Ormat Technologies, Inc. · NYSE:ORA

Ormat Technologies — Q3 2019 Earnings Presentation

35 slides from Ormat Technologies's earnings presentation, Nov 7, 2019

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

    ORMAT TECHNOLOGIES, INC. THIRD QUARTER 2019 EARNINGS CALL NOVEMBER 7, 2019 Tungsten Mountain Geothermal & Solar Hybrid Power Plant in Nevada Copyright Copyright©©2019 2019Ormat OrmatTechnologies, Technologies,Inc. 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 amounts for 2020 growth (MW) or 2022 operational performance metrics such

  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: Third Quarter 2019 - Prepared Remarks

    THIRD QUARTER 2019 - PREPARED REMARKS • Q3 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: Q3 2019 Highlights

    Q3 2019 HIGHLIGHTS ($ millions, except per share amounts) Q3 2019 Q3 2018 Change (%) Revenues Electricity 124.0 116.9 6.1% Product 43.0 48.4 (11.2%) Other 3.5 1.2 203.0% Total Revenues 170.5 166.5 2.4% Gross Profit 55.5 48.8 13.7% Gross margin (%) Electricity 35.4% 31.7% Product 27.8% 26.4% Other (9

  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 +$4M (2.4%) -$2.7M (-2.3%) 2.0% 25.2% Q3 2019 72.7% $166.5 $170.5 0.7% $117.7 $115.0 29.1% Q3 2018 70.2% Q3 2018 Q3 2019 Q3 2018 Q3 2019 Electricity Product Other Copyright © 2019 Ormat Technologies, Inc. 7

  8. Slide 8: Electricity Segment

    ELECTRICITY SEGMENT Revenues Cost of revenues +$7.1M (6.1%) $0.3M (0.3%) $124.0 $116.9 $79.8 $80.1 Q3 2018 Q3 2019 Q3 2018 Q3 2019 The increase in revenues was primarily attributable to: The slight increase in cost of revenues was primarily • $7.2M – Increase in MGH Complex mainly due to the attribu

  9. Slide 9: Product Segment

    PRODUCT SEGMENT Revenues Cost of revenues -$5.4M (-11.2%) -$4.6M (-12.9%) $48.4 $43.0 $35.7 $31.1 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Copyright © 2019 Ormat Technologies, Inc. 9

  10. Slide 10: Other Segment

    OTHER SEGMENT Revenues Cost of revenues +$2.3M (203.0%) +$1.6M (75.1%) $3.8 $3.5 $2.2 $1.2 Q3 2018 Q3 2019 Q3 2018 Q3 2019 The Other segment includes revenues from the provision of energy storage demand response and energy management services. The increase in revenues and cost of revenues is driven

  11. Slide 11: Total Gross Profit and Margin

    TOTAL GROSS PROFIT AND MARGIN Gross profit Gross margin +$6.7M (13.7%) 32.5% $55.5 $48.8 29.3% Q3 2018 Q3 2019 Q3 2018 Q3 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 31.7% 35.4% 35.3% 38.7% 26.4% 27.8% Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018Q3 2019 W/O W/O (9.3)% Puna Puna (89.0)% 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 -$4.8M (-55.9%) -$1.7M (-12.3%) $13.6 $11.9 $8.6 $3.8 Q3 2018 Q3 2019 Q3 2018 Q3 2019 • Decrease due to $5.0 million termination fee related • The decrease was mainly attrib

  14. Slide 14: Operating Income

    OPERATING INCOME Total operating income $12.8M (49.5%) $38.7 $25.9 Q3 2018 Q3 2019 The increase was primarily attributable to an increase in the Electricity segment gross profit and the $5.0 million termination fee of the Galena 2 PPA in the three months ended September 30, 2018, offset partially by

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

    OPERATING INCOME (LOSS) BY SEGMENT Electricity segment Product segment Other segment $12.2M (60.6%) -$0.5M (-6.5%) $1.1M (69.7%) $32.4 $20.2 $7.3 $6.8 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 ($1.5) ($0.5) Copyright © 2019 Ormat Technologies, Inc. 15

  16. Slide 16: Interest Expense, Net

    INTEREST EXPENSE, NET Interest expense, net +$1.4 (7.4%) $20.1 $18.7 Q3 2018 Q3 2019 This increase was primarily attributable to interest expense related to: • The $50M senior unsecured loan from Migdal • The $114.7M limited recourse loans from OPIC received on October 29, 2018 to finance the Hondur

  17. Slide 17: Income Tax Provision

    INCOME TAX PROVISION $9.6 $1.2 Q3 2018 Q3 2019 • Ormat’s effective tax rate for the third quarter of 2019 was 40.7%. 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) $15.6 $15.6 $15.6 $0.30 $0.31 $0.30 $10.6 $0.21 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 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 $9.9M (13.0%) $7.5M (11.1%) $0.8M (9.1%) $1.6M $85.5 $87.0 $74.8 $75.6 $77.3 $67.3 88% of total adjusted EBITDA 89% of total adjusted EBITDA $9.0 $9.8 ($0.8) $0.8 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3

