ORMAT TECHNOLOGIES, INC. — Earnings Release 2019

Nov 7, 2019

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 FNK IR 646-415-8972 rob@FNKIR.com

ORMAT TECHNOLOGIES REPORTS THIRD QUARTER 2019 FINANCIAL RESULTS

ELECTRICITY REVENUES INCREASE 6.1% AND GROSS MARGINS EXPAND TO 32.5%; COMPANY RAISES 2019 REVENUE GUIDANCE TO UPPER END OF RANGE AND INCREASES ADJUSTED EBITDA GUIDANCE

RENO, Nev. November 6, 2019, Ormat Technologies, Inc.1 (NYSE: ORA) today announced financial results for the third quarter ended September 30, 2019.

(\$ millions, except per share amounts)	Q3 2019	Q3 2018	Change (%)
Revenues
Electricity	124.0	116.9	6.1%
Product	43.0	48.4	(11.2%)
Other	3.5	1.2	203.0%
Total Revenues	170.5	166.5	2.4%
Gross Profit	55.5	48.8	13.7%
Gross margin (%)
Electricity	35.4%	31.7%
Product	27.8%	26.4%
Other	(9.3%)	(89.0%)
Gross margin (%)	32.5%	29.3%
Operating income	38.7	25.9	49.5%
Net income attributable to the Company's shareholders	15.6	10.6	47.5%
Diluted EPS	\$0.30	\$0.21	42.9%
Diluted EPS W/O the impact of Puna2	\$0.35	\$0.26
Adjusted Net income attributable to the Company's stockholders3	15.6	15.6
Diluted Adjusted EPS3	\$0.30	\$0.31
Adjusted EBITDA3	85.5	75.6	13.0%
Adjusted EBITDA W/O the impact of Puna3	87.0	77.3	12.5%

¹ Ormat Technologies, Inc. is also referred to herein as the "Company", "Ormat", "we" or "us"

² Diluted EPS excludes \$2.5 million and \$2.6 million related to Puna in the three months ended September 30, 2019 and 2018, respectively

³ Reconciliation is set forth below in this release

"We continue to deliver on our stated goals of growing revenues and expanding gross margin," commented Isaac Angel, Chief Executive Officer. "Total revenues increased 2.4%, driven by strong growth of 6.1% in our core Electricity revenues, which helped to offset both the lack of revenues from our Puna plant in Hawaii (which is preparing to re-start operations after the damage from the 2018 eruption of the Kilauea volcano), as well as the expected quarterly decline in our Product segment revenues. These strong results demonstrate the overall robustness of our Electricity segment and the benefit of our diversified portfolio of operations. Our gross margins also expanded on a year-over-year basis due to the positive impacts of our initiatives to improve plant-level efficiencies and to increase the geographic diversification of our Product segment into higher-margin territories."

Mr. Angel continued, "The reconstruction efforts at Puna are on schedule and we expect our refurbishment activities will be completed by the end of the year, enabling us to deliver energy from the plant. All of our insurers have now started paying the costs to rebuild the damaged power plant equipment. However, certain insurers rejected our claim for business interruption coverage, and we have filed a lawsuit against these insurers. These lawsuits will not impact our plans for re-starting the Puna facility, and we expect to be able to sell the electricity produced at Puna as soon as the relevant permits required from local authorities for the operation of the substation and the transmission network upgrades being undertaken by our partners at Hawaii Electric Light Company (HELCO) are received. These are expected by the end of Q1 2020, and so we expect to be able to bring the power plant back to operation promptly thereafter, and to gradually increase the power plant's generating capacity as we complete wellfield drilling work, with a target of regaining full operation by the end of the second quarter of 2020."

"In the product segment, we are working on new opportunities in New Zealand, Indonesia and the Philippines to diversify and grow our backlog." continued Mr. Angel. "We remain on pace to meet our full-year targets in all segments and expect to continue our growth path in 2020"

