

Ormat will host a listen-only webcast to discuss its financial results and other matters discussed in this press release at 10 a.m. ET on Wednesday, November 4, 2015. The live, listen-only webcast will be available at www.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 Events & Presentations in the Investor Relations section of Ormat’s website.

An archive of the webcast will be made available on the website under Events & Presentations in the Investor Relations tab.

Participant Telephone Numbers

Participant Dial In (Toll Free):  1-877-511-6790
Participant International Dial In:  1-412-902-4141
Canada Toll Free 1-855-669-9657
 
Please ask to be joined into the Ormat Technologies, Inc. call. 
 

CONFERENCE REPLAY

US Toll Free:  1-877-344-7529
International Toll:  1-412-317-0088
Replay Access Code:  10074547
   

About Ormat Technologies

With over five decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company solely 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 69 U.S. patents, Ormat’s power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 470 employees in the United States and over 600 overseas. Ormat’s flexible, modular solutions for geothermal power and REG are ideal for the 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 2,000 MW of gross capacity. Ormat’s current 666 MW generating portfolio is spread globally in the U.S., Guatemala and Kenya.

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 Technologies, Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2015.

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 Statements of Operations
For the Nine and Three-Month Period Ended September 30, 2015 and 2014
(Unaudited)

   Three Months Ended
September 30
   Nine Months Ended
September 30
  2015   2014   2015   2014
                       
   (In thousands, except per
share data)
   (In thousands, except per
share data)
Revenues:                      
Electricity $   97,245     $   102,506      $   278,124     $   289,015  
Product     65,607         37,736         145,446         121,266  
Total revenues     162,852         140,242         423,570         410,281  
Cost of revenues:                      
Electricity     61,501         61,727         179,604         186,083  
Product     42,019         23,040         89,826         75,307  
Total cost of revenues     103,520         84,767         269,430         261,390  
Gross margin     59,332         55,475         154,140         148,891  
Operating expenses:                      
Research and development expenses (income)     335         250         1,112         395  
Selling and marketing expenses     4,383         4,258         12,099         10,853  
General and administrative expenses     7,950         7,179         25,597         20,847  
Write-off of unsuccessful exploration activities     185                 359         8,107  
Operating income     46,479         43,788         114,973         108,689  
Other income (expense):                      
Interest income     53         35         106         236  
Interest expense, net     (17,748 )       (22,494 )       (54,435 )       (65,084 )
Foreign currency translation and transaction gains (losses)     1,296         (2,946 )       (641 )       (3,639 )
Income attributable to sale of tax benefits     8,634         5,487         18,917         18,334  
Gain from sale of property, plant and equipment                             7,628  
Other non-operating income (expense), net     (131 )       243         (1,523 )       649  
Income before income taxes and equity in                      
losses of investees     38,583         24,113         77,397         66,813  
Income tax provision     38,211         (6,444 )       26,696         (17,731 )
Equity in losses of investees, net     (3,133 )       (899 )       (4,892 )       (1,210 )
Net income     73,661         16,770         99,201         47,872  
Net income attributable to noncontrolling interest     (1,522 )       (256 )       (2,616 )       (670 )
Net income attributable to the Company’s stockholders  $   72,139      $   16,514      $   96,585      $   47,202  
                       
Earnings per share attributable to the Company’s stockholders – Basic and diluted:                      
Basic:                      
Net Income (loss)  $   1.47      $   0.36      $   2.00      $   1.04  
                       
Diluted:                      
Net Income  $   1.41      $   0.36      $   1.93      $   1.03  
                       
Weighted average number of shares used in computation of earnings per share attributable to the Company’s stockholders:                      
Basic     49,023         45,690         48,388         45,594  
Diluted     51,113         46,102         50,011         45,917  
                                       

Ormat Technologies, Inc. and Subsidiaries 
Condensed Consolidated Balance Sheets 
As of September 30, 2015 and December 31, 2014 
(Unaudited)

     September 30,    December 31,
    2015   2014
             
       (In thousands)
 ASSETS
Current assets:            
Cash and cash equivalents    $     171,541      $     40,230  
Restricted cash, cash equivalents and marketable securities         70,523           93,248  
Receivables:            
Trade         52,313           48,609  
Related entity                 451  
Other         9,946           10,141  
Due from Parent                 1,337  
Inventories         16,595           16,930  
Costs and estimated earnings in excess of billings on uncompleted contracts         14,459           27,793  
Deferred income taxes         1,344           251  
Prepaid expenses and other         34,011           34,884  
Total current assets         370,732           273,874  
Deposits and other         17,506           20,044  
Deferred charges         36,235           37,567  
Property, plant and equipment, net         1,580,379           1,437,637  
Construction-in-process         230,561           296,722  
Deferred financing and lease costs, net         24,718           27,057  
Intangible assets, net         26,202           28,655  
Total assets   $     2,286,333     $     2,121,556  
 LIABILITIES AND EQUITY
Current liabilities:            
Accounts payable and accrued expenses    $     85,226      $     88,276  
Deferred income taxes         975           974  
Short-term revolving credit lines with banks (full recourse)                 20,300  
Billings in excess of costs and estimated earnings on uncompleted contracts         22,616           24,724  
Current portion of long-term debt:            
Limited and non-recourse:            
Senior secured notes         33,197           34,368  
Other loans         21,495           17,995  
Full recourse         17,228           19,116  
Total current liabilities         180,737           205,753  
Long-term debt, net of current portion:            
Limited and non-recourse:            
Senior secured notes         317,909           360,366  
Other loans         288,753           264,625  
Full recourse:            
Senior unsecured bonds         250,058           250,289  
Other loans         23,070           34,351  
Unconsolidated investments         12,667           3,617  
Liability associated with sale of tax benefits         18,580           39,021  
Deferred lease income         58,325           60,560  
Deferred income taxes         31,360           66,220  
Liability for unrecognized tax benefits         7,112           7,511  
Liabilities for severance pay         18,826           20,399  
Asset retirement obligation         20,282           19,142  
Other long-term liabilities         697           2,956  
Total liabilities         1,228,376           1,334,810  
             
