Ormat Technologies Reports Second Quarter 2020 Financial Results

| Source: Ormat Technologies, Inc. Ormat Technologies, Inc.

COMPANY IMPROVED ITS MARGINS IN ALL OPERATING SEGMENTS, LED BY THE STRENGTH AND RESILIENCY OF OUR ELECTRICITY SEGMENT

MANAGEMENT NARROWS THE UPPER-END OF THE GUIDANCE

RENO, Nev., Aug. 04, 2020 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE: ORA) today announced financial results for the second quarter ended June 30, 2020.

FINANCIAL RESULTS

($ MILLIONS, EXCEPT PER SHARE AMOUNTS)Q2 2020Q2 2019CHANGE (%)
Revenues   
Electricity128.7   129.1   (0.3 )%
Product43.7   52.0   (16.0)%
Energy Storage and Management Services2.5   3.0   (15.0)%
Total Revenues174.9   184.1   (5.0)%
    
Gross Profit  65.4  65.10.4  %
Gross margin (%)   
Electricity44.1  %42.8  % 
Product20.6  %20.6  % 
Energy Storage & Management Services(13.6)%(29.5)% 
Gross margin (%)37.4  %35.4  % 
    
Operating income48.1   46.9   2.5  %
Net income attributable to the Company’s stockholders23.0   33.9   (32.1)%
Diluted EPS0.45   0.66   (32.8)%
Adjusted Net income attributable to the Company’s stockholders123.0   20.6   11.7  %
Adjusted diluted EPS10.45   0.40   11.1  %
Adjusted EBITDA197.9   94.9   3.2  %

1 Reconciliation is set forth below in this release

“This was another solid quarter of strong execution led by the improved profitably of our Electricity segment,” commented Doron Blachar, Chief Executive Officer. “I am extremely proud of how our team is operating through  the challenging COVID-19 environment and how we were able to successfully complete the enhancement of our 19MW Steamboat Hills complex on time and make significant progress to bring Puna back online  by the end of the year.”

“We continue with our efforts to minimize the COVID-19 implication on our business, and while we did not experience material impact on our results so far, the continued outbreak of the COVID-19 may affect us more  in the future. Specifically, awarding contracts for significant projects in the Products segment is currently delayed. Nevertheless, our Product segment is currently on track to meet its revenue forecast for the full-year 2020,” added Mr. Blachar.

“Since March 31, 2020,” Mr. Blachar continues, “we have increased our liquidity by over $400 million through the issuance of long-term debt that gives us the flexibility to allocate our resources and manufacturing capabilities to support our organic growth. We are increasing and focusing our efforts on exploring and developing internal projects with a target to increase our geothermal portfolio in the US and globally by 2023 and beyond. This quarter reinforces our confidence that Ormat is on the right path to continue its growth trajectory by relying on Ormat’s integrated business model, our geographic and revenue diversity, and our excellent team.”

FINANCIAL HIGHLIGHTS FOR THE SECOND QUARTER OF 2020

  • Total revenues of $174.9 million, down 5.0% compared to Q2 2019;
    • Electricity segment revenues of $128.7 million compared to $129.1 million in Q2 2019;
    • Product segment revenues of $43.7 million, down 16.0% compared to Q2 2019;
    • Energy Storage & Management Services segment revenues of $2.5 million compared to $3.0 million in Q2 2019;
  • Total gross margin was 37.4%, compared to 35.4% in Q2 2019;
    • Electricity segment gross margin was 44.1% compared to 42.8% for Q2 2019;
    • The Company recorded business interruption insurance income of $3.3 million related to the 2018 volcanic eruption in Hawaii, which netted to zero Puna’s cost of revenues and reduced general and administrative costs by $0.6 million; In the second quarter 2019, the Company recorded business interruption insurance income of $6.8 million that resulted in a positive gross margin of $1.8 million.
  • Operating income increased 2.5% due to better gross margins and lower operating expenses;
  • Net income was $25.3 million compared to $36.2 million in Q2 2019; Q2 2019 net income included $13.3 million related to a one-time Tax benefit;
  • Net income attributable to the Company's stockholders was $23.0 million, or $0.45 per diluted share, compared to $33.9 million, or $0.66 per diluted share in Q2 2019; adjusted net income attributable to the Company's stockholders1 for Q2 2019 was $20.6 million  or $0.40 per diluted share;
  • Adjusted EBITDA1 increased 3.2% to $97.9 million, up from $94.9 million in Q2 2019;
  • Product segment backlog was approximately $66 million as of August 3, 2020; and
  • The Company declared a quarterly dividend of $0.11 per share for the second quarter of 2020.

