NEWARK, N.J., Nov. 5, 2018 /PRNewswire/ -- Genie Energy
Ltd. (NYSE: GNE, GNEPRA) reported third quarter 2018 net income of
$0.21 per share on revenue of
$71.8 million.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
(Throughout
this release, 3Q18 results are compared to 3Q17 results unless
otherwise noted)
- Consolidated revenue increased to $71.8 million from $69.5
million primarily as a result of increased consumption per
electric meter;
- GRE's income from operations increased to $9.2 million from $4.8
million. Adjusted EBITDA* increased to $9.8 million from $5.4
million;
- Consolidated income from operations increased to
$6.0 million from $1.4 million. Consolidated Adjusted EBITDA*
increased to $8.0 million from
$3.3 million;
- Earnings per share increased to $0.21 per basic and diluted share from
$0.02;
- During the third quarter, Genie Energy divested of a
majority stake in its Atid drilling services subsidiary based in
Israel by contributing it to a
newly formed entity owned by Genie, Atid's management and Genie
Chairman Howard Jonas;
- Following the quarter close, Genie acquired a majority stake
in Prism Solar Technologies, a solar solutions and technology
company and domestic manufacturer of high-efficiency bi-facial
solar panels;
- Genie Energy's Board of Directors has declared a third
quarter dividend of $0.075 per
share.
COMMENTS OF MICHAEL STEIN, CEO OF GENIE ENERGY
"Genie Energy significantly increased its profitability compared
to the year ago quarter reflecting the lower spend on oil and gas
exploration activities and reduced domestic customer acquisition
expense while making good progress in the effort to diversify its
global revenue base.
"We divested a majority interest in Atid, our drilling services
subsidiary in Israel, during the
quarter. The deal reduces our financial exposure to Atid's
operations, while retaining upside potential over the longer term
through our remaining stake.
"Overseas, our joint venture in the UK is adding customers at a
healthy rate and in Japan, we
expect to begin enrolling customers as early as the end of the
year.
"Last week, we announced the acquisition of a majority stake in
Prism Solar Technologies, a manufacturer of high efficiency solar
panels based in New York. We will team with Prism's second
largest stakeholder to provide complete solar solutions for
commercial clients and expect that Prism will be accretive to
Adjusted EBITDA* in 2019."
CONSOLIDATED RESULTS
$ in millions,
except EPS
|
3Q18
|
2Q18
|
3Q17
|
|
3Q18
-3Q17
Change
(%/$)
|
Revenue
|
$71.8
|
$56.4
|
$69.5
|
|
+3.4%
|
Gross
profit
|
$21.3
|
$16.1
|
$21.8
|
|
(2.3%)
|
Gross margin
percentage
|
29.6%
|
28.5%
|
31.3%
|
|
(170) BP
|
SG&A expense
(including stock-based compensation)
|
$13.9
|
$15.4
|
$19.5
|
|
(28.5)%
|
Stock-based
compensation included in SG&A
|
$1.1
|
$1.3
|
$1.4
|
|
(23.3)%
|
Exploration
expense**
|
-
|
-
|
$0.8
|
|
$(0.8)
|
Equity in the loss of
Orbit Energy
|
$(0.8)
|
$(0.7)
|
$(0.2)
|
|
$(0.7)
|
Write-down of assets
held for sale to fair value
|
$0.4
|
$2.3
|
-
|
|
$0.4
|
Income (loss) from
operations
|
$6.0
|
$(2.3)
|
$1.4
|
|
+$4.6
|
Adjusted
EBITDA*
|
$8.0
|
$1.8
|
$3.3
|
|
+$4.7
|
Net income (loss)
attributable to Genie Energy common stockholders
|
$5.5
|
$(2.3)
|
$0.4
|
|
+$5.1
|
Earnings (loss) per
share attributable to Genie Energy common stockholders
|
$0.21
|
$(0.09)
|
$0.02
|
|
+$0.19
|
Capitalized
exploration costs
|
-
|
-
|
$2.3
|
|
$(2.3)
|
Net cash provided by
(used in) operating activities
|
$8.2
|
$3.4
|
$6.6
|
|
+$1.6
|
*Adjusted EBITDA for all periods is a non-GAAP measure
intended to provide useful information that supplements the core
operating results in accordance with GAAP of Genie Energy or the
relevant segment. Please refer to the Reconciliation of
Non-GAAP Financial Measure at the end of this release for an
explanation of Adjusted EBITDA and reconciliation to the most
directly comparable GAAP measure.
