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0001296445 ORMAT TECHNOLOGIES, INC. false --12-31 Q3 2020 779 0 1,930,599 1,880,547 219,562 149,830 4,858 4,688 7,508 8,479 5,559 6,317 9,091 10,482 2,174 675 1,430 1,519 0.001 0.001 200,000,000 200,000,000 51,068,590 51,068,590 51,031,652 51,031,652 0.11 0 6 0.11 0 6 0.11 24 0 6 0.11 0 0.11 0 6 0.11 0 0 0 0 6 6 6 3 0 0 November 18, 2020 December 2, 2020 6 Contract assets and contract liabilities are presented as "Costs and estimated earnings in excess of billings on uncompleted contracts" and "Billings in excess of costs and estimated earnings on uncompleted contracts", respectively, on the consolidated balance sheets. The contract liabilities balance at the beginning of the year was fully recognized as product revenues during the nine months ended September 30, 2020 as a result of performance obligations have been satisfied. The foregoing cross currency swap transactions were designated as a cash flow hedge as further described under note 1 to the condensed consolidated financial statements. The changes in the CCS fair value are initially recorded in "Other comprehensive income (loss)" and a corresponding amount is reclassified out of "Accumulated other comprehensive income (loss)" to "Derivatives and foreign currency transaction gains (losses)" to offset the remeasurement of the underlying hedged transaction which also impacts the same line item in the condensed consolidated statements of operations and comprehensive income. Including unconsolidated investments 73,714 — — 73,714 Goodwill is primarily related to certain potential future economic benefits arising from assets acquired. Goodwill is allocated to the Energy Storage and Management Services segment and is deductible for tax purposes. Electricity segment assets include goodwill in the amount of $20.1 million and $19.9 million as of September 30, 2020 and 2019, respectively. ESMS segment assets include goodwill in the amount of $3.5 million and $0 million as of September 30, 2020 and 2019, respectively. No goodwill is included in the Product segment assets as of September 30, 2020 and 2019. Electricity segment revenues in the United States are all accounted under lease accounting except for $15.0 million and $47.4 million in the three and nine months ended September 30, 2020, respectively, that are accounted under ASC 606. For the three and nine months ended September 30, 2019, Electricity segment revenues in the United States are all accounted under lease accounting except for $13.5 million and $44.0 million, respectively, that are accounted under ASC 606. Product and ESMS segment revenues in the United States are accounted under ASC 606. The foregoing currency forward transactions were not designated as hedge transactions and are marked to market with the corresponding gains or losses recognized within "Derivatives and foreign currency transaction gains (losses)". These amounts relate to CCS contracts valued primarily based on the present value of the CCS future settlement prices for USD and NIS zero yield curves and the applicable exchange rate as of September 30, 2020. These amounts are included within "Other receivables", net of $8.3 million in cash collateral deposits on September 30, 2020 in the consolidated balance sheets. Including unconsolidated investments 91,277 — — 91,277 Electricity segment revenues in foreign countries are all accounted under lease accounting. Product segment revenues in foreign countries are accounted under ASC 606. Intangible assets of $17.7 million are related to a long-term energy storage resource adequacy agreement with SCE and are depreciated over a period of approximately 6.5 years. The remaining $2.0 million is related to certain other contract rights. These amounts relate to contingent receivables and payables relating to acquisition of the Guadeloupe power plant, valued primarily based on unobservable inputs and are included within "Prepaid expenses and other", "Accounts payable and accrued expenses" and "Other long-term liabilities" on September 30, 2020 and December 31, 2019 in the consolidated balance sheets with the corresponding gain or loss being recognized within "Derivatives and foreign currency transaction gains (losses)" in the condensed consolidated statements of operations and comprehensive income. These amounts relate to currency forward contracts valued primarily based on observable inputs, including forward and spot prices for currencies, net of contracted rates and then multiplied by notional amounts, and are included within "Other receivables" and "Accounts payable and accrued expenses", as applicable, on September 30, 2020 and December 31, 2019, in the condensed consolidated balance sheets with the corresponding gain or loss being recognized within "Derivatives and foreign currency transaction gains (losses)" in the consolidated statement of operations and comprehensive income. 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Table of Contents

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q 

 

 

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2020

 

or

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from              to

 

Commission file number: 001-32347

 

ORMAT TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

88-0326081

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

  

6140 Plumas Street, Reno, Nevada

89519-6075

(Address of principal executive offices)

(Zip Code)

 

(775) 356-9029

(Registrant’s telephone number, including area code)  

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☑     No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☑     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer ☑

Accelerated filer ☐    

Non-accelerated filer ☐    

Smaller reporting company ☐

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.  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes     ☑ No

 

As of October 30, 2020, the number of outstanding shares of common stock, par value $0.001 per share, was 51,068,590.

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

ORA

NYSE

 

 

 
Table of Contents

 

 

ORMAT TECHNOLOGIES, INC.

 

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2020

 

PART I — FINANCIAL INFORMATION

  
     

 ITEM 1.

FINANCIAL STATEMENTS

4
     

 ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS

 28
     

 ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

58
     

 ITEM 4.

CONTROLS AND PROCEDURES

58
   

PART II — OTHER INFORMATION

59
   

 ITEM 1.

LEGAL PROCEEDINGS

 59
     

 ITEM 1A.

RISK FACTORS

 59
     

 ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 60
     

 ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

 61
     

 ITEM 4.

MINE SAFETY DISCLOSURES

 61
     

 ITEM 5.

OTHER INFORMATION

 61
     

 ITEM 6.

EXHIBITS

 61
     

SIGNATURES

62

 

ii
Table of Contents

 

Certain Definitions

 

Unless the context otherwise requires, all references in this quarterly report to “Ormat”, “the Company”, “we”, “us”, “our company”, “Ormat Technologies” or “our” refer to Ormat Technologies, Inc. and its consolidated subsidiaries.

 

iii
Table of Contents
 

 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENT

 

 

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

  

September 30,
2020

  

December 31,
2019

 
  

(Dollars in thousands)

 

ASSETS

        

Current assets:

        

Cash and cash equivalents

 $197,309  $71,173 

Restricted cash and cash equivalents (primarily related to VIEs)

  92,233   81,937 

Receivables:

        

Trade less allowance for credit losses of $779 and $0, respectively (primarily related to VIEs)

  157,497   154,525 

Other

  23,349   22,048 

Inventories

  34,384   34,949 

Costs and estimated earnings in excess of billings on uncompleted contracts

  18,123   38,365 

Prepaid expenses and other

  9,696   12,667 

Total current assets

  532,591   415,664 

Investment in unconsolidated companies

  91,277   81,140 

Deposits and other

  39,293   38,284 

Deferred income taxes

  108,145   129,510 

Property, plant and equipment, net ($1,930,599 and $1,880,547 related to VIEs, respectively)

  2,036,821   1,971,415 

Construction-in-process ($219,562 and $149,830 related to VIEs, respectively)

  463,073   376,555 

Operating leases right of use ($4,858 and $4,688 related to VIEs, respectively)

  16,762   17,405 

Finance leases right of use ($7,508 and $8,479 related to VIEs, respectively)

  12,399   14,161 

Intangible assets, net

  197,002   186,220 

Goodwill

  23,584   20,140 

Total assets

 $3,520,947  $3,250,494 
         
LIABILITIES AND EQUITY        

Current liabilities:

        

Accounts payable and accrued expenses

 $144,473  $141,857 

Short term revolving credit lines with banks (full recourse)

  —   40,550 

Commercial paper

  —   50,000 

Billings in excess of costs and estimated earnings on uncompleted contracts

  7,683   2,755 

Current portion of long-term debt:

        

Limited and non-recourse (primarily related to VIEs):

        

Senior secured notes

  24,836   24,473 

Other loans

  35,369   34,458 

Full recourse

  17,768   76,572 

Operating lease liabilities

  3,026   2,743 

Finance lease liabilities

  3,148   3,068 

Total current liabilities

  236,303   376,476 

Long-term debt, net of current portion:

        

Limited and non-recourse (primarily related to VIEs):

        

Senior secured notes (less deferred financing costs of $5,559 and $6,317, respectively)

  320,936   339,336 

Other loans (less deferred financing costs of $9,091 and $10,482, respectively)

  293,415   317,395 

Full recourse:

        

Senior unsecured bonds (less deferred financing costs of $2,174 and $675, respectively)

  696,868   286,453 

Other loans (less deferred financing costs of $1,430 and $1,519, respectively)

  64,150   68,747 

Operating lease liabilities

  13,407   14,008 

Finance lease liabilities

  9,706   11,209 

Liability associated with sale of tax benefits

  112,950   123,468 

Deferred income taxes

  101,886   97,126 

Liability for unrecognized tax benefits

  12,643   14,643 

Liabilities for severance pay

  18,132   18,751 

Asset retirement obligation

  52,193   50,183 

Other long-term liabilities

  7,812   8,039 

Total liabilities

  1,940,401   1,725,834 
         

Commitments and contingencies (Note 9)

          
         

Redeemable noncontrolling interest

  8,743   9,250 
         

Equity:

        

The Company's stockholders' equity:

        

Common stock, par value $0.001 per share; 200,000,000 shares authorized; 51,068,590 and 51,031,652 issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

  51   51 

Additional paid-in capital

  920,210   913,150 

Retained earnings

  534,984   487,873 

Accumulated other comprehensive income (loss)

  (15,503)  (8,654)

Total stockholders' equity attributable to Company's stockholders

  1,439,742   1,392,420 

Noncontrolling interest

  132,061   122,990 

Total equity

  1,571,803   1,515,410 

Total liabilities, redeemable noncontrolling interest and equity

 $3,520,947  $3,250,494 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

4
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME

(Unaudited)

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands,
except per share data)

  

(Dollars in thousands,
except per share data)

 

Revenues:

                

Electricity

 $123,660  $123,978  $395,201  $395,965 

Product

  29,625   43,037   120,737   147,195 

Energy storage and management services

  5,662   3,484   10,022   10,442 

Total revenues

  158,947   170,499   525,960   553,602 

Cost of revenues:

                

Electricity

  76,670   80,124   219,988   231,442 

Product

  24,037   31,073   95,724   114,495 

Energy storage and management services

  4,210   3,807   9,014   12,844 

Total cost of revenues

  104,917   115,004   324,726   358,781 

Gross profit

  54,030   55,495   201,234   194,821 

Operating expenses:

                

Research and development expenses

  1,490   1,062   4,281   2,772 

Selling and marketing expenses

  4,076   3,783   13,724   10,924 

General and administrative expenses

  14,539   11,931   43,154   41,801 

Business interruption insurance income

  (17,761)  —   (20,743)  — 

Operating income

  51,686   38,719   160,818   139,324 

Other income (expense):

                

Interest income

  626   482   1,469   1,195 

Interest expense, net

  (21,756)  (20,076)  (58,814)  (62,816)

Derivatives and foreign currency transaction gains (losses)

  1,047   205   2,111   696 

Income attributable to sale of tax benefits

  7,014   4,056   16,818   16,457 

Other non-operating income (expense), net

  961   244   1,343   1,362 

Income from operations before income tax and equity in earnings (losses) of investees

  39,578   23,630   123,745   96,218 

Income tax (provision) benefit

  (15,361)  (9,626)  (45,275)  (20,136)

Equity in earnings (losses) of investees, net

  (1,119)  1,085   (196)  3,334 

Net income

  23,098   15,089   78,274   79,416 

Net income attributable to noncontrolling interest

  (7,419)  516   (13,516)  (3,927)

Net income attributable to the Company's stockholders

 $15,679  $15,605  $64,758  $75,489 

Comprehensive income:

                

Net income

  23,098   15,089   78,274   79,416 

Other comprehensive income (loss), net of related taxes:

                

Change in foreign currency translation adjustments

  1,321   (2,191)  1,597   (3,057)

Change in unrealized gains or losses in respect of the Company's share in derivatives instruments of unconsolidated investment

  947   (1,467)  (4,461)  (4,699)

Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge

  (3,548)  —   (3,548)  — 

Change in respect of derivative instruments designated for cash flow hedge

  36   18   66   58 

Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge

  (6)  (7)  (19)  (24)

Comprehensive income

  21,848   11,442   71,909   71,694 

Comprehensive income attributable to noncontrolling interest

  (7,751)  1,051   (14,000)  (3,254)

Comprehensive income attributable to the Company's stockholders

 $14,097  $12,493  $57,909  $68,440 
                 

Earnings per share attributable to the Company's stockholders:

                

Basic:

                

Net income

  0.31   0.31   1.27   1.49 

Diluted:

                

Net income

  0.31   0.30   1.26   1.48 

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

                

Basic

  51,072   50,933   51,051   50,816 

Diluted

  51,282   51,334   51,386   51,124 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

5
Table of Contents

 

 

ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

 

  

The Company's Stockholders' Equity

 
                  

Accumulated

             
          

Additional

      

Other

             
  

Common Stock

  

Paid-in

  

Retained

  

Income

      

Noncontrolling

  

Total

 
  

Shares

  

Amount

  

Capital

  

Earnings

  

(Loss)

  

Total

  

Interest

  

Equity

 
  

(Dollars in thousands, except per share data)

 

Balance at December 31,2018

  50,700  $51  $901,363  $422,222  $(3,799) $1,319,837  $125,259  $1,445,096 

Cumulative effect of changes in accounting principles

  —   —   —   (58)  —   (58)  —   (58)

Adjusted balance as of the beginning of the year

  50,700   51   901,363   422,164   (3,799)  1,319,779   125,259   1,445,038 

Stock-based compensation

  —   —   2,360   —   —   2,360   —   2,360 

Exercise of options by employees and directors

  52   —   —   —   —   —   —   — 

Cash paid to noncontrolling interest

  —   —   —   —   —   —   (4,146)  (4,146)

Cash dividend declared, $0.11 per share

  —   —   —   (5,579)  —   (5,579)  —   (5,579)

Net income

  —   —   —   25,946   —   25,946   1,855   27,801 

Other comprehensive income (loss), net of related taxes:

                                

Foreign currency translation adjustments

  —   —   —   —   (1,026)  (1,026)  (322)  (1,348)

Change in respect of derivative instruments designated for cash flow hedge

  —   —   —   —   22   22   —   22 

Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment (net of related tax of $0)

  —   —   —   —   (1,145)  (1,145)  —   (1,145)

Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (net of related tax of $6)

  —   —   —   —   (8)  (8)  —   (8)

Balance at March 31,2019

  50,752  $51  $903,723  $442,531  $(5,956) $1,340,349  $122,646  $1,462,995 
                                 

Balance as of the beginning of the period

  50,752  $51  $903,723  $442,531  $(5,956) $1,340,349  $122,646  $1,462,995 

Stock-based compensation

  —   —   2,643   —   —   2,643   —   2,643 

Exercise of options by employees and directors

  110   —   —   —   —   —   —   — 

Cash paid to noncontrolling interest

  —   —   —   —   —   —   (2,767)  (2,767)

Cash dividend declared, $0.11 per share

  —   —   —   (5,589)  —   (5,589)  —   (5,589)

Net income

  —   —   —   33,938   —   33,938   2,017   35,955 

Other comprehensive income (loss), net of related taxes:

                                

Currency translation adjustment

  —   —   —   —   298   298   184   482 

Loss in respect of derivative instruments designated for cash flow hedge

  —   —   —   —   18   18   —   18 

Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment (net of related tax of $0)

  —   —   —   —   (2,087)  (2,087)  —   (2,087)

Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (net of related tax of $6)

  —   —   —   —   (9)  (9)  —   (9)

Balance at June 30,2019

  50,862  $51  $906,366  $470,880  $(7,736) $1,369,561  $122,080  $1,491,641 
                                 

Balance as of the beginning of the period

  50,862  $51  $906,366  $470,880  $(7,736) $1,369,561  $122,080  $1,491,641 

Stock-based compensation

  —   —   2,228   —   —   2,228   —   2,228 

Exercise of options by employees and directors

  131   —   2,057   —   —   2,057   —   2,057 

Cash paid to noncontrolling interest

  —   —   —   —   —   —   (1,326)  (1,326)

Cash dividend declared, $0.11 per share

  —   —   —   (5,606)  —   (5,606)  —   (5,606)

Increase in noncontrolling interest in McGinnes Hills 3

  —   —   —   —   —   —   4,641   4,641 

Net income

  —   —   —   15,605   —   15,605   (805)  14,800 

Other comprehensive income (loss), net of related taxes:

                                

Currency translation adjustment

  —   —   —   —   (1,656)  (1,656)  (535)  (2,191)

Loss in respect of derivative instruments designated for cash flow hedge (net of related tax of $24)

  —   —   —   —   18   18   —   18 

Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment (net of related tax of $0)

  —   —   —   —   (1,467)  (1,467)  —   (1,467)

Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (net of related tax of $6)

  —   —   —   —   (7)  (7)  —   (7)

Balance at September 30,2019

  50,993  $51  $910,651  $480,879  $(10,848) $1,380,733  $124,055  $1,504,788 
                                 

Balance at December 31, 2019

  51,032  $51  $913,150  $487,873  $(8,654) $1,392,420  $122,990  $1,515,410 

Cumulative effect of changes in accounting principles

  —   —   —   (755)  —   (755)  —   (755)

Adjusted balance as of the beginning of the year

  51,032  $51  $913,150  $487,118  $(8,654) $1,391,665  $122,990  $1,514,655 

Stock-based compensation

  —   —   1,989   —   —   1,989   —   1,989 

Exercise of options by employees and directors

  4   —   —   —   —   —   —   — 

Cash paid to noncontrolling interest

  —   —   —   —   —   —   (3,007)  (3,007)

Cash dividend declared, $0.11 per share

  —   —   —   (5,614)  —   (5,614)  —   (5,614)

Increase in noncontrolling interest

  —   —   —   —   —   —   1,447   1,447 

Net income

  —   —   —   26,033   —   26,033   3,543   29,576 

Other comprehensive income (loss), net of related taxes:

                                

Foreign currency translation adjustments

  —   —   —   —   (258)  (258)  (387)  (645)

Change in respect of derivative instruments designated for cash flow hedge

  —   —   —   —   13   13   —   13 

Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment (net of related tax of $0)

  —   —   —   —   (4,755)  (4,755)  —   (4,755)

Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge

  —   —   —   —   (8)  (8)  —   (8)

Balance at March 31,2020

  51,036  $51  $915,139  $507,537  $(13,662) $1,409,065  $124,586  $1,533,651 
                                 

Balance as of the beginning of the period

  51,036  $51  $915,139  $507,537  $(13,662) $1,409,065  $124,586  $1,533,651 

Stock-based compensation

  —   —   2,264   —   —   2,264   —   2,264 

Exercise of options by employees and directors

  31   —   —   —   —   —   —   — 

Cash dividend declared, $0.11 per share

  —   —   —   (5,719)  —   (5,719)  —   (5,719)

Increase in noncontrolling interest in U.S. Geothermal

  —   —   —   —   —   —   1,307   1,307 

Net income

  —   —   —   23,046   —   23,046   1,982   25,028 

Other comprehensive income (loss), net of related taxes:

                                

Currency translation adjustment

  —   —   —   —   382   382   539   921 

Loss in respect of derivative instruments designated for cash flow hedge

  —   —   —   —   17   17   —   17 

Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment (net of related tax of $0)

  —   —   —   —   (653)  (653)  —   (653)

Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (net of related tax of $6)

  —   —   —   —   (5)  (5)  —   (5)

Balance at June 30,2020

  51,067  $51  $917,403  $524,864  $(13,921) $1,428,397  $128,414  $1,556,811 
                                 

Balance as of the beginning of the period

  51,067  $51  $917,403  $524,864  $(13,921) $1,428,397  $128,414  $1,556,811 

Stock-based compensation

  —   —   2,807   —   —   2,807   —   2,807 

Exercise of options by employees and directors

  2   —   —   —   —   —   —   — 

Cash paid to noncontrolling interest

  —   —   —   —   —   —   (3,749)  (3,749)

Cash dividend declared, $0.11 per share

  —   —   —   (5,559)  —   (5,559)  —   (5,559)

Net income

  —   —   —   15,679   —   15,679   7,064   22,743 

Other comprehensive income (loss), net of related taxes:

                                

Currency translation adjustment

  —   —   —   —   989   989   332   1,321 

Loss in respect of derivative instruments designated for cash flow hedge

  —   —   —   —   36   36   —   36 

Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment (net of related tax of $0)

  —   —   —   —   947   947   —   947 

Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge

  —   —   —   —   (3,548)  (3,548)  —   (3,548)

Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge

  —   —   —   —   (6)  (6)  —   (6)

Balance at September 30,2020

  51,069  $51  $920,210  $534,984  $(15,503) $1,439,742  $132,061  $1,571,803 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 

   

Nine Months Ended
September 30,

  
   

2020

    

2019

  
   

(Dollars in thousands)

  

Cash flows from operating activities:

                

Net income

   $ 78,274     $ 79,416  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation and amortization

     115,672       111,328  

Accretion of asset retirement obligation

     2,319       2,015  

Stock-based compensation

     7,060       7,231  

Amortization of deferred lease income

     —       (2,014 )

Income attributable to sale of tax benefits, net of interest expense

     (10,846 )     (7,738 )

Equity in losses (earnings) of investees

     196       (3,334 )

Mark-to-market of derivative instruments

     (1,612 )     (1,909 )

Loss on disposal of property, plant and equipment

     618       1,426  

Loss (gain) on severance pay fund asset

     (24 )     (862 )

Deferred income tax provision

     25,522       7,177  

Liability for unrecognized tax benefits

     (2,000 )     3,284  

Deferred lease revenues

     —       (470 )

Changes in operating assets and liabilities, net of businesses acquired:

                

Receivables

     (5,753 )     (60 )

Costs and estimated earnings in excess of billings on uncompleted contracts

     20,242       (995 )

Inventories

     565       3,780  

Prepaid expenses and other

     2,971       4,003  

Change in operating lease right of use asset

     2,695       5,620  

Deposits and other

     (1,277 )     (2,622 )

Accounts payable and accrued expenses

     2,617       14,237  

Billings in excess of costs and estimated earnings on uncompleted contracts

     4,928       (12,399 )

Liabilities for severance pay

     (619 )     576  

Change in operating lease liabilities

     (2,436 )     —  

Other long-term liabilities

     (222 )     (6,238 )

Net cash provided by operating activities

     238,890       201,452  

Cash flows from investing activities:

                

Capital expenditures

     (231,784 )     (190,530 )

Investment in unconsolidated companies

     (14,794 )     (3,096 )

Cash paid for business acquisition, net of cash acquired

     (43,321 )     —  

Decrease (increase) in severance pay fund asset, net of payments made to retired employees

     529       615  
Other investing activities     (3,600 )     —  

Net cash used in investing activities

     (292,970 )     (193,011 )

Cash flows from financing activities:

                

Proceeds from long-term loans, net of transaction costs

     419,262       132,847  

Proceeds from exercise of options by employees

     —       2,057  

Proceeds from the sale of limited liability company interest, net of transaction costs

     —       58,671  

Repayments of commercial paper and prepayment of loans

     (50,000 )     (6,098 )

Proceeds from revolving credit lines with banks

     1,249,400       1,311,500  

Repayment of revolving credit lines with banks

     (1,289,950 )     (1,470,500 )

Cash received from noncontrolling interest

     7,577       3,346  

Proceeds from issuance of commercial paper

     —       50,000  

Repayments of long-term debt

     (115,606 )     (52,997 )

Cash paid to noncontrolling interest

     (9,234 )     (9,399 )

Payments under finance lease obligations

     (2,205 )     (2,734 )

Deferred debt issuance costs

     (2,360 )     (4,566 )

Cash dividends paid

     (16,892 )     (16,774 )

Net cash provided by (used in) financing activities

     189,992       (4,647 )

Effect of exchange rate changes

     520       (1,252 )

Net change in cash and cash equivalents and restricted cash and cash equivalents

     136,432       2,542  

Cash and cash equivalents and restricted cash and cash equivalents at beginning of period

     153,110       177,495  

Cash and cash equivalents and restricted cash and cash equivalents at end of period

   $ 289,542     $ 180,037  

Supplemental non-cash investing and financing activities:

                

Increase (decrease) in accounts payable related to purchases of property, plant and equipment

   $ (995 )   $ 7,496  

 

The accompanying notes are an integral part of the consolidated financial statements.

 

7
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

NOTE 1 — GENERAL AND BASIS OF PRESENTATION

 

These unaudited condensed consolidated interim financial statements of Ormat Technologies, Inc. and its subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not contain all information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial position as of September 30, 2020, the condensed consolidated statements of operations and comprehensive income and the condensed consolidated statements of equity for the three and nine months ended September 30, 2020 and 2019 and the condensed consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019.

 

The financial data and other information disclosed in the notes to the condensed consolidated financial statements related to these periods are unaudited. The results for the periods presented are not necessarily indicative of the results to be expected for the year.

 

These condensed unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The condensed consolidated balance sheet data as of December 31, 2019 was derived from the Company’s audited consolidated financial statements for the year ended December 31, 2019 but does not include all disclosures required by U.S. GAAP.

 

Dollar amounts, except per share data, in the notes to these financial statements are rounded to the closest $1,000.

 

Energy storage assets portfolio purchase transaction

 

On July 20, 2020, the Company completed the acquisition of 100% of the 20MW/80MWh Pomona Energy Storage ("Pomona") facility in California from Alta Gas Power Holdings (U.S.) Inc. for total consideration of $43.3 million. The Pomona facility has been in commercial operation since December 2016 under a 10-year energy storage resource agreement with Southern California Edison Company ("SCE").

 

The Pomona facility is one of the largest battery storage assets in operation in the region and is the Company's first battery storage asset in California. The purchase increases the Company's operating portfolio to 73MW/136MWh and adds to its battery storage assets in New Jersey, New England and Texas.

 

The Company accounted for the transaction in accordance with Accounting Standard Codification ("ASC") 805, Business Combinations and following the transaction close date, consolidated the results of Pomona in accordance with ASC 810, Consolidation in its condensed consolidated financial statements.

 

The following table summarizes the purchase price allocation to the fair value of the assets acquired and liabilities assumed (in millions):

 

Trade receivables

 $0.8 

Other receivables

  0.2 

Property, plant and equipment, net

 

20.1

 

Intangible assets (1)

 

19.7

 

Goodwill (2)

  3.5 

Total assets acquired

 $44.3 
     

Liabilities assumed

 $(1.0)
     

Total assets acquired and liabilities assumed, net

 $43.3 

 

(1) Intangible assets of $17.7 million are related to a long-term energy storage resource adequacy agreement with SCE and are depreciated over a period of approximately 6.5 years. The remaining $2.0 million is related to certain other contract rights.

(2) Goodwill is primarily related to certain potential future economic benefits arising from assets acquired. Goodwill is allocated to the Energy Storage and Management Services segment and is deductible for tax purposes.

 

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

The amounts of revenues and earnings related to Pomona that are included in the Company's condensed consolidated statements of operations and comprehensive income for the three months ended September 30, 2020 since the acquisition date are $2.4 million and $1.1 million, respectively. Unaudited pro forma information is not included as the Company deemed the transaction to not qualify as a significant business combination.

 

Senior Unsecured Bonds - Series 4

 

On July 1, 2020, the Company concluded an auction tender and accepted subscriptions for New Israeli Shekels ("NIS") 1.0 billion aggregate principal amount of senior unsecured bonds (the “Senior Unsecured Bonds - Series 4”). The Senior Unsecured Bonds - Series 4 are denominated in NIS and converted to approximately $290 million using a cross-currency swap transaction shortly after the completion of such issuance. The Senior Unsecured Bonds - Series 4 bear interest at a fixed rate of 3.35% per annum, payable semi-annually in arrears starting December 2020 and will be repaid in 10 equal annual payments commencing June 2022 unless prepaid earlier by the Company pursuant to the terms and conditions of the trust instrument that governs the Senior Unsecured Bonds - Series 4. The proceeds from the Senior Unsecured Bonds - Series 4 were used to pay the total consideration of $43.3 million, net in the Pomona purchase transaction as further detailed above and to repay certain existing indebtedness with the balance being used to support the Company's growth plans.

 

Cross Currency Swap

 

Concurrently with the issuance of the Senior Unsecured Bonds - Series 4, the Company entered into a long-term cross currency swap (the "Cross Currency Swap" or "CCS") with the objective of hedging the currency rate fluctuations related to the aggregated principal amount and interest of the Senior Unsecured Bonds - Series 4 at an average fixed rate of 4.34%. The terms of the Cross Currency Swap match those of the Senior Unsecured Bonds - Series 4, including the notional amount of the principal and interest payment dates. The Company designated the Cross Currency Swap as a cash flow hedge as per ASC 815, Derivatives and Hedging and accordingly measures the Cross Currency Swap instrument at fair value. The changes in the Cross Currency Swap fair value are initially recorded in Other Comprehensive Income (Loss) and reclassified to Derivatives and foreign currency transactions gains (losses) in the same period or periods during which the hedged transaction affects earnings and is presented in the same line item in the condensed consolidated statements of operations and comprehensive income as the earnings effect of the Senior Unsecured Bonds - Series 4.

 

Senior Unsecured Bonds - Series 3

 

On April 6, 2020, the Company concluded an auction tender and accepted subscriptions for an additional aggregate principal amount of approximately $50 million of its Series 3 Senior Unsecured Bonds (the “Additional Series 3 Bonds”). The Additional Series 3 Bonds will mature in September 2022 and bear interest at a fixed rate of 4.45% per annum, payable semi-annually in arrears. The Additional Series 3 Bonds will be repaid at maturity in a single bullet payment, unless earlier prepaid by the Company pursuant to the terms and conditions of the trust instrument that governs such Senior Unsecured Bonds.

 

On April 20, 2020, the Company concluded an additional auction tender and accepted subscriptions for an aggregate principal amount of approximately $14.5 million of its Series 3 Senior Unsecured Bonds (the “Second Addition to Series 3 Bonds”). The Second Addition to Series 3 Bonds will mature in September 2022 and bear interest at a fixed rate of 4.45% per annum, payable semi-annually in arrears. The Second Addition to Series 3 Bonds will be repaid at maturity in a single bullet payment, unless earlier prepaid by the Company pursuant to the terms and conditions of the trust instrument that governs such Senior Unsecured Bonds.

 

Additionally, on May 13, 2020, the Company concluded an additional auction tender and accepted subscriptions for an aggregate principal amount of approximately $15.3 million under Series 3 Senior Unsecured Bonds (the “Third Addition to Series 3 Bonds”). The Third Addition to Series 3 Bonds will mature in September 2022 and bear interest at a fixed rate of 4.45% per annum, payable semi-annually in arrears. The Third Addition to Series 3 Bonds will be repaid at maturity in a single bullet payment, unless earlier prepaid by the Company pursuant to the terms and conditions of the trust instrument that governs such Senior Unsecured Bonds.

 

9
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

In September 2020, the Company fully repaid the Senior Unsecured Bonds - Series 2 that were issued in September 2016 for an aggregate amount of $67 million.

 

Senior Unsecured Loan

 

In April 2020, the Company entered into a second addendum (the “Second Addendum”) to the loan agreement with the Migdal Group dated March 22, 2018. The Second Addendum provides for an additional loan by the lenders to the Company in an aggregate principal amount of $50.0 million (the “Second Addendum Migdal Loan”). Of the Second Addendum Migdal Loan, $31.5 million will be repaid in 15 equal semi-annual payments commencing on September 15, 2021 and ending on September 15, 2028. The principal amount of the Second Addendum Migdal Loan of $18.5 million will be repaid in one bullet payment on March 15, 2029. The Second Addendum Migdal Loan bears interest at a fixed rate of 5.44% per annum, payable semi-annually in arrears, subject to adjustment in certain circumstances. The Second Addendum Migdal Loan was entered into under substantially the same terms and conditions of the Migdal Loan Agreement.

 

COVID-19 consideration

 

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus ("COVID-19") a pandemic. The Company has implemented significant measures in order to meet government requirements and preserve the health and safety of its employees, including by working remotely and adopting separate shifts in its power plants, manufacturing facilities and other locations while at the same time trying to continue operations at close to full capacity in all locations. In addition, the Company focused efforts to adjusting its operations to mitigate the impact of COVID-19 including managing its global supply chain risks and enhancing its liquidity profile. In the first quarter of 2020, the Company took prompt steps to manage its expenses including responsible cost cutting measures. In addition, in order to support its capital expenditure and growth plans, in the second quarter and July 2020, the Company raised more than $400 million through long term loans as described above. While the extent and duration of the economic downturn from the COVID-19 pandemic remains unclear, the Company has considered, among other things, whether the global operational disruptions indicate a change in circumstances that may trigger asset impairments and whether it needs to revisit accounting estimates and projections or its expectations about collectability of receivables. Additionally, the Company has considered the potential impacts on its fair value disclosures and on its internal control over financial reporting. During the second and third quarters of 2020, the Company's power plants, manufacturing and storage facilities have been operating at close to full capacity and there was no significant direct impact on the Company's operations as a result of the pandemic or the related economic downturn. In the Product segment, the Company experienced a decline in backlog, which it believes resulted mainly due to the impact of COVID-19 and the unwillingness of potential customers to enter into new commitments at this time. While significant uncertainty still exists concerning the magnitude of the impact and duration of the COVID-19 pandemic on the global economy, the Company has determined that there was no triggering event for an impairment with respect to any of its assets nor has there been an adverse change in the probability related to the collectability of its receivables. The Company continues to assess the potential impact of the global economic situation on its consolidated financial statements.

 

Puna

 

On May 3, 2018, the Kilauea volcano located in close proximity to the Company's 38 MW geothermal power plant in the Puna district of Hawaii's Big Island erupted following a significant increase in seismic activity in the area. Before it stopped flowing, the lava covered the wellheads of three geothermal wells, monitoring wells and the substation of the Puna complex, as well as an adjacent warehouse that stored a drilling rig. The insurance policy coverage for property and business interruption is provided by a consortium of insurers some of which denied the full amount of our claim asserting that our insurance policy has coverage limitations. During the first nine months of 2020, the Company recognized business interruption income of $28.6 million which was included in cost of revenues up to the amount covering the related costs and the remainder, totaling $20.7 million, was included in business interruption insurance income under operating expenses in the consolidated statements of operations and comprehensive income. During the third quarter of 2020, the Company recognized business interruption insurance income of $20.4 million which was included in cost of revenues up to the amount covering the related costs and the remainder, totaling $17.8 million, was included in business interruption insurance income under operating expenses in the consolidated statements of operations and comprehensive income. During the first nine months of 2020, the Company received $4.7 million in property damage insurance proceeds, of which $0.6 was recorded in the statements of operations under non-operating income. The Company has filed a lawsuit against those insurers that have not accepted its insurance claim.

 

As of November 2020, construction of the electrical substation and electrical transmission lines at the Puna power plant is completed and the power plant is currently connected to the transmission lines. On the field side, the Company connected one new production well to the power plant and is in the process of connecting a second production well. The Company expects to start generating power in the next few weeks with a gradual increase in generation to 29 MW by the end of the year, although the exact timing remains uncertain.

 

10
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

In December 2019, Puna Geothermal Venture ("PGV") and Hawaii Electric Light Company's ("HELCO") subsidiary reached an agreement on an amended and restated power purchase agreement ("PPA") for dispatchable geothermal power sold from the Puna complex. The new PPA, which is subject to Public Utility Commission approval, extends the term until 2052 with an increased contract capacity of 46MW and a fixed price with no escalation, regardless of changes to fossil fuel pricing. The Commercial Operation Date ("COD") of the new 8MW plant is expected during 2022. The existing PPA remains in effect, with current terms, until the expansion is completed, and the new plant reaches its COD.

 

The Company continues to assess the accounting implications of this event on the assets and liabilities on its consolidated balance sheets and whether an impairment will be required. Any significant damage to the geothermal resource or continued shut-down following the lava event at the Puna facilities could have an adverse impact on the power plant's electricity generation and availability, which in turn could have a material adverse impact on the Company's business and results of operations. 

 

Write-offs of unsuccessful exploration activities

 

There were no write-offs of unsuccessful exploration activities for the three and nine months ended September 30, 2020 and 2019.

 

Reconciliation of Cash and cash equivalents and restricted cash and cash equivalents

 

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents as reported on the balance sheet to the total of the same amounts shown on the statement of cash flows:

 

  

September 30,

  

December 31,

  

September 30,

 
  

2020

  

2019

  

2019

 
  

(Dollars in thousands)

 

Cash and cash equivalents

 $197,309  $71,173  $97,602 

Restricted cash and cash equivalents

  92,233   81,937   82,435 

Total Cash and cash equivalents and restricted cash and cash equivalents

 $289,542  $153,110  $180,037 

 

Concentration of credit risk

 

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts receivable.

 

The Company places its temporary cash investments with high credit quality financial institutions located in the United States (“U.S.”) and in foreign countries. At September 30, 2020 and December 31, 2019, the Company had deposits totaling $27.3 million and $12.9 million, respectively, in ten U.S. financial institutions that were federally insured up to $250,000 per account. At September 30, 2020 and December 31, 2019, the Company’s deposits in foreign countries amounted to approximately $99.3 million and $84.8 million, respectively.

 

At September 30, 2020 and December 31, 2019, accounts receivable related to operations in foreign countries amounted to approximately $129.0 million and $118.8 million, respectively. At September 30, 2020 and December 31, 2019, accounts receivable from the Company’s primary customers, which each accounted for revenues in excess of 10% of total consolidated revenues for the nine months ended September 30, 2020 or 2019, amounted to approximately 60% and 58% of the Company’s trade receivables, respectively.

 

11
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

The Company's revenues from its primary customers as a percentage of total revenues are as follows:

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Sierra Pacific Power Company and Nevada Power Company

  15.4

%

  15.1

%

  17.1

%

  16.7

%

Southern California Public Power Authority (“SCPPA”)

 

19.5

   16.7   19.8

 

  17.7

 

Kenya Power and Lighting Co. Ltd. ("KPLC")

  18.2

 

  18.0

 

  16.5

 

  16.6

 

 

The Company has historically been able to collect on substantially all of its receivable balances. As of September 30, 2020, the amount overdue from KPLC was $52.9 million of which $13.6 million was paid in October 2020. These amounts represent an average of 83 days overdue. The Company believes it will be able to collect all past due amounts in Kenya. This belief is supported by the fact that in addition to KPLC's obligations under its power purchase agreement, the Company holds a support letter from the Government of Kenya that covers certain cases of KPLC non-payment (such as where caused by government actions/political events).  Additionally, on April 17, 2020, the company received from KPLC a notice declaring a force majeure event in Kenya due to the impact of COVID-19 and purporting to reduce the Olkaria complex’s contracted capacity from 150 MW to 133.9 MW. This notice, which had an immaterial impact on revenue, was withdrawn by KPLC in early September 2020. In addition, the Company experienced a higher rate of curtailments in the second quarter of 2020 by KPLC in the Olkaria complex that was reduced in the third quarter of 2020. The impact of the curtailments is limited as the structure of the PPA secures the vast majority of the Company's revenues with fixed capacity payments unrelated to the electricity actually generated.

