Good morning, and welcome to the Ormat Technologies Fourth Quarter and Full Year 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be a question-and-answer session. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Rob Fink of Hayden IR. Please go ahead, sir.

Thank you, operator. 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 the information provided during this call may contain forward-looking statements related to current expectations, estimates, forecast 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, 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 Technology's Annual Report on Form 10-K 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 this morning, 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 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 on the Investor Relations tab. With all that said, I now like to turn the call over to Isaac. Isaac, the call is yours.

Thank you very much, Rob, and good morning, everyone. Thank you for joining us today. Starting with Slide 5, I'd like to start that Ormat delivered another strong year, driven by continued growth in our Electricity segment. We entered 2018 poised to build up our leadership position and create additional shareholder's value. I'd like to start with our decision to postpone our 2017 10-K and the announcement of the expected material weakness. We expect to file our 10-K on or before March 16, 2018. The delay in filing is a result of the need to complete additional review procedures, primarily related to with respect to accounting for income tax in financial reporting. We also announced that we expect to report material weakness in internal control over financial reporting as a result of a need to identify the deficiency related to accounting for income taxes. Although the work in relation to these review procedures is ongoing, the company believes our results of operations contained in this release are materially correct. And we are working diligently to remediate any issues. In any case, we do not believe it will impact our operational performances or execution of our future plans. Let us continue with 2017 key highlights. Being the industry's only vertically integrated player, with tremendous expertise in all facets, creates a significant competitive advantage that helps us to develop resources relatively rapidly and drive efficiency throughout the value chain. We have set a goal of adding an incremental 190 to 200 megawatt of organic growth by the end of 2020, on top of the approximately 90 megawatt of new capacity we have added over the last year from Sarulla, Platanares and Tunsgten Mountain power plants. Additionally, once closed the U.S. geothermal acquisition should further bolster our growth. As we previously stated, we are focused on increasing the portion of revenues from the Electricity segment and expect that 2018, the increase in revenues and profitability of the Electricity segment will increase the total EBITDA margin and will and will contribute to our profitable growth. In the Product segment, we secured new contracts and reached a backlog of $243 million to support revenues in 2018 and beyond. We also have expectation that our storage initiative will augment our growth over the next few years. We have advanced the new offering and are positioned to develop three battery storage systems in New Jersey during 2018. I will turn the call over to Doron for a review of financial results before I provide an update on our operations. Doron?

Thank you, Issac, and good morning, everyone. Starting with revenues on Slide 7, for the full year 2017 total revenues was $692.8 million compared to $652.6 million last year, an increase of 4.6%. This increase was attributable to our Electricity segment, in which revenues increased by 7.3% compared to the corresponding period in 2016. Moving to Slide 8, revenues in our Electricity segment were $468.3 million for the full year 2017 compared to $436.3 million in 2016. This increase was primarily attributable to the full year consolidation of our Bouillante power plant in Guadeloupe. The increase was also due to the commencement of our Platanares power plant in Honduras in September 2017, as well as the commencement of our Tungsten Mountain power plant in Nevada in December 2017. An additional contributor is the increased generation at our Puna power plant, attributable to successful improvement of the resource performance. Electricity segment revenues were also increased as a result of $2.7 million generated by our Viridity business from the provision of energy storage and demand response services. The increase was partially offset by a decrease in generation at some of our power plants, that we had scheduled to take offline temporarily to address maintenance issue. Turning to Slide 9, full year 2017 revenue for our Product segment were $224.5 million, down 0.8%, compared to $226.3 million for 2016. The slight decrease was primarily attributable to a different mix of near-completion contract, a new contract signed during 2017 that impact the revenue recognition. Moving to Slide 10 for a look at our gross margin. For the full year 2017 combined gross margin was 38.7%, compared to 40.9% in 2016. Our Electricity segment gross margin increased to 41.9% for the full year 2017, up from 40% in 2016, primarily due to an increase in…

Thank you very much, Doron. Starting with Slide 24, are an update on operations. During 2017, we have added approximately 90 megawatts, an increased our fleet to 795 megawatts by bringing new power plants online. Additionally, as you can see on Slide 25, we adjusted the generation capacity of our existing power plants based on their performance. Turning to Slide 26, generation in this quarter was positively affected by Puna and Bouillante as described by Doron, as well as from Platanares coming online. The overall generation year-over-year increase by 1.7%. Turning to Slide 27 for an update on our backlog. As of February 26, 2018, our Product segment backlog increased to $243 million. We were able to sign new contracts in Turkey, which continue to represent a significant share of our total backlog. We view this region as one with many opportunities due to the geothermal resources and the government's commitment to geothermal energy. We are positioned to utilize our vertically integrated structure to price our offerings competitively to push out more competition. We also continue to expand our presence in New Zealand, where we signed a $50 million EPC contract related to Ngawha extension geothermal project. We expect to contract to have a significant contribution to our 2019 and 2020 Product segment revenuers. Additionally for the first time in a decade, we received an order from EDC in the Philippines. We are targeting the Philippines as a market with the potential for our product sales, and we believe, this order will create more opportunities in the region. Our backlog also includes the Soda Lake $36 million EPC contract that was signed in December 2016, and is still pending final notice to proceed. This contract was not included in 2018 revenue guidance. We anticipate that our backlog context mix -…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Noah Kaye of Oppenheimer. Please go ahead.

