ORA - Earnings call transcript Q2 2022 | Ormat Technologies, Inc.

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Operator

Good morning and welcome to the Ormat Technologies Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to your host, Sam Cohen, with Alpha IR. Please go ahead.

Sam Cohen

Thank you, operator. Reporting. Doron and Executive of Smadar and Planning are Chief Assi Investor today ESG Officer; Financial Lavi, & the Blachar, Officer; Chief Ginzburg, Relations Hosting Vice President

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

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

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

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

Doron Blachar

quarter, we us recent for against and that from momentum advancement continued Day. year, Sam the second our In everyone. the the Thank the growth beginning milestones today. good initiatives the morning Thank solid you in Investor of positive out strategic and joining you, by demonstrated laid we and

by driven and performance Electricity encouraged growing supported strong robust by in from top EBITDA segment adjusted are the Energy both growth Storage line by and company’s our the We further captured our segment.

milestone to financial of makes with the attractiveness end portfolio position the Wister geothermal grid. healthy validate the the power of of quarter X commercial operating Tungsten This Tierra markets are and we added operational X interconnection our significant and additional we CDX, quarter, we achievements capabilities, first and commenced megawatts projects addition through strong the solar to operation allow storage XX to are that Since be CDX the optimizing the in. to our sold the the megawatts our With the and power and facility. the Buena respect plants plants, of Steamboat

in which the majority growing years forecast. at our for our We consistent X most in project with strong large plant, execution and PPA for next XXX the California megawatts. in PPAs We Nevada to These North are as project challenges Analyst face of up chain-related the two Valley extremely and U.S.-based our market, renewed and well the This renewals. Nevada rates, pleased deliver show the signed successfully of over new supply Day U.S. attractive of constraints. portfolio operational in as geothermal reflect labor another contract, Nevada PPAs totaling long-term signed the demand we geothermal to and

execute financial will green via refinance flexibility the notes. further million issuance enhance to debt strong attractive convertible growth higher-cost to our Finally, position of strategy. our healthy capital partially and and $XXX of look used enabled us long-term coupon be rate Proceeds our to an financial raise at as of we X.X%

Now the turn review will Assi results. the updates I over to call further operation before to I our financial plans, on future and provide

Assi?

Assi Ginzburg

you, Thank Doron.

$XXX.X my substantial the across Energy Let XX.X% review was for start year-over-year, up X. financial of me and million, growth our Total Electricity, highlights Product on reflecting Storage quarter second Slide segments. revenue

consolidated XXXX from in within lower the to $XX or diluted margin $XX.X the U.S. the a in basis, same quarter attributed X.X% gross share compared to dollar On net second X.X% XXXX due $X.X The a the versus company’s down was to diluted income after-tax per to gross was share, time our shekel. $X.XX adjusted last segment. stockholders million Net in or was decrease year. $XX.X million XX.X% Second $X.XX of resulted quarter. last the stronger year. diluted margin same net profit million $XX.X income XX.X%, attributed a income per Israeli was $X.XX Product and and million to of from net This due This an company’s quarter adjusted down net mainly the of a quarter million. mainly were margin gross gross the slightly down in to a versus to EPS currency-related in with diluted income or attributed stockholder stockholders per income share loss loss attributed

compared of quarter quarter the our last a This second the Excluding record now largely as these currency-related $X.XX $XX.X G&A $XXX.X Electricity a lower our expenses. months contribution been represents would and second was year. The and our of stronger in million format second per issues, equal in share. within have result million. increased to driven adjusted reduction EBITDA legal increase by costs figure of million EPS quarter Adjusted XX.X% segment trailing to XX is in $XXX.X EBITDA

new Electricity X Dixie plant. fire and of $XXX.X increased the gained which higher oil million, to power of revenue from operation Heber slightly and operation work impact the at level, down Puna, by These plant in contributions assets offset at supported contribution and revenue benefited Moving the segment elevated Breaking X. the increased prices. at to has Terra-Gen from segment rates maintenance XX.X% our the were by power the acquisition, Valley through X revenue to Tungsten Slide expansion

