Good morning and welcome to the Arma Technologies second quarter 2026 earnings conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask a question. If you would like to ask a question during this time, just press star followed by the number 1 on your telephone keypad. And if you would like to withdraw your question, press star 1 again. Please note that this event is being recorded. I would like to turn the conference over to Josh Carroll with Alpha IR. Please go ahead.

Thank you, Operator. Hosting the call today are Dharam Lashar, Chief Executive Officer, Ozzy Ginsberg, Chief Financial Officer, and Smedhar Lavee, Vice President of Investor Relations and ESG Planning 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 risks and uncertainties. For a discussion of such risks and uncertainties, we see risk factors as described in ORMAC Technologies' annual report on Form 10-K and core 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 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'd like to remind everyone that a side 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 Ormat's CEO, Dharam Boshar.

Dharam? Thank you, Josh. Good morning, everyone, and thank you for joining us today. Let me begin with the key highlights from the second quarter, starting on slide four. The first half of 2026 reflects accelerating momentum across all three business segments. Second quarter revenue increased 10.6%, gross profit increased 20.8%, and adjusted EBITDA increased 6.9% compared with the prior year period. On the strength of these results, we are raising our full year revenue and adjusted EBITDA guidance. In our electricity segment, Blue Mountains contribution, stronger performance at Olcaria and Tuna, and lower cartelment in the United States drove continued growth. In energy storage segment, revenue nearly tripled year over year, supported by new capacity additions, high asset availability, and favorable merchant pricing in PJM. Taking together, these results demonstrate the strength and balance of our three-segment model, and the returns available when long-term contracted revenues are paired with selective merchant exposure. On the development side, we added 155 megawatts to our generating portfolio since the beginning of the year, including the hooker solo and storage acquisition, the shared storage facility, and the commencement of commercial operation at our 10-megawatt Dominica geothermal power plant. On the EGS front, we advanced both the SLB and Sage pilot program towards field execution and introduced Omega 100, our new 100-megawatt binary unit designed for large-scale conventional geothermal and EGS applications, both of which I will discuss in more detail shortly. I will now turn the call over to Asi to review our financial results.

