Ormat Technologies, Inc. · NYSE:ORA
Ormat Technologies — Q3 2020 Earnings Presentation
34 slides from Ormat Technologies's earnings presentation, Nov 4, 2020
Slide 1: Third Quarter 2020 Earnings Call
ORMAT TECHNOLOGIES, INC. THIRD QUARTER 2020 EARNINGS CALL NOVEMBER 4, 2020 Copyright Copyright Copyright©© 2020 ©2020 Ormat 2020Ormat Technologies, OrmatTechnologies, Inc. Technologies,Inc. 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 This presentation, and information provided during any discussion accompanying amounts for 2022 growth (MW) or 2022 operational performance metrics such
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
Slide 4: Third Quarter 2020 - Prepared Remarks
THIRD QUARTER 2020- PREPARED REMARKS • Q3 2020 Highlights - Doron Blachar, CEO • Financial Overview - Assi Ginzburg, CFO • Operations & Business Updates - Doron Blachar, CEO • Q&A Copyright © 2020 Ormat Technologies, Inc. 4
Slide 5: Q3 2020 Highlights
Q3 2020 HIGHLIGHTS ($ millions, except per share amounts) Q3 2020 Q3 2019 % Change Revenues Electricity 123.7 124.0 (0.3%) Product 29.6 43.0 (31.2%) Energy Storage Management Services 5.7 3.5 62.5% Total Revenues 158.9 170.5 (6.8%) Gross Profit 54.0 55.5 (2.6%) Gross margin (%) Electricity 38.0% 35.
Slide 6: Key Business Highlights
KEY BUSINESS HIGHLIGHTS • Net Income attributable to our shareholder increased year-over-year by 0.5% • Adjusted EBITDA increased year-over-year by 25.3% • Electricity segment adjusted EBITDA contribution increased from 87.5% to 92.5% • Cash, cash equivalents and restricted cash increased by $136.4
Slide 7: Financial Results
FINANCIAL RESULTS ASSI GINZBURG, CFO Copyright © 2020 Ormat Technologies, Inc. 7
Slide 8: Total Revenues
TOTAL REVENUES Total Revenues Total Cost of Revenues Segment contribution $-11.6M , (-6.8%) -$10.1M , (-8.8%) 2.0% 25.2% $170.5 $158.9 Q3 2019 72.7% $115.0 $104.9 3.6% 18.6% Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2020 77.8% Electricity Product ESMS Copyright © 2020 Ormat Technologies, Inc. 8
Slide 9: Electricity Segment
ELECTRICITY SEGMENT Revenues Cost of Revenues $-0.3M , (-0.3%) $-3.5M , (-4.3%) $124.0 $123.7 $80.1 $76.7 Q3 2019 Q3 2020 Q3 2019 Q3 2020 • Revenues were impacted mainly by: • The decrease was primarily attributable to: • Lower generation at our REG power plants and curtailments in • Insurance incom
Slide 10: Product Segment
PRODUCT SEGMENT Revenues Cost of Revenues $-13.4M , (-31.2%) $-7.0M , (-22.6%) $43.0 $29.6 $31.1 $24.0 Q3 2019 Q3 2020 Q3 2019 Q3 2020 • Expected decline in revenues as a result lower products backlog impacted by COVID 19 Copyright © 2020 Ormat Technologies, Inc. 10
Slide 11: Energy Storage and Management Services Segment
ENERGY STORAGE AND MANAGEMENT SERVICES SEGMENT Revenues Cost of Revenues $2.2M , (+62.5%) $0.4M , (+10.6%) $5.7 $4.2 $3.5 $3.8 Q3 2019 Q3 2020 Q3 2019 Q3 2020 • The increase is mainly due to $2.4 million revenues related to the • The increase is mainly due to $1.3 million cost of revenues related to
Slide 12: Total Gross Profit and Margin
TOTAL GROSS PROFIT AND MARGIN Gross Profit Gross Margin $-1.5M , (-2.6%) +1.5 bp , (+4.6%) 34.0% 32.5% $55.5 $54.0 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Copyright © 2020 Ormat Technologies, Inc. 12
Slide 13: Gross Margin by Segment