shutdown, Heber through X, year of For anticipate revenue by interruption our the for business impacted income we the recovering be forward lost majority where insurance. going the the will

we of In Heber in April of quarter, $X million million of discuss recorded beginning later. X.X% a represents XXXX, of Doron X. This prolonged by maintenance total related proceeds Valley, increased to as the impacted a quarter. Dixie that the were and revenue will consolidated segment, at result second BI the $X.X which XX% $XX.X The negatively now Product revenue revenue started million work to quarter. insurance the revenue sales XX% and our in increased – XXXX. This increased is is I’m driven meaningful segment PJM, which of by current time Stryker million higher last in due when at increase asset revenue the sorry, Energy to revenues storage mainly year. Storage same the of year-over-year primarily increase the recognition $X.X by to million XX%, additional quarter to our rates second Plumsted higher the versus compared In $X.X

higher Storage contracts X, year. X.X% expect Product significantly gross transportation signed segment during margin the decreased points was Energy absorb Moving had quarter segment, reported QX, Once these XX the quarter the in material contracts margin quarter for impacted gross achieve last of by are year. the Gross costs. to In to basis last marine the the XXXX XX% completed rapid increase positively we declining increase compared to assets. was in in the margins. XX% for in gross of Electricity had by raw a our The compared PJM segment for second rates we quarter to to when availability year. the better of the XX.X%, and last gross X% margin storage was that same margin and to to impacted Slide margin same time compared The

segment X, $X.X generated the Electricity representing of almost reported less appendix and The are and in adjusted EBITDA slide. the XX% adjusted adjusted X% EBITDA Looking Reconciliation Product the Energy segment Slide segment adjusted EBITDA of at provided EBITDA. of X% total EBITDA than the second million, total quarter. generated of in Storage

Moving to X. Slide

equivalents carried XXX,XXX keep ability intend reduce bond entered June cash down XXXX. to X.X%. our proceeds the repay a return an as we restricted in cash also allocate billion. to debt reinvest and projects million issuance net to Proceeds we equivalent And part $XXX principal dividends of at that approximately Our of we XXXX, strong all the we converted conversion, a of growth excess transaction, attractive the of amount the X a connection the amount part finance operation our of the approximately very notes service December event was of generated rate equivalents the objectives. in June all the as of price and senior bond, from and liquidity bond further loan debts and share million buyback, series eligible proceeds accordance price. rate. bank to were as used In also to compared that approximately June, Ormat’s to of and in the payments raised new make Cash To with XX, high million of strength cash XXXX, for in the of X $X.X from cash conversion of price. to of green our intended $XXX look in offering convertible framework. transaction. required capital unsecured convertible and into financial be transaction shareholders in break time to term dilution will attractive as This enhance and cash buyback interest future shares and call XX, realize at illustrating net the the we the call at dilution, million the to maintain. The the cash was we refinance long-term flexibility capped share months, green further offset the to our our of for reduce slide company’s our The and/or was our used XX, cash with the business, of outstanding capped $XXX.X and/or finance We to use that with exceed the form a the profile from $XX

deferred to nature, of XX for appendix. the Our was global growth of help is that average deploy net it total billion, should on Slide of environment. in presented June note think was our our payment cost fixed position rate to nearly financing this end X%. at to prepare company we multiyear costs, rising the We XXXX, debt and to plan, the XX, schedule The Ormat important capital quarter are rate approximately of debt debt down as $X.X competitively liabilities the its all interest fund as which of is in in

XXXX, first Moving nearly we our growth. advance to In CapEx invested Slide in the to half million XX. of $XXX

and We have available of million $XXX credit. of cash lines

share of approved over the XXXX. XXXX, That and to the capital future the of Slide XX, of million payable of payment ample $X.XX on capital turn last includes the perspective X, from to quarters and appendix. Board is authorized the issued my concludes to well Ormat on now to with shares stock quarterly total Our dividend a excellent in for $XXX financial like as would Overall, capital of expected growth liquidity the detailed very developments. to rates. resource outstanding Directors overview. of XX, August fund expenditures, holders On attractive company on all of our recent X call declared, August additional at some and of per capital discuss common Doron I XXXX, initiatives XXXX approximately positioned to access August a XX

