Ormat Technologies Reports Third Quarter 2024 Financial Results

- Advertisement -

REVENUE AND ADJUSTED EBITDA GROWTH HIGHLIGHT CONTINUED PROGRESS TOWARDS ACHIEVING GROWTH TARGETS

HIGHLIGHTS

  • ELECTRICITY SEGMENT REVENUES AND ADJUSTED EBITDA INCREASE DRIVEN BY SOLID OPERATIONAL EXECUTION AND A STRATEGICALLY EXPANDED GENERATION PORTFOLIO
  • COMPANY NARROWS ITS FULL YEAR REVENUE GUIDANCE AND INCREASES ITS FULL YEAR ADJUSTED EBITDA GUIDANCE, FOLLOWING STRONG THIRD QUARTER RESULTS
  • COMPANY ANNOUNCED IN OCTOBER THE COMMERCIAL OPERATION OF ITS LARGEST STORAGE PROJECT TO DATE AND PLANS TO COMPLETE THE PROJECT’S INVESTMENT TAX CREDIT TRANSFER BY END OF YEAR

RENO, Nev., Nov. 06, 2024 (GLOBE NEWSWIRE) — Ormat Technologies, Inc. (NYSE: ORA), a leading renewable energy company, today announced financial results for the third quarter ended September 30, 2024.

KEY FINANCIAL RESULTS TBU

  Q3 2024 Q3 2023 Change (%) 9 months 2024 9 months 2023 Change (%)
GAAP Measures            
Revenues ($ millions)            
Electricity 164.6   157.2   4.7%   522.1   482.8   8.1%  
Product 37.4   39.8   (6.2)%   100.0   83.3   20.0%  
Energy Storage 9.8   11.0   (11.1)%   26.8   21.9   22.2%  
Total Revenues 211.8   208.1   1.8%   648.9   588.1   10.3%  
             
Gross Profit 58.9

  60.0   (1.9)%   199.1   185.6   7.3%  
Gross margin (%)            
Electricity 30.2%   31.8%     34.5%   35.5%    
Product 19.2%   18.7%     16.0%   13.9%    
Energy Storage 20.2%   22.9%     11.5%   11.2%    
Gross margin (%) 27.8%   28.8%     30.7%   31.6%    
             
Operating income ($ millions)

35.7   37.6   (5.0)%   123.4   115.0   7.3%  
Net income attributable to the Company’s stockholders 22.1   35.5   (37.7)%   82.9   88.7   (6.5)%  
Diluted EPS ($) 0.36   0.59   (39.0)%   1.37   1.49   (8.1)%  
             
Non-GAAP Measures            
Adjusted Net income attributable to the Company’s stockholders 26.3   28.2   (6.7)%   90.2   81.4   10.8%  
Adjusted Diluted EPS ($) 0.42   0.47   (10.6)%   1.49   1.37   8.8%  
Adjusted EBITDA1 ($ millions) 137.7   118.3   16.3%   405.0   342.7   18.2%  

“Our third quarter financial performance was driven by the strong contribution of our recently acquired Enel assets and the results of two successful drilling campaigns at our Puna and Olkaria power plants. Adjusted EBITDA grew by 16.3% during the quarter, driven by growth across all three of our operating segments. In addition, we generated higher transferred PTCs during the quarter at improved PTC rates. This robust performance enabled us to raise our 2024 annual Adjusted EBITDA guidance, highlighting Ormat’s strong financial results thus far this year and our confidence in our coming quarter.” said Doron Blachar, Chief Executive Officer of Ormat Technologies.”

“We continue to make great progress in our strategic efforts to balance our Energy Storage portfolio between contracted and merchant exposure as we focus on delivering consistent stability and improved margins. Our progress is highlighted by the recent commercial operation of our 80MW/320MWh Bottleneck storage project. This key development comes in addition to multiple other contracts signed during the third quarter: an RA (Resource adequacy) agreement with the City of Riverside for our 80MW/320MWh Shirk storage facility and the signing of our first two tolling agreements in Texas for our 60MW/120MWh Lower Rio storage facility and our 60MW/120MWh Bird Dog storage facility. These achievements serve as a testament to our team’s ability to execute across Ormat’s portfolio expansion strategy and to bring profitable projects to fruition.”

Blachar continued, “As we look ahead, we continue to see strong industry tailwinds globally for both Geothermal and Energy Storage that will help accelerate improved profitability. We expect that as electricity demand continues to increase due to global decarbonization efforts, the electrification of the modern economy, as well as the rapid expansion of data centers and computing needs, we will remain well-positioned to capitalize on these trends and convert them into continued returns.”

