ORA - Earnings call transcript Q4 2021 | Ormat Technologies, Inc.

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Operator

Good morning, and welcome to the Ormat Technologies Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Sam Cohen with Alpha IR Group. ahead. go Please

Sam Cohen

and Hosting Executive operator. Lavi, today Doron ESG are President, Thank Assaf the Ginzburg, Chief Planning and Relations Officer; of Smadar Chief Blachar, Head you, Investor call supporting. Financial Vice Officer;

generally of management's statements Before Litigation company's results objectives to information and may forward-looking a may during the the These you relate and of as XXXX. as plans, projected provided that results estimates, expectations, future result and uncertainties. in to would operations Reform differ forecasts certain future beginning, Private statements are about this defined projections, those and relating are materially future or like events Actual we forward-looking expectations remind current for that to contain trends. based from on Act estimates risks current call Securities and the projections forward-looking

such a XX-Q SEC. as Technologies in Ormat factors discussion uncertainties, quarterly For on risk on and of please with see the described are XX-K filed reports report risks annual and Form that Form

addition, night in statements Because should well not financial considered GAAP. will financial posted adjusted these presenting issued company as information for such be the management in the slides last forth present Reconciliations with set with the press and website. was the as in that during is to prepared measures they measures GAAP, directly as isolation measures EBITDA. the calculated call, on most such non-GAAP the reasonings in release comparable In GAAP accordance are not accordance in the from

today's the Relations Investor of Doron over to on Doron, turn yours. who call this company's on at presentation said, the found to Slide that is tab. that will remind I management, accessed ormat.com under would on a the With X over to website I Before begin presentation. call call be now turn Blachar, is slide accompanying presentation may the that like everyone the link call I'd to all like the

Doron Blachar

include expanding segment a electricity for thank by today. expansion total of revenues Good new successfully by we power PV activities exploration that our energy This of and year, to emission-free X result remain our demonstrated growth this finish by higher continuing late to plans with EPS, development, the adjusted to the our the continue translated acceleration the we number megawatts. was solid confident operating of our a of campaigns. This adjusted the the our upon foundation performance solid and build drilling we rate storage to EBITDA XXXX. our XXX of for US, Thank you, record completing projects income, end increase operating of a that plants, with records, support and In assets geothermal-acquired integrating quarterly quarter of market in believe in higher efforts XX joining number and in while electricity by impact and of morning, and the adjusted demand electricity development much our commission and geothermal the us momentum. everyone, that storage will XXXX recent emission, navigating the geothermal year-over-year achieved California Sam. are to increase US gigawatt quarter We solar portfolio construction. This in caused to fourth and solar high-capacity the revenue, drove storage towards record of of growth amount a Nevada, in Both in a XXXX. our COVID-XX, geothermal demand encouraged resource. see product this storage you capacity result to prepared We massive PPA we marked And our for we grow The fourth has long-term recognition will was prices. and in total reach energy annual encouraging the including importance supported growing we geothermal which in CPUC side estimate the year, and to the of into mainly period. the energy. accelerated and encouraging that and recognize employ new disruption a California, we which on quarter intermediate for of portfolio. growth portfolio and plan expect the adopt revenue geothermal in combined and power, end in portfolio segment EBITDA total million increases new We will the run than business, are of on X.X $XXX generation the more an to decision Notably,

with expect trajectory plants forward the growth power commissioning and beyond. as established in We to of new continue XXXX move we this

further plans. We future call will operations March give before our plans to on details our future I on turn Day the over our growth and updates to planned will on provide more Investor at X. review results the being I financial Assaf

Assaf?

