Ormat Technologies, Inc. · NYSE:ORA
Ormat Technologies — Q3 2019 Earnings Presentation
35 slides from Ormat Technologies's earnings presentation, Nov 7, 2019
Slide 1: Tungsten Mountain Geothermal & Solar Hybrid Power Plant in Nevada
Tungsten Mountain Geothermal & Solar Hybrid Power Plant in Nevad.
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT This presentatio 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 Securities Litigation Reform Act of 1995. These statements in
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 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 ne
Slide 5: Diluted EPS excludes Puna
Diluted EPS excludes $2.5 million and $2.6 million related to Puna in the three months ended September 30, 2019 and 2018, respectively Reconciliation is set forth below in this release
Slide 6: Financial Results
FINANCIAL RESULTS DORON BLACHAR, CFO Copyright © 2019 Ormat Technologies, Inc.
Slide 7: Total Revenues
TOTAL REVENUES Total revenues +$4M (2.4%) $166.5 $170.5 Total cost of revenues -$2.7M (-2.3%) $117.7 $115.0 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Segment contribution 2.0% 25.2% Q3 2019 72.7% 0.7% 29.1% Q3 2018 70.2% mElectricity © Product = Other mat Technologies, ne
Slide 8: Electricity Segment
ELECTRICITY SEGMENT Revenues +$7.1M (6.1%) $124.0 $116.9 Q3 2018 Q3 2019 The increase in revenues was primarily attributable to: » $7.2M - Increase in MGH Complex mainly due to the commencement of phase 3 in December 2018 Partially offset by: » Planned outages as a preparation for the repowering wor
Slide 9: Product Segment
PRODUCT SEGMENT Revenues -$5.4M (-11.2%) $48.4 Q3 2018 $43.0 Q3 2019 Cost of revenues -$4.6M (-12.9%) $35.7 $31.1 Q3 2018 Q3 2019 Copyright © 2019 Ormat Technologies, ne
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 @3 2018 @3 2019 Q3 2018 @3 2019 The Other segment includes revenues fromthe provision of energy storage demand response and energy management services. The increase in revenues and cost of revenues is driven b
Slide 11: Total Gross Profit and Margin
TOTAL GROSS PROFIT AND MARGIN Gross profit Gross margin +$6.7M (13.7%) $55.5 32.5% $48.8 29.3% Q3 2018 Q3 2019 Q3 2018 Q3 2019 Copyright © 2019 Ormat Technologies ne
Slide 12: Gross Margin by Segment
GROSS MARGIN BY SEGMENT Electricity gross margin 31.7% 35.4% 35.3% 38.7% Qs 3 Qs 3 2018 2019 2018 2019 w/o w/o Puna Puna Product gross margin Other gross margin 26.4% 27.8% = Q3 2018 Q3 2019 8 Q3 2019 (9.3)% (89.0)% Copyright © 2019 Ormat Technologies ne
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 attribu
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
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 a ——_——_ Q3 2018 Q3 2019 Q3 2018 3 2019 Q3 2018 Q3 2019 ($1.5) ($0.5) Copyright © 2019 Ormat Technologies ne
Slide 16: Interest Expense, Net
INTEREST EXPENSE, NET Interest expense, net +$1.4 (7.4%) $18.7 $201 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 Hondura
Slide 17: Income Tax Provision
INCOME TAX PROVISION $9.6 $1.2 Q3 2018 Q3 2019 * Ormat’s effective tax rate for the third quarter of 2019 was 40.7%. Copyright 2019 Ormat Technologies ne
Slide 18: Net Income Attributable to the Company's Stockholders & EPS
NET INCOME ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS & EPS Net Income attributable to the Diluted EPS2 Company's Stockholders ($M) $15.6 $15.6 $15.6 $0.30 $0.31 $0.30 $10.6 | $0.21 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Adjusted! Adjusted’ (1) Adjusted net income attributab
Slide 19: Adjusted EBITDA ($M)
ADJUSTED EBITDA! ($M) Total adjusted EBITDA $9.9M (13.0%) Electricity segment $7.5M (11.1%) Product segment $0.8M (9.1%) $85.5 $87.0 ara 4.8 $75.6 $77.3 $67.3 88% om total adjusted EBITDA 89% of total | EBITDA $9.0 $9.8 Q3 2018 Q32019 Q32018 Q32019 a 2018 Q3 2019 Q3 2018 Q3 2019 W/O Puna W/O Puna Q3
Slide 20: Cash and Cash Equivalents & Restricted Cash ($M)
CASH AND CASH EQUIVALENTS & RESTRICTED CASH ($M) 2015 190.5 182.8 159.0 59.1 16.8 9.4 180.0 5.7 December Proceeds Proceeds Cash Capex Teer pet Dividend nn omer 30208 31, 2018 from from loans from ese Payment interest v.20 Tax operating credit Partnership: activity Copyright © 2019 Ormat Technologies
Slide 21: Payment of Principal Due by Period ($M)
PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 4.9% @4-2019 Year 2019 Long-term non-recourse debt & limited recourse debt 93 9.3 Senior Secured Notes (non-recourse) 208 208 Long-term loans (full recourse) 47 47 Commercial paper 50.0 50.0 Total 84.8 84.8 Total Debt Remeinies 2020 2021
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 e 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
Slide 23: Operations & Business Updates
OPERATIONS & BUSINESS UPDATES ISAAC ANGEL, CEO
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 e 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)” 1.4
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 e Permits are delayed * Reached successfully the productio
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
Slide 27: Insurance Update on Puna Plant in Hawaii
INSURANCE UPDATE ON PUNA PLANT IN HAWAII ° Property Insurance e 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
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 * Continue to look for M&A opportunities Project pes Expected COD Geothermal Projects U.S - Steamboat Hills Enhancement 19 MW 2020 Guadeloupe- Bouillante 10 MW 20212) Heber Complex T1M
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% Ne | 16% 26% ~ ax y a 24% 23% "Turkey =NZ =©US *Bolivia «Chile =Taiwan = Others =Turkey =NZ =US. *Philippines Copyright © 2019 Ormat Tech
Slide 30: Energy Storage
ENERGY STORAGE ° 40MW/40MWh operating assets e Plumsted and Stryker - connected to PJM ° 22MW/57.5MWh under construction and development © I]OMW/12.5MWh Rabbit Hill project under construction - will be connected to ERCOT © 2MW/5MWh Hinesburg project - connected to ISO New England markets ° IOMW/40MW
Slide 31: Expected Capital Needs for the Remainder of 2019
EXPECTED CAPITAL NEEDS FOR THE REMAINDER OF 2019 Construction & enhancements Maintenance CapEx (Excluding Puna) Storage activity Exploration Manufacturing facility Total CapEx Puna repairs and drillings in Q@4 2019 Long- and short-term debt repayment $54.0 $17.0 $3.0 $5.0 $3.0 $82.0 $8.0 $84.8 Copyr
Slide 32: 2019 Guidance
2019 GUIDANCE 2019 Revenue Guidance ($M) Electricity revenues 535-540 Products revenues 185-190 Other revenues 1-13 Total expected revenues 731-743 2019 Adjusted EBITDA ($M) Adjusted EBITDA 385-390 2019 guidance exeludes any impact from Puna operation or expected business interruption insurance proc
Slide 33: Thank You!
THANK YOU! ©
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
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