Q1 2024 Ormat Technologies IncEarnings Call
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Operator: Good morning, and welcome to the Ormat Technologies first quarter 2024 earnings conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. You can ask a question by dialing star 1 on your telephone keypad to raise your hand and join the queue. And please note that today's event is being recorded. I would now like to turn the conference over to Josh Carroll with Alpha IR. Please go ahead.
Good morning, and welcome to the <unk> Technologies' first quarter 'twenty to 'twenty four earnings conference call.
Joshua Carroll: All participants will be in listen only mode.
Joshua Carroll: After todays presentation, there will be an opportunity to ask questions. You can ask a question by Dialling Star one on your telephone keypad to raise your hand and joined the queue.
Operator: Please note that today's event is being recorded.
Joshua Carroll: I would now like to turn the conference over to Josh Carrol with Alpha IR. Please go ahead.
Joshua Carroll: Thank you, Operator. Hosting the call today are Doron Blachar, Chief Executive Officer; Ozzie Ginzburg, Chief Financial Officer; and Smadar Lavie, Vice President of Best Relations and ESG Planning and Reporting. Before beginning, we would like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts, and projections of future events that are forward-looking as defined in the Private Securities Litigation Format of 1995. These forward-looking statements generally relate to the company's plans, objectives, and expectations for future operations and are based on management's current estimates and projections, future results, or trends.
Joshua Carroll: Thank you operator.
Joshua Carroll: Call today are traveling to our Chief Executive Officer, as he Ginsberg Chief Financial Officer.
Joshua Carroll: <unk>, Vice President of Investor Relations and ESG plenty of reporting.
Joshua Carroll: 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 Ormat Technologies' and its report on Form 10-K and core reports on Form 10-Q that are filed with the SEC. In addition, during the call, the company will present non-GAAP financial measures such as adjusted EBITDA. Reconciliation to the most directly comparable gap measures and management reasons for presenting such information are set forth in the press release that was issued last night, as well as in the slides posted on the website. Because these measures are not calculated in accordance with GAAP, they should not be considered in isolation from the financial statements prepared in accordance with GAAP.
Joshua Carroll: Before beginning I would like to remind you that the information provided during this call may contain forward looking statements relating to current expectations estimates forecasts and projections about future events that are forward looking.
Joshua Carroll: Defined in the private Securities Litigation Reform Act of 995.
Joshua Carroll: These forward looking statements generally relate to the company's plans objectives and expectations for future operation and are based on management's current estimates and projections future results or trends.
Joshua Carroll: Actual future results may differ materially from those projected as a result of certain risks and uncertainties.
Joshua Carroll: A discussion of such risks and uncertainties. Please see risk factors as described in Ormat technologies annual report on Form 10-K quarterly reports on Form 10-Q that are filed with the SEC and.
Joshua Carroll: In addition, during the call the company will present non-GAAP financial measures such as adjusted EBITDA.
Joshua Carroll: Reconciliations to the most directly comparable GAAP measures and management reasons for presenting such information is set forth in the press release that was issued last night as well as in the slides posted on the website.
Joshua Carroll: Because these measures are not calculated in accordance with GAAP. They should not be considered in isolation from the financial statements prepared in accordance with GAAP.
Joshua Carroll: Before I turn the call over to management, I'd like to remind everyone that a slide presentation accompanying this call may be accessed on the company's website at ormat.com, and there's a presentation link that's found on the Investor Relations tab. With all that said, I would now like to turn the call over to Doron Blachar. Doron, the call is yours.
Speaker Change: Before I turn the call over to management I would like to remind everyone that a slide presentation accompanying this call may be accessed on the company's website format dotcom.
Doron Blachar: Presentation late that's found on the Investor Relations tab.
Doron Blachar: So all that said I would now like to turn the call over to Ron Bouchard drawn the call's yours.
Doron Blachar: Thank you, Josh, and good morning, everyone. Thank you for joining us today.
Doron Blachar: Thank you Josh and good morning, everyone. Thank you for joining us today.
Doron Blachar: During the first quarter, Ormat delivered strong financial results driven by improved operating performance and continued growth across all three sectors. This quarter, the company saw a 21% increase in total revenue, a 25.5% rise in earnings per diluted share, and a 14.4% increase in adjusted EBITDA when compared to the first quarter of last year. The first quarter results were fueled by organic growth that included the successful execution of our strategic plan and enhanced operational efficiency at existing facilities, which together contributed more than 50% of the increase in revenues and in e-commerce...
Doron Blachar: During the first quarter.
Doron Blachar: Delivered strong financial results driven by improved operating performance and continued growth across all three segments.
Doron Blachar: This quarter the company saw a 21% increase in total revenues.
Doron Blachar: $25 five in earnings per diluted share and 14.4% increase in adjusted EBITDA when compared to the first quarter of last year.
Doron Blachar: The first quarter results were fueled by organic growth. This includes the successful execution of our strategic plan and in the <unk>.
Doron Blachar: Operational efficiency at the existing facilities.
Doron Blachar: Which together contributed more than 50% of the increase in revenues and in EBITDA.
Doron Blachar: In addition, these results were positively impacted by the recent acquisition of assets from Enel Green Power North. Furthermore, our electricity segment continues to drive growth. This quarter's record results reflect an impressive improvement in operational performance at Puna and at our Heber 1 facility, which was partially operational during the prior years. Furthermore, the new capacity we added last year in Oates Valley and Dixie Valley and the new acquired assets added this year helped grow our electricity segment economics relative to the comparable prior year period and also offset the impact of business interruption insurance income of $6.7 million included in last year's first quarter results.
Doron Blachar: In addition, these results were positively impacted by the recent acquisition of assets from Enel Green Power North America.
Doron Blachar: Our electricity segment continues to drive growth this quarter record results reflect an impressive improvement in operational performance, it's pulling up and I thought well he'd been one facility, which was partially operational during the prior year's quarter.
Doron Blachar: Furthermore, the new capacity, we added last year and those Valeant exit value and then you acquired assets added this year.
Doron Blachar: Grow our segment that pulled about mix relative to the comparable prior year period, and also offset the impact of business interruption insurance income.
Doron Blachar: $6 7 million.
Doron Blachar: Included in last year's first quarter results.
Doron Blachar: Okay.
Doron Blachar: In the storage segment, we experienced a greater degree of stability in revenues from several new projects launched in 2023 that helped improve the segment's growth. This Flemington project that came online in the first quarter also contributed to our results, and we expect the bottleneck project to come online towards the end of the second quarter. In our product segment, our backlog has continued to stay strong due to the growing demand for geothermal products, with year-to-date revenues increasing by an impressive 147%.
Doron Blachar: In the storage segment, we experienced a greater degree of stability in revenues from several new projects launched in 2023, that's helped improve the segment's gross margin.
Doron Blachar: These flemington project that came online in the first quarter.
Doron Blachar: Contributed to our results and we expect the bottleneck project to come online towards the end of the second quarter.
Doron Blachar: You know our product segment backlog has continued to stay strong due to the growing demand for geothermal products with year to date revenues, increasing by an impressive 147%.
Doron Blachar: Since the beginning of the year, we have added, including the NL assets, 130 megawatts of new generating capacity. Combined with the potential uplifts from our successful drilling campaign in Kenya and the macro drivers, we are confident in meeting both our long-term capacity expansion goals and our financial targets for 2024 and beyond. On a macro level, the global demand for renewable energy continues to grow, driven by increasing environmental concerns, supportive government policies, attractive power purchase agreements, and increased renewable demand, including from data.
Doron Blachar: Since the beginning of the year.
Doron Blachar: <unk> added, including the net assets 130 megawatts of generating capacity.
Doron Blachar: Combined with the potential uplift from our successful drilling campaign in Kenya, and the macro drivers. We are confident in meeting both our long term capacity expansion goals and our financial targets for 2024 and beyond.
Doron Blachar: Well the macro base the global demand for renewable energy continues to grow driven by interest thinking environmental concerns supportive government policies attractive power purchase agreements and increased renewable demand, including from data center.
Doron Blachar: Our diverse portfolio of geothermal, solar, and energy storage solutions positions us well to capitalize on this favorable tail. Now, before I provide further updates on our operations and plans, I will turn the call over to Asi to review the financial results.
