Ormat Technologies, Inc. · NYSE:ORA
Ormat Technologies — Q2 2020 Earnings Presentation
32 slides from Ormat Technologies's earnings presentation, Aug 5, 2020
Slide 1: Ormat Technologies, Inc. Second Quarter 2020 Earnings Call
ORMAT TECHNOLOGIES, INC. SECOND QUARTER 2020 EARNINGS CALL AUGUST 5, 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: Second Quarter 2020 - Prepared Remarks
SECOND QUARTER 2020- PREPARED REMARKS • Q2 2020 highlights: Doron Blachar, CEO • Financial overview: Assi Ginzburg, CFO • Operations & business updates: Doron Blachar, CEO • Q&A Copyright © 2020 Ormat Technologies, Inc. 4
Slide 5: Q2 2020 Highlights
Q2 2020 HIGHLIGHTS ($ millions, except per share amounts) Q2 2020 Q2 2019 % Change Revenues Electricity 128.7 129.1 (0.3%) Product 43.7 52.0 (16.0%) Energy Storage Management Services 2.5 3.0 (15.0%) Total Revenues 174.9 184.1 (5.0%) Gross Profit 65.4 65.1 0.4% Gross margin (%) Electricity 44.1% 42.
Slide 6: Financial Results
FINANCIAL RESULTS ASSI GINZBURG, CFO Copyright © 2020 Ormat Technologies, Inc. 6
Slide 7: Total Revenues
TOTAL REVENUES Total revenues Total cost of revenues Segment contribution $-9.2M (-5.0%) $-9.4M (-7.9%) 1.4% $184.1 $174.9 25.0% Q2 2020 $118.9 73.6% $109.5 1.6% 28.3% Q2 2019 Q2 2019 Q2 2020 Q2 2019 Q2 2020 70.1% Electricity Product Energy Storage Copyright © 2020 Ormat Technologies, Inc. 7
Slide 8: Electricity Segment
ELECTRICITY SEGMENT Revenues Cost of revenues $-0.4M (-0.3%) $-1.8M(-2.5%) $129.1 $128.7 $73.8 $72.0 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Revenues were impacted mainly by: • The decrease was primarily attributable to: • Lower revenues in Olkaria complex due to curtailment • Lower operational costs in som
Slide 9: Product Segment
PRODUCT SEGMENT Revenues Cost of revenues $-8.3M (-16.0%) $-6.6M (-16.0%) $52.0 $43.7 $41.3 $34.7 Q2 2019 Q2 2020 Q2 2019 Q2 2020 • The decrease in revenues and related cost of revenues is related to the timing of revenue recognition of the projects included in our backlog Copyright © 2020 Ormat Tec
Slide 10: Energy Storage and Management Services Segment
ENERGY STORAGE AND MANAGEMENT SERVICES SEGMENT Revenues Cost of revenues $-0.4M (-15.0%) $-1.0M (-25.4%) $3.8 $3.0 $2.9 $2.5 Q2 2019 Q2 2020 Q2 2019 Q2 2020 • The decline is mainly due to the impact of COVID 19 on the frequency regulation market prices. Copyright © 2020 Ormat Technologies, Inc. 10
Slide 11: Total Gross Profit and Margin
TOTAL GROSS PROFIT AND MARGIN Gross profit Gross margin $0.2M (0.4%) 37.4% 35.4% $65.4 $65.1 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Copyright © 2020 Ormat Technologies, Inc. 11
Slide 12: Gross Margin by Segment
GROSS MARGIN BY SEGMENT Electricity Product Energy Storage Management and Services 42.8% 44.1% 20.6% 20.6% Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 (13.6%) (29.5%) Copyright © 2020 Ormat Technologies, Inc. 12
Slide 13: Selling and Marketing & General and Administrative Expenses
SELLING AND MARKETING & GENERAL AND ADMINISTRATIVE EXPENSES Selling and marketing expenses General and administrative expenses $1.6M (48.2%) $-2.9M (-20.4%) $14.2 $11.3 $4.9 $3.3 Q2 2019 Q2 2020 Q2 2019 Q2 2020 The increase was primarily due to: The decrease was primarily attributable to • An increa
Slide 14: Operating Income
OPERATING INCOME Total operating income $1.2M (2.5%) $46.9 $48.1 Q2 2019 Q2 2020 • The increase was primarily due to the increase in our Electricity segment gross margin, and a decrease in general and administrative expenses. Partially offset by a decrease in our Product segment gross margin. Copyri
Slide 15: Operating Income (Loss) by Segment
OPERATING INCOME (LOSS) BY SEGMENT Electricity segment Product segment Energy Storage $2.4M (5.5%) $-1.5M (-28.2%) Management Services segment $0.3M (-15.6%) $45.9 $43.5 $5.3 $3.8 ($1.9) ($1.6) Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Copyright © 2020 Ormat Technologies, Inc. 15
Slide 16: Interest Expense, Net
INTEREST EXPENSE, NET Interest Expense, Net $-1.7M (-8.0%) $21.5 $19.8 Q2 2019 Q2 2020 This decrease was primarily due to: • $0.7 million decrease in interest related to the sale of tax benefits. • $1.9 million increase in interest capitalized to projects. • Lower interest expense as a result of pri
Slide 17: Income Tax Benefit (Expense)
INCOME TAX BENEFIT (EXPENSE) $3.5 Q2 2019 Q2 2020 ($11.8) • Ormat’s effective tax rate for the second quarter of 2020 is 33.3%. • Income tax benefit for the second quarter of 2019, included a on-time tax benefit. Copyright © 2020 Ormat Technologies, Inc. 17
