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Ormat Technologies Inc$57.71$.03.05%

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 Ormat Technologies Reports 25% Increase in Revenues for the First Quarter of 2017
   Monday, May 08, 2017 5:00:19 PM ET

Electricity Segment Expands 7.3% to Record Revenues of $115.8 million; Products Segment Up 69.5%

Management Reiterates Full-Year Guidance

Ormat Technologies, Inc. (ORA ) today announced financial results for the first quarter ended March 31, 2017.

Financial Summary:

($ millions, except per share amounts)                1Q 2017   1Q 2016   Change
Revenues
Electricity                                           $   115.8 $   107.9 7.3  %
Product                                               $   74.1  $   43.7  69.5 %
Total Revenues                                        $   189.9 $   151.6 25.3 %
Gross profit                                          $   74.4  $   63.9  16.5 %
Operating income                                      $   59.5  $   50.5  17.7 %
Net income attributable to the Company’s stockholders $   35.3  $   29.3  20.6 %
Earnings per share                                        0.70      0.59  18.9 %
Adjusted EBITDA                                       $   91.8  $   80.2  14.4 %

First Quarter 2017 Highlights and Recent Developments:

-- Total revenues of $189.9 million, up 25.3% compared to the first quarter of 2016; <ul type="circle"><p>-- Electricity segment revenues increased 7.3% to record revenues of $115.8 million, up from $107.9 million in the first quarter of 2016;

-- Electricity segment revenues increased 7.3% to record revenues of $115.8 million, up from $107.9 million in the first quarter of 2016;

-- Product segment revenues increased 69.5% to $74.1 million, up from $43.7 million in the first quarter of 2016;

-- Electricity generation increased 2.2%, compared to the first quarter of 2016, from 1.397 million MWh to 1.428 million MWh;

-- Gross margin decreased to 39.2% compared to 42.1% in the first quarter of 2016, due to a lower margin in the Product segment;

-- Operating income increased 17.7% to $59.5 million, compared to $50.5 million in the first quarter of 2016;

-- Net income attributable to the company’s shareholders of $35.3 million or $0.70 per diluted share, compared to $29.3 million or $0.59 per diluted share in the first quarter of 2017;

-- Adjusted EBITDA grew 14.4% to a record of $91.8 million in the first quarter of 2017;

-- Declared a quarterly dividend of $0.08 per share for the first quarter of 2017;

-- Product segment backlog remains strong at $207.0 million; added approximately $30 million of new orders;

-- Closed acquisition of substantially all of the business and assets of Viridity Energy, Inc.;

-- Commenced commercial operation of the first unit of the Sarulla geothermal power plant, one of the world’s largest geothermal power plants, located in Indonesia’s North Sumatra; and

-- ORIX will acquire 22% ownership stake in Ormat from FIMI and Bronicki Investments and simultaneously enter into strategic partnership with Ormat. Closing is expected in the third quarter of 2017.

"This was another good quarter, benefitting from outstanding execution in both our electricity and products segment," commented Isaac Angel, Chief Executive Officer. "As we have noted, our goal in the electricity segment has been to adjust output at our facilities to maximize efficiency, and the progress we are making in this area is evidenced by the improvement in gross margin to 43.0%. The addition of the Bouillante facility, coupled with full output again at Puna, has helped us increase revenue in the segment by more than 7%. I am encouraged with our progress in this segment."

Mr. Angel continued, "Our products segment delivered a nearly 70% increase in quarterly sales, due to our progress in projects in New Zealand, China and Turkey. As previously indicated, several of these projects, most notably in Turkey, as well as timing issues related to product deliveries, contributed to lower gross margin which is expected to remain at similar level during 2017. As a result of the improvements we are constantly making to increase efficiencies across our operations, we delivered a record adjusted EBITDA of nearly $92 million."

Mr. Angel continued, "We recently announced that ORIX will acquire 22% ownership stake in Ormat mainly from FIMI and Bronicki Investments. Simultaneous, we signed a commercial cooperation agreement with ORIX. We see this commercial cooperation agreement as a significant development that will enhance our strategic position, expand our geographic footprint as well as our technological and customer base. ORIX’s global reach and reputation in the energy market serves as a further validation of Ormat’s comprehensive capabilities and track record to a broader market and provides a platform to accelerate our growth."

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 noncontrolling interest to be approximately $23.0 million."