Doron Blachar: Our diverse portfolio of geothermal solar and energy storage solution positions us well to capitalize on this favorable tailwind.
Asi: Now before I provide further updates on our operations plans I will turn the call over philosophy to review the financial results.
Doron Blachar: Yes.
Asi: Thank you Darren.
Assaf Ginzburg: Let me start my review of our financial highlights on slide Total revenue for the fourth quarter was $224.2 million, up 21% year-over-year. This was driven by growth across all three sectors.
Asi: Let me start my review of our financial highlights on slide five.
Asi: Total revenue for the fourth quarter was $224 $2 million.
Asi: Up 21% year over year.
Asi: This was driven by growth across all three segments.
Assaf Ginzburg: Ormat's first quarter 2024 gross profit was $78.8 billion, up by 3.6% versus $76.1 million in the first quarter of 2022, resulting in a consolidated gross margin of $35.2 billion. Net income attributed to the company's stockholders was $38.6 million, or $0.64 per diluted share in the quarter, compared to $29 million or $0.51 per diluted share in the first quarter of the prior year, Our adjusted net income, attributable to the company's stockholders, was $39.6 million, or $0.65 per diluted share. This represents a significant increase.
Asi: Well my first quarter 2024, gross profit was $78 $8 billion up by three 6% versus $76 1 million in the first quarter of 2023.
Assaf Ginzburg: Resulting in a consolidated gross margin of 35, 2%.
Assaf Ginzburg: Net income attributed to the company's stockholders.
Assaf Ginzburg: $38 $6 million.
Assaf Ginzburg: <unk> 64 cents per diluted share in the quarter compared to $29 million or 51 cents per diluted share in the first quarter of the prior year.
Assaf Ginzburg: Excluding onetime M&A expenses related to the Enel recent acquisition, our adjusted net income attributable to the company stockholders was $39 6 million or 65 cents per diluted share.
Assaf Ginzburg: This represents a significant increase.
Assaf Ginzburg: 36.5% in Adjusted Net Income attributable to the company's stockholders and 27.5% in EPS compared to the same quarter last year. The solid earnings and EPS growth were mainly the results of the new assets added to the portfolio relative to last year's first quarter and a lower tax rate as we continue to capture benefits from the IRA tax credit. A just-a-day bid of $141.2 million increased 14.4% in the first quarter compared to $123.5 million in the prior year.
Assaf Ginzburg: 36, 5% and adjusted net income at.
Assaf Ginzburg: Attributable to the company stockholders and.
Assaf Ginzburg: 27, 5% in EPS compared to the same quarter last year.
Assaf Ginzburg: The solid earnings and EPS growth were mainly the results of the new assets added to the portfolio relative to last year first quarter.
Assaf Ginzburg: And a lower tax rate as we continue to catch up benefit from the higher rate tax credits.
Assaf Ginzburg: Adjusted EBITDA of $141 $2 million increased 14, 4% in the first quarter.
Assaf Ginzburg: Compared to $123 5 million in the prior year period.
Assaf Ginzburg: The year-over-year increase in adjusted EBITDA was driven by growth in all three sectors, with the electricity segment leading the way, largely as a result of better performance of operating assets that led to increased generation. The commercial operation of North Valley last year, the inclusion of the new acquired NL assets in our portfolio, and a larger contribution from tax equity transactions. On slide five, we break down the revenue performance by segment. Electricity segment revenues increased 12.3% to $191.3 million.
Assaf Ginzburg: The year over year increase in adjusted EBITDA was driven by growth in all three segments with electricity segment, leading the increase along.
Assaf Ginzburg: Largely as a result of better performance of operating assets that led to increased generation.
Assaf Ginzburg: The commercial operation of North Valley last year, the inclusion of the new acquired assets in our portfolio and a larger contribution from tax equity transactions.
Assaf Ginzburg: All set by $6 $7 million of business interruption insurance income recorded last year related to puna.
Assaf Ginzburg: Yeah.
Assaf Ginzburg: On slide five we break down the revenue performance at the segment level.
Assaf Ginzburg: Electricity segment revenues increased 12, 3% to $191 3 million.
Assaf Ginzburg: This inquest was largely driven by contributions from the new and ill-acquired assets and from Hieber 1, which was only partially operational in the first quarter of 2020. Improved generation at Puna that is now operating above 30 megawatts. The addition of North Valley Power Plant in April 2020.
Assaf Ginzburg: This increase was largely driven by contribution from the new Enel acquired assets and from EBIT one.
Assaf Ginzburg: Which was only partially operational in the first quarter of 2023.
Assaf Ginzburg: Improved generation owner that is now operating above 30 megawatt.
Assaf Ginzburg: The addition of note Valley power plant in April 2023.
Assaf Ginzburg: In the product segment, revenue marked a substantial increase, growing by 147.3% to $24.8 billion. The growth in our product segment was supported by a higher backlog and the timing of revenue recognition. The current product segment backlog is approximately $130 million as of May 8, 2020. Energy storage segment revenues increased by 66% to $8.1 million in the first quarter, driven largely by the impact of CODs for storage facilities that the company achieved in the second half of 2020, Flemington that came online this year, and a higher merchant rate in the PGM region.
Assaf Ginzburg: In the product segment revenue marked a substantial increase growing by 147, 3% to $24 8 million.
Assaf Ginzburg: The growth in our product segment was supported by higher backlog and the timing of revenue recognition.
Assaf Ginzburg: The current product segment backlog.
Assaf Ginzburg: Approximately $130 million as of May eight 2024.
Assaf Ginzburg: Energy storage segment revenues increased by 66% to $8 1 million in the first quarter.
Assaf Ginzburg: Even largely by the impact of Seo deals for storage facilities that the company achieved in the second half of 2023.
Assaf Ginzburg: Let me turn it came online this year and a higher merchant rates in the PJM region.
Assaf Ginzburg: Moving to slides, the gross margin for the electricity segment was 39% in the first quarter, down from 44.4% from the previous year. The reduction in margin was driven by the absence of a business interruption insurance process that slowed down our last year's cost of revenue.
Assaf Ginzburg: Moving to slide six.
Assaf Ginzburg: The gross margin for the electricity segment was 39% in the first quarter.
Assaf Ginzburg: <unk> from 44, 4% from the previous year.
Assaf Ginzburg: <unk> margin was driven by the absence of business interruption insurance proceeds that flowed through our last year's cost of revenues.
Assaf Ginzburg: In the product segment, gross margin was 14.8% in the first quarter, up 790 basis points compared to the first quarter of 2020. Margin increase due to the increased profitability of our recently signed energy storage segment. The energy storage segment reported a first quarter gross margin of 7.5% compared to negative 3.6% in the prior year. The increase in gross margin was driven by the new projects that were launched in 2023. The Commercial Operation Achievement is Flemington and Better Merchant Prices, mainly in PG&E.
Assaf Ginzburg: In the product segment gross margin was 14, 8% in the first quarter up 790 basis points compared to the first quarter of 2023.
Assaf Ginzburg: Margin increased due to the increased profitability of our recently signed contracts.
Assaf Ginzburg: The energy storage segment, we reported the first quarter gross margin of seven 5% compared to negative three 6% in the prior year.
Assaf Ginzburg: The increase in gross margin was driven by the new projects that were launched in 2023.
Assaf Ginzburg: The commercial operation activities, Remington and better merchant prices mainly in PJM.
Assaf Ginzburg: Breaking down adjusted EBITDA, the electricity segment generated 92% of Ormat's total consolidated adjusted EBITDA in the first quarter of 2025. The product segment generated 5%... And the energy storage segment reported adjusted EBITDA of $3.7 million, almost 3% of total adjusted EBITDA. Reconciliations of EBITDA and Adjusted EBITDA are provided in the appendix. Moving to slide seven.
Assaf Ginzburg: Breaking down adjusted EBITDA, the electricity segment generated 92% of our March total consolidated adjusted EBITDA in the first quarter of 2024.
Assaf Ginzburg: The product segment generated 5% and the energy storage segment reported adjusted EBITDA of $3 $7 million.
Assaf Ginzburg: Post 3% of total adjusted EBITDA.
Assaf Ginzburg: Reconciliations of EBITDA and adjusted EBITDA are provided in the appendix slides.
