Ormat Technologies Inc. Q1 2010 Earnings Call Transcript

Ormat Technologies Inc. Q1 2010 Earnings Call Transcript
Publish date:

Ormat Technologies Inc. (ORA)

Q1 2010 Earnings Call

May 6, 2010 9:00 am ET


Robert Fink - KCSA Strategic Communications

Dita Bronicki - CEO

Yoram Bronicki - President & COO

Joseph Tenne - CFO

Smadar Lavi - VP of Corporate Finance & IR


Paul Clegg - Jefferies

Lasan Johong - RBC Capital Market

Michael Lapides - Goldman Sachs

Ben Kallo - Baird

Dan Mannes - Avondale

Steve Milunovich - Merrill Lynch

Dilip Warrier - Thomas Weisel Partners

John Segrich - Gabelli

Brian Yerger - AERCA Advisors

JinMing Liu - Ardour Capital

Carter Driscoll - Capstone Investments

Justin Cable - Global Hunter Securities

Peter Christiansen - Merrill Lynch



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Good morning. My name is [Watts] and I will be your conference operator today. At this time, I would like to welcome everyone to the Ormat Technologies first quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers

remarks, there will be question-and-answer session. (Operator instructions) Thank you.


ll now turn the conference over to Robert Fink of KCSA Strategic Communications. Please go ahead, sir.

Robert Fink

Thank you, Watts. Hosting the call today are Dita Bronicki, Chief Executive Officer; Yoram Bronicki, President and Chief Operating Officer; Joseph Tenne, Chief Financial Officer; and Smadar Lavi, Vice President of Corporate Finance and Investor Relations.

Before beginning, we would like to remind you that information provided during this call may contain forward looking statements relating to current expectations, estimates, forecasts, and projections about future events that are forward-looking 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 these 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 company

s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 8, 2010.

In addition, during this call statements that maybe made that include financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission such as EBITDA. These measure maybe difference 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 adjusted EBITDA may provide meaningful supplemental information regarding liquidity measurement that both management and investors benefit from in assessing Ormat Technologies

liquidity, and when planning and forecasting future periods. This non-GAAP financial measure may also facilitate management

s internal comparison to the company

s historical liquidity.

Before I turn the call over to management, I would like to remind everyone that a slide presentation accompanies this call and can be accessed on Ormat

s website at www.ormat.com under the webcast and presentation link as found in the Investor Relations tab.

With that said, I would now like to turn over the call to Joseph for review of the quarter

s financials. Yoram will then update the status of operation and following Dita

s remarks, we will open the call for question. Joseph, the floor is yours.

Joseph Tenne

Thank you, Rob and good morning everybody. We have included certain financial highlights from our company

s statements, preparation and balance sheet in our earnings release and in accompanying slides. I would like now to review the main issues the effective our financial results starting with slide four.

For the first quarter of 2010, total revenues were $82.7 million compared to $99.3 million in the first quarter of 2009. As you can see on slide five, this quarter the Electricity segment had revenues of $66.1 million, compared to $62.1 million for the first quarter of 2010. The increase in generation is the results of some additional capacity with North Brawley being the single most significant contributor to the increase and solid performance from most of plans other than Puna.

In the Product segment on next slide, this quarter and throughout the year, we expect revenues in corresponding margins to be down from last year

s high due to a decline in the product backlog. The first quarter revenues were $16.5 million, compared to $37.3 million in the same quarter last year.

Moving to slide seven, the company

s gross margin was 19% compared to 31.6% in the same period last year. Gross margin for the Electricity segment was 17.5% for the fiscal quarter of 2010, compared to 29.6% in the same quarter last year. The decrease in the gross margin is due to the impact of placing North Brawley in service at partial load, which increase the cost per megawatt hours in the current quarter, compared to the first quarter last year. In the Product segment, gross margin was 24.8%, compared to 34.9% for the same quarter last year.

Moving now to slide eight, interest expense mix for the first quarter of 2010 was $9.7 million, compared to $3.3 million in the same period last year. The $6.4 million increase was principally attributable to $4.2 million decrease in interest capitalize to projects under construction, primarily due to the commencement of operations of North Brawley and an increase in interest expense due to new long term project finance in corporate debt.

Moving to slide nine, loss from continuing operations for the first quarter of 2010 was $2 million, compared to income from continuing operations of $14.4 million in the same quarter last year. Such decrease in income from continuing operations was principally attributable to the decrease in our gross margin and an increase in interest expense.

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