ormat technologies, inc. · 2020. 4. 29. · indonesia - sarulla project, phase 1, (330 mw project)...

Green energy you can rely on

Copyright © 2016 Ormat Technologies, Inc.

Don A. Campbell Complex, Nevada, U.S.

May 2016

Ormat Technologies, Inc.


Disclaimer

Information provided during this presentation 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 the company’s plans, objectives and expectations for future operations, and are based on

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, please see risk factors as described in the Annual Report on Form 10-K filed with the Securities and

Exchange Commission on February 26, 2016.

In addition, during this presentation, statements may be made that include a financial measure defined as non-GAAP financial measures by the

Securities and Exchange Commission, such as EBITDA and adjusted EBITDA. These measures may be different from non-GAAP financial measures

used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial

information prepared and presented in accordance with GAAP.

Management of Ormat Technologies believes that EBITDA and adjusted EBITDA may provide meaningful supplemental information regarding liquidity

measurement that both management and investors benefit from referring to this non-GAAP financial measures in assessing Ormat Technologies’

liquidity, and when planning and forecasting future periods. This non-GAAP financial measures may also facilitate management’s internal comparison to

the company’s historical liquidity.

EBITDA and Adjusted EBITDA are not a measurement 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.

Copyright © 2016 Ormat Technologies, Inc. All Rights Reserved. This document contains information proprietary to Ormat Technologies, Inc.

Reproduction in any form without prior written permission is strictly prohibited

1


Introduction

2

Market leader with proven track record in the geothermal sector

Our mission is to become a leading global renewable energy provider

Own &

Operate nearly

700MW

$million Revenue

in 2015

595Years of

experience

50

Employees

1,060


Local

Utilities

The Only Vertically Integrated Geothermal Player

3

Development Engineering Construction OperationManufacturing

(1) Five years average (2011-2015)

Electricity Segment

66% of total revenues1


The Only Vertically Integrated Geothermal Player

4

Products Segment

Local Utilities,

Developers

C&I

34% of total revenues1

Engineering ConstructionManufacturing

(1) Five years average (2011-2015)

Copyright © 2016 Ormat Technologies, Inc. 5

Why Geothermal

Renewable

• Supporting legislation

• Growing demand

Global growth potential

• Estimated 10X the

installed capacity

Competitive

• Firm & flexible

• Cost effective

High entry barriers

• Niche market

• Capital intensive

• Expertise


Market Opportunities for Geothermal Growth

6

Industry estimate: potential is over 10x the global installed capacity of over 13GW

U.S. 3.6 GW

LATAM 1.6 GW

Europe 2.4 GW

Africa 0.6 GW Asia Pacific 3.9 GW

Oceana 1 GW

Source: Hydrothermal Geothermal Resources Potential, EMERGING ENERGY RESEARCH, LLC. Global “Geothermal Markets and Strategies: 2009–2020”, May 2009.

"Geothermal Power Generation in the World 2005–2010 Update Report" Ruggero Bertani Enel Green Power, via Dalmazia 15 – 00198 Roma (Italy) April 2010. 2015

Annual U.S. & Global Geothermal Power Production Report GEA Feb.2016.


Geothermal Market

7

148

55

153208

Steam Binary

Ormat

Others16%

Ormat84%

Binary17%

Steam83%

Global Installed Capacity by

Technology Type(%)

2015 Actual Installed Capacity by

Technology Type (MW)

Liquid-

dominated

Steam-

dominated

Binary

Steam

Geothermal Combined Cycle


0

20

40

60

80

100

120

140

0

500

1000

1500

2000

2500

3000

3500

Toshiba Mitsubishi Fuji Ormat Ansaldo/Tosi GE Alstom TAS

MW Operating Estimated Project Count

Low-mid temperature geothermal binary market is led by Ormat

Market Share - Products Segment

8

Major Geothermal Equipment Suppliers (MW & Project Count)

1GEA 2015 Annual U.S. & Global Geothermal Power Production Report & Ormat

MW# Projects

http://geo-energy.org/reports/2015/2015 Annual US Global Geothermal Power Production Report Draft final.pdf


