PRESS RELEASE [ORMAT GRAPHIC LOGO]
FOR IMMEDIATE RELEASE
Ormat Technologies Contact: Investor Relations Contact
Dita Bronicki Jeff Corbin/Todd Fromer
CEO and President KCSA Worldwide
+1-775-356-9029 212-896-1214/212-896-1215
DBRONICKI@ORMAT.COM JCORBIN@KCSA.COM/TFROMER@KCSA.COM
FOR IMMEDIATE RELEASE
ORMAT TECHNOLOGIES, INC. REPORTS RECORD THIRD QUARTER 2005 RESULTS
Revenues rise 9.5 Percent
Net Income grows 82 Percent
Company announces quarterly cash dividend of $0.03 per share
SPARKS, NEVADA, NOVEMBER 9, 2005 -- Ormat Technologies, Inc. (NYSE: ORA) today
announced financial results for the third quarter ended September 30, 2005. For
the quarter, total revenues were $69.3 million as compared to $63.3 million for
the same period in 2004, an increase of 9.5%.
Electricity segment revenues for the quarter were $51.4 million, an increase of
5.3% as compared to $48.8 million during the same period in 2004. The increase
in revenues was primarily attributed to higher energy rates for power supplied
under the power purchase agreement of the Puna project. In addition, the third
quarter is traditionally Ormat's strongest quarter due to seasonality as
capacity rates applicable to Ormat's California power purchase agreements are
higher in the summer months resulting in increased revenues during the third
quarter.
Net income for the quarter ended September 30, 2005 was $12.3 million or $0.39
per share of common stock as compared with $6.8 million or $0.28 per share of
common stock during the same period in 2004. There were 31.6 million weighted
average shares outstanding during the third quarter of 2005 and 24.4 million
during the same period in 2004.
For the quarter ended September 30, 2005, the Company's gross margin was 45.3%
compared to 43.2% during the same period in 2004. Operating income for the
quarter ended September 30, 2005 was $25.3 million as compared with $22.5
million for the same period in 2004, an increase of 12.1%.
Adjusted EBITDA for the quarter ended September 30, 2005 was $37.7 million as
compared with $33.0 million for the same period in 2004. Adjusted EBITDA
includes operating income and depreciation and amortization totaling $4.2
million and $2.7 million for the quarters ended September 30, 2005 and 2004,
respectively, related to the Company's unconsolidated investment interest of 50%
in the Mammoth project in California and 80% in the Leyte project in the
Philippines. The reconciliation of GAAP net income to Adjusted EBITDA is set
forth below in this release.
For the nine months ended September 30, 2005, total revenues were $179.2
million, a 10.0% increase over total revenues of $163.0 million for the same
period in 2004. Revenues in the nine months ended September 30, 2005 included
all revenues generated by the Steamboat 2/3 projects that Ormat acquired on
February 13, 2004 and the Steamboat Hills and Puna projects that the Company
acquired during the second quarter of 2004.
Net income for the nine months ended September 30, 2005 was $20.3 million or
$0.64 per common share as compared with $13.0 million or $0.55 per share for the
same period of 2004. There were 31.6 million weighted average shares outstanding
during the first half of 2005 and 23.6 million during the same period in 2004.
For the nine months ended September 30, 2005, the Company's gross margin was
37.8% compared to 38.8% during the same period in 2004. Operating income for the
nine months ended September 30, 2005 was $50.1 million as compared with $48.1
million for the same period in 2004, an increase of 4.1%.
Adjusted EBITDA for nine months ended September 30, 2005 was $89.0 million as
compared with $79.7 million for the same period in 2004. Adjusted EBITDA
includes operating income and depreciation and amortization totaling $13.0
million and $9.6 million for the nine months ended September 30, 2005 and 2004,
respectively, related to the Company's unconsolidated investment interest of 50%
in the Mammoth project in California and 80% in the Leyte project in the
Philippines. The reconciliation of GAAP net income to Adjusted EBITDA is set
forth below in this release.
As of September 30, 2005, the Company had cash, cash equivalents and marketable
securities of $103.0 million compared to $125.9 million as of December 31, 2004.
The decrease in the Company's cash position was principally due to capital
expenditures and the repayment of long-term debt offset by an increase of $71.0
million as a result of the refinancing of the Puna project in May 2005.
On November 9, 2005, Ormat's Board of Directors approved the payment of a
quarterly cash dividend of $0.03 per common share pursuant to the Company's
dividend policy, which targets an annual payout ratio of at least 20% of the
Company's net income, subject to Board approval. The dividend will be paid on
December 6, 2005 to shareholders of record as of the close of business on
November 29, 2005.
An Ormat subsidiary recently made a decision to refinance its existing project
finance debt outstanding under its Credit Agreement with Beal Bank, relating to
the Heber Projects. This refinancing is expected to be effected in the fourth
quarter of 2005 or the first quarter of 2006, and if completed within this time
frame, will cause a one-time charge of approximately $10.0 million, net of
related taxes of approximately $6.5 million. The charge will result from the
prepayment premium associated with the payment to Beal Bank and the write-down
of certain capitalized costs associated with the incurrence of the Beal Bank
debt. The charge would be a non-recurring interest expense with no impact on
revenues or operational items. In subsequent accounting periods, the refinancing
would reduce Ormat's overall interest expense and as such, would have a positive
effect on future earnings and cash flow.
