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 theSecurities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 4, 2020
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 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 andFinancial Condition.
On November 6, 2020, 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, 2020. 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 5.02 Departure of Directors orCertain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) On November 4, 2020, the Compensation Committee of the Board of Directors of the Registrant approved an amended and restated compensation arrangement between the Registrant and Howard Jonas, the Registrant’s Chairman of the Board of Directors (a non-executive officer position), that will become effective following the scheduled expiration of the current employment agreement between the Company and Mr. Jonas on December 31, 2020. The Fourth Amended and Restated Employment Agreement between the Registrant and Mr. Jonas to be effective as of January 1, 2021 provides for: (i) a three-year term commencing January 1, 2021, (ii) an annual base salary of $200,000 and (iii) a grant of 100,000 restricted shares of the Company’s Class B common stock, which shall vest in substantially equal installments on January 5, 2022, 2023 and 2024.
On November 4, 2020, the Compensation Committee of the Board of Directors of the Registrant approved an amended and restated compensation arrangement between the Registrant and Avi Goldin, the Registrant’s Chief Financial Officer that will become effective following the scheduled expiration of the current employment agreement between the Company and Mr. Goldin on December 31, 2020. The Third Amended and Restated Employment Agreement (the “Employment Agreement”) between the Registrant and Mr. Goldin to be effective as of January 1, 2021 provides for: (i) a three-year term commencing January 1, 2021, (ii) an annual base salary of $400,000, (iii) an annual guaranteed bonus of $140,00 and additional performance bonuses in the discretion of the Compensation Committee and (iv) severance upon certain terminations or non-renewals of the Employment Agreement.
A copy of the Employment Agreement is filed as Exhibit 10.01 to this report and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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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/ Michael Stein | |
| Name: | Michael Stein | |
| Title: | Chief Executive Officer |
Dated: November 6, 2020
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EXHIBIT INDEX
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Exhibit 10.01
THIRDAMENDED AND RESTATED EMPLOYMENT AGREEMENT
This THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of November 4, 2020, and effective January 1, 2021, is by and between Genie Energy Ltd., a Delaware corporation (the “Company”) and Avi Goldin, an individual (the “Employee”).
WHEREAS, the Employee is currently employed as Chief Financial Officer of the Company pursuant to the terms of that certain Second Amended and Restated Employment Agreement dated December 28, 2017 (as amended by that c4ertain Amendment No. 1 to Second Amended and Restated Employment Agreement dated September 29, 2020 and Amendment No. 2 to Second Amended and Restated Employment Agreement dated October 2, 2020), between the Company and the Employee (collectively, the “Existing Agreement”);
WHEREAS, in recognition of the Employee’s experience and abilities, the Company desires to assure itself of the continued employment of the Employee in accordance with the terms and conditions provided herein; and
WHEREAS, the Employee wishes to continue to perform services for the Company in accordance with the terms and conditions provided herein; and
WHEREAS, the parties desire to amend and restate the Existing Agreement, with effect as of January 1, 2021 (the “Amendment Effective Date”), as follows:
NOW, THEREFORE, in consideration of the promises and the respective covenants and agreements of the parties herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Existing Agreement. Until 11:59 p.m. on December 31, 2020, the Existing Agreement shall remain in full force and effect (unless terminated in accordance with its terms), other than the provision of Section 3 thereof providing for automatic renewal of the terms thereof. From and after 12:00 a.m. on January 1, 2021, the Existing Agreement is hereby amended and restated in its entirety.
2. Employment. The Company hereby agrees to continue to employ the Employee, and the Employee hereby agrees to continue to be employed by the Company and to perform services for the Company or its subsidiaries and affiliates, on the terms and conditions set forth herein, in each case, with effect as of the Amendment Effective Date.
3. Term. The term of the Agreement as amended and restated (the “Term”) shall commence on the Amendment Effective Date and shall terminate on December 31, 2023 (the “Initial Expiration Date”), or upon the Employee’s earlier death, or other termination of employment pursuant to Section 10 hereof. The Term shall automatically be renewed or extended for additional one year periods beyond its otherwise scheduled expiration unless, not later than ninety (90) days prior to any such expiration, either party hereto shall have notified the other party in writing that such renewal extension shall not take effect.
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4. Position. During the Term, the Employee shall serve as the Chief Financial Officer of the Company (and may also be named as Chief Financial Officer of one or more of the Company’s subsidiaries) and in such other capacities as shall be designated by the Board of Directors of the Company (the “Board”) and agreed to by the Employee from time to time.
5. Duties and Reporting Relationship. During the Term, the Employee shall, on a full-time basis, use his skills and render services to the best of his abilities on behalf of the Company. The Employee shall report directly to the Chief Executive Officer of the Company. The Employee shall comply with all policies and procedures of the Company.
6. Place of Performance. The Employee shall perform his duties and conduct his business on a full-time basis at the Company’s Headquarters (subject to work at home as mandated to advisable related to public health concerns), except for required travel on Company business.
7. Compensation and Related Matters.
(a) Annual Base Salary. During the Term, the Company shall pay to the Employee an annual base salary (the “Base Salary”) at a rate of FOUR HUNDRED THOUSAND DOLLARS ($400,000), payable in accordance with the Company’s standard payroll practices, less applicable taxes and customary withholdings.
(b) Bonus; Equity.
| (i) | During<br> the Term, the Employee shall also be entitled to an annual bonus in the gross amount<br> of ONE HUNDRED FORTY THOUSAND DOLLARS ($140,000), less applicable taxes and customary<br> withholdings, in respect of any year commencing with 2021 through the Initial Expiration<br> Date (“Guaranteed Bonus”). Payment of the Guaranteed Bonus shall be<br> made to the Employee in accordance with Company policy, but in no event later than ninety<br> (90) days following the end of the fiscal year in respect of which it is payable (each<br> such payment date, a “Bonus Payment Date”). It is understood and agreed<br> that the Employee shall be eligible for such a Guaranteed Bonus only if the Employee<br> has been continuously employed by the Company from the Amendment Effective Date through<br> end of the applicable fiscal year, and the Employee has not, as of such Bonus Payment<br> Date, issued notice of his resignation, regardless of the reason for such resignation<br> or been terminated by the Company for Cause (as defined below). |
|---|---|
| (ii) | Additionally,<br> the Employee shall be eligible to participate in any bonus pool established for, or broad-based<br> equity grant made to, employees or management of the Company, in each case at levels<br> set in the sole discretion of the Company and upon the approval of the Compensation Committee<br> of the Company’s Board of Directors. The Employee shall have a target bonus of<br> ONE HUNDRED THIRTY THOUSAND DOLLARS ($130,000). Any bonus that is awarded under this<br> provision (a “Discretionary Bonus”) shall be paid to the Employee<br> on the Bonus Payment Date following the end of the relevant fiscal year. It is understood<br> and agreed that the Employee shall be eligible for a Discretionary Bonus only if the<br> Employee has been continuously employed by the Company from the Amendment Effective Date<br> through end of the applicable fiscal year, and the Employee has not, as of such Bonus<br> Payment Date, issued notice of his resignation, regardless of the reason for such resignation<br> or been terminated by the Company for Cause. |
| --- | --- |
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(c) Employee Benefits. During the Term, the Employee will be eligible to participate in the Company’s benefit plans, in each case as available to similarly situated employees (collectively the “Programs”), as such Programs are adopted by the Company, subject to the terms and conditions of the Programs. In addition, during the Term, the Employee will be eligible to participate in the Company’s 401(k) savings plan (the “401(k) Plan”) subject to the terms and conditions of the 401(k) Plan.