FINANCIAL HIGHLIGHTS FOR THE THIRD QUARTER OF 2019

• Total revenues of \$170.5 million, up 2.4% compared to the third quarter of 2018;
• Electricity segment revenues of \$124.0 million, up 6.1% compared to Q3 2018, with the growth resulting from the commencement of commercial operation of the third phase of the McGinness Hills Complex in Nevada, which began in December 2018;
• Electricity segment gross margin was 35.4% compared to 31.7% for Q3 2018. Excluding the impact from Puna, Electricity segment gross margin would have been 38.7% in Q3 2019 and 35.3% in Q3 2018;
• Product segment backlog was approximately \$167.0 million as of November 6, 2019;
• Net income was \$15.1 million in Q3 2019 compared to \$10.1 million in Q3 2018, an increase of \$5.0 million mainly due to an increase of \$12.8 million in operating income partially offset by an increase of \$8.4 million in income tax provision;
• Net income attributable to the Company's stockholders in Q3 2019 was \$15.6 million, or \$0.30 per diluted share, compared to \$10.6 million, or \$0.21 per diluted share in Q3 2018;
• Adjusted EBITDA increased 13.0% to \$85.5 million from \$75.6 million in Q3 20184. Adjusted EBITDA includes approximately negative \$1.5 million and negative \$1.7 million of Adjusted EBITDA related to Puna in Q3 2019 and Q3 2018, respectively. Adjusted EBITDA, excluding any impact from Puna, was \$87.0 million in Q3 2019 and \$77.3 million in Q3 2018;
• The Company declared a quarterly dividend of \$0.11 per share for the third quarter of 2019.

⁴ Reconciliation is set forth below in this release

Recent Developments

• Announced the commercial operation of the Hinesburg Battery Energy Storage System (Hinesburg BESS) under an agreement with Vermont Electric Cooperative (VEC).
• Entered a partnership agreement with a private investor that acquired membership interests in the McGinness Hills phase 3 power plant to receive substantially all of the plant's tax attributes for an initial purchase price of approximately \$59.3 million.

2019 GUIDANCE

Mr. Angel added, "We are raising our 2019 Revenue guidance to the upper end of the range and increasing Adjusted EBITDA guidance. Excluding Puna, we expect full-year 2019 total revenues of between \$731 million and \$743 million, with Electricity segment revenues between \$535 million and \$540 million, and Product segment revenues between \$185 million and \$190 million. Revenues from our energy storage services business are expected to be between \$11 million and \$13 million. We expect 2019 Adjusted EBITDA to be between \$385 million and \$390 million. We expect annual Adjusted EBITDA attributable to minority interest to be approximately \$23 million. This guidance, with regard to revenues, Adjusted EBITDA and Adjusted EBITDA attributable to minority interest, excludes any contribution and/or impact from Puna."

The Company provides a reconciliation of Adjusted EBITDA, a non-GAAP financial measure for the three months ended September 30, 2019. 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 related to still evolving effects of the tax law reform in the United States and other non-cash expenses and adjusting items which are excluded from the calculation of Adjusted EBITDA.

THIRD QUARTER 2019 FINANCIAL RESULTS (COMPARING THE QUARTER ENDED SEPTEMBER 30, 2019 TO THE QUARTER ENDED SEPTEMBER 30, 2018)

Total revenues for the quarter were \$170.5 million, up 2.4% compared to the same quarter last year. Electricity segment revenues increased 6.1% to \$124.0 million, up from \$116.9 million last year. The increase was mainly attributable to the commencement of commercial operation of the third phase of the McGinness Hills Complex in Nevada, effective December 2018, which generated total complex revenues of \$20.0 million for the three months ended September 30, 2019 compared to \$12.8 million for the three months ended September 30, 2018. Product segment revenues decreased 11.2% to \$43.0 million, down from \$48.4 million in the same quarter last year. Other segment revenues were \$3.5 million compared to \$1.2 million in the same quarter last year. The increase was mainly driven by the start of operation of two storage energy facilities in the PJM market.

General and administrative expenses were \$11.9 million, or 7.0% of total revenues, compared to \$13.6 million, or 8.2% of total revenues. This decrease was mainly related to a decrease in professional fees.

Net income attributable to the Company's shareholders was \$15.6 million, or \$0.30 per diluted share, compared to \$10.6 million, or \$0.21 per diluted share.

Adjusted EBITDA5 was \$85.5 million, compared to \$75.6 million. The increase in Adjusted EBITDA is mainly related to the commencement of commercial operation of the third phase of the McGinness Hills Complex. A reconciliation of GAAP net income to EBITDA and Adjusted EBITDA is set forth below in this release.

⁵ Reconciliation is set forth below in this release

DIVIDEND

On November 6, 2019, the Company's Board of Directors declared, approved and authorized payment of a quarterly dividend of \$0.11 per share pursuant to the Company's dividend policy. The dividend will be paid on December 4, 2019 to shareholders of record as of the close of business on November 20, 2019.

