Ormat Technologies, Inc. · NYSE:ORA
Ormat Technologies — FY2016 Earnings Presentation
35 slides from Ormat Technologies's earnings presentation, Mar 1, 2017
Slide 1: Fourth Quarter and Year-End 2016 Earnings Call
Ormat Technologies, Inc. Fourth Quarter and Year-End 2016 Earnings Call March 1, 2017 Green energy you can rely on Copyright © 2017 Ormat Technologies, Inc.
Slide 2: Disclaimer
Disclaimer 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-looking sta
Slide 3: Agenda
Agenda • Fourth Quarter and Year-End 2016 prepared remarks • 2016 highlights: Isaac Angel, CEO • Financial overview: Doron Blachar, CFO • Operations & business updates: Isaac Angel, CEO • Q&A 3 Copyright © 2017 Ormat Technologies, Inc.
Slide 4: Q4 YE 2016 Financial Summary
Q4 YE 2016 Financial Summary • Strong execution on all key metrics ($ millions, except per share amounts) 4Q 2016 4Q 2015 Change 2016 2015 Change Revenues Electricity 114.6 97.8 17.2% 436.3 375.9 16.1% Product 51.9 73.3 (29.2%) 226.3 218.7 3.5% Total revenues 166.5 171.1 (2.7%) 662.6 594.6 11.4% Gro
Slide 5: Financial Results
Financial Results Doron Blachar, CFO Green energy you can rely on 5 Copyright © 2017 Ormat Technologies, Inc.
Slide 6: Total Revenues
Total Revenues Total Revenues Total Cost of Revenues Segment Contribution +67.9 million (+11.4%) +15.4 million (+4.1%) $662.6 $594.6 $376.4 $391.8 37% 34% 63% 66% YE 2015 YE 2016 YE 2015 YE 2016 2015 2016 Electricity Segment Product Segment All amounts in million USD 6 Copyright © 2017 Ormat Technol
Slide 7: Electricity Segment
Electricity Segment Revenues Cost of Revenues +$60.4 million (+16.1%) +$19.0 million (+7.8%) $436.3 $375.9 $242.6 $261.6 YE 2015 YE 2016 YE 2015 YE 2016 • Commencement of second phase of McGinness Hills & Don A. • Additional cost of revenues from the second phase Campbell power plants in Feb. and Se
Slide 8: Product Segment
Product Segment Revenues Cost of Revenues +$7.6 million (+3.5%) -$3.6 million (-2.6%) $218.7 $226.3 $133.8 $130.2 YE 2015 YE 2016 YE 2015 YE 2016 Increased primarily attributable to: Decrease primarily attributable to: • Increase from revenue recognition • Efficiencies, cost savings and project mana
Slide 9: Gross Margin
Gross Margin Combined Electricity Segment Product Segment 42.5% 40.9% 40.0% 38.8% 36.7% 35.5% YE 2015 YE 2016 YE 2015 YE 2016 YE 2015 YE 2016 9 Copyright © 2017 Ormat Technologies, Inc.
