Ben Calo - Stanford Group Dan Mannes - Avondale Partners Greg Orrell - Lehman Brothers Michael Lapides - Goldman Sachs Emily Christie - RBC Capital Markets Brian Yager - Joseph Loman

Good morning. My name is Melissa and I’ll your conference operator today. At this time I would like to welcome everyone to the Ormat Technologies first quarter 2008 Earnings Call. (Operator Instructions) It is now my pleasure to turn the call over to your host David Burke. Sir, you may begin your conference.

Thank you, Melissa. Thank you all for joining us today. This is David Burke with KCSA Strategic Communications, Investors Relations Consultant to Ormat Technologies. This point you should have all received the first quarter 2008 earnings press release. If you have not received the release, please refer to Ormat’s corporate website at www.ormat.com. Hosting the call today are Dita Bronicki, Chief Executive Officer, Yoram Bronicki, President and Chief Operating Officer, Joseph Tenne, Ormat’s Chief Financial Officer, Smadar Lavi, Vice President, Corporate Finance and Investor Relations. Before beginning we would like to remind you that information provided during this call may contain statements relating to current expectations, estimates, forecast and projections about future events that are forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward looking statements generally relate to company’s trend, projectors and expectations for future operations and to meet the management’s current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risk and uncertainties. For discussion of such risk and uncertainties please see Risk Factors as described in the Annual Report on Form 10-K filed with the Securities and Exchange Commission March 5th, 2008 and prospectus supplement filed with the Securities and Exchange Commission on October 23rd, 2007. In addition, during this call, statements made that include the financial measured defined as non-GAAP financial measures by the Securities and Exchange Commission such as adjusted EBITDA. This measure may be different from non-GAAP financial measures viewed by other companies. Presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management of Ormat Technologies believes that adjusted EBITDA may provide meaningful supplemental information regarding liquidity measurement that management investors benefit from referring to this non-GAAP financial measures in assessing Ormat Technologies liquidity and when planning forecasting future periods. This non-GAAP financial information measure may also facilitate management’s interpretation in company’s historical liquidity. Before I turn the call over to management I would like to mention that a slide presentation accompanying this call via Ormat’s website www.ormat.com under the event link as show in the Investor Relations tab. That said, I would like to now turn the call over to Dita, Yoram and Joseph who would like to make some formal remarks and review the financials. Following this remarks management will be glad to answer any questions you many have. Dita, call is yours.

Thank you, David and good morning everyone. It was another strong quarter for Ormat, as the expansion plans that we started implementing a few years back, continue to yield strong growth. Let us begin on slide four. In the first quarter revenues increased 12.4% from the same period last year, but the important number is the revenues in the electricity segment increased by 36.3%. Net income was $10.1 million this quarter and was considerably better than last year’s period, which experienced accumulation of operational issues. Turning to slide five. We remain on track with our construction activities. We recently reached commercial operation of Heber South project, which added 10 megawatts to Heber Complex. And we expect to add approximately 100 additional megawatts by the end of the year. On product side of our business we strengthen our product backlog since the beginning of the year by signing approximately $100 million of EPC contract, of which approximately $50 million are still awaiting the notice to proceed subject to the close of financing before our customer. Additionally, the projected business environment that we outlined last, just a few short weeks ago now, for quarterly earnings call remains today and the growth driver for Geothermal renewable energy continue to head in an encouraging direction. Let’s move to slide six and let me begin by saying that our priorities continue to focus on putting necessary pieces in place to achieve the goal of 100 megawatt each year beyond 2010. As I have mentioned in the past tax land, which we have in the form of a large renewal development portfolio, putting resources to develop the land, which we also have been putting in place by adding manpower and equipment and have been actively exploring the geothermal resources from Greenfield. It will also (inaudible) and…

Thank you Dita and good morning everyone. I would like to begin on slide 10. First quarter was another record quarter in our US energy production. We were up 31% to close to 572,000 megawatt hour excluding maintenance. Our Puna plant did exceptional results and was joined by all three of our California plants, all showing record generation and revenues in terms of first quarter. During the first quarter we have performed some major maintenance activity in preparation for summer peak, however, the bulk of this activity will occur during the second quarter. Unlike last year, most of our maintenance activity, including only short outages and will be mostly reflected in our cost in energy generation. However, late in this quarter we planned to begin the re-borrowing of the steamboat tow and three plants, which will have a noticeable impact on generation. Moving to slide 11. In our major capital projects we are on track to add additional 174 megawatt by the end of 2009 or early 2010. Throughout the rest of 2008 we expect to add approximately 101 megawatt from four projects, 50 megawatts from the North Brawley project, 35 megawatts from Phase II of our project in Kenya, 11 megawatt from OREG 2 and 5 megawatts from the GDL project in New Zealand. For 2009 and early 2010, we expect to add 73 megawatts in generating capacity from the following projects, 15 in East Brawley, 11 megawatt from the remaining OREG 2 facilities, 8 megawatt from the Puna expansion and 4 megawatt from the Peetz recovered energy project. Now to the next slide. Projects beyond 2009 are mostly in exploration and development stages. It includes work developed between 18 megawatt and 30 megawatt plants from our Eastern Nevada prospects Buffalo and Grass Valley. We are to develop a…

