"The reports are excellent, and we're very satisfied with the results. There is growth in all parameters, and the results are a record," Ormat Technologies Inc. (NYSE: ORA; TASE: ORMT) CEO Isaac Angel said today. The geothermal energy company surpassed the analysts' revenue forecasts with $149 million in the fourth quarter of 2014, up 14%, compared with the corresponding quarter in 2013. At the same time, net profit was $7 million, $0.15 per share, down 14%, compared with the corresponding quarter in the preceding year, and lower than the analysts' forecasts.
The reason for the company's low profit was a $15.4 million write-off for exploration and assessment of geothermal resources after it was decided to discontinue their development. These resources are the Wister site in California and in the Mount Spurr site in Alaska. After conducting exploratory studies at those sites, management concluded that the geothermal resource as well as the commercial environment would not support commercial operations in the foreseeable future. "That is the nature of our business," Angel explained. "Ormat is building green field power stations; in other words, buying or obtaining territories for exploration, and if resources are found, we build. If they aren't found, just like in the oil industry, the company writes off the investment. Despite the write-offs, our results are good," he stresses.
Ormat's revenue grew 4.9% to $560 million in 2014. The electricity sector, in which the company also owns power stations, grew 15.9% to $382 million. Additional revenue came from the products sector - construction of power stations for customers, in which annual revenue was down 12.9%. The annual net profit attributed to the shareholders grew 31.4% to $54.3 million, and adjusted EBITDA (profit minus interest, taxes, depreciation, and amortization) was up 13.1% to $273 million. Ormat generated $213 million from current activities in 2014, and had $40.2 million in cash at the end of the year. The company also had $198 million in unused bank credit.
7% growth expected in 2015
Ormat will distribute a dividend of $0.08 per share in 2015 ($3.7 million in total). The chief beneficiaries will be Ishay Davidi's FIMI Opportunity Funds, owner of 15.1% of Ormat's shares, and Ormat founding family Bronicki (8.9%). Ormat recently announced the introduction of a financial partner, Canadian fund Northleaf Capital, for some of its North American assets. The fund acquired 40% of a special purpose vehicle (SPV), to which some of Ormat's power stations were transferred for $175 million. Ormat today announced that this cooperation was being extended with the construction of an additional power station, in which Northleaf will also acquire a 40% stake. Ormat did not state how much money was involved.
Ormat expects its electricity sector to generate $380-390 million in revenue in 2015 (growth of up to 2%) and its products sector to generate $180-190 million (up to 7% growth), making total revenue $560-580 million. Ormat provided a forecast for adjusted EBITDA for the first time: $280-290 million, reflecting growth of up to 6%, and improvement in EBITDA margins. "We're entering 2015 with a healthy balance sheet, a strong orders backlog, and a balanced portfolio of assets spread throughout the world," Angel said. After completing the merger between Ormat Technologies and its parent company, Ormat Industries, the merged company's market cap is currently $1.46 billion.
The company plans to apply for listing on another stock exchange, and management has made its recommendations to the board of directors in this matter.
Published by Globes [online], Israel business news - www.globes-online.com - on February 25, 2015
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