Aiming4
15年前
Ormat Technologies Inc. Q4 2009 Earnings Call Transcript
February 28, 2010
http://seekingalpha.com/article/191127-ormat-technologies-inc-q4-2009-earnings-call-transcript
Ormat Technologies Inc. (ORA)
Q4 2009 Earnings Call
February 24, 2010 10:00 AM ET
Executives
Marybeth Csaby – IR, KCSA Strategic Communications
Dita Bronicki – CEO
Yoram Bronicki – President and COO
Joseph Tenne – CFO
Smadar Lavi - VP of Corporate Finance and IR
Analysts
Lasan Johong – RBC Capital Market
Gregg Orrill – Barclays Capital
Michael Lapides – Goldman Sachs
Dan Mannes - Avondale
Ben Kallo - Robert W. Baird
Connie Wing – Piper Jaffray
Paul Clegg – Jefferies
John Segrich – Gabelli
Peter Christiansen – Merrill Lynch
Thomas Daniels – Thomas Weisel Partners
Justin Cable – Global Hunter Securities
Brian Yerger – AERCA
Carter Driscoll – Capstone Investments
Presentation
Operator
Welcome to the Ormat Technologies Fourth Quarter and Year-End 2009 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be question-and-answer session.
(Operator instructions) Thank you. I would now like to turn the conference over to Marybeth Csaby with KCSA Strategic Communications. You may begin your conference.
Marybeth Csaby
Thank you and thank you everyone. Hosting the call today are Dita Bronicki, Chief Executive Officer; Yoram Bronicki, President and Chief Operating Officer; Joseph Tenne, Chief Financial Officer; and Smadar Lavi, Vice President of Corporate Finance and Investor Relations.
Before beginning, we would like to remind you that information provided during this call may contain forward looking statements relating to current expectations, estimates, forecasts, and projections about future events that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company’s plans, objectives, and expectations for future operations and are based on 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, please see risk factors as described in the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2009.
In addition, during this call statements that may be made that include financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission such as EBITDA and adjusted EBITDA. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management of Ormat Technologies believes that adjusted EBITDA may provide meaningful supplemental information regarding liquidity measurement that both management and investors benefit from referring to this non-GAAP financial measure in assessing Ormat Technologies’ liquidity, and when planning and forecasting future periods. This non-GAAP financial measure may also facilitate management’s internal comparison to the company’s historical liquidity.
Before I turn the call over to management, I would like to remind everyone that a slide presentation accompanies this call and can be accessed on company’s website at www.Ormat.com under the Events Calendar link found in the Investor Relations tab. With that said, I would like to turn the call over to Dita.
Dita Bronicki
Thank you, Marybeth and good morning everyone. Thank you for joining us today for the presentation of the summary of 2009 and a outlook for the near future. We are pleased to report strong results for 2009 resulted from an impressive increase in revenue and 58.4% increase in net income. As we announced this morning in our earnings release, we have allocated up to 2 hours to the call today to allow us enough time for discussion. We are also scheduling an Analyst and Shareholders Day in New York on April 9. A “save the date” will be forthcoming later this week.
Yoram will start with the review of our operation. Joseph will review the financial and elaborate on the 2010 restatement. And as usual, following my closing remarks, we will give time for Q&A.
Let me now turn the call to Yoram. Yoram?
Yoram Bronicki
I would like to start with the operational highlights on slide four. As you can see in the chart, in the past four years, we have increased our total generation by approximately 40% with 2009’s generation being 14% higher than 2008 and totaling 3.4 million megawatt hours. The steady growth in total generation each year is a result of completing new projects and enhancement of existing plants. In the past year we have benefited from the first full year of generation from the expansion of the Olkaria plant. Numerous enhancements to existing plants and added to our fleet 20 megawatt of REG units.
This January the previous owner of the 8 megawatt GDL power plant in New Zealand exercised the call option and we sold our interest. As a result, we will record a pretax gain of approximately $6 million in this first quarter of 2010.
Slide 5 reviews the status of the North Brawley and Puna power plants. As we have recently disclosed, the North Brawley power plant has been placed in service in mid January. The decision was preceded by a series of experiments that proved that the plant can operate long-term at commercial loads.
Over the past months, we have seen considerable improvement in the quality of the produced geothermal fluid especially from the longer running wells and we were successful in devising means to prevent the produced solids from contaminating the rest of the system. We have installed temporary filtration on all of our injection wells and identified qualified vendors for filtration means.
We were also successful in developing efficient ways to clean our injection wells as they clog up over time. The results of these efforts allowed us to inject treated brine at as much as 40% of the nominal flow with the ability to generate over 17 megawatt.
Based on our experience so far, we believe that the production field can support the design capacity of 50 megawatt and that the main issues that have not been resolved yet are the injectivity index, in most of our injection wells that is too low even on what we believe are clean wells and treated brine. And despite our effort to expedite the procurement of permanent solid removal equipment, we are now looking at the late Q1 installation of the first unit and we hope that they will alleviate the need to procure large quantity of disposable cartridges.
We have developed a plan that would help us address these issues and it is comprised of better solid removal equipment, resolution of the injection capacity through well improvement or addition of wells and modification of the surface equipment. The extent of the implementation will be determined by the success of each of the steps and may require an additional investment of $15 million to $30 million.
In our past calls and our most recent press release, we described the well field work that was performed in Puna as part of the modernization of the plant and the addition of equipment that will increase the plant’s output to 38 megawatt. Our plant included a clean-out of one production well, a redrill with the new completion of two other production wells and redrilling an out-of-service wells to provide spare injection capacity. The drilling of the new injection well has been successful. However both the clean-outs and the redrill of the producers provided only a short-term improvement and within a few months, the production from the wells dropped significantly.
Based on the surveys that we completed, we believe that the decline is due to scaling in the well bore.
Our plan is to try to address this through chemical cleaning which will be – we will complement by mechanical cleaning. However, the scaling rate indicates that with the modified completions the wells cannot support the flow rate that we were producing from them and we have started to drill a new production well.
To facilitate the scales clean-out, we will source a small workover rate that will remain on sight, accelerate the clean-outs when needed and perform it at a fraction of the cost that our current drilling rig requires. Based on the current schedule, we expect the power plant to return to full capacity in the second half of 2010. I would like to point out that other than Puna and North Brawley, the other geothermal projects in our portfolio operated at high capacity factor with excellent result.
Turning now to an update on our future growth on slide six. The key to growth of the geothermal industry is successful exploration of large plots of land. And in the last three years, we have conduction substantial exploration activity predominantly Greenfield and mostly in the United States.
As exploration involves a certain failure rate, our focus has been on reducing the cost that are associated with the process that allows to screen the different prospects prior to expensive drilling and we are very happy with the improvement that we have seen over the past years. We are in various stages of construction and development of 11 projects that will add to our portfolio 246 megawatts by the end of 2013. In addition, we plan to add 35 megawatts from solar photovoltaic installation, which represent our 70% ownership interest.
While we may experience delays in the completion schedule, we may also be able to complete construction earlier than we have previously announced on some of the projects.
Turning to slide seven, in addition to the projects under construction and development, we have 11 sites in the U.S. where exploration has either not started or is in very early stage. In two sites in Nevada, we completed exploration studies and started exploration drilling. The exploration process in these sites has been delayed due to the slow permitting process. In two additional sites in Nevada we completed exploration studies and are waiting for permits to start the exploration drilling. In seven other sites in the U.S. and an additional site in Guatemala, we have started exploration studies. We expect that some of these sites will add capacity by 2013 and the others will provide growth beyond that timeframe.
We continue to strengthen our land position with new leases on federal and private land in Nevada, California and Utah. In addition, we were awarded an exploration concession to cover 26,000 acres in Chile, a country that is believed to have a large untapped geothermal potential. Our land position for projects under exploration and future explorations stands at approximately 290,000 acres in 22 sites and approximately 16,000 acres of pending leases.
Turning to slide eight for an update on projects under construction, in the slide you can see the status and expected completion schedule for each project. Starting with the additional 8 megawatt in Puna, we are currently drafting a PPA with Hawaii Electric Light Company. In Jersey Valley, field development for Phase I is almost complete, engineering is in progress and power generation equipment is in fabrication. We haven’t received the permit to construct yet.
With the continued delay in getting the construction permits for East Brawley, we are now scheduling the project for 2012. The delay will enable us to implement our learning from North Brawley and the East Brawley design. Field development and power plant engineering are proceeding from McGinness Hills and in Carson Lake, we are still waiting for permits to continue drilling.
As per the recent acquisition of interest in HSS, we expect to close this quarter and plan to start to field development of the first phase of Tuscarora project next quarter. Based on our current schedule, we expect to operate the first phase in 2012.
Now let me continue with our projects under development on slide nine. In Wister, we are preparing to perform our joint exploration program with the DOE and hope to complete the consolidation of our land position. We currently plan for the first phase of the project to be 30 megawatt and expect commercial operation of the first phase in 2012 or 2013. We are currently developing the next phase of the Mammoth Complex in which we have a 50% ownership interest and anticipate that the commercial operation of the 25 megawatt power plant will occur in 2013.
In Sarulla, the consortium is in negotiations with the state power utility, PLN, to adjust the tariff of the PPA and to introduce other amendments to satisfy lender’s requirement. The government has allowed PLM to make contract amendments including to the tariff for the Sarulla project and a state audit agency team shall review these contracts and amendments, which will also require approval of the Ministry of Energy and Mineral Resources and the Ministry of State Owned Enterprises.
From past experience, it is hard to estimate when these negotiations will be concluded. Construction is expected to start after Sarulla consortium obtains financing, a process that we expect to take approximately one year.
And in Olkaria we signed a letter of intent with Kenya Power and Lighting for further expansion of the project by up to 52 megawatt. Here too the expansion will be done in two phases; first phase comprising of 36 megawatt within 3.5 years from finalizing the amendment to the existing PPA with an option for second phase comprising of 16 megawatt within 4.5 years on commercial operation of the previous phase. The amendment to the existing PPA is subject to applicable government to approval and the consent of the lenders that provide the financing to the existing power plant.
With respect to our solar photovoltaic joint venture, we have rights for the development of eight projects of a total of about 50 megawatt of which we will own 70%. The leases are comprised of agriculture and non-agricultural lands in Northern and Southern Israel. In some of the sites we have already started the permitting process.
Let us now turn to slide 10 with an update on the product segment. As we explained in the past, 2009 was a record year in terms of revenue from this segment and we do not expect the next year to be as strong. However, we are pleased to announce that we have recently added approximately $42 million to our backlog in contract signed for geothermal plants and remote power units. We expect 2010 revenues from this segment to return to 2007, 2008 levels and our current backlog stands at approximately $90 million, approximately $20 million out of it will be effective upon receipt of down payment.
