Q4 2019 Earnings Call
Good day and welcome doormat Technologies fourth quarter and 2019 year end conference called all participants will be in listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by zero after today's presentation will be an opportunity to ask questions.
You may press star than one on your telephone keypad to withdraw your question, please press * then two.
Please note. The event is being recorded. I'd like to turn the conference over to mister Robb think f m k investor relations, please go ahead.
Thank you operator hosting the call today or Isaac Angel chief executive officer your own president and Chief Financial Officer and Smith our lobby vice president of corporate Financial investor relations.
Before beginning we would like to remind you that the information provided during this call may contain forward-looking statements related to current expectations estimate forecasts and projections about future events forward-looking as defined in the private Securities litigation Reform Act of 1995.
These forward-looking statements generally relate to the company's plans objectives and expectations for future operations are based on Management's current estimates and projections future results or Trends wage actual future results May differ materially from those projected as a result of certain risks and uncertainties for a discussion of such risks and uncertainties. Please see risk factors as described. In fact Technology's annual report on form 10-K and quarterly reports on 10-q that are filed with the SEC in addition during the fall of the company will present non-gaap Financial measures such wage adjusted even a an adjusted net income attributable to the company stock holders.
reconciliations to the most directly comparable gaap measures and management reason
For presenting such information is set forth in the press release that was issued last night as well as in the slides that are posted on the company's website and caught these measures measures are not calculated in accordance with gaap. They should not be considered in isolation from the financial statements prepared in accordance with gaap.
Before I turn the call over to management, I would like to remind everyone that a slide presentation company. This call may be accessed on the company's website at 4 under the presentation link that's found on the investor relations tab.
With all that said I'd now like to turn the call over to Isaac Isaac the call is yours.
Thank you very much and good morning everyone. Thank you for joining us today starting with slight 5.
The fourth quarter was a strong ending to a good year for all Matt is our results exceeded the guidance for revenue and we're within our guidance for evidence. We achieved growth overcoming some significant challenges that material impacted our results in particular our power plant generation and overall Revenue group, despite the loss of production from Pune facility in Hawaii for the entire year. We are delivering Financial results with top and bottom line growth. This is strong Testament to our revenue and Geographic diversity operational efficiency, and the Professionals of our team overall our total revenues for 2019 increased 3.7% to 546 million dollars with our electricity segment revenues growing 6% to 540.3 million dollars benefiting from new facility job.
both online at the end of the
2018 as well as contributions from our acquisition of your short-term.
Deposit product segment revenues decline is expected. But our margins in this segment have normalized overall. We are well-positioned for continued success in 2020 in June forward Spooner is expected to come back online in the second half of 2020. And as we continue to benefit from incremental capacity from all projects currently under construction and enhancement.
Additionally I announced last night that I will retiring a sea of Walmart on July 1st 2020.
I do so after proudly leading or Matt for the last six years and safe in the knowledge that our board has put in place an orderly management succession plan for the more money. I will discuss shortly. I look forward to continuing to contribute to almost success following my retirement.
I'm excited that the board is appointed to Ron or Matt. CFO is my successor the wrong joint or Matt one year before me and has played a key role in orchestrating wage and executing the operational transformation of our company.
Their own offers a boat during offers both deep understanding of all aspects of business combined with strategic vision of the company's future over the past seven years the dog, he was proved himself as a talented and thoughtful leader that will demonstrate the ability to drive mergers and acquisition and operational excellence. I can think of no better choice to succeed mean reading or math and I look forward to supporting your own any steam, you know, Mass continuous growth and success.
We do our own transitioning to the cro. We are also pleased to welcome a sub Ginsburg will join our Mark is our new Chief Financial Officer in May serves as an Executive Vice President of the u.s. Holdings in Chief Financial Officer officer of the lake Logistics to u.s. Listed companies back during his more than 15 years with delek as he developed an in-depth understanding of Enterprise with a business and operation that has similarities to our map.
Experience in corporate finance financial planning tax and accounting and investor relations will be invaluable to our Mac finally as part of our succession planning. I will remain employed at Alma throughout December 31st, 2020 in order to support the management team for the more I have accepted with gratitude towards invitation to join it as a director now, I will turn the call over to the wrong for revealed Financial results before I provide an update on our operation the wrong place.
