Ormat Technologies Inc.
11/05/2025 | Press release | Distributed by Public on 11/05/2025 11:58
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
This quarterly report on Form 10-Q includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this quarterly report 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 quarterly report on Form 10-Q, the words "may", "will", "could", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "projects", "potential", "contemplate", or "target" 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. The forward-looking statements in this quarterly report are primarily located in the material set forth under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Risk Factors", and "Notes to Condensed Consolidated Financial Statements", but are found in other locations as well. These forward-looking statements generally relate to our plans, objectives and expectations for future operations and are based upon 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. You should read this quarterly report on Form 10-Q completely and with the understanding that actual future results and developments may be materially different from what we expect attributable to a number of risks and uncertainties, many of which are beyond our control.
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.
During the period covered by this quarterly report on Form 10-Q, there have been no material changes in our risk factors previously disclosed in our 2024 Annual Report. A summary of the risks that may cause actual results to differ from our expectations include, but are not limited to the following:
Risks Related to the Company's Business and Operation
•Our financial performance depends on the successful operation of our geothermal, REG, solar PV power plants under the Electricity segment as well as our energy storage facilities, which are subject to various operational risks.
•Our exploration, development, and operation of geothermal energy resources are subject to geological risks and uncertainties, which may result in insufficient prospects to support our growth, decreased performance or increased costs for our power plants.
•We may decide not to implement, or may not be successful in implementing, one or more elements of our multi-year strategic plan, and the plan may not achieve its goal of enhancing shareholder value.
•Changes in U.S. and foreign government policy, including the imposition of or increases in tariffs and changes to existing trade agreements, could have a material adverse effect on global economic conditions and our business, results of operations, prospects and financial condition.
•Our investments in BESS technology involves new technologies and expected advanced technologies with relatively limited history with respect to reliability and performance and may not perform as expected. In addition, our investments and profitability may be negatively affected by a number of factors, including increases in storage costs, expanded trade restrictions, risk of fire and volatility in merchant prices.
•Concentration of customers, specific projects and regions may expose us to heightened financial exposure.
•Our international operations expose us to risks related to the application of foreign laws and regulations.
•Political, economic and other conditions in the emerging economies where we operate, including Israel, may subject us to greater risk than in the developed U.S. economy.
•Conditions in and around Israel, where the majority of our senior management and our main production and manufacturing facilities are located, may adversely affect our operations and may limit our ability to produce and sell our products, and support our Electricity segment.
•Responses in various countries where we have business operations to Israel's ongoing military conflicts on some of its borders or future similar conflicts may adversely affect our operations and may limit our ability to produce and sell our products.
•Some of our leases will terminate if we do not extract geothermal resources in "commercial quantities" or if we fail to comply with the terms or stipulations of such leases or any of the provisions of the Geothermal Steam Act or if the lessor under any such lease defaults on any debt secured by the relevant property, thus requiring us to enter into new leases or secure rights to alternate geothermal resources, none of which may be available on terms as favorable to us as any such terminated lease, if at all.
•Our business development activities may not be successful and our projects under construction or facilities undergoing enhancement and repowering may encounter delays.
•Our future growth depends, in part, on the successful enhancement of a number of our existing facilities.
•We rely on power transmission facilities that we do not own or control.
•Our use of joint ventures may limit our flexibility with jointly owned investments.
•Our operations could be adversely impacted by climate change and other extreme weather events..
•We could be impacted by regulatory and other responses to climate change.
•We may not be able to successfully complete acquisitions, and we may not be able to successfully integrate, or realize anticipated synergies from, companies that we have acquired and may acquire in the future.
•We encounter intense competition from electric utilities, other power producers, power marketers, developers and third-party investors.
•Changes in costs and technology may significantly impact our business by making our power plants and products less competitive, resulting in our inability to sign new or recontracted PPAs for our Electricity segment and new supply and EPC contracts for our Products segment.
•Our intellectual property rights may not be adequate to protect our business.
•We may experience a cyber-incident, cyber security breach, severe natural event or physical attack on our operational networks and information technology systems.
Risks Related to Governmental Regulations, Laws and Taxation
•Our financial performance could be adversely affected by changes in the legal and regulatory environment affecting our operations.
•Pursuant to the terms of some of our PPAs with investor-owned electric utilities and publicly-owned electric utilities in states that have renewable portfolio standards, the failure to supply the contracted capacity and energy thereunder may result in the imposition of penalties.
•If any of our domestic power plants lose their current Qualifying Facility status under the U.S. Public Utility Regulatory Policies Act of 1978 ("PURPA"), or if amendments to PURPA are enacted that substantially reduce the benefits currently afforded to Qualifying Facilities, our domestic operations could be adversely affected.
•The reduction, elimination or inability to monetize government incentives could adversely affect our business, financial condition, future results and cash flows.
•We are a holding company and our cash depends substantially on the performance of our subsidiaries and the power plants they operate, most of which are subject to restrictions and taxation on dividends and distributions.
•The costs of compliance with federal, state, local and foreign environmental laws and our ability to obtain and maintain environmental permits and governmental approvals required for development, construction and/or operation may result in liabilities, costs and delays in construction (as well as any fines or penalties that may be imposed upon us in the event of any non-compliance or delays with such laws or regulations).
•We could be exposed to significant liability for violations of hazardous substances laws because of the use or presence of such substances at our power plants.
•U.S. federal, state and foreign country income tax reform could adversely affect us.
Risks Related to Economic and Financial Conditions
•We may be unable to obtain the financing we need on favorable terms to pursue our growth strategy and any future financing we receive may be less favorable to us than our current financing arrangements.
•We have incurred substantial indebtedness that may decrease our business flexibility, access to capital, and/or increase our borrowing costs, and we may still incur substantially more debt, which may adversely affect our operations and financial results.
•Our debt obligations may adversely affect our ability to raise additional capital and will be a burden on our future cash resources, particularly if we elect to settle these obligations in cash upon conversion or upon maturity or required repurchase.
•The capped call transactions, into which we entered in connection with the issuance of the June 2022 convertible notes, (the "Notes"), may affect the value of the Notes and our common stock and we are subject to counterparty risk with respect to the capped call transactions.
•Our foreign power plants and foreign manufacturing operations expose us to risks related to fluctuations in currency rates, which may reduce our profits from such power plants and operations.
•Our power plants have generally been financed through a combination of our corporate funds and limited or non-recourse project finance debt and lease financing. If our project subsidiaries default on their obligations under such limited or non-recourse debt or lease financing, we may be required to make certain payments to the relevant debt holders, and if the collateral supporting such leveraged financing structures is foreclosed upon, we may lose certain of our power plants.
•We may experience fluctuations in the costs of construction, raw materials, commodities and drilling.
•Our commodity derivative activity may limit potential gains, increase potential losses, result in earnings volatility and involve other risks.
•We are exposed to swap counterparty credit risk.
Risks Related to Force Majeure
•The existence of a prolonged force majeure event or a forced outage affecting a power plant, or the transmission systems could reduce our net income.
•Threats of terrorism may impact our operations in unpredictable ways and could adversely affect our business, financial condition, future results and cash flow.
Risks Related to Ownership of our Common Stock
•Future equity issuances, including through our current or any future equity compensation plans, could result in dilution, which could cause the price of our shares of common stock to decline.
•The price of our common stock has in the past and may in the future fluctuate substantially, and your investment may decline in value.
•We may issue additional shares of our common stock in connection with conversions of the Notes, and thereby dilute our existing stockholders and potentially adversely affect the market price of our common stock.
•The fundamental change provisions of the Notes may delay or prevent an otherwise beneficial takeover attempt of us.
Investors are cautioned that these forward-looking statements are inherently uncertain. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein. Other than as required by law, we undertake no obligation to update forward-looking statements even though our situation may change in the future. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes included elsewhere in this quarterly report and the "Risk Factors" section of our 2024 Annual Report on Form 10-K for the year ended December 31, 2024 and any updates contained herein as well as those set forth in our reports and other filings made with the SEC.
General
Overview
We are a leading vertically integrated company that is primarily engaged in the geothermal energy power business. We leverage our core capabilities and global presence to expand our activity in recovered energy generation and into different energy storage services and solar PV (including hybrid geothermal and solar PV as well as solar plus energy storage). Our objective is to become a leading global provider of renewable energy and help to mitigate climate change by providing a replacement to carbon-intensive energy sources. We have adopted a strategic plan to focus on several key initiatives to expand our business.
We currently conduct our business activities in three business segments:
•Electricity Segment. In the Electricity segment, we develop, build, own and operate geothermal, solar PV and recovered energy-based power plants in the United States and geothermal power plants in other countries around the world and sell the electricity they generate. In the three and nine months ended September 30, 2025, we derived 70.8% and 71.8%, respectively, of our Electricity segment revenues from our operations in the United States, and 29.2% and 28.2%, respectively, from the rest of the world.
•Product Segment. In the Product segment, we design, manufacture and sell equipment for geothermal and recovered energy-based electricity generation and provide services relating to the engineering, procurement and construction of geothermal and recovered energy-based power plants. In the three and nine months ended September 30, 2025, we derived 4.9% and 6.4%, respectively, of our Product segment revenues from our operations in the United States and 95.1% and 93.6%, respectively, from the rest of the world.
•Energy Storage Segment. In the Energy Storage segment, we own and operate grid connected In Front of the Meter BESS, which provide capacity, energy and/or ancillary services directly to the electric grid. In the three and nine months ended September 30, 2025, we derived all of our Energy Storage segment revenues from our operations in the United States.
Our current generating portfolio of approximately 1.6 GW includes geothermal power plants in the United States, Kenya, Guatemala, Honduras, Guadeloupe and Indonesia, as well as energy storage facilities, recovered energy generation and Solar PV power plants in the United States.
Recent Developments
The most significant developments in our Company and business since January 1, 2025 are described below.
•In October 2025, the Company and SLB announced an agreement to fast-track the development and commercialization of integrated geothermal assets, including enhanced geothermal systems ("EGS"). Together, Ormat and SLB intend to streamline project deployment, from concept to power generation. As part of this effort, SLB will develop, pilot and scale EGS solutions to enable wide-scale EGS adoption. This collaboration will include the design and construction of an EGS pilot at an Ormat site.
•In September 2025, we successfully commenced the commercial operations of our 60MW/120MWh Lower Rio energy storage facility, located in Texas. This facility will provide energy and ancillary services under a seven-year tolling agreement.
•In August 2025, we announced the signing of a strategic commercial agreement with Sage Geosystems Inc. ("Sage"), a pioneer in next-generation geothermal and energy storage technology. Under the terms of the agreement, Sage will pilot its advanced pressure geothermal technology to extract geothermal heat energy from hot dry rock at an existing Ormat power plant. This collaboration aims to significantly reduce the time needed to bring geothermal energy to market and is expected to enhance the Company's operational efficiency while accelerating the implementation of next-generation geothermal solutions. The strategic commercial agreement is expected to close by the end of 2025.
•In August 2025, we signed two Geothermal Exploration and Energy Conversion Agreements ("GEECA"), a novel form of power purchase agreement, with Perusahaan Listrik Negara ("PLN"), each covering up to 20 MW of geothermal capacity each in Songa Wayaua and Atadei located in Indonesia. Under the terms of these agreements, the Company, through its project companies, will undertake exploration drilling, finance, design, construct, install, and operate the Geothermal Power Plant on a BOT ("Build, Operate and Transfer") basis , with a 23 year operating term. PLN will reimburse the cost of successful drilling and retains the option to acquire up to a 30% equity interest in the project companies.
