Ormat Technologies, Inc.

Q1 2023 Earnings Conference Call


spk01: Good morning and welcome to the ORMAD Technologies first quarter 2023 earnings conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again. Please know that this event is being recorded. I'd now like to turn the conference over to Alex Steinberg with Alpha IR. Please go ahead.
spk04: Thank you, operator. Hosting the call today are Duran Bashar, Chief Executive Officer, Ozzie Ginsberg, Chief Financial Officer, and Smadar Lavie, Vice President of Investor Relations and ESG Planning and Reporting. Before beginning, we would like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts, and projections about future events, that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company's plans, objectives, and expectations for future operations and are based on management's current estimates and projections, future results, or trends. Actual future results may differ materially from those projected as a result of certain risk and uncertainties. For a discussion of such risk and uncertainties, Please see risk factors as described in ORMAT Technologies' annual report on Form 10-K and quarterly reports on Form 10-Q that are filed with the SEC. In addition, during the call, the company will present non-GAAP financial measures, such as adjusted EBITDA. Reconciliation is the most directly comparable GAAP measures, and management's reasons for presenting such information is set forth in the press release that was issued last night, as well as in the slides posted on the website. Because these measures are not calculated in accordance with GAAP, they should not be considered in isolation from the financial statements prepared in accordance with GAAP. Before I turn the call over to management, I would like to remind everyone that a slide presentation accompanying this call may be accessed on the company's website at ormat.com under the presentation link that's found on the investor relations tab. With all that said, I would now like to turn the call over to Duran Bashar. Duran, the call is all yours.
spk00: Thank you, Alec, and good morning, everyone. Thank you for joining us today. We are pleased to report a strong start to the year, with impressive net income and adjusted EBITDA growth year over year, supported mainly by our electricity sector. Our operating income and adjusted EBITDA saw significant improvement of 17.9% and 14.5% respectively, and our net income increased 57.5% as income tax was positively impacted by the Inflation Reduction Act. We attribute this success to our strategic growth initiatives from last year, as well as our operational performance and the regulatory tailwind that allowed us to maximize shareholders' value. Our electricity segment continued to lead the way with strong performance that demonstrated the benefit of our ongoing portfolio expansion strategy. In our product segment, The stepdown in revenue compared to the first quarter last year was largely due to the timing we made in recognizing revenue throughout the year, which we expect to accelerate in the remaining of the year. Our storage segment quarterly performance was negatively impacted by an overall reduction in energy rates, which impacted our results in the PJM and Kaiser facilities. As we enter the second quarter, we completed construction and started operation of two new energy storage facilities, and we are near completion of additional two facilities with a total capacity of 64 megawatt, 64 megawatt hour. We expect the overall positive momentum we saw in Q1 to continue in the rest of 2023 with the IRA providing additional benefits through the tax credits available for geothermal and energy storage projects, which we expect will positively impact our bottom line. We remain on track with our full year guidance for 2023 and capacity expansion goals for 2025. As we look to the future, we are confident in the continued demand for renewable energy, and we expect to benefit from it in all our three segments. Now, before I provide further updates on our operations and future plans, I will turn the call over to Asi to review the financial results. Asi?
