ORMAT TECHNOLOGIES INC

Previous wording

*Electricity Segment.*Revenues attributable to our Electricity segment are derived from the sale of electricity from our power plants pursuant to long-term PPAs. While approximately 87.9% of our Electricity revenues for the year ended December 31, 2023 were derived from PPAs with fixed price components, we have variable price PPAs in Hawaii, which provide for payments based on the local utilities’ avoided cost. The avoided cost is the incremental cost that the power purchaser avoids by not having to generate such electrical energy itself or purchase it from others. In Hawaii, the prices paid for electricity pursuant to the 25 MW PPA for the Puna Complex in Hawaii change primarily as a result of variations in the price of oil as well as other commodities. In 2019, we signed a new PPA related to Puna with fixed prices, increased capacity and extended the term until 2052 that was approved recently by the PUC.

Current wording

Revenues attributable to our Electricity segment are derived from the sale of electricity from our power plants pursuant to long-term PPAs. While approximately 81.3% of our Electricity revenues for the year ended December 31, 2024 were derived from PPAs with fixed price components, we have a variable price PPA in Hawaii, which provide for payments based on the local utilities’ avoided cost. The avoided cost is the incremental cost that the power purchaser avoids by not having to generate such electrical energy itself or purchase it from others. In Hawaii, the prices paid for electricity pursuant to the 25 MW PPA for the Puna Complex change primarily as a result of variations in the price of oil as well as other commodities. In 2024, the HPUC approved a new PPA related to Puna with fixed prices, increased capacity and an extension of the term until 2052. Accordingly, our revenues from this power plant may fluctuate. Our Electricity segment revenues are also subject to seasonal variations, as more fully described in “Seasonality” below.

Previous wording

Product Segment. Revenues attributable to our Product segment are based on the sale of equipment, engineering, procurement and construction contracts and the provision of various services to our customers. Product segment revenues fluctuate between periods, primarily based on our ability to receive customer orders, the status and timing of such orders, delivery of raw materials and the completion of manufacturing. Larger customer orders for our products are typically the result of our sales efforts, our participation in, and winning tenders or requests for proposals issued by potential customers in connection with projects they are developing and orders by returning customers. Such projects often take a significant amount of time to design and develop and are subject to various contingencies, such as the customer’s ability to raise the necessary financing for a project. Consequently, we are generally unable to predict the timing of such orders for our products and may not be able to replace existing orders that we have completed with new ones. As a result, revenues from our Product segment fluctuate (sometimes extensively) from period to period.

Current wording

Revenues attributable to our Product segment are based on the sale of equipment, engineering, procurement and construction contracts and the provision of various services to our customers. Product segment revenues fluctuate between periods, primarily based on our ability to receive customer orders, the status and timing of such orders, delivery of raw materials and the completion of manufacturing. Larger customer orders for our products are typically the result of our sales efforts, our participation in, and winning tenders or requests for proposals issued by potential customers in connection with projects they are developing and orders by returning customers. Such projects often take a significant amount of time to design and develop and are subject to various contingencies, such as the customer’s ability to raise the necessary financing for a project. Consequently, we are generally unable to predict the timing of such orders for our products and may not be able to replace existing orders that we have completed with new ones. As a result, revenues from our Product segment fluctuate (sometimes extensively) from period to period.

Previous wording

Energy Storage Segment. Revenues attributable to our Energy Storage segment are generated by several grid-connected BESS facilities that we own and operate from selling energy, capacity and/or ancillary services in merchant markets like PJM Interconnect, ISO New England, ERCOT and CAISO. The revenues fluctuate over time since a large portion of such revenues are generated in the merchant markets, where price volatility is inherent. We recently signed a second long-term tolling agreement that will secure fixed revenues for our Pomona 2 20MW/40MWh project that follows similar contracts for the Bottleneck 80MW/320MWh project, both in California.

Current wording

Revenues attributable to our Energy Storage segment are generated by several grid-connected BESS facilities that we own and operate from selling energy, capacity and/or ancillary services in merchant markets like PJM Interconnect, ISO New England, ERCOT and CAISO or under tolling agreements that have fixed revenues. The revenues fluctuate over time since a large portion of such revenues are generated in the merchant markets, where price volatility is inherent. We are seeking to reduce volatility by increasing the amount of long-term tolling agreements in our portfolio. In 2024 we signed two long-term tolling agreement, that will secure fixed revenues for the 60MW/120MWh Lower Rio and 60MW/120MWh Bird Dog project in Texas.

