Ormat sees continued growth of revenues in electricity and product segments

Olkaria III geothermal plant of Ormat, Kenya (source: Ormat video screenshot)

Alexander Richter 8 May 2019

In a release, Ormat Technologies, Inc. (NYSE: ORA) announced its financial results for the first quarter ended March 31, 2019.

“Ormat delivered another strong quarter, with continued growth across our diversified portfolio of operations helping us to overcome the loss of revenue and profit resulting from the temporary shutdown of our Puna power plant in Hawaii,” commented Isaac Angel, Chief Executive Officer. “Our Electricity segment revenue grew 7.9% and generation increased 11.0% in Q1 2019 vs Q1 2018, reflecting the contribution of new and expanded power plants as well as the continuing growth resulting from our recent USG acquisition.  Gross margin for this segment also expanded to 45.7%, despite the overhang of Puna’s ongoing fixed expenses, demonstrating our continuing commitment to expanding the operating efficiency of our core Electricity generation business.  Furthermore, progress to bring Puna back online is continuing, and we remain optimistic that this important power plant will be ready to resume operation by year-end.”

Mr. Angel continued, “Our Product division also delivered solid revenue growth, and although two larges but lower-margin Turkish contracts impacted our gross margin in this segment during the quarter, we expect margin performance in Products to be stronger for the balance of the year.”

Financial highlights for the first quarter of 2019

• Total revenues of $199.0 million, up 8.2% compared to the first quarter of 2018 despite the volcano-related shutdown of Ormat’s Puna power plant in Hawaii;
• Electricity segment revenues of $142.9 million, up 7.9% compared to Q1 2018, as the growth resulting from recently expanded operations at McGuinness Hills and Olkaria, as well as contributions from recently acquired USG, combined to mitigate the loss of revenues resulting from the temporary shutdown of the Puna power plant;
• Electricity segment gross margin was 45.7% compared to 44.5% for Q1 2018. Excluding the impact from Puna, Electricity segment gross margin would have been 48.2% in Q1 2019 and 44.8% in Q1 2018;
• Product segment backlog was $226.4 million as of May 6, 2019;
• Net income was $28.1 million in Q1 2019 compared to net income of $74.3 million in Q1 2018. Net income for Q1 2018 included one-time tax income of $44.4 million, resulting in a net tax benefit of $26.9 million for that quarter, compared to a provision for income taxes of $14.0 million in Q1 2019;
• Net income attributable to the Company’s stockholders in Q1 2019 was $25.9 million, or $0.51 per diluted share, compared to $69.5 million, or $1.36 per diluted share, in Q1 2018; Adjusted Net income attributable to the Company’s stockholders, was $25.9 million, or $0.51 per diluted share, compared to $25.1 million, or $0.49 per diluted share, Q1 2018;
• Adjusted EBITDA increased 3.4% to $101.8 million, from $98.4 million in Q1 2018.  Adjusted EBITDA includes approximately $1.2 million expense related to Puna, net of $1.3 million insurance proceeds received for business interruption; Adjusted EBITDA excluding any impact from Puna was $103.0 million;
• Declared a quarterly dividend of $0.11 per share for the first quarter of 2019.

2019 Guidance

Mr. Angel added, “We expect full-year 2019 total revenues between $720 million and $742 million with Electricity segment revenues between $530 million and $540 million, excluding any impact from Puna during 2019. We expect Product segment revenues between $180 million and $190 million.  Revenues from energy storage and demand response activity are expected to be between $10 million and $12 million. We expect 2019 Adjusted EBITDA between $370 million and $380 million for the full year, with no Puna-related EBITDA. We expect annual Adjusted EBITDA attributable to minority interest to be approximately $23 million, assuming no contribution from Puna during 2019.”

The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months ended March 31, 2019. However, the Company is unable to provide a reconciliation for its Adjusted EBITDA guidance range due to high variability and complexity with respect to estimating forward looking amounts for impairments and disposition and acquisition of business interests, income taxes including the tax impact of the repatriation of proceeds from sales in foreign jurisdictions and tax benefit or expense related to effects of the still evolving tax law reform in the United States and other non-cash expenses and adjusting items which are excluded from the calculation of Adjusted EBITDA.

First quarter 2019 Financial Results (comparing quarter ended March 31, 2019 to the quarter ended March 31, 2018)

Total revenues for the quarter were $199.0 million, up 8.2% compared to the same quarter last year. Electricity segment revenues increased 7.9% to $142.9 million, up from $132.5 million last year. The increase was mainly attributable to the MGH phase 3 and Olkaria III expansion, which came online in the second half of 2018, as well as the USG acquisition in April 2018, partially offset by the temporary shutdown of the Puna plant. Product segment revenues increased 7.1% to $52.1 million, up from $48.7 in the same quarter last year. Other segment revenues were $4.0 million compared to $2.9 million.

General and administrative expenses were $15.7 million, or 7.9% of total revenues, compared to $13.8 million, or 7.5% of total revenues. This increase was mainly due to expenses related to legal settlements, increase in stock-based compensation and professional fees.

The Company reported net income attributable to the Company’s shareholders of $25.9 million, or $0.51 per diluted share, compared to $69.5 million, or $1.36 per diluted share. Adjusted Net income attributable to the Company’s stockholders was $25.9 million, or $0.51 per diluted share, compared to $25.1 million or, $0.49 per diluted share in the same quarter last year. In the first quarter of 2018, we recorded a one-time tax income of $44.4 million for the reduction of the valuation allowance related to foreign tax credits and production tax credits.

Adjusted EBITDA of $101.8 million, compared to $98.4 million. The increase in Adjusted EBITDA is mainly related to the increase in gross profit as a result of higher revenues. The reconciliation of GAAP net income to EBITDA and Adjusted EBITDA is set forth below in this release. Adjusted EBITDA excluding any impact from Puna was $103.0 million.

Dividend

On May 6, 2019, the Company’s Board of Directors declared, approved and authorized payment of a quarterly dividend of $0.11 per share pursuant to the Company’s dividend policy. The dividend will be paid on May 28, 2019 to shareholders of record as of the close of business on May 20, 2019.

Source: company release