Slide 1: Fourth Quarter and Year-End 2018 Earnings
ORMAT TECHNOLOGIES, INC. FOURTH QUARTER AND YEAR-END 2018 EARNINGS cA “3 ne
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT This presentation includes Forward-Looking Statements and the disc: Forward-Looking Statements. This presentation, and information provided during any discussion accompanying this presentation, may contain “forward-looking statements” within the meaning of the Private Securitie
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: Fourth Quarter and Full Year 2018 Prepared Remarks
FOURTH QUARTER AND FULL YEAR 2018 PREPARED REMARKS * Q4 and FY 2018 highlights: Isaac Angel, CEO ° Financial overview: Doron Blachar, CFO ° Operations & business updates: Isaac Angel, CEO "Q&A Copyright © 2019 Ormat Technologies, Inc.
Slide 5: Q4 and YE 2018 Highlights
Q4 AND YE 2018 HIGHLIGHTS % 4 2018 4 2017 ($ millions, except per share amounts) Gie=D Revenues ty 8.0% Product 379 33% Other 24 os 27 Total Revenues 190.5 166.4 14.5% 692.8 3.8% 54.0% 415% 42.7% 30.3% 32.2% Other 7.9% (304.6%) (98.3%) Gross margin (%) 47.7% 38.7% 37.6% 38.7% Operating income 680 48
Slide 6: Financial Results
FINANCIAL RESULTS DORON BLACHAR, CFO Copyright © 2019 Ormat Technologies, Inc.
Slide 7: FY 2018 - Total Revenues
FY 2018 - TOTAL REVENUES Total revenues Total cost of revenues Segment contribution +$26.5M (3.8%) +24.5M (5.8%) 11% 28.0% $692. $719.3 2018 70.9% $424. aaa. 4 0.4% 32.4% 2017 67.2% 2017 2018 2017 2018 mElectricity © Product = Other Copyright © 2019 Ormat Technologies, Inc.
Slide 8: FY 2018 - Electricity Segment
FY 2018 - ELECTRICITY SEGMENT Revenues Cost of revenues +$44.3M (9.5%) +$31.4M (11.8%) 509. $465. s 6 $298. $266. 3 8 2017 2018 2017 2018 The increase in revenues was primarily attributable to: » $34.4M - commencement of Platanares power plant in Sept. 2017 * $21.4M - consolidation of USG which was
Slide 9: FY 2018 - Product Segment
FY 2018 - PRODUCT SEGMENT Revenues -$22.7M (-10.1%) $224, 5 $201.7 2017 2018 Cost of revenues -$11.4M (-7.5%) $152.1 $140.7 2,017 2018 Copyright © 2019 Ormat Technologies, Inc.
Slide 10: FY 2018 - Other Segment
FY 2018 - OTHER SEGMENT Revenues Cost of revenues +$4.9M (179.4%) +$4.5M (82.1%) $9.9 $7.6 $5.4 $2.7 2017 2018 2017 2018 The Other segment includes revenues from the provision of energy storage demand response and energy management services by our Viridity business following the acquisition of subst
Slide 11: YE 2018 - Total Gross Profit and Margin
YE 2018 - TOTAL GROSS PROFIT AND MARGIN Gross profit $268, $270. 5 2017 2018 Gross margin 38.7% 37.6% 2017 2018 Copyright © 2019 Ormat Technologies, Inc.
Slide 12: YE 2018 - Gross Margin by Segment
YE 2018 -GROSS MARGIN BY SEGMENT Electricity gross margin Product gross margin 9, 42.7% 41.5% 32.2% 30.3% 2017 2018 2017 2018 Other gross margin -29.2% 98.3% Copyright © 2019 Ormat Technologies, Inc.
