Q3 2025 Ormat Technologies Inc Earnings Call
Good morning and welcome to the ormat Technologies. Third quarter 2025 earnings conference call. All participants will be in a listen-only mode.
After the today's presentation, there will be an opportunity to ask questions if you like to ask a question during that time, press star followed by the number 1 on your telephone keypad.
If you would like to withdraw your question press star followed by the number 1.
Please note that this event is being recorded. I will now like to turn the conference over to Josh Carroll with Alpha IR please go ahead.
Thank you. Our chief executive officer, Aussie Ginsburg, Chief Financial Officer is fedar Levy, vice president of investor relations and ESG planning reporting.
Before beginning, we'd like to remind you that the information. Provided during this call, may contain 4 looking statements relating to current expectations assessments, forecasts and projections about future events that are forward-looking as defined in the private Securities. Litigation Reform, Act of 1995.
We're looking statements, generally relate to the company's plans, objectives and expectations for future operations. In our base on Management's, current estimates and projections future results or trends.
Actual future results May differ materially from those projected as a result of certain risk factors and uncertainties.
For a discussion of such risk and uncertainty, please see risk factors as described norat Technologies and report on form 105 with the SEC.
In addition, during the call, the company will present non-gaap Financial measures such as adjusted ibida.
Reconciliations the most directly comparable, gaap measures and management reasons for presenting. Such information is set forth in the press release. That is issued last night as well as in the slides posted on the website.
Because these measures are not calculated in accordance with gaps, they should not be considered in isolation from the financial statements prepared in accordance with gaap.
Before I turn the call over to the management. If you would like to remind everyone that the slide presentation accompanying, this call may be accessed on the company's website at ormat.com under the presentation link that is found on the investor relations tab.
With all that said, I would now like to turn the call over to format Co Don Bashar Don.
Thank you, Josh. Good morning, everyone. And thank you for joining us today.
Let me start with quarter. Highlights on slide 4.
Omar delivered, another quarter of strong results, demonstrating, continued advancement and successful, execution of our strategic growth initiative.
These achievements are effective, in the 17.9% increase in Revenue. A 13.3% increase in operating income, and a 9.3% growth in net income attributable, to the company's stockholders.
Our strong results were, primarily driven by sustained improvements in both our energy storage and product segments, which contributed to higher revenues and enhanced profitability.
These strong results enabled us to increase our revenues and adjusted TVA guidance for 2025.
During the quarter, Market achieved several significant strategic milestones, including securing a 25-year extension for our 52-megawatt Hebrew PPA with Scapa.
And obtaining, 2 geothermal, exploration, licenses in Indonesia, totaling 40 meals.
This long-term PPA in Indonesia were executed in partnership with pln the countries. National utility provider reinforcing, our strategic presence in the region.
Within our storage segment, we successfully commissioned the Lower Rio energy storage facility in Texas on schedule. And in our product segment, we expanded our backlog to 295 million dollars through the addition of new Supply agreements.
Our legislators is that of an Innovative technology company and is part of our strategy. We are always exploring additional ways to utilize our capabilities knowledge and technology for new avenues to capture growth.
To that end, we have achieved significant progress in advancing. Our enhanced geothermal system strategy demonstrating our commitment to Innovation and sustainable growth.
We entered into a partnership with SLB to develop an EGS solution. And in addition, we signed the collaboration agreement with sage to develop another EGS solution based on different Technologies.
I will elaborate on this later.
Before I provide some additional updates on our business, I would now like to turn the call over to AI to discuss our financial results. I see
Thank you, Don. Let me start my review of our financial highlights on slide 6.
Total revenue for the third quarter was 249.7 Million.
17.9% increase compared to last year's third quarter.
The stop line. Expansion was driven by growth across all 3 operating segments. Notably our growth continued to reflect the strong results from both our energy storage and product segment.
Gross profit for the third quarter, was 64 million up 8.8% from 58.9 million in the third quarter of 2024.
Resulting in a Consolidated growth margin of 25.6% versus 27.8% last year.
And product segment.
Costly offset by lower performance of our electricity segment.
Net income attributable to the company's stockholders was 24.1 million or 39 cents per diluted share.
Compared to 22.1 million or 36 cents per diluted share in the third quarter of the prior year.
Adjusted net income attributable to the company's stockholders was $24.9 million, or $0.41 per share, compared to $26.3 million in the third quarter.
Adjust the debt for the third quarter was 138.4 Million, 8.6% increase compared to last year.
