Ormat Technologies Reports 2014 Second Quarter Results

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| Source: Ormat Technologies, Inc.

Net income for the second quarter of $9.1 million or $0.20 per share attributable to company's shareholders

Product segment backlog increased to a record $376.0 million

Company maintains 2014 annual revenue guidance

RENO, Nev., Aug. 5, 2014 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE:ORA) announced today its financial results for the second quarter of 2014.

Quarterly financial and operational highlights:

  • Quarterly revenues were $127.6 million, a 16.4% decrease from the second quarter of 2013 as a result of an expected reduction in Product Segment revenues. For the first six months of 2014, total revenues decreased slightly from the prior year by 0.6%;
  • Electricity segment revenue increase of 4.5% year over year;
  • Quarterly gross margins reached 31.3% for the second quarter and 34.6% for the first half of the year;
  • Adjusted EBITDA for the quarter reached $59.7 million and $130.3 million for the first half of the year;
  • Net income attributable to the company's shareholders of $9.1 million, or $0.20 per share for the second quarter and $30.7 million, or $0.67 per share for the first six months of 2014;
  • Sarulla Consortium closed a $1.17 Billion financing agreement;
  • Product backlog grew to a record of $376.0 million primarily with the addition of the Sarulla $254.0 million supply contract; and
  • Isaac Angel became CEO on July 1, 2014.

"We are pleased with the results for the second quarter, which reflect the continued success of our business and contributed to strong financial results in the first half of 2014," said Ormat's CEO Isaac Angel. "In our Electricity Segment, we continued to enhance our power plants, which will drive improvements in the segment. Even with the expected and scheduled outage of Heber 1, Electricity Segment revenues increased 4.5% compared to the prior year, and increased 19.5% for the first six months of 2014. In our Product Segment, we grew our backlog to a record $376.0 million with the addition of our $254.0 million supply contract at Sarulla."

Mr. Angel concluded, "Overall, we are well positioned to continue to execute on our growth strategy. We reaffirm our 2014 guidance and expect total revenues to be between $540.0 million to $560.0 million with electricity revenues ranging $370.0 million to $380.0 million and our product segment revenues to be between $170.0 million and $180.0 million."

Financial Summary

For the three months ended June 30, 2014, total revenues decreased to $127.6 million from $152.7 million in the second quarter of 2013, a decrease of 16.4%. Electricity revenues increased 4.5% to $91.7 million in the three months ended June 30, 2014. Product revenues decreased 44.7% to $35.9 million in the three months ended June 30, 2014. By reaffirming our Product Segment guidance, we expect the second half of 2014 to be stronger than the first half with a strong fourth quarter.        

Operating income for the three months ended June 30, 2014 was $22.3 million, compared to $37.9 million for the three months ended June 30, 2013. Operating income includes an $8.1 million write-off of our Wister site in California off-set by a $7.6 million pre-tax profit from the sale of the Heber Solar project in California.

For the three months ended June 30, 2014, the company reported net income attributable to the company's shareholders of $9.1 million, or $0.20 per share, compared to $25.2 million, or $0.55 per share, for the three months ended June 30, 2013. For the six months ended June 30, 2014, the company reported net income attributable to the company's shareholders of $30.7 million, or $0.67 per share, compared to $20.1 million, or $0.44 per share, for the six months ended June 30, 2013 and increase of 52.7%.

Adjusted EBITDA for the three months ended June 30, 2014 was $59.7 million, compared to $69.7 million for the three months ended June 30, 2013, a decrease of 14.3%. Adjusted EBITDA for the six months ended June 30, 2014 was $130.3 million, compared to $115.5 million for the six months ended June 30, 2013, an increase of 12.9%. The reconciliation of GAAP net cash provided by operating activities and net income to EBITDA and Adjusted EBITDA and additional cash flows information is set forth below in this release.

Net cash provided by operating activities was $103.6 million in the six months ended June 30, 2014, compared to $20.0 million in the six months ended June 30, 2013.

On August 5, 2014, ORMAT's Board of Directors approved a payment of a quarterly dividend of $0.05 per share pursuant to the company's dividend policy. The dividend will be paid on August 28, 2014 to shareholders of record as of closing of business on August 19, 2014.