Assaf Ginzburg: Moving to slide seven.
Assaf Ginzburg: In the first quarter, we recorded $17.5 million in income related to tax benefits, an increase of $4.9 million compared to last year. The increase is mainly due to $2.5 million higher transferable PTCs and $1.7 million income related to the new North Valley Tax Equity Transaction signed in Q4 of 2022. Also...
Assaf Ginzburg: In the first quarter, we recorded $17 $5 million in income related to tax benefits.
Assaf Ginzburg: An increase of $4 9 million.
Assaf Ginzburg: Compared to last year.
Assaf Ginzburg: The increase is mainly due to tune in to ask million dollars higher variable PTC and $1 7 million income related to the new North Valley tax equity transaction signed in Q4 of 2023.
Assaf Ginzburg: Also.
Assaf Ginzburg: In the first quarter, we recorded $11.5 million of ITC benefits in the income tax line related to the storage facility, and we expect proportional quarterly amounts to be recorded throughout the year. We anticipate, during 2024, to receive approximately $150 million in cash proceeds related to the PTC and ITC benefits, which will reduce our capital. Spending our ability to profitably grow our base of generating assets and ultimately lowering the capital intensity of our growth efforts. Looking at slide eight.
Assaf Ginzburg: In the first quarter, we recorded 11 and a half million dollars.
Assaf Ginzburg: Of ITC benefit in the income tax line related to the storage facility.
Assaf Ginzburg: And we expect proportionately quarterly amount to be recorded throughout the year.
Assaf Ginzburg: We anticipate during 2020 full to receive approximately $150 million in cash proceeds.
Assaf Ginzburg: They add to the PTC and ITC benefits that will reduce our capital needs.
Assaf Ginzburg: Expanding our ability to profitably grow our base of generating assets and ultimately lowering the capital intensity of our growth efforts.
Assaf Ginzburg: Looking at slide eight.
Assaf Ginzburg: Our net debt as of March 31, 2024 was approximately $2.1 billion, equivalent to 4.1 times net debt to EBIT. Cash and cash equivalents and restricted cash and cash equivalents as of March 31st, 2024 were approximately 299 million dollars compared to 288 million dollars at the end of 2020. Slide 8 breaks down our use of cash for the 12 months, illustrating Ormat's ability to reinvest in the business and service our debt obligation while also consistently returning capital to our shareholders, oil while growing our business.
Assaf Ginzburg: Our net debt as of March 31, 2024 was approximately $2 1 billion.
Assaf Ginzburg: Equivalent to four one times net debt to EBITDA.
Assaf Ginzburg: Cash and cash equivalents and restricted cash and cash equivalents as of March 31 2024.
Assaf Ginzburg: Approximately $299 million.
Assaf Ginzburg: Compared to $288 million.
Assaf Ginzburg: At the end of 2023.
Assaf Ginzburg: Slide eight breaks down our use of cash for the 12 months illustrating our ability to reinvest in the business.
Assaf Ginzburg: And service our debt obligations, while also consistently returning capital to our shareholders.
Assaf Ginzburg: Oil while growing our business.
Assaf Ginzburg: Our total debt as of March 31, 2024 was approximately $2.4 billion net of deferred financing. It's presented on slide 30 in the appendix, which outline the payment schedule. The average cost of our debt for the company stands at 4.57%, and nearly all of our debt liabilities remain at a fixed rate in nature, which we believe will help continue to position Ormat competitively in a higher and more volatile global interest rate environment. Moving to the next slide now.
Assaf Ginzburg: Our total debt as of March 31, 2024 was approximately $2 4 billion net of deferred financing cost.
Assaf Ginzburg: As presented on slide 30 in the appendix, which outline the payment schedule.
Assaf Ginzburg: The average cost of our debt for the company stands at 457% nearly all of our debt liabilities remained at a fixed rate in nature, which we believe will help continue to position our <unk> competitively in a higher and more volatile global interest rate environment.
Assaf Ginzburg: Moving to slide nine.
Assaf Ginzburg: We have approximately $766 million of total equity. Our total expected capital expenditure for the remaining of 2024 is approximately $472 million, as detailed in slide 31 in the appendix. We plan to invest approximately $254 million in the electricity segment for construction, drilling, and maintenance and $196 million in our storage assets during the remainder of 2020. Overall, Ormat's balance sheets and capital resources position the company well, facilitating our ability to continue executing our strategic goals plan.
Assaf Ginzburg: We have approximately $766 million of total liquidity.
Assaf Ginzburg: Our total expected capital expenditure for the remaining of 2024 is approximately $472 million.
Assaf Ginzburg: As detailed in slide 31 in the appendix.
Assaf Ginzburg: We plan to invest approximately $254 million electricity segment for construction drilling in maintenance Capex and $196 million in our storage assets and the remaining of 2024.
Assaf Ginzburg: Overall, our mobile as sheet and capital risk has positioned the company well.
Assaf Ginzburg: Facilitating our ability to continue executing our strategic growth plan.
Assaf Ginzburg: We have maintained excellent liquidity, and we have ample access to additional. On May 8, 2024, our Board of Directors declared, approved, and authorized payment of a quarterly dividend of $0.12 per share, payable on June 5, 2024, to shareholders of record as of May 22, 2024. We expect to maintain this dividend level for the remaining three quarters of the year. That concludes my financial overview. I would like now to turn the call over to Doron to discuss some of our recent developments.
Assaf Ginzburg: We have maintained excellent liquidity and we have ample access to additional capital.
Doron Blachar: On May eight 2024, our board of directors declared approved and authorized payment of quarterly dividend of 12 <unk> per share.
Doron Blachar: On June five 2024 to shareholders of record as of May 22024.
Doron Blachar: We expect to maintain this dividend level for the remaining of the three quarters of the year.
Doron Blachar: That concludes my financial overview.
Doron Blachar: I'd like now to turn to call to dawn to discuss some of our recent developments.
Doron Blachar: Thank you Oscar.
Doron Blachar: Turning to slide 11 for a look at our electricity segment operating portfolio. As previously mentioned, generation growth in our core electricity segment was positively impacted by several CODs that occurred last year after the first quarter and the opening of steamboat solar DC. In addition, generation grew from the contribution of the newly acquired geothermal and solar energy. Our PUNA complex also helped drive generation growth during the quarter, as its generating capacity continued to ramp up relative to last year, running at 30 MW over the last. This was further accom- plied by increased generation at TVO1. In total, we have added 110 MW since the beginning of the year to the electricity segment portfolio and grown generation by 7.9%.
Doron Blachar: Turning to slide 11 for a look at our electricity segment operating portfolio.
Doron Blachar: As previously mentioned generation growth in our core electricity segment was positively impacted by several facilities that occurred last year. After the first quarter and the shell deal steamboat solar this year.
Doron Blachar: In addition generation drew from the contribution of the newly acquired geothermal and solar assets.
Doron Blachar: Our Pune complex also helped drive generation growth during the quarter.
Doron Blachar: Generating capacity continued to ramp up relative to last year running at 30 megawatts over the last two quarters.
Doron Blachar: This further accomplished by increased generation at <unk>.
Doron Blachar: In total we added 110 megawatts since the beginning of the year to the electricity segment portfolio and grew the generation by seven 9%.
Doron Blachar: Tune in to FLY12 for an update on our operating foot... At our Olkaria power plant in Kenya, our operational teams are continuing to work to increase capacity, and we are currently operating at close to 130... Our drilling campaign in Olkaria has continued to show positive results, and we continue to believe that the connection of the new wells will both support generation upsides and Improved Future Performance. In Guadalupe, as announced before, we signed a 30-year PPA with EDF for the development of a new 10-megawatt geothermal power plant, which helps support our capacity growth targets and strategically expands our presence in the attractive Caribbean region. The new geothermal plant will be added to our existing 50 megawatts per yard.
Doron Blachar: Turning to slide 12 for an update on our operating footprint.
Doron Blachar: <unk> power plant in Kenya, our operational teams are continuing to work to increase capacity.
Doron Blachar: And we're currently operating at close to 130 megawatts.
Doron Blachar: Our drilling campaign in oncology has continued to show positive results and we continue to believe that the collection of the new wells will both support generation upside.
Doron Blachar: And improve future performance.
