GNE - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to Genie Energy’s Second Quarter 2022 Earnings Call. [Operator Instructions] Please note this event is being recorded. I will now turn the call over to Brian Siegel of Hayden IR.

Brian Siegel

Thank you. With me today are Michael Stein, Genie Energy’s CEO; and Avi Goldin, Genie Energy’s CFO, who will discuss operational and financial results for the 3 months period ended June 30, 2022. to during in call, general to the in are made prepared in or differ statements that nature, or uncertainties which remarks Q&A subject anticipates. materially forward-looking from this actual the either conference the specific may those Any cause and company results risks session, whether periodically and in the reports These risks are but discussed include, SEC. not limited we uncertainties filed with and uncertainties to, the specific risks that that to that either those made update results Genie we assumes statements to factors have forecast. may forward-looking the to no may or make obligation that they from or any actual differ update materially cause

useful may believes management and information During management make their core Management to investors that non-GAAP that supplement adjusted remarks, results. of EBITDA, our measure measure. provides to a its operating both reference EBITDA adjusted

Our to includes income all EBITDA of its consolidated consolidated income nearest periods from earnings adjusted net a measures, for operations and GAAP release reconciliation presented. comparable

are earnings EBITDA operations presented. for In segment’s their for all in from release reconciled applicable addition, income respective to periods adjusted segments the

Stein, the Relations over is with SEC. Investor filed turn on will our on genie.com Chief Genie’s the Michael? at Officer. earnings release now has Our Form and Michael posted X-K to Executive page I been conference

Michael Stein

to Brian. our our Avi I deeper will financial a then to discuss remarks, strategy your Officer, XXXX will Thank our into our glad my quarter you, quarter Financial Avi, Today, Welcome Goldin, and results results. Genie forward. will we provide call. dive on questions. earnings second Energy’s be second some color Chief moving After provide take After

the seasonally energy income recorded profitability of spring. during our is the consumption easily and quarter most typically both consumption Despite second our profitable second this, year in due history. operations in quarter EBITDA period to lower adjusted The we from record the lowest

our our quarters, energy portfolio customer prices generate businesses, while to period to we reducing mentioned positioned As the combined deliberately of we team, preserve us This with risk to profits recent adapted far delivered this margins. current our work management optimize I to have strategy, have so excellent of acquisition record in efforts of high the year. the

half by winter grew gain The our at strategies, million provides $XX which extraordinary on segment QX sequentially. CityCom our grow profit Solar second generated was of This within community which in in and the the $X.X marketing for million driven CityCom customer strong to the acquisition, We and gross of $XX and Europe. subsidiary, $XX.X increase in revenue of well or Energy, market. Similar slowed Genie mark-to-market EBITDA record Genie GRE, businesses volatile adjusted subsidiary Retail in billing will position this Looking from or to also and hedge services significantly markets million. million the hedges position power Renewables promising run-up our forward management our revenue hedging generated GRE, this careful revenue by in $X.X International, Retail acquisition GREI, optimized were us to that our was million due solar third-party customer renewables by segments, efforts to Genie other reported believe nearly heavily quarter continue year. developers. performance the and commodity primarily results strong season. we GREI’s into the impacted our Energy moving results. our

returned the dividend to quarter. the common par $X the repurchased $X preferred shares during redeemed opportunistically $X.XXX quarterly million outstanding million preferred base with shareholders totaled value of in common This, and and combined XXX,XXX stock stock, on dividend our regular of nearly Finally, stock. we in capital

in and the to Washington, XX which, U.S. in strategy our a margins. and and deregulated business Energy U.S., and among owns and in XX of customers Genie REPs during team, range actively in and retail internationally. geographies. strategy be manage recent other growth we quick provide Underlying margins to customers rapidly price we the forward our energy mentioned We obligations extraordinary of things, works response mitigation resilient, wide flow as our we conditions, to evolving a geographically and of our quarters challenging and portfolio current across flexible both preserve to customer asset-light acquisition REPs earlier, model reduced including market have to our as times our price REPs investment allow Now, volatility. to conditions, obligation and and states the risk In take bases most three to higher services pricing, during customer as deregulated rising or well cash is doing when our I forward. hedges our I GRE’s within market of some us drive anticipation seen or generating will other In overview moving invest manage growth period markets energy as diverse of D.C. the others periods, market such steps while operate volatility. remarkably has proven of positive

