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):
November 7, 2022
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<br>to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant<br>to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications<br>pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications<br>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 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 7, 2022, 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, 2022. 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 FinancialStatements and Exhibits.
| (d) | Exhibits. |
|---|---|
| Exhibit No. | Document |
| --- | --- |
| 99.1 | Press Release, dated November 7, 2022, reporting the results of operations for the quarter ended September 30, 2022. |
| 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/ Michael Stein | |
| Name: | Michael Stein | |
| Title: | Chief Executive Officer |
Dated: November 7, 2022
2
EXHIBIT INDEX
| Exhibit Number | Document |
|---|---|
| 99.1 | Press Release, dated November 7, 2022, reporting the results of operations for the quarter ended September 30, 2022. |
| 104 | Cover Pager Interactive Data File, formatted in Inline XBRL document |
3
Exhibit 99.1
Genie Energy Announces Third Quarter Results
Reports record third-quarter gross profit, netincome and Adjusted EBITDA^1^
Acquired site rights to build up to 64MW (megawatts)of solar projects
Newark, NJ – November 7, 2022: Genie Energy, Ltd. (NYSE: GNE, GNEPRA), a leading retail energy and renewable energy solutions provider, today announced results for its third quarter ended September 30, 2022.
“We reported record third quarter profit metrics driven by strength in Genie Retail Energy (GRE), our domestic retail energy business,” said Michael Stein, chief executive officer. “GRE continued to outperform in a volatile energy price environment. We were well-positioned with our customer book and hedges heading into the quarter and were able to drive a 54% gross margin and generate nearly $28 million in Adjusted EBITDA. Genie Renewables (GREW) also made excellent progress in our solar business, acquiring site rights to 64MW of solar projects and advancing them through their permitting processes.
“Given the challenging environment in the European energy market, we determined that the risk was beyond our acceptable tolerances. As a result, we exited our remaining international retail operations and no longer serve customers in Scandanavia.* Finally, building on our strong domestic operational performance, we returned $3.2 million in capital to shareholders via redemption of preferred stock and payments of our regular quarterly common and preferred stock dividends.”
| * | Genie Retail Energy International (GREI) results are classifiedas discontinued operations in the third quarter of 2022 and for all prior periods presented. |
|---|
Third Quarter 2022 Highlights (versus 3Q21 unless otherwise noted; excludes GREI for all periods)
| ● | Revenue<br>decreased 7.3% to $81.3 million from $87.7 million; | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ● | Gross profit increased 24.7% to $43.1 million from $34.6 million, and gross<br>margin increased to 53.1% from 39.5%, driven by strength at GRE; | |||||||||||||||||
| --- | --- | |||||||||||||||||
| ● | Income from operations increased 34.8% to $23.5<br>million from $17.5 million; | |||||||||||||||||
| --- | --- | |||||||||||||||||
| ● | Adjusted EBITDA^1^ increased 35.2% to $24.5 million from $18.1 million; | |||||||||||||||||
| --- | --- | |||||||||||||||||
| ● | GRE generated income from continuing operations<br>and Adjusted EBITDA of $27.4 million and $27.7 million, compared to $19.7 million and $20.0 million, respectively; | |||||||||||||||||
| --- | --- | |||||||||||||||||
| ● | Net income from continuing operations attributable<br>to GNE common stockholders increased to $18.3 million, and diluted income per share (EPS) increased to $0.70, compared to a loss of $2.7<br>million and net loss per share of $0.10, respectively; | |||||||||||||||||
| --- | --- | |||||||||||||||||