Thank you, Doron. I will begin my review of the financial results on slide six. Second quarter revenue was $258.8 million, an increase of 10.6% compared with the prior year period, led by strong energy storage performance and continued growth in the electricity sector. Gross profit increased 20.8% to $68.7 million, and consolidated gross margin expanded by 220 basis points to 26.5%, reflecting the strong performance and margin attribution of our storage assets in PGM. Net income attributable to the company stockholders was $27.1 million or $0.43 per diluted share, compared with $0.28 million or $0.46 per diluted share in the prior year period. The year-over-year decrease reflects a $6.6 million write-off storage project we decided not to pursue, partially offset by stronger underlying operating performance. Adjusted net income attributed to company stockholders in the second quarter of 2026 increased 6.5% to $31 million, or $0.50 per diluted share, compared with $29.1 million, or $0.48 per diluted share, in the second quarter of 2025. Adjusted EBITDA increased 6.9% to $143.9 million, led by energy storage performance. Slide 7 provides additional details on our segment performance. Electricity segment revenue in the second quarter increased 5.8% to $169.3 million. The increase reflects a full quarter contribution for Blue Mountain, higher energy rates, and improved performance at Puna, stronger generation at Orcaria, following well-filled optimization, and lower curtailments at the Guinness Hills, Lixit Valley, and Tungsten, partially offset by planned maintenance activities. Product segment revenue decreased 21.6% to $46.7 million. reflecting the timing of manufacturing and construction progress. Product segment gross margin was 9.7% down from prior year period, mainly due to increased construction costs related to a project in Europe and the impact of foreign exchange fluctuation on manufacturing costs. We expect product segment gross margin for the second half of the year to be approximately 15%. and for the full-year gross margin to be approximately 18%. Energy storage segment revenue increased 195.1% to $42.8 million. High asset availability enabled us to capture strong merchant pricing in PJM, while capacity addition, completed over the past 12 months, contributed incremental revenue. The segment generated a gross margin of 56.2%, reflecting our strategy of optimizing the mix of contracted and merchant revenues. We expect energy storage gross margin to normalize to 30 to 40% in the second half of the year, and for the full year to be approximately 40 to 50%. Slides 8 and 9 summarize our first half results. revenue increase 42.9% to $662.7 million, driven by substantial growth across all three segments. Adjusted EBITDA increased 18.9% to $338.8 million, and adjusted diluted EPS increased 54.3% to $1.79 per share. Turning to slide 10, during the first half of 2026, we collected approximately $52 million of proceeds from tax credit monetization transaction. For the full year, we continued to expect approximately $90 million in proceeds, including approximately $70 million related to ITCs and approximately $20 million related to PTCs transfers. During the second quarter, we recorded a $9.5 billion ITC benefits. For the full year, we expect to record approximately $59.9 million in ITC benefits, which we expect to result in an effective income tax benefit rate of approximately 15% in the second half of the year, excluding changes, of course, in law and other one-time ITCs. Slide 11 presents the change in our cash position during the first half of the year. Cash and cash equivalent and restricted cash total approximately $658 million as of June 30, 2026, compared with approximately $281 million at year-end 2025. The increase reflects the proceeds from our convertible notes offering and other financing activities, cash generated from operation, tax credit monetization, and the proceeds from the top two sell, partially offset by capital expenditure, debt repayments, acquisitions, and investments. Our total debtors of June 30, 2026 was approximately $3.4 billion, excluding deferred financing And the weighted average interest rate on our debt portfolio was approximately 3.9%. Turning to slide 12, total liquidity was approximately $1.1 billion as of June 30, 2026. Net debt was approximately $2.7 billion, equivalent to 4.3 times net debt to adjust the debita. A net debt represented approximately 50% of total capitalization. We expect capital expenditures for the remainder of 2026 to be $449 million. Of that, approximately $281 million is allocated to the electricity segment for construction, exploration, drilling, and maintenance. $129 million to the storage asset construction and approximately $20 million to the SLB pilot and other EGS activities. Our detailed capital expenditure plan is included in slide 34 of the appendix. In support of our broader development program, we secured several important financing sources. In May, we closed a unique exploration financing facility up to $40 million for the obsolete geothermal project in Indonesia under the World Bank's Geothermal Resource Risk Mitigation Program. This structure provides a risk-sharing mechanism that reduces the financial exposure associated with early-stage exploration. Our strong liquidity and access to capital provide us with the flexibility to fund our development pipeline while continuing to service our debt obligation and return cash to capital shareholders. On August 5, 2026, our board of directors declared a quarterly dividend of 12 cents per share, payable on September 2, 2026, to shareholders of record as of August 19, 2026. The company also expects to pay a quarterly dividend of 12 cents per share in the next quarter. I will now turn the call over back to the Ron to discuss the recent operating and strategic developments.

