Benzinga | Nov 3, 2020 04:36PM EST

Ormat Technologies Sees FY 2020 Revenue Between $707M And $717M, EBITDA Between $417M And $425M

FAVORABLE SETTLEMENT WITH THE KENYAN TAX AUTHORITIES;

OPERATING INCOME INCREASED 33.5% OVER LAST YEAR;

IMPROVED CASH FLOW FROM OPERATION SUPPORTED BY COLLECTION IN HONDURAS AND KENYA

RENO, Nev., Nov. 03, 2020 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc.1 (NYSE:ORA) today announced financial results for the third quarter ended September 30, 2020.

KEY FINANCIAL RESULTS

Q3 2020 Q3 2019 CHANGE (%)Revenues ($ millions) Electricity 123.7 124.0 (0.3 )Product 29.6 43.0 (31.2 )Energy Storage & Management Services 5.7 3.5 62.5 Total Revenues 158.9 170.5 (6.8 ) Gross margin (%) Electricity 38.0 % 35.4 % Product 18.9 % 27.8 % Energy Storage & Management Services 25.6 % (9.3 )% Gross margin (%) 34.0 % 32.5 % Operating Income ($ millions) 51.7 38.7 33.5 Net income attributable to the Company's 15.7 15.6 0.5 stockholders Diluted EPS ($) 0.31 0.30 Adjusted EBITDA2 ($ millions) 107.1 85.5 25.3

"Our third quarter results reflect the strength of our business model and our operating execution," commented Doron Blachar, Chief Executive Officer. "Ormat delivered double-digit increases in year-over-year operating income and Adjusted EBITDA, and made progress with its efforts to grow its Electricity and Storage segments. Subsequent to the end of the quarter, we reached a favorable settlement and resolved the most significant tax assessment issued by the Kenya Revenue Authority (KRA). We are updating our full-year 2020 revenue guidance range and increasing our expected 2020 Adjusted EBITDA."

"This quarter also delivered strong cashflow from operations and Adjusted EBITDA, driven mainly by a $20.1 million payment received from ENEE, our customer in Honduras, for prior years' outstanding invoices, and improved collection from KPLC, our customer in Kenya. KPLC has made all scheduled payments for the third quarter and has started reducing overdue amount in October. In addition, we received $20.4 million business interruption insurance proceeds related to the 2018 volcanic eruption in Hawaii."

"Furthermore, in the product segment, we signed a $12.2 million contract and we anticipate the signing of additional contract in late 2020 or early 2021, even though this segment of our business is most directly impacted by the COVID-19 pandemic," continued Blachar. "We are encouraged by our storage segment results, which delivered its second consecutive quarter of positive EBITDA. The results were supported by the addition of the newly acquired Pomona storage facility as well as the volatility in merchant prices, which has driven increased revenues and profitability in our storage activity in the quarter."

FINANCIAL AND BUSINESS HIGHLIGHTS FOR THE THIRD QUARTER OF 2020

* Net income attributable to the Company's stockholders was $15.7 million, or $0.31 per diluted share, compared to $15.6 million, or $0.30 per diluted share in Q3 2019;

* Adjusted EBITDA3 increased 25.3% to $107.1 million, up from $85.5 million in Q3 2019;

* Net income attributable to the Company's stockholders benefited from an $8.1 million in insurance income related to our Puna power plant (representing Ormat's 63.25% portion after tax), partially offset by non-cash charges of $1.4 million related to the Sarulla power plants. Additionally, a recent change in U.S. tax law resulted in a $3.7 million charge. In aggregate, these factors positively impacted our diluted EPS by 5.9 cents;

* In Kenya, Ormat concluded a tax audit by the Kenya Revenue Authority (KRA) related to a $190 million tax assessment issued in December 2019 and reached a favorable settlement with the KRA. The total net estimated impact on Ormat's results, all of which will be recorded in Q4 2020 is approximately $6 million, or $0.12 per diluted share, including all associated interest and penalties. The settlement covered tax years 2013 through 2019, and included deferral of tax benefits that were previously utilized by Ormat, resulting in a payment to the KRA of $28.2 million most of which the Company expects to recover through lower future tax payments;

