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Ormat Technologies Inc$52.82$.12.23%

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 Ormat Technologies Reports 2017 Third Quarter Earnings
   Tuesday, November 07, 2017 6:11:20 PM ET

Management Affirms Full-Year Total Revenue and Adjusted EBITDA Guidance

RENO, NV--(Marketwired - November 07, 2017) - Ormat Technologies, Inc. (ORA ) today announced financial results for the third quarter ended September 30, 2017.

($ millions, except per share amounts)                                  Q3 2017    Q3 2016    Change
Revenues                                                                         
                            Electricity                          $112.3     $109.8     2.3%
                            Product                              $44.9      $74.8      (40.0%)
Total Revenues                                                          $157.2     $184.6     (14.9%)
Gross margin (%)                                                                 
                            Electricity                          41.4%      39.4%      5.1%
                            Product                              28.3%      41.7%      (32.2%)
Gross margin (%)                                                        37.7%      40.3%      (6.6%)
Operating income                                                        $44.0      $48.2      (8.8%)
Net income attributable to the Company’s shareholders                   $19.2      $12.1      58.8%
Diluted EPS                                                             $0.38      $0.24      58.3%
                                                                          
Adjusted Net income attributable to the Company’s stockholders ((1))    $21.1      $28.1      (24.9%)
Adjusted Diluted EPS (1)                                                $0.42      $0.56      (25.0%)
Adjusted EBITDA                                                         $76.4      $85.4      (10.5%)

(1) Adjusted Net income attributable to the Company’s stockholders and diluted EPS for the third quarter of 2017 excludes $1.9 million or $0.04 per diluted share, attributable to a one-time make whole premium paid in connection with the prepayment of OFC Senior Secured Notes and DEG loan. Adjusted Net income attributable to the Company’s stockholders and diluted EPS for the third quarter of 2016 excludes $16.0 million or $0.32 per diluted share, related to $11.0 million of expenses related to the settlement of a previously outstanding claim and $5.0 million in one-time prepayment fees.

Third quarter 2017 highlights and recent developments:

Total revenues of $157.2 million, down 14.9% compared to the third quarter of 2016;

Electricity segment revenues of $112.3 million, up 2.3% compared to the third quarter of 2016, mainly due to higher performance of our Puna plant in Hawaii, our Bouillante power plant in Guadeloupe and partial contribution of the recently commenced Platanares power plant in Honduras, as well as revenue generated from our demand response and storage activity;

Product segment revenues of $44.9 million, down 40.0% compared to the third quarter of 2016, mainly due to near-completion of our Sarulla contract; Revenue for the full year 2017 are expected to remain on track with our full year guidance;

Electricity generation decreased 2.2%, compared to the third quarter of 2016, from 1.26 million MWh to 1.23 million MWh;

Gross margin was 37.7% of total revenues compared to 40.3% in the third quarter of 2016, due to lower revenues and lower margins in the Product segment, as expected; Electricity segment gross margin increased to 41.4% from 39.4%;

Operating income decreased 8.8% to $44.0 million compared to $48.2 million in the third quarter of 2016;

Net income attributable to the company’s shareholders was $19.2 million, or $0.38 per diluted share, compared to $12.1 million, or $0.24 per diluted share, in the third quarter of 2016;

Adjusted net income attributable to the company’s shareholders of $21.1 million, or $0.42 per diluted share, compared to $28.1 million, or $0.56 per diluted share, in the third quarter of 2016;

Adjusted EBITDA of $76.4 million, down 10.5% compared to $85.4 million in the third quarter of 2016;

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

Commenced commercial operation of the 35 MW Platanares power plant, the first geothermal power plant in Honduras that is expected to generate approximately $33 million of annual revenues; and

Commenced commercial operation of the second unit of the Sarulla geothermal power plant, located in Indonesia’s North Sumatra and expanded its generating capacity to 220 MW (28 MW Ormat’s share);

"This was a strategically important quarter in our electricity segment, as we increased revenue and gross margin mainly due to the performances of our Bouillante power plant in Guadeloupe, and our Puna plant in Hawaii," commented Isaac Angel, Chief Executive Officer. "Our revenues and gross margin from our electricity segment continue to benefit from our ongoing efforts to improve efficiencies, and we expect further improvements in 2018 and beyond. Our Platanares power plant in Honduras commences operation toward the end of the third quarter and contributed to the electricity segment results as well. We are very excited about the long-term potential in Honduras and with Platanares, our first facility in the region. We expect the Tungsten Mountain project in Nevada to come online by the end of 2017. Tungsten Mountain will increase our portfolio to 800 MW and will further strengthen our results and contribute to our innovative portfolio PPA with SCPPA."

