GNE - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to Genie Energy's Third Quarter 2021 Earnings Call. [Operator Instructions] On this morning's call, Michael Stein, Genie Energy's Chief Executive Officer and Avi Goldin, Genie Energy's Chief Financial Officer, will discuss operational and financial results for the 3-month period ended September 30, 2021. Any forward-looking statements made during this conference call, either in the prepared remarks or in the Q&A session, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates. These risks and uncertainties include, but are not limited to, specific risks and uncertainties discussed in the reports that Genie Energy files periodically with the SEC. Genie Energy assumes no obligation, either to update any forward-looking statements that they have made or may make or to update the factors that may cause actual results to differ materially from those that they forecast.

may to management non-GAAP EBITDA, remarks, measure. the make adjusted reference a During Genie adjusted Genie measure information believes Energy's Management that of results. management investors operating to and EBITDA that core supplement Energy's both useful provides The Genie reconciliation adjusted income consolidated to EBITDA from measures, includes operations nearest GAAP periods income of presented. comparable consolidated its net earnings Energy release a and for all

Genie Genie respective Energy applicable Corporation segment's EBITDA been will release Stein, Genie of SEC. In conference for segments this periods X-K are Please go Form presented. will to management, page all Michael addition, note, there on opportunity now filed over on Stein. is The to Executive [Operator from Chief income website, posted the ahead, by be recorded. their being turn earnings operations is has Mr. Instructions] Relations the today's event for adjusted reconciled a with After the I genie.com, Energy's Please Officer. to presentation Energy's Investor and Genie an the ask questions.

Michael Stein

deeper your ended a XX, U.K. our discuss Call. glad forward. to Avi exit Welcome growth I the Thank provide Goldin, be Earnings XXXX. will Quarter also Financial Oriel XXXX update start we transaction questions. moving and into provide with the will then plan a review Energy's financial how to spin-off this and Third impacts of results, operator. to the the then on and our September will for Genie from call you, retail strategy Today, market an X our ongoing our operational high-level the take financial months we results Officer, quarter's Chief dive

price the year decided by an body announced, during U.K. in U.K. our the This equity not faced were the with challenges raise weeks, has in costs. our to over plans wholesale the past significant market keep spikes derailed As caps up XXXX Energy increasing as Orbit spin-off Oriel to subsidiary in X regulatory impacting we market previously for energy offering conditions fiscal

related once and the million planned quarters. to a operating business U.K. its companies agreement go-forward clear to the discontinued classify filed began unprofitable from Orbit's we to cash-generating update are to we increased cash as when Orbit want U.S. supply we our we on regulators, and with no On currently energy longer XX the year response In was pivoted we $XX.X a have $XX.X and QX, and result, of from the this to no providing with impact expense will that expect asset factors, market. exit in results debt I this an bankruptcy. operations. in after loss $X.X operations anticipate a exit the with ongoing, million work Talks orderly arrangement are million this In regulators from for already U.K. Regardless, market. basis, material write-downs to investing As bad an finalized we third operations. have future an quarter and Orbit's immature closed, operations negative year last relatively be compared have due incremental from Scandinavian from business and to regulators. these the

spikes price impossible to than the to environment is U.S. customers. on it and we different Scandinavia regulatory in costs and is caps market, in it as very wholesale the the the and Additionally, entered institutes pass U.K. extraordinary after

and U.K. Retail Energy generate market, as couple cash within in sheet, or ability additional which strong XX into stated we warrant It moving that a space. of long-term business, attractive expect next states, operations demonstrated our over a we states, the business for a GRE in currently this base. investment conditions. leaves I of differentiator And level, does risk where owns taking corporate opportunity a markets our And new short, as and that to will assets resilient leave stronger D.C. Genie As has strategy by services XX states that existing last market Genie forward? offer opportunistically it of the when So plus as our diversification, is a required asset-light our us energy investment both in Energy both installed balance a additional capital. us expanding profitable This in of reduces within deregulated we market to and us with portfolio Washington of with offering mid- exit an get geographically, to quarter, grow major generate profile saw share products well variety to from operates growth leaves the QX. cash quarters the conditions At as debt-free competitive

