[ORMAT(R) LOGO]
PRESS RELEASE
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
ORMAT TECHNOLOGIES, INC. REPORTS FOURTH QUARTER 2005
AND YEAR-END RESULTS
Record Revenues of $238.0 Million for the year ended 2005 an 8.6%
increase over 2004;
Operating Income increases 2.3% to $63.9 Million in 2005 from $62.4 Million;
Company announces quarterly cash dividend of $0.03 per share
SPARKS, NEVADA, MARCH 7, 2006 -- ORMAT Technologies, Inc. (NYSE: ORA) today
announced financial results for the fourth quarter and full year ended December
31, 2005. For the fourth quarter, total revenues were $58.8 million as compared
to $56.2 million for the same period in 2004, an increase of 4.5%.
Electricity segment revenues for the fourth quarter were $43.1 million, an
increase of 8.4% as compared to $39.8 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 for the Puna project.
Net loss for the quarter ended December 31, 2005 was $(5.1) million or $(0.16)
per share of common stock as compared with net income of $4.7 million or $0.17
per share of common stock during the same period in 2004. The Company's net loss
in the fourth quarter was attributable to the Company's decision to refinance
the debt of the Heber project provided under a Credit Agreement with Beal Bank,
in order to reduce the Company's future interest expense, which will have a
positive effect on future earnings and cash flows. As a result, the Company
incurred a one-time, non-recurring charge of $16.6 million ($10.3 million
after-tax). There were 31.6 million weighted average shares outstanding during
the fourth quarter of 2005 and 28.0 million during the same period in 2004.
For the quarter ended December 31, 2005, the Company's gross margin was 36.4%
compared to 35.3% during the same period in 2004. Operating income for the
quarter ended December 31, 2005 was $13.8 million as compared with $14.3 million
for the same period in 2004. The reduction in operating income is primarily
attributed to an increase in operating expenses necessary to meet compliance
with Sarbanes-Oxley, net lease expense related to the Puna refinancing, and an
increase in research and development costs. Operating income for the quarter
ended December 31, 2004, includes a non-recurring gain of $0.9 million related
to the sale of certain geothermal asset.
Adjusted EBITDA for the quarter ended December 31, 2005 was $26.2 million as
compared with $26.7 million for the same period in 2004. Adjusted EBITDA
includes consolidated EBITDA and the Company's share in the operating income and
depreciation and amortization totaling $3.4 million and $3.8 million for the
quarters ended December 31, 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 year ended December 31, 2005, total revenues were $238.0 million, an
8.6% increase over total revenues of $219.2 million for the year ended December
31, 2004. Net income for the year ended December 31, 2005 was $15.2 million or
$0.48 per share of common stock as compared with $17.8 million or $0.72 per
share of common stock for the year ended December 31, 2004. The reduction in net
income in the year ended December 31, 2005 was attributable to the Company's
decision to refinance the debt of the Heber project provided under a Credit
Agreement with Beal Bank, in order to reduce the Company's future interest
expense, which will have a positive effect on future earnings and cash flows. As
a result, the Company incurred a one-time, non-recurring charge of $16.6 million
($10.3 million after-tax). There were 31.6 million weighted average shares
outstanding during 2005 and 24.8 million during 2004.
For the year ended December 31, 2005, the Company's gross margin was 37.5%
compared to 37.9% for the year ended December 31, 2004. Operating income for the
year ended December 31, 2005, was $63.9 million as compared with $62.4 million
for the same period in 2004, an increase of 2.3%.
Adjusted EBITDA for the year ended December 31, 2005, was $115.2 million as
compared with $109.6 million for the year ended December 31, 2004. Adjusted
EBITDA includes consolidated EBITDA and the Company's share in the operating
income and depreciation and amortization totaling $16.5 million and $14.6
million for the years ended December 31, 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 December 31, 2005, the Company had cash, cash equivalents and marketable
securities, net of short-term bank credit of $66.5 million compared to $125.9
million as of December 31, 2004. The decrease in the Company's cash position was
principally due to the combination of capital expenditures and the repayment of
long-term debt, primarily offset by an increase of $83.0 million as a result of
the Puna refinancing in May and December 2005.
On March 7, 2006, Ormat's Board of Directors approved the payment of a quarterly
cash dividend of $0.03 per 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. Although the Company suffered a loss in the
fourth quarter, the Board approved a dividend payment that is equal to the
dividend paid in the previous quarter. The Company expects that this loss will
be compensated in future periods by lower interest expenses. The dividend will
be paid on April 4, 2006 to shareholders of record as of the close of business
on March 28, 2006. The Company expects to pay a dividend of $0.04 per share, in
the next three quarters as well.
