Q3 2024 Ormat Technologies Inc Earnings Call
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Speaker Change: I would now like to turn the conference over to Josh Carroll with Alpha IR. Please go ahead.
Josh Carroll: Thank you operator hosting the call today.
Speaker Change: Chief Executive Officer.
Speaker Change: And as for Chief Financial Officer, <unk>, <unk>, Vice President of Investor Relations and ESG planning reported.
Speaker Change: Before beginning we'd 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.
Speaker Change: As defined in the private Securities Litigation Reform Act of 1095.
Speaker Change: These forward looking statements generally relate to the company's plans objectives and expectations for future operations.
Speaker Change: And are based on management's current estimates and projections future results or trends.
Speaker Change: Actual future results may differ materially from those projected as a result of certain risks and uncertainties.
Speaker Change: A discussion of such risks and uncertainties. Please see risk factors as described in more met technologies annual report on Form 10-K, and quarterly reports on Form 10-Q filed with the SEC.
Speaker Change: In addition, during the call the company will present non-GAAP financial measures such as adjusted EBITDA.
Speaker Change: Filiation to the most directly comparable GAAP measures and managements reason for things such information is set forth in the press release that was issued last night as well as in the slides posted on the website.
Speaker Change: Because these measures are not calculated in accordance with GAAP. They should not be considered in isolation from our financial statements prepared in accordance with GAAP.
Speaker Change: 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 <unk> Dot com under the presentation link that's found on the Investor Relations tab.
Speaker Change: With that said I would now like to turn the call over to <unk> CEO, Ron Bouchard Ron.
Ron Bouchard: Thank you Josh and good morning, everyone. Thank you for joining us today.
Ron Bouchard: During the third quarter, but continued to make significant progress towards achieving its long term growth targets.
Speaker Change: Also delivering strong financial results.
Speaker Change: Our financial performance during the quarter was highlighted by a 16, 3% increase in adjusted EBITDA drill.
Speaker Change: Driven by the strength of our growing operating portfolio.
Speaker Change: Solid operational performance and increased benefits for BTC generating during the quarter with higher prices.
Speaker Change: Within our electricity segment, we marked another quarter of consistent EBITDA improvements, which was driven by contributions from our recently acquired assets and the improved operational performance from our Pune facility, which continues to strengthen.
Speaker Change: In our energy storage business, we made significant progress in the third quarter as we transition to a more stable and consistently profitable portfolio.
Speaker Change: Setting the stage for accelerated growth.
Speaker Change: This progress is highlighted by the signing of two tolling agreements in Texas, the signing of an agreement in California.
Speaker Change: In our recent announcement that we have achieved commercial operation for our largest storage facility in our operating portfolio to 80 megawatts 320 megawatts hour bottleneck project in California.
Speaker Change: While the global macro perspective, we continue to experience strong industry tailwind three operating segments driven by the momentum we see related to the increased demand for renewable energy.
Speaker Change: To support the massive growth of data centers.
Speaker Change: Our business is very well positioned to continue to capitalize on these trends, which will strengthen our ability to sign additional long term contracts at elevated prices, while continuing to maintain strong product segment backlog.
Speaker Change: We expect that these trends should improve our profitability over time and allow us to reach our long term goals of growing our operating portfolio to approximately $2. One to two three gigawatts by the end of 'twenty two.
Speaker Change: Before I transfer the call to asset I would like to share with you. Good news, we recently received.
Speaker Change: In March 2021 we established a special committee of independent directors to investigate among other things certain claims made in a report published by a short seller regarding the company compliance with anti corruption law.
Speaker Change: We provided information as requested by the security and Exchange Commission and Department of Justice related to display.
Speaker Change: On October 22nd.
Speaker Change: 2024, we will notified by the staff of the SEC.
Speaker Change: <unk> has concluded its investigation it does not intend to recommend any enforcement action against the company at this time.
In our energy storage business, we made significant progress in the third quarter as we transition to a more stable and consistently profitable portfolio setting the stage for accelerated growth.
Speaker Change: We're proud of the company's commitment to compliance and the strength of our compliance program and we are happy to have this behind us. So we can devote our full attention to the important work or mud does every day.
This progress is highlighted by the signing of two tolling agreements in Texas, the signing of an agreement in California.
Speaker Change: Now before I provide further updates on our operations and plans I will turn the call over to <unk> to review the financial results for the quarter.
Recent announcements that we have achieved commercial operation for our largest storage facility.
Speaker Change: <unk>.
Speaker Change: Thank you Lauren.
Speaker Change: Let me start my review of our financial highlights on slide five.
Our operating portfolio to 80 megawatts 320 megawatt hour bottleneck project in California.
Speaker Change: Total revenue for the third quarter was $211 8 million.
While the global macro perspective, we continue to experience strong industry tailwind three operating segments.
Speaker Change: And the increase of one 8% on a year over year basis.
Speaker Change: Our consolidated top line expansion was driven by four seven growth in our electricity segment.
Given by the momentum we see related to the increased demand for renewable energy.
Both the massive growth of data centers.
Speaker Change: Which serves as a testament to the segment solid and predictable revenue.
Yeah.
Our business is very well positioned to continue to capitalize on these trends, which will strengthen our ability to sign additional long term contracts.
Our business is very well positioned to continue and capitalize on these trends, which will strengthen our ability to sign additional long-term contracts at elevated prices while continuing to maintain strong product segment backlog.
Speaker Change: <unk> third quarter 2024, gross profit was $58 9 million versus $60 million captured in the third quarter of 2023.
<unk> prices, while continuing to maintain strong product segment backlog.
With these trends should improve our profitability over time and allow us to reach our long term goals of growing our operating portfolio to approximately two plus two to three gigawatt by the end of 'twenty six.
We expect that these trends should improve our profitability over time and allow us to reach our long-term goals of growing our operating portfolio to approximately 2.1 to 2.3 GW by the end of 2026.
Speaker Change: Resulting in a consolidated gross margin of 27, 8%.
Speaker Change: Versus 28, 8% last year.
Speaker Change: Net income attributable to the company's stockholders was $22 1 million or <unk> 36 per diluted share in the quarter compared to.
Speaker Change: Before I transfer the call to us I would like to share with you. Good news, we recently received.
Before I transfer the call to Asi, I would like to share with you good news we recently received.
Speaker Change: In March 2021 we established a special committee of independent directors to investigate among other things certain claims made in a report published by a short seller regarding the company compliance with anti corruption law.
In March 2021, we established a special committee of independent directors to investigate, among other things, certain claims made in a report published by a short seller regarding the company compliance with anti-corruption law.
Speaker Change: $35 5 billion.
Speaker Change: <unk> 69 per diluted share in the third quarter of the prior year.
Speaker Change: The decrease in net income during the quarter was mainly driven by a $9 4 million dollar tax income recorded in the third quarter 2023 related to changes in Kenya tax laws.
We provided information as requested by the security and Exchange Commission and Department of Justice related to display.
