U.S. Markets closed

Ormat Technologies Reports First Quarter 2019 Financial Results

Revenue Increases 8.2%; Management Reiterates Full-Year Guidance And Expectation To Reopen Puna By Year-End

RENO, Nev., May 06, 2019 (GLOBE NEWSWIRE) -- RENO, Nev. May 6, 2019, Ormat Technologies, Inc.1 (ORA) today announced financial results for the first quarter ended March 31, 2019.

($ millions, except per share amounts)

Q1 2019

Q1 2018

% Change

Revenues

Electricity

142.9

132.5

7.9

%

Product

52.1

48.7

7.1

%

Other

4.0

2.9

39.8

%

Total Revenues

199.0

184.0

8.2

%

Gross margin (%)

Electricity

45.7

%

44.5

%

Product

19.2

%

30.7

%

Other

(30.2

)%

(20.3

)%

Gross margin (%)

37.3

%

39.9

%

Operating income

53.7

54.6

(1.6

)%

Net income attributable to the Company’s shareholders2

25.9

69.5

(62.7

)%

Diluted EPS

0.51

1.36

(62.5

)%

Adjusted Net income attributable to the Company’s stockholders2

25.9

25.1

3.4

%

Adjusted Diluted EPS

0.51

0.49

4.1

%

Adjusted EBITDA1

101.8

98.4

3.4

%

“Ormat delivered another strong quarter, with continued growth across our diversified portfolio of operations helping us to overcome the loss of revenue and profit resulting from the temporary shutdown of our Puna power plant in Hawaii,” commented Isaac Angel, Chief Executive Officer. “Our Electricity segment revenue grew 7.9% and generation increased 11.0% in Q1 2019 vs Q1 2018, reflecting the contribution of new and expanded power plants as well as the continuing growth resulting from our recent USG acquisition. Gross margin for this segment also expanded to 45.7%, despite the overhang of Puna’s ongoing fixed expenses, demonstrating our continuing commitment to expanding the operating efficiency of our core Electricity generation business. Furthermore, progress to bring Puna back online is continuing, and we remain optimistic that this important power plant will be ready to resume operation by year-end.”

Mr. Angel continued, “Our Product division also delivered solid revenue growth, and although two larges but lower-margin Turkish contracts impacted our gross margin in this segment during the quarter, we expect margin performance in Products to be stronger for the balance of the year.”

____________________
1 Ormat Technologies, Inc. is also referred to herein as the “Company”, “Ormat”, “we” or “us”
2 Reconciliation is set forth below in this release

FINANCIAL HIGHLIGHTS FOR THE FIRST QUARTER OF 2019

  • Total revenues of $199.0 million, up 8.2% compared to the first quarter of 2018 despite the volcano-related shutdown of Ormat’s Puna power plant in Hawaii;

  • Electricity segment revenues of $142.9 million, up 7.9% compared to Q1 2018, as the growth resulting from recently expanded operations at McGuinness Hills and Olkaria, as well as contributions from recently acquired USG, combined to mitigate the loss of revenues resulting from the temporary shutdown of the Puna power plant;

  • Electricity segment gross margin was 45.7% compared to 44.5% for Q1 2018. Excluding the impact from Puna, Electricity segment gross margin would have been 48.2% in Q1 2019 and 44.8% in Q1 2018;

  • Product segment backlog was $226.4 million as of May 6, 2019;

  • Net income was $28.1 million in Q1 2019 compared to net income of $74.3 million in Q1 2018. Net income for Q1 2018 included one-time tax income of $44.4 million, resulting in a net tax benefit of $26.9 million for that quarter, compared to a provision for income taxes of $14.0 million in Q1 2019;

  • Net income attributable to the Company's stockholders in Q1 2019 was $25.9 million, or $0.51 per diluted share, compared to $69.5 million, or $1.36 per diluted share, in Q1 2018; Adjusted Net income attributable to the Company's stockholders, was $25.9 million, or $0.51 per diluted share, compared to $25.1 million, or $0.49 per diluted share, Q1 20183 ;

  • Adjusted EBITDA increased 3.4% to $101.8 million, from $98.4 million in Q1 2018. Adjusted EBITDA includes approximately $1.2 million expense related to Puna, net of $1.3 million insurance proceeds received for business interruption; Adjusted EBITDA excluding any impact from Puna was $103.0 million3;

  • Declared a quarterly dividend of $0.11 per share for the first quarter of 2019.

