Ormat Technologies, Inc. (NYSE: ORA) today announced financial
results for the first quarter ended March 31, 2020.
Financial Results
($ millions, except per share amounts) |
Q1 2020 |
Q1 2019 |
Change (%) |
Revenues |
|
|
|
Electricity |
142.9 |
|
142.9 |
|
0.0 % |
|
Product |
47.4 |
|
52.1 |
|
(9.0)% |
|
Energy Storage & Management Services |
1.8 |
|
4.0 |
|
(53.9)% |
|
Total Revenues |
192.1 |
|
199.0 |
|
(3.5)% |
|
Gross Profit |
81.8 |
|
74.2 |
|
10.3 % |
|
Gross margin (%) |
|
|
|
Electricity |
50.0 % |
|
45.7 % |
|
|
|
Product |
22.0 % |
|
19.2 % |
|
|
|
Energy Storage & Management Services |
(5.6)% |
|
(30.2)% |
|
|
|
Gross margin (%) |
42.6 % |
|
37.3% |
|
|
|
|
|
|
|
Operating income |
61.1 |
|
53.7 |
|
13.6% |
|
Net income attributable to the Company’s stockholders |
26.0 |
|
25.9 |
|
|
|
Diluted EPS |
0.51 |
|
0.51 |
|
|
|
Adjusted EBITDA1 |
106.0 |
|
101.8 |
|
4.2% |
|
“In the first quarter, we achieved strong
results, driven by the solid performance of our electricity
segment, which benefits from our continuous efforts to streamline
operations and optimize power generation,” commented Isaac Angel,
Chief Executive Officer. “Our electricity segment gross margin
improved by 350 basis points excluding the contribution of
insurance claims, demonstrating our improved efficiency and greater
profitability at the same revenue level. The world is currently
facing a global health crisis and we are experiencing a dramatic
volatile economic environment, the impact and duration of which is
still uncertain. In the first quarter, we took prompt steps to
secure the safety of our employees, to optimize our supply chain,
and to enhance our liquidity position in order to support capital
expenditures and growth plans. These efforts, together with the
inherent stable and long term contracted portfolio of our
electricity segment, have enabled us to ease the impact of the
COVID-19 pandemic at this time. The planned leadership transition
is progressing smoothly and according to plan. Assi Ginzburg joined
our company May 10th as our new Chief Financial Officer,
strengthening our management team.”
Doron Blachar, Ormat’s President, added, “The
board has nominated Mr. Angel for election as a director at our
annual general meeting later this year and, if elected, it is
proposed that he will serve as Chairman of the board.”
Mr. Blachar continued, “In order to support our
capital expenditures and growth, we increased and drew lines of
credits and in April 2020, we raised an additional $64 million
through the private issuance of bonds (series 3) and borrowed $50
million pursuant to a loan agreement with one of our existing
lenders. The strong quarter, reinforces our confidence that Ormat
is on the right path with a resilient business model, geographic
and revenue diversity, and an excellent team.”
Mr. Blachar will assume the role of Chief
Executive Officer on July 1, 2020.
Financial Highlights for the First Quarter of
2020
- Total revenues of $192.1 million,
down 3.5% compared to Q1 2019;
- Electricity segment revenues of
$142.9 million, unchanged compared to Q1 2019;
- Electricity segment gross margin
was 50.0% compared to 45.7% for Q1 2019;
- Product segment revenues of $47.4
million, down 9.0% compared to Q1 2019;
- Product segment backlog was
approximately $96.5 million as of May 3, 2020;
- Energy Storage & Management
Services segment revenues of $1.8 million compared to $4.0 million
in Q1 2019;
- The Company recorded business
interruption insurance income of $4.9 million related to the 2018
volcanic eruption in Hawaii, which reduced cost of revenues and
general and administrative costs by $2.5 million and $2.4 million,
respectively;
- Total gross margin was 42.6%,
compared to 37.3% in Q1 2019;
- Operating income increased
13.6%
- Net income was $29.9 million
compared to $28.1 million in Q1 2019;
- Net income attributable to the
Company's stockholders was $26.0 million, or $0.51 per diluted
share, compared to $25.9 million, or $0.51 per diluted share in Q1
2019;
- Adjusted EBITDA1 increased
4.2% to $106.0 million, up from $101.8 million in Q1 2019;
and
- The Company declared a quarterly
dividend of $0.11 per share for the first quarter of 2020.