spk07: Thank you, Doron. Let me start my review of our financial highlights on slide five. Total revenue for the first quarter was $185.2 million, up roughly 1% year-over-year, mostly driven by growth in our electricity segment. Fifth quarter 2023, total gross profit was $76.1 million. This resulted in a gross margin of 41.1%, up from the gross margin of 38.1% in the first quarter of 2022. Net income attributed to the company's stakeholders was $29 million, or 51 cents per diluted share, in the quarter. This compares favorably to the results of $18.4 million, or 33 cents per diluted share in the same period last year. The 57.5% increase in net income was mainly the result of a strong increase in operating income driven by new capacity added in the electricity segment in the second half of 2022 and the contribution of the IRA benefit to both our new geothermal and storage facilities. Adjusted EBITDA of $123.5 million increased 14.5% in the first quarter, compared to $107.9 million in the first quarter last year. The increase was largely driven by 17.9% increase in operating income as a result of the new assets added, further supported by the impact of the PTC generated in the quarter. Breaking the revenues down to the segment level, electricity segment revenue increased 4.8% to $170.3 million. This increase was driven by contribution from OMAD's portfolio expansion efforts in 2022, mainly from CD4, tungsten, and the solar facility, as well as from the successful repowering of Huber II in the Huber complex. These drivers of revenue growth were partially offset by lower energy rates at Puna. In the product segment, revenue decreased by 31.4% to $10 million and represented 5.4% of the total consolidated revenue in the first quarter. The year-over-year decline was mainly due to the timing of revenue recognition compared to the prior year period. we were able to sign three new contracts during the first quarter at a total amount of approximately $40 million. And we reiterate our confidence in our full year segment revenue guidance, which represent up to 89% growth compared to the same time last year. Energy storage segment revenues were $4.9 million compared to $6.6 million in the first quarter of 2022. This decrease was driven primarily by the reduction in energy rates in the east coast of the United States, resulting in lower rates at our PJM facilities. Moving to slide six. The gross margin for the electricity segment was 44.4%, compared to 41.8% in the second quarter last year. The gross margin expansion was attributed to the new added capacity and higher BI insurance proceeds by $4.5 million versus last year, related to the pool of plants. In the product segment, gross margin was 6.9% in the quarter, which was flat compared to the same year-ago period. Despite flat segment margin, we believe that the strength of our new contract, signed in late 2022, and 2023 so far, will drive higher margin for the segment for the remaining of the year. The energy storage segment reported a negative gross margin compared to a gross margin of 13.5% in the first quarter last year. We expect margin improvement as well as we start to operate the new assets and grow the segment portfolio significantly. The electricity segment generated 98% of OMAD total consolidated adjusted EBITDA in the first quarter. The product segment generated 1.5%. And the energy storage segment reported the adjusted EBITDA of $0.8 million, representing half percent of total adjusted EBITDA for the company. Reconciliation of EBITDA and adjusted EBITDA are provided in the appendix slide. Looking at slide seven. our net debt as of March 31st, 2023 was approximately $1.6 billion. Cash and cash equivalent and restricted cash and cash equivalent as of March 31st, 2023 was approximately $522 million compared to $227 million as of December 31st, 2022. The slide breaks down the use of cash for three months illustrated our much ability to reinvest in the business, service our debt, and return capital to our shareholders in the form of cash dividends. We note that these use of cash have been funded from our equity offering, cash generating by our operation, and the strong liquidity portfolio we maintain. Our total debt as of March 31, 2023, was approximately $2.1 billion, net of deferred financing costs. and its payment schedule is presented on slide 28 in the appendix. The average cost of debt of the company stands at 4.14%. We think it is important to note that as we prepare to deploy capital to fund our multi-year growth target, nearly all of our debt liabilities remain fixed rate in nature, which we believe will help continue positioning OMART competitively in the rising global interest rate environment. In addition, we expect to finance 30 to 50% of our future U.S. capex with the support of ITC and PTC under the new IRA, which we expect will enable us to significantly reduce the funds needed to develop storage and geothermal assets. Moving to slide eight, in the first quarter of 2023, We have invested nearly $107 million in CAPEX to advance our growth. We have $1.1 billion of cash and available lines of credit. Our total expected capital for the last three quarters of 2023 includes $494 million of capital expenditure, as detailed in slide 29 in the appendix. Overall, we have strong position in terms of capital sourcing. with excellent liquidity and access to additional capital at attractive rates to support our future growth initiatives. On May 9, 2023, our Board of Directors declared, approved, and authorized payment of a quarterly dividend of 12 cents per share to all holders of the companies issued and outstanding shares of common stock on May 23, 2023. Payable on June 6, 2023. In addition, the company expects to pay quarterly dividends of 12 cents per share in each of the next two quarters. That concludes my financial overview. I would like now to turn the call over to Daron to discuss some of our recent developments.