Doron Blachar: In Guadeloupe as announced before we signed a 30 year PPA with EDF for the development of our new 10 megawatt geothermal power plant.
Doron Blachar: Which helps support our capacity growth targets and strategically expand our presence in the attractive Caribbean region.
Doron Blachar: The new geothermal plant will be added to our existing 50 megawatts.
Doron Blachar: This and the expected 10 megawatt Dominica power plant currently under development will bring our total geothermal capacity in the Caribbean region to 35 megawatts once the plants become operational in 2020. And on the strategic front, on slide 13, we announced in January that we completed the acquisition of the portfolio of geothermal and solar assets for Menel Green Power North America. The contribution of the new assets to First Quarter revenues and EBITDA is aligned with our... We have identified new opportunities to enhance the acquired assets on top of the upgrades that we have already initiated, and we are currently evaluating their potential contribution. Turning to slide 14.
Doron Blachar: This and the expected 10 megawatts Dominica pulp and currently under development will bring our total geothermal capacity in the Caribbean region to 35 megawatts once the plans to become operational in 2025.
Doron Blachar: And on the strategic front on Slide 13, we announced in January that we completed the acquisition of the portfolio of geothermal and solar assets from Enel Green Power North America.
Doron Blachar: The contribution of the new assets to first quarter revenues and EBITDA is aligned with our expectation.
Doron Blachar: We have identified new opportunities to enhance the acquired assets on top of the upgrades that we've already initiated and we are currently evaluating the potential contribution.
Doron Blachar: Turning to slide 14.
Doron Blachar: Our product segment backlog stands at 130 million units. We are encouraged by the worldwide tailwind for geothermal energy that should allow us to continue maintaining a strong, Moving to slide 15. The energy storage segment delivered a strong quarter that was supported by new projects which contributed to our results, as well as the long-term tolling agreement for our Pomona II facility in California, which helped create a stable and profitable revenue stream for the energy storage segment.
Doron Blachar: Our product segment backlog stands at $130 million.
Doron Blachar: We are encouraged by the worldwide tailwind for geothermal that should allow us to continue maintaining our strong backlog.
Doron Blachar: Moving to slide 15, the energy storage segment delivered a strong quarter. This was supported by new project, which contributed to our results as well as the long term tolling agreement for our Pomona to facility in California, which helped create a stable and profitable revenue stream for the energy.
Doron Blachar: Storage segment.
Doron Blachar: Also, we saw a better merchant rate in the PGM region that supported Q1 profit. As Asi mentioned, we have also continued to benefit from ITC with both our East Flemington and Bottleneck facilities that are eligible for tax credit, which reduces our tax expense. Moving to slides 17 and 18.
Doron Blachar: Also we saw better merchant rates and PGM region.
Doron Blachar: Posted Q1 profitability.
Doron Blachar: As as you mentioned, we have also continued to benefit from ITC with both our east Remington and bottleneck facilities.
Doron Blachar: Eligible to tax rate, which reduced our tax expense in the quarter.
Doron Blachar: Moving to slide 17 and 18.
Doron Blachar: We continue to see an increase in the demand for electricity and energy storage. The successful and steady execution of our growth strategy has given us the confidence to maintain our target to reach between 2.1 to 2.3 GW of portfolio capacity by year-end 2021. Slides 19 and 20 display the geothermal and hybrid solar PV projects that we currently have underway. We continue to remain on pace to complete three geothermal development projects in 2024, including Bihari Repowering in the U.S., Zunil in Guatemala, and Ijet in India. Combined, these projects will help increase our energy generating capacity by 26%. In our Solar PV portfolio, Steamboat Hill Solar completed COD during the first quarter, and during April, we achieved COD for North Valley.
Doron Blachar: We continue to see an increase in the demand for electricity and energy storage segments.
Doron Blachar: The successful and steady execution of our growth strategy.
Doron Blachar: Given us the confidence to maintain our targets to which between $2. One to 2.3 gigawatt portfolio capacity by year end 2026.
Doron Blachar: Slides 19, and 20 display the geothermal and hybrid solar PV projects that we currently have underway.
Doron Blachar: We continue to remain on pace to complete three geothermal development projects in 2024, which includes b, while repowering in the U S.
Doron Blachar: Sunil in Guatemala, and Egypt, Indonesia.
Doron Blachar: Combined these projects will help increase our energy generating capacity by 26 megawatts.
Doron Blachar: Solar PV portfolio Steamboat Hills solar complete facility during the first quarter and during April we achieved CRD four north valley soil.
Doron Blachar: Slides 21 and 22 highlight the third layer of our growth plan, energy storage. We completed the East Flemington 20 MW, 20 MWh facility and currently have six energy storage projects under development that will add 335 MW or 1040 MWh to our storage portfolio by the end of 2025 at our Bottleneck facility in California. We are currently in the commissioning stage, and we anticipate that the 80 MW or 320 MWh storage facility will begin operation towards the end of the second quarter of this year.
Doron Blachar: Slide 21, and 'twenty two highlight the third layer of our growth plan the energy storage side.
Doron Blachar: We completed the east Flemington 20 megawatts 20 megawatts our facility in.
Doron Blachar: Currently have six energy storage projects under development.
Doron Blachar: At 335 megawatts or 1040 megawatt hour to hour storage portfolio by the end of 2025.
Doron Blachar: At our bottleneck facility in California.
Doron Blachar: We're currently in the commissioning stage and we anticipate that the 80 megawatts or 320 megawatt hour storage facility will begin operating towards the end of the second quarter of this year.
Doron Blachar: Please turn to slide 23 for a discussion of our 2024 guide. We continue to expect total revenue to increase by 7% year-over-year at the mid-point, to be between $860 and $910 million, with electricity segment revenues between $710 and $730 million, an increase of 8% compared to 2023. We expect between $115 and $135 million in the product segment, and energy storage revenues are expected to be between $35 and $45 million. We expect adjusted EBITDA to increase by approximately 10% in the mid-2020s to range between 500 and 545 million.
Doron Blachar: Please turn to slide 23 for a discussion of our 2020 full guidance.
Doron Blachar: We continue to expect total revenues to increase by 7% year over year at the midpoint.
Doron Blachar: To be between 860 $910 million.
Doron Blachar: With electricity segment revenues between 710 and $730 million.
Doron Blachar: An increase of 8% compared to 2023.
Doron Blachar: We expect between 115 and $135 million in the product segment.
Doron Blachar: And energy storage revenues are expected to be between 35 and $45 million.
Doron Blachar: We expect adjusted EBITDA to increase by approximately 10% at the midpoint to range between 515 and $545 million.
Doron Blachar: We expect annual adjusted EBITDA attributable to minority interest to be approximately $18 million. I will end our prepared remarks on slide 24. We remain on track to achieve our long-term growth target. We believe that our compelling and differentiated portfolio, unique growth strategy, and our track record to develop compelling projects with long-term PPAs position us well to improve profitability as demand continues to increase for renewable energy and drive significant shareholder value. Supporting this are favorable macro drivers, such as the increasing demand for renewable energy from data centers, attractive power purchase agreements, and declining battery prices. We look forward to meeting and speaking with our shareholders, analysts, and broader stakeholders at our upcoming Analyst Day in June. This concludes our prepared remarks. Now I would like to open the call for questions.
Doron Blachar: We expect annual adjusted EBITDA attributable to minority interest to be approximately $18 million.
Doron Blachar: I will end our prepared remarks on slide 24.
Doron Blachar: We remain on track to achieve our long term growth targets.
Doron Blachar: We believe that our compelling and differentiated portfolio.
Doron Blachar: <unk> growth strategy, and our track record to develop compelling projects with long term ppas position.
Doron Blachar: Position us well to improve profitability as demand continues to increase for renewable energy.
Doron Blachar: And drive significant shareholder value.
Doron Blachar: Supporting this are the favorable macro driver such as the increasing demand for renewable energy from data center attractive power purchase agreement and declining battery prices.
Speaker Change: We look forward to meeting and speaking with our shareholders analysts and broader stakeholders at our upcoming analyst day in June 'twenty.
Speaker Change: This concludes our prepared remarks, now I would like to open the call for questions.
Speaker Change: <unk> please.
Doron Blachar: Yeah.
