Ormat Technologies, Inc. Q1 FY2023 Earnings Call

Good morning and welcome to the Ormat 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. Please note that this event is being recorded. I’d now like to turn the conference over to Alec Steinberg with Alpha IR. Please go ahead.

Thank you, operator. Hosting the call today are Doron Blachar, Chief Executive Officer; Assi Ginzburg, Chief Financial Officer; and Smadar Lavi, Vice President of Investor Relations and ESG Planning and Reporting. Before beginning, we would like to remind that 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. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks 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. Reconciliations to the most directly comparable GAAP measures and management’s reasons for presenting such information are 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 Doron Blachar. Doron, the call is all yours.

Thank you, Alec, and good morning, everyone. Thank you for joining us today. We’re 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. 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 shareholder 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 step-down in revenue compared to the first quarter last year was largely due to the timing in recognizing revenue throughout the year, which we expect to accelerate in the remaining of the year. Our storage segment’s quarterly performance was negatively impacted by an overall reduction in energy rates, which impacted our results in the PJM and CAISO facilities. As we enter the second quarter, we completed construction and started operations of two new energy storage facilities, and we are near completion of two additional facilities with a total capacity of 64 megawatt hours. We expect the overall positive momentum we saw in Q1 to continue in the rest of 2023, with the IRA providing additional benefits to the tax credits available for geothermal 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 Assi to review the financial results. Assi?

Thank you, Doron. Let me start my review of our financial highlights on slide 5. Total revenue for the first quarter was $185.2 million, up roughly 1% year-over-year, mostly driven by growth in our Electricity segment. First 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 company stakeholders was $29 million or $0.51 per diluted share in the quarter. This compares favorably to the results of $18.4 million or $0.33 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 a 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 contributions from Ormat’s portfolio expansion efforts in 2022, mainly from CD4, Tungsten, and solar facility, as well as from the successful repowering of Heber 2 in the Heber 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 period. However, we were able to sign three new contracts during the first quarter at a total amount of approximately $40 million. We reiterate our confidence in our full year segment revenue guidance, which represents 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 6, the gross margin for the Electricity segment was 44.4%, compared to 41.8% in the second quarter of last year. The gross margin expansion was attributed to the new added capacity and higher insurance proceeds by $4.5 million versus last year related to the Puna plant. 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 contracts 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 we start to operate the new assets and grow the segment portfolio significantly. The Electricity segment generated 98% of Ormat's total consolidated adjusted EBITDA in the first quarter. The Product segment generated 1.5%. And the Energy Storage segment reported adjusted EBITDA of $0.8 million, representing 0.5% of total adjusted EBITDA for the Company. Reconciliation of EBITDA and adjusted EBITDA are provided in the appendix slides. Looking at slide 7, our net debt as of March 31, 2023 was approximately $1.6 billion. Cash and cash equivalents, and restricted cash and cash equivalents as of March 31, 2023 was approximately $522 million compared to $227 million as of December 31, 2022. The slide breaks down the use of cash for three months, illustrating Ormat’s ability to reinvest in the business, service our debt and return capital to our shareholders in the form of cash dividends. We note that this use of cash has been falling from our equity offering, cash generated by operations, and the strong liquidity profile we maintain. Our total debt as of March 31, 2023 was approximately $2.1 billion, net of deferred financing cost, 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 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 Ormat 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 energy. Moving to slide 8. In the first quarter of 2023, we invested nearly $107 million in CapEx to advance our growths. 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 a 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 $0.12 per share to all holders of the Company’s 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 $0.12 per share in each of the next two quarters. That concludes my financial overview. I would like now to turn the call over to Doron to discuss some of our recent developments. Doron?