Thank you, Isaac and good morning everyone. I would like to thank aiesec in the board of directors for the confidence in me. And I look forward to moving to my new role and CEO leading a month devoted and professional team.
Let me start the review of our results of flight seven.
Those are revenues for the full year 2019 was $746 Million up 3.7% from prior-year our cost of revenues increased 6.2% 476.7 million dollars and twenty-nine cents.
Writing this down. There is a segment 6% representing 72.4% of total revenue in 2019. What product segment revenues declined 5.3% representing 25.6% of total revenue in 2019?
Energy storage and Management Services segment revenues nearly doubled year-over-year the Fourteen point seven million dollars and represented 2% of our total revenues for the full year of 2018.
Moving to slide a revenues in our electricity segment with 540.3 million dollar for the full year 2019 compared to $599,000 in 2018 primarily driven by commencement of commercial operation of the surveys of Ministry of complex in December, 2018. And Africa expansion pack me 2018 by the contribution from use geothermal acquisition in May 2018.
It was partially offset by the shutdown of the pool of plant following the volcanic eruption in May 2018 and by decreasing generation used to pretend by the object here in Ontario complex.
Cost of revenues increased 4.9% 312.8 million for the full year of 2019. This increase was primarily attributable to additional costs related to the power plants that were added during 2018 that they just mentioned.
I need to slide line product segments Revenue 191 for 2019 compared to two hundred and one point seven million in 2018.
The decrease in Revenue relates to timing of Revenue combination of the project included in our backyard.
Cost of revenues in the product segment with 146 million dollar up 3.8% compared to 2018 the increase in cost of revenues in this segment Woodridge increased competition and different product sales compared to 2018.
Let's lighten the energy storage and managed Services segment contributed fourteen point seven million dollars of revenue for the full year 2019 compared to Thursday is 6 million dollars and twenty.
This growth was mainly driven by the start of operation of two energy storage facilities in the City, MO.
Will be the slide 11 for discussion of our total gross profit amount for 2019 Consolidated gross profit was 269.3 Million months resulting in a gross profit margin of 36.1% compared to gross profit of 270.4 million and gross profit. Margin 37.6% in 2018.
What's light will gross margin for the electricity segment extended the ogre you to 42.1%
Improvement was primarily due to the addition of new power plants added during 2018.
Gross margin included 12.6 million additional cost of revenues related to Pune in both 2019 and 2018 excluding the impact of fullness of life with 44.1% in 2019 for girls to 41.9% in 2018.
In the product segment gross margin was 23.6% in 2019 compared to 30.3% in 2018.
In the second half of the you will begin to see margin Improvement in the product segment and a dissipated and expect continued Improvement as we move forward normalize locksmith forward those normalized margins between 23 and 27% for this segment of our business.
Energy storage and Management Services reports and negative gross margin is expected. Do I need to slice 13 selling and marketing expenses for the full 2019 for $15 compared to nineteen point eight million dollars for 2018 the decrease of 24% primarily deal with a five million dollar termination fee of the Galena to PA in 2018, excluding this termination fee 2018 selling and marketing expenses represented to 4.1% of Revenue compared with 2% for 2019.
G&A expenses for the full year 2019 with 55.8 million dollar compared to forty seven point nine million for 2018 and increase 16.6% primarily attributable to extend point three million dollars of income adjustment related to the acquisition of our ability business in 2018 possibly office by product related to the statement about 2017 financial statements and costs related to that position of Youth.
GNA expensive for 2019 represented 7.5% of total revenue compared to 8.1% excluding the end of adjustment for 2018 month.
I need to slide fourteen operating income for 2019 increased 4.7% to 193.8 million compared to twenty years.
This was primarily related to the interest in our electricity segment gross margin.
I'll see you all set by decreasing our product segment both Mountain.
Looks like 15 you can see the breakdown of the operating income by segment.
Do I need to slide 16?
Next interest expense for 2019 with 80.4 million compared to 70.9 Million last year and increase of 13.3% off.
