UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 20232024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-35327
GENIE ENERGY LTD.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
| 45-2069276 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification Number) |
|
|
|
520 Broad Street, Newark, New Jersey |
| 07102 |
(Address of principal executive offices) |
| (Zip Code) |
(973) 438-3500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b)-2 of the Exchange Act:
Title of | TradingSymbol | Name of exchange of which registered |
Class B common stock, par value $0.01 per share | GNE | |
New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☒ |
Non-accelerated filer | ☐ | Smaller reporting company |
|
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒
As of May 8, 20232024, the registrant had the following shares outstanding:
Class A common stock, $0.01 par value: | 1,574,326 shares |
Class B common stock, $0.01 par value: |
|
GENIE ENERGY LTD.
TABLE OF CONTENTS
i |
GENIEGENIE ENERGY LTD.
(in thousands, except per share amounts)
| March 31, |
| December 31, |
| March 31, |
| December 31, |
| ||||||
| (Unaudited) |
| (Note 1) |
| (Unaudited) |
| (Note 1) |
| ||||||
Assets |
|
|
|
|
|
|
|
| ||||||
Current assets: |
|
|
|
|
|
|
|
| ||||||
Cash and cash equivalents | $ | 105,220 |
| $ | 98,571 |
| $ | 106,560 |
| $ | 107,609 |
| ||
Restricted cash—short-term | 3,791 | 6,007 | 9,918 | 10,442 | ||||||||||
Marketable equity securities | 4,663 | 490 | 372 | 396 | ||||||||||
Trade accounts receivable, net of allowance for doubtful accounts of $5,383 and $4,826 at March 31, 2023 and December 31, 2022, respectively |
| 65,203 |
| 55,134 |
| |||||||||
Trade accounts receivable, net of allowance for doubtful accounts of $7,020 and $6,574 at March 31, 2024 and December 31, 2023, respectively |
| 60,087 |
| 61,909 |
| |||||||||
Inventory |
| 19,345 |
| 15,714 |
|
| 18,460 |
| 14,598 |
| ||||
Prepaid expenses |
| 7,855 |
| 6,822 |
|
| 15,049 |
| 16,222 |
| ||||
Other current assets |
| 5,363 |
|
| 6,207 |
|
| 6,085 |
|
| 5,475 |
| ||
Current assets of discontinued operations | 35,750 | 38,688 | 11,292 | 13,182 | ||||||||||
Total current assets |
| 247,190 |
| 227,633 |
|
| 227,823 |
| 229,833 |
| ||||
Restricted cash—long-term | 45,541 | 44,945 | ||||||||||||
Property and equipment, net | 964 | 891 | 16,139 | 15,192 | ||||||||||
Goodwill |
| 9,998 |
| 9,998 |
|
| 9,998 |
| 9,998 |
| ||||
Other intangibles, net |
| 3,033 |
| 3,133 |
|
| 2,643 |
| 2,735 |
| ||||
Deferred income tax assets, net |
| 5,799 |
| 5,799 |
|
| 5,200 |
| 5,200 |
| ||||
Other assets |
| 13,506 |
|
| 13,856 |
|
| 16,427 |
|
| 15,247 |
| ||
Noncurrent assets of discontinued operations | 12,520 | 16,305 | 4,533 | 7,405 | ||||||||||
Total assets | $ | 293,010 |
| $ | 277,615 |
| $ | 328,304 |
| $ | 330,555 |
| ||
Liabilities and equity |
|
|
|
|
|
|
|
|
|
| ||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
| ||||
Trade accounts payable |
| 19,894 |
| 25,313 |
|
| 22,407 |
| 27,881 |
| ||||
Accrued expenses |
| 38,568 |
| 35,659 |
|
| 53,821 |
| 49,389 |
| ||||
Income taxes payable |
| 27,580 |
| 22,576 |
|
| 9,614 |
| 6,699 |
| ||||
Due to IDT Corporation, net |
| 98 |
| 165 |
|
| 120 |
| 145 |
| ||||
Other current liabilities |
| 7,580 |
|
| 4,549 |
|
| 6,107 |
|
| 9,280 |
| ||
Current liabilities of discontinued operations | 11,076 | 10,936 | 8,516 | 4,858 | ||||||||||
Total current liabilities |
| 104,796 |
| 99,198 |
|
| 100,585 |
| 98,252 |
| ||||
Noncurrent captive insurance liability | 45,541 | 44,945 | ||||||||||||
Other liabilities |
| 1,894 |
|
| 4,087 |
|
| 2,082 |
|
| 2,212 |
| ||
Noncurrent liabilities of discontinued operations | 686 | 686 | 681 | 638 | ||||||||||
Total liabilities |
| 107,376 |
| 103,971 |
|
| 148,889 |
| 146,047 |
| ||||
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 866 and 983 shares issued and outstanding at March 31, 2023 and December 31, 2022 | 7,359 | 8,359 | ||||||||||||
Class A common stock, $0.01 par value; authorized shares—35,000; 1,574 shares issued and outstanding at March 31, 2023 and December 31, 2022 | 16 | 16 | ||||||||||||
Class B common stock, $0.01 par value; authorized shares—200,000; 27,159 and 27,126 shares issued and 24,439 and 24,421 shares outstanding at March 31, 2023 and December 31, 2022, respectively | 271 | 271 | ||||||||||||
Series 2012-A, designated shares—8,750; at liquidation preference, consisting of 0 shares issued and outstanding at March 31, 2024 and December 31, 2023 | — | — | ||||||||||||
Class A common stock, $0.01 par value; authorized shares—35,000; 1,574 shares issued and outstanding at March 31, 2024 and December 31, 2023 | 16 | 16 | ||||||||||||
Class B common stock, $0.01 par value; authorized shares—200,000; 28,905 and 28,764 shares issued and 25,605 and 25,820 shares outstanding at March 31, 2024 and December 31, 2023, respectively | 289 | 288 | ||||||||||||
Additional paid-in capital |
| 147,445 |
| 146,546 |
|
| 157,549 |
|
| 156,101 |
| |||
Treasury stock, at cost, consisting of 2,720 and 2,705 shares of Class B common stock at March 31, 2023 and December 31, 2022 | (19,175 | ) | (19,010 | ) | ||||||||||
Treasury stock, at cost, consisting of 3,300 and 2,944 shares of Class B common stock at March 31, 2024 and December 31, 2023 | (29,285 | ) | (22,661 | ) | ||||||||||
Accumulated other comprehensive income | 1,895 | 1,926 | (1,911 | ) | 3,299 | |||||||||
Retained earnings |
| 61,333 |
| 49,010 | ||||||||||
Total Genie Energy Ltd. stockholders’ equity |
| 199,144 |
|
| 187,118 |
| 192,856 |
|
| 197,239 | ||||
Noncontrolling interests |
| (13,510 | ) |
| (13,474 | ) |
| (13,441 | ) |
| (12,731 | ) | ||
Total equity |
| 185,634 |
|
| 173,644 |
| 179,415 |
|
| 184,508 | ||||
Total liabilities and equity | $ | 293,010 |
| $ | 277,615 |
| $ | 328,304 |
| $ | 330,555 |
|
See accompanying notes to consolidated financial statements.
1 |
GENIE ENERGY LTD.
| Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||
| 2023 | 2022 | 2024 | 2023 | |||||||||||
| (in thousands, except per share data) | (in thousands, except per share data) | |||||||||||||
Revenues: | |||||||||||||||
Electricity | $ | 74,487 | $ | 59,380 | $ | 89,396 | $ | 74,487 | |||||||
Natural gas | 26,925 | 24,504 | 22,398 | 26,925 | |||||||||||
Other | 3,864 | 2,042 | 7,894 | 3,864 | |||||||||||
Total revenues | 105,276 | 85,926 | 119,688 | 105,276 | |||||||||||
Cost of revenues | 71,990 | 38,819 | 85,902 | 71,990 | |||||||||||
Gross profit | 33,286 | 47,107 | 33,786 | 33,286 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative (i) | 22,011 | 20,145 | 22,901 | 22,011 | |||||||||||
Provision for captive insurance liability | 1,036 | — | |||||||||||||
Income from operations | 11,275 | 26,962 | 9,849 | 11,275 | |||||||||||
Interest income | 974 | 17 | 1,340 | 974 | |||||||||||
Interest expense | (19 | ) | (50 | ) | (32 | ) | (19 | ) | |||||||
Loss on marketable equity securities and investments | (71 | ) | (652 | ) | |||||||||||
Other income (loss), net | 3,246 | (498 | ) | ||||||||||||
Gain (loss) on marketable equity securities and investments | 117 | (71 | ) | ||||||||||||
Other income, net | |||||||||||||||
Income before income taxes | 15,405 | 25,779 | 11,354 | 15,405 | |||||||||||
Provision for income taxes | (4,068 | ) | (7,112 | ) | (2,920 | ) | (4,068 | ) | |||||||
Net income from continuing operations | 11,337 | 18,667 | 8,434 | 11,337 | |||||||||||
Income (loss) from discontinued operations, net of taxes | 3,055 | (1,932 | ) | ||||||||||||
(Loss) income from discontinued operations, net of taxes | |||||||||||||||
Net income | 14,392 | 16,735 | |||||||||||||
Net loss attributable to noncontrolling interests, net | (39 | ) | (1,154 | ) | |||||||||||
Net income (loss) attributable to noncontrolling interests, net | 46 | (39 | ) | ||||||||||||
Net income attributable to Genie Energy Ltd. | 14,431 | 17,889 | |||||||||||||
Dividends on preferred stock | (157 | ) | (370 | ) | — | (157 | ) | ||||||||
Net income attributable to Genie Energy Ltd. common stockholders | $ | 14,274 | $ | 17,519 | |||||||||||
| |||||||||||||||
Amounts attributable to Genie Energy Ltd. common stockholders | |||||||||||||||
Net income (loss) attributable to Genie Energy Ltd. common stockholders | |||||||||||||||
Continuing operations | $ | 11,218 | $ | 19,294 | $ | 8,388 | $ | 11,218 | |||||||
Discontinued operations | 3,056 | (1,775 | ) | ||||||||||||
Net income attributable to Genie Energy Ltd. common stockholders | $ | 14,274 | $ | 17,519 | |||||||||||
Earnings per share attributable to Genie Energy Ltd. common stockholders: | |||||||||||||||
Earnings (loss) per share attributable to Genie Energy Ltd. common stockholders: | |||||||||||||||
Basic: | |||||||||||||||
Continuing operations | $ | 0.44 | $ | 0.75 | $ | 0.31 | $ | 0.44 | |||||||
Discontinued operations | 0.12 | (0.07 | ) | ||||||||||||
Earnings per share attributable to Genie Energy Ltd. common stockholders | $ | 0.56 | $ | 0.68 | |||||||||||
Diluted | |||||||||||||||
Continuing operations | $ | 0.42 | $ | 0.74 | $ | 0.31 | $ | 0.42 | |||||||
Discontinued operations | 0.12 | (0.07 | ) | ||||||||||||
Earnings per share attributable to Genie Energy Ltd. common stockholders | $ | 0.54 | $ | 0.67 | |||||||||||
Weighted-average number of shares used in calculation of earnings per share: | |||||||||||||||
Basic | 25,326 | 25,764 | 26,790 | 25,326 | |||||||||||
Diluted | 26,620 | 26,128 | 27,298 | 26,620 | |||||||||||
| |||||||||||||||
Dividends declared per common share | $ | 0.075 | $ | 0.075 | $ | 0.075 | $ | 0.075 | |||||||
(i) Stock-based compensation included in selling, general and administrative expenses | $ | 899 | $ | 840 | $ | 749 | $ | 899 |
See accompanying notes to consolidated financial statements.
2 |
GENIE ENERGY LTD.
(Unaudited)
| Three Months Ended March 31, | ||||||
| 2023 | 2022 | |||||
| (in thousands) | ||||||
Net income | $ | 14,392 | $ | 16,735 | |||
Other comprehensive loss: | |||||||
Foreign currency translation adjustments | (28 | ) | 303 | ||||
Comprehensive income | 14,364 | 17,038 | |||||
Comprehensive gain attributable to noncontrolling interests | 36 | 1,190 | |||||
Comprehensive income attributable to Genie Energy Ltd. | $ | 14,400 | $ | 18,228 |
| Three Months Ended March 31, | ||||||
2024 | 2023 | ||||||
| (in thousands) | ||||||
Net income | $ | 8,169 | $ | 14,392 | |||
Other comprehensive loss: | |||||||
Foreign currency translation adjustments | (5,082 | ) | (28 | ) | |||
Comprehensive income | 3,087 | 14,364 | |||||
Comprehensive loss attributable to noncontrolling interests | (46 | ) | 36 | ||||
Comprehensive income attributable to Genie Energy Ltd. | $ | 3,041 | $ | 14,400 |
See accompanying notes to consolidated financial statements.
3 |
GENIE ENERGY LTD.
Genie Energy Ltd. Stockholders
|
| Preferred |
| Class A |
| Class B |
| Additional |
|
|
| Accumulated Other |
|
|
|
|
|
|
| |||||||||||||||||
|
| Stock |
| Common Stock |
| Common Stock |
| Paid-In |
| Treasury |
| Comprehensive |
| Retained |
| Noncontrolling |
| Total |
| |||||||||||||||||
|
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Stock |
| Income |
| Earnings |
| Interests |
| Equity |
| |||||||||||
BALANCE AT JANUARY 1, 2023 | 983 | $ | 8,359 | 1,574 | $ | 16 | 27,126 | $ | 271 | $ | 146,546 | $ | (19,010 | ) | $ | 1,926 | $ | 49,010 | $ | (13,474 | ) | $ | 173,644 | |||||||||||||
Dividends on preferred stock ($ 0.1594 per share) | — | — | — | — | — | — | — | — | — | (157 | ) | — | (157 | ) | ||||||||||||||||||||||
Dividends on common stock ($0.075 per share) | — | — | — | — | — | — | — | — | — | (1,951 | ) | — | (1,951 | ) | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 33 | — | 899 | — | — | — | — | 899 | ||||||||||||||||||||||||
Restricted Class B common stock purchased from employees | — | — | — | — | — | — | — | (165 | ) | — | — | — | (165 | ) | ||||||||||||||||||||||
Redemption of preferred stock | (117 | ) | (1,000 | ) | — | — | — | — | — | — | — | — | — | (1,000 | ) | |||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | — | (31 | ) | — | 3 | (28 | ) | ||||||||||||||||||||||
Net income (loss) for three months ended March 31, 2023 | — | — | — | — | — | — | — | — | — | 14,431 | (39 | ) | 14,392 | |||||||||||||||||||||||
BALANCE AT MARCH 31, 2023 | 866 | $ | 7,359 | 1,574 | $ | 16 | 27,159 | $ | 271 | $ | 147,445 | $ | (19,175 | ) | $ | 1,895 | $ | 61,333 | $ | (13,510 | ) | $ | 185,634 |
|
| Preferred |
| Class A |
| Class B |
| Additional |
|
|
| Accumulated Other |
|
|
| Non |
|
|
| |||||||||||||||||
|
| Stock |
| Common Stock |
| Common Stock |
| Paid-In |
| Treasury |
| Comprehensive |
| Retained |
| controlling |
| Total |
| |||||||||||||||||
|
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Stock |
| Income |
| Earnings |
| Interests |
| Equity |
| |||||||||||
BALANCE AT JANUARY 1, 2024 | — | $ | — | 1,574 | $ | 16 | 28,765 | $ | 288 | $ | 156,101 | $ | (22,661 | ) | $ | 3,299 | $ | 60,196 | $ | (12,731 | ) | $ | 184,508 | |||||||||||||
Dividends on common stock ($0.075 per share) | — | — | — | — | — | — | — | — | — | (2,121 | ) | — | (2,121 | ) | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 14 | — | 749 | — | — | — | — | 749 | ||||||||||||||||||||||||
Restricted Class B common stock purchased from employees | — | — | — | — | — | — | — | (2,523 | ) | — | — | — | (2,523 | ) | ||||||||||||||||||||||
Exercise of stock options | — | — | — | — | 126 | 1 | 1,015 | — | — | — | — | 1,016 | ||||||||||||||||||||||||
Purchase of equity of subsidiary | — | — | — | — | — | — | (316 | ) | — | — | — | (884 | ) | (1,200 | ) | |||||||||||||||||||||
Repurchase of Class B common stock from stock repurchase program | — | — | — | — | — | — | — | (4,101 | ) | — | — | — | (4,101 | ) | ||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | — | — | — | — | (5,210 | ) | — | 128 | (5,082 | ) | ||||||||||||||||||||||
Net income (loss) for three months ended March 31, 2024 | — | — | — | — | — | — | — | — | — | 8,123 | 46 | 8,169 | ||||||||||||||||||||||||
BALANCE AT MARCH 31, 2024 | — | $ | — | 1,574 | $ | 16 | 28,905 | $ | 289 | $ | 157,549 | $ | (29,285 | ) | $ | (1,911 | ) | $ | 66,198 | $ | (13,441 | ) | $ | 179,415 |
4 |
GENIE ENERGY LTD.
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except dividend per share) — (Continued)
Genie Energy Ltd. Stockholders
|
| Preferred |
| Class A |
| Class B |
| Additional |
|
|
| Accumulated Other |
|
|
|
|
|
|
|
| Preferred |
| Class A |
| Class B |
| Additional |
|
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| Accumulated Other |
|
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| Non |
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|
| ||||||||||||||||||||||||||||||||||
|
| Stock |
| Common Stock |
| Common Stock |
| Paid-In |
| Treasury |
| Comprehensive |
| Accumulated |
| Noncontrolling |
| Total |
|
| Stock |
| Common Stock |
| Common Stock |
| Paid-In |
| Treasury |
| Comprehensive |
| Retained |
| controlling |
| Total |
| ||||||||||||||||||||||||||||||||||
|
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Stock |
| Income |
| Deficit |
| Interests |
| Equity |
|
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Stock |
| Income |
| Earnings |
| Interests |
| Equity |
| ||||||||||||||||||||||
BALANCE AT JANUARY 1, 2022 | 2,322 | $ | 19,743 | 1,574 | $ | 16 | 26,633 | $ | 266 | $ | 143,249 | $ | (14,034 | ) | $ | 3,160 | $ | (29,115 | ) | $ | (12,496 | ) | $ | 110,789 | ||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2023 | 983 | $ | 8,359 | 1,574 | $ | 16 | 27,126 | $ | 271 | $ | 146,546 | $ | (19,010 | ) | $ | 1,926 | $ | 49,010 | $ | (13,474 | ) | $ | 173,644 | |||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock ($0.1594 per share) | — | — | — | — | — | — | — | — | — | (370 | ) | — | (370 | ) | — | — | — | — | — | — | — | — | — | (157 | ) | — | (157 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Dividends on common stock ($0.075 per share) | — | — | — | — | — | — | — | — | — | (1,934 | ) | — | (1,934 | ) | — | — | — | — | — | — | — | — | — | (1,951 | ) | — | (1,951 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 9 | — | 840 | — | — | — | — | 840 | — | — | — | — | 33 | — | 899 | — | — | — | — | 899 | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class B common stock to Howard Jonas | — | — | — | — | — | — | — | (71 | ) | — | — | — | (71 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Class B common stock purchased from employees | — | — | — | — | — | — | — | (165 | ) | — | — | — | (165 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of preferred stock | (117 | ) | (1,000 | ) | — | — | — | — | — | — | — | — | — | (1,000 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | — | — | — | — | — | — | — | — | 339 | — | (36 | ) | 303 | — | — | — | — | — | — | — | — | (31 | ) | — | 3 | (28 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Net loss for three months ended March 31, 2022 | — | — | — | — | — | — | — | — | — | 17,889 | (1,154 | ) | 16,735 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE AT MARCH 31, 2022 | 2,322 | $ | 19,743 | 1,574 | $ | 16 | 26,642 | $ | 266 | $ | 144,089 | $ | (14,105 | ) | $ | 3,499 | $ | (13,530 | ) | $ | (13,686 | ) | $ | 126,292 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss for three months ended March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE AT MARCH 31, 2023 | 866 | $ | 7,359 | 1,574 | $ | 16 | 27,159 | $ | 271 | $ | 147,445 | $ | (19,175 | ) | $ | 1,895 | $ | 61,333 | $ | (13,510 | ) | $ | 185,634 |
GENIE ENERGY LTD.