1 Reconciliation is set forth below in this release

RECENT DEVELOPMENTS

  • As of August 2020, Ormat continue its efforts to recommission its Puna power plant. The Company obtained all necessary permits to start operation, completed the construction of the substation and connected a new production well to the power plant. We expect to resume commercial operation during the fourth quarter with gradual increase of generation to 29MW by the end of the year, subject to on time completion of the transmission line by HELCO and additional field recovery work.
  • In July 2020, we completed the acquisition of the 20MW/80MWh Pomona energy storage asset in California from Alta Gas for a total net consideration of $43.9 million. The facility is our first battery storage asset in operation in California, increasing our existing operating portfolio to 73MW/136MWh and adding to our battery storage assets in New Jersey, New England and Texas. 
  • In July, Ormat issued approximately $290.0 million of corporate bonds at an effective fixed interest rate of 4.34%. In April and May the Company has issued approximately $130 million of new corporate debt.
  • In June, Ormat completed the enhancement of its Steamboat Hills complex and increased its generating capacity by 19MW to a total of 84MW.

2020 GUIDANCE

Mr. Blachar added, “We are narrowing the upper-end of the guidance for full-year 2020 and expect total revenues of between $710 million and $725 million with Electricity segment revenues between $550 million and $560 million. We expect Product segment revenues of between $140 million and $150 million. Revenues from Energy Storage and Management Services segment are expected to be between $15 million and $17 million. We expect 2020 Adjusted EBITDA of between $400 million and $410 million for the full year. We expect annual Adjusted EBITDA attributable to minority interest to be approximately $27 million.”

The Company provides a reconciliation of Adjusted EBITDA, a Non-GAAP financial measure for the three months ended June 30, 2020. 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 tax expense, and other non-cash expenses and adjusting items that are excluded from the calculation of Adjusted EBITDA.

SECOND QUARTER 2020 FINANCIAL RESULTS (COMPARING THE QUARTER ENDED JUNE 30, 2020 TO THE QUARTER ENDED JUNE 30, 2019)

Total revenues for the quarter were $174.9 million, down 5.0% compared to the same quarter last year. Electricity segment revenues of $128.7 million were down slightly compared to $129.1 million last year. Product segment revenues decreased 16.0% to $43.7 million, down from $52.0 million in the same quarter last year due lower contract backlog. Energy Storage and Management Services segment revenues were $2.5 million compared to $3.0 million in the same quarter last year.

The Company recorded $3.3 million of business interruption insurance income related to the 2018 volcanic eruption, which disrupted operations at its Puna plant. Consistent with generally accepted accounting practices, $2.7 million was allocated to offset costs of revenue at Puna, which netted to zero, and the remaining $0.6 million was allocated to reduce general and administrative expenses.

General and administrative expenses were $11.3 million, or 6.5% of total revenues, compared to $14.2 million, or 7.7% of total revenues. The decrease was primarily attributable to a decrease in professional fees, business interruption insurance income related to Puna and gain of $1.3 million from sale of concession.

Net income attributable to the Company’s stockholders was $23.0 million, or $0.45 per diluted share, compared to $33.9 million, or $0.66 per diluted share. In the second quarter 2019 net income attributable to the Company’s stockholders included $13.3 million of one-time Tax benefit. Adjusted net income attributable to the Company's stockholders1 in the second quarter 2019 was 20.6 million, or $0.40 per diluted share.