 

In Honduras, the Company has been able to successfully collect an overdue debt from Empresa Nacional de Energía Eléctrica ("ENEE") of $20.1 million that was related to the period from October 2018 to April 2019. However, due to continuing restrictive measures related to the COVID-19 pandemic in Honduras, the Company may experience delays in collection. As of September 30, 2020, the total amount overdue from ENEE was $5.8 million, of which the Company received payment of $2.9 million in October 2020. In addition, on April 30, 2020, the Company also received from ENEE a notice declaring a force majeure event in Honduras due to the impact of COVID-19. The Company has not identified any impact on its consolidated financial statements as a result of this notice.

 

The Company may experience delays in collection in other locations due to the restrictive measures related to the COVID-19 pandemic which were imposed globally to different extents.

 

Revenues from contracts with customers

 

Contract assets related to our Product segment reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities related to the Company's Product segment reflect payments received in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on the terms established in the contracts. Total contract assets and contract liabilities as of September 30, 2020 and December 31, 2019 are as follows:

 

  

September 30,

  

December 31,

 
  

2020

  

2019

 
  

(Dollars in thousands)

 

Contract assets (*)

 $18,123  $38,365 

Contract liabilities (*)

 $(7,683) $(2,755)

 

(*) Contract assets and contract liabilities are presented as "Costs and estimated earnings in excess of billings on uncompleted contracts" and "Billings in excess of costs and estimated earnings on uncompleted contracts", respectively, on the consolidated balance sheets. The contract liabilities balance at the beginning of the year was fully recognized as product revenues during the nine months ended September 30, 2020 as a result of performance obligations having been satisfied.

 

On September 30, 2020, the Company had approximately $49.5 million of remaining performance obligations not yet satisfied or partly satisfied related to our Product segment. The Company expects to recognize approximately 100% of this amount as Product revenues during the next 24 months.

 

12
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

Leases in which the Company is a lessor

 

The table below presents the lease income recognized as a lessor:

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Lease income relating to lease payments from operating leases

 $108,619  $110,461  $347,778  $351,953 

 
 

NOTE 2 — NEW ACCOUNTING PRONOUNCEMENTS

 

New accounting pronouncements effective in the nine months period ended September 30, 2020

 

Financial Instruments—Credit Losses

 

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-13, Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. This guidance replaces the current incurred loss impairment methodology. Under the new guidance, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects its current estimate of credit losses expected to be incurred over the life of the financial instrument based on historical experience, current conditions and reasonable and supportable forecasts. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. ASU 2018-19 clarifies that receivables from operating leases are accounted for using the lease guidance and not as financial instruments. The guidance became effective on January 1, 2020, including interim periods within that year and requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Under the modified retrospective method of adoption, prior year reported results are not restated. The Company has performed its analysis of the impact on its financial instruments that are within the scope of this guidance, primarily cash and cash equivalents and restricted cash and cash equivalents, receivables (excluding those accounted under lease accounting) and costs and estimated earnings in excess of billings on uncompleted contracts, based on class of financing receivables which share the same or similar risk characteristics such as customer type and geographic location, among others. The Company has estimated the expected credit losses for each class of financing receivables by applying the related corporate default rate which corresponds to the credit rating of the specific customer or class of financing receivables. For trade receivables, the Company applied this methodology using aging schedules reflecting how long the receivables have been outstanding. The Company has also considered the existence of credit enhancement arrangements that may mitigate the credit risk of its financial receivables in estimating the applicable corporate default rate. The Company adopted this update effective January 1, 2020 and recorded a cumulative-effect adjustment to its retained earnings as of that date of approximately $0.8 million. While significant uncertainty still exists concerning the magnitude of the impact and duration of the COVID-19 pandemic on the global economy, the Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted.

 

13
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

The following table describes the changes in the allowance for expected credit losses for the three and nine months ended September 30, 2020 (all related to trade receivables):

 

  

Three Months
Ended
September 30,

  

Nine Months
Ended
September 30,

 
  

2020

  

2020

 
  

(Dollars in thousands)

 
         

Beginning balance of the allowance for expected credit losses

 $779  $755 

Provision for expected credit losses for the period

  —   24 

Ending balance of the allowance for expected credit losses

 $779  $779 

 

New accounting pronouncements effective in future periods 

 

Accounting for Income Taxes

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019- 12 is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC 740. The standard is effective for annual periods beginning after December 15, 2020 and interim periods within. Early adoption is permitted although the Company had not early adopted ASU 2019-12 as of September 30, 2020. The Company does not anticipate ASU 2019-12 will have a material impact on its consolidated financial statements.

 

Reference Rate Reform

 

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as the London Interbank Offered Rate ("LIBOR") reference rate is scheduled to be discontinued on December 31, 2021. The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Modifications of contracts within the scope of Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate. The amendments in this Update are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the amendments in this Update must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The Company evaluated the impact of the transition from LIBOR, and currently believes that the transition will not have a material impact on its consolidated financial statements.

 

 

NOTE 3 — INVENTORIES

 

Inventories consist of the following:

 

  

September 30,

  

December 31,

 
  

2020

  

2019

 
  

(Dollars in thousands)

 

Raw materials and purchased parts for assembly

 $19,585  $21,942 

Self-manufactured assembly parts and finished products

  14,799   13,007 

Total inventories

 $34,384  $34,949 

 

14
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

 

NOTE 4— FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received upon selling an asset or paid upon transferring a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below:

 

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

 

Level 2 — Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

 

Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

The following table sets forth certain fair value information at September 30, 2020 and December 31, 2019 for financial assets and liabilities measured at fair value by level within the fair value hierarchy, as well as cost or amortized cost. As required by the fair value measurement guidance, assets and liabilities are classified in their entirety based on the lowest level of inputs that is significant to the fair value measurement.

 

      

September 30, 2020

 
      

Fair Value

 
  

Carrying Value at September 30, 2020

  

Total

  

Level 1

  

Level 2

  

Level 3

 
  

(Dollars in thousands)

 

Assets:

                    

Current assets:

                    

Cash equivalents (including restricted cash accounts)

 $37,787  $37,787  $37,787  $—  $— 

Derivatives:

                    

Contingent receivable (1)

  106   106   —   —   106 

Currency forward contracts (2)

  1,974   1,974   —   1,974   — 

Liabilities:

                    

Current liabilities:

                    

Derivatives:

                    

Contingent payables (1)

  (3,029)  (3,029)  —   —   (3,029)

Cross currency swap (3)

  (2,790)  (2,790)  —   (2,790)  — 
  $34,048  $34,048  $37,787  $(816) $(2,923)

 

15
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

      

December 31, 2019

 
      

Fair Value

 
  

Carrying
Value at
December
31, 2019

  

Total

  

Level 1

  

Level 2

  

Level 3

 
  

(Dollars in thousands)

 

Assets

                    

Current assets:

                    

Cash equivalents (including restricted cash accounts)

 $28,316  $28,316  $28,316  $—  $— 

Derivatives:

                    

Contingent receivables (1)

  102   102   —   —   102 

Currency forward contracts (2)

  362   362   —   362   — 

Liabilities:

                    

Current liabilities:

                    

Derivatives:

                    

Contingent payable (1)

  (3,359)  (3,359)  —   —   (3,359)
  $25,421  $25,421  $28,316  $362  $(3,257)

 

 

1.

These amounts relate to contingent receivables and payables relating to acquisition of the Guadeloupe power plant, valued primarily based on unobservable inputs and are included within “Prepaid expenses and other”, “Accounts payable and accrued expenses” and “Other long-term liabilities” on September 30, 2020 and December 31, 2019 in the consolidated balance sheets with the corresponding gain or loss being recognized within "Derivatives and foreign currency transaction gains (losses)" in the condensed consolidated statements of operations and comprehensive income.

 

 

2.

These amounts relate to currency forward contracts valued primarily based on observable inputs, including forward and spot prices for currencies, net of contracted rates and then multiplied by notional amounts, and are included within “Other receivables” and “Accounts payable and accrued expenses”, as applicable, on September 30, 2020 and December 31, 2019, in the condensed consolidated balance sheets with the corresponding gain or loss being recognized within “Derivatives and foreign currency transaction gains (losses)” in the consolidated statement of operations and comprehensive income.

 

 

3.

These amounts relate to CCS contracts valued primarily based on the present value of the CCS future settlement prices for USD and NIS zero yield curves and the applicable exchange rate as of September 30, 2020. These amounts are included within “Other receivables”, net of $8.3 million in cash collateral deposits on September 30, 2020 in the consolidated balance sheets.

 

The amounts set forth in the tables above include investments in debt instruments and money market funds (which are included in cash equivalents). Those securities and deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in an active market.

 

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

The following table presents the amounts of gain (loss) recognized in the consolidated statements of operations and comprehensive income on derivative instruments (in thousands):

 

    

Amount of recognized
gain (loss)

 

Amount of recognized
gain (loss)

Derivatives not designated as
hedging instruments

 

Location of recognized gain
(loss)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

    

2020

 

2019

 

2020

 

2019

 
                

Currency forward contracts (1)

 

Derivative and foreign currency transaction gains (losses)

 $424 $941 $2,949 $2,640 
                

Derivatives designated as cash flow hedging instruments

               
                

Cross currency swap (2)

 

Derivative and foreign currency transaction gains (losses)

 $758 $— $758 $— 

 

(1) The foregoing currency forward transactions were not designated as hedge transactions and are marked to market with the corresponding gains or losses recognized within “Derivatives and foreign currency transaction gains (losses)”.

 

(2) The foregoing cross currency swap transactions were designated as a cash flow hedge as further described under note 1 to the condensed consolidated financial statements. The changes in the CCS fair value are initially recorded in "Other comprehensive income (loss)" and a corresponding amount is reclassified out of "Accumulated other comprehensive income (loss)" to "Derivatives and foreign currency transaction gains (losses)" to offset the remeasurement of the underlying hedged transaction which also impacts the same line item in the condensed consolidated statements of operations and comprehensive income.

 

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 during the nine months ended September 30, 2020.

 

The following table presents the effect of derivative instruments designated as cash flow hedges on the condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2020:

 

  

Balance in Other
comprehensive income
(loss) beginning of
period

  

Gain or (loss)
recognized in Other
comprehensive income
(loss)

  

Amount reclassified
from Other
comprehensive income
(loss) into earnings

  

Balance in Other
comprehensive income
(loss) end of period

 

Cash flow hedge:

                

Cross currency swap

 $—  $(2,790) $(758) $(3,548)

 

The estimated net amount of existing gain (loss) that is reported in "Accumulated other comprehensive income (loss)" as of September 30, 2020 that is expected to be reclassified into earnings within the next 12 months is immaterial. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flow is from the transaction commencement date through June 2031.

 

17
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

The fair value of the Company’s long-term debt approximates its carrying amount, except for the following: 

 

  

Fair Value

  

Carrying Amount

 
  

September 30,
2020

  

December 31,
2019

  

September 30,
2020

  

December 31,
2019

 
  

(Dollars in millions)

  

(Dollars in millions)

 

Olkaria III Loan - OPIC

 $198.7  $202.1  $179.2  $192.6 

Olkaria III plant 4 Loan - DEG 2

  43.8   43.8   40.0   42.5 

Olkaria III plant 1 Loan - DEG 3

  38.7   38.8   34.9   37.1 

Platanares Loan - OPIC

  115.4   115.3   98.3   104.5 

Amatitlan Loan

  24.4   26.4   23.6   26.3 

Senior Secured Notes:

                

OFC 2 LLC ("OFC 2")

  214.3   210.9   192.3   203.0 

Don A. Campbell 1 ("DAC 1")

  80.8   78.5   74.5   78.2 

USG Prudential - NV

  32.8   30.6   27.9   28.4 

USG Prudential - ID

  18.1   18.6   18.5   19.6 

USG DOE

  45.5   45.0   38.1   40.8 

Senior Unsecured Bonds

  557.9   205.7   508.6   204.3 

Senior Unsecured Loan

  228.9   161.3   200.0   150.0 

Plumstriker

 

19.7

   21.7   19.7   21.6 

Other long-term debt

  16.9   16.3   17.1   17.4 

 

18
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

The fair value of the long-term debt is determined by a valuation model, which is based on a conventional discounted cash flow methodology and utilizes assumptions of current borrowing rates. The fair value of revolving lines of credit is determined using a comparison of market-based price sources that are reflective of similar credit ratings to those of the Company.

 

As disclosed above under Note 1 to the condensed consolidated financial statements, the outbreak of the COVID-19 pandemic has resulted in a global economic downturn and market volatility that may have an impact on the estimated fair value of the Company's long-term debt. While interest rates on U.S. Treasury securities have declined and may continue to decline as a result of the COVID-19 pandemic, other components of the Company's borrowing rates have increased and may continue to increase as the global economic situation evolves, all of which have a direct impact on the fair value of the Company's long-term debt.

 

The carrying value of financial instruments such as revolving lines of credit and deposits approximates fair value.

 

The following table presents the fair value of financial instruments as of September 30, 2020: 

 

  

Level 1

  

Level 2

  

Level 3

  

Total

 
  

(Dollars in millions)

 

Olkaria III - OPIC

 $—  $—  $198.7  $198.7 

Olkaria III plant 4 Loan - DEG 2

  —   —   43.8   43.8 

Olkaria III plant 1 Loan - DEG 3

  —   —   38.7   38.7 

Platanares Loan - OPIC

  —   —   115.4   115.4 

Amatitlan Loan

  —   24.4   —   24.4 

Senior Secured Notes:

                

OFC 2 Senior Secured Notes

  —   —   214.3   214.3 

DAC 1 Senior Secured Notes

  —   —   80.8   80.8 

USG Prudential - NV

  —   —   32.8   32.8 

USG Prudential - ID

  —   —   18.1   18.1 

USG DOE

  —   —   45.5   45.5 

Senior Unsecured Bonds

  —   —   557.9   557.9 

Senior Unsecured Loan

  —   —   228.9   228.9 

Plumstriker

  —   19.7   —   19.7 

Other long-term debt

  —   —   16.9   16.9 

Deposits

  14.8   —   —   14.8 

 

19
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

The following table presents the fair value of financial instruments as of December 31, 2019:

 

  

Level 1

  

Level 2

  

Level 3

  

Total

 
  

(Dollars in millions)

 

Olkaria III Loan - OPIC

 $—  $—  $202.1  $202.1 

Olkaria IV - DEG 2

  —   —   43.8   43.8 

Olkaria IV - DEG 3

  —   —   38.8   38.8 

Platanares Loan - OPIC

  —   —   115.3   115.3 

Amatitlan Loan

  —   26.4   —   26.4 

Senior Secured Notes:

                

OFC 2 Senior Secured Notes

  —   —   210.9   210.9 

DAC 1 Senior Secured Notes

  —   —   78.5   78.5 

USG Prudential - NV

  —   —   30.6   30.6 

USG Prudential - ID

  —   —   18.6   18.6 

USG DOE

  —   —   45.0   45.0 

Senior Unsecured Bonds

  —   —   205.7   205.7 

Senior Unsecured Loan

  —   —   161.3   161.3 

Plumstriker

  —   21.7   —   21.7 

Other long-term debt

  —   —   16.3   16.3 

Commercial paper

  —   50.0   —   50.0 

Revolving lines of credit

  —   40.6   —   40.6 

Deposits

  12.2   —   —   12.2 

 
 

NOTE 5 — STOCK-BASED COMPENSATION

 

On May 12, 2020, the Company granted certain members of its management an aggregate of 46,795 Stock Appreciation Rights ("SARs"), 6,142 Restricted Stock Units ("RSUs") and 5,637 Performance Stock Units ("PSUs") under the Company’s 2018 Incentive Plan. The exercise price of each SAR was $68.34 which represented the fair market value of the Company’s common stock on the grant date. The SARs will expire six years from date of grant and the SARs, RSUs and PSUs have a vesting period of between 2 to 4 years from the grant date.

 

The fair value of each SAR, RSU and PSU on the grant date was $17.6, $67.2 and $73.2, respectively. The Company calculated the fair value of each SAR on the grant date using the complex lattice, tree-based option-pricing model based on the following assumptions:

 

Risk-free interest rates

  0.44

%

Expected life (in years)

  2.8 

Dividend yield

  0.63

%

Expected volatility (weighted average)

  28.14

%

 

On June 15, 2020, the Company granted certain directors, members of its management and employees an aggregate of 852,475 SARs, 11,068 RSUs and 10,962 PSUs under the Company’s 2018 Incentive Plan. The exercise price of each SAR was $69.14 which represented the fair market value of the Company’s common stock on the grant date. The SARs will expire six years from date of grant, except for 1,156 SARs which will expire in 5 months from the grant date, and the SARs, RSUs and PSUs have a vesting period of between 2 to 4 years from the grant date.

 

20
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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

The fair value of each SAR, RSU and PSU on the grant date was $18.0, $68.0 and $65.0 , respectively. The Company calculated the fair value of each SAR on the grant date using the complex lattice, tree-based option-pricing model based on the following assumptions:

 

Risk-free interest rates

0.44%-0.28%

Expected life (in years)

2-2.8

Dividend yield

 0.64% 

Expected volatility (weighted average)

28.5%-35.2%

 

On July 1, 2020, the Company granted its newly appointed CEO an aggregate of 45,365 SARs, 6,020 RSUs and 6,540 PSUs under the Company’s 2018 Incentive Plan. The exercise price of each SAR was $63.40 which represented the fair market value of the Company’s common stock on the grant date. The SARs will expire six years from date of grant and the SARs, RSUs and PSUs have a vesting period of between 2 to 4 years from the grant date.

 

 

The fair value of each SAR, RSU and PSU on the grant date was $16.53, $62.29 and $57.34 , respectively. The Company calculated the fair value of each SAR on the grant date using the complex lattice, tree-based option-pricing model based on the following assumptions:

 

Risk-free interest rates

0.41%-0.17%

Expected life (in years)

 2.8 

Dividend yield

 0.64% 

Expected volatility (weighted average)

28.5%-35.7%

 
 

NOTE 6 — INTEREST EXPENSE, NET

 

The components of interest expense are as follows:

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Interest related to sale of tax benefits

 $1,991  $2,671  $6,814  $9,487 

Interest expense

  22,000   17,924   58,801   54,307 

Less — amount capitalized

  (2,235)  (519)  (6,801)  (978)

Total interest expense, net

 $21,756  $20,076  $58,814  $62,816 

 

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

 

NOTE 7 — EARNINGS PER SHARE

 

Basic earnings per share attributable to the Company’s stockholders is computed by dividing net income or loss attributable to the Company’s stockholders by the weighted average number of shares of common stock outstanding for the period. The Company does not have any equity instruments that are dilutive, except for employee stock-based awards.

 

The table below shows the reconciliation of the number of shares used in the computation of basic and diluted earnings per share (in thousands):

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
                 

Weighted average number of shares used in computation of basic earnings per share add:

  51,072   50,933   51,051   50,816 

Additional shares from the assumed exercise of employee stock options

  210   401   335   308 

Weighted average number of shares used in computation of diluted earnings per share

  51,282   51,334   51,386   51,124 

 

The number of stock-based awards that could potentially dilute future earnings per share and that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive was 298,661 and 2,495 for the three months ended September 30, 2020 and 2019, respectively, and 133,869 and 172,153 for the nine months ended September 30, 2020 and 2019, respectively. 

 

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

 

NOTE 8 — BUSINESS SEGMENTS

 

The Company has three reporting segments: the Electricity segment, the Product segment and the Energy Storage and Management Services segment ("ESMS"). These segments are managed and reported separately as each offers different products and serves different markets.

 

 

•

Under the Electricity segment, the Company builds, owns and operates geothermal, solar PV and recovered energy-based power plants in the United States and geothermal power plants in other countries around the world and sell the electricity they generate.

 

 

•

Under the Product segment, the Company designs, manufactures and sells equipment for geothermal and recovered energy-based electricity generation and remote power units and provide services relating to the engineering, procurement and construction of geothermal and recovered energy-based power plants.

 

 

•

Under the ESMS segment the Company provides energy storage, demand response and energy management related services as well as services relating to the engineering, procurement, construction, operation and maintenance of energy storage units mainly through its Viridity business. 

 

Transfer prices between the operating segments are determined based on current market values or cost-plus markup of the seller’s business segment.

 

Summarized financial information concerning the Company’s reportable segments is shown in the following tables, including the Company's disaggregated revenues from contracts with customers:

 

  

Electricity

  

Product

  

ESMS

  

Consolidated

 
  

(Dollars in thousands)

 

Three Months Ended September 30, 2020:

                

Revenues from external customers:

                

United States (1)

 $73,180  $435  $5,662  $79,277 

Foreign (2)

  50,480   29,190   —   79,670 

Net revenue from external customers

  123,660   29,625   5,662   158,947 

Intersegment revenues (4)

  —   36,839   —   — 

Operating income (loss)

  50,847   1,285   (446)  51,686 

Segment assets at period end (3) (*)

  3,236,631   148,106   136,210   3,520,947 

* Including unconsolidated investments

  91,277   —   —   91,277 
                 

Three Months Ended September 30, 2019:

                

Revenues from external customers:

                

United States (1)

 $71,916  $4,816  $3,484  $80,216 

Foreign (2)

  52,062   38,221   —   90,283 

Net revenue from external customers

  123,978   43,037   3,484   170,499 

Intersegment revenues (4)

  —   20,831   —   — 

Operating income (loss)

  32,362   6,826   (469)  38,719 

Segment assets at period end (3) (*)

  3,050,971   125,762   82,760   3,259,493 

* Including unconsolidated investments

  73,714   —   —   73,714 
                 

Nine Months Ended September 30, 2020:

                

Revenues from external customers:

                

United States (1)

 $245,299  $1,412  $10,022  $256,733 

Foreign (2)

  149,902   119,325   —   269,227 

Net revenue from external customers

  395,201   120,737   10,022   525,960 

Intersegment revenues (4)

  —   95,948   —   — 

Operating income (loss)

  155,352   8,960   (3,494)  160,818 

Segment assets at period end (3) (*)

  3,236,631   148,106   136,210   3,520,947 

* Including unconsolidated investments

  91,277   —   —   91,277 
                 

Nine Months Ended September 30, 2019:

                

Revenues from external customers:

                

United States (1)

 $240,375  $28,591  $10,442  $279,408 

Foreign (2)

  155,590   118,604   —   274,194 

Net revenue from external customers

  395,965   147,195   10,442   553,602 

Intersegment revenues (4)

  —   58,259   —   — 

Operating income (loss)

  127,388   16,385   (4,449)  139,324 

Segment assets at period end (3) (*)

  3,050,971   125,762   82,760   3,259,493 

* Including unconsolidated investments

  73,714   —   —   73,714 

 

 

(1)

Electricity segment revenues in the United States are all accounted under lease accounting except for $15.0 million and $47.4 million in the three and nine months ended September 30, 2020, respectively, that are accounted under ASC 606. For the three and nine months ended September 30, 2019, Electricity segment revenues in the United States are all accounted under lease accounting except for $13.5 million and $44.0 million, respectively, that are accounted under ASC 606. Product and ESMS segment revenues in the United States are accounted under ASC 606.

 

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

 

(2)

Electricity segment revenues in foreign countries are all accounted under lease accounting. Product segment revenues in foreign countries are accounted under ASC 606.

 

 

(3)

Electricity segment assets include goodwill in the amount of $20.1 million and $19.9 million as of September 30, 2020 and 2019, respectively. ESMS segment assets include goodwill in the amount of $3.5 million and $0 million as of September 30, 2020 and 2019, respectively. No goodwill is included in the Product segment assets as of September 30, 2020 and 2019.

 

 

(4)

Intersegment revenue are fully eliminated in consolidation.

 

Reconciling information between reportable segments and the Company’s consolidated totals is shown in the following table:

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Revenues:

                

Total segment revenues

 $158,947  $170,499  $525,960  $553,602 

Intersegment revenues

  36,839   20,831   95,948   58,259 

Elimination of intersegment revenues

  (36,839)  (20,831)  (95,948)  (58,259)

Total consolidated revenues

 $158,947  $170,499  $525,960  $553,602 
                 

Operating income:

                

Operating income

 $51,686  $38,719  $160,818  $139,324 

Interest income

  626   482   1,469   1,195 

Interest expense, net

  (21,756)  (20,076)  (58,814)  (62,816)

Derivatives and foreign currency transaction gains (losses)

  1,047   205   2,111   696 

Income attributable to sale of tax benefits

  7,014   4,056   16,818   16,457 

Other non-operating income (expense), net

  961   244   1,343   1,362 

Total consolidated income before income taxes and equity in income of investees

 $39,578  $23,630  $123,745  $96,218 

 

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

 

NOTE 9 — COMMITMENTS AND CONTINGENCIES

 

•     On May 21, 2018, a motion to certify a class action was filed in Tel Aviv District Court against Ormat Technologies, Inc. and 11 officers and directors.  The alleged class is defined as "All persons who purchased Ormat shares on the Tel Aviv Stock Exchange between August 3, 2017 and May 13, 2018". The motion alleges that the Company and other respondents violated  Sections 31(a)(1) and 38C of the Israeli Securities Law, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, because they allegedly: (1) misled investors by stating in the Company's financial statements that it maintains effective internal controls over its accounting policies and procedures, even though the Company's internal controls had material weaknesses which led to erroneous accounting in its 2017 unaudited quarterly reports that had to be restated, including adjustments to the Company’s net income and shareholders’ equity; and (2) failed to issue an immediate report in Israel until May 16, 2018, analogous to the report that was released in the United States on May 11, 2018 stating, inter alia, that the errors in its financial reports affected its balance sheet and would be remedied in its 2017 annual report. Agreed motions were filed from time to time with, and granted by, the Tel Aviv District Court to stay the proceedings in Israel in light of the United States case (Mac Costas). On June 30, 2020, pursuant to the execution and submission of a settlement agreement to the United States court for approval, which resolves the matters raised with respect to the entire class of shareholders (whether traded on the Tel Aviv Stock Exchange or U.S. stock exchange), the Company filed a motion informing the Tel Aviv court of the settlement. On July 2, 2020, the plaintiff in the Tel Aviv action filed a motion requesting the Israeli court to issue an Anti-Suit Injunction against Phoenix Insurance, the lead plaintiff in the United States case, instructing it to, inter alia, discontinue acting on behalf of the Israeli class members in the matter. Agreed motions were filed from time to time to, and granted by, the Tel Aviv District Court delaying the date for response to the Anti-Suit Injunction. The Company considers that it has strong legal defenses and it is not probable that the request for an Anti-Suit Injunction will be granted. The potential amount that the Company may bear in this context cannot be reasonably estimated at this time.

 

•     On June 11, 2018, a putative class action filed by Mac Costas on behalf of alleged shareholders that purchased or acquired the Company's ordinary shares between August 8, 2017 and May 15, 2018 was commenced in the United States District Court for the District of Nevada against the Company and its Chief Executive Officer and Chief Financial Officer, which was subsequently amended by a consolidated complaint filed by lead plaintiff Phoenix Insurance in May 13, 2019.  The complaint asserts claim against all defendants pursuant to Section 10(b) of the Exchange Act, as amended, and Rule 10b-5 thereunder and against its officers pursuant to Section 20(a) of the Exchange Act.  The complaint alleges that the Company's Form 10-K for the years ended December 31, 2016 and 2017, and Form 10-Qs for each of the quarters in the nine months ended September 30, 2017 contained material misstatements or omissions, among other things, with respect to the Company’s tax provisions and the effectiveness of its internal control over financial reporting, and that, as a result of such alleged misstatements and omissions, the plaintiffs suffered damages. On December 6, 2019 the Company’s motion to dismiss was denied by the court. On March 23, 2020, pursuant to out of court mediation, a term sheet for a proposed settlement of the action without admission of liability or wrongdoing, was signed between the parties and on June 10, 2020, a joint stipulation and motion for preliminary approval of the comprehensive executed settlement documentation was filed for the court for approval, which is now pending. The sum the Company will bear in this context is not material.

 

•     On September 11, 2018, the Klein derivative action (Klein Action) was filed against the Company, our board and its Chief Executive Officer and Chief Financial Officer in the United States District Court for the District of Nevada, and on October 22, 2018, the Matthew derivative action (Matthew Action) was filed against the Company, certain named present and former board members (Barniv, Beck, Boehm, Clark, Falk, Freeland, Granot, Joyal, Nishigori, Sharir, Stern and Wong) in the United States District Court, District of Nevada.  The Klein complaint asserts four derivative causes of action generally arising from Ormat's restatement of its financial statements: (i) the individual defendants allegedly breached their fiduciary duties by allowing the Company to improperly report its financials; (ii) the individual defendants allegedly were unjustly enriched by being compensated while breaching their fiduciary duties; (iii) the individual defendants allegedly committed corporate waste in paying officers and directors and by incurring legal costs and potential liability; and (iv) the director defendants allegedly breached Section 14(a) of the Exchange Act in connection with the issuance of the 2018 proxy. The Matthew complaint similarly alleges derivatively a breach of fiduciary duties, abuse of control, gross mismanagement, and corporate waste by the named directors. On January 24, 2019, the Nevada Court entered an order consolidating the Klein Action and Matthew Action. On July 10, 2020, a comprehensive settlement package and derivative stipulation of settlement was submitted to the court, and on October 12, 2020, Plaintiff filed an unopposed motion to the Nevada Court requesting preliminary approval of the corporate governance enhancement settlement. The sum the Company will bear for implementation is not material.

 

Following the announcement of the Company’s acquisition of U.S. Geothermal Inc. ("USG"), a number of putative  shareholder class action complaints were initially filed on behalf of USG shareholders between March 8, 2018 and March 30, 2018 against USG and the individual members of the USG board of directors.  All of the purported class action suits filed in Federal Court in Idaho have been voluntarily dismissed.  The single remaining class action complaint is a purported class action filed in the Delaware Chancery Court, entitled Riche v. Pappas, et al., Case No. 2018-0177 (Del. Ch., Mar. 12, 2018). An amended complaint was filed on May 24, 2018 under seal, under a confidentiality agreement that was executed by plaintiff.  The amended Riche complaint alleges state law claims for breach of fiduciary duty against former USG directors and seeks post-closing damages. On March 27, 2020, pursuant to out of court mediation, a term sheet for a proposed settlement of the action, without admission of liability or wrongdoing, was signed between the parties. On June 3, 2020, a comprehensive settlement package and stipulation of settlement was filed with the court for approval, and on September 16, 2020 the Delaware Chancery Court approved the settlement. Plaintiff’s revised motion requesting the court to approve Plaintiff’s proposed allocation plan was filed on October 6, 2020. The sum the Company will bear in this context is not material.

 

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

•     On March 29, 2016, a former local sales representative in Chile, Aquavant, S.A., filed a claim on the basis of unjust enrichment against Ormat’s subsidiaries in the 27th Civil Court of Santiago, Chile. The claim requests that the court order Ormat to pay Aquavant $4.6 million in connection with its activities in Chile, including the EPC contract for the Cerro Pabellon project and various geothermal concessions, plus 3.75% of Ormat geothermal products sales in Chile over the next 10 years. Pursuant to various motions submitted by the defendants and the plaintiffs to various courts, including the Court of Appeals, the case was removed from the original court and then refiled before the 11th Civil Court of Santiago. On April 16, 2020, the 11th Civil Court of Santiago issued its order rejecting Plaintiff's principal claim of unjust enrichment, as an improper cause of action, rejecting Plaintiff's secondary claim for declaratory judgment, which the Court associates with the principal claim of unjust enrichment and not relating to a number of defenses raised by the Company. In May 2020, each of the parties filed separately to the court of appeals, which are pending. The Company considers it has strong legal defenses and the probability of the claimant receiving an award is low. The potential amount that the Company may bear in this context cannot be reasonably estimated at this time.

 

In addition, from time to time, the Company is named as a party to various other lawsuits, claims and other legal and regulatory proceedings that arise in the ordinary course of the Company's business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damage, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to such lawsuits, claims and proceedings, the Company accrues reserves when a loss is probable, and the amount of such loss can be reasonably estimated. It is the opinion of the Company’s management that the outcome of these proceedings, individually and collectively, will not be material to the Company’s consolidated financial statements as a whole. 

 

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ORMAT TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

 

 

NOTE 10 — INCOME TAXES

 

The Company’s effective tax rate expense (benefit) for the three months ended September 30, 2020 and 2019 was 38.8% and 40.7%, respectively and 36.6% and 20.9% for the nine months ended September 30, 2020 and 2019, respectively. The effective rate differs from the federal statutory rate of 21% for the nine months ended September 30, 2020 due to: (i) the mix of business in various countries with higher statutory tax rates than the federal statutory tax rate; (ii) a net increase in the valuation allowance on deferred tax assets related to Production Tax Credits ("PTC"), partially offset by tax depreciation benefits related to intra-entity transfers of assets and the release of reserves and interest for uncertain tax positions in foreign jurisdictions related to prior years.

 

In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020 in the United States provides relief on deferral of tax payments and filings, modifies the net operating loss utilization rules, and temporarily increases the interest expense deduction allowed. For the nine months ended September 30, 2020, there were no material tax impacts to our consolidated financial statements as it relates to the CARES Act or other COVID-19 stimulus measures. The Company will continue to monitor additional guidance issued by Treasury, the Internal Revenue Service and other taxing authorities.

 

Tax Audit in Kenya

 

The Company has received three Notices of Assessments (“NoA”) from the Kenya Revenue Authority ("KRA") relating to certain findings in respect of its audit of tax years 2013 to 2017. The Company has responded and objected to each of the KRA audit findings and has filed its appeals to Objection Decisions issued by the KRA and continuing the legal process in order to resolve the issues raised.

 

The Company is currently at different stages of discussions with the KRA on the matters included in NoA 1 and NoA 3 issued by the KRA, totaling approximately $9 million, including interest and penalties. The Company believes its tax positions for the issues raised during the audit period for these assessments is more-likely-than-not sustainable based on technical merits under Kenyan tax law. As of September 30, 2020, the Company had not recorded any tax reserves related to these demands except for an immaterial amount.

 

On October 19, 2020, the Company settled NoA 2 issued by the KRA. Refer to Note 11 - Subsequent Events for a detailed discussion of this settlement.

 

 

NOTE 11 — SUBSEQUENT EVENTS

 

Cash Dividend

 

On November 3, 2020, the Board of Directors of the Company declared, approved and authorized payment of a quarterly dividend of $5.6 million ($0.11 per share) to all holders of the Company’s issued and outstanding shares of common stock on November 18, 2020, payable on December 2, 2020.

 

Tax Audit in Kenya

 

On October 19, 2020, the Company entered into a settlement agreement in relation to the second NoA that was issued by the KRA on December 4, 2019 totaling approximately $190 million of proposed adjustments, including interest and penalties. The settlement agreement extended the audit period for the issues addressed within the assessment, to cover the period from 2013 through 2019 and resulted in a total settlement payment of approximately $28 million including interest and penalties related to late payment in respect of 2019 taxable income. Additionally, the settlement included a deferral of tax benefits to be utilized in years subsequent to 2019 in an amount of approximately $28 million. The assessment was paid on October 27, 2020.

 

The Company is currently evaluating the impact of the settlement with the KRA on its annual consolidated financial statements for 2020 and currently believes that such impact will be immaterial.

 

Stock based awards

 

On November 3, 2020, the Company granted its directors SARs and RSUs under the Company’s 2018 Incentive Plan. The exercise price of each SAR will be the closing share price on November 4, 2020. The grant date fair value of the award to each of the directors is $120,000. The SARs and RSUs will vest fully on the first anniversary of the grant date and will expire in six years.

 

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Cautionary Note Regarding Forward-Looking Statements

 

This quarterly report on Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this quarterly report that address activities, events or developments that we expect or anticipate will or may occur in the future, including such matters as our projections of annual revenues, expenses and debt service coverage with respect to our debt securities, future capital expenditures, business strategy, competitive strengths, goals, development or operation of generation assets, market and industry developments and the growth of our business and operations, are forward-looking statements. When used in this quarterly report on Form 10-Q, the words “may”, “will”, “could”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, or “contemplate” or the negative of these terms or other comparable terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. The forward-looking statements in this quarterly report are primarily located in the material set forth under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Risk Factors”, and “Notes to Condensed Consolidated Financial Statements”, but are found in other locations as well. These forward-looking statements generally relate to our plans, objectives and expectations for future operations and are based upon management’s current estimates and projections of future results or trends. Although we believe that our plans and objectives reflected in or suggested by these forward-looking statements are reasonable, we may not achieve these plans or objectives. You should read this quarterly report on Form 10-Q completely and with the understanding that actual future results and developments may be materially different from what we expect attributable to a number of risks and uncertainties, many of which are beyond our control.

