Ormat Technologies, Inc. · NYSE:ORA
Ormat Technologies — Q3 2017 Earnings Presentation
26 slides from Ormat Technologies's earnings presentation, November 2017
Slide 1: .
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Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Information provided during this presentation 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-
Slide 3: Third Quarter 2017 Prepared Remarks
THIRD QUARTER 2017 PREPARED REMARKS * Q3 2017 highlights: Isaac Angel, CEO Financial overview: Doron Blachar, CFO ° Operations & business updates: Isaac Angel, CEO Q&A Copyright © 2017 Ormat Technologies, Inc. 3
Slide 4: Q3 2017 Highlights
Q3 2017 HIGHLIGHTS ($M, except per share amounts) Q3 2017 Q3 2016 Revenues Electricity $112.3 $109.8 2.3% Product $44.9 $74.8 (40.0%) Total Revenues $157.2 $184.6 (14.9%) Gross margin (%) Electricity 41.4% 39.4% 5.1% Product 28.3% 41.7% (32.2%) Gross margin (%) 37.7% 40.3% (6.6%) Operating income $4
Slide 5: Financial Results
FINANCIAL RESULTS DORON BLACHAR, CFO Copyright © 2017 Ormat Technologies, Inc. 5
Slide 6: Total Revenues
TOTAL REVENUES Total revenues Total cost of revenues Segment contribution -$27.4M (14.9%) -12.1M (11.0%) 29% $184.6 Q3 2017 $157.2 71% $110.1 $98.0 41% Q3 2016 59% Q3 2016 Q3 2017 Q3 2016 Q3 2017 mElectricity © Product Copyright © 2017 Ormat Technologies, Inc. 6
Slide 7: Electricity Segment
ELECTRICITY SEGMENT Revenues Cost of revenues +$2.5M (2.3%) -0.7M (1.1%) $109.8 $112.3 $66.5 $65.8 Q3 2016 Q3 2017 Q3 2016 Q3 2017 The increase in revenues was primarily attributable to: « Increase in generation at Bouillante power plant in Guadeloupe and at Puna power plant in Hawaii ° $1.6M - comm
Slide 8: Product Segment
PRODUCT SEGMENT Revenues Cost of revenues -$29.9M (40.0%) -11.4M (26.2%) $74.8 $44.9 $43.6 $32.2 Q3 2016 Q3 2017 Q3 2016 Q3 2017 The decrease in revenues was primarily attributable to: * Decrease in revenues as a result of near-completion of our contracts for the Cerro Pavilion in Chile and Sarulla
Slide 9: Gross Margin
GROSS MARGIN Total gross margin Electricity gross margin Product gross margin 41.7% 40.3% 39.4% 41.4% 6 37.7% : : | Q3 2016 Q3 2017 Q3 2016 Q3 2017 Q3 2016 Q3 2017 Copyright © 2017 Ormat Technologies, Inc. 9
Slide 10: Operating Income
OPERATING INCOME Total operating income Electricity -$4.3M (8.8%) +$12.3M (51.5%) Adjusted! +$1.3M (3.7%) $48.2 $44.0 $34.9 $36.2 $23.9 Q3 2016 Q3 2017 Q3 2016 Q32016 Q3 2017 Adjusted! (Adjusted operating income for the third quarter of 2016 excludes $11.0M of expenses related to the settlement of a
Slide 11: Interest Expense, Net
INTEREST EXPENSE, NET Interest expense, net -$5.4 (31.8%) $17.1 $11.7 Q3 2016 Q3 2017 The decrease was primarily attributable to: » Repayment of $250M of senior unsecured bonds with 7% interest rate, through the issuance of $204M senior unsecured bonds which bear average interest of 4.2% * Lower int
Slide 12: Other Non-Operating Expense, Net
OTHER NON-OPERATING EXPENSE, NET $5.5 $1.6 Q3 2016 Q3 2017 Other non-operating expense, net for Q3 2017 includes: * Make whole premium of $1.9M resulting from the prepayment of $14.3 M of our OFC Senior Secured Notes and $11.8 M of our DEG loan Other non-operating expense, net for Q3 2016 includes:
Slide 13: Net Income Attributable to the Company's Stockholders & EPS
NET INCOME ATTRIBUTABLE TO THE COMPANY'’S STOCKHOLDERS & EPS Net Income Attributable to the EPs2 Company's Stockholders ($M) +$7.1 (58.8%) -$7.0 (24.9%) +$0.14 (58.3%) -$0.14 (25.0%) $28.1 $21.1 $0.56 $19.2 $0.42 $0.38 “ $12.1 $0.24 i Q3 2016 Q3 2017 Q3 2016 Q3 2017 Q3 2016 Q3 2017 Q3 2016 Q3 2017 A
Slide 14: Adjusted EBITDA ($M)
ADJUSTED EBITDA! ($M) Total adjusted EBITDA -$9.0M (10.5%) Electricity +$5.2M (8.6%) $85.4 $76.4 Q3 2016 Q3 2017 Q3-16 Q3-17 D&A2 25.2 25.8 $65.7 $60.5 Q3 2016 Q3 2017 D&A? 24.4 24.9 (1) For EBITDA reconciliation see appendix (2) D&A is excluding deferred financing costs Product -$14.2M (56.9%) $24.