Doron Blachar

Assi. you, Thank

on we Slide to XX, to that inclusion fire of see a forward. positively was portfolio, partially offset we look Dixie Beowawe going Slide to Electricity mentioned. as of This by plant. the Valley megawatts supported portfolio, by And quarter, the generation our added X the already the will contribute for was Heber generation segment Turning and growth this you the which power operating XX at generation can XX

expect global positively noted Puna Slide is by to quarter. continue in level. geothermal higher our continue we dynamic And and XX this to power an XX, running the prices the second energy third the we on impacted As currently, in to and be XX-megawatt operating quarter, experienced approximate prices at plant PPA

enable plans term, on in and are us Hawaii longer we market are PPA. our in current focused the amending the address to new currently our to long-term conditions power Over the repowering HELCO agreement plant, still with

capacity. campaign in are to our quarter, Slide which Olkaria our XX, on increase will Kenya, in Turning drilling track third enable we begin to plant to during the us further first,

repowering respect the are optimizing with Second, which currently through be to X, we completed work, is second contract of Heber expected XXXX. to quarter in the

we operations it steam failure, in a Next, to full turbine But the forward Valley The scheduled was the returned a and higher while maintenance, significantly. scheduled impacted to at we unplanned for plant year than experienced capacity our generator and The completed in plant the Valley performing shutdown, thus service Dixie were able and has a due due to at already power QX. before. maintenance shutdown not pull QX. shutdown Dixie elected to earlier is was

update Turning $XX an to including a last the to previously. Slide saw on approximately million as for XX% Philippines, the during were increase to able we contracts discussed quarter, contract totaling We the quarter. our XX backlog, compared a in we sizable sign

Storage at Moving energy an quarter, PJM market. delivered segment. for to Energy supported XX The segment Energy prices on another Slide Storage strong elevating update the by

of Tierra start we Buena recent quarter, facility. the Next the from expect to operation also benefiting

Moving to XX and Slides XX.

portfolio year X.X growth megawatts electricity Energy current XXX-megawatt-hour of storage Storage any approximately buildup hybrid assumption the buildup XXX plan, and to expected XXX hour to we to to projects and additions end This generation with portfolio or we which Tungsten and overcome us a Wister XXXX the megawatt is the permitting and currently XXXX. solar, of As growth increase XXX majority enhance In chain and can we our our XXX XXXX our XX-megawatt, robust total increase solar These between is XXX additional and the a to solar gigawatts. year of communicated, CDX, comprised plan display PV will projects enable of operation our commercial underway challenges. goals. by reach have – mainly PV supply total development. high XX XX following our Slides geothermal megawatts, to supports geothermal in growth comprise that portfolio Steamboat X hybrid X which a XXX by and portfolio, Tungsten’s is an X, significant our

Tungsten we Dixie during North track We positive are which respect solar, solar, ninth all our XX-megawatt first expect in the Valley With come we to project, North a to Valley, received recently with quarter XXXX. solar Brady of online the on of from ruling Meadows circuit.

collaboratively the measures whether and have protect currently to Valley and with are different together the are ability completion. also working to additional our Dixie identify work mitigation in project agencies are We to Toad necessary to the moved confident

operating. the While we process, through plant full has on online power halt construction focus this to to go temporarily to Ormat allow decided efforts and bring these

Moving XX. to Slides XX and

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

the a XX-megawatt-hour currently operation of X-megawatt, megawatts construction we the in Following of or Tierra XXX projects capacity Buena, recent with X with have development XXX the and continue combined this under segment megawatt-hour.