 

Specific factors that might cause actual results to differ from our expectations include, but are not limited to the following, many of which are, and will be, amplified by the COVID-19 pandemic:

 

 

•

the impact and potential impact of the COVID-19 outbreak on our growth plans, financial position and results of operations;

 

 

•

significant considerations, risks and uncertainties discussed in this quarterly report;

 

 

•

geothermal resource risk (such as the heat content, useful life and geological formation of the reservoir);

 

 

•

acceleration of our exploration activity that may increase future write-offs;

 

 

•

operating risks, including equipment failures and the amounts and timing of revenues and expenses;

 

 

•

financial market conditions and the results of financing efforts;

 

 

•

weather and other natural phenomena including earthquakes, volcanic eruption, drought and other natural disasters;

 

 

•

political, legal, regulatory, tax, governmental, administrative and economic conditions and developments in the United States and other countries in which we operate and, in particular, possible import tariffs, possible late payments, the impact of recent and future federal, state and local regulatory proceedings and changes, including legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry, public policies and government incentives that support renewable energy and enhance the economic feasibility of our projects at the federal and state level in the United States, Kenya, Turkey and elsewhere, and carbon-related legislation;

 

 

•

risks and uncertainty with respect to our internal control over financial reporting, including the identification of a material weakness which, if not timely remediated, may adversely affect the accuracy and reliability of our financial statements;

 

 

•

the impact of fluctuations in oil and natural gas prices under certain of our power purchase agreements (“PPAs”)

 

 

•

the competition with other renewable sources or a combination of renewable sources and energy storage on the energy price component under future PPAs;

 

 

•

risks and uncertainties with respect to our ability to implement strategic goals or initiatives in segments of the clean energy industry or new or additional geographic focus areas;

 

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•

risk and uncertainties associated with our operating storage facilities and with future development of storage and geothermal projects which  operate as "merchant" facilities without long-term sales agreements, including the variability of revenues and profitability of such projects;

 

 

•

environmental constraints on operations and environmental liabilities arising out of past or present operations, including the risk that we may not have, and in the future may be unable to procure, any necessary permits or other environmental authorizations;

 

 

•

construction or other project delays or cancellations;

 

 

•

the enforceability of long-term PPAs for our power plants;

 

 

•

contract counterparty risk, including late payments, or no payments;

 

 

•

changes in environmental and other laws and regulations to which our Company is subject, as well as changes in the application of existing laws and regulations;

 

 

•

current and future litigation;

 

 

•

our ability to successfully identify, integrate and complete acquisitions;

 

 

•

our ability to access the public markets for debt or equity capital;

 

 

•

competition from other geothermal energy projects and new geothermal energy projects developed in the future, and from alternative electricity producing technologies;

 

 

•

market or business conditions and fluctuations in demand for energy or capacity in the markets in which we operate, which may affect the market prices for energy or capacity including those in the markets where we operate;

 

 

•

when, if and to what extent opportunities under our commercial cooperation agreement with ORIX Corporation may in fact materialize;

 

 

•

the direct or indirect impact on our Company’s business of various forms of hostilities including the threat or occurrence of war or terrorist incidents or responses to such threatened or actual incidents, including the effect on the availability of and premiums on insurance;

 

 

•

the direct or indirect impact on our Company’s business of a or cyber-attacks or response to such attacks; 

 

 

•

our strategic plan to expand our geographic markets, customer base and product and service offerings may not be implemented as currently planned or may not achieve our goals as and when implemented;

 

 

•

development and construction of solar photovoltaic (Solar PV) and energy storage projects, if any, may not materialize as planned; and

 

 

•

the effect of and changes in current and future land use and zoning regulations, residential, commercial and industrial development and urbanization in the areas in which we operate.

 

Investors are cautioned that these forward-looking statements are inherently uncertain. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein. Other than as required by law, we undertake no obligation to update forward-looking statements even though our situation may change in the future. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes included elsewhere in this report and the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”) and any updates contained herein as well as those set forth in our reports and other filings made with the Securities and Exchange Commission (the “SEC”).

 

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General

 

Overview

 

We are a leading vertically integrated company that is primarily engaged in the geothermal and recovered energy power businesses. We leveraged our core capabilities and global presence to expand our activity into the solar Photovoltaic (PV) and energy storage and management services business.

 

We design, develop, build, sell, own, and operate clean, environmentally friendly geothermal and recovered energy-based power plants, usually using equipment that we design and manufacture. Our objective is to become a leading global provider of renewable energy and we have adopted a strategic plan to focus on several key initiatives to expand our business.

 

We currently conduct our business activities in three business segments:

 

 

•

Electricity Segment. In the Electricity segment, which contributed 77.8% of our total revenues in the three months ended September 30, 2020, we develop, build, own and operate geothermal, solar PV and recovered energy-based power plants in the United States and geothermal power plants in other countries around the world and sell the electricity they generate. In the  three months ended September 30, 2020, we derived 59.2% of our Electricity segment revenues from our operations in the United States and 40.8% from the rest of the world. 

 

 

•

Product Segment. In the Product segment, which contributed 18.6% of our total revenues in the  three months ended September 30, 2020, we design, manufacture and sell equipment for geothermal and recovered energy-based electricity generation and remote power units and provide services relating to the engineering, procurement, construction, of geothermal, and recovered energy-based power plants. In the three months ended September 30, 2020, we derived 1.5% of our Product segment revenues from our operations in the United States and 98.5% from the rest of the world.  

 

 

•

Energy Storage and Management Services Segment. In the Energy Storage and Management Services segment, which contributed 3.6% of our total revenues in the three months ended September 30, 2020, we provide energy storage, demand response and energy management related services as well as services relating to the engineering, procurement, construction, operation and maintenance of energy storage units through the business of our Viridity Energy Solutions Inc. ("Viridity"), which we acquired in 2017. In the three months ended September 30, 2020, we derived 100% of our Energy Storage and Management Services segment revenues from our operations in the United States.

  

Our operations are conducted in the U.S. and the rest of the world. Our current generating portfolio includes geothermal power plants in the U.S., Kenya, Guatemala, Honduras, Guadeloupe and Indonesia, as well as recovered energy generation and Solar PV power plants and storage activity in the U.S.

 

We continue to examine a range of potential acquisitions and investments around the world as part of our growth strategy. Our most recent acquisition was the Pomona energy storage asset in California from Alta Gas which was completed in July 2020 for total consideration of $43.3 million.

 

COVID 19 Update

 

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus ("COVID-19") a pandemic.

 

The Company has implemented significant measures both to comply with government requirements and to preserve the health and safety of its employees. These measures include working remotely where possible and operating separate shifts in its power plants, manufacturing facilities and other locations while trying to continue operations in close to full capacity in all locations. During the quarter and subsequently, the Company's power plants, manufacturing facility and storage facilities have been operating at close to full capacity and there has been no material impact on our operations as a result of these measures.

 

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We experienced the following impacts on our segment operations:

 

 

•

In our Electricity segment, almost all of our revenues in the nine month ended September 30, 2020 was generated under long term contracts and the majority have a fixed energy rate. As a result, despite logistical and other challenges, we experienced only a limited impact of COVID-19 on our Electricity segment. Nevertheless, on April 17, 2020, we received from Kenya Power & Lighting Co. Ltd. ("KPLC") a notice declaring a force majeure event in Kenya due to the impact of COVID-19 and purporting to reduce the Olkaria complex’s contracted capacity from 150 MW to 133.9 MW. This notice, which had an immaterial impact on our revenues, was removed in early September 2020. In addition, we experienced a higher rate of curtailments in the second quarter of 2020 by KPLC in the Olkaria complex that was reduced in the third quarter 2020. The impact of the curtailments is limited as the structure of the PPA which secures the vast majority of our revenues with fixed capacity payments and is unrelated to the electricity actually generated (in 2019 and the nine months ended September 30, 2020, capacity payments represented 70% and 75% of our revenues, respectively). On April 30, 2020, we also received from ENEE a notice declaring a force majeure event in Honduras due to the impact of COVID-19. We have not identified any impact on our consolidated financial statements as a result of this notice. In addition, ENEE has initiated discussions with several Independent Power Producers ("IPP"s), including Ormat, on potential changes in their existing PPAs. However, Ormat’s Platanares geothermal power plant has one of the lowest rates of renewable energy in the country, and Ormat expects this fact to have positive implications for Ormat’s discussions with ENEE.  Furthermore, our future growth in the Electricity segment might be adversely impacted by a lack of funding for projects, a decrease in demand for electricity, delays in permitting and the implications of global and local restrictions on our ability to procure raw material and ship our products.  

 

 

•

Our Product segment revenues are generated from sales of products and services pursuant to contracts, under which we have a right to payment for any product that was produced for the customer. Recognition of revenue under these contracts is impacted by delays in the progress of the third-party projects into which our products and services are incorporated. We experienced delays and significant cost increases in two of the projects in the product segment that adversely impacted our results of operations during the first nine months of 2020. We had a product backlog of $49.6 million as of November 3, 2020, which includes revenues for the period between October 1, 2020 and November 3, 2020 compared to $167 million as of November 6, 2019.  We believe that the decline in backlog resulted mainly from the impact of COVID-19 and the unwillingness of potential customers to enter into new commitments at this time. We currently expect to recognize more than 80% of our backlog by the end of 2020. Nevertheless, for the reasons set out above, restrictions on travel and because our customers are deferring their decision to purchase, we expect that 2021 product revenues will be significantly lower than our expected revenues for 2020.  

 

 

•

Our Energy Storage and Management Services segment generates revenues mainly from participating in the energy and ancillary services markets, run by regional transmission operators and independent system operators in the various markets where our assets operate. Therefore, the revenues these assets generate is directly impacted by the prevailing market prices for energy and or ancillary services.

 

 

•

In addition, we experience delays in the permitting for new projects in all segments that may also cause a delay in those projects.

 

Given uncertainties regarding future global economic activity and the continued and potential future impact of COVID-19, we have undertaken a number of steps in managing our global supply chain risks as well as enhancing the Company’s liquidity position. In the first quarter of 2020, we took prompt steps to manage our expenses including responsible cost cutting measures and significantly reduced hiring. In addition, in order to support our capital expenditure and growth plans, since the beginning of 2020, we raised more than $400 million through long term loans.

 

Despite our efforts to provide insight into the performance of our business and the trends affecting it, as of the date of this filing, significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic. We may become subject to any of the following impacts:

 

 

•

limitations on the ability of our suppliers to obtain raw materials that are required for the manufacturing of the products we either sell to third parties or build for ourselves or to meet delivery requirements and commitments that may result in penalty payments;
 

•

impact on our efforts to sign new contracts for our Product segment due to operational and travel restrictions and availability of our customers and their willingness to enter into new agreements;
 

•

limitations on the ability of our customers to pay us on a timely basis;
 

•

lack or limited availability of capital or postponement of capital allocation for future growth;
 

•

additional declarations of COVID-19 as force majeure by our customers and suppliers;
 

•

a reduction in the demand for electricity and for our products;
 

•

change in regulations, taxes and levies that may affect our operations and cost structure;
 

•

risk of infection among employees that may impact the day-to-day operations;
 

•

delays in obtaining the required permits that may impact our ability to implement our growth plan;
 

•

limited ability to oversee remote operation due to travel restrictions.

 

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Other Recent Developments

 

The most significant developments in our Company and business since January 1, 2020 are described below.

 

 

•

As of November 2020, construction of the electrical substation and electrical transmission lines at the Puna power plant is completed and the power plant is currently connected to the transmission lines. On the field side, the Company connected one new production well to the power plant and is in the process of connecting a second production well. The Company  expects to start generating power in the next few weeks with a gradual increase in generation to 29 MW by the end of the year, although the exact timing remains uncertain.  

 

 

•

In October 2020, we concluded an audit and reached a favorable settlement in respect of a tax assessment of approximately $190 million which was issued in December 2019 by the KRA in Kenya. The settlement covered tax years 2013 through 2019 and primarily included deferral of tax benefits that we previously utilized, resulting in a payment to the KRA of $28.2 million, including interest and penalties. We expect to recover a majority of the assessment as a reduction of cash tax payments in the future. The estimated impact on our results in the fourth quarter this year is estimated to be immaterial; 

 

 

•

In October 2020, we announced the signing of two Resource Adequacy Agreements, each for 50% of our 5 MW / 20 MWh Tierra Buena battery energy storage project currently under development in Sutter County, northern California. The agreements were signed with two Community Choice Aggregators, Redwood Coast Energy Authority and Valley Clean Energy.

 

 

•

In September 2020, we announced that Empresa Nacional de Energia Electrica, (ENEE), our customer for our Platanares geothermal power plant in Honduras, had paid the $20 million overdue payment that was outstanding from prior years.

 

 

•

In July 2020, we completed the acquisition of the Pomona energy storage asset in California from Alta Gas for total net consideration of $43.3 million. The Pomona energy storage facility has been in commercial operation since December 31, 2016 under a 10-year energy storage resource adequacy agreement with Southern California Edison Company. It also participates in the energy and ancillary services markets run by the California Independent System Operator. The facility is our first battery storage asset in operation in California, increasing our existing operating portfolio to 73MW/136MWh and adding to our other battery storage assets located in New Jersey, New England and Texas.

 

 

•

In July 2020, we issued approximately $290.0 million of bonds (the "Bonds") that were issued in New Israeli Shekels and were converted to U.S. Dollars using a cross-currency swap transaction (the “Swap”) at an effective fixed interest rate of 4.34%. The $290 million of bonds will mature in June 2031 and bear, prior to the Swap, a fixed interest rate of 3.35% per annum, payable semi-annually starting December 2020. The Bonds will be repaid in 10 equal installments starting June 2022, unless prepaid earlier by Ormat pursuant to the terms and conditions of the trust instrument that will govern the Bonds. The Bonds received a rating of ilAA- from Maloot S&P in Israel with a stable outlook. In April and May 2020, we also raised approximately $130 million of new corporate debt from existing lenders.

 

 

•

In June 2020, we completed the enhancement of our Steamboat Hills complex and increased its generating capacity by 19MW to a total of 84MW. Enhancement work included the replacement of all old generating unit equipment with new, state-of-the-art equipment and resource modifications. The new equipment will increase the productivity and efficiency of the power plant and is expected to reduce maintenance costs per kWh. The Steamboat Hills power plant continues to sell its electricity under the current 25-year long term portfolio power purchase agreement with Southern California Public Power Authority ("SCPPA"), with 100% of the capacity going to the Los Angeles Department of Water and Power.

 

 

•

In April 2020, we announced the commercial operation of the Rabbit Hill Battery Energy Storage System ("BESS") facility, providing required ancillary services and energy optimization to the wholesale markets managed by the Electricity Reliability Council of Texas ("ERCOT"). The facility is located in the City of Georgetown, Texas, and it is sized to provide approximately 10 MW of fast responding capacity to the ERCOT market. Ormat’s wholly owned subsidiary Viridity Energy Solutions Inc. designed, built, owns and operates the lithium-Ion-based BESS, using batteries from a tier 1 supplier.

 

 

•

In February 2020, we announced a transition of our senior management. Mr. Isaac Angel has decided to retire from his position as Chief Executive Officer, effective July 1, 2020, after six years of successful service to the Company, its employees and its shareholders. Mr. Angel became a member of Ormat’s Board of Directors and its chairman and will continue to be employed by the Company through December 31, 2020 in order to assist with the management transition. Ormat’s Board of Directors has appointed Mr. Blachar, the Company’s President and Chief Financial Officer, to succeed Mr. Angel. Mr. Doron Blachar assumed the role of Chief Executive Officer on July 1, 2020 upon Mr. Angel’s retirement. Mr. Blachar was succeeded in his role as Chief Financial Officer by Mr. Assaf Ginzburg, effective May 10, 2020.

 

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•

In January 2020, we signed two similar PPAs with Silicon Valley Clean Energy ("SVCE") and Monterey Bay Community Power ("MBCP"). Under the PPAs, SVCE and MBCP will each purchase 7 MW (for a total of 14 MW) of power generated by the expected 30 MW Casa Diablo-IV ("CD4") geothermal project located in Mammoth Lakes, California that is under construction. The PPAs are for a term of 10 years and have a fixed MWh price, which includes energy, capacity, environmental attributes, and all other ancillary benefits. The remaining 16 MW of generating capacity will be sold under an additional PPA with SCPPA, which was signed in early 2019. The CD4 power plant is expected to be on-line at the end of 2021, and will be the first geothermal power plant built within the California Independent System Operator ("CAISO") balancing authority in the last 30 years and will be the first in Ormat’s portfolio that will sell its output to a Community Choice Aggregator.

 

Trends and Uncertainties

 

Different trends, factors and uncertainties may impact our operations and financial condition, including many that we do not or cannot foresee. However, we believe that our results of operations and financial condition for the foreseeable future will be primarily affected by trends, factors and uncertainties discussed in our 2019 Annual Report under “Part II - Item 7 – Management Discussion and Analysis of Financial Condition and Results of Operation” in addition to the information set forth in this report. These trends, factors and uncertainties are from time to time also subject to market cycles.

 

 

•

As COVID-19 threatens demand, oil prices have declined and could have consequences on the global transition to renewable energy and on governmental support for renewables. We believe that the direct impact of declining oil prices on us is not material. In addition, volatile natural gas prices may have an impact on ancillary services prices related to our Energy Storage and Management Services revenues.

 

Revenues

 

For the nine months ended September 30, 2020, 98.2% of our Electricity segment revenues were from PPAs with fixed energy rates, which are not affected by fluctuations in energy commodity prices. We have variable price PPAs in California and Hawaii, which provide for payments based on the local utilities’ avoided cost, which is the incremental cost that the power purchaser avoids by not having to generate such electrical energy itself or purchase it from others, as follows:

 

 

•

The energy rates under the PPAs in California for each of Heber 2 power plant in the Heber Complex and the G2 power plant in the Mammoth Complex, a total of between 30 megawatts (MW) and 40 MW, change primarily based on fluctuations in natural gas prices.

 

 

•

The prices paid for the electricity pursuant to the 25 MW PPA for the Puna Complex in Hawaii change primarily as a result of variations in the price of oil as well as other commodities. We recently signed a new PPA related to Puna with fixed prices that will govern a future plant.

 

To comply with obligations under their respective PPAs, certain of our project subsidiaries are structured as special purpose, bankruptcy remote entities and their assets and liabilities are ring-fenced. Such assets are not generally available to pay our debt, other than debt at the respective project subsidiary level. However, these project subsidiaries are allowed to pay dividends and make distributions of cash flows generated by their assets to us, subject in some cases to restrictions in debt instruments, as described below.

 

Electricity segment revenues are also subject to seasonal variations and are affected by higher-than-average ambient temperatures, as described below under “Seasonality”.

 

Revenues attributable to our Product segment are based on the sale of equipment, engineering procurement and construction (“EPC”) contracts and the provision of various services to our customers. Product segment revenues vary from period to period because of the timing of our receipt of purchase orders and the progress of our equipment manufacturing and execution of the relevant project.

 

Revenues attributable to our Energy Storage and Management Services segment are derived primarily from Battery Storage as a Service ("BSAAS") systems, demand response and energy management services and fluctuate from period to period. Pricing of such services and products are dependent on market supply and demand trends, market volatility, the need and price for ancillary services and other factors that may change over time.

 

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The following table sets forth a breakdown of our revenues for the periods indicated:

 

   

Revenue (Dollars in thousands)

    

Increase (decrease)

  
   

Three Months
Ended September 30,

    

Nine Months
Ended September 30,

    

Three Months
Ended September 30,

    

Nine Months
Ended September 30,

  
   

2020

    

2019

    

2020

    

2019

    

2020

    

2020

  

Revenues:

                                                                

Electricity

   $ 123,660     $ 123,978     $ 395,201     $ 395,965     $ (318 )     (0.3

)%

   $ (764 )     (0.2

)%

Product

     29,625       43,037       120,737       147,195       (13,412 )     (31.2

)%

     (26,458 )     (18.0

)%

Energy storage and management services

     5,662       3,484       10,022       10,442       2,178       62.5

%

     (420 )     (4.0

)%

Total

   $ 158,947     $ 170,499     $ 525,960     $ 553,602     $ (11,552 )     (6.8

)%

   $ (27,642 )     (5.0

)%

 

   

% of Revenues for Period Indicated

  
   

Three Months
Ended September 30,

    

Nine Months
Ended September 30,

  
   

2020

    

2019

    

2020

    

2019

  

Revenues:

                                

Electricity

     77.8

%

     72.7

%

     75.1

%

     71.5

%

Product

     18.6       25.2       23.0       26.6  

Energy storage and management services

     3.6       2.0       1.9       1.9  

Total

     100.0

%

     100.0

%

     100.0

%

     100.0

%

 

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The following table sets forth the geographic breakdown of the revenues attributable to our Electricity, Product and Energy Storage and Management Services segments for the periods indicated:

 

   

Revenue (Dollars in thousands)

    

Increase (decrease)

  
   

Three Months Ended September 30,

    

Nine Months Ended September 30,

    

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2020

    

2019

    

2020

    

2019

    

2020

    

2020

  

Electricity Segment:

                                                                

United States

   $ 73,180     $ 71,916     $ 245,299     $ 240,375     $ 1,264       1.8

%

   $ 4,924       2.0

%

Foreign

     50,480       52,062       149,902       155,590       (1,582 )     (3.0

)%

     (5,688 )     (3.7

)%

Total

   $ 123,660     $ 123,978     $ 395,201     $ 395,965     $ (318 )     (0.3

)%

   $ (764 )     (0.2

)%
                                                                 

Product Segment:

                                                                

United States

   $ 435     $ 4,816     $ 1,412     $ 28,591     $ (4,381 )     (91.0

)%

   $ (27,179 )     (95.1

)%

Foreign

     29,190       38,221       119,325       118,604       (9,031 )     (23.6

)%

     721       0.6

%

Total

   $ 29,625     $ 43,037     $ 120,737     $ 147,195     $ (13,412 )     (31.2

)%

   $ (26,458 )     (18.0

)%
                                                                 

Energy Storage and Management Services Segment:

                                                                

United States

   $ 5,662     $ 3,484     $ 10,022     $ 10,442     $ 2,178       62.5

%

   $ (420 )     (4.0

)%

Total

   $ 5,662     $ 3,484     $ 10,022     $ 10,442     $ 2,178       62.5

%

   $ (420 )     (4.0

)%

 

   

% of Revenues for Period Indicated

  
   

Three Months
Ended September 30,

    

Nine Months Ended
September 30,

  
   

2020

    

2019

    

2020

    

2019

  

Electricity Segment:

                                

United States

     59.2

%

     58.0

%

     62.1

%

     60.7

%

Foreign

     40.8       42.0       37.9       39.3  

Total

     100.0

%

     100.0

%

     100.0

%

     100.0

%
                                 

Product Segment:

                                

United States

     1.5

%

     11.2

%

     1.2

%

     19.4

%

Foreign

     98.5       88.8       98.8       80.6  

Total

     100.0

%

     100.0

%

     100.0

%

     100.0

%
                                 

Energy Storage and Management Services Segment:

                                

United States

     100.0

%

     100.0

%

     100.0

%

     100.0

%

Total

     100.0

%

     100.0

%

     100.0

%

     100.0

%

 

The contribution of our domestic and foreign operations within our Electricity segment and Product segment to combined pre-tax income differ in a number of ways.

 

In the nine months ended September 30, 2020 and 2019, 51% and 50% of our revenues were derived from international operations, respectively, and our international operations were more profitable than our U.S. operations. A substantial portion of international revenues came from Kenya and Turkey and, to a lesser extent, from Guadeloupe, Guatemala and Honduras and other countries. Our operations in Kenya contributed disproportionately to gross profit and net income. 

 

Electricity Segment. Our Electricity segment domestic revenues were approximately 62% and 61% of our total Electricity segment for the nine months ended September 30, 2020 and 2019, respectively. However, domestic operations in our Electricity segment have higher costs of revenues and expenses than the foreign operations in our Electricity segment. Our foreign power plants are located in lower-cost regions, like Kenya, Guatemala, Honduras and Guadeloupe, which favorably impact payroll, well-field and maintenance expenses among other items. They are also newer than most of our domestic power plants and therefore tend to have lower maintenance costs and higher availability factors than our domestic power plants.

 

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Product Segment. Our Product segment foreign revenues were approximately 99% and 81% of our total Product segment revenues for the nine months ended September 30, 2020 and 2019, respectively. Our Product segment foreign activity also benefits from lower costs of revenues and expenses than Product segment domestic activity such as labor and transportation costs. Accordingly, our Product segment foreign activity contributes more than our Product segment domestic activity to our pre-tax income from operations.

 

In the nine months ended September 30, 2020, the international operations in our Electricity segment accounted for 53% of our total gross profit, 71% of our net income and 45% of our EBITDA.

 

Seasonality

 

Electricity generation from some of our geothermal power plants is subject to seasonal variations; in the winter, our power plants produce more energy primarily attributable to the lower ambient temperature, which has a favorable impact on the energy component of our Electricity segment revenues and the prices under many of our contracts are fixed throughout the year with no time-of-use impact. The prices paid for electricity under the PPAs for the Heber 2 power plant in the Heber Complex, the Mammoth Complex and the North Brawley power plant in California, the Raft River power plant in Idaho and the Neal Hot Springs power plant in Oregon, are higher in the months of June through September. The higher payments payable under these PPAs in the summer months partially offset the negative impact on our revenues from lower generation in the summer attributable to a higher ambient temperature. As a result, we expect the revenues and as a result the gross margin in the winter months to be higher than the revenues in the summer months and in general we expect the first and fourth quarters to generate higher revenues than the second and third quarters.

 

Breakdown of Cost of Revenues

 

The principal cost of revenues attributable to our three segments are discussed in our 2019 Annual Report under “Part II - Item 7 – Management Discussion and Analysis of Financial Condition and Results of Operation”.

 

Critical Accounting Estimates and Assumptions

 

A comprehensive discussion of our critical accounting estimates and assumptions is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in our 2019 Annual Report.

 

New Accounting Pronouncements

 

See Note 2 to our condensed consolidated financial statements set forth in Item 1 of this quarterly report for information regarding new accounting pronouncements.

 

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Results of Operations

 

Our historical operating results in dollars and as a percentage of total revenues are presented below. A comparison of the different years described below may be of limited utility due to (i) our recent construction of power plants and enhancement of acquired power plants; (ii) fluctuation in revenues from our Product segment; and (iii) the impact of the lava eruption on our Puna plant in Hawaii and the related insurance proceeds.

 

   

Three Months Ended
September 30,

    

Nine Months Ended
September 30,

  
   

2020

    

2019

    

2020

    

2019

  
   

(Dollars in thousands,
except per share data)

    

(Dollars in thousands,
except per share data)

  

Statements of Operations Historical Data:

                                

Revenues:

                                

Electricity

   $ 123,660     $ 123,978     $ 395,201     $ 395,965  

Product

     29,625       43,037       120,737       147,195  

Energy storage and management services

     5,662       3,484       10,022       10,442  

Total Revenues

     158,947       170,499       525,960       553,602  

Cost of revenues:

                                

Electricity

     76,670       80,124       219,988       231,442  

Product

     24,037       31,073       95,724       114,495  

Energy storage and management services

     4,210       3,807       9,014       12,844  

Total cost of revenues

     104,917       115,004       324,726       358,781  

Gross profit

                                

Electricity

     46,990       43,854       175,213       164,523  

Product

     5,588       11,964       25,013       32,700  

Energy storage and management services

     1,452       (323 )     1,008       (2,402 )

Total gross profit

     54,030       55,495       201,234       194,821  

Operating expenses:

                                

Research and development expenses

     1,490       1,062       4,281       2,772  

Selling and marketing expenses

     4,076       3,783       13,724       10,924  

General and administrative expenses

     14,539       11,931       43,154       41,801  

Business interruption insurance income

     (17,761 )     —       (20,743 )     —  

Operating income

     51,686       38,719       160,818       139,324  

Other income (expense):

                                

Interest income

     626       482       1,469       1,195  

Interest expense, net

     (21,756 )     (20,076 )     (58,814 )     (62,816 )

Derivatives and foreign currency transaction gains (losses)

     1,047       205       2,111       696  

Income attributable to sale of tax benefits

     7,014       4,056       16,818       16,457  

Other non-operating income (expense), net

     961       244       1,343       1,362  

Income from operations before income tax and equity in earnings (losses) of investees

     39,578       23,630       123,745       96,218  

Income tax (provision) benefit

     (15,361 )     (9,626 )     (45,275 )     (20,136 )

Equity in earnings (losses) of investees, net

     (1,119 )     1,085       (196 )     3,334  

Net income

     23,098       15,089       78,274       79,416  

Net income attributable to noncontrolling interest

     (7,419 )     516       (13,516 )     (3,927 )

Net income attributable to the Company's stockholders

   $ 15,679     $ 15,605     $ 64,758     $ 75,489  

Earnings per share attributable to the Company's stockholders:

                                

Basic:

                                

Net income

   $ 0.31     $ 0.31     $ 1.27     $ 1.49  

Diluted:

                                

Net income

   $ 0.31     $ 0.30     $ 1.26     $ 1.48  

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

                                

Basic

     51,072       50,933       51,051       50,816  

Diluted

   $ 51,282     $ 51,334     $ 51,386     $ 51,124  

 

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Three Months Ended
September 30,

    

Nine Months Ended
September 30,

  
   

2020

    

2019

    

2020

    

2019

  

Statements of Operations Data:

                                

Revenues:

                                

Electricity

     77.8

%

     72.7

%

     75.1

%

     71.5

%

Product

     18.6       25.2       23.0       26.6  

Energy storage and management services

     3.6       2.0       1.9       1.9  

Total Revenues

     100.0       100.0       100.0       100.0  

Cost of revenues:

                                

Electricity

     62.0       64.6       55.7       58.5  

Product

     81.1       72.2       79.3       77.8  

Energy storage and management services

     74.4       109.3       89.9       123.0  

Total cost of revenues

     66.0       67.5       61.7       64.8  

Gross profit

                                

Electricity

     38.0       35.4       44.3       41.5  

Product

     18.9       27.8       20.7       22.2  

Energy storage and management services

     25.6       (9.3 )     10.1       (23.0 )

Total gross profit

     34.0       32.5       38.3       35.2  

Operating expenses:

                                

Research and development expenses

     0.9       0.6       0.8       0.5  

Selling and marketing expenses

     2.6       2.2       2.6       2.0  

General and administrative expenses

     9.1       7.0       8.2       7.6  

Business interruption insurance income

     (11.2 )     0.0       (3.9 )     0.0  

Operating income

     32.5       22.7       30.6       25.2  

Other income (expense):

                                

Interest income

     0.4       0.3       0.3       0.2  

Interest expense, net

     (13.7 )     (11.8 )     (11.2 )     (11.3 )

Derivatives and foreign currency transaction gains (losses)

     0.7       0.1       0.4       0.1  

Income attributable to sale of tax benefits

     4.4       2.4       3.2       3.0  

Other non-operating income (expense), net

     0.6       0.1       0.3       0.2  

Income from operations before income tax and equity in earnings (losses) of investees

     24.9       13.9       23.5       17.4  

Income tax (provision) benefit

     (9.7 )     (5.6 )     (8.6 )     (3.6 )

Equity in earnings (losses) of investees, net

     (0.7 )     0.6       0.0       0.6  

Net income

     14.5       8.8       14.9       14.3  

Net income attributable to noncontrolling interest

     (4.7 )     0.3       (2.6 )     (0.7 )

Net income attributable to the Company's stockholders

     9.9

%

     9.2

%

     12.3

%

     13.6

%

 

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Comparison of the Three Months Ended September 30, 2020 and the Three Months Ended September 30, 2019 

 

Total Revenues

 

   

Three Months Ended September 30,

          
   

2020

    

2019

    

Change

  
   

(Dollars in millions)

          

Electricity segment revenues

   $ 123.7     $ 124.0       (0.3

)%

Product segment revenues

     29.6       43.0       (31.2 )

Energy Storage and Management Services segment revenues

     5.7       3.5       62.5  

Total revenues

   $ 158.9     $ 170.5       (6.8

)%

 

Total revenues for the three months ended September 30, 2020 were $158.9 million, compared to $170.5 million for the three months ended September 30, 2019, which represented a 6.8% decrease from the prior year period. This decrease was attributable to a $13.4 million, or 31.2%, decrease in our Product segment revenues compared to the corresponding period in 2019, offset partially by a $2.2 million, or 62.5% increase in Energy Storage and Management Services segment revenues as compared to the corresponding period in 2019, all as discussed below. Electricity segment revenues remained almost flat.

 

Electricity Segment

 

Revenues attributable to our Electricity segment for the three months ended September 30, 2020 were $123.7 million, compared to $124.0 million for the three months ended September 30, 2019.

 

Power generation in our power plants decreased by 3.5% from 1,388,001 MWh in the three months ended September 30, 2019 to 1,339,147 MWh in the three months ended September 30, 2020 mainly due to the lower generation at our OREG facilities and curtailments in the Olkaria power plant driven, inter alia, by the impact of COVID 19 in Kenya. However, revenues remained unchanged because of better performance in some of the U.S. power plants and because of different energy rates under our portfolio contracts.

 

Product Segment

 

Revenues attributable to our Product segment for the three months ended September 30, 2020 were $29.6 million, compared to $43.0 million for the three months ended September 30, 2019, which represented a 31.2% decrease. The decrease in our Product segment revenues was mainly due to projects in Turkey and the U.S., which were completed in 2019 and which accounted for $6.4 million in Product segment revenues in the three months ended September 30, 2019, and by other projects in Turkey, New Zealand and Chile, which started in 2019, and provided $21.4 million in revenue recognized during the three months ended September 30, 2020 compared to $32.0 million in the three months ended September 30, 2019. The decrease was partially offset by other projects in Turkey which were started in 2020, and provided $3.4 million in revenue recognized during the three months ended September 30, 2020.

 

Energy Storage and Management Services Segment

 

Revenues attributable to our Energy Storage and Management Services segment for the three months ended September 30, 2020 were $5.7 million compared to $3.5 million for the three months ended September 30, 2019. The increase is mainly due to $2.4 million revenues from the acquisition of the Pomona energy storage asset, offset partially by the impact of COVID 19 on the frequency regulation market prices. The Energy Storage and Management Services segment includes revenues from the delivery of energy storage, demand response and energy management services.

 

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Total Cost of Revenues

 

   

Three Months Ended September 30,

          
   

2020

    

2019

    

Change

  
   

(Dollars in millions)

          

Electricity segment cost of revenues

   $ 76.7     $ 80.1       (4.3

)%

Product segment cost of revenues

     24.0       31.1       (22.6 )

Energy Storage and Management Services segment cost of revenues

     4.2       3.8       10.6  

Total cost of revenues

   $ 104.9     $ 115.0       (8.8

)%

 

Total cost of revenues for the three months ended September 30, 2020 was $104.9 million, compared to $115.0 million for the three months ended September 30, 2019, which represented an 8.8% decrease. This decrease was attributable to a decrease of $3.5 million, or 4.3%, in cost of revenues from our Electricity segment, a decrease of $7.0 million, or 22.6%, in cost of revenues from our Product segment offset partially by an increase of $0.4 million, or 10.6%, in cost of revenues from our Energy Storage and Management Services segment generated by our Viridity business, all as discussed below. As a percentage of total revenues, our total cost of revenues for the three months ended September 30, 2020 decreased to 66.0% from 67.5% for the three months ended September 30, 2019.

 

Electricity Segment

 

Total cost of revenues attributable to our Electricity segment for the three months ended September 30, 2020 was $76.7 million, compared to $80.1 million for the three months ended September 30, 2019. This decrease was primarily attributable to lower operational costs in some of our power plants in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 and a decrease in lease expense of $1.3 million due to the termination of the lease contract. Cost of revenues at our Puna power plant that was shut down immediately following the Kilauea volcanic eruption on May 3, 2018, includes business interruption recovery of $2.6 million in the three months ended September 30, 2020  compared to $1.2 million in the three months ended September 30, 2019. As a percentage of total Electricity revenues, our total cost of revenues attributable to our Electricity segment for the three months ended September 30, 2020 was 62.0%, compared to 64.6% for the three months ended September 30, 2019. This decrease was primarily attributable to the increase in gross profit relating to lower operational costs in some of our power plants. The cost of revenues attributable to our international power plants was 21.0% of our total Electricity segment cost of revenues.

 

Product Segment

 

Total cost of revenues attributable to our Product segment for the three months ended September 30, 2020 was $24.0 million, compared to $31.1 million for the three months ended September 30, 2019, which represented a 22.6% decrease. This decrease was primarily attributable to the decrease in Product segment revenues, different product scope and different margins in the various sales contracts we entered into mainly in Turkey, New Zealand and Chile for the Product segment during these periods. As a percentage of total Product segment revenues, our total cost of revenues attributable to our Product segment for the three months ended September 30, 2020 and 2019, was 81.1% and 72.2%, respectively. This increase is mainly related to the higher cost of revenues related to the Nawgha project that we are constructing in New Zealand and that was impacted, among other things, by the restrictions and limitations in the country associated with COVID 19.

 

Energy Storage and Management Services Segment

 

Cost of revenues attributable to our Energy Storage and Management Services segment for the three months ended September 30, 2020 were $4.2 million compared to $3.8 million for the three months ended September 30, 2019.Cost of revenues attributable to our Energy Storage and Management Services segment for the three months ended September 30, 2020 includes $1.3 million from the acquisition of the Pomona energy storage asset. The Energy Storage and Management Services segment includes cost of revenues related to the delivery of energy storage, demand response and energy management services.

 

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Research and Development Expenses, Net

 

Research and development expenses for the three months ended September 30, 2020 were $1.5 million, compared to $1.1 million for the three months ended September 30, 2019. The increase is mainly attributable to new development projects that took place during 2020.

 

Selling and Marketing Expenses

 

Selling and marketing expenses for the three months ended September 30, 2020 were $4.1 million compared to $3.8 million for the three months ended September 30, 2019. The increase was primarily due to an increase in sales commissions due to different product mix and increase in marketing activities. Selling and marketing expenses for the three months ended September 30, 2020 constituted 2.6% of total revenues for such period, compared to 2.2% for the three months ended September 30, 2019.

 

General and Administrative Expenses

 

General and administrative expenses for the three months ended September 30, 2020 were $14.5 million compared to $11.9 million for the three months ended September 30, 2019.  The increase was primarily attributable to an increase in insurance expenses and professional fees. General and administrative expenses for the three months ended September 30, 2020 constituted 9.1% of total revenues for such period, compared to 7.0% for the three months ended September 30, 2019.

 

Business Interruption Insurance Income

 

Business interruption insurance income for the three months ended September 30, 2020 was $17.8 million compared to nil for the three months ended September 30, 2019. Business interruption insurance income for the three months ended September 30, 2020 is attributable to business interruption recovery relating to the Puna power plant which was received this quarter.

 

Operating Income

 

Operating income for the three months ended September 30, 2020 was $51.7 million, compared to $38.7 million for the three months ended September 30, 2019, which represented a 33.5% increase. The increase in operating income was primarily attributable to the increase in our Electricity and Energy Storage and Management Services segments gross margin, and business interruption insurance income, offset partially by a decrease in our Product segment gross margin, and an increase in general and administrative expenses, as discussed above. Operating income attributable to our Electricity segment for the three months ended September 30, 2020 was $50.8 million, compared to $32.4 million for the three months ended September 30, 2019. Operating income attributable to our Product segment for the three months ended September 30, 2020 was $1.3 million, compared to $6.8 million for the three months ended September 30, 2019. Operating loss attributable to our Energy Storage and Management Services segment for the three months ended September 30, 2020 was $0.4 million compared to $0.5 million for the three months ended September 30, 2019.

 

Interest Expense, Net

 

Interest expense, net for the three months ended September 30, 2020 was $21.8 million, compared to $20.1 million for the three months ended September 30, 2019. This increase was primarily due to a $4.1 million increase in interest expense primarily related to $79.4 million of proceeds from a Senior Unsecured Bonds Series 3 received in April and May 2020; (ii) $50.0 million of proceeds from a Senior Unsecured Loan received in April 2020, and (iii) $290 million of proceeds from Bonds Series 4 received in July 2020, offset by a decrease of $0.7 million in interest related to the sale of tax benefits and a $1.7 million increase in interest capitalized to projects.

