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Ormat Technologies Reports 2014 First Quarter Results

(May 08, 2014)


Record quarterly revenues in the electricity segment, increase 38.8% to $94.8 million



Net income of $21.6 million or $0.47 per share attributable to company's shareholders  



EBITDA grew 54.4% and reached $70.6 million



RENO, Nev., May 8, 2014 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE:ORA) announced today its financial results for the first quarter of 2014.



Quarterly financial highlights compared to the same quarter last year:



  • Quarterly revenues increased 19.8% to $142.4 million;

     


  • Gross margin increased from to 22.5% to 37.5%;

     


  • Operating income reached $42.6 million compared to $7.7 million;

     


  • Net income attributable to the company's shareholders was $21.6 million, or $0.47 per share on a fully diluted basis, compared to a net loss of ($5.0) million, or ($0.11) per share;

     


  • Adjusted EBITDA grew 54.4% to $70.6 million;

     


  • Cash flow from operation reached $68.1 million;

     


  • Declared a dividend of $0.05 per share.



Operational highlights and recent developments:





  • Increased electricity generation by 15.5% year-over-year to 1.2 million MWh, driven primarily by new capacity coming on line at Olkaria III Plants 2 and 3 in Kenya as well as at the Don A. Campbell Plant in Nevada;

     


  • The Sarulla consortium signed a $1.17 billion financing agreements for the development and construction of the 330 MW Sarulla geothermal project in Indonesia. Closing is anticipated in the 2nd quarter of 2014

     


  • Sold Heber Solar PV project in California for approximately $35.3 million; $7.5 million pre-tax gain will be recorded in the second quarter 2014; and,

     


  • Began CEO transition with Isaac Angel joining Ormat on April 1, 2014 in preparation to succeed retiring CEO Dita Bronicki on July 1, 2014.



Dita Bronicki, chief executive officer of Ormat, stated, "We delivered strong financial and operational results in the first quarter. In the electricity segment, revenues grew by 38.8%, while gross margins increased to 39.8%. The growth in the margin was mainly due to the addition of the new facilities that were described earlier. The margin also benefited from a reduction in our specific operating cost from 35 to 30 $/MWh. Part of this reduction is lasting and is driven by the addition of the modern plants with the specific characteristics of their well fields and plant design that provide the marginal generation at a lower cost. Part of the reduction in cost this quarter is driven by timing, and we expect higher operating expenses in the 2nd quarter of this year."



"The performance of the product segment was also very satisfactory and our backlog remains substantial, and currently stands at $120.4 million excluding Sarulla. As we guided in the year-end earnings call, we expect product revenues to decrease during the second quarter before strengthening toward the end of the year. The expected release of the Sarulla supply contract later this quarter, when the financial closing of the project will occur, will garner a continued strong product segment not only in 2014 but in the next few years."



Bronicki concluded, "We reaffirm our 2014 guidance and expect total revenues to be between $540.0 million to $560.0 million with electricity revenues ranging $370.0 million to $380.0 million and our product segment revenues to be between $170.0 million and $180.0 million, including a $36.0 million contribution from the Sarulla project."



Financial Summary                                                                                                     



For the three months ended March 31, 2014, total revenues reached $142.4 million from $118.9 million in the first quarter of 2013, an increase of 19.8%. Electricity revenues increased 38.8% to $94.8 million in the three months ended March 31, 2014 from $68.3 million in the three months ended March 31, 2013. Product revenues decreased 5.9% to $47.6 million in the three months ended March 31, 2014 from $50.6 million in the three months ended March 31, 2013.



Operating income for the three months ended March 31, 2014 was $42.6 million, compared to $7.7 million for the three months ended March 31, 2013 which included a one-time termination fee of $9.0 million for the Mammoth PPAs



For the three months ended March 31, 2014, the company reported net income attributable to the company's shareholders of $21.6 million, or $0.47 per diluted share, compared to net loss of ($5.0) million, or ($0.11) per diluted share, for the three months ended March 31, 2013.



Adjusted EBITDA for the three months ended March 31, 2014 was $70.6 million, compared to $45.7 million for the three months ended March 31, 2013, an increase of 54.4%. 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.



Net cash provided by operating activities was $68.1 million in the three months ended March 31, 2014, compared to $18.2 million in the three months ended March 31, 2013.



On May 8, 2014, ORMAT's Board of Directors approved a payment of a quarterly dividend of $0.05 per share pursuant to the company's dividend policy, which targets an annual payoff ratio of at least 20% of the company's net income. The dividend will be paid on May 30, 2014 to shareholders of record as of closing of business on May 21, 2014.



As of March 31, 2014, cash and cash equivalents were $47.9 million. In addition, as of March 31, 2014, the company had $208.1 million of unused corporate borrowing capacity under existing lines of credit with different commercial banks.



Conference Call Details



Ormat will host a conference call to discuss its financial results and other matters discussed in this press release at 9:00 A.M. ET on Friday, May 9, 2014.  The call will be available as a live, listen-only webcast at www.ormat.com. During the webcast, management will refer to slides that will be posted on the web site. The slides and accompanying webcast can be accessed through the Webcast & Presentations in the Investor Relations section of Ormat's website.



An archive of the webcast will be available approximately 10 minutes after the conclusion of the live call.



About Ormat Technologies



With over four decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company solely engaged in geothermal and recovered energy generation (REG). 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 over 77 U.S. patents, Ormat's power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 480 employees in the United States and about 640 overseas. Ormat's flexible, modular solutions for geothermal power and REG are ideal for the 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 1,750 MW of gross capacity. Ormat's current generating portfolio of 626 MW (net) is spread globally in the U.S., Guatemala and Kenya.



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 Technologies, Inc.'s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2014.



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 Statements of Operations

For the Three-Month Periods Ended March 31, 2014 and 2013

(Unaudited)

 

 

 

 

Three Months Ended March 31, 

 

2014

2013 As revised

 

 

 

 

(In thousands, except per share data) 

Revenues:

 

 

Electricity

$ 94,817

$ 68,298

Product

47,619

50,608

Total revenues

142,436

118,906

Cost of revenues: 

 

 

Electricity

57,034

55,088

Product

31,943

37,041

Total cost of revenues

88,977

92,129

Gross margin

53,459

26,777

Operating expenses: 

 

 

Research and development expenses (income)

(87)

1,000

Selling and marketing expenses

3,379

11,509

General and administrative expenses

7,596

6,584

Impairment charge

 


Write-off of unsuccessful exploration activities



Operating income

42,571

7,684

Other income (expense): 

 

 

Interest income

111

41

Interest expense, net

(20,518)

(15,863)

Foreign currency translation and transaction gains (losses)

(638)

1,682

Income attributable to sale of tax benefits

6,717

3,532

Other non-operating expense, net

63

1,417

Income (loss), before income taxes and equity in losses of investees

28,306

(1,507)

Income tax provision

(6,320)

(4,047)

Equity in losses of investees, net

(197)


Income (loss) from continuing operations

21,789

(5,554)

Discontinued operations: 

 

 

Income from discontinued operations 


827

Income tax provision


(222)

Total income from discontinued operations


605

 

 

 

Net income (loss)

21,789

(4,949)

Net income attributable to noncontrolling interest

(237)

(85)

Net income (loss) attributable to the Company's stockholders

$ 21,552

$ (5,034)

 

 

 

Earnings per share attributable to the Company's stockholders - Basic and diluted: 

 

 

Income (loss) from continuing operations

$ 0.47

$ (0.12)

Discontinued operations

 -- 

0.01

Net Income (loss)

$ 0.47

$ (0.11)

 

 

 

Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders: 

 

 

Basic

45,479

45,431

Diluted

45,660

45,431


































































































































































































































































































































































 

 

Ormat Technologies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

As of March 31, 2014 and December 31, 2013 

(Unaudited)

 

 

 

 

 March 31, 

 December 31, 

 

2014

2013

 

 

 

 

 (In thousands) 

 

 ASSETS 

Current assets: 

 

 

Cash and cash equivalents

$ 47,927

$ 57,354

Restricted cash, cash equivalents and marketable securities

 74,406

 51,065

Receivables: 

 

 

Trade

 55,676

 95,365

Related entity

 442

 442

Other

 28,756

 11,049

Due from Parent

 534

 382

Inventories

 22,671

 22,289

Costs and estimated earnings in excess of billings on uncompleted contracts

 27,789

 21,217

Deferred income taxes

 684

 523

Prepaid expenses and other

 33,728

 29,654

Total current assets

 292,613

 289,340

Unconsolidated investments

 7,510

 7,076

Deposits and other

 24,743

 22,114

Deferred income taxes

 —

 891

Deferred charges

 35,881

 36,738

Property, plant and equipment, net

 1,463,574

 1,452,336

Construction-in-process

 249,777

 288,827

Deferred financing and lease costs, net

 29,127

 30,178

Intangible assets, net

 31,122

 31,933

Total assets

$ 2,134,347

$ 2,159,433

LIABILITIES AND EQUITY 

Current liabilities: 