GROSS MARGIN BY SEGMENT Electricity Product ESMS 38.0% 35.4% 27.8% 18.9% 25.6% (9.3%) Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Copyright © 2020 Ormat Technologies, Inc. 13
Slide 14: Selling and Marketing & General and Administrative Expenses
SELLING AND MARKETING & GENERAL AND ADMINISTRATIVE EXPENSES Selling and Marketing General and Expenses Administrative Expenses $0.3M , (+7.7%) $2.6M, (+21.9%) $14.5 $11.9 $3.8 $4.1 Q3 2019 Q3 2020 Q3 2019 Q3 2020 • The increase was primarily due to an increase in sales • The increase was mainly driv
Slide 15: Operating Income
OPERATING INCOME Total Operating Income Segment contribution $13.0M , (+33.5%) (1.2%) 17.6% $51.7 $38.7 Q3 2019 83.6% 2.5% (0.9%) Q3 2019 Q3 2020 Q3 2020 98.4% • Increase was primarily attributable to: • Increase in our Electricity and ESMS’s segments gross margin. • Business interruption insurance
Slide 16: Interest Expense, Net
INTEREST EXPENSE, NET Interest Expense, Net $1.7M (+8.4%) $21.8 $20.1 Q3 2019 Q3 2020 • Decrease was primarily due to: • $0.7M decrease in interest related to the sale of tax benefits. • $1.7M increase in interest capitalized to projects. • Offset by • $4.1M increase in interest expense related to t
Slide 17: Income Tax Provision
INCOME TAX PROVISION $15.4 $9.6 Q3 2019 Q3 2020 • Ormat’s effective tax rate for the third quarter of 2020 is 38.8%. • Income tax provision for the third quarter of 2020, included a $3.7M million tax charges related to recent change in the US tax law. Copyright © 2020 Ormat Technologies, Inc. 17
Slide 18: Net Income Attributable to Stockholders & Diluted EPS
NET INCOME ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS & DILUTED EPS Net Income attributable to the Company's Diluted EPS Stockholders (+0.5%) $15.6 $15.7 $0.30 $0.31 Q3 2019 Q3 2020 Q3 2019 Q3 2020 • Net income attributable to the Company’s stockholders benefited from $8.1 million (Ormat’s 63.25% po
Slide 19: Adjusted EBITDA ($M)
ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Segment contribution $21.6M , (+25.3%) $107.1 1.0% 11.5% $85.5 Q3 2019 87.5% 1.9% 5.6% Q3 2019 Q3 2020 Q3 2020 Q3 19 Q3 20 92.5% D&A2 36.4 39.6 Electricity Product ESMS (1) For Adjusted EBITDA reconciliation see appendix (2) D&A is excluding deferred finan
Slide 20: Adjusted EBITDA by Segment
ADJUSTED EBITDA1 ($M) Electricity segment Product segment ESMS segment $24.3M , (+32.4%) $-3.9M , (-39.4%) $1.2M , (+147.0%) $99.1 $74.8 $9.8 $6.0 $0.8 $2.0 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 19 Q3 20 Q3 19 Q3 20 Q3 19 Q3 20 D&A2 33.7 36.1 D&A2 1.4 1.2 D&A2 1.3 2.3 (1) For Adjusted E
Slide 21: Cash and Cash Equivalents and Restricted Cash
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENT($M) 238.9 231.8 253.7 43.3 40.6 16.9 14.8 8.8 289.5 153.1 - - - - - - - - Dec.31, 2019 Debt, net Cash from CapEx Pomona Revolver Divedend Unconsolidated companies OthersSeptember 30, 2020 September December Change in Debt Cash from Ca
Slide 22: Payment of Principal Due by Period
PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE (DEBT AS OF SEPTEMBER 30, 2020) – 4.90% Debt as of September 30, 2020 Q4-2020 Year 2020 Long-term non-recourse debt & limited recourse debt 9.3 9.3 Senior Secured Notes (non-recourse) 5.8 5.8 Long-term loans (full recourse) 4.7 4.7 Total
Slide 23: Financing Activity
FINANCING ACTIVITY • Successfully raised over $400M of long-term debt since April • $290 million unsecured bonds series 4 • $79.0 million - bond series 3 expansion • $50.0 million from existing lender Copyright © 2020 Ormat Technologies, Inc. 23