spk00: Daron? Thank you, Asi. Turning to slide 10, we look at our electricity segment operating portfolio. Generation growth continues to be positively supported by the addition of CD4, tungsten, Iberturi Power and the new solar facilities, including Worcester Solar. This was partially offset by lower generation at our old facilities that are mainly constrained by heat availability from the natural gas pipeline. In addition, since the end of the first quarter, we added 31 megawatts to the electricity segment from the new North Valley Power Plant and the completion of the solar facility adjacent to our Brady Geothermal Power Plant and reached total electricity portfolio of 1.1 gigawatts. Moving to slide 11, our Kona geothermal power plant has recently achieved the generating capacity of approximately 28 megawatts, which is a significant improvement from the 23 to 25 megawatts range in the fourth quarter of 2022. While prices for electricity generation remain healthy, they were lower than last year's As for the project expansion, we agreed with HELCO on new terms of the PPA that are more favorable to OMAC, and we are awaiting approval from the Hawaii PUC. In regard to our Wakaria power plant in Kenya, we have made progress in our ongoing efforts to increase the complex capacity. We have reached a capacity of approximately 127 megawatts, up from 125 megawatts in the fourth quarter of 2022. With respect to HBR 1, the new power plant is near completion and expect to be online by the end of the second quarter. The new facility, together with the repairing of the HBR 2, is expected to bring the total complex capacity to 89 megawatts and improve its efficiency and profitability. Turning to slide 12 for an update on our backlog, which stands at $147 million. We were able to sign contracts totaling approximately $40 million during the first quarter. In addition, recently a new favorable tariff structure was approved in Turkey, which we anticipate will increase demand for new development. Moving to slide 13, the energy storage segment was affected by low rates at PGM and KAIS. However, we have made progress in this segment by starting at the end of the quarter the operating of two new facilities, nearing completion of two more which will add a combined capacity of 64 megawatt 64 megawatt hour we anticipate that this project will have to increase the segment's revenue for the year moving to slide 14 for an overview of the strong tailwind we expect from regulatory initiatives on the international side as i mentioned earlier the new target that was recently introduced in turkey includes additional incentives that will overall secure developments with local manufacturing a tariff of approximately $118 per megawatt hour. We believe this will reopen the Turkish market for us for new sales opportunities. In the U.S., we already saw this quarter the positive benefits of the Inflation Reduction Act on our results. Transferable PTC related to Hebrew geothermal and Worcester solar and PTC sold under the CD4 new tax equity transaction increased our adjusted EBITDA by $4.8 million this quarter. In addition, the transferable ITC related to Howell Energy Storage Facility reduced our tax expense and thus increased net income. This positive impact will continue through the year and will increase as we add more new projects. We expect a total cash benefit related to PTC and ITC benefit of approximately $150 million in 2023. This source of cash will enable us to significantly reduce our capital needs for the year, particularly as we look to continue growing our leading geothermal portfolio. Moving to slides 16 and 17, our growth plans for both the electricity and storage segments remain firmly on track. despite some minor delays. As we look ahead to 2025, our target of approximately 1.83 gigawatts of added capacity represents an impressive 485% growth at the midpoint compared to the year-end 2022. This will be achieved through the addition of 230 to 260 megawatts of geothermal and solar energy power plants and 412 to 442 megawatts of energy storage capacity. Slides 18 and 19 display the geothermal and hybrid solar PV projects currently underway. The Dixie Valley and Himbe 1 geothermal power plants and steamboat solar are expected to be online during the second quarter of 2023. Moving to slide 20 and 21, which highlights the third layer of our growth plan, the energy storage segment. As presented on slide 20, and as I mentioned earlier, we commenced the operation of Howell and Bowley Green, and we are near completion of Upton and Andover. In addition, we have two assets that are planned to be online in the second half of 2023. Our energy storage pipeline is robust, and we have developed a pipeline of more than 3 gigawatts of capacity in our U.S. pipeline, mainly in California and Texas. Please