| ● | Cash, restricted cash and marketable equity<br>securities increased to $87.7 million at September 30, 2022, from $67.2 million at June 30, 2022; | |||||||||||||||||
| --- | --- | |||||||||||||||||
| ● | Declared a $0.075 quarterly dividend for class<br>A and B common stockholders; | |||||||||||||||||
| --- | --- | |||||||||||||||||
| ● | Redeemed $1 million of preferred stock. | |||||||||||||||||
| --- | --- | |||||||||||||||||
| Select Financial Metrics: 2022 versus 2021 as of 9/30/22* | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in $M except for EPS) | 3Q22 | 3Q21 | Change | YTD<br><br>2022 | YTD<br><br>2021 | Change | ||||||||||||
| Total Revenue | $ | 81.3 | $ | 87.7 | (7.3 | )% | $ | 234.2 | $ | 254.1 | (7.8 | )% | ||||||
| Genie Retail - US (GRE) | $ | 79.9 | $ | 86.3 | (7.4 | )% | $ | 227.0 | $ | 244.0 | (7.0 | )% | ||||||
| Electricity | $ | 73.8 | $ | 82.8 | (10.9 | )% | $ | 186.2 | $ | 218.1 | (14.6 | )% | ||||||
| Natural Gas | $ | 6.2 | $ | 3.5 | 75.0 | % | $ | 40.8 | $ | 25.9 | 57.5 | % | ||||||
| Genie Renewables | $ | 1.4 | $ | 0.9 | 2.2 | % | $ | 7.2 | $ | 6.2 | 16.5 | % | ||||||
| Gross Margin | 53.1 | % | 39.5 | % | 1360 | bps | 51.3 | % | 26.7 | % | 2455 | bps | ||||||
| Genie Retail - US (GRE) | 54.1 | % | 39.6 | % | 1453 | bps | 27.6 | % | 24.7 | % | 394 | bps | ||||||
| Genie Renewables | (6.3 | )% | 34.0 | % | (4029 | )bps | 17.5 | % | 40.4 | % | (2298 | )bps | ||||||
| Income (Loss) from Operations | $ | 23.5 | $ | 17.5 | 34.8 | % | $ | 62.3 | $ | 18.3 | 240.7 | % | ||||||
| Operating Margin | 29.0 | % | 19.9 | % | 903 | bps | 26.6 | % | (5.1 | )% | 3168 | bps | ||||||
| Net Income (Loss) Attributable to Discontinued Operations | $ | (1.5 | ) | $ | (10.9 | ) | (86.6 | )% | $ | 25.9 | $ | (17.0 | ) | nm | ||||
| Net Income (Loss) Attributable to GNE Common Stockholders | $ | 18.3 | $ | (2.7 | ) | nm | $ | 69.7 | $ | (0.0 | ) | nm | ||||||
| Diluted Earnings (Loss) Per Share | $ | 0.70 | $ | (0.10 | ) | nm | $ | 2.65 | $ | (0.00 | ) | nm | ||||||
| Adjusted EBITDA^1^ | $ | 24.5 | $ | 18.1 | 35.2 | % | $ | 64.7 | $ | 20.4 | nm | |||||||
| Cash Flow from Continuing Operating Activities | $ | 22.5 | $ | 0.3 | nm | $ | 44.9 | $ | (0.9 | ) | nm |
nm = not measurable/meaningful
| * | Numbers | may not add due to rounding |
|---|---|---|
| ** | GREI operations have been classified as a discontinued operation<br>and its results excluded from current and historical results | |
| --- | --- | |
| ^1^ | Adjusted EBITDA for all periods presented is a non-GAAPmeasure intended to provide useful information that supplements the core operating results in accordance with GAAP of Genie Energy orthe relevant segment. Please refer to the Reconciliation of Non-GAAP Financial Measure at the end of this release for an explanationof Adjusted EBITDA, as well as reconciliations to its most directly comparable GAAP measure. | |
| --- | --- |
Select Business Metrics: 2022 versus 2021(as of quarters ended on September 30)**
| Units in 1000s | 3Q22 | 3Q21 | Change | |||
|---|---|---|---|---|---|---|
| Retail Performance Metrics: | ||||||
| Genie Retail - US (GRE) | 251 | 336 | (25.3 | )% | ||
| Electricity | 174 | 276 | (37.0 | )% | ||
| Natural Gas | 77 | 60 | 28.1 | % | ||
| Meters in 1000s units | ||||||
| Genie Retail - US (GRE) | 271 | 361 | (25.0 | )% | ||
| Electricity | 193 | 289 | (33.0 | )% | ||
| Natural Gas | 77 | 72 | 7.3 | % | ||
| Gross Adds | 34 | 47 | (27.7 | )% | ||
| Churn*** | 4.7 | % | 4.0 | % | 70 | bps |
| ** | GREI operations have been classified<br>as a discontinued operation and its results excluded from current and historical results | |||||
| --- | --- | |||||
| *** | Excludes expiration of low<br>margin aggregation deals | |||||
| --- | --- |
2
Segment Highlights
Genie Retail Energy (GRE)
GRE delivered record third quarter gross profit, income from operations, and Adjusted EBITDA, highlighted by strong margins in its retail book. Electric per meter consumption declined moderately versus the year-ago quarter but remained solidly above pre-COVID levels. As in prior quarters, GRE moderated customer acquisition to maximize the value of its portfolio, given the ongoing market volatility.
