The power plant in Hawai that has been shut down for eighteen months because of a volcanic eruption is still weighing on the results of geothermic energy company Ormat Technologies (ORA), but that has not stopped the company from raising its annual guidance, or its share price from reaching record levels.
Last night, Ormat released its third quarter results, which were slightly below the analysts' estimates, with the Puna plant in Hawai shut down. Excluding Puna, Ormat overtook earnings estimates. The Puna plant is expected to reopen and to reach full output capacity by the end of the second quarter of 2020.
Ormat is traded on New York and Tel Aviv at a market cap of $3.9 billion. The biggest shareholder in the company is Japanese company ORIX, which holds 21.6% of the shares, with a current value of $839 million, two years after it bought the stake from the FIMI fund and the Bronicki family for $630 million.
Ormat has two business segments: the electricity segment, in which it owns power plants; and the products segment, in which it constructs power plants for others. In recent years it has expanded to additional activities. In the third quarter, electricity segment revenue grew 6.1% to $124 million, while products revenue fell 11.2% to $43 million. Other revenue almost tripled to $3.5 million.
Net profit attributable to shareholders totaled $15.6 million, 47% higher than in the corresponding quarter of 2018, and earnings per share were $0.30, or $0.35 excluding the Puna plant, which is incurring expenses but not generating revenue. Adjusted EBITDA rose 13% to $85.5 million, or $87 million excluding Puna.
In this context, Ormat CEO Isaac Angel said, "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," Angel added, "we are working on new opportunities in New Zealand, Indonesia and the Philippines to diversify and grow our backlog. We remain on pace to meet our full-year targets in all segments and expect to continue our growth path in 2020"
As mentioned. Ormat raised its annual guidance. It now sees revenue of $731-743 million, with the electricity segment contributing $535-540 million and the product segment $185-190 million. Annual EBITDA is expected to be in the $385-380 million range, up from previous guidance of $375-385 million.
Published by Globes, Israel business news - en.globes.co.il - on November 7, 2019
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