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01/10 18:58
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong financial performance with improved margins and higher PPA prices. The company has resolved past issues like the Imperial Valley grid failure and anticipates a strong Q4. While EGS projects won't impact 2028 targets, they show long-term potential. No equity financing is needed, and CapEx is covered by EBITDA and tax credits. The market cap suggests moderate volatility, leading to a positive prediction for stock price movement.
Total Revenue $249.7 million, a 17.9% increase year-over-year. This growth was driven by improvements across all three operating segments, particularly strong results from the Energy Storage and Product segments.
Gross Profit $64 million, up 8.8% from $58.9 million in the third quarter of 2024. Consolidated gross margin was 25.6%, down from 27.8% last year, due to lower performance in the Electricity segment despite improvements in the Storage and Product segments.
Net Income Attributable to Stockholders $24.1 million or $0.39 per diluted share, compared to $22.1 million or $0.36 per diluted share in the prior year, reflecting a 9.3% increase. This was driven by higher revenues and better margins in the Product segment.
Adjusted EBITDA $138.4 million, a 0.6% increase year-over-year. Growth was driven by higher revenue and better margins in the Product segment, offset by lower income from sales of tax benefits and reduced benefits from a legal settlement in the Storage segment.
Electricity Segment Revenue $167.1 million, a 1.5% increase year-over-year. Growth was driven by the acquisition of Blue Mountain and improved performance at the Dixie Valley facility, offset by a $3.2 million reduction at the Puna complex in Hawaii due to lower energy rates.
Product Segment Revenue $62.2 million, a 66.6% increase year-over-year. This was driven by a strong backlog and progress in manufacturing and construction.
Energy Storage Segment Revenue $20.4 million, a 108% increase year-over-year. Growth was driven by the commissioning of the Bottleneck and Montague facilities in late 2024 and the COD of the Lower Rio facility in 2025.
Electricity Segment Gross Margin 25.4%, down from 30.2% last year. The decline was due to temporary lower generation at Stillwater, reduced output at Imperial Valley due to a third-party grid failure, and lower energy prices at the Puna complex in Hawaii.
Product Segment Gross Margin 21.7%, up from 19.2% last year. This improvement was driven by better profitability on contracts.
Energy Storage Segment Gross Margin 39.4%, up from 20.2% last year. This was driven by seasonally high margins at the Bottleneck Storage facility and higher merchant prices in the PJM region.
Cash and Cash Equivalents Approximately $206 million as of September 30, 2025, similar to the end of 2024.
Total Debt Approximately $2.7 billion as of September 30, 2025, with a cost of debt at 4.8%. Most debt liabilities are at fixed interest rates.
Net Debt Approximately $2.5 billion as of September 30, 2025, equivalent to 4.4x net debt to EBITDA.
Tax Benefits $14.4 million in income related to tax benefits in the third quarter, compared to $19.8 million last year. ITC benefits of $9.5 million were recorded in the income tax line for the quarter.
Enhanced Geothermal System (EGS) strategy: Ormat entered into partnerships with SLB and Sage to develop EGS solutions, aiming to streamline project deployment and reduce costs for geothermal energy extraction.
Energy Storage: Commissioned the Lower Rio Energy Storage facility in Texas and achieved 108% revenue growth in the segment, driven by new facilities like Bottleneck and Montague.
Product Segment: Expanded backlog to $295 million, a 79% increase year-over-year, driven by new supply agreements and a large contract worth $86 million.
Geothermal exploration in Indonesia: Secured two geothermal exploration licenses totaling 40MW in partnership with Indonesia's national utility provider, PLN.
New Zealand Project: Customer exercised an option to purchase the TOPP 2 facility, which will now fall under the Product segment upon completion.
Revenue Growth: Achieved a 17.9% increase in total revenue, driven by growth across all three operating segments.
Adjusted EBITDA: Increased by 0.6% year-over-year to $138.4 million, supported by higher revenue and better margins in the Product segment.
Electricity Segment: Revenue increased by 1.5% to $167.1 million, supported by acquisitions and improved facility performance.
Partnerships for EGS Development: Collaborated with SLB and Sage to advance EGS technology, aiming to scale geothermal energy solutions and reduce costs.
Capacity Expansion: On track to achieve portfolio capacity targets of 2.6-2.8 GW by 2028, with 98 MW of new capacity expected by 2026.