** Genie Energy's Afek Oil & Gas subsidiary accounts
for its oil and gas exploration activities under the "successful
efforts" method of accounting. Under this method, acquisition
costs, costs of drilling exploratory wells, and exploratory-type
stratigraphic test wells are capitalized on the balance sheet as
"Capitalized exploration costs – unproved oil and gas property"
pending determination of whether the well has found proved
reserves. Exploration costs, other than exploration drilling
costs, are charged to expense in the statement of operations as
"Exploration expense".
*** Genie Energy accounts for its investment in Orbit
Energy, its joint venture operating in the UK, under the equity
method of accounting. Under this method Genie Energy records its
share in the net income or loss of the joint venture. Therefore,
revenue generated, and expenses incurred by the joint venture are
not reflected in Genie Energy's consolidated revenue and
expenses.
Consolidated results include corporate overhead and results of
Genie's oil and gas exploration businesses.
Corporate overhead totaled $2.0
million in 3Q18 including $0.9
million in non-cash compensation. The corresponding
3Q17 results total were $2.2 million
and $1.2 million, respectively.
Genie Energy's Afek oil and gas exploration subsidiary is
awaiting permitting required for final testing on an existing
well. Afek incurred no exploration costs, no capitalized
exploration costs and $54 thousand in
SG&A expense in 3Q18 compared to $754
thousand in exploration expense, $2.3
million in capitalized exploration costs and $257 thousand in SG&A expense in 3Q17.
Genie Energy's GOGAS subsidiary includes the full impact of its
Atid drilling services company in Israel prior to the divestiture of a majority
stake, as well as the Company's portion of results subsequent to
the transaction. GOGAS generated $170
thousand in drilling services revenue and incurred
$688 thousand in SG&A expense in
3Q18. In 3Q17, GOGAS had no revenue and $158 thousand in SG&A expense.
BALANCE SHEET HIGHLIGHTS
At September 30, 2018, Genie
Energy had $131.5 million in total
assets, including $46.9 million in
cash, cash equivalents and restricted cash. Liabilities
totaled $52.5 million and working
capital (current assets less current liabilities) totaled
$52.2 million.
DIVIDEND ON GENIE ENERGY COMMON STOCK
Genie Energy's Board of Directors has declared a 3Q18 dividend
of $0.075 per share of Class A and
Class B common stock with a record date of November 19, 2018. The dividend will be
paid on or about November 30,
2018. The distribution will be treated as an ordinary
dividend for income tax purposes.
GENIE RETAIL ENERGY
The Genie Retail Energy (GRE) segment includes results of
Genie's retail provider businesses including results of operations
from the operations of its joint venture in the UK.
$ in
millions
|
3Q18
|
2Q18
|
3Q17
|
|
3Q18-3Q17
Change
(%/$)
|
Genie Retail
Energy
|
|
|
|
|
|
Total
revenue
|
$71.7
|
$56.5
|
$69.5
|
|
+3.2%
|
Electricity revenue
|
$67.3
|
$48.5
|
$66.2
|
|
+1.7%
|
Natural
gas revenue
|
$3.7
|
$7.4
|
$2.8
|
|
+32.8%
|
Other
revenue
|
$0.7
|
$0.6
|
$0.5
|
|
+36.4%
|
Gross
profit
|
$21.1
|
$16.1
|
$21.8
|
|
(3.1)%
|
Gross margin
percentage
|
29.4%
|
28.5%
|
31.3%
|
|
(190) BP
|
SG&A
expense
|
$11.1
|
$12.1
|
$16.8
|
|
(34.0)%
|
Equity in the loss of
Orbit Energy
|
$(0.8)
|
$(0.7)
|
$(0.2)
|
|
$(0.6)
|
Income from
operations
|
$9.2
|
$3.3
|
$4.8
|
|
+$4.4
|
Adjusted
EBITDA
|
$9.8
|
$3.8
|
$5.4
|
|
+$4.4
|
Accruals and a reversal of an accrual pertaining to legal
matters within Genie Retail Energy (GRE) in 3Q18 decreased revenue
by $3.0 million and SG&A by
$1.5 million. In 3Q17, a legal
accrual reduced revenue by $1.3
million and increased SG&A expense by $0.2 million. Income from operations and
Adjusted EBITDA* were reduced by $1.5
million, net, in both 3Q18 and 3Q17 as a result.
