Ormat Technologies, Inc. (NYSE:ORA) Q2 2024 Earnings Conference Call August 7, 2024 9:00 AM ET Company Participants Josh Carroll - Alpha IR Group, IR Doron Blachar - CEO Assi Ginzburg - CFO Conference Call Participants Noah Kaye - Oppenheimer Justin Clare - Roth MKM Derek Podhaizer - Barclays Jon Windham - UBS Financial Ryan Levine - Citi Julien Dumoulin Smith - Jefferies Jeff Osborne - TD Cowen Operator Good morning and welcome to the Ormat Technologies Second Quarter 2024 Earnings Conference Call. All par ...

Core Insights - Ormat Technologies Inc. reported second-quarter 2024 adjusted earnings per share of 40 cents, exceeding the Zacks Consensus Estimate of 37 cents by 8.1% and matching the year-ago quarter's results [1] - The adjusted earnings were supported by higher revenues and improved margins, although offset by increased interest expenses [1] Revenue Performance - The company generated revenues of $213 million, surpassing the Zacks Consensus Estimate by 0.9% and reflecting a 9.3% year-over-year increase, driven by growth across all three segments [3] - Electricity segment revenues reached $166.2 million, up 7% year over year, primarily due to contributions from newly acquired Enel assets and improved operational performance [4] - Product segment revenues increased by 13.1% to $37.8 million, attributed to a higher backlog and enhanced revenue recognition [5] - Energy segment revenues surged 48.1% to $8.9 million, driven by improved pricing from the Pomona 2 tolling agreement and higher merchant prices [5] Operational Metrics - Total operating expenses were $26.3 million, a 3.9% increase from the previous year, while operating income rose 45% year over year to $35.1 million [6] - Total cost of revenues was $151.6 million, up 4.3% year over year, with net interest expenses increasing by 38.2% to $33.7 million [6] Financial Condition - As of June 30, 2024, the company had cash and cash equivalents of $66.3 million, a decrease from $195.8 million as of December 31, 2023 [7] 2024 Guidance - The company updated its 2024 revenue guidance to a range of $875-$910 million, compared to the previous guidance of $860-$910 million, with the Zacks Consensus Estimate at $881.9 million [8] - Electricity segment revenues are now expected to be between $710-$720 million, while product segment revenues are projected to be $130-$145 million [9] - Annual adjusted EBITDA is projected to be in the range of $520-$550 million, an increase from the prior guidance of $515-$545 million [10]

Ormat Technologies (ORA) came out with quarterly earnings of $0.40 per share, beating the Zacks Consensus Estimate of $0.37 per share. This compares to earnings of $0.40 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 8.11%. A quarter ago, it was expected that this geothermal company would post earnings of $0.68 per share when it actually produced earnings of $0.65, delivering a surprise of -4.41%. Over the last four quarters ...

Core Viewpoint - Ormat Technologies, Inc. reported strong financial results for Q2 2024, with total revenues increasing by 9.3% year-over-year, driven by growth across all operating segments and improved profitability [2][3]. Financial Performance - Total revenues for Q2 2024 reached $213.0 million, up from $194.8 million in Q2 2023, marking a 9.3% increase [3][5]. - Operating income increased by 45% to $35.1 million compared to $24.2 million in the same period last year [3][5]. - Adjusted EBITDA rose by 25% to $126.1 million from $100.9 million year-over-year [3][5]. - The company increased its full-year EBITDA guidance range, reflecting strong execution and confidence in future performance [2]. Segment Performance - The Electricity segment generated revenues of $166.2 million, a 7.0% increase year-over-year, supported by the acquisition of Enel assets and improved generation at the Puna facility [3][5]. - The Energy Storage segment saw a significant revenue increase of 48.1%, driven by the addition of 83 MW of capacity and improved pricing from tolling agreements [3][5]. - The Product segment's revenues increased by 13.1%, with gross margins improving from 10.4% to 13.7% [3][5]. Guidance and Future Outlook - The company provided guidance for total revenues between $875 million and $910 million for the full year 2024 [7]. - The Electricity segment is expected to generate revenues between $710 million and $720 million, while the Energy Storage segment is projected to bring in $35 million to $45 million [7]. - Ormat aims to expand its generating portfolio to approximately 2.1 to 2.3 GW by the end of 2026, capitalizing on favorable industry trends [4][6]. Recent Developments - The company hosted an Investor Day to outline its commitment to growth in the Electricity segment and plans to enhance the Energy Storage segment [6]. - A 15-year Resource Adequacy Purchase and Sale Agreement was signed for the 80MW/320MWh Shirk Energy Storage facility, with a guaranteed commercial operation date of March 1, 2026 [6]. - The company commenced commercial operation of a 6 MW upgrade at the Beowawe geothermal power plant [6]. Dividend Announcement - On August 6, 2024, the Board of Directors declared a quarterly dividend of $0.12 per share, to be paid on September 3, 2024 [9].

The earnings report, which is expected to be released on August 6, 2024, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. This geothermal company is expected to post quarterly earnings of $0.37 per share in its upcoming report, which represents a year-over-year change of -7.5%. Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out ...

Project Overview - The Shirk project is expected to be eligible for a 40% Investment Tax Credit, highlighting Ormat's strategic growth in the Energy Storage segment in California [1] - The project represents Ormat's first storage contract with the City of Riverside and the City's first long-term Resource Adequacy (RA) Agreement [1] - The RA Agreement includes a guaranteed commercial operation date (COD) of March 1, 2026, with potential achievement by the end of 2025, showcasing Ormat's execution capabilities [1] Company Background - Ormat Technologies is a leading geothermal company with over five decades of experience, vertically integrated in geothermal and recovered energy generation (REG) [2] - The company has a total generating portfolio of 1,415MW, including 1,225MW of geothermal and solar generation globally and 190MW of energy storage in the U S [2] - Ormat leverages its core capabilities in geothermal and REG to expand into energy storage services, solar PV, and energy storage plus solar PV [2] Market and Strategic Focus - The Shirk project aligns with Ormat's strategic growth focus on key U S markets like California, transitioning its Energy Storage business to a higher-growth segment [6] - The project supports the City of Riverside's long-term Resource Adequacy needs cost-effectively while advancing battery energy storage deployment within the CAISO balancing authority [2][6] Project Details - The Shirk Battery Energy Storage System (BESS) has a capacity of 80MW/320MWh and is located in Visalia, California [5] - The 15-year Resource Adequacy Purchase and Sale Agreement (RA Agreement) with the City of Riverside underscores Ormat's commitment to renewable energy solutions [5][6]

The Shirk project, which is currently expected to be eligible for a 40% Investment Tax Credit, represents Ormat's continued commitment to strategically growing its Energy Storage segment in the key California energy market. The agreement is Ormat's first storage contract with the City of Riverside and is the City's first long-term RA Agreement. Critically, included in the RA Agreement is a guaranteed commercial operation date (COD) of March 1, 2026, that the Company currently believes can be achieved by the ...

A month has gone by since the last earnings report for Ormat Technologies (ORA) . Shares have added about 9.1% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Ormat Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Ormat Q1 Earnings Miss Estimates, Rev ...

RENO, Nev., June 04, 2024 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE:ORA), a leading renewable energy company, announced today that it will host an Investor and Analyst Day in New York City at the New York Stock Exchange (NYSE) on Thursday, June 20, 2024. The Investor and Analyst Day event will begin with a gathering and breakfast at 08:00 a.m. Eastern Time (EDT). The presentation will start at 09:00 a.m. EDT and will include presentations from multiple members of the executive leadership team. Orma ...

PART I — FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Ormat reported strong Q1 2024 financial results with revenues up **21%** to **$224.2 million** and net income increasing to **$38.6 million** [Condensed Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets grew to **$5.52 billion** by March 31, 2024, driven by acquisitions and increased property, plant, and equipment Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total current assets** | $609,235 | $646,003 | | **Property, plant and equipment, net** | $3,220,246 | $2,998,949 | | **Goodwill** | $151,122 | $90,544 | | **Total assets** | **$5,516,844** | **$5,208,279** | | **Total current liabilities** | $546,254 | $537,012 | | **Total long-term debt, net** | $1,817,473 | $1,568,680 | | **Total liabilities** | **$3,030,213** | **$2,756,693** | | **Total equity** | **$2,476,519** | **$2,440,987** | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME) Total revenues increased **21.0%** to **$224.2 million** in Q1 2024, with net income rising **32.9%** to **$38.6 million** Q1 2024 vs. Q1 2023 Performance (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Total revenues** | $224,166 | $185,232 | | Electricity Revenue | $191,253 | $170,310 | | Product Revenue | $24,832 | $10,042 | | Energy Storage Revenue | $8,081 | $4,880 | | **Gross profit** | $78,810 | $76,069 | | **Operating income** | $52,583 | $53,166 | | **Net income attributable to Company's stockholders** | $38,587 | $29,029 | | **Diluted EPS** | $0.64 | $0.51 | [Condensed Consolidated Statements of Cash Flow](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOW) Operating cash flow more than doubled to **$115.2 million**, while investing activities increased due to a **$274.6 million** acquisition Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $115,209 | $56,456 | | **Net cash used in investing activities** | ($377,834) | ($111,177) | | Cash paid for business acquisition, net of cash acquired | ($274,631) | $0 | | Capital expenditures | ($103,386) | ($106,877) | | **Net cash provided by financing activities** | $273,944 | $350,381 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the **$274.6 million** Enel acquisition, new debt, customer concentration, and a disputed **$79.0 million** tax demand - On January 4, 2024, the Company acquired a portfolio of geothermal and solar assets from Enel Green Power North America for a total cash consideration of **$274.6 million**. The acquired assets contributed **$9.4 million** to revenues for the period[25](index=25&type=chunk)[32](index=32&type=chunk) - To finance the Enel acquisition and other purposes, the company entered into several new loan agreements in Q1 2024: a **$75 million** loan with Hapoalim Bank, a **$125 million** loan with HSBC Bank, and issued **$135.1 million** in Mammoth Senior Secured Notes[35](index=35&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk) - The company faces significant customer concentration risk, with SCPPA (**24.7%**), Sierra Pacific/Nevada Power (**16.8%**), and KPLC (**12.2%**) accounting for a combined **53.7%** of total revenues in Q1 2024[49](index=49&type=chunk) - Subsequent to the quarter end, on April 23, 2024, the Company's Kenyan branch received a preliminary demand for approximately **$79.0 million** in back taxes from the Kenya Revenue Authority (KRA), which the Company believes is without merit[105](index=105&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=28&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) MD&A highlights **21%** revenue growth, Adjusted EBITDA of **$141.2 million**, and planned **$472.0 million** capital expenditures [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Q1 2024 total revenues increased **21.0%** to **$224.2 million**, driven by segment growth, though gross margin declined to **35.2%** Revenue by Segment - Q1 2024 vs Q1 2023 (in millions) | Segment | Q1 2024 | Q1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Electricity | $191.3 | $170.3 | 12.3% | | Product | $24.8 | $10.0 | 147.3% | | Energy Storage | $8.1 | $4.9 | 65.6% | | **Total** | **$224.2** | **$185.2** | **21.0%** | - The increase in Electricity segment revenue was mainly due to the Enel acquisition (**$9.4 million**), the Heber 1 plant resuming operations (**$6.2 million**), the new North Valley plant (**$3.6 million**), and higher generation at Puna (**$4.2 million**)[147](index=147&type=chunk) - Cost of revenues for the Electricity segment increased by **$22.0 million**, partly due to **$6.7 million** in business