As delays we commercial our track but operation with targets. see, there are dates, growth XXXX on you in can slight are

our to of us that for are turn projects targets the growth included in discussion development. Please help The with other should our hit various stages pipeline guidance. Slide XXXX XX of a XXXX

million. million We expect Electricity between million and revenue $XXX $XXX and with $XXX $XXX between revenues range segment to total million,

$XX to between Storage million. for to expected Energy $XX be million revenue is and between revenues $XX Product segment expect $XX million Guidance We million.

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

to expect approximately be annual We minority EBITDA adjusted interests $XX attributable million. to

operating a XXXX As our insurance guidance June solid on $X.X six XX. adjusted noted in were already progress quarter, Slide by end in EBITDA long-term million will business and This includes demonstrated $XX was proceeds, I momentum, of against interruption financial the strong ended prepared previous which recorded million XXXX. XX, continued in months goals. our remarks the for quarter with

is both supported related passed, in the standalone including efficient revenue Reduction growth. Inflation a and to while solar material tax the of experiencing in Act, the increasing for to that remain potential shortages, additional further U.S., if ability delivering focused storage us This recently investment on more including benefit the accelerating supply enable While enjoy will in momentum credit tax and and batteries capacity and and storage production are markets proposed credit increase our value panels, would chain by bottom disruptions our way. electricity expansion segments realize to line our facilities, tax global meaningful challenges our we raw

to trying times our revenue We as are growth by ability these well as expanded into profitability. in resilience Ormat’s encouraged turn

This differentiation model developers. energy with storage development, our to integrated remarks. long-term approximately numerous by towards and significant provides generating projects gigawatts confident and deliver annual run X.X to combined end million geothermal, portfolio an $XXX concludes under solar prepared of other growing on EBITDA and in XXXX. XXXX we Our a many pipeline versus of basis the to increase energy our business us plans a adjusted our renewable remain With rate

call please. open Now, the I to would for questions. like Operator,

Operator

Kaye the comes with [Operator Oppenheimer. Instructions] Noah first from line of question The

You may proceed.

Noah Kaye

questions. Yes. Thanks the taking for

discussed You profile really around little this return build to at bit. on geothermal for Investor And new but I projects. want it a this here Day, subject point the it’s at

see continued have to cost parts of structure. in of We the a inflation lot

So, you of CapEx terms of is in seeing are can what you kind think that IRRs for where increases, there on per headroom additional and PPA then, comment to assuming out? penciling megawatt you inflation trends average are

Doron Blachar

Thanks for rates one on see Noah. and has that see expenses. on We Hi, up inflation hand, – the we our some operating going impact question.

X.X started Actually, have significant raw months months that a have down we previous we years, ago. few prices. years, in continuous raw over in Although invested the a prices material the going seen Electricity we a and if of look obviously, profile in And very inflation gross in if EBITDA material. the margin the the not O&M segment, projects, on that the on although at is you our reduction go have what saw few so the impact capital the to in inflation margin, you last look is up, X material increase is

or couple we the CapEx seen lower a forward, as the in last that we top are than we vertically that, years. And of bit a new have we maybe would even look similar integrated on projects’ see of be So, company. what

project alluded So, developing reduce cost of also in in that, – improving higher, something in geothermal pricing products signing parallel we to we significant – that continuously The And demand you signed. cost. that are PPA the to we projects. way pricing and increases. the that we seeing PPA alternative our one reduction order are that geothermal are and market, see continued have we the this CapEx is supports for our every continuously growing, And is and

and similar better see So, a overall, return for geothermal. we

Reduction new PTC Now tax Act And of the can probably equity these support least see the with annually. and Inflation is the will no for mechanics continuing be the need getting to us. this at utilized geothermal, much of we less extension for the credits and production They on need easier costly. transactions. – No tax draft,

So, we see strong a very momentum.

