|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
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, 2018, 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
27
A of the Securities Act of
1933
and Section
21
E 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 under Item
1
A to Part I “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018. 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, 2018.
Overview
We are comprised of Genie Retail Energy
("GRE"), Genie Retail Energy International ("GRE International"), Genie Energy Services ("GES") and Genie Oil & Gas ("GOGAS").
GRE owns and operates retail energy providers ("REPs"), including IDT Energy, Residents Energy, Town Square Energy ("TSE"), and Mirabito Natural Gas, or Mirabito. GRE's REP businesses resell electricity and natural gas to residential and small business customers primarily in the Eastern United States.
Through a joint venture, in which the Company owns 67% interest, GRE International has been serving customers in Great Britain and acquired a license to service customers in Japan through a wholly owned subsidiary. In January 2019, the Company acquired an
80
% interest in Lumo Energia Ojy ("Lumo"), a REP with approximately
32,000
residential customers in Finland.
In the first quarter of
2019
, we revised our reportable segments in connection with the acquisition of an
80
% interest in Lumo Energia Ojy ("Lumo"). W
e bifurcated GRE, creating GRE International into a separate reportable segment which will include
REPs outside North America, currently includes Lumo, Genie Japan and our share of operations of Shoreditch Energy Limited ("Shoreditch").
GES oversees Diversegy, a retail energy advisory and brokerage company that serves commercial and industrial customers throughout U.S. and manages our
60
% controlling interest in Prism. Prism is a
solar solutions company that is engaged in U.S. based manufacturing of solar panels, solar installation design and solar energy project management.
The Company also operates (and owns
97
% of the equity of) GOGAS, an oil and gas exploration company and owns a minority interest in a contracted drilling services company ("Atid
613
"). GOGAS’
four
exploration projects are inactive. GOGAS holds
86.1
% interest in Afek Oil and Gas ("Afek"), an oil and gas exploration project in the Golan Heights in Northern Israel. Until September 2018, GOGAS also owned Atid, a drilling services company operating in Israel.
As part of our ongoing business development efforts, we continuously 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.
Genie Retail Energy
Seasonality and Weather
The weather and the seasons, among other things, affect GRE’s and GRE International'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. 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
50
% and
45
% of GRE’s natural gas revenues for the relevant years were generated in the first quarter of
2018
and
2017
, 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
% of GRE’s REPs’ electricity revenues for the relevant years were generated in the third quarter of
2018
and
2017
, respectively. Our 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.
Purchase of Receivables
Utility companies offer purchase of receivable, or POR, programs in most of the service territories in which we operate. 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.
Class Action Lawsuit
On March 13, 2014, July 2, 2014 and July 15, 2014, named plaintiffs in Pennsylvania, New York and New Jersey commenced
three
separate putative class-action lawsuits against IDT Energy, GRE, Genie International Corporation ("GEIC"), and Genie (collectively, “IDTE”) contending, among other things, that they and other former and current customers of IDTE were injured as a result of IDTE’s allegedly unlawful sales and marketing practices. We denied any basis for those allegations and/or wrongdoing. On July 5, 2017, we entered into a settlement of all
three
actions to further its efforts to address its customers’ concerns and on October 18, 2018, the Court entered a final order approving the Settlement Agreement.
Under the Settlement Agreement, we agreed to pay certain amounts to resolve the lawsuits and obtain a release of claims that were, or could have been, asserted in the lawsuits or that are related to, or arise out of the conduct alleged in the lawsuits or similar conduct, wherever it may have occurred. The settlement payment includes payments to customers who timely made a claim, class counsel, and the named plaintiffs, as well as the cost of a claims administrator for administrating the claims process. The period for class members to make claims has expired, and in first quarter of
2018
, based on the claims received and related administrative costs, we estimated that the total settlement payment will be approximately $
7.6
million.
In second quarter 2019, the remaining balance of the liability related to the clas
s-action lawsuit was settled in full.
New York Public Service Commission Proceedings
In December 2017, the New York Public Service Commission (“PSC”) held an evidentiary hearing to assess the retail energy market in New York. The parties recently completed post-hearing briefing in the proceedings. The Company is evaluating the potential impact of any new order from the PSC that may follow from the evidentiary process, while preparing various contingencies for operation in compliance with any new requirements that may be imposed. Depending on the final language of any new order, as well as the Company’s ability to modify its relationships with its New York customers, an order could have a substantial impact upon the operations of GRE’s REPs in New York. As of
June 30, 2019
, New York represented
27.3
% of GRE’s total meters served and
19.0
% of the total residential customer equivalents (“RCEs”) of GRE’s customer base. For the
three
and
six months ended June 30, 2019
, New York gross revenues were $
11.3
million and $
32.7
million, respectively.
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.
On December 16, 2016, the PSC issued an order (the “
2016
Order”) prohibiting
REPs
to service to customers enrolled in New York’s utility low-income assistance programs. Temporary stays of the
2016
Order expired, and
REPs
were required to return service of their low-income customers to the relevant local incumbent utility on the modified schedule set forth in the
PSC’s
2016
Order. The
2016
Order required
GRE’s
REPs
to transfer customer accounts comprising approximately
18,700
meters, representing approximately
10,600
RCEs, to their respective incumbent utilities in the
six months ended June 30, 2018
.
