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Section 1: 8-K (FORM 8-K)

ora20180619_8k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

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

 

Ormat Technologies, Inc.


(Exact name of Registrant as specified in its charter)

 

Delaware

(State or other jurisdiction

of incorporation)

001- 32347

Commission File Number

88-0326081

(I.R.S. Employer Identification Number)

 

6225 Neil Road, 

Reno, Nevada
(Address of principal executive offices)

 

89511-1136
(Zip Code)

 

(775) 356-9029
(Registrant’s telephone number, including area code)

 

Not Applicable

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

 

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

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

Emerging growth company ☐

 

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

 

 

 

 

Item 2.02. Results of Operations and Financial Condition.

 

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

 

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

 

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

99.1

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

 

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SIGNATURES

 

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

 

 

ORMAT TECHNOLOGIES, INC.

 

 

 

 

 

 

         

 

 

 

 

 

 

By:

  /s/ Isaac Angel

 

 

 

Name:

Isaac Angel

 

 

 

Title:

Chief Executive Officer

 

 

Date: June 20, 2018

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

ex_116660.htm

Exhibit 99.1

 

 

 

Ormat Technologies Contact:

Smadar Lavi

VP Corporate Finance and Head of Investor Relations

775-356-9029 (ext. 65726)

slavi@ormat.com

Investor Relations Agency Contact:

Rob Fink

Hayden - IR

646-415-8972

rob@haydenir.com

 

Ormat Technologies Files Restated Financial reports and files Q1 2018 financial report CONTAINING ADJUSTED RESULTS

 

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

 

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

 

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

 

Scope of restatement 

 

 

Year Ended

December 31, 2017

Three Months Ended

December 31, 2017

Three Months Ended

September 30, 2017

Three Months Ended

June 30, 2017

 

As

Reported

As

Restated

As

Reported

As

Restated

As

Reported

As

Restated

As

Reported

As

Restated

Income tax (provision) benefit

1.4

(21.7)

29.7

28.3

(11.0)

(6.2)

(6.4)

(32.8)

Net income

170.2

147.1

69.4

68.1

22.8

27.6

38.2

11.8

                 

Net income attributable to the Company's stockholders

155.5

132.4

66.0

64.6

19.2

24.0

35.0

8.6

Diluted EPS:

3.06

2.61

1.29

1.27

0.38

0.47

0.69

0.17

                 
Adjusted net income attributable to the Company’s stockholders1 151.9 155.2 66.0 64.6 21.1 25.9 29.5 29.5
Adjusted diluted EPS1 2.99 3.06 1.29 1.26 0.42 0.51 0.58 0.58
                 

 

 

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

 

 

 

 

 

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

 

Q1 2018

 

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

 

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

 

($M)

Three Months Ended March 31, 2018

 

As reported

on May 7, 2018

As filed

Income tax benefit

2.1

26.9

Net income

49.4

74.3

     

Net income attributable to the Company's stockholders

44.7

69.5

Diluted EPS:

0.88

1.36

     

Adjusted net income attributable to the Company’s stockholders 2

24.4

25.1

Adjusted diluted EPS 2

0.48

0.49

 

 

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

 


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

 

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

 

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

 

About Ormat Technologies

 

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

 

 

Ormat’s Safe Harbor Statement

 

Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to Ormat's plans, objectives and expectations for future operations and are based upon its management's current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, see "Risk Factors" as described in Ormat Technologies, Inc.'s Form 10-K/A filed with the SEC on June 19, 2018 and Form 10-Q for the period ended March 31, 2018 filed with the SEC on June 19, 2018.

 

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

 

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Reconciliation of adjusted net income attributable to the Company's stockholders

 

 

Year Ended

December 31, 2017

Three Months Ended

December 31, 2017

Three Months Ended

September 30, 2017

Three Months Ended

June 30, 2017

 

As

Reported

As

Restated

As

Reported

As

Restated

As

Reported

As

Restated

As

Reported

As

Restated

Net income attributable to the Company's stockholders

155.5

132.4

66.0

64.6

19.2

24.0

35.0

8.6

Adjusted for:

               

Tax benefit related to valuation allowance and other tax restructuring

(5.5)

20.9

       

(5.5)

20.9

One-time make whole premium paid in connection with the prepayment of OFC Senior Secured Notes and DEG loan

1.9

1.9

   

1.9

1.9

   

Adjusted net income attributable to the Company's stockholders

151.9

155.2

66.0

64.6

21.1

25.9

29.5

29.5

 

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Ormat Technologies, Inc. and Subsidiaries

 

Ormat Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

For the Three-Month Periods Ended March 31, 2018 and 2017

(Unaudited)

 

   

Three Months Ended March 31

 
   

2018

   

2017

 
   

(In thousands, except per

share data)

 

Revenues:

               

Electricity

  $ 132,489     $ 115,776  

Product

    48,672       74,122  

Other

    2,862        

Total revenues

    184,023       189,898  

Cost of revenues:

               

Electricity

    73,482       66,036  

Product

    33,726       49,452  

Other

    3,443        

Total cost of revenues

    110,651       115,488  

Gross profit

    73,372       74,410  

Operating expenses:

               

Research and development expenses

    1,108       602  

Selling and marketing expenses

    3,699       4,363  

General and administrative expenses

    13,849       9,949  

Write-off of unsuccessful exploration activities

    123        

Operating income

    54,593       59,496  

Other income (expense):

               

Interest income

    113       244  

Interest expense, net

    (14,344 )     (14,923 )

Derivatives and foreign currency transaction gains (losses)

    (1,599 )     1,338  

Income attributable to sale of tax benefits

    7,361       6,157  

Other non-operating expense, net

    (20 )     (92 )