•In August 2025, we announced the signing of a 25-year extension to its existing power purchase agreement with the Southern California Public Power Authority ("SCPPA"), for the 52MW from Heber 1 geothermal facility. This long-term agreement, which is effective February 2026, will ensure the continued delivery of clean, baseload geothermal energy to the Los Angeles Department of Water and Power and the Imperial Irrigation District. The
Company will supply the SCPPA with electricity from the Ormat Heber 1 geothermal facility, located in the Imperial Valley of Southern California.
•In July 2025, we entered into loan agreements with a consortium of French banks pursuant to which we will borrow up to approximately €99.8 million aggregate principal amount in connection with our new Bouillante geothermal power plant in Guadeloupe.
•In July 2025, we entered into a tax partnership agreement with a private investor, under which the private investor paid approximately $77.1 million for the tax benefits related to the Heber 1&2 Geothermal power plants that are part of our Heber Complex. The private investor will pay over eight years additional installments that are expected to amount to approximately $25.7 million.
•In June, 2025, we entered into loan agreements with the Caribbean Development Bank and Caricom Development Fund pursuant to which we will borrow up to $49.8 million aggregate principal amount in connection with the 10MW Geothermal Project in Dominica.
•In June 2025, we closed the acquisition of the Blue Mountain geothermal power plant from Cyrq Energy. The 20MW facility, located in Humboldt County, NV, was purchased for $88.7 million for 100% of the equity interest in the power plant. The power plant, built using Ormat technology, features an existing 51MW interconnection capacity and a PPA with NV Energy ("NVE") that expires at the end of 2029. The Company plans to upgrade the power plant and increase its capacity by 3.5MW. Additionally, subject to permit and PPA approval, Ormat intends to add a 13MW solar facility to support the plant's auxiliaries.
•In May 2025, we announced the signing of a $62.0 million Hybrid Tax Equity partnership with Morgan Stanley Renewables, Inc. The partnership's transaction covers the Lower Rio 60MW/120MWh storage facility and the Arrowleaf 35MW/140MWh storage and 42MW solar projects, which are expected to achieve Commercial Operation Date ("COD") by the end of 2025.
•In February 2025, we won a tender issued by the Israeli Electricity Authority and have been awarded two separate 15-year tolling agreements for two Energy Storage facilities. The facilities under the tolling agreements are expected to have a combined capacity of approximately 300MW/1200MWh. The ownership of the projects will be shared, 50/50 between Ormat and Allied Infrastructure LTD, a leading infrastructure company in Israel.
•In February 2025, we announced the successful COD for the Ijen geothermal power plant that is owned jointly with PT Medco Power Indonesia ("Medco Power"). The Ijen Geothermal Power Plant, equipped with Ormat Energy Converter, began operations with its first phase, delivering 35MW of electricity power to the Java grid, Ormat's share of the facility is 17MW.
•In January 2025, we announced the signing of a 10-year PPA with Calpine Energy Solutions, one of North America's largest energy suppliers. Under this agreement, Calpine Energy Solutions agreed to purchase up to 15MW of clean, renewable energy from the Mammoth 2 geothermal power plant located near Mammoth Lakes, California, to support demand within its retail portfolio. Energy deliveries under the PPA are scheduled to begin in the first quarter of 2027 and will replace the existing PPA with Southern California Edison. The new PPA includes an increase in production capacity and a higher price point.
Trends and Uncertainties
Different trends, factors and uncertainties may impact our operations and financial condition, including many that we do not or cannot foresee. However, we believe that our results of operations and financial condition for the foreseeable future will be primarily affected by trends, factors and uncertainties discussed in our 2024 Annual Report under "Part II - Item 7 - Management Discussion and Analysis of Financial Condition and Results of Operation", in addition to the information set forth in this quarterly report. These trends, factors and uncertainties are, from time to time, also subject to market cycles.
•Throughout 2025, the United States introduced actions to increase import tariffs at various rates, including on certain products imported from almost all countries and individualized higher tariffs on certain other countries, such as China. Other countries have announced retaliatory actions or plans for retaliatory actions in response. Some of these tariff announcements were followed by limited exemptions and temporary pauses. As of the date of this quarterly report, discussions remain ongoing regarding U.S. trade restrictions and tariffs on imports and retaliatory tariffs from numerous countries, and while certain of these tariffs and other trade restrictions have already taken effect, there continues to be significant uncertainty about the future relationship between the United States and other countries regarding such trade policies, treaties, and tariffs. Accordingly, we can make no assurance about the eventual impact on our operating results and business. Our Energy Storage segment growth relies on imported batteries from China, and the growth of projects in the United States in the Electricity segment requires raw materials and equipment from various countries.
While there has so far been only limited impact on short-term growth in both of these segments, a significant increase in tariffs may lead to a slowdown in the growth of our Energy Storage segment in the United States if we
While there has so far been only limited impact on short-term growth in both of these segments, a significant increase in tariffs may lead to a slowdown in the growth of our Energy Storage segment in the United States if we
are unable to pass the price increases from tariffs through to our customers. This could affect our long-term growth targets, specifically in our Energy Storage segment in the United States, and, to a lesser extent, across our business. Additionally, increases in the cost of raw materials and equipment resulting from tariffs could increase our capital expenditures for projects built in the United States under our Electricity segment. We have worked to accelerate imports into the United States and have expedited Chinese imports prior to the potential reinstatement of higher tariffs. However, we can make no assurance that we will succeed in avoiding any of these negative consequences. In addition, current uncertainties about tariffs and their effects on trading relationships may contribute to inflation in the markets in which we operate. For more information, see Part II, Item 1A "Risk Factors"
•On July 4, 2025, the OBBB was signed into law by the President of the United States. Rules under the OBBB were updated in August 2025. For more information, see Note 10 of notes to the unaudited condensed consolidated financial statements contained in this quarterly report. The Company is currently evaluating the impact of the OBBBA on its consolidated financial statements, however, it does not expect the impact to be material.
Revenues
For the nine months ended September 30, 2025, 93.6% of our Electricity segment revenues were derived from PPAs with fixed energy rates, which are not affected by fluctuations in energy commodity prices. We have a variable price PPA in Hawaii, which provides for payments based on the local utilities' avoided cost, which is the incremental cost that the power purchaser avoids by not having to generate such electrical energy itself or purchase it from others. In Hawaii, the prices paid for electricity pursuant to the 25MW PPA for the Puna Complex in Hawaii change primarily as a result of variations in the price of oil, as well as other commodities. In 2024, the HPUC approved a new PPA related to Puna with fixed prices, increased capacity and an extension of the term until 2052.
To comply with obligations under their respective PPAs, certain of our project subsidiaries are structured as special purpose, bankruptcy remote entities and their assets and liabilities are ring-fenced. Such assets are not generally available to pay our debt, other than debt at the respective project subsidiary level. However, these project subsidiaries are allowed to pay dividends and make distributions of cash flows generated by their assets to us, subject in some cases to restrictions in debt instruments, as described below.
Electricity segment revenues are also subject to seasonal variations and are affected by higher-than-average ambient temperatures, as described below under "Seasonality". These variations became severe in recent years due to extreme weather events and in some cases cannot be forecasted.
Revenues attributable to our Product segment are based on the sale of equipment, engineering, procurement and construction contracts and the provision of various services to our customers, or as related to the Dominica project, under a BOT agreement with the Commonwealth of Dominica. Product segment revenues vary from period to period because of the timing of our receipt of purchase orders and the progress of our equipment manufacturing and execution of the relevant project.
Revenues attributable to our Energy Storage segment are generated by several grid-connected BESS facilities that we own and operate that sell energy, capacity and/or ancillary services in merchant markets like PJM Interconnect, ISO New England, ERCOT and CAISO or under tolling agreements that have fixed revenues. The revenues fluctuate over time since a large portion of such revenues are generated in the merchant markets, where price volatility is inherent. We are seeking to reduce volatility by increasing the amount of long-term tolling agreements in our portfolio.
The following table sets forth a breakdown of our revenues for the periods indicated:
| Revenue | Increase (Decrease) | % of Revenues for Period Indicated | |||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2025 | 2024 | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Electricity | $ | 167,110 | $ | 164,638 | $ | 2,472 | 1.5 | % | 66.9 | % | 77.7 | % | |||||||||||||||||||||||
| Product | 62,247 | 37,357 | 24,890 | 66.6 | 24.9 | 17.6 | |||||||||||||||||||||||||||||
| Energy storage | 20,370 | 9,789 | 10,581 | 108.1 | 8.2 | 4.6 | |||||||||||||||||||||||||||||
| Total | $ | 249,727 | $ | 211,784 | $ | 37,943 | 17.9 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||||
|
Revenue
|
Increase (Decrease) | % of Revenues for Period Indicated | |||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2025 | 2024 | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Electricity | $ | 507,263 | $ | 522,117 | $ | (14,854) | (2.8) | % | 71.1 | % | 80.5 | % | |||||||||||||||||||||||
| Product | 153,628 | 100,018 | 53,610 | 53.6 | 21.5 | 15.4 | |||||||||||||||||||||||||||||
|
Energy storage
|
52,616 | 26,778 | 25,838 | 96.5 | 7.4 | 4.1 | |||||||||||||||||||||||||||||
| Total | $ | 713,507 | $ | 648,913 | $ | 64,594 | 10.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||||
The following table sets forth the geographic breakdown of the revenues attributable to our Electricity, Product and Energy Storage segments for the periods indicated:
| Revenue | Increase (decrease) | % of Revenues for Period Indicated | ||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Three Months Ended March 31, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| Electricity Segment: | (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||
| United States | $ | 118,391 | $ | 116,914 | $ | 1,477 | 1.3 | % | 70.8 | % | 71.0 | % | ||||||||||||||||||||||||||
| Foreign | 48,720 | 47,724 | 995 | 2.1 | 29.2 | 29.0 | ||||||||||||||||||||||||||||||||
| Total | $ | 167,110 | $ | 164,638 | $ | 2,472 | 1.5 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
| Product Segment: | ||||||||||||||||||||||||||||||||||||||
| United States | $ | 3,021 | $ | 3,202 | $ | (181) | (5.7) | % | 4.9 | % | 8.6 | % | ||||||||||||||||||||||||||
| Foreign | 59,226 | 34,155 | 25,071 | 73.4 | 95.1 | 91.4 | ||||||||||||||||||||||||||||||||
| Total | $ | 62,247 | $ | 37,357 | $ | 24,890 | 66.6 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
| Energy Storage Segment: | ||||||||||||||||||||||||||||||||||||||
| United States | $ | 20,370 | $ | 9,789 | $ | 10,581 | 108.1 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
| Total | $ | 20,370 | $ | 9,789 | $ | 10,581 | 108.1 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
| Revenue | Increase (decrease) |
% of Revenues for Period Indicated
|
||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
| Electricity Segment: | ||||||||||||||||||||||||||||||||||||||
| United States | $ | 364,021 | $ | 380,424 | $ | (16,403) | (4.3) | % | 71.8 | % | 72.9 | % | ||||||||||||||||||||||||||
| Foreign | 143,242 | 141,693 | 1,549 | 1.1 | 28.2 | 27.1 | ||||||||||||||||||||||||||||||||
| Total | $ | 507,263 | $ | 522,117 | $ | (14,854) | (2.8) | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
| Product Segment: | ||||||||||||||||||||||||||||||||||||||
| United States | $ | 9,783 | $ | 5,693 | $ | 4,090 | 71.8 | % | 6.4 | % | 5.7 | % | ||||||||||||||||||||||||||
| Foreign | 143,845 | 94,325 | 49,520 | 52.5 | 93.6 | 94.3 | ||||||||||||||||||||||||||||||||
| Total | $ | 153,628 | $ | 100,018 | $ | 53,610 | 53.6 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
| Energy Storage Segment: | ||||||||||||||||||||||||||||||||||||||
| United States | $ | 52,616 | $ | 26,778 | $ | 25,838 | 96.5 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
| Total | $ | 52,616 | $ | 26,778 | $ | 25,838 | 96.5 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
In the nine months ended September 30, 2025 and 2024, 40.2% and 36.4% of our total revenues, respectively, were derived from foreign locations, and 43.2% and 38.7%, for the three months ended September 30, 2025 and 2024, respectively. Our foreign operations had higher Electricity gross margins than our U.S. operations in each of those periods. A substantial portion of Electricity segment foreign revenues came from Kenya and to a lesser extent, from Honduras, Guadeloupe and Guatemala. Our operations in Kenya contributed disproportionately to gross profit and net income. The contribution to combined pre-tax income of our domestic and foreign operations within our Electricity segment and Product segment differ in a number of ways, as summarized below.
