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 SecuritiesExchange Act of 1934
Date of Report (Date of earliest event reported):
May 8, 2023
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 communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement 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 B common stock, par value $.01 per share | GNE | New York Stock Exchange |
| Series 2012-A Preferred stock, par value $.01 per share | GNE.PRA | New 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. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 8, 2023, 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 March 31, 2023. 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 May 8, 2023, reporting the results of operations for the quarter and full year ended March 31, 2023. |
| 104 | Cover 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: | Michael Stein | |
| Title: | Chief Executive Officer |
Dated: May 8, 2023
2
EXHIBIT INDEX
| Exhibit Number | Document |
|---|---|
| 99.1 | Press Release, dated May 8, 2023, reporting the results of operations for the quarter and full year ended March 31, 2023. |
| 104 | Cover Pager Interactive Data File, formatted in Inline XBRL document |
3
Exhibit 99.1
Genie Energy Announces First Quarter 2023Results
Sequential quarterly meter and RCE growthof 27% and 34%, respectively
Newark, NJ – May 8, 2023: Genie Energy, Ltd. (NYSE: GNE, GNEPRA), a leading retail energy and renewable energy solutions provider, today announced results for its first quarter ended March 31, 2023.
Michael Stein, chief executive officer of Genie Energy, commented: “We had a very strong first quarter delivering excellent bottom line results and efficiently expanding our retail customer portfolio. While our results in the year ago quarter were exceptional, this quarter was among the strongest in our history highlighted by the robust growth in our customer book.
“Genie Retail Energy (GRE) was well-positioned to benefit from the reduction in energy market price volatility this quarter and, in combination with our vigorous and cost-efficient marketing activities, achieved significant year-over-year RCE growth of 36%.
“Genie Renewables (GREW) continued to invest in promising growth opportunities during the quarter, adding new projects to its development pipeline while building out its platform to drive and support additional expansion. In April, we broke ground on our first community solar generation project, which we expect to complete this year.”
First Quarter 2023 Highlights
(versus 1Q22 unless otherwise noted; excludes discontinuedoperations of Genie Retail Energy International (GREI) for all periods)
| ● | Revenue<br>increased 22.5% to $105.3 million from $85.9 million; |
|---|---|
| ● | Gross<br>profit decreased 29.3% to $33.3 million from $47.1 million, and gross margin decreased to 31.6% from 54.8%; |
| --- | --- |
| ● | Income<br>from operations decreased 58.2% to $11.3 million from $27.0 million; |
| --- | --- |
| ● | Adjusted<br>EBITDA^1^ decreased 55.6% to $12.4 million from $28.0 million; |
| --- | --- |
| ● | GRE<br>income from operations and Adjusted EBITDA decreased to $16.4 million and $16.8 million from $30.2 million and $30.5 million, respectively; |
| --- | --- |
| ● | Net<br>income attributable to GNE common stockholders and diluted income per share (EPS) decreased to $14.3 million and $0.54 from $17.5 million<br>and $0.67, respectively; |
| --- | --- |
| ● | Cash,<br>restricted cash and marketable equity securities increased to $113.7 million at March 31, 2023, from $105.1 million at December 31, 2022; |
| --- | --- |
| ● | Genie<br>Energy will pay a $0.075 quarterly dividend to class A and B common stockholders on May 30, 2023 with a record date of May 19th; |
| --- | --- |
| ● | Redeemed<br>$1.0 million of preferred stock. |
| --- | --- |
| ^1^ | Adjusted EBITDA for all periods presented is a non-GAAP measureintended to provide useful information that supplements the core operating results in accordance with GAAP of Genie Energy or the relevantsegment. Please refer to the Reconciliation of Non-GAAP Financial Measure at the end of this release for an explanation of Adjusted EBITDA,as well as reconciliations to its most directly comparable GAAP measure. |