 

Derivatives and Foreign Currency Transaction Gains (Losses)

 

Derivatives and foreign currency transaction gains for the three months ended September 30, 2020 were $1.0 million, compared to $0.2 million for the three months ended September 30, 2019. Derivatives and foreign currency transaction gains for the three months ended September 30, 2020 and 2019, respectively, were primarily attributable to gains from foreign currency forward contracts which were not accounted for as hedge transactions.

 

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Table of Contents

 

Income Attributable to Sale of Tax Benefits

 

Income attributable to the sale of tax benefits for the three months ended September 30, 2020 was $7.0 million, compared to $4.1 million for the three months ended September 30, 2019. Tax equity is a form of financing used for renewable energy projects. This income primarily represents the value of PTCs and taxable income or loss generated by certain of our power plants allocated to investors under tax equity transactions.

 

Other Non-Operating Income (Expense), Net

 

Other non-operating income for the three months ended September 30, 2020 was $1.0 million, compared to $0.2 million for the three months ended September 30, 2019. Other non-operating income for the three months ended September 30, 2020, mainly includes $0.6 million of property damage recovery related to the Puna power plant.

 

Income Taxes

 

Income tax provision for the three months ended September 30, 2020 was $15.4 million compared to income tax provision of $9.6 million for the three months ended September 30, 2019. Our effective tax rate for the three months ended September 30, 2020 and 2019, was 38.8% and 40.7%, respectively. The effective rate differs from the federal statutory rate of 21% for the three months ended September 30, 2020 due to: (i) the mix of business in various countries with higher statutory tax rates than the federal statutory tax rate; (ii) a net increase in the valuation allowance on deferred tax assets related to Production Tax Credits ("PTC") mainly due to U.S. IRS income tax regulations issued during the period, partially offset by the release of reserves and interest for uncertain tax positions in foreign jurisdictions related to prior years.

 

Equity in Earnings (losses) of Investees, Net

 

Equity in losses of investees, net for the three months ended September 30, 2020 was $1.1 million, compared to equity in earnings of investees, net of $1.1 million for the three months ended September 30, 2019. Equity in earnings (losses) of investees, net is mainly derived from our 12.75% share in the earnings or losses in the Sarulla Consortium ("Sarulla"). The decrease was mainly due to lower result of operations and revaluation of the local currency compared to the U.S. dollar in Sarulla during the third quarter of 2020. Sarulla is currently developing a remediation plan with a target to increase generation in the near-term back to previous levels. We are following the remediation plans in Sarulla as well as the accounting impact and its implication on our financial statements and our investment in Sarulla.

 

Net Income

 

Net income for the three months ended September 30, 2020 was $23.1 million, compared to $15.1 million for the three months ended September 30, 2019, which represents an increase of $8.0 million. This increase in net income was primarily attributable to business interruption insurance income of $17.8 million, partially offset by an increase in general and administrative expenses of $2.6 million, an increase of $1.7 million in interest expense, net, an increase of $5.7 million in income tax provision and an increase of $2.2 million in equity in losses of investees.

 

Net Income Attributable to the Company’s Stockholders

 

Net income attributable to the Company’s stockholders for the three months ended September 30, 2020 was $15.7 million, compared to net income attributable to the Company’s stockholders of $15.6 million for the three months ended September 30, 2019, which represents an increase of $0.1 million. This increase was attributable to the increase of $7.9 million in net income attributable to non-controlling interest mainly due to the business interruption recovery of the Puna power plant in Hawaii, offset by an increase in net income of $8.0 million, all as discussed above.

 

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Comparison of the Nine Months Ended September 30, 2020 and the Nine Months Ended September 30, 2019

 

   

Nine Months Ended
September 30,

          
   

2020

    

2019

    

Change

  
   

(Dollars in millions)

          

Electricity segment revenues

   $ 395.2     $ 396.0       —

%

Product segment revenues

     120.7       147.2       (18.0

)%

Energy Storage and Management Services segment revenues

     10.0       10.4       (4.0

)%

Total revenues

   $ 526.0     $ 553.6       (5.0

)%

 

Total Revenues

 

Total revenues for the nine months ended September 30, 2020 were $526.0 million, compared to $553.6 million for the nine months ended September 30, 2019, which represented a 5.0% decrease from the prior year period. This decrease was attributable to a $26.5 million or 18.0% decrease in our Product segment revenues compared to the corresponding period in 2019, as discussed below. Electricity segment revenues and Energy Storage and Management Services segment revenues remained almost flat.

 

Electricity Segment

 

Revenues attributable to our Electricity segment for the nine months ended September 30, 2020 were $395.2 million, compared to $396.0 million for the nine months ended September 30, 2019.

 

Power generation in our power plants had a decrease of 0.8% from 4,464,401 MWh in the nine months ended September 30, 2019 to 4,429,834 MWh in the nine months ended September 30, 2020 due to the lower generation at some of our power plants, including our OREG facilities and Olkaria complex that were impacted by lower demand due to COVID 19. However, revenues remained unchanged because of different energy rates under our portfolio contracts.

 

Product Segment

 

Revenues attributable to our Product segment for the nine months ended September 30, 2020 were $120.7 million, compared to $147.2 million for the nine months ended September 30, 2019, which represented an 18.0% decrease. The decrease in our Product segment revenues was mainly due to projects in Turkey and the U.S., which were completed in 2019 and accounted for $74.7 million in revenues in the nine months ended September 30, 2019. The decrease was partially offset by other projects in Turkey, New Zealand and Chile, which started in 2019, and provided $81.4 million in revenue recognized during the nine months ended September 30, 2020 compared to $51.0 million for the nine months ended September 30, 2019, and other projects in Turkey, which started in 2020 and provided $22.9 million for the nine months ended September 30, 2020.

  

Energy Storage and Management Services Segment

 

Revenues attributable to our Energy Storage and Management Services segment for the nine months ended September 30, 2020 were $10.0 million compared to $10.4 million for the nine months ended September 30, 2019.  The slight decrease was mainly driven by revenues from a one-time EPC project in the amount of $2.4 million in the nine months ended September 30, 2019, offset by $2.4 million of revenues from the acquisition of the Pomona energy storage asset. The Energy Storage and Management Services segment includes revenues from the delivery of energy storage, demand response and energy management services.

 

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Total Cost of Revenues

 

   

Nine Months Ended

September 30,

          
   

2020

    

2019

    

Change

  
   

(Dollars in millions)

          

Electricity segment cost of revenues

   $ 220.0     $ 231.4       (4.9

)%

Product segment cost of revenues

     95.7       114.5       (16.4

)%

Energy Storage and Management Services segment cost of revenues

     9.0       12.8       (29.8

)%

Total cost of revenues

   $ 324.7     $ 358.8       (9.5

)%

 

Total cost of revenues for the nine months ended September 30, 2020 was $324.7 million, compared to $358.8 million for the nine months ended September 30, 2019, which represented a 9.5% decrease. This decrease was attributable to a decrease of $11.5 million, or 4.9%, in cost of revenues from our Electricity segment, a decrease of $18.8 million, or 16.4%, in cost of revenues from our Product segment and a decrease of $3.8 million, or 29.8%, in cost of revenues from our Energy Storage and Management Services segment generated by our Viridity business, all as discussed below. As a percentage of total revenues, our total cost of revenues for the nine months ended September 30, 2020 decreased to 61.7% from 64.8% for the nine months ended September 30, 2019.

 

Electricity Segment

 

Total cost of revenues attributable to our Electricity segment for the nine months ended September 30, 2020 was $220.0 million, compared to $231.4 million for the nine months ended September 30, 2019. This decrease was primarily attributable to a decrease in cost of revenues at our Puna power plant that was shut down immediately following the Kilauea volcanic eruption on May 3, 2018, as the cost of revenues at our Puna power plant for the nine months ended September 30, 2020 includes a decrease in lease expense of $3.9 million due to the termination of the lease transaction. The decrease was also due to lower operational costs in some of our power plants in the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. Cost of revenues at our Puna power plant, which included business interruption recovery of $7.8 million in the nine months ended September 30, 2020 , compared to $9.3 million in the nine months ended September 30, 2019. As a percentage of total Electricity revenues, our total cost of revenues attributable to our Electricity segment for the nine months ended September 30, 2020 was 55.7%, compared to 58.5% for the nine months ended September 30, 2019. The cost of revenues attributable to our international power plants was 21.9% of our Electricity segment cost of revenues.

 

Product Segment

 

Total cost of revenues attributable to our Product segment for the nine months ended September 30, 2020 was $95.7 million, compared to $114.5 million for the nine months ended September 30, 2019, which represented a 16.4% decrease. This decrease was primarily attributable to the decrease in Product segment revenues, different product scope and different margins in the various sales contracts we entered into mainly in Turkey, New Zealand and Chile for the Product segment during these periods. As a percentage of total Product segment revenues, our total cost of revenues attributable to our Product segment for the nine months ended September 30, 2020 was 79.3%, compared to 77.8% for the nine months ended September 30, 2019. This increase is mainly related to the higher cost of revenues related to the Nawgha project that we are constructing in New Zealand and that was impacted, among other things, by the restrictions and limitations in the country associated with COVID 19.

 

Energy Storage and Management Services Segment

 

Cost of revenues attributable to our Energy Storage and Management Services segment for the nine months ended September 30, 2020 were $9.0 million compared to $12.8 million for the nine months ended September 30, 2019. The decrease was mainly driven by cost of revenues from a one-time EPC project in the amount of $1.9 million in the nine months ended September 30, 2019, offset partially by $1.3 million in cost of revenues from the acquisition of the Pomona energy storage asset. The Energy Storage and Management Services segment includes cost of revenues related to the delivery of energy storage, demand response and energy management services.

 

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Research and Development Expenses, Net

 

Research and development expenses for the nine months ended September 30, 2020 were $4.3 million, compared to $2.8 million for the nine months ended September 30, 2019. The increase is mainly due to new development projects that took place during the nine months ended September 30, 2020.

 

Selling and Marketing Expenses

 

Selling and marketing expenses for the nine months ended September 30, 2020 were $13.7 million compared to $10.9 million for the nine months ended September 30, 2019. The increase was mainly due to an increase in sales commissions due to different product mix and increase in marketing activities. Selling and marketing expenses for the nine months ended September 30, 2020 constituted 2.6% of total revenues for such period, compared to 2.0% for the nine months ended September 30, 2019.

 

General and Administrative Expenses

 

General and administrative expenses for the nine months ended September 30, 2020 were $43.2 million compared to $41.8 million for the nine months ended September 30, 2019. The increase was primarily attributable to an increase in professional fees, and $1.3 million in costs associated with one of our legal claims, partially offset by a $1.3 million gain from the sale of a concession in one of our foreign locations. General and administrative expenses for the nine months ended September 30, 2020 constituted 8.2% of total revenues for such period, compared to 7.6% for the nine months ended September 30, 2019.

 

Business Interruption Insurance Income

 

Business interruption insurance income for the nine months ended September 30, 2020 was $20.7 million compared to nil for the nine months ended September 30, 2019. Business interruption insurance income for the nine months ended September 30, 2020 is attributable to business interruption recovery relating to the Puna power plant which was received this quarter.

 

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Operating Income

 

Operating income for the nine months ended September 30, 2020 was $160.8 million, compared to $139.3 million for the nine months ended September 30, 2019, which represented a 15.4% increase. The increase in operating income was attributable to the increase in our Electricity and Energy Storage and Management Services segments gross margin, and business interruption insurance income, as discussed above, offset partially by a decrease in our Product segment gross margin and an increase in general and administrative expenses. Operating income attributable to our Electricity segment for the nine months ended September 30, 2020 was $155.4 million, compared to $127.4 million for the nine months ended September 30, 2019. Operating income attributable to our Product segment for the nine months ended September 30, 2020 was $9.0 million, compared to $16.4 million for the nine months ended September 30, 2019. Operating loss attributable to our Energy Storage and Management Services segment for the nine months ended September 30, 2020 was $3.5 million compared to $4.4 million for the nine months ended September 30, 2019.

 

Interest Expense, Net

 

Interest expense, net for the nine months ended September 30, 2020 was $58.8 million, compared to $62.8 million for the nine months ended September 30, 2019. This decrease was primarily due to (i) $2.7 million decrease in interest related to the sale of tax benefits; (ii) $5.8 million increase in interest capitalized to projects and (iii) lower interest expense as a result of principal payments of long term debt. The decrease was partially offset by interest expense from: (i) $79.4 million of proceeds from a senior unsecured bonds series 3 received in April and May 2020; (ii) $50.0 million of proceeds from a senior unsecured loan received in April 2020; and (iii) $290 million of proceeds from bonds series 4 received on July 2020.

 

Derivatives and Foreign Currency Transaction Gains (Losses)

 

Derivatives and foreign currency transaction gains for the nine months ended September 30, 2020 were $2.1 million, compared to $0.7 million for the nine months ended September 30, 2019. Derivatives and foreign currency transaction gains for the nine months ended September 30, 2020 and 2019, were primarily attributable to gains from foreign currency forward contracts which were not accounted for as hedge transactions.

 

Income Attributable to Sale of Tax Benefits

 

Income attributable to the sale of tax benefits for the nine months ended September 30, 2020 was $16.8 million, compared to $16.5 million for the nine months ended September 30, 2019. Tax equity is a form of financing used for renewable energy projects. This income primarily represents the value of PTCs and taxable income or loss generated by certain of our power plants allocated to investors under tax equity transactions.

 

Other Non-Operating Income (Expense), Net

 

Other non-operating income for the nine months ended September 30, 2020 was $1.3 million, compared to $1.4 million for the nine months ended September 30, 2019. Other non-operating income for the nine months ended September 30, 2020 mainly includes $0.6 million of property damage recovery related to the Puna power plant. Other non-operating income for the nine months ended September 30, 2019 mainly includes income of $1.0 million from the sale of PG&E receivables relating to the January 2019 monthly invoice which was not paid as it occurred before PG&E filed for reorganization under Chapter 11 bankruptcy.

 

Income Taxes

 

Income tax provision for the nine months ended September 30, 2020 was $45.3 million compared to $20.1 million for the nine months ended September 30, 2019. Our effective tax rate for the nine months ended September 30, 2020 and September 30, 2019, was 36.6% and 20.9%, respectively. The effective rate differs from the federal statutory rate of 21% for the nine months ended September 30, 2020 due to: (i) the mix of business in various countries with higher statutory tax rates than the federal statutory tax rate, and (ii) a net increase in the valuation allowance on deferred tax assets related to Production Tax Credits ("PTC"), mainly due to U.S. IRS income tax regulations issued during the period, partially offset by tax depreciation benefits related to intra-entity transfers of assets and the release of reserves and interest for uncertain tax positions in foreign jurisdictions related to prior years.

 

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Equity in Earnings (losses) of Investees, Net

 

Equity in losses of investees, net for the nine months ended September 30, 2020 was $0.2 million, compared to Equity in earnings of investees, net of $3.3 million for the nine months ended September 30, 2019. Equity in earnings (losses) of investees, net is mainly derived from our 12.75% share in the earnings or losses in Sarulla. The decrease was mainly attributable to a lower result of operations due to well-field issues in the NIL power plant which resulted in lower generation. Sarulla is currently developing a remediation plan with a target to increase generation in the near-term back to previous levels. We are following the remediation plans in Sarulla as well as the potential accounting impact on our financial statements in respect of our investment in Sarulla.

 

Net Income

 

Net income for the nine months ended September 30, 2020 was $78.3 million, compared to $79.4 million for the nine months ended September 30, 2019, which represents a decrease of $1.1 million. This decrease in net income was primarily attributable to an increase in income tax provision of $25.1 million, and an increase of $3.5 million in equity in losses of investees, partially offset by an increase of $21.5 million in operating income, as discussed above, and a decrease of $4.0 million in interest expense, net.

 

Net Income Attributable to the Company’s Stockholders

 

Net income attributable to the Company’s stockholders for the nine months ended September 30, 2020 was $64.8 million, compared to $75.5 million for the nine months ended September 30, 2019, which represents a decrease of $10.7 million. This decrease was attributable to an increase of $9.6 million in net income attributable to non-controlling interest mainly due to the business interruption recovery of the Puna power plant in Hawaii, and a decrease in net income of $1.1 million, all as discussed above.

 

Liquidity and Capital Resources

 

Our principal sources of liquidity have been derived from cash flows from operations, proceeds from third party debt such as borrowings under our credit facilities, offerings and issuances of debt securities, project financing, tax monetization transactions, short term borrowing under our lines of credit, and proceeds from the sale of equity interests in one or more of our projects. We have utilized this cash to develop and construct power plants, fund our acquisitions, pay down existing outstanding indebtedness, and meet our other cash and liquidity needs.

 

As of September 30, 2020, we had access to (i) $197.3 million in cash and cash equivalents, of which $76.6 million is held by our foreign subsidiaries; and (ii) $388.8  million of unused corporate borrowing capacity under existing committed lines of credit with different commercial banks.

 

Our estimated capital needs for the remainder of  2020 include  $127.0  million for capital expenditures on new projects under development or construction including storage projects, exploration activity and maintenance capital expenditures for our existing projects.  In addition, $19.8 million will be needed for debt repayment.

 

We expect to finance these requirements with: (i) the sources of liquidity described above; (ii) positive cash flows from our operations; and (iii) future project financings and re-financings (including construction loans and tax equity). Management believes that, based on the current stage of implementation of our strategic plan, the sources of liquidity and capital resources described above will address our anticipated liquidity, capital expenditures, and other investment requirements.

 

As of September 30, 2020, we continue to maintain our assertion to no longer indefinitely reinvest foreign funds held by our foreign subsidiaries, with the exception of a certain balance held in Israel, and have accrued the incremental foreign withholding taxes. Accordingly, during the nine months ended September 30, 2020, we included a foreign income tax expense of $5.0 million related to foreign withholding taxes on accumulated earnings of all of our foreign subsidiaries.

 

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Letters of Credits Under Credit Agreements

 

Some of our customers require our project subsidiaries to post letters of credit in order to guarantee their respective performance under relevant contracts. We are also required to post letters of credit to secure our obligations under various leases and licenses and may, from time to time, decide to post letters of credit in lieu of cash deposits in reserve accounts under certain financing arrangements. In addition, our subsidiary, Ormat Systems, is required from time to time to post performance letters of credit in favor of our customers with respect to orders of products. 

 

Credit Agreements

 

Issued Amount

    

Issued and
Outstanding as of

September 30,

2020

  

Termination
Date
   

(Dollars in millions)

    

Committed lines for credit and letters of credit

   $ 478.0     $ 114.2  

October 2020-July 2022

Committed lines for letters of credit

     145.0       75.6  

October 2020-September 2021

Non-committed lines

     -       10.1  

December 2020

Total

   $ 623.0     $ 199.9    

 

Restrictive Covenants

 

Our obligations under the credit agreements, the loan agreements, and the trust instrument governing the bonds described above, are unsecured, but we are subject to a negative pledge in favor of the banks and the other lenders and certain other restrictive covenants. These include, among other things, restraints on: (i) creating any floating charge or any permanent pledge, charge or lien over our assets without obtaining the prior written approval of the lender; (ii) guaranteeing the liabilities of any third party without obtaining the prior written approval of the lender; and (iii) selling, assigning, transferring, conveying or disposing of all or substantially all of our assets, or a change of control in our ownership structure. Some of the credit agreements, the term loan agreements, and the trust instrument contain cross-default provisions with respect to other material indebtedness owed by us to any third party. In some cases, we have agreed to maintain certain financial ratios, which are measured quarterly, such as: (i) equity of at least $600 million and in no event less than 25% of total assets; (ii) 12-month debt, net of cash, cash equivalents, and short-term bank deposits to Adjusted EBITDA ratio not to exceed 6.0; and (iii) dividend distributions not to exceed 35% of net income in any calendar year.  As of September 30, 2020: (i) total equity was $1,571.8 million and the actual equity to total assets ratio was 44.6% and (ii) the 12-month debt, net of cash, cash equivalents, to Adjusted EBITDA ratio was 3.0. During the nine months ended September 30, 2020, we distributed interim dividends in an aggregate amount of $16.9 million. The failure to perform or observe any of the covenants set forth in such agreements, subject to various cure periods, would result in the occurrence of an event of default and would enable the lenders to accelerate all amounts due under each such agreement.

 

As described above, we are currently in compliance with our covenants with respect to the credit agreements, the loan agreements and the trust instrument, and believe that the restrictive covenants, financial ratios and other terms of any of our full-recourse bank credit agreements will not materially impact our business plan or operations.

 

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Future minimum payments

 

Future minimum payments under long-term obligations, excluding revolving credit lines with commercial banks, as of September 30, 2020, are as follows:

 

   

(Dollars in
thousands)

  

Year ending December 31:

       

2020

   $ 21,995  

2021

     85,679  

2022

     341,456  

2023

     137,129  

2024

     118,865  

Thereafter

     807,614  

Total

   $ 1,512,738  

 

Third-Party Debt 

 

Our third-party debt consists of (i) non-recourse and limited-recourse project finance debt or acquisition financing debt that we or our subsidiaries have obtained for the purpose of developing and constructing, refinancing or acquiring our various projects and (ii) full-recourse debt incurred by us or our subsidiaries for general corporate purposes.

 

Non-Recourse and Limited-Recourse Third-Party Debt

 

Loan

  


Amount Issued

  

Amount Outstanding
as of

September 30, 2020

  

Interest Rate

  

Maturity
Date

 

Related Project

Location
   

(Dollars in millions)

                  

OFC 2 Senior Secured Notes – Series A

   $ 151.7   $ 88.9     4.67%     2032  

McGinness Hills phase

1 and Tuscarora

U.S.

OFC 2 Senior Secured Notes – Series B

     140.0     103.4     4.61%     2032  

McGinness Hills phase

2

U.S.

Olkaria III Financing Agreement with OPIC – Tranche 1

     85.0     48.4     6.34%     2030  

Olkaria III Complex

Kenya

Olkaria III Financing Agreement with OPIC – Tranche 2

     180.0     103.2     6.29%     2030  

Olkaria III Complex

Kenya

Olkaria III Financing Agreement with OPIC – Tranche 3

     45.0     27.5     6.12%     2030  

Olkaria III Complex

Kenya

Amatitlan Financing (1)

     42.0     23.6  

LIBOR+4.35%

     2027  

Amatitlan

Guatemala

Don A. Campbell Senior Secured Notes

     92.5     74.5     4.03%     2033  

Don A. Campbell

Complex

U.S.

Prudential Capital Group Idaho Loan (2)

  

 

 20.0     17.5     5.80%     2023  

Neal Hot Springs and

Raft River

U.S.

U.S. Department of Energy Loan (3)

     96.8     42.0     2.60%     2035  

Neal Hot Springs

U.S.

Prudential Capital Group Nevada Loan

     30.7     26.7     6.75%     2037  

San Emidio

U.S.

Platanares Loan with OPIC

     114.7     98.3     7.02%     2032  

Platanares

Honduras

Viridity - Plumstriker

     23.5     19.7  

LIBOR+3.5%

     2026  

Plumsted+Striker

U.S.

Géothermie Bouillante (4)

     8.9     7.8     1.52%     2026  

Géothermie Bouillante

Guadeloupe

Géothermie Bouillante (4)

     8.9     9.4     1.93%     2026  

Géothermie Bouillante

Guadeloupe

Total

    $ 1,039.7   $  690.9                  

 

 

1.

LIBO Rate cannot be lower than 1.25%. Margin of 4.35% as long as the Company’s guaranty of the loan is outstanding (current situation) or 4.75% otherwise.
 

2.

Secured by equity interest.
 

3.

Secured by the assets.
 

4.

Loan in Euro and issued amount is EUR 8.0 million

 

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 Full-Recourse Third-Party Debt

 

Loan

  

Amount Issued

    

Amount Outstanding
as of

September 30, 2020

   

Interest Rate

  

Maturity Date
   

(Dollars in millions)

            

Senior Unsecured Bonds Series 3

   $ 218.0     $ 218.0       4.45%  

September 2022

Senior Unsecured Bonds Series 4 (1)

     289.8       290.6       3.35%  

June 2031

Senior unsecured Loan 1

     100.0       100.0       4.8%  

March 2029

Senior unsecured Loan 2

     50.0       50.0       4.60%  

March 2029

Senior unsecured Loan 3

     50.0       50.0       5.44%  

March 2029

DEG Loan 2

     50.0       40.0       6.28%  

June 2028

DEG Loan 3

     41.5       34.9       6.04%  

June 2028

Total

    $ 799.3      $ 783.5            

 

(1) Bonds issued in total aggregate principal amount of NIS 1.0 billion.

 

Liquidity Impact of Uncertain Tax Positions

 

The Company has a liability associated with unrecognized tax benefits and related interest and penalties in the amount of approximately $12.6 million as of September 30, 2020. This liability is included in long-term liabilities in our condensed consolidated balance sheet because we generally do not anticipate that settlement of the liability will require payment of cash within the next twelve months. We are not able to reasonably estimate when we will make any cash payments required to settle this liability.

 

Dividends

 

The following are the dividends declared by us since September 30, 2018:

 

Date Declared

  

Dividend
Amount per
Share

 

Record Date

Payment Date

November 6, 2018

   $ 0.10  

November 20, 2018

December 4, 2018

February 26, 2019

   $ 0.11  

March 14, 2019

March 28, 2019

May 6, 2019

   $ 0.11  

May 20, 2019

May 28, 2019

August 7, 2019

   $ 0.11  

August 20, 2019

August 27, 2019

November 6, 2019

   $ 0.11  

November 20, 2019

December 4, 2019

February 25, 2020

   $ 0.11  

March 12, 2020

March 26, 2020

May 8, 2020

   $ 0.11  

May 21, 2020

June 2, 2020

August 4, 2020

   $ 0.11  

August 18, 2020

September 1, 2020

November 4, 2020

   $ 0.11  

November 18, 2020

December 2, 2020

 

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Historical Cash Flows

 

The following table sets forth the components of our cash flows for the periods indicated:

 

   

Nine Months Ended September 30,

  
   

2020

    

2019

  
   

(Dollars in thousands)

  

Net cash provided by operating activities

   $ 238,890     $ 201,452  

Net cash used in investing activities

     (292,970 )     (193,011 )

Net cash provided by (used in) financing activities

     189,992       (4,647 )

Net change in cash and cash equivalents and restricted cash and cash equivalents

     136,432       2,542  

 

For the Nine Months Ended September 30, 2020

 

Net cash provided by operating activities for the nine months ended September 30, 2020 was $238.9 million, compared to $201.5 million for the nine months ended September 30, 2019. The net increase of  $37.4 million was primarily due to a net decrease of $25.2 million in costs and estimated earnings in excess of billings, net in our Product segment in the nine months ended September 30, 2020, compared to a net increase of $13.4 million in the nine months ended September 30, 2019, as a result of timing of billing to our customers and an increase of $18.3 million in deferred income tax provision, offset partially by (i) an increase in receivables of $5.8 million in the nine months ended September 30, 2020, compared to $0.1 million in the nine months ended September 30, 2019, as a result of the timing of collections from our customers; and (ii) an increase in accounts payable and accrued expenses of $2.6 million in the nine months ended September 30, 2020, compared to $14.2 million in the nine months ended September 30, 2019, mainly due to timing of payments to our suppliers, partially offset by a withholding tax payment of approximately $8 million in the nine months ended September 30, 2020 compared to $14 million in the nine months ended September 30, 2019 due to a distribution from OSL.

 

Net cash used in investing activities for the nine months ended September 30, 2020 was $293.0 million, compared to $193.0 million for the nine months ended September 30, 2019. The principal factors that affected our net cash used in investing activities during the nine months ended September 30, 2020 were: (i) capital expenditures of $231.8 million, primarily for our facilities under construction that support our growth plan; (ii) cash paid for the acquisition of the Pomona energy storage asset in California from Alta Gas for a total net consideration of $43.3 million; and (iii) an investment in an unconsolidated company of $14.8 million. The principal factor that affected our net cash used in investing activities during the nine months ended September 30, 2019 was capital expenditures of $190.5 million, primarily for our facilities under construction.

 

Net cash provided by financing activities for the nine months ended September 30, 2020 was $190.0 million, compared to $4.6 million net cash used in financing activities for the nine months ended September 30, 2019. The principal factors that affected the net cash provided by financing activities during the nine months ended September 30, 2020 were: (i) $289.9 million of proceeds from bonds series 4; (ii) $79.4 million of proceeds from a senior unsecured bonds series 3; and (iii) $50.0 million of proceeds from a senior unsecured loan, partially offset by: (i) the repayment of commercial paper debt in the amount of $50.0 million; (ii) the repayment of our revolving credit lines with commercial banks which were withdrawn primarily to secure cash in hand in order to meet our capital needs in light of the uncertainty related to the COVID-19 pandemic in the amount of $40.6 million; (iii) the repayment of long-term debt in the amount of $115.6 million; (iv) a $16.9 million cash dividend payment and (v) $9.2 million cash paid to a noncontrolling interest. The principal factors that affected our net cash used in financing activities during the nine months ended September 30, 2019 were: (i) net payment of $159.0 million from our revolving credit lines with commercial banks which were used for capital expenditures, (ii) the repayment of long-term debt in the amount of $59.1 million; (iii) a $16.8 million cash dividend paid; and (iv) $9.4 million cash paid to noncontrolling interest, partially offset by: (i) $50 million of proceeds from a senior unsecured loan; (ii) $41.5 million of proceeds from a term loan for our Olkaria 3 complex; (iii) $23.5 million of proceeds for the financing of two 20 MW battery energy storage projects; (iv) $17.8 million of proceeds from limited and non-recourse loans for our Guadeloupe power plant; (v) $50.0 million of proceeds from issuance of commercial paper and (vi) proceeds from the sale of a limited liability company interest in McGinness Hills Phase 3, net of transaction costs of $58.7 million.

 

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Non-GAAP Measures: EBITDA and Adjusted EBITDA

 

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 liabilities, (viii) gains or losses on sale 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 accounting principles generally accepted in the U.S. (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. Our Board of Directors and senior management use EBITDA and Adjusted EBITDA to evaluate our financial performance. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.

 

Net income for the three and nine months ended September 30, 2020 was $23.1 million and 78.3 million, respectively, compared to $15.1 million and $79.4 million for the three and nine months ended September 30, 2019, respectively.

 

Adjusted EBITDA for the three and nine months ended September 30, 2020 was $107.1 million and $311.0 million, respectively, compared to $85.5 million and $282.1 million for the three and nine months ended September 30, 2019, respectively.

 

The following table reconciles net income to EBITDA and Adjusted EBITDA for the three and nine months period ended September 30, 2020 and 2019:

 

   

Three Months Ended
September 30,

    

Nine Months Ended
September 30,

  
   

2020

    

2019

    

2020

    

2019

  
   

(Dollars in thousands)

    

(Dollars in thousands)

  

Net income

   $ 23,098     $ 15,089     $ 78,274     $ 79,416  

Adjusted for:

                                

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

     21,130       19,594       57,345       61,621  

Income tax provision (benefit)

     15,361       9,626       45,275       20,136  

Adjustment to investment in an unconsolidated company: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla

     4,395       2,644       10,271       7,884  

Depreciation and amortization

     39,628       36,365       111,728       106,982  

EBITDA

   $ 103,612     $ 83,318     $ 302,893     $ 276,039  

Mark-to-market gains or losses from accounting for derivative

     431       (330 )     (1,612 )     (1,909 )

Stock-based compensation

     2,807       2,228       7,060       7,231  

Merger and acquisition transaction costs

     211       250       1,369       750  

Settlement expenses

     —       —       1,277       —  

Adjusted EBITDA

   $ 107,061     $ 85,466     $ 310,987     $ 282,111  

 

In May 2014, Sarulla closed $1,170 million in financing. As of September 30, 2020, the credit facility has an outstanding balance of $1,010.0 million. Our proportionate share in the SOL credit facility is $128.8 million. In October, Sarulla has not met its debt service coverage ratio under the credit facility agreement and is undergoing negotiations with its lenders for a waiver covering this non-compliance as well as a remediation plan aiming to achieve compliance in the future.

 

Capital Expenditures 

 

Our capital expenditures primarily relate to: (i) the development and construction of new power plants, (ii) the enhancement of our existing power plants; and (iii) investment in activities under our strategic plan.

 

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The following is an overview of projects that are fully released for construction.

 

Heber Complex (California). We are currently in the process of repowering the Heber 1 and Heber 2 power plants. We are planning to replace steam turbine and old OEC units with new advanced technology equipment that will add a net capacity of 11 MW. Following these enhancements, we expect the capacity of the complex to reach 92 MW. Permitting, engineering and procurement as well as manufacturing and construction are ongoing. We expect commercial operation at the end of 2021.

 

CD 4 Project (California). We plan to develop a 30 MW project at the Mammoth complex on primarily Bureau of Land Management ("BLM") leases. We signed a Wholesale Distribution Access Tariff Cluster Large Generator Interconnection Agreement with Southern California Edison in December 2017. We signed a 25-year PPA with SCPPA for 16 MW that will be sold to the City of Colton in California, and we recently signed an additional two similar 10-year PPAs with SVCE and MBCP, each of which will purchase 7 MW (for a total of 14 MW) of power. Engineering and procurement are ongoing. Construction commencement is planned for the second half of 2020 pending receipt of permits. We expect commercial operation at the end of 2021.

 

Wister Solar (California). We are developing a 20MW AC solar PV project on the Wister site in California. We plan to install a Solar PV system and sell the electricity under a PPA with San Diego Gas & Electric. Engineering and procurement are ongoing. Permitting has been delayed due to COVID-19 implications. We expect the project to be completed in the second half of 2021.

 

McGinness Hills expansion (Nevada). We are expanding the McGinness Hills complex by 8 MW by adding an Ormat energy converter. Construction and equipment delivery are ongoing. We expect the project to be completed in 2021, subject to approval of the lender.

 

Dixie Meadows (Nevada). We are developing the 12MW Dixie Meadows geothermal power plant in Churchill County, Nevada.  Engineering and procurement have commenced. We are planning to sell the electricity generated under the Portfolio SCPPA PPA. Engineering and procurement are ongoing. Commercial operation is expected in 2022.

 

Tungsten expansion (Nevada). We are expanding the Tungsten geothermal power plant to add new 11 MW in Churchill County, Nevada. We are planning to sell the electricity generated under the Portfolio SCPPA PPA. Engineering and procurement have commenced and commercial operation is expected in 2022.

 

In addition, we are in the process of upgrading some of the equipment, such as turbines and pipelines, at some of our operating power plants, including Ormesa in California and Amatitlan in Guatemala.

 

The following is an overview of projects that are in initial stages of construction:

 

Carson Lake Project. We plan to develop between 10 MW to 15 MW at the Carson Lake project on BLM leases located in Churchill County, Nevada. We signed a Small Generator Interconnection Agreement with NV Energy in December 2017. As of September 30, 2020, we are planning the drilling activity to begin next year.

 

We have budgeted approximately $466.0 million in capital expenditures for construction of new projects and enhancements to our existing power plants, of which we had invested $159.0 million as of September 30, 2020. We expect to invest approximately $69.0 million in the fourth quarter of 2020 and the remaining approximately $238.0 million thereafter.

 

In addition, we estimate approximately $58.0 million in additional capital expenditures in 2020 to be allocated as follows: (i) approximately $30.0 million for the exploration and development of new projects and enhancements of existing power plants that are not yet released for full construction; (ii) approximately $9.0 million for maintenance capital expenditures to our operating power plants including drilling in our Puna power plant; (iii) approximately $16.0 million for the construction and development of storage projects; and (iv) approximately $3.0 million for enhancements to our production facilities.

 

In the aggregate, we estimate our total capital expenditures for 2020 to be approximately $127.0 million.

 

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Exposure to Market Risks

 

Based on current conditions, we believe that we have sufficient financial resources to fund our activities and execute our business plans. However, the cost of obtaining financing for our project needs may increase significantly or such financing may be difficult to obtain.

 

We, like other power plant operators, are exposed to electricity price volatility risk. Our exposure to such market risk is currently limited because many of our long-term PPAs (except for the 25 MW PPA for the Puna complex and the between 30 MW and 40 MW PPAs in the aggregate for the Heber 2 power plant in the Heber Complex, and the G2 power plant in the Mammoth Complex) have fixed or escalating rate provisions that limit our exposure to changes in electricity prices. Our energy storage projects sell on "merchant" and are exposed to changes in the electricity market prices.

 

The energy payments under the PPAs of the Heber 2 power plant in the Heber Complex and the G2 power plant in the Mammoth Complex are determined by reference to the relevant power purchaser’s Short Run Avoided Cost (“SRAC”). A decline in the price of natural gas will result in a decrease in the incremental cost that the power purchaser avoids by not generating its electrical energy needs from natural gas, or by reducing the price of purchasing its electrical energy needs from natural gas power plants, which in turn will reduce the energy payments that we may charge under the relevant PPA for these power plants. The Puna complex is currently benefiting from energy prices which are higher than the floor under the 25 MW PPA for the Puna complex.

 

As of September 30, 2020, 97.1% of our consolidated long-term debt was fixed rate debt and therefore was not subject to interest rate volatility risk. As of such date, 2.9% of our long-term debt was floating rate debt, exposing us to interest rate risk in connection therewith. As of September 30, 2020, $43.3 million of our long-term debt remained subject to interest rate risk.

 

We currently maintain our surplus cash in short-term, interest-bearing bank deposits, money market securities and commercial paper (with a minimum investment grade rating of AA by Standard & Poor’s Ratings Services).

 

Our cash equivalents are subject to interest rate risk. Fixed rate securities may have their market value adversely impacted by a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. As a result of these factors, our future investment income may fall short of expectations because of changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value because of changes in interest rates.

 

We are also exposed to foreign currency exchange risk, in particular the fluctuation of the U.S. dollar versus the Israeli shekel and euro. Risks attributable to fluctuations in currency exchange rates can arise when we or any of our foreign subsidiaries borrow funds or incur operating or other expenses in one type of currency but receive revenues in another. In such cases, an adverse change in exchange rates can reduce such subsidiary’s ability to meet its debt service obligations, reduce the amount of cash and income we receive from such foreign subsidiary, or increase such subsidiary’s overall expenses. In Kenya, the tax asset is recorded in Kenyan Shillings ("KES") similar to the tax liability, however any change in the exchange rate in the KES versus the USD has an impact on our financial results. Risks attributable to fluctuations in foreign currency exchange rates can also arise when the currency denomination of a particular contract is not the U.S. dollar. Substantially all of our PPAs in the international markets are either U.S. dollar-denominated or linked to the U.S. dollar except for our operations on Guadeloupe, where we own and operate the Boulliante power plant which sells its power under a Euro-denominated PPA with Électricité de France S.A. Our construction contracts from time to time contemplate costs which are incurred in local currencies. The way we often mitigate such risk is to receive part of the proceeds from the contract in the currency in which the expenses are incurred. Currently, we have forward contracts in place to reduce our foreign currency exposure and expect to continue to use currency exchange and other derivative instruments to the extent we deem such instruments to be the appropriate tool for managing such exposure.

