ORMAT TECHNOLOGIES, INC. — Earnings Release 2018

Jun 20, 2018

8-K 1 ora20180619_8k.htm FORM 8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 ________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 20, 2018 (June 19, 2018)

Ormat Technologies, Inc.

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)

001- 32347 Commission File Number

88-0326081 (I.R.S. Employer Identification Number)

6225 Neil Road, Reno, Nevada (Address of principal executive offices) 89511-1136 (Zip Code)

(775) 356-9029

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On June 19, 2018, Ormat Technologies, Inc. (the "Company") issued a press release announcing that it has filed an amended (i) Form 10-Q for the period ending June 30, 2017 (ii) Form 10-Q for the period ending September 30, 2017 and (iii) Form 10-K for the year ending December 31, 2017 with the U.S. Securities and Exchange Commission ("SEC") to restate its financial results for the second, third and fourth quarters of 2017 and for the full-year of 2017. In addition, the Company announced it has filed its quarterly report on Form 10-Q for the period ending March 31, 2018 with the SEC in which the Company adjusted the income tax benefit for the first quarter of 2018 as compared to what was previously reported on May 7, 2018. A copy of the Company's press release is furnished as Exhibit 99.1 to this Report and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release, dated June19, 2018, announcing the filing of the Company's (i) restated financial results for the second, third and fourth quarters of 2017 and for the full-year of 2017 and (ii) Form 10-Q for the period ending March 31, 2018.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ORMAT TECHNOLOGIES, INC.

By: /s/ Isaac Angel

Name:Isaac Angel Title: Chief Executive Officer

Date: June 20, 2018

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EX-99.1 2 ex_116660.htm EXHIBIT 99.1

Exhibit 99.1

Ormat Technologies Contact: Smadar Lavi VP Corporate Finance and Head of Investor Relations 775-356-9029 (ext. 65726) slavi@ormat.com

Investor Relations Agency Contact: Rob Fink Hayden - IR 646-415-8972 rob@haydenir.com

ORMAT TECHNOLOGIES FILES RESTATED FINANCIAL REPORTS AND FILES Q1 2018 FINANCIAL REPORT CONTAINING ADJUSTED RESULTS

RENO, Nev. June 19, 2018, Ormat Technologies, Inc. (NYSE: ORA) ("Ormat" or the "Company") today announced that it has filed an amended (i) Form 10-Q for the period ending June 30, 2017 (ii) Form 10-Q for the period ending September 30, 2017 and (iii) Form 10-K for the year ending December 31, 2017 with the U.S. Securities and Exchange Commission (SEC) to restate its financial results for the second, third and fourth quarters of 2017 and for the full-year of 2017. In addition, the Company has filed its quarterly report on Form 10-Q for the period ending March 31, 2018 with the SEC containing adjustments from the amounts previously reported on May 7, 2018.

As previously reported, upon the recommendation of its Audit Committee, Ormat's Board of Directors determined that the Company should restate prior period financial results based on the Company's conclusion that there were errors in the income tax provision primarily relating to the Company's valuation allowance based on the Company's ability to utilize Federal tax credits in the U.S. prior to their expiration and the resulting impact on the Company's deferred tax asset valuation allowance. Additionally, the Company netted certain deferred income tax assets and deferred income tax liabilities across different tax jurisdictions that are not permitted to be netted pursuant to U.S. generally accepted accounting principles (U.S. GAAP). The restatement impacted the "income tax (provision) benefit" line item in the Company's statements of operations, with associated impacts to net income and earnings per share and the "deferred income taxes" line items on its balance sheet.

The previously reported revenue, net income before tax and adjusted EBITDA for the second, third and fourth quarters of 2017 and for the full-year of 2017 remained unchanged.