While conditions engine but at back opportunistically our and customer to is base, customer selectively when our do base management present strategy market mid warrant. acquisition even long-term to strategy customer has grow, led to to our trim throttle our so

to areas our into and new Our territories, and additional market base. customer installed include share services increasing products in expanding our expansion programs offering existing

Renewables mentioned the solar developers; Our solar by recent balance management as markets with path a major strategy of broker. for generate of on solar weeks, am I opportunities formation significant have mentioned third-party I returns utility-scale few also of value Energy expect This participate the believe robust In includes participants of solar that Sunlight’s strong customer serve to our Genie Investments developed returns ownership over In second work. to say source billing We through will originated as we for hedges. new a Sunlight Sunlight consists predictable significant Solar, increase capital our that will most service quarters, procurement the individual from generation. electricity multiple rate over and structure and quarter as as earlier, Genie to forward international Genie Renewables full segment potential sheet general full projects and suite and forward excited mentioned which Genie very services; Diversegy, on the our related energy and Genie provides gains the that we on services of returns community outsized Solar, for energy to our vehicle to and segment projects creating to but investors, with partners. benefited of results medium creating outsized to will past provide partner, I will by step value projects business, installation attractive returns generation Genie limited a for earlier, this the third-parties. putting seeks financial acquisition, which investors projects, win high-growth I community generate took investment an for mark-to-market CityCom who commercial, outside long-term. stable, from

volatility market, of and the we now risks, to continued in the reduce optimize the our this geopolitical with obligations economic overall and in sale Swedish position forward global starting book. Given are our steps taking

our able to provide this third be more to during expect quarter effort on earnings call. We details

currently adjusted averages. at GRE, of to year, and we exceed historical strong remain to EBITDA to Looking the expect the remainder seasonal

in more the contribute forward of revenue in solar EBITDA summary, our sharing results strong expansion bottom over we million space year the year-over-year and time. million Renewables to will We expect record $XX half line looking are to and adjusted generate Genie first In the to we consolidated for expect work about half. had development the continue during that year of to $XX second

taken commitment to foundation growth also to And return to capital steps for shareholders. have We emerging lay our to businesses. several the renewable in fulfill continue we finally, long-term our

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

Avi Goldin

our morning. Thank you, will our on a for move quarter my year-over-year second the today thanks XXXX comparison rather of compare June and X the factors to financial sequential joining the I remarks characteristic of ended than Throughout this months us the retail second XX, energy on results focusing XXXX. seasonal of to for call to remarks, businesses. My XXXX, quarter Michael cover results everyone

The and a the record by had achieving gas to compared of third driven second the and Genie first by gains typically consumption as per meter of well quarter mark-to-market heating Overall, of to strong as very business levels seasons characterized retail strong reduced respectively. is our profitability peak second cooling due quarters, electricity hedges. increase quarter, domestic performance Energy forward in the our international and

income. to has by decision both margins electricity customer the company increasingly continue late forward XXXX in the internationally. record and deliver the our approach positively in by This reducing Our hedge value to prices and volatile wholesale book helped to loaded of optimize response U.S. impacted the results be

our to acquisition we stock. both noted, capital dividends through our Michael As also our common and continued to return and preferred shareholders of

