Good day, and thank you for standing by. Welcome to the Enlight’s Second Quarter 2024 Earnings Call. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Yonah Weisz, Director. Please go ahead..

Certain statements made on the call today, including but not limited to statements regarding business strategy and plans, our project portfolio, market opportunity, utility demand and potential growth, discussions with commercial counterparties and financing sources, pricing trends for materials, progress of Company projects, including anticipated timing of related approvals and project completion and anticipated production delays, expected impact from various regulatory developments, completion of development, the potential impact of the current conflicts in Israel on our operations and financial condition and Company actions designed to mitigate such impact, and the Company’s future financial and operational results and guidance, including revenue and adjusted EBITDA, are forward-looking statements within the meaning of U.S.

federal securities laws which reflect management's best judgment based on currently available information. We reference certain project metrics in this earnings call and additional information about such metrics can be found in our earnings release.

These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our 2023 annual report filed with the SEC on March 28, 2024 and other filings for more information on the specific factors that could cause actual results to differ materially from our forward-looking statements.

Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. Additionally, non-IFRS financial measures may be discussed on the call.

These non-IFRS measures should be considered in addition to and not as a substitute for or in isolation from our results prepared in accordance with IFRS.

Reconciliations to the most directly comparable IFRS financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on our Investor Relations webpage.

With me this morning are Gilad Yavetz, CEO and Co-founder of Enlight, Nir Yehuda, CFO of Enlight, and Adam Pishl, CEO and Co-founder of Clenera. Gilad will provide some opening remarks and will then turn the call over to Adam for a review of our U.S. activity and then to Nir for a review of our second quarter results.

Our executive team will then be available to answer your questions..

power demand continues to rise, while equipment costs remain low, resulting in higher PPA prices and attractive project returns. We continue to progress with our development goals and project CODs on a global scale.

And it is exactly such an environment which positions Enlight to realize its dual goal of delivering higher-than-market growth at higher-than-market returns. I’d now like to hand the call over to Adam..

Thank you, Gilad. Enlight and Clenera continue to deliver on our rapid expansion strategy in the U.S. renewable energy market. We are currently focused on commissioning the Atrisco project, as well as financing and starting construction on the Quail Ranch, Roadrunner and Country Acres projects.

Together these four projects total approximately 1.2 GW of solar and 3.2 GWh of energy storage capacity. Let us begin with a closer look at Atrisco. This project has a capacity of 364 MW of solar and 1.2 GWh of energy storage, and is one of the largest battery projects in the U.S.

The first portion of the solar facility is expected to be connected to the grid imminently, and we expect the remaining solar and energy storage components to be connected and achieve COD later this year.

In addition, we recently reached financial close on the energy storage portion of the project, receiving more than $400 million of debt and tax equity from top-tier lenders including HSBC and U.S. Bank. This financing, from the world’s leading banks, demonstrates the quality of our projects and our ability to fund our growth.

We are proud to have earned their trust and are excited to build upon these key relationships. As Atrisco nears completion, we continue to focus on Country Acres, Quail Ranch, and Roadrunner. These projects total 810 MW of solar and over 2 GWh of energy storage capacity. All three projects are nearing construction.

Development of Country Acres, a 392 MW of energy and 688 GWh battery project in California, is progressing, and we are finalizing details with the utility. Quail Ranch, a New Mexico Project, is a 128 MW solar and 400 MG hour storage brownfield expansion of Atrisco. It awaits regulatory and legal approval of the PPA and ESA agreements.

Roadrunner is a 290 MW solar and 940 MWh energy storage project in Arizona. It is currently awaiting government permits ahead of construction. We are also excited to highlight our CO Bar complex in Arizona.

The CO Bar complex is currently made up of three projects totaling 1.2 GW of solar and 824 MWh of energy storage, with the potential to expand the energy storage portion to an additional 3.2 GWh, making it the largest complex we have announced in the U.S.

The project has been delayed due to the interconnection queue reform announced by APS in the third quarter of 2023. This process is still ongoing, and we continue to work with the utility to help enable completion of the interconnection facilities as rapidly as possible.

The energy market continues to provide compelling support for our project fundamentals. Increased demand for renewable energy is reinforcing PPA pricing, which reflects the scarcity of new projects. Both solar module and battery prices are lower than at the beginning of last year.

Additionally, there is some indication interest rates may begin to drop, which would have a positive impact on our cost to finance. Our relationship with suppliers remains strong and we have been able to adapt to the new AD/CVD framework.