As of June 30, 2014, cash and cash equivalents were $80.1 million. In addition, as of June 30, 2014, the company had $168.4 million of unused corporate borrowing capacity under existing lines of credit with different commercial banks.

Conference Call Details

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release at 10:00 A.M. ET on Wednesday, August 6, 2014.  The call will be available as a live, listen-only webcast at www.ormat.com. During the webcast, management will refer to slides that will be posted on the web site. The slides and accompanying webcast can be accessed through the Webcast & Presentations in the Investor Relations section of Ormat's website.

An archive of the webcast will be available approximately 10 minutes after the conclusion of the live call.

About Ormat Technologies

With over four 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). 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 over 77 U.S. patents, Ormat's power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 480 employees in the United States and about 640 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 1,800 MW of gross capacity. Ormat's current generating portfolio of 626 MW (net) 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 28, 2014.

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 Six and Three-Month Periods Ended June 30, 2014 and 2013
(Unaudited)
         
   Three Months Ended June 30   Six Months Ended June 30 
  2014 2013  2014 2013 
  (In thousands, except per share data) (In thousands, except per share data)
Revenues:         
Electricity  $ 91,692  $ 87,713  $ 186,509  $ 156,011
Product 35,911 64,966 83,530 115,574
Total revenues 127,603 152,679 270,039 271,585
Cost of revenues:         
Electricity 67,322 58,641 124,356 113,729
Product 20,324 43,657 52,267 80,698
Total cost of revenues 87,646 102,298 176,623 194,427
Gross margin 39,957 50,381 93,416 77,158
Operating expenses:         
Research and development expenses 232 1,608 145 2,608
Selling and marketing expenses 3,216 3,777 6,595 15,286
General and administrative expenses 6,072 7,134 13,668 13,718
Write-off of unsuccessful exploration activities 8,107 8,107
Operating income 22,330 37,862 64,901 45,546
Other income (expense):         
Interest income 90 87 201 128
Interest expense, net (22,072) (17,504) (42,590) (33,367)
Foreign currency translation and transaction gains (losses) (55) 904 (693) 2,586
Income attributable to sale of tax benefits 6,130 5,783 12,847 9,315
Gain from sale of property, plant and equipment 7,628 7,628
Other non-operating expense, net 343 29 406 1,446
Income before income taxes and equity in income losses of investees 14,394 27,161 42,700 25,654
Income tax provision (4,967) (5,780) (11,287) (9,827)
Equity in income (losses) of investees, net (114) 9 (311) 9
Income from continuing operations 9,313 21,390 31,102 15,836
Discontinued operations:         
Income from discontinued operations  4,480 5,311
Income tax provision (363) (614)
Total income from discontinued operations 4,117 4,697
         
Net income 9,313 25,507 31,102 20,533
Net income attributable to noncontrolling interest (177) (322) (414) (407)
Net income attributable to the Company's stockholders  $ 9,136  $ 25,185  $ 30,688  $ 20,126
         
Earnings per share attributable to the Company's stockholders - Basic and diluted:         
Income from continuing operations  $ 0.20  $ 0.46  $ 0.67  $ 0.34
Discontinued operations  --  0.09  --   0.10
Net Income  $ 0.20  $ 0.55  $ 0.67  $ 0.44
         
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:         
Basic 45,606 45,431 45,545 45,431
Diluted 45,963 45,448 45,827 45,443
         
Ormat Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of June 30, 2014 and December 31, 2013 
(Unaudited)
     
