Ormat Technologies, Inc. · NYSE:ORA

Ormat Technologies — Q1 2019 Earnings Presentation

34 slides from Ormat Technologies's earnings presentation, May 7, 2019

  1. Slide 1: Ormat Technologies First Quarter 2019 Earnings Call

    ORMAT TECHNOLOGIES, INC. FIRST QUARTER 2019 EARNINGS CALL MAY 7, 2019 Copyright © 2019 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 discussion accompanying this amounts for 2020 growth (MW) or 2022 operational performance metrics

  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: First Quarter 2019 - Prepared Remarks

    FIRST QUARTER 2019 - PREPARED REMARKS • Q1 2019 highlights: Isaac Angel, CEO • Financial overview: Doron Blachar, CFO • Operations & business updates: Isaac Angel, CEO • Q&A Copyright © 2019 Ormat Technologies, Inc. 4

  5. Slide 5: Q1 2019 Highlights

    Q1 2019 HIGHLIGHTS ($ millions, except per share amounts) Q1 2019 Q1 2018 % Change Revenues Electricity 142.9 132.5 7.9% Product 52.1 48.7 7.1% Other 4.0 2.9 39.8% Total Revenues 199.0 184.0 8.2% Gross margin (%) Electricity 45.7% 44.5% Product 19.2% 30.7% Other (30.2)% (20.3)% Gross margin (%) 37.3

  6. Slide 6: Financial Results

    FINANCIAL RESULTS DORON BLACHAR, CFO Copyright © 2019 Ormat Technologies, Inc. 6

  7. Slide 7: Total Revenues

    TOTAL REVENUES Total revenues Total cost of revenues Segment contribution +$15.0M (8.2%) +14.2M (12.9%) 20.1% $199.0 26.2% Q1 2019 $184.0 71.8% 1.6% $124.9 $110.7 26.4% Q1 2018 72.0% Q1 2018 Q1 2019 Q1 2018 Q1 2019 Electricity Product Other Copyright © 2019 Ormat Technologies, Inc. 7

  8. Slide 8: Electricity Segment

    ELECTRICITY SEGMENT Revenues Cost of revenues +$10.4M (7.9%) +$4.1M (5.5%) $142.9 $132.5 $77.5 $73.5 Q1 2018 Q1 2019 Q1 2018 Q1 2019 The increase in revenues was primarily attributable to: • $9.4M – Increase in MGH phase 3 mainly due to the commencement of phase 3 in December 2018 • $9.3M - consolid

  9. Slide 9: Product Segment

    PRODUCT SEGMENT Revenues Cost of revenues $3.5M (7.1%) $8.4M (24.8%) $52.1 $48.7 $42.1 $33.7 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Copyright © 2019 Ormat Technologies, Inc. 9

  10. Slide 10: Other Segment

    OTHER SEGMENT Revenues Cost of revenues +$1.1M (39.8%) +$1.8M (51.3%) $5.2 $4.0 $3.4 $2.9 Q1 2018 Q1 2019 Q1 2018 Q1 2019 The Other segment includes revenues from the provision of energy storage demand response and energy management services Copyright © 2019 Ormat Technologies, Inc. 10

  11. Slide 11: Total Gross Profit and Margin

    TOTAL GROSS PROFIT AND MARGIN Gross profit Gross margin 39.9% $73.4 $74.2 37.3% Q1 2018 Q1 2019 Q1 2018 Q1 2019 Copyright © 2019 Ormat Technologies, Inc. 11

  12. Slide 12: Gross Margin by Segment

    GROSS MARGIN BY SEGMENT Electricity gross margin Product gross margin Other gross margin 48.2% 44.5% 45.7% 30.7% 19.2% Q1 2018 Q1 2019 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 W/O Puna (20.3) % (30.2) % Copyright © 2019 Ormat Technologies, Inc. 12

  13. Slide 13: Selling and Marketing & General and Administrative Expenses

    SELLING AND MARKETING & GENERAL AND ADMINISTRATIVE EXPENSES Selling and marketing expenses General and administrative expenses +$0.2M (4.5%) +$1.8M (13.3%) $15.7 $13.8 $3.7 $3.9 Q1 2018 Q1 2019 Q1 2018 Q1 2019 • constituted 1.9% of total revenues for Q1 2019, • The increase was mainly attributable t

  14. Slide 14: Operating Income

    OPERATING INCOME Total operating income -$0.9M (-1.6%) $54.6 $53.7 Q1 2018 Q1 2019 The slight decrease was primarily attributable to: • Decrease in our Product segments gross profit • Increase in general and administrative expenses • Offset by: • Increase in our Electricity segment gross profit Copy

  15. Slide 15: Operating Income (Loss) by Segment

    OPERATING INCOME (LOSS) BY SEGMENT Electricity segment Product segment Energy Storage Management Services segment $177.2 $155.5 $38.1 $23.2 2018 2019 2018 2019 2018 2019 ($8.5) ($6.6) Copyright © 2019 Ormat Technologies, Inc. 15

  16. Slide 16: Interest Expense, Net

    INTEREST EXPENSE, NET Interest expense, net +$6.9 (48.0%) $21.2 $14.3 Q1 2018 Q1 2019 This increase was primarily attributable to • Acquisition of USG - interest expense associated with $96M loans • $2.2M increase in interest expense related to the sale of tax benefits • Higher interest expense as a

  17. Slide 17: Income Tax (Provision)/Benefit

    INCOME TAX (PROVISION)/BENEFIT $26.9 Q1 2018 Q1 2019 ($14.0) Our effective tax rate for the quarter is approximately 34%. Copyright © 2019 Ormat Technologies, Inc. 17