Sequentially, RCEs and meters served decreased by 11,000 and 9,000 to 251,000 and 271,000, respectively, as of September 30, 2022. Average monthly churn increased to 4.7% from 4.0% in the year-ago quarter and from 4.4% in the second quarter of 2022.
Genie Renewables (GREW)
Genie Solar Energy continued building solar projects for large commercial customers and is on track to continue recognizing additional revenue from its growing backlog of projects.
As previously disclosed, GREW is also building a portfolio of company-owned and/or controlled solar generation fields. In that regard, the Company achieved site control on multiple projects totaling 64MW of generation capacity.
Balance Sheet and Cash Flow Highlights
On September 30, 2022, Genie Energy reported $259.9 million in total assets. Liabilities totaled $97.7 million, and working capital (current assets less current liabilities) totaled $128.5 million. Non-current liabilities were $11.7 million.
For the quarter ended September 30, 2022, net cash provided by operating activities was $25.6 million compared to $6.0 million a year ago.
Strategic Update and Commentary on the Balance of 2022
GRE will continue monitoring the U.S. retail energy markets for customer acquisition opportunities. As volatility either moderates or becomes more palatable to customers, GRE expects to recalibrate its customer acquisition and retention programs to generate growth in its customer book.
On October 12, 2022, Genie announced that, on November 15, 2022, it would redeem 986,400 shares of its Preferred Stock for an aggregate cost of approximately $8.3 million. After this redemption, Genie Energy will have 983,358 shares of Preferred Stock outstanding with an aggregate stated value of $8.4 million.
Stein commented, “We expect energy prices to remain volatile as we head into the Winter months, but we continue to be well-positioned from a risk management position and will return to customer acquisition mode on a market-by-market basis when the risk/reward balance is favorable. Additionally, we expect to receive all approvals necessary to begin construction on our first wholly-owned and operated solar generation project this quarter. Finally, we continue to redeem our preferred stock to enhance our flexibility to invest future cash-flows in value creation initiatives, including pursuing additional growth opportunities in our renewables business.”
3
| Trended Financial Information:* | |||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in $M except for EPS, RCE and Meters)** | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 2019 | 2020 | 2021 | YTD 2022 | ||||||||||||||||||||||
| Total Revenue | $ | 96.3 | $ | 70.1 | $ | 87.7 | $ | 69.2 | $ | 85.9 | $ | 66.9 | $ | 81.3 | $ | 315.3 | $ | 338.4 | $ | 323.3 | $ | 234.2 | |||||||||||
| Genie Retail - US (GRE) | $ | 90.7 | $ | 67.0 | $ | 86.3 | $ | 67.9 | $ | 83.9 | $ | 63.2 | $ | 79.9 | $ | 286.6 | $ | 304.4 | $ | 311.8 | $ | 244.0 | |||||||||||
| Electricity | $ | 73.4 | $ | 61.9 | $ | 82.8 | $ | 54.9 | $ | 59.4 | $ | 53.1 | $ | 73.8 | $ | 246.7 | $ | 270.9 | $ | 273.0 | $ | 186.2 | |||||||||||
| Natural Gas | $ | 17.3 | $ | 5.1 | $ | 3.5 | $ | 12.9 | $ | 24.5 | $ | 10.1 | $ | 6.2 | $ | 39.9 | $ | 33.6 | $ | 38.8 | $ | 40.8 | |||||||||||