Market Share - Electricity Segment

9

1Ormat study based on presented public disclosure;

Top 10 Geothermal owners & operators1 (MW)

0

5

10

15

20

25

30

35

40

45

0

200

400

600

800

1000

1200

EDC (PNOC) Chevron ENEL CFE Calpine Ormat Mighty RiverPower

ContactEnergy

Aboitiz Terra-Gen

Operation (MW) Estimated Project Count

MW

Most active global developer - with over 400 MW developed in the last decade


Stable, well managed, cash generating assets

• Global operation of nearly 700 MW in 18 sites

• 92% geothermal; 8% REG

• Weighted average PPA life -15 years

$315 $330

$382 $376

$410-$420

2012 2013 2014 2015 2016E

Electricity Segment Overview

10

Annual Revenue ($million)

U.S. 515 MW Guatemala 43 MW Kenya 139 MW


Reducing the Impact of Commodity Prices

84%

4%

12%

11

86%

5%9%

No Impact

Oil

Natural gas

Limited exposure currently; expect further significant reduction at the end of 2017

91%

3%6%

Portfolio (MW) as of 01/2016

Expected Portfolio (MW) as of 12/2017

2015 Revenues

Less than 10% from 2016 expected

Electricity segment revenue


• Backlog of $214 million1

• Added value to our customers

• Customized design based on resource characteristics

• EPC expertise

$187$203

$177

$219$210-$220

2012 2013 2014 2015 2016E

Product Segment Overview

12

Built over 150 power plants and installed over 2,000 MW of Geothermal & REG

$197 million - 4 yr. Average

Revenue from 3rd Party Sales ($million)

1 The backlog is as of May 4, 2016. Includes revenues for the period

between March 31, 2016 and May 4, 2016

Geothermal Power plants

REG (Recovered Energy Generation)

Remote Power Units


2000 2005 2015

Acquisition (MW) Organic Growth (MW)

Increasing Shareholders Value

13

M&A

Organic

Growth

Proactive growth initiatives to accelerate profitable growth

$238MRev.: $595M

M&A

Expansion to new activities

Organic Growth

Geographical & Technological expansion

Improve efficiencies

Fu

nd

ing

~$60M


Improve Efficiencies

14

Development Engineering Construction OperationManufacturing

Reduce costs

Increase efficiencies


The Numbers Tell It All

15

Total Adjusted EBITDA Margin

Reduction in equipment and

construction cost

Reducing the CapEx per MW

from $4.5M-$5M to $4M-$4.5M

26%30%

36% 37% 39%

2012 2013 2014 2015 LTM

Total Gross Margin

37%45%

49% 49% 49%

2012 2013 2014 2015 LTM


Organic Growth - Market Growth Drivers

Energy Shortage Supportive Legislation

16

Leadership


• Expanding geographical footprint and diversifying technologies

• Added 29 MW in January 2016

• Expect to add between 160 and190 MW by YE 2018

• Extensive activities to support long term growth

Organic Growth and M&A

Business Development & Exploration

17

Construction & Development

1 Ormat’s share (12.75% in Sarulla ; 51% in Menangai 85% in Bouillante) ;

M&A

Guadeloupe

IndonesiaKenya

Chile

Guatemala

Honduras

U.S.

New Zealand

Ethiopia

Project Projected

Capacity

Expected

COD

Guadeloupe- Bouillante 7 MW1 H2 2016

Indonesia - Sarulla Project, Phase 1,

(330 MW project)

14 MW1 YE 2016

Guadeloupe- Bouillante 4 MW1 2017

Honduras, Platanares 35 MW 2017

U.S. - Tungsten 25 MW-35 MW 2017

U.S. - Dixie Meadows 25 MW-35 MW 2018

Kenya, Menangai (35 MW project) 18 MW1 2018

Indonesia - Sarulla Project, Phases

2 & 3 (330 MW project)

