Ormat Technologies Inc (ORA)

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Ormat Technologies, Inc. Reports Fourth Quarter 2005 and Year-End Results

Tuesday March 7, 9:33 pm ET

Record Revenues of $238.0 Million for the Year Ended 2005 an 8.6% Increase Over 2004;
Operating Income increases 2.3% to $63.9 Million in 2005 From $62.4 Million;
Company Announces Quarterly Cash Dividend of $0.03 Per Share

SPARKS, Nevada, March 7 /PRNewswire-FirstCall/ -- ORMAT Technologies, Inc. (NYSE: ORA - News) today announced financial results for the fourth quarter and full year ended December 31, 2005. For the fourth quarter, total revenues were $58.8 million as compared to $56.2 million for the same period in 2004, an increase of 4.5%.

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Electricity segment revenues for the fourth quarter were $43.1 million, an increase of 8.4% as compared to $39.8 million during the same period in 2004. The increase in revenues was primarily attributed to higher energy rates for power supplied under the power purchase agreement for the Puna project.

Net loss for the quarter ended December 31, 2005 was $(5.1) million or $(0.16) per share of common stock as compared with net income of $4.7 million or $0.17 per share of common stock during the same period in 2004. The Company's net loss in the fourth quarter was attributable to the Company's decision to refinance the debt of the Heber project provided under a Credit Agreement with Beal Bank, in order to reduce the Company's future interest expense, which will have a positive effect on future earnings and cash flows. As a result, the Company incurred a one-time, non-recurring charge of $16.6 million ($10.3 million after-tax), primarily related to prepayment premium and the write-off of deferred financing costs. There were 31.6 million weighted average shares outstanding during the fourth quarter of 2005 and 28.0 million during the same period in 2004.

For the quarter ended December 31, 2005, the Company's gross margin was 36.4% compared to 35.3% during the same period in 2004. Operating income for the quarter ended December 31, 2005 was $13.8 million as compared with $14.3 million for the same period in 2004. The reduction in operating income is primarily attributed to an increase in operating expenses necessary to meet compliance with Sarbanes-Oxley, net lease expense related to the Puna refinancing, and an increase in research and development costs. Operating income for the quarter ended December 31, 2004, includes a non-recurring gain of $0.9 million related to the sale of certain geothermal asset.

Adjusted EBITDA for the quarter ended December 31, 2005 was $26.2 million as compared with $26.7 million for the same period in 2004. Adjusted EBITDA includes consolidated EBITDA and the Company's share in the operating income and depreciation and amortization totaling $3.4 million and $3.8 million for the quarters ended December 31, 2005 and 2004, respectively, related to the Company's unconsolidated investment interest in the Leyte project in the Philippines and its 50% in the Mammoth project in California. The reconciliation of GAAP net income to Adjusted EBITDA is set forth below in this release.

For the year ended December 31, 2005, total revenues were $238.0 million, an 8.6% increase over total revenues of $219.2 million for the year ended December 31, 2004. Net income for the year ended December 31, 2005 was $15.2 million or $0.48 per share of common stock as compared with $17.8 million or $0.72 per share of common stock for the year ended December 31, 2004. The reduction in net income in the year ended December 31, 2005 was attributable to the Company's decision to refinance the debt of the Heber project provided under a Credit Agreement with Beal Bank, in order to reduce the Company's future interest expense, which will have a positive effect on future earnings and cash flows. As a result, the Company incurred a one-time, non-recurring charge of $16.6 million ($10.3 million after-tax), as discussed above. There were 31.6 million weighted average shares outstanding during 2005 and 24.8 million during 2004.

For the year ended December 31, 2005, the Company's gross margin was 37.5% compared to 37.9% for the year ended December 31, 2004. Operating income for the year ended December 31, 2005, was $63.9 million as compared with $62.4 million for the same period in 2004, an increase of 2.3%.

Adjusted EBITDA for the year ended December 31, 2005, was $115.2 million as compared with $109.6 million for the year ended December 31, 2004. Adjusted EBITDA includes consolidated EBITDA and the Company's share in the operating income and depreciation and amortization totaling $16.5 million and $14.6 million for the years ended December 31, 2005 and 2004, respectively, related to the Company's unconsolidated investment interest in the Leyte Project in the Philippines, and it's 50% in the Mammoth project in California. The reconciliation of GAAP net income to Adjusted EBITDA is set forth below in this release.