compared XX.X% this to to to quarter gross acquire from four $XX year-over-year workers X.X% sales to GRE’s to international was consumption $XX profit the fewer The Revenue reflect Turning entering which Electricity after consumption year, new demand XX.X% a earlier, higher are manage now and prices. reduced from also average as compared side have increases of Not earnings XXXX increased profit electricity gross expense, XX.X% than to management. boosting and the second million in from million margin was $X to from from declined per programs. to acquisition income of operations impacted to to million the the $XXX,XXX where $XX quarter the including $XX.X strength increased the risk we $XX.X at Results quarters our ago quarter. businesses. driven meter, a of sales general relatively on of increased to the as resulting to last in which and $XXX,XXX have Genie on value climbed income gain $X.X lower Solar Genie substantially of largely to two business, million. leverages million. million decreased which year, electricity customer GRI second first slightly consumption margin GRE, energy gas per EBITDA share Consolidated million to portfolio to operations thus climbed in SG&A EBITDA. to Renewables Genie $XX.X gas-only $X.XX and was increased the Renewables delivered we profit to appreciation quarter the over Consolidated year adjusted at our community Consolidated gross operations consumption rates more in our customers GREI $X.X prices by year corporate increase electricity XX.X% operations gas decline This continue within ago the meters, began $XX.X $XX.X from risen for in in gas increased gas year management we quarter the compared ago during increased advance were CityCom year second Net At decrease million to ago Revenue the counts compared compared year solar $XX.X from quarters invest $XX.X our XX.X%. second compared our of the to markets quarter million adjusted million. gross this sales. solar in profit GRE’s factors year reflecting to reflecting the meter P&L. and to a in the gas meter. million million compared increased last mark-to-market overhead, Gross in from $XX.X quarter a office, a second fiscal recent a as optimization loss of at diluted XX.X% the selling only from million offset served. the overhead. Through in Renewables generated Energy driven in of modest hedges. more quarter X.X% discussed Gross from the second I XXXX. quarter the was profit. was GREI operations from earlier. million spend Consolidated $XXX,XXX forward quarter ago increase increased result increase $XXX,XXX million our gross offset declines million due of the by XXX% income to more from rose Genie million income of was per million, average at but the the $X.XX in high posted return in of to $XX.X have fell income year XX.X% marketing to as in partially to and expertise past $X.X significantly to hedges attributable $X.X of $X.X a GRE period Consolidated revenue million by growth prices quarter. the and sales XXXX, meters $XX.X $XXX,XXX by increased increased, in The quarter. as ago.

cash, $XX.X million to sheet. to $XXX.X marketable million totaled now balance and or our share. Net Turning $XX.X securities diluted On capital increased per equity $X.XX restricted June during XX, million. the quarter working cash

Our to there declined our compared as insolvency to the moves cash quarter forward. former as we cash UK balance process last of the administrator move business

shares During quarter, the common of $X.XX at $X.X an stock repurchased we purchase per price Class million XXX,XXX our average for B share. of

worth our preferred of We also redeemed stock. $X million

half the are we more the for At half. a of than ahead, we positioned Looking half first gains is well be modest GRE, strong, in will although second we outlook year. second solid what the the achieved expect year-over-year

ramp conditions efforts support acquisition up balance to customer warrant. provides Our plenty market sheet where of

current the our we GREI’s in are options additional reduce optimize Europe, exploring environment and taken forward electricity have and to pricing steps Given obligations initial position.

our have further third in update We for will quarter. the a business on the plans

are range we very Finally, opportunities for related of the excited solar Genie and generation about and businesses. depth in the

We leverage balance shareholders. and expertise our long-term infrastructure to able to build generate that and will out be attractive relevant expectation our and for the are moving returns quickly sheet

Now Q&A. operator, back to you for

Operator

Instructions] [Operator Capital Mountain question coming today from Great Aaron for Shafter first Management. is with Your

Aaron Shafter

able that Friday on $X.XX. or currently you I’m price – My there the had a to being on an trading with at some said is button bought average buyback. pre-market back you I Congratulations I this the wrong. first guys. a glad to shares and and consecutive able related in to – Hi, you but stock ask last record-setting some right problems went The I’m $X.XX at bit at question is time. quarter, of is $X out going second the at quarter. you press something questions were guess

basis, So a you higher the looked cheap it lot it it’s when PE a like than buybacks. was But bit did before. on a little

it still these see really cheap. Do at levels? Now looks doing you buybacks yourselves

Michael Stein

Hi, Aaron. Thanks for the questions.

that in might any ever have First the we to if can problem of questions you with out you obviously, all, have. again reach us future,

buyback, still that have left on of In buyback. on the the authorization us runway Board terms of the the plenty we given has

as making will to We continue when use decision. best of cash and always, that assess value

to buying give money As back the you and know, shareholders. we’ve we’re back – preferred also to been buying some attempt

bunch table. always balance the So of a we’re It’s trying to different things. on