| --- | --- |
Select Financial Metrics: Three Months Ended March 31, 2023 versus 2022*
| (in $M except for EPS) | 1Q23 | 1Q22 | Change | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Total Revenue | $ | 105.3 | $ | 85.9 | 22.5 | % | |||
| Genie Retail | $ | 101.4 | $ | 83.9 | 20.9 | % | |||
| Electricity | $ | 74.5 | $ | 59.4 | 25.4 | % | |||
| Natural Gas | $ | 26.9 | $ | 24.5 | 9.9 | % | |||
| Genie Renewables | $ | 3.9 | $ | 2.0 | 89.2 | % | |||
| Gross Margin | 31.6 | % | 54.8 | % | (2321 | )bps | |||
| Genie Retail | 32.1 | % | 55.5 | % | (2345 | )bps | |||
| Genie Renewables | 19.3 | % | 25.7 | % | (634 | )bps | |||
| Income from Operations | $ | 11.3 | $ | 27.0 | (58.2 | )% | |||
| Operating Margin | 10.7 | % | 31.4 | % | (2067 | )bps | |||
| Net Income from Continuing Operations | $ | 11.3 | $ | 18.7 | (39.3 | )% | |||
| Income (Loss) Attributable to Discontinued Operations, net of tax | $ | 3.1 | $ | (1.9 | ) | $ | (5.0 | ) | |
| Net Income Attributable to GNE Common Stockholders | $ | 14.3 | $ | 17.5 | (18.5 | )% | |||
| Diluted Earnings Per Share | $ | 0.54 | $ | 0.67 | (20.0 | )% | |||
| Adjusted EBITDA^1^ | $ | 12.4 | $ | 28.0 | (55.6 | )% | |||
| Cash Flow Provided by Continuing Operating Activities | $ | 1.5 | $ | 18.2 | (91.6 | )% |
nm = not measurable/meaningful
| * | Numbers may not add due to rounding |
|---|---|
| ** | GREI operations have been classified<br>as a discontinued operation and its results excluded from current and historical results |
| --- | --- |
Segment Highlights
Genie Retail Energy (GRE)
GRE accelerated customer acquisition during the quarter as market volatility subsided and customers were highly receptive to targeted marketing initiatives.
Sequentially, meters and RCEs served increased by 87,000 and 77,000 to 349,000 and 352,000, respectively, as of March 31, 2023. Average monthly churn decreased to 4.4% sequentially from 5.5% in the fourth quarter of 2022.
Genie Retail (GRE) Select Performance Metrics: 2023 versus 2022 as of 3/31/2023**
| RCEs and Meters in 1000s | 1Q23 | 4Q22 | 1Q22 | Sequential Change | YoY Change | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Total RCEs | 353 | 262 | 260 | 34.5 | % | 35.6 | % | |||
| Electricity | 276 | 181 | 182 | 52.4 | % | 51.3 | % | |||
| Natural Gas | 77 | 81 | 78 | -5.4 | % | -1.4 | % | |||
| Total Meters | 349 | 275 | 286 | 26.9 | % | 22.0 | % | |||
| Electricity | 271 | 196 | 209 | 37.7 | % | 29.5 | % | |||
| Natural Gas | 78 | 79 | 77 | -1.7 | % | 1.3 | % | |||
| Gross Adds | 129 | 47 | 44 | 174.4 | % | 192.2 | % | |||
| Churn*** | 4.4 | % | 5.5 | % | 4.5 | % | (100 | )bps | (10 | )bps |
| ** | GREI operations have been classified<br>as a discontinued operation and its results excluded from current and historical results | |||||||||
| --- | --- | |||||||||
| *** | Excludes expiration of low margin<br>aggregation deals | |||||||||
| --- | --- |
2
Genie Renewables (GREW)
Genie Solar Energy’s revenue increased in the first quarter, driven mainly by services provided to third parties, including its consultative energy services for large commercial customers.
As of the end of the quarter, Genie Solar had an operating project pipeline of 78MW across the three phases of project development.
| Pipeline | Total | Site Control | Permitting | Construction |
|---|---|---|---|---|
| MW | 78 | 49 | 25 | 4 |
| Project Count | 10 | 5 | 4 | 1 |
Balance Sheet and Cash Flow Highlights
As of March 31, 2023, Genie Energy reported $293.0 million in total assets. Liabilities totaled $107.4 million, and working capital (current assets less current liabilities) totaled $142.4 million. Non-current liabilities were $2.6 million.
Net cash provided by operating activities was $11.2 million compared to $18.3 million a year ago.
Strategic Update and Commentary
Stein added, “We continue to see attractive opportunities to add to our retail customer base entering the second quarter and expect to generate solid meter growth. Our plan has been to aggressively move into growth mode once market volatility subsided, and these initial results are very encouraging.