Previous wording

We are pursuing the development of additional grid-connected BESS projects in multiple regions, with expected revenues coming from providing energy, capacity and/or ancillary services on a merchant basis, and/or through bilateral fixed contracts with load serving entities, investor owned utilities, publicly owned utilities and community choice aggregators. We aim to balance merchant risk with long term tolling agreements and we may pursue financial instruments, where appropriate, to hedge some of the merchant risk

Current wording

We are pursuing the development of additional grid-connected BESS projects in multiple regions, with expected revenues coming from providing energy, capacity and/or ancillary services on a merchant basis, and/or through bilateral fixed contracts with load serving entities, investor-owned utilities, publicly owned utilities and community choice aggregators.

Previous wording

Our management assesses the performance of our operating segments differently. In the case of our Electricity segment, when making decisions about potential acquisitions or the development of new projects, management typically focuses on the internal rate of return of the relevant investment, technical and geological matters and other business considerations. Management evaluates our operating power plants based on revenues, expenses, and EBITDA, and our projects that are under development based on costs attributable to each such project. Management evaluates the performance of our Product segment based on the timely delivery of our products, performance quality of our products, and revenues and costs actually incurred to complete customer orders compared to the costs originally budgeted for such orders. We evaluate Energy Storage segment performance similar to the Electricity segment with respect to projects that we own and operate.*** ***

Current wording

Our management assesses the performance of our operating segments differently. In the case of our Electricity segment, when making decisions about potential acquisitions or the development of new projects, management typically focuses on the internal rate of return of the relevant investment, technical and geological matters and other business considerations. Management evaluates our operating power plants based on revenues, expenses, and EBITDA, and our projects that are under development based on costs attributable to each such project. Management evaluates the performance of our Product segment based on the timely delivery of our products, performance quality of our products, and revenues and costs actually incurred to complete customer orders compared to the costs originally budgeted for such orders. We evaluate our Energy Storage segment performance similar to the Electricity segment with respect to projects that we own and operate.

Previous wording

In 2023, 2022 and 2021, 39%, 34% and 34% of our total revenues were derived from foreign locations, respectively, and our foreign operations had higher gross margins than our U.S. operations in each of those years. A substantial portion of international revenues came from Kenya and, to a lesser extent, from Honduras, Guadeloupe, Guatemala and other countries. Our operations in Kenya contributed disproportionately to gross profit and net income. The contribution to combined pre-tax income of our domestic and foreign operations within our Electricity segment and Product segment differ in a number of ways.

Current wording

In 2024, 2023 and 2022, 37%, 39% and 34% of our total revenues were derived from foreign locations, respectively, and our foreign operations had higher gross margins than our U.S. operations in each of those years. A substantial portion of the Electricity Segment foreign revenues came from Kenya and, to a lesser extent, from Honduras, Guadeloupe, and Guatemala. Our operations in Kenya contributed disproportionately to gross profit and net income. The contribution to combined pre-tax income of our domestic and foreign operations within our Electricity segment and Product segment differ in a number of ways, as summarized below.

Previous wording

Electricity Segment. Our Electricity segment domestic revenues were approximately 71%, 71% and 69% of our total Electricity segment for the years ended December 31, 2023, 2022 and 2021, respectively. However, domestic operations have higher costs of revenues and expenses than our foreign operations. Our foreign power plants are located in lower-cost regions, like Kenya, Guatemala, Honduras and Guadeloupe, which favorably impact payroll, and maintenance expenses among other items. Our power plants in foreign locations are also newer than most of our domestic power plants and therefore tend to have lower maintenance costs and higher availability factors than our domestic power plants. Consequently, in 2023 and 2022, the international operations of the segment accounted for 44% and 43% of our total gross profits, 63% and 72% of our net income (assuming the majority of corporate operating expenses and financing are recorded under domestic jurisdiction) and 36% and 36% of our EBITDA, respectively.

Current wording

Our Electricity segment domestic revenues were approximately 73%, 71% and 71% of our total Electricity segment for the years ended December 31, 2024, 2023 and 2022, respectively. However, domestic operations have higher costs of revenues and expenses than our foreign operations. Our foreign power plants are located in lower-cost regions, like Kenya, Guatemala, Honduras and Guadeloupe, which favorably impact payroll, and maintenance expenses among other items. Our power plants in foreign locations are also newer than most of our domestic power plants and therefore tend to have lower maintenance costs and higher availability factors than our domestic power plants. Consequently, in 2024 and 2023, our foreign operations of the segment accounted for 39% and 44% of our total gross profits, 78% and 63% of our net income (considering the majority of corporate operating and financing expenses are recorded under our domestic operations), and 31% and 36% of our EBITDA, respectively.

Previous wording

Product Segment. Our Product segment foreign revenues were 94%, 90% and 88% of our total Product segment revenues for the years ended December 31, 2023, 2022 and 2021, respectively.

Current wording

Our Product segment foreign revenues were 94%, 94% and 90% of our total Product segment revenues for the years ended December 31, 2024, 2023 and 2022, respectively.

Previous wording

*Energy Storage Segment.*Our Energy Storage segment domestic revenues were 100.0% of our total Energy storage segment revenues for years ended December 31, 2023, 2022 and 2021, respectively.

