Enlight Renewable Energy Ltd.

Good day and thank you for standing by. Welcome to the Enlight Renewable Energy fourth quarter and year end 2023 financial results conference call. 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 one and one 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, Josef Leskovec. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining our fourth quarter and full year 2023 earnings conference call for Enlight Renewable Energy. Before beginning this call, I would like to draw participants' attention to the following. Certain statements made on the call today, including but not limited to statements regarding business strategy and plans, our project portfolio, market opportunity, utility demand and potential growth, discussions with commercial counterparties and financing sources, pricing trends for materials, progress of company projects including anticipated timing of related approvals and project completion and anticipated production delays, expected impact from various regulatory developments, completion of development, the potential impact of the current conflict in Israel on our operations and financial condition, and company actions designed to mitigate such impact, expected changes in Clinera's leadership, and the company's future financial and operational results and guidance, including revenue and adjusted EBITDA, are forward-looking statements within the meaning of U.S. federal securities law, which reflect management's best judgment based on currently available information. We reference certain project metrics in this earnings call, and additional information about such metrics can be found in our earnings release. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our 2022 annual report filed with the SEC on March 30, 2023, and other filings for more information on the specific factors that could cause actual results to differ materially 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 earnings call, which are posted on our investor relations webpage. With me this morning are Gilad Yavit, CEO and co-founder of Enlight, Nir Yudas, CFO of Enlight, Jason Ellsworth, CEO and co-founder of Clonera, and Adam Fischel, COO and co-founder of Clonera. Gilad will provide some opening remarks and will then turn the call over to Jason and Adam for review of our U.S. activity, and then to Nir for our review of our fourth quarter and full year results. Our executive team will then be available to answer your questions.

Thank you all for joining us today for Enlight's fourth quarter and full year 2023 earnings call. In 2023, we continue to deliver on the Enlight story, above-market growth and above-market project returns. Moreover, we build the necessary foundation to take the next major step in 2024 and beyond. And light is now on the cusp of another major expansion as we begin the construction of several flagship solar and storage projects, particularly in the United States. I will first review the important achievements we've made in 2023, and we'll then describe our outlook into 2024 and beyond. Let's start with our strong full-year 2023 financial results. Revenue for the whole of 2023 grew 33% over last year to $256 million. Net income grew 157% to 98 million, and adjusted EBITDA grew 45% to 189 million annually. We also saw significant growth in our operating cash flow, which reached $150 million for the full year, an increase of 66% over 2022. In the fourth quarter, revenue grew 21% over last year to $74 million. Net income grew 48% to $16 million, and adjusted EBITDA grew 8% to $47 million. Overall, we delivered strong growth and profitability in 2023. even amidst a challenging macroeconomic backdrop. Driving the growth in our financial parameters was our project addition. In 2023, we connected over 480 megawatts across Israel, Europe, and the U.S., a growth of 33 percent. This included Genesis Wind in Israel and Apex Solar in the U.S. while we also ramped up production at Bjornberget in Sweden. As of today, we have 1.9 gigawatts of operational duration, as well as our first operational storage project with a capacity of 277 megawatt hours. This result testifies to the strength and resilience of Enlight geography and technology diversification, combined with our developer-plus IPP model. As a result, we benefit from recurring and growing income from our IPP, while our greenfield development activity fuels continuous growth at high returns. In 2023, we also saw a rapidly improving outlook for electricity demand. Electricity demand is rising in the US for the first time in two decades, driving increased PPA pricing. Moreover, equipment costs have come down significantly, while the cost of finance is now in decline. As a result, we expect to see continued demand for our projects at attractive returns. We demonstrated that in 2023, by successfully amending PPA pricing upwards from over 1.8 gigawatts by an average of 25 percent, while assigning new PPAs at even higher levels. Our pipeline of large-scale projects and competitive access to the grid allows us to continue to capitalize on the need for electricity with favorable prices. At the same time, panel and battery pricing fell considerably throughout the year. These trends have continued to consolidate in the fourth quarter. Higher PPA pricing and lower construction costs contributed to the improving project returns. which we expect to reach 10% on an unlevered basis for project-reaching COD between 2024 and 2026. On top of that, in the fourth quarter, we saw nearly 70 base points decline in interest rates. When overlaying this with our unlevered project returns of 10%, we can generate average levered equity IRR in the mid to high tens, and in some cases, even higher. In 2023, we also continued to convert additions to our material portfolio. Our greenfield development teams converted 871 megawatts and 2.7 gigawatt hours from our large development pipeline into material projects. The additions included several major