turn to slide 22 for a discussion of our 2023 guide. In the first three months of 2023, OMAD has delivered meaningful year-over-year growth across our revenues, operating income, adjusted EBITDA, and net income. We expect full-year revenues to range between $823 million and $858 million, which would represent a 12% to 17% increase year-over-year. Within electricity, revenues are expected to be between $670 and $685 million, a 7% increase at the midpoint. We also expect product revenue to come between $120 and $135 million, an approximately 79% increase. Storage revenue guidance is $33 to $38 million for the year, which is also significant increase year-over-year. Adjusted EBITDA for 2023 is expected to be between $480 million and $510 million, which is a double-digit improvement from 2022 throughout the range. On slide 24, before I close the call, I want to highlight our continued commitment to environmental, social, and governance ESG initiatives. As part of this commitment, we are working to finalize and publish our 2022 ESG report by the end of August, which will provide a comprehensive overview of our sustainability initiatives, performance, and targets. Further supporting our ESG initiatives, we have established a new ESG committee within our board of directors, and next week will be our first global ESG week. I will end our prepared remarks on slide 26. In summary, we are pleased to report another solid quarter with significant growth. Despite some short-term delay, our growth plan remains on track, and we are well positioned to capitalize on the strong global demand for renewable energy solutions. As always, we remain dedicated to delivering sustainable, profitable growth for our shareholders, while also making a positive impact on the environment and the communities where we operate. This concludes our prepared remarks. Now, I would like to open the call for questions. Operator?
spk01: Thank you. As a reminder, if you'd like to ask a question, please press star then one on your telephone keypad. The first question is from Noah Kay with Oppenheimer. Your line is open.
spk05: Good morning, and thanks for taking the questions. Maybe we can start with the HEPA-1 repowering. Congratulations on getting that done timely. I think if we went back a year ago and looked at the impact from the fire and look at where you are now, it's impressive what you've been able to do with that complex. Maybe talk through how that process has played out, what you've actually done to be able to affect the repowering.
spk07: Noah, good morning and thank you for the question. So as a reminder, Hieber 2 started already to operate in Q4 of last year, really throughout December. And Hieber 1 is expected any day now to have the COD. It should be during the Q2 before the end of the quarter. Hieber 1 used to be a 40 megawatt power plant. And 50% of the power plant was equipment. And 50% was basically Toshiba or Mitsubishi equipment. It was steam equipment. During the fire, the steam equipment were all obsolete. And during the last year, we were able to basically reinstall all of the units. We are not going to use even the old units that were not used to operate. And then further, the new capacity of Heber between Heber 1 and Heber 2 and the surrounding facilities will be close to 90 mega. And we also expect it to happen in a much better profitability because the cost to operate a brand new plant is much better than the cost to operate an old steam plant.
spk05: It's very helpful. I think it opens up a broader question about repowering opportunities across the portfolio. I don't know whether ITC benefits would factor into that decision, but perhaps you can comment to the repowering opportunity that you see today. Any potential quantification of that would be helpful.
spk00: I know, it's Doron. So as you said, the Hibber facility was repowered. We've done a similar project in our Mesa facility and in G2 in Mamos and in other sites. So we currently don't have any big repowering project like Hibber in our facility. We have smaller ones like Dixie Valley that you see and in Guatemala. So we do have smaller projects. Biwawi is another project that we're actually doing a so-called power, basically taking an old facility that is doing 9, 10 megawatts and will generate over 20 megawatts when it comes online in the middle of next year.
spk06: Okay.
spk00: that's the big repower that we have today.
spk05: Very helpful. And maybe the last one, just on the PUNA PPA refining, nice to hear that that moved forward. You mentioned it's more favorable for the company. Can you just sort of dimension for us in what way is it more favorable? I know that you know, for the PUC, there was a desire to kind of get away from linkage to fossil fuel prices. Talk about why this is more favorable for the company.