Recent Developments
- In March 2020, the World Health
Organization declared the outbreak of the COVID-19, a pandemic. We
implemented significant measures both to comply with government
requirements and to preserve the health and safety of our
employees. These measures include working remotely where
possible and operating the separate shifts in the power plants,
manufacturing facilities and other locations while trying to
continue operations in close to full capacity in all locations. We
did not experience a material impact on our results of operations
during the first quarter. This is in part due to long-term
contracted nature and stability of our revenue streams in the
electricity segment. However, the extent to which COVID-19
may ultimately impact our business, operations, financial results
and financial condition will depend on numerous evolving factors
which are currently uncertain and cannot be predicted.
- As of May 2020, we continue our
efforts to reconstruct our Puna power plant. We drilled a
successful production well that will enable us to start commercial
operation of the power plant during the fourth quarter and, with
additional field recovery work, we expect this will gradually
increase to 29 MW by the end of the year, assuming all permits are
received and transmission network upgrade is complete.
- Ormat announced the commercial
operation of the Rabbit Hill Battery Energy Storage System facility
providing ancillary services and energy optimization to the
wholesale markets managed by the Electricity Reliability Council of
Texas (ERCOT). The facility is located in the City of Georgetown,
Texas, and it is sized to provide approximately 10 MW of fast
responding capacity to the ERCOT market.
2020 Guidance
Mr. Angel added, “We are updating our
expectations for full-year 2020 due to uncertainty around COVID-19
duration and implications as well as due to the recent update in
Puna. We expect total revenues of between $710 million and $740
million with electricity segment revenues between $550 million and
$570 million. We continue to expect product segment revenues of
between $140 million and $150 million. Revenues from energy storage
and demand response activity expected to be between $15 million and
$20 million. We are also updating 2020 Adjusted EBITDA that is
expected to be between $400 million and $415 million for the full
year. We expect annual Adjusted EBITDA attributable to minority
interest to be approximately $26 million.”
The Company provides a reconciliation of
Adjusted EBITDA, a non-GAAP financial measure for the three months
ended March 31, 2020. However, the Company is unable to provide a
reconciliation for its Adjusted EBITDA guidance range due to high
variability and complexity with respect to estimating forward
looking amounts for impairments and disposition and acquisition of
business interests, income taxes expense, and other non-cash
expenses and adjusting items that are excluded from the calculation
of Adjusted EBITDA.
First Quarter 2020 Financial Results (Comparing
the Quarter Ended March 31, 2020 to the Quarter Ended March 31,
2019)
Total revenues for the quarter were $192.1
million, down 3.5% compared to the same quarter last year.
Electricity segment revenues of $142.9 million were unchanged
compared to last year. Product segment revenues decreased 9.0% to
$47.4 million, down from $52.1 million in the same quarter last
year due to projects in Turkey and U.S., which were completed in
2019. Energy Storage and Management Services segment revenues were
$1.8 million compared to $4.0 million in the same quarter last
year. The decrease was mainly driven by revenues from a one-time
EPC project in the first quarter of 2019.
The Company recorded $4.9 million of business
interruption insurance income related to the 2018 volcanic
eruption, which disrupted operations at Ormat’s Puna plant.
Consistent with generally accepted accounting practices, $2.5
million was allocated to offset costs of revenue at Puna and the
remaining $2.4 million was allocated to reduce general and
administrative expenses.
