Ormat Technologies Reports 2013 Third Quarter Results

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Electricity revenues increased 14.7% to $89.0 million
Company raises revenue guidance for 2013

RENO, Nev., Nov. 5, 2013 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE:ORA) today announced financial results for the third quarter of 2013.

Quarterly financial highlights compared to the same quarter last year:

  • Electricity revenue increased by 14.7% to $89.0 million;
  • Gross margin grew 75 basis points to 30.4%;
  • Operating income reached $29.8 million compared to $12.1 million;
  • Net income attributable to the Company's shareholders was $13.0 million or $0.28 per share (diluted), compared to a net loss of $0.6 million or $0.01 per share (diluted);
  • Adjusted EBITDA grew 25.0% to $60.3 million; and
  • Declared dividend of $0.04 per share

Operational highlights and recent developments:

  • Increased electricity generation by 5.0% to 985,531 MWh, driven by new capacity coming on line at Olkaria III Plant 2 in Kenya, and increased generation at the McGuiness Hills plant;
  • Successfully completed the world's largest binary geothermal plant, the 100 MW Ngatamariki in New Zealand, under a $142.0 million EPC contract;
  • Secured a 10-year Power Purchase Agreement (PPA) with the Southern California Public Power Authority to supply power from the Heber 1 geothermal plant in California beginning December 16, 2015. The new PPA replaces the Standard Offer Contract No. 4 (SO#4), which is tied to natural gas prices, with fixed-price contract at a higher rate;
  • Entered into a joint development agreement with eBay to develop a 5 MW recovered energy generation power plant in Utah to supply cleaner electricity to eBay's new data center; and
  • Signed an agreement for a greenfield development of the Hu'u Dompu geothermal prospect in Indonesia

Dita Bronicki, Chief Executive Officer of Ormat, stated: "During the third quarter, we continued to deliver strong financial and operational results. In the electricity segment, we benefitted from the first full quarter of commercial operation of the Olkaria III Plant 2 in Kenya, which helped drive a 5.0% increase in generation. In addition, gross margin increased in the electricity segment to 31.1% due to the contribution of the new plants added to our portfolio in the past two years and to our continued focus on improving operational efficiencies at our existing plants. Looking ahead, we are poised to continue these positive trends and we aim to bring new capacity on line and replace legacy PPAs with more favorable agreements."

"A substantial milestone in the product segment is the completion of the 100MW Ngatamariki geothermal power plant. The completion of the plant in less than 24 months from the award with generation at 104% of its designed output is a further testament to our execution capability and the suitability of our technology to large geothermal facilities. Looking forward, our backlog remains strong as we secured new orders in the third quarter 2013 and stands at approximately $173.0 million with more than $120.0 million expected to be recognized in 2014."

Ms. Bronicki concluded, "We are raising our 2013 guidance and expect total revenue to be between $525.0 million to $535.0 million with electricity segment revenues to be approximately $330.0 million and product segment revenues to be between $195.0 million and $205.0 million."

Financial Summary

For the three months ended September 30, 2013, total revenues reached $130.7 million from $132.3 million in the third quarter of 2012, a decrease of 1.2%. Electricity revenues increased 14.7% to $89.0 million from $77.6 million in the three months ended September 30, 2012. Product revenues decreased 23.6% to $41.8 million from $54.7 million in the three months ended September 30, 2012.

Operating income for the three months ended September 30, 2013 was $29.8 million, compared to $12.1 million for the three months ended September 30, 2012. Third quarter 2012 results included a $7.3 million impairment loss related to the OREG 4 recovered energy generation power plant.

For the three months ended September 30, 2013, the Company reported net income attributable to the Company's shareholders of $13.0 million or $0.28 per share (diluted) compared to net loss of $0.6 million or $0.01 per share (diluted) for the three months ended September 30, 2012.

Adjusted EBITDA for the three months ended September 30, 2013 was $60.3 million, compared to $48.2 million for the three months ended September 30, 2012, an increase of 25.0%. The reconciliation of GAAP net cash provided by (used in) 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 $32.2 million in the nine months ended September 30, 2013, compared to $62.4 million in the nine months ended September 30, 2012.