Slide 13: YE 2018 - Selling and Marketing, and G&A Expenses
YE 2018 - SELLING AND MARKETING, AND GENERAL AND ADMINISTRATIVE EXPENSES Selling and marketing expenses +$4.2M (26.9%) $19.8 $15.6 2017 2018 * This increase was primarily due to $5.0M termination fee paid to NV Energy related to the termination of the Galena 2 PPA General and administrative expenses
Slide 14: YE 2018 - Operating Income
YE 2018 - OPERATING INCOME Total operating income -$19.9M (-9.7%) $205.0 $185.1 2017 2018 The decrease was primarily attributable to: Decrease in our Product segments gross margin $5.0M termination fee of Galena 2 PPA Increase in general and administrative expenses Goodwill impairment charge related
Slide 15: YE 2018 - Operating Income (Loss) by Segment
YE 2018 - OPERATING INCOME (LOSS) BY SEGMENT Electricity segment Product segment -$2.1M (-1.3%) -$12.4M (-24.6%) $157.6 $155.5 $50.5 $38.1 2017 2018 2017 2018 Other segment -$5.4M (-171.5%) Copyright © 2019 Ormat Technologies, Inc.
Slide 16: YE 2018 - Interest Expense, Net
YE 2018 - INTEREST EXPENSE, NET Interest expense, net +$16.8 (31.0%) $70.9 $54.1 2017 2018 This increase was primarily attributable to Acquisition of USG - interest expense associated with approx. $100M loans of USG $4.5M increase in interest expense related to the sale of tax benefits Higher intere
Slide 17: YE 2018 - Income Tax Provision
YE 2018 - INCOME TAX PROVISION $34.7 $21.7 2017 2018 Our annual effective tax rate, excluding mainly the impact of the valuation allowance release in 2018 is approximately 42%. Copyright © 2019 Ormat Technologies, Inc.
Slide 18: YE 2018 - Net Income Attributable to Stockholders & EPS
YE 2018 - NET INCOME ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS & EPS Net Income attributable to the EPS? Company's Stockholders ($M) $155.2 $3.06 $132.4 $2.61 $106.1 $2.08 $98.0 | $1.92 2017 2018 2017 2018 2017 2018 2017 2018 Adjusted! Adjusted" (1) Adjusted net income attributable to the company's
Slide 19: Fourth Quarter 2018 Revenues
FOURTH QUARTER 2018 REVENUES Total Electricity Product Other $190. $138. $128. 3 ° $49. 7 $37.9 $0.5 $2.4 Q4 2017 Q4 2018 Q4 2017 Q4 2018 Q4 2017 Q4 2018 Q4 2017 Q4 2018 Copyright © 2019 Ormat Technologies, Inc.
Slide 20: Fourth Quarter 2018 Gross Margin
FOURTH QUARTER 2018 GROSS MARGIN Total Electricity Product Other 54.0 47.7 428 % 38.7 % % % 28.7 332 % 7.9% Q42017 _Q4 2018 Q42017 _Q4 2018 Q42017 _Q4 2018 Qa 7 @4 2018 304. Copyright © 2019 Ormat Technologies, Inc.
