Ormat Technologies, Inc. · NYSE:ORA

Ormat Technologies — Q1 2018 Earnings Presentation

32 slides from Ormat Technologies's earnings presentation, May 8, 2018

  1. Slide 1: First Quarter 2018 Earnings Call

    ORMAT TECHNOLOGIES, INC. FIRST QUARTER 2018 EARNINGS CALL MAY 8, 2018 Copyright © 2018 Ormat Technologies, Inc.

  2. 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 this presentation, This and other forward-looking statements made in or during the may contain “forwar

  3. Slide 3: Safe Harbor Statement: Reconciliation to US GAAP

    SAFE HARBOR STATEMENT THIS PRESENTATION INCLUDES FORWARD-LOOKING STATEMENTS AND THE DISCLAIMER SHOULD BE READ CAREFULLY RECONCILIATION TO US GAAP FINANCIAL INFORMATION Copyright © 2018 Ormat Technologies, Inc. All Rights Reserved. This presentation includes certain “non-GAAP financial This document

  4. Slide 4: First Quarter 2018 Prepared Remarks

    FIRST QUARTER 2018 PREPARED REMARKS • Q1 2018 highlights: Isaac Angel, CEO • Financial overview: Doron Blachar, CFO • Operations & business updates: Isaac Angel, CEO • Q&A Copyright © 2018 Ormat Technologies, Inc. 4

  5. Slide 5: Q1 2018 Highlights

    Q1 2018 HIGHLIGHTS ($M, except per share amounts) Q1 2018 Q1 2017 Change (%) Revenues Electricity 132.5 115.8 14.4% Product 48.7 74.1 (34.3%) Other 2.8 - - Total Revenues 184.0 189.9 (3.1%) Gross margin (%) Electricity 44.5% 43.0% Product 30.7% 33.3% Other (20.3%) - Gross margin (%) 39.9% 39.2% Oper

  6. Slide 6: Financial Results

    FINANCIAL RESULTS DORON BLACHAR, CFO Copyright © 2018 Ormat Technologies, Inc. 6

  7. Slide 7: Total Revenues

    TOTAL REVENUES Total revenues Total cost of revenues Segment contribution -$5.9M (3.1%) -4.8M (4.2%) 2% 26% Q1 2018 72% $189.9 $184.0 $115.5 39% $110.7 Q1 2017 61% Q1 2017 Q1 2018 Q1 2017 Q1 2018 Electricity Product Other Copyright © 2018 Ormat Technologies, Inc. 7

  8. Slide 8: Electricity Segment

    ELECTRICITY SEGMENT Revenues Cost of revenues +$16.7M (14.4%) +7.4M (11.3%) $132.5 $115.8 $73.5 $66.0 Q1 2017 Q1 2018 Q1 2017 Q1 2018 The increase in revenues was primarily attributable to: • $8.4M - commencement of Platanares power plant in Sept. 2017 • $4.8M - commencement of Tungsten Mountain pow

  9. Slide 9: Product Segment

    PRODUCT SEGMENT Revenues Cost of revenues -$25.5M (34.3%) -15.7M (31.8%) $74.1 $48.7 $49.5 $33.7 Q1 2017 Q1 2018 Q1 2017 Q1 2018 The decrease in our Product segment revenues was attributable to the timing of revenue recognition Copyright © 2018 Ormat Technologies, Inc. 9

  10. Slide 10: Other Segment

    OTHER SEGMENT Revenues Cost of revenues 3.4 $2.8 $0.0 $0.0 Q1 2017 Q1 2018 Q1 2017 Q1 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 substantially all of the business a

  11. Slide 11: Total Gross Profit and Margin

    TOTAL GROSS PROFIT AND MARGIN Gross profit Gross margin -$1.0M (1.4%) $74.4 $73.4 39.2% 39.9% Q1 2017 Q1 2018 Q1 2017 Q1 2018 Copyright © 2018 Ormat Technologies, Inc. 11

  12. Slide 12: Gross Margin by Segment

    GROSS MARGIN BY SEGMENT Electricity gross margin Product gross margin Other gross margin 44.5% 43.0% 33.3% 30.7% Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 (20.3%) Copyright © 2018 Ormat Technologies, Inc. 12

  13. Slide 13: Operating Income

    OPERATING INCOME Total operating income Operating income by segment -$4.9M (8.2%) Electricity segment Product segment Other segment +$5.5M (13.4%) -$9.0M (48.4%) -$1.4M $59.5 $54.6 $46.4 $40.9 $18.6 $9.6 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 ($1.4) The decrease was primaril

  14. Slide 14: Interest Expense, Net

    INTEREST EXPENSE, NET Interest expense, net -$0.6 (3.9%) $14.9 $14.3 Q1 2017 Q1 2018 The decrease was primarily attributable to: • $0.6 million decrease in interest related to the sale of tax benefits and lower interest expense as a result of principal payments of long term debt Partially offset by

  15. Slide 15: Income Tax (Provision) Benefit

    INCOME TAX (PROVISION) BENEFIT Income tax (provision) benefit Effective tax rate 39.4% 20.8% $2.1 Q1 2017 Q1 2018 Q1 2018 Q1 2017 Q1 2018 Q1 2018 Adjusted1 (4.7%) Adjusted 1 ($10.9) (18.2) • Our effective tax rate for Q1 2018 and Q1 2017, was (4.7)% and 20.8%, respectively • Our effective tax rate i

  16. Slide 16: Net Income Attributable to the Company's Stockholders & EPS

    NET INCOME ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS & EPS Net Income Attributable to the EPS2 Company's Stockholders ($M) +$9.4M (26.5%) -$10.9M (30.9%) $44.7 $0.88 $35.3 $35.3 $0.70 $0.70 $24.4 $0.48 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q3 2016 Q3 2017 Q1 2017 Q1 2018 Adjusted1 Adjusted1 (1) Adjusted

