Ormat Technologies, Inc. (NYSE: ORA) today announced financial
results for the first quarter ended March 31, 2021.
KEY FINANCIAL RESULTS
|
Q1 2021 |
|
|
Q1 2020 |
|
|
Change (%) |
|
GAAP Measures |
|
|
|
|
|
|
|
|
Revenues ($ millions) |
|
|
|
|
|
|
|
|
Electricity |
145.0 |
|
|
142.9 |
|
|
1.5 |
% |
Product |
8.6 |
|
|
47.4 |
|
|
(81.8 |
)% |
Energy Storage |
12.7 |
|
|
1.8 |
|
|
589.1 |
% |
Total Revenues |
166.4 |
|
|
192.1 |
|
|
(13.4 |
)% |
|
|
|
|
|
|
|
|
|
Gross margin (%) |
|
|
|
|
|
|
|
|
Electricity |
44.9 |
% |
|
50.0 |
% |
|
|
|
Product |
6.6 |
% |
|
22.0 |
% |
|
|
|
Energy Storage |
62.4 |
% |
|
(5.6 |
)% |
|
|
|
Gross margin (%) |
44.3 |
% |
|
42.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income ($
millions) |
49.9 |
|
|
61.1 |
|
|
(18.3 |
)% |
Net income attributable to the
Company’s stockholders |
15.3 |
|
|
26.0 |
|
|
(41.4 |
)% |
Diluted EPS ($) |
0.27 |
|
|
0.51 |
|
|
(47.1 |
)% |
Non-GAAP Measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net income
attributable to the Company’s stockholders |
24.1 |
|
|
26.0 |
|
|
(7.3 |
)% |
Adjusted Diluted EPS ($) |
0.42 |
|
|
0.51 |
|
|
(17.6 |
)% |
Adjusted EBITDA1 ($
millions) |
99.2 |
|
|
106.0 |
|
|
(6.4 |
)% |
(1) Reconciliation is set forth below in this
release
“Our first quarter results reflect continued
strength from our Electricity and our rapidly growing Energy
Storage segments that were able to partially offset a $9.9 million
reduction in gross profit in the Product segment that was adversely
impacted by the COVID-19 pandemic and the $4.9 million of insurance
income related to Puna that was received in the first quarter of
last year,” commented Doron Blachar, Chief Executive Officer. “We
continue to show revenue growth in both the Electricity and Energy
Storage segments and are expecting to maintain growth and improve
Adjusted EBITDA.”
“Ormat’s pipeline of energy storage projects
continues to expand, and we have secured large quantities of
batteries that will be delivered over the next four years on
competitive terms in order to support our growing needs,” added Mr.
Blachar. “This segment continues to contribute positive Adjusted
EBITDA and we are increasingly confident that growth will
accelerate.”
“This year we will lay additional groundwork to
accelerate the growth of our Electricity and Energy Storage
segments,” added Mr. Blachar. “Governments around the world
continue to support renewable energy, and the current U.S.
administration has indicated an eagerness to invest in
infrastructure, particularly for clean energy. We are
well-positioned to take advantage of these trends. We expect to
increase our combined geothermal, energy storage and solar
generating portfolio to approximately 1.5 GW by 2023, with a
significant contribution coming from our energy storage business.
This will enable an annual run-rate of $500 million in Adjusted
EBITDA towards the end of 2022.”
