Ormat Technologies, Inc. · NYSE:ORA

Ormat Technologies — Q3 2021 Earnings Presentation

37 slides from Ormat Technologies's earnings presentation, Nov 4, 2021

  1. Slide 1: Ormat Technologies, Inc. Earnings Call

    ORMAT TECHNOLOGIES, INC. EARNINGS CALL DORON BLACHAR, CEO ASSI GINZBURG, CFO NOVEMBER 4, 2021 Copyright © 2021 Ormat Technologies, Inc. Copyright © 2021 Ormat Technologies, Inc.

  2. Slide 2: Safe Harbor Statement and Non-GAAP Metrics

    SAFE HARBOR STATEMENT AND NON-GAAP METRICS 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 this presentation, These forward-looking statements

  3. Slide 3: Q3 2021 Highlights: Transitioning to Accelerated Growth

    Q3 2021 I HIGHLIGHTS TRANSITIONING TO ACCELERATED GROWTH GROWTH DEMONSTRATED CONTINUED TO DRIVE IN THE LEADING SEGMENTS BUSINESS RESILIENCE PROFITABLE GROWTH Copyright © 2021 Ormat Technologies, Inc. 3

  4. Slide 4: Financial Performance

    FINANCIAL 01 PERFORMANCE Copyright © 2019 Ormat Technologies, Inc. Copyright © 2021 Ormat Technologies, Inc. 4 Copyright © 2021 Ormat Technologies, Inc.

  5. Slide 5: Financial Performance

    FINANCIAL PERFORMANCE Q3 21 Revenues Gross margin Adjusted EBITDA(1) EPS/Adjusted EPS (2,3) $158.8M 39.8% $101.6M $0.26/0.32 (0.1%) +580bps (5.1%) (16.1%)/+3.6% 9 MONTHS 21 Revenues Gross margin Adjusted EBITDA(1) EPS/Adjusted EPS(1,2,3) $472.1M 40.0% $285.4M $0.77/0.99 (10.2%) +170bps (8.2%) (38.9%

  6. Slide 6: Revenues by Segment

    REVENUES BY SEGMENT Q3 21 Total Electricity Products Storage 90% 7% $158.8M $142.7M $10.5M $5.7M Electricity Products (0.1%) +15.4% (64.5%) - 3% Storage 9 MONTHS 21 Total Electricity Products Storage 89% 6% $472.1 $421.5M $26.6M $24.0M Electricity Products (10.2%) +6.7% (78.0%) +139.6% 5% Storage Co

  7. Slide 7: Gross Margin by Segment

    GROSS MARGIN BY SEGMENT Q3 21 Total Electricity Products Storage 39.8% 42.8% 12.8% 12.2% +580 bps +480 bps -610 bps -1,340 bps 9 MONTHS 21 Total Electricity Products Storage 40.0% 41.8% 12.8% 37.5% 170 bps -250 bps -790 bps +2,740 bps Copyright © 2021 Ormat Technologies, Inc. 7

  8. Slide 8: Adjusted EBITDA by Segment

    ADJUSTED EBITDA(1) BY SEGMENT Q3 21 Total Electricity Products Storage 96% 2% $101.6 $97.6M $2M $2M Electricity Products (5.1%) (1.3%) (66.9%) (3.5)% 2% Storage 9 MONTHS 21 Total Electricity Products Storage 95% 2% $285.4M $272.3M $6.2M $6.9M Electricity Products (8.2%) (6.3%) (66.9%) +354.9% 3% Sto

  9. Slide 9: Q3 2021 Cash and Net Debt

    Q3 2021 I CASH AND NET DEBT Cash and Cash Equivalents, Marketable Securities and restricted cash and Cash Equivalents ($M) Net Debt ($M) 275 288 $1,517 (1) 145 171 $537 Debt Investment 58 $919 Proceeds Cash from in CapEx 20 15 operating M&A $402 activities Debt Dividend Other Repayment DEC. 31, 2020

  10. Slide 10: Business Resilience

    02 BUSINESS RESILIENCE Copyright © 2021 Ormat Technologies, Inc. Copyright © 2021 Ormat Technologies, Inc. 10

  11. Slide 11: Ormat View 2021 as a Build Up Year

    ORMAT VIEW 2021 AS A BUILD UP YEAR MOVE TOWARDS ACHIEVING ITS GROWTH GOALS OPERATION UPDATE KENYA UPDATE M&A UPDATE Generation Puna, Hawaii Operational challenges PRODUCT SEGMENT STORAGE UPDATE LEGISLATION UPDATE Copyright © 2021 Ormat Technologies, Inc. 11

  12. Slide 12: Electricity Operation Q3

    ELECTRICITY OPERATION Q3 New acquired 67.5MW were added in NV 2021 GROWING PORTFOLIO 13.8% increase in generation 4 5 2 1 3 Puna power plant – 26 MW average 6 McGinness Hills expansion - start of operation in May 2021 Dixie Valley and Beowawee – acquired in July 2021 Offset by lower generation at Ol