|
| Three Months Ended |
|
| Three Months Ended |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2024 |
| 2023 |
| |||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||
Operating activities |
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
| $ | 14,392 |
| $ | 16,735 | ||||||||||
Net income (loss) from discontinued operations, net of tax | 3,055 | (1,932 | ) | |||||||||||||
Net (loss) income from discontinued operations, net of tax | ||||||||||||||||
Net income from continuing operations | 11,337 | 18,667 | ||||||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
| ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
| |||||||||
Provision for captive insurance liability | 1,036 | — | ||||||||||||||
Depreciation and amortization |
|
| 96 |
|
|
| 96 |
|
|
| 219 |
|
| 115 |
| |
Impairment of assets |
|
| 19 |
|
| — | ||||||||||
Provision for doubtful accounts receivable |
|
| 574 |
|
|
| 392 |
|
|
| 729 |
|
| 574 |
| |
Unrealized loss on marketable equity securities and investment | 71 | 652 | ||||||||||||||
Inventory valuation allowance | ||||||||||||||||
Unrealized gain on marketable equity securities and investments and others, net | (49 | ) | (124 | ) | ||||||||||||
Stock-based compensation |
|
| 899 |
|
|
| 814 |
|
|
| 749 |
|
| 899 |
| |
Equity in the net income in equity method investees |
|
| (195 | ) |
|
| (125 | ) | ||||||||
Change in assets and liabilities: |
|
|
|
|
|
|
|
| ||||||||
Changes in assets and liabilities: |
|
|
|
|
|
|
| |||||||||
Trade accounts receivable |
|
| (10,643 | ) |
|
| (2,368 | ) |
|
| 1,093 |
|
| (10,643 | ) | |
Inventory |
|
| (3,631 | ) |
|
| (1,145 | ) |
|
| (2,191 | ) |
| (3,631 | ) | |
Prepaid expenses |
|
| (1,032 | ) |
|
| (1,904 | ) |
|
| 581 |
|
| (1,032 | ) | |
Other current assets and other assets |
|
| 1,138 |
|
| (5,638 | ) | |||||||||
Trade accounts payable, accrued expenses and other liabilities |
|
| (2,051 | ) |
|
| 2,589 |
|
| (5,694 | ) |
| (2,051 | ) | ||
Due to IDT Corporation, net |
|
| (66 | ) |
|
| (391 | ) |
|
| (25 | ) |
| (66 | ) | |
Income taxes payable |
|
| 5,004 |
|
| 6,560 | ||||||||||
Net cash provided by operating activities of continuing operations | 1,520 | 18,199 | ||||||||||||||
Net cash provided by operating activities of discontinued operations | 9,714 | 141 | ||||||||||||||
Net cash provided by operating activities |
|
| 11,234 |
|
| 18,340 | ||||||||||
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Capital expenditures |
|
| (98 | ) |
|
| (59 | ) |
| (1,206 | ) |
| (98 | ) | ||
Proceeds from the sale of marketable equity securities | 343 | — | ||||||||||||||
Purchase of marketable equity securities and other investment |
|
| (4,559 | ) |
|
| (200 | ) | ||||||||
Purchase of solar system facility | (1,344 | ) | — | |||||||||||||
Purchases of marketable equity securities and other investments | (2,094 | ) | (4,559 | ) | ||||||||||||
Purchase of equity of subsidiary | (1,200 | ) | — | |||||||||||||
Proceeds from the sale of marketable equity securities and other investments | — | 343 | ||||||||||||||
Proceeds from settlement of equity method investment | 133 | — | — | 133 | ||||||||||||
Investment in notes receivables with related party | — | (1,388 | ) | |||||||||||||
Repayment of notes receivable |
|
| 19 |
|
|
| 19 |
|
|
| — |
|
|
| 19 |
|
Net cash used in investing activities of continuing operations | (4,162 | ) | (1,628 | ) | ||||||||||||
Net cash used in investing activities of discontinued operations | — | (21,832 | ) | |||||||||||||
Net cash used in investing activities |
|
| (4,162 | ) |
|
| (23,460 | ) |
| (5,844 | ) |
| (4,162 | ) | ||
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Dividends paid |
|
| (2,108 | ) |
|
| (2,304 | ) |
| (2,121 | ) |
| (2,108 | ) | ||
Repurchases of Class B common stock | (4,101 | ) | — | |||||||||||||
Repurchases of Class B common stock from employees |
|
| (165 | ) |
|
| (71 | ) |
|
| (1,508 | ) |
|
| (165 | ) |
Redemption of preferred stock | (1,000 | ) | — | — | (1,000 | ) | ||||||||||
Net cash used in financing activities |
|
| (3,273 | ) |
|
| (2,375 | ) |
| (7,730 | ) |
| (3,273 | ) | ||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
| (10 | ) |
|
| 27 |
|
| 74 |
|
| (10 | ) | ||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
| 3,789 |
|
| (7,468 | ) | |||||||||
Cash, cash equivalents, and restricted cash (including discontinued operations) at beginning of period |
|
| 106,080 |
|
|
| 102,149 |
| ||||||||
Cash, cash equivalents and restricted cash (including discontinued operations) at end of the period | 109,869 | 94,681 | ||||||||||||||
Less: Cash of discontinued operations at end of period | 858 | 1,726 | ||||||||||||||
Cash, cash equivalents, and restricted cash (excluding discontinued operations) at end of period |
| $ | 109,011 |
|
| $ | 92,955 |
| ||||||||
Net (decrease) increase in cash, cash equivalents, and restricted cash | ||||||||||||||||
Cash, cash equivalents, and restricted cash (including cash held at discontinued operations) at beginning of period |
|
| 165,479 |
|
|
| 106,080 |
| ||||||||
Cash, cash equivalents and restricted cash (including cash held at discontinued operations) at end of the period | 164,905 | 109,869 | ||||||||||||||
Less: Cash held at of discontinued operations at end of period | 2,886 | 858 | ||||||||||||||
Cash, cash equivalents, and restricted cash (excluding cash held at discontinued operations) at end of period |
| $ | 162,019 |
|
| $ | 109,011 |
|
See accompanying notes to consolidated financial statements.
6 |
Note 1—Basis of Presentation and Business Changes and Development
The accompanying unaudited consolidated financial statements of Genie Energy Ltd. and its subsidiaries (the “Company” or “Genie”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 20232024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.2024. The balance sheet at December 31, 20222023 has been derived from the Company’s audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022,2023, as filed with the U.S. Securities and Exchange Commission (the “SEC”).
The Company owns 99.5%100% of Genie Energy International Corporation (“GEIC”), which owns 100% of Genie Retail Energy (“GRE”), 100% of Genie Retail Energy International ("GRE International") and varied interests in entities withinthat comprise the Genie Renewables.Renewables segment.
GRE owns and operates retail energy providers (“REPs”REPs”), including IDT Energy (“IDT Energy”), Residents Energy (“Residents Energy”), Town Square Energy and Town Square Energy East (collectively, "TSE"), Southern Federal Power ("Southern Federal") and Mirabito Natural Gas (“Mirabito”Mirabito”). The majority of GRE's REP businesses resell electricity and natural gas to residential and small business customers primarilyare located in the Eastern and Midwestern United States and Texas. Mirabito supplies natural gas to commercial customers in Florida.
Genie Renewables consists of a 95.5% interest in Genie Solar, aan integrated solar energy company, a 92.8% interest in CityCom Solar, a marketer of community solar energyand other sales solutions and a 96.0%91.5% interest in Diversegy, an energy broker.
Genie Solar owns Sunlight Energy, a broker for commercial customers,solar energy developer and operator and a 60.0% interest in Prism Solar Technology ("Prism"), which designed and manufactures specialized a solar solutions company that is engaged in the manufacturing of solar panels, solar installation design and solar energy project management.panels.
One-Time Tax Credit
In the first quarter of 2023,2024, the Company received $3.1 million in respect of a related to a one-time tax credit related to payroll taxes incurred in prior years, which the Company recognized as a gain included in other income, (expense), net in the accompanying consolidated statements of operations for the three months ended March 31, 2023.
Discontinued Operations in Finland and Sweden
Previously,Prior to the third quarter of 2022, the Company had a third segment, Genie Retail Energy International, or GRE International, which supplied electricity to residential and small business customers in Scandinavia. However, as a result of volatility in the energy market in Europe, in the third quarter of 2022, the Company decided to discontinue the operations of Lumo Energia Oyj ("Lumo Finland") and Lumo Energi AB ("Lumo Sweden"). In July 2022, the Company entered into a series of transactions to sell most of the electricity swap instruments held by Lumo Sweden. The Company also entered into a series of transactions to transfer the customers of Lumo Finland and Lumo Sweden to other suppliers.
The Company determined that the discontinued operations inof Lumo Finland and Lumo Sweden represented a strategic shift that willwould have a major effect on the Company's operations and financial statements. The Company has accountedaccounts for these businesses as discontinued operations and accordingly, has presentedpresents the results of operations and related cash flows as discontinued operations. The results of operations and related cash flows are presented as discontinued operations for all periods presented.periods. Any remaining assets and liabilities of the discontinued operations have beenare presented separately and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of March 31, 20232024 and December 31, 2022.2023. Lumo Finland and Lumo Sweden are continuing to liquidate their remaining receivables and settle any remaining liabilities.
In November 2022, Lumo Finland declared bankruptcy and the administration of Lumo Finland was transferred to an administrator (the "Lumo Administrators"). All assets and liabilities of Lumo Finland remain with Lumo Finland, in which Genie retains its equity ownership interest, however, the management and control of Lumo Finland were transferred to the Lumo Administrators. Since the Company lost control of the management of Lumo Finland in favor of the Lumo Administrators, the accounts of Lumo Finland were deconsolidated effective November 9, 2022.
Following the discontinuance of operations of Lumo Finland and Lumo Sweden, GRE International ceased to be a segment and the remaining assets and liabilities and results of continuing operations of GRE International were combined with corporate.
Discontinued Operations in the United Kingdom
In October 2021, as part of the orderly exit process from the United KingdomU. K. market, Orbit Energy Limited ("Orbit"), a REP owed by the Company that used to operate in U.K.,United Kingdom, and Shell U.K. Limited ("Shell") agreed to terminate the exclusive supply contract between them. As part of the termination agreement, Orbit was required to unwind all physical forward hedges with Shell which resulted in net cash proceeds after settlement of all related liabilities with Shell.
Following the termination of the contract with Shell, Orbit filed a petition with the High Court of Justice Business and Property of England and Wales (the “Court”) to declare Orbit insolvent based on the Insolvency Act of 1986. On November 29, 2021, the Court declared Orbit insolvent, revoked Orbit's license to supply electricity and natural gas in the United Kingdom, ordered the current customers to be transferred to “supplier of last resort” and transferred the administration of Orbit to Administratorsan administrator (the" Orbit Administrators") effective December 1, 2021. All of the customers of Orbit were transferred to a third-party supplier effective December 1, 2021 as ordered by the Court. All assets and liabilities of Orbit, including cash and receivables remain with Orbit, in which Genie retains a 100% interest, however, the management and control of Orbit was transferred to the Administrators.
The Company determined that the discontinued operations in the United Kingdomof Orbit represented a strategic shift that willwould have a major effect on the Company's operations and financial statements. Since the appointment of the Orbit Administrators, the Company has accounted for the Orbit businessthese businesses as discontinued operations and accordingly, has presented the results of operations and related cash flows as discontinued operations. The results of operations and related cash flows are presented as discontinued operations for all periods presented. Any remaining assets and liabilities of the discontinued operations have been presented separately, and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of March 31, 2023 and December 31, 2022.Since the Company lost control of the management of Orbit in favor of the Orbit Administrators, the accounts of Orbit were deconsolidated effective December 1, 2021.
On November 21, 2023, the Court issued an order to cease the administration and revert the control of Orbit from the Orbit Administrators to the Company effective November 28, 2023. Following the Company regaining control of the management of Orbit, the accounts of Orbit are consolidated effective November 28, 2023.
Seasonality and Weather; Climate Change and Volatility in Pricing
The weather and the seasons, among other things, affect GRE’s revenues. Weather conditions have a significant impact on the demand for natural gas used for heating and electricity used for heating and cooling. Typically, colder winters increase demand for natural gas and electricity, and hotter summers increase demand for electricity. Milder winters or summers have the opposite effect. Unseasonable temperatures in other periods may also impact demand levels. Natural gas revenues typically increase in the first quarter due to increased heating demands and electricity revenues typically increase in the third quarter due to increased air conditioning use. Approximately 39.7%48.1% and 44.5%39.7% of GRE’s natural gas revenues for the relevant years were generated in the first quarters 20222023 and 2021,2022, respectively, when demand for heating was highest. Although the demand for electricity is not as seasonal as natural gas (due, in part, to usage of electricity for both heating and cooling), approximately 30.532.5% and30.330.5% of GRE’s electricity revenues were generated in the third quarters of2023 and 2022 and, respectively2021, respectively.. GRE’s REPs’ revenues and operating income are subject to material seasonal variations, and the interim financial results are not necessarily indicative of the estimated financial results for the full year.
In addition to the direct physical impact that climate change may have on the Company's business, financial condition and results of operations because of the effect on pricing, demand for our offerings and/or the energy supply markets, we may also be adversely impacted by other environmental factors, including: (i) technological advances designed to promote energy efficiency and limit environmental impact; (ii) increased competition from alternative energy sources; (iii) regulatory responses aimed at decreasing greenhouse gas emissions; and (iv) litigation or regulatory actions that address the environmental impact of our energy products and services.
8 |
Note 2—Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet and the corresponding amounts reported in the consolidated statements of cash flows:
| March 31, 2023 |
| December 31, 2022 |
| March 31, 2024 | March 31, 2024 |
| December 31, 2023 |
| |||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||
Cash and cash equivalents |
| $ | 105,220 |
|
| $ | 98,571 |
| $ | 106,560 |
|
| $ | 107,609 |
| |
Restricted cash—short-term |
|
| 3,791 |
|
|
| 6,007 |
|
| 9,918 |
|
| 10,442 |
| ||
Restricted cash—long-term | 45,541 | 44,945 | ||||||||||||||
Total cash, cash equivalents, and restricted cash |
| $ | 109,011 |
|
| $ | 104,578 |
| $ | 162,019 |
|
| $ | 162,996 |
|
Restricted cash—short-term includes amounts set aside in accordance with GRE's Amended and Restated Preferred Supplier Agreement with BP Energy Company (“BP”) (see Note 18) and Credit Agreement with JPMorgan Chase (see Note 19).
Restricted cash—long-term consists of cash of a wholly-owned captive insurance subsidiary (the "Captive"), which is restricted for use to secure the noncurrent portion of the insured liability program (see Note 18). At March 31, 2024 and December 31, 2023, the restricted cash—short-term $6.3 million of cash of the Captive which is restricted for use in order to secure the current portion of the insured liability program.
Included in the cash and cash equivalents as of March 31, 20232024 and December 31, 20222023 is cash received from Lumo Sweden (see Note 5).
Note 3—Inventories
Inventories consisted of the following:
| March 31, 2023 |
| December 31, 2022 |
| March 31, 2024 | March 31, 2024 | December 31, 2023 | December 31, 2023 |
| |||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||
Natural gas |
| $ | 315 |
|
| $ | 3,302 |
| $ | 309 | $ | 1,309 |
| |||
Renewable credits |
|
| 15,839 |
|
| 10,531 | ||||||||||
Solar Panels: |
|
|
|
|
| |||||||||||
Finished goods | 3,191 | 1,881 | ||||||||||||||
Solar panels, net of a valuation allowance of $1.3 million and $0.8 million at March 31, 2024 and December 31, 2023, respectively | ||||||||||||||||
Totals |
| $ | 19,345 |
|
| $ | 15,714 |
In the three months ended March 31, 2024, the Company recorded an inventory valuation allowance of $0.4 million to the cost of revenues to write down the carrying value of solar panel inventories to the estimated net realizable value. There is no inventory valuation allowance recorded for the three months ended March 31, 2023.
Note 4—Revenue Recognition
Revenue from the single performance obligation to deliver a unit of electricity and/or natural gas is recognized as the customer simultaneously receives and consumes the benefit. Variable quantities in requirements contracts are considered to be options for additional goods and services because the customer has a current contractual right to choose the amount of additional distinct goods to purchase. GRE recordrecords unbilled revenues for the estimated amount customers will be billed for services rendered from the time meters were last read to the end of the respective accounting period. The unbilled revenue is estimated each month based on available per day usage data, the number of unbilled days in the period and historical trends.
Incumbent utility companies in most of the service territories in which GRE's REPs operate offer purchase of receivable,receivables, or POR, programs, and GRE’s REPs participate in POR programs for a majority of their receivables. The Company estimates variable consideration related to its rebate programs using the expected value method and a portfolio approach. The Company’s estimates related to rebate programs are based on the terms of the rebate program, the customer’s historical electricity and natural gas consumption, the customer’s rate plan, and a churn factor. Taxes that are imposed on the Company’s sales and collected from customers are excluded from the transaction price.
9 |
Revenue from sales of solar panels are recognized at a point in time following the transfer of control of the solar panels to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. For sales contracts that contain multiple performance obligations, such as the shipment or delivery of solar modules, the Company allocates the transaction price to each performance obligation identified in the contract based on relative standalone selling prices, or estimates of such prices, and recognize the related revenue as control of each individual product is transferred to the customer, in satisfaction of the corresponding performance obligations. Revenues from sales of solar panels are included in other revenues in the consolidated statements of operations.
Genie Solar enters into contracts to identify, develop, and in some cases operate solar generation sites to provide solar electricity to its customers. Obligations under solar project contracts consist of a series of tasks and components and accordingly are accounted for as multiple performance obligations. Because the Company’s performance creates and enhances assets that are controlled by and specific to customers, the Company recognizes construction services revenue over time. Revenue for these performance obligations is recognized using the input method based on the cost incurred as a percentage of total estimated contract costs. Due to the significance of the costs associated with solar panels to the total project, our judgment on when such costs should be included in the measure of progress has a material impact on revenue recognition. Contract costs include all direct material and labor costs related to contract performance. Revenues from sales of solar panels and solar panel projects are included under the Other Revenues in the consolidated statements of operations.
Energy generation revenue is earned from both the sale of electricity generated from solar projects and the sale of renewable energy credits which are included in the Other Revenues in the consolidated statement of operations.
Revenue from energy generation is recognized when the Company satisfies the performance obligation, which occurs at the time of the delivery of electricity at the contractual rates.
The Company applies for and receives Solar Renewable Energy Credits ("SRECs") in certain jurisdictions for power generated by solar energy systems it owns. There are no direct costs allocated to SRECs upon generation. The Company typically sells SRECs to different customers from those purchasing the energy. The sale of each SREC is a distinct performance obligation satisfied at a point in time and that the performance obligation related to each SREC is satisfied when each SREC is delivered to the customer.
Revenues from commissions from selling third-party products to customers, entry and other fees from the energy brokerage are recognized at the time the performance obligation is met. The Company's contacts with customers for commission revenue contain a single performance obligation and are satisfied at a point in time.
The Company recognizes the incremental costs of obtaining a contract with a customer as an asset if it expects the benefit of those costs to be longer than one year. The Company determined that certain sales commissions to acquire customers meet the requirements to be capitalized. For GRE, the Company applies a practical expedient to expense costs as incurred for sales commissions to acquire customers as the period would have been one year or less.
Disaggregated Revenues
The following table shows the Company’s revenues disaggregated by pricing plans offered to customers:
| Electricity |
|
| Natural Gas |
|
| Other |
|
| Total |
| |||||
(in thousands) | ||||||||||||||||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate |
| $ | 29,505 |
|
| $ | 5,615 |
|
| $ | — |
|
| $ | 35,120 |
|
Variable rate |
|
| 44,982 |
|
|
| 21,310 |
|
|
| — |
|
|
| 66,292 |
|
Other |
|
| — |
|
|
| — |
|
|
| 3,864 |
|
|
| 3,864 |
|
Total |
| $ | 74,487 |
|
| $ | 26,925 |
|
| $ | 3,864 |
|
| $ | 105,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate |
| $ | 18,618 |
|
| $ | 3,784 |
|
| $ | — |
|
| $ | 22,402 |
|
Variable rate |
|
| 40,762 |
|
|
| 20,720 |
|
|
| — |
|
| 61,482 |
| |
Other |
|
| — |
|
|
| — |
|
|
| 2,042 |
|
|
| 2,042 |
|
Total |
| $ | 59,380 |
|
| $ | 24,504 |
|
| $ | 2,042 |
|
| $ | 85,926 |
|
| Electricity | Natural Gas | Other | Total | ||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate |
| $ | 52,097 |
|
| $ | 7,429 |
|
| $ | — |
|
| $ | 59,526 |
|
Variable rate |
|
| 37,299 |
|
|
| 14,969 |
|
|
| — |
|
|
| 52,268 |
|
Other |
|
| — |
|
|
| — |
|
|
| 7,894 |
|
|
| 7,894 |
|
Total |
| $ | 89,396 |
|
| $ | 22,398 |
|
| $ | 7,894 |
|
| $ | 119,688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate |
| $ | 29,505 |
|
| $ | 5,615 |
|
| $ | — |
|
| $ | 35,120 |
|
Variable rate |
|
| 44,982 |
|
|
| 21,310 |
|
|
| — |
|
| 66,292 |
| |
Other |
|
| — |
|
|
| — |
|
|
| 3,864 |
|
|
| 3,864 |
|
Total |
| $ | 74,487 |
|
| $ | 26,925 |
|
| $ | 3,864 |
|
| $ | 105,276 |
|
Fixed and variable rate revenues are from GRE. Other revenues are revenues from Genie Renewables which includes revenues from solar panels, solar projects and energy generation by Genie Solar, commissions from marketing energy solutions by CityCommCityCom Solar and Diversegy and selling solar panels by Prism.Diversegy.