Assaf Ginzburg

Thank you, Doron.

start highlights me Let on X. of review financial Slide my our

the For of and the pandemic, versus EBITDA, an operating quarterly revenue, marked adjusted since prior income the time improvement periods. first beginning our

of XXXX, in and revenue EBITDA fourth prior the X% X.X% approximately in For quarter versus adjusted in Ormat reported EPS X.X% an as period. well adjusted improvement increase total as

reduction and EBITDA mostly segment revenues in X.X% XXXX, Adjusted as the year full product down a the total result was of EPS were adjusted contribution. the XX%, down For decreased X%.

year the McGinness Olkaria the and shutdown partially the driving challenges from expansion the in from some backlog approximately in new Valley Beowawe XXXX. in in by the segment, to continuing in now decline full quarter the year-over-year Bouillante revenue of contracts. declined full Dixie plant; revenues signing of the Breaking X. total Slide and experienced recovery revenue plant in challenges the the segment in resource delay plant Product This Kenya temporary growth revenues were Quarterly [indiscernible] we power of operations. the COVID. acquired Hills is XX.X% plant. recovery revenue down which offset as and of resulting Power representing and to to Puna Due our X.X% expected expansions Guadalupe, slowness was supported increase In increase and in Moving This XX%. electricity revenues X% was declined newly XX%, contribution year the the the power full back power

from In material and impacts global the [indiscernible] PGA energy related fourth the results facilities, segment, from response quarter, demand increased the the energy ongoing in for raw the additional million the Viridity acquisition. In costs, and contribution driven revenue diminishing and of year-over-year $X.X Texas. partially of rising costs by year. offsetting Vallecito partially by XX% inherited segment results crisis onetime mainly the grew transportation storage the In approximately offset addition, in higher a to prices was February The pandemic in addition of quarter increase markets revenues for revenues revenue year-over-year. the storage the XX% activity

volume materials segment, negatively cost cost of combined Let's fourth year the and Slide by gross The a In caused and quarter. lower was margin the thus in segment margin move to and Guadalupe. previously fixed loss due marine for challenges by X. and to [indiscernible] product margins lower rising impacted raw national in both mentioned electricity transportation. gross the Primarily full decreased leverage portfolio with in

by it power XX% prices as to of full to the well gross PGA the expansion the This margin onetime our XXXX, revenues Texas the increased margin storage year increase Energy prices for market. to the related increased XXXX, For fourth in in the was XX.X%. and gross segment in as Storage in driven quarter segment power

drivers year in are the Turning generated continue main now slide. Reconciliation year of appendix full segment X. EBITDA the $XX.X profitability. to storage provided million EBITDA and be quarter. the Slide total EBITDA to and electricity adjusted adjusted of the full The million, The segment company of $X.X in a XXXX EBITDA XX% including approximately the reported of fourth adjusted in the

Turning to Slide X.

XXXX, from $XX including For million year we term raised the approximately in proceeds $XXX green and bank the full loan. bank million from proceeds term $XXX net million successfully aggregate loans

Our year the net as Cash December to ability balance of our priorities XX and including of debt cash $XXX equivalents, and end dividends. use the trailing business, return the debt The of of capital our of our in slight form billion. the investing were to serving $X.X XX continue million. and was shareholders to just over in back for securities months our of illustrate the cash marketable as breakdown cash

was on was company bear of interest Slide presented short-term Our of net billion, include average The as appendix. for XX The year. our the debt X.X% is the at and fixed long-term XXXX that beginning XX of at the cost December $X.X in The majority end debt deferred debt of versus X.X% schedule rates. loans the financing payment of costs. of the

$XX have interest. limited million interest exposure our and rates to of variable per loans only We rising

capital and credit To growth, the investment approximately of growth in of to now $XXX will The Moving couple significant in require have facility. robust both storage fund electricity segment Slide global the a next cash years. our we this million XX. over

approximately CapEx ample expected with on expenditure future access for growth the additional million capital as detailed liquidity is capital total from perspective Slide and in to to excellent well Ormat appendix. the Our initiatives. receivable, $XX.X reduced January amounts KPLC the that positioned Overall, XX capital includes fund XXXX additional of were a February $XXX year. the from overdue between the and latest international the our are significantly $XX.X payments With accounts of And million to regards to at million. payments we of end by made encouraged

quarterly the due of experiencing XX, some company's dividends the of situation On dividend delays in paid X, the Board investees on payments, On be as election XXXX. a per XX, to country. be of we is said stabilized. to day the in Honduras, on stockholders February the are XXXX, recent dividend policy. will Having share Directors XXXX, payment $X.XX declared, to March believe authorized the hand, close that, of record are will business of and in other once the believe approved pursuant March paid we The overdue the we on company's political which

dividend company X In pay each next to addition, $X.XX expects a in quarters. share per quarterly of the Doron? of the

Doron Blachar

Thank you, Assaf.

