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Ormat Technologies Reports 2015 Third Quarter Results

Total Revenues increase 16.1% to a quarterly record of $162.9 million;
Adjusted EBITDA increased 14.3% to a quarterly record of $79.0 million;
Company Increases Full-Year 2015 Total Revenue and Adjusted EBITDA Guidance

RENO, Nev., Nov. 03, 2015 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE:ORA) today announced financial results for the third quarter ended September 30, 2015.

Third Quarter Highlights and Recent Developments:

  • Total revenues increased 16.1% to a quarterly record of $162.9 million, compared to $140.2 million in the third quarter of 2014;
  • Product segment revenues increased 73.9% to $65.6 million, compared to $37.7 million in the third quarter of 2014;
  • Electricity revenues of $97.2 million, compared to $102.5 million in the third quarter of 2014; reduction is mainly due to lower oil and natural gas prices offset by higher generation from new projects that came online;
  • The Company recorded income tax benefit that includes deferred tax asset and related expenses of $48.7 million relating to a new tax law in Kenya which extended the period of utilizing investment deductions for the Olkaria 3 power plant from five years to 10 years;
  • Total book equity exceeded $1 billion;
  • Net income attributable to the company's shareholders of $72.1 million or $1.41 per diluted share; excluding the deferred tax asset and related expenses, net income was $23.4 million or $0.46 per diluted share compares to $16.5 million or $0.36 per diluted share in the third quarter of 2014;
  • Adjusted EBITDA increased 14.3% to a quarterly record of $79.0 million, compared to $69.1 million in the third quarter of 2014;
  • Declared a quarterly dividend of $0.06 per share for the third quarter of 2015;
  • Began commercial operation of Don A. Campbell Phase 2 geothermal power plant in Nevada ahead of schedule; and
  • Signed a collaboration agreement with Toshiba Corporation to develop strategic opportunities for collaboration in the areas of geothermal power generation systems and related equipment.

Isaac Angel, chief executive officer of Ormat, stated, “This was a very strong quarter for Ormat, as our balanced business model enabled us to deliver 16% revenue growth and a 14% improvement in Adjusted EBITDA, overcoming headwinds related to oil and natural gas prices impacting our electricity segment. Our Product Segment delivered another strong quarter as we benefited from new contracts, including the EPC contract related to a geothermal project in Chile as well as progress in the Sarulla project in Indonesia.

During the quarter our Don A. Campbell Phase 2 plant reached commercial operation, just 10 months after we broke ground and six months ahead of schedule, doubling the generating capacity of the geothermal complex. This expansion, along with the contribution of our McGinness Hills power plant, drove a 10% increase in power generation. We continue to improve construction lead time and expect an earlier completion of plant 4 at the Olkaria 3 complex, which was initially expected in mid-2016 and currently planned to be completed in the first quarter of 2016.”

“We recently announced our collaboration agreement with Toshiba, the world’s leading supplier of geothermal steam turbines, to develop strategic opportunities for collaboration in the areas of geothermal power generation systems and related equipment,” continued Mr. Angel. “We view this agreement as the next major step in our stated goal to expand our presence in the geothermal space and ultimately target the larger renewable energy market. This collaboration will expand our addressable market, create incremental growth opportunities and further strengthen our leadership position.”

Guidance

Mr. Angel added, “We increase and narrow the range of our 2015 total revenue guidance and increase the adjusted EBITDA guidance. We expect total revenue of between $570.0 million and 585.0 million, though the composition to be more heavily weighted towards our product segment. We expect to see stronger performance of our product segment and expect revenue to be between $195.0 million and $205.0 million. For the electricity segment, we expect revenues to be between $375.0 million and $380.0 million. The Electricity segment revenue guidance assumes the continued impact of low oil and natural gas prices, which translates to approximately $28 million reduction in revenues compared to last year. We expect 2015 Adjusted EBITDA guidance of $282.0 to $292.0 million for the full year, which is also impacted by current oil and natural gas prices. We expect annual adjusted EBITDA attributable to minority’s interest to be approximately $13.0 million.”

Third Quarter Financial Summary

Total revenues for the three months ended September 30, 2015 were $162.9 million, an increase of 16.1% compared to $140.2 million for the three months ended September 30, 2014. Electricity revenues were $97.2 million for the quarter compared to $102.5 million in the third quarter last year, with the decrease primarily related to lower oil and gas prices. Product revenues increased 73.9% to $65.6 million for the third quarter of 2015, from $37.7 million in the third quarter last year.

The decrease in the Electricity segment revenue was primarily attributable to lower energy rates under some of the PPAs that are impacted by oil and natural gas prices and a reduction in net gain on derivative contracts on oil and natural gas prices from $4.0 million in the three months ended September 30, 2014 to $0.4 million in the three months ended September 30, 2015. The decrease was partially offset by operations of the second phase of the McGinness Hills power plant in Nevada, which commenced commercial operation in February 2015 and drove overall generation increase to 10.0% quarter over quarter.