  17. Slide 17: Adjusted EBITDA ($M)

    ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Electricity segment Product segment Other segment +$6.6M (7.2%) +$16.8M (23.4%) -$9.1M (45.7%) $98.4 $91.8 $88.7 $71.9 90.1% of total adjusted EBITDA 78.2% of total adjusted EBITDA $20.0 $10.8 ($1.1) Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017

  18. Slide 18: Cash and Cash Equivalents and Restricted Cash ($M)

    CASH AND CASH EQUIVALENTS AND RESTRICTED CASH ($M) $67.0 $100.0 $44.0(1) $63.8 (1) $16.7 $13.0 $11.6 $4.7 $105.1 $96.6 $1.3 $3.0 Dec.31, 2017 Other Cash Proceeds CapEx One- time Debt Net Dividend Cash Investment March 31, derived from withholdin repayment repayment paid to in Sarulla 2018 from Migda

  19. Slide 19: Payment of Principal Due by Period ($M)

    PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 4.9% Q2-2018 Q3-2018 Q4-2018 FY 2018 Long-term non-recourse debt & limited recourse debt 5.4 5.4 5.4 16.1 Senior Secured Notes (non-recourse) due 2033 8.5 3.0 10.7 22.2 Long-term loans (full recourse) 0.3 0.0 2.5 2.8 Revolving bank credi

  20. Slide 20: Financing

    FINANCING • Corporate debt • Closed a $100M senior unsecured loan with Migdal group • Project finance debt • Signed $125M financing agreement with OPIC • Signed a finance agreement with the Overseas Private Investment Corporation (OPIC), to provide an approximately $125M loan (on a non-recourse basi

  21. Slide 21: Operations & Business Updates

    OPERATIONS & BUSINESS UPDATES ISAAC ANGEL, CEO Copyright © 2018 Ormat Technologies, Inc. 21

  22. Slide 22: US Geothermal (USG) Acquisition

    US GEOTHERMAL (USG) ACQUISITION • Following the closing of USG acquisition Ormat owns • Three geothermal power projects in Oregon, Nevada and Idaho • Total generating capacity of 38 MW net1 • Existing PPAs at favorable price terms with an aggregated contract capacity of 55 MW • Development assets in

  23. Slide 23: Operations

    OPERATIONS • Generation • 6.7% increase year over year • Generation was positively affected from Platanares, Tungsten Mountain and Puna • Puna, Hawaii • Kilauea volcano eruption1 Generation (Million MWh)2 5.4 5.5 5.6 4.8 4.3 4.5 2013 2014 2015 2016 2017 LTM (1) On May 3, 2018, the Kilauea volcano lo

  24. Slide 24: Product Segment

    PRODUCT SEGMENT • Backlog increased to $281M as of May 7, 2018 • Added new orders mainly from Turkey • The strong backlog gives more visibility on 2019 but may also support 2018 as the Company evaluates the probability of new contracts contribution to 2018 • The backlog includes revenues for the per

  25. Slide 25: Organic Growth

    ORGANIC GROWTH • NIL 2, the third unit of the 330 MW Sarulla geothermal power plant, commenced commercial operation • Ormat’s share is 12.75% in Sarulla • Commencement of the 3rd phase adds 14 MW to our portfolio • 4 MW of the Brady repowering commenced operation • Expect to add between 172 MW and 1

  26. Slide 26: Energy Storage

    ENERGY STORAGE • Commissioned 1MW/1MWh Behind- the-Meter energy storage system • The project will serve Atlantic County Utility Authority’s (ACUA) unique ecological green facility using a battery storage as a service (BSAAS) model, optimizing the facility economics as well as providing PJM Interconn

  27. Slide 27: Energy Storage

    ENERGY STORAGE • Viridity subsidiary expects to start construction of two 20MW/20MWh utility scale located in New Jersey • Excepted completion: Q4 2018 • The projects are expected to generate in 2019 average revenues of between $7M and $8M, mainly from ancillary services • The projects’ revenues are

  28. Slide 28: Capital Needs for the Remainder 2018

    CAPITAL NEEDS FOR THE REMAINDER 2018 Capital needs ($M) Construction & enhancements $111 Maintenance CapEx(1) $40 Exploration and development $35 Storage activity $36 Manufacturing facility $9 Total CapEx $231 Debt repayment $52 Total $283 (1) including $18M one-time investment allocated for stand-b

  29. Slide 29: 2018 Guidance

    2018 GUIDANCE 2018 Revenue Guidance ($M) Electricity revenues 523-533 Products revenues 180-190 Other revenues(1) 8-12 Total expected revenues 711-735 2018 Adjusted EBITDA Guidance ($M) Adjusted EBITDA(2) 368-378 (1) “Other” segment reflect revenues from energy storage, demand response and energy ma

  30. Slide 30: Summary – Continuing Execution

    SUMMARY – CONTINUING EXECUTION Improve Organic Strategic New efficiencies growth M&A activities Increased electricity segment Plan to add by the end of 2020 Secured capital in the amount of: quarterly gross margin to: 45% 172-182 MW 225 $M of organic growth To support our growth plan Closed acquisit

  31. Slide 31: 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 © 2018 Ormat Technologies, Inc. 31

  32. Slide 32: Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information ($M)

    RECONCILIATION OF EBITDA ADJUSTED EBITDA AND ADDITIONAL CASH FLOWS INFORMATION ($M) Reconciliation of EBITDA and Adjusted EBITDA For the Three-Month Periods Ended March 31, 2018 and 2017 (Unaudited) We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate

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