Thank you, Assi. Turning to slide 10 for a look at our Electricity segment operating portfolio. Generation growth continues to be positively supported by the addition of CD4, Tungsten, Heber 2 repowering, and the new solar facilities including with the Wister Solar. This was partially offset by lower generation at our old facilities that are mainly constrained by heat availability from the natural gas pipeline. By 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, reaching a total electricity portfolio of 1.10 gigawatts. Moving to slide 11, our Puna geothermal power plant has recently achieved a 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 our electricity generation remain healthy, they were lower than last year. As for the product expansion, we agreed with HELCO on new terms for the PPA that are more favorable to Ormat and we are awaiting approval from the Hawaii PUC. In regard to our Olkaria power plant in Kenya, we have made progress in our ongoing efforts to increase the complex capacity. We have raised the capacity to approximately 127 megawatts, up from 125 megawatts in the fourth quarter of 2022. With respect to Heber 1, the new power plant is nearing completion and we expect it to be online by the end of the second quarter. The new facilities together with the repowering of Heber 2 are 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 PJM and CAISO. However, we’ve 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 hours. We anticipate that these projects will help 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 tariff recently introduced in Turkey includes additional incentives that will overall secure development with local manufacturing, at 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 benefit of the Inflation Reduction Act on our results. Transferable PTC related to Heber 2 geothermal, Wister 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 our energy storage facilities 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 the total cash benefit related to PTC and ITC benefits to be 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 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 of 2022. This will be achieved through the addition of 203 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 Heber 1 geothermal power plant and Steamboat Solar are expected to be online during the second quarter of 2023. Moving to slides 20 and 21, which highlight 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 Bowling Green and we are nearing 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 guidance. In the first three months of 2023, Ormat 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 will represent a 12% to 17% increase year-over-year. Within electricity, revenues are expected to be between $670 million and $685 million, a 7% increase at the midpoint. Products revenue is expected to come between $120 million and $135 million, an approximately 79% increase. Storage revenue guidance is $33 million to $38 million for the year, which is also a 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’re working to finalize and publish our 2022 ESG report by the end of August, which would 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 delays, our growth plan remains on track and we’re 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?

Thank you. The first question is from Noah Kaye with Oppenheimer.

Maybe we can start with the Heber 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, 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 effect the repowering?

So, as I reminder, Heber 2 started operating in Q4 of last year, really throughout December. Heber 1 is expected any day now to have the COD, should be during Q2, before the end of the quarter. Heber 1 used to be a 40-megawatt power plant and 50% of the power plant was Ormat equipment and 50% was basically Toshiba or Mitsubishi equipment; it was steam equipment. During the fire, the steam equipment became obsolete. Over the last year, we were able to reinstall all of the units. We’re not going to use even the old unit that Ormat used to operate. With the new capacity of Heber between Heber 1 and Heber 2 and the surrounding facilities, we will have close to 90 megawatts. We also expect it to happen with much better profitability because the cost to operate a brand-new plant is significantly lower than the cost of operating an older steam plant.

I think this raises a larger question about repowering opportunities within our portfolio. I'm not sure if ITC benefits will influence that decision, but could you provide insights on the PTC and ITC? Additionally, could you discuss the current repowering opportunities you see and any potential quantification of those?

So, as you said, the Heber facility was repowered. We’ve done a similar project in our Ormesa facility and in G2 in Mammoth and in other sites. Currently, we don’t have any major repowering projects, like Heber, in our facilities. We have smaller ones, at Dixie Valley that you see and in Guatemala. So, we do have a smaller project. Beowawe is another project that we’re doing – we’re actually repowering essentially taking an old facility that was doing 9 to 10 megawatts and it will generate over 20 megawatts when it comes online in the middle of next year. That’s the big repower that we have today.

And maybe the last one, just on the Puna, PPA restarting, nice to hear that move 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 for the PUC, there was a desire to get away from linkage to fossil fuel prices. Talk about why this is more favorable for the Company?