of We [arms]: term, It meters GREI the growth potential short. years. will slow with also not -- conditions our and next us European market more to immediate total opportunity profitability emerging which are see take expand time leaves Genie winter. doing countries, to affords steps the is growth XXXX. also, Scandinavia, Retail times, business increased which and a over addressable X growth margins what First other is total over business or business in expect to few International, million constitute in are to XX This we for in at when term, the horizon this protect shorter the Longer market we Energy positive, is bringing into favorable, a than will, already this adjusted-EBITDA as handful

business growth opportunity. Renewables another exciting Genie is Our

have value to We we Over adjusted sheet. projects increase on the returns, and have top initiative to through win discussed, by believe more chain the margins steps balance line year, attractive strong the financial significantly as solar will past rate project new we to our opportunity taken EBITDA this provide leveraging up move finance improve meaningfully growth. its contribute and the and, recently

full and a strong the performance. pre-COVID strength, operations remained meter at adjusted our business from margin. EBITDA main despite in driver our reported its to pre-COVID to record was continued delivered record behind [XX%] GRE customers financial year-to-date. head by margin this per drove We generated situation high outperforming higher-margin margin grew below gross positive the and at U.K. $X EBITDA. is X% typical strong rate Customer base quarter meter GREI consumption delivering third gross Moving acquisition in X%. returned believe gains the the Mark-to-market Scandinavian the performance. a growth and million but and churn gross nearly our XX% strength, has and of has rates for not XX% GRE reported competition margin our adjusted income We levels record

cash to we move and time market shifting is maximize based our made a preserve on margin conditions. flow. tactics This Looking to QX, are we have from time short-term to

contracts As high-margin while with and overall relative the such, sales in acutely customer we wholesale hedges energy costs. reducing and to to our favorably gas are forward pre-winter run-up acquisition more prices, on allowing natural currently positioned focus us

Additionally, are invest aggregation projects. deals focus heading sales we continue into have the improve spring. some on activities will new coming low-margin financial Renewables books, profile Genie the off and to acquisition that further which adding in our should customer to

and well will system excited as quarter situation. potential financing and limited and U.K. basis us on on performance new are offerings, we the look increase our forward begun business project help we our solar updating growth to both initiatives In as offer returns. on you a about next have to which development believe win summary, to further We

Goldin financial discussion Avi to over results. of Now his for our QX

Avi Goldin

the XXXX. and you, my like that quarter ended comparisons, the third parts are the XXXX, make to Michael, apples-to-apples quarter morning. of point comparison to business. out remarks, rather months call [nuisance] this there remarks our the somewhat X on some focusing joining results financial the Throughout that the to moving Thank also than for characteristic year-over-year thanks quarter XX, challenging. sequential September are today on for us compare everyone cover seasonal I'd energy retail this third I the our and of consideration My an factors results XXXX

acquired example, already For of in we Energy's quarter equity of the own fourth Orbit part XXXX. we that the didn't

XXXX were, Genie results third So our consolidated under third XXXX they International. Retail while not our financials, the quarter quarter in were of into

side, to results from $XXX last consolidation in recorded to this current were provide impact relative said, quarter, to finally, million. The from strong the we flip from the call. part our U.K. of exit GREI. color the sold in QX increased period. we is year-ago a while throughout mainly million of million on generated That these quarter full the of $X.X our quarter early Japanese increase some results in $XX.X increased this under the revenue QX XXXX, I'll market. are assessing planned Genie at oX And GREI, the generally reflecting was revenue revenue my of the On operations XXXX, year. Japan where impacts XX% line mostly by in top Consolidated