We provided information as requested by the Security and Exchange Commission and Department of Justice related to these claims.
Speaker Change: On October 26, 2024, we were notified by the staff of the FCC.
On October 22, 2024, we were notified by the staff of the SEC that the SEC has concluded its investigation and does not intend to recommend an enforcement action against the company at this time.
Speaker Change: Adjusted net income attributable to the company stockholders was $26 $3 million.
<unk> has concluded its investigation it does not intend to recommend any enforcement action against the company at this time.
Speaker Change: Or <unk> 42 per diluted share.
Speaker Change: Compared to $28 2 million or <unk> 47 per diluted share in the previous year's period.
Speaker Change: We're proud of the company's commitment to compliance and the strengths of our compliance program.
We are proud of the company's commitment to compliance and the strength of our compliance program. And we are happy to have this behind us so we can devote our full attention to the important work OMAD does every day.
Speaker Change: A reconciliation of adjusted net income and EPS are provided in the appendix slide in the back of the presentation.
Speaker Change: We are happy to have this behind us. So we can devote our full attention to the important work or mud does every day.
Speaker Change: Third quarter, adjusted EBITDA was $137 7 million.
Speaker Change: Now before I provide further updates on our operations and plans I will turn the call over to Etsy to review the financial results for the quarter.
Now, before I provide further updates on our operations and plans, I will turn the call over to Asi to review the financial results for the quarter. Asi?
Speaker Change: An increase of 16, 3% compared to the one in $10 $3 million generated in the prior year period.
Speaker Change: <unk>.
Asi: Thank you Lauren.
Thank you, Doron.
Speaker Change: Let me start my review of our financial highlights on slide five.
Speaker Change: The extremely strong year over year increase in adjusted EBITDA was driven by contributions from the Nal assets, we acquired in the first quarter of 2024.
Speaker Change: Total revenue for the third quarter was $211 8 million.
Total revenue for the third quarter was $211.8 million, an increase of 1.8% on a year-over-year basis.
Speaker Change: And the increase of one 8% on a year over year basis.
Speaker Change: The sale of tax benefits from newly build plan and improve operational performance and higher pricing at our Puna power plant.
Speaker Change: Our consolidated top line expansion was driven by $4 seven growth in our electricity segment.
Speaker Change: In addition.
Speaker Change: Our adjusted EBITDA results during the quarter also benefit from compensation, we received from our recently negotiated settlement agreement with the battery supplier.
Which serves as a testament to the segment solid and predictable revenues.
Speaker Change: <unk> third quarter 2024, gross profit was $58 $9 million versus $60 million captured in the third quarter of 2023.
Orman's third quarter 2024 gross profit was $58.9 million versus $60 million captured in the third quarter of 2023.
Speaker Change: As a result, we will recognize this compensation over 24 months started April 2024.
Speaker Change: Whereby a total of $25 million.
Speaker Change: Resulting in a consolidated gross margin of 27, 8%.
resulting in a consolidated gross margin of 27.8% versus 28.8% last year.
Speaker Change: Will be recognized as income.
Speaker Change: This quarter, we recognized $6 5 million.
Speaker Change: Versus 28, 8% last year.
Speaker Change: Related to the period between April and September of 2024.
Speaker Change: Net income attributable to the company stockholders was $22 1 million or <unk> 36 per diluted share in the quarter compared to $35 5 million or <unk> 59 per diluted share in the third quarter of the prior year.
Speaker Change: And in the next six quarters, we should recognize approximately $3 1 million each quarter.
Net income attributable to the company's stockholders was $22.1 million, or $0.36 per diluted share in the quarter, compared to $35.5 million, or $0.59 per diluted share in the third quarter of the prior year.
Speaker Change: To clarify the settlement payment will not have an impact on our storage revenues or margin.
Speaker Change: There will only be recognized as operating income.
Speaker Change: The decrease in net income during the quarter was mainly driven by a $9 4 million dollar tax income recorded in the third quarter 2023 related to changes in Kenya tax laws.
Speaker Change: Turning to slide six.
Speaker Change: We breakdown the revenue performance at the segment level electricity segment revenue increased by four 7% to $164 6 million.
Speaker Change: Third quarter revenue growth was driven by contribution from our acquired <unk> asset.
Speaker Change: Adjusted net income attributable to the company stockholders was $26 $3 million.
Adjusted net income attributable to the company's stockholders was $26.3 million, or $0.42 per diluted share, compared to $28.2 million, or $0.47 per diluted share in the previous year's period.
Speaker Change: And the increase in revenues at our pool of complex <unk>.
Speaker Change: Following our successful drilling campaign.
Speaker Change: Or 42 cents per diluted share.
Speaker Change: The solid revenue growth in the electricity segment was partially offset by the expected weaker performance at Dixie Valley plant.
Speaker Change: Compared to $28 $2 million or <unk> 47 cents per diluted share in the previous year's period.
Speaker Change: Reconciliations of adjusted net income and EPS are provided in the appendix slide in the back of the presentation.
Speaker Change: Which was weaker compared to the prior year period.
Reconciliations of Adjusted Net Income and EPS are provided in the appending slides in the back of the presentation.
Speaker Change: Due to an unplanned partial outage.
Speaker Change: During the second quarter of the year, which we announced in our second quarter earnings call.
Speaker Change: Third quarter, adjusted EBITDA was $137 7 million.
Third quarter adjusted EBITDA was $137.7 million, an increase of 16.3% compared to the $118.3 million generated in the prior year period.
Speaker Change: Don will provide later an update on Dixie value in.
Speaker Change: An increase of 16, 3% compared to the $118 $3 million generated in the prior year period.
Speaker Change: In the product segment, where revenues were still strong.
Speaker Change: <unk> declined by six 2% to $37 4 million.
Speaker Change: The extremely strong yields or the increase in adjusted EBITDA was driven by contributions from the Nal assets, we acquired in the first quarter of 2024.
The extremely strong year-over-year increase in adjusted EBITDA was driven by contributions from the NL assets we acquired in the first quarter of 2024.
Speaker Change: Versus the same period last year.
Speaker Change: The current product segment backlog stands at approximately $165 million.
Speaker Change: As of November six 2024.
Speaker Change: The sale of tax benefits from newly built plant and improve operational performance and higher pricing at a pull apart.
The sale of tax benefits from newly built plants and improved operation performance and higher pricing at our Apuna power plant.
Speaker Change: Similar to the backlog level in the second quarter of this year.
Speaker Change: As it include among other things.
Speaker Change: In addition.
Speaker Change: In addition, our rejected EBITDA results during the quarter also benefit from compensation we received from a recently negotiated settlement agreement with a battery supplier.
Speaker Change: <unk> recently signed $24 $7 million contract.
Speaker Change: Our adjusted EBITDA results during the quarter also benefit from compensation, we received from our recently negotiated settlement agreement with the battery supplier.
Speaker Change: So a geothermal power plant in Portugal.
Speaker Change: In addition to starting the manufacturing of $6 1 million New records.