 

 

Accounts payable and accrued expenses

$ 93,820

$ 98,047

Short-term revolving credit lines with banks (full recourse)

 34,733

 —

Billings in excess of costs and estimated earnings on uncompleted contracts

 3,817

 7,903

Current portion of long-term debt:

 

 

Limited and non-recourse:

 

 

Senior secured notes

 29,337

 31,137

Other loans

 21,127

 20,377

Full recourse

 28,994

 28,875

Total current liabilities

 211,828

 186,339

Long-term debt, net of current portion:

 

 

Limited and non-recourse:

 

 

Senior secured notes

 256,366

 270,310

Other loans

 305,762

 311,078

Full recourse:

 

 

Senior unsecured bonds

 250,520

 250,596

Other loans

 49,887

 53,467

Revolving credit lines with banks (full recourse)

 62,467

 112,017

Liability associated with sale of tax benefits

 56,090

 60,985

Deferred lease income

 62,762

 63,496

Deferred income taxes

 59,322

 55,035

Liability for unrecognized tax benefits

 5,132

 4,950

Liabilities for severance pay

 24,182

 23,841

Asset retirement obligation

 19,053

 18,679

Other long-term liabilities

 5,282

 3,529

Total liabilities

 1,368,653

 1,414,322

 

 

 

Equity: 

 

 

The Company's stockholders' equity: 

 

 

Common stock

 46

 46

Additional paid-in capital

 736,735

 735,295

Retained earnings

 15,737

 (3,088)

Accumulated other comprehensive income

 451

 487

 

 752,969

 732,740

Noncontrolling interest

 12,725

 12,371

Total equity

 765,694

 745,111

Total liabilities and equity

$ 2,134,347

$ 2,159,433

 

 

 


Ormat Technologies, Inc. and Subsidiaries

Reconciliation of EBITDA, Adjusted EBITDA and Additional Cash Flows Information

For the Three-Month Periods Ended March 31, 2014 and 2013

(Unaudited)



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, excluding impairment of long-lived assets and one-time termination fee. EBITDA and Adjusted EBITDA are not a measurement of financial performance or liquidity under accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America. EBITDA and Adjusted EBITDA are presented because we believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of a company's ability to service and/or incur debt. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.



The following tables reconcile net cash provided by operating activities and net income to EBITDA and Adjusted EBITDA for the three-month periods ended March 31, 2014 and 2013:


































































































































































 

 Three Months Ended March 31, 

 

2014

2013 As revised

 

 

 

 

 (in thousands) 

Net cash provided by operating activities

$ 68,076

$ 18,216

Adjusted for:

 

 

Interest expense, net (excluding amortization of deferred financing costs)

 19,176

 14,336

Interest income

 (111)

 (41)

Income tax provision

 6,320

 4,269

Adjustments to reconcile net income or loss to net cash provided by operating activities (excluding depreciation and amortization)

 (22,870)

 (28)

EBITDA

$ 70,591

$ 36,752

 

 

 

Termination fees

 — 

 8,979

Adjusted EBITDA

$ 70,591

$ 45,731

Net cash used in investing activities

$ (35,323)

$ (98,244)

Net cash (used in) provided by financing activities

$ (42,180)

$ 71,027

 

 

 

 

 

 

 

 

 

 

 Three Months Ended March 31, 

 

2014

2013 As revised

 

 

 

 

 (in thousands) 

Net income (loss)

$ 21,789

$ (4,949)

Adjusted for:

 

 

Interest expense, net (including amortization of deferred financing costs)

 20,407

 15,797

Income tax provision (benefit)

 6,320

 4,269

Depreciation and amortization

 22,075

 21,635

EBITDA

$ 70,591

$ 36,752

 

 

 

Termination fees

 — 

 8,979

Adjusted EBITDA

$ 70,591

$ 45,731

CONTACT: Ormat Technologies Contact:
Dita Bronicki
CEO
775-356-9029
dbronicki@ormat.com

Investor Relations Contact:
Rob Fink/Brad Nelson
KCSA Strategic Communications
212-896-1206 (Rob) /212-896-1217 (Brad)
rfink@kcsa.com / bnelson@kcsa.com



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