_______________
3 Reconciliation is set forth below in this release

2019 GUIDANCE

Mr. Angel added, “We expect full-year 2019 total revenues between $720 million and $742 million with Electricity segment revenues between $530 million and $540 million, excluding any impact from Puna during 2019. We expect Product segment revenues between $180 million and $190 million. Revenues from energy storage and demand response activity are expected to be between $10 million and $12 million. We expect 2019 Adjusted EBITDA between $370 million and $380 million for the full year, with no Puna-related EBITDA. We expect annual Adjusted EBITDA attributable to minority interest to be approximately $23 million, assuming no contribution from Puna during 2019.”

The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months ended March 31, 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 including the tax impact of the repatriation of proceeds from sales in foreign jurisdictions and tax benefit or expense related to effects of the still evolving tax law reform in the United States and other non-cash expenses and adjusting items which are excluded from the calculation of Adjusted EBITDA.

FIRST QUARTER 2019 FINANCIAL RESULTS (COMPARING THE QUARTER ENDED MARCH 31, 2019 TO THE QUARTER ENDED MARCH 31, 2018)

Total revenues for the quarter were $199.0 million, up 8.2% compared to the same quarter last year. Electricity segment revenues increased 7.9% to $142.9 million, up from $132.5 million last year. The increase was mainly attributable to the MGH phase 3 and Olkaria III expansion, which came online in the second half of 2018, as well as the USG acquisition in April 2018, partially offset by the temporary shutdown of the Puna plant. Product segment revenues increased 7.1% to $52.1 million, up from $48.7 in the same quarter last year. Other segment revenues were $4.0 million compared to $2.9 million.

General and administrative expenses were $15.7 million, or 7.9% of total revenues, compared to $13.8 million, or 7.5% of total revenues. This increase was mainly due to expenses related to legal settlements, increase in stock-based compensation and professional fees.

The Company reported net income attributable to the Company’s shareholders of $25.9 million, or $0.51 per diluted share, compared to $69.5 million, or $1.36 per diluted share. Adjusted Net income attributable to the Company's stockholders was $25.9 million, or $0.51 per diluted share, compared to $25.1 million or, $0.49 per diluted share in the same quarter last year. In the first quarter of 2018, we recorded a one-time tax income of $44.4 million for the reduction of the valuation allowance related to foreign tax credits and production tax credits.

Adjusted EBITDA of $101.8 million, compared to $98.4 million. The increase in Adjusted EBITDA is mainly related to the increase in gross profit as a result of higher revenues. The reconciliation of GAAP net income to EBITDA and Adjusted EBITDA is set forth below in this release. Adjusted EBITDA excluding any impact from Puna was $103.0 million.

DIVIDEND

On May 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 May 28, 2019 to shareholders of record as of the close of business on May 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 Tuesday, May 7, at 9 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:

10130752

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 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 910 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-Month Periods Ended March 31, 2019 and 2018
(Unaudited)

Three Months Ended March 31

2019

2018

(In thousands, except per share data)

Revenues:

Electricity

$

142,908

$

132,489

Product

52,128

48,672

Other

4,002

2,862

Total revenues

199,038

184,023

Cost of revenues:

Electricity

77,543

73,482

Product

42,106

33,726

Other

5,210

3,443

Total cost of revenues

124,859

110,651

Gross profit

74,179

73,372

Operating expenses:

Research and development expenses

900

1,108

Selling and marketing expenses

3,865

3,699

General and administrative expenses

15,689

13,849

Write-off of unsuccessful exploration activities

123

Operating income

53,725

54,593

Other income (expense):

Interest income

293

113

Interest expense, net

(21,223

)

(14,344

)

Derivatives and foreign currency transaction gains (losses)

472

(1,599

)

Income attributable to sale of tax benefits

7,764

7,361

Other non-operating expense, net

91

(20

)

Income before income taxes and equity in losses of investees

41,122

46,104

Income tax (provision) benefit

(14,039

)

26,942

Equity in losses of investees, net

1,047

1,210

Net income

28,130

74,256

Net income attributable to noncontrolling interest

(2,184

)

(4,748

)

Net income attributable to the Company's stockholders

$

25,946

$

69,508

Earnings per share attributable to the Company's stockholders - Basic and diluted:

Basic:

Net Income

$

0.51

$

1.37

Diluted:

Net Income

$

0.51

$

1.36

Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:

Basic

50,709

50,614

Diluted

51,012

51,051

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
For the Periods Ended March 31, 2019 and December 31, 2018
(Unaudited)

March 31,

December 31,

2019

2018

(In thousands)

ASSETS

Current assets:

Cash and cash equivalents

$

79,366

$

98,802

Restricted cash, cash equivalents and marketable securities

93,098

78,693

Receivables:

Trade

139,870

137,581

Other

18,319

19,393

Inventories

42,982

45,024

Costs and estimated earnings in excess of billings on uncompleted contracts......