	Year Ended December 31, 2017		Three Months Ended December 31, 2017		Three Months Ended		Three Months Ended June 30, 2017
					September 30, 2017
	As	As	As	As	As	As	As	As
	Reported	Restated	Reported	Restated	Reported	Restated	Reported	Restated
Income tax (provision) benefit	1.4	(21.7)	29.7	28.3	(11.0)	(6.2)	(6.4)	(32.8)
Net income	170.2	147.1	69.4	68.1	22.8	27.6	38.2	11.8
Net income attributable to the Company's stockholders Diluted EPS:	155.5 3.06	132.4 2.61	66.0 1.29	64.6 1.27	19.2 0.38	24.0 0.47	35.0 0.69	8.6 0.17
Adjusted net income attributable to the Company's stockholders1 Adjusted diluted EPS1	151.9 2.99	155.2 3.06	66.0 1.29	64.6 1.26	21.1 0.42	25.9 0.51	29.5 0.58	29.5 0.58

SCOPE OF RESTATEMENT

ORMAT TECHNOLOGIES, INC. 6225 Neil Road Reno, Nevada • +1-775-356-9029 • ormat@ormat.com ormat.com

In connection with the restatement of the full-year 2017 financial statements, the Company also made revisions to the same line items in certain quarterly financial statements for 2016 and its full-year 2016 and 2015 financial statements.

Q1 2018

The Company has also filed its quarterly report on Form 10-Q for the period ending March 31, 2018 with the SEC. Within this report, the Company adjusted the income tax benefit for the first quarter of 2018 compared to the amount reported on May 7, 2018. As a result of this adjustment, the Company's income tax benefit increased to \$26.9 million compared to \$2.1 million reported on May 7, 2018. The Company's amended net income attributable to the Company's shareholders is \$69.5 million, or \$1.36 per diluted share, compared to \$44.7 million, or \$0.88 per diluted share, reported on May 7, 2018. The Company's amended adjusted net income attributable to the Company's shareholders is \$25.1 million, or \$0.49 per diluted share, compared to \$24.4 million, or \$0.48 per diluted share, reported on May 7, 2018.

The previously reported revenue, net income before tax and adjusted EBITDA for the first quarter of 2018 remained unchanged.

(\$M)	Three Months Ended March 31, 2018
	As reported on May 7, 2018	As filed
Income tax benefit	2.1	26.9
Net income	49.4	74.3
Net income attributable to the Company's stockholders	44.7	69.5
Diluted EPS:	0.88	1.36
Adjusted net income attributable to the Company's stockholders '2	24.4	25.1
Adjusted diluted EPS 2	0.48	0.49

In addition, during the first quarter of 2018, based upon continued analysis of the specific provisions of the "Tax Cuts and Jobs Act", specifically the newly created requirement that global intangible low-taxed income (GILTI) earned by controlled foreign corporations (CFCs) must be included currently in gross income of the CFC's U.S. shareholder, the Company concluded it was more likely than not that the Section 78 gross up included in the GILTI calculation would provide an additional source of realization for the Company's foreign tax credits and production tax credits. Accordingly, in the first quarter of 2018, the Company recorded a tax benefit of \$44.4 million for the reduction of the valuation allowance related to foreign tax credits and production tax credits. In addition, due to the complexity of the new GILTI tax rules, the Company is continuing to evaluate this provision of the Act and the application of ASC 740. In May 2018, certain officials from the U.S. Department of the Treasury and the Internal Revenue Service made public comments about a plan to propose regulations related to GILTI that will confirm how to allocate certain income in the GILTI calculation. As a result, all or substantially all of the tax benefit of \$44.4 million recorded by the Company for the period ended March 31, 2018 is expected to be reversed in the period ended June 30, 2018. The range of the ultimate adjustment in the second quarter results is dependent upon multiple variables and the release of additional guidance in future periods may require changes to the Company's provisional estimates.

1 A reconciliation of Adjusted Net income attributable to the Company's stockholders is set forth below in this release

2 Adjusted Net income attributable to the Company's stockholders and diluted EPS for the first quarter of 2018 excludes the \$20.3 million and \$ 44.4 million tax benefits recorded for the reduction of the valuation allowance related to foreign tax credits and production tax credits as reported on May 7, 2018 and as filed, respectively.