Puna is another significant repower that will restart once we secure the PPA. We are going to replace the entire facility with a new one that will come online. As you know, we have invested considerable effort and resources into drilling at Puna. None of these expenses are included in the new and updated PPA. Therefore, the PPA is more advantageous for us as it reflects the higher costs we incurred for drilling and discovering resources to support the 46-megawatt facility. We have completed it and submitted it to the PUC. We expect to receive approval from the PUC in Hawaii by the middle of Q3, allowing us to proceed with the project.

The next question is from Justin Clare with ROTH MKM.

First off here, 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. When might you be ready to share additional details on projects that you have in the pipeline? I’m just wondering at this point in time, 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?

Thank you, Justin. We have approximately 40 sites now that are listed in our 10-K, traditional prospects that we have globally, most of them in the U.S., especially in Nevada and California. We started this year a core hole program; we wanted to drill in three locations with core holes in Nevada. The plan for the core holes is a seven-location core hole plan where we will drill before we start to drill two-side with real core holes. This will be the next level of development that we will have. These will likely come online if everything is successful in their ‘26, ‘27 timeframe horizon. That’s in the U.S. In Indonesia, we’re drilling in two locations. We just responded to a new tender that was issued by the Indonesian government and utility – the state-owned utility, and we’re competing with Pertamina and Chevron on the site. We have additional locations that we are in various stages of negotiation as part of the exploration. In Indonesia, the process takes a bit longer. So it’s maybe a little later, but there are definitely many potentials that we’re working on today for the next round of development beyond what we have listed in our presentation.

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 U.S., but then also in other markets. It sounds like the PPA signed for the Puna project was favorable, but maybe you can just comment on what you’re seeing more broadly.

We see continuous demand for geothermal projects. To follow up on your previous question, we have been asked already by different utilities and CPAs about signing PPAs toward the end of 2020 and maybe into the beginning of 2030. So we see quite a lot of demand. When demand is high and the number of projects is not very high, prices go up. So, we continue to see increased pricing in the U.S. Indonesia has set – the other locations we’re operating have set a presidential tariff that ranges between $95 to $110, $120 per megawatt depending on the location of the site. So, these also reflect good PPA pricing.

And then maybe just one more for me. Shifting to the Product segment. Revenues declined a bit quarter-over-quarter. I was wondering if you could share why the revenues declined in that segment. Was this just due to the timing for product deliveries, or do you see any issue in supply chain or logistics? And then, also on the margin profile. You indicated that margins in that segments are expected to increase through the rest of the year. I was wondering where could we see gross margins for the Product segment in Q2, Q3, or Q4 moving through the year here.

As we mentioned in our brief remarks, we expect the full-year revenue to be on the high end of the revenue as we were able to have a sufficient backlog to almost guarantee nearly all the revenue for the year. The reason we were behind this quarter was just the way we decided to allocate work between internal work, building projects for Ormat, and working for third-party clients. In terms of margin, I think that on an annual basis, Ormat in this environment should see gross margins somewhere between 15% to 20%. These are the types of margins that we should see based on the combination of some of the contracts that have lower margins from 2022 and the ones that are tracking with higher margins that were signed in early 2023. Therefore, when you combine them, and consider our fixed costs, we should come somewhere between 15% to 20% margin, maybe on the higher end toward the end of the year.

The next question is from Julien Dumoulin-Smith with Bank of America.

I wanted to talk about California first and foremost. Obviously, California capacity prices are up very meaningfully in the last few months here and year-over-year in a big way. I know that you principally operate a contractor 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?

Hey, Julien, thank you. We see the demand is very strong in California, as you say, but we also see a very strong demand in Nevada, that is coming from the basic requirement to go renewable. 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 maximum. Today we’re drilling in 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 that geothermal and PTC is up until the end of ‘24. We hope they will be extended. Regardless, we are operating with the context of beginning construction, according to the IRS requirements by the end of the year. Most of our projects coming online in the following four years will enjoy the IRA and PTCs, even if they are not extended for geothermal. So, we’ve put a lot of effort into the U.S., mainly in the resource and exploration phase. As I said before, we have already drilled in three new locations in Nevada, four holes, and are planning to build another for the end of this year and the beginning of next year. This will serve as the base for the next wave of projects that if exploration is successful will be part of our growth going forward.

