Ormat Technologies, Inc. (ORA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I want to welcome you all to the 2021 annual meeting of stockholders of Ormat Technologies. My name is Isaac Angel, Chairman of the Board, and I will act as the Chairman of this meeting. In light of the continued impact on the coronavirus and in consideration of medical and governmental recommendations, limiting the number of persons that may gather at public events, this is a virtual meeting conducted via live audio webcast. At this time, I call the meeting to order. There are 3 items of business on today's agenda. The election of 9 director nominees, the ratification of the appointment of the company's independent auditor for the fiscal year ending December 31, 2021, and the approval on an advisory basis of the compensation of our named executive officers. Also present at the meeting live online are our director nominees: Byron Wong, Dan Falk, David Granot, Dafna Sharir, Stanley Stern, Hidetake Takahashi, Albertus Bruggink and Mike Nikkel. Doron Blachar, our Chief Executive Officer; Assaf Ginzburg, our Chief Financial Officer; Jessica Woelfel, our Interim General Counsel, who will act secretary of the meeting and Etty Rosner, our Corporate Secretary. Also are present American Stock Transfer & Trust Company, our transfer agent, that has been appointed to act as inspector of election. Eitan Glazer, who is the partner at Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited, is also present at the meeting. Doron Blachar and Assaf Ginzburg has been appointed as proxies on behalf of the Board of Directors for today's annual meeting. Before we begin with the items to be voted on the meeting, I would like to thank Mrs. Ravit Barniv and Mr. Stan Koyanagi for their years of service and hard work as the Board members on behalf of the company. We will conduct the formal part of the meeting, and once the votes have been taken and polls are closed, the tabulated votes will be reported concluding the formal part of the meeting. Thereafter, we will try to answer appropriate questions from stockholders that are submitted during the meeting. Mr. Glazer, the representative from our registered public accounting firm, will also be available to answer appropriate questions. Please submit your questions during the meeting in the field provided on your virtual meeting screen. The poll for each matter upon which stockholders will vote at this meeting opened at 10:00 Eastern day time this morning and will remain open until announcement that the polls are closed. The Board of Directors set March 11, 2021, as the record date for the stockholders meeting. The Secretary will present the affidavit of mailing of the notice of meeting and the accompanying proxy materials and annual report. Jessi?

Mr. Chairman, I present the affidavit of mailing of Ormat Technologies Incorporated, which states that mailing of the notice of meeting and accompanying proxy materials and annual report commenced on March 25th to those individuals who are stockholders of record as of March 11, 2021. The record date for stockholders entitled to notice of this meeting, which is in accordance with the bylaws of the company. A copy of the notice of meeting and the affidavit of mailing will be incorporated into the minutes of this meeting.

Our first order of business at this meeting is to determine whether the shares were presented at the meeting, either in person or by proxy, are sufficient to constitute a quorum for the purpose of transaction business. Secretary, do you have a report?

Yes, they do. The stockholders list shows that holders of 55,983,341 shares of common stock of the corporation are entitled to vote at this meeting. We are informed by American Stock Transfer that they are represented in person online or by proxy a majority of the outstanding shares of common stock entitled to vote at this meeting.

Thank you. Because holders of a majority of the outstanding shares entitled to vote at this meeting are present in person, online or by proxy, I declare this meeting to be duly convened for purpose of transaction such businesses many properly come before it -- as may properly come before it. If you have given already -- if you have already given your proxy to management, you need to vote online since the person designated as proxy will vote for you as indicated on the proxy card. However, if you may revoke your proxy by voting only during the meeting, if you so desire, if you have not voted or if you want to change your vote, you may do so now online. The approval of proposal 1. The proposal to elect each of the 9 director nominees for directors require the majority of the votes cast by the holders of our common stock. The approval of proposal 2. The proposal to ratify the appointment of Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited, as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021, requires the majority of votes present in person or represented by proxy and entitled to vote on this proposal. With respect to proposal 3, the proposal to approve the compensation paid to the company's named executive directors, stockholder votes are advisory and will not be binding upon our Board of Directors. However, our compensation committee will take into account the outcome of the vote when considering future executive compensation arrangements. The proposal requires a majority of votes present in person or presented by proxy and entitled to vote on this proposal. I will now present each proposal. Once each proposal has been presented for consideration, I will declare the polls for all proposals closed. The first matter to be voted on is proposal #1. The election of each of 9 director nominees as directors of the company. The Board of Directors has recommended that stockholders vote for the election of each of the director nominee. The second matter to be voted on is proposal #2. The proposal to ratify the appointment of Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited, as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021. The Board of Directors has recommended that stockholders vote for the ratification of Kesselman & Kesselman as our independent registered public accounting firm for 2021. The third matter to be voted on is proposal #3. The proposal to approve in a nonbinding advisory vote, the compensation paid to the company's named executive officers. The Board of Directors has recommended that the stockholders vote for the approval of the compensation paid to our named executive directors. The polls for each of the proposals to be considered are now closed. All ballots and proxies have been submitted to the inspector and this concludes the business item on the agenda for this annual meeting. As a chairman of the meeting, recognize the votes on the proposal represented by the proxies solicited by the Board of Directors. The votes will now be tabulated, after which we will announce the results of the voting. Okay. I now ask the secretary to report the preliminary results of the voting.

