Ormat Technologies ((ORA)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Ormat Technologies’ recent earnings call conveyed a generally positive sentiment, underscored by robust revenue growth in key segments such as energy storage and products. The company also highlighted successful financing initiatives and favorable policy changes. However, challenges were acknowledged in the electricity segment, including revenue declines and margin compression, partly due to energy curtailment impacts.
Record Second Quarter Revenue and Adjusted EBITDA
Ormat Technologies reported a record-breaking second quarter, with revenue climbing by 9.9% to $234 million. The company also saw a significant 26.1% increase in net income and a 6.7% improvement in adjusted EBITDA, reflecting strong operational performance.
Significant Growth in Energy Storage Segment
The energy storage segment experienced remarkable growth, with revenues surging by 62.7% to $14.5 million. This increase was driven by the addition of new energy storage facilities and favorable merchant prices in the PGM market.
Product Segment Recovery
Ormat’s product segment showed a strong recovery, with revenues increasing by 57.6% to $59.6 million. This growth was supported by a robust backlog and improved profitability, signaling a positive trend for the segment.
Successful Financing and Funding Initiatives
The company secured $300 million in funding through tax equity transactions and project finance debt. This financial boost is set to support future development across Ormat’s portfolio, enhancing its growth prospects.
Permitting and Policy Support
Ormat benefited from accelerated federal permitting and extended PTC and ITC benefits, which are expected to enhance growth potential, particularly in the geothermal and energy storage segments.
Electricity Segment Revenue Decline
The electricity segment faced challenges, with revenues declining by 3.8% to $159.9 million. This decrease was attributed to maintenance work and energy curtailment in the U.S., impacting overall performance.
Gross Margin Compression
Ormat experienced a decline in consolidated gross margin, which fell to 24.3% from 28.8% the previous year. This was primarily due to temporary margin compression in the electricity segment.
Energy Curtailment Impact
Energy curtailment in the U.S. led to an approximate $12 million reduction in EBITDA, highlighting a significant challenge faced by the company in the current period.
Forward-Looking Guidance
Ormat Technologies maintained its 2025 guidance, projecting total revenue between $935 million and $975 million, with adjusted EBITDA expected to range from $563 million to $593 million. The company emphasized the benefits of recent federal permitting reforms, which are set to enhance their geothermal development pipeline.
In summary, Ormat Technologies’ earnings call reflected a positive outlook with strong growth in key segments and successful financing initiatives. Despite challenges in the electricity segment, the company’s forward-looking guidance remains optimistic, supported by favorable policy changes and strategic funding.