FINANCIAL AND RECENT BUSINESS HIGHLIGHTS

  • Net income attributable to the Company’s stockholders for the third quarter was $22.1 million, compared to $35.5 in the same period last year. Diluted EPS for the third quarter was $0.36, compared with $0.59 in the prior year period. This decrease in net income from the same period last year was mainly driven by a $9.4 million tax income, recorded in the third quarter of 2023 related to changes in Kenya tax laws.
  • Adjusted net income attributable to the Company’s stockholders for the third quarter was $26.3 million, compared to $28.2 million last year. Adjusted EPS was $0.42, compared to $0.47 in the prior year period.
  • Adjusted EBITDA for the third quarter was $137.7 million, an increase of 16.3% compared to 2023. The year-over-year increase in Adjusted EBITDA was driven by contribution of the Enel assets we acquired in the first quarter of 2024, the sale of tax benefits from newly built plants, improved performance and pricing of our Puna power plant and a legal settlement with a battery supplier, which we expect to continue to receive over the next 18 months, which reflects the loss of revenues as a result of battery non- supply.
  • Electricity segment revenues increased 4.7% year-over-year. Third quarter revenue growth was driven by the contribution of our acquired Enel assets and higher generation and pricing at Puna. The increase was partially offset by the partial outage at our Dixie Valley power plant, which is currently in the startup phase following an unplanned outage. The decrease in the Electricity segment gross margin was mainly impacted by higher depreciation related to the acquired Enel assets.
  • Product segment revenues decreased 6.2% due to the timing of revenue recognition during the third quarter.
  • Product segment backlog stands at approximately $165.0 million as of November 5, 2024, and includes approximately $33.0 million in new contracts signed during the third quarter.
  • Energy Storage segment revenues decreased 11.1% year-over-year, due to higher energy rates realized in ERCOT during the previous year as the result of an inclement weather event.
  • G&A expenses increased mainly due to one-time consulting fees of $4.8 million related to a settlement agreement with a third-party battery systems supplier.
  • Other operating income was $6.3 million recorded in the third quarter 2024 and represents the non-refundable portion of the recovery of damages received from a third-party battery systems supplier as part of a settlement agreement entered into in August 2024, which reflects the impact associated with lost revenues due to delays caused by batteries that were not supplied.        

IN ADDITION, SINCE THE END OF THE SECOND QUARTER, THE COMPANY:

  • Announced the successful commencement of commercial operations at the 80MW/320MWh Bottleneck Energy Storage facility in the Central Valley of California. The Bottleneck facility is the Company’s largest energy storage facility.
  • Secured a 15-year RA agreement with the City of Riverside for the Shirk Energy Storage facility, which includes a guaranteed COD for March 1, 2026.
  • Signed the first tolling agreements in Texas for two 60MW/120MWh Energy Storage Facilities. The agreements secure fixed, long-term revenues, and de-risked Ormat’s Texas storage portfolio by approximately 50%, aligning with the Company’s long-term plan to improve segment profitability and accelerate growth.
  • Secured land parcels in Nevada’s BLM auction to further advance geothermal development in the state.

2024 GUIDANCE

  • Total revenues of between $875 million and $893 million.
  • Electricity segment revenues between $710 million and $715 million.
  • Product segment revenues of between $130 million and $138 million.
  • Energy Storage revenues of between $35 million and $40 million.
  • Adjusted EBITDA to be between $540 million and $555 million.
    • Adjusted EBITDA attributable to minority interest of approximately $20 million.

The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three and nine months ended September 30, 2024. However, the Company does not provide guidance on net income and is unable to provide a reconciliation for its Adjusted EBITDA guidance range to net income without unreasonable efforts due to high variability and complexity with respect to estimating certain forward-looking amounts. These include impairments and disposition and acquisition of business interests, income tax expense, and other non-cash expenses and adjusting items that are excluded from the calculation of Adjusted EBITDA.

DIVIDEND

On November 6, 2024, the Company’s Board of Directors declared, approved, and authorized payment of a quarterly dividend of $0.12 per share pursuant to the Company’s dividend policy. The dividend will be paid on December 4, 2024, to stockholders of record as of the close of business on November 20, 2024.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Thursday, November 7, 2024, at 10:00 a.m. ET.

To join the call, please dial +1-646-960-0440, approximately 15 minutes prior to the scheduled start of the call. The access code for the call is 2705841. Please request the “Ormat Technologies, Inc. call” when prompted by the conference call operator. The conference call will also be accompanied by a live webcast which will be hosted on the Investor Relations section of the Company’s website.

