Ormat Technologies, Inc. (ORA) Bundle
Understanding Ormat Technologies, Inc. (ORA) Revenue Streams
Understanding Ormat Technologies, Inc.’s Revenue Streams
Ormat Technologies, Inc. operates primarily through three segments: Electricity, Product, and Energy Storage. The following outlines the revenue contributions from these segments for the most recent financial periods.
Revenue Breakdown by Segment
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | YTD 2024 Revenue (in millions) | YTD 2023 Revenue (in millions) | Year-over-Year Change (%) |
|---|---|---|---|---|---|
| Electricity | $164.6 | $157.2 | $522.1 | $482.8 | 8.1% |
| Product | $37.4 | $39.8 | $100.0 | $83.3 | 20.0% |
| Energy Storage | $9.8 | $11.0 | $26.8 | $21.9 | 22.2% |
| Total Revenue | $211.8 | $208.1 | $648.9 | $588.1 | 10.3% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate showcases the overall increase in total revenue from 2023 to 2024. The total revenue rose from $588.1 million in the first nine months of 2023 to $648.9 million in the same period of 2024, reflecting a growth rate of 10.3%.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contribution of each business segment to total revenue is as follows:
- Electricity Segment: 80.5% of total revenue
- Product Segment: 15.4% of total revenue
- Energy Storage Segment: 4.1% of total revenue
This indicates that the Electricity segment remains the dominant source of revenue, although the Product and Energy Storage segments are showing significant growth rates.
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- The Electricity segment revenue increased by $39.3 million primarily due to the consolidation of geothermal and solar power plants acquired from Enel, contributing $25.5 million.
- The Product segment revenue saw a significant increase of $16.7 million attributed to project progress, marking a 20.0% growth.
- The Energy Storage segment also experienced growth, with an increase of $4.9 million due to new facilities commencing operations.
Overall, the growth in revenue reflects strategic expansions and operational improvements across all segments.
A Deep Dive into Ormat Technologies, Inc. (ORA) Profitability
A Deep Dive into Ormat Technologies, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was $58.9 million, resulting in a gross profit margin of 27.8%. In comparison, for the same period in 2023, the gross profit was $60.0 million with a gross profit margin of 28.8%. For the nine months ended September 30, 2024, the gross profit amounted to $199.1 million, yielding a gross profit margin of 30.7%, compared to $185.6 million and a margin of 31.6% for the nine months ended September 30, 2023.
Operating Profit: The operating income for the three months ended September 30, 2024 was $35.7 million, down from $37.6 million in the same period in 2023. For the nine months ended September 30, 2024, operating income reached $123.4 million, compared to $115.0 million for the same period in 2023.
Net Profit: Net income attributable to the Company's stockholders for the three months ended September 30, 2024 was $22.1 million, down from $35.5 million for the same period in 2023. For the nine months ended September 30, 2024, net income was $82.9 million, compared to $88.7 million for the same period in 2023.
Trends in Profitability Over Time
The following table highlights the profitability metrics over time, comparing the three and nine months ended September 30 for the years 2024 and 2023:
| Metric | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Gross Profit | $58.9 million | $60.0 million | $199.1 million | $185.6 million |
| Gross Margin | 27.8% | 28.8% | 30.7% | 31.6% |
| Operating Income | $35.7 million | $37.6 million | $123.4 million | $115.0 million |
| Net Income | $22.1 million | $35.5 million | $82.9 million | $88.7 million |
Comparison of Profitability Ratios with Industry Averages
As of 2024, the profitability ratios for Ormat Technologies were compared against industry averages:
- Gross Profit Margin: Ormat at 27.8% vs. Industry Average of 25%
- Operating Profit Margin: Ormat at 16.8% vs. Industry Average of 15%
- Net Profit Margin: Ormat at 10.4% vs. Industry Average of 9%
Analysis of Operational Efficiency
The analysis of operational efficiency indicates that:
- Cost of Revenues: The total cost of revenues for the three months ended September 30, 2024, was $152.9 million, up from $148.1 million in the same period of 2023.
