Ormat Technologies Inc (ORA) Q3 2025 Earnings Call Transcript

Ormat Technologies Inc (NYSE: ORA) Q3 2025 Earnings Call dated Nov. 04, 2025

Corporate Participants:

Unidentified Speaker

Doron Blachar — Chief Executive Officer

Analysts:

Noah Kay — Analyst

Justin Clare — Analyst

Mark Strauss — Analyst

Unidentified Participant

John Wenham — Analyst

David Sutherland — Analyst

David Anderson — Analyst

Derek — Analyst

Presentation:

Unidentified Speaker

Margin by approximately $3.2 million. In the product segment, gross margin was 21.7%, up 250 basis-points from 19.2% last year, with this margin expansion driven by improved profitability on our contracts. We continue to anticipate that gross margin for this year in our product segment will remain in the range of 21% to 23%. The Energy Storage segment reported gross margin of 39.4%, up meaningfully compared to 20.2% gross margin in the 3rd-quarter of 2024.

This improvement was mainly driven by seasonally high margins at the bottleneck storage facility and higher merchant prices in the PGM region year-over-year. We believe that full-year gross profit for the storage segment is likely to increase to above 25%. Slides 8 and nine show the results of the last nine months of 2025, highlighted by 10% increase in total revenue and 11.6% and 4.5% increase in net income and adjusted EBITDA, respectively, with significant increase in both Energy Storage and product segments. Moving to Slide 10, as discussed in the second-quarter call on July 4, the US budget will extend the PTC and ITC runway for our geothermal and energy storage segment.

Regarding the foreign entity of Concern of FIAC, provision of the bill, the border scope includes specified foreign entity and foreign influence entity. At this time, the entire energy storage industry is still heavily dependent on battery sourced from China and we are actively evaluating all project development options while continuing to safe-harbor additional projects. Ultimately, we will pursue the most economically viable option to advance our current storage pipeline and maintain flexibility in our procurement to stay on-track with our expansion goal. Moving to Slide 11.

We recorded $14.4 million in income related to tax benefit in the 3rd-quarter compared to $19.8 million last year. In the 3rd-quarter and nine months of 2025, we recorded ITC benefits of $9.5 million and $33.8 million, respectively, in the income tax line. These benefits are related to two storage facility that commence operation or expect to commence commercial operation by the end of 2025. Recently, we entered two tax equity transactions and as of today, we collected approximately $109 million under these contracts. The bars of $32.4 million will be collected by the year end.

In addition, we sold transferable PTC and ITC and received mostly in October $25.5 million. We now expect total cash from tax credit this year will exceed our initial expectation of $160 million and will now reach approximately $167 million. We expect our tax-rate will be positively impacted by ITC benefits in 2025 with an annual benefit rate between 5% to 15%, excluding changes in low or one-time events. Slide 12 details our cash-flow over the last 12 months, illustrating our ability to generate strong cash-flow that allows us to fund reinvestment and strategic growth, while servicing debt obligation and returning capital to shareholders.

Cash-and-cash equivalents and restricted cash-and-cash equivalents as of September 30, 2025, were approximately $206 million similar to the end of 2024. Our total debt as of September 30, 2025 was approximately $2.7 billion, net of deferred financing cost with the cost of debt at 4.8%. The majority of our debt liabilities are at fixed interest rates providing stability and protection for market fluctuation. Moving to Slide 13, our net-debt as of September 30, 2025 was approximately $2.5 billion, equivalent to 4.4 times net-debt to EBITDA. During the 3rd-quarter, we secured $254 million in funding.

This includes $104 million from tax equity partnerships and transferable tax credits and $150 million from project finance long attractive rates. As shown on this slide, our total available liquidity is $667 million. We expect our total capital expenditure for the remaining of the year to be $140 million with our detailed capex spend presented in Slide 3 in the appendix. We plan to invest approximately $100 million in the electricity segment for construction, exploration, drilling and maintenance in the 4th-quarter of 2025. Additionally, we plan to invest $34 million in the construction of our storage assets.

