Ormat Technologies Reports 2015 First Quarter Results


Company Reiterates Full-Year Revenue and Adjusted EBITDA Guidance

Product Segment Backlog Reaches a Record $387.0 Million

RENO, Nev., May 6, 2015 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE:ORA) today announced financial results for the first quarter ended March 31, 2015.

First Quarter Highlights and Recent Developments:

  • Electricity revenues of $90.0 million, compared to $94.8 million in the first quarter of 2014;
  • Product Segment revenues of $30.3 million, compared to $47.6 million in the first quarter of 2014;
  • Cash flow from operation was $83.1 million, an increase of 22.1% compared to $68.1 million in the first quarter of 2014;
  • Adjusted EBITDA of $65.3 million, compared to $73.4 million in the first quarter of 2014;
  • Declared a quarterly dividend of $0.06 per share for the first quarter of 2015;
  • Product segment backlog reached a record $387.0 million as of May 6, 2015;
  • Entered into a 20-year PPA with Southern California Public Power Authority (SCPPA) for the second phase of Don A. Campbell project;  management expects to complete this project by the end of 2015, approximately three months earlier than previously expected;
  • Completed the share exchange transaction with Ormat Industries Ltd, pursuant to the Share Exchange Agreement and Plan of Merger by and among Ormat Industries and Ormat Systems;
  • McGinness Hills complex annual generating capacity increased to approximately 72MW following the initiation of commercial operation in February 2015 of the Phase 2 geothermal power plant; and
  • Closed and received $162.3 million cash from Northleaf Capital Partners for a 36.75% equity investment in certain power plants.


Isaac Angel, chief executive officer of Ormat, stated, “As expected, this quarter faced headwinds related to lower oil and natural gas prices and lower generation at Puna due to last summer’s hurricane that reduced revenues by $6.6 million and $3.1 million, respectively. On the expense side, we had a one-time expense of $3.4 million associated with our restructuring transaction. In addition, normal fluctuations in revenue recognition inherent within our product division resulted in lower revenues for the quarter compared to last year. We expect revenues will be stronger during the second half of 2015.”

“During the first quarter we accelerated construction of the second phase of the Don A. Campbell project, and as a result, we expect to begin generating electricity towards the end of 2015, approximately three months ahead of schedule,” continued Mr. Angel. “Subsequent to the end of the quarter, our product segment backlog as of May 6, 2015, increased to a record of approximately $387.0 million.”

“We also began executing a multi-year plan to set the stage for our next growth phase,” continued Mr. Angel. “Central to this plan is our focus on expanding our geographic reach. We are also focused on technology diversification, capturing a larger share of the high temperature geothermal resource market with our proven binary system. I am increasingly excited about the opportunities before us, and believe Ormat is uniquely positioned to succeed in the evolving renewable energy market.”

Guidance

Mr. Angel added, “We reiterate our 2015 revenue guidance despite the current oil and natural gas prices, which translates to a $26.6 million reduction in revenues compared to last year, and we expect the electricity segment revenues to be between $380.0 million and $390.0 million, and product segment revenues to be between $180.0 million and $190.0 million. We reiterate our 2015 Adjusted EBITDA guidance of $280.0 to $290.0 million for the full year, which is also impacted by current oil and natural gas prices.”

First Quarter Financial Summary

Total revenues for the three months ended March 31, 2015 were $120.2 million, compared to $142.4 million for the three months ended March 31, 2014, which represented a 15.6% decrease. Electricity revenues decreased 5.1% to $90.0 million in the three months ended March 31, 2015, from $94.8 million in the three months ended March 31, 2014. Product revenues decreased 36.4% to $30.3 million in the three months ended March 31, 2015, from $47.6 million in the three months ended March 31, 2014.

The revenue decline was primarily attributable to lower energy rates resulting from the decline in natural gas and oil prices, lower generation at the company’s Puna power plant due to the hurricane and the timing of revenue recognition in the company’s product segment. The lower commodity prices had an approximate $6.6 million impact on revenues and the lower generation in Puna had a $3.1 million impact on revenues. The decrease was partially offset by $3.6 million additional revenues from the commencement of operations of McGinness Hills phase 2 power plant in Nevada in February 2015 and a reduction in net loss on derivative contracts on oil and natural gas prices from a net loss of $2.4 million in the first quarter of 2014 to a net gain of $0.3 million in the first quarter of 2015.