On November 5, 2013, ORMAT's Board of Directors approved a payment of a quarterly dividend of $0.04 per share pursuant to the Company's dividend policy, which targets an annual payoff ratio of at least 20% of the Company's net income. The dividend will be paid on December 4, 2013 to shareholders of record as of closing of business on November 20, 2013.

As of September 30, 2013 cash, cash equivalents were $35.4 million. In addition, as of September 30, 2013, the Company had $145.2 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 9:00 A.M. EST on Wednesday, November 6, 2013. 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 82 U.S. patents, Ormat's power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has over 500 employees in the United States and about 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 supplied to utilities and developers worldwide, totaling approximately 1600 MW of gross capacity. Ormat's current generating portfolio of 595 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 March 11, 2013.

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 Periods Ended September 30, 2013 and 2012
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2013 2012 2013 2012
(In thousands, except (In thousands, except
per share data) per share data)
Revenues:
Electricity $88,994 $77,612 $245,005 $238,837
Product 41,755 54,685 157,329 149,616
Total revenues 130,749 132,297 402,334 388,453
Cost of revenues:
Electricity 61,356 59,924 175,085 172,785
Product 29,637 42,130 110,335 108,575
Total cost of revenues 90,993 102,054 285,420 281,360
Gross margin 39,756 30,243 116,914 107,093
Operating expenses:
Research and development expenses 838 1,436 3,446 3,948
Selling and marketing expenses 2,575 3,346 17,861 12,752
General and administrative expenses 6,546 6,132 20,264 20,163
Impairment charge 7,264 -- 7,264
Write-off of unsuccessful exploration activities -- -- -- 1,919
Operating income 29,797 12,065 75,343 61,047
Other income (expense):
Interest income 742 280 870 1,004
Interest expense, net (18,459) (15,400) (51,826) (44,541)
Foreign currency translation and transaction gains (losses) 1,258 615 3,844 (1,127)
Income attributable to sale of tax benefits 5,027 2,311 14,342 7,417
Other non-operating expense, net 137 215 1,583 344
Income before income taxes and equity in losses of investees 18,502 86 44,156 24,144
* Income tax provision (5,201) (1,088) (15,028) (10,148)
Equity in losses of investees, net (158) (1,245) (149) (1,542)
Income (loss) from continuing operations 13,143 (2,247) 28,979 12,454
Discontinued operations:
Income from discontinued operations (including gain on disposal of $3,646, $0, $3,646 and $0, respectively) -- 2,123 5,311 4,875
Income tax provision -- (391) (614) (1,097)
Total income from discontinued operations -- 1,732 4,697 3,778
* Net income (loss) 13,143 (515) 33,676 16,232
Net income attributable to noncontrolling interest (193) (67) (600) (278)
Net income (loss) attributable to the Company's stockholders $12,950 $(582) $33,076 $15,954
Earnings (loss) per share attributable to the Company's stockholders:
Basic:
Income (loss) from continuing operations $0.29 $(0.05) $0.62 $0.27
Discontinued operations -- 0.04 0.10 0.08
Net Income (loss) $0.29 $(0.01) $0.72 $0.35
Diluted:
Income (loss) from continuing operations $0.28 $(0.05) $0.62 $0.27
Discontinued operations -- 0.04 0.10 0.08
Net Income (loss) $0.28 $(0.01) $0.72 $0.35
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:
Basic 45,438 45,431 45,433 45,431
Diluted 45,494 45,431 45,454 45,438
* The "income tax provision" for the nine months ended September 30 2013 includes a correction of $3.1 million (increase) for the three-month period ended March 31, 2013 previously reported by the Company, and a corresponding reduction in net income.
Ormat Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of September 30, 2013 and December 31, 2012
(Unaudited)
September 30, December 31,
2013 2012
As Revised
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 35,435 $ 66,628
Short-term bank deposit -- 3,010
Restricted cash, cash equivalents and marketable securities 84,197 76,537
Receivables:
Trade 60,526 55,680
Related entity 442 373
Other 24,643 8,632
Due from Parent 373 311
Inventories 20,396 20,669
Costs and estimated earnings in excess of billings on uncompleted contracts 36,201 9,613
Deferred income taxes 162 637
Prepaid expenses and other 36,724 34,144
Total current assets 299,099 276,234
Unconsolidated investments 5,419 2,591
Deposits and other 31,110 36,187
Deferred income taxes 15,966 21,283
Deferred charges 34,635 35,351
Property, plant and equipment, net 1,383,353 1,252,873
Construction-in-process 335,915 396,141
Deferred financing and lease costs, net 29,806 31,371
Intangible assets, net 33,032 35,492
Total assets $ 2,168,335 $ 2,087,523
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 83,751 $ 98,001
Deferred income taxes 20,428 20,392
Billings in excess of costs and estimated earnings on uncompleted contracts 12,708 25,408
Current portion of long-term debt:
Limited and non-recourse:
Senior secured notes 30,059 28,231
Other loans 18,288 11,453
Full recourse 28,875 28,649
Total current liabilities 194,109 212,134
Long-term debt, net of current portion:
Limited and non-recourse:
Senior secured notes 286,786 312,926
Other loans 272,710 242,815
Full recourse:
Senior unsecured bonds 250,674 250,904
Other loans 64,414 82,344
Revolving credit lines with banks (full recourse) 123,288 73,606
Liability associated with sale of tax benefits 65,402 51,126
Deferred lease income 64,217 66,398
Deferred income taxes 52,233 45,059
Liability for unrecognized tax benefits 8,878 7,280
Liabilities for severance pay 23,642 22,887
Asset retirement obligation 20,436 19,289
Other long-term liabilities 4,576 5,148
Total liabilities 1,431,365 1,391,916
Equity:
The Company's stockholders' equity:
Common stock 46 46
Additional paid-in capital 737,125 732,140
Retained earnings (13,066) (44,326)
Accumulated other comprehensive income 527 651
724,632 688,511
Noncontrolling interest 12,338 7,096
Total equity 736,970 695,607
Total liabilities and equity $ 2,168,335 $ 2,087,523
Ormat Technologies, Inc. and Subsidiaries
Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information
For the Nine and Three-Month Periods Ended September 30, 2013 and 2012
(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 (used in) operating activities and net income to EBITDA and Adjusted EBITDA for the nine and three-month periods ended September 30, 2013 and 2012:

