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

Financial Data and Key Metrics Changes - Total revenues for 2024 were $879.7 million, marking growth of 6.1% year over year, while revenue for the fourth quarter was$ 230.7 million, down 4.4% year over year [13][14] - Adjusted EBITDA for the full year 2024 was $550.5 million, an increase of 14.3% compared to 2023, with fourth quarter adjusted EBITDA results at$ 145.5 million, an increase of 4.6% year over year [16][17] - Net income attributable to stockholders for the full year 2024 was $123.7 million or$ 2.04 per diluted share, compared to $124.4 million or$ 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 $180.1 million, while for the full year, electricity revenue increased by 5.3% to$ 702.3 million [18][19] - Product segment revenue declined by 21.4% to $39.6 million during the fourth quarter, but grew by 4.4% to$ 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 $37.7 million for the full year [19] Market Data and Key Metrics Changes - The gross margin for the Electricity segment was 34.9% in the fourth quarter and 34.6% for the full year, impacted by curtailments in the U.S. and Kenya [20] - Energy Storage segment reported gross margin of 9.5% and 10.9% during the fourth quarter and full year respectively, marking significant improvement [22] Company Strategy and Development Direction - The company aims to achieve a capacity CAGR of 14% to 16%, primarily driven by strong U.S. market demand for base load electricity [39] - The company is focusing on capturing demand through its Electricity and Storage segments, with plans to invest approximately$ 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 $10 million to$ 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 $667.1 million of total available liquidity and plans to invest$ 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]