Jeff Stanlis - MS/Hayden, IR Isaac Angel - Chief Executive Officer Doron Blachar - Chief Financial Officer.

Dan Mannes - Avondale Partners Mark Barnett - Morningstar JinMing Liu - Ardour Capital Ella Fried - Leumi.

Good morning and welcome to the Ormat Technologies First Quarter Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Mr. Jeff Stanlis of Hayden/MS IR. Please go ahead.

Thank you, Tanya. Hosting the call today are Isaac Angel, Chief Executive Officer; Doron Blachar, Chief Financial Officer; and Smadar Lavi, Vice President of Corporate Finance and Investor Relations.

Before we begin we would like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts and projections about future events that are forward-looking, as defined in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements generally relate to the company’s plans, objectives and expectations for future operations and are based on management’s current estimates and projections for future results and trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties.

For a discussion of such risks and uncertainties please see the risk factors as described in Ormat Technologies’ annual report on Form 10-K filed with the Securities and Exchange Commission. In addition during the call the company will present non-GAAP financial measures, such as EBITDA and adjusted EBITDA.

Reconciliations to the most directly comparable GAAP measures and management reasons for presenting such information is set forth in the press release that was issued last night, as well as in the slides posted on the company’s website. Because these measures are not calculated in accordance with U.S.

GAAP, they should not be considered in isolation from the financial statements prepared in accordance with US GAAP.

Before I turn the call over to management I would like to remind everyone that a slide presentation accompanying this call may be accessed on the company’s website at ormat.com, under the IR Events & Presentations link that’s found on the Investor Relations tab. With all that said, I would like to turn the call over to Isaac Angel.

Isaac, the call is yours..

Thank you Jeff and good morning everyone. Thank you for joining us today for the presentation of our first quarter 2015 results. Starting with slide four, the first quarter was a solid quarter with some expected headwinds in which we progressed with our expansion plan and began executing our initiative to set the stage for our next growth phase.

Just a few weeks ago we conducted a successful Analysts Day in New York and discussed our multi-year plan designated to elevate Ormat from a leading geothermal company, to a recognized global leader in the larger renewable energy industry.

This ambitious plan involves extending our geographical read and expanding our technology to capture a larger portion of high temperature geothermal market with our proven binary system, as well as with third party steam technology. Over the long-term we are focusing on growing our customer base around the world.

Moving to slide five, our financial results, as expected, were affected by lower commodity prices, one-time expenses related to the restructuring transaction as well as normal quarterly fluctuations in revenue recognition for our product segment.

While these factors collectively resulted in lower quarterly revenues and net income we reiterating our revenue and adjusted-EBITDA guidance for the full year. This morning we announced a new $98.8 million EPC contract for geothermal project in Chile.

This contract is our first products win in the emerging Chilean market and it’s evidence of our continued focus on expanding our geographic reach. I’ll provide some additional remarks regarding our progress after Doron reviews the financial results.

Doron?.

Thank you, Isaac, and good morning everyone. Let me start by providing an overview of our financial results for the quarter end March 31, 2015. Starting with slide seven, total revenues for the first quarter of 2015 were $120.2 million, compared to $142.4 million in the first quarter of 2014 with 75% of it coming from the Electricity segment in 2015.

In our Electricity segment, as you can see on slide eight, revenues were $90 million in the first quarter of 2015 compared with $94.8 million in the first quarter last year.

The decrease was mainly due to the lower energy rates, resulting from lower oil and natural gas prices of $6.6 million and lower generation at Puna power plant of $3.1 million as a result of last summer’s hurricane.

The decrease was partially offset by the February 2015 commencement of the McGuinness Hills Phase 2 Power Plant in Nevada, adding $3.6 million of revenue and by a reduction in net loss on derivative contracts on oil and natural gas prices year-over-year.

In the Product segment on slide nine, revenues were $30.3 million compared to $47.6 million in the first quarter of 2014. As you already know, our product segment is characterized by fluctuations in quarterly revenues.