Three Months Ended September 30 Nine Months Ended September 30
2013 2012 2013 2012
(in thousands) (in thousands)
Net cash provided by (used in) operating activities $ 12,276 $ (9,695) $ 32,226 $ 62,384
Adjusted for:
Interest expense, net (excluding amortization of deferred financing costs) 17,405 14,202 47,367 40,931
Interest income (742) (280) (870) (1,004)
Income tax provision 5,201 1,479 15,642 11,245
Adjustments to reconcile net income or loss to net cash provided by operating activities (excluding depreciation and amortization) 26,115 35,236 72,361 29,661
EBITDA $ 60,255 $ 40,942 $ 166,726 $ 143,217
Impairment charge -- 7,264 -- 7,264
Termination fee -- -- 8,979 --
Adjusted EBITDA $ 60,255 $ 48,206 $ 175,705 $ 150,481
Net cash provided by (used in) investing activities $ (25,029) $ 13,417 $ (128,198) $ (53,611)
Net cash provided by (used in) financing activities $ 19,295 $ (32,882) $ 64,779 $ (71,135)
Three Months Ended September 30 Nine Months Ended September 30
2013 2012 2013 2012
(in thousands) (in thousands)
Net income (loss) $ 13,143 $ (515) $ 33,676 $ 16,232
Adjusted for:
Interest expense, net (including amortization of deferred financing costs) 17,717 15,120 50,956 43,537
Income tax provision 5,201 1,479 15,642 11,245
Depreciation and amortization 24,194 24,858 66,452 72,203
EBITDA $ 60,255 $ 40,942 $ 166,726 $ 143,217
Impairment charge -- 7,264 -- 7,264
Termination fee -- -- 8,979 --
Adjusted EBITDA $ 60,255 $ 48,206 $ 175,705 $ 150,481

CONTACT: Ormat Technologies Contact: Dita Bronicki CEO 775-356-9029 dbronicki@ormat.com Investor Relations Contact: Todd Fromer/Rob Fink KCSA Strategic Communications 212-896-1215 (Todd) /212-896-1206 (Rob) tfromer@kcsa.com / rfink@kcsa.com

Source:Ormat Technologies, Inc.