On March 27, 2018, the New York Court of Appeals granted Motions for Leave to Appeal the question of whether the New York Legislature ever imparted to the PSC the authority to regulate the rates that private, non-monopoly
REPs
charge their customers. On March 19, 2019, the Court of Appeals heard oral arguments regarding the decision entered by the Appellate Division, Third Department, concerning the issue of the scope of the
PSC’s
authority over
REPs
under the Public Service Law, and to pronounce New York law on that issue. On May 9, 2019, the Court of Appeals ruled that although the PSC has no direct pricing authority over private non-monopoly REPs, their authority to regulate and control access to public utility infrastructure allows them to impose price caps on the prices that non-monopoly REPs charge its customers for natural gas and electricity.
Ohio Public Utilities Commission
In August and November of
2017
, the Public Utilities Commission of Ohio (“PUCO”) commenced investigations into the marketing and enrollment practices of our subsidiary Town Square Energy, LLC. The PUCO’s investigations arose from customer complaints that representatives of Town Square allegedly engaged in misleading and deceptive sales practices in connection with Town Square’s table top marketing campaign. Town Square has and continues to cooperate fully with the PUCO’s investigation. Pending the outcome of the investigations, and in response to the PUCO’s recommendation, Town Square temporarily ceased further marketing activity in Ohio. Town Square also undertook various remedial measures which included retraining its vendors. Subsequently, on January 16, 2018, the PUCO issued its findings that Town Square was in probable non-compliance with various sections of the Ohio Administrative Code and proposed various corrective actions which included agent retraining, development of an effective quality assurance program and advising customers that they have the option to enroll with Town Square or switch their service to the regular utilities. Following the settlement discussion, Town Square and the PUCO entered into a settlement agreement which was approved by the PUCO on February 27, 2019. Under the terms of the agreement, Town Square will pay a forfeiture fee of $
0.2
million to the State of Ohio. In addition, Town Square will work with the PUCO and take steps to ensure full compliance with PUCO rules and orders, including updating customers, providing the PUCO with updated information, and submitting quarterly report for a one-year period. In connection with the foregoing, we accrued $
0.2
million in the third quarter of 2018. If the parties are successful in reaching settlement, Town Square intends to resume marketing activity. As of
June 30, 2019
, Town Square in Ohio represented
0.3
% of GRE’s total meters served and
0.3
% of the total residential customer equivalents of GRE’s customer base. For the
three
and
six months ended June 30, 2019
, Town Square in Ohio gross revenues were $
0.1
million and $
0.3
million, respectively.
State of Connecticut Public Utilities Regulatory Authority
On September 19, 2018, the State of Connecticut Public Utilities Regulatory Authority (“PURA”) commenced an investigation into Town Square following customer complaints of allegedly misleading and deceptive sales practices on the part of Town Square.
The Office of Consumer Counsel has joined in the investigation.
Although Town Square denies any basis for those complaints and any wrongdoing on its part, it is cooperating with the investigation and responding to subpoenas for discovery.
As of
June 30, 2019
, Town Square’s Connecticut customer base represented
12.0
% of GRE’s total meters served and
15.4
% of the total residential customer equivalents of GRE’s customer base. For the
three
and
six months ended June 30, 2019
, Town Square’s gross revenues from sales in Connecticut were $
8.2
million and $
14.6
million, respectively.
As of
June 30, 2019
no claims or demands have been made against Town Square by either agency, and there is insufficient basis to deem the loss probable or to the assess the amount of any possible loss.
State of Illinois Office of the Attorney General
In response to complaints that IDT Energy enrolled consumers without their express consent and misrepresented the amount of savings those consumers would receive, the Office of the Attorney General of the State of Illinois (“IL AG”) has been investigating the marketing practices of IDT Energy and has alleged violations of the 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
. Shortly thereafter, the Illinois Commerce Commission ("IL ICC") commenced a similar investigation. Although IDT Energy denies any wrongdoing in connection with those allegations, the parties (including the IL ICC) settled the matter pursuant to a court approved consent decree that includes restitution payments in the amount of $
3.0
million, temporary suspension of all marking activities directed at new customers, and implementation of various compliance and reporting procedures.
In third quarter of
2018
, the Company recorded a liability of $
3.0
million recorded as a reduction of electricity revenues in the consolidated statement of operations. As of
June 30, 2019
Illinois represented
15.7
% of GRE’s total meters served and
14.7
% of the total residential customer equivalents of GRE’s customer base. For the
three
and
six months ended June 30, 2019
and
2018
, IDT Energy’s gross revenues from sales in Illinois was $
1.9
million and $
5.2
million, respectively.
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, 2018. 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 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, 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, 2018.