Thank you Yoram and good morning. Beginning with slide 16, for the first quarter of 2008 total revenues were $69.4 million, a 12.4% increase from revenues of $61.7 million in the same quarter of 2007. On to slide 17. In our electricity segment total revenues were $59.5 million, a 36.3% increase over total revenues of $43.7 million in the first quarter of 2007. This increase is primarily attributable to $40.6 million additional revenues generated in the US as a result of an increase in our generating capacity and increasing the energy rates in the Puna project due to higher oil prices and in our Standard Offer number 4 power purchase agreements in California and $1.2 million of additional revenues coming from our international plains resulting mainly from our Amatitlan project in Guatemala. The increase over the same period last year also reflects the weak first quarter of 2007 that resulted from accumulation of operational issues in certain projects most of which have been reserved. Total cost of revenue attributable to our electricity segment was $38.7 million, as compared to the $39.7 million, which represented a 2.6% decrease in total cost of revenues for such segment. This decrease is primarily due to heightened major maintenance costs that we experienced during the first quarter of 2007. The decrease in our costs in this segment was partially offset by cost relating to new and enhanced project placed into service and an increase in labor and material cost in existing place. In our product segment in the next slide total revenues for the first quarter of 2008 were $9.9 million as compared to total revenues of $18.1 million, which represents a 45.4% decrease. The decrease in our product segment revenues is mainly attributable to last years lower product backlog and the timing of revenue…

If you turn to the final slide, there is no change in our revenue guidance for 2008. We expect our Electricity segment revenues to be $245 million. We also expect an additional $9 million of revenues from our share of electricity revenues generated by a subsidiary which is accounted for under the equity method. With respect to our products segment, we currently expect that our 2008 revenues will be between $70 million and $80 million. I would like to thank you for your continued support to Ormat, and I hope to conclude my remark by reiterating how committed and confident we are that our selected goal that we have set for the company will be achieve in the years to come. Thank you and I will open now the call for questions. Operator, please.

(Operator Instruction) Our first question is coming from [Ben Calo] with Stanford Group. Please go ahead.

Hi, my question is on the gross margins. You had some improvement in Products segment, and above that you have talked about including price escalations in some of your contracts. And I just wondered to see with new recovered energy generation contracts you won, then also the contract in the Gethermal. Are those price escalations included in there and if so, if not do you expect to have the same kind of margins here or we are going to see margins above 20% in the Products segment?

When we were talking in the prior call, Ben, about including price escalations in contract, we were meaning, and I think that's what we said, that the price escalation will go until it was noticeable that it was safe for the contract. Not beyond the contracting execution. So, it should be clear that we are now planning the issues we had last year of contract which had no price escalations, but the price escalation stopped at the time we started manufacturing, or we had the signal to proceed, and of course we are trying to look as much as we can at this point our costs, but we cannot look at all the costs. So the pressure that the market is still seeing on course may impact the contract. We still believe that this new contract will hit gross margins as we announced in the first quarter, we see about 20% on that order.

Okay, great. And then on the Electricity side of the business, you mentioned next quarter is when you are going to do the Steamboat and bring power down, so that would affect both the cost side and the revenue side. But then also you talked -- earlier on, I think talked about some normal maintenance. I am just wondering if you give us some details on where that maintenance was going to occur with complexes.

I am sorry Ben, what did you want to know about the maintenance?

Just what complexes you are going to be perform in maintenance on, in the second quarter?

The reality is that we do pre-peak maintenance in all of our facilities, so facilities that have peak season are Ormesa, Mammoth and Heber with other individual plants and we perform pre-peak maintenance on everywhere there as well as a semi-annual shutdown of the Puna plant that happens in the spring and in the fall. So this activity went through most of these facilities. Some of it is still ongoing.

So you guys have already performed some of it in the first part of the second quarter?

Yeah. There have been…

Kind of like, (inaudible).