Electricity Segment.Our Electricity segment domestic revenues were approximately 71.8% and 72.9% of our total Electricity segment revenues for the nine months ended September 30, 2025 and 2024, respectively, and 70.8% and 71.0%, for the three months ended September 30, 2025 and 2024, respectively. Our Electricity segment foreign revenues were approximately 28.2% and 27.1% of our total Electricity segment revenues for the nine months ended September 30, 2025 and 2024, respectively and 29.2% and 29.0%, for the three months ended September 30, 2025 and 2024, respectively. However, domestic operations have higher costs of revenues and expenses than our foreign operations. Our foreign power plants are located in lower-cost regions, like Kenya, Guatemala, and Honduras, which favorably impact payroll, maintenance expenses and other items. Our power plants in those foreign locations are also newer than most of our domestic power plants and therefore tend to have lower maintenance costs and higher availability factors than our domestic power plants. Consequently, in the nine months ended September 30, 2025 and 2024, our foreign operations of the segment accounted for 40.7% and 40.2%, respectively, of our total gross profits, 78.6% and 79.7%, respectively, of our net income (assuming the majority of corporate operating expenses and financing are recorded under our domestic jurisdiction), and 29.2% and 31.2%, respectively, of our EBITDA.
Product Segment.Our Product segment foreign revenues were approximately 93.6% and 94.3% of our total Product segment revenues for the nine months ended September 30, 2025 and 2024, respectively, and 95.1% and 91.4%, for the three months ended September 30, 2025 and 2024, respectively.
Energy Storage Segment. Our Energy Storage segment domestic revenues were 100% of our total Energy Storage segment revenues for each of the three and nine months ended September 30, 2025 and 2024.
Seasonality
Electricity generation from some of our geothermal power plants is subject to seasonal variations. In the winter, our power plants produce more energy primarily attributable to the lower ambient temperature, which has a favorable impact on the energy component of our Electricity segment revenues as the prices under many of our contracts are fixed throughout the year with no time-of-use impact. The prices paid for electricity under the PPAs for the Mammoth Complex and the North Brawley power plant in California, the Raft River power plant in Idaho, the Neal Hot Springs power plant in Oregon and the Dixie Valley power plant in Nevada are higher in the months of June through September. The higher payments payable under these PPAs in the summer months partially offset the negative impact on our revenues from lower generation in the summer attributable to a higher ambient temperature. As a result, we expect the revenues and gross profit in the winter months to be higher than the revenues and gross profit in the summer months and in general we expect the first and fourth quarters to generate higher revenues than the second and third quarters. In the Energy Storage segment pursuant to the Bottleneck tolling agreement, approximately 45% of the revenues are generated in the third quarter, and the rest is nearly even between the first, second and fourth quarters.
Breakdown of Cost of Revenues
The principal cost of revenues attributable to our three segments are discussed in our 2024 Annual Report under "Part II - Item 7 - Management Discussion and Analysis of Financial Condition and Results of Operations."
Critical Accounting Estimates and Assumptions
A comprehensive discussion of our critical accounting estimates and assumptions is included in our 2024 Annual Report under "Part II, Item 7 - Management Discussion and Analysis of Financial Condition and Results of Operations."
New Accounting Pronouncements
See Note 2 to our condensed consolidated financial statements set forth in Item 1 of this quarterly report for information regarding new accounting pronouncements.
Results of Operations
Our historical operating results in U.S. dollars and as a percentage of total revenues are presented below for each of the periods indicated.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | ||||||||||||||||||||||
| Statements of Operations Historical Data: | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Electricity | $ | 167,110 | $ | 164,638 | $ | 507,263 | $ | 522,117 | |||||||||||||||
| Product | 62,247 | 37,357 | 153,628 | 100,018 | |||||||||||||||||||
| Energy storage | 20,370 | 9,789 | 52,616 | 26,778 | |||||||||||||||||||
| Total Revenues | 249,727 | 211,784 | 713,507 | 648,913 | |||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||||
| Electricity | 124,588 | 114,941 | 365,657 | 342,186 | |||||||||||||||||||
| Product | 48,766 | 30,166 | 116,568 | 83,982 | |||||||||||||||||||
| Energy storage | 12,336 | 7,815 | 37,423 | 23,687 | |||||||||||||||||||
| Total cost of revenues | 185,690 | 152,922 | 519,648 | 449,855 | |||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Electricity | 42,522 | 49,697 | 141,606 | 179,931 | |||||||||||||||||||
| Product | 13,481 | 7,191 | 37,060 | 16,036 | |||||||||||||||||||
| Energy storage | 8,034 | 1,974 | 15,193 | 3,091 | |||||||||||||||||||
| Total gross profit | 64,037 | 58,862 | 193,859 | 199,058 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development expenses | 1,284 | 1,816 | 5,265 | 5,110 | |||||||||||||||||||
| Selling and marketing expenses | 4,895 | 4,248 | 13,437 | 13,541 | |||||||||||||||||||
| General and administrative expenses | 20,174 | 22,973 | 57,869 | 60,536 | |||||||||||||||||||
| Other operating income | (3,125) | (6,250) | (10,519) | (6,250) | |||||||||||||||||||
| Impairment of long-lived assets | - | 323 | - | 1,280 | |||||||||||||||||||
| Write-off of unsuccessful exploration and storage activities | 377 | 77 | 1,144 | 1,456 | |||||||||||||||||||
| Operating income | 40,432 | 35,675 | 126,663 | 123,385 | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest income | 1,626 | 2,051 | 4,868 | 6,494 | |||||||||||||||||||
| Interest expense, net | (35,677) | (34,822) | (106,832) | (99,506) | |||||||||||||||||||
| Derivatives and foreign currency transaction gains (losses) | (891) | 2,046 | 6,237 | 132 | |||||||||||||||||||
| Income attributable to sale of tax benefits | 14,356 | 19,760 | 48,178 | 53,034 | |||||||||||||||||||
| Other non-operating income, net | 124 | 22 | 422 | 122 | |||||||||||||||||||
|
Income from operations before income tax and equity in earnings (losses) of investees
|
19,970 | 24,732 | 79,536 | 83,661 | |||||||||||||||||||
| Income tax (provision) benefit | 4,283 | 1,193 | 13,544 | 4,518 | |||||||||||||||||||
| Equity in earnings (losses) of investees | 455 | (1,624) | 861 | 437 | |||||||||||||||||||
| Net income | 24,708 | 24,301 | 93,941 | 88,616 | |||||||||||||||||||
| Net income attributable to noncontrolling interest | (571) | (2,219) | (1,396) | (5,704) | |||||||||||||||||||
| Net income attributable to the Company's stockholders | $ | 24,137 | $ | 22,082 | $ | 92,545 | $ | 82,912 | |||||||||||||||
| Earnings per share attributable to the Company's stockholders: | |||||||||||||||||||||||
| Basic: | $ | 0.40 | $ | 0.37 | $ | 1.53 | $ | 1.37 | |||||||||||||||
| Diluted: | $ | 0.39 | $ | 0.36 | $ | 1.51 | $ | 1.37 | |||||||||||||||
|
Weighted average number of shares used in computation of earnings per share attributable to the Company's stockholders:
|
|||||||||||||||||||||||
| Basic | 60,749 | 60,480 | 60,666 | 60,439 | |||||||||||||||||||
| Diluted | 61,252 | 60,770 | 61,132 | 60,726 | |||||||||||||||||||
Operating results as a percentage of total revenues:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Statements of Operations Data: | |||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Electricity | 66.9 | % | 77.7 | % | 71.1 | % | 80.5 | % | |||||||||||||||
| Product | 24.9 | 17.6 | 21.5 | 15.4 | |||||||||||||||||||
| Energy storage | 8.2 | 4.6 | 7.4 | 4.1 | |||||||||||||||||||
| Total Revenues | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||||
| Electricity | 74.6 | 69.8 | 72.1 | 65.5 | |||||||||||||||||||
| Product | 78.3 | 80.8 | 75.9 | 84.0 | |||||||||||||||||||
| Energy storage | 60.6 | 79.8 | 71.1 | 88.5 | |||||||||||||||||||
| Total cost of revenues | 74.4 | 72.2 | 72.8 | 69.3 | |||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Electricity | 25.4 | 30.2 | 27.9 | 34.5 | |||||||||||||||||||
| Product | 21.7 | 19.2 | 24.1 | 16.0 | |||||||||||||||||||
| Energy storage | 39.4 | 20.2 | 28.9 | 11.5 | |||||||||||||||||||
| Total gross profit | 25.6 | 27.8 | 27.2 | 30.7 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development expenses | 0.5 | 0.9 | 0.7 | 0.8 | |||||||||||||||||||
| Selling and marketing expenses | 2.0 | 2.0 | 1.9 | 2.1 | |||||||||||||||||||
| General and administrative expenses | 8.1 | 10.8 | 8.1 | 9.3 | |||||||||||||||||||
| Other operating income | (1.3) | (3.0) | (1.5) | (1.0) | |||||||||||||||||||
| Impairment of long-lived assets | - | 0.2 | - | 0.2 | |||||||||||||||||||
| Write-off of unsuccessful exploration and storage activities | 0.2 | - | 0.2 | 0.2 | |||||||||||||||||||
| Operating income | 16.2 | 16.8 | 17.8 | 19.0 | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest income | 0.7 | 1.0 | 0.7 | 1.0 | |||||||||||||||||||
| Interest expense, net | (14.3) | (16.4) | (15.0) | (15.3) | |||||||||||||||||||
| Derivatives and foreign currency transaction gains (losses) | (0.4) | 1.0 | 0.9 | - | |||||||||||||||||||
| Income attributable to sale of tax benefits | 5.7 | 9.3 | 6.8 | 8.2 | |||||||||||||||||||
| Other non-operating income, net | - | - | 0.1 | - | |||||||||||||||||||
|
Income from operations before income tax and equity in earnings (losses) of investees
|
8.0 | 11.7 | 11.1 | 12.9 | |||||||||||||||||||
| Income tax (provision) benefit | 1.7 | 0.6 | 1.9 | 0.7 | |||||||||||||||||||
| Equity in earnings (losses) of investees | 0.2 | (0.8) | 0.1 | 0.1 | |||||||||||||||||||
| Net income | 9.9 | 11.5 | 13.2 | 13.7 | |||||||||||||||||||
| Net income attributable to noncontrolling interest | (0.2) | (1.0) | (0.2) | (0.9) | |||||||||||||||||||
| Net income attributable to the Company's stockholders | 9.7 | % | 10.4 | % | 13.0 | % | 12.8 | % | |||||||||||||||
Comparison of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024
Total Revenues
The table below compares revenues for the three months ended September 30, 2025 to the three months ended September 30, 2024.
| Three Months Ended September 30, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| Electricity segment | $ | 167.1 | $ | 164.6 | 1.5 | % | |||||||||||
| Product segment | 62.2 | 37.4 | 66.6 | ||||||||||||||
| Energy Storage segment | 20.4 | 9.8 | 108.1 | ||||||||||||||
| Total revenues | $ | 249.7 | $ | 211.8 | 17.9 | % | |||||||||||
Electricity Segment
Revenues attributable to our Electricity segment for the three months ended September 30, 2025 were $167.1 million, compared to $164.6 million for the three months ended September 30, 2024. This increase of $2.5 million was mainly attributable to: (i) $2.9 million increase related to the Blue Mountain power plant which was purchased in June 2025; and (ii) $4.0 million increase compared to the third quarter of 2024 during which the Dixie Valley power plant had an unscheduled outage. This increase was partially offset by $3.2 million decrease in revenues primarily due to reduction in Puna's energy rates that are tied to oil prices and by $1.7 million increase in curtailments in the U.S..