Recently Issued Accounting Standards
Information regarding new accounting pronouncements is included in Note
19
—
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
and
Six Months Ended June 30, 2019
Compared to
Three
and
Six Months Ended June 30, 2018
Genie Retail Energy Segment
|
Three
months ended
June 30,
|
|
Chan
ge
|
|
Six
months ended
June 30,
|
|
Change
|
|
|
|
2019
|
|
2018
|
|
|
$
|
|
|
%
|
|
|
2019
|
|
|
2018
|
|
|
$
|
|
|
%
|
|
|
|
(in thousands)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity
|
|
$
|
49,237
|
|
|
$
|
48,514
|
|
|
$
|
723
|
|
|
|
1.5
|
%
|
|
$
|
107,049
|
|
|
$
|
113,852
|
|
|
$
|
(
6,803
|
)
|
|
|
(
6.0
|
)%
|
Natural gas
|
|
|
5,194
|
|
|
|
7,362
|
|
|
|
(
2,168
|
)
|
|
|
(
29.4
|
)
|
|
|
23,900
|
|
|
|
30,790
|
|
|
|
(
6,890
|
)
|
|
|
(
22.4
|
)
|
Total revenues
|
|
|
54,431
|
|
|
|
55,876
|
|
|
|
(
1,445
|
)
|
|
|
(
2.5
|
)
|
|
|
130,949
|
|
|
|
144,642
|
|
|
|
(
13,693
|
)
|
|
|
(
9.5
|
)
|
Cost of revenues
|
|
|
46,188
|
|
|
|
40,073
|
|
|
|
6,115
|
|
|
|
15.3
|
|
|
|
98,027
|
|
|
|
104,663
|
|
|
|
(
6,636
|
)
|
|
|
(
6.3
|
)
|
Gross profit
|
|
|
8,243
|
|
|
|
15,803
|
|
|
|
(
7,560
|
)
|
|
|
(
47.8
)
|
|
|
|
32,922
|
|
|
|
39,979
|
|
|
|
(
7,057
|
)
|
|
|
(
17.6
|
)
|
Selling, general and
administrative expenses
|
|
|
13,661
|
|
|
|
11,677
|
|
|
|
1,984
|
|
|
|
16.9
|
|
|
|
24,837
|
|
|
|
24,816
|
|
|
|
21
|
|
|
|
0.1
|
|
(Loss) income from operations
|
|
$
|
(
5,418
|
)
|
|
$
|
4,126
|
|
|
$
|
(
9,544
|
)
|
|
|
(
231.4
)
|
%
|
|
$
|
8,085
|
|
|
$
|
15,163
|
|
|
$
|
(
7,078
|
)
|
|
|
(
46.7
)
|
%
|
Revenues
. GRE’s electricity revenues increased in
three months ended June 30, 2019
compared to the same period in
2018
. The increase is due to increases in both electricity consumption and the average rate per kilowatt hour sold in the
three months ended June 30, 2019
compared to the same period in 2018. Electricity consumption by GRE’s REP’s customers increased
0.4
% in the
three months ended June 30, 2019
, compared to the same period in
2018
. The increase in electricity consumption reflected an increase in averag
e number of meters served, which increased
3.2
% in the
three months ended June 30, 2019
compared to the same period in
2018
, although average consumption per meter decreased
2.7
% in the
three months ended June 30, 2019
compared to the same period in
2018
. The average rate per kilowatt hour sold increased
1.1
% in the
three months ended June 30, 2019
compared to the same period in
2018
reflecting an increase in the underlying commodity cost.
GRE’s electricity revenues decreased in the
six months ended June 30, 2019
compared to the same period in
2018
due to a decrease in electricity consumption partially offset by increase in average rate per kilowatt hour sold in the
six months ended June 30, 2019
compared to the same period in 2018.
Electricity consumption by GRE’s REP’s customers decreased by
8.0
% in the
six months ended June 30, 2019
compared to the same period in
2018
. The decrease in electricity consumption reflected a decrease in average number of meters served and decrease in averag
e consumption per meter, which decreased by
6.3
% and
1.8
%, respectively. in the
six months ended June 30, 2019
, compared to the same period in
2018.
The average rate per kilowatt hour sold increased
2.2
% in the
six months ended June 30, 2019
compared to the same period in
2018
reflecting an increase in the underlying commodity cost.
GRE’s natural gas revenues decrease in the
three months ended June 30, 2019
compared to the same period in
2018
. The average rate per therm sold decreased
4.8
% in the
three months ended June 30, 2019
compared to the same period in
2018
. Natural gas consumption by
GRE’s
REP’s
customers decreased
25.9
% in the
three months ended June 30, 2019
compared to the same period in
2018
reflecting the
18.8
% decrease in average meters served in the
three months ended June 30, 2019
compared to the same period in
2018
. The average consumption per meter also decreased by
8.7
% in the
three months ended June 30, 2019
compared to the same period in
2018
.
GRE’s
natural gas revenues decreased in the
six months ended June 30, 2019
compared to the same period in
2018
.
Natural gas consumption by
GRE’s
REP’s
customers decreased by
24.0
% in the
six months ended June 30, 2019
compared to the same period in
2018
, reflecting the
24.1
% decrease in average meters served in the
six months ended June 30, 2019
compared to the same period in
2018
. The decrease was partially offset by a
2.1
% increase in the average rate per therm sold in the
six months ended June 30, 2019
compared to the same period in
2018
.
The customer base for GRE’s REPs as measured by meters served consisted of the following:
(in thousands)
|
|
June 30,
2019
|
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
|
September 30, 2018
|
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
Meters at end of quarter:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity customers
|
|
307
|
|
|
|
277
|
|
|
|
245
|
|
|
|
269
|
|
|
|
282
|
|
Natural gas customers
|
|
71
|
|
|
|
67
|
|
|
|
70
|
|
|
|
73
|
|
|
|
81
|
|
Total meters
|
|
378
|
|
|
|
344
|
|
|
|
315
|
|
|
|
342
|
|
|
|
363
|
|
Gross meter acquisitions in
three months ended June 30, 2019
, were 91,000 compared to
57,000
in
2018
.
Gross meter acquisitions in
six months ended June 30, 2019
, were
176,000
compared to
112,000
in
2018
.
Gross meter acquisitions for the
six months ended June 30, 2019
includes the impact of a municipal aggregation deal in New Jersey which added approximately
35,000
meters. After the first quarter of
2018
, we focused our meter acquisition efforts outside of New York State while simultaneously taking steps to reduce the prospective and contingent impacts of the PSC’s orders on our New York operations. Meters served increased by
34,000
or
9.9
% from March 31, 2019 to
June 30, 2019
.
