Good day, and welcome to the Ormat Technologies' Q1 2017 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would like to turn the conference over to Jeff Stanlis, Investor Relations. Please go ahead.

Thank you, Francisca. 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 beginning, we would like to remind you that 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 operation and are based on management's current estimates and projections, future results or trends. Actual future 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 Risk Factors as described in Ormat Technologies' Annual Report on Form 10-K filed with the SEC. In addition, during the call, we will present non-GAAP financial measures such as EBITDA and adjusted EBITDA. Reconciliations to the most directly comparable GAAP measures and management's 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 our 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 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 Events and Presentations link that's found under the Investor Relations' tab. With all that said, I'd now like to turn the call over to Mr. Angel. The call is yours.

Thank you very much Jeff, and good morning, everyone. Thank you for joining us today for the presentation of our first quarter 2017 results and our outlook for 2017. Starting with Slide 4, the first quarter was an excellent start of 2017 for Ormat building on the momentum we generate in 2016 as we delivered another quarter of strong growth and profitability. We continued to improve our operational efficiency, improving our profitability profile and we are well positioned to deliver consistent growth. Recent M&A activity has created new and exciting opportunities for us and it dwells our ability to achieve our stated goal of evolving into a recognized leader in renewable energy. Our Electricity segment had a strong quarter delivering 7.3% growth reflecting at generation coming online and the return of Puna to full capacity as we continue to adjust capacity to maximize efficiency and bring new phases online. In addition, our product segment delivered a strong quarter driven by the timing of revenue recognition. During the quarter we signed new contracts to support our product backlog. Near the end of the first quarter, Ormat closed the acquisition of the business and assets of Viridity Energy Inc., a company engaged in demand response, energy management and storage of energy. As most of you know, demand respond and energy storage are two of the fastest growing segments of the energy industry, and this acquisition accelerates our entry into the space. Integration is already underway and we are promoting several storage opportunities in the East and West Coast. Turning to Slide 5, last week we announced that ORIX Corporation, one of the world's leading diversified company with operations in 36 countries will acquire an approximately 22% ownership position in Ormat by purchasing approximately 11 million shares of Ormat common stock from FIMI,…

Thank you, Isaac and good morning everyone. Starting with revenues on Slide 7. For the first quarter 2017 total revenues were $189.9 million up 25.3% compared to $151.6 million in the same period last year. This increase was attributable to both our electricity and product segment in which revenues increased by 7.3% and 69.5% respectively compared to the corresponding period in 2016. Moving to Slide 8, first quarter 2017 revenue in our electricity segment were $115.8 million compared to $107.9 million in the same period last year. This increase was primarily attributable to the consolidation of power Bouillante outlined in Guadeloupe effective July 5, 2016 with revenues of $5.4 million for the quarter and an increase in generation at our Puna power plant gives a successful improvement of the results performed. Moving to Slide 9, first quarter 2017 revenue for our product segments was $74.1 million compared to $43.7 million over the same period last year representing an increase 69.5%. This increase was primarily due to the start of revenue recognition from two new geothermal project in New Zealand and China that we started to construct in the first quarter of 2017 and are scheduled to be completed by mid-2017 and the end of 2017 respectively. The increase was also driven by the start of approximately $17 million in revenue recognition from our new project in Turkey partially offset by other projects in Turkey several of which were completed at the end of last year. The increase in our product segments revenue was partially offset by a decrease in revenues from our geothermal product in Chile, which is close to completion and due to timing of revenue recognition and different product. As you know, our product segment is characterized by fluctuations in quarterly revenue. This quarter represents approximately 33% of…

Thank you very much Doron. Starting with Slide 17 for an update on operations. The power generation in our power plants increased by 2.2% from the first quarter of 2016 to 1.4 million megawatt hours in the first quarter of 2017 mainly due to the increase in generation at our Puna power plant due to high performance and the consolidation of our Bouillante power plant. Turning to Slide 18 for an update on our backlog. We continue to support our backlog which as of May 8, 2017 stands at $207 million with $30 million of new contracts we won mainly to Turkey. Together with the existing projects, the Turkish contract is a significant share in our current backlog. As we have previously indicated, we expect these new contracts in Turkey to result in overall lower margin for our product segment compared to the previous years. Turning to Slide 19, in Sarulla Indonesia, the first unit with the 110 megawatt capacity commenced operation in March 2017 or much share in the first unit is 14 megawatt and we started to generate income from our 12.75% equity investment in Sarulla consortium which is recorded in the P&L under equity income of industries. We continue to share our expertise as work continues on the second and third units of the Sarulla project that are expected to come online by 2017 and 2018 respectively. For the second phase of the power plant, engineering and procurement has been substantially completed. Site construction is in progress and all of the major generating units including those to be supplied by Ormat were delivered. For the third phase engineering, procurement and construction work at the site are in progress and manufacturing of equipment to be supplied by Ormat is underway as planned. Drilling for the second and third…

[Operator Instructions] The first question comes from Noah Kaye of Oppenheimer. Please go ahead.

