Slide 1: Fourth Quarter and Year-End 2019 Earnings Call
ORMAT TECHNOLOGIES, INC. FOURTH QUARTER AND YEAR-END 2019 EARNINGS CALL FEBRUARY 26, 2020 Copyright Copyright Copyright©© 2020 ©2020 Ormat 2020Ormat Technologies, OrmatTechnologies, Inc. Technologies, Inc. Inc.
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 2022 growth (MW) or 2022 operational performance metrics such
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 2019 - Prepared Remarks
FOURTH QUARTER AND FULL YEAR 2019- PREPARED REMARKS • Q4 and FY 2019 highlights: Isaac Angel, CEO • Financial overview: Doron Blachar, President and CFO • Operations & business updates: Isaac Angel, CEO • Q&A Copyright © 2020 Ormat Technologies, Inc. 4
Slide 5: Q4 and YE 2019 Highlights
Q4 AND YE 2019 HIGHLIGHTS Change Change ($ millions, except per share amounts) Q4 2019 Q4 2018 FY 2019 FY 2018 (%) (%) Revenues Electricity 144.4 138.3 4.4% 540.3 509.9 6.0% Product 43.8 49.7 (11.9%) 191.0 201.7 (5.3%) Energy Storage & Management Services 4.3 2.4 75.5% 14.7 7.6 92.3% Total revenues
Slide 6: Financial Results
FINANCIAL RESULTS DORON BLACHAR, PRESIDENT AND CFO Copyright © 2020 Ormat Technologies, Inc. 6
Slide 7: FY 2019 - Total Revenues
FY 2019 - TOTAL REVENUES Total revenues Total cost of revenues Segment contribution $26.8M (3.7%) $27.9M (6.2%) 1.1% 28.0% $719.3 $746.0 2018 70.9% $448.8 $476.7 2.0% 25.6% 2019 72.4% 2018 2019 2018 2019 Electricity Product Energy Storage Copyright © 2020 Ormat Technologies, Inc. 7
Slide 8: FY 2019 - Electricity Segment
FY 2019 - ELECTRICITY SEGMENT Revenues Cost of revenues $30.5M (6.0%) $14.6M (4.9%) $509.9 $540.3 $298.3 $312.8 2018 2019 2018 2019 The increase in revenues was primarily attributable to: • $31.8M – commencement of the third phase of our McGinness Hills Complex in December 2018 • $14.2M - consolidat
Slide 9: FY 2019 - Product Segment
FY 2019 - PRODUCT SEGMENT Revenues Cost of revenues $-10.7M (-5.3%) $5.3M (3.8%) $201.7 $191.0 $140.7 $146.0 2018 2019 2018 2019 Copyright © 2020 Ormat Technologies, Inc. 9
Slide 10: FY 2019 - Energy Storage and Management Services Segment
FY 2019 - ENERGY STORAGE AND MANAGEMENT SERVICES SEGMENT Revenues Cost of revenues $7.1M (92.3%) $8.0M (81.3%) $17.9 $14.7 $9.9 $7.6 2018 2019 2018 2019 Copyright © 2020 Ormat Technologies, Inc. 10
Slide 11: YE 2019 - Total Gross Profit and Margin
YE 2019 - TOTAL GROSS PROFIT AND MARGIN Gross profit Gross margin $270.4 $269.3 37.6% 36.1% 2018 2019 2018 2019 Copyright © 2020 Ormat Technologies, Inc. 11
Slide 12: YE 2019 - Gross Margin by Segment
YE 2019 –GROSS MARGIN BY SEGMENT Electricity gross margin Product gross margin Energy Storage Management Services gross margin 44.1% 41.5% 42.1% 41.9% 30.3% 23.6% 2018 2019 2018 2019 2018 2019 2018 2019 w/o Puna w/o Puna (21.8%) (29.2%) Copyright © 2020 Ormat Technologies, Inc. 12
Slide 13: YE 2019 - Selling and Marketing, and G&A Expenses
YE 2019 - SELLING AND MARKETING, AND GENERAL AND ADMINISTRATIVE EXPENSES Selling and marketing expenses General and administrative expenses $-4.8M (-24.0%) $8.0M (16.6%) $55.8 $47.9 $19.8 $15.0 2018 2019 2018 2019 • Decrease due to the $5.0 million termination fee of the The increase was primarily a
Slide 14: YE 2019 - Operating Income
YE 2019 - OPERATING INCOME Total operating income $8.7M (4.7%) $185.1 $193.8 2018 2019 The increase was primarily attributable to Increase in electricity segment gross profit and the $5.0 million termination fee of the Galena 2 PPA in 2018, offset partially by a decrease in the Product segment gross
Slide 15: YE 2019 - Operating Income (Loss) by Segment
YE 2019 - OPERATING INCOME (LOSS) BY SEGMENT Electricity segment Product segment Energy Storage Management Services segment $21.6M (13.9%) $-14.9M (-39.1%) $1.9M (-22.8%) $177.2 $155.5 $38.1 $23.2 2018 2019 2018 2019 2018 2019 ($8.5) ($6.6) Copyright © 2020 Ormat Technologies, Inc. 15
Slide 16: YE 2019 - Interest Expense, Net
YE 2019 - INTEREST EXPENSE, NET Interest expense, net $9.5 (13.3%) $80.4 $70.9 2018 2019 This increase was primarily interest expense related to: • The $96M loans related to USG projects • The $150M senior unsecured loans • The $114.7M limited recourse loans from OPIC received on October 29, 2018 to