When you compare it to the three-week five year outage of Heber 1 last year where roughly 40% of the facility or 50% of the facility where the complex was shutdown for three weeks, this is much more noticeable than the type of mandates we do on our binary unit. It's a very short maintenance and when it's back running, it's one unit after the other and so on. So, there are some advantages to it. This will translate into O&M cost, but not huge impact on generation. As for the Steamboat side, it's repowering. It's a capital project. So, the costs themselves may not be very visible immediately, just the extent of time that it would take to do the surgery.

Do you have the turbines there onsite there for Steamboat through and through, it’s a new turbine?

I am sorry there is some knocking here. (inaudible).

There is a new turbine that you've installed in Steamboat through and through. Are those on site now?

I am not sure. I mean they have been. They are on their way. I am not sure if they have arrived yet or not.

Okay.

We still don’t have it back of mind.

Okay. And then there was a pick-up and recovery energy generation sales in the first quarter. Maybe could you talk about what's driving that? There is a renewable portfolio status or is it just that you guys have been out there in the field for a while? And then also, could you actually just walk us through how many sales people you have going after that market? Are they the same sales people that are selling geothermal power plants?

The sales people who are dedicated to recovered energy in the United States are separate for geothermal. In the rest of the world it's the same team. The fact that we did get this quarter more order than prior had more to do with how the product segment behaved. The product segment doesn't behave evenly over time, on a project-by-project basis, and when the project occurs, it occurs. So, you cannot have a small fair projection of when the orders are coming, but we do see an increase interest, and I think that what's driving the increased interest is more the concept of energy efficiency than on your business before you stand up. It is the awareness and some guidance by the sales people with whose help that energy efficiency should be taken care of.

Great. Thank you so much. Good quarter.

Thank you. Your next question is coming from Dan Mannes with Avondale Partners. Please go ahead.

Just a couple of quick follow-up questions. First of all, just on Sarulla. I think you mentioned you are still looking for financing at year end. I just wanted to ask a little bit. My understanding was that the PPA there was already locked in at a fairly low level given the robustness of the resource. Is there any issue there on sort of the capital side? Is that a bit of a hold-up or is that not an issue?

It will not be right to say that it is not an issue, because the rates had been low three years ago, and cost escalation is hurting. But this is not what is holding it up; it's just the slowness of the process in Indonesia. Until now the increase in cost were offset by lower interest rate coming from the sources of financing that we now expected for the quarter as opposed to what we have assumed originally. But that is what I would say pressure that we will try to deal with. You are right.

But generally speaking potential returns on the project are still acceptable from your standpoint?

They are still acceptable, but they've certainly been eroded in the last three years, no doubt.

Understood. Switching topics quickly, on the REG business, it looks like an acceleration three orders, two on the product sales side, one on the power side in the last three months event and a lot of that it looks like you really have been able to penetrate for instance the northern border pipeline. Can you talk at all about your success, and once you get a couple of units on a pipeline, your ability to really grow that out or maybe what the barriers are once you've already sort of proven on a pipe?

I think that what we are seeing now is the result of the long work that we have done on recovered energy. We started to market recovered energy probably in 2004 aggressively, but it wasn't until we have had some federal projects up and running that the market understood the solution, the technical solution, the operational solution and it is moving forward. The regulatory environment, the awareness for climate change is another driver. In certain states, it is contributed start of the outlier, but not in all of them and actually the order that we got in Nevada, it is start of the outlier. In then new project, it is not start of the outlier but it's driven by the general atmosphere to work on renewable energy.

I guess more generically are you finding, especially once you have sort of proven one, on a given pipe, are you finding that pipe is more willing to talk about putting on incremental units or is it more of an issue, because of the different state regulatory situations more than the relationship between pipe owner?

It's not penetrating pipeline-by-pipeline, I think so.

I am sorry, say that again.

Penetrating pipeline-by-pipeline.

Okay.

On the land pipeline, we had one unit and then we had a follow on order position us unique. So, this is the way it seems to develop. I don't know with two examples we can say that it is certain, but it seems like this.

Okay. Can you touch briefly on Europe as an option? Is this more on the geothermal side or on the REG side when you talk about potentially moving into that market?

Europe is more on the REG side, because there are very few (inaudible) which has the geothermal potential. Whereas in Iceland there is a huge potential but it is not necessarily suitable for our technology because it's a very a smallest incremental market in Iceland. Germany the little geothermal that they have is little and a small recovered energy.

I wanted to bring up Germany specifically, because we have heard there was a lot of activity there on the geothermal, but potentially on small units. It sounded like they are digging very deep, but the incentive plans are fairly attractive. Is that a market you plan to spend a lot of time in or is that a little bit small for you?

