Enlight Renewable Energy Ltd.

Good day and thank you for standing by. Welcome to the Enlite Q4 2022 earnings call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Joseph Lefkowitz, VP of Corporate Finance and M&A. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining our fourth quarter and full year 2022 Earnings Conference Call for Enlight Renewable Energy. With me this morning are Gilad Yavitz, CEO and co-founder of Enlight, Nir Yehuda, CFO of Enlight, and Jason Ellsworth, CEO and co-founder of ClinAir. Gilad will provide some opening remarks and will then turn over the call to Nir for a review of our fourth quarter and full year results, and then to Jason for a review of our U.S. activity. Our executive team will then be available to answer your questions. Certain statements made on the call today, including but not limited to statements regarding business strategy and plans, our project portfolio, market opportunity and potential growth, completion of development, and the company's future financial and operational results and guidance, including revenue and adjusted EBITDA, may be forward-looking statements which reflect management's best judgment based on currently available information. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our earnings release for more information on the specific factors that could cause actual results to materially differ from our forward-looking statements. Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. Additionally, non-IFRS financial measures may be discussed on the call. These non-IFRS measures should be considered in addition to and not as a substitute for or in isolation from our results prepared in accordance with IFRS. Reconciliations to the most directly comparable IFRS financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on our investor relations webpage. With that, I will turn the call over to Gilad.

Thank you, Yosef, and thanks all for joining us today. We are very excited to announce strong results in our first early conference call at the U.S. public company. We delivered both record annual and quarterly results, continuing to demonstrate our track record of converting projects from development to operation. In 2022, we succeeded in connecting 810 megawatts over the course of the year. These successful conversions and strong performance across our business drove record financial results in 2022 with revenue up 88% to $192 million and adjusted EBITDA up 96% to $130 million. In addition, we sold $80 million of electricity, which was not recognized under IFRS as revenue or adjusted EBITDA for our project, treated as financial assets. As a result, the IPC arm of the business is already generating material cash flow, the company generated $90 million of cash flow from operation in 2022. Before we dive deeper into numbers, since this is our first earning call as a U.S. public company, I wanted to take a few minutes to talk about Enlight and what we believe makes us unique. First off, we are a true Greenfield developer of utility-scale renewable energy projects. Our Greenfield development expertise enables us to source projects from scratch, organically, and control the full project lifecycle. We source land, find scarce interconnection, manage complex relationships with local communities, find offtake for power, and ultimately construct, own, and operate our projects over the long run. This approach has helped us to achieve market-leading project returns. which we have demonstrated over the past decade, having successfully developed four gigawatts of power. Second, we believe we are in the right market at the right time. Our unique footprint across the U.S., Europe, and Israel provides exposure to some of the fastest growing renewable markets in the world. We believe our U.S. portfolio, which is largely located in the western part of the country, is well positioned to benefit from the game-changing Inflation Reduction Act. In addition, we believe our European portfolio, located across nine different countries, is positioned to benefit from the high power price environment in increasing urgency from the European Union to accelerate the energy transition. Third, we have significant portfolio diversification, not just in geography, but in technology and revenue structures. We are not only in solar, but are experts in working in solar, storage, and wind. We are not 100% contracted, but we are not overly exposed to merchants. This provides us with clear visibility on our cash flow through long-term PPAs, together with upside potential through select merchant exposure in Europe. Finally, we believe we have a cost capital edge. Through the credibility we have built, having successfully developed four gigawatts of projects, we've been able to cultivate the appetite of institutional partners on a global basis over the years. This is giving us access to what we view as a competitive cost of capital, which has amplified our equity returns. As the first pure play utility scale developer to be publicly traded on a national exchange in the U.S., we aim to deliver value for our shareholders by continuing to deliver on our two-fold objective, executing on above-market project returns and above-market growth. As many of you know, we have been a public company in Israel for the past decade and have produced very strong results and shareholder returns. We were very gratified by the response to our U.S. IPO. We intend to be very active on the investor relationship vector in the U.S. market and to deliver the same level of transparency and engagement Moving now to the fourth quarter of 2022 and full year end results. In short, Enlight had a terrific year and we believe the business has never been better positioned. The year was characterized by two main themes. One, the successful conversion of the project portfolio and two, the optimization and de-risking of project returns. Starting from conversion, In 2022, we succeeded in connecting 810 megawatts over the course of the year, including Hakama, the largest wind farm in Spain, Emeka Bacha, the largest operational wind farm in Israel, and gradually Bjorn Berget, one of the largest wind farms across Europe, which we expect to reach full CLD by the end of Q2 2023. Similarly, we continued not only convert projects to operations, but also progress projects to the start of construction. In 2022, we commenced construction on 630 megawatts of generation capacity and 1.7 gigawatt hour of storage. This included Atrisco Solar, our flagship solar and storage project in New Mexico. We now have 1 gigawatt of generation capacity and 1.7 gigawatt hour of storage capacity under construction, which provides clear visibility on our future performance through 2024 as projects come online. Finally, we expanded our mature project portfolio by nearly 0.9 gigawatts of generation capacity, over 20% this year through our successful development efforts in the U.S. and Spain. As a reminder, our mature portfolio includes operational projects, projects under construction, projects in pre-construction, meaning those due to commence construction within a year of today's date, and projects with signed PPAs. These are portfolio projects that we consider largely and relatively . With a total mature product portfolio of 4.5 gigawatts generation and 2.7 gigawatt hour of storage, all of which is expected to be operational by the end of 2025, we see a clear path for the future of our business. Moving to the second theme, this year, we successfully managed to navigate