Commenting on the results, Dita Bronicki, President and Chief Executive Officer
of Ormat said, "2005 was a successful and defining year for Ormat. Our results
were in-line with our expectations and we met and exceeded important operational
goals including the completion of enhancements and additional construction at
several of our major projects. We also completed our first full year as a public
company and celebrated our 40th anniversary in the renewable energy business."
"We continued to benefit from higher prices paid for electricity produced in
Puna, and we further extended our organic growth momentum, increasing our net
ownership interest in generating capacity by 21 MW. Included in this total are
13 MW attributable to the Burdette geothermal power plant in Nevada, a new plant
that came online this past November, and 8 MW resulting from improvements to
Ormat's existing geothermal projects."
Ms. Bronicki continued, "Accomplishments in our recovered energy generation and
products segments complemented our success in electricity. During the year, we
announced several key contract wins including a new geothermal power plant in
the Azores. More importantly, we announced several new orders and power purchase
agreements for Recovered Energy Generation, including a new order from a western
Canada pipeline company and an order from a cement plant in India. We also
entered into two recovered energy agreements for electricity generated from
recovered energy plants that Ormat is constructing along pipelines in the
Midwestern United States and Washington State, respectively.
"In January 2006, we reached an agreement with the U.S. Navy for the use of
their geothermal property for the construction of a new geothermal facility.
This agreement, together with other leases that we secured during the year,
increased the base upon which we will increase the pace of our organic growth
beyond 2007."
Commenting on the outlook for 2006, Ms. Bronicki said, "We expect to complete
construction of Desert Peak 2 in Nevada and Amatitlan in Guatemala, which
together will add 35 MW to our electricity business. We also expect to add an
additional 24 MW from enhancements to Mammoth, Ormesa and Galena. Additionally,
we have commenced construction on the 22 MW OREG 1 project, the recovered energy
project located along a Midwestern pipeline. These enhancements and construction
projects represent a robust addition to our overall business and serve to
further strengthen our foothold in the renewable energy sector."
"We expect our 2006 electricity segment revenue to be approximately $195
million. We also expect an additional $18 million of revenue from our share of
electricity revenue generated by subsidiaries which are accounted for under the
equity method. With regard to our products segment, we currently expect that our
2006 revenue will be between $60 million and $70 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 Wednesday,
March 8, 2006. 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 7028002.
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 Ormat'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 "Risk Factors" as described in the Company's Annual Report on
Form 10-K/A filed with the Securities and Exchange Commission on April 12, 2005
and Form S-3 filed with the Securities and Exchange Commission on January 17,
2006.
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.
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 AND TWELVE MONTH PERIODS ENDED DECEMBER 31, 2005 AND 2004
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- -----------------------
2005 2004 2005 2004
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenues:
Electricity:
Energy and capacity $ 24,966 $ 17,900 $104,975 $100,281
Lease portion of energy and capacity 17,600 21,913 70,963 58,550
Lease income 572 -- 1,431 --
-------- -------- -------- --------
Total electricity 43,138 39,813 177,369 158,831
Products 15,643 16,428 60,623 60,399
-------- -------- -------- --------
Total revenues 58,781 56,241 237,992 219,230
-------- -------- -------- --------
Cost of revenues:
Electricity:
Energy and capacity $ 16,996 $ 16,889 70,328 63,300
Lease portion of energy and capacity 8,132 7,178 30,215 26,442
Lease expense 1,229 -- 3,072 --
-------- -------- -------- --------
Total electricity 26,357 24,067 103,615 89,742
Products 11,053 12,306 45,236 46,336
-------- -------- -------- --------
Total cost of revenues 37,410 36,373 148,851 136,078
-------- -------- -------- --------
Gross margin 21,371 19,868 89,141 83,152
Operating expenses (income):
Research and development expenses 1,165 622 3,036 2,175
Selling and marketing expenses 2,083 2,174 7,876 7,769
General and administrative expenses 4,330 3,614 14,320 11,609
