Genie Energy Ltd. Reports Fourth Quarter and Full Year 2019 Results

NEWARK, N.J., March 12, 2020 /PRNewswire/ -- Genie Energy Ltd. (NYSE: GNE, GNEPRA) reported fourth quarter 2019 break even net income on revenue of $82.0 million and full year 2019 net income of $0.10 per share on revenue of $315.3 million

Genie Energy is a leading provider of electricity and natural gas to homes and small businesses in the Eastern U.S. Genie also operates an E&P company with an active exploratory program in Northern Israel.

HIGHLIGHTS
(Throughout this release, 4Q19 results are compared to 4Q18 results and full year 2019 results are compared to full year 2018 unless otherwise noted)

  • Global RCEs served increased 45.5% during 2019 to 374 thousand at December 31, 2019. Global meters served increased 53.9% to 497 thousand during the year.
  • Consolidated revenue increased 30.6% in 4Q19 to $82.0 million from $62.8 million. Full year revenue increased 12.5% to $315.3 million from $280.3 million
  • Results from Orbit Energy, Genie's retail energy provider JV in the UK, are not consolidated.  Orbit Energy revenue was $30.8 million in 2019 and $2.5 million in 2018. Genie pro forma consolidated revenue inclusive of Orbit was $346.1 million in 2019 and $282.8 million in 2018.*
  • Consolidated income from operations increased to $2.3 million in 4Q19 from a loss from operations of $0.5 million. Full year 2019 income from operations was $9.8 million compared to $12.0 million.
  • Consolidated Adjusted EBITDA* increased to $0.8 million in 4Q19 from $(0.6) million. Full year 2019 Adjusted EBITDA was $10.1 million compared to $17.9 million.
  • At Genie Retail Energy (GRE), income from operations increased to $8.2 million in 4Q19 from $3.4 million. Full year 2019 income from operations was $27.2 million compared to $29.0 million.
  • During the fourth quarter, Genie repurchased 261,722 shares of Class B common stock bringing the full year 2019 purchases to 731,869 shares, approximately 2.7% of all common shares outstanding, for $5.6 million.
  • Through stock repurchases and dividends paid on both its common and preferred stock, Genie returned $15.2 million to investors in 2019.
  • Genie's Board of Directors has declared a fourth quarter 2019 dividend of $0.075 per share.

COMMENTS OF MICHAEL STEIN, CEO
"Genie Energy capped a productive 2019 with strong fourth quarter operational and financial results. We grew our international retail energy business in each of our three international markets – the U.K Japan, and Finland – and expect to launch an additional Scandinavian market in 2020. Our domestic retail energy business expanded into the Texas market and generated $8.5 million in Adjusted EBITDA in the fourth quarter and $28.3 million in the full year. 

"Our financial and operational results and positive outlook allowed us to continue our stock repurchase program in the fourth quarter. For the full year, we bought back 2.7% of our common stock for $5.6 million, while returning $9.6 million in dividends to our common and preferred shareholders.

"Looking ahead, we will continue our strategic focus on growth and profitability within our retail energy supply business –growing our customer base organically in our current markets, and prudently expanding into new territories and markets in 2020."

 

CONSOLIDATED RESULTS

 

$ in millions, except EPS

4Q19

3Q19

4Q18


2019

2018

Revenue

$82.0

$85.7

$62.8


$315.3

$280.3

Gross profit

$22.0

$26.4

$14.7


$82.9

$76.5

Gross margin percentage

26.8%

30.7%

23.5%


26.3%

27.3%

SG&A expense

$19.2

$19.4

$15.2


$72.5

$61.5

   Stock-based compensation included in SG&A

-

$0.3

$0.8


$1.1

$4.5

   Depreciation and amortization

$0.8

$0.9

$0.4


$3.6

$2.1

Impairment of assets

$0.4

-

-


$0.4

$2.7

Income (loss) from operations 

$2.3

$6.9

$(0.5)


$9.8

$12.0

Adjusted EBITDA*

$0.8

$8.0

$(0.6)


$10.1

$17.9

Equity in the net loss in equity method investees**

$(2.7)

$(0.2)

$(1.3)


$(4.8)

$(3.4)

(Provision for) benefit from income taxes

$(1.5)

$(1.9)

$14.1


$4.6

$12.4

Net income attributable to Genie Energy common stockholders

-

$4.9

$12.3


$2.7

$21.3

Earnings per diluted share attributable to Genie Energy common stockholders

-

$0.18

$0.47


$0.10

$0.83

Net cash provided by (used in) operating activities

$0.2

$12.1

$(0.9)


$15.8

$19.4

 

* Pro forma results and Adjusted EBITDA for all periods presented are non-GAAP measures 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 pro forma results and Adjusted EBITDA as well as to reconciliations to the respective most directly comparable GAAP measures.