* At the Puna power plant, construction of the electrical substation and transmission lines is completed, and the power plant is currently connected to the transmission lines. On the field side, the Company connected one new production well to the power plant and is in the process of connecting a second production well. The Company expects to start generating power in the next few weeks with a gradual increase in generation to 29 MW by the end of the year, although the exact timing remains uncertain;

* Ormat signed a new $12.2 million contract, which resulted in a Product segment backlog of $49.6 million as of November 3, 2020;

* Electricity segment gross profit for the third quarter 2020 included $2.6 million of business interruption insurance income recorded under Puna's cost of revenues. In the third quarter 2019, the Company recorded business interruption insurance income of $1.2 million under Puna's cost of revenues;

* In October 2020, Ormat announced the signing of two Resource Adequacy Agreements, each for 50% of its 5 MW / 20 MWh Tierra Buena battery energy storage project currently under development in Sutter County, northern California. The agreements were signed with two Community Choice Aggregators, Redwood Coast Energy Authority and Valley Clean Energy;

* In September 2020, Ormat announced that Empresa Nacional de Energia Electrica, (ENEE), Ormat's customer for our Platanares geothermal power plant in Honduras, has paid a $20.1 million overdue payment that was outstanding from prior years;

* In July 2020, Ormat completed the acquisition of the 20MW/80MWh Pomona energy storage asset in California from Alta Gas for a total net consideration of $43.3 million. The facility is the Company's first operational battery storage asset in operation in California, increasing its existing operating portfolio to 73MW/136MWh including its battery storage assets located in New Jersey, New England and Texas; and

* In July 2020, Ormat issued approximately $290 million of senior unsecured bonds in an unregistered offering outside of the United States. The bonds bear interest at a fixed rate of 4.34% payable semi-annually on June 15 and December 15 through June 15, 2031. The Company used the proceeds to pay for the acquisition of the Pomona battery storage facility, repay existing indebtedness and to support its growth plans.

2020 GUIDANCE

* Total revenues of between $707 million and $717 million Electricity segment revenues between $550 million and $555 million (including approximately $6 million of expected revenues related to the Puna power plant, assuming its reopening in the fourth quarter) Product segment revenues of between $142 million and $147 million Energy Storage and Management Services segment revenues of approximately $15 million

* Adjusted EBITDA of between $417 million and $425 million Adjusted EBITDA attributable to minority interest to be approximately $34 million.

The Company provides a reconciliation of Adjusted EBITDA, a Non-GAAP financial measure, for historical periods. 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 tax expense, and other non-cash expenses and adjusting items that are excluded from the calculation of Adjusted EBITDA.

DIVIDEND

On November 3, 2020, 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 December 2, 2020 to stockholders of record as of the close of business on November 18, 2020.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Wednesday, November 4th, at 10 a.m. ET. The call will be available as a live, listen-only webcast at investor.ormat.com. Duringthe webcast, management will refer to slides that will be posted on the website. The slides and accompanying webcast can be accessed through the News & Events in the Investor Relations section of Ormat's website.

An archive of the webcast will be available approximately 60 minutes after the conclusion of the live call.

Investors may access the call by dialing:

Participant dial in (toll free): 1-877-511-6790Participant international dial-in: 1-412-902-4141 Conference replay US Toll Free: 1-877-344-7529International Toll: 1-412-317-0088Replay Access Code: 10149112

ABOUT ORMAT TECHNOLOGIES

With over five decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation ("REG"), with the objective of becoming a leading global provider of renewable energy. The Company owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on the Ormat Energy Converter -- a power generation unit that converts low-, medium- and high-temperature heat into electricity. With 63 U.S. patents, Ormat's power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 578 employees in the United States and 830 overseas. Ormat's flexible, modular solutions for geothermal power and REG are ideal for vast range of resource characteristics. The Company has engineered, manufactured and constructed power plants, which it currently owns or has installed to utilities and developers worldwide, totaling over 3,000 MW of gross capacity. Ormat's current 933 MW generating portfolio is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe. Ormat expanded its operations to provide energy storage and energy management solutions, by leveraging its core capabilities and global presence as well as through its Viridity Energy Solutions Inc. subsidiary.

ORMAT'S SAFE HARBOR STATEMENT

Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to Ormat's plans, objectives and expectations for future operations and are based upon its management's current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties.

For a discussion of such risks and uncertainties, see "Risk Factors" as described in Ormat's Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 2, 2020 and from time to time, in Ormat's quarterly reports on Form 10-Q that are filed with the SEC.

These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Condensed Consolidated Statement of Operations

For the Three and Nine Month Periods Ended September 30, 2020 and 2019 Three Months Ended Nine-Months Ended September 30, September 30, 2020 2019 2020 2019 (Dollars in thousands, except per share data)Revenues: Electricity 123,660 123,978 395,201 395,965 Product 29,625 43,037 120,737 147,195 Energy storage and management 5,662 3,484 10,022 10,442 servicesTotal revenues 158,947 170,499 525,960 553,602 Cost of revenues: Electricity 76,670 80,124 219,988 231,442 Product 24,037 31,073 95,724 114,495 Energy storage and management 4,210 3,807 9,014 12,844 servicesTotal cost of revenues 104,917 115,004 324,726 358,781 Gross profit 54,030 55,495 201,234 194,821 Operating expenses: Research and development 1,490 1,062 4,281 2,772 expensesSelling and marketing expenses 4,076 3,783 13,724 10,924 General and administrative 14,539 11,931 43,154 41,801 expensesBusiness interruption insurance (17,761 ) ? (20,743 ) ? incomeOperating income 51,686 38,719 160,818 139,324 Other income (expense): Interest income 626 482 1,469 1,195 Interest expense, net (21,756 ) (20,076 ) (58,814 ) (62,816 ) Derivatives and foreigncurrency transaction gains 1,047 205 2,111 696 (losses)Income attributable to sale of 7,014 4,056 16,818 16,457 tax benefitsOther non-operating income 961 244 1,343 1,362 (expense), netIncome from operations beforeincome tax and equity in 39,578 23,630 123,745 96,218 earnings (losses) of investeesIncome tax (provision) benefit (15,361 ) (9,626 ) (45,275 ) (20,136 ) Equity in earnings (losses) of (1,119 ) 1,085 (196 ) 3,334 investees, netNet income 23,098 15,089 78,274 79,416 Net income attributable to (7,419 ) 516 (13,516 ) (3,927 ) noncontrolling interestNet income attributable to the 15,679 15,605 64,758 75,489 Company's stockholdersEarnings per share attributable to the Company's stockholders:Basic: Net income 0.31 0.31 1.27 1.49 Diluted: Net income 0.31 0.30 1.26 1.48 Weighted average number ofshares used in computation of earnings per share attributableto the Company's stockholders:Basic 51,072 50,933 51,051 50,816 Diluted 51,282 51,334 51,386 51,124



ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Condensed Consolidated Balance Sheet