General and administrative expenses were $14.4
million, or 7.5% of total revenues, compared to $15.7 million, or
7.9% of total revenues. The decrease was primarily attributable to
business interruption insurance income.
Net income attributable to the Company’s
stockholders was $26.0 million, or $0.51 per diluted share,
compared to $25.9 million, or $0.51 per diluted share.
Adjusted EBITDA1 was $106.0 million
compared to $101.8 million last year.
Dividend
On May 8, 2020, the Company’s Board of Directors
declared, approved and authorized payment of a quarterly dividend
of $0.11 per share pursuant to the Company’s dividend policy. The
dividend will be paid on June 2, 2020 to stockholders of
record as of the close of business on May 21, 2020.
CONFERENCE CALL DETAILS
Ormat will host a conference call to discuss its
financial results and other matters discussed in this press release
on Monday, May 11, at 10 a.m. ET. 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 News & Events in the Investor Relations section of
Ormat’s website.
An archive of the webcast will be available
approximately 60 minutes after the conclusion of the live call.
Investors may
access the call by dialing: |
|
|
|
Participant dial in (toll free): |
1-877-511-6790 |
Participant international dial-in: |
1-412-902-4141 |
|
|
Conference replay |
|
|
|
US Toll Free: |
1-877-344-7529 |
International Toll: |
1-412-317-0088 |
Replay Access Code: |
10142576 |
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 63 U.S. patents, Ormat’s power solutions have
been refined and perfected under the most grueling environmental
conditions. Ormat has 578 employees in the United States and 830
overseas. Ormat’s flexible, modular solutions for geothermal power
and REG are ideal for 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 3,000 MW of gross capacity.
Ormat’s current 914 MW generating portfolio is spread globally in
the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe.
Ormat expanded its operations to provide energy storage and energy
management solutions, by leveraging its core capabilities and
global presence as well as through its Viridity Energy Solutions
Inc. subsidiary.
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’s Form 10-K
filed with the Securities and Exchange Commission (“SEC”) on March
2, 2020 and from time to time, in Ormat’s quarterly reports on Form
10-Q that are filed with the SEC.
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 SubsidiariesCondensed Consolidated
Statement of OperationsFor the Three - Month Period Ended March 31,
2020 and 2019(Unaudited)
|
Three Months
Ended March 31, |
|
2020 |
|
2019 |
|
(Dollars in thousands, except per share data) |
Revenues: |
|
|
|
Electricity |
142,856 |
|
|
|
142,908 |
|
|
Product |
47,411 |
|
|
|
52,128 |
|
|
Energy storage and management services |
1,846 |
|
|
|
4,002 |
|
|
Total revenues |
192,113 |
|
|
|
199,038 |
|
|
Cost of revenues: |
|
|
|
Electricity |
71,368 |
|
|
|
77,543 |
|
|
Product |
36,978 |
|
|
|
42,106 |
|
|
Energy storage and management services |
1,949 |
|
|
|
5,210 |
|
|
Total cost of revenues |
110,295 |
|
|
|
124,859 |
|
|
Gross profit |
81,818 |
|
|
|
74,179 |
|
|
Operating expenses: |
|
|
|
Research and development expenses |
1,619 |
|
|
|
900 |
|
|
Selling and marketing expenses |
4,794 |
|
|
|
3,865 |
|
|
General and administrative expenses |
14,348 |
|
|
|
15,689 |
|