was per gas consumption from the year, Energy, our million is important in consumption meters [XQ's] not electricity Retail by comparison, for average QX retail while revenue For while was reported in The a increase driven Genie the both unit. meters season. decline higher meter. $XX.X pre-COVID remained reflected which our offset last in and figures. revenue unit note, for It by Orbit and to natural in served per generated overall down an to saw X% in consumption Revenue above XXXX, sales at consumption, $XX commodity decreased million, business, domestic levels

from churn below We levels. the increased albeit also saw quarter, prior historical

that limited is generally in million business our growth. the to be to continue quarter. year-ago million, channels drive we in Revenue for decrease access $X.X Renewables marketing traditional a face-to-face from $X.X our Additionally,

about and to was renewables-focused points, expand gross profit the mentioned, system results, unexpected X margins our reporting and our with margins. commercial gross Michael contributions from installations, by all XX% increased not excited solar including we expanded million, segments. of We're XXX into potential As strong very as increased offset to projects decline solar basis segment community in Consolidated was this of and higher-margin quarter $XX.X a third financing. continue by businesses, revenue improved the

cost explore an In forward in expenses reimbursement as to as GRE contracts into prices Energy, our Orbit as The underlying we in benefited Uri of decision write-down the business million levels. addition which million. from the million arreflecting exit assets $X.X Texas' $X.X strong U.K. performance, from bad of in from State expenses. to well wholesale mark-to-market a Consolidated increase due Winter into plan expense a approximately reduction in consolidation the winter. market to approval acquisition increased to and financial some million customer intangible as the $XX.X added increased Storm $XX.X resulted normal have of primarily including SG&A the debt of related expense, well heading for from in as International above to The million $XX.X gains SG&A

increased EBITDA Our $X.XX compared of million share here Adjusted quarter. EPS in Orbit was the The key $X.X year-ago XX.X% from diluted to in I year-ago compared $XX $X.XX quarter. year-ago consolidated the income million Genie to impact compared $X.X operations million to the per again Energy's $X.X million to just of Energy driver totaled quarter. was mentioned. loss

In securities, additional million on in our unrealized the our down that $X.XX U.K. impacted share the impact addition bottom Rafael was last the of by disappointing fourth loss to loss an $X.X Holdings. Rafael from assets, week negative stock unrealized negatively line quarter was of per and news Note reasonably write-off an the investment as reported sharply. in marketable predominantly expect

to was results securities To was $XX.X our from cash Working up, wrap strong. balance cash, marketable financial end, operations the Turning sheet. quarter capital million. were and now At million. restricted $XX.X totaled

we the rates planned U.K., Our cash see balance sheet with adjusted burn from exit in a EBITDA. is higher And ongoing expect and lower the also shape. of would good to

and to strategies our other will allow and attractive geographic competitive hedging, continue opportunities. are a grow in diversification us risk-mitigation business other invest value to the differentiator of believe We the and

Now operator, for back to you Q&A.

Operator

Capital. Instructions] Our from today at is Mountain Great coming question first [Operator Shafter Aaron

Aaron Shafter

the or Congratulations have if outstanding in I of though, rates the you to not rate that regarding that that. questions One on the but to concerns, of raise some the orbit your relating answered rates this in extraordinary amount or being wondering former existed And X some some U.K., mentioned unwilling hard that other rule before Orbit cap basically them numbers. on regulators you there purchased is situation. strong a do Avi situation whether after on that hard the partners and held? the I'm given limit were

Avi Goldin

after. was instituted decent entered cap subsequent It margins XXXX. shortly able the being see were in after price cap instituted. we the So was to instituted the market to And we

envisioned. situation So responding And that this where is not to. situation possibly a a kind we it's never inappropriately situation of could unfortunately, we force that kind -- the majeure a of it's the are regulators believe a

Aaron Shafter

in situation mentioned Michael think something updating the I future, of And update U.K. it Did what that the would the hear be? And in correctly? about I type

Michael Stein

longer operationally, -- a of when just would may there'll negative customers any It we if an of there And intangibles. we at to be write-down believe got what out more, don't any update Again, be but serve. associated be be no any and how the we cash would on as result. write-downs impact similar had

Aaron Shafter

Okay. had getting any was and And big Is the Texas. relief surprise progress before at any more your in a in all crazy you that? early there this, situation once-in-XXX-year on the year, from weather

Michael Stein

Yes.