 

On July 1, 2020, we concluded an auction tender and accepted subscriptions for senior unsecured bonds comprised of NIS 1.0 billion aggregate principal amount (the “Senior Unsecured Bonds - Series 4”). The Senior Unsecured Bonds - Series 4 were issued in New Israeli Shekels and converted to approximately $290 million using a cross-currency swap transaction shortly after the completion of such issuance.

 

We performed a sensitivity analysis on the fair values of our long-term debt obligations, and foreign currency exchange forward contracts. The foreign currency exchange forward contracts listed below principally relate to trading activities. The sensitivity analysis involved increasing and decreasing forward rates at September 30, 2020 and December 31, 2019 by a hypothetical 10% and calculating the resulting change in the fair values.

 

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At this time, the development of our strategic plan has not exposed us to any additional market risk. However, as the implementation of the plan progresses, we may be exposed to additional or different market risks.

 

The results of the sensitivity analysis calculations as of September 30, 2020 and December 31, 2019 are presented below:

 

   

Assuming a
10% Increase in Rates

    

Assuming a
10% Decrease in Rates

    

Risk

  

September
30, 2020

    

December
31, 2019

    

September
30, 2020

    

December
31, 2019

  

Change in the Fair Value of
   

(Dollars in thousands)

    

Foreign Currency

   $ (4,498 )   $ (4,198 )   $ 5,498     $ 5,131  

Foreign currency forward contracts

Interest Rate

     (3,028 )     (4,574 )     3,091       4,723  

OFC 2 Senior Secured Notes

Interest Rate

     (3,294 )     (4,647 )     3,377       4,812  

OPIC Loan

Interest Rate

     (4,913 )     (1,797 )     4,974       1,822  

Senior Unsecured Bonds

Interest Rate

     (619 )     (905 )     633       934  

DEG 2 Loan

Interest Rate

     (1,260 )     (1,835 )     1,291       1,906  

DAC 1 Senior Secured Notes

Interest Rate

     (334 )     (516 )     342       534  

Amatitlan Loan

Interest Rate.

     (2,724 )     (3,272 )     2,770       3,363  

Migdal Loan, the Additional Migdal Loan and the Second Addendum Migdal Loan

Interest Rate

     (937 )     (1,141 )     977       1,207  

San Emidio Loan

Interest Rate

     (414 )     (776 )     419       797  

DOE Loan

Interest Rate

     (169 )     (281 )     171       286  

Idaho Holdings Loan

Interest Rate

     (2,187 )     (2,978 )     2,250       3,099  

Platanares OPIC Loan

Interest Rate

     (477 )     (728 )     487       749  

DEG 3 Loan

Interest Rate

     (195 )     (342 )     198       350  

Plumstriker Loan

Interest Rate

     —       (295 )     —       298  

Commercial paper

Interest Rate

     (112 )     (201 )     113       204  

Other long-term loans

 

In July 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR (London Interbank Offered Rate), announced that it intends to phase out LIBOR by the end of 2021. It is unclear whether or not LIBOR will cease to exist at that time and/or whether new methods of calculating LIBOR will be established such that it will continue to exist after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new SOFR (Secured Overnight Financing Rate) index calculated by short-term repurchase agreements, backed by Treasury securities.

 

The Company has evaluated the impact of the transition from LIBOR, and currently believes that the transition will not have a material impact on its consolidated financial statements.

 

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Effect of Inflation

 

We expect that inflation will not be a significant risk in the near term, given the current global economic conditions, however, that could change in the future. To address the possibility of rising inflation, some of our contracts include certain provisions that mitigate inflation risk.

 

In connection with the Electricity segment, none of our U.S. PPAs, including the SCPPA Portfolio PPA, are directly linked to the Consumer Price Index ("CPI"). Inflation may directly impact an expense we incur for the operation of our projects, thereby increasing our overall operating costs and reducing our profit and gross margin. The negative impact of inflation would be partially offset by price adjustments built into some of our PPAs that could be triggered upon such occurrences. The energy payments pursuant to our PPAs for some of our power plants such as the Brady power plant, the Steamboat 2 and 3 power plants and the McGinness Complex increase every year through the end of the relevant terms of such agreements, although such increases are not directly linked to the CPI or any other inflationary index. Lease payments are generally fixed, while royalty payments are generally calculated as a percentage of revenues and therefore are not significantly impacted by inflation. In our Product segment, inflation may directly impact fixed and variable costs incurred in the construction of our power plants, thereby increasing our operating costs in the Product segment. We are more likely to be able to offset all or part of this inflationary impact through our project pricing. With respect to power plants that we build for our own electricity production, inflationary pricing may impact our operating costs which may be partially offset in the pricing of the new long-term PPAs that we negotiate.

 

Concentration of Credit Risk

 

Our credit risk is currently concentrated with the following major customers: Sierra Pacific Power Company and Nevada Power Company (subsidiaries of NV Energy), SCPPA and Kenya Power and Lighting Company (KPLC). If any of these electric utilities fail to make payments under its PPAs with us, such failure would have a material adverse impact on our financial condition. Also, by implementing our multi-year strategic plan we may be exposed, by expanding our customer base, to different credit profile customers than our current customers. 

 

   

Three Months Ended
September 30,

    

Nine Months Ended
September 30,

  
   

2020

    

2019

    

2020

    

2019

  

Sierra Pacific Power Company and Nevada Power Company

     15.4

%

     15.1

%

     17.1

%

     16.7

%

Southern California Public Power Authority (“SCPPA”)

  

19.5

       16.7       19.8       17.7

 

Kenya Power and Lighting Co. Ltd. ("KPLC")

     18.2

 

     18.0

 

     16.5

 

     16.6

 

 

We have historically been able to collect on substantially all of our receivable balances. As of September 30, 2020, the amount overdue from KPLC was $52.9 million of which $13.6 million was paid in October 2020. These amounts represent an average of 83 days overdue. We believe we will be able to collect all past due amounts in Kenya. This belief is supported by the fact that in addition to KPLC's obligations under its power purchase agreement, we hold a support letter from the Government of Kenya that covers  certain cases of KPLC non-payment (such as where caused by government actions/political events). In Honduras, we have been able to successfully collect an overdue debt from Empresa Nacional de Energía Eléctrica ("ENEE") of $20.1 million that was related to the period from October 2018 to April 2019. However, due to continuing restrictive measures related to the COVID-19 pandemic in Honduras, the Company may experience delays in collection. As of September 30, 2020, the total amount overdue from ENEE was $5.8 million, of which the Company received payment of $2.9 million in October 2020.

 

Government Grants and Tax Benefits 

 

A comprehensive discussion on government grants and tax benefits is included in our 2019 Annual Report. There have been no material changes to this section in the nine months ended September 30, 2020.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The information appearing under the headings “Exposure to Market Risks” and “Concentration of Credit Risk” in Part I, Item 2 of this quarterly report on Form 10-Q is incorporated by reference herein.

 

ITEM 4. CONTROLS AND PROCEDURES

 

a. Evaluation of disclosure controls and procedures

 

Our management, including our Chief Executive Officer and Chief Financial Officer, have conducted the evaluation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) required by Rules 13a-15(b) or 15d-15(b) under the Exchange Act, as amended.  Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of September 30, 2020 as a result of a material weakness in our internal control over financial reporting that existed at December 31, 2017 and has not been remediated by the end of the period covered by this quarterly report on Form 10-Q. 

 

Previously Identified Material Weakness in Internal Control Over Financial Reporting

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

We previously disclosed in our 2019 Annual Report the following material weakness which still existed as of September 30, 2020. In connection with the change in our repatriation strategy and the related release of the U.S. income tax valuation allowance in the second quarter of 2017, we did not perform an effective risk assessment related to our internal controls over the accounting for income taxes.  As a result, we identified a deficiency in the design of our internal control over financial reporting related to our accounting for income taxes, which resulted in the restatements of the Company’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2017, the three and nine months ended September 30, 2017, and the restatement of the Company’s consolidated financial statements for the year ended December 31, 2017. Additionally, this control deficiency could result in a misstatement of the aforementioned balances and disclosures that would result in a material misstatement to the interim or annual consolidated financial statements that would not be prevented or detected. Our management has concluded that this deficiency constitutes a material weakness in our internal control over financial reporting.

 

Remediation Plan for Material Weakness

 

Subsequent to the evaluation made in connection with filing our Amended Annual Report on Form 10-K for the year ended December 31, 2017, our management, with the oversight of the Audit Committee of the Board of Directors, has continued the process of remediating the material weakness. In connection with the remediation process, we have:

 

 

•

performed an enhanced risk assessment related to our internal controls over the accounting for income taxes;
 

•

recruited additional tax personnel throughout the 2019 year, including a VP of Global Tax in January 2019 and a Director of Global Tax in September 2019 and in May 2020 added a Senior Tax Manager;
 

•

engaged an external tax and accounting firm to assist in the preparation of our annual and quarterly income tax provision;
 

•

implemented specific control procedures for the review, analysis and reporting of our income tax accounts, including control procedures of projections that support the deferred tax assets and liabilities;
 

•

strengthened our income tax controls with improved documentation, communication, technology and oversight.

 

We have made substantial progress this period in developing and implementing our remediation plan and we are improving our internal processes. The continued process included the hiring of additional personnel, continuous implementation of automation of key elements of the tax provision and modification of controls as applicable in order to reduce the risk of material misstatement. The material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We are committed to continuing to improve our internal control processes and will continue to review, optimize and enhance our financial reporting controls and procedures accordingly. However, there can be no assurance that this will occur within 2020.

 

b.  Changes in internal control over financial reporting

 

There were no changes in our internal controls over financial reporting in the third quarter of 2020 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

 

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PART II — OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

The information required with respect to this item can be found under “Commitments and Contingencies” in Note 9 of notes to the unaudited condensed consolidated financial statements contained in this quarterly report and is incorporated by reference into this Item 1.

 

ITEM 1A. RISK FACTORS

 

A comprehensive discussion of our other risk factors is included in the “Risk Factors” section of our annual report on Form 10-K for the year ended December 31, 2019 which was filed with the SEC on March 2, 2020. The risks described in our Form 10-K and herein are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

We are exposed to swap counterparty credit risk that could materially and adversely affect our business, operating results, and financial condition.

 

We rely on cross-currency swap contracts to effectively manage our currency risk related to our Senior Unsecured Bonds - Series 4 issued in July 2020. Failure to perform under derivatives contracts by one or more of our counterparties could disrupt our hedging operations if the counterparties will not fulfill their obligations under the agreements, particularly if we were entitled to a termination payment under the terms of the contract that we did not receive, if we had to make a termination payment upon default of the counterparty, or if we were unable to reposition the swap with a new counterparty. However, we believe the risk is reduced because we have entered into separate agreements with several different counterparties, all of whom are large, well-established financial institutions.

 

We may not be able to obtain sufficient insurance coverage to cover damages resulting from any damages to our assets and profitability including but not limited to natural disasters such as volcanic eruptions, lava flows wind and earthquake, which could materially and adversely affect our business, operating results, and financial condition.

 

Ormat’s business interruption and property damage insurance coverage may not be sufficient to cover all losses sustained as a result of natural disasters such as volcanic eruptions, lava flows wind and earthquake  or any other insurable risk. Ormat has experienced increased costs and difficulties in obtaining sufficient insurance coverage for natural disasters for our Puna power plant in Hawaii following May 2018 eruption of the Kilauea volcano. Before the eruption in 2018, Ormat obtained  natural disasters business interruption and property damage insurance coverage of up to approximately $100 million compare to approximately $30 million that we were able to secure recently. 

 

The global spread of COVID-19 pandemic may have an adverse impact and could adversely affect our financial results.

 

The COVID-19 pandemic and efforts to control its spread have significantly curtailed the movement of people, goods and services worldwide. Governments around the world have ordered companies to limit or suspend non-essential operations and imposed operational and travel restrictions resulting in a decline in global economic activity and an increase in market volatility. We have implemented significant measures both to comply with government requirements and to preserve the health and safety of our employees. These measures include working remotely where possible and operating separate shifts in our power plants, manufacturing facilities and other locations while trying to continue operations as close to full capacity in all locations.

 

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Table of Contents

 

While we did not experience any material impact on our results of operations during the first quarter of 2020, we have started to experience impacts in the second and third quarters of 2020 which varied among our business segments:

 

 

•

In our Electricity segment, almost all of our revenues in the nine months ended September 30, 2020 were generated under long term contracts and the majority have a fixed energy rate.  As a result, despite logistical and other challenges, we experienced limited impact of COVID-19 on our electricity segment. Nevertheless, on April 17, 2020, we received from Kenya Power & Lighting Co. Ltd. ("KPLC") a notice declaring a force majeure event in Kenya due to the impact of COVID-19 and purporting to reduce the Olkaria complex’s contracted capacity from 150 MW to 133.9 MW. This notice, which had an immaterial impact on our revenues, was removed in early September 2020. In addition, we experienced a higher rate of curtailments in the second quarter of 2020 by KPLC in the Olkaria complex that was reduced in the third quarter 2020. The impact of the curtailments is limited as the structure of the PPA which secures the vast majority of our revenues with fixed capacity payments and is unrelated to the electricity actually generated (in 2019 and the nine months ended September 30, 2020, capacity payments represented 70% and 75% of our revenues, respectively). On April 30, 2020, we also received from ENEE a notice declaring a force majeure event in Honduras due to the impact of COVID-19. We have not identified any impact on our consolidated financial statements as a result of this notice. In addition, ENEE has initiated discussions with several Independent Power Producers ("IPP"s), including Ormat, on potential changes in their existing PPAs. However, Ormat’s Platanares geothermal power plant has one of the lowest rates of renewable energy in the country, and Ormat expects this fact to have positive implications for Ormat’s discussions with ENEE.  In addition, our future growth in the electricity segment would be adversely impacted by a lack of funding for projects and the implications of global and local restrictions on our ability to procure raw material and ship our products.   

 

 

•

In our Product segment, the economic downturn has adversely impacted customers’ purchasing decisions and travel restrictions have adversely impacted our sales and marketing efforts. We experienced a decrease in our backlog that we believe was due to the impact of COVID-19. We may face similar challenges in future periods in the event of a prolonged shutdown.

 

 

•

Our Energy Storage and Management Services segment generates revenues mainly from participating in the energy and ancillary services markets, run by regional transmission operators and independent system operators in the various markets where our assets operate. Therefore, the revenues these assets generate is directly impacted by the prevailing market prices for energy and or ancillary services.

 

 

•

In addition, we experience delays in the permitting for new projects in all segments that may also cause a delay in those projects.

 

The extent to which COVID-19 ultimately impacts our business, operations, financial results and financial condition will depend on numerous evolving factors which are currently uncertain and cannot be predicted, including:

 

 

•

the duration and scope of the pandemic;

 

 

•

governmental, business and individuals’ actions taken in response;

 

 

•

the effect on our customers and customers’ demand for our services and products;

 

 

•

the effect on our suppliers and disruptions to the global supply chain;

 

 

•

our ability to sell and provide our services and products, including as a result of travel restrictions and people working from home;

 

 

•

disruptions to our operations resulting from the illness of any of our employees;

 

 

•

our ability to oversee remote operation due to travel restrictions;

 

 

•

restrictions or disruptions to transportation, including reduced availability of ground or air transport; and

 

 

•

decrease in electricity demand; and the ability of our customers to pay for our services and products.

 

In addition, the impact of COVID-19 on macroeconomic conditions may impact the proper functioning of financial and capital markets, foreign currency exchange rates, commodity and interest rates. Any of the events described above could amplify the other risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2019 and could materially adversely affect our business, financial condition, results of operations and/or stock price.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

We hereby file, as exhibits to this quarterly report, those exhibits listed on the Exhibit Index below.

 

EXHIBIT INDEX

 

Exhibit No.

Document
   

10.1

Deed of Trust, dated as of June 25, 2020, by and between Ormat Technologies, Inc. and Mishmeret Trust Services Company Ltd., as trustee. incorporated by reference to Exhibit 4.1 to Ormat Technologies, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 1, 2020.
   

10.2

Form of Bonds (included in Schedule One to the Deed of Trust incorporated by reference to Exhibit 4.1 and to Ormat Technologies, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 1, 2020.
   

10.3+

Amended and Restated Employment Agreement, dated July 2, 2020, between Ormat Technologies, Inc., Ormat Systems, Ltd. and Doron Blachar incorporated by reference to Exhibit 10.1 and to Ormat Technologies, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 6, 2020.
   

31.1*

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
   

31.2*

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
   

32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.
   

32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.
   
   
   

101.SC*

Inline XBRL Taxonomy Extension Schema Document.

101.CA*

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DE*

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LA*

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PR*

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)
   

*

Filed herewith

+

This document has been identified as a management contract or compensatory plan or arrangement.

 

60
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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 thereunto duly authorized.

 

 

ORMAT TECHNOLOGIES, INC.

  
       
       
 

By:

/s/ ASSAF GINZBURG

  
 

Name:

Assaf Ginzburg

  
 

Title:

Chief Financial Officer

  

 

Date: November 5, 2020

 

61
ex_209762.htm

Exhibit 31.1

 

Ormat Technologies, Inc.

 

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Doron Blachar, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2020 of Ormat Technologies, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

 

 

 

By:

/s/ DORON BLACHAR

 

 

 

 Doron Blachar

 

 

 

 Chief Executive Officer

 

 

Date: November 5, 2020

 
ex_209763.htm

Exhibit 31.2

 

Ormat Technologies, Inc.

 

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Assaf Ginzburg, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2020 of Ormat Technologies, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

 

 

 

By:

/s/ ASSAF GINZBURG

 

 

 

 Assaf Ginzburg

 

 

 

 Chief Financial Officer

 

 

Date: November 5, 2020

 

 
ex_209764.htm

Exhibit 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Doron Blachar, certify, pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of Ormat Technologies, Inc. on Form 10-Q for the quarter ended September 30, 2020 (i) fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and (ii) that information contained in such quarterly report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Ormat Technologies, Inc. This written statement is being furnished to the Securities and Exchange Commission as an exhibit accompanying such quarterly report and shall not be deemed filed pursuant to the Exchange Act.

 

 

 

 

 

 

By:

/s/ DORON BLACHAR

 

 

 

Name: Doron Blachar

 

 

 

Title: Chief Executive Officer

 

 

Date: November 5, 2020

 

 
ex_209765.htm

Exhibit 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Assaf Ginzburg, certify, pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of Ormat Technologies, Inc. on Form 10-Q for the quarter ended September 30, 2020 (i) fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and (ii) that information contained in such quarterly report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Ormat Technologies, Inc. This written statement is being furnished to the Securities and Exchange Commission as an exhibit accompanying such quarterly report and shall not be deemed filed pursuant to the Exchange Act.

 

 

 

 

 

 

By:

/s/ ASSAF GINZBURG

 

 

 

 Name: Assaf Ginzburg

 

 

 

 Title: Chief Financial Officer

 

 

Date: November 5, 2020

 

 
v3.20.2
Document And Entity Information - shares
 9 Months Ended
Sep. 30, 2020
Oct. 30, 2020
Document Information [Line Items]    
Entity Central Index Key 0001296445  
Entity Registrant Name ORMAT TECHNOLOGIES, INC.  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2020  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2020  
Document Transition Report false  
Entity File Number 001-32347  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 88-0326081  
Entity Address, Address Line One 6140 Plumas Street  
Entity Address, City or Town Reno  
Entity Address, State or Province NV  
Entity Address, Postal Zip Code 89519-6075  
City Area Code 775  
Local Phone Number 356-9029  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   51,068,590
Title of 12(b) Security Common Stock  
Trading Symbol ORA  
Security Exchange Name NYSE  
v3.20.2
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 197,309 $ 71,173
Restricted cash and cash equivalents (primarily related to VIEs) 92,233 81,937
Receivables:    
Trade less allowance for credit losses of $779 and $0, respectively (primarily related to VIEs) 157,497 154,525
Other 23,349 22,048
Inventories 34,384 34,949
Costs and estimated earnings in excess of billings on uncompleted contracts [1] 18,123 38,365
Prepaid expenses and other 9,696 12,667
Total current assets 532,591 415,664
Investment in unconsolidated companies 91,277 81,140
Deposits and other 39,293 38,284
Deferred income taxes 108,145 129,510
Property, plant and equipment, net 2,036,821 1,971,415
Construction-in-process 463,073 376,555
Operating leases right of use 16,762 17,405
Finance leases right of use 12,399 14,161
Intangible assets, net 197,002 186,220
Goodwill 23,584 20,140
Total assets 3,520,947 [2],[3] 3,250,494
Current liabilities:    
Accounts payable and accrued expenses 144,473 141,857
Short term revolving credit lines with banks (full recourse) 0 40,550
Commercial paper 0 50,000
Billings in excess of costs and estimated earnings on uncompleted contracts 7,683 2,755
Current portion of long-term debt:    
Senior secured notes 24,836 24,473
Other loans 35,369 34,458
Full recourse 17,768 76,572
Operating lease liabilities 3,026 2,743
Finance lease liabilities 3,148 3,068
Total current liabilities 236,303 376,476
Long-term debt, net of current portion:    
Senior secured notes (less deferred financing costs of $5,559 and $6,317, respectively) 320,936 339,336
Other loans (less deferred financing costs of $9,091 and $10,482, respectively) 293,415 317,395
Senior unsecured bonds (less deferred financing costs of $2,174 and $675, respectively) 696,868 286,453
Other loans (less deferred financing costs of $1,430 and $1,519, respectively) 64,150 68,747
Operating lease liabilities 13,407 14,008
Finance lease liabilities 9,706 11,209
Liability associated with sale of tax benefits 112,950 123,468
Deferred income taxes 101,886 97,126
Liability for unrecognized tax benefits 12,643 14,643
Liabilities for severance pay 18,132 18,751
Asset retirement obligation 52,193 50,183
Other long-term liabilities 7,812 8,039
Total liabilities 1,940,401 1,725,834
Commitments and contingencies (Note 9)
Redeemable noncontrolling interest 8,743 9,250
Equity:    
Common stock, par value $0.001 per share; 200,000,000 shares authorized; 51,068,590 and 51,031,652 issued and outstanding as of September 30, 2020 and December 31, 2019, respectively 51 51
Additional paid-in capital 920,210 913,150
Retained earnings 534,984 487,873
Accumulated other comprehensive income (loss) (15,503) (8,654)
Total stockholders' equity attributable to Company's stockholders 1,439,742 1,392,420
Noncontrolling interest 132,061 122,990
Total equity 1,571,803 1,515,410
Total liabilities, redeemable noncontrolling interest and equity $ 3,520,947 $ 3,250,494
[1] Contract assets and contract liabilities are presented as "Costs and estimated earnings in excess of billings on uncompleted contracts" and "Billings in excess of costs and estimated earnings on uncompleted contracts", respectively, on the consolidated balance sheets. The contract liabilities balance at the beginning of the year was fully recognized as product revenues during the nine months ended September 30, 2020 as a result of performance obligations have been satisfied.
[2] Electricity segment assets include goodwill in the amount of $20.1 million and $19.9 million as of September 30, 2020 and 2019, respectively. ESMS segment assets include goodwill in the amount of $3.5 million and $0 million as of September 30, 2020 and 2019, respectively. No goodwill is included in the Product segment assets as of September 30, 2020 and 2019.
[3] Including unconsolidated investments 91,277 — — 91,277
v3.20.2
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Trade, allowance for credit losses $ 779 $ 0
Property, plant and equipment, net 2,036,821 1,971,415
Construction-in-process 463,073 376,555
Operating leases right of use 16,762 17,405
Finance leases right of use $ 12,399 $ 14,161
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 200,000,000 200,000,000
Common stock, shares issued (in shares) 51,068,590 51,031,652
Common stock, shares outstanding (in shares) 51,068,590 51,031,652
Senior Secured Notes [Member]    
Deferred financing costs $ 5,559 $ 6,317
Other Loans, Limited and Non-recourse [Member]    
Deferred financing costs 9,091 10,482
Senior Unsecured Bonds [Member]    
Deferred financing costs 2,174 675
Other Loans, Full Recourse [Member]    
Deferred financing costs 1,430 1,519
Variable Interest Entity, Primary Beneficiary [Member]    
Property, plant and equipment, net 1,930,599 1,880,547
Construction-in-process 219,562 149,830
Operating leases right of use 4,858 4,688
Finance leases right of use $ 7,508 $ 8,479
v3.20.2
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Revenues:        
Revenue $ 158,947 $ 170,499 $ 525,960 $ 553,602
Cost of revenues:        
Cost of revenues 104,917 115,004 324,726 358,781
Gross profit 54,030 55,495 201,234 194,821
Operating expenses:        
Research and development expenses 1,490 1,062 4,281 2,772
Selling and marketing expenses 4,076 3,783 13,724 10,924
General and administrative expenses 14,539 11,931 43,154 41,801
Business interruption insurance income (17,761) 0 (20,743) 0
Operating income 51,686 38,719 160,818 139,324
Other income (expense):        
Interest income 626 482 1,469 1,195
Interest expense, net (21,756) (20,076) (58,814) (62,816)
Derivatives and foreign currency transaction gains (losses) 1,047 205 2,111 696
Income attributable to sale of tax benefits 7,014 4,056 16,818 16,457
Other non-operating income (expense), net 961 244 1,343 1,362
Income from operations before income tax and equity in earnings (losses) of investees 39,578 23,630 123,745 96,218
Income tax (provision) benefit (15,361) (9,626) (45,275) (20,136)
Equity in earnings (losses) of investees, net (1,119) 1,085 (196) 3,334
Net income 23,098 15,089 78,274 79,416
Net income attributable to noncontrolling interest (7,419) 516 (13,516) (3,927)
Net income attributable to the Company's stockholders 15,679 15,605 64,758 75,489
Comprehensive income:        
Net income 23,098 15,089 78,274 79,416
Other comprehensive income (loss), net of related taxes:        
Change in foreign currency translation adjustments 1,321 (2,191) 1,597 (3,057)
Change in unrealized gains or losses in respect of the Company's share in derivatives instruments of unconsolidated investment 947 (1,467) (4,461) (4,699)
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge 36 18    
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge (6) (7) (19) (24)
Comprehensive income 21,848 11,442 71,909 71,694
Comprehensive income attributable to noncontrolling interest (7,751) 1,051 (14,000) (3,254)
Comprehensive income attributable to the Company's stockholders $ 14,097 $ 12,493 $ 57,909 $ 68,440
Basic:        
Net income (in dollars per share) $ 0.31 $ 0.31 $ 1.27 $ 1.49
Diluted:        
Net income (in dollars per share) $ 0.31 $ 0.30 $ 1.26 $ 1.48
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:        
Basic (in shares) 51,072 50,933 51,051 50,816
Diluted (in shares) 51,282 51,334 51,386 51,124
Cross Currency Interest Rate Contract [Member]        
Other comprehensive income (loss), net of related taxes:        
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge $ (3,548) $ 0 $ (3,548) $ 0
Other Contract [Member]        
Other comprehensive income (loss), net of related taxes:        
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge 36 18 66 58
Electricity [Member]        
Revenues:        
Revenue 123,660 123,978 395,201 395,965
Cost of revenues:        
Cost of revenues 76,670 80,124 219,988 231,442
Product [Member]        
Revenues:        
Revenue 29,625 43,037 120,737 147,195
Cost of revenues:        
Cost of revenues 24,037 31,073 95,724 114,495
Energy Storage and Management Services [Member]        
Revenues:        
Revenue 5,662 3,484 10,022 10,442
Cost of revenues:        
Cost of revenues $ 4,210 $ 3,807 $ 9,014 $ 12,844
v3.20.2
Condensed Consolidated Statements of Equity (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
Cumulative Effect, Period of Adoption, Adjustment [Member]
Common Stock [Member]
Cumulative Effect, Period of Adoption, Adjustment [Member]
Additional Paid-in Capital [Member]
Cumulative Effect, Period of Adoption, Adjustment [Member]
Retained Earnings [Member]
Cumulative Effect, Period of Adoption, Adjustment [Member]
AOCI Attributable to Parent [Member]
Cumulative Effect, Period of Adoption, Adjustment [Member]
Parent [Member]
Cumulative Effect, Period of Adoption, Adjustment [Member]
Noncontrolling Interest [Member]
Cumulative Effect, Period of Adoption, Adjustment [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Common Stock [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Additional Paid-in Capital [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Retained Earnings [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
AOCI Attributable to Parent [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Parent [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Noncontrolling Interest [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Cross Currency Interest Rate Contract [Member]
Common Stock [Member]
Cross Currency Interest Rate Contract [Member]
Additional Paid-in Capital [Member]
Cross Currency Interest Rate Contract [Member]
Retained Earnings [Member]
Cross Currency Interest Rate Contract [Member]
AOCI Attributable to Parent [Member]
Cross Currency Interest Rate Contract [Member]
Parent [Member]
Cross Currency Interest Rate Contract [Member]
Noncontrolling Interest [Member]
Cross Currency Interest Rate Contract [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Parent [Member]
Noncontrolling Interest [Member]
Total
Balance (in shares) at Dec. 31, 2018 50,700                                         50,700            
Balance in Other comprehensive income (loss) beginning of period at Dec. 31, 2018 $ 0 $ 0 $ (58) $ 0 $ (58) $ 0 $ (58) $ 51 $ 901,363 $ 422,164 $ (3,799) $ 1,319,779 $ 125,259 $ 1,445,038               $ 51 $ 901,363 $ 422,222 $ (3,799) $ 1,319,837 $ 125,259 $ 1,445,096
Stock-based compensation                                           $ 0 2,360 0 0 2,360 0 2,360
Exercise of options by employees and directors (in shares)                                           52            
Exercise of options by employees and directors                                           $ 0 0 0 0 0 0 0
Cash paid to noncontrolling interest                                           0 0 0 0 0 (4,146) (4,146)
Cash dividend declared                                           0 0 (5,579) 0 (5,579) 0 (5,579)
Net income                                           0 0 25,946 0 25,946 1,855 27,801
Change in foreign currency translation adjustments                                           0 0 0 (1,026) (1,026) (322) (1,348)
Change in respect of derivative instruments designated for cash flow hedge                                           0 0 0 22 22 0 22
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment                                           0 0 0 (1,145) (1,145) 0 (1,145)
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge                                           0 0 0 (8) (8) 0 (8)
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge                                           $ 0 0 0 22 22 0 22
Balance (in shares) at Mar. 31, 2019                                           50,752            
Balance in Other comprehensive income (loss) end of period at Mar. 31, 2019                                           $ 51 903,723 442,531 (5,956) 1,340,349 122,646 1,462,995
Balance (in shares) at Dec. 31, 2018 50,700                                         50,700            
Balance in Other comprehensive income (loss) beginning of period at Dec. 31, 2018 $ 0 0 (58) 0 (58) 0 (58) 51 901,363 422,164 (3,799) 1,319,779 125,259 1,445,038               $ 51 901,363 422,222 (3,799) 1,319,837 125,259 1,445,096
Change in foreign currency translation adjustments                                                       (3,057)
Change in respect of derivative instruments designated for cash flow hedge                                         $ 0              
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment                                                       (4,699)
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge                                                       (24)
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge                                         0              
Balance (in shares) at Sep. 30, 2019                                           50,993            
Balance in Other comprehensive income (loss) end of period at Sep. 30, 2019                                           $ 51 910,651 480,879 (10,848) 1,380,733 124,055 1,504,788
Balance (in shares) at Mar. 31, 2019                                           50,752            
Balance in Other comprehensive income (loss) beginning of period at Mar. 31, 2019                                           $ 51 903,723 442,531 (5,956) 1,340,349 122,646 1,462,995
Stock-based compensation                                           $ 0 2,643 0 0 2,643 0 2,643
Exercise of options by employees and directors (in shares)                                           110            
Exercise of options by employees and directors                                           $ 0 0 0 0 0 0 0
Cash paid to noncontrolling interest                                           0 0 0 0 0 (2,767) (2,767)
Cash dividend declared                                           0 0 (5,589) 0 (5,589) 0 (5,589)
Net income                                           0 0 33,938 0 33,938 2,017 35,955
Change in foreign currency translation adjustments                                           0 0 0 298 298 184 482
Change in respect of derivative instruments designated for cash flow hedge                                           0 0 0 18 18 0 18
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment                                           0 0 0 (2,087) (2,087) 0 (2,087)
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge                                           0 0 0 (9) (9) 0 (9)
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge                                           $ 0 0 0 18 18 0 18
Balance (in shares) at Jun. 30, 2019                                           50,862            
Balance in Other comprehensive income (loss) end of period at Jun. 30, 2019                                           $ 51 906,366 470,880 (7,736) 1,369,561 122,080 1,491,641
Stock-based compensation                                           $ 0 2,228 0 0 2,228 0 2,228
Exercise of options by employees and directors (in shares)                                           131            
Exercise of options by employees and directors                                           $ 0 2,057 0 0 2,057 0 2,057
Cash paid to noncontrolling interest                                           0 0 0 0 0 (1,326) (1,326)
Cash dividend declared                                           0 0 (5,606) 0 (5,606) 0 (5,606)
Net income                                           0 0 15,605 0 15,605 (805) 14,800
Change in foreign currency translation adjustments                                           0 0 0 (1,656) (1,656) (535) (2,191)
Change in respect of derivative instruments designated for cash flow hedge                                         0 0 0 0 18 18 0 18
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment                                           0 0 0 (1,467) (1,467) 0 (1,467)
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge                                           0 0 0 (7) (7) 0 (7)
Increase in noncontrolling interest                                           0 0 0 0 0 4,641 4,641
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge                                         0 $ 0 0 0 18 18 0 18
Balance (in shares) at Sep. 30, 2019                                           50,993            
Balance in Other comprehensive income (loss) end of period at Sep. 30, 2019                                           $ 51 910,651 480,879 (10,848) 1,380,733 124,055 1,504,788
Balance (in shares) at Dec. 31, 2019 51,032                                         51,032            
Balance in Other comprehensive income (loss) beginning of period at Dec. 31, 2019 $ 0 0 (755) 0 (755) 0 (755) 51 913,150 487,118 (8,654) 1,391,665 122,990 1,514,655               $ 51 913,150 487,873 (8,654) 1,392,420 122,990 1,515,410
Stock-based compensation                                           $ 0 1,989 0 0 1,989 0 1,989
Exercise of options by employees and directors (in shares)                                           4            
Exercise of options by employees and directors                                           $ 0 0 0 0 0 0 0
Cash paid to noncontrolling interest                                           0 0 0 0 0 (3,007) (3,007)
Cash dividend declared                                           0 0 (5,614) 0 (5,614) 0 (5,614)
Net income                                           0 0 26,033 0 26,033 3,543 29,576
Change in foreign currency translation adjustments                                           0 0 0 (258) (258) (387) (645)
Change in respect of derivative instruments designated for cash flow hedge                                           0 0 0 13 13 0 13
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment                                           0 0 0 (4,755) (4,755) 0 (4,755)
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge                                           0 0 0 (8) (8) 0 (8)
Increase in noncontrolling interest                                           0 0 0 0 0 1,447 1,447
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge                                           $ 0 0 0 13 13 0 13
Balance (in shares) at Mar. 31, 2020                                           51,036            
Balance in Other comprehensive income (loss) end of period at Mar. 31, 2020                                           $ 51 915,139 507,537 (13,662) 1,409,065 124,586 1,533,651
Balance (in shares) at Dec. 31, 2019 51,032                                         51,032            
Balance in Other comprehensive income (loss) beginning of period at Dec. 31, 2019 $ 0 $ 0 $ (755) $ 0 $ (755) $ 0 $ (755) $ 51 $ 913,150 $ 487,118 $ (8,654) $ 1,391,665 $ 122,990 $ 1,514,655               $ 51 913,150 487,873 (8,654) 1,392,420 122,990 1,515,410
Change in foreign currency translation adjustments                                                       1,597
Change in respect of derivative instruments designated for cash flow hedge                                         (3,548)              
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment                                                       (4,461)
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge                                                       (19)
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge                                         (3,548)              
Balance (in shares) at Sep. 30, 2020                                           51,069            
Balance in Other comprehensive income (loss) end of period at Sep. 30, 2020                                           $ 51 920,210 534,984 (15,503) 1,439,742 132,061 1,571,803
Balance (in shares) at Mar. 31, 2020                                           51,036            
Balance in Other comprehensive income (loss) beginning of period at Mar. 31, 2020                                           $ 51 915,139 507,537 (13,662) 1,409,065 124,586 1,533,651
Stock-based compensation                                           $ 0 2,264 0 0 2,264 0 2,264
Exercise of options by employees and directors (in shares)                                           31            
Exercise of options by employees and directors                                           $ 0 0 0 0 0 0 0
Cash dividend declared                                           0 0 (5,719) 0 (5,719) 0 (5,719)
Net income                                           0 0 23,046 0 23,046 1,982 25,028
Change in foreign currency translation adjustments                                           0 0 0 382 382 539 921
Change in respect of derivative instruments designated for cash flow hedge                                           0 0 0 17 17 0 17
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment                                           0 0 0 (653) (653) 0 (653)
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge                                           0 0 0 (5) (5) 0 (5)
Increase in noncontrolling interest                                           0 0 0 0 0 1,307 1,307
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge                                           $ 0 0 0 17 17 0 17
Balance (in shares) at Jun. 30, 2020                                           51,067            
Balance in Other comprehensive income (loss) end of period at Jun. 30, 2020                                           $ 51 917,403 524,864 (13,921) 1,428,397 128,414 1,556,811
Stock-based compensation                                           $ 0 2,807 0 0 2,807 0 2,807
Exercise of options by employees and directors (in shares)                                           2            
Exercise of options by employees and directors                                           $ 0 0 0 0 0 0 0
Cash paid to noncontrolling interest                                           0 0 0 0 0 (3,749) (3,749)
Cash dividend declared                                           0 0 (5,559) 0 (5,559) 0 (5,559)
Net income                                           0 0 15,679 0 15,679 7,064 22,743
Change in foreign currency translation adjustments                                           0 0 0 989 989 332 1,321
Change in respect of derivative instruments designated for cash flow hedge                             $ 0 $ 0 $ 0 $ (3,548) $ (3,548) $ 0 (3,548) 0 0 0 36 36 0 36
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment                                           0 0 0 947 947 0 947
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge                                           0 0 0 (6) (6) 0 (6)
Change in unrealized gains or losses in respect of a cross currency swap derivative instrument that qualifies as a cash flow hedge                             $ 0 $ 0 $ 0 $ (3,548) $ (3,548) $ 0 $ (3,548) $ 0 0 0 36 36 0 36
Balance (in shares) at Sep. 30, 2020                                           51,069            
Balance in Other comprehensive income (loss) end of period at Sep. 30, 2020                                           $ 51 $ 920,210 $ 534,984 $ (15,503) $ 1,439,742 $ 132,061 $ 1,571,803
v3.20.2
Condensed Consolidated Statements of Equity (Unaudited) (Parentheticals) - USD ($)
$ in Thousands
 3 Months Ended
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Retained Earnings [Member]            
Cash dividend declared, per share (in dollars per share)     $ 0.11 $ 0.11 $ 0.11 $ 0.11
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge, tax           $ 6
Cash dividend declared, per share (in dollars per share) $ 0.11 $ 0.11        
Change in unrealized gains or losses in respect of the Company's share in derivative instruments of unconsolidated investment, tax $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Amortization of unrealized gains in respect of derivative instruments designated for cash flow hedge, tax   $ 6   6 $ 6  
Loss in respect of derivative instruments designated for cash flow hedge, tax       $ 24    
v3.20.2
Condensed Consolidated Statements of Cash Flow (Unaudited) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Cash flows from operating activities:    
Net income $ 78,274 $ 79,416
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 115,672 111,328
Accretion of asset retirement obligation 2,319 2,015
Stock-based compensation 7,060 7,231
Amortization of deferred lease income 0 (2,014)
Income attributable to sale of tax benefits, net of interest expense (10,846) (7,738)
Equity in losses (earnings) of investees 196 (3,334)
Mark-to-market of derivative instruments (1,612) (1,909)
Loss on disposal of property, plant and equipment 618 1,426
Loss (gain) on severance pay fund asset (24) (862)
Deferred income tax provision 25,522 7,177
Liability for unrecognized tax benefits (2,000) 3,284
Deferred lease revenues 0 (470)
Changes in operating assets and liabilities, net of businesses acquired:    
Receivables (5,753) (60)
Costs and estimated earnings in excess of billings on uncompleted contracts 20,242 (995)
Inventories 565 3,780
Prepaid expenses and other 2,971 4,003
Change in operating lease right of use asset 2,695 5,620
Deposits and other (1,277) (2,622)
Accounts payable and accrued expenses 2,617 14,237
Billings in excess of costs and estimated earnings on uncompleted contracts 4,928 (12,399)
Liabilities for severance pay (619) 576
Change in operating lease liabilities (2,436) 0
Other long-term liabilities (222) (6,238)
Net cash provided by operating activities 238,890 201,452
Cash flows from investing activities:    
Capital expenditures (231,784) (190,530)
Investment in unconsolidated companies (14,794) (3,096)
Cash paid for business acquisition, net of cash acquired (43,321) 0
Decrease (increase) in severance pay fund asset, net of payments made to retired employees 529 615
Other investing activities (3,600) 0
Net cash used in investing activities (292,970) (193,011)
Cash flows from financing activities:    
Proceeds from long-term loans, net of transaction costs 419,262 132,847
Proceeds from exercise of options by employees 0 2,057
Proceeds from the sale of limited liability company interest, net of transaction costs 0 58,671
Repayments of commercial paper and prepayment of loans (50,000) (6,098)
Proceeds from revolving credit lines with banks 1,249,400 1,311,500
Repayment of revolving credit lines with banks (1,289,950) (1,470,500)
Cash received from noncontrolling interest 7,577 3,346
Proceeds from issuance of commercial paper 0 50,000
Repayments of long-term debt (115,606) (52,997)
Cash paid to noncontrolling interest (9,234) (9,399)
Payments under finance lease obligations (2,205) (2,734)
Deferred debt issuance costs (2,360) (4,566)
Cash dividends paid (16,892) (16,774)
Net cash provided by (used in) financing activities 189,992 (4,647)
Effect of exchange rate changes 520 (1,252)
Net change in cash and cash equivalents and restricted cash and cash equivalents 136,432 2,542
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period 153,110 177,495
Cash and cash equivalents and restricted cash and cash equivalents at end of period 289,542 180,037
Supplemental non-cash investing and financing activities:    
Increase (decrease) in accounts payable related to purchases of property, plant and equipment $ (995) $ 7,496
v3.20.2
Note 1 - General and Basis of Presentation
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1 — GENERAL AND BASIS OF PRESENTATION

 

These unaudited condensed consolidated interim financial statements of Ormat Technologies, Inc. and its subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not contain all information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial position as of September 30, 2020, the condensed consolidated statements of operations and comprehensive income and the condensed consolidated statements of equity for the three and nine months ended September 30, 2020 and 2019 and the condensed consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019.

 

The financial data and other information disclosed in the notes to the condensed consolidated financial statements related to these periods are unaudited. The results for the periods presented are not necessarily indicative of the results to be expected for the year.

 

These condensed unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The condensed consolidated balance sheet data as of December 31, 2019 was derived from the Company’s audited consolidated financial statements for the year ended December 31, 2019 but does not include all disclosures required by U.S. GAAP.

 

Dollar amounts, except per share data, in the notes to these financial statements are rounded to the closest $1,000.

 

Energy storage assets portfolio purchase transaction

 

On July 20, 2020, the Company completed the acquisition of 100% of the 20MW/80MWh Pomona Energy Storage ("Pomona") facility in California from Alta Gas Power Holdings (U.S.) Inc. for total consideration of $43.3 million. The Pomona facility has been in commercial operation since December 2016 under a 10-year energy storage resource agreement with Southern California Edison Company ("SCE").

 

The Pomona facility is one of the largest battery storage assets in operation in the region and is the Company's first battery storage asset in California. The purchase increases the Company's operating portfolio to 73MW/136MWh and adds to its battery storage assets in New Jersey, New England and Texas.

 

The Company accounted for the transaction in accordance with Accounting Standard Codification ("ASC") 805, Business Combinations and following the transaction close date, consolidated the results of Pomona in accordance with ASC 810, Consolidation in its condensed consolidated financial statements.

 

The following table summarizes the purchase price allocation to the fair value of the assets acquired and liabilities assumed (in millions):

 

Trade receivables

 $0.8 

Other receivables

  0.2 

Property, plant and equipment, net

 

20.1

 

Intangible assets (1)

 

19.7

 

Goodwill (2)

  3.5 

Total assets acquired

 $44.3 
     

Liabilities assumed

 $(1.0)
     

Total assets acquired and liabilities assumed, net

 $43.3 

 

(1) Intangible assets of $17.7 million are related to a long-term energy storage resource adequacy agreement with SCE and are depreciated over a period of approximately 6.5 years. The remaining $2.0 million is related to certain other contract rights.

(2) Goodwill is primarily related to certain potential future economic benefits arising from assets acquired. Goodwill is allocated to the Energy Storage and Management Services segment and is deductible for tax purposes.

 

The amounts of revenues and earnings related to Pomona that are included in the Company's condensed consolidated statements of operations and comprehensive income for the three months ended September 30, 2020 since the acquisition date are $2.4 million and $1.1 million, respectively. Unaudited pro forma information is not included as the Company deemed the transaction to not qualify as a significant business combination.

 

Senior Unsecured Bonds - Series 4

 

On July 1, 2020, the Company concluded an auction tender and accepted subscriptions for New Israeli Shekels ("NIS") 1.0 billion aggregate principal amount of senior unsecured bonds (the “Senior Unsecured Bonds - Series 4”). The Senior Unsecured Bonds - Series 4 are denominated in NIS and converted to approximately $290 million using a cross-currency swap transaction shortly after the completion of such issuance. The Senior Unsecured Bonds - Series 4 bear interest at a fixed rate of 3.35% per annum, payable semi-annually in arrears starting December 2020 and will be repaid in 10 equal annual payments commencing June 2022 unless prepaid earlier by the Company pursuant to the terms and conditions of the trust instrument that governs the Senior Unsecured Bonds - Series 4. The proceeds from the Senior Unsecured Bonds - Series 4 were used to pay the total consideration of $43.3 million, net in the Pomona purchase transaction as further detailed above and to repay certain existing indebtedness with the balance being used to support the Company's growth plans.

 

Cross Currency Swap

 

Concurrently with the issuance of the Senior Unsecured Bonds - Series 4, the Company entered into a long-term cross currency swap (the "Cross Currency Swap" or "CCS") with the objective of hedging the currency rate fluctuations related to the aggregated principal amount and interest of the Senior Unsecured Bonds - Series 4 at an average fixed rate of 4.34%. The terms of the Cross Currency Swap match those of the Senior Unsecured Bonds - Series 4, including the notional amount of the principal and interest payment dates. The Company designated the Cross Currency Swap as a cash flow hedge as per ASC 815, Derivatives and Hedging and accordingly measures the Cross Currency Swap instrument at fair value. The changes in the Cross Currency Swap fair value are initially recorded in Other Comprehensive Income (Loss) and reclassified to Derivatives and foreign currency transactions gains (losses) in the same period or periods during which the hedged transaction affects earnings and is presented in the same line item in the condensed consolidated statements of operations and comprehensive income as the earnings effect of the Senior Unsecured Bonds - Series 4.

 

Senior Unsecured Bonds - Series 3

 

On April 6, 2020, the Company concluded an auction tender and accepted subscriptions for an additional aggregate principal amount of approximately $50 million of its Series 3 Senior Unsecured Bonds (the “Additional Series 3 Bonds”). The Additional Series 3 Bonds will mature in September 2022 and bear interest at a fixed rate of 4.45% per annum, payable semi-annually in arrears. The Additional Series 3 Bonds will be repaid at maturity in a single bullet payment, unless earlier prepaid by the Company pursuant to the terms and conditions of the trust instrument that governs such Senior Unsecured Bonds.

 

On April 20, 2020, the Company concluded an additional auction tender and accepted subscriptions for an aggregate principal amount of approximately $14.5 million of its Series 3 Senior Unsecured Bonds (the “Second Addition to Series 3 Bonds”). The Second Addition to Series 3 Bonds will mature in September 2022 and bear interest at a fixed rate of 4.45% per annum, payable semi-annually in arrears. The Second Addition to Series 3 Bonds will be repaid at maturity in a single bullet payment, unless earlier prepaid by the Company pursuant to the terms and conditions of the trust instrument that governs such Senior Unsecured Bonds.

 

Additionally, on May 13, 2020, the Company concluded an additional auction tender and accepted subscriptions for an aggregate principal amount of approximately $15.3 million under Series 3 Senior Unsecured Bonds (the “Third Addition to Series 3 Bonds”). The Third Addition to Series 3 Bonds will mature in September 2022 and bear interest at a fixed rate of 4.45% per annum, payable semi-annually in arrears. The Third Addition to Series 3 Bonds will be repaid at maturity in a single bullet payment, unless earlier prepaid by the Company pursuant to the terms and conditions of the trust instrument that governs such Senior Unsecured Bonds.

 

In September 2020, the Company fully repaid the Senior Unsecured Bonds - Series 2 that were issued in September 2016 for an aggregate amount of $67 million.

 

Senior Unsecured Loan

 

In April 2020, the Company entered into a second addendum (the “Second Addendum”) to the loan agreement with the Migdal Group dated March 22, 2018. The Second Addendum provides for an additional loan by the lenders to the Company in an aggregate principal amount of $50.0 million (the “Second Addendum Migdal Loan”). Of the Second Addendum Migdal Loan, $31.5 million will be repaid in 15 equal semi-annual payments commencing on September 15, 2021 and ending on September 15, 2028. The principal amount of the Second Addendum Migdal Loan of $18.5 million will be repaid in one bullet payment on March 15, 2029. The Second Addendum Migdal Loan bears interest at a fixed rate of 5.44% per annum, payable semi-annually in arrears, subject to adjustment in certain circumstances. The Second Addendum Migdal Loan was entered into under substantially the same terms and conditions of the Migdal Loan Agreement.

 

COVID-19 consideration

 

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus ("COVID-19") a pandemic. The Company has implemented significant measures in order to meet government requirements and preserve the health and safety of its employees, including by working remotely and adopting separate shifts in its power plants, manufacturing facilities and other locations while at the same time trying to continue operations at close to full capacity in all locations. In addition, the Company focused efforts to adjusting its operations to mitigate the impact of COVID-19 including managing its global supply chain risks and enhancing its liquidity profile. In the first quarter of 2020, the Company took prompt steps to manage its expenses including responsible cost cutting measures. In addition, in order to support its capital expenditure and growth plans, in the second quarter and July 2020, the Company raised more than $400 million through long term loans as described above. While the extent and duration of the economic downturn from the COVID-19 pandemic remains unclear, the Company has considered, among other things, whether the global operational disruptions indicate a change in circumstances that may trigger asset impairments and whether it needs to revisit accounting estimates and projections or its expectations about collectability of receivables. Additionally, the Company has considered the potential impacts on its fair value disclosures and on its internal control over financial reporting. During the second and third quarters of 2020, the Company's power plants, manufacturing and storage facilities have been operating at close to full capacity and there was no significant direct impact on the Company's operations as a result of the pandemic or the related economic downturn. In the Product segment, the Company experienced a decline in backlog, which it believes resulted mainly due to the impact of COVID-19 and the unwillingness of potential customers to enter into new commitments at this time. While significant uncertainty still exists concerning the magnitude of the impact and duration of the COVID-19 pandemic on the global economy, the Company has determined that there was no triggering event for an impairment with respect to any of its assets nor has there been an adverse change in the probability related to the collectability of its receivables. The Company continues to assess the potential impact of the global economic situation on its consolidated financial statements.

 

Puna

 

On May 3, 2018, the Kilauea volcano located in close proximity to the Company's 38 MW geothermal power plant in the Puna district of Hawaii's Big Island erupted following a significant increase in seismic activity in the area. Before it stopped flowing, the lava covered the wellheads of three geothermal wells, monitoring wells and the substation of the Puna complex, as well as an adjacent warehouse that stored a drilling rig. The insurance policy coverage for property and business interruption is provided by a consortium of insurers some of which denied the full amount of our claim asserting that our insurance policy has coverage limitations. During the first nine months of 2020, the Company recognized business interruption income of $28.6 million which was included in cost of revenues up to the amount covering the related costs and the remainder, totaling $20.7 million, was included in business interruption insurance income under operating expenses in the consolidated statements of operations and comprehensive income. During the third quarter of 2020, the Company recognized business interruption insurance income of $20.4 million which was included in cost of revenues up to the amount covering the related costs and the remainder, totaling $17.8 million, was included in business interruption insurance income under operating expenses in the consolidated statements of operations and comprehensive income. During the first nine months of 2020, the Company received $4.7 million in property damage insurance proceeds, of which $0.6 was recorded in the statements of operations under non-operating income. The Company has filed a lawsuit against those insurers that have not accepted its insurance claim.

 

As of November 2020, construction of the electrical substation and electrical transmission lines at the Puna power plant is completed and the power plant is currently connected to the transmission lines. On the field side, the Company connected one new production well to the power plant and is in the process of connecting a second production well. The Company expects to start generating power in the next few weeks with a gradual increase in generation to 29 MW by the end of the year, although the exact timing remains uncertain.

 

In December 2019, Puna Geothermal Venture ("PGV") and Hawaii Electric Light Company's ("HELCO") subsidiary reached an agreement on an amended and restated power purchase agreement ("PPA") for dispatchable geothermal power sold from the Puna complex. The new PPA, which is subject to Public Utility Commission approval, extends the term until 2052 with an increased contract capacity of 46MW and a fixed price with no escalation, regardless of changes to fossil fuel pricing. The Commercial Operation Date ("COD") of the new 8MW plant is expected during 2022. The existing PPA remains in effect, with current terms, until the expansion is completed, and the new plant reaches its COD.

 

The Company continues to assess the accounting implications of this event on the assets and liabilities on its consolidated balance sheets and whether an impairment will be required. Any significant damage to the geothermal resource or continued shut-down following the lava event at the Puna facilities could have an adverse impact on the power plant's electricity generation and availability, which in turn could have a material adverse impact on the Company's business and results of operations. 

 

Write-offs of unsuccessful exploration activities

 

There were no write-offs of unsuccessful exploration activities for the three and nine months ended September 30, 2020 and 2019.

 

Reconciliation of Cash and cash equivalents and restricted cash and cash equivalents

 

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents as reported on the balance sheet to the total of the same amounts shown on the statement of cash flows:

 

  

September 30,

  

December 31,

  

September 30,

 
  

2020

  

2019

  

2019

 
  

(Dollars in thousands)

 

Cash and cash equivalents

 $197,309  $71,173  $97,602 

Restricted cash and cash equivalents

  92,233   81,937   82,435 

Total Cash and cash equivalents and restricted cash and cash equivalents

 $289,542  $153,110  $180,037 

 

Concentration of credit risk

 

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts receivable.

 

The Company places its temporary cash investments with high credit quality financial institutions located in the United States (“U.S.”) and in foreign countries. At September 30, 2020 and December 31, 2019, the Company had deposits totaling $27.3 million and $12.9 million, respectively, in ten U.S. financial institutions that were federally insured up to $250,000 per account. At September 30, 2020 and December 31, 2019, the Company’s deposits in foreign countries amounted to approximately $99.3 million and $84.8 million, respectively.

 

At September 30, 2020 and December 31, 2019, accounts receivable related to operations in foreign countries amounted to approximately $129.0 million and $118.8 million, respectively. At September 30, 2020 and December 31, 2019, accounts receivable from the Company’s primary customers, which each accounted for revenues in excess of 10% of total consolidated revenues for the nine months ended September 30, 2020 or 2019, amounted to approximately 60% and 58% of the Company’s trade receivables, respectively.

 

The Company's revenues from its primary customers as a percentage of total revenues are as follows:

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Sierra Pacific Power Company and Nevada Power Company

  15.4

%

  15.1

%

  17.1

%

  16.7

%

Southern California Public Power Authority (“SCPPA”)

 

19.5

   16.7   19.8

 

  17.7

 

Kenya Power and Lighting Co. Ltd. ("KPLC")

  18.2

 

  18.0

 

  16.5

 

  16.6

 

 

The Company has historically been able to collect on substantially all of its receivable balances. As of September 30, 2020, the amount overdue from KPLC was $52.9 million of which $13.6 million was paid in October 2020. These amounts represent an average of 83 days overdue. The Company believes it will be able to collect all past due amounts in Kenya. This belief is supported by the fact that in addition to KPLC's obligations under its power purchase agreement, the Company holds a support letter from the Government of Kenya that covers certain cases of KPLC non-payment (such as where caused by government actions/political events).  Additionally, on April 17, 2020, the company received from KPLC a notice declaring a force majeure event in Kenya due to the impact of COVID-19 and purporting to reduce the Olkaria complex’s contracted capacity from 150 MW to 133.9 MW. This notice, which had an immaterial impact on revenue, was withdrawn by KPLC in early September 2020. In addition, the Company experienced a higher rate of curtailments in the second quarter of 2020 by KPLC in the Olkaria complex that was reduced in the third quarter of 2020. The impact of the curtailments is limited as the structure of the PPA secures the vast majority of the Company's revenues with fixed capacity payments unrelated to the electricity actually generated.

 

In Honduras, the Company has been able to successfully collect an overdue debt from Empresa Nacional de Energía Eléctrica ("ENEE") of $20.1 million that was related to the period from October 2018 to April 2019. However, due to continuing restrictive measures related to the COVID-19 pandemic in Honduras, the Company may experience delays in collection. As of September 30, 2020, the total amount overdue from ENEE was $5.8 million, of which the Company received payment of $2.9 million in October 2020. In addition, on April 30, 2020, the Company also received from ENEE a notice declaring a force majeure event in Honduras due to the impact of COVID-19. The Company has not identified any impact on its consolidated financial statements as a result of this notice.

 

The Company may experience delays in collection in other locations due to the restrictive measures related to the COVID-19 pandemic which were imposed globally to different extents.

 

Revenues from contracts with customers

 

Contract assets related to our Product segment reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities related to the Company's Product segment reflect payments received in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on the terms established in the contracts. Total contract assets and contract liabilities as of September 30, 2020 and December 31, 2019 are as follows:

 

  

September 30,

  

December 31,

 
  

2020

  

2019

 
  

(Dollars in thousands)

 

Contract assets (*)

 $18,123  $38,365 

Contract liabilities (*)

 $(7,683) $(2,755)

 

(*) Contract assets and contract liabilities are presented as "Costs and estimated earnings in excess of billings on uncompleted contracts" and "Billings in excess of costs and estimated earnings on uncompleted contracts", respectively, on the consolidated balance sheets. The contract liabilities balance at the beginning of the year was fully recognized as product revenues during the nine months ended September 30, 2020 as a result of performance obligations having been satisfied.

 

On September 30, 2020, the Company had approximately $49.5 million of remaining performance obligations not yet satisfied or partly satisfied related to our Product segment. The Company expects to recognize approximately 100% of this amount as Product revenues during the next 24 months.

 

Leases in which the Company is a lessor

 

The table below presents the lease income recognized as a lessor:

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Lease income relating to lease payments from operating leases

 $108,619  $110,461  $347,778  $351,953 

 
v3.20.2
Note 2 - New Accounting Pronouncements
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Accounting Standards Update and Change in Accounting Principle [Text Block]

NOTE 2 — NEW ACCOUNTING PRONOUNCEMENTS

 

New accounting pronouncements effective in the nine months period ended September 30, 2020

 

Financial Instruments—Credit Losses

 

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-13, Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. This guidance replaces the current incurred loss impairment methodology. Under the new guidance, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects its current estimate of credit losses expected to be incurred over the life of the financial instrument based on historical experience, current conditions and reasonable and supportable forecasts. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. ASU 2018-19 clarifies that receivables from operating leases are accounted for using the lease guidance and not as financial instruments. The guidance became effective on January 1, 2020, including interim periods within that year and requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Under the modified retrospective method of adoption, prior year reported results are not restated. The Company has performed its analysis of the impact on its financial instruments that are within the scope of this guidance, primarily cash and cash equivalents and restricted cash and cash equivalents, receivables (excluding those accounted under lease accounting) and costs and estimated earnings in excess of billings on uncompleted contracts, based on class of financing receivables which share the same or similar risk characteristics such as customer type and geographic location, among others. The Company has estimated the expected credit losses for each class of financing receivables by applying the related corporate default rate which corresponds to the credit rating of the specific customer or class of financing receivables. For trade receivables, the Company applied this methodology using aging schedules reflecting how long the receivables have been outstanding. The Company has also considered the existence of credit enhancement arrangements that may mitigate the credit risk of its financial receivables in estimating the applicable corporate default rate. The Company adopted this update effective January 1, 2020 and recorded a cumulative-effect adjustment to its retained earnings as of that date of approximately $0.8 million. While significant uncertainty still exists concerning the magnitude of the impact and duration of the COVID-19 pandemic on the global economy, the Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted.

 

The following table describes the changes in the allowance for expected credit losses for the three and nine months ended September 30, 2020 (all related to trade receivables):

 

  

Three Months
Ended
September 30,

  

Nine Months
Ended
September 30,

 
  

2020

  

2020

 
  

(Dollars in thousands)

 
         

Beginning balance of the allowance for expected credit losses

 $779  $755 

Provision for expected credit losses for the period

  —   24 

Ending balance of the allowance for expected credit losses

 $779  $779 

 

New accounting pronouncements effective in future periods 

 

Accounting for Income Taxes

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019- 12 is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC 740. The standard is effective for annual periods beginning after December 15, 2020 and interim periods within. Early adoption is permitted although the Company had not early adopted ASU 2019-12 as of September 30, 2020. The Company does not anticipate ASU 2019-12 will have a material impact on its consolidated financial statements.

 

Reference Rate Reform

 

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as the London Interbank Offered Rate ("LIBOR") reference rate is scheduled to be discontinued on December 31, 2021. The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Modifications of contracts within the scope of Topic 470, Debt, should be accounted for by prospectively adjusting the effective interest rate. The amendments in this Update are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the amendments in this Update must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The Company evaluated the impact of the transition from LIBOR, and currently believes that the transition will not have a material impact on its consolidated financial statements.
v3.20.2
Note 3 - Inventories
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Inventory Disclosure [Text Block]

NOTE 3 — INVENTORIES

 

Inventories consist of the following:

 

  

September 30,

  

December 31,

 
  

2020

  

2019

 
  

(Dollars in thousands)

 

Raw materials and purchased parts for assembly

 $19,585  $21,942 

Self-manufactured assembly parts and finished products

  14,799   13,007 

Total inventories

 $34,384  $34,949 

 
v3.20.2
Note 4 - Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

NOTE 4— FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received upon selling an asset or paid upon transferring a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below:

 

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

 

Level 2 — Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

 

Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

The following table sets forth certain fair value information at September 30, 2020 and December 31, 2019 for financial assets and liabilities measured at fair value by level within the fair value hierarchy, as well as cost or amortized cost. As required by the fair value measurement guidance, assets and liabilities are classified in their entirety based on the lowest level of inputs that is significant to the fair value measurement.

 

      

September 30, 2020

 
      

Fair Value

 
  

Carrying Value at September 30, 2020

  

Total

  

Level 1

  

Level 2

  

Level 3

 
  

(Dollars in thousands)

 

Assets:

                    

Current assets:

                    

Cash equivalents (including restricted cash accounts)

 $37,787  $37,787  $37,787  $—  $— 

Derivatives:

                    

Contingent receivable (1)

  106   106   —   —   106 

Currency forward contracts (2)

  1,974   1,974   —   1,974   — 

Liabilities:

                    

Current liabilities:

                    

Derivatives:

                    

Contingent payables (1)

  (3,029)  (3,029)  —   —   (3,029)

Cross currency swap (3)

  (2,790)  (2,790)  —   (2,790)  — 
  $34,048  $34,048  $37,787  $(816) $(2,923)

 

 

      

December 31, 2019

 
      

Fair Value

 
  

Carrying
Value at
December
31, 2019

  

Total

  

Level 1

  

Level 2

  

Level 3

 
  

(Dollars in thousands)

 

Assets

                    

Current assets:

                    

Cash equivalents (including restricted cash accounts)

 $28,316  $28,316  $28,316  $—  $— 

Derivatives:

                    

Contingent receivables (1)

  102   102   —   —   102 

Currency forward contracts (2)

  362   362   —   362   — 

Liabilities:

                    

Current liabilities:

                    

Derivatives:

                    

Contingent payable (1)

  (3,359)  (3,359)  —   —   (3,359)
  $25,421  $25,421  $28,316  $362  $(3,257)

 

 

1.

These amounts relate to contingent receivables and payables relating to acquisition of the Guadeloupe power plant, valued primarily based on unobservable inputs and are included within “Prepaid expenses and other”, “Accounts payable and accrued expenses” and “Other long-term liabilities” on September 30, 2020 and December 31, 2019 in the consolidated balance sheets with the corresponding gain or loss being recognized within "Derivatives and foreign currency transaction gains (losses)" in the condensed consolidated statements of operations and comprehensive income.

 

 

2.

These amounts relate to currency forward contracts valued primarily based on observable inputs, including forward and spot prices for currencies, net of contracted rates and then multiplied by notional amounts, and are included within “Other receivables” and “Accounts payable and accrued expenses”, as applicable, on September 30, 2020 and December 31, 2019, in the condensed consolidated balance sheets with the corresponding gain or loss being recognized within “Derivatives and foreign currency transaction gains (losses)” in the consolidated statement of operations and comprehensive income.

 

 

3.

These amounts relate to CCS contracts valued primarily based on the present value of the CCS future settlement prices for USD and NIS zero yield curves and the applicable exchange rate as of September 30, 2020. These amounts are included within “Other receivables”, net of $8.3 million in cash collateral deposits on September 30, 2020 in the consolidated balance sheets.

 

The amounts set forth in the tables above include investments in debt instruments and money market funds (which are included in cash equivalents). Those securities and deposits are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in an active market.

 

The following table presents the amounts of gain (loss) recognized in the consolidated statements of operations and comprehensive income on derivative instruments (in thousands):

 

    

Amount of recognized
gain (loss)

 

Amount of recognized
gain (loss)

Derivatives not designated as
hedging instruments

 

Location of recognized gain
(loss)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

    

2020

 

2019

 

2020

 

2019

 
                

Currency forward contracts (1)

 

Derivative and foreign currency transaction gains (losses)

 $424 $941 $2,949 $2,640 
                

Derivatives designated as cash flow hedging instruments

               
                

Cross currency swap (2)

 

Derivative and foreign currency transaction gains (losses)

 $758 $— $758 $— 

 

(1) The foregoing currency forward transactions were not designated as hedge transactions and are marked to market with the corresponding gains or losses recognized within “Derivatives and foreign currency transaction gains (losses)”.

 

(2) The foregoing cross currency swap transactions were designated as a cash flow hedge as further described under note 1 to the condensed consolidated financial statements. The changes in the CCS fair value are initially recorded in "Other comprehensive income (loss)" and a corresponding amount is reclassified out of "Accumulated other comprehensive income (loss)" to "Derivatives and foreign currency transaction gains (losses)" to offset the remeasurement of the underlying hedged transaction which also impacts the same line item in the condensed consolidated statements of operations and comprehensive income.

 

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 during the nine months ended September 30, 2020.

 

The following table presents the effect of derivative instruments designated as cash flow hedges on the condensed consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2020:

 

  

Balance in Other
comprehensive income
(loss) beginning of
period

  

Gain or (loss)
recognized in Other
comprehensive income
(loss)

  

Amount reclassified
from Other
comprehensive income
(loss) into earnings

  

Balance in Other
comprehensive income
(loss) end of period

 

Cash flow hedge:

                

Cross currency swap

 $—  $(2,790) $(758) $(3,548)

 

The estimated net amount of existing gain (loss) that is reported in "Accumulated other comprehensive income (loss)" as of September 30, 2020 that is expected to be reclassified into earnings within the next 12 months is immaterial. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flow is from the transaction commencement date through June 2031.

 

The fair value of the Company’s long-term debt approximates its carrying amount, except for the following: 

 

  

Fair Value

  

Carrying Amount

 
  

September 30,
2020

  

December 31,
2019

  

September 30,
2020

  

December 31,
2019

 
  

(Dollars in millions)

  

(Dollars in millions)

 

Olkaria III Loan - OPIC

 $198.7  $202.1  $179.2  $192.6 

Olkaria III plant 4 Loan - DEG 2

  43.8   43.8   40.0   42.5 

Olkaria III plant 1 Loan - DEG 3

  38.7   38.8   34.9   37.1 

Platanares Loan - OPIC

  115.4   115.3   98.3   104.5 

Amatitlan Loan

  24.4   26.4   23.6   26.3 

Senior Secured Notes:

                

OFC 2 LLC ("OFC 2")

  214.3   210.9   192.3   203.0 

Don A. Campbell 1 ("DAC 1")

  80.8   78.5   74.5   78.2 

USG Prudential - NV

  32.8   30.6   27.9   28.4 

USG Prudential - ID

  18.1   18.6   18.5   19.6 

USG DOE

  45.5   45.0   38.1   40.8 

Senior Unsecured Bonds

  557.9   205.7   508.6   204.3 

Senior Unsecured Loan

  228.9   161.3   200.0   150.0 

Plumstriker

 

19.7

   21.7   19.7   21.6 

Other long-term debt

  16.9   16.3   17.1   17.4 

 

The fair value of the long-term debt is determined by a valuation model, which is based on a conventional discounted cash flow methodology and utilizes assumptions of current borrowing rates. The fair value of revolving lines of credit is determined using a comparison of market-based price sources that are reflective of similar credit ratings to those of the Company.

 

As disclosed above under Note 1 to the condensed consolidated financial statements, the outbreak of the COVID-19 pandemic has resulted in a global economic downturn and market volatility that may have an impact on the estimated fair value of the Company's long-term debt. While interest rates on U.S. Treasury securities have declined and may continue to decline as a result of the COVID-19 pandemic, other components of the Company's borrowing rates have increased and may continue to increase as the global economic situation evolves, all of which have a direct impact on the fair value of the Company's long-term debt.

 

The carrying value of financial instruments such as revolving lines of credit and deposits approximates fair value.

 

The following table presents the fair value of financial instruments as of September 30, 2020: 

 

  

Level 1

  

Level 2

  

Level 3

  

Total

 
  

(Dollars in millions)

 

Olkaria III - OPIC

 $—  $—  $198.7  $198.7 

Olkaria III plant 4 Loan - DEG 2

  —   —   43.8   43.8 

Olkaria III plant 1 Loan - DEG 3

  —   —   38.7   38.7 

Platanares Loan - OPIC

  —   —   115.4   115.4 

Amatitlan Loan

  —   24.4   —   24.4 

Senior Secured Notes:

                

OFC 2 Senior Secured Notes

  —   —   214.3   214.3 

DAC 1 Senior Secured Notes

  —   —   80.8   80.8 

USG Prudential - NV

  —   —   32.8   32.8 

USG Prudential - ID

  —   —   18.1   18.1 

USG DOE

  —   —   45.5   45.5 

Senior Unsecured Bonds

  —   —   557.9   557.9 

Senior Unsecured Loan

  —   —   228.9   228.9 

Plumstriker

  —   19.7   —   19.7 

Other long-term debt

  —   —   16.9   16.9 

Deposits

  14.8   —   —   14.8 

 

The following table presents the fair value of financial instruments as of December 31, 2019:

 

  

Level 1

  

Level 2

  

Level 3

  

Total

 
  

(Dollars in millions)

 

Olkaria III Loan - OPIC

 $—  $—  $202.1  $202.1 

Olkaria IV - DEG 2

  —   —   43.8   43.8 

Olkaria IV - DEG 3

  —   —   38.8   38.8 

Platanares Loan - OPIC

  —   —   115.3   115.3 

Amatitlan Loan

  —   26.4   —   26.4 

Senior Secured Notes:

                

OFC 2 Senior Secured Notes

  —   —   210.9   210.9 

DAC 1 Senior Secured Notes

  —   —   78.5   78.5 

USG Prudential - NV

  —   —   30.6   30.6 

USG Prudential - ID

  —   —   18.6   18.6 

USG DOE

  —   —   45.0   45.0 

Senior Unsecured Bonds

  —   —   205.7   205.7 

Senior Unsecured Loan

  —   —   161.3   161.3 

Plumstriker

  —   21.7   —   21.7 

Other long-term debt

  —   —   16.3   16.3 

Commercial paper

  —   50.0   —   50.0 

Revolving lines of credit

  —   40.6   —   40.6 

Deposits

  12.2   —   —   12.2 

 
v3.20.2
Note 5 - Stock-based Compensation
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]

NOTE 5 — STOCK-BASED COMPENSATION

 

On May 12, 2020, the Company granted certain members of its management an aggregate of 46,795 Stock Appreciation Rights ("SARs"), 6,142 Restricted Stock Units ("RSUs") and 5,637 Performance Stock Units ("PSUs") under the Company’s 2018 Incentive Plan. The exercise price of each SAR was $68.34 which represented the fair market value of the Company’s common stock on the grant date. The SARs will expire six years from date of grant and the SARs, RSUs and PSUs have a vesting period of between 2 to 4 years from the grant date.

 

The fair value of each SAR, RSU and PSU on the grant date was $17.6, $67.2 and $73.2, respectively. The Company calculated the fair value of each SAR on the grant date using the complex lattice, tree-based option-pricing model based on the following assumptions:

 

Risk-free interest rates

  0.44

%

Expected life (in years)

  2.8 

Dividend yield

  0.63

%

Expected volatility (weighted average)

  28.14

%

 

On June 15, 2020, the Company granted certain directors, members of its management and employees an aggregate of 852,475 SARs, 11,068 RSUs and 10,962 PSUs under the Company’s 2018 Incentive Plan. The exercise price of each SAR was $69.14 which represented the fair market value of the Company’s common stock on the grant date. The SARs will expire six years from date of grant, except for 1,156 SARs which will expire in 5 months from the grant date, and the SARs, RSUs and PSUs have a vesting period of between 2 to 4 years from the grant date.

 

The fair value of each SAR, RSU and PSU on the grant date was $18.0, $68.0 and $65.0 , respectively. The Company calculated the fair value of each SAR on the grant date using the complex lattice, tree-based option-pricing model based on the following assumptions:

 

Risk-free interest rates

0.44%-0.28%

Expected life (in years)

2-2.8

Dividend yield

 0.64% 

Expected volatility (weighted average)

28.5%-35.2%

 

On July 1, 2020, the Company granted its newly appointed CEO an aggregate of 45,365 SARs, 6,020 RSUs and 6,540 PSUs under the Company’s 2018 Incentive Plan. The exercise price of each SAR was $63.40 which represented the fair market value of the Company’s common stock on the grant date. The SARs will expire six years from date of grant and the SARs, RSUs and PSUs have a vesting period of between 2 to 4 years from the grant date.

 

 

The fair value of each SAR, RSU and PSU on the grant date was $16.53, $62.29 and $57.34 , respectively. The Company calculated the fair value of each SAR on the grant date using the complex lattice, tree-based option-pricing model based on the following assumptions:

 

Risk-free interest rates

0.41%-0.17%

Expected life (in years)

 2.8 

Dividend yield

 0.64% 

Expected volatility (weighted average)

28.5%-35.7%

 
v3.20.2
Note 6 - Interest Expense, Net
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Interest Expense Disclosure [Text Block]

NOTE 6 — INTEREST EXPENSE, NET

 

The components of interest expense are as follows:

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Interest related to sale of tax benefits

 $1,991  $2,671  $6,814  $9,487 

Interest expense

  22,000   17,924   58,801   54,307 

Less — amount capitalized

  (2,235)  (519)  (6,801)  (978)

Total interest expense, net

 $21,756  $20,076  $58,814  $62,816 

 
v3.20.2
Note 7 - Earnings Per Share
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Earnings Per Share [Text Block]

NOTE 7 — EARNINGS PER SHARE

 

Basic earnings per share attributable to the Company’s stockholders is computed by dividing net income or loss attributable to the Company’s stockholders by the weighted average number of shares of common stock outstanding for the period. The Company does not have any equity instruments that are dilutive, except for employee stock-based awards.