10 |
The following table shows the Company’s revenues disaggregated by non-commercial and commercial channels:
| Electricity |
|
| Natural Gas |
|
| Other |
|
| Total |
| Electricity |
| Natural Gas |
| Other |
| Total |
| |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Non-Commercial Channel |
| $ | 82,942 |
| $ | 16,922 |
| $ | — |
| $ | 99,864 |
| |||||||||||||||||||
Commercial Channel |
|
| 6,454 |
|
| 5,476 |
|
| — |
|
| 11,930 |
| |||||||||||||||||||
Other |
|
| — |
|
| — |
|
| 7,894 |
|
| 7,894 |
| |||||||||||||||||||
Total |
| $ | 89,396 |
| $ | 22,398 |
| $ | 7,894 |
| $ | 119,688 |
| |||||||||||||||||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Non-Commercial Channel |
| $ | 60,123 |
|
| $ | 20,783 |
|
| $ | — |
|
| $ | 80,906 |
|
| $ | 60,123 |
| $ | 20,783 |
| $ | — |
| $ | 80,906 |
| |||
Commercial Channel |
|
| 14,364 |
|
|
| 6,142 |
|
|
| — |
|
| 20,506 |
|
|
| 14,364 |
|
| 6,142 |
|
| — |
|
| 20,506 |
| ||||
Other |
|
| — |
|
|
| — |
|
|
| 3,864 |
|
|
| 3,864 |
|
|
| — |
|
| — |
|
| 3,864 |
|
| 3,864 |
| |||
Total |
| $ | 74,487 |
|
| $ | 26,925 |
|
| $ | 3,864 |
|
| $ | 105,276 |
|
| $ | 74,487 |
| $ | 26,925 |
| $ | 3,864 |
| $ | 105,276 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Non-Commercial Channel |
| $ | 50,622 |
|
| $ | 19,638 |
|
| $ | — |
|
| $ | 70,260 |
| ||||||||||||||||
Commercial Channel |
|
| 8,758 |
|
|
| 4,866 |
|
| — |
|
| 13,624 |
| ||||||||||||||||||
Other |
|
| — |
|
|
| — |
|
|
| 2,042 |
|
|
| 2,042 |
| ||||||||||||||||
Total |
| $ | 59,380 |
|
| $ | 24,504 |
|
| $ | 2,042 |
|
| $ | 85,926 |
|
Contract liabilities
Certain revenue generating contracts at Renewables include provisions that require advance payment from customers. These advance payments are recognized as revenue as the Company satisfies the performance obligations to the other party. A portion of the transaction price allocated to the performance obligations to be satisfied in future periods is recognized as a contract liability. Contract liabilities are included in other current liabilities account in the consolidated balance sheet.
The table below reconciles the change in the carrying amount of contract liabilities:
Three Months Ended March 31, | ||||||||
2024 | 2023 |
| ||||||
(in thousands) | ||||||||
Contract liability, beginning | $ | 5,582 | $ | 1,759 |
| |||
Recognition of revenue included in the beginning of the year contract liability | (2,560 | ) | (148 | ) | ||||
Additions during the period, net of revenue recognized during the period | 663 | 476 | ||||||
Contract liability, end | $ | 3,685 | $ | 2,087 |
Allowance for doubtful accounts
The change in the allowance for doubtful accounts was as follows:
Three Months Ended March 31, | ||||||||
2024 | 2023 |
| ||||||
(in thousands) | ||||||||
Allowance for doubtful accounts, beginning | $ | 6,574 | $ | 4,826 |
| |||
Additions charged (reversals credited) to expense | 729 | 574 | ||||||
Other additions (deductions) | (283 | ) | (17 | ) | ||||
Allowance for doubtful accounts, end | $ | 7,020 | $ | 5,383 |
Note 5—Acquisitions and Discontinued Operations
Acquisition of Solar System Facilities
On November 3, 2023, the Company acquired ten special-purpose entities that own and operate solar system facilities in Ohio and Michigan. The Company paid a total of $7.5 million, including $1.0 million being held in escrow to be released to the sellers upon satisfaction of the conditions set forth in the related purchase agreement.
The acquisition has been accounted for as asset acquisition and the Company recorded $7.7 million in total purchase price, including $0.2 million of direct transaction cost allocated to solar arrays assets included in the property and equipment account in the consolidated balance sheet with estimated useful lives of 14 to 30 years.
On November 3, 2023, the Company also signed an agreement to purchase from the sellers another special purpose entity that owned and operated a solar system facility in Indiana, for $1.3 million, subject to the satisfaction of certain closing conditions. In February 2024, the purchase of the solar system facility in Indiana was completed after the closing conditions were met. The acquisition has been accounted for as asset acquisition and the Company recorded $1.3 million to solar arrays assets included in the property and equipment account in the consolidated balance sheet with estimated useful lives of 30 years.
The acquired assets are allocated to the Renewables segment.
Lumo Finland and Lumo Sweden Operations
As a result of the sustained volatility of the energy market in Europe, in Julythe third quarter of 2022, the Company initiated a plandecided to dispose of certain assets and liabilitiesdiscontinue the operations of Lumo Finland and Lumo Sweden. From July 13, 2022 to July 19, 2022, the Company entered into a series of transactions to sell most of the electricity swap instruments held by Lumo Sweden for a gross aggregate amount of €41.1 million (equivalent to approximately $41.4 million at the dates of the transactions) before fees and other costs.Sweden. The sale price has been fixed and is expected to continue to be settled monthly based on the monthly commodity volume specified in the instruments from September 2022 to March 2025.
In July 2022, Lumo Sweden entered into a transaction to transfer, effective August 5, 2022, its customers to a third party for a nominal consideration. In August 2022,Lumo Finland entered into a transaction to transfer its variable rate customers to a third party for €1.9 million (equivalent to $2.0 million) and terminated the contracts of fixed rate customers.
The Company determined that exitingthe discontinued operations inof Lumo Finland and Lumo Sweden represented a strategic shift that willwould have a major effect on the Company's operations and financial statements and accordingly, the results of operations and related cash flows are presented as discontinued operations for all periods presented. The assets and liabilities of the discontinued operations have beenare presented separately and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of March 31, 20232024 and December 31, 2022. Lumo Finland and2023. Lumo Sweden areis continuing to liquidate their remaining receivables and settle any remaining liabilities.
In November 2022, Lumo Finland declared bankruptcy and the administration of Lumo Finland was transferred to the Lumo Administrators.an administrator (the "Lumo Administrators"). All assets and liabilities of Lumo Finland remain with Lumo Finland, in which Genie retains its equity ownership interest, however, the management and control of Lumo Finland were transferred to the Lumo Administrators. Since the Company lost control of the management of Lumo Finland in favor of the Lumo Administrators, the accounts of Lumo Finland were deconsolidated effect November 9, 2022.
The following table represents summarized balance sheet information of assets and liabilities of the discontinued operations of Lumo Sweden:
| March 31, 2023 |
| December 31, 2022 |
| March 31, 2024 |
| December 31, 2023 | |||||||||
(in thousands) | (in thousands) | |||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash |
| $ | 858 |
|
| $ | 1,503 |
|
| $ | 2,886 |
|
| $ | 2,483 |
|
Receivables from the settlement of derivative contract—current |
|
| 18,053 |
|
|
| 23,351 |
| ||||||||
Receivables from the settlement of derivative contract—current |
|
| 8,406 |
|
|
| 10,699 |
| ||||||||
Current assets of discontinued operations |
| $ | 18,911 |
|
| $ | 24,854 |
|
| $ | 11,292 |
|
| $ | 13,182 |
|
Receivables from the settlement of derivative contract—noncurrent | $ | 8,652 | $ | 12,689 | $ | 426 | $ | 2,362 | ||||||||
Other noncurrent assets | 3,868 | 3,616 | 4,107 | 5,078 | ||||||||||||
Noncurrent assets of discontinued operations | $ | 12,520 | $ | 16,305 | $ | 4,533 | $ | 7,440 | ||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income taxes payable | 10,959 | 10,894 | 1,721 | 1,399 | ||||||||||||
Other current liabilities |
|
| 117 |
|
| 42 | ||||||||||
Accounts payable and other current liabilities | ||||||||||||||||
Current liabilities of discontinued operations |
| $ | 11,076 |
|
| $ | 10,936 |
|
| $ | 1,752 |
|
| $ | 1,490 |
|
Deferred tax liabilities | 686 | 686 | 681 | 698 | ||||||||||||
Noncurrent liabilities of discontinued operations | $ | 686 | $ | 686 | $ | 681 | $ | 698 |
The summary of the results of operations of the discontinued operations of Lumo Finland and Lumo Sweden were as follows:
| Three Months Ended March 31, | ||||||
| 2023 | 2022 | |||||
| (in thousands) | ||||||
Revenues | $ | — | $ | 12,603 | |||
Cost of revenues | — | 14,169 | |||||
Gross loss | — | (1,566 | ) | ||||
Selling, general and administrative expenses | — | 965 | |||||
Loss from operations | — | (2,531 | ) | ||||
Other income | 250 | — | |||||
Income before income taxes | 250 | (2,531 | ) | ||||
(Provision for) benefit from income taxes | (68 | ) | 599 | ||||
Net income (loss) from discontinued operations, net of taxes | $ | 182 | $ | (1,932 | ) | ||
Income (loss) before income taxes attributable to Genie Energy Ltd. | $ | 250 | $ | (2,343 | ) |
| Three Months Ended March 31, | ||||||
| 2024 | 2023 | |||||
| (in thousands) | ||||||
Income from operations | $ | — | $ | — | |||
Other income, net | 551 | 250 | |||||
Income before income taxes | 551 | 250 | |||||
Provision for income taxes | (816 | ) | (68 | ) | |||
Net (loss) income from discontinued operations, net of taxes | $ | (265 | ) | $ | 182 | ||
Income before income taxes attributable to Genie Energy Ltd. | $ | 551 | $ | 250 |
The following table presents a summary of cash flows of the discontinued operations:operations
The summary of presents a summary of cash flows of the discontinued operations of Lumo Finland and Lumo Sweden:
| Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2023 | 2022 | 2024 | 2023 | ||||||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||||||
Net income (loss) | $ | 182 | $ | (1,932 | ) | |||||||||||||||||||||||
Net (loss) income | $ | (265 | ) | $ | 182 | |||||||||||||||||||||||
Non-cash items | 62 | 132 | 541 | 62 | ||||||||||||||||||||||||
Changes in assets and liabilities | 9,470 | 1,941 | ||||||||||||||||||||||||||
Cash flows provided by operating activities of discontinued operations | $ | 9,714 | $ | 141 | $ | 4,208 | $ | 9,714 |
13 |
In furtherance of the Company's exit from the retail energy markets in Finland and Sweden and to facilitate the maximization of value at Lumo Sweden, on November 3, 2022, the Company acquired additional minority interests in Lumo Finland and Lumo Sweden from an employee for 132,302 restricted Class B common stock of the Company, which will vest ratably from November 2022 to May 2025. The Company increased its interest in Lumo Finland from 91.6% to 96.6% and in Lumo Sweden from 98.8% to 100%.
Prior to being treated as discontinued operations or consolidated, the assets and liabilities of Lumo Finland and Lumo Sweden were included in GRE International segment.
On November 8, 2023, the Lumo Administrators, acting on behalf of the Bankruptcy Estate, filed a claim in the District Court of Helsinki against Genie Nordic, a wholly owned subsidiary of the Company and the parent company of Lumo Finland, its directors, officers and affiliates, in which it alleges that the gain from the sale of swap instruments owned by Lumo Sweden amounting to €35.2 million (equivalent to $38.0 million as of March 31, 2024) belongs to the Bankruptcy Estate. The Company believes that the Lumo Administrators' position is without merit, and it intends to vigorously defend its position against the Lumo Administrators' claims.
Genie was also notified that the Lumo Administrators filed a claim against one of Lumo Finland’s suppliers, seeking to recover payments made by Lumo Finland amounting to €4.2 million (equivalent to $4.5 million as of March 31, 2024) prior to the bankruptcy. Related to such payment, the Lumo Administrators have filed a recovery claim jointly against the Company and the supplier for €1.6 million (equivalent to $1.7 million as of March 31, 2024) alleging that a portion of the payment to Lumo Finland effectively reduced the Company's liability under the terms of a previously supplied parental guarantee (this €1.6 million is included within and not additive to the €4.2 million). The Lumo Administrators allege that the payments represented preferential payments and therefore belong to the bankruptcy estate which are recoverable under the laws of Finland. The Company intends to challenge the Lumo Administrators' claims. Should the Lumo Administrators succeed in clawing back the funds from the supplier, it is possible that the supplier may seek to recover its losses against the Company, under terms of the parental guarantee. At this time, there is insufficient basis to assess an amount of any probable loss.
United KingdomU.K. Operations
In the third quarter of 2021, the natural gas and energy market in the U.K.United Kingdom deteriorated which prompted the Company to start the process of orderly withdrawal from the U.K. market.United Kingdom. In October 2021, as part of the orderly exit process, Orbit and Shell U.K. Limited ("Shell") agreed to terminate the exclusive supply contract between them. As part of the termination agreement, Orbit was required to unwind all physical forward hedges with Shell which resulted in net cash proceeds after settlement of all related liabilities with Shell.
Following the termination of the contract with Shell, Orbit filed a petition with the High Court of Justice Business and Property of England and Wales (the “Court”) to declare Orbit insolvent based on the Insolvency Act of 1986. On November 29, 2021, the Court declared Orbit insolvent, revoked Orbit's license to supply electricity and natural gas in the United Kingdom, ordered the current customers to be transferred to “supplier of last resort” and transfer the administration of Orbit to Orbit Administrators effective December 1, 2021. All of the customers of Orbit were transferred to a third-party supplier2021, which transfer was effective December 1, 2021 as ordered by the Court.2021. All assets and liabilities of Orbit, including cash and receivables remainremained with Orbit and the management and control of which was transferred to Orbit Administrators. TheAs a result of loss of control, the Company expects thatdeconsolidated Orbit effective December 1, 2021 and estimated the administrationremaining liability related to its ownership of Orbit will be completed in 2023Orbit..
In the fourth quarter of 2021, Orbit transferred to GEIC a net amount of $49.7 million from the proceeds of the settlement of the contract with Shell which is included in cash and cash equivalents in the consolidated balance sheet as of December 31, 2021. In January 2022, the Company transferred $21.5 million to the Administrators of Orbit Energy to fund the settlement of the expected remaining liabilities of Orbit of $30.8 million, which were included in the current liabilities of discontinued operations in the consolidated balance sheet as of December 31, 2021. In February 2022, the Company deposited $28.3 million into an attorney trust account to hold, preserve, and dispense funds to the extent needed in connection with the administration process. On February 24, 2022, the Administrators filed a petition under Chapter 15 of the U.S. Bankruptcy Code with the Bankruptcy Court of the Southern District of New York seeking (i) recognition of the U.K. administration proceeding as a foreign main proceeding and the U.K. Administrators as its foreign representatives, and (ii) entrusting distribution of the funds the Company deposited into its attorney’s trust fund to the U.K. Administrators. In the second quarter of 2022, the Administrators filed an application to transfer the funds back to the Administrators’ control in the U.K. Subject to certain representations and expectations regarding use and application of the funds to efficiently and expeditiously pay off creditors and bring a timely close to the insolvency administration, the Company decided not to oppose the application, and the $28.3 million was transferred to the account of the Administrator. In August 2022, the Administrator paid the Company a partial return of its interest in Orbit of £4.6 million (equivalent to $5.4 million).The Company believes that the funds remaining with the Administrators are more than sufficient to pay any remaining creditors of Orbit (with any surplus, which the Company expects to be significant, to be returned to the Company).
The Company determined that exitingthe discontinued operations in the United Kingdomof Orbit represented a strategic shift that willwould have a major effect on the Company's operations and financial statements and accordingly, the results of operations and related cash flows are presented as discontinued operations for all periods presented.effective December 1, 2021.
On November 21, 2023, the Court issued an order to cease the administration and revert the control of Orbit from the Orbit Administrators to the Company effective November 28, 2023. Following the Company regaining control of the management of Orbit, the accounts of Orbit were reconsolidated effective November 28, 2023. In 2023, the Orbit Administrators paid the Company a return of its interest in Orbit of £18.8 million (equivalent to $23.7 million The assetson the dates of transfer).
Upon reconsolidation of the accounts of Orbit, the Company recorded cash and accrued expenses of $21.1 million and $0.8 million, respectively. AtMarch 31, 2024Orbit had income tax payable of $6.8million, included in current liabilities of the discontinued operations have been presented separately, and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of March 31, 2023 andsheet. At December 31, 2022.2023 Orbit has income tax payable and accrued expenses of $2.6 million and $0.8 million, respectively, included in current liabilities of discontinued operations in the consolidated balance sheet.
As a result ofThere were no income or loss of control,from discontinued operations recognized in the Company deconsolidated Orbit effective December 1, 2021 and estimated the remaining liability related to its ownership of Orbit.
In the three months ended March 31, 2024. In the three months ended March 31, 2023, the Company recognized income from discontinued operation, net of taxes of $2.9$2.9 million mainly from the increase in the estimated value of our investments in Orbit due to a change in estimated net assets of Orbit after the Administrator settles the liabilities. The carrying valueexpected settlement of the Company's interest inliabilities by the Orbit was net investments of $16.8Administrators. million and $13.8 million as of March 31, 2023 and December 31, 2022, respectively. The carrying value was determined by estimating the net realizable values of assets and fair values of remaining liabilities which approximates its carrying values as of March 31, 2023 and December 31, 2022.
Prior to being treated as discontinued operations and consolidated,deconsolidation, the assets and liabilities of Orbit were included in the Company's former GRE International segment.
14 |
Note 6—Fair Value Measurements
The following table presents the balance of assets and liabilities measured at fair value on a recurring basis:
|
| Level 1 (1) |
| Level 2 (2) |
| Level 3 (3) |
|
| Total |
| Level 1 (1) | Level 2 (2) | Level 3 (3) | Total | ||||||||||||||||||
|
| (in thousands) |
| (in thousands) | ||||||||||||||||||||||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
March 31, 2024 | ||||||||||||||||||||||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Marketable equity securities | $ | 4,663 | $ | — | $ | — | $ | 4,663 | $ | 372 | $ | — | $ | — | $ | 372 | ||||||||||||||||
Derivative contracts |
| $ | 1,626 |
| $ | — |
| $ | — |
|
| $ | 1,626 |
| $ | 784 | $ | — | $ | — | $ | 784 | ||||||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Derivative contracts |
| $ | 3,559 |
| $ | — |
| $ | — |
|
| $ | 3,559 |
| $ | 145 | $ | — | $ | — | $ | 145 | ||||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Marketable equity securities | $ | 490 | $ | — | $ | — | $ | 490 | $ | 396 | $ | — | $ | — | $ | 396 | ||||||||||||||||
Derivative contracts |
| $ | 4,060 |
| $ | — |
| $ | — |
|
| $ | 4,060 |
| $ | 673 | $ | — | $ | — | $ | 673 | ||||||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Derivative contracts |
| $ | 2,857 |
| $ | — |
| $ | — |
|
| $ | 2,857 |
| $ | 1,724 | $ | — | $ | — | $ | 1,724 |
(1)(1) – quoted prices in active markets for identical assets or liabilities
(2)(2) – observable inputs other than quoted prices in active markets for identical assets and liabilities
(3)(3) – no observable pricing inputs in the market
The Company’s derivative contracts consist of natural gas and electricity put and call options and swaps. The underlying asset in the Company’s put and call options is a forward contract. The Company’s swaps are agreements whereby a floating (or market or spot) price is exchanged for a fixed price over a specified period.
The Company did not have any transfers of assets or liabilities between Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the three months ended March 31, 2023 and 2022.2024 or 2023.
15 |
Fair Value of Other Financial Instruments
The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting this data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.
Restricted cash—short-term, trade receivables, due to IDT Corporation, other current assets and other current liabilities. At March 31, 20232024 and December 31, 2022,2023, the carrying amounts of these assets and liabilities approximated fair value. The fair value estimate for restricted cash—short-term was classified as Level 1. The carrying value of other current assets, due to IDT Corporation, and other current liabilities approximated fair value.
Other assets. At March 31, 20232024 and December 31, 2022,2023, other assets included notes receivable. AtMarch 31, 20232024, the carrying amount of the notes receivable and loans payable approximated fair value. The fair values were estimated based on the Company’s assumptions, and were classified as Level 3 of the fair value hierarchy.
The primary non-recurring fair value estimates typically are in the context of goodwill impairment testing, which involves Level 3 inputs, and asset impairments (Note 9) which utilize Level 3 inputs.
Concentration of Credit Risks
The Company holds cash, cash equivalents, and restricted cash at several major financial institutions, which may exceed Federal Deposit Insurance Corporation insured limits. Historically, the Company has not experienced any losses due to such concentration of credit risk. The Company’s temporary cash investments policy is to limit the dollar amount of investments with any one financial institution and monitor the credit ratings of those institutions. While the Company may be exposed to credit losses due to the nonperformance of the holders of its deposits, the Company does not expect the settlement of these transactions to have a material effect on its results of operations, cash flows or financial condition.
The following table summarizes the percentage of consolidated trade receivable by customers that equal or exceed 10.0% of consolidated net trade receivables atMarch 31, 2023 2024andDecember 31, 2022 2023(no (no other single customer accounted for 10.0% or greater of our consolidated net trade receivable as March 31, 2023 2024orDecember 31, 20222023):
| March 31, 2023 |
|
| December 31, 2022 |
| |||
Customer A |
| 10.9 | % |
| 10.2 | % | ||
Customer B | 11.0 | na |
March 31, 2024 | December 31, 2023 | |||||||
Customer A | 19.9 | % | 21.4 | % |
na—lessless than 10.0% of consolidated net trade receivables at the relevant date
The following table summarizes the percentage of revenues by customers that equal or exceed 10.0% of consolidated net trade revenues for the three months endedreceivables at March 31, 20232024 and December 31, 20222023 (no other single customer accounted for 10.0% or greater of our consolidated revenues in these periods):
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Customer A | na | % | 10.4 | % |
Three Months Ended March 31, | ||||||||
2024 | 2023 | |||||||
Customer A | 21.8 | % | na | % |
na—less than 10.0% of consolidated revenue in the period
Note 7—Derivative Instruments
The primary risk managed by the Company using derivative instruments is commodity price risk, which is accounted for in accordance with Accounting Standards Codification 815 — Derivatives and Hedging. Natural gas and electricity put and call options and swaps are entered into as hedges against unfavorable fluctuations in market prices of natural gas and electricity. The Company does not apply hedge accounting to these options or swaps, therefore the changes in fair value are recorded in earnings. By using derivative instruments to mitigate exposures to changes in commodity prices, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk. The Company minimizes the credit or repayment risk in derivative instruments by entering into transactions with high-quality counterparties. At March 31, 2023,2024, GRE’s swaps and options were traded on the Intercontinental Exchange.
