Q1 2025 Ormat Technologies Inc Earnings Call
Speaker Change: Good morning and welcome to the Ormat Technologies First Quarter 2025 Ernames Conference Call
Speaker Change: All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. If you would like to ask a question, please press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.
Please note that this event is being recorded.
Josh Carroll: I would now like to turn the conference over to Josh Carroll with Alfa IR.
Josh Carroll: Actual future results may differ materially from those projected as a result of certain risks and uncertainties.
Josh Carroll: Reconciliation 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 on the slides post on the website.
Josh Carroll: With all that said, I would now like to turn the call over to Ormat CEO , Doron Blachar, Doron.
Daron Blachar: Thank you, Josh. Good morning, everyone, and thank you for joining us today.
Daron Blachar: Achieving a 2.5% increase in revenue, the 4.6 rise in net income attributable to the company stockholders and the record quarterly adjusted EBDA, growth of 6.4% compared to the first quarter of Loughtale.
Daron Blachar: This growth was driven by robust performance and significant expansion in both our storage and product segments year over year.
Daron Blachar: We benefited from stable contracted revenues due to the bottleneck-tolling agreement, while on the other hand capitalized on higher-merchant prices in additional capacity in the PGM market due to the cold or winter weather.
Daron Blachar: This improved performance was supported by revenue generation from our expanded portfolio, notably our East Flemington, Montague and Botanic Energy Storage Facility, which commenced commercial operation in 2024
Daron Blachar: We are optimistic about the growth potential of our geothermal business in 2025 and beyond.
Daron Blachar: This plant, located in Humbert County, Nevada, was originally built by Omas in 2009, and currently says power to envy energy under a PPA expiring at the end of 2029.
Daron Blachar: We plan to upgrade the plan, adding an additional 3.5 megawatt of capacity expected by 2027.
Daron Blachar: In addition, we plan to install 13 megawatt of solar to support the plant of zero systems, subject to permitting a PPR filter.
Daron Blachar: We anticipate finalizing this acquisition toward the end of the second quarter.
Daron Blachar: Now, before I turn the court over to us to review the financial result for the quarter, I would like to briefly address the impact of tariffs announced by the US government, the situation which is very fluid and being monitored closely by us.
Daron Blachar: Our energy storage segment may face interim headwinds due to the tariffs on China affecting the import of storage equipment components.
Daron Blachar: and other diversification strategies to ensure our product timeline and budget remain on top.
Daron Blachar: We have also taken proactive measures to safeguard our growth in light of recent executive order related to eye-to-way tax credits.
Daron Blachar: The demand for reliable renewable energy, the main strong, and we believe that our proactive measures will allow us to effectively execute our strategy and grow in line with this demand.
Asi: I will now turn the call over to Asi to discuss our financial results. Asi?
Thank you, Doron.
Asi: Total revenue for the first quarter was $229.8 million at 2.5% increase compared to last year's first quarter.
Asi: Resulting in a consolidated gross margin of 31.7% versus 35.2% last year.
Asi: The decline was largely due to the electricity segment gross margin decrease, partially offset by improved performance in storage and product segments
Asi: Net income attributable to the company's stockholders was $40.4 million or 66 cents per diluted share compared to $38.6 million or 64 cents per diluted share in the first quarter of the prior year.
Asi: Injusted net income attributable to the company stockholders was $41.5 million or $68 per diluted share and the increase of 4.8% and 4.6% respectively.
And Justin Debidder for the first quarter was 150.3 million dollars.
A 6.4% increase convert to last year.
Leading to a quarterly record and just an ebidam in Omat history.
Asi: This decline was due to the anticipated cocktail metine vada, from third body transmission maintenance and cocktail metine california due to one fire.
which completed its upgrade in 2024.
and is operating under improved PPA prices starting Q1 2025.
Asi: Product segment revenues increased by 27.9% to 31.8 million dollars during the first quarter
Asi: Energy storage segment, Ravenio, increased by nearly 120% in the first quarter
Asi: Gross margin for the electricity segment was 33, 5% in the first quarter down from 39% from last year.
Asi: This margin comparison was due to lower revenue, resulting from curtailment in Nevada and California.
Asi: In the product segment gross margin was 22, 3%.
