Ormat Technologies, Inc. · NYSE:ORA
Ormat Technologies — Q2 2018 Earnings Presentation
35 slides from Ormat Technologies's earnings presentation, Aug 8, 2018
Slide 1: Second Quarter 2018 Earnings Call
ORMAT TECHNOLOGIES, INC. SECOND QUARTER 2018 EARNINGS CALL AUGUST 8, 2018 Copyright © 2018 Ormat Technologies, Inc.
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT This presentation includes Forward-Looking Statements and the disclaimer should be read carefully Forward-Looking Statements such as growth (MW), revenue by segment, segment breakdown This presentation, and information provided during any and domestic/international geographic b
Slide 3: Safe Harbor Statement: Reconciliation to US GAAP
SAFE HARBOR STATEMENT 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 fi
Slide 4: Second Quarter 2018 Prepared Remarks
SECOND QUARTER 2018 PREPARED REMARKS • Q2 2018 highlights: Isaac Angel, CEO • Financial overview: Doron Blachar, CFO • Operations & business updates: Isaac Angel, CEO • Q&A Copyright © 2018 Ormat Technologies, Inc. 4
Slide 5: Q2 2018 Highlights
Q2 2018 HIGHLIGHTS ($M except per share amounts) Q2 2018 Q2 2017 Change (%) Revenues Electricity 122.2 110.9 10.2% Product 54.9 67.6 (18.7%) Other 1.2 0.9 36.8% Total Revenues 178.3 179.4 (0.6%) Gross margin (%) Electricity 33.5 43.0 Product 31.6 35.7 Other (68.3) (154.6) Gross margin (%) 32.2 39.3
Slide 6: Financial Results
FINANCIAL RESULTS DORON BLACHAR, CFO Copyright © 2018 Ormat Technologies, Inc. 6
Slide 7: Total Revenues
TOTAL REVENUES Total revenues Total cost of revenues Segment contribution -$1.1M (0.6%) +12.0M (11.0%) 1% 31% Q2 2018 68% $179.4 $178.3 $120.8 38% $108.9 Q2 2017 62% Q2 2017 Q2 2018 Q2 2017 Q2 2018 Electricity Product Other Copyright © 2018 Ormat Technologies, Inc. 7
Slide 8: Electricity Segment
ELECTRICITY SEGMENT Revenues Cost of revenues +$11.3M (10.2%) +18.0M (28.5%) $122.2 $110.9 $81.2 $63.2 Q2 2017 Q2 2018 Q2 2017 Q2 2018 The increase in revenues was primarily attributable to: • $8.0M - commencement of Platanares power plant in Sept. 2017 • $3.4M - consolidation of USG which was acqui
Slide 9: Product Segment
PRODUCT SEGMENT Revenues Cost of revenues -$12.7M (18.7%) -5.9M (13.5%) $67.6 $54.9 $43.4 $37.6 Q2 2017 Q2 2018 Q2 2017 Q2 2018 Copyright © 2018 Ormat Technologies, Inc. 9
Slide 10: Other Segment
OTHER SEGMENT Revenues Cost of revenues $2.2 $2.0 $1.2 $0.9 Q2 2017 Q2 2018 Q2 2017 Q2 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
Slide 11: Total Gross Profit and Margin
TOTAL GROSS PROFIT AND MARGIN Gross profit Gross margin -$13.0M (18.5%) 39.3% $70.5 32.2% $57.5 Q2 2017 Q2 2018 Q2 2017 Q2 2018 Copyright © 2018 Ormat Technologies, Inc. 11
Slide 12: Electricity Segment Gross Margin
ELECTRICITY SEGMENT GROSS MARGIN Electricity gross margin Excluding Puna and USG 43.0% 43.0% 43.0% 43.0% 42.9% 40.7% 39.2% 33.5% Q2 2017 Q2 2018 H1 2017 H1 2018 Q2 2017 Q2 2018 H1 2017 H1 2018 Copyright © 2018 Ormat Technologies, Inc. 12
Slide 13: Gross Margin by Segment
GROSS MARGIN BY SEGMENT Product gross margin Other gross margin 35.7% 31.6% Q2 2017 Q2 2018 Q2 2017 Q2 2018 (68.3%) (154.6%) Copyright © 2018 Ormat Technologies, Inc. 13
Slide 14: G&A and Operating Income
