ORA - Earnings call transcript Q3 2020 | Ormat Technologies, Inc.

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Operator

Good morning, and welcome to the Ormat Technologies Incorporated Q3 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Rob Fink of FNK, IR. ahead. go Please

Rob Fink

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

to like call Securities as estimates, defined are this forward-looking forecasts would we projections contain XXXX. Reform beginning, remind that Act future provided may current the to related 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 are please section uncertainties, SEC. discussion with a XX-K see Technology's Report and that risks described as quarterly on such XX-Q filed Factors and Form Annual Form Ormat in the on Risk reports For

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

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

Doron Blachar

quarter for morning, Starting and This Ormat. today. good and with everyone. for you Rob, X. you, was slide X good another Thank Thank joining us

continue delivering progress challenges our of the solar storage, to We pandemic making the significant executing hybrid to in long-term geothermal COVID in plan, improvements and and capacity. our geothermal year-over-year our successfully navigate profitability increase

assessment. our Our operating increases adjusted of made efforts business and execution. our EBITDA the year-over-year for has progress double-digit in We operating from the to $XXX results quarter million resolved generated income The significant by electricity with October. KPLC, and settled operations the Kenya, tax third improved and model reflect flow the our assessment grow customer strength fourth with our payments started and KPLC quarter Honduras on delivered assessments third million payment Kenya. scheduled overdue by quarter, from quarter our KRA. $XX.X segment. most year's P&L. outstanding collection an assessment amounts reducing expected storage of and We invoices ENEE, impact We strong limited and from cash made a this we for customer the in received driven in in tax a all favorably has in issued this prior Also

Additionally, Kenya KPLC early in in force removed the September. by declared was majeure

segment, electricity grow later I our as the are continuing elaborate our call. We efforts to on will

storage current the is segment to us segment the further impacted mainly results, a decline The provide I affected financial results review backlog effect. call in for to also product the to profitability, and on due is segments our encouraged which results of turn lower the Ginzburg our two We lower revenue Assaf helping quarter. COVID-XX by operations. are these over of offset I reduced by update the strength this will being before

Assaf?

Assaf Ginzburg

you, Thank Doron.

in revenues and The gross result the $XXX $XXX a for revenue our million, was million. Let slide me net on start X% were my down X%. to decreased review performance financial of decrease Total cost of X% profit quarter of X.

a last from increased this XX.X% to margin year XX% gross quarter. However,

Moving in quarter million period the were with in more slide electricity last $XXX same our for our to segment for on line Revenues details segment. year. electricity X

interruption Olkaria, This curtailment business margin. by insurance included in this last revenue to $X.X received quarter result $X.X we of million This related in income offset benefited quarter. of this a from increased revenue insurance of $XX.X as a during in of and period. million Ormesa million Puna Cost included Steamboat total the out to this via of year revenues lower Hills, income quarter Brawley compared gross

from GAAP, business the insurance. proceeds interruption As allocate we a the reminder on the

expenses. insurance First electricity the when in a the that exhausted, is under P&L. separate of operating under line segment; and item cost income to revenue is the balance allocated of the

XX. slide to Turning

segment revenue. of increase its addition Pomona As following $X.X enjoyed expected quarterly product the last to by revenues, Services generated segment on July, XX, XX.X% This of last year slide contributed Management which year. continuing impact to Storage On an compared segment. COVID-XX million million $XX.X revenue of $X.X million the Energy to quarter from are our lower this over in the segment and in acquisition the due

Moving of to XX XX slide for discussion gross and profit a margin. and our

of with be Energy Storage carrying in improvement XX. XX.X%, gross expected quarter quarters. negative was Pomona COVID quarter in in XXXX results Services project by impacted a by project restriction Gross strong improved Ngawha electricity that gross segment year revenue to our associated a building margin efforts demonstrating a margin other the due for line of was the with electricity gross to prior that of is much currently This margin. declining improve margin among higher Management segment higher in the product delivering The reported we segment, of The $X gross margin. and Mainly country The and both Ngawha margin New related this compared operating quarter full better and Zealand. depreciation the a that this in to project addition of cost by In impacted are to the margin improved see performance driven quarter limitation assets. we efficiency million third cost the consolidated our profit. this also to gross storage although segments.