|
Operating income |
61,057 |
|
|
|
53,725 |
|
|
Other income (expense): |
|
|
|
Interest income |
402 |
|
|
|
293 |
|
|
Interest expense, net |
(17,273 |
) |
|
|
(21,223 |
) |
|
Derivatives and foreign currency transaction gains (losses) |
393 |
|
|
|
472 |
|
|
Income attributable to sale of tax benefits |
4,132 |
|
|
|
7,764 |
|
|
Other non-operating income (expense), net |
78 |
|
|
|
91 |
|
|
Income from operations before income tax and equity in earnings
(losses) of investees |
48,789 |
|
|
|
41,122 |
|
|
Income tax (provision)
benefit |
(18,148 |
) |
|
|
(14,039 |
) |
|
Equity in earnings (losses) of
investees, net |
(735 |
) |
|
|
1,047 |
|
|
Net income. |
29,906 |
|
|
|
28,130 |
|
|
Discontinued operations: |
|
|
|
Net income |
29,906 |
|
|
|
28,130 |
|
|
Net income attributable to noncontrolling interest |
(3,873 |
) |
|
|
(2,184 |
) |
|
Net income attributable to the Company's stockholders |
26,033 |
|
|
|
25,946 |
|
|
Earnings per share
attributable to the Company's stockholders: |
|
|
|
Basic: |
|
|
|
Net income |
0.51 |
|
|
|
0.51 |
|
|
Diluted: |
|
|
|
Net income |
0.51 |
|
|
|
0.51 |
|
|
Weighted average number of shares used in computation of earnings
per share attributable to the Company's stockholders: |
|
|
|
Basic |
51,036 |
|
|
|
50,709 |
|
|
Diluted |
51,526 |
|
|
|
51,012 |
|
|
|
|
|
|
|
|
|
|
Ormat Technologies, Inc. and SubsidiariesCondensed Consolidated
Balance SheetFor the Periods Ended March 31, 2020 and December 31,
2019(Unaudited)
|
March 31, 2020 |
|
December 31,2019 |
ASSETS |
Current assets: |
|
|
|
Cash and cash equivalents |
231,149 |
|
|
71,173 |
|
Restricted cash and cash equivalents |
88,627 |
|
|
81,937 |
|
Receivables: |
|
|
|
Trade |
168,924 |
|
|
154,525 |
|
Other |
27,718 |
|
|
22,048 |
|
Inventories |
34,107 |
|
|
34,949 |
|
Costs and estimated earnings in excess of billings on uncompleted
contracts |
22,305 |
|
|
38,365 |
|
Prepaid expenses and other |
11,456 |
|
|
12,667 |
|
Total current assets |
584,286 |
|
|
415,664 |
|
Investment in unconsolidated
companies |
76,008 |
|
|
81,140 |
|
Deposits and other |
37,734 |
|
|
38,284 |
|
Deferred income taxes |
118,682 |
|
|
129,510 |
|
Property, plant and equipment,
net |
1,981,086 |
|
|
1,971,415 |
|
Construction-in-process |
413,789 |
|
|
376,555 |
|
Operating leases right of
use |
17,611 |
|
|
17405 |
|
Finance leases right of
use |
14,149 |
|
|
14161 |
|
Intangible assets, net |
182,305 |
|
|
186,220 |
|
Goodwill |
19,963 |
|
|
20,140 |
|
Total assets |
3,445,613 |
|
|
3,250,494 |
|
|
|
|
|
LIABILITIES AND EQUITY |
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
140,867 |
|
|
141,857 |
|
Short term revolving credit lines with banks (full recourse) |
270,500 |
|
|
40,550 |
|
Commercial paper |
8,275 |
|
|
50,000 |
|
Billings in excess of costs and estimated earnings on uncompleted
contracts |
5,937 |
|
|
2,755 |
|
Current portion of long-term debt: |
|
|
|
Senior secured notes |
24,617 |
|
|
24,473 |
|
Other loans |
34,408 |
|
|
34,458 |
|
Full recourse |
76,572 |
|
|
76,572 |
|
Operating lease liabilities |
2,974 |
|
|
2,743 |
|
Finance lease liabilities |
3,169 |
|
|
3,068 |
|
Total current liabilities |
567,319 |
|
|
376,476 |
|
Long-term debt, net of current
portion: |
|
|
|
Limited and non-recourse: |
|
|
|
Senior secured notes |
331,077 |
|
|
339,336 |
|
Other loans |
309,588 |
|
|
317,395 |
|
Full recourse: |
|
|
|
Senior unsecured bonds |