"Product segment revenue for the full year 2017 is expected to remain strong," added Mr. Angel. "As we have previously indicated, quarterly fluctuations in our product segment do occur based on the status and timing of our sales orders, delivery of raw materials and the completion of manufacturing of such orders. Such fluctuations may cause lower revenues and profitability on a quarterly basis as it did in the quarter. Our efforts to secure new orders bore fruit and we reached a backlog of $182 million as of November 7, 2017, strengthening and supporting our product segment revenue in 2018."

Guidance

Mr. Angel added, "We remain confident in our full-year outlook, and are narrowing our guidance range, and slightly increasing the expectations for the total revenue and Adjusted EBITDA, based on increasing visibility into our fourth quarter results.

We reiterate our guidance and we expect full-year 2017 total revenues between $686.0 million and $696.0 million with electricity segment revenues between $463.0 million and $468.0 million and product segment revenues between $223.0 million and $228.0 million. We expect 2017 Adjusted EBITDA between $343.0 million and $348.0 million for the full year. We expect annual Adjusted EBITDA attributable to non-controlling interest to be approximately $23.0 million."

Third Quarter 2017 Financial Results

For the three months ended September 30, 2017, total revenues were $157.2 million, down from $184.6 million for the three months ended September 30, 2016, a decrease of 14.9%. Electricity segment revenues increased 2.3% to $112.3 million for the three months ended September 30, 2017, up from $109.8 million for the three months ended September 30, 2016. Product segment revenues decreased 40.0% to $44.9 million for the three months ended September 30, 2017, from $74.8 million for the three months ended September 30, 2016.

General and administrative expenses for the three months ended September 30, 2017 were $10.9 million, or 6.9% of total revenues, compared to $19.1 million, or 10.3% of total revenues, for the three months ended September 30, 2016. The decrease was primarily attributable to $11.0 million expenses in the three months ended September 30, 2016, related to a settlement of a previously outstanding claim. The decrease was partially offset by general and administrative expenses attributable to the demand response and storage activity that we acquired on March 15, 2017.

The company reported net income attributable to the company’s shareholders of $19.2 million, or $0.38 per diluted share, compared to net income attributable to the company’s shareholders of $12.1 million, or $0.24 per diluted share, for the same period last year. This increase in net income was primarily attributable to a decrease of $5.4 million in interest expense, net, related to the early repayment of two higher interest loans and a decrease in other non-operating expense of $4.0 million, partially offset by a decrease in operating income of $4.3 million. Adjusted net income attributable to the company’s shareholders was $21.1 million, or $0.42 per diluted share, which excludes $1.9 million or $0.04 per diluted share of attributable to the make whole premium associated with the full prepayment of the OFC Senior Secured Notes and DEG loan.

Adjusted EBITDA for the three months ended September 30, 2017 was $76.4 million, compared to $85.4 million for the three months ended September 30, 2016, a decrease of 10.5%. 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.

Backlog

Ormat’s Product segment backlog, as of November 8, 2017, was $182.0 million, which included revenues for the period between October 1, and November 8, 2017.

Dividend

On November 7, 2017, the Company’s Board of Directors approved and authorized payment of a quarterly dividend of $0.08 per share pursuant to the company’s dividend policy. The dividend will be paid on December 5, 2017 to shareholders of record as of the close of business on November 21, 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 Wednesday, November 8, 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 New & Events 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: 10113007

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 776 MW generating portfolio is spread globally in the U.S., Guatemala, Guadeloupe, Honduras, Indonesia and Kenya. Ormat also intends to expand its operations and provide energy management and energy storage solutions, by leveraging its core capabilities and global presence as well as through its Viridity Energy Solutions, Inc. subsidiary, a Philadelphia-based company with nearly a decade of expertise and leadership in demand response, energy management and storage.

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.

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

                                                                                                                                                                     
                                                                                                                               Three Months Ended September 30                        Nine Months Ended September 30         
                                                                                                                               2017                         2016                      2017                2016               
                                                                                                                                                                     