storage consecutive We depreciation expect to our amortization rate quarter where consolidated be annual Pomona second to was EBITDA a run and energy business our year. million contributed results. $X.X positive the of This

slide for to million to mainly driven expenses XX. increase sales compared Turning insurance is expense were quarter million $XX.X by increase commission, $XX.X other year. services. in the SG&A The last professional and third

XX. income slide third to quarter operating of Operating for segment. slide, by breakdown this the In Turning income you see the XX.X%. the can by increased

this for million borrowed bond, expense Turning by third XX. in we million QX. $XX.X early the interest compared was the the expense quarter interest slide was negatively which to $XXX in to Net million impacted Interest of XXXX of quarter cost period. prior $XX.X the

$XXX to bonds used the debt lines were and CapEx the expected available quarter proceeds pay XXXX prepared down credit all all investments. facilities. issuance us last paying million While to revolving in the to toward U.S. enable to well increase Indonesia outstanding and part The support including of of the be our of credit

third to Turning tax $XX compared third for slide XX. Provision to of the $XX.X effective million for quarter XXXX. income income rate was tax quarter XX% the from an tax of for million expense of

laws. a tax $X.X million we recent had in related to charge items a quarter change U.S. non-cash This

by to was $XX.X shares Turning per shares income $X.XX XX. the compared $XX.X diluted third after-tax stockholders from company's of million portion $X.X or million million charge offset Sarulla. the to company the Net slide per $X.X for year. $X.XX Ormat's Net related income last or to income to benefited to stockholders million attributable diluted partially Puna insurance quarter of non-cash related to attributable

per tax U.S. income in charge. In a in factors law a $X.X share. these recent change million by our the addition, $X.XXX In resulted in positively impacted the EPS tax aggregate, diluted

to EBITDA insurance slide EBITDA increased you our EBITDA Turning that adjusted quarter to the that this Adjusted year. from was electricity see contribution the impact last this slide XX.X%. XX, Please total received included the full $XX.X $XXX.X million, of XX. up BI million to In quarter. note can

reduced EPS to associated portion adjusted on slides. by of EBITDA in partners. impact provided a our the the related tax appendix and by and EBITDA Reconciliation are While

September restricted the This XX. plans. ability December to reinvest to down X business approximately slide Cash of XXXX $XXX and growth to $XXX months million million XXXX. our support in was cash the XX, the slide use first for demonstrate enhanced as of breaks of and XX, our now cash as Turning to compared

debt rate on interest as net September schedule of of financing XXXX is payment XX, The $X.X debt and XX. short-term billion costs was X.X%. and -- its page our deferred long-term is Our currently presented on

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

pursuant XX and increase in share a that the provides plans activities on dividend target overview slide globally of storage day exploring paid efforts to Directors internal of XXXX, stockholders XX, activity. and electricity X, the X, and policy. XXXX XXXX our Turning a to and $X.XX dividend beyond. With record company's new December close in the On continue financing the dividend in developing will November increase declared our and with of per of recent of XXXX. our segment on line as These Board of U.S. project. The company's be to on an to our Business November to of

from Honduras this of $XX in our September, in the we received ENEE for to to some Before had favorable million we customer I call on In call invoices. year's want I Doron, outstanding prior development the elaborate front. international

amounts collection we made the KPLC starting and has KPLC, for Kenya. scheduled in our improved third quarter In October. from overdue addition, reducing all payment customer has started in

QX years were Kenya tax approximately stages reached estimated third payment it the $X.XX the by of which the and million by $X year of and have results, my in X a the share penalties. including KRA a authority tax quarter, lower amount in to net this conclude through settlement. total included in of million, interest known unresolved and QX in diluted very $XX.X The to settlement overview. benefits million all KRA as company tax negotiation we XXXX XXXX to $X December the recorded is The favorable concluded payments. related the which interest to most at assessment XXXX as is them through subsequent Ormat also tax of expected Finally, recover that of a associated all and impact deferral That previously $XXX of the of resulting during all covered different We by future Ormat of tax including utilized a noted still XXXX total end assessment only penalties. issued it million be per the we will on

Now and I call to like operational the turn business over Doron for to update. would Doron? now any

Doron Blachar

Thank you, Assaf.