G&A AND OPERATING INCOME General and administrative expenses Total operating income +$3.7M (30.0%) -$16.5M (31.1%) $53.2 $36.6 $15.9 $12.2 Q2 2017 Q2 2018 Q2 2017 Q2 2018 The increase was primarily attributable to: • The decrease in operating income was • $2.0M G&A expenses coming from first time at
Slide 15: Operating Income (Loss) by Segment
OPERATING INCOME (LOSS) BY SEGMENT Electricity segment Product segment Other segment -$10.5M (27.6%) -$6.2 M (36.5%) $38.0 $27.5 $17.0 $10.8 Q2 2017 Q2 2018 Q2 2017 Q2 2018 Q2 2017 Q2 2018 (1.9) (1.6) Copyright © 2018 Ormat Technologies, Inc. 15
Slide 16: Interest Expense, Net
INTEREST EXPENSE, NET Interest expense, net +$1.3 (9.0%) $15.8 $14.5 Q2 2017 Q2 2018 This increase was primarily attributable to • $100.0M of proceeds from a senior unsecured loan received on March 22, 2018 • Net proceeds of $107.1 M from revolving credit lines with commercial banks • Acquisition of
Slide 17: Income Tax Provision
INCOME TAX PROVISION $32.8 $29.1 Q2 2017 Q2 2018 The effective tax rate is primarily based upon the composition of our income in different countries and changes related to valuation allowances for certain countries. Excluding the release of the valuation allowance the effective tax rate for the seco
Slide 18: Net Income (Loss) Attributable to Stockholders & EPS
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS & EPS Net Income (loss) attributable to the EPS2 Company's Stockholders ($M) $29.5 $16.6 $0.58 $8.6 $0.32 $0.17 Q2 2017 Q2 2018 Q2 2017 Q2 2018 Q2 2017 Q2 2018 Q2 2017 Q2 2018 ($0.3) Adjusted1 ($0.01) Adjusted1 (1) Adjusted Net income attr
Slide 19: Adjusted EBITDA ($M)
ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Electricity segment Product segment Other segment -$7.3M (8.3%) +$2.6M (3.9%) -$9.9M (44.6%) $88.1 $80.8 $67.2 $69.8 86.4% of total adjusted EBITDA 76.3% of total $22.2 adjusted EBITDA $12.3 Q2 2017 Q2 2018 Q2 2017 Q2 2018 Q2 2017 Q2 2018 Q1 2017 Q1 2018 (
Slide 20: Cash and Cash Equivalents and Restricted Cash ($M)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ($M) $207.1 $139.1 $95.1 $67.1 $28.3 $32.4 $16.7 $8.0 $3.8 $142.7 $27.0 $96.6 $3.5 Dec.31, 2017 Other Tungsten Cash Proceeds CapEx USG Repayment Dividend Cash Investment June 30, USG 2018 restricted Mountain Derived from long term Paid in Sarulla cash Ta
Slide 21: Payment of Principal Due by Period ($M)
PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 4.9% Q3-2018 Q4-2018 FY 2018 Long-term non-recourse debt & limited recourse debt 5.4 5.4 10.7 Senior Secured Notes (non-recourse) due 2033 8.0 11.1 19.1 Long-term loans (full recourse) 0.0 2.5 2.5 Revolving bank credit 71.5 0.0 71.5 Tota
Slide 22: Financing: Tungsten Mountain Tax Equity Transaction
FINANCING • Tungsten Mountain tax equity transaction • Entered into a partnership agreement with a private investor to efficiently monetize the federal Production Tax Credits available to the Tungsten Mountain Geothermal power plant • Initial purchase price of approx. $33.4M • Additional installment
Slide 23: Operations & Business Updates
OPERATIONS & BUSINESS UPDATES ISAAC ANGEL, CEO Copyright © 2018 Ormat Technologies, Inc. 23
Slide 24: Update on Puna Plant in Hawaii
UPDATE ON PUNA PLANT IN HAWAII • May 3, 2018 - the Kilauea volcano erupted and plant went down • Steps have been taken to secure the Puna facilities in accordance with its emergency response plan • Lave covered three production wells, fresh water wells, it consumed drilling rig, other equipment and