This increase was primarily attributable to new loans in the details on the slide offset by lower interest expense the result of principal payment of long-term debt.
Turning to slide 17.
You confessed provision for 2019 with 45.6 million compared to thirty four point seven million dollars in a 2018 an increase of ten point five million dollars.
I was actually for 2019 was 33.2% compared to 25.3% for 2018.
The Vines between the two. Is primarily due to the composition of our income before taxes in different countries in changes related to valuation allowance in the US looking to 2020
10:30 will stay the tax rate will be between 30 to 40% excluding the impact of one-time items.
For monthly posted net income see visible to the company shareholders 88.1 million or $1.72 per diluted share for purple 98 million month $1 4.92 cents per diluted share for 2018.
That income attributable to the company's shareholders or significantly impacted by The increased effective death.
Adjusted net income attributable to the company stock holder for 2019 of 74.8 million or $1.46 per diluted share wage adjusted it to the company stock holders for 2018 four hundred and six point 1 million dollar or two point zero eight dollars adjusted EPS without the impact of corner or $1 point six cents per share and $1 4.95 plus 4019 and 2018 respectively.
Sending out to slide nineteen.
I would like to know go over a few quarterly financial highlights.
Total revenues for the fourth quarter of 2019 with 192.4 million up 1% from the prior year. Breaking this down the electricity surged 4.4% to one hundred and forty four point four million dollar while product segment Revenue decreased 11.9% to 43.8 million in the fourth quarter of 2018 energy storage and Management Services segments Revenue with 4.3 million dollars in the fourth quarter of 2019 compared to the 2.4 million in the 4th fourth of June.
Looks like 20 total gross margin for the fourth quarter 29% or 38.7% and compares to 47.7% in the Friday. Of course.
Gross margin for the electricity segment was lower at 43.6% compared to an unusually high gross margin in the segment in 2018, which benefited from 12.5 million dollar was Insurance process related to Pune received in the fourth quarter 2018.
Excluding the impact of polar gross margin was 41.2% in 2019 compared to 43.7% in 2018 in the product segment both modules 28.2% in the fourth quarter of 2019 compared to 32.2% in the fourth quarter of 2018.
Energy storage and Management Services to make segments reported and negative gross. Margin is we have disappeared.
There is a slight when you want operating income for the fourth quarter of 2019 with 54.5 million dollars compared to 68 million dollars for 2018. The decrease of 19.9% decrease was primarily attributable to the insurance process receive in 2018 from the full insurance claim. I just mentioned
looks like 22 format reported net income attributable to the company shareholder for the fourth quarter of 2019 of 12.6 million or $0.24 per diluted share of eighteen point two million dollars of 36 cents per diluted share for the fourth quarter of 2018 at 33%
Adjusted net income attributable to the company stockholders and you look at DPS for the fourth quarter 2018 of 21.3 million or $0.42 per month without being affected for the adjusted. Net income three visible to the company stockholders, 15.9 or 31 cents per diluted share and 16.533 7 0 for 2019 and 2018 respectively.
I need to slide twenty-three adjusted ebitda for the increase 4.4% to 384.3 million dollars in 2019 adjusted ebitda without the impact of increased 8.7% 385.5 million dollars in in 2019 F350 four point seven million dollars off the electricity segment generated 91% of the total. It'd be done in the full day of 2019 the product segment Jersey like the 9% of the total for the party of 2019.
The energy stored in Management Services at the negative adjusted to be done for $600,000.
Moving to slide twenty-four adjusted ebitda with 102 2.2 million for the fourth quarter of 2019 down from 113.2 million pistols in the fourth quarter of 2018 just to be that without the impact of increased 1.1% 204.7 million dollars and twenty-nine cents after each other than three point six million dollars in 2018.
Lee cancellation of you be done in adjusted to be done are provided in the appendix line.
Sending notice like 25 cash and cash equivalents and restricted cash and cash equivalents as of December 31st, 2019 was 153.1 Million M. 277.5 million. As of December 31st 2018.
That companies like breakdown the use of cash for the first month.
Our long-term and short-term that as of December 31st 2019 was one point two billion dollars net of deferred financing and it's payment schedule is presented on Thursday average cost of the date for the company is 4.7%
As of December 25th 2019 with 1.1 billion.