compared generation our at power slide in decline quarter curtailments XX generation. a for at generation to the to in X.X% This mainly plant. lower some OREG Turning our the due declined facility and look Power Olkaria power the in year. by to last plants is

of energy However, different revenue portfolio rates contracts. remained because unchanged under our

is line to plant completed and XX, the and of plant generation efforts transmission resume electrical the noted and slide our construction at forward to Puna the connected on line. transmission power the currently the As is substation moved

one a side, process the On in the field we we well. of power connected second production well to connecting the plant new are and production

power in megawatts. XX expect exact as start year, increase remains timing the We we next although, megawatts of a with build XXXX We to few to expand to generating end new by uncertain. generation the to the generation power a throughout plant in the XX weeks gradual further aim plan with

XX. slide to Turning

with next the last work grow in compared years two and XXX more are add in added to XXX the continue development segment our XXXX we two We our till our megawatts with and megawatts XXXX. on the profitable to to to we years track XX electricity megawatts

XXXX are we to result years. a efforts As expansion expecting be in higher previous our than these CapEx in of

for in manufacturing integration capacity our to As we the support weak are as to we capabilities product using quarter, focus electricity initiatives preparation segment's of a last more segment, vertical to our future part growth. our discussed internal shift on XXXX

resources We manufacturing and growth and to exploration XXXX are our in allocating capital beyond. continue

and increasing exploration in existing profitability. new operating and that our increase are developing worldwide projects U.S. will domestically internal globally activities We enhancing assets, our the

portfolio. We M&A opportunities actively for to are worldwide expand also the looking and U.S. in our

As you our the see new can in portfolio. to a solar project list, added we

project and serve adding to geothermal are to hybrid power existing duplicating plants geothermal successful auxiliary the our Tungsten needs. solar We

backlog. our on update an for XX slide to Turning

has our is the being around business with by pandemic, product a Our part of projects the COVID-XX been most the segment We believe short-term impacted delayed. phenomenon. world this

November However, we XXXX $XX of did sign and segment our million. backlog was a $XX million product as contract,

by additional We or have late sign of to additional a we and XXXX expect XXXX. agreement pipeline one early contracts

revenue. And product slowly However, significantly segment to XXXX weakness consequence product anticipate the evolve California EBITDA, we solution. revenues Energy partially for business. storage our reduce strategic we that weakness the demand continues more becoming becoming more comprehensive XX in compared segment storage offsetting in in renewable will guided slide a strategy. energy continued the the this been for segment consistent recent in discussed energy blackout energy currently only -- heightened improvement in has XXXX of The segment a important affordable, as reduced in to the quickly but a storage

business With future to our to come continue we We periods. market. segment to on changing additional expand to in these tailwinds, California elsewhere rapidly hope win presence be in with this out and development updates able in the

revenues. are expect XXXX During $X.X X to County the The CCAs. third comply in grid XXXX. first to Resource to Adequacy of our energy June the state-wide agreement, growth market storage X the signed project to million storage. mandate California State CCAs is Agreements for these annual Two These expand which with aggregators multiyear for add of energy deals of our the than Buena to development X.X or later footprint will California. X.X for commercial XX-year primary remains project, an incremental gigawatts our quarter, under that the no California CCAs is operations a adequacy the start resource each Tierra signed begin Under energy we California. two in generate storage from energy megawatts agreement community and by storage resource adequacy expected Northern choice currently

represents quarter XX of we storage Pomona facility hour and The completed operating existing hours. the to which acquisition the Pomona the megawatts in third XX-megawatt our During the EBITDA portfolio to quarter. XX-megawatt, XXX-megawatt energy in third but saw increased contribution California, positive asset its revenues we also

Slide to XX. Turning

expected spend includes that plants projects the existing enhancement expenditure for for capital approximately construction released million construction. capital of of our for and Our rest year the $XX new for to power management

a $XXX for estimate in additional Slide for million our investments the approximately addition, the to turn the XX, million. to XXXX We listed be XXXX expenditure of Please In discussion of for we remainder estimate slide. guidance. $XX total

are our We guidance year XXXX. updating for the full

the million plant revenues revenues million with $XXX in million $XXX to and the fourth reopening million million including revenue power $XXX Puna between total between expected expect and its We $XXX approximately quarter. $X electricity related segment assuming

million. product between and expected energy segment is for be and demand expect million. response million revenues $XXX storage activity Revenues $XXX $XX We to approximately

are We and it now and EBITDA million. our $XXX increasing is $XXX be between to million expected adjusted

approximately We $XX expect annual adjusted to EBITDA million. interest attributable to be minority

quarter. have with with Ormat what a I'm summary proud As very team we accomplished this

our which to prepared EBITDA. is expand plans continue will We remarks. increasing portion our an remain more on of segment profitable track revenues electricity taking with to our and our This concludes

questions. I the would for if you Now like open please? call to Operator

Operator

comes first ahead. Oppenheimer. The Instructions] [Operator Noah Kaye question with from Please go

