Earnings call transcript: Ormat Technologies Q3 2025 earnings beat forecasts

Ormat Technologies Inc (ORA) reported its third-quarter 2025 earnings, surpassing market expectations with an earnings per share (EPS) of $0.41, compared to the forecasted $0.3859, marking a 6.25% surprise. The company's revenue stood at $249.7 million, exceeding the anticipated $234.3 million, resulting in a 6.59% revenue surprise. Following the announcement, Ormat's stock rose 4.22% in premarket trading, reflecting positive investor sentiment.

Key Takeaways

• Ormat Technologies reported a 17.9% year-over-year revenue increase.
• EPS and revenue both surpassed market expectations.
• Stock price increased by 4.22% in premarket trading.
• Significant growth in the energy storage segment, with a 108% increase.
• New strategic partnerships and international expansion initiatives were highlighted.

Company Performance

Ormat Technologies demonstrated robust performance in Q3 2025, with a notable 17.9% increase in total revenue compared to the same period last year. The company's growth was driven by substantial gains in its product and energy storage segments. Ormat's strategic focus on expanding its geothermal energy footprint internationally, particularly in Indonesia and New Zealand, and its innovative partnerships in Enhanced Geothermal Systems (EGS) technology have positioned it well against competitors in the renewable energy sector.

Financial Highlights

• Revenue: $249.7 million, up 17.9% year-over-year
• Earnings per share: $0.41, surpassing the forecast of $0.3859
• Gross profit: $64 million, an 8.8% increase
• Net income: $24.1 million
• Adjusted EBITDA: $138.4 million, a 0.6% increase
• Electricity segment revenue: $167.1 million, a 1.5% increase
• Product segment revenue: $62.2 million, a 66.6% increase
• Energy storage segment revenue: $20.4 million, a 108% increase

Earnings vs. Forecast

Ormat Technologies exceeded expectations with an EPS of $0.41 against the forecast of $0.3859, resulting in a 6.25% earnings surprise. Revenue also surpassed projections, reaching $249.7 million compared to the expected $234.3 million, reflecting a 6.59% surprise. This performance marks a positive deviation from previous quarters, indicating strong operational execution and strategic growth initiatives.

Market Reaction

Following the earnings announcement, Ormat's stock saw a 4.22% increase in premarket trading, reaching $112.37. This upward movement indicates investor confidence in the company's financial health and strategic direction. The stock's performance is noteworthy as it approaches its 52-week high of $113.25, signaling strong market sentiment relative to broader industry trends.

Outlook & Guidance

Ormat Technologies provided an optimistic outlook, with revenue guidance for 2025 set between $960 million and $980 million, representing a 10.2% increase. The company also targets an adjusted EBITDA range of $575 million to $593 million. Strategic initiatives include expanding its portfolio capacity to 2.6-2.8 GW by 2028 and significant growth in product and storage segments.

Executive Commentary

CEO Doron Bouchard emphasized the company's growth momentum, stating, "We are experiencing strong momentum across our business, fueled by new strategic partnerships and expanding portfolio." This reflects Ormat's commitment to leveraging innovative technologies and expanding its global footprint. VP of Investor Relations Svedar Levy highlighted improvements in the permitting process, noting, "We see getting permits become a much less of an issue when it's a federal permit."

Risks and Challenges

• Supply Chain Disruptions: Potential delays in equipment and materials could impact project timelines.
• Regulatory Changes: Shifts in energy policy or environmental regulations could affect operations.
• Market Competition: Increasing competition in the renewable energy sector may pressure margins.
• Geopolitical Risks: International expansion exposes the company to geopolitical and economic uncertainties.
• Technological Advancements: Rapid changes in energy technology may require continuous innovation.

Q&A

During the earnings call, analysts inquired about ongoing negotiations for power purchase agreements (PPAs) with hyperscalers, reflecting the growing demand for renewable energy in data centers. Questions also focused on the viability of EGS pilot projects with partners SLB and Sage, highlighting the potential for future projects in this area. The company addressed concerns about minimal expected curtailments in 2026, assuring stakeholders of its operational resilience.

Full transcript - Ormat Technologies Inc (ORA) Q3 2025:

Conference Operator: Good morning, and welcome to the Ormat Technologies Third Quarter twenty twenty five Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Josh Carroll with Alpha IR.

Please go ahead.