Slide 24: Operations & Business Updates
OPERATIONS & BUSINESS UPDATES DORON BLACHAR, CEO Copyright © 2020 Ormat Technologies, Inc. 24
Slide 25: Electricity Generation
ELECTRICITY GENERATION • 3.5% decrease • Mainly due to the lower generation at our OREG facility and curtailments in the Olkaria power plant driven, inter alia, by the affect of COVID 19 in Kenya. Generation (GWh)(1) 1.4 1.3 Q3 2019 Q3 2020 (1) Ormat owns 12.75% minority interest at Sarulla, which i
Slide 26: Puna Plant in Hawaii - Update
PUNA PLANT IN HAWAII - UPDATE • Substation construction • Construction of the electrical substation and electrical transmission lines is completed • Wellfield • One well is connected to the power plant • Forecasted outcome • Start of power generation is expected in the next few weeks with a gradual
Slide 27: Growth Plan - Geothermal and Solar
GROWTH PLAN – GEOTHERMAL AND SOLAR • Added 19 MW in June 2020 from Steamboat Hills enhancement, Nevada • Reached a portfolio of 933 MW • Expect adding between 160 MW and 180 MW by the end of 2022 – approximately 18% growth Projected Project Expected COD PPA Capacity (MW) Geothermal Projects U.S - He
Slide 28: Products Segment - Third-Party Backlog
PRODUCTS SEGMENT - THIRD-PARTY BACKLOG • Backlog as of November 03, 2020 – $49.61 million • 93.3% Geothermal contracts Geothermal contracts geographic breakdown 7% 4% 16% 18% 1% 5% 26% 23% Turkey NZ US Chile Germany Taiwan Guatemala Others 28 (1) The backlog includes revenues for the period between
Slide 29: Energy Storage Management Services
ENERGY STORAGE MANAGEMENT SERVICES • Operating portfolio of 73MW/136MWh including • Battery storage assets located in California, New Jersey, New England and Texas • Completed the acquisition of the Pomona 20 MW / 80 MWh facility in California • Generated $2.4 million revenues in the third quarter •
Slide 30: Capital Needs for the Remainder of 2020
CAPITAL NEEDS FOR THE REMAINDER OF 2020 Capital needs ($M) Construction & Enhancements – fully released 69 Development enhancement and Exploration – not yet released 30 Maintenance CapEx (including drilling in Puna) 9 Storage activity 16 Enhancement of the production facilities 3 Total CapEx 127 Cop
Slide 31: 2020 Guidance ($M)
2020 GUIDANCE ($M) Forecast Electricity Revenues 550-555 Products Revenues 142-147 Energy Storage and Management Services Revenues 15 Total Revenues 707-717 Adjusted EBITDA 417-425 • Electricity segment guidance includes approximately $6 million of expected revenues related to the Puna power plant,
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 Copyright©©2020 2020Ormat OrmatTechnologies, Technologies,Inc. Inc. 32
Slide 33: Reconciliation of EBITDA and Adjusted EBITDA
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA FOR THE THREE AND NINE-MONTHS PERIODS ENDED SEPTEMBER 30, 2020 AND 2019 (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
Slide 34: Condensed Consolidated Statement of Operations
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS. FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019 Three Months Ended September 30, Nine-Months Ended September 30, 2020 2019 2020 2019 (Dollars in thousands, except per share data) Revenues: Electricity 123,660 123,978 395,201 395,