Ormat Technologies, Ormat News, Investing in Ormat
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Although Ormat Technologies seems to be making a turnaround, investors may want to wait for a better entry point.
Although Ormat Technologies seems to be making a turnaround, investors may want to wait for a better entry point.
Ormat Technologies Inc (ORA) is engaged mainly in the geothermal and recovered energy power business and has a market cap of slightly over $2 billion. The company operates in two units, namely Electricity and Products. The Electricity segment develops, builds and operates geothermal and recovered energy-based power plants, apart from selling the electricity generated at its plants. The Products segment designs, manufactures, and sells equipment used to generate electricity from geothermal and recovered energy.
The Reno, Nevada-based company’s net income rose to $12.2 million, or $0.28 per diluted share, in the second quarter of 2008, from $8.5 million, or $0.22 per share, in the year-ago quarter. The earnings marginally beat the expectations of analysts surveyed by Thomson Financial. Although revenue for the quarter was down 4.6% at $80.2 million, this was broadly in-line with consensus expectations. While revenues at its Electricity division grew by almost 12%, the company’s product revenues plunged by close to 36%. Efforts to enhance capacity and improve the efficiency of existing plants enabled the electric segment to post a good performance.
Ormat Technologies indicated that from the projects that are scheduled to commence generating energy over the next couple of years, 101 megawatts of energy would come online by the end of 2008 and an additional 73 megawatts would be available by the end of next year.
The company closed the sale of 3,100,000 common shares in a public offering in mid-May, netting aggregate proceeds of roughly $149.6 million. Ormat Technologies aims to use a portion of or the entire proceeds to acquire additional geothermal and recovered energy assets.
The company has entered into a supply contract valued at about $16 million for a new geothermal power plant that is to be constructed in Turkey. The delivery would be made over 16 months. Ormat Technologies has also bagged a supply as well as a construction contract with a New Zealand company. The contracts taken together are valued at about $42 million and the power plant construction is planned to be completed within 23 months.
The company’s earnings prospects are bright. However, this may be a good time to follow a “wait and watch” approach.
Alternatio Cirqui, EconomyWatch.com Energy