Current wording

Our Energy Storage segment domestic revenues were 100.0% of our total Energy storage segment revenues for years ended December 31, 2024, 2023 and 2022, respectively.

Previous wording

Electricity generation from some of our geothermal power plants is subject to seasonal variations; in the winter, our power plants produce more energy primarily attributable to the lower ambient temperature, which has a favorable impact on the energy component of our Electricity segment revenues as the prices under many of our contracts are fixed throughout the year with no time-of-use impact. The prices paid for electricity under the PPAs for the Mammoth Complex and the North Brawley power plant in California, the Raft River power plant in Idaho, the Neal Hot Springs power plant in Oregon and the recently acquired Dixie Valley power plant in Nevada, are higher in the months of June through September. The higher payments payable under these PPAs in the summer months partially offset the negative impact on our revenues from lower generation in the summer attributable to a higher ambient temperature. As a result, we expect the revenues and gross profit in the winter months to be higher than the revenues and gross profit in the summer months and in general we expect the first and fourth quarters to generate higher revenues than the second and third quarters.

Current wording

Electricity generation from some of our geothermal power plants is subject to seasonal variations. In the winter, our power plants produce more energy primarily attributable to the lower ambient temperature, which has a favorable impact on the energy component of our Electricity segment revenues as the prices under many of our contracts are fixed throughout the year with no time-of-use impact. The prices paid for electricity under the PPAs for the Mammoth Complex and the North Brawley power plant in California, the Raft River power plant in Idaho, the Neal Hot Springs power plant in Oregon and Dixie Valley power plant in Nevada, are higher in the months of June through September. The higher payments payable under these PPAs in the summer months partially offset the negative impact on our revenues from lower generation in the summer attributable to a higher ambient temperature. As a result, we expect the revenues and gross profit in the winter months to be higher than the revenues and gross profit in the summer months and in general we expect the first and fourth quarters to generate higher revenues than the second and third quarters. In the Storage segment pursuant to the Bottleneck tolling agreement, approximately 45% of the revenues are generated in the third quarter, and the rest is roughly even between the first, second and fourth quarters.

Previous wording

The principal cost of revenues attributable to our operating power plants are operation and maintenance expenses comprised of salaries and related employee benefits, equipment expenses, costs of parts and chemicals, costs related to third-party services, lease expenses, royalties, startup and auxiliary electricity purchases, property taxes, insurance, depreciation and amortization and, for some of our projects, purchases of make-up water for use in our cooling towers. In our California power plants, our principal cost of revenues also includes transmission charges and scheduling charges. In some of our Nevada power plants we also incur transmission and wheeling charges. Some of these expenses, such as parts, third-party services and major maintenance, are not incurred on a regular basis. This results in fluctuations in our expenses and our results of operations for individual power plants from quarter to quarter. Payments made to government agencies and private entities on account of site leases where power plants are located are included in cost of revenues. Royalty payments, included in cost of revenues, are made as compensation for the right to use certain geothermal resources and are paid as a percentage of the revenues derived from the associated geothermal rights. Royalties constituted approximately 4.6% and 4.8% of Electricity segment revenues for the years ended December 31, 2023 and 2022, respectively.

Current wording

The principal cost of revenues attributable to our operating power plants are operation and maintenance expenses comprised of salaries and related employee benefits, equipment expenses, costs of parts and chemicals, costs related to third-party services, lease expenses, royalties, startup and auxiliary electricity purchases, property taxes, insurance, depreciation and amortization and, for some of our projects, purchases of make-up water for use in our cooling towers. In our California power plants, our principal cost of revenues also includes transmission charges and scheduling charges. In some of our Nevada power plants we also incur transmission and wheeling charges. Some of these expenses, such as parts, third-party services and major maintenance, are not incurred on a regular basis. This results in fluctuations in our expenses and our results of operations for individual power plants from quarter to quarter. Payments made to government agencies and private entities on account of site leases where power plants are located are included in cost of revenues. Royalty payments, included in cost of revenues, are made as compensation for the right to use certain geothermal resources and are paid as a percentage of the revenues derived from the associated geothermal rights. Royalties constituted approximately 4.6% and 4.6% of Electricity segment revenues for the years ended December 31, 2024 and 2023, respectively.

Previous wording

The principal cost of revenues attributable to our Energy Storage segment are direct costs of the BESS that we own. Direct costs include the labor associated with operations and maintenance of owned BESS.

Current wording

The principal cost of revenues attributable to our Energy Storage segment are direct costs of the BESS that we own, and depreciation and amortization. Direct costs include the labor associated with operations and maintenance of owned BESS.