29,762

42,130

Prepaid expenses and other

18,224

51,441

Total current assets

421,621

473,064

Investment in an unconsolidated company

71,885

71,983

Deposits and other

18,154

18,209

Deferred income taxes

109,821

113,760

Property, plant and equipment, net

1,962,580

1,959,578

Construction-in-process

266,083

261,690

Operating lease right of use

60,656

Financing lease right of use

14,433

Deferred financing and lease costs, net

1,733

3,242

Intangible assets, net

196,125

199,874

Goodwill

20,123

19,950

Total assets

$

3,143,214

$

3,121,350

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable and accrued expenses

$

108,309

$

116,362

Short-term revolving credit lines with banks (full recourse)

60,900

159,000

Billings in excess of costs and estimated earnings on uncompleted contracts

15,508

18,402

Current portion of long-term debt:

Limited and non-recourse:

Senior secured notes

33,639

33,493

Other loans

29,687

29,687

Full recourse

9,368

5,000

Operating lease liabilities

7,532

Finance lease liabilities

3,147

Total current liabilities

268,090

361,944

Long-term debt, net of current portion:

Limited and non-recourse:

Senior secured notes

367,142

375,337

Other loans

312,779

320,242

Full recourse:

Senior unsecured bonds

353,626

303,575

Other loans

78,149

41,579

Operating lease liabilities

17,667

Finance lease liabilities

11,954

Liability associated with sale of tax benefits

68,852

69,893

Deferred lease income

47,658

48,433

Deferred income taxes

68,005

61,323

Liability for unrecognized tax benefits

12,482

11,769

Liabilities for severance pay

18,400

17,994

Asset retirement obligation

41,246

39,475

Other long-term liabilities

5,464

16,087

Total liabilities

1,671,514

1,667,651

Redeemable non-controlling interest

8,705

8,603

Equity:

The Company's stockholders' equity:

Common stock

51

51

Additional paid-in capital

903,723

901,363

Retained earnings (accumulated deficit)

442,531

422,222

Accumulated other comprehensive income (loss)

(5,956

)

(3,799

)

1,340,349

1,319,837

Noncontrolling interest

122,646

125,259

Total equity

1,462,995

1,445,096

Total liabilities and equity

$

3,143,214

$

3,121,350

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
Reconciliation of EBITDA and Adjusted EBITDA
For the Three-Month Periods Ended March 31, 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-month periods ended March 31, 2019 and 2018.

Three Months Ended March 31

2019

2018

(in thousands)

Net income

$

28,130

$

74,256

Adjusted for:

Interest expense, net (including amortization of deferred financing costs)

20,930

14,231

Income tax provision

14,039

(26,942

)

Adjustment to investment in unconsolidated company:

our proportionate share in interest, tax and depreciation and amortization

2,661

3,530

Depreciation and amortization

34,866

29,437

EBITDA

$

100,626

$

94,512

Mark-to-market gains or losses from accounting for derivatives

(1,209

)

962

Stock-based compensation

2,360

1,707

Merger and acquisition transaction cost

1,095

Write-off of unsuccessful exploration activities

123

Adjusted EBITDA

$

101,777

$

98,399

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
Reconciliation of Adjusted Net Income attributable to the Company's stockholders
For the Three-Month Periods Ended March 31, 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 periods ended March 31, 2019 and 2018.

Three Months Ended March 31

2019

2018

(in thousands)

Net income attributable to the Company's stockholders

$

25.9

$

69.5

One-time tax Income

(44.4

)

Adjusted Net income attributable to the Company's stockholders

$

25.9

$

25.1

Weighted average number of shares diluted used in computation of earnings per share attributable to the Company's stockholders:

51.0

51.1

Adjusted EPS

0.51

0.49


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
Hayden - IR
646-415-8972
rob@haydenir.com