Loading, Please Wait...

CST: 13/12/2019 02:29:28   

Ormat Technologies Reports Third Quarter 2019 Financial Results

36 Days ago

ELECTRICITY REVENUES INCREASE 6.1% AND GROSS MARGINS EXPAND TO 32.5%; COMPANY RAISES 2019 REVENUE GUIDANCE TO UPPER END OF RANGE AND INCREASES ADJUSTED EBITDA GUIDANCE

RENO, Nev, Nov. 06, 2019 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc.1 (NYSE: ORA) today announced financial results for the third quarter ended September 30, 2019.

($ millions, except per share amounts) Q3 2019 Q3 2018 Change (%)
Revenues      
Electricity   124.0     116.9   6.1 %
Product   43.0     48.4   (11.2 %)
Other   3.5     1.2   203.0 %
Total Revenues   170.5     166.5   2.4 %
Gross Profit   55.5     48.8   13.7 %
Gross margin (%)      
Electricity   35.4 %   31.7 %  
Product   27.8 %   26.4 %  
Other   (9.3 %)   (89.0 %)  
Gross margin (%)   32.5 %   29.3 %  
       
Operating income   38.7     25.9   49.5 %
Net income attributable to the Company’s shareholders   15.6     10.6   47.5 %
Diluted EPS $ 0.30   $ 0.21   42.9 %
Diluted EPS W/O the impact of Puna2 $ 0.35   $ 0.26    
       
Adjusted Net income attributable to the Company’s stockholders3   15.6     15.6    
Diluted Adjusted EPS3 $ 0.30   $ 0.31    
       
Adjusted EBITDA3   85.5     75.6   13.0 %
Adjusted EBITDA W/O the impact of Puna3   87.0     77.3   12.5 %

“We continue to deliver on our stated goals of growing revenues and expanding gross margin,” commented Isaac Angel, Chief Executive Officer. “Total revenues increased 2.4%, driven by strong growth of 6.1% in our core Electricity revenues, which helped to offset both the lack of revenues from our Puna plant in Hawaii (which is preparing to re-start operations after the damage from the 2018 eruption of the Kilauea volcano), as well as the expected quarterly decline in our Product segment revenues. These strong results demonstrate the overall robustness of our Electricity segment and the benefit of our diversified portfolio of operations. Our gross margins also expanded on a year-over-year basis due to the positive impacts of our initiatives to improve plant-level efficiencies and to increase the geographic diversification of our Product segment into higher-margin territories.”

Mr. Angel continued, “The reconstruction efforts at Puna are on schedule and we expect our refurbishment activities will be completed by the end of the year, enabling us to deliver energy from the plant. All of our insurers have now started paying the costs to rebuild the damaged power plant equipment. However, certain insurers rejected our claim for business interruption coverage, and we have filed a lawsuit against these insurers. These lawsuits will not impact our plans for re-starting the Puna facility, and we expect to be able to sell the electricity produced at Puna as soon as the relevant permits required from local authorities for the operation of the substation and the transmission network upgrades being undertaken by our partners at Hawaii Electric Light Company (HELCO) are received.  These are expected by the end of Q1 2020, and so we expect to be able to bring the power plant back to operation promptly thereafter, and to gradually increase the power plant’s generating capacity as we complete wellfield drilling work, with a target of regaining full operation by the end of the second quarter of 2020.”

“In the product segment, we are working on new opportunities in New Zealand, Indonesia and the Philippines to diversify and grow our backlog.” continued Mr. Angel. “We remain on pace to meet our full-year targets in all segments and expect to continue our growth path in 2020”

FINANCIAL HIGHLIGHTS FOR THE THIRD QUARTER OF 2019

  • Total revenues of $170.5 million, up 2.4% compared to the third quarter of 2018;

  • Electricity segment revenues of $124.0 million, up 6.1% compared to Q3 2018, with the growth resulting from the commencement of commercial operation of the third phase of the McGinness Hills Complex in Nevada, which began in December 2018;

  • Electricity segment gross margin was 35.4% compared to 31.7% for Q3 2018. Excluding the impact from Puna, Electricity segment gross margin would have been 38.7% in Q3 2019 and 35.3% in Q3 2018;

  • Product segment backlog was approximately $167.0 million as of November 6, 2019;