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Furthermore, as previously reported, the Company identified a material weakness in its internal control over financial reporting related to accounting for income taxes. Management, with the oversight of the Audit Committee and the Board of Directors, continues to dedicate significant resources and efforts to improve the Company's control environment and take steps to address the material weakness identified. These efforts are intended both to address the identified material weakness and to enhance the Company's overall financial control environment.

ABOUT ORMAT TECHNOLOGIES

With over five decades of experience, Ormat is a leading geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation (REG), with the objective of becoming a leading global provider of renewable energy. The company owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on the Ormat Energy Converter – a power generation unit that converts low-, medium- and high-temperature heat into electricity. With 77 U.S. patents, Ormat's power solutions have been refined and perfected under the most grueling environmental conditions. Ormat has 530 employees in the United States and 770 overseas. Ormat's flexible, modular solutions for geothermal power and REG are ideal for the vast range of resource characteristics. The company has engineered, manufactured and constructed power plants, which it currently owns or has installed to utilities and developers worldwide, totaling over 2,600 MW of gross capacity. Ormat's current approximately 851 MW generating portfolio is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras and Guadeloupe. In March 2017, Ormat expanded its operations to provide energy storage and energy management solutions, by leveraging its core capabilities and global presence as well as through its Viridity Energy Solutions, Inc. subsidiary, a Philadelphia-based company with nearly a decade of expertise and leadership in demand response, energy management and storage.

ORMAT'S SAFE HARBOR STATEMENT

Information provided in this press release 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 Ormat's plans, objectives and expectations for future operations and are based upon its 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, see "Risk Factors" as described in Ormat Technologies, Inc.'s Form 10-K/A filed with the SEC on June 19, 2018 and Form 10-Q for the period ended March 31, 2018 filed with the SEC on June 19, 2018.

These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

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RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO THE COMPANY'S STOCKHOLDERS

	Year Ended December 31, 2017		Three Months Ended December 31, 2017			Three Months Ended	Three Months Ended June 30, 2017
						September 30, 2017
	As	As	As	As	As	As	As	As
	Reported	Restated	Reported	Restated	Reported	Restated	Reported	Restated
Net income attributable to the Company's stockholders	155.5	132.4	66.0	64.6	19.2	24.0	35.0	8.6
Adjusted for: Tax benefit related to valuation allowance and other tax restructuring One-time make	(5.5)	20.9					(5.5)	20.9
whole premium paid in connection with the prepayment of OFC Senior Secured Notes and DEG loan	1.9	1.9			1.9	1.9
Adjusted net income attributable to the Company's stockholders	151.9	155.2	66.0	64.6	21.1	25.9	29.5	29.5

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

Ormat Technologies, Inc. and Subsidiaries Condensed Consolidated Statements of Operations For the Three-Month Periods Ended March 31, 2018 and 2017 (Unaudited)

	Three Months Ended March 31
	2018	2017
	(In thousands, except per
	share data)
Revenues:
Electricity	\$ 132,489	\$	115,776
Product	48,672		74,122
Other	2,862		—
Total revenues	184,023		189,898
Cost of revenues:
Electricity	73,482		66,036
Product	33,726		49,452
Other	3,443		—
Total cost of revenues	110,651		115,488
Gross profit	73,372		74,410
Operating expenses:
Research and development expenses	1,108		602
Selling and marketing expenses	3,699		4,363
General and administrative expenses	13,849		9,949
Write-off of unsuccessful exploration activities	123		—
Operating income	54,593		59,496
Other income (expense):
Interest income	113		244
Interest expense, net	(14,344)		(14,923)
Derivatives and foreign currency transaction gains (losses)	(1,599)		1,338
Income attributable to sale of tax benefits	7,361		6,157
Other non-operating expense, net	(20)		(92)
Income before income taxes and equity in losses of investees	46,104		52,220
Income tax (provision) benefit	26,942		(11,004)
Equity in losses of investees, net	1,210		(1,599)
Net income	74,256		39,617
Net income attributable to noncontrolling interest	(4,748)		(4,423)
Net income attributable to the Company's stockholders	\$ 69,508	\$	35,194
Earnings per share attributable to the Company's stockholders - Basic and diluted:
Basic:
Net Income	\$ 1.37	\$	0.71
Diluted:
Net Income	\$ 1.36	\$	0.70
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:
Basic	50,614		49,680

