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 Ormat Technologies Reports 2014 Fourth Quarter and Year End Results With Record Revenues of $559.5 Million and Operating Income of $143.5 Million
   Tuesday, February 24, 2015 7:28:12 PM ET

Operating income grew 48.0% Year over Year

Adjusted EBITDA Grew 13.1% Year over Year

Ormat Technologies, Inc. (ORA ) today announced financial results for the fourth quarter and full year ended December 31, 2014.

Financial highlights for the full year:

-- Total revenues of $559.5 million in 2014, an increase of 4.9% from 2013;

-- Electricity segment revenues increased 15.9% to $382.3 million in 2014 from $329.7 million in 2013;

-- Gross margin increased to 36.4% in 2014 compared to 30.0% for full year 2013;

-- Operating income grew 48.0% to $143.5 million in 2014 from $97.0 million in 2013;

-- Adjusted EBITDA grew 13.1% to $272.7 million in 2014;

-- Net income attributable to the company’s shareholders increased 31.4% compared to 2013 and reached $54.2 million, or $1.18 per share;

-- Net income attributable to the company’s shareholders excluding a $15.4 million write-off of unsuccessful exploration activities was $69.6 million, or $1.51 per share in 2014; and

-- Declared a quarterly dividend of $0.08 per share for the fourth quarter of 2014.

Operational and business developments:

-- Completed share exchange transaction to streamline the corporate structure and to increase float;

-- Signed a definitive agreement to monetize operational assets at an attractive valuation by signing a $175.0 million agreement with Northleaf Capital Partners for a 40% equity investment in certain power plants at a valuation of $438.0 million;

-- Signed an amendment to the Olkaria PPA in Kenya paving the way for a 24 MW expansion of the 110MW complex;

-- Obtained $140.0 million in financing the McGinness Hills Phase 2 that recently completed construction and started operation;

-- Signed 25-Year PPA and Steam Supply Agreements for the 35MW Menengai Geothermal Project in Kenya;

-- Signed $22.3 million EPC contract with the Utah Associated Municipal Power Systems (UAMPS) for a Recovered Energy Generation Project;

-- Closed a $1.17 billion financing agreement for the Sarulla consortium and commenced full construction of the 330MW project;

-- Added the $254.0 million Sarulla supply contract to the Products backlog; and

-- Sold Heber Solar PV project in California for approximately $35.3 million; recording a $7.6 million pre-tax gain in the second quarter of 2014.

Isaac Angel, chief executive officer of Ormat, stated, "This was an important year of progress and operational success. The recently announced share exchange transaction and the formation of the joint venture and the equity investment by Northleaf represent key milestones to increase shareholder value. We delivered growth and improved profitability, meeting our operational targets. We enter 2015 with a healthy balance sheet, a strong pipeline, a balanced portfolio of operational and emerging projects around the world, strengthened by the contribution of the Don A. Campbell, Olkaria - Plant 3, and the recent initial operation of phase 2 of our McGinness Hills plant. This year, we will build upon the strong operating results within our electricity segment as we begin work on phase 2 of our Don A. Campbell plant, which we expect to complete by Q1 2016."

"I’m glad to report that Northleaf, our new joint venture partner, will purchase a minority interest and add the Don A. Campbell phase 2 to the existing joint venture once it is completed and tested, validating our expectation that this relationship will represent a long-term, mutual beneficial arrangement that also monetizes our operational assets at an attractive valuation."

"In the product segment, we have secured $41.0 million in new orders since the end of the third quarter, positioning our product backlog as of February 16, 2015 at approximately $326.0 million," continued Mr. Angel.

"In addition to our operational and business accomplishments this year, as new management, we also focus on enhancing shareholder value," continued Mr. Angel. "We completed a share exchange transaction and now our shares trade on multiple stock exchange markets. We believe that increasing the float to 76% of the total shares outstanding will help improve the liquidity of our common stock and better position Ormat to new investors."

Guidance

Mr. Angel added, "We expect our 2015 electricity revenues to be between $380.0 million and $390.0 million and our product segment revenues to be between $180.0 million and $190.0 million.

In addition, as we continue to make operational progress and monetize our assets, we felt it was an appropriate time to transition to a more traditional, operational-focused methodology for calculating Adjusted EBITDA. For 2015, we expect to generate Adjusted EBITDA of $280.0 to $290.0 million. On our call we will present the historical adjusted EBITDA based on this methodology."