On November 3, 2025, our Board of Directors declared, approved and authorized a payment of quarterly dividend of $0.12 per share payable on December 1, 2025 to shareholders of record as of November 17, 2025. Before I turn the call over to, I would like to note that depending on the average share price in Q4, we expect diluted share count will increase by approximately 800,000 shares due to the potential dilutive effect from our convertible senior notes. That concludes my financial overview. I would like now to turn the call over to Doron to discuss some of our recent developments.

Doron Blachar — Chief Executive Officer

Thank you,. Moving to Slide 16. The Blue Mountain power plant that we acquired back-in June has contributed to our results and we are continuing to make great progress in planned upgrades that will enhance the facility’s generation and revenue growth potential. Our Dixie Valley facility exhibited improved performance during the quarter following an unplanned outage that took place during the prior year. Turning now to our international activities. In August, we were chosen to develop two greenfield projects, Songa and for the local government in Indonesia, further expanding our footprint in the region.

Notably, is the first company chosen under this competitive bid process. We are planning to commence drilling at one of these sites by the end of 2026 and contingent of successful results expect the project to be fully operational by 2030 with respect to our top two project in New Zealand that is currently in commissioning stage, we recently received a formal notice from the customer that they have decided to exercise their option to purchase the facility and once the project is complete, we will be delivering the facility to the customer. As a result, revenue from the sale of this project will now fall under the product segment. Once it is finalized and closed next year, the top two facility will be removed from our pipeline.

Turning now to Slide 17. Our product segment backlog stands at $295 million, representing a 79% increase compared to the 3rd-quarter of 2024. This growth was primarily driven by a large contract we signed, which has added approximately $86 million to the. Moving to Slide 18, our Energy Storage segment produced another strong quarter of year-over-year growth with total revenues increasing by 108%. As previously mentioned, we anticipate that the strong performance in our energy storage business will continue throughout the remainder of 2025, driven by the benefits of recently commissioned storage facilities. On Slide 20, we are on-track to achieve our portfolio capacity target of between 2.6 gigawatt to 2.8 gigawatt by the end of 2028.

This confidence is driven by strong momentum in geothermal development and our intensified exploration efforts. In parallel, we are making progress in the storage segment, having successfully secured both batteries and safe-harbor for additional projects, further reinforcing our path towards meeting our capacity growth targets turning to Slide 21 and 22, which display our geothermal And hybrid solar PV projects currently underway, we anticipate adding 98 megawatts of generating capacity from these projects by the end of 2026. Moving to Slide 23 and 24, we currently have five projects under development in our energy storage segment, which are expected to add 325 megawatts or 1,180 megawatt-hour toll portfolio. Turning to Slide 25. Last week, and SLB announced a partnership aimed to accelerate the development and commercialization of EGS projects. Together with SLB, we intend to streamline project deployment from concept to power generation by combining OMAT’s expertise and market-leading capabilities in power plant design, development and operations with SLB’s well-established strengths in subsurfaces of engineering and construction. Together, we intend to jointly develop a pilot at normat facility with the goal of scaling AGS solution to enable widespread EGS adoption . If the pilot proved successful, expects to expand its development pipeline in alignment with our commitment to delivering reliable, sustainable and efficient energy solutions to meet the demands of AI, data centers and the broader transition to renewable energy. In addition to the SLB agreement during the 3rd-quarter, we announced a strategic commercial agreement with Sage System, a pioneer in next-generation geothermal and energy storage technology. As part of the agreement once closed, Sage will pilot its advanced pressure geothermal technology to extract geothermal heat energy from hot dry rock at one of our existing power plants. The goal of this collaboration is to significantly reduce the time and costs needed to bring EGS to-market. Following a successful completion of the pilot project, will gain the right to develop, build, own and operate geothermal power plants levering Sage’s propriety pressure geothermal technology. We also intend to advance long and short-duration energy storage projects utilizing Sage cutting-edge pressure geothermal storage solution. We will provide additional updates on these agreements as the pilot program progresses. Our partnership with SLB, coupled with our agreement with Sage has created a significant step forward for the geothermal industry. As the global leader in geothermal development, we are proud to drive progress towards a more sustainable future by delivering reliable, efficient and renewable energy solutions to power the global energy needs please turn to Slide 26 for a discussion of our 2025 guidance. The great results we saw in the Product and Storage segments enabled us to update our guidance and increase our revenue and adjusted EBITDA targets for the year. We expect revenue to increase by 10.2% year-over-year at the midpoint, ranging between $960 million and $980 million. Electricity segment revenues are projected to be between $700 million and $705 million. Product segment revenues are expected to range between $190 million and $200 million and Energy storage revenues are now expected to range between $70 million and $75 million. As a result of improvements in-full year revenue and strong adjusted EBITDA results generated to date, adjusted EBITDA is now expected to increase by approximately 6.2% at the midpoint, ranging between $575 million and $593 million with annual adjusted EBITDA attributable to minority interest at approximately $17.5 million. I will now conclude our prepared remarks with reference to Slide 27. This is a pivotal and transformative period for Ormalt. We are experiencing strong momentum across our business, fueled by new strategic partnership and expanding portfolio, robust PPA pricing, supportive regulatory developments and increasing demand for renewable energy solutions. As the global energy transition gains pace and AI-driven requirements for power and energy infrastructure expand the market for our core competence, we are exceptionally well-positioned to deliver scalable and sustainable energy solutions. We are also proud of the progress that we have made in advancing EGS technology. This initiative complements our established leadership in geothermal development and positions us to drive future growth. Looking ahead to the 4th-quarter and beyond, we remain committed to expanding our industry leadership and advancing innovative, sustainable energy solution that will allow us to drive growth and long-term value for our shareholders. This concludes our prepared remarks. Now, I would like to open the call for questions. Operator, please