Meters served increased by
63,000
or
20.0
% from December 31, 2018 to
June 30, 2019.
In the
three months ended June 30, 2019
average monthly churn decreased to
4.4
% compared to
5.7
% for same period in
2018
.
In
six months ended June 30, 2019
average monthly churn decreased to
4.8
% compared to
6.6
% for same period in
2018
. The reduction in churn reflects the effect of our channel, product and customer diversification programs to systematically improve customer retention and renewals.
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.
|
|
June 30, 2019
|
|
|
March 31, 2019
|
|
|
December 31, 2018
|
|
|
September 30, 2018
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
RCEs at end of quarter:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity customers
|
|
259
|
|
|
|
243
|
|
|
|
195
|
|
|
|
216
|
|
|
|
219
|
|
Natural gas customers
|
|
59
|
|
|
|
57
|
|
|
|
58
|
|
|
|
59
|
|
|
|
64
|
|
Total RCEs
|
|
318
|
|
|
|
300
|
|
|
|
253
|
|
|
|
275
|
|
|
|
283
|
|
RCEs increased
12.4
% at
June 30, 2019
compared to
June 30, 2018
primarily due to the acquisition of relatively higher consumption meters in recent quarters.
Cost of Revenues and Gross Margin Percentage
. GRE’s cost of revenues and gross margin percentage were as follows:
|
|
Three
months ended
June 30,
|
|
Chan
ge
|
|
Six
months ended
June 30,
|
|
Change
|
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
|
(in thousands)
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity
|
|
$
|
41,309
|
|
|
$
|
35,492
|
|
|
$
|
5,817
|
|
|
|
16.4
|
%
|
|
$
|
81,909
|
|
|
$
|
82,467
|
|
|
$
|
(
558
|
)
|
|
|
(
0.7
|
)%
|
Natural gas
|
|
|
4,879
|
|
|
|
4,582
|
|
|
|
297
|
|
|
|
6.5
|
|
|
|
16,118
|
|
|
|
22,196
|
|
|
|
(
6,078
|
)
|
|
|
(
27.4
)
|
|
Total cost of revenues
|
|
$
|
46,188
|
|
|
$
|
40,074
|
|
|
$
|
6,114
|
|
|
|
15.3
|
%
|
|
$
|
98,027
|
|
|
$
|
104,663
|
|
|
$
|
(
6,636
|
)
|
|
|
(
6.3
|
)%
|
|
|
Three
months ended
June 30,
|
|
Six
months ended
June 30,
|
|
|
2019
|
|
2018
|
|
|
Ch
an
ge
|
|
2019
|
|
2018
|
|
Change
|
Gross margin percentage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity
|
|
|
16.1
|
%
|
|
|
26.8
|
%
|
|
|
(
10.7
|
)%
|
|
|
23.5
|
%
|
|
|
27.6
|
%
|
|
|
(
4.1
|
)%
|
Natural gas
|
|
|
6.1
|
|
|
|
37.8
|
|
|
|
(
31.7
|
)
|
|
|
32.6
|
|
|
|
27.9
|
|
|
|
4.7
|
|
Total gross margin percentage
|
|
|
15.1
|
%
|
|
|
28.3
|
%
|
|
|
(
13.0
|
)%
|
|
|
25.1
|
%
|
|
|
27.8
|
%
|
|
|
(
2.7
|
)%
|
Cost of revenues for electricity increased in the
three
and
six months ended June 30, 2019
compared to the same periods in
2018
primarily because of increases in the average unit cost of electricity and in electricity consumption by GRE’s REPs’ customers. The average unit cost of electricity increased
15.9
% and
7.9
% in the
three
and
six months ended June 30, 2019
, respectively, compared to the same periods in
2018
. The increases in unit cost are partially due to losses incurred by GRE related to hedging activities. Gross margin on electricity sales decreased in the three and
six months ended June 30, 2019
compared to the same periods in
2018
because the average rate charged to customers increased less than the average unit cost of electricity.
Cost of revenues for natural gas increased in the
three months ended June 30, 2019
compared to the same period in
2018
primarily because of an increase in the average unit cost of natural gas partially offset by a decrease in natural gas consumption by GRE's REPs' customers. The average unit cost of natural gas increased
44.4%
in the
three months ended June 30, 2019
compared to the same period in
2018
partially because of losses from hedging activities. Natural gas consumption of GRE's REPs' customers decreased
25.9%
in the
three months ended June 30, 2019
compared to the same period in
2018
resulting from a decrease in average meters served between the comparative periods and a decrease in consumption per meter. Gross margin on natural gas sales decreased in the
three months ended June 30, 2019
compared to the same period in
2018
because the average rate charged to customers increased less than the increase in the average unit cost of natural gas.
Cost of revenues for natural gas decreased in the
six months ended June 30, 2019
compared to the same period in
2018
primarily because of a decrease in the natural gas consumption by
GRE's REPs' customers and decrease in the average unit cost of natural gas. Natural gas consumption of
GRE's REPs' customers decreased
24.0%
in the
six months ended June 30, 2019
compared to the same period in
2018
resulting from decrease in average meters served during the period.
The average unit cost of natural gas decreased
4.3%
in the
six months ended June 30, 2019
compared to the same period in
2018
.
Gross margin on natural gas sales increased in the
six months ended June 30, 2019
compared to the same period in
2018
because the average rate charged to customers increased more than the average unit cost of natural gas.
The decrease in gross margin reflects the impact of generally weaker operating environment on consumption and cost of electricity and natural gas including the effect of fair value adjustments on our hedges.