Slide 15: Cash and Cash Equivalents ($M)
CASH AND CASH EQUIVALENTS ($M) $166.5 $177.4 $55.2 $37.9 $35.3 18.0 $ $16.6 $14.3 $8.3 $77.2 Dec.31, 2016 Proceeds Cash CapEx Debt Investment Viridity Cash Dividend OFC Net Sept. 30, 2017 from . derived repayment inan acquisition paidto prepayment change revolving from unconsolidated non-controlling
Slide 16: Payment of Principal Due by Period ($M)
PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 5.0% 017. FY 2017 Long-term non-recourse debt & limited recourse debt 5.4 5.4 Senior Secured Notes (non-recourse) due 2033 10.2 10.2 Long-term loans (full recourse) 0.3 0.3 Total 15.8 15.8 3 2017 2018 2019 2020 2021 Thereafter Long-term
Slide 17: Operations & Business Updates
OPERATIONS & BUSINESS UPDATES ISAAC ANGEL, CEO Copyright © 2017 Ormat Technologies, Inc. 17
Slide 18: Generation
GENERATION ° 2.2% decrease year over year e Lower generation at some of our power plants that needed to take offline to address maintenance issues ° Higher generation at: e Puna power plant in Hawaii e Successful improvement of the resource performance e Bouillante power plant in Guadalupe e Success
Slide 19: Product Segment
PRODUCT SEGMENT ¢ Backlog of approximately $182M as of Nov. 7, 2017 e Includes revenues for the period between Oct. 1, and Nov. 7, 2017 e Added new orders from Turkey and Philippines e Strengthen and support our product segment revenue in 2018 Copyright © 2017 Ormat Technologies, Inc. 19
Slide 20: Electricity Segment - Future Growth
ELECTRICITY SEGMENT - FUTURE GROWTH Platanares, Honduras 7 Added 63 MW to our portfolio during 2017 * March 2017 - added 14 MW from SIL, Sarulla Indonesia! September 2017 - added 35 MW from Platanares, Honduras * October 2017 - added 14 MW from NIL 1, Sarulla Indonesia!
Slide 21: Expect to Add Between 150MW and 160MW by Year-End 2019
EXPECT TO ADD BETWEEN 150MW AND 160 MW BY YEAR-END 2019 U.S. - Tungsten Mountain Indonesia - Sarulla project, NIL 2 Kenya - Olkaria repowering U.S - McGinness Hills, phase 3 Guadeloupe- Bouillante 24 MW 14 MW! 10 MW 48 MW 10 MW Q4 2017 v 2018 v 2018 v 2018 v 2019 TBD Tungsten Mountain, Nevada (1) Or
Slide 22: Capital Needs for the Remainder of 2017
CAPITAL NEEDS FOR THE REMAINDER OF 2017 Cap needs ($M) Construction & enhancements $72 Maintenance CapEx $8 Exploration $2 Total CapEx $82 Debt repayment $16 Total $98 Copyright © 2017 Ormat Technologies, Inc. 22
Slide 23: 2017 Guidance
2017 GUIDANCE ° We are affirming our 2017 full-year guidance: e 2017 revenues guidance between $686M and $696M e Electricity Segment - between $463M and $468M e Product Segment - between $223M and $228M ° Adjusted EBITDA 2017 guidance: e Between $343M and $348M e Annual Adjusted EBITDA attributable
Slide 24: Investor Relations
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Slide 25: Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information
RECONCILIATION OF EBITDA ADJUSTED EBITDA AND ADDITIONAL CASH FLOWS INFORMATION 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,
Slide 26: Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information
RECONCILIATION OF EBITDA ADJUSTED EBITDA AND ADDITIONAL CASH FLOWS INFORMATION Three Months Ended Nine Months Ended September 2017 2016 2017 2016 (in thousands) thousands) Net income $ 22,780 $ 14,406 $ 100,757. $ 70,284 Adjusted for: Interest expense, net (including amortization of deferred financi