- Operating Expenses: Total operating expenses for the three months ended September 30, 2024, were $22.9 million, compared to $16.4 million for the same period in 2023.
- Research and Development Expenses: For the three months ended September 30, 2024, R&D expenses were $1.8 million, compared to $1.4 million in 2023.
The operational efficiency can be further illustrated in the following table:
| Category | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 |
|---|---|---|
| Total Cost of Revenues | $152.9 million | $148.1 million |
| Operating Expenses | $22.9 million | $16.4 million |
| Research and Development Expenses | $1.8 million | $1.4 million |
Debt vs. Equity: How Ormat Technologies, Inc. (ORA) Finances Its Growth
Debt vs. Equity: How Ormat Technologies, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company had total long-term debt of $1.39 billion and short-term debt amounting to $100 million. The total liabilities stood at $3.07 billion.
Debt-to-Equity Ratio
The debt-to-equity ratio was calculated at 0.55, which is below the industry average of approximately 0.75, indicating a lower reliance on debt financing compared to peers in the energy sector.
Recent Debt Issuances
- In July 2024, the company issued $45.2 million in additional 2.50% Convertible Senior Notes due 2027.
- On January 2, 2024, the company secured loans of $75 million from Hapoalim Bank and $125 million from HSBC Bank.
- On March 28, 2024, the company issued $135.1 million principal amount of senior secured notes.
Credit Ratings
The company's credit rating is Baa3 from Moody's, indicating a moderate credit risk, which is consistent with its current debt levels and financial health.
Refinancing Activity
The company has actively managed its debt portfolio, including refinancing efforts such as the issuance of new convertible notes and loans to replace existing higher-interest obligations.
Debt Financing vs. Equity Funding
As of September 30, 2024, the total stockholders' equity was reported at $2.39 billion, reflecting a strong equity base. The company balances its financing strategy by maintaining a mix of debt and equity, utilizing debt instruments for project financing while leveraging equity for growth opportunities.
| Debt Type | Amount ($ million) | Interest Rate (%) | Maturity Date |
|---|---|---|---|
| Convertible Senior Notes | 476.4 | 2.50 | July 15, 2027 |
| Hapoalim 2024 Loan | 75.0 | 6.60 | April 1, 2032 |
| HSBC Bank 2024 Loan | 125.0 | 3-month SOFR + 2.25 | July 1, 2028 |
| Commercial Paper | 100.0 | 3-month SOFR + 1.10 | 90 days |
| Senior Secured Notes | 135.1 | Not disclosed | Not disclosed |
As of September 30, 2024, the company’s total stockholder's equity was $2.39 billion, providing a solid foundation for continued growth and investment. The firm strategically employs both debt and equity to finance its operations, ensuring a balanced approach to capital management.
Assessing Ormat Technologies, Inc. (ORA) Liquidity
Assessing Ormat Technologies, Inc.'s Liquidity
The liquidity position of Ormat Technologies, Inc. is critical for understanding its ability to meet short-term obligations. Key metrics to consider include the current and quick ratios, working capital trends, and cash flow statements.
Current and Quick Ratios
As of September 30, 2024, Ormat reported a current ratio of 1.2, indicating that the company has $1.20 in current assets for every $1.00 of current liabilities. The quick ratio, which excludes inventory from current assets, stood at 0.9. This suggests that while the company has adequate current assets, it may face challenges if it needs to liquidate inventory quickly to meet its obligations.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, was $136.1 million as of September 30, 2024. This represents an increase from $85.4 million in the previous year, reflecting improved operational efficiency and asset management.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $388.1 | $252.0 | $136.1 |
| September 30, 2023 | $355.2 | $269.8 | $85.4 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, Ormat reported net cash provided by operating activities of $252.3 million, a significant increase from $170.3 million in the same period of 2023. This increase is primarily attributed to higher net income and improved collection of receivables.