Diluted	51,051	50,491

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March 31, December 31,

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES Ormat Technologies, Inc. and Subsidiaries Condensed Consolidated Balance Sheets As of March 31, 2018, and December 31, 2017 (Unaudited)

		2018		2017 (As Restated)
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	\$	54,723	\$	47,818
Restricted cash, cash equivalents and marketable securities Receivables:		50,332		48,825
Trade		103,580		110,410
Other		10,018		13,828
Inventories		20,069		19,551
Costs and estimated earnings in excess of billings on uncompleted contracts		41,134		40,945
Prepaid expenses and other		42,274		40,269
Total current assets		322,130		321,646
Investment in an unconsolidated company		63,109		34,084
Deposits and other		21,205		21,599
Deferred income taxes		124,304		57,337
Deferred charges		—		49,834
Property, plant and equipment, net		1,723,560		1,734,691
Construction-in-process		345,563		293,542
Deferred financing and lease costs, net		4,922		4,674
Intangible assets, net		84,771		85,420
Goodwill		21,253		21,037
Total assets	\$	2,710,817	\$	2,623,864
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	\$	103,551	\$	153,796
Short-term revolving credit lines with banks (full recourse)		38,500		51,500
Billings in excess of costs and estimated earnings on uncompleted contracts		10,458		20,241
Current portion of long-term debt:
Limited and non-recourse:
Senior secured notes		28,398		33,226
Other loans		21,495		21,495
Full recourse		2,809		3,087
Total current liabilities		205,211		283,345
Long-term debt, net of current portion:
Limited and non-recourse:
Senior secured notes		305,905		311,668
Other loans		237,245		242,385
Full recourse:
Senior unsecured bonds		303,469		203,752
Other loans		46,506		46,489
Liability associated with sale of tax benefits		42,622		44,634
Deferred lease income		50,745		51,520
Deferred income taxes		48,074		61,961
Liability for unrecognized tax benefits		9,074		8,890
Liabilities for severance pay		20,874		21,141
Asset retirement obligation		27,639		27,110
Other long-term liabilities		21,625		18,853

https://www.sec.gov/Archives/edgar/data/1296445/000143774918012103/ex_116660.... 20/06/2018

Total liabilities	1,318,989	1,321,748
Redeemable non-controlling interest	6,943	6,416
Equity:
The Company's stockholders' equity:
Common stock	51	51
Additional paid-in capital	890,485	888,778
Retained earnings (accumulated deficit)	410,758	327,255
Accumulated other comprehensive income (loss)	(909)	(4,706)
	1,300,385	1,211,378
Noncontrolling interest	84,500	84,322
Total equity	1,384,885	1,295,700
Total liabilities and equity	\$ 2,710,817 \$	2,623,864

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES Reconciliation of EBITDA and Adjusted EBITDA For the Three-Month Periods Ended March 31, 2018 and 2017 (Unaudited)

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 costs (vi) stock-based compensation, (vii) gains or losses from extinguishment of liability, (viii) gains or losses on sales of subsidiaries and property, plant and equipment and (ix) other unusual or non-recurring items. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under U.S. GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or as an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. 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 table reconciles net income to EBITDA and Adjusted EBITDA for the three-month periods ended March 31, 2018 and 2017.

	Three Months Ended March 31
	2018		2017
	(in thousands)
Net income	\$	74,256	\$	39,617
Adjusted for:
Interest expense, net (including amortization of deferred financing costs)		14,231		14,679
Income tax provision		(26,942)		11,004
Adjustment to investment in uncosolidated company:
our proportionate share in interest, tax and depreciation and amortization		3,530		—
Depreciation and amortization		29,437		25,542
EBITDA	\$	94,512	\$	90,842
Mark-to-market on derivatives instruments		962		(1,523)
Stock-based compensation		1,707		1,713
Merger and acquisition transaction cost		1,095		800
Write-off of unsuccessful exploration activities		123		—
Adjusted EBITDA	\$	98,399	\$	91,832

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