“At Genie Solar, we expect to complete construction on a few operating projects in 2023 while achieving key pre-construction milestones on several others. In addition, we have a large pipeline of projects in negotiation, in due diligence and under review, and expect to increase both the number of projects and aggregate MW in the pipeline throughout the balance of this year.”
3
Trended Financial Information:*
| (Dollars in millions except for EPS)VMeters and RCEs in 1000s** | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 | 2021 | 2022 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Revenue | $ | 85.9 | $ | 66.9 | $ | 81.3 | $ | 81.4 | $ | 105.3 | $ | 323.3 | $ | 315.5 | |||||||
| Genie Retail | $ | 83.9 | $ | 63.2 | $ | 79.9 | $ | 77.0 | $ | 101.4 | $ | 311.8 | $ | 304.0 | |||||||
| Electricity | $ | 59.4 | $ | 53.1 | $ | 73.8 | $ | 55.6 | $ | 74.5 | $ | 273.0 | $ | 241.8 | |||||||
| Natural Gas | $ | 24.5 | $ | 10.1 | $ | 6.2 | $ | 21.4 | $ | 26.9 | $ | 38.8 | $ | 62.1 | |||||||
| Genie Renewables | $ | 2.0 | $ | 3.8 | $ | 1.4 | $ | 4.4 | $ | 3.9 | $ | 7.5 | $ | 11.6 | |||||||
| Gross Margin | 54.8 | % | 44.5 | % | 53.1 | % | 42.7 | % | 31.6 | % | 28.3 | % | 49.1 | % | |||||||
| Genie Retail | 55.5 | % | 45.9 | % | 54.1 | % | 44.4 | % | 32.1 | % | 29.1 | % | 50.3 | % | |||||||
| Genie Renewables | 25.7 | % | 21.6 | % | -6.3 | % | 12.4 | % | 19.3 | % | 37.1 | % | 15.6 | % | |||||||
| Income from Operations | $ | 27.0 | $ | 11.8 | $ | 23.5 | $ | 15.5 | $ | 11.3 | $ | 24.1 | $ | 11.6 | |||||||
| Operating Margin | 31.4 | % | 17.6 | % | 29.0 | % | 19.0 | % | 6.8 | % | 7.5 | % | 3.7 | % | |||||||
| Net (Loss) Income Attributable to Discontinued Operations | $ | (1.9 | ) | $ | 29.3 | $ | (1.5 | ) | $ | 4.5 | $ | 3.1 | $ | 11.7 | $ | 30.4 | |||||
| Net Income Attributable to GNE Common Stockholders | $ | 17.5 | $ | 33.9 | $ | 18.3 | $ | 16.2 | $ | 14.3 | $ | 27.5 | $ | 85.9 | |||||||
| Diluted Earnings Per Share | $ | 0.67 | $ | 1.30 | $ | 0.70 | $ | 0.61 | $ | 0.54 | $ | 1.05 | $ | 3.28 | |||||||
| Adjusted EBITDA | $ | 28.0 | $ | 12.2 | $ | 24.5 | $ | 18.5 | $ | 12.4 | $ | 27.8 | $ | 83.2 | |||||||
| GRE Retail Performance Metrics | |||||||||||||||||||||
| RCEs | 260 | 263 | 251 | 262 | 353 | 260 | 262 | ||||||||||||||
| Electricity | 182 | 185 | 174 | 181 | 276 | 189 | 181 | ||||||||||||||
| Natural Gas | 78 | 77 | 77 | 81 | 77 | 71 | 81 | ||||||||||||||
| Meters | 286 | 280 | 270 | 275 | 349 | 285 | 275 | ||||||||||||||
| Electricity | 209 | 203 | 193 | 196 | 271 | 210 | 197 | ||||||||||||||
| Natural Gas | 77 | 77 | 77 | 79 | 78 | 75 | 79 | ||||||||||||||
| Gross Meter Additions | 44 | 34 | 34 | 47 | 129 | 177 | 159 | ||||||||||||||
| Churn*** | 4.5 | % | 4.4 | % | 4.4 | % | 5.5 | % | 4.4 | % | 4.5 | % | 4.8 | % |
nm = not measurable/meaningful
| * | Numbers may not add due to rounding |
|---|---|
| ** | GREI operations have been classified<br>as a discontinued operation and its results excluded from current and historical results |
| --- | --- |
| *** | Excludes expiration of low margin<br>aggregation deals |
| --- | --- |
4
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 1-888-506-0062 (toll-free from the US) or 1-973-528-0011 (international) and provide the following participant access code: 643101.
