Q2 2020 Genie Energy Ltd Earnings Call

Please continue to stand by the confidence we'll begin momentarily if he would like to register for question you May press. The one followed by the for please remain on line.

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Good evening I Love.

Second quarter.

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No.

[laughter] signal a conference specialist.

All right there.

Pardon me.

Management team wasn't step up.

That's all.

Yes, I did pretty well.

Any forward looking.

During this conference call either in the prepared remarks.

That's why the general or.

Sure I suppose.

Certainties that may cause actual results.

No.

Right.

These risks and uncertainties include but are not limited.

With some certainty that support.

You filed periodically.

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Genie Energy assumes no obligation I did I think any forward looking statements that they have made for me I think the factors that may cause actual results could differ materially from those that they've worked out.

During the remarks medicines.

Adjusted EBITDA, Oh, well my revenue at school form I think I'm afraid.

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Retail energy and for that segment.

Our non-GAAP metric.

HM.

Adjusted EBITDA.

Oh, former result by premises.

Oh, that's <unk> supplement.

I'm really.

Not segment core operating result.

[laughter] energy earnings release includes a reconciliation of adjusted EBITDA net income I'm not the pro Formas.

No actually international adult.

Comparable GAAP measures.

Release is posted on the Investor Relations Page <unk> Corporation website.

We've done we've got news Dot Dot Com my husband filed on form 8-K with the FCC.

After todays presentation by Genie Energys management, there won't be I'll ask question.

The question My class, one then or on the Touchtone phone.

With all your question please press one.

Please note. This event is being recorded I will now turn the conference over to Michael Stein.

Executive Officer. Please go ahead of the sign.

Thank you operator, welcome to Genie Energy's second quarter 2020 earnings call today, we will discuss our operational and financial results for the three months ended June Thirtyth 2020.

As in prior quarters, My remarks will focus on our operational results and key performance indicators hobby Golden Our Chief Financial Officer will follow with a deeper dive into the quarter's financial results. Following Ali's remarks, we'll be glad to take your questions Genie energy generated the highest level of adjusted EBITDA any second quarter and the company's history and much improved fund.

Actual results compared to the difficulty ergo core operation. We are businesses also performed very well despite the challenges of the cold in 19 impacted environment.

Globally, our retail energy provider businesses, which generated 94% of a revenue.

64000, Archie is year over year, and 20000 sequentially to reach four to 21000 Rcs solid growth in both our domestic and international markets.

I will meter served increased by 88000 year over year and 4000 sequentially to 536000. The increases in meters served were driven by expansion at Genie retail international including those that are ordered energy joint venture in the UK.

Here in the U.S. Genie retail energy added 25000, Archie is year over year and 13000 sequentially to reach 346 3000 overseas domestic meters served declined by 4000 year over year and 10000 sequentially to 374000, the robust increase year over year in domestic Rcs relative to the.

Recent meters sure reflects our sustained focus on acquiring higher consumption meters warmer than average weather in the second after the quarter and the Colby 19, driven shift to work from home.

These factors combined increase electric for meter consumption by 26% compared to the you will go quarter.

Coven 19 pandemic has impacted several key aspects of Jefferies business operations within mix financial impact.

Our customer base is predominantly residential so we benefited from the increased demand for electricity as customers work from their homes Radnet offices on the other hand like other retail providers, we suspended our face to face customer acquisition programs in March as public health measures were implemented to combat Kobin 19, as a result gross meter adds decreased to four.

40000, this quarter from 69000, the prior quarter and for 91000, a year ago quarter. While we are intent on growing Jerry's metered base over the long term the declining meter rides has two positive short term impacts both customer acquisition expense and customer churn rates have decreased significantly.

Jerry's churn rate decreased to 3.9% in second quarter from 4.7% in the first quarter, that's partly because new customers tend to have higher rates are churn them longer tenured customers. So we would expect to see churn rates fall. After the pace of gross meter addition, slows, but also kogan 19 halted not just our own face to face customer acquisition programs.

But also our competitors programs this effectively eliminates a key churn driver.

Well, if you had a Jerry we expect to see a modest rebound in new your acquisition beginning in the third quarter public health restrictions have begun to ease in some of our markets, which allows us to resume face to face sales and marketing.

We'll also be entering some new utility utility territories.

Turning now to Genie retail energy International Rcs increased 40000 year over year and 7000 sequentially to 79000 meters served increased by 92000. Your year end 14000 sequentially to 161000 meters, we generated solid year over year growth in each of our overseas markets that you case.

And the Navy and Japan at June Thirtyth enjoy our international had 30% of our global global meters served nearly 18% of our global Rcs I'm very pleased by the progress we made to diversify our customer base also this quarter, we successfully leveraged lumos expertise and platform to enter the Swedish retail supply market and began.

Firing customers there at Genie Energy services Genie seller had a record quarter generating positive adjusted EBITDA for the first time, while diversity is close to breakeven.

As I mentioned last quarter, we're refining prisms always business model to more closely aligned with the current business environment.

G.S. recorded an impairment of $800000 in the second quarter related to the write down of an asset impacting income from operations, but not adjusted EBITDA.

I'd go gas, we have had to again postpone the final wall tests at Opex nest, Teligent nest and drilling site because of cold 19 restrictions and essential member of our technical team and not been able to get a visa I'm reluctant to offer a new timeframe for completion of the test when the execution depends on factors outside of our span of control, but I will provide an update for you when we.

