Ormat Technologies, Inc. (ORA) Income Statement

The revenue trajectory is highly volatile, with 2026Q1 showing a dramatic 75.8% year-over-year increase, likely reflecting the addition of new geothermal or solar assets entering service. However, 2026Q2's growth decelerated sharply to 10.6%, indicating that the revenue boost may be tied to specific project milestones rather than a consistent rate base expansion. This pattern suggests that investors should monitor the pace of new project completions and the associated rate recovery mechanisms, as revenue growth may not be smooth quarter-to-quarter.

The wide fluctuation in operating margin—from -1.3% in 2025Q3 to 22.6% in 2026Q1—suggests that ORA's earnings are not consistently tracking an authorized return. This volatility may reflect the mix of projects in operation, with some assets earning above allowed returns while others face higher costs or lower output. The negative operating margin in 2025Q3 is particularly notable, as it implies that certain projects may be experiencing operational issues or that costs are not being fully recovered in that period. Investors should assess whether these swings are temporary or indicative of a structural gap between authorized and earned returns.

The negative operating income in 2025Q3 is a red flag for cost recovery, as it suggests that ORA's cost structure is not always aligned with revenue. For a renewable utility, fuel costs are typically minimal, but purchased power or operational expenses could be subject to timing mismatches. The fact that net income remained positive ($24.1M) despite the operating loss suggests that other income items, such as tax benefits or interest income, offset the operating shortfall. This highlights the importance of understanding the specific cost recovery mechanisms in ORA's contracts, as they may not provide full protection against cost overruns or volume shortfalls.

The disconnect between revenue growth and EPS growth in 2026Q2 indicates that ORA's capital expenditures may be in a construction phase, with assets not yet contributing to earnings. The high D&A in recent quarters (e.g., $78.6M in 2026Q1) reflects the growing asset base, but the associated financing costs and depreciation are weighing on net income. This suggests that the current CAPEX cycle may be a period of investment that will only yield EPS growth once projects are fully operational and included in rate base. Investors should monitor the timing of project completions and the regulatory treatment of construction costs to assess when the earnings inflection will occur.