 

** Genie Energy accounts for its investments in Orbit Energy, its joint venture operating in the U.K., and Atid, a drilling contractor based in Israel in which it holds a minority stake, 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, and expenses incurred are not reflected in Genie Energy's consolidated revenue and expenses, but Orbit Energy's customers are included in metrics regarding our customer base.

 

 

GLOBAL METERS AND RCEs

 

Genie Energy's global customer base increased sequentially and year-over-year driven by investment in customer acquisition domestically and in overseas markets.  Genie Energy's global RCE and meter totals are provided in the chart below.

 

Global RCEs and Meters (in thousands)*

December 31, 2019

September 30, 2019

June 30, 2019

March 31, 2019

December 31, 2018

Electricity RCEs

297

309

291

272

197

Natural gas RCEs

77

75

66

61

60

Total RCEs

374

384

357

333

257







Electricity meters

390

392

361

322

249

Natural gas meters

107

100

87

77

74

Total meters

497

492

448

399

323

 

*Includes RCEs and meters acquired and served by Genie Energy's domestic and international retail energy provider businesses including operations in Finland and Japan and at Genie's joint venture in the U.K. (although U.K. operations are not included in our consolidated results of operations).

 

 

SEGMENT RESULTS

 

Genie Retail Energy (GRE)

 

GRE's financial results are summarized in the chart below:

 

Genie Retail Energy

$ in millions

4Q19

3Q19

4Q18


2019

2018

Total revenue

$74.0

$81.7

$58.8


$286.6

$274.4

   Electricity revenue

$61.2

$78.5

$46.7


$246.7

$227.9

   Natural gas revenue

$12.9

$3.2

$12.1


$39.9

$46.6

Gross profit

$22.0

$25.7

$14.5


$80.6

$75.4

Gross margin percentage

29.7%

31.5%

24.7%


28.1%

27.4%

SG&A expense

$13.8

$14.8

$11.2


$53.4

$46.4

   Depreciation and amortization

$0.2

$0.2

$0.2


$0.7

$1.5

Income from operations

$8.2

$10.9

$3.4


$27.2

$29.0

Adjusted EBITDA*

$8.5

$11.2

$3.8


$28.3

$31.1

 

GRE – KPIs and Take-Aways: 


  • Customers served at December 31st totaled 309 thousand RCEs and 370 thousand meters.  The RCE and meter counts increased from 253 thousand RCEs and 315 thousand meters at December 31, 2108, and decreased from 329 thousand RCEs and 389 thousand meters at September 30, 2019. The year over year increases reflect sustained investment in new customer acquisitions during the year. The fourth quarter decreases compared to the prior quarter largely reflects seasonal factors that typically inhibit customer acquisition during the fourth quarter. 
  • Gross meters added during 4Q19 totaled 56,000 compared to 76,000 in 3Q19 and 45,000 in 4Q18. Gross meter acquisitions in 2019 increased to 308,000 from 197,000 in 2018 including the impact of a municipal aggregation deal which added approximately 35,000 meters.
  • Average monthly churn was 6.1% - a decrease from 7.1% in 4Q18 and an increase from 5.3% in 3Q19. For the full year 2019, average monthly churn decreased to 5.3% from 6.5% in 2018;
  • Electricity revenue in 4Q19 increased to $61.2 million from $46.7 million in the year ago period reflecting the increase in meters and RCEs served as well as increases in consumption per meter and revenue per kilowatt hour sold. Full year 2019 electricity revenue increased to $246.7 million from $227.9 million driven primarily by higher meter counts and increased consumption per meter.
  • SG&A expense in 4Q19 increased to $13.8 million from $11.2 million. Full year 2019 SG&A expense increased to $53.4 million from $46.4 million. The quarterly and annual increases resulted primarily from increased investment in new customer acquisitions and, to a lesser extent, the reversal of an accrual related to legal expenses in the fourth quarter of 2018.
  • Income from operations in 4Q19 increased to $8.2 million from $3.4 million driven by increased electricity consumption and a decrease in the commodity cost of electricity. Full year income from operations decreased to $27.1 million from $29.0 million as the increase in gross profit generated primarily by higher per meter electricity consumption was more than offset by increased customer acquisition expense.

