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Ormat Technologies Reports Second Quarter 2024 Financial Results

HIGHLIGHTS

  • TOTAL REVENUES FOR THE SECOND QUARTER INCREASED BY 9.3% YEAR-OVER-YEAR, WITH GROWTH REALIZED ACROSS ALL THREE OPERATING SEGMENTS
  • INCREASED PROFITABILITY IN ALL SEGMENTS DROVE A 45% INCREASE IN OPERATING INCOME AND A 25% INCREASE IN ADJUSTED EBITDA
  • INCREASE IN FULL YEAR EBITDA GUIDANCE RANGE, DEMONSTRATING STRONG EXECUTION AND CONFIDENCE IN THE COMPANY’S FORWARD OUTLOOK

RENO, Nev., Aug. 06, 2024 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE: ORA), a leading renewable energy company, today announced financial results for the second quarter ended June 30, 2024.

KEY FINANCIAL RESULTS

 Q2 2024Q2 2023Change (%)H1 2024H1 2023Change (%)
GAAP Measures      
Revenues ($ millions)      
Electricity166.2155.37.0%357.5325.69.8%
Product37.833.513.1%62.743.544.0%
Energy Storage8.96.048.1%17.010.955.9%
Total Revenues213.0194.89.3%437.1380.015.0%
       
Gross margin (%)      
Electricity33.5%29.6% 36.4%37.3% 
Product13.7%10.4% 14.1%9.6% 
Energy Storage5.7%1.9% 6.6%(0.5)% 
Gross margin (%)28.8%25.4% 32.1%33.0% 
       
Operating income ($ millions)
35.124.245.0%87.777.413.3%
Net income attributable to the Company’s stockholders22.224.2(8.1)%60.853.214.3%
Diluted EPS ($)0.370.40(7.5)%1.000.9011.1%
       
Non-GAAP Measures1      
Adjusted Net income attributable to the Company’s stockholders24.324.20.3%63.953.220.0%
Adjusted Diluted EPS ($)0.400.400.0%1.050.9016.7%
Adjusted EBITDA1 ($ millions)126.1100.925.0%267.3224.419.1%

____________________________________
Reconciliation is set forth below in this release.

“Our strong second quarter results demonstrate Ormat’s track record of translating revenue growth into stronger results across our three-operating segments. This was evidenced by the 9.3% increase in total revenues and a 45% and 25.0% increase in operating income and adjusted EBITDA1, respectively, led by strategic expansion to our capacity generating portfolio and improved operating performance," said Doron Blachar, Chief Executive Officer of Ormat Technologies. “Notably, we are also continuing to make great progress in transitioning our Energy Storage business toward becoming a higher-growth segment with improved margins. These efforts are highlighted by the segment experiencing a 48.1% increase in revenue primarily as a result of the additional 83MW we added in the last 12 months, including the COD at East Flemington this quarter, the signing of our long-term tolling agreement at our Pomona 2 storage facility, and improved merchant prices.”

“Our Electricity segment continued to capture consistent growth during the quarter, which was largely driven by the addition of the Enel assets that we acquired at the beginning of the year, the continued improved generation performance at our Puna facility, and the contributions from a full quarter of performance at Heber following the recent upgrade.”

Blachar continued, “We are encouraged by the increased demand for renewable energy and zero emissions power generation solutions, and we remain confident with our long-term plans to increase our combined geothermal, energy storage and solar generating portfolio to approximately 2.1 to 2.3 GW by the end of 2026. We believe that we are well-positioned to capitalize on favorable industry tailwinds and support our customers’ needs with our diversified portfolio of geothermal, solar, and energy storage solutions.”