Turning to Slide a look XX our at operating portfolio. for

power by power and recent integration of Puna year, to acquired the plants year. to X% is the compared This increased recovery assets. last For our increase newly due full mainly our enhancements, in generation

the with and of year, in average rate an XXXX. For X.X%, $XX hour segment both revenues XXXX increased electricity megawatt our of approximately per

reached that Slide XX November XX plant volcano. As to able years in the the at been operations resumed stabilize power XXXX, XX, have Puna And X.X disruption it the of time, megawatt megawatts. noted Kilauea since after we capacity. In XXXX, approximately on

year-end. linked the we the rate is for performance by avoided oil As in for therefore, of a the currently, both improve XXXX, increase In utility to energy XX the first benefiting further rising and to are new Puna you our from the megawatts and expect plan existing drill to the prices. XXXX local we and know, And one cost. one generation

of which a to some is and discuss lower in full the a $X power same a XXX plants I power in the XX. XXXX on megawatts challenges year me in of in start million we of million of XXXX. Let reservoir, Slide performance caused to the approximately gross fourth one Kenya. due the experienced reduction Currently, will plant our with few known generating approximately in compared the approximately $XX quarter of XXXX in period profit the Olkaria

the performance to plant efficiency We of improve increase wealthy equipment. are the power the and working

shutdown and plant the expect partial results approximately limited Guadeloupe, in to second XXXX. will gradually capacity, half injection by In due these scaling of of plant the XXX the the the that power experienced megawatts end power to of We XXX actions will successful we during raise year. and of the the Bouillante increase

result our The saw same for gross back to the the and full the trajectory to period XXXX issue, in with the disruption. we profit of the to reduced of by we compared this results year XXXX. expect normal in project pull $X and $X approximately XXXX to operational line quarter is back now million million in a As prior fourth operations,

to we XX. acquisition closed July, Terra-Gen the In of Slide Turning assets. accretive

capacity over the acquisition As are its acquired Valley net already a greenfield Valley the approximately control development process portfolio, to the Dixie now the of with double a ago, plant of Beowawe, Dixie of reminder, asset, XX to have power enhancing XXXX. just transmission an And X we in maximum this and adjacent our months end We a underutilized XX.X total capacity along megawatts. added generation in line. by capacity and we of the to its assets megawatts plan

time for last XX backlog. We compared we segment our Slide believe to update XXXX. increase XXXX same to inflex to on the revenues XX% a which product Moving in us enable the see an year, versus will

are continued globally, potential will We encouraged that this improve. confident geothermal power, are reflect large demand for globally the and the that pipeline are we resolved also once by significantly segment of obstacles projects COVID-related

of to XX. consolidated develop Moving storage energy important part continues segment results. our into an to The Slide

an XX% in saw natural increase quarter, for a storage segment. as noticeable region to facilities revenue, This the energy due as our improvement of up rising in we were PGM well increase year-over-year received which Part higher was prices. margin related gas in the operating to the rates

our for have are We increased releasing and projects pipeline construction planned. as new

develop segment, margins of continue of approximately we in XXXX to plan projects prices and we $XX to recently that facilities in this California. project revenue will to in storage be generate XX% annual in XXX today's $X are online to greater an million XX-megawatt an in we XX%. evidenced revenues approximately of expect and bring hour new XXXX construction As EBITDA expected approximately our as The released build with million that we the of megawatt plan to magnitude

to XXXX The away targets. of renewable set US industry to change XX. beneficial including United and to ambitious governments a global made climate reach globally. those Moving the an to the in legislationary the reduce States warming support commitment and conference Slide Glasgow brought energy target