Do I need to slide?
27
let me speak briefly for financing activities during the for the full year 2019 was successfully raised approximately 242 million dollars in the aggregate including 15.3 million dollar profit related to the tax Equity partnership for McGinnis filter.
Overall format is what position with Sanford access to additional Capital to fund future and children.
February twenty five twenty the companies both of the declared approved and authorized payment of the quarterly dividend of $0.11 per share plus went to the company policy.
The dividend will be paid on March 26th went to share with the vehicle out of the close of business on March 20th 2020.
In addition to speak with safe to pay dividends $0.11 per share in the next three quarters.
Yep.
Excuse my financial overview. I would now like to turn the call to isolate for an operational and business update Isaac. Thank you very much. Iran turning to slide 29 for Thursday. It's generation.
Euro per year older generation power plants increased by 6.5% from 5.9. Megabyte in 2018 to 6.2 million months in 2019. This increase is attributed to the addition of McGinnis EOS pastry the expansion in Kenya and the acquisition of your assets as well as the new generation in constant power plant with the addition of the solar system. The increase was partially offset by the shutdown of our Pune palkhi following the volcanic eruption and curtailments by the update in New York area three complex and Senior as you can see on a slight dirty, we adjusted the generation capacity of your existing problems based based on their performance and we expect continuing to adjustment and enhancements to optimize plan performance in Don Campbell with
see some temperature decline of the
Resource any McGinnis the complex is performing better than expected in Zuni power plant, according to the PPA revenues used to be calculated based on 24th of generating capacity and it was unrelated performance of The Reservoir in 2019, and old war revenues are calculated based on the actual generation of like power plants there for the generation capacity was updated to reflect the current generation.
Turning to slide Thirty-One. Let me spend a few moments providing an update on the situation at Pune as of today the Reconstruction effort to continue office building permit that is required for the construction of the substation was received recently Falco continues with the effort to complete the up the upgrade of the transmission lines. And we expect these efforts to end by me 20 20 on the field side. We complete we completed the drilling of one of the production. Well, this was blocked immediately after Thursday. We continue our field recovery work which includes drilling of existing wealth clean out and drilling of new wells as be expecting issue power generation off for testing the only the second quarter commercial operation of Pune power plant in the full capacity is expected in third quarter, assuming or permits Patelco receipt dead.
Transmission lines upgrade is completed filter recovery successfully achieved our expected evidence from Poland 20/20 is approximately 14 million dollars.
let me speak on the insurance situation for a moment on flight 232
as discussed in previous course, we maintain coverage for property and business Interruption scenarios provided by a Consortium of insurance as of the end of 2019 total claims send it approximately 68 million dollars while we received only a total of 21.2 million since the start of the event Thursday. We have filed the law suit against the insurers that do not accept our plane.
Moving to slide thirty-three with family believe that our operations in Pune will continue to contribute to our operations in long-term in parallel with our recovery work with Poonam recently reach an agreement with hell code and find a new p p a that was filed with the PC for approval the new PPA extend the current terms until 2015 and increases the the the current contract capacity by 8. Megabytes to 46 megabytes the Snoopy PA will replace the prior PPA when the new 46mm give a problem reaches reached commercial operation expected in the first half of 2022. The energy rate under the contract is fixed at $17 per megawatt hour for all energy purchased during any contract here up to 227227000.
And megawatt-hours.
And it's $40 per megawatt-hour a bowl about 20 227000 megawatt-hours in addition and we'll capacity payment under the contract. So approximately 19.5 million dollars in connection with the execution of the new p p a V8 effectively terminated the lease transactions involving the original Power plan, which provides us the ability to satisfy our obligations under the new p p a as a result. We pay twenty point five million dollars and heavy obligations for future lease payments as of December 31st, 2019.