This year over year growth was driven mostly by higher revenue and better margins in the product segment.
As well as contribution from new Assets in the nlg storage segment.
This contributions were offset by lower income attributable, to sales of tax benefits, and reduce benefits from a legal settlement with the batteries supplier in a storage segment.
Which were both exceptionally High during the third quarter of 2024.
Slide 7, breaks down the revenue performance at a segment level.
primarily due to the recent acquisition of Blue Mountain and the improved performance at our Dixie Valley facility,
this expansion to our operating portfolio, had to more than offsets 3.2 million reduction complex in a while due to lower energy rates.
Product segment revenues increased by 66.6% to 62.2 million dollars during the third quarter.
Driven by our strong backlog, and the timing of progress made in manufacturing and construction.
LSG storage segment Revenue increased by 108% to 20.4 million dollars in the third quarter, finally driven by the successful commissioning of the bottleneck and Montegue facilities in late 2024 and the co of our 60 megawatt, 120 megawatt hour, lower rear facility this quarter
I would like to help the person next to our facility in line with its contracts contributed. Approximately 45% of its annual revenues during the third quarter.
Which generally significantly increased storage revenue and profits in the third quarter compared to the rest of the year.
Our flow line 7, the gross margin for the electricity. Segment was 25.4% in the third quarter.
Down from 30.2% from last year.
The gross margin is a third quarter of 2025 was negatively impacted by 5.5 million dollars due to Temporary large generation and still water from ongoing enhancement work.
Reduced outputs that are Imperial Valley assets following its third-party grid. Failure caused by September strong.
And to lesser extent containment in the US.
In addition, lower energy prices at our Pune complex in Hawaii, reduce gross margin by approximately 3.2 million dollars.
In the product segment, gross margin was 21.7% up, 250 basis points from 19.2% last year.
What is margin? Expansion driven by improved profitability on our contracts.
We continue to anticipate that gross margin for this year. In our product segment, will remain in the range of 21% to 23%.
The energy storage segment, reported gross margin of 39.4% up meaningfully compared to 20.2%, gross margin in the third quarter of 2024.
This Improvement was mainly driven by seasonally High margins at the bottom. Next storage facility.
And higher Merchant prices in the PGM region year over the years.
The story segment is likely to increase to about 25%.
Slide 8 and 9 show the results of the last 9 months of 2025.
Highlighted by a 10% increase in total revenue, and 11.6% and 4.5% increases in net income and adjusted EBITDA, respectively.
With significant increase in both energy storage and product segments.
Moving to slide 10.
As discussed in the second quarter. Call on July 4th, the US budget will extended the PTC and ITC. Runway 4, our geothermal and energy storage center.
Regarding the foreign entity of concerns of Phi.
Provision of the bill.
The Border scope includes specified, foreign entity and foreign influence entity. At this time, the entire energy storage industry is still heavily dependent on Battery Source from China.
And we are actively evaluating all project development options.
While continuing to save Harbor additional projects ultimately we will pursue the most economically viable option to invent our current storage Pipeline and maintain flexibility in our procurement to stay on track with our expansion goals.
Moving to slide 11.
We recorded 14.4 million in income related to tax benefit in the third quarter.
Compared to 19.8 Million last year.
In the third quarter and 9 months of 2025, we recorded ITC benefits of 9.5 million and 33.8 million respectively in the income tax line.
These benefits are related to 2 storage facility that commenced operation or expect to comment commercial operation by the end of 2025.
Recently, we entered 2 tabs Equity transactions. And as of today, we collected approximately 109 million dollars under this contract.
The balance of 32.4 million will be collected by the year end in addition, we resold, transferable PTC and ITC and received mostly in October, 2, 5. 5,
We now expect total cash from tax credit. This year will exceed our initial expectation of 160 million dollars and will now reach approximately 1 167 million dollars
We expect to Mark tax rate will be positively impacted by ITC benefits in 2025, with an annual benefit rate between 5 to 15%. Excluding changes in law for 1 Time Event.
Slide, 12 details are cash flow over the last 12 months, illustrating or Mobility to generate strong cash flow that allows us to fund reinvestment and strategic growth while servicing, their obligation and returning Capital to shareholders.
cash and cash equivalent and restricted, cash and cash equivalent as of September 30th 2025 when approximately 206 billion dollars, similar to the end of 2024,
Our total debt as of September 30th 2025 was approximately 2.7 billion dollar net of deferred financing costs with the cost of debt at 4.8%.