 

Genie Retail Energy International (GRE International)

 

Genie Energy accounts for its investments in Orbit Energy, 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.

 

Genie Retail Energy International

$ in millions

4Q19

3Q19

4Q18


2019

2018

Total revenue

$5.8

$3.0

$-


$16.6

$--

Gross profit

$(0.3)

$0.4

$(0.1)


$0.3

$(0.1)

Gross margin percentage

(5.0)%

13.0%

-


2.0%

--

SG&A expense

$2.9

$2.0

$0.7


$8.5

$1.1

Loss from operations

$(3.2)

$(1.6)

$(0.7)


$(8.1)

$(1.2)

Adjusted EBITDA*

$(5.6)

$(1.0)

$(1.7)


$(10.7)

$(4.2)

Equity in the net loss in Orbit Energy

$2.5

-

$1.0


$4.4

$3.0

 

  • Customers served at December 31st increased to 65,000 RCEs and 127,000 meters compared to 55,000 RCEs and 103,000 meters at September 30th and 4,000 RCEs and 8,000 meters at December 31, 2018.
  • GRE International's revenue increased to $5.8 million compared to nil in 4Q18 reflecting the impact of the Lumo Energia acquisition in 1Q19 and initial revenue contribution from Genie Japan. Full year 2019 revenue was $16.6 million compared to nil a year earlier.
  • On a pro forma basis*, inclusive of Orbit Energy revenue, GRE International's revenue increased to $47.4 million in 2019 from $2.5 million in 2018.
  • In 4Q19, equity in the net loss of Orbit Energy increased to $2.5 million from $1.0 million, primarily reflecting the timing of capital contributions to Orbit Energy. For the full year, GRE's equity in the loss increased to $4.4 million from $3.0 million as Orbit Energy accelerated its meter acquisition program.
  • Loss from operations increased to $3.2 million in 4Q19 from $0.7 million reflecting the timing of capital contributions noted above, the impact from the acquisition of Lumo Energia and launch of Genie Japan earlier in the year. The full year 2019 loss from operations increased to $8.1 million from a loss from operations of $1.2 million. The increases reflect the acquisition of Lumo Energia, launch of Genie Japan and expansion of their respective customer acquisition programs during 2019. 
  • On a pro forma basis*, inclusive of Orbit Energy's loss from operations of, GRE International's loss from operations was $17.4 million in 2019 compared to $5.7 million in 2018.

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.
  • Revenue in 4Q19 decreased to $2.1 million from $4.0 million due to the timing of orders and deliveries within the Prism Solar business. Full year 2019 revenue increased to $12.1 million from $5.7 million reflecting the acquisition of Prism Solar in 4Q18;
  • GES' loss from operations in 4Q19 increased to $1.2 million from $0.6 million. The loss from operations for the full year 2019 increased to $2.9 million from $1.0 million in 2018.

Genie Oil and Gas (GOGAS)

  • Operations at Genie Energy's Afek oil and gas exploration subsidiary remain suspended pending final testing on an existing well, which is expected to take place in the first half of 2020;
  • GOGAS' loss from operations in 4Q19 was $0.4 million compared to a loss of $1.1 million. The full year 2019 loss from operations totaled $1.3 million compared to $7.0 million in 2018. The quarterly and full year decreases reflect the suspension of Afek's exploration program.

Corporate

  • Corporate loss from operations decreased to $1.3 million in 4Q19 from $1.7 million in 4Q18.  The full year 2019 loss from operations decreased to $5.4 million from $8.3 million. The corporate spend dropped on a decline in stock-based compensation, which decreased to $0.1 million dollars in 4Q19 from $0.6 million in the year ago quarter. For the full year 2019, stock-based compensation decreased to $0.6 million from $4.0 million.

BALANCE SHEET AND CASH FLOW HIGHLIGHTS
At December 31, 2019, Genie Energy had $156.2 million in total assets, including $38.6 million in cash, cash equivalents and restricted cash. Liabilities totaled $75.3 million and working capital (current assets less current liabilities) totaled $40.8 million

Cash used in operating activities in 4Q19 decreased to $0.2 million compared to cash used in operating activities of $0.9 million in 4Q18.  For the full year 2019, cash provided by operating activities was $15.8 million compared to $19.4 million in 2018.

DIVIDEND ON GENIE ENERGY COMMON STOCK
Genie Energy's Board of Directors has declared a 4Q19 dividend of $0.075 per share of Class A and Class B common stock with a record date of March 24, 2020. The dividend will be paid on or about April 3, 2020. The distribution will be treated as an ordinary dividend for income tax purposes.