Genie Retail Energy's customer base as measured in residential
customer equivalents (RCEs) and meters served decreased (see chart)
year over year reflecting the regulatorily mandated relinquishment
of certain low-income customers in New
York served by retail energy providers (REPs) to the
incumbent utilities as well as GRE's strategic decision to focus on
higher value customers, reduce regulatory risk in certain
jurisdictions, and reduce customer acquisition expense in order to
increase liquidity and enhance strategic flexibility. Gross
meter acquisitions during 3Q18 totaled 45,000 compared to 111,000
in 3Q17 and 57,000 in 2Q18.
RCEs and Meters at
End
of Quarter (in thousands)
|
September 30,
2018
|
June 30,
2018
|
March 31,
2018
|
December 31,
2017
|
September 30,
2017
|
Electricity
RCEs
|
216
|
219
|
218
|
228
|
243
|
Natural gas
RCEs
|
59
|
64
|
67
|
73
|
82
|
Total
RCEs
|
275
|
283
|
285
|
301
|
325
|
|
|
|
|
|
|
Electricity
meters
|
269
|
282
|
284
|
307
|
330
|
Natural gas
meters
|
73
|
81
|
89
|
105
|
116
|
Total
meters
|
342
|
363
|
373
|
412
|
446
|
GRE's average monthly customer churn in 3Q18 was 5.7%, unchanged
compared to the prior quarter and a decrease from 6.9% in the year
ago quarter. The year over year decline primarily reflects lower
rates of new customer acquisitions in recent periods – new
customers exhibit higher churn rates than longer tenured customers
- and the impact of customer retention programs.
Meters enrolled in offerings with fixed rate characteristics
constituted approximately 36% of GRE's total load during
September 2018 the same level as in
September 2017.
GRE's revenue increased to $71.7
million from $69.5 million
driven by a strong increase in electricity consumption per meter
and increased commercial gas sales partially offset by the impact
of the larger legal accrual in 3Q18 compared to 3Q17 and a decrease
in revenue per kilowatt hour sold.
GRE's gross margin percentage decreased to 29.4% from 31.3% and
gross profit decreased to $21.1
million from $21.8 million
predominantly as the result of the reduction in revenue resulting
from the larger accrual in 3Q18 compared to 3Q17.
GRE's SG&A expense decreased to $11.1
million from $16.8 million as
a result of the reduction in gross meter ads compared to the year
ago quarter and the reversal of an accrual for legal matters.
GRE's income from operations increased to $9.2 million from $4.8
million and Adjusted EBITDA* increased to $9.8 million from $5.4
million. The improvements were primarily attributable
to the decrease in customer acquisition expense.
GENIE ENERGY EARNINGS CONFERENCE CALL
This earnings press release is available for download in the
"Investors" section of the Genie Energy website
(www.genie.com/investor-relations) and has been filed on a current
report (Form 8-K) with the SEC.
At 5:30 PM Eastern time today,
November 5, 2018, Genie Energy's
management will host a conference call to discuss financial and
operational results, business outlook and strategy. The call
will begin with management's remarks followed by Q&A with
investors.
To participate in the conference call, dial toll-free
1-888-348-6472 (from the US) or 1-412-902-4240 (international) and
request the Genie Energy conference call.
The call replay will be available at 1-844-512-2921 (US
toll-free) or 1-412-317-6671 (international) through November 12, 2018. The replay PIN is
10125910. A recording of the call - in MP3 format - will also
be available for playback on the "Investors" section of the Genie
Energy website.
Investors can sign up through the Genie Energy website to have
earnings releases and other press releases e-mailed directly to
them.
ABOUT GENIE ENERGY LTD.
Genie Energy Ltd. (NYSE: GNE, GNEPRA), is a global provider of
energy services. Genie's Retail division supplies electricity
and natural gas primarily to residential and small business
customers in the United States.
Genie's International division supplies customers in Europe and Asia. Genie's Energy Services
division includes Diversegy, a commercial brokerage and marketing
services company, and Genie Solar Energy, a provider of solar
generation systems. For more information, visit
Genie.com.
