ORA Ormat Technologies Inc

Record Revenues of $64.1 Million for the Second Quarter of 2006, a 14.4% Increase Over Prior Year's Quarter RENO, Nev., Aug. 6 /PRNewswire-FirstCall/ -- ORMAT Technologies, Inc. (NYSE:ORA) today announced financial results for the second quarter ended June 30, 2006. For the second quarter, total revenues were $64.1 million compared to $56.0 million for the second quarter of 2005, an increase of 14.4 %. (Logo: http://www.newscom.com/cgi-bin/prnh/20040422/LATH066LOGO ) Electricity segment revenues for the quarter were $48.8 million, an increase of 15.0% compared to $42.4 million for the same quarter in 2005. Product segment revenues for the quarter were $15.3 million, an increase of 12.4% compared to $13.6 million for the same quarter in 2005. The increase in revenues was primarily attributed to revenues generated from the Zunil project in Guatemala (which was consolidated as of March 13, 2006) and from the Burdette plant (whose construction was completed in November 2005 and commercial operation declared on February 28, 2006), as well as higher energy rates, coupled with increased capacity for power supplied under the power purchase agreement of the Puna project. Net income for the quarter ended June 30, 2006 was $8.4 million, or $0.24 per share of common stock, compared with net income of $4.1 million, or $0.13 per share of common stock, for the same quarter in 2005. There were 35.3 million weighted average number of shares used in computation of diluted earnings per share in the first quarter of 2006 and 31.6 million shares in the same quarter in 2005. For the quarter ended June 30, 2006, the Company's gross margin was 36.8%, compared to 30.0% for the same quarter in 2005. Operating income for the quarter ended June 30, 2006 was $15.5 million compared with $11.5 million for the same quarter in 2005. Adjusted EBITDA for the quarter ended June 0, 2006 was $29.1 million compared with $24.8 million for the same quarter in 2005. Adjusted EBITDA includes consolidated EBITDA and the Company's share in the operating income and depreciation and amortization totaling $3.4 million and $4.9 million for the quarters ended June 30, 2006 and 2005, respectively, related to the Company's unconsolidated investment interests of 50% in the Mammoth project in California and 80% in the Leyte project in the Philippines. The reconciliation of GAAP net income to Adjusted EBITDA is set forth below in this release. For the six months ended June 30, 2006, total revenues were $124.4 million, a 13.2% increase over total revenues of $109.9 million for the same period in 2005. Net income for the six months ended June 30, 2006 was $16.3 million or $0.49 per share of common stock compared with $8.0 million or $0.25 per share for the same period of 2005. There were 33.5 million weighted average number of shares used in computation of diluted earnings per share in the first half of 2006 and 31.6 million shares during the same period in 2005. For the six months ended June 30, 2006 the Company's gross margin was 37.4%, compared with 33.1% during the same period in 2005. Operating income for the six months ended June 30, 2006 was $30.2 million compared with $24.9 million for the same period in 2005. Adjusted EBITDA for the six months ended June 30, 2006 was $57.5 million compared with $50.9 million for the same period in 2005. Adjusted EBITDA includes operating income, depreciation and amortization totaling $7.5 million and $8.9 million, for the six months ended June 30, 2006 and 2005, respectively, related to the Company's unconsolidated investment interests of 50% in the Mammoth project in California and 80% in the Leyte project in the Philippines. The reconciliation of GAAP net income to Adjusted EBITDA is set forth below in this release. As of June 30, 2006, the Company had cash, cash equivalents and marketable securities of $108.6 million compared to $70.5 million as of December 31, 2005. The increase in the Company's cash position was principally due to the closing of the sale of 4,025,000 shares of common stock at $35.50 per share in a follow-on public offering (including the exercise of the underwriters' over-allotment option) in April 2006. This resulted in net proceeds of approximately $135.1 million, which the Company expects to use to pursue its corporate growth strategies. Additionally, Ormat utilized a portion of its cash position to fund capital expenditures in the amount of $80.0 million, investment in Orzunil of $15.4 million and repayment of long-term debt. On August 6, 2006, Ormat's Board of Directors approved the payment of a quarterly cash dividend of $0.04 per share, pursuant to the Company's dividend policy, which targets an annual payout ratio of at least 20% of the Company's net income, subject to Board approval. The dividend will be paid on August 30, 2006 to shareholders of record as of the close of business on August 23, 2006. The Company expects to pay a dividend of $0.04 per share in the next quarter as well. Commenting on second quarter results, Dita Bronicki, President and Chief Executive Officer of Ormat, said, "Ormat continued to position itself in the