(d) Business Expenses. The Company shall reimburse the Employee for all ordinary and necessary business expenses incurred by him in connection with his employment (including without limitation, expenses for travel (with class of travel in accordance with Company policy) and entertainment incurred in conducting or promoting business for the Company) upon submission by the Employee of receipts and other documentation in accordance with the Company’s normal business expense reimbursement policies. The Employee must use the Company’s travel department (if such a department exists) to arrange for all business related travel.
(e) Paid Vacation. The Company will provide the Employee with paid vacation in addition to Company Closed Days as outlined in the Company’s Policy Handbook for Employees as it may be amended from time to time.
8. Non-Disclosure and Non-Competition Agreement. The Employee acknowledges that the Non-Disclosure and Non-Competition Agreement with the Company that he previously executed (the “NDNC”) remains in full force and effect and binding on him. Notwithstanding anything to the contrary contained herein, the remedies provided for in the NDNC are separate and distinct from those provided for in this Agreement and in no event shall such remedies be superseded by any provision contained herein.
9. Representations. The Employee represents and warrants to the Company that the execution and delivery of this Agreement, and the terms of the NDNC, do not, and the performance by the Employee of his obligations thereunder shall not, conflict with, result in the breach of any provisions of or the termination of, or constitute a default under, any agreement, contract, or other obligation to assign inventions or to keep information confidential, to which the Employee is a party or by which the Employee was, is, or may be bound.
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10. Termination. The Employee’s employment hereunder may be terminated without breach of this Agreement as follows:
(a) Death; Disability. The Employee’s employment hereunder shall terminate upon his death or, as permitted by law, Disability (as hereinafter defined). Upon any such termination, the Employee (or, in the event of his death, his estate) (i) shall receive any accrued or vested compensation, including salary and bonus(es), through the “Date of Termination” (as hereinafter defined), and (ii) shall be reimbursed for unpaid and approved business expenses (in accordance with the Company’s normal business expense reimbursement procedures) through such Date of Termination. The Employee (and in the event of his death, his estate) shall not be entitled to any other amounts or benefits from the Company or otherwise, except payments pursuant to any Company life insurance program/policy then in effect. For purposes of this Agreement, “Disability” shall mean the inability of the Employee to perform his duties on account of a physical or mental illness for a period of sixty (60) consecutive days or ninety (90) days in any six (6) month period, and the term “Disabled” shall have a corresponding meaning. Notwithstanding anything contained herein to the contrary, during any period of Disability, the Company shall not be obligated to pay any compensation or other amounts to the Employee except as expressly provided by the Programs then in effect.
(b) Cause; Resignation Without Good Reason. The Company may terminate the Employee’s employment hereunder for Cause (as hereinafter defined) or the Employee may resign from his position with the Company without Good Reason (as hereinafter defined). For purposes of this Agreement, the Company shall have “Cause” to terminate the Employee’s employment hereunder: (i) upon the Employee’s indictment or conviction for the commission of an act or acts constituting a felony under the laws of the United States or any State thereof, (ii) upon the Employee’s commission of fraud, embezzlement or gross negligence, (iii) upon the Employee’s willful or continued failure to perform an act permitted by the Company’s rules, policies or procedures, including without limitation, the Company’s **** Code of Business Conduct and Ethics that is within his material duties hereunder (other than by reason of physical or mental illness or disability) or directives of the Board, or material breach of the terms hereof or of the NDNC, in each case, after written notice has been delivered to the Employee by the Company, which notice specifically identifies the manner in which the Employee has not substantially performed his duties or has committed a breach, and the Employee’s failure to substantially perform his duties or breach is not cured within fifteen (15) business days after such notice has been given to the Employee; (iv) upon any misrepresentation by the Employee of a material fact to or concealment by the Employee of a material fact from the Board, the Chairman, the Chief Executive Officer and/or general counsel; or (v) upon any material violation of the Company’s rules, policies or procedures, including without limitation, the Company’s Code of Business Conduct and Ethics. For purposes of this Section 10(b), no act or failure to act on the Employee’s part shall be deemed “willful” unless done or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s act, or failure to act, was in the best interest of the Company.
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If the Company terminates the Employee’s employment for Cause, or if the Employee shall resign from the Company without Good Reason, the Employee shall not be entitled to any severance payments, any unvested stock options, and other unvested equity incentive awards shall terminate, and the Employee shall relinquish any and all rights to any amounts payable and to any benefits otherwise provided for herein, provided that the Employee shall (A) be entitled to receive accrued or vested compensation, including salary and Guaranteed Bonus (to be paid when paid to other officers of the Company), through the Date of Termination, and (B) have the right to be reimbursed for unpaid and approved business expenses (in accordance with the Company’s normal business expense reimbursement procedures) through such Date of Termination.
If the Employee resigns from the Company without Good Reason, or if the Employee does not intend to seek renewal of the Term, the Employee shall provide written notice to the Company at least ninety (90) days prior to the actual Date of Termination of the Employee’s employment, which ninety day notice period may be waived by the Company in its sole discretion.
(c) Termination Without Cause; Resignation for Good Reason or following a CEO Change. The Employee’s employment hereunder may also be terminated by the Company at any time for any reason without Cause or by the Employee for Good Reason or due to a CEO Change.
For purposes of this Agreement, the Employee shall have “Good Reason” to terminate his employment hereunder upon (i) the Company’s failure to perform its material duties hereunder, which failure has not been cured by the Company within fifteen (15) days of its receipt of written notice thereof from the Employee; (ii) a reduction by the Company (without the consent of the Employee, which consent may be revoked at any time) in the Employee’s Base Salary, or substantial reduction in the other benefits provided to the Employee; (iii) the assignment to the Employee of duties inconsistent with the Employee’s status as a senior executive officer of the Company, or the designation by the Company of the Employee to any position or capacity other than (A) Chief Financial Officer of the Company, (B) Chief Financial Officer of one of the Company’s subsidiaries, or (C) Chief Operating Officer of the Company; (iv) the relocation of the Employee’s principle place of employment to a location more than thirty-five (35) miles from its current Newark, New Jersey location or outside of the New York City metropolitan area; (v) the assignment of duties inconsistent with the Company’s rules, policies or procedures, including without limitation, the Company’s Code of Business Conduct and Ethics; (vi) any purported termination of the Employee’s employment not in accordance with the terms hereof; or (vii) any Change in Control of the Company. For purposes of this Agreement, a “Change in Control” shall mean and shall be deemed to have occurred if (A) any person or group (within the meaning of Rule 13d-3 of the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended), other than Howard Jonas, members of his immediate family, his affiliates, trusts or private foundations established by or on his behalf or for the benefit of members of his immediate family or descendants, and the heirs, executors or administrators of Howard Jonas, shall acquire in one or a series of transactions, whether through sale of stock or merger, voting securities representing more than 50% of the voting power of all outstanding voting securities of the Company or any successor entity of the Company, or (B) the stockholders of the Company shall approve a complete liquidation or dissolution of the Company. As used herein, a “CEO Change” shall mean the appointment as Chief Executive Officer of the Company any person other than, Michael Stein, Howard Jonas, the Employee or any person that is affiliated with the holders of the Class B common stock of the Company. The Employee’s right to terminate the Employee’s employment for Good Reason shall not be affected by the Employee’s incapacity due to physical or mental illness. The Employee’s continued employment shall not constitute consent to, or a waiver of rights, with respect to any act or failure to act constituting Good Reason hereunder. Notwithstanding the foregoing, a termination shall not be treated as a resignation for Good Reason if the Employee shall have consented in writing to the occurrence of the event giving rise to the claim of resignation for Good Reason.