Previous wording

Our assessment of economic viability of an exploration project involves significant management judgment and uncertainties as to whether a commercially viable resource exists at the time we acquire land rights and begin to capitalize such costs. As a result, it is possible that our initial assessment of a geothermal resource may be incorrect and we will have to write off costs associated with the project that were previously capitalized. Due to the uncertainties inherent in geothermal exploration, historical impairments may not be indicative of future impairments. Included in construction-in-process are costs related to projects in exploration and development of $162.5 million and $95.3 million at December 31, 2023 and 2022, respectively.

Current wording

Our assessment of economic viability of an exploration project involves significant management judgment and uncertainties as to whether a commercially viable resource exists at the time we acquire land rights and begin to capitalize such costs. As a result, it is possible that our initial assessment of a geothermal resource may be incorrect and we will have to write off costs associated with the project that were previously capitalized. Due to the uncertainties inherent in geothermal exploration, historical impairments may not be indicative of future impairments. Included in construction-in-process are costs related to projects in exploration and development of $193.7 million and $162.5 million at December 31, 2024 and 2023, respectively.

Previous wording

We evaluate our ability to utilize the deferred tax assets quarterly and assess the need for a valuation allowance. In assessing the need for a valuation allowance, we estimate future taxable income, including the impacts of the enacted tax law, the feasibility of ongoing tax planning strategies and the realizability of tax credits and tax loss carryforwards. Valuation allowances related to deferred tax assets can be affected by changes in tax laws, statutory tax rates, and future taxable income. In the future, if there is insufficient evidence that we will be able to generate sufficient future taxable income in the United States, we may be required to record a valuation allowance, resulting in income tax loss in our Consolidated Statement of Operations.

Current wording

Valuation allowances related to deferred tax assets can be affected by changes in tax laws, statutory tax rates, and future taxable income. In the future, if there is insufficient evidence that we will be able to generate sufficient future taxable income in the U.S., we may be required to record a valuation allowance, resulting in income tax loss in our Consolidated Statement of Operations.

Previous wording

A discussion of changes in our results of operations in 2022 compared to 2021 has been omitted from this Form10-K, but may be found in “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 24, 2023, which is incorporated by reference herein. This Form 10-K for the fiscal year ended December 31, 2022 is available free of charge on the SECs website at www.sec.gov and at www.Ormat.com, by clicking “Investors” located at the top of the home page.

Current wording

A discussion of changes in our results of operations in 2023 compared to 2022 has been omitted from this Form 10-K, but may be found in “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 23, 2024, which is incorporated by reference herein. This Form 10-K for the fiscal year ended December 31, 2023 is available free of charge on the SECs website at www.sec.gov and at www.Ormat.com, by clicking “Investors” located at the top of the home page.

Previous wording

For the year ended December 31, 2023, our total revenues increased by 13.0% from $734.2 million in 2022 to $829.4 million in 2023.

Current wording

For the year ended December 31, 2024, our total revenues increased by 6.1% from $829.4 million in 2023 to $879.7 million in 2024.

Previous wording

For the year ended December 31, 2023, our Electricity segment generated 80.4% of our total revenues, compared to 86.0% in the previous year, while our Product segment generated 16.1% of our total revenues, compared to 9.7% in the previous year, and our Energy Storage segment generated 3.5% of our total revenues, compared to 4.2% in the previous year.

Current wording

For the year ended December 31, 2024, our Electricity segment generated 79.8% of our total revenues, compared to 80.4% in the previous year, while our Product segment generated 15.9% of our total revenues, compared to 16.1% in the previous year, and our Energy Storage segment generated 4.3% of our total revenues, compared to 3.5% in the previous year.

Previous wording

Revenues attributable to our Electricity segment for the year ended December 31, 2023 were $666.8 million, compared to $631.7 million for the year ended December 31, 2022, representing a 5.5% increase. This increase was mainly due to (i) $8.9 million related to the CD4 power plant which started commercial operation in July 2022; (ii) $8.8 million related to the North Valley power plant which started commercial operations in April 2023; (iii) $9.4 million related to the Heber 1 power plant which resumed operations in May 2023 after a temporary shutdown due to a fire incident that occurred in February 2022; (iv) $3.8 million related to the Tungsten 2 power plant which started commercial operation in April 2022, and (v) $8.6 million related to higher generation in Kenya and Guadeloupe. This increase was partially offset by $9.4 million related to lower revenues at the Puna power plant due to lower electricity prices and generation.