Equity:            
The Company’s stockholders’ equity:            
Common stock         49           46  
Additional paid-in capital         846,998           742,006  
Retained earnings         128,352           41,539  
Accumulated other comprehensive income         (12,844 )         (8,668 )
          962,555           774,923  
Noncontrolling interest         95,402           11,823  
Total equity         1,057,957           786,746  
Total liabilities and equity    $     2,286,333      $     2,121,556  
                     

Ormat Technologies, Inc. and Subsidiaries 
Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information 
For the Nine and Three-Month Period Ended September 30, 2015 and 2014 
(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 cost, (iv) stock-based compensation, and (vii) gain from extinguishment of liability. 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 tables reconcile net cash provided by operating activities and net income to EBITDA and Adjusted EBITDA for the nine and three-month period ended September 30, 2015 and September 30, 2014:

     Three Months Ended September 30    Nine Months Ended September 30
    2015   2014   2015   2014
                         
     (in thousands)    (in thousands)
Net cash provided by operating activities    $     10,239      $     75,191      $     122,965      $     178,770  
Adjusted for:                        
Interest expense, net (excluding amortization                        
of deferred financing costs)         15,244           20,038           47,571           59,366  
Interest income         (53 )         (35 )         (106 )         (236 )
Income tax provision         (38,211 )         6,444           (26,696 )         17,731  
Adjustments to reconcile net income or loss to net cash                        
provided by operating activities (excluding                        
depreciation and amortization)         91,326           (32,404 )         56,699           (56,062 )
EBITDA   $     78,545     $     69,234     $     200,433      $     199,569  
                         
Mark to market on derivative instruments which represents swap contracts on natural gas and oil prices                   (4,165 )         4,129           (4,467 )
Stock-based compensation         921           1,502           3,077           4,308  
Gain on sale of a subsidiary and property, plant and equipment                                       (7,628 )
Loss from extinguishment of liability                             1,710            
Merger and Acquisition transactions costs                           3,800            
Write-off of unsuccessful exploration activities         185                     359           8,107  
Mark to market on derivatives which represents currency forward contracts         (645 )         2,537           (1,335 )         4,473  
Adjusted EBITDA   $     79,006      $     69,108     $     212,173      $     204,362  
Net cash provided by (used in) investing activities   $     2,895      $     (106,423 )   $     (76,538 )    $     (135,435 )
Net cash provided by (used in)  financing activities   $     20,742      $     (6,437 )   $     84,884      $     (58,238 )
                         
                         
     Three Months Ended September 30    Nine Months Ended September 30
    2015   2014   2015   2014
                         
     (in thousands)    (in thousands)
Net income    $     73,661      $     16,770      $     99,201      $     47,872  
Adjusted for:                        
Interest expense, net (including amortization                        
of deferred financing costs)         17,695           22,459           54,329           64,848  
Income tax provision         (38,211 )         6,444           (26,696 )         17,731  
Depreciation and amortization         25,400           23,561           73,599           69,118  
EBITDA   $     78,545     $     69,234     $     200,433      $     199,569  
                         
Mark to market on derivative instruments which represents swap contracts on natural gas and oil prices                 (4,165 )         4,129           (4,467 )
Stock-based compensation         921           1,502           3,077           4,308  
Gain on sale of a subsidiary and property, plant and equipment                                       (7,628 )
Loss from extinguishment of liability                             1,710            
Merger and Acquisition transactions costs                             3,800            
Write-off of unsuccessful exploration activities         185                     359           8,107  
Mark to market on derivatives which represents currency forward contracts         (645 )         2,537           (1,335 )         4,473  
Adjusted EBITDA   $     79,006      $     69,108     $     212,173      $     204,362  

 

CONTACT: Ormat Technologies Contact:		
Smadar Lavi				
Investor Relations			
775-356-9029				
slavi@ormat.com			

Investor Relations Agency Contact:	
Miri Segal/Brett Maas
MS/Hayden - IR
917-607-8654/646-536-7331
msegal@ms-ir.com / brett@haydenir.com