Ormat Technologies, Inc. (NYSE:ORA) today announced financial results for the second quarter ended June 30, 2017.

Financial Summary:

($ millions, except per share amounts) 2Q 2017 2Q 2016 Change
Revenues      
Electricity $ 111.8   $ 104.0   7.5 %
Product $ 67.6   $ 55.9   21.0 %
Total Revenues $ 179.4   $ 159.9   12.2 %
Gross profit $ 70.5   $ 65.8   7.1 %
Gross margin (%)   39.3 %   41.2 % (4.6 %)
Operating income $ 53.2   $ 51.9   2.4 %
Net income attributable to the Company’s shareholders $ 35.0   $ 24.3   43.9 %
Diluted EPS $ 0.69   $ 0.49   40.8 %
       
Adjusted Net income attributable to the Company’s stockholders (1) $ 29.5     24.3   21.3 %
Adjusted Diluted EPS(1) $ 0.58   $ 0.49   18.4 %
       
Adjusted EBITDA $ 88.1   $ 81.2   8.5 %

Second Quarter 2017 Highlights and Recent Developments:

  • Total revenues of $179.4 million, up 12.2% compared to the second quarter of 2016: - Electricity segment revenues of $111.8 million, up 7.5% compared to the second quarter of 2016, mainly due to higher performance of our Puna plant as well as the consolidation of our Bouillante power plant in Guadeloupe; - Product segment revenues of $67.6 million, up 21.0% compared to the second quarter of 2016;
  • Electricity generation increased 2.4%, compared to the second quarter of 2017, from 1.30 million MWh to 1.33 million MWh;
  • Gross margin was 39.3% of total revenues compared to 41.2% in the second quarter of 2016, due to lower margins in the product segment; Electricity segment margin increased to 41.5% from 40.2%;
  • Operating income increased 2.4% to $53.2 million compared to $51.9 million in the second quarter of 2016;
  • Net income attributable to the company's shareholders of $35.0 million, or $0.69 per diluted share, compared to $24.3 million, or $0.49 per diluted share, in the second quarter of 2016;
  • Adjusted net income attributable to the company's shareholders of $29.5 million, or $0.58 per diluted share, compared to $24.3 million, or $0.49 per diluted share, in the second quarter of 2016;
  • Adjusted EBITDA of $88.1 million, up 8.5% compared to $81.2 million in the second quarter of 2016;
  • Declared a quarterly dividend of $0.08 per share for the second quarter of 2017;
  • Product segment backlog remains strong at $192.0 million2; added approximately $50.0 million of new orders;
  • Executed a new portfolio power purchase agreement (portfolio PPA) with Southern California Public Power Authority (SCPPA), under which SCPPA will purchase 150MW of power generated by a portfolio of Ormat’s new and existing geothermal power plants beginning in the fourth quarter of 2017 at a fixed price of $75.50 per MWh; and
  • ORIX acquired 22% ownership stake in Ormat and the previously reported Commercial Cooperation Agreement entered into by Ormat and ORIX is now effective.             

“Continued growth in our electricity segment and a strong quarter for our products segment enabled us to deliver 12.2% top-line growth in the second quarter,” commented Isaac Angel, Chief Executive Officer. “Our focus on streamlining our entire value chain over the past three years enabled us to increase electricity segment gross margin to 41.5% and to grow our Adjusted EBITDA by 8.5%, demonstrating the strength of our business.”

“During the second quarter we signed the new portfolio PPA with SCPPA. This portfolio PPA will enable both the development of multiple new projects as well as the sustainable operation of several of our existing geothermal power plants. With the SCPPA portfolio PPA in place, Ormat is well positioned for consistent growth in the US. Another recent noteworthy development is that with the closing of ORIX’s acquisition of an approximately 22% ownership stake in Ormat, the Commercial Cooperation Agreement that Ormat and ORIX executed in connection with that acquisition became effective last week, and we expect that it will expand our business opportunities in Asia and other key geographies and may also improve our access to capital,” added Mr. Angel.

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 non-controlling interest to be approximately $23.0 million.”

Second Quarter 2017 Financial Results

For the three months ended June 30, 2017, total revenues were $179.4 million, up from $159.9 million for the three months ended June 30, 2016, an increase of 12.2%. Electricity segment revenues increased 7.5% to $111.8 million in the three months ended June 30, 2017, up from $104.0 million for the three months ended June 30, 2016. Product segment revenues increased 21.0% to $67.6 million for the three months ended June 30, 2017, up from $55.9 million in the three months ended June 30, 2016.

General and administrative expenses for the three months ended June 30, 2017 were $12.2 million, or 6.8% of total revenues, compared to $8.8 million, or 5.5% of total revenues, for the three months ended June 30, 2016. The increase was mainly due to a $2.1 million non-cash charge for stock-based compensation expense associated with the acceleration of the vesting period of the stock options of the CEO and the CFO as part of ORIX’s acquisition of 22% of ownership stake in Ormat; and $0.9 million of costs associated with the ORIX transaction and Ormat’s M&A activities. 

