Good day, and thank you for standing by. Welcome to the Enlight Renewable Energy Fourth Quarter and Year End 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Yosef Lefkovitz. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining our fourth quarter and full year 2023 earnings conference call for Enlight Renewable Energy. Before beginning this call, I would like to draw participants' attention to the following: 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 conflict in Israel on our operations and financial condition and company actions designed to mitigate such impact, expected changes in Clenera's leadership and the company's future financial and operational results and guidance, including revenue and adjusted EBITDA are forward-looking statements within the meaning of US Federal Securities law, 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 2022 annual report filed with the SEC on March 30th, 2023, 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 earnings 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; Jason Ellsworth, CEO and Co-Founder of Clenera; and Adam Pishl, COO and Co-Founder of Clenera. Gilad will provide some opening remarks and we'll then turn the call over to Jason and Adam for review of our US activity and then to Nir for our review of our fourth quarter and full year results. Our executive team will then be available to answer your questions.

Thank you all for joining us today for Enlight's Fourth Quarter and Full Year 2023 Earnings Call. In 2023, we continue to deliver on the Enlight story above market growth and above market project returns. Moreover, we built the necessary foundation to take the next major step in 2024 and beyond. Enlight is now on the cusp of another major expansion as we begin the construction of several flagship solar and storage projects, particularly in the United States. I will first review the important achievements we've made in 2023 and will then describe our outlook into 2024 and beyond. Let's start with our strong full year 2023 financial results. Revenue for the whole of 2023 grew 33% over last year to $256 million. Net income grew 157% to $98 million and adjusted EBITDA grew 45% to $189 million annually. We also saw significant growth in our operating cash flow, which reached $150 million for the full year, an increase of 66% over 2022. In the fourth quarter, revenue grew 21% over last year to $74 million. Net income grew 48% to $16 million and adjusted EBITDA grew 8% to $47 million. Overall, we delivered strong growth and profitability in 2023, even amidst a challenging macroeconomic backdrop. Driving the growth in our financial parameters was our project additions. In 2023, we connected over 480 megawatts across Israel, Europe and the US, a growth of 33%. This included Genesis Wind in Israel and Apex Solar in the US, while we also ramped up production at Bjornberget in Sweden. As of today, we have 1.9 gigawatts of operational generation as well as our first operational storage project with a capacity of 277 megawatt hours. These results testify to the strength and resilience of Enlight's geography and technology diversification, combined with our developer plus…

Thank you, Gilad. I will certainly miss working with you and the rest of our amazing team at Enlight and Clenera. Regarding our US business, 2023 was foundational. And in 2024, we expect to launch from that foundation into a period of significant growth. During 2023, we successfully completed Apex Solar, a 106 megawatt project located outside Dillon, Montana. Apex was the first project completed together by Enlight and Clenera in the US. We also made progress toward completing our Atrisco Solar project in New Mexico. As of today, equipment supporting the full 364 megawatts is installed and work is underway to finalize mechanical completion. Further, during the fourth quarter, we closed tax equity and debt financing on Atrisco Solar, raising $300 million of construction and term debt and $198 million in PTC tax equity. The transaction, which released $204 million of excess equity back to Enlight's balance sheet, demonstrated our continued access to competitive project financing, including tax equity. We have reached a mutual resolution of a supplier matter on the 1.2 gigawatt hour battery storage portion of Atrisco and now expect the solar site will reach COD in third quarter of 2024 and the storage installation in fourth quarter of 2024. Our overall project portfolio in the US advanced steadily in 2023 with approximately 10 gigawatts through system impact study. We signed PPAs on 806 megawatts and 2 gigawatt hours that will enter construction in 2024. This includes Country Acres, a 392 megawatt and 688 megawatt hour project delivering to Sacramento Utility District in California. Roadrunner, a 294 megawatt and 940 megawatt hour facility contracted with AEPCO in Arizona and Quail Ranch, a 120 megawatt and 400 megawatt hour project that represents the second phase of our Atrisco facility in New Mexico and delivers to PNM. The full…