The majority of our debt, liabilities or fixed interest rates, providing stability and protection for Market fluctuations.
Moving to slide 13, our net debt as of September 30th 2025 was approximately 2.5 billion equivalent to 4.4 times made it to IA.
During the third quarter, we secured 254 million dollars in funding. This includes 104 million dollars from tax Equity Partnerships, and transferable tax credits, and 160 million dollars from Project Finance, Long and attractive rates.
It's shown on the slide. Our total available liquidity, is 667 million.
We expect our total capital expenditure for the remaining of the year to be 1 million dollars.
With our digital capex plan presented in the Flight territory in the appendix.
we plan to invest approximately 100 million dollars in electricity segment for construction, exploration, Drilling and maintenance in the fourth quarter of 2025,
Construction of our storage assets.
On November 3rd, 2025 our board of directors, declared approved, and authorized a payment of quarterly dividend of 12 cents per share. Payable on December 1st 2025 to shareholders of record as of November 1720 255.
Before I turn the call over to the run, I would like to know that depending on the average share price. In Q4, we expect diluted share count will increase by approximately 800,000 shares due to the potential dilutive effect from our convertible senior notes.
That conclude my financial overview. I would like now to turn the call over to Don to discuss some of our recent developments.
Thank you. A
moving to slide 16.
The Blue Mountain power plant that we acquired back in June have contributed to our results and we're continuing to make great progress. In plant upgrades that would enhance the facility's, generation and revenue growth potential.
Our Basic Value facility, exhibited improved performance during the quarter following an unplanned outage that took place during the prior year.
Turning now to our International activity,
In our group, we were chosen to develop 2, Greenfield projects, longer and die. For the local government in Indonesia further, expanding our footprint in The Reef.
Notably format is the first company chosen under this competitive build process.
we are planning to commence drilling at 1 of these sites by the end of 2026,
And contingent of successful results, expect the project to be fully operational by 2030.
With respect to our top 2 project in New Zealand, this is currently, in commissioning stage recently, received the formal notice from the customer that they have decided to exercise their option to purchase the facilities. And once the project is complete, we will be delivering the facility to the customer.
As a result revenues from the sale of these projects will now fall under the product segment.
Once it is finalized and closed. Next year, the top 2 facilities will be removed from our pipeline.
Turning now to slide 17.
Our product segment backlog stands at 295 million representing a 79% increase compared to the third quarter of 2024.
this growth was primarily driven by large contract we signed, which has added approximately 86 million dollars to the best of
moving to slide 18.
Our energy storage segments, produced another strong quarter of year over year, growth with total revenues increasing by 180%.
As previously mentioned, we anticipate that this strong performance in our energy storage business, with continuous throughout the remainder of 2025 driven by the benefits of recently, commissioned storage facilities.
On slide 20, we are all tracked to achieve our portfolio capacity, targets of between, 2.6 gigawatt to 2.8 gigawatt by the end of 2028.
this confidence is driven by strong, momentum in geothermal development and our intensified exploration as
In parallel, we are making progress in the storage segment. Having successfully secured both batteries and safe, harbor for additional projects.
Further reinforcing our fast. Road meeting our capacity growth services.
Turning to slide 21 and 22 which display our geothermal and hybrid solar PV projects currently underway. We anticipate adding 98 megawatts or generating capacity from these projects by the end of 2020.
Moving to slides 23 and 24.
We currently have 5 projects under development in our energy store segments which are expected to add 325 megawatts for 1,180 megawatt hours to our portfolio.
Turning the slide 25.
Last week, Omas and SLB announced the partnership aimed at accelerating the developments and commercialization of EGS projects.
With smbs, well established strength in subsurface with the war engineering and construction.
Together we intend to jointly develop a pilot economic facility with the goal of scaling AGS solutions to enable widespread EGS adoption.
If the pilot will successfully automatic space to expand its development pipeline, in alignment with our commitment, to delivering reliable sustainable and efficient Energy Solutions to meet the demands of AI Data Center and the broader transition to renewable energy.
In addition to the SMB agreement during the third quarter, we are now a strategic commercial agreement with sage gel system. A Pioneer in next generation geo7, and energy storage technology.
As part of the agreement, once closed, the state will file its advanced threshold geothermal technology to extract geothermal heat energy from hot dry rocks. It's one of our existing power plants.