The decrease in the first quarter is primarily due to the timing of revenue recognition and specifically this quarter due to the allocation of manufacturing resource to expedite the construction of the Don Campbell Phase 2 project in order to commence commercial operation towards the end of 2015 three months earlier than anticipated.

As planned we remain on schedule with our contract with third-party customers and on track with our fully year guidance. We expect revenues in the second half of the year to be strong. Moving to slide ten, the company combined gross margin for the first quarter was 36.6% compared to 37.5% in the first quarter of last year.

In the Electricity segment gross margin was 38.2% compared to 39.8% last year and in the Product segment gross margin was 31.9% compared to 32.9% in the prior year quarter. Moving to slide 11, first quarter operating income was $29.9 million compared to $42.6 million in the first quarter of 2014.

The decrease in operating income was primarily due to the decline in revenue and a one-time expense of $3.4 million related to the restructuring transaction. Operating income attributable to our Electricity segment in the first quarter of 2015 was $24 million compared to $30.9 million in prior year’s quarter.

Operating income attributable to our Product segment was $5.9 million compared to $11.7 million in the first quarter of 2014. Moving to slide 12, interest expense net of capitalized interest for the first quarter of 2015 was $17.8 million compared to $20.5 million last year.

This decrease was primarily due to the lower interest expense as a result of debt repayment, partially offset by increase in interest expense related to a new loan to finance the construction of McGinness Hills Phase 2 project from August 2014.

Moving to slide 13, net income attributable to the company stockholders for the first quarter of 2015 was $10 million or $0.21 per basic and diluted share compared to $21.6 million or $0.47 per basic and diluted share in the first quarter of 2014.

Please move to slide 14, adjusted EBITDA for the first quarter of 2015 was $65.3 million compared to $73.4 million in the same quarter last year. Turning to slide 15, cash and cash equivalents as of March 31, 2015 were $7.7 million. We generated $83.1 million in cash from operating activities.

The accompanying slide breaks down the use of cash during the quarter. Our long-term debt as of March 31, 2015 and the payment schedule are presented in slide 16 of the presentation. The average cost of debt for the company stands at 6.1%.

On May 6, 2015 Ormat Board of Directors approved payment of a quarterly dividend of $0.06 per share for the first quarter. The dividend will be paid on May 27, 2015 to shareholders of record as of closing of business on May 19, 2015. In addition the company expects to pay quarterly dividend of $0.06 per share in each of the next two quarters.

That concludes my financial overview I would like now to turn the call to Isaac for an operational and business update. Isaac..

Thank you, Doron. Starting with slide 18 for an update on operations, in February the second phase of our McGinness Hills geothermal power plant in Nevada began commercial operation. This complex has an annual generation capacity of 72 megawatts and sells its electricity under a power purchase agreement with NV Energy.

In Heber 1 enhancement we intend to drill an additional well in 2015 and perform upgrade to surface equipment following which we expect capacity of the complex to reach 92 megawatts with higher capacity sector in current performance.

Our portfolio generation in the first quarter were similar to the first quarter 2014 mainly due to lot lower generation as expected in Puna.

As part of management’s new operational approach we are focused on profit optimization and while it may translate to reduction in generation in some plants we expect the profitability will continue to improve as it has been.

Moving to slide 19, in March we signed a 20 year agreement with Southern California public power authority for the 19 megawatt second phase of our Don Campbell project in Nevada. As Doron just mentioned we now expect this phase to come online by the end of 2015 approximately three months ahead of schedule.

In Olkaria we are on schedule with the construction of the 24 megawatt plant in Kenya, the 4 plant is expected to bring the complex generation capacity to 134 megawatts in the second half of 2016. And with regard to Sarulla, Indonesia the consortium is continuing field development at the site.

The first phase is expected to commence operation in 2016 and the remaining two phases are scheduled to commence within 18 months thereafter. The projects I just described as well as additional projects under various stages of development are expected to add between 90 to 115 megawatt by the end of 2017.