Moving to slide thirty-four. We remain on track with our new term growth and we play between 180 and 200 megabits to Thursday and solar power plants by the end of 2022 from organic crowds. This target is supported by the list of potential projects presented on the slide in May 2019. We began operational first-ever through terminal and solar hybrid Project 7. Megawatt Ac solar expansion of our Tungsten Mountain, Georgia project in Nevada.
electrician
Generated from the tungsten solar power plant is used to offset the equipment energy use at the facility does increasing the renewable energy delivered by the project off the steamboat heals the part of Steamboat complex. We are replacing the old Power Plant equipment with our new advanced technology equipment that will eventually wage increase the capacity of the complex by approximately 19, megabytes and reduced maintenance costs equipment has been delivered to the site and construction is ongoing expect commercial operation to begin in the first half of 2020.
In Hebrew complex in California. We are in process of recovering the Hebrew one and he brought to power plant. We are replacing the steam turbine and the older equipment with our advanced technology equipment. If we add the net capacity of 11 megabytes following these in enhancement, we expect the capacity of the complex to reach 92 megabytes per month megabox permitting engineering and procurement are ongoing manufacturing construction of equipment commence in the fourth quarter of 2019. We expect it commercial operation in early 2021.
Will you play?
And to develop the CD for thirty megabytes are binary power plant near Mammoth complex, California. We recently announced the signing of a nice to Pas. And now we have secured the full capacity expected for this project. These two PS were signed with Silicon Valley clean energy and multi-racial Community power that we purchased seven Mega each and fourteen Meg of power together engineering and procurement for the construction of CD4 project have started and we expect this project come online at the end of twenty Twenty-One. It's North Valley Nevada following exploration activities. We reduced the expected generation capacity due to recent application of well. Injection limitation in our operation asset. Valkaria, bhuyan Pune and McGinnis Hills. We expect to add more capacity by enhancing their Club.
Operation as you can see in the table. We also expect new power from solar project. We still solid was.
Release for construction and will add twenty megabytes in 2021 and we also plan to replicate our success successful hybrid system and constant in the steamboat adding five megawatts of solar power turning to slide thirty-five. We continue to expand our geothermal development inventory and add New Prospect to support. Our future of growth is up today. We have around 41 prospects worldwide.
Turning to size 36 for an update on our backlog.
Our product Sigmund backlog was approximately $142 million while this is down from... We are close to signing a significant contract which is which if sign would replenish our backlog.
Fluctuations in the Cygnet of our business not uncommon as the type of the contract and the way revenues are recognized may lead to volatility.
we have
Working on new opportunities in New Zealand Indonesia and the Philippines to diversify and grow our revenues.
In these three countries, we identified several projects that payment voucher and contribute to our backlog.
We are also watching closely the Turkish market and its current legislation which expires at the end of 2020 would be extended. We may have further opportunities in this country.
It's already Christy segment continues to strengthen and grow the volatility of the product segments in revenues and margins will have relatively less of an impact on our overall Financial results turning to slide thirty-seven.
for an update on an energy storage and Management Services
We continue to utilize our engineering expertise resources and access to Capital to build presence in the energy storage Market our efforts in battery storage activity remain focused on Greenfield development as well as m&a enjoying development opportunities in 2019. We commissioned to projects in New Jersey and walk in Vermont. We are successful in creating diversify storage portfolio in this market spinning multiple regions in the US.
we are in the
Stage of aquarium acquiring a new portfolio of both operating energy storage and projects under development in order for a storage project under development to be ready to move into a PC phase requires site control and interconnection agreements permits from all the authorities and viable financial model our development pipeline including the new edition. We expect to secure consist of multiple projects in different development stages of which we expect between 150 and 200 megabytes off to be commissioned between 2020 and 2022 moving to slide thirty-eight.
In December 2019. The stock extenders package was signed into low and retroactively revived extending the full PTC for geothermal.
