Ormat Technologies, Inc. · NYSE:ORA

Ormat Technologies — Q4 2017 Earnings Presentation

38 slides from Ormat Technologies's earnings presentation, Mar 1, 2018

  1. Slide 1: Fourth Quarter and Year-End 2017 Earnings Call

    FOURTH QUARTER AND YEAR-END 2017 EARNINGS CALL MARCH 1, 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 (cont.)

    SAFE HARBOR STATEMENT This presentation includes Forward-Looking Statements and the disclaimer should be read carefully Forward-Looking Statements- cont. These risks, uncertainties and other factors include, but are not Copyright © 2018 Ormat Technologies, Inc. All Rights Reserved. limited to, the r

  4. Slide 4: Fourth Quarter and Full Year 2017 Prepared Remarks

    FOURTH QUARTER AND FULL YEAR 2017 PREPARED REMARKS • Q4 and FY 2017 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: Q4 and FY 2017 Highlights

    Q4 AND FY 2017 HIGHLIGHTS Q4 Q4 Chang Chang (in $M except per share amounts) 2017 2016 2017 2016 e e Revenues Electricity $128.5 $114.6 12.1% $468.3 $436.3 7.3% Product $37.9 $51.9 -27.0% $224.5 $226.3 -0.8% Total Revenues $166.4 $166.5 -0.1% $692.8 $662.6 4.6% Gross margin (%) Electricity (1) 41.6%

  6. Slide 6: Financial Results

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

  7. Slide 7: FY 2017 - Total Revenues

    FY 2017 - TOTAL REVENUES Total revenues Total cost of revenues Segment contribution +$30.2M (4.6%) +32.6 (8.3%) 32% $692.8 2017 $662.6 68% $424.4 $391.8 34% 2016 66% 2016 2017 2016 2017 Electricity Product Copyright © 2018 Ormat Technologies, Inc. 7

  8. Slide 8: Electricity Segment

    ELECTRICITY SEGMENT Revenues Cost of revenues +$32.0M (7.3%) +10.7M (4.1%) $468.3 $436.3 $261.6 $272.3 2016 2017 2016 2017 • $13.6M from full year consolidation of Bouillante, • Additional cost of revenues from the Guadeloupe consolidation the full year consolidation of • $12.2M-commencements of Pla

  9. Slide 9: Product Segment

    PRODUCT SEGMENT Revenues Cost of revenues -$1.8M (0.8%) +$21.9M (16.8%) $226.3 $224.5 $152.1 $130.2 2016 2017 2016 2017 • Completion of our contracts in Cerro Pabellon, • Additional costs associated with Cerro Pabellon Chile, in Sarulla, Indonesia, and other projects in project in Chile Turkey, whic

  10. Slide 10: Gross Margin

    GROSS MARGIN Total gross margin Electricity gross margin Product gross margin 41.9% 40.0% 42.5% 40.9% 38.7% 32.2% 2016 2017 2016 2017 2016 2017 (1) Electricity revenues for the full year ended December 31, 2017 includes $2.7M revenues and $5.4M cost of revenues from Viridity Copyright © 2018 Ormat T

  11. Slide 11: Operating Income

    OPERATING INCOME Total operating income Electricity Product +$3.1M (1.6%) +$27.7M (21.8%) -$24.6M (32.8%) Adjusted1 +$16.5M (12.0%) $201.9 $205.0 $154.5 $138.0 $126.8 $75.1 $50.5 2016 2017 2016 2016 2017 2016 2017 Adjusted(1) (1) Adjusted operating income for 2016 excludes $11.0M of expenses related

  12. Slide 12: Interest Expense, Net

    INTEREST EXPENSE, NET Interest expense, net -$13.2 (19.7%) $67.4 $54.1 2016 2017 The decrease was primarily attributable to: • Repayment of $250M of senior unsecured bonds with 7% interest rate, through the issuance of $204M senior unsecured bonds which bear average interest of 4.2% • Lower interest

  13. Slide 13: Other Non-Operating Expense, Net

    OTHER NON-OPERATING EXPENSE, NET $5.3 $1.7 2016 2017 • Other non-operating expense, net for 2017 includes: • Make whole premium of $1.9M resulting from the prepayment of $14.3M of our OFC Senior Secured Notes and $11.8M of our DEG loan • Other non-operating expense, net for 2016 includes: • Prepayme

  14. Slide 14: Income Before Income Taxes and Equity in Losses of Investees

    INCOME BEFORE INCOME TAXES AND EQUITY IN LOSSES OF INVESTEES Adjusted(1) +$29.6 (21.0%) +$15.5 (9.9%) $170.7 $172.6 $157.1 $141.1 2016 2017 2016 2017 (1) Adjusted Income before income taxes and equity in losses of investees for the full year 2017 excludes $1.9 million attributable to a one-time make

