Ormat Technologies Acquires Geothermal and Solar Portfolio for $274.6 Million

Ormat Technologies acquires Enel Green Power North America's geothermal and solar power plants for $274.6 million, expanding generation capacity and improving profitability. Ormat reports strong Q1 2024 financial results, driven by improved operating performance and growth across all three segments.

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Aqsa Younas Rana
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Ormat Technologies Acquires Geothermal and Solar Portfolio for $274.6 Million

Ormat Technologies Acquires Geothermal and Solar Portfolio for $274.6 Million

Ormat Technologies, Inc., a leading geothermal and renewable energy company, has acquired a portfolio of geothermal and solar power plants from Enel Green Power North America for $274.6 million. The acquisition, which closed on January 4, 2024, is expected to expand Ormat's generation capacity and improve profitability through cost reduction and synergies.

Why this matters: This acquisition marks a significant step towards increasing the global renewable energy capacity, contributing to the fight against climate change. As the world transitions towards cleaner energy sources, deals like this will play a crucial role in shaping the future of the energy industry.

The acquisition aligns with Ormat's strategic objectives, enhancing its capabilities and competitiveness in the renewable energy industry. The deal marks a significant milestone in the company's growth strategy, solidifying its position in the global energy market.

Ormat delivered strong financial results in the first quarter of 2024, driven by improved operating performance and continued growth across all three segments. Total revenues increased by 21% year-over-year, with a 25.5% rise in earnings per diluted share and a 14.4% increase in adjusted EBITDA compared to the first quarter of last year.

Organic growth contributed more than 50% of the increase in revenues and EBITDA, fueled by the successful execution of Ormat's strategic plan and enhanced operational efficiency at existing facilities. CEO Doron Blachar stated, "During the first quarter, Ormat delivered strong financial results driven by improved operating performance and continued growth across all three segments."

The acquisition added 130 megawatts of new generating capacity, which, combined with the potential uplift from Ormat's successful drilling campaign in Kenya, positions the company to meet its long-term capacity expansion goals and financial targets for 2024 and beyond. Blachar emphasized, "The first quarter results were fueled by organic growth that includes the successful execution of our strategic plan and enhanced operational efficiency at existing facilities, which together contributed more than 50% of the increase in revenues and in EBITDA."

Ormat's market capitalization stands at $4.16 billion USD, with a P/E Ratio of 31.2, which decreases to 30.68 when adjusted for the last twelve months as of Q1 2024. The company is trading at a low P/E ratio relative to near-term earnings growth, with a PEG Ratio for the last twelve months as of Q1 2024 at 0.43, indicating a high earnings growth rate compared to its P/E ratio.

Theacquisitionof Enel Green Power North America's portfolio of geothermal and solar power plants for $274.6 million represents a significant step forward for Ormat Technologies, Inc. With expanded generation capacity, improved profitability, and strong financial performance, Ormat is well-positioned to continue its growth trajectory in the renewable energy sector. The company's commitment to delivering value to shareholders is evident in its 20 consecutive years of dividend payments, underscoring its financial stability and long-term vision.