Good morning. Thanks for taking the questions. Hey, Isaac and team. I just want to start with the pipeline trajectory here. You've updated the organic growth outlook to adding 190 to 200 megawatts by year end 2020. I think before this, the target was 150 to 160 megawatts by year end 2019. So just so I can understand how we should be modeling this, what should apples-to-apples be for how much you think you're going to add by 2019, understanding that as subtracting out 24 megawatts at Tungsten that you already brought online?

Noah, I don't have in front the rate on for each specific year, everything in the aggregate. You can see on the presentation where we added a few projects that I don't think we've discussed before. It relates to the Puna enhancement, CD4, Tungsten, solar and the Viridity powering. But I don't have the specific breakdown for each of the years in front of me to give you a specific response on 2020 numbers. We will try to provide it to you offline, Noah.

Okay. But I think it's fair to then just calculate, if I take out Tungsten that there is an additional 65 megawatts of new projects that you see coming online by 2020, kind of relative to what you guided before through 2019. So...

Yeah, [indiscernible].

Yeah, yeah. Maybe just understanding both for this quarter and then for the year ahead guidance, you called out $0.5 million of revenue from Viridity in the quarter, $1.9 million of COGS. What was Viridity OpEx in the quarter and how should we think about Viridity EBITDA and sort of all the energy storage, other profile for 2018, because it certainly appears like it is at least in the short term margin dilutive?

Noah, don't forget that the company only joined us during 2018. And it took us at least two quarters to sort out and consolidate into the company. The actual real project - we have two types of projects, we have projects that we are building program in front of the meter and behind the meter. And we have projects that we are building that are - built on our equity and we will operate them. And we are building - and we have EPC projects. The main two or two something projects, which will be adding to revenue sometime next year will be finished this year. But - so, I am not expecting this segment to be impressive before the end of 2018.

So we should assume no - basically no EBITDA contribution or is it actually…?

Exactly. So our guidance is EBITDA for 2018 doesn't really include any positive impact coming from the segment. The first two quarters were quarters that we consolidated the company into and started to build projects in the second year, which is 2018 is the year that we are building up our portfolio and product and projects around U.S. So I believe that the main impact on EBITDA will be coming beginning of next year.

Great. Great. I appreciate calling that out. And then, just on financing, couple of questions on financing, I think you look at all the capital funding needs, just kind of wondering generally how to think about funding that. And then kind of maybe a minor item here, but I believe we're still waiting on an OPIC disbursement related to the project, one international project, a substantial disbursement. Can you kind of update us on what the timing of that will be?

Yes, we are in the practically the final stages of financing our Platanares project in Honduras. We do because you say it's more than $100 million of financing. And that, obviously, currently is financed with our own equity so once this comes into play it will support our CapEx in 2018. In addition to that, I would say that we are in advanced discussions to get some corporate loans if we need as well as some tax equity discussions that we have for the Tungsten project that came online in December that we expect to have in the second half of the - to finalize in the second half of the year.

Okay, great. And just to be clear, you think that the OPIC funding will likely come, say, by the end of the first half of this year?

Yes.

Oaky. Thank you so much.

Thanks, Noah.

Thank you.

[Operator Instructions] Today's next question comes from Paul Coster of JPMorgan. Please. go ahead.

[indiscernible] if you don't mind, a few questions. What is the dividend policy moving forward? If you can just walk us through what's happening there, please. And the tax rate for 2018, what should we assume?

On the dividend policy, we did say that we're going to pay about $0.10 in the next three quarters. It's a similar dividend policy, we are - however, we did increase the first three quarters' dividend in order to more streamline the four quarters' dividend. The Q4 will have a catch-up our policy of 20% of net income, but since Q1 to Q3 continue to grow and we actually increased them from $0.08 to $0.10 this year, we assume that the catch-up would be significant lower then what we see this year. Regarding the tax rate with tax reform that in the U.S., and its multiple implications on Ormat. It's very hard to give the number. I think that if you're looking on cash basis then we don't see paying cash in the U.S. due to the NOLs and the PTCs that we have. And the other locations would be similar to previous years. So it's very hard to give you a specific percentage of tax rate to put in today.