In this press release, all statements that are not purely
about historical facts, including, but not limited to, those in
which we use the words "believe," "anticipate," "expect," "plan,"
"intend," "estimate, "target" and similar expressions, are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. While these
forward-looking statements represent our current judgment of what
may happen in the future, actual results may differ materially from
the results expressed or implied by these statements due to
numerous important factors, including, but not limited to, those
described in our most recent report on SEC Form 10-K (under the
headings "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations"), which may be
revised or supplemented in subsequent reports on SEC Forms 10-Q and
8-K. We are under no obligation, and expressly disclaim any
obligation, to update the forward-looking statements in this press
release, whether as a result of new information, future events or
otherwise.
GENIE ENERGY
LTD.
|
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands, except
per share amounts)
|
|
|
September 30,
2018
|
December
31,
2017
|
|
(Unaudited)
|
(Audited)
|
|
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$
45,916
|
$
29,913
|
Trade accounts
receivable, net of allowance for doubtful accounts of $1,709 and
$1,099 at September 30, 2018 and December 31, 2017,
respectively
|
37,371
|
44,629
|
Inventory
|
7,912
|
3,986
|
Prepaid
expenses
|
5,984
|
6,131
|
Other current
assets
|
3,810
|
5,503
|
|
|
|
Total current
assets
|
100,993
|
90,162
|
Property and
equipment, net
|
739
|
4,020
|
Goodwill
|
9,998
|
9,998
|
Other intangibles,
net
|
4,556
|
4,859
|
Investment in equity
method investees
|
2,969
|
3,450
|
Restricted
cash—long-term
|
997
|
1,496
|
Deferred income tax
assets, net
|
2,028
|
2,141
|
Other
assets
|
9,183
|
9,652
|
|
|
|
Total
assets
|
$
131,463
|
$
125,778
|
|
|
|
Liabilities and
equity
|
|
|
Current
liabilities:
|
|
|
Trade accounts
payable
|
$
17,286
|
$
21,068
|
Accrued
expenses
|
27,597
|
28,069
|
Income taxes
payable
|
1,976
|
2,204
|
Due to IDT
Corporation
|
90
|
228
|
Other current
liabilities
|
1,880
|
3,172
|
|
|
|
Total current
liabilities
|
48,829
|
54,741
|
Revolving line of
credit
|
2,514
|
2,513
|
Other
liabilities
|
1,170
|
1,396
|
|
|
|
Total
liabilities
|
52,513
|
58,650
|
Commitments and
contingencies
|
|
|
Equity:
|
|
|
Genie Energy Ltd.
stockholders' equity:
|
|
|
Preferred stock, $.01
par value; authorized shares—10,000:
|
|
|
Series 2012-A, designated
shares—8,750; at liquidation preference, consisting of 2,322 shares
issued and outstanding at September 30, 2018 and December 31,
2017
|
19,743
|
19,743
|
Class A common
stock, $.01 par value; authorized shares—35,000; 1,574 shares
issued and outstanding at September 30, 2018 and December 31,
2017
|
16
|
16
|
Class B common stock,
$.01 par value; authorized shares—200,000; 25,547 and 23,601 shares
issued and 25,318 and 23,270 shares outstanding at September 30,
2018 and December 31, 2017, respectively
|
255
|
236
|
Additional paid-in
capital
|
135,793
|
130,870
|
Treasury stock, at
cost, consisting of 229 and 331 shares of Class B common stock at
September 30, 2018 and December 31, 2017, respectively
|
(1,518)
|
(2,428)
|
Accumulated other
comprehensive income
|
2,437
|
3,045
|
Accumulated
deficit
|
(64,186)
|
(67,469)
|
|
|
|
Total Genie Energy
Ltd. stockholders' equity
|
92,540
|
84,013
|
Noncontrolling
interests
|
(13,590)
|
(16,885)
|
|
|
|
Total
equity
|
78,950
|
67,128
|
Total liabilities and
equity
|
$
131,463
|
$
125,778
|
|
|
|
|
|
|
|
GENIE ENERGY
LTD.