The summarized volume of GRE’s outstanding contracts and options at March 31, 20232024 was as follows (MWh – Megawatt hour and Dth – Decatherm):
Settlement Dates |
| Volume |
| |||||
|
| Electricity (in MWH) |
|
| Gas (in Dth) | |||
Second quarter 2023 | 31,728 | 13,072 | ||||||
Third quarter 2023 | 45,056 | — | ||||||
Fourth quarter 2023 | 108,332 | 610,000 | ||||||
First quarter 2024 | 6,160 | 910,000 | ||||||
Second quarter 2024 | — | — | ||||||
Third quarter of 2024 | 16,592 | — | ||||||
Fourth quarter of 2024 | — | — | ||||||
First quarter of 2025 | 13,520 | 225,000 | ||||||
Second quarter of 2025 | — | 227,500 | ||||||
Third quarter of 2025 | — | 230,000 | ||||||
Fourth quarter of 2025 | — | 230,000 | ||||||
First quarter of 2026 | — | — | ||||||
Second quarter of 2026 | — | — | ||||||
Third quarter of 2026 | 3,520 | — |
Settlement Dates | Volume | |||||||
Electricity (in MWH) | Gas (in Dth) | |||||||
Second quarter 2024 | — | 77,500 | ||||||
Third quarter of 2024 | 24,208 | — | ||||||
Fourth quarter of 2024 | — | — | ||||||
First quarter of 2025 | — | 225,000 | ||||||
Second quarter of 2025 | — | 227,500 | ||||||
Third quarter of 2025 | — | 230,000 | ||||||
Fourth quarter of 2025 | — | 230,000 | ||||||
First quarter of 2026 | — | — | ||||||
Second quarter of 2026 | — | — | ||||||
Third quarter of 2026 | 3,520 | — |
The fair value of outstanding derivative instruments recorded in the accompanying consolidated balance sheets were as follows:
Asset Derivatives |
| Balance Sheet Location |
| March 31, |
| December 31, |
| Balance Sheet Location | March 31, | December 31, | ||||||||||
|
| (in thousands) |
| (in thousands) | ||||||||||||||||
Derivatives not designated or not qualifying as hedging instruments: |
|
|
|
|
|
|
| |||||||||||||
Energy contracts and options1 | Other current assets | $ | 586 | $ | 2,799 | Other current assets | $ | 448 | $ | 321 | ||||||||||
Energy contracts and options | Other assets | 1,040 | 1,261 | Other assets | 336 | 352 | ||||||||||||||
Total derivatives not designated or not qualifying as hedging instruments — Assets |
|
| $ | 1,626 |
| $ | 4,060 |
| $ | 784 | $ | 673 | ||||||||
|
|
|
|
|
| |||||||||||||||
Liability Derivatives |
| Balance Sheet Location |
| March 31, 2023 |
| December 31, 2022 |
| Balance Sheet Location | March 31, 2024 | December 31, 2023 | ||||||||||
|
| (in thousands) |
| (in thousands) | ||||||||||||||||
Derivatives not designated or not qualifying as hedging instruments: |
|
|
|
|
| |||||||||||||||
Energy contracts and options1 | Other current liabilities | $ | 3,444 | $ | 1,800 | Other current liabilities | $ | 125 | $ | 1,716 | ||||||||||
Energy contracts and options | Other liabilities | 115 | 1,057 | Other liabilities | 20 | 8 | ||||||||||||||
Total derivatives not designated or not qualifying as hedging instruments — Liabilities |
| $ | 3,559 |
| $ | 2,857 |
| $ | 145 | $ | 1,724 |
(1) The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months.
17 |
The effects of derivative instruments on the consolidated statements of operations was as follows:
|
| Amount of (Loss) Gain Recognized on Derivatives | Amount of Loss Recognized on Derivatives | ||||||||||||||||||
Derivatives not designated or not qualifying as |
| Location of Gain Recognized | Three Months Ended March 31, | Location of Gain Recognized | Three Months Ended March 31, | ||||||||||||||||
hedging instruments |
| on Derivatives | 2023 | 2022 | on Derivatives | 2024 | 2023 | ||||||||||||||
|
|
| (in thousands) | (in thousands) | |||||||||||||||||
Energy contracts and options |
| Cost of revenues | $ | (11,175 | ) | $ | 37,512 |
Other assets consisted of the following:
March 31, 2023 |
| December 31, 2022 |
| March 31, 2024 |
| December 31, 2023 |
| |||||||||
(in thousands) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Security deposit |
| $ | 7,336 |
|
| $ | 7,341 |
|
| $ | 8,097 |
|
| $ | 7,950 |
|
Right-of-use assets, net of amortization |
|
| 1,796 |
|
|
| 1,892 |
|
|
| 2,045 |
|
| 2,138 |
| |
Fair value of derivative contracts—noncurrent | 1,040 | 1,261 | 329 | 352 | ||||||||||||
Other assets |
|
| 3,334 |
|
|
| 3,362 |
|
|
| 5,956 |
|
|
| 4,807 |
|
Total other assets |
| $ | 13,506 |
|
| $ | 13,856 |
|
| $ | 16,427 |
|
| $ | 15,247 |
|
Note 9—Goodwill and Other Intangible Assets
The table below reconciles the change in the carrying amount of goodwill for the period from January 1, 20232024 to March 31, 2023:2024:
| GRE | Genie Renewables | Total | |||||||||
(in thousands) | ||||||||||||
Balance at January 1, 2023 |
| $ | 9,998 | $ | — | $ | 9,998 | |||||
Additions/deductions during the period | — | — | — | |||||||||
Balance at March 31, 2023 |
| $ | 9,998 | $ | — | $ | 9,998 |
| GRE | Genie Renewables | Total | |||||||||
(in thousands) | ||||||||||||
Balance at January 1, 2024 |
| $ | 9,998 | $ | — | $ | 9,998 | |||||
Additions/deductions during the period | — | — | — | |||||||||
Balance at March 31, 2024 |
| $ | 9,998 | $ | — | $ | 9,998 |
18 |
The table below presents information on the Company’s other intangible assets:
| Weighted Average Amortization Period |
| Gross Carrying Amount |
|
| Accumulated Amortization |
|
| Net |
|
| Weighted Average Amortization Period |
|
| Gross Carrying Amount |
| Accumulated Amortization |
|
| Net |
| |||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Patents and trademarks |
|
| 18.1 years |
| $ | 3,510 |
|
| $ | (1,212 | ) |
| $ | 2,298 |
|
|
| 18.1 years |
|
| $ | 3,510 |
| $ | (1,431 | ) |
| $ | 2,079 |
| ||
Customer relationships |
|
| 9.0 years |
|
| 1,100 |
|
|
| (682 | ) |
|
| 418 |
|
|
| 9.0 years |
|
|
| 1,100 |
|
| (805 | ) |
|
| 295 |
| ||
Licenses |
| 10.0 years |
|
|
| 479 |
|
|
| (162 | ) |
|
| 317 |
|
| 10.0 years |
|
|
| 479 |
|
| (210 | ) |
|
| 269 |
| |||
Total |
|
|
| $ | 5,089 |
|
| $ | (2,056 | ) |
| $ | 3,033 |
|
|
|
|
| $ | 5,089 |
| $ | (2,446 | ) |
| $ | 2,643 |
| ||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Patent and trademark |
|
| 18.1 years |
| $ | 3,510 |
|
| $ | (1,154 | ) |
| $ | 2,356 |
|
|
| 18.1 years |
|
| $ | 3,510 |
| $ | (1,383 | ) |
| $ | 2,127 |
| ||
Customer relationships |
|
| 9.0 years |
|
| 1,100 |
|
|
| (652 | ) |
|
| 448 |
|
|
| 9.0 years |
|
|
| 1,100 |
|
| (774 | ) |
|
| 326 |
| ||
Licenses |
|
| 10.0 years |
|
|
| 479 |
|
|
| (150 | ) |
|
| 329 |
|
|
| 10.0 years |
|
|
| 479 |
|
| (198 | ) |
|
| 281 |
| |
Total |
|
|
| $ | 5,089 |
|
| $ | (1,956 | ) |
| $ | 3,133 |
|
|
|
|
| $ | 5,089 |
| $ | (2,355 | ) |
| $ | 2,734 |
|
Amortization expense of intangible assets was $0.1 $0.1 million for each of thethree months ended March 31, 2024 and 2023, respectively. and 2022. The Company estimates that amortization expense of intangible assets will be $0.3 million, $0.4 million, $0.4$0.3 million, $0.3 million, $0.30.2 million and $1.4$1.2 million for the remainder of 2023,2024, and for 2024, 2025, 2026, 2027, 2028 and thereafter, respectively.
Note 10—Accrued Expenses and Other Current Liabilities
Accrued expenses consisted of the following:
| March 31, 2023 |
| December 31, 2022 |
| March 31, 2024 |
| December 31, 2023 |
| ||||||||
(in thousands) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Renewable energy |
| $ | 24,574 |
|
| $ | 18,444 |
|
| $ | 39,379 |
|
| $ | 31,662 |
|
Liability to customers related to promotions and retention incentives |
|
| 9,385 |
|
| 9,111 |
|
|
| 9,439 |
|
| 9,493 |
| ||
Payroll and employee benefit | 2,054 | 4,251 | 1,807 | 5,095 | ||||||||||||
Other accrued expenses |
|
| 2,555 |
|
|
| 3,853 |
|
|
| 3,196 |
|
|
| 3,139 |
|
Total accrued expenses |
| $ | 38,568 |
|
| $ | 35,659 |
| $ | 53,821 | $ | 49,389 |
|
Other current liabilities consisted of the following:
| March 31, 2024 |
|
| December 31, 2023 |
| |||
(in thousands) | ||||||||
Contract liabilities |
| $ | 3,685 |
|
| $ | 5,582 |
|
Current hedge liabilities | 125 | 1,716 | ||||||
Current lease liabilities | 231 | 309 | ||||||
Current captive insurance liability | 583 | 143 | ||||||
Others |
|
| 1,483 |
|
|
| 1,530 |
|
Total other current liabilities | $ | 6,107 | $ | 9,280 |
|
19 |
|
| March 31, 2023 |
| December 31, 2022 |
| March 31, 2024 |
| December 31, 2023 | ||||||
(in thousands) | (in thousands) | |||||||||||||
ROU Assets | $ | 1,796 | $ | 1,892 | $ | 2,045 | $ | 2,138 | ||||||
Current portion of operating lease liabilities | 258 | 250 | 232 | 309 | ||||||||||
Noncurrent portion of operating lease liabilities | 1,599 | 1,699 | 1,879 | 1,952 | ||||||||||
Total |
| $ | 1,857 |
| $ | 1,949 |
| $ | 2,111 |
| $ | 2,261 |
Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||
2023 | 2022 | 2024 | 2023 | |||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | (in thousands) | (in thousands) | ||||||||||||
Operating cash flows from operating activities | $ | 130 | $ | 119 | $ | 144 | $ | 130 | ||||||
ROU assets obtained in the exchange for lease liabilities | ||||||||||||||
Operating leases | $ | — | $ | — | $ | — | $ | — |
(in thousands) | ||||||||
Remainder of 2023 |
| $ | 295 |
| ||||
2024 | 350 | |||||||
Remainder of 2024 |
| $ | 330 |
| ||||
2025 | 277 | |||||||
2026 | 272 | 301 | ||||||
2027 | 277 | 306 | ||||||
2028 | 312 | |||||||
Thereafter | 1,616 | 2,240 | ||||||
Total future lease payments | 3,087 | |||||||
Less imputed interest | 1,230 | |||||||
Total operating lease liabilities |
| $ | 1,857 |
|
| $ | 2,111 |
|
20 |
Note 12—Equity
Dividend Payments
The following table summarizes the quarterly dividends declared by the Company on its Class A and Class B common stock during the three months ended March 31, 20232024 (in thousands, except per share amounts):
Declaration Date |
| Dividend Per Share |
|
| Aggregate Dividend Amount |
|
| Record Date |
| Payment Date | ||
|
|
|
|
|
|
| ||||||
Series 2012-A Preferred Stock ("Preferred Stock") | ||||||||||||
January 12, 2023 |
| $ | 0.1594 |
|
| $ | 157 |
|
| February 7, 2023 |
| February 15, 2023 |
Class A Common Stock and Class B Common Stock | ||||||||||||
February 9, 2023 | $ | 0.0750 | $ | 1,951 | February 21, 2023 | March 1, 2023 |
Declaration Date |
| Dividend Per Share |
|
| Aggregate Dividend Amount |
|
| Record Date |
| Payment Date | ||
|
|
|
|
|
|
| ||||||
February 8, 2024 | $ | 0.0750 | $ | 2,121 | February 20, 2024 | February 28, 2024 |
In the year ended December 31, 2022, the Company accrued Additional Dividends of $0.5301 per share on its Preferred Stock, equal to $0.5 million in the aggregate in respect of the GRE results of operations through December 31, 2022, which the Company expects to pay in May 2023.
On April 17, 2023, the Company’s Board of Directors declared aggregate dividends of $0.6895 per share on its the Preferred Stock, consisting of a quarterly Base Dividend of $0.1594 per share for the first quarter of 2023, and Additional Dividends of $0.5301 per share in respect of the GRE results of operations during the year ended December 31, 2022 as discussed above. The dividend will be paid on or about May 15, 2023 to stockholders of record as of the close of business May 5, 2023 and to the holders of Preferred Stock that was redeemed by the Company in the three months ended March 31, 2023.
On May 3, 2023,2, 2024, the Company’s Board of Directors declared a quarterly dividend of $0.0750 per share on its Class A common stock and Class B common stock for the first quarter of 2023.2024. The dividend will be paid on or about May 31, 20232024 to stockholders of record as of the close of business on May 20, 2023.2024.
The Delaware General Corporation Law allows companies to declare dividends out of “Surplus,” which is calculated by deducting the par value of the company’s stock from the difference between total assets and total liabilities. The Company has elected to record dividends declared against accumulated deficit.
Stock Repurchases and Redemption; Treasury Shares
On March 11, 2013, the Board of Directors of the Company approved a program for the repurchase of up to an aggregate of 7.0 million shares of the Company’s Class B common stock. In the three months ended March 31, 2024, the Company acquired 250,000 Class B common stock under the stock purchase program for an aggregate amount of $4.1 million. There werenopurchases under this program in the threemonths endedMarch 31, 2023 or 2022.. At March 31, 2023, 4.72024, 4.4 million shares of Class B common stock remained available for repurchase under the stock repurchase program.
As of March 31, 20232024 and December 31, 2022,2023, there were 2.73.3 million and 2.9 million outstanding shares of Class B common stock held in the Company's treasury, respectively, with a cost basis of $19,175$29.3 million and $19.022.7 million, respectively, at a weighted average cost per share of $7.05.and $7.03,$8.88 and $7.75, respectively.
On February 7, 2022, the Board of Directors of the Company authorized a program to redeem, beginning, in the second quarter of 2033, up to $1.0 million per quarter of the Company's Preferred Stock at the liquidation preference of $8.50 per share beginning in the second quarter of 2022.share. In the three months ended March 31, 2023, and 2022, the Company redeemed and aggregate of 117,647 2,322,726 shares of Preferred Stock under this programat the liquidation preference of $8.50 for an aggregate amount of $$19.8 million. 1.0 million. There wasFollowing the redemption, there are no redemption under this program inshares of Preferred Stock outstanding, all rights of Preferred Stockholders have terminated, and the three months ended March 31, 2022.
Preferred Stock’s ticker symbol, "GNEPRA", has been retired.
On April 17, 2023, the Company's Board of Directors approved the redemption of 117,647 shares of outstanding Preferred Stock on May 15, 2023 (the "Redemption Date") at a price of $8.50 per share equivalent to approximately $1.0 million in the aggregate, together with an amount equal to all dividends accrued and unpaid up to, but not including, the Redemption Date.
21 |
Exercise of Stock Options
In February 2024, Howard S. Jonas exercised options to purchase 126,176 shares of Class B common stock through a cashless exercise and the Company issued 49,632 Class B common stock to Howard S. Jonas with the remaining 76,544 Class B common stock used for payment of the exercise price or retained by the Company to satisfy withholding tax obligations in connection to the exercise of the options.
In May 2023, Howard S. Jonas exercised options to purchase 256,818 shares of Class B common stock through a cashless exercise and the Company issued 98,709 Class B common stock to Howard S. Jonas with the remaining 158,109 Class B common stock used for payment of the exercise price or retained by the Company to satisfy withholding tax obligations in connection to the exercise of the options.
On May 3, 2022, the Board of Directors authorized the redemption of $2.0 million ofAt March 31, 2024, There were no outstanding options to purchase the Company's Preferred Stock during the second quarter of 2022, which the Company redeemed on June 13, 2022.common stock.
Warrants to Purchase Class B Common Stock
On June 8, 2018, the Company sold to Howard S. Jonas, the Chairman of the Company’s Board of Directors and then the holder of the controlling portion of the Company's common stock, shares of the Company’s Class B common stock and warrants to purchase an additional 1,048,218 shares of the Company’s Class B common stock at an exercise price of $4.77 per share for an aggregate exercise price of $5.0 million. TheIn June 2023, the holders of these warrants will expire in June 2023. In addition, on June 12, 2018,exercised the Company sold to a third-party investor treasury shares of the Company’s Class B common stock for an aggregate sales price of $1.0 million and warrants to purchase an additional 209,644 shares of the Company’s Class B common stock at an exercise price of $4.77 per share, for an aggregate exercise price of $1.0 million.
In May 2022, a holder of warrants exercised warrants to purchase 209,6441,048,218 shares of Class B common stock warrants through a for $5.0 millioncashlessexercise and the Company issued 72,657 common shares with the remaining 136,987 warrants being cancelled in payment of the exercise price..
As of March 31, 20232024, there were nooutstanding warrants to purchase 1,048,218shares of the Company’s Class BCompany's common stock at $4.77 per share, all of which will expire in June 2023.stock.
Purchase of Equity of Subsidiaries
In November 2022February 2024, the CompanyCompany purchased from a certain employeeinvestor a 5.10.5% and 2.3% interestsequity interest in Lumo Finland and Lumo Sweden, respectively, by issuing GEIC for $123,3021.2 shares of the Company's Class B restricted common stock, which will ratably vest on a bi-annual basis between May 2023 and up to May 2025million..
Stock-Based Compensation
The Company’s 2011 Stock Option and Incentive Plan (as amended, the "2011 Plan") is intended to provide incentives to executives, employees, directors and consultants of the Company. Incentives available under the Plan include stock options, stock appreciation rights, limited rights, deferred stock units, and restricted stock. The 2011 Plan expired in 2021 and no new grants are to be issued thereunder, however, outstanding grants are not impacted by the expiration of the plan.
On March 8, 2021, the Board of Directors adopted the CompanyCompany's 2021 Stock Option and Incentive Plan (the "2021 Plan"), subject to the approval of the Company's stockholders. In May 2021, the 2021 Plan became effective and replaced the Company's 2011 Stock Option and Incentive the 2011 Plan. Similar to the 2011 Plan, theThe 2021 Plan provides incentives to executives, employees, directors and consultants of the Company. Incentives available under the 2021 Plan includeprovide for grants of stock options, stock appreciation rights, limited stock appreciation rights, deferred stock units, and restricted stock. The Plan is administered by the Compensation Committee of the Company’s Board of Directors. The maximum number of shares reserved for the grant of awards under the 2021 Plan isupon adoption was 1.0 million shares of Class B Common Stock. On May 10, 2023, the Company's stockholders approved an amendment to the 2021 Plan that, among other things, increased the number of shares of the Company’s Class B common stock available for the grant of awards thereunder by 0.5 million shares of Class B Common Stock.
In February 2022, the Company granted certain employees and members of its Board of Directors an aggregate of 290,000 deferred stock units which willwere eligible to vest in two tranches contingent upon the achievement of a specified thirty-day average closing price of the Company's Class B common stock within a specified period of time (the "2022 market conditions") and the satisfaction of service-based vesting conditions. Each deferred stock unit entitlesentitled the recipient to receive, upon vesting, up to two shares of Class B common stock of the Company depending on market conditions. The Company used a Monte Carlo simulation model to estimate the grant-date fair value of the awards. Assumptions and estimates utilized in the model include the risk-free interest rate, dividend yield, expected stock volatility based on a combination of the Company’s historical stock volatility. In the second quarter of 2022, the 2022 market conditions were partially achieved and the Company issued 290,000 shares of its restricted Class B common stock. In February 2023, the remaining portion of the 2022 market conditions was achieved and subject to amending the Company's 2021 Stock Option and Incentive Plan to reserve additional shares for issuance thereunder, the Company will issueissued an additional 290,000 restricted shares of its Class B common stock.stock in May 2023. The restricted shares to be issued will beare subject to service-based vesting conditions as described above.