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 passcode: 48305. The replay will remain available through May 22, 2023. 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 abouthistorical 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 withinthe meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our current judgmentof what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due tonumerous 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”), whichmay be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. We are under no obligation, and expressly disclaim anyobligation, to update the forward-looking statements in this press release, whether as a result of new information, future events or otherwise.
Contact:
Brian Siegel IRC, MBA
Senior Managing Director
Hayden IR
(346) 396-8696
brian@haydenir.com
5
GENIE ENERGY LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
| December 31,<br> 2022 | |||||
|---|---|---|---|---|---|
| (Audited) | |||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 105,220 | $ | 98,571 | ||
| Restricted cash—short-term | 3,791 | 6,007 | |||
| Marketable equity securities | 4,663 | 490 | |||
| Trade accounts receivable, net of allowance for doubtful accounts of 5,383 and 4,826 at March 31, 2023 and December 31, 2022, respectively | 65,203 | 55,134 | |||
| Inventory | 19,345 | 15,714 | |||
| Prepaid expenses | 7,855 | 6,822 | |||
| Other current assets | 5,363 | 6,207 | |||
| Current assets of discontinued operations | 35,750 | 38,688 | |||
| Total current assets | 247,190 | 227,633 | |||
| Property and equipment, net | 964 | 891 | |||
| Goodwill | 9,998 | 9,998 | |||
| Other intangibles, net | 3,033 | 3,133 | |||
| Deferred income tax assets, net | 5,799 | 5,799 | |||
| Other assets | 13,506 | 13,856 | |||
| Noncurrent assets of discontinued operations | 12,520 | 16,305 | |||
| Total assets | 293,010 | $ | 277,615 | ||
| Liabilities and equity | |||||
| Current liabilities: | |||||
| Trade accounts payable | 19,894 | 25,313 | |||
| Accrued expenses | 38,568 | 35,659 | |||
| Income taxes payable | 27,580 | 22,576 | |||
| Due to IDT Corporation, net | 98 | 165 | |||
| Other current liabilities | 7,580 | 4,549 | |||
| Current liabilities of discontinued operations | 11,076 | 10,936 | |||
| Total current liabilities | 104,796 | 99,198 | |||
| Other liabilities | 1,894 | 4,087 | |||
| Noncurrent liabilities of discontinued operations | 686 | 686 | |||
| Total liabilities | 107,376 | 103,971 | |||
| 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 866 and 983 shares issued and outstanding at March 31, 2023 and December 31, 2022 | 7,359 | 8,359 | |||
| Class A common stock, 0.01 par value; authorized shares—35,000; 1,574 shares issued and outstanding at March 31, 2023 and December 31, 2022 | 16 | 16 | |||
| Class B common stock, 0.01 par value; authorized shares—200,000; 27,159 and 27,126 shares issued and 24,439 and 24,421 shares outstanding at March 31, 2023 and December 31, 2022, respectively | 271 | 271 | |||
| Additional paid-in capital | 147,445 | 146,546 | |||
| Treasury stock, at cost, consisting of 2,720 and 2,705 shares of Class B common stock at March 31, 2023 and December 31, 2022 | (19,175 | ) | (19,010 | ) | |
| Accumulated other comprehensive income | 1,895 | 1,926 | |||
| Retained earnings | 61,333 | 49,010 | |||
| Total Genie Energy Ltd. stockholders’ equity | 199,144 | 187,118 | |||
| Noncontrolling interests | (13,510 | ) | (13,474 | ) | |
| Total equity | 185,634 | 173,644 | |||
| Total liabilities and equity | 293,010 | $ | 277,615 |
All values are in US Dollars.
