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Ormat reports product backlog of $387m in quarterly results

Las Pailas plant, Costa Rica (source: Ormat)
Alexander Richter 8 May 2015

The firm's revenues are slightly smaller, mostly due to lower oil prices yet the firm has higher cash flows and as vast product backlog, signalling the good health of Ormat's finances.

In a press release published today by Ormat Technologies, Inc, the company made public the financial results for the first quarter ended March 31, 2015. The following corresponds to the official statement:

First Quarter Highlights and Recent Developments:

• Electricity revenues of $90.0 million, compared to $94.8 million in the first quarter of 2014;
• Product Segment revenues of $30.3 million, compared to $47.6 million in the first quarter of 2014;
• Cash flow from operation was $83.1 million, an increase of 22.1% compared to $68.1 million in the first quarter of 2014;
• Adjusted EBITDA of $65.3 million, compared to $73.4 million in the first quarter of 2014;
• Declared a quarterly dividend of $0.06 per share for the first quarter of 2015;
• Product segment backlog reached a record $387.0 million as of May 6, 2015;
• Entered into a 20-year PPA with Southern California Public Power Authority (SCPPA) for the second phase of Don A. Campbell project; management expects to complete this project by the end of 2015, approximately three months earlier than previously expected;
• Completed the share exchange transaction with Ormat Industries Ltd, pursuant to the Share Exchange Agreement and Plan of Merger by and among Ormat Industries and Ormat Systems;
• McGinness Hills complex annual generating capacity increased to approximately 72MW following the initiation of commercial operation in February 2015 of the Phase 2 geothermal power plant; and
• Closed and received $162.3 million cash from Northleaf Capital Partners for a 36.75% equity investment in certain power plants.

Isaac Angel, chief executive officer of Ormat, stated, “As expected, this quarter faced headwinds related to lower oil and natural gas prices and lower generation at Puna due to last summer’s hurricane that reduced revenues by $6.6 million and $3.1 million, respectively. On the expense side, we had a one-time expense of $3.4 million associated with our restructuring transaction. In addition, normal fluctuations in revenue recognition inherent within our product division resulted in lower revenues for the quarter compared to last year. We expect revenues will be stronger during the second half of 2015.”

“During the first quarter we accelerated construction of the second phase of the Don A. Campbell project, and as a result, we expect to begin generating electricity towards the end of 2015, approximately three months ahead of schedule,” continued Mr. Angel. “Subsequent to the end of the quarter, our product segment backlog as of May 6, 2015, increased to a record of approximately $387.0 million.”

“We also began executing a multi-year plan to set the stage for our next growth phase,” continued Mr. Angel. “Central to this plan is our focus on expanding our geographic reach. We are also focused on technology diversification, capturing a larger share of the high temperature geothermal resource market with our proven binary system. I am increasingly excited about the opportunities before us, and believe Ormat is uniquely positioned to succeed in the evolving renewable energy market.”

Guidance

Mr. Angel added, “We reiterate our 2015 revenue guidance despite the current oil and natural gas prices, which translates to a $26.6 million reduction in revenues compared to last year, and we expect the electricity segment revenues to be between $380.0 million and $390.0 million, and product segment revenues to be between $180.0 million and $190.0 million. We reiterate our 2015 Adjusted EBITDA guidance of $280.0 to $290.0 million for the full year, which is also impacted by current oil and natural gas prices.”

First Quarter Financial Summary

Total revenues for the three months ended March 31, 2015 were $120.2 million, compared to $142.4 million for the three months ended March 31, 2014, which represented a 15.6% decrease. Electricity revenues decreased 5.1% to $90.0 million in the three months ended March 31, 2015, from $94.8 million in the three months ended March 31, 2014. Product revenues decreased 36.4% to $30.3 million in the three months ended March 31, 2015, from $47.6 million in the three months ended March 31, 2014.

The revenue decline was primarily attributable to lower energy rates resulting from the decline in natural gas and oil prices, lower generation at the company’s Puna power plant due to the hurricane and the timing of revenue recognition in the company’s product segment. The lower commodity prices had an approximate $6.6 million impact on revenues and the lower generation in Puna had a $3.1 million impact on revenues. The decrease was partially offset by $3.6 million additional revenues from the commencement of operations of McGinness Hills phase 2 power plant in Nevada in February 2015 and a reduction in net loss on derivative contracts on oil and natural gas prices from a net loss of $2.4 million in the first quarter of 2014 to a net gain of $0.3 million in the first quarter of 2015.

The company reported net income attributable to the company’s shareholders of $10.0 million or $0.21 per share in the first quarter of 2015 compared to $21.6 million or $0.47 per share for the first quarter of 2014. Net income for the first quarter of 2015 included approximately $3.4 million in non-recurring charges related to the share exchange transaction recorded in general and administrative expenses and $1.4 million foreign currency translation and transaction losses compared to $0.6 million in the first quarter of 2014.

Adjusted EBITDA for the three months ended March 31, 2015 was $65.3 million, compared to $73.4 million for the three months ended March 31, 2014. The reconciliation of GAAP net cash provided by operating activities and net income to EBITDA and Adjusted EBITDA and additional cash flows information is set forth below in this release.

On May 6, 2015, ORMAT’s Board of Directors approved a payment of a quarterly dividend of $0.06 per share pursuant to the company’s dividend policy. The dividend will be paid on May 27, 2015 to shareholders of record as of the close of business on May 19, 2015. In addition, the company expects to pay quarterly dividends of $0.06 per share in each of the next two quarters.

Webcast Conference Details

Ormat will host a listen-only webcast to discuss its financial results and other matters discussed in this press release at 9 a.m. ET on Thursday, May 7, 2015. The live, listen-only webcast will be available at www.ormat.com. During the webcast, management will refer to slides that will be posted on the website. The slides and accompanying webcast can be accessed through the Events & Presentations in the Investor Relations section of Ormat’s website.

An archive of the webcast will be made available on the website under Events & Presentations in the Investor Relations tab.

To read the full document, please follow the link.

Source: Press Release by Ormat