Aaron Shafter

but it’s recently where for I Is being – the Russell to Russell indices. at close. that back really calculations what I we haven’t – one any should, here And would right updated now, into get you and XXXX the No the done mean, XXXX be have yet. maybe something has then done stock to guys that all? about them, follow Genie

Avi Goldin

for the of the aware and that. obviously the we’re publish They potential specific So exact metrics. timing don’t

But this we where say is to so… to hard prior it be. that experience going around it’s is So know the area, cost exactly from

Aaron Shafter

the have was by at was that least qualified. when would – calculations our you mean I trading stock And recently definitely Yes. $XX Okay. above

sale wondering to and given book situation operating – which the in in worried in the and mentioned exactly able there. you general? in out in particular, and outside can the Europe, hedge and if your markets Europe now lay Swedish right properly being I’m You U.S. you’re about of

Michael Stein

Sure.

our sold So customers. yes, we Swedish

from we if taking the profit of wanted precluding up on customers. value built what value we the are hedge and we in is not sold we’re customers, book well can excess And is that Instead to, of Sweden. we those Sweden for hedge the us the we book had But doing market in of again the there moment, So we’re customers, Swedish into felt marketing start Literally, essentially the is longer whenever serving since back and what no value of customers. the going be. please. tomorrow, that nothing would the customers we serving we’re for

in we still are In bit little customers serving a moment, I not that answer customers. there, though, still actively would are we’re serving even we of say as Finland, market, of potentially there. So a the complicated

we as to maximize as best those us the that only And when something in Those to. the continue there Avi of entities mentioned, that’s ideally, and we are allow do two in we we’re it in strategically interest customers ones a of decide hedges is deem when we well if serve company. ways value the ready license the have market looking to to we’re way to to want to the marketing at some future for looking actively where ready As point well. we would want

internationally. in operating space not are the retail energy else anywhere We

Aaron Shafter

Okay.

up it. the covers much. work. Okay, Thanks Keep good that very

Michael Stein

Thank you.

Operator

is Your Global. next Onboard Fruchter coming today for [ph] from Yehuda with question

Unidentified Analyst

good I private guys. questions have a morning, investor. here. I Hi, am of a couple

on balance flow pretty operations million the you quarter-to-quarter. cash of used is have am The cash down this first sheet have went in understand the to also thing line year-over-year, discontinued what – because just the year. investing $XX of activities cash statement, and net I trying then significantly this And

on and going kind what’s you forward? If of there the [indiscernible] explain going is what

Avi Goldin

Sure. This is Avi.

discontinued balance And operations half process administrators sheet, hands there, it a course moved flows within entity the working the UK course the all moved market. was say, that and our of of bit the we, past, have XXXX, as over the specifically that through a little exiting in optimize a some not resolution. I year, of the back line in it’s position the sheet. the balance the the And been into currently the because the a cash the market, would first of there looking year, over to of series year of UK of through end our that is U.S. tail on to So, in that pending over on that that transactions are that we

as and intents money went back it the moved purposes, all in, current cash into from that other for So, assets.

Unidentified Analyst

to is now much? for has that get possible gone it cash cash pretty or that just So, you back

Avi Goldin

that what of expectation that reflects our going to of number what be sheet the returned is But balance know to when ultimate exactly us that is portion to is point best at we you don’t on be. is the is current resolution some going the resolved. be. the going asset see So, administration that cash to The this estimate

Unidentified Analyst

no? any operations you is respect or there for UK in to cash more fund that And need the

Avi Goldin

No.

Unidentified Analyst

sustainable doing year, these base My Okay. how marketing, going not If this I you next you question did to any I in Is I are generate the down. like this really consider kind business am talking going mean next U.S. are flow no is, mean the able marketing would about now? this be is business. case? right you the forward? the of to cash

Michael Stein

portfolio say book. that we few for the certainly of given would and next do the made, I that in financial quarters market short-term with customers the very we our kind so And strong given in moves the expect the in mean I have results, the – hedge

If year would us not yes. we confidently of kinds you asked these returns, we ago a see say could

So, little more we that and out next that say we what look future. would the say But we the quarters what about are we going are I few say a careful strong. into to expect

