Ormat Technologies Q2 Earnings Call Highlights

Ormat Technologies NYSE: ORA raised its full-year revenue and adjusted EBITDA outlook after reporting second-quarter growth across its electricity, energy storage and product businesses, led by higher energy storage revenue and improved geothermal operations. Second-quarter revenue rose 10.6% from a year earlier to $258.8 million, while gross profit increased 20.8% to $68.7 million. Consolidated gross margin expanded 220 basis points to 26.5%, driven in part by the margin contribution from energy storage assets in the PJM market, Chief Financial Officer Assi Ginzburg said.

Net income attributable to company stockholders was $27.1 million, or $0.43 per diluted share, compared with $28 million, or $0.46 per diluted share, in the prior-year quarter. Ginzburg said the decline reflected a $6.6 million write-off for a storage project the company decided not to pursue. Adjusted net income rose 6.5% to $31 million, or $0.50 per diluted share, while adjusted EBITDA increased 6.9% to $143.9 million.

Energy storage revenue nearly tripled, increasing 195.1% to $42.8 million. The segment’s gross margin reached 56.2%, as high asset availability enabled the company to benefit from merchant pricing in PJM and recently completed facilities added capacity. Chief Executive Officer Doron Blachar said approximately $19.5 million of the revenue increase came from existing PJM assets, while newly commissioned facilities contributed about $7.7 million. Ormat’s operating storage portfolio stood at 495 megawatts and 1,358 megawatt-hours at quarter-end. Management said it expects storage pricing to normalize during the second half of the year, though it anticipates conditions will remain stronger than in prior years. The company expects energy storage gross margin of 30% to 40% in the second half and 40% to 50% for the full year. Blachar said the company continues to target a mix of roughly 50% contracted and 50% merchant exposure in storage. In markets where merchant pricing is lower, including Texas and California, Ormat is seeking tolling agreements, he said, while PJM’s more variable pricing supports merchant exposure. Ormat has seven storage projects under construction or development totaling 497 MW, or 1,888 MWh. The portfolio includes the recently approved 100 MW, 400 MWh Denali facility in California, which is expected to begin operations by the end of 2028 under a 20-year tolling agreement with Clean Power Alliance.

Electricity segment revenue increased 5.8% to $169.3 million. The increase reflected a full-quarter contribution from Blue Mountain, higher energy rates and improved performance at Puna, stronger generation at Olka...