6
GENIE ENERGY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
| Three Months Ended<br> March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| (in thousands, except per share data) | ||||||
| Revenues: | ||||||
| Electricity | $ | 74,487 | $ | 59,380 | ||
| Natural gas | 26,925 | 24,504 | ||||
| Other | 3,864 | 2,042 | ||||
| Total revenues | 105,276 | 85,926 | ||||
| Cost of revenues | 71,990 | 38,819 | ||||
| Gross profit | 33,286 | 47,107 | ||||
| Operating expenses: | ||||||
| Selling, general and administrative (i) | 22,011 | 20,145 | ||||
| Income from operations | 11,275 | 26,962 | ||||
| Interest income | 974 | 17 | ||||
| Interest expense | (19 | ) | (50 | ) | ||
| Loss on marketable equity securities and investments | (71 | ) | (652 | ) | ||
| Other income (loss), net | 3,246 | (498 | ) | |||
| Income before income taxes | 15,405 | 25,779 | ||||
| Provision for income taxes | (4,068 | ) | (7,112 | ) | ||
| Net income from continuing operations | 11,337 | 18,667 | ||||
| Income (loss) from discontinued operations, net of taxes | 3,055 | (1,932 | ) | |||
| Net income | 14,392 | 16,735 | ||||
| Net loss attributable to noncontrolling interests, net | (39 | ) | (1,154 | ) | ||
| Net income attributable to Genie Energy Ltd. | 14,431 | 17,889 | ||||
| Dividends on preferred stock | (157 | ) | (370 | ) | ||
| Net income attributable to Genie Energy Ltd. common stockholders | $ | 14,274 | $ | 17,519 | ||
| Amounts attributable to Genie Energy Ltd. common stockholders | ||||||
| Continuing operations | $ | 11,218 | $ | 19,294 | ||
| Discontinued operations | 3,056 | (1,775 | ) | |||
| Net income attributable to Genie Energy Ltd. common stockholders | $ | 14,274 | $ | 17,519 | ||
| Earnings per share attributable to Genie Energy Ltd. common stockholders: | ||||||
| Basic: | ||||||
| Continuing operations | $ | 0.44 | $ | 0.75 | ||
| Discontinued operations | 0.12 | (0.07 | ) | |||
| Earnings per share attributable to Genie Energy Ltd. common stockholders | $ | 0.56 | $ | 0.68 | ||
| Diluted | ||||||
| Continuing operations | $ | 0.42 | $ | 0.74 | ||
| Discontinued operations | 0.12 | (0.07 | ) | |||
| Earnings per share attributable to Genie Energy Ltd. common stockholders | $ | 0.54 | $ | 0.67 | ||
| Weighted-average number of shares used in calculation of earnings per share: | ||||||
| Basic | 25,326 | 25,764 | ||||
| Diluted | 26,620 | 26,128 | ||||
| Dividends declared per common share | $ | 0.075 | $ | 0.075 | ||
| (i) Stock-based compensation included in selling, general and administrative expenses | $ | 899 | $ | 840 |
7
GENIE ENERGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
| Three Months Ended<br> March 31, | ||||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||
| (in thousands) | ||||||
| Operating activities | ||||||
| Net income | $ | 14,392 | $ | 16,735 | ||
| Net income (loss) from discontinued operations, net of tax | 3,055 | (1,932 | ) | |||
| Net income from continuing operations | 11,337 | 18,667 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||
| Depreciation and amortization | 96 | 96 | ||||
| Impairment of assets | 19 | — | ||||
| Provision for doubtful accounts receivable | 574 | 392 | ||||
| Unrealized loss on marketable equity securities and investment | 71 | 652 | ||||
| Stock-based compensation | 899 | 814 | ||||
| Equity in the net income in equity method investees | (195 | ) | (125 | ) | ||
| Change in assets and liabilities: | ||||||
| Trade accounts receivable | (10,643 | ) | (2,368 | ) | ||
| Inventory | (3,631 | ) | (1,145 | ) | ||
| Prepaid expenses | (1,032 | ) | (1,904 | ) | ||
| Other current assets and other assets | 1,138 | (5,638 | ) | |||
| Trade accounts payable, accrued expenses and other liabilities | (2,051 | ) | 2,589 | |||
| Due to IDT Corporation, net | (66 | ) | (391 | ) | ||
| Income taxes payable | 5,004 | 6,560 | ||||
| Net cash provided by operating activities of continuing operations | 1,520 | 18,199 | ||||