Slide 10: Operating Income
Operating Income Total Electricity Segment Product Segment +$37.8 million (+23.1%) +$27.5 million (+27.7%) +$10.4 million (+16.1%) As adjusted +$48.8 million (+29.7%) As adjusted +$38.5 million (+38.7%) $212.9 $201.9 $164.1 $137.8 $126.8 $99.3 $75.1 $64.7 YE 2015 YE 2016 YE 2016 As YE 2015 YE 2016 Y
Slide 11: Net Income Attributable to the Company's Stockholders & EPS
Net Income Attributable to the Company's Stockholders & EPS Net Income Attributable to the Earnings per Share (Diluted)2 Company's Stockholders -$25.6 million (-21.5%) As adjusted +$39.1 million (+55.1%) $119.6 $109.9 $93.9 $2.43 $2.19 $70.9 $1.87 $1.44 YE 2015 YE 2015 YE 2016 YE 2016 YE 2015 YE 201
Slide 12: Fourth Quarter Revenues
Fourth Quarter Revenues Total Revenues Electricity Segment Product Segment -$4.6 million (-2.7%) +$16.8 million (+17.2%) -$21.4 million (-29.2%) $171.1 $166.5 $114.6 $97.8 $73.3 $51.9 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016 All amounts in million USD 12 Copyright © 2017 Ormat Technologies, I
Slide 13: Fourth Quarter Results
Fourth Quarter Results Operating Income Net Income Attributable to the Earnings per Share +2.1 million (+4.4%) Company's Stockholders (Diluted)1 +5.2 million (+22.6%) $49.1 $51.2 $0.56 $28.2 $0.46 $23.0 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016 1. Weighted average number of shares used in comp
Slide 14: Adjusted EBITDA
Adjusted EBITDA Total Electricity Segment Product Segment $323.8 $291.3 $243.6 $224.0 +$32.6 million (+11.2%) +$19.6 million (+8.8%) +$13.0 million (+19.3%) $79.1 $76.9 $80.2 $67.3 $57.5 $60.5 $21.6 $16.4 Q4 Q4 YE YE Q4 Q4 YE YE Q4 Q4 YE YE 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016
Slide 15: New Financing Update
New Financing Update • $105.0M in Project Finance • Olkaria Plant 4 - $50M with DEG, 6.28% coupon • Don A. Campbell Phase 1 - $92.5M with MEAG (the asset manager of Munich Re), 4.03% coupon • Ormat share $55.0M • $83.1M in Tax Equity with a financial investor to efficiently monetize the federal tax
Slide 16: Cash and Cash Equivalents
Cash and Cash Equivalents $203.5 $249.5 $159.3 $151.9 $142.5 $64.1 $62.1 $59.9 $25.7 $20.1 $6.8 $230.2 $44.1 $185.9 $15.2 December 31, Net change in Proceeds from Proceeds from Proceeds from Cash from Bonds Bonds Capital Cash paid to Debt Cash dividend Guadeloupe Repurchase December 31, 2015 restric
Slide 17: Payment of Principal Due by Period
Payment of Principal Due by Period1 The average interest rate as of YE 2016 is 5.0% down from 5.9% for YE 2015 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Year 2017 Long-term non-recourse debt & limited recourse debt 5,373 5,374 5,374 5,374 21,495 Senior Secured Notes (non-recourse) 6,121 10,176 2,885 13,052 32
Slide 18: Operations & Business Updates
Operations & Business Updates Isaac Angel, CEO Green energy you can rely on 18 Copyright © 2017 Ormat Technologies, Inc.
Slide 19: 44 MW Additions in 2016
44 MW Additions in 2016 • Commenced operation of 29 MW Plant 4 in Olkaria III complex in Kenya • Acquired 10MW Bouillante Geothermal Power plant in Guadalupe and rapidly increased its capacity to 15MW Bouillante Geothermal Power plant in Guadalupe Olkaria III Geothermal Complex in Kenya 19 Copyright
Slide 20: Operations Update
Operations Update Capacity Generating Region Plant Factor Capacity (MW) (%) Heber 92 Ormesa 40 California 78% Mammoth 29 North Brawley 18 Brady 18 West Nevada 87% Steamboat 73 McGinness Hills 86 East Nevada Don A. Campbell 41 97% Generation (million MWh) Tuscarora 18 Jersey Valley 10 Hawaii Puna 38
Slide 21: New PPA
New PPA • Signed 25-year PPA with SCPPA to deliver electricity from the Ormesa complex in California, beginning November 30, 2017 • Ormesa’s current 30-year SO#4 PPA is with Southern California Edison • The PPA has a variable energy rate tied primarily to volatile natural gas prices • Will expire on
Slide 22: Product Segment
Product Segment • Backlog of approximately $251.0 million as of February 27, 2017 • Includes revenues for the period between January 1, 2017 and February 27, 2017 • We expect the new contracts will result in overall lower margins for the products segment compared to previous years Cerro Pabellon, Ch
Slide 23: Executing Our Strategic Plan
Executing Our Strategic Plan Expansion to new activities Funding M&A Organic Growth Geographical & Technological expansion Improve efficiencies 23 Copyright © 2017 Ormat Technologies, Inc.