We believe that the improvement in the global economy along with financing and regulatory incentives in the United States will positively impact our future revenues in this segment. I should reiterate that the revenues from this segment are generally less predictable, mainly due to the long sales cycle and the impact the global economic slowdown had on construction starts.
With the operational overview complete, let me turn the call over to Joseph. Joseph?
Joseph Tenne
Good morning everyone. Beginning with slide 12, for the year total revenues were $415.2 million or 20.4% increase from revenues of $344.8 million in the previous year. In our product segment on slide 13, total revenues for the year were $159.4 million, a 72.2% increase over total revenues of $92.6 million in the previous year. Most of the increase in revenues was derived from three large EPC contracts for the construction of the Blue Mountain project in Nevada, the Centennial Binary Plant in New Zealand, and the Las Pailas project in Costa Rica.
Total cost of revenues attributable to our product segment for the year was $112.5 million compared to $72.8 million in 2008. On slide 14, in our EPC segment, total revenues for the year were $225.9 million of total revenues of $252.3 million in the previous year. The increase in revenues is attributable to an increase of 14.2% in our U.S. and international electricity generation. Despite this increase in generation, our electricity revenues increased by a modest 1.4% due to a decline in the average revenues per megawatt hour from $86 to $76 mainly attributable to a decrease in the energy rate in the Puna plant and added payment expiration under the Heber II PPA.
The increase in generation is primarily attributable to a commissioning of Olkaria III in Kenya, GDL in New Zealand, Galena III in Nevada and generation restoration following through by and replacement in Steamboats II and III also in Nevada. This was partially offset by a temporary decrease in the generating capacity of the Puna power plant.
Total of revenues attributable to our electricity segment was $180.2 million compared to $170.1 million in the previous year, which represented a 5.9% increase. This reflects increased cost including depreciation as a result of new and enhanced projects placed into service and increasing certain maintenance costs in order to ensure higher availability during the summer and increased repair costs of the geothermal well field in Puna. This was partially offset by a decreased royalties cost in Puna.
Moving now to the next slide, which represents combined gross margin and gross margin for each segment for the year. The company’s combined gross margin was 29.5% compared to 29.6% in 2008.
Now slide 16. Net income for the year was $68.6 million or $1.51 per share diluted compared to $34.3 million or $0.98 per share diluted for the year ended December 31, 2008 as restated.
Now I would like to go over a few quarterly financial highlights beginning with slide 17. For the fourth quarter, total revenues were $95.3 million, consistent with the fourth quarter of 2008. Electricity segment’s revenue for the quarter were $63.9 million, an increase of 2.9% compared to $62.1 million during the same quarter in 2008. Product segment’s revenue for quarter were $71.4 million, a decrease of 6.1% compared to $33.4 million for the same period last year.
Now on slide 18, net income for the fourth quarter of 2009 was $16.1 million or $0.35 per share diluted compared to $5.4 million or $0.12 per share diluted as restated.
As shown in the following slide, slide number 19, adjusted EBITDA for the year ended December 31, 2009 was $167 million compared to $121.9 million for the year ended December 31, 2008. For the fourth quarter of 2009, adjusted EBITDA was $41.8 million compared to $20.1 million for the same quarter in 2008 as restated.
Reconciliation of GAAP net income to adjusted EBITDA – reconciliation of GAAP cash flows from operations to EBITDA is set forth in slide 30 and 31. To the next slide.
As of December 31, 2009 the company had cash and cash equivalents of $46.3 million compared to $34.4 million as of December 31, 2008. The increase in our cash position was mainly due to $105 million from refinancing of the Olkaria III power plant in Kenya, $110.8 million cash flows from operating activities, $90 million proceeds from long-term loan – loans agreements and these are public loans, $42 million from the Amatitlan financing and $34 million from using revolving credit lines also on the [corporative] basis.
The increase was partially offset by funding of capital expenditures in the amount of [$270.6 million] and $49.8 million repayment of long-term debt to our parent and to third parties. Our long-term debt as of the end of the year ended December 31, 2009 and the payment schedule are presented in slide 21 in the presentation.
Slide 22 reflects our dividend policy and recent dividend declaration. On February 23, 2010 Ormat’s Board of Directors approved the payment of a quarterly cash dividend of $0.12 per share pursuant to the company’s dividend policy, which targets an annual payout ratio of at least 20% of the company’s net income subject to Board approval. The dividend would be paid on March 21, 2010 to shareholders of record as of the close of business on March 16, 2010. The company expects to pay a dividend of $0.05 per share in the next three quarters in 2010.
Before I turn over the call to Dita, I would like to spend a few minutes to share and elaborate on the disclosure we provided in our earnings release and Form 8-K we filed this morning relating to our 2008 restatements.
Through the third quarter of 2009, we accounted for exploration and development costs using an accounting method that is analogous to the full cost method used in the oil and gas industry. Under that method, we capitalized costs incurred in connection with the exploration and development of geothermal resources on an area-of-interest basis. Each area of interest included a number of potential projects in the state of Nevada that were planned to be operated together with the same operation and maintenance team. Impairment tests were performed on an area-of-interest basis rather than at a single site. Under this methodology, costs associated with the projects that we have determined are not economically feasible remained capitalized as long as the area-of-interest was not subject to impairment.
Following a periodic review performed by the SEC staff, we concluded that this accounting treatment was inappropriate in certain respects. Accordingly, February 23, 2010, our Audit Committee and Board of Directors, based on management recommendations, concluded that our financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2008 require restatement and should no longer be relied upon.
The impact of the restatement is a decrease of approximately $6.2 million in net income or $0.14 per share during the fourth quarter of the year ended December 31, 2008. The decrease represents a reduction of 12.6% from our originally reported net income of $49.5 million in 2008 and a reduction of 53.6% from our originally reported net income of $11.6 million in the fourth quarter of 2008. The company filed a report on – this morning the company filed a report on Form 8-K and intends to effect the above mentioned restatement in its annual report on Form 10-K for the year ended December 31, 2009 and this will be filed during the first half of March.
The Company also plans to revise its financial statements as of and for the three and nine month periods ended December 31, 2009 to reduce net income by approximately $1.5 million or $0.03 per share. In connection with the filing of our annual report on Form 10-K for the year ended December 31, 2009, we will revise the third quarter unaudited financial information included in the notes to the financial statements to reflect the expensing of such costs in that interim period.
Thank you all and I would like now to turn the call back to Dita for final remarks.
Dita Bronicki
Thank you, Joseph. I will cover in my remarks the recent business development and update on our financing activity and capital requirement and will conclude with the revenue guidance of 2010.
Let me start on slide 24, with two business developments that demonstrate our dedication to promote growth and to diversity in our generating portfolio. We continue to consider various opportunities in the solar energy market in addition to our activity in R&D in the solar field. Our roots in solar power as well as the potential synergies with our geothermal power plants encouraged us to explore opportunities in this field. The declining cost of solar PV technology and the attractive electricity prices that may be achieved in certain countries, create an attractive opportunity and in October last year, we entered as a developer to the solar PV market. We signed a joint venture with Sunday for 36 megawatt PV energy systems in Israel approved feed-in tariff is at an average of $0.36 to kilowatt hour.
So given our EPC and development expertise, we view this venture as a good sales activity for us to undertake as we explore other opportunities and technologies in the solar market. In parallel with our solar activity, we continue to look to organic goals and acquisition of opportunities in geothermal. The acquisition of the ownership intellect in the Tuscarora project is an example for this.
We have been acquiring development leases for a few years and have amassed a substantial portfolio from which we can explore and build plants literally from ground up. What made the Tuscarora project attractive is that it is a project that is ready in an advanced stage of development.
Looking at our financing activity, on slide 25, during the year we continued to secure our growth by providing the required financing. The Olkaria and Amatitlan projects were financed and separately we raised $90 million in corporate loans. We continue to secure committed lines of credit and entered into an additional $15 million line with a commercial bank in the fourth quarter.
Looking forward, it is our intention to refinance North Brawley with approximately $100 million with longer term loan with a financial institution and approximately $100 million ITC cash grant available under the Stimulus Act. We will also continue to evaluate the best approach to our projects under construction and will select the financing option that will be most appropriate for each individual project. In the U.S. today, it is the DOE guaranteed loans under Section 1705 and in certain cases under Section 1703, the innovative technology alternative.
Out of the projects currently under construction and development, we expect 162 megawatts to be eligible for ARRA benefits.
Please turn to slide 26, in which we will see our CapEx requirement for 2010. We plan to invest in 2010 $276 million for construction and additional $54 million for development of new projects. In addition, our capital expenditure budget for operating power plant is approximately $15 million and we expect to invest additional $15 million in exploration during 2010 and this number is net of DOE grants that were approved.
We also expect to invest approximately $3.6 million for production facilities and machinery. The funding of this program will come from cash from operation, unused corporate lines of credit and expected proceeds from the refinancing and the cash grant from North Brawley. Loans under the DOE loan guarantee program are an additional source for construction financing.
As to the outlook for 2010, please turn to slide 27. We expect our 2010 electricity segment revenues to be between $275 million and $285 million. We also expect an additional $9 million of revenue from our share of electricity revenues generated by a subsidiary, which is accounted for under the equity methods, an increase of 9% over the 2009 revenues.
With respect to our product segment, we expect our 2010 revenues to be between $75 million and $85 million, an expected lower number than 2009. We expect that with the lower revenues and increased cost of the North Brawley and Puna plants together with the lower level of revenue recognition in the product segment, and the reduction in capitalized interest as the result of slower volume of construction in progress, we may report a net loss in the first quarter of 2010. We however expect to be positive for the remainder of 2010 fiscal year and believe that our business and prospects remain strong.
Slide 28 summarizes what we believe will be the driving force behind our goals. For growth beyond 2010, we continue to add the necessary resources, which are land, drilling capabilities and capital. So we can move forward unimpeded with our exploration and development plans. In addition, we have expanded our manufacturing facility during 2009, which we are able to scale to support rapid growth if needed. And finally, both our electricity and product segments continue to benefit from the supportive environmental regulation in the United States as well as the government financial backing for clean energy.
It is important for us to emphasize that while 2009 has not been free of challenges that we will continue to experience also in the first half of 2010. Such challenges are not unique to us and any geothermal developer and operator may face similar issue. But it takes one company such as Ormat with an experienced management team, a strong technical team and the necessary capital resources to deal with it. As one of the more mature geothermal and pure play companies operating today, we have a large and balance project portfolio with a stable revenue flow that enable us to operate our plans responsibly and to move forward with our goal plan.
Before I open the call to question, I want to thank you for your support and I look forward to what should amount to a better year in many regard. Operator, at this time, I would like to open the call for questions. Operator?
Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Lasan Johong of RBC Capital Market.
Lasan Johong – RBC Capital Market
Thank you. Good morning, Dita.