Gain on sale of geothermal resource rights -- (845) -- (845)
-------- -------- -------- --------
Operating income 13,793 14,303 63,909 62,444
Other income (expense):
Interest income 1,053 821 4,308 1,316
Interest expense (26,506) (11,573) (55,317) (42,785)
Foreign currency translation and
transaction losses (374) 443 (439) (146)
Other non-operating income 347 (109) 512 112
-------- -------- -------- --------
Income (loss) before income taxes, minority
interest, and equity in income of investees (11,687) 3,885 12,973 20,941
Income tax benefit (provision) 4,921 (455) (4,690) (6,609)
Minority interest in earnings of subsidiaries -- -- -- (108)
Equity in income of investees 1,623 1,319 6,894 3,567
-------- -------- -------- --------
Net income (loss) (5,143) 4,749 15,177 17,791
======== ======== ======== ========
Basic and diluted earnings (loss) per share: $ (0.16) $ 0.17 $ 0.48 $ 0.72
======== ======== ======== ========
Weighted average number of shares outstanding 31,563 27,969 31,563 24,806
======== ======== ======== ========
ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2005 AND 2004
DECEMBER 31,
---------------------------
2005 2004
-------- --------
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE AMOUNTS)
ASSETS
Current assets:
Cash and cash equivalents $ 26,976 $ 36,750
Marketable securities 43,560 89,166
Restricted cash, cash equivalents and marketable securities 36,732 3,676
Receivables:
Trade 33,515 26,913
Related entities 524 2,413
Other 2,629 1,816
Inventories, net 5,224 6,046
Costs and estimated earnings in excess of
billings on uncompleted contracts 8,883 3,164
Deferred income taxes 1,663 1,001
Prepaid expenses and other 3,256 2,377
-------- --------
Total current assets 162,962 173,322
Restricted cash, cash equivalents and marketable securities -- 19,339
Unconsolidated investments 47,235 48,818
Deposits and other 13,489 13,759
Deferred income taxes 5,376 3,044
Property, plant and equipment, net 491,835 466,826
Construction-in-process 128,256 60,177
Deferred financing and lease costs, net 17,412 15,873
Intangible assets, net 47,915 48,930
-------- --------
Total assets $914,480 $850,088
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank credit $ 3,996 $ --
Accounts payable and accrued expenses 50,048 37,565
Billings in excess of costs and estimated
earnings on uncompleted contracts 12,657 6,139
Current portion of long-term debt:
Limited and non-recourse 2,888 8,295
Full recourse 1,000 24,361
Senior secured notes (non-recourse) 23,754 6,090
Due to Parent, including current portion of notes payable to Parent 32,003 40,531
-------- --------
Total current liabilities 126,346 122,981
Long-term debt, net of current portion:
Limited and non-recourse 11,252 159,370
Full recourse 2,000 3,000
Senior secured notes (non-recourse) 324,645 183,399
Notes payable to Parent, net of current portion 140,162 171,809
Other liabilities 1,309 1,389
Deferred lease income 81,569 --
Deferred income taxes 22,004 18,368
Liabilities for severance pay 11,409 11,129
Asset retirement obligation 11,461 10,665
-------- --------
Total liabilities 732,157 682,110
-------- --------
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 (153) (244)
Retained earnings 55,824 44,441
Accumulated other comprehensive income (loss) 2,549 (322)
-------- --------
Total stockholders' equity 182,259 167,914
-------- --------
Total liabilities and stockholders' equity $914,480 $850,088
======== ========
ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(DOLLARS IN THOUSANDS)
EBITDA represents net income before interest, taxes, depreciation and
amortization. Adjusted EBITDA includes The Company's share in operating income,
depreciation and amortization of its 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 twelve month periods ended
December 31, 2005 and 2004:
THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- ----------------------
2005 2004 2005 2004
------- ------- -------- --------
Net income (loss) $(5,143) $ 4,749 $ 15,177 $ 17,791
Adjusted for:
Equity in income of investees (1,623) (1,319) (6,894) (3,567)
Interest expenses, net (including amortization
of deferred financing costs) 25,827 10,309 51,448 41,615
Other non-operating income (347) 109 (512) (112)
Income tax provision (4,921) 455 4,690 6,609
Minority interest in earnings of subsidiaries -- -- -- 108
Depreciation and amortization 8,938 8,657 34,799 32,591
------- ------- -------- --------
EBITDA 22,731 22,960 98,708 95,035
Equity in income of Mamoth-Pacific and Ormat Leyte 1,844 1,166 6,478 2,897
Depreciation, amortization, interest and income taxes
attributable to our equity in Mammoth-Pacific
and Ormat Leyte 1,603 2,600 10,031 11,698
------- ------- -------- --------
ADJUSTED EBITDA $26,178 $26,726 $115,217 $109,630
======= ======= ======== ========