CONFERENCE CALL DETAILS

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release on Thursday, November 7, at 10 a.m. ET. The call will be available as a live, listen-only webcast at investor.ormat.com. During the webcast, management will refer to slides that will be posted on the website. The slides and accompanying webcast can be accessed through the News & Events in the Investor Relations section of Ormat's website.

An archive of the webcast will be available approximately 60 minutes after the conclusion of the live call.

Investors may access the call by dialing:

Participant dial in (toll free): 1-877-511-6790 Participant international dial in: 1-412-902-4141

Conference replay

US Toll Free:	1-877-344-7529
International Toll:	1-412-317-0088
Replay Access Code:	10135777

ABOUT ORMAT TECHNOLOGIES

With over five decades of experience, Ormat Technologies, Inc. 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 584 employees in the United States and 762 overseas. Ormat's flexible, modular solutions for geothermal power and REG are ideal for a 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 2,900 MW of gross capacity. Ormat's current 917 MW generating portfolio is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe. 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.

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's Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 1, 2019 and from time to time, in Ormat's quarterly reports on Form 10-Q that are filed with the SEC.

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.

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Operations For the Three- and Nine-Month Periods Ended September 30, 2019 and 2018 (Unaudited)

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019	2018
	(In thousands, except per				(In thousands, except per
	share data)			share data)
Revenues:
Electricity \$	123,978	\$	116,891	\$	395,965 \$	371,559
Product	43,037		48,439		147,195	152,026
Other	3,484		1,150		10,442	5,217
Total revenues	170,499		166,480		553,602	528,802
Cost of revenues:
Electricity	80,124		79,845		231,442	234,563
Product	31,073		35,669		114,495	106,968
Other	3,807		2,174		12,844	7,645
Total cost of revenues	115,004		117,688		358,781	349,176
Gross profit	55,495		48,792		194,821	179,626
Operating expenses:
Research and development expenses	1,062		706		2,772	3,065
Selling and marketing expenses	3,783		8,578		10,924	15,989
General and administrative expenses	11,931		13,602		41,801	43,321
Write-off of unsuccessful exploration activities	—		4		—	123
Operating income	38,719		25,902		139,324	117,128
Other income (expense):
Interest income	482		214		1,195	516
Interest expense, net	(20,076)		(18,700)		(62,816)	(48,890)
Derivatives and foreign currency transaction gains (losses)	205		(383)		696	(2,511)
Income attributable to sale of tax benefits	4,056		4,066		16,457	14,983
Other non-operating expense, net	244		309		1,362	7,662
Income before income taxes and equity in
losses of investees	23,630		11,408		96,218	88,888
Income tax (provision) benefit	(9,626)		(1,184)		(20,136)	(3,347)
Equity in losses of investees, net	1,085		(117)		3,334	1,481
Net income	15,089		10,107		79,416	87,022
Net income attributable to noncontrolling interest	516		474		(3,927)	(7,276)
Net income attributable to the Company's stockholders \$	15,605	\$	10,581	\$	75,489 \$	79,746
Earnings per share attributable to the Company's stockholders - Basic and diluted: Basic:
Net Income	\$ 0.31	\$	0.21	\$	1.49 \$	1.58
Diluted:
Net Income	\$ 0.30	\$	0.21	\$	1.48 \$	1.56
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:
Basic	50,933		50,645		50,816	50,627
Diluted	51,334		50,963		51,124	50,985