  18. Slide 18: Net Income Attributable to the Company's Stockholders & EPS

    NET INCOME ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS & EPS Net Income attributable to the Diluted EPS2 Company's Stockholders ($M) $69.5 $1.36 $25.9 $25.1 $25.9 $0.51 $0.49 $0.51 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Adjusted1 Adjusted1 (1) Adjusted net income attributable

  19. Slide 19: Adjusted EBITDA ($M)

    ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Electricity segment Product segment Other segment $3.4M (3.4%) +$8.2M (9.2%) -$4.9M (-45.5%) $0.2M (13.7%) $96.8 $101.8 $103.0 $98.4 $88.7 95% of total adjusted EBITDA 90% of total adjusted EBITDA $10.8 $5.9 ($1.1) ($1.0) Q1 2018 Q1 2019 Q1 2019 Q1 2018 Q1

  20. Slide 20: Cash and Cash Equivalents & Restricted Cash ($M)

    CASH AND CASH EQUIVALENTS & RESTRICTED CASH ($M) $98.1 $77.4 $51.3 $50.0 $41.5 $15.8 $5.6 $4.5 $177.5 $1.4 $172.5 December Other DEG Proceeds Cash Revolving CapEx Payment of Dividend Paid March 31, Dec.31, 31, 2018 Other DEG loan Unsecured from Cash from from Revolving lines of CapEx Debt long term

  21. Slide 21: Payment of Principal Due by Period ($M)

    PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 5.2% Q2-2019 Q3-2019 Q4-2019 Year 2019 Long-term non-recourse debt & limited recourse debt 7.4 7.4 7.4 22.2 Senior Secured Notes (non-recourse) 9.1 4.8 11.3 25.2 Long-term loans (full recourse) 4.7 0.0 4.7 9.4 Revolving bank credit(2) 44

  22. Slide 22: Financing Activity

    FINANCING ACTIVITY • Successfully raised $92M • $42M unsecured notes with DEG for the Olkaria III recent enhancement • Fixed interest rate of 6.04% • Maturity - June 2028 • Additional $50M under the senior unsecured notes from Migdal • Fixed interest rate of 4.6% • Maturity - March 2029 Copyright ©

  23. Slide 23: Operations & Business Updates

    OPERATIONS & BUSINESS UPDATES ISAAC ANGEL, CEO Copyright © 2019 Ormat Technologies, Inc. 23

  24. Slide 24: Generation – 11% Increase Year over Year

    GENERATION – 11% INCREASE YEAR OVER YEAR • 11% increase year over year • generation was positively affected by McGinness Hills phase 3, Olkaria III plant 1 expansion, and USG power plants; • Partially offset by a decrease in generation due to :the outage related to Puna shutdown Generation (GWh)(1)

  25. Slide 25: Operation Update on Puna Plant in Hawaii

    OPERATION UPDATE ON PUNA PLANT IN HAWAII • Working rapidly to resume operation of our Puna power plant following the Kilauea volcano erupted • Access road to the site - completed • Mobilizing of a workover rigs from the mainland to Hawaii - completed • Drilling of new fresh water well - completed •

  26. Slide 26: Insurance Update on Puna Plant in Hawaii

    INSURANCE UPDATE ON PUNA PLANT IN HAWAII • Property Insurance • All insurers accepted our claim and started to pay the costs to rebuild the destroyed items including the substation • Business Interruption • Some insurers accepted that coverage starts at May 2018 • Still in discussions to reach an un

  27. Slide 27: Growth Plan

    GROWTH PLAN • Expect adding between 127 MW and 142 MW by the end of 2021(1) • Continue to look for M&A opportunities Projected Project Expected COD PPA Capacity U.S - Tungsten Solar 7 AC MW Q2 2019 v U.S - Steamboat Hills Enhancement 19 MW 2020 v Tungsten 2 15 MW 2020 v Wister Solar 20 MW 2020 v Gua

  28. Slide 28: Product Segment

    PRODUCT SEGMENT • Backlog of $ 226.4 million as of May 6, 2019 • The backlog includes revenues for the period between April 1, 2019 and May 6, 2019 • 98% Geothermal contracts • Backlog include a new contract for the project in Chile - $59.0 million Geothermal contracts geographic breakdown 1% 26% 38

  29. Slide 29: Energy Storage

    ENERGY STORAGE • Two 20MW/20MWh utility scale energy storage systems in New Jersey • two systems commenced operation during Q1 2019 • New 10MW/12.5MWH system under construction in Georgetown, Texas • provide frequency regulation and load shifting services to ERCOT • Vallecito battery Energy - 10 MW

  30. Slide 30: Expected Capital Needs for the Remainder of 2019

    EXPECTED CAPITAL NEEDS FOR THE REMAINDER OF 2019 Capital needs ($M) Construction & enhancements $125 Maintenance CapEx (including drilling in Puna) $45 Storage activity $13 Exploration $10 Manufacturing facility $7 Total CapEx $200.0 Long-term debt repayment $56.8 Copyright © 2019 Ormat Technologies

  31. Slide 31: 2019 Guidance

    2019 GUIDANCE 2019 Revenue Guidance ($M) Electricity revenues 530-540 Products revenues 180 – 190 Other revenues(1) 10-12 Total expected revenues 720-742 2019 Adjusted EBITDA ($M) Adjusted EBITDA(2) 370-380 2019 guidance excludes any impact from Puna operation or expected business interruption insur

  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] 32 Copyright © 2019 Ormat Technologies, Inc.

  33. Slide 33: Reconciliation of EBITDA and Adjusted EBITDA

    RECONCILIATION OF EBITDA AND ADJUSTED EBITDA FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2019 AND 2018 (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 amortizatio

  34. Slide 34: Reconciliation of Adjusted Net Income

    RECONCILIATION OF ADJUSTED NET INCOME FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2019 AND 2018 (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. The

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