Income tax benefit for the three months ended September 30, 2015 was $38.2 million, compared to income tax provision of $6.4 million for the three months ended September 30, 2014. Income tax benefit for the three months ended September 30, 2015, includes a $48.7 million deferred tax asset and related expenses relating to the release of the valuation allowance for the additional 50% investment deduction for our Olkaria 3 power plant in Kenya based on amendments to the Kenya Income Tax Act that came into effect on September 11, 2015 and which extended the period to utilize such investment deduction from five years to ten years.

Ormat reported net income attributable to the company’s shareholders of $72.1 million, inclusive of the above deferred tax asset and related expenses, or $1.41 per diluted share in the third quarter of 2015 compared to $16.5 million or $0.36 per diluted share for the third quarter of 2014. Excluding the deferred tax asset and related expenses, net income attributable to the company’s shareholders was $23.4 million or $0.46 per diluted share compared to $16.5 million or $0.36 per diluted share in the third quarter of 2014.

Adjusted EBITDA for the three months ended September 30, 2015 was $79.0 million, compared to $69.1 million for the three months ended September 30, 2014 an increase of 14.3%. The reconciliation of GAAP net cash provided by operating activities and net income to EBITDA and Adjusted EBITDA and additional cash flow information is set forth below in this release.

On November 3, 2015, ORMAT’s Board of Directors approved a payment of a quarterly dividend of $0.06 per share. The dividend will be paid on December 2, 2015 to shareholders of record as of the close of business on November 18, 2015.

Webcast Conference Details

Ormat will host a listen-only webcast to discuss its financial results and other matters discussed in this press release at 10 a.m. ET on Wednesday, November 4, 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 Free1-855-669-9657
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
Replay Access Code: 10074547

About Ormat Technologies

With over five 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), 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 over 2,000 MW of gross capacity. Ormat’s current 666 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 Nine and Three-Month Period Ended September 30, 2015 and 2014
(Unaudited)

Three Months Ended
September 30
Nine Months Ended
September 30
2015 2014 2015 2014
(In thousands, except per
share data)
(In thousands, except per
share data)
Revenues:
Electricity$ 97,245 $ 102,506 $ 278,124 $ 289,015
Product 65,607 37,736 145,446 121,266
Total revenues 162,852 140,242 423,570 410,281
Cost of revenues:
Electricity 61,501 61,727 179,604 186,083
Product 42,019 23,040 89,826 75,307
Total cost of revenues 103,520 84,767 269,430 261,390
Gross margin 59,332 55,475 154,140 148,891
Operating expenses:
Research and development expenses (income) 335 250 1,112 395
Selling and marketing expenses 4,383 4,258 12,099 10,853
General and administrative expenses 7,950 7,179 25,597 20,847
Write-off of unsuccessful exploration activities 185 359 8,107
Operating income 46,479 43,788 114,973 108,689
Other income (expense):
Interest income 53 35 106 236
Interest expense, net (17,748) (22,494) (54,435) (65,084)
Foreign currency translation and transaction gains (losses) 1,296 (2,946) (641) (3,639)
Income attributable to sale of tax benefits 8,634 5,487 18,917 18,334
Gain from sale of property, plant and equipment 7,628
Other non-operating income (expense), net (131) 243 (1,523) 649
Income before income taxes and equity in
losses of investees 38,583 24,113 77,397 66,813
Income tax provision 38,211 (6,444) 26,696 (17,731)
Equity in losses of investees, net (3,133) (899) (4,892) (1,210)
Net income 73,661 16,770 99,201 47,872
Net income attributable to noncontrolling interest (1,522) (256) (2,616) (670)
Net income attributable to the Company's stockholders $ 72,139 $ 16,514 $ 96,585 $ 47,202
Earnings per share attributable to the Company's stockholders - Basic and diluted:
Basic:
Net Income (loss) $ 1.47 $ 0.36 $ 2.00 $ 1.04
Diluted:
Net Income $ 1.41 $ 0.36 $ 1.93 $ 1.03
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:
Basic 49,023 45,690 48,388 45,594
Diluted 51,113 46,102 50,011 45,917

Ormat Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of September 30, 2015 and December 31, 2014
(Unaudited)

