Ormat Technologies, Inc. Reports Second Quarter 2010 Results

RENO, Nev., Aug. 4 /PRNewswire-FirstCall/ -- Ormat Technologies, Inc. (NYSE: ORA) today announced financial results for the second quarter 2010.

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Second Quarter Results

For the three-month period ended June 30, 2010, total revenues were $96.3 million, a $3.2 million decrease from the second quarter of 2009. The results include a 15% increase in revenues of the Electricity Segment which was offset by the expected reduced activity in the Product Segment from a record high during 2009.

For the quarter, the Company reported a net loss of $1.5 million, or ($0.03) per share (basic and diluted), compared to net income of $16.0 million, or $0.35 per share (basic and diluted), for the same period a year ago. The decrease is principally attributable to high costs of the North Brawley power plant, a $3.1 million write-off of capitalized costs associated with an exploration prospect which we decided not to pursue, and an increase in interest expense due to a decrease in capitalized interest for projects under construction.  

Other than the North Brawley power plant, our power plants performed well. The North Brawley power plant had an after tax loss of approximately $7.4 million, or $0.16 per share, for the quarter. Although measures are in process to reduce operating costs, financial improvement of the North Brawley power plant is expected only when production ramps up later in the year.

Commenting on the results, Dita Bronicki, Chief Executive Officer of Ormat, stated: "The low generation and high operating costs at the North Brawley power plant had a significant impact on this quarter's results. Presently, the plant is operating at a stable output of approximately 20MW. We expect financial improvement as the plant's output increases toward 50 MW later in the year. We expect breakeven results for North Brawley sometime in 2011.  With the strong results from the rest of our plants and the success of the enhancement programs in other facilities, most notably Puna, we expect the overall results from the Electricity Segment to improve in the coming months."

"Important achievements occurred in several business development and financing areas that we expect will have a positive impact on our future results," continued Dita Bronicki.

• "We closed on approximately $142 million of 7- year senior unsecured bonds;
• We completed the acquisition of the remaining 50% interest in the Mammoth complex and will be able to move quickly to modernize the complex and generate higher revenue from the existing field and its expansion;
• We submitted our first application for a DOE Loan Guarantee for three geothermal projects under construction in Nevada; and
• Secured support for the Mount Spurr project in Alaska by the passage of Alaska Senate Bill 243, which significantly reduces royalty rates paid from geothermal production on state lands, and the recent Alaska Energy Authority approval of a $2 million grant from the Renewable Energy Grant Fund to support our exploration and drilling program this summer."

Electricity revenues for the second quarter of 2010 increased by 15% to $68.8 million from $59.8 million in the second quarter of 2009.  The increase in revenues was primarily due to North Brawley being placed into service in January 2010, and increased output from Puna resulting from repair work completed in June 2010. Total output increased by 11% from 796,000 MWh in the second quarter of 2009 to 880,000 MWh in the second quarter of 2010. The average revenue rate of the Company's electricity portfolio increased from $75 per MWh in the second quarter of 2009 to $78 per MWh in the second quarter of 2010.

Product revenues for the three-month period ended June 30, 2010 were $27.5 million, compared to $39.7 million in 2009. As noted in recent earnings releases, the Company expects revenues in the Product Segment to be down from last year's high throughout the rest of the year.

Adjusted EBITDA for the second quarter of 2010 was $24.0 million, compared to $39.8 million in the same quarter last year. Adjusted EBITDA includes consolidated EBITDA and the Company's share in the interest, taxes, depreciation and amortization related to the Company's unconsolidated 50% interest in the Mammoth complex in California.  As further described in "Reconciliation of EBITDA and Adjusted EBITDA and Additional Cash Flows Information" below, the Company changed the method for calculating EBITDA and adjusted EBITDA beginning in the third quarter of 2009.

Cash and cash equivalents as of June 30, 2010 were $54.2 million. The Company has available committed lines of credit with commercial banks aggregating $362.5 million, of which $68.7 million is unused.

The Company submitted an application for the American Recovery and Reinvestment Act ("ARRA") cash grant for the North Brawley power plant in June 2010 and expects to receive the funds shortly.

On August 4, 2010, Ormat's Board of Directors approved the payment of a quarterly dividend of $0.05 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.   The dividend will be paid on August 26, 2010 to shareholders of record as of the close of business on August 17, 2010. The Company expects to pay a dividend of $0.05 per share for the  third quarter of 2010.

Commenting on the outlook for 2010, Ms. Bronicki said, "We are updating our guidance to reflect the consolidation of the Mammoth complex revenues starting August 2010 and expect 2010 Electricity Segment revenues to be between $285 million and $295 million. This number does not include our share in the revenues of the Mammoth complex of approximately $6 million for the first seven months of 2010 that was accounted by the equity method.  With regard to the Product Segment, we expect 2010 revenues to be between $75 million and $85 million."