Electricity Segment Gross Margin Decline: The gross margin for the Electricity segment decreased from 30.2% to 25.4% year-over-year, negatively impacted by $5.5 million due to temporary lower generation at Stillwater from ongoing enhancement work, reduced output at Imperial Valley assets following a third-party grid failure caused by a storm, and curtailment in the U.S. Additionally, lower energy prices at the Puna complex in Hawaii reduced gross margin by approximately $3.2 million.
Dependence on Chinese Batteries: The Energy Storage industry, including Ormat, remains heavily dependent on batteries sourced from China. This reliance poses risks due to the U.S. budget bill's foreign entity of concern (FEOC) provision, which could impact project development and procurement flexibility.
Debt Levels and Interest Rates: Ormat's total debt stands at approximately $2.7 billion, with a net debt to EBITDA ratio of 4.4x. While most debt is at fixed interest rates, the high debt level could pose financial risks, especially in fluctuating market conditions.
Project Delays and Revenue Shifts: The TOPP 2 project in New Zealand, initially part of the pipeline, will now be sold to the customer upon completion, shifting its revenue to the Product segment and removing it from the pipeline. This could impact future capacity growth projections.
Regulatory and Market Risks: The company faces regulatory and market risks, including curtailment in the U.S. and lower energy prices in specific regions like Hawaii, which have already impacted financial performance.
Revenue Guidance for 2025: Revenue is expected to increase by 10.2% year-over-year at the midpoint, ranging between $960 million and $980 million.
Electricity Segment Revenue: Projected to be between $700 million and $705 million for 2025.
Product Segment Revenue: Expected to range between $190 million and $200 million for 2025.
Energy Storage Revenue: Now expected to range between $70 million and $75 million for 2025.
Adjusted EBITDA Guidance: Expected to increase by approximately 6.2% at the midpoint, ranging between $575 million and $593 million, with annual adjusted EBITDA attributable to minority interest at approximately $17.5 million.
Energy Storage Segment Growth: Strong performance expected to continue throughout the remainder of 2025, driven by benefits of recently commissioned storage facilities.
Geothermal Development and Capacity Targets: On track to achieve portfolio capacity targets of between 2.6 gigawatts to 2.8 gigawatts by the end of 2028, with 98 megawatts of generating capacity expected to be added by the end of 2026.
Energy Storage Projects: Five projects under development expected to add 325 megawatts or 1,180-megawatt hours to the portfolio.
Enhanced Geothermal System (EGS) Development: Partnerships with SLB and Sage Geosystems to develop and pilot EGS solutions, with potential for scaling and widespread adoption if successful.
Quarterly Dividend Declaration: On November 3, 2025, the Board of Directors declared, approved, and authorized a payment of a quarterly dividend of $0.12 per share. This dividend is payable on December 1, 2025, to shareholders of record as of November 17, 2025.
The earnings call indicates strong financial performance with improved margins and higher PPA prices. The company has resolved past issues like the Imperial Valley grid failure and anticipates a strong Q4. While EGS projects won't impact 2028 targets, they show long-term potential. No equity financing is needed, and CapEx is covered by EBITDA and tax credits. The market cap suggests moderate volatility, leading to a positive prediction for stock price movement.
The earnings call reflects a positive sentiment with strong financial performance, strategic partnerships, and optimistic guidance. The acquisition and expansion plans, energy storage growth, and improved permitting are promising. The Q&A section supports this with ongoing negotiations and legal settlements favoring Ormat. The stock's market cap indicates moderate sensitivity to these factors, suggesting a positive stock price movement.
The earnings call presents a mixed picture: strong growth in energy storage and product segments, but declining electricity revenue and margins. The company's net debt is high, posing risks. Despite the dividend, lack of a repurchase program and unclear guidance on EGS technology implementation add uncertainty. The market cap suggests moderate reaction, likely resulting in a neutral stock price movement over the next two weeks.
The company reported mixed financial results with positive full-year growth but a decline in Q4 revenues and gross profit. The Q&A revealed uncertainties in electricity generation and geothermal projects, despite optimism in energy storage margins. The market cap suggests moderate sensitivity to earnings. Given the mixed signals and lack of clear guidance, the stock is likely to have a neutral movement, staying within -2% to 2%.
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