Enlight Renewable Energy Ltd (ENLT) Earnings

Management highlights

- Overall Financial & Portfolio Performance: The company delivered record Q2 2026 results, with 55% YoY revenue growth and 67% YoY adjusted EBITDA growth, driven by strong execution across its global renewable energy platform. Total portfolio grew 4.6% sequentially to 43.1 factored gigawatts, while the mature portfolio (operating, under-construction, pre-construction) grew 6% to 12.3 factored gigawatts, expanding the share of portfolio close to revenue generation. 50% of required equity for the mature portfolio has been invested, 69% of required project financing is already secured, and the company holds $1.2 billion in liquidity to cover remaining equity needs. - U.S. Operations Milestones: The company completed $2.6 billion financial close for the 1.2 GW solar / 4 GWh storage CO-BAR complex in Arizona, the largest single financing in company history, with full construction mobilization for phase three ongoing and initial commercial operation date (COD) targeted for H2 2027. The company signed its first U.S. commercial power purchase agreement (PPA) with Google for 200 MW of generation from the Oklahoma Solstice project, its first offtake agreement in the Southern Power Pool. The company exceeded safe harbor targets, securing 17.9 factored gigawatts of safe harbored capacity (62% of the total 29 factored gigawatt U.S. portfolio) to lock in U.S. investment tax credits (ITC), with an additional 4.7 factored gigawatts of energy storage eligible for full ITC through 2037. Multiple other projects are under construction on schedule, with CODs ranging from late 2026 to H1 2027. - European Expansion: The company entered two new European markets, Finland and Romania, via acquisition of mature, high-return energy storage projects. In Finland, the company acquired three projects totaling 1.4 GWh of storage, two already under construction with COD targeted for H1 2028, expected to generate over $50 million EBITDA at a 16.5% unlevered return in the first full year of operation. In Romania, the company acquired the 848 MWh Carpen storage cluster, expected to come online between H2 2028 and H1 2029 at a 17% expected unlevered return. Both markets face rapidly growing storage demand driven by expanding wind and solar penetration, positioning Enlight as an early mover to capture high returns from severe storage shortage. Construction commenced on the 880 MWh BritaGov storage project in Germany, on track for COD H1 2028. - New Growth Engine: Data Center Strategy: Enlight is developing a ~2 GW IT data center pipeline across the U.S., Israel, and Europe, focused on large-scale facilities co-located with its existing renewable generation and storage assets. The strategy leverages Enlight's existing capabilities in energy infrastructure development to meet growing AI-driven demand for reliable, low-carbon power for data centers, where power access is the primary constraint on growth. CAPEX for initial projects is expected to begin in 2027, with no contribution to 2028 results as this initiative will drive growth beyond 2028. - 2028 Roadmap Progress: The estimated 2028 annual recurring revenue (ARR) from the mature portfolio increased from $2.1 billion to $2.3 billion, with the company on track to have over 7 factored gigawatts under construction by end-2026, and over 90% of the mature portfolio either operating or under construction by year-end. The current under- and pre-construction portfolio of 8.4 factored gigawatts is expected to deliver ~13% unlevered project returns, implying over 18% return on equity after leverage.

Guidance

- Management raised 2026 full-year revenue guidance to a range of $790 million to $820 million, from the prior range of $755 million to $785 million, a 4.5% increase at the midpoint. - Management raised 2026 full-year adjusted EBITDA guidance to a range of $565 million to $585 million, from the prior range of $545 million to $565 million, a 3.6% increase at the midpoint. - The guidance increase reflects strong H1 2026 performance, elevated merchant electricity prices in Europe and Israel, and higher expected revenue from the company's electricity trading activity in Israel. - No additional asset sell-downs are included in 2026 guidance, after the completion of the second tranche of the Sunlight Cluster interest sale in Q2 2026. - The 2028 operating capacity target was modestly reduced to ~12 factored gigawatts (from the prior range of 12 to 13 factored gigawatts), as some projects were pushed to 2029 COD, while 2028 ARR was increased by $100 million to $2.2-$2.3 billion driven by higher-revenue storage acquisitions in Finland and Romania.

Segment performance

Enlight did not report separate financial performance for distinct product/geographic segments in the prepared remarks, with all growth and earnings figures reported on a consolidated company basis. Consolidated Q2 2026 total revenue and income was $210 million, a 55% increase year-over-year (YoY). Adjusted EBITDA grew 67% YoY to $160 million, while net income rose to $31 million from $6 million YoY. Operating cash flow increased 34% YoY to $84 million, with an annualized run rate of ~$100 million per quarter excluding working capital fluctuations. For H1 2026, total revenue grew 55% YoY; adjusted EBITDA (excluding the Sunlight Cluster interest sale) increased 53% to $314 million, net income rose to $68 million from $26 million YoY, and operating cash flow increased 48% to $185 million. Capital expenditure for H1 2026 doubled YoY to $1.3 billion.

Risks & headwinds

- Forward-looking statements (including project timelines, guidance, and returns) are subject to risks and uncertainties that could cause actual results to differ materially, including risks related to the ongoing conflicts in the Middle East impacting operations and financial conditions. - U.S. import tariff and regulatory changes for solar modules and inverters pose potential cost increase risks, though management notes minimal near-term impact on its current mature portfolio. - Safe harboring projects to lock in ITC requires projects to reach COD by 2030; management carefully selects which projects to safe harbor based on interconnection and offtake timeline risk to avoid wasted investment. - Market price volatility for merchant electricity in Europe can impact project returns, though management actively balances contracted and merchant exposure to protect returns while capturing upside.

Analyst Q&A

• Q: The updated 2026 guidance implies lower H2 revenue and adjusted EBITDA compared to H1 2026. What drives this sequential decline, and why was the 2028 factored gigawatt capacity target lowered while ARR increased? /

  A: The sequential decline is driven by two key factors. First, growing lower-margin electricity trading activity in Israel increased revenue more than it increased EBITDA. Second, the second tranche of the Sunlight Cluster interest sale contributed to H1 2026 EBITDA, with no additional sell-downs expected in H2. The 2028 capacity target was lowered because new high-value storage projects acquired in Finland and Romania were factored per gigawatt-hour of capacity, and some existing projects were pushed to 2029 COD; these new storage projects add more revenue per factored gigawatt than traditional generation, driving higher ARR even with lower total capacity.

• Q: What is your outlook for hyperscaler PPAs, and what demand trends are you seeing for power? /

  A: Management expects more hyperscaler PPAs going forward, reflecting both growing AI-driven electricity demand and Enlight's expansion into new U.S. markets outside its original Western U.S. footprint, where utility PPAs were the norm. In some cases, Enlight will develop its own data centers to use the power generated from its projects rather than selling power via PPA to external hyperscalers, capturing additional value from its generation assets. Overall, management is seeing accelerating demand for power across all customer segments.

• Q: Are the high returns on new Finnish and Romanian storage projects expected, are these acquisitions a foothold for future growth, and how did you approach safe harbor decisions for early-stage projects? /

  A: The high returns reflect the severe current shortage of energy storage in these markets, driven by rapidly growing renewable penetration. The acquisitions were opportunistic entry points to establish a foothold quickly, and management is already pursuing additional greenfield and M&A opportunities in both markets. For safe harbor, management safe harbored 91% of advanced development projects and 38% of early development projects, carefully evaluating each project's timeline to ensure it can reach COD by 2030 to qualify for ITC, avoiding unnecessary upfront investment for projects unlikely to meet the deadline.

• Q: What is your outlook for asset sales in 2026 and 2027, how does geopolitical change impact European merchant pricing strategy, and do you need additional capital to support your growth plan? /

  A: No additional asset sell-downs are included in 2026 guidance after the completion of the Sunlight Cluster transaction. In Europe, growing renewable penetration has increased demand for storage to resolve production-demand mismatch, making merchant storage the most lucrative current opportunity; management balances contracted revenue floors to enable high leverage while retaining upside from merchant price swings. The company has more than enough internal liquidity to cover all required equity investment for its mature portfolio through 2028, with ~$1.2 billion in on-balance sheet liquidity and growing recurring operating cash flow of ~$100 million per quarter to fund future growth.

• Q: What impact would new U.S. tariffs on solar modules and inverters have, and can you pass cost increases to customers? /

  A: A significant portion of modules needed for current U.S. construction is already in the country, so there is no expected near-term impact. New inverter restrictions apply to future models, not near-term projects. Enlight has a diversified supplier base across global markets, with experience pivoting to new sources when trade restrictions change. Most PPAs and supplier contracts include adjustment mechanisms that pass a portion of any regulatory-driven cost increases to off-takers and suppliers, protecting expected project returns.