Hi Isaac, and Doron, good morning. Another nice quarter. First Isaac you mentioned that the plan rated capacity again sales went up a bit, I think Bouillante is now at the higher end of your prior estimated range. So can you just help us understand what drove the increase in estimated capacity, the resource actually better or did you just develop better engineering solutions to tap it [ph]. Thanks.

Noah, thank you very much and good morning. And I understand you were asking about McGinness III right?

Yes, McGinness III so the capacity went up from 45 previously to 48. So can you just help us understand what droves the increase in the expected capacity?

Okay. As I explained numerous times before, we are developing all our projects around the world on stages, we prefer to go on smaller stages even though we knew that in McGinnis Hills we have a larger resource just from the beginning. We developed Phase 1 about three years ago then the second phase about a year and a half ago and since then we ran different models on our resource and we understand that the resource can support the next development that we are doing right now which will be 48 megawatts and according to our expectation this might not even be the last stage.

Okay, that's good color thank you. Second obviously with the backlog seeing some roll off at the Sarulla. May be you could talk about your view on and your visibility to replacing and growing the products backlog now with the opportunity you said that you see and maybe that’s a good way to tie-in the news on the ORIX Corporation strategic partnership. What are your expectations for replacing backlog, what are you seeing out there in terms of opportunity? Thank you.

Okay Noah. First of all as you recall our strategy holds for a higher increase on our Electricity segment and our Product segment that did bring - was determined for ORIX land or agreement come in place. Even though Ormat and specifically our sales and marketing teams are surprising us all over again and this year product sales are obviously higher than expected during our fall last year. And still our expectation is that this particular agreement with ORIX will open new horizons specifically in the Far East it might affect positively of course our product segment. But I want to be very careful in not change anything on our expectation as of now and just to remind you that the deal is not even closed yet.

And an apart from ORIX how would you assess the activity out there for the products business, what do you think is the potential to replace some of the backlog that will roll off as you complete to roll?

As we speak now or I'm very optimistic about our replacement for the upcoming reminder of this year and the beginning of year with new contracts coming from specifically Turkey, New Zealand, and the U.S. And as I said before for the rest of 2018, 2019 and 2020 there might be additional countries that will come into the loop as we continue.

Great. And if I could sneak one more and it's on Viridity. We were at the Energy Storage Associated Expo recently, it seems like grid storage is really starting to turn the corner here with financing and models business models product models that do make sense. So would be helpful to understand what are your expectations for the Viridity platform to do more energy storage projects what do you see in the pipeline at Viridity with respects specifically to energy storage and how long do you think it will be before there is something significant announcement in terms of the number of new storage projects? Thanks.

First of all you’ll recall that our main reason to acquire Viridity businesses whilst it’s for energy storage. But to our positive surprise also the DR market is making some positive steps specifically in the East Coast which is bringing some serious opportunities in this business. But as you said before we can also feel that the energy storage market is turning the corner in the state but not only in the state and we are taken numerous project that we are involved in but unfortunately I will not be able to provide you a specific number. But just to say that I am cautiously optimistic and also happy that we did this investment.

Okay, great very much, we'll look forward to more details great execution and Doron see you a bit later today at our conference. Thank you.

The next question comes from Brad Meikle of Craig-Hallum. Please go ahead.

So with the ORIX investment, how much potential do you think is there for realistically geothermal development in Japan. It looks like there is only 500 megawatts it’s been developed out of the 300 gigawatts peak load. So seems to be a drop in the bucket and obviously geothermal fairs quite well with all the solar being deployed with the higher capacity factor. So do you think you actually be able a bit bring any projects to market in Japan?