Josh Carroll, Alpha IR Representative, Alpha IR: You, operator. Hosting the call today are Rondo Fowler, Chief Executive Officer Ozzy Ginsberg, Chief Financial Officer Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting. Before beginning, we would like to remind you that the information provided during this call may contain forward looking statements relating to current expectations, estimates, forecasts and projections about future events that are forward looking as defined in the Private Securities Litigation Reform Act of 1995. These forward looking statements generally relate to the company's plans, objectives and expectations for future operations and are based on management's current estimates and projections, future results or trends. Actual future results may differ materially from those projected as a result of certain risk factors and uncertainties.

For a discussion of such risks and uncertainties, please see Risk Factors as described in NorMat Technologies' annual report on Form 10 ks and quarterly reports on Form 10 Q that are filed with the SEC. In addition, during the call, the company will present non GAAP financial measures such as adjusted EBITDA. Reconciliations to the most directly comparable GAAP measures and management reasons for presenting such information is set forth in the press release that was issued last night as well as in the slides posted on the website. Because these measures are not calculated in accordance with GAAP, they should not be considered in isolation from the financial statements prepared in accordance with GAAP. Before I turn the call over to management, I'd 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 Ormat's CEO, Doron Bouchard. Doron?

Doron Bouchard, Chief Executive Officer, Ormat Technologies: Thank you, Josh. Good morning, everyone, and thank you for joining us today. Let me start with quarter highlights on Slide four. Walmart delivered another quarter of strong results, demonstrating continued advancement and successful execution of our strategic growth initiatives. These achievements are reflected in a 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 EBITDA guidance for 2025. During the quarter, Ormat achieved several significant strategic milestones, including securing a twenty five year extension for our 52 megawatts Heber PPA with SCAPA and obtaining two geothermal exploration licenses in Indonesia totaling 40 megawatts. These long term PPAs in Indonesia were executed in partnership with PLN, the country's 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 $295,000,000 through the addition of new supply agreement. Our legacy Atoma is that of an innovative technology company. And as 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 a 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 Assi to discuss our financial results. Assi?

Assi Ginsberg, Chief Financial Officer, Ormat Technologies: Thank you, Doron. Let me start my review of our financial highlights on Slide six. Total revenue for the third quarter was $249,700,000 a 17.9% increase compared to last year's third quarter. This top line expansion was driven by growth across all three operating segments. Notably, our growth continued to reflect the strong results from both our energy storage and product segments.

Gross profit for the third quarter was $64,000,000 up 8.8% from $58,900,000 in the 2024, resulting in a consolidated gross margin of 25.6% versus 27.8% last year. The increase in gross margin was a result of improvement in our Storage and Product segment, partially offset by lower performance of our electricity segments. Net income attributable to the company's stockholders was $24,100,000 or $0.39 per diluted share compared to $22,100,000 or $0.36 per diluted share in the third quarter of the prior year. Adjusted net income attributable to the company's stockholders was $24,900,000 or $0.41 per diluted share compared to $26,300,000 or $0.42 per diluted share in the third quarter prior year. Adjusted EBITDA for the third quarter was $138,400,000 a 0.6% 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 energy storage segment. These contributions were offset by a lower income attributable to sales of tax benefits and reduced benefits from a legal settlement with a battery supplier in our storage segment, which were both exceptionally high during the 2024. Slide seven breaks down the revenue performance at the segment level. Electricity segment revenue for the third quarter increased by 1.5% to $167,100,000 primarily due to the recent acquisition of Blue Mountain and the improved performance at our Dixie Valley facility. This expansion to our operating portfolio helped to more than offset $3,200,000 reduction at our Puna complex in Hawaii due to lower energy rates.

Product segment revenues increased by 66.6% to $62,200,000 during the third quarter, driven by our strong backlog and the timing of progress made in manufacturing and construction. Energy Storage segment revenues increased by 108% to $20,400,000 in the third quarter, primarily driven by the successful commissioning of the Bottleneck and Montague facilities in late twenty twenty four and the COD of our 60 megawatt, 120 megawatt hour Lower Rio facility this quarter. I would like to add that the bottleneck storage facility in line with its contract contributed approximately 45% of its annual revenue during the third quarter, which generally significantly increased storage revenue and profits in the third quarter compared to the rest of the year. Also on Slide seven, the gross margin for the electricity segment was 25.4% in the third quarter, down from 30.2% from last year. The gross margin in the 2025 was negatively impacted by $5,500,000 due to temporary lower generation at Stillwater from ongoing enhancement work, reduced output at our Imperial Valley assets following a third party grid failure caused by September storm and to lesser extent curtailment in The U.

S. In addition, lower energy prices at our Puna complex in Hawaii reduced gross margin by approximately $3,200,000 In the product segment, gross margin was 21.7%, up two fifty basis points from 19.2% last year, with this 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 2024. This improvement was mainly driven by seasonally high margins at the bottleneck storage facility and higher merchant prices in the PGM region year over year.

We believe that full year gross profit for the storage segment is likely to increase to above 25%. Slides eight and nine show the results of the last nine months of 2025, highlighted by 10% increase in total revenue and 11.64.5% increase 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 4, The U. S.

Budget bill extended the PTC and ITC runway for our geothermal and energy storage segment. Regarding the foreign entity of concern, or FIAC, provision of the bill, the broader scope includes specified foreign entity and foreign influence entity. At this time, the entire energy storage industry is still heavily dependent on battery sourced from China. And we are actively evaluating all project development option, while continuing to safe harbor additional projects. Ultimately, we will pursue the most economically viable option to advance our current storage pipeline and maintain flexibility in our procurement to stay on track with our expansion goal.

Moving to Slide 11, we recorded $14,400,000 in income related to tax benefit in the third quarter compared to nineteen point eight million dollars last year. In the third quarter and nine months of twenty twenty five, we recorded ITC benefits of $9,500,000 and $33,800,000 respectively in the income tax line. These benefits are related to two storage facility that commence operation or expect to commence commercial operation by the 2025. Recently, we entered two tax equity transaction. And as of today, we collected approximately $109,000,000 under these contracts.

The balance of $32,400,000 will be collected by the year end. In addition, we sold transferable PTC and ITC and received mostly in October $25,500,000 We now expect total cash from tax credit this year will exceed our initial expectation of $160,000,000 and will now reach approximately $167,000,000 We expect our tax rate will be positively impacted by ITC benefits in 2025 with an annual benefit rate between 5% to 15%, excluding changes in law or onetime events. Slide 12 details our cash flow over the last twelve months, illustrating Ormat's ability to generate strong cash flow that allows us to fund reinvestment and strategic growth, while servicing debt obligation and returning capital to shareholders. Cash and cash equivalents and restricted cash and cash equivalents as of 09/30/2025 were approximately $2.00 $6,000,000 similar to the 2024. Our total debt as of 09/30/2025, was approximately $2,700,000,000 net of deferred financing costs, with a cost of debt at 4.8%.

The majority of our debt liabilities are at fixed interest rates providing stability and protection for market fluctuation. Moving to Slide 13, our net debt as of 09/30/2025 was approximately $2,500,000,000 equivalent to 4.4 times net debt to EBITDA. During the third quarter, we secured $254,000,000 in funding. This includes $104,000,000 from tax equity partnerships and transferable tax credits and $150,000,000 from project finance loan at attractive rates. As shown on the slide, our total available liquidity is $667,000,000 We expect our total capital expenditure for the remaining of the year to be $140,000,000 with our detailed CapEx spend presented in Slide 33 in the appendix.

We plan to invest approximately $100,000,000 in the electricity segment for construction, exploration, drilling and maintenance in the 2025. Additionally, we plan to invest $34,000,000 in the construction of our storage assets. On 11/03/2025, our Board of Directors declared, approved and authorized a payment of quarterly dividend of $0.12 per share payable on 12/01/2025 to shareholders of record as of 11/17/2025. Before I turn the call over to Doron, 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 concludes my financial overview.

I would like now to turn the call over to Doron to discuss some of our recent developments.

Doron Bouchard, Chief Executive Officer, Ormat Technologies: Thank you, Assi. Moving to Slide 16. The Blue Mountain power plant that we acquired back in June has contributed to our results, and we're continuing to make great progress in planned upgrades that will enhance the facility's generation and revenue growth potential. Our Dixie Valley facility exhibited improved performance during the quarter following an unplanned outage that took place during the prior year. Turning now to our international activities.

In August, we were chosen to develop two greenfield projects, Songa and Atedai for the local government in Indonesia, further expanding our footprint in the region. Notably, Ormat is the first company chosen under this competitive bid process. We are planning to commence drilling at one of these sites by the 2026 and contingent on successful results expects the projects to be fully operational by 2030. With respect to our top two project in New Zealand that is currently in commissioning stage, we recently received a formal notice from the customer that they have decided to exercise their option to purchase the facility. And once the project is complete, we will be delivering the facility to the customer.

As a result, revenue from the sale of this project will now fall under the product segment. Once it is finalized and closed next year, the top two facility will be removed from our pipeline. Turning now to Slide 17. Our product segment backlog stands at $295,000,000 representing a 79% increase compared to the 2024. This growth was primarily driven by a large contract we signed, which has added approximately $86,000,000 to the backlog.

Moving to Slide 18. Our Energy Storage segment produced another strong quarter of year over year growth with total revenues increasing by 108%. As previously mentioned, we anticipate that this strong performance in our energy storage business will continue throughout the remainder of 2025, driven by the benefits of recently commissioned storage facilities. On Slide 20, we are on track to achieve our portfolio capacity targets of between 2.6 gigawatt to 2.8 gigawatt by the 2028. This confidence is driven by strong momentum in geothermal development and our intensified exploration efforts.

In parallel, we are making progress in the storage segment, having successfully secured both batteries and safe harbor for additional projects, further reinforcing our path towards meeting our capacity growth targets. Turning to Slide 20 '1 and '22, which display our geothermal and hybrid solar PV projects currently underway. We anticipate adding 98 megawatts of generating capacity from these projects by the 2026. Moving to Slide '23 and '24. We currently have five projects under development in our Energy Storage segment, which are expected to add three twenty five megawatts or eleven eighty megawatt hour to our portfolio.

Turning to Slide 25. Last week, OMAT and SLB announced a partnership aimed to accelerate the development and commercialization of EGS projects. Together with SLB, we intend to streamline project deployment from concept to power generation by combining Ormat's expertise and market leading capabilities in power plant design, development and operations with SLB's well established strengths in subsurface reservoir engineering and construction. Together, we intend to jointly develop a pilot at an Ormat facility with the goal of scaling EGS solution to enable widespread EGS adoption. If the pilot proved successful, Ormat expects 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 SLB agreement during the third quarter, we announced a strategic commercial agreement with Sage Geosystem, a pioneer in next generation geothermal and energy storage technology. As part of the agreement, once closed, Sage will pilot its advanced threshold geothermal technology to extract geothermal heat energy from hot dry rock at one of our existing power plants. The goal of this collaboration is to significantly reduce the time and costs needed to bring EGS to market. Following a successful completion of the pilot project, Ormat will gain the right to develop, build, own and operate geothermal power plants levering Sage's proprietary pressure geothermal technology. We also intend to advance long and short duration energy storage projects, utilizing Sage cutting edge threshold geothermal storage solution.

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. As the global leader in geothermal development, we are proud to drive progress towards a more 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 Storage segments enabled us to update our guidance and increase our revenue and adjusted EBITDA targets for the year.

We expect revenue to increase by 10.2% year over year at the midpoint, ranging between $960,000,000 and $980,000,000 Electricity segment revenues are projected to be between $700,000,000 and $7.00 $5,000,000 Product segment revenues are expected to range between $190,000,000 and $200,000,000 and energy storage revenues are now expected to range between 70,000,000 and $75,000,000 As a result of improvements in full year revenue and strong adjusted EBITDA results generated to date, adjusted EBITDA is now expected to increase by approximately 6.2% at the midpoint, ranging between $575,000,000 and $593,000,000 with annual adjusted EBITDA attributable to minority interest at approximately $17,500,000 I will now conclude our prepared remarks with reference to Slide 27. This is a pivotal and transformative period for Ormat. We are experiencing strong momentum across our business, fueled by new strategic partnership and expanding portfolio, robust PPA pricing, supported regulatory developments 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 our core competence, we are exceptionally well positioned to deliver scalable and sustainable energy solution. 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 solution that will allow us to drive growth and long term value for our shareholders. This concludes our prepared remarks. Now I would like to open the call for questions. Operator, please.

Conference Operator: Thank Your first question is from the line of Noah Kaye with Oppenheimer.

Noah Kaye, Analyst, Oppenheimer: Well, good morning, Doron, Assi. Thanks for taking the questions. Hope you're well. Sorry, can you hear me? Yes,

Conference Operator: your line is coming through.

Noah Kaye, Analyst, Oppenheimer: Okay. Thank you. All right. So maybe to start with, it was in the slide deck on Page 15, just referencing the two fifty megawatts PPAs under negotiation with hyperscalers and data centers. Don't believe I heard an update in the prepared remarks.

Can you maybe just update on I'm sorry. I'm getting a lot of feedback here. I don't

Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting, Ormat Technologies: Noah? Noah, do you hear us?

Noah Kaye, Analyst, Oppenheimer: Yes. I'm sorry. Can you hear me coming through?

Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting, Ormat Technologies: Yes. Okay. So

Noah Kaye, Analyst, Oppenheimer: Okay. I'm sorry. I'm getting a lot of feedback, but I was just hoping for an update on the PPA discussions with hyperscalers. Thank you.

Doron, Chief Executive Officer, Ormat Technologies: So hopefully, can hear me well. We are actually in very final negotiations on a couple of PPAs with hyperscalers and the same magnitude, you know, that we have been discussing. We hope to be able to finalize them, sign them, and announce them in the next couple of months, hopefully, even before that. But it's 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.

Noah Kaye, Analyst, Oppenheimer: Great. We look forward to that. Second question, I think you mentioned TOP two will likely convert over to a products revenue, should be doing the EPC work there. Just how to think about how that might translate into additional products backlog and the revenue opportunity associated with that?

Doron, Chief Executive Officer, Ormat Technologies: Yes. I would say it's a it's an EPC project roughly, you know, $100,000,000 in that range. So they have exercised the option. We need to close the the transaction that will probably occur in '26. And at that point, once the transaction closes, it's the accounting wise the time we can actually account it as part of the project segment.

Noah Kaye, Analyst, Oppenheimer: Very helpful. And then you mentioned a couple of these key collaborations EGS. I was hoping you could give us a little bit more color on some of the pilots that are Can associated with you give us a little bit more detail on the scope of the pilot? What steps exactly you'll kind of be taking here in the early days to kind of assess commercial viability and what you'll be looking for to go ahead with a larger project?

Doron, Chief Executive Officer, Ormat Technologies: Sure. So these are two different transactions. So with SLB, we've started a joint venture, and and we have chosen the site. The pilot for the SLB will be next to our facility in Desert Peak in Nevada. Actually, it's the same location that twenty years ago, Walmart started an EGS project there.

So this the project the pilot starts, you know, with SLB looking into the right technology and developing the right technology for an NGS 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'll be working on. Once these two are are aligned, we will drill the pilot wells. We expect that will happen towards the second half of the end of twenty six. And then we'll run the pilot, and we will utilize our Desert Peak site.

And by that, save a lot of time of all the need to build a facility to generate electricity. So this is on the SAP part. On the Sage, so the Sage pilot is is pilot that they are managing. We are discussing with them what is the right location for an EGS project next to one of our facilities, similar again to save time. But on this case, you know, be the permitting and everything is done by by Sage, not by us.

We are just allowing them to utilize one of our facilities, which we haven't finalized with them yet which one.

Noah Kaye, Analyst, Oppenheimer: Very helpful. Lots more to ask, but I will defer to my colleagues. Thank you.

Doron, Chief Executive Officer, Ormat Technologies: Thank you, Thank you, Noah.

Conference Operator: Your next question is from the line of Justin Clare with ROTH Capital.

Justin Clare, Analyst, ROTH Capital: Hi. Thanks for the time. So wanted to start out with the electricity segment. Wondering if you could just discuss within the electricity segment the how you anticipate the gross margins trending in Q4. There was a number of different factors that affected the margins in Q3.

Wondering if those are being resolved or if they could affect Q4. And then just looking into 2026, it'd be great if you could just talk about the puts and takes you see for the electricity segment in regard to kind of operational issues that you that impacted 2025 and the curtailments and how you see things evolving for that segment next year.

Doron, Chief Executive Officer, Ormat Technologies: So I will start maybe with '26. What we've seen, we are not aware today of any material curtailments that are planned by NV Energy or by or from California near the control substation. So the big impact that we had 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 and the operators, not us. This is regarding 2026.

Regarding '26, I can tell you that we had some curtailment in October by NV Energy, which wasn't a planned one. It was an an unplanned curtailment that they've done. Q four is usually much stronger than Q3 and Q2. So we do expect a higher gross margin in Q4 versus Q3.

Noah Kaye, Analyst, Oppenheimer: Okay.

Justin Clare, Analyst, ROTH Capital: Got it. And then I guess just some of the factors that affected Q3, the Stillwater enhancement, the Imperial Valley grid failure, have those been resolved at this point? Or could there be an effect in Q4? Wondering for Q4, could we see directionally an improvement versus the year ago period? Or could those factors result in a year over year decline?

Doron, Chief Executive Officer, Ormat Technologies: The storm in the Imperial Valley impact IID, they had, I think, a few 100 poles that fell down, and it took them a while bring them up. So this event is is over and behind us. The Stillwater upgrade continued into into October. So it will have some impact, but not as big of an impact as as in q three.

Assi Ginsberg, Chief Financial Officer, Ormat Technologies: Got it. Okay. And then

Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting, Ormat Technologies: I would just add to it. From a season perspective, Q4 is usually one of the strongest quarter for the year, and we expect this to be probably the strongest for 2025. We see lesson in the curtailment, which is very positive. If you look at 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 Q4. 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, as Doron mentioned, some curtailment in Q4 on one end and also Stillwater is still not at its full capacity.