tax the closely ITC. [indiscernible] from part storage as approval receive a its The in XXXX. credits includes watching are for eligible the option ITC TPC hopefully includes bill also extension, and We and to

is and XXXX. the We requiring of of which power In getting electric XXXX, the procure gigawatt power that are acknowledgment this issued is emission are to X service CPUC. entities [indiscernible], encouraged the X mainly we independent the demand support load by geothermal. by great high-capacity We CPUC rulings from

of role. megawatts XX,XXX plan, the CPUC and California preferred X,XXX and energy advantage system of additional the storage health weather battery recently, unlocks a needs We tailwinds nearly extension XXXX us in megawatts independent negotiate for build Just an importance as a enabling new XXXX. demonstrate recent of future. includes its geothermal higher PPAs capacity believe geothermal planning X,XXX which with plays issued XXXX for regulatory pushes geothermal Geothermal target the these zero-emission XXXX. by the the megawatts in to new beyond strategic value illuminates This procurement by also and This source, renewable in to rates.

XXXX to by hour us portfolio battery of solar displayed year-end conducted increase storage reach energy Moving by our subject, total across of and ability X enhance XXX any and Slide our capabilities to and to will and and XX. XX XXXX. expected portfolio supply permitting than growth XX% XX we the supports The our XX comprising XXX course, and XX end challenges. increase more XXXX XXXX our is which total buildup of plan, megawatt our In PV to we an Slide robust with XXXX. to portfolio, additional overcome plan to XX a to additions by versus XXXX XXX the to XXX between currently megawatts projects XXX growth chain storage projects portfolio of and the our megawatts majority geothermal our current growth underway megawatt These enable plans. XXX by

Beowawe we can few names, earlier. including a added I the repowering see, you mentioned As

added a few our a hybrid addition also geothermal for as project. We PV solar

project track setting In that Dixie our addition, for construction. we circuits on temporarily recent following the aside an decision are with injunction X Meadows

Moving to and Slide XX XX.

second demonstrates growth started construction. energy storage energy The XX facilities from the storage plan our layer segment. crop the that have of Slide

projects with and hour new released megawatt New total were the XXX a megawatts, in of XXX X As can see California from you list, for Jersey. construction in

The will see subject obviously, development. different other in XXXX in interconnection require the should to included an stages of of pipeline growth the are The targets that justification. us economic all release agreement, are projects execution our help

at storage XX and pipeline stands to on As full guidance. X.X hour with includes gigawatt potential of Slide Texas turn X.X currently discussion a gigawatt see Please Slide you in our our California, XXXX named mainly Jersey. XX, projects, for and energy can New year XX

revenues with between total XX% by million, revenue expect electricity compared of We $XXX to XX% increase to segment XXXX. year-over-year $XXX increase million, and XXX to between XXX an and approximately

between expected to revenue the onetime be approximately revenues an and XX to revenue revenue XX% XX% XXXX when million related of in product the storage $XX expect segment Texas XXXX. freeze the and million We between are energy XX excluding the interest in increase $XX with of and million, $X.X

increase adjusted to and and to We between $XXX expect EBITDA XXX XX% be million.

adjusted XX. We interest our to guidance EBITDA approximately a to proceeds. minority remarks $X expect attributable million. be annual EBITDA million Adjusted Slide XXXX insurance includes on end prepared $XX for I'll

performance prices concludes meaningful and will In the adjusted assets, believe our impacted we developed, roughly This pipeline in external are advantages our Operator? structure, and of market we believe and we XX lower exploration XX% X.X of EBITDA. step cost that our will buildup our significant target the supporting see our XXXX of buildup beyond remarks. the increase mentioned, and segment. revenue this solar issues tailwinds portfolio. solar trajectory, to significant that prepared have the our encouraged the in value Ormat and large strong result projects product position and a than our in we storage primarily as we in actively capacity on XXXX. mark important we As With and XXXX. projects XXXX, expansion, support focused year, underway, more this activity In XXXX expect strategy, overcoming our increased shareholder the geothermal by X XXXX the of strongly gigawatt expanding fiscal regulatory was in PPA success some the geothermal meaningful XXXX an beyond. continue process expect financial growth profitable by of will We our segment, growth in to we driving in towards move a our have we growth are deliver and our we in