                                                                                                                               (In thousands, except per share data)                  (In thousands, except per share data)  
Revenues:                                                                                                                                                                   
                                    Electricity                                                                                $           112,273          $           109,795       $        339,826    $        321,664   
                                    Product                                                                                         44,912                74,822          186,621      174,408   
                                                                        Total revenues                                157,185               184,617         526,447      496,072   
Cost of revenues:                                                                                                                                                           
                                    Electricity                                                                                     65,774                66,481          197,249      192,410   
                                    Product                                                                                         32,218                43,647          125,102      99,504    
                                                                        Total cost of revenues                        97,992                110,128         322,351      291,914   
Gross profit                                                                                                                        59,193                74,489          204,096      204,158   
Operating expenses:                                                                                                                                                         
                                    Research and development expenses                                                        716                   1,086           2,368        2,030     
                                    Selling and marketing expenses                                                           3,630                 4,793           12,083       12,136    
                                    General and administrative expenses                                                      10,877                19,093          33,027       36,625    
                                    Write-off of unsuccessful exploration activities                                         -                     1,294           -            2,714     
                                                                        Operating income                                     43,970                48,223          156,618      150,653   
Other income (expense):                                                                                                                                                     
                                    Interest income                                                                          255                   266             861          831       
                                    Interest expense, net                                                                           (11,692     )                (17,137     )          (41,155  )          (51,561  )
                                    Derivatives and foreign currency transaction gains (losses)                                     (1,001      )                (222        )          2,040        (2,592   )
                                    Income attributable to sale of tax benefits                                              3,506                 3,463           14,019       12,380    
                                    Other non-operating expense, net                                                         (1,592      )                (5,546      )          (1,678   )          (5,306   )
                                                                        Income before income taxes and equity in                                       
                                                                        losses of investees                           33,446                29,047          130,705      104,405   
Income tax provision (benefit)                                                                                                             (11,003     )                (11,988     )          (28,258  )          (29,387  )
Equity in losses of investees, net                                                                                                  337                   (2,653      )          (1,690   )          (4,734   )
                                                                                                                                                                     
                                    Net income                                                                                      22,780                14,406          100,757      70,284    
                                    Net income attributable to noncontrolling interest                                       (3,599      )                (2,326      )          (11,228  )          (4,584   )
                                    Net income attributable to the Company’s stockholders                                      $           19,181           $           12,080        $        89,529     $        65,700    
                                                                                                                                                                     
Earnings per share attributable to the Company’s stockholders - Basic and diluted:                                                                                                                      
Basic:                                                                                                                                                                      
                                    Net Income                                                                                 $           0.38             $           0.24          $        1.79       $        1.33      
                                                                                                                                                                     
Diluted:                                                                                                                                                                    
                                    Net Income                                                                                 $           0.38             $           0.24          $        1.77       $        1.31      
                                                                                                                                                                     
Weighted average number of shares used in computation of earnings per share attributable to the Company’s stockholders:                                              
                                    Basic                                                                                           50,367                49,599          49,942       49,410    
                                    Diluted                                                                                         50,867                50,289          50,669       50,097    
                                                                                                                                                                     

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

                                                                                                                                          
                                                                                                                            September 30,    December 31,
                                                                                                                            2017                    2016
                                                                                                                                          
                                                                                                                                (In thousands)
ASSETS
Current assets:                                                                                                                                  
            Cash and cash equivalents                                                                                       $          77,212       $         230,214
            Restricted cash, cash equivalents and marketable securities                                                  42,559          34,262
                                 Receivables:                                                                                      
                                                                    Trade                                         98,384          80,807
                                                                    Other                                         11,591          17,482
                                 Inventories                                                                             18,685          12,000
                                 Costs and estimated earnings in excess of billings on uncompleted contracts      42,087          52,198
                                 Prepaid expenses and other                                                       41,727          45,867
                                                                    Total current assets                   332,245         472,830
Investment in an unconsolidated company                                                                                         25,367          -
Deposits and other                                                                                                                     17,371          18,553
Deferred charges                                                                                                                43,972          43,773
Property, plant and equipment, net                                                                                                     1,621,012       1,556,378
Construction-in-process                                                                                                                350,872         306,709
Deferred financing and lease costs, net                                                                                         5,426           3,923
Intangible assets, net                                                                                                                 86,806          52,753
Goodwill                                                                                                                               20,667          6,650
                                                                    Total assets                       $          2,503,738    $         2,461,569
LIABILITIES AND EQUITY
Current liabilities:                                                                                                                             
            Accounts payable and accrued expenses                                                                    $          103,335      $         91,650
            Short-term revolving credit lines with banks (full recourse)                                                 33,900          -
            Billings in excess of costs and estimated earnings on uncompleted contracts                                  6,015           31,630
            Current portion of long-term debt:                                                                                     
                                 Limited and non-recourse:                                                                  
                                                                    Senior secured notes                          27,847          32,234
                                                                    Other loans                            21,495          21,495
            Full recourse                                                                                                864             12,242
                                                                    Total current liabilities              193,456         189,251
Long-term debt, net of current portion:                                                                                                   
            Limited and non-recourse:                                                                                                     
                                 Senior secured notes                                                                    322,299         350,388
                                 Other loans                                                                      247,401         261,845
            Full recourse:                                                                                                                
                                 Senior unsecured bonds                                                           203,715         203,577
                                 Other loans                                                                      48,957          57,063
Accumulated losses of unconsolidated company in excess of investment                                                            -               11,081
Liability associated with sale of tax benefits                                                                                  46,803          54,662
Deferred lease income                                                                                                           52,273          54,561
Deferred income taxes                                                                                                                  54,495          35,382
Liability for unrecognized tax benefits                                                                                         6,188           5,738
Liabilities for severance pay                                                                                                   20,364          18,600
Asset retirement obligation                                                                                                     24,740          23,348
Other long-term liabilities                                                                                                     19,121          21,294
                                                                    Total liabilities                      1,239,812       1,286,790
                                                                                                                                          