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If the Employee gives notice of his intent to terminate his employment with Good Reason, the Employee shall first provide written notice to the Company, which notice specifically identifies the event or circumstances giving rise to the Good Reason for which the Employee is terminating his employment, within ninety (90) days of when such event or circumstance giving rise to the Good Reason becomes effective or transpires. The notice of Good Reason must give the Company the opportunity to cure and if the Company fails to cure within thirty (30) business days of its receipt of the notice, the Employee’s resignation for Good Reason shall be deemed effective.
If the Company terminates the Employee’s employment without Cause or the Employee terminates his employment for Good Reason, (1) the terminating Party shall provide the other Party with at least sixty (60) days’ notice (which time period may be shortened by mutual agreement of the parties) of its intent to terminate this Agreement, if by the Company without Cause or if by the Employee for Good Reason; (2) ) the Company shall have the sole right to determine whether or not the Employee shall actively work for the Company during the notice period; (3) the Company shall pay to the Employee all accrued or vested compensation, including salary, Guaranteed Bonus and Discretionary Bonus (with bonuses to be paid when paid to other officers of the Company) through the Date of Termination, (4) the Company shall reimburse the Employee for unpaid and approved business expenses through such Date of Termination (in accordance with the Company’s normal business expense reimbursement procedures), (5) all awards theretofore granted to the Employee under the Company’s incentive plans shall continue to vest (and the restrictions thereon lapse) on their then existing schedule notwithstanding the termination of employment, and (6) the Company shall pay to the Employee a severance payment equal to his Base Salary plus the greater of (x) the amount he would be entitled to under Company policy in effect at that time, and (y) his Base Salary plus Guaranteed Bonus plus Discretionary Bonus for the Minimum Severance Period (the “Non-Cause Severance Payment”).
If the Employee provides written notice to the Company of his resignation due to a CEO Change within thirty (30) days following announcement of such CEO Change, (AA) the Employee shall provide the Company with at least sixty (60) days’ notice (which time period may be shortened by the Company) of his intent to terminate this Agreement; and (BB) the Company shall pay to the Employee a severance payment equal to the greater of (1) the amount he would be entitled to under Company policy in effect at that time, and (2) his Base Salary plus Guaranteed Bonus for a period of twelve (12) months (the “CEO Change Severance Payment” and the CEO Change Severance Payment or the Non-Cause Severance Payment, a “Severance Payment”).
As a condition to receiving any Severance Payment, the Employee will be required to execute and deliver the Company’s standard release agreement (the “Release Agreement”) within 45 days of the Date of Termination. Subject to Section 20 hereof, the Severance Payment will be paid over the period of time covered thereby following the effective date of the Release Agreement on the Company’s regularly scheduled payroll payment dates, and in accordance with the terms of the Release Agreement.
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As used in this Agreement, the term “Minimum Severance Period” shall mean a number of months equal to eighteen (18) plus two (2) weeks for each full year of employment of the Employee with the Company or its affiliates subsequent to January 1, 2021.
(d) Severance upon expiration of the Term. Upon expiration of the Term, and in the event that the Company does not offer to extend the Term on terms that, had such term been implemented by the Company during the Term, would not have given the Employee the right to terminate his employment for Good Reason under clauses (ii), (iii) or (iv) of the definition thereof, and the Company and the Employee do not agree on terms and conditions for continued employment, the Employee shall also be entitled to receive (1) all accrued or vested compensation, including salary, commission, Guaranteed Bonus and Discretionary Bonus (with bonuses to be paid when paid to other officers of the Company) through the Date of Termination, (2) unpaid and approved business expenses through such Date of Termination (in accordance with the Company’s normal business expense reimbursement procedure), and (3) a severance payment equal to the greater of (A) the amount he would be entitled to under Company policy in effect at that time, and (B) his Base Salary plus Guaranteed Bonus plus Discretionary Bonus (at the rates in effect on the Date of Termination) for the Minimum Severance Period, subject to his execution and delivery of the Release Agreement within 30 days of the Date of Termination. Subject to Section 20 hereof, the severance payment will be paid over the period of time covered thereby following the effective date of the Release Agreement on the Company’s regularly scheduled payroll payment dates, and in accordance with the terms of the Release Agreement. Further, upon such non-extension of the Term by the Company, and notwithstanding termination of Employee’s employment, all awards theretofore granted to the Employee under the Company’s incentive plans shall continue to vest (and the restrictions thereon lapse) on their then existing schedule through the end of the Minimum Severance Period following the Date of Termination.
(e) Notice of Termination. Any termination of the Employee’s employment by the Company (other than termination upon the death of the Employee) or by the Employee shall be communicated by written Notice of Termination by such party to the other in accordance with Section 11 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee’s employment under the provision so indicated (as applicable).
(f) Date of Termination. “Date of Termination” shall mean (i) if the Employee’s employment is terminated by his death, the date of his death, (ii) the date of expiration of the Term if either party elects not to renew the Term for an additional year or (iii) if the Employee’s employment is terminated pursuant to any of the other terms set forth above, the date specified in the Notice of Termination.
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11. Notices. For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or (unless otherwise specified) mailed by United States certified or registered mail, return receipt requested, postage prepaid, or by an overnight courier (signature required) or by electronic mail (return receipt requested) in each case addressed as follows:
If to the Company:
Genie Energy Ltd.
520 Broad Street
Newark, New Jersey 07102
Attn: Chief Executive Officer
with a copy to:
Genie Energy Ltd.
520 Broad Street
Newark, New Jersey 07102
Attn: General Counsel
If to the Employee:
Avi Goldin
499 Emerson Avenue
Teaneck, NJ 07666
or to such other address, facsimile number or email address as either party may have furnished to the other in accordance herewith, except that notices of change of address shall be effective only upon receipt.
12. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Employee and such officer of the Company as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party, which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New Jersey without regard to its conflicts of law principles. By executing this Agreement, the Employee consents to the personal jurisdiction of all state and federal courts and arbitration forums located in the State of New Jersey. This Agreement shall be binding upon and inure to the benefit of the Company, and its successors and assigns, and upon the Employee. The obligations of the Employee shall not be assignable or otherwise transferable.
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13. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
15. Entire Agreement. **** Other than the NDNC, this Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes any and all other prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereof; and any prior agreement, including but not limited to the Existing Agreement, of the parties hereto in respect of the subject matter contained herein is hereby terminated and canceled.
16. Arbitration. Except as set forth in Section 8 and Section 18 and claims that pursuant to applicable law a party is prohibited from requiring another party to agree to submit to arbitration, the Employee and the Company agree that any claim, controversy or dispute between the Employee and the Company (including, without limitation, its affiliates, officers, representative or agents) arising out of or relating to this Agreement, the employment of the Employee, the cessation of employment of the Employee, or any matter relating to the foregoing shall be submitted to and settled by arbitration pursuant to the Federal Arbitration Act in a forum of the American Arbitration Association (“AAA”) located in the State of New Jersey and conducted in accordance with the AAA’s Employment Arbitration Rules. In such arbitration: (i) the arbitrator shall agree to treat all evidence and other information presented by the parties to the same extent as Confidential Information under the NDNC must be held confidential by the Employee, (ii) the arbitrator shall have no authority to amend or modify any of the terms of this Agreement, and (iii) the arbitrator shall have ten business days from the closing statements or submission of post-hearing briefs by the parties to render his or her decision. Any arbitration award shall be final and binding upon the parties, and any court, state or federal, having jurisdiction may enter a judgment on the award. The foregoing requirement to arbitrate claims, controversies, and disputes applies to all claims or demands arising out of or related to the Employee’s employment at the Company, including, without limitation any rights or claims the Employee may have under the Age Discrimination in Employment Act of 1967 (which prohibits age discrimination in employment), Title VII of the Civil Rights Act of 1964 (which prohibits discrimination in employment based on race, color, national origin, religion, sex, or pregnancy), the Americans with Disabilities Act of 1991 (which prohibits discrimination in employment against qualified persons with a disability), the Equal Pay Act (which prohibits paying men and women unequal pay for equal work), ERISA, the New Jersey Law Against Discrimination, the New Jersey Conscientious Employee Protection Act (or other federal or state whistleblower laws), or any other federal, state, or local laws or regulations pertaining to the Employee’s employment or the termination of the Employee’s employment (except as set forth in Section 8 and Section 18 and claims that pursuant to applicable law a party is prohibited from requiring another party to agree to submit to arbitration). The parties hereby confirm their understanding that by signing this Agreement they are waiving any right to a trial by jury, and are forfeiting any right to bring claims arising out of or related to the Employee’s employment at the Company in a court of law (except as set forth in Section 8 and Section 18 and claims that pursuant to applicable law a party is prohibited from requiring another party to agree to submit to arbitration), regardless of whether such claims would be based on federal, state or local law or regulations. For the avoidance of doubt, the parties acknowledge and agree that the existence of a claim by a party that is not subject to arbitration pursuant to this paragraph shall not impair the enforceability of this paragraph with respect to any other claim brought by that party. Notwithstanding the foregoing, nothing in this paragraph shall be interpreted to mean that the Employee cannot file a charge with the Equal Employment Opportunity Commission and/or the National Labor Relations Board.
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17. Choice of Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of New Jersey without regard to conflicts of law principles.
18. Remedies of the Company. Notwithstanding the arbitration provisions of Section 16, upon any termination for Cause that may cause irreparable harm to the Company or upon the violation of the NDNC, the Company shall be entitled, if it so elects, to institute and prosecute proceedings to obtain injunctive relief and damages, costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses, with respect to such termination.
19. Representations. The Employee has been advised to obtain independent counsel to evaluate the terms, conditions, and covenants set forth herein and he has been afforded ample opportunity to obtain such independent advice and evaluation. The Employee warrants to the Company that he has relied upon such independent counsel and not upon any representation (legal or otherwise), statement, or advice said or offered by the Company or the Company’s counsel in connection herewith.
20. Compliance with Section 409A. All provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under the Internal Revenue Code of 1986 (“Code”) Section 409A (“Section 409A”). By way of example, and not limitation, it is the intent of the parties that the Severance Payment, including each payment in a series of installment payments, is intended to be a separate payment for purposes of Treas. Reg. §1.409A-2(b), and is intended to be either: (i) exempt from Section 409A, including, but not limited to, by compliance with the short-term deferral exemption as specified in Treas. Reg. § 1.409A-1(b)(4) and the involuntary separation pay exception within the meaning of Treas. Reg. § 1.409A-1(b)(9)(iii), or (ii) in compliance with Section 409A, including, but not limited to, being paid pursuant to a fixed schedule or specified date pursuant to Treas. Reg. §1.409A-3(a) and the provisions of this Agreement will be administered, interpreted and construed accordingly. Notwithstanding the foregoing, if any payment would be subject to additional taxes and interest under Section 409A because the timing of such payment is not delayed as provided in Code Section 409A(a)(2)(B)(i), and Employee constitutes a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), then any such payments that Employee would otherwise be entitled to during the first six months following Employee’s “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i) shall be accumulated and paid on the date that is six months after Employee’s separation from service (or if such payment date does not fall on a business day of the Company, the next following business day of the Company), or such earlier date upon which such amount can be paid under Section 409A without being subject to such additional taxes and interest. In no event shall the Company be liable to Employee for any tax, penalty, or interest levied on Employee as a result of the application of Code Section 409A to any payments or benefits provided to Employee by the Company.
10
IN WITNESS WHEREOF, the parties have executed this Third Amended and Restated Employment Agreement as of the date and year first written above.
| GENIE ENERGY LTD. | |
|---|---|
| By: | /s/ Michael Stein |
| Michael Stein | |
| Chief Executive Officer | |
| EMPLOYEE: | |
| /s/ Avi Goldin | |
| Avi Goldin |
11
Exhibit 99.1
Genie Energy Ltd. Reports Third Quarter 2020 Results
NEWARK, NJ — November 6, 2020: Genie Energy Ltd. (NYSE: GNE, GNEPRA) reported third quarter 2020 earnings of $0.24 per diluted share on revenue of $96.3 million.
HIGHLIGHTS
(Throughout this release, 3Q20 results are compared to 3Q19results unless otherwise noted)
| ● | By quarter end, Genie had expanded its global customer base to the highest level in company history. Global RCEs rose to 442,000<br>and global meters to 558,000, representing year over year increases of 15% and 13% respectively. |
|---|---|
| ● | Consolidated revenue increased 12.4% to $96.3 million driven by increases in average electricity consumption in the U.S. and<br>internationally. Gross profit increased 3.7% to $27.3 million while SG&A expense decreased 3.0% to $18.8 million on reduced<br>customer acquisition expense. |
| --- | --- |
| ● | Consolidated income from operations increased 22.2% to $8.5 million. Consolidated Adjusted EBITDA^1^ increased 18.6%<br>to $9.5 million. |
| --- | --- |
| ● | Genie Retail Energy, Genie’s domestic energy supply business, increased income from operations to $12.3 million from<br>$10.9 million and Adjusted EBITDA^1^ to $12.6 million from $11.2 million. |
| --- | --- |
| ● | Diluted EPS increased to $0.24 from $0.18. |
| --- | --- |
COMMENTS OF MICHAEL STEIN, CEO
“Our strong third quarter results reflect our long-term investments in customer base growth and geographic diversification. International meter acquisitions led the expansion of our global customer base to its highest level in our history.
“In the U.S., our year over year increases in revenue, gross profit and income from operations were driven by increased average per meter electricity consumption. Residential electricity demand in the U.S. has increased in the COVID-19 era while churn and the pace of meter acquisition have slowed.
“After the third quarter closed, we acquired our partner’s interest in our U.K. joint venture for $1.7 million. We are excited about the long-term prospects for this business and expect it to become EBITDA accretive within the next two years.
“Our bottom line results further strengthened our balance sheet this quarter even as we continued to invest to grow our international businesses. By the quarter close, we had achieved our highest levels of cash and working capital since 2016.”
CONSOLIDATED RESULTS
| <br><br>$ in millions, except EPS** | 3Q20 | 2Q20 | 3Q19 | 3Q20-3Q19<br> Change<br>(%/) | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 96.3 | $ | 76.1 | $ | 85.7 | ||||
| Gross profit | $ | 27.3 | $ | 19.5 | $ | 26.4 | ||||
| Gross margin percentage | 28.4 | % | 25.6 | % | 30.7 | % | ||||
| SG&A expense | $ | 18.8 | $ | 16.0 | $ | 19.4 | ||||
| Stock-based compensation included in SG&A | $ | 0.4 | $ | 0.4 | $ | 0.3 | ||||
| Depreciation and amortization | $ | 0.7 | $ | 0.7 | $ | 0.9 | ||||
| Bad debt expense | $ | 1.0 | $ | 0.6 | $ | 0.1 | ||||
| Impairment of assets | na | $ | 0.8 | na | ||||||
| Income from operations | $ | 8.5 | $ | 2.7 | $ | 6.9 | ||||
| Adjusted EBITDA^1^ | $ | 9.5 | $ | 3.5 | $ | 8.0 | ||||
| Equity in the net loss in equity method investees^2^ | $ | (0.1 | ) | $ | (1.2 | ) | $ | (0.2 | ) | |
| Provision for income taxes | $ | (2.4 | ) | $ | (0.6 | ) | $ | (1.9 | ) | |
| Net income attributable to Genie Energy common stockholders | $ | 6.4 | $ | 1.6 | $ | 4.9 | ||||
| Earnings per diluted share attributable to Genie Energy common stockholders | $ | 0.24 | $ | 0.06 | $ | 0.18 | ||||
| Net cash provided by operating activities | $ | 10.4 | $ | 16.4 | $ | 12.1 |
All values are in US Dollars.