Dita Bronicki
Good morning.
Lasan Johong – RBC Capital Market
A few questions actually. Over the last year and a half, there seems to have been a pretty big slowdown in new geothermal projects either being announced or and/or being funded. Are you seeing that fund change, are we getting back on track to kind of more of an accelerated development and new project requests from utilities?
Yoram Bronicki
Is your question specifically for Ormat or an industry question?
Lasan Johong – RBC Capital Market
Well, obviously Ormat primarily but yes, industry as well.
Yoram Bronicki
Because I think that there is really many factors, and they are different. I would say that the biggest roadblock that we were facing is how slow the regulatory process has been and as – I think this is probably the first time that we actually give the numbers but with 22 prospects where we could do exploration, we were generally unable to leave the start line just because of the slowness in the getting the permit. And this, of course, flies in the opposite direction from both very intensive solicitation from the different IOUs in the west for additional power, all the incentive programs, whether the ITC cash grant 1703 to 1705. But there is no way to take – either use your own money or enjoy that – those incentives if you can’t get the permits to do the exploration, that really starts the project and in some places as we described on East Brawley, we have done the exploration but because of the regulatory cycle, we can’t get the permit to construct.
And so, when you analyze Ormat, I would say that these are the factors that affected us are mostly external factors and not internal factors. And we are – I have to say that we remain optimistic since there is all this goodwill and everybody is interested in doing more renewal projects, we remain optimistic that there would be a way to open this bottleneck.
Lasan Johong – RBC Capital Market
So if the regulatory bottleneck is kind of taken out of the equation, then is it fair to say that you are seeing more request for projects than you did a year ago, let’s say?
Yoram Bronicki
Yes, I mean again there is – we have and you have to recognize the difference between us and some of the other players, the method we prefer to operate is first we explore a site, we can conclude what the size is and then we sign a PPA rather than do it the other way around because people don’t always recognize how far – how big is the gap between encouraging signs on the surface that the geothermal reservoirs underneath and actually producing hot brine from it.
And so, for us we would like to bring our man position to a certain area and at that point sign the PPAs, and this is what you should expect from us.
Lasan Johong – RBC Capital Market
I think that’s conservative, I think that’s a good way of doing it. On the projects that you currently have under construction, how much of the – I am assuming that the ITC grant money is what you will tap. How much of that construction cost would you eventually get back? And does that then negate a need for any future equity issues?
Dita Bronicki
The ability to leverage new construction under today’s program is in excess of 80%, maybe 78% around this because the DOE guaranteed loan is for 80%. The ITC grant reduces it a bit, so in the order of 80%. Depending, of course, how fast we grow is one element which will go into it and the other is how much we can still leverage our balance sheet today with paying back some of the loans, with having several projects which are not financed on our balance sheet like all the recovered energy generation project are not financed in our balance sheet. We do have a debt capacity on our balance sheet.
So we don’t see a need to grow back to the equity market in the near future in order to finance our role as we plan it now. Depending, of course, how fast the process of the DOE loan guarantees will be implemented. We believe that with the regulations out since October of last year, the process is now going to be smooth and fast, but of course time will tell.
Lasan Johong – RBC Capital Market
Okay, so near term meaning at least over the next 12 months?
Dita Bronicki
Pardon me?
Lasan Johong – RBC Capital Market
You said you don’t expect to tap the equity market in the near term. I am assuming that’s at least in the next 12 months.
Dita Bronicki
But listen, everything that I say is based on what we know today. If a large acquisition opportunity will come up, this may change totally. From what we have today we think that, from the 260 or so megawatts that we have today under construction and development, at least 160 are available for stimulus money and that’s a big part of it.
Lasan Johong – RBC Capital Market
That is exactly what I needed to know. And then, I was a little confused about the backlog situation. Yoram, you had mentioned that upon receipt of a down payment on $20 million of backlog that it would become effective. Was that $20 million included in the $90 million backlog you currently have or excluded?
Yoram Bronicki
No, it’s included.
Lasan Johong – RBC Capital Market
Oh, it’s included in that, okay. And then on a yearly basis, it seems like the monetization of the backlog is very, very bumpy meaning in some years it’s like – this year you are expecting to get something like 70% or so or 80% or so of that backlog monetized whereas last year I think it was significantly less than that. Is there any way you can give us a rule of thumb of how much of your backlog you can monetize in any given year?
Dita Bronicki
I am afraid that it’s hard to do. It’s even hard to ask. If you look at the changes that we had to do to give in our expected revenue from the product segment over the year, you can see that it was even difficult for us to project it. Not to say that we cannot share our rule of thumb, it depends on timing of progress that is literally out of our control. If a supplier that has promised a four-month delivery is late and he is delivering it only after six months, there is a delay in it income recognition. If a supplier promised a four-month delivery is doing better and he is delivering after three months, there is an increase in income recognition. It has nothing to do with final completion of the project, it’s just a timing of income recognition and unfortunately, it is very hard to predict.
Operator
The next question comes from Gregg Orrill of Barclays Capital.
Gregg Orrill – Barclays Capital
I was wondering if you could talk about the injections that you are doing at North Brawley and sort of what it is you are injecting there and how that complies with environmental regulations.
Yoram Bronicki
There is – we are not injecting anything other than geothermal brine. What I referred to is there is a measure that is called an injectivity index, which is a way to normalize an individual well’s capacity to take fluid and that’s really – you would calculate this by how many gallons per minute can you inject for every one PSI of pumping pressure. And theoretically the wells could take a very large amount of geothermal brine into them. However, a poor injectivity well would require high pressure which then translates into higher parasitic loads.
And we had a certain plan for our injection wells, which was in our design basis and it’s based on our experience in similar plants in Heber and Ormesa. And the majority of our injection wells have been providing us with a lower injectivity index, which is really the reason why at this point we can inject only 40% or 45% of the amount of brine that we could actually produce from the production wells. But in terms of the material itself that is being injected is just the brine.
Gregg Orrill – Barclays Capital
Okay, and then I think it was mentioned earlier that – I think Dita mentioned that the first quarter would be a loss. Does that come as a result of the treatment of capitalized interest related to the North Brawley project or what’s really causing that?
Dita Bronicki
It’s certainly a very important factor in it. As we have placed Brawley in service in the middle of January, we cannot capitalize any more of the interest related to the investment in Brawley. We are starting to depreciate the full amount of the investment but our revenues have been 17 megawatts and I don’t want to take it away from Yoram but we are already a 20 megawatt as we speak, 21, Yoram, correct me. So it’s ramping up, but it’s ramping up slowly and as a result of it, during the first quarter the high level of expenses of Brawley, one element. The other element is lower product revenue, but Brawley – and the third element is the low income level in Puna, which is operating at 17 megawatts rather than a 25 megawatt or 30 megawatt.
So these three factors may, I said may, creates a loss in the first quarter, maybe a breakeven.
Gregg Orrill – Barclays Capital
Okay. And coming back to the accounting change, what’s a decent rule of thumb going forward in terms of looking at your exploration spending, how much of that should be considered capitalized versus expense?
Dita Bronicki
It’s a good question and of course, the answer is an estimate and we are not guiding related to it or anything. If we have budgeted for this year a $15 million of exploration expenses and it’s lower because we have a participation of the Department of Energy in the exploration expenses. And if the success rate is going to be is similar to 2009, which wasn’t bad and we have also improved in the costs of a unsuccessful project, we incur today less cost in a project until we know it is successful or not and this is all a result of a learning curve over the years. You could think of a couple of million dollars.
Operator
The next question comes from Michael Lapides of Goldman Sachs.
Michael Lapides – Goldman Sachs
Hey, guys, two questions; one kind of big picture in terms of just financing and cash flows from individual project. In general, are you likely to more, I mean generally take the ITC rather than the production tax credits on new geothermal projects built here in the U.S.?
Dita Bronicki
The answer is if we have to say generally, yes, as long as the ITC is provided as a cash grant, which means projects that are going to be – to start construction until the end of 2010 under current regulations are eligible for ITC cash grant and on those more likely than not, we will take the cash grant. Even though there might be – depending what happens with the tax equity market, if it comes back, if it doesn’t come back and at what prices it comes back, it has always been even in 2009 it was there but at prices which didn’t make sense to do a transaction. But I think that as a rule of thumb, we should think that as long as ITC cash grant is available, we will take the ITC cash grant.
When the ITC cash grant goes away and we will have to make a choice between PTC and ITC; there an analysis has to be made on a project by project basis. Some projects may be more advantageous to take the ITC and for other projects it may be more advantageous with PTC.
Michael Lapides – Goldman Sachs
One other question on the product side, I mean I think the backlog items have been beaten to death, but want to talk about margins a little bit because gross margins in the fourth quarter kind of coming in right around just under maybe 20%, your run rate historically had been a bit above that. Curious how you are thinking about competition in the product segment and what that does, if anything, to the margins or what might be creating downward pressure on gross margins there?
Dita Bronicki
I think we have spoken about it during several calls during the year that the margins of 2009 were higher than what we expect average margins to be. We explained the reasons for it and we expect margins to go back as of the latter part of 2010 to more historical numbers which have been between 20% and 25%.
Michael Lapides – Goldman Sachs
Okay. And the only reason I ask is that the fourth quarter came in at the low end of that range that you just gave, trying to figure out if there is risk to the downside to that.
Dita Bronicki
Like everything which relates to the product segment, it’s bumpy.
Operator
The next question comes from Dan Mannes of Avondale.
Dan Mannes – Avondale
A couple of quick follow-up questions. First briefly on Blue Mountain, which I think is done, it sounds like maybe there were some warranty issues there on the site. Can you maybe give us a frame of reference on what your potential exposures there?
Dita Bronicki
Well, there has been a warranty problem on Blue Mountain and actually a big warranty problem. The exposure is, of the warranty is fully provided for in our results. That’s probably one of the reasons you will see lower margin [update] in the fourth quarter because we have fully provided for the warranty problem. And it has to do with installation of cable, there were some workmanship by our subcontractor issue, there were some design errors by ourselves. We are not free from responsibility and that’s why we had to provide for it in our financial restatement.
Dan Mannes – Avondale
And then just real briefly the incremental $40 million of product wins, are you going to disclose who that’s with? I mean are those domestic geothermal, international or etcetera.
Dita Bronicki
That’s no problem to answer, there is no domestic geothermal yet in this number. The domestic geothermal project, we expect to come later on and that’s the slowness, I think Yoram spoke about, the slowness at which the stimulus money is coming to the market, it is not yet in the market and that’s why we don’t see it yet in our strong backlog. It’s international and it’s [really not] power units in Israel, it’s not only geothermal.
Dan Mannes – Avondale
Got it. Two more quick ones. On the Hot Sulfur Springs or Tuscarora, can you give us a little bit of color around how we should think about what you pay for it and what’s the difference in return profile for you buying sort of an advanced development project versus doing it yourself and what made this one uniquely attractive to you?
