News

Ormat continues growth of electricity and product revenues

Germencik 2 (Effe 3) Geothermal Power Plant, Turkey (source: Ormat Technologies)
Alexander Richter 8 Nov 2016

Ormat Technologies reports an increase in revenues for Q3 of 2016 over the same period last year pushing total revenues to $184.6 million for the quarter, with $109.8m for electricity revenues and $74.8m for its product segment.

In a release yesterday, Ormat Technologies, Inc. (NYSE:ORA) announced financial results for the third quarter ended September 30, 2016.

For the full release click the link below.

In the third quarter of this year, Ormat has been able to grow the revenues of its electricity segments to $109.8 million, up 12.9% compared to the third quarter of 2015. It credits new power plants commencing operations in Q4 of 2015, higher energy rates at the Heber 1 plant and the consolidation of the Guadeloupe plant acquired from Geothermie Bouillante SA in July 2016.

In the third quarter, Ormat generated around 1.3 million MWh or 1,300 GWh.

With gross margins increased to 40.3% of total revenues compared to 36.4% in the third quarter of 2015, the company clearly has managed to improve operating efficiencies.

“We continue to execute on our strategic plan and advance initiatives to enhance operational efficiency that will position Ormat for continued profitable growth,” Isaac Angel, Chief Executive Officer. “We again delivered double-digit revenue growth, due to strong performances from both our electricity and product segment, and prudent expense management enabled us to generate a 25.6% year-over-year increase in gross margin.

We prepaid the $250 million high-cost indebtedness that was due on August 2017 and successfully raised over $200 million in two tranches of senior unsecured bonds, which will enable us to significantly reduce our ongoing interest expense. We also signed a settlement agreement with respect to the previously disclosed False Claims Act litigation to avoid the burden, inconvenience and expense of continued litigation with no admission of wrongdoing by Ormat. The total $16 million one-time expenses that we incurred in the third quarter (comprising the False Claims Act litigation settlement expenses and the prepayment premium on the bonds) will result in significant savings in future expenses. Our results exceeded expectations and give us confidence to increase 2016 guidance. We are increasingly optimistic about our growth and profitability prospects in 2017 and beyond.”

Guidance

Mr. Angel added, “We are well-ahead of the pace for our previous guidance, and with a strong backlog and increasing confidence in both our electricity and product segment, we are increasing our 2016 full-year outlook. We now expect full-year 2016 total revenue of between $637.0 million and $647.0 million, with product segment revenue of between $215.0 million and $220.0 million. For the electricity segment, we expect revenues to be between $422.0 million and $427.0 million. We now expect 2016 Adjusted EBITDA of between $318.0 million and $323.0 million for the full year.”

Financial Summary of Third Quarter Results

For the three months ended September 30, 2016, total revenues were $184.6 million, up from $162.9 million for the three months ended September 30, 2015, an increase of 13.4%. Electricity segment revenues increased 12.9% to $109.8 million in the three months ended September 30, 2016, up from $97.2 million for the three months ended September 30, 2015. Product segment revenues increased 14.0% to $74.8 million for the three months ended September 30, 2016, up from $65.6 million in the three months ended September 30, 2015.

General and administrative expenses for the three months ended September 30, 2016 were $19.1 million, compared to $8.0 million for the three months ended September 30, 2015. The increase was mainly due to a non-recurring $11.0 million expense related to a settlement of the previously disclosed False Claims Act litigation. Excluding the one-time expenses, general and administrative expenses for the three months ended September 30, 2016 constituted 4.5% of total revenues for the period, compared to 4.9% for the three months ended September 30, 2015.

Other non-operating expense for the three months ended September 30, 2016 was $5.5 million, including of prepayment fees of approximately $5.0 million due to the repayment of the Company’s senior unsecured bonds in September 2016, compared to $0.1 million for the three months ended September 30, 2015.

Income tax provision for the three months ended September 30, 2016 was $12.0 million, compared to income tax benefit of $38.2 million for the three months ended September 30, 2015. Income tax benefit for the three months ended September 30, 2015 includes a $49.4 million deferred tax asset relating to the release of the valuation allowance for the additional 50% investment deduction for our Olkaria 3 power plant based on amendments to the Kenya Income Tax Act that came into effect on September 11, 2015 and which extended the period to utilize such investment deduction from five years to ten years. Income tax provision for the three months ended September 30, 2015, excluding the $49.4 million, was $11.2 million.

The company reported net income attributable to the company’s shareholders of $12.1 million, including $11.0 million in one-time settlement expenses and $5.0 million in repayment fees, each referenced above, or $0.24 per diluted share, compared to net income attributable to the company’s shareholders of $72.1 million, including a $48.7 million tax benefit and related expenses, also referenced above, or $1.41 per diluted share, for the same period last year.

Net income attributable to the company’s shareholders of $28.1 million or $0.56 per diluted share excluding $16 million one-time expenses comprising the False Claims Act litigation settlement expenses and the prepayment premium on the bonds , compared to $23.4 million, excluding $48.7 million tax benefit and related expenses, or $0.46 per diluted share, for the third quarter of 2015;

Adjusted EBITDA for the three months ended September 30, 2016 was $85.4 million, compared to $79.0 million for the three months ended September 30, 2015, an increase of 8.1%. EBITDA and Adjusted EBITDA for the third quarter of 2016 includes $3.5 million of Income attributable to sale of tax benefits compared to $8.6 million for the third quarter of 2015. The reconciliation of GAAP net cash provided by (used in) operating activities and net income to EBITDA and Adjusted EBITDA and additional cash flow information is set forth below in this release.

On November 7, 2016, Ormat’s Board of Directors approved payment of a quarterly dividend of $0.07 per share pursuant to the company’s dividend policy. The dividend will be paid on December 6, 2016 to shareholders of record as of the close of business on November 21, 2016.

Source: Company release via Stockhouse