Financial Summary

Annual Results

For the year ended December 31, 2014, total revenues increased 4.9% from $533.2 million in 2013 to $559.5 million in 2014. Electricity Segment revenues increased 15.9% from $329.7 million in 2013 to $382.3 million in 2014. This increase was primarily due to the contribution of the Olkaria III complex in Kenya and our Don A. Campbell power plant in Nevada. Additionally the increase was a result of higher energy rates under the SO#4 contracts and net gain on derivative contracts on oil and natural gas prices of $5.7 million in the year ended December 31, 2014, compared to a net loss of $5.0 million over the corresponding period in 2013. Product revenues decreased 12.9% to $177.2 million in 2014 compared to $203.5 million in 2013.

Operating income for the full year 2014 was $143.5 million, up 48.0%, compared to $97.0 million in 2013.

The company reported that net income attributable to the company’s shareholders increased 31.4% to $54.2 million or $1.18 per share in full year 2014 compared to $41.2 million or $0.91 per share.

Full-year results were impacted by a $15.4 million write-off of unsuccessful exploration activities related to our exploration activities in the Wister site in California and in the Mount Spurr site in Alaska. After conducting exploratory studies in those sites, management concluded that the geothermal resource as well as the commercial environment would not support commercial operations at the foreseeable future. Costs associated with exploration activities (including up-front bonus lease costs of approximately $3.5 million) at these sites were expensed accordingly. Excluding these costs net income attributable to the company’s shareholders increased 68.8% to $69.6 million or $1.51 per share in full year 2014 compared to $41.3 million or $0.91 per share.

Adjusted EBITDA for the year ended December 31, 2014 was $272.7 million, compared to $241.0 million for the year ended December 31, 2013. 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 $213.2 million in the year ended December 31, 2014, compared to $86.8 million in the year ended December 31, 2013.

As of December 31, 2014, cash, cash equivalents were $40.2 million. In addition, as of December 31, 2014, the company had $198.0 million of unused corporate borrowing capacity under existing lines of credit with different commercial banks.

Fourth Quarter Results

For the three months ended December 31, 2014, total revenues reached $149.8 million from $130.9 million in the fourth quarter of 2013, an increase of 14.0%. Electricity revenues increased 10.1% to $93.3 million in the three months ended December 31, 2014, from $84.7 million in the three months ended December 31, 2013. Product revenues increased 21.2% to $56.0 million in the three months ended December 31, 2014, from $46.2 million in the three months ended December 31, 2013.

The three months ended December 31, 2014 results were mainly impacted by a $7.3 million write-off of unsuccessful exploration activities related to the Mount Spurr site in Alaska and approximately $3.0 million increase in income tax costs mainly due to the impact of the devaluation of the shekel against the dollar and its impact on the tax expense in Israel.

The company reported net income attributable to the company’s shareholders of $7.0 million or $0.15 per share and $14.3 million or $0.31 per share excluding $7.3 million write-off of unsuccessful exploration work. For the three months ended December 31, 2013, the company reported net income attributable to the company’s shareholders of $8.2 million or $0.18 per share and $12.3 million or $0.27 per share excluding $4.1 million write-off of unsuccessful exploration work.

Adjusted EBITDA for the three months ended December 31, 2014 was $68.3 million, compared to $62.2 million for the three months ended December 31, 2013. 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.

On February 24, 2015, ORMAT’s Board of Directors approved a payment of a quarterly dividend of $0.08 per share pursuant to the company’s dividend policy; the dividend paid targets an annual payoff ratio of at least 20% of the company’s net income. The dividend will be paid on March 27, 2015 to shareholders of record as of closing of business on March 16, 2015. In addition, the company expects to pay quarterly dividends of $0.06 per share in the next three quarters.

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. EDT on Wednesday, February 25, 2015. 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 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                   18556699657
CONFERENCE REPLAY
US Toll Free:                      1-877-344-7529
International Toll:                1-412-317-0088
Canada Toll Free:                  855-669-9658
Replay Access Code:                10059522

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 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 1,900 MW of gross capacity. Ormat’s current 647 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 28, 2014.