  • Net income was $15.1 million in Q3 2019 compared to $10.1 million in Q3 2018, an increase of $5.0 million mainly due to an increase of $12.8 million in operating income partially offset by an increase of $8.4 million in income tax provision;

  • Net income attributable to the Company's stockholders in Q3 2019 was $15.6 million, or $0.30 per diluted share, compared to $10.6 million, or $0.21 per diluted share in Q3 2018;

  • Adjusted EBITDA increased 13.0% to $85.5 million from $75.6 million in Q3 20184. Adjusted EBITDA includes approximately negative $1.5 million and negative $1.7 million of Adjusted EBITDA related to Puna in Q3 2019 and Q3 2018, respectively. Adjusted EBITDA, excluding any impact from Puna, was $87.0 million in Q3 2019 and $77.3 million in Q3 2018;

  • The Company declared a quarterly dividend of $0.11 per share for the third quarter of 2019.

Recent Developments

  • Announced the commercial operation of the Hinesburg Battery Energy Storage System (Hinesburg BESS) under an agreement with Vermont Electric Cooperative (VEC).

  • Entered a partnership agreement with a private investor that acquired membership interests in the McGinness Hills phase 3 power plant to receive substantially all of the plant’s tax attributes for an initial purchase price of approximately $59.3 million.

2019 GUIDANCE

Mr. Angel added, “We are raising our 2019 Revenue guidance to the upper end of the range and increasing Adjusted EBITDA guidance. Excluding Puna, we expect full-year 2019 total revenues of between $731 million and $743 million, with Electricity segment revenues between $535 million and $540 million, and Product segment revenues between $185 million and $190 million.  Revenues from our energy storage services business are expected to be between $11 million and $13 million. We expect 2019 Adjusted EBITDA to be between $385 million and $390 million. We expect annual Adjusted EBITDA attributable to minority interest to be approximately $23 million. This guidance, with regard to revenues, Adjusted EBITDA and Adjusted EBITDA attributable to minority interest, excludes any contribution and/or impact from Puna.”

The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months ended September 30, 2019. 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 taxes expense related to still evolving effects of the tax law reform in the United States and other non-cash expenses and adjusting items which are excluded from the calculation of Adjusted EBITDA.

THIRD QUARTER 2019 FINANCIAL RESULTS (COMPARING THE QUARTER ENDED SEPTEMBER 30, 2019 TO THE QUARTER ENDED SEPTEMBER 30, 2018)

Total revenues for the quarter were $170.5 million, up 2.4% compared to the same quarter last year. Electricity segment revenues increased 6.1% to $124.0 million, up from $116.9 million last year. The increase was mainly attributable to the commencement of commercial operation of the third phase of the McGinness Hills Complex in Nevada, effective December 2018, which generated total complex revenues of $20.0 million for the three months ended September 30, 2019 compared to $12.8 million for the three months ended September 30, 2018. Product segment revenues decreased 11.2% to $43.0 million, down from $48.4 million in the same quarter last year. Other segment revenues were $3.5 million compared to $1.2 million in the same quarter last year. The increase was mainly driven by the start of operation of two storage energy facilities in the PJM market.

General and administrative expenses were $11.9 million, or 7.0% of total revenues, compared to $13.6 million, or 8.2% of total revenues. This decrease was mainly related to a decrease in professional fees.  

Net income attributable to the Company’s shareholders was $15.6 million, or $0.30 per diluted share, compared to $10.6 million, or $0.21 per diluted share.

Adjusted EBITDA5 was $85.5 million, compared to $75.6 million. The increase in Adjusted EBITDA is mainly related to the commencement of commercial operation of the third phase of the McGinness Hills Complex. A reconciliation of GAAP net income to EBITDA and Adjusted EBITDA is set forth below in this release.