Slide 24: Strategy Implementation - Improve Efficiencies
Strategy Implementation - Improve Efficiencies Gross Margin Adjusted EBITDA Margin 49% 49% 49% 45% 41% 36% 37% 37% 30% 26% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Continuing our efforts to improve efficiencies across our entire value chain 24 Copyright © 2017 Ormat Technologies, Inc.
Slide 25: Strategy Implementation - Improve Efficiencies
Strategy Implementation - Improve Efficiencies Electricity Segment Gross Margin Operating Cost 1 ($/MWh) 40% $37 $34 $35 36% 36% $30 $30 29% 25% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 1 Operating cost excludes depreciation 25 Copyright © 2017 Ormat Technologies, Inc.
Slide 26: Strategy Implementation - Organic Growth and M&A
Strategy Implementation - Organic Growth and M&A • Expanding geographical footprint and diversifying technologies • Added 44 MW in 2016 from Olkaria III, Kenya & Bouillante, Guadeloupe • Expect to add between 215 MW and 225 MW by YE 2019 Project Projected Capacity Expected COD Indonesia - Sarulla Pr
Slide 27: Future Prospects
Future Prospects • 35 prospects in the US, Guatemala, New Zealand, Honduras, Indonesia, Guadeloupe and Ethiopia support our long term organic growth • During 2016 added 11 new prospects • Eight new prospects in Nevada and Utah • Three new prospects in Indonesia, Guadeloupe and Honduras Construction
Slide 28: Expansion to New Activities - Energy Storage Market
Expansion to New Activities - Energy Storage Market A growth engine that diversifies our technological, geographical & customer base • Outline strategy • Target energy storage market 2015 • Establish M&A team • Establish storage team 2016 • Collaboration with Alevo to jointly build and own a first s
Slide 29: Expansion to New Activities - Energy Storage Market
Expansion to New Activities - Energy Storage Market Global EPC & Funding Energy Storage Battery Business Operation Management Development Software Technology Provider 29 Copyright © 2017 Ormat Technologies, Inc.
Slide 30: Capital Needs for 2017
Capital Needs for 2017 Capital Needs (millions) $165 Construction & enhancements $25 Development $35 Maintenance CapEx $25 Exploration $5 Production facility $255 Total CapEx $66 Debt repayment $321 Total 30 Copyright © 2017 Ormat Technologies, Inc.
Slide 31: Regulatory Updates
Regulatory Updates Continued support for renewables & geothermal • Nevada • Proposed bill AB 206 that would replace the current RPS targets of 25% by 2020 to 50% by 2030 and 80% by 2040 • California • Proposed bill target 100% renewable by 2045, up from 50% by 2030 • Los Angeles approved a 100% clea
Slide 32: 2017 Guidance
2017 Guidance • 2017 revenues guidance between $680 million and $700 million • Electricity Segment - between $460 million and $470 million • Product Segment - between $220 million and $230 million • Adjusted EBITDA 2017 guidance: • Between $340 million and $350 million • Annual Adjusted EBITDA attri
Slide 33: Q&A
Q&A Green energy you can rely on Copyright © 2017 Ormat Technologies, Inc.
Slide 34: 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 35: Reconciliation of EPS
Reconciliation of EPS Year Ended December 31 2016 2015 (in thousands) Net income attributable to the Company's stockholders........................................................................................................................................................ $ 93,930 $ 119,573 One-t