PR Newswire | Aug 5, 2021 07:31AM EDT

08/05 06:30 CDT

Genie Energy Announces Second Quarter 2021 Results28% revenue increase driven by customer growth and the consolidation of UK results into Genie Retail Energy InternationalGenie Retail US - sustained benefits from elevated consumption even as COVID-19 related door-to-door channel restrictions relaxExploring separation of Genie Retail Energy International through a potential spin-off NEWARK, N.J., Aug. 5, 2021

NEWARK, N.J., Aug. 5, 2021 /PRNewswire/ --Genie Energy, Ltd. (NYSE: GNE, GNEPRA), a leading retail energy provider in deregulated markets in the U.S. and Europe and a provider of renewables solutions in the U.S., today announced results for its second quarter - the three months ended June 30, 2021.

"We generated very strong net income and global customer base expansion in the second quarter driven by organic meter growth in our international operations as they moved towards profitability," said Michael Stein, Chief Executive Officer. "In the U.S., we were encouraged by the durability of the elevated consumption levels we've experienced in recent quarters and by several states moving to re-open for door-to-door marketing, an important sales channel for meter acquisition."

Second Quarter 2021 Highlights

* Revenue of $97.7 million versus $76.1 million in the year-ago quarter; * Gross profit and gross margin of $23.8 million and 24.3%, respectively, versus $19.5 million and 25.6%, respectively, in the year-ago quarter; * Income from operations and operating margin of $1.4 million and 1.4%, respectively, versus $2.7 million and 3.6%, respectively, in the year-ago quarter; * Net income attributable to GNE common stockholders and earnings per share (EPS) of $5.0 million and $0.19 per diluted share versus $1.6 million and $0.06, respectively, in the year-ago quarter. Net income in the second quarter included a gain on the sale of the operations in Japan. * Adjusted EBITDA1 of $3.1 million versus $3.5 million in the year-ago quarter; * Re-purchased 393,000 shares of GNE common stock.

Select Financial Metrics: Q2 2021 compared to Q2 2020*

(in $M except for EPS) Q221 Q220 Change

Total Revenue $97.7 $76.1 28.4%

Genie Retail - US (GRE) $67.0 $66.5 0.8%

Electricity $61.9 $61.1 1.3%

Natural Gas $5.1 $5.4 (5.8)%

Genie Retail - International (GREI) $28.4 $5.0 463.5%

Electricity $21.4 $4.8 343.4%

Natural Gas $6.7 $0.0 nm

Genie Renewables $2.3 $4.6 (48.7)%

Gross Margin 24.3% 25.6% (130bp)

Genie Retail - US (GRE) 27.4% 25.7% 170bp

Genie Retail - International (GREI) 15.9% 38.0% (2210bp)

Genie Renewables 39.4% 11.4% 2800bp

Income from Operations $1.4 $2.7 (50.3)%

Operating Margin 1.4% 3.6% -370bp

Net Income Attributable to Genie Energy Ltd. Common Stockholders $5.0 $1.6 213.7%

Diluted Earnings Per Share $0.19 $0.06 $0.13

Adjusted EBITDA^1 $3.1 $3.5 (11.5)%

Cash Flow from Operating Activities $4.1 $16.4 (75.0)%

nm = not measurable/meaningful

*Numbers may not add due to rounding

Select Business Metrics: 2021 versus 2020 as of 6/30/21

Units in 1000s Q221 Q220 Change

Retail Performance Metrics:

Retail Customer Equivalents (RCE) 436 418 4.3%

Genie Retail - US (GRE) 330 343 (3.8)%

Electricity 272 288 (5.6)%

Natural Gas 58 55 5.5%

Genie Retail - International (GREI) 106 76 39.5%

Electricity 82 55 49.1%

Natural Gas 24 21 14.3%

Meters in 1000s units 554 522 6.1%

Genie Retail - US (GRE) 361 374 (3.5)%

Electricity 292 311 (6.1)%

Natural Gas 69 64 7.8%

Genie Retail - International (GREI) 193 147 31.3%

Electricity 141 105 34.3%

Natural Gas 52 43 20.9%

GRE Average Monthly Churn - Meters

Gross Sales 35 40 (12.5)%

Churn 3.8% 3.9% 10bps

Genie Retail Energy (GRE) delivered solid results for the quarter, driven by continued strong overall consumption within its residential electric meter base. While gross meter acquisitions have not yet returned to pre-COVID levels, churn remained below pre-COVID levels due to remaining restrictions on door-to-door marketing across the industry that lead to fewer customers switching suppliers.