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 Three-Month Periods and Years Ended December 31, 2014 and 2013
(Unaudited)
                                                                                                                        Three Months Ended                    Year Months Ended
                                                                                                                        December 31                           December 31
                                                                                                                        2014               2013               2014               2013
                                                                                                                        (In thousands, except per share data) (In thousands, except per share data)
Revenues:
Electricity                                                                                                             $ 93,286           $ 84,742           $ 382,301          $ 329,747
Product                                                                                                                 55,957             46,163             177,223            203,492
Total revenues                                                                                                          149,243            130,905            559,524            533,239
Cost of revenues:
Electricity                                                                                                             60,547             57,789             246,630            232,874
Product                                                                                                                 33,836             30,212             109,143            140,547
Total cost of revenues                                                                                                  94,383             88,001             355,773            373,421
Gross margin                                                                                                            54,860             42,904             203,751            159,818
Operating expenses:
Research and development expenses                                                                                       388                1,519              783                4,965
Selling and marketing expenses                                                                                          4,572              6,752              15,425             24,613
General and administrative expenses                                                                                     7,767              8,924              28,614             29,188
Write-off of unsuccessful exploration activities                                                                        7,332              4,094              15,439             4,094
Operating income                                                                                                        34,801             21,615             143,490            96,958
Other income (expense):
Interest income                                                                                                         76                 462                312                1,332
Interest expense, net                                                                                                   (19,570)           (21,950)           (84,654)           (73,776)
Foreign currency translation and transaction gains (losses)                                                             (2,200)            1,241              (5,839)            5,085
Income attributable to sale of tax benefits                                                                             5,809              5,603              24,143             19,945
Gain from sale of property, plant and equipment                                                                         --                 --                 7,628              --
Other non-operating expense, net                                                                                        107                9                  756                1,592
Income before income taxes and equity in losses of investees                                                            19,023             6,980              85,836             51,136
Income tax provision (benefit)                                                                                          (9,877)            1,476              (27,608)           (13,552)
Equity in losses of investees, net                                                                                      (2,003)            (101)              (3,213)            (250)
Income from continuing operations                                                                                       7,143              8,355              55,015             37,334
Discontinued operations:
Income from discontinued operations                                                                                     --                 --                 --                 5,311
Income tax provision                                                                                                    --                 --                 --                 (614)
Total income from discontinued operations                                                                               --                 --                 --                 4,697
Net income                                                                                                              7,143              8,355              55,015             42,031
Net income attributable to noncontrolling interest                                                                      (163)              (193)              (833)              (793)
Net income attributable to the Company’s stockholders                                                                   $ 6,980            $ 8,162            $ 54,182           $ 41,238
Earnings per share attributable to the Company’s stockholders - Basic and diluted:
Basic:
Income from continuing operations                                                                                       $ 0.15             $ 0.18             $ 1.19             $ 0.81
Discontinued operations                                                                                                 --                 --                 --                 0.10
Net Income                                                                                                              $ 0.15             $ 0.18             $ 1.19             $ 0.91
Diluted:
Income from continuing operations                                                                                       $ 0.15             $ 0.18             $ 1.18             $ 0.81
Discontinued operations                                                                                                 --                 --                 --                 0.10
Net Income                                                                                                              $ 0.15             $ 0.18             $ 1.18             $ 0.91
Weighted average number of shares used in computation of earnings per share attributable to the Company’s stockholders:
Basic                                                                                                                   45,709             45,461             45,623             45,440
Diluted                                                                                                                 46,189             45,610             45,974             45,475
Ormat Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of December 31, 2014 and December 31, 2013
(Unaudited)
                                                                            December 31,    December 31,
                                                                            2014            2013
                                                                            (In thousands)
ASSETS
Current assets:
Cash and cash equivalents                                                   $ 40,230        $ 57,354
Restricted cash, cash equivalents and marketable securities                 93,248          51,065
Receivables:
Trade                                                                       48,609          95,365
Related entity                                                              451             442
Other                                                                       10,141          11,049
Due from Parent                                                             1,337           382
Inventories                                                                 16,930          22,289
Costs and estimated earnings in excess of billings on uncompleted contracts 27,793          21,217
Deferred income taxes                                                       251             523
Prepaid expenses and other                                                  34,884          29,654
Total current assets                                                        273,874         289,340
Unconsolidated investments                                                  --              7,076
Deposits and other                                                          20,044          22,114
Deferred income taxes                                                       --              891
Deferred charges                                                            37,567          36,738
Property, plant and equipment, net                                          1,437,637       1,452,336
Construction-in-process                                                     296,722         288,827
Deferred financing and lease costs, net                                     27,057          30,178
Intangible assets, net                                                      28,655          31,933
Total assets                                                                $ 2,121,556     $ 2,159,433
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses                                       $ 88,276        $ 98,047
Deferred income taxes                                                       974             --
Short term revolving credit lines with banks (full recourse)                20,300          --
Billings in excess of costs and estimated earnings on uncompleted contracts 24,724          7,903
Current portion of long-term debt:
Limited and non-recourse:
Senior secured notes                                                        34,368          31,137
Other loans                                                                 17,995          20,377
Full recourse                                                               19,116          28,875
Total current liabilities                                                   205,753         186,339
Long-term debt, net of current portion:
Limited and non-recourse:
Senior secured notes                                                        360,366         270,310
Other loans                                                                 264,625         311,078
Full recourse:
Senior unsecured bonds                                                      250,289         250,596
Other loans                                                                 34,351          53,467
Revolving credit lines with banks (full recourse)                           --              112,017
Unconsolidated investments                                                  3,617           --
Liability associated with sale of tax benefits                              39,021          60,985
Deferred lease income                                                       60,560          63,496
Deferred income taxes                                                       66,220          55,035
Liability for unrecognized tax benefits                                     7,511           4,950
Liabilities for severance pay                                               20,399          23,841
Asset retirement obligation                                                 19,142          18,679
Other long-term liabilities                                                 2,956           3,529
Total liabilities                                                           1,334,810       1,414,322
Equity:
The Company’s stockholders’ equity:
Common stock                                                                46              46
Additional paid-in capital                                                  742,006         735,295
Retained earnings (accumulated deficit)                                     41,539          (3,088)
Accumulated other comprehensive income (loss)                               (8,668)         487
                                                                            774,923         732,740
Noncontrolling interest                                                     11,823          12,371
Total equity                                                                786,746         745,111
Total liabilities and equity                                                $ 2,121,556     $ 2,159,433