DIVIDEND

On November 6, 2019, 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 December 4, 2019 to shareholders of record as of the close of business on November 20, 2019.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Thursday, November 7, 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:  10135777 

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 77 U.S. patents, Ormat’s power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 584 employees in the United States and 762 overseas. Ormat’s flexible, modular solutions for geothermal power and REG are ideal for a 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 2,900 MW of gross capacity. Ormat’s current 917 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 1, 2019 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 Nine-Month Periods Ended September 30, 2019 and 2018
(Unaudited)

                       
  Three Months Ended
September 30
  Nine Months Ended
September 30
  2019     2018     2019     2018  
                       
  (In thousands, except per
share data)
  (In thousands, except per
share data)
Revenues:                      
Electricity $ 123,978     $ 116,891     $ 395,965     $ 371,559  
Product   43,037       48,439       147,195       152,026  
Other   3,484       1,150       10,442       5,217  
Total revenues   170,499       166,480       553,602       528,802  
Cost of revenues:                      
Electricity   80,124       79,845       231,442       234,563  
Product   31,073       35,669       114,495       106,968  
Other   3,807       2,174       12,844       7,645  
Total cost of revenues   115,004       117,688       358,781       349,176  
Gross profit   55,495       48,792       194,821       179,626  
Operating expenses:                      
Research and development expenses   1,062       706       2,772       3,065  
Selling and marketing expenses   3,783       8,578       10,924       15,989  
General and administrative expenses   11,931       13,602       41,801       43,321  
Write-off of unsuccessful exploration activities         4             123  
Operating income   38,719       25,902       139,324       117,128  
Other income (expense):                      
Interest income   482       214       1,195       516  
Interest expense, net   (20,076 )     (18,700 )     (62,816 )     (48,890 )
Derivatives and foreign currency transaction gains (losses)   205       (383 )     696       (2,511 )
Income attributable to sale of tax benefits   4,056       4,066       16,457       14,983  
Other non-operating expense, net   244       309       1,362       7,662  
Income before income taxes and equity in                      
losses of investees   23,630       11,408       96,218       88,888  
Income tax (provision) benefit   (9,626 )     (1,184 )     (20,136 )     (3,347 )
Equity in losses of investees, net   1,085       (117 )     3,334       1,481  
                       
Net income   15,089       10,107       79,416       87,022  
Net income attributable to noncontrolling interest   516       474       (3,927 )     (7,276 )
Net income attributable to the Company's stockholders $ 15,605     $ 10,581     $ 75,489     $ 79,746  
                       
Earnings per share attributable to the Company's stockholders - Basic and diluted:                      
Basic:                      
Net Income $ 0.31     $ 0.21     $ 1.49     $ 1.58  
                       
Diluted:                      
Net Income $ 0.30     $ 0.21     $ 1.48     $ 1.56  
                       
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:                      
Basic   50,933       50,645       50,816       50,627  
Diluted   51,334       50,963       51,124       50,985  
                       


CONDENSED CONSOLIDATED BALANCE SHEET
For the Periods Ended September 30, 2019 and December 31, 2018
(Unaudited)

  September 30,   December 31,
  2019     2018  
           
    (In thousands)
ASSETS
Current assets:          
Cash and cash equivalents $ 97,602     $ 98,802  
Restricted cash and cash equivalents   82,435       78,693  
Receivables:          
Trade   139,226       137,581  
Other   18,482       19,393  
Inventories   39,324       45,024  
Costs and estimated earnings in excess of billings on uncompleted contracts   43,125       42,130  
Prepaid expenses and other   12,116       51,441  
Total current assets   432,310       473,064  
Investment in an unconsolidated company   73,714       71,983  
Deposits and other   21,078       18,209  
Deferred income taxes   131,820       113,760  
Property, plant and equipment, net   1,962,637       1,959,578  
Construction-in-process   352,013       261,690  
Operating lease right of use   58,170        
Financing lease right of use   18,046        
Deferred financing and lease costs, net   957       3,242  
Intangible assets, net   188,815       199,874  
Goodwill   19,933       19,950  
Total assets $ 3,259,493     $ 3,121,350  
LIABILITIES AND EQUITY              
Current liabilities:          
Accounts payable and accrued expenses $ 137,176     $ 116,362  
Short-term revolving credit lines with banks (full recourse)         159,000  
Commercial paper   50,000        
Billings in excess of costs and estimated earnings on uncompleted contracts   6,003       18,402  
Current portion of long-term debt:          
Limited and non-recourse:          
Senior secured notes   39,393       33,493  
Other loans   34,135       29,687  
Full recourse   76,572       5,000  
Operating lease liabilities   6,253        
Finance lease liabilities   3,191        
Total current liabilities   352,723       361,944  
Long-term debt, net of current portion:          
Limited and non-recourse:          
Senior secured notes   344,924       375,337  
Other loans   326,227       320,242  
Full recourse:          
Senior unsecured bonds   286,401       303,575  
Other loans   73,384       41,579  
Operating lease liabilities   17,698        
Finance lease liabilities   12,224        
Liability associated with sale of tax benefits   118,811       69,893  
Deferred lease income   43,264       48,433  
Deferred income taxes   86,475       61,323  
Liability for unrecognized tax benefits   15,053       11,769  
Liabilities for severance pay   18,570       17,994  
Asset retirement obligation   44,810       39,475  
Other long-term liabilities   5,400       16,087  
Total liabilities   1,745,964       1,667,651  
           