   June 30,   December 31, 
  2014 2013
     
   (In thousands) 
 ASSETS 
 Current assets:     
 Cash and cash equivalents  $ 80,120  $ 57,354
 Restricted cash, cash equivalents and marketable securities  54,077  51,065
 Receivables:     
 Trade  78,764  95,365
 Related entity  442  442
 Other  7,963  11,049
 Due from Parent  607  382
 Inventories  18,292  22,289
 Costs and estimated earnings in excess of billings on uncompleted contracts  25,918  21,217
 Deferred income taxes  2,484  523
 Prepaid expenses and other  38,156  29,654
 Total current assets  306,823  289,340
Unconsolidated investments  3,308  7,076
Deposits and other  23,480  22,114
Deferred income taxes  —  891
Deferred charges  35,674  36,738
Property, plant and equipment, net  1,468,012  1,452,336
Construction-in-process  247,901  288,827
Deferred financing and lease costs, net  29,429  30,178
Intangible assets, net  30,302  31,933
 Total assets  $ 2,144,929  $ 2,159,433
 LIABILITIES AND EQUITY 
 Current liabilities:     
 Accounts payable and accrued expenses  $ 79,800  $ 98,047
 Short-term revolving credit lines with banks (full recourse)  42,600  —
 Billings in excess of costs and estimated earnings on uncompleted contracts  28,185  7,903
 Current portion of long-term debt:    
 Limited and non-recourse:    
 Senior secured notes  30,208  31,137
 Other loans  21,207  20,377
 Full recourse  23,994  28,875
 Total current liabilities  225,994  186,339
Long-term debt, net of current portion:    
Limited and non-recourse:    
Senior secured notes  241,146  270,310
Other loans  300,429  311,078
Full recourse:    
Senior unsecured bonds  250,443  250,596
Other loans  43,940  53,467
Revolving credit lines with banks (full recourse)  82,000  112,017
Liability associated with sale of tax benefits  50,829  60,985
Deferred lease income  62,029  63,496
Deferred income taxes  63,884  55,035
Liability for unrecognized tax benefits  5,589  4,950
Liabilities for severance pay  23,794  23,841
Asset retirement obligation  19,422  18,679
Other long-term liabilities  4,830  3,529
Total liabilities  1,374,329  1,414,322
     
Equity:     
The Company's stockholders' equity:     
Common stock  46  46
Additional paid-in capital  738,842  738,929
Retained earnings  22,597  (6,722)
Accumulated other comprehensive income  (3,673)  487
   757,812  732,740
Noncontrolling interest  12,788  12,371
Total equity  770,600  745,111
Total liabilities and equity  $ 2,144,929  $ 2,159,433
 
Ormat Technologies, Inc. and Subsidiaries
Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information
For the Six and Three-Month Periods Ended June 30, 2014 and 2013
(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, excluding impairment of long-lived assets and one-time termination fee. 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 six and three-month periods ended June 30, 2014 and 2013:

   Three Months Ended June 30   Six Months Ended June 30 
  2014 2013  2014 2013 
         
   (in thousands)   (in thousands) 
Net cash provided by operating activities  $ 35,503  $ 1,734  $ 103,579  $ 19,950
Adjusted for:        
Interest expense, net (excluding amortization of deferred financing costs)  20,152  15,626  39,328  29,962
Interest income  (90)  (87)  (201)  (128)
Income tax provision  4,967  6,143  11,287  10,441
Adjustments to reconcile net income or loss to net cash provided by operating activities (excluding depreciation and amortization)  (788)  46,303  (23,658)  46,246
EBITDA  $ 59,744  $ 69,719  $ 130,335  $ 106,471
         
Termination fees  —   —   —   8,979
Adjusted EBITDA  $ 59,744  $ 69,719  $ 130,335  $ 115,450
Net cash provided by (used in) investing activities  $ 6,311  $ (4,925)  $ (29,012)  $ (103,169)
Net cash provided by (used in) financing activities  $ (9,621)  $ (25,543)  $ (51,801)  $ 45,484
         
         
   Three Months Ended June 30   Six Months Ended June 30 
  2014 2013  2014 2013 
         
   (in thousands)   (in thousands) 
Net income  $ 9,313  $ 25,507  $ 31,102  $ 20,533
Adjusted for:        
Interest expense, net (including amortization of deferred financing costs)  21,982  17,417  42,389  33,239
Income tax provision  4,967  6,143  11,287  10,441
Depreciation and amortization  23,482  20,652  45,557  42,258
EBITDA  $ 59,744  $ 69,719  $ 130,335  $ 106,471
         
Termination fees  —   —   —   8,979
Adjusted EBITDA  $ 59,744  $ 69,719  $ 130,335  $ 115,450
         
Ormat Technologies Contact:
Smadar Lavi
Investor Relations
775-356-9029


Investor Relations Contact:
Rob Fink/Brad Nelson
KCSA Strategic Communications
212-896-1206 / 212-896-1217
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