Q3 2019 Earnings Call
Good day, and welcome to Genie Energys third quarter 2019 earnings.
And it's presentation Genie Energys management team will discuss financial and operational results three month period.
Any forward looking statements made during this conference call.
These risks and uncertainties include.
Women to specific risks and uncertainties discussed in the reports the Genie energy files periodically.
We see.
Genie energy assumes no obligation to.
Any forward looking statements.
They have made or may make or update the factors may cause actual results to differ materially from those forecast during their remarks management may make reference to adjusted EBITDA, which is a non-GAAP measure management believes that Genie Energy's adjusted EBITDA provides useful information both management anybody.
That's right, excluding certain expenses, but may not be indicative of Genie energys all the relevant segment's core operating results.
The Genie energy earnings release, including a reconciliation of adjusted EBITDA to net income is on the Investor Relations page of the Genie Corporation website Www Dot Genie dotcom.
Earnings release, it's also been filed on form 8-K C C.
After today's presentation by Genie Energys management will be opportunity to ask questions to ask the question. You May proceed Star then 100 Touchtone phone to withdraw your question. Please press Star then too.
Please note that is being recorded.
I'd now like turn the conference over to Michael Stein Genie Energys Chief Executive Officer. Please go ahead Mr. Stein.
Thank you operator, welcome to Genie Energy's third quarter earnings call today, we will discuss our operational and financial results for the three month period ended September Thirtyth 2019, My remarks today will focus on our business strategy and operational results Avi Goldin, our Chief Financial Officer will follow with an overview of our financial results follow.
Now these remarks, we'll be glad to take your questions Genie energy continued its growth with a solid third quarter as a hobby will detail for you we increased revenue and gross profit substantially compared to the strong year ago quarter. This allowed us to ramp up our investment in growth opportunities, while still generating sufficient cash to further strengthen our balance sheet and return value to our stockholders.
Across the board I was very pleased with the quarter's results in the U.S. Genie retail energy added 11000, RC ease and 10000 meters to reached 329000, Rcs and 389000 meters at September Thirtyth.
Gross meter adds a gree totaled 76000, a significant increase from the 45000 meters. We added in the ergo quarter no below the pace of last quarter. When we added 91000 meters. During the quarter. We entered the largest deregulated electricity mark in the U.S., Texas with over 7 million addressable meters. Although we've just begun to acquire meters in alone. So.
Our state I'm excited about the opportunity as of today, we are already serving a few thousand overseas there and we expect continued growth in the coming quarters Genie retail energy International continued to expand in all three of our overseas markets. The UK, Finland, and Japan, we added an aggregate of 34000 meters in these markets during the quarter to reach 103.
3000 meters at September Thirtyth equivalent to 53000, Archie is we expect to continue to build our share in a disciplined fashion in each of these markets.
Within our Genie Energy services Division prison solar continues to perform well under its preferred supplier agreement with JP Morgan Chase during the quarter presume received new purchase orders from JP Morgan for panels generating 35 megawatts in aggregate. We expect these orders to impacted divisions financial results in the first half of next year.
Because of the breadth and sophistication of the JP Morgan solution presume is also well positioned to pursue additional clients with nationwide footprint and demanding design requirements, our strong balance sheet and disciplined approach to investing in growth initiatives enabled us to repurchase approximately 470000 shares of our outstanding class B common stock for $3.4 million over there.
Past three months in response to market conditions.
Through this repurchase and payment of preferred and common dividends, we've returned over $10 million to shareholders through the first three quarters of the year. Nevertheless, even with our significant investments in new customer acquisition. The U.S. an overseas we close the books this quarter with stronger cash and working capital positions. Looking ahead, we will continue to invest strategically and opportunities for growth.
Router business.
Now with more on this quarter's financial results, Here's our Chief Financial Officer Avi Goldin. Thank you Mike one thanks to everyone on the call for joining US. This morning My remarks today cover our financial results for three months ended September Thirtyth throughout my remarks, I compared to third quarter 2019 results to the third quarter 2018, focusing on the euro.
Every year, rather than sequential comparison removes reconsideration the seasonal factors that are characteristic of our retail energy business.
Third quarter includes the P. cooling season, and the highest levels of electricity consumption for the year.
Third quarter 2019 financial highlights include significant year over year topline growth balance by increasing investment in customer acquisition costs that led to income from operations and adjusted EBITDA at levels comparable city or go quarter EPS decreased slightly on increased provision for income taxes cash generation with strong finding the buyback.
As Michael mentioned and adding additional working capital liquidity to our balance sheet, well continue to support our quarterly preferred and common stock dividends.
Consolidated revenue in third quarter increased $85.7 million from $71.8 million as sales of electricity increased by $14.2 million to $81.5 million.
Genie retail energy, our domestic energy supply business contributed $81.6 million in revenue, an increase of $10.7 million compared to a year ago quarter increase largely reflects growth in our domestic electric customer base, which grew by approximately 46000 meters 52000, Rcs compared to the year go quarter as.
Was modest increases in electricity consumption per meter and revenue per kilowatt hours sold.
At Genie retail international the acquisition of what about in January it's subsequent expansion and growth and she Japan boosted revenue was $3 million on the quarter compared to nail in a year ago quarter.
Our Genie Energy services Division, which includes diversity, our energy brokerage business prison solar generated revenue of $1 million compared to 678000, a year ago quarter the growth in geometries customer base and improved margins on domestic electricity sales helped genie energy to achieve its highest level of consolidated gross profit.
Three years $26.4 million, an increase of $5.1 million from the prior year.
As Mike will discuss we invested in new meter additions in both our domestic and overseas retail energy businesses at higher rates near go quarter, driving an increase SGN egg sets to $19.4 million from $13.9 million as a result.
