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spk05: Good day and thank you for standing by. Welcome to the Enlight's second quarter 2024 earnings call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Yonah Weiss, Director. Please go ahead.
spk11: Thank you, operator. Good morning, everyone, and thank you for joining our second quarter 2024 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 conflicts in Israel on operations and financial condition and company actions designed to mitigate such impact, 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 laws, 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 2023 Annual Report, filed with the SEC on March 28, 2024, 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 call, which are posted on our investor relations webpage. With me this morning are Gilad Yavetz, CEO and co-founder of Enlight, Nir Yehuda, CFO of Enlight, and Adam Pischel, CEO and co-founder of Clonera. Gilad will provide some opening remarks and will then turn the call over to Adam for a review of our U.S. activity and then to Nir for a review of our second quarter results. Our executive team will then be available to answer your questions.
spk17: Thank you, Yona, and thank you all for joining us today. Enlight continues to deliver excellent performance as we progress through 2024, and we are pleased to present a very strong set of financial results for the first half and second quarter of 2024. Comparing the first half of 2024 to the same period in 2023, revenue grew 42% to $175 million, adjusted EBITDA grew 33% to $126 million, net income dropped to $34 million, and cash flow from operation was lowered by 4% to $91 million. On a quarter-to-quarter basis, compared to last year, revenue was up 61% to $85 million, and adjusted EBITDA grew 39% to $58 million. Net income was $9 million versus $22 million, driven by inflation indexation impacts and the Clean Era earn-out calculation, which Shani will explain in more detail later on, while cash flow from operation rose to $56 million, up 42%. On the back of these results, we are pleased to increase our full year 2024 guidance ranges. We now expect 2024 revenues of $345 million to $360 million, up from $330 million to $360 million, while we now expect 2024 EBITDA of $245 to $260 million, up from $235 to $255. This represents an increase of $5 million and $7.5 million at the midpoint, respectively. Enlight is now in the midst of delivering on its major expansion plan, and we continue to execute on the build-out of our mature portfolio. From the beginning of 2024, we have completed construction on 0.5 gigawatt and 1.4 gigawatt hour of capacity, including our flagship Atrisco Solar and energy storage project in New Mexico. This capacity is expected to contribute $71 million in revenues and $56 million in EBITDA on a full year basis. In the next two quarters, we will start with construction capex on 810 megawatts and more than 2 gigawatt hour at three additional projects in the US, which are expected to contribute $132 million in revenues and $106 million in EBITDA on an annual basis when fully operational. In the next three years, our global generation and storage capacity will triple, reaching 5.4 gigawatts and 5.9 gigawatt hours by 2027. The United States is now experiencing a transformation in electricity demand. Power consumption is rising fast, And it's estimated that two-thirds of the growth in the U.S. power demand till the end of this decade can be attributed to the electricity needs of data centers, AI, and electric vehicles alone. This is being reflected in higher PPA prices. Enlight is uniquely positioned for a tight power market environment with a broad set of projects that are deliverable in the short to medium term. These include our flagship Atrisco project with 364 megawatts and 1.2 gigawatt hour capacity located in New Mexico, where we have recently achieved financial close for the energy storage portion of the complex for more than $400 million in loans and tax equity. This completes the financing for the entire Atrisco complex with the solar portion financed in December 2023. Atrisco construction has been completed with the gradual commencement of the solar component planned to begin in the coming weeks. We expect full COD of the co-located solar and energy storage complex to be reached by the end of the year. We are also beginning to build additional capacity in the western U.S. with country acres, quail ranch, and roadrunner, three major projects totaling 810 megawatts and 2.0 GWh capacity. We are now completing development and expect construction capex to begin by the end of 2024. Equipment prices remain favorable, with panels and battery prices having fallen by around 25 to 30% from the start of 2023. All these factors create extremely beneficial tailwinds for the project that we will be building between now and 2027, which we expect to yield an attractive unlevered return of approximately 10.5%. Adding in financing between 5.5% to 6% results in leveraged returns in the need to high TINs. Our European projects are benefiting from robust market conditions. Spanish electricity prices now in the 60 to 70 euro range are resulting in excellent financial performance at Hekama. The profitability of this project is well above what we modeled when we first planned it, and we have already recovered half of our equity investment in the past three years. We have hedged 65% of Hekama's anticipated 2024 generation for 100 euro per megawatt hour, and have already begun billing up a hedge for 2025, which so far covers 45% of next year's output at a price of 64 euro per megawatt hour. Hekama continues to excel on an operational level, with generation volumes up 14% and 17% for the second quarter of 2024 and first half 2024, respectively, when compared to the same periods last year. Construction at Project Pupin in Serbia continues on pace, with turbines now being delivered and installed on site. This 94 MW wind farm achieved financial close last quarter and is scheduled to reach COD during the second half of 2025. Finally, Tepolsa, a 60 MW fully merchant solar project, began operation on schedule at the end of July, marking the completion of our fifth project in Hungary. Enlight keeps on broadening its presence in Israel. Yesha and Reem, two projects that are part of the 248 megawatts and 593 megawatt-hour Israel solar and storage cluster, reached COD during the second quarter. The cluster is approaching its full capacity with three more projects left to be completed during 2024. We also received approval for 200 megawatts of additional interconnect to Israel's national grid which will be used to expand the offtake of existing projects as well as support the launching of new ones. On the commercial side, we continue to expand our reach into Israel's newly deregulated power sector. Our joint venture with Electropower to supply electricity to the country's household sector was formally launched in July, and we signed five additional PPAs with industrial customers. To sum up, This quarter showed strong financial performance, which is reflected in our results, and increased guidance ranges. The U.S. market presents a compelling opportunity to drive and light rapid growth. Power demand continues to rise, while equipment costs remain low, resulting in higher PPA prices and attractive project returns. We continue to progress with our development goals and project CODs on a global scale, and it is exactly such an environment which position Enlight to realize its dual goal of delivering higher-than-market growth at higher-than-market returns. I'd now like to hand the call over to Adam.