Commenting on the results, Dita Bronicki, President and Chief Executive Officer
of Ormat said, "Ormat's top and bottom line growth this quarter reflects
performance in line with the Company's plans, and was further enhanced by the
higher prices paid for the electricity produced in Puna. Our construction and
enhancement projects are on track. Galena will start to generate additional
revenues in November and Heber will start to generate additional revenues
towards the end of December. Puna's output was increased by 4 MW in June and is
reflected in this quarter's revenue."
Ms. Bronicki continued, "Our product segment continued to gain traction as we
entered into a $4.4 million supply contract with UltraTech Cement Ltd. in
Mumbai, India for a Recovered Energy Generating power plant. This is the third
contract this year in Recovered Energy; a market that we believe represents
substantial growth potential for Ormat.
Commenting on the outlook for 2005, Ms. Bronicki said, "We expect our 2005
electricity segment revenue to slightly exceed the projection we previously made
of $170 million. We also continue to expect an additional $18 million of revenue
from our share of electricity revenue generated by subsidiaries and
accounted for under the equity method. With regard to our products segment, we
currently expect that our 2005 revenue will be approximately $60 million."
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. U.S. E.S.T. on Thursday,
November 10, 2005. The call will be available as a live, listen-only webcast at
www.ormat.com. A 30-day archive of the webcast will be available approximately 2
hours after the conclusion of the live call. To listen to a replay, please call
1-877-519-4471 in the United States and Canada and 1-973-341-3080 for
international callers and utilize code 6620202.
ABOUT ORMAT TECHNOLOGIES
Ormat Technologies, Inc. is a vertically integrated company primarily engaged in
the geothermal and recovered energy power business. The Company designs,
develops, builds, owns and operates geothermal power plants. It also designs,
develops and builds, and plans to own and operate, recovered energy-based power
plants. Additionally, the Company designs, manufactures and sells geothermal and
recovered energy power units and other power generating equipment, and provides
related services. Ormat products and systems are covered by more than 70
patents. Ormat currently has operations in the United States, Israel, the
Philippines, Guatemala, Kenya, and Nicaragua.
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 the Company's plans, objectives and expectations for future operations and
are based upon 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 "Management Discussion and Analysis of Financial Condition
and Results of Operations - Risk Factors" as described in the Company's 10-K/A
filed with the Securities and Exchange Commission on April 12, 2005. 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.
ABOUT NON - GAAP FINANCIAL MEASURES
This press release includes a financial measure defined as a non-GAAP financial
measure by the Securities and Exchange Commission: adjusted EBITDA. This measure
may be different from non-GAAP financial measures used by other companies. The
presentation of this financial information is not intended to be considered in
isolation or as a substitute for the financial information prepared and
presented in accordance with GAAP. Management of Ormat Technologies, Inc.
believes that adjusted EBITDA provides meaningful supplemental information that
both management and investors benefit from in assessing Ormat Technologies'
ability to service and/or incur debt.
ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------ -----------------------------------
2005 2004 2005 2004
--------------- ------------------- -------------- ------------------
(IN THOUSANDS, EXCEPT (IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS) PER SHARE AMOUNTS)
Revenues:
Electricity:
Energy and capacity $ 30,042 $ 34,333 $ 80,009 $ 82,381
Lease portion of energy and capacity 20,772 14,470 53,363 36,637
Lease income 571 - 859 -
----------- ------------- ---------- ------------
Total electricity 51,385 48,803 134,231 119,018
Products 17,905 14,480 44,980 43,971
----------- ------------- ---------- ------------
Total revenues 69,290 63,283 179,211 162,989
----------- ------------- ---------- ------------
Cost of revenues:
Electricity:
Energy and capacity 16,948 16,971 53,332 46,411
Lease portion of energy and capacity 7,350 8,092 22,083 19,264
Lease expense 1,557 1,843
----------- ------------- ---------- ------------
Total electricity 25,855 25,063 77,258 65,675
Products 12,073 10,908 34,183 34,030
----------- ------------- ---------- ------------
Total cost of revenues 37,928 35,971 111,441 99,705
----------- ------------- ---------- ------------
Gross margin 31,362 27,312 67,770 63,284
Operating expenses:
Research and development expenses 777 351 1,871 1,553
Selling and marketing expenses 1,934 1,649 5,793 5,595
General and administrative expenses 3,388 2,776 9,990 7,995
----------- ------------- ---------- ------------
Operating income 25,263 22,536 50,116 48,141
Other income (expense):
Interest income 1,370 64 3,255 495
Interest expense (9,011) (11,737) (28,811) (31,212)
Foreign currency translation and