Unidentified Analyst

you or business situation the am is level now, turn have isn’t and like a getting marketing, and are then of there I…? some doing some if then peak new in customers you And kind customers off start turn certain when other earnings to with a not this of these your of point, at

Michael Stein

Yes.

marketing. we spending there definitely more is ultimate money There spending, is be certainly down be we would more So, on profitability. take could money could which

to full costs. that back item, we went on at spend no what look $X strength, we gross spend, money about would profits not our doesn’t build the another generate, If back of $X that worth the the spent can affect of book But the marketing. touch marketing we marketing question over we of on the year, kind again, full million you How of over we question no up to dollars. to marketing obviously like be at – line figure P&L, it’s course would or have spend the really course year. If it, it’s money the of probably which million, marketing

Unidentified Analyst

financing, the equity in started great you in I going And case, you of shareholder to in which then terms you to Okay. benefit direction area? the trying to just to are regards if different of now have a understand But are that’s different that in I forward? going think the have growth they investors to exactly that I solar power to Is then be of how the of getting is want deals, sort with go you subsidiaries a financing, new the subsidiaries of one understand, see And a into. lot in structure how benefit going lot just am what of energy, the Genie the a to question Energy Genie private get situation on of biggest these small growth deals? that going is kind it

Michael Stein

Yes.

represent So, a are the And essentially exactly value can’t approach integrated vertically subsidiaries there. right, all – or where solar that come I the commercial you another. complete to we we subsidiaries scale commercial taking say going place to from industry utility one those got is a we that few believe are different in

obviously from benefit that question which would line Genie to of which how business also development be will exactly you question piece are critical about building the up put essentially fund selling versus bit how structure is the are piece to benefiting flexibility determining how up to of what fast. structure that us collect family the of the we a us with we or might Genie to the of in off-take the from we going is decide set the the companies GP-LP the much decide like much from a the be much terms versus much obviously the and of it how we asking, items But answer think it LPs really little is to of scaling the benefit I financing specifically gives have getting customers, that in from.

Unidentified Analyst

the I I the money comes on basically, projects, are gets GNE you So, dividend that to back to power. right? solar the you? are right? investing financing in the back on back, a Is the money you front, how dividend as some mean But mean getting

Michael Stein

So, mean solar essentially related to an I in yes, asset you the then you upkeep you which the – are GP-LP the I array, mean own of expenses they there is first have amounts to and small maintenance the that’s with of money and the facilities related whatever then service those might of project the are debt and structure, you place. have in associated operation building

How generates You much returns to its generate as maximize there, course you fees is as like fees dividends these the obviously I when course, these the distributed to you include what limited operate in partners. or to of time to then want exactly able management to And leverage and GP would that’s then, said, have. that we much things have you income LPs build it’s the yes, flexibility and net with And can Genie. of which will generate things. – sorry, from like gets over the the incentive and associated a

it’s another to of item income income. So, fee potential line

Unidentified Analyst

getting I Thanks time. lot. let it. a will I someone the appreciate

Michael Stein

Thanks for joining.

Operator

today for coming J. Lustig question at from next Your is Goldman. Jason

Jason Lustig

wanted Thanks gave a for question guys. an question, results a to earlier. I Fantastic clarify to, Avi, the Hey. answer question. just for you

company’s the the administration. sheet UK is released eventually on estimate The from cash the that balance asset of other that’s current best

Avi Goldin

So, the discontinued of is. operations portion that

Jason Lustig

Okay. today? And what is number that

Avi Goldin

XX.X.

Jason Lustig

the on estimate high-level timing? And Okay. any

Michael Stein

believe, mean Avi… also expect, I we Well, I

Avi Goldin

Sorry.

Michael Stein

Fine. Okay.

Sorry.

Avi Goldin

wouldn’t towards that time. I timing, I resolution, small we which to say to it’s say the hard and come certain will and are being some held really for prognosticate. on some funds incremental ultimately might want coming of in stages, period So, progress back really then others seeing

Jason Lustig

Got it.

much. very you Thank Okay.

Operator

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

now You disconnect. may

Genie Energy (GNE) 8 Aug 222022 Q2 Earnings call transcript