Selling, General and Administrative
. The increase in selling, general and administrative expense in the three
six months ended June 30, 2019
compared to the same period in
2018
was primarily due to the increase in customer acquisition costs related to increased pace of customer acquisition activities and the increase in gross customer additions. Commission expenses increased $
2.1
million and $
1.0
million in the three and
six months ended June 30, 2019
,compared to the same periods in
2018
. As a percentage of GRE’s total revenues, selling, general and administrative expense increased from
20.9%
in the
three months ended June 30, 2018
to
25.1%
in the
three months ended June 30, 2019
and from
17.2%
in the
six months ended June 30, 2018
to
19.0%
in the
six months ended June 30, 2019
.
GRE International Segment
|
|
Three
Months Ended
June 30,
|
|
|
Change
|
|
|
Six
Months Ended
June 30,
|
|
|
Change
|
|
|
|
2019
|
|
2018
|
|
|
$
|
|
|
%
|
|
|
2019
|
|
|
2018
|
|
|
$
|
|
|
%
|
|
|
|
(in thousands)
|
|
Revenues
|
|
$
|
2,870
|
|
|
$
|
—
|
|
|
$
|
2,870
|
|
|
nm
|
%
|
|
$
|
7,713
|
|
|
$
|
—
|
|
|
$
|
7,713
|
|
|
|
nm
|
%
|
Cost of revenue
|
|
|
2,629
|
|
|
|
—
|
|
|
|
2,629
|
|
|
nm
|
|
|
|
7,491
|
|
|
|
—
|
|
|
|
7,491
|
|
|
|
nm
|
|
Gross loss
|
|
|
241
|
|
|
|
—
|
|
|
|
241
|
|
|
nm
|
|
|
|
222
|
|
|
|
—
|
|
|
|
222
|
|
|
|
nm
|
|
Selling, general and administrative expenses
|
|
|
1,848
|
|
|
|
53
|
|
|
|
1,795
|
|
|
nm
|
|
|
|
3,572
|
|
|
|
144
|
|
|
|
3,428
|
|
|
|
nm
|
|
Loss from operations
|
|
$
|
(
1,607
|
)
|
|
$
|
(
53
|
)
|
|
$
|
(
1,554
|
)
|
|
nm
|
|
|
$
|
(
3,350
|
)
|
|
$
|
(
144
|
)
|
|
$
|
(
3,206
|
)
|
|
|
nm
|
|
Equity in net loss of joint venture
|
|
$
|
867
|
|
|
$
|
716
|
|
|
$
|
151
|
|
|
21.1
|
%
|
|
$
|
1,938
|
|
|
$
|
1,221
|
|
|
$
|
717
|
|
|
|
58.7
|
%
|
nm—
not
meaningful
GRE International, holds our stakes in REPs outside North America
These businesses currently include our stake in Shoreditch, which operates Orbit Energy in the U.K., Genie Japan, and Lumo, which operates in Finland. We account for our investments in Shoreditch under the equity method of accounting. Under this method we record our share in the net income or loss of Shoreditch. Therefore, revenue generated, and expenses incurred are not reflected in our consolidated revenue and expenses.
Meters served by GRE International's REPs increased to
69,000
at
June 30, 2019
from
55,000
at March 31, 2019 primarily as a result of the acquisition of Lumo in January 2019 as well as growth in Lumo and Shoreditch. The Company also started the commercial operations of Genie Japan in second quarter of 2019.
RCEs
at
June 30, 2019
increased to
39,000
from 33,000 at March 31, 2019
primarily from the increase in meters served as discussed above.
Revenue and Cost of
Revenue.
GRE International's revenues and cost of revenue in the three and
six months ended June 30, 2019
pertains to operation of Lumo.
Equity in net loss of joint venture.
We account for our ownership interest in Shoreditch using the equity method since we have the ability to exercise significant influence over Shoreditch's operating and financial matters, although we do not control Shoreditch.
The Company's share in
Shoreditch’s
net loss for the
three months ended June 30, 2019
was $
0.9
million compared to $
0.7
million for the same period in
2018
.
The Company's share in
Shoreditch’s
net loss for the
six months ended June 30, 2019
was $
1.9
million compared to $
1.2
million for the same period in
2018
. The increase is mainly a result of increase in level of activity of Shoreditch.
GES Segment
|
|
Three
Months Ended
June 30,
|
|
|
Change
|
|
|
|
Six
Months Ended
June 30,
|
|
|
|
Change
|
|
|
|
2019
|
|
|
2018
|
|
|
|
$
|
|
|
|
%
|
|
|
|
2019
|
|
|
|
2018
|
|
|
|
$
|
|
|
%
|
|
|
|
(in thousands)
|
|
Revenues
|
|
$
|
3,708
|
|
|
$
|
557
|
|
|
$
|
3,151
|
|
|
|
nm
|
%
|
|
$
|
|
8,964
|
|
|
$
|
1,060
|
|
|
$
|
7,904
|
|
|
nm
|
%
|
Cost of revenue
|
|
|
3,214
|
|
|
|
287
|
|
|
|
2,927
|
|
|
|
nm
|
|
|
|
|
7,540
|
|
|
|
508
|
|
|
|
7,032
|
|
|
nm
|
|
Gross profit
|
|
|
494
|
|
|
|
270
|
|
|
|
224
|
|
|
|
83.0
|
|
|
|
|
1,424
|
|
|
|
552
|
|
|
|
872
|
|
|
158.0
|
|
Selling, general and administrative expenses
|
|
|
1,176
|
|
|
|
358
|
|
|
|
818
|
|
|
|
nm
|
|
|
|
|
2,338
|
|
|
|
731
|
|
|
|
1,607
|
|
|
nm
|
|
Loss from operations
|
|
$
|
(
682
|
)
|
|
$
|
(
88
|
)
|
|
$
|
(
594
|
)
|
|
|
nm
|
%
|
|
$
|
|
(
914
|
)
|
|
$
|
(
179
|
)
|
|
$
|
(
735
|
)
|
|
nm
|
%
|
nm—
not
meaningful
Revenue.
