ORA - Earnings call transcript Q1 2019 | Ormat Technologies, Inc.

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Operator

Good morning and welcome to the Ormat Technologies Inc.

First Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would like to now turn the conference over to Rob Fink. ahead. go Please

Rob Fink

Hosting Executive operator. Smadar today Isaac Investor are Vice Thank Doron the Blachar, Chief Relations. and Finance Officer; of and Chief Angel, President you, Corporate call Financial Lavi, Officer;

to like call Securities as estimates, defined are this forward-looking forecast, would we projections contain XXXX. Reform beginning, remind that Act future provided may current the to relating Private forward-looking about in Litigation you of statements and the during information expectations, objectives, plans, estimates company's expectations the These results to that Before projected relate generally result certain based may current statements operations as future management's or results of are those risks and and and materially future forward-looking for future from and differ a trends. uncertainties. on events Actual projections

of with please as uncertainties, discussion SEC. a and see annual on and filed risks in described reports Form such are the factors quarterly that report XX-K Technology's Ormat XX-Q risk on For

accordance financial the company's In as press stockholders. call, the for the comparable addition the in issued in and during Reconciliations isolation to measures is adjusted GAAP Company's the present from to company information management forth the most release set as measures that GAAP. should net statements on attributable considered presenting reasons and be EBITDA with in directly such adjusted in in they not not income the measures last slides accordance posted non-GAAP such well calculated website. will was were as are that these night the Because with prepared GAAP financial

would be on Relations presentation yours. presentation to like ormat.com remind to Isaac the call accompanying Isaac over management, link company's website the I Angel. everyone slide at now turn call a that tab. like accessed that's the would the to the to Before turn found said, all is Investor over on I this call With the call may under that I

Isaac Angel

Starting today. joining the quarter everyone. good for with was Thank first you start very an us much morning and Rob you excellent slide Thank for X, XXXX.

USG We for growth in of I'm such incredibly up X.X% more Adjusted of as challenges. efficient and impact diversified the lost profitable is benefit $XXX.X quarter our increased $XXX last with X% X.X% we We resulting profits continuing Generation continue benefits X.X% as operationally a to revenue remains electricity as enjoy of last closed business. in revenues, new the generation plans contribution facing from deliver year. segment even Puna. from industry's of continuing revenue overall the generated proud acquisition. growth in and delivered Hawaii adjusted In one the segment, than million our important reflecting in and the EBITDA core XX% the quarter-over-quarter, million, X.X% from our to product and expanded while Puna team increase This volcanic and recent EBITDA to well for plant drove the our year the quarter, growth the increase electricity approximately of as vertically-integrated eruption. continue we only during excluding of our then Puna up following even consolidated company.

our business. build to segment Our on of contribution and to pipeline current continued the are continues the we about our based optimistic backlog,

segment electricity seasonality generation, characterized segment in our in while by product know, you is fluctuations As revenues. by our characterized quarterly is

first operations. over turn review for by Also, to and the expectation Doron XXXX update year release. earnings end. a results before Doron call provide to second the fourth of guidance usually and operation an will financial resume be our the reiterate I the in quarters, quarters reiterate the at I our Puna please. provided on third the expect we Although, to we fourth weaker we than quarter

Doron Blachar

X.X% for increased same grew compared the everyone. segment and year. revenue Breaking revenues million, up and slide X, morning X.X% Isaac were total to Starting revenues electricity quarter this the good down, X.X%. the product segment on you, with last $XXX Thank quarter

