Ormat Technologies, Inc. · NYSE:ORA

Ormat Technologies — Q3 2018 Earnings Presentation

34 slides from Ormat Technologies's earnings presentation, Nov 6, 2018

  1. Slide 1: Ormat Technologies Third Quarter 2018 Earnings Call

    ORMAT TECHNOLOGIES, INC. THIRD QUARTER 2018 EARNINGS CALL NOVEMBER 6, 2018 Copyright © 2018 Ormat Technologies, Inc.

  2. Slide 2: Safe Harbor Statement

    SAFE HARBOR STATEMENT This presentation includes Forward-Looking Statements and the disclaimer should be read carefully Forward-Looking Statements This presentation, and information provided during any amounts for 2020 growth (MW) or 2022 operational performance discussion accompanying this presenta

  3. Slide 3: Non-GAAP Metrics

    NON-GAAP METRICS Reconciliation to US GAAP Financial Information This presentation includes certain “non-GAAP financial measures” within the meaning of Regulation G under the Securities Exchange Act of 1934, as amended, including EBITDA and Adjusted EBITDA. The presentation of these non-GAAP financi

  4. Slide 4: Third Quarter 2018 Prepared Remarks

    THIRD QUARTER 2018 PREPARED REMARKS • Q3 2018 highlights: Isaac Angel, CEO • Financial overview: Doron Blachar, CFO • Operations & business updates: Isaac Angel, CEO • Q&A Copyright © 2018 Ormat Technologies, Inc. 4

  5. Slide 5: Q3 2018 Highlights

    Q3 2018 HIGHLIGHTS ($ millions, except per share amounts) Q3 2018 Q3 2017 Change (%) Revenues Electricity 116.9 110.9 5.4% Product 48.4 44.9 7.9% Other 1.1 1.4 (17.7%) Total Revenues 166.5 157.2 5.9% Gross margin (%) Electricity 31.7% 41.9% Product 26.4% 28.3% Other (89.0%) 4.8% Total (%) 29.3% 37.7

  6. Slide 6: Financial Results

    FINANCIAL RESULTS DORON BLACHAR, CFO Copyright © 2018 Ormat Technologies, Inc. 6

  7. Slide 7: Total Revenues

    TOTAL REVENUES Total revenues Total cost of revenues Segment contribution +$9.3M (5.9%) +19.7M (20.1%) 0.7% 29.1% Q3 3018 70.2% $166.5 $157.2 0.9% $117.7 28.6% $98.0 Q3 2017 70.5% Q3 2017 Q3 2018 Q3 2017 Q3 2018 Electricity Product Other Copyright © 2018 Ormat Technologies, Inc. 7

  8. Slide 8: Electricity Segment

    ELECTRICITY SEGMENT Revenues Cost of revenues +$6.0M (5.4%) +15.4M (23.9%) $116.9 $110.9 $79.8 $64.4 Q3 2017 Q3 2018 Q3 2017 Q3 2018 The increase in revenues was primarily attributable to: • $8.8M - commencement of Platanares power plant in Sept. 2017 • $3.4M - commencement of Tungsten Mountain powe

  9. Slide 9: Product Segment

    PRODUCT SEGMENT Revenues Cost of revenues +$3.5M (7.9%) +3.5M (10.7%) $48.4 $44.9 $35.7 $32.2 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Copyright © 2018 Ormat Technologies, Inc. 9

  10. Slide 10: Other Segment

    OTHER SEGMENT Revenues Cost of revenues $2.2 $1.4 $1.3 $1.2 Q3 2017 Q3 2018 Q3 2017 Q3 2018 The Other segment includes revenues from the provision of energy storage demand response and energy management services by our Viridity business following the acquisition of substantially all of the business

  11. Slide 11: Total Gross Profit and Margin

    TOTAL GROSS PROFIT AND MARGIN Gross profit Gross margin -$10.4M (17.6%) 37.7% $59.2 29.3% $48.8 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Copyright © 2018 Ormat Technologies, Inc. 11