The BTC provides a tax credit of 2.2 point five cents for each kilowatt-hour of energy produced by the taxpayer from qualified Life Energy projects. It starts construction by December 31st, 2020 the extension of the tax credits supports and enables us to exchange rate or mid and long-term growth in the US by improving project economics and feasibility enabling us to build new projects even prior to signing a p p e n to sell your electricity output in the merchant Market on spot until an acceptable long-term PPA is obtained and signed this approach will enable us to maximize benefits from the PTC at the same time increase our growth based in the United States while maintaining our hurdle Iraq.
turning to
Flight 39 estimated Capital needs in 2020 include approximately a hundred twenty thirty four million for Capital expenditures for construction wage project and enhancement or existing power plant management release for construction. In addition. We estimate additional $198 million for the investigation and development that could not get released for Full Construction maintenance of capital expenditures front construction and development of storage project and enhancement to our prompt production facilities as detailed in the slide in the aggregate. We estimate total Capital expenditures for 2020 to be approximately 632 million dollars. In addition. We expect 185 million dollars for long-term debt repayment twenty-twenty an additional phone number.
$1000000
For repayment of short-term revolving lines of credit that we assume would be renewed. Please turn to slide forty-four a discussion of our wage twenty guidance.
We expect full-year 2020 total revenues between 720 and 7 and 740 million with electricity segment revenues between 560 and 570 billion dollars.
We expect product segment revenues between 140 and 150 million dollars revenues from energy storage and demand response activity are expected to be between fifteen and twenty million dollars. We expect twenty-twenty just a debit or between $400 and $5 and $450 million dollars for the full month. We expect annual just a tribute to the minority interests to be approximately twenty-six million dollars in summary. This was a strong year for a month and with several catalysts including the expected the commencement of operation at Pune the expected contract in our product salesman. Can you sign ppas and the extension we are well-positioned for the future.
with the progress in the store
Which Market we are increasingly positioned as a leader in renewable energy be on geothermal. This concludes. Our prepared remarks now like to open the floor for questions operator. If you please begin the question-and-answer session to ask a question, we press star then one on your telephone keypad.
For using a speaker phone, please. Pick up your handset before pressing the keys to withdraw your question, please press star then to this time will tell us to assemble our roster.
First question comes from Mister Paul Cosner JPMorgan, please go ahead.
Yeah, thank you very much for taking our questions. This is Mark Strauss on for Paul just start off with a congratulations on the retirement as well as the promotion page first question drawn. Maybe are you able to quantify the impact to The 20/20 guide Revenue guidance from the the delay in Pune?
The originally hope the pool I know with gradually stock in Q2 and get to full operational to 3 and onwards. So the full operation is something that we still expect. So with that way estimate the impact on Q2 of fuel million dollars, you know, maybe three or four million dollars and they beat them.
Okay, and then looking out at your your year-end 22 megawatt Edition Target, does that include cunha coming back online or would that be in addition to Pune coming back online?
Hakuna is in the number.
Who Northlake in the megawatt number? Okay, okay, but not in the Edition.
Okay, so 180 to 200 would be on top of the the 38 246 from Pune.
Okay, great. Thank you. And then lastly um, can you just give a bit more color on the potential magnitude of what God punishment names for for product backlog. I mean it is at getting you back to where you were a couple of quarters ago to a year ago any color there would be helpful. I understand. You're probably Limited in what you can say just giving your made negotiations, but appreciate it.
Mark, this is Isaac. And thanks for your congratulations. Look, we we are saying in the last six years that the end of the day because of the bumpiness of the product segments. We're pushing very hard the electricity segment to to to be percentage was much higher. And as a matter of fact 2019 product segment. It'd be present it only 9% of the of the company as a total but regardless to say and in our projections for the last three years were basically round if you record 160 to 170 million dollars, but eventually few of the Market's booming with it much higher numbers than that this Market namely being the Turkish market in the last two and a half three years because of political and financial reasons. The Turkish market is stopped dead.
and and even though
There is a huge potential over there. We we are not expecting it to be back in 20 20 20, but maybe in 20 21 and 21 22 the company prepared itself off for the for this issue in the Turkish market and we concentrated in three other geographies namely and New Zealand in Asia and the Philippine our expectation that one of the country's not expectation actually as we said in the script and that wage are expecting, uh, the first for one of these contracts to kick in sometime early 2022 or but again, as I said it may or may not happen and if it will happen it will replenish twenty-twenty story it it will replenish the backlog in the backlog will be a game.
Hi.
than before
it's a matter of timing.
And we will obviously announced it's whenever it will kick in.
Right. Okay, that's it for us. Thank you very much.