second quarter for future growth. Both our business segments generated increased revenues during the second quarter. We added $41 million from new orders to our product backlog, positioning Ormat for added growth in its products segment. In addition, by winning the tender for the 340 MW Sarulla project in Indonesia, expected to be the world's largest geothermal power project, we expect to secure significant revenues for our product segment for the period between 2008 and 2011 and we continue to demonstrate Ormat's leadership role in the global geothermal business." Commenting on Ormat's progress in its newest business initiative, Mrs. Bronicki said, "We are particularly pleased with the results of our recovered energy power generation business in the first six months of 2006, having recognized revenues of approximately $9.2 million during this period compared to $0.6 million in the same period last year." Ormat also announced that it signed two 20-year power purchase agreements with Sierra Pacific for up to 30 MW each of geothermal power. Both contracts stem from Sierra Pacific's outstanding request for proposal from last year, where Sierra evaluated not only geothermal, but also energy produced from wind, solar and other renewable sources. Commenting on the outlook for 2006, Mrs. Bronicki said, "We expect that our 2006 electricity segment revenues will be 1.0%-2.0% lower than our previously reported estimate of $204.0 million due to delays in the completion of some of our projects under construction. We also expect an additional $18 million of revenue from our share of electricity revenue generated by Mammoth and Leyte, which are accounted for under the equity method. With regard to our products segment, we currently expect that our 2006 revenue will be between $65 million and $70 million." Conference Call Details Ormat will host a conference call to discuss its financial results and other matters discussed in this press release at 9:00 a.m. U.S. E.D.T. on Monday, August 7, 2006. The call will be available as a live, listen-only webcast at http://www.ormat.com/ . A 30-day archive of the webcast will be available approximately 2 hours after the conclusion of the live call. To listen to a replay, please call 1-877-519-4471 in the United States and Canada and 1-973-341-3080 for international callers and utilize code 7610837. About Ormat Technologies Ormat Technologies, Inc. is a vertically integrated company primarily engaged in the geothermal and recovered energy power business. The Company designs, develops, builds, owns and operates geothermal power plants. It also designs, develops and builds, and plans to own and operate, recovered energy-based power plants. Additionally, the Company designs, manufactures and sells geothermal and recovered energy power units and other power generating equipment, and provides related services. Ormat products and systems are covered by more than 70 patents. ORMAT currently operates the following geothermal power plants: in the United States -- Brady, Desert Peak, Heber, Mammoth, Ormesa, Puna and Steamboat; in the Philippines -- Leyte; in Guatemala -- Zunil; in Kenya -- Olkaria; and in Nicaragua -- Momotombo. 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 28, 2006 and the Prospectus Supplement filed with the Securities and Exchange Commission on April 5, 2006. 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. About non-GAAP financial measures This press release includes a financial measure defined as a non-GAAP financial measure by the Securities and Exchange Commission: adjusted EBITDA. This measure may be different from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management of Ormat Technologies, Inc. believes that adjusted EBITDA provides meaningful supplemental information that both management and investors benefit from in assessing Ormat Technologies' ability to service and/or incur debt. Ormat Technologies Contact: Investor Relations Contact Dita Bronicki Todd Fromer / Marybeth Csaby CEO and President KCSA Worldwide +1-775-356-9029 212-896-1215 / 212-896-1236 / Ormat Technologies, Inc. and Subsidiaries Condensed Consolidated Statements of Operations For the three and six month periods ended June 30, 2006 and 2005 (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 (in thousands, (in thousands, except per except per share amounts) share amounts) Revenues: Electricity: Energy and capacity $28,857 $25,457 $54,022 $49,966 Lease portion of energy and capacity 19,238 16,650 37,135 32,593 Lease income 672 287 1,343 287 Total electricity 48,767 42,394 92,500 82,846 Products 15,319 13,631 31,907 27,075 Total revenues 64,086 56,025 124,407 109,921 Cost of revenues: Electricity: Energy and capacity 20,368 19,782 37,542 36,055 Lease portion of energy and capacity 9,258 7,394 17,640 14,733 Lease expense 1,310 615 2,621 615 Total electricity 30,936 27,791 57,803 51,403 Products 9,580 11,427 20,112 22,110 Total cost of revenues 40,516 39,218 77,915 73,513 Gross margin 23,570 16,807 46,492 36,408 Operating expenses: Research and development expenses 890 714 1,663 1,094 Selling and marketing expenses 2,826 1,651 5,521 3,859 General