Adjusted EBITDA1 was $97.9 million compared to $94.9 million last year.

1 Reconciliation is set forth below in this release

DIVIDEND

On August 4, 2020, 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 September 1, 2020 to stockholders of record as of the close of business on August 18, 2020.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Wednesday, August 5th, 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: 10145766

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 63 U.S. patents, Ormat’s power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 578 employees in the United States and 830 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 3,000 MW of gross capacity. Ormat’s current 933 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 2, 2020 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 Six-Month Periods Ended June 30, 2020 and 2019

 Three Months Ended June 30,Six-Months Ended June 30,
 2020201920202019
 (Dollars in thousands, except per share data)
Revenues:    
Electricity128,685   129,079   271,541   271,987   
Product43,701   52,030   91,112   104,158   
Energy storage and management services2,514   2,956   4,360   6,958   
  Total revenues174,900   184,065   367,013   383,103   
Cost of revenues:    
Electricity71,950   73,775   143,318   151,318   
Product 34,709   41,316   71,687   83,422   
Energy storage and management services2,855   3,827   4,804   9,037   
  Total cost of revenues109,514   118,918   219,809   243,777   
  Gross profit65,386   65,147   147,204   139,326   
Operating expenses:    
Research and development expenses1,172   810   2,791   1,710   
Selling and marketing expenses 4,854   3,276   9,648   7,141   
General and administrative expenses 11,285   14,181   25,633   29,870   
  Operating income48,075   46,880   100,605   100,605   
Other income (expense):    
Interest income 441   420   843   713   
Interest expense, net (19,785) (21,517) (37,058) (42,740) 
Derivatives and foreign currency transaction gains (losses) 671   19   1,064   491   
Income attributable to sale of tax benefits 5,672   4,637   9,804   12,401   
Other non-operating income (expense), net 304   1,027   382   1,118   
  Income from operations before income tax and equity in earnings (losses) of investees 35,378   31,466   84,167   72,588   
Income tax (provision) benefit(11,766) 3,529   (29,914) (10,510) 
Equity in earnings (losses) of investees, net 1,658   1,202   923   2,249   
Net income25,270   36,197   55,176   64,327   
Discontinued operations:     
Net income25,270   36,197   55,176   64,327
Net income attributable to noncontrolling interest (2,224) (2,259) (6,097) (4,443) 
Net income attributable to the Company's stockholders 23,046   33,938   49,079   59,884   
Earnings per share attributable to the Company's stockholders:    
Basic:    
  Net income0.45   0.67   0.96   1.18   
Diluted:    
  Net income0.45   0.66   0.95   1.17   
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:    
  Basic51,043   50,800   51,040   50,757   
  Diluted 51,362   51,094   51,448   51,058   

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
For the Periods Ended June 30, 2020 and December 31, 2019

 June 30, 2020 December 31, 2019
ASSETS
Current assets:   
Cash and cash equivalents 173,718   71,173  
Restricted cash and cash equivalents 76,116   81,937  
Receivables:   
  Trade 179,757   154,525  
  Other 18,121   22,048  
Inventories38,932   34,949  
Costs and estimated earnings in excess of billings on uncompleted contracts 19,477   38,365  
Prepaid expenses and other 10,948   12,667  
  Total current assets517,069   415,664  
Investment in unconsolidated companies 84,414   81,140  
Deposits and other 37,278   38,284  
Deferred income taxes116,758   129,510  
Property, plant and equipment, net2,038,038   1,971,415  
Construction-in-process394,123   376,555  
Operating leases right of use17,638   17,405  
Finance leases right of use 13,280   14,161  
Intangible assets, net179,659   186,220  
Goodwill20,120   20,140  
Total assets3,418,377   3,250,494  
    