spk30: Thank you, Gilad. Enlight and Clean Air continue to deliver on our rapid expansion strategy in the U.S. renewable energy market. We are currently focused on commissioning the Atrisco project, as well as financing and starting construction on the Quail Ranch Roadrunner, and Country Acres projects. Together, these four projects total approximately 1.2 gigawatts of solar and 3.2 gigawatt hours of energy storage capacity. Let us begin with a closer look at Atrisco. This project has a capacity of 364 megawatts of solar and 1.2 gigawatt hours of energy storage and is one of the largest battery projects in the U.S. The first portion of the solar facility is expected to be connected to the grid imminently, and we expect the remaining solar and energy storage components to be connected and achieve COD later this year. In addition, we recently reached financial close on the energy storage portion of the project, receiving more than $400 million of debt and tax equity from top tier lenders, including HSBC and U.S. Bank. This financing from the world's leading banks demonstrates the quality of our projects and our ability to fund our growth. We are proud to have earned their trust and are excited to build upon these key relationships. As Atrisco nears completion, we continue to focus on Country Acres, Quail Ranch, and Roadrunner. These projects total 810 megawatts of solar and over two gigawatt hours of energy storage capacity. All three projects are nearing construction. Development of country acres, a 392-megawatt energy and 688-megawatt-hour battery project in California is progressing, and we are finalizing details with the utility. Quail Ranch, a New Mexico project, is a 128-megawatt solar and 400-megawatt-hour storage brownfield expansion of Atrisco. It awaits regulatory and legal approval of the PPA and ESA agreements. Roadrunner is a 290 megawatt solar and 940 megawatt hour energy storage project in Arizona. It is currently awaiting government permits ahead of construction. We are also excited to highlight our CO bar complex in Arizona. The CO bar complex is currently made up of three projects totaling 1.2 gigawatts of solar, and 824 megawatt hours of energy storage, with the potential to expand the energy storage portion to an additional 3.2 gigawatt hours, making it the largest complex we have announced in the U.S. The project has been delayed due to the interconnection queue reform announced by APS in the third quarter of 2023. This process is still ongoing, and we continue to work with the utility to help enable completion of the interconnection facilities as rapidly as possible. The energy market continues to provide compelling support for our project fundamentals. Increased demand for renewable energy is reinforcing PPA pricing, which reflects the scarcity of new projects. Both solar module and battery prices are lower than at the beginning of last year. Additionally, there is some indication interest rates may begin to drop, which would have a positive impact on our cost of finance. Our relationship with suppliers remains strong, and we have been able to adapt to the new ADCVD framework. For example, one of our key panel suppliers has relocated cell production to non-affected Southeast Asian countries, which enables a stable supply of modules for future projects. In light of the current U.S. regulatory environment, we are expanding relationships with suppliers to further diversify our supply chain and pursue more domestic content qualifications. These important partnerships, our ability to adapt to changing market conditions, and continuing to deliver high-quality projects are propelling our U.S. expansion strategy. I'd now like to turn the call over to Nir for a review of our quarterly results.
spk14: there thank you adam in the second quarter of 24 the company's revenues increased to 84 million up from 53 million last year a growth rate of 61 percent year over year growth was mainly driven by new projects compared to last year as well as higher production in inflation indexation at some of our operational projects in the second quarter of 23 where new projects in the U.S., Hungary, and Israel started selling electricity. The most important of these is Genesis Wind, which contributed $10 million to revenue, followed by the Israel Storage and Solar Cluster, which added an additional $6 million. Bjorn Bed, which sold limited amounts of power during the second quarter of 2023, contributed $5 million in this quarter. The TAMA revenue increased 37% year-over-year to $13 million, as the project benefited from positive pricing and production trends. We sold electricity at an average of 71 euro per megawatt versus 58 euro per megawatt for the same period this year, while production was up 40% from the same period last year. The average price realized through our hedging strategy was 85 euro per megawatt, covering 70% of the quarter production. Current market conditions have significantly streamed up, with prices in the range of 60 to 70 euro per megawatt. Finally, the reclassification of financial asset projects in Israel, the fixed asset project boosted revenues by 5 million. Second quarter net income decreased from 22 million last year to 9 million this year, a decline of 58%. percentage year-over-year. The impact of new projects added $6 million. In addition, we experienced a significant inflation impact on our second denominated debt, which resulted in a non-cash financial expense of $5 million. We also expect revenues to rise higher due to the index linkage for the majority of our electricity PPAs in Israel, which we reflected in our financial statement starting for 2025 onwards. Overall, this represents a net benefit to the company. The reclassification of the financial assets reduced financial income by $3 million. In addition, other income in the second quarter of last year was higher by $10 million net of tax due to one-off benefits linked to change in Clean Era A&R calculation and recognition of LDs from Siemens Gamesa due to the delay in reaching full production at Project Buremberg. In the second quarter of 24, the company adjusted EBITDA grew by 39% to $58 million compared to $42 million for the same period in 23. On the whole, adjusted EBITDA growth was driven by the same positive factor which affected our revenue growth and which contributed $24 million. Note that adjusted EBITDA for the second quarter of 23 was boosted by $8 million from recognition of NDIS compensation. Looking to our balance sheet, Enlight achieved the major financial closing of Atrisco Energy Storage in the U.S. at the end of July. We raised $407 million in term loans and tax equity for the construction of energy storage component of the project. When adding the $303 million raised at the financial close of the solar portion in December 23, the total financing and tax equity amounted to $710 million for the entire solar energy storage complex. Financial and tax equity arrangements for the entire Atrisco project are now complete. We also recycled $234 million of the access capital back to Enlight as a result of this transaction. This fund will be used to propel Enlight's future growth forward. In addition, Enlight has $320 million of revolving credit facilities at Israeli banks, of which $170 million has been drawn as of the publication of this report. Moreover, in the second quarter of 24, cash flow from operation was $56 million, an increase of 42% year-over-year. Moving to 24 guidance, given the strong set of results we delivered for the second quarter and first half of 24, we are raising our financial outlook for the year. On the back of sound operational performance as well as OMM and SG&A cost savings, Our range for 24 revenue guidance rises to 345 to 360 million from 335 and 360 million previously. And our adjusted EBITDA guidance range rises to 245 to 260 million from 235 and 255 million previously. This represents an increase of 5 million and 7.5 million from previous midpoints respectively. and further demonstrate the financial strength of the company as it continues to deliver rapid growth and expansion.