Dita Bronicki
I will not answer the first question but I will answer the second and the third. We are a potential buyer for any geothermal asset in the United States, but we are a potential buyer when it is at the right price. There were assets in 2008 and 2009 that had been sold to private equity participants at prices that we didn’t find economical and therefore we didn’t participate.
When it is economical, we are a buyer because as we have said more than once, the limiting factor of our goal is the ability to explore projects and post them fast enough to bring them from the exploration phase to the construction phase and you cannot jumpstart it. It takes the time whether it’s because of permitting or whether it’s because of exploration. But if you have an opportunity to jump a step and start from immediately from a construction phase, after the exploration is done and the early development is done, it is an advantage and we took that advantage.
Dan Mannes – Avondale
Is it fair to say, I mean especially given the higher relative risk profile of drilling versus the actual construction and operation and you have experience in all three, is it acceptable that you guys get a lower overall return just to be able to avoid the higher risk step?
Dita Bronicki
I am not sure that has really a direct impact on the overall return, but maybe.
Dan Mannes – Avondale
Okay, two last questions. One of them, on the Q1 potential for a loss, is that after taking into account the gain on sale of GDL or is that before that item?
Dita Bronicki
We have taken it into account and we are cautious. It may happen, it may not happen, but yes, it’s after.
Dan Mannes – Avondale
Got it and then the final one, as you look at the capital profile for 2010 between cash on hand and the availability underlines etcetera, and plus being able to extract the cash back out of Brawley, 2010 looks pretty well covered. But if you look 2011, you don’t really have other than Jersey Valley, anything else coming on in ‘10 and none of the other projects come until 2012.
So how much are you sort of in your thought process leaning on the loan guarantees or potential modernization of the ITC before the plants come online to fund 2011 in your head or do you have another plan that you haven’t really laid out yet?
Dita Bronicki
First of all, we are always attentive to market opportunities on the financing structures and financing side and we are watching the market development and there may be other opportunities and the DOE loan guarantee. But in between DOE loan guarantee and ITC and don’t forget cash from operating activity; in 2009, our cash from operating activity was more than $100 million. It’s not a negligible number.
Operator
The next question comes from Ben Kallo of Baird.
Ben Kallo – Robert W. Baird
I wanted to start on guidance and maybe get some assumptions around 2010 guidance. First on the electricity side, what are your assumptions around Brawley and then also Puna and how they ramp up over the year? And then have you included any solar revenue in the electricity segment guidance?
Dita Bronicki
No solar revenue. We don’t think that the solar projects are going to be online in 2010. So that’s easy. What we have assumed both on Puna and Brawley is in line with the press release that we issued couple of weeks ago. Brawley will ramp up gradually, but will not reach the full capacity before the end of the year and these are our assumptions in the revenue. And Puna will take to about the middle of the year until we reach full production. Of course, if we are able to do better, it will improve, but these are the assumptions.
Ben Kallo – Robert W. Baird
Okay, so although there is possible downside, if it doesn’t ramp up like that, like you mentioned earlier, Brawley is producing about 20 megawatts, is that ahead of expectations so there could be some upside to the guidance there?
Yoram Bronicki
I think that there could be an upside to the guidance but it’s a long way to go and since you have been following us for quite a while, you know that there is always the unexpected. So there is – we would rather stay with this number.
Ben Kallo – Robert W. Baird
Okay, and then on the product side, similar question. I know in last call you mentioned a couple deals you were following. Is that the $40 million that you mentioned in the presentation there? Are there some potential winds out there that could affect 2010 to the upside in the back half or even in the early 2011?
Dita Bronicki
The truth is that the large order that we mentioned in the November call, which was the [Brazilian order] still didn’t come in. So the answer is yes, there could be additional product orders, that if they are released, if they are finalized soon enough, we will still have an impact on the product segment in 2010.
Ben Kallo – Robert W. Baird
Okay, have you seen any changes to the pipeline outside of what’s going to affect 2010 and outside of Sarulla because I’ll get to that in a minute. But outside of that, have you seen changes to your pipeline since our last call here? Has that improved?
Dita Bronicki
Yes, I mean all the $40 million that we got are all new orders since our last call and these are not the orders that we expected. Actually one of them is, all the others not. So, yes. I mean we do see start of movement, not yet in the U.S.
Ben Kallo – Robert W. Baird
Okay. In your prepared remarks on Sarulla, you mentioned, it sounded like there were some movements since the last call and then I think everyone out there has been reading some – that the price has been finalized. So how do you see that progressing and if you can give us any more detail on that?
Dita Bronicki
But, Ben, the price has not been finalized. What was finalized is a committee to negotiate with us and approve the price. So it’s a very small step forward. It’s not really the breakthrough. Once the price is finalized, this is going to be the breakthrough but we are not yet there. We are at least in a structured process that the result of which can be finalization of the price but the price is not yet finalized. And we have been reading the same probably in newspaper clipping and the Indonesian press was much more optimistic about this happening. The reality that it is probably at least two months away but being Indonesia I am not sure even about that.
Ben Kallo – Robert W. Baird
Okay, great. And then as far as the timing of the financing of Brawley, could you give us some detail on that because it does contribute to your CapEx there for the year. So how do we think about that?
Dita Bronicki
We have to take a decision when to apply for the ITC grant and that’s actually an internal decision. It has an impact on how much the ITC cash grant is going to be. As Yoram said, the CapEx budget for Brawley is not defined yet, it’s a range between $15 million and $30 million. Once this is going to be defined [in well advance] will be the right time to submit the ITC grant application because you can submit an ITC grant application only once and all the CapEx that was not incurred by the time you submit your application is not eligible to the ITC grant anymore. So if you are not under pressure and we are not under pressure, you should manage the time that you submit your application.
So I think that – and for the project financing, that’s another $100 million in our financing plan. I think a good assumption should be in the third quarter.
Ben Kallo – Robert W. Baird
Is there a certain threshold that you have to meet to get that project financed as far as megawatts production?
Dita Bronicki
It’s not yet defined with the lenders. There is going to be one but we didn’t define it yet.
Ben Kallo – Robert W. Baird
And then my last question is more of a high level question. As far as what you guys think – we have talked about this before, but as far as replacement value for your current assets, I know every asset is different. But if you guys could give a range or some type of replacement valuation for per megawatt and for your assets?
Dita Bronicki
Replacement value you mean how much would a third party pay for them or how much it would cost to build a new –
Ben Kallo – Robert W. Baird
Yes.
Dita Bronicki
How much it would cost to build new capacity?
Ben Kallo – Robert W. Baird
More of what the market’s value of assets right now?
Dita Bronicki
I don’t know what the market value. I don’t know that there were any geothermal transactions closed recently. So I don’t know that we have a number. I don’t know, Smadar, you know.
Smadar Lavi
No, not for operating power plants and we can estimate but I am not sure it will be in line with the market. We can estimate – our estimation for replacement cost, but not the market.
Operator
Your next question comes from Elaine Kwei of Piper Jaffray.
Connie Wing – Piper Jaffray
This is Connie Wing for Elaine Kwei. Thank you for taking my question. Going back to East Brawley, can you speak a bit about what is the difference between the permitting process for East Brawley from your previous experience, that is are you see the regulatory environment becoming more difficult?
Yoram Bronicki
Specifically, East Brawley I would say that it’s more a local issue than the regulatory environment by itself. This is, as we described in the past, we were caught in a controversy between some of the users of irrigation water and those who have to allocate the water and therefore we cannot get – although the quantity of water that we use, comparatively agricultural use and others is not that significant, we cannot get a commitment from the agency or the co-op that sells the water, we cannot get a commitment from them to supply the water, and therefore the county is not willing to give us a permit to construct.
In both cases, they don’t want this to be used against them in that political fight and so we are stuck in the middle. We think that our use of the water makes a lot of sense in terms of the economic development of the area and that good sense would prevail because it does serve everybody’s interest. And in the meantime, we are not willing to move to a technical solution that is less optimal just because we are caught there in the middle.
So it is really a county issue. It does give an indication on the long-term issues around water in the West and so there is a global aspect there, but for us there it’s very site specific and county specific.
Connie Wing – Piper Jaffray
Any more insight on timing on that?
Yoram Bronicki
We think that we are in a process that we are now following a process that would allow us to get the right commitment and basically it’s a process where all the parties involved would be comfortable that they have no exposure from us building the plant and using water. And our hope is that this will be completed in about somewhere towards the middle or the end of the second quarter, which would then release the next steps in permitting and this is why we think that we would take 2011 for the construction of the plant and will be up sometime in 2012.
Connie Wing – Piper Jaffray
Do you hedge PPA selling prices at Puna?
Yoram Bronicki
I am sorry, can you repeat that?
Connie Wing – Piper Jaffray
Do you hedge PPA selling prices at Puna?
Yoram Bronicki
No.
Connie Wing – Piper Jaffray
No, okay. Would you consider doing it in the future?
Yoram Bronicki
Can’t say that no but that’s not in our plan at this point.
Connie Wing – Piper Jaffray
Are any existing PPAs at risk of being renegotiated at this time?
Yoram Bronicki
No, we don’t see this as a risk and we are not planning to renegotiate PPAs that are in effect. As PPAs come to maturity and we do have some, not this year, but we do have some that will expire, we will negotiate them. But there’s nothing that is coming for negotiation this year.
Operator
Next question comes from Paul Clegg of Jefferies.
Paul Clegg – Jefferies
Some questions for Joseph actually. How much of the quarter-over-quarter decline in gross margins and electricity revenues in 4Q was due to Puna versus other issues like seasonality or you also mentioned warranty expense I think in there. I am just trying to get a sense of a more normalized gross margin for the electricity business.
Joseph Tenne
For electricity, a big part that we demonstrated in the call is coming from a decrease in the rates in Puna and of the performance and also seasonality, third quarter is always better. As to the product segment, of course, as Dita said before, the impact on the fourth quarter is because of the issue mentioned on the Blue Mountain issue. But going forward to 2010, we have said that we will not repeat the level of 30% gross margins in the product segment.
Paul Clegg – Jefferies
No, I understood. Really more on the electricity segment, I guess is my concern and trying to kind of quantify the Puna effect. So once that we see Puna come back online, I want to get a sense of what level of potential positive impacts I could have in the gross margin outside of potential seasonality issues or warranty issues that may have affected the fourth quarter otherwise.
Joseph Tenne
It greatly depends on prices in Puna and also if you see, we have said that the average rate decrease from (inaudible), this reflects only the impact of the pricing, not the generating capacity.
Paul Clegg – Jefferies
So capacity utilization didn’t really have much of an impact on the margin?
Joseph Tenne
The percentage of Puna is going down more projects are coming online. So this is something that should be taken into account.
