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Ormat Technologies Reports 2017 Second Quarter Earnings

RENO, Nev., Aug. 03, 2017 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE:ORA) today announced financial results for the second quarter ended June 30, 2017.

Financial Summary:

($ millions, except per share amounts)2Q 20172Q 2016Change
Revenues
Electricity$111.8 $104.0 7.5%
Product$67.6 $55.9 21.0%
Total Revenues$179.4 $159.9 12.2%
Gross profit$70.5 $65.8 7.1%
Gross margin (%) 39.3% 41.2%(4.6%)
Operating income$53.2 $51.9 2.4%
Net income attributable to the Company’s shareholders$35.0 $24.3 43.9%
Diluted EPS$0.69 $0.49 40.8%
Adjusted Net income attributable to the Company’s stockholders (1)$29.5 24.3 21.3%
Adjusted Diluted EPS(1)$0.58 $0.49 18.4%
Adjusted EBITDA$88.1 $81.2 8.5%

Second Quarter 2017 Highlights and Recent Developments:

  • Total revenues of $179.4 million, up 12.2% compared to the second quarter of 2016:

    - Electricity segment revenues of $111.8 million, up 7.5% compared to the second quarter of 2016, mainly due to higher performance of our Puna plant as well as the consolidation of our Bouillante power plant in Guadeloupe;

    - Product segment revenues of $67.6 million, up 21.0% compared to the second quarter of 2016;

  • Electricity generation increased 2.4%, compared to the second quarter of 2017, from 1.30 million MWh to 1.33 million MWh;

  • Gross margin was 39.3% of total revenues compared to 41.2% in the second quarter of 2016, due to lower margins in the product segment; Electricity segment margin increased to 41.5% from 40.2%;

  • Operating income increased 2.4% to $53.2 million compared to $51.9 million in the second quarter of 2016;

  • Net income attributable to the company's shareholders of $35.0 million, or $0.69 per diluted share, compared to $24.3 million, or $0.49 per diluted share, in the second quarter of 2016;

  • Adjusted net income attributable to the company's shareholders of $29.5 million, or $0.58 per diluted share, compared to $24.3 million, or $0.49 per diluted share, in the second quarter of 2016;

  • Adjusted EBITDA of $88.1 million, up 8.5% compared to $81.2 million in the second quarter of 2016;

  • Declared a quarterly dividend of $0.08 per share for the second quarter of 2017;

  • Product segment backlog remains strong at $192.0 million2; added approximately $50.0 million of new orders;

  • Executed a new portfolio power purchase agreement (portfolio PPA) with Southern California Public Power Authority (SCPPA), under which SCPPA will purchase 150MW of power generated by a portfolio of Ormat’s new and existing geothermal power plants beginning in the fourth quarter of 2017 at a fixed price of $75.50 per MWh; and

  • ORIX acquired 22% ownership stake in Ormat and the previously reported Commercial Cooperation Agreement entered into by Ormat and ORIX is now effective.

“Continued growth in our electricity segment and a strong quarter for our products segment enabled us to deliver 12.2% top-line growth in the second quarter,” commented Isaac Angel, Chief Executive Officer. “Our focus on streamlining our entire value chain over the past three years enabled us to increase electricity segment gross margin to 41.5% and to grow our Adjusted EBITDA by 8.5%, demonstrating the strength of our business.”

“During the second quarter we signed the new portfolio PPA with SCPPA. This portfolio PPA will enable both the development of multiple new projects as well as the sustainable operation of several of our existing geothermal power plants. With the SCPPA portfolio PPA in place, Ormat is well positioned for consistent growth in the US. Another recent noteworthy development is that with the closing of ORIX’s acquisition of an approximately 22% ownership stake in Ormat, the Commercial Cooperation Agreement that Ormat and ORIX executed in connection with that acquisition became effective last week, and we expect that it will expand our business opportunities in Asia and other key geographies and may also improve our access to capital,” added Mr. Angel.

Guidance

Mr. Angel added, “We reiterate our guidance and expect full-year 2017 total revenues between $680.0 million and $700.0 million with electricity segment revenues between $460.0 million and $470.0 million and product segment revenues between $220.0 million and $230.0 million. We expect 2017 Adjusted EBITDA between $340 million and $350 million for the full year. We expect annual Adjusted EBITDA attributable to non-controlling interest to be approximately $23.0 million.”

Second Quarter 2017 Financial Results

For the three months ended June 30, 2017, total revenues were $179.4 million, up from $159.9 million for the three months ended June 30, 2016, an increase of 12.2%. Electricity segment revenues increased 7.5% to $111.8 million in the three months ended June 30, 2017, up from $104.0 million for the three months ended June 30, 2016. Product segment revenues increased 21.0% to $67.6 million for the three months ended June 30, 2017, up from $55.9 million in the three months ended June 30, 2016.

