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ORMAT TECHNOLOGIES, INC. (ORA)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $249.7M, a strong beat vs S&P Global consensus $234.3M (+$15.5M, +6.6%); GAAP diluted EPS was $0.39 vs consensus $0.383 (modest beat), while adjusted diluted EPS was $0.41 *.
  • Strength came from Product (+66.6% YoY revenue) and Energy Storage (+108.1% YoY) as storage margins rose to 39.4% on seasonal Bottleneck contributions and higher PJM merchant prices; Electricity grew 1.5% but margins compressed to 25.4% given Stillwater enhancement work, Imperial Valley grid storm impact, curtailments and lower Puna rates .
  • Guidance raised: total revenues to $960–$980M and adjusted EBITDA to $575–$593M; segment mix revised (Electricity lowered to $700–$705M; Product raised to $190–$200M; Storage raised to $70–$75M) .
  • Strategic catalysts: hyperscaler PPAs in final negotiations (target magnitude ~250 MW) expected to be signed in coming months, and EGS partnerships (SLB pilot at Desert Peak; Sage collaboration) to expand geothermal addressable market and serve AI/data center loads .

What Went Well and What Went Wrong

What Went Well

  • Product segment revenue surged 66.6% YoY to $62.2M with margin expansion to 21.7% on improved contract profitability; backlog rose to ~$295M, supported by a new ~$86M contract .
    Quote: “Our product segment backlog stands at $295 million…primarily driven by a large contract we signed” .
  • Energy Storage revenue doubled (+108% YoY to $20.4M) and gross margin improved to 39.4% driven by Bottleneck’s seasonal revenue profile and stronger PJM prices; Lower Rio 60MW/120MWh reached COD .
    Quote: “The energy storage segment reported gross margin of 39.4%...seasonally high margins at the Bottleneck storage facility and higher merchant prices in the PGM region” .
  • Raised FY2025 revenue and adjusted EBITDA guidance on segment strength; declared $0.12 dividend payable Dec 1, 2025 .

What Went Wrong

  • Electricity gross margin fell to 25.4% (vs 30.2% last year) due to a $5.5M temporary generation reduction (Stillwater enhancements; Imperial Valley storm grid failure; curtailment) and ~$3.2M lower Puna energy rates .
  • Net benefit from sale of tax credits declined YoY in Q3 ($14.4M vs $19.8M), and reduced benefits from prior-year battery supplier settlement tempered adjusted EBITDA growth (+0.6% YoY to $138.4M) .
  • FEOC-related uncertainty persists in storage supply chains, requiring safe harboring and procurement flexibility; storage market still aligning to new rules .

Financial Results

Consolidated Actuals (GAAP and Adjusted)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$229.8 $234.0 $249.7
GAAP Diluted EPS ($)$0.66 $0.46 $0.39
Gross Margin (%)31.7% 24.3% 25.6%
Operating Income ($USD Millions)$50.9 $35.3 $40.4
Adjusted EBITDA ($USD Millions)$150.3 $134.6 $138.4

Actuals vs S&P Global Consensus

MetricQ1 2025Q2 2025Q3 2025
Revenue Actual ($USD Millions)$229.8 $234.0 $249.7
Revenue Consensus Mean ($USD Millions)$227.5*$221.6*$234.3*
Revenue Surprise ($USD Millions, %)+$2.3, +1.0%*+$12.4, +5.6%*+$15.5, +6.6%*
Primary EPS Actual ($)$0.68*$0.48*$0.41*
Primary EPS Consensus Mean ($)$0.590*$0.380*$0.383*
EPS Surprise ($)+$0.090*+$0.100*+$0.027*

Values retrieved from S&P Global.*

Segment Breakdown – Q3 2025

MetricElectricityProductEnergy Storage
Revenue ($USD Millions)$167.1 $62.2 $20.4
YoY Growth (%)+1.5% +66.6% +108.1%
Gross Margin (%)25.4% 21.7% 39.4%

KPIs

KPIValue
Product backlog~$295M
Net debt / EBITDA~4.4x
Net debt~$2.5B
Total available liquidity$667M
Cash & restricted cash (9/30/25)~$206M
Cost of debt~4.8%
Quarterly dividend$0.12 per share (Dec 1, 2025)
Cash from tax credits (2025E)~$167M
Lower Rio storage COD60MW/120MWh (Texas)
Heber PPA extension25-year, 52MW (SCPPA)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenuesFY 2025$935–$975M $960–$980M Raised
Electricity RevenuesFY 2025$710–$725M $700–$705M Lowered
Product RevenuesFY 2025$172–$187M $190–$200M Raised
Energy Storage RevenuesFY 2025$53–$63M $70–$75M Raised
Adjusted EBITDAFY 2025$563–$593M $575–$593M Raised (midpoint)
Adj. EBITDA attributable to minority interestFY 2025~$21M ~$17.5M Lowered

Earnings Call Themes & Trends

TopicQ1 2025 (Previous Mentions)Q2 2025 (Previous Mentions)Q3 2025 (Current Period)Trend
AI/data center PPAs (hyperscalers)PPA pricing above $100/MWh; negotiations advancing Maintaining 2028 targets; multiple PPAs progressing Final negotiations on several PPAs; announcements expected in coming months Intensifying; near-term execution
FEOC, IRA, safe harbor (storage)Safe harbor efforts; limited short-term tariff impact Detailed safe harbor plan through 2028/29; minimal FEOC impact on geothermal All projects under construction safe-harbored; market still aligning to FEOC Risk managed; ongoing monitoring
Permitting acceleration (BLM, federal)Executive order could cut permitting timelines drastically NV permits received within weeks; further acceleration Continued progress; drilling program ramp (additional rigs) Improving throughput
Electricity operations (curtailments, storms)Curtailments in NV/CA; Puna maintenance impact Curtailments reduced in H2; Stillwater planned upgrade Q3 impacted by Imperial Valley storm, Stillwater work; Q4 expected to be strongest, albeit slightly below 2024 margins Transitory headwinds easing
Product segment margins/backlogGM 19–21% outlook; backlog $314M GM 21–23%; backlog $263M GM 21–23% for year; backlog $295M; elevated revenue run-rate ($200M) Sustained strength
Energy Storage margins & growthQ1 GM 30.6% (PJM weather) Full-year storage GM up to 20%; seasonality Q3 GM 39.4%; full-year storage gross profit likely >25% Upside vs prior outlook
EGS partnerships/pilotsSeeking strategic partnerships; EGS could boost growth Pursuing partnerships; new SVP for EGS/drilling SLB JV pilot at Desert Peak (pilot wells ~H2 2026); Sage pressure geothermal pilot; scale could be 100s of MW Concrete partnerships; defined pilots

Management Commentary

  • “We delivered a 17.9% increase in revenue, 13.3% increase in operating income, and 9.3% growth in net income…driven by sustained improvements in both our energy storage and product segments” .
  • “Our product segment backlog stands at $295 million…representing a 79% increase compared to the third quarter of 2024” .
  • “Together with SLB, we intend to…jointly develop a pilot at an Ormat facility…scaling EGS solutions to enable widespread EGS adoption” .

Q&A Highlights

  • Hyperscaler PPAs: Management is “very close” on a couple of PPAs, with announcements targeted in the next couple of months .
  • EGS pilots: SLB pilot at Desert Peak (site chosen; permitting/development underway; pilot wells targeted H2 2026); Sage to run a separate pilot near an Ormat facility; scale could reach hundreds of MW if successful .
  • Electricity margins outlook: Q4 typically strongest; improvement vs Q3 expected with less curtailment, though Stillwater not yet at full output; Q4 margins likely below 2024 levels .
  • Product segment trajectory: Elevated revenue run-rate (~$200M) and long-term margin target 17–20% after an exceptional 2025; backlog supported by Asia and New Zealand EPCs and future Indonesia BOT recognition .
  • Financing/tax credits: 2025 tax credits ~$167M; starting 2026 expected proceeds include ~$100M asset sale (New Zealand) plus ~$70M of ITC/credits, covering most CapEx; no equity need anticipated .

Estimates Context

  • Q3 2025: Revenue beat — Actual $249.7M vs consensus $234.3M (+$15.5M, +6.6%); EPS beat — Primary EPS $0.41 vs $0.383 (+$0.027). Ten EPS estimates and eight revenue estimates informed consensus for Q3 *.
  • Prior quarters showed consistent beats: Q2 revenue $234.0M vs $221.6M; EPS $0.48 vs $0.380; Q1 revenue $229.8M vs $227.5M; EPS $0.68 vs $0.590*.
    Values retrieved from S&P Global.*

Where estimates may need to adjust:

  • Raise FY Product and Storage assumptions following segment outperformance and COD additions; modestly lower Electricity given curtailment/storm impacts and Stillwater upgrade timing .
  • Incorporate higher storage gross profit trajectory (>25% full-year) and seasonal concentration, plus bottleneck contract timing .
  • Reflect updated consolidated guidance midpoint: revenue +$15M and adjusted EBITDA +$12M vs prior midpoint .

Key Takeaways for Investors

  • The print was clean: broad-based revenue strength with notable beats vs consensus and guidance raised; strong near-term narrative in Product and Storage; Electricity headwinds are transitory and easing into Q4 * .
  • Expect catalysts from hyperscaler PPAs; recontracting opportunities (e.g., Blue Mountain post-2029) at >$100/MWh PPA pricing should expand margins ROIC .
  • Storage profitability is improving structurally (contracted + merchant mix, seasonal Bottleneck effect), with full-year gross profit likely above 25%; watch FEOC policy but safe harbor mitigates near-term risk .
  • EGS optionality is significant; SLB/Sage pilots de-risk commercialization and could unlock large-scale growth supporting AI/data center demand; timelines into 2026–2027 .
  • Balance sheet/liquidity support self-funded growth via tax credits and project financings; dividend maintained at $0.12/share .
  • Near-term trading: stock should respond to PPA announcements and any EGS pilot milestones; monitor Q4 Electricity margin recovery vs 2024 baseline and Stillwater’s ramp .
S&P Global disclaimer: All consensus estimate values (*) are retrieved from S&P Global. Surprises are computed using S&P consensus and company-reported actuals.