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Companhia Energtica de Minas Gerais’ (CIG) on Q2 2015 Results – Earnings Call Transcript

Start Time: 13:00 End Time: 13:53 Companhia Energtica de Minas Gerais (NYSE: CIG ) Q2 2015 Earnings Conference Call August 19, 2015 13:00 ET Executives Antonio Carlos Velez Braga – General Manager & IR Luiz Fernando Rolla – Chief Institutional Relations & Communication Officer Fabiano Maia Pereira – Chief Officer, Finance Analysts Vinicius Tsubone – UBS Lylianna Yang – UBS Antonio Carlos Velez Braga Good afternoon to all of you. My name is Antonio Carlos Velez Braga, Cemig’s Investor Relations Officer. We’ll now start the video webcast with Cemig’s results from the Second Quarter 2015. We have the presences of Dr. Mauro Borges, Chief Executive Officer, Fabiano Maia Pereira and also Dr. Luiz Fernando Rolla, Institutional Relations and Communications Officer. You can follow this over the phones, 5511-2188-0155 or 21880188 and also in our website ri.cemig.com.br. To start off our presentation, we hand over the floor to Dr. Luiz Fernando Rolla, our Institutional Relations and our Communications Officer. Luiz Fernando Rolla Good afternoon. It’s always a major pleasure to us to disclose our results this time of the second quarter 2015. Today, we unfortunately can’t count on the presence of Dr. Mauro Lemos. He has a bad throat and he is not in position to speak well. And I and Dr. Fabiano Maia will take over and try to make up for his absence, answer any questions from the strategic point of view. As always, our presentation covers first the highlights of the quarter and then we go more specifically into our results of that quarter. We’ve had a disclosure from the Energy Ministry of Brazil talking about the decisions, taken as provisional measure about two very relevant topics. But at this point, we haven’t got enough information, enough clarity about that to disclose and to tell you about it. So, according to our internal advice we’ll set up another date for further information to you about these latest developments from our Ministry of Energy. Result presentation starts with our usual disclaimer. We’ll point at some of the most relevant pieces of information that can govern our decisions. We focus on some key indicators, so that you can understand our results. As you know, the context in Brazil, what we have been through in these first six months of Brazil and more specifically in the second quarter is radically different from what happened in the first and second quarters last year. Several variables saw relevant changes. I could mention PLD, the spot price that was substantially reduced due to the regulatory change proposed by the government. Also, interest rates grew very sharply from last year. We had some impact on our results as we’re about to see. Anyway, we had an adjustment in the first quarter and in the second quarter for our tariffs in our distributor and that helped us achieve this 14% plus increase, second quarter that was almost BRL5.400 million the consolidated for Cemig GT and this was a result of the developments. EBITDA dropped substantially almost 22% as compared to second quarter last year for reasons we’re going to show you in the next slide. Also, net income saw a sharp drop for the same reasons, our contracts in Brazil, but this has been absorbed by the company very well and this can be linked to the situation in Brazil. Yes, we have been talking about that before this meeting, I and Luiz Fernando, in the first month of this year, we already could foresee that we should brace for tougher times than last year. We made adjustments in-house, so that we could traverse this more delicate moment of our economy. And as we’re about to see, we have managed to deliver that result, especially given the cost reduction measures we took, that are controllable by the company and you see the positive results. We had some highlights, as you all probably know, our injunction questioning the postponement of our concession of the Jaguara Hydro Plant. So the Appeal Court has arrived at a decision. We’re just waiting for the publication of the full judgment so that we can define our line of direction in response. That’s just like we did with Sao Simao. This should be unfolding into the upcoming months and as I said, we just await publication of the full judgment. We had the signature of agreement about this transaction that is very ambitious, strategic view behind it. So far as the technology we’re absorbing with this transaction, is being acquired. So we’re signing this agreement with SunEdison and this should add substantial value to Cemig, SunEdison being a global player and bringing solar energy, topnotch technology and this is probably in the future is to become one of the top sources of energy. This transaction was rather complex, wasn’t it? And it’s brought very positive results to us. Yes indeed, as we have signed this agreement, in our understanding, through Renova, this allows us to achieve new levels of competitiveness, opening new pathways for access to top technology, spearhead technology at lower costs. For sure, because if we have this partner, then we would have access to the U.S. market, very well developed in that regard. This allows us to have a lower cost in the funding of our future projects without bringing any other risks to Renova, in terms of exchange rate, for example, you could see the volatility of the rates in the recent weeks and this protects us from the contamination so far, as these are funds which will be raised in international market, so this transaction is of high quality, bringing a lot of positive results to Renova and also to Cemig, as one of the its major stockholders. Also, the benefit of the sale of [indiscernible] participation right is a function of the GSF and increasing GSF and also of the transfer of the prices of our energy bought in the entire sector. We have been granted an injunction and we would have to hear from our CEO to see what could be done about this issue, this issue affecting all the companies in our group. Our debt profile has been adjusted by ratings companies. This was not only restricted to our companies, but that was a result of the overall situation of our industry regarding GSF and also increasing costs of bought energy, this was a generalized movement. But we’re pleased to see that we’re still at a condition that allows us access to markets, especially local markets with investors of higher quality. This is extremely important to us. As you know, our strategy is to seek financing and funding in the financial market, in the local market to preserve us from any exchange rate related risks. As this first part has been closed and we could give you an overview of events in the first and second quarters. Let’s move on to the results of the second quarter more specifically. So, we will share this task, Velez, Fabiano and myself to show you the effects of this context that we’ve just described. Let’s we start by the consolidated net revenue indicators that was a very positive performance, almost 15% increase, even more so given the fact that sales were reduced. Even against all odds and with the drop in the supply of energy, we had this substantial increase. This drop in demand was expected due to conditions of the economy and the tariff adjustment of the beginning of the year that was accompanied by a reduction in the consumption of families, and also this restructuring of Gasmig last year. Then we had the purchase of Petrobras participation in Gasmig, our own ownership, which is almost 100% and we shared in the Gasmig results even more. Another relevant point in this context was the GSF. We’re dealing with this provisional measure from government. This was an average — that was 81%, different from what it shows there. And yes, even having this at 81% average, we had very a good result in Cemig GT, as a result of the two plants, even as they face legal issues in court. For a long term, in Cemig — well we cannot sign long term contracts with that regard, so presently we should do the liquidation at the spot price, which at this moment ended up being positive for the company. Our court litigations are still on, still in progress and then if we end by keeping the plant, then we will go for the long term agreement. That’s our priority, rather than the short-term liquidations. Yes, our view is a very long term. Now, as for the volumes sold, a good deal of that reduction was in our distributor. You can see that in these two diagrams, one showing second quadrant’s rather 2014 and 2015. Yes, we saw, at the time there is robust growth of some segments and then the overall drop in the first half was 1.8%. But as we had this tariff impact, then this is reinforced. We can see that the residential consumers, families, have reduced and made their consumption more efficient. When they compared quarters in 2014 and 2015, we can see how it dropped. A factor that we have been following up there closely is that while we have increase in tariffs, this has not been accompanied by default from the consumers. And having viewed the huge tariff adjustments, we should expect commercial losses or even higher default levels. Fortunately this didn’t happen. Fabiano mentioned in the beginning, in the first part of his presentation about our cost reduction measures, trying to adjust to this transitional moment, which as a function of the first quarter, which had not yet been adjusted, this only in the second quarter. Then we have to adjust our cash flow accordingly, so that it would preserve some of the things that are very valuable to us as we’re going to see next year. We had anticipated a more difficult scenario in 2015. We started controlling some expenses. And in this slide we can show you that the major increase in expenses was in non-controllable costs, especially electricity and gas, coming from Gasmig, of course. We had some provisions for losses on investments, basically Parati and pension plan rule. Parati, as a function, now it’s only the decrease in energy volume, but also it was of the higher interest rates. This alters the balance of our agreement with investments. This is being conducted with upmost care by us. So that in the end we can have a zero balance as for remuneration of the investors. As we said in the beginning, our Renova operation included some of that replacing Light. This allows Light to be in better position to pay dividend and this can be improved, as a function of this provisional measure that’s being issued by the government and this will bring effects, we hope, counter-effects in the Santo Antonio Plant. The cash generation, as measured by [indiscernible] or EBITDA, despite a decrease in the period, this is still in-line with what we had been expecting, especially in view of the advice we gave to the market during our Annual Meeting that happened in May this year. We’re reaching at half year a good deal of our guidance and we will meet our target. You can see contribution of generation was very effective in view of the performance of our Cemig GT, which is indeed a major contributor to the results in this semester. We got to 70% of our guidance, because of our strategy for trading in the first half of the year and as expected, we would be above 50% and we would have reached more than 50% of the numbers expected for the entire year, that was expected and this is according to our guidance. This is explained by the concentration of the Cemig GT sales in the first half of the year. Consolidated net income, we had a drop in the second quarter, but we still have 1.4% increase in that indicator, more than BRL2 billion of consolidated net income, with a very effective contribution to that result. Everything that we have said so far led to this result. So this is a very robust result, even considering the poor 2014 performance, we’re above that already. We had a strategy to look very carefully at the company debt, as we will see. Next we can see that the expenses increased, given the indexes, the CDI and IPCA of the country were especially complicated at the moment, but it tends to fall back to the previous normal levels in the near future. We can see the two most significant companies. We can see that in the year 2015, we have already taken a major step. If we remember our debt for the year, was at a much higher level than we show here and with a longer tenure. So the debt profile allows us, despite disproportionate cash flow generation and economic context of Brazil, we still then managed to have some very suitable financial indicators. You can see the nominal costs, as this CDI and IPCA increased, but in real terms, it’s rather stable, which is positive to the company. In terms of the maturity, we’re in a comfortable position, because we can see BRL2 billion maturing this year, but in July we already would roll BRL1 billion more for the Cemig GT company, so that we can design our strategy for the second half of this year, already having viewed the next year, not just this year. If you consider one more indicator, which is insurance coverage, we have five times factored. So the net debt over EBITDA is at a very comfortable position financially. And Cemig GT is even better, which allows us to reduce our debt. We have paid part of the debt already. We have rolled BRL1 billion from their debt already. And we now must look more carefully at this indicator, that index or should work in the second half and early next year. Yes, we should link that to our revenues — associating that with the ratio, revenue and debt. Now for Cemig Distributor, we have had a good view in 2015, it’s just some BRL500 million to be rolled on until the end of this year. We’ve achieved success in this rolling of the debt, although indicators are somehow pressured, like net debt on EBITDA. But the real cost is rather low, relatively low and we can reduce our debt and we have already begun to do that. We’ve taken measures, such as our reduction on dividends payment for Cemig Holding, so that we could generate surplus so that we wouldn’t have to increase indebtedness further. So for 2016, our debt is still relatively high, but in the second semester of 2015. We’ll have the time enough to work on this 2016 debt with necessary adjustments in the removal of a concession contract for distribution Cemig, we’re being well positioned to roll on the debt. What about the financial indicators, regulatory ones? We have made studies and calculations. We’re at ease with regard to the new regulatory codes proposed by the regulatory agency. This is the program that we’re going to accomplish by the end of the year. It’s a very robust program and a good deal of this program concentrated on our distributor. We have taken some measures to preserve their accomplishments of this investment program, which is extremely important to us, because it allows us to adjust our performance indicators as required by the regulatory body for renewal of concession contracts. While there is an additional 120,000 new consumers in this first half, by the end of the year it will have reached to 150,000 new consumers. That’s a substantial effort made by the company and this is part of this deep adjustment that we have been making in the management of the distributor. Let me comment, only to say that we will keep on making these necessary adjustments, precisely to deliver all these improvements in efficiency and regulatory compliance. This is a favorite for our Financial Officer. The major item here is that despite the favorable context and scenario, we’ve managed to keep enough cash to comply with our obligations and it’s allowed us to also make significant investments, while at the same time reducing the debt and even so, keeping this very comfortable cash availability. These were the main facts and figures that we would like to convey to you. Now we will open for the Q&A and in case we have overseen any aspect that may be of interest to you. Question-and-Answer Session Operator [Operator Instructions]. Our first question from Goldman Sachs. Q – Unidentified Analyst I’ve two questions, first about the plans, immediate plans. Despite the core decision, I would like to know the strategy of the company about this new rule that we read in the newspapers. Some Congressmen in State of Minas Gerais are trying to propose new measures. This opens up President. She would like to know what Cemig is doing. Well, have you actually managed to present an expressive, a substantial reduction in costs? Is there any reversal in provision or is there any unexpected event that is in play or have they really achieved a better discipline of costs? A – Luiz Fernando Rolla We will start answering in sequence. About the proposals being submitted to the Congress, as I mentioned, you know our position with that regard. Our decision is to try and protect the best interests of the company and it’s a function of some movement, the most effective, the one you mentioned about energy intensive consumers of the Northeast and the reaction and Minas Gerais’ own counterpart’s reactions, if they are expected to have the same benefits as given by our two, the Northeast and others. Our position is clear, we’re trying to defend the company’s interest, trying to safeguard our interest in our — concession contracts in our three plants. The plants that we’re transferring as of July to the Federal government, you know, our view about that. We’re seeking the best opportunities in the sense of assessing whether it is worthwhile going for it, in view of the longer-term contracts proposed by the Ministry. For the second question, yes, we had our last Annual Meeting last May. Our Corporate Management Officer, he made a comment about the major increase in productivity from our workforce. And this is the major fact in achieving the results you have just seen. We have been working in the sense of increasing productivity among our staff and workforce. We have seen some places where this was initiated already and we will go for new initiatives in the second half and we’ll enter 2016 with a complete project for the company, seeking higher levels of productivity of the company with ensuring a reduction in operational costs. Operator [Operator Instructions]. Mr. Vinicius Tsubone from UBS has a question. Vinicius Tsubone I would like to know a few more details. What Cemig did about the GSF deficit and the level of the risk, is it zero risk or what? A – Luiz Fernando Rolla The injunction that protects us against the GSF risks, yes, it really implies zero risk, not 5%, as it’s been said for the general market. We requested and required and obtained 0% risk. Operator Lylianna Yang from UBS has a question. Lylianna Yang My first question in regards [indiscernible] at the Light. We’re negotiating a possible extension of that, a new possible partner with Light or perhaps reimbursement in that regard? And the second question is, what will be your response about Jaguara and Sao Simao, as the judgment is published? In the past, you’ve considered and had some resource and appealed to the Supreme Court. Will that just be an appeal really or will you be questioning the constitutionality of the measure? Luiz Fernando Rolla Before I answer your question, I would like to say that if our international investor had any difficulty in making a question, you can send us an email and right after this video conference, we’ll share with our participants those email and our answers. If by the end of this webcast he is not able to make the question, well [indiscernible]. You know already our strategic vision and view about this issues, this structure that we have set up, it gives those who are having a private vehicle or private means, we have done that once with Light, we’re finishing in the second generation, we will go next for the third generation. We have no intention, whatsoever, to stop or to terminate this structure. This is part of our long term view to have Light as part of our private management. And we’ll seek other investors if the partner is no longer interested in keeping their position as partner, we will seek new partners in order to keep the links with Light. We’re talking about prospective investors, as well with current investors to check for their appetite, so to say and we have no intention again to break off with the cycle we have started some time ago. The second question, Lylianna, I put it to Raul Lycurgo, our Legal Department Officer. He said, I cannot tell you, because this is part of our strategy that should be implemented. We must wait for the publication of the final judgment, so that we can decide the best route to follow having in view the best interest of our company. At this point, we cannot answer your question, therefore, but rest assured that we will always be defending the best interests of the company, the same way as we have been doing so far. We’ll go for a negotiated solution and if that doesn’t work, we’ll resort to all the legal means at our disposal. Operator [Operator Instructions]. Luiz Fernando Rolla There being no more questions, we can then close this presentation. Before that, though, I would like our Investor Relations Officer to show us our next agenda for September. I know that it will take more than half an hour if you listen all of it, but naturally could point at the highlights, so that our investors could bear for that. Antonio Carlos Velez Braga Well, yes we have started last Friday with a luncheon in Sao Paulo with Santander. In September, next week, we will go on our road show with Pension Funds to prepare for the second half of the year, actions, plans, in-line