Scott's our third quarter results before turning the call. The RV I want to highlight that given our continued favorable outlook and strong cash generation in recent quarters and after raising our dividend last quarter, we resumed repurchasing our shares in the second quarter, while continuing to pay the dividend at the increased rate and also Vic shout out to the Genie team that again.

Outstanding job growing our business and significantly enhancing our bottom line results all all working from on a big. Thank you. Then now here is genies CFO Avi goldin to discuss our financial results.

Thank you Michael on thanks to everyone on the call for joining US. This morning, My remarks today cover our financial results for three months ended June Thirtyth 2020.

Throughout my remarks, I'll compare second quarter 2020 results to the second quarter of 2019, focusing on the year over year, rather than sequential comparison removes some consideration the seasonal factors that impact our retail energy business.

Keep in mind at the second quarters, typically characterized by relatively low energy consumption. After the peak heating season first quarter and before the third quarters peak air conditioning months in July and August results are driven by the electric side of the business with minimal gas consumption.

The second quarter's financial results were strong, particularly in comparison to the you go quarter.

As you May recall, the second quarter of last year was heavily impacted by mild weather.

Mark to market within our hedge book, we expressed confidence that the business would rebound in our performance. Since then has justified that confidence.

And the trailing 12 month period. The company has achieved its highest level of consolidated operating income and adjusted EBITDA.

As Mike will discuss the covert 19 pandemic has resulted in mixed operating impacts increasing electricity consumption and while decreasing churn and slowing the pace of gross meter additions.

In addition, the decline in overall commercial industrial power consumption on markets has helped mitigate price volatility. Despite the increase in residential consumption as we've noted before predictable commodity price environment tend to favor our business model.

Solid revenue in the second quarter increased by $15.1 million to $76.1 million the increases powered by higher per meter electricity consumption, resulting from the general acquisition of higher consumption meters warmer weather than year ago quarter, an increase to residential electricity consumption from residential customers as part of the transition to work from home.

During cobot 19.

At Genie retail energy revenue increased by $12 million to $66.5 million electricity sales accounted for nearly all of the increase electricity consumption increased 35% for many years ago quarter more than offsetting a modest decrease in revenue per kilowatt hours sold.

Overseas at Genie retail energy international revenue increased by $2.2 million to $5 million, reflecting meter based growth low in Scandinavia and Genie Japan.

As discussed in our earnings release, we account for the result of orbit energy or joint venture operating to you can't using the equity method.

Results of operations are not consolidated in our revenue were gross profit.

During the quarter, we provided or but with an additional 1.5 million of capital, resulting in net loss of orbit energy that amount compared to a net loss of $867000 and your go quarter.

Our Genie Energy services Division increased revenue by and from $59000 to $4.6 million.

Consolidated gross profit in the second quarter more than doubled from your go quarter, increasing by $10.5 million to $19.5 million.

As I noted in my opening we had a difficult quarter a year ago. The operating environment was weak, although consumption or mark to market Lawson or forward hedge book this quarter, we benefited from the strong consumption levels at Genie retail energy and our consolidated gross margin rebounded to 25.6% from 14.7% in your go quarter.

The decrease in meter acquisition expenses year, we helped us to reduce consolidated <unk> expense by $2.3 million to $16 million.

The rebound in Jerry's margin and reduced customer acquisition spend helped drive a 12 million dollar improvement in our consolidated income from operations, which is $2.7 million compared to a loss from operations of $9.3 million in a year ago corridor.

Adjusted EBITDA reflects the equity net loss of equity method Investees, a $1.2 million was positive $3.5 million compared to negative $9.1 million year ago.

Earnings per share was six cents per diluted share per share compared to a net loss of 29 cents per share and you go quarter. Our balance sheet continues to provide us with strategic flexibility at June Thirtyth, we had $41.8 million in cash cash equivalents and restricted cash and working capital of $49.1 million.

Cash provided by operating activities in the second quarter was $16.4 million compact compared to cash used in operating activities or $3.1 million in the second quarter of 2019.

Swing is attributable in large parts of the change in your income as well as the unwind of cash collateral that was posted in the first quarter of 2020 that was returned in second quarter in support of the hedge book.

As Michael mentioned, we continue to be diligent about returning value to our shareholders. This quarter, we repurchased over 200000 shares of Genie class B common stock for $1.5 million.

To wrap up we met the various challenges at the corporate 19 environment to post a strong second quarter significantly improving on the financials also the same period, a year ago shrunk consumption per electricity meters and reduction in customer acquisition spend keyed substantial year over year improved bottom line results.

That concludes my discussion of our financial results now operator back to you for Q and <unk>.

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We will now begin the question and answer session to ask a question you May press. One then for on your Touchtone phone. If you are using his speakerphone. Please pick up you had said before pressing the keys to withdraw your registration. Please press. The one then three at this time, you will pause momentarily to assemble.

Our roster.

Our first question is from the line of Aaron Shafter from Great Mountain Capital Management. Please go ahead.

I ratio.

Situations on yet another strong quarter.

Not only was it a vast improvement over Q2 2019, but you've been built on Q1 of this year and what you set records for the company. So now that you're going to a year showing strong results from the two bad quarter last year.

Do you expect market to recognize that you need a stock is underpriced.

Hire and thanks to the good wishes and good to hear from you again.

We don't really know what's going to happen in the market. We think we should get a little bit of a boost.

But we'll wait and see how the market reacts and you know as as we discussed in previous quarters were.

And as we did this quarter will be diligent and ER in repurchasing opportunity comes or what.

Okay. So you you did repurchase more than 200000 shares.

And if you see opportunity, we can expect to a more repurchases.

What we tