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Ormat Technologies(ORA) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for 2024 were 879.7million,markinggrowthof6.1879.7 million, marking growth of 6.1% year over year, while revenue for the fourth quarter was 230.7 million, down 4.4% year over year [13][14] - Adjusted EBITDA for the full year 2024 was 550.5million,anincreaseof14.3550.5 million, an increase of 14.3% compared to 2023, with fourth quarter adjusted EBITDA results at 145.5 million, an increase of 4.6% year over year [16][17] - Net income attributable to stockholders for the full year 2024 was 123.7millionor123.7 million or 2.04 per diluted share, compared to 124.4millionor124.4 million or 2.08 per diluted share in the previous year [15][16] Business Segment Data and Key Metrics Changes - Electricity segment revenue for the fourth quarter decreased by 2.1% to 180.1million,whileforthefullyear,electricityrevenueincreasedby5.3180.1 million, while for the full year, electricity revenue increased by 5.3% to 702.3 million [18][19] - Product segment revenue declined by 21.4% to 39.6millionduringthefourthquarter,butgrewby4.439.6 million during the fourth quarter, but grew by 4.4% to 139.7 million for the full year [19] - Energy Storage segment revenue increased by 56.7% in the fourth quarter and by 30.6% to 37.7millionforthefullyear[19]MarketDataandKeyMetricsChangesThegrossmarginfortheElectricitysegmentwas34.937.7 million for the full year [19] Market Data and Key Metrics Changes - The gross margin for the Electricity segment was 34.9% in the fourth quarter and 34.6% for the full year, impacted by curtailments in the U.S. and Kenya [20] - Energy Storage segment reported gross margin of 9.5% and 10.9% during the fourth quarter and full year respectively, marking significant improvement [22] Company Strategy and Development Direction - The company aims to achieve a capacity CAGR of 14% to 16%, primarily driven by strong U.S. market demand for base load electricity [39] - The company is focusing on capturing demand through its Electricity and Storage segments, with plans to invest approximately 570 million in capital expenditures for 2025 [29][30] - The company is transitioning its Storage segment to a more predictable portfolio with stronger profitability, highlighted by new tolling agreements [38] Management's Comments on Operating Environment and Future Outlook - Management expects total revenue in 2025 to be negatively impacted by 10millionto10 million to 15 million in the U.S. due to ongoing curtailments [21] - The company anticipates growing demand for renewable energy to support AI data centers and the transition to a cleaner energy future [46] - Management expressed confidence in geothermal energy's role in the transition to a cleaner energy future, supported by favorable policy developments [45] Other Important Information - The company secured three new PPAs for its Boyan power plant in Guadeloupe and other projects in California, capturing significantly higher rates than current agreements [10] - The company has approximately 667.1millionoftotalavailableliquidityandplanstoinvest667.1 million of total available liquidity and plans to invest 355 million in the electricity segment for construction, exploration, drilling, and maintenance [29][30] Q&A Session Summary Question: Electricity generation expectations for the Electricity segment in 2025 - Management indicated that generation expectations for 2025 may see a modest increase, with potential for double-digit growth in 2026 as new projects come online [50][52] Question: CapEx guide and exploration activities - Management confirmed a doubling year-over-year of exploration and preliminary drilling activities, focusing on increasing exploration efforts to support future growth [57][58] Question: Safe harbor for geothermal projects - Management stated that they have safe harbored many projects not listed in their presentation, aiming to secure additional projects for 2029 [70][72] Question: Contribution from the New Zealand project contract - Management expects significant revenue contribution from the $210 million contract in New Zealand, with revenue spread across multiple years [73][75] Question: Energy Storage margins outlook - Management anticipates margins for the Energy Storage segment to be between 15% to 20% for the full year 2025, influenced by weather events and new projects [92][93] Question: MOU with SLB for geothermal assets - Management highlighted the importance of the MOU with SLB for developing geothermal projects, focusing on addressing technology challenges in Enhanced Geothermal Systems (EGS) [99][101]