Ormat Technologies, Inc.1 (NYSE: ORA) today announced financial
results for the third quarter ended September 30, 2020.
KEY FINANCIAL RESULTS
|
Q3 2020 |
Q3 2019 |
CHANGE (%) |
Revenues ($
millions) |
|
|
|
Electricity |
123.7 |
|
124.0 |
|
(0.3 |
) |
Product |
29.6 |
|
43.0 |
|
(31.2 |
) |
Energy Storage &
Management Services |
5.7 |
|
3.5 |
|
62.5 |
|
Total
Revenues |
158.9 |
|
170.5 |
|
(6.8 |
) |
|
|
|
|
Gross margin
(%) |
|
|
|
Electricity |
38.0 |
% |
35.4 |
% |
|
Product |
18.9 |
% |
27.8 |
% |
|
Energy Storage &
Management Services |
25.6 |
% |
(9.3 |
)% |
|
Gross margin
(%) |
34.0 |
% |
32.5 |
% |
|
|
|
|
|
Operating Income ($
millions) |
51.7 |
|
38.7 |
|
33.5 |
|
|
|
|
|
Net income attributable to the Company’s
stockholders |
15.7 |
|
15.6 |
|
0.5 |
|
|
|
|
|
Diluted EPS
($) |
0.31 |
|
0.30 |
|
|
Adjusted EBITDA2 ($
millions) |
107.1 |
|
85.5 |
|
25.3 |
|
|
|
|
|
|
|
|
“Our third quarter results reflect the strength
of our business model and our operating execution,” commented Doron
Blachar, Chief Executive Officer. “Ormat delivered double-digit
increases in year-over-year operating income and Adjusted EBITDA,
and made progress with its efforts to grow its Electricity and
Storage segments. Subsequent to the end of the quarter, we reached
a favorable settlement and resolved the most significant tax
assessment issued by the Kenya Revenue Authority (KRA). We are
updating our full-year 2020 revenue guidance range and increasing
our expected 2020 Adjusted EBITDA.”
“This quarter also delivered strong cashflow
from operations and Adjusted EBITDA, driven mainly by a $20.1
million payment received from ENEE, our customer in Honduras, for
prior years’ outstanding invoices, and improved collection from
KPLC, our customer in Kenya. KPLC has made all scheduled payments
for the third quarter and has started reducing overdue amount in
October. In addition, we received $20.4 million business
interruption insurance proceeds related to the 2018 volcanic
eruption in Hawaii.”
“Furthermore, in the product segment, we signed
a $12.2 million contract and we anticipate the signing of
additional contract in late 2020 or early 2021, even though this
segment of our business is most directly impacted by the COVID-19
pandemic,” continued Blachar. “We are encouraged by our storage
segment results, which delivered its second consecutive quarter of
positive EBITDA. The results were supported by the addition of the
newly acquired Pomona storage facility as well as the volatility in
merchant prices, which has driven increased revenues and
profitability in our storage activity in the quarter."
FINANCIAL AND BUSINESS HIGHLIGHTS FOR THE THIRD
QUARTER OF 2020
- Net income attributable to the
Company's stockholders was $15.7 million, or $0.31 per diluted
share, compared to $15.6 million, or $0.30 per diluted share in Q3
2019;
- Adjusted EBITDA3 increased 25.3% to
$107.1 million, up from $85.5 million in Q3 2019;
- Net income attributable to the
Company’s stockholders benefited from an $8.1 million in insurance
income related to our Puna power plant (representing Ormat’s 63.25%
portion after tax), partially offset by non-cash charges of $1.4
million related to the Sarulla power plants. Additionally, a recent
change in U.S. tax law resulted in a $3.7 million charge. In
aggregate, these factors positively impacted our diluted EPS by 5.9
cents;
- In Kenya, Ormat concluded a tax
audit by the Kenya Revenue Authority (KRA) related to a $190
million tax assessment issued in December 2019 and reached a
favorable settlement with the KRA. The total net estimated impact
on Ormat’s results, all of which will be recorded in Q4 2020 is
approximately $6 million, or $0.12 per diluted share, including all
associated interest and penalties. The settlement covered tax years
2013 through 2019, and included deferral of tax benefits that were
previously utilized by Ormat, resulting in a payment to the KRA of
$28.2 million most of which the Company expects to recover through
lower future tax payments;
- At the Puna power plant,
construction of the electrical substation and transmission lines is
completed, and the power plant is currently connected to the
transmission lines. On the field side, the Company connected one
new production well to the power plant and is in the process of
connecting a second production well. The Company expects to start
generating power in the next few weeks with a gradual increase in
generation to 29 MW by the end of the year, although the exact
timing remains uncertain;
- Ormat signed a new $12.2 million
contract, which resulted in a Product segment backlog of $49.6
million as of November 3, 2020;
- Electricity segment gross profit
for the third quarter 2020 included $2.6 million of business
interruption insurance income recorded under Puna’s cost of
revenues. In the third quarter 2019, the Company recorded business
interruption insurance income of $1.2 million under Puna’s cost of
revenues;
- In October 2020, Ormat announced
the signing of two Resource Adequacy Agreements, each for 50% of
its 5 MW / 20 MWh Tierra Buena battery energy storage project
currently under development in Sutter County, northern California.