Slide 18: Net Income Attributable to the Company's Stockholders & EPS
NET INCOME ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS & EPS Net Income attributable to the Company's EPS Stockholders ($M) $33.9 $0.66 $23.0 $20.6 $0.45 $0.40 Q2 2019 Q2 2020 Q2 2019 Q2 2019 Q2 2020 Q2 2019 Adjusted1 Adjusted1 • This decrease was mainly attributable to an increase in income tax prov
Slide 19: Adjusted EBITDA ($M)
ADJUSTED EBITDA1 ($M) Total adjusted EBITDA Electricity segment Product segment Energy Storage $3.0M (3.2%) $4.4M (5.1%) $-2.3M (-26.9%) Management Services segment $0.9M (-137.9%) $97.9 $94.9 $91.4 $86.9 93% of total adjusted EBITDA 92% of total adjusted EBITDA $8.6 $6.3 ($0.6) $0.2 Q2 2019 Q2 2020
Slide 20: Cash and Cash Equivalents and Restricted Cash and Cash Equivalent ($M)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENT($M) 51.4 5.5 151.3 59.5 154.4 11.3 7.8 3.7 249.8 153.1 - - - - - - - - Dec.31, 2019 December Cash Cash from from Revolver Revolving Debt, net Debt, net (1) Others Others CapEx CapEx Divedend Unconsolidated companies Dividend Non-Contr
Slide 21: Payment of Principal Due by Period ($M)
PAYMENT OF PRINCIPAL DUE BY PERIOD ($M) AVERAGE INTEREST RATE (DEBT AS OF JUNE 30, 2020) - 5.03% Debt as of June 30, 2020 Q3-2020 Q4-2020 Year 2020 Long-term non-recourse debt & limited recourse debt 8.0 9.3 17.3 Senior Secured Notes (non-recourse) 8.7 5.8 14.5 Long-term loans (full recourse) 0.0 4.
Slide 22: Operations & Business Updates
OPERATIONS & BUSINESS UPDATES DORON BLACHAR, CEO Copyright © 2020 Ormat Technologies, Inc. 22
Slide 23: Generation
GENERATION • 4.73% decrease • Mainly due to the lower generation at our OREG facility and curtailments in the Olkaria power plant driven, inter alia, by the affect of COVID 19 in Kenya. Generation (GWh)(1) 1.52 1.44 Q2 2019 Q2 2020 Copyright © 2020 Ormat Technologies, Inc. 23
Slide 24: Puna Plant in Hawaii - Update
PUNA PLANT IN HAWAII - UPDATE • Substation construction • Building the electrical substation • Construction was completed by Ormat, • Awaiting HELCO to complete their part – expected in the third quarter • Wellfield • Completed drilling of two production wells • One well blocked after flow test and
Slide 25: Growth Plan – Geothermal and Solar
GROWTH PLAN – GEOTHERMAL AND SOLAR • Added 19 MW from Steamboat Hills Enhancement in June 2020 • Expect adding between 160 MW and 180 MW by the end of 2022(1) • Continue to look for M&A opportunities Projected Added Project Expected COD PPA Capacity (MW) Geothermal Projects U.S - Heber Complex 11 20
Slide 26: Products Segment - Third-Party Backlog
PRODUCTS SEGMENT - THIRD-PARTY BACKLOG • Backlog as of August 3, 2020 – $66 million • 95.5% Geothermal contracts Backlog geographic breakdown 15% 24% 1% 29% 27% 4% Turkey NZ US Chile Taiwan Others Copyright © 2020 Ormat Technologies, Inc. 26
Slide 27: Energy Storage Management Services
ENERGY STORAGE MANAGEMENT SERVICES • Pomona, California (20MW/80MWh) • Closed on the acquisition from AltaGas on July 20 • Rabbit Hill, ERCOT (9.9 MW/ 10 MWh): • In commercial operation since April 24, 2020 • Valecito, California (10 MW / 40 MWh) • Delays in permitting due to COVID-19 • Improved the
Slide 28: Capital Needs for the Remainder of 2020
CAPITAL NEEDS FOR THE REMAINDER OF 2020 Capital needs ($M) Construction & Enhancements – fully released 120 Development enhancement and Exploration – not yet released 30 Maintenance CapEx (including drilling in Puna) 30 Storage activity 16 Enhancement of the production facilities 11 Total CapEx 207
Slide 29: 2020 Guidance ($M)
2020 GUIDANCE ($M) Forecast Electricity Revenues 550-560 Products Revenues 140-150 Energy Storage and Management Services Revenues 15-17 Total Revenues 710-725 Adjusted EBITDA 400-410 The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months ended Ju
Slide 30: 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. 30
Slide 31: Reconciliation of EBITDA and Adjusted EBITDA
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA FOR THE THREE AND SIX-MONTHS PERIODS ENDED JUNE 30, 2020 AND 2019 (UNAUDITED) We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation and amor
Slide 32: Reconciliation of Adjusted Net Income
RECONCILIATION OF ADJUSTED NET INCOME FOR THE THREE-MONTHS PERIODS ENDED JUNE 30, 2020 AND 2019 (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