Capacity in market space: Ellomay Capital Ltd. (NYSE: ELLO)

On Thursday, Ellomay Capital Ltd. (NYSE: ELLO) stock traded volume of 298 shares during its last trading session as compared to its average volume of 5973 shares over the recent month. ELLO ended its day with the above stream along the move of 1.82% and closed at the price of $25.5 before opening at $25.5.

Ellomay Capital Ltd. (ELLO) recently stated its unaudited financial results for the three month period ended March 31, 2020.

Financial Highlights

Revenues were about €1.9M for the three months ended March 31, 2020, contrast to about €4.7M for the three months ended March 31, 2019. The decrease in revenues is mainly due to the sale of ten Italian indirectly wholly-owned subsidiaries of the Company, which held twelve photovoltaic plants in Italy with an aggregate installed capacity of about 22.6 MWp, during December 2019 (the “Italian PV Portfolio”).

Operating expenses were about €1.1M for the three months ended March 31, 2020, contrast to about €1.7M for the three months ended March 31, 2019. The decrease in operating expenses is mainly attributable to the sale of the Italian PV Portfolio and to increased operational efficiency of the Company’s Waste-to-Energy projects in the Netherlands. Depreciation expenses were about €0.7M for the three months ended March 31, 2020, contrast to about €1.6M for the three months ended March 31, 2019. The decrease reflects the sale of the Italian PV Portfolio.

Project development costs were about €1.8M for the three months ended March 31, 2020, contrast to about €0.9M for the three months ended March 31, 2019. The increase in project development expenses is mainly attributable to the development of photovoltaic projects in Italy.

General and administrative expenses were about €1.1M for the three months ended March 31, 2020, contrast to about €0.9M for the three months ended March 31, 2019. There was no material change in the substance and composition of the expenses included in general and administrative expenses between the two periods.

Share of profits of equity accounted investee, after elimination of intercompany transactions, was about €1.3M for the three months ended March 31, 2020, contrast to about €1.2M for the three months ended March 31, 2019. The increase in the Company’s share of profit of equity accounted investee is mainly attributable to lower financing expenses incurred by Dorad Energy Ltd. for the period as a result of the CPI indexation of loans from banks.

Financing expenses, net were about €0.4M for the three months ended March 31, 2020, contrast to about €1.7M for the three months ended March 31, 2019. The decrease in financing expenses, net, was mainly Because of: (i) income recorded in connection with the reevaluation of the Company’s euro/US$ forward transactions and revaluation of Dori Energy loan in the aggregate amount of about €1M during the three months ended March 31, 2020, contrast to about €0.4M during the three months ended March 31, 2019, (ii) reduced expenses resulting from exchange rate differences amounting to about €0.7M in the three months ended March 31, 2020, contrast to about €1.2M for the three months ended March 31, 2019, mainly in connection with the New Israeli Shekel cash and cash equivalents and with the New Israeli Shekel denominated Debentures, caused by the 0.6% appreciation of the euro against the NIS during the three months ended March 31, 2020, contrast to the 5% devaluation of the euro against the NIS during the three months ended March 31, 2019 and (iii) a decrease in financing expenses of about €0.3M contrast to financing expenses in the three months ended March 31, 2019 resulting from the early repayment of the Company’s Series A Debentures and the sale of the Italian PV Portfolio, including all related project finance.

First Quarter 2020 CEO Review

Ran Fridrich, CEO and a board member of the Company, provided the following CEO review:

Impact of COVID – 19 on the Company’s activities

The immediate impact of the pandemic on the Company’s activities has been minor thus far.

Out of concern for its employees, the Company was prepared to enable its employees to work full-time from home. All employees presently have remote access and if additional quarantine is required, the Company’s work will not be affected.

The effect is mainly reflected in the decrease of electricity prices in Spain, which impacts the revenues of the Company’s 4 presently active Spanish photovoltaic facilities. About 20% of the revenues of these facilities is derived from the sale of electricity to the grid at current electricity prices. As a result of the decrease in electricity prices, the revenues from these facilities in the first quarter of 2020 reduced by about €0.1M contrast to the revenues in the same period in 2019.

The pandemic caused a cumulative delay of about 30 days in the completion of works in the Talasol project (300 MW photovoltaic plant) located in Spain. Despite this delay, we presently expect that the EPC contractor will meet the original delivery dates of the project.

As for the long-term effects, the main influencing factor is the amount of time it will take for electricity prices to return to the pre-crisis price environment. In our opinion, based on the assessment of experts in the field, the process is predictable to take about two years.

The impact of electricity prices on the Talasol project is minimal, as we have a fixed rate contract (PPA) for a period of 10 years from the date of commercial operation in connection with about 80% of the project output.

As for projects under development in Italy and Spain (an aggregate of up to 650 MW), we presently estimate that when these projects reach financial closing, the prevailing electricity prices will enable the signing of PPA transactions at prices that are in line with our financial model. In parallel, the panel prices and construction costs are predictable to continue to decline and support the economic viability of the projects. We presently estimate that the return spreads to us will be about an 11%-13% leveraged return, with 60% financing coverage.

The majority of the Company’s efforts recently are focused on the successful completion of the Talasol project, the development of photovoltaic plants in Spain and Italy, and in bringing the pumped storage project in the Manara Cliff, Israel, to financial closing.

The first quarter of 2020 was characterized by a decrease in revenues, mainly as a result of the sale of our Italian PV portfolio. Financing expenses in the quarter reduced by about €1.3M as a result of exchange rate differences, revaluation of a loan to an equity accounted investee and Because of a important reduction in the Company’s debt.

Project development expenses increased by over €1M in the quarter, as a result of increased volume of projects that are presently in the development pipeline.

The Company continues its attempts to reduce costs and increase operational efficiency of its operating photovoltaic facilities in Spain and Israel.

Biogas operations in the Netherlands reached a stable operating position and are fully in line with the planned budget. In February 2020, a very strong storm hit one of the facilities (GGOT), causing the facility to be partially deactivated. The damage repair and return of the facility to full activity took about 8 weeks, as the process of returning to full biological facility output is gradual. In May 2020, the facility returned to full operation and current production exceeds 100% of the originally planned output. Facility insurance and profit loss insurance are predictable cover the majority of the damage.

The Company’s total equity increased by about 24% during the first quarter to about €133M.

ELLO’s shares are at 7.20% for the quarter and driving a 196.51% return over the course of the past year.  Right now, the stock beta is 1.53. The average volatility for the week and month was at 1.34% and 2.70% respectively. There are 11.81M shares outstanding and 311.10M shares are floated in market.

Leave a Reply

Your email address will not be published. Required fields are marked *