Paul Clegg – Jefferies
Okay, I guess another question on Puna. How much of the CapEx budget that you laid out is related to issues at Puna also?
Dita Bronicki
The total CapEx for exploration plans was approximately $15 million. So I mean all in all it’s not a major number.
Paul Clegg – Jefferies
Just wanted to talk, revisit the methodology on the 2008 restatement and the impact, did it have any impact on the December quarter. In other words, if you anticipated – if you were to have use the same accounting methodology, was there a negative effect in the fourth quarter? And then as we extrapolate that into 2010, is it having any effect on the guidance and if so, can you kind of help quantify it?
Joseph Tenne
On Q4 2009, there was no impact if that’s the question. In 2009, we are talking about one project, in 2008 we are talking about two projects. And if you see the numbers, there was a separate line item in the P&L, so you can see the numbers. And as Dita and Yoram said, we spend less on each project on exploration. So that’s why 2009 number is lower than 2008 number.
Dita Bronicki
Let me add to the last part of your question whether it has an impact on guidance, we are giving guidance for revenue. This has the impact on cost or no, it has no impact on guidance.
Joseph Tenne
And it’s not a drive for the anticipated loss, it’s not expected.
Paul Clegg – Jefferies
It’s not, okay. Very good. And that loss, if I understood correctly, it sounds like you still think you have a chance of being profitable. So in terms of magnitude of the loss, it doesn’t sound like we are talking about something that large for the first quarter?
Dita Bronicki
It’s true.
Paul Clegg – Jefferies
And then final question, do you anticipate, there has been a lot of disruption in the currency markets. How does that affect your business model in 2010 and if you could just talk about hedging strategies on the currency?
Dita Bronicki
Until this year, we have, if you want, three currencies, the U.S. currency, of course and the some New Zealand and the Israeli shekel. The New Zealand uncertainty if you want, has gone by the effect that the GDL project was sold. So the only currency uncertainty is the Israeli shekel and we have the policy to hedge about 50% of our exposure, sometimes even a larger portion for the next six months or so. So we are trying to avoid fluctuations resulting from currency fluctuation.
Joseph Tenne
But, Paul, let me add to what Dita said. As we say and you see it in our 10-K, that even if we hedge our foreign currency operations, we do not implement the hedge accounting. So if you see a loss on exchange difference, that means that we gain on the operating income. So you have to look it at that way. And this fluctuation do not represent a real loss or a gain on the other side [would be better].
Paul Clegg – Jefferies
In terms of tax rate outlook in 2010, would you expect it to be significantly different than 2009 in anyway?
Joseph Tenne
Look, the tax rate is impacted by the pretax income because the amounts of PTC that we enjoy is relatively stable. So any decrease in net income will decrease the tax rate – sorry, pretax income. Any increase in pretax income will increase the rates.
Paul Clegg – Jefferies
I am sorry, will increase the percent – because of the PTC?
Joseph Tenne
Increase the effective tax rate.
Operator
Next question comes from John Segrich of Gabelli.
John Segrich – Gabelli
Just a couple of more questions. I didn’t catch the amount of revenues that you generated in the U.S. I know you end up giving it in the K, but could you just give it to us now?
Dita Bronicki
How much of the revenues were in the U.S.?
John Segrich – Gabelli
Yes.
Dita Bronicki
Joseph will find it.
Joseph Tenne
In electricity?
John Segrich – Gabelli
Yes, the electricity.
Joseph Tenne
(Inaudible).
John Segrich – Gabelli
For the full year.
Dita Bronicki
Let’s move on to the next question in the meantime.
John Segrich – Gabelli
If I could, just following on to that then, I guess I am just trying to understand on back to electricity margin question, you have got some plans that are really running well below optimal capital and there is some remediation work that’s being done. So maybe could you just give us a sense of what you think the electricity margins will be kind of a range in 2010? And clearly, they got to be down from 2009.
Dita Bronicki
They are going to be down. I don’t know that we are prepared to give a range.
John Segrich – Gabelli
Do you think it’s sort of a 24%, 25% level?
Dita Bronicki
We cannot give it.
John Segrich – Gabelli
It’s okay. If I can ask in a different way then, you have given pretty good revenue guidance, very explicit. We have talked about some of these costs and overruns; you have got sort of less capitalized interest coming through on the P&L. Your OpEx, I assume is going to be up in 2010 versus 2009?
Yoram Bronicki
Our OpEx in 2010 compared to 2009, was that the question?
John Segrich – Gabelli
Yes.
Yoram Bronicki
I think that if you ignore the fact that Brawley costs were not part of the OpEx in 2009 and they will be in 2010, we don’t expect dramatic changes to the numbers, certainly not when it’s normalized to generation. So there has been constant growth of our operating expenses as we added more megawatts to our fleet. But generally speaking on a dollars per megawatt hour sold, we are not seeing a dramatic increase. And I just only qualify this with the impact of the depreciation of Brawley, which is not insignificant. This may actually modify the picture temporarily.
John Segrich – Gabelli
Right, but that’s in the gross margin, right?
Yoram Bronicki
No cost. We are actually becoming more efficient as time goes by in our fleet growth.
John Segrich – Gabelli
But the OpEx whether it’s in R&D or sales and marketing, you should show some growth in dollar value on a year-on-year basis, right?
Yoram Bronicki
I think that the R&D and sales and marketing, not necessarily will not, we don’t expect huge changes in our operating method. We have been fairly active.
Dita Bronicki
Let me just clarify the sales and marketing are a function of volume of sales in the product segment. So they are related to the volume. G&A, we don’t expect to go up in the next year substantially, maybe slightly. R&D depends on the program that we have. We have currently a program of a rig for LNG. We have spoken about it several years ago, didn’t mention much about it in the last probably year or two.
We have currently under – and you will see it when you look at the R&D explanations in the 10-K, if we didn’t say it in the prepared remarks, but we have a $10 million program of building a better site, you need in LNG installation in Spain. It was recorded in the fourth quarter and it will continue to be recorded in the early quarters of 2010 as R&D and once the better site is successful, it may be moved into income.
So you may see some – but these are small numbers, they are not big numbers, but they may have some impact on results.
John Segrich – Gabelli
I guess what I am trying to understand is you have been very clear on margins coming down in both segments of the business now, we have talked about the OpEx. Can you give us any range of what you think EPS might come in for 2010 or order of magnitude that you think it will be down?
Dita Bronicki
No, we cannot do it.
John Segrich – Gabelli
But do you think you will earn more than a dollar?
Dita Bronicki
We cannot do it.
Yoram Bronicki
To give you an answer on your question, the exact number and this is $182 million.
John Segrich – Gabelli
$182 million, okay, thank you.
Yoram Bronicki
The question on revenues in the U.S. in 2009, the electricity revenues, it was $182 million and that would be included in our 10-K.
Operator
Next question comes from Peter Christiansen of Merrill Lynch.
Peter Christiansen – Merrill Lynch
Just going back to the Faulkner I issue, is there a potential for Ormat to be anyway financially responsible for the lost output either to the developer or the off-taker on that project? And additionally, do you carry any EPC or warranty insurance for these types of issues?
Dita Bronicki
Contextually, the answer is very clear. The warranty liability does not include loss of revenues and our warranty is not insured. We have the product liability but there is no product liability claim here, it is a warranty issue and not a liability issue. What we have decided is to do first what we have to and this is to bring a project back on line as quickly as possible and that’s what we have been concentrating in doing and we are in the process bringing the power plant back on line. Soon, as I believe will (inaudible), they are not sure.
Everything will be dealt with our customer later on.
Peter Christiansen – Merrill Lynch
I know it might be a little bit too early to tell but is there any way from what you guys have seen, is there any difference in the characteristics of the resource of East Brawley from North Brawley? Does that have difficulties of a higher degree, a lesser degree from what you can tell so far?
Yoram Bronicki
Our expectation is that it would be identical. Now there is always variability within the wells. Even in North Brawley, some wells are easier, both on the production or on the injection side. But it seems that it’s generally a resource of the same kind and the things that we should have or that we have done or should have done in North Brawley would apply to East Brawley as well.
Peter Christiansen – Merrill Lynch
With the new area of interest basis that you are using, of the write-downs I guess so far, I was wondering if you would break that – are you going to break that down in terms of what percentage was exploration related, what percentage was dealing with the lease, if you can give us any color on that?
Dita Bronicki
Let me try to clarify because maybe it wasn’t clear. Unfortunately the area of interest concept for testing impairment of exploration was not accepted and the reason for the restatement is that we are doing the review for impairment on a project by project basis and not on an area of interest basis.
So whatever was written off is a specific project that was determined to be not commercially viable and therefore it was written off.
Peter Christiansen – Merrill Lynch
Just one last question. We have heard of a private developer has developed an interesting technology, extracting lithium from geothermal brine. And I was wondering if you are aware of the technology, is this something that Ormat has looked into given the potential that lithium ion batteries have here for electric vehicles across the world. This sounds like it could be interesting.
Yoram Bronicki
You are right, it could be interesting. The lithium is not present in all brines, the composition of brines do differ between sites. The same concept could be applied not only to lithium, but to all – to other elements that are sometimes present in the brine and it’s true that for some elements recovering them from the brine is actually a shortcut compared to what needs to be done when they are produced, were they need to be extracted from ore or from solids.
So it could be very interesting. But the things with such technology is that first it needs to work and then you need to see whether the numbers actually work. At this point it’s not a business objective for us. There could be cooperation like this or sometime in the future and we may even decide to do something on our own but our focus at this point is really making power.
Operator
Your next question comes from Thomas Daniels of Thomas Weisel Partners.
Thomas Daniels – Thomas Weisel Partners
I just wanted to kind of rehash the ITC cash grants question. I guess when you look at your guys’ project, you have a lot of potential projects to come online before you enter 2013 but kind of a gray area for us is what the DOE means by breaking ground by year end 2010. Could you clarify what that means and then maybe talk what specific projects you guys expect to file ITC applications for aside from North Brawley?
Dita Bronicki
I can share with you what the common understanding is today of what it means to start construction. Our expectations, the specific guidelines will come out soon but until the guidelines come out, there is a general definition of substantial site construction and it’s totally gray and totally undefined what substantial site construction means, but certainly it includes a requirement that all the permits fell in place so that you can do a substantial site construction.
But there is an alternative method that the people are calling the Safe Harbor [loan] and this is to incur fully non-refundable commitment of at least 5% of total project cost and this can be implemented by ordering the equipment doesn’t have necessarily to be site construction. I believe that some sites work has to be done but specifically it can exclude the actual construction and be replaced by 5% of project cost.