Six-Month Results

For the six-month period ended June 30, 2010, total revenues were $178.9 million, a decrease of 10.0% from $198.8 million in the same period last year. Net income for the period was $0.3 million, or $0.01 per share (basic and diluted), compared to net income of  $30.5 million, or $0.67 per share (basic and diluted), in the same period last year.

Electricity Segment revenues for the six-month period ended June 30, 2010 were $134.9 million, compared to $121.9 million in the same period a year ago. Product Segment revenues for the first half of 2010 were $44.0 million, compared to $76.9 million in the same period in 2009.

Adjusted EBITDA for the six-month period was $56.1 million, compared to $77.2 million in the same period a year ago. Adjusted EBITDA includes consolidated EBITDA and the Company's share in the interest, taxes, depreciation and amortization related to the Company's unconsolidated 50% interest in the Mammoth complex in California. As further described in "Reconciliation of EBITDA and Adjusted EBITDA and Additional Cash Flows Information" below, we changed the method for calculating EBITDA and adjusted EBITDA beginning in the third quarter of 2009.

Conference Call Details

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release at 10:00 A.M. EDT on Thursday, August 5, 2010.  The call will be available as a live, listen-only webcast at www.ormat.com. During the webcast, management will refer to slides that will be posted on the web site. The slides and accompanying webcast can be accessed through the Webcast & Presentations in the Investor Relations section of Ormat's website.

A 30-day archive of the webcast will be available approximately 2 hours after the conclusion of the live call. A replay will be available from available from 1 p.m. EDT on August 5, 2010 through 11:59 p.m. EDT, August 12, 2010.  Please call: (800) 642-1687 (U.S. and Canada) (706) 645-9291 (International) and enter the Reply code: 87735952

About Ormat Technologies

Ormat Technologies, Inc. is the only vertically-integrated company primarily engaged in the geothermal and recovered energy power business. The Company designs, develops, owns and operates geothermal and recovered energy-based power plants around the world. Additionally, the Company designs, manufactures and sells geothermal and recovered energy power units and other power-generating equipment, and provides related services. The Company has more than four decades of experience in the development of environmentally-sound power, primarily in geothermal and recovered-energy generation. Ormat products and systems are covered by 75 U.S. patents. Ormat has engineered and built power plants, that it currently owns or has supplied to utilities and developers worldwide, totaling approximately 1300 MW of gross capacity. Ormat's current generating portfolio includes the following geothermal and recovered energy-based power plants: in the United States - Brady, Brawley, Heber, Mammoth, Ormesa, Puna, Steamboat, OREG 1, OREG 2 and Peetz; in Guatemala - Zunil and Amatitlan; in Kenya – Olkaria III; and, in Nicaragua - Momotombo.

Ormat's Safe Harbor Statement

Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to Ormat's plans, objectives and expectations for future operations and are based upon its management's current estimates and projections of future results or trends. 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 Ormat Technologies, Inc.'s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 8, 2010.

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 Six-Month Periods Ended June 30, 2010 and 2009

(Unaudited)

Ormat Technologies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

As of June 30, 2010 and December 31, 2009

(Unaudited)

Ormat Technologies, Inc. and Subsidiaries

Reconciliation of EBITDA and Adjusted EBITDA and Additional Cash Flows Information

(Unaudited)

We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate adjusted EBITDA to include depreciation and amortization, interest and taxes attributable to our equity investments in the Mammoth complex. EBITDA and adjusted EBITDA are not measurements of financial performance or liquidity 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. EBITDA and adjusted EBITDA are presented because we believe they are 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. The following table reconciles net cash provided by operating activities to EBITDA and adjusted EBITDA, for the three and six-month periods ended June 30, 2010, and 2009:

We previously calculated EBITDA to exclude equity income of investees and other non-operating expense (income) and adjusted EBITDA to exclude other non-operating expense (income). In addition, we now reconcile EBITDA and adjusted EBITDA to our net cash provided by operating activities for each of the periods shown, rather than net income amounts we have used for reconciliation in prior periods. Accordingly, the information in the tables below is not directly comparable to similar reconciliation information we have reported for prior periods not reflected in the tables below. The change in the way we now calculate EBITDA and adjusted EBITDA results in higher EBITDA and adjusted EBITDA for each of the periods shown above than we would have reported using our prior method for calculating EBITDA and adjusted EBITDA. The following table shows, for each period reported above, the differences in our reported EBITDA and adjusted EBITDA resulting from the change in our method for computing these amounts.  

This comparative non-GAAP information is provided to assist investors in evaluating the impact of the change in the way we calculate these amounts in performing their financial analysis of our operations for the periods presented.   This information should not be considered in isolation or as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP or other non-GAAP financial measures. 

SOURCE Ormat Technologies, Inc.