FINANCIAL AND BUSINESS HIGHLIGHTS
- Net income
attributable to the Company's stockholders was $15.3 million, or
$0.27 per diluted share, compared to $26.0 million, or $0.51 per
diluted share in the first quarter of last year, representing a
decrease of 41.4% and 47.1%, respectively, mainly as a result of
the February power crisis in Texas, which led to emergency
regulations impacting our Rabbit Hill energy storage project, as
well as the slowdown in Ormat’s Products segment;
- Adjusted net
income attributable to the Company's stockholders was $24.1
million, or $0.42 per diluted share compared to $26.0 million or
$0.51 per diluted share in 2020. Net income attributable to the
Company's stockholders in the first quarter of 2021 was adjusted to
exclude a one-time net expense of $12.1 million pre-tax and $8.8
million after tax related to the February power crisis in Texas,
which caused a significant increase in demand for electricity on
the one hand and a decrease in the electricity supply in the region
on the other hand, leading to a significant increase in the
Responsive Reserve Service market price. The following is a
breakdown of the pre-tax net expense as recorded in our P&L:
- Revenue of $5.4
million under Energy Storage segment
- Expense of $3.0
million under General and Administrative Expenses
- Loss of $14.5
million under Derivatives and Foreign Currency Transaction Gains
(Losses);
- Adjusted EBITDA
decreased 6.4% to $99.2 million, from $106.0 million in the first
quarter of last year mainly due to a $9.9 million reduction in
Product segment gross profit this quarter and BI insurance income
of $4.9 million recorded in the first quarter of last year (a
reconciliation of GAAP net income to EBITDA and Adjusted EBITDA is
set forth below in this release);
- Electricity
segment revenues increased slightly compared to the first quarter
of last year, supported by a contribution from newly added capacity
at the Steamboat Complex and from Puna’s resumed operation,
partially offset by curtailments in the Olkaria complex in Kenya
due to COVID-19 and lower resource performance in the complex that
caused a reduction in generation. We are evaluating a recovery plan
to restore the complex’s generating capacity;
- Product segment
revenues decreased 81.8% to $8.6 million, down from $47.4 million
in the same quarter last year, impacted mainly by COVID-19;
- Product segment
backlog stands at $37.2 million as of May 5, 2021;
- Energy Storage
segment revenues were a record $12.7 million compared to $1.8
million in the same quarter last year. The increase was mainly
related to higher revenues at our Rabbit Hill project driven by the
February power crisis in Texas, and revenues from our Pomona asset
in California which was acquired in July 2020;
- We announced the
commercial operation of the 10 MW/40 MWh Vallecito Battery Energy
Storage System (Vallecito BESS). The Vallecito BESS provides local
resource adequacy to Southern California Edison (SCE) under a
20-year energy storage resource adequacy agreement. In addition,
the facility will provide ancillary services and energy
optimization through participation in merchant markets run by the
California Independent System Operator (CAISO);
- The Puna power
plant is currently generating approximately 20 MW. We plan to
connect two injection wells during the second quarter and are
targeting close to full capacity in mid-2021. While the enactment
of the new PPA, signed with HELCO at the end of 2019, was recently
delayed by the PUC, we will continue selling electricity under our
existing long-term PPA;
- McGinness Hills
expansion is completed and we are in late stage of start-up;
and
- We released two
energy storage systems for construction, the 20 MW/MWh Andover and
the 7 MW/MWh Howell, that are located in New Jersey and will sell
ancillary services to PJM. We are targeting commercial operation in
the first half of 2022.
2021 GUIDANCE
- Total revenues of between $645 million and $680 million;
- Electricity segment revenues between $570 million and $580
million;
- The electricity segment includes $33 million from the Puna
power plant in Hawaii, assuming we will meet our target of bringing
the plant close to full operation in mid-2021;
- Product segment revenues of between $50 million and $70
million;
- Energy Storage revenues of between $25 million and $30
million;
- Adjusted EBITDA to be between $400 million and $410 million;
- Adjusted EBITDA attributable to minority interest of
approximately $32 million.
The Company provides a reconciliation of
Adjusted EBITDA, a Non-GAAP financial measure for the three months
ended March 31, 2021. 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 May 5, 2021, the Company’s Board of Directors
declared, approved, and authorized payment of a quarterly dividend
of $0.12 per share pursuant to the Company’s dividend policy. The
dividend will be paid on June 1, 2021 to stockholders of record as
of the close of business on May 18, 2021. In addition, the Company
expects to pay a quarterly dividend of $0.12 per share in each of
the next three quarters.
CONFERENCE CALL DETAILS
Ormat will host a conference call to discuss its
financial results and other matters discussed in this press release
on Thursday, May 6th, at 9 a.m. ET. The call will be available as a
live, listen-only webcast at investor.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 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): |
1-877-511-6790 |
Participant international
dial-in: |
1-412-902-4141 |
|
|
Conference replay |
|
US Toll Free: |
1-877-344-7529 |
International Toll: |
1-412-317-0088 |
Replay Access Code: |
10154447 |
|
|
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 robust plans to accelerate
long-term growth in the energy storage market and to establish a
leading position in the U.S. energy storage market. 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. The Company has engineered,
manufactured and constructed power plants, which it currently owns
or has installed for utilities and developers worldwide, totaling
approximately 3,200 MW of gross capacity. Ormat leveraged its core
capabilities in the geothermal and REG industries and its global
presence to expand the Company’s activity into energy storage
services, solar Photovoltaic (PV) and energy storage plus Solar PV.
Ormat’s current 932 MW of geothermal and Solar generating portfolio
is spread globally in the U.S., Kenya, Guatemala, Indonesia,
Honduras, and Guadeloupe and its 83 MW energy storage portfolio is
located in the U.S.
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
February 26, 2021 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 SUBSIDIARIESCondensed Consolidated Statement
of OperationsFor the Three-Month periods Ended March 31, 2021 and
2020 |
|
|
|
|
|
Three Months Ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share data) |
Revenues: |
|
|
|
|
|
|
Electricity |
|
144,988 |
|
|
142,856 |
|
Product |
|
8,643 |
|
|
47,411 |
|
Energy storage |
|
12,721 |
|
|
1,846 |
|
Total revenues |
|
166,352 |
|
|
192,113 |
|
Cost of revenues: |
|
|
|
Electricity |
|
79,851 |
|
|
71,368 |
|
Product |
|
8,074 |
|
|
36,978 |
|
Energy storage |
|
4,780 |
|
|
1,949 |
|
Total cost of revenues |
|
92,705 |
|
|
110,295 |
|
Gross profit |
|
73,647 |
|
|
81,818 |
|
Operating expenses: |
|
|
|
Research and development expenses |
|
876 |
|
|
1,619 |
|
Selling and marketing expenses |
|
4,276 |
|
|
4,794 |
|
General and administrative expenses |
|
18,606 |
|
|
16,745 |
|
Business interruption insurance income |
|
— |
|
|
(2,397 |
) |
Operating income |
|
49,889 |
|
|
61,057 |
|
Other income (expense): |
|
|
|
Interest income |
|
263 |
|
|
402 |
|
Interest expense, net |
|
(19,016 |
) |
|
(17,273 |
) |
Derivatives and foreign currency transaction gains (losses) |
|
(16,866 |
) |
|
393 |
|
Income attributable to sale of tax benefits |
|
6,355 |
|
|
4,132 |
|
Other non-operating income (expense), net |
|
(331 |
) |
|
78 |
|
Income from operations before income tax and equity in earnings
(losses) of investees |
|
20,294 |
|
|
48,789 |
|
Income tax provision |
|
(3,007 |
) |
|
(18,148 |
) |
Equity in earnings (losses) of
investees, net |
|
542 |
|
|
(735 |
) |
Net income |
|
17,829 |
|
|
29,906 |
|
Net income attributable to noncontrolling interest |
|
(2,570 |
) |
|
(3,873 |
) |
Net income attributable to the Company's stockholders |
|
15,259 |
|
|
26,033 |
|
Earnings per share
attributable to the Company's stockholders: |
|
|
|
Basic: |
|
0.27 |
|
|
0.51 |
|
Diluted: |
|
0.27 |
|
|
0.51 |
|
Weighted average number of shares used in computation of earnings
per share attributable to the Company's stockholders: |
|
|
|
|
|
|