So at least it’s quantifiable and easy to implement and to know that you are there or not there. We believe that a number of our projects will be eligible for ITC cash grant in addition to North Brawley. North Brawley, we can already apply. All the other projects, we are not yet there but we will be before the end of 2010 and this will include Jersey Valley which is in construction, it will include Puna, the 8 megawatt; this will include East Brawley, it will include McGinness and maybe additional projects that are still in exploration and this may still reach a construction by – start of construction by that time, Carson Lake, Tuscarora, all additional projects that may reach that point.
Thomas Daniels – Thomas Weisel Partners
And your REG projects, they don’t qualify for ITC cash grants, do they?
Dita Bronicki
No, they don’t.
Thomas Daniels – Thomas Weisel Partners
Next question, which is, I know North Brawley is going to have cost overruns, I think it’s around maybe for CapEx around $6.5 million per megawatt, I know we have been kind of using $5 million per megawatt and capital expenditures. Is that still a good run rate if we are to add up all your projects and megawatts you are going to bring online and expected how much that’s going to cost you around, $5 million per megawatt?
Dita Bronicki
It’s on the high side if you exclude North Brawley.
Thomas Daniels – Thomas Weisel Partners
Okay, that’s on the high side, great. And then just one final one, on the loan guarantee and the loan programs under 1705 and 1703, I know there is a set sum of money. Is there any time requirements on those, you think how many of these projects do you think you will be able to access low cost government loans or loan guarantees?
Dita Bronicki
The loan guarantees are available for projects that start construction by September 2011. So it’s a nine months later than the ITC cash grant. They need to be completed by 2013 and this is why we are talking about what we think we will have by 2013.
Operator
The next question comes from Justin Cable of Global Hunter Securities.
Justin Cable – Global Hunter Securities
Most of my questions have been answered, but I was curious about the dividend payment, why the jump-up this quarter and then falling back down in the next three quarters.
Dita Bronicki
Our dividend policy is 20% of net income. So because the net income – and the way we are doing it is that we are announcing the first three quarter number at the beginning of the year and doing a true up based on the fourth quarter. So at the beginning of the year we announce $0.06 per share and did the true up and got to a total for the year of $0.30 per share. For next year we are announcing $0.05 a quarter and once in place then what we announced at the beginning of this year because we expect next year to be weaker than this year and we will do the true up in the fourth quarter.
Justin Cable – Global Hunter Securities
The $0.05 a share, I mean can we then not extrapolate that or can we extrapolate that as kind of giving the direction for EPS?
Dita Bronicki
You cannot.
Justin Cable – Global Hunter Securities
For 2010 CapEx, how much of this is for solar?
Dita Bronicki
Almost nothing. Most of the solar activity is going to be – in 2010 it’s not – permitting, planning, zoning – I mean the big issue is to get the zoning approval, so solar is not a big portion of it.
Justin Cable – Global Hunter Securities
Last question I have is just on any kind of one-time gains or write-downs that we should anticipate for 2010. I think there’s already been mention of a gain for the Q1. But maybe you can give us – if there is anything else that we should expect for 2010 as a whole?
Dita Bronicki
I mean we have the GDL, the $6 million of GDL and we are not aware of anything else.
Operator
Next question comes from Brian Yerger of AERCA.
Brian Yerger – AERCA
I joined the call late, I am just wondering on the product segment, did you give any visibility? I know you don’t give quarterly guidance but did you do anything in terms of first half, second half in terms of product revenue?
Dita Bronicki
No, we have not done it and we cannot do it now.
Brian Yerger – AERCA
So you don’t know if it’s going to be more distributed fairly even throughout the quarters or just not sure?
Dita Bronicki
We know that the first quarter is going to be weaker than the others.
Brian Yerger – AERCA
Okay, so Q1 is going to be weak for 2010 on the product side?
Dita Bronicki
Yes.
Operator
Your next question comes from Carter Driscoll of Capstone Investments.
Carter Driscoll – Capstone Investments
Wanted to just take a step back and readdress the state of U.S. thermal market, obviously with your branded presence domestically, you know probably at what stage lot of these projects are in and maybe you could help us look at the landscape a little differently from your perspective as it affects obviously the product segment.
Are there specific things you can do to accelerate engagements with some of these potential customers by using your expertise and in terms of pulling some of the – your potential EPC or equipment sales forward or do you really just have to wait until kind of a proposal is put out there and go through the bidding process?
Yoram Bronicki
So the answer is that with some developers we have a more intimate relationship, with some of them it’s more a formal one. So we certainly hope that in some cases we could work – process that as much better to all parties. But what you have to recognize is that the issue is really without not only good exploration results, but without the confirmation of the well field. It is a very tough especially for a single project developer or a developer that has just a few projects. It is very hard for that developer to release the construction of the power plant. And since our product on the product side this is what we generally provide. We do not provide the field development work, just the power plant. It has to wait. Any well commitment beyond this really has to wait till the field is developed.
And the change, I would say that a change in the last two years is relevant both to lenders and also from what we understand to the DOE’s criteria, they put a very strong emphasis on approving the field and with numbers ranging from 70% of the brine, behind pipe, as they call it to sometimes a 100% of the brine behind pipe. And therefore that requires probably somewhere between a quarter and a third of the total installed cost of the project to be spent before equipment can be released.
And so, I think that if you want to look at the bigger picture when it comes not to forging relationships but to actual release of projects in our product segment, there is a lot of work that needs to be done and it takes time. And my understanding is that only a little bit of this was done in the last year and a half and in the U.S. by other developers.
Carter Driscoll – Capstone Investments
Would it be fair to qualify that more of it was an unrealistic expectation maybe of pushing – getting from exploration to the drilling stage for some of your potential domestic customers or was it more of a kind of a capital constraint or a combination of the two? It almost seems that you are better funded than most of the potential customers and domestically and therefore maybe they underestimated one or both of those aspects.
Yoram Bronicki
No, no, I think that, yes that it’s a fair statement to say that is a combination of the two and really the disparity between very strong endorsement of geothermal or renewable energy as a way to jump start the economy and what actually needs to happen or it needs to be done by the developers that are often cash constrained and it’s just – and the product comes at very late in that stage, the actual sale of product.
Operator
Your next question comes from Lasan Johong of RBC Capital Market.
Lasan Johong – RBC Capital Market
I just had a follow-up question, Dita, on the solar issue. I know you are focusing primarily on Israel but have you looked at opportunities since last we talked in the U.S. where you might be able to take advantage of your locations? Are you still studying that, is that still an option, is there any project?
Dita Bronicki
The answer is that we are looking at this year and studying it but there is nothing specific to report yet but yet we are looking at it very seriously.
Lasan Johong – RBC Capital Market
And I guess the other question is more of a comment. Any chance Ormat might start getting EBITDA guidance going forward?
Dita Bronicki
We are noting your request, but I don’t think anytime soon.
Operator
This concludes the question-and-answer portion of today’s conference. I would now like to turn the call back over to Dita for closing remarks.
Dita Bronicki
Thank you, operator. Thank you all for participating in such an active and thorough discussion and we look forward to see you in about six weeks and continue the dialog and get a better understanding of our plans, our growth plans and of our future. Thank you all.
Operator
Thank you. This concludes your conference. You may now disconnect.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!
Aiming4
15年前
02/24/10 - Ormat Technologies Reports Record 2009 Year End and Fourth Quarter Results
ORMAT TECHNOLOGIES REPORTS RECORD 2009 YEAR END AND FOURTH QUARTER RESULTS
Annual net income increased to $68.6 million
Annual revenue increased 20.4% to $415.2 million
Q4 2008 and full year 2008 restated
RENO, Nevada, February 24, 2010 – Ormat Technologies, Inc. (NYSE: ORA) today announced results for the fourth quarter and full year ended December 31, 2009. Highlights of the Company performance include.
• Revenues increased 20.4% for the year to $415.2 million and remained consistent with the fourth quarter of 2008.
• Annual net income increased to $68.6 million and fourth quarter net income increased to $16.1 million (in each case, after giving effect to the restatement described below).
• Earnings per share (diluted) increased to $1.51 per share of common stock for the year and to $0.35 per share of common stock in the quarter (in each case, after giving effect to the restatement described below).
• Total generation increased by 14% to 3.4 million MWh during 2009.
• The Product Segment backlog as of today is approximately $90 million.
Commenting on the annual results, Dita Bronicki, Chief Executive Officer of Ormat, stated: “Ormat reported record revenues for the year and Product Segment revenue was exceptionally strong during 2009. While we do not expect revenues and corresponding margins in the Product Segment to continue at this level in 2010, the improving global economy combined with funding and regulatory benefits in the United States should contribute to our future revenues in this segment.
We had success in improving the performance of our existing power plants. Generation in our Electricity Segment increased year-over-year by 14% from improved performance of existing power plants and new power plants that came on-line in 2009. Revenue for the segment was stable even when taking into account that the Puna power plant experienced lower availability due to maintenance related issues.
We are in varying stages of exploration and development on land where we have been acquiring rights to use the geothermal resource over the past few years. Results from several sites are encouraging and should yield several commercial projects over the next few years. Closing of the purchase of the Hot Sulphur Springs (“HSS”) project is expected by the end of the first quarter 2010. This acquisition includes a project in an advanced stage of development and is expected to come online in 2012 and sell its output under a long-term PPA that we recently signed with NV Energy.”
2008 Restatement
Through the third quarter of 2009, we accounted for exploration and development costs using an accounting method that is analogous to the full cost method used in the oil and gas industry. Under that method, we capitalized costs incurred in connection with the exploration and development of geothermal resources on an “area-of-interest” basis. Each area of interest included a number of potential projects in the state of Nevada that were planned to be operated together with the same operation and maintenance team. Impairment tests were performed on an area-of-interest basis rather than at a single site. Under this methodology, costs associated with projects that we have determined are not economically feasible remained capitalized as long as the area-of-interest was not subject to impairment.
Following a periodic review performed by the Securities and Exchange Commission (“SEC”) Staff, we concluded that this accounting treatment was inappropriate in certain respects. Accordingly, on February 23, 2010, our Audit Committee and Board of Directors, based on management recommendations, concluded that our financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2008 require restatement and should no longer be relied upon.
The impact of the restatement is a decrease of approximately $6.2 million in net income (or $0.14 per share) during the year end and the fourth quarter ended December 31, 2008. This decrease represents a reduction of 12.6% from our originally reported net income of $49.5 million in 2008 and a reduction of 53.6% from our originally reported net income of $11.6 million in the fourth quarter of 2008. The Company is filing a Report on Form 8-K and intends to effect the above mentioned restatement in its annual report on Form 10-K for the year ended December 31, 2009. The Company also plans to revise its financial statements as of and for the three and nine months ended September 30, 2009 to reduce net income by approximately $1.5 million (or $0.03 per share). In connection with the filing of its Annual Report on Form 10-K for the year ended December 31, 2009, the Company will revise the third quarter unaudited financial information included in the notes to the financial statements to reflect the expensing of such costs in that interim period.