Speaker Change: As a result, we will recognize this compensation over 24 months started April 2024.
Speaker Change: As a result, we will recognize this compensation over 24 months started April 2024, whereby a total of $25 million will be recognized as income.
Speaker Change: Energy storage segment revenue declined 11, 1% to $9 8 million in the third quarter.
Speaker Change: Whereby a total of $25 million.
Speaker Change: Will be recognized as income.
Speaker Change: The decline was mainly driven by lower prices in the aircraft market.
Speaker Change: This quarter, we recognized $6 two 5 million.
This quarter we recognize $6.25 million dollars related to the period between April and September of 2024.
Speaker Change: Related to the period between April and September of 2024.
Speaker Change: Third quarter 2023 was positively impacted by spiking prices in the aircraft market.
Speaker Change: And in the next six quarters, we should recognize approximately $3 1 million each quarter.
Speaker Change: And in the next six quarters, we should recognize approximately $3.1 million each quarter.
Speaker Change: Due to weather events.
Speaker Change: Moving to slide seven.
Speaker Change: To clarify the settlement payment will not have an impact on our storage revenues or margin.
Speaker Change: Gross margin for the electricity segment was 32% in the third quarter.
Speaker Change: To clarify, the settlement payments will not have an impact on our storage revenues or margins.
Speaker Change: <unk> form 31, 8% from the previous deal.
Speaker Change: There will only be recognized as operating income.
They will only be recognized as operating income.
Speaker Change: The margin comparison was driven primarily by lower generation at our <unk> Valley facility due to the partial shutdown, which we've previously noted during our second quarter earnings call.
Speaker Change: Turning to slide six.
Speaker Change: Turning to slide 6. We break down the revenue performance at the segment level. Electricity segment revenue increased by 4.7% to $164.6 million.
Speaker Change: We breakdown the revenue performance at the segment level electricity segment revenue increased by four 7% to $164 6 million.
Speaker Change: Third quarter revenue growth was driven by contribution from our acquired the net assets.
Speaker Change: Breaking down adjusted EBITDA at the segment level on slide eight.
Speaker Change: The increase in revenues at our full our complex.
Speaker Change: The electricity segment generated 82% of format total consolidated adjusted EBITDA in the third quarter.
Speaker Change: Following our successful drilling campaign.
Following our successful drilling campaign.
Speaker Change: The solid revenue growth in the electricity segment was partially offset by the expected weaker performance at Dixie valid claims.
Speaker Change: The solid revenue growth in the electricity segment was partially offset by the expected weaker performance at Dixie Valley plant.
Speaker Change: The product segment contributed 10%.
Speaker Change: And the energy storage segment accounted for 8% of total adjusted EBITDA.
Speaker Change: Which was weaker compared to the prior year period.
Speaker Change: Due to an unplanned partial outage that started during the second quarter of the year, which we announced in our second quarter earnings call.
Speaker Change: A reconciliation of EBITDA and.
Speaker Change: And adjusted EBITDA are provided in the appendix slide in the back of the presentation.
Speaker Change: Don will provide later an update on Dixie value.
Speaker Change: Moving to slide nine.
Speaker Change: In the product segment, where revenues were still strong but declined by six 2% to $37 4 million.
Speaker Change: In the third quarter, we recorded $19 8 million and income related to tax benefit.
Speaker Change: Versus the same period last year.
Speaker Change: Compared to $14 9 million last year.
Speaker Change: The current product segment backlog stands at approximately $165 million.
Speaker Change: This increase is mainly attributable to a transferable PTC.
Speaker Change: As of November six 2024.
Speaker Change: Related to be while we power plant.
Speaker Change: Similar to the backlog level in the second quarter of this year.
Speaker Change: Which commenced operation in the second quarter of 2024.
Speaker Change: As it include among other things.
Speaker Change: And an increase in the value of the PTC.
Speaker Change: <unk> recently signed $24 $7 million contract for.
Speaker Change: So a geothermal power plant in Portugal.
Speaker Change: We continue to anticipate that we will receive up to $152 million in cash proceeds related to PTC.
Speaker Change: In addition to starting the manufacturing of $6 1 million New records.
Speaker Change: And ITC burner.
Speaker Change: Energy storage segment revenues declined 11, 1% to $9 8 million in the third quarter.
Speaker Change: Benefits in 2024.
Speaker Change: During the third quarter, we sold and collected.
Speaker Change: $14 million BTC, we generated from Heber complex.
Speaker Change: The decline was mainly driven by lower prices in the aircraft market.
Speaker Change: And we expect in the fourth quarter to complete the monetization of the bottleneck ITC and.
Speaker Change: Third quarter 2023.
Speaker Change: Positively impacted by spiking prices in the aircraft market.
Speaker Change: And complete the tax equity transactions of Heber complex.
Speaker Change: Due to weather events.
Speaker Change: While this is our base case expectation we note that it is possible that the heber transaction may be pushed to early 2025.
Speaker Change: Moving to slide seven.
Speaker Change: Gross margin for the electricity segment was 32% in the third quarter.
Speaker Change: As we have noted previously.
Speaker Change: Al form 31, 8% from the previous year.
Speaker Change: These proceeds will effectively lower the capital intensity of our multiyear growth strategy.
Speaker Change: The margin comparison was driven primarily by lower generation at our Dixie Valley facility due to the partial shutdown, which we've previously noted during our second quarter earnings call.
Speaker Change: Looking at slide 10.
Speaker Change: Our net debt as of September 32024.
Speaker Change: Was approximately $2 2 billion.
Speaker Change: Equivalent to four one times net debt to EBITDA.
Speaker Change: Breaking down adjusted EBITDA at the segment level on slide eight.
Speaker Change: Cash and cash equivalents and restricted cash and cash equivalents.
Speaker Change: The electricity segment generated 82% of format total consolidated adjusted EBITDA in the third quarter.
Speaker Change: As of September 32024 was $176 8 million compared to $287 $8 million at the end of 2023.
Speaker Change: The product segment contributed 10%.
Speaker Change: The energy storage segment accounting for 8% of total adjusted EBITDA.
Speaker Change: Slide 10 breaks down our use of cash for the nine months.
Speaker Change: A reconciliation of EBITDA and adjusted EBITDA are provided in the appendix slide in the back of the presentation.
Speaker Change: Illustrating our ability to generate cash flows to reinvest in and grow the business, while servicing our debt obligations.
Speaker Change: Moving to slide nine.
Speaker Change: And also consistently returning capital to our shareholders.
Speaker Change: In the third quarter really COVID-19 $19 $8 million in income related to tax benefits.
Speaker Change: Our total debt as of September 32024 was approximately $2 4 billion net of deferred financing costs.
Speaker Change: Compared to $14 9 million last year.
Speaker Change: And as presented on slide 2019 of the appendix.
Speaker Change: This increase is mainly attributable to a transferable PTC related to be while we power plant.
Speaker Change: Which outline the payment schedule.
Speaker Change: The average cost of our debt for the company stands at 463%.