September 30, December 31,
2015 2014
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 171,541 $ 40,230
Restricted cash, cash equivalents and marketable securities 70,523 93,248
Receivables:
Trade 52,313 48,609
Related entity 451
Other 9,946 10,141
Due from Parent 1,337
Inventories 16,595 16,930
Costs and estimated earnings in excess of billings on uncompleted contracts 14,459 27,793
Deferred income taxes 1,344 251
Prepaid expenses and other 34,011 34,884
Total current assets 370,732 273,874
Deposits and other 17,506 20,044
Deferred charges 36,235 37,567
Property, plant and equipment, net 1,580,379 1,437,637
Construction-in-process 230,561 296,722
Deferred financing and lease costs, net 24,718 27,057
Intangible assets, net 26,202 28,655
Total assets $ 2,286,333 $ 2,121,556
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 85,226 $ 88,276
Deferred income taxes 975 974
Short-term revolving credit lines with banks (full recourse) 20,300
Billings in excess of costs and estimated earnings on uncompleted contracts 22,616 24,724
Current portion of long-term debt:
Limited and non-recourse:
Senior secured notes 33,197 34,368
Other loans 21,495 17,995
Full recourse 17,228 19,116
Total current liabilities 180,737 205,753
Long-term debt, net of current portion:
Limited and non-recourse:
Senior secured notes 317,909 360,366
Other loans 288,753 264,625
Full recourse:
Senior unsecured bonds 250,058 250,289
Other loans 23,070 34,351
Unconsolidated investments 12,667 3,617
Liability associated with sale of tax benefits 18,580 39,021
Deferred lease income 58,325 60,560
Deferred income taxes 31,360 66,220
Liability for unrecognized tax benefits 7,112 7,511
Liabilities for severance pay 18,826 20,399
Asset retirement obligation 20,282 19,142
Other long-term liabilities 697 2,956
Total liabilities 1,228,376 1,334,810
Equity:
The Company's stockholders' equity:
Common stock 49 46
Additional paid-in capital 846,998 742,006
Retained earnings 128,352 41,539
Accumulated other comprehensive income (12,844) (8,668)
962,555 774,923
Noncontrolling interest 95,402 11,823
Total equity 1,057,957 786,746
Total liabilities and equity $ 2,286,333 $ 2,121,556

Ormat Technologies, Inc. and Subsidiaries
Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information
For the Nine and Three-Month Period Ended September 30, 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) 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 cost, (iv) stock-based compensation, and (vii) gain from extinguishment of liability. 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 nine and three-month period ended September 30, 2015 and September 30, 2014:

Three Months Ended September 30 Nine Months Ended September 30
2015 2014 2015 2014
(in thousands) (in thousands)
Net cash provided by operating activities $ 10,239 $ 75,191 $ 122,965 $ 178,770
Adjusted for:
Interest expense, net (excluding amortization
of deferred financing costs) 15,244 20,038 47,571 59,366
Interest income (53) (35) (106) (236)
Income tax provision (38,211) 6,444 (26,696) 17,731
Adjustments to reconcile net income or loss to net cash
provided by operating activities (excluding
depreciation and amortization) 91,326 (32,404) 56,699 (56,062)
EBITDA $ 78,545 $ 69,234 $ 200,433 $ 199,569
Mark to market on derivative instruments which represents swap contracts on natural gas and oil prices (4,165) 4,129 (4,467)
Stock-based compensation 921 1,502 3,077 4,308
Gain on sale of a subsidiary and property, plant and equipment (7,628)
Loss from extinguishment of liability 1,710
Merger and Acquisition transactions costs 3,800
Write-off of unsuccessful exploration activities 185 359 8,107
Mark to market on derivatives which represents currency forward contracts (645) 2,537 (1,335) 4,473
Adjusted EBITDA $ 79,006 $ 69,108 $ 212,173 $ 204,362
Net cash provided by (used in) investing activities $ 2,895 $ (106,423) $ (76,538) $ (135,435)
Net cash provided by (used in) financing activities $ 20,742 $ (6,437) $ 84,884 $ (58,238)
Three Months Ended September 30 Nine Months Ended September 30
2015 2014 2015 2014
(in thousands) (in thousands)
Net income $ 73,661 $ 16,770 $ 99,201 $ 47,872
Adjusted for:
Interest expense, net (including amortization
of deferred financing costs) 17,695 22,459 54,329 64,848
Income tax provision (38,211) 6,444 (26,696) 17,731
Depreciation and amortization 25,400 23,561 73,599 69,118
EBITDA $ 78,545 $ 69,234 $ 200,433 $ 199,569
Mark to market on derivative instruments which represents swap contracts on natural gas and oil prices (4,165) 4,129 (4,467)
Stock-based compensation 921 1,502 3,077 4,308
Gain on sale of a subsidiary and property, plant and equipment (7,628)
Loss from extinguishment of liability 1,710
Merger and Acquisition transactions costs 3,800
Write-off of unsuccessful exploration activities 185 359 8,107
Mark to market on derivatives which represents currency forward contracts (645) 2,537 (1,335) 4,473
Adjusted EBITDA $ 79,006 $ 69,108 $ 212,173 $ 204,362


Ormat Technologies Contact: Smadar Lavi Investor Relations 775-356-9029 slavi@ormat.com Investor Relations Agency Contact: Miri Segal/Brett Maas MS/Hayden - IR 917-607-8654/646-536-7331 msegal@ms-ir.com / brett@haydenir.com

Source:Ormat Technologies, Inc.