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| Statement |
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| So we actually are starting to benefit from the growth that we see in the storage |
| This expansion aligns with our multiyear capacity expansion targets, further strengthening our EBITDA and earnings generation in 2024 and beyond |
| The company reported robust fourth quarter revenue growth with a 17.4% increase compared to the previous year's quarter and commendable 11.5% rise in adjusted EBITDA |
| Throughout the year, Ormat maintained its momentum with a successful development execution and enhanced operational performance from existing facilities coupled with the promising recovery in the product segment |
| These factors collectively contributed to a 13% increase in total annual revenues and a 10.6% increase in full year adjusted EBITDA |
| 2023 was a very good year and we expect 2024 to be even a better year |
| The significant year-over-year earning growth was driven by higher operating income, further supplemented by the impact of the IRA benefit that flow through our tax line |
| As we continue to successfully execute against our growth strategy, we expect the benefits of improved generation capacity and our team's demonstrated ability to sign PPAs with attractive pricing terms will continue to support solid returns and earnings performance for our shareholders as we head into 2024 |
| In our product segment, we are encouraged by the recovery we saw in 2023 annual product segment revenues grew $87.3 million versus 2022, and our increased backlog of $152 million is representative of the growing global demand for our geothermal products |
| We expect this healthy demand combined with our industry leadership position to allow us to continue competing and growing our presence in key strategic regions |
| Looking ahead to 2024, we expect to continue capturing the benefits of our successful growth strategy |
| We expect them to perform much better over the next year or two starting even already in Puna |
| The proximity of these two power plants creates attractive operational synergies that will reduce manpower costs and strengthen the economic potential of the expected new power plants |
| We continue to see strong support for renewable energy backed by the IRA benefits including the PTC for geothermal and ITC for storage |
| We expect this support will continue to create opportunities for new PPAs in both the electricity and storage segment and expect that these benefits will continue to reduce our capital needs and to help fund our growth strategy and enhance our EPS in 2024 and beyond |
| The current environment carries encouraging tailwinds supporting demand for geothermal and energy storage, driven by global decarbonization efforts and the collective push to utilize the world's renewable energy resources to reduce greenhouse gas emissions and combat the impact of climate change |
| The Q4 marks another strong finish to an overall excellent year in 2023, creating positive momentum as we head into 2024 and positioning us well as we aim to deliver on our multiyear financial and operating targets |
| These three agreements contribute to the growth of a stable, profitable and predictable revenue stream for the Energy Storage segment, with over 40% of the segment's revenue expected to be contracted by the end of 2024 |
| We continue to see an increase in the demand for geothermal energy and the successful and steady execution of our growth strategy has given us the confidence to reiterate our 2026 target that we provided in early 2022 |
| This fourth quarter and full year results represent solid growth across both our electricity and product segments |
| We are back to normal operating at -- the operation at Puna and have successfully increased generation above 30 megawatts, up from the low 20s we observed earlier in the year |
| Our record fourth quarter adjusted EBITDA results of $139 million increased 11.5% compared to $124.7 million in the fourth of last year |
| This marks a 13.6% increase versus prior year level, positioning us well to achieve our multiyear portfolio expansion target |
| When you see the plan that we have to grow the storage to over -- to 700 to 800 megawatts at the end of 2026, it is a significant growth and we expect this segment to grow -- to continue and grow significantly as we continue to release large projects during the year |
| The balance sheet is very strong |
| This support has helped sustain and expand the tailwinds for future PPAs |
| As we have discussed previously, the Inflation Reduction Act, which was signed on August 16, 2022 has had a significant positive impact on our ability to develop geothermal and storage asset in the U.S |
| I hope that this year we'll see the opposite and therefore the operating cash flow will be much stronger |
| The quarter also benefited from improved generation at Puna power plant that had been operating at lower capacity in the first three quarter of 2023 |
| In the product segment revenue marked a substantial increase growing by 87.3% to $133.8 million and by 56.7% to $50.4 million in full year 2023 and in the fourth quarter respectively |
| Statement |
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| Energy Storage segment revenue decreased by 6.8% to $28.9 million in the full year 2023 and by 14% to $7 million compared to last year's fourth quarter |
| The gross margin for the electricity segment was 36.6% and 39.5% in 2023 Q4, down 320 basis points and 400 basis points respectively |
| The segment reported lower revenues and gross margin in the fourth quarter, due to lower year-over-year merchant rates, primarily in the PJM and Kaiser markets |
| In the Products segment, gross margin was 13.4% and 12.6% in the full year 2023 and the fourth quarter respectively, down 190 basis points and 1,000 basis points |
| Lower year-over-year segment revenues was driven primarily by lower revenue in the PJM and Kaiser markets as merchant rates were lower than 2022 |
| And the negative margins in the quarter |
| The decrease in full year margin performance was mainly due to business interruption of $15.6 million recorded in 2022 compared to $6.3 million recorded in Q1 2023 related to the Heber and the Puna power plant as well as revenue at Puna due to lower generation and energy prices |
| In the Q4 of 2023, margin was negative 8.9% compared to positive 11.7% year-over-year |
| This was partially offset by a reduction in capacity at our Puna facility due to operational issues related to the performance of the well field, which caused us to run the plant at lower capacity rates |
| Doron Blachar I think on the negative margins of the quarter as we said relates mainly to the merchant pricing and the fact that most of the fleet is merchant |
| As I mentioned on the call, we expect PTCs to be down roughly $5 million to $10 million year-over-year because of the elimination of one of our facilities that we enter into 10 years ago when it's basically ended |
| Margin decreased due to lower profitability associated with contracts that were signed during 2021 2022, partially offset by new contract with higher margin that were signed in 2023 |
| Is there any key hubs that may have caused the margin pressure in this recent quarter? And how are you seeing the outlook for storage margin going forward? And to the extent there's any resource adequacy or any other payments that are relevant for that margin outlook that we should keep in mind? Doron Blachar I would say 2023 was relatively low merchant pricing across all markets that we operate in and that's why you saw lower margins in the energy storage |
| Also you have in Puna and Kenya assets that were not performing well over the last few years |
| I can tell you that until the last legislation and few weeks ago, we didn't see strong regulatory support in New Mexico |
| So we will not see this high volatility that we see today |
| Actual future results may differ materially from those projected as a result of certain risks and uncertainties |
| Quarter-over-quarter earning was impacted by higher effective tax rate |
| In the quarter, the reduction was mainly driven by $6.4 million of business interruption income recorded in fourth quarter 2022 related to Heber 1 |
| At higher economics due to lower capital needs |
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