Asi: From 14, 8% last year.
Asi: Driven by improved profitability on our contracts, we now expect gross margin for the year to be in the range of 19% to 21% in these segments.
Asi: The energy segment reported gross margin of 36% a significant improvement from seven 5% in Q1 2024.
Asi: This was driven by strong performance in the PJM merchant markets.
Asi: On a cold winter along the east coast contributed to elevated merchant pricing.
Asi: We have made progress in transitioning their revenue and margin profile of this segment, achieving a greater degree of contracted revenues, while benefiting from periodically pricing strength.
Asi: With improved Q1 performance, we now anticipate full year gross profit as highest 20%.
Asi: Breaking down adjusted EBITDA on slide seven the electricity segment generated 83% of our total consolidated adjusted EBITDA in the first quarter of 2020.
Asi: The product segment generated 7% and the energy storage segment contributed 10% compared to 3% last year.
Asi: Reconciliation of EBITDA and adjusted EBITDA are provided in the appendix slides.
Asi: Moving to slide eight we recorded $17 6 million.
Asi: In income related to tax benefits in the first quarter.
Asi: Compared to $17 5 million.
Asi: Last year.
Asi: In the first quarter, we recorded a $13 $9 million of ITC benefits in the income tax line related to two storage facility.
Asi: Expected to come online in 2025.
Asi: We anticipate receiving approximately $160 million in cash proceeds related to PTC and ITC benefits in 2020.
Asi: Mainly from tax equity transaction.
Asi: The Heber complex ITC benefit for storage assets that we would see on the 2025 and PBC transfers.
Asi: We expect our tax rate will be positively impacted by the ITC benefits in 2025.
Asi: With an annual tax benefit rates between 5% and 10% excluding changes in law or one time events.
Asi: Looking at slide nine.
Asi: Net debt as of March 31, 2025 was approximately $2 3 billion.
Asi: Equivalent to four two times net debt to EBITDA.
Asi: Cash and cash equivalents.
Asi: And restricted cash and cash equivalents as of March 31, 2025.
Asi: There are approximately $225 million.
Asi: Compared to $206 million at the end of 2024.
Asi: Slide nine breaks our use of cash flow over the last 12 months illustrating.
Asi: Illustrating how much ability to generate strong cash flows.
Asi: To reinvest in this strategically grow their businesses.
Asi: Servicing our debt obligation and returning capital to shareholders.
Asi: Our total debt as of March 31, 2025 was approximately $2 6 billion.
Asi: Net of deferred financing costs with because of debt of $4, 79%.
Asi: The majority of our net liabilities are at fixed interest rates providing.
Asi: Ability and protection from market fluctuations.
Asi: During the first quarter the company raised $200 million with variable interest rates.
Asi: Moving to slide 10, we have approximately $696 million of total available liquidity.
Asi: Our total expected capital expenditure for 2025 increase to $597 million, mainly due to incremental capex for the geothermal and storage, resulting from increased import areas.
Asi: As well as Capex required to secure safe harbor for storage asset expected to come online.
Asi: 2026.
Asi: Neither capex is presented in slide 29 in the appendix.
Asi: We plan to invest approximately $275 million in electricity segment for construction exploration drilling and maintained it in the last three quarters of 2025.
Asi: Additionally, we plan to invest $130 million for the construction of our store Jason.
Asi: On May seven 2025, our board of directors declared approved and authorized payment of quarterly dividend of 12 cents per share payable on June <unk> 2025 to.
Asi: <unk> to shareholders of record as of May 21, 2025.
Asi: The company expects to pay a quarterly dividend of 12 <unk> per share in each of the next two quarters.
Speaker Change: That concludes my financial overview I would like now to turn the call to Ron to discuss some of our recent developments.
Ron: Thank you aarti.
Ron: Turning to slide 12 for a look at our electricity segment operating portfolio.
Ron: Portfolio growth during the quarter was positively supported by the recent C. O D of the agent geothermal power plant, which we jointly own with PT Medco power Indonesia.
Ron: As we noted during our fourth quarter call.
Ron: The agent facility began operation of its first phase delivering 35 megawatts to the Jeff agreed with our share of the facility being 17 megawatts.
