Welcome to Ormat Technologies, Inc. Investor Event - Tel Aviv March 9, 2016 Don A. Campbell Complex, Nevada, U.S. Green energy you can rely on
Disclaimer Information provided during this presentation 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 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 February 26, 2016. In addition, during this presentation, statements may be made that include a financial measure defined as non-gaap financial measures by the Securities and Exchange Commission, such as EBITDA and adjusted EBITDA. These measures may be different from non-gaap financial measures used by other companies. 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 EBITDA and adjusted EBITDA may provide meaningful supplemental information regarding liquidity measurement that both management and investors benefit from referring to this non-gaap financial measures in assessing Ormat Technologies liquidity, and when planning and forecasting future periods. This non-gaap financial measures may also facilitate management s internal comparison to the company s historical liquidity. EBITDA and Adjusted EBITDA are not a measurement of financial performance or liquidity under accounting principles generally accepted in the United States of America and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with accounting principles generally accepted in the United States of America. 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. All Rights Reserved. This document contains information proprietary to Ormat Technologies, Inc. Reproduction in any form without prior written permission is strictly prohibited 1
Introduction Market leader with proven track record in the geothermal sector Our mission is to become a leading global renewable energy provider 2 $billion Market Cap. 595 $million FY2015 Revenues Own & Operate nearly 700 MW 1,060 Employees Market Cap. is as of March 4, 2016 3
The Only Vertically Integrated Geothermal Player Products Segment Engineering Manufacturing Construction 34% of total revenues1 Local Utilities, Developers C&I (1) Five years average (2011-2015) 4
The Only Vertically Integrated Geothermal Player Electricity Segment Development Engineering Manufacturing Construction Operation 66% of total revenues1 Local Utilities (1) Five years average (2011-2015) 5
Management - Executing Change New management team in place since mid-2014 Accelerating Growth Changing Decision Making Process Improving Efficiencies 6
Foundation for Growth Corporate restructuring & asset monetization transactions Ormat Technologies, Inc. Ormat Systems, Inc. Ormat Nevada, Inc. Ormat International, Inc. Float increased to 78% Improve liquidity Simplified corporate structure Eliminated redundancies Northleaf equity investment Valuation reinforced the value of operational assets Strengthened balance sheet 7
Funding Increasing Shareholders Value Proactive growth initiatives to accelerate profitable growth Expansion to new activities Organic Growth M&A M&A Organic Growth Geographical & Technological expansion Improve efficiencies 2000 2005 2015 Rev.: ~$60M $238M $595M Acquisition (MW) Organic Growth (MW) 8
Funding Increasing Shareholders Value Expansion to new activities M&A Organic Growth Geographical & Technological expansion Improve efficiencies 9
Value Chain Improvements Increase efficiencies Development Engineering Manufacturing Construction Operation Reduce costs 10
Development Phased development Incremental development Minimizing resource risks Utilizing site potential Benefit from economies of scale 11
Engineering Organizational changes Structure Processes Ormat Energy Converter (OEC) Cost reduction New 4 stage turbine Increased efficiencies Turbine output power increase by 20% Improved air-cooled condenser Planned improvements Improve thermodynamic cycle by up to 5% Improve product engineering work flow and process 12
Manufacturing Reduce manufacturing lead-time Automation Reduce machining time Improve management control Improve procurement process Centralize global procurement 20% cost reduction of OEC purchasing volume Reduce time to market-from 12 to 8 months Centralized logistics Export and import CNC machines 13
Operation Reduce operating cost Shared control center Implementation East NV to cover west NV and OREGs Imperial Valley, California Improve management control Operation Cost 1 - East Nevada ($/MWh) 25.0 23.6 21.3 20.7 Stand Alone Project 2014 2015 2016E (1) Operation cost includes fixed O&M, variable O&M, field O&M, royalties, and related G&A. In 2015, the operating cost excludes one-time items. Relates only to East Nevada projects. 14