Power generation in our power plants increased by 1.9% from 1,616,634 MWh in the three months ended September 30, 2024 to 1,647,912 MWh in the three months ended September 30, 2025.
Product Segment
Revenues attributable to our Product segment for the three months ended September 30, 2025 were $62.2 million, compared to $37.4 million for the three months ended September 30, 2024. This increase of $24.9 million, or 66.6%, is primarily related to the progress in our projects and timing of when revenues are recognized during the period. During the three months ended September 30, 2025 and 2024, Product revenues included projects primarily in New Zealand and Dominica.
Energy Storage Segment
Revenues attributable to our Energy Storage segment for the three months ended September 30, 2025 were $20.4 million compared to $9.8 million for the three months ended September 30, 2024. This increase of $10.6 million is primarily related to $9.2 million from new energy storage facilities which commenced commercial operation in the fourth quarter of 2024 or later such as Bottleneck, Montague, and Lower Rio, as well as higher energy rates at PJM storage facilities in the three months ended September 30, 2025, compared to the same period in the previous year.
Total Cost of Revenues
The table below compares cost of revenues for the three months ended September 30, 2025 to the three months ended September 30, 2024.
| Three Months Ended September 30, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| Electricity segment | $ | 124.6 | $ | 114.9 | 8.4 | % | |||||||||||
| Product segment | 48.8 | 30.2 | 61.7 | ||||||||||||||
| Energy Storage segment | 12.3 | 7.8 | 57.9 | ||||||||||||||
| Total cost of revenues | $ | 185.7 | $ | 152.9 | 21.4 | % | |||||||||||
Electricity Segment
Total cost of revenues attributable to our Electricity segment for the three months ended September 30, 2025 was $124.6 million, compared to $114.9 million for the three months ended September 30, 2024, which represents an increase of $9.6 million, or 8.4%. This increase is primarily attributable to (i) an increase in the power plant depreciation expenses of $5.8 million, as a results of our investments in our power plants; (ii) an increase of $1.3 million in the Stillwater power plant as a result of maintenance work during the third quarter of 2025; (iii) a $1.4 million increase in the Steamboat complex, primarily as a result of a property tax refund which was recorded in the third quarter of 2024; and (vi) a $0.8 million increase related to the Blue Mountain power plant which was purchased in June 2025.
Our total Electricity segment cost of revenues for the three months ended September 30, 2025 was 74.6% of Electricity segment revenues, compared to 69.8% for the three months ended September 30, 2024. The cost of revenues attributable to our international power plants for the three months ended September 30, 2025 was 17.6% of our total Electricity segment cost of revenues for this period compared to 16.9% for the same period in the prior year.
Product Segment
Total cost of revenues attributable to our Product segment for the three months ended September 30, 2025 was $48.8 million, compared to $30.2 million for the three months ended September 30, 2024, which represented a 61.7% increase. This increase is primarily attributable to the increase in Product segment revenues, as discussed above. As a percentage of total Product segment revenues, total cost of revenues attributable to our Product segment for the three months ended September 30, 2025, and 2024, was 78.3% and 80.8%, respectively, which results from the different profitability of the different projects included in each period.
Energy Storage Segment
Cost of revenues attributable to our Energy Storage segment for the three months ended September 30, 2025 was $12.3 million compared to $7.8 million for the three months ended September 30, 2024. This increase of $4.5 million includes an increase of $2.7 million in depreciation and amortization expenses, and is primarily related to the new energy storage facilities which commenced commercial operation in the fourth quarter of 2024, or later such as Bottleneck, Montague, and Lower Rio.
Research and Development Expenses, Net
Research and development expenses for the three months ended September 30, 2025 were $1.3 million, compared to $1.8 million for the three months ended September 30, 2024. The decrease in research and development expenses, net is primarily related to the timing of when we allocate resources to research and development projects.
Selling and Marketing Expenses
Selling and marketing expenses for the three months ended September 30, 2025 were $4.9 million compared to $4.2 million for the three months ended September 30, 2024. Selling and marketing expenses for the three months ended September 30, 2025 and 2024 constituted 2.0% and 2.0% of total revenues, respectively.
General and Administrative Expenses
General and administrative expenses for the three months ended September 30, 2025 were $20.2 million compared to $23.0 million for the three months ended September 30, 2024. General and administrative expenses for the three months ended September 30, 2025 and 2024 constituted 8.1% and 10.8% of total revenues, respectively. The decrease in general and administrative expenses of $2.8 million is primarily attributable to consulting fees related to a settlement agreement with a third-party battery systems supplier of $4.8 million which was recorded in the third quarter of 2024. This decrease was partially offset by higher consulting fees in the three months ended September 30, 2025 of $1.3 million, out of which $0.5 million is related to the Blue Mountain purchase transaction, and the remainder is related to the timing of when we incur services from our vendors.
Other Operating Income
Other operating income for the three months ended September 30, 2025 was $3.1 million compared to $6.3 million for the three months ended September 30, 2024. Other operating income primarily represents the non-refundable portion of the recovery of damages received from a third-party battery systems supplier as part of a settlement agreement entered into in August 2024, for which contingency conditions have been met.
Impairment of Long-Lived Assets
There was no impairment of long-lived assets in the three months ended September 30, 2025. Impairment of long-lived assets for the three months ended September 30, 2024 of $0.3 million is related to the termination of the waste heat agreement between the Company's wholly-owned subsidiary, OREG 4, and Highline Electric Association, Inc., effective May 2024.
Write-off of Unsuccessful Exploration and Storage Activities
Write-off of unsuccessful exploration and storage activities for the three months ended September 30, 2025 was $0.4 million compared to $0.1 million for the three months ended September 30, 2024. These write-offs are primarily related to geothermal exploration and storage projects that the Company decided to no longer pursue.
Interest Income
Interest Income for the three months ended September 30, 2025 was $1.6 million, compared to $2.1 million for the three months ended September 30, 2024. Interest income is primarily related to interest earned on cash and cash equivalents held by the Company during the period. The decrease in interest income is primarily related to lower average balances of cash and cash equivalents period over period.
Interest Expense, Net
Interest expense, net for the three months ended September 30, 2025 was $35.7 million, compared to $34.8 million for the three months ended September 30, 2024. This increase of $0.9 million was primarily attributable to interest expense relating to loan agreements entered into during, or subsequently to, the third quarter of 2024 such as: (i) the Discount 2024 II loan entered into in September 2024; (ii) the issuance of the Additional 2.50% Senior Convertible Notes in July 2024; (iii) the Bottleneck Loan entered into in November 2024; (iv) the Mizrahi 2025 Loan entered into in February 2025; (v) the Discount 2025 Loan and Hapoalim 2025 Loan entered into in March 2025; and (vi) the Discount 2025 II Loan entered into in May 2025; (vii) the GB Loan entered into in July 2025; and (vii) the Heber 1 and 2 tax monetization transaction entered into in July 2025. This increase was partially offset by an increase in the amount of interest capitalized due to an increase in the construction-in-process balance, period over period, as well as lower interest expenses on other existing loans as a result of scheduled payments.
Derivatives and Foreign Currency Transaction Gains (Losses)
Derivatives and foreign currency transaction gains and losses for the three months ended September 30, 2025 was a loss of $0.9 million, compared to a gain of $2.0 million for the three months ended September 30, 2024. Derivatives and foreign currency transaction gains and losses primarily include gain and losses from foreign currency forward contracts which were not accounted for as hedge transactions, and the impact of changes in foreign currency exchange rates against the U.S. Dollar.
Income Attributable to Sale of Tax Benefits
Income attributable to the sale of tax benefits for the three months ended September 30, 2025 was $14.4 million, compared to $19.8 million for the three months ended September 30, 2024. This income primarily represents the value of
PTCs and taxable income or loss generated by certain of our power plants which are allocated to investors under tax equity transactions, as well as to income related to the expected sale of transferable PTCs under the IRA regulations.
Other Non-Operating Income (Expense), Net
Other non-operating income (expense), net for the three months ended September 30, 2025 was an income of $0.1 million, compared to an income of $22.0 thousand for the three months ended September 30, 2024.
Income Taxes
Income tax benefit for the three months ended September 30, 2025 was $4.3 million compared to income tax benefit of $1.2 million for the three months ended September 30, 2024. This change primarily relates to the generation of additional investment tax credits, and the change in "Income from operations before income tax and equity in earnings of investees". Our effective tax rate for the three months ended September 30, 2025 and 2024, was (21.4)% and (4.8)%, respectively.
Equity in Earnings (Losses) of Investees, Net
Equity in earnings of investees, net for the three months ended September 30, 2025 was earnings of $0.5 million, compared to losses of $1.6 million for the three months ended September 30, 2024. Equity in earnings (losses) of investees, net is derived from our 12.75% share in the earnings or losses in the Sarulla Consortium ("Sarulla") and our 49% share in the earnings or losses in the Ijen geothermal project.
Net Income Attributable to the Company's Stockholders
Net income attributable to the Company's stockholders for the three months ended September 30, 2025 was $24.1 million, compared to $22.1 million for the three months ended September 30, 2024, which represents an increase of $2.1 million. This increase is attributable to a increase of $0.4 million in net income which was affected by the explanations described above, and a decrease of $1.6 million in net income attributable to noncontrolling interest, which is primarily related to the noncontrolling share in the net results of the Puna and Guadeloupe power plants.
Comparison of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024
Total Revenues
The table below compares revenues for the nine months ended September 30, 2025 to the nine months ended September 30, 2024.
| Nine Months Ended September 30, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
|
Segment Revenues:
|
(Dollars in millions) | ||||||||||||||||
| Electricity segment | $ | 507.3 | $ | 522.1 | (2.8) | % | |||||||||||
| Product segment | 153.6 | 100.0 | 53.6 | ||||||||||||||
| Energy Storage segment | 52.6 | 26.8 | 96.5 | ||||||||||||||
| Total revenues | $ | 713.5 | $ | 648.9 | 10.0 | % | |||||||||||
Electricity Segment
Revenues attributable to our Electricity segment for the nine months ended September 30, 2025, were $507.3 million, compared to $522.1 million for the nine months ended September 30, 2024. The decrease of $14.9 million in our Electricity segment revenues was mainly attributable to: (i) a $9.6 million decrease in revenues due to a temporary reduction in generation in our Puna power plant, primarily caused by wellfield issues during the first half of 2025 and lower energy rates in the third quarter; (ii) a $15.6 million decrease in revenues primarily related to curtailments from McGinness Hills, Tungsten and Dixie Valley; (iii) a $3.2 million decrease in revenues related to the Stillwater power plant, primarily due to planned repowering of the power plant; and (iv) an additional reduction in revenues in lower amounts at a number of other power plants. This decrease was partially offset by (i) a $3.3 million increase in revenues related to the Blue Mountain power plant which was purchased in June 2025; (ii) a $4.3 million increase in revenues related to the Beowawe repower project which commenced commercial operation in the second quarter of 2024; and (iii) a $4.2 million increase in revenues in the Dixie Valley power plant, net of curtailment, due to the unscheduled maintenance work in 2024.