GES' revenues increased in the three and
six months ended June 30, 2019
compared to the same periods in
2018
. The increase in revenues were the result of our acquisition of a controlling interest in Prism in October 2018. Revenues from Prism in the three and
six months ended June 30, 2019
were $3.2 million and $
8.0
million, respectively. Revenues from Diversegy includes commissions, entry fees and other fees from our energy brokerage and marketing services businesses.
Cost of Revenues.
Cost of revenues
increased
in the three and
six months ended June 30, 2019
compared to the same periods in
2018
primarily as a result of the Prism acquisition in October 2018. Cost of revenues from Prism in the three and
six months ended June 30, 2019
were $2.9 million and $
6.8
million, respectively. Cost of revenues in the three and
six months ended June 30, 2018
relates to Diversegy
commission expense incurred by our energy brokerage and marketing services businesses.
General and Administrative
. General and administrative expenses increased the three and
six months ended June 30, 2019
compared to the same periods in
2018
primarily because of the acquisition of Prism offset by decrease in operating expenses of Diversegy.
Genie Oil and Gas Segment
|
|
Three
Months Ended
June 30,
|
|
Change
|
|
Six
Months Ended
June 30,
|
|
Change
|
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
|
(in thousands)
|
Revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
nm
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
nm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
381
|
|
|
|
1,064
|
|
|
$
|
(
683
|
)
|
|
|
(
64.2
|
)
|
|
|
545
|
|
|
|
2,198
|
|
|
$
|
(
1,653
|
)
|
|
|
(
75.2
|
)
|
Exploration expense
|
|
|
—
|
|
|
|
17
|
|
|
|
(
17
|
)
|
|
|
100.0
|
|
|
|
—
|
|
|
|
244
|
|
|
|
(
244
|
)
|
|
|
(
100.0
|
)
|
Impairment of assets
|
|
|
—
|
|
|
|
2,291
|
|
|
|
(
2,291
|
)
|
|
|
(
100.0
|
)
|
|
|
—
|
|
|
|
2,291
|
|
|
|
(
2,291
|
)
|
|
|
(
100.0
|
)
|
Loss from operations
|
|
$
|
381
|
|
|
$
|
3,372
|
|
|
$
|
(
2,991
|
)
|
|
|
(
88.7
|
)
|
|
$
|
545
|
|
|
$
|
4,733
|
|
|
$
|
(
4,188
|
)
|
|
|
(
88.5
|
)%
|
Equity in net (loss) income of Atid
613
|
|
$
|
(
204
|
)
|
|
$
|
—
|
|
|
$
|
(
204
|
)
|
|
|
nm
|
|
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
70
|
|
|
|
nm
|
|
nm—not meaningful
General and Administrative
. General and administrative expense
decreased
in the three and
six months ended June 30, 2019
compared to the same periods in
2018
because of decrease in payroll and related expenses and depreciation expense, primarily due divestiture of a controlling interest in Atid in third quarter of
2018
.
Exploration.
Exploration expense in the three and
six months ended June 30, 2018
was primarily incurred in the wrap-up of the suspended drilling operations.
Subsequent analysis indicates that a zone within the well contains evidence of hydrocarbons at levels sufficient to warrant additional testing. Accordingly, Afek requested and received a renewal of its exploratory license from the Ministry of Energy for the Northern portion of its former license area. Afek is in the process of securing the equipment needed to perform the testing.
Impairment of Assets.
In the three and six months ended June 30, 2018, we recorded a $2.3 million impairment of assets related to the decision to divest our majority interest in drilling business in Israel.
Corporate
Corporate does 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 expense.
|
|
Three
months ended
June 30,
|
|
Change
|
|
|
Six
months ended
June 30,
|
|
Change
|
|
|
|
2019
|
|
|
2018
|
|
|
$
|
|
|
%
|
|
|
2019
|
|
|
2018
|
|
|
$
|
|
|
%
|
|
|
|
(in thousands)
|
|
General and administrative and loss from operations
|
|
$
|
1,188
|
|
|
$
|
2,218
|
|
|
$
|
(
1,030
|
)
|
|
|
(
1.4
|
)%
|
|
$
|
2,718
|
|
|
$
|
4,578
|
|
|
$
|
(
1,860
|
)
|
|
|
(
10.0
|
)%
|
Corporate general and administrative expenses decreased in the
three
and
six months ended June 30, 2019
compared to the same periods in
2017
primarily because of decreases in severance expense and payroll and related expense, including a decrease in stock-based compensation expense. As a percentage of our consolidated revenues, Corporate general and administrative expense decreased from
3.9
% in the three months ended June 30, 2018 to
1.9
% in the
three months ended June 30, 2019
and decreased from
3.1
% in the
six months ended June 30, 2018
to
1.8
% in the
six months ended June 30, 2019
.
