Ormat Completed the Acquisition of Contracted Operating Geothermal and Solar Assets From Enel Green Power North America

Rhea-AI Summary

Ormat Technologies, a leading renewable energy company (NYSE: ORA), has closed the acquisition of geothermal and solar assets from Enel Green Power North America for $271 million. The acquired portfolio includes two geothermal power plants, a triple hybrid geothermal, solar PV, and solar thermal power plant, two solar assets, and two greenfield development assets. The transaction was funded through available cash and $200M in newly issued long-term corporate debt. Ormat expects the acquisition to be immediately accretive to both revenues and EBITDA, and plans to enhance the performance of the assets through operational initiatives.

Insights

Market Research Analyst

The strategic acquisition by Ormat Technologies of geothermal and solar assets from Enel Green Power North America represents a significant consolidation in the renewable energy sector. This move not only increases Ormat's generating portfolio by a notable margin but also diversifies its energy mix with the inclusion of solar photovoltaic (PV) and solar thermal power plants. The $271 million transaction, with a blend of cash and newly issued long-term corporate debt, suggests a confident investment in renewable technologies, which is in line with the growing trend of sustainable energy solutions.

The immediate accretion to revenues and EBITDA indicates a well-valued acquisition, which is expected to strengthen Ormat's financial position. The focus on operational enhancements and the integration of state-of-the-art equipment could lead to improved efficiency and cost savings, further boosting profitability. For stakeholders, the short-term benefits include potential increases in share value due to immediate accretion, while long-term benefits could be realized from the company's stronger presence in the renewable space, which is likely to attract more investors seeking sustainable investments.

Financial Analyst

Ormat's acquisition funded through a combination of cash reserves and $200M in long-term corporate debt is a strategic leverage of its balance sheet, reflecting a calculated risk in expanding its asset base. The immediate accretive nature of the deal to Ormat's profitability metrics such as EBITDA is a positive sign for investors, indicating that the earnings generated by the acquired assets will outweigh the cost of capital from the newly issued debt. This could lead to improved earnings per share, a key metric for stock valuation.

Investors should monitor the company's debt-to-equity ratio and interest coverage ratios in subsequent quarters to assess the financial health post-acquisition. Additionally, the company's ability to enhance the performance of the new assets through operational improvements will be crucial in determining the long-term success of this acquisition. If Ormat successfully implements its value-enhancement initiatives, it could lead to sustainable growth, potentially setting a new benchmark for operational efficiency in the sector.

Energy Sector Analyst

The acquisition of a portfolio of geothermal and solar assets by Ormat Technologies is a strategic move that capitalizes on the synergies between different forms of renewable energy. The geothermal capacity of approximately 40 MW and Solar PV of 20MW, along with two solar assets totaling 40 MW, signifies a substantial increase in Ormat's renewable footprint, particularly in key U.S. states like Nevada, Utah, Connecticut and California.

The integration of these assets into Ormat's existing operations is expected to create a more robust and diverse energy portfolio, which could provide a hedge against market volatility. The emphasis on triple hybrid geothermal, solar PV and solar thermal power plants showcases an innovative approach to maximizing energy capture and efficiency, which may set a precedent within the industry. This could lead to increased competitiveness and potentially drive down costs for consumers in the long run, while also enhancing Ormat's market position.

• Strategic Acquisition Advances Ormat’s Electricity Segment Growth Plans and Further Strengthens its Presence in the U.S. Renewable Energy Sector
• Increased Ormat Electricity Segment Generating Portfolio to 1,215 MW
• Assets Located in Nevada, Utah, Connecticut and California

RENO, Nev., Jan. 04, 2024 (GLOBE NEWSWIRE) -- Ormat Technologies, Inc. (NYSE: ORA), a leading renewable energy company, announces that it has closed the previously announced acquisition of a portfolio of geothermal and solar assets from Enel Green Power North America (EGPNA), a subsidiary of Enel SpA (ENEL.MI, LLC). Under the agreement, Ormat paid $271 million for 100% of the equity interest in the portfolio assets.

The acquired portfolio includes two contracted operating geothermal power plants and one triple hybrid geothermal, solar PV and solar thermal power plant with a total geothermal capacity of approximately 40 MW and Solar PV of 20MW, two Solar assets with a total nameplate capacity of 40 MW, and two greenfield development assets.