General and administrative expenses for the three months ended June 30, 2017 were $12.2 million, or 6.8% of total revenues, compared to $8.8 million, or 5.5% of total revenues, for the three months ended June 30, 2016. The increase was mainly due to a $2.1 million non-cash charge for stock-based compensation expense associated with the acceleration of the vesting period of the stock options of the CEO and the CFO as part of ORIX’s acquisition of 22% of ownership stake in Ormat; and $0.9 million of costs associated with the ORIX transaction and Ormat’s M&A activities.

The company reported net income attributable to the company’s shareholders of $35.0 million, or $0.69 per diluted share, compared to net income attributable to the company’s shareholders of $24.3 million, or $0.49 per diluted share, for the same period last year. Adjusted net income attributable to the company’s shareholders was $29.5 million, or $0.58 per diluted share, which excludes $5.5 million and $0.11 per diluted share, respectively, of one-time benefit related to tax restructuring.

Adjusted EBITDA for the three months ended June 30, 2017 was $88.1 million, compared to $81.2 million for the three months ended June 30, 2016, an increase of 8.5%. The reconciliation of GAAP net cash provided by (used in) operating activities and net income to EBITDA and Adjusted EBITDA and additional cash flow information is set forth below in this release.

Dividend

On August 3, 2017, ORMAT’s Board of Directors approved a quarterly dividend of $0.08 per share pursuant to the company’s dividend policy. The dividend will be paid on August 29, 2017 to shareholders of record as of the close of business on August 15, 2017.

Conference Call Details

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release at 10 a.m. ET on Thursday, August 3, 2017. 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 Events & Presentations in the Investor Relations section of Ormat’s website.

An archive of the webcast will be available approximately 30 minutes after the conclusion of the live call.

Please ask to be joined into the Ormat Technologies, Inc. call.

Participant telephone numbers
Participant dial in (toll free): 1-877-511-6790
Participant international dial in: 1-412-902-4141
Canada Toll Free 1-855-669-9657
Conference replay
US Toll Free:1-877-344-7529
International Toll:1-412-317-0088
Replay Access Code: 10110511

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 73 U.S. patents, Ormat’s power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 530 employees in the United States and 720 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 2,200 MW of gross capacity. Ormat’s current 727 MW generating portfolio is spread globally in the U.S., Guatemala, Guadeloupe, Indonesia 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 1, 2017.

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.

_________________________

1 Adjusted Net income attributable to the Company’s stockholders and diluted EPS excludes $5.5 million and $0.11 per diluted share, respectively, of one-time benefit related to tax restructuring as will be fully described in our quarterly report on Form 10Q that will be filled with the SEC on August 4, 2017.

2 Backlog as of August 3, 2017 includes revenues for the period between July 1, 2017 and August 3, 2017.



Ormat Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three and Six-Month Periods Ended June 30, 2017 and 2016
(Unaudited)

Three Months Ended June 30 Six Months Ended June 30
2017 2016 2017 2016
(In thousands, except per share data) (In thousands, except per share data)
Revenues:
Electricity$111,777 $104,001 $227,553 $211,869
Product 67,587 55,860 141,709 99,586
Total revenues 179,364 159,861 369,262 311,455
Cost of revenues:
Electricity 65,439 62,243 131,475 125,929
Product 43,432 31,822 92,884 55,857
Total cost of revenues 108,871 94,065 224,359 181,786
Gross profit 70,493 65,796 144,903 129,669
Operating expenses:
Research and development expenses 1,050 595 1,652 944
Selling and marketing expenses 4,090 3,668 8,453 7,343
General and administrative expenses 12,201 8,783 22,150 17,532
Write-off of unsuccessful exploration activities 863 1,420
Operating income 53,152 51,887 112,648 102,430
Other income (expense):
Interest income 362 245 606 565
Interest expense, net (14,540) (18,401) (29,463) (34,424)
Derivatives and foreign currency transaction gains (losses) 1,703 (4,332) 3,041 (2,370)
Income attributable to sale of tax benefits 4,356 4,519 10,513 8,917
Other non-operating expense, net 6 49 (86) 240
Income before income taxes and equity in
losses of investees 45,039 33,967 97,259 75,358
Income tax provision (benefit) (6,369) (7,890) (17,255) (17,399)
Equity in losses of investees, net (428) (1,144) (2,027) (2,081)
Net income 38,242 24,933 77,977 55,878
Net income attributable to noncontrolling interest (3,206) (584) (7,629) (2,258)
Net income attributable to the Company's stockholders$35,036 $24,349 $70,348 $53,620
Earnings per share attributable to the Company's stockholders - Basic and diluted:
Basic:
Net Income$0.70 $0.49 $1.41 $1.09
Diluted:
Net Income$0.69 $0.49 $1.39 $1.07
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:
Basic 49,771 49,456 49,726 49,314
Diluted 50,624 50,137 50,559 49,977

Ormat Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of June 30, 2017 and December 31, 2016
(Unaudited)