Consolidated
Selling, General and Administrative
. Stock-based compensation expense included in consolidated selling, general and administrative expense was $
0.3
million and $
1.3
million in the
three months ended June 30, 2019
and
2018
, respectively, and $
0.8
million and $
2.6
million in the
six months ended June 30, 2019
and
2018
, respectively. At
June 30, 2019
, aggregate unrecognized compensation cost related to non-vested stock-based compensation was $
2.4
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
June 30,
|
|
|
Change
|
|
|
Six
months ended
June 30,
|
|
|
Change
|
|
|
|
2019
|
|
|
2018
|
|
|
$
|
|
|
%
|
|
|
2019
|
|
|
2018
|
|
|
$
|
|
|
%
|
|
|
|
(in thousands)
|
|
(Loss) income from operations
|
|
$
|
(
9,276
|
)
|
|
$
|
(
1,605
|
)
|
|
$
|
(
7,671
|
)
|
|
|
477.9
|
%
|
|
$
|
558
|
|
|
$
|
5,529
|
|
|
$
|
(
4,971
|
)
|
|
|
(
89.9
)
|
%
|
Interest income
|
|
|
189
|
|
|
|
108
|
|
|
|
81
|
|
|
|
75.0
|
|
|
|
281
|
|
|
|
189
|
|
|
|
92
|
|
|
|
48.7
|
|
Interest expense
|
|
|
(
178
|
)
|
|
|
(
81
|
)
|
|
|
(
97
|
)
|
|
|
119.8
|
|
|
|
(
319
|
)
|
|
|
(
173
|
)
|
|
|
(
146
|
)
|
|
|
84.4
|
|
Equity in net loss in equity method investees
|
|
|
(
1,071
)
|
|
|
|
(
716
)
|
|
|
|
(
355
)
|
|
|
|
49.6
|
|
|
|
(
1,868
)
|
|
|
|
(
1,221
)
|
|
|
|
(
647
)
|
|
|
|
53.0
|
|
Other income (expense), net
|
|
|
157
|
|
|
|
58
|
|
|
|
99
|
|
|
|
170.7
|
|
|
|
232
|
|
|
|
100
|
|
|
|
132
|
|
|
|
132.0
|
|
(Provision for) benefit from income taxes
|
|
|
1,678
|
|
|
|
(
258
)
|
|
|
|
1,936
|
|
|
|
(
750.4
|
)
|
|
|
(
1,225
|
)
|
|
|
(
1,057
|
)
|
|
|
(
168
|
)
|
|
|
15.9
|
|
Net (loss) income
|
|
|
(
8,501
|
)
|
|
|
(
2,494
|
)
|
|
|
(
6,007
|
)
|
|
|
240.9
|
|
|
|
(
2,341
|
)
|
|
|
3,367
|
|
|
|
(
5,708
|
)
|
|
|
(
169.5
|
)
|
Net loss attributable to noncontrolling interests
|
|
|
1,035
|
|
|
|
575
|
|
|
|
460
|
|
|
|
80.0
|
|
|
|
944
|
|
|
|
870
|
|
|
|
74
|
|
|
|
8.5
|
|
Net (loss) income attributable to Genie
|
|
$
|
(
7,466
|
)
|
|
$
|
(
1,919
|
)
|
|
$
|
(
5,547
|
)
|
|
|
289.1
|
%
|
|
$
|
(
1,397
|
)
|
|
$
|
4,237
|
|
|
$
|
(
5,634
|
)
|
|
|
(
133.0
)
|
%
|
Other Income (Expense), net
. Other income, net in the
three
and
six months ended June 30, 2019
consisted primarily of foreign currency transaction gains. Other expense, net in the
three
and
six months ended June 30, 2018
consisted primarily of foreign currency transaction losses.
Benefit from (Provision for) Income Taxes
. The primary driver for the reported tax rate (income tax benefit)
for the
three months ended June 30, 2019
is the tax benefit from losses incurred during the period particularly in the GRE segment. In the fourth quarter of
2018
, the Company released the valuation allowance on our U.S. deferred tax assets. The provision for income taxes for the
three months ended June 30, 2018
relates to the taxable income of GRE for the period. For the
six months ended June 30, 2019
provision for income taxes relates to both federal as well as state income taxes from GRE segment for the period. Deferred taxes from GRE International were provided with full valuation allowance. The low tax rate (benefit from income taxes) for the
six months ended June 30, 2018
relates to tax benefit from losses incurred by GRE and GOGAS during the period.
Net Loss Attributable to Noncontrolling Interests.
The change in the net loss attributable to noncontrolling interests in the three and six months ended June 30, 2019 compared to the similar periods in
2018
was primarily due to the noncontrolling interest related to Prism, which the Company acquired in October 2018, and Lumo, which the Company acquired in January 2019, partially offset by decrease in net losses of Afek and CCE.
Liquidity and Capital Resources
General
We currently expect that our cash flow from operations and the $
32.9
million balance of unrestricted cash and cash equivalents that we held at
June 30, 2019
will be sufficient to meet our currently anticipated cash requirements for at least the period from July 1, 2019 to August 8, 2020.
At
June 30, 2019
, we had working capital (current assets less current liabilities) of $
42.7
million.
|
|
Six Months Ended
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(in thousands)
|
|
Cash flows provided by (used in):
|
|
|
|
|
|
|
Operating activities
|
|
$
|
3,872
|
|
|
$
|
12,069
|
|
Investing activities
|
|
|
(
2,076
|
)
|
|
|
(
999
|
)
|
Financing activities
|
|
|
(
6,132
|
)
|
|
|
1,517
|
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
|
12
|
|
|
|
(
77
)
|
|
Increase in cash, cash equivalents, and restricted cash
|
|
$
|
(
4,324
|
)
|
|
$
|
12,510
|
|
Operating Activities
Cash provided by operating activities was $
3.9
million and $
12.1
million in the
six months ended June 30, 2019
and
2018
, respectively. Net income after non-cash adjustments
decreased
cash flows by $
8.0
for the
six months ended June 30, 2019
, compared to the same period in
2018
. The decrease is primarily the result of unfavorable gross margin during the
six months ended June 30, 2019
compared to the same period in 2018 as discussed above.