and administrative expenses 4,404 2,975 9,088 6,602 Operating income 15,450 11,467 30,220 24,853 Other income (expense): Interest income 2,347 1,075 3,462 1,885 Interest expense (7,741) (9,502) (15,194) (19,800) Foreign currency translation and transaction gains (losses) (69) 39 (77) (44) Other non-operating income 204 72 307 112 Income before income taxes, minority interest, and equity in income of investees 10,191 3,151 18,718 7,006 Income tax provision (2,156) (1,154) (4,070) (2,634) Minority interest in earnings of subsidiaries (571) -- (571) -- Equity in income of investees 931 2,097 2,210 3,630 Net income $8,395 $4,094 $16,287 $8,002 Earnings per share - basic and diluted $0.24 $0.13 $0.49 $0.25 Weighted average number of shares used in computation of earnings per share: Basic 35,105 31,563 33,343 31,563 Diluted 35,254 31,579 33,475 31,576 Ormat Technologies, Inc. and Subsidiaries Consolidated Balance Sheets As of June 30, 2006 and December 31, 2005 (Unaudited) June 30 December 31, 2006 2005 (in thousands) Assets Current assets: Cash and cash equivalents $24,736 $26,976 Marketable securities 83,823 43,560 Restricted cash, cash equivalents and marketable securities 36,126 36,732 Receivables: Trade 36,879 33,515 Related entities 1,642 524 Other 2,620 2,629 Inventories, net 5,117 5,224 Costs and estimated earnings in excess of billings on uncompleted contracts 2,493 8,883 Deferred income taxes 4,246 1,663 Prepaid expenses and other 5,397 3,256 Total current assets 203,079 162,962 Unconsolidated investments 38,189 47,235 Deposits and other 14,386 13,489 Deferred income taxes 7,108 5,376 Property, plant and equipment, net 594,732 491,835 Construction-in-process 132,443 128,256 Deferred financing and lease costs, net 16,862 17,412 Intangible assets, net 46,505 47,915 Total assets $1,053,304 $914,480 Liabilities and Stockholders' Equity Current liabilities: Short-term bank credit $-- $3,996 Accounts payable and accrued expenses 44,008 50,048 Billings in excess of costs and estimated earnings on uncompleted contracts 9,827 12,657 Current portion of long-term debt: Limited and non-recourse 8,503 2,888 Full recourse 1,000 1,000 Senior secured notes (non-recourse) 24,091 23,754 Due to Parent, including current portion of notes payable to Parent 31,181 32,003 Total current liabilities 118,610 126,346 Long-term debt, net of current portion: Limited and non-recourse 26,560 11,252 Full recourse 1,000 2,000 Senior secured notes (non-recourse) 315,280 324,645 Notes payable to Parent, net of current portion 123,572 140,162 Other liabilities -- 1,309 Deferred lease income 80,226 81,569 Deferred income taxes 25,758 22,004 Liabilities for severance pay 12,668 11,409 Asset retirement obligation 12,578 11,461 Total liabilities 716,252 732,157 Minority interest in net assets of subsidiaries 5,373 64 Stockholders' equity: Common stock, par value $0.001 per share; 200,000,000 shares authorized; 35,587,496 and 31,562,496 shares issued and outstanding, respectively 35 31 Additional paid-in capital 259,545 124,008 Unearned stock-based compensation -- (153) Retained earnings 69,741 55,824 Accumulated other comprehensive income 2,358 2,549 Total stockholders' equity 331,679 182,259 Total liabilities and stockholders' equity $1,053,304 $914,480 Ormat Technologies, Inc. and Subsidiaries Reconciliation of adjusted EBITDA EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA includes operating income, depreciation and amortization of our equity investments in the Mammoth and Leyte projects. EBITDA and adjusted EBITDA are presented because we believe it is 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. EBITDA and adjusted EBITDA are not measurements of financial performance 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. The following table reconciles net income to EBITDA and adjusted EBITDA, for the three and six month periods ended June 30, 2006 and 2005: Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 (in thousands) (in thousands) Net income $8,395 $4,094 $16,287 $8,002 Adjusted for: Equity in income of investees (931) (2,097) (2,210) (3,630) Minority interest in earnings of subsidiaries 571 -- 571 -- Interest expense, net (including amortization of deferred financing costs) 5,463 8,388 11,809 17,959 Other non-operating income (204) (72) (307) (112) Income tax provision 2,156 1,154 4,070 2,634 Depreciation and amortization 10,227 8,447 19,786 17,188 EBITDA 25,677 19,914 50,006 42,041 Equity in income of Mammoth- Pacific L.P. and Ormat Leyte 931 1,885 2,484 3,210 Depreciation, amortization, interest and taxes attributable to the Company's equity in Mammoth- Pacific L.P. and Ormat Leyte 2,461 3,016 5,049 5,684 Adjusted EBITDA $29,069 $24,815 $57,539 $50,935 http://www.newscom.com/cgi-bin/prnh/20040422/LATH066LOGO http://photoarchive.ap.org/ DATASOURCE: Ormat Technologies, Inc. CONTACT: Dita Bronicki, CEO and President of Ormat Technologies, +1-775-356-9029, ; or Investor Relations, Todd Fromer, +1-212-896-1215, , or Marybeth Csaby. +1-212-896-1236, , , both of KCSA Worldwide, for Ormat Technologies Web site: http://www.ormat.com/

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