LIABILITIES AND EQUITY
Current liabilities:   
Accounts payable and accrued expenses 149,591   141,857  
Short term revolving credit lines with banks (full recourse) 100,057    40,550   
Commercial paper 3,775    50,000   
Billings in excess of costs and estimated earnings on uncompleted contracts 5,599    2,755   
Current portion of long-term debt:   
  Senior secured notes28,544   24,473  
  Other loans 34,341   34,458  
Full recourse 76,572   76,572  
Operating lease liabilities 3,016   2,743   
Finance lease liabilities3,151    3,068   
   Total current liabilities 404,646    376,476   
Long-term debt, net of current portion:   
  Limited and non-recourse:   
  Senior secured notes 325,714   339,336  
  Other loans 301,318   317,395  
Full recourse:—    —   
  Senior unsecured bonds415,751    286,453   
  Other loans 64,150    68,747   
Operating lease liabilities14,201    14,008   
Finance lease liabilities10,523    11,209   
Liability associated with sale of tax benefits 118,072   123,468  
Deferred income taxes104,013   97,126  
Liability for unrecognized tax benefits 15,309   14,643  
Liabilities for severance pay 18,835   18,751  
Asset retirement obligation 51,414   50,183  
Other long-term liabilities7,814   8,039  
Total liabilities 1,851,760   1,725,834  
    
Commitments and contingencies   
    
Redeemable noncontrolling interest 9,806    9,250   
    
Equity:   
The Company's stockholders' equity:   
  Common stock51   51  
  Additional paid-in capital917,403   913,150  
  Retained earnings 524,864   487,873  
  Accumulated other comprehensive income (loss) (13,921)  (8,654) 
  Total stockholders' equity attributable to Company's stockholders1,428,397    1,392,420   
Noncontrolling interest 128,414    122,990   
  Total equity1,556,811    1,515,410   
  Total liabilities, redeemable noncontrolling interest and equity 3,418,377    3,250,494   


ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Reconciliation of EBITDA and Adjusted EBITDA
For the Three and Six-Month Periods Ended June 30, 2020 and 2019

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 or loss from extinguishment of liabilities, (viii) gain or loss on sale of subsidiary and property, plant and equipment and (ix) other unusual or non-recurring items. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the United States, or U.S. GAAP, 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 U.S. GAAP. We use EBITDA and Adjusted EBITDA as a performance metric because it is a metric used by our Board of Directors and senior management in evaluating our financial performance. 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 six - month periods ended June 30, 2020 and 2019.

 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
 (Dollars in thousands)(Dollars in thousands)
Net income25,270   36,197   55,176   64,327   
Adjusted for:    
Interest expense, net (including amortization of deferred financing costs)19,344   21,097   36,215   42,027   
Income tax provision (benefit)11,766   (3,529) 29,914   10,510   
Adjustment to investment in an unconsolidated company: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla3,199   2,579   5,876   5,240   
Depreciation and amortization36,812   35,751   72,100   70,617   
EBITDA 96,391   92,095   199,281   192,721   
Mark-to-market gains or losses from accounting for derivative (1,482) (370) (2,043) (1,579) 
Stock-based compensation 2,264   2,643   4,253   5,003   
Merger and acquisition transaction costs 618   500   1,158   500   
Settlement expenses 89   —   1,277   —   
Adjusted EBITDA 97,880   94,868   203,926   196,645   


ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Reconciliation of Adjusted Net Income attributable to the Company's stockholders
For the Three-Month Period Ended June 30, 2020 and 2019

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 ended June 30, 2020 and 2019.

 Three Months Ended June 30,
 20202019
   
Net income attributable to the Company's stockholders23.0  33.9   
One-time tax items—  (13.3) 
Adjusted Net income attributable to the Company's stockholders 23.0  20.6   
Weighted average number of shares diluted used in computation of earnings per share attributable to the Company's stockholders: 51.4  51.1   
Diluted Adjusted EPS 0.45  0.40   
   


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

 


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