Annual Results
For the year ended December 31, 2009, total revenues were $415.2 million, an increase of 20.4% from $344.8 million for the year ended December 31, 2008, consisting of a 72.2% increase in Product Segment revenues and a 1.4% increase in Electricity Segment revenues.
Net income for the year ended December 31, 2009 was $68.6 million, or $1.51 per share of common stock (diluted), compared to $43.3 million, or $0.98 per share of common stock (diluted), for the year ended December 31, 2008 (as restated), which represents an increase of 58.4% in net income. The increase in net income is primarily attributable to our Product Segment and to a $13.3 million gain from the extinguishment of a liability associated with the sale of equity interests in OPC LLC, as a result of our acquisition of Class B membership units from Lehman Brothers.
Electricity revenues for the year ended December 31, 2009 were $255.9 million, an increase of 1.4% from $252.3 million for the year ended December 31, 2008. Revenues in our Electricity Segment in the year ended December 31, 2009 were impacted by a decline in the average revenue rate from $86 to $76 per MWh due to the effect of lower oil prices on the Puna power plant’s energy rates, as well as a decline in production due to the enhancement and repair of the geothermal well field which we are undertaking to increase availability at the plant.
Revenues from the Product Segment for the year ended December 31, 2009 were $159.4 million, compared to $92.6 million for the year ended December 31, 2008, an increase of 72.2%. The increase in product sales was primarily attributable to engineering, procurement and construction (EPC) contracts for the construction of three large binary geothermal projects in Nevada, New Zealand and Costa Rica.
For the year ended December 31, 2009, the Company’s gross margin was 29.5%, compared to 29.6% for the year ended December 31, 2008. Operating income for the year ended December 31, 2009 was $68.8 million, compared to $50.8 million for the year ended December 31, 2008 (as restated), an increase of 35.4%. The increase in operating income is primarily attributable to an increase in revenues and gross margin of our Product Segment.
Adjusted EBITDA for the year ended December 31, 2009 increased to $167.0 million compared to $121.9 million for the year ended December 31, 2008 (as restated). Adjusted EBITDA includes consolidated EBITDA and the Company’s share in the interest, taxes, depreciation and amortization related to the Company's unconsolidated 50% interest in the Mammoth complex in California. As further described in “Reconciliation of EBITDA and Adjusted EBITDA and Additional Cash Flows Information” below, we changed the method for calculating EBITDA and adjusted EBITDA beginning in the third quarter of 2009.
Cash and cash equivalents as of December 31, 2009 increased to $46.3 million from $34.4 million as of December 31, 2008. In addition, as of December 31, 2009, we have available committed lines of credit with commercial banks aggregating $362.5 million, of which $175.0 million is unused.
On February 23, 2010, Ormat’s Board of Directors approved the payment of a quarterly cash dividend of $0.12 per share pursuant to the Company’s dividend policy, which targets an annual payout ratio of at least 20% of the Company’s net income, subject to Board approval. The dividend will be paid on March 25, 2010, to shareholders of record as of the close of business on March 16, 2010. The Company expects to pay a dividend of $0.05 per share in the next three quarters.
Commenting on the outlook for 2010, Ms. Bronicki said, “We expect our 2010 Electricity Segment revenues to be between $275 million and $285 million. We also expect an additional $9 million of revenues from our share of electricity revenue generated by a subsidiary, which is accounted for under the equity method. With regard to our Product Segment, we expect that our 2010 revenues will be between $75 million and $85 million.”
Fourth Quarter Results
For the fourth quarter of 2009, total revenues were $95.3 million, consistent with the fourth quarter of 2008. Net income for the quarter was $16.1 million, or $0.35 per share of common stock (diluted), compared to $5.4 million, or $0.12 per share of common stock (basic and diluted) for the same quarter last year (as restated).
Revenues attributable to our Electricity Segment for the fourth quarter of 2009 were $63.9 million, an increase of 2.9%, compared to $62.1 million for the same quarter last year. Product Segment revenues for the fourth quarter of 2009 were $31.4 million, a decrease of 6.1%, compared to $33.4 million for the same quarter last year.
Adjusted EBITDA for the fourth quarter of 2009 increased to $41.8 million compared to $20.1 million in the same quarter last year (as restated). Adjusted EBITDA includes consolidated EBITDA and the Company’s share in the interest, taxes, depreciation and amortization related to the Company's unconsolidated 50% interest in the Mammoth complex in California. As further described in “Reconciliation of EBITDA and Adjusted EBITDA and Additional Cash Flows Information” below, we changed the method for calculating EBITDA and adjusted EBITDA beginning in the third quarter of 2009.
Conference Call Details
Ormat will host a conference call to discuss its financial results and other matters discussed in this press release from 10:00 a.m. to 12:00 p.m. U.S. EST today, February 24, 2010. The call will be available as a live, listen-only webcast at www.ormat.com. During the webcast, management will refer to slides that will be posted on the web site. The slides and accompanying webcast can be accessed through the Event Calendar in the Investor Relations section of Ormat’s website.
A 30-day archive of the webcast will be available approximately 2 hours after the conclusion of the live call. A replay will be available from 1:00 pm EST on February 24, 2010 through 11:59 p.m. EST, March 3, 2010. Please call: (800) 642-1687 (U.S. and Canada) or (706) 645-9291 (International) and enter the code 53390852.
About Ormat Technologies
Ormat Technologies, Inc. is the only vertically-integrated company primarily engaged in the geothermal and recovered energy power business. The Company designs, develops, owns and operates geothermal and recovered energy-based power plants around the world. Additionally, the Company designs, manufactures and sells geothermal and recovered energy power units and other power-generating equipment, and provides related services. The Company has more than four decades of experience in the development of environmentally-sound power, primarily in geothermal and recovered-energy generation. Ormat products and systems are covered by 75 U.S. patents. Ormat has built over approximately 1,200 MW of plants half for its own account and half as supplies to utilities and developers. Ormat’s current generating portfolio includes the following geothermal and recovered energy-based power plants: in the United States - Brady, Heber, Mammoth, Ormesa, Puna, Steamboat, North Brawley, OREG 1, OREG 2 and Peetz; in Guatemala - Zunil and Amatitlan; in Kenya – Olkaria III and in Nicaragua - Momotombo.
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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2009.
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.
Pro-Life
16年前
Look, Cramer was right??? Ormat Technologies, Inc. Reports Second Quarter 2009 Results
Q2 net income increased 32.3% to $16.0 million;
Q2 revenues increased 24.9% to $100.2 million;
RENO, Nevada, August 5, 2009 – Ormat Technologies, Inc. (NYSE: ORA) today announced record financial results for the second quarter of 2009.
Second Quarter Results
Total revenues for the second quarter were $100.2 million, compared to $80.2 million for the second quarter of 2008, an increase of 24.9%, which consisted of a 115.1% increase in revenues from the Product Segment, and a decline of 2.0% in revenue in the Electricity Segment.
For the quarter, the Company reported net income of $16.0 million, or $0.35 per share (basic and diluted), compared to net income of $12.1 million, or $0.28 per share (basic and diluted), for the second quarter of 2008. The increase in net income is primarily attributable to our Product Segment and some foreign currency translation gains.
Commenting on the quarter's results, Dita Bronicki, Chief Executive Officer of Ormat, stated: "We are pleased with the growth of our business and the record revenues of $100.2 million in this quarter. Total generation for the quarter was strong, up 14% from the 2008 quarter. We produced 811,000 megawatt hours and 1,701,000 megawatt hours for the quarter and first six months, respectively, up from 712,000 megawatt hours and 1,444,000 megawatt hours, respectively, last year. Notwithstanding the strong growth in generation, total revenues in the Electricity Segment declined slightly due to the expected reduction in Puna revenues resulting from lower oil prices and the ongoing construction at Puna. Our Product Segment delivered another solid quarter which more than offset the reduction in the Electricity Segment.”
"During the quarter, we continued to make selective investments in land acquisition, which is fundamental to building a sustainable growth company with profitable results. Our strategy is to continue to invest in high potential land. Our growth initiatives continue moving forward, with new exploration occurring at several sites within the United States.” Ms. Bronicki continued.
Electricity revenues for the three-month period ended June 30, 2009 were $60.6 million compared to $61.8 million in the year ago period, a decrease of 2.0%. The decrease in electricity revenues is primarily attributable to lower energy rates at Puna, due to lower oil prices and to the expiration of the "adder”, an additional energy rate paid to us under the Heber 2 power purchase agreement.
Revenues from the Product Segment totaled $39.7 million for the quarter, compared to $18.4 million in 2008.
Adjusted EBITDA for the second quarter of 2009 was $32.3 million, compared to $29.2 million in the same quarter last year. Adjusted EBITDA includes operating income and depreciation and amortization totaling $1.2 million and $1.3 million for the quarters ended June 30, 2009 and 2008, respectively, related to the Company's unconsolidated investment interest of 50% in the Mammoth Project in California. The reconciliation of GAAP net income to Adjusted EBITDA is set forth below in this release. Cash and cash equivalents as of June 30, 2009 increased to $46.0 million from $34.4 million as of December 31, 2008.
On August 5, 2009, Ormat's Board of Directors approved the payment of a quarterly cash dividend of $0.06 per share pursuant to the Company's dividend policy, which targets an annual payout ratio of at least 20% of the Company's net income, subject to Board approval. The dividend will be paid on August 27, 2009 to shareholders of record as of the close of business on August 18, 2009. The Company expects to pay a dividend of $0.06 per share in the next quarter as well.
Commenting on the outlook for 2009, Ms. Bronicki said, "Following our second quarter earnings results, we are increasing our guidance for 2009. We expect our total revenues to increase to between $382 million and $400 million. With the delay in the commercial operation of North Brawley, we expect our 2009 Electricity Segment revenues to be between $252 million and $260 million. We also expect additional revenues of approximately $9 million from our share of electricity revenues generated by Mammoth that is accounted for under the equity method. With regard to our Product Segment, we are increasing our guidance for 2009 revenues and expect them to now be between $130 million and $140 million.”
Ms. Bronicki concluded, "This has been another good quarter for Ormat. During the quarter and subsequently, we were able to raise additional project financing and corporate loans of over $80 million to fund our growth. In addition, the recently announced regulations for the ITC cash grant and the expected regulations for the U.S. Department of Energy loan guaranty reflect a further increase in governmental support for the renewable energy industry, and Ormat is well positioned to take advantage of it.”
Six-Month Results
For the six-month period ended June 30, 2009, total revenues were $200.1 million, an increase of 33.8% from $149.6 million in the same period last year. Net income for the period was $30.5 million, an increase of 38.1% from $22.1 million in the same period last year. Earnings per share (diluted) for the first half of 2009 was $0.67, compared to $0.52 in the first half of 2008.