Ron: We also recently signed a 10 year PPA with Calpine energy solutions for up to 15 megawatts of carbon free geothermal capacity, it's favorable to.
Ron: This PPA would replace the current lower price PPA with Southern California, Edison mammoths due in the first quarter of 2027.
Ron: Let's move to slide 13 for an update on the operations of the electricity segment.
Ron: At our Puna power plant in Hawaii, we are conducting maintenance work on one of the world, which will result in a temporary decrease in electricity generation in the second quarter of 2025.
Ron: This decrease is expected to negatively impact second quarter revenues and EBITDA by approximately $4 million.
Ron: And net profit by approximately $3 million.
Ron: Additionally, we anticipate continued curtailments in the U S. Due to the maintenance work on the NV energy transmission line as previously announced.
Ron: Despite these impacts we do not anticipate any changes to our annual guidance for revenue and EBITDA due to the expected completion of the Blue Mountain project acquisition by the end of the second quarter and improved profitability in EBITDA.
Ron: And those statements.
Ron: Okay.
Speaker Change: Before moving on to the product segment I would like to inform you of our recent management decision.
Speaker Change: Given the expansion in the number of power pass, we own our expected organic and M&A growth and the significant interest in drilling and exploration activities.
Speaker Change: I have decided to restructure the award of the electricity segment EVP into two distinct management position.
Speaker Change: One will oversee the power plant operations, while the other will be responsible for drilling and exploration activity.
Speaker Change: I am confident that these changes will support <unk> ongoing operation and growth.
Speaker Change: Turning now to slide 14, our product segment backlog stands at $314 million.
Speaker Change: Up 142% compared to the first quarter of 2024.
Speaker Change: This increase was largely driven by the signing of a large EPC contract in New Zealand for the <unk> to a 100 megawatt power plant.
Speaker Change: And the Dominica Beauty project.
Speaker Change: As we have previously highlighted the revenues from this backlog will continue to be recognized over two years.
Speaker Change: Moving to slide 15, our energy storage segments experienced strong growth on a year over year basis with total revenues increasing 120%.
Speaker Change: Additionally, revenues in the PGM market were up by approximately 150% due to higher merchant prices and recent facilities that came online during the previous year.
Speaker Change: We anticipate that this strong performance will continue throughout 2025.
Speaker Change: We continue to see the benefit of our recently achieved.
Speaker Change: The energy storage facility.
Speaker Change: We made great progress during the quarter in advancing our energy storage portfolio expansion outside the U S.
Speaker Change: We announced two separate 15 news tolling agreements in Israel in partnership with Allied infrastructure, LCD, leading Israeli infrastructure company.
Speaker Change: Our share of the project is 150 megawatts or 610 megawatt hour.
Speaker Change: This tolling agreements will provide stability and growth to our storage segment, which are an essential element of our growth strategy.
Speaker Change: Moving to slide 17.
Speaker Change: Despite the uncertain regulatory environment, we continue to remain on track to reach our portfolio capacity target of between two six gigawatt to two eight gigawatts by year end 'twenty 'twenty eight.
Speaker Change: Our confidence is supported by the promising growth we're seeing in geothermal development.
Speaker Change: In our efforts to ramp up exploration activity.
Speaker Change: This is further supported by progress we've made in the store segment to secure both batteries and safe Harbor.
Speaker Change: <unk> project and by the new expected development in Israel.
Speaker Change: Turning to slide 18, and 19, which displays our geothermal and hybrid solar PV projects underway.
Speaker Change: We anticipate adding an additional 168 megawatts, including Blue mountain to our generating capacity from geothermal and solar PV project by the end of 2026.
Speaker Change: Moving to slide 2020 one.
Speaker Change: We currently have six projects under development in our energy storage segment, which are expected to have 385 megawatts.
Speaker Change: One three gigawatt hour to our portfolio.
Speaker Change: Our focus continues to remain on balancing contracted revenues and merchant market pricing exposure for profitability upsides in our storage portfolio.
Speaker Change: Please turn to slide 22 for a discussion of our 2025 guidance.
Speaker Change: We expect total revenues to increase by 9% year over year at the midpoint, ranging between $935 million and $975 million.
Speaker Change: Electricity segment's revenue up we'll just have to be between $710 million to $725 million.