  13. Slide 13: Puna Capacity Update

    I Q1 2021 Q2 2021 Q3 2021 End of 2021 Q3 2020 13 MW 20 MW 26 MW Working to 10 MW Stable capacity maximize long Resumed operation term capacity Operating at stable capacity of 26MW Continue reservoir study and improvement of existing wells PUC suspended the new PPA approval Copyright © 2021 Ormat Tec

  14. Slide 14: Operational Challenges

    OPERATIONAL CHALLENGES $9.2M impact on gross margin and adj. EBITDA Olkaria • Lower performance of the resource, drilling campaign continue • Continued curtailment by KPLC cause reduction in energy revenues • Resulting in lower gross profit by $3.6 million year over year • Capacity will increase gra

  15. Slide 15: Kenya Update

    KENYA UPDATE Presidential task force • Task force completed their review of all Independent Power Producer’s PPAs • Ormat’s rates in Kenya are significantly lower than many other IPP’s operating in the country We remain committed to providing clean, renewable base load energy to Kenya and working wi

  16. Slide 16: M&A Update

    M&A UPDATE In Generated $14.4M Revenue & $11.2M EBITDA Q3/21 Acquired from TG Geothermal Portfolio, LLC1 : In Expects $55M Revenue & $37M EBITDA 67.5 MW from two geothermal plants in Nevada: 2022 Expects to increase capacity in Dixie Valley 56 MW Dixie Valley Off taker: SCE I PPA by 2038 I above mar

  17. Slide 17: Product Backlog

    PRODUCT BACKLOG Signing 3rd parties’ contracts Backlog at $66.9M(1) Signed a few contracts including Salak 14MW power plant in Indonesia and 10MW San Jacinto in Nicaragua. We see more opportunities that can be matured before year-end Ching-Shui geothermal power plant, Taiwan (1) Backlog as of Novemb

  18. Slide 18: Energy Storage

    ENERGY STORAGE 4 Improved profitability of the storage facilities 3 1 Energy Storage performance Q3/21 gross profit – $0.7M Q3/21 Adjusted EBITDA - $2.0M 2 $M Storage Segment Revenues 6.0 5.7 5.7 26% 5.2 5.0 4.1 4.0 3.0 01 CA 02 TX 30MW/120MWh 10MW/10MWh 1.6 -67% 2.0 1.0 0.5 03 NJ 04 VT 0.0 41MW/41M

  19. Slide 19: A Strong Tailwind

    A STRONG TAILWIND Governments around the world continue to support renewable energy In the U.S., negotiations between the White House and Congress have made substantial progress over the past week The Bill draft includes, among others: • Extension of PTC and ITC until the end of 2026 for geothermal

  20. Slide 20: Driving Profitable Growth

    03 DRIVING PROFITABLE GROWTH Copyright © 2019 Ormat Technologies, Inc. Copyright © 2021 Ormat Technologies, Inc. 20 Copyright © 2021 Ormat Technologies, Inc.

  21. Slide 21: Robust Growth Plan

    Increase solar and geothermal capacity significantly Accelerate storage capacity to establish ROBUST leading position in the U.S. storage sector GROWTH PLAN YE 2023 portfolio target: 1,528MW - 1,648MW Total expected MW growth: ~ 50% This growth plan is subject to obtaining all permits and regulatory

  22. Slide 22: 2023 Growth Target by Segments

    2023 GROWTH GEOTHERMAL & ENERGY SOLAR ENERGY STORAGE TARGET BY SEGMENTS YE 2023 TARGET 1,255MW-1,275MW 273MW-373MW MW ADDITION* 323MW-343MW 200MW-300MW MW GROWTH 35%-37% 274%-411% Change in MW growth is compared to a 932MW Geothermal & Solar portfolio (including 83MW added in 2021) and a 73 MW stora

  23. Slide 23: Geothermal and Solar Projects Under Development

    July New acquired 67.5MW were added in NV 2021 Projected Expected Project Capacity PPA COD (MW) U.S - Heber Complex 11 End 2022  U.S - CD4 30 Q1 2022  End Under U.S - North Valley 25 2022/Early negotiation 2023 GEOTHERMAL U.S. - Puna expansion 8 2023 Suspended 10 PROJECTS U.S - Dixie Meadows 15 20

  24. Slide 24: Energy Storage Projects Under Development

    Projected Expected Type of Project Capacity COD contract (MW) Capacity PPA CA - Tierra Buena 5 Q1 2022 and Merchant TX - Upton 25 Q1 2022 Merchant ENERGY STORAGE NJ - Andover 20 Q2 2022 Merchant 6 PROJECTS 89 MW NJ - Howell 7 Q2 2022 Merchant ENERGY OH – Bowling Green 12 Q3 2022 Capacity and Merchan

  25. Slide 25: Energy Storage Pipeline

    2.1 GW 30 200MW - 300MW potential capacity of named expected addition U.S. storage pipeline prospects by YE 2023 ENERGY STORAGE PIPELINE Copyright © 2021 Ormat Technologies, Inc. 25

