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Genie Energy Announces Third Quarter 2021 Results

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  • GNE
  • GNE-PA

Record consolidated gross margin, gross profit and Adjusted EBITDA(1)

Genie Retail Energy (GRE) achieved record operating profitability

Planned orderly withdrawal from U.K. retail market underway

NEWARK, N.J., Nov. 4, 2021 /PRNewswire/ -- Genie Energy, Ltd. (NYSE: GNE, GNEPRA), a leading retail energy provider in deregulated markets in the U.S. and select markets in Europe, and a provider of renewables solutions in the U.S., today announced results for its third quarter ended September 30, 2021.

Genie Energy is a leading provider of electricity and natural gas to homes and small businesses in the Eastern U.S. Genie also operates an E&P company with an active exploratory program in Northern Israel.
Genie Energy is a leading provider of electricity and natural gas to homes and small businesses in the Eastern U.S. Genie also operates an E&P company with an active exploratory program in Northern Israel.

"Genie Energy performed exceptionally well this quarter, generating record gross margin, gross profit and Adjusted EBITDA," said Michael Stein, chief executive officer. "Our performance was highlighted by strong results from both our U.S. and Scandinavian energy supply businesses. Genie Renewables continued to experience robust customer demand, and we anticipate significant growth in the coming quarters.

"In our international business, as we previously announced, we are withdrawing from the U.K. market as a result of the impact of structural market limitations in the current high-cost environment. Although we have set aside plans for the spin-off, looking ahead, we expect no new material negative cash impact as a result of the exit. In fact, retiring from that market obviates the need to invest additional growth capital."

Third Quarter 2021 Highlights (3Q21 results versus 3Q20 unless otherwise noted)

  • Revenue increased 17.5% to $113.2 million;

  • Gross profit increased 55.1% to $42.4 million and gross margin increased to 37.4% from 28.4%;

  • Income from operations decreased to $6.9 million from $8.5 million; operating margin decreased to 6.1% from 8.8%. Income from operations included a loss from operations of $16.4 million in the UK (primarily expenses related to the Company's withdrawal from that market) compared to a loss from operations of $4.2 million from the U.K. a year ago;

  • Adjusted EBITDA increased 58.5% to $15.0 million compared to $9.5 million;

  • GRE generated record income from operations and Adjusted EBITDA of $19.7 million and $20.0 million, respectively, compared to $12.2 million and $12.5 million;

  • Net loss attributable to GNE common stockholders was ($2.7) million and diluted loss per share was ($0.10), including a $(0.26) per share writedown of assets related to the Company's exit from the U.K. market. In the year-ago quarter, net income was $6.4 million and diluted earnings per share (EPS) was $0.24; and,

  • Re-purchased 230,000 shares of GNE common stock for $1.4 million.

1 Adjusted EBITDA for all periods presented 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 Measures at the end of this release for an explanation of Adjusted EBITDA, as well as for reconciliations to its most directly comparable GAAP measures.

Select Financial Metrics: Q3 2021 compared to Q3 2020

(in $M except for EPS)

3Q21

3Q20

Change

Consolidated Revenue

$113.2

$96.3

17.5%

Genie Retail - US (GRE)

$86.3

$88.9

(2.9)%

Electricity

$82.8

$86.2

(3.9)%

Natural Gas

$3.5

$2.7

29.1%

Genie Retail - International (GREI)

$25.5

$5.8

337.5%

Electricity

$21.0

$5.6

275.3%

Natural Gas

$4.1

$0.0

nm

Genie Renewables

$1.3

$1.6

(14.9)%

Gross Margin

37.4%

28.4%

910bp

Genie Retail - US (GRE)

39.6%

29.0%

1060bp

Genie Retail - International (GREI)

30.5%

18.7%

1180bp

Genie Renewables

34.0%

27.1%

690bp

Income from Operations

$6.9

$8.5

(19.0)%

Operating Margin

6.1%

8.8%

(270)bp

Net (Loss) Income Attributable to Genie Energy Ltd. Common Stockholders

$(2.7)

$6.4

213.7%

Diluted (Loss) Earnings Per Share

$(0.10)