	September 30, 2019		December 31, 2018
		(In thousands)
ASSETS Current assets:
Cash and cash equivalents	\$ 97,602	\$	98,802
Restricted cash and cash equivalents	82,435		78,693
Receivables:
Trade	139,226		137,581
Other	18,482		19,393
Inventories	39,324		45,024
Costs and estimated earnings in excess of billings on uncompleted contracts	43,125		42,130
Prepaid expenses and other	12,116		51,441
Total current assets	432,310		473,064
Investment in an unconsolidated company	73,714		71,983
Deposits and other	21,078		18,209
Deferred income taxes	130,461		113,760
Property, plant and equipment, net	1,962,637		1,959,578
Construction-in-process	352,013		261,690
Operating lease right of use	58,170		—
Financing lease right of use	18,046		—
Deferred financing and lease costs, net	957		3,242
Intangible assets, net	188,815		199,874
Goodwill	19,933		19,950
Total assets	\$ 3,258,134	\$	3,121,350
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	\$ 137,176	\$	116,362
Short-term revolving credit lines with banks (full recourse)	—		159,000
Commercial paper	50,000		—
Billings in excess of costs and estimated earnings on uncompleted contracts	6,003		18,402
Current portion of long-term debt:
Limited and non-recourse:
Senior secured notes	39,393		33,493
Other loans	34,135		29,687
Full recourse	76,572		5,000
Operating lease liabilities	6,253		—
Finance lease liabilities	3,191		—
Total current liabilities	352,723		361,944
Long-term debt, net of current portion:
Limited and non-recourse:
Senior secured notes	344,924		375,337
Other loans	326,227		320,242
Full recourse:
Senior unsecured bonds	286,401		303,575
Other loans	73,384		41,579
Operating lease liabilities	17,698		—
Finance lease liabilities	12,224		—
Liability associated with sale of tax benefits	118,811		69,893
Deferred lease income	43,264		48,433
Deferred income taxes	85,116		61,323
Liability for unrecognized tax benefits	15,053		11,769
Liabilities for severance pay	18,570		17,994
Asset retirement obligation	44,810		39,475
Other long-term liabilities	5,400		16,087
Total liabilities	1,744,605		1,667,651
Redeemable non-controlling interest	8,741		8,603
Equity:
The Company's stockholders' equity:
Common stock	51		51
Additional paid-in capital	910,651		901,363
Retained earnings (accumulated deficit)	480,879		422,222
Accumulated other comprehensive income (loss)	(10,848)		(3,799)
	1,380,733		1,319,837
Noncontrolling interest	124,055		125,259
Total equity	1,504,788		1,445,096
Total liabilities and equity	\$ 3,258,134	\$	3,121,350

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

Reconciliation of EBITDA and Adjusted EBITDA For the Three- and Nine-Month Periods Ended September 30, 2019 and 2018 (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) gain from extinguishment of liability, and (viii) gain on sale of subsidiary and property, plant and equipment. EBITDA and Adjusted EBITDA are not a measurement of financial performance or liquidity under accounting principles generally accepted in the United States of America and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with accounting principles generally accepted in the United States of America. 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 and nine-month periods ended September 30, 2019 and 2018.

		Three Months Ended September				Nine Months Ended September
		2019	2018		2019		2018
	(in thousands)				(in thousands)
Net income	\$	15,089 \$	10,107	\$	79,416	\$	87,022
Adjusted for:
Interest expense, net (including amortization
of deferred financing costs)		19,594	18,486		61,621		48,374
Income tax (benefit) provision		9,626	1,184		20,136		3,347
Adjustment to investment in unconsolidated company:
our proportionate share in interest, tax and depreciation and amortization		2,644	3,784		7,884		11,768
Depreciation and amortization		36,365	33,687		106,982		94,983
EBITDA	\$	83,318 \$	67,248	\$	276,039	\$	245,494
Mark-to-market gains or losses from accounting for derivatives		(330)	(297)		(1,909)		1,202
Stock-based compensation		2,228	3,559		7,231		7,382
Insurance proceeds in excess of assets carrying value		—	—		—		(7,150)
Termination fee		—	4,973		—		4,973
Merger and acquisition transaction cost		250	120		750		2,790
Write-off of unsuccessful exploration activities		—	—		—		119
Adjusted EBITDA	\$	85,466 \$	75,603	\$	282,111	\$	254,810
Puna's related EBITDA		1,490	1,650		(1,311)		(4,905)
Adjusted EBITDA excluding Puna's impact		86,956	77,253		280,800		249,905

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

Reconciliation of Adjusted Net Income attributable to the Company's stockholders For the Three-Month and Nine-Month Periods Ended September 30, 2019 and 2018 (Unaudited)

Adjusted Net Income attributable to the Company's stockholders and Adjusted EPS are adjusted for one-time expense items that are not representative of our ongoing business and operations. The use of Adjusted Net income attributable to the Company's stockholders and Adjusted EPS is intended to enhance the usefulness of our financial information by providing measures to assess the overall performance of our ongoing business.

The following table reconciles Net income attributable to the Company's stockholders and Adjusted EPS for the three-month and nine-month periods ended September 30, 2019 and 2018.

		Three Months Ended September 30
	2019		2018
		(in millions)
Net income attributable to the Company's stockholders	\$	15.6 \$	10.6
One-timetermination fee		—	5.0
Adjusted Net income attributable to the Company's stockholders	\$	15.6 \$	15.6
Weighted average number of shares diluted used in computation of earnings per share attributable to the Company's stockholders:		51.3	51.0
Diluted Adjusted EPS		0.30	0.31