As of March 31, 20232024, there were approximately $2.90.8 million of total unrecognized stock-based compensation costs related to outstanding and unvested equity-based grants. These costs are expected to be recognized over a weighted-average period of approximately 1.20.8 years.
Note 13—Variable Interest Entity
Citizens Choice Energy, LLC (“CCE”) is a REP that resells electricity and natural gas to residential and small business customers in the State of New York. The Company does not own any interest in CCE. Since 2011, the Company has provided CCE with substantially all of the cash required to fund its operations. The Company determined that it has the power to direct the activities of CCE that most significantly impact its economic performance and it has the obligation to absorb losses of CCE that could potentially be significant to CCE on a stand-alone basis. The Company therefore determined that it is the primary beneficiary of CCE, and as a result, the Company consolidates CCE within its GRE segment. The net income or loss incurred by CCE was attributed to noncontrolling interests in the accompanying consolidated statements of operations.
The Company has an option to purchase 100% of the issued and outstanding limited liability company interests of CCE for one dollar plus the forgiveness of $0.5 million that the Company loaned to CCE in October 2015. The option expires on October 22, 2023.
Net loss related to CCE and aggregate net funding provided by the Company were as follows:
Three Months Ended March 31, | |||||||||
2023 | 2022 | ||||||||
(in thousands) | |||||||||
Three Months Ended March 31, | |||||||||
2024 | |||||||||
(in thousands) | |||||||||
Net loss | $ | 92 | $ | 986 | |||||
Aggregate provided by the Company, net | $ | 79 | $ | 1,458 | |||||
Aggregate funding (provided by) paid to the Company, net |
Summarized combined balance sheet amounts related to CCE was as follows:
| March 31, |
| December 31, 2022 |
|
| March 31, |
|
| December 31, 2023 |
| ||||||
(in thousands) | (in thousands) | |||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash, cash equivalents and restricted cash |
| $ | 328 |
|
| $ | 295 |
|
| $ | 264 |
|
| $ | 265 |
|
Trade accounts receivable |
|
| 480 |
|
|
| 549 |
|
|
| 260 |
|
|
| 275 |
|
Prepaid expenses and other current assets |
|
| 322 |
|
|
| 363 |
|
|
| 308 |
|
|
| 323 |
|
Other assets |
|
| 359 |
|
|
| 359 |
|
|
| 360 |
|
|
| 360 |
|
Total assets |
| $ | 1,489 |
|
| $ | 1,566 |
|
| $ | 1,192 |
|
| $ | 1,223 |
|
Liabilities and noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
| $ | 641 |
|
| $ | 700 |
|
| $ | 651 |
|
| $ | 611 |
|
Due to IDT Energy |
|
| 6,076 |
|
|
| 5,997 |
|
|
| 4,801 |
|
|
| 4,893 |
|
Noncontrolling interests |
|
| (5,228 | ) |
|
| (5,131 | ) |
|
| (4,260 | ) |
|
| (4,281 | ) |
Total liabilities and noncontrolling interests |
| $ | 1,489 |
|
| $ | 1,566 |
|
| $ | 1,192 |
|
| $ | 1,223 |
|
The assets of CCE may only be used to settle obligations of CCE, and may not be used for other consolidated entities. The liabilities of CCE are non-recourse to the general credit of the Company’s other consolidated entities.
23 |
Note 14—Income Taxes
The following table provides a summary of Company's effective tax rate:
| Three Months Ended March 31, | |||||
| 2023 | 2022 | ||||
Reported tax rate | 26.4 | % | 27.6 | % |
| Three Months Ended March 31, | |||||
| 2024 | 2023 | ||||
Reported tax rate | 25.7 | % | 26.4 | % |
The reported tax raterates for the three months ended March 31, 2023 2024 was 26.4%, a decreasedecreased compared to the same period in 2022.2023. The decrease isdecreases are mainly from the change in the mix of tax rates in the jurisdictions where the Company earned taxable income.
Note 15—Earnings Per Share
Basic earnings per share is computed by dividing net income or loss attributable to all classes of common stockholders of the Company by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted earnings per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increases is anti-dilutive.
The weighted-average number of shares used in the calculation of basic and diluted earnings per share attributable to the Company’s common stockholders consists of the following:
| Three Months Ended March 31, | |||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
2024 | ||||||||||||||
(in thousands) | ||||||||||||||
Basic weighted-average number of shares | 25,326 | 25,764 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||
Non-vested restricted Class B common stock | ||||||||||||||
Stock options and warrants | 805 | 308 | ||||||||||||
Non-vested restricted Class B common stock | 441 | 56 | ||||||||||||
Unissued vested deferred stock units | 48 | — | — | 48 | ||||||||||
Diluted weighted-average number of shares | 26,620 | 26,128 |
Unissued vested deferred stock units in three months ended March 31, 2023 pertain to the weighted average of restricted shares of the company's Class B common stock that the Company expectsexpected, at that time, to issue related to satisfaction of 2022 market conditions (see Note 12 — Equity). to the vesting of certain then outstanding deferred stock units.
The following sharesThere were no other instruments excluded from the computation of diluted earnings per share computations:
| Three Months Ended March 31, | ||||||
2023 | 2022 | ||||||
(in thousands) | |||||||
Shares underlying options and warrants | — | 126 | |||||
Non-vested deferred stock units | — | 580 |
Stock options were excluded fromfor each of the diluted earnings per share computation for the three months ended March 31, 2022 because the exercise prices of the stock options were greater than the average market prices of the Company's stock during the period.
Non-vested deferred stock units were excluded from the basic2024 and diluted weighted average shares outstanding calculation because the market conditions for vesting of those deferred stock units were not met as of March 31, 2022.2023.
Note 16—Related Party Transactions
On November 2, 2023, the Company made a charitable donation to Genie Energy Charitable Foundation ("Genie Foundation") by issuing 50,000 shares of Class B common stock from its treasury stock with an aggregate value of approximately $1.0 million. The Company is the sole member of Genie Foundation and the Company's Chief Executive Officer and Chief Financial Officer serve as members of the board of directors of Genie Foundation.
On December 7, 2020, the Company invested $5.0 million to purchase 218,245 shares of Class B common stock of Rafael Holdings, Inc. ("Rafael"). Rafael, a publicly-traded company, is also a related party. Rafael is a former subsidiary of IDT that was spun off from IDT in March 2018. Howard S. Jonas is the Executive Chairman and Chairman of the Board of Directors of Rafael. In connection with the purchase, Rafael issued to the Company warrants to purchase an additional 43,649 shares of Rafael's Class B common stock with an exercise price of $22.91 per share. The warrants had a term expiring on June 6, 2022. The Company exercised the warrants in full on March 31, 2021 for a total exercise price of $1.0 million. The Company does not exercise significant influence over the operating or financial policies of Rafael. In thethree months ended March 31, 2023,, the Company sold 195,501 shares of Class B common stock of Rafael for $0.3 million. In the second quarter of 2023, the Company acquired 150,000 Class B common stock of Rafael for $0.3 million. For the three months ended March 31, 20232024 and 20222023 the Company recognized losses on investmenta loss of minimal amount and $0.1 million, and $0.7 million, respectively, in connection with the investment. At March 31, 2023,2024, the carrying values of the remaining investment in theCompany holds 216,393 Class B common stock of Rafael was $0.1with a carrying value of $0.4 million. The Company does not exercise significant influence over the operating or financial policies of Rafael.
The Company was formerly a subsidiary of IDT Corporation (“IDT”). On October 28, 2011, the Company was spun-off by IDT. The Company entered into various agreements with IDT prior to the spin-off including an agreement for certain services to be performed by the Company and IDT. The Company also provides specified administrative services to certain of IDT’s foreign subsidiaries. Howard Jonas is the Chairman of the Board of IDT.
The Company leases office space and parking in New Jersey. Until August 2022, the space was leased from Rafael. The leases expire in April 2025. On August 22, 2022, Rafael completed the sale of the leased office space and parking in New Jersey, including the lease of the Company, to a third-party buyer.
The charges for services provided by IDT to the Company, and rent charged by Rafael, net of the charges for the services provided by the Company to IDT, are included in “Selling, general and administrative” expense in the consolidated statements of operations.
Three Months Ended | ||||||||
Three Months Ended | ||||||||
| 2023 | 2022 | ||||||
| (in thousands) | |||||||
Amount IDT charged the Company | $ | 322 | $ | 406 | ||||
Amount the Company charged IDT | $ | 37 | $ | 37 | ||||
Amount Rafael charged the Company | $ | — | $ | 58 |
The following table presents the balance of receivables and payables to IDT and Rafael:IDT:
| March 31, 2023 |
| December 31, 2022 |
|
| March 31, 2024 |
| December 31, 2023 |
| |||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||
Due to IDT |
| $ | 118 |
|
| $ | 185 |
|
| $ | 144 |
|
| $ | 165 |
|
Due from IDT |
| $ | 20 |
|
| $ | 20 |
|
| $ | 24 |
|
| $ | 20 |
|
Due to Rafael |
| $ | — |
|
| $ | — |
|
On August 31, 2018, the Company extended a loan to a former employee for $0.1 million. The loan agreement requires scheduled payments from December 31, 2020 to December 2052. The loan bears the same interest equivalent to a minimum rate, in effect from time to time required by local regulations and is compounded annually. The Company recorded nominal amounts of interest income for the three months ended March 31, 2023 and 2022 related to this debt. The outstanding balance, including accrued interest was $0.1 million as of March 31, 2023.
The Company obtains insurance policies from several insurance brokers, one of which is IGM Brokerage Corp. (“IGM”). IGM is owned by the mother of Howard S. Jonas and Joyce Mason, who is a Director and Corporate Secretary of the Company. Jonathan Mason, husband of Joyce Mason and brother-in-law of Howard S. Jonas, provides insurance brokerage services via IGM. Based on information the Company received from IGM, the Company believes that IGM received commissions and fees from payments made by the Company (including payments from third party brokers). The Company paid IGM a total of $0.5$0.4 million in 20222023 related to premium of various insurance policies that were brokered by IGM. There was no outstanding payable to IGM as of March 31, 2023.2024. Neither Howard S. Jonas nor Joyce Mason has any ownership or other interest in IGM other than via the familial relationships with their mother and Jonathan Mason.
On February 21, 2022, the Company entered into a Loan and Security Agreement to extend up to 5.5 million New Israel Shekel, or NIS (equivalent to $1.5 million) with Natan Ohayon (the "Ohayon Loan"). Natan Ohayon holds a minority interest in Petrocycle Ltd ("Petrocycle"), a subsidiary of the Company. Petrocycle is a preoperating entity engaged in the development of a process to recycle used engine oil into usable gasoline. TheOhayonLoan, which is secured by all assets that Mr. Ohayon acquired using the proceeds of the loan bears a minimum interest as set by the Income Tax Regulations of Israel and is due, together with the principal amount on or before December 31, 2023. In 2022, the Company extended an additional NIS0.7million (equivalent to $0.2million) to Mr.Ohayon related to his share of operations ofPetrocycle. In December 2022, the Company suspended the development of business operations ofPetrocycle after it was determined that it will not meet the expected results.Petrocycle provided full impairment of its property and equipment, theOhayon Loan and advances to Mr.Ohayon for an aggregate amount of $2.1 million.
Investments in Atid 613
In September 2018, the Company divested a majority interestinterest in Atid Drilling Ltd. in exchange for a 37.5% interest in a contracting drilling company in Israel ("Atid 613") which the Company accounted for using equity method of accounting. The Company did not recognize any equity in net loss from Atid 613 for the Three Months Ended March 31, 2023 and 2022. In March 2023, the Company received $0.1 million from Atid 613 for the full settlement of its investments in Atid 613. The Company recognized a minimal gain from settlement of investment included in other income (loss), net in its consolidated statements of operations for the three months ended March 31, 2023. 2024. The carrying value ofCompany did not recognize any equity in net loss from Atid613 for the Company's investments in Atid was $0.1 million at Decemberthree months ended March 31, 2022 included in other noncurrent assets in the consolidated balance sheets. 2023.
25 |
The Company has two reportable business segments: GRE and Genie Renewables. Prior to In the third quarter 2022, following the discontinuance of operations ofLumo Finland andLumo Sweden, GRE International ceased to be a segment and the remaining assets and liabilities and results of continuing operations of GRE International were combined with corporate. GRE owns and operates REPs, including IDT Energy, Residents Energy, TSE, Southern Federal and Mirabito. GRE'sIts REP businesses resell electricity and natural gas to residential and small business customers in the Eastern and Midwestern United States and Texas. Genie Renewables designs, manufacturesdevelops, constructs and operates solar energy projects, distributes solar panels, offers energy brokerage and advisory services and also sells third-party products to customers. Corporate costs include unallocated compensation, consulting fees, legal fees, business development expenses and other corporate-related general and administrative expenses. Corporate does not generate any revenues, nor does it incur any cost of revenues.
The Company’s reportable segments are distinguished by types of service, customers and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s chief operating decision-maker.
The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its business segments based primarily on income (loss) from operations. There are no significant asymmetrical allocations to segments.
Operating results for the business segments of the Company were as follows:
(in thousands) |
| GRE | Genie Renewables |
|
| Corporate |
|
| Total |
|
| GRE | Genie Renewables |
|
| Corporate |
|
| Total |
| ||||||||||
Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||
Revenues | $ | 101,412 | $ | 3,864 | $ | — | $ | 105,276 | $ | 112,465 | $ | 7,223 | $ | — | $ | 119,688 | ||||||||||||||
Income (loss) from operations | 16,445 | (1,148 | ) | (4,022 | ) | 11,275 | ||||||||||||||||||||||||
Depreciation and amortization | 83 | 13 | — | 96 | 105 | 114 | — | 219 | ||||||||||||||||||||||
Stock-based compensation | 273 | 1 | 575 | 849 | 247 | 9 | 493 | 749 | ||||||||||||||||||||||
Provision for doubtful accounts receivables | 574 | — | — | 574 | 729 | — | — | 729 | ||||||||||||||||||||||
Provision for (benefit from) income taxes | 4,650 | (315) | (267 | ) | 4,068 | 4,089 | (611 | ) | (558 | ) | 2,920 | |||||||||||||||||||
Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||||||
Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||
Revenues | $ | 83,884 | $ | 2,042 | $ | — | $ | 85,926 | $ | 101,412 | $ | 3,864 | $ | — | $ | 105,276 | ||||||||||||||
Income (loss) from operations | 30,176 | (479 | ) | (2,735 | ) | 26,962 | 16,445 | (1,148 | ) | (4,022 | ) | 11,275 | ||||||||||||||||||
Depreciation and amortization | 85 | 11 | — | 96 | 83 | 13 | — | 96 | ||||||||||||||||||||||
Stock-based compensation | 246 | — | 558 | 840 | 273 | 1 | 575 | 849 | ||||||||||||||||||||||
Provision for (benefit from) income taxes | 4,650 | (315 | ) | (267 | ) | 4,068 | ||||||||||||||||||||||||
Provision for doubtful accounts receivables | 392 | — | — | 392 | 574 | — | — | 574 | ||||||||||||||||||||||
Provision for (benefit from) income taxes | 7,833 | — | (721 | ) | 7,112 |
Total assets for the business segments of the Company were as follows:follows
(in thousands) |
| GRE | Genie Renewables |
|
| Corporate |
|
| Total |
| ||||||
Total assets: |
|
|
|
|
|
|
|
|
|
| ||||||
March 31, 2023 |
| $ | 209,483 | $ | 15,680 |
|
| $ | 67,847 |
|
| $ | 293,010 |
| ||
December 31, 2022 | 191,839 | 12,191 | 73,585 | 277,615 |
(in thousands) |
| GRE | Genie Renewables |
|
| Corporate |
|
| Total |
| ||||||
Total assets: |
|
|
|
|
|
|
|
|
|
| ||||||
March 31, 2024 |
| $ | 212,230 | $ | 30,593 |
|
| $ | 85,481 |
|
| $ | 328,304 |
| ||
December 31, 2023 | 214,121 | 28,912 | 87,522 | 330,555 |
The total assets of corporate segment includes total assets of discontinued operations of Orbit, Lumo Finland and Lumo Sweden with aggregate net book value of $48.3$15.8 million and $55.0$20.6 million at March 31, 20232024 and December 31, 2022,2023, respectively.
Note 18 — Commitments and Contingencies
Legal Proceedings
On September 29, 2023, the Attorney General of the State of Illinois filed a complaint against Residents Energy in the Circuit Court of Cook County, Illinois, Chancery Division.The Complaint alleges several counts of violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq., and the Illinois Telephone Solicitations Act, 815 ILCS 413/1 et seq., in connection with Residents Energy’s marketing practices, and seeks monetary damages to redress any resulting losses alleged to have been incurred by customers, civil penalties for certain alleged violations in the amount of $50.0 thousand per violation, and other forms of injunctive and equitable relief to prevent future violations.The Company denies these allegations and intends to vigorously defend itself against any and all claims. As of March 31, 2024, there is insufficient basis to deem any loss probable or to assess the amount of any possible loss. For the three months ended March 31, 2024 and 2023, Resident Energy's gross revenues from sales in Illinois were $12.5 million $13.6 million, respectively.
The Company may from time to time be subject to legal proceedings that arise in the ordinary course of business. Although there can be no assurance in this regard, the Company does not expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations, cash flows or financial condition.
Refer to Note 5—Acquisitions and Discontinued Operations and Divestiture, for discussion related to the administration of Orbit.Lumo Finland.
Agency and Regulatory Proceedings
From time to time, the Company receives inquiries or requests for information or materials from public utility commissions or other governmental regulatory or law enforcement agencies related to investigations under statutory or regulatory schemes, and the Company responds to those inquiries or requests. The Company cannot predict whether any of those matters will lead to claims or enforcement actions or whether the Company and the regulatory parties will enter into settlements before a formal claim is made.
State of Connecticut Public Utilities Regulatory Authority
Residents Energy
In August 2020, Residents Energy began marketing retail energy services to Connecticut. For the year ended December 31, 2021, Residents Energy's gross revenues from sales in Connecticut was $0.2 million. During the fourth quarter of 2020, the enforcement division of PURA contacted Residents Energy concerning customer complaints received in connection with alleged door-to-door marketing activities in violation of various rules and regulations. On March 12, 2021, the enforcement division filed a motion against Resident Energy with the adjudicating body of PURA, seeking the assessment of $1.5 million in penalties, along with a suspension of license, auditing of marketing practices upon reinstatement and an invitation for settlement discussions.
In June 2022, the parties settled the dispute. Pursuant to the terms of the settlement agreement, Residents Energy paid $0.3 millionand volunteered to withdraw from the market in Connecticut for a period of 36 months.
Other Reviews or Investigations
From time to time regulators may initiate reviews, compliance checks or issue subpoenas for information as means to evaluate the Company and its subsidiaries’ compliance with applicable laws, rules, regulations and practices.
In 2019, the Office of the Attorney General of the State of Illinois ("IL AG") notified Residents Energy (by way of subpoena) that it was conducting an investigation to assess compliance with the Illinois Consumer Fraud and Deceptive Business Practices Act. Following a dispute between the Company and the IL AG regarding the merits of the subpoena and investigation, the IL AG filed and complaint in the Circuit Court of Cook County, Illinois (Chancery Division) seeking to enforce compliance. The scope of the subpoena was later modified in response to subsequent negotiations between the Company and the IL AG, and the Company has satisfied the requirements of the subpoena. In April 2023, the IL AG dismissed its complaint against the Company. For the three months ended March 31, 2023 and 2022, Resident Energy’s gross revenues from sales in Illinois were $13.6 million and $8.3 million, respectively.
In response to certain customer complaints, the State of Maine Public Utility Commission ("MPUC") has opened a review of the door to door marketing practices of Town Square. In connection with the review, the MPUC has requested information from Town Square demonstrating compliance in the form of an order to show cause as to why its marketing practices are in compliance and it should be permitted to continue licensed operations in Maine. In August 2021, the parties settled the dispute without any obligation for payment by Town Square. In connection with the settlement, Town Square has agreed to voluntarily refrain from door-to-door marketing activities in Maine through June 30, 2023, and to voluntarily refrain from outbound telemarketing to obtain new residential customers for a period of six months, along with certain compliance procedures.For the three months ended March 31, 2023 and 2022, Town Square’s gross revenues from sales in Maine were $0.8 million and $0.4million, respectively.
Other Commitments
Purchase Commitments
The Company had future purchase commitments of $132.5130.3 million at March 31, 2023,2024, of which $114.8116.1 million was for future purchase of electricity. The purchase commitments outstanding as of March 31, 20232024 are expected to be paid as follows:
(in thousands) |
|
|
|
|
|
| ||
Remainder of 2022 |
| $ | 71,164 |
| ||||
2023 |
|
| 41,673 |
| ||||
2024 |
|
| 16,701 |
| ||||
Remainder of 2024 |
| $ | 83,983 |
| ||||
2025 | 2,964 |
|
| 40,089 |
| |||
2026 | — |
|
| 6,219 |
| |||
2027 | — | |||||||
Thereafter |
|
| — |
|
|
| — |
|
Total payments |
| $ | 132,502 |
|
In the three months ended March 31, 2023, the Company purchased $15.8 million and $8.2 million of electricity and renewable energy credits, respectively, under these purchase commitments. In the three months ended March 31, 20222024, the Company purchased $20.134.0 million and $4.14.9 million of electricity and renewable energy credits, respectively, under these purchase commitments. In the three months ended March 31, 2023, the Company purchased $15.8 million and $8.2 million of electricity and renewable energy credits, respectively, under these purchase commitments.
