Ormat Technologies(ORA) - 2023 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements Ormat Technologies reported $185.2 million in Q1 2023 total revenues, with net income attributable to stockholders rising to $29.0 million, total assets increasing to $5.02 billion, and financing activities providing $350.4 million in net cash inflow Condensed Consolidated Balance Sheet Data (Unaudited) | | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | | (In millions) | (In millions) | | Total current assets | $811.0 | $456.7 | | Total assets | $5,015.3 | $4,611.6 | | Total current liabilities | $391.0 | $343.9 | | Total liabilities | $2,668.9 | $2,581.0 | | Total equity | $2,337.0 | $2,021.0 | Condensed Consolidated Statements of Operations (Unaudited) | | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | | (In millions, except per share data) | (In millions, except per share data) | | Total revenues | $185.2 | $183.7 | | Gross profit | $76.1 | $69.9 | | Operating income | $53.2 | $45.1 | | Net income attributable to the Company's stockholders | $29.0 | $18.4 | | Diluted EPS | $0.51 | $0.33 | Condensed Consolidated Statements of Cash Flow (Unaudited) | | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | | (In millions) | (In millions) | | Net cash provided by operating activities | $56.5 | $81.8 | | Net cash used in investing activities | ($111.2) | ($139.3) | | Net cash provided by (used in) financing activities | $350.4 | ($44.7) | - In March 2023, the company completed a public offering of 3.6 million shares of common stock, with net proceeds of approximately $341.7 million[26][81] - The company secured a $100 million loan agreement in February 2023, featuring a 10-year term and a fixed interest rate of 6.45%[25] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a 0.8% increase in Q1 2023 total revenues, primarily driven by 4.8% growth in the Electricity segment, with gross margin improving to 41.1% and Adjusted EBITDA increasing to $123.5 million, while maintaining strong liquidity and estimating $494.0 million in capital expenditures for the rest of 2023 Revenues by Segment (Q1 2023 vs Q1 2022) | Segment | Q1 2023 Revenue | Q1 2022 Revenue | Change (%) | | :--- | :--- | :--- | :--- | | Electricity | $170.3 million | $162.5 million | 4.8% | | Product | $10.0 million | $14.6 million | (31.4)% | | Energy Storage | $4.9 million | $6.6 million | (25.6)% | | Total | $185.2 million | $183.7 million | 0.8% | - The increase in Electricity segment revenue was mainly due to the CD4 facility ($5.4 million) and Tungsten Mountain 2 ($3.9 million) starting commercial operations in 2022[122] - The decrease in Energy Storage segment revenue was mainly due to lower energy rates at PJM and CAISO facilities compared to the prior year[125] - The company's liquidity as of March 31, 2023, includes $414.9 million in cash and cash equivalents and $391.0 million of unused corporate borrowing capacity[147] - Estimated capital expenditures for the last three quarters of 2023 total approximately $494.0 million, allocated to new construction, enhancements, exploration, and maintenance[189] Adjusted EBITDA Reconciliation | | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | | (In millions) | (In millions) | | Net income | $33.5 | $22.8 | | EBITDA | $119.5 | $102.6 | | Adjusted EBITDA | $123.5 | $107.9 | Quantitative and Qualitative Disclosures About Market Risk The company faces limited electricity price volatility due to fixed-rate PPAs, minimal interest rate risk with 98.8% fixed-rate long-term debt, and manages foreign currency exposure to the U.S. dollar, NIS, and Euro using derivatives, with a 10% rate change impacting forward contracts by $4.6 million to $5.6 million - Exposure to electricity price volatility is limited because the majority of long-term PPAs have fixed or escalating rate provisions, though energy storage projects are exposed to merchant market prices[191] - As of March 31, 2023, 98.8% of the company's consolidated long-term debt was fixed-rate, minimizing exposure to interest rate volatility[193] - The company is exposed to foreign currency risk, particularly the fluctuation of the U.S. dollar versus the New Israeli Shekel (NIS) and the Euro, mitigated by using forward and cross-currency swap contracts[195] Sensitivity Analysis of Foreign Currency Forward Contracts (as of March 31, 2023) | Scenario | Change in Fair Value | | :--- | :--- | | Assuming a 10% Increase in Rates | ($4.61 million) | | Assuming a 10% Decrease in Rates | $5.63 million | Controls and Procedures The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls over financial reporting during the first quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[215] - No changes in internal controls over financial reporting occurred in the first quarter of 2023 that have materially affected or are reasonably likely to materially affect internal control over financial reporting[216] PART II — OTHER INFORMATION Legal Proceedings The company is involved in a stayed lawsuit regarding its Dixie Meadows project, is in ongoing discussions with Kenya's KPLC concerning PPA tariff reductions, and a special committee is investigating short seller claims related to anti-corruption compliance, with cooperation extended to the SEC and DOJ - A lawsuit regarding the Dixie Meadows project, alleging violations of environmental laws and threats to the Dixie Valley Toad, was stayed on February 14, 2023, with the company working with the BLM and FWS on the matter[75] - Discussions are ongoing with Kenya Power and Lighting Co. Ltd. (KPLC) regarding a presidential task force's recommendation to renegotiate PPA tariffs to secure reductions[77] - A special committee of independent directors is investigating claims from a short seller's report concerning compliance with anti-corruption laws, and the company is providing information to the SEC and DOJ[76] Risk Factors No material changes to the company's risk factors were disclosed in its 2022 Annual Report on Form 10-K, except for a new risk factor concerning recent financial services industry events that could impact the company's cash access and the financial stability of its customers and suppliers - A new risk factor has been added regarding the potential adverse impact of recent events in the financial services industry, such as bank closures, on the company's business and financial condition[221] - The financial industry instability could threaten the company's access to its cash and cash equivalents and affect the ability of customers and suppliers to meet their obligations[222] Unregistered Sales of Equity Securities and Use of Proceeds None - None[223] Defaults Upon Senior Securities None - None[224] Mine Safety Disclosures None - None[225] Other Information None - None[226] Exhibits This section lists the exhibits filed with the quarterly report, including employment agreements, compensation plan documents, and certifications by the CEO and CFO - The report includes an index of all exhibits filed, such as management contracts, compensation plans, and Sarbanes-Oxley certifications[228][230]