8-K
Genie Energy Ltd. (GNE)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 4, 2021
GENIE
ENERGY LTD.
(Exact name of registrant as specified in its charter)
| Delaware | 1-35327 | 45-2069276 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission File Number) | (IRS Employer<br><br> <br>Identification No.) |
| 520 Broad Street<br><br> <br>Newark, New Jersey | 07102 |
|---|---|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (973) 438-3500
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b)-2 of the Exchange Act:
| Title of each class | Trading Symbol | Name of each exchange on<br><br> <br>which registered |
|---|---|---|
| Class<br> B common stock, par value $.01 per share | GNE | New<br> York Stock Exchange |
| Series<br> 2012-A Preferred stock, par value $.01 per share | GNE.PRA | New<br> York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item2.02. Results of Operations and Financial Condition.
On November 4, 2021, the Registrant distributed over a wire service and posted to the investor relations page of its website (www.genie.com), an earnings release announcing its results of operations for the quarter ended September 30, 2021. A copy of the earnings release concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The Registrant is furnishing the information contained in this Report, including Exhibit 99.1, pursuant to Item 2.02 of Form 8-K promulgated by the Securities and Exchange Commission (the “SEC”). This information shall not be deemed to be “filed” with the SEC or incorporated by reference into any other filing with the SEC unless otherwise expressly stated in such filing. In addition, this Report and the press release contain statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in the press release.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
|---|---|
| Exhibit No. | Document |
| --- | --- |
| 99.1 | Press Release, dated November 4, 2021, reporting the results of operations for the quarter ended September 30, 2021. |
| 104 | Cover<br> Pager Interactive Data File, formatted in Inline XBRL document |
1
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GENIE ENERGY LTD. | |
|---|---|
| By: | /s/<br> Michael Stein |
| Name:<br> Michael Stein | |
| Title:<br> Chief Executive Officer |
Dated: November 4, 2021
2
EXHIBIT
INDEX
| Exhibit Number | Document |
|---|---|
| 99.1 | Press Release, dated November 4, 2021, reporting the results of operations for the quarter ended September 30, 2021. |
| 104 | Cover<br> Pager Interactive Data File, formatted in Inline XBRL document |
3
Exhibit 99.1
GenieEnergy Announces Third Quarter 2021 Results
Recordconsolidated gross margin, gross profit and Adjusted EBITDA^1^
GenieRetail Energy (GRE) achieved record operating profitability
Plannedorderly withdrawal from U.K. retail market underway
Newark,NJ – November 4, 2021: 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 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.”
ThirdQuarter 2021 Highlights (3Q21 results versus 3Q20 unless otherwise noted)
| ● | Revenue<br> increased 17.5% to $113.2 million; | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| ● | Gross<br> profit increased 55.1% to $42.4 million and gross margin increased to 37.4% from 28.4%; | ||||||||
| ● | Income<br> from operations decreased to $6.9 million from $8.5 million; operating margin decreased to<br> 6.1% from 8.8%. Income from operations included a loss from operations of $16.4 million in<br> the UK (primarily expenses related to the Company’s withdrawal from that market) compared<br> to a loss from operations of $4.2 million from the U.K. a year ago; | ||||||||
| ● | Adjusted<br> EBITDA increased 58.5% to $15.0 million compared to $9.5 million; | ||||||||
| ● | GRE<br> generated record income from operations and Adjusted EBITDA of $19.7 million and $20.0 million,<br> respectively, compared to $12.2 million and $12.5 million; | ||||||||
| ● | Net<br> loss attributable to GNE common stockholders was ($2.7) million and diluted loss per share<br> was ($0.10), including a $(0.26) per share writedown of assets related to the Company’s<br> exit from the U.K. market. In the year-ago quarter, net income was $6.4 million and diluted<br> earnings per share (EPS) was $0.24; and, | ||||||||
| ● | Re-purchased<br> 230,000 shares of GNE common stock for $1.4 million. | ||||||||
| ^1^ | Adjusted EBITDA for all periods presented is a non-GAAPmeasure intended to provide useful information that supplements the core operating results in accordance with GAAP of Genie Energy orthe relevant segment. Please refer to the Reconciliation of Non-GAAP Financial Measures at the end of this release for an explanationof 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 | % | 910 | bp | |||
| Genie Retail - US (GRE) | 39.6 | % | 29.0 | % | 1060 | bp | |||
| Genie Retail - International (GREI) | 30.5 | % | 18.7 | % | 1180 | bp | |||
| Genie Renewables | 34.0 | % | 27.1 | % | 690 | bp | |||
| 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 | % | 30 | bps |
2
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.
BalanceSheet 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.