Speaker Change: Product segment's revenues between 172 and $187 million.
Speaker Change: And energy storage revenues between 53 and $63 million.
Speaker Change: Adjusted EBITDA is expected to increase by approximately 5% at the midpoint range.
Speaker Change: Ranging between 563 and $593 million with.
Speaker Change: With annual adjusted EBITDA attributable to minority interest is approximately $21 million.
Speaker Change: I will end our prepared remarks on slide 23.
Speaker Change: Despite potential tariff impact and potential changes in the IRA program this increased uncertainty.
Speaker Change: We believe the short term impact on our operating segments is minimum.
Speaker Change: We remain committed to achieving our growth trajectory of two six to 2.8 gigawatt power generating capacity by the end of 2028.
Speaker Change: Here are the reasons behind our confidence.
Speaker Change: First we are proactively ensure that our geothermal project of safe Harbor for PTC eligibility through 2028 and.
Speaker Change: In ITC benefits for energy storage through 2026, and in some cases beyond with effort ongoing to secure additional projects.
Speaker Change: These measures will help us navigate any changes to the higher rate tax grid.
Speaker Change: Second we continue to see exciting growth opportunities for geothermal driven by the expected easing of project permitting timelines and increased focus on geothermal exploration, which will further support growth in our electricity segment.
Speaker Change: Third we're staying agile by collaborating closely with our suppliers and customers to mitigate tariff impact.
Speaker Change: Through supply chain adjustment and procurement enhancement.
Speaker Change: The goal that all our energy storage projects remain on schedule.
Next the demand for electricity, especially for renewable energy sources remains enormous to support AI data center and the transition to a cleaner energy future.
Speaker Change: Walmart is well positioned to meet this demand.
Speaker Change: And finally, we are committed to continuous innovation and are exploring how to best develop and integrate <unk> technology into operation and future growth.
Speaker Change: We are evaluating several technologies that enhance underutilized our plan using EGF drilling.
Speaker Change: Additionally, Omar is pursuing strategic partnership to develop new <unk> projects and offer advanced solution to potential <unk> customers in our productivity.
Speaker Change: We believe the new management structure will enable us the greater focus on each year.
Speaker Change: This is an exciting time for Mark as we look ahead, we will continue to focus on delivering reliable and sustainable energy solutions, and leveraging our capabilities to deliver attractive and expanded shareholder value.
Speaker Change: This concludes our prepared remarks, now I would like to open the call for questions operator. Please.
Speaker Change: At this time I would like to remind everyone in order to ask a question press star followed by the one on your telephone keypad.
Speaker Change: Your first question comes from the line of Justin Clare with Roth capital.
Speaker Change: Please go ahead.
Speaker Change: Yeah, Hi, thanks for taking my questions.
Speaker Change: Wanted to start out here just on the storage project development.
Speaker Change: Development pipeline and just wondering it sounds like you had all of the batteries for 2025 and 2026 projects already imported before.
Speaker Change: The significant increase in tariffs, but when we look a little further out.
Speaker Change: How current year development of storage projects be affected are you slowing anything down in kind of waiting to see how the supply chain.
Speaker Change: Develops if you could just share a little bit about what you are saying now.
Speaker Change: Hi, Thank you. Thank you Justin.
Speaker Change: No.
Speaker Change: First of all we need to see.
Speaker Change: How the tariff it will settle down at what price.
Speaker Change: What percentage and what how it will impact the different countries.
Speaker Change: But regardless of this we.
Speaker Change: Seen multiple alternatives to acquire batteries from different location not just from China.
Speaker Change: We are in contact with.
Speaker Change: New battery manufacturer that are building.
Speaker Change: The.
Speaker Change: Manufacturing facilities in the U S and are willing already to commit to sell batteries from the U S that would also have.
Speaker Change: Potentially benefit the array of the made in the U S benefits.
Speaker Change: So we see that the market is getting.
Speaker Change: Ready to work on the.
Speaker Change: Dealing with this topic.
Speaker Change: Internally, we are continuing all of our business development efforts by lenders needed interconnection developing the project getting them ready to.
Speaker Change: Past really two projects released.
Speaker Change: Tim.