Thank you, Jason. Leading alongside Jason for nearly two decades has been an incredible journey. Together we have built three renewable energy companies, developed hundreds of solar projects and most importantly have built an incredible team of professionals who are now leading Clenera into its greatest period of growth. While execution is our highest priority for 2024, Enlight and Clenera continue to invest in our growing development portfolio that will take us through the next decade and beyond. I am passionate about renewable energy, this incredible organization and our dedicated team and I'm excited about this expanded role. I am confident in our 2024 execution plan and look forward to sharing more of this developing growth story during future earnings calls. Thank you and I'll now turn the call over to Nir.

Thank you, Adam. In the fourth quarter of 2023, the company's revenue increased to $74 million, up from $61 million last year a growth rate of 21% year over year. Growth was mainly driven by new operational projects compared to last year while being offset by a decline in revenue caused by much lower electricity prices in Spain relative to the prices observed in the same quarter last year. Since the fourth quarter of last year, projects in the US, Hungary and Israel started selling electricity. The most important of this is Genesis Wind, which contributed $9 million to revenue. In addition, Bjornberget, which barely sold power in 2022, contributed $6 million in this quarter. Gecama generated revenue approximately $14 million in revenues. However, its contribution fell 36% year over year due to much lower Spanish power prices compared to Q4 2022 and relative to expected prices in Q4 2023. We sold power in Spain at an average price of EUR50 per megawatt this quarter versus EUR115 per megawatt in the same period last year. In addition, we were impacted by the slower than expected ramp-up in production at Genesis Wind and Israel's [Technical Difficulty]. Fourth quarter net income increased to $16 million, a growth rate of 48% year over year. Three non-cash items this quarter. A mark to market loss related to interest rate hedges on the financial growth process at Atrisco Storage of $8 million, gains related to the reduction in expected earnout payments linked to the acquisition of Clenera of $12 million and a loss of $5 million due to the impact of Israeli shekel volatility on foreign currency liabilities. These figures are all net of tax. In the fourth quarter of 2023, the company adjusted EBITDA grew by 8% to $47 million compared to $43 million…

Thank you. [Operator Instructions] We will take our first question. Your first question comes from the line of Justin Clare from ROTH MKM. Please go ahead, your line is open.

Yes, hello, thanks for taking our questions. So first off here, you did mention plans to execute larger asset sell-downs in 2024. Was wondering if you could give us a sense for the possible magnitude of those sell downs, how much equity capital you might be looking to raise and what would be needed to support your 2025 developments. And then the projects in the US, Quail Ranch, Roadrunner, Country Acres, are those projects that you're looking at for potentially selling minority interests?

Hi, thank you very much for the question Justin. So first on the sell down. So yes, as you said, part of our strategy is to perform some sell-downs on our very large portfolio that is maturing next year. So we intend to construct and hold the main project that we are going to construct next year, Country Acres, Roadrunner, Quail Ranch and other projects in Europe and Israel. But there is potential for additional large sell downs. Currently, in the current guidance that we provided to the market, we assumed total sell-downs of $15 million. But of course, the potential can be higher and it's important to say, based on your second question is that we are already fully funded in terms of the equity ticket that we need to invest for all the growth that we are going to construct next year. So we are talking about roughly 900 megawatts of new project and 2.7 gigawatt hours of new storage project. All are fully funded and we do not have to perform any sell downs or any capital raise or debt raise in terms of the corporate in order to raise the equity. It is already in the company. So the effort in terms of finance will be more on the construction debt and the tax equity side, so project finance.

Got it. Okay, very helpful. And then you did secure a large number of PPA amendments in 2023. Was wondering what we could expect going forward here. Are there additional possible amendments for PPAs for any of your projects that you're developing here? And then also just wondering, on the general trend, we've seen a decline in module prices, battery prices. What are you seeing in terms of the PPA trend? Has that started to level off or potentially decline? Or is demand so high that that things are potentially moving even higher here?

