ORA Ormat Technologies Inc

Record Revenues and Record Net Income for the Third Quarter RENO, Nev., Nov. 7 /PRNewswire-FirstCall/ -- ORMAT Technologies, Inc. (NYSE:ORA) today announced financial results for the quarter ended September 30, 2006. For the third quarter, total revenues were $77.8 million compared to $69.3 million for the same quarter in 2005, an increase of 12.4%. (Logo: http://www.newscom.com/cgi-bin/prnh/20040422/LATH066LOGO ) Net income for the quarter ended September 30, 2006 was $13.9 million or $0.39 per share of common stock, as compared with net income of $12.3 million or $0.39 per share of common stock for the same quarter in 2005. There were 35.6 million weighted average number of shares used in computation of earnings per share in the third quarter of 2006 and 31.6 million shares in the same quarter in 2005. Electricity Segment revenues for the quarter were $56.4 million compared to $51.4 million for the same quarter in 2005, an increase of 9.8%. The increase in revenues was primarily attributed to a growth in generating capacity, which increased the Company's revenues by $1.3 million and the inclusion of a full quarter of $3.5 million in revenues generated from our Zunil project in Guatemala, which was consolidated as of March 13, 2006. For the quarter ended September 30, 2006, the Company's gross margin was 41.6% compared to 45.3% for the same quarter in 2005. Operating income for the quarter ended September 30, 2006 was $24.9 million as compared with $25.3 million for the same quarter in 2005. Gross margin was impacted by a reduction in Electricity Segment margins, which were lower due to the repair cost of the Puna wells and an increase in the operating costs, some of which were related to new power plants that came on line during the quarter but did not yet contribute fully to revenues. Adjusted EBITDA for the quarter ended September 30, 2006 was $39.7 million as compared with $37.7 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 $4.1 million for the quarters ended September 30, 2006 and 2005 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 nine months ended September 30, 2006, total revenues were $202.3 million, a 12.9% increase over total revenues of $179.2 million for the same period in 2005. Net income for the nine months ended September 30, 2006 was $30.2 million or $0.89 per common share as compared to $20.3 million, or $0.64 per share for the same period of 2005. There were 34.1 million weighted average shares outstanding during the first nine months of 2006 and 31.6 million during the same period in 2005. For the nine months ended September 30, 2006, the Company's gross margin was 39.0% compared to 37.8% during the same period in 2005. Operating income for the nine months ended September 30, 2006 increased 10.0% to $55.1 million from $50.1 million for the same period in 2005. Adjusted EBITDA for the nine months ended September 30, 2006 was $97.3 million as compared with $89.0 million for the same period in 2005. Adjusted EBITDA includes operating income, depreciation and amortization totaling $11.7 million and $13.0 million, for the nine months ended September 30, 2006 and 2005, respectively, related to the Company's unconsolidated investment interest 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 September 30, 2006, the Company had cash, cash equivalents and marketable securities of $79.9 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, which resulted in net proceeds of approximately $135.1 million, as well as cash provided by operating activities of $55.2 million. Ormat used a portion of its cash position to fund capital expenditures in the amount of $114.9 million, an investment in Orzunil of $22.8 million, and the repayment of long-term debt in an amount of $35.3 million (including repayment of parent loan). On November 7, 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 December 13, 2006 to shareholders of record as of the close of business on November 30, 2006. Commenting on the Company's recent quarter results, Dita Bronicki, President and Chief Executive Officer, stated, "We had a good quarter and showed year-over-year gains in revenue in both Segments; growth in the Electricity Segment is expected to continue further with the addition of 250 MW expected to come on line in the three years until the end of 2008". "Revenues from our Products Segment were strong", Mrs. Bronicki continued. "We continue to see growing interest in our recovered energy power generation technology. Over the quarter, we received from ENAGAS S.A. in Spain the first order from a European natural gas pipeline, for a recovered energy generation unit, which we plan to have installed by mid-2008." Mrs. Bronicki concluded, "The worldwide concerns surrounding greenhouses gases and global warming continue to create an extremely supportive regulatory environment for geothermal and other renewable energy sources. In the third quarter, California enacted the greenhouse gas emission reduction law and has accelerated the timing required for utilities to achieve 20% of the power supply from renewables under the States Renewable Portfolio Standard, from 2017 to 2020. These developments underscore the importance of alternative energy as a growth sector that is not tied to fluctuations of gas and oil prices." Commenting on the Company's outlook for the remainder of 2006, Mrs. Bronicki stated, "We continue to expect revenues from our Electricity Segment in 2006 of approximately $200 million, and from our Products Segment in 2006 of between $65 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.S.T. on Wednesday, November 8, 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 7952588. 