The agreements were signed with two Community Choice Aggregators,
Redwood Coast Energy Authority and Valley Clean Energy;
- In September 2020, Ormat announced
that Empresa Nacional de Energia Electrica, (ENEE), Ormat’s
customer for our Platanares geothermal power plant in Honduras, has
paid a $20.1 million overdue payment that was outstanding from
prior years;
- In July 2020, Ormat completed the
acquisition of the 20MW/80MWh Pomona energy storage asset in
California from Alta Gas for a total net consideration of $43.3
million. The facility is the Company’s first operational battery
storage asset in operation in California, increasing its existing
operating portfolio to 73MW/136MWh including its battery storage
assets located in New Jersey, New England and Texas; and
- In July 2020, Ormat issued
approximately $290 million of senior unsecured bonds in an
unregistered offering outside of the United States. The bonds bear
interest at a fixed rate of 4.34% payable semi-annually on June 15
and December 15 through June 15, 2031. The Company used the
proceeds to pay for the acquisition of the Pomona battery storage
facility, repay existing indebtedness and to support its growth
plans.
2020 GUIDANCE
- Total revenues of between $707
million and $717 million
- Electricity segment revenues
between $550 million and $555 million (including approximately $6
million of expected revenues related to the Puna power plant,
assuming its reopening in the fourth quarter)
- Product segment revenues of between
$142 million and $147 million
- Energy Storage and Management
Services segment revenues of approximately $15 million
- Adjusted EBITDA of between $417
million and $425 million
- Adjusted EBITDA attributable to
minority interest to be approximately $34 million.
The Company provides a reconciliation of
Adjusted EBITDA, a Non-GAAP financial measure, for historical
periods. 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 tax expense, and other non-cash expenses and adjusting items
that are excluded from the calculation of Adjusted EBITDA.
DIVIDEND
On November 3, 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 December 2, 2020 to
stockholders of record as of the close of business on November 18,
2020.
CONFERENCE CALL DETAILS
Ormat will host a conference call to discuss its
financial results and other matters discussed in this press release
on Wednesday, November 4th, 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: |
|
10149112 |
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 933 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 and Nine Month Periods Ended September
30, 2020 and 2019 |
|
|
|
|
Three Months Ended September 30, |
Nine-Months Ended September 30, |
|
2020 |
2019 |
2020 |
2019 |
|
(Dollars in thousands, except per share data) |
Revenues: |
|
|
|
|
Electricity |
123,660 |
|
|
123,978 |
|
|
395,201 |
|
|
395,965 |
|
|
Product |
29,625 |
|
|
43,037 |
|
|
120,737 |
|
|
147,195 |
|
|
Energy storage and management services |
5,662 |
|
|
3,484 |
|
|
10,022 |
|
|
10,442 |
|
|
Total revenues |
158,947 |
|
|
170,499 |
|
|
525,960 |
|
|
553,602 |
|
|
Cost of revenues: |
|
|
|
|
Electricity |
76,670 |
|
|
80,124 |
|
|
219,988 |
|
|
231,442 |
|
|
Product |
24,037 |
|
|
31,073 |
|
|
95,724 |
|
|
114,495 |
|
|
Energy storage and management services |
4,210 |
|
|
3,807 |
|
|
9,014 |
|
|
12,844 |
|
|
Total cost of revenues |
104,917 |
|
|
115,004 |
|
|
324,726 |
|
|
358,781 |
|
|
Gross profit |
54,030 |
|
|
55,495 |
|
|
201,234 |
|
|
194,821 |
|
|
Operating expenses: |
|
|
|
|
Research and development expenses |
1,490 |
|
|
1,062 |
|
|
4,281 |
|
|
2,772 |
|
|
Selling and marketing expenses |
4,076 |
|
|
3,783 |
|
|
13,724 |
|
|
10,924 |