StrategicUpdate
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.
FourthQuarter 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.
3
TrendedFinancial Information:*
| (in $M except EPS, RCE and Meters) | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 | 2019 | 2020 | YTD<br> <br>2021 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total<br> Revenue | $ | 104.1 | $ | 76.1 | $ | 96.3 | $ | 102.9 | $ | 135.3 | $ | 97.7 | $ | 113.2 | $ | 315.3 | $ | 379.3 | $ | 346.2 | ||||||||||
| Genie<br> 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<br> Gas | $ | 16.1 | $ | 5.4 | $ | 2.7 | $ | 9.4 | $ | 17.3 | $ | 5.1 | $ | 3.5 | $ | 39.9 | $ | 33.6 | $ | 25.9 | ||||||||||
| Genie<br> 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<br> Gas | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 8.3 | $ | 11.8 | $ | 6.7 | $ | 4.1 | $ | 0.0 | $ | 8.3 | $ | 22.6 | ||||||||||
| Genie<br> Renewables | $ | 18.0 | $ | 4.6 | $ | 1.6 | $ | 1.1 | $ | 2.5 | $ | 2.3 | $ | 1.3 | $ | 12.1 | $ | 24.4 | $ | 6.2 | ||||||||||
| Gross<br> Margin | 27.8 | % | 25.6 | % | 28.3 | % | 21.4 | % | 12.9 | % | 24.3 | % | 37.4 | % | 26.3 | % | 25.8 | % | 24.2 | % | ||||||||||
| Genie<br> Retail - US (GRE) | 43.7 | % | 25.7 | % | 29.0 | % | 25.6 | % | 16.5 | % | 27.4 | % | 39.6 | % | 28.1 | % | 28.9 | % | 27.6 | % | ||||||||||
| Genie<br> Retail - International (GREI) | -4.5 | % | 38.0 | % | 19.0 | % | 13.8 | % | 3.3 | % | 15.9 | % | 30.5 | % | 1.8 | % | 14.5 | % | 14.3 | % | ||||||||||
| Genie<br> Renewables | 8.9 | % | 11.4 | % | 27.1 | % | -29.0 | % | 44.9 | % | 39.4 | % | 34.0 | % | 15.7 | % | 9.4 | % | 40.4 | % | ||||||||||
| Income<br> (loss) from Operations | $ | 9.2 | $ | 2.7 | $ | 8.5 | $ | (1.1 | ) | $ | (6.6 | ) | $ | 1.4 | $ | 6.9 | $ | 9.8 | $ | 19.3 | $ | 1.7 | ||||||||
| Operating<br> Margin | 8.8 | % | 3.6 | % | 8.8 | % | -1.1 | % | -4.9 | % | 1.4 | % | 6.1 | % | 3.1 | % | 5.1 | % | 0.5 | % | ||||||||||
| Net<br> 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 EBITDA^1^ | $ | 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<br> 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<br> Gas | 58 | 55 | 56 | 53 | 56 | 58 | 60 | nm | nm | nm | ||||||||||||||||||||
| Genie<br> 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<br> 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<br> 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<br> Gas | 71 | 64 | 67 | 65 | 65 | 69 | 72 | nm | nm | nm | ||||||||||||||||||||
| Genie<br> 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<br> Gas | 40 | 43 | 46 | 47 | 47 | 52 | 55 | nm | nm | nm | ||||||||||||||||||||
| Average Monthly Churn - Meters | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Genie<br> Retail - US (GRE) | ||||||||||||||||||||||||||||||
| Gross Sales | 69 | 40 | 44 | 59 | 60 | 35 | 46 | 308 | 212 | 144 | ||||||||||||||||||||
| Chum | 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
4
EarningsAnnouncement 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.
AboutGenie 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.
Inthis press release, all statements that are not purely about historical facts, including, but not limited to, those in which we use thewords “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. Whilethese forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materiallyfrom the results expressed or implied by these statements due to numerous important factors, including, but not limited to, those describedin our most recent report on SEC Form 10-K (under the headings “Risk Factors” and
“Management’sDiscussion and Analysis of Financial Condition and Results of Operations”), which may be revised or supplemented in subsequent reportson SEC Forms 10-Q and 8-K. We are under no obligation, and expressly disclaim any obligation, to update the forward-looking statementsin this press release, whether as a result of new information, future events or otherwise.
Contact:
Brian Siegel IRC, MBA
Managing Director
Hayden IR
(346) 396-8696
brian@haydenir.com
5
GENIEENERGY LTD.
CONSOLIDATEDBALANCE SHEETS
(inthousands, except per share amounts)
| December 31,<br> 2020 | |||||
|---|---|---|---|---|---|
| (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 |
All values are in US Dollars.