In terms of investing activities, the company used $645.1 million during the same period, primarily for capital expenditures and business acquisitions. Financing activities provided $282.0 million, reflecting new debt issuances and other financing arrangements.
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $252.3 | $170.3 |
| Investing Activities | ($645.1) | ($458.2) |
| Financing Activities | $282.0 | $247.6 |
Potential Liquidity Concerns or Strengths
Despite the solid liquidity ratios, potential concerns arise from the high level of capital expenditures, which have reached $645.1 million for the first nine months of 2024. Additionally, the company has $440.2 million of unused corporate borrowing capacity, which provides a buffer against liquidity issues. However, given the quick ratio below 1.0, there is a risk that immediate liabilities could pose challenges if cash flows fluctuate.
Furthermore, the company needs to manage its foreign cash holdings, amounting to $46.2 million, effectively, as these may be subject to repatriation taxes and other regulations. Overall, while Ormat Technologies demonstrates strong operational cash flow, its liquidity management will be crucial in navigating upcoming capital needs and obligations.
Is Ormat Technologies, Inc. (ORA) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the valuation metrics for Ormat Technologies, Inc. are as follows:
- Price-to-Earnings (P/E) Ratio: 33.2
- Price-to-Book (P/B) Ratio: 3.3
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: 21.5
Over the last 12 months, the stock price has experienced the following trends:
- 12-Month High: $90.27
- 12-Month Low: $62.00
- Current Stock Price (as of November 1, 2024): $80.50
Dividend metrics are also critical for investors:
- Dividend Yield: 0.59%
- Dividend Payout Ratio: 32.8%
Analyst consensus on the stock valuation indicates:
- Buy: 8 analysts
- Hold: 5 analysts
- Sell: 1 analyst
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 33.2 |
| Price-to-Book (P/B) Ratio | 3.3 |
| EV/EBITDA Ratio | 21.5 |
| 12-Month High | $90.27 |
| 12-Month Low | $62.00 |
| Current Stock Price | $80.50 |
| Dividend Yield | 0.59% |
| Dividend Payout Ratio | 32.8% |
| Analyst Consensus - Buy | 8 |
| Analyst Consensus - Hold | 5 |
| Analyst Consensus - Sell | 1 |
Key Risks Facing Ormat Technologies, Inc. (ORA)
Key Risks Facing Ormat Technologies, Inc.
Ormat Technologies, Inc. faces various internal and external risks that could significantly impact its financial health. These risks include industry competition, regulatory changes, and fluctuations in market conditions.
Industry Competition
The energy sector is highly competitive, particularly in the renewable energy domain. The company competes with various players in geothermal, solar, and energy storage markets. As of September 30, 2024, the company reported total revenues of $648.9 million, up from $588.1 million in the previous year, indicating a growth trajectory but also highlighting the competitive pressures to maintain and grow market share.
Regulatory Changes
Changes in government policies and regulations can impact operational capabilities and profitability. The Inflation Reduction Act, signed into law in August 2022, introduced provisions that could affect the cost structure and investment strategies of renewable energy projects. As of September 30, 2024, the company has incurred a foreign income tax expense of $1.2 million related to foreign withholding taxes on accumulated earnings.
Market Conditions
Fluctuations in electricity prices can affect revenue stability. The company primarily operates under long-term Power Purchase Agreements (PPAs) which mitigate some risks associated with price volatility. However, energy storage projects are sold on a merchant basis and are exposed to market price changes. The Puna Complex benefits from current higher energy prices, which may not be sustainable.
Operational Risks
Operational risks include the potential for outages or disruptions at power plants. Prolonged force majeure events can lead to significant financial losses. In 2024, the company issued $45.2 million in convertible senior notes due 2027 to refinance existing debt, showcasing its strategy to manage financial obligations amid operational uncertainties.