Current wording

Revenues attributable to our Electricity segment for the year ended December 31, 2024 were $702.3 million, compared to $666.8 million for the year ended December 31, 2023, representing a 5.3% increase. This increase of $35.5 million was mainly attributable to (i) $33.3 million related to the geothermal and solar power plants included in the Enel purchase transaction which were consolidated by the Company starting the first quarter of 2024; (ii) $17.4 million related to the Puna power plant due to its higher power generation and energy prices in 2024; and (iii) $11.0 million related to the Heber 1 power plant which resumed operations in May 2023 after a temporary shutdown due to a fire incident that occurred in February 2022. This increase was partially offset by a decrease in revenues in 2024 compared to 2023 as follows: (i) $12.8 million in the Dixie Valley power plant due to an unplanned outage in 2024; (ii) $10.3 million in McGinness Hills complex primarily due to curtailments which were mostly related to third-party grid maintenance; (iii) $4.2 million in the Guadeloupe power plant due to lower availability; and (iv) decreases in power generation in lesser amounts at a number of other power plants.

Previous wording

During the years ended December 31, 2023 and 2022, our consolidated power plants generated 7,196,440 MWh and 6,661,775 MWh, respectively, an increase of 8.0%. The average prices during the years ended December 31, 2023 and 2022 were $92.7 and $94.8 per MWh, respectively.

Current wording

During the years ended December 31, 2024 and 2023, our consolidated power plants generated 7,450,071 MWh and 7,196,440 MWh, respectively, an increase of 3.5%. The average prices during the years ended December 31, 2024 and 2023 were $94.3, and $92.7 per MWh, respectively.

Previous wording

As a percentage of total Electricity revenues, the total cost of revenues attributable to our Electricity segment for the year ended December 31, 2023 was 63.4%, compared to 60.2% for the year ended December 31, 2022. This increase was primarily attributable to higher operational costs in some of our power plants as well as the impact of business interruption insurance income as described above. The cost of revenues attributable to our international power plants was 18% of our Electricity segment cost of revenues for the year ended December 31, 2023.

Current wording

As a percentage of total Electricity revenues, the total cost of revenues attributable to our Electricity segment for the year ended December 31, 2024 was 65.4%, compared to 63.4% for the year ended December 31, 2023. This increase was primarily attributable to higher operational costs and depreciation expenses in some of our power plants as well as the impact of business interruption insurance income included as a reduction to cost of revenues in 2023, as described above. The cost of revenues attributable to our international power plants was 18.3% of our Electricity segment cost of revenues for the year ended December 31, 2024, compared to 18.0% for the year ended December 31, 2023.

Previous wording

Total cost of revenues attributable to our Product segment for the year ended December 31, 2023 was $115.8 million, compared to $60.5 million for the year ended December 31, 2022, representing a 91.5% increase from the prior year. This increase was primarily attributable to the increase in Product segment revenues, as discussed above. As a percentage of total Product segment revenues, our total cost of revenues attributable to our Product segment for the year ended December 31, 2023 was 86.6%, compared to 84.7% for the year ended December 31, 2022, which represents a lower gross profit on projects in 2023 compared to 2022.

Current wording

Total cost of revenues attributable to our Product segment for the year ended December 31, 2024 was $113.9 million, compared to $115.8 million for the year ended December 31, 2023, representing a 1.6% decrease from the prior year. This decrease was primarily attributable to higher profitability of projects, and therefore lower related costs, in projects for which revenues were recognized in 2024, compared to projects for which revenues were recognized in 2023. As a percentage of total Product segment revenues, our total cost of revenues attributable to our Product segment for the year ended December 31, 2024 was 81.6%, compared to 86.6% for the year ended December 31, 2023.

Previous wording

Cost of revenues attributable to our Energy Storage segment for the year ended December 31, 2023 were $27.1 million as compared to $24.5 million in the year ended December 31, 2022. This increase was mainly due to the addition of new energy storage systems to our commercially operating facilities in 2023.

Current wording

Cost of revenues attributable to our Energy Storage segment for the year ended December 31, 2024 were $33.6 million as compared to $27.1 million in the year ended December 31, 2023. This increase was mainly due to depreciation related to the addition of new energy storage systems to our commercially operating facilities in 2023 and 2024.

Previous wording

Research and development expenses for the year ended December 31, 2023 were $7.2 million, compared to $5.1 million for the year ended December 31, 2022, represent a 42.1% increase. The increase is mainly attributable to the timing of new development projects that took place during the year ended December 31, 2023 compared to 2022.

Current wording

Research and development expenses for the year ended December 31, 2024 were $6.5 million, compared to $7.2 million for the year ended December 31, 2023, represent a 9.9% decrease. This decrease is mainly attributable to the timing of research and development projects that took place during the year ended December 31, 2024 compared to 2023.

Previous wording

Selling and marketing expenses for the year ended December 31, 2023 were $18.3 million, compared to $16.2 million for the year ended December 31, 2022, representing a 13.0% increase. The increase was mainly due to the corresponding increase in Product segment revenues. Selling and marketing expenses constituted 2.2% of total revenues for the years ended December 31, 2023 and 2022.