spk00: Yeah. Actually, PUNA is another big repo that we will do, basically, this one. You know, we have the PPA. We're going to replace the entire facility with a new facility that will come online. Since you're obviously following us over the time, you've seen that we've invested quite a lot of efforts in drilling into Pune. And all of these costs are basically embedded into the new and updated PPA. So the PPA is better for us because it takes into account the higher cost that we had in order to drill and find resources to support the 46-megawatt facility. And it's... Very helpful. And we finished... Go ahead, please. Yeah, and they filed it with the PUC, and we hope that Q3 will get... Middle of Q3 will get the fluid from the PUC in Hawaii and can move forward with the project.
spk02: Very helpful. Thank you.
spk01: The next question is from Justin Clare with Roth MKM. Your line is open.
spk02: Yeah, hi. Thanks for taking our questions. First off here, I just wanted to see if you could talk about the visibility you have into growing your geothermal capacity beyond the projects under development that you have already identified in the presentation. You know, when might you be ready to share additional details on projects that you have in the pipeline? And then just wondering at this point in time, you know, beyond the projects identified, are you developing additional projects that will have CODs potentially in 2024, or are they likely to be 2025 or sometime beyond?
spk00: Thank you, Justin. We have approximately 40 sites that are listed in our 10K. It's an additional prospect that we have globally, most of them in the US, in Nevada, in California. We've started this year a cohort program. We've already drilled in three locations, cohorts in Nevada, and the plan for the co-holds. It's a seven-location co-hold plan where we will drill, before we start to build a two-site well, we drill co-holds. This will be the next level of development that we will have. And they will come, assuming everything is successful, in the 26-27 timeframe horizon. That's in the US. In Indonesia, we're drilling in two locations. We just responded to a new tender that was issued by the Indonesian government and the utility, the state-owned utility, and we're competing with Pertamina and Chevron on the site. And we have additional locations. that we are in various stages of negotiation as part of the exploration. However, in Indonesia, the process takes a bit longer, so it's maybe a little later, but there's definitely many potentials that we are working today for the next round of development beyond what we have listed in our presentation.
spk02: Okay, great. Very helpful. And then I was wondering if you could just update us on what you're seeing in terms of the trend in PPA pricing for geothermal assets, maybe in the US, but then also in other markets. It sounds like the PPA signed for the Kuna project was favorable, but maybe you can just comment on what you're seeing more broadly.
spk00: We see a continuous demand for a geothermal project. I can tell you, to follow up on your previous question, we've actually been asked already by different utilities and CCAs on signing PPAs towards the end of the 2020s and maybe to the beginning of the 2030s. So we see quite a lot of demand. And when demand is high and the number of projects are not very high, prices go up. So we continue to see increased pricing in the U.S. Indonesia has set, the other location that we're operating has set a presidential tariff that ranges between 95 to 110, $120 per megawatt depends on the location of the site. So these are also good PPA pricing. Got it. Okay.
spk02: And then maybe just one more for me, shifting to the product segment. Revenues declined a bit quarter over quarter. I was just wondering if you could share why the revenues declined in that segment. Was this just happened to be the timing for product deliveries? Or did you see any issue in supply chain or logistics? And then also on the margin profile, you indicated that margins in that segment are expected to increase through the rest of the year here. I was wondering, you know, where could we see gross margins for the project segment in, you know, say Q2, Q3, or Q4, you know, moving through the year here?
spk07: So, as we mentioned in our brief remarks, we expect the full year revenue to be on the high end of the revenue as basically we were able to have a sufficient backlog to almost guarantee almost the revenue for the year. And the reason why we were behind this quarter was just the way we decided to allocate work between internal work, building projects for OMAT, and working for third parties. With respect to margin, I think that, you know, an annual base or much in this environment should be some of between 15 to 20% of gross margin. These are the types of margins that we should have based on the combination of some of the contracts that have lower margins that are coming from 2022 and the ones that are slightly with higher margins that were signed early 2023. So when you combine between them and also some of our fixed costs, we should come somewhere between 15% to 20% margin, maybe on the higher end towards the end of the year.
