Genie Energy Q1 2023 Earnings Report

Genie Energy EPS Results

• Actual EPS: $0.42
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Genie Energy Revenue Results

• Actual Revenue: $105.28 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Genie Energy Announcement Details

• Quarter: Q1 2023
• Date: 5/8/2023
• Time: N/A
• Conference Call Date: Monday, May 8, 2023
• Conference Call Time: 8:30AM ET

Genie Energy (NYSE:GNE), through its subsidiaries, engages in the supply of electricity and natural gas to residential and small business customers in the United States and internationally. It operates in two segments, GRE and Genie Renewables. The company also develops, constructs, and operates solar energy projects for commercial and industrial customers, as well as its own portfolio; provides energy brokerage and advisory services; markets community solar energy solutions; and manufactures and distributes solar panel, as well as engages in solar installation design and project management activities. Genie Energy Ltd. was incorporated in 2011 and is headquartered in Newark, New Jersey.

Genie Energy Q1 2023 Earnings Call Transcript

[Operator]

Good morning, and welcome to Genie Energy's First Quarter 2023 Earnings Call. All participants will be in listen only mode. After today's presentation by Genie Energy's management, There will be an opportunity to ask questions. Please note this event is being recorded. I will now turn the call over to Brian Siegel of Hayden IR.

[Speaker 1]

Thank you, operator. With me today are Michael Stein, Genie Energy's CEO and Avi Golden, Genie Energy's CFO, We will discuss operational and financial results. Any forward looking statements made during this conference call, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those statements. These risks and uncertainties include, but are not limited to, Notes discussed in the reports that we file periodically with the SEC. Genius assumes no obligation to update any forward looking statements that we have made or may make management makes reference to adjusted EBITDA, a non GAAP measure.

[Speaker 1]

Management believes that its measure of adjusted EBITDA provides useful information to both management and investors That supplement our core operating results, our earnings release, which is posted on the genie.comir page, includes a reconciliation of consolidated adjusted EBITDA I will now turn the conference over to Michael Stein, Genie's Chief Executive Officer.

[Speaker 2]

Thank you, Brian. Welcome to Genie Energy's Q1 earnings call. As those of you who have been following us know, In 2022, we achieved remarkable financial results. Those results were driven by our ability to be nimble with customer acquisition and renewals, While our risk management team did an excellent job managing market volatility. It was a banner year, but it came at a cost.

[Speaker 2]

Throughout 2021 2022, we saw the size of our customer base shrink as due to extraordinary volatility in the wholesale energy markets, We scaled back our customer acquisition efforts. However, during that period, we repeatedly stated that when the volatility subsided, we would be ready to return to growth. In the Q1 of 2023, we delivered on that promise. Allow me to elaborate. In the Q1, our REP business, GRE increased its meter base by 63,000, an increase of 22% over last year, And the customer base grew by 92,000 RCEs, a 35% increase from last year.

[Speaker 2]

With this increase, in just one quarter, we were able to climb to within 3,000 RCEs of the highest domestic RCE count in the company's history. Meanwhile, our SG and A expense decreased compared to the year ago quarter. Financial results were also excellent. While not at the level of last year's Q1's extraordinary performance, we were able to deliver the next best Q1 bottom line results in GRE's history. Looking ahead, we expect solid growth and strong financial results to continue in the 2nd quarter.

[Speaker 2]

GE Renewables or GRU increased revenue reflecting our increased services to third party customers. Additionally, we expanded our resource investment to support our vertically integrated strategy to develop and own solar power generation projects, Which led to negative adjusted EBITDA for the segment. Of note, we've moved closer to notice to proceed or NTP With construction on several projects and after the end of the quarter, we broke ground on our first project. We are also moving toward gaining site control on more potential In this quarter's earnings release, we are disclosing our current development pipeline, consists of approximately 78 megawatts across 10 projects at different stages of the development process. We intend to continue updating that table on a quarterly basis As we continue to win new projects and move them forward through the development cycle.

[Speaker 2]

We are excited about this business opportunity and to drive significant value in the future. Transitioning to our 2023 outlook, we are on target to generate consolidated adjusted EBITDA in the $40,000,000 to $50,000,000 Well above our pre-twenty 22 normalized $25,000,000 to $30,000,000 range. In addition, we expect to continue to significantly grow our customer base Organically, looking to the 2nd quarter with wholesale energy costs stabilized at lower levels relative to the past year, we continue to see an outstanding arbitrage opportunity versus The incumbent utilities, we will continue to exploit this by adding customers, albeit likely at a lower growth rate than we saw in the Q1. Looking to the full year for GRU, we expect to complete construction on several Genie owned projects, while continuing to evaluate a large pipeline of potential opportunities. As a result, we intend for Gru to become a major national player in the solar generation and consultative energy spaces in years to come.

[Speaker 2]

In summary, we continue to deliver strong results in the Q1 and have taken several steps forward in our efforts to generate long term growth in our emerging renewables businesses. And finally, we continue to fulfill our commitment to return capital to our shareholders. Now, I'll turn the call over to Avi for his discussion of our Q1 financial results.

[Speaker 3]

Thank you, Michael, and thanks to everyone on the call for joining us this morning. My remarks today cover our financial results for the 3 months ended March 31, 2023. Throughout my remarks, I'll primarily compare Q1 2023 results to the Q1 of 2022 To remove from consideration the seasonal factors that are characteristic of our Retail Energy businesses. The Q1 is typically characterized by seasonally elevated levels Per meter electricity and gas consumption as it includes the year's peak heating months in most of our RAP service areas. Genie's Q1 financial results reflected our retail business' very strong underlying fundamentals and continued investment to build out our renewables platform.

[Speaker 3]

Last year, amid the elevated level of volatility in global energy markets, we disclosed that we've generated stronger than new home margins at GRE By moderating our customer acquisition engine to reduce consumption, in addition to lowering our customer acquisition spend, this enabled us to monetize a portion of our forward commodity hedges and reduce our effective supply cost, but also have the impact of reducing the size of our customer book. We said at the time that we'd work to rebuild our customer base when market conditions warranted. And we were, as Michael discussed, remarkably successful in the Q1, Adding 92,000 RCEs, we will accomplish this without increasing acquisition expense by aggressively pursuing lower cost marketing channels. From a balance sheet perspective, our strong operating results this quarter enabled us to further fortify our financial position even as we continue to return value to stock through quarterly common stock dividends and redemption of our preferred stock. Now let's look at the quarter's results in more detail.

[Speaker 3]

1st quarter consolidated revenue increased 23 percent to $105,000,000 from $86,000,000 in the year ago quarter, driven by our retail businesses. At GRE, 1st quarter revenue increased by 21 percent to $101,000,000 led by a 25% increase in electricity sales to 74,000,000 Average revenue per kilowatt sold increased by 20%, reflecting higher market rates across virtually all of our retail electricity markets. Although the mild winter contributed to a 10% reduction in per meter electricity consumption, our meter growth helped boost overall kilowatt hours sold by 4.5% compared to the year ago quarter. Gas sales increased 10% to $27,000,000 on an 11% increase in revenue per thermos sold. At Renewables, our Q1 revenue increased to $3,900,000 from $2,000,000 primarily reflecting increased revenue from our community solar marketing business, Supplemented by sales growth at Diversigy, our energy brokerage business, and on a consolidated basis in the Q1 decreased 29% to $33,000,000 from $47,000,000 in the Q1 of 2022.

[Speaker 3]

At GRE, gross profit decreased to $33,000,000 from $47,000,000 and gross margin decreased to 32% compared to 56%, reflecting the extraordinary nature of the year ago quarter's environment that I discussed earlier. Consolidated SG and A increased 9% to $22,000,000 from $20,000,000 At GRE, SG and A decreased to $16,100,000 from $16,400,000 Although we acquired 85,000 more meters this quarter than year ago period, much of that growth was generated through lower cost acquisition channels. We expect to continue to build our book as we head further into the year in a more stable and normalized market, and we expect that our per meter acquisition expense will increase. Corporate SG and A increased to $4,000,000 from $2,700,000 primarily driven by non routine expenses incurred in the wind down of our former international operations with the residual impact of those operations now included within corporate. Consolidated income from operations decreased to $11,300,000 in the 1st quarter $27,000,000 and consolidated adjusted EBITDA decreased to $12,400,000 from $28,000,000 reflecting the outsized performance in the Q1 of 2022.

[Speaker 3]

At Genie Retail, income from operations was $16,400,000 and adjusted EBITDA was $16,800,000 which reflects a strong first quarter result, albeit below last year's records of $30,200,000 $30,500,000 respectively. Junior Renewables income from operations and adjusted EBITDA negative $1,100,000 and negative $857,000 respectively, compared to negative $478,000 and negative $468,000 in the year ago period. The change reflects the increase in SG and A as we invested to grow our renewables platform and expand our operational capabilities. Genie's diluted EPS was $0.54 per share on net income attributable to Genie common stockholders of $14,300,000 compared to EPS $0.67 on net income attributable to Genie common stockholders of $17,500,000 in the year ago quarter. Net income in the quarter was positively impacted by onetime gains discontinued operations and at corporate.

[Speaker 3]

Turning now to our balance sheet. At March 31, cash, restricted cash and Equity Securities totaled $113,700,000 an increase from $105,100,000 at December 31st last year. Working capital was $142,400,000 and non current liabilities totaled just $2,600,000 To wrap up, We kicked off 2023 with a strong Q1, highlighted by the financial performance at GRE, including robust margins and impressive customer growth. We expect to continue to leverage our strong balance sheet to build our retail book and pursue other growth opportunities in both our retail and renewables businesses in the coming quarters, While further strengthening our balance sheet and continuing to return value to holders of our common stock. Now operator, back to you for Q and A.

[Operator]

We will now begin the question and answer This concludes our question and answer session and Conference Call. Thank you for attending today's presentation. You may now disconnect.