Genie Energy Announces Third Quarter Results

Reports record third-quarter gross profit, net income and Adjusted EBITDA¹

Acquired site rights to build up to 64MW (megawatts) of solar projects

NEWARK, N.J., Nov. 7, 2022 /PRNewswire/ -- Genie Energy, Ltd. (NYSE: GNE, GNEPRA), a leading retail energy and renewable energy solutions provider, today announced results for its third quarter ended September 30, 2022.

"We reported record third quarter profit metrics driven by strength in Genie Retail Energy (GRE), our domestic retail energy business," said Michael Stein, chief executive officer. "GRE continued to outperform in a volatile energy price environment. We were well-positioned with our customer book and hedges heading into the quarter and were able to drive a 54% gross margin and generate nearly $28 million in Adjusted EBITDA. Genie Renewables (GREW) also made excellent progress in our solar business, acquiring site rights to 64MW of solar projects and advancing them through their permitting processes.

"Given the challenging environment in the European energy market, we determined that the risk was beyond our acceptable tolerances. As a result, we exited our remaining international retail operations and no longer serve customers in Scandanavia.* Finally, building on our strong domestic operational performance, we returned $3.2 million in capital to shareholders via redemption of preferred stock and payments of our regular quarterly common and preferred stock dividends."

* Genie Retail Energy International (GREI) results are classified as discontinued operations in the third quarter of 2022 and for all prior periods presented.

Third Quarter 2022 Highlights (versus 3Q21 unless otherwise noted; excludes GREI for all periods)

• Revenue decreased 7.3% to $81.3 million from $87.7 million;
• Gross profit increased 24.7% to $43.1 million from $34.6 million, and gross margin increased to 53.1% from 39.5%, driven by strength at GRE;
• Income from operations increased 34.8% to $23.5 million from $17.5 million;
• Adjusted EBITDA¹ increased 35.2% to $24.5 million from $18.1 million;
• GRE generated income from continuing operations and Adjusted EBITDA of $27.4 million and $27.7 million, compared to $19.7 million and $20.0 million, respectively;
• Net income from continuing operations attributable to GNE common stockholders increased to $18.3 million, and diluted income per share (EPS) increased to $0.70, compared to a loss of $2.7 million and net loss per share of $0.10, respectively;
• Cash, restricted cash and marketable equity securities increased to $87.7 million at September 30, 2022, from $67.2 million at June 30, 2022;
• Declared a $0.075 quarterly dividend for class A and B common stockholders;
• Redeemed $1 million of preferred stock.

Segment Highlights

Genie Retail Energy (GRE)

GRE delivered record third quarter gross profit, income from operations, and Adjusted EBITDA, highlighted by strong margins in its retail book. Electric per meter consumption declined moderately versus the year-ago quarter but remained solidly above pre-COVID levels. As in prior quarters, GRE moderated customer acquisition to maximize the value of its portfolio, given the ongoing market volatility. 

Sequentially, RCEs and meters served decreased by 11,000 and 9,000 to 251,000 and 271,000, respectively, as of September 30, 2022. Average monthly churn increased to 4.7% from 4.0% in the year-ago quarter and from 4.4% in the second quarter of 2022.

Genie Renewables (GREW)

Genie Solar Energy continued building solar projects for large commercial customers and is on track to continue recognizing additional revenue from its growing backlog of projects.

As previously disclosed, GREW is also building a portfolio of company-owned and/or controlled solar generation fields. In that regard, the Company achieved site control on multiple projects totaling 64MW of generation capacity.

Balance Sheet and Cash Flow Highlights

On September 30, 2022, Genie Energy reported $259.9 million in total assets. Liabilities totaled $97.7 million, and working capital (current assets less current liabilities) totaled $128.5 million. Non-current liabilities were $11.7 million.

For the quarter ended September 30, 2022, net cash provided by operating activities was $25.6 million compared to $6.0 million a year ago.