Power generation in our power plants decreased by 1.8% from 5,437,679 MWh in the nine months ended September 30, 2024 to 5,338,053 MWh in the nine months ended September 30, 2025.
Product Segment
Revenues attributable to our Product segment for the nine months ended September 30, 2025were $153.6 million, compared to $100.0 million for the nine months ended September 30, 2024. This increase of $53.6 million, or 53.6%, is primarily related to the progress in our projects which results in the timing of when revenues are recognized. During the nine months ended September 30, 2025, and 2024, Product revenues included projects primarily in New Zealand and Dominica.
Energy Storage Segment
Revenues attributable to our Energy Storage segment for the nine months ended September 30, 2025 were $52.6 million compared to $26.8 million for the nine months ended September 30, 2024. The increase of $25.8 million is primarily related to (i) the East Flemington energy storage facility which commenced commercial operations during the first quarter of 2024; (ii) the Bottleneck, Montague, and Lower Rio energy storage facilities which commenced commercial operation in the fourth quarter of 2024 or later; and (iii) higher energy rates at PJM storage facilities in the nine months ended September 30, 2025, compared to the same period in the previous year.
Total Cost of Revenues
The table below compares cost of revenues for the nine months ended September 30, 2025 to the nine months ended September 30, 2024.
| Nine Months Ended September 30, | |||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||
|
Segment Cost of Revenues:
|
(Dollars in millions) | ||||||||||||||||
| Electricity segment | $ | 365.7 | $ | 342.2 | 6.9 | % | |||||||||||
| Product segment | 116.6 | 84.0 | 38.8 | ||||||||||||||
| Energy Storage segment | 37.4 | 23.7 | 58.0 | ||||||||||||||
| Total cost of revenues | $ | 519.6 | $ | 449.9 | 15.5 | % | |||||||||||
Electricity Segment
Total cost of revenues attributable to our Electricity segment for the nine months ended September 30, 2025 was $365.7 million, compared to $342.2 million for the nine months ended September 30, 2024, which represents an increase of $23.5 million, or 6.9%. This increase is primarily attributable to (i) an increase in power plants depreciation expenses of $15.9 million, as a result of our investments in our power plants; (ii) an increase of $3.8 million and $2.0 million, in the CD4 power plant and the Heber complex, respectively, primarily associated with property tax expenses relating to prior years which were recorded in 2025; (iii) an increase of $1.3 million in the Stillwater power plant as a result of maintenance work during the third quarter of 2025; and (iv) additional increases in lower amounts in our other power plants.
Our total Electricity segment cost of revenues for the nine months ended September 30, 2025 was 72.1% of Electricity revenues, compared to 65.5% for the nine months ended September 30, 2024. The cost of revenues attributable to our international power plants for the nine months ended September 30, 2025 was 17.6% of our total Electricity segment cost of revenues for this period, compared to 18.0% for the same period in the prior year.
Product Segment
Total cost of revenues attributable to our Product segment for the nine months ended September 30, 2025 was $116.6 million, compared to $84.0 million for the nine months ended September 30, 2024, which represented a 38.8% increase. This increase was primarily attributable to the increase in Product segment revenues as discussed above. As a percentage of total Product segment revenues, our total cost of revenues attributable to our Product segment for the nine months ended September 30, 2025, and 2024, was 75.9% and 84.0%, respectively, which results from the different profitability of the different projects included in each period.
Energy Storage Segment
Cost of revenues attributable to our Energy Storage segment for the nine months ended September 30, 2025 was $37.4 million compared to $23.7 million for the nine months ended September 30, 2024. This increase of $13.7 million includes an
increase of $7.3 million in depreciation and amortization expenses, and is primarily related to the new energy storage facilities which commenced commercial operation in the fourth quarter of 2024 or later such as Bottleneck, Montague, and Lower Rio.
Research and Development Expenses, Net
Research and development expenses for the nine months ended September 30, 2025 were $5.3 million, compared to $5.1 million for the nine months ended September 30, 2024. The increase in research and development expenses is mainly attributable to the timing of when we allocate resources to research and development projects.
Selling and Marketing Expenses
Selling and marketing expenses for the nine months ended September 30, 2025 were $13.4 million compared to $13.5 million for the nine months ended September 30, 2024. Selling and marketing expenses for the nine months ended September 30, 2025, constituted 1.9% of total revenues for such period, compared to 2.1% for the nine months ended September 30, 2024.
General and Administrative Expenses
General and administrative expenses for the nine months ended September 30, 2025 were $57.9 million compared to $60.5 million for the nine months ended September 30, 2024. The decrease of $2.7 million in general and administrative expenses is primarily attributable to consulting fees related to a settlement agreement with a third-party battery systems supplier of $4.8 million, which was recorded in the third quarter of 2024.
Other Operating Income
Other operating income for the nine months ended September 30, 2025 was $10.5 million compared to $6.3 million for the nine months ended September 30, 2024. Other operating income primarily represents the non-refundable portion of the recovery of damages received from a third-party battery systems supplier as part of a settlement agreement entered into in August 2024, for which contingency conditions have been met.
Impairment of Long-Lived Assets
There was no impairment of long-lived assets in the nine months ended September 30, 2025. Impairment of long-lived assets for the nine months ended September 30, 2024 of $1.3 million was related to the termination of the waste heat agreement between the Company's wholly-owned subsidiary, OREG 4, and Highline Electric Association, Inc., effective May 2024.
Write-off of Unsuccessful Exploration and Storage Activities
Write-off of unsuccessful exploration and storage activities for the nine months ended September 30, 2025 was $1.1 million, compared to $1.5 million for the nine months ended September 30, 2024. These write-offs are related to accumulated costs of geothermal exploration and storage projects that the Company decided to no longer pursue.
Interest Income
Interest Income for the nine months ended September 30, 2025 was $4.9 million, compared to $6.5 million for the nine months ended September 30, 2024. Interest income is primarily related to interest earned on cash and cash equivalents held by the Company during the period. The decrease in interest income is primarily related to lower average balances of cash and cash equivalents period over period.
Interest Expense, Net
Interest expense, net for the nine months ended September 30, 2025 was $106.8 million, compared to $99.5 million for the nine months ended September 30, 2024. This increase of $7.3 million is primarily attributable to interest expenses relating to loan agreements entered into during, or subsequent to, the nine months ended September 30, 2024 such as: (i) the Mammoth Senior Secured Notes entered into in March 2024; (ii) the DEG 4 Loan entered into in April 2024; (iii) the Discount 2024 Loan and the Discount 2024 II loans entered into in May 2024 and September 2024, respectively; (iv) the issuance of the Additional 2.50% Senior Convertible Notes in July 2024; (v) the Bottleneck Loan entered into in November 2024; (vi) the Mizrahi 2025 Loan entered into in February 2025; (vii) the Discount 2025 Loan and Hapoalim 2025 Loan entered into in March 2025; (viii) the Discount 2025 II Loan entered into in May 2025; (ix) the GB Loan entered into in July 2025; and (x) the Heber 1 and 2 tax monetization transaction entered into in July 2025. This increase was partially offset by an increase in the amount of interest capitalized due to an increase in the construction-in-process balance and lower interest expenses on other long-term loans as a result of regular principal payments.
Derivatives and Foreign Currency Transaction Gains (Losses)
Derivatives and foreign currency transaction gains and losses for the nine months ended September 30, 2025 was a gain of $6.2 million, compared to a gain of $0.1 million for the nine months ended September 30, 2024. Derivatives and foreign currency transaction gains and losses primarily includes losses from foreign currency forward contracts which were not accounted for as hedge transactions, and the impact of changes in foreign currency exchange rates against the U.S. Dollar.
Income Attributable to Sale of Tax Benefits
Income attributable to the sale of tax benefits for the nine months ended September 30, 2025 was $48.2 million, compared to $53.0 million for the nine months ended September 30, 2024. This income primarily represents the value of PTCs and taxable income or loss generated by certain of our power plants which are allocated to investors under tax equity transactions, and to income related to the expected sale of transferable production tax credits under the IRA regulations.
Other Non-Operating Income (Expense), Net
Other non-operating income (expense), net for the nine months ended September 30, 2025 was $0.4 million, compared to $0.1 million for the nine months ended September 30, 2024.
Income Taxes
Income tax benefit for the nine months ended September 30, 2025 was $13.5 million compared to income tax benefit of $4.5 million for the nine months ended September 30, 2024. This change primarily relates to the generation of additional investment tax credits. Our effective tax rate for the nine months ended September 30, 2025 and 2024, was (17.0)% and (5.4)%, respectively.
Equity in Earnings (Losses) of Investees, Net
Equity in earnings and losses of investees, net for the nine months ended September 30, 2025 was earnings of $0.9 million, compared to earnings of $0.4 million for the nine months ended September 30, 2024. Equity in earnings and losses of investees, net is mainly derived from our 12.75% share in the earnings or losses in the Sarulla consortium and our 49% share in the earnings or losses from the Ijen geothermal project. The increase in equity in earnings of investees is primarily related to the increase in net income generated by the Ijen project.
Net Income Attributable to the Company's Stockholders
Net income attributable to the Company's stockholders for the nine months ended September 30, 2025 was $92.5 million, compared to $82.9 million for the nine months ended September 30, 2024, which represents an increase of $9.6 million. This increase was attributable to the increase of $5.3 million in net income which was affected by the explanations described above, as well as a decrease of $4.3 million in net income attributable to noncontrolling interest, which is primarily related to the noncontrolling share in the net results of the Puna and Guadeloupe power plants.
Liquidity and Capital Resources
Our principal sources of liquidity have been derived from cash flows from operations, proceeds from third party debt such as borrowings under our credit facilities, private or public offerings and issuances of debt or equity securities, project financing and tax monetization transactions, short term borrowing under our lines of credit, and proceeds from the sale of equity interests in one or more of our projects. We have utilized this cash to develop and construct power plants, fund our acquisitions, pay down existing outstanding indebtedness, and meet our other cash and liquidity needs.
As of September 30, 2025, we had access to (i) $79.6 million in cash and cash equivalents, of which $28.1 million is held by our foreign subsidiaries; and (ii) $387.1 million of unused corporate borrowing capacity under existing committed lines for credit and letters of credit with different commercial banks.
Our estimated capital needs for the remainder of 2025 include $140 million for capital expenditures on new projects under development or construction including energy storage projects, exploration activity and maintenance capital expenditures for our existing projects. In addition, $60.6 million will be needed for long-term debt repayment.
We expect to finance these requirements with: (i) the sources of liquidity described above; (ii) positive cash flows from our operations; and (iii) future project financings and re-financings (including construction loans and tax equity transactions). Management believes that, based on the current stage of implementation of our strategic plan, the sources of liquidity and capital resources described above will address our anticipated liquidity, capital expenditures, and other investment requirements.