|
|
General and administrative expenses |
14,539 |
|
|
11,931 |
|
|
43,154 |
|
|
41,801 |
|
|
Business interruption insurance income |
(17,761 |
) |
|
— |
|
|
(20,743 |
) |
|
— |
|
|
Operating income |
51,686 |
|
|
38,719 |
|
|
160,818 |
|
|
139,324 |
|
|
Other income (expense): |
|
|
|
|
Interest income |
626 |
|
|
482 |
|
|
1,469 |
|
|
1,195 |
|
|
Interest expense, net |
(21,756 |
) |
|
(20,076 |
) |
|
(58,814 |
) |
|
(62,816 |
) |
|
Derivatives and foreign currency transaction gains (losses) |
1,047 |
|
|
205 |
|
|
2,111 |
|
|
696 |
|
|
Income attributable to sale of tax benefits |
7,014 |
|
|
4,056 |
|
|
16,818 |
|
|
16,457 |
|
|
Other non-operating income (expense), net |
961 |
|
|
244 |
|
|
1,343 |
|
|
1,362 |
|
|
Income from operations before income tax and equity in earnings
(losses) of investees |
39,578 |
|
|
23,630 |
|
|
123,745 |
|
|
96,218 |
|
|
Income tax (provision)
benefit |
(15,361 |
) |
|
(9,626 |
) |
|
(45,275 |
) |
|
(20,136 |
) |
|
Equity in earnings (losses) of
investees, net |
(1,119 |
) |
|
1,085 |
|
|
(196 |
) |
|
3,334 |
|
|
Net income |
23,098 |
|
|
15,089 |
|
|
78,274 |
|
|
79,416 |
|
|
Net income attributable to noncontrolling interest |
(7,419 |
) |
|
516 |
|
|
(13,516 |
) |
|
(3,927 |
) |
|
Net income attributable to the Company's stockholders |
15,679 |
|
|
15,605 |
|
|
64,758 |
|
|
75,489 |
|
|
Earnings per share
attributable to the Company's stockholders: |
|
|
|
|
Basic: |
|
|
|
|
Net income |
0.31 |
|
|
0.31 |
|
|
1.27 |
|
|
1.49 |
|
|
Diluted: |
|
|
|
|
Net income |
0.31 |
|
|
0.30 |
|
|
1.26 |
|
|
1.48 |
|
|
Weighted average number of shares used in computation of earnings
per share attributable to the Company's stockholders: |
|
|
|
|
Basic |
51,072 |
|
|
50,933 |
|
|
51,051 |
|
|
50,816 |
|
|
Diluted |
51,282 |
|
|
51,334 |
|
|
51,386 |
|
|
51,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ORMAT
TECHNOLOGIES, INC AND SUBSIDIARIESCondensed Consolidated Balance
SheetFor the Periods Ended September 30, 2020 and December 31,
2019 |
|
|
|
|
|
September 30, 2020 |
|
December 31, 2019 |
ASSETS |
Current assets: |
|
|
|
Cash and cash equivalents |
197,309 |
|
|
|
71,173 |
|
|
Restricted cash and cash equivalents |
92,233 |
|
|
|
81,937 |
|
|
Receivables: |
|
|
|
Trade |
157,497 |
|
|
|
154,525 |
|
|
Other |
23,349 |
|
|
|
22,048 |
|
|
Inventories |
34,384 |
|
|
|
34,949 |
|
|
Costs and estimated earnings in excess of billings on uncompleted
contracts |
18,123 |
|
|
|
38,365 |
|
|
Prepaid expenses and other |
9,696 |
|
|
|
12,667 |
|
|
Total current assets |
532,591 |
|
|
|
415,664 |
|
|
Investment in unconsolidated
companies |
91,277 |
|
|
|
81,140 |
|
|
Deposits and other |
39,293 |
|
|
|
38,284 |
|
|
Deferred income taxes |
108,145 |
|
|
|
129,510 |
|
|
Property, plant and equipment,
net |
2,036,821 |
|
|
|
1,971,415 |
|
|
Construction-in-process |
463,073 |
|
|
|
376,555 |
|
|
Operating leases right of
use |
16,762 |
|
|
|
17,405 |
|
|
Finance leases right of
use |
12,399 |
|
|
|
14,161 |
|
|
Intangible assets, net |
197,002 |
|
|
|
186,220 |
|
|
Goodwill |
23,584 |
|
|
|
20,140 |
|
|
Total assets |
3,520,947 |
|
|
|
3,250,494 |
|
|
|
|
|
|
LIABILITIES AND EQUITY |
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
144,473 |
|
|
|
141,857 |
|
|
Short term revolving credit lines with banks (full recourse) |
— |
|
|
|
40,550 |
|
|
Commercial paper |
— |
|
|
|
50,000 |
|
|
Billings in excess of costs and estimated earnings on uncompleted
contracts |
7,683 |
|
|
|
2,755 |
|
|
Current portion of long-term debt: |
|
|
|
Senior secured notes |
24,836 |
|
|
|
24,473 |
|
|
Other loans |
35,369 |
|
|
|
34,458 |
|
|
Full recourse |
17,768 |
|
|
|
76,572 |
|
|
Operating lease liabilities |
3,026 |