Income before income taxes and equity in losses of investees

    46,104       52,220  

Income tax (provision) benefit

    26,942       (11,004 )

Equity in losses of investees, net

    1,210       (1,599 )
                 

Net income

    74,256       39,617  

Net income attributable to noncontrolling interest

    (4,748 )     (4,423 )

Net income attributable to the Company's stockholders

  $ 69,508     $ 35,194  
                 

Earnings per share attributable to the Company's stockholders - Basic and diluted:

               

Basic:

               

Net Income

  $ 1.37     $ 0.71  
                 

Diluted:

               

Net Income

  $ 1.36     $ 0.70  
                 

Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:

               

Basic

    50,614       49,680  

Diluted

    51,051       50,491  

 

Page 5/7

 

 

Ormat Technologies, Inc. and Subsidiaries

Ormat Technologies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

As of March 31, 2018, and December 31, 2017

(Unaudited)

   

March 31,

   

December 31,

 
   

2018

   

2017 (As Restated)

 
                 
   

(In thousands)

 

ASSETS

 

Current assets:

               

Cash and cash equivalents

  $ 54,723     $ 47,818  

Restricted cash, cash equivalents and marketable securities

    50,332       48,825  

Receivables:

               

Trade

    103,580       110,410  

Other

    10,018       13,828  

Inventories

    20,069       19,551  

Costs and estimated earnings in excess of billings on uncompleted contracts..

    41,134       40,945  

Prepaid expenses and other

    42,274       40,269  

Total current assets

    322,130       321,646  

Investment in an unconsolidated company

    63,109       34,084  

Deposits and other

    21,205       21,599  

Deferred income taxes

    124,304       57,337  

Deferred charges

          49,834  

Property, plant and equipment, net

    1,723,560       1,734,691  

Construction-in-process

    345,563       293,542  

Deferred financing and lease costs, net

    4,922       4,674  

Intangible assets, net

    84,771       85,420  

Goodwill

    21,253       21,037  

Total assets

  $ 2,710,817     $ 2,623,864  

LIABILITIES AND EQUITY

 

Current liabilities:

               

Accounts payable and accrued expenses

  $ 103,551     $ 153,796  

Short-term revolving credit lines with banks (full recourse)

    38,500       51,500  

Billings in excess of costs and estimated earnings on uncompleted contracts

    10,458       20,241  

Current portion of long-term debt:

               

Limited and non-recourse:

               

Senior secured notes

    28,398       33,226  

Other loans

    21,495       21,495  

Full recourse

    2,809       3,087  

Total current liabilities

    205,211       283,345  

Long-term debt, net of current portion:

               

Limited and non-recourse:

               

Senior secured notes

    305,905       311,668  

Other loans

    237,245       242,385  

Full recourse:

               

Senior unsecured bonds

    303,469       203,752  

Other loans

    46,506       46,489  

Liability associated with sale of tax benefits

    42,622       44,634  

Deferred lease income

    50,745       51,520  

Deferred income taxes

    48,074       61,961  

Liability for unrecognized tax benefits

    9,074       8,890  

Liabilities for severance pay

    20,874       21,141  

Asset retirement obligation

    27,639       27,110  

Other long-term liabilities

    21,625       18,853  

Total liabilities

    1,318,989       1,321,748  
                 

Redeemable non-controlling interest

    6,943       6,416  
                 

Equity:

               

The Company's stockholders' equity:

               

Common stock

    51       51  

Additional paid-in capital

    890,485       888,778  

Retained earnings (accumulated deficit)

    410,758       327,255  

Accumulated other comprehensive income (loss)

    (909 )     (4,706 )
      1,300,385       1,211,378  

Noncontrolling interest

    84,500       84,322  

Total equity

    1,384,885       1,295,700  

Total liabilities and equity

  $ 2,710,817     $ 2,623,864  

 

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Ormat Technologies, Inc. and Subsidiaries

Reconciliation of EBITDA and Adjusted EBITDA

For the Three-Month Periods Ended March 31, 2018 and 2017

(Unaudited)

 

 

We calculate EBITDA as net income before interest, taxes, depreciation and amortization. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for (i) termination fees, (ii) impairment of long-lived assets, (iii) write-off of unsuccessful exploration activities, (iv) any mark-to-market gains or losses from accounting for derivatives, (v) merger and acquisition transaction costs (vi) stock-based compensation, (vii) gains or losses from extinguishment of liability, (viii) gains or losses on sales of subsidiaries and property, plant and equipment and (ix) other unusual or non-recurring items. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under U.S. GAAP and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or as an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA are presented because we believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of a company’s ability to service and/or incur debt. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.

 

The following table reconciles net income to EBITDA and Adjusted EBITDA for the three-month periods ended March 31, 2018 and 2017.

 

   

Three Months Ended March 31

 
   

2018

   

2017

 
                 
   

(in thousands)

 

Net income

  $ 74,256     $ 39,617  

Adjusted for:

               

Interest expense, net (including amortization of deferred financing costs)

    14,231       14,679  

Income tax provision

    (26,942 )     11,004  

Adjustment to investment in uncosolidated company:

               

our proportionate share in interest, tax and depreciation and amortization

    3,530        

Depreciation and amortization

    29,437       25,542  

EBITDA

  $ 94,512     $ 90,842  
                 

Mark-to-market on derivatives instruments

    962       (1,523 )

Stock-based compensation

    1,707       1,713  

Merger and acquisition transaction cost

    1,095       800  

Write-off of unsuccessful exploration activities

    123        

Adjusted EBITDA

  $ 98,399     $ 91,832  

 

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