McGinness our to operations growth in from in last X, Moving same slide as at revenues Hills the recently from Geothermal year; quarter and were to the expanded the compared resulting electricity revenues quarter recently segment $XXX.X the for $XXX.X million power overcome shutdown plant. combined temporary well million Puna the contributions Olkaria, the plants from loss as acquired US to of power resulting of

quarter to last revenues in attributable to as quarter. the lower-margin to margin but $XX.X lower the from increase two million in increased slide segment's X.X% million, X, revenues well year. segment this product large Turning as up $XX.X Turkish are Both on business same

the performance million for other $X of energy XXXX. be margin product you revenues in XX, slide expect million We year. stronger and of can response management to the $X.X services. segment to segment includes compared energy provision from contributed of in On that the storage, revenues balance This demand see

operating compared fixed margin Moving the was overhang XX.X% Electricity approximately to the Electricity quarter first gross business. core quarter In segment, On slide Product Puna, XX.X% commitment margin, first generation for same last XX.X% of XX.X%, expenses, ongoing Puna gross our for the our slide XX quarter margin of for gross margin; consolidated demonstrating year. to Gross margin a continuing last without to was the compared expanded XX.X%. to the the our XX, XX.X% despite of discussion profit gross was first to of efficiency expanding the quarter impact in total our in segment year. and

at impact the than contracts usual margin I to it relates Turkish before, As of large margin. the two our a lower mentioned

XX%. be between We continue and for this gross to margin XXXX expect in segment to XX%

negative gross Our other a margin. segment reported

Turning quarter administrative compared million same was last mainly for year. last $X.X million compensation million and the quarter compared of professional related the first to expenses expenses General to and fees. settlement, million legal for due quarter to higher increase $X.X $XX.X XXXX of were to $XX.X to This year. selling expenses for first and were the marketing XXXX for slide XX, stock-based

to million the slide you XX, The Turning to attributable of gross segment for operating primarily year. first of last decrease income segment. XX, the $XX.X the breakdown was quarter quarter the can same for income to slight see profit. were slide product by operating On million XXXX lower compared $XX.X

XX, slide primarily were quarter to year. benefits, tax expense as detailed a of the payments million to for long-term was related $XX.X million by debt. in to of of offset This compared interest increase sale net the loans last result lower and XXXX principal of Turning new $XX.X attributable the interest expense first to interest as slide,

provision of included income a XXXX of same $XX.X the tax $XX.X slide QX quarter Turning income the to million benefit last year. to one-time million. XXXX a for the XX, of for tax compared $XX million first was quarter

tax the Our XX%. approximately effective quarter rate for is

$X.XX the proceeds share, Turning diluted million Puna year. to income or attributable company's and our was to share were million the first quarter income per to or company's insurers. $XX.X was impacted net quarter from $X.XX the EPS the stockholders income by for quarter diluted slide per from as share stockholders quarter are compared of XX, and or net share. the per income to diluted last stockholders Adjusted attributable also Net contribution partial attributable net received attributable diluted $X.XX to XXXX year for million $XX.X diluted for same company's first to result adjusted same the or of of EPS a million negative company's $XX.X last $X.XX the the $XX.X stockholders per for XXXX

adjusted increased Adjusted adjusted business XX, Adjusted X.X% million insurance excluding slide million million EBITDA EBITDA loss to Puna $XXX.X of interruption. and received million QX EBITDA of Turning $X.X the includes million. the net in $X.X to from related of $XX.X impacts in to are EBITDA proceeds for the appendix are from approximately XXXX. net $XXX EBITDA provided Puna was Reconciliation of slide. any that

cash of use million months. cash compared XXXX. slide March down XX, Cash equivalents $XXX.X and of cash accompanying XX. slide the XXXX as to $XXX.X as of for breaks to The the December restricted Turning and million three XX, were

debt the as cost long-term deferred of XX. average XX, presented net on of XXXX Our for financing slide its schedule debt The was of $X.XX and X.X%. billion is is company payments costs March

billion. XX, net was as Our of debt March $X.X XXXX

to financing quarter. XX. speak activities slide the to during briefly We Turning our first

a for a million. institution now the turn of XXXX. During company's capital the approximately record an successfully to a Isaac? dividend company's XXXX the overview. access This raising will On I in DEG to as to and declared Ormat May related enhancement, We to Directors Isaac future on from $XX we with million policy. is well an additional $X.XX quarter, signed on concludes business quarterly per the with share of authorized dividend to The be dividend recent would Overall, added $XX aggregate. business $XX the call to XXXX initiatives. approximately close agreement the notes III May shareholders Israeli and operational approved ample financing of Olkaria Board XX, raised fund million and financial of X, unsecured to positioned like pursuant paid update. payment my of of May