|
|
|
2,743 |
|
|
Finance lease liabilities |
3,148 |
|
|
|
3,068 |
|
|
Total current liabilities |
236,303 |
|
|
|
376,476 |
|
|
Long-term debt, net of current
portion: |
|
|
|
Limited and non-recourse: |
|
|
|
Senior secured notes |
320,936 |
|
|
|
339,336 |
|
|
Other loans |
293,415 |
|
|
|
317,395 |
|
|
Full recourse: |
— |
|
|
|
— |
|
|
Senior unsecured bonds |
696,868 |
|
|
|
286,453 |
|
|
Other loans |
64,150 |
|
|
|
68,747 |
|
|
Operating lease liabilities |
13,407 |
|
|
|
14,008 |
|
|
Finance lease liabilities |
9,706 |
|
|
|
11,209 |
|
|
Liability associated with sale
of tax benefits |
112,950 |
|
|
|
123,468 |
|
|
Deferred income taxes |
101,886 |
|
|
|
97,126 |
|
|
Liability for unrecognized tax
benefits |
12,643 |
|
|
|
14,643 |
|
|
Liabilities for severance
pay |
18,132 |
|
|
|
18,751 |
|
|
Asset retirement
obligation |
52,193 |
|
|
|
50,183 |
|
|
Other long-term
liabilities |
7,812 |
|
|
|
8,039 |
|
|
Total liabilities |
1,940,401 |
|
|
|
1,725,834 |
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Redeemable noncontrolling
interest |
8,743 |
|
|
|
9,250 |
|
|
|
|
|
|
Equity: |
|
|
|
The Company's stockholders' equity: |
|
|
|
Common stock |
51 |
|
|
|
51 |
|
|
Additional paid-in capital |
920,210 |
|
|
|
913,150 |
|
|
Retained earnings |
534,984 |
|
|
|
487,873 |
|
|
Accumulated other comprehensive income (loss) |
(15,503 |
) |
|
|
(8,654 |
) |
|
Total stockholders' equity attributable to Company's
stockholders |
1,439,742 |
|
|
|
1,392,420 |
|
|
Noncontrolling interest |
132,061 |
|
|
|
122,990 |
|
|
Total equity |
1,571,803 |
|
|
|
1,515,410 |
|
|
Total liabilities, redeemable noncontrolling interest and
equity |
3,520,947 |
|
|
|
3,250,494 |
|
|
|
|
|
|
|
|
|
|
ORMAT TECHNOLOGIES, INC AND SUBSIDIARIESReconciliation of EBITDA
and Adjusted EBITDA For the Three and Nine-Month Periods Ended
September 30, 2020 and 2019
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 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.
Our board of directors and senior management use EBITDA and
Adjusted EBITDA to evaluate 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 and nine-month periods
ended September 30, 2020 and 2019.
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2020 |
2019 |
2020 |
2019 |
|
(Dollars in thousands) |
(Dollars in thousands) |
Net income |
23,098 |
|
|
15,089 |
|
|
78,274 |
|
|
79,416 |
|
|
Adjusted for: |
|
|
|
|
Interest expense, net (including amortization of deferred financing
costs) |
21,130 |
|
|
19,594 |
|
|
57,345 |
|
|
61,621 |
|
|
Income tax provision (benefit) |
15,361 |
|
|
9,626 |
|
|
45,275 |
|
|
20,136 |
|
|
Adjustment to investment in an unconsolidated company: our
proportionate share in interest expense, tax and depreciation and
amortization in Sarulla |
4,395 |
|
|
2,644 |
|
|
10,271 |
|
|
7,884 |
|
|
Depreciation and amortization |
39,628 |
|
|
36,365 |
|
|
111,728 |
|
|
106,982 |
|
|
EBITDA |
103,612 |
|
|
83,318 |
|
|
302,893 |
|
|
276,039 |
|
|
Mark-to-market gains or losses
from accounting for derivative |
431 |
|
|
(330 |
) |
|
(1,612 |
) |
|
(1,909 |
) |
|
Stock-based compensation |
2,807 |
|
|
2,228 |
|
|
7,060 |
|
|
7,231 |
|
|
Merger and acquisition
transaction costs |
211 |
|
|
250 |
|
|
1,369 |
|
|
750 |
|
|
Settlement expenses |
— |
|
|
— |
|
|
1,277 |
|
|
— |
|
|
Adjusted EBITDA |
107,061 |
|
|
85,466 |
|
|
310,987 |
|
|
282,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
___________________________________1 Ormat Technologies, Inc. is
also referred to herein as the “Company”, “Ormat”, “we” or “us”2
Reconciliation is set forth below in this release3 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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