Thanks, Mark. Our next question comes from Noah Cain of Oppenheimer, please go ahead. Thanks. Good morning. Appreciate you taking the questions and yeah again as the previous month. Congratulations Isaac on your pending retirement. And that's Tyrone on the CEO role. We we wish you both well and and look forward to it.
Thank you very much.
I might not have caught this in a prepared remarks. What was the driver or drivers of the lower your of your electricity segment gross margin performance.
Okay, and I think the year-over-year gross margin segment has a very small difference the main difference to the insurance process that we received from a from Pune the once you exclude the main differences, you can see that actually gross margin in fiscal 2019 and with the 44% compared to 42% in 2015. So actually gross margin excluding the Pune impact went up.
Okay, but it says in in the slide twenty that without Pune for 2019 was 46.9% And without Pune for 2018. It was 48.6. So it's 150 business decline year-over-year. Yes. Yes. Yeah. Yeah. I responded to the email in the queue for 2018 month and it is the difference between 2019 and 2019. The weather issued Nevada had extremely hot bath. The temperature were much higher than normal and then you know, our power plants are are full. And whenever there is a very hot temperatures bill is an impact on the on days.
on the power plants
Okay, that's helpful. Thanks North North Valley is that's a Greenfield project, correct?
It's a green field project to the existing media project that we acquired from long-term. Oh, and basically it was the development project which arrived together with the with the deal and we are developing it right now right off with the downsizing of of the expected resource. Obviously the economics don't meet the hurdle rate or it wouldn't be in your pipeline. Just would that be the case without the wage see how did that play into it?
Look the the ptc's basically completely new era enormous as you probably know that we we never build a power plant life without the PPA before and because of the BTC now the company decided to start building and operating power plants and sell them on the market expecting to be PA that will kick in during the life cycle of the project. Our expectation is that with the growing RPS specifically in Canada in sorry in California and Nevada and other state that's off the electricity prices for green energy will be higher than today and we expect that and Thursday.
phone number is with the
PCC on those power plants and you should also remember that costs are going down here after a year to build those power plants. So basically starting June 20-22. Our our model is a bit changing and we will be building powerful and prior who PPA received from a from a utility or a customer.
okay, you'll build the power plants starting in twenty two and two with with which
projects are we referring to here talking about Dixie Meadows in today?
We we no boil on the outside of the US. It's in the in the Caribbean but we have a list of prospects which are in the list. I don't recall the exact number of the flight, but you can look at the 10K and see a list of those projects which are Prospect to be billed off within those within the BTC initiative. Okay? Okay, if I get one more in obviously obviously know obviously did not accelerate the growth of the company by by these problems.
right, so
So on this Prospect list, yeah, it's very much waved to the US. I don't see Kenya listed. I think you were reported as being a bidders on the engine hundred forty megawatt tender just kind of given in fact that you're standing in the curtailments that you experienced there. And you know these Financial challenges. How are you thinking about your participation in that Market at this point?
Okay, first of all, let's let's differentiate between the PTC initiative which is solely in the US of course and the other countries which are foreign countries on the other countries Kenya being one of them. Obviously. We're we are experiencing curtailment today and we and you're right there is certain issue. We are off during the situation. We will be we are participating in the tender, but eventually the the management and the board will decide when and how and how much to invest in Kennewick for excellence in build or not build those probably not raw if I can add, you know, the list of prospects, you know, these are places that we actually have land position the time, you know into tender to be there and maybe also problem but we don't have the land position. So it is not listed on the prospect.
Right. So everything on the prospects light is places where you've got the line confession.
Okay, that's very helpful. Thank you. Thank you. Can I have a question, please? Press * then 1
Our next question comes from Jeff Osborne Cowen and Company, please go ahead.
Yeah, good morning and congratulations on my end as well. Just a follow-up on on Kenya. Can you talk about the receivables that are due from them as well? As on doors is the situation getting better or similar month prior quarters.