For the Periods Ended September 30, 2020 and December 31, 2019 September 30, December 31, 2020 2019ASSETSCurrent assets: Cash and cash equivalents 197,309 71,173 Restricted cash and cash equivalents 92,233 81,937 Receivables: Trade 157,497 154,525 Other 23,349 22,048 Inventories 34,384 34,949 Costs and estimated earnings in excess of billings 18,123 38,365 on uncompleted contractsPrepaid expenses and other 9,696 12,667 Total current assets 532,591 415,664 Investment in unconsolidated companies 91,277 81,140 Deposits and other 39,293 38,284 Deferred income taxes 108,145 129,510 Property, plant and equipment, net 2,036,821 1,971,415 Construction-in-process 463,073 376,555 Operating leases right of use 16,762 17,405 Finance leases right of use 12,399 14,161 Intangible assets, net 197,002 186,220 Goodwill 23,584 20,140 Total assets 3,520,947 3,250,494 LIABILITIES AND EQUITYCurrent liabilities: Accounts payable and accrued expenses 144,473 141,857 Short term revolving credit lines with banks (full ? 40,550 recourse)Commercial paper ? 50,000 Billings in excess of costs and estimated earnings 7,683 2,755 on uncompleted contractsCurrent portion of long-term debt: Senior secured notes 24,836 24,473 Other loans 35,369 34,458 Full recourse 17,768 76,572 Operating lease liabilities 3,026 2,743 Finance lease liabilities 3,148 3,068 Total current liabilities 236,303 376,476 Long-term debt, net of current portion: Limited and non-recourse: Senior secured notes 320,936 339,336 Other loans 293,415 317,395 Full recourse: ? ? Senior unsecured bonds 696,868 286,453 Other loans 64,150 68,747 Operating lease liabilities 13,407 14,008 Finance lease liabilities 9,706 11,209 Liability associated with sale of tax benefits 112,950 123,468 Deferred income taxes 101,886 97,126 Liability for unrecognized tax benefits 12,643 14,643 Liabilities for severance pay 18,132 18,751 Asset retirement obligation 52,193 50,183 Other long-term liabilities 7,812 8,039 Total liabilities 1,940,401 1,725,834 Commitments and contingencies Redeemable noncontrolling interest 8,743 9,250 Equity: The Company's stockholders' equity: Common stock 51 51 Additional paid-in capital 920,210 913,150 Retained earnings 534,984 487,873 Accumulated other comprehensive income (loss) (15,503 ) (8,654 ) Total stockholders' equity attributable to 1,439,742 1,392,420 Company's stockholdersNoncontrolling interest 132,061 122,990 Total equity 1,571,803 1,515,410 Total liabilities, redeemable noncontrolling 3,520,947 3,250,494 interest and equity

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Reconciliation of EBITDA and Adjusted EBITDA

For the Three and Nine-Month Periods Ended September 30, 2020 and 2019

We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for (i) termination fees, (ii) impairment of long-lived assets, (iii) write-off of unsuccessful exploration activities, (iv) any mark-to-market gains or losses from accounting for derivatives, (v) merger and acquisition transaction costs, (vi) stock-based compensation, (vii) gain or loss from extinguishment of liabilities, (viii) gain or loss on sale of subsidiary and property, plant and equipment and (ix) other unusual or non-recurring items. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the United States, or GAAP, and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. Our board of directors and senior management use EBITDA and Adjusted EBITDA to evaluate our financial performance. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the three and nine-month periods ended September 30, 2020 and 2019.

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 (Dollars in thousands) (Dollars in thousands)Net income 23,098 15,089 78,274 79,416 Adjusted for: Interest expense, net (includingamortization of deferred 21,130 19,594 57,345 61,621 financing costs)Income tax provision (benefit) 15,361 9,626 45,275 20,136 Adjustment to investment in anunconsolidated company: ourproportionate share in interest 4,395 2,644 10,271 7,884 expense, tax and depreciationand amortization in SarullaDepreciation and amortization 39,628 36,365 111,728 106,982 EBITDA 103,612 83,318 302,893 276,039 Mark-to-market gains or losses 431 (330 ) (1,612 ) (1,909 ) from accounting for derivativeStock-based compensation 2,807 2,228 7,060 7,231 Merger and acquisition 211 250 1,369 750 transaction costsSettlement expenses ? ? 1,277 ? Adjusted EBITDA 107,061 85,466 310,987 282,111

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1 Ormat Technologies, Inc. is also referred to herein as the "Company", "Ormat", "we" or "us"

2 Reconciliation is set forth below in this release

3 Reconciliation is set forth below in this release

Ormat Technologies Contact: Investor Relations Agency Contact:Smadar Lavi Rob FinkVP Corporate Finance and Head of InvestorRelations FNK IR

775-356-9029 (ext. 65726) 646-415-8972

slavi@ormat.com rob@FNKIR.com