As of September 30, 2025, we continue to maintain our assertion to no longer indefinitely reinvest foreign funds held by our foreign subsidiaries, and have accrued the incremental foreign withholding taxes. Accordingly, during the nine months ended September 30, 2025, we included a foreign income tax expense of $0.6 million related to foreign withholding taxes on accumulated earnings of all of our foreign subsidiaries.
As further described under Note 1 to the condensed consolidated financial statements, the Company entered into the following new loan agreements during the nine months ended September 30, 2025: (i) the Mizrahi 2025 Loan in February 2025 for $50.0 million; (ii) the Discount 2025 Loan in March 2025 for $50.0 million; (iii) the Hapoalim 2025 Loan in March 2025, and later in June 2025, for a total of $150.0 million; (iv) the Discount 20205 II Loan in May 2025 for $50 million; (v) the GB Loan in August 2025 for €76.0 million; (vi) the Dominica Loan in August 2025 for $37.6 million; and (vii) the Mammoth Senior Secured Notes 2025 in September for $23.4 million. Additionally, (1) in May 2025, the Company entered into a hybrid tax equity partnership with a private investor for the purpose of monetizing ITCs for a total estimated consideration of $62.0 million, of which $32.7 million was made during the second and third quarters of 2025, as further described under Note 1 to the consolidated financial statements, and (2) in July 2025, the Company entered in a tax monetization transaction with a private investor for the purpose of monetizing PTCs for a total consideration of $77.1 million, and for additional installments expected to amount to approximately $25.7 million.
Letters of Credits Under Credit Agreements
Some of our customers require our project subsidiaries to post letters of credit in order to guarantee their respective performance under relevant contracts. We are also required to post letters of credit to secure our obligations under various leases and licenses and may, from time to time, decide to post letters of credit in lieu of cash deposits in reserve accounts under certain financing arrangements. In addition, our subsidiary, Ormat Systems, is required from time to time to post performance letters of credit in favor of our customers with respect to orders of products.
| Credit Agreements | Amount Issued |
Issued and Outstanding as of September 30, 2025
|
Termination Date
|
|||||||||||
| (Dollars in millions) | 387.1 | |||||||||||||
| Committed lines for credit and letters of credit | $ | 533.0 | $ | 145.9 |
November 2025-June 2028
|
|||||||||
| Committed lines for letters of credit | 155.0 | 95.6 |
November 2025-March 2026
|
|||||||||||
| Non-committed lines | - | 54.5 |
October 2025
|
|||||||||||
| Total | $ | 688.0 | $ | 296.0 | ||||||||||
Restrictive Covenants
Our obligations under the credit agreements, the loan agreements, and the trust instrument governing the bonds described above, are unsecured, but we are subject to a negative pledge in favor of the banks and the other lenders and certain other restrictive covenants. These include, among other things, restraints on: (i) creating any floating charge or any permanent pledge, charge or lien over our assets without obtaining the prior written approval of the lender; (ii) guaranteeing the liabilities of any third party without obtaining the prior written approval of the lender; and (iii) selling, assigning, transferring, conveying or disposing of all or substantially all of our assets, or a change of control in our ownership structure. Some of the credit agreements, the term loan agreements, and the trust instrument contain cross-default provisions with respect to other material indebtedness owed by us to any third party. In some cases, we have agreed to maintain certain financial ratios, which are measured quarterly, such as: (i) equity of at least $750 million and in no event less than 25% of total assets; and (ii) 12-month debt, net of cash, cash equivalents, and short-term bank deposits to Adjusted EBITDA ratio not to exceed 6. As of September 30, 2025: (i) total equity was $2,643.0 million and the actual equity to total assets ratio was 43.4% and (ii) the 12-month debt, net of cash, cash equivalents, to Adjusted EBITDA ratio was 4.42. During the nine months ended September 30, 2025, we distributed interim dividends in an aggregate amount of $21.8 million. The failure to perform or observe any of the covenants set forth in such agreements, subject to various cure periods, would result in the occurrence of an event of default and would enable the lenders to accelerate all amounts due under each such agreement.
As described above, we are currently in compliance with our covenants with respect to the credit agreements, the loan agreements and the trust instrument (except as described below), and believe that the restrictive covenants, financial ratios and other terms of any of our full-recourse bank credit agreements will not materially impact our business plan or operations.
As of September 30, 2025, we did not meet the dividend distribution criteria related to the Mammoth Senior Secure Notes and the DAC 1 Senior Secured Notes, which resulted in certain equity distribution restrictions from these related subsidiaries. As of September 30, 2025, the amount restricted for distribution by these subsidiaries was $9.3 million and $0.7 million,
respectively. Additionally, as of September 30, 2025, we were not in compliance with the Platanares DFC Loan finance agreement due to a breach of payment terms by the offtaker under the PPA. On October 27, 2025, a waiver and amendment to the finance agreement were signed between the Company and the lender, effectively resolving the noncompliance issue as of September 22, 2025. As of September 30, 2025, the amount restricted for distribution by this subsidiary was $11.5 million. There were no restrictions on the retained earnings or net income of Ormat Technologies, Inc., as the parent company, in respect of these matters, as of September 30, 2025.
Future minimum payments
Future minimum cash payments under long-term obligations (including long-term debt, lease obligations and financing liability), as of September 30, 2025, are as follows:
| (Dollars in thousands) | |||||
| Year ending December 31: | |||||
| 2025 | $ | 62,657 | |||
| 2026 | 311,110 | ||||
| 2027 | 785,554 | ||||
| 2028 | 338,381 | ||||
| 2029 | 315,230 | ||||
| Thereafter | 966,710 | ||||
| Total | $ | 2,779,642 | |||
Third-Party Debt
Our third-party debt consists of (i) non-recourse and limited-recourse project finance debt or acquisition financing debt that we or our subsidiaries have obtained for the purpose of developing and constructing, refinancing or acquiring our various projects; (ii) full-recourse debt incurred by us or our subsidiaries for general corporate purposes; (iii) financing liability related to the business combination purchase transaction of the Terra-Gen geothermal assets; (iv) convertible senior notes; (v) commercial paper; and (vi) short term revolving credit lines with banks which may be drawn as needed.
Non-Recourse, Limited-Recourse, Full-Recourse Third-Party Debt, Financial Liability and Convertible Senior Notes
|
Loan
|
Amount Outstanding as of September 30, 2025
|
Interest Rate Range
|
Maturity Date | ||||||||
|
(Dollars in millions)
|
|||||||||||
|
Limited and non-recourse loans: fixed rate
|
$ | 757.0 |
2.4% - 7.0%
|
June-30 - July-47
|
|||||||
|
Full recourse loans:
|
|||||||||||
|
Fixed-rate
|
826.8 |
2.9% - 7.9%
|
January-28- February-33
|
||||||||
|
Variable-rate
|
331.2 |
6.6% - 6.7%
|
September-28 - May-33
|
||||||||
|
Financing liability (1)
|
216.4 | 6.0% | June-38 | ||||||||
|
Convertible senior notes (2)
|
476.4 | 2.5% | July-27 | ||||||||
|
Short term revolving credit lines with banks
|
35.0 | 6.6% | March-26 | ||||||||
(1)Financing Liability
The financing liability is related to the sale and lease back transaction of the Dixie Valley power plant which was acquired as part of the business combination transaction of the Terra-Gen geothermal assets in July 2021. The financing liability bears a fixed interest rate of 6.01% per annum, principal and interest are payable semi-annually, and it matures in June 2038.
(2)Convertible Senior Notes
The Original Convertible Notes due 2027 were issued in June 2022 in a single series of a $431.3 million aggregate principal amount. The Original Convertible Notes bear annual interest at a rate of 2.5%, payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2023. The Original Convertible Notes mature on July 15,
2027, unless earlier converted, redeemed or repurchased. In July 2024, the Company issued an additional $45.2 million aggregate principal amount of its 2.50% Original Convertible Notes.
Short-term Commercial Paper
In October 2023, the Company completed the issuance of the commercial paper in the aggregate amount of $73.2 million, and subsequently on December 11, 2023, the Company issued an additional amount of $26.8 million, under the same terms of the commercial paper framework agreement (together, the "Commercial Paper"). The Commercial Paper was issued for a period of 90 days and extends automatically for additional 90-day periods for up to five years, unless the Company notifies the participants otherwise or a notice of termination is provided by the participants in accordance with the provisions of the Commercial Paper agreement. The Commercial Paper bears an annual interest of three months SOFR +1.1% which is paid at the end of each 90-day period. As of September 30, 2025, the base rate was 4.3%, and the aggregate outstanding amount of the Commercial Paper is $100.0 million.
Dividends
The Company has declared and distributed quarterly dividends of $0.12 per share during the past two years.
Historical Cash Flows
The following table sets forth the components of our cash flows for the periods indicated:
| Nine Months Ended September 30, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||
| Net cash provided by operating activities | $ | 230,061 | $ | 252,300 | ||||||||||
| Net cash used in investing activities | (579,797) | (645,115) | ||||||||||||
| Net cash provided by financing activities | 349,081 | 282,030 | ||||||||||||
| Translation adjustments on cash and cash equivalents | 620 | (210) | ||||||||||||
| Net change in cash and cash equivalents and restricted cash and cash equivalents | $ | (35) | $ | (110,995) | ||||||||||
For the Nine Months Ended September 30, 2025
Net cash provided by operating activities for the nine months ended September 30, 2025 was $230.1 million, compared to $252.3 million for the nine months ended September 30, 2024, representing an decrease of $22.2 million. Net cash provided by operating activities for the nine months ended September 30, 2025 was primarily attributable to net income of $93.9 million, adjusted for certain non-cash items such as depreciation and amortization, income attributable to the sale of tax benefits, and deferred income tax provision, among others, and primarily by: (i) a net change of $14.8 million in the short-term costs and estimated earnings in excess of billings on uncompleted contracts and short-term billings in excess of costs and estimated earnings on uncompleted contracts, as a result of the timing of billing to our customers; and (ii) a net decrease in trade receivables of $19.1 million, due to the timing of collection from our customers. This was partially offset by: (i) a net increase of $40.1 million in the long-term costs and estimated earnings in excess of billings on uncompleted contracts related to the Dominica project; (ii) a net decrease in accounts payable and accrued expenses of $34.7 million as a result of the timing of payments to our suppliers; and (iii) a net increase in inventories of $6.5 million, primarily related to the timing of allocating costs to projects under construction. Net cash provided by operating activities for the nine months ended September 30, 2024 was primarily attributable to net income of $88.6 million for the period, adjusted for certain non-cash items, such as depreciation and amortization, income attributable to the sale of tax benefits, and deferred income tax provision, among others, and primarily by:(i) a cash inflow related to the net decrease in trade receivables of $42.5 million, due to timing of collection from our customers; (ii) an increase in other long-term liabilities of $8.3 million primarily related to recovery of damages received from a third-party battery systems supplier as part of a settlement agreement, for which contingency conditions have not yet been met; and (iii) a net increase in accounts payable and accrued expenses of $7.0 million as a result of timing of payments to our suppliers, and $22.5 million of the recovery of damages received from a third-party battery systems supplier as part of a settlement agreement, for which contingency conditions have not yet been met, and which is presented in the short-term. This increase was partially offset by (i) a net increase of $33.9 million in costs and estimated earnings in excess of billings on uncompleted contracts, including the long-term balance related to the Dominica project, and billings in excess of costs and estimated earnings on uncompleted contracts, as a result of timing of billing to our customers; and (ii) an increase in prepaid expenses and other of $10.7 million, primarily related to timing of prepayments to suppliers and governmental authorities.