 

The table below shows the reconciliation of the number of shares used in the computation of basic and diluted earnings per share (in thousands):

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
                 

Weighted average number of shares used in computation of basic earnings per share add:

  51,072   50,933   51,051   50,816 

Additional shares from the assumed exercise of employee stock options

  210   401   335   308 

Weighted average number of shares used in computation of diluted earnings per share

  51,282   51,334   51,386   51,124 

 

The number of stock-based awards that could potentially dilute future earnings per share and that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive was 298,661 and 2,495 for the three months ended September 30, 2020 and 2019, respectively, and 133,869 and 172,153 for the nine months ended September 30, 2020 and 2019, respectively. 

 
v3.20.2
Note 8 - Business Segments
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

NOTE 8 — BUSINESS SEGMENTS

 

The Company has three reporting segments: the Electricity segment, the Product segment and the Energy Storage and Management Services segment ("ESMS"). These segments are managed and reported separately as each offers different products and serves different markets.

 

 

•

Under the Electricity segment, the Company builds, owns and operates geothermal, solar PV and recovered energy-based power plants in the United States and geothermal power plants in other countries around the world and sell the electricity they generate.

 

 

•

Under the Product segment, the Company designs, manufactures and sells equipment for geothermal and recovered energy-based electricity generation and remote power units and provide services relating to the engineering, procurement and construction of geothermal and recovered energy-based power plants.

 

 

•

Under the ESMS segment the Company provides energy storage, demand response and energy management related services as well as services relating to the engineering, procurement, construction, operation and maintenance of energy storage units mainly through its Viridity business. 

 

Transfer prices between the operating segments are determined based on current market values or cost-plus markup of the seller’s business segment.

 

Summarized financial information concerning the Company’s reportable segments is shown in the following tables, including the Company's disaggregated revenues from contracts with customers:

 

  

Electricity

  

Product

  

ESMS

  

Consolidated

 
  

(Dollars in thousands)

 

Three Months Ended September 30, 2020:

                

Revenues from external customers:

                

United States (1)

 $73,180  $435  $5,662  $79,277 

Foreign (2)

  50,480   29,190   —   79,670 

Net revenue from external customers

  123,660   29,625   5,662   158,947 

Intersegment revenues (4)

  —   36,839   —   — 

Operating income (loss)

  50,847   1,285   (446)  51,686 

Segment assets at period end (3) (*)

  3,236,631   148,106   136,210   3,520,947 

* Including unconsolidated investments

  91,277   —   —   91,277 
                 

Three Months Ended September 30, 2019:

                

Revenues from external customers:

                

United States (1)

 $71,916  $4,816  $3,484  $80,216 

Foreign (2)

  52,062   38,221   —   90,283 

Net revenue from external customers

  123,978   43,037   3,484   170,499 

Intersegment revenues (4)

  —   20,831   —   — 

Operating income (loss)

  32,362   6,826   (469)  38,719 

Segment assets at period end (3) (*)

  3,050,971   125,762   82,760   3,259,493 

* Including unconsolidated investments

  73,714   —   —   73,714 
                 

Nine Months Ended September 30, 2020:

                

Revenues from external customers:

                

United States (1)

 $245,299  $1,412  $10,022  $256,733 

Foreign (2)

  149,902   119,325   —   269,227 

Net revenue from external customers

  395,201   120,737   10,022   525,960 

Intersegment revenues (4)

  —   95,948   —   — 

Operating income (loss)

  155,352   8,960   (3,494)  160,818 

Segment assets at period end (3) (*)

  3,236,631   148,106   136,210   3,520,947 

* Including unconsolidated investments

  91,277   —   —   91,277 
                 

Nine Months Ended September 30, 2019:

                

Revenues from external customers:

                

United States (1)

 $240,375  $28,591  $10,442  $279,408 

Foreign (2)

  155,590   118,604   —   274,194 

Net revenue from external customers

  395,965   147,195   10,442   553,602 

Intersegment revenues (4)

  —   58,259   —   — 

Operating income (loss)

  127,388   16,385   (4,449)  139,324 

Segment assets at period end (3) (*)

  3,050,971   125,762   82,760   3,259,493 

* Including unconsolidated investments

  73,714   —   —   73,714 

 

 

(1)

Electricity segment revenues in the United States are all accounted under lease accounting except for $15.0 million and $47.4 million in the three and nine months ended September 30, 2020, respectively, that are accounted under ASC 606. For the three and nine months ended September 30, 2019, Electricity segment revenues in the United States are all accounted under lease accounting except for $13.5 million and $44.0 million, respectively, that are accounted under ASC 606. Product and ESMS segment revenues in the United States are accounted under ASC 606.

 

 

(2)

Electricity segment revenues in foreign countries are all accounted under lease accounting. Product segment revenues in foreign countries are accounted under ASC 606.

 

 

(3)

Electricity segment assets include goodwill in the amount of $20.1 million and $19.9 million as of September 30, 2020 and 2019, respectively. ESMS segment assets include goodwill in the amount of $3.5 million and $0 million as of September 30, 2020 and 2019, respectively. No goodwill is included in the Product segment assets as of September 30, 2020 and 2019.

 

 

(4)

Intersegment revenue are fully eliminated in consolidation.

 

Reconciling information between reportable segments and the Company’s consolidated totals is shown in the following table:

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Revenues:

                

Total segment revenues

 $158,947  $170,499  $525,960  $553,602 

Intersegment revenues

  36,839   20,831   95,948   58,259 

Elimination of intersegment revenues

  (36,839)  (20,831)  (95,948)  (58,259)

Total consolidated revenues

 $158,947  $170,499  $525,960  $553,602 
                 

Operating income:

                

Operating income

 $51,686  $38,719  $160,818  $139,324 

Interest income

  626   482   1,469   1,195 

Interest expense, net

  (21,756)  (20,076)  (58,814)  (62,816)

Derivatives and foreign currency transaction gains (losses)

  1,047   205   2,111   696 

Income attributable to sale of tax benefits

  7,014   4,056   16,818   16,457 

Other non-operating income (expense), net

  961   244   1,343   1,362 

Total consolidated income before income taxes and equity in income of investees

 $39,578  $23,630  $123,745  $96,218 

 
v3.20.2
Note 9 - Commitments and Contingencies
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

NOTE 9 — COMMITMENTS AND CONTINGENCIES

 

•     On May 21, 2018, a motion to certify a class action was filed in Tel Aviv District Court against Ormat Technologies, Inc. and 11 officers and directors.  The alleged class is defined as "All persons who purchased Ormat shares on the Tel Aviv Stock Exchange between August 3, 2017 and May 13, 2018". The motion alleges that the Company and other respondents violated  Sections 31(a)(1) and 38C of the Israeli Securities Law, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, because they allegedly: (1) misled investors by stating in the Company's financial statements that it maintains effective internal controls over its accounting policies and procedures, even though the Company's internal controls had material weaknesses which led to erroneous accounting in its 2017 unaudited quarterly reports that had to be restated, including adjustments to the Company’s net income and shareholders’ equity; and (2) failed to issue an immediate report in Israel until May 16, 2018, analogous to the report that was released in the United States on May 11, 2018 stating, inter alia, that the errors in its financial reports affected its balance sheet and would be remedied in its 2017 annual report. Agreed motions were filed from time to time with, and granted by, the Tel Aviv District Court to stay the proceedings in Israel in light of the United States case (Mac Costas). On June 30, 2020, pursuant to the execution and submission of a settlement agreement to the United States court for approval, which resolves the matters raised with respect to the entire class of shareholders (whether traded on the Tel Aviv Stock Exchange or U.S. stock exchange), the Company filed a motion informing the Tel Aviv court of the settlement. On July 2, 2020, the plaintiff in the Tel Aviv action filed a motion requesting the Israeli court to issue an Anti-Suit Injunction against Phoenix Insurance, the lead plaintiff in the United States case, instructing it to, inter alia, discontinue acting on behalf of the Israeli class members in the matter. Agreed motions were filed from time to time to, and granted by, the Tel Aviv District Court delaying the date for response to the Anti-Suit Injunction. The Company considers that it has strong legal defenses and it is not probable that the request for an Anti-Suit Injunction will be granted. The potential amount that the Company may bear in this context cannot be reasonably estimated at this time.

 

•     On June 11, 2018, a putative class action filed by Mac Costas on behalf of alleged shareholders that purchased or acquired the Company's ordinary shares between August 8, 2017 and May 15, 2018 was commenced in the United States District Court for the District of Nevada against the Company and its Chief Executive Officer and Chief Financial Officer, which was subsequently amended by a consolidated complaint filed by lead plaintiff Phoenix Insurance in May 13, 2019.  The complaint asserts claim against all defendants pursuant to Section 10(b) of the Exchange Act, as amended, and Rule 10b-5 thereunder and against its officers pursuant to Section 20(a) of the Exchange Act.  The complaint alleges that the Company's Form 10-K for the years ended December 31, 2016 and 2017, and Form 10-Qs for each of the quarters in the nine months ended September 30, 2017 contained material misstatements or omissions, among other things, with respect to the Company’s tax provisions and the effectiveness of its internal control over financial reporting, and that, as a result of such alleged misstatements and omissions, the plaintiffs suffered damages. On December 6, 2019 the Company’s motion to dismiss was denied by the court. On March 23, 2020, pursuant to out of court mediation, a term sheet for a proposed settlement of the action without admission of liability or wrongdoing, was signed between the parties and on June 10, 2020, a joint stipulation and motion for preliminary approval of the comprehensive executed settlement documentation was filed for the court for approval, which is now pending. The sum the Company will bear in this context is not material.

 

•     On September 11, 2018, the Klein derivative action (Klein Action) was filed against the Company, our board and its Chief Executive Officer and Chief Financial Officer in the United States District Court for the District of Nevada, and on October 22, 2018, the Matthew derivative action (Matthew Action) was filed against the Company, certain named present and former board members (Barniv, Beck, Boehm, Clark, Falk, Freeland, Granot, Joyal, Nishigori, Sharir, Stern and Wong) in the United States District Court, District of Nevada.  The Klein complaint asserts four derivative causes of action generally arising from Ormat's restatement of its financial statements: (i) the individual defendants allegedly breached their fiduciary duties by allowing the Company to improperly report its financials; (ii) the individual defendants allegedly were unjustly enriched by being compensated while breaching their fiduciary duties; (iii) the individual defendants allegedly committed corporate waste in paying officers and directors and by incurring legal costs and potential liability; and (iv) the director defendants allegedly breached Section 14(a) of the Exchange Act in connection with the issuance of the 2018 proxy. The Matthew complaint similarly alleges derivatively a breach of fiduciary duties, abuse of control, gross mismanagement, and corporate waste by the named directors. On January 24, 2019, the Nevada Court entered an order consolidating the Klein Action and Matthew Action. On July 10, 2020, a comprehensive settlement package and derivative stipulation of settlement was submitted to the court, and on October 12, 2020, Plaintiff filed an unopposed motion to the Nevada Court requesting preliminary approval of the corporate governance enhancement settlement. The sum the Company will bear for implementation is not material.

 

Following the announcement of the Company’s acquisition of U.S. Geothermal Inc. ("USG"), a number of putative  shareholder class action complaints were initially filed on behalf of USG shareholders between March 8, 2018 and March 30, 2018 against USG and the individual members of the USG board of directors.  All of the purported class action suits filed in Federal Court in Idaho have been voluntarily dismissed.  The single remaining class action complaint is a purported class action filed in the Delaware Chancery Court, entitled Riche v. Pappas, et al., Case No. 2018-0177 (Del. Ch., Mar. 12, 2018). An amended complaint was filed on May 24, 2018 under seal, under a confidentiality agreement that was executed by plaintiff.  The amended Riche complaint alleges state law claims for breach of fiduciary duty against former USG directors and seeks post-closing damages. On March 27, 2020, pursuant to out of court mediation, a term sheet for a proposed settlement of the action, without admission of liability or wrongdoing, was signed between the parties. On June 3, 2020, a comprehensive settlement package and stipulation of settlement was filed with the court for approval, and on September 16, 2020 the Delaware Chancery Court approved the settlement. Plaintiff’s revised motion requesting the court to approve Plaintiff’s proposed allocation plan was filed on October 6, 2020. The sum the Company will bear in this context is not material.

 

•     On March 29, 2016, a former local sales representative in Chile, Aquavant, S.A., filed a claim on the basis of unjust enrichment against Ormat’s subsidiaries in the 27th Civil Court of Santiago, Chile. The claim requests that the court order Ormat to pay Aquavant $4.6 million in connection with its activities in Chile, including the EPC contract for the Cerro Pabellon project and various geothermal concessions, plus 3.75% of Ormat geothermal products sales in Chile over the next 10 years. Pursuant to various motions submitted by the defendants and the plaintiffs to various courts, including the Court of Appeals, the case was removed from the original court and then refiled before the 11th Civil Court of Santiago. On April 16, 2020, the 11th Civil Court of Santiago issued its order rejecting Plaintiff's principal claim of unjust enrichment, as an improper cause of action, rejecting Plaintiff's secondary claim for declaratory judgment, which the Court associates with the principal claim of unjust enrichment and not relating to a number of defenses raised by the Company. In May 2020, each of the parties filed separately to the court of appeals, which are pending. The Company considers it has strong legal defenses and the probability of the claimant receiving an award is low. The potential amount that the Company may bear in this context cannot be reasonably estimated at this time.

 

In addition, from time to time, the Company is named as a party to various other lawsuits, claims and other legal and regulatory proceedings that arise in the ordinary course of the Company's business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damage, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to such lawsuits, claims and proceedings, the Company accrues reserves when a loss is probable, and the amount of such loss can be reasonably estimated. It is the opinion of the Company’s management that the outcome of these proceedings, individually and collectively, will not be material to the Company’s consolidated financial statements as a whole. 

 
v3.20.2
Note 10 - Income Taxes
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 10 — INCOME TAXES

 

The Company’s effective tax rate expense (benefit) for the three months ended September 30, 2020 and 2019 was 38.8% and 40.7%, respectively and 36.6% and 20.9% for the nine months ended September 30, 2020 and 2019, respectively. The effective rate differs from the federal statutory rate of 21% for the nine months ended September 30, 2020 due to: (i) the mix of business in various countries with higher statutory tax rates than the federal statutory tax rate; (ii) a net increase in the valuation allowance on deferred tax assets related to Production Tax Credits ("PTC"), partially offset by tax depreciation benefits related to intra-entity transfers of assets and the release of reserves and interest for uncertain tax positions in foreign jurisdictions related to prior years.

 

In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), enacted on March 27, 2020 in the United States provides relief on deferral of tax payments and filings, modifies the net operating loss utilization rules, and temporarily increases the interest expense deduction allowed. For the nine months ended September 30, 2020, there were no material tax impacts to our consolidated financial statements as it relates to the CARES Act or other COVID-19 stimulus measures. The Company will continue to monitor additional guidance issued by Treasury, the Internal Revenue Service and other taxing authorities.

 

Tax Audit in Kenya

 

The Company has received three Notices of Assessments (“NoA”) from the Kenya Revenue Authority ("KRA") relating to certain findings in respect of its audit of tax years 2013 to 2017. The Company has responded and objected to each of the KRA audit findings and has filed its appeals to Objection Decisions issued by the KRA and continuing the legal process in order to resolve the issues raised.

 

The Company is currently at different stages of discussions with the KRA on the matters included in NoA 1 and NoA 3 issued by the KRA, totaling approximately $9 million, including interest and penalties. The Company believes its tax positions for the issues raised during the audit period for these assessments is more-likely-than-not sustainable based on technical merits under Kenyan tax law. As of September 30, 2020, the Company had not recorded any tax reserves related to these demands except for an immaterial amount.

 

On October 19, 2020, the Company settled NoA 2 issued by the KRA. Refer to Note 11 - Subsequent Events for a detailed discussion of this settlement.
v3.20.2
Note 11 - Subsequent Events
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Subsequent Events [Text Block]

NOTE 11 — SUBSEQUENT EVENTS

 

Cash Dividend

 

On November 3, 2020, the Board of Directors of the Company declared, approved and authorized payment of a quarterly dividend of $5.6 million ($0.11 per share) to all holders of the Company’s issued and outstanding shares of common stock on November 18, 2020, payable on December 2, 2020.

 

Tax Audit in Kenya

 

On October 19, 2020, the Company entered into a settlement agreement in relation to the second NoA that was issued by the KRA on December 4, 2019 totaling approximately $190 million of proposed adjustments, including interest and penalties. The settlement agreement extended the audit period for the issues addressed within the assessment, to cover the period from 2013 through 2019 and resulted in a total settlement payment of approximately $28 million including interest and penalties related to late payment in respect of 2019 taxable income. Additionally, the settlement included a deferral of tax benefits to be utilized in years subsequent to 2019 in an amount of approximately $28 million. The assessment was paid on October 27, 2020.

 

The Company is currently evaluating the impact of the settlement with the KRA on its annual consolidated financial statements for 2020 and currently believes that such impact will be immaterial.

 

Stock based awards

 

On November 3, 2020, the Company granted its directors SARs and RSUs under the Company’s 2018 Incentive Plan. The exercise price of each SAR will be the closing share price on November 4, 2020. The grant date fair value of the award to each of the directors is $120,000. The SARs and RSUs will vest fully on the first anniversary of the grant date and will expire in six years.

 
v3.20.2
Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Effect of COVID-19 Pandemic, Policy [Text Block]

COVID-19 consideration

 

In March 2020, the World Health Organization declared the outbreak of the novel coronavirus ("COVID-19") a pandemic. The Company has implemented significant measures in order to meet government requirements and preserve the health and safety of its employees, including by working remotely and adopting separate shifts in its power plants, manufacturing facilities and other locations while at the same time trying to continue operations at close to full capacity in all locations. In addition, the Company focused efforts to adjusting its operations to mitigate the impact of COVID-19 including managing its global supply chain risks and enhancing its liquidity profile. In the first quarter of 2020, the Company took prompt steps to manage its expenses including responsible cost cutting measures. In addition, in order to support its capital expenditure and growth plans, in the second quarter and July 2020, the Company raised more than $400 million through long term loans as described above. While the extent and duration of the economic downturn from the COVID-19 pandemic remains unclear, the Company has considered, among other things, whether the global operational disruptions indicate a change in circumstances that may trigger asset impairments and whether it needs to revisit accounting estimates and projections or its expectations about collectability of receivables. Additionally, the Company has considered the potential impacts on its fair value disclosures and on its internal control over financial reporting. During the second and third quarters of 2020, the Company's power plants, manufacturing and storage facilities have been operating at close to full capacity and there was no significant direct impact on the Company's operations as a result of the pandemic or the related economic downturn. In the Product segment, the Company experienced a decline in backlog, which it believes resulted mainly due to the impact of COVID-19 and the unwillingness of potential customers to enter into new commitments at this time. While significant uncertainty still exists concerning the magnitude of the impact and duration of the COVID-19 pandemic on the global economy, the Company has determined that there was no triggering event for an impairment with respect to any of its assets nor has there been an adverse change in the probability related to the collectability of its receivables. The Company continues to assess the potential impact of the global economic situation on its consolidated financial statements.

 
Puna Power Plant, Policy [Policy Text Block]

Puna

 

On May 3, 2018, the Kilauea volcano located in close proximity to the Company's 38 MW geothermal power plant in the Puna district of Hawaii's Big Island erupted following a significant increase in seismic activity in the area. Before it stopped flowing, the lava covered the wellheads of three geothermal wells, monitoring wells and the substation of the Puna complex, as well as an adjacent warehouse that stored a drilling rig. The insurance policy coverage for property and business interruption is provided by a consortium of insurers some of which denied the full amount of our claim asserting that our insurance policy has coverage limitations. During the first nine months of 2020, the Company recognized business interruption income of $28.6 million which was included in cost of revenues up to the amount covering the related costs and the remainder, totaling $20.7 million, was included in business interruption insurance income under operating expenses in the consolidated statements of operations and comprehensive income. During the third quarter of 2020, the Company recognized business interruption insurance income of $20.4 million which was included in cost of revenues up to the amount covering the related costs and the remainder, totaling $17.8 million, was included in business interruption insurance income under operating expenses in the consolidated statements of operations and comprehensive income. During the first nine months of 2020, the Company received $4.7 million in property damage insurance proceeds, of which $0.6 was recorded in the statements of operations under non-operating income. The Company has filed a lawsuit against those insurers that have not accepted its insurance claim.

 

As of November 2020, construction of the electrical substation and electrical transmission lines at the Puna power plant is completed and the power plant is currently connected to the transmission lines. On the field side, the Company connected one new production well to the power plant and is in the process of connecting a second production well. The Company expects to start generating power in the next few weeks with a gradual increase in generation to 29 MW by the end of the year, although the exact timing remains uncertain.

 

In December 2019, Puna Geothermal Venture ("PGV") and Hawaii Electric Light Company's ("HELCO") subsidiary reached an agreement on an amended and restated power purchase agreement ("PPA") for dispatchable geothermal power sold from the Puna complex. The new PPA, which is subject to Public Utility Commission approval, extends the term until 2052 with an increased contract capacity of 46MW and a fixed price with no escalation, regardless of changes to fossil fuel pricing. The Commercial Operation Date ("COD") of the new 8MW plant is expected during 2022. The existing PPA remains in effect, with current terms, until the expansion is completed, and the new plant reaches its COD.

 

The Company continues to assess the accounting implications of this event on the assets and liabilities on its consolidated balance sheets and whether an impairment will be required. Any significant damage to the geothermal resource or continued shut-down following the lava event at the Puna facilities could have an adverse impact on the power plant's electricity generation and availability, which in turn could have a material adverse impact on the Company's business and results of operations. 

 
Exploratory Drilling Costs Capitalization and Impairment, Policy [Policy Text Block]

Write-offs of unsuccessful exploration activities

 

There were no write-offs of unsuccessful exploration activities for the three and nine months ended September 30, 2020 and 2019.

 
Cash and Cash Equivalents, Policy [Policy Text Block]

Reconciliation of Cash and cash equivalents and restricted cash and cash equivalents

 

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents as reported on the balance sheet to the total of the same amounts shown on the statement of cash flows:

 

  

September 30,

  

December 31,

  

September 30,

 
  

2020

  

2019

  

2019

 
  

(Dollars in thousands)

 

Cash and cash equivalents

 $197,309  $71,173  $97,602 

Restricted cash and cash equivalents

  92,233   81,937   82,435 

Total Cash and cash equivalents and restricted cash and cash equivalents

 $289,542  $153,110  $180,037 

 
Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of credit risk

 

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts receivable.

 

The Company places its temporary cash investments with high credit quality financial institutions located in the United States (“U.S.”) and in foreign countries. At September 30, 2020 and December 31, 2019, the Company had deposits totaling $27.3 million and $12.9 million, respectively, in ten U.S. financial institutions that were federally insured up to $250,000 per account. At September 30, 2020 and December 31, 2019, the Company’s deposits in foreign countries amounted to approximately $99.3 million and $84.8 million, respectively.

 

At September 30, 2020 and December 31, 2019, accounts receivable related to operations in foreign countries amounted to approximately $129.0 million and $118.8 million, respectively. At September 30, 2020 and December 31, 2019, accounts receivable from the Company’s primary customers, which each accounted for revenues in excess of 10% of total consolidated revenues for the nine months ended September 30, 2020 or 2019, amounted to approximately 60% and 58% of the Company’s trade receivables, respectively.

 

The Company's revenues from its primary customers as a percentage of total revenues are as follows:

 

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Sierra Pacific Power Company and Nevada Power Company

  15.4

%

  15.1

%

  17.1

%

  16.7

%

Southern California Public Power Authority (“SCPPA”)

 

19.5

   16.7   19.8

 

  17.7

 

Kenya Power and Lighting Co. Ltd. ("KPLC")

  18.2

 

  18.0

 

  16.5

 

  16.6

 

 

The Company has historically been able to collect on substantially all of its receivable balances. As of September 30, 2020, the amount overdue from KPLC was $52.9 million of which $13.6 million was paid in October 2020. These amounts represent an average of 83 days overdue. The Company believes it will be able to collect all past due amounts in Kenya. This belief is supported by the fact that in addition to KPLC's obligations under its power purchase agreement, the Company holds a support letter from the Government of Kenya that covers certain cases of KPLC non-payment (such as where caused by government actions/political events).  Additionally, on April 17, 2020, the company received from KPLC a notice declaring a force majeure event in Kenya due to the impact of COVID-19 and purporting to reduce the Olkaria complex’s contracted capacity from 150 MW to 133.9 MW. This notice, which had an immaterial impact on revenue, was withdrawn by KPLC in early September 2020. In addition, the Company experienced a higher rate of curtailments in the second quarter of 2020 by KPLC in the Olkaria complex that was reduced in the third quarter of 2020. The impact of the curtailments is limited as the structure of the PPA secures the vast majority of the Company's revenues with fixed capacity payments unrelated to the electricity actually generated.

 

In Honduras, the Company has been able to successfully collect an overdue debt from Empresa Nacional de Energía Eléctrica ("ENEE") of $20.1 million that was related to the period from October 2018 to April 2019. However, due to continuing restrictive measures related to the COVID-19 pandemic in Honduras, the Company may experience delays in collection. As of September 30, 2020, the total amount overdue from ENEE was $5.8 million, of which the Company received payment of $2.9 million in October 2020. In addition, on April 30, 2020, the Company also received from ENEE a notice declaring a force majeure event in Honduras due to the impact of COVID-19. The Company has not identified any impact on its consolidated financial statements as a result of this notice.

 

The Company may experience delays in collection in other locations due to the restrictive measures related to the COVID-19 pandemic which were imposed globally to different extents.

 
Revenue [Policy Text Block]

Revenues from contracts with customers

 

Contract assets related to our Product segment reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities related to the Company's Product segment reflect payments received in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on the terms established in the contracts. Total contract assets and contract liabilities as of September 30, 2020 and December 31, 2019 are as follows:

 

  

September 30,

  

December 31,

 
  

2020

  

2019

 
  

(Dollars in thousands)

 

Contract assets (*)

 $18,123  $38,365 

Contract liabilities (*)

 $(7,683) $(2,755)

 

(*) Contract assets and contract liabilities are presented as "Costs and estimated earnings in excess of billings on uncompleted contracts" and "Billings in excess of costs and estimated earnings on uncompleted contracts", respectively, on the consolidated balance sheets. The contract liabilities balance at the beginning of the year was fully recognized as product revenues during the nine months ended September 30, 2020 as a result of performance obligations having been satisfied.

 

On September 30, 2020, the Company had approximately $49.5 million of remaining performance obligations not yet satisfied or partly satisfied related to our Product segment. The Company expects to recognize approximately 100% of this amount as Product revenues during the next 24 months.

 
Lessor, Leases [Policy Text Block]

Leases in which the Company is a lessor

 

The table below presents the lease income recognized as a lessor:

  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Lease income relating to lease payments from operating leases

 $108,619  $110,461  $347,778  $351,953 

 
v3.20.2
Note 1 - General and Basis of Presentation (Tables)
 9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Trade receivables

 $0.8 

Other receivables

  0.2 

Property, plant and equipment, net

 

20.1

 

Intangible assets (1)

 

19.7

 

Goodwill (2)

  3.5 

Total assets acquired

 $44.3 
     

Liabilities assumed

 $(1.0)
     

Total assets acquired and liabilities assumed, net

 $43.3 
Schedule of Cash and Cash Equivalents [Table Text Block]
  

September 30,

  

December 31,

  

September 30,

 
  

2020

  

2019

  

2019

 
  

(Dollars in thousands)

 

Cash and cash equivalents

 $197,309  $71,173  $97,602 

Restricted cash and cash equivalents

  92,233   81,937   82,435 

Total Cash and cash equivalents and restricted cash and cash equivalents

 $289,542  $153,110  $180,037 
Schedules of Concentration of Risk, by Risk Factor [Table Text Block]
  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Sierra Pacific Power Company and Nevada Power Company

  15.4

%

  15.1

%

  17.1

%

  16.7

%

Southern California Public Power Authority (“SCPPA”)

 

19.5

   16.7   19.8

 

  17.7

 

Kenya Power and Lighting Co. Ltd. ("KPLC")

  18.2

 

  18.0

 

  16.5

 

  16.6

 
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]
  

September 30,

  

December 31,

 
  

2020

  

2019

 
  

(Dollars in thousands)

 

Contract assets (*)

 $18,123  $38,365 

Contract liabilities (*)

 $(7,683) $(2,755)
Operating Lease, Lease Income [Table Text Block]
  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Lease income relating to lease payments from operating leases

 $108,619  $110,461  $347,778  $351,953 
v3.20.2
Note 2 - New Accounting Pronouncements (Tables)
 9 Months Ended
Sep. 30, 2020
Notes Tables  
Accounts Receivable, Allowance for Credit Loss [Table Text Block]
  

Three Months
Ended
September 30,

  

Nine Months
Ended
September 30,

 
  

2020

  

2020

 
  

(Dollars in thousands)

 
         

Beginning balance of the allowance for expected credit losses

 $779  $755 

Provision for expected credit losses for the period

  —   24 

Ending balance of the allowance for expected credit losses

 $779  $779 
v3.20.2
Note 3 - Inventories (Tables)
 9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
  

September 30,

  

December 31,

 
  

2020

  

2019

 
  

(Dollars in thousands)

 

Raw materials and purchased parts for assembly

 $19,585  $21,942 

Self-manufactured assembly parts and finished products

  14,799   13,007 

Total inventories

 $34,384  $34,949 
v3.20.2
Note 4 - Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2020
Notes Tables  
Fair Value, by Balance Sheet Grouping [Table Text Block]
      

September 30, 2020

 
      

Fair Value

 
  

Carrying Value at September 30, 2020

  

Total

  

Level 1

  

Level 2

  

Level 3

 
  

(Dollars in thousands)

 

Assets:

                    

Current assets:

                    

Cash equivalents (including restricted cash accounts)

 $37,787  $37,787  $37,787  $—  $— 

Derivatives:

                    

Contingent receivable (1)

  106   106   —   —   106 

Currency forward contracts (2)

  1,974   1,974   —   1,974   — 

Liabilities:

                    

Current liabilities:

                    

Derivatives:

                    

Contingent payables (1)

  (3,029)  (3,029)  —   —   (3,029)

Cross currency swap (3)

  (2,790)  (2,790)  —   (2,790)  — 
  $34,048  $34,048  $37,787  $(816) $(2,923)
      

December 31, 2019

 
      

Fair Value

 
  

Carrying
Value at
December
31, 2019

  

Total

  

Level 1

  

Level 2

  

Level 3

 
  

(Dollars in thousands)

 

Assets

                    

Current assets:

                    

Cash equivalents (including restricted cash accounts)

 $28,316  $28,316  $28,316  $—  $— 

Derivatives:

                    

Contingent receivables (1)

  102   102   —   —   102 

Currency forward contracts (2)

  362   362   —   362   — 

Liabilities:

                    

Current liabilities:

                    

Derivatives:

                    

Contingent payable (1)

  (3,359)  (3,359)  —   —   (3,359)
  $25,421  $25,421  $28,316  $362  $(3,257)
Derivative Instruments, Gain (Loss) [Table Text Block]
    

Amount of recognized
gain (loss)

 

Amount of recognized
gain (loss)

Derivatives not designated as
hedging instruments

 

Location of recognized gain
(loss)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

    

2020

 

2019

 

2020

 

2019

 
                

Currency forward contracts (1)

 

Derivative and foreign currency transaction gains (losses)

 $424 $941 $2,949 $2,640 
                

Derivatives designated as cash flow hedging instruments

               
                

Cross currency swap (2)

 

Derivative and foreign currency transaction gains (losses)

 $758 $— $758 $— 
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss) [Table Text Block]
  

Balance in Other
comprehensive income
(loss) beginning of
period

  

Gain or (loss)
recognized in Other
comprehensive income
(loss)

  

Amount reclassified
from Other
comprehensive income
(loss) into earnings

  

Balance in Other
comprehensive income
(loss) end of period

 

Cash flow hedge:

                

Cross currency swap

 $—  $(2,790) $(758) $(3,548)
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block]
  

Fair Value

  

Carrying Amount

 
  

September 30,
2020

  

December 31,
2019

  

September 30,
2020

  

December 31,
2019

 
  

(Dollars in millions)

  

(Dollars in millions)

 

Olkaria III Loan - OPIC

 $198.7  $202.1  $179.2  $192.6 

Olkaria III plant 4 Loan - DEG 2

  43.8   43.8   40.0   42.5 

Olkaria III plant 1 Loan - DEG 3

  38.7   38.8   34.9   37.1 

Platanares Loan - OPIC

  115.4   115.3   98.3   104.5 

Amatitlan Loan

  24.4   26.4   23.6   26.3 

Senior Secured Notes:

                

OFC 2 LLC ("OFC 2")

  214.3   210.9   192.3   203.0 

Don A. Campbell 1 ("DAC 1")

  80.8   78.5   74.5   78.2 

USG Prudential - NV

  32.8   30.6   27.9   28.4 

USG Prudential - ID

  18.1   18.6   18.5   19.6 

USG DOE

  45.5   45.0   38.1   40.8 

Senior Unsecured Bonds

  557.9   205.7   508.6   204.3 

Senior Unsecured Loan

  228.9   161.3   200.0   150.0 

Plumstriker

 

19.7

   21.7   19.7   21.6 

Other long-term debt

  16.9   16.3   17.1   17.4 
Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis [Table Text Block]
  

Level 1

  

Level 2

  

Level 3

  

Total

 
  

(Dollars in millions)

 

Olkaria III - OPIC

 $—  $—  $198.7  $198.7 

Olkaria III plant 4 Loan - DEG 2

  —   —   43.8   43.8 

Olkaria III plant 1 Loan - DEG 3

  —   —   38.7   38.7 

Platanares Loan - OPIC

  —   —   115.4   115.4 

Amatitlan Loan

  —   24.4   —   24.4 

Senior Secured Notes:

                

OFC 2 Senior Secured Notes

  —   —   214.3   214.3 

DAC 1 Senior Secured Notes

  —   —   80.8   80.8 

USG Prudential - NV

  —   —   32.8   32.8 

USG Prudential - ID

  —   —   18.1   18.1 

USG DOE

  —   —   45.5   45.5 

Senior Unsecured Bonds

  —   —   557.9   557.9 

Senior Unsecured Loan

  —   —   228.9   228.9 

Plumstriker

  —   19.7   —   19.7 

Other long-term debt

  —   —   16.9   16.9 

Deposits

  14.8   —   —   14.8 
  

Level 1

  

Level 2

  

Level 3

  

Total

 
  

(Dollars in millions)

 

Olkaria III Loan - OPIC

 $—  $—  $202.1  $202.1 

Olkaria IV - DEG 2

  —   —   43.8   43.8 

Olkaria IV - DEG 3

  —   —   38.8   38.8 

Platanares Loan - OPIC

  —   —   115.3   115.3 

Amatitlan Loan

  —   26.4   —   26.4 

Senior Secured Notes:

                

OFC 2 Senior Secured Notes

  —   —   210.9   210.9 

DAC 1 Senior Secured Notes

  —   —   78.5   78.5 

USG Prudential - NV

  —   —   30.6   30.6 

USG Prudential - ID

  —   —   18.6   18.6 

USG DOE

  —   —   45.0   45.0 

Senior Unsecured Bonds

  —   —   205.7   205.7 

Senior Unsecured Loan

  —   —   161.3   161.3 

Plumstriker

  —   21.7   —   21.7 

Other long-term debt

  —   —   16.3   16.3 

Commercial paper

  —   50.0   —   50.0 

Revolving lines of credit

  —   40.6   —   40.6 

Deposits

  12.2   —   —   12.2 
v3.20.2
Note 5 - Stock-based Compensation (Tables)
 9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

Risk-free interest rates

  0.44

%

Expected life (in years)

  2.8 

Dividend yield

  0.63

%

Expected volatility (weighted average)

  28.14

%

Risk-free interest rates

0.44%-0.28%

Expected life (in years)

2-2.8

Dividend yield

 0.64% 

Expected volatility (weighted average)

28.5%-35.2%

Risk-free interest rates

0.41%-0.17%

Expected life (in years)

 2.8 

Dividend yield

 0.64% 

Expected volatility (weighted average)

28.5%-35.7%
v3.20.2
Note 6 - Interest Expense, Net (Tables)
 9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Other Nonoperating Expense, by Component [Table Text Block]
  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Interest related to sale of tax benefits

 $1,991  $2,671  $6,814  $9,487 

Interest expense

  22,000   17,924   58,801   54,307 

Less — amount capitalized

  (2,235)  (519)  (6,801)  (978)

Total interest expense, net

 $21,756  $20,076  $58,814  $62,816 
v3.20.2
Note 7 - Earnings Per Share (Tables)
 9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Weighted Average Number of Shares [Table Text Block]
  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
                 

Weighted average number of shares used in computation of basic earnings per share add:

  51,072   50,933   51,051   50,816 

Additional shares from the assumed exercise of employee stock options

  210   401   335   308 

Weighted average number of shares used in computation of diluted earnings per share

  51,282   51,334   51,386   51,124 
v3.20.2
Note 8 - Business Segments (Tables)
 9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Segment Reporting Information, by Segment [Table Text Block]
  

Electricity

  

Product

  

ESMS

  

Consolidated

 
  

(Dollars in thousands)

 

Three Months Ended September 30, 2020:

                

Revenues from external customers:

                

United States (1)

 $73,180  $435  $5,662  $79,277 

Foreign (2)

  50,480   29,190   —   79,670 

Net revenue from external customers

  123,660   29,625   5,662   158,947 

Intersegment revenues (4)

  —   36,839   —   — 

Operating income (loss)

  50,847   1,285   (446)  51,686 

Segment assets at period end (3) (*)

  3,236,631   148,106   136,210   3,520,947 

* Including unconsolidated investments

  91,277   —   —   91,277 
                 

Three Months Ended September 30, 2019:

                

Revenues from external customers:

                

United States (1)

 $71,916  $4,816  $3,484  $80,216 

Foreign (2)

  52,062   38,221   —   90,283 

Net revenue from external customers

  123,978   43,037   3,484   170,499 

Intersegment revenues (4)

  —   20,831   —   — 

Operating income (loss)

  32,362   6,826   (469)  38,719 

Segment assets at period end (3) (*)

  3,050,971   125,762   82,760   3,259,493 

* Including unconsolidated investments

  73,714   —   —   73,714 
                 

Nine Months Ended September 30, 2020:

                

Revenues from external customers:

                

United States (1)

 $245,299  $1,412  $10,022  $256,733 

Foreign (2)

  149,902   119,325   —   269,227 

Net revenue from external customers

  395,201   120,737   10,022   525,960 

Intersegment revenues (4)

  —   95,948   —   — 

Operating income (loss)

  155,352   8,960   (3,494)  160,818 

Segment assets at period end (3) (*)

  3,236,631   148,106   136,210   3,520,947 

* Including unconsolidated investments

  91,277   —   —   91,277 
                 

Nine Months Ended September 30, 2019:

                

Revenues from external customers:

                

United States (1)