Financial Risks
The company has substantial debt obligations, which can limit financial flexibility. As of September 30, 2024, the total outstanding balance of the Sarulla consortium credit facility was $717.6 million, with the company's proportionate share being $91.5 million. The financial debt to adjusted EBITDA ratio must not exceed 6.0 under existing loan agreements.
Mitigation Strategies
To mitigate these risks, Ormat has diversified its revenue streams across different segments: Electricity, Product, and Energy Storage. The company reported segment revenues as follows for the nine months ended September 30, 2024:
| Segment | Revenues (in millions) | Percentage of Total Revenues |
|---|---|---|
| Electricity | $522.1 | 80.5% |
| Product | $100.0 | 15.4% |
| Energy Storage | $26.8 | 4.1% |
| Total | $648.9 | 100% |
Additionally, the company maintains a robust liquidity position with access to $88.1 million in cash and cash equivalents and $440.2 million of unused corporate borrowing capacity as of September 30, 2024.
Foreign Currency Exposure
Fluctuations in currency rates pose another risk, particularly for operations outside the U.S. The company has forward and cross-currency swap contracts in place to manage exposure to the New Israeli Shekel and Euro. This strategy aims to minimize the financial impact of currency fluctuations on operational expenses and revenues.
Future Growth Prospects for Ormat Technologies, Inc. (ORA)
Future Growth Prospects for Ormat Technologies, Inc.
Analysis of Key Growth Drivers
The company is positioned to capitalize on several key growth drivers, including product innovations, market expansions, and strategic acquisitions. In 2024, the company expects to invest approximately $378.0 million in capital expenditures aimed at new projects and enhancements to existing power plants.
Future Revenue Growth Projections
For the nine months ended September 30, 2024, total revenues reached $648.9 million, compared to $588.1 million during the same period in 2023. This represents a growth rate of approximately 10.3%. The revenue breakdown is as follows:
| Segment | Revenue (2024) | Revenue (2023) | Growth Rate |
|---|---|---|---|
| Electricity | $522.1 million | $482.8 million | 8.1% |
| Product | $100.0 million | $83.3 million | 20.0% |
| Energy Storage | $26.8 million | $21.9 million | 22.3% |
Strategic Initiatives and Partnerships
In 2024, significant strategic initiatives include the acquisition of a portfolio of geothermal and solar assets from Enel Green Power North America for $272 million. This acquisition enhances the company's generation capacity and profitability. Additionally, the company signed multiple long-term agreements, including:
- A 30-year Power Purchase Agreement (PPA) with Electricité de France for a new 10MW geothermal plant in Guadeloupe.
- Two seven-year tolling agreements with Equilibrium Energy for energy storage facilities.
Competitive Advantages
The company's competitive advantages include a diversified portfolio of renewable energy sources, established relationships with utility companies, and a strong presence in both domestic and international markets. As of September 30, 2024, the company reported segment assets totaling $5.59 billion. The company also benefits from a high percentage of fixed-rate long-term contracts, which mitigates revenue volatility.
Projected Financial Performance
The company anticipates continued revenue growth driven by the expansion of its electricity and energy storage segments. For the nine-month period ending September 30, 2024, operating income increased to $123.4 million, up from $115.0 million in the previous year, indicating a healthy operating margin.
Capital Expenditure Plans
The company has budgeted approximately $143.0 million for capital expenditures in the remainder of 2024, which will support ongoing projects and operational enhancements. The breakdown of planned capital expenditures includes:
| Use of Funds | Amount (in millions) |
|---|---|
| New project development | $75.0 |
| Maintenance capital expenditures | $10.0 |
| Energy storage projects | $75.0 |
| Enhancements to production facilities | $3.0 |
Conclusion
The financial health and strategic positioning of the company underscore its potential for significant growth in the renewable energy sector. Continued investment in infrastructure and strategic partnerships will be critical for maintaining competitive advantages and driving future revenue growth.
Ormat Technologies, Inc. (ORA) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Ormat Technologies, Inc. (ORA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Ormat Technologies, Inc. (ORA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Ormat Technologies, Inc. (ORA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.