Q4 2019 Earnings Call
Natural gas territories in Michigan early this year will also expand our brand presence in Connecticut. And we are exploring an opportunity in Georgia. GRE is churn in the fourth quarter dropped 6.1% compared to 7.1% a year earlier in the year ago quarter. The churn rate included the impact of the expiration of the municipal aggregation deal backing out the impact from the event turn off in constant year-over-year at 6.1% the fact that we added over 100,000 meters more gross in 2019 than we did in 2018, but were able to maintain comparable rates of churn indicate wage were making good progress in our effort to extend average customer tenure at GRE International. We again invested significantly to expand our customer base at orbit energy our JV operating in the UK. We are hoping that orbit is now adequately capitalized to continue to grow and operate for the foreseeable future in Finland. Lumo and continue to successfully grow its book without requiring an additional cash infusion phone number.
a day operations in the
Fourth-quarter, we increased our ownership from 80% to 90% of the business by buying out. One of the company's Founders as we have said before we intend to leverage loomos infrastructure to address other countries in the Scandinavian market. And in fact, we expect to our choir our first Scandinavian customers outside of Finland this month, Jeanne, Japan has just begun to ramp up its customer acquisition program. And so far we are very early in the process still dead has produced solid results in our Genie Energy Services or EES business Hour Energy advisory service diversity achieved an important Milestone becoming net income positive off the fourth quarter and we look for it to be net income positive on a go-forward basis presume solar on the other hand has not met its targets and we have begun at streamlining its operations. And in order to return it to profitability on a Consolidated basis. We invested significantly to pursue growth opportunities and diversify our business in 2019 while still delivering strong financial results and returning value our shareholders dead.
Our strong performance and liquid balance sheet enabled us to repurchase an additional $262 thousand shares of our outstanding Class B common stock for two point two million dollars during the fourth quarter during the full Year's 2019. We repurchased 5.6 million dollars worth of stock or 2.7% of our common shares outstanding and paid an additional nine point six million dollars in dividends to our common and preferred stock holders.
We are proud of our record of returning valued our shareholders and look forward to continuing to produce significant growth and Cheryl the returns in 2020. Now with more on the quarter's Financial results. Here is our Chief Financial Officer Avi. Golden. Thank you Michael and thanks to everyone in the call for joining us this morning. My remarks should I cover our financial results for the three and twelve month periods ended December 31st, 2019 throughout my remarks. I compare the fourth quarter 2019 results to the fourth quarter of 2018 and the full year 2019 results to full year 2018 regarding a quarterly results focusing on the year-over-year rather than the sequential comparison removed from consideration. The seasonal factors characteristic of our Retail Energy business for fourth-quarter is not older quarter with relatively modest levels of parameter consumption falling between the peak cooling season, the third quarter and the peak eating season in the first quarter picking up where Michael left off.
Fourth quarter's financial highlights included a record level of Revenue significant year-over-year revenue and gross profit increases and increased investment in customer acquisition costs, especially in our own National markets income from operations and adjusted ebitda improved substantially from the year-ago quarter EPS decreased slightly on an increased provision for income taxes, Can you perform it's allowed for the additional fourth-quarter buyback that Michael mentioned and enabled us to continue our quarterly preferred and common stock dividends.
Consolidated Revenue
In the fourth quarter increased nineteen point two million dollars a year every year 282 million dollars the highest level of Revenue. We have generated any fourth quarter in our history. The increase is primary results of growth in our domestic meter base and a shift to higher consumption meters as well as the meter growth at genie in retail International full-year Revenue increased by $35 a month to $350 a 2019 reflecting increased Revenue at both Tre International and Cheney Retail Energy in the fourth quarter GE energy our domestic energy supply business contributed seventy-four million dollars of Revenue and increase of 15.2 million dollars compared to the year ago quarter reflecting growth in our meter base and a shift or consumption meters.
And Cheney retail International the acquisition of lumo in January month and full-year revenue of 16.6 million dollars GRE International had no Revenue in 2018 as discussed our earnings release we account for the results of orbit energy are joining a property in the UK using the equity method and its results of operations are not Consolidated in our revenue for profit and sg&a.