6
GENIEENERGY LTD.
CONSOLIDATEDSTATEMENTS OF OPERATIONS(Unaudited)
| Three Months Ended<br> September 30, | Nine Months Ended<br> 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: | ||||||||||||
| Selling, general and administrative (i) | 28,853 | 18,831 | 75,366 | 54,287 | ||||||||
| Impairment of assets | 6,650 | — | 6,650 | 993 | ||||||||
| Income from operations | 6,873 | 8,485 | 1,655 | 20,428 | ||||||||
| Interest income | 8 | 21 | 28 | 164 | ||||||||
| Interest expense | (99 | ) | (48 | ) | (311 | ) | (223 | ) | ||||
| Equity in the net income (loss) in equity method investees, net | 52 | (146 | ) | 215 | (1,698 | ) | ||||||
| Unrealized (loss) gain on marketable equity securities and investments | (5,312 | ) | — | 1,710 | — | |||||||
| Gain on sale of subsidiary | — | — | 4,226 | — | ||||||||
| Other (loss) income, net | (17 | ) | 291 | 267 | 390 | |||||||
| Income before income taxes | 1,505 | 8,603 | 7,790 | 19,061 | ||||||||
| Provision for income taxes | (3,822 | ) | (2,406 | ) | (7,515 | ) | (5,563 | ) | ||||
| Net (loss) income | (2,317 | ) | 6,197 | 275 | 13,498 | |||||||
| Net loss attributable to noncontrolling interests | (31 | ) | (531 | ) | (821 | ) | (1,026 | ) | ||||
| Net (loss) income attributable to Genie Energy Ltd. | (2,286 | ) | 6,728 | 1,096 | 14,524 | |||||||
| Dividends on preferred stock | (370 | ) | (370 | ) | (1,111 | ) | (1,111 | ) | ||||
| Net (loss) income attributable to Genie Energy Ltd. common stockholders | $ | (2,656 | ) | $ | 6,358 | $ | (15 | ) | $ | 13,413 | ||
| (Loss) Earnings per share attributable to Genie Energy Ltd. common stockholders: | ||||||||||||
| Basic | $ | (0.10 | ) | $ | 0.25 | $ | (0.00 | ) | $ | 0.51 | ||
| Diluted | $ | (0.10 | ) | $ | 0.24 | $ | (0.00 | ) | $ | 0.50 | ||
| Weighted-average number of shares used in calculation of (loss) earnings per share: | ||||||||||||
| Basic | 25,514 | 25,928 | 25,867 | 26,107 | ||||||||
| Diluted | 25,514 | 26,769 | 25,867 | 26,839 | ||||||||
| Dividends declared per common share | $ | — | $ | 0.085 | $ | — | $ | 0.245 | ||||
| (i) Stock-based compensation included in selling, general and administrative expenses | $ | 531 | $ | 447 | $ | 1,680 | $ | 1,331 |
7
GENIEENERGY LTD.
CONSOLIDATEDSTATEMENTS OF CASH FLOWS(Unaudited)
| Nine Months Ended<br> September 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| (in thousands) | ||||||
| Operating activities | ||||||
| Net income | $ | 275 | $ | 13,498 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 3,326 | 2,219 | ||||
| Impairment of assets | 6,650 | 993 | ||||
| Deferred income taxes | 2,877 | 4,838 | ||||
| Provision for doubtful accounts receivable | 8,018 | 2,209 | ||||
| Unrealized gain on marketable equity securities and investment | (1,710 | ) | — | |||
| Stock-based compensation | 1,680 | 1,331 | ||||
| Equity in the net (income) loss in equity method investees | (215 | ) | 1,698 | |||
| Gain on sale of subsidiary | (4,226 | ) | — | |||
| Loss on sale of assets held for sale | — | 456 | ||||
| Gain on deconsolidation of subsidiaries | — | (98 | ) | |||
| Change in assets and liabilities: | ||||||
| Trade accounts receivable | (7,570 | ) | 2,827 | |||
| Inventory | (6,718 | ) | 3,218 | |||
| Prepaid expenses | (1,524 | ) | 2,166 | |||
| Other current assets and other assets | (13,718 | ) | (633 | ) | ||
| Trade accounts payable, accrued expenses and other current liabilities | 5,414 | 2,018 | ||||
| Contract liability | 2,796 | (12,393 | ) | |||
| Due to IDT Corporation | (148 | ) | (266 | ) | ||
| Income taxes payable | 4,542 | (43 | ) | |||
| Net cash provided by operating activities | 86 | 24,038 | ||||
| Investing activities | ||||||
| Capital expenditures | (158 | ) | (125 | ) | ||
| Proceeds from disposal of assets held for sale | — | 48 | ||||
| Proceeds from the sale of a subsidiary, net of cash disposed | 4,550 | — | ||||
| Purchase of marketable equity securities | (1,000 | ) | — | |||
| Investments in equity method investee | — | (1,502 | ) | |||
| Purchase of short-term equity investments | (750 | ) | — | |||
| Payment of acquisition of intangible | — | (298 | ) | |||
| Repayment of notes receivable | 14 | 14 | ||||
| Net cash provided by (used in) investing activities | 2,656 | (1,863 | ) | |||