The Numbers Tell It All - Electricity Segment Reducing Operating Cost 1 ($/MWh) Increasing Adjusted EBITDA ($/MWh) 37 34 35 30 39 43 47 47 2012 2013 2014 2015 2012 2013 2014 2015 Generation (million MWh) 3.9 4.3 4.5 4.8 Adjusted EBITDA Margin 49% 56% 56% 60% 2012 2013 2014 2015 2012 2013 2014 2015 (1) Operating cost excludes depreciation 15
The Numbers Tell It All Reduction in equipment and construction cost Reducing the CapEx per MW from $4.5M-$5M to $4M-$4.5M Total Gross Margin 36% 37% 30% 26% Total Adjusted EBITDA Margin 49% 49% 45% 37% 2012 2013 2014 2015 2012 2013 2014 2015 16
Funding Increasing Shareholders Value Expansion to new activities M&A Organic Growth Geographical & Technological expansion in both segments Improve efficiencies 17
Market Share - Electricity Segment Most active global developer - with over 400 MW developed in the last decade MW 1200 Top 10 Geothermal owners & operators (MW) 1000 800 600 400 200 0 EDC (PNOC) (1) Ormat study based on presented public disclosure Chevron ENEL CFE Calpine Mighty River Power 18 Ormat Contact Energy Terra-Gen Cal Energy/BH Energy
Market Share - Products Segment Low-mid temperature geothermal binary market is led by Ormat MW 3500 3000 Major Geothermal Equipment Suppliers (MW & Project Count) # Projects 140 120 Global Installed Capacity by Technology Type 2500 2000 1500 1000 100 80 60 40 Steam 83% Binary 17% Ormat 84% Others 16% 500 20 0 Toshiba Mitsubishi Fuji Ormat Ansaldo/Tosi GE Alstom TAS 0 MW Operating Estimated Project Count (1) GEA 2015 Annual U.S. & Global Geothermal Power Production Report & Ormat 19
Market Opportunities for Geothermal Growth Industry estimate: potential is over 10x the global installed capacity of 13GW Europe 2.3 GW North America 3.6 GW Africa 0.6 GW Asia Pacific 3.9 GW LATAM 1.6 GW Oceana 1 GW Source: Hydrothermal Geothermal Resources Potential, EMERGING ENERGY RESEARCH, LLC. Global Geothermal Markets and Strategies: 2009 2020, May 2009. "Geothermal Power Generation in the World 2005 2010 Update Report" Ruggero Bertani Enel Green Power, via Dalmazia 15 00198 Roma (Italy) April 2010. 2015 Annual U.S. & Global Geothermal Power Production Report GEA Feb.2015. 20
Market Growth Drivers Energy Shortage Supportive Legislation Leadership 21
Growth Drivers - Electricity Shortage Lesotho DR of Congo Mozambique Malawi Kenya Tanzania Uganda Madagascar Burkina Faso Sudan Zambia Togo Ethiopia Benin Eritrea Botswana Zimbabwe Congo, Rep Namibia Angola Cameroon Nigeria Senegal Cote d'ivoire Ghana Gabon South Africa Morocco Tunisia Algeria Egypt Mauritius Libya Afghanistan Bangladesh Cambodia Myanmar Sri Lanka DPR Korea Nepal Indonesia India Pakistan Philippines Mongolia Thailand Laos East Timor Vietnam Malaysia China Singapore Haiti Nicaragua Bolivia Honduras Guatemala Peru Panama El Salvador Jamaica Ecuador Paraguay Dominican Republic Cuba Argentina Colombia Brazil Chile Venezuela Costa Rica 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 78% Electricity shortage (% of population) Africa Asia LATAM 68% 25% 18% 0% Source :The International Energy Agency s World Energy Outlook & POPULATION REFERENCE BUREAU, 2014 world population data sheet 22
Growth Drivers - Regulation Support U.S. Regulation Support Renewables Portfolio Standards California 50% by 2030 Hawaii 100% by 2045 Oregon - new bill to curb coal and set 50% RPS by 2040 passed Senate Tax incentives Tax credits Accelerated depreciation International Paris COP 21 195 countries are moving towards a low carbon sustainable future Tax incentives Kenya, Indonesia, Guatemala Feed in Tariff Kenya, Indonesia Financing 23
Growth Drivers - Leadership Collaboration with Toshiba Geothermal Combined Cycle Steam Binary (ORC) Geothermal Resource Temperature (ºC) 100 150 200 250 300 Liquid dominated 350 Steam dominated 24
Growth Drivers - Leadership Collaboration with Toshiba & Geothermal Combined Cycle Steam Binary (ORC) Geothermal Resource Temperature (ºC) 100 150 200 250 300 Liquid dominated 350 Steam dominated 25
Ormat s Geothermal Focus North America U.S. Mexico Europe Turkey Asia Indonesia China LATAM Guatemala Honduras Chile East Africa Kenya Ethiopia Tanzania Oceania New Zealand 26
Translating Market Opportunity to Numbers Estimated Potential 1 +2,000 MW by 2020 Asia, Africa & LATAM to lead the growth 2015 Ormat delivered ~75% of Binary Growth Collaboration with Toshiba may increase potential & market share (1) Ormat s estimate of geothermal potential for its binary plants in both segments 27