flagship projects in the United States, such as Roadrunner and Country Acres, which will commence construction in 2024. And finally, substantial financing is required to sustain and accelerate such growth. And in 2023, we successfully raised capital from a diverse set of sources. Given the constrained financing environment, this constitutes a notable achievement. We raised $271 million in equity through an IPO on the NASDAQ at the start of the year. and secured over half a billion dollars in project finance and tax equity. Also important was the completion of our first asset sell-down in the U.S. and some sell-downs in Israel, totaling $19 million. While these initial disposals were small, this set the precedent for sell-downs to become an increasingly important source of funds in the future. To sum up, 2023 was a year in which Enite delivered on its above-market growth and above-market return score. We secured various sources of financing, expanded the portfolio of projects to be built in the near term, and improved future project returns, all amidst a challenging macroeconomic environment. Looking to 2024, we forecast further revenue growth and profitability. We expect to add 543 megawatts of generation and 1.6 gigawatt hours of energy storage to our operational assets, among them a TRISCO project in the U.S. This represents our major move into energy storage with 580% growth in this segment. Moreover, we expect to commence construction on upwards of 1 gigawatt and 2.9 gigawatt hours of capacity in 2024, which reflects an over 55% increase on our current operational generation and 1,040% increase on our operational storage. This includes major projects such as Roadrunner, Country Acres, and Quail Ranch in the U.S. Hekama Hybrid in Spain, and several standalone storage projects in Israel and Italy. In total, including Atrisco, these projects are expected to generate $307 million in revenue and $221 million in EBITDA in their first full year of operation. This is a massive step in the growth of the company, and therefore, execution of this project is our highest priority. These new builds will also help diversify and light current geographical mix, introducing significant U.S. exposure while adding a major element of solar and storage to our technological mix, which is largely wind today. In 2024, we also expect to convert more of our large development pipeline into mature projects. Examples of this include our unique portfolio of solar and storage in PJM, in the U.S., totaling 1.4 gigawatts and 2.2 gigawatt hours of storage. This project, which benefits from exceedingly lower interconnection costs, has been moved to PGM's interconnection fast track, significantly easing their path to further development. In addition, we have additional large-scale solar and storage projects across the Western U.S. and wind projects in Europe that are approaching maturity. The depth and breadth of our development pipeline is a strategic resource for Enlight. With 15 gigawatts and 25 gigawatt hours of storage of potential, it ensures that we maintain a sizable buffer of imminently available mature projects on which we can work. Finally, it is important for me to stress that with the capital we raised last year, we have all the equity needed to fund 2024's We will have to secure significant project finance commitments. However, the success in raising project finance during 2023 provides us with confidence that we will achieve this. With macroeconomic conditions now more settled, our all-in interest rate for project finance now stands at 5.25% to 5.75%. In 2024, we also plan to execute large asset sell-downs, either of minority or majority stakes in the U.S. project, further underpinning the company's financial position. As Enlight continues to grow, our ability to sell finance also gathers steam. A larger IPP provides more operating cash flow, while additional conversion of projects increases the potential for sell-downs. Both these represent sources of funds for future growth, and when combined with our extensive pipeline of development projects, provide a path for growth without the need for external capital. Turning to our 2024 guidance, we expect revenues between $335 million and $360 million, 36% higher than in 2023 at the midpoint, and adjusted EBITDA between 235 million and 255 million, 30% above that of 2023 at the midpoint. Growth continues to be robust as we add new projects to our operational portfolio. Nir will describe in detail the assumptions that underlie this guidance later in the course. To tie it all together, In 2024, Enlight will harness its resources to grow considerably in all markets, but especially in the U.S. And as before, we aim to continue delivering on our two-fold objective, above-market growth and above-market product returns. Before handing the call over to Jason for his remarks, I'd like to comment on the CleanEURA leadership transition we announced in January. After more than 10 years at CEO of Clinera, Jason accepted a call from the Church of Jesus Christ of Latter-day Saints to serve as a full-time mission president in Chile. He will leave his post with Clinera at the end of June. Clinera's COO and co-founder, Adam Pischel, will assume the role of CEO. Adam is an amazing leader and responsible for building Clinera beside Jason during the last 10 years. We anticipate a smooth transition over the next six months as Adam and the amazing Glinera leadership team remain and continue to move the company and its projects forward. I thank Jason for his leadership and expertise in creating and cultivating Glinera. His vision, leadership, and tireless work, coupled with his talented and dedicated, propelled the company to make a huge impact on the U.S. renewable market. Adam has always been a big part of CleanAira's success, and I'm fully confident in his skills, experience, and leadership, and his ability to take CleanAira to the next level, which we at Enlight shall continue to support and accelerate. Jason?