transaction losses (21) (192) (65) (589)
Other non-operating income 53 76 165 221
----------- ------------- ---------- ------------
Income before income taxes, minority
interest, and equity in income of investees 17,654 10,747 24,660 17,056
Income tax provision (6,977) (4,197) (9,611) (6,154)
Minority interest in earnings of subsidiaries - - - (108)
Equity in income of investees 1,641 213 5,271 2,248
----------- -------------- ---------- ------------
Net income 12,318 6,763 20,320 13,042
=========== ============== ========== ============
Basic and diluted income per share:
Net income $ 0.39 $ 0.28 $ 0.64 $ 0.55
=========== ============== ========== ============
Weighted average number of shares outstanding 31,563 24,375 31,563 23,610
=========== ============== ========== ============
ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004
(UNAUDITED)
SEPTEMBER 30 DECEMBER 31,
2005 2004
----------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE AMOUNTS)
ASSETS
Current assets:
Cash and cash equivalents $ 48,538 $ 36,750
Marketable securities 54,447 89,166
Restricted cash, cash equivalents and marketable securities 38,719 3,676
Receivables:
Trade 35,941 26,913
Related entities 445 2,413
Other 1,938 1,816
Inventories, net 5,241 6,046
Costs and estimated earnings in excess of
billings on uncompleted contracts 5,511 3,164
Deferred income taxes 1,411 1,001
Prepaid expenses and other 4,096 2,377
--------------- ------------
Total current assets 196,287 173,322
Restricted cash, cash equivalents and marketable securities 712 19,339
Unconsolidated investments 48,554 48,818
Deposits and other 15,745 13,759
Deferred income taxes 5,007 3,044
Property, plant and equipment, net 449,330 466,826
Construction-in-process 144,568 60,177
Deferred financing and lease costs, net 18,059 15,873
Intangible assets, net 46,854 48,930
--------------- ------------
Total assets $ 925,116 $ 850,088
=============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 61,617 $ 37,56
Billings in excess of costs and estimated
earnings on uncompleted contracts 12,361 6,139
Current portion of long-term debt:
Limited and non-recourse 9,847 8,295
Full recourse 1,000 24,361
Senior secured notes (non-recourse) 7,814 6,090
Due to Parent, including current portion of notes payable to Parent 38,721 40,531
--------------- ------------
Total current liabilities 131,360 122,981
Long-term debt, net of current portion:
Limited and non-recourse 151,797 159,370
Full recourse 2,000 3,000
Senior secured notes (non-recourse) 178,692 183,399
Notes payable to Parent, net of current portion 155,198 171,809
Other liabilities 1,349 1,389
Deferred lease income 70,141 --
Deferred income taxes 25,359 18,368
Liabilities for severance pay 11,322 11,129
Asset retirement obligation 11,240 10,665
--------------- ------------
Total liabilities 738,458 682,110
--------------- ------------
Minority interest in net assets of subsidiaries 64 64
--------------- ------------
Stockholders' equity:
Common stock, par value $0.001 per share; 200,000,000 shares
authorized; 31,562,496 shares issued and outstanding 31 31
Additional paid-in capital 124,008 124,008
Unearned stock-based compensation (170) (244)
Retained earnings 61,914 44,441
Accumulated other comprehensive income (loss) 811 (322)
--------------- ------------
Total stockholders' equity 186,594 167,914
--------------- ------------
Total liabilities and stockholders' equity $ 925,116 $ 850,088
=============== ============
ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(DOLLARS IN THOUSANDS)
RECONCILIATION FROM NET INCOME TO ADJUSTED EBITDA:
EBITDA represents net income before interest, taxes, depreciation and
amortization. Adjusted EBITDA includes operating income, depreciation and
amortization of our equity investments in the Mammoth and Leyte projects. EBITDA
and adjusted EBITDA are presented because we believe it is 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.
EBITDA and adjusted EBITDA are not measurements of financial performance 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. The following table reconciles net income to EBITDA
and adjusted EBITDA, for the three and nine-month periods ended September 30,
2005 and 2004:
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------------------------
2005 2004 2005 2004
------------- ----------------- ----------------- ----------------
(UNAUDITED) (UNAUDITED)
Net income $ 12,318 $ 6,763 $ 20,320 $ 13,042
Adjusted for:
Equity in income of investees (1,641) (213) (5,271) (2,248)
Interest expenses, net (including amortization
of deferred financing costs) 7,662 11,865 25,621 31,306
Other non-operating income (53) (76) (165) (221)
Income tax provision 6,977 4,197 9,611 6,154
Minority interest in earnings of subsidiaries -- -- -- 108
Depreciation and amortization 8,243 7,726 25,861 21,984
--------------- -------------- ----------- -----------
EBITDA 33,506 30,262 75,977 70,125
Equity in income of Mamoth-Pacific and Ormat Leyte 1,424 18 4,634 1,731
Depreciation, amortization, interest and income taxes
attributable to our equity in Mammoth-Pacific
and Ormat Leyte 2,745 2,688 8,428 7,849
--------------- -------------- ----------- -----------
ADJUSTED EBITDA $ 37,675 $ 32,968 $ 89,039 $ 79,705
=============== ============== =========== ===========