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

    CASH AND CASH EQUIVALENTS & RESTRICTED CASH ($M) 201.5 190.5 182.8 159.0 59.1 58.7 16.8 177.5 180.0 9.4 5.7 - - - - - - - - - December Proceeds Proceeds CapEx Revolving Debt Dividend non-controlling Other September Cash 31, 2018 from from loans lines of Payment interest 30, 2019 from Tax credit oper

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

    PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 4.9% Q4-2019 Year 2019 Long-term non-recourse debt & limited recourse debt 9.3 9.3 Senior Secured Notes (non-recourse) 20.8 20.8 Long-term loans (full recourse) 4.7 4.7 Commercial paper 50.0 50.0 Total 84.8 84.8 Remainder Total Debt 2020

  22. Slide 22: Financing Activity

    FINANCING ACTIVITY • Successfully raised year-to-date $242M • $59.3M tax partnership transaction of McGinness Hills phase 3 • $50.0M of commercial paper • Three months LIBOR + 0.75%, issued for 90 days and extends automatically for additional periods of 90 days for up to 5 years • $18M with Société

  23. Slide 23: Operations & Business Updates

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

  24. Slide 24: Generation - Increase Year over Year

    GENERATION – INCREASE YEAR OVER YEAR 4.9% increase year over year • generation was positively affected by McGinness Hills phase 3 • Partially offset by planned outages as a preparation for the repowering work at Ormesa as well as curtailments by the offtaker in Olkaria complex Generation (GWh)(1) 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 • Building the electrical substation • Construction in progress – expect completion by the end of 2019 • Permits are delayed • Reached successfully the productio

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

    OPERATION UPDATE ON PUNA PLANT IN HAWAII • Power plant refurbishment activities will be completed by the end of 2019, enabling us to deliver energy from the plant • Local permitting and transmission network upgrades being undertaken by our local utility partner is expected to be received by the end

  27. Slide 27: 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 damaged items including the substation • Business Interruption • Certain insurers rejected our claim for business interruption coverage, and we have filed a law

  28. Slide 28: Growth Plan

    GROWTH PLAN • Added 7 MW from Tungsten Solar in Nevada • Expect adding between 120 MW and 135 MW by the end of 2021(1) • Continue to look for M&A opportunities Projected Project Expected COD PPA Capacity Geothermal Projects U.S - Steamboat Hills Enhancement 19 MW 2020 v Guadeloupe- Bouillante 10 MW

  29. Slide 29: Product Segment

    PRODUCT SEGMENT • Backlog as of October 22, 2019 – $167M • 99% Geothermal contracts Geothermal contracts geographic breakdown November 2019 November 2018 1% 1% 3% 16% 26% 44% 24% 2% 1% 59% 23% Turkey NZ US Bolivia Chile Taiwan Others Turkey NZ US Philippines Copyright © 2019 Ormat Technologies, Inc.

  30. Slide 30: Energy Storage

    ENERGY STORAGE • 40MW/40MWh operating assets • Plumsted and Stryker – connected to PJM • 22MW/57.5MWh under construction and development • 10MW/12.5MWh Rabbit Hill project under construction – will be connected to ERCOT • 2MW/5MWh Hinesburg project – connected to ISO New England markets • 10MW/40MWh

  31. Slide 31: Expected Capital Needs for the Remainder of 2019

    EXPECTED CAPITAL NEEDS FOR THE REMAINDER OF 2019 Capital needs ($M) Construction & enhancements $54.0 Maintenance CapEx (Excluding Puna) $17.0 Storage activity $3.0 Exploration $5.0 Manufacturing facility $3.0 Total CapEx $82.0 Puna repairs and drillings in Q4 2019 $8.0 Long- and short-term debt rep

  32. Slide 32: 2019 Guidance

    2019 GUIDANCE 2019 Revenue Guidance ($M) Electricity revenues 535-540 Products revenues 185–190 Other revenues(1) 11-13 Total expected revenues 731-743 2019 Adjusted EBITDA ($M) Adjusted EBITDA(2) 385-390 2019 guidance excludes any impact from Puna operation or expected business interruption insuran

  33. 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 Copyright©©2019 2019Ormat OrmatTechnologies, Technologies,Inc. Inc. 33

  34. Slide 34: Reconciliation of EBITDA and Adjusted EBITDA

    RECONCILIATION OF EBITDA AND ADJUSTED EBITDA FOR THE THREE- AND NINE-MONTHS PERIODS ENDED SEPTEMBER 30, 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 a

  35. Slide 35: Reconciliation of Adjusted Net Income

    RECONCILIATION OF ADJUSTED NET INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 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 use

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