Speaker Change: Which commenced operation in the second quarter of 2024.
Speaker Change: And we reiterate that the majority of our debt liabilities are at fixed interest rates.
Speaker Change: And an increase in the value of the PTC.
Speaker Change: Moving to slide 11, we have approximately $675 million of total available liquidity.
Speaker Change: We continue to anticipate that we will receive up to $152 million in cash proceeds related to PTC.
Speaker Change: Our expected capital expenditures for the remaining of 2024 is approximately $143 million.
Speaker Change: And ITC.
Speaker Change: Benefits in 2024.
Speaker Change: Detailed in slide 30 in the appendix.
Speaker Change: During the third quarter, we sold and collected $14 million BTC, we generated from Heber complex.
Speaker Change: We plan to invest approximately $65 million in the electricity segment for construction exploration drilling and maintenance.
Speaker Change: And we expect in the fourth quarter to complete the monetization of the bottleneck ITC.
Speaker Change: We also plan to invest $75 million for the construction of our store adjusted during the remainder of 2020.
Speaker Change: And complete the tax equity transactions of Heber complex.
Speaker Change: As we continue to progress with executing on our growth plan we.
Speaker Change: While this is our base case expectation we note that it is possible that the heber transaction may be pushed to early 2025.
Speaker Change: We are consistently increasing our cash generation.
Speaker Change: Combined with the expected cash from utilizing the tax benefit will fund our capex.
Speaker Change: As we have noted previously.
Speaker Change: These proceeds will effectively lower the capital intensity of our multiyear growth strategy.
Speaker Change: We continue to maintain excellent liquidity and have ample access to additional capital.
Speaker Change: Looking at slide 10.
Speaker Change: On November six 2024, our board of directors declared approved and authorized payment of quarterly dividends of <unk> 12 per share payable on December four 2024 to shareholders on record as of November 22024.
Speaker Change: Our net debt as of September 32024.
Speaker Change: Was approximately $2 2 billion.
Speaker Change: Equivalent to four one times net debt to EBITDA.
Speaker Change: Cash and cash equivalents and restricted cash and cash equivalents.
Speaker Change: That concludes my financial overview.
Speaker Change: As of September 32024 was $176 8 million compared to $287 8 million at the end of 2023.
Ron Bouchard: I would like now to turn the call over to Ron to discuss some of our recent development.
Ron Bouchard: Thank you.
Ron Bouchard: Turning to slide 34, we look at our statistically segments operate portfolio.
Speaker Change: Slide 10 breaks down our use of cash for the nine months.
Ron Bouchard: In the nine months ended September 32024, we generated $5 7 million megawatt hour to seven 9% generation growth leading electricity.
Speaker Change: Illustrating our ability to generate cash flows to reinvest in and grow the business, while servicing our debt obligations.
Ron Bouchard: The increase was positively impacted by our strategically acquired <unk> assets and the continued improvement in performance for Conocophillips.
Speaker Change: And also consistently returning capital to our shareholders.
Speaker Change: Our total debt as of September 32024 was approximately $2 4 billion net of deferred financing costs.
Ron Bouchard: Turning to slide 14 for an update on our operating footprint.
Speaker Change: And as presented on slide 29 in the appendix.
Ron Bouchard: As our Pune conflicts.
Speaker Change: Which outlined the payment schedule.
Ron Bouchard: Zero continuous improvements in the reservoir performance, which has increased capacity and in turn driven generation growth.
Speaker Change: The average cost of our debt for the company stands at 463%.
Speaker Change: And we reiterate that the majority of our debt liabilities are fixed interest rate.
Ron Bouchard: We also benefited from higher prices this quarter.
Ron Bouchard: As our <unk> power plant in Kenya with.
Speaker Change: Moving to slide 11, we have approximately $675 million of total available liquidity.
Ron Bouchard: We successfully reached 147 megawatts of capacity following our successful drilling campaign.
Speaker Change: Our expected capital expenditures for the remaining of 'twenty 'twenty four is approximately $143 million as detailed in slide 30 in the appendix.
Ron Bouchard: And while we continued to experience curtailments from our off taker. This trend was reduced throughout the third quarter.
Ron Bouchard: As a result, our revenues from we'll call you increased during the third quarter by approximately four 5% versus prior year.
Speaker Change: We plan to invest approximately $65 million in the electricity segment for construction exploration drilling and maintenance.
Speaker Change: We also plan to invest $75 million for the construction of our store adjusted during the remainder of 2024.
Ron Bouchard: As we noted earlier, our Dixie Valley facility also experienced lower electricity generation this quarter.
Speaker Change: As we continue to progress with executing on our growth plans.
Ron Bouchard: Due to an unplanned outage that occurred during the second quarter of this year.
Speaker Change: We are consistently increasing our cash generation.
Ron Bouchard: As a result, our revenues and EBITDA were negatively impacted by roughly $4 2 million and $4 1 million.
Speaker Change: Combined with the expected cash from utilizing the tax benefits will fund our capex.
Speaker Change: We continue to maintain excellent liquidity and have ample access to additional capital.
Ron Bouchard: During the third quarter, respectively.
Ron Bouchard: We're currently in the final stages of completing the shutdown of the facility and expect generation to increase moving forward as a result.
Speaker Change: On November six 2024, our board of directors declared approved and authorized payment of quarterly dividends of 12 cents per share payable on December 4th 2024 to shareholders on record as of November 22024.
Ron Bouchard: On a positive note our net assets have continued to strengthen our third quarter earnings results with the asset generating revenue and EBITDA of seven 5 million.
Speaker Change: That concludes my financial overview.
Ron Bouchard: And $4 6 million respectively.
Speaker Change: I would like now to turn the call over to Ron to discuss some of our recent developments.
Ron Bouchard: We continue to make great progress in enhancing the three acquired geothermal assets, which once complete will translate into expanded retail through improved twofold.
Ron: Thank you.
Ron: Turning to slide 13 for a look with our logistics segment operated portfolio.
Ron: In the nine months ended September 32024, we generated $5 7 million megawatt hours of seven 9% generation growth leading into 236.
Ron Bouchard: Finally, our coffer to facility in Utah was partially released for initial construction.
Ron Bouchard: We anticipate that the 25% to 35 megawatt power plant will be completed by the end of 2020 silver.
Ron: The increase was positively impacted by our strategically acquired <unk> assets and the continued improvement in performance for the complex.
Ron Bouchard: A larger and earlier than previously expected compared to our acquisition model.
Ron: Turning to slide 14 for an update on our operating footprint.
Ron Bouchard: Turning to slide 15.
Ron Bouchard: Our product segment backlog stands at $165 million.
Ron: So it will accomplish.
Ron Bouchard: Which is similar to the second quarter of 2024.
Ron: ZIP continuous improvements in the reservoir performance, which has increased capacity and Intel driven generation growth.
Ron Bouchard: And as you can see on this slide we added to the backlog total of approximately $33 million of new contracts during the quarter.
Ron: We also benefited from higher prices this quarter.