Are Genie Energy Services Division generated revenue of 2.1 million dollars compared to $4 in the year-ago quarter to decrease reflects the timing of delivery of solar panels within the prison solar business back to solid gross profit the fourth quarter increased 7.2 million dollars to $22 substantially all of it generated at Genie Retail Energy as a result of increased electricity consumption and DMV electricity Supply costs for the full year 2019, gross profit increased six point four million dollars to eighty two point nine million dollars primarily because of increased per meter electricity consumption engine driven by the shift to higher consumption meters in the fourth quarter increased rates of customer acquisition and both Tre and GRE International to have a four million dollar increase in consolidating expect to nineteen point two million dollars, the full-year increase in sg&a expense was ten point nine million dollars to seventy two point five million dollars.
According the net loss Equity method investees, which is comprised of orbit energy in our minority stake in that speed increase the two point seven million dollars in the fourth quarter from one point three million dollars in the fourth quarter of 2018 the increase reflects the timing of additional Capital we provided to finance orbit energies leader acquisition program the full year net loss increased one point four million dollars to 4.8 million. We are hopeful that orbit energy now have sufficient Capital cleaned up its leader acquisition program during 2020 are Consolidated income from operations was two point three million dollars compared to a loss from operations of five or fifty thousand a year ago quarter the increase in gross profit Center by Virginia Retail Energy was only partially offset by increases in g r e s customer acquisition expense and the increase loss in equity of equity method of Estes the full year 2019 income from operations was nine point eight billion dollars a year-over-year decrease of 2.2 million dollars.
adjusted ebitda for the quarter was
816 thousand dollars an increase of one point three million dollars compared to the year ago quarter full your adjusted ebitda decrease 7.8 million dollars to ten point 1 million dollars primarily as a result of wage increase customer acquisition expense at Greentree International. We recorded no net income in the fourth quarter compared to EPS of $0.47 a year ago quarter when we recorded a one-time $14,000 benefit from income taxes. The tax benefit was also the main driver behind historically High EPS of $0.83 per share of 2018 EPs and 2019 was $0.10 off our balance sheet remains drop December 31st. We reported a hundred fifty six point two million dollars in total assets including thirty eight point six billion dollars in cash cash equivalents and restricted cash liabilities total 75.3 million dollars, which is 3.2 million dollars were non-current and working capital totaled 4.8 million dollars.
The strength of our balance sheet and underlying performance enabled us to again repurchase shares in the fourth quarter for the full year. We brought back 2.7% of our outstanding common stock for five point, six million and Hayden additional 9.6 million and dividends to Holders of our common and preferred stock and speaking of dividends our board of directors again declared a quarterly dividend are common stock of 7 and 1/2 cents a share down to wrap up. Fourth quarter revenue is the highest for the shoulder quarter in the company's history and a significant increase from the year-ago largely because of our investments in meter base growth new markets and higher consumption meters, of course project is robust, but its impact is balanced by significantly higher rates of new customer acquisition nevertheless income from operations and adjusted ebitda improve significantly compared to the year ago quarter, this caps off the 2009 successfully balance computer growth with underlying financial performance that was in line with expectations. Now, I will turn the call back to the operator for Q&A.
We will now begin the question-and-answer session to ask you a question. You may press * then 1 on our touch-tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press * then two.
At this time, we will pause momentarily to assemble our roster.
And our first question will come from Aaron Shafter with great Mountain capital.
Congratulations gentlemen on quarter of a good solid customer acquisition and a great year of strong customer growth. I'm wondering if everyone's talking about the coronavirus if you can tell us if if there's any impact if any of coronavirus on Thursday and Ginny's operations and earnings
Hi. Hi Aaron. Thanks. Thanks for the for calling in and thanks for the question. We have not yet seen any any material impact from the coronavirus on on our activities so far this year twenty-twenty object that that could change we have included a few, you know business related risks, you know due to Corona fiber in our in our tent Kate and you know, one of them would be, you know, potentially seeing a Slowdown in door-to-door sales. Other than that, I can't think of of anything. But like I said to date we haven't seen a Slowdown in sales.
okay, and and
And the coronavirus is closed a lot of fear in the market. It's a sell-off in the stocks in general. I I tribute at least the the sell-off ingenie mm that type of fear you mentioned. I talked about the stock buyback program. I'm wondering if you can tell us anything about future stock BuyBacks if any or planned and that's how you see the decline in stock is an opportunity to to purchase shares back cheaply.