spk15: I will now turn the call over to the operator for questions.
spk04: Thank you.
spk05: To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A queue. Our first question comes from the line of Justin Clare from Roth Capital Partners. Please go ahead. Your line is open.
spk02: Hi. Thanks for taking the question. So first off, I was wondering if you could just share how much of your capacity that is currently planned for completion through 2027 is uncontracted at this point. And maybe if you could just talk about your strategy for contracting the remainder of your open capacity. Sure, when you might be able to sign PPAs for the uncontracted amount. And then just, you know, do you anticipate PPAs likely to be above where you've contracted other assets recently? It sounds like PPA prices are continuing to move upwards. Maybe just comment on what you're seeing there.
spk17: Jonah, why don't you take this question and Adam can compliment you.
spk11: Justin, hi there. Thanks for your question. At this point, most of our projects are contracted. We do have some open PPAs on the far end of our mature portfolio. However, the important thing to point out here is that our advanced development portfolio which is, again, a bit further out than our mature portfolio, is completely uncontracted. And we do have a sense, given the demand that we see in the United States, that PPAs will remain at the levels that we see today and have potential for increases.
spk30: Yeah, thank you for your question, and thank you, Yannick. Just to add a little bit of color there, certainly those PPAs we expect to continue to be at this level or higher in the future. We are actively, with some of the projects that we currently have, actively renegotiating PPA prices and receiving higher rates than were previously contracted as well.
spk02: Okay, great. And then maybe just shifting to the supply chain here, you know, I was wondering if you could just share where you are in the procurement process as we look at Quail Ranch, Roadrunner, Country Acres. It sounds like you do have a cell supplier now that's manufacturing in countries that are unaffected by the ADCD, the new framework that was put in place. I'm wondering, you know, Is that supplier currently in the process of ramping up new manufacturing facilities? Is supply available today? And then maybe you could comment on just where you're seeing module prices for U.S. projects. Has that moved upward since the introduction of this new ADCVD framework?
spk17: Yeah, I can start, and then Adam, you can compliment me if you like. Hi, it's Vilad. So in general, as you asked, as you said in your question, so we have secured the line of supply for panels for three projects in the U.S. through a non-ADCVD impacted countries. It means that we have a reliable source of supply for all the 800 megawatts in countries that are not impacted, so not from the four countries in Southeast Asia, rather the in India and in terms of the trend on the price so we see of course I think we need to start with the base trend so the price before tariffs and then prices after the tariffs so if we analyze prices before tariffs so we see a very sharp drop in the base panels prices throughout the world today. Before tariffs, we are on $110 per kilowatt on the international market. And we see the same trend for batteries. We are now on $170 per kilowatt. And we see this trend going down. So towards 2030, we believe, or analysts estimate that prices will go down to 70 and 110, respectively. So, in the U.S., with the tariffs, of course, prices are higher, but still lower than what we saw at the beginning of 2023. We are about 25 percent lower and sometimes 30 percent lower than the prices that we assumed in our model in 2023. Therefore, the returns for the project right now are increasing in the overall through this higher level of PPA prices, as we mentioned before, lower level of panels in the U.S. in the overall after the tariffs, and let's say the stabilized financing cost that we see with some positive trend of the cost of finance even declining. So in the overall, we see better returns. We mentioned in our presentation an average return for the new project of 10.5% before leverage, which is even a rough return because it's only EV to EBITDA. So if you take the long-term result, it's even better. And of course, after leverage, with cost of capital around 6% and maybe lower, returns reaches deep teens. So we see good trends on the market right now.
spk02: Okay, great. That's helpful. One more question just on domestic content here, the potential for the adder. I was wondering if you think you could secure the domestic content adder for any of your battery storage projects with CODs in 2025 or 2026. Sounds like there's different suppliers that are offering alternative approaches to qualifications, some with domestic cells, some without. So just wondering if that has been factored into your model and what the potential is for securing that adder.
spk17: So we'll start with Atrisco. Atrisco, as you know, is based on Tesla batteries and they have potential to qualify for the tax equity adder. We will know that for sure on COD. So currently it's not modeled. It's a pure upside and we will see in the future. Regarding additional projects in the U.S., so in the project where we will use Tesla, so there is a potential for the U.S. content. Of course, it varies from project to project to clear the line, but there is a clear potential for that. And for the rest of the suppliers, I believe the potential is a little bit down the road towards 26, 27. Okay, great.
spk03: I appreciate it. Thank you.
spk05: Thank you. Once again, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We'll now move on to our next question. Our next question comes from the line of Mahip Mandloy from Mizuho. Please go ahead. Your line is open.