Slide 17: YE 2019 - Income Tax Provision
YE 2019 - INCOME TAX PROVISION $45.6 $34.7 2018 2019 Ormat’s effective tax rate for the year ended 2019 was 33.2%. Copyright © 2020 Ormat Technologies, Inc. 17
Slide 18: YE 2019 - Net Income and EPS
YE 2019 - NET INCOME ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS & EPS Net Income attributable to the Company's EPS2 Stockholders ($M) $106.1 $98.0 $2.08 $88.1 $1.92 $1.72 $74.8 $1.46 2018 2019 2018 2019 2018 2019 2018 2019 Adjusted1 Adjusted1 (1) Reconciliation is set forth in the appendix slides (2
Slide 19: Fourth Quarter 2019 Revenues
FOURTH QUARTER 2019 REVENUES Total Electricity segment Product segment Energy Storage Management Services segment $190.5 $192.4 $138.3 $144.4 $49.7 $43.8 $2.4 $4.3 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Copyright © 2020 Ormat Technologies, Inc. 19
Slide 20: Fourth Quarter 2019 Gross Margin
FOURTH QUARTER 2019 GROSS MARGIN Total Electricity segment Product segment Energy Storage Management Services segment 54.0% 48.6% 46.9% 47.7% 43.6% 38.7% 32.2% 28.2% 7.9% Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 w/o Puna w/o Puna (19.0%) Copyright © 2020 Ormat
Slide 21: Fourth Quarter 2019 Operating Income
FOURTH QUARTER 2019 OPERATING INCOME $-13.5M (-19.9%) $68.0 $54.5 Q4 2018 Q4 2019 Copyright © 2020 Ormat Technologies, Inc. 21
Slide 22: Fourth Quarter 2019 Net Income and EPS
FOURTH QUARTER 2019 NET INCOME ATTRIBUTABLE TO THE COMPANY’S SHAREHOLDERS AND EPS Net income attributable to the Company’s shareholders EPS $-5.6M (-30.8%) $21.3 $18.2 $12.6 $12.6 $0.42 $0.36 $0.24 $0.24 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2019 w/o Puna w/o Puna Adjusted(1) Ad
Slide 23: FY 2019 - Adjusted EBITDA ($M)
FY 2019 - ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Electricity segment Product segment Energy Storage Management $16.3M (4.4%) $26.8M (8.3%) $-13.5M (-28.6%) Services segment $384.3 $385.5 $351.2 $368.0 $354.7 $324.4 91% of total adjusted EBITDA 88% of total adjusted EBITDA $47.2 $33.7 2018 2019
Slide 24: Fourth Quarter 2019 Adjusted EBITDA ($M)
FOURTH QUARTER 2019 ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Electricity segment Product segment Energy Storage Management Services segment $-11.0M (-9.7%) $-5.8M (-5.8%) $-5.6M (-37.7%) $0.3M (-75.0%) $113.2 $102.2 $103.6 $104.7 $98.6 $92.8 $15.0 $9.4 Q4 2018 Q4 2019 Q4 2018 Q4 2019 Q4 2018 Q4 2
Slide 25: YE 2019 - Cash and Cash Equivalents and Restricted Cash
YE 2019 - CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ($M) 236.5 280.0 182.8 118.5 35.4 93.8 177.5 58.3 22.4 10.7 9.7 2.3 153.1 - - - - - - - - - - - Dec.31, Tax Insurance Proceeds CashCash from CapEx Revolving Debt Dividend Investment in Non Other Dec.31, December Proceeds Insurance Proceeds CapE
Slide 26: Payment of Principal Due by Period
PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 4.7% Q1-2020 Q2-2020 Q3-2020 Q4-2020 Year 2020 Long-term non-recourse debt & limited recourse debt 8.0 9.1 8.0 9.3 34.5 Senior Secured Notes (non-recourse) 8.3 5.4 72.1 5.8 91.7 Long-term loans (full recourse) 0.0 4.7 0.0 4.7 9.4 Commerc
Slide 27: 2019 Financing Activity
2019 FINANCING ACTIVITY • Successfully raised $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 Géneralé
Slide 28: Operations & Business Updates
OPERATIONS & BUSINESS UPDATES ISAAC ANGEL, CEO Copyright © 2020 Ormat Technologies, Inc. 28
Slide 29: Generation – 6.5% Increase Year Over Year
GENERATION – 6.5% INCREASE YEAR OVER YEAR • 6.5% increase year over year • 2019 generation was positively affected by phase 3 of McGinness Hills Complex, Olkaria III plant 1 expansion the addition of USG power plants; • Partially offset by: • no generation in Puna due to the outage following the vol
Slide 30: Global Portfolio (914 MW)
GLOBAL PORTFOLIO (914 MW) U.S. 629 MW Guadeloupe Guatemala 15 MW 40 MW Honduras Kenya Indonesia 38 MW 150 MW 42 MW(1) • Main generating capacity adjustments taking advantage of a higher performing resource at: • McGinness Hills - adjusted to 143 MW from 140 MW • Main generating capacity reductions d
Slide 31: Update on Puna Plant in Hawaii