Net cash used in investing activities for the nine months ended September 30, 2025 was $579.8 million, compared to $645.1 million for the nine months ended September 30, 2024. The principal factors that affected our net cash used in investing activities during the nine months ended September 30, 2025, and 2024 were: (i) capital expenditures of $474.7 million during the nine months ended September 30, 2025, compared to $359.9 million, in the same period of the prior year, primarily for our facilities under construction that support our growth plan; and (ii) cash paid for the business acquisition of the Blue Mountain power plant of $88.7 million in the nine months ended September 30, 2025, compared to $274.6 million for the purchase of a portfolio of assets from Enel in the nine months ended September 30, 2024.
Net cash provided by financing activities for the nine months ended September 30, 2025 was $349.1 million, compared to $282.0 million for the nine months ended September 30, 2024. The principal factors that affected the net cash provided by financing activities during the nine months ended September 30, 2025 were: (i) net proceeds of $444.6 million from long-term loans entered into during the first half of 2025; (ii) proceeds of $109.8 million from tax monetization transactions entered into during the period; (iii) net cash received from revolving credit lines with banks of $35.0 million; and (iv) cash received from noncontrolling interest in the amount of $10.3 million. These cash inflows were partially offset by: (i) scheduled repayments of long-term debt in the amount of $203.3 million; (ii) cash paid in relation to debt issuance and line of credit transactions of $16.8 million, (iii) cash dividend payment of $21.8 million; and (iv) a cash paid to noncontrolling interest of $7.4 million. The principal factors that affected our net cash provided by financing activities during the nine months ended September 30, 2024 were: (i) net proceeds of $442.6 million from long-term loans entered into during the first half of 2024; and (ii) cash received from noncontrolling interest in the amount of $12.3 million. These cash inflows were partially offset by: (i) scheduled repayments of long-term debt in the amount of $164.6 million; (ii) cash paid to noncontrolling interest of $6.1 million; (iii) net cash outflow from revolving credit lines with banks of $20.0 million; and (iv) a cash dividend payment of $21.8 million.
Non-GAAP Measures: EBITDA and Adjusted EBITDA
We calculate EBITDA as net income before interest, taxes, depreciation, amortization and accretion. We calculate Adjusted EBITDA as net income before interest, taxes, depreciation, amortization and accretion, adjusted for (i) mark-to-market gains or losses from accounting for derivatives not designated as hedging instruments; (ii) stock-based compensation, (iii) merger and acquisition transaction costs; (iv) gain or loss from extinguishment of liabilities; (v) cost related to a settlement agreement; (vi) non-cash impairment charges; (vii) write-off of unsuccessful exploration and storage activities; and (viii) other unusual or non-recurring items. We adjust for these factors as they may be non-cash, unusual in nature and/or are not factors used by management for evaluating operating performance. We believe that presentation of these measures will enhance an investor's ability to evaluate our financial and operating performance. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the United States, or U.S. GAAP, and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net earnings as indicators of our operating performance or any other measures of performance derived in accordance with U.S. GAAP. Our Board of Directors and senior management use EBITDA and Adjusted EBITDA to evaluate our financial performance. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.
Net income for the three and nine months ended September 30, 2025 was $24.7 million and $93.9 million, respectively, compared to $24.3 million and $88.6 million, for the three and nine months ended September 30, 2024, respectively.
Adjusted EBITDA for the three and nine months ended September 30, 2025 was $138.4 million and $423.3 million, respectively, compared to $137.7 million and $405.0 million, for the three and nine months ended September 30, 2024, respectively.
The following table reconciles net income to EBITDA and Adjusted EBITDA for the three and nine months period ended September 30, 2025 and 2024:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||||||
| Net income | $ | 24,708 | $ | 24,301 | $ | 93,941 | $ | 88,616 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
|
Interest expense, net (including interest income and amortization of deferred financing costs)
|
34,051 | 32,771 | 101,964 | 93,012 | |||||||||||||||||||
| Income tax provision (benefit) | (4,283) | (1,193) | (13,544) | (4,518) | |||||||||||||||||||
|
Adjustment to investment in unconsolidated companies: our proportionate share in interest expense, tax and depreciation and amortization in Sarulla and Ijen
|
3,580 | 5,903 | 10,857 | 12,673 | |||||||||||||||||||
| Depreciation, amortization and accretion | 73,239 | 65,885 | 213,071 | 190,244 | |||||||||||||||||||
| EBITDA | $ | 131,295 | $ | 127,667 | $ | 406,289 | $ | 380,027 | |||||||||||||||
|
Mark-to-market (gains) or losses of derivative instruments
|
1,198 | (409) | (1,206) | 870 | |||||||||||||||||||
| Stock-based compensation | 4,941 | 5,042 | 14,473 | 14,887 | |||||||||||||||||||
| Allowance for bad debts | 158 | 121 | 210 | 342 | |||||||||||||||||||
| Impairment of long-lived assets | - | 323 | - | 1,280 | |||||||||||||||||||
| Merger and acquisition transaction costs | 479 | 80 | 1,488 | 1,379 | |||||||||||||||||||
|
Settlement agreement
|
- | 4,750 | 900 | 4,750 | |||||||||||||||||||
| Write-off of unsuccessful exploration and storage activities | 377 | 77 | 1,144 | 1,456 | |||||||||||||||||||
| Adjusted EBITDA | $ | 138,448 | $ | 137,651 | $ | 423,298 | $ | 404,992 | |||||||||||||||
As of September 30, 2025, the outstanding carrying value of long-term debt owed by SOL and Ijen, our unconsolidated investments, was $645.3 million, and $105.0 million, respectively, in which our proportionate share was $82.3 million, and $51.5 million, respectively.
Capital Expenditures
Our capital expenditures primarily relate to: (i) the development and construction of new power plants, (ii) the enhancement of our existing power plants; and (iii) investment in activities under our strategic plan.
The following is an overview of projects that are fully released for construction:
Zunil Upgrade (Guatemala). We are expanding the Zunil geothermal power plant in Guatemala to add 5MW of additional capacity. We are planning to sell the electricity generated under the existing PPA with the local utility, Institute Nacional de Electrification or "INDE". Construction has been completed and drilling was delayed to 2026.
Bouillante Repowering (Guadeloupe). We are currently in the process of upgrading the Bouillante project and planning to install a new Ormat energy converter that will add net capacity of 10MW. Construction is progressing and the PPA was signed. We expect commercial operation in the second quarter of 2026.
Topp 2 (New Zealand). We are developing the 50MW Topp 2 geothermal power plant in New Zealand which was recently released for construction. We signed an agreement with Eastland Generation Limited ("EGL"), under which the Company will design, build, commission and own the power plant. EGL will operate and maintain the power plant under a separate services arrangement. As part of the development agreement with EGL, the Company has granted EGL a contractual option to purchase the power plant at an agreed purchase price, subject to certain conditions. Ormat recently received an option exercise notice from EGL pursuant to which EGL wishes to acquire the power plant. The Parties are expected to sign the sale agreement in the fourth quarter of 2025, or the first quarter of 2026.
Dominica. We are developing the 10MW Dominica geothermal power plant in the Dominica Island. We signed a 25-year PPA with the local utility. At the end of the agreement term, ownership of the power plant will be transferred to the local Government. Construction is progressing towards commissioning. An extreme rainy season caused construction delays and we expect commercial operation in the first quarter of 2026.
Cove Fort Upgrade (U.S.). We are upgrading the power plant that was purchased in January 2024 to add 7MW. Construction is ongoing and we expect commercial operation in the second quarter of 2026.
Stillwater Upgrade (U.S.). We are upgrading the power plant that was purchased in January 2024 to add 5MW. Upgrade is nearly completed and the power plant is online. We expect to complete the upgrade in Q4 2025.
Salt Wells Upgrade (U.S.). We are upgrading the power plant that was purchased in January 2024 to add 5MW. Construction is ongoing and we expect commercial operation in the second quarter of 2026.
Blue Mountain Upgrade (U.S.). We are upgrading the power plant that was purchased in June 2025 to add 3.5MW. Engineering and procurement is ongoing and commercial operation is expected to start in the first half of 2027.
Heber Complex (U.S.)We are currently in the process of upgrading the Heber complex. We are planning to add a new 23MW power plant and increase the operating power plants by additional 2MW. We expect commercial operation in the second half of 2027.
In addition, we are in the process of repowering the Puna power plant.
In the Energy Storage segment, we are currently in the process of constructing several facilities as detailed below:
| Project Name | Size | Location | Customer | Expected COD | ||||||||||
| Arrowleaf | 35MW/140MWh | CA | SDCP |
Q4 2025
|
||||||||||
| Bird Dog | 60MW/120MWh | CA | SDCP |
Q2 2026
|
||||||||||
|
Shirk
|
80MW/320MWh |
CA
|
CAISO
|
Q1 2026
|
||||||||||
|
Israel High Voltage (*)
|
150MW/600MWh
|
Israel
|
Israeli Electricity Authority | 2028 | ||||||||||
(*) Represents our share of two projects, which are joint ventures.
We have budgeted approximately $558.0 million in capital expenditures for the construction of new projects and enhancements to our existing power plants in the Electricity segment, of which we had invested $266.0 million as of September 30, 2025. We expect to invest approximately $30.0 million in the rest of 2025 and the remaining amount of approximately $262.0 million thereafter.
In addition, we estimate approximately $110.0 million in additional capital expenditures in 2025 to be allocated as follows: (i) approximately $55.0 million for the exploration, drilling and development of new projects and enhancements of existing power plants that are not yet released for full construction; (ii) approximately $15.0 million for maintenance capital expenditures for our operating power plants; (iii) approximately $34.0 million for the construction and development of energy storage projects; and (iv) approximately $6.0 million for enhancements to our production facilities.
In the aggregate, we estimate our total capital expenditures for the fourth quarter of 2025 to be approximately $140 million.
Exposure to Market Risks
Based on current conditions, we believe that we have sufficient financial resources to fund our activities and execute our business plans. However, due to various factors (including those discussed in "-General-Trends and Uncertainties" in this quarterly report and in the same section of Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Annual Report), the cost of obtaining financing for our project needs may increase significantly or such financing may be difficult to obtain.
We, like other power plant operators, are exposed to electricity price volatility risk. Our exposure to such market risk is currently limited (except for the 25MW PPA for the Puna complex) because the majority of our long-term PPAs have fixed or escalating rate provisions that limit our exposure to changes in electricity prices. Our energy storage projects sell primarily on a "merchant" basis and are exposed to changes in the electricity market prices.
The Puna Complex is currently benefiting from energy prices which are higher than the floor under the 25MW PPA as a result of higher fuel costs that impact HELCO's avoided cost. In 2024, the HPUC approved a new PPA for our Puna power plant, which has a fixed energy price with no escalation and de-links it from oil prices, as discussed above.
As of September 30, 2025, 87.3% of our consolidated long-term debt was at fixed interest rates, and therefore not subject to interest rate volatility risk. During the nine months ended September 30, 2025, we entered into the following variable interest rate loans: the Hapoalim 2025 Loan, the Mizrahi 2025 Loan, the Discount 2025 Loan, and the Discount 2025 II Loan, which increased the portion of our variable interest rate in our total consolidated long-term debt. Our short-term commercial paper, which was issued on October 23, 2023, bears an annual interest rate of three months SOFR plus 1.1%, therefore presenting an exposure to interest rate volatility. The outstanding amount of the short-term commercial paper as of September 30, 2025 was $100.0 million.