GLOBAL METERS AND RCEs
Genie Energy’s global customer base increased year-over-year and sequentially driven by Genie International’s investment in customer acquisition complemented by more modest domestic RCE growth. COVID-19 public health restrictions relaxed in some Genie domestic markets in the third quarter, facilitating a partial reactivation of previously curtailed customer acquisition channels. Genie Energy’s global RCE and meter totals are provided in the chart below.
| ****<br><br>GlobalRCEs and Meters (in thousands)^3^ | September 30,<br><br>2020 | June 30,<br><br> <br>2020 | March 31,<br><br>2020 | December 31,<br><br>2019 | September 30,<br><br>2019 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Electricity RCEs | 364 | 346 | 325 | 297 | 309 | |||||
| Natural gas RCEs | 78 | 75 | 76 | 77 | 75 | |||||
| Total RCEs | 442 | 421 | 401 | 374 | 384 | |||||
| Electricity meters | 445 | 429 | 421 | 390 | 392 | |||||
| Natural gas meters | 113 | 107 | 111 | 107 | 100 | |||||
| Total meters | 558 | 536 | 532 | 497 | 492 |
2
SEGMENT RESULTS
Genie Retail Energy (GRE)
| GenieRetail Energy<br> <br>$ in millions | 3Q20 | 2Q20 | 3Q19 | 3Q20-3Q19<br>Change<br>(%/) | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Total revenue | $ | 89.5 | $ | 66.5 | $ | 81.7 | ||||
| Electricity revenue | $ | 86.2 | $ | 61.1 | $ | 78.5 | ||||
| Natural gas revenue | $ | 2.7 | $ | 5.4 | $ | 3.2 | ||||
| Other | $ | 0.6 | - | - | ||||||
| Gross profit | $ | 25.9 | $ | 17.1 | $ | 25.7 | ||||
| Gross margin percentage | 29.0 | % | 25.7 | % | 31.5 | % | ||||
| SG&A expense | $ | 13.6 | $ | 11.1 | $ | 14.8 | ||||
| Depreciation and amortization | $ | 0.1 | $ | 0.1 | $ | 0.2 | ||||
| Income from operations | $ | 12.3 | $ | 6.0 | $ | 10.9 | ||||
| Adjusted EBITDA^1^ | $ | 12.6 | $ | 6.2 | $ | 11.2 |
All values are in US Dollars.
GRE - KPIs and Take-Aways:
| ● | RCEs served at September 30, 2020 increased 6% to 350,000 from 329,000 a year earlier and 2% from 343,000 at June 30, 2020. |
|---|---|
| ● | Meters served at September 30, 2020 decreased 4% to 375,000 from 389,000 a year earlier and increased slightly from 374,000<br>at June 30, 2020. |
| --- | --- |
| ● | Gross meters added during 3Q20 totaled 44,000 compared to 76,000 in 3Q19 and 40,000 in 2Q20. The year over year decrease is<br>due to COVID-19 related curtailment of certain customer acquisition activities. |
| --- | --- |
| ● | Average monthly customer churn decreased to 3.7% from 5.3% in 3Q19 and 3.9% in 2Q20, reflecting decreased sales activity by<br>competitors and lower rates of gross meter ads in recent quarters – both as a result of COVID-19-related restrictions on<br>customer acquisition in certain channels – as well as the continuing increase in the ratio of fixed rate to variable rate<br>customers, where fixed rate customers generally have lower rates of churn. |
| --- | --- |
| ● | The year over year increase in electricity revenue was driven by a strong increase in average meter electricity consumption<br>reflecting increased residential demand during the COVID-19 pandemic, and, to a lesser extent, a shift within GRE’s electricity<br>customer base to meters with higher average consumption. |
| --- | --- |
| ● | The year over year increases in income from operations and Adjusted EBITDA^1^ were driven by increased per meter electricity<br>consumption and decreased customer acquisition expense, offset by a mild decrease in gross margin. |
| --- | --- |
Genie Retail Energy International (GRE International)
| GRE International<br> <br>$ in millions | 3Q20 | 2Q20 | 3Q19 | 3Q20-3Q19<br> Change<br>(%/) | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Total revenue | $ | 5.8 | $ | 5.0 | $ | 3.0 | ||||
| Gross profit | $ | 1.1 | $ | 1.9 | $ | 0.4 | ||||
| Gross margin percentage | 18.7 | % | 38.0 | % | 13.0 | % | ||||
| SG&A expense | $ | 2.7 | $ | 2.5 | $ | 2.0 | ||||
| Loss from operations | $ | (1.6 | ) | $ | (0.6 | ) | $ | (1.6 | ) | |
| Adjusted EBITDA^1^ | $ | (1.0 | ) | $ | (1.6 | ) | $ | (1.0 | ) | |
| Equity in the net loss in Orbit Energy^4^ | - | $ | (1.5 | ) | - |
All values are in US Dollars.
3
GRE International – KPIs and Take-Aways:
| ● | RCE’s served^3^ at September 30, 2020 increased 69% to 92,000 from 55,000 a year earlier and increased 18% from<br>79,000 at June 30, 2020 led by expansion in the U.K. and Scandinavian markets. |
|---|---|
| ● | Meters served^3^ at September 30, 2020 increased 76% to 182,000 from 103,000 a year earlier and 13% from 161,000 at<br>June 30, 2020. |
| --- | --- |
| ● | On a pro forma basis^5^, inclusive of Orbit Energy’s revenue, GRE International’s revenue increased to<br>$20.9 million from $8.8 million in 3Q19. |
| --- | --- |
| ● | On a pro forma basis^5^, inclusive of Orbit Energy’s loss from operations, GRE International’s loss from<br>operations increased to $5.8 million from $4.2 million in 3Q19. |
| --- | --- |
Genie Energy Services (GES)
GES comprises Diversegy, a commercial energy consulting business, Genie’s interest in Prism Solar, a supplier of solar panels and solutions, and Genie Solar Energy.
| ● | GES’ revenue of $1.0 million was unchanged from 3Q19. |
|---|---|
| ● | GES’ loss from operations was $0.7 million compared to a loss from operations of $0.8 million in 3Q19. |
| --- | --- |
Genie Oil and Gas (GOGAS)
| ● | GOGAS’ Afek oil and gas exploration subsidiary initiated its final well test in the second half of October, following<br>the quarter close. |
|---|---|
| ● | GOGAS’ loss from operations^6^ decreased to $0.1 million from $0.3 million in 3Q19. |
| --- | --- |
Corporate
| ● | Corporate loss from operations was $1.4 million compared to a loss from operations of $1.3 million in 3Q19. The losses include<br>the impact of corporate stock-based compensation which increased to $0.2 million from $0.1 million in 3Q19. |
|---|
BALANCE SHEET AND CASH FLOW HIGHLIGHTS
At September 30, 2020, Genie Energy had $148.9 million in total assets. Cash, cash equivalents and restricted cash increased to $49.2 million from $41.8 million at June 30, 2020. Liabilities totaled $62.4 million and working capital (current assets less current liabilities) totaled $54.9 million compared to $49.1 million at June 30, 2020.