Noah Kaye

I ask give Can of what to broader Dixie the related is, increased us just operations. that certainly there. guess some generally the planning in areas bit around are. helpful your operations I to the and where extreme point And continue Are shutdown? a forward the I we generally about wanted for question guess little pretty an OpEx Very you maintenance And shutdown. a basically the this indication costs you of to at resiliency? events of pull lot see caused just Valley of weather climate

Doron Blachar

the year overall backwards Terra-Gen, in project for of this and the while due the do planning in and that did know, to is, failed what the do is Look, the the we maintenance year. of move as We period generator. generator of this entire time before to able Unfortunately, to to plant shutdown are Dixie the generator do fixing there were the on a And same just happened maintenance a QX QX. was maintenance. failure we was to Valley, had from acquired we that issue that this we you last actually

I things the the we an oil So, ongoing business another a I actually, But see we labor impact the just these think labor failure expenses. XX-years-old that and market costs, part the these of cost. And unfortunately, we to on O&M happened are on some needed part, maintenance. before mainly the is this knew manage it’s maintenance. generator generator, said But did that

Noah Kaye

in. more Yes. Maybe I will just sneak one

comment You the that the positive look may you you Governors what incrementally Can IRA. engaged some that to and there policy like is of might It highlighted development. coming out there? just looks Association or Western are be how support like in

Doron Blachar

got many pushed for projects. we California that support Nevada geothermal in both look CCA policy The utilities in and and to

re-contracting only are I the existing geothermal – think the biggest – of for we most developer the because support is new geothermal new maybe probably the not the ones. or projects

tell project. seen the a we of the to see that processes permitting also pushing from can I lot expedite Governor So, in have we California support. you

more think do he than hope faster that the the And few renewable that And for energy. in what can a the that we weather is nice that you very permitting part also the conditions had will make of company to highlight need So, to allow place past. I in. the a us decisions fact is last managing climate I will say extreme we have solution actually have be that personally these crisis to

Noah Kaye

the Thank Great. you Doron. color for

Doron Blachar

Thank you.

Operator

next The of Mr. JPMorgan. question Kaye. line comes Mark Strouse with from you, the Thank

may You proceed.

Mark Strouse

Yes. our questions. much for very Thank taking you

Just your partnerships, efficient when tax the Inflation becoming equity on Reduction are – you of portfolio on go-forward and a had potential as think a that kind of not to of the to well? needing being few should that the maybe about are a kind follow-ups contracts basis apply talking more is PTC new signed, kind for that Act, about as there we or existing

Assi Ginzburg

is This morning. Good Assi.

in looking to almost assess to order start PTC the to tax see transaction. are cash bill a final options versus enjoying the equity We a

the in Of we to, that and can but to a plenty those. sell those is new need sold the be money to according of ruling, a actually to course, company U.S., there new PTCs, makes still – Mark, they

projects new line under bottom we and can for PTC the see that’s apply construction will the enjoy loans. also if is, we try the So, and

Mark Strouse

pull the of a about am and forward IRA, ITC as XXXX Assi. looking in potentially as potential about those And Okay. kind you longer-dated opportunities of that just far goes, that talking just those the thinking think one longer-term the storage when pipeline or maybe, some about Thanks could I and kind should geothermal follow-up, more beyond, could you there visibility? the the benefiting are is this that XXXX then that and into we – as at of the maybe pipeline of,

Doron Blachar

Doron. have that It’s projects time. the constraints on the are takes permitting we main because that It’s earlier to you the not It’s probably directly projects pull are and very to related process Ormat. process interconnection that familiar it hard the

them we are of whenever to We usually ready are we can, do point but waiting for permitting connection. and

we So, environment, environment unless I local projects don’t able and to regulatory – something will forward in not change in push the interconnection regulatory permitting the be the parts.

Assi Ginzburg

it’s something provide that that on unique should is on boost our the haven’t we we seen, think it. the more storage side, I And really but storage that ITC to Mark, anticipated worth quite business. mentioning

of revenues they you our related some the lower to of gas, are so As natural ITCs. result be know, a should not as

of operating. assets are signed that, RAs to that California our have all on addition In we

we So, ITC even should see for a the enjoy will and we developments, lower CapEx future IRR. higher the

the think industry. So, is to the do we whole and something IRA to Ormat supportive very that

Mark Strouse

you. sense. Okay. Thank makes Very That helpful.