FINANCIAL AND RECENT BUSINESS HIGHLIGHTS

  • Net income attributable to the Company’s stockholders for the second quarter was $22.2 million, compared to $24.2 in the same period last year. Diluted EPS for the second quarter was $0.37, compared with $0.40 in the prior year period. The net income was impacted by approximately $2.0 million in after tax write-offs related to the decommissioning of OREG 4, Recovered Energy Generation facility (REG), and to an unsuccessful exploration activity.
  • Adjusted net income attributable to the Company’s stockholders for the second quarter was $24.3 million compared to $24.2 million last year, and diluted adjusted EPS was $0.40, similar to the prior year period. In the second quarter 2024, the Company had higher revenues and improved margins across all three segments that was offset by higher interest costs.
  • Adjusted EBITDA for the second quarter was $126.1 million, an increase of 25.0% compared to 2023. The year-over-year increase in Adjusted EBITDA was driven by higher gross margins across all three business segments, which drove higher operating income. Better margins were mainly driven by the improved operation at our Puna power plant and the contribution of the Heber complex repowering.
  • Electricity segment revenues increased 7% year-over year. Second quarter revenue growth was primarily driven by the Company’s newly acquired Enel assets, a step up in operating performance and power generation at Puna, and the resumption of Heber 1 operations. The increase was partially offset by an unplanned outage at our Dixie Valley power plant. Gross margin in the segment grew from 29.6% in the second quarter 2023 to 33.5% in the same period this year, mainly due to improved performance at Puna.
  • Product segment revenues in the second quarter increased 13.1% compared to last year and gross margin improved from 10.4% in the second quarter 2023 to 13.7% in the second quarter 2024, supported by higher backlog, higher revenue recognition and increased profitability of our contracts.
  • Product segment backlog stands at approximately $165 million as of August 5, 2024.
  • Energy Storage segment revenues increased 48.1% year-over-year, driven by the operation of an additional 83 MW since the second quarter of 2023 and improved prices from the Company’s Pomona 2 tolling agreement combined with higher merchant prices. The segment’s gross margin grew from 1.9% in the second quarter 2023 to 5.7% in the same period this year, as the Company benefited from higher profitability from our contracts and incrementally improved pricing in merchant markets mainly in the PJM market.

IN ADDITION, IN THE SECOND QUARTER, THE COMPANY:

  • Hosted an Investor Day that highlighted Ormat’s commitment to continued profitable growth in its Electricity Segment and shared its plans to transform the Energy Storage segment into a high-growth unit through strategic organic growth, a strong pipeline, and improved project returns through higher PPA and tolling agreements combined with IRA tax benefits. The Company announced that it is targeting a generating portfolio of 2.6 to 2.8 GW by YE 2028.
  • Subsequent to quarter end, the Company signed a 15-year Resource Adequacy Purchase and Sale Agreement with the City of Riverside for the 80MW/320MWh Shirk Energy Storage facility, which includes a guaranteed commercial operation date (COD) of March 1, 2026.
  • Commenced commercial operation of the 6 MW Beowawe geothermal power plant upgrade.

2024 GUIDANCE

  • Total revenues of between $875 million and $910 million.
  • Electricity segment revenues between $710 million and $720 million.
  • Product segment revenues of between $130 million and $145 million.
  • Energy Storage segment revenues of between $35 million and $45 million.
  • Adjusted EBITDA to be between $520 million and $550 million.
    • Adjusted EBITDA attributable to minority interest of approximately $20 million.

The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three and six months ended June 30, 2024, and 2023. However, the Company does not provide guidance on net income and is unable to provide a reconciliation for its Adjusted EBITDA guidance range to net income without unreasonable efforts due to the high variability and complexity with respect to estimating certain forward-looking amounts. These include 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 August 06, 2024, 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 September 03, 2024, to stockholders of record as of the close of business on August 20, 2024. In addition, the Company expects to pay a quarterly dividend of $0.12 per share in the next quarter.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Wednesday, August 7, 2024, at 9:00 a.m. ET.

Participants within the United States and Canada, please dial 1-888-770-2286, approximately 15 minutes prior to the scheduled start of the call. If you are calling outside of the United States and Canada, please dial +1-646-960-0440. Access code for the call is 9122486. Please request the “Ormat Technologies, Inc. call” when prompted by the conference call operator. The conference call will also be accompanied by a webcast live on the Investor Relations section of the Company's website.

A replay will be available one hour after the end of the conference call. To access the replay within the United States and Canada, please dial 1-800-770-2030. From outside of the United States and Canada, please dial +1-647-362-9199. Please use the replay access code 9122486. The webcast will also be archived on the Investor Relations section of the Company's website.

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 1,420MW with a 1,230MW geothermal and solar generation portfolio that is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe, and a 190MW 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. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect or anticipate will or may occur in the future, including such matters as our projections of annual revenues, expenses and debt service coverage with respect to our debt securities, future capital expenditures, business strategy, competitive strengths, goals, development or operation of generation assets, market and industry developments and the growth of our business and operations, are forward-looking statements. When used in this press release, the words “may”, “will”, “could”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, “contemplate” or “targets” or the negative of these terms or other comparable terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. 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. Although we believe that our plans and objectives reflected in or suggested by these forward-looking statements are reasonable, we may not achieve these plans or objectives. Actual future results may differ materially from those projected as a result of certain risks and uncertainties and other risks described under "Risk Factors" as described in Ormat’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2024, and in Ormat’s subsequent quarterly reports on Form 10-Q that are filed from time to time with the SEC.