Current wording

Selling and marketing expenses for the year ended December 31, 2024 were $17.7 million, compared to $18.3 million for the year ended December 31, 2023, representing a 3.3% decrease. Selling and marketing expenses constituted 2.0% and 2.2% of total revenues for the years ended December 31, 2024 and 2023, respectively.

Previous wording

General and administrative expenses for the year ended December 31, 2023 constituted 8.2% of total revenues for such period, compared to 8.3%, for the year ended December 31, 2022.

Current wording

General and administrative expenses for the year ended December 31, 2024 constituted 9.1% of total revenues for such period, compared to 8.2%, for the year ended December 31, 2023.

Previous wording

Write-off of Unsuccessful Exploration Activities

Current wording

Write-off of Unsuccessful Exploration and Storage Activities

Previous wording

Write-offs of unsuccessful exploration activities for year ended December 31, 2023 were $3.7 million compared to $0.8 million for the year ended December 31, 2022. These write-offs are primarily related to geothermal exploration projects that the Company decided to no longer pursue as well as costs related to a small storage facility that the Company decided to no longer develop.

Current wording

Write-offs of unsuccessful exploration and storage activities for year ended December 31, 2024 were $3.9 million compared to $3.7 million for the year ended December 31, 2023. These write-offs are primarily related to geothermal exploration projects that the Company decided to no longer pursue, as well as costs related to a number of battery energy storage projects that the Company decided to no longer pursue and develop.

Previous wording

Derivatives and foreign currency transaction losses for the year ended December 31, 2023 was $3.3 million, compared to $6.0 million for the year ended December 31, 2022. Derivatives and foreign currency transaction losses primarily includes losses from foreign currency forward contracts which were not accounted for as hedge transactions and which were higher in 2023 than in 2022.

Current wording

Derivatives and foreign currency transaction losses for the year ended December 31, 2024 was $4.2 million, compared to $3.3 million for the year ended December 31, 2023. Derivatives and foreign currency transaction losses primarily includes losses from foreign currency forward contracts which were not accounted for as hedge transactions, and the impact of changes in foreign currency exchange rates against the U.S. Dollar.

Previous wording

Income attributable to the sale of tax benefits for the year ended December 31, 2023 was $61.2 million, compared to $33.9 million for the year ended December 31, 2022. This income primarily represents the value of PTCs and taxable income or loss generated by certain of our power plants allocated to investors under tax equity transactions. This increase of $27.3 million is primarily related to the CD 4 tax equity transaction entered into in December 2022, the North Valley tax equity transaction entered into in October 2023, and the income related to the expected sale of transferable production tax credits of $10.8 million, which was recorded in 2023 under the new IRA regulations and of which $3.3 million was received in cash under a tax credit purchase agreement entered into with a third party in December 2023.

Current wording

Income attributable to the sale of tax benefits for the year ended December 31, 2024 was $73.1 million, compared to $61.2 million for the year ended December 31, 2023. This income primarily represents the value of PTCs and taxable income or loss generated by certain of our power plants allocated to investors under tax equity transactions, and to income related to the expected sale of transferable production tax credits under the existing IRA regulations. This increase of $11.9 million is primarily related to the Heber 1 power plant which resumed operations in May 2023, the Beowawe Repower power plant which commenced operations in the second quarter of 2024, and to the increase in the PTCs rates.

Previous wording

Other non-operating income (expense), net for the year ended December 31, 2023 was a income of $1.5 million, compared to an expense of $0.7 million for the year ended December 31, 2022. Other non-operating income for the year ended December 31, 2023 is primarily attributable to $1.2 million related to a settlement and release transaction with a third party entered into in December 2023. Other non-operating (expense), net for year ended December 31, 2022 is primarily related to the payment of the make-whole premium of $1.1 million from the prepayment of Series 3 Bonds in the second quarter of 2022, as further discussed under Note 11 to the consolidated financial statements, net of gain from a sale of certain equipment to a third party.

Current wording

Other non-operating income (expense), net for the year ended December 31, 2024 was an income of $0.2 million, compared to an expense of $1.5 million for the year ended December 31, 2023. Other non-operating (expense), net for year ended December 31, 2023 is primarily attributable to $1.2 million related to a settlement and release transaction with a third party entered into in December 2023.

Previous wording

Income tax provision for the year ended December 31, 2023, was $6.0 million, a decrease of $8.8 million compared to an income tax provision of $14.7 million for the year ended December 31, 2022. Our effective tax rate for the year ended December 31, 2023 and 2022, was 4.3% and 15.4%, respectively. The effective rate differs from the federal statutory rate of 21% for the year ended December 31, 2023 due to the generation of investment tax credits, a net benefit associated with the statutory tax rate change in Kenya resulting from the Finance Act, and the jurisdictional mix of earnings at differing tax rates from the federal statutory tax rate.