Speaker Change: Once we have a better clear understanding of the tariff and the higher ratios.
Speaker Change: The last element that we are doing as well.
Speaker Change: We're hoping protocols in Israel, two very large tender that we won in Israel.
Speaker Change: Both the terms of the 300 megawatts 1200 megawatt hour and our share is 50% of that in addition to that we have additional projects that we are developing.
Speaker Change: In Israel.
Speaker Change: So I think if you look at it all around we are continuing we do believe that the energy storage market will.
Speaker Change: Continue to grow it might be a different balance balancing point.
Speaker Change: Between cost and the pricing.
Speaker Change: We see that.
Speaker Change: Other developers as well as all the battery manufacturers are getting prepared.
Speaker Change: A significant but still maintained low pricing.
Speaker Change: Got it Okay very helpful. And then just wanted to check in on how the tariffs may affect your cost for geothermal I believe that your equipment.
Speaker Change: It is manufactured in Israel, and then would be subject to the 10% Universal tariff. So just wanted to confirm that and then just how much of impact could that have on the total capex for geothermal plants.
Speaker Change: So all in all the impact is not material because when you look into the cost of the capex of the power plant and all it starts with the exploration, which is pure U S. Then the development and drilling.
Speaker Change: That is P. L U S power so the power that comes from.
Speaker Change: But from Israel might be.
Speaker Change: 25%, maybe 30% of the total cost so if you add to that 10% general.
Speaker Change: Worldwide.
Speaker Change: It's not very material Israel had the 3% target before that.
Speaker Change: So all in all it's not that material on top of that we see the increase in PPA pricing that.
Speaker Change: More than compensate for this increase.
Speaker Change: Alright, Okay, alright that makes sense and then just one final one on the.
Speaker Change: EGF technology, just wondering if you could talk about.
Speaker Change: Potential timing in which that technology might be implemented and then do you see that as more expanding the opportunity set in terms of where you could develop geothermal plants or or did I hear you say that you could actually enhance the performance of existing plants is that possible opportunity.
Speaker Change: Well I would say both.
Speaker Change: Both.
We have power plant debt.
Speaker Change: Have the capability to generate more electricity so building.
Speaker Change: <unk>.
Speaker Change: Drilling <unk> wells.
Speaker Change: Using inkjet technology what might increase.
Speaker Change: Output of this.
Speaker Change: Facility that we already have.
Speaker Change: On the <unk> technology.
Speaker Change: I will say that.
Speaker Change: We're working with partners and others to develop some technology, we will have some more.
Speaker Change: The.
Speaker Change: Information to update as we progress with this.
Speaker Change: However, we need to take into account the technological challenges.
Speaker Change: It's not just the question of the cost of the drilling is the question of how much water you use and how much water you lose during the working on the operating the Ags facility.
Speaker Change: How the.
Speaker Change: The overall call due to the water that is running on them. So there are still some technological issues.
Speaker Change: But if and when the aegis technology will be available I see that as a very nice upside to our muscle to be able to develop much more power.
Speaker Change: Power plants.
Speaker Change: In more locations and not just be tied to specific locations.
Speaker Change: Okay I appreciate it thank you.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Mark Strouse with Jpmorgan.
Speaker Change: Please go ahead.
Speaker Change: Hey, this is Michael Fairbanks on for Mark.
Speaker Change: Maybe just ignoring potential changes to the IRS for a second are you hearing anything from a policy or a regulatory perspective.
Speaker Change: You think could help speed up the development of Greenfield geothermal in the U S.
Speaker Change: Yes.
Speaker Change: It's a great question.
Speaker Change: A couple of weeks ago.
Speaker Change: <unk> already issued an executive order dealing with the German team on BLM land.
Speaker Change: Reissuing.
Speaker Change: Neil.
Speaker Change: I don't think it's exactly in unit basically.
Speaker Change: <unk> the current process a process that.
Speaker Change: It used to take us between one to three years under the older. It should take between 14% to 28 days.
Speaker Change: So since the order was issued we have been.
Speaker Change: Working to treat.
Speaker Change: All the relevant new documentation pilot.
Speaker Change: <unk> and <unk>.
Speaker Change: How the process works its a new process, so not everybody knows exactly.