$0.24

$(0.34)

Adjusted EBITDA

$15.0

$9.5

34.9%

Cash Flow from Operating Activities

$6.0

$10.4

(42.7)%

Select Business Metrics: 2021 versus 2020 as of 9/30/21

Units in 1000s

3Q21

3Q20

Change

Retail Performance Metrics:




Retail Customer Equivalents (RCE)

434

441

(1.5)%

Genie Retail - US (GRE)

336

350

(3.9)%

Electricity

276

294

(5.9)%

Natural Gas

60

56

6.6%

Genie Retail - International (GREI)

98

91

7.5%

Electricity

73

69

6.1%

Natural Gas

24

22

12.1%

Meters

554

558

(0.7)%

Genie Retail - US (GRE)

361

375

(3.8)%

Electricity

289

309

(6.4)%

Natural Gas

72

67

8.0%

Genie Retail - International (GREI)

193

182

5.9%

Electricity

138

136

1.1%

Natural Gas

55

46

20.0%

GRE Average Monthly Churn – Meters




Gross Sales

46

44

4.5%

Churn

4.0%

3.7%

30bps

GRE delivered record levels of gross profit, income from operations and Adjusted EBITDA for the quarter driven by strong margins in the retail book and mark-to-market increases in the value of its forward commodity positions after both electricity and natural gas prices rose sharply. In addition, Genie recorded a $1.9 million credit to the cost of sales reflecting expected reimbursement from the State of Texas for charges imposed by ERCOT during the severe winter storm in February 2021. Operationally, GRE served 336,000 RCEs at September 30, 2021, a 2.0% increase sequentially and a 3.9% decrease year over year. Per meter consumption, while decreasing slightly compared to the year-ago quarter, remained above pre-COVID levels. Monthly churn, at 4.0%, was below typical pre-COVID levels while increasing from 3.7% in the year-ago quarter and from 3.8% in the prior quarter.

GREI revenue growth was driven by the consolidation of Orbit Energy (U.K.) results following our purchase of the non-controlled interest in Orbit during October 2020, which previously had not been consolidated, and by organic meter growth compared to the prior year. Orbit Energy's loss from operations was $16.4 million for the quarter, including a $6.7 million ($0.26 cents per share) impairment of assets In Scandanavia, GREI curtailed meter acquisition in a rising commodity price environment, leading to increased profitability and a decrease in meters served during the quarter.

Genie Renewables (formerly Genie Energy Services) reported a higher gross margin and improved overall results as it shifted to higher-margin solar projects.

Balance Sheet and Cash Flow Highlights
At September 30, 2021, Genie Energy reported $193.2 million in total assets, including $48.6 million in cash, restricted cash and marketable equity securities. Liabilities totaled $110.7 million and working capital (current assets less current liabilities) totaled $44.4 million. Non-current liabilities were $3.0 million.

Cash provided by operating activities during the quarter ended September 30, 2021 was $6.0 million compared to $10.4 million a year ago.

Strategic Update
Genie has suspended the planned spin-off of its international operations in the U.K. and Scandinavia following the deterioration of the U.K. energy market, where a planned, orderly withdrawal from the market is underway. Genie does not expect to incur additional material, cash charges as a result.

Fourth Quarter Commentary
Heading into the winter heating season, Genie is positioned to mitigate foreseeable volatility in wholesale energy prices through its risk-management program including hedging and forward commodity contract positioning. As a result of commodity price increases, Genie expects to generate robust margins from its retail supply businesses. Moreover, the company expects to reduce supply requirements by narrowing its customer acquisition program to higher margin customers. This strategy optimizes margins while dampening customer acquisition expense. When combined with increasing profitability in Scandanavia, the elimination of additional investment in the U.K. market and growth opportunities for Genie Renewables, management believes the Company is well positioned to deliver strong fourth quarter results.