So -- quarter, we from million we we you we I about the think announced remarks, Texas Avi -- got government. in another his that may last mentioned of recall $X.X got relief

representatives million get of to and I announced relief we continue Texas, work industry that to try with to quarter, This we got, other the we was more number believe, $X.X

Avi Goldin

the of that through of half funds flow first XXXX. be clear, at just And the start will sort expected to

approved the entities first XXXX. mechanism in, going kick their half order are on. which of voted by the to So relief But in was receive formally should and the

Aaron Shafter

Okay.

You that noted release shares in you the the million. Genie at common of $X.X XXX,XXX repurchased

So you $X that a -- was that's shares. purchase more if to below roughly XX% the share, stock I'm to XX% works an plans the your have a closed maybe attractive wondering seem level be to share. higher. price to out $X.XX buybacks you for Yesterday, just would that increase given the -- than

Michael Stein

we the the our the is position to price We do continue do opportunistically to it attractive. have share Board when buybacks. is to authorization And from think

exactly you do. about general same. to the tell is feeling our going So But we're much I our what strategy, can't it,

Aaron Shafter

a related that, noted common a increase. said the has to noted recently, but the And obviously, had stock stock the has had decline, has preferred

in about convince How the that at general. concerned investors be in investors in preferred? do preferred, paying the in So are you preferred with on investors you'll the more have the it continue confidence the like able seems dividend the that but common looking the investors company common to

Michael Stein

I just think execute. -- have we to we

have We on these with events I get or some not rare, of a few your to very quarters breaks of catch execute, seem few a by hit normal circumstances think, execution. that

this of us, the think, market hopefully, react. will behind some difficulty I And

Aaron Shafter

that there have rates are markets has? And Okay. any cap other of type in on that these the that U.K. hard you're

Michael Stein

No.

Aaron Shafter

cap any rates? markets Can into that we assume you that don't have a going hard plan on entering on

Michael Stein

it market, as changed into that I going attention know don’t U.K., the entering We the already we had any we years. for probably in a It of after we’re interested said, our in right now. entered introduced had been the generally they but operating And few market. have would about

So and that that thought how a kind like proven majeure situation, in in be responsible enough we wrong they with are was regulator that force cap it but a responsible the would regard. set we seems of

Operator

Our Wealth coming next Canam is question David Canam today from at Management.

David Canam

stock. fact the U.K., dividends going cash is has whole I'm on lot. to then that the in have something a significant What's now? buying you're your further Historically, appetite for common at going Is forward, on be a Scandinavia, appreciate business shrink the share I dividend. outlook exiting to paid back flow. the Or the remaining it back going dividends? to discussion international to don't et this common Board's it count the generating first But go and view you're your prospects the given free time. cetera, I general, -- keep simple. given for

Michael Stein

had have yet. it's reinstituting next guess, So to We going quarter. the up, something not after discussed dividend I if did we probably not think -- come that's I to

we a had quarters to few about think the wanted I think at suspended to a take it, time I dividend, the think about at least. indicated year when we we

continuing it. we're about think to So still

David Canam

mean Okay. shrunk the company stock remaining shareholders But personal is back would I dividends, count. much fact recovers, off stock. we're buying stock the the share levels, common buying better these that I My a more for is appreciate as be as once which the then given opinion at paying ultimately in possible. back

luck sailing you Good smooth events be don't any wish Hopefully, crazy I I future, forward. anymore. much will going the hit you these while in luck. by hope it So get of

Avi Goldin

Thank you.

Michael Stein

you. Thank

Operator

[Operator Instructions] call. session you attending concludes This presentation. for today's question-and-answer and conference Thank our

You may now disconnect.

Genie Energy (GNE) 6 Nov 212021 Q3 Earnings call transcript