Thank you, Asi. Turning to slide 14, our total operating portfolio now stands at approximately 1.85 gigawatts. On slide 15, our electricity portfolio stands at approximately 1,355 megawatts globally, with new 15 megawatts added during the quarter. We currently have 202 megawatts of electricity project under construction and development through the end of 2028. including 87 megawatts of geothermal capacity and 115 megawatts of solar capacity. All of these projects are supported by long-term PPAs providing strong visibility for future growth. Slide 16 details the electricity segment second quarter drivers. Cartelment in the U.S. declined by $4.2 million. Blue Mountain contributed approximately $2.6 million dollars of revenue and puna revenue increased by approximately three million dollars on higher rates and recovery from prior year wellfield issues at olcaria stronger generation following wellfield optimization added approximately 2.5 million dollars overall power generation increased three percent year over year moving to slide 17. one of our strategic priorities over the past several years has been to proactively renegotiate contracts well ahead of expiration, extending the contract's term while capturing the significant improvement we are seeing in geothermal pricing. Over the past year, we continue to make excellent progress on this initiative. In addition to signing new PPAs for projects with expiring contracts, we executed several blend and extend agreements, including the Blue Mountain Power Plant that increase the value of our existing asset base while providing our customers with long-term price certainty and reliable baseload renewable energy. The recontracted and blend and extend PPAs are expected to increase annual revenues by approximately $14 million as they become effective over the next several years, starting in 2026 and continuing through 2030. Importantly, these contracts are secured with minimal incremental capital investments, making them one of the most attractive sources of value creation within our portfolio. Looking further ahead, we continue to see significant opportunities across our contracting portfolio. Between 2031 and 2034, we have approximately 190 megawatts under contracts that are currently priced at a weighted average of approximately $86 per megawatt hour lower than today's market pricing of over $100 per megawatt hour we believe our existing geothermal fleet provides a meaningful embedded opportunity to continue repricing contracts and creating long-term shareholders value turning to slide 18 our product segment backlog stood at approximately 203 million dollars as of august 5 2026. the decrease from year end 2025 primarily reflects the recognition of 105 million dollars of revenue from the top two projects during the first quarter the backlog remains geographically diversified with the majority associated with projects in asia and okanya moving to slide 19. energy storage revenue increased 195% to $42.8 million, including approximately $19.5 million of higher revenue from existing PGM assets and approximately $7.7 million generated by newly commissioned facilities. The operating portfolio now stands at 495 megawatts and 1,358 megawatt hours. Turning to slide 21, we remain on track to achieve our 2028 portfolio targets of 2.6 to 2.8 gigawatts, representing an expected compound annual growth rate of approximately 15% to 18% from 2025. Slides 22 and 23 provide details on our geothermal and solar development pipeline. recent milestones include commercial operations in dominica and completion of the cofort expansion while construction and development continue across our u.s and international portfolio including the addition of puna expansion and lone mountain turning to slide 24 and 25 we have seven energy storage projects under construction and development with total capacity of 497 megawatts, or 1,888 megawatt-hours. This includes the new 100-megawatt, 400-megawatt-hour Denali facility in California, which we recently approved for development. Denali is expected to commence operation by the end of 2028 and will provide storage services under a 20-year tolling agreement with Clean Power Alliance. Our broader U.S. energy storage pipeline now totals approximately 2.5 gigawatts or approximately 10 gigawatt hours across 25 named prospects. Turning to slide 26, our EGS strategy advanced across three pillars during the quarter. Surface technology, subsurface pilot projects and development, footprint across the Western United States. On the surface side, we introduced Omega 100, our modular 100-megawatt ORC unit designed for large-scale geothermal and EGS applications. Leveraging or much a decade of leadership in binary technology, Omega 100 is designed to serve both our future EGS development and third-party projects. During the year, we also continued evaluating manufacturing readiness and the associated cost structure to support future commercial deployment. On the subsurface side, we continued to advance both of our pilot projects. At our SLB Desert Peak pilot, we completed the analysis of geophysical seismic data and incorporated the results into an updated subsurface model. we also submitted drilling permits applications to regress procurement of long lead items and enter the final stages of vendor selection keeping us on track to begin drilling in the fourth quarter of 2026. at the sage pilot we selected the project location advanced permitting activities reached the final stages of procurement drilling services and made progress on the engineering work required to integrate SAGE technology into an existing OMAD power plant. Beyond the pilot projects, we are expanding our geothermal land position and securing additional water rights and interconnection opportunities across the western United States. During the year, we were awarded federal lease covering 10,642 acres in New Mexico for EGS development, and we are currently negotiating the acquisition of additional acres in Oregon and Idaho. Our resource team has also identified two promising prospects within our existing portfolio that we believe could support large-scale EGS development, and we continue to pursue additional interconnection opportunities in Nevada. These initiatives, together with our strategic partnerships, expanding resource positions, and proprietary surface technology, position ORMAT to leverage its deep expertise to advance EGS-forward commercial deployment, driving what we believe is a compelling long-term growth opportunity for the company. Please turn to slide 27 for an updated 2026 guidance. Based on our strong first-half performance and continued business momentum, We are raising our full-year revenue and adjusted EBITDA guidance. We now expect total revenues of $1.15 billion to $1.2 billion, representing growth of approximately 18.7% at the midpoint compared to 2025. By segment, we expect electricity revenue of $710 million to $725 million. dollars product revenue of 300 million dollars to 320 million dollars and energy storage revenue of 140 million dollars to 155 million dollars we now expect adjusted EBITDA of 630 million dollars to 650 million dollars representing growth of approximately 10 percent at the midpoint compared with 2025. Approximately $17 million of adjusted EBITDA is expected to be attributable to minority interest. Let me close on slide 28. The second quarter reinforced the strength of our diversified business model and discipline execution. Double-digit revenue growth, gross profit expansion of more than 20%, a full-year guidance raise, and continued prospects on projects that will drive our long-term growth. We also expanded our development pipeline, advanced the SLB and SAGE EGS pilots, and reinforced our funding platform in a supportive policy environment. As demand for reliable around-the-clock, low-carbon electricity continues to grow, ORMAT is well-positioned to capture that demand through our combination of operating expertise development capabilities, technology leadership, and strong capital position. We remain focused on executing our strategy, achieving our 2028 gross objective, and creating long-term value for our shareholders. Before we open the call for questions, I would also like to invite everyone to join us at our Investor Day, which we will host on September 8th at the New York Stock Exchange. during the event we will provide a deeper look into a much long-term growth strategy including our plans to expand our electricity and energy storage businesses as well as our roadmap for developing and commercializing EGS we look forward to sharing more detail with you then with that I will conclude our prepared remarks operator we are now ready to take questions we will now