So we we we do have the authority from the board to continue our buyback program and you know, we'll we'll continue to assess you know, as as things go on in the market as you know, we did buy back a lot in the year of 2019 June and you know, one of the one of the the goals of twenty-twenty is to to build back our our cash hoard, you know put it on the the upward trajectory again, so I would say there's always a possibility that we're we're doing BuyBacks, but you know today as of this time we are not doing one right now.
And finally, I'm wondering if you can share anything else anything more about affect the the press release reads the same much except it's expected the first half of 2020 on the last call you explain that the uh, the drill that was being used by a t. Had been had some problem and that was why the program really couldn't begin to the testing program. I'm wondering if you could tell us anything more.
Yes, so that that's true that the drill was experiencing some some delays and and the well test was pushed off as a result. We do still believe that we're going to get the well test done before the first half ends meaning in the second quarter.
And you can't be give us any more than than than just that or you want to do a conscious. I'm hesitant to just because you know, we've experienced all these delays and you know, we were hoping to get this done a long time ago and and so a number of factors, you know permitting
Scheduling with with some of the people who use the land during the you know throughout the year name the Army and then you know the rig having some you know some trouble. I mean, I'm just hesitant to put anything definitive but we we really do believe that it's that we should get it done in a second Corps. Okay, so my questions
Again, if you have a question, you can press * 1 and our next question comes from my time with Noble Financial.
I think that Michael you made some comments about how the churn rate was. Perhaps a little abnormally large this time and I didn't quite catch the reasoning behind that could you repeat them know so so I think I was I think I mentioned that last year it was abnormally High last years of normal because of a regulatory requirement to drop some customers. Sorry not as that wasn't the regulatory requirement. We adjourn was abnormally High last year because we had an aggregation deal an aggregation deal is when life is a pouty opt-in to to take service from us and it's a it's a fixed time period that we serve them for and when that time. They all drop at once so when you normalize for for for them meaning when you exclude them or churn rate in the fourth quarter of 2018 and our turn red in the fourth quarter of
2019 was was just about even and then there was a small impairment a Goodwill not a big number, but can you just can't explain what that was?
Sure, so that was within the within prison solar from the acquisition as Michael referenced the business office. I'll you know is something that we're we're excited about hasn't been performing as expected and we're we're working on some future planning that that required a a small Goodwill impairment.
Yeah you as long as we're talking about present, you mentioned streamlining operations. Can you expand upon what that exactly means?
Sure, we've we we essentially just tried to cut some expenses. We parted ways with the CEO trying to bring in a different vision for for the business, you know, so on a go-forward basis the expenses should be lower and hopefully we'll focus on you know on on Thursday bread and butter of sales.
Okay, and then finally just one kind of gauge your comfort level on the the losses that the JV is certainly understandable as you expand into new area. How do you see those turning off to gain? Is it a question of one-time cost as you enter new areas or brand recognition to be established for a year or more a case that you expect them to be slow gradual jeans towards profitability.
So so the the international business is I guess I'll speak to them as a unit not just the JV if that's okay. The international says generated on a pro-forma basis meaning when you were if you were to consolidate orbit in the UK business into International the business did just north of forty seven billion dollars of Revenue basically more or less from a standstill at the beginning of 2019 month. So, you know, we're we're pretty excited about about the potential and you know, the rapid growth that we've been able to achieve their you know, in in in the faith in our business the retail supply business, you know, acquiring customers is expensive and you need a a critical mass of customers in New Jersey.
a restriction
To help offset, not just the G&A costs but the additional acquisition costs you do as you try to grow the business. So of of the three-month, you know of of the three international projects that we have, you know, they're all different. They're all like different, you know, they're kind of operating at different Paces. I would say the the UK business and the Scandinavian business have some some critical mass that will help them achieve profitability or a little bit faster, but we are hoping that that in the UK, we turned the corner toward profitability towards the end of the year. We expect the Scandinavian Market to be profitable this year and and Japan we we expect to continue investing.
Okay, that's helpful. Thank you for your answers. Sure.
This concludes our question-and-answer session and conference call. Thank you for attending today's presentation. You may now disconnect.