Our cash equivalents are subject to interest rate risk. We currently maintain our surplus cash in short-term, interest-bearing bank deposits, money market funds, corporate bonds and debt securities that are classified as available for sale (with a minimum investment grade rating of A+ by Standard & Poor's Ratings Services).
We are also exposed to foreign currency exchange risk, in particular the fluctuation of the U.S. dollar versus the New Israeli Shekel ("NIS") in Israel, the Euro, and the New Zealand Dollar. Risks attributable to fluctuations in currency exchange rates can arise when we, or any of our foreign subsidiaries, borrow funds or incur operating or other expenses in one type of currency but receive revenues in another. In such cases, an adverse change in exchange rates can reduce such subsidiary's ability to meet its debt service obligations, reduce the amount of cash and income we receive from such foreign subsidiary, or increase such subsidiary's overall expenses. In Kenya, the tax related asset and liability are recorded in Kenyan Shillings ("KES"), therefore, any change in the exchange rate in the KES versus the U.S. dollar has an impact on our financial results. Risks attributable to fluctuations in the foreign currency exchange rates can also arise when the currency denomination of a particular contract is not the U.S. dollar. Substantially all of our PPAs in the international markets are either U.S. dollar-denominated or linked to the U.S. dollar except for our operations on Guadeloupe, where we own and operate the Bouillante power plant which sells its power under a Euro-denominated PPA with Électricité de France S.A. Our construction contracts from time to time contemplate costs which are incurred in local currencies. The way we often mitigate such risk is to receive part of the proceeds from the contract in the currency in which the expenses are incurred. Currently, we have forward and cross-currency swap contracts in place to reduce our NIS/U.S. dollar currency exposure and expect to continue to use currency exchange and other derivative instruments to the extent we deem such instruments to be the appropriate tool for managing such exposure.
On July 1, 2020, we concluded an auction tender and accepted subscriptions for senior unsecured bonds comprised of NIS 1.0 billion aggregate principal amount (the "Senior Unsecured Bonds - Series 4"). The Senior Unsecured Bonds - Series 4 were issued in New Israeli Shekels and converted to approximately $290 million using a cross-currency swap transaction shortly after the completion of such issuance.
In June 2022, we issued $431.3 million aggregate principal amount of our 2.5% convertible senior notes due in 2027. The convertible senior notes bear annual interest at a rate of 2.5%, payable semiannually in arrears, and mature on July 15, 2027, unless earlier converted, redeemed or repurchased. In July 2024, we issued an additional $45.2 million aggregate principal amount of our 2.50% senior secured notes.
We performed a sensitivity analysis on the fair values of our long-term debt obligations, commercial paper and foreign currency exchange forward contracts. The foreign currency exchange forward contracts listed below principally relate to trading activities. The sensitivity analysis involved increasing and decreasing forward rates at September 30, 2025 and December 31, 2024 by a hypothetical 10% and calculating the resulting change in the fair values.
At this time, the development of our strategic plan has not exposed us to any additional market risk. However, as the implementation of the plan progresses, we may be exposed to additional or different market risks.
The results of the sensitivity analysis calculations as of September 30, 2025 and December 31, 2024 are presented below:
|
Assuming a 10% Increase in Rates |
Assuming a 10% Decrease in Rates |
||||||||||||||||||||||||||||
| Risk | September 30, 2025 | December 31, 2024 | September 30, 2025 | December 31, 2024 | Change in the Fair Value of: | ||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Foreign currency | $ | 238 | $ | (700) | $ | 2,624 | $ | 2,078 |
Foreign currency forward contracts
|
||||||||||||||||||||
| Interest rate | (604) | - | 628 | - |
Mammoth Senior Secured Notes 2025
|
||||||||||||||||||||||||
| Interest rate | (1,376) | - | 1,455 | - |
Dominica Loan
|
||||||||||||||||||||||||
| Interest rate | (1,888) | - | 1,968 | - |
GB Loan
|
||||||||||||||||||||||||
| Interest rate | (928) | - | 957 | - | Mizrahi 2025 Loan | ||||||||||||||||||||||||
| Interest rate | (961) | - | 991 | - | Discount 2025 Loan | ||||||||||||||||||||||||
| Interest rate | (1,026) | - | 1,059 | - | Discount 2025 II Loan | ||||||||||||||||||||||||
| Interest rate | (2,841) | - | 2,930 | - | Hapoalim 2025 Loan | ||||||||||||||||||||||||
| Interest rate | (2,752) | (2,986) | 2,916 | 3,180 | Bottleneck Loan | ||||||||||||||||||||||||
| Interest rate | (4,702) | (5,096) | 5,037 | 5,469 | Mammoth Senior Secured Notes | ||||||||||||||||||||||||
| Interest rate | (356) | (574) | 361 | 584 | Mizrahi Loan | ||||||||||||||||||||||||
| Interest rate | (642) | (886) | 659 | 914 | Mizrahi Loan 2023 | ||||||||||||||||||||||||
| Interest rate | (409) | (679) | 414 | 691 | Hapoalim Loan | ||||||||||||||||||||||||
| Interest rate | (1,454) | (1,708) | 1,497 | 1,762 | Hapoalim Loan 2023 | ||||||||||||||||||||||||
| Interest rate | (993) | (1,295) | 1,018 | 1,333 | Hapoalim 2024 Loan | ||||||||||||||||||||||||
| Interest rate | (176) | (289) | 179 | 294 |
HSBC Loan
|
||||||||||||||||||||||||
| Interest rate | (738) | (1,213) | 747 | 1,233 | HSBC Bank 2024 Loan | ||||||||||||||||||||||||
| Interest rate | (507) | (759) | 516 | 776 | Discount Loan | ||||||||||||||||||||||||
| Interest rate | (478) | (599) | 491 | 617 | Discount 2024 Loan | ||||||||||||||||||||||||
| Interest rate | (583) | (851) | 593 | 871 | Discount 2024 II Loan | ||||||||||||||||||||||||
| Interest rate | (8,665) | (9,275) | 9,199 | 9,882 | Financing Liability | ||||||||||||||||||||||||
| Interest rate | (2,207) | (2,617) | 2,274 | 2,704 | OFC 2 Senior Secured Notes | ||||||||||||||||||||||||
| Interest rate | (1,389) | (1,909) | 1,422 | 1,965 | Olkaria III - DFC Loan | ||||||||||||||||||||||||
| Interest rate | (762) | (924) | 786 | 960 | DEG 4 Loan | ||||||||||||||||||||||||
| Interest rate | (2,978) | (3,542) | 3,060 | 3,661 | Senior Unsecured Bonds | ||||||||||||||||||||||||
| Interest rate | (149) | (240) | 151 | 245 | DEG 2 Loan | ||||||||||||||||||||||||
| Interest rate | (1,003) | (1,142) | 1,043 | 1,189 | DAC 1 Senior Secured Notes | ||||||||||||||||||||||||
| Interest rate | (1,838) | (2,491) | 1,878 | 2,561 | Senior Unsecured Loan (Migdal) | ||||||||||||||||||||||||
| Interest rate | (769) | (835) | 814 | 886 | Prudential - NV | ||||||||||||||||||||||||
| Interest rate | (485) | (583) | 500 | 603 | DOE Loan | ||||||||||||||||||||||||
| Interest rate | (1,855) | (2,026) | 1,975 | 2,164 | Prudential - Idaho Refinancing Loan | ||||||||||||||||||||||||
| Interest rate | (1,254) | (1,517) | 1,296 | 1,574 | Platanares DFC Loan | ||||||||||||||||||||||||
| Interest rate | (121) | (197) | 123 | 201 | DEG 3 Loan | ||||||||||||||||||||||||
| Interest rate | (18) | (22) | 19 | 22 | Commercial paper | ||||||||||||||||||||||||
| Interest rate | - | (17) | - | 17 | Other long-term loans | ||||||||||||||||||||||||
Effect of Inflation
While inflation has recently slowed to more normal levels, we saw an increase in overall operating and other costs from early 2022 until 2024, as the result of higher inflation rates, in particular in the United States. The inflation rates in the U.S. may rise due to expected changes in the import tariffs. In order to address the possibility of rising inflation, some of our contracts include certain provisions that mitigate inflation risk, such as escalating price provisions built into some of our PPAs.
In connection with the Electricity segment, none of our U.S. PPAs, including the SCPPA Portfolio PPA, are directly linked to the Consumer Price Index ("CPI"). Inflation may directly impact expenses we incur for the operation of our projects, thereby increasing our overall operating costs and reducing our profit and gross margin. The negative impact of inflation would be partially offset by price adjustments built into some of our PPAs that could be triggered upon such occurrences. In our Product segment, inflation may directly impact fixed and variable costs incurred in the construction of third-party power plants, thereby lowering our profit margins at the Product segment. We are more likely to be able to offset long term, all or part of this inflationary impact through our project pricing. With respect to power plants that we build for our own electricity production, inflationary pricing may impact our operating costs which may be partially offset in the pricing of the new long-term PPAs that we negotiate. Interest rates for both short-term and long-term debt have increased in the past five years, although they have decreased slightly recently. Although our outstanding debt mostly bears fixed interest rates, as we refinance it, or borrow additional amounts, we may incur additional interest expense as a result.
Contractual Obligations and Commercial Commitments
We have various contractual obligations, which are recorded as liabilities in our consolidated condensed financial statements. Other items are not recognized as liabilities in our consolidated condensed financial statements but are required to be disclosed. There have been no material changes, outside of the ordinary course of business, to our contractual obligations as previously disclosed in our 2024 Annual Report.
Concentration of Credit Risk
Our credit risk is currently concentrated with the following major customers: Sierra Pacific Power Company and Nevada Power Company (subsidiaries of NV Energy), SCPPA and KPLC. If any of these electric utilities fail to make payments under its PPAs with us, such failure would have a material adverse impact on our financial condition. Also, as we implement our multi-year strategic plan we may be exposed, by expanding our customer base, to different credit profile customers than our current customers.
The Company's revenues from its primary customers as a percentage of total revenues are as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Sierra Pacific Power Company and Nevada Power Company | 12.1 | % | 13.5 | % | 13.7 | % | 15.0 | % | |||||||||||||||
| Southern California Public Power Authority ("SCPPA") | 15.1 | 17.9 | 17.9 | 20.9 | |||||||||||||||||||
| Kenya Power and Lighting Co. Ltd. ("KPLC") | 11.9 | 13.5 | 12.1 | 12.9 | |||||||||||||||||||
The Company has historically been able to collect on substantially all of its receivable balances. As of September 30, 2025, the amount overdue from KPLC in Kenya was $36.3 million of which $11.0 million was paid in October of 2025. The Company believes it will be able to collect all past due amounts from KPLC. This belief is supported by the fact that in addition to KPLC's obligations under its power purchase agreement, the Company holds a support letter from the Government of Kenya that covers certain cases of KPLC non-payment (such as non-payments that are caused by government actions and/or political events).
In Honduras, as of September 30, 2025, the total amount overdue from Empresa Nacional de Energía Eléctrica ("ENEE") was $16.0 million of which $1.0 million was paid in October of 2025. In addition, due to the financial situation in Honduras, the Company may experience further delays in collection. The Company believes it will be able to collect all past due amounts from ENEE.
Government Grants and Tax Benefits
A comprehensive discussion on government grants and tax benefits is included in "Part II - Item 7 - Management Discussion and Analysis of Financial Condition and Results of Operation" of our 2024 Annual Report, as updated by "General-Trends and Uncertainties" in Part I, Item 2 of this quarterly report on Form 10-Q.
Ormat Technologies Inc. published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 17:59 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]