Isaac Angel

you on Doron. with slide XX is very update Thank operations. an Starting much

the San plants. Olkaria our of shutdown. fleet offsetting year-over-year XXX,XXX Hills Puna This Hot the Springs, our from generation to was by X.XX Emidio we The hours hours power increased the overall quarter XX%. Raft During McGinness million first increased well and River XXXX, as added and X as consolidation of Neal megawatt and approximately adding megawatt partially III Phase expansion by

XX. Turning to slide

at Puna. on moments few a spend the me Let update providing situation an

plant progress back operation to with continue in We efforts online end the by the target the to the resuming bring of make year. of the

large the We of are and the with substation. wells progressing the island the to additional and wells are drilling mobilizing currently required rig we production of if from and wells help the the fixing electrical existing plugs removing to with building

of bring value time. have a will on we the development. company, entire integrated As chain help controlling the of This us geothermal advantage unique Puna vertically

Moving to slide XX.

this inability will another that interruption received for generate that million of and the The claimed the that past quarter company year. profit XX, business interruption reached an In recorded to company the approximately own of As March loss interruption the from be compensates the and the surface $XX.X XXXX coverage business April, agreement second claims resulted future million. business for $X we insurance $XX.X of in with million electricity. property we of paid

equipment resell potential Moving with remain add list supported are the end is XXX Hills on on will SCPPA of Public slide. from generated project of XX-megawatt by of Steamboat expected and recently SCPPA, our will purchase XXX growth. in Solar, the at work our is the ongoing to market. Tungsten XX-year megawatts recovering, the PPA permitting, Diablo-IV Mammoth This sell Lakes, XX. construction site price and megawatt hour. of the engineering $XX most to spot megawatts located in XX of and to In the a the Power Colton. and The progressing. the ongoing. intends In by the We California. of track by City growth. We CDX out Heber fixed offtakers Authority, megawatts or between California slide with near-term on Enhancement, presented Casa per balance output organic PPA Ormat engineering are target to XXXX geothermal of We is to has Southern projects or announced or the and other procurement in procurement XX-megawatt plan

the CDX see can XXXX. until in you As pipeline added was growth table, to our

slide for update our to on Turning XX, backlog. an

together margin Product have Product As help segment in Included term, volatility will Philippines, backlog of new opportunities at will In our to believe us regions, and EPC a to Turkey of in contracts Longer anticipate Electricity in Turkey as the we other grow, overall Chile. in mentioned, Zealand, backlog, the in backlog in be mix, segment, impact million. our the of May segment the Latin will our backlog, X, our backlog. currently the million America. that XXXX, see and impact margin of Product in segment less Product our contract an We the especially the XX%. XX% financial segment to Moreover, results. of project margin on lower our drive as we Product new New opportunities in gross the diversify range with $XXX.X $XX I continues stands volatility

this plan XX-megawatt Georgetown, XX.X-megawatt on update past in hour XXXX. of megawatt plan provide which XXXX, our be Texas, operations systems. regulation it's two Turning were acquired frequency us. in activity. XX we to the project involved In project to additional to early of We end complete an will the slide we meter We facility energy storage an XX, hour in shifting in for started by site storage the services ERCOT. fully load the and and a now to before that We to owned this of front

That's We contract project West local have of an a sub-area for that Storage California. the with to resources energy capacity in Coast provide the which Agreement, of project fixed subject awarded to participate in premium. an area, to and and Moorpark Big by Energy XX-year hour merchant East we PUC a agreement XX the RFPs signed are to and Vallecito project on Edison the end We Adequacy approval, continue revenues local is South area Carpinteria, recently megawatt California expect XXXX. in commission stream RFP we This by located requirement capacity on our Resource megawatt where our the XX battery issued generate for Creek/Ventura to we market. income a California CAISO additional will and at plan

will long-term. a contribute mid portfolio build to our and continue that We the to in earnings

approximately and million plants. include estimated slide XX, projects for needs enhancement our power existing of XXXX to of the Turning three of construction for new last our capital $XXX quarters

we plants, operating Puna. including addition, expenditures in $XX estimate million maintenance approximately power of capital In drilling for for