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 Nine-Month Periods Ended September 30, 2006 and 2005 (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 (in thousands, (in thousands, except per except per share amounts) share amounts) Revenues: Electricity: Energy and capacity $33,823 $30,042 $87,845 $80,009 Lease portion of energy and capacity 21,908 20,772 59,043 53,363 Lease income 671 571 2,014 859 Total electricity 56,402 51,385 148,902 134,231 Products 21,446 17,905 53,353 44,980 Total revenues 77,848 69,290 202,255 179,211 Cost of revenues: Electricity: Energy and capacity 22,194 17,277 59,736 53,332 Lease portion of energy and capacity 8,814 7,350 26,454 22,083 Lease expense 1,311 1,228 3,932 1,843 Total electricity 32,319 25,855 90,122 77,258 Products 13,157 12,073 33,269 34,183 Total cost of revenues 45,476 37,928 123,391 111,441 Gross margin 32,372 31,362 78,864 67,770 Operating expenses: Research and development expenses 826 777 2,489 1,871 Selling and marketing expenses 2,410 1,934 7,931 5,793 General and administrative expenses 4,270 3,388 13,358 9,990 Operating income 24,866 25,263 55,086 50,116 Other income (expense): Interest income 1,443 1,370 4,905 3,255 Interest expense (8,347) (9,011) (23,541) (28,811) Foreign currency translation and transaction losses (933) (21) (1,010) (65) Other non-operating income 65 53 372 165 Income before income taxes, minority interest, and equity in income of investees 17,094 17,654 35,812 24,660 Income tax provision (4,342) (6,977) (8,412) (9,611) Minority interest in earnings of subsidiaries (242) -- (813) -- Equity in income of investees 1,429 1,641 3,639 5,271 Net income $13,939 $12,318 $30,226 $20,320 Earnings per share - basic and diluted $0.39 $0.39 $0.89 $0.64 Weighted average number of shares used in computation of earnings per share: Basic 35,588 31,563 34,100 31,563 Diluted 35,609 31,579 34,100 31,576 Ormat Technologies, Inc. and Subsidiaries Consolidated Balance Sheets As of September 30, 2006 and December 31, 2005 (Unaudited) September 30, December 31, 2006 2005 (in thousands) Assets Current assets: Cash and cash equivalents $19,856 $26,976 Marketable securities 60,018 43,560 Restricted cash, cash equivalents and marketable securities 45,444 36,732 Receivables: Trade 42,360 33,515 Related entities 884 524 Other 4,135 2,629 Inventories, net 5,880 5,224 Costs and estimated earnings in excess of billings on uncompleted contracts 8,625 8,883 Deferred income taxes 1,796 1,663 Prepaid expenses and other 6,768 3,256 Total current assets 195,766 162,962 Unconsolidated investments 38,984 47,235 Deposits and other 14,137 13,489 Deferred income taxes 7,270 5,376 Property, plant and equipment, net 613,844 491,835 Construction-in-process 145,064 128,256 Deferred financing and lease costs, net 16,331 17,412 Intangible assets, net 45,801 47,915 Total assets $1,077,197 $914,480 Liabilities and Stockholders' Equity Current liabilities: Short-term bank credit $-- $3,996 Accounts payable and accrued expenses 60,919 50,048 Billings in excess of costs and estimated earnings on uncompleted contracts 7,707 12,657 Current portion of long-term debt: Limited and non-recourse 8,335 2,888 Full recourse 1,000 1,000 Senior secured notes (non-recourse) 24,090 23,754 Due to Parent, including current portion of notes payable to Parent 33,386 32,003 Total current liabilities 135,437 126,346 Long-term debt, net of current portion: Limited and non-recourse 24,334 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 123,555 140,162 Other liabilities -- 1,309 Deferred lease income 79,554 81,569 Deferred income taxes 27,024 22,004 Liabilities for severance pay 13,018 11,409 Asset retirement obligation 13,201 11,461 Total liabilities 732,403 732,157 Minority interest in net assets of subsidiaries 64 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 260,080 124,008 Unearned stock-based compensation -- (153) Retained earnings 82,256 55,824 Accumulated other comprehensive income 2,359 2,549 Total stockholders' equity 344,730 182,259 Total liabilities and stockholders' equity $1,077,197 $914,480 Ormat Technologies, Inc. and Subsidiaries Reconciliation of Adjusted EBITDA (Unaudited) 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 nine- month periods ended September 30, 2006 and 2005: Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 (in thousands) (in thousands) Net income $13,939 $12,318 $30,226 $20,320 Adjusted for: Equity in income of investees (1,429) (1,641) (3,639) (5,271) Minority interest in earnings of subsidiaries 242 -- 813 -- Interest expense, net (including amortization of deferred financing costs) 7,837 7,662 19,646 25,621 Other non-operating income (65) (53) (372) (165) Income tax provision 4,342 6,977 8,412 9,611 Depreciation and amortization 10,734 8,243 30,520 25,861 EBITDA 35,600 33,506 85,606 75,977 Equity in income of Mammoth- Pacific L.P. and Ormat Leyte 1,429 1,424 3,913 4,634 Depreciation, amortization, interest and taxes attributable to the Company's equity in Mammoth-Pacific L.P. and Ormat Leyte 2,695 2,745 7,744 8,428 Adjusted EBITDA $39,724 $37,675 $97,263 $89,039 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, Inc. Web site: http://www.ormat.com/

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