spk08: Hey, hello, and thanks for taking the questions here. Just following with the last question there, can you confirm on the unlevered returns, does that assume your latest model cost assumptions as your supplier moves to the U.S.? And on the Tesla content or other domestic suppliers, does it also include the domestic content or that's still an upside to the yields there?
spk17: So the tax equity adder for domestic content is still not included, so it's an upside on which we will know in the coming months. And on the brownfield side for a trace code is included.
spk06: Perfect, perfect.
spk08: And maybe one question just on slides. I think it was 18 where you kind of like show the timeline of projects to be delivered in Virginia. or the list of projects that are under construction or under development. Could you just maybe talk about the timeline on when do you expect those to be installed or COD in Virginia, and what kind of returns are looking over there as well?
spk17: Yeah, great question. Thanks. So we do have, you know, quite a substantial portfolio there in PGM comparing, let's say, in light of the fact that Clinera is a developer that is expertise is usually in the West and 70% of the portfolio comes from the West. Having said so, we do have a couple of projects, about five to seven projects in PJM, still in permitting phase, so we are still under development. We will see for the future. We got some good interconnection response. We hope to complete permitting. So this is an upside that we will see for the future for the next quarter on how we develop. On the meantime, we do have after the three projects that Adam mentioned in his remarks, Quail Ranch, Roadrunner, and Country Acres, we do have additional a bunch of projects that are really approaching maturity in terms of completion of development. We see a very strong trend of construction in 25 after the three projects or in following the three projects that were mentioned. I believe that we are starting to see the fruits of our investments together with CleanEra on the development side in the US and very large projects are coming into fruition.
spk08: And then this last one on slide 14 on the portfolio, I think it looks like you've pushed out some 300 megawatts from 2026 to 2027. Sorry if I missed this earlier. Could you just remind us which project that is or what's causing that?
spk19: Yonah, would you like to take the answer?
spk11: Sure. May I ask you just, could you repeat the question?
spk08: Yeah, and if I look at the 2026 mature portfolio size, including the pre-construction, it seems 300 megawatts lower than what you had the last quarter. It looks like the project was moved out from 2026 to 2027.
spk11: just want to understand what does that thank you very much for that yes so I just take you back a quarter and in q1 we talked about rustic hills moving out to 2027 in order to benefit from what we believe will be a healthy domestic panel production a panel production industry in the United States and so we moved rustic hills out to 2027 and in order to plan to get those domestically produced panels in addition to the IRA adder for domestic content. And that was a worthwhile move for us. And so we've done the same thing in this quarter for Gemstone and Kogan. And that's the 300 megawatt which you've seen transferred into 2027. Again, from the idea of by that time we'll have a good amount of domestic content eligible panels to purchase. which is better for us. At the same time, the utility which we're in touch with is not really under any pressure for that immediate supply, and so they're agreeing with this move as well.
spk07: Got it. Thank you.
spk11: Thank you.
spk05: Thank you. We'll now move on to our next question. Our next question comes from the line of David Purse from Wolf Research. Please go ahead. Your line is open.
spk22: Good morning.
spk24: Can you elaborate, please, on the interconnection queue reform for CO bar in Arizona? Are you waiting on a specific regulatory order? When do you expect clarity on that issue?
spk18: Adam, would you like to take the question?
spk30: Yeah, so we've been working very closely with utility. That discussion is ongoing. We expect to receive clarity on that in the coming months.
spk22: And is that the gating item? Do you have to do a subsequent filing or proceeding?
spk30: That is the gating item. And we expect the utility has been very helpful in this process, and so we expect that to close out here pretty quickly.
spk24: Great. And you may have just addressed this on a previous question, but how much capacity is in the advanced development book that is not in your mature projects, but you footnoted in your slides? Is that what you just described in the previous question with Gemstone and Kogan, or are those other plants?
spk17: There are much bigger plans, so Yona, maybe you can go over the main projects that are in the queue after the three next ones in the U.S. and mention also a little bit the progress in Europe and Israel as well that is aggregating.
spk11: Okay, again, you're asking as to what's in the Advanced Development Portfolio?
spk21: That was put in your mature project. Yeah.
spk10: Forgive me, could you repeat that?
spk24: Sure. In your mature projects portfolio, there's a footnote that says that it excludes some projects in 2027 in your advanced development book that are not illustrated. I'm just curious what that potential could be for 2027. or that could be pulled into your mature project book?
spk11: Sure. It could be about 4 giga of generation and up to 14 gigawatt of storage. Got it.
spk21: Okay, great.
spk20: Thank you. Yonah, can you elaborate a little bit about CO-BAR and Snowflake and the other projects?
spk17: to give some color on what we have in line after the three projects that were mentioned specifically as mature?
spk11: Sure. Well, on CO-BAR, we have essentially a very large potential capacity of uncontracted storage. That's around 3 gigawatts of uncontracted storage capacity. and that is something which still stays open. That is in our mature portfolio, but it has the potential that I described earlier on of the advanced development portfolio of not being contracted. And we have another project named Snowflake in the U.S., which I believe is approximately 1 gigawatt of generation capacity and approximately 2 gigawatt of storage capacity and that is uncontracted as well. We also have projects which we may be working on in the Balkans as well as also looking for Italy and Spain as well. Great.
spk21: Okay. Thank you.
spk05: Thank you. We'll now move on to our next question. Our next question comes from the line of Adil Hasidim from Bank Lumi. Please go ahead. Your line is open. As there is no response, that concludes today's question and answer session. So I'll hand the call back to Yona for closing remarks.