Besides the investment in new projects we are continuing our exploration and business development activities to support future growth. If you could please turn to slide 20, you’ll see our CapEx requirement for the remainder of 2016. We plan to invest a total of $112 million in capital expenditures on new projects under construction and enhancement.

An additional $39 million are budgeted for development and exploration activities, maintenance capital for operating projects and investment in machinery and equipment. In addition $61 million will be required for debt repayment. Slide 21 provides an update on the Product segment.

As I mentioned at the beginning of the call we have secured a new $98.8 million contract positioning our product backlog as of May 6, 2015 at a record of $387 million. This robust backlog will support our financials in the next two to three years. Let me continue my review of business update on slide 22.

Last week we closed the equity transaction with Northleaf Capital Partners under which Ormat contributes certain geothermal [ph] unrecovered energy generation power plant into a newly established holding company. And Northleaf acquired just 6.75% equity interest in the joint venture for a purchase price of $162.3 million.

Ormat will continue to consolidate the entity and its assets as well as provide day-to-day management, operations and maintenance control over the project.

The purchase price and the percentage interest acquired by Northleaf were adjusted based on the Canadian dollar versus US dollars, exchange rate and were affected by the devaluation of the Canadian dollar against the U.S. dollar. The purchase price implies an aggregate transaction value of approximately $442 million.

Moving to slide 23 for a regulation update. Global demand for renewable energy remains strong as awareness increases for the positive value of geothermal as compared to intermittent renewable technology. More and more leaders and policy makers are raising the standards for renewables.

In January of this year California Governor Jerry Brown announced that he would like to raise the renewables portfolio standard target to 50% by 2030 from its current goal of 33% by 2020. In March House and Senate Committees in Hawaii unanimously approved legislation to raise the state’s renewable portfolio standard from 40% by 2030 to 100% by 2040.

The State has excellent wind, solar, geothermal, biomass, hydropower, and Ocean energy resources to transform the Island’s fuel mix to clean energy. We are also seeing similar initiatives in other parts of the world as well.

At the Fifth African Geothermal Conference this past October, Tanzanian’s Vice President, called up African nation and their partners to use the potential of geothermal in the region as a catalyst for achieving the continent’s economy, social environmental development aspirations.

The leaders in the region clearly understand that sustainable and affordable energy supply is essential to realizing economic and social development, especially renewable energies such as geothermal present a viable option towards that specification of generation mix and thereby increasing power supply and liability.

The equivalent -- the acknowledgement of the renewables benefit in the regulation support as well as energy shortage in many of the developing countries creates opportunities for Ormat. The multi-year plan that was presented back at the analyst day is based on this trend and opportunity.

For those of you that were unable to attend our Analyst Day you can review that webcast on our website.

In my opening remarks I mentioned that the main tenets of our plan, this plan is new for us and it’s a several moving part and a long-term view and we recognized that investors are eager to understand the underlying metrics and tracked to evaluate that progress.

We are committed to providing meaningful tools to help investors track our progress as we actively implement our plan. I am confident that we will be able to capitalize on the opportunities before us and believe Ormat is uniquely position to succeed in the evolving renewable market energy -- renewable energy market.

Turning to slide 24, we reiterate our 2015 revenue guidance, despite the current oil and natural gas prices, which translate with $26.6 million reduction in revenues compared to last year.

We expect the electricity segment’s revenues to be between $380 million and $390 million and product segment revenues to be between $180 million and $190 million or total revenues of between $560 million and $580 million.

We also reiterate our adjusted EBITDA guidance of $280 million to $290 million for the full year which is also impacted of course by current oil and natural gas prices. We expect Northleaf’s portion of the 2015 adjusted EBITDA guidance to be approximately $ 14 million. This concludes our remarks for today. Thank you for your continued support.

Operator?.

We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Dan Mannes from Avondale Partners. Please go ahead. .

Thanks, good morning everyone..

Good morning..

Hi, Dan..

A couple of questions here, first on the Chilean award number one, that is included in the guidance number in the backlog number, and can you provide the name of the developer of the project?.