June 30, December 31,
2017 2016
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $118,390 $230,214
Restricted cash, cash equivalents and marketable securities 49,510 34,262
Receivables:
Trade 79,587 80,807
Other 20,128 17,482
Inventories 18,569 12,000
Costs and estimated earnings in excess of billings on uncompleted contracts 59,901 52,198
Prepaid expenses and other 41,151 45,867
Total current assets 387,236 472,830
Investment in an unconsolidated company 13,957
Deposits and other 18,125 18,553
Deferred charges 43,598 43,773
Property, plant and equipment, net 1,526,485 1,556,378
Construction-in-process 408,939 306,709
Deferred financing and lease costs, net 5,186 3,923
Intangible assets, net 86,986 52,753
Goodwill 20,121 6,650
Total assets $2,510,633 $2,461,569
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses $101,827 $91,650
Short-term revolving credit lines with banks (full recourse) 30,000
Billings in excess of costs and estimated earnings on uncompleted contracts 17,574 31,630
Current portion of long-term debt:
Limited and non-recourse:
Senior secured notes 32,608 32,234
Other loans 21,495 21,495
Full recourse 10,673 12,242
Total current liabilities 214,177 189,251
Long-term debt, net of current portion:
Limited and non-recourse:
Senior secured notes 334,365 350,388
Other loans 252,085 261,845
Full recourse:
Senior unsecured bonds 203,678 203,577
Other loans 52,742 57,063
Accumulated losses of unconsolidated company in excess of investment 11,081
Liability associated with sale of tax benefits 48,810 54,662
Deferred lease income 53,036 54,561
Deferred income taxes 44,113 35,382
Liability for unrecognized tax benefits 6,015 5,738
Liabilities for severance pay 21,025 18,600
Asset retirement obligation 24,267 23,348
Other long-term liabilities 22,823 21,294
Total liabilities 1,277,136 1,286,790
Redeemable non-controlling interest 5,898 4,772
Equity:
The Company's stockholders' equity:
Common stock 50 50
Additional paid-in capital 875,591 869,463
Retained earnings (accumulated deficit) 274,566 216,644
Accumulated other comprehensive income (loss) (6,933) (7,732)
1,143,274 1,078,425
Noncontrolling interest 84,325 91,582
Total equity 1,227,599 1,170,007
Total liabilities and equity $2,510,633 $2,461,569

Ormat Technologies, Inc. and Subsidiaries
Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information
For the Three and Six-Month Periods Ended June 30, 2017 and 2016
(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, (vi) stock-based compensation, (vii) gain from extinguishment of liability, and (viii) gain on sale of subsidiary and property, plant and equipment. 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 three-month and six months periods ended June 30, 2017 and 2016.

Three Months Ended June 30 Six Months Ended June 30
2017 2016 2017 2016
(in thousands) (in thousands)
Net cash provided by operating activities $42,695 $92,529 $114,158 $119,573
Adjusted for:
Interest expense, net (excluding amortization
of deferred financing costs) 13,266 17,165 26,671 31,292
Interest income (362) (245) (606) (565)
Income tax provision 6,369 7,890 17,255 17,399
Adjustments to reconcile net income or loss to net cash
provided by operating activities (excluding
depreciation and amortization) 22,570 (42,519) 17,901 (12,437)
EBITDA $ 84,538 $ 74,820 $ 175,379 $ 155,262
Mark-to-market gains or losses from accounting for derivatives (940) 4,240 (2,463) 2,494
Stock-based compensation 3,630 817 5,343 1,659
Merger and acquisition transaction cost 900 500 1,700 647
Write-off of unsuccessful exploration activities 863 1,420
Adjusted EBITDA $ 88,128 $ 81,240 $ 179,959 $161,482
Net cash used in investing activities $(65,367) $(10,669) $(194,105) $(55,289)
Net cash provided by (used in) financing activities $(33,076) $(37,802) $(31,877) $(57,647)
Three Months Ended June 30 Six Months Ended June 30
2017 2016 2017 2016
(in thousands) (in thousands)
Net income $38,242 $24,933 $77,977 $55,878
Adjusted for:
Interest expense, net (including amortization
of deferred financing costs) 14,178 18,156 28,857 33,859
Income tax provision 6,369 7,890 17,255 17,399
Depreciation and amortization 25,749 23,841 51,290 48,126
EBITDA $ 84,538 $ 74,820 $ 175,379 $ 155,262
Mark-to-market gains or losses from accounting for derivatives (940) 4,240 (2,463) 2,494
Stock-based compensation 3,630 817 5,343 1,659
Merger and acquisition transaction cost 900 500 1,700 647
Write-off of unsuccessful exploration activities 863 1,420
Adjusted EBITDA $ 88,128 $ 81,240 $179,959 $161,482


Ormat Technologies Contact: Smadar Lavi Investor Relations 775-356-9029 (ext. 65726) slavi@ormat.com Investor Relations Agency Contact: Rob Fink/Brett Maas Hayden - IR 646-415-8972/646-536-7331 rob@haydenir.com / brett@haydenir.com

Source:Ormat Technologies, Inc.