| Financing activities | ||||||
| Dividends paid | (1,111 | ) | (7,543 | ) | ||
| Proceeds from revolving line of credit | — | 1,000 | ||||
| Repayment of revolving line of credit | — | (3,514 | ) | |||
| Proceeds from loan | — | 1,395 | ||||
| Repayment of loan | — | — | ||||
| Purchases of Class B common stock | (3,847 | ) | (1,634 | ) | ||
| Repayment of notes payable | — | (25 | ) | |||
| Proceeds from exercise of stock options | — | 18 | ||||
| Purchase of Class B common stock from employees upon vesting of restricted shares | (236 | ) | (263 | ) | ||
| Repayment of loan payable | — | (930 | ) | |||
| Net cash used in financing activities | (5,194 | ) | (11,496 | ) | ||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (221 | ) | (3 | ) | ||
| Net (decrease) increase in cash, cash equivalents, and restricted cash | (2,673 | ) | 10,676 | |||
| Cash, cash equivalents, and restricted cash at beginning of period | 43,184 | 38,554 | ||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 40,511 | $ | 49,230 |
8
Reconciliationof Non-GAAP Financial Measures for the Third Quarter 2021
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 for the third quarter 2021, as well as for the third quarter 2020, Adjusted EBITDA on a consolidated basis and for its Genie Retail Energy segment. 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 Energy’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 Energy’s measure of segment level Adjusted EBITDA starts with income (loss) from operations, and adds back depreciation, amortization, 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 Energy’s measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Management believes that Genie Energy’s measure of Adjusted EBITDA provides useful information to both management and investors by excluding certain expenses that may not be indicative of Genie Energy’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 Energy’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, income (loss) from operations and net income (loss), on a consolidated level to facilitate internal and external comparisons to 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. Genie Energy’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 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.
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 Energy’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 the Genie Retail Energy (GRE) segment.
9
Reconciliationof Adjusted EBITDA on a Consoliadated Basis and for Genie Retail Energy (GRE)
| Consolidated | GRE | ||||
|---|---|---|---|---|---|
| Three months ended September 30, 2021 (Q3 2021) | |||||
| Net loss attributable to Genie Energy LTD | $ | (2,286 | ) | ||
| Net loss attributable to non-controlling interests | (31 | ) | |||
| Net loss | $ | (2,317 | ) | ||
| Provision for income taxes | (3,822 | ) | |||
| Other loss, net | (17 | ) | |||
| Unrealized loss on marketable equity securities and investments | (5,312 | ) | |||
| Interest income | 8 | ||||
| Interest expense | (99 | ) | |||
| Equity in the net income of equity method investees | 52 | ||||
| Income from operations | $ | 6,873 | $ | 19,715 | |
| Add: | |||||
| Stock-based compensation | 531 | 155 | |||
| Depreciation and amortization | 881 | 90 | |||
| Subtract: | |||||
| Equity in the net income of equity method investees | (52 | ) | |||
| Impairment of assets | (6,650 | ) | |||
| Adjusted EBITDA | $ | 14,987 | $ | 19,960 |
| Consolidated | GRE | ||||
|---|---|---|---|---|---|
| Three months ended September 30, 2020 (Q3 2020) | |||||
| Net income attributable to Genie Energy LTD | $ | 6,728 | |||
| Net income attributable to non-controlling interests | (531 | ) | |||
| Net income | $ | 6,197 | |||
| Provision for income taxes | (2,406 | ) | |||
| Other income, net | 291 | ||||
| Interest income | 21 | ||||
| Interest expense | (48 | ) | |||
| Equity in the net loss of equity method investees | (146 | ) | |||
| Income from operations | $ | 8,485 | $ | 12,228 | |
| Add: | |||||
| Stock-based compensation | 447 | 172 | |||
| Depreciation and amortization | 670 | 117 | |||
| Subtract: | |||||
| Equity in the net loss of equity method investees | 146 | ||||
| Adjusted EBITDA | $ | 9,456 | $ | 12,517 |
10