Noah Kaye

not pre-pandemic correctly Thank KPLC taking morning hear regularly, I force start buying factor questions. with comparably near And I the the that to September? at/or majeure did Appreciate you. in everyone. just this they guess Kenya, you does are point? you the levels that Good imply only to but at lifted power paying

Doron Blachar

buying last bought regardless Kenya in we've And what the returning is still than less bit the more than a the at year. September. what to in seen They But normal end they QX are they is COVID lifted that force of Yes. country majeure of business. roughly they've

hope QX that we decline. which continue lower than the So will curtailment are current to

Noah Kaye

Yes.

back been? is you start Okay. claims Thanks. have can of your just of online just get interruption And on then That's we proceeds in insurance really sort Can to terms here of outstanding the kind XQ? mean next the just what year-to-date you back like us remind helpful. I for how in And year. you Puna much out as insurance business this can -- so

Assaf Ginzburg

is this Assaf. Noah, Hey

roughly between separate income, you're item insurance looking If the year-to-date. $XX million and line gross it's margin of

Noah Kaye

recover you is expect And to much didn't Okay. I And outstanding? XQ? catch sorry, more in how you, but I'm any did if

Assaf Ginzburg

policy. $XXX will this the likely we're for point a have XX% therefore with the that will something now. less them event policy, including roughly insurance of legal still we it's with guidance company of Out collected we million I the at provide we're actually cannot of in the And have -- QX. And negotiating QX. right we say in in one

Noah Kaye

Okay.

obviously, that a on backlog come to watched XXXX. may in here. and So declining still products, we've just And be

I think prospects the although at sounds it this some indicating like -- for near-to-medium term. you're point good

I $XX sort enough be revenue this thinking could for into that Just of $XX benefit indicator about as next How million it over for course of modeling and mean then XXXX? a to book everybody's million the or significantly than is likely we level? reasonable really better you this so turn around that should revenues do year

Doron Blachar

giving is this -- is delay we sign a at of since between from not there revenue percentage time until a contract -- not can for revenue there we next start obviously we're stage giving we time completion the it. But So are recognize year. we're a actually to any and time recognizing guidance

lower into So that QX to XXXX. we and be we And said obviously, effect as sign today going QX, signed we is contract today. XXXX them come than can onwards, if towards

Noah Kaye

at That's right. you're guidance And think going really give that for on the year, formal be your a is higher lines of it mention early -- anything year with it's or of of I even gas helpful. could did magnitude to next one. In like understanding finally or greater XX% putting increase, to is to you we here along Again development. than too indicative next that? last XX% even order somewhere the Right, the be are CapEx looking that foot which but

Doron Blachar

plan to last that years If the the we two and megawatts. in you we XX look had we megawatts around megawatts XXX -- said in now XXX

going in be XXXX than XX%. or is increase and the higher XXXX XX% So to

Noah Kaye

right. All will I jump helpful. you. That’s Yes. Thank back.

Doron Blachar

Thank you, Noah.

Operator

with Strouse Please Mark The next go comes [Operator from JPMorgan. Instructions] question ahead.

Mark Strouse

Was revenue actually lower end of if you just could timing you the our the Thank the narrowing kind great. of pullbacks it much of you expectations towards quantify Puna that Kenya on buckets very the drove for could color changes kind for of taking production? that the or you. be them that Can any been Thanks But range like have break would down this year? kind different in Most there guidance that that? for questions. provide of more Anything just answered. Yes.

Doron Blachar

Yes.

So Mark. thank you,

parameter longer We side it taking said start as were field. the bit Unfortunately is you it On a on hoping electricity earlier. Puna. the the to work main will is

in shortened segment is the main end. the it that's low The So that to driver which middle. pushes we guidance, the product the

So there. where I it roughly we said the on there's it's And major be. will no storage front, think, over change

Mark Strouse

Right.

Okay. us. That’s very very helpful. That’s it you for Thank much.

Doron Blachar

Thank you.