Genie Retail Energy International's (GREI) strong revenue growth was driven by a combination of organic meter growth and the full consolidation of results related to the purchase of the non-controlled interest in Orbit Energy in October 2020, which previously had not been consolidated. This strong growth came despite the revenue impact from the sale of the Company's Japanese operations early in the second quarter of 2021.

Genie Renewables (formerly Genie Energy Services) reported increased gross margin as the segment shifted to higher-margin solar projects. Revenue decreased due to the fulfillment of a large order in the prior year's quarter.

1Adjusted EBITDA for all periods presented is a non-GAAP measure intended to provide useful information that supplements the core operating results in accordance with GAAP of Genie Energy or the relevant segment. Please refer to the Reconciliation of Non-GAAP Financial Measures at the end of this release for an explanation of Adjusted EBITDA, as well as for reconciliations to its most directly comparable GAAP measures.

Trended Financial Information:*

(in $M except for EPS, RCE and Meters) Q120 Q220 Q320 Q420 Q121 Q221 2019 2020 YTD 2021

Total Revenue $104.1 $76.1 $96.3 $102.9 $135.3 $97.7 $315.3 $379.3 $233.0

Genie Retail - US (GRE) $79.1 $66.5 $88.9 $69.9 $90.7 $67.0 $286.6 $305.3 $157.6

Electricity $63.1 $61.1 $86.2 $60.5 $73.4 $61.9 $246.7 $271.7 $135.3

Natural Gas $16.1 $5.4 $2.7 $9.4 $17.3 $5.1 $39.9 $33.6 $22.4

Genie Retail - International (GREI) $6.7 $5.0 $5.8 $31.8 $42.2 $28.4 $16.6 $49.6 $70.6

Electricity $6.9 $4.8 $5.6 $23.4 $30.3 $21.4 $16.4 $40.7 $51.7

Natural Gas $0.0 $0.0 $0.0 $8.3 $11.8 $6.7 $0.0 $8.3 $18.5

Genie Renewables $18.0 $4.6 $1.6 $1.1 $2.5 $2.3 $12.1 $24.4 $4.8

Gross Margin 27.8% 25.6% 28.3% 21.4% 12.9% 24.3% 26.3% 25.8% 17.7%

Genie Retail - US (GRE) 43.7% 25.7% 29.0% 25.6% 16.5% 27.4% 28.1% 28.9% 20.2%

Genie Retail - International (GREI) -4.5% 38.0% 19.0% 13.8% 3.3% 15.9% 1.8% 14.5% 8.5%

Genie Renewables 8.9% 11.4% 27.1% -29.0% 44.9% 39.4% 15.7% 9.4% 42.2%

Income (loss) from Operations $9.2 $2.7 $8.5 ($1.1) ($6.6) $1.4 $9.8 $19.3 ($5.2)

Operating Margin 8.8% 3.6% 8.8% -1.1% -4.9% 1.4% 3.1% 5.1% -2.2%

Net income attributable to Genie Energy Ltd. common stockholders $5.5 $1.6 $6.4 ($1.7) ($2.4) $5.0 $2.7 $11.7 $2.6

Diluted Earnings (Loss) Per Share $0.20 $0.06 $0.24 ($0.06) ($0.09) $0.19 $0.10 $0.44 $0.10

Cash Flow from Operating Activities ($2.7) $16.3 $10.4 ($0.9) ($10.0) $4.1 $15.8 $23.1 ($5.9)

Retail Performance Metrics:

Retail Customer Equivalents (RCE) in 1000s 398 418 437 435 446 436 nm nm nm

Genie Retail - US (GRE) 330 343 350 337 347 330 nm nm nm

Electricity 272 288 294 284 291 272 nm nm nm

Natural Gas 58 55 56 53 56 58 nm nm nm

Genie Retail - International (GREI) 69 76 87 98 98 106 nm nm nm

Electricity 50 55 66 76 77 82 nm nm nm

Natural Gas 19 21 22 21 21 24 nm nm nm

Meters in 1000s units 520 522 543 547 555 554 nm nm nm

Genie Retail - US (GRE) 384 374 375 368 373 361 nm nm nm

Electricity 313 311 309 303 308 292 nm nm nm

Natural Gas 71 64 67 65 65 69 nm nm nm

Genie Retail - International (GREI) 136 147 167 179 182 193 nm nm nm

Electricity 96 105 121 132 135 141 nm nm nm

Natural Gas 40 43 46 47 47 52 nm nm nm

Average Monthly Churn - Meters

Genie Retail - US (GRE)