with what Dr. Rolla said, to reduce our CDI exposure of our debt. Also, a conference with the Deutsche Bank in New York, a very important meeting as the North American market comes back from vacation, that’s also a big agenda. Morgan Stanley in London follows, a possible road show for the Continental Europe programs. And by late September, a conference in New York also with Santander, utilities, infrastructure and other Latin American and European companies of the sector. Very relevant meetings and we will be available 24/7, yes, to respond to your questions and clarify your doubts. And what about local market? Up next, we have done that, you know, all our original officers. Our agenda in that regard has been completed already. Dr. Fabiano, any final comments to our investors? Fabiano Maia Pereira For me it’s great, it’s been great. We have provided all the most relevant information during the presentation. Excellent. So I’d like to thank you for your attention. I know that time is precious and I hope we have provided all the adequate information you require for a sound decision making. And I hope that you’ll find it’s very interesting level for purchase, this investment that we believe will bring very good results to our investors. We’re available to further queries from you via phone and email. This presentation and all relative information related to the second quarter will be posted on the website and final words of confidence. Our company has demonstrated its capacity to react within tough conditions and favorable conditions and our attitude is always to strongly defend our interest, interest of our investors, shareholders, employees and consumers. I thank you for your attention again and in future we’ll sum up a new broadcast for comments on the recent provisional measures. Thank you. Operator So our webcast is now concluded. We thank you all for your participation and have a nice afternoon.

U.S. Geothermal’s (HTM) Management Discusses on Q4 2014 Results – Earnings Call Transcript

U.S. Geothermal Inc. (NYSEMKT: HTM ) Q4 2014 Earnings Conference Call March 17, 2015 11:00 AM ET Executives Douglas J. Glaspey – President and Chief Operating Officer Kerry D. Hawkley – Chief Financial Officer Jonathan Zurkoff – Treasurer and Executive Vice President of Finance Analysts James P. McIlree – Chardan Capital Markets, LLC Operator Greetings, ladies and gentlemen and welcome to the U.S. Geothermal’s 2014 Year-End Earnings Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now pleasure to introduce your host Mr. Doug Glaspey. Thank you, sir. You may begin. Douglas J. Glaspey Thank you, operator, and good morning, everybody. Thank you all for joining us on today’s call and for your continuing interest in U.S. Geothermal. My name is Doug Glaspey, I am the President and Chief Operating Officer. Dennis Gilles, our CEO is not able to join us today, he is recovering from recent surgery, we do expect to have him back in the office next week. Joining me on today’s call will be Kerry Hawkley, our Chief Financial Officer and Jonathan Zurkoff, our Executive Vice President of Finance. Jonathan will be presenting Dennis’s prepared comments summarizing the highlights of the year. Before we go any further I would like to make a note that on our March 4, news release regarding earnings call there was a typo some people have noticed that, its was a 100 megawatts production for our growth strategy to 2020, our plan has not changed it is 200 megawatts of growth by 2020. So I just want to make sure everybody understood that we hadn’t changed our strategy. The Company’s performance in 2014 was strong with our operating revenue up 13% compared to 2013. Adjusted EBITDA was up 12% over 2013 and net income up approximately 263% over 2013. Our plans continue to outperform industry standards for operational availability and we are focused on brining the next phase of growth to our shareholders. Kerry Hawkley will now provide you with a summary of our financial results for 2014. Kerry? Kerry D. Hawkley Thank you, Doug. And good morning to our listeners on this call. Before beginning, we would like to remind you that the information provided during this call may contain forward-looking statements relating 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 of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. During the call we will present non-GAAP financial measures such as EBITDA, adjusted EBITDA, and adjusted net income, reconciliation 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. Because these measures are not calculated in accordance with U.S. GAAP, it should not be considered in isolation from our financial statements prepared in accordance with GAAP. I’ll now discuss the financial statements of U.S. Geothermal for the year ended December 31, 2014. On our balance sheet, total assets are at $232.9 million. Our total liabilities are $102.0 million. Non-controlling interests are at $46.4 million, and our net stockholders equity is now at $84.5 million. On our statement of operations our 12-month net income of $11.6 million in 2014 is comparable to the $1.9 million for the same period last year. And adjusted net income for 2014 eliminating the deferred tax asset gain in the impairment loss for Granite Creek is $1.8 million. For the year revenues were up $3.6 million or 13% over 2013. Energy production was up 29,401 megawatt hours or 9.5%. Plant production expenses were up $1.8 million, primarily insurance and maintenance costs. Drilling costs in 2014 that were capitalized were at El Ceibillo, San Emidio Phase II and Crescent Valley. The interest expense at San Emidio $319,000 over last year, primarily because a portion of the interest in 2013 was capitalized. This will have a direct impact to the net income attributable to U.S. Geothermal since San Emidio 100% owned by U.S. Geothermal. Our stock-based compensation is up $583,000 due to options in shares granted to our employees, executives, and directors in April of 2014. These costs are non-cash and align the interest of our employees, officers and directors with shareholders. We incurred exploration drilling costs during the year of $449,000 at our Gerlach Project. We’ve recognized a loss of $452,000 on an impairment associated with our decision to abandon the development of our Granite Creek Project. We also recognized a gain of 10.3 million on a deferred tax assets that we have recorded based on our more likely than not criteria. Adjusted EBITDA for 2014 was $17.2 million, versus $15.3 million in 2013. Our statement of cash flow, cash and cash equivalents at the beginning of the year were $28.7 million. 12 months, cash generated by operations were $12.8 million. Notes payments reduced our total debt by $4.6 million. Payment to our non-controlling interest partner Enbridge were $15 million. We acquired the WGP Geysers project for $6.8 million, inclusive of legal cost. We capitalized drilling at San Emidio, El Ceibillo and Crescent Valley this year and that totaled $3.7 million in. Through the exercise of warrants and options we received $1.6 million in cash, so at the end of the year our cash and cash equivalents were $13.0 million. Please note that our exploration development budget for 2015 requires approximately $5.5 million in cash from U.S. Geothermal, which can be funded internally by cash flows from operations. On our statement of changes in stockholders equity, we’ve added the net income of $11.6 million during the year should be noted that the accumulated deposit is now reflected net of tax or $19.3 million. Shares of common stock issued upon exercise of stock purchases warrants were $2.6 million, shares of common stock issued upon exercise of stock options were $1.1 million. We granted 559,000 shares of common stock to our employees, executives, and directors in Q2 that had a one-year restriction. We just have cash of $15 million that was distributed to Enbridge, we issued 693,000 shares in Q4 to acquire 100% of the shares of Earth Power Resources. So at the end of the year 12/31/2014 are issued an outstanding shares in our totals of 107.0 million shares. Now as we mentioned briefly in the third quarter earnings call regarding our provision for income tax we have now met to more likely to not criteria set for recording the deferred tax asset on the balance sheet. During the fourth quarter, the company discontinued the 100% valuation allowance on our deferred tax asset. The impact to the financial statements net of tax on the income in 2014 was $10.3 million. In other words, we have been profitable now for over two years and we anticipate being profitable going forward as our projects are reliable and the revenues are predictable. Our deferred tax assets will offset future taxes and same as cash. Also in response to the apparent confusion noted during the last earnings call we have added additional disclosure on Page 85 in the MD&A regarding the net income attributable to the non-controlling interest and the net income attributable to U.S. Geothermal and its shareholders, which we hope provide you the clarity thought. The table on Page 85 shows the contribution our three operating projects provides the net income attributable to U.S. Geothermal and it also shows the cost associated with our exploration activities, corporate costs, the deferred tax asset gain and the impairment loss. You will see that Neal Hot Springs contributed $5.9 million, San Emidio contributed $0.5 million, Raft River contributed 300,000 for a total contributed to U.S. Geothermal of $6.7 million from these three projects. From that exploration activities and corporate overhead cost $4.9 million if you exclude the deferred tax and impairment adjustments. This last category includes the Company’s cost of existence including the listed on two stock exchanges legal accounting and professional fees, filings with government agencies, stock-based compensation in the costs of evaluating and developing new projects. These costs are almost 100% U.S. Geothermal costs and reduce the net income attributable to U.S. Geothermal. However as we grow the company by adding income generating projects in the future, this category will not increased significantly from current levels. Allowing the net income from the new projects to increase the bottom line almost dollar per dollar, we believe that company as well-positioned to take advantage of many future opportunities. Thank you for your continued interest in U.S. Geothermal and I will turn the call back over to Doug. Douglas J. Glaspey Thank you, Kerry. I will now provide the highlights of our operations performance for this fourth quarter and for the full-year 2014 as well as the summary of our current development activities. Generation for the fourth quarter from all three plants was 96,831 megawatt hours, and that’s compares 96,508 megawatt hours in the fourth quarter of 2013. Generation for the year 2014 totaled 339,086 megawatt hours, compared to 309,687 megawatt hours for 2013, which represents a 9.5% increase in generation year-over-year. The fourth quarter is typically one of our best generation quarters of the year as you all know, due to the cooler winter temperatures. But I will note, that while the East has had a very cold winter, the West is actually had a relatively mild winter. At Neal Hot Springs, generation for the quarter was 54,472 megawatt hours with average hourly generation of 25.08 net megawatts hours for hour of operation. The facility operated at 98.3% availability for the fourth quarter and 98.5% availability for the year, excluding scheduled maintenance hours. Generation for 2014 at Neal was 183,394 megawatt hours, compared to 155,428 megawatt hours in 2013 an 18% increase year-over-year at Neal Hot Springs. We’re proud to say that the geothermal reservoir at Neal continues to outperform our reservoir model, with over two years of stable temperature and flow rate. At San Emidio, our generation for the quarter was 21,745 megawatt hours with average hourly generation of 9.93 net megawatt hours per hour. Operating availability was 99.2% for the fourth quarter and 98.5% for the year, again excluding scheduled maintenance and hours. Generation for the year was 76,894 megawatt hours compared to generation of 76,697 megawatt hours in 2013. You can see that San Emidio has reached its plateau on this particular case, we think we will see a little bit better generation this year because of the addition of Well 6121 that was added in September and it increased the brand temperature feeding the plant by 3.3 degrees. San Emidio plant of course continues to run very smoothly, we’re very pleased with the plant and the reservoir remains within its projected parameters. At Raft River generation was 20,614 megawatt hours for the quarter with an average hourly generation of 9.59 net megawatts. Raft River operated at 97.3% availability during the fourth quarter and 99.5% for the year. Generation for 2014 was 78,798 megawatt hours compared to generation of 77,561 megawatt hours in 2013. Raft River which is our oldest facility continues to operate at consistent, high availability, with stable generation. I will note that Raft River will have an extended maintenance outage of 14 days in the second quarter of 2015 and it will be undergoing its first turbine overhaul since the plant started in 2008. We are very pleased with the performance of all three plants during the fourth quarter and for all of 2014. Our operations team has produced outstanding operation availability at all of the facilities which equates to our high level of power generation. On the development front, at San Emidio Phase II, the project continues to be dependent upon successful drilling and expansion of the currently known geothermal resource. Before we make the decision to move forward with building the second power plant we have to be successful with drilling additional production and injection wells that will support that second plant. We drilled two new wells in the South Zone during 2014 and expanded the high temperature anomaly farther South from the current well field. We did not plan commercial permeability in either one of those wells, we did find increasing temperature and it’s an important indicator of an active geothermal system. This temperature data is in effect an arrow pointing toward a potential source of the geothermal flow path farther South and we are going follow up on it. The South Zone area is held by