A replay will be available one hour after the end of the conference call. To access the replay, please dial +1-647-362-9199. Please use the replay access code 2705841. The webcast will also be archived on the Investor Relations section of the Company’s website.

ABOUT ORMAT TECHNOLOGIES

With over five decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation (“REG”), with robust plans to accelerate long-term growth in the energy storage market and to establish a leading position in the U.S. energy storage market. The Company owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on the Ormat Energy Converter – a power generation unit that converts low-, medium- and high-temperature heat into electricity. The Company has engineered, manufactured and constructed power plants, which it currently owns or has installed for utilities and developers worldwide, totaling approximately 3,400 MW of gross capacity. Ormat leveraged its core capabilities in the geothermal and REG industries and its global presence to expand the Company’s activity into energy storage services, solar Photovoltaic (PV) and energy storage plus Solar PV. Ormat’s current total generating portfolio is 1,500MW with a 1,230MW geothermal and solar generation portfolio that is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe, and a 270MW energy storage portfolio that is located in the U.S.

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. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect or anticipate will or may occur in the future, including such matters as our projections of annual revenues, expenses and debt service coverage with respect to our debt securities, future capital expenditures, business strategy, competitive strengths, goals, development or operation of generation assets, market and industry developments and the growth of our business and operations, are forward-looking statements. When used in this press release, the words “may”, “will”, “could”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, or “contemplate” or the negative of these terms or other comparable terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. 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. Although we believe that our plans and objectives reflected in or suggested by these forward-looking statements are reasonable, we may not achieve these plans or objectives. Actual future results may differ materially from those projected as a result of certain risks and uncertainties and other risks described under “Risk Factors” as described in Ormat’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2024, and in Ormat’s subsequent quarterly reports on Form 10-Q that are filed from time to time with the SEC.

These forward-looking statements are made only as of the date hereof, and, except as legally required, 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 Statement of Operations
For the Three and nine-Month periods Ended September 30, 2024, and 2023

  Three Months Ended September 30,   Nine Months Ended September 30,
    2024       2023       2024       2023    
  (Dollars in thousands, except per share data)   (Dollars in thousands, except per share data)
Statements of Operations Historical Data:                
Revenues:                
Electricity $ 164,638     $ 157,212     $ 522,117     $ 482,846    
Product   37,357       39,831       100,018       83,331    
Energy storage   9,789       11,013       26,778       21,907    
Total Revenues   211,784       208,056       648,913       588,084    
Cost of revenues:                
Electricity   114,941       107,166       342,186       311,348    
Product   30,166       32,393       83,982       71,729    
Energy storage   7,815       8,494       23,687       19,445    
Total cost of revenues   152,922       148,053       449,855       402,522    
Gross profit                
Electricity   49,697       50,046       179,931       171,498    
Product   7,191       7,438       16,036       11,602    
Energy storage   1,974       2,519       3,091       2,462    
Total gross profit   58,862       60,003       199,058       185,562    
Operating expenses:                
Research and development expenses   1,816       1,392       5,110       4,763    
Selling and marketing expenses   4,248       4,682       13,541       13,999    
General and administrative expenses   22,973       14,044       60,536       49,525    
Other operating income   (6,250)             (6,250)          
Write-off of long-lived assets   323             1,280          
Write-off of unsuccessful exploration activities   77       2,318       1,456       2,318    
Operating income   35,675       37,567       123,385       114,957    
Other income (expense):                
Interest income   2,051       2,827       6,494       9,620    
Interest expense, net   (34,822)       (25,054)       (99,506)       (73,078)    
Derivatives and foreign currency transaction gains (losses)   2,046       (781)       132       (3,990)    
Income attributable to sale of tax benefits   19,760       14,936       53,034       42,481    
Other non-operating income, net   22       108       122       247    
Income from operations before income tax and equity in earnings (losses) of investees   24,732       29,603       83,661       90,237    
Income tax (provision) benefit   1,193       7,134       4,518       2,205    
Equity in earnings (losses) of investees   (1,624)       (405)       437       1,862    
Net income   24,301       36,332       88,616       94,304    
Net income attributable to noncontrolling interest   (2,219)       (879)       (5,704)       (5,631)    
Net income attributable to the Company’s stockholders $ 22,082     $ 35,453     $ 82,912     $ 88,673    
Earnings per share attributable to the Company’s stockholders:                
Basic: $ 0.37     $ 0.59     $ 1.37     $ 1.50    
Diluted: $ 0.36     $ 0.59     $ 1.37     $ 1.49    
Weighted average number of shares used in computation of earnings per share attributable to the Company’s stockholders:                
Basic   60,480       60,299       60,439       59,105    
Diluted   60,770       60,570       60,726       59,494    

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
For the Periods Ended September 30, 2024, and December 31, 2023

  September 30, 2024           December 31, 2023  
  (Dollars in thousands)
ASSETS
Current assets:      
Cash and cash equivalents $ 88,129     $ 195,808  
Restricted cash and cash equivalents (primarily related to VIEs)   88,646       91,962  
Receivables:      
Trade less allowance for credit losses of $210 and $90 respectively (primarily related to VIEs)   153,074       208,704  
Other   47,265       44,530  
Inventories   47,408       45,037  
Costs and estimated earnings in excess of billings on uncompleted contracts   31,345       18,367  
Prepaid expenses and other   81,624       41,595  
Total current assets   537,491       646,003  
Investment in unconsolidated companies   126,767       125,439  
Deposits and other   59,592       44,631  
Deferred income taxes   199,010       152,570  
Property, plant and equipment, net ($3,107,654 and $2,802,920 related to VIEs, respectively)   3,326,187       2,998,949  
Construction-in-process ($390,703 and $376,602 related to VIEs, respectively)   847,048       814,967  
Operating leases right of use ($12,823 and $9,326 related to VIEs, respectively)   30,205       24,057  
Finance leases right of use (none related to VIEs)   2,843       3,510  
Intangible assets, net   309,853       307,609  
Goodwill   151,345       90,544  
Total assets $ 5,590,341     $ 5,208,279  
       
LIABILITIES AND EQUITY
Current liabilities:      
Accounts payable and accrued expenses $ 217,927     $ 214,518  
Short term revolving credit lines with banks (full recourse)         20,000  
Commercial paper (less deferred financing costs of $25 and $29, respectively)   99,975       99,971  
Billings in excess of costs and estimated earnings on uncompleted contracts   10,005       18,669  
Current portion of long-term debt:      
Limited and non-recourse (primarily related to VIEs)   67,979       57,207  
Full recourse   160,847       116,864  
Financing liability   4,093       5,141  
Operating lease liabilities   4,178       3,329  
Finance lease liabilities   1,330       1,313  
Total current liabilities   566,334       537,012  
Long-term debt, net of current portion:      
Limited and non-recourse (primarily related to VIEs and less deferred financing costs of $8,375 and $7,889, respectively)   527,518       447,389  
Full recourse (less deferred financing costs of $4,860 and $3,056, respectively)   846,183       698,187  
Convertible senior notes (less deferred financing costs of $7,329 and $8,146, respectively)   469,108       423,104  
Financing liability   216,476       220,619  
Operating lease liabilities   22,348       19,790  
Finance lease liabilities   1,589       2,238  
Liability associated with sale of tax benefits   150,542       184,612  
Deferred income taxes   77,487       66,748  
Liability for unrecognized tax benefits   7,860       8,673  
Liabilities for severance pay   10,234       11,844  
Asset retirement obligation   126,980       114,370  
Other long-term liabilities   42,843       22,107  
Total liabilities   3,065,502       2,756,693  
       
Commitments and contingencies (Note 9)      
       
Redeemable noncontrolling interest   10,856       10,599  
       
Equity:      
The Company’s stockholders’ equity:      
Common stock, par value $0.001 per share; 200,000,000 shares authorized; 60,476,526 and 60,358,887 issued and outstanding as of September 30, 2024 and December 31, 2023, respectively   61       60  
Additional paid-in capital   1,630,335       1,614,769  
Treasury stock, at cost (258,667 shares held as of September 30, 2024 and December 31, 2023, respectively)   (17,964)       (17,964)  
Retained earnings   780,959       719,894  
Accumulated other comprehensive income (loss)   (4,594)       (1,332)  
Total stockholders’ equity attributable to Company’s stockholders   2,388,797       2,315,427  
Noncontrolling interest   125,186       125,560  
Total equity   2,513,983       2,440,987  
Total liabilities, redeemable noncontrolling interest and equity $ 5,590,341     $ 5,208,279  

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Reconciliation of EBITDA and Adjusted EBITDA
For the Three- and Nine-Month Periods Ended September 30, 2024, and 2023