The overall transaction was funded through available cash, in combination with $200M newly issued long-term corporate debt. The acquisition is expected to be immediately accretive to both revenues and EBITDA, and Ormat intends to further improve the performance of the acquired asset portfolio through a series of operational enhancement and optimization initiatives.

Doron Blachar, CEO of Ormat Technologies said, “Ormat is pleased to close this transaction and begin capturing the value of these assets for our shareholders. The acquired assets will be immediately accretive to Ormat’s profitability, and we expect to improve the generation, revenues and EBITDA performance through a series of value-enhancement initiatives, including the integration of Ormat’s own state-of-the-art equipment. We look forward to integrating these attractive geothermal and solar assets into our existing portfolio and translating our results into enhanced shareholder value creation in both the near-and long-term. This deal serves as a testimony to our team’s execution as well as Ormat’s position as a leader in the renewable energy space, while reflecting our ongoing commitment to advancing renewable power solutions, globally.”

ABOUT ORMAT TECHNOLOGIES

With over five decades of experience, Ormat Technologies, Inc. is a leading geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation (“REG”), with robust plans to accelerate long-term growth in the energy storage market and to establish a leading position in the U.S. energy storage market. The Company owns, operates, designs, manufactures and sells geothermal and REG power plants primarily based on the Ormat Energy Converter – a power generation unit that converts low-, medium- and high-temperature heat into electricity. The Company has engineered, manufactured and constructed power plants, which it currently owns or has installed for utilities and developers worldwide, totaling approximately 3,200 MW of gross capacity. Ormat leveraged its core capabilities in the geothermal and REG industries and its global presence to expand the Company’s activity into energy storage services, solar Photovoltaic (PV) and energy storage plus Solar PV. Ormat’s current total generating portfolio is 1,385 MW with a 1,215 MW geothermal and solar generation portfolio that is spread globally in the U.S., Kenya, Guatemala, Indonesia, Honduras, and Guadeloupe, and a 170 MW energy storage portfolio that is located in the U.S.

ORMAT’S SAFE HARBOR STATEMENT

Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect or anticipate will or may occur in the future, including such matters as our projections of annual revenues, expenses and debt service coverage with respect to our debt securities, future capital expenditures, business strategy, competitive strengths, goals, development or operation of generation assets, market and industry developments and the growth of our business and operations, are forward-looking statements. When used in this press release, the words “may”, “will”, “could”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, or “contemplate” or the negative of these terms or other comparable terminology are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. These forward-looking statements generally relate to Ormat's plans, objectives and expectations for future operations and are based upon its management's current estimates and projections of future results or trends. Although we believe that our plans and objectives reflected in or suggested by these forward-looking statements are reasonable, we may not achieve these plans or objectives. Actual future results may differ materially from those projected as a result of certain risks and uncertainties and other risks described under "Risk Factors" as described in Ormat’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 24, 2023, and in Ormat’s subsequent quarterly reports on Form 10-Q that are filed from time to time with the SEC.

These forward-looking statements are made only as of the date hereof, and, except as legally required, we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Ormat Technologies Contact: Smadar Lavi VP Head of IR and ESG Planning & Reporting 775-356-9029 (ext. 65726) slavi@ormat.com

Investor Relations Agency Contact: Alec Steinberg or Joseph Caminiti Alpha IR Group 312-445-2870 ORA@alpha-ir.com

FAQ

What assets did Ormat Technologies acquire from Enel Green Power North America?

Ormat Technologies acquired a portfolio of geothermal and solar assets from Enel Green Power North America, including two geothermal power plants, a triple hybrid geothermal, solar PV, and solar thermal power plant, two solar assets, and two greenfield development assets.

How much did Ormat Technologies pay for the acquisition?

Ormat Technologies paid $271 million for 100% of the equity interest in the portfolio assets.

How was the acquisition funded?

The acquisition was funded through available cash, in combination with $200M newly issued long-term corporate debt.

What is the expected impact of the acquisition on Ormat's financials?

Ormat expects the acquisition to be immediately accretive to both revenues and EBITDA.

What are Ormat's plans for the acquired assets?

Ormat intends to further improve the performance of the acquired asset portfolio through a series of operational enhancement and optimization initiatives.