interruption insurance proceeds that benefited the prior-year period but were absent in 2024[153](index=153&type=chunk) - Net interest expense increased by **$7.3 million** to **$31.0 million**, primarily due to new loans taken out to finance acquisitions and growth[161](index=161&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) Strong liquidity with **$201.5 million** cash and **$324.3 million** unused capacity supports **$635.3 million** in projected capital needs - As of March 31, 2024, the company had **$201.5 million** in cash and cash equivalents and **$324.3 million** in unused borrowing capacity[170](index=170&type=chunk) - Estimated capital needs for the rest of 2024 total approximately **$635.3 million**, comprising **$472.0 million** for capital expenditures and **$163.3 million** for debt repayment[171](index=171&type=chunk) - The company is subject to financial covenants, including maintaining equity of at least **$750 million** (actual: **$2,476.5 million**) and a net debt to Adjusted EBITDA ratio below **6.0** (actual: **4.13**)[177](index=177&type=chunk) [Non-GAAP Measures: EBITDA and Adjusted EBITDA](index=54&type=section&id=Non-GAAP%20Measures%3A%20EBITDA%20and%20Adjusted%20EBITDA) Adjusted EBITDA increased to **$141.2 million** in Q1 2024, reflecting adjustments for non-cash items and M&A costs Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **Net income** | **$40,350** | **$33,461** | | Interest expense, net | $29,129 | $21,780 | | Income tax provision (benefit) | ($147) | $8,885 | | Depreciation, amortization and accretion | $61,676 | $52,396 | | Other adjustments | $3,352 | $2,982 | | **EBITDA** | **$134,360** | **$119,504** | | Mark-to-market (gains) or losses | $813 | $993 | | Stock-based compensation | $4,769 | $2,990 | | Merger and acquisition transaction costs | $1,299 | $0 | | **Adjusted EBITDA** | **$141,241** | **$123,487** | [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company manages market risks including electricity price volatility, interest rate fluctuations, and foreign currency exposure - The company's exposure to electricity price volatility is limited because the majority of its long-term PPAs have fixed or escalating rates. However, energy storage projects are exposed to merchant market prices[212](index=212&type=chunk) - As of March 31, 2024, **100%** of consolidated long-term debt was at fixed interest rates, but **$100.0 million** in short-term commercial paper bears a variable rate (SOFR + 1.1%)[214](index=214&type=chunk) - The company is exposed to foreign currency risk, particularly the U.S. dollar versus the New Israeli Shekel (NIS) and the Euro. It uses forward contracts and cross-currency swaps to mitigate this exposure[216](index=216&type=chunk) [Controls and Procedures](index=52&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management confirmed the effectiveness of disclosure controls and procedures as of March 31, 2024, with no material changes - Based on an evaluation as of March 31, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[232](index=232&type=chunk) - There were no material changes to the company's internal control over financial reporting during the first quarter of 2024[233](index=233&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=53&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in ordinary legal proceedings and an ongoing anti-corruption investigation, cooperating with authorities - The company is involved in ordinary course legal proceedings, which management does not expect to have a material impact[95](index=95&type=chunk) - A Special Committee continues to investigate claims from a short seller's report concerning anti-corruption compliance, and the company is providing information to the SEC and DOJ[96](index=96&type=chunk) [Risk Factors](index=53&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to the company's risk factors were reported during the quarter compared to the 2023 Annual Report - During the quarter, there have been no material changes in the company's risk factors from those disclosed in the 2023 Annual Report on Form 10-K[237](index=237&type=chunk) [Other Part II Items](index=53&type=section&id=Other%20Part%20II%20Items) No unregistered equity sales, defaults on senior securities, or mine safety disclosures were reported for the period - No unregistered sales of equity securities, defaults upon senior securities, or mine safety disclosures were reported for the period[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk)