Sign in

You're signed outSign in or to get full access.

OT

ORMAT TECHNOLOGIES, INC. (ORA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $230.7M (down 4.4% YoY) and diluted EPS rose to $0.67 (up 13.6% YoY); Adjusted EBITDA increased to $145.5M (up 4.6% YoY). Management attributed the revenue decline to a Dixie Valley outage and heavy curtailments, while EPS benefited from tax benefits and segment mix .
  • Segment mix: Electricity revenue declined 2.1% YoY to $180.1M; Product fell 21.4% YoY to $39.6M (timing of revenue recognition), and Energy Storage grew 56.7% YoY to $11.0M with CODs at Bottleneck and Montague .
  • 2025 guidance introduced: total revenue $935–$975M, Adjusted EBITDA $563–$593M, with headwinds from U.S. curtailments ($10–$15M impact embedded) and tailwinds from tax benefits; dividend of $0.12/share expected for the next three quarters .
  • Strategic catalysts: negotiations for ~250MW PPAs with hyperscalers at >$100/MWh, safe-harbored PTC/ITC across geothermal through 2028 and storage through 2026, and record Product backlog ($340M) underpin multi-year growth .

What Went Well and What Went Wrong

What Went Well

  • Energy Storage momentum: revenue up 56.7% YoY in Q4; CODs for 80MW/320MWh Bottleneck (CA) and 20MW/20MWh Montague (PJM) support more stable margins and contracted mix .
  • Product margin expansion and backlog strength: Q4 Product gross margin rose to 24.5% (12.6% prior-year); backlog reached a record ~$340M including ~$210M Te Mihi Stage 2 EPC in New Zealand .
  • CEO strategic positioning: “We are currently in negotiations for approximately 250MW with hyper-scalers… at rates exceeding $100 per MWh” and safe-harbored geothermal projects (PTC) through 2028 and storage (ITC) through 2026 .

What Went Wrong

  • Curtailments and outages weighed on Electricity: Q4 Electricity revenue declined 2.1% YoY due to Dixie Valley partial outage and heavy U.S. curtailments (e.g., McGinness T-line maintenance); curtailments expected to persist into 2025 .
  • Consolidated gross margin modestly compressed to 31.9% (32.5% prior-year), reflecting impacts from curtailments and segment mix .
  • Product revenue declined 21.4% YoY on timing, despite stronger margins; raising investor focus on cadence predictability in EPC-heavy backlog .

Financial Results

Consolidated Summary (Quarterly)

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($USD Millions)$213.0 $211.8 $230.7
Gross Profit ($USD Millions)$61.4 $58.9 $73.6
Gross Margin (%)28.8% 27.8% 31.9%
Operating Income ($USD Millions)N/AN/A$49.1
Net Income Attributable to Stockholders ($USD Millions)$22.2 $22.1 $40.8
Diluted EPS ($)$0.37 $0.36 $0.67
Adjusted Net Income ($USD Millions)$24.3 $26.3 $43.6
Adjusted Diluted EPS ($)$0.40 $0.42 $0.72
Adjusted EBITDA ($USD Millions)$126.1 $137.7 $145.5

Note: Wall Street consensus (S&P Global) for Q4 revenue/EPS was unavailable at the time of analysis; beat/miss vs estimates cannot be assessed.

Segment Revenues and Margins

SegmentQ2 2024 Revenue ($M)Q3 2024 Revenue ($M)Q4 2024 Revenue ($M)Q2 2024 Gross Margin (%)Q3 2024 Gross Margin (%)Q4 2024 Gross Margin (%)
Electricity$166.2 $164.6 $180.1 33.5% 30.2% 34.9%
Product$37.8 $37.4 $39.6 13.7% N/A24.5%
Energy Storage$8.9 $9.8 $11.0 5.7% N/A9.5%

KPIs (Q4 2024 Focus)

KPIQ4 2024
Product Backlog ($USD Millions)~$340
Income Attributable to Sale of Tax Benefits (Q4) ($USD Millions)$20.0
ITC Benefit Recognized in Income Tax Line (Q4) ($USD Millions)$20.4 (storage facilities)
Cash + Restricted Cash ($USD Millions, 12/31/2024)~$206
Net Debt / EBITDA (as of 12/31/2024)~4.0x
Dividend Declared$0.12/share; expected next three quarters
COD MilestonesBottleneck 80MW/320MWh; Montague 20MW/20MWh