  12. Slide 12: Electricity Segment Gross Margin

    ELECTRICITY SEGMENT GROSS MARGIN Q3 2018 and 9M 2018 Third quarter First nine months Excluding Puna 41.9% 42.6% 39.3% 36.9% 35.3% 31.7% Q3 2017 Q3 2018 9M 2017 9M 2018 Q3 2018 9M 2018 The decrease was primarily attributable to: • The Puna power plant in Hawaii under which we recorded cost of revenue

  13. Slide 13: Gross Margin by Segment

    GROSS MARGIN BY SEGMENT Product gross margin Other gross margin 28.3% 26.4% 4.8% Q3 2017 Q3 2018 Q3 2017 Q3 2018 (89.0) Copyright © 2018 Ormat Technologies, Inc. 13

  14. Slide 14: Selling and Marketing, and General and Administrative Expenses

    SELLING AND MARKETING, AND GENERAL AND ADMINISTRATIVE EXPENSES Selling and marketing expenses General and administrative expenses +$4.9M (136.3%) +$2.7M (25.1%) $13.6 $10.9 $8.6 $3.6 $3.6 Q3 2017 Q3 2018 Q3 2018 Q3 2017 Q3 2018 Excluding termination fee • This increase was primarily due to $5.0M The

  15. Slide 15: Operating Income

    OPERATING INCOME Total operating income -$18.1M (41.1%) $44.0 $25.9 Q3 2017 Q3 2018 The decrease was primarily attributable to: • Decrease in our Electricity segments gross margin • $5.0M termination fee of Galena 2 PPA • Increase in general and administrative expenses Copyright © 2018 Ormat Technol

  16. Slide 16: Operating Income (Loss) by Segment

    OPERATING INCOME (LOSS) BY SEGMENT Electricity segment Product segment Other segment -$17.1M (45.9%) -$0.5M (6.0%) $37.3 $20.2 $7.8 $7.3 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 (1.1) (1.5) Copyright © 2018 Ormat Technologies, Inc. 16

  17. Slide 17: Interest Expense, Net

    INTEREST EXPENSE, NET Interest expense, net +$1.3 (9.0%) $18.7 $11.7 Q3 2017 Q3 2018 This increase was primarily attributable to • Acquisition of USG - interest expense associated with approx. $100M loans of USG • $1.3M increase in interest expense related to the sale of tax benefits • Higher intere

  18. Slide 18: Income Tax Provision

    INCOME TAX PROVISION $6.2 $1.2 Q3 2017 Q3 2018 Copyright © 2018 Ormat Technologies, Inc. 18

  19. Slide 19: Net Income Attributable to Stockholders & EPS

    NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS & EPS Net Income (loss) attributable to the EPS2 Company's Stockholders ($M) $25.9 $24.0 $15.6 $0.47 $0.51 $10.6 $0.31 $0.21 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Adjusted1 Adjusted1 (1) Adjusted net income attrib

  20. Slide 20: Adjusted EBITDA ($M)

    ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Electricity segment Product segment Other segment -$0.8M (1.1%) +$1.1M (1.7%) -$1.7M (16.1%) $76.4 $75.6 $66.2 $67.3 89% of total adjusted EBITDA 87% of total adjusted EBITDA $10.6 $9.0 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 ($0.5)

  21. Slide 21: Cash and Cash Equivalents and Restricted Cash ($M)

    CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ($M) $258.0 $200.7 $95.1 $103.2 $41.9 $21.8 $32.4 $9.6 $3.8 $155.1 $27.0 $96.6 $3.7 $7.1 Dec.31, Other Cash USG Tungsten Cash Proceeds CapEx USG Repayment Dividend Cash Investment Sept. 30, 2017 received restricted Mountain from from Acquisition long ter

  22. Slide 22: Payment of Principal Due by Period ($M)

    PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 4.9% Q4-2018 FY 2018 Long-term non-recourse debt & limited recourse debt 5.4 5.4 Senior Secured Notes (non-recourse) due 2033 11.1 11.1 Long-term loans (full recourse) 2.5 2.5 Revolving bank credit 50.0 50.0 Total 69.0 69.0 Remaining 201

