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MarketScreener Homepage  >  Equities  >  Nyse  >  Ormat Technologies, Inc.    ORA

ORMAT TECHNOLOGIES, INC.

(ORA)
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Ormat Technologies : Reports Third Quarter 2020 Financial Results

11/03/2020 | 04:31pm EST

FAVORABLE SETTLEMENT WITH THE KENYAN TAX AUTHORITIES;
OPERATING INCOME INCREASED 33.5% OVER LAST YEAR;
IMPROVED CASH FLOW FROM OPERATION SUPPORTED BY COLLECTION IN HONDURAS AND KENYA

RENO, Nev., Nov. 03, 2020 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc.1 (NYSE: ORA) today announced financial results for the third quarter ended September 30, 2020.

KEY FINANCIAL RESULTS

 Q3 2020Q3 2019CHANGE (%)
Revenues ($ millions)   
Electricity123.7 124.0 (0.3)
Product29.6 43.0 (31.2)
Energy Storage & Management Services5.7 3.5 62.5 
Total Revenues158.9 170.5 (6.8)
    
Gross margin (%)   
Electricity38.0%35.4% 
Product18.9%27.8% 
Energy Storage & Management Services25.6%(9.3)% 
Gross margin (%)34.0%32.5% 
    
Operating Income ($ millions)51.7 38.7 33.5 
    
Net income attributable to the Company’s stockholders15.7 15.6 0.5 
    
Diluted EPS ($)0.31 0.30  
Adjusted EBITDA2 ($ millions)107.1 85.5 25.3 
       

“Our third quarter results reflect the strength of our business model and our operating execution,” commented Doron Blachar, Chief Executive Officer. “Ormat delivered double-digit increases in year-over-year operating income and Adjusted EBITDA, and made progress with its efforts to grow its Electricity and Storage segments. Subsequent to the end of the quarter, we reached a favorable settlement and resolved the most significant tax assessment issued by the Kenya Revenue Authority (KRA). We are updating our full-year 2020 revenue guidance range and increasing our expected 2020 Adjusted EBITDA.”

“This quarter also delivered strong cashflow from operations and Adjusted EBITDA, driven mainly by a $20.1 million payment received from ENEE, our customer in Honduras, for prior years’ outstanding invoices, and improved collection from KPLC, our customer in Kenya. KPLC has made all scheduled payments for the third quarter and has started reducing overdue amount in October. In addition, we received $20.4 million business interruption insurance proceeds related to the 2018 volcanic eruption in Hawaii.”

“Furthermore, in the product segment, we signed a $12.2 million contract and we anticipate the signing of additional contract in late 2020 or early 2021, even though this segment of our business is most directly impacted by the COVID-19 pandemic,” continued Blachar. “We are encouraged by our storage segment results, which delivered its second consecutive quarter of positive EBITDA. The results were supported by the addition of the newly acquired Pomona storage facility as well as the volatility in merchant prices, which has driven increased revenues and profitability in our storage activity in the quarter."  