Cash provided by operating activities in 3Q20 was $10.4 million compared to $12.1 million in 3Q19.
DIVIDEND ON GENIE ENERGY COMMON STOCK
Genie's Board of Directors has declared a third quarter dividend of $0.085 with a record date of December 4, 2020. The dividend will be paid on or about December 11, 2020. The distribution will be treated as an ordinary dividend for income tax purposes.
4
GENIE ENERGY EARNINGS CONFERENCE CALL
This earnings press release is available for download in the “Investors” section of the Genie Energy website (https://genie.com/investors/investor-relations/) and has been filed on a current report (Form 8-K) with the SEC.
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 1-888-348-6472 (toll-free from the US) or 1-412-902-4240 (international) and request the Genie Energy conference call.
Approximately three hours after the call, a call replay will be accessible by dialing 1-844-512-2921 (toll-free from the US) or 1-412-317-6671 (international) and providing the replay PIN: 10149641. The replay will remain available through November 13, 2020. A recording of the call - in MP3 format - will also be available for playback on the “Investors” section of the Genie Energy website.
Investors can sign up through the Genie Energy website to have earnings releases and other press releases e-mailed directly to them.
ABOUT GENIE ENERGY LTD.
Genie Energy Ltd. (NYSE: GNE, GNEPRA), is a global 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 Europe and Asia. The Genie Energy Services division includes Diversegy, a commercial and industrial brokerage and consultative services company, and Genie Solar Energy and Prism Solar, which design, supply and install commercial solar solutions. For more information, visit Genie.com.
In this press release, all statements that are not purelyabout 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-lookingstatements represent our current judgment of what may happen in the future, actual results may differ materially from the resultsexpressed or implied by these statements due to numerous important factors, including, but not limited to, those described in ourmost recent report on SEC Form 10-K (under the headings “Risk Factors” and “Management’s Discussion andAnalysis of Financial Condition and Results of Operations”), which may be revised or supplemented in subsequent reports onSEC 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:
Genie Energy Investor Relations
Bill Ulrey
P: (973) 438-3848
E-mail: invest@genie.com
5
FOOTNOTES:
| ^1^ | Adjusted EBITDA for all periods presented is a non-GAAPmeasure. The ‘Reconciliation of Non-GAAP Financial Measures’ at the end of this release provides an explanation ofAdjusted EBITDA and reconciliations to its most directly comparable GAAP measures. |
|---|---|
| ^2^ | Genie Energy accounted for its investments in OrbitEnergy, its joint venture operating in the U.K., and Atid, a drilling contractor based in Israel in which it holds a minoritystake, under the equity method of accounting. Under this method, Genie Energy records its share in the net income or loss of theventure. Therefore, revenue generated and expenses incurred are not reflected in Genie Energy’s consolidated revenue andexpenses. However, Orbit Energy’s customers are included in metrics regarding our global customer base. |
| --- | --- |
^^
| ^3^ | Includes RCEs and meters acquired and served by GenieEnergy’s domestic and international retail energy provider businesses including operations in Scandinavia and Japan andat Genie’s joint venture in the U.K. (although U.K. operations have not been included in our consolidated results of operations). |
|---|
^^
| ^4^ | Genie Energy accounted for its investments in OrbitEnergy, its joint venture operating in the U.K., under the equity method of accounting. Revenue generated, and expenses incurred,are not reflected in segment revenue and operating expenses. RCE and meter counts do, however, include Orbit Energy customers. |
|---|
^^
| ^5^ | Pro forma results for all periods presented are non-GAAPmeasures intended to provide useful information that supplement the core operating results in accordance with GAAP of the relevantsegment. Please refer to the ‘Reconciliation of Non-GAAP Financial Measures’ at the end of this release for an explanationof the pro forma results as well as for reconciliations to their most directly comparable GAAP measures. |
|---|
^^
| ^6^ | Genie Energy accounts for its minority interest in Atid,a drilling company based in Israel, under the equity method of accounting within its GOGAS segment. Atid’s revenue generated,and expenses incurred, are not reflected in segment revenue and operating expenses. |
|---|
6
GENIE ENERGY LTD.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
| December 31,<br><br> <br>2019 | |||||
|---|---|---|---|---|---|
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 19,556 | $ | 31,242 | ||
| Restricted cash—short-term | 29,104 | 6,792 | |||
| Trade accounts receivable, net of allowance for doubtful accounts of 4,285 and 2,631 at September 30, 2020 and December 31, 2019, respectively | 44,787 | 49,822 | |||
| Inventory | 13,414 | 16,632 | |||
| Prepaid expenses | 4,181 | 6,318 | |||
| Other current assets | 4,271 | 2,133 | |||
| Total current assets | 115,313 | 112,939 | |||
| Property and equipment, net | 357 | 3,607 | |||
| Goodwill | 12,213 | 12,135 | |||
| Other intangibles, net | 5,067 | 6,837 | |||
| Investment in equity method investees | 483 | 675 | |||
| Restricted cash—long-term | 570 | 520 | |||
| Deferred income tax assets, net | 7,316 | 12,154 | |||
| Other assets | 7,573 | 7,377 | |||
| Total assets | 148,892 | $ | 156,244 | ||
| Liabilities and equity | |||||
| Current liabilities: | |||||
| Loan payable | 1,422 | $ | 921 | ||
| Trade accounts payable | 22,889 | 24,387 | |||
| Accrued expenses | 31,326 | 26,116 | |||
| Contract liability | 1,033 | 13,426 | |||
| Income taxes payable | 1,548 | 1,591 | |||
| Due to IDT Corporation, net | 115 | 381 | |||
| Short-term revolving line of credit | — | 2,514 | |||
| Other current liabilities | 2,109 | 2,820 | |||
| Total current liabilities | 60,442 | 72,156 | |||
| Long-term notes payable | — | 777 | |||
| Other liabilities | 1,952 | 2,381 | |||
| Total liabilities | 62,394 | 75,314 | |||
| 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, 2020 and December 31, 2019 | 19,743 | 19,743 | |||
| Class A common stock, 0.01 par value; authorized shares—35,000; 1,574 shares issued and outstanding at September 30, 2020 and December 31, 2019 | 16 | 16 | |||
| Class B common stock, 0.01 par value; authorized shares—200,000; 25,808 and 25,785 shares issued and 24,521 and 24,755 shares outstanding at September 30, 2020 and December 31, 2019, respectively | 258 | 258 | |||
| Additional paid-in capital | 140,935 | 139,615 | |||
| Treasury stock, at cost, consisting of 1,287 and 1,030 shares of Class B common stock at September 30, 2020 and December 31, 2019 | (9,572 | ) | (7,675 | ) | |
| Accumulated other comprehensive income | 2,800 | 2,519 | |||
| Accumulated deficit | (52,691 | ) | (59,671 | ) | |
| Total Genie Energy Ltd. stockholders’ equity | 101,489 | 94,805 | |||
| Noncontrolling interests | (14,991 | ) | (13,875 | ) | |
| Total equity | 86,498 | 80,930 | |||
| Total liabilities and equity | 148,892 | $ | 156,244 |
All values are in US Dollars.
