News
Feb 24, 2010Ormat Technologies Reports Record 2009 Year End & Fourth Quarter Results
Annual net income increased to $68.6 million
Annual revenue increased 20.4% to $415.2 million
Q4 2008 and full year 2008 restated
RENO, Nevada, February 24, 2010 – Ormat Technologies, Inc. (NYSE: ORA) today announced results for the fourth quarter and full year ended December 31, 2009. Highlights of the Company performance include.
- Revenues increased 20.4% for the year to $415.2 million and remained consistent with the fourth quarter of 2008.
- Annual net income increased to $68.6 million and fourth quarter net income increased to $16.1 million (in each case, after giving effect to the restatement described below).
- Earnings per share (diluted) increased to $1.51 per share of common stock for the year and to $0.35 per share of common stock in the quarter (in each case, after giving effect to the restatement described below).
- Total generation increased by 14% to 3.4 million MWh during 2009.
- The Product Segment backlog as of today is approximately $90 million. Commenting on the annual results, Dita Bronicki, Chief Executive Officer of Ormat, stated: “Ormat reported record revenues for the year and Product Segment revenue was exceptionally strong during 2009. While we do not expect revenues and corresponding margins in the Product Segment to continue at this level in 2010, the improving global economy combined with funding and regulatory benefits in the United States should contribute to our future revenues in this segment.
We had success in improving the performance of our existing power plants. Generation in our Electricity Segment increased year-over-year by 14% from improved performance of existing power plants and new power plants that came on-line in 2009. Revenue for the segment was stable even when taking into account that the Puna power plant experienced lower availability due to maintenance related issues.
We are in varying stages of exploration and development on land where we have been acquiring rights to use the geothermal resource over the past few years. Results from several sites are encouraging and should yield several commercial projects over the next few years. Closing of the purchase of the Hot Sulphur Springs (“HSS”) project is expected by the end of the first quarter 2010. This acquisition includes a project in an advanced stage of development and is expected to come online in 2012 and sell its output under a long-term PPA that we recently signed with NV Energy.”
2008 Restatement
Through the third quarter of 2009, we accounted for exploration and development costs using an accounting method that is analogous to the full cost method used in the oil and gas industry. Under that method, we capitalized costs incurred in connection with the exploration and development of geothermal resources on an “area-of-interest” basis. Each area of interest included a number of potential projects in the state of Nevada that were planned to be operated together with the same operation and maintenance team. Impairment tests were performed on an area-of-interest basis rather than at a single site. Under this methodology, costs associated with projects that we have determined are not economically feasible remained capitalized as long as the area-of-interest was not subject to impairment.
Following a periodic review performed by the Securities and Exchange Commission (“SEC”) Staff, we concluded that this accounting treatment was inappropriate in certain respects. Accordingly, on February 23, 2010, our Audit Committee and Board of Directors, based on management recommendations, concluded that our financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2008 require restatement and should no longer be relied upon.
The impact of the restatement is a decrease of approximately $6.2 million in net income (or $0.14 per share) during the year end and the fourth quarter ended December 31, 2008. This decrease represents a reduction of 12.6% from our originally reported net income of $49.5 million in 2008 and a reduction of 53.6% from our originally reported net income of $11.6 million in the fourth quarter of 2008. The Company is filing a Report on Form 8-K and intends to effect the above mentioned restatement in its annual report on Form 10-K for the year ended December 31, 2009. The Company also plans to revise its financial statements as of and for the three and nine months ended September 30, 2009 to reduce net income by approximately $1.5 million (or $0.03 per share). In connection with the filing of its Annual Report on Form 10-K for the year ended December 31, 2009, the Company will revise the third quarter unaudited financial information included in the notes to the financial statements to reflect the expensing of such costs in that interim period.
Annual Results
For the year ended December 31, 2009, total revenues were $415.2 million, an increase of 20.4% from $344.8 million for the year ended December 31, 2008, consisting of a 72.2% increase in Product Segment revenues and a 1.4% increase in Electricity Segment revenues.
