Ormat Technologies Reports 2010 Year End and Fourth Quarter 2010 Results

RENO, Nev., Feb. 22, 2011 /PRNewswire/ -- Ormat Technologies, Inc. (NYSE: ORA) today announced financial results for the fourth quarter and full year ended December 31, 2010.

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The highlights for the year and recent development:

• 15.5% increase in Electricity Segment revenues;
• Annual net income of $37.2 million, or $0.82 per share;
• Completed the 15 MW Jersey Valley Plant in Northern Nevada and the 8 MW Puna expansion;
• Raised approximately $250 million in debt offering;
• Refinanced $24.9 million in tax equity transaction for OPC power plants;
• Increased land position to 343,000 acres;
• Acquired the balance of the Mammoth complex; and  
• Continued progress in greenfield development sites.

Commenting on the results, Dita Bronicki, Chief Executive Officer of Ormat, stated: "The significant resources we have invested in the acquisition, exploration and development of new leases, as well as project enhancements, are reflected in the steady growth of our total generation.  This positively impacted revenue in our Electricity Segment, which reached $291.8 million, a 15.5% increase over last year.  We currently have ten projects in various stages of construction and development that we expect will add significantly to our generation and top-line growth through 2013."

"Looking to the longer-term, we continue to search for new geothermal fields while keeping a careful eye on value.  Lease acquisition and greenfield development remain key to our long-term objectives, and are supported by our ability to raise attractive financing.  Our land portfolio totals over 343,000 acres and we have 15 projects in various stages of exploration. We raised approximately $250 million in a bond offering and we will continue to pursue the benefits of the stimulus ARRA where eligible. In our product business we see some results from our marketing efforts with new orders added to our backlog and are optimistic that some of current negotiations will mature into additional orders in the near future."

"The low output and high costs of North Brawley materially impacted our results in 2010.  However, we expect to see improvement, both in terms of revenue and costs towards the end of 2011.  North Brawley capacity was recently increased to approximately 30 MW following the addition of a new injection area and work to increase the output of the power plant will continue in 2011."

The North Brawley power plant was tested under U.S. GAAP guidance for impairment in the current year due to the low output and the higher than expected operating costs. Based on these indicators we tested North Brawley for recoverability by estimating its future cash flows. The test for recoverability concluded that no impairment existed at December 31, 2010.  However, if we will not be able to bring the project capacity to approximately 45 MW and the operating costs to the level of our current projections, we will have to record a material impairment of the investment in the power plant. We are continuously assessing our progress in achieving these objectives.

Financial Summary

Annual Results

For the year ended December 31, 2010, total revenues were $373.2 million, compared to $412.0 million for the year ended December 31, 2009.  Electricity Segment revenues increased by 15.5% to $291.8 million up from $252.6 million in the year ended December 31, 2009.  Total output increased by almost 14.0% and the average revenue rate of the Company's electricity portfolio increased slightly from $77 per MWh in 2009 to $78 per MWh in 2010.

Product Segment revenues for the year ended December 31, 2010 were $81.4 million, compared to the exceptionally strong revenue of $159.4 million in the year ended December 31, 2009, a decrease of 48.9%. This decrease in our product revenue is a result of a decline in our Product Segment customer orders, which we have previously discussed.

Net income for the year ended December 31, 2010 was $37.2 million, or $0.82 per share of common stock (diluted), compared to $68.6 million, or $1.51 per share of common stock (diluted), for the year ended December 31, 2009. The decrease in net income is principally attributable to a decrease in the total gross margin due to the decrease in product revenues and the increase in electricity cost of revenues relating mainly to North Brawley, which had an after-tax loss of approximately $15.2 million, or $0.33 per share, for the year, and to an increase in interest expense, net. This was partially offset by an after-tax capital gain of $22.4 million, related to the acquisition of a controlling interest in the Mammoth complex in California.  

Adjusted EBITDA for the year ended December 31, 2010 was $164.3 million compared to $167.0 million for the year ended December 31, 2009. 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 until August 1, 2010, the date we acquired the remaining 50% interest. The reconciliation of GAAP net cash provided by operating activities to Adjusted EBITDA and additional cash flows information is set forth below in this release.

Cash and cash equivalents as of December 31, 2010 increased to $82.8 million from $46.3 million as of December 31, 2009. In addition, as of December 31, 2010, we have available committed lines of credit with commercial banks aggregating $402.5 million, of which $149.1 million is unused.

On February 22, 2011, Ormat's Board of Directors approved the payment of a quarterly cash 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, subject to Board approval.  The dividend will be paid on March 24, 2011, to shareholders of record as of the close of business on March 15, 2011. The Company expects to pay a dividend of $0.04 per share in the next three quarters.

Commenting on the outlook for 2011, Ms. Bronicki said, "We expect our 2011 Electricity Segment revenues to be between $315 million and $325 million. With regard to our Product Segment, we expect that our 2011 revenues will be between $75 million and $85 million."

Fourth Quarter Results

For the three-month period ended December 31, 2010, total revenues were $92.8 million, compared to $94.2 million in the fourth quarter of 2009. Electricity Segment revenues increased by 17.1% to $73.6 million up from $62.8 million in the fourth quarter of 2009.

Product Segment revenues for the three-month period ended December 31, 2010 were $19.3 million, compared to $31.4 million in the same period in 2009.

For the quarter, the Company reported net income of $4.5 million or $0.10 per share (diluted), compared to $16.1 million, or $0.35 per share (diluted), for the same period in 2009.

Adjusted EBITDA for the fourth quarter of 2010 was $29.4 million, compared to $41.8 million for the same period 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 until August 1, 2010, the date we acquired the remaining 50% interest. The reconciliation of GAAP net cash provided by operating activities to Adjusted EBITDA and additional cash flows information is set forth below in this release.

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. EST on Wednesday, February 23, 2011.  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.

Webcast will be available approximately 2 hours after the conclusion of the live call. A replay will be available from 1 p.m. EST on February 23, 2011.  Please call: (800) 642-1687 (U.S. and Canada) (706) 645-9291 (International) and enter the Reply code: 17704060

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, Jersey Valley, Mammoth, Ormesa, Puna, Steamboat, OREG 1, OREG 2, OREG 3 and OREG 4; 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.

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 twelve-month periods ended December 31, 2010, and 2009:

SOURCE Ormat Technologies, Inc.