Ron: At our <unk> power plant in Kenya with.
Ron Bouchard: Yeah.
Ron Bouchard: Moving to slide 16, despite the lower year over year revenue performance, we experienced in our storage segment due to lower more normalized coke prices, we continue to make great progress in transitioning our storage business into a more predictable portfolio.
Ron: We successfully reached 147 megawatts of capacity following our successful drilling campaign.
Ron: While we continue to experience curtailments for the off taker.
Ron: <unk> was reduced throughout the third quarter.
Ron: As a result, our revenues for all carriers increased during the third quarter by approximately four 5% versus prior year.
Ron Bouchard: With consistently stronger underlying profitability.
Ron Bouchard: This is highlighted by the Eylea agreements will reach with the city of Riverside for sure 80 megawatts to 320 megawatt hour facility as well as our first two tolling agreements takes us four hour lower REO and built facilities, each with 60 megawatts 120 megawatts hour.
Ron: As we noted earlier, our Dixie Valley facility.
Ron: So experienced lower electricity generation this quarter deal with unplanned outage that occurred during the second quarter of this year.
Ron: As a result, our revenue and EBITDA were negatively impacted by roughly $4 2 million and $4 1 million during.
Ron Bouchard: Additionally, we continue to capture the benefits from some of our facilities that recently came online over the past few quarters.
Ron Bouchard: Such as our <unk> facility.
Ron: During the third quarter, respectively.
Ron Bouchard: Became operational earlier this year.
Ron: We're currently in the final stages of completing the shutdown of the facility and expect generation to increase moving forward as a result.
Speaker Change: Consistent with Duffy I'm also excited to highlight the just a week ago, we announced the commercial operation for 80 megawatts to 320 megawatts hour bottlenecks facility.
Ron: On a positive note our net assets have continued to strengthen our third quarter earnings results with the asset generating revenue and EBITDA of seven 5 million.
Ron Bouchard: Which is our largest energy storage facility, and which will generate stable contracted revenues from a 15 year tolling agreement with San Diego gas and electric.
Ron: And $4 6 million respectively.
Ron: We continue to make great progress in enhancing the three acquired geothermal assets, which once complete will translate into expanded with sales through improved performance.
Speaker Change: This is an exciting development for months and should we expect that the bottling facility will play a key role in improving our energy storage revenue and EBITDA results going forward.
Ron: Finally, our coffer to facility in Utah was partially released for initial construction.
Speaker Change: Moving to slide 18, we continue to remain on track to have our portfolio capacity target, which between two six gigawatt to two eight gigawatts by year end 2028.
Ron: We anticipate that the 25% to 35 megawatt power plant will be completed by the end of 'twenty 'twenty silver.
Ron: Larger and earlier than previously expected compared to our acquisition model.
Speaker Change: As a reminder, we currently expect to see an annual capacity growth rate, which was 15% to 17% with the majority of that was focused on the strong U S market.
Ron: Turning to slide 15.
Ron: Product segment backlog stands at $165 million.
Speaker Change: The U S continues to remain the main focus of our growth efforts due to the regulatory support and the interest in demand we're seeing for electricity.
Ron: Which is similar to the second quarter 2024.
Ron: And as you can see on the slide we added to the backlog total of approximately $33 million of new contracts during the quarter.
Speaker Change: Which we are well positioned to capture through both our electricity and storage segments.
Ron: Moving to slide 16, despite the lower year over year revenue performance, we experienced in our storage segment due to lower more normalized prices, we continue to make great progress in transitioning our storage business into a more predictable portfolio.
Speaker Change: Turning now to slides 19, and 20, which display our geothermal and hybrid solar PV projects. We currently have underway.
Speaker Change: We continue to remain on track to complete the Egypt projects in Indonesia by the end of 'twenty 'twenty four.
Ron: With consistently stronger underlying profitability.
Speaker Change: Moving to slide 21, and 'twenty two to discuss our energy storage segment growth.
Ron: This is highlighted by the hour agreements will reach with the city of Riverside for sure 80 megawatts 320 megawatt hour facility.
Speaker Change: In total we currently have six different storage projects under development.
Speaker Change: We expect to achieve by the end of 2026.
Ron: As well as our first two tolling agreements and takes us <unk>.
Speaker Change: Which we believe will add a total of 355 megawatts or 920 megawatt hour to our storage portfolio.
Speaker Change: Rio and Bill talk facilities, each with 60 megawatts 120 megawatts hour.
Ron: Additionally, we continue to capture the benefits from some of our facilities that recently came online over the past few quarters such as our is limited facility that became operational earlier this year.
Speaker Change: As we have previously noted we are continuing to remain focused on achieving a balanced fleet in our stores portfolio of contracted revenues and merchant market price.
Speaker Change: Please turn to slide 23 for a discussion of our 2020 for guidance.
Ron: Consistent with Duffy I'm also excited to highlight just a week ago, we announced the commercial operation for 80 megawatts 340 megawatts hour bottlenecks facility.
Speaker Change: In the first nine months of 2020 for Boardwalk has delivered meaningful year over year growth across our revenues and adjusted EBITDA.
Ron: <unk> is our largest energy storage facility at <unk>.
Speaker Change: Heading into the close of the year.
Ron: Which will generate stable contracted revenues for with 15 year tolling agreement with San Diego gas and electric.
Speaker Change: Narrowing our revenue guidance.
Speaker Change: We expect full year revenues to range between $875 million.
Speaker Change: At $893 million.
Ron: This is an exciting development for a month or two we expect that the bottlenecks facility will play a key role in improving our energy storage revenue and EBITDA results going forward.
Speaker Change: Electricity segments revenues are expected to be between $710 million and $715 million.
Speaker Change: Product segment revenues are expected to be between $130 million and.
Ron: Moving to slide 18, we continue to remain on track to have our portfolio capacity target, which between two six gigawatt to two eight gigawatts by year end 2028.
Speaker Change: $138 million.
Speaker Change: And storage revenues between $35 million and $40 million.
Ron: As a reminder, we currently expect to see an annual capacity growth rate between 15% to 17% with the majority of that was focused on the strong U S markets.
Speaker Change: We are increasing our adjusted EBITDA guidance to reflect our strong third quarter results and now expect full year adjusted EBITDA performance to end between $540 million.
Ron: The U S continues to remain the main focus of our growth efforts due to the regulatory support and the interest in demand we're seeing for electricity.
Speaker Change: And $555 million.
Speaker Change: And finally, we expect annual adjusted EBITDA attributable to the minority interest will be approximately $20 million.
Ron: Which we are well positioned to capture through both our electricity and storage segments.
Speaker Change: I will end our prepared remarks on slide 24.
Ron: Turning now to slides 19, and 20, which display of geothermal and hybrid solar PV projects. We currently have underway.
Speaker Change: To wrap up.
Speaker Change: We have continued to successfully execute against our strategic objectives over the past three quarter as evidenced by the increasing size of our operating portfolio.