Slide 25: Update on Puna Geothermal Power Plant in Hawaii
UPDATE ON PUNA GEOTHERMAL POWER PLANT IN HAWAII Fissure 8 continues to erupt lava into the channel leading northeastward from the vent Puna Geothermal Venture Fissure 8 (1) source: USGS Copyright © 2018 Ormat Technologies, Inc. 25
Slide 26: Operations
OPERATIONS • Generation - 7.7% increase year over year • Generation was positively affected by Platanares and Tungsten Mountain • The increase was partially offset by the outage related to the May 3, 2018 volcano eruption near the Puna Plan and by a decrease at some of our power plants mainly due to
Slide 27: Product Segment
PRODUCT SEGMENT • Backlog of $229M as of August 1, 2018 • The backlog includes revenues for the period between July 1, 2018 and August 1, 2018 TAOM, New Zealand Copyright © 2018 Ormat Technologies, Inc. 27
Slide 28: Organic Growth
ORGANIC GROWTH • 11 MW Plant I expansion project in the Olkaria III complex in Kenya commenced commercial operation • The expansion increased the total generating capacity of the complex to 150 MW Olkaria III – Plant I expansion project Copyright © 2018 Ormat Technologies, Inc. 28
Slide 29: Growth Plan
GROWTH PLAN • Added 67 MW YTD from organic growth and acquisition • Expect to add between 115 MW and 125 MW by the end of 2020 • Puna enhancement on hold • Plan to enhance Steamboat Hills power plant and add 16 MW to its current capacity (12 MW) Projected Project Expected COD PPA Capacity U.S - McGi
Slide 30: Energy Storage
ENERGY STORAGE • Viridity subsidiary expects started construction of two 20MW/20MWh utility scale located in New Jersey • Excepted completion: Q4 2018 • The projects are expected to generate in 2019 average revenues of between $7M and $8M, mainly from ancillary services • The projects’ revenues are
Slide 31: Capital Needs for the Remainder of 2018
CAPITAL NEEDS FOR THE REMAINDER 2018 Capital needs ($M) Construction & enhancements $33 Maintenance CapEx $5 Exploration and development $22 Storage activity $30 Manufacturing facility $8 Total CapEx $98 Debt repayment $32 Revolving bank credit repayment $72 Total $202 Copyright © 2018 Ormat Technol
Slide 32: 2018 Guidance
2018 GUIDANCE 2018 Revenue Guidance ($M) Electricity revenues(1) 500-510 Products revenues 190-200 Other revenues(2) 8-12 Total expected revenues 698-722 2018 Adjusted EBITDA Guidance ($M) Adjusted EBITDA(3) 370-380 (1) In light of the continued lava flow near the Puna Plant and the relevant account
Slide 33: Thank You!
THANK YOU! Contact IR: Smadar Lavi VP Corporate Finance and Head of Investor Relations 775-356-9029 (ext. 65726) [email protected] Copyright © 2018 Ormat Technologies, Inc. 33
Slide 34: Reconciliation of EBITDA and Adjusted EBITDA ($M)
RECONCILIATION OF EBITDA ADJUSTED EBITDA ($M) 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 as
Slide 35: Reconciliation of Adjusted Net Income Attributable to the Company's Shareholders
RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO THE COMPANY'S SHAREHOLDERS For the Three-Month Periods Ended June 30, 2018 and 2017 (Unaudited) Three Months Ended June 30 2018 2017 (in millions) Net income attributable to the Company's stockholders..............................................