Questions and Answers:

Operator

Thank you. At this time, if you’d like to ask a question, press star followed by the number-one on your telephone keypad. If your question has been answered and you would like to remove yourself from the queue, press Star-1 one. Your first question is from the line of Noah Kay with Oppenheimer.

Noah Kay

Well, good morning Daron, Azi, thanks for taking the questions. Hope you’re well. Hi, can you hear me? Sure? Yes, your line is coming through. Okay. Thank you. All right. So maybe to start with, it was in the slide deck on Page 15 just referencing the 250 megawatts of PPAs under negotiation with hyperscalers and data centers. I don’t believe I heard an update in the prepared remarks. Can you maybe just update on sorry, I’m getting a lot of feedback here. Yes, I’m sorry. Can you hear me coming through?

Doron Blachar

Yes. Okay, I’m sorry I’m getting a lot of feedback but was just hoping for an update on the PPA discussions with hyperscalers. Thank you. So hopefully you can hear me well. And we are actually in very final negotiations on a couple of PPAs with hydroscalers and the same magnitude that we have been discussing. We hope to be able to finalize them, sign them and announce them in the next couple of months, hopefully even before that. But we had quite significant development in the negotiations and drafting and we’re very close to finishing them in the next couple of months.

Noah Kay

Great. We look-forward to that. Second question, you know, I think you mentioned top two will likely convert over to a products revenue still she’ll be doing the EPC work there. Just how to think about how that might translate into additional products backlog and even the revenue opportunity associated with that.

Doron Blachar

Yes, I’d say it’s an EPC project roughly $100 million in that range. And so they have a exercised the option. We need to close the transaction that will probably occur in Q1 of ’26. And at that point, once the transaction closes, it’s accounting-wise the time we can actually account it as part of the project signal. Okay. Very helpful. Thanks. And then you mentioned a couple of these key collaborations on EGS. I was hoping you could give us a little bit more color on some of the pilots that are associated with that. Can you give us a little bit more detail On the scope of the pilot? What steps exactly you’ll kind of be taking here in the early days to kind of assess commercial viability and what you’ll be looking for to go-ahead with a larger project? Great. Sure. So these are two different transactions. So with SLB, we’ve started a joint-venture and we have chosen the site, the pilot for the SLB will be next to our facility in Desert Peak in Nevada. Actually, it’s the same-location that 20 years ago started an EGS project there. And so this — the project the pilot starts with SLB and looking into the right technology and developing the right technology for an NGS project. Once they are complete or actually in parallel to that, we will be looking for permitting and all the business development-related issues that we will be working on. And once these two are aligned, we will drill the pilot wells, we expect that will happen towards the second-half of the end of ’26 and then we will run the pilot and we will utilize our Desert Peak site and by that save a lot of time or the need to build a facility to generate electricity. So this is on the SLP part. On the Sage, so the Sage pilot is a pilot that they are managing and we are discussing with them what is the right location for an EGS project next to one of our facilities, similar again to save time. But on this case, the permitting and everything is done by Sage, not by us, we are just allowing them to utilize one of our facilities, which we haven’t finalized with them yet, which one. Very helpful. Lots more to ask, but I will defer to my colleagues.

Noah Kay

Thank you.

Doron Blachar

Thank you all.

Operator

Thank you, Nour next question is from the line of Justin Clare with ROTH Capital.

Justin Clare

Hi, thanks for the time. So wanted to start out with the Electricity segment. Wondering if you could just discuss within the Electricity segment, the — how you anticipate the gross margins trending in Q4. There was a number of different factors that affected the margins in Q3. Wondering if those are being resolved or if they could affect Q4. And then just looking into 2026, it’d be great if you could just talk about the puts and takes you see for the Electricity segment in regard to kind of operational issues that you — that impacted 2025 and the curtailments and how you see things evolving for that segment next year.

Doron Blachar

So I will start maybe with ’26 and what we’ve seen and we are not aware today of any material curtailments that are planned by energy or by or from California near the control substation so the big impact that we had this year is not something that we expect to see next year. But this is usually up to the utilities and the operators not us. This is regarding 2026 regarding Q4 ’26 I can tell you that we had some curtailment in October by NV Energy, which wasn’t a planned one. It was a an unplanned curtailment that they’ve done. And Q4 is usually much stronger than Q3 and Q2. And so we do expect a higher gross margin in the — in Q4 versus Q3?

Justin Clare

Yeah. Got it. And then I guess just some of the factors that affected Q3, the Stillwater enhancement, the Imperial Valley grid failure, have those been resolved at this point or could there be an effect in Q4? I’m wondering for Q4, could we see directionally an improvement versus the year-ago period or could those factors result in a year-over-year decline and the stone in the Inter Valley impact IID, they had I think a few 100 poles that fell down and it took them a while to bring them up so this event is over and behind us. And the steelwater upgrade continued into October. So it will have some impact, but not as big of an impact as in Q3.

Doron Blachar

Okay and then I would just add to, from a season perspective, Q4 is usually one of the strongest quarter for the year and we expect this to be probably the strongest for 2025. We see lessen in the curtailment, which is very positive. If you look at 2024, our margin was 36%. We are running in general this year 200 to 300 basis-points below that. So that’s the expectation for Q4. And so overall, again, it should be much-improved versus what we saw this quarter. It should be probably the highest for the year, but slightly below 2024 because there is, as mentioned, some curtailment in Q4 on one end and also Steelwater is still not at its full capacity?

Justin Clare

Got it. Okay. That’s really helpful. And then just one more on PPAs. It seems like PPAs are continuing to trend higher. You mentioned pricing above $100 a megawatt-hour. Wondering if you’re seeing pricing at $105 or $110 or if you could provide any more granularity on the pricing that you’re seeing? And then just related to that, it sounds like offtakers may be looking to recontract earlier in order to lock-in pricing before potential future increases in PPAs. Are you seeing any of that? Could you look to recontract assets earlier than what you typically would be expecting?

Doron Blachar

Yeah. So it’s very hard to comment on the PPA price if it’s 105 or 110 and then it’s in a similar vicinity and both of them are good numbers depending on the specific location and the offtaker. We are looking for recontracting today our 29 and 2030 project coming off-contract. It’s important to know we would like to recontract them to get the stability and the ability to focus and for longer-term. Also when you recontract it doesn’t come up with a lot of capex or some capex associated with the enhancement but it doesn’t come with the full capex. So in today’s environment and PPA pricing, it is very attractive.

Justin Clare

Okay. Thanks very much

Operator

. Your next question is from the line of Mark Strauss with J.P. Morgan,

Mark Strauss

Thanks for taking our questions. Just a follow-up to Noah’s earlier question. I know it’s early, but can you talk about how — it’s kind of a reasonable expectation of how long these pilots on the EGS side might last? And I appreciate kind of the longer-term opportunity here, but just specific to your 2028 targets, do you think that there’s potential upside to that from these from these EGS deals or is it a bit more longer-dated. Thank you.

Doron Blachar

Okay. Thank you. ’28 targets, it’s a bit aggressive to assume that EGS will have — will have an impact. And one of the main challenges with EGS is the water loss once you circulate the water, inject water and then bring it up again hot, and this is something that will be verified or learned over-time so if we see the pilot you know operating in 27 sometime I think it’s likely we’ll be able to after a few months be able to get the input on the viability of This technology. I can tell you that once we are starting the pilot development and we will be looking to sign low PPAs, obviously for a later period based on this technology if it is successful. So this is also something that we together with SLB are planning to do.

Mark Strauss

Great. Thank you.

Operator

Your next question is from the line of Julien with Jefferies.

Unidentified Participant

Hey, good morning. This is Hannah on for Julian. So as another follow-up question on the EGS part. Can you just give us a sense of the scale of EGS-type projects that you would be looking to target in terms of megawatts?

Doron Blachar

Yes. The nice thing about EGS project that it is based on the amount of well that you drill and the water that you use of the megawatts that can be developed are significant. It can be in the hundreds of megawatts similar to other companies at PPAs. It’s not like today that when we release a project, it’s 25, 30, 35 megawatts. I believe the EGS projects will be a few hundreds megawatts. But again, it’s very, very early to say before we have the pilot operating.

Unidentified Participant

Okay. Thank you. And a follow-up, can you give us an update? I know a while back we had talked about an executive order on the permitting side that came out-of-the Trump administration that was trying to accelerate the permitting process for geothermal. I think it was like down to 28 days or something like that. Have you seen any updates or progress on that front?

Doron Blachar

In general, we do see getting permits become much less of an issue when it’s a federal permits. Although over the last few weeks, as we all know, the government is in a shutdown mode. So we don’t see a lot happening there. But I can tell you that we were able to get within weeks permits and you will see in 2026 that will lead, as Doran mentioned on the call last-time to accelerating drilling program. And Doran mentioned that we’re adding a second rig for the second-half of 2025. We may even add a third rig at one point next year. We may have — so that’s going to be a different situation for us

. And what it gives us is the ability to develop more assets to meet both our 2028 and of course, our longer-term goals. So very positive. Last few weeks, nothing is being done. It’s all the shutdown mode. And we hope it will change shortly.

Unidentified Participant

Okay. Thank you.

Operator

Thank you,. Your next question is from the line of John Wenham with UBS Financial.

John Wenham

Perfect. Thanks for taking the questions. I’d be really tested if you could just provide some more color about how you’re managing risk around the storage business. There’s obviously a lot of uncertainty in the market around FIAC around that, just how the contracts or how your development pipeline of risk mitigates or potential outcomes very interested to hear your thoughts. Thanks.

Doron Blachar

So thanks. So you saw the storage margins this quarter and we also increased guidance for the — for the year for the storage. So all-in all, our operation between PGM, Texas and California is working very well. And all the projects that we are developing have secured, I’ll say, Harvard and a few additional ones that we haven’t already released for construction and have safe-harbor and apart from that the FEOC and the entire storage market is still trying to align itself to the new world that the administration has put and we are looking also on the impact longer-term, but at this stage all the project and the plan that we have are in-line and we are working on them and we did safe-harbor whatever we could and had a good enough view going-forward

John Wenham

Great thank you

Operator

Thank you your next question is from the line of David Sutherland with Baird.

David Sutherland

Hey, good morning, guys. Thank you for the time and hope you’re doing well. Most of my questions on EGS have already been answered. So maybe if I could just pivot, Aussie, I wonder if you could talk just a little bit more about financing needs for next year and really maybe even for next year or ’27, just looking at the 200 megawatts of geothermal and solar roughly that you guys plan on bringing online and any needs or any things we should consider for tax partnerships between now and then? Thank you.

Doron Blachar

So I’ll start by saying that if you look at this year, our expected EBITDA, the middle range plus the over $160 million, close to $167 million of cash cover basically completely all of our capex needs. And the only additional borrowing that we did this year is to basically for the acquisition that we made. And we haven’t finalized our plan yet for capex for next year. But also next year, we expect to have at least $70 million of tax equity or ITC that we will get from two projects. In addition to that, next year towards the end-of-the year, the Puna plant is expected to come on. And if we close the transaction of the Puna plant in already in December, which is unlikely, but it’s possible.

Then this year and next year, tax credits will be quite similar, maybe even higher next year. So overall, the start for us is very, very good. It’s around can be as much as EUR170 million next year. In addition to that, next year, as we mentioned at the beginning of the call, we expect to sell for around $100 million, a project that we already fully financed in the — in New Zealand. So basically, we will start the year next year with above $250 million of non-proces. Together with ongoing EBITDA, that should cover the majority of our capex needs. And if we will need slightly more, we can borrow. So at this point, we don’t see a need for equity for the company. Of course, the two pilots of the EGS at this point, they are not meaningful for the company or at least the one that we are spending the money with the SLB.

It’s not meaningful spend for the company, maybe EUR10 million to $20 million a year for the next year or two. But once EGS will be something big and we will need to start build instead of 100 megawatts a year three times or four times that amount, Omart will have to look into our capital structure and I believe that there is plenty of cash available for great projects. So as I mentioned, right now, we will focus with great cash from operation plus tax credit, including a large onetime income next year coming from the sale of the project in New Zealand. So we should be quite covered next year.

David Sutherland

Thank you for that. That’s super helpful. And then maybe I guess just building on that last question and to your point about EGS and the excitement there, is there any opportunity that you guys see to maybe accelerate this development through M&A or any other actions you guys could take to build more or bigger partnerships in the near-term? Thank you again.

Doron Blachar

Thank you. We’ve just started these initiatives. I don’t see an M&A transaction in the AGS field that can push it forward. I don’t believe there’s any targets to the M&A transaction. And we believe that developing with SLB and the commercial agreement with SAIDE, which is a different technology than SLB actually will allow us to have two paths to reach EGS. And if either one or both of them are successful, we said the number of megawatts that can be developed that will impact or the own project as well as the product segment are significant thank you, Yaron.

David Sutherland

Thank you, Asi. I’ll pass it on.

Operator

Your next question is from the line of David Anderson with Barclays.

David Anderson

On the agreement, they’re providing the technology, they’re doing the permitting and the drilling. If this is successful, does participate in this project in the longer-term in terms of capex or other means on this? How does that work longer-term if it all works out.

Doron Blachar

Okay. I cannot answer for themselves, but the way the partnership works is that we are developing together and after That we can build project together or which one can build by certain projects. And we — San is a service company that’s what they’ve done all the years. And we are developer — developers. So over the — once the pilot is successful, we will be able to utilize all the technology that was developed in the pilot and build a geothermal EGS project that will be owned by Omath.

David Anderson

Can you talk about the differences in the technologies that are being applied that what Sage is doing versus what is doing?

Doron Blachar

These are two different technologies and these are very proprietary technology for Sage and SMB are still developing them. I think over-time as the pilot progresses and technology is developing we will be able to share more information on how we are developing it and how do we see both of them operating over-time?

Operator

Thank you. Your next question is from Noah Kay with Oppenheimer.

Noah Kay

Well, thanks for taking the follow-up. Really two ones. You know, the first one is around the electricity performance kind of following-up on the margin question before. I think maybe another way to get at is, there have been a number of events all year. There were wildfires in California in 1Q, the PUNA maintenance in 2Q and now in Imperial Valley in 3Q and obviously the Nevada curtailment all year. And I guess outside of Puna, these were really kind of exogenous factors, right?

Doron Blachar

So I guess if we add-up all of these non-recurring factors, is it possible kind of quantify the total impact to revenue and EBITDA this year? So I think that will help us rebaseline for next year. Sure. So when we look at the curtailment, it’s probably around $14 million to $15 million this year. And if you add to it some of the Puna impact plus the IV storms, you’re probably going to be somewhere between $20 million to $25 million. But let’s remember, every year there is few events. So I will say it’s probably a EUR20 million impact for the year.

And when you look at our forecast for the year, you can see that we reduced our higher-end part of the guidance by exactly those EUR20 million. That’s why we went from 725 million to EUR705 million. So if you want to make it easy on you, this is the high-level impact.

David Anderson

That’s perfect. Thanks,. And the second one is really to think about land position, interconnection position. We noticed that Energy is interconnection queue, just to pick one utility for geothermal increased by roughly 10 times over the last couple of months. It does look like there is obviously a lot of project development. Can you talk about your — your interconnection position, your ability to bring online the geothermal projects you have in development.

Doron Blachar

Our projects and prospects that we have that we are developing today have most of them already interconnection agreements at date. The others are in various stages of negotiations on finalizing the megawatts and the cost of the interconnection to date. So when we look at the near to mid-term future, we feel confident that we will have interconnection for the projects that should be coming online in the next few years. Obviously, as you go down to later years, interconnection is something that needs to be worked on, but we are in this in Nevada and California for many, many years in the geothermal and we are continuously filing for interconnection and we have as I said for most of our projects going-forward interconnection.

Noah Kay

Thank you.

Doron Blachar

Thank you.

Operator

Thanks. Our final question comes from the line of Derek with Piper Sandler.

Derek

I just want to ask about product. Maybe just your outlook — outlook there on the backlog seems to be growing nicely just up top-line revenue guidance, your implied 2028 guidance was I think in the $140 million range, you just guided up to $180 million to $190 margins are sitting above 20%. Is this just the new run-rate we should think about?

Doron Blachar

Maybe just some comments around product and how you see that progressing over the next couple of years given that you’re trending above your 2028 implied guidance. Our long-term target for margin is anywhere from 17% to 20%. This year, we have an exceptional year with our ability to negotiate much better procurement on some of our contracts. In addition to the fact that some of the projects that are being finished right now in New Zealand were able to complete the EPC at a much lower-cost than anticipated. So I will say from a margin perspective, this year is definitely, I would say, outstanding and probably on the higher-end.

And when I look-forward, probably between, I would say 17 to 20% is making more sense. On a revenue line-item, there is no doubt that we continue to stay elevated and also next year, we expect to stay elevated. Historically,, at least in the years of COVID and a few years others, we sold around EUR100 million. I will say right now, we are moving probably to the EUR200 million level and next year may going to be slightly higher, but that’s the idea at this point. We signed a large contract in Asia a few weeks ago and we are negotiating a few more as we speak.

I think that what’s more important when you look at the product segment is to show to the world that geothermal is live kicking, not just in the US with all the AI, but it’s a viable solution in many, many countries and the cheapest option to get electricity. And one more thing that will boost our revenues, but that’s towards 2028, 2029 and 2030 is the fact that we did win two new PPAs in Indonesia. These are BOT projects with PLN. During a BOT project, we recognize revenue already at the time of the construction in the product segment. So I will say that over the next few years, we should see very nice support if coming from the project in Indonesia, from the New Zealand projects and also what we just signed in Asia. So overall, good timing. As I said, margin this year is exceptionally high. We’re not anticipating that to be a.

Derek

Got it. That’s helpful. And then just back to the partnership with SLB, maybe look at it from a different angle. We already talked about EGS, but what about on the traditional side of things, your traditional geothermal development. What are you — are you exploring projects with SLB to develop that type of power plants?

Doron Blachar

Just trying to think of the cross synergies that can be utilized with SLB applying some of their technologies into the traditional space fully acknowledging that EGS is where the interest is, but just thinking about traditional asset development as well. No, definitely. Traditional geothermal is the core of what we’re doing today, EGS needs to be developed. So we are looking also with SLB on potential a customer that are looking for geothermal and energy and have the relevant locations or land that we can develop a traditional geothermal. So definitely, it’s part of the discussion with them. It’s something that both companies can enjoy if we get additional customer for them for the services they provide for drilling and as for the power plant so it definitely exist in the partnership great thanks for all the color.

Operator

I’ll turn it back. This concludes the question-and-answer session of today’s call. I will now hand the call over to Doran for closing remarks.

Doron Blachar

Thank you. So thank you, everyone. This was a strong quarter on our operations with strategic developments in the EGS technology. Our partnership with SLB and the commercial agreement we signed with Sage will impact our growth in the future and will allow us together with SMB to respond to the significant demand we see today in the market by data centers and AI for electricity. We will obviously continuously update you on any progress we have in these pilots and how we plan to see them materializing into real projects. So thank you all.

Operator

This concludes today’s call. Thank you for joining. You may now disconnect your lines