begin the question and answer session if you would like to ask a question at this time just press star followed by the number one on your telephone keypad and if you would like to withdraw your question just press star one again and our first question comes from the line of justin clear we're rock capital partners justin please go ahead hi good morning uh thanks for the time here uh wanted to just start on the uh electricity segment so when i look at the uh the q2 electricity gross margin.

It looks like it declined slightly year over year. This is despite the improved performance at Puna and Olcaria, lower curtailments, and then the contribution from Blue Mountain. So just wondering if there were other factors that maybe offset the benefits. And then you also did modestly lower the full year outlook. So just wondering what explains the lowered expectation there for the electricity segment.

Good morning, Justin. This is Asi. I hope everything is well. I'll start with the second part of the presentation. As you all know, in the Q2, we do update the annual forecast for the first time, the guidance. And first, I'm glad to report that the company is finally going to reach close to $1.2 billion of revenues, which is a huge increase versus the last few years. And we also increased the middle point of the EBITDA guidance, and increased significantly the lower points of the EBITDA guidance. And that came mostly as a result of weather-related activities on one hand that we saw in the East Coast, offset by a lower $5 million in the electricity segment. The majority of it related to two projects in the Caribbean. Those projects, we do have around one or two months delays on those projects on the COD. But I'm glad to report that one of them already COD. Dominica is already in full operations since July 31st. As of the offset of the gross margin on the quarter, I would say the only one time that we've seen is that we did have some planned maintenance for the quarter. And we do expect margin to improve towards the end of the year. Okay, got it. That's helpful. Cool.

Maybe then just shifting over to the energy storage segment. So for that segment, you listed the revenue guide, I think $45 million at the midpoint. And so I was just wondering if you could speak to your assumptions around merchant pricing in the back half for that storage segment relative to what you experienced in the first half. and maybe you could speak to kind of how pricing has trended in Q3, the quarter to date. Are you seeing any signs of pricing normalization in PJM at this point, or are you seeing continued strength?