spk02: Okay, got it.
spk01: Thank you. Again, that's star one. If you'd like to ask a question, the next question is from Julian Dumoulin-Smith with Bank of America. Your line is open.
spk03: Hey, good morning, team. Thank you guys very much. Appreciate it. Look, I wanted to talk about California first and foremost. Obviously, California capacity prices are up very meaningfully in the last few months here and obviously year over year in a big way. I know that you principally operate a contracted portfolio, but I just wanted to get a sense as to how that might impact even modest amounts of exposure in the next few years as you might see some step up from that. as well as does that actually change your development focus to fixate on California and the opportunity there, just given how much more robust the IRRs are conceivably between first the higher capacity and secondly IRA, if you will.
spk00: Hi, Julian. Thank you. We see the demand very strongly in California, as you said, but we also see a very strong demand in Nevada that is coming from the basic requirement to go to renewables. As preparation for this growth that we started to see a couple of years ago with the resolution of the CPUC, we have more than doubled our exploration efforts. In the past, we've been drilling in two to three locations at the maximum. Today, we're drilling at five locations in parallel and targeting to go up to seven locations. We see the benefits that we get in the higher PPA pricing and the IRA, as you mentioned. We're working the geothermal PTCs up until the end of 2024. and we hope they will be extended but regardless we are operating in the context of getting to start of construction according to the irs requirements by the end of the year so most of our projects coming online in the following four years will enjoy the ira ppcs even if they will not be extended for geothermal so we've put a lot of efforts into the U.S., mainly in the resource and exploration phase. And as I said before, we are drilling, drilled already in three new locations in Nevada core holes, planning to drill another four this year and the beginning of next year. And this will be the base for the next wave of projects that, if the exploration will be successful, will be part of our growth focus.
spk03: Excellent. Thank you very much. And if you can elaborate briefly, if you don't mind, key question is around the ITCs and PTCs recognized through the forecast period. I think you guys had $150 million in the current year here. How does that flow through over the next few years? Just what does that amount to per year if you can try to give some sense of visibility? I know these things are moving around a little bit.
spk07: Julian, this is Asi. Thank you for the question. So first, the ITC is an outcome of the amount of capex and the timing of the COD of the storage assets. This year, the amounts of assets that we are bringing online, we expect somewhere around $15 to $18 million of ITC benefits. All of it should flow through the reduction in income tax and reduce the tax rate for the company, similar to what we saw this quarter. When we look to next year, We have two large projects. The larger of one, of course, is bottleneck, which cost us around 105, 110 million. It looks like, based on preliminary analysis, that bottleneck will be entitled to 40% ITC, which means under this scenario, only bottleneck next year should give us, compared to the 15, 18 this year, 40 million. So next year, ITC benefit will be more than doubled in this year. Because in addition to bottleneck, we also have, as you can see on the list, Montague, which also we expect to get around $6 million of ITC. So on ITC and net income next year, we see a boost and we see roughly $45 million of ITC process. When we look at tax equity transaction, we do have the Huawei next year. It won't be as big as what we saw this year. It will be equal to somewhere around North Valley. and it should add around $30, $35 million of proceeds. So between the two next year, we expect around $75 million of ITC and PTC proceeds. In addition to some other PTCs that we will generate during the year from some of the solar projects, so it's probably going to be around $80 million, but the P&L impact in 2024 will be much higher. The cash impact will be lower, but the P&L impact will be much higher, so we expect a very good net income exchange.
spk03: Right, and that's because you flow the ITCs pretty much instantaneously, right? When we're talking these numbers, that's not necessarily delayed or staggered over some period of time, right, just to confirm with you, right? The numbers that you quoted are flowing through the P&L.
spk07: The ITC proceeds that I quoted flying through the P&L, you are correct. The PTC... are flying through the cash flow and then amortized over usually 9 to 10 years through the tax equity line item. And you can see that this quarter there was $4.8 million more than the same period last year. It's because we are producing more PTCs. We expect to sell them either through tax equity transactions or through, I would say, a PTC transfer transaction. We are seeing the market moving to a higher level and values on PTCs. You know, it started with 89, 80 to 85 cents. Now we're getting quotes up to 92 cents on the dollar for PTCs. And hopefully Bank of America will be buying from us more PTCs in the future.
spk03: There we go. Indeed. All right. Thank you guys very much. I appreciate it. All right. Thank you. Thank you.
spk01: The next question is from Jeff Osborne with TD Cowen. Your line is open.
spk06: Yeah, good morning. Just a couple questions on my side. I think, Asi, you've given some hints or breadcrumbs over the past two earnings calls about some of the leverage in the model and new projects that are flowing through 24. In response to Julian's question, you talked a lot about the tax side, but I was wondering if you could talk specifically on EBITDA as you get a full year of PUNA, Breakneck, some of the other projects, or Bottleneck. Is there a way of quantifying? what sort of incremental EBITDA you have in 2024, either through the rebuilds of the two facilities or some of the new projects?
spk07: Good morning, Jeff. So first, already last quarter, we mentioned that the assets that will be built in 2023 and will be operated in 2023 will add roughly $30 million, 3-0, of adjusted EBITDA to 2024. Puna will only be upgraded in 2025. In addition to that, there are new assets that will be operated in 2024, partially, which are Battleneck, Montague on the storage side, combined probably over $15 million of EBITDA. And then we also have the upgrade of Biwawi, That's our largest project in 2024, which will add a few more million dollars of EBITDA. So the assets that will be COD, hopefully as early as we can this year, should add to the following year around $30 million of EBITDA, which means if in 2023 our guidance are for $480 to $510 million of EBITDA, The year after, we should benefit by additional $30 million from the assets that were already paid by the company. And then we'll start adding the new assets for 2024. Got it.
spk06: That's helpful. And then maybe just one follow-up. I think it was on Justin's question about the product's gross margins. I think you mentioned the Turkish market. support has come back. I think they have an election this weekend, if I'm not mistaken. But I'm just curious, a two-part question, how political that process was. If the outcome of the election changes, is there any risk to that program? And then B, I think historically, your Turkish margins in particular were pretty depressed relative to other countries. So I'm just curious, as Turkey starts resuming orders, if there's any risk to the 15% and 20% number that you talked about?
spk00: Hi. So the elections in Turkey is May 14. The new tariff was signed last week. We cannot predict who's going to win the election and obviously what the winner will do following the election. But this feed-in tariff was due for a long period of time. So the market did stop. I think the government in Turkey saw that the market stopped. because of the feed-in tariff that was initiated a few years ago. And the discussion on improving the feed-in tariff was a very long discussion. So we hope that it will not be changed or reduced. I can tell you that unlike previous years, the requirement is for a lot of production in Turkey. And as you know, we have a facility in Turkey and we know subcontractors that can deliver the required goods in Turkey. So we're very encouraged that the feed-in tariff came in. We're waiting for the election. We hope that after the election, the economy in Turkey, regardless who wins, will be more stable and stronger that will allow the local developers to release projects We've already been approached by multiple of them, but similar to what you asked, everybody is waiting for the elections on May 14. Margins in Turkey in the past had ups and downs. There are a few projects with very nice margins, others with lower margins. We do expect significant competition on the supply in Turkey, but If it's going to be a big market, I'm sure we'll be able to take a large portion of it with good margins.
spk06: Thanks for the detail. That's all I have. Appreciate it.
spk01: Thank you. We have no further questions at this time. I'll turn it over to the presenters for any closing comments.
spk00: Thank you, operator. Thank you all for joining us and your continuous support. We look forward to continue and deliver to all our shareholders and all our stakeholders a profitable growth. Thank you all.
spk01: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

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