Slide 21: Fourth Quarter 2018 Operating Income
FOURTH QUARTER 2018 OPERATING INCOME $19.6M (40.5%) $68.0 $48.4 Q4 2017 Q4 2018 Copyright © 2019 Ormat Technologies, Inc. 21
Slide 22: Fourth Quarter 2018 Income Before Income Taxes
FOURTH QUARTER 2018 INCOME BEFORE INCOME TAXES AND EQUITY IN LOSSES OF INVESTEES ($M) +$8.3M (20.7%) $48.3 $40.0 Q4 2017 Q4 2018 Copyright © 2019 Ormat Technologies, In:
Slide 23: Fourth Quarter 2018 Net Income and EPS
FOURTH QUARTER 2018 NET INCOME ATTRIBUTABLE TO THE COMPANY’S SHAREHOLDERS AND EPS Net income attributable to the Company’s shareholders -$46.4M (71.8%) $64.6 $64.6 $21.3 $18.2 Q4 Q4 Q4 Q4 2017 2018 2017 2018 Adjusted For reconciliation see appendix Earnings per share $1.27 $1.27 $0.36 $0.42 Q4 Q4 Q4
Slide 24: Fourth Quarter 2018 Adjusted EBITDA
FOURTH QUARTER 2018 ADJUSTED EBITDA! ($M) Total adjusted EBITDA Electricity segment Product segment Other segment $25.7M (29.4%) +$21.8M (27.3%) $6.1M (68.8%) $101.7 $79.9 $8.9 $15.0 —. — Q42017,- Q4 2018 Q42017. 4 2018 Q4 2017 Q4 2018 Q42017. Q4 2018 ($1.4) ($3.6) D&AZ 31.6 32.6 D&AZ 29.0 31.2 D&AZ
Slide 25: FY 2018 - Adjusted EBITDA
FY 2018 - ADJUSTED EBITDA! ($M) Total adjusted EBITDA Electricity segment $24.1M (7%) +$43.9M (15.5%) $343. $368.0 8 $327.6 $283.7 I / 89% of total adjusted EBITDA 83% of total Product segment -$14.3M (-23.3%) Other segment adjusted EBITDA $61.5 $47.2 2017 2018 2017 2018 2017 2018 2017 bore D&AZ 108
Slide 26: YE 2018 - Cash and Cash Equivalents and Restricted Cash
YE 2018 - CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ($M) $145.8 $258.5 $114.7 $107.5 | $100.0 [| $32.4 $27.0 $3.2 $10.4 fm $95.1 $62.8 $26.8 $13.1 gz $177.5 December Other _ Cash USG Mountain ProceedsRevolving OPIC Cash Capex USG —LongDividend —_Paid_Investment December 31, 2017 received restric
Slide 27: Payment of Principal Due by Period
PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 5.0% @1-2019 @2-2019 @3-2019 __@4-2019 _Year 2019 Long-term non-recourse debt & limited recourse debt 74 74 74 74 29.7 Senior Secured Notes (non-recourse) due 2033 78 9.6 48 n3 335 Long-term loans (full recourse) 0.0 25 0.0 25 5.0 15.2 1
Slide 28: 2018 Financing Activity
2018 FINANCING ACTIVITY ° Successfully raised $260M ° $114.7M for the 35 MW Platanares geothermal power plant in Honduras with OPIC « Additional $10M is expected during the first half of 2019 e Raised $33.4M as part of Tungsten Mountain tax equity partnership. Additional $13M is expected to be recei
Slide 29: Operations & Business Updates
OPERATIONS & BUSINESS UPDATES ISAAC ANGEL, CEO
Slide 30: Delivering Growth and Expanding Geographical Footprint
DELIVERING GROWTH AND EXPANDING GEOGRAPHICAL FOOTPRINT 2018 portfolio growth summary: T15 mw 6 2 of new capacity new power plants new states - U.S. December 2018,McGinness Hils Phase 3, Nevada, U.S. US. Kenya @ @ Indonesia May 2018, NIL 2, Sarulla, June 2018, Olkar April 2018, acquired NHS, April 20
Slide 31: Global Portfolio (910 MW)
GLOBAL PORTFOLIO (910 MW) us. @ 622 MW Guatemala ” @Guadelourg 43 MW Honduras ae Indonesia @ 38 MW 42MWo » Main generating capacity adjustments taking advantage of a higher performing resource at: » McGinness Hills - adjusted to 140 MW from 138 MW * Brady - adjusted to 26 MW from 22 MW. » USG acquir
Slide 32: Generation - 6.9% Increase Year Over Year
GENERATION - 6.9% INCREASE YEAR OVER YEAR ° 6.9% increase year over year e 2018 generation was positively affected by Platanares, Tungsten Mountain, Olkaria III plant 1 expansion, and USG power plants; e Partially offset by a decrease in generation due to :the outage related to Puna shutdown Generat