federal leases and it takes anextraordinary amount of time to permit drilling activities on these lands. We are currently in the process of permitting a series of temperature gradient wells to extent our information on the area. And if the temperature gradient wells outline an attractive targets, we’ll follow up with observation wells or slim holes as they are known, to explore for the source of the high temperature fluid. This is an iterative process and it takes time, but after finding fluid temperatures of over 321 degrees in the South Zone it’s well worth following up. During the year we also constructed cross tie pipeline between the Phase I plant and the Phase II project area that was built in the third quarter and began producing fluid from well 61-21 early in the fourth quarter. This was all part of a long-term flow test for the South Zone. This well remains in production as we collect reservoir data and the plus side is it also increased our generation from the Phase I plan. Through the year we continued on with the interconnection studies with the Phase II plants and received the first phase study called the System Impact Study back from NV Energy on December 24. We might recall we’ve already have 16 megawatts of reserve transmission of San Emidio and we are requesting an additional 3.9 megawatts in order to accommodate a second full-size plan. The System Impact Study indicated that the additional 3.9 megawatt of transmission can be added to the NVE transmission system with a cost of approximately $270,000. A second phase study called the Facilities Study was started by NV Energy in January 2015. Now this series of studies for transmission happens at all of our projects it’s a FERC mandated process and all of the utilities have to go through it, we have to pay for everyone of these studies. So it just one of the areas in power generation that we have to go through. NV Energy issued a request for proposal on October 1, for 100 megawatts of renewable energy that would be contracted in 2015 for consumption in Southern Nevada. We responded to the RFP with a proposal for San Emidio Phase II on November 12. In early December NV Energy asked the Nevada Public Utilities Commission to allow them to combine the 2014 and 2015 renewable RFPs for a total of 200 megawatts under request. This request was approved and subsequent to the end of the year, we resubmitted our proposal for the Phase II plant and were notified on March 3 that our bid was advanced to the initial shortlist for Geothermal projects. NV Energy schedule indicates that the anticipate selecting the final shortlist projects before the end of April. At El Ceibillo and Guatemala, early this year we completed nine temperature gradient wells at El Ceibillo. The wells were shallow from 650 to 1,300 feet deep and we found temperatures ranging from a 176 to 413 degrees Fahrenheit, extraordinarily high for this shallow of a well. Results, from these wells effectively moves a high temperature resource target area approximately half a kilometer Northwest of our initial target zone. This change in our target location required us to acquire additional service leases before we could enter into our next phase of drilling. Keep in mind that while we have a concession to exploit the Geothermal resource from the Guatemalan government, we also need to have leases for surface access from private individuals. After extensive negotiations we were able to finalize a lease on an additional 80 acres of land that covers us new target area on October 15. Once the lease was signed, we prepare to drill pads for our planned well EC2, which will be a car hole design exactly like the EC1 well we drilled in 2013. The planned depth for EC2 is 2,330 feet deep, at 600 to 1000 meters based on our temperature gradient wells we do have a target in mind as far as depth also for temperatures, so we are anxious to get started on this next well. Our next hurdle, however before we resume drilling is to secure approval from the Guatemalan government to modify our development schedule under the terms of the concession. Based on the new schedule and the subsequent delays for approval you might recall we’ve been seeking this approval for over a year. Our online data’s moved out from the second quarter of 2018. Again this schedule is contingent on the drilling, finding the commercial resource on the project, which we are optimistic about but given the results obtained from our recently completed temperature gradient drilling program. Also at El Ceibillo our memorandum of understanding for a PPA that was held by the project was based on our original development schedule for the project. We met with the purchaser through the year who is one of the largest power brokers in Central America. But due to the delays and approval of the modified development schedule with the Guatemalan Ministry of Energy the purchaser declined to extend the agreement. We are continuing discussions with them and are approaching other power consumers in Guatemala and Central America. Central America still has a growing demand for power especially base load type resources. So we believe there is a very good market in the area. At our WGP Geysers Project, we are continuing to pursue two paths for development of the project. To secure a new power purchase agreement for the sale of electricity and if we’re successful in doing so, we will construct a new power plant and sell energy or to produce steam for sale to one of the other power plant operators in the Geysers. We keep the project ready for either development path; a 12 month extension for the Sonoma County Conditional Use Permit to construct the power plant was applied for and approved in June. We are currently preparing to file a new Conditional Use Permit application in 2015 to maintain our readiness. We also filed a new transmission interconnection request to the California independent system operator so that the project can be placed in the transmission queue. Again, we have to go through these transmission studies to make sure our power plant built on the site can be interconnected into the transmission system, so we can deliver our power to a purchaser. Since the four production wells were drilled in 2008 and 2009 the previous owner did not conduct long enough flow tests for bankable reservoir model. An Air Quality Permit was obtained for extended flow test Sonoma County Air Quality Board and we have scheduled a flow test of the existing wells during the second quarter of 2015 that time is coming up very rapidly. Additionally, we’ve been doing engineering optimization studies of the power plant design, the new reservoir model will reflect the hybrid plant design and includes both water cooling in the summer and air cooling in the winter. Hybrid cooling will provide a significant increase from a traditional 20% increase into 65% in the volume of water available for injection back into the reservoir providing longer term stable steam production. This kind of optimization is critical to maximize the power generation from the property. Three California base requests for proposals for renewable energy PPAs were used at late 2014 and early 2015, submitted the WGP Geysers all three. We were