Renewable Energy Credits
GRE must obtain a certain percentage or amount of its power supply from renewable energy sources in order to meet the requirements of renewable portfolio standards in the states in which it operates. This requirement may be met by obtaining renewable energy credits that provide evidence that electricity has been generated by a qualifying renewable facility or resource. At March 31, 20232024, , GRE had commitments to purchase renewable energy credits of $17.714.2 million.
Captive Insurance Subsidiary
In December 2023, the Company established the Captive insurance company with the primary purpose of enhancing the Company's risk financing strategies. The Captive insures the Company against certain risks unique to the operations of the Company and its subsidiaries for which insurance may not be currently available or economically feasible in today's insurance marketplace. The covered risks are both current and related to historical business activities.
The Company, with input from external experts, estimated the expected ultimate cost of: 1) claims defense cost, settlements and penalties resulting from insured risk, and 2) stranded risk which includes economic losses due to regulatory restrictions or unanticipated reduction of demand, as well as the level cost associated with contesting such restrictions. The amount of the expected loss liability for each risk is based on an analysis performed by a third-party actuary which assumed historical patterns. The key assumptions used in developing these estimates are subject to variability.
In December 2023, the Company paid a $51.2 million premium to the Captive, which is, recognized as restricted cash in the consolidated balance sheet. At March 31, 2024, the balance of short-term and long-term restricted cash and cash equivalents of the Captive are $6.3 million and $45.5 million, respectively. The Captive must maintain a sufficient level of cash to fund future reserve payments and secure the insurer's liabilities, particularly those related to insured risks. The Company also recognized a $1.0 million provision for captive insurance liability for the three months ended March 31, 2024, related to the Captive's exposure for the insured risks. At March 31, 2024, the current portion of the captive insurance liability of $0.6 million is included in other current liabilities on the consolidated balance sheet.
The table below reconciles the change in the current and noncurrent captive insurance liabilities for three months ended March 31, 2024 (in thousands):
Current and noncurrent captive insurance liabilities, beginning | $ | 45,088 |
| |
Changes for the provision of prior year claims | (564 | ) | ||
Changes for the provision for current year claims | 1,600 | |||
Payment of claims | — | |||
Current and noncurrent captive insurance liabilities, end | $ | 46,124 |
The captive insurance liability outstanding at March 31, 2024 is expected to be paid as follows (in thousands).
2024 |
| $ | 269 | |
2025 |
|
| 1,257 | |
2026 |
|
| 2,518 | |
2027 |
|
| 3,497 | |
2028 |
|
| 3,878 | |
Thereafter |
|
| 34,705 | |
Total payments |
| $ | 46,124 |
Performance Bonds and Unused Letters of Credit
GRE has performance bonds issued through a third party for certain utility companies and for the benefit of various states in order to comply with the states’ financial requirements for REPs. At March 31, 2023,2024, GRE had aggregate performance bonds of $14.921.5 million outstanding and minimal amount of unused letters of credit.
BP Energy Company Preferred Supplier Agreement
Certain of GRE’s REPs are party to an Amended and Restated Preferred Supplier Agreement with BP, which is to be in effect through November 30, 2023.2026. Under the agreement, the REPs purchase electricity and natural gas at market rate plus a fee. The obligations to BP are secured by a first security interest in deposits or receivables from utilities in connection with their purchase of the REPs’ customer’s receivables, and in any cash deposits or letters of credit posted in connection with any collateral accounts with BP. The ability to purchase electricity and natural gas under this agreement is subject to satisfaction of certain conditions including the maintenance of certain covenants. At March 31, 2023,2024, the Company was in compliance with such covenants. At March 31, 2023,2024, restricted cash—short-term of $0.60.4 million and trade accounts receivable of $63.164.2 million were pledged to BP as collateral for the payment of trade accounts payable to BP of $14.216.0 million at March 31, 2023.2024.
Note 19—Debt
On December 13, 2018, the Company entered into a Credit Agreement with JPMorgan Chase Bank (“Credit(the “Credit Agreement”). On December 27, 2022,February 14, 2024, the Company entered into the thirdfourth amendment of itsthe existing Credit Agreement to extend the maturity date to December 31, 2023.2024. The aggregate principal amount was reduced to $3.0 million credit line facility (“Credit(the “Credit Line”). The Company pays a commitment fee of 0.1% per annum on the unused portion of the Credit Line as specified in the Credit Agreement. The borrowed amounts will be in the form of letters of credit which will bear interest of 1.0% per annum. The Company will also pay a fee for each letter of credit that is issued equal to the greater of $500 or 1.0% of the original maximum available amount of the letter of credit. The Company agreed to deposit cash in a money market account at JPMorgan Chase Bank as collateral for the line of credit equal to $3.1 million. As of March 31, 2023,2024, there are no letters of credit issued by JP Morgan Chase Bank. At March 31, 2023,2024, the cash collateral of $3.8 million$3.3 million was included in restricted cash—short-term in the consolidated balance sheet.
Note 20—Recently Issued Accounting Standards
In June 2016,December 2023, the FASB issued ASU No. 2016-13, Measurement of Credit Losses2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 will require public entities to disclose on Financial Instruments, that changes the impairment model for most financial assetsan annual basis a tabular reconciliation using both percentages and amounts, broken out into specific categories with certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized costreconciling items at or above 5% of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities.statutory (i.e. expected) tax further broken out by nature and/or jurisdiction. The new provisions willrequire all entities to disclose on an annual basis the amount of income taxes paid (net of refunds received), disaggregated between federal (national), state/local and foreign, and amounts paid to an individual jurisdiction when 5% or more of the total income taxes paid. The new provisions are required to be applied ason a cumulative-effect adjustment to retained earnings.prospective basis; retrospective application is permitted. The Company adoptedguidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. Although the new standard on January 1, 2023 with no significantonly requires additional disclosures, the Company is in the process of determining the impact onof this guidance to its consolidated financial statements. income tax disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 amends Accounting Standards Codification 280, Segment Reporting (“ASC 280”)to require public entities to disclose significant segment expenses and other segment items that are regularly provided to the chief operating decision maker (“CODM”) and included in each reported measure of a reportable segment’s profit or loss, on an annual and interim basis, and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The new provisions permit entities to report multiple measures of a reportable segment’s profit or loss if the CODM uses those measures to allocate resources and assess performance. The new standard is required to be applied retrospectively to all periods presented in the financial statements, unless impracticable. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is also permitted. Although the new standards only require additional disclosures, the Company is in the process of determining the impact of this guidance to its segment disclosures.
The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2022,2023, as filed with the U.S. Securities and Exchange Commission (or SEC).
As used below, unless the context otherwise requires, the terms “the Company,” “Genie,” “we,” “us,” and “our” refer to Genie Energy Ltd., a Delaware corporation, and its subsidiaries, collectively.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends,” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed below under Part II, Item IA and under Item 1A to Part I “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022.2023. The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the SEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the year ended December 31, 2022.2023.
Overview
We are comprised of Genie Retail Energy ("GRE") and Genie Renewables. In the third quarter of 2022, we discontinued the operations of Lumo Finland and Sweden as discussed below. Following this discontinuance of operations, Genie Retail Energy International ("GRE International") ceased to be a segment and the remaining assets and liabilities and results of any continuing operations of GRE International were combined with corporate.
GRE owns and operates retail energy providers ("REPs"), including IDT Energy, Residents Energy, Town Square Energy ("TSE"), Southern Federal and Mirabito Natural Gas. GRE's REPs' businesses resell electricity and natural gas primarily to residential and small business customers, with the majority of the customers in the Eastern and Midwestern United States and Texas.
Genie Renewables holds aour 95.5% interest in Genie Solar, aan integrated solar energy company, aour 92.8% interest in CityCom Solar, a marketer of community solar energyand other sales solutions aand our 96.0% interest in Diversegy, an energy broker.
Genie Solar holds our interest in Sunlight Energy, a broker for commercial customers,solar energy developer and aoperator and our 60.0% interest in Prism Solar Solar Technology ("Prism"), a which designs and manufactures specialized solar solutions company that is engaged in manufacturing of solar panels, solar installation design and solar energy project management.panels.
As part of our ongoing business development efforts, we seek out new opportunities, which may include complementary operations or businesses that reflect horizontal or vertical expansion from our current operations. Some of these potential opportunities are considered briefly and others are examined in further depth. In particular, we seek out acquisitions to expand the geographic scope and size of our REP businesses.
Discontinued Operations in Finland and Sweden
As a result of continued volatility in the energy market in Europe, in the third quarter of 2022, we decided to discontinue the operations of Lumo Energia Oyj ("Lumo Finland") and Lumo Energi AB ("Lumo Sweden"). FromIn July 13, 2022 to July 19, 2022, the Company entered into a series of transactions to sell most of the electricity swap instruments held by Lumo Sweden for a gross aggregate amount of €41.1 million (equivalent to approximately $41.4 million at the dates of the transactions) before fees and other costs.Sweden. The sale price is to be settled monthly based on the monthly commodity volume specified in the instruments from September 2022 to March 2025. The net book valueCompany also entered into a series of transactions to transfer the instruments sold was €customers of Lumo34.2 million (equivalent to $35.8 million).
In July 2022, Finland and Lumo Sweden entered into a transaction to transfer, effective August 5, 2022, its customers to a third party for nominal consideration. In August 2022 Lumo Finland entered in a transaction to transfer its variable rate customers to a third party for €$1.9 million (equivalent to $2.0 million), and transferred the fixed rate customers to other utilities with no considerations. suppliers.
We determined that exitingthe discontinued operations of Lumo Finland and Lumo Sweden markets represented a strategic shift that would have a major effect on our operations and financial statements. We account for these businesses as discontinued operations and accordingly, presentedpresent the results of operations and related cash flows as discontinued operations for all periods presented. TheAny remaining assets and liabilities of the discontinued operations have beenare presented separately and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of March 31, 20232024 and December 31, 2022.2023. Lumo Finland and Lumo Sweden will continueare continuing to liquidate their remaining receivables and settle any remaining liabilities.
InOn November 7, 2022, Lumo Finland declaredfiled a petition for bankruptcy, andwhich was approved by the Helsinki District Court on November 9, 2022. The administration of Lumo Finland was transferred to an administrator (the "Lumo Administrator"Administrators"). All assets and liabilities of Lumo Finland remain with Lumo Finland, in which Genie retains itswe retain our equity ownership interest, however, the management and control of Lumo Finland were transferred to the Lumo Administrator. Administrators. Since the Company lost control of the management of Lumo Finland in favor of the Lumo Administrator, Administrators, the accounts of Lumo Finland were deconsolidated effective November 9, 2022.
On November 3, 2022, we acquired additional minority interests in Lumo Finland and Lumo Sweden from an employee for 132,302 of our restricted Class B common stock, which will vest ratably from November 2022 to May 2025. We increased our interest in Lumo Finland from 91.6% to 96.6% and increased from 97.1% to 100% in Lumo Sweden.
Net loss from discontinued operations of Lumo Finland and Lumo Sweden, net of taxes was $0.2$0.3 million and $1.9$0.2 million for the three months ended March 31, 2024 and 2023, and 2022, respectively.
Following the discontinuance of operations of Lumo Finland and Lumo Sweden, GRE International ceased to be a segment and the remaining assets and liabilities and results of continuing operations of GRE International were combined with corporate.
On November 8, 2023, the Lumo Administrators, acting on behalf of the Bankruptcy Estate, filed a claim in the District Court of Helsinki against Genie Nordic, its directors, officers and affiliates, in which it alleges that the gain from the sale of swap instruments owned by Lumo Sweden amounting to €35.2 million (equivalent to $38.0 million as of March 31, 2024) belongs to the Bankruptcy Estate. We believe that the Lumo Administrators' position is without merit, and we intend to vigorously defend our position against the Administrators' claims.
We are also notified that the Lumo Administrators filed a claim against one of Lumo Finland’s suppliers, seeking to recover payments made by Lumo Finland amounting to €4.2 million (equivalent to $4.5 million as of March 31, 2024) prior to the bankruptcy. Related to such payment, the Lumo Administrators have filed a recovery claim jointly against us and the supplier for €1.6 million (equivalent to $1.7 million as of March 31, 2024) alleging that a portion of the payment to Lumo Finland effectively reduced our liability under the terms of a previously supplied parental guarantee (this €1.6 is included within and not additive to the €4.2 million). The Lumo Administrators allege that the payments represented preferential payments and therefore belong to the bankruptcy estate which are recoverable under the laws of Finland. We intend to challenge the Lumo Administrators' claims. Nevertheless, should the Lumo Administrators succeed in clawing back the funds from the supplier, it is possible that the supplier will seek to recover its losses against us, under terms of the parental guarantee. At this time there is insufficient basis to assess an amount of any probable loss
Discontinued Operations in the United Kingdom
InOn November 29, 2021 the natural gas and energy market in the United Kingdom deteriorated which prompted us to suspend the then contemplated spin-off of our international operations and start the process of orderly withdrawal from the U.K. market. In October 2021, as part of the orderly exit process from the U.K. market, Orbit Energy Limited ("Orbit"), a REP that used to operatewhich operated in the U.K., and Shell U.K. Limited ("Shell") agreed to terminate the exclusive supply contract between them. As part of the termination agreement, Orbit was required to unwind all physical forward hedges with Shell which resulted in net cash proceeds after settlement of all related liabilities with Shell. A portion of the net cash proceeds was transferred to us (see Note 5, Discontinued Operations and Divestiture, to our financial statements included elsewhere in this Quarterly Report on Form 10-Q).
Following the termination of the contract between Orbit and Shell, we filed a petition with the High Court of Justice Business and Property of England and Wales (the “Court”) to declare Orbit insolvent based on the Insolvency Act of 1986. On November 29, 2021, the Court declared Orbit insolvent based on the Insolvency Act of 1986, revoked Orbit's license to supply electricity and natural gas in the United Kingdom ordered that Orbit's currentwas declared and its customers bewere transferred to a “supplier of last resort” and transferredresort.” Effective December 1, 2021, the administration of Orbit was transferred to a third party Administrators (the "Orbit Administrators"). The accounts of Orbit were deconsolidated from those of the Company effective December 1, 2021. All of the customers of Orbit were transferred to a third-party supplier effective December 1, 2021 as ordered by the Court. All assets and liabilities of Orbit, including cash and receivables remain with Orbit, the management and control of which was transferred to Administrators.
We determined that exiting the United Kingdomdiscontinued operations of Orbit represented a strategic shift that would have a major effect on our operations and the financial statements. Since the appointment of the Orbit Administrators, we accounted their businesses as discontinued operations and accordingly, have presented the results of operations and related cash flows as discontinued operations for all periods presented. Theoperations. Any remaining assets and liabilities of the discontinued operations have been presented separately, and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of March 31, 2023 and December 31, 2022. Since the Company lost control of the management of Orbit in favor of the Orbit Administrators, the accounts of Orbit were deconsolidated effective December 1, 2021.
Coronavirus Disease (COVID-19)On November 28, 2023, the administration of Orbit ceased and the control of Orbit reverted back to the Company from the Orbit Administrators. The accounts of Orbit were reconsolidated with those of the Company effective November 28, 2023.
StartingThere were no income or loss from discontinued operations recognized in the first quarter 2020, the world and the United States experienced the unprecedented impact of the coronavirus disease 2019 (COVID-19) pandemic.
The COVID-19 pandemic has impacted our business, however, as we progressed through 2022 and have entered 2023, our service territories have reopened, and we expect the impacts of the pandemic will be less severe than in prior years. This was the case in the three months period ended March 31, 2023. COVID-19 pandemic has affected and may continue to affect our results2024. In the three months ended March 31, 2023, the Company recognized income from discontinued operation, net of operations, financial conditions and cash flowstaxes of $2.9 million mainly from the increase in the future.
There are many uncertainties regarding the impact of the COVID-19 pandemic, and we are closely monitoring those impacts on all aspectsestimated value of our business, including how it will impact our customers, employees, suppliers, vendors and business partners.
investments in Orbit due to a change in estimated net assets of Orbit after the Orbit Administrators settle the liabilities.
Genie Retail Energy
GRE operates REPs that resell electricity and/or natural gas to residential and small business customers in Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Texas, Rhode Island, and Washington, D.C. GRE’s revenues represented approximately96.3% 94.0% and 97.6%96.3% of our consolidated revenues in the three months ended March 31, 2024 and March 31, 2023, and 2022, respectively.
.
Seasonality and Weather; Climate Change and Volatility in Pricing
The weather and the seasons, among other things, affect GRE’s REPs' revenues. Weather conditions have a significant impact on the demand for natural gas used for heating and electricity used for heating and cooling. Typically, colder winters increase demand for natural gas and electricity, and hotter summers increase demand for electricity. Milder winters and/or summers have the opposite effects. Unseasonable temperatures in other periods may also impact demand levels. Potential changes in global climate may produce, among other possible conditions, unusual variations in temperature and weather patterns, resulting in unusual weather conditions, more intense, frequent and extreme weather events and other natural disasters. Some climatologists believe that these extreme weather events will become more common and more extreme, which will have a greater impact on our operations. Natural gas revenues typically increase in the first quarter due to increased heating demands and electricity revenues typically increase in the third quarter due to increased air conditioning use. Approximately 39.7%48.1% and 44.5%39.7% of GRE’s natural gas revenues for the relevant years were generated in the first quarter of 20222023 and 20212022 respectively, when demand for heating was highest. Although the demand for electricity is not as seasonal as natural gas (due, in part, to usage of electricity for both heating and cooling), approximately 30.5%32.5% and 30.3%30.5% of GRE’s electricity revenues for 20222023 and 20212022 respectively, were generated in the third quarters of those years. GRE's REP's revenues and operating income are subject to material seasonal variations, and the interim financial results are not necessarily indicative of the estimated financial results for the full year.
In addition to the direct physical impact that climate change may have on our business, financial condition and results of operations because of the effect on pricing, demand for our offerings and/or the energy supply markets, we may also be adversely impacted by other environmental factors, including: (i) technological advances designed to promote energy efficiency and limit environmental impact; (ii) increased competition from alternative energy sources; (iii) regulatory responses aimed at decreasing greenhouse gas emissions; and (iv) litigation or regulatory actions that address the environmental impact of our energy products and services.
Purchase of Receivables and Concentration of Credit Risk
Utility companies offer purchase of receivable, or POR, programs in most of the service territories in which GRE operates. GRE’s REPs reduce their customer credit risk by participating in POR programs for a majority of their receivables. In addition to providing billing and collection services, utility companies purchase those REPs’ receivables and assume all credit risk without recourse to those REPs. GRE’s REPs’ primary credit risk is therefore nonpayment by the utility companies. In the three months ended March 31, 20232024 thethe associated cost was approximately 0.9%1.0% of GRE revenue.revenue and approximately 0.9% for the three months ended March 31, 2023, respectively. At March 31, 2023, 2024,83.8% 86.7% of GRE’s net accounts receivable were under a POR program. Certain of the utility companies represent significant portions of our consolidated revenues and consolidated gross trade accounts receivable balance during certain periods, and such concentrations increase our risk associated with nonpayment by those utility companies.
The following table summarizes the percentage of consolidated trade receivablereceivables by customers that equal or exceed 10.0% of consolidated net trade receivables at March 31, 20232024 and December 31, 20222023 (no other single customer accounted for 10.0% or greater of our consolidated net trade receivable as of March 31, 20232024 or December 31, 20222023).
March 31, 2023 | December 31, 2022 | |||||||
Customer A |
| 10.9 | % |
| 10.2 | % | ||
Customer B | 11.0 | na |
March 31, 2024 | December 31, 2023 | |||||||
Customer A |
| 19.9 | % |
| 21.4 | % |
na—less than10.0% of consolidated net trade receivables at the relevant date
The following table summarizes the percentage of revenues by customers that equal or exceed 10.0% of consolidated revenues for the three months ended March 31, 2024 or 2023 and December 31, 2022 (no other single customer accounted for 10.0% or greater of our consolidated revenues for the three months ended March 31, 2023 and December 31, 2022)2024 or 2023):
Three Months Ended September 30 | ||||||||
2023 | 2022 | |||||||
Customer A | na | % | 10.4 | % |
Three Months Ended March 31, | ||||||||
2024 | 2023 | |||||||
Customer A | 21.8 | % | na |
na—less than 10.0% of consolidated revenue in the period
Legal Proceedings
Although GRE endeavors to maintain best sales and marketing practices, such practices have been the subject of class action lawsuits in the past.
See Note 18, Commitments and Contingencies, in this Quarterly Report on Form 10-Q, which is incorporated by reference.
Agency and Regulatory Proceedings
From time to time, the Company responds to inquiries or requests for information or materials from public utility commissions or other governmental regulatory or law enforcement agencies related to investigations under statutory or regulatory schemes. The Company cannot predict whether any of those matters will lead to claims or enforcement actions or whether the Company and the regulatory parties will enter into settlements before a formal claim is made. See NotesNote 18, Commitments and Contingencies,, in the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q, which is incorporated by reference, for further detail on agency and regulatory proceedings.