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 time today, March 12, 2020, 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 toll-free 1-888-348-6472 (from the US) or 1-412-902-4240 (international) and request the Genie Energy conference call.

The call replay will be available at 1-844-512-2921 (US toll-free) or 1-412-317-6671 (international) through March 19, 2020. The replay PIN is 10138657. 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 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 SHEET
(in thousands, except per share amounts) 

 



December 31


(in thousands, except per share amounts)


2019



2018









ASSETS







CURRENT ASSETS:







Cash and cash equivalents


$

31,242



$

41,601


Restricted cash—short-term



6,792




1,653


Trade accounts receivable, net of allowance for doubtful accounts of $2,631 and $2,003 at December 31, 2019 and 2018, respectively



49,822




35,920


Inventory



16,632




9,893


Prepaid expenses



6,318




6,167


Other current assets



2,133




2,670


TOTAL CURRENT ASSETS



112,939




97,904


Property and equipment, net         



3,607




4,301


Goodwill



12,135




11,082


Other intangibles, net



6,837




6,321


Investment in equity method investees



675




2,208


Restricted cash – long-term



520




943


Deferred income tax assets, net



12,154




15,625


Other assets



7,377




8,480


TOTAL ASSETS


$

156,244



$

146,864


LIABILITIES AND EQUITY









CURRENT LIABILITIES:









Loan payable


$

921



$


Current portion of notes payable



116




923


Trade accounts payable



24,387




18,508


Accrued expenses     



26,116




25,242


Contract liability



13,426




1,137


Income taxes payable



1,591




1,463


Due to IDT Corporation



381




234


Short-term revolving line of credit



2,514





Other current liabilities



2,704




3,279


TOTAL CURRENT LIABILITIES



72,156




50,786


Long-term notes payable



777





Long -term revolving line of credit






2,516


Other liabilities   



2,381




900


TOTAL LIABILITIES



75,314




54,202


Commitments and contingencies (Note 15 and Note 16)









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 December 31, 2019 and 2018               



19,743




19,743


Class A common stock, $0.01 par value; authorized shares – 35,000; 1,574 shares issued and outstanding at December 31, 2019 and 2018 



16




16


Class B common stock, $0.01 par value; authorized shares – 200,000; 25,785 and 25,544 shares issued and 24,755 and 25,294 shares outstanding at December 31, 2019 and 2018, respectively       



258




255


Additional paid-in capital  



139,615




136,629


Treasury stock, at cost, consisting of 1,030 and 250 shares of Class B common at December 31, 2019 and 2018, respectively  



(7,675)




(1,624)


Accumulated other comprehensive income  



2,519




2,591


Accumulated deficit  



(59,671)




(53,939)


Total Genie Energy Ltd. stockholders' equity  



94,805




103,671


Noncontrolling interests:









Noncontrolling interests  



(13,875)




(11,009)


TOTAL EQUITY  



80,930




92,662


TOTAL LIABILITIES AND EQUITY  


$

156,244



$

146,864



 

GENIE ENERGY LTD.

CONSOLIDATED STATEMENT OF OPERATIONS



Year ended December 31,

(in thousands, except per share data)


2019



2018


REVENUES:







Electricity  


$

263,091



$

227,883


Natural gas  



39,926




46,560


Other  



12,274




5,866


Total revenues  



315,291




280,309


Cost of revenues  



232,392




203,762


GROSS PROFIT  



82,899




76,547


OPERATING EXPENSES AND LOSSES:









Selling, general and administrative



72,467




61,544


Exploration  






244


Research and development expense             



207




39


Impairment of assets 



400




2,742


Income from operations  



9,825




11,978


Interest income  



448




557


Interest expense 



(530)




(401)


Equity in the net loss in equity method investees



(4,830)




(3,430)


Gain on extinguishment of liability






164


Other income, net  



1,066




156


Income before income taxes  



5,979




9,024


(Provision for) benefit from income taxes  



(4,600)




12,376


NET INCOME     



1,379




21,400


Net loss attributable to noncontrolling interests  



2,796




1,385


NET INCOME ATTRIBUTABLE TO GENIE ENERGY LTD.  