Em em, it's the some changes there. I'll say on the on Kenya and the situation is quite similar. They keep on paying they're paying a little bit delayed, but they are constantly, you know paying us. I don't remember the exact due date. What date is today, but in general I think the youngest
He's about seventy or eighty day the same. That's the the oldest one, but they keep on paying in Honduras. It's a bit of a more of a unique situation. They have been paying us constantly for the ongoing invoices on time and and they are but they there is an older debt that they haven't won a Davis and and that is still still open. But on the rest of the pain, that's all time on on what we did get actually we got an approval to sell an additional 3 megawatts to private customer.
Yes.
so that's actually
Tells us, you know to generate more electricity did the power plants can do and sell not to the electric to an electric company and and that obviously will be should be paid regularly from the private customer.
It's it's helpful. I appreciate the detail there question on the guidance front. So the 140 to 150. You mentioned that there was a a contract that it sounded like you were in late-stage negotiations and feel comfortable that that would come through at some point early this year. I think is how you framed it is that award potentially shippable in 2020. And is that in the guidance for product red or not? It was a bit confused on the timing it sounded like you would win it, but it was unclear when the revenue would be.
Jeff it's not in the numbers are backlog is contrast which are signed and somehow paid for and that's why everything that happens in the guidance is is deliverable and available this contract if we're talking about is a larger contract that if it will kick off and then part of it will be and deliverable this delivered this year. We just I don't know we are recognizing percentage of completion. So it's not just a question of the river. It's also question, you know, how much work we've done today? So we do expect that if we win it and it would be signed and Thursday. We will be able to recognize Revenue in 2020.
Got it. That's helpful. And the last line of questioning I had was on the the storage front recognizing it's it's small today, but certainly the 150 to 200 megawatts of pipeline is impressive. I had a two-part question one is Thursday. Can you articulate what size that would need to be either in revenue or megawatts for that that business unit to break even with question one. And then question too is just in the the pipeline wage. I assume it's all in front of the meter utility-scale stuff similar to what you're doing in California and Texas and New Jersey, but I was just curious what you're seeing in terms of the price environment for the the 150 to 200 that your bidding or in the pipeline.
On your first question, we expect this segment to be a positive on this year.
And the prices are it depends on the market and the services that we are providing so it varies very much but in general if we're looking at the project that we are building our our our that we're planning based on the choices that we have today are on low teens today. And did you tell me about
Got it. That's helpful. That's all I had. Thank you.
Thank you. Jeff. Next question comes from l o freed the bank, please. Go ahead.
Hello. Hello. Can you hear me?
Oh, okay. I was fine. I would like also to send my I would like to send my best wishes close to the running 2:00 and do with them success wage. And the the question I have actually could you please give us some details on short and long-term implications of the tax law reform which wage I suppose we still sucks up. Some of the of the effect is still there. Do you see any developments with the tax in the foreseeable future? And if not, could you give us some detail on it?
Hi.
And thank you and the tax reform, you know is good luck.
Thank you very much. The taxes for me is obviously complicated and reform it was structured dead is slightly simpler to us companies but International companies with operations globally, it has quite uniqueness. So we are we are working on them. We say that way, you know, try to to guide, you know, the the market that the tax rate for next to the effective tax rate for next year would be between Thirty to forty percent. I know it's a relatively large range but this stage with the complication it has and that's the range if we're able to give
Hey, how how how much of it will be in the cash flow or or how much of it would be deducted or and and and how for how long do you have till Thursday from from today's perspective the text threads and other assets that you could walk in if if you could give some kind of timeline.
Basically, we don't expect most of this is off the account e or actually booking tax entries. We don't expect to pay taxes in the US and still twenty twenty six or seven or even maybe afterwards and we are paying taxes in Israel, and we would probably start to pay taxes in Kenyan sometime a 2020 and so overall it should be in the range of 20 to around twenty twenty-five million annually, but obviously this is something that is, you know subject to change from the law one-time events, but the big part of the tax is the accounting majors.
Thank you very much. This is really helpful.
Thank you. This concludes our question answer session now like to turn the conference back over to mr. They can't do for any closing remarks, please go ahead.
Okay guys. Thank you very much for participating and thank you for your support as I'm going to be here for at least two more quarters. This is not a goodbye yet. So you will hear from me yet in the upcoming quarter, and then we say goodbye. Thank you very much again. And again, thank you for your support.
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