The goal of this collaboration is the significantly reduced the time and costs needed to bring EGS to Market.
Following a successful completion of the pilot project, Ormat will get the right to develop, build, own, and operate geothermal power plants, delivering Sage's profile, the pressure geothermal technology.
We also intend to advance long and short duration, energy, storage projects, utilizing stage, Cutting Edge, treasure. Geothermal Storage Solutions,
We will provide additional updates on these agreements as the pilot program progresses.
Our partnership with SLB coupled with our agreement with sage has created a significant step forward for the geothermal industry.
And the global leader in geothermal development. We are proud to drive progress toward the most sustainable future by delivering reliable efficient and renewable. Energy solutions to power the global energy needs.
Please turn to slide 26 for a discussion of our 2025 guidance.
The great results we saw in the product and Source, segments enabled us to update our guidance and increase our revenue and adjusted Eva Target for the year.
We expect Revenue to increase by 10.2% year-over-year at the midpoint ranging between 960 and 980 million.
Electricity segment, revenues are projected to be between 700 and 705 million.
Product segment revenues are expected to range between 190 and 200 million dollars and energy stored revenues are now expected to range between 70 and 75 million.
As a result of improvements in full year revenue and strong adjusted Evar results generated today. Adjusted ibida is now expected to increase by approximately 6.2% in the midpoint ranging between 575 and 593 million with annual adjusted. Ebida attributable to minority interests at approximately 17.5 million dollars.
I will now conclude our prepared remarks to reference the slide 27.
This is the pivotal and transformative period for us.
We are experiencing strong momentum across our business, fueled by new strategic partnership, and expanding portfolio. Robust PPA pricing supported regulatory development and increasing demand for Renewable Energy Solutions.
As the global energy transition gains pace and AI driven requirements, for power and energy infrastructure. Expand the market for a core competence where exceptionally well, positioned to deliver scalable and sustainable energy solutions.
We are also proud of the progress that we have made in advancing EGS technology.
This initiative, complements, our established leadership in geothermal development and positions us to drive future growth.
Looking ahead to the fourth quarter and Beyond, we remain committed to expanding our industry leadership and advancing Innovative sustainable. Energy solutions that will allow us to drive growth and long-term value for our shareholders.
Includes of the P remarks.
Now, I would like to open the call for questions, operator, please.
Thank you at this time. If you would like to ask a question press star followed by the number 1 on your telephone keypad.
If your question has been answered and you would like to remove yourself from the queue press star 1,
Your first question is from the line.
Of know. Okay. With Oppenheimer.
Well, good morning, uh doron, AI. Thanks for taking the questions. Hope you're well.
So can you hear me major?
Yes, your line is coming through.
Okay, thank you. All right, so um, maybe just start with, uh, you know, it was in the uh, slide decks uh, on page 15 just um, referencing. The 250 megawatts of PPA is under negotiation with hyperscalers and data centers. Um don't believe, uh, I heard an update in the prepared remarks. Can you maybe just update on uh, you know,
I'm sorry, I'm getting a lot of feedback here. I don't
no.
Yes, I'm sorry. Can you hear me coming through?
Okay, I'm sorry, I'm getting a lot of feedback but uh, we're just hoping for an update on the uh PPA discussions with hyperscalers. Thank you.
you can hear me well, um,
we are, uh, in actually, in in very final negotiations, on a couple of ppas with hyperscalers and in the same, uh,
Madna suit, you know, that we have been uh, discussing. We hope to be able to uh, finalize them, sign them and announce them in the next couple of months. Hopefully, even before that.
um,
But it's, uh, we had quite a significant development in the negotiations and Drafting and we're very close to finish finishing them.
In the next couple of months.
Great. We look forward to that. Um, second question. Um, you know I think you you mentioned top 2, uh, will likely convert over to a products.
Uh, revenue, uh, since you'll be doing the EPC work there. Um, just how to think about how that might sort of translate into, uh, you know, additional products, backlog, and, uh, you know, the revenue opportunity associated with that.
Yes, I would say it's a it's an EPC project, roughly, you know, 100 million dollars in that range. And so they have
Exercised the option. We need to close the the transaction. This will probably occur in q1 of 26 and at that point
Once the transaction closes it's the it's the accounting widest. The time we can actually account it as part of the project signal.