| Net cash provided by operating activities of discontinued operations | 9,714 | 141 | ||||
| Net cash provided by operating activities | 11,234 | 18,340 | ||||
| Investing activities | ||||||
| Capital expenditures | (98 | ) | (59 | ) | ||
| Proceeds from the sale of marketable equity securities | 343 | — | ||||
| Purchase of marketable equity securities and other investment | (4,559 | ) | (200 | ) | ||
| Proceeds from settlement of equity method investment | 133 | — | ||||
| Investment in notes receivables with related party | — | (1,388 | ) | |||
| Repayment of notes receivable | 19 | 19 | ||||
| Net cash used in investing activities of continuing operations | (4,162 | ) | (1,628 | ) | ||
| Net cash used in investing activities of discontinued operations | — | (21,832 | ) | |||
| Net cash used in investing activities | (4,162 | ) | (23,460 | ) | ||
| Financing activities | ||||||
| Dividends paid | (2,108 | ) | (2,304 | ) | ||
| Repurchases of Class B common stock from employees | (165 | ) | (71 | ) | ||
| Redemption of preferred stock | (1,000 | ) | — | |||
| Net cash used in financing activities | (3,273 | ) | (2,375 | ) | ||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (10 | ) | 27 | |||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 3,789 | (7,468 | ) | |||
| Cash, cash equivalents, and restricted cash (including discontinued operations) at beginning of period | 106,080 | 102,149 | ||||
| Cash, cash equivalents and restricted cash (including discontinued operations) at end of the period | 109,869 | 94,681 | ||||
| Less: Cash of discontinued operations at end of period | 858 | 1,726 | ||||
| Cash, cash equivalents, and restricted cash (excluding discontinued operations) at end of period | $ | 109,011 | $ | 92,955 |
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Reconciliation of Non-GAAP Financial Measure for the First Quarter
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.
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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.
| Non-GAAP Reconciliation - Adjusted EBITDA | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | 1Q21 | **** | 2Q21 | 3Q21 | **** | 4Q21 | 1Q22 | 2Q22 | **** | 3Q22 | 4Q22 | 1Q23 | 2021 | 2022 | **** | |||||||||||
| Income (loss) from Operations | $ | (3.2 | ) | $ | 4.0 | $ | 17.5 | $ | 5.8 | $ | 27.0 | $ | 11.8 | $ | 23.5 | $ | 15.5 | $ | 11.3 | $ | 24.1 | $ | 77.8 | |||
| Add back | ||||||||||||||||||||||||||
| Depreciation and. Amortization | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.4 | $ | 0.4 | ||||
| Non-Cash Compensation | $ | 0.6 | $ | 0.5 | $ | 0.5 | $ | 1.2 | $ | 0.8 | $ | 0.7 | $ | 0.7 | $ | 0.7 | $ | 0.8 | $ | 2.8 | $ | 3.0 | ||||
| Impairment | $ | 0.0 | $ | 0.0 | $ | (0.0 | ) | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 2.1 | $ | 0.0 | $ | 0.0 | $ | 2.1 | |||
| Equity in the Loss of AMSO/GEUK | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.2 | $ | 0.1 | $ | (0.4 | ) | $ | 0.2 | $ | 0.1 | $ | 0.2 | $ | 0.4 | $ | (0.0 | ) | ||
| Adjusted EBITDA | $ | (2.4 | ) | $ | 4.7 | $ | 18.1 | $ | 7.3 | $ | 28.0 | $ | 12.2 | $ | 24.5 | $ | 18.5 | $ | 12.4 | $ | 27.8 | $ | 83.2 | |||
| Non-GAAP Reconciliation – GRE Adjusted EBITDA | ||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||||
| (in millions) | 1Q23 | 1Q22 | 2022 | 2021 | ||||||||||||||||||||||
| Income (loss) from Operations | $ | 16.4 | $ | 30.2 | $ | 92.6 | $ | 34.7 | ||||||||||||||||||
| Add back | ||||||||||||||||||||||||||
| Depreciation and Amortization | $ | 0.1 | $ | 0.1 | $ | 0.3 | $ | 0.4 | ||||||||||||||||||
| Stock-based Compensation | $ | 0.3 | $ | 0.2 | $ | 1.0 | $ | 0.9 | ||||||||||||||||||
| Impairment | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | ||||||||||||||||||
| Equity in the income of equity method investee | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | ||||||||||||||||||
| Adjusted EBITDA | $ | 16.8 | $ | 30.5 | $ | 93.8 | $ | 36.0 |
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