Operator: Thank you, and as mentioned, the floor is now open for questions. To ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via the loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute. Again, that is star number one to join the queue, and your first question comes from the line of Noah Kaye from Oppenheimer. Please go ahead.
Speaker Change: Thank you and as mentioned the floor is now open for questions to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.
Operator: If you would like to withdraw your question simply press Star one again.
Operator: If you are called upon to ask your questions and listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute.
Operator: Again that is star wanted to join the queue and your first question comes from the line of Noah Kaye from Oppenheimer. Please go ahead.
Andre Adams: Hi there, you've got Andre Adams on for NOAA. So, the first question would be, you've seen good performance so far from the email assets. Can you give us a little bit more color on how you're proceeding with the previously announced capacity upgrades? And if you could provide any more detail on the new opportunities you're pursuing with those assets, whether they're greenfield or brownfield.
Operator: Hi, there you've got Andre Adams on for Noah.
Andre Adams: So the first question would be you've seen good performance so far from the.
Andre Adams: Assets can you give us a little bit more color on how you are proceeding with the previously announced capacity upgrades.
Andre Adams: And if you could provide any more detail on the new opportunities you're pursuing but those assets, whether they are greenfield or brownfield specifically.
Doron Blachar: Thank you, and this is Doron. So the NNAs, as we said, are performing a little bit better than what we expected as part of the acquisition. The enhancements that we plan to have by the end of 2025 are on track. We've actually started on one of them, the engineering part, and with the other two, we're finalizing our detailed plan, and we'll start the engineering and manufacturing immediately afterwards. And so things are on track as we expected.
Speaker Change: Okay. Thank you.
Andre Adams: It is the wrong so.
Speaker Change: And then.
Doron Blachar: And are performing.
Doron Blachar: Better than what we have.
Doron Blachar: Basically the bulk of it.
Doron Blachar: Acquisition.
Doron Blachar: The enhancement.
Doron Blachar: We plan to have by the end of 'twenty five are on track to add could be.
Speaker Change: So already.
Doron Blachar: And one of them the engineering.
Doron Blachar: The other tool and we're finalizing our detailed plan and start the engineering and manufacturing immediately afterwards.
Speaker Change: So things at all.
Doron Blachar: On track as we expect.
Doron Blachar: The improved enhancement that we see, we actually have spoken to our offtaker in Koforth, and there is a very strong, there's a very strong demand for additional megawatts, and we are working with him to see if we can increase the interconnection. And the PPA, which is very much in favor, we do believe the existing resource can support more megawatts than what we anticipated originally. So if these three stars align, we'll be able to do more than we've expected.
Doron Blachar: The improved enhancement that we see we actually have.
Doron Blachar: Spoken you know with our offtake.
Doron Blachar: And the go forward and build a very strong and there is a very strong demand.
Doron Blachar: Additional megawatts and we are working with him.
Doron Blachar: To see if we can.
Doron Blachar: Everything to conviction.
Doron Blachar: And the PPA, which is very much in favor.
Doron Blachar: We do believe the resource to support more existing resource support more.
Doron Blachar: Megawatts than what we anticipated originally.
Doron Blachar: So it's that.
Doron Blachar: These three stars will align will be able to do more than what we've expected.
Doron Blachar: Mike most of the enhancement.
Doron Blachar: A few months forward, but it would be.
Doron Blachar: It might move the enhancement a few months ahead, but it will be more done. So these are brownfields. And since we do see this, very strong demand over there, and we believe that we might be able to expedite the Greenfield, which was forecast three years down the road, but we might be able to bring it a little bit earlier.
Doron Blachar: So these are brownfield.
Doron Blachar: Yes.
Doron Blachar: Since we do see this.
Doron Blachar: Very strong demand overdue bills.
Doron Blachar: Believe that might be able to expedite also the greenfield which was.
Doron Blachar: Walk us down the road, but we might.
Doron Blachar: It might be able to bring it to a bit earlier.
Doron Blachar: Okay.
Speaker Change: Great. Thanks.
Justin Lars Clare: Great, thanks. Your next question comes from the line of Justin Clare from Roth MKM. Please go ahead. Justin Clare, your line is open.
Doron Blachar: Your next question comes from the line of Justin Clare from Russ M km. Please go ahead.
Justin Lars Clare: Just in Clay your line is open.
Doron Blachar: Yep. Good morning. Sorry about that. So, I wanted to start off here, just you had mentioned data centers earlier, and there's obviously pretty strong demand for firm renewable power from data centers. So, wondering if you could just speak to the opportunity that you're seeing there for Ormat to serve that need, whether from the geothermal side of your business or from the storage side of your business.
Justin Lars Clare: Yep.
Justin Lars Clare: Morning, sorry about that.
Doron Blachar: So I.
Doron Blachar: I wanted to start off here just you had mentioned Datacenters earlier and there is obviously pretty strong demand for firm renewable power from data centers. So I'm wondering if you could just speak to the opportunity that youre seeing there for or Matt.
Doron Blachar: To serve that need whether from the geothermal side of your business or from the storage side of your business.
Doron Blachar: Yeah.
Doron Blachar: As you said, the market today is in very strong demand from the utilities, but also from the data centers. We've already been approached by a few data centers that are looking for green and basic renewable energy. We are discussing with them, and geothermal is a specific site, so we're discussing with them exactly how we can connect to them to make sure that they can get the green energy that they are looking for. I hope that in the next few months we'll have some more updates for you, but we are in discussions with some of them.
Speaker Change: Well, yes.
Doron Blachar: Yes.
Doron Blachar: As you said.
Doron Blachar: The market today.
Doron Blachar: And the very strong demand.
Doron Blachar: From the utilities, but also from the data center.
Doron Blachar: Would you buy a few data centers.
Doron Blachar: They are looking for green.
Doron Blachar: Baseload renewable energy.
Doron Blachar: We are discussing with them.
Doron Blachar: Geothermal is specific sites, we're discussing with them exactly how we can connect to them and to make sure that they can get.
Doron Blachar: The Green energy that they are looking for.
Doron Blachar: And I hope that the next few months, we'll have some more updates to you but.
Doron Blachar: We are in discussion with.
Doron Blachar: With some of them.
Doron Blachar: And the price singles.
Doron Blachar: The pricing over there is very high, the PTA from the utilities. You know, if we talked about it in the past, in the 80s, I can say today that the discussions for geothermal are in the 90s and above that even. So there's a lot of demand, and we're trying to see how we can generate more and more electricity from our facilities.
Doron Blachar: Very hard the pricing that we see the PPA from the utilities.
Doron Blachar: And the best in the 18th.
Doron Blachar: Today, the discussion for geothermal in the nineties.
Doron Blachar: Above that even.
Doron Blachar: So there was a lot of demand and we're trying to see how we can generate more and more.
Doron Blachar: Electricity from our facilities.
Justin Lars Clare: Okay, great. And then maybe, maybe a little bit over that, you did mention that you've had success in the drilling campaign with your Olcaria facility, and there's potential upside to the generation there. I was wondering if you could just speak to the time frame at which we could potentially anticipate more capacity coming online. And then, can you remind us, do you need to update the PPA as you increase capacity there? And then, is there any potential change to the PPA pricing, either for the existing capacity or for the new capacity?
Speaker Change: Okay great.
Doron Blachar: And then maybe shifting over you did mentioned that <unk> had success in the drilling campaign with your old carrier facility and there is potential.
Justin Lars Clare: Potential upside to the generation. There was wondering if you could just speak to the timeframe at which we could potentially anticipate more capacity coming online and then can you remind us do you need to update the PPA.
Justin Lars Clare: PPA as you increase capacity there and then is there any potential change to the PPA pricing either for the existing capacity or for the new capacity.
Doron Blachar: Thank you so much. I'll start with our PPA for 150 megawatts at the existing price. This is what we have signed, and that's what we can reach. For about $150,000, we'll obviously need to negotiate an additional PPA.
Speaker Change: Thank you Scott I'll start with the PPA for 150 megawatts.
Doron Blachar: Right.
Doron Blachar: What we.
Speaker Change: We have signed and that's what we can reach.
Doron Blachar: About 150, we would obviously need to negotiate an additional PPA.