Very helpful. Thanks. Um, and then, you know, you mentioned a couple of these uh key collaborations on on EGS. I was hoping you could give us a little bit more color on. Um, you know, some of the pilots um, that are associated with that. Um, can you give us a little bit more detail on on the scope of the pilot? Uh, what what steps exactly you'll kind of be taking here, uh, in the early days to, um, kind of assess commercial viability and what you'll be looking for to go ahead with a larger project,
Sure. So um,
These are 2 different.
Transactions.
so, with SLB, uh, with with started the joint venture,
And and um we've chosen the site. The pilot for the SLB will be next to our facility in desert City in Nevada. Actually it's the same location that 20 years ago or month started in AGS project there.
Stuff. You know it should be looking into the right technology and developing the right technology for an EGS project once they are complete or actually in parallel to that. We will be looking for permitting and all the business development-related issues that we will be working on.
Once these 2 are are aligned, we will, uh, drill the pilot Wells.
We expect that will happen to the second half of the end of 26. And then we will run the pilot and we will utilize our desert pick site and buy that save a lot of time of all the need to build a facility to
generate electricity.
This is on the S&P path.
On the stage. And so the stage pilot is, is pilot that they are managing. We are discussing with them. What is the right location for an EGS project next to 1 of our facilities uh similar again to save time. But on this case you know be the permitting and everything is done by by Sage not by user, just allowing them to utilize uh 1 of our facilities.
which we haven't finalized with them yet, which 1
Very helpful. Uh, lots more to ask but I will uh defer to my colleagues. Thank you.
Thank you. Thank you know.
Your next question is from the line of Justin Clare with Rob capital.
Hi. Yeah, thanks for the time. Uh, so wanted to start out with the uh, electricity segment uh, wondering if you could just discuss, you know, within the electricity segment, the the how you anticipate the growth margins, uh, trending in Q4, there was a number of different factors that affected the margins in Q3 wondering if those are are being resolved or if they could affect Q4, uh, and then just looking at the 2026. Uh, it'd be great if you could just talk about the puts and takes, you see for the electricity segment uh in regard to kind of operational uh issues that you uh that impacted 2025 and the curtailment and and how you see things uh evolving for that segment next year.
well, I will stop maybe with the 26 and
What we've seen we are not aware today of any material car payments that are planned by NV Energy or by or from California near the control sub substation. So the big impact that we have this year is not something that we expect to see next year. But you know, this is usually up to the utilities and the and the operator is not asked. This is the
Regarding 2026. Um,
Regarding.
New uh for 26. I can tell you that. We had some competent in October by NV Energy, which wasn't a planned 1. Uh, it was
um,
And Q4 is usually much stronger than Q3 and Q2. Uh, so we do it that higher growth margin in in Q4 versus a Q3.
Okay, got it. And then I, I guess just some of the, uh, factors that affected Q3, The Still Water enhancement. The uh, Imperial Valley, uh, grid failure. Have those been, um, resolved at this point, or could there be a a effect in Q4 wondering, you know, for Q4? Could we see, you know, directionally and Improvement versus the year ago period or could those factors, uh, result in a year-over-year, uh, decline,
And the storm in the Imperial Valley impact IID. They had, I think a few hundred posts that fell down and it took them a while to bring them up. So this event is is over and behind us.
impressed, but not as big of an impact, as as in Q3
Got it. Okay. And then
I will just add to it. It was from season perspective. Q4 is usually 1 of the strongest quarter for the year and we expect this to be probably the strongest for 20205. We see lesson in the Capel which is very positive. If you look at the 2024, our margin was 36%. We are running in general this year.
200 to 300 basis points below that. So that's the expectation for a Q4.
And so overall again it should be much improved versus what we saw this quarter. It should be probably the highest for the year but slightly below 2024 because there is it's the 1 M some curtailment in Q4 on 1 end.
And also still water is still not a pixel capacity.
Okay, that's that's really helpful. And then just 1 more on uh ppas. Uh it's it seems like ppas are continuing to Trend higher. You mentioned pricing above 100 dollars, a megawatt hour wondering if you're seeing pricing you know at 105 or 110 or if you could provide any more granularity in on the pricing that you're seeing uh and then just related to that. Um, it sounds like off-takers may be looking to recontract um earlier in order to lock in
Pricing before, uh, potential, you know, future increases in ppas. Are you seeing, uh, any of that uh, could you look at recontract assets, you know, earlier than than what you typically would be expecting?
so it's very hard to, you know to comment on the PPA price if it's 105 or 110 then it's it's in a similar vicinity and both of them are good numbers depending on the specific location and the off data
Uh, we are looking for recontracting today. Our 2029 and 2030 projects are coming off of contract.