Justin Clare, Analyst, ROTH Capital: Got it. Okay. That's really helpful. And then just one more on PPAs. It seems like PPAs are continuing to trend higher.

You mentioned pricing above $100 a megawatt hour. Wondering if you're seeing pricing at $105 or $110 or if you could provide any more granularity on the pricing that you're seeing? And then just related to that, it sounds like off takers may be looking to recontract earlier in order to lock in pricing before potential future increases in PPAs? Are you seeing any of that? Could you look to recontract assets earlier than what you typically would be expecting?

Doron, Chief Executive Officer, Ormat Technologies: So it's very hard to, you know, to comment on the PPA price if it's $1.00 5 for $1.10. There, it's it's in the similar vicinity, and both of them are good numbers depending on the specific location and the off taker. We are looking for recontracting today our twenty nine and two thousand and thirty projects coming off contract. It's important, you know, we would like to recontract them to get the stability and the ability to focus and for longer term. Also, you recontract a project, you know, it doesn't come up with a lot of CapEx.

There's some CapEx associated with the enhancement, but it doesn't come with the full CapEx. So in today's environment and PPA pricing, it is very attractive.

Justin Clare, Analyst, ROTH Capital: Okay. Thanks very much.

Conference Operator: Your next question is from the line of Mark Strouse with JPMorgan.

Mark Strouse, Analyst, JPMorgan: Yes. Thanks for taking our questions. Just a follow-up to Noah's earlier question. I know it's early, but can you talk about how it's kind of a reasonable expectation of how long these pilots on the EGS side might last. And I appreciate kind of the longer term opportunity here.

But just specific to your 2028 targets, do you think that there's potential upside to that EGS deals? Or is it a bit more longer dated? Thank you.

Doron, Chief Executive Officer, Ormat Technologies: Thank you. 28 targets, it's a bit aggressive to assume that EGS will have an impact. You know, one of the main challenges with EGS is the water loss. Once you circulate the water, inject inject water, and then bring it up again hot, this is something that will, you know, will be verified or learned over time. So if we see the pilot, you know, operating in '27 sometime, I think it's likely that we'll be able to, after a few few months, be able to get the input on the viability of this technology.

I can tell you that once we are starting the pilot development, we will be looking to sign long PPAs, 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.

Noah Kaye, Analyst, Oppenheimer: Great. Thank you.

Conference Operator: Your next question is from the line of Julien JULIEN Dumoulin Smith SMITH:] with Jefferies.

Hannah Velasquez, Analyst, Jefferies: Hey, good morning. This is Hannah Velasquez on for Julien. So as 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?

Doron, Chief Executive Officer, Ormat Technologies: Yes. Look, the nice thing about EGS project that it is based on the amount of well that you drill and the water that you use. So the megawatts that can be developed are It can be in the hundreds of megawatts similar to other companies at PPAs. It's not like today that when we release a project, it's 25, thirty, thirty five megawatts. I believe the ETS projects will be in a few hundreds of megawatts.

But again, it's very, very early to say before we have the pilot operating.

Hannah Velasquez, Analyst, Jefferies: Okay. And as a follow-up, can you give us an update? I know a while back, we had talked about an executive order on the permitting side that came out of the Trump administration that was trying to accelerate the permitting process for geothermal. I think it was, like, down to twenty eight days or something like that. Have you seen any updates or progress on that front?

Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting, Ormat Technologies: In general, we do see getting permits become a much less of an issue when it's a federal permits. 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, as Doron mentioned on the call last time, to accelerating drilling program.

Doron mentioned that we're adding a second rig for the 2025. We may even add a third rig at one point next year. We may have so that's gonna 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 on a shutdown mode. We hope it will change shortly.

Hannah Velasquez, Analyst, Jefferies: Okay. Thank you.

Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting, Ormat Technologies: Thank you, Ana.

Conference Operator: Your next question is from the line of Jon Winhelm with UBS Financial.

Josh Carroll, Alpha IR Representative, Alpha IR0: Perfect. Thanks for taking the questions. I'd be really interested if could just provide some more color about how you're managing risk around the storage business. There's obviously a lot of uncertainty in the market around Fiat around that, just how the contracts or

Noah Kaye, Analyst, Oppenheimer: how your development

Josh Carroll, Alpha IR Representative, Alpha IR0: pipeline risk mitigates or potential outcomes to that? Be very interested to hear your thoughts. So

Doron, Chief Executive Officer, Ormat Technologies: thank you, John. So you saw the storage margins this quarter, and we also increased guidance for the for the year for the for the storage. So all in all, our operation between the PGM, Texas, and and and California is working very well. All the projects that we are developing have secured a safe harbor and a few additional ones that we haven't already released for construction have safe harbor. Apart from that, the SEOC 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 a on the impact longer term. But at this stage, all the project 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 a good enough view going forward.

Josh Carroll, Alpha IR Representative, Alpha IR0: Great. Thank you.

Doron, Chief Executive Officer, Ormat Technologies: Thank you.

Conference Operator: Your next question is from the line of David Sutherland with Baird.

Josh Carroll, Alpha IR Representative, Alpha IR1: Hey, good morning, guys. Thank you for the time and hope you're doing well. Most of my questions on EGS have already been answered. So maybe if I could pivot. Assi, I wonder if you could talk just a little bit more about financing needs for next year.

And then really maybe even for next year 2027, just looking at the 200 megawatts of geothermal and solar roughly that you guys plan on bringing online and any needs or any of the things we should consider for tax partnerships between now and then? Thank you.

Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting, Ormat Technologies: So I'll start by saying that if you look at this year, our expected EBITDA, the middle range plus the over $160,000,000 close to $167,000,000 of cash cover basically 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 yet for CapEx for next year, but also next year we expect to have at least $70,000,000 of tax equity or ITC that we will get from two 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 Puna plant in already in 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 $170,000,000 next year. In addition to that next year, as we mentioned at the beginning of the call, we expect to sell for around $100,000,000, a project that we already fully financed in in New Zealand. So basically, we will start the year next year with above $250,000,000 of nonprofits. Together with ongoing EBITDA, that should cover the majority of our CapEx needs.

And if we will need slightly more, we can borrow. So at this point, we don't see a need for equity for the company. Of course, the two pilots of the AGS at this point, they are not meaningful for the company or at least the one that we are spending the money with the SLB. It's not meaningful spend for the for the company, maybe 10 to 20,000,000 a year for the next year or two. But once EGS will be something big, and we will need to start build instead of the 100 megawatts a year, three times or four times that amount, OMAT 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 one time income next year coming from the sale of of the project in New Zealand. So we should be quite covered next year.

Josh Carroll, Alpha IR Representative, Alpha IR1: Thank you for that. That's super helpful. And then 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 to maybe accelerate this development through M and A or any other actions you guys could take to build more or bigger partnerships in the near term? Thank you again.

Doron, Chief Executive Officer, Ormat Technologies: Thank you. We've just started these initiatives. I don't see an M and A transaction in the AGS field that can push it forward. I don't believe there's any targets today for M and A transaction. We believe that developing with SLB and the commercial agreement with SAID, which is a different technology than SLB, actually will allow us to have two paths to reach EGS.

And if either one or both of them are successful, we said the number of megawatts that can be developed that will impact Ormat own project as well as the product segment are significant.

Conference Operator: Your next question is from the line of David Anderson with Barclays.

Josh Carroll, Alpha IR Representative, Alpha IR0: On the Schlumberger agreement, they're providing the technology, they're doing the permitting and the drilling. If this is successful, does Schlumberger participate in this project in the longer term in terms of CapEx or other means on this? How does that work longer term if this this all works out?

Doron, Chief Executive Officer, Ormat Technologies: Okay. I cannot answer for St. Borje themselves. But the way the partnership works is that we're developing together. And after that, we can build project together or which one can build by by itself projects.

We SambaJay is a service company. That's what they've done all all the years. And we are developer com developers. So with the once the pilot is successful, we will be able to utilize all the technology that was developed in the pilot and build a a geothermal EGS project that will be owned by Ormat.

Josh Carroll, Alpha IR Representative, Alpha IR0: Can you talk of the differences in the technologies that are being applied, that what Sage is doing versus what Schlumberger is doing?

Doron, Chief Executive Officer, Ormat Technologies: It's these are two different technologies. These are very proprietary technology for Sage, and SMB are still developing them. I think over time, as the pilot progresses and technology is developing, we are that we will be able to share more information on how we are developing it and how do we see both of them operating over

Doron Bouchard, Chief Executive Officer, Ormat Technologies: time.

Josh Carroll, Alpha IR Representative, Alpha IR0: Your

Conference Operator: next question is from Noah Kaye with Oppenheimer.