7
GENIE ENERGY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
| Three Months Ended<br> September 30, | Nine Months Ended<br> September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||
| (in thousands, except per share data) | ||||||||||||
| Revenues: | ||||||||||||
| Electricity | $ | 91,793 | $ | 81,473 | $ | 227,671 | $ | 196,142 | ||||
| Natural gas | 2,724 | 3,169 | 24,190 | 27,069 | ||||||||
| Other | 1,809 | 1,071 | 24,591 | 10,127 | ||||||||
| Total revenues | 96,326 | 85,713 | 276,452 | 233,338 | ||||||||
| Cost of revenues | 69,010 | 59,360 | 200,744 | 172,417 | ||||||||
| Gross profit | 27,316 | 26,353 | 75,708 | 60,921 | ||||||||
| Operating expenses and losses: | ||||||||||||
| Selling, general and administrative (i) | 18,831 | 19,408 | 54,287 | 53,419 | ||||||||
| Impairment of assets | — | — | 993 | — | ||||||||
| Income from operations | 8,485 | 6,945 | 20,428 | 7,502 | ||||||||
| Interest income | 21 | 163 | 164 | 445 | ||||||||
| Interest expense | (48 | ) | (161 | ) | (223 | ) | (479 | ) | ||||
| Equity in the net loss in equity method investees, net | (146 | ) | (238 | ) | (1,698 | ) | (2,106 | ) | ||||
| Other income (expense), net | 291 | (85 | ) | 390 | 147 | |||||||
| Income before income taxes | 8,603 | 6,624 | 19,061 | 5,509 | ||||||||
| Provision for income taxes | (2,406 | ) | (1,916 | ) | (5,563 | ) | (3,142 | ) | ||||
| Net income | 6,197 | 4,708 | 13,498 | 2,367 | ||||||||
| Net loss attributable to noncontrolling interests | 531 | 539 | 1,026 | 1,484 | ||||||||
| Net income attributable to Genie Energy Ltd. | 6,728 | 5,247 | 14,524 | 3,851 | ||||||||
| Dividends on preferred stock | (370 | ) | (370 | ) | (1,111 | ) | (1,111 | ) | ||||
| Net income attributable to Genie Energy Ltd. common stockholders | $ | 6,358 | $ | 4,877 | $ | 13,413 | $ | 2,740 | ||||
| Earnings per share attributable to Genie Energy Ltd. common stockholders: | ||||||||||||
| Basic | $ | 0.25 | $ | 0.18 | $ | 0.51 | $ | 0.10 | ||||
| Diluted | $ | 0.24 | $ | 0.18 | $ | 0.50 | $ | 0.10 | ||||
| Weighted-average number of shares used in calculation of earnings per share: | ||||||||||||
| Basic | 25,928 | 26,683 | 26,107 | 26,603 | ||||||||
| Diluted | 26,769 | 27,669 | 26,839 | 27,541 | ||||||||
| Dividends declared per common share | $ | 0.085 | $ | 0.075 | $ | 0.245 | $ | 0.225 | ||||
| (i) Stock-based compensation included in selling, general and administrative expenses | $ | 447 | $ | 335 | $ | 1,331 | $ | 1,106 |
8
GENIE ENERGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
| Nine Months Ended<br><br>September 30, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| (in thousands) | ||||||
| Operating activities | ||||||
| Net income | $ | 13,498 | $ | 2,367 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 2,219 | 2,797 | ||||
| Impairment of assets | 993 | — | ||||
| Deferred income taxes | 4,838 | 1,591 | ||||
| Provision for doubtful accounts receivable | 2,209 | 453 | ||||
| Loss on sale of assets held for sale | 456 | — | ||||
| Stock-based compensation | 1,331 | 1,106 | ||||
| Equity in the net loss in equity method investees | 1,698 | 2,106 | ||||
| Gain on deconsolidation of subsidiaries | (98 | ) | — | |||
| Change in assets and liabilities: | ||||||
| Trade accounts receivable | 2,827 | (1,607 | ) | |||
| Inventory | 3,218 | 264 | ||||
| Prepaid expenses | 2,166 | (395 | ) | |||
| Other current assets and other assets | (633 | ) | 1,243 | |||
| Trade accounts payable, accrued expenses and other current liabilities | 2,018 | 2,152 | ||||
| Contract liability | (12,393 | ) | 3,378 | |||
| Due to IDT Corporation | (266 | ) | (81 | ) | ||
| Income taxes payable | (43 | ) | 563 | |||
| Net cash provided by operating activities | 24,038 | 15,937 | ||||
| Investing activities | ||||||
| Capital expenditures | (125 | ) | (343 | ) | ||
| Proceeds from disposal of assets held for sale | 48 | — | ||||
| Payment for acquisition of intangible | (298 | ) | — | |||
| Investments in equity method investee | (1,502 | ) | (719 | ) | ||
| Payments for business acquisition, net of cash acquired | — | (1,852 | ) | |||
| Investments in notes receivables | — | (214 | ) | |||
| Repayment of notes receivable | 14 | 132 | ||||
| Net cash used in investing activities | (1,863 | ) | (2,996 | ) | ||
| Financing activities | ||||||
| Dividends paid | (7,543 | ) | (7,220 | ) | ||
| Repayment of short-term debt—Lumo | — | (2,260 | ) | |||
| Proceeds from exercise of stock options | 18 | 1,405 | ||||
| Proceeds from revolving line of credit | 1,000 | — | ||||
| Repayment of revolving line of credit | (3,514 | ) | — | |||
| Purchase of Class B common stock from employees upon vesting of restricted shares | (263 | ) | (315 | ) | ||
| Proceeds from loan | 1,395 | — | ||||
| Repayment of loan payable | (930 | ) | — | |||
| Purchases of Class B common stock | (1,634 | ) | (3,415 | ) | ||
| Repayment of notes payable | (25 | ) | (37 | ) | ||
| Net cash used in financing activities | (11,496 | ) | (11,842 | ) | ||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (3 | ) | 12 | |||
| Net increase in cash, cash equivalents, and restricted cash | 10,676 | 1,111 | ||||
| Cash, cash equivalents, and restricted cash at beginning of period | 38,554 | 44,197 | ||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 49,230 | $ | 45,308 |
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Reconciliation of Non-GAAP FinancialMeasures for the Third Quarter 2020
In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States of America (GAAP), Genie Energy also disclosed for the third quarter 2020, as well as for comparable periods, pro forma revenue and income (loss) from operations for its Genie Retail Energy International (GRE International) segment and, for on a consolidated basis and for all segments, Adjusted EBITDA, which are non-GAAP measures. 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 measures of pro forma results consist of the corresponding GAAP metric with the addition of the corresponding results for Orbit Energy, the company’s joint venture operating in the United Kingdom. GAAP results for Orbit Energy are accounted for under the equity method of accounting. Under this method, Genie Energy records its share in the net income or loss of the venture. Therefore, revenue generated, expenses incurred and income (loss) from operations are not reflected in Genie Energy’s consolidated revenue and expenses (although Orbit Energy’s customers are included in metrics regarding our customer base). Pro forma results are calculated by adding the result for Orbit Energy to its corresponding GAAP result. Pro forma results are provided for the third quarter 2020 and third quarter 2019 to supplement the following results: revenue of the Genie Retail Energy International segment; and loss from operations for the Genie Retail Energy International segment.
Genie Energy’s measure of Adjusted EBITDA consists of gross profit less selling, general and administrative expense, exploration expense and equity in the net loss of in equity method investees, net, plus depreciation, amortization and stock-based compensation (which are included in selling, general and administrative expense). Another way of calculating Adjusted EBITDA is to start with income from operations and add depreciation, amortization, stock-based compensation and impairment of goodwill and subtract equity in net loss in equity method investees, net.