Yes, so I can start with the answer, and then Jason, you can complement me on the US market if you like. So basically what we are seeing overall in the different markets, but especially in the US is that the PPA price curves are continuing to rise, although natural gas prices have already normalized. This is because we see for the first time in two decades a rise for the demand of electricity in the US market. And we believe these are very positive conditions that will continue to fuel our growth in the coming years. Now that we have amended the majority of our PPAs pre-construction, we believe that the next PPA that we are going to sign are going to be new PPAs. I would say materially, but the level of pricing in the new PPAs that we have signed recently, and we expect to sign the next year, we expect to maintain the higher level than in the past of around 25%. So again, reflecting higher level of electricity pricing and higher demand for electricity in the US. What we see in Europe is that electricity prices are continuing to normalize based on the historical peaks that were in the last two years. But still, as we said in previous discussions, the norm, the new norm of electricity prices after the decline is still very high comparing our levelized cost of electricity in our project, in wind or solar in Europe, and therefore the returns are very high. So we expect electricity prices in Europe to continue and normalize on the level of 50 to 60. And this level is still a high level that reflects very good returns for our project. Jason, if you want to complement me on the US?

You bet. No thanks. Justin, great question. Gilad answered this very well. And we have a small number of PPAs that we are discussing potential price increases with but as Gilad has noted, the emphasis is on the new pricing and we are seeing steady growth on the heels of dramatic growth in terms of demand and strong [Technical Difficulty]. Some of what is advantaging the company is our interconnection position where we have projects roughly 10 gigawatts through system impact study, projects that are advanced and mature and ready to deliver to utilities [Technical Difficulty] where queues are clogged up and projects are behind schedule with competing [Technical Difficulty] and therefore giving us the opportunity to deliver at strong pricing. We see long term that this steady increase in demand here in the US, along with a limited supply capacity is driving prices incrementally higher year over year. So [Technical Difficulty] for the long term and we're experiencing that on the ground.

Got it. Okay, very, very helpful. Maybe just one more. Curious on how you're positioned relative to securing the domestic content adder in the US. Whether it's for the solar portion of a project or the storage part of a project. What's the time frame that we should be thinking about in terms of when that contact that adder could be secured?

Jason, would you like to take this?

Yes, I'll take it. No. It's another great question. So each of these projects today is when Gilad and Nir are speaking of the economics on these projects [Technical Difficulty] project finance, none of those include domestic content adders as a basis [Technical Difficulty] all of that is considered to be upside. We are working carefully along the path of confirming [Technical Difficulty] on a number of these projects, both in terms of storage, as well as the overall PB side. Some of that does depend on the advances our suppliers make in terms of their [Technical Difficulty] production and we are seeing that accelerate. But watching it carefully and we're not getting out over our skis of our product. There we're making certain that that we're taking product from lines that are stable. [Technical Difficulty] is making certain that we deliver on the projects on time and that those projects are producing [Technical Difficulty] in the coming years. So we're carefully pursuing domestic content, but doing it in [Technical Difficulty] way that supports the overall plan. Again, not included in our current forecast by way of revenue or EBITDA.

Okay. Got it.

Justin, just to reiterate that and as a following to what Jason said, I think that we can now disclose that on Atrisco we finally selected Tesla to be the battery supplier. And as Jason said, the assumption, the current assumption for the project still does not assume tax equity adder on the battery. However, we believe that there is a potential for that. We will see in the future. So this is some upside that we believe that there might be unlocked in the future.

[Technical Difficulty] It may be worth noting just quickly as well, that we have been aggressive about capturing the community [Technical Difficulty] community adder and have included that on a number of projects thus far. So that is nice upsell to [Technical Difficulty]

Right. Okay. Thanks for the time.

Thank you. We will take our next question. Please stand by. Your next question comes from the line of Mark Strouse from JP Morgan. Please go ahead. Your line is open.

Great. Thank you very much for taking our questions. I'd just like to start by thanking Jason for all of your help since prior to the IPO. And best of luck with your next chapter. Our questions, I think just kind of maybe one multipart question, if I can. The 4Q revenue shortfall you mentioned, kind of a slower ramp at Genesis Wind and the Israeli or the Israel cluster. Just checking, are those now fully ramped? And then on the next part, with the 2024 guide, we didn't notice any major project pushouts, but the EBITDA guide is a little bit lower than what consensus expectations were. So just kind of seeing if you can bridge that gap between. It sounds like asset sales might be part of that driver. Can you talk about any kind of conservatism that you're baking in projects ramping or FX, anything else that you think might be driving that? Thank you.

Yes. Hi, Mark. Thank you very much for the question. So far, I would say just in general, in terms of our guidance and the general way we look at the market and the company right now, I would say that after 15 years and founding the company, I think that the conditions that right now we see in the market and also for the company are maybe the best condition we've seen. We are seeing a very nice and accelerated growth but also based on scale and very high returns. So if you look on our presentation, you can see that the average unlevered return of our projects for the whole next three years is around 10%. Meaning, that delivered return, the IRR will be in the midst of the teens or maybe higher. I think this is a very good, I would say a number, especially for the large scale that we are going to build and for the ones that we are entering into this year. And this is a large capacity of almost 1 giga of generation and almost 3 giga of energy storage. So we are talking about even a higher IRRs. So first, yes, there was some shortfall in the fourth quarter, but we still grew 40% on average between the EBITDA and the revenue, and we are going to grow 35% next year. I think this kind of continuous growth will continue based on high returns. And based on that, we are very positive. On the EBITDA, there is no particular reason why the EBITDA is 30%. There is no trend. I would just like to point out that currently a big portion of our revenue mix is coming from the wind projects in Europe that are partially based on merchant price forecasting…

Very helpful. I'll take the rest offline. Thank you.

Thank you. [Operator Instructions] We will take our next question. The question comes from the line of Maheep Mandloi from Mizuho. Please go ahead. Your line is open.

Hi there. This is David Benjamin for Maheep Mandloi. I have a question on your strategy with tax equity transferability versus traditional tax equity. Can you talk a little bit about where you guys are now and where you see that trending over the next year?

Yosef will refer to that. Thank you, Maheep.

Thank you, David. What we're seeing in the market is the move towards traditional tax equity with credits being transferred through the bank's transfer desks. So the banks will come in and monetize the accelerated depreciation and some of the other attributes, and the cash flow, obviously, in the pre-flip period. But what they will look to do is syndicate the transfers to Fortune 500 customers who the bank services elsewhere. Now, what we think is important to emphasize is that the move towards the transfer market will also accelerate the path to construction finance. While in the past, construction finance was predicated on full tax equity commitments, the ability for tax equity providers to use transfer and syndicate those credits will enable us to access construction capital earlier and therefore reduce the peak equity that we need for projects. I think that's where this is headed and the conversations we've had with the major banks.

And just as an addition, I would say that I believe because of the position of Enlight as a public company and its positioning in the market is such that we feel that once there is a bottleneck in tax equity in the market, players like Enlight get prioritized. So this is why we believe we were able to complete tax equity last year with Atrisco and based on favorable terms. In the future, I think the tax transferability will ease up a little bit of bottleneck. But still player like us will be able to play between the traditional structure and the transferability. And it's important to say that once we sell down more assets and we generate more profit on the corporate level, we will be able to monetize these profits in terms of depreciation, also in the tax transferability structure. And thus, I would say, create also a good alternative in terms of our tax structure versus the regular or traditional tax equity. So I think that we are positioned very well today in the market to be able to select between the traditional structure and the new structure and be able to execute on the project on time based on that.

Great, thanks. That's very helpful. I'll take the rest offline.

Thank you. [Operator Instructions] We will take our next question. Your next question comes from the line of David Paz from Wolfe. Please go ahead. Your line is open.

Thank you, good morning. A couple of quick questions. Just on the Co Bar interconnection issue. Can you just -- sorry if you disclosed this already, but provide an update on the timing and any further studies or anything else that's needed to achieve a 2026 COD?

Yes. So what I can tell is that there is no change in our assumption or forecast for Co Bar. So we will start constructing Co Bar in 2025 and believe that we will reach COD by the end of 2026. And the growth that we forecast for 2024 and 2025 is not based on that. So this will only, I would say support the additional growth that is needed for 2026 and, of course, following that year. So no change in our forecast right now on Co Bar.

Okay. And just for your other projects in the US, I think this interconnection issue was surprised if I recall correctly. Are there any other projects where we should be watching or you're awaiting for any studies that could impact timing?

Yes, I think that we can point out to very good news that we received in our PJM portfolio. As you know, majority of the portfolio in the US comes from the WECC states. But there were always areas of development in PJM and MISO. And recently in the last quarter, we got very good, very positive milestones in PJM, [indiscernible] project totaling more than 1 gigawatts of generation and around 2 gigawatt hour of storage with five projects getting into the fast track in terms of the interconnection queue and with network upgrades that are less than $5 million per project, which is a very, very good results for PJM. And we believe that this potential that is unlocking in a new market for us opens up a lot of alternatives for us either to go on and construct this project or maybe following our sell down strategy to use that because of their high valuation and perform sell downs to recycle equity into our growth in the west. So these are very, very good news that we got recently and is reflected in our presentation in slide 14.

Yes, that's great. It was my last question related to that slide. And can you maybe just talk about the growth that you see beyond what you've laid out here? Are there other projects that are maybe in the advanced, I guess, the stage behind early stage? And in particular, just how are these arrangements, particularly with the data centers being, how are you -- what do those look like in terms of the economics? Are you seeing -- do you directly contract bilaterally with the data center? How do you provide the service? Thank you.

So, David, and then, Jason, feel free to chime in afterwards. I think on the data center side, whether the demand is direct from the data center businesses or through the utilities that service them, we see massive demand through Virginia and broader PJM, but particularly in the Virginia region, which, as we know is, if not the biggest data center market in the world. The interconnection advantage that we've developed in PJM, particularly these projects in Virginia, gives us a unique opportunity to provide power to the AI data center. Massive growth and need for power that we're seeing, and that's putting us in the driver's seat on terms and offtake. So whether that's ultimately sleeved through the utility or directly from the data center providers, we're in a very strong position on those projects. In addition, there's some other projects outside of PJM in the West Coast. We've got another major project in Arizona called Snowflake which is another gigawatt interconnection. We've got a gigawatt interconnection in the Pacific Northwest which is uniquely positioned to serve the big data center markets in the Northwest, the Microsoft’s and Amazon’s of the world. So the portfolio is very well positioned to echo Jason's comments at the beginning to service the massive demand of electricity that we're seeing coming particularly from the data center market, but also broadly across the US in the coming years.

Great. Thanks.

[Multiple Speakers] Yosef and I would note that in as particularly in the west, we've been successful at maintaining busbar PPA standard and that's unique across our portfolio and will continue to be a strength of the company given our strong interconnection positions, so [Technical Difficulty] sleeved delivering to bus -- at the busbar and all sleeved through utilities to date [Technical Difficulty] future. But we continue to find that as an effective way forward.

Great. Thank you so much.

Thank you. There are no further questions. I would like to hand back to Yosef Lefkovitz for closing remarks.

Thank you everybody for your time today. We will be at the Bank of America Power and Utilities Conference in New York early next week, and we look forward to seeing many of you there. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.