Ormat CEO steps down

Isaac Angel  photo: Eyal Izhar

CFO Doron Blachar will replace Isaac Angel as CEO. The company reported at 10% fall in profit in 2019.

Israeli geothermal energy company Ormat Technologies Inc. (NYSE: ORA; TASE: ORA) today published its financial results for 2019, and announced the resignation of CEO Isaac Angel. He will leave Ormat in July, and be replaced by president and CFO Doron Blachar. Before joining Ormat, Blachar served in executive positions at Shikun & Binui, ADO Group, Teva Pharmaceutical Industries, and Amdocs. Delek Logistics Partners CFO Assaf Ginzburg will replace Blachar as Ormat's CFO.

Angel will finish a six-year term as CEO, during which the company underwent many changes: a merger with a subsidiary, acquisition of a company, retroactive revision of its financial statements, measures to improve the company under former controlling shareholder FIMI Opportunity Funds (which brought Angel to the company), and the sale of Ormat's controlling interest to Japanese corporation ORIX.

The Kilauea volcano, which erupted in May 2018 and caused the closing down of Ormat's nearby Puna power station, had a negative impact on Ormat's 2019 results. The power station is scheduled to resume activity this year, but only in the second half of the year, which is later than expected. The closing down of the Puna plant cost Ormat $0.14 in profit per share. The company's gross profit margin, which was 36.1%, would have been 37.5% without the volcano. Its adjusted EBITDA, which totaled $384.3 million, would have been $385.5 million without the volcano.

Ormat is active in two main sectors: electricity in which it owns power stations that it has builds, and products - power stations that it builds for other concerns. The Puna shutdown affects the electricity sector.

Ormat finished 2019 with $746 million in revenue, 3.7% more than in 2018. Its fourth quarter revenue totaled $192 million, 1% more than in the corresponding quarter on 2018. Despite the shutdown at Puna, revenue in the electricity sector was up 4.4% to $144 million in the fourth quarter and 6% to $540 million in 2019 as a whole. Revenue in the products sector fell 11.9% to $43.8 million in the fourth quarter and 5.3% to $191 million in 2019 as a whole. Growth was rapid in the energy storage and management services sector, but this still accounts for only a small fraction of Ormat's activity, and is still dragging down the company's profit margin. Revenue in this sector amounted to $14.7 million in 2019, 92.3% more than in 2018.

Net profit attributable to shareholders was down 30.8% to $12.6 million in the fourth quarter, as a result of lower gross profit and higher operating expenses. Net profit for 2019 as a whole was off 10.1% to $88.1 million, and its adjusted net profit attributable to shareholders declined 29.5% to $74.8 million.

Guidance for 2020: Lower than 2019, analysts' expectations

Ormat's guidance for 2020 listed $720-740 million in revenue, lower than 2019 and the analysts' expectations. The company expects $560-570 million in revenue from the electricity sector, and continued decline in the products sector, with revenue amounting to $140-150 million. Ormat projects $15-20 million in revenue from energy storage and management services, and believes that it adjusted EBITDA will total $405-415 million.

Angel says that Ormat is well-positioned to continue its success in 2020 and beyond, given an encouraging regulatory environment, its solid growth plans, and growing demand for stable electricity from renewable energy sources. He emphasized that the company's revenue from the electricity sector grew "despite no contribution by Puna for all of 2019, and we signed three important PPAs in Hawaii and California, giving us great visibility into the coming year." Angel added that the company was close to signing an important contract in the products sector.

"Confidence in our business is growing with the recent extension of federal tax incentives, which supports our accelerated growth plans in the US," Angel said.

Commenting on Blachar, his successor, Angel said, "Doron has proved himself to be a talented and outstanding executive with demonstrated ability as a business leader. I am confident that Doron will lead Ormat to continued success."

Ormat is listed on the NYSE and Tel Aviv Stock Exchange (TASE) at a $4.1 billion market cap, after its share price climbed 41.8% in 2019. The company's share price was down 3% at the outset of today's trading on the TASE.

Published by Globes, Israel business news - en.globes.co.il - on February 26, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Isaac Angel  photo: Eyal Izhar
Isaac Angel photo: Eyal Izhar
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