The company reported net income attributable to the company’s shareholders of $35.0 million, or $0.69 per diluted share, compared to net income attributable to the company’s shareholders of $24.3 million, or $0.49 per diluted share, for the same period last year. Adjusted net income attributable to the company’s shareholders was $29.5 million, or $0.58 per diluted share, which excludes $5.5 million and $0.11 per diluted share, respectively, of one-time benefit related to tax restructuring.

Adjusted EBITDA for the three months ended June 30, 2017 was $88.1 million, compared to $81.2 million for the three months ended June 30, 2016, an increase of 8.5%. 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.

Dividend

On August 3, 2017, ORMAT’s Board of Directors approved a quarterly dividend of $0.08 per share pursuant to the company’s dividend policy. The dividend will be paid on August 29, 2017 to shareholders of record as of the close of business on August 15, 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 Thursday, August 3, 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 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:  10110511

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 727 MW generating portfolio is spread globally in the U.S., Guatemala, Guadeloupe, Indonesia 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 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.

_________________________

1 Adjusted Net income attributable to the Company’s stockholders and diluted EPS excludes $5.5 million and $0.11 per diluted share, respectively, of one-time benefit related to tax restructuring as will be fully described in our quarterly report on Form 10Q that will be filled with the SEC on August 4, 2017.

2 Backlog as of August 3, 2017 includes revenues for the period between July 1, 2017 and August 3, 2017.

Ormat Technologies, Inc. and SubsidiariesCondensed Consolidated Statements of OperationsFor the Three and Six-Month Periods Ended June 30, 2017 and 2016(Unaudited) 

     Three Months Ended June 30     Six Months Ended June 30     
    2017     2016     2017     2016      
                             
     (In thousands, except per share data)     (In thousands, except per share data)     
  Revenues:                          
  Electricity $ 111,777     $ 104,001     $ 227,553     $ 211,869      
  Product   67,587       55,860       141,709       99,586      
  Total revenues   179,364       159,861       369,262       311,455      
  Cost of revenues:                          
  Electricity   65,439       62,243       131,475       125,929      
  Product   43,432       31,822       92,884       55,857      
  Total cost of revenues   108,871       94,065       224,359       181,786      
  Gross profit   70,493       65,796       144,903       129,669      
  Operating expenses:                          
  Research and development expenses   1,050       595       1,652       944      
  Selling and marketing expenses   4,090       3,668       8,453       7,343      
  General and administrative expenses   12,201       8,783       22,150       17,532      
  Write-off of unsuccessful exploration activities   —       863       —       1,420      
  Operating income   53,152       51,887       112,648       102,430      
  Other income (expense):                          
  Interest income   362       245       606       565      
  Interest expense, net   (14,540 )     (18,401 )     (29,463 )     (34,424 )    
  Derivatives and foreign currency transaction gains (losses)   1,703       (4,332 )     3,041       (2,370 )    
  Income attributable to sale of tax benefits   4,356       4,519       10,513       8,917      
  Other non-operating expense, net   6       49       (86 )     240      
  Income before income taxes and equity in                          
  losses of investees   45,039       33,967       97,259       75,358      
  Income tax provision (benefit)   (6,369 )     (7,890 )     (17,255 )     (17,399 )    
  Equity in losses of investees, net   (428 )     (1,144 )     (2,027 )     (2,081 )    
                             
  Net income   38,242       24,933       77,977       55,878      
  Net income attributable to noncontrolling interest   (3,206 )     (584 )     (7,629 )     (2,258 )    
  Net income attributable to the Company's stockholders $ 35,036     $ 24,349     $ 70,348     $ 53,620      
                             
  Earnings per share attributable to the Company's stockholders - Basic and diluted:                          
  Basic:                          
  Net Income $ 0.70     $ 0.49     $ 1.41     $ 1.09      
                             
  Diluted:                          
  Net Income $ 0.69     $ 0.49     $ 1.39     $ 1.07      
                             
  Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:                          
  Basic   49,771       49,456       49,726       49,314      
  Diluted   50,624       50,137       50,559       49,977      
                             
                             

Ormat Technologies, Inc. and SubsidiariesCondensed Consolidated Balance SheetsAs of June 30, 2017 and December 31, 2016(Unaudited)

