Ormat Technologies Reports Q2 2026 Results: Full Earnings Call Transcript

Ormat Technologies (NYSE: ORA ) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below. This content is powered APIs. 9%.

2 billion and adjusted EBITDA between $630 million and $650 million. Significant growth was seen in the Energy Storage segment, with revenue nearly tripling year-over-year, driven by new capacity additions and favorable merchant pricing. S. Ormat Technologies added 155 megawatts to its generating portfolio, including acquisitions and new projects, and continued advancing its EGS pilot programs.

Management highlighted a strategic focus on renegotiating PPAs to capture better pricing, with expectations to increase annual revenues by approximately $14 million. 1 billion as of June 30, 2026, and has allocated substantial capital expenditures for future growth. Ormat Technologies is progressing with several energy storage projects and anticipates achieving its 2028 portfolio targets with a compound annual growth rate of 15% to 18%. Full Transcript OPERATOR Good morning and welcome to Ormat Technologies second quarter 2026 earnings conference call.

All participants will be in listen-only mode. After today's presentation there will be an opportunity to ask questions. If you would like to ask a question during this time, just press star followed by the number one on your telephone keypad, and if you would like to withdraw your question, press star one again. Please note that this event is being recorded.

I would like to turn the conference over to Josh Carroll with Alpha IR. Please go ahead. Josh Carroll, Alpha IR Thank you, operator. Hosting the call today are Doron Blachar, Chief Executive Officer, Assi Ginzburg, Chief Financial Officer, and Smadar 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 risks and uncertainties.

For a discussion of such risks and uncertainties, please see Risk Factors as described in Ormat Technologies' Annual Report on Form 10-K 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's reasons for presenting such information are 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. com under the Presentation link that's found on the Investor Relations tab. With all that said, I would now like to turn the call over to Ormat's CEO, Doron Blachar. Doron Blachar, CEO Thank you, Josh.

Good morning, everyone, and thank you for joining us today. Let me begin with the key highlights from the second quarter, starting on slide 4. The first half of 2026 reflects accelerating momentum across all three business segments. 9% compared with the prior year period.

On the strength of these results, we are raising our full-year revenue and adjusted EBITDA guidance. In our Electricity segment, Blue Mountain's contribution, stronger performance at Olkaria and Puna, and lower curtailment in the United States drove continued growth. In Energy Storage, segment revenue nearly tripled year over year, supported by new capacity additions, high asset availability, and favorable merchant pricing in PJM. Taken together, these results demonstrate the strength and balance of our three-segment model and the returns available when long-term contracted revenues are paired with selective merchant exposure.

On the development side, we added 155 megawatts to our generating portfolio since the beginning of the year, including the Hukou solar and storage acquisition, the Shared storage facility, and the commencement of commercial operation at our 10 megawatt Dominica geothermal power plant. On the EGS front, we advanced both the SLB and SAGE pilot programs toward field execution and introduced Omega 100, our new 100 megawatt binary unit designed for large-scale conventional geothermal and EGS applications, both of which I will discuss in more detail shortly. I will now turn the call over to Assi to review our financial results. Assi Ginzburg, CFO Thank you, Doron.

I will begin my review of the financial results on slide 6. 6% compared with the prior year period, led by strong energy storage performance and continued growth in the Electricity segment. 5%, reflecting the strong performance and margin contribution of our storage assets in PJM. 46 per diluted share in the prior year period.

6 million write-off for a storage project we decided not to pursue, partially offset by stronger underlying operating performance. 48 per diluted share in the second quarter of 2025. 9 million, led by energy storage performance. Slide 7 provides additional details on our segment performance.

3 million. The increase reflects a full-quarter contribution for Blue Mountain, higher energy rates and improved performance at Puna, stronger generation at Olkaria following wellfield optimization, and lower curtailments at McGinness Hills, Dixie Valley, and Tungsten Mountain, partially offset by planned maintenance activities. 7 million, reflecting the timing of manufacturing and construction progress. 7%, down from the prior year period, mainly due to increased construction costs related to a project in Europe and the impact of foreign exchange fluctuation on manufacturing costs.

We expect Product segment gross margin for the second half of the year to be approximately 15% and for the full year gross margin to be approximately 18%. 8 million. High asset availability enabled us to capture strong merchant pricing in PJM, while capacity additions completed over the past 12 months contributed incremental revenue. 2%, reflecting our strategy of optimizing the mix of contracted and merchant revenues.

We expect Energy Storage gross margin to normalize to 30% to 40% in the second half of the year and for the full year to be approximately 40% to 50%. Slides 8 and 9 summarize our first half results. 7 million, driven by substantial growth across all three segments. 79 per share.

Turning to slide 10, during the first half of 2026 we collected approximately $52 million of proceeds from tax credit monetization transactions. For the full year, we continue to expect approximately $90 million in proceeds, including approximately $70 million related to ITCs and approximately $20 million related to PTC transfers. 5 million ITC benefit. 9 million in ITC benefits, which we expect will result in an effective income tax benefit rate of approximately 15% in the second half of the year, excluding changes in law and other one-time items.

Slide 11 presents the change in our cash position during the first half of the year. Cash and cash equivalents and restricted cash totaled approximately $658 million as of June 30, 2026, compared with approximately $81 million at year-end 2025. The increase reflects the proceeds from our convertible notes offering and other financing activities, cash generated from operations, tax credit monetization, and the proceeds from the top to sale, partially offset by capital expenditures, debt repayments, acquisitions, and investments. 9%.