Hi, thank you. It's Doron. So I would say on the energy storage part, pricing in the first half were very, very strong, the merchant prices. Over the last few weeks we see them becoming a bit more normal as we went toward the end of July and into August. We're looking at the second half as a more normalized pricing although a bit higher than what we've seen in previous years and you can see also with the guidance that the first half is stronger than the second half. But at the end of the day it's impacts mainly by the weather conditions in the east coast i would say that the weather conditions in california and texas actually had the the opposite effect but in total it was a very very positive impact for the energy storage okay i appreciate it thank you and your next question comes from the line of noah k with oppenheimer noah please go ahead hello thanks for taking the questions all uh looking forward to your investor day and um maybe we'll start with the the project pipeline uh it's really nice to see that that growing uh you added loan mountain uh to the official list here uh so the question is should we assume these new projects coming into pipeline are generally covered under the umbrella ppa with google uh and maybe just give us an update on how you're tracking towards you know meeting that uh portfolio uh target of 150 megawatts i know thank you for the question so yes long mountain is going to be part of this portfolio ppa with with google i expect that in the coming quarters will release some more greenfielders will be part of the portfolio ppa with google we feel very comfortable in meeting the minimum and maximum targets in the portfolio. We signed the portfolio with the range, like in the past, with the minimum and maximum, in order to allow us flexibility in managing the portfolios as pricing continues to increase.

Okay, very good, thanks. And then, you know, appreciate all the updates on the EGS pilots as they advance. Can you maybe help us understand, appreciate a little bit more What you're working towards solving in terms of the key technical challenges when you're looking to, I know these are quite small projects, but when you're looking to integrate them into, you know, some of your existing operations, and basically what have you had to sort of figure out in terms of operating these pilots safely and without having any real impact to the existing assets? thanks so um the pilots uh that we're doing and we're planning in both pilots to drill the appraisal well or monitoring well this year and the full pilots next year during next year

should not have any impact on the existing facilities they're going to be drilled outside of the existing reservoir and be connected to the existing facilities. We might have a short shutdown of a couple of days in order to connect them, but even that, I believe, will be very small and should happen hopefully by the end of 27 or beginning of 28. I would say the main challenges with the EGS technology at the end of the day is how you maintain the water on one hand, build the facility that the tractors are connecting, and how you reduce the cooling effect that you continuously inject through the structure of cold water. In a traditional geothermal, we have the large pool of resource that is heated up from below. Here, continuously move water. I think this is one of the challenges that exists.

Very helpful, Colin. Thank you.

Your next question comes from the line of John Windham with UBS. John, please go ahead.

Hey, perfect. Congratulations on the result, and I guess not taking it for granted. Thanks again for all the transparency on the projects. Maybe a couple quick things I want to dig into, and first, unfortunately, is weather, but you mentioned it before. I'm just trying to think through, or if you have any color, on potential impacts on the third quarter generation due to the heat dome in the west. I know a lot of the total generation geothermal is a little bit about the temperature differentiation between subsurface and above ground. So just any comments you have on that, and I'll have a quick follow-up.

Yeah. So since we did finish July regarding all the information, all in all, July had some very hot days, but some days were not hotter than the average, and I'd say that all in all, July was relatively as we expected. August is starting very hot, and as you said, very hot has an impact on geothermal, and we need to see how the weather continues in the west during August and September to know it, but July was relatively flat.

Okay, thanks. I know it's a smaller part of your business on the solar side, but any thoughts about the FCC's ruling on banning new models for inverter imports, whether that's any impact to your storage or the solar business you have? Thanks so much.

So, of course, we are looking into it and following all the unknown changes that is coming. We do think that we will be able at this point to buy from China inverters, and we will be able basically to eliminate the ability to connect to them from remotely. And that option is available when we talk to our vendors. And it looks like that's the main restriction at this point. So we are moving forward. We do have Jersey Valley solar and storage that's under construction. We do have Denali that we just announced. We actually have unprecedented amount of solar and storage under construction these days. So I will say we do think that we will be able to eliminate the ability to connect from remote to those inverters.

And therefore, we will be able to buy foreign, not just Chinese, but in general, foreign inverters. lately we've got we've gotten some of those from from spain and we think that we'll be able to buy more your next question comes from the lineup davis sonderland with baird davis please go ahead hey good morning guys congrats on the results and thank you very much for taking our questions maybe i have two both on strategy and i guess i'll start first with energy storage i wanted to just ask if the grid congestion the weather events all the things that have led to higher pricing for the merchant contract specifically have made you guys rethink or re-contemplate the strategy of merchant versus tolling and that mix element and just what you guys prefer in each region?