| Genie Renewables | $ | 2.5 | $ | 2.3 | $ | 1.3 | $ | 1.3 | $ | 2.0 | $ | 3.8 | $ | 1.4 | $ | 12.1 | $ | 25.2 | $ | 7.5 | $ | 7.2 | |||||||||||
| Gross Margin | 14.4 | % | 27.8 | % | 39.5 | % | 34.3 | % | 54.8 | % | 44.5 | % | 53.1 | % | 26.3 | % | 27.0 | % | 28.3 | % | 51.3 | % | |||||||||||
| Genie Retail - US (GRE) | 16.5 | % | 16.5 | % | 16.5 | % | 16.5 | % | 16.5 | % | 16.5 | % | 16.5 | % | 28.1 | % | 29.0 | % | 29.1 | % | 52.3 | % | |||||||||||
| Genie Renewables | 44.9 | % | 39.4 | % | 34.0 | % | 21.5 | % | 25.7 | % | 21.6 | % | -6.3 | % | 15.7 | % | 8.8 | % | 37.1 | % | 17.5 | % | |||||||||||
| Income (loss) from Operations | $ | (3.2 | ) | $ | 4.0 | $ | 17.5 | $ | 5.8 | $ | 27.0 | $ | 11.8 | $ | 23.5 | $ | 9.8 | $ | 23.1 | $ | 24.1 | $ | 62.3 | ||||||||||
| Operating Margin | -3.3 | % | 5.7 | % | 19.9 | % | 8.4 | % | 31.4 | % | 17.6 | % | 29.0 | % | 3.1 | % | 6.8 | % | 7.5 | % | 26.6 | % | |||||||||||
| Net Income (Loss) Attributable to Discontinued Operations | $ | (3.4 | ) | $ | (2.7 | ) | $ | (10.9 | ) | $ | 28.7 | $ | (1.9 | ) | $ | 29.3 | $ | (1.5 | ) | $ | 9.8 | $ | (0.5 | ) | $ | 11.7 | $ | 25.9 | |||||
| Net Income (Loss) Attributable to GNE Common Stockholders | $ | (2.4 | ) | $ | 5.0 | $ | (2.7 | ) | $ | 27.6 | $ | 17.5 | $ | 33.9 | $ | 18.3 | $ | 9.8 | $ | 11.7 | $ | 27.5 | $ | 69.7 | |||||||||
| Diluted Earnings (Loss) Per Share | $ | (0.09 | ) | $ | 0.19 | $ | (0.10 | ) | $ | 1.06 | $ | 0.67 | $ | 1.30 | $ | 0.70 | $ | 0.10 | $ | 0.44 | $ | 1.06 | $ | 2.65 | |||||||||
| Adjusted EBITDA | $ | (2.4 | ) | $ | 4.7 | $ | 18.1 | $ | 7.3 | $ | 28.0 | $ | 12.2 | $ | 24.5 | $ | 10.1 | $ | 26.6 | $ | 27.8 | $ | 64.7 | ||||||||||
| GRE Retail Performance Metrics | |||||||||||||||||||||||||||||||||
| RCEs | 347 | 330 | 336 | 260 | 260 | 263 | 251 | 307 | 337 | 260 | nm | ||||||||||||||||||||||
| Electricity | 291 | 272 | 276 | 189 | 182 | 185 | 174 | 246 | 284 | 189 | nm | ||||||||||||||||||||||
| Natural Gas | 56 | 58 | 60 | 71 | 78 | 77 | 77 | 61 | 53 | 71 | nm | ||||||||||||||||||||||
| Meters | 373 | 361 | 361 | 285 | 286 | 280 | 271 | 369 | 368 | 285 | nm | ||||||||||||||||||||||
| Electricity | 308 | 292 | 289 | 210 | 209 | 203 | 193 | 296 | 303 | 210 | nm | ||||||||||||||||||||||
| Natural Gas | 65 | 69 | 72 | 75 | 77 | 77 | 77 | 73 | 65 | 75 | nm | ||||||||||||||||||||||
| Gross Adds | 62 | 35 | 46 | 33 | 44 | 34 | 33 | 308 | 212 | 177 | 112 | ||||||||||||||||||||||
| Churn*** | 4.9 | % | 3.8 | % | 4.0 | % | 6.2 | % | 4.5 | % | 4.4 | % | 4.7 | % | 5.3 | % | 4.4 | % | 4.5 | % | 4.5 | % |
nm = not measurable/meaningful
| * | Numbers may not add due to rounding |
|---|---|
| ** | GREI operations have been classified as a discontinued operation<br>and its results excluded from current and historical results |
| --- | --- |
| *** | Excludes expiration of low margin aggregation deals |
| --- | --- |
4
Dividend on Genie Energy Common Stock
Genie Energy’s Board of Directors has declared a dividend of $0.075 per share of Class A and Class B common stock with a record date of November 14, 2022. The dividend will be paid on or about November 21, 2022. The distribution will be treated as an ordinary dividend for income tax purposes.