For example, one of our key panel suppliers has relocated cell production to non-affected Southeast Asian countries, which enables a stable supply of modules for future projects. In light of the current U.S.

regulatory environment, we are expanding relationships with suppliers to further diversify our supply chain and pursue more domestic content qualifications. These important partnerships, our ability to adapt to changing market conditions, and continuing to deliver high-quality projects are propelling our U.S. expansion strategy.

I’d now like to turn the call over to Nir for a review of our quarterly results.

Nir?.

Thank you Adam. In the second quarter of 2024, the Company’s revenues increased to $84 million, up from $53 million last year, a growth rate of 61% year-over-year. Growth was mainly driven by new projects compared to last year as well as higher production and inflation indexation at some of our operational projects.

Since the second quarter of 2023, 12 new projects in the U.S., Hungary, and Israel started selling electricity. The most important of these is Genesis Wind which contributed $10 million to revenue, followed by the Israel Storage and Solar Cluster, which added an additional $6 million.

Björnberget, which sold limited amounts of power during 2Q23, contributed $5 million in this quarter. Gecama revenues increased 37% year-over-year to $13 million, as the project benefited from positive pricing and production trends.

We sold electricity at an average of €71 per MW versus €58 per MW for the same period this year, while production was up 14% from the same period last year. The average price realized through our hedging strategy was €85 per MW, covering 70% of the quarter’s production.

Current market conditions have significantly firmed up, with prices in the range of €60 TO €70 per MW. Finally, the reclassification of financial asset projects in Israel to fixed asset projects boosted revenues by $5 million. Second quarter net income decreased from $22 million last year to $9 million this year, a decline of 58% year-over-year.

The impact of new projects added $6 million. In addition, we experienced a significant indexation impact on our Shekel denominated debt, which resulted in a non-cash financial expense of $5 million.

We also expect revenues to rise higher due to the index linkage for the majority of our electricity PPAs in Israel which will be reflected in our financial statements starting from 2025 onwards. Overall, this represents a net benefit to the Company. The reclassification of the financial asset reduced financial income by $ 3million.

In addition, other income in the second quarter of last year was higher by $10 million net of tax due to one-off benefits linked to changes in the Clenera earnout calculations and recognition of LDs from Siemens Gamesa due to the delay in reaching full production at project Björnberget.

In the second quarter of 2024, the Company’s Adjusted EBITDA grew by 39% to $58 million compared to $42m for the same period in 2023. On the whole Adjusted EBITDA growth was driven by the same positive factors which affected our revenue growth and which contributed $24 million.

Note that adjusted EBITDA for second quarter of 2023 was boosted by $8 million from the recognition of LDs compensation. Looking to our balance sheet, Enlight achieved the major financial closing of Atrisco Energy Storage in the U.S. at the end of July.

We raised $407 million in term loans and tax equity for the construction of Energy Storage component of the project. When adding the $303 million raised at the financial close of the Solar portion in December 2023, the total financing and tax equity amounts to $710 million for the entire Solar and Energy Storge complex.

Financial and tax equity arrangements for the entire Atrisco project are now complete. We also recycled $234 million of excess capital back to Enlight as a result of this transaction; these funds will be used to propel Enlight’s future growth forward.

In addition, Enlight has $320 million of revolving credit facilities at Israeli and international banks, of which $170 million have been drawn as of the publication of this report. Moreover, in the second quarter of 2024 cash flow from operations was $56 million, an increase of 42% year-over-year.

Moving to 2024 guidance, given the strong set of results we delivered for the second quarter and first half of 2024, we are raising our Financial Outlook for the year.

On the back of sound operational performance as well as O&M and SG&A cost savings, our range for 2024 revenue guidance rises to $345 million to $360 million from $335 million to $360 million previously, and our adjusted EBITDA guidance range rises to $245 million to $260 million from $235 million to $255 million previously.

This represents an increase of $5 million and $7.5 million from previous midpoints respectively, and further demonstrates the financial strength of the Company as it continues to deliver rapid growth and expansion. I will now turn the call over to the operator for questions.

[Operator Instructions] Our first question comes from the line of Justin Clare from Roth Capital Partners. Please go ahead, your line is open..

Hi, thanks for taking the question. So first off, was wondering if you could just share how much of your capacity that is currently planned for completion through 2027 is uncontracted at this point.

And maybe if you could just talk about your strategy for contracting the remainder of your open capacity, share when you might be able to sign PPAs for the uncontracted amount. And then just, do you anticipate PPAs likely to be above where you've contracted other assets recently? It sounds like PPA prices are continuing to move upwards.

Maybe you just comment on what you're seeing there..

Yonah, why don't you take this question and Adam can compliment you..

Justin, hi there. Thanks for your question. At this point, we have some, most of our projects are contracted. We do have some open PPAs on the far end of our mature portfolio. However, the important thing to point out here is that our advanced development portfolio, which is again, a bit further out than our mature portfolio, is completely uncontracted.

And we do have a sense, given the demand that we see in the United States, that PPAs will remain at the levels that we see today and have potential for increases..

Yes, thank you for your question and thank you. Thank you, Yonah..

Just to add a little bit of color there, certainly those PPAs we expect to continue to be at this level or higher in the future. We are actively, with some of the projects that we currently have, actively renegotiating PPA prices and receiving higher rates than were previously contracted as well..

Okay, great. And then maybe just shifting to the supply chain here, I was wondering if you could just share where you are in the procurement process as we look at Quail Ranch, Roadrunner, Country Acres.

It sounds like you do have a cell supplier now that's manufacturing in countries that are unaffected by the AD/CVD, the new framework that was put in place.

Wondering, is that supplier currently in the process of ramping up new manufacturing facilities? Is supply available today? And then maybe you could comment on just where you're seeing module prices for U.S. projects.

Has that moved upward since the introduction of this new AD/CVD framework?.

Yes, I can start and then Adam, you can compliment me if you like. Hi, it's Gilad. So in general, as you asked, as you said in your question, so we have secured the line of supply for panels for three projects in the U.S. through a non-AD/CVD impacted countries.

It means that we have a reliable source of supply for all the 800 megawatts in countries that are not impacted. So not from the four countries in Southeast Asia, rather than in India. And in terms of the trend, on the price. So we see ofcourse I think we need to start with the base trend, so the price before tariffs and then price after the tariffs.

So if we analyze prices before tariffs, we see a very sharp drop in the base panel prices throughout the world. Today, before tariffs, we are on $110 per kilowatt on the international market. And we see the same trend for batteries. We are now on $170 per kilowatt, and we see this trend going down.

So towards 2030, we believe or analysts estimate that prices will go down to $70 and $110, respectively. So in the U.S. with the tariffs, of course, prices are higher, but still lower than what we saw at the beginning of 2023. We are about 25% lower, and sometimes 30% lower than the prices that we assumed in our model in 2023.

Therefore, the returns for the project right now are increasing in the overall through this higher level of PPA prices, as we mentioned before, lower level of panels in the U.S. in the overall after the tariffs, and let's say the stabilized financing cost that we see with some positive trend of the cost of finance even declining.

So in the overall, we see better returns. We mentioned in our presentation an average return for the new project of 10.5% before leverage, which is even a rough return because only EV to EBITDA. So if you take the long-term result, it's even better. And of course, after leverage with cost of capital around 6% and maybe lower, returns reach deep teens.

So we see good trends on the market right now..

Okay, great. That's helpful. One more question just on domestic content here, the potential for the adder. I was wondering if you think you could secure the domestic content adder for any of your battery storage projects with CODs in 2025 or 2026.

It sounds like there's different suppliers that are offering alternative approaches to qualifications, some with domestic sales, some without. So just wondering if that has been factored into your model and what the potential is for securing that adder..

We'll start with Atrisco. Atrisco, as you know, is based on Tesla batteries, and they have potential to qualify for the tax equity adder. We will know that for sure on COD. So currently it's not modeled. It's a pure upside, and we will see in the future.

Regarding additional projects in the U.S., so in the project where we will use Tesla, there is a potential for the U.S. content. Of course, it varies from project to project to clear the line, but there is a clear potential for that. And for the rest of the suppliers, I believe the potential is a little bit down the road towards 2026, 2027..

Okay, great. I appreciate it. Thank you..

Thank you. [Operator Instructions] We'll now move on to our next question. Our next question comes from the line of Maheep Mandloi from Mizuho. Please go ahead. Your line is open..

Hey, hello, and thanks for taking the questions there. I just wanted to know the last question there.

Can you confirm on the unlevered returns? Does that assume your latest module cost assumptions as your supplier moves to the U.S.? And on the Tesla contender, other domestic suppliers, does it also include the domestic contender? That's still an upside to the yield there..

So the tax equity adder for domestic content is still not included. So it's an upside on which we will know in the coming months. And on the brownfield side for a trace, it is included..

Perfect. And maybe one question just on the slide. I think it was 18 where you kind of like show the timeline of projects to be delivered in Virginia. The list of projects with the construction on the development.

Could you maybe talk about the timeline on when do you expect those to be installed or COD in Virginia and what kind of returns are looking with that as well?.

Great question. Thanks. So we do have quite a substantial portfolio there in PGM comparing say in light of the fact that Clenera is a developer that is expertise is usually in the West and 70% of the portfolio comes from the West.

Having said, so we do have a couple of projects about five to seven project in PGM still in permitting phase so we are still under development we will see for the future we got some good interconnection response we hope to complete permitting so this is an upside that we will see for the future for the next quarter on how we develop.

On the meantime we do have after the three projects that Adam mentioned in his remarks Quail Ranch, Roadrunner and Country Acres we do have additional a bunch of projects that are really approaching maturity in terms of completion of development we see a very strong trend of construction in 2025 after the three project or in following the three projects that were mentioned.

So we see, I believe that we are starting to see the fruits of our investments together with Clenera on the development side in the U.S. and very large projects are coming into fruition..

Okay and then this last one on slide 14 on the portfolio I think it looks like you pushed out some 300 MWs from 2026 to 2027, sorry if I missed this earlier, please remind us what project that is or what's causing that?.

Yonah, would you like to take the answer?.

Sure.

Maheep, could you repeat the question?.

Yes, if I look at the 2026 mature portfolio size of it including a pre-construction, it seems 300 MWs lower than what you had the last quarter.

It looks like project was moved out from 2026 to 2027 just want to understand what that thank?.

Thank you very much for that.

So I'll just take you back a quarter and in Q1 we talked about Rustic Hills moving out to 2027 in order to benefit from what we believe will be a healthy domestic panel production panel production industry in the United States and so we moved Rustic Hills out to 2027 in order to plan to get those domestically produced panels at or in addition to the IRA adder for domestic content and that was a worthwhile move for us.

And so we've done the same thing in this quarter for Gemstone and Cogan [ph] and that's the 300 MW which you've seen transferred into 2027 again from the idea of by that time we'll have a good amount of domestic content eligible panels to purchase which is better for us.

At the same time the utility which we're in touch with is not really under any pressure for that immediate supply and so they're agreeing with this move as well..

Got it. Thank you..

Thank you..

Thank you. We'll now move on to our next question. Our next question comes from the line of David Paz from Wolfe Research. Please go ahead. Your line is open..

Good morning. Can you can you elaborate please on the Interconnection Q reform for CO Bar in Arizona.

Are you awaiting on a specific regulatory order when do you expect clarity on that issue?.

Adam, would you like to take the question..

Yes so we've been working very closely with utility that that discussion is ongoing. We expect to receive clarity on that in the coming months..

And is that the gating item, do you have to do a subsequent filing or proceeding?.

That is the gating item. And we expect the utility is has been very helpful in this process and so we expect that to close out here pretty quickly..

Great.

And you may have just addressed this on a previous question, but how much capacity is in the advanced development book that is not in your mature projects, but you've noted in your slides? Is that what you just described in the previous question with Gemstone and Cogan [ph] or those other plants?.

There are much bigger plants. So, Yonah, maybe you can go over the main projects that are in the queue after with the next one in the U.S. and mention also a bit of progress in Europe and Israel as well, that is aggregating..

Okay, again, you were asking as to what's in the advanced development portfolio?.

Let's put down in terms of Gemstone. Your mature project..

Forgive me.

Could you repeat that?.

Sure. In your mature projects portfolio, there's a footnote that says that it excludes some advanced projects in 2027 in your advanced development book that are not illustrated. I'm just curious what that potential could be for 2027 or that could be pulled into your mature projects book..

Sure. It could be it could be about four giga of generation and up to 14 GW of storage..

Okay, great.

Can you elaborate a little bit about CO Bar and snowflakes and the other projects to give some color on what we have in line after the three projects that were mentioned specifically as mature?.

Sure. Well, on CO Bar, we have essentially a very large potential capacity of un-contracted storage. That's around 3 GW of un-contracted storage capacity. And that is something which still stays open. That is in our mature portfolio, but it has the potential that I described earlier on of the advanced development portfolio of not being contracted.

And we have another project named Snowflake in the U.S. which I believe is approximately 1 GW of generation capacity and approximately 2 GW of storage capacity. And that is un-contracted as well. We also have projects which we may be working on in the Balkans as well as also looking for Italy and Spain as well..

Great. Okay, thank you..

Thank you. We'll now move on to our next question. Our next question comes from the line of Adil Hasidim from Banklumi. Please go ahead. Your line is open. As there is no response that concludes today's question-and-answer session. So I'll hand the call back to Yonah for closing remarks..

Thank you, everyone, for joining us. And we look forward to speaking with you next quarter..

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by..