Doron Blachar: The drilling campaign was very, very successful. We were able to drill to the deep reservoir, which is effectively a new reservoir for us. And we see, on occasional days, a very, very high generation above, close to 140 megawatts, but it's not yet stable. We expect that towards the end of the year, we will be able to make some adjustments to the power plant, and hopefully, by that time, we'll be able to generate closer to 140 megawatts. But we're very, very encouraged by the campaign that we did. It went to a totally new reservoir, and it was very successful.
Doron Blachar: The drilling.
Doron Blachar: Pain was very very successful, we're able to drill to the deeper one.
Doron Blachar: Sure.
Doron Blachar: Certainly a new as well for us.
Doron Blachar: And we see an occasional days.
Doron Blachar: It's very very high generation above.
Doron Blachar: Gross 140 megawatts.
Doron Blachar: It's stable, we expect it towards the end of the year.
Doron Blachar: We will be able to make some adjustment to the power plant and hopefully by that time, we'll be able to generate at closer to.
Doron Blachar: 140.
Speaker Change: Thanks, a lot.
Doron Blachar: But we're very very encouraged with the campaign that we did.
Doron Blachar: Once to a totally new.
Doron Blachar: This as well.
Doron Blachar: And it was very successful.
Justin Lars Clare: Okay, got it. And then just one more on storage. You know, we've heard the pricing for batteries continues to trend lower here, so I was wondering if you could update us on what you're seeing. We've also heard that there are potentially more favorable terms being offered from suppliers, and I was wondering, you know, could this affect your CAPEX expectations moving forward here? And you know, I guess maybe you could also comment on the project returns for storage and how attractive those might be.
Speaker Change: Okay got it and then just one more on storage.
Justin Lars Clare: The pricing for batteries continues to trend lower here.
Justin Lars Clare: So just wondering if you could update us on what Youre seeing we've also heard that there is potentially more favorable terms being offered from suppliers and.
Justin Lars Clare: I'm wondering could this affect your capex expectations moving forward here and.
Justin Lars Clare: I guess, maybe can you also comment on the project returns.
Justin Lars Clare: For storage and how attractive those might be.
Doron Blachar: So we definitely see the price of batteries going down. It will help us to release more projects with higher returns. We're able to see low double-digit returns on our project, project IRR on the storage.
Justin Lars Clare: So.
Justin Lars Clare: And we definitely see that price those batteries are going down.
Doron Blachar: It will help us to really small projects with higher returns.
Speaker Change: Good to see.
Doron Blachar: Low double digit returns on our project.
Speaker Change: I don't know.
Doron Blachar: On the storage.
Doron Blachar: Yeah.
Doron Blachar: We do see competition between the battery suppliers, although most of them are from China, where they are trying to get more market share from one another. But we definitely see, we feel more comfortable today with securing batteries and contracts. The delivery times of batteries have become much faster than in the past. In the past, it would have been 18 months, sometimes even more than today. You can get between 12 to 18 months delivery time. Definitely, the market on the battery side has changed significantly, and we hope and expect it to continue.
Doron Blachar: We do see between that.
Doron Blachar: The battery suppliers are doing most of them are from China competition between them.
Doron Blachar: Trying to get more market share between one another.
Doron Blachar: But we definitely see we feel more comfortable today.
Doron Blachar: Q1, the batteries.
Doron Blachar: Contract the delivery times of batteries has become much faster than in the past during the past six would have been 18 months, sometimes even more debt today.
Doron Blachar: Can get between 12 to 18 months and delivery time.
Doron Blachar: So definitely the market on the battery side or change significantly.
Doron Blachar: And we hope and expect it to continue.
Justin Lars Clare: Okay, thanks very much.
Speaker Change: Okay. Thanks very much.
Speaker Change: Thank you.
Ryan Michael Levine: Your next question comes from the line of Ryan Levine from Citi. Please go ahead.
Justin Lars Clare: Your next question comes from the line of Ryan Levine from Citi. Please go ahead.
Doron Blachar: Thank you for taking my question. To follow up on some of the earlier comments, you mentioned opportunities to pursue development with some of these data center customers at about $10 per megawatt above previous pricing. What markets are you targeting for that customer base? Some of the Western US states or other parts of the world.
Ryan Michael Levine: Thank you for taking my question to follow up on some of the earlier comments you mentioned opportunities to pursue development with some of these data center customers.
Doron Blachar: At that.
Doron Blachar: $10 per megawatt hour.
Doron Blachar: Above previous pricing what markets are you targeting for that customer base.
Doron Blachar: Then in the Western U S states or other parts of the world.
Doron Blachar: At this stage, we are targeting purely the western part of the U.S. We had some discussions about, you know, supplying somebody that will build a data center someplace near the National Front. But we see this is very early, but if somebody decides to develop a data center in Guatemala or Kenya, we'll be very happy to supply him with green energy from our facility.
Doron Blachar: At this stage, we're targeting purely the western part of the U S.
Doron Blachar: Some discussions about supplying somebody group it was built.
Doron Blachar: Data Center someplace.
Doron Blachar: And on the international front.
Doron Blachar: But we see this is very early but if somebody will decide to develop.
Doron Blachar: The same thing what the Milo Kenya.
Doron Blachar: I'll be very happy to supply them with green energy from our facility.
Ryan Michael Levine: Great. And in the slide deck, it highlighted the successful campaign in Kenya. Can you provide a little more color around the markers of that success or what you're seeing from that drilling campaign?
Doron Blachar: Great.
Doron Blachar: And in the slide deck.
Ryan Michael Levine: As highlighted the successful campaign in Kenya can you provide a little more color around the markers of that success or what you're seeing from that drilling campaign.
Doron Blachar: The campaign we basically did was split into two parts. On the one hand, we drilled into our existing reservoir, which is relatively shallow, which was okay to support the existing generation. But we also drilled to the deep reservoir. Deep, I mean around 10,000 feet, which is the deepest that Ormat has drilled so far. And here we hit a very good reservoir. It has the potential to increase generation to the area of 140 megawatts.
Ryan Michael Levine: Yes.
Ryan Michael Levine: The campaign basically.
Doron Blachar: It was split into two on one hand.
Doron Blachar: Great.
Doron Blachar: These figures of law, which is relatively shallow.
Doron Blachar: Okay.
Doron Blachar: The existing generation.
Doron Blachar: But we also go into the details of all deep I mean around 10000 feet.
Doron Blachar: Which is the deepest drill bit muscles will profile and here, we get a very good potential to increase generation.
Doron Blachar: The area of the 140 megawatts.
Doron Blachar: We've seen that for a short period of time, but we need to make some adjustments to the pipeline in order to be able to accept this strong resource. And we expect that to happen towards the end of the year.
Doron Blachar: We've seen that for a short period of time, but we need to make some adjustment to the power plant in order to be able to accept.
Doron Blachar: This wrong resource.
Doron Blachar: That's what happened towards the end of the year.
Ryan Michael Levine: Okay, and last quarter you had highlighted some trade route redirection away from the Suez Canal. Is that still going on? Is there a way to quantify the impact to your business from Margins or Atlas?
Speaker Change: Okay and last quarter, you had highlighted some trade route redirection away from the Suez Canal.
Ryan Michael Levine: Is that still going on there a way to quantify the impact to your business.
Ryan Michael Levine: And margins our outlook.
Doron Blachar: Now the change of route that we mentioned happened, and once it happens, you know, it doesn't change. You take it into account. So the shipping time is extended by two weeks, and once you align all your projects, all your manufacturing and delivery times to that, then it's not a problem. It doesn't impact anyone.
Speaker Change: Well the change of route that we mentioned happened in once it happens you know it doesn't change you take it into account.
Doron Blachar: Shipping time is extended by two weeks.
Doron Blachar: Once you're aligned audio project audio all manufacturing and delivery times to bed that needs.
Doron Blachar: It doesn't impact anymore.
Doron Blachar: Yeah.
Ryan Michael Levine: Great. Thanks for taking my questions.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Thank you.
Derek John Podhaizer: And as a reminder, if you would like to join the queue and ask a question, or if you have a follow-up question, please press star 1 on your telephone keypad now. And your next question comes from the line of Derek Podhaizer from Barclays. Please go ahead.
Speaker Change: And as a reminder, if you would like to join the queue and ask a question or if you have a follow up question. Please press star one on your telephone keypad now.