Okay Brad, good morning. First of all Japan is one of the leading country on the geothermal potential. The problem until recently was that most of is insured is in those national park - it was impossible to drill in until recently. We know that the local regulation and laws in Japan are changing and due to the fact I believe the agreement with ORIX eventually today represents a higher potential then it would have represented a few years back. So it’s very difficult to determine the exact megawatts but obviously the number that you mentioned are negligible to the actual potential that Japan will present in the upcoming years. And soon enough after this deal close we will sit down with ORIX people and try to see what the actual potential residing in Japan, but you realize that as ORIX being a large global the potential is not only residing in Japan but also additional countries in Southeast Asia, Indonesia being one of them. And I hope and believe that this corporation will strengthen our positioning in Indonesia which is already doing huge steps towards geothermal energy and today Indonesia is one of the growing country in green energy and specifically in geothermal.

Thanks. And also in Japan I mean obviously Toshiba is having a lot of problems related to Westinghouse, the bankruptcy and the nuclear problems. Is that helping you at all competitively with possibly being less of a factor?

If we put aside Toshiba which I don’t want to relate to the company itself of course, no doubt that the calamity that happened in Japan is helping in the growth of green energy in Japan. And we have a technical agreement with Toshiba and we are working together in a few specific projects mainly in Turkey but I don’t think it has the agreement that we have with them has any significant at this stage if we look at it from ORIX standpoint.

All right, thanks. And last question is, obviously you’ve done business with JBIC in Japan from a lender standpoint for your national projects in the past but is the ORIX relationship going to significantly change your access to achieve that maybe higher leverage at a project level internationally which will require either put up less equity perhaps or have this cheaper debt giving you a competitive advantage developing internationally projects? Thank you.

Brad no doubt we worked with JBIC before but we worked with JBIC as a U.S. company. And to your specific question, I'm hoping and expecting but frankly I don't know yet and the future will tell. So in next year calls we will if something change or not but no doubt that here in management we have high hopes on this regard.

Great, thanks very much.

[Operator Instructions] The next question comes from Jeff Osborne of Cowen & Co. Please go ahead.

Good morning and congratulations on the strong results. Just a couple questions from me, I was wondering if you could just touch on the electricity segment and particular you made a big focus over the past couple of quarters in optimizing the power plants. Angel just give us an update on how many of the installed base has been optimized at this point and how much is left to go.

Okay. Jeff, yes we are working diligently in the last three and something years in all our power plants. I should say that we went through half to 60% of the power plants and we still have a lot to go. But it shouldn’t mislead you on the numbers which means that not necessarily the remaining part that we didn’t deal with yet will bring the same efficiencies as we got on the first three years which were quite significant because don't forget and I said that in my previous call we picked up the low hanging fruit just at the beginning. So even though as we have a long way to go, doesn’t necessarily mean that the efficiencies that would come in the future will be another 30% growth on profitability. I expect it to be lower than that but still as I said you about 40% to grow on the power plant side.

Got it, that’s helpful. And then how do we think about the product gross margin cadence through the year. It sounds like Turkey will be ramping up and so what's the trajectory of gross margins for that particular segment second quarter through the fourth quarter given the propensity of Turkey in the backlog?

Okay. Jeff we said in the last two years that you expected profitability on the product segment should be between 30% to 35% and we are still reiterating the number. Q1 in this particular year was a bit lower and I expect it to be on the high side of our expectation for the whole 2017.

Got it, that’s helpful. And the last question I had for Angel is just can you give us an update on what you're seeing in Ethiopia and Guatemala in particular?

And update on Guatemala and Ethiopia, okay, we have as we started some concessions in Ethiopia and we are working diligently on the final PPA that will be signed with the Ethiopian government which I expect to be finalized by the end of this year or beginning of next year. Soon as this will be done we will not start with a big boom, but probably with the first stage of a 50 megawatt or even less than that on one of the five out of the four that we are signing contract for. And also we will operate the first power plant in Bouillante and we will see that everything is okay, we will continue up to road to develop the four - the full 450 megawatt. This is for Ethiopia, on Guatemala we have two operating power plants and we are participating in a tender for the - for a certain megawatt which will be finalized within next few months. We have sufficient length position to develop a third power plant and we are also in a very significant effort to increase our Sarulla power plant from its current situation with larger power plant.

Excellent. Thanks for the details. I appreciate it.

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

Good morning everyone again, thank you very much for your ongoing support. Ormat is doing many, many baby steps and also I hope to join steps towards the future and as I said in numerous times before, I’m very optimistic of the future and thank you for your support.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.