Operator

is Thank America. Please you, with go line Bank Julien ahead. Mr. from Strouse. The the of next question Smith of

Unidentified Analyst

Anya for in Julien It’s Hi here. stepping guys.

was there situation storage, if the what across if mitigate just then growth any the update For you seem I just your first chain the on It any is provide you be supply to procurement for like example, generally would unchanged But details my color here seems wondering on and also. of battery solar part, [indiscernible] shipped? on other think have It yes, needs chain this supply could and can And supply to risks So, But portfolio storage. those you there helpful shift what was most projects. provide you geothermal, were types? is maybe of question issues, how from quarter. across already wondering last be I the much changes or versus across levels an chain?

Doron Blachar

Okay. Thank you.

with of last new think quarter discussed megawatts you Ormat issue XX been and for will leading couple we issues if supply I geothermal so operating on when the that I to we and something would supply company. in and chain So, have to, The geothermal plants in alone geothermal that storage that reality I the the related how that has the this the you segments I part, drill added say of down power years. maybe we and deal start. demonstrates And is three the look chain solar fact on that into part, at are need

We vertically are integrated.

them and some We we supply with one, with see, get And on knowledge suppliers into a as you do other. able manage to have the globally. move multiple chain we experience expect are of projects, the generally to kind issue time can geothermal them, And the come. as if to we we and come

seeing On this the few batteries and of are we and challenging solar, is months. a a more small delays market, supply chain market,

– that the of most that support the are batteries, of near and can projects our and the medium-term. we already to announced, way we meet our the suppliers are projects. stock that, and We we both have And on level solar the battery a have by strategic geothermal And storage our materials, we we in the needs issues. all we the growth are buy. relevant that However, is basically there maintain able and we have in already timetables relevant that with case on are all it for mitigating that working

Unidentified Analyst

as growth to you can give geothermal on And if color a you. maybe follow-up, I some opportunity. was – Thank hoping

Indonesian strong. particularly Day, prospects you mentioned Specifically, Analyst your as at

hearing there? Anything that So, you’re an provide that on update front you any additional is then at [ph]? maybe this upside secondly, there And point? could targets see for

Doron Blachar

at answer I said very us. so will Indonesia market as to try a Your Investor part the I is growing line said very on heard. and is you we And for important not that good, as Day, least the

already of on developing we have, top that with Medco, are our partner. Sarulla We Ijen and

have additional we Tindung projects, project. Toka two where We the and of [indiscernible], own XXX%

to the quarter start in and beginning Toka Tindung of year. Wartsila year, drilling end expect to in drilling next We start of this

we development. of we mid-term PLN, with in And some but and by and they multiple the since top our a joint discussions entity. state-owned So, utility, on have. the developers plan law where on it’s standalone these that in are all are joint of the XXX% venture. Indonesian that’s we own that through PLN the them have doing On are near-term, projects, The and with operates that, projects required growth in Indonesian others not way with ventures, local

working them. closely very are We with

see of We business in and important become resource an we team dedicated a sales our have part and And growth Indonesia a plans. dedicated Indonesia. in development mid-term to the

Unidentified Analyst

you. Okay, great. Thank

Operator

[Operator closing additional back questions it time. are this pass remarks. Instructions] to left management for no team will the There at I

Doron Blachar

you Thank everyone.

you another on top our seen, both has on for have Ormat very numbers. strong adjusted As and this EBITDA quarter been line

to and the segments we the And forward. On going more buildup we half, almost invested the the projects – enjoy is Energy This and the fruits XXX Storage investing have the expect here, in first to we Geothermal a in and today time. $XXX we in million the and our are near this same. these do plan mid-term than CapEx, demonstrates from confidence that

all good a So, thank for you have day. your support and

Operator

Thank call. conference you. today’s concludes That

You lines. now your may disconnect

Ormat (ORA) 7 Aug 222022 Q2 Earnings call transcript