4,175




22,785


Dividends on preferred stock  



(1,481)




(1,481)


NET INCOME ATTRIBUTABLE TO GENIE ENERGY LTD. COMMON STOCKHOLDERS  


$

2,694



$

21,304











Earnings per share attributed to Genie Energy Ltd. common stockholder









Basic           


$

0.10



$

0.85


Diluted


$

0.10



$

0.83











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









Basic       



26,607




25,154


Diluted



27,464




25,695











Dividends declared per common share


$

0.30



$

0.30


(i) Stock-based compensation included in selling, general and administrative expenses


$

1,102



$

4,523



 


 

GENIE ENERGY LTD.

CONSOLIDATED STATEMENT OF CASH FLOWS



Year ended December 31,

(in thousands)


2019



2018


OPERATING ACTIVITIES







Net income 


$

1,379



$

21,400


Adjustments to reconcile net income to net cash provided by operating activities: 









Depreciation and amortization  



3,627




2,062


Deferred income taxes  



3,471




(13,483)


Provision for doubtful accounts receivable  



658




904


Stock-based compensation  



1,102




4,523


Gain on sale disposal of property and equipment               






(18)


Gain on extinguishment of liability         






(164)


Impairment of goodwill       



400





Impairment of assets             






2,742


Equity in the net loss of equity method investees



4,830




3,430


Change in assets and liabilities, net of effect of acquisition:









Trade accounts receivable  



(12,041)




7,817


Inventory  



(6,739)




(4,764)


Prepaid expenses  



(124)




219


Other current assets and other assets  



1,137




2,726


Trade accounts payable, accrued expenses and other current liabilities  



5,506




(7,846)


Contract liability



12,271




547


Due to IDT Corporation  



147




20


Income taxes payable  



128




(741)


Net cash provided by operating activities  



15,752




19,374


INVESTING ACTIVITIES









    Capital expenditures  



(404)




(584)


    Investments in notes receivable



(214)





    Proceeds from disposal of property  






62


    Payment for acquisition of license in Japan     






(745)


    Cash transferred to Atid 613






(209)


    Payment for acquisition, net of cash acquired  



(2.044)




(250)


    Repayment of notes receivable  



124




94


    Investments in equity method investees



(3,235)




(1,306)


Net cash used in investing activities  



(5,773)




(2,938)


FINANCING ACTIVITIES









    Dividends paid  



(9,595)




(9,256)


    Purchases of Class B common stock 



(5,584)





    Repayment of short-term debt—Lumo Energia        



(2,260)





    Repayment of notes payable



(45)




(10)


    Proceeds from exercise of stock options  



1,407





    Proceeds from sales of Class B common stock and warrants






6,000


    Proceeds from loan



921





    Repurchases of Class B common stock from employees



(467)




(889)


Net cash used in financing activities  



(15,623)




(4,155)


Effect of exchange rate changes on cash and cash equivalents  



1




(11)


Net (decrease) increase in cash and cash equivalents  



(5,643)




12,270


Cash and cash equivalents at beginning of year           



44,197




31,927


Cash and cash equivalents at end of year           


$

38,554



$

44,197


Reconciliation of Non-GAAP Financial Measures for the Fourth Quarter and Full Years 2019 and 2018

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 fourth quarter and full years 2019 and 2018, as well as for comparable periods, pro forma results and 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 measure 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 from operations are not reflected in Genie Energy's consolidated revenue and expenses. However, 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 full years 2019 and 2018 to supplement the following results: consolidated revenue; 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. In addition, management uses and Adjusted EBITDA to evaluate operating performance in relation to Genie Energy's competitors. Disclosure of this 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 facilitates evaluation of the results of all of the company's retail energy provider (REP) businesses as if they were fully consolidated, which provides useful information regarding the size, growth and financial performance of all of the company's REP businesses, In contrast, GAAP results only include the company's equity in the results of the operations of its U.K. venture.

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 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 from operations and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Following is the reconciliation of pro forma results and Adjusted EBITDA to their most directly comparable GAAP measure.  Pro forma consolidated revenue is reconciled to consolidated revenue, pro forma revenue for the Genie Retail Energy International segment is reconciled to the segment's revenue, and Genie Retail Energy International's 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.