The company reported net income attributable to the company’s shareholders of $10.0 million or $0.21 per share in the first quarter of 2015 compared to $21.6 million or $0.47 per share for the first quarter of 2014. Net income for the first quarter of 2015 included approximately $3.4 million in non-recurring charges related to the share exchange transaction recorded in general and administrative expenses and $1.4 million foreign currency translation and transaction losses compared to $0.6 million in the first quarter of 2014.

Adjusted EBITDA for the three months ended March 31, 2015 was $65.3 million, compared to $73.4 million for the three months ended March 31, 2014.  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.

On May 6, 2015, ORMAT’s Board of Directors approved a payment of a quarterly dividend of $0.06 per share pursuant to the company’s dividend policy. The dividend will be paid on May 27, 2015 to shareholders of record as of the close of business on May 19, 2015. In addition, the company expects to pay quarterly dividends of $0.06 per share in each of the next two quarters.

Webcast Conference Details

Ormat will host a listen-only webcast to discuss its financial results and other matters discussed in this press release at 9 a.m. ET on Thursday, May 7, 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 Free18556699657
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
Canada Toll Free:855-669-9658
Replay Access Code: 10064470


About Ormat Technologies

With five decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company currently 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 approximately 2,000 MW of gross capacity. Ormat’s current 647 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 Three-Month Period Ended March 31, 2015 and 2014
(Unaudited)

       
   Three Months Ended March 31 
  2015 2014
       
       
   (In thousands, except per share data) 
 Revenues:      
 Electricity$ 89,953  $ 94,817 
 Product  30,278    47,619 
 Total revenues  120,231    142,436 
 Cost of revenues:      
 Electricity  55,581    57,034 
 Product  20,625    31,943 
 Total cost of revenues  76,206    88,977 
 Gross margin  44,025    53,459 
 Operating expenses:      
 Research and development expenses (income)  363    (87)
 Selling and marketing expenses  3,433    3,379 
 General and administrative expenses  10,204    7,596 
 Write-off of unsuccessful exploration activities  174     
 Operating income  29,851    42,571 
 Other income (expense):      
 Interest income  9    111 
 Interest expense, net  (17,828)   (20,518)
 Foreign currency translation and transaction gains (losses)  (1,366)   (638)
 Income attributable to sale of tax benefits  5,552    6,717 
 Other non-operating expense, net  283    63 
 Income before income taxes and equity in      
 losses of investees  16,501    28,306 
 Income tax provision  (5,459)   (6,320)
 Equity in losses of investees, net  (775)   (197)
       
 Net income  10,267    21,789 
 Net income attributable to noncontrolling interest  (235)   (237)
 Net income attributable to the Company's stockholders $  10,032   $  21,552 
       
 Earnings per share attributable to the Company's stockholders - Basic and diluted:      
 Net Income  $  0.21   $  0.47 
       
 Weighted average number of shares used in computation of earnings per share
  attributable to the Company's stockholders: 
     
 Basic  47,244    45,479 
 Diluted  48,079    45,660 
       

Ormat Technologies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets
As of March 31, 2015 and December 31, 2014
(Unaudited)

