Ormat TechnologiesORA

Key highlights

• Energy storage revenue surge: Revenue from the energy storage division nearly tripled, jumping 195.1% to $42.8 million as the company added new capacity and took advantage of high prices in the energy market. This segment now accounts for 16.5% of total sales compared to just 6.2% a year ago, showing the company is successfully diversifying beyond its core geothermal power plants.
• Full year outlook raised: Management increased its 2026 revenue guidance to a range between $1,150 million and $1,200 million, while also raising its target for adjusted earnings before interest, taxes, and other items to between $630 million and $650 million. This higher forecast signals confidence that strong demand for renewable power will outweigh recent project write-offs.
• Product segment margins squeezed: Gross margins for the product segment, which includes building power plants for others, fell to 9.7% from 27.7% a year ago due to high construction costs on a European project and currency shifts. While this segment's revenue dropped 21.6% this quarter, the company maintains a $202.8 million order backlog to support future work.
• Generation capacity expanding: The total generating portfolio reached 1,850 MW following the addition of 155 MW from new solar, geothermal, and storage sites since the start of the year. This steady expansion is backed by 202 MW of new electricity projects currently under construction, all of which have long term contracts in place to sell the power they produce.

Our take: This was a strong quarter that proved the company's expansion into energy storage is paying off. Triple digit growth in storage revenue more than offset temporary weakness in the construction business, and the raised full year guidance suggests the momentum is sustainable. The core business remains healthy and continues to build the long term scale we look for.