For $XX million exploration to activity. our plan invest and activity, additional development million storage planned is our we for and approximately $XX

also aggregate, in total for three we XXXX. facilities the of We estimate $XXX production plan the In expenditures approximately to last approximately of million capital $X invest million. quarters our

$XX.X be a the in long-term assume of expect renewed. discussion million three to guidance. credit quarters last will we repayment turn million $XX.X of debt revolving we Please additional of of XXXX, addition, XXXX for that In slide short-term for for our XX, lines and repayment

stimulate by resources and system a significant with shutdown CPUC presented emission there strong is call provided In the to other geothermal We by selects our renewable Puna the Integrated are goal three-gigawatt XXX% XXXX. power pushes providers on Resource to sector of in fourth and its to XX% a with and renewable year Energy In dioxide Plan overcome least energy adapted We and means was and this for XXXX, proposed see continue related number have to in emphasize calls power anonymously new XXXX, California, plan we meet storage of the and the the carbon that others. XXXX which approximately zero the PUC which to X,XXX have recent of the U.S. summary, end signed the quarter weeks supplying challenges renewables Puna the guidance SBXXX and we quarter and megawatts level reiterating in start build-out slide. XXXX the we support in CAISO government effort storage a for the for fresh of is Nevada XXXX, energy strong the new In Nevada, initiatives California. an geothermal and by major in earnings operating. back the NV the the of These at to state and up in region. examples expect By the

prepared in As geothermal we the us, well-positioned And these put growing and continue behind to storage Ormat challenges is market. concludes this our the remarks.

Operator? Now, for I questions. the to would call like open

Operator

you. Thank

Please go with from will We the question being Our [Operator now ahead. comes Oppenheimer. session. Kaye today first question-and-answer Noah Instructions]

Noah Kaye

start Good strong the year. Hi. morning. the Congrats to on

on pipeline. of to a with couple Just start the questions

remarks the CDX, added your is about expect you Can contracted megawatts XX-megawatt and up? plant, capacity there? do said progress talk you remaining the When tide in you that to So SCPPA. have XX with we contracting in

Isaac Angel

intention will is the We're optimistic the the cities of to soon. be that additional if to rest the market. at capacity part negotiating And contracted rest the more in the with be least very -- will in our I'm remaining and add sell spot there area a

Noah Kaye

it timing quarter due little that or was Okay. out to? what this or Great. last just a taken And Carson bit like then looks later from Lake quarter was

Isaac Angel

delayed. actually the Noah, is is -- it thing

much done stage. So, other projects them out, and advanced have is that promoting are stages later which will in are a but we Lake Carson really in we be taken not it

Noah Kaye

sites, add about opportunity your those on you Okay. solar or about from And maybe maybe can we at right geothermal you're on it about to given already adjacent talk see And understand there solar understand so exposure, projects are the pipeline are that to more If if looks expecting returns I solar these we ask project these -- like project projects? sites? the you that XX the what your booked that solar interconnection, solar megawatts. is an projects can are then

Isaac Angel

Okay. but always the our Steamboat Noah, to the -- COD that ago is something a is discussed adding solar on be solar we won the solar solar other talking as will as we huge before frankly -- plants, remember facilities follow sorry solar return soon. to a not company, such it basically intention services hand, we our operating speaking electricity should later on provide is COD very to time us our more ancillary to Tungsten giving RFP about the those and that on. and we and When solar, power long are is

and to and correctly go COD recall decided will if we build So be it ahead it I XXXX.

obviously US So doing; it return you the outside particular plants, participating regular US. one that RFPs stands US Geothermal than bit power it are of we're as this the is which realize lower is something still higher our that the saying but a there than on much today over are return as in in returns the we on