Speaker Change: The outcome will be but we are definitely pushing forward all of our greenfield eligible for this because it's only on the rollout.
Speaker Change: Forward getting.
Speaker Change: Sure.
Speaker Change: The relevant permits drilling permits.
Speaker Change: To date.
Speaker Change: Development of Greenfield in the U S.
Speaker Change: Great and then maybe just as a follow up.
Speaker Change: Given the strong quarter on storage and some of the headwinds in electricity.
Speaker Change: Do you have an updated view on where gross margin should shake out for those segments for the year and maybe just how that progresses throughout the year.
Speaker Change: So as we said in our prepared remarks.
Speaker Change: So its margin this year is going to be on the towards the higher end of 20%.
Speaker Change: Initially we thought at the beginning of the year it would be slightly less than that.
Speaker Change: We also said in the prepared remarks.
Speaker Change: <unk> segment.
Speaker Change: Not for May 18 to 20 initially to 90, 21%.
Speaker Change: I think on the electricity segment, we still need to finalize the numbers.
Speaker Change: To move because of curtailment, but we are seeing few points lower versus last year.
Speaker Change: Great. Thank you.
Speaker Change: Okay.
Speaker Change: The next questions.
Speaker Change: Your next question comes from the line of Noah Kaye with Oppenheimer.
Speaker Change: Please go ahead.
Andre: Hi, there this is andre items on for Noah.
Speaker Change: Congrats on the Blue Mountain acquisition agreement. It sounds like you have a couple of value creation levers there could you give us some parameters on expected EBITDA contribution from the asset as it stands today and what timing and investment cost might be on the capacity expansion in solar project and what that contribution.
Andre: <unk> revenue and EBITDA would be once completed.
Speaker Change: First good morning.
Ahmad: I'll start by saying that this is a very important transaction to ahmad because it shows how we can continue to grow into the U S and enhanced asset right.
Ahmad: Second we will provide more detail information once we would own the asset, but it's all the way.
Ahmad: These assets the EBITDA multiple is at lower double digits.
Ahmad: And we once we completed.
Ahmad: Low double digit multiple and once we complete all the upgrades, we're expecting it to go down significantly anywhere from 30% to 40% like we did in the prior transaction.
Ahmad: I would also point out that.
Ahmad: It has a relatively short PPA, which is by the end of 2029 in this case, it's a big upside.
Ahmad: The carbon prices are materially above.
Speaker Change: Oh PPA prices all historical prices that we've seen in the geothermal for many many years and.
Speaker Change: And therefore that will be another upside that wants to complete.
Speaker Change: Completed the tree.
Speaker Change: <unk> action and we have a new PPA in 2029 and forward 2030 and forward it will be another upside to the number.
Speaker Change: I will say, though that on timing.
Speaker Change: The first step will be to enhance the facility and to add three five megawatts and Thats. One we can start doing one.
Speaker Change: Once we hit the facility at hand, and we don't need any special.
Speaker Change: Approval suite.
On the other hand in order to add the solar which is a key component.
Speaker Change: Additional performance of this asset we will need approval from the.
Speaker Change: The off taker.
Speaker Change: And we believe that overtime, we can get it because this off taker in the past agree.
Speaker Change: For new Ppas that will allow us to rollout.
Speaker Change: Hopefully that answered the question.
Speaker Change: Yeah. Thank you so much and on the topic of <unk>.
Speaker Change: Pricing and conversations if you could just give us an update on <unk>. He talks with hyper scaler in particular.
Speaker Change: And how much.
Speaker Change: The post 2029 re contracting opportunity.
Speaker Change: On slide four.
Speaker Change: Are the.
Speaker Change: Existing portfolio.
Speaker Change: Okay.
Speaker Change: On the re contracting in the PPA pricing they remain high.
Speaker Change: That.
Speaker Change: The current changes in.
Speaker Change: The market hasn't impacted the demand for geothermal with CPA pricing above 100 from Hyperscale as well as from.
Speaker Change: Utilities companies as well as for CCA is negative for us.
Speaker Change: The industry PPA is above 100.
Speaker Change: Yeah.
Speaker Change: We are negotiating multiple ppas once we will sign the PPA will obviously issued a press release and announced it to the to the market.