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
(in thousands,
except per share data)
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity
|
|
$
|
67,292
|
|
$
|
66,189
|
|
$
|
181,141
|
|
$
|
163,636
|
|
Natural gas
|
|
|
3,702
|
|
|
2,787
|
|
|
34,492
|
|
|
26,045
|
|
Other
|
|
|
848
|
|
|
497
|
|
|
1,911
|
|
|
1,445
|
|
Total
revenue
|
|
|
71,842
|
|
|
69,473
|
|
|
217,544
|
|
|
191,126
|
|
Cost of
revenue
|
|
|
50,572
|
|
|
47,694
|
|
|
155,743
|
|
|
132,371
|
|
Gross
profit
|
|
|
21,270
|
|
|
21,779
|
|
|
61,801
|
|
|
58,755
|
|
Operating expenses
and losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative (i)
|
|
|
13,912
|
|
|
19,464
|
|
|
46,379
|
|
|
63,008
|
|
Write-down of assets
held for sale to fair value
|
|
|
451
|
|
|
—
|
|
|
2,742
|
|
|
—
|
|
Exploration
|
|
|
—
|
|
|
753
|
|
|
244
|
|
|
2,556
|
|
Equity in the net loss
of equity method investees
|
|
|
861
|
|
|
159
|
|
|
2,082
|
|
|
159
|
|
Income (loss) from
operations
|
|
|
6,046
|
|
|
1,403
|
|
|
10,354
|
|
|
(6,968)
|
|
Interest
income
|
|
|
195
|
|
|
51
|
|
|
384
|
|
|
207
|
|
Interest
expense
|
|
|
(89)
|
|
|
(67)
|
|
|
(261)
|
|
|
(199)
|
|
Gain on extinguishment
of liability
|
|
|
164
|
|
|
—
|
|
|
164
|
|
|
—
|
|
Other income (loss),
net
|
|
|
25
|
|
|
9
|
|
|
93
|
|
|
(421)
|
|
Income (loss) before
income taxes
|
|
|
6,341
|
|
|
1,396
|
|
|
10,764
|
|
|
(7,381)
|
|
(Provision for income
taxes
|
|
|
(675)
|
|
|
(421)
|
|
|
(1,733)
|
|
|
(453)
|
|
Net income
(loss)
|
|
|
5,666
|
|
|
975
|
|
|
9,031
|
|
|
(7,834)
|
|
Net loss (income)
attributable to noncontrolling interests
|
|
|
251
|
|
|
(197)
|
|
|
1,122
|
|
|
626
|
|
Net income (loss)
attributable to Genie Energy Ltd
|
|
|
5,917
|
|
|
778
|
|
|
10,153
|
|
|
(7,208)
|
|
Dividends on preferred
stock
|
|
|
(370)
|
|
|
(370)
|
|
|
(1,111)
|
|
|
(1,111)
|
|
Net income (loss)
attributable to Genie Energy Ltd. common stockholders
|
|
$
|
5,547
|
|
$
|
408
|
|
$
|
9,042
|
|
$
|
(8,319)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to Genie Energy Ltd. common
stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.21
|
|
$
|
0.02
|
|
$
|
0.36
|
|
$
|
(0.35)
|
|
Diluted
|
|
$
|
0.21
|
|
$
|
0.02
|
|
$
|
0.36
|
|
$
|
(0.35)
|
|
Weighted-average
number of shares used in calculation of earnings (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
25,805
|
|
|
23,567
|
|
|
24,895
|
|
|
23,495
|
|
Diluted
|
|
|
26,442
|
|
|
24,158
|
|
|
25,225
|
|
|
23,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
|
$
|
0.075
|
|
$
|
0.075
|
|
$
|
0.225
|
|
$
|
0.225
|
|
(i) Stock-based
compensation included in selling, general and administrative
expenses
|
|
$
|
1,082
|
|
$
|
1,411
|
|
$
|
3,686
|
|
$
|
3,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GENIE ENERGY
LTD.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Nine Months
Ended
September 30,
|
|
2018
|
2017
|
|
(in
thousands)
|
Operating
activities
|
|
|
Net income
(loss)
|
$
9,031
|
$
(7,834)
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
Depreciation and
amortization
|
1,645
|
1,528
|
Write-down of assets
held for sale to fair value
|
2,742
|
—
|
Deferred income
taxes
|
113
|
(543)
|
Provision for doubtful
accounts receivable
|
610
|
392
|
Gain on sale of
property and equipment
|
(18)
|
—
|
Stock-based
compensation
|
3,686
|
3,796
|
Equity in the net loss
of equity method investees
|
2,082
|
159
|
Gain on extinguishment
of liability
|
(164)
|
—
|
Change in assets and
liabilities:
|
|
|
Trade accounts
receivable
|
6,648
|
2,275
|
Inventory
|
(3,926)
|
1,128
|
Prepaid
expenses
|
143
|
(3,150)
|
Other current assets
and other assets
|
2,417
|
(2,127)
|
Trade accounts
payable, accrued expenses and other current liabilities
|
(4,404)
|
8,840
|
Due to IDT
Corporation
|
(138 )
|
52
|
Income taxes
payable
|
(228)
|
(1,320)
|
|
|
|
Net cash provided by
(used in) operating activities
|
20,239
|
3,196
|
Investing
activities
|
|
|
Capital
expenditures
|
(575 )
|
(3,248)
|
Proceeds from sale of
property and equipment
|
62
|
—
|
Payments for business
acquisition, net of cash acquired
|
—
|
(3,717)
|
Payments for
intangible acquisition
|
(745)
|
—
|
Investment in joint
venture
|
(658)
|
(1,275)
|
Investments in