Noah Kaye

sneak PJM you're And more slide on helpful. a if very deck storage there I the for one bullet That’s working in plants, how I financing Amergan on think was in, the the two [ph]. Okay. could maybe

equity of requirements ask in the you now, you've about more to forward the think would understand recapitalizing equity how as of So that terms would And are pipeline so this and got to that what want total your be for go And just mean and in kind in closing kind close obviously debt? I non-recourse project? think of do you debt you because how then returns. and requirement

Isaac Angel

Okay.

beginning those of to all, of what First a the are totally projects types at these projects, of we financeable. contrary told

one two -- that and very non-recourse to actually on see first a financing; contract The close two closing premium. are the done, more. growing it's level almost the It first financing can completely be power contract is normal those of the one also we will -- appetite plants for and

Noah Kaye

much. very you, Thank

Isaac Angel

Noah. very you, a much Have day. Thank nice

Operator

Instructions] with Capital. ahead. comes [Operator question ROTH Please Sweeney Our next from Gerry go

Gerry Sweeney

taking expansion could I morning. a but you of was bit call. maybe have you Obviously, term? the margin of side. expand maybe and margin on drivers I of the Phase Good your Electricity talk right. targeting some more margins, curious, what in Thanks All -- what on opportunities know higher the for little are about are some you efforts it expansion talk two specifically the to efforts remaining my longer

Isaac Angel

so Hi the for on in I question. our work Look, existing the first said it's executing Gerry. we our strategy. last increase on that and assets of will on we automation more mean build will and new be Thanks basically are different what be years, five doing. specifically -- to the they the our that we're target profitability assets manner by that's on and a profitable means then and more using

more as obviously III growing. As new McGinness is such more power new the online plant, and facilities profitability overall the coming Olkaria and are

stand on to will -- years said think last our our upcoming recall if you XX% I be pretty the we XX% around are As target Analyst much and for there. we that Day, to few be we

Gerry Sweeney

if it you talked better automation correctly I I just also into everything think PPA new you margins, could the remember be et Okay. -- CDX And was about $XX I said per the you and that hour. cetera but the factor and then projects does wrong. How on said was

an of this the for going some and $XX impact projects of is in more on forward new probably this think other PPAs some were the have area. I geothermal? Does market the the

Isaac Angel

geothermal XX we market have right, downs but the already ups you experienced the years. and in last Gerry, in

the representing last I it. to future think -- this be which but expecting project, eight decided on that the we will and years, the particular are that the ahead go was We really nobody seven, oven for in knows. contract don't $XX the

looking the future than with states, and other new years that California coming that if grow up RPS Our are we six eventually geothermal Nevada, and the higher PPA will expectation we five, is will expect in four, $XX. the with that for be the prices to appetite that

Gerry Sweeny

Great. Thanks. I appreciate it.

Isaac Angel

very you much, Thank Gerry

Operator

comes question from Please Company. with next Osborne The Cowen Jeff & ahead. go

Jeff Osborne

wondering Hi, think good can covered my when were year-end, that on I you Puna, being end. understand, by elaborate was is talk there. by wells I I or originally morning. were on Couple one you it well just that all of lava. about operational three if questions XX and

what any what as As be sure the the wasn't needs that to done you and be testing new extent I will those So been of drilling done? of efficacy uncap is?

Isaac Angel

between thing again the as sure, resource warmer anybody them very, is, first they the question. wells. wells it's power estimation as unplugging than progressing. before providing we operational and because probably it and majority how we better is two now out Okay, production production to injections place monitoring was have you injection time. recall those are sure Jeff. is the When of right know the injection are with One the were un-operational the production than the and for XX are else, megawatts we know that that is wells flat well. if will are very there following, wells is The And all this and for we four of flow, the three were for and we of Thanks soon providing -- it not it plant the there on know became right I an

as those this we before said time we be operational of optimistic the or wells, I year. unplug we will will we Now us in to have be end but four working we -- some are are parallel, take three that as by it will