spk11: Thank you, everyone, for joining us. And we look forward to speaking with you next quarter.
spk05: This concludes today's conference call. Thank you for participating. you Thank you. Thank you. Thank you. music music
spk11: Good morning, everyone, and thank you for joining our second quarter 2024 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 conflicts in Israel on operations and financial condition, and company actions designed to mitigate such impact, 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 laws, 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 2023 Annual Report, filed with the SEC on March 28, 2024 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 call, which are posted on our Investor Relations webpage. With me this morning are Gilad Yavetz, CEO and co-founder of Enlight, Nir Yehuda, CFO of Enlight, and Adam Pischel, CEO and co-founder of Clonera. Gilad will provide some opening remarks and will then turn the call over to Adam for a review of our U.S. activity and then to Nir for a review of our second quarter results. Our executive team will then be available to answer your questions.
spk17: Thank you, Yonah, and thank you all for joining us today. Enlight continues to deliver excellent performance as we progress through 2024, and we are pleased to present a very strong set of financial results for the first half and second quarter of 2024. Comparing the first half of 2024 to the same period in 2023, revenue grew 42% to $175 million, adjusted EBITDA grew 33% to $126 million, net income dropped to $34 million, and cash flow from operation was lower by 4% to $91 million. On a quarter-to-quarter basis, compared to last year, revenue was up 61% to $85 million, and adjusted EBITDA grew 39% to $58 million. Net income was $9 million versus $22 million, driven by inflation indexation impacts and the Clinera earn-out calculation, which Schneer will explain in more detail later on, while cash flow from operation rose to $56 million, up 42%. On the back of these results, we are pleased to increase our full-year 2024 guidance ranges. We now expect 2024 revenues of $345 million to $360 million, up from $330 million to $360 million, while we now expect 2024 EBITDA of $245 to $260 million, up from 235 to 255. This represents an increase of 5 million and 7.5 million at the midpoint, respectively. Enlight is now in the midst of delivering on its major expansion plan, and we continue to execute on the builder of our mature portfolio. From the beginning of 2024, we have completed construction on 0.5 gigawatt and 1.4 gigawatt hour of capacity including our flagship Atrisco solar and energy storage project in New Mexico. This capacity is expected to contribute $71 million in revenues and $56 million in EBITDA on a full year basis. In the next two quarters, we will start with construction capex on 810 megawatts and more than two gigawatt hour at three additional projects in the US, which are expected to contribute $132 million in revenues and $106 million in EBITDA on an annual basis when fully operational. In the next three years, our global generation and storage capacity will triple, reaching 5.4 gigawatts and 5.9 gigawatt hours by 2027. The United States is now experiencing a transformation in electricity demand. Power consumption is rising fast, And it's estimated that two-thirds of the growth in the U.S. power demand till the end of this decade can be attributed to the electricity needs of data centers, AI, and electric vehicles alone. This is being reflected in higher PPA prices. Enlight is uniquely positioned for a tight power market environment with a broad set of projects that are deliverable in the short to medium term. These include our flagship Atrisco project with 364 megawatts and 1.2 gigawatt hour capacity located in New Mexico, where we have recently achieved financial growth for the energy storage portion of the complex for more than $400 million in loans and tax equity. This completes the financing for the entire Atrisco complex with the solar portion financed in December 2023. Atrisco construction has been completed with the gradual commencement of the solar component planned to begin in the coming weeks. We expect full COD of the co-located solar and energy storage complex to be reached by the end of the year. We are also beginning to build additional capacity in the western U.S. with country acres, quail ranch, and roadrunner, three major projects totaling 810 megawatts and 2.0 GWh capacity. We are now completing development and expect construction capex to begin by the end of 2024. Equipment prices remain favorable, with panels and battery prices having fallen by around 25 to 30% from the start of 2023. All these factors create extremely beneficial tailwinds for the project that we will be building between now and 2027, which we expect to yield an attractive unlevered return of approximately 10.5%. Adding in financing between 5.5% to 6% results in leveraged returns in the need to high TINs. Our European projects are benefiting from robust market conditions. Spanish electricity prices, now in the 60 to 70 euro range, are resulting in excellent financial performance at Hekama. The profitability of this project is well above what we modeled when we first planned it, and we have already recovered half of our equity investment in the past three years. We have hedged 65% of Hekama's anticipated 2024 generation for 100 euro per megawatt hour, and have already begun billing up a hedge for 2025, which so far covers 45% of next year's output at a price of 64 euro per megawatt hour. Hekama continues to excel on an operational level, with generation volumes up 14% and 17% for the second quarter of 24 and first half 24, respectively, when compared to the same periods last year. Construction at Project Pupin in Serbia continues on pace, with turbines now being delivered and installed on site. This 94 MW wind farm achieved financial close last quarter and is scheduled to reach COD during the second half of 2025. Finally, Tepolsa, a 60 MW fully merchant solar project, began operation on schedule at the end of July, marking the completion of our fifth project in Hungary. Enlight keeps on broadening its presence in Israel. Yesha and Reem, two projects that are part of the 248 megawatts and 593 megawatt hour Israel solar and storage cluster, reached COD during the second quarter. The cluster is approaching its full capacity with three more projects left to be completed during 2024. We also received approval for 200 megawatts of additional interconnect to Israel's national grid which will be used to expand the offtake of existing projects as well as support the launching of new ones. On the commercial side, we continue to expand our reach into Israel's newly deregulated power sector. Our joint venture with Electropower to supply electricity to the country's household sector was formally launched in July, and we signed five additional PPAs with industrial customers. To sum up, This quarter showed strong financial performance, which is reflected in our results, and increased guidance ranges. The US market presents a compelling opportunity to drive and light rapid growth. Power demand continues to rise, while equipment costs remain low, resulting in higher PPA prices and attractive project returns. We continue to progress with our development goals and project CODs on a global scale, and it is exactly such an environment which position Enlight to realize its dual goal of delivering higher-than-market growth at higher-than-market returns. I'd now like to hand the call over to Adam.