Ormat Technologies, Inc. and Subsidiaries

Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information

For the Three-Month Periods and Years Ended December 31, 2014 and 2013

(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 periods and years ended December 31, 2014 and 2013:

                                                                                                                                    Three Months Ended December 31  Year Ended December 31
                                                                                                                                    2014            2013            2014        2013
                                                                                                                                    (in thousands)                  (in thousands)
Net cash provided by operating activities                                                                                           $ 34,465        $ 54,534        $ 213,235   $ 86,760
Adjusted for:
Interest expense, net (excluding amortization of deferred financing costs)                                                          17,604          20,310          76,970      67,677
Interest income                                                                                                                     (76)            (462)           (312)       (1,332)
Income tax provision                                                                                                                9,877           (1,476)         27,608      14,166
Adjustments to reconcile net income or loss to net cash  provided by operating activities (excluding depreciation and amortization) (1,360)         (24,158)        (57,422)    48,203
EBITDA                                                                                                                              $ 60,510        $ 48,748        $ 260,079   $ 215,474
Mark to market on derivative instruments which represents swap contracts on natural gas and oil prices                              (2,493)         4,326           (6,960)     7,813
Stock-based compensation                                                                                                            1,263           1,714           5,571       6,262
Gain on sale of a subsidiary and property, plant and equipment                                                                      --              --              (7,628)     (3,646)
Termination fees                                                                                                                    --              2,625           --          11,604
Share exchange transaction costs                                                                                                    1,000           --              1,000       --
Write-off of unsuccessful exploration activities                                                                                    7,332           4,094           15,439      4,094
Mark to market on derivatives which represents currency forward contracts                                                           699             662             5,172       (615)
Adjusted EBITDA                                                                                                                     $ 68,311        $ 62,169        $ 272,673   $ 240,986
Net cash provided by investing activities                                                                                           $ 6,273         $ (28,955)      $ (129,162) $ (157,153)
Net cash provided by (used in) financing activities                                                                                 $ (42,959)      $ (3,660)       $ (101,197) $ 61,119
                                                                                                                                    Three Months Ended December 31  Year Ended December 31
                                                                                                                                    2014            2013            2014        2013
                                                                                                                                    (in thousands)                  (in thousands)
Net income                                                                                                                          $ 7,143         $ 8,355         $ 55,015    $ 42,031
Adjusted for:
Interest expense, net (including amortization of deferred financing costs)                                                          19,494          21,488          84,342      72,444
Income tax provision                                                                                                                9,877           (1,476)         27,608      14,166
Depreciation and amortization                                                                                                       23,996          20,381          93,114      86,833
EBITDA                                                                                                                              $ 60,510        $ 48,748        $ 260,079   $ 215,474
Mark to market on derivative instruments which represents swap contracts on natural gas and oil prices                              (2,493)         4,326           (6,960)     7,813
Stock-based compensation                                                                                                            1,263           1,714           5,571       6,262
Gain on sale of a subsidiary and property, plant and equipment                                                                      --              --              (7,628)     (3,646)
Termination fees                                                                                                                    --              2,625           --          11,604
Share exchange transaction costs                                                                                                    1,000           --              1,000       --
Write-off of unsuccessful exploration activities                                                                                    7,332           4,094           15,439      4,094
Mark to market on derivatives which represents currency forward contracts                                                           699             662             5,172       (615)
Adjusted EBITDA                                                                                                                     $ 68,311        $ 62,169        $ 272,673   $ 240,986
CONTACT: Ormat Technologies:
         Smadar Lavi
         Investor Relations
         775-356-9029
         slavi@ormat.com

         Investor Relations Agency:
         Miri Segal/Brett Maas
         MS/Hayden - IR
         917-607-8654/646-536-7331
         msegal@ms-ir.com / brett@haydenir.com

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