Trended Financial Information:*

(in $M except for EPS, RCE and Meters)

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21


2019

2020

YTD 2021

Total Revenue

$104.1

$76.1

$96.3

$102.9

$135.3

$97.7

$113.2


$315.3

$379.3

$346.2

Genie Retail - US (GRE)

$79.1

$66.5

$88.9

$69.9

$90.7

$67.0

$86.3


$286.6

$305.3

$244.0

Electricity

$63.1

$61.1

$86.2

$60.5

$73.4

$61.9

$82.8


$246.7

$271.7

$218.1

Natural Gas

$16.1

$5.4

$2.7

$9.4

$17.3

$5.1

$3.5


$39.9

$33.6

$25.9

Genie Retail - International (GREI)

$6.7

$5.0

$5.8

$31.8

$42.2

$28.4

$25.5


$16.6

$49.6

$96.1

Electricity

$6.9

$4.8

$5.6

$23.4

$30.3

$21.4

$21.0


$16.4

$40.7

$72.7

Natural Gas

$0.0

$0.0

$0.0

$8.3

$11.8

$6.7

$4.1


$0.0

$8.3

$22.6

Genie Renewables

$18.0

$4.6

$1.6

$1.1

$2.5

$2.3

$1.3


$12.1

$24.4

$6.2

Gross Margin

27.8%

25.6%

28.3%

21.4%

12.9%

24.3%

37.4%


26.3%

25.8%

24.2%

Genie Retail - US (GRE)

43.7%

25.7%

29.0%

25.6%

16.5%

27.4%

39.6%


28.1%

28.9%

27.6%

Genie Retail - International (GREI)

-4.5%

38.0%

19.0%

13.8%

3.3%

15.9%

30.5%


1.8%

14.5%

14.3%

Genie Renewables

8.9%

11.4%

27.1%

-29.0%

44.9%

39.4%

34.0%


15.7%

9.4%

40.4%

Income (loss) from Operations

$9.2

$2.7

$8.5

($1.1)

($6.6)

$1.4

$6.9


$9.8

$19.3

$1.7

Operating Margin

8.8%

3.6%

8.8%

-1.1%

-4.9%

1.4%

6.1%


3.1%

5.1%

0.5%

Net income attributable to Genie Energy Ltd. common stockholders

$5.5

$1.6

$6.4

($1.7)

($2.4)

$5.0

($2.7)


$2.7

$11.7

nm

Diluted Earnings (Loss) Per Share

$0.20

$0.06

$0.24

($0.06)

($0.09)

$0.19

$0.10


$0.10

$0.44

$0.00

Adjusted EBITDA1

$10.3

$3.5

$9.5

$0.7

($4.5)

$3.1

$15.0


$10.1

$24.0

$13.5

Retail Customer Equivalents (RCE) in 1000s

398

418

437

435

446

436

434


nm

nm

nm

Genie Retail - US (GRE)

330

343

350

337

347

330

336


nm

nm

nm

Electricity

272

288

294

284

291

272

276


nm

nm

nm

Natural Gas

58

55

56

53

56

58

60


nm

nm

nm

Genie Retail - International (GREI)

69

76

87

98

98

106

98


nm

nm

nm

Electricity

50

55

66

76

77

82

73


nm

nm

nm

Natural Gas

19

21

22

21

21

24

24


nm

nm

nm

Meters in 1000s units

520

522

543

547

555

554

554


nm

nm

nm

Genie Retail - US (GRE)

384

374

375

368

373

361

361


nm

nm

nm

Electricity

313

311

309

303

308

292

289


nm

nm

nm

Natural Gas

71

64

67

65

65

69

72


nm

nm

nm

Genie Retail - International (GREI)

136

147

167

179

182

193

193


nm

nm

nm

Electricity

96

105

121

132

135

141

138


nm

nm

nm

Natural Gas

40

43

46

47

47

52

55


nm

nm

nm

Average Monthly Churn - Meters












Genie Retail - US (GRE)












Gross Sales

69

40

44

59

60

35

46


308

212

144

Churn

4.3%

3.9%

3.7%

5.3%

4.9%

3.8%

4.0%


5.3%

4.4%

4.2%

nm = not measurable/meaningful












*Numbers may not add due to rounding












Earnings Announcement and Supplemental Information
Genie Energy has filed this release in a current report (Form 8-K) with the SEC and posted it on its website (https://genie.com/investors/investor-relations/).

At 8:30 AM Eastern today, 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 1-888-506-0062 (toll-free from the US) or 1-973-528-0011 (international) and provide the following participant access code: 536748.

Approximately three hours after the call, a call replay will be accessible by dialing 1-877-481-4010 (toll-free from the US) or 1-919-882-2331 (international) and providing the replay PIN: 43494. The replay will remain available through November 18, 2021. A recording of the call also will be available for playback on the "Investors" section of the Genie Energy website.

About Genie Energy Ltd.
Genie Energy Ltd. (NYSE: GNE, GNEPRA), is a provider of energy services. The Genie Retail Energy division supplies electricity, including electricity from renewable resources, and natural gas to residential and small business customers in the United States. The Genie Retail Energy International division supplies customers in selected markets in Europe. Genie Renewables comprises Genie Solar Energy, a provider of end-to-end customized solar solutions primarily for commercial customers, Diversegy, a commercials energy consulting business, CityCom Solar, a provider of community solar energy solutions and Genie's interest in Prism Solar, a supplier of solar panels and solutions. 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)



September 30,
2021



December 31,
2020



(Unaudited)



(Audited)


Assets






Current assets:






Cash and cash equivalents

$

33,983



$

36,913


Restricted cash—short-term


6,528




6,271


Marketable equity securities


8,048




5,089


Trade accounts receivable, net of allowance for doubtful accounts of $16,465 and $8,793 at
September 30, 2021 and December 31, 2020, respectively


58,593




60,778


Inventory


23,648




16,930


Prepaid expenses


5,767




4,633


Other current assets


15,924




3,206


Total current assets


152,491




133,820


Property and equipment, net


281




259


Goodwill


25,627




25,929


Other intangibles, net


3,768




11,645


Deferred income tax assets, net


2,005




4,882


Other assets


9,448




10,804


Total assets

$

193,620



$

187,339


Liabilities and equity








Current liabilities:








Loan payable

$



$

1,453


Trade accounts payable


39,760




43,005


Accrued expenses


51,339




42,762


Contract liability


8,317




5,609


Income taxes payable


6,435




1,893


Due to IDT Corporation, net


109




257


Other current liabilities


2,132




2,494


Total current liabilities


108,092




97,473


Other current liabilities


2,965




3,787


Total liabilities


111,057




101,260


Commitments and contingencies






Equity:








Genie Energy Ltd. stockholders' equity:








Preferred stock, $0.01 par value; authorized shares—10,000:








Series 2012-A, designated shares—8,750; at liquidation preference, consisting of 2,322 shares issued and outstanding at September 30, 2021 and December 31, 2020


19,743




19,743


Class A common stock, $0.01 par value; authorized shares—3,500; 1,574 shares issued and outstanding at September 30, 2021 and December 31, 2020


16




16


Class B common stock, $0.01 par value; authorized shares—200,000; 26,582 and 25,966 shares issued and 24,600 and 24,646 shares outstanding at September 30, 2021 and December 31, 2020, respectively


266




260


Additional paid-in capital


141,787




140,746


Treasury stock, at cost, consisting of 1,982 and 1,320 shares of Class B common stock at September 30, 2021 and December 31, 2020, respectively


(13,922)




(9,839)


Accumulated other comprehensive income


2,994




3,827


Accumulated deficit


(56,673)




(56,658)


Total Genie Energy Ltd. stockholders' equity


94,211




98,095


Noncontrolling interests


(11,648)




(12,016)


Total equity


82,563




86,079


Total liabilities and equity

$

193,620



$

187,339


GENIE ENERGY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)




Three Months Ended
September 30,


Nine Months Ended
September 30,




2021



2020


2021



2020




(in thousands, except per share data)


Revenues:













Electricity


$

103,799



$

91,793



$

290,783



$

227,671


Natural gas



7,609




2,724




48,458




24,190


Other



1,756




1,809




6,970




24,591


Total revenues



113,164




96,326




346,211




276,452


Cost of revenues



70,788




69,010




262,540




200,744


Gross profit



42,376




27,316




83,671




75,708


Operating expenses and losses:







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