Jeff Osborne

as negotiation I revert you And evidence think of of know relates the models not think what do it. as back we our to do Puna? then you that profile is would giving do how add about XXXX see that or this? to there more and of to Should PPA investors to now or the you you're they advise -- for pricing wait it old to XXXX, guidance Got any but

Isaac Angel

a of not that secret contract a existing nobody be before about today It's it thing, XXXX is that negotiations stage. One sure everybody wait XX-megawatt outcome Island's with those plant beyond Jeff, today negotiations, HELCO going crucial. power of until and is for What -- is the talked the we certain we that. go at at knows this to rates. thing have have to we see end. for XX-megawatt of after state is will unfortunate geothermal but XX% realizes the that Hawaii where episode thing electricity and the lava or damaging this the and let's And this shutdown

Jeff Osborne

I margins, Make I sense. know being seen? the there. on that fluctuations any end chart Two change light Turkey, risk ones it weeks recent about past, to of but on potential delayed that as the the of we've how in other quick to based the my you've helpful canceled of think or lira if is But volatility months, currency pie could. gross and XX% QX just is came like the On or there risk looks relates being the through backlog that? in in do we that highlighted the it risks any projects with

Isaac Angel

Let's divide three. thing this to

are denominated. The is our first contracts all part dollar

in of I And second if power other of even word contracts is operating we if look you find during -- point competition push in. That's in not The can or will see investment Ormat are the markets such particular signed country the Turkey Philippines additional some will to is we which Chile that and severe or And is and we kind, we Based part have our are of significant And developers finalize want was project. find might and those future world. a, of second diversify, the you're see you there or contract and at the it as a had Zealand, we right local in the why still largest list last a you out turbulence that to markets you Central done the very part use was quite America. half the third two were and make in finish because of push-ups be of fact did. on of plants. one that the that that very, severely to may it's there them XXXX, is to that started markets delays the a prospects, are though and New successful. PRs approach our And the

Jeff Osborne

great there. it's And the diversification to see

from time with I been maturity level? ORIX, in there ago, just very that the scale Or also revenue you how to doesn't development. Day there's take of working just you then think ahead? reflecting sure to Just certain should that on other it a business, turn seem project years on some Viridity bigger on like the What wasn't And about the two well the ORIX a and both we it about as remind public them in you positive? picture-wise lot the to presentation EBITDA Is as comments. for quickly, that will things the Analyst report? the Can us get the segments domain about

us And Day, the wondering on some was just And of at that of Analyst if potential highlighted funding items I together. some you projects update the were time partnership that ago. status for the can

Isaac Angel

or business understand, storage much that the it for we exactly we not maturity this want projects. market, of the building on three storage big potential as but projects already all a is us whole, is the all, but as slower. of this projects within of Ormat first Jeff, finalized a timeline in those as for all is

year. the done quarters at next beginning We one have one then another will of which two and another next the within be

then, power the a of being plants and changed us. by focus building when I the than progress. plants all power we bit means voltage meter frequency making starts selling And plants, the a power of that company, you you instead your up focus, is other slower, build a owned in own regulation, that mentioned plants providing power which revenue to which build bit But, So great. are But were to front a our -- we are regulation party. to built we for -- the power also and changed plant third

But it. all we to we So of the have point view, bit about corporate from vision. patient that be a long-term understand

on I the is to do. the This question. on think your -- thing best first it's

one, we unfortunately yet. it the second but will. that But On I'm substantial optimistic are with nothing ORIX, working happened

Jeff Osborne

thank hear, you. to good Great

Isaac Angel

Thank Jeff. much you very

Operator

concludes This for to our any Isaac back would conference over remarks. to question-and-answer session. turn like I the closing Angel

Isaac Angel

Thank you for us joining for morning. everyone much this very --

that excited very are very our QX, proud will Thank much. of employees happen. very the performance of I hope be for a it with We with you sign -- year. our a it very successful And our made

Operator

now has concluded. for conference The Thank you today's attending presentation.

disconnect. now may You

Ormat (ORA) 7 May 192019 Q1 Earnings call transcript