  26. Slide 26: Maintaining a Strong Capital Position

    MAINTAINING A STRONG CAPITAL POSITION TO SUPPORT ACCELERATED GROWTH Q4 2021 expected capital $177M needs(1) to support future growth target Over Cash, cash equivalents, $ 780 restricted cash and available lines of credit Access to various 44% 3.9x sources of capital Net debt to Net debt to capitaliz

  27. Slide 27: ESG Initiatives

    ESG INITIATIVES ENVIRONMENT GOVERNANCE We are moving to strengthen our ESG commitments Building our approach and policy on significant valuable issues • Water management • Taxation • Suppliers and procurement policy • political communication Planning to issue corporate sustainability report in the n

  28. Slide 28: 2021 Guidance

    2021 GUIDANCE (3) Total revenues Electricity revenues Products revenues Storage revenues Adjusted EBITDA $652M-$675M $585M-$595M $40M-$50M $27M-$30M $400M-$410M MW EXPECTATIONS ADJUSTED EBITDA EXPECTATIONS >1,500MW >$500M run-rate(2) 1,005MW $420M (1) 2020 2021 2022 2023 2020 2021 2022 2023 (1) For

  29. Slide 29: Summary

    Executed M&A growth strategy Robust portfolio with new added capacity Delivered revenue growth in our leading segments Contribution from new assets and restored loss generation A strong tailwinds to support renewable and storage energy Well-positioned to take advantage of these trends Maintaining a

  30. Slide 30: Thank You!

    THANK YOU! SMADAR LAVI I VP CORPORATE FINANCE AND HEAD OF INVESTOR RELATIONS 775-356-9029 (EXT. 65726) I SLAVI@ORMAT.COM Copyright © 2021 Ormat Technologies, Inc. 30 Copyright © 2021 Ormat Technologies, Inc.

  31. Slide 31: Products Segment Third-Party Backlog

    2% 5% 14% PRODUCTS SEGMENT Germany 16% THIRD-PARTY Guatemala Japan 12% BACKLOG(1) Indonesia 2% Taiwan Chile 11% $66.9M 7% Nicaragua CONTRACTS GEOGRAPHIC Canada BREAKDOWN Others 98.6% Geothermal contracts 31% Backlog as of November 3, 2021. The backlog includes revenues for the period between October

  32. Slide 32: Payment of Principal Due by Period

    PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 4.4% Q4-2021 Year 2021 Long-term non-recourse debt & limited recourse debt 9.7 9.7 Senior Secured Notes (non-recourse) 6.1 6.1 Long-term loans (full recourse) 13.6 13.6 Total $29.4 $29.4 Remaining Total 2021 2022 2023 2024 2025 Thereafte

  33. Slide 33: CapEx for 2021

    CAPEX FOR 2021 ACTUAL INVESTED CAPITAL NEEDS TOTAL CAPEX ($M) IN 9 MONTHS 2021 FOR Q4 2021 FOR 2021 Electricity Segment 263 145 408 Construction & Enhancements – fully released 156 110 266 Development enhancement, drillings and Exploration 24 15 39 Puna restoration (including drilling) 27 5 32 Olkar

  34. Slide 34: P&L Highlights

    P&L HIGHLIGHTS Q3 2021 Q3 2020 YTD 2021 YTD 2020 GAAP MEASURES Revenues ($M) Electricity 142.7 123.7 421.5 395.2 Product 10.5 29.6 26.6 120.7 Energy Storage 5.7 5.7 24.0 10.0 Total Revenues 158.8 158.9 472.1 526.0 Gross margin (%) Electricity 42.8 % 38.0 % 41.8 % 44.3 % Product 12.8 % 18.8 % 12.8 %

  35. Slide 35: Reconciliation of EBITDA and Adjusted EBITDA

    RECONCILIATION OF EBITDA AND ADJUSTED EBITDA (DOLLARS IN THOUSANDS) Three Months Nine-Months Ended June 30, Ended June 30, 2021 2020 2021 2020 Net income 20,780 23,098 53,804 78,274 Adjusted for: Interest expense, net (including amortization of deferred financing costs) 21,711 21,130 58,282 57,345 I

  36. Slide 36: Reconciliation of Adjusted Net Income and Adjusted EPS

    RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO THE COMPANY’S STOCKHOLDERS AND ADJUSTED EPS Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 2021 2020 2021 2020 (in millions, except for EPS) GAAP Net income attributable to the Company's stockholders $ 14.9 $ 15.7 $ 43

  37. Slide 37: Reconciliation of Non-GAAP Financial Measures

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES September 30, 2021 Cash and cash equivalents and Restricted cash (in millions $) Cash and cash equivalents 268 Marketable Securities at fair value 45 Restricted cash and cash equivalents 88 Total cash and cash equivalents and Restricted cash (in millions

Ormat Technologies — Q3 2021 Earnings Presentation on 6ix