  15. Slide 15: Net Income Attributable to Shareholders and EPS

    NET INCOME ATTRIBUTABLE TO THE COMPANY’S SHAREHOLDERS AND EPS Net income attributable to the Company’s shareholders Earnings per share Adjusted(1) Adjusted(1) +$61.6M (65.5%) +$42.0M (38.2%) $155.5 $151.9 $3.06 $2.99 $109.9 $2.19 $93.9 $1.87 2016 2017 2016 2017 2016 2017 2016 2017 (1) Adjusted Net i

  16. Slide 16: Fourth Quarter 2017 Revenues

    FOURTH QUARTER 2017 REVENUES Total Electricity Product -$0.2M (0.1%) +$13.9M (12.1%) -$14.0M (27.0%) $166.5 $166.4 $128.5 $114.6 $51.9 $37.9 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Copyright © 2018 Ormat Technologies, Inc. 16

  17. Slide 17: Fourth Quarter Gross Margin

    FOURTH QUARTER GROSS MARGIN Total gross margin Electricity gross margin Product gross margin 41.6% 39.7% 40.8% 40.0% 38.7% 28.7% 2016 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 (1) Electricity revenues for the fourth quarter of 2017 includes $0.5M revenues and $1.9M cost of revenues from Viridity Copyrigh

  18. Slide 18: Fourth Quarter 2017 Operating Income

    FOURTH QUARTER 2017 OPERATING INCOME -$2.8M (5.5%) $51.2 $48.4 Q4 2016 Q4 2017 Copyright © 2018 Ormat Technologies, Inc. 18

  19. Slide 19: Fourth Quarter Income Before Income Taxes and Equity in Losses

    FOURTH QUARTER INCOME BEFORE INCOME TAXES AND EQUITY IN LOSSES OF INVESTEES ($M) +$3.3M (9.1%) $40.0 $36.7 Q4 2016 Q4 2017 Copyright © 2018 Ormat Technologies, Inc. 19

  20. Slide 20: Net Income Attributable to Shareholders and EPS

    NET INCOME ATTRIBUTABLE TO THE COMPANY’S SHAREHOLDERS AND EPS Net income attributable to the Company’s shareholders Earnings per share +$37.7M (133.7%) $66.0 $1.29 $28.2 $0.56 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Copyright © 2018 Ormat Technologies, Inc. 20

  21. Slide 21: Fourth Quarter Adjusted EBITDA

    FOURTH QUARTER ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Electricity Product +$10.5M (13.6%) +$18.1M (29.8%) -$7.6M (46.1%) $87.4 $78.5 $76.9 $60.5 $16.4 $8.9 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 D&A2 25.9 31.6 D&A2 25.0 30.7 D&A2 0.9 0.9

  22. Slide 22: Full Year Adjusted EBITDA

    FULL YEAR ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Electricity Product +$20.0M (6.2%) +$38.7M (15.9%) -$18.8M (23.4%) $343.8 $282.3 $323.8 $243.6 82.1% of total adjusted EBITDA $80.2 75.2% of total $61.4 adjusted EBITDA 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 D&A2 99.1 108.7 D

  23. Slide 23: Cash and Cash Equivalents

    CASH AND CASH EQUIVALENTS ($M) $245.6 $259.2 $51.5 $66.2 $230.2 $46.3 $35.3 $21.3 $20.5 $14.6 $14.3 $1.8 $47.8 Dec.31, 2016 Proceeds Cash CapEx Debt Investment Viridity Cash Dividend Net OFC Other Dec.31, from derived repayment in Sarulla acquisition paid to change prepayment 2017 revolving from non

  24. Slide 24: Payment of Principal Due by Period

    PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE: 4.8% Q1 Q2 Q3 Q4 FY 2018 Long-term non-recourse debt & limited recourse debt 5.4 5.4 5.4 5.4 21.5 Senior Secured Notes (non-recourse) due 2033 11.0 8.5 3.0 10.7 33.2 Long-term loans (full recourse) 0.3 0.3 0.0 2.5 3.1 Revolving bank cred

  25. Slide 25: Operations & Business Updates

    OPERATIONS & BUSINESS UPDATES ISAAC ANGEL, CEO Copyright © 2018 Ormat Technologies, Inc. 25

  26. Slide 26: Delivering Growth and Expanding Geographical Footprint

    DELIVERING GROWTH AND EXPANDING GEOGRAPHICAL FOOTPRINT March 2017, SIL, Sarulla, Indonesia(1) U.S. Guadeloupe Guatemala Honduras Kenya Indonesia New region Existing region Sept. 2017, Platanares, Honduras 90 MW 4 2 of new capacity new power plants new regions Oct. 2017, NIL 1, Sarulla, Indonesia(1)