Of the 5.5 million dollar increase 1.5 is explained by a reversal of an accrual for legal expenses that took place in a year ago quarter. The balance largely reflects higher customer acquisition expenses geometry, and to a lesser extent agitare international partially offset by a decrease in noncash compensation expense the corporate.
Equity in the net loss adventures, which is comprised of orbit energy and our minority stake in that he was $238000 compared to $860000 in third quarter of 2018 did decrease is primarily because he's not required any impact from orbit during the quarter as we are fully valued our investment today as you provide additional cash Oregon.
Yes, it when we get impact our results.
Our consolidated income from operations was 6.9 $9. The same isn't a year ago quarter as the increasing gross profit was offset by higher FDIC expense. Likewise, adjusted EBITDA was unchanged for the year ago period at eight $9.
Our net income per share was 18 cents compared to 21 cents near go period as the provision for income tax increase by $1.2 million for four cents per diluted share our balance sheet continues to reflect the strength of our businesses at September Thirtyth. We reported 150.2, 9000 total assets, including 45.2 $9 in cash cash equivalent.
Unrestricted cash liabilities totaled $62.4 million on working capital totaled $46.5 million strengthen our balance sheet cash flows enabled us to use $3.4 million during the quarter to repurchase over 470000 shares 1.7% of outstanding share base.
Reported results for the second quarter, we've described how the weaker than expected period was largely resulting from factors not reflective of the underlying strength of our businesses that assessment has been born out this quarter, we delivered solid results, while investing significantly in growth and returning value to stockholders.
Finally, our board of directors, he get declared a quarterly dividend our common stock was seven assets a share.
To wrap up third quarter is characterized by strong revenue growth and improved margins balanced by the increased investment in domestic international meter acquisition.
We paid $2.4 million in dividends to holders of our common and preferred stock.
Actually returned initial $3.4 million through share repurchases, all while increasing working capital and liquidity now I will turn the call back to the operator for today.
Thank you we will now begin the question answer session to ask a question. You May proceed Star then one on your Touchtone phone.
Do you think speakerphone, please pick up there's a handset personally keys to withdraw your question. Please press Star then to at this time, a pause momentarily to assemble roster.
Our first question comes from Aaron Chapter with Great Mountain. Please go ahead.
Hi.
Great quarter, I think it's clearly after this quarter that the last quarter was an aberration and went to one time costs.
You mentioned in the release that you were entering the Texas market.
And I'm wondering if you can.
Give me any more information on how things are going in Texas, So far.
Yeah. Thanks, Thanks, Sharon so 100% agree with you.
Last quarter was certainly an aberration from our perspective as well.
You know as you pointed out we demonstrated that very clearly this quarter.
In terms of in terms of Texas I mentioned in my remarks that we already have a few thousand Archie each asset today.
Going forward, we're just going to talk about you know the meters in Archie each of the entire company and just include Texas.
In those counts.
What we're happy with with where it is right now and the trajectory, we see upward going forward.
Okay and.
You went over the the buyback go a little bit so quickly and I missed.
Some things in my notes and I was wondering if you could.
Go over that a little bit more detail a little bit slower.
Yes, So we bought back 470147 shares of the class B common stock and we paid a total of $3.4 million.
For for those shares.
Okay and did I hear you mentioned.
Really something about the preferred as well no. We did not we did not by by any of the preferred I think what you're referring to is we just mentioned that we paid out in the preferred dividends in the common dividends and along with the the buyback we return so far about $10 million worth of.
Cashback dish to shareholders, Okay alright.
And finally.
Im wondering if you can.
Give some guidance about what's going on with upsets in the one that London and back in the March call you'd originally expected.
That.
The equipment and the testing would be our hopes we don't button you ended the second quarter.
That got pushed back because of permitting.
And then you expected.
Sometime in the following quarter, but.
And then in the call in August .
The expectation with sometime in the middle of the fourth quarter and no. It said.
In your release.
Something about happening in the next two quarters.
You have the permit have you gotten the testing equipment.
Has that been received yet at all and they're not what's the delay.
And what more can you tell us on that.
It is fair fair fair questions.
It's been a little bit frustrating for us as well so just to just to recap and recall.
So as of.
We're not exact we're not really spending.
Any additional Monday.
While we wait to be able to do that that test just to clarify any ongoing operations any ongoing expenditures that we've been spending until this point.
During the delayed.
Part of the process.
Has not been a result of the delay its money we would have spent even if we did it on time because we have.
Certain contracts and agreements to employees and.
Some vendors that we have.
Payout, regardless, so that's point number one.
On the permitting absolutely right. We've got the permitting we have everything we need from a regulatory perspective.
To do that final test in terms of the equipment, we have almost all the equipment.
In country as well.
The thing that's holding US up is there was a little bit of they have a problem.
With the rig.
The rig.
Had experienced some issues.
Which has delayed delayed the ability right now that rig is working for other.
Doing drilling for content on a contract basis for other companies for water companies in Israel and as a result of the problem, which the rig to break down in the rig.
The work you're doing for other companies.
You know has delayed.
Our ability to use that rig for for our purposes, but again that is not our problem thats.
Thats that problem belongs to a t. drilling, which we still have a minority share of.
Yeah.
It's not something that.
That affects us significantly.
There is look I would call. It maybe a 50 50 chance that will still be able to do well test.
The end of this year, we just.
We've been in this position before as you pointed out where we said we think it's going to happen. This quarter, we think it's going to happen next quarter and it didn't happen. So.
We're trying to be a little bit more conservative on our timelines that we give and Thats why we said the next couple of quarters.
Okay great.
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This concludes our question and answer session and today's conference call. Thank you for attending today's presentation. You may now disconnect.