Operator

from The Instructions] is Co. with & next question [Operator go Jeff Please Osborne Cowen ahead.

Jeff Osborne

afternoon, A of couple my guys. Good questions end. on

a On the we -- be an overhang time, that cost do congratulations so been the quite where has $X thing, quarter? Kenya other think certainly for resolving million expense, for next should goods modeled -- to the investors of for see. about is on the How that that item? some in or great Is

Assaf Ginzburg

Good the million to in morning. I right it in now we're item. book item. penalties. tax tax interest put that the planning It suggested roughly And will line everything we line will $X of include and

impact impact shouldn't only not best tax and It as rate. will is as it EBITDA. impact the quarter So you good know, that will usually why But significant. our the be that's news QX

Jeff Osborne

any quarter pricing to do then associated isn't the that and the adequacy what just on for you you the such overall year, about pricing you I the think profitability Got run as current we gave the in repeatable? it. given know quarter environment the how for guidance saw but rate And resources batteries? alluded maybe third the that side you third abnormal Was saw in blackouts. storage there

Doron Blachar

pricing in has summer. hour. did ordinary Texas mild the $X,XXX They be an usually megawatt the on hour -- pricing. to QX But blackout In rose hour during they in per even that had out the had blackout. and were California with quite the per extreme pricing in contrary megawatt XXXX, the Yeah. actually push of $X,XXX They to $X,XXX

that So actually happen. didn't

in see do in abnormalities some QX So California. we

we'll a still we you need to But It energy something QX be grow follow expect we'll that to additional guidance that storage. better in this it's to quarters is material bit we not as than give QX, and So obviously since other the business. Ormat.

Jeff Osborne

strategy storage, How M&A it. in now geothermal of acquisitions to two Doron touch relative well. had think the other the several And you been Can that target Got M&A reflect You've years technologies pipeline as a you've looks And you've you alluded on M&A? for as the in that on haven't as just but then U.S. years. for obviously what Ormat, like would done I focused things a tuck-in you than active. to the you're and to geothermal, future different on? past past relative

Doron Blachar

Yes.

geothermal, an acquisition. So there's active pipeline of on today potential

synergetic with other we geothermal that forecast. accretive industry are make the risk seen the we've that to acquisition few some to acquisitions that we are and On sometimes on knowing underpriced resources, and storage, risks potential acquisitions. that a maybe the better they we are did us are are that have projects Ormat. trying we to the today of in the the front, by And the And compared a understanding the and And we to knowing at looking market. happen. sometimes But --

others. are additional like These smaller are usually acquisitions. and Pomona We discussing acquisitions

So I acquisition near-term. see the expect do some in more to

Jeff Osborne

if and for a you've got capital CapEx year allocation I an XXXX it. be challenging then Got guess, Certainly then M&A. elevated potential it also

paying So, geothermal on on plan it's or side, pretty how any sizable assuming for you the are these small? do M&A

Doron Blachar

sizable might capital capacity. they our within No, ability be

significant with So, the money us different by we we have give -- institutions quarter. right did Capital have raise is do us finance If the -- do lend it target the bond, the even. price, approaches in money. bond to we We $XXX available. right can earlier financial million to to

Jeff Osborne

to operational was the of the change $XX.X on with just I'm guidance just last guidance of that assets quarter. the trying through? this to pieces much sort of Honduras of event get just flow EBITDA and adjusted sense EBITDA was as Was How million a moving Honduras. versus sort my that the Makes the sense. relates And it in from last question quarter?

Doron Blachar

event. event flow -- didn't a didn't cash It go P&L. through the flow Honduras was The

you did increased the business there. that item of see the one was that after cash that you $XX.X a million is that, specific following through a So of line pure interruption and in the is one it. G&A can -- The see we EBITDA the thing And go P&L the can income guidance. that business interruption have that

Jeff Osborne

it. Got

Okay. had. That’s I Thank you. all

Doron Blachar

you. Thank

Operator

[Operator Instructions] over This concludes to conference our closing back would any Doron session. question-and-answer I like turn Blachar for to the remarks.

Doron Blachar

you. Thank

unknown So for on will for it And thank you. I whatever everybody you, continued but U.S. talk Still thank the want us you day results, support joining in right soon. special be. the one hopefully it this be to the the right one, want to Thank to you you and

Operator

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

disconnect. now may You

Ormat (ORA) 4 Nov 202020 Q3 Earnings call transcript