spk30: Thank you, Gilad. Enlight and Clean Air continue to deliver on our rapid expansion strategy in the U.S. renewable energy market. We are currently focused on commissioning the Atrisco project, as well as financing and starting construction on the Quail Ranch Roadrunner, and Country Acres projects. Together, these four projects total approximately 1.2 gigawatts of solar and 3.2 gigawatt hours of energy storage capacity. Let us begin with a closer look at Atrisco. This project has a capacity of 364 megawatts of solar and 1.2 gigawatt hours of energy storage and is one of the largest battery projects in the U.S. The first portion of the solar facility is expected to be connected to the grid imminently, and we expect the remaining solar and energy storage components to be connected and achieve COD later this year. In addition, we recently reached financial close on the energy storage portion of the project, receiving more than $400 million of debt and tax equity from top tier lenders, including HSBC and U.S. Bank. This financing from the world's leading banks demonstrates the quality of our projects and our ability to fund our growth. We are proud to have earned their trust and are excited to build upon these key relationships. As Atrisco nears completion, we continue to focus on Country Acres, Quail Ranch, and Roadrunner. These projects total 810 megawatts of solar and over two gigawatt hours of energy storage capacity. All three projects are nearing construction. Development of country acres, a 392-megawatt energy and 688-megawatt-hour battery project in California is progressing, and we are finalizing details with the utility. Quail Ranch, a New Mexico project, is a 128-megawatt solar and 400-megawatt-hour storage brownfield expansion of Atrisco. It awaits regulatory and legal approval of the PPA and ESA agreements. Roadrunner is a 290 megawatt solar and 940 megawatt hour energy storage project in Arizona. It is currently awaiting government permits ahead of construction. We are also excited to highlight our CO bar complex in Arizona. The CO bar complex is currently made up of three projects totaling 1.2 gigawatts of solar, and 824 megawatt hours of energy storage, with the potential to expand the energy storage portion to an additional 3.2 gigawatt hours, making it the largest complex we have announced in the U.S. The project has been delayed due to the interconnection queue reform announced by APS in the third quarter of 2023. This process is still ongoing, and we continue to work with the utility to help enable completion of the interconnection facilities as rapidly as possible. The energy market continues to provide compelling support for our project fundamentals. Increased demand for renewable energy is reinforcing PPA pricing, which reflects the scarcity of new projects. Both solar module and battery prices are lower than at the beginning of last year. Additionally, there is some indication interest rates may begin to drop, which would have a positive impact on our cost of finance. Our relationship with suppliers remains strong, and we have been able to adapt to the new ADCVD framework. For example, one of our key panel suppliers has relocated cell production to non-affected Southeast Asian countries, which enables a stable supply of modules for future projects. In light of the current U.S. regulatory environment, we are expanding relationships with suppliers to further diversify our supply chain and pursue more domestic content qualifications. These important partnerships, our ability to adapt to changing market conditions, and continuing to deliver high-quality projects are propelling our U.S. expansion strategy. I'd now like to turn the call over to Nir for a review of our quarterly results.
spk14: there thank you adam in the second quarter of 24 the company's revenues increased to 84 million up from 53 million last year a growth rate of 61 percent year over year growth was mainly driven by new projects compared to last year as well as higher production in inflation indexation at some of our operational projects in the second quarter of 23 where new projects in the U.S., Hungary, and Israel started selling electricity. The most important of these is Genesis Wind, which contributed $10 million to revenue, followed by the Israel Storage and Solar Cluster, which added an additional $6 million. Bjorn Bed, which sold a limited amount of power during the second quarter of 2023, contributed $5 million in this quarter. The TAMA revenue increased 37% year-over-year to $13 million, as the project benefited from positive pricing and production trends. We sold electricity at an average of 71 euro per megawatt versus 58 euro per megawatt for the same period this year, while production was up 40% from the same period last year. The average price realized through our hedging strategy was 85 euro per megawatt, covering 70% of the quarter production. Current market conditions have significantly streamed up, with prices in the range of 60 to 70 euro per megawatt. Finally, the reclassification of financial asset projects in Israel, the fixed asset project boosted revenues by 5 million. Second quarter net income decreased from 22 million last year to 9 million this year, a decline of 58%. percentage year-over-year. The impact of new projects added $6 million. In addition, we experienced a significant inflation impact on our second denominated debt, which resulted in a non-cash financial expense of $5 million. We also expect revenues to rise higher due to the index linkage for the majority of our electricity PPAs in Israel, which we reflected in our financial statement starting for 2025 onwards. Overall, this represents a net benefit to the company. The reclassification of the financial assets reduced financial income by $3 million. In addition, other income in the second quarter of last year was higher by $10 million net of tax due to one-off benefits linked to change in Clean Era A&R calculation and recognition of LDs from Siemens Gamesa due to the delay in reaching full production at Project Buremberg. In the second quarter of 24, the company adjusted EBITDA grew by 39% to $58 million compared to $42 million for the same period in 23. On the whole, adjusted EBITDA growth was driven by the same positive factor which affected our revenue growth and which contributed $24 million. Note that adjusted EBITDA for the second quarter of 23 was boosted by $8 million from recognition of NDIS compensation. Looking to our balance sheet, Enlight achieved the major financial closing of Atrisco Energy Storage in the U.S. at the end of July. We raised $407 million in term loans and tax equity for the construction of energy storage component of the project. When adding the $303 million raised at the financial close of the solar portion in December 23, the total financing and tax equity amounted to $710 million for the entire solar energy storage complex. Financial and tax equity arrangements for the entire Atrisco project are now complete. We also recycled $234 million of the access capital back to Enlight as a result of this transaction. This fund will be used to propel Enlight's future growth forward. In addition, Enlight has $320 million of revolving credit facilities at Israeli banks, of which $170 million has been drawn as of the publication of this report. Moreover, in the second quarter of 24, cash flow from operation was $56 million, an increase of 42% year-over-year. Moving to 24 guidance, given the strong set of results we delivered for the second quarter and first half of 24, we are raising our financial outlook for the year. On the back of sound operational performance as well as OMM and SG&A cost savings, Our range for 24 revenue guidance rises to 345 to 360 million from 335 and 360 million previously. And our adjusted EBITDA guidance range rises to 245 to 260 million from 235 and 255 million previously. This represents an increase of 5 million and 7.5 million from previous midpoints respectively. and further demonstrate the financial strength of the company as it continues to deliver rapid growth and expansion.