It's important. You know, we would like to reconstruct them to get the stability and the ability to focus and
for longer term.
In today's environment and PPA pricing. It is very attractive.
Okay, thanks very much.
Your next question is from the line of Mark Strauss with JP Morgan.
Uh, yes. Thanks for taking our questions. Um, just a, a follow-up to Noah's earlier question. Uh, I know, I know it's early. Uh, but can you talk about how, you know, it's kind of a, a reasonable expectation of how long these these pilots on the EGS side might last. Um, and I I appreciate kind of the the longer term opportunity here but just, uh, it specific to your 2028 targets. Uh, do you think that there's potential upside to that from these, uh, from these EGS deals? Or is it a bit more longer dated? Thank you.
Okay, thank you. Um, 28 targets. It's a bit aggressive to assume that EGS will have will have an impact.
You know, 1 of the main challenges with EGS is the water loss. Once you succeed, the water inject inject water and then bring it up again. Hot
And this is something that will, you know, will be.
Verified or or learned over the time.
so if you see the file of the, you know, operating in 27 sometimes I think it's likely that
You'll be able to after few few months, be able to get the input on the viability of this technology.
I can tell you that once we have have starting the pilot, the development, uh, we will be looking to sign, uh, load PPA. Obviously for a later, period, based on this technology, if it is successful. So, this is also something that
We together with SLB are planning to do.
Great. Thank you.
Your next question is from the line of Julian de Molen Smith with Jeffries.
Hey, good morning. This is Hannah Velasquez on for Julian. So, uh, another follow-up question on the EGS part. Can you just give us a sense of the scale of EGS-type projects that you would be looking to target in terms of megawatts?
Definitely it. It the the nice thing about EGS projects that it is based on the amount of well to drill and the water that you use. So the megawatts that can be developed are significant. It can be in the hundreds of megawatts in order to other companies at ppas. It's not like today that when we
Release a project. It's a 25 30, 35 megawatts. I believe the easiest project will be
In a few hundreds, maybe a month. But again, it's very, very early.
to say before we have the pilot operating
Thank you, and as a followup.
Um, an executive order on the pyramiding side, that came out of the Trump Administration, that was trying to accelerate the permitting process for a geothermal. I think it was like down to 28 days or something like that. Um, have you seen any updates or progress on that front?
In general, we do see getting permits become much less of an issue when it's a federal permit.
Although over the last few weeks as we all know the government is in a shutdown mode. So I don't we don't see a lot happening there, but I can tell you that we were able to get within weeks.
Permits, and you will see in 2026 that will lead, is the $1 million on the call last time to accelerate in drilling program.
The 1 mentioned that we are adding a second rig for the second half of 2025.
We may even add a third rig at 1 Point next year, we may have so that's going to be a different situation for us.
And what it gives us is the ability to develop more assets to meet both our 2028 and of course, our longer term goals. So very positive. Last few weeks, nothing is being done, you know, it's all uh on the shutdown mode, we hope it will change shortly.
Okay, thank you.
Thank you, Hannah.
Your next question is from the line of John Windham with UBS Financial.
Perfect. Thanks for taking the questions. I'd be really interested. If you could just provide some more color about how you're managing risk around the storage business because I say a lot of uncertainty um in the market around Fiat around that just how the contracts or how your development pipeline um risk mitigates for potential outcomes for that to be very interested to hear your thoughts. Thanks.
John so uh you saw the uh, those modules this quarter and we're also increased guidance for the, for the year, for the, for the storage.
so, all in all in our
Operations between the PGM, Texas and and California is working very well all the projects that we are developing at the field of Safe Harbor.
Um, and a few additional ones that we haven't already released for construction have Safe Harbor. Um,
Apart from that the FOC and the entire storage Market. You know, is still trying to align itself to this to the new world that the Administration has put and we're looking also on on the impact longer term. But at this stage, all the projects and the plan that we have are in line and we are working on them and and we did Safe Harbor, whatever we could and had the good enough view going forward.
Great. Thank you.
Thank you. Your next question is from the line of David Sutherland with beard
You know, and then thank you.
So I start by saying that if you look at this year,
our expected immediate the middle range, plus the, uh, over 160 million close to 167 million dollars of Cash, cover basically, uh, completely all of our capex needs,
And the only additional borrowing that we did this year is to basically for the acquisition that we made.