FINANCIAL AND BUSINESS HIGHLIGHTS FOR THE THIRD QUARTER OF 2020

  • Net income attributable to the Company's stockholders was $15.7 million, or $0.31 per diluted share, compared to $15.6 million, or $0.30 per diluted share in Q3 2019;
  • Adjusted EBITDA3 increased 25.3% to $107.1 million, up from $85.5 million in Q3 2019;
  • Net income attributable to the Company’s stockholders benefited from an $8.1 million in insurance income related to our Puna power plant (representing Ormat’s 63.25% portion after tax), partially offset by non-cash charges of $1.4 million related to the Sarulla power plants. Additionally, a recent change in U.S. tax law resulted in a $3.7 million charge. In aggregate, these factors positively impacted our diluted EPS by 5.9 cents;
  • In Kenya, Ormat concluded a tax audit by the Kenya Revenue Authority (KRA) related to a $190 million tax assessment issued in December 2019 and reached a favorable settlement with the KRA. The total net estimated impact on Ormat’s results, all of which will be recorded in Q4 2020 is approximately $6 million, or $0.12 per diluted share, including all associated interest and penalties. The settlement covered tax years 2013 through 2019, and included deferral of tax benefits that were previously utilized by Ormat, resulting in a payment to the KRA of $28.2 million most of which the Company expects to recover through lower future tax payments;
  • At the Puna power plant, construction of the electrical substation and transmission lines is completed, and the power plant is currently connected to the transmission lines. On the field side, the Company connected one new production well to the power plant and is in the process of connecting a second production well. The Company expects to start generating power in the next few weeks with a gradual increase in generation to 29 MW by the end of the year, although the exact timing remains uncertain;
  • Ormat signed a new $12.2 million contract, which resulted in a Product segment backlog of $49.6 million as of November 3, 2020;
  • Electricity segment gross profit for the third quarter 2020 included $2.6 million of business interruption insurance income recorded under Puna’s cost of revenues. In the third quarter 2019, the Company recorded business interruption insurance income of $1.2 million under Puna’s cost of revenues;
  • In October 2020, Ormat announced the signing of two Resource Adequacy Agreements, each for 50% of its 5 MW / 20 MWh Tierra Buena battery energy storage project currently under development in Sutter County, northern California. The agreements were signed with two Community Choice Aggregators, Redwood Coast Energy Authority and Valley Clean Energy;
  • In September 2020, Ormat announced that Empresa Nacional de Energia Electrica, (ENEE), Ormat’s customer for our Platanares geothermal power plant in Honduras, has paid a $20.1 million overdue payment that was outstanding from prior years;
  • In July 2020, Ormat completed the acquisition of the 20MW/80MWh Pomona energy storage asset in California from Alta Gas for a total net consideration of $43.3 million. The facility is the Company’s first operational battery storage asset in operation in California, increasing its existing operating portfolio to 73MW/136MWh including its battery storage assets located in New Jersey, New England and Texas; and
  • In July 2020, Ormat issued approximately $290 million of senior unsecured bonds in an unregistered offering outside of the United States. The bonds bear interest at a fixed rate of 4.34% payable semi-annually on June 15 and December 15 through June 15, 2031. The Company used the proceeds to pay for the acquisition of the Pomona battery storage facility, repay existing indebtedness and to support its growth plans.

2020 GUIDANCE

  • Total revenues of between $707 million and $717 million
    • Electricity segment revenues between $550 million and $555 million (including approximately $6 million of expected revenues related to the Puna power plant, assuming its reopening in the fourth quarter)
    • Product segment revenues of between $142 million and $147 million
    • Energy Storage and Management Services segment revenues of approximately $15 million
  • Adjusted EBITDA of between $417 million and $425 million
    • Adjusted EBITDA attributable to minority interest to be approximately $34 million.

The Company provides a reconciliation of Adjusted EBITDA, a Non-GAAP financial measure, for historical periods. However, the Company is unable to provide a reconciliation for its Adjusted EBITDA guidance range due to high variability and complexity with respect to estimating forward-looking amounts for impairments and disposition and acquisition of business interests, income tax expense, and other non-cash expenses and adjusting items that are excluded from the calculation of Adjusted EBITDA.

DIVIDEND

On November 3, 2020, the Company’s Board of Directors declared, approved, and authorized payment of a quarterly dividend of $0.11 per share pursuant to the Company’s dividend policy. The dividend will be paid on December 2, 2020 to stockholders of record as of the close of business on November 18, 2020.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Wednesday, November 4th, at 10 a.m. ET. The call will be available as a live, listen-only webcast at investor.ormat.com. During the webcast, management will refer to slides that will be posted on the website. The slides and accompanying webcast can be accessed through the News & Events in the Investor Relations section of Ormat’s website.

An archive of the webcast will be available approximately 60 minutes after the conclusion of the live call.
Investors may access the call by dialing:

Participant dial in (toll free): 1-877-511-6790
Participant international dial-in: 1-412-902-4141
   
Conference replay  
   
US Toll Free: 1-877-344-7529
International Toll: 1-412-317-0088
Replay Access Code: 10149112

ABOUT ORMAT TECHNOLOGIES

With over five decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation (“REG”), with the objective of becoming a leading global provider of renewable energy. The Company owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on the Ormat Energy Converter – a power generation unit that converts low-, medium- and high-temperature heat into electricity. With 63 U.S. patents, Ormat’s power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 578 employees in the United States and 830 overseas. Ormat’s flexible, modular solutions for geothermal power and REG are ideal for vast range of resource characteristics. The Company has engineered, manufactured and constructed power plants, which it currently owns or has installed to utilities and developers worldwide, totaling over 3,000 MW of gross capacity. Ormat’s current 933 MW generating portfolio is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe. Ormat expanded its operations to provide energy storage and energy management solutions, by leveraging its core capabilities and global presence as well as through its Viridity Energy Solutions Inc. subsidiary.

ORMAT’S SAFE HARBOR STATEMENT

Information provided in this press release 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 statements generally relate to Ormat's plans, objectives and expectations for future operations and are based upon its management's current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties.

For a discussion of such risks and uncertainties, see "Risk Factors" as described in Ormat’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 2, 2020 and from time to time, in Ormat’s quarterly reports on Form 10-Q that are filed with the SEC.

These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

 
ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
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,
 2020201920202019
 (Dollars in thousands, except per share data)
Revenues:    
Electricity123,660  123,978  395,201  395,965  
Product29,625  43,037  120,737  147,195  
Energy storage and management services5,662  3,484  10,022  10,442  
Total revenues158,947  170,499  525,960  553,602  
Cost of revenues:    
Electricity76,670  80,124  219,988  231,442  
Product24,037  31,073  95,724  114,495  
Energy storage and management services4,210  3,807  9,014  12,844  
Total cost of revenues104,917  115,004  324,726  358,781  
Gross profit54,030  55,495  201,234  194,821  
Operating expenses:    
Research and development expenses1,490  1,062  4,281  2,772  
Selling and marketing expenses4,076  3,783  13,724  10,924  
General and administrative expenses14,539  11,931  43,154  41,801  
Business interruption insurance income(17,761)   (20,743)   
Operating income51,686  38,719  160,818  139,324  
Other income (expense):    
Interest income626  482  1,469  1,195  
Interest expense, net(21,756) (20,076) (58,814) (62,816) 
Derivatives and foreign currency transaction gains (losses)1,047  205  2,111  696  
Income attributable to sale of tax benefits7,014  4,056  16,818  16,457  
Other non-operating income (expense), net961  244  1,343  1,362  
Income from operations before income tax and equity in earnings (losses) of investees39,578  23,630  123,745  96,218  
Income tax (provision) benefit(15,361) (9,626) (45,275) (20,136) 
Equity in earnings (losses) of investees, net(1,119) 1,085  (196) 3,334  
Net income23,098  15,089  78,274  79,416  
Net income attributable to noncontrolling interest(7,419) 516  (13,516) (3,927) 
Net income attributable to the Company's stockholders15,679  15,605  64,758  75,489  
Earnings per share attributable to the Company's stockholders:    
Basic:    
Net income0.31  0.31  1.27  1.49  
Diluted:    
Net income0.31  0.30  1.26  1.48  
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:    
Basic51,072  50,933  51,051  50,816  
Diluted51,282  51,334  51,386  51,124  
             


 
ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
For the Periods Ended September 30, 2020 and December 31, 2019
    
 September 30, 2020 December 31, 2019
ASSETS
Current assets:   
Cash and cash equivalents197,309   71,173  
Restricted cash and cash equivalents92,233   81,937  
Receivables:   
Trade157,497   154,525  
Other23,349   22,048  
Inventories34,384   34,949  
Costs and estimated earnings in excess of billings on uncompleted contracts18,123   38,365  
Prepaid expenses and other9,696   12,667  
Total current assets532,591   415,664  
Investment in unconsolidated companies91,277   81,140  
Deposits and other39,293   38,284  
Deferred income taxes108,145   129,510  
Property, plant and equipment, net2,036,821   1,971,415  
Construction-in-process463,073   376,555  
Operating leases right of use16,762   17,405  
Finance leases right of use12,399   14,161  
Intangible assets, net197,002   186,220  
Goodwill23,584   20,140  
Total assets3,520,947   3,250,494  
    
LIABILITIES AND EQUITY
Current liabilities:   
Accounts payable and accrued expenses144,473   141,857  
Short term revolving credit lines with banks (full recourse)   40,550  
Commercial paper   50,000  
Billings in excess of costs and estimated earnings on uncompleted contracts7,683   2,755  
Current portion of long-term debt:   
Senior secured notes24,836   24,473  
Other loans35,369   34,458  
Full recourse17,768   76,572  
Operating lease liabilities3,026   2,743  
Finance lease liabilities3,148   3,068  
Total current liabilities236,303   376,476  
Long-term debt, net of current portion:   
Limited and non-recourse:   
Senior secured notes320,936   339,336  
Other loans293,415   317,395  
Full recourse:     
Senior unsecured bonds696,868   286,453  
Other loans64,150   68,747  
Operating lease liabilities13,407   14,008  
Finance lease liabilities9,706   11,209  
Liability associated with sale of tax benefits112,950   123,468  
Deferred income taxes101,886   97,126  
Liability for unrecognized tax benefits12,643   14,643  
Liabilities for severance pay18,132   18,751  
Asset retirement obligation52,193   50,183  
Other long-term liabilities7,812   8,039  
Total liabilities1,940,401   1,725,834  
    
Commitments and contingencies   
    
Redeemable noncontrolling interest8,743   9,250  
    
Equity:   
The Company's stockholders' equity:   
Common stock51   51  
Additional paid-in capital920,210   913,150  
Retained earnings534,984   487,873  
Accumulated other comprehensive income (loss)(15,503)  (8,654) 
Total stockholders' equity attributable to Company's stockholders1,439,742   1,392,420  
Noncontrolling interest132,061   122,990  
Total equity1,571,803   1,515,410  
Total liabilities, redeemable noncontrolling interest and equity3,520,947   3,250,494  
        

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Reconciliation of EBITDA and Adjusted EBITDA
For the Three and Nine-Month Periods Ended September 30, 2020 and 2019

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, (ii) impairment of long-lived assets, (iii) write-off of unsuccessful exploration activities, (iv) any mark-to-market gains or losses from accounting for derivatives, (v) merger and acquisition transaction costs, (vi) stock-based compensation, (vii) gain or loss from extinguishment of liabilities, (viii) gain or loss on sale of subsidiary and property, plant and equipment and (ix) other unusual or non-recurring items. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the United States, or GAAP, and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. Our board of directors and senior management use EBITDA and Adjusted EBITDA to evaluate our financial performance. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the three and nine-month periods ended September 30, 2020 and 2019.

 Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019
 (Dollars in thousands)(Dollars in thousands)
Net income23,098  15,089  78,274  79,416  
Adjusted for:    
Interest expense, net (including amortization of deferred financing costs)21,130  19,594  57,345  61,621  
Income tax provision (benefit)15,361  9,626  45,275  20,136  
Adjustment to investment in an unconsolidated company: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla4,395  2,644  10,271  7,884  
Depreciation and amortization39,628  36,365  111,728  106,982  
EBITDA103,612  83,318  302,893  276,039  
Mark-to-market gains or losses from accounting for derivative431  (330) (1,612) (1,909) 
Stock-based compensation2,807  2,228  7,060  7,231  
Merger and acquisition transaction costs211  250  1,369  750  
Settlement expenses    1,277    
Adjusted EBITDA107,061  85,466  310,987  282,111  
             


___________________________________
1Ormat Technologies, Inc. is also referred to herein as the “Company”, “Ormat”, “we” or “us”
2 Reconciliation is set forth below in this release
3 Reconciliation is set forth below in this release

  
Ormat Technologies Contact:
Smadar Lavi
VP Corporate Finance and Head of Investor Relations
775-356-9029 (ext. 65726)
slavi@ormat.com
Investor Relations Agency Contact:
Rob Fink
FNK IR
646-415-8972
rob@FNKIR.com
  


ormat.png

Source: Ormat Technologies, Inc.

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Financials (USD)
Sales 2020 711 M - -
Net income 2020 92,5 M - -
Net Debt 2020 1 295 M - -
P/E ratio 2020 63,3x
Yield 2020 0,42%
Capitalization 5 991 M 5 991 M -
EV / Sales 2020 10,2x
EV / Sales 2021 10,2x
Nbr of Employees 1 408
Free-Float 98,7%
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Mean consensus HOLD
Number of Analysts 7
Average target price 84,14 $
Last Close Price 107,28 $
Spread / Highest target 16,5%
Spread / Average Target -21,6%
Spread / Lowest Target -34,8%
EPS Revisions
Managers and Directors
NameTitle
Doron Blachar Chief Executive Officer
Shlomi Argas President
Dan Michael Falk Independent Director
David Granot Independent Director
Ravit Bar Niv Independent Director
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