We calculate EBITDA as net income before interest, taxes, depreciation, amortization and accretion. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation, amortization and accretion, adjusted for (i) mark-to-market gains or losses from accounting for derivatives not designated as hedging instruments; (ii) stock-based compensation, (iii) merger and acquisition transaction costs; (iv) gain or loss from extinguishment of liabilities; (v) cost related to a settlement agreement; (vi) non-cash impairment charges; (vii) write-off of unsuccessful exploration activities; and (viii) other unusual or non-recurring items. We adjust for these factors as they may be non-cash, unusual in nature and/or are not factors used by management for evaluating operating performance. We believe that presentation of these measures will enhance an investor’s ability to evaluate our financial and operating performance. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the United States, or U.S. GAAP, 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 U.S. GAAP. Our Board of Directors and senior management use EBITDA and Adjusted EBITDA to evaluate our financial performance. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the three-and-nine-month periods ended September 30, 2024, and 2023:

  Three Months Ended September 30,   Nine Months Ended September 30,
    2024       2023       2024       2023  
  (Dollars in thousands)   (Dollars in thousands)
Net income $ 24,301     $ 36,332     $ 88,616     $ 94,304  
Adjusted for:              
Interest expense, net (including amortization of deferred financing costs)   32,771       22,227       93,012       63,458  
Income tax provision (benefit)   (1,193)       (7,134)       (4,518)       (2,205)  
Adjustment to investment in unconsolidated companies: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla and Ijen   5,903       3,794       12,673       10,826  
Depreciation, amortization and accretion   65,885       56,749       190,244       162,084  
EBITDA $ 127,667     $ 111,968     $ 380,027     $ 328,467  
Mark-to-market (gains) or losses from accounting for derivative   (409)       (307)       870       284  
Stock-based compensation   5,042       3,934       14,887       11,235  
Allowance for bad debts   121             342        
Write-off of long-lived assets   323             1,280        
Merger and acquisition transaction costs   80       418       1,379       418  
Legal fees related to a settlement agreement   4,750             4,750        
Write-off of unsuccessful exploration activities   77       2,318       1,456       2,318  
Adjusted EBITDA $ 137,651     $ 118,331     $ 404,991     $ 342,722  

ORMAT TECHNOLOGIES, INC AND SUBSIDIARIES
Reconciliation of Adjusted Net Income attributable to the Company’s stockholders and Adjusted EPS
For the Three and Nine-month Periods Ended September 30, 2024, and 2023

Adjusted Net Income attributable to the Company’s stockholders and Adjusted EPS are adjusted for one-time expense items that are not representative of our ongoing business and operations. The use of Adjusted Net income attributable to the Company’s stockholders and Adjusted EPS is intended to enhance the usefulness of our financial information by providing measures to assess the overall performance of our ongoing business.

The following tables reconciles Net income attributable to the Company’s stockholders and Adjusted EPS for the three and Nine-month periods ended September 30, 2024, and 2023.

  Three Months Ended September 30,
    Nine Months Ended September 30,
  2024   2023     2024   2023    
(Dollars in millions except earnings per share)                
GAAP Net income attributable to the Company’s stockholders 22.1   35.5     82.9   88.7    
Impact of changes related to the Kenya Finance Act 2023   (9.4)       (9.4)    
Write-off of Energy Storage project assets, long-lived assets, and unsuccessful exploration activities 0.32   1.8     2.16   1.8    
M&A costs 0.06   0.3     1.09   0.3    
Bad debts 0.10       0.27      
Legal fees related to a settlement agreement 3.75       3.75      
Adjusted Net income attributable to the Company’s stockholders 26.3   28.2     90.2   81.4    
GAAP diluted EPS ($) 0.36   0.59     1.37   1.49    
Impact of changes related to the Kenya Finance Act 2023   (0.16)       (0.16)    
Write-off of Energy Storage project assets, long-lived assets, and unsuccessful exploration activities 0.00   0.03     0.04   0.03    
M&A costs 0.00   0.01     0.02   0.01    
Bad debts 0.00       0.00      
Legal fees related to a settlement agreement 0.06       0.06      
Diluted Adjusted EPS ($) 0.42   0.47     1.49   1.37    

Ormat Technologies Contact:
Smadar Lavi
VP Head of IR and ESG Planning & Reporting
775-356-9029 (ext. 65726)
[email protected]
  Investor Relations Agency Contact:
Joseph Caminiti or Josh Carroll
Alpha IR Group
312-445-2870
[email protected]

Disclaimer: The above press release comes to you under an arrangement with GlobeNewswire. Agrigate Global takes no editorial responsibility for the same.