These forward-looking statements are made only as of the date hereof, and, except as legally required, 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 Six-Month periods Ended June 30, 2024, and 2023

 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
 (Dollars in thousands, except per share data)
Revenues:    
Electricity166,226 155,324 357,479 325,634 
Product37,829 33,458 62,661 43,500 
Energy storage8,908 6,014 16,989 10,894 
Total revenues212,963 194,796 437,129 380,028 
Cost of revenues:    
Electricity110,515 109,424 227,245 204,182 
Product32,662 29,985 53,816 39,336 
Energy storage8,400 5,897 15,872 10,951 
Total cost of revenues151,577 145,306 296,933 254,469 
Gross profit61,386 49,490 140,196 125,559 
Operating expenses:    
Research and development expenses1,730 2,083 3,294 3,371 
Selling and marketing expenses4,167 5,369 9,293 9,317 
General and administrative expenses18,026 17,814 37,563 35,481 
Write-off of long-lived assets957  957  
Write-off of unsuccessful exploration activities1,379  1,379  
Operating income35,127 24,224 87,710 77,390 
Other income (expense):    
Interest income2,604 4,942 4,443 6,793 
Interest expense, net(33,716)(24,393)(64,684)(48,024)
Derivatives and foreign currency transaction gains (losses)(332)(1,272)(1,914)(3,209)
Income attributable to sale of tax benefits15,798 14,979 33,274 27,545 
Other non-operating income (expense), net74 79 100 139 
Income from operations before income tax and equity in earnings (losses) of investees19,555 18,559 58,929 60,634 
Income tax (provision) benefit3,178 3,956 3,325 (4,929)
Equity in earnings (losses) of investees, net1,232 1,996 2,061 2,267 
Net income23,965 24,511 64,315 57,972 
Net income attributable to noncontrolling interest(1,722)(320)(3,485)(4,752)
Net income attributable to the Company's stockholders22,243 24,191 60,830 53,220 
Earnings per share attributable to the Company's stockholders:    
Basic:0.37 0.40 1.01 0.91 
Diluted:0.37 0.40 1.00 0.90 
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:    
Basic60,451 60,245 60,419 58,494 
Diluted60,755 60,634 60,655 58,901 


ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Condensed Consolidated Balance Sheet
For the Periods Ended June 30, 2024 and December 31, 2023

 June 30, 2024 December 31, 2023
ASSETS
Current assets:   
Cash and cash equivalents66,262  195,808 
Marketable securities at fair value   
Restricted cash and cash equivalents97,480  91,962 
Receivables:   
Trade147,328  208,704 
Other44,568  44,530 
Inventories44,647  45,037 
Costs and estimated earnings in excess of billings on uncompleted contracts29,719  18,367 
Prepaid expenses and other86,991  41,595 
Total current assets516,995  646,003 
Investment in unconsolidated companies129,664  125,439 
Deposits and other48,737  44,631 
Deferred income taxes186,194  152,570 
Property, plant and equipment, net3,328,676  2,998,949 
Construction-in-process799,868  814,967 
Operating leases right of use26,192  24,057 
Finance leases right of use2,887  3,510 
Intangible assets, net316,515  307,609 
Goodwill151,074  90,544 
Total assets5,506,802  5,208,279 
    
LIABILITIES AND EQUITY
Current liabilities:   
Accounts payable and accrued expenses183,386  214,518 
Short term revolving credit lines with banks (full recourse)  20,000 
Commercial paper99,974  99,971 
Billings in excess of costs and estimated earnings on uncompleted contracts16,277  18,669 
Current portion of long-term debt:   
Limited and non-recourse (primarily related to VIEs):67,921  57,207 
Full recourse154,246  116,864 
Financing Liability3,620  5,141 
Operating lease liabilities4,041  3,329 
Finance lease liabilities1,267  1,313 
Total current liabilities530,732  537,012 
Long-term debt, net of current portion:   
Limited and non-recourse:540,995  447,389 
Full recourse:839,253  698,187 
Convertible senior notes424,268  423,104 
Financing liability219,682  220,619 
Operating lease liabilities20,480  19,790 
Finance lease liabilities1,684  2,238 
Liability associated with sale of tax benefits167,188  184,612 
Deferred income taxes78,850  66,748 
Liability for unrecognized tax benefits7,520  8,673 
Liabilities for severance pay10,009  11,844 
Asset retirement obligation125,035  114,370 
Other long-term liabilities33,858  22,107 
Total liabilities2,999,554  2,756,693 
    