 
    March 31,   December 31, 
   2015 2014
        
     (In thousands) 
  ASSETS 
  Current assets:       
   Cash and cash equivalents   $    70,724   $    40,230 
   Restricted cash, cash equivalents and marketable securities     115,530      93,248 
   Receivables:       
   Trade     56,300      48,609 
   Related entity    —     451 
   Other     9,732      10,141 
   Due from Parent    —     1,337 
   Inventories     17,286      16,930 
   Costs and estimated earnings in excess of billings on uncompleted contracts     7,426      27,793 
   Deferred income taxes     496      251 
   Prepaid expenses and other     29,566      34,884 
   Total current assets     307,060      273,874 
 Deposits and other     17,963      20,044 
 Deferred charges     37,301      37,567 
 Property, plant and equipment, net      1,535,757      1,437,637 
 Construction-in-process     230,037      296,722 
 Deferred financing and lease costs, net     27,369      27,057 
 Intangible assets, net     27,846      28,655 
   Total assets $   2,183,333  $   2,121,556 
  LIABILITIES AND EQUITY 
  Current liabilities:       
   Accounts payable and accrued expenses  $    83,676   $    88,276 
   Deferred income taxes     975      974 
   Short-term revolving credit lines with banks (full recourse)     30,600      20,300 
   Billings in excess of costs and estimated earnings on uncompleted contracts     57,861      24,724 
   Current portion of long-term debt:      
   Limited and non-recourse:      
   Senior secured notes      36,544      34,368 
   Other loans     17,995      17,995 
   Full recourse     17,203      19,116 
   Total current liabilities     244,854      205,753 
 Long-term debt, net of current portion:      
   Limited and non-recourse:      
   Senior secured notes     355,776      360,366 
   Other loans     260,125      264,625 
   Full recourse:      
   Senior unsecured bonds     250,212      250,289 
   Other loans     32,684      34,351 
 Unconsolidated investments     7,688      3,617 
 Liability associated with sale of tax benefits     33,685      39,021 
 Deferred lease income     59,815      60,560 
 Deferred income taxes     70,247      66,220 
 Liability for unrecognized tax benefits     7,190      7,511 
 Liabilities for severance pay     18,499      20,399 
 Asset retirement obligation     19,514      19,142 
 Other long-term liabilities     3,872      2,956 
   Total liabilities     1,364,161      1,334,810 
        
  Equity:       
   The Company's stockholders' equity:       
   Common stock     49      46 
   Additional paid-in capital     771,591      742,006 
   Retained earnings     47,673      41,539 
   Accumulated other comprehensive income     (11,971)     (8,668)
       807,342      774,923 
   Noncontrolling interest     11,830      11,823 
   Total equity     819,172      786,746 
   Total liabilities and equity  $    2,183,333   $    2,121,556 
        

Ormat Technologies, Inc. and Subsidiaries

Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information
For the Three-Month Period Ended March 31, 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) write-off of unsuccessful exploration activities,(ii) any mark-to-market gains or losses from accounting for derivatives, (iii) merger and acquisition transaction cost, (iv) stock-based compensation,. 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 three-month period ended March 31, 2015 and March 31, 2014:

 
    Three Months Ended March 31  
   2015 2014 
         
    (in thousands)  
 Net cash provided by operating activities  $    83,147   $    68,076  
 Adjusted for:       
 Interest expense, net (excluding amortization       
   of deferred financing costs)     15,972      19,176  
 Interest income     (9)     (111) 
 Income tax provision     5,459      6,320  
 Adjustments to reconcile net income or loss to net cash        
   provided by operating activities (excluding        
   depreciation and amortization).     (47,220)     (22,870) 
 EBITDA $   57,349   $   70,591   
         
 Mark to market on derivative instruments which represents swap contracts on natural gas and oil prices     4,129      225  
 Stock-based compensation     1,127      1,440  
 Share exchange transaction costs     3,400     —  
 Write-off of unsuccessful exploration activities     174     —  
 Mark to market on derivatives which represents currency forward contracts      (860)     1,177  
 Adjusted EBITDA $   65,319    $    73,433   
 Net cash used in investing activities $   (47,257)  $    (35,323) 
 Net cash used in  financing activities $   (5,396)  $    (42,180) 
 
         
         
    Three Months Ended March 31  
   2015 2014 
         
    (in thousands)  
 Net income  $    10,267   $    21,789  
 Adjusted for:       
 Interest expense, net (including amortization       
   of deferred financing costs)     17,819      20,407  
 Income tax provision      5,459      6,320  
 Depreciation and amortization     23,804      22,075  
 EBITDA $   57,349   $   70,591   
         
 Mark to market on derivative instruments which represents swap contracts on natural gas and oil prices     4,129      225  
 Stock-based compensation     1,127      1,440  
 Share exchange transaction costs     3,400     —  
 Write-off of unsuccessful exploration activities     174     —  
 Mark to market on derivatives which represents currency forward contracts      (860)     1,177  
 Adjusted EBITDA $   65,319    $    73,433   
 

 

 

 


            

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