 

 

Reconciliations of Pro Forma Consolidated Revenue and Pro Forma Genie Retail

Energy International Segment Revenue and Loss from Operations to Corresponding GAAP Results

 






Full Year 2019

Full Year 2018




(results in millions)





Consolidated Results







Consolidated revenue


$    315.3

$    280.3




plus

Orbit Energy revenue


$       30.8

$        2.5




Pro forma consolidated revenue


$     346.1

$    282.8











Genie Retail Energy International (GREI) Segment Results





GREI segment revenue


$       16.6

-




plus

Orbit Energy revenue


$       30.8

$         2.5




Pro forma GREI segment revenue


$       47.4

$         2.5












GREI segment loss from operations


$       (8.1)

$       (1.2)




plus

Orbit Energy loss from operations


$       (9.2)

$       (4.5)




Pro forma GREI segment loss from operations


$     (17.4)

$       (5.7)










 


Reconciliations of Adjusted EBITDA to GAAP Income from Operations and GAAP Net Income

Three months ended December 31, 2019 (4Q19)

Total


GRE

GES

GRE International

GOGAS

Corporate









Net income attributable to Genie Energy Limited

$ 324







Net loss attributable to non-controlling interests

1312







Net income

$ (988)







Provision for income taxes

1,458







Other income, net

(919)







Interest expense

150







Interest income

(102)







Equity in the net loss of equity method investees

$ 2,724







Income from operations

$ 2,323


$ 8,235

$ (1,183)

$ (3,222)

$ (200)

$ (1,307)

Add:









Stock-based compensation

(4)


117


(226)


106


Depreciation and amortization

821


175

244

387

15



Impairment

400



400




Subtract:









Equity in the net loss of equity method investees

2724




2,501

213

10

Adjusted EBITDA

$ 816


$ 8,527

$ (539)

$(5,562)

$(398)

$  (1,211)

 

Three months ended September 30, 2019 (3Q19)

Total


GRE

GES

GRE International

GOGAS

Corporate









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


Subtract:









Equity in the net loss of equity method investees

238





148

90

Adjusted EBITDA

$ 7,975


$ 11,159

$ (555)

$ (978)

$ (416)

$ (1,235)


 

Three months ended December 31, 2018 (4Q18)

Total


GRE

GES

GRE International

GOGAS

Corporate









Net income attributable to Genie Energy Limited

$ 12,632







Net loss attributable to non-controlling interests

264







Net income

$ 12,368







Provision for income taxes

14,109







Other income, net

32







Interest expense

(140)







Interest income

174







Equity in the net loss of equity method investees

(1,348)







Income from operations

$ (459)


$ 3,357

$ (637)

$ (729)

$ (778)

$ (1,671)

Add:









Stock-based compensation

1,082


190




646


Depreciation and amortization

462


244

157

1

14



Impairment

451







Subtract:









Equity in the net loss of equity method investees

861




1002

346


Adjusted EBITDA

$  675


$ 3,791

$ (480)

$  (1,730)

$  (1,110)

$ (1,025)

 

Twelve months ended December 31, 2019

Total


GRE

GES

GRE International

GOGAS

Corporate









Net income attributable to Genie Energy Limited

$ 4,175







Net loss attributable to non-controlling interests

(2,796)







Net income

$ 1,379







Provision for income taxes

4,600







Other income, net

1,066







Interest expense

629







Interest income

(547)







Equity in the net loss of equity method investees

4,830







Income (loss)  from operations

$ 11,957


$ 27,176

$ (2,895)

$ (8,133)

$ (1,028)

$ (5,296)

Add:









Stock-based compensation

1102


456


56


590


Depreciation and amortization

3589


703

1,008

1,819

57

1


Impairment of goodwill

400



400




Subtract:









Equity in the net loss of equity method investees

4830




4,440

291

100

Adjusted EBITDA

$ 12,218


$ 28,335

$(1,487)

$ (10,698)

$ (1,262)

$ (4,805)


 

Twelve months ended December 31, 2018

Total


GRE

GES

GRE International

GOGAS

Corporate









Net income attributable to Genie Energy Limited

$ 22,785







Net loss attributable to non-controlling interests

1,385







Net income

$ 21,400







Provision for income taxes

12,376







Gain on extinguishment of liability

164







Other expense, net

156







Interest expense

(401)







Interest income

557







Equity in the net loss of equity method investees

(3,430)







Income from operations

$ 11,978


$ 28,989

$ (982)

$ (1,201)

$ (6,533)

$ (8,295)

Add:









Stock-based compensation

4,523


563




3,960


Depreciation and amortization

2,062


1,536

178

1

345

1


Impairment

2,742





2,742


Subtract:









Equity in the net loss of equity method investees

3,430




2,990

440


Adjusted EBITDA

$ 17,875


$ 31,088

$ (804)

$ (4,190)

$ (3,886)

$ (4,334)

 

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SOURCE Genie Energy Ltd.

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