a volatile macro environment, which included supply chain challenges and overall cost inflation. We secured increases in PPA prices of around 17 to 25% for projects totaling around 1 gigawatt. These price increases enabled us to offset the return compression we had seen from increased capex and financing costs. We are currently in advanced negotiation with off-takers to increase the PPA price for an additional 900 megawatts of contracted products. Our ability to secure these price increases is driven by the strategic interconnection position of our project. Off-takers lack energy and capacity, as there are very few large-scale renewable energy projects that can meet their procurement needs, even jammed interconnection queues. Our projects, which are advanced from an interconnection perspective and of significant scale, offer utilities the solution they need. As of this release, we have nearly 8.5 gigawatts past system impact study, which we believe is a unique position in the U.S. market. On supply chain, we believe we have been ahead of the curve, particularly in the U.S. Our first project, Apex Solar, was sourced with solar panels from Wari, a tier one Indian supplier, and we continue to receive deliveries to the project site. We have since expanded our relationship with Wari and now have the ability to purchase up to two gigawatts from Wari for our U.S. portfolio through 2025. Similarly, on battery, we have acquired utility-scale battery solutions from a U.S.-based supplier. This will enable us to benefit from the domestic content adder on storage, a unique advantage in battery where there are very few US-based suppliers. Looking to 2023 and beyond, we benefit from what we see as healthy adjusted PPA prices, de-risk supply chain, material regulatory benefits, and certainty past the IRA and repowering EU, and a substantial pipeline of advanced development projects In addition to the mature portfolio, which totals 4.2 gigawatts, we are also seeing significant demand for battery storage, especially from off-takers in Western U.S. Battery helps us accelerate our growth and increase project returns on the same development efforts. These are all tailwinds for business. Based on the positive trends, in the business and the factors I described, we are increasing our mid-range annual deployment guidance from 1 to 1.2 gigawatts per year to 1.5 gigawatts per year, starting from 2026 and beyond. Over time, we also expect that the U.S.-based project will represent at least 50% of our business. I'll now hand it over to Nir to discuss our results and 2023 outlook. Thank you, Gilad. Before I provide an update on 2022 performance and 2023 guidance, I would like to discuss some of the recent volatility in the Israeli financial market over the past few weeks, which has been driven by political uncertainty around the proposed judicial reform. While Enlight is headquartered in Israel, ultimately we are largely an international company. For former 40 IPOs, 81% of the company's cash as of year end was held in dollars or euros. In the fourth quarter of 2022, approximately 80% of our revenues were denominated in either euros or other European currencies. We have limited exposure to the Israeli shekel, which reflects the growing part of our business in Europe and the U.S. And it's important to note that we have not made any deposits or other investments with Silicon Valley Bank, and to the best of our knowledge, have no exposure to it. In the fourth quarter of 2022, the company's revenue increased to $61 million, up from $35 million in the same period in 2021. The growth was mainly driven by the addition of new projects, including Hakama, Emeka Baha, and Selak, which contributed an additional $32 million in the fourth quarter, and the recognition of all profits from the sale of electricity by the Halut Yod project from the second quarter of 2022 as revenue following its reclassification, which contributed an additional $2 million to revenue in the fourth quarter. This positive impact was partially offset by lower production and one-time events, which reduced availability, that had a 6 million impact, and weaker effects, which had a 3 million impact. In addition, we saw 2 million of electricity in projects treated as financial assets in the quarter, which under IFRS we are required to account for as a financing income or other non-PNL metrics. And in the full year 2022, the company's revenues were 192 million versus 102 million in the full year 2021. The increase in revenues was mainly driven by the addition of new projects, which contributed an additional 86 million, the reclassification of , which contributed an additional 12 million and 2 million from PPI inflation indexation. This positive impact was partially offset by lower production and one-time events, which reduced availability, that had an 8 million impact, and weaker effects, which had a 6 million impact. In addition, we sold 18 million of electricity from projects treated as financial assets in 2022, which under IFRS, we are required to account for as financial income or other non-P&L measures. In the fourth quarter of 2022, the company's adjusted EBITDA almost doubled to 43 million compared to 22 million for the same period in 2021. The increase was driven by the same factors which affected our revenues increase in the same period. For the full year 2022, the company adjusted EBITDA also nearly doubled to 130 million compared to 66 million in 2021. The increase was driven by the same factor which affected our revenue increase in the same period that was offset by an additional $8 million from corporate overhead expenses. I would like also to reiterate Gilad's comment on the company's growing cash flow. For the full year 2022, the company reported $90 million of net cash from operating activity 52 million for the same period in 2021, an increase of 73 percent. Our IPP arm is beginning to generate substantial cash flow, which will help finance our growth going forward. Moving to 2023 guidance, we are pleased to issue our outlook for 2023, including revenues between 290 million and 300 million. Adjusted EBITDA between 188 million and 198 million. 1.8 gigabyte operational by year end 2023. Our guidance for 2020 is based amongst other on the following assumptions. Full COD of VON by end of Q2 2023. Genesis wind to reach COD by end of Q3 2023. Epic solar to COD by the end of Q2 2023, error to U.S. dollar of 1.04, and U.S. dollar to shekel of 3.65. It is important to note that our adjusted EBITDA estimate does not include the tax credit to be received at the COD of Apex Solar. We also note that following the reclassification of the Halut Yod project, we still expect proceeds from the sale of electricity generated from the project treated as financial assets that are not reflected as revenue or adjusted EBITDA, to reach approximately $15 million in 2023. We are pleased to also share project tables at the back of our earnings release and in Excel format on our website. These tables provide significant detail on our mature project portfolio, particularly projects under construction and pre-construction. We hope to provide best-in-class transparency on our business. It is important to note that our adjusted EBITDA estimate per project does not include tax credit recognition and possess forward looking information, which is subject to the disclaimer provided in our earning release and in our project statement. I will now hand it over to Jason, who will get into detail a bit more on our U.S. project.