Derek John Podhaizer: And your next question comes from the line of Derek behavior from Barclays. Please go ahead.
Derek John Podhaizer: Hey, good morning. Maybe just to continue the conversation on Kenya, could you provide us an update on the collection progress and whether you're collecting in USD or not?
Derek John Podhaizer: Hey, good morning.
Derek John Podhaizer: Just to continue the conversation on Kenya could you provide us an update on the collections progress.
Derek John Podhaizer: Whether you are collecting in USD or not.
Derek John Podhaizer: Yeah.
Doron Blachar: Good morning. As we mentioned last year, we do expect improvement in collection in Kenya. Over the quarter, and you will see it in our cash flow, our operating cash flow was probably one of the strongest ever in Ormat history. I think it was close to $120 million. You'll see it in the presentation.
Derek John Podhaizer: Good morning.
Derek John Podhaizer: Last year, we do expect improvement in the collection in Kenya.
Doron Blachar: Over the quarter.
Doron Blachar: Our cash flow.
Doron Blachar: Operating cash flow was one probably the strongest ever in the history I think it was close to $140 million a seat on the presentation.
Doron Blachar: And it was supported by a very good collection in Kenya. We collected over $25 million in the last four months, in addition to the current billing. So almost $60 million in a four-month collection. I don't think we've seen that much in the last few years.
Doron Blachar: It was supported by very good collection in Kenya, we collected the last four months in addition to the colon billing.
Doron Blachar: $25 million, so almost $60 million.
Doron Blachar: Four months collection.
Doron Blachar: I don't think we've seen as much in the last few years.
Doron Blachar: A dollar in Kenya, we do see achieved did very successful bond offerings to the government.
Derek John Podhaizer: The dollar in Kenya, we do see a shift. They had a very successful bond offering for the government. And as a result, the currency is in a much better situation. And I can tell you that we are very pleased with the situation in Kenya.
Derek John Podhaizer: And as a result, the equivalency in a much better situation and I can tell you that we are.
Derek John Podhaizer: We're very pleased with.
Derek John Podhaizer: The situation in Canada. These days.
Doron Blachar: Great, appreciate the color. Maybe just expand on the $150 million you're expecting in cash payments from the PTC ITC. We saw $29 million in the first quarter. So maybe walk us through how that'll step up for the remainder of the year, just as you see it today.
Speaker Change: Great appreciate the color.
Derek John Podhaizer: Maybe just expand on the $150 million youre expecting and cash payments from the PTC ITC we.
Doron Blachar: We saw 29 million first quarter, so maybe walk us through how that will step up for the remainder of the year just as you see it today.
Doron Blachar: Yeah.
Doron Blachar: So just to explain, the $150 million is a cash item; not all of it will flow through the P&L.
Speaker Change: So just to extend the $150 million is the cash items not all of it.
Doron Blachar: Goes to the P&L.
Doron Blachar: The two largest items in that are two tax equity transactions that we plan to make this year, one for the Hebrew power plant that is already operating, and one for the Biwawe power plant that is basically, as we speak, starting to operate. So those combined will bring close to $100 million in GAS-150. In addition to that, we have two storage assets that are coming online this year. One that has already come online, which is Flemington, and the second one, which is Pomona, which is very close to starting operation in the next few weeks.
Doron Blachar: The two largest item in that are to tax equity transactions.
Doron Blachar: But we plan to make the shield one for the <unk> power plant is already operating.
Doron Blachar: And one for degree while we power plant.
Doron Blachar: Basically as we speak.
Doron Blachar: It's starting to operate so those combined will bring a close to $100 million, we've got months each day.
Doron Blachar: In addition to that we have to stall as Jed said without coming online Bcl, one that already came online which is getting done.
Doron Blachar: And the second one was just on one which is very close to start operating in the next few weeks. So between those two we expect to get roughly $35 million to $40 million of cash.
Doron Blachar: So between those two, we expect to get roughly $35 to $40 million in cash. So when you combine those, this is almost all of the $150 million. The remaining is PVC transfer, mostly for the Hebrew power plant that we generated last year and this year. We're generating around $4 million a quarter in PTCs over there. So when you think about it, some of it would flow to the P&L. All of the ITC storage would flow to the P&L.
Doron Blachar: So when you combine those this is almost all of the $150 million. The remaining is PTC transfer.
Doron Blachar: Mostly for the EBIT power plant.
Doron Blachar: We generated during this year, we're generating around four with another quarter of PTC is okay. So when you think about it.
Doron Blachar: Some of it will flow through the P&L all of the ITC storage would flow through the P&L all of the PTC the transfer will flow through the P&L and then the tax equity transactions on the Geo terminal, which is roughly $100 million will flow through the P&L over the next eight nine years evenly.
Doron Blachar: All of the PTCs transfer would flow to the P&L, and then the tax equity transactions on the geothermal, which is roughly $100 million, will flow to the P&L over the next eight, nine years. But the most important thing is that we're expecting $150 million in cash. When you combine it with our very strong EBITDA this year, it gets us to a point where Ormat is almost fully covering all of its needs, including all the growth capex, which we haven't been in that situation for years.
Doron Blachar: But the most important thing is that we are expecting $150 million of cash when you combine it with <unk>.
Doron Blachar: Very strong EBITDA this year it gets us to a point that all might almost.
Doron Blachar: Fully covering all of it needs, including all the growth Capex, which we haven't been in that situation for years.
Derek John Podhaizer: Right, and I appreciate that. And then, maybe just lastly, on the CapEx, I noticed in the deck it was revised up from 550 to 570 for 2024. It looks like it's all in storage, so maybe some color on that. What's driving the increase to your CapEx budget for the year?
Speaker Change: Right I appreciate that and then maybe just lastly on the Capex I noticed in the deck. It was revised up $550 to $5 70 for 'twenty one it looks like it's all in storage. So maybe some color around that what's driving the increase to your capex budget for the year.
Doron Blachar: What we see on storage is two things that are really helping us pre-releasing projects that you don't see their names. The first thing is, as mentioned on the call before by Doron, battery prices are down close to 50% versus two years ago.
Derek John Podhaizer: What we see ontologies to things that are really helping us.
Doron Blachar: Pre releasing projects that you don't see their named yet.
Doron Blachar: First thing is as I mentioned on the call will be followed by Don battery prices down close to 50% versus two years ago.
Derek John Podhaizer: So this has enabled us to release more projects. So that's one thing that we are already pre-releasing. And second, PPA prices are almost at the level that they were before the IRA came in. So we are in a very strong demand for PPAs on the one hand. And battery prices are coming down. So we are pre-releasing more projects. Some of it includes buying some batteries for those projects. Therefore, you see some increase.
Doron Blachar: This has enabled us to release more projects. So that's one thing that we are already pre leasing project and second.
Derek John Podhaizer: PPA prices.
Derek John Podhaizer: Almost at the level they were before the <unk>. So we are in a very strong demand for ppas on one hand.
Derek John Podhaizer: And then battery prices are coming down. So we are releasing more projects some of which include the buying some of the battery.
Derek John Podhaizer: Project.
Derek John Podhaizer: Therefore, you see some inquiries but.
Derek John Podhaizer: But what will happen next, in the next few quarters, you will see us bringing more projects to you guys, maybe even as early as between now and year-end, and maybe we'll talk about it at analyst day, but there are more projects that are coming online and therefore we're increasing. We don't see an increase in the current project capital. Actually, we see a decrease, so it's coming from new projects.
Derek John Podhaizer: What will happen next in the next few quarters, you will see us bringing more.
Derek John Podhaizer: Projects do you guys, maybe even as early as the between now and year end.
Derek John Podhaizer: And maybe we'll talk about in the analyst day, but there are more projects.
Derek John Podhaizer: Coming online and therefore, we think we don't see an increase.
Derek John Podhaizer: In the current projects Capex.
Derek John Podhaizer: Actually we see a decrease so it's coming from new projects.
Derek John Podhaizer: Great. I appreciate all the color. I'll turn it back.
Speaker Change: Great I appreciate all the color I'll turn it back.
Jeffrey David Osborne: And your next question is from the line of Jeff Osborne from TD Cowan. Please go ahead.
Derek John Podhaizer: And your next question is from the line of Jeff Osborne from TD Cowen. Please go ahead.