       June 30,     December 31, 
      2017     2016  
               
         (In thousands) 
   ASSETS                 
  Current assets:            
  Cash and cash equivalents   $ 118,390     $ 230,214  
  Restricted cash, cash equivalents and marketable securities     49,510       34,262  
  Receivables:            
  Trade     79,587       80,807  
  Other     20,128       17,482  
  Inventories     18,569       12,000  
  Costs and estimated earnings in excess of billings on uncompleted contracts     59,901       52,198  
  Prepaid expenses and other     41,151       45,867  
  Total current assets     387,236       472,830  
  Investment in an unconsolidated company     13,957       —  
  Deposits and other     18,125       18,553  
  Deferred charges     43,598       43,773  
  Property, plant and equipment, net     1,526,485       1,556,378  
  Construction-in-process     408,939       306,709  
  Deferred financing and lease costs, net     5,186       3,923  
  Intangible assets, net     86,986       52,753  
  Goodwill     20,121       6,650  
  Total assets   $ 2,510,633     $ 2,461,569  
   LIABILITIES AND EQUITY                 
  Current liabilities:            
  Accounts payable and accrued expenses   $ 101,827     $ 91,650  
  Short-term revolving credit lines with banks (full recourse)     30,000       —  
  Billings in excess of costs and estimated earnings on uncompleted contracts     17,574       31,630  
  Current portion of long-term debt:            
  Limited and non-recourse:            
  Senior secured notes     32,608       32,234  
  Other loans     21,495       21,495  
  Full recourse     10,673       12,242  
  Total current liabilities     214,177       189,251  
  Long-term debt, net of current portion:            
  Limited and non-recourse:            
  Senior secured notes      334,365       350,388  
  Other loans     252,085       261,845  
  Full recourse:            
  Senior unsecured bonds     203,678       203,577  
  Other loans     52,742       57,063  
  Accumulated losses of unconsolidated company in excess of investment     —       11,081  
  Liability associated with sale of tax benefits     48,810       54,662  
  Deferred lease income     53,036       54,561  
  Deferred income taxes     44,113       35,382  
  Liability for unrecognized tax benefits     6,015       5,738  
  Liabilities for severance pay     21,025       18,600  
  Asset retirement obligation     24,267       23,348  
  Other long-term liabilities     22,823       21,294  
  Total liabilities     1,277,136       1,286,790  
               
  Redeemable non-controlling interest     5,898       4,772  
               
  Equity:            
  The Company's stockholders' equity:            
  Common stock     50       50  
  Additional paid-in capital     875,591       869,463  
  Retained earnings (accumulated deficit)     274,566       216,644  
  Accumulated other comprehensive income (loss)     (6,933 )     (7,732 )
        1,143,274       1,078,425  
  Noncontrolling interest     84,325       91,582  
  Total equity     1,227,599       1,170,007  
  Total liabilities and equity   $ 2,510,633     $ 2,461,569  
               
 

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

 
       Three Months Ended June 30     Six Months Ended June 30   
      2017     2016     2017     2016    
                             
       (in thousands)     (in thousands)   
  Net cash provided by operating activities   $ 42,695     $ 92,529     $ 114,158     $ 119,573    
  Adjusted for:                          
  Interest expense, net (excluding amortization                                   
  of deferred financing costs)     13,266       17,165       26,671       31,292    
  Interest income     (362 )     (245 )     (606 )     (565 )  
  Income tax provision     6,369       7,890       17,255       17,399    
  Adjustments to reconcile net income or loss to net cash                          
  provided by operating activities (excluding                          
  depreciation and amortization)     22,570       (42,519 )     17,901       (12,437 )  
  EBITDA   $   84,538     $   74,820     $   175,379      $   155,262    
                             
  Mark-to-market gains or losses from accounting for derivatives     (940 )     4,240       (2,463 )     2,494    
  Stock-based compensation     3,630       817       5,343       1,659    
  Merger and acquisition transaction cost     900       500       1,700       647    
  Write-off of unsuccessful exploration activities     —       863       —       1,420    
  Adjusted EBITDA   $   88,128      $    81,240     $  179,959      $ 161,482    
                             
                             
  Net cash used in investing activities   $ (65,367 )   $ (10,669 )   $ (194,105 )   $ (55,289 )  
  Net cash provided by (used in) financing activities   $ (33,076 )   $ (37,802 )   $ (31,877 )   $ (57,647 )  
 
                             
                             
       Three Months Ended June 30     Six Months Ended June 30   
      2017     2016     2017     2016    
                             
       (in thousands)     (in thousands)   
  Net income   $ 38,242     $ 24,933     $ 77,977     $ 55,878    
  Adjusted for:                          
  Interest expense, net (including amortization                                   
  of deferred financing costs)     14,178       18,156       28,857       33,859    
  Income tax provision     6,369       7,890       17,255       17,399    
  Depreciation and amortization     25,749       23,841       51,290       48,126    
  EBITDA   $   84,538     $   74,820     $   175,379      $   155,262    
                             
  Mark-to-market gains or losses from accounting for derivatives     (940 )     4,240       (2,463 )     2,494    
  Stock-based compensation     3,630       817       5,343       1,659    
  Merger and acquisition transaction cost     900       500       1,700       647    
  Write-off of unsuccessful exploration activities     —       863       —       1,420    
  Adjusted EBITDA   $   88,128      $    81,240     $ 179,959      $ 161,482    
  
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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