33 |
State of Connecticut Public Utilities Regulatory Authority
Residents Energy
In August of 2020, Residents Energy began marketing retail energy services in Connecticut. For the year ended December 31, 2021 Residents Energy's gross revenues from sales in Connecticut was $0.2 million. During the fourth quarter of 2020, the enforcement division of the State of Connecticut Public Utilities Regulatory Authority ("PURA") contacted Residents Energy concerning customer complaints received in connection with alleged door-to-door marketing activities in violation of various rules and regulations. On March 12, 2021, the enforcement division filed a motion against Resident Energy with the adjudicating body of PURA, seeking the assessment of $1.5 million in penalties, along with a suspension of license for eighteen months, auditing of marketing practices upon reinstatement and an invitation for settlement discussions.
In May 2021, the parties reached a settlement, pursuant to which Residents will pay $0.3 million. Residents Energy has also volunteered to withdraw from the market in Connecticut for a period of 36 months.
Critical Accounting Policies
Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.2023. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require the application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to revenue recognition, allowance for doubtful accounts, acquisitions, goodwill, and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022.2023.
Recently Issued Accounting Standards
Information regarding new accounting pronouncements is included in Note 20—Recently Issued Accounting Standards, to the current period’s consolidated financial statements.
Results of Operations
We evaluate the performance of our operating business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations.
Three Months Ended March 31, 20232024 Compared to Three Months Ended March 31, 20222023
Genie Retail Energy Segment
| Three months ended March 31, | Change | ||||||||||||||||||||||||||||||
(amounts in thousands) | 2023 | 2022 | $ | % | ||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Electricity | $ | 74,487 | $ | 59,380 | $ | 15,107 | 25.4 | % | ||||||||||||||||||||||||
Electricity | ||||||||||||||||||||||||||||||||
Electricity | $ | 89,396 | $ | 74,487 | $ | 14,909 | 20.0 | % | ||||||||||||||||||||||||
Natural gas | 26,925 | 24,504 | 2,421 | 9.9 | 22,398 | 26,925 | (4,527 | ) | (16.8 | ) | ||||||||||||||||||||||
Others | 671 | — | 671 | nm | ||||||||||||||||||||||||||||
Total revenues | 101,412 | 83,884 | 17,528 | 20.9 | ||||||||||||||||||||||||||||
Cost of revenues | 68,874 | 37,301 | 31,573 | 84.6 | ||||||||||||||||||||||||||||
Gross profit | 32,538 | 46,583 | (14,045 | ) | (30.2 | ) | 32,195 | 32,538 | (343 | ) | (1.1 | ) | ||||||||||||||||||||
Selling, general and administrative expenses | 16,093 | 16,407 | (314 | ) | (1.9 | ) | ||||||||||||||||||||||||||
Income from operations | $ | 16,445 | $ | 30,176 | $ | (13,731 | ) | (45.5 | )% | $ | 14,248 | $ | 16,445 | $ | (2,197 | ) | (13.4 | ) |
nm—notmeaningful
34 |
Revenues. Electricity revenues increased by 25.4%20.0% in the three months ended March 31, 20232024 compared to the same period in 20222023. The increase was due to increasesan increase in electricity consumption andpartially offset by a decrease in the average price per kilowatt hour charged to customers in the three months ended March 31, 20232024 compared to the same period in 20222023. Electricity consumption by GRE’s REPs' customers increased by 4.534.0% in the three months ended March 31, 20232024, compared to the same period in 20222023, reflecting a 16.2%an 18.4% increase in the average number of meters served partially offset byand a 10.1% decrease13.2% increase in average consumption per meter. Electricity consumptionThe increase in meters served was driven by strong customer acquisitions during 2023 that continued into 2024 which had been curtailed during 2023 due to market conditions. The increase in per meter decreasedconsumption is due to colder weather in the three months ended March 31, 2023 due to milder weather conditions in our service areas2024 compared to the same period in 2022. The increase in meters served was driven by a restart of customer acquisition efforts. The average rate per kilowatt hour sold increased 20.1decreased 10.4% in the three months ended March 31, 20232024 compared to the same period in 20222023 due to increasesthe shift in the average wholesale pricemix of electricity. customers and products sold during the quarters.
GRE’s natural gas revenues increaseddecreased by 9.9%16.8% in the three months ended March 31, 20232024 compared to the same period in 20222023. The increase in natural gas revenues in the three months ended March 31, 2023 compared to the same period in 2022decrease was a result of an increasea decrease in average revenue per therm sold partially offset by a slight decreasean increase in natural gas consumption.The average revenue per therm sold increaseddecreased by 22.610.8% in the three months ended March 31, 20232024, compared to the same period in 20232022. The decrease in revenue per therm was driven by an increase in the portion of the customer base consisting of commercial customers with fixed rates compared to customers with variable rates in the three months ended March 31, 2024 compared to the same period in 2023. Natural gas consumption by GRE’s REPs’ customers decreasedincreased by 0.87.5% in the three months ended March 31, 20232024 compared to the same period in 20222023, reflecting an 8.1% decrease in average consumption per meter partially offset by 7.9%a 6.0% increase in average meters served in the three months ended March 31, 20232024 compared to the same period in 20222023, partially offset by a 1.4% decrease in average consumption per meter.
Other revenues in the three months ended March 31, 2024 included revenues from the sale of petroleum products in Israel.
The customer base for GRE’s REPs as measured by meters served consisted of the following:
(in thousands) |
| March 31, 2023 | December 31, 2022 |
| September 30, 2022 |
| June 30, 2022 |
| March 31, 2022 |
|
| March 31, 2024 | December 31, 2023 | December 31, 2023 |
| September 30, 2023 |
| June 30, 2023 |
| March 31, 2023 |
| |||||||||||||||||
Meters at end of quarter: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Electricity customers |
| 271 |
| 196 |
|
| 193 |
|
| 203 |
|
| 209 |
|
| 281 |
| 279 |
| 304 |
| 301 |
| 271 |
| |||||||||||||
Natural gas customers |
| 78 |
| 79 |
|
| 77 |
|
| 77 |
|
| 77 |
|
| 83 |
| 82 |
|
| 81 |
|
| 80 |
|
| 78 |
| ||||||||||
Total meters |
| 349 |
| 275 |
|
| 270 |
|
| 280 |
|
| 286 |
|
| 364 |
| 361 |
|
| 385 |
|
| 381 |
|
| 349 |
|
Gross meter acquisitions in the three months ended March 31, 2023,2024, were 129,00070,000 compared to 44,000129,000 for the same period in 2022.2023. The increase in the gross meter acquisitions for the three months ended March 31, 2023 compared to the same period in 2022 was due to a “strategic pause” on certain customer acquisition channels that started in the fourth quarter 2021. In the first quarter of 2023, we resumed customer acquisition activities using a variety of new channels.and existing channels after a "strategic pause" implemented from the fourth quarter of 2021 through 2022.
Meters served increased by 74,0003,000 meters or 26.9%0.8% from December 31, 20222023 to March 31, 20232024. Meters served increased by 63,000 meters or 22.0% fromMarch 31, 2022toMarch 31, 2023. The increasesincrease in the number of meters served at March 31, 20232024 compared to December 31, 20222023 and March 31, 2022 was due to the resumption of customercontinued acquisition activities in 2024 and 2023 as discussed above.
In the three months ended March 31, 20232024, average monthly churn increased to 4.4%5.5% compared to 4.5%4.4% for same period in 20222023.
The average rates of annualized energy consumption, as measured by RCEs, are presented in the chart below. An RCE represents a natural gas customer with annual consumption of 100 mmbtu or an electricity customer with annual consumption of 10 MWh. Because different customers have different rates of energy consumption, RCEs are an industry standard metric for evaluating the consumption profile of a given retail customer base.
(in thousands) |
| March 31, 2023 | December 31, 2022 |
| September 30, 2022 |
| June 30, 2022 |
| March 31, 2022 |
|
| March 31, 2024 | December 31, 2023 | December 31, 2023 |
| September 30, 2023 |
| June 30, 2023 |
| March 31, 2023 |
| |||||||||||||||||
RCEs at end of quarter: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Electricity customers |
| 276 |
| 181 |
| 174 |
| 185 |
| 182 |
|
| 267 |
| 272 |
| 298 |
| 304 |
| 276 |
| ||||||||||||||||
Natural gas customers |
| 77 |
| 81 |
|
| 77 |
|
| 77 |
|
| 78 |
|
| 81 |
| 78 |
|
| 77 |
|
| 76 |
|
| 77 |
| ||||||||||
Total RCEs |
| 353 |
| 262 |
|
| 251 |
|
| 262 |
|
| 260 |
|
| 348 |
| 350 |
|
| 375 |
|
| 380 |
|
| 353 |
|
RCEs increased 35.8% at March 31, 2023 compared to March 31, 2022. RCEs increased by 34.7% at March 31, 20232024 decreased 0.6% compared to December 31, 2022. 2023. TThehe increase is due to the resumption of customer acquisition activities as discussed above.
35 |
Cost of Revenues and Gross Margin Percentage. GRE’s cost of revenues and gross margin percentage were as follows:
Three Months Ended March 31, | Change | |||||||||||||||||||||||||||||||
(amounts in thousands) | 2023 | 2022 | $ | % | ||||||||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||||||||||
Electricity | $ | 45,766 | $ | 25,197 | $ | 20,569 | 81.6 | % | ||||||||||||||||||||||||
Electricity | ||||||||||||||||||||||||||||||||
Natural gas | 23,108 | 12,104 | 11,004 | 90.9 | 13,888 | 23,108 | (9,220 | ) | (39.9 | ) | ||||||||||||||||||||||
Others | 665 | — | 665 | nm | ||||||||||||||||||||||||||||
Total cost of revenues | $ | 68,874 | $ | 37,301 | $ | 31,573 | 84.6 | % |
nm—notmeaningful
Three months ended March 31, | Three months ended March 31, | Three months ended March 31, | ||||||||||||||||||
(amounts in thousands) | 2023 | 2022 | Change | 2024 | 2023 | Change | ||||||||||||||
Gross margin percentage: | ||||||||||||||||||||
Electricity | 38.6 | % | 57.6 | % | (19.0 | )% | 26.5 | % | 38.6 | % | (12.1 | ) | ||||||||
Natural gas | 14.2 | 50.6 | (36.4 | ) | ||||||||||||||||
Others | 0.9 | — | 0.9 | |||||||||||||||||
Total gross margin percentage | 32.1 | % | 55.5 | % | (23.4 | )% | 28.6 | % | 32.1 | % | (3.5 | ) |
Cost of revenues for electricity increased in the three months ended March 31, 20232024 compared to the same period in 20222023 primarily because of increases in electricity consumption by GRE’s REPs’ customers and the average unit cost of electricity. The average unit cost of electricity increased 73.97.2% in the three months ended March 31, 20232024 compared to the same period in 20222023. The significant increase is due to a risean increase in the average wholesale price of electricity during the three months ended March 31, 2023compared to the same period in 2022.electricity. The gross margin on electricity sales decreased in the three months ended March 31, 20232024 compared to the same period in 20222023 because the average unit cost of electricity increased while the average rate charged to customers increased less than the increase in the average unit cost of electricity. decreased.
Cost of revenues for natural gas increaseddecreased in the three months ended March 31, 20232024 compared to the same period in 20222023 primarily because of increasesa decrease in the average unit cost of natural gas partially offset by an increase in the natural gas consumption by GRE's REPs' customers and in the average unit cost of natural gas.. The average unit cost of natural gas increaseddecreased by 92.5%44.1% per therm in the three months ended March 31, 20232024 compared to the same period in 20222023. The significant increase is due to a risedecrease in the wholesale price of natural gas during the three months ended March 31, 2023compared to the same period in 2022.gas. Gross margin on natural gas sales decreasedincreased in the three months ended March 31, 20232024 compared to the same period in 20222023 because the average rate charged to customers increaseddecreased less than the increasedecrease in the average unit cost of natural gas.
Selling, General and Administrative. The decrease in selling,Selling, general and administrative expenses increased by 11.5% in the three months ended March 31, 20232024 compared to the same period in 20222023 was primarily due to decreases in employee-related costs and POR program fees, partially offset by an increaseincreases in marketing and customer acquisition cost. Employee-related expenses decreased by $0.5 million in the three months ended March 31, 2023 compared to the same period in 2022 primarily due to a decrease in accrued bonuses as a resultcosts, employee-related costs, POR program fees, processing fees and provision of a decrease in the income from operations of GRE. doubtful account. Marketing and customer acquisition expenses increased by $0.3$0.6 million in the three months ended March 31, 20232024 compared to the same period in 20222023 as a result of an increase in the number of meters acquired.acquired during 2023 period.Employee-related expenses increased by $0.3.0 million in the three months ended March 31, 2024 compared to the same period in 2023 primarily due to an increase in the number of employees. POR program fees decreasedincreased by $0.30.1. million in the three months ended March 31, 20232024 compared to the same period in 20222023 as a result of changes in rates implemented by several utilities. utilities. Processing fees increased by $0.2 million in the three months ended March 31, 2024 compared to the same period in 2023 as a result of a higher level of activities from an increase in the number of meters. Provision for doubtful accounts increased by $0.2 million in the three months ended March 31, 2024 compared to the same period in 2023 as a result of increase in revenues in non-POR territories. As a percentage of GRE’s total revenues, selling, general and administrative expense increased from 19.6%15.9% in the three months ended March 31, 20222023 to 15.9%16.0% in the three months ended March 31, 2023. 2024.
Genie Renewables Segment
The Genie Renewables (formerly GES) segment is composed of Genie Solar, CityCom Solar Diversegyand Prism.Diversegy. Genie Solar is an integrated solar energy company. CityCommcompany that develops, constructs and operates solar energy projects for commercial and industrial customers as well as its own portfolio. CityCom Solar is a marketer of community solaralternative products and services complementary to our energy solutions.offerings. Diversegy provides energy brokerage and advisory services to commercial and industrial customers. Prism provides solar and manufacturing of solar panels, solar installation design and solar energy project management.
Three Months Ended March 31, | Change | ||||||||||||||||||||||||||||||||
(amounts in thousands) | 2023 | 2022 | $ | % | |||||||||||||||||||||||||||||
Revenues | $ | 3,864 | $ | 2,042 | $ | 1,822 | 89.2 | % | $ | 7,223 | $ | 3,864 | $ | 3,359 | 86.9 | % | |||||||||||||||||
Cost of revenue | 3,116 | 1,518 | 1,598 | 105.3 | |||||||||||||||||||||||||||||
Gross profit | 748 | 524 | 224 | 42.7 | |||||||||||||||||||||||||||||
Selling, general and administrative expenses | 1,896 | 1,003 | 893 | 89.0 | |||||||||||||||||||||||||||||
Loss from operations | $ | (1,148 | ) | $ | (479 | ) | $ | 669 | 139.7 | % | $ | (645 | ) | $ | (1,148 | ) | $ | (503 | ) | (43.8 | ) |
Revenue. Genie Renewables' revenues increased in the three months ended March 31, 20232024 compared to the same period in 20222023. The increaseincreases in revenues waswere the result of increases in revenues from commissionsthe development of the solar projects for customers from selling third-party products to customers by CityComGenie Solar, and revenues from Diversegy that includes commissions, entry fees and other fees from our energy brokeragebrokerage and marketing services businesses.businesses, partially offset by decreases in commissions from selling third-party products to customers by CityCom Solar and sale of solar panels by Prism. Genie Solar projects had significant progress in the in the three months ended March 31, 2024 compared to the same period in 2023.
Cost of Revenues. CostThe variations in the cost of revenue increased inrevenues for the three months ended March 31, 20232024 compared to the same periodperiods in 2022. The increase2023 are consistent with the variations in revenues of Genie Solar, Diversegy, CityCom Solar and Prism. In the first quarter of 2024, we recorded a $0.4 million charge to the cost of revenues reflectsof Genie Solar to write down the increase in revenuescarrying value of CityCom Solar and Diversegy.solar panel inventories to the estimated net realizable value.
Selling, General and Administrative. Selling, general and administrative expenses increased in the three months ended March 31, 20232024 compared to the same periodperiods in 20222023 primarily due to increases in headcount in Genie Solar and Diversegy, and consulting fees and warehousing costs at Genie Solar.Solar and depreciation from the solar arrays acquired by Genie Solar in the last six months.
Corporate
As discussed above, the remaining accounts of GRE International were transferred to corporate starting in the third quarter of 2022. Entities under corporate do not generate any revenues, nor does it incur any cost of revenues. Corporate costs include unallocated compensation, consulting fees, legal fees, business development expense and other corporate-related general and administrative expenses.
Three Months Ended March 31, | Change | ||||||||||||||||
(amounts in thousands) | 2023 | 2022 | $ | % | |||||||||||||
General and administrative expenses and loss from operations | $ | (4,022 | ) | $ | (2,735 | ) | $ | 1,287 | 47.1 | % |
Three Months Ended March 31, | Change | |||||||||||||||
(amounts in thousands) | 2024 | 2023 | $ | % | ||||||||||||
General and administrative expenses | 2,718 | 4,022 | (1,304 | ) | (32.4) | |||||||||||
Provision for captive insurance liability | 1,036 | — | 1,036 | nm | ||||||||||||
General and administrative expenses and loss from operations | $ | 3,754 | $ | 4,022 | $ | (268 | ) | (6.7 | )% |
Corporate general and administrative expenses increaseddecreased in the three months ended March 31, 20232024 compared to the same period in 20222023, primarily because of increasedecreases in employee related cost.employee-related cost and professional and consulting fees. As a percentage of our consolidated revenues, Corporate general and administrative expense increaseddecreased to 2.3% in the three months ended March 31, 2024 from 3.8% in the three months ended March 31, 2023. from 3.2%
In December 2023, we established a wholly-owned captive insurance subsidiary (the "Captive") with the primary purpose of enhancing our risk financing strategies. In December 2023, we paid $51.2 million premiums to Captive, which amount is included in restricted cash in our consolidated balance sheet as of December 31, 2023. The Captive must maintain a sufficient level of cash to fund future reserve payment and secure the insurer's liabilities, particularly those related to the insured risks. We also recognized a $1.0 million provision for captive insurance liability for the three months ended March 31, 2022.2024 related to Captive's exposure for the insured risks.
Consolidated
Selling, general and administrative expenses. Stock-based compensation expense included in consolidated selling, general and administrative expenseexpenses was $0.9 million in each of the three months ended March 31, 20232024 and 2022. 2023. At March 31, 2023,2024, the aggregate unrecognized compensation cost related to non-vested stock-based compensation was $4.1$1.7 million. The unrecognized compensation cost is recognized over the expected service period.
The following is a discussion of our consolidated income and expense line items below income from operations:
Three Months Ended March 31, | Change | ||||||||||||||||||||||||||||||||
(amounts in thousands) | 2023 | 2022 | $ | % | |||||||||||||||||||||||||||||
Income from operations | $ | 11,275 | $ | 26,962 | $ | (15,687 | ) | (58.2 | )% | $ | 9,849 | $ | 11,275 | $ | (1,426 | ) | (12.6) | % | |||||||||||||||
Interest income | 974 | 17 | 957 | nm | |||||||||||||||||||||||||||||
Interest expense | (19 | ) | (50 | ) | (31 | ) | (62.0 | ) | |||||||||||||||||||||||||
Other income (loss), net | 3,246 | (498 | ) | 3,744 | nm | ||||||||||||||||||||||||||||
Loss on marketable equity securities and investments | (71 | ) | (652 | ) | (581 | ) | (89.1 | ) | |||||||||||||||||||||||||
Other income, net | |||||||||||||||||||||||||||||||||
Gain (loss) on marketable equity securities and investments | |||||||||||||||||||||||||||||||||
Provision for benefit from income taxes | (4,068 | ) | (7,112 | ) | (3,044 | ) | (42.8 | ) | |||||||||||||||||||||||||
Net income from continuing operations | 11,337 | 18,667 | (7,330 | ) | (39.3 | ) | 8,434 | 11,337 | (2,903 | ) | (25.6 | ) | |||||||||||||||||||||
Income (loss) from discontinued operations, net of tax | 3,055 | (1,932 | ) | 4,987 | 258.1 | ||||||||||||||||||||||||||||
(Loss) income from discontinued operations, net of tax | (265 | ) | 3,055 | (3,320 | ) | (108.7 | ) | ||||||||||||||||||||||||||
Net income | 14,392 | 16,735 | (2,343 | ) | (14.0 | ) | 8,169 | 14,392 | (6,223 | ) | (43.2 | ) | |||||||||||||||||||||
Net loss attributable to noncontrolling interests | (39 | ) | (1,154 | ) | (1,115 | ) | (96.6 | ) | |||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | 46 | (39 | ) | 85 | (217.9 | ) | |||||||||||||||||||||||||||
Net income attributable to Genie Energy Ltd. | $ | 14,431 | $ | 17,889 | $ | (3,458 | ) | (19.3 | )% | $ | 8,123 | $ | 14,431 | $ | (6,308 | ) | (43.7) | % |
nm—not meaningful
Interest income. Interest income increased in the three months ended March 31, 2023,2024, compared to the same period in 20222023 primarily due to increasesincrease in average cash and cash equivalents and restricted cash during the period and significant increases in average effective interest rates on those balances.period.
Other Income, (Loss), net. Other income, (loss), net in the three threemonths ended March 31, 20232024 and 2023 consisted primarily of foreign currency transactions and equity in net loss in equity method investees. Other income (loss) income, net, in the three months ended March 31, 2024 consisted primarily of on-time tax credit related to payroll taxes incurred in prior years.Other income (loss), net in thethree months ended March 31, 2023 also includes net equity in net income of equity methods investees. Other income (loss), net in the three months ended March 31, 2022 consisted primarily of foreign currency transactions and equity in net loss in equity method investees.