  27. Slide 27: Global Portfolio (795 MW)

    GLOBAL PORTFOLIO (795 MW) U.S. 535 MW Guadeloupe Guatemala 15 MW 43 MW Honduras Kenya Indonesia 35 MW 139 MW 28 MW(1) • Generating capacity adjustments taking advantage of a higher performing resource at: • McGinness Hills - adjusted to 90 MW from 86 MW • Tungsten Mountain - adjusted to 26 MW from 2

  28. Slide 28: Generation

    GENERATION • 1.7% increase year over year • Generation was positively affected from Puna and Bouillante Generation (Million MWh) (1) 5.4 5.5 4.8 4.5 4.3 2013 2014 2015 2016 2017 (1) Ormat owns 12.75% minority interest at Sarulla, which is accounted under the equity method. We include Sarulla in our

  29. Slide 29: Product Segment Backlog

    PRODUCT SEGMENT • Backlog of approximately $243.0M as of Feb. 26, 2018 • Includes revenues for the period between January 1, 2018 and February 26, 2018 • The backlog includes the Soda Lake $36M EPC contract • The contract was signed in December 2016 and is still pending final notice to proceed and w

  30. Slide 30: Organic Growth - Expected Capacity Additions by Year-End 2020

    ORGANIC GROWTH - EXPECT TO ADD BETWEEN 190 MW AND 200 MW BY YEAR-END 2020(1) Projected Project Expected COD PPA Capacity Indonesia - Sarulla project, NIL 2 14 MW(2) Q1 /Q2 2018(3) v U.S - Brady Repowering 4 MW Q1 2018 v Kenya - Olkaria III – Plant 1 Repowering 10 MW H2 2018 v U.S - McGinness Hills,

  31. Slide 31: Development and Exploration Pipeline to Support Future Growth

    DEVELOPMENT AND EXPLORATION PIPELINE TO SUPPORT FUTURE GROWTH 32 prospects under exploration and development to support our growth targets U.S. Central America & Caribbean Africa Asia Pacific Nevada 15 sites Guatemala 2 sites Ethiopia 4 sites New Zealand 1 sites California 3 sites Honduras 1 site Or

  32. Slide 32: Energy Storage

    ENERGY STORAGE • Viridity acquisition (March 2017) positioned us to strengthen and expand our presence in the energy storage market • Post merger integration process was completed • Developed turnkey and unique offerings with Ormat integration: Battery Storage as a Service, BSAAS systems • Developin

  33. Slide 33: U.S. Geothermal Acquisition

    US GEOTHERMAL ACQUISITION • Key highlights: • Signed a definitive agreement to acquire U.S. Geothermal for a total consideration of approx.$110M (on fully diluted basis) • U.S. Geothermal operates three geothermal power projects in Oregon, Nevada and Idaho • The operating assets • Currently generate

  34. Slide 34: Capital Needs for 2018

    CAPITAL NEEDS FOR 2018 Capital needs ($M) Construction & enhancements $156 Maintenance CapEx $51 Exploration and development $41 Storage activity $40 Manufacturing facility $12 Total CapEx $300 Debt repayment $58 Revolving lines of credit $51 Total $409 Copyright © 2018 Ormat Technologies, Inc. 34

  35. Slide 35: 2018 Guidance

    2018 GUIDANCE(1) 2018 Revenue Guidance ($M) Electricity revenues 500-510 Products revenues 180-190 Other revenues(2) 8-12 Total expected revenues 688-712 2018 Adjusted EBITDA Guidance ($M) Adjusted EBITDA(3) 355-365 (1) As we have not yet closed the US Geothermal acquisition, we did not include any

  36. Slide 36: Summary - Continuing Execution

    SUMMARY – CONTINUING EXECUTION Improve Organic Strategic New efficiencies growth M&A activities Signed agreement to acquire Increased electricity segment Added approximately U.S. Geothermal, which operates gross margin to: 42% 90 MW 38 MW of organic growth and has future prospects Increased electric

  37. Slide 37: 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. 37

  38. Slide 38: Reconciliation of EBITDA, Adjusted EBITDA

    RECONCILIATION OF EBITDA ADJUSTED EBITDA Reconciliation of EBITDA, Adjusted EBITDA For the Three and Twelve-Month Periods Ended December 31, 2017 and 2016 (Unaudited) Due to the matters mentioned above, for the purposes of this release, we have calculated EBITDA as income before income taxes and equ

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