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 working capital
increase
cash flows by $
0.9
million for the
six months ended June 30, 2019
, compared to the same period in
2018
. Changes in other assets
decreased
cash flows by $
1.0
million for the
six months ended June 30, 2019
, compared to the same period in
2018
.
As of November 19, 2015, certain of GRE’s REPs entered into an Amended and Restated Preferred Supplier Agreement with BP Energy Company, or BP, which was amended as of June 7, 2018. The agreement’s termination date is November 30, 2021. 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. In addition, the REPs must pay an advance payment of $
2.0
million to BP each month that BP will apply to the next invoiced amount due to 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
June 30, 2019
, we were in compliance with such covenants. At
June 30, 2019
, restricted cash—short-term of $
0.9
million and trade accounts receivable of $
33.6
million were pledged to BP as collateral for the payment of trade accounts payable to BP of $
13.8
million at
June 30, 2019
.
From time to time, we receive 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 we respond to those inquiries or requests. We cannot predict whether any of those matters will lead to claims or enforcement actions.
Investing Activities
Our capital expenditures were $
0.3
million in the
six months ended June 30, 2019
compared to $
0.4
million in the
six months ended June 30, 2019
. We had purchase commitments of $
121.4
million at
June 30, 2019
, of which $
99.3
million was for purchases of electricity. We currently anticipate that our total capital expenditures in the
twelve
months ending
December 31, 2019
will be between $
0.5
million and $
1.0
million.
We received $
0.3
million from an employee for the repayment of notes receivable in the
six months ended June 30, 2019
.
On January 2, 2019, the Company completed the purchase of an
80
% controlling interest in Lumo. The Company paid the sellers a total of €
1.6
million (equivalent to $
1.9
million at that time). The Company contributed €
1.3
million (equivalent to $
1.5
million at that time) as a capital loan to fund Lumo's working capital requirements. We also provided Lumo with a secured loan for €
2.0
million (equivalent to $
2.3
million at that time) to pay off and replace its remaining debt.
Financing Activities
In each of the
six months ended June 30, 2019
and
2018
, we paid aggregate quarterly Base Dividends of $
0.03188
per share, $
0.7
million in the aggregate, on our Series
2012
-A Preferred Stock, or Preferred Stock. On July 16, 2019, our Board of Directors declared a quarterly Base Dividend of $
0.1594
per share on our Preferred Stock. The dividend will be paid on or about August 15, 2019 to stockholders of record as of the close of business on August 6, 2019.
In the
six months ended June 30, 2019
and
2018
, we paid aggregate quarterly dividends of $
0.15
per share to stockholders of our Class A common stock and Class B common stock. The Company paid $
4.1
million and $
3.7
million for the
six months ended June 30, 2019
and
2018
. On August 1, 2019, 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 August 23, 2019 to stockholders of record as of the close of business on August 16, 2019.
On April 4, 2017, GRE, IDT Energy, and other GRE subsidiaries entered into a Credit Agreement with Vantage Commodities Financial Services II, LLC, or Vantage, for a $
20
million revolving loan facility. The borrowers consist of our subsidiaries that operate REP businesses, and those subsidiaries’ obligations are guaranteed by GRE. On April 4, 2017, the borrowers borrowed $
4.3
million under this facility, which included $
1.8
million that was previously outstanding under the credit facility between REH and Vantage. The REH Credit Agreement with Vantage was terminated in connection with the entry into this credit agreement. The borrowers have provided as collateral a security interest in their receivables, bank accounts, customer agreements, certain other material agreements and related commercial and intangible rights. Outstanding principal amount incurs interest at
LIBOR
plus
4.5
% per annum. Interest is payable monthly, and all outstanding principal and any accrued and unpaid interest is due on the maturity date of April 3, 2020. The borrowers are required to comply with various affirmative and negative covenants, including maintaining a target tangible net worth during the term of the credit agreement. To date, we are in compliance with such covenants. In the
six months ended June 30, 2019
, there were no amounts borrowed or repaid under the line of credit. At
June 30, 2019
, $
2.5
million was outstanding under the line of credit and the effective interest rate was
7.02
% per annum.
On December 18, 2018, we entered into a Credit Agreement with JPMorgan Chase Bank (“Credit Agreement”) for a $
5.0
million credit line facility (“Credit Line”) which expires on
December 31, 2019
. The Company will pay a commitment fee of
0.10
%
per annum on 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
1.00
% 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
$
5.1
million
. As of
June 30, 2019
there were no amounts borrowed under the line of credit. At
June 30, 2019
the cash collateral of $
5.2
million was included in restricted cash—short-term in the consolidated balance sheet.
In the
six months ended June 30, 2019
, we received proceeds of $
1.0
million from the exercise of stock options for which we issued
141,150
shares of our Class B common stock. There were no stock option exercises in the
six months ended June 30, 2019
.
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. There were no repurchases under the program in the
six months ended June 30, 2019
and
2018
. At
June 30, 2019
,
6.9
million shares remained available for repurchase under the stock repurchase program.
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, results of operations, liquidity, capital expenditures or capital resources, other than the following. 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
June 30, 2019
, GRE had aggregate performance bonds of $
13.1
million outstanding.