Thank you for the question. We started our strategy and there's a lot of questions whether we should go fully contracted like geothermal or fully merchant. And we chose a risk managed approach of 50% contracted and 50% merchant. We are still with this strategy. There are markets where we see that the merchant prices are very low, like in Texas and California. And over those markets, we look for a tolling agreement, PGM that has very fluctuated merchant pricing. We are merchants. So our strategy hasn't changed. Overall, we're looking at 50-50. I can say that we are looking at additional markets like Georgia, Oklahoma and others to build a project there and you can see in the pipeline that we have today almost two gigawatt hour of projects under construction that will be COD'd not later than the end of 2028 and that's increasing significantly our portfolio and this is one of the decisions we made a few years ago to focus on energy storage as a strong supporter for our renewable energy platforms thank you very much toron and maybe turning to electricity just looking at the ppa environment and appreciate your commentary about it still remaining very constructive i just wanted to ask how far out negotiation stretching your philosophy on contracting today versus waiting for potentially higher prices down the road or any other considerations on the ppa backdrop and thank you guys very much we see a ppa pricing continue to to increase we are negotiating some additional contracts for projects in the early stages of negotiations and it's always a question whether to sign today future contract or not but when we see a high ppa like the one that we signed with google and with switch that takes away the risk of exploration these are things that we're happy to sign they are limited in in magnitude number of megawatts as well as timing so in case we see continued pricing increase we can continue to sign new PPAs and I said all of the PPAs have a minimum and a maximum of all the portfolio and this allows us in case pricing goes up to go to the lower level if prices stays down to go to the higher level I will say that also on the EGS front we are discussing EGS PPAs. These tend to be with higher PPA tracing that we have assigned so far.

Super helpful. Thank you guys very much. I'll pass you on.

Again, if you would like to ask a question, just press star followed by the number one on your telephone keypad. And if you would like to answer your question, just press star one again. And our next question comes from the line of Chris Dent-Riles with RBC.

Chris, please go ahead. yeah good morning and thank you um i wanted to ask a bit more on on the egs side of things here and you you commented in the prepared remarks that you're adding some acreage i think new mexico oregon looking at idaho as well as identified a couple of sites on your own side and so maybe just how do we think about the investment strategy that you all are making right now just given you haven't you know spot a well yet and so i guess from my purview it looks like you're quite confident and the outcome of this, but what's the level of risk management, I guess, in terms of making investments today ahead of seeing initial pilot results?

Thank you. So on the technology side, and I mentioned before the challenges we have, but in order to deal with these challenges and what gives us a much higher confidence in the ability to solve all these issues is the joint venture that we did with SLB. As you know, SLB is one of the, if not the largest drilling company, and they have the expertise of drilling and fracking. And we believe that all technological issues can be solved if you have the right expert with you. We have started significantly efforts in developing the EGS. The investment to date on land is not that material, definitely not for a company in the size of format. We have multiple discussions in different states, on different sizes of land, and we'll update the market as we progress and also on our investor day in September in New York. but these so far are not a significant amount of money got it thank you maybe as a follow up and just to the comment on the prior question I think you mentioned that discussing PPA pricing for EGS projects that that could be higher than other conversations and so maybe just on that you know what's the time frame that you're kind of looking to potentially will a sign these ppas and what when do you think delivery would start thanks we will obviously give a lot a lot of more information about the investor there i would say that we are speaking with different hyperscalers data centers and utilities about egs projects all of them are aware of the fact that the pilots are being developed And whatever PPA we will sign, you know, we will take into account the fact that the technology is not fully yet developed and will allow us to manage the risk as we've been doing for many years. Thank you.

There's no further questions at this time. I will now turn the call back over to Daron for closing remarks.

Okay. Thank you, everyone, for joining us today. Q2 was an excellent quarter. format that allowed us also to increase our guidance. We have a very good pipeline both on the electricity, the geothermal part as well as on the energy storage part projects that are being developed. And looking forward to seeing all of you, you know, in Vestor Day in September, we will be able to give much more color on our pipeline for the traditional energy and also give quite a lot of more information about our EGSA pipeline development. Thank you. This concludes the race call. You may now disconnect.