As of December 31, 2005, the Company had cash, cash equivalents and marketable securities, net of short-term bank credit of $66.5 million compared to $125.9 million as of December 31, 2004. The decrease in the Company's cash position was principally due to the combination of capital expenditures and the repayment of long-term debt, primarily offset by an increase of $83.0 million as a result of the Puna refinancing in May and December 2005.

On March 7, 2006, Ormat's Board of Directors approved the payment of a quarterly cash dividend of $0.03 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. Although the Company suffered a loss in the fourth quarter, the Board approved a dividend payment that is equal to the dividend paid in the previous quarter. The Company expects that this loss will be compensated in future periods by lower interest expenses. The dividend will be paid on April 4, 2006 to shareholders of record as of the close of business on March 28, 2006. The Company expects to pay a dividend of $0.04 per share, in the next three quarters as well.

Commenting on the results, Dita Bronicki, President and Chief Executive Officer of Ormat said, "2005 was a successful and defining year for Ormat. Our results were in-line with our expectations and we met and exceeded important operational goals including the completion of enhancements and additional construction at several of our major projects. We also completed our first full year as a public company and celebrated our 40th anniversary in the renewable energy business."

"We continued to benefit from higher prices paid for electricity produced in Puna, and we further extended our organic growth momentum, increasing our net ownership interest in generating capacity by 21 MW. Included in this total are 13 MW attributable to the Burdette geothermal power plant in Nevada, a new plant that came online this past November, and 8 MW resulting from improvements to Ormat's existing geothermal projects."

Ms. Bronicki continued, "Accomplishments in our recovered energy generation and products segments complemented our success in electricity. During the year, we announced several key contract wins including a new geothermal power plant in the Azores. More importantly, we announced several new orders and power purchase agreements for Recovered Energy Generation, including a new order from a western Canada pipeline company and an order from a cement plant in India. We also entered into two recovered energy agreements for electricity generated from recovered energy plants that Ormat is constructing along pipelines in the Midwestern United States and Washington State, respectively.

"In January 2006, we reached an agreement with the U.S. Navy for the use of their geothermal property for the construction of a new geothermal facility. This agreement, together with other leases that we secured during the year, increased the base upon which we will increase the pace of our organic growth beyond 2007."

Commenting on the outlook for 2006, Ms. Bronicki said, "We expect to complete construction of Desert Peak 2 in Nevada and Amatitlan in Guatemala, which together will add 35 MW to our electricity business. We also expect to add an additional 24 MW from enhancements to Mammoth, Ormesa and Galena. Additionally, we have commenced construction on the 22 MW OREG 1 project, the recovered energy project located along a Midwestern pipeline. These enhancements and construction projects represent a robust addition to our overall business and serve to further strengthen our foothold in the renewable energy sector."

"We expect our 2006 electricity segment revenue to be approximately $195 million. We also expect an additional $18 million of revenue from our share of electricity revenue generated by subsidiaries which are accounted for under the equity method. With regard to our products segment, we currently expect that our 2006 revenue will be between $60 million and $70 million."

Conference Call Details

Ormat will host a conference call to discuss its financial results and other matters discussed in this press release at 9:00 a.m. U.S. E.S.T. on Wednesday, March 8, 2006. The call will be available as a live, listen-only webcast at www.ormat.com . A 30-day archive of the webcast will be available approximately 2 hours after the conclusion of the live call. To listen to a replay, please call 1-877-519-4471 in the United States and Canada and 1-973-341-3080 for international callers and utilize code 7028002.

About Ormat Technologies

Ormat Technologies, Inc. is a vertically integrated company primarily engaged in the geothermal and recovered energy power business. The Company designs, develops, builds, owns and operates geothermal power plants. It also designs, develops and builds, and plans to own and operate, recovered energy- based power plants. Additionally, the Company designs, manufactures and sells geothermal and recovered energy power units and other power generating equipment, and provides related services. Ormat products and systems are covered by more than 70 patents. Ormat currently has operations in the United States, Israel, the Philippines, Guatemala, Kenya, and Nicaragua.

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