286,505 |
|
|
286,453 |
|
Other loans |
68,789 |
|
|
68,747 |
|
Operating lease liabilities |
14,035 |
|
|
14,008 |
|
Finance lease liabilities |
11,230 |
|
|
11,209 |
|
Liability associated with sale
of tax benefits |
121,627 |
|
|
123,468 |
|
Deferred income taxes |
100,969 |
|
|
97,126 |
|
Liability for unrecognized tax
benefits |
14,560 |
|
|
14,643 |
|
Liabilities for severance
pay |
18,208 |
|
|
18,751 |
|
Asset retirement
obligation |
50,786 |
|
|
50,183 |
|
Other long-term
liabilities |
7,867 |
|
|
8,039 |
|
Total liabilities |
1,902,560 |
|
|
1,725,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling
interest |
9,402 |
|
|
9,250 |
|
|
|
|
|
Equity: |
|
|
|
The Company's stockholders' equity: |
|
|
|
Common stock |
51 |
|
|
51 |
|
Additional paid-in capital |
915,139 |
|
|
913,150 |
|
Retained earnings |
507,537 |
|
|
487,873 |
|
Accumulated other comprehensive income (loss) |
(13,662) |
|
|
(8,654) |
|
Total stockholders' equity attributable to Company's
stockholders |
1,409,065 |
|
|
1,392,420 |
|
Noncontrolling interest |
124,586 |
|
|
122,990 |
|
Total equity |
1,533,651 |
|
|
1,515,410 |
|
Total liabilities, redeemable noncontrolling interest and
equity |
3,445,613 |
|
|
3,250,494 |
|
|
|
|
|
|
|
Ormat Technologies, Inc. and SubsidiariesReconciliation of
EBITDA and Adjusted EBITDAFor the Three- Month Period Ended March
31, 2020 and 2019(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 costs, (vi) stock-based compensation, (vii) gain or
loss from extinguishment of liabilities, (viii) gain or loss on
sale of subsidiary and property, plant and equipment and (ix) other
unusual or non-recurring items. EBITDA and Adjusted EBITDA are not
measurements of financial performance or liquidity under accounting
principles generally accepted in the United States, or U.S. GAAP,
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 U.S. GAAP.
We use EBITDA and Adjusted EBITDA as a performance metric because
it is a metric used by our Board of Directors and senior management
in evaluating our financial performance. However, other companies
in our industry may calculate EBITDA and Adjusted EBITDA
differently than we do.
The following table reconciles net income to
EBITDA and Adjusted EBITDA for the three -month period ended March
31, 2020 and 2019.
|
Three Months Ended March 31, |
|
2020 |
2019 |
|
(Dollars in thousands) |
Net income |
29,906 |
|
|
28,130 |
|
|
Adjusted for: |
|
|
Interest expense, net (including amortization of deferred financing
costs) |
16,871 |
|
|
20,930 |
|
|
Income tax provision (benefit) |
18,148 |
|
|
14,039 |
|
|
Adjustment to investment in an unconsolidated company: our
proportionate share in interest expense, tax and depreciation and
amortization in Sarulla |
2,677 |
|
|
2,661 |
|
|
Depreciation and amortization |
35,288 |
|
|
34,866 |
|
|
EBITDA |
102,890 |
|
|
100,626 |
|
|
Mark-to-market gains or losses
from accounting for derivative |
(561 |
) |
|
(1,209 |
) |
|
Stock-based compensation |
1,989 |
|
|
2,360 |
|
|
Merger and acquisition
transaction costs |
540 |
|
|
— |
|
|
Settlement expenses |
1,188 |
|
|
— |
|
|
Adjusted EBITDA |
106,046 |
|
|
101,777 |
|
|
|
|
|
|
|
|
|
_______________________
1 Reconciliation is set forth below in this release
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 FNK IR 646-415-8972 rob@FNKIR.com |
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