spk15: I will now turn the call over to the operator for questions.
spk04: Thank you.
spk05: To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A queue. Our first question comes from the line of Justin Clare from Roth Capital Partners. Please go ahead. Your line is open.
spk02: Hi. Thanks for taking the question. So first off, I was wondering if you could just share how much of your capacity that is currently planned for completion through 2027 is uncontracted at this point. And maybe if you could just talk about your strategy for contracting the remainder of your open capacity. Sure, when you might be able to sign PPAs for the uncontracted amount. And then just, you know, do you anticipate PPAs likely to be above where you've contracted other assets recently? It sounds like PPA prices are continuing to move upwards. Maybe just comment on what you're seeing there.
spk17: Jonah, why don't you take this question and Adam can compliment you.
spk11: Justin, hi there. Thanks for your question. At this point, most of our projects are contracted. We do have some open PPAs on the far end of our mature portfolio. However, the important thing to point out here is that our advanced development portfolio which is, again, a bit further out than our mature portfolio, is completely uncontracted. And we do have a sense, given the demand that we see in the United States, that PPAs will remain at the levels that we see today and have potential for increases.
spk30: Yeah, thank you for your question, and thank you, Yannick. Just to add a little bit of color there, certainly those PPAs we expect to continue to be at this level or higher in the future. We are actively, with some of the projects that we currently have, actively renegotiating PPA prices and receiving higher rates than were previously contracted as well.
spk02: Okay, great. And then maybe just shifting to the supply chain here, you know, I was wondering if you could just share where you are in the procurement process as we look at Quail Ranch, Roadrunner, Country Acres. It sounds like you do have a cell supplier now that's manufacturing in countries that are unaffected by the ADCD, the new framework that was put in place. I'm wondering, you know, Is that supplier currently in the process of ramping up new manufacturing facilities? Is supply available today? And then maybe you could comment on just where you're seeing module prices for U.S. projects. Has that moved upward since the introduction of this new ADCVD framework?
spk17: Yeah, I can start, and then Adam, you can compliment me if you like. Hi, it's Vilad. So in general, as you asked, as you said in your question, so we have secured the line of supply for panels for three projects in the U.S. through a non-ADCVD impacted countries. It means that we have a reliable source of supply for all the 800 megawatts in countries that are not impacted, so not from the four countries in Southeast Asia, rather the in India and in terms of the trend on the price so we see of course I think we need to start with the base trend so the price before tariffs and then prices after the tariffs so if we analyze prices before tariffs so we see a very sharp drop in the base panels prices throughout the world today. Before tariffs, we are on $110 per kilowatt on the international market. And we see the same trend for batteries. We are now on $170 per kilowatt. And we see this trend going down. So towards 2030, we believe or analysts estimate that prices will go down to 70 and 110, respectively. So, in the U.S., with the tariffs, of course, prices are higher, but still lower than what we saw at the beginning of 2023. We are about 25 percent lower and sometimes 30 percent lower than the prices that we assumed in our model in 2023. Therefore, the returns for the project right now are increasing in the overall through this higher level of PPA prices, as we mentioned before, lower level of panels in the U.S. in the overall after the tariffs, and let's say the stabilized financing cost that we see with some positive trend of the cost of finance even declining. So in the overall, we see better returns. We mentioned in our presentation an average return for the new project of 10.5% before leverage, which is even a rough return because it's only EV to EBITDA. So if you take the long-term result, it's even better. And of course, after leverage, with cost of capital around 6% and maybe lower, returns reaches deep teens. So we see good trends on the market right now.
spk02: Okay, great. That's helpful. One more question just on domestic content here, the potential for the adder. I was wondering if you think you could secure the domestic content adder for any of your battery storage projects with CODs in 2025 or 2026. Sounds like there's different suppliers that are offering alternative approaches to qualifications, some with domestic cells, some without. So just wondering if that has been factored into your model and what the potential is for securing that adder.
spk17: So we'll start with Atrisco. Atrisco, as you know, is based on Tesla batteries and they have potential to qualify for the tax equity adder. We will know that for sure on COD. So currently it's not modeled. It's a pure upside and we will see in the future. Regarding additional projects in the U.S., so in the project where we will use Tesla, so there is a potential for the U.S. content. Of course, it varies from project to project to clear the line, but there is a clear potential for that. And for the rest of the suppliers, I believe the potential is a little bit down the road towards 26, 27. Okay, great.
spk03: I appreciate it. Thank you.
spk05: Thank you. Once again, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We'll now move on to our next question. Our next question comes from the line of Mahip Mandloy from Mizuho. Please go ahead. Your line is open.