not short listed on the first two and are waiting the results of the third. Direct bilateral discussions are also being held with both power purchasers and steam sale purchasers. The results of the flow test we have scheduled for this spring and the bankable reservoir model will play a key role in making the best decision on how the project is developed. Moving to the exploration front, at Crescent Valley in Nevada which is one of the properties we acquired in the Earth Power Resources acquisition, in late November we conducted a gravity survey in the area with Hot Springs and strong faulting with intense solidification that already had a number of temperature gradient wells drilled that exhibited high results. We located and permitted a well on private property an initiated drilling in December starting construction to qualifying the project for the 30% investment tax credit. The well is currently at just over 900 feet deep and we expect to complete it within this next month. Additional program of deep 1000 foot temperature gradient wells over much larger area are also planned for 2015. So we’re just starting to explore Crescent Valley it’s a great looking prospect. At Gerlach we completed well 1810A to a depth of 2889 feet that was completed in November. This well was a follow up on a historic well that was reported to have encountered a significant loss circulation zone at depth but had no temperature information. Gerlach is some of the largest Hot Springs in Nevada and geothermometer temperatures of 338 to 352 degrees Fahrenheit which made it an excellent exploration target. The well founds some modest production mid-depth but no permeability deep in the well and the maximum temperature found in the well was 275 degrees Fahrenheit. We are reviewing the results of further work at Gerlach but it will be dependent on additional funding from the joint venture. I will now turn the meeting over to Jonathan Zurkoff to provide Dennis’s remarks. Jonathan? Jonathan Zurkoff Thank you, Doug. I will summarize our notable highlights for 2014. First on our consolidated financial performance revenues were up 13% coming in for the year at $31 million, compared to $27.4 million for the 2013 period. Adjusted EBITDA of 12% for the year at $17.2 million compared to $15.3 million in 2013. EBITDA was up for the year yielding $14.9 million, compared to $14.5 million for 2013. Net income up 263% with the total for the year at $14.9 million compared to $4.1 million in 2013. Cash flow from operations was $12.8 million for the year compared to $10.6 million for 2013, an increase of approximately 21% and long-term debt reduced by $4.8 million. Looking at the financial performance attributable to U.S. Geothermal that is after eliminating minority interest which represents our partner share Neal Hot Springs and Raft River. Our net income for the year was up 497% with the total for the year of $11.6 million compared to $1.9 million for 2013. Adjusted net income for the year was $1.8 million versus $1.9 million in 2013, adjustments include both the one-time gain from the recognition of the deferred tax assets and a one-time impairment for the write-off of the development cost associated with our Granite Creek project. We ended the fourth quarter with cash and cash equivalents of $13 million a $2.3 million increase over the prior quarter, relative to operating performance generation for the year was up 9.5% over the last year, mostly resulting from the higher unit availabilities. Our fleet-wide average operating availability for the year was an impressive 98.7% on equally impressive 96.2% with planned maintenance outages included. On the growth side, at our El Ceibillo project and Guatemala we continue to work with the Ministry of Energy and Mines and are very pleased to report that we now have lowered movements on our request to modify the construction schedule and there are Geothermal concessions. We are ready to drill our next well after we obtain final approval of our new schedule from the Energy Minister. Our team in Guatemala is also holding discussions with our former as well as potentially new off-takers for the energy and we are examining, other new prospects in the country. The acquisition of Earth Power Resources was completed on December 12, bringing three additional high quality geothermal prospects into our development pipeline. We began work immediately on the Crescent Valley project by starting the drilling of a production well before year-end, qualifying this project for a 30% investment tax credit which became available with the federal tax extender legislation that was past late last year. At San Emidio II we completed well 6121 installed the production pipeline and continue to produce well 6121 in the South Zone to the Phase I plan. We are also permitting an underground it drilling in the South Zone to verify and expanded resource. Further we have interconnection studies continuing with NV Energy we have submitted two proposals to NV Energy for the 2014 and 2015 request for proposals for 200 megawatts of renewable energy, and we’ve been notified that our proposal have been short listed. At WGP Geysers, we are approaching potential off-takers for the power from the proposed power plant, we’ve responded to request for a proposal as well as started bi-lateral discussions with interested parties and continued discussions for an alternative possible steam sell . A flow tested existing wells is planned for this spring, which will provide valuable information on this resource as it’s needed to optimize the design of either a power plant or pipeline to deliver steam. Capital and operating costs for both potential operating scenarios are being refined and budgetary bids have been received. We have also reapplied for a transmission interconnection agreement. We continue evaluating a number of other potential acquisitions that could drive our growth both in the near-term and now to our long-term portfolio. Regarding our development budget for 2015, expense activities for our early stage exploration projects are budgeted at $1.5 million. Capital expenditures on our more advanced development projects have been budgeted for up to $3.9 million. These budgets are based on our current portfolio and maybe altered depending on the results of early stage work or new opportunities. On the legislative front in late 2014, Congress passed a tax extender result that will allow us to potentially use a 30% investment tax credit on our projects and start a construction prior to the end of 2014, we believe our Geysers project, our San Emidio II and our Crescent Valley projects are currently qualifying. There are also indications that congress will take up an energy bill in 2015. In California which is the largest geothermal market in the United States, Governor Brown announced a new goal of 50% renewable energy by 2030. The California PUC will also be implementing newly passed AB 2363 which requires the establishment of rules for inclusion of integration cost for renewable. Intermittent technologies such as wind and solar will likely have to include the permitting cost for these resources. Moving on to guidance, our guidance for 2015 is based solely on our existing