  23. Slide 23: Financing

    FINANCING • Platanares finance agreement with OPIC • October 2018 - completed the closing of the first Tranche under the previously announced finance agreement totaling up to $124.7 M for the 35 MW Platanares geothermal power plant in Honduras with OPIC • Ormat received a disbursement of $114.7 M re

  24. Slide 24: Operations & Business Updates

    OPERATIONS & BUSINESS UPDATES ISAAC ANGEL, CEO Copyright © 2018 Ormat Technologies, Inc. 24

  25. Slide 25: Update on Puna Plant in Hawaii

    UPDATE ON PUNA PLANT IN HAWAII • May 3, 2018 - the Kilauea volcano erupted and plant went down • Lava recently stopped flowing • The volcano alert level was officially lowered on September 5th • We are making the following Key steps that will ultimately bring Puna back online: • Begun the process of

  26. Slide 26: Generation - 7.1% Increase Year over Year

    GENERATION - 7.1% INCREASE YEAR OVER YEAR • Q3 2018 generation was positively affected by Platanares, Tungsten Mountain, Olkaria III plant 1 expansion, and USG power plants; • Partially offset by a decrease in generation due to : • The outage related to Puna shutdown • Some of our power plants that

  27. Slide 27: Product Segment

    PRODUCT SEGMENT • Backlog of $ 226.4M as of November 1, 2018 • The backlog includes revenues for the period between October 1, 2018 and November 1, 2018 • Secured two new contracts in Turkey • The backlog is expected to support revenue for 2019 and beyond Copyright © 2018 Ormat Technologies, Inc. 27

  28. Slide 28: Growth Plan

    GROWTH PLAN • Added 67 MW YTD from organic growth and acquisition • 11 MW - plant 1 expansion in Olkaria III, Kenya • 38 MW - Neal Hot Springs, San Emidio and Raft River (USG Acquisition) • 14 MW - NIL 2, Sarulla, Indonesia(1) • 4 MW - Brady repowering, Nevada • Expect to add between 115 MW and 125

  29. Slide 29: Energy Storage

    ENERGY STORAGE • Two 20MW/20MWh utility scale energy storage systems in New Jersey are under construction • Excepted completion: first system is expected be operational in Q4 2018 and the second system in the Q1 2019 • The projects are expected to generate in 2019 average revenues of between $7M and

  30. Slide 30: Capital Needs for the Remainder 2018

    CAPITAL NEEDS FOR THE REMAINDER 2018 Capital needs ($M) Construction & enhancements $22 Maintenance CapEx $12 Storage activity $14 Manufacturing facility $1 Total CapEx $49 Debt repayment $19 Revolving bank credit repayment $50 Total $118 Copyright © 2018 Ormat Technologies, Inc. 30

  31. Slide 31: Reaffirming 2018 Guidance

    REAFFIRMING 2018 GUIDANCE 2018 Revenue Guidance ($M) Electricity revenues 500-510 Products revenues 190-200 Other revenues(1) 8-12 Total expected revenues 698-722 2018 Adjusted EBITDA Guidance ($M) Adjusted EBITDA(2) 370 -380 (1) “Other” segment reflect revenues from energy storage, demand response

  32. Slide 32: Thank You!

    THANK YOU! Contact IR: Smadar Lavi VP Corporate Finance and Head of Investor Relations 775-356-9029 (ext. 65726) [email protected] Copyright © 2018 Ormat Technologies, Inc. 32

  33. Slide 33: Reconciliation of EBITDA and Adjusted EBITDA

    RECONCILIATION OF EBITDA AND ADJUSTED EBITDA FOR THE THREE AND NINE MONTHS PERIODS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED) We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation an

  34. Slide 34: Reconciliation of Adjusted Net Income

    RECONCILIATION OF ADJUSTED NET INCOME FOR THE THREE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED) Adjusted net income attributable to the Company's stockholders and Adjusted EPS are adjusted for one-time expense items that are not representative of our ongoing business and operations.

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