Operator

Instructions]. [Operator

Noah question Oppenheimer. to goes with first Kaye Our

can ahead. You go

Noah Kaye

around on comment start the guess pricing Can to looking like PPAs to couple you environment? XXXX. you've I development geothermal inflationary pricing, PPA I of I'd energy we're seeing the some the got on broadly. And double prices project prices and where expiring order capacity and and with upward wanted environment. pressures to you're procurement in CPUC ask a considering you Beowawe the the

prices do out where penciling in Just PPA this you may geothermal for think new environment? be

Doron Blachar

question. for the Thanks

and decline the say a we've of in those to if PPAs. with XXXX, reduce CapEx is a PPA and reduce Yet you on able California what be had XXXX project are the out prices getting cost we PPA. After to were till be $XX those RFPs we I signed on that that and years a back But we were from in O&M still So but continuous that if XXXX, what ones we've getting think seen above. and seen exploration costs. to prices that are will sign, finally what we SCPPA seen the remember, it coming because level I were XXXX levels. We would develop portfolio in able efficient large seen we've responding back in to the to

Noah Kaye

so And encouraging. very mid-XXs. That's

on timing I are inflation kind do next question in, that you are towards profile. around of term coming for And really projects experiencing cost online? have PPAs is what And you the years? guess couple the are the COD moving the impact what so in that locked for already expect projects of the IRRs to that on

Doron Blachar

see obviously salary as seen X over and we increases we've you Look, the -- years, increases. cost said, last

increased the cost are assets. structure of development see more than that for impact developing PPA some there we the compensating that. is the pricing on on So But

into do these So some projects, online will bill better come -- from passed. to similar projects we that business. take We still is returns also benefit that need due coming grandfathering projects wasn't the the There will expect -- the the returns new that previous see projects. better we on do some to and PTCs bill for account new

Noah Kaye

But just and a the then. And since I clarify, a labor signed mentioned of Absolutely. had now seen and cost you PPAs over Doron, for we've to these inflate number mean you've for commodities projects year.

existing when for locked that environment investors projects What the So very there's should return of that pricing. get coming now new expecting already on favorable be PPA online. PPA right I the in. any are kind is those about a compression

Doron Blachar

We were for able manufacture and we to this, them. prepare

feel that mitigating process we if were get able comfortable So the we with we're the that said, the take permit. -- confident project since the Dixie plans that construction starting BLM now, and with to we've are the we done very we very we

this. already we've amount of significant So manufactured

actual to impact, expect all. it material So don't be the at we

Noah Kaye

just one just The million, growth guide, And of more. Okay. project a growth there's in back. ton the happening here. the CapEx mean $XXX I

my So just about managing leverage meantime. question to real the considerations is in

you as you're, mentioned, think X.Xx. I

If At maybe little CapEx, cash the midpoint do inch generation, Where that target? terms an net guidance you? Xx. a maintaining of just leverage comfortable bit level in flow consideration for operating point a your take that is continues minus debt to to under at you you up feel probably of leverage issuer what

Doron Blachar

and I Assaf will will follow. start

years we've resources done good develop effort more if most we will very more had than I so our we going year, pandemic segments. think allocate significant the about CapEx. that last pushed And year million. internally a the X the is starting, forward. to $XXX growth example million impact increased and CapEx this that we is are we than saw a can we CapEx year, of we $XXX that fact And the have million integrated between vertically have $XXX have our this we of the ago, when different in next And