Slide 33: Update on Puna Plant in Hawaii
UPDATE ON PUNA PLANT IN HAWAII * Working rapidly to resume operation of our Puna power plant following the Kilauea volcano erupted e Access road to the site - completed e Mobilizing of a workover rigs from the mainland to Hawaii - completed ° Drilling of new fresh water well - completed e Removing t
Slide 34: Update on Puna Plant in Hawaii - Insurance
UPDATE ON PUNA PLANT IN HAWAII ° Insurance Update e Property Insurance e Allinsurers accepted our claim and started to pay the costs to rebuild the destroyed items including the substation e Business Interruption e Some insurers accepted that coverage starts at May 2018 and paid so far approximately
Slide 35: Growth Plan
GROWTH PLAN ° Added 115 MW YTD from organic growth and acquisition ° Expect adding between 127 MW and 142 MW by the end of 2021 * Continue to look for M&A opportunities Project Capacity U.S - Tungsten Solar 7ACMW U.S - Steamboat Hills Enhancement 19 MW Tungsten 2 15 MW Wister Solar 20 MW Guadeloupe-
Slide 36: Development and Exploration Pipeline to Support Future Growth
DEVELOPMENT AND EXPLORATION PIPELINE TO SUPPORT FUTURE GROWTH 38 prospects under exploration and development to support our growth targets e o ° ) e e U.S. Central America & Caribbean Africa Asia Pacific Nevada 18 sites Guatemala 2sites Ethiopia 4sites New Zealand lsite California 4sites Honduras 1s
Slide 37: Product Segment
PRODUCT SEGMENT ° Backlog of $ 216.8M as of February 26, 2019 ° The backlog includes revenues for the period between January 1, 2019 and February 26, 2019 * 96% Geothermal contracts e Signed new contract in Turkey for approx. $28 million * Backlog excludes contract that was agreed but not yet signed
Slide 38: Energy Storage
ENERGY STORAGE * Two 20MW/20MWh utility scale energy storage systems in New Jersey e One system is in operation e Second system is expected be operational during Q1 2019 * New 10MW/12.5MWH system under construction in Georgetown, Texas ° provide frequency regulation and load shifting services to ERC
Slide 39: Capital Needs for the Remainder 2019
CAPITAL NEEDS FOR THE REMAINDER 2019 Construction & enhancements Maintenance CapEx (including drilling in Puna) Storage activity Exploration Manufacturing facility Total CapEx Long-term debt repayment $159 $57 $14 $l $9 $250.0 $68 Copyright © 2019 Ormat Technologies, Inc. 39
Slide 40: 2019 Guidance
2019 GUIDANCE Electricity revenues 530-540 Products revenues 180 - 190 Other revenues 10-12 Total expected revenues 720-742 Adjusted EBITDA® 370-380 2019 guidance exeludes any impact from Puna. operation or expected business interruption insurance proceeds that we pursue to receive during the 2019.
Slide 41: Summary - Continuing Execution
SUMMARY - CONTINUING EXECUTION = <S Improve Organic Strategic New efficiencies growth M&A activities a Three new power plants under ceanely SSSIMTEME SEES Added approximately the US Geothermal acquisition % 77MW 38 MW 42% of organic growth and future prospects Increased electricity segment Commissio
Slide 42: Thank You!
THANK YOU! ©
Slide 43: Reconciliation of EBITDA and Adjusted EBITDA
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA FOR THE THREE AND TWELVE MONTHS PERIODS ENDED DECEMBER 31, 2018 AND 2017 (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
Slide 44: Reconciliation of Adjusted Net Income
RECONCILIATION OF ADJUSTED NET INCOME FOR THE THREE AND TWELVE MONTHS PERIODS ENDED DECEMBER 31, 2018 AND 2017 (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 o