Commitments and contingencies   
Redeemable noncontrolling interest9,985  10,599 
    
Equity:   
The Company's stockholders' equity:   
Common stock61  60 
Additional paid-in capital1,624,763  1,614,769 
Treasury stock, at cost(17,964) (17,964)
Retained earnings766,137  719,894 
Accumulated other comprehensive income (loss)(1,754) (1,332)
Total stockholders' equity attributable to Company's stockholders2,371,243  2,315,427 
Noncontrolling interest126,020  125,560 
Total equity2,497,263  2,440,987 
Total liabilities, redeemable noncontrolling interest and equity5,506,802  5,208,279 


ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Reconciliation of EBITDA and Adjusted EBITDA
For the Three- and Six-Month Periods Ended June 30, 2024, and 2023

We calculate EBITDA as net income before interest, taxes, depreciation, amortization and accretion. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation, amortization and accretion, adjusted for (i) mark-to-market gains or losses from accounting for derivatives not designated as hedging instruments; (ii) stock-based compensation; (iii) merger and acquisition transaction costs; (iv) gain or loss from extinguishment of liabilities; (v) cost related to a settlement agreement; (vi) non-cash impairment charges; (vii) write-off of unsuccessful exploration activities; and (viii) other unusual or non-recurring items. We adjust for these factors as they may be non-cash, unusual in nature and/or are not factors used by management for evaluating operating performance. We believe that presentation of these measures will enhance an investor’s ability to evaluate our financial and operating performance. 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. 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-six-month periods ended June 30, 2024, and 2023:

 Three Months Ended June 30,   Six Months ended June 30,   
 2024 2023   2024 2023  
 (Dollars in thousands)   (Dollars in thousands)  
Net income 23,965 24,511 (22.3)% 64,315 57,972 10.9%
Adjusted for:           
Interest expense, net (including amortization of deferred financing costs)31,112 19,451   60,241 41,231  
Income tax provision (benefit)(3,178) (3,956)   (3,325) 4,929  
Adjustment to investment in an unconsolidated companies: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla and Ijen3,418 4,050   6,770 7,032  
Depreciation and amortization62,683 52,939   124,359 105,335  
EBITDA 118,000 96,995 21.7% 252,360 216,499 16.6%
Mark-to-market gains or losses from accounting for derivative466 (402)   1,279 591  
Stock-based compensation5,077 4,311   9,845 7,301  
Allowance for bad debt221    221   
Write-off of long-lived assets957    957   
Merger and acquisition transaction costs    1,299   
Write-off of unsuccessful exploration activities1,379    1,379   
Adjusted EBITDA126,100 100,904 25% 267,341 224,392 19.1%


ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES

Reconciliation of Adjusted Net Income attributable to the Company's stockholders and Adjusted EPS
For the Three and Six-month Periods Ended June 30, 2024, and 2023

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 table reconciles Net income attributable to the Company's stockholders and Adjusted EPS for the three and six-month periods ended June 30, 2024 and 2023.

 Three Months Ended June 30,
 Six Months Ended June 30,
 2024 2023 2024 2023
(in millions, except for EPS)       
GAAP Net income attributable to the Company's stockholders22.2 24.2 60.8 53.2
Write-off of long-lived assets0.8  0.8 
Write-off of unsuccessful exploration activities1.1  1.1 
M&A costs  1.0 
Allowance for bad debt0.2  0.2 
Adjusted Net income attributable to the Company's stockholders$24.3 $24.2 $63.9 $53.2
GAAP diluted EPS0.37 0.40 1.00 0.90
Write-off of long-lived assets0.01  0.01 
Write-off of unsuccessful exploration activities0.02  0.02 
M&A costs-  0.02 
Allowance for bad debt0.00  0.00 
Diluted Adjusted EPS $0.40 $0.40 $1.05 $0.90


Ormat Technologies Contact:
Smadar Lavi
VP Head of IR and ESG Planning & Reporting
775-356-9029 (ext. 65726)
slavi@ormat.com
 Investor Relations Agency Contact:
Joseph Caminiti or Josh Carroll
Alpha IR Group
312-445-2870
ORA@alpha-ir.com

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