Speaker Change: But I can say that all of our negotiations have advanced since the last time with Paul.
Speaker Change: Hopefully, we'll be able to.
Speaker Change: <unk>.
Speaker Change: One once we sign it soon.
Speaker Change: Great. Thank you so much on Tesla.
Speaker Change: Your next question comes from the line of David Anderson with Barclays. Please go ahead great.
David Anderson: Great. Thank you and good morning, so sort of more of a conceptual question. So we're hearing about the hyperscale are sent.
David Anderson: Data center demand is increasing and obviously a higher PPA prices.
David Anderson: Puts you in a good position, but overall.
David Anderson: Have a lot of contracting option really over the next five years, while your assets just curious how your.
David Anderson: What are some of the leverage you have to capture some of that higher PPA you mentioned, the M&A and at that takes all of our other M&A or other M&A opportunities out there.
David Anderson: Are you thinking about Greenfield and then you've mentioned a few times Ags.
David Anderson: I'm just kind of curious where you are on that so how can we capture this sort of.
David Anderson: This market dynamic today in your numbers.
David Anderson: Look we have increased.
David Anderson: Significantly our exploration activities over the last.
David Anderson: Two years.
David Anderson: We see.
David Anderson: Alright.
David Anderson: A few greenfield.
David Anderson: And that.
David Anderson: Advanced exploration stages and should.
David Anderson: And get to the market in 28, and 29 and onwards.
David Anderson: All of this is duane trends will be.
David Anderson: Under this new PPA regime.
David Anderson: The higher PPA some of them.
David Anderson: It will probably go to Hyperscale ourselves some will go to Utah.
David Anderson: Utilities, others might be a three way contrast between Omar the hyper scalar and the utility.
David Anderson: But.
David Anderson: The most.
David Anderson: Utilizing better.
David Anderson: PPA will be through these new branches coming online.
David Anderson: As well as re contracting in the Blue Mountain is one at the end of 2009, but we are still water and software that are also coming online.
David Anderson: And we see this demand increase.
David Anderson: Regarding ags.
David Anderson: As I said we.
David Anderson: Focusing on fewer new technologies and new investments that we are looking into the etfs as well as developing.
David Anderson: Yeah.
David Anderson: Some specifics with partners.
David Anderson: EGF processes and technologies.
David Anderson:
David Anderson: And once we will have something more concrete we will announce to the market.
Speaker Change: So on that exploration Youre talking about presumably you guys can be developed where you're at with your binary cycle.
David Anderson: Current techniques I'm.
David Anderson: I am just curious on the exploration side I know you have an agreement with Schlumberger.
David Anderson: Or a partnership or I'm not exactly sure. What it is perhaps you can talk about how you see them, helping you get there I'm, assuming there is potential for efficiencies and completions and all that I'm just could you talk through a little bit on that exploration and how you get to commerciality.
David Anderson: Yes, so exploration as you said all of our power plant that we build up build based on the binary robot technology. So we've built them out.
David Anderson: Sales.
David Anderson: <unk> to us.
David Anderson: We do not use third party technology, we believe our technology superior to others.
David Anderson: Regarding Schlumberger we have.
David Anderson: A cooperation agreement with them on developing new projects that either us or them could bring to the table.
David Anderson: Obviously once a project will come from this collaboration they will do the drilling we will do the above ground.
David Anderson: Structure.
David Anderson: And that will.
David Anderson: Okay.
David Anderson: Increase our.
David Anderson: Product sales in one hand, and if it will be in a project.
David Anderson: The gross number the <unk> segment.
David Anderson: Interesting. Thank you.
David Anderson: Thank you.
David Anderson: Yes.
Speaker Change: As a reminder, if you'd like to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: The next question comes from the line of Ben Cowell with Baird.
Speaker Change: Please go ahead.
Ben Cowell: Hey, good morning, Thanks for taking.
Speaker Change: My question.
Speaker Change: Just first.
Speaker Change: Look at your 28 targets.
Speaker Change: There are several moving pieces.
Speaker Change: Higher PPA prices.
Speaker Change: This period.
Speaker Change: Doug.
Speaker Change: Uncertainty with energy storage I'm just wondering.
Speaker Change: No.
