Ormat Technologies (NYSE: ORA) reported Q1 EPS of $0.51, in-line with the analyst estimate of $0.51. Revenue for the quarter came in at $192.1 million versus the consensus estimate of $187 million.

Financial Highlights for the First Quarter of 2020

• Total revenues of $192.1 million, down 3.5% compared to Q1 2019;
• Electricity segment revenues of $142.9 million, unchanged compared to Q1 2019;
• Electricity segment gross margin was 50.0% compared to 45.7% for Q1 2019;
• Product segment revenues of $47.4 million, down 9.0% compared to Q1 2019;
• Product segment backlog was approximately $96.5 million as of May 3, 2020;
• Energy Storage & Management Services segment revenues of $1.8 million compared to $4.0 million in Q1 2019;
• The Company recorded business interruption insurance income of $4.9 million related to the 2018 volcanic eruption in Hawaii, which reduced cost of revenues and general and administrative costs by $2.5 million and $2.4 million, respectively;
• Total gross margin was 42.6%, compared to 37.3% in Q1 2019;
• Operating income increased 13.6%
• Net income was $29.9 million compared to $28.1 million in Q1 2019;
• Net income attributable to the Company's stockholders was $26.0 million, or $0.51 per diluted share, compared to $25.9 million, or $0.51 per diluted share in Q1 2019;
• Adjusted EBITDA1 increased 4.2% to $106.0 million, up from $101.8 million in Q1 2019; and
• The Company declared a quarterly dividend of $0.11 per share for the first quarter of 2020.

“In the first quarter, we achieved strong results, driven by the solid performance of our electricity segment, which benefits from our continuous efforts to streamline operations and optimize power generation,” commented Isaac Angel, Chief Executive Officer. “Our electricity segment gross margin improved by 350 basis points excluding the contribution of insurance claims, demonstrating our improved efficiency and greater profitability at the same revenue level. The world is currently facing a global health crisis and we are experiencing a dramatic volatile economic environment, the impact and duration of which is still uncertain. In the first quarter, we took prompt steps to secure the safety of our employees, to optimize our supply chain, and to enhance our liquidity position in order to support capital expenditures and growth plans. These efforts, together with the inherent stable and long term contracted portfolio of our electricity segment, have enabled us to ease the impact of the COVID-19 pandemic at this time. The planned leadership transition is progressing smoothly and according to plan. Assi Ginzburg joined our company May 10th as our new Chief Financial Officer, strengthening our management team.”

Doron Blachar, Ormat’s President, added, “The board has nominated Mr. Angel for election as a director at our annual general meeting later this year and, if elected, it is proposed that he will serve as Chairman of the board.”

Mr. Blachar continued, “In order to support our capital expenditures and growth, we increased and drew lines of credits and in April 2020, we raised an additional $64 million through the private issuance of bonds (series 3) and borrowed $50 million pursuant to a loan agreement with one of our existing lenders. The strong quarter, reinforces our confidence that Ormat is on the right path with a resilient business model, geographic and revenue diversity, and an excellent team.”

Mr. Blachar will assume the role of Chief Executive Officer on July 1, 2020.

GUIDANCE:

Ormat Technologies sees FY2020 revenue of $710-740 million, versus the consensus of $729.56 million.

Mr. Angel added, “We are updating our expectations for full-year 2020 due to uncertainty around COVID-19 duration and implications as well as due to the recent update in Puna. We expect total revenues of between $710 million and $740 million with electricity segment revenues between $550 million and $570 million. We continue to expect product segment revenues of between $140 million and $150 million. Revenues from energy storage and demand response activity expected to be between $15 million and $20 million. We are also updating 2020 Adjusted EBITDA that is expected to be between $400 million and $415 million for the full year. We expect annual Adjusted EBITDA attributable to minority interest to be approximately $26 million.”

The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months ended March 31, 2020. However, the Company is unable to provide a reconciliation for its Adjusted EBITDA guidance range due to high variability and complexity with respect to estimating forward looking amounts for impairments and disposition and acquisition of business interests, income taxes expense, and other non-cash expenses and adjusting items that are excluded from the calculation of Adjusted EBITDA.

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