Genie Energy Ltd. Reports First Quarter 2019 Results

NEWARK, N.J., May 6, 2019 /PRNewswire/ -- Genie Energy Ltd. GNE GNEPRA))) reported first quarter 2019 net income of $0.21 per share on revenue of $86.6 million. 

FINANCIAL AND OPERATIONAL HIGHLIGHTS

(Throughout this release, 1Q19 results are compared to 1Q18 results unless otherwise noted)

• Genie Energy's global customer base increased by 77 thousand RCEs during 1Q19 to 333 thousand at March 31^st.  Global meters served climbed by 76 thousand to 399 thousand;
• Genie Energy continued to expand its global footprint, closing on the acquisition of Finnish retail energy provider Lumo Energia and launching operations in Japan;
• Consolidated revenue decreased to $86.6 million from $89.3 million;
• Consolidated income from operations increased to $9.8 million from $7.1 million.  Consolidated Adjusted EBITDA* increased to $10.4 million from $8.6 million;
• Earnings per share decreased to $0.21 per basic and diluted share from $0.24;
• Genie Energy's Board of Directors has declared a first quarter 2019 dividend of $0.075 per share.

COMMENTS OF MICHAEL STEIN, CEO OF GENIE ENERGY

"Genie Energy had an excellent first quarter.  Income from operations and Adjusted EBITDA both increased significantly even as we continued to invest in expansion of our customer base and building out our solar solutions business.  These investments also further mitigate our commodity and geography-linked risks.

"Looking ahead, we are working to further expand our domestic meter base and expect to launch service in Texas in the second quarter.  Internationally, our customer acquisition programs are progressing in the U.K, and Japan while our Finnish retail supplier business provides a platform to address additional markets in Scandinavia."

CONSOLIDATED RESULTS

* Genie Energy accounts for its investments in Orbit Energy, its joint venture operating in the UK and Atid, a drilling services business based in Israel, in which it holds a minority stake, under the equity method of accounting. Under this method Genie Energy records its share in the net income or loss of the venture. Therefore, revenue generated, and expenses incurred are not reflected in Genie Energy's consolidated revenue and expenses.

* *Adjusted EBITDA for all periods is a non-GAAP measure intended to provide useful information that supplements the core operating results in accordance with GAAP of Genie Energy or the relevant segment.  Please refer to the Reconciliation of Non-GAAP Financial Measure at the end of this release for an explanation of Adjusted EBITDA and reconciliation to the most directly comparable GAAP measure.

METERS AND RCEs

Genie Energy's global customer base increased sequentially and year-over-year driven by the acquisition of Finish electricity provider Lumo Energia during the quarter, the expansion of Orbit Energy, a joint venture supplying electricity and natural gas in the UK, and robust domestic customer base growth driven, in part, by a municipal aggregation agreement in New Jersey.  Genie Energy's global RCE and meter totals are provided in the chart below.

*Includes RCEs and meters acquired and served by Genie Energy's domestic and international retail energy provider businesses including its JV operating in the UK, Orbit Energy.

Consolidated Take-Aways

• Consolidated revenue decreased to $86.6 million from $89.3 million in 1Q18.  The change reflected the year over year decrease in domestic retail energy revenues substantially offset by revenue contributions from Prism Solar and Lumo Energia, acquired in 4Q18 and 1Q19 respectively.
• Genie Energy's gross profit increased to $25.6 million from $24.5 million in 1Q18 primarily from increased margins on domestic gas sales and the impact of the Prism Solar acquisition.
• SG&A expense declined to $15.8 million from $17.1 million in 1Q18 reflecting decreases in domestic customer acquisition expense and corporate-level stock-based compensation.
• Consolidated income from operations increased to $9.8 million from $7.1 million in 1Q18 and Adjusted EBITDA increased to $10.4 million from $8.6 million. 

SEGMENT RESULTS

Genie Energy's segment reporting in 1Q19 and prior periods has been revised to reflect recent changes in its business operations and structure:

• Genie Retail Energy (GRE) comprises domestic retail energy supply businesses;
• Genie Energy Services (GES) comprises Genie Solar, Prism Solar Technologies, and Diversegy, a retail brokerage and advisory business;
• Genie Retail Energy International (GRE International) comprises overseas retail energy supply businesses including interests in Lumo Energia (Finland), Genie Energy Japan and results from Orbit Energy, a joint venture operating in the UK;  
• Genie Oil and Gas (GOGAS) comprises Afek's currently suspended oil and gas exploration venture in Israel (formerly a separate segment), a minority stake in a drilling services company based in Israel and inactive legacy exploration ventures;
• Corporate is Genie Energy's corporate overhead. 

Genie Retail Energy (GRE)

• Gross meter adds during the quarter totaled 85 thousand including a municipal aggregation deal in New Jersey which added approximately 34 thousand meters;
• Average monthly average churn decreased to 5.3% from 7.1% in 4Q18. Churn was favorably impacted by the municipal aggregation agreement as these meters are typically characterized by relatively low rates of churn, and by relatively low rates of new customer acquisition in recent quarters.  The churn rate in the prior quarter was negatively impacted by the expiration of a municipal aggregation agreement. Excluding the impact of that expiration, average monthly churn for the prior quarter would have been approximately 6.1%. Average monthly churn in the year ago quarter was 7.6% including the impact of a regulatorily mandated relinquishment of low-income customers in New York.
• GRE increased income from operations to $13.5 million from $11.0 million in 1Q18.  Adjusted EBITDA increased to $13.8 million from $11.6 million in 1Q18.  The increases reflect margin improvement on natural gas sales and decreased customer acquisition expense.

GRE's financial results are summarized in the chart below:

Genie Energy Services (GES)

• GES revenue increased to $5.3 million from $502 thousand in 1Q18 reflecting the impact of the Prism Solar acquisition in 4Q18;
• GES' loss from operations was $232 thousand in 1Q19 compared to a loss from operations $92 thousand in 1Q18. 
• GES generated positive Adjusted EBITDA of $45 thousand compared to negative Adjusted EBITDA of $85 thousand in 1Q18.

Genie Retail Energy International (GRE International)

• GRE International served 33 thousand RCEs and 55 thousand meters at March 31^st, compared to 4 thousand RCEs and 8 thousand meters at December 31^st.  The increases resulted from the acquisition of Lumo Energy and organic growth at Orbit Energy;
• GRE International's revenue increased to $4.8 million compared to nil in 1Q18 on the Lumo Energia acquisition;
• Equity in the loss of Orbit Energy was $1.1 million compared to $506 thousand in 1Q18;   
• GRE International's loss from operations increased to $1.7 million from a loss from operations of $91 thousand in 1Q18.  Negative Adjusted EBITDA was $2.3 million compared to $597 thousand in 1Q18.  The increased losses reflect increased meter acquisition expense at Orbit Energy and Lumo Energia and buildout operations at Genie Japan.

Genie Oil and Gas (GOGAS)

• Operations at Genie Energy's Afek oil and gas exploration subsidiary remain suspending pending the permitting required for final testing on an existing well;
• Exploration expense was nil in the 1Q19 compared to $227 thousand in 1Q18;
• Loss from operations was $163 thousand compared to a loss from operations of $1.4 million in 1Q18.  Adjusted EBITDA was $124 thousand compared to negative Adjusted EBITDA of $1.2 million in 1Q18.  The improvements reflect the suspension of oil and gas exploration activities at Afek and a positive equity contribution from Genie's minority stake in drilling services company Atid.

Corporate

• Corporate loss from operations was $1.5 million compared to a loss of $2.4 million in 1Q18.  The loss narrowed on a decline in corporate stock-based compensation, which decreased to $238 thousand dollars from $1.2 million in the year ago quarter.  Negative Adjusted EBITDA was $1.3 million compared to $1.1 million in 1Q18.

BALANCE SHEET HIGHLIGHTS

At March 31, 2019, Genie Energy had $154.2 million in total assets, including $44.5 million in cash, cash equivalents and restricted cash.  Liabilities totaled $55.9 million and working capital (current assets less current liabilities) totaled $51.7 million. 

DIVIDEND ON GENIE ENERGY COMMON STOCK

Genie Energy's Board of Directors has declared a 1Q19 dividend of $0.075 per share of Class A and Class B common stock with a record date of May 20, 2019.  The dividend will be paid on or about May 31, 2019.  The distribution will be treated as an ordinary dividend for income tax purposes.

GENIE ENERGY EARNINGS CONFERENCE CALL

This earnings press release is available for download in the "Investors" section of the Genie Energy website (www.genie.com/investor-relations) and has been filed on a current report (Form 8-K) with the SEC.  

At 8:30 AM Eastern time today, May 6, 2019, Genie Energy's management will host a conference call to discuss financial and operational results, business outlook and strategy.  The call will begin with management's remarks followed by Q&A with investors. 

To participate in the conference call, dial toll-free 1-888-348-6472 (from the US) or 1-412-902-4240 (international) and request the Genie Energy conference call.

The call replay will be available at 1-844-512-2921 (US toll-free) or 1-412-317-6671 (international) through May 13, 2019.  The replay PIN is 10130656.  A recording of the call - in MP3 format - will also be available for playback on the "Investors" section of the Genie Energy website.

Investors can sign up through the Genie Energy website to have earnings releases and other press releases e-mailed directly to them. 

ABOUT GENIE ENERGY LTD.

Genie Energy Ltd. GNE GNEPRA))), is a global provider of energy services.  The Genie Retail Energy division supplies electricity and natural gas primarily to residential and small business customers in the United States. The Genie Retail Energy International division supplies customers in Europe and Asia.  The Genie Energy Services division includes Diversegy, a commercial brokerage and marketing services company, and Genie Solar Energy, a provider of solar generation systems.  For more information, visit Genie.com.

In this press release, all statements that are not purely about historical facts, including, but not limited to, those in which we use the words "believe," "anticipate," "expect," "plan," "intend," "estimate, "target" and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors, including, but not limited to, those described in our most recent report on SEC Form 10-K (under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations"), which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K.  We are under no obligation, and expressly disclaim any obligation, to update the forward-looking statements in this press release, whether as a result of new information, future events or otherwise.

 

 

GENIE ENERGY LTD. 

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts) 

 

 

GENIE ENERGY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

GENIE ENERGY LTD. 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

 

Reconciliation of Non-GAAP Financial Measure for the First Quarter 2019

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States of America (GAAP), Genie Energy also disclosed for the first quarter 2019, as well as for comparable periods, Adjusted EBITDA, which is a non-GAAP measure. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

Genie Energy's measure of Adjusted EBITDA consists of gross profit less selling, general and administrative expense, exploration expense and equity in the net loss of in equity method investees, net, plus depreciation, amortization and stock-based compensation (which are included in selling, general and administrative expense). Another way of calculating Adjusted EBITDA is to start with income from operations and add depreciation, amortization and stock-based compensation and subtract equity in net loss in equity method investees, net.

Management believes that Genie Energy's Adjusted EBITDA provides useful information to both management and investors by excluding certain expenses that may not be indicative of Genie Energy's or the relevant segment's core operating results. Management uses Adjusted EBITDA, among other measures, as a relevant indicator of core operational strengths in its financial and operational decision making. In addition, management uses Adjusted EBITDA to evaluate operating performance in relation to Genie Energy's competitors. Disclosure of this financial measure may be useful to investors in evaluating performance and allows for greater transparency to the underlying supplemental information used by management in its financial and operational decision-making. In addition, Genie Energy has historically reported Adjusted EBITDA and believes it is commonly used by readers of financial information in assessing performance, therefore the inclusion of comparative numbers provides consistency in financial reporting at this time.

Management refers to Adjusted EBITDA, as well as the GAAP measures gross profit, income (loss) from operations and net income (loss), on a segment and/or consolidated level to facilitate internal and external comparisons to the segments' and Genie Energy's historical operating results, in making operating decisions, for budget and planning purposes, and to form the basis upon which management is compensated.

Although depreciation and amortization are considered operating costs under GAAP, they primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. While Genie Energy's oil and gas exploration business may be capital intensive, Genie Energy does not expect to incur significant depreciation or depletion expense for the foreseeable future. Genie Energy's operating results exclusive of depreciation and amortization is therefore a useful indicator of its current performance.

Stock-based compensation recognized by Genie Energy and other companies may not be comparable because of the various valuation methodologies, subjective assumptions and the variety of types of awards that are permitted under GAAP. Stock-based compensation is excluded from Genie Energy's calculation of Adjusted EBITDA because management believes this allows investors to make more meaningful comparisons of the operating results of Genie Energy's core business with the results of other companies. However, stock-based compensation will continue to be a significant expense for Genie Energy for the foreseeable future and an important part of employees' compensation that impacts their performance.

Adjusted EBITDA should be considered in addition to, not as a substitute for, or superior to, gross profit, income from operations, cash flow from operating activities, net income, basic and diluted earnings per share or other measures of liquidity and financial performance prepared in accordance with GAAP. In addition, Genie Energy's measurements of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Following is the reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, which is income from operations, for Genie Energy's reportable segments and net income for Genie Energy on a consolidated basis.

 

 

 

 

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SOURCE Genie Energy Ltd.