Speaker Change: We were still a 25 25, how you guys are thinking about your ability to meet those targets at this point, although I have a follow up.
Speaker Change: Okay, Hi, and welcome.
Speaker Change: To join Us.
Speaker Change: When we looked at.
Speaker Change: 2028.
Speaker Change: <unk> targets.
Speaker Change: Just on the geothermal and the energy storage.
Speaker Change: We have.
Speaker Change: Sales plan internally at least all the potential projects that should come online.
Speaker Change: We know what we're drilling today on the geothermal power Wassa exploration.
Speaker Change: On what sites, we're doing exploration.
Speaker Change: Obviously, we know that there is not 100% success. So we are using some statistics over there.
Speaker Change: To see which one will come online.
Speaker Change: And on the energy storage part.
Speaker Change: Now all the 25 26 projects.
Speaker Change: Now I also mentioned the two Israeli large very large project that we are building.
Speaker Change: Additional projects that we're building in.
Speaker Change: In Israel, and we are continuously continue to develop projects.
Speaker Change: In the U S.
Speaker Change: To be ready.
Speaker Change: Once the uncertainty of the salaries and the IRA will go away to.
Speaker Change: To tell you that the fact that there is.
Speaker Change: This uncertainty is not.
Speaker Change: History and.
Speaker Change: We are negotiating with some of our potential customers taking into account this uncertainty.
Speaker Change: And sharing the risk.
Speaker Change: With our customers in order to continue and develop the project.
Speaker Change: I don't think that the energy storage in the U S is going to disappear regardless of the outcome of the tariff or the IRA I believe it's going to get to a new.
Speaker Change: The structure may be a new.
Speaker Change: Steady state.
Speaker Change: Capex will be a bit higher.
Speaker Change: Pricing will be higher.
Speaker Change: Do see a continuous reduction in battery prices.
Speaker Change: That offset some of the interest in the targets.
Speaker Change: So I believe it will continue but.
Speaker Change: But we do have a detailed plan how to get to the 2028 end of the year.
Speaker Change: With that we put for both geothermal.
Speaker Change: And the energy stored.
Speaker Change: Thank you I appreciate that.
Speaker Change: Maybe if you could expand on the electric C. Restructure you mentioned.
Speaker Change: What the changes operationally or financially.
Speaker Change: Details can give there.
Speaker Change: Yes. Thank you.
Speaker Change: Over the last.
Speaker Change: A couple of years.
Speaker Change: <unk> increased our fleet through acquisition of the <unk>.
Speaker Change: <unk>.
Speaker Change: Now the Blue mountain assets and organic growth that we have and the growth that we see coming in the next few.
Speaker Change: Yes.
Speaker Change: And in parallel to that we increased significantly the exploration and drilling.
Speaker Change: This year, we're planning for around $150 million of Capex.
Speaker Change: Capex only on exploration and drilling we believe we will keep the same level in the coming years.
Speaker Change: And as such and in order to.
Speaker Change: Respond to the great demand in the U S.
Speaker Change: I thought it was right to have two separate management members focused and dedicated on this to on one hand.
Speaker Change: Maintaining and increasing.
Speaker Change: Performance of the electricity segment and on the other hand, making sure that the drilling is efficient.
Speaker Change: Resource is working across multiple sites at the same time.
Speaker Change: And also the ability to focus on <unk> in addition.
Speaker Change: So it's a way for all Mark too.
Speaker Change: Get more aligned.
Speaker Change: With the market demand.
Speaker Change: To be able to respond to the market.
Speaker Change: <unk> renewable electricity.
Speaker Change: Great. Thank you guys very much.
Speaker Change: Thank you.
Speaker Change: I will now turn the call back over to Dawn <unk> for closing remarks. Please go ahead.
Speaker Change: Okay. Thank you all for joining us on the call today and your continued support.
Speaker Change: We see the increased demand.
Speaker Change: For renewable energy, we see the increased support from the administration for geothermal for developing geothermal across the U S.
Speaker Change: We are doing.
Speaker Change: Everything that we can in order to capture.
Speaker Change: This potential and translated into profitable growth.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, this concludes today's call. Thank you all for joining you may now disconnect.
Speaker Change: [music].