We have been informed by the inspector of election that the ballots have been counted and that the majority of the votes cast voted to elect Isaac Angel, Albertus Bruggink, Dan Falk, David Granot Dafna Sharir, Stanley B. Stern, Hidetake Takahashi, Byron G. Wong and Mike Nikkel to the Board of Directors of the company. And that accordingly, these directors nominees have been duly elected as directors of the company to serve for the term expiring on the date of the company's 2022 Annual Meeting and until their successors have been duly elected and qualified. We have been further informed by the inspector of election that a majority of the shares of our voting stock entitled to vote present at this meeting, in person or represented by proxy, voted for the ratification of the appointment of Kesselman & Kesselman, a member of the firm of PricewaterhouseCoopers International Limited, as independent auditor of the company for the fiscal year ending December 31, 2021. And that, accordingly, the ratification of the appointment of Kesselman & Kesselman has been approved. We have been further informed by the inspector of election that a majority of the shares of our voting stock entitled to vote present at this meeting, in person or represented by proxy, voted for the approval on an advisory basis of the compensation of our named executive officers as disclosed in the proxy statement pursuant to Item 402 of Regulation S-K. And that accordingly, the compensation of our named executive officers has been approved. The inspector of election will file his report with respect to the results of the final voting in the minutes of this meeting.

This concludes the formal business of the meeting. I want to thank you for attending today's meeting. Since there is no further business or questions to come before the meeting, it is adjourned. Now we will go to the management presentation, Mr. Blachar?

I'm honored to be speaking to you in my first Annual General Meeting as Chief Executive Officer of Ormat. I assume this role during a period of tremendous challenges and uncertainty relating to the lingering impact of the COVID-19 pandemic. However, the resilience the company has demonstrated through these challenging times has made me incredibly optimistic about robust future as we have maintained a strong leadership position in the market with the strongest balance sheet in our history and multiple pathways for profitable growth. We just completed another strong year for Ormat with $85.5 million in net income attributable to the company's stockholders and $1.65 in earnings per share, both quite similar to the result of the last year despite a 5.5% decrease in total revenue due to the global pandemic. During the year, we continued to grow revenue in our liquidity segment due to added capacity and better performance of other projects in our portfolio and our energy storage revenue increased as well, growing to 2% of our total revenue for the year. This performance and our continued leadership enabled us to strengthen our balance sheet as we exited the year with more than $530 million in cash, cash equivalents and restricted cash. As a result, we entered 2021 well capitalized to execute our long-term growth. We view 2021 as an important transition year, as we have navigated the continued profound impact that pandemic has had on our product segment, and we developed additional facilities to support our electricity and store segments. Our goal is to increase our generating portfolios by 50% to approximately 1.5 gigawatts by 2023, with a significant contribution coming from our energy storage business. This represents up to approximate 29% increase in our geothermal and solar capacity and up to approximately 400% increase in our energy storage assets by the end of 2022. Our plan suggests that we can reach an annual run rate of $500 million in adjusted EBITDA towards the end of 2022, that we expect to continue to grow as we move forward with our plans in 2023 and onwards. While we expect a challenging year for our product segment, and as a result we are forecasting lower year-over-year revenue and a slight impact on our adjusted EBITDA, this segment remains an industry leader and provide Ormat with a competitive differentiator by making us the geothermal industry only vertically integrated company. In the short term, we are utilizing this important strategic asset to accelerate the expansion of our other 2 segments. The shifting capacity from customers who have put projects on hold while they deal with the more urgent pandemic-related challenges to our own projects. We can accelerate product development and do so cost effective. Ormat continues to lead in environmental, social and governance objectives as well. We will provide renewable energy, safely, economically and in an environmentally responsible manner around the world, enabling the increased use of renewable energy and increasing energy dependency for our customers. Access to cost-effective base load electricity is not just environmentally urgent, but also is critical to addressing poverty and social inequality by encouraging local economic growth and employment opportunities. In summary, 2020 was another successful year for Ormat, and I'm increasingly optimistic about Ormat's position. Our medium-term goal of increasing our generating portfolio by 50% will meaningfully bolster our competitive position. I would like to personally thank all our stakeholders and first and foremost our customers, shareholders and employees as well as the Ormat's management team. You will see meaningful progress in 2021 as we break ground and advance projects around the world. In particular, I think you will see growth in our storage offering as that segment becomes an increasingly important part of our future. The future of Ormat is bright.

This concludes our management presentation. Management will now respond to questions that have been submitted on the virtual annual meeting platform.

We have no questions on the platform.

We also have the representative of Kesselman & Kesselman, introduced earlier, is also available to answer appropriate questions submitted by the stockholders. But I don't see any questions. So I want to thank you all for attending today's meeting and for your continued support for Ormat Technologies, Inc. There is a question coming in. The question is any development regarding the issued statement issued on March 1, 2021, which is the hindered book claims. Do you believe that the constant decline in stock price that occurred around in February, beginning March 2021 was solely to [indiscernible] and filed in vendor claims. First of all, I cannot and will not relate to the stock price. On the other hand, as we indicated in our annual report and the press releases, there really is a special committee working within the company with outside counsels to this claims. I would like to believe there is no -- nothing real into these claims. But again, I will not relate to those and to the stock price. Any other questions?

No other questions are coming. Let's just give it another second and then we can...

Yes. Let's give it another second.

Let's check for another one. Okay, no questions.

Okay. Thank you for your question. And again, this concludes our meeting for today, and thank you very much for your ongoing support.

This concludes the meeting. You may now disconnect.