Jeffrey David Osborne: Hey, good morning. Just two quick ones. I might have missed it, but did you provide an update, or could you provide an update on the domestic storage battery supply that you were aiming to achieve? I think that was later this year or early next year.
Jeffrey David Osborne: Hey, Good morning, guys. Just two quick ones I might have missed it but did you provide an update or could you provide an update on the domestic storage battery supply that you're aiming to achieve I think that was later this year early next.
Doron Blachar: And at this point, it looks like the best route is to focus on and buy a Chinese-made battery. Of course, we're talking to many manufacturers to see who will be the first one that will start producing in the US to try to tie it to it. We also see that there is no way to get a domestic court, even when buying Chinese batteries; this is still very preliminary. But, for example, it looks like Tesla that does buy outside the US battery cells is eligible, or at least potentially eligible, for domestic content. So there are two routes, just to be clear. One is to buy used manufactured batteries; they don't exist yet.
Speaker Change: Can you name it.
Jeffrey David Osborne: This point it looks like the best route into focus and by Chinese manufactured batteries of course, we are talking to many manufacturers to see who will be the first one that will start producing in the U S to try to tie to it.
Doron Blachar: We also see that as maybe a way to get the domestic content.
Doron Blachar: Even with buying Chinese batteries.
Doron Blachar: It's still very preliminary.
Doron Blachar: But for example, it looks like Tesla does buy.
Doron Blachar: Outside the U S is battery cells are eligible or at least potentially eligible for the domestic content. So there are two outs just to be clear one.
Doron Blachar: And it will probably be slightly more expensive. And the second route is to see if there is a way to buy Chinese-made batteries and do enough work on them to make them eligible for the extra 10%. But I will say one thing.
Doron Blachar: U S manufactured.
Doron Blachar: They don't exist yet.
Doron Blachar: And it will be probably slightly more expensive and the second route is to see is there a way to buy Chinese manufacture batteries to.
Doron Blachar: To make enough work with them to make them eligible for the extra 10%.
Doron Blachar: But I will say one thing we did see a few weeks ago.
Doron Blachar: We did see a few weeks ago that there were new maps of areas that will be eligible for an additional 10% of the energy community's additional 10%. And it might be that there's an indication that some of our projects that we have on the books today that we thought that we'd have a 30% at BRAC are actually going to get to 40% because of the area that they are in. So there are positive things on both sides. I just want to make a comment. I responded earlier, and I said that the ITC is related to Pomona. I just said the ITC is related to Bottleneck, which is a project that costs us slightly over $100 million and has a 40% ITC percentage eligible for it.
Doron Blachar: They were new maps.
Doron Blachar: But.
Doron Blachar: Areas that will be eligible for energy community additional 10%.
Doron Blachar: And it might be this there was indication that some of our projects that we have on the books today.
Doron Blachar: We thought it will over 30%.
Speaker Change: Got it.
Doron Blachar: Brad actually going to get to 40% because of the.
Doron Blachar: Area that they are so there are positive things on both sides.
Doron Blachar: Want to make a comment I responded earlier and I said that.
Doron Blachar: The ITC is related to promote will now adjusted the ITC related to bottleneck.
Doron Blachar: Which is a project that we it cost us slightly over $100 million and has a 40%.
Doron Blachar: ITC percentage of eligible for it.
Doron Blachar: Yeah.
Jeffrey David Osborne: That's helpful. And the last one I had is just, can you remind us, are there any renewables that you have coming up in the next two to three years? Certainly, there's a lot of demand for green base load power like you offer. It just was unclear to me with the existing assets. Do you have any renewables that would be up for potentially signing at a much higher price?
Speaker Change: Got it that's helpful and the last one I had just can you remind us is there any renewals that you have coming up in the next two to three years certainly there's a lot of demand for Green Baseload power IQ offer just was unclear to me with the existing assets do you have any renewals.
Jeffrey David Osborne: Would be up for potentially side, you've got a much higher price.
Jeffrey David Osborne: Yeah.
Doron Blachar: So we have a list of the projects on the presentation that are coming online in the coming... Thank you very much. And we have Galena and Stimbo that are also expected to change and the PPA and go to the new PPA towards the 26, 27.
Jeffrey David Osborne: Okay.
Jeffrey David Osborne: So we have a list of the progress on the presentations that are coming online in the coming.
Doron Blachar: Yes.
Doron Blachar: We have some renewals that are coming on as well as new contracts I believe the renewals be Huawei is one of them, which is the enhancement in the change of the contract we have.
Doron Blachar: But that is changing in the 26.
Doron Blachar: We have the Galena and steamboat that also with the change.
Doron Blachar: And the PPA and go to the new PPA towards the 'twenty 'twenty six 'twenty seven.
Doron Blachar: Yes.
Jeffrey David Osborne: So just to be clear, Doron, I thought many of those weren't those for the 150 megawatts combined. I think it was that you signed a couple of years ago for LEDWP or the Southern California Basin, or no?
Doron Blachar: So just to be clear John.
Doron Blachar: Any of those weren't those for the 150 megawatts combined I think it was that you signed a couple of years ago for led DWP to Southern California Basin right now.
Doron Blachar: Some of them are for LAWP, some of them are for Envy Energy, some we are negotiating, the Hebrew one is none, none of them, so we are negotiating today a PPA. It has a PPA with COPPA that ends at the end of 2025, and we are now negotiating a new PPA. For the extension, we have quite a lot of D-metroid. So I think we have all of them going into existing Portfolio PPAs and some for new ones. We're also looking to see how we can optimize the existing PPA that we've signed to make sure that it's a win-win situation for both parties.
Doron Blachar: Some of them are fully WPS somewhat demo for NV energy.
Doron Blachar: Negotiating the Heber one.
Doron Blachar: None none.
Doron Blachar: None of them. So we are negotiating today PPA has a PPA with the.
Doron Blachar: Copper that ends at the end of 'twenty fives, and we are now negotiating a new PPA.
Doron Blachar: So the extension, we have quite a lot of demand for it.
Doron Blachar: We have all of them going into existing.
Doron Blachar: Portfolio, Ppas and some new ones.
Doron Blachar: So looking to see how we can.
Doron Blachar: Optimize.
Doron Blachar: Existing ppas with Si.
Doron Blachar: To make sure that.
Doron Blachar: It's a win win situation for both.
Doron Blachar: Okay.
Doron Blachar: Yeah.
Jeffrey David Osborne: Perfect. Thank you.
Speaker Change: Perfect. Thank you.
Doron Blachar: And that concludes the Q&A session for today. I will now turn the conference back over to Doron for closing remarks.
Jeffrey David Osborne: And that concludes the Q&A session for today I will now turn the conference back over to Darren for closing remarks.
Doron Blachar: Thank you everyone for joining us. The quarter was a very good quarter. The demand that we see in the U.S. from utilities and data centers is great, very, very strong, and increasing, and obviously is pushing PPA pricing up, and we see the improved operation. Puna, which has done in the quarter over 30 megawatts and is continuing like that, and the successful campaign in Elkaria, so we are very encouraged for this year and for the coming years, and we look forward to seeing all of you in New York at our investors and analysts day in June.
Doron Blachar: Okay. Thank you everyone for joining the call.
Doron Blachar: It was a very good quarter the demand that we see in the U S from utilities and data centers.
Doron Blachar: Very very strong and increasing.
Doron Blachar: Obviously, pushing PPA pricing up.
Doron Blachar: CD pool.
Doron Blachar: <unk>.
Doron Blachar: Tuna. This is good because then in the quarter over 30 megawatts continue like that and the success campaign.
Doron Blachar: So we're very encouraged.
Doron Blachar: Yeah.
Doron Blachar: For this year and for the coming years.
Doron Blachar: We look forward to see all of you.
Doron Blachar: In the New York.
Doron Blachar: Our investors and analyst day in June Thank you.
Doron Blachar: Yeah.
Operator: This concludes today's conference call. Thank you all for joining us. Enjoy the rest of your day. You may now disconnect.
Speaker Change: This concludes today's conference call. Thank you all for joining us and enjoy the rest of your day you may now disconnect.
Operator: [music].
Operator: Yeah.
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Operator: Okay.
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Operator: Okay.
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