Ron: We continue to remain on track to complete the Egypt projects in Indonesia by the end of 'twenty 'twenty four.
Speaker Change: Our ability to secure new long term agreement. This will drive improved product return to higher PPA pricing and tolling agreement.
Ron: Moving to slide 21, and 'twenty two to discuss our energy storage segments rolls.
Ron: In total we currently have six different storage projects under development.
Speaker Change: Additionally, the monetization of both PTC and ITC benefit and the strong cash flow from our operations, our positioning us well to support our future growth.
Ron: We expect to achieve.
Ron: The end of 2026.
Ron: Which we believe will add a total of 355 megawatts or 920 megawatt hour to our storage portfolio.
Speaker Change: Improved profitability across the enterprise.
Ron: As we have previously noted we are continuing to remain focused on achieving a better sleep and our stores portfolio of contracted revenues and merchant market pricing.
Speaker Change: This gives us confidence that we are well positioned to achieve our long term growth targets and deliver meaningful value for our stakeholders through improved financial performance in 2025 and beyond.
Ron: Please turn to slide 23 for a discussion of our 2020 for guidance.
Speaker Change: Now I would like to open the call for questions operator. Please.
Ron: In the first nine months of 'twenty 'twenty four.
Speaker Change: Yeah.
Ron: What has delivered meaningful year over year growth across our revenues and adjusted EBITDA.
Speaker Change: Thank you we will now.
Speaker Change: I will begin the question and answer session. If you would.
Speaker Change: Like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue and if you'd like to withdraw that question again press star one.
Ron: Heading into the close of the year, we are narrowing our revenue guidance.
Ron: We expect full year revenues to range between $875 million.
Speaker Change: I ask that you limit yourself to one question and one follow up your first question comes from the line of Noah Kaye with Oppenheimer. Please go ahead.
Ron: At $893 million.
Ron: Electricity segments revenues are expected to be between $710 million and $715 million.
Speaker Change: Okay.
Speaker Change: Thanks, I was hoping to start with geothermal development.
Ron: Product segment's revenues are expected to be between $130 million and.
Speaker Change: Maybe you could start by commenting on the results of the BLM land auction looks.
Ron: $138 million.
Ron: And storage revenues between $35 million and $40 million.
Speaker Change: It looks like you won a fair amount there.
Speaker Change: And then it also looks like there is a proposed categorical exclusion.
Ron: We are increasing our adjusted EBITDA guidance to reflect our strong third quarter results and now expect full year adjusted EBITDA performance to end between $540 million.
Speaker Change: NIPA.
Speaker Change: For geothermal permitting that's something that you highlighted at Investor day, as a potential benefit.
Speaker Change: Talk to us a little bit about the implications for development and at the heart of this is really whether you think you can start to speed up some of the new geothermal projects to help capitalize on this really strong demand for Baseload zero emissions power.
Ron: And $555 million.
Ron: And finally, we expect annual adjusted EBITDA attributable to the minority interest to be approximately $20 million.
Ron: I will and also thirdly milestone slide 24.
Speaker Change: Thanks Noah.
Speaker Change: Regarding the BLM auction.
Ron: To wrap up.
Ron: We have continued to successfully execute against our strategic objectives over the past three quarter.
Speaker Change: Actually.
Speaker Change: Acquired all the land that we nominated for the actual auction basically the way. It works is that the company has asked the BLM to nominate lands and then they're open for auction. So we're able to secure all the land that we nominated as well as additional few sites.
Ron: Evidenced by the interesting side of our operated portfolio.
Ron: Our ability to secure new long term agreement this will drive improved product detail through higher PPA pricing and tolling agreements.
Ron: Additionally, the monetization of both PTC and ITC benefits and the strong cash flows from our operations, our positioning us well to support our future growth and drive improved profitability across the enterprise.
Speaker Change: So.
Speaker Change: We do have some.
Speaker Change: Additional sites, but also sites that we had land position.
Speaker Change: And after initial review by our.
Speaker Change: Exploration resource team, we've acquired some additional.
Speaker Change: Then to secure the full.
Ron: This gives us confidence that we are well positioned to achieve our long term growth targets and deliver meaningful value for our stakeholders through improved financial performance in 2025 and beyond.
Speaker Change: This site to be able to develop a project and this definitely will come into our growth portfolio.
Speaker Change: The category of treatment.
Speaker Change: You mentioned.
Speaker Change: A big step we've been working on it for quite a while it will shorten.
Speaker Change: Now I would like to open the call for questions operator. Please.
Speaker Change: The development the exploration phase.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session.
Speaker Change: And it will enable us to expedite our cohort program.
Speaker Change: I would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.
Speaker Change: And allow us to get permitting for the exploration phase.
Ron: And if you'd like to withdraw that question again press star one and we ask that you limit yourself to one question and one follow up.
Speaker Change: Faster.
Speaker Change: We have done.
Speaker Change: Over the last.
Speaker Change: A year.
Speaker Change: First question comes from the line of Noah Kaye with Oppenheimer. Please go ahead.
Speaker Change: <unk> seven call.
Speaker Change: Whole campaigns in the U S.
Speaker Change: Yes.
Speaker Change: All of them actually were successful and we are moving to the next part of the solution for building full stack as well.
Noah Kaye: Thanks, I was hoping to start with geothermal development.
Speaker Change: You know maybe you can start by commenting on the <unk>.
Speaker Change: The result of the the BLM land auction.
Speaker Change: And in parallel to that we're going to do some.
Speaker Change: It looks like you won a fair amount there and it also looks like there's a proposed categorical exclusion.
Speaker Change: Cohort campaign be entire year.
Speaker Change: For an additional between four to six sides.
Speaker Change: To NIPA.
Speaker Change: The fact that.
Speaker Change: For for geothermal permitting that's something that you'd have.
Speaker Change: Processes enable processes.
Speaker Change: Highlighting at Investor day, as a potential benefit so just talk to us a little bit about the implications for development and at the heart of this is really whether you think you can start to speed up some of the new geothermal projects to help capitalize on this really strong demand for Baseload zero emissions power.
Speaker Change: In short, we believe we'll be able to meet our targets definitely and hopefully exceed them.
Speaker Change: Yeah very helpful. Maybe you can comment on what you think I know, it's probably early in the process of setting capex budgets for next year, but.
Speaker Change: What does all this mean for how much you might be able to spend.
Noah Kaye: Thanks Noah.
Speaker Change: You know in terms of the Capex for electricity next year, I would think that you'd be lapping some of the.
Speaker Change: Regarding the BLM auction.
Speaker Change: Or actually are.
Speaker Change: While all the land that we nominated for the auction auction basically the way. It works is that the company has asked the BLM to nominate lands and then they're open for offshore so we're able to secure all the land that.
Speaker Change: Development enhancements.
Speaker Change: That should get you made progress on this year, so presumably a bit more dry powder to go after kind of core growth.
Speaker Change: We nominated as well as additional fuel sites.
Speaker Change: Oh, yes definitely.