First Quarter 2017 Financial Results

For the three months ended March 31, 2017, total revenues were $189.9 million, up from $151.6 million for the three months ended March 31, 2016, an increase of 25.3%. Electricity segment revenues increased 7.3% to $115.8 million in the three months ended March 31, 2017, up from $107.9 million for the three months ended March 31, 2016. Product segment revenues increased 69.5% to $74.1 million for the three months ended March 31, 2017, up from $43.7 million in the three months ended March 31, 2016.

General and administrative expenses for the three months ended March 31, 2017 were $9.9 million, or 5.2% of total revenues, compared to $8.7 million, or 5.8% of total revenues, for the three months ended March 31, 2016. The increase was mainly due to merger and acquisition costs.

The company reported net income attributable to the company’s shareholders of $35.3 million, or $0.70 per diluted share, compared to net income attributable to the company’s shareholders of $29.3 million, or $0.59 per diluted share, for the same period last year.

Adjusted EBITDA for the three months ended March 31, 2017 was $91.8 million, compared to $80.2 million for the three months ended March 31, 2016, an increase of 14.4%. 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 May 8, 2017, 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 will be paid on May 31, 2017 to shareholders of record as of the close of business on May 22, 2017. In addition, the company expects to pay quarterly dividends of $0.08 per share in the next two quarters.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Conference Call Details</span>

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release at 9 a.m. ET on Tuesday, May 9, 2017. The call will be available as a live, listen-only webcast at www.ormat.com/investors. 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:                10104670

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">About Ormat Technologies</span>

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 474 employees in the United States and over 700 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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Ormat’s Safe Harbor Statement</span>

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.

Ormat Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Month Periods Ended March 31, 2017 and 2016
(Unaudited)
                                                                                                                              Three Months Ended March 31
                                                                                                                              2017             2016
                                                                                                                              (In thousands, except per share data)
      Revenues:
      Electricity                                                                                                             $     115,776    $     107,868
      Product                                                                                                                       74,122           43,726
      Total revenues                                                                                                                189,898          151,594
      Cost of revenues:
      Electricity                                                                                                                   66,036           63,686
      Product                                                                                                                       49,452           24,035
      Total cost of revenues                                                                                                        115,488          87,721
      Gross profit                                                                                                                  74,410           63,873
      Operating expenses:
      Research and development expenses                                                                                             602              349
      Selling and marketing expenses                                                                                                4,363            3,675
      General and administrative expenses                                                                                           9,949            8,749
      Write-off of unsuccessful exploration activities                                                                              --               557
      Operating income                                                                                                              59,496           50,543
      Other income (expense):
      Interest income                                                                                                               244              320
      Interest expense, net                                                                                                         (14,923 )        (16,023 )
      Derivatives and foreign currency transaction gains (losses)                                                                   1,338            1,962
      Income attributable to sale of tax benefits                                                                                   6,157            4,398
      Other non-operating expense, net                                                                                              (92     )        191
      Income before income taxes and equity in losses of investees                                                                  52,220           41,391
      Income tax provision (benefit)                                                                                                (10,886 )        (9,509  )
      Equity in losses of investees, net                                                                                            (1,599  )        (937    )
      Net income                                                                                                                    39,735           30,945
      Net income attributable to noncontrolling interest                                                                            (4,423  )        (1,674  )
      Net income attributable to the Company’s stockholders                                                                   $     35,312     $     29,271
      Earnings per share attributable to the Company’s stockholders - Basic and diluted:
      Basic:
      Net Income                                                                                                              $     0.71       $     0.60
      Diluted:
      Net Income                                                                                                              $     0.70       $     0.59
      Weighted average number of shares used in computation of earnings per share attributable to the Company’s stockholders:
      Basic                                                                                                                         49,680           49,173
      Diluted                                                                                                                       50,491           49,782
Ormat Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of March 31, 2017 and December 31, 2016
(Unaudited)
                                                                                  March 31,            December 31,
                                                                                  2017                 2016
                                                                                       (In thousands)
     ASSETS
     Current assets:
     Cash and cash equivalents                                                    $    174,138         $    230,214
     Restricted cash, cash equivalents and marketable securities                       59,879               34,262
     Receivables:
     Trade                                                                             68,920               80,807
     Other                                                                             10,976               17,482
     Inventories                                                                       17,804               12,000
     Costs and estimated earnings in excess of billings on uncompleted contracts       56,550               52,198
     Prepaid expenses and other                                                        40,482               45,867
     Total current assets                                                              428,749              472,830
     Investment in an unconsolidated company                                           2,806                --
     Deposits and other                                                                20,075               18,553
     Deferred charges                                                                  43,960               43,773
     Property, plant and equipment, net                                                1,542,687            1,556,378
     Construction-in-process                                                           351,636              306,709
     Deferred financing and lease costs, net                                           3,465                3,923
     Intangible assets, net                                                            86,800               52,753
     Goodwill                                                                          19,710               6,650
     Total assets                                                                 $    2,499,888       $    2,461,569
     LIABILITIES AND EQUITY
     Current liabilities:
     Accounts payable and accrued expenses                                        $    95,518          $    91,650
     Short-term revolving credit lines with banks (full recourse)                      30,000               --
     Billings in excess of costs and estimated earnings on uncompleted contracts       17,595               31,630
     Current portion of long-term debt:
     Limited and non-recourse:
     Senior secured notes                                                              32,285               32,234
     Other loans                                                                       21,495               21,495
     Full recourse                                                                     10,598               12,242
     Total current liabilities                                                         207,491              189,251
     Long-term debt, net of current portion:
     Limited and non-recourse:
     Senior secured notes                                                              344,397              350,388
     Other loans                                                                       256,787              261,845
     Full recourse:
     Senior unsecured bonds                                                            203,649              203,577
     Other loans                                                                       56,890               57,063
     Accumulated losses of unconsolidated company in excess of investment              --                   11,081
     Liability associated with sale of tax benefits                                    51,122               54,662
     Deferred lease income                                                             53,798               54,561
     Deferred income taxes                                                             42,283               35,382
     Liability for unrecognized tax benefits                                           6,312                5,738
     Liabilities for severance pay                                                     19,530               18,600
     Asset retirement obligation                                                       23,803               23,348
     Other long-term liabilities                                                       32,130               21,294
     Total liabilities                                                                 1,298,192            1,286,790
     Reedemable non-controlling interest                                               5,195                4,772
     Equity:
     The Company’s stockholders’ equity:
     Common stock                                                                      50                   50
     Additional paid-in capital                                                        871,176              869,463
     Retained earnings (accumulated deficit)                                           243,508              216,644
     Accumulated other comprehensive income (loss)                                     (7,076    )          (7,732    )
                                                                                       1,107,658            1,078,425
     Noncontrolling interest                                                           88,843               91,582
     Total equity                                                                      1,196,501            1,170,007
     Total liabilities and equity                                                 $    2,499,888       $    2,461,569