Redeemable non-controlling interest   8,741       8,603  
           
Equity:          
The Company's stockholders' equity:          
Common stock   51       51  
Additional paid-in capital   910,651       901,363  
Retained earnings (accumulated deficit)   480,879       422,222  
Accumulated other comprehensive income (loss)   (10,848 )     (3,799 )
    1,380,733       1,319,837  
Noncontrolling interest   124,055       125,259  
Total equity   1,504,788       1,445,096  
Total liabilities and equity $ 3,259,493     $ 3,121,350  
           

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
Reconciliation of EBITDA and Adjusted EBITDA
For the Three- and Nine-Month Periods Ended September 30, 2019 and 2018
(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 costs, (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 table reconciles net income to EBITDA and Adjusted EBITDA for the three and nine-month periods ended September 30, 2019 and 2018.

  Three Months Ended September 30   Nine Months Ended September 30
  2019     2018     2019     2018  
                       
  (in thousands)   (in thousands)
Net income $ 15,089     $ 10,107     $ 79,416     $ 87,022  
Adjusted for:                      
Interest expense, net (including amortization                      
  of deferred financing costs)   19,594       18,486       61,621       48,374  
Income tax (benefit) provision   9,626       1,184       20,136       3,347  
Adjustment to investment in unconsolidated company:                      
our proportionate share in interest, tax and depreciation and amortization   2,644       3,784       7,884       11,768  
Depreciation and amortization   36,365       33,687       106,982       94,983  
EBITDA $ 83,318     $ 67,248     $ 276,039     $ 245,494  
                       
Mark-to-market gains or losses from accounting for derivatives   (330 )     (297 )     (1,909 )     1,202  
Stock-based compensation   2,228       3,559       7,231       7,382  
Insurance proceeds in excess of assets carrying value                     (7,150 )
Termination fee         4,973             4,973  
Merger and acquisition transaction cost   250       120       750       2,790  
Write-off of unsuccessful exploration activities                     119  
Adjusted EBITDA $ 85,466     $ 75,603     $ 282,111     $ 254,810  
                       
Puna's related EBITDA   1,490       1,650       (1,311 )     (4,905 )
                       
Adjusted EBITDA excluding Puna's impact   86,956       77,253       280,800       249,905  
                       

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
Reconciliation of Adjusted Net Income attributable to the Company's stockholders
For the Three-Month and Nine-Month Periods Ended September 30, 2019 and 2018
(Unaudited)

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 and nine-month periods ended September 30, 2019 and 2018.

  

    Three Months Ended September 30  
    2019   2018  
               
    (in millions)  
Net income attributable to the Company's stockholders   $ 15.6   $ 10.6  
               
One-timetermination fee         5.0  
               
Adjusted Net income attributable to the Company's stockholders   $ 15.6   $ 15.6  
               
Weighted average number of shares diluted used in computation of earnings per share attributable to the Company's stockholders:     51.3     51.0  
               
Diluted Adjusted EPS     0.30     0.31  
               


1 Ormat Technologies, Inc. is also referred to herein as the “Company”, “Ormat”, “we” or “us”
2 Diluted EPS excludes $2.5 million and $2.6 million related to Puna in the three months ended September 30, 2019 and 2018, respectively
3 Reconciliation is set forth below in this release
4 Reconciliation is set forth below in this release
5 Reconciliation is set forth below in this release

 


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


 

 

Is your business listed correctly on America’s largest city directory network of 1,000 portals?