28 MW1 2018/2019


Expansion to New Activities - Long-Term Growth

18

Growing global

demand driven by

legislation and/or

energy shortage

Leveraging our capabilities to exploit growth opportunities

Capabilities and

global presence to

provide reliable

integration solutions

What activities

Solar PV and /or

Storage solutions

Why Why Ormat


How We Fund Growth

19

Strong balance sheet to support growth initiatives

*As of December 31, 2015

• Approx. $232 million available cash to fund growth

• Cash and cash equivalent

• Borrowing capacity under committed lines of credit

• Growing cash from our existing portfolio

• Access to capital

• Project debt financing

• Cash from equity transactions

• Potential tax equity transactions

• McGinness, Campbell, Dixie Meadows and Tungsten

• New potential equity partnerships

• Low leverage


Portfolio Approach

Geographical & Technological Expansions

• Portfolio approach - diversification

• Geographies

• Technologies (Geothermal, REG, Solar, Storage)

• Additional risk mitigation aspects

• Host country guarantee

• Project finance (OPIC, ADB, DEG and AFDB)

• Political Risk Insurance (MIGA)

• Competitive pricing

• Low incentive for breach of contract

20


90 108

315 330382 376

410-420

3044

187203

177 219

210-220

Q1 2015 Q1 2016 2012 2013 2014 2015 2016E

Electricity Products

$502$533

$620-

$640

$560

$120$152

$595

Strong Execution - Revenue ($million)

21

AnnualQuarterly


Continued Improvements - Annual Gross Margin

25.7%

30.0%

36.4% 36.7%

2012 2013 2014 2015

24.6%

29.4%

35.5% 35.5%

2012 2013 2014 2015

Combined Electricity Segment Product Segment

27.6%30.9%

38.4% 38.8%

2012 2013 2014 2015

22


Continued Improvements - Quarterly Gross Margin

23

Combined Electricity Segment Product Segment

36.6%

42.1%

Q1 2015 Q1 2016

38.2%41.0%

Q1 2015 Q1 2016

31.9%

45.0%

Q1 2015 Q1 2016


Strong Execution - Adjusted EBITDA ($million)

By Segments

24

$65$80

$187

$241

$273

$291

$300-$310

Q1 2015 Q1 2016 2012 2013 2014 2015 2016E

AnnualQuarterly

78%

22%

Electricity Product

77%

23%

FY 2015

FY 2014


Well Positioned to Support Growth - Organic & M&A

595 633 677 640 624

436445 324

280 276

2012 2013 2014 2015 Q1 2016

Project Finance Corporate Debt

25

56% 57%52%

39% 39%

2012 2013 2014 2015 Q1 2016

Total Debt ($ million) Net Debt ($ million)

$885$970

$868

$685 $688

2012 2013 2014 2015 Q1 2016

Net Debt to Capital

$1,078$1,031 $1,001

$920

4.7x4.0x

3.2x2.4x

2012 2013 2014 2015

Net Debt to Adjusted EBITDA (<3)

$900


Investment Highlights

• Market leader

• Substantial and growing

cash flow from operation

• Potential for accelerated

growth from new activities

• Global regulatory support

26

Sustainable growth Efficient operation Well positioned to fund growth

• Strong balance sheet

• Access to various

sources of capital

• Efficient operation - new

management focus

• Improving margins

Green energy you can rely on


Don A. Campbell Complex, Nevada, [email protected]

Thank you!


Same Technology- Different Applications

Air-Cooled Binary Geothermal Power Plant Recovered Energy Generation (REG) System

28


0

500

1000

1500

2000

2500

3000

3500

2015 2016 2017 2018 2019 2020 2021 2022

Latin America East Africa Asia Pacific Europe US

Geothermal in a Growing Global Market

Source : Ormat 2015, Accumulated estimated MW potential for organic growth

Ormat’s estimated geothermal potential for electricity and product segments

29

MW

Industry estimate: potential is over 10x the global installed capacity of 13GW


Reconciliation of EBITDA Adjusted EBITDA and Additional

Cash Flows Information

• We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for (i) termination fees, (ii) impairment of

long-lived assets, (iii) write-off of unsuccessful exploration activities,(iv) any mark-to-market gains or losses from accounting for derivatives, (v) merger and acquisition transaction cost, (vi) stock-based compensation, (vii) gain from

extinguishment of liability, and (viii) gain on sale of subsidiary and property, plant and equipment. EBITDA and Adjusted EBITDA are not a measurement 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 tables reconcile net cash provided by (used in) operating activities and net income to EBITDA and Adjusted EBITDA for the three-month periods and years ended December 31, 2015 and 2014: the quarterly table is not correct –

there should be an M&A line and not share exchange, the M&A line is should be write off of exploration