Ormat Technologies, Inc. and Subsidiaries

Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information

For the Three Month Periods Ended March 31, 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 periods ended March 31, 2017 and 2016.

                                                                                                                                     Three Months Ended March 31
                                                                                                                                     2017              2016
                                                                                                                                     (in thousands)
 Net cash provided by operating activities                                                                                           $   71,463        $   27,044
 Adjusted for:
 Interest expense, net (excluding amortization of deferred financing costs)                                                              13,405            14,127
 Interest income                                                                                                                         (244     )        (320    )
 Income tax provision                                                                                                                    10,886            9,509
 Adjustments to reconcile net income or loss to net cash provided by operating activities (excluding depreciation and amortization)      (4,669   )        30,082
 EBITDA                                                                                                                              $   90,841        $   80,442
 Mark-to-market gains or losses from accounting for derivatives                                                                          (1,523   )        (1,746  )
 Stock-based compensation                                                                                                                1,713             842
 Merger and acquisition transaction cost                                                                                                 800               147
 Write-off of unsuccessful exploration activities                                                                                        --                557
 Adjusted EBITDA                                                                                                                     $   91,831        $   80,242
 Net cash used in investing activities                                                                                               $   (128,738 )    $   (44,620 )
 Net cash provided by (used in) financing activities                                                                                 $   1,199         $   (19,845 )
                                                                                                                                     Three Months Ended March 31
                                                                                                                                     2017              2016
                                                                                                                                     (in thousands)
 Net income                                                                                                                          $   39,735        $   30,945
 Adjusted for:
 Interest expense, net (including amortization of deferred financing costs)                                                              14,679            15,703
 Income tax provision                                                                                                                    10,886            9,509
 Depreciation and amortization                                                                                                           25,541            24,285
 EBITDA                                                                                                                              $   90,841        $   80,442
 Mark-to-market gains or losses from accounting for derivatives                                                                          (1,523   )        (1,746  )
 Stock-based compensation                                                                                                                1,713             842
 Merger and acquisition transaction cost                                                                                                 800               147
 Write-off of unsuccessful exploration activities                                                                                        --                557
 Adjusted EBITDA                                                                                                                     $   91,831        $   80,242

Backlog as of May 8, 2017 and includes revenues for the period between April 1, 2017 and May 8, 2017.

New contracts and change orders in the period between February 27, 2017 until May 8, 2017.

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

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