Basic |
|
55,988 |
|
|
51,036 |
|
Diluted |
|
56,735 |
|
|
51,526 |
|
|
|
|
|
|
|
|
ORMAT
TECHNOLOGIES, INC AND SUBSIDIARIESCondensed Consolidated Balance
SheetFor the Periods Ended March 31, 2021 and December 31,
2020 |
|
|
|
|
|
March 31, 2021 |
|
December 31, 2020 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
376,630 |
|
|
448,252 |
|
Marketable securities at fair value |
27,735 |
|
|
— |
|
Restricted cash and cash equivalents |
88,449 |
|
|
88,526 |
|
Receivables: |
|
|
|
Trade |
139,711 |
|
|
149,170 |
|
Other |
10,513 |
|
|
17,987 |
|
Inventories |
38,408 |
|
|
35,321 |
|
Costs and estimated earnings in excess of billings on uncompleted
contracts |
20,876 |
|
|
24,544 |
|
Prepaid expenses and other |
22,613 |
|
|
15,354 |
|
Total current assets |
724,935 |
|
|
779,154 |
|
Investment in unconsolidated
companies |
104,519 |
|
|
98,217 |
|
Deposits and other |
52,956 |
|
|
66,989 |
|
Deferred income taxes |
119,217 |
|
|
119,299 |
|
Property, plant and equipment,
net |
2,148,589 |
|
|
2,099,046 |
|
Construction-in-process |
471,548 |
|
|
479,315 |
|
Operating leases right of
use |
15,627 |
|
|
16,347 |
|
Finance leases right of
use |
8,336 |
|
|
11,633 |
|
Intangible assets, net |
189,249 |
|
|
194,421 |
|
Goodwill |
24,237 |
|
|
24,566 |
|
Total assets |
3,859,213 |
|
|
3,888,987 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable and accrued expenses |
148,071 |
|
|
152,763 |
|
Billings in excess of costs and estimated earnings on uncompleted
contracts |
12,686 |
|
|
11,179 |
|
Current portion of long-term debt: |
|
|
|
|
|
Senior secured notes |
24,963 |
|
|
24,949 |
|
Other loans |
36,240 |
|
|
35,897 |
|
Full recourse |
26,168 |
|
|
17,768 |
|
Operating lease liabilities |
2,935 |
|
|
2,922 |
|
Finance lease liabilities |
3,171 |
|
|
3,169 |
|
Total current liabilities |
254,234 |
|
|
248,647 |
|
Long-term debt, net of current
portion: |
|
|
|
Limited and non-recourse: |
|
|
|
|
|
Senior secured notes |
306,891 |
|
|
315,195 |
|
Other loans |
276,186 |
|
|
284,928 |
|
Full recourse: |
|
|
|
|
|
Senior unsecured bonds |
698,271 |
|
|
717,534 |
|
Other loans |
59,601 |
|
|
59,556 |
|
Operating lease liabilities |
12,332 |
|
|
12,897 |
|
Finance lease liabilities |
5,851 |
|
|
9,104 |
|
Liability associated with sale
of tax benefits |
107,105 |
|
|
111,476 |
|
Deferred income taxes |
87,421 |
|
|
87,972 |
|
Liability for unrecognized tax
benefits |
3,094 |
|
|
1,970 |
|
Liabilities for severance
pay |
18,202 |
|
|
18,749 |
|
Asset retirement
obligation |
64,354 |
|
|
63,457 |
|
Other long-term
liabilities |
6,086 |
|
|
6,235 |
|
Total liabilities |
1,899,628 |
|
|
1,937,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling
interest |
9,706 |
|
|
9,830 |
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
The Company's stockholders' equity: |
|
|
|
|
|
Common stock |
56 |
|
|
56 |
|
Additional paid-in capital |
1,264,828 |
|
|
1,262,446 |
|
Retained earnings |
558,644 |
|
|
550,103 |
|
Accumulated other comprehensive income (loss) |
(6,920 |
) |
|
(6,620 |
) |
Total stockholders' equity attributable to Company's
stockholders |
1,816,608 |
|
|
1,805,985 |
|
Noncontrolling interest |
133,271 |
|
|
135,452 |
|
Total equity |
1,949,879 |
|
|
1,941,437 |
|
Total liabilities, redeemable noncontrolling interest
and equity |
3,859,213 |
|
|
3,888,987 |
|
|
|
|
|
|
|
ORMAT TECHNOLOGIES, INC AND SUBSIDIARIESReconciliation of EBITDA
and Adjusted EBITDA For the Three-Month Periods Ended March 31,
2021 and 2020
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 U.S. 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.