UPDATE ON PUNA PLANT IN HAWAII Working rapidly to resume operation of our Puna power plant following the volcanic eruption • Building the electrical substation: • Permits that has been required for the construction and operation of the substation was received recently. • HELCO continues their effort
Slide 32: Update on Insurance of Puna Plant in Hawaii
UPDATE ON INSURANCE OF PUNA PLANT IN HAWAII • Property Insurance • All insurers accepted our claim and are paying 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 laws
Slide 33: Update on Puna Plant in Hawaii
UPDATE ON PUNA PLANT IN HAWAII • Signed an amended and restated PPA with HELCO, subject to PUC approval • Extends the current term until 2052 • Increases the current contract capacity by 8 MW to 46MW • Expected to reach commercial operation in the first half of 2022 • Fixed the energy rate to delink
Slide 34: Growth Plan – Geothermal and Solar
GROWTH PLAN – GEOTHERMAL AND SOLAR • Added 7 MW from Tungsten Solar in Nevada during 2019 • Expect adding between 180 MW and 200 MW by the end of 2022(1) Projected Project Expected COD PPA Capacity (MW) Geothermal Projects U.S - Steamboat Hills Enhancement 19 2020 U.S - Heber Complex 11 Early 2021
Slide 35: Development and Exploration Pipeline to Support Future Growth
DEVELOPMENT AND EXPLORATION PIPELINE TO SUPPORT FUTURE GROWTH 41 prospects under exploration and development to support our growth targets U.S. Central America & Caribbean Africa Asia Pacific Nevada 22 sites Guatemala 2 sites Ethiopia 4 sites New Zealand 1 site California 4 sites Honduras 1 site Ind
Slide 36: Backlog
BACKLOG • Backlog as of February 24, 2020 – $141.9M • 98.1% Geothermal contracts • we are close to signing a significant contract that, if signed, would replenish our backlog Geothermal contracts geographic breakdown 1% 2% 24% 45% 2% 2% 24% Turkey NZ US Bolivia Chile Taiwan Others Copyright © 2020 O
Slide 37: Energy Storage
ENERGY STORAGE • Projects released for construction • Rabbit Hill, Texas (10 MW / 12.5 MWh) • Finalizing market testing so we can get ERCOT’s approval to provide ancillary services; started generating revenue from energy optimization. • Vallecito, California (10 MW / 40 MWh) • Signed EPC Agreement a
Slide 38: PTC Extender
PTC EXTENDER • In December 2019, the tax extenders package was signed into law and retroactively revived, extending the full PTC for geothermal facilities • Continues U.S. support for the geothermal industry. • PTC provides a tax credit of 2.5 cents per kWh of energy produced by the taxpayer from qu
Slide 39: Capital Needs for 2020
CAPITAL NEEDS FOR 2020 Capital needs ($M) Construction & Enhancements – fully released 134.0 Development enhancement and Exploration – not yet released 57.0 Maintenance CapEx (including drilling in Puna) 61.0 Storage activity 65.0 Enhancement of the production facilities $15 Total CapEx $332.0 Long-
Slide 40: 2020 Guidance ($M)
2020 GUIDANCE ($M) Forecast Electricity Revenues 560-570 Products Revenues 140-150 Energy Storage and Management Services Revenues 15-20 Total Revenues 720-740 Adjusted EBITDA 405-415 The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months and year
Slide 41: Summary – Continuing Execution
SUMMARY – CONTINUING EXECUTION Improve Organic Strategic New efficiencies growth M&A activities Increased electricity segment Electricity segment gross Secured over 242 Adjusted EBITDA portion to margin: 91% 42% $M capital to support growth plan(2) Energy Storage pipeline Geothermal & Solar Growth 1
Slide 42: Thank You!
THANK YOU! Contact IR: Smadar Lavi VP Corporate Finance and Head of Investor Relations 775-356-9029 (ext. 65726) slavi@ormat.com Copyright Copyright©©2020 2020Ormat OrmatTechnologies, Technologies, Inc. Inc. 42
Slide 43: Reconciliation of EBITDA and Adjusted EBITDA
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA FOR THE THREE AND TWELVE-MONTHS PERIODS ENDED DECEMBER 31, 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 44: Reconciliation of Adjusted Net Income
RECONCILIATION OF ADJUSTED NET INCOME FOR THE THREE AND TWELVE-MONTHS PERIODS ENDED DECEMBER 31, 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 o