Growth Initiatives - Organic Growth and M&A Electricity Segment Added 29 MW in January 2016 Expect to add between 160 to 190 MW by YE 2018 Project Projected Capacity (MW) Expected COD U.S. - Tungsten 25-35 2017 U.S. - Dixie Meadows 25-35 2018 Project Indonesia - Sarulla (330 MW) Phase 1 Projected Capacity (MW) Expected COD 14 1 YE 2016 Phase 2 &3 28 1 2018/2019 Guadeloupe- Bouillante (M&A) 7 MW 1 H2 2016 Guadeloupe- Bouillante 4 MW 1 2017 Honduras, Platanares 35 MW 2017 Project Projected Capacity (MW) Expected COD Kenya, Menangai (35 MW project) 18 1 2018 1 Ormat s share (12.75% in Sarulla ; 51% in Menangai 85% in Bouillante) 28
Growth Initiatives - 30 Future Prospects Electricity Segment OR,4 NV, 11 CA,4 NM, 1 HI, 1 Chile - 1 Ethiopia - 4 U.S. - 21 Guatemala - 2 Kenya - 1 New Zealand - 1 29
Growth Initiatives - Strengthening Electricity Segment Electricity Products Exploration & development acceleration plan Strengthening electricity segment with its recurring revenue flows Electricity /Products segments revenue evolution in the next five years 30
Funding Increasing Shareholders Value Expansion to new activities M&A Organic Growth Geographical & Technological expansion Improve efficiencies 31
Proactively Looking For M&A Opportunities Established M&A team Geothermal Accretive acquisitions Transaction that will generate synergies Distressed, operational & underdeveloped assets New Activities Supplemental aspects to provide end to end solutions 32
Funding Increasing Shareholders Value Expansion to new activities M&A Organic Growth Geographical & Technological expansion Improve efficiencies 33
Expansion to New Activities - Long-Term Growth Leveraging our capabilities to exploit growth opportunities What activities Why Why Ormat Solar PV and /or Storage solutions Growing global demand driven by legislation and/or energy shortage Capabilities and global presence to provide reliable integration solutions 34
Evolving into an End-to-End Provider Technology Supplier System Integrator Project Developer EPC O&M Micro Grid / Utility C&I / Utility 35
Building Upon Our Financial Strength Doron Blachar, CFO Don A. Campbell Complex, Nevada, U.S. Green energy you can rely on
Strong Execution - Revenue ($million) Quarterly $502 187 $533 203 Annual $595 $560 177 219 $620- $640 210-220 $149 $171 56 73 93 98 315 330 382 376 410-420 Q4 2014 Q4 2015 2012 2013 2014 2015 2016E Electricity Products 37
Reducing the Impact of Commodity Prices Limited exposure currently; expect further significant reduction at the end of 2017 Portfolio (MW) as of 01/2016 4% 12% 2015 Revenues 5% 9% 84% Expected Portfolio (MW) as of 12/2017 3% 6% 91% 86% No Impact Oil Natural gas 38
Continued Improvements - Annual Gross Margin Combined Electricity Segment Product Segment 26% 30% 36% 37% 25% 29% 36% 36% 28% 31% 38% 39% 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 39
Strong Execution - Adjusted EBITDA ($million) Quarterly Annual By Segments FY 2015 $187 $241 $273 $291 $300- $310 23% 77% $68 $79 FY 2014 22% Q4 2014 Q4 2015 2012 2013 2014 2015 2016E Electricity 78% Product 40
Reducing Leverage Total Debt ($ million) Net Debt ($ million) $1,031 $1,078 $1,001 436 445 324 $920 280 $885 $970 $868 $685 595 633 677 640 2012 2013 2014 2015 2012 2013 2014 2015 Project Finance Corporate Debt 41
Strong Financial Metrics Net Debt to Capital Net Debt to Adjusted EBITDA (<3) 56% 57% 52% 39% 4.7x 4.0x 3.2x 2.4x 2012 2013 2014 2015 2012 2013 2014 2015 42
Well Positioned to Support Growth Approx. $380 million available cash to fund growth Cash, cash equivalent and restricted cash Borrowing capacity under committed lines of credit Growing cash from our existing portfolio Access to capital Project debt financing Cash from equity transactions Potential tax equity transactions McGinness, Campbell, Dixie Meadows and Tungsten New potential equity partnerships Low leverage *As of December 31, 2015 43
Portfolio Approach Geographical & Technological Expansions Portfolio approach - diversification Geographies Technologies (Geothermal, REG, Solar, Storage) Additional risk mitigation aspects Host country guarantee Project finance (OPIC, ADB, DEG and AFDB) Political Risk Insurance (MIGA) Competitive pricing Low incentive for breach of contract 44
Summary Isaac Angel, CEO Don A. Campbell Complex, Nevada, U.S. Green energy you can rely on
Investment Highlights Growth Improvements Shareholder Value New Activity Funding 46
Becoming A Leading Global Renewable Energy Provider Continue to Lead the Geothermal Market Expansion of Addressable Markets Geographical, Technological, Customer Base Accelerating Profitable Growth 47
Generating for Generations Don A. Campbell Complex, Nevada, U.S. Green energy you can rely on 48