capitalized exploration costs—unproved oil and gas
property
|
—
|
(5,531)
|
Investments in notes
receivable
|
(1,225)
|
—
|
Cash divested from
Atid
|
(209)
|
—
|
Repayment of notes
receivable
|
80
|
446
|
|
|
|
Net cash used in
investing activities
|
(3,270)
|
(13,325)
|
Financing
activities
|
|
|
Dividends
paid
|
(6,870)
|
(6,674)
|
Purchase of equity of
subsidiary
|
—
|
(312)
|
Proceeds from sales of
Class B common stock and warrants
|
6,000
|
—
|
Proceeds from
revolving line of credit
|
—
|
14,450
|
Repayment of revolving
line of credit
|
—
|
(12,655)
|
Exercise of stock
options
|
—
|
109
|
Repurchases of Class B
common stock from employees
|
(783)
|
(829)
|
|
|
|
Net cash used in
financing activities
|
(1,653)
|
(5,911 )
|
Effect of exchange
rate changes on cash, cash equivalents, and restricted
cash
|
(36)
|
75
|
|
|
|
Net increase
(decrease) in cash, cash equivalents, and restricted
cash
|
15,280
|
(15,965)
|
Cash, cash
equivalents, and restricted cash at beginning of period
|
31,927
|
47,052
|
|
|
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
47,207
|
$
31,087
|
|
|
|
Reconciliation of Non-GAAP Financial Measure for the Third
Quarter 2018 and 2017
In addition to disclosing financial results that are determined
in accordance with generally accepted accounting principles in
the United States of America
(GAAP), Genie Energy also disclosed for the third quarter of 2018,
as well as for comparable periods, Adjusted EBITDA, which is a
non-GAAP measure. Generally, a non-GAAP financial measure is a
numerical measure of a company's performance, financial position,
or cash flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with GAAP.
Genie Energy's measure of Adjusted EBITDA consists of gross
profit less selling, general and administrative expense,
exploration expense and equity in the net loss of joint venture,
plus depreciation, amortization and stock-based compensation (which
are included in selling, general and administrative expense).
Another way of calculating Adjusted EBITDA is to start with income
(loss) from operations and add depreciation, amortization,
stock-based compensation, and write-down of assets held for sale to
fair value.
Management believes that Genie Energy's Adjusted EBITDA provides
useful information to both management and investors by excluding
certain expenses that may not be indicative of Genie Energy's or
the relevant segment's core operating results. Management uses
Adjusted EBITDA, among other measures, as a relevant indicator of
core operational strengths in its financial and operational
decision making. In addition, management uses Adjusted EBITDA to
evaluate operating performance in relation to Genie Energy's
competitors. Disclosure of this financial measure may be useful to
investors in evaluating performance and allows for greater
transparency to the underlying supplemental information used by
management in its financial and operational decision-making. In
addition, Genie Energy has historically reported Adjusted EBITDA
and believes it is commonly used by readers of financial
information in assessing performance, therefore the inclusion of
comparative numbers provides consistency in financial reporting at
this time.
Management refers to Adjusted EBITDA, as well as the GAAP
measures gross profit, income (loss) from operations and net income
(loss), on a segment and/or consolidated level to facilitate
internal and external comparisons to the segments' and Genie
Energy's historical operating results, in making operating
decisions, for budget and planning purposes, and to form the basis
upon which management is compensated.
Although depreciation and amortization are considered operating
costs under GAAP, they primarily represent the non-cash current
period allocation of costs associated with long-lived assets
acquired or constructed in prior periods. While Genie Energy's oil and gas exploration business
may be capital intensive, Genie Energy does not expect to incur
significant depreciation or depletion expense for the foreseeable
future. Genie Energy's operating results exclusive of depreciation
and amortization is therefore a useful indicator of its current
performance.