You are absolutely right that it's driven by incentive, we’ve got a huge incentive that Germany is going to renewable energy. I don’t think that it would be a viable economy state project. We have delivered in 2007 one unit to Germany, which is a project which is now complete and we will respond to opportunities, but if it's a too small unit, then we may not do it.

Understood. And then lastly, I know there was a prior question on the product side, but on the power segment side, as you are constructing new plants, are you finding the cost pressures there at all, especially given that you walk up the power purchase agreement before the plant goes under construction. Are you seeing any erosion of returns on your own projects?

Yes, we do. If we entered into a power purchase agreement then, three years ago and the quarters will come online only a year from now. I think that cost increase were more than what we assumed, but the total interest because it is divided over a certain period is not substantial

But you are not currently, looking at the capital numbers you laid out, it didn’t look like you were changing the capital numbers through year end ’08 materially, but as you look out to ’00 and ’10 has that changed at all?

Well, if you look at our typical or averagely quarter megawatt installed here, it has increased.

Can you give some sort of range or?

It will in June summer because it depends on the location of the (inaudible) et cetera, but the numbers that we say are between $3000 and $4000 range kilowatt installed.

Just one last question, on OPC the number that came in was significantly higher than you had previously estimated at your $64 million, was there any change in the underlying agreement or how are you able to extract more capital there?

Two elements, one the revenues were a little higher than was assumed in the basic model. And the second is pull up of the basic model which was done.

Great, thank you very much.

You are welcome.

Thank you. Your next question is coming from Greg Orrell with Lehman Brothers. Please go ahead.

Hi.

I am sorry Mr. Orrell, your line is live.

We can't hear…operator, we didn't hear Greg.

We'll move on to our next caller, Michael Lapides with Goldman Sachs. Please go ahead.

Just in general on financial markets, can you talk a little bit about how some of the turmoil in the credit market impacts your ability to pioneer some of the projects, not just the tax equity financing but the actual any new debt that you might take out? And also can you talk a little bit about your plans for the debt that matures during 2008?

Michael the way we look at the markets, we did not have any, say, substantial plans to go into the debt market in 2008. We were planning to do tax monetization in 2008. And this market has not changed, may be people are looking at a little higher terms than a year ago. But there was no substantive change in debt market. Also the debt market is available and what happens on the debt market is that rates went down and the margins went up and in total if there is an increasing cost, it's an modest increasing cost, and for good projects, there is money available, we just did not plan on doing it -- on tapping it this year that corporate line of credit-- we have been able to secure -- let say into the sales point of view.

Okay. And just to make sure I understand correctly your plans for the debt coming due this year?

It's just part of the same cost that could (inaudible) uses, no any specific plans.

Okay, thank you.

You're welcome.

Thank you. Your next question is coming from Greg Orrell with Lehman Brothers. Please go ahead.

Thanks, can you hear me Dita?

Yes, now I can.

Hi. I wanted to ask about Sarulla and sort of what were transpire in terms of going from 25% projected ownership to 12.75% is there a negotiation or is that, a monetization?

It's not a monetization, we are reducing our ownership, but we are not selling it for a field, development field anything. We are reducing it, because we will feel more comfortable in this project to hold the lower position, the negotiations is done that the party who is going to come in and as a result of it we will reduce our ownership. We choose to do it like this has been announced this summer, following that they are planning to come into this project and we are holding it up as to get the final approval of the Indonesian authorities to lend power company and resource company to the change of the ownership, which we expect any day now like you say in Indonesia but any day now in Indonesia no one knows when it is.

Fair enough. How much of the $76 million EPC contract with Nevada Geothermal is in your guidance?

The 26 that we had notice to proceed from.

Okay. And I know it's difficult but any…

It's not just to explain, it's not, we don't think that we will get well into feet, but the well into feet is probably going to be into 2009, and nothing 2008. So, it's now that the full contrast will be released, on the contrary from what we know they are close to closing the financing. But it's just as reducing of the contract is over the two year period, '08 and '09.

Okay. And then lastly, just talking around margins, you gave some guidance on the products business gross margin on the Electricity business either versus what we saw last year or otherwise?

We are planning not to give guidance. But what we say I think in the last earning call is that level that we saw in the second half of 2006 what we believe to be at the level for the company.

Okay. Thank you.

Thank you. Your next question is coming from [Emily Christie] with RBC Capital Markets. Please go ahead.

Good morning. Most of my questions have been answered but I just have one follow-up on the recovered energy? What are your capabilities in terms of how many of those units, you can construct per year? RBC Capital Markets: Good morning. Most of my questions have been answered but I just have one follow-up on the recovered energy? What are your capabilities in terms of how many of those units, you can construct per year?