At this time Dan it is obviously as we have said it is in Chile, it is with the Chilean development company but we cannot really disclose the name of the holding company as we are not allowed to at this stage..

And it is in the better of the 387..

Got it.

Given the fact that it is going to start working this year, any thoughts on that maybe providing some upside to the guidance or to the opportunity for product sales in ’15?.

At this stage we are reiterating our number and we are not expecting any upside coming from this project. As you probably understand we are working on it for few months already..

Understood. The second question is I look at your CapEx guidance for the balance of the year I think it was roughly a $150 million. When you gave CapEx guidance for the full year I think you said it was right around 250 and you only spent 40 in the first quarter.

So I am wondering, were there either some projects that were deferred or alternatively have things come in cheaper than expected?.

It is a combination but more the first one to some tenders in the U.S. that were delayed from NV Energy and some projects that have been delayed for couple of weeks/months, so this delayed some of the CapEx for next year..

Okay. On the Northleaf transaction now that’s closed, can you maybe talk a little bit how the accounting is going to work and as you think about adjusted EBITDA are you going to include the outflows to them in your adjusted EBITDA, will that be excluded. I just want to make sure we are thinking about it correctly as it relates to your guidance..

From the accounting standpoint since we are consolidating that subsidiary, all of the numbers are going to be included 100% within our number. Northleaf is going to have income related to non-controlling shareholder. That is going to be there the line where you will see the part that Northleaf is entitled to.

Thirdly, our guidance, the 280 to 290 looks that they want 100% of the company and what we said the relevant part for Northleaf is about $14 million of that..

So the 280-290 does not exclude the $14 million, the roughly $14 million annually that will go out to Northleaf?.

Yeah, that’s right..

Okay. But I just -- not to quibble but for of the tax equity transactions you do include that, that is included in your adjusted EBITDA.

So it seems like that you are treating the two a little bit differently?.

Dan, what we have done this quarter in order to be fully transparent we gave out the specific number that relates to Northleaf, as we go through the end of the quarter and do all the accounting when we look into it but we thought it’s important you will know the number, the 100% the Northleaf number in order for you to do your valuation either way..

Understood. I just wanted that clarification.

And then lastly I know you just had your Analyst Day recently and I know it’s probably little bit early, just wonder if there is any update that’s worth discussing in terms of some of the non-geothermal initiatives, anything you can give us in terms of what you are doing for instance in solar?.

We have lots of initiatives on all subjects we discussed during the Analyst Day but nothing that we can come up and say is concluded and we are very optimistic on our new initiatives, on geographical expansion as we just mentioned on Chilean thing and also on technology and customer base but nothing that we talk about right now..

Understood, we’ll look forward to updates in future quarters. Thank you..

Thank you very much, Dan..

Our next question comes from Mark Barnett from Morningstar Equity Research. Please go ahead..

Hi, good morning everyone..

Good morning Mark..

For me today just a couple of more general questions, obviously the moves in Hawaii are very supportive move.

I am just wondering what you think if you could talk about the potential on Island for further geothermal development in terms of maybe size of the addressable resource?.

We just won a tender of 25 megawatts which is additional to our existing power plant in Puna. We are negotiating with HELCO [ph] the final steps of this tender and as we are in Hawaii for many years and the advantages of geothermal are well known in the Island I think geothermal will be a larger part of the upcoming green energy.

We cannot predict what’s going to be exact megawatts at the end of the day, but we are very optimistic regarding Hawaii..

So there is likely fairly long runway there even if the projects are smaller in size like the 25 megawatt..

They are small but we are building in stages, so it’s our strategy to build 25, another 25 and then another one..

Right, okay, and I know you weren’t able to disclose your partner in the Chilean project but more generally speaking could you just give us an update on the remuneration structure for geothermal? And then whether the bulk of the resource there is at that higher end of the heat spectrum or whether there is some lower heat potential there as well?.