Stock-based compensation recognized by Genie Energy and other
companies may not be comparable because of the various valuation
methodologies, subjective assumptions and the variety of types of
awards that are permitted under GAAP. Stock-based compensation is
excluded from Genie Energy's calculation of Adjusted EBITDA because
management believes this allows investors to make more meaningful
comparisons of the operating results of Genie Energy's core
business with the results of other companies. However, stock-based
compensation will continue to be a significant expense for Genie
Energy for the foreseeable future and an important part of
employees' compensation that impacts their performance.
Write-down of assets held for sale to fair value is a component
of (loss) income from operations that is excluded from the
calculation of Adjusted EBITDA. From time-to-time, Genie Energy may
determine that a line of business is outside of its core business
and therefore decide to dispose of the related assets and
liabilities. However, such disposals do not occur each quarter.
Genie Energy does not believe the losses or gains from asset
disposals or sales are components of its or the relevant segment's
core operating results.
Adjusted EBITDA should be considered in addition to, not as a
substitute for, or superior to, gross profit, income (loss) from
operations, cash flow from operating activities, net income (loss),
basic and diluted earnings (loss) per share or other measures of
liquidity and financial performance prepared in accordance with
GAAP. In addition, Genie Energy's measurements of Adjusted EBITDA
may not be comparable to similarly titled measures reported by
other companies.
Following is the reconciliation of Adjusted EBITDA to the most
directly comparable GAAP measure, which is income (loss) from
operations for Genie Energy's reportable segments and net income
(loss) for Genie Energy on a consolidated basis.
Genie Energy
Ltd.
Reconciliation of
Adjusted EBITDA to Net Income (loss)
(unaudited)
$ in
thousands
|
|
Consolidated
|
|
Genie
Retail
Energy
|
Three Months Ended
September 30, 2018
(3Q18)
|
|
|
|
Adjusted
EBITDA
|
$
8,042
|
|
$
9,781
|
Subtract:
|
|
|
|
Write-down of assets
held for sale to fair value
|
451
|
|
-
|
Stock-based
compensation
|
1,082
|
|
136
|
Depreciation and
amortization
|
463
|
|
437
|
Income from
operations
|
6,046
|
|
$
9,208
|
Interest
income
|
195
|
|
|
Interest
expense
|
(89)
|
|
|
Gain on
extinguishment of liability
|
164
|
|
|
Other income,
net
|
25
|
|
|
Provision for income
taxes
|
(675)
|
|
|
Net income
|
5,666
|
|
|
Net loss attributable
to noncontrolling interests
|
251
|
|
|
Net income
attributable to Genie Energy Ltd.
|
$
5,917
|
|
|
|
|
|
|
|
Consolidated
|
|
Genie
Retail
Energy
|
Three Months Ended
June 30, 2018
(2Q18)
|
|
|
|
Adjusted
EBITDA
|
$
1,817
|
|
$
3,825
|
Subtract:
Write-down of assets held
for sale to fair
value
|
2,291
|
|
-
|
Stock-based
compensation
|
1,257
|
|
118
|
Depreciation and
amortization
|
590
|
|
438
|
(Loss) income from
operations
|
(2,321)
|
|
$
3,269
|
Interest
income
|
108
|
|
|
Interest
expense
|
(81)
|
|
|
Other income,
net
|
58
|
|
|
Provision for income
taxes
|
(258)
|
|
|
Net loss
|
(2,494)
|
|
|
Net loss attributable
to noncontrolling interests
|
575
|
|
|
Net loss attributable
to Genie Energy Ltd.
|
$
(1,919)
|
|
|
|
|
|
|
|
Consolidated
|
|
Genie
Retail
Energy
|
Three Months Ended
September 30, 2017
(3Q17)
|
|
|
|
Adjusted
EBITDA
|
$
3,301
|
|
$
5,382
|
Subtract:
|
|
|
|
Stock-based
compensation
|
1,411
|
|
176
|
Depreciation and
amortization
|
487
|
|
434
|
Income from
operations
|
1,403
|
|
$ 4,772
|
Interest
income
|
51
|
|
|
Interest
expense
|
(67)
|
|
|
Other income,
net
|
9
|
|
|
Provision for income
taxes
|
(421)
|
|
|
Net income
|
975
|
|
|
Net income
attributable to noncontrolling interests
|
(197)
|
|
|
Net income
attributable to Genie Energy Ltd.
|
$
778
|
|
|
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SOURCE Genie Energy Ltd.