 $240,375  $28,591  $10,442  $279,408 

Foreign (2)

  155,590   118,604   —   274,194 

Net revenue from external customers

  395,965   147,195   10,442   553,602 

Intersegment revenues (4)

  —   58,259   —   — 

Operating income (loss)

  127,388   16,385   (4,449)  139,324 

Segment assets at period end (3) (*)

  3,050,971   125,762   82,760   3,259,493 

* Including unconsolidated investments

  73,714   —   —   73,714 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]
  

Three Months Ended
September 30,

  

Nine Months Ended
September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Revenues:

                

Total segment revenues

 $158,947  $170,499  $525,960  $553,602 

Intersegment revenues

  36,839   20,831   95,948   58,259 

Elimination of intersegment revenues

  (36,839)  (20,831)  (95,948)  (58,259)

Total consolidated revenues

 $158,947  $170,499  $525,960  $553,602 
                 

Operating income:

                

Operating income

 $51,686  $38,719  $160,818  $139,324 

Interest income

  626   482   1,469   1,195 

Interest expense, net

  (21,756)  (20,076)  (58,814)  (62,816)

Derivatives and foreign currency transaction gains (losses)

  1,047   205   2,111   696 

Income attributable to sale of tax benefits

  7,014   4,056   16,818   16,457 

Other non-operating income (expense), net

  961   244   1,343   1,362 

Total consolidated income before income taxes and equity in income of investees

 $39,578  $23,630  $123,745  $96,218 
v3.20.2
Note 1 - General and Basis of Presentation 1 (Details Textual)
$ in Thousands, ₪ in Billions
 1 Months Ended 3 Months Ended 4 Months Ended 9 Months Ended
Jul. 20, 2020
USD ($)
May 13, 2020
USD ($)
Apr. 20, 2020
USD ($)
Apr. 06, 2020
USD ($)
Oct. 31, 2020
USD ($)
Sep. 30, 2020
USD ($)
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Jul. 31, 2020
USD ($)
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Jul. 01, 2020
USD ($)
Jul. 01, 2020
ILS (₪)
Apr. 30, 2020
USD ($)
Dec. 31, 2019
USD ($)
Exploration Abandonment and Impairment Expense             $ 0 $ 0   $ 0 $ 0        
Cash, FDIC Insured Amount           $ 27,300 27,300     27,300         $ 12,900
Cash, Uninsured Amount           99,300 99,300     99,300         84,800
Accounts Receivable, after Allowance for Credit Loss, Current, Total           157,497 157,497     157,497         154,525
Product [Member]                              
Revenue, Remaining Performance Obligation, Amount           $ 49,500 $ 49,500     $ 49,500          
Revenue, Remaining Performance Obligation, Percentage           100.00% 100.00%     100.00%          
Kenya Power and Lighting Co LTD [Member]                              
Accounts Receivable, Past Due           $ 52,900 $ 52,900     $ 52,900          
Accounts Receivable, Past Due, Average Number of Days Overdue           83 83     83          
Kenya Power and Lighting Co LTD [Member] | Subsequent Event [Member]                              
Proceeds from (Repayments of) Accounts Receivable Securitization, Total         $ 13,600                    
ENNE [Member]                              
Accounts Receivable, Past Due           $ 5,800 $ 5,800     $ 5,800          
ENNE [Member] | February and March [Member]                              
Accounts Receivable, Past Due           20,100 20,100     $ 20,100          
ENNE [Member] | Subsequent Event [Member]                              
Proceeds from (Repayments of) Accounts Receivable Securitization, Total         $ 2,900                    
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Primary Customers [Member]                              
Concentration Risk, Percentage                   60.00% 58.00%        
Non-US [Member]                              
Accounts Receivable, after Allowance for Credit Loss, Current, Total           129,000 129,000     $ 129,000         $ 118,800
Electricity Segment [Member] | Puna Geothermal Power Plant [Member]                              
Business Interruption Insurance Recovery, Gross             20,400     28,600          
Proceeds from Insurance Settlement, Operating Activities                   4,700          
Electricity Segment [Member] | Puna Geothermal Power Plant [Member] | Operating Expense [Member]                              
Gain on Business Interruption Insurance Recovery             17,800     20,700          
Electricity Segment [Member] | Puna Geothermal Power Plant [Member] | Nonoperating Income (Expense) [Member]                              
Proceeds from Insurance Settlement, Operating Activities                   $ 600          
COVID 19 [Member]                              
Proceeds from Issuance of Long-term Debt, Total                 $ 400,000            
Senior Unsecured Bonds, Series 4 [Member]                              
Debt Instrument, Face Amount                       $ 290,000 ₪ 1    
Debt Instrument, Interest Rate, Stated Percentage                       3.35% 3.35%    
Debt Instrument, Number of Annual Payments                       10 10    
Senior Unsecured Bonds, Series 4 [Member] | Cross Currency Interest Rate Contract [Member]                              
Derivative, Fixed Interest Rate                       4.34% 4.34%    
Senior Unsecured Bonds, Series 3 [Member]                              
Debt Instrument, Interest Rate, Stated Percentage   4.45% 4.45% 4.45%                      
Proceeds from Issuance of Long-term Debt, Total   $ 15,300 $ 14,500 $ 50,000                      
Senior Unsecured Bonds, Series 2 [Member]                              
Repayments of Debt           $ 67,000                  
Second Addendum Migdal Loan [Member]                              
Debt Instrument, Face Amount                           $ 50,000  
Debt Instrument, Interest Rate, Stated Percentage                           5.44%  
Debt Instrument, Principal to Be Repaid in Installments                           $ 31,500  
Debt Instrument, Number of Semi-annual Payments                           15  
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid                           $ 18,500  
Pomona Energy Storage [Member] | Southern California Edison Company [Member]                              
Energy Storage Resource Agreement, Term (Year) 10 years                            
Pomona Energy Storage [Member]                              
Business Acquisition, Percentage of Voting Interests Acquired 100.00%                            
Business Combination, Consideration Transferred, Total $ 43,300                            
Business Acquisition, Pro Forma Revenue             2,400                
Business Acquisition, Pro Forma Net Income (Loss)             $ 1,100                
Pomona Energy Storage [Member] | Long-term Energy Storage Resource Adequacy Agreement [Member]                              
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles $ 17,700                            
Finite-Lived Intangible Asset, Useful Life (Year) 6 years 6 months                            
Pomona Energy Storage [Member] | Other Contract Rights [Member]                              
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles $ 2,000                            
v3.20.2
Note 1 - General and Basis of Presentation 2 (Details Textual)
Sep. 30, 2020
Product [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Month) 24 months
v3.20.2
Note 1 - General and Basis of Presentation - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Jul. 20, 2020
Dec. 31, 2019
Goodwill, Ending Balance $ 23,584   $ 20,140
Pomona Energy Storage [Member]      
Trade receivables   $ 800  
Other receivables   200  
Property, plant and equipment, net   20,100  
Intangible assets (1) [1]   19,700  
Goodwill, Ending Balance [2]   3,500  
Total assets acquired   44,300  
Liabilities assumed   (1,000)  
Total assets acquired and liabilities assumed, net   $ 43,300  
[1] Intangible assets of $17.7 million are related to a long-term energy storage resource adequacy agreement with SCE and are depreciated over a period of approximately 6.5 years. The remaining $2.0 million is related to certain other contract rights.
[2] Goodwill is primarily related to certain potential future economic benefits arising from assets acquired. Goodwill is allocated to the Energy Storage and Management Services segment and is deductible for tax purposes.
v3.20.2
Note 1 - General and Basis of Presentation - Cash and Restricted Cash and Cash Equivalents (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Sep. 30, 2019
Dec. 31, 2018
Cash and cash equivalents $ 197,309 $ 71,173 $ 97,602  
Restricted cash and cash equivalents 92,233 81,937 82,435  
Total Cash and cash equivalents and restricted cash and cash equivalents $ 289,542 $ 153,110 $ 180,037 $ 177,495
v3.20.2
Note 1 - General and Basis of Presentation - Customers as a Percentage of Total Revenues (Details) - Revenue Benchmark [Member] - Customer Concentration Risk [Member]
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Sierra Pacific Power Company And Nevada Power Company [Member]        
Percent of revenues 15.40% 15.10% 17.10% 16.70%
Southern California Public Power Authority [Member]        
Percent of revenues 19.50% 16.70% 19.80% 17.70%
Kenya Power and Lighting Co LTD [Member]        
Percent of revenues 18.20% 18.00% 16.50% 16.60%
v3.20.2
Note 1 - General and Basis of Presentation - Contract Assets (Liabilities) (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Contract assets (*) [1] $ 18,123 $ 38,365
Contract liabilities (*) [1] $ (7,683) $ (2,755)
[1] Contract assets and contract liabilities are presented as "Costs and estimated earnings in excess of billings on uncompleted contracts" and "Billings in excess of costs and estimated earnings on uncompleted contracts", respectively, on the consolidated balance sheets. The contract liabilities balance at the beginning of the year was fully recognized as product revenues during the nine months ended September 30, 2020 as a result of performance obligations have been satisfied.
v3.20.2
Note 1 - General and Basis of Presentation - Lease Income as Lessor (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Lease income relating to lease payments from operating leases $ 108,619 $ 110,461 $ 347,778 $ 351,953
v3.20.2
Note 2 - New Accounting Pronouncements (Details Textual) - USD ($)
$ in Thousands
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Jan. 01, 2020
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance $ 1,571,803 $ 1,556,811 $ 1,533,651   $ 1,515,410 $ 1,504,788 $ 1,491,641 $ 1,462,995 $ 1,445,096
Cumulative Effect, Period of Adoption, Adjustment [Member]                  
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance         (755)       (58)
Retained Earnings [Member]                  
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance $ 534,984 $ 524,864 $ 507,537   487,873 $ 480,879 $ 470,880 $ 442,531 422,222
Retained Earnings [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]                  
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance         $ (755)       $ (58)
Accounting Standards Update 2016-13 [Member] | Retained Earnings [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]                  
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance       $ (800)          
v3.20.2
Note 2 - New Accounting Pronouncements - Changes in the Allowance for Expected Credit Losses (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2020
Beginning balance of the allowance for expected credit losses   $ 0
Ending balance of the allowance for expected credit losses $ 779 779
Accounting Standards Update 2016-13 [Member]    
Beginning balance of the allowance for expected credit losses 779 755
Provision for expected credit losses for the period 0 24
Ending balance of the allowance for expected credit losses $ 779 $ 779
v3.20.2
Note 3 - Inventories - Inventories, Current (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Raw materials and purchased parts for assembly $ 19,585 $ 21,942
Self-manufactured assembly parts and finished products 14,799 13,007
Total inventories $ 34,384 $ 34,949
v3.20.2
Note 4 - Fair Value of Financial Instruments (Details Textual)
$ in Millions
Sep. 30, 2020
USD ($)
Cross Currency Interest Rate Contract [Member] | Other Receivables [Member]  
Derivatives, Cash Collateral Deposits $ 8.3
v3.20.2
Note 4 - Fair Value of Financial Instruments - Financial Assets and Liabilities at Fair Value (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Reported Value Measurement [Member]    
Cash equivalents (including restricted cash accounts) $ 37,787 $ 28,316
Fair Value, Net Asset (Liability), Total 34,048 25,421
Reported Value Measurement [Member] | Contingent Receivable [Member]    
Derivative Asset, Current [1] 106 102
Reported Value Measurement [Member] | Currency Forward Contracts [Member]    
Derivative Asset, Current [2] 1,974 362
Reported Value Measurement [Member] | Contingent Payable [Member]    
Derivative Liability, Current [1] (3,029) (3,359)
Reported Value Measurement [Member] | Cross Currency Interest Rate Contract [Member]    
Derivative Liability, Current [3] (2,790)  
Estimate of Fair Value Measurement [Member]    
Cash equivalents (including restricted cash accounts) 37,787 28,316
Fair Value, Net Asset (Liability), Total 34,048 25,421
Estimate of Fair Value Measurement [Member] | Contingent Receivable [Member]    
Derivative Asset, Current [1] 106 102
Estimate of Fair Value Measurement [Member] | Currency Forward Contracts [Member]    
Derivative Asset, Current [2] 1,974 362
Estimate of Fair Value Measurement [Member] | Contingent Payable [Member]    
Derivative Liability, Current [1] (3,029) (3,359)
Estimate of Fair Value Measurement [Member] | Cross Currency Interest Rate Contract [Member]    
Derivative Liability, Current [3] (2,790)  
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]    
Cash equivalents (including restricted cash accounts) 37,787 28,316
Fair Value, Net Asset (Liability), Total 37,787 28,316
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member] | Contingent Receivable [Member]    
Derivative Asset, Current [1] 0 0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member] | Currency Forward Contracts [Member]    
Derivative Asset, Current [2] 0 0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member] | Contingent Payable [Member]    
Derivative Liability, Current [1] 0 0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member] | Cross Currency Interest Rate Contract [Member]    
Derivative Liability, Current [3] 0  
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]    
Cash equivalents (including restricted cash accounts) 0 0
Fair Value, Net Asset (Liability), Total (816) 362
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member] | Contingent Receivable [Member]    
Derivative Asset, Current [1] 0 0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member] | Currency Forward Contracts [Member]    
Derivative Asset, Current [2] 1,974 362
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member] | Contingent Payable [Member]    
Derivative Liability, Current [1] 0 0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member] | Cross Currency Interest Rate Contract [Member]    
Derivative Liability, Current [3] (2,790)  
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]    
Cash equivalents (including restricted cash accounts) 0 0
Fair Value, Net Asset (Liability), Total (2,923) (3,257)
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member] | Contingent Receivable [Member]    
Derivative Asset, Current [1] 106 102
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member] | Currency Forward Contracts [Member]    
Derivative Asset, Current [2] 0 0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member] | Contingent Payable [Member]    
Derivative Liability, Current [1] (3,029) $ (3,359)
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member] | Cross Currency Interest Rate Contract [Member]    
Derivative Liability, Current [3] $ 0  
[1] These amounts relate to contingent receivables and payables relating to acquisition of the Guadeloupe power plant, valued primarily based on unobservable inputs and are included within "Prepaid expenses and other", "Accounts payable and accrued expenses" and "Other long-term liabilities" on September 30, 2020 and December 31, 2019 in the consolidated balance sheets with the corresponding gain or loss being recognized within "Derivatives and foreign currency transaction gains (losses)" in the condensed consolidated statements of operations and comprehensive income.
[2] These amounts relate to currency forward contracts valued primarily based on observable inputs, including forward and spot prices for currencies, net of contracted rates and then multiplied by notional amounts, and are included within "Other receivables" and "Accounts payable and accrued expenses", as applicable, on September 30, 2020 and December 31, 2019, in the condensed consolidated balance sheets with the corresponding gain or loss being recognized within "Derivatives and foreign currency transaction gains (losses)" in the consolidated statement of operations and comprehensive income.
[3] These amounts relate to CCS contracts valued primarily based on the present value of the CCS future settlement prices for USD and NIS zero yield curves and the applicable exchange rate as of September 30, 2020. These amounts are included within "Other receivables", net of $8.3 million in cash collateral deposits on September 30, 2020 in the consolidated balance sheets.
v3.20.2
Note 4 - Fair Value of Financial Instruments - Amounts of Gain (Loss) Recognized in Condensed Consolidated Statements on Derivative Instruments Not Designated as Hedges (Details) - Foreign Currency Gain (Loss) [Member] - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Currency Forward Contracts [Member]        
Amount of gain (loss) recognized [1] $ 424 $ 941 $ 2,949 $ 2,640
Cross Currency Interest Rate Contract [Member]        
Amount of gain (loss) recognized [2] $ 758 $ 0 $ 758 $ 0
[1] The foregoing currency forward transactions were not designated as hedge transactions and are marked to market with the corresponding gains or losses recognized within "Derivatives and foreign currency transaction gains (losses)".
[2] The foregoing cross currency swap transactions were designated as a cash flow hedge as further described under note 1 to the condensed consolidated financial statements. The changes in the CCS fair value are initially recorded in "Other comprehensive income (loss)" and a corresponding amount is reclassified out of "Accumulated other comprehensive income (loss)" to "Derivatives and foreign currency transaction gains (losses)" to offset the remeasurement of the underlying hedged transaction which also impacts the same line item in the condensed consolidated statements of operations and comprehensive income.
v3.20.2
Note 4 - Fair Value of Financial Instruments - Derivative Instruments in Other Comprehensive Income (Loss) (Details)
$ in Thousands
 9 Months Ended
Sep. 30, 2020
USD ($)
Balance in Other comprehensive income (loss) beginning of period $ 1,515,410
Balance in Other comprehensive income (loss) end of period 1,571,803
Cross Currency Interest Rate Contract [Member] | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest [Member]  
Balance in Other comprehensive income (loss) beginning of period 0
Gain or (loss) recognized in Other comprehensive income (loss) (2,790)
Amount reclassified from Other comprehensive income (loss) into earnings (758)
Balance in Other comprehensive income (loss) end of period $ (3,548)
v3.20.2
Note 4 - Fair Value of Financial Instruments - Fair Value of Long-term Debt Approximates Its Carrying Amount, Exceptions (Details) - USD ($)
$ in Millions
Sep. 30, 2020
Dec. 31, 2019
Estimate of Fair Value Measurement [Member]    
Other long-term debt $ 16.9 $ 16.3
Reported Value Measurement [Member]    
Other long-term debt 17.1 17.4
Olkaria III OPIC [Member]    
Loans 198.7 202.1
Olkaria III OPIC [Member] | Estimate of Fair Value Measurement [Member]    
Loans 198.7 202.1
Olkaria III OPIC [Member] | Reported Value Measurement [Member]    
Loans 179.2 192.6
Olkaria III Plant 4 Loan - DEG 2 [Member]    
Loans 43.8 43.8
Olkaria III Plant 4 Loan - DEG 2 [Member] | Estimate of Fair Value Measurement [Member]    
Loans 43.8 43.8
Olkaria III Plant 4 Loan - DEG 2 [Member] | Reported Value Measurement [Member]    
Loans 40.0 42.5
Olkaria III plant 1 Loan - DEG 3 [Member]    
Loans 38.7 38.8
Olkaria III plant 1 Loan - DEG 3 [Member] | Estimate of Fair Value Measurement [Member]    
Loans 38.7 38.8
Olkaria III plant 1 Loan - DEG 3 [Member] | Reported Value Measurement [Member]    
Loans 34.9 37.1
Platanares Loan - OPIC [Member]    
Loans 115.4 115.3
Platanares Loan - OPIC [Member] | Estimate of Fair Value Measurement [Member]    
Loans 115.4 115.3
Platanares Loan - OPIC [Member] | Reported Value Measurement [Member]    
Loans 98.3 104.5
Amatitlan Loan [Member]    
Loans 24.4 26.4
Amatitlan Loan [Member] | Estimate of Fair Value Measurement [Member]    
Loans 24.4 26.4
Amatitlan Loan [Member] | Reported Value Measurement [Member]    
Loans 23.6 26.3
OFC Two Senior Secured Notes [Member] | Estimate of Fair Value Measurement [Member]    
Notes 214.3 210.9
OFC Two Senior Secured Notes [Member] | Reported Value Measurement [Member]    
Notes 192.3 203.0
Don A. Campbell 1 ("DAC1") [Member]    
Notes 80.8 78.5
Don A. Campbell 1 ("DAC1") [Member] | Estimate of Fair Value Measurement [Member]    
Notes 80.8 78.5
Don A. Campbell 1 ("DAC1") [Member] | Reported Value Measurement [Member]    
Notes 74.5 78.2
USG Prudential - NV [Member]    
Notes 32.8 30.6
USG Prudential - NV [Member] | Estimate of Fair Value Measurement [Member]    
Notes 32.8 30.6
USG Prudential - NV [Member] | Reported Value Measurement [Member]    
Notes 27.9 28.4
USG Prudential - ID [Member]    
Notes 18.1 18.6
USG Prudential - ID [Member] | Estimate of Fair Value Measurement [Member]    
Notes 18.1 18.6
USG Prudential - ID [Member] | Reported Value Measurement [Member]    
Notes 18.5 19.6
USG DOE [Member]    
Notes 45.5 45.0
USG DOE [Member] | Estimate of Fair Value Measurement [Member]    
Notes 45.5 45.0
USG DOE [Member] | Reported Value Measurement [Member]    
Notes 38.1 40.8
Senior Unsecured Bonds [Member]    
Senior Unsecured debt 557.9 205.7
Senior Unsecured Bonds [Member] | Estimate of Fair Value Measurement [Member]    
Senior Unsecured debt 557.9 205.7
Senior Unsecured Bonds [Member] | Reported Value Measurement [Member]    
Senior Unsecured debt 508.6 204.3
Senior Unsecured Loan [Member]    
Senior Unsecured debt 228.9 161.3
Senior Unsecured Loan [Member] | Estimate of Fair Value Measurement [Member]    
Senior Unsecured debt 228.9 161.3
Senior Unsecured Loan [Member] | Reported Value Measurement [Member]    
Senior Unsecured debt 200.0 150.0
Plumstriker Loan Agreement [Member]    
Loans 19.7  
Senior Unsecured debt   21.7
Plumstriker Loan Agreement [Member] | Estimate of Fair Value Measurement [Member]    
Loans 19.7 21.7
Plumstriker Loan Agreement [Member] | Reported Value Measurement [Member]    
Loans $ 19.7 $ 21.6
v3.20.2
Note 4 - Fair Value of Financial Instruments - Fair Value of Financial Instruments (Details) - USD ($)
$ in Millions
Sep. 30, 2020
Dec. 31, 2019
Deposits $ 14.8 $ 12.2
Revolving lines of credit   40.6
Commercial Paper [Member]    
Commercial paper   50.0
Olkaria III OPIC [Member]    
Loans 198.7 202.1
Olkaria III Plant 4 Loan - DEG 2 [Member]    
Loans 43.8 43.8
Olkaria III plant 1 Loan - DEG 3 [Member]    
Loans 38.7 38.8
Platanares Loan - OPIC [Member]    
Loans 115.4 115.3
Amatitlan Loan [Member]    
Loans 24.4 26.4
OFC Senior Secured Notes [Member]    
Notes 214.3 210.9
Don A. Campbell 1 ("DAC1") [Member]    
Notes 80.8 78.5
USG Prudential - NV [Member]    
Notes 32.8 30.6
USG Prudential - ID [Member]    
Notes 18.1 18.6
USG DOE [Member]    
Notes 45.5 45.0
Senior Unsecured Bonds [Member]    
Senior Unsecured debt 557.9 205.7
Senior Unsecured Loan [Member]    
Senior Unsecured debt 228.9 161.3
Plumstriker Loan Agreement [Member]    
Loans 19.7  
Senior Unsecured debt   21.7
Other Long-term Debt [Member]    
Senior Unsecured debt 16.9 16.3
Fair Value, Inputs, Level 1 [Member]    
Deposits 14.8 12.2
Revolving lines of credit   0.0
Fair Value, Inputs, Level 1 [Member] | Commercial Paper [Member]    
Commercial paper   0.0
Fair Value, Inputs, Level 1 [Member] | Olkaria III OPIC [Member]    
Loans 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | Olkaria III Plant 4 Loan - DEG 2 [Member]    
Loans 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | Olkaria III plant 1 Loan - DEG 3 [Member]    
Loans 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | Platanares Loan - OPIC [Member]    
Loans 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | Amatitlan Loan [Member]    
Loans 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | OFC Senior Secured Notes [Member]    
Notes 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | Don A. Campbell 1 ("DAC1") [Member]    
Notes 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | USG Prudential - NV [Member]    
Notes 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | USG Prudential - ID [Member]    
Notes 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | USG DOE [Member]    
Notes 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | Senior Unsecured Bonds [Member]    
Senior Unsecured debt 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | Senior Unsecured Loan [Member]    
Senior Unsecured debt 0.0 0.0
Fair Value, Inputs, Level 1 [Member] | Plumstriker Loan Agreement [Member]    
Loans 0.0  
Senior Unsecured debt   0.0
Fair Value, Inputs, Level 1 [Member] | Other Long-term Debt [Member]    
Senior Unsecured debt 0.0 0.0
Fair Value, Inputs, Level 2 [Member]    
Deposits 0.0 0.0
Revolving lines of credit   40.6
Fair Value, Inputs, Level 2 [Member] | Commercial Paper [Member]    
Commercial paper   50.0
Fair Value, Inputs, Level 2 [Member] | Olkaria III OPIC [Member]    
Loans 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | Olkaria III Plant 4 Loan - DEG 2 [Member]    
Loans 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | Olkaria III plant 1 Loan - DEG 3 [Member]    
Loans 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | Platanares Loan - OPIC [Member]    
Loans 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | Amatitlan Loan [Member]    
Loans 24.4 26.4
Fair Value, Inputs, Level 2 [Member] | OFC Senior Secured Notes [Member]    
Notes 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | Don A. Campbell 1 ("DAC1") [Member]    
Notes 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | USG Prudential - NV [Member]    
Notes 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | USG Prudential - ID [Member]    
Notes 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | USG DOE [Member]    
Notes 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | Senior Unsecured Bonds [Member]    
Senior Unsecured debt 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | Senior Unsecured Loan [Member]    
Senior Unsecured debt 0.0 0.0
Fair Value, Inputs, Level 2 [Member] | Plumstriker Loan Agreement [Member]    
Loans 19.7  
Senior Unsecured debt   21.7
Fair Value, Inputs, Level 2 [Member] | Other Long-term Debt [Member]    
Senior Unsecured debt 0.0 0.0
Fair Value, Inputs, Level 3 [Member]    
Deposits 0.0 0.0
Revolving lines of credit   0.0
Fair Value, Inputs, Level 3 [Member] | Commercial Paper [Member]    
Commercial paper   0.0
Fair Value, Inputs, Level 3 [Member] | Olkaria III OPIC [Member]    
Loans 198.7 202.1
Fair Value, Inputs, Level 3 [Member] | Olkaria III Plant 4 Loan - DEG 2 [Member]    
Loans 43.8 43.8
Fair Value, Inputs, Level 3 [Member] | Olkaria III plant 1 Loan - DEG 3 [Member]    
Loans 38.7 38.8
Fair Value, Inputs, Level 3 [Member] | Platanares Loan - OPIC [Member]    
Loans 115.4 115.3
Fair Value, Inputs, Level 3 [Member] | Amatitlan Loan [Member]    
Loans 0.0 0.0
Fair Value, Inputs, Level 3 [Member] | OFC Senior Secured Notes [Member]    
Notes 214.3 210.9
Fair Value, Inputs, Level 3 [Member] | Don A. Campbell 1 ("DAC1") [Member]    
Notes 80.8 78.5
Fair Value, Inputs, Level 3 [Member] | USG Prudential - NV [Member]    
Notes 32.8 30.6
Fair Value, Inputs, Level 3 [Member] | USG Prudential - ID [Member]    
Notes 18.1 18.6
Fair Value, Inputs, Level 3 [Member] | USG DOE [Member]    
Notes 45.5 45.0
Fair Value, Inputs, Level 3 [Member] | Senior Unsecured Bonds [Member]    
Senior Unsecured debt 557.9 205.7
Fair Value, Inputs, Level 3 [Member] | Senior Unsecured Loan [Member]    
Senior Unsecured debt 228.9 161.3
Fair Value, Inputs, Level 3 [Member] | Plumstriker Loan Agreement [Member]    
Loans 0.0  
Senior Unsecured debt   0.0
Fair Value, Inputs, Level 3 [Member] | Other Long-term Debt [Member]    
Senior Unsecured debt $ 16.9 $ 16.3
v3.20.2
Note 5 - Stock-based Compensation (Details Textual) - The 2018 Incentive Plan [Member] - $ / shares
Jul. 01, 2020
Jun. 15, 2020
May 12, 2020
Stock Appreciation Rights (SARs) [Member]      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) 45,365 852,475 46,795
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Exercise Price (in dollars per share) $ 63.40 $ 69.14 $ 68.34
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year) 6 years 6 years 6 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) $ 16.53 $ 18.0 $ 17.6
Restricted Stock Units (RSUs) [Member]      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) 6,020 11,068 6,142
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) $ 62.29 $ 68.0 $ 67.2
Performance Stock Units (PSU) [Member]      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares) 6,540 10,962 5,637
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) $ 57.34 $ 65.0 $ 73.2
SARs, RSUs, and PSUs [Member] | Minimum [Member]      
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year) 2 years 2 years 2 years
SARs, RSUs, and PSUs [Member] | Maximum [Member]      
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year) 4 years 4 years 4 years
Stock Appreciation Rights, Expiratiopn Period 2 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)   1,156  
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)   5 months  
v3.20.2
Note 5 - Stock-based Compensation - Fair Value of Stock-based Award on the Date of Grant (Details)
Jul. 01, 2020
Jun. 15, 2020
May 12, 2020
May 2020 SARs [Member]      
Risk-free interest rates     0.44%
Expected life (in years) (Year)     2 years 9 months 18 days
Dividend yield     0.63%
Expected volatility (weighted average)     28.14%
June 2020 SARs [Member]      
Expected life (in years) (Year) 2 years 9 months 18 days    
Dividend yield 0.64% 0.64%  
June 2020 SARs [Member] | Minimum [Member]      
Risk-free interest rates 0.41% 0.44%  
Expected life (in years) (Year)   2 years  
Expected volatility (weighted average) 28.50% 28.50%  
June 2020 SARs [Member] | Maximum [Member]      
Risk-free interest rates 0.17% 0.28%  
Expected life (in years) (Year)   2 years 9 months 18 days  
Expected volatility (weighted average) 35.70% 35.20%  
v3.20.2
Note 6 - Interest Expense, Net - Components of Interest Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Interest related to sale of tax benefits $ 1,991 $ 2,671 $ 6,814 $ 9,487
Interest expense 22,000 17,924 58,801 54,307
Less — amount capitalized (2,235) (519) (6,801) (978)
Total interest expense, net $ 21,756 $ 20,076 $ 58,814 $ 62,816
v3.20.2
Note 7 - Earnings Per Share (Details Textual) - shares
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) 298,661 2,495 133,869 172,153
v3.20.2
Note 7 - Earnings Per Share - Shares Used to Calculate Earnings Per Share (Details) - shares
shares in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Weighted average number of shares used in computation of basic earnings per share add: (in shares) 51,072 50,933 51,051 50,816
Additional shares from the assumed exercise of employee stock options (in shares) 210 401 335 308
Weighted average number of shares used in computation of diluted earnings per share (in shares) 51,282 51,334 51,386 51,124
v3.20.2
Note 8 - Business Segments (Details Textual)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Sep. 30, 2020
USD ($)
Sep. 30, 2019
USD ($)
Dec. 31, 2019
USD ($)
Number of Reportable Segments     3    
Revenue from Contract with Customer, Including Assessed Tax $ 158,947 $ 170,499 $ 525,960 $ 553,602  
Goodwill, Ending Balance 23,584   23,584   $ 20,140
Electricity Segment [Member]          
Revenue from Contract with Customer, Including Assessed Tax 123,660 123,978 395,201 395,965  
Goodwill, Ending Balance 20,100 19,900 20,100 19,900  
Electricity Segment [Member] | Accounting Standards Update 2014-09 [Member]          
Revenue from Contract with Customer, Including Assessed Tax 15,000 13,500 47,400 44,000  
Energy Storage and Management Services [Member]          
Goodwill, Ending Balance 3,500 0 3,500 0  
Product Segment [Member]          
Revenue from Contract with Customer, Including Assessed Tax 29,625 43,037 120,737 147,195  
Goodwill, Ending Balance $ 0 $ 0 $ 0 $ 0  
v3.20.2
Note 8 - Business Segments - Summarized Financial Information Concerning Reportable Segments (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Dec. 31, 2019
Revenues $ 158,947 $ 170,499 $ 525,960 $ 553,602  
Operating income (loss) 51,686 38,719 160,818 139,324  
Segment assets at period end 3,520,947 [1],[2] 3,259,493 [1],[3] 3,520,947 [1],[2] 3,259,493 [1],[3] $ 3,250,494
Segment Reconciling Items [Member]          
Revenues 0 [4] 0 0 [4] 0 [4]  
Segment assets at period end 91,277 73,714 91,277 73,714  
Electricity Segment [Member]          
Revenues 123,660 123,978 395,201 395,965  
Operating income (loss) 50,847 32,362 155,352 127,388  
Segment assets at period end [1] 3,236,631 [2] 3,050,971 [3] 3,236,631 [2] 3,050,971 [3]  
Electricity Segment [Member] | Segment Reconciling Items [Member]          
Revenues 0 [4] 0 0 [4] 0 [4]  
Segment assets at period end 91,277 73,714 91,277 73,714  
Product Segment [Member]          
Revenues 29,625 43,037 120,737 147,195  
Operating income (loss) 1,285 6,826 8,960 16,385  
Segment assets at period end [1] 148,106 [2] 125,762 [3] 148,106 [2] 125,762 [3]  
Product Segment [Member] | Segment Reconciling Items [Member]          
Revenues 36,839 [4] 20,831 95,948 [4] 58,259 [4]  
Segment assets at period end 0 0 0 0  
Other Segments [Member]          
Revenues 5,662 3,484 10,022 10,442  
Operating income (loss) (446) (469) (3,494) (4,449)  
Segment assets at period end [1] 136,210 [2] 82,760 [3] 136,210 [2] 82,760 [3]  
Other Segments [Member] | Segment Reconciling Items [Member]          
Revenues 0 [4] 0 0 [4] 0 [4]  
Segment assets at period end 0 0 0 0  
UNITED STATES          
Revenues [5] 79,277 80,216 256,733 279,408  
UNITED STATES | Electricity Segment [Member]          
Revenues [5] 73,180 71,916 245,299 240,375  
UNITED STATES | Product Segment [Member]          
Revenues [5] 435 4,816 1,412 28,591  
UNITED STATES | Other Segments [Member]          
Revenues [5] 5,662 3,484 10,022 10,442  
Non-US [Member]          
Revenues [6] 79,670 90,283 269,227 274,194  
Non-US [Member] | Electricity Segment [Member]          
Revenues [6] 50,480 52,062 149,902 155,590  
Non-US [Member] | Product Segment [Member]          
Revenues [6] 29,190 38,221 119,325 118,604  
Non-US [Member] | Other Segments [Member]          
Revenues [6] $ 0 $ 0 $ 0 $ 0  
[1] Electricity segment assets include goodwill in the amount of $20.1 million and $19.9 million as of September 30, 2020 and 2019, respectively. ESMS segment assets include goodwill in the amount of $3.5 million and $0 million as of September 30, 2020 and 2019, respectively. No goodwill is included in the Product segment assets as of September 30, 2020 and 2019.
[2] Including unconsolidated investments 91,277 — — 91,277
[3] Including unconsolidated investments 73,714 — — 73,714
[4] Intersegment revenue are fully eliminated in consolidation.
[5] Electricity segment revenues in the United States are all accounted under lease accounting except for $15.0 million and $47.4 million in the three and nine months ended September 30, 2020, respectively, that are accounted under ASC 606. For the three and nine months ended September 30, 2019, Electricity segment revenues in the United States are all accounted under lease accounting except for $13.5 million and $44.0 million, respectively, that are accounted under ASC 606. Product and ESMS segment revenues in the United States are accounted under ASC 606.
[6] Electricity segment revenues in foreign countries are all accounted under lease accounting. Product segment revenues in foreign countries are accounted under ASC 606.
v3.20.2
Note 8 - Business Segments - Reconciling Information Between Reportable Segments and Consolidated Totals (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Revenue $ 158,947 $ 170,499 $ 525,960 $ 553,602
Operating income (loss) 51,686 38,719 160,818 139,324
Interest income 626 482 1,469 1,195
Interest expense, net (21,756) (20,076) (58,814) (62,816)
Derivatives and foreign currency transaction gains (losses) 1,047 205 2,111 696
Income attributable to sale of tax benefits 7,014 4,056 16,818 16,457
Other non-operating income (expense), net 961 244 1,343 1,362
Total consolidated income before income taxes and equity in income of investees 39,578 23,630 123,745 96,218
Intersegment Eliminations [Member]        
Revenue 36,839 20,831 95,948 58,259
Consolidation, Eliminations [Member]        
Revenue $ (36,839) $ (20,831) $ (95,948) $ (58,259)
v3.20.2
Note 9 - Commitments and Contingencies (Details Textual) - Former Local Sales Representative vs. Ormat [Member] - Pending Litigation [Member]
$ in Millions
Mar. 29, 2016
USD ($)
Loss Contingency, Damages Sought, Value $ 4.6
Loss Contingency, Additional Damages Sought for Ormat Geothermal Products Sales in Chile, Percent 3.75%
Loss Contingency, Damages Sought, Ormat Geothermal Products Sales in Chile, Period (Year) 10 years
v3.20.2
Note 10 - Income Taxes (Details Textual) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Effective Income Tax Rate Reconciliation, Percent, Total 38.80% 40.70% 36.60% 20.90%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent     21.00%  
Foreign Tax Authority [Member] | Kenya Revenue Authority [Member] | First and Third Assessment Tax Years 2013-2017 [Member]        
Income Tax Examination, Estimate of Possible Loss     $ 9  
v3.20.2
Note 11 - Subsequent Events (Details Textual) - USD ($)
 3 Months Ended
Nov. 03, 2020
Oct. 27, 2020
Oct. 19, 2020
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dividends, Common Stock, Total       $ 5,559,000 $ 5,719,000 $ 5,614,000 $ 5,606,000 $ 5,589,000 $ 5,579,000
Common Stock, Dividends, Per Share, Declared (in dollars per share)       $ 0.11 $ 0.11        
Subsequent Event [Member]                  
Dividends, Common Stock, Total $ 5,600,000                
Common Stock, Dividends, Per Share, Declared (in dollars per share) $ 0.11                
Dividends Payable, Date of Record Nov. 18, 2020                
Dividends Payable, Date to be Paid Dec. 02, 2020                
Subsequent Event [Member] | SARs and RSUs [Member] | The 2018 Incentive Plan [Member]                  
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Grant Date Fair Value $ 120,000                
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year) 6 years                
Subsequent Event [Member] | Foreign Tax Authority [Member] | Kenya Revenue Authority [Member] | Second Assessment Tax Years 2013-2019 [Member]                  
Income Tax Examination, Liability (Refund) Adjustment from Settlement with Taxing Authority     $ 190,000,000            
Income Tax Examination, Deferral of Tax Benefits     $ 28,000,000            
Subsequent Event [Member] | Foreign Tax Authority [Member] | Kenya Revenue Authority [Member] | Tax Year 2019 [Member]                  
Income Tax Examination, Penalties and Interest Expense, Total   $ 28,000,000