operations and does not include any impact that may be provided by acquisitions we are currently evaluating. These figures are forecast only and considered forward looking statements. Our guidance for 2015 is as follows. Our revenues $28 million to $33 million, Adjusted EBITDA $15 million to $19 million, EBITDA $12 million to $16 million and net income of $1.9 million to $5.9 million. So Doug, I’ll turn it back to you. Douglas J. Glaspey Thank you Jonathan. In summary with our strong cash flow from operations, we continue to have adequate cash on hand to support both our ongoing operations and early stage developments efforts and we continue to add cash to our balance sheet in preparation for our next construction project or acquisition. We also believe we are appropriately prepared to be responsive to many of the additional growth opportunities that we are currently evaluating. In closing, we have now had nine consecutive quarters of positive EBITDA and cash flow. Our fleet of power plants continues to perform well. We are pleased with the performance of our resources, we are pleased with the new growth opportunities recently added to our portfolio and optimistic regarding the other growth opportunities we are currently evaluating. We thank you for your continuing support and operator, I would now like to open the call for questions. Question-and-Answer Session Operator Thank you. [Operator Instructions] We have a question from the line of [indiscernible] Private Investor. Please proceed with your question. Unidentified Analyst Yes, hello. Douglas J. Glaspey Yes, Steven we can hear you. Unidentified Analyst On Neal Hot Springs you are talking about adding a hybrid system there, adding water. What kind of megawatt improvement would that make? Douglas J. Glaspey Steven you are exactly right we are going to be evaluating the possibility of using the wet cooling in the summer months. I think everybody understands that Neal Hot Springs is an air cooled facility, and in the hot summer hours can dip as low as seven to eight megawatts. We think we can double that with water cooling, so it would be similar to other projects in the summer time. I don’t have a number for you for a total impact of megawatt hours for the year. But we think it’s substantial and, of course it’s something we can do on the surface that doesn’t take drilling. So we should be drilling a water well early this hopefully within the next month or so to see if we can find a suitable water resource that would supply that cooling system, and then we are going to test several different possibilities conventional water cooling towers and mist cooling are the two we are going to looking at and hopefully by the end of this season we’ll have an idea of if we can add that water cooling. But thank you for the question its one of the ways we can increase generation without spending a lot of capital. Unidentified Analyst I had another question on the Geysers and the flow test, or fewer on your on your presentation where you make whatthe 38 megawatts. If you did that, would you be able to be more competitive on your megawatt price and the bidding for PPA with a bigger plan? Douglas J. Glaspey Yes, thank you Steven the of course of the size of the plan has an impact typically on capital cost per megawatt hour that 38 megawatt size is the growth generation from the currently permitted plant. So that’s one of the things that flow test is going to tell us this spring – exactly what size plant we can build and operate over the long-term we don’t just look at what the short-term generation is of course. We are going to be looking at time periods of 20 years to 25 years and that’s the number we are seeking from the flow test this year. Unidentified Analyst Okay and then on your net income guidance that’s just U.S. Geothermal that’s excludes the non-consulting interest right? Kerry D. Hawkley That is correct. Unidentified Analyst Okay. All right well thanks a lot and everything looks good. Keep up the good work. Douglas J. Glaspey Thank you. Kerry D. Hawkley Thank you, Steven. Operator Thank you. Our next question comes from the line of Jim McIlree with Chardan Capital. Please proceed with your question. James P. McIlree Yes, thanks and good morning. Douglas J. Glaspey Good morning. James P. McIlree When do you think that you would arrive at a decision on Geysers, which direction you would go either the electricity or the steam? Douglas J. Glaspey Good morning Jim. My expectation is certainly before the end of this year and I would like to have that decision somewhere around mid-year. James P. McIlree And so if it were – let’s take year-end instead. So if it were year-end decision what does that imply in terms of when it comes online starts generating revenue? Douglas J. Glaspey If it was a year-end decision we would have at least two years of construction. Kerry D. Hawkley If it was a power plant. Douglas J. Glaspey If it’s a power plant. If it’s a steam sell it could potential be as short as nine to 12 months. James P. McIlree And similar question for the Crescent Valley and Gerlach efforts. A timeframe as to when those could be online if all goes well. Douglas J. Glaspey Little bit longer timeframe, we still have to define resources of those projects and lets say we’re successful this year, so by the end of the year we have resource defined, we have a PPA in hand and you are looking at, at least two years of construction, before you would be online and generating electricity. James P. McIlree And is there any additional information you can provide as to why the Guatemala power buyer side is not renewed at contracts for the MOU. Kerry D. Hawkley Well I think there is probably several reasons Jim, the power situation in the country has changed a little bit and it’s a little uncertain right now, there was a large coal fired power plant that was supposed to be built in Guatemala that is only partially been built now, they have had a lot of trouble with their hydro facilities, actually they are having a bit of a drought down there as well so hydro has not turned out to be as consistent as they would like. So I think its really more uncertainty than anything else. You might recall too that that MOU covered flat priced PPA, so one of the things we’re looking at with them is shaping that PPA price overtime putting an escalator in it which it didn’t have before. So I think there is a number of issues that I guess I can’t tell you exactly why, but those are my feelings. James P. McIlree Okay, great. That’s very helpful. Thank you. Kerry D. Hawkley Thanks Jim. End of Q&A Operator [Operator Instructions] It seems there are no further questions at this time. I would like to turn it back to management for closing comments. Douglas J. Glaspey Great, I would like to thank everybody again for being on the call. We’re looking forward to a very exciting 2015, we’ve got a lot of things that we’re evaluating and as far as new projects are concerned we have a lot of work to do on our existing development and exploration projects. So keep a close eye on us and we look forward to talking to you next quarter. Thank you very much. Operator Thank you. Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.