Gross Sales 69 40 44 59 60 35 308 212 95

Churn 4.3% 3.9% 3.7% 5.3% 4.9% 3.8% 5.3% 4.4% 4.3%

nm = not measurable/meaningful

*Numbers may not add due to rounding

Strategic Update

Genie is conducting a strategic review of its businesses in part to address the different investment profiles of its U.S. and European businesses and to enhance shareholder value across its operations. As one element of this review, the Company is contemplating opportunities to separate GREI from GRE and Genie Renewables through a spin-off of GREI into a separate, publicly-traded entity. If a transaction is consummated, Genie believes that shareholders could benefit from the potential spin-off of GREI with adequate capital and a dedicated management team empowered to gain scale and accelerate growth in its current and prospective European markets. The remaining US operations, GRE and Genie Renewables would then be positioned to accelerate their respective growth plans. Management will provide additional details on its strategic review during today's earnings conference call.

Q2 2021 Commentary from Michael Stein, CEO

"Genie delivered a very strong second quarter with robust top and bottom-line results. As we look to the second half of the year, we are focused on delivering strong cash flow and bottom-line performance. We are encouraged by the improvement in the marketing environment in the US and are confident that we can return to our previous levels of meter growth once all sales channels are fully re-opened. Internationally, following the successful sale of our Japanese operations, we expect our remaining business to continue to drive strong growth while demonstrating improving profitability, which we believe makes GREI an attractive investment on a stand-alone basis. We expect to have more clarity on strategic direction as our plans are finalized."

Earnings Announcement and Supplemental Information

Genie's earnings release will be filed on Form 8-K and posted on the Genie investor relations website (Genie Investor Relations Page) at approximately 7:30 a.m. Eastern on August 5, 2021. Management will host an earnings conference call beginning at 8:30 a.m. Eastern. Management's presentation of the results, outlook and strategy will be followed by Q&A with investors.

To participate in the conference call, dial 1-877-545-0320 (toll-free from the US) or 1-973-528-0016 (international) and request the Genie Energy conference call.

Approximately three hours after the call, a call replay will be accessible by dialing 1-877-481-4010 (toll-free from the US) or 1-919-882-2331 (international) and providing the replay PIN: 42242. The replay will remain available through August 19, 2021. 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 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 Renewables division comprises Genie Solar Energy, a provider of end-to-end customized solar solutions primarily for commercial customers, Diversegy, a commercials energy consulting business, CityCom Solar, a provider of community solar energy solutions and Genie's interest in Prism Solar, a supplier of solar panels and solutions. For more information, visit Genie.com.

In this press release, all statements that are not purely about 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-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous 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"), which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. We are under no obligation, and expressly disclaim any obligation, to update the forward-looking statements in this press release, whether as a result of new information, future events or otherwise.

GENIE ENERGY LTD.CONSOLIDATED BALANCE SHEETS(in thousands, except per share amounts)



June 30, December 31, 2021 2020

(Unaudited)

Assets

Current assets:

Cash and cash equivalents $ 31,446 $ 36,913

Restricted cash-short-term 6,121 6,271

Marketable equity securities 13,370 5,089

Trade accounts receivable, net of allowance fordoubtful accounts of $11,268 and $8,793 at June 30, 59,659 60,7782021 and December 31, 2020, respectively

Inventory 15,653 16,930

Prepaid expenses 5,385 4,633

Other current assets 4,956 3,206

Total current assets 136,590 133,820

Property and equipment, net 269 259

Goodwill 26,041 25,929

Other intangibles, net 9,177 11,645

Investment in joint venture 936 -

Deferred income tax assets, net 1,908 4,882

Other assets 10,205 10,804

Total assets $ 185,126 $ 187,339

Liabilities and equity

Current liabilities:

Loan payable $ - $ 1,453

Trade accounts payable 36,141 43,005

Accrued expenses 49,104 42,762

Contract liability 5,217 5,609

Income taxes payable 2,518 1,893

Due to IDT Corporation, net 304 257

Other current liabilities 2,011 2,494

Total current liabilities 95,295 97,473

Other liabilities 3,331 3,787

Total liabilities 98,626 101,260

Commitments and contingencies

Equity:

Genie Energy Ltd. stockholders' equity:

Preferred stock, $0.01 par value; authorizedshares-10,000:

Series 2012-A, designated shares-8,750; atliquidation preference, consisting of 2,322 shares 19,743 19,743issued and outstanding at June 30, 2021 andDecember 31, 2020

Class A common stock, $0.01 par value; authorizedshares-35,000; 1,574 shares issued and outstanding 16 16at June 30, 2021 and December 31, 2020