Earnings Announcement and Supplemental Information
At 8:30 AM Eastern today, Genie’s management will host a conference call to discuss financial and operational results, business outlook, and strategy. The call will begin with management’s remarks, followed by Q&A with investors.
To participate in the conference call, dial 1-877-545-0523 (toll-free from the U.S.) or 1-973-528-0011 (international) and provide the following participant access code: 643413.
Approximately three hours after the call, a call replay will be accessible by dialing 1-877-481-4010 (toll-free from the U.S.) or 1-919-882-2331 (international) and providing the replay passcode: 46970. The replay will remain available through November 21, 2022. A recording of the call also will be available for playback on the “Investors” section of the Genie Energy website.
About Genie Energy Ltd.
Genie Energy Ltd., (NYSE: GNE, GNEPRA) is a retail energy and renewable energy solutions provider. The Genie Retail Energy division supplies electricity, including electricity from renewable resources, and natural gas to residential and small business customers in the United States. The Genie Renewables division is a vertically-integrated provider of commercial, community, and utility-scale solar energy solutions. For more information, visit Genie.com.
In this press release, all statements that are not purely 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> 2021 | |||||
|---|---|---|---|---|---|
| (Audited) | |||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 81,705 | $ | 93,568 | ||
| Restricted cash—short-term | 5,555 | 6,657 | |||
| Marketable equity securities | 471 | 1,336 | |||
| Trade accounts receivable, net of allowance for doubtful accounts of 4,448 and 6,139 at September 30, 2022 and December 31, 2021, respectively | 43,524 | 41,309 | |||
| Inventory | 18,517 | 17,720 | |||
| Prepaid expenses | 7,806 | 4,164 | |||
| Other current assets | 8,156 | 2,354 | |||
| Current assets of discontinued operations | 48,863 | 33,237 | |||
| Total current assets | 214,597 | 200,345 | |||
| Goodwill | 9,998 | 9,998 | |||
| Other intangibles, net | 3,232 | 3,530 | |||
| Deferred income tax assets, net | 5,203 | 5,203 | |||
| Other assets | 12,975 | 9,217 | |||
| Noncurrent assets of discontinued operations | 13,851 | 1,172 | |||
| Total assets | 259,856 | $ | 229,465 | ||
| Liabilities and equity | |||||
| Current liabilities: | |||||
| Trade accounts payable | 18,783 | 14,541 | |||
| Accrued expenses | 41,803 | 38,005 | |||
| Income taxes payable | 17,521 | 9,512 | |||
| Due to IDT Corporation, net | 135 | 532 | |||
| Other current liabilities | 2,150 | 1,732 | |||
| Current liabilities of discontinued operations | 5,731 | 51,970 | |||
| Total current liabilities | 86,123 | 116,292 | |||
| Other liabilities | 2,159 | 1,946 | |||
| Noncurrent liabilities of discontinued operations | 9,502 | 438 | |||
| Total liabilities | 97,784 | 118,676 | |||
| 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 1,970 and 2,322 shares issued and outstanding at September 30, 2022 and December 31, 2021 | 16,743 | 19,743 | |||
| Class A common stock, 0.01 par value; authorized shares—35,000; 1,574 shares issued and outstanding at September 30, 2022 and December 31, 2021 | 16 | 16 | |||
| Class B common stock, 0.01 par value; authorized shares—200,000; 27,003 and 26,620 shares issued and 24,313 and 24,615 shares outstanding at September 30, 2022 and December 31, 2021, respectively | 270 | 266 | |||
| Additional paid-in capital | 145,552 | 143,249 | |||
| Treasury stock, at cost, consisting of 2,690 and 2,005 shares of Class B common stock at September 30, 2022 and December 31, 2021 | (18,852 | ) | (14,034 | ) | |
| Accumulated other comprehensive (loss) income | (3,075 | ) | 3,160 | ||
| Retained earnings (accumulated deficit) | 34,782 | (29,115 | ) | ||
| Total Genie Energy Ltd. stockholders’ equity | 175,436 | 123,285 | |||
| Noncontrolling interests | (13,364 | ) | (12,496 | ) | |
| Total equity | 162,072 | 110,789 | |||
| Total liabilities and equity | 259,856 | $ | 229,465 |
All values are in US Dollars.