Redeemable non-controlling interest                                                                                             6,481           4,772
                                                                                                                                          
Equity:                                                                                                                                          
            The Company’s stockholders’ equity:                                                                                    
                                 Common stock                                                                     51              50
                                 Additional paid-in capital                                                              896,005         869,463
                                 Retained earnings (accumulated deficit)                                                 289,561         216,644
                                 Accumulated other comprehensive income (loss)                                    (5,634)         (7,732)
                                                                                                                                1,179,983       1,078,425
Noncontrolling interest                                                                                                         77,462          91,582
                                 Total equity                                                                     1,257,445       1,170,007
                                 Total liabilities and equity                                                 $          2,503,738    $         2,461,569
                                                                                                                                          

Ormat Technologies, Inc. and Subsidiaries Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information For the Three and Nine-Month Periods Ended September 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 nine months periods ended September 30, 2017 and 2016.

                                                        Three Months Ended September 30                                        Nine Months Ended September 30
                                                        2017                                               2016                2017                 2016
                                                                                                             
                                                        (in thousands)                                                                (in thousands)
Net cash provided by operating activities               $                                       52,375     $        38,454     $        166,533     $        158,027
Adjusted for:                                                                                                       
Interest expense, net (excluding amortization                                                                       
of deferred financing costs)                                                             10,515       15,977       37,186        47,269
Interest income                                                                          (255)        (266)        (861)         (831)
Income tax provision                                                                            11,003       11,988       28,258        29,387
Adjustments to reconcile net income or loss to net cash                                                      
provided by operating activities (excluding                                                                  
depreciation and amortization)                                                           (2,667)      2,259        15,234        (10,178)
EBITDA                                                         $                                       70,971     $        68,412     $        246,350     $        223,674
                                                                                                             
Mark-to-market gains or losses from accounting for derivatives                                  1,663        (1,697)      (800)         797
Stock-based compensation                                                                        1,861        1,724        7,204         3,383
Gains or losses on sale of subsidiary and property, plant and equipment                         -            (686)        -             (686)
Gains or losses from extinguishment of debt                                              1,950        5,780        1,950         5,780
Termination fees                                                                                -            11,000       -             11,000
Merger and acquisition transaction cost                                                  -            (412)        1,700         235
Write-off of unsuccessful exploration activities                                         -            1,294        -             2,714
Adjusted EBITDA                                         $                                       76,445     $        85,415     $        256,404     $        246,897
                                                                                                             
                                                                                                             
Net cash used in investing activities                   $                                       (67,465)   $        (69,900)   $        (261,570)   $        (125,189)
Net cash provided by (used in) financing activities     $                                       (26,088)   $        (71,045)   $        (57,965)    $        (128,692)
                                                                                                                                
                                                                                                                                
                                                                                                                                
                                                                     Three Months Ended September 30                           Nine Months Ended September 30
                                                                     2017                                  2016                2017                2016
                                                                                                            
                                                                     (in thousands)                                                   (in thousands)
Net income                                                                  $                          22,780     $        14,406     $        100,757    $        70,284
Adjusted for:                                                                                                      
Interest expense, net (including amortization                                                                      
of deferred financing costs)                                                             11,437       16,871       40,294       50,730
Income tax provision                                                                            11,003       11,988       28,258       29,387
Depreciation and amortization                                                            25,751       25,147       77,041       73,273
EBITDA                                                                      $                          70,971     $        68,412     $        246,350    $        223,674
                                                                                                            
Mark-to-market gains or losses from accounting for derivatives                                         1,663        (1,697)      (800)        797
Stock-based compensation                                                                        1,861        1,724        7,204        3,383
Gains or losses on sale of subsidiary and property, plant and equipment                                -            (686)        -            (686)
Gains or losses from extinguishment of debt                                              1,950        5,780        1,950        5,780
Settlement expenses                                                                             -            11,000       -            11,000
Merger and acquisition transaction cost                                                  -            (412)        1,700        235
Write-off of unsuccessful exploration activities                                         -            1,294        -            2,714
Adjusted EBITDA                                                      $                          76,445     $        85,415     $        256,404    $        246,897
                                                                                                            

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 Hayden - IR 646-415-8972 rob@haydenir.com



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