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues ($USD Millions)FY 2025N/A (initial)$935–$975 New
Electricity Revenues ($USD Millions)FY 2025N/A$710–$725 New
Product Revenues ($USD Millions)FY 2025N/A$172–$187 New
Energy Storage Revenues ($USD Millions)FY 2025N/A$53–$63 New
Adjusted EBITDA ($USD Millions)FY 2025N/A$563–$593; ~$23 attributable to minority interests New
DividendFY 2025$0.12/qtr$0.12/qtr expected for next three quarters Maintained
Curtailment Impact (Revenue)FY 2025N/A-$10M to -$15M expected in U.S.; embedded in guide New (headwind)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q3)Current Period (Q4 2024)Trend
AI/data center demandExploring portfolio PPAs with utilities and tech companies; pricing trended >$100/MWh Negotiating ~250MW with hyperscalers at >$100/MWh; potential indexation Strengthening pricing and pipeline
Supply chain & tariffsBatteries largely sourced from China; ordering for upcoming projects 10% tariff impact manageable given battery cost deflation (~$250 to ~$100–$130/kWh) Manageable cost tailwind offsets tariff
Curtailments/outagesDixie Valley outage impacting 2024; Kenya curtailments; mitigation efforts U.S. T-line replacement and CA wildfire-related overload; 2025 impact -$10–$15M; Dixie back full in Nov Persistent near-term headwind
Product backlog/marginsBacklog ~$165M; Product GM 13.7% (target 15–20%) Record backlog ~$340M; Q4 GM 24.5%; 2025 GM target 18–20% Improving
Regulatory/legalSEC investigation closed; positive permitting reforms discussed Safe-harbored PTC/ITC through 2028/2026; seeking extensions beyond Secured incentives; proactive
Storage portfolio modelShift to tolling RA/tolling agreements (Riverside, TX tolling) Expect 15–20% GM full-year; Q1/Q3 stronger; contracted mix rising Margin stabilization/uptrend

Management Commentary

  • “We are currently in negotiations for approximately 250MW with hyper-scalers… at rates exceeding $100 per MWh.” — CEO Doron Blachar .
  • “We expect total revenue in 2025 to be negatively impacted by $10 million to $15 million in the U.S. The impact was taken into consideration in our 2025 revenue guidance.” — CFO Assaf Ginzburg .
  • “We have taken strategic actions to safe harbor… all geothermal projects with expected CODs through 2028, as well as the associated ITC benefits for all energy storage projects through 2026.” — CEO Doron Blachar .
  • “Product segment backlog stands at a record of approximately $340.0 million… including approximately $210.0 million… Te Mihi Stage 2.” — Press release .
  • “In the fourth quarter, we recorded a $20.4 million ITC benefit… related to the 3 storage facilities East Flemington, Bottleneck and Montague.” — CFO Assaf Ginzburg .

Q&A Highlights

  • Generation outlook: 2025 generation likely flattish to modestly up due to limited early-year CODs and curtailments; 2026 set up for stronger growth as projects come online (Dixie recovery contributes) .
  • Exploration ramp: Doubling exploration/preliminary drilling; shift from core wells to full-size wells to accelerate geothermal growth amid >$100/MWh PPA pricing .
  • Recontracting: Mammoth G2 reprice to >$100/MWh (from <~$70); Heber recontract at ~$100 pending final signatures; NV Energy portfolio PPAs in ~$70s for 2026–2028 .
  • Storage margins/tariffs: Expect full-year GM 15–20%; tariffs manageable given battery price declines; Texas tolling ~half of CA four-hour contract values; more predictable contracted mix .
  • Incentives/cash: Expect up to ~$160M cash in 2025 from PTC/ITC; net debt/EBITDA ~4x; liquidity ~$667M; dividend $0.12/qtr .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 (revenue, EPS) were unavailable due to provider limits at the time of analysis; therefore, beat/miss vs Street cannot be assessed. Where applicable, investor comparisons should be deferred until consensus is accessible.
  • Given the absence of consensus, internal performance context highlights: EPS up 13.6% YoY; Adjusted EBITDA up 4.6% YoY; revenue down 4.4% YoY .

Key Takeaways for Investors

  • Near-term headwinds from U.S. curtailments (-$10–$15M 2025 revenue) are embedded in guidance; monitoring NV Energy T-line replacement and CA grid dynamics is critical for quarterly cadence .
  • Strategic pricing power is improving: hyperscaler PPAs under negotiation at >$100/MWh and recontracting opportunities (Mammoth, Heber) de-risk post-2026 cash flows and support margin expansion .
  • Storage portfolio de-risking via tolling/RA contracts should lift full-year GM toward 15–20%, reducing exposure to merchant volatility; Q1 and Q3 are expected stronger .
  • Product segment provides visibility: record ~$340M backlog and rising margins (Q4 24.5%; 2025 target 18–20%) support multi-year revenue and earnings stability .
  • Tax incentives are a material cash source and earnings tailwind (Q4 ITC $20.4M; 2025 cash from PTC/ITC up to $160M), lowering capital intensity and supporting growth CapEx ($570M 2025) .
  • Balance sheet and liquidity adequate for plan: net debt/EBITDA ~4x; ~$667M liquidity; dividend maintained at $0.12/qtr, signaling confidence in cash generation .
  • Monitoring points: confirmation of Heber/Mammoth recontracts, progression of safe-harbored projects, curtailment normalization, and execution on PPAs with hyperscalers should drive multiple re-rating catalysts through 2025–2026 .