Geothermal power company Ormat Technologies (ORA) had a weak first quarter, but expects improvement later in the year, and reaffirms its annual guidance. The company also reported a new geothermal project in Chile today, worth $98.8 million, to be completed by mid-2017.
Ormat, controlled by Ishay Davidi's FIMI fund and the Bronicki family, is traded in New York and Tel Aviv at a market cap of $1.8 billion. It constructs geothermal power plants for customers (product segment), and also runs its own plants (electricity segment).
Both areas of activity saw declines in the first quarter. Electricity revenue totaled $90.0 million, compared with $94.8 million in the first quarter of 2014; and product segment revenue totaled $30.3 million, compared with $47.6 million in the first quarter of 2014, representing a decline of 36.4%. Total revenue fell 15.6% to $120 million, below the consensus analysts' estimate of $136 million.
Ormat CEO Isaac Angel said, "As expected, this quarter faced headwinds related to lower oil and natural gas prices and lower generation at Puna due to last summer’s hurricane that reduced revenues by $6.6 million and $3.1 million, respectively. On the expense side, we had a one-time expense of $3.4 million associated with our restructuring transaction. In addition, normal fluctuations in revenue recognition inherent within our product division resulted in lower revenues for the quarter compared to last year. We expect revenues will be stronger during the second half of 2015.
“During the first quarter we accelerated construction of the second phase of the Don A. Campbell project, and as a result, we expect to begin generating electricity towards the end of 2015, approximately three months ahead of schedule. Subsequent to the end of the quarter, our product segment backlog as of May 6, 2015, increased to a record of approximately $387.0 million.”
The company reported a net profit attributable to the company’s shareholders of $10.0 million, or $0.21 per share, in the first quarter of 2015, compared with $21.6 million, or $0.47 per share, for the first quarter of 2014. Net income for the first quarter of 2015 included approximately $3.4 million in non-recurring charges related to the share exchange transaction, and $1.4 million foreign currency translation and transaction losses, compared with $0.6 million in the first quarter of 2014.
Adjusted EBITDA for the three months ended March 31, 2015 was $65.3 million, compared with $73.4 million for the three months ended March 31, 2014.
On the company's guidance, Angel said, “We reiterate our 2015 revenue guidance despite the current oil and natural gas prices, which translates to a $26.6 million reduction in revenues compared to last year, and we expect the electricity segment revenues to be between $380.0 million and $390.0 million, and product segment revenues to be between $180.0 million and $190.0 million. We reiterate our 2015 Adjusted EBITDA guidance of $280.0 to $290.0 million for the full year, which is also impacted by current oil and natural gas prices.”
Angel recently presented Ormat's new strategy, which includes entering new types of power production and geographical expansion. “We also began executing a multi-year plan to set the stage for our next growth phase,” he said today, "Central to this plan is our focus on expanding our geographic reach. We are also focused on technology diversification, capturing a larger share of the high temperature geothermal resource market with our proven binary system. I am increasingly excited about the opportunities before us, and believe Ormat is uniquely positioned to succeed in the evolving renewable energy market."
Published by Globes [online], Israel business news - www.globes-online.com - on May 7, 2015
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