At this stage it’s very difficult to predict, we know that the resources there; we are not carrying the risk of the exploration, we are only the EPC supplier and our product are chosen, obviously we competed with [indiscernible] solution providers and others but in general we are very happy with the win because it’s comparatively high temperature and still the partner chose us, our binary solution and not somebody else and as you understand from the amount it’s a fairly big power plant..

Right, okay.

And just maybe I was mistaken but you were also maybe undergoing some exploration on your own in Chile or did I misinterpret?.

No we are we have our own exploration in Chile but this one is not the case. This is completely different site which is explored by our partner and we are not carrying any exploration liabilities in this particular site. .

Okay. I understand that. Thank you..

Thank you..

[Operator Instructions]. The next question comes from JinMing Liu from Ardour Capital. Please go ahead..

Good morning..

Good morning Jin..

Yeah. First question about your cost for your Electricity segment, that $55.6 million was the lowest number in three-four years on a quarterly basis.

So anything specific that happened during the quarter today, did you improve the cost at some of your more troublesome power [indiscernible] most probably or it’s just the seasonal thing happened there?.

Jin, yeah as you know and we discuss this issue lengthily last year actually, we are working very diligently on cost reduction and sometime it’s even coming on the expense of generation but at the end of the day you see our bottom line is improving as we are becoming more cost effective on each and every power plant.

We have a very precise plan to work on each and every power plant and as we speak, we are starting to see the result of this plan..

Okay.

Just for my understanding, how much was the Puna issue contribution to the cost reduction during the quarter?.

In Puna we have a generation issue which started last summer with the hurricane. We actually announced that we are going to solve this issue on the second half of 2015 which we intend to do so and it’s lower by $3 million comparing to last year and as I said, we expect to be back online on full production during the second part of this year..

Okay. Good.

Switch to your backlog numbers, can you provide us a breakout between EPC contracts and just pure equipment sale for just for your backlog numbers?.

First of all, all our backlog relates to our product sale. .

Right..

As you mentioned in part of them we also provide EPC but we never gave this breakdown between the products and the EPC products. But what you’re asking is something that we should think about and maybe we can -- let me think about it and maybe we can break it for you sometime next call..

Okay. Thanks for that.

Lastly, regarding the Northleaf transaction, just one or two question there, all for the future dividends pay or payable to Northleaf whether those payments will be in the Canadian dollar or US dollar?.

The transaction in the US dollar and we’ll operate in US dollar. The only impact for the Canadian dollar was the funding or the investment of Northleaf going forward there’s no impact of Canadian dollars on our results or dividend or any other parameter..

Okay. So there is no currency risk associated with that. Okay, great. Thanks a lot..

Thank you very much..

Our next question comes from Ella Fried from Leumi. Please go ahead..

Good afternoon.

Could you give us an update on the impact on the technology diversification plans that you’re having on the company’s CapEx in the next two years?.

As I said during the conference call it is an ongoing process and we are working on the technology diversification very diligently as I’ve said. But we don’t have a cumulative CapEx number that we can provide as of now.

I am expecting that before the end of this year, we will come with and as I said also the original -- we didn’t provide you yet, an update by means of numbers and results on this issue. .

Yeah. I know..

And we intend to do so within the next few months and we’ll provide you more color, numbers results on CapEx. .

And if I can add, prior to any additional or initiatives on new project that will go over the last couple of years we have the CapEx of further around the $200 million mark, a little bit above, little bit below. Going forward this year and then going forward this is a relative number this year. It seems relevant going forward. .

Thank you. And another question.

Can you give us maybe some rough estimate about the profitability level of the product segment in the next three quarters till the end of 2015?.

We gave you our estimations for the whole year. The guidance actually is we are reiterating the numbers. So if you take $30 million out of the number it gives you the remaining of the year concerning the product. As you probably know we are far from being flat during the quarter..

Okay. Thank you..

Thank you..

This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Isaac Angel for any closing remarks..

I like to thank you very much for joining us this morning and for your ongoing support and see you in our tours during -- with the investors or the next Q2 call. Thank you very much and have a nice day..

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect..