With 70 MW added this year, Ormat on track of growing its global geothermal plant capacity
Despite the challenges due to the volcanic eruption near the Puna Geothermal Plant in Hawaii, Ormat continues to grow overall geothermal electricity production and has added 70 MW in new capacity this year, with an additional 125 MW in generation capacity to be added until 2020.
In a release yesterday, Ormat Technologies, Inc. (NYSE: ORA) announced financial results for the second quarter ended June 30, 2018. The financial results were impacted by two main events. First, the shutdown of the Puna Power Plant in Hawaii on May 3, 2018 following the nearby Kilauea volcano eruption and second, the consolidation of U.S. Geothermal Inc. (“USG”), following the close of its acquisition on April 24, 2018.
“In the second quarter we delivered a 10.2% increase in electricity segment revenue and a 7.7% increase in generation despite the significant impact of the Puna Plant outage following the Kilauea Volcano eruption,” commented Isaac Angel, Chief Executive Officer. “This speaks to the strength of our Electricity segment. The growth we delivered in the recent 12 months from organic growth and by acquisitions mitigated the impact of the shutdown in the Puna Plant and enabled us to increase the Electricity segment revenue and maintain a constant level of total revenues quarter over quarter by compensating for the expected reduction in the Product segment.
The outage we had this quarter in the Puna Plant and the planned maintenance activity in the USG plants impacted our profitability. However, despite this outage and planned maintenance and assuming we will receive the insurance payouts related to Puna Plant’s loss of profits by the end of the year, we expect that the profitability in the electricity segment in the full year to be in line with profitability last year.”
Mr. Angel continued: “In Hawaii, lava continues to flow near our Puna Plant, and it is not yet possible to anticipate a timeline for the lava flow resolution. This impacts our financials, but we are in discussion with our insurers and expect to be reimbursed for loss of profits and property damages. Assuming the insurance reimbursement will be in line with our expectations we will meet our Adjusted EBITDA targets for the year. However, the timing of insurance commitment and payouts can impact this as we navigate the event.”
Mr. Angel added, “We continued with our growth plans in the second quarter. From the beginning of the year we added approximately 70 MW to our portfolio including 11 MW that were added in the second quarter to our Olkaria III complex in Kenya, bringing our total portfolio to 862 MW. We are on track with our near-term growth target and plan to add between 115 and 125 MW by the end of 2020.”
Mr. Angel added, “In light of the continued lava flow near the Puna Plant and the accounting treatment that does not allow to record insurance payouts in revenues, we are adjusting our full-year 2018 guidance for the Electricity segment revenues to be between $500 million and $510 million to reflect the Puna Plant shutdown. We are increasing our guidance for the Product segment revenues to be between $190 million and $200 million. There is no change to Revenues from energy storage and demand response activity which are expected to be between $8 million and $12 million. As such, guidance for the total revenues is between $698 million and $722 million. We increased our 2018 guidance for Adjusted EBITDA to be between $370 million and $380 million for the full year, assuming successful resolution by the end of 2018 of our insurance claim for loss of profits at the Puna Plant.
In the event we do not reach a resolution of our insurance claim by the end of 2018, the 2018 Adjusted EBITDA will be negatively impacted by approximately $20.0 million dollars.
We expect annual Adjusted EBITDA attributable to minority interest to be approximately $30.0 million. The minority interest includes our partners share in the insurance claim for the Puna Plant.
The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three and six months ended June 30, 2018. 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 recently-enacted tax law reform in the United States and other non-cash expenses and adjusting items which are excluded from the calculation of Adjusted EBITDA..
Second Quarter 2018 Financial Results
For the three months ended June 30, 2018, total revenues were $178.3 million, down 0.6% compared to the quarter ended June 30, 2017. Electricity segment revenues increased 10.2% to $122.2 million for the three months ended June 30, 2018, up from $110.9 million for the three months ended June 30, 2017. The increase was mainly attributable to the commencement of new power plants and the consolidation of USG and was offset by the outage at the Puna Plant. Product segment revenues decreased 18.7% to $54.9 million for the three months ended June 30, 2018, from $67.6 million for the three months ended June 30, 2017. Other segment revenue were $1.2 million in the second quarter of 2018 compared to $0.9 million in 2017.
General and administrative expenses for the three months ended June 30, 2018 were $15.9 million, or 8.9% of total revenues, compared to $12.2 million, or 6.8% of total revenues, for the three months ended June 30, 2017. The increase was primarily attributable to expenses of approximately $2.0 million related to USG consolidation that was acquired on April 24, 2018 and higher costs associated with the identified restatement of our second and third quarter of 2017 financial statements and our full-year 2017 financial statements and the associated work related to the restatement.
Other non-operating income (expense), net for the three months ended June 30, 2018 were $7.4 million reflecting insurance proceeds that we received for the loss of a rig at the Puna Plant.
The Company reported net loss attributable to the Company’s shareholders of $0.3 million, or $0.01 per diluted share, compared to net income attributable to the Company’s shareholders of $8.6 million, or $0.17 per diluted share, for the second quarter last year. Adjusted net income attributable to the Company’s shareholders of $16.6 million, or $0.32 per diluted share for the three months ended June 30, 2018, compared to $29.5 million, or $0.58 per diluted share, in the second quarter of 2017; Adjusted Net income attributable to the Company’s stockholders and diluted EPS for the second quarter of 2018 excludes an increase in the valuation allowance related to foreign tax credits and production tax credit, which is volatile between the periods in light of the evolving regulations in the tax code in the US following the new tax act and is not indicative to our long term operational results.
Adjusted EBITDA for the three months ended June 30, 2018 was $80.8 million, compared to $88.1 million for the three months ended June 30, 2017. The reduction in Adjusted EBITDA is mainly related to the outage and planned maintenance described above and higher general and administrative expenses. The reconciliation of GAAP net income to EBITDA and Adjusted EBITDA is set forth below in this release.
On August 7, 2018, the Company’s Board of Directors declared, approved and authorized payment of a quarterly dividend of $0.10 per share pursuant to the Company’s dividend policy. The dividend will be paid on August 29, 2018 to shareholders of record as of the close of business on August 21, 2018. In addition, the Company expects to pay quarterly dividends of $0.10 per share in the next quarter.
Source: company release