Ormat Technologies(ORA) - 2023 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarter ended June 30, 2023 Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2023, shows total assets of $5.01 billion, an increase from $4.61 billion at year-end 2022 Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $5,010,644 | $4,611,579 | | Cash and cash equivalents | $275,066 | $95,872 | | Property, plant and equipment, net | $2,836,003 | $2,493,457 | | Total Liabilities | $2,593,594 | $2,581,014 | | Current portion of long-term debt | $169,008 | $165,504 | | Long-term debt, net of current portion | $1,597,969 | $1,619,202 | | Total Equity | $2,407,042 | $2,020,975 | Condensed Consolidated Statements of Operations For Q2 2023, total revenues increased 15.2% YoY to $194.8 million, with net income more than doubling to $24.2 million Q2 2023 vs. Q2 2022 Performance (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Total Revenues | $194,796 | $169,078 | | Gross Profit | $49,490 | $57,601 | | Operating Income | $24,224 | $38,607 | | Net Income Attributable to Stockholders | $24,191 | $11,260 | | Diluted EPS | $0.40 | $0.20 | H1 2023 vs. H1 2022 Performance (in thousands, except per share data) | Metric | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Total Revenues | $380,028 | $352,788 | | Gross Profit | $125,559 | $127,506 | | Operating Income | $77,390 | $83,685 | | Net Income Attributable to Stockholders | $53,220 | $29,690 | | Diluted EPS | $0.90 | $0.53 | Condensed Consolidated Statements of Cash Flow For H1 2023, net cash from operating activities was $130.5 million, with a net increase in cash of $168.7 million Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $130,505 | $115,290 | | Net cash used in investing activities | ($274,942) | ($225,036) | | Net cash provided by financing activities | $313,087 | $123,010 | | Net change in cash | $168,706 | $12,937 | - Financing activities in H1 2023 were highlighted by proceeds of $341.7 million from a common stock issuance and $99.9 million from new long-term loans[23] Notes to Condensed Consolidated Financial Statements The notes detail significant financial events, including a $341.7 million equity offering and key customer revenue concentrations - In March 2023, the company raised net proceeds of approximately $341.7 million through a public offering of 4,140,000 shares of common stock[31] - The company's three largest customers (SCPPA, Sierra Pacific/Nevada Power, and KPLC) represented 23.8%, 17.9%, and 14.4% of total revenues, respectively, for the six months ended June 30, 2023[38] - The company is involved in a lawsuit regarding its Dixie Meadows project, which is currently stayed. The net book value of the project was approximately $84.7 million as of June 30, 2023[85] - Subsequent to the quarter end, on August 2, 2023, the Board of Directors declared a quarterly dividend of $0.12 per share[91] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's performance, highlighting a 15.2% YoY revenue increase in Q2 2023 and strengthened liquidity Recent Developments The company has been active in expanding its portfolio, commencing operations for several BESS projects and a geothermal plant - Successfully commenced commercial operations at five new BESS facilities in 2023: Pomona (20MW/40MWh), Upton (23MW/23MWh), Andover (20MW/20MWh), Howell (7MW), and Bowling Green (12MW)[111][113] - The North Valley geothermal power plant (25 MW) began commercial operation in April 2023 under a 25-year PPA with NV Energy[113] - Signed a 20-year PPA with San Diego Community Power (SDCP) for the Arrowleaf Solar and Storage Facility (42 MW solar, 35 MW/140 MWh storage)[111] Results of Operations This section details operating results, showing Q2 2023 total revenues grew 15.2% to $194.8 million, driven by the Product segment Q2 2023 vs Q2 2022 Revenue by Segment (in millions) | Segment | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | Electricity | $155.3 | $151.2 | 2.7% | | Product | $33.5 | $10.4 | 222.0% | | Energy Storage | $6.0 | $7.5 | (19.7)% | | Total | $194.8 | $169.1 | 15.2% | - The increase in Q2 Electricity revenue was mainly due to new plants (CD4, North Valley) and an upgrade (Dixie Valley), partially offset by lower revenue at the Puna plant due to lower electricity prices[132] - The decrease in Q2 Energy Storage revenue was mainly due to lower energy rates at PJM and CAISO facilities compared to the prior year[135] - For H1 2023, total revenues increased 7.7% YoY to $380.0 million, while net income attributable to stockholders increased to $53.2 million from $29.7 million[157][181] Liquidity and Capital Resources As of June 30, 2023, the company had $275.1 million in cash and equivalents and $390.8 million in unused borrowing capacity - As of June 30, 2023, the company had $275.1 million in cash and cash equivalents and $390.8 million of unused corporate borrowing capacity[183] - Estimated capital needs for the remainder of 2023 include $328.0 million for capital expenditures and $80.2 million for long-term debt repayment[184] - The company maintains certain financial covenants, including an equity to total assets ratio of not less than 25% (actual 48.0%) and a net debt to Adjusted EBITDA ratio not to exceed 6.0 (actual 3.56)[190] Non-GAAP Measures: EBITDA and Adjusted EBITDA The company uses EBITDA and Adjusted EBITDA to evaluate financial performance, with Q2 2023 Adjusted EBITDA at $100.9 million Reconciliation of Net Income to Adjusted EBITDA (in thousands) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2022 | | Net income | $24,511 | $14,945 | $57,972 | $37,738 | | EBITDA | $96,995 | $92,815 | $216,499 | $195,403 | | Adjusted EBITDA | $100,904 | $100,678 | $224,391 | $208,546 | Capital Expenditures The company outlines its significant project pipeline, estimating total capital expenditures for the last three quarters of 2023 at $328.0 million - Total estimated capital expenditures for the last three quarters of 2023 are approximately $328.0 million[226] - Key projects expected to come online in 2023 include the Heber Complex repowering (to 87 MW), Steamboat Solar, North Valley Solar, and Steamboat Hills Solar[213][214][216][218] - The company is constructing several energy storage facilities, with expected completion dates ranging from Q3 2023 to H2 2025, including the 80MW/320MWh Bottleneck project[222] Quantitative and Qualitative Disclosures About Market Risk This section incorporates by reference the detailed discussion on market risks from Item 2, MD&A - Information regarding market risk is incorporated by reference from the 'Exposure to Market Risks' and 'Concentration of Credit Risk' sections in Item 2 of this report[248] Controls and Procedures The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2023 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[250] - No changes in internal controls over financial reporting occurred in Q2 2023 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[251] PART II — OTHER INFORMATION Legal Proceedings This section refers to Note 9 of the condensed consolidated financial statements for information regarding legal proceedings - Information regarding legal proceedings is incorporated by reference from Note 9 to the condensed consolidated financial statements[254] Risk Factors This section updates the company's risk factors, highlighting a new material risk concerning conditions in and around Israel - A new material risk factor has been added regarding the political and security conditions in Israel, where the majority of senior management and main production facilities are located[255] - The risk factor highlights that widespread political unrest and protests in response to proposed judicial system reforms could negatively impact the business environment, potentially affecting investment, currency, and overall stability[258] Other Information The company discloses that on April 2, 2023, both the CEO and Chairman entered into written stock selling plans - On April 2, 2023, CEO Doron Blachar and Chairman Isaac Angel each entered into a Rule 10b5-1 stock selling plan[262] Exhibits This section lists the exhibits filed with the quarterly report, primarily consisting of CEO and CFO certifications - The exhibits filed with the report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Inline XBRL documents[268]