Assaf Ginzburg

almost yes, Noah, the million $XXX level will you year expect XX%. CapEx, of can the billion go And $X.X do that debt. net midpoint only see year see, up. So also as can with with go up guidance, we we as net ended our the of But our EBITDA by of you with next debt

net cash hand. issue you where we we on look also we don't significantly available facilities And net that remind level, next at keep that any of will not you credit is be we to of are. expected from this at year, going and when year this have do leverage operate. So the to think different I

that XX% level a leverage. very an of really it. this And manage to know, from easy it's return. we has you as of asset EBITDA is fixed feel that's our So And with generated why comfortable

Operator

Our Dumoulin-Smith Bank next from America. question goes of to Julien

Anya Weaving

in Julien. stepping Anya for actually is This

I your rate I maybe because just able could were guidance to the for if maintain was more the the EBITDA some $XXX detail to So number guess, a first, because $XXX you bridge year-end XXXX run us million impact? on run rate million And $XXX million wondering give you year-end at despite guidance. from

course my I do is pieces And Or question are largely So guess the over the other trajectory there how moving that of is, earnings transient see output? by issues year? outages you that reduced there? XXXX pressure driven as any such

Doron Blachar

is question. Ormat. great Aanya, is different for There no XXXX that a doubt year

new We will time, operated actually showing for have also same either margins, come expect year online year, as be of both the the we And of next $XXX electricity projects, mentioned much the next the majority you the we in year. do in that above impact And end they're for the X for shutdowns segments, but many and revenue. enhance that enjoy months Dixie at the and or benefits will that's to With going projects additional that are have XXXX said, to increase segment. higher XXXX, And remember next those will time, rate do Also, the the when the only very on end bring you the at electricity some product project, full year of will as go or million improvements to of side, not for revenue assets have the take operate from same them those towards to for online, in we run the online. year. why the of to call. the and the be we of expect million, all XXXX to you in of on $XX the order some Beowawe shutdowns assets bring anticipate therefore, therefore, can the that level. storage, as stabilize see at we product And XX projects, that good come please of year. that When being men and XX you we

Anya Weaving

more maybe a as if And to Great. on Olkaria status. you ask wanted Okay. some detail just could follow-up, provide I

of pace the And EBITDA? specifically, some impact Just in see does how by ramp that more you then And of how do issues year-end? the there. the production XXXX

Assaf Ginzburg

in I'll The start year. one-time second event. and rest bring up. continue Olkaria, It's with of will QX In This the the not through start the part. ramp-up a will capacity

So this is a sometime through -- of of gradual QX end into starting the year. in the interest

out them. regarding The the Kenya. from other really it slow. going that part a Olkaria They team with the from back discussions the President other is debt We collection, side. we reach We negotiating the force PPA There regarding This isn't task in of discussed us something the to is did once. extremely on responded. didn't hear

the that get the long-term we and benefit in of There we in with I the will it's year, would is think win-win similar in where some to second situation half it's a PPA enjoy there. benefits August. process, I know with Hawaii Kenya So in done a We we've to can believe. something what they elections enjoy over are them that

that, it unless the until after delayed elections. So just believe well before happens we something be will

Operator

[Operator There are no any for the this There questions back closing I'll questions time, over registered further registered team at turn Instructions]. are management at to remarks. the this time. further conference so no

Doron Blachar

Thank you.

of than saw for you significant our thank meaningful in I guidance is buildup million with here So CapEx CapEx revenues and going would investment parallel XXXX, you very to very our be and the a more another like of XXXX $XXX increase to all of strong support. as a EBITDA. was In to here.

regulatory and PPAs coming in zoom. and in the finally, XX. to CapEx on we to basically enjoy plan all York and that see all going encouraged Analyst regulations like you the the we to to of not, you And you get to from and the be and from It's you our if exploration PPAs the do these sign the tailwind to We new expect with person of we are able through exploration very CapEx that conference. and all. California on the be do, the to some up remind that hybrid of benefit March a we projects. in person, I'd Day New Happy in combination Thank of

Operator

XXXX Thank for That Technologies Call. QX concludes today's participation. you Ormat your Earnings

now can disconnect your You lines.

Ormat (ORA) 24 Feb 222021 Q4 Earnings call transcript