Provision for Income Taxes. The change in the reported tax rate for the three months ended March 31, 20232024 compared to the same periods in 2022,2023, is the result of changes in the mix of jurisdictionjurisdictions in which taxable income was earned.
Net Loss Attributable to Noncontrolling Interests. The decreasedecreases in net loss attributable to noncontrolling interests in the three months ended March 31, 20232024 compared to the same periods in 20222023 was primarily due to a decrease in the share of noncontrolling interest in the net incomeoperations of Lumo Sweden and Lumo Finland as well as a decrease in losses incurred by Citizens Choice Energy.
LossGain (loss) on Marketable Equity Securities and Investments. The lossgain on marketable equity securities and investment for the three months ended March 31, 20232024 pertains to the change in fair value of the Company's investments in common stock of Rafael Holdings, Inc. ("Rafael") which the Company acquired in December 2020. As discussed above, we sold a large portion2020 and various investments in equity of our holdings in the common stock of Rafael in the first quarter of 2023.several entities.
Income (Loss) income from Discontinued Operations, net of tax. IncomeLoss from discontinued operations, net of tax in the three months ended March 31, 2024 is mainly related to foreign exchange differences in Lumo Sweden during the period. Gain from discontinued operations, net of tax in the three months ended March 31, 2023 is mainly from an increase in the estimated value of our investments in Orbit and foreign exchange gaindifferences in Lumo Sweden. Loss from discontinued operations, net of tax in the three months ended March 31, 2022is mainly due to results of operations ofLumo Finland andLumo Sweden.
Liquidity and Capital Resources
General
We currently expect that our cash flow from operations and the $105.2$106.6 million balance of unrestricted cash and cash equivalents that we held at March 31, 20232024 will be sufficient to meet our currently anticipated cash requirements for at least the period to MayMarch 9, 2024.2025.
At March 31, 2023,2024, we had working capital (current assets less current liabilities) of $142.4$127.2 million.
|
| Three Months Ended March 31, |
|
| Three Months Ended March 31, |
| ||||||||||
| 2023 |
|
| 2022 |
|
| 2024 |
| 2023 |
| ||||||
|
| (in thousands) |
|
| (in thousands) |
| ||||||||||
Cash flows provided by (used in): |
|
|
|
|
|
|
|
|
|
|
| |||||
Operating activities |
| $ | 1,520 |
| $ | 18,199 | ||||||||||
Investing activities |
|
| (4,162 | ) |
|
| (1,628 | ) |
| (5,844 | ) |
| (4,162 | ) | ||
Financing activities |
|
| (3,273 | ) |
|
| (2,375 | ) |
| (7,730 | ) |
| (3,273 | ) | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (10 | ) | 27 | 74 | (10 | ) | ||||||||||
Increase in cash, cash equivalents and restricted cash of continuing operations | (5,925 | ) | 14,223 | |||||||||||||
Cash flows provided by (used in) discontinued operations | 9,714 | (21,691 | ) | |||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
| $ | 3,789 |
| $ | (7,468 | ) | |||||||||
Decrease in cash, cash equivalents and restricted cash of continuing operations | ||||||||||||||||
Cash flows provided by discontinued operations | ||||||||||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash |
Operating Activities
Cash, cash equivalents and restricted cash provided by operating activities of continuing operations was $1.5$8.7 million in the three months ended March 31, 20232024 compared to net cash used in operating activities of continuing operations of $18.2 $1.5 million in the three months ended March 31, 2022.2023. The decrease is primarily the fluctuation in the results of operations in the three months ended March 31, 20232024 compared to the same period in 2022.2023.
Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Changes in assets and liabilities decreased cash flows by $9.0$8.5 million for the three months ended March 31, 2023,2024, compared to the same period in 2022.2023.
Certain of GRE's REPs are party to an Amended and Restated Preferred Supplier Agreement with BP Energy Company, or BP, which is to be in effect through November 30, 2023. Under the agreement, the REPs purchase electricity and natural gas at market rate plus a fee. The obligations to BP are secured by a first security interest in deposits or receivables from utilities in connection with their purchase of the REP’s customer’s receivables, and in any cash deposits or letters of credit posted in connection with any collateral accounts with BP. The ability to purchase electricity and natural gas under this agreement is subject to satisfaction of certain conditions including the maintenance of certain covenants. At March 31, 2023,2024, we were in compliance with such covenants. At March 31, 2023,2024, restricted cash—short-term of $0.6$0.4 million and trade accounts receivable of $63.1$64.2 million were pledged to BP as collateral for the payment of trade accounts payable to BP of $14.2$16.0 million at March 31, 2023.2024.
We had purchase commitments of $132.5130.3 million at March 31, 20232024, of which $114.8116.1 million was for purchases of electricity.
From time to time,As discussed above, in December 2023, we receive inquiries or requestsestablished the Captive insurance subsidiary. At March 31, 2024, the balance of short-term and long-term restricted cash and cash equivalents of the Captive are $6.3 million and $45.5 million, respectively. We also recognized $1.0 million provision for information or materials from public utility commissions or other governmental regulatory or law enforcement agenciescaptive insurance liability for the three months ended March 31, 2024, related to investigationsCaptive's exposure for the insured risks. At March 31, 2024, the current captive insurance liability of $0.6 million is included in other current liabilities in the consolidated balance sheet. The amount of the expected loss liability for each risk is based on an analysis performed by a third-party actuary which assumed historical patterns. The key assumptions used in developing these estimates are subject to variability.
We are a lessee under statutory or regulatory schemes,operating lease agreements primarily for office space in locations where we operate and for our solar development projects with lease periods expiring between 2024 and 2052. Our future lease payments under the operating leases as of March 31, 2024 were $3.9 million.
GRE has performance bonds issued through a third party for the benefit of certain utility companies and for various states in order to comply with the states’ financial requirements for retail energy providers. At December 31, 2023, we respond to those inquiries or requests. We cannot predict whether anyhad outstanding aggregate performance bonds of those matters will lead to claims or enforcement actions.$21.5 million and a minimal amount of unused letters of credit.
Investing Activities
Our capital expenditures were $0.1decreased $1.2 million for each of the three months ended March 31, 2024 compared to the same period in 2023. The capital expenditures are mainly for the construction of solar projects at Genie Solar. In the third quarter of 2023, and 2022.we transferred $4.3 million worth of solar panels that are intended to be used in Genie Solar projects from inventories to construction in progress related to solar panels expected to be used in the solar project by Genie Solar. We currently anticipate that our total capital expenditures in the twelve months ending December 31, 20232024 will be between $15.0between $6.0 million to $20.00$10.00 million mostly related to the solar projects of Genie Renewables.
On November 3, 2023, we acquired ten special-purpose entities that own and operate solar system facilities in Ohio and Michigan for an aggregate purchase price of $7.5 million. The acquisition has been accounted for as an asset acquisition with a total purchase price of $7.7 million, including $0.2 million of direct transaction cost allocated to solar arrays assets included in the property and equipment account in our consolidated balance sheet.
On November 3, 2023, we also signed an agreement to purchase from the sellers another special purpose entity that owned and operated a solar system facility in Indiana, for $1.3 million, subject to the satisfaction of certain closing conditions. In February 2024, the purchase of the solar system facility in Indiana was completed after the closing conditions were met. The acquisition has been accounted for as asset acquisition and we recorded $1.3 million to solar arrays assets included in the property and equipment account in the consolidated balance sheet.
In February 2024, we purchased from a certain investor 0.5% interest in GEIC by paying $1.2 million.
In the three months ended March 31, 2024 and 2023, we acquired minimal interests in various ventures for an aggregate amount of investments of $2.1 million and $0.2 million, respectively.
In 2020 and 2021, we invested an aggregate of $6.0 million for 261,984 shares of Class B common stock of Rafael Holdings, Inc. ("Rafael"). Rafael, a publicly-traded company that is alsoand a related party. We do not exercise significant influence over the operating or financial policies of Rafael. In the three months ended March 31, 2023, we sold 195,501 shares of our Class B common stock of Rafael for $0.3 million. In the second quarter of 2023, we acquired 150,001 shares of our Class B common stock of Rafael for $0.3million. We do not exercise significant influence over the operating or financial policies of Rafael. At March 31, 2023,2024, the carrying value of the remaining investments in the Class B common stock of Rafael was $0.1$0.4 million.
In the three months ended March 31, 2023, we invested $4.6 million to purchase the common stock of a publicly traded company. At March 21, 2023, the carrying value of our investmentscompany which we sold for $3.9 million in the marketable equity securities was $4.6 million.second quarter of 2023.
In March 2023, the Company received $0.1 million from Atid 613 Drilling Ltd. ("Atid 613") for the full settlement of its investment in Atid 613. The Company recognized a minimal gain from settlement of investment included in other income (loss), net in its consolidated statements of operations for the three months ended March 31, 2023.
In the three months ended March 31, 2022, we acquired minimal interests in various ventures for an aggregate amount of investments of $0.2 million.
On February 21, 2022, we entered into a LoanNovember 29, 2021, Orbit, which operated in the United Kingdon, was declared insolvent and Security Agreementits customers were transferred to extend upthe “supplier of last resort.” Effective December 1, 2021, the administration of Orbit was transferred to 5.5 million New Israel Shekel, or NIS (equivalent to $1.5 million as at March 31, 2023) with Natan Ohayon (the "Ohayon Loan"). Natan Ohayon holds a minority interest in Petrocycle Ltd ("Petrocycle"), a subsidiaryOrbit Administrators. The accounts of Orbit were deconsolidated from those of the Company. Petrocycle is a preoperating entity engaged in the development of a process to recycle used engine oil into usable gasoline. TheOhayonLoan, which is secured by all assets that Mr. Ohayon acquired using the proceeds of the loan bears a minimum interest as set by the Income Tax Regulations of Israel (3.23% in 2022) and is due, together with the principal amount on or beforeCompany effective December 31, 2023. In December 2022, the Company suspended the development of business operations of Petrocycle after it was determined that the current operations will not meet the expected results. Petrocycle provided full impairment of its property and equipment and notes and other receivables from its minority interest partner for an aggregate amount of $2.1 million.
In the fourth quarter of 2021, Orbit transferred to GEIC a net amount of $49.7 million from the proceeds of the settlement of the contract with Shell which is included in cash and cash equivalents in the consolidated balance sheet as of December 31,1, 2021. In January 2022, we transferred $21.5$49.7 million to the Orbit Administrators of Orbit to fund the settlement of the expected remaining liabilities of Orbit of $30.8 million, which were included in the current liabilities of discontinued operations in the consolidated balance sheet as part of December 31, 2021. In February 2022, we deposited $28.3 million into an attorney trust account to hold, preserve, and dispense funds to the extent needed in connection with the administration process. On February 24, 2022,November 28, 2023, the Administrators filed a petition under Chapter 15administration of the U.S. Bankruptcy Code with the Bankruptcy Court of the Southern District of New York seeking (i) recognition of the U.K. administration proceeding as a foreign main proceedingOrbit ceased and the U.K. Administrators as its foreign representatives, and (ii) entrusting distributioncontrol of the funds the Company deposited into its attorney’s trust fund to the U.K. Administrators. In the second quarter of 2022, the Administrators filed an application to transfer the fundsOrbit reverted back to the Administrators’ control inCompany from the U.K. Subject to certain representations and expectations regarding use and applicationAdministrators. The accounts of Orbit were reconsolidated with those of the funds to efficiently and expeditiously pay off creditors and bringCompany effective November 28, 2023. In 2023, the Orbit Administrators paid us a timely close to the insolvency administration, we decided not to oppose the application, and the Court transferred the $28.3 million to the Administrator. In August 2022, the Administrator paid the Company a partial return of itsour interest in Orbit of £4.6£18.8 million (equivalent to $5.4 million). In$23.7 million on the three months ended March 31, 2023, the Administrator paida partial returndates of its interest in Orbit of£0.4 million (equivalent to $0.5 million)transfer). We believe that the funds are more than sufficient to pay any remaining creditors of Orbit (with any surplus, which we expect to be significant, to be returned to us).
Financing Activities
In the three months ended March 31, 2023 and 2022, we paid aggregate quarterly Base Dividends of $0.1594 per share of our 2021-A Preferred Stock or Preferred Stock. We paid $0.2 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively. On April 17, 2023, our Board of Directors declared aggregate dividends of $0.6895per share on the Preferred Stock, consisting of aquarterly Base Dividend of $0.1594 per share for thefirstquarter of2023, and Additional Dividends of $0.5301 per share in respect of the GRE results of operations during the year ended December 31, 2022. The dividend will be paid on or aboutMay 15, 2023 to stockholders of record as of the close of businessMay 5, 2023 and to the holders of Preferred Stock that we redeemed in thethree months ended March 31, 2023.2024
In the three months ended March 31, 2023 and 2022,2023, we paid aggregate quarterly dividends of $0.075$0.075 per share to stockholders of our Class A common stock and Class B common stock. The Company paid $2.0stock, or aggregate dividends of $2.1 million and $1.9$2.0 million forin the three months ended March 31, 2024 and 2023, and 2022. respectively. On May 3, 2023,2, 2024 our Board of Directors declared a quarterly dividend of $0.075 per share on our Class A common stock and Class B common stock. The dividend will be paid on or about May 31, 20232024 to stockholders of record as of the close of business on May 20, 2023.2024.
In thethree months ended March 31, 2023, we paid Base Dividends of $0.1594 per share of our 2012-A Preferred Stock or Preferred Stock in an aggregate amount of $0.2 million.
On March 11, 2013, our Board of Directors approved a program for the repurchase of up to an aggregate of 7.0 million shares of our Class B common stock. In the three months ended March 31, 2024, we acquired 250,000 Class B common stock under the stock purchase program for an aggregate amount of $4.1 million.There wereare no repurchases under this program in the three months ended March 31, 2023 and 2022.. At March 31, 2023, 4.72024, 4.4 million shares of Class B common stock remained available for repurchase under the stock repurchase program.
On February 7, 2022, our Board of Directors of the Company authorized a program to redeem up to $1.0 million per quarter of our Preferred Stock at the liquidation preference of $8.50 per share beginning in the second quarter of 2022. In the three months ended March 31, 2023, the Company redeemed 117,647 shares of Preferred Stock under the stock purchase program for an aggregate amount of $1.0$1.0 million.
On April 17,May 16, 2023,the Company's our Board of Directors approved the redemption of 117,647 shares ofall outstanding Preferred Stock on May 15,June 16, 2023 (the "Redemption Date") at a pricethe liquidation preference of $8.50 per share, equivalent to approximately $1.0 million, together with an amount equal to all dividends accrued and unpaid up to, but not including, the Redemption Date. On the Redemption Date, we completed the redemption of 748,064 shares of Preferred Stock for an aggregate amount of $6.5 million and the related accrued dividends of $0.1349 per share equivalent to $0.1 million. Following the redemption, there are no shares of Preferred Stock outstanding, all rights of Preferred Stockholders have terminated, and the Preferred Stock’s ticker symbol, "GNEPRA", has been retired.
In the three months ended March 31, 2024 and 2023, wepaid $2.5million and $0.2 million, respectively, to repurchase our Class B common stock of our Class B common stock tendered by our employees (including one officer) to satisfy tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock and exercise of stock options. Such shares were repurchased by us based on their fair market value on the trading day immediately prior to the vesting date.
On December 13, 2018, we entered into a Credit Agreement with JPMorgan Chase Bank (“Credit Agreement”). On December 27, 2022,February 14, 2024, the Company entered into the third amendment of its existing Credit Agreement to extend the maturity date of December 31, 2023.2024. The aggregate principal amount was reduced to $3.0 million credit line facility (“Credit Line”). The Company pays a commitment fee of 0.1% per annum on the unused portion of the Credit Line as specified in the Credit Agreement. The borrowed amounts will be in the form of letters of credit which will bear interest of 1.0% per annum. The Company will also pay a fee for each letter of credit that is issued equal to the greater of $500 or 1.0% of the original maximum available amount of the letter of credit. We agreed to deposit cash in a money market account at JPMorgan Chase Bank as collateral for the line of credit equal to $3.1$3.1 million. As of March 31, 20232024, there is no issued letter of credit from the Credit Line. At March 31, 20232024, the cash collateral of $3.33.8 million was included in restricted cash—short-term in the consolidated balance sheet.
Cash flows from discontinued operations
In
Cash provided by operating activities of discontinued operations was $9.7 million in the three months ended March 31, 2024 compared to $4.2 million in the same period in 2023. The cash provided by operating activities of discontinued operations in the three months ended March 31, 2024 and 2023 we paid $0.2 million to repurchase 15,986 shares of our Class B common stock of our Class B common stock tendered by our employees and an officer to satisfy tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. Such shares were repurchased by us based on their fair market value on the trading day immediately priorpertains to the vesting date.
Off-Balance Sheet Arrangements
We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, resultsproceeds from the settlement of operations, liquidity, capital expenditures or capital resources, other than the following. GRE has performance bonds issued through a third party for the benefithedges of certain utility companies and for various states in order to comply with the states’ financial requirements for retail energy providers. At March 31, 2023, the Company had outstanding aggregate performance bonds of $14.9 million and a minimal amount of unused lettLumo Sweden. ers of credit.
Our primary market risk exposure is the price applicable to our natural gas and electricity purchases and sales. The sales price of our natural gas and electricity is primarily driven by the prevailing market price. Hypothetically, for our GRE segment, if our gross profit per unit in the three months ended March 31, 20232024 had remained the same as in the three months ended March 31, 2022,2023, our gross profit from electricity sales would have increased by $7.014.8 million and our gross profit from natural gas sales would have increased by $8.5 million in the three months ended March 31, 2023. decreased $4.4 million.
The energy markets have historically been very volatile, and we can reasonably expect that electricity and natural gas prices will be subject to fluctuations in the future. In an effort to reduce the effects of the volatility of the price of electricity and natural gas on our operations, we have adopted a policy of hedging electricity and natural gas prices from time to time, at relatively lower volumes, primarily through the use of put and call options and swaps. While the use of these hedging arrangements limits the downside risk of adverse price movements, it also limits future gains from favorable movements. We do not apply hedge accounting to these options or swaps, therefore the mark-to-market change in fair value is recognized in cost of revenue in our consolidated statements of operations. We recognized losses from derivative instruments of $11.2$5.5 million for the three months ended March 31, 2023 and gains of $37.5$11.2 million in the three months ended March 31, 20222024 and 2023, respectively, from our derivative instruments. Refer to Note 7 – Derivative Instruments, for details of the hedging activities.
Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2023.2024.
Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended March 31, 20232024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Legal proceedings in which we are involved are more fully described in Note 18 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.
There are no material changes from the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.2023.
The following table provides information with respect to purchases by us of shares of our Class B common stock during the first quarter of 2023:2024:
|
| Total |
|
| Average |
| Total Number |
| Maximum |
|
| Total |
| Average |
| Total Number |
| Maximum |
| |||||||||||||
January 1–31, 2023 |
|
| 14,217 |
|
| $ | 10.14 |
|
|
| — |
|
|
| 4,668,973 | |||||||||||||||||
February 1–28, 2023 |
|
| — | (2) |
|
| — |
|
|
| — |
|
|
| 4,668,973 |
| ||||||||||||||||
January 1–31, 2024 |
| 15,792 |
|
| $ | 28.91 |
|
| — |
|
| 4,661,417 | ||||||||||||||||||||
February 1–28, 2024 |
| 109,916 | (2) |
| 18.80 |
|
| — |
|
| 4,661,417 |
| ||||||||||||||||||||
March 1–31, 2023 |
|
| 1,769 |
|
|
| 11.59 |
|
|
| — |
|
|
| 4,668,973 |
|
| 250,000 |
|
| 16.40 |
|
|
| 250,000 |
|
| 4,411,417 | ||||
Total |
|
| 15,986 |
|
| $ | 10.30 |
|
|
| — |
|
|
|
|
|
|
| 375,708 |
| $ | 18.80 |
|
|
| 250,000 |
|
|
|
|
(1) | Under our existing stock repurchase program, approved by our Board of Directors on March 11, 2013, we were authorized to repurchase up to an aggregate of 7.0 million shares of our Class B common stock. |
(2) | Consists of Class B Common stock that |
The following table provides information with respect to redemption by us of shares of our Preferred stock during the first quarter of 2023:
|
| Total |
|
| Average |
|
| Total Number |
|
| Maximum |
| ||||
January 1–31, 2023 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | 983,835 | |
February 1–28, 2023 |
|
| 117,647 |
|
| 8.50 |
|
|
| 117,647 |
|
|
| 866,188 |
| |
March 1–31, 2023 |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 866,188 | |
Total |
|
| 117,647 |
|
| $ | 8.50 |
|
|
| 117,647 |
|
|
|
|
|
None
Not applicable
NoneNone
Exhibit |
| Description |
|
|
|
31.1* |
| |
|
|
|
31.2* |
| |
| ||
32.1* |
| |
|
|
|
32.2* |
| |
|
|
|
101.INS* |
| XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Filed or furnished herewith. |
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 thereunto duly authorized.
| Genie Energy Ltd. | |
|
|
|
May 9, | By: | /s/ Michael M. Stein |
|
| Michael M. Stein
|
|
|
|
May 9, | By: | /s/ Avi Goldin |
|
| Avi Goldin
|