Speaker Change: Next year.
Speaker Change: So.
Speaker Change: Capex to be higher than the.
Speaker Change: We do have some additional sites, but also sites that we had land position.
Speaker Change: For Capex.
Speaker Change: The biggest.
Speaker Change: In defence over there will be on the exploration path because as I said earlier.
Speaker Change: And after initial review by our exploration of the resource team, we've acquired some additional land to secure the full.
Speaker Change: Moving from core hole program.
Speaker Change: The full size of drilling.
Speaker Change: The site to be able to develop a project and this definitely will come into our growth portfolio.
Speaker Change: This call will cost depends how deep you go between 500000, maybe $2 million million in.
Speaker Change: The category.
Speaker Change: You mentioned.
Speaker Change: Full size win is in the range of $4 million to $6 million.
Speaker Change: The big step we've been working on it for quite a while it will shorter.
Speaker Change: And we plan to do a few.
Speaker Change: A full size with NEC.
Speaker Change: The development the escalation phase.
Speaker Change: Next on the call all of that we've done $24 2023.
Speaker Change: And it will enable us to expedite our cohort program.
Speaker Change: Okay very good.
Speaker Change: And allow us to get permitting for the exploration phase.
Speaker Change: I'll jump back in queue and ask more questions at that time.
Speaker Change: Faster.
Speaker Change: We have done.
Speaker Change: Thank you.
Speaker Change: Over the last.
Speaker Change: Your next question comes from the line of Justin Clare with Roth Capital. Please go ahead.
Speaker Change: A year.
Speaker Change: Seven call whole.
Speaker Change: All campaigns in the U S.
Speaker Change: Hey, Good morning House has enabled zooms.
Speaker Change: All of them actually.
Speaker Change: <unk> technology.
Speaker Change: And we're moving to the next part of the exploration for drilling full size well next year.
Speaker Change: So I wanted to start off here.
Speaker Change: With the new administration in the U S.
Speaker Change: And in parallel to that we're going to do some another cohort comparing the entire year for an additional.
Speaker Change: It does look possible that we could get a change in the IRI legislation.
Speaker Change: Four to six sides and the fact that the processes enable process has.
Speaker Change: Im wondering how youre thinking about mitigating any potential risk of a policy change have you looked at safe harboring geothermal or storage projects to ensure you can qualify for the PTC and ITC.
Speaker Change: Improved and shortened we believe we'll be able to meet our target definitely and hopefully exceed them.
Speaker Change: Yep very helpful. Maybe you can comment on what you think I know, it's probably early in the process of setting capex budgets for next year, but what does all this mean for you know how much you might be able to spend.
Speaker Change: So I'm just wondering how you are positioned there.
Speaker Change: Okay.
Speaker Change: And Justin So I would say on the geothermal the Ptc's bulk. This is something that has been going on for more than a decade.
Speaker Change: Now in terms of the Capex for electricity next year, I would think that you'd be lapping some of the.
Speaker Change: The low end and then the question whether or not they would extend it and then the extended so the concept of safe Harbor on the geothermal part is something that we've been operating all along.
Speaker Change: Development enhancements.
Speaker Change: That should get you made progress on this year, so presumably a bit more dry powder to go after kind of core growth.
Speaker Change: And we are getting prepared that if anything will change for the PTC for geothermal and we will have the safe Harbor for all projects that we will deliver develop afterwards.
Speaker Change: Oh, yes definitely.
Speaker Change: Next year.
Speaker Change: Capex to be higher than the 20.
Speaker Change: I'd say that in the previous Trump administration, they extended the PTC for geothermal.
Speaker Change: 20.
Speaker Change: For Capex.
Speaker Change: The biggest.
Speaker Change: So Jill turmoil I think it is not in the same category as the other but still we are definitely looking at safe harbors.
Speaker Change: The difference over there will be on the exploration part because as I said earlier.
Speaker Change: Moving full cohort program.
Speaker Change: And the same we are.
Speaker Change: The full size of drilling.
Speaker Change: We're going to apply to the energy storage projects that were in construction already we have secured the batteries, we need to see how we bring them into the U S. If anybody will change anything.
Speaker Change: This call will cost depends how deep you go you know between 500000, maybe to a million million and a half.
Speaker Change: A full size well within the range of $4 million to $6 million.
Speaker Change: But there are still.
Speaker Change: A few months until they know the.
Speaker Change: And we plan to do a few.
Speaker Change: The change takes place.
Speaker Change: A full size.
Speaker Change: So we are looking at.
Speaker Change: Our next few on the call or that we've done in 2004 and 2023.
Speaker Change: Also on Safe Harbor on the energy storage.
Speaker Change: But on the geothermal this is how we have been working for the last.
Speaker Change: Okay.
Speaker Change: Okay very good.
Speaker Change: Thank the more than a decade, and we do hope that.
Speaker Change: I'll jump back in queue and ask more questions that we have time.
Speaker Change: PTC for geothermal as you've done in these less administration they will continue.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Justin Clare with Roth Capital. Please go ahead.
Speaker Change: Got it okay.
Speaker Change: And then I was wondering if you could also comment on you know maybe just provide an update on what youre seeing in terms of the trend in ppas for geothermal projects.
Speaker Change: Hey, Good morning House has enabled zooms.
Speaker Change: Companion technology.
Speaker Change: So I wanted to start off here.
Speaker Change: Or are we seeing pricing continuing to trend upward.
Speaker Change: With the with the New administration in the U S. It does look possible that we could get a change in the irate legislation.
Speaker Change: And then you do have some capacity that where the ppas are expiring in 2006 totaled 27.
Speaker Change: So just wondering how youre thinking about mitigating any potential risk of a policy change have you looked at safe harboring geothermal or storage projects to ensure you can qualify for the PTC.
Speaker Change: Any sense for when you might.
Speaker Change: Extend those contracts and how.
Speaker Change: New Ppas might compare to what you are currently operating under.
Speaker Change: Yeah. Thanks, so the trend.
Speaker Change: So just wondering how you're positioned there.
Speaker Change: Continues and we see pricing today north of 100.
Speaker Change: Okay.
Speaker Change: Thanks, Justin So I would say on the term of the PTC, but this is something that has been going on for more than a decade.
Speaker Change: We have we are in.
Speaker Change: Negotiating with multiple.
Speaker Change: Players.
Speaker Change: On the.
Speaker Change: The low end and then the other question whether or not they would extend it and then the extended.
Speaker Change: Contracting new power plants as well.
Speaker Change: Re contracting the future ones.
Speaker Change: No.
Speaker Change: Cost of the Safe Harbor on the geothermal power, but something that we've been operating all along.
Speaker Change: The PPA for Heber.
Speaker Change: Slide 26, we have signed the PPA.
Speaker Change: And we are getting prepared that if anything will change for the PTC for geothermal we will have the safe Harbor.
Speaker Change: Re contracting it.
Speaker Change: It's similar.
Speaker Change: Similar prices.
Speaker Change: We are waiting for the offtake to finishes.
