Ormat Technologies Reports Third Quarter 2021 Financial Results

NEWLY AQUIRED GEOTHERMAL ASSETS CONTRIBUTED TO OUR REVENUES AND BOTTOM LINE

ELECTRICITY SEGMENT CONTINUES TO DELIVER PROFIT GROWTH

INCREASED PRODUCT SEGMENT BACKLOG TO $67 MILLION

REITERATE 2021 ANNUAL ADJUSTED EBITDA GUIDANCE

RENO, Nev., Nov. 03, 2021 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE: ORA) today announced financial results for the third quarter ended September 30, 2021.

KEY FINANCIAL RESULTS

⁽¹⁾ Reconciliation is set forth below in this release

“We again delivered year-over-year growth in the Electricity segment. The recent acquisition of two geothermal power plants in Nevada, the stable operation of the Puna power plant at 26MW and the contribution of business interruption insurance related to the Puna eruption helped us deliver sequential growth despite the operational challenges and unexpected equipment issues we recently experienced in some of our power plants. We made progress in resolving these challenges and expect them to gradually recover by the first half of 2022.” commented Doron Blachar, Chief Executive Officer.

“Our product segment market continued to recover from Covid impacts as we signed in the third quarter two supply contracts in Nicaragua and in Indonesia,” continued Blachar.   “As a result, our product segment backlog increased to $67 million, giving us a good start for this segment going into 2022. As we move towards full operation of our portfolio and continued recovery of our product segment, we expect to increase top- and bottom-line growth, boosting overall profitability and supporting the earnings power of the Company.”

“We continue to make progress in our growth plans in both our storage and geothermal portfolios, and we expect to expand the capacity of the two geothermal assets that we recently acquired and continue to accelerate our development in Indonesia where a significant portion of the world’s geothermal potential exists” concluded Blachar. “We are making steps toward achieving our long-term goal of increasing our combined geothermal, energy storage and solar generating portfolio to more than 1.5 GW by 2023, supporting our target of an annual run-rate of more than $500 million in Adjusted EBITDA towards the end of 2022.”

FINANCIAL AND BUSINESS HIGHLIGHTS

• Net income attributable to the Company's stockholders was $14.9 million, or $0.26 per diluted share, compared to $15.7 million, or $0.31 per diluted share in the third quarter of last year, representing a decrease of 5.0% and 16.1%, respectively, mainly as a result of lower operating income driven mainly by a $9.0 million increase in the G&A expenses;
• Adjusted net income attributable to the Company’s stockholders was $17.8 million, or $0.32 per diluted share, compared to $15.7 million or $0.31 per diluted share in 2020. Net income attributable to the Company’s stockholders in the third quarter of 2021 was adjusted to exclude transaction costs of $3.7 million pre-tax and $2.9 million after tax related to the TG Geothermal assets acquisition.
• Electricity segment revenues increased compared to the third quarter of last year, supported by a contribution from the MGH Complex expansion, Puna recovery and the recently completed acquisition of two plants from TG Geothermal, partially offset by lower performance at our Olkaria complex in Kenya, Bouillante power plant in Guadeloupe and Brawley power plant in California. We expect to restore generating capacity in the Bouillante and Brawley power plant by year-end and in our Olkaria complex in the first half of 2022;
• Total business interruption insurance income recorded in the third quarter 2021 was $15.8 million, of which $15.5 million was included in the Electricity segment cost of revenues and impacted the segment gross profit, and the balance of $0.3 million was included in operating income, compared to $20.4 million in the third quarter 2020, of which $2.6 million was included in the Electricity segment cost of revenues and impacted the segment gross profit and the balance of $17.8 million was included in the operating income. Excluding the impact of business interruption insurance income, gross profit increased 2.8% compared to the same quarter last year;
• Product segment revenues decreased 64.5% to $10.5 million, down from $29.6 million in the same quarter of last year, impacted primarily by COVID-19;
• Energy Storage segment revenues were $5.7 million, similar to last year;
• G&A expenses in the third quarter of 2021 increased 62.0% from $14.5 million in the third quarter of 2020 to $23.6 million this year. The increase is mainly due to $5.5 million of transaction costs including costs of $3.7 million related to the TG Geothermal acquisition that was closed during July, legal costs associated with the business interruption insurance claim and legal costs associated with the investigation by the Special Committee;
• Product segment backlog grew by 13.2% to $66.9 million as of November 3, 2021;
• Adjusted EBITDA decreased 5.1% to $101.6 million, from $107.1 million in the third quarter of last year mainly due to a combination of lower business interruption income and higher G&A costs. In addition, the benefit of the newly acquired assets from TG Geothermal was partly offset by a $9.2 million year-over-year reduction in EBITDA as a result of operational issues at three of our plants (a reconciliation of GAAP net income to EBITDA and Adjusted EBITDA is set forth below in this release);
  

In addition, the Company:

• Completed a $38.9 million tax equity partnership transaction for the Steamboat Hills geothermal power plant with additional future payments of approximately $5.3 million, whereby the Company will continue to operate and maintain the power plant and will receive substantially all of the distributable cash flow generated by the power plant;
• Signed a JV agreement with a local Indonesian gold mining company to explore the Toka Tindung project located in the Bitung area of the North Sulawesi region, Indonesia. The Company is expected to hold a 75% interest in the project;
• Signed a supply contract with Polaris Infrastructure Inc. (TSX: PIF) for a 10 MW power plant located in Nicaragua; and,
• Signed a Long-Term Resource Adequacy agreement with Pacific Gas and Electric Company (PG&E) for the 20MW/40MWh Pomona-2 facility that is currently under construction.

2021 GUIDANCE

• Total revenues of between $652 million and $675 million;

• Electricity segment revenues between $585 million and $595 million;

• Product segment revenues of between $40 million and $50 million;
  

• Energy Storage revenues of between $27 million and $30 million;

• Adjusted EBITDA to be between $400 million and $410 million;
  
     • Adjusted EBITDA includes insurance proceeds related to the 2018 Puna insurance claim of $15.8 million.
  
     • Adjusted EBITDA attributable to minority interest of approximately $31 million.

The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three and nine months ended September 30, 2021. However, the Company is unable to provide a reconciliation for its Adjusted EBITDA guidance range due to the 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, 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 December 3, 2021, to stockholders of record as of the close of business on November 17, 2021.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Thursday, November 4, at 10 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:

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 total generating portfolio is 1.1 GW with 1,015 MW of geothermal and Solar generation portfolio that is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe, and 83 MW energy storage portfolio that 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 SUBSIDIARIES

Condensed Consolidated Statement of Operations
For the Three and Nine Month Periods Ended September 30, 2021 and 2020

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Condensed Consolidated Balance Sheet
For the Periods Ended September 30, 2021 and December 31, 2020

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Reconciliation of EBITDA and Adjusted EBITDA
For the Three and Nine-Month Periods Ended September 30, 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 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, 2021 and 2020.

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Reconciliation of Adjusted Net Income attributable to the Company's stockholders and Adjusted EPS
For the Three and Nine-Month Periods Ended September 30, 2021 and 2020

Adjusted Net Income attributable to the Company's stockholders and Adjusted EPS are adjusted for 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 and Nine-month periods ended September 30, 2021 and 2020.

¹ Reconciliation is set forth below in this release