Current wording

Income tax (provision) benefit for the year ended December 31, 2024, was a benefit of $16.3 million, a decrease of $22.3 million compared to an income tax provision of $(6.0) million for the year ended December 31, 2023. Our effective tax rate for the year ended December 31, 2024 and 2023, was (14.1)% and 4.3%, respectively. The effective rate differs from the federal statutory rate of 21% for the year ended December 31, 2024 due to the generation of investment tax credits, a net benefit associated with the U.S. state effective tax rate, and the jurisdictional mix of earnings at differing tax rates from the federal statutory tax rate.

Previous wording

Equity in losses of investees, net in the year ended December 31, 2023, was $0.0 million, compared to $3.1 million in the year ended December 31, 2022. Equity in earnings (losses) of investees, net is mainly derived from our 12.75% share in the earnings or losses in Sarulla and our 49% share in the earnings or losses in the Ijen geothermal project. The decrease in equity in losses of investees, net is primarily related to increase in net income generated by the Ijen project starting in 2023. During the second quarter of 2022, Sarulla agreed with its banks on a framework that will enable it to perform remediation work that is aimed to improve the plant’s performance. The outcome of the first phase of the recovery plan is under evaluation towards the decision regarding the implementation of the second phase. However, as part of the remediation works involves drilling activities, uncertainty remains regarding Sarulla’s ability to meet the plan and the Company is evaluating periodically the impact of the plan on future performance. As the Company determined that the current situation and circumstances related to its equity investment in Sarulla are temporary, no impairment testing was required at year-end.

Current wording

Equity in losses of investees, net in the year ended December 31, 2024, was net losses of $0.4 million, compared to net earnings of $35.0 thousand in the year ended December 31, 2023. Equity in earnings (losses) of investees, net is mainly derived from our 12.75% share in the earnings or losses in the Sarulla project, and our 49% share in the earnings or losses in the Ijen geothermal project. The decrease in this line item is primarily related to a decrease in net income generated by the Ijen project in 2024, compared to 2023. In the second quarter of 2022, Sarulla agreed with its banks on a framework that will enable it to perform remediation works that are aimed to restore the power plants' performance. The first phase of the recovery plan included the drilling of an additional production well, which was successful, and certain modifications to surface equipment are still underway. Following the positive indications from the first phase, during the second quarter of 2024, Sarulla commenced discussions with the banks towards implementation of the additional phases.

Previous wording

Net income attributable to the Company’s stockholders for the year ended December 31, 2023 was $124.4 million, compared to $65.8 million for the year ended December 31, 2022, which represents an increase of $58.6 million. This increase was attributable to the increase of $55.3 million in net income which was affected by the factors described above, as well as a decrease in expenses of $3.2 million in net income attributable to noncontrolling interest, primarily due to the lower performance by our Puna power plant, year over year.

Current wording

Net income attributable to the Company’s stockholders for the year ended December 31, 2024 was $123.7 million, compared to $124.4 million for the year ended December 31, 2023, which represents a decrease of $0.7 million. This decrease was attributable to the decrease in net income which was affected by the factors described above, as well as a decrease in expenses of $1.2 million in net income attributable to noncontrolling interest.

Previous wording

Our principal sources of liquidity have been derived from cash flows from operations, proceeds from third party debt such as borrowings under our credit facilities and issuances of debt securities, equity offerings, project financing and tax monetization transactions, short term borrowing under our lines of credit, and proceeds from the sale of equity interests in one or more of our projects. We have utilized this cash to develop and construct power plants, fund our acquisitions, pay down existing outstanding indebtedness, and meet our other cash and liquidity needs.

Current wording

Our principal sources of liquidity have been derived from cash flows from operations, proceeds from third-party debt such as borrowings under our credit facilities and issuances of debt securities, equity offerings, project financing and tax monetization transactions, short term borrowing under our lines of credit, and proceeds from the sale of equity interests in one or more of our projects. We have utilized this cash to develop and construct power plants, storage facilities, fund our acquisitions, pay down existing outstanding indebtedness, and meet our other cash and liquidity needs.

Previous wording

As of December 31, 2023, we had access to: (i) $195.8 million in cash and cash equivalents, of which $57.5 million was held by our foreign subsidiaries; and (ii) $307.8 million of unused corporate borrowing capacity under existing committed lines for credit and letters of credit with different commercial banks.

Current wording

As of December 31, 2024, we had access to: (i) $94.4 million in cash and cash equivalents, of which $73.9 million was held by our foreign subsidiaries; and (ii) $374.1 million of unused corporate borrowing capacity under existing committed lines for credit and letters of credit with different commercial banks.

Previous wording

As of December 31, 2023, $302.8 million in the aggregate was outstanding under credit agreements with several banks as detailed below under “Letters of Credits under the Credit Agreements”.

Current wording

As of December 31, 2024, $286.6 million in the aggregate was outstanding under credit agreements with several banks as detailed below under “Letters of Credits under the Credit Agreements”.