1 billion as of June 30, 2026. 3 times net debt to adjusted EBITDA. Net debt represented approximately 50% of total capitalization. We expect capital expenditures for the remainder of 2026 to be $449 million.

Of that, approximately $281 million is allocated to the Electricity segment for construction, exploration, drilling, and maintenance, $129 million to the Storage asset construction, and approximately $20 million to the SLB pilot and other EGS activities. Our detailed capital expenditure plan is included in slide 34 of the appendix. In support of our broader development program, we secured several important financing sources. In May we closed a unique exploration financing facility up to $40 million for the Wapsalit geothermal project in Indonesia under the World Bank's Geothermal Resource Risk Mitigation Program.

This structure provides a risk-sharing mechanism that reduces the financial exposure associated with early-stage exploration. Our strong liquidity and access to capital provide us with the flexibility to fund our development pipeline while continuing to service our debt obligations and return cash to shareholders. 12 per share, payable on September 2, 2026, to shareholders of record as of August 19, 2026. 12 per share in the next quarter.

I will now turn the call back over to Doron to discuss the recent operating and strategic developments. Doron Blachar, CEO Thank you, Assi. 85 gigawatts. On Slide 15, our electricity portfolio stands at approximately 1,355 megawatts globally with a new 15 megawatts added during the quarter.

We currently have 202 megawatts of electricity projects under construction and development through the end of 2028, including 87 megawatts of geothermal capacity and 115 megawatts of solar capacity. All of these projects are supported by long-term PPAs, providing strong visibility for future growth. Slide 16 details the electricity segment second-quarter drivers. S.

2 million. 6 million of revenue, and Puna revenue increased by approximately $3 million on higher rates and recovery from a prior-year wellfield issue at Olkaria. 5 million. Overall, power generation increased 3% year over year.

Moving to Slide 17, one of our strategic priorities over the past several years has been to proactively renegotiate contracts well ahead of expiration and extend the contracts' term while capturing the significant improvement we are seeing in geothermal pricing over the past year. We continue to make excellent progress on this initiative. In addition to signing new PPAs for projects with expiring contracts, we executed several blend-and-extend agreements, including the Blue Mountain power plant, that increased the value of our existing asset base while providing our customers with long-term price certainty and reliable baseload renewable energy.

The re-contracted and blend-and-extend PPAs are expected to increase annual revenues by approximately $14 million as they become effective over the next several years starting in 2026 and continuing through 2030. Importantly, these contracts are secured with minimal incremental capital investments, making them one of the most attractive sources of value creation within our portfolio. Looking further ahead, we continue to see significant opportunities across our contracting portfolio.

Between 2031 and 2034, we have approximately 190 megawatts under contract that are currently priced at a weighted average of approximately $86 per megawatt hour, lower than today's market pricing of over $100 per megawatt hour. We believe our existing geothermal fleet provides a meaningful embedded opportunity to continue repricing contracts and creating long-term shareholder value. Turning to Slide 18, our Product segment backlog stood at approximately $203 million as of August 5, 2026. The decrease from year-end 2025 primarily reflects the recognition of $105 million of revenue from the top two projects during the first quarter.

The backlog remains geographically diversified, with the majority associated with projects in Asia and Oceania. 7 million generated by newly commissioned facilities. The operating portfolio now stands at 495 megawatts and 1,358 megawatt hours. 8 gigawatts, representing an expected compound annual growth rate of approximately 15% to 18% from 2025.

Slides 22 and 23 provide details on our geothermal and solar development pipeline. S. and international portfolio, including the addition of Puna expansion and Lone Mountain. Turning to Slides 24 and 25, we have seven energy storage projects under construction and development with total capacity of 497 megawatts, or 1,888 megawatt hours.

This includes the new 100-megawatt, 400-megawatt-hour Denali facility in California, which we recently approved for development. Denali is expected to commence operation by the end of 2028 and will provide storage services under a 20-year tolling agreement with Clean Power Alliance. S. 5 gigawatts, or approximately 10 gigawatt hours, across 25 named prospects.

Turning to Slide 26, our EGS strategy advanced across three pillars—surface technology, subsurface pilot projects, and development footprint across the Western United States. On the surface side, we introduced Omega 100, our modular 100-megawatt ORC unit designed for large-scale geothermal and EGS applications. Leveraging almost decades of leadership in binary technology, Omega 100 is designed to serve both our future EGS development and third-party projects. During the year, we also continued evaluating manufacturing readiness and the associated cost structure to support future commercial deployment.

On the subsurface side, we continue to advance both of our pilot projects. At our SLB Desert Peak pilot, we completed the analysis of geophysical seismic data and incorporated the results into an updated subsurface model. We also submitted drilling permit applications, progressed procurement of long-lead items, and entered the final stages of vendor selection, keeping us on track to begin drilling in the fourth quarter of 2026.

At the Sage pilot, we selected the project location, advanced permitting activities, reached the final stages of procuring drilling services, and made progress on the engineering work required to integrate SAGE technology into an existing Ormat power plant. Beyond the pilot projects, we're expanding our geothermal land position and securing additional water rights and interconnection opportunities across the Western United States. During the year, we were awarded a federal lease covering 10,642 acres in New Mexico for EGS development, and we are currently negotiating the acquisition of additional acres in Oregon and Idaho.

Our resource team has also identified two promising prospects within our existing portfolio that we believe could support large-scale EGS development, and we continue to pursue additional interconnection opportunities in Nevada.