Speaker Change: For all project that we will deliver develop afterwards.
Speaker Change: I would say that in the previous Trump administration, they extended the PTC for geothermal.
Speaker Change: Approval process, and we expect that to happen.
Speaker Change: The end of this year, maybe beginning of next year.
Speaker Change: Okay.
Speaker Change: So geothermal I think it is not in the same category as the other but still we are definitely looking at safe harbors.
Speaker Change: And we are also in.
Speaker Change: The final negotiations on the extension of the Matamoros the G to re contracting for 2007.
Speaker Change: And the same you know we are going to apply to the energy storage projects that were in construction already we have secured the batteries, we need to see how we bring them into the U S. If anybody will change anything.
Speaker Change: This will be in similar pricing as.
Speaker Change: As I mentioned before.
Speaker Change: So we see this.
Speaker Change: The increase in demand.
Speaker Change: But there are still.
Speaker Change: And.
Speaker Change: So it created for almost every project we have we have a few obstacles that would like.
Speaker Change: A few months until they know that.
Speaker Change: The change takes place.
Speaker Change: So we are looking at.
Speaker Change: <unk> contracted.
Speaker Change: So on safe Harbor on the energy storage.
Speaker Change: Okay I appreciate it thank you.
Speaker Change: But on the geothermal this is how we have been working for the last.
Speaker Change: Thank you.
Speaker Change: Again, if you would like to ask a question. Please press star one on your telephone Keypad. Your next question comes from the line of Mark Strouse with Jpmorgan. Please go ahead.
Speaker Change: Thank the more than a decade.
Speaker Change: And we do hope that.
Speaker Change: PTC for geothermal as you've done in these less administration they will continue.
Speaker Change: Okay.
Speaker Change: Got it okay.
Mark Strouse: Yes, thanks for taking my questions.
Speaker Change: And then I was wondering if you could also comment on you know maybe just provide an update on what youre seeing in terms of the trend in ppas for geothermal projects.
Speaker Change: Is there any color that you can give on the <unk>.
Speaker Change: Pricing of the new tolling agreements in Texas.
Speaker Change: Any color about.
Speaker Change: The margin accretion relative to 2024 levels as that comes online.
Speaker Change: Or are we seeing pricing continuing to trend upward.
Speaker Change: And then you do have some capacity that where the ppas are expiring in 2026 2027.
Speaker Change: Good morning, Mark.
Mark Strouse: We won't give you specific numbers, but I will say that.
Speaker Change: Any sense for when you might.
Speaker Change: The numbers for the two hour batteries and takes us basically half.
Speaker Change: Extend those contracts and how.
Speaker Change: But the value that we get for today's environment for four hours in California, and California market is around 16 to 17000 Margaret.
Speaker Change: New Ppas might compare to what you are currently operating under.
Speaker Change: So.
Speaker Change: Trends are.
Speaker Change: Continues and we see pricing today north of 100.
Speaker Change: Or is it per month.
Speaker Change: So the numbers in Texas.
Speaker Change: Have it slightly shorter it's a seven year transaction and when we think from a mountain expansion. We do believe that our gross margin over the next few years will go towards.
Speaker Change: We have we are negotiating with multiple.
Speaker Change: The players.
Speaker Change: <unk>.
Speaker Change: Around 32% to 30%.
Speaker Change: Flat in the last few months.
Speaker Change: We should expect recovering margin already already in 2025.
Speaker Change: We expect the bottleneck.
Speaker Change: Just came online a few days ago to operate a full year, so that will be the first step and then.
Speaker Change: We have been.
Speaker Change: It can have a 425 one of the Texas project and then in 2026, we have the next Texas project. So.
Speaker Change: Eventually, we will get closer to the 30% but.
Speaker Change: The way, we are probably going to visit.
Speaker Change: Anywhere from 10 to 20.
Speaker Change: Okay. Thanks, Alethia, and then kind of Relatedly can you talk about kind of merchant pricing.
Speaker Change: What are your merchant contracts are operating what youre seeing with pricing there.
Speaker Change: Is there reason to be more optimistic kind of on the latest trends compared to what it was earlier this year. Thank you.
Speaker Change: I wouldn't say that this year, we in general the U S did not have any weather events that impacted profitability.
Speaker Change: You saw in Q3 last year it was enough that.
Speaker Change: We had some I would say.
Speaker Change: Good weather in picks us with much less adverse today in Texas, we need additional $2 million in revenue. So I wouldn't say that we do expect from time to time those to happen and they can add a few million dollars to our top line.
Speaker Change: So this is where we are and then on PJM I will say in general throughout the year, we experienced quite good margin. So.
Speaker Change: We did able to put the gross margin positive this quarter in installments, even though there was no weather events.
Speaker Change: I think the key and you ask that in the first question everything that is under construction right now besides the Louisa and Montague, which im not allowed us towards that we have all of them already have ppas. So when you think about trajectory for the next few years back and Nick has 320 megawatts it fully contracted.
Speaker Change: Sure Ian Borden, each one is 120 megawatt hour fully contracted.
Speaker Change: Montague is in the east coast and those prices in the east coast have been trending quite favorable somewhere around 25% to $30 per megawatt hour throughout the year.
Speaker Change: We have <unk> coming in the end of 2020.
Speaker Change: <unk> also with the full PPA. So I will say there is a shifting model and business model and as a result.
Speaker Change: Activity will be much less impactful for us I do expect as I said earlier from time to time to have some weather events that part of the model It takes us.
Speaker Change: The reason why we're able to secure good contracts there is because some people believe that there will be more volatility.
Speaker Change: We decided to keep some of the volatility and to reduce some of the exposure to the volatility, but we still like the merchant environment in Texas.
Speaker Change: But as I said.
Speaker Change: <unk> is a geothermal company, we like to balance between the exposures.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Thank you Mark.
Speaker Change: And we have no further questions in our queue. At this time I will now turn the call back over to management for closing remarks.
Speaker Change: Okay. So thank you everyone would say that as you've seen almost continues to grow and develop its profitable operations in the U S and globally.
Speaker Change: I would like to highlight one other item that we did talk.
Speaker Change: Talk about it in the script and that is the fact that.
Speaker Change: If you remember.
Speaker Change: The FCC has.
Speaker Change: In total the company.
Speaker Change: Formerly the <unk> decided to close its investigation, although Matt.
Speaker Change: And with no.
Speaker Change: Sure.
Speaker Change: No actions.
Speaker Change: Following to this.
Speaker Change: Letter that we received from the FCC the board of directors has.
Speaker Change: Decided to.
Speaker Change: This demand, especially committee independent Special Committee investigated these issues so.
Speaker Change: So this is a very very positive and it demonstrates.
Speaker Change: The company's commitment to comply.
Speaker Change: With all.
Speaker Change: Wherever we are operating.
Speaker Change: So thank you everyone for your support and looking to see in the future. Thank you.
Speaker Change: That concludes today's conference call. Thank you for your participation and you may now disconnect.