spk08: Hey, hello, and thanks for taking the questions here. Just following with the last question there, can you confirm on the unlevered returns, does that assume your latest model cost assumptions as your supplier moves to the U.S.? And on the Tesla content or other domestic suppliers, does it also include the domestic content or that's still an upside to the yields there?
spk17: So the tax equity adder for domestic content is still not included, so it's an upside on which we will know in the coming months. And on the brownfield side for Atresco, it is included.
spk06: Perfect, perfect.
spk08: And maybe one question just on the slide. I think it was 18 where you kind of like show the timeline of projects to be delivered in Virginia. or the list of projects that are under construction or under development. Could you just maybe talk about the timeline on when do you expect those to be installed or COD in Virginia, and what kind of returns are looking over there as well?
spk17: Yeah, great question. Thanks. So we do have, you know, quite a substantial portfolio there in PGM comparing, let's say, in light of the fact that Clinera is a developer that is expertise is usually in the West and 70% of the portfolio comes from the West. Having said so, we do have a couple of projects, about five to seven projects in PJM, still in permitting phase. So we are still under development. We will see for the future. We got some good interconnection response. We hope to complete permitting. So this is an upside that we will see for the future for the next quarter on how we develop. On the meantime, we do have after the three projects that Adam mentioned in his remarks, Quail Ranch, Roadrunner, and Country Acres, we do have additional a bunch of projects that are really approaching maturity in terms of completion of development we see a very strong trend of a construction in 25 after the three projects or in following the the three projects that were mentioned so we see I believe that we are starting to see the fruits of our investments together with CleanEra on the development side in the US and very large projects are coming into fruition.
spk08: And then this last one on slide 14 on the portfolio, I think it looks like you've pushed out some 300 megawatts from 2026 to 2027. Sorry if I missed this earlier. Could you just remind us which project that is or what's causing that?
spk19: Yonah, would you like to take the answer?
spk11: Sure. May I ask you just, could you repeat the question?
spk08: Yeah, and if I look at the 2026 mature portfolio size, including the pre-construction, it seems 300 megawatts lower than what you had the last quarter. It looks like the project was moved out from 2026 to 2027.
spk11: just want to understand what does that thank you very much for that yes so I just take you back a quarter and in q1 we talked about rustic hills moving out to 2027 in order to benefit from what we believe will be a healthy domestic panel production a panel production industry in the United States and so we moved rustic hills out to 2027 and in order to plan to get those domestically produced panels in addition to the IRA adder for domestic content. And that was a worthwhile move for us. And so we've done the same thing in this quarter for Gemstone and Kogan. And that's the 300 megawatt which you've seen transferred into 2027. Again, from the idea of by that time we'll have a good amount of domestic content eligible panels to purchase. which is better for us. At the same time, the utility which we're in touch with is not really under any pressure for that immediate supply, and so they're agreeing with this move as well.
spk07: Got it. Thank you.
spk11: Thank you.
spk05: Thank you. We'll now move on to our next question. Our next question comes from the line of David Purse from Wolf Research. Please go ahead. Your line is open.
spk22: Good morning.
spk24: Can you elaborate, please, on the interconnection queue reform for CO bar in Arizona? Are you waiting on a specific regulatory order? When do you expect clarity on that issue?
spk18: Adam, would you like to take the question?
spk30: Yeah, so we've been working very closely with utility. That discussion is ongoing. We expect to receive clarity on that in the coming months.
spk22: And is that the gating item? Do you have to do a subsequent filing or proceeding?
spk30: That is the gating item. And we expect the utility has been very helpful in this process, and so we expect that to close out here pretty quickly.
spk24: Great. And you may have just addressed this on a previous question, but how much capacity is in the advanced development book that is not in your mature projects, but you footnoted in your slides? Is that what you just described in the previous question with Gemstone and Kogan, or are those other plants?
spk17: There are much bigger plans, so Yona, maybe you can go over the main projects that are in the queue after the three next ones in the U.S. and mention also a little bit the progress in Europe and Israel as well that is aggregating.
spk11: Okay, again, you're asking as to what's in the Advanced Development Portfolio?
spk21: That was put in your mature project.
spk10: Forgive me, could you repeat that?
spk24: Sure. In your mature projects portfolio, there's a footnote that says that it excludes some projects in 2027 in your advanced development book that are not illustrated. I'm just curious what that potential could be for 2027. or that could be pulled into your mature project book?
spk11: Sure. It could be about 4 giga of generation and up to 14 gigawatt of storage. Got it.
spk21: Okay, great. Thank you.
spk20: Yonah, can you elaborate a little bit about CO-BAR and Snowflake and the other projects?
spk17: to give some color on what we have in line after the three projects that were mentioned specifically as mature?
spk11: Sure. Well, on CO-BAR, we have essentially a very large potential capacity of uncontracted storage. That's around 3 gigawatts of uncontracted storage capacity. and that is something which still stays open. That is in our mature portfolio, but it has the potential that I described earlier on of the advanced development portfolio of not being contracted. And we have another project named Snowflake in the US, which I believe is approximately 1 gigawatt of generation capacity and approximately 2 gigawatt of storage capacity and that is uncontracted as well. We also have projects which we may be working on in the Balkans as well as also looking for Italy and Spain as well. Great.
spk21: Okay. Thank you.
spk05: Thank you. We'll now move on to our next question. Our next question comes from the line of Adil Hasidim from Bank Lumi. Please go ahead. Your line is open. As there is no response, that concludes today's question and answer session. So I'll hand the call back to Yona for closing remarks.
spk11: Thank you, everyone, for joining us. And we look forward to speaking with you next quarter.
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