Okay. You just got upgrade activity in 2018, and I think, I heard you say, Angel, that the margins and the EBITDA - the EBITDA margins for the Electricity should improve. Can you just talk us through the capacity factor impact of the upgrades and why does that the margins are not impacted by that?

Paul, on the efficiencies - on the percentage there is a real difference, if you look year-by-year. The growing percentage of profitability is mainly coming of two things. The first one being a new power plants added to the fleet, which their O&M expenses are lower than older power plant. And the second thing is efficiency coming from the older power plants, and they're being enhanced and developed and changed based on our new technologies. So overall, if you look a few years back, we are expecting our profitability on those power plants still continue to grow.

Okay. And one question, this might be just a narrower on my part. But I thought Dixie Meadows was coming online imminently. Can you just talk us through what's the status of that facility is?

We still have Dixie Meadows on our expected fleet, but unfortunately as we have to drill in a different area that we are expecting to get permits to drill there. So it will take more time to come up with available resource and build up a power plant on it.

So what timeframe do you [indiscernible].

It's not going to happen in 2018.

Okay. Thank you very much.

Thank you, Paul.

And ladies and gentlemen, our next question comes from Jeff Osborne of Cowen and Company. Please go ahead.

Yeah, good morning, guys. I was wondering if you could just expand on the tax issues or are these at the corporate level where the controls are or is it at the plant level, just any additional detail you can give us would be helpful.

The issue is basically - the corporate business are U.S. tax issues. I wouldn't call them too much issues. It's obviously as we said, they don't have any material impact on the financial statement. They relate mainly to internal control, the thought process, and its procedures and process.

Got it. And then, how should we think about the PTC extension? And is there any ramifications to contracts that have been signed over the past year, year-and-a-half that were signed without the ITC, notably the SCPPA project?

No, the extension of the PTC is obviously a good thing. We are looking to see whether we can actually have maybe another project that will be able to have start of construction due to the extension from the end of 2016 to 2017. The existing project that we had coming online, Tungsten or McGinness 3 are - is as we understand it, eligible for the PTC. And we - on Tungsten, as I said before, we are negotiating tax equity. And McGinness Phase 3 is also one that we will start negotiating as we get closer to COD.

Got it. And then, may be just the last one for me on the U.S. geothermal. Can you talk about - first of all in 2Q, do you have any insight at this point, if that will be an early 2Q or late 2Q close, where do we stand on how we should model that?

Probably, the simple answer will be probably in the middle.

All right, very good. And then, what about the 50% improvement that you're talking about in terms of the accretiveness? Is that - I imagine the Boise facility they have would be shut down pretty quickly. But as we model the plant-level economics, which are not in your guidance, is it a safe assumption to say that most of that construction would happen in 2018 and by the spring of 2019 would be largely done and is a tailwind for 2019 results?

Jeff, we didn't close this acquisition yet. And obviously, we're not coming with operational plans, what to close, how to close and when to close them. So one thing is sure, that once we close it we will come up with the plan that we have and prepared for this acquisition. Eventually, as I mentioned during my remarks before, our expectation is overall on year 2019, we will have 50% efficiency on the numbers.

By the end of 2019, okay. My last question may be about U.S. geothermal that you could answer. It's just they're undeveloped assets, so Guatemala, Nevada, the geysers. Can you just touch on any of those as we look out to the end of 2020, recognizing it's not part of your 190 to 200 megawatts that you're talking about? But do you have any sense of confidence in those assets or have you not done any due diligence yet.

Obviously, we did due diligence, otherwise, we wouldn't be in a situation to offer and sign an agreement with them, so it will relate to Nevada. And if you relate to Guatemala, we have also an existing asset very close to their asset. But the main problem over there is the PPA. We don't - I don't see an upcoming PPA in the near future in Guatemala. On the geysers, it's a different type of resource. And our resource group and engineering group are looking into it, what exactly we can do with it, because as everybody understands, it is a different type of a resource. And it's not a type of resource that we are dealing with. And again, same place there is an issue of PPA. In other assets in enhancements, there might be a change. And that we can find the PPA for it in Nevada. And then it will be an immediate accretive to our fleet, an immediate accretion to our fleet.

Great to hear. Thank you.

Thank you, Jeff.

And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to Isaac for any closing remarks.

Thank you very much. And, ladies and gentlemen, thank you for your ongoing support. And as we all realize, there is a hurdle this quarter and this year, which I believe our excellent employees and advisors will overcome in the upcoming very near future. And as we remarked, I don't think and believe that it has any impact on our strategy, execution and operation. And I'm expecting that 2018 being a much better year than 2017, which by itself, was an excellent year for Ormat. Thank you very much.

And thank you, sir. Today's conference has now concluded. We thank you all for attending today's presentation. You may now disconnect.