We use EBITDA and Adjusted EBITDA as a performance metric because
it is a metric used by our Board of Directors and senior management
in evaluating 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-Month periods ended March
31, 2021 and 2020.
|
|
Three Months Ended March 31 |
|
|
2021 |
2020 |
|
|
(Dollars in thousands) |
Net income |
|
17,829 |
|
|
29,906 |
|
Adjusted for: |
|
|
|
Interest expense, net (including amortization of deferred financing
costs) |
|
18,753 |
|
|
16,871 |
|
Income tax provision (benefit) |
|
3,007 |
|
|
18,148 |
|
Adjustment to investment in an unconsolidated company: our
proportionate share in interest expense, tax and depreciation and
amortization in Sarulla |
|
2,465 |
|
|
2,677 |
|
Depreciation and amortization |
|
40,829 |
|
|
35,288 |
|
EBITDA |
|
82,883 |
|
|
102,890 |
|
Mark-to-market gains or losses
from accounting for derivative |
|
2,086 |
|
|
(561 |
) |
Stock-based compensation |
|
2,097 |
|
|
1,989 |
|
Merger and acquisition
transaction costs |
|
484 |
|
|
540 |
|
Reversal of a contingent
liability |
|
(418 |
) |
|
— |
|
Allowance for bad debts
related to February power crisis in Texas |
|
2,980 |
|
|
— |
|
Hedge losses resulting from
February power crisis in Texas |
|
9,133 |
|
|
— |
|
Settlement expenses |
|
— |
|
|
1,188 |
|
Adjusted EBITDA |
|
99,245 |
|
|
106,046 |
|
|
|
|
|
|
|
|
ORMAT TECHNOLOGIES, INC AND SUBSIDIARIESReconciliation of
Adjusted Net Income attributable to the Company's stockholders and
Adjusted EPSFor the Three-Month Periods Ended March 31, 2021 and
2020
Adjusted Net Income attributable to the
Company's stockholders and Adjusted EPS are adjusted for one-time
expense items that are not representative of our ongoing business
and operations. The use of Adjusted Net income attributable to the
Company's stockholders and Adjusted EPS is intended to enhance the
usefulness of our financial information by providing measures to
assess the overall performance of our ongoing business.
The following tables reconciles Net income
attributable to the Company's stockholders and Adjusted EPS for the
three-month periods ended March 31, 2021 and 2020.
|
|
|
|
|
Three Months Ended March 31 |
(Dollars in millions
except, per share data) |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
Net income attributable to the
Company's stockholders |
|
$ |
15.3 |
|
$ |
26.0 |
|
|
|
|
|
|
|
One-time net expense related
to February power crisis in Texas |
|
$ |
8.8 |
|
$ |
— |
|
|
|
|
|
|
|
Adjusted Net income
attributable to the Company's stockholders |
|
$ |
24.1 |
|
$ |
26.0 |
|
|
|
|
|
|
|
Weighted average number of
shares diluted used in computation of earnings per share
attributable to the Company's stockholders |
|
|
56.7 |
|
|
51.5 |
|
|
|
|
|
|
|
Diluted Adjusted EPS |
|
|
0.42 |
|
|
0.51 |
Ormat Technologies Contact:Smadar LaviVP Corporate Finance and Head
of Investor Relations775-356-9029 (ext. 65726)slavi@ormat.com |
|
Investor Relations Agency Contact:Rob FinkFNK
IR646-415-8972rob@FNKIR.com |
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