30

Net cash provided by operating activities.................................................................................................................. $ 67,060 $ 34,465 $ 190,025 $ 213,235

Adjusted for:

Interest expense, net (excluding amortization

of deferred financing costs).................................................................................................................................... 16,231 17,604 63,802 76,970

Interest income................................................................................................................................................................ (191) (76) (297) (312)

Income tax provision ..................................................................................................................................................... 11,438 9,877 (15,258) 27,608

Adjustments to reconcile net income or loss to net cash

provided by operating activities (excluding

depreciation and amortization).................................................................................................................................... (16,169) (1,360) 40,530 (57,422)

EBITDA............................................................................................................................................................................ $ 78,369 $ 60,510 $ 278,802 $ 260,079

Mark to market on derivative instruments which represents swap contracts on natural gas and oil prices — (2,493) 4,129 (6,960)

Stock-based compensation 878 1,263 3,955 5,571

Gain on sale of a subsidiary and property, plant and equipment — — — (7,628)

Loss from extinguishment of liability — — 1,710 —

Merger and acquisition transaction costs — 1,000 3,800 1,000

Write-off of unsuccessful exploration activities 1,220 7,332 1,579 15,439

Mark to market on derivatives which represents currency forward contracts (1,385) 699 (2,720) 5,172

Adjusted EBITDA........................................................................................................................................................... $ 79,082 $ 68,311 $ 291,255 $ 272,673

Net cash provided by investing activities.................................................................................................................. $ (14,433) $ 6,273 $ (90,971) $ (129,162)

Net cash provided by (used in) financing activities.................................................................................................. $ (38,249) $ (42,959) $ 46,635 $ (101,197)

Three Months Ended December 31

2015 2014

(in thousands)

Year Ended December 31

2015 2014

(in thousands)


Reconciliation of EBITDA Adjusted EBITDA and Additional

Cash Flows Information

• We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation and

amortization, adjusted for (i) termination fees, (ii) impairment of long-lived assets, (iii) write-off of unsuccessful exploration activities,(iv) any mark-to-market gains or losses from

accounting for derivatives, (v) merger and acquisition transaction cost, (vi) stock-based compensation, (vii) gain from extinguishment of liability, and (viii) gain on sale of subsidiary

and property, plant and equipment. EBITDA and Adjusted EBITDA are not a measurement 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 tables reconcile net cash provided by (used in) operating activities and net income to EBITDA and Adjusted EBITDA for the three-month periods ended March 31,

2016 and 2015

31

Net cash provided by operating activities.................................................................................................................. $ 27,044 $ 83,147

Adjusted for:

Interest expense, net (excluding amortization

of deferred financing costs).................................................................................................................................... 14,127 15,972

Interest income................................................................................................................................................................ (320) (9)

Income tax provision ..................................................................................................................................................... 9,509 5,459

Adjustments to reconcile net income or loss to net cash

provided by operating activities (excluding

depreciation and amortization).................................................................................................................................... 30,082 (47,220)

EBITDA............................................................................................................................................................................ $ 80,442 $ 57,349

Mark to market on derivative instruments which represents swap contracts on natural gas and oil prices 174 4,129

Stock-based compensation 842 1,127

Merger and acquisition transaction costs 147 3,400

Write-off of unsuccessful exploration activities 557 174

Mark to market on derivatives which represents currency forward contracts (1,920) (860)

Adjusted EBITDA........................................................................................................................................................... $ 80,242 $ 65,319

Net cash provided by investing activities.................................................................................................................. $ (44,620) $ (47,257)

Net cash provided by (used in) financing activities.................................................................................................. $ (19,845) $ (5,396)

Three Months Ended March 31

2016 2015

(in thousands)

ormat technologies, inc. · 2020. 4. 29. · indonesia - sarulla project, phase 1, (330 mw project)...

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