Noah Kaye, Analyst, Oppenheimer: Well, thanks for taking the follow-up. Really two ones. The first one is around the electricity performance, kind of following up on the margin question before. I think maybe another way to get at is there have been a number of events all year. There were wildfires in California in 1Q, the Puna maintenance in 2Q and now Imperial Valley in 3Q and obviously the Nevada curtailment all year.

And I guess outside of Puna, these were really kind of exogenous factors, right? So I guess if we add up all of these non recurring factors, is it possible to kind of quantify the total impact to revenue and EBITDA this year? I think that'll help us rebaseline for next year.

Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting, Ormat Technologies: Sure. So when we look

Josh Carroll, Alpha IR Representative, Alpha IR0: at the

Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting, Ormat Technologies: curtailment, it's probably around $14,000,000 to $15,000,000 this year. If you add to it some of the Puna impact plus the IV storms, you're probably gonna be somewhere between 20 to 25,000,000. But let's remember, every year there is few events. So I will say it's probably a 20,000,000 impact for the year. And when you look at our focus for the year, you can see that we reduced our higher end part of the guidance by exactly those $20,000,000 That's why we went from $725,000,000 to $7.00 5,000,000 So if you want to make it easy on you, this is the high level impact.

Noah Kaye, Analyst, Oppenheimer: That's perfect. Thanks, Assi. And the second one is really to think about land position and interconnection position. We noticed that NB Energy's interconnection queue, just to pick one utility for geothermal increased by roughly 10x over the last couple of months. It does look like there is obviously a lot of project development.

Can you talk about your interconnection position and your ability to bring online the geothermal projects you have in development?

Doron, Chief Executive Officer, Ormat Technologies: Our 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 midterm future, we feel 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 be worked on. But we are in this in Nevada 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, interconnection.

Noah Kaye, Analyst, Oppenheimer: Thank you.

Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting, Ormat Technologies: Thank you, Noah. Thanks.

Conference Operator: Our final question comes from the line of Derek Peltzer with Piper Sandler.

Josh Carroll, Alpha IR Representative, Alpha IR0: Hey, I just want to

Josh Carroll, Alpha IR Representative, Alpha IR2: ask about product. Maybe just your 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 $140,000,000 range. You just guided up to 180,000,000 to 190,000,000 Margins are sitting above 20%. Is this just the new run rate we should think about?

Maybe just some comments around product and how you see that progressing over the next couple of years given that you're trending above your 2028 implied guidance?

Svedar Levy, Vice President of Investor Relations and ESG Planning and Reporting, Ormat Technologies: Our long term target for margin is anywhere from 17% to 20%. This year, we have an exceptional year with our ability to negotiate much better procurement on some of our contracts. In addition to the fact that some of the projects that are being finished right now in New Zealand, we were able to complete the EPC at a much lower cost than anticipated. So I would say from a margin perspective, this year is definitely, I would 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 continue to stay elevated. And also next year, we expect to stay elevated. Historically, OMAT, you know, at least in the years of COVID and the few years others, we sold around a 100,000,000. I will say, right now, we are moving probably to the 200,000,000 level. And next year, may gonna 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 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 life 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 to get electricity. One more thing that will boost our revenues, but that's towards 2028, 2029, and 2030, is the fact that we did win two new PPAs in Indonesia. These are BOT projects with PLN. During a BOT project, we recognized revenue already at the time of the construction in the product segment.

So I will say that over the next few years, we should see very nice support coming from the project in Indonesia, from the New Zealand project, 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 at this level.

Josh Carroll, Alpha IR Representative, Alpha IR2: Got it. That's helpful. And then 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 exploring projects with SLB to develop that type of 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, fully acknowledging that EGS is where the interest is, but just thinking about traditional asset development as well.

Doron, Chief Executive Officer, Ormat Technologies: No. Definitely. You know, traditional geothermal is, you know, the core of what we're doing today. EGS needs to be developed. So we are looking also with SMB on potential customer that are looking for geothermal energy and have, you know, the relevant location or land that we can develop traditional geothermal.

So definitely, it's part of the discussion with them. It's something that both companies can enjoy if we get the additional customer for them for the services they provide for the for drilling and ask for the power plant. So it definitely exists in the partnership.

Josh Carroll, Alpha IR Representative, Alpha IR2: Great. Thanks for all the color. I'll turn it back.

Conference Operator: This concludes the question and answer session of today's call. I will now hand the call over to Doran for closing remarks.

Doron, Chief Executive Officer, Ormat Technologies: Thank you. So 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 together with S and P 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 these pilots and how we plan to see them materializing into real projects.

So thank you all.

Conference Operator: This concludes today's call. Thank you for joining. You may now disconnect your lines.

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