Net income for the year ended December 31, 2009 was $68.6 million, or $1.51 per share of common stock (diluted), compared to $43.3 million, or $0.98 per share of common stock (diluted), for the year ended December 31, 2008 (as restated), which represents an increase of 58.4% in net income. The increase in net income is primarily attributable to our Product Segment and to a $13.3 million gain from the extinguishment of a liability associated with the sale of equity interests in OPC LLC, as a result of our acquisition of Class B membership units from Lehman Brothers.
Electricity revenues for the year ended December 31, 2009 were $255.9 million, an increase of 1.4% from $252.3 million for the year ended December 31, 2008. Revenues in our Electricity Segment in the year ended December 31, 2009 were impacted by a decline in the average revenue rate from $86 to $76 per MWh due to the effect of lower oil prices on the Puna power plant’s energy rates, as well as a decline in production due to the enhancement and repair of the geothermal well field which we are undertaking to increase availability at the plant.
Revenues from the Product Segment for the year ended December 31, 2009 were $159.4 million, compared to $92.6 million for the year ended December 31, 2008, an increase of 72.2%. The increase in product sales was primarily attributable to engineering, procurement and construction (EPC) contracts for the construction of three large binary geothermal projects in Nevada, New Zealand and Costa Rica.
For the year ended December 31, 2009, the Company’s gross margin was 29.5%, compared to 29.6% for the year ended December 31, 2008. Operating income for the year ended December 31, 2009 was $68.8 million, compared to $50.8 million for the year ended December 31, 2008 (as restated), an increase of 35.4%. The increase in operating income is primarily attributable to an increase in revenues and gross margin of our Product Segment.
Adjusted EBITDA for the year ended December 31, 2009 increased to $167.0 million compared to $121.9 million for the year ended December 31, 2008 (as restated). 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.
Cash and cash equivalents as of December 31, 2009 increased to $46.3 million from $34.4 million as of December 31, 2008. In addition, as of December 31, 2009, we have available committed lines of credit with commercial banks aggregating $362.5 million, of which $175.0 million is unused.
On February 23, 2010, Ormat’s Board of Directors approved the payment of a quarterly cash dividend of $0.12 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 25, 2010, to shareholders of record as of the close of business on March 16, 2010. The Company expects to pay a dividend of $0.05 per share in the next three quarters.
Commenting on the outlook for 2010, Ms. Bronicki said, “We expect our 2010 Electricity Segment revenues to be between $275 million and $285 million. We also expect an additional $9 million of revenues from our share of electricity revenue generated by a subsidiary, which is accounted for under the equity method. With regard to our Product Segment, we expect that our 2010 revenues will be between $75 million and $85 million.”
Fourth Quarter Results
For the fourth quarter of 2009, total revenues were $95.3 million, consistent with the fourth quarter of 2008. Net income for the quarter was $16.1 million, or $0.35 per share of common stock (diluted), compared to $5.4 million, or $0.12 per share of common stock (basic and diluted) for the same quarter last year (as restated).
Revenues attributable to our Electricity Segment for the fourth quarter of 2009 were $63.9 million, an increase of 2.9%, compared to $62.1 million for the same quarter last year. Product Segment revenues for the fourth quarter of 2009 were $31.4 million, a decrease of 6.1%, compared to $33.4 million for the same quarter last year.
Adjusted EBITDA for the fourth quarter of 2009 increased to $41.8 million compared to $20.1 million in the same quarter last year (as restated). 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 from 10:00 a.m. to 12:00 p.m. U.S. EST today, February 24, 2010. The call will be available as a live, listen-only webcast at http://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 Event Calendar 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 1:00 pm EST on February 24, 2010 through 11:59 p.m. EST, March 3, 2010. Please call: (800) 642-1687 (U.S. and Canada) or (706) 645-9291 (International) and enter the code 53390852.
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 built over approximately 1,200 MW of plants half for its own account and half as supplies to utilities and developers. Ormat’s current generating portfolio includes the following geothermal and recovered energy-based power plants: in the United States - Brady, Heber, Mammoth, Ormesa, Puna, Steamboat, North Brawley, 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 2, 2009.
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.
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