We haven't finalized our plan here for capex for next year. But also next year, we expect to have at least 70 million dollars of tax Equity or ITC that we will get from 2 projects.
In addition, to that next year towards the end of the year, the Puna plant is expected to come on. And if we close the transaction of the, uh, Pune plant in already in the December, which is unlikely, but it's possible then this year. And next year tax credits will be quite similar maybe even higher next year. So overall, the the the starts for the for us is very, very good. It's around can be as much as 1 170 million next year.
In addition to that next year, as we mentioned at the beginning of the call, we expect to sell for around hundred million dollars. The project that we already fully financed in the, in the New Zealand. So basically, we will start the year next year, with the above, 250 million dollars of non-processed.
Together, we don't go in iida.
That should cover the majority of our capex needs. And if we will need slightly more we can B.
So, at this point, we don't see a need for equity for the company. Of course, the 2 Pilots of the EGS at this point. There are no meaningful for the company or at least the 1 that we are spending the money with the SLB not meaningful. Spend for the, for the company, maybe, 10 to 20 million a year for the next year or 2.
But once EGS will be
something big and we will need to start building instead of a 100 megawatts a year 3 time or 4 times that amount how much will have to look into our capital structure and and I believe that there is plenty of cash available for great projects
So as I mentioned right now, we will focus with great cash from operation plus tax credit. Including a large 1-time income next year. Coming from the sale of
Of the project in New Zealand. So we should be quite covered next year.
Thank you for that. That's super helpful. Um, and maybe I guess just building on that last question and to your point about EGS and the excitement there is there any opportunity that you guys see today, the accelerate this development through m&a or any other actions you guys could take to build more or bigger Partnerships, uh, in the near term?
Thank you again.
Thank you. Oh, we've just, you know, started this initiative. I don't see any elimination of transactions in the EGS field that can push it forward. So, I don't believe there's any target to the formula transaction.
We believe that the developing with SLB and the commercial agreement would say, which is a different technology than than SLB actually will allow us to have 2 uh paths.
To uh uh reach ETFs uh and if either 1 of both of them are successful. Uh we said the number of megawatt that can be developed that will impact or M on Project as well as the product segment of significance.
Thank you, Don. Thank you. Ah, I'll pass it on.
Your next question is from the line of David Anderson with Barclays.
Agreement. Um, they're providing the technology; they're doing the permitting and the drilling. If this is successful, the Sher...
participate in this project in the longer term in terms of capex or or other or other means on this, how does that work longer term if this if this all works out
okay, I cannot answer for sambo themselves but the way the
Partnership works. Is that well developing together and after that we can build projects together or which 1 can build by by yourself projects, um, we, uh, San Jose is a service company. That's what they've done all over the years and we are Developer developers. So over the once the pilot is successful, we will be able to utilize all the technology that was developed in the pilot and build geothermal EGS projects, that will be owned by.
Can you talk about the differences in the technologies that are being applied? That what stage is doing versus what stage is doing?
It's a these are 2 different Technologies. I I um these are very proprietary technology for sage and SSD are still developing them. I think all the time because the pilot progresses and technology is developing with that we will be able to share more information on how we are developing it and how do we see uh both of them operating.
Over time.
Thank you.
Your next question is from Noah K with Oppenheimer.
Well, thanks for taking the follow-up. Um, really, really 2 ones. Uh, you know, the first 1 is around the electricity performance, kind of following up on the, on the margin question before I think maybe another way to get at is
You know, there have been a number of events all year. Uh, you know, there were wildfires in California in 1 Q. Uh, the Puna maintenance in 2q and you now in Imperial Valley in 3Q and obviously, the Nevada curtailment all year. And I guess outside of Pune, now, these were really kind of exogenous factors, right? So I, I guess if we add up all of these non-recurring factors is possible kind of quantify the total impact to revenue and even
This year, so I think that'll help us rebel line for next year.
Sure. So when we look at the containment,
It's probably around $14 to $15 million this year.
If you add to it, some of the Puna impact, plus the IV storms, you're probably going to be some of the 2020 to 25 million, but let's remember every year there is few events. So I will say it's probably 20 million impact for the year. And when you look at our Focus for the year, you can see that we reduced higher end part of the guidance, by exactly those 20 million. That's why we went from 725 to 7005. So if you want to make it easier on you, this is this is the high level impact.