6
GENIE ENERGY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)
| Three Months Ended<br> September 30, | Nine Months Ended<br> September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| (in thousands, except per share data) | ||||||||||||
| Revenues: | ||||||||||||
| Electricity | $ | 73,764 | $ | 82,801 | $ | 186,207 | $ | 222,005 | ||||
| Natural gas | 6,153 | 3,516 | 40,754 | 25,878 | ||||||||
| Other | 1,368 | 1,338 | 7,189 | 6,177 | ||||||||
| Total revenues | 81,285 | 87,655 | 234,150 | 254,060 | ||||||||
| Cost of revenues | 38,142 | 53,049 | 114,082 | 186,152 | ||||||||
| Gross profit | 43,143 | 34,606 | 120,068 | 67,908 | ||||||||
| Operating expenses and losses: | ||||||||||||
| Selling, general and administrative (i) | 19,605 | 17,143 | 57,796 | 49,628 | ||||||||
| Income from operations | 23,538 | 17,463 | 62,272 | 18,280 | ||||||||
| Interest income | 194 | 8 | 259 | 28 | ||||||||
| Interest expense | (33 | ) | (99 | ) | (135 | ) | (311 | ) | ||||
| Unrealized gain (loss) on marketable equity securities and investments | 57 | (5,312 | ) | (742 | ) | 1,710 | ||||||
| Gain on sale of subsidiary | — | — | — | 4,226 | ||||||||
| Other income (loss), net | 156 | 35 | (712 | ) | 482 | |||||||
| Income before income taxes | 23,912 | 12,095 | 60,942 | 24,415 | ||||||||
| Provision for income taxes | (6,482 | ) | (3,498 | ) | (16,791 | ) | (7,149 | ) | ||||
| Net income from continuing operations | 17,430 | 8,597 | 44,151 | 17,266 | ||||||||
| Loss (income) from discontinued operations, net of taxes | (1,459 | ) | (10,914 | ) | 25,929 | (16,991 | ) | |||||
| Net income (loss) | 15,971 | (2,317 | ) | 70,080 | 275 | |||||||
| Net (loss) income attributable to noncontrolling interests | (2,797 | ) | (31 | ) | (1,056 | ) | (821 | ) | ||||
| Net income (loss) attributable to Genie Energy Ltd. | 18,768 | (2,286 | ) | 71,136 | 1,096 | |||||||
| Dividends on preferred stock | (454 | ) | (370 | ) | (1,448 | ) | (1,111 | ) | ||||
| Net income (loss) attributable to Genie Energy Ltd. common stockholders | $ | 18,314 | $ | (2,656 | ) | $ | 69,688 | $ | (15 | ) | ||
| Amounts attributable to Genie Energy Ltd. common stockholders | ||||||||||||
| Income from continuing operations | $ | 22,259 | $ | 8,643 | $ | 48,368 | $ | 17,303 | ||||
| (Loss) income from discontinued operations | (3,945 | ) | (11,299 | ) | 21,320 | (17,318 | ) | |||||
| Net income (loss) attributable to Genie Energy Ltd. common stockholders | $ | 18,314 | $ | (2,656 | ) | $ | 69,688 | (15 | ) | |||
| Earnings per share attributable to Genie Energy Ltd. common stockholders: | ||||||||||||
| Basic: | ||||||||||||
| Income from continuing operations | $ | 0.88 | $ | 0.34 | $ | 1.89 | $ | 0.67 | ||||
| (Loss) income from discontinued operations | (0.15 | ) | (0.44 | ) | 0.83 | (0.67 | ) | |||||
| Net income (loss) attributable to Genie Energy Ltd. common stockholders | $ | 0.73 | $ | (0.10 | ) | $ | 2.72 | $ | (0.00 | ) | ||
| Diluted | ||||||||||||
| Income from continuing operations | $ | 0.85 | $ | 0.34 | $ | 1.84 | $ | 0.67 | ||||
| (Loss) income from discontinued operations | (0.15 | ) | (0.44 | ) | 0.81 | (0.67 | ) | |||||
| Net income (loss) attributable to Genie Energy Ltd. common stockholders | $ | 0.70 | $ | (0.10 | ) | $ | 2.65 | $ | 0.00 | |||
| Weighted-average number of shares used in calculation of earnings per share: | ||||||||||||
| Basic | 25,233 | 25,514 | 25,623 | 25,867 | ||||||||
| Diluted | 26,205 | 25,514 | 26,261 | 25,867 | ||||||||
| Dividends declared per common share | $ | 0.075 | $ | 0.225 | $ | — | $ | — | ||||
| (i) Stock-based compensation included in selling, general and administrative expenses | $ | 713 | $ | 504 | $ | 2,232 | $ | 1,597 |
7
GENIE ENERGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
| Nine Months Ended<br> September 30, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| (in thousands) | ||||||
| Operating activities | ||||||
| Net income | $ | 70,080 | $ | 275 | ||
| Net income (loss) from discontinued operations, net of tax | 25,929 | (16,991 | ) | |||
| Net income from continuing operations | 44,151 | 17,266 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||
| Depreciation and amortization | 288 | 343 | ||||
| Deferred income taxes | — | 2,880 | ||||
| Provision for doubtful accounts receivable | 2,116 | 1,372 | ||||
| Unrealized loss (gain) marketable equity securities and investment | 742 | (1,710 | ) | |||
| Stock-based compensation | 2,232 | 1,597 | ||||
| Equity in the net loss (income) in equity method investees | 91 | (215 | ) | |||
| Gain on sale of subsidiaries | — | (4,226 | ) | |||
| Change in assets and liabilities: | ||||||
| Trade accounts receivable | (4,331 | ) | (12,427 | ) | ||
| Inventory | (797 | ) | (6,718 | ) | ||
| Prepaid expenses | (3,641 | ) | (1,713 | ) | ||
| Other current assets and other assets | (6,084 | ) | (8,829 | ) | ||
| Trade accounts payable, accrued expenses and other current liabilities | 2,570 | 7,337 | ||||
| Due to IDT Corporation | (398 | ) | (148 | ) | ||
| Income taxes payable | 8,009 | 4,263 | ||||
| Net cash provided by (used in) operating activities of continuing operations | 44,948 | (928 | ) | |||
| Net cash used in discontinued operations | 8,150 | 1,014 | ||||
| Net cash provided by operating activities | 53,098 | 86 | ||||
| Investing activities | ||||||
| Capital expenditures | (1,058 | ) | (158 | ) | ||
| Proceeds from the sale of subsidiary, net of cash disposed | — | 4,550 | ||||
| Investment in notes receivables with related party | (1,505 | ) | — | |||
| Purchase of marketable equity securities and other investments | (1,300 | ) | (1,750 | ) | ||
| Repayment of notes receivable | 19 | 14 | ||||
| Net cash (used in) provided by investing activities of continuing operations | (3,844 | ) | 2,656 | |||
| Net cash used in investing activities of discontinued operations | (43,941 | ) | — | |||
| Net cash (used in) provided by investing activities | (47,785 | ) | 2,656 | |||
| Financing activities | ||||||
| Dividends paid to Class A and Class B common stock stockholders | (1,104 | ) | — | |||
| Dividends paid to preferred stock stockholders | (5,790 | ) | (1,111 | ) | ||
| Repurchases of Class B common stock from employees | (409 | ) | (236 | ) | ||
| Repurchase of Class B common stock | (4,414 | ) | (3,847 | ) | ||
| Redemption of preferred stock | (3,000 | ) | — | |||
| Net cash used in by financing activities | (14,717 | ) | (5,194 | ) | ||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (15 | ) | (221 | ) | ||
| Net decrease in cash, cash equivalents, and restricted cash | (9,419 | ) | (2,673 | ) | ||
| Cash, cash equivalents, and restricted cash at beginning of period | 102,149 | 43,184 | ||||
| Cash, cash equivalents and restricted cash (including discontinued operations) at end of the period | 92,730 | 40,511 | ||||
| Less: Cash of discontinued operations at end of period | 5,470 | 3,910 | ||||
| Cash, cash equivalents, and restricted cash (excluding discontinued operations) at end of period | $ | 87,260 | $ | 36,601 |
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Reconciliation of Non-GAAP Financial Measure for the Third Quarter2022
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.
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Stock-based compensation recognized by Genie Energy and other companies may not be comparable because of the various valuation methodologies, subjective assumptions and the variety of types of awards that are permitted under GAAP. Stock-based compensation is excluded from Genie’s calculation of Adjusted EBITDA because management believes this allows investors to make more meaningful comparisons of the operating results of Genie’s core business with the results of other companies. However, stock-based compensation will continue to be a significant expense for Genie Energy for the foreseeable future and an important part of employees’ compensation that impacts their performance.
Impairment of goodwill is a component of (loss) income from operations that is excluded from the calculation of Adjusted EBITDA. The impairment of goodwill is primarily dictated by events and circumstances outside the control of management that trigger an impairment analysis. While there may be similar charges in other periods, the nature and magnitude of these charges can fluctuate markedly and do not reflect the performance of Genie’s continuing operations.
Following are the reconciliations of Adjusted EBITDA on a consolidated basis to its most directly comparable GAAP measure. Adjusted EBITDA is reconciled to net income for Genie Energy on a consolidated basis and for GRE.
| Non-GAAP Reconciliation - Consolidated Adjusted EBITDA | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 2020 | 2021 | 9 Mos 2022 | ||||||||||||||
| Income (loss) from Operations | $ | (3.2 | ) | $ | 4.0 | $ | 17.5 | $ | 5.8 | $ | 27.0 | $ | 11.8 | $ | 23.5 | $ | 23.1 | $ | 24.1 | $ | 62.3 | ||
| Add back | |||||||||||||||||||||||
| Depreciation and Amortization | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 1.1 | $ | 0.4 | $ | 0.3 | |||
| Non-Cash Compensation | $ | 0.6 | $ | 0.5 | $ | 0.5 | $ | 1.2 | $ | 0.8 | $ | 0.7 | $ | 0.7 | $ | 1.0 | $ | 2.8 | $ | 2.2 | |||
| Impairment | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 0.0 | $ | 1.4 | $ | 0.0 | $ | 0.0 | |||
| Equity in the Loss of AMSO/GEUK | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | 0.2 | $ | 0.1 | $ | (0.4 | ) | $ | 0.2 | $ | 0.1 | $ | 0.4 | $ | (0.1 | ) | |
| Adjusted EBITDA | $ | (2.4 | ) | $ | 4.7 | $ | 18.1 | $ | 7.3 | $ | 28.0 | $ | 12.2 | $ | 24.5 | $ | 26.6 | $ | 27.8 | $ | 64.7 | ||
| Non-GAAP Reconciliation - GRE | |||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||
| (in millions) | 1Q22 | 2Q22 | 3Q22 | ||||||||||||||||||||
| Income (loss) from Operations | $ | 30.2 | $ | 14.4 | $ | 27.4 | |||||||||||||||||
| Add back | |||||||||||||||||||||||
| Depreciation and Amortization | $ | 0.1 | $ | 0.1 | $ | 0.1 | |||||||||||||||||
| Stock-based Compensation | $ | 0.2 | $ | 0.2 | $ | 0.2 | |||||||||||||||||
| Impairment | $ | 0.0 | $ | 0.0 | $ | 0.0 | |||||||||||||||||
| Equity in the income of equity method investee | $ | 0.0 | $ | 0.0 | $ | 0.0 | |||||||||||||||||
| Adjusted EBITDA | $ | 30.5 | $ | 14.7 | $ | 27.7 |
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