Emily I couldn't hear you, what is the question?

Sorry, could you hear me now? RBC Capital Markets: Sorry, could you hear me now?

Yes.

In terms of the recovered energy units how many of those are you able to construct per year in terms of workforce and equipment that sort of thing? RBC Capital Markets: In terms of the recovered energy units how many of those are you able to construct per year in terms of workforce and equipment that sort of thing?

You know, from a manufacturing point of view, I don't think we have a limitation, we are lucky to have sustainability to sub-construct more or less depending on the volume, and this is not a limiting sector. A number of EPC may be a limiting factor. We can not do entire EPC contracts, we don't take, but if the market will be well up to that level we will just often to do it as well. Right now, we don't see need for it.

Okay, alright. Thanks very much. RBC Capital Markets: Okay, alright. Thanks very much.

Alright.

Thank you. Your next question is coming from [Brian Yager with Joseph Loman]. Please go ahead.

Thank you, good afternoon. Thanks for taking my question. On the proactive maintenance and Steamboat replacements for Q2, you had mentioned it's not going to be a large impact on Electricity revenues, could you give us, I know the last question you are trying to talk to much about gross margins could you give us a little bit more color on how these maintenance issues are going to impact gross margins for Q2 this year, and in general on a forward basis, I mean, is it just a large impact on gross margins every, let say Q1 and Q2, or how do you view that?

We don't see a huge impact if you compare our results in -- or expected results when you compare the results previous years. So, the preventive maintenance are scheduled maintenance is not going to be material. The impact on the Steamboat complex is, you know, would be material depending on what base line you comparative since this complex have been played by turbine players in last two years. And again, when you look at, you will look at the complex, and compare it even when we do the preventive shutdown to electric turbines it will not do that material because we have been problems there. So, I think, if I have to guess and based on what we know now, it will not be that noticeable but it would be much, much better after the end of this.

Okay, great. So essentially the Q1 of '07 was an anomaly, in terms of maintenance and outages?

Yeah, it wasn't anomaly, it's not to be the dead horse but the issue there was that the way that the Heber I project is structured. When we do the five-year maintenance on the turbine there it takes everything down. And it's a long maintenance cycle, we have the complex down for it, I think it was 23 days but it may reserve having half of generation down for all that time is very significant. Beyond that we had turbine issues the different plans with we had some pretty mature shut down of the Steamboat Hills plant because of an adjacent project construction and all these things are accumulated to both high cost and low generation. We should not see that this year and not on a typical year for sure.

Okay, great. And so that Heber 1 project shutdown, you don’t see that for any other of your large projects that would impact a quarter downward?

Thanks a lot.

Thank you. Your next question is coming from Dan Mannes with Avondale Partners. Please go ahead.

Sorry just one follow-up. You had mentioned during the last quarter that you are actually going to sell potentially a portion of the Carson Lake plant this year specific. And I know historically on small projects, you haven’t normally liked using partners. Can you talk a little bit of this strategic move, because this is a little bit difference in the way you structured plant before?

You are absolutely right. It's not a partner, it’s a joint venture with the affiliate which is a major customer and it is certainly different than just letting being a partner into the project. We view specific interest in don’t say joint venturing with that it's strategic because it reflects the utility change of sentiments towards geothermal and their desire to have ownership of geothermal power plant, which they didn’t have until now.

And admittedly this is the first one of it’s kind, does this change potentially dynamic at all, you told this will tend to have a little bit lower cost to capital, they would given the difficulties in sighting fossil fuel generation in Nevada, does this bring the potential that they would be an equity partner in multiple plants going forward maybe you wouldn’t move more to more of a development role rather than just being an owner of the projects?

It may be with respect to field specific, but I can not say for sure that it will be.

Okay. Great thank you.

You are welcome.

Thank you. Our final question is coming from Michael Lapides with Goldman Sachs. Please go ahead.

Hi, Dita. Just a quick question on the contract view for the recovered energy projects. How do we think about what the contract pricing for the recovered energy projects are in general versus kind of typical geothermal projects?

The recovered energy pricing is by definition lower than geothermal, because we don’t have to do the investment in the resource. So we are saving about (inaudible) cost. There is an additional element in the recovered energy, which is device which transforms the hot oil into a working heat for the unit, which is a little higher. But generally speaking I think we can think about $2 million or maybe little more.

Okay, great, thank you.

Thank you. I would like to turn the floor back over to management for any closing comments.

My only additional comment to you is the big thank you for the support of the company. Thank you.

Thank you. This does concludes today’s Ormat Technologies first quarter 2008 earnings conference call. You may now disconnect.