That that's perfect. Thanks, I see. Um, and the second 1 is really to think about um,
Land position and interconnection position. You know, we noticed that, uh, Envy energy is interconnection queue. Just just to pick 1 utility, uh, for geothermal increased by, uh, roughly 10x, um, over the last couple of months, uh, it does look like there is obviously a lot of project development, can you talk about your, uh, your interconnection position your ability to, uh, bring online? Um, you know, the geothermal projects you have in development
The power um, um, projects and prospects that we have that we are developing today have most of them already interconnection agreements and dates.
The others are in various stages of negotiations, on finalizing, you know, the megawatts and the cost of the interconnection, the date.
so, when we look at the near to mid-term future, we feel a confidence that
We will have interconnection for the projects that should be coming online in the next few years.
Obviously, as you go down the to the to later years, you know, interconnection is something that needs to
To be worked on, but we are in this.
In a very and California for many, many years, in the geothermal, and we are continuously filing for interconnection.
and we have, as I said for most of our projects going forward into connection,
thank you.
Thank you know.
Our final question comes from line of Derek paiser with Piper Satler.
Hey, um, just want to ask about product. Um, maybe just your Outlook Outlook there on the backlog seems to be growing nicely. Just up your top line, revenue, guidance, your implied 2028 guidance is I think in the 140 million dollar range, you just got it up to 180.
2190. Uh, margins are sitting above 20%. Uh, is this just a new run rate? We should think about, maybe just some comments around product and how you see that progressing over the next couple years given that you're trending above your 2028, implied guidance.
You know, our long-term target for margin is anywhere from 17% to 20%.
Contract.
In addition to the fact that some of the project are are being finished right now in New Zealand were able to complete the EPC at a much lower cost than anticipated. So I will say, from a margin perspective this year is definitely, I will say outstanding and probably on the higher end and when I look forward probably between, I would say 17 to 20 is making more sense on the revenue line item. There is no doubt that we can continue to stay elevated and also next year, we expect to stay elevated. Historically, how much, you know, at least in the years of Co and the few years others, we sold around 100 million. I will say, right now, we are moving probably to the 200 million level.
And next year may be slightly higher, but that's the idea. At this point, we signed a large contract in Asia a few weeks ago, and we're negotiating a few more as we speak. I think that what's more important when you look at the product segment is.
To show to the world that geothermal is light kicking. Not just in the US with all the AI but it's a viable solution in many, many countries and the cheapest option to uh, to get electricity 1, more thing that will boost our revenues. But that's toward 2028 2029 and 2030 is the fact that we did win, 2 new PP.
Is in Indonesia. These are Bots projects with pln.
During a BLT project, we recognize Revenue already at the time of the construction in the product segment.
So, I would say that over the next few years, we should see a very nice support coming from the project in Indonesia, from the New Zealand projects and also what we just signed in Asia. So, overall, good timing. As I said, margin, this year is exceptionally High. We're not anticipating that to be a, this level.
That's helpful. Um, and then, just, just back to the partner partnership with SLB, maybe looking at it from a different angle. We already talked about EGS. But what about on the traditional side of things, your traditional geothermal development. What are you perform? Are you, are you exploring progress with SLB to develop that type of, uh, power plants. Just trying to think of the cross synergies. That can be utilized with SLB applying some of their Technologies into the traditional space. All, you know, fully acknowledging that EGS is where the interest is, but just thinking about traditional asset development as well.
No uh definitely you know traditional geothermal is, you know, the core of what we're doing today, EGS and needs to be developed. So we are looking also with SLB on potential, uh, customer that uh are looking for geothermal as energy and have, you know, the relevant, uh, locations or land that we can.
developed the
Traditional geothermal is definitely part of the discussion with them. It's something that both companies can enjoy if we get the additional...
A customer for them, for the services they provide for drilling, and up for the problems that definitely exist in the partnership.
Great. Thanks for the caller. I'll turn it back.
Include the question-and-answer session of today's call. I will now hand the call over to Doron for closing remarks.
Thank you.
Thank you, everyone. This was a strong quarter on our operations with strategic developments, in the EGS technology.
Our partnership with SLB and the commercial agreement. We signed with sage will impact our growth in in the future.
And will allow us to together with SLB to respond to the significant demand. We see today in the market by data centers and AI for electricity.
We will obviously continuously update you on any progress we have in this pilot and how we plan to see them materializing into real projects.
So, thank you all.
This concludes today's call, thank you for joining. You may now disconnect your lines.