Strategic Update and Commentary on the Balance of 2022

GRE will continue monitoring the U.S. retail energy markets for customer acquisition opportunities. As volatility either moderates or becomes more palatable to customers, GRE expects to recalibrate its customer acquisition and retention programs to generate growth in its customer book.

On October 12, 2022, Genie announced that, on November 15, 2022, it would redeem 986,400 shares of its Preferred Stock for an aggregate cost of approximately $8.3 million. After this redemption, Genie Energy will have 983,358 shares of Preferred Stock outstanding with an aggregate stated value of $8.4 million.

Stein commented, "We expect energy prices to remain volatile as we head into the Winter months, but we continue to be well-positioned from a risk management position and will return to customer acquisition mode on a market-by-market basis when the risk/reward balance is favorable. Additionally, we expect to receive all approvals necessary to begin construction on our first wholly-owned and operated solar generation project this quarter. Finally, we continue to redeem our preferred stock to enhance our flexibility to invest future cash-flows in value creation initiatives, including pursuing additional growth opportunities in our renewables business."

Dividend on Genie Energy Common Stock

Genie Energy's Board of Directors has declared a dividend of $0.075 per share of Class A and Class B common stock with a record date of November 14, 2022. The dividend will be paid on or about November 21, 2022. The distribution will be treated as an ordinary dividend for income tax purposes. 

Earnings Announcement and Supplemental Information

At 8:30 AM Eastern today, Genie'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 1-877-545-0523 (toll-free from the U.S.) or 1-973-528-0011 (international) and provide the following participant access code: 643413.

Approximately three hours after the call, a call replay will be accessible by dialing 1-877-481-4010 (toll-free from the U.S.) or 1-919-882-2331 (international) and providing the replay passcode: 46970. The replay will remain available through November 21, 2022. 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 retail energy and renewable energy solutions provider. 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 Renewables division is a vertically-integrated provider of commercial, community, and utility-scale solar energy 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.

Reconciliation of Non-GAAP Financial Measure for the Third Quarter 2022

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 disclosed Adjusted EBITDA on a consolidated basis and for GRE. Adjusted EBITDA 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's measure of consolidated Adjusted EBITDA starts with net income and adds back interest, taxes, depreciation, amortization, stock-based compensation and impairment of assets and subtracts out equity in the net loss of equity method investees, net. Genie's measure of segment-level Adjusted EBITDA starts with income (loss) from operations and adds back depreciation, amortization, and stock-based compensation and subtracts out impairment of assets and equity in the net loss of equity method investees, net.

Adjusted EBITDA should be considered in addition to, not as a substitute for, or superior to, revenue, 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's measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Management believes that Genie's measure of Adjusted EBITDA provides useful information to both management and investors by excluding certain expenses that may not be indicative of Genie's or GRE'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.

Management also uses Adjusted EBITDA to evaluate operating performance in relation to Genie's competitors. Disclosure of this non-GAAP 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 revenue, gross profit, and income (loss) from operations, as well as net income (loss), on a consolidated level to facilitate internal and external comparisons to Genie'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. Genie's operating results exclusive of depreciation and amortization are therefore useful indicators 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's calculation of Adjusted EBITDA because management believes this allows investors to make more meaningful comparisons of the operating results of Genie'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.

Impairment of goodwill is a component of (loss) income from operations that is excluded from the calculation of Adjusted EBITDA. The impairment of goodwill is primarily dictated by events and circumstances outside the control of management that trigger an impairment analysis. While there may be similar charges in other periods, the nature and magnitude of these charges can fluctuate markedly and do not reflect the performance of Genie's continuing operations.

Following are the reconciliations of Adjusted EBITDA on a consolidated basis to its most directly comparable GAAP measure. Adjusted EBITDA is reconciled to net income for Genie Energy on a consolidated basis and for GRE.

SOURCE Genie Energy Ltd.

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