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.

Julien, this is Assi. Thank you for the question. First, the ITC is an outcome of the amount of CapEx and the timing of the COD of the storage assets. This year, the amount of assets that we’re bringing online, we expect somewhere around $15 million to $18 million of ITC benefits. All of which should flow to the reduction in income tax and reduce the tax rate for the companies, similar to what we saw this quarter. When we look to next year, we have two large projects, the larger of which is Bottleneck, which will cost us around $105 million, $110 million. Based on preliminary analyses, Bottleneck will be entitled to 40% ITC, which means, under this scenario, only Bottleneck next year should give us about $40 million compared to the $50-80 million this year. Therefore, next year, the ITC benefit will be more than double this year. In addition to Bottleneck, we also expect to receive around $6 million of ITC from Montague. So, next year we expect approximately $75 million of combined ITC and PTC proceeds. In addition to some other PTCs that will generate during the year from some of the solar projects, we could expect to reach around $80 million. However, the P&L impact in 2024 will be much higher, while the cash impact will be lower, but the P&L impact will be substantially higher. Therefore, we expect a significant increase in net income.

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?

The ITC proceeds, as I quoted, flow into the P&L, you are correct. The PTC flows to cash flow and then amortizes over usually 9 to 10 years through the tax equity line item. 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 PTC transfer transactions. We have seen the market moving to a higher level in terms of PTC values. It started with $0.80 to $0.85; now we’re getting quotes up to $0.92 on the dollar for PTCs. Hopefully, Bank of America will be buying from us more PTCs in the future.

There we go. Indeed. All right. Thank you guys very much. I appreciate it.

Thank you.

The next question is from Jeff Osborne with TD Cowen.

Just a couple of questions on my side. I think, Assi, 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, through ‘24. In response to Julien's question, you talked a lot about the tax side. But I was wondering if you could talk specifically about 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 ‘24, either through the rebuilds of the two facilities or some of the new projects?

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 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 Bottleneck, Montague on the storage side, combined probably over $50 million of EBITDA. We also have the upgrade of Beowawe, the largest project in 2024, which will add a few more million dollars of EBITDA. The assets that will be COD, hopefully, as early as we can this year, should add about $30 million of EBITDA to the following year. This means if in 2023, our guidance is for $480 million to $510 million of EBITDA, in 2024, we should benefit from an additional $30 million from the assets that were already paid for by the Company. After that, we’ll start adding the new assets for 2024.

And then, maybe just one follow-up. I think it was on Justin’s question about product gross margins. I think you mentioned that Turkish 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 are any risks to the 15% to 20% number you talked about?

The elections in Turkey are on May 14th, and 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. This feed-in tariff was due for a long period of time. The market did stop, and I think the government in Turkey saw that the market stopped because of the feed-in tariff that was initiated a few years ago. The discussion on improving the feed-in tariff was a very long discussion. We hope that it will not be changed or reduced. Unlike previous years, the requirement is for a lot of production in Turkey. We have a facility in Turkey and 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 of who wins, will be more stable and stronger, which will allow local developers to proceed with these projects. We’ve already been approached by multiple of them. But similarly to what you asked, everybody’s waiting for the elections on May 14th. Margins in Turkey, in the past, have had ups and downs. There are a few projects with very nice margins and others with lower margins. We do expect significant competition on the supply in Turkey. If it becomes a large market, I’m sure we’ll be able to take a significant portion of it with good margins.

We have no further questions at this time. I’ll turn it over to the presenters for any closing comments.

Thank you, operator. Thank you all for joining us and your continued support. We look forward to continuously delivering to all our stakeholders profitable growth. Thank you all.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.