Class B common stock, $0.01 par value; authorizedshares-200,000; 26,106 and 25,966 shares issued and 261 26024,393 and 24,646 shares outstanding at June 30,2021 and December 31, 2020, respectively

Additional paid-in capital 142,056 140,746

Treasury stock, at cost, consisting of 1,713 and1,320 shares of Class B common stock at June 30, (12,274) (9,839)2021 and December 31, 2020, respectively

Accumulated other comprehensive income 3,178 3,827

Accumulated deficit (54,017) (56,658)

Total Genie Energy Ltd. stockholders' equity 98,963 98,095

Noncontrolling interests (12,463) (12,016)

Total equity 86,500 86,079

Total liabilities and equity $ 185,126 $ 187,339

GENIE ENERGY LTD.CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)



Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020

(in thousands, except per share data)

Revenues:

Electricity $ 83,314 $ 65,906 $ 186,985 $ 135,877

Natural gas 11,776 5,396 40,848 21,467

Other 2,616 4,773 5,214 22,782

Total revenues 97,706 76,075 233,047 180,126

Cost of revenues 73,940 56,588 191,752 131,734

Gross profit 23,766 19,487 41,295 48,392

Operating expenses and losses:

Selling, general and administrative (i) 22,410 15,956 46,514 35,456

Impairment of assets - 801 - 993

Income (loss) from operations 1,356 2,730 (5,219) 11,943

Interest income 10 20 20 143

Interest expense (103) (58) (212) (175)

Equity in the net income (loss) in equity method investees, net 53 (1,173) 164 (1,552)

Unrealized gain on marketable equity securities and investments 2,915 - 7,022 -

Gain on sale of subsidiary 4,226 - 4,226 -

Other (loss) income, net (14) (52) 283 98

Income before income taxes 8,443 1,467 6,284 10,457

Provision for income taxes (3,158) (587) (3,693) (3,156)

Net income 5,285 880 2,591 7,301

Net loss attributable to noncontrolling interests (82) (1,083) (790) (494)

Net income attributable to Genie Energy Ltd. 5,367 1,963 3,381 7,795

Dividends on preferred stock (370) (370) (740) (740)

Net income attributable to Genie Energy Ltd. common stockholders $ 4,997 $ 1,593 $ 2,641 $ 7,055

Earnings per share attributable to Genie Energy Ltd. common stockholders:

Basic $ 0.19 $ 0.06 $ 0.10 $ 0.27

Diluted $ 0.19 $ 0.06 $ 0.10 $ 0.26

Weighted-average number of shares used in calculation of earnings per share:

Basic 25,804 26,087 25,903 26,098

Diluted 26,227 26,853 26,446 26,804

Dividends declared per common share $ - $ 0.085 $ - $ 0.160

(i) Stock-based compensation included in selling, general and administrative $ 559 $ 401 $ 1,148 $ 884expenses

GENIE ENERGY LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

Six Months Ended June 30,

2021 2020

(in thousands)

Operating activities

Net income $ 2,591 $ 7,301

Adjustments to reconcile net income to net cash (usedin) provided by operating activities:

Depreciation and amortization 2,446 1,548

Impairment of assets - 993

Deferred income taxes 2,974 2,537

Provision for doubtful accounts receivable 2,539 1,215

Unrealized gain on marketable equity securities and (7,022) -investment

Stock-based compensation 1,148 884

Equity in the net (income) loss in equity method (164) 1,552investees

Gain on sale of subsidiary (4,226) -

Loss on sale of assets held for sale - 78

Gain on deconsolidation of subsidiaries - (98)

Change in assets and liabilities:

Trade accounts receivable (3,157) 6,847

Inventory 1,277 1,930

Prepaid expenses (1,142) 2,016

Other current assets and other assets (2,865) 223

Trade accounts payable, accrued expenses and other (609) (1,006)current liabilities

Contract liability (333) (12,707)

Due to IDT Corporation 47 (286)

Income taxes payable 625 615

Net cash (used in) provided by operating activities (5,871) 13,642

Investing activities

Capital expenditures (80) (99)

Proceeds from disposal of assets held for sale - 5

Proceeds from the sale of a subsidiary, net of cash 4,550 -disposed

Purchase of marketable equity securities (1,000) -

Investments in equity method investee - (1,502)

Payment of acquisition of intangible - (298)

Repayment of notes receivable 13 12

Net cash provided by (used in) investing activities 3,483 (1,882)

Financing activities

Dividends paid (740) (4,955)

Proceeds from revolving line of credit - 1,000

Repayment of revolving line of credit - (3,514)

Proceeds from loan - 1,395

Repayment of loan - (930)

Purchases of Class B common stock (2,435) (1,546)

Repayment of notes payable - (17)

Net cash used in financing activities (3,175) (8,567)

Effect of exchange rate changes on cash, cash (54) 12equivalents, and restricted cash

Net (decrease) increase in cash, cash equivalents, and (5,617) 3,205restricted cash

Cash, cash equivalents, and restricted cash at 43,184 38,554beginning of period

Cash, cash equivalents, and restricted cash at end of $ 37,567 $ 41,759period

Reconciliation of Non-GAAP Financial Measures for the Second Quarter 2021

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States of America (GAAP), Genie Energy disclosed for the second quarter 2021, as well as for the second quarter 2020, Adjusted EBITDA on a consolidated basis. Adjusted EBITDA is a non-GAAP measure.

Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

Genie Energy's measure of Adjusted EBITDA consists of gross profit less selling, general and administrative expense, 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) and impairments of goodwill. 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 measure of Adjusted EBITDA provides useful information to both management and investors by excluding certain expenses that may not be indicative of Genie Energy's core operating results. Management uses Adjusted EBITDA, among other measures, as a relevant indicator of core operational strengths in its financial and operational decision making.

Management also uses Adjusted EBITDA to evaluate operating performance in relation to Genie Energy's competitors. Disclosure of this non-GAAP financial measure may be useful to investors in evaluating performance and allows for greater transparency to the underlying supplemental information used by management in its financial and operational decision-making. In addition, Genie Energy has historically reported Adjusted EBITDA and believes it is commonly used by readers of financial information in assessing performance. Therefore, the inclusion of comparative numbers provides consistency in financial reporting at this time.

Management refers Adjusted EBITDA as well as the GAAP measures revenue, gross profit, income (loss) from operations and net income (loss), on consolidated level to facilitate internal and external comparisons to Genie Energy's historical operating results, in making operating decisions, for budget and planning purposes, and to form the basis upon which management is compensated.

Although depreciation and amortization are considered operating costs under GAAP, they primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Genie Energy's operating results exclusive of depreciation and amortization are therefore useful indicators of its current performance.

Stock-based compensation recognized by Genie Energy and other companies may not be comparable because of the various valuation methodologies, subjective assumptions and the variety of types of awards that are permitted under GAAP. Stock-based compensation is excluded from Genie Energy's calculation of Adjusted EBITDA because management believes this allows investors to make more meaningful comparisons of the operating results of Genie Energy's core business with the results of other companies. However, stock-based compensation will continue to be a significant expense for Genie Energy for the foreseeable future and an important part of employees' compensation that impacts their performance.

Impairment of goodwill is a component of (loss) income from operations that is excluded from the calculation of Adjusted EBITDA. The impairment of goodwill is primarily dictated by events and circumstances outside the control of management that trigger an impairment analysis. While there may be similar charges in other periods, the nature and magnitude of these charges can fluctuate markedly and do not reflect the performance of Genie Energy's continuing operations.

Adjusted EBITDA should be considered in addition to, not as a substitute for, or superior to, revenue, gross profit, income from operations, cash flow from operating activities, net income, basic and diluted earnings per share or other measures of liquidity and financial performance prepared in accordance with GAAP. In addition, Genie Energy's measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Following are the reconciliations 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.

Reconciliation of Adjusted EBITDA



Total

Three months ended June 30, 2021 (Q2 2021)

Net income attributable to Genie Energy Limited $ 5,367

Net loss attributable to non-controlling interests (82)

Net income $ 5,285

Provision for income taxes 3,158

Other income, net 14

Gain on sale of a subsidiary (4,226)

Unrealized gain on marketable equity securities and investments (2,915)

Interest income (10)

Interest expense 103

Equity in the net income of equity method investees (53)

Income from operations $ 1,356

Add:

Stock-based compensation 559

Depreciation and amortization 1,115

Subtract:

Equity in the net income of equity method investees (53)

Adjusted EBITDA $ 3,083

Total

Three months ended June 30, 2020 (Q2 2020)

Net income attributable to Genie Energy Limited $ 1,963

Net income attributable to non-controlling interests (1,083)

Net income $ 880

Provision for income taxes 587

Other income, net 52

Interest income (20)

Interest expense 58

Equity in the net loss of equity method investees 1,173

Income from operations $ 2,730

Add:

Stock-based compensation 401

Depreciation and amortization 723

Impairment 801

Subtract:

Equity in the net loss (income) of equity method investees 1,173

Adjusted EBITDA $ 3,482

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SOURCE Genie Energy Ltd.