Previous wording

Our estimated capital needs for 2024 include approximately $550.0 million for capital expenditures on new projects under development or construction including storage projects, exploration activity and maintenance capital expenditures for our existing projects. In addition, we expect $179.0 million for long-term debt repayments.

Current wording

Our estimated capital needs for 2025 include approximately $570.0 million for capital expenditures on new projects under development or construction including storage projects, exploration activity and maintenance capital expenditures for our existing projects. In addition, we expect $235.7 million for long-term debt repayments.

Previous wording

Our capital expenditures primarily relate to the enhancement of our existing power plants and the construction of new power plants. We have budgeted approximately $572.0 million in capital expenditures for construction of new projects and enhancements to our existing power plants, of which we had invested $111.0 million as of December 31, 2023. We expect to invest approximately $184.0 million in 2024 and the remaining approximately $277.0 million on thereafter.

Current wording

Our capital expenditures primarily relate to the enhancement of our existing power plants and the construction of new power plants. We have budgeted approximately $460.0 million in capital expenditures for construction of new projects and enhancements to our existing power plants, of which we had invested $135.0 million as of December 31, 2024. We expect to invest approximately $160.0 million in 2025 and the remaining approximately $165.0 million on thereafter.

Previous wording

In addition, we estimate approximately $365.0 million in additional capital expenditures in 2024 to be allocated as follows: (i) approximately $89.0 million for the exploration, drilling and development of new projects and enhancements of existing power plants that are not yet released for full construction; (ii) approximately $66.0 million for maintenance of capital expenditures to our Electricity segment operating power plants; (iii) approximately $187.0 million for the construction and development of storage projects; and (iv) approximately $23.0 million for enhancements to our production facilities.

Current wording

In addition, we estimate approximately $410.0 million in additional capital expenditures in 2025 to be allocated as follows: (i) approximately $140.0 million for the exploration, drilling and development of new projects and enhancements of existing power plants that are not yet released for full construction; (ii) approximately $55.0 million for maintenance of capital expenditures to our Electricity segment operating power plants; (iii) approximately $200.0 million for the construction and development of storage projects; and (iv) approximately $15.0 million for enhancements to our production facilities.

Previous wording

Our obligations under the credit agreements, the loan agreements, and the trust instrument governing the bonds described above, are unsecured, but we are subject to a negative pledge in favor of the banks and the other lenders and certain other restrictive covenants. These include, among other things, a prohibition on: (i) creating any floating charge or any permanent pledge, charge or lien over our assets without obtaining the prior written approval of the lender; (ii) guaranteeing the liabilities of any third party without obtaining the prior written approval of the lender; and (iii) selling, assigning, transferring, conveying or disposing of all or substantially all of our assets, or a change of control in our ownership structure. Some of the credit agreements, the term loan agreements, and the trust instrument contain cross-default provisions with respect to other material indebtedness owed by us to any third party. In some cases, we have agreed to maintain certain financial ratios, which are measured quarterly, such as: (i) equity of at least $750 million and in no event less than 25% of total assets; and (ii) 12-month debt, net of cash, cash equivalents, and short-term bank deposits to Adjusted EBITDA ratio not to exceed 6. As of December 31, 2023: (i) total equity was $2,441.0 million and the actual equity to total assets ratio was 46.9%; and (ii) the 12-month debt, net of cash and cash equivalents to Adjusted EBITDA ratio was 3.74. During the year ended December 31, 2023, we distributed interim dividends in an aggregate amount of $28.4 million. The failure to perform or observe any of the covenants set forth in such agreements, subject to various cure periods, would result in the occurrence of an event of default and would enable the lenders to accelerate all amounts due under each such agreement.** **

Current wording

guaranteeing the liabilities of any third-party without obtaining the prior written approval of the lender; and (iii) selling, assigning, transferring, conveying or disposing of all or substantially all of our assets, or a change of control in our ownership structure. Some of the credit agreements, the term loan agreements, and the trust instrument contain cross-default provisions with respect to other material indebtedness owed by us to any third-party. In some cases, we have agreed to maintain certain financial ratios, which are measured quarterly, such as: (i) equity of at least $750 million and in no event less than 25% of total assets; and (ii) 12-month debt, net of cash, cash equivalents, and short-term bank deposits to Adjusted EBITDA ratio not to exceed 6. As of December 31, 2024: (i) total equity was $2,550.9 million and the actual equity to total assets ratio was 45.0%; and (ii) the 12-month debt, net of cash and cash equivalents to Adjusted EBITDA ratio was 4.03. During the year ended December 31, 2024, we distributed interim dividends in an aggregate amount of $29.1 million. The failure to perform or observe any of the covenants set forth in such agreements, subject to various cure periods, would result in the occurrence of an event of default and would enable the lenders to accelerate all amounts due under each such agreement.