Electricity Segment revenues for the six-month period ended June 30, 2009 were $123.2 million, compared to $121.3 million in the same period a year ago. Product Segment revenues for the first half of 2009 were $76.9 million, compared to $28.3 million in the same period in 2008.
Adjusted EBITDA for the six-month period was $68.2 million, compared to $56.7 million in the same period a year ago. Adjusted EBITDA includes consolidated EBITDA and the Company's share in the operating income and depreciation and amortization totaling $2.7 million and $2.8 million for the six months ended June 30, 2009 and 2008, respectively, related to the Company's unconsolidated investment interest of 50% in the Mammoth project in California. The reconciliation of GAAP net income to Adjusted EBITDA is set forth below in this release.
Conference Call Details
Ormat will host a conference call to discuss its financial results and other matters discussed in this press release at 10:00 A.M. EDT on Thursday, August 6, 2009. The call will be available as a live, listen-only webcast at www.ormat.com. During the webcast, management will refer to slides that will be posted on the web site. The slides and accompanying webcast can be accessed through the Event Calendar in the Investor Relations section of Ormat's website.
A 30-day archive of the webcast will be available approximately 2 hours after the conclusion of the live call. A replay will be available from 10:00 a.m. EDT on August 6, 2009 through 11:59 p.m. EDT, August 13, 2009. Please call: (800) 642-1687 (U.S. and Canada) or (706) 645-9291 (International) and enter the code 20233844.
About Ormat Technologies
Ormat Technologies, Inc. is the only vertically-integrated company primarily engaged in the geothermal and recovered energy power business. The Company designs, develops, owns and operates geothermal and recovered energy-based power plants around the world. Additionally, the Company designs, manufactures and sells geothermal and recovered energy power units and other power-generating equipment, and provides related services. The Company has more than four decades of experience in the development of environmentally-sound power, primarily in geothermal and recovered-energy generation. Ormat products and systems are covered by 75 U.S. patents. Ormat has built over approximately 1,200 MW of plants half for its own account and half as supplies to utilities and developers. Ormat current generating portfolio includes the following geothermal and recovered energy-based power plants: in the United States - Brady, Heber, Mammoth, Ormesa, Puna, Steamboat, OREG 1, OREG 2 and Peetz; in Guatemala - Zunil and Amatitlan; in Kenya - Olkaria; in Nicaragua - Momotombo and in New Zealand - GDL.
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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2009.
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.
midastouch017
17年前
A father's lessons
Yehuda Bronicki is better known as the chairman and CTO of geothermal energy company Ormat. But 60 years ago during World War Two, his father, Naftali Backenroth, was an entrepreneur of a different kind. "Globes" tells the story of a man who used his flair for business enterprise to rescue fellow Jews from the clutches of the Nazi machine.
Merav Ankori 1 May 08 17:06
Talking about his childhood during the Holocaust is something that Yehuda Bronicki, chairman and CTO of geothermal energy company Ormat Industries (TASE: ORMT) finds difficult, but he overcomes his reluctance, as a tribute to his father who saved the lives of hundreds of Jews during the Holocaust. As the story unfolds, the full extent of the trauma Bronicki went through as a child becomes clear, as does the bravery of his father. This is the story of Polish Jew, who managed to outwit the Nazis and initiate entrepreneurial ventures that saved many lives.
Born into an oil family Yehuda Bronicki was born in 1934 to Naftali and Ann (Hanna) Backenroth in Lvov, then part of Poland and now part of the Ukraine. From very early times Naftali showed an entrepreneurial flair and the same passion for ideas. He was born into family that founded a global business in oil and petroleum refining (ironically, the "green" Bronicki was born to an oil family), and dairies called "Backenroth Brothers." The business later became part of the Rothschild family businesses.
But Naftali Backenroth wanted to do something else with his life. He was drawn to agriculture and began studying agronomy. He encountered anti-Semitism when he started his studies in Lvov and then later on in Vienna as well, but he refused to let that stop him from completing his studies. His next port of call was France, where he enrolled at the special agricultural institute for the French colonies, under a scheme initiated by Baron Rothschild to support Jews interested in working in agriculture in Eretz Israel. And that, undoubtedly, was Backenroth's goal.
But as fate would have it, Backenroth's father, Bronicki's grandfather, died, and the oil refinery went bankrupt. Backenroth senior had to put his plans on hold and return to Lvov to help support the family. Incidentally, Backenroth also studied geology during the course of his agronomy studies, a knowledge that he would later put to good use when he carried out oil exploration in Poland for French oil companies. "It was in a beautiful region," Bronicki recalls. "My first memories of father are the trips with him in the Carpathian region, where he carried out the oil exploration."
The Ukraine's agronomist
And then war broke out. "We were living in the Klimubka region where father had rented an apartment," recalls Bronicki. The region is part of what is now Ukrainian territory, south of Drohobycz, (an industrial city on the Carpathian border which had a population of 60,000, at least of half them Jews). He wasn't rich. And then he was drafted into the Polish army as cavalry officer, and my mother and I left for large a town called Pashmishel (on the current Polish-Ukrainian border). I have no idea how he managed it, but the moment the Polish army fell apart, he found us.
"In 1941, the region was captured by the Germans," Bronicki continues. "The pogroms against local Jews began even before the Gestapo arrived, when there were only German and Ukrainian troops. They started by killing all the men in Schodnica, near the region where we lived.
"We never had any food shortages until the Germans arrived, we lived in the grain shed of Europe. And after they came, the Jews were the only ones to starve. Being hungry is not something you can explain. It's not just going hungry, but also not knowing whether there'll be any food tomorrow. You can't explain it to anyone who hasn't experienced it either, what a lack of freedom feels like. But overall, anyone who wasn't broken during this period emerged a stronger person in the aftermath."
Backenroth faces the Gestapo
Between 1941-1942, the Backenroth family was imprisoned in the Drohobycz ghetto, and it was during this time that most of Backenroth's acts of valor took place. When the Gestapo began "recruiting" Jews for forced labor, Backenroth, on learning that Jewish laborers from a nearby town had been murdered shortly after being "recruited", set about saving the lives of local Jews in the reality that now prevailed. First he negotiated with the Judenratt and Gestapo and secured increased food rations for workers at forced labor sites. The Nazis gave every Jewish laborer just 200 grams of bread for an entire day, but Backenroth persuaded them to give the Jews the same rations as those for non-Jewish slave laborers.
"Because there were incidents where the Nazis murdered Jewish laborers who didn't always understand orders in German, father suggested to the Gestapo that they employ 40 German-speaking people, thereby saving their lives. He also invented all kinds of tasks to find work for more people," says Bronicki.
Thanks to Backenroth's mediation, some of these Jews began working in workshops that supported the Nazi war effort, but the actions had already begun in the Drohobycz ghetto, and the workshops were gradually closed down. Backenroth then set about forming an agricultural farm to provide an excuse to employ Jews. He persuaded the Nazis that it would pay for them to increase their available food supplies, and even organized the farm together with a Nazi officer. He saved the lives of 250 Jews through this.
Backenroth continued to pursue every possible option for creating jobs, so that the Nazis would need people for labor, rather than murdering them. His next venture was a horse riding farm to entertain the Nazis. In the ghetto center, he set up a recreation center for the Nazis near the Gestapo headquarters, from whose torture chamber the screams of pain could be heard far and wide. He also managed to rescue the relatives of those people that already been selected for forced labor on the grounds that laborers would find it difficult to work if their relatives were murdered. He even plucked Jews right out of a major action in 1942, and got them into work details, risking his own life in the process. He was constantly engaged in an extremely precarious battle of wits with the Nazis where one small mistake could have spelled the end for him and for his workers.
Obviously, not all of Drohobycz's Jews survived, quite the contrary - many of them were murdered in actions that took place in the nearby Bronica forest. Backenroth decided to change his name to Bronicki, in memory of the victims that died at the site. Bronicki junior eventually visited the site during a trip in 1992 together with his wife Dita, but found himself and unable to say a word as he stood next to the memorial to the victims. The emotion and tears overwhelmed him.
Starting over
The war years were one long episode of mass murder and desperate attempts to survive and rescue others. "The Russians liberated us in August 1944," says Bronicki. We wanted to get to the West by going over the border into Poland, (which was not yet under communist rule, an event that came two years later in 1946), because things in Russia were horrendous, and then make our way from there to Israel. My father did not reveal that we wanted to leave for Poland and we managed to escape across the border.
"We traveled on an ordinary train but we had to hide. It was the three of us, plus my cousin, father's sister's son, whose parents sent him to us at the age of 12. They were later sent to Treblinka where they died, but they managed to save him. He lived with us from then on and died 20 years ago. We were also joined by another boy whose parents were murdered towards the end of the war, so I actually had two brothers.
"We got to Cracow and father found work in a factory owned by Jews. Mother began producing cosmetics and selling them to individuals and stores," says Bronicki.
"It wasn't until we arrived in Israel in 1958 that I stopped dreaming about the war. As a child, I watched from the windows as Jews were killed, but most things I didn't see with my own eyes. After years like these, you see everything in life differently," says Bronicki.
Globes: Did your father ever talk about what happened?
Bronicki:"No. My children asked him about that period and always wanted to know why he wouldn't say more. He told me that every time he thought of someone he'd managed to rescue, he immediately recalled ten more people whom he failed to rescue. It's not that he hid things, but I could see he didn't like talking about it, so I didn't push it. With people who were less close he found it easier to talk to people."
One outsider that Bronicki senior did talk to was television presenter and former Channel 1 director general Motti Kirshenbaum, who in 1992 made a film about Bronicki's bravery, a year before Naftali Bronicki died. The film features testimony from many survivors, who recalled Naftali's activity during the war, and he himself appeared too, looking very youthful and lucid.
"Father worked until the age of 86," recalls Bronicki. "In 1961 he and a partner set up a waste recycling plant in Yavne, at a time when nobody understood a thing about this. He and Dita's father helped us found our company, Ormat, in the yard of their plant, which later closed." Bronicki notes.
Was your father proud of your achievements as industrialists?
"He was not the type that handed out compliments, and Dita and I weren't looking for complements either, but we could see our work gave him a lot pleasure. I also consulted him frequently on issues such as, for example, fluid for the turbines. The small turbines still use the type of fluid he recommended to this day. He also helped us obtain materials."
Naftali Backenroth died in 1993 in Israel, the country he intended to make his home in long before World War Two, but whose life took a different turn. The man, who saved the lives of many Jews, was tormented to his last day by all those he failed to rescue.
Published by Globes [online], Israel business news - www.globes-online.com - on May 1, 2008
Hot Features
プレミアム
登録してリアルタイムのチャート、分析ツール、価格を入手してください。
whytestocks
4年前
dippyfloppity
11年前
Penny Roger$
13年前
dealerschool2006
14年前