Management believes that Genie Energy’s pro forma results and Adjusted EBITDA provide useful information to both management and investors by excluding certain expenses that may not be indicative of Genie Energy’s or the relevant segment’s core operating results. Management uses the pro forma results and Adjusted EBITDA, among other measures, as relevant indicators of core operational strengths in its financial and operational decision making.
Pro forma revenue and pro forma income (loss) from operations are used specifically to evaluate the performance of its GRE International division. Management also used Adjusted EBITDA to evaluate operating performance in relation to Genie Energy’s competitors. Disclosure of these 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.
The pro forma results facilitate evaluation of the results of GRE International as if the results of its U.K joint venture, Orbit Energy, were fully consolidated, which provides useful information regarding the size, growth and financial performance of GRE International businesses in aggregate. In contrast, GAAP results only include the company’s equity in the results of the operations of its U.K. venture.
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Management refers to pro forma results and Adjusted EBITDA, as well as the GAAP measures revenue, gross profit, income (loss) from operations and net income (loss), on a segment and/or consolidated level to facilitate internal and external comparisons to the segments’ and Genie Energy's historical operating results, in making operating decisions, for budget and planning purposes, and to form the basis upon which management is compensated.
Although depreciation and amortization are considered operating costs under GAAP, they primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. While Genie Energy’s oil and gas exploration business may be capital intensive, Genie Energy does not expect to incur significant depreciation or depletion expense for the foreseeable future. Genie Energy’s operating results exclusive of depreciation and amortization is therefore a useful indicator of its current performance.
Stock-based compensation recognized by Genie Energy and other companies may not be comparable because of the various valuation methodologies, subjective assumptions and the variety of types of awards that are permitted under GAAP. Stock-based compensation is excluded from Genie Energy’s calculation of Adjusted EBITDA because management believes this allows investors to make more meaningful comparisons of the operating results of Genie Energy’s core business with the results of other companies. However, stock-based compensation will continue to be a significant expense for Genie Energy for the foreseeable future and an important part of employees’ compensation that impacts their performance.
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.
Pro forma revenue and pro forma income (loss) from operations as well as 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 measurements of pro forma revenue, pro forma income (loss) from operations and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Following are the reconciliations of GRE International’s pro forma results and Adjusted EBITDA to its most directly comparable GAAP measure. Pro forma revenue for the GRE International segment is reconciled to the segment’s revenue, and GRE International’s pro forma loss from operations is reconciled to the segment’s loss from operation. Adjusted EBITDA is reconciled to income from operations for Genie Energy’s reportable segments and net income for Genie Energy on a consolidated basis.
Reconciliation of pro forma GRE International revenueand loss from operations
Genie Retail Energy International (GREI) SegmentResults
| (results in millions) | 3Q20 | 3Q19 | ||||
|---|---|---|---|---|---|---|
| GREI segment revenue | $ | 5.8 | $ | 3.0 | ||
| plus Orbit Energy revenue | $ | 15.1 | $ | 5.8 | ||
| Pro forma GREI segment revenue | $ | 20.9 | $ | 8.8 | ||
| GREI segment loss from operations | $ | (1.6 | ) | $ | (1.6 | ) |
| plus Orbit Energy loss from operations | $ | (4.2 | ) | $ | (2.6 | ) |
| Pro forma GREI segment loss from operations | $ | (5.8 | ) | $ | (4.2 | ) |
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Reconciliation of Adjusted EBITDA
| Total | GRE | GES | GREI | GOGAS | CORP | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended September 30, 2020 (3Q20) | |||||||||||||||||
| Net income attributable to Genie Energy Limited | $ | 6,728 | |||||||||||||||
| Net loss attributable to non-controlling interests | (531 | ) | |||||||||||||||
| Net income | $ | 6,197 | |||||||||||||||
| Provision for income taxes | 2,406 | ||||||||||||||||
| Other income, net | (291 | ) | |||||||||||||||
| Interest expense | 48 | ||||||||||||||||
| Interest income | (21 | ) | |||||||||||||||
| Equity in the net loss of equity method investees | 146 | ||||||||||||||||
| Income from operations | $ | 8,485 | $ | 12,333 | $ | (719 | ) | $ | (1,574 | ) | $ | (146 | ) | $ | (1,409 | ) | |
| Add: | |||||||||||||||||
| Stock-based compensation | 447 | 172 | 68 | 207 | |||||||||||||
| Depreciation and amortization | 670 | 117 | 11 | 527 | 15 | ||||||||||||
| Impairment | |||||||||||||||||
| Subtract: | |||||||||||||||||
| Equity in the net loss of equity method investees | 146 | 143 | 3 | ||||||||||||||
| Adjusted EBITDA | $ | 9,456 | $ | 12,622 | $ | (708 | ) | $ | (979 | ) | $ | (274 | ) | $ | (1,205 | ) | |
| Total | GRE | GES | GREI | GOGAS | CORP | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three months ended June 30, 2020 (2Q20) | |||||||||||||||||
| Net income attributable to Genie Energy Limited | $ | 1,963 | |||||||||||||||
| Net loss attributable to non-controlling interests | (1,083 | ) | |||||||||||||||
| Net income | $ | 880 | |||||||||||||||
| Provision for income taxes | 587 | ||||||||||||||||
| Other expenses, net | 52 | ||||||||||||||||
| Interest expense | 58 | ||||||||||||||||
| Interest income | (20 | ) | |||||||||||||||
| Equity in the net loss of equity method investees | 1,173 | ||||||||||||||||
| Income (loss) from operations | $ | 2,730 | $ | 5,957 | $ | (1,113 | ) | $ | (607 | ) | $ | (172 | ) | $ | (1,335 | ) | |
| Add: | |||||||||||||||||
| Stock-based compensation | 401 | 175 | 14 | 213 | |||||||||||||
| Depreciation and amortization | 722 | 118 | 95 | 495 | 14 | ||||||||||||
| Impairment | 801 | 801 | |||||||||||||||
| Subtract: | |||||||||||||||||
| Equity in the net loss of equity method investees | 1,173 | 1,502 | (224 | ) | (105 | ) | |||||||||||
| Adjusted EBITDA | $ | 3,481 | $ | 6,250 | $ | (217 | ) | $ | (1,600 | ) | $ | 66 | $ | (1,017 | ) | ||
| Total | GRE | GES | GREI | GOGAS | CORP | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three months ended September 30, 2019 (3Q19) | |||||||||||||||||
| Net income attributable to Genie Energy Limited | $ | 5,247 | |||||||||||||||
| Net loss attributable to non-controlling interests | (539 | ) | |||||||||||||||
| Net income | $ | 4,708 | |||||||||||||||
| Provision for income taxes | 1,916 | ||||||||||||||||
| Other income, net | 85 | ||||||||||||||||
| Interest expense | 161 | ||||||||||||||||
| Interest income | (163 | ) | |||||||||||||||
| Equity in the net loss of equity method investees | 238 | ||||||||||||||||
| Income from operations | $ | 6,945 | $ | 10,856 | $ | (798 | ) | $ | (1,560 | ) | $ | (283 | ) | $ | (1,270 | ) | |
| Add: | |||||||||||||||||
| Stock-based compensation | 335 | 116 | 94 | 125 | |||||||||||||
| Depreciation and amortization | 933 | 187 | 243 | 488 | 15 | ||||||||||||
| Impairment | |||||||||||||||||
| Subtract: | |||||||||||||||||
| Equity in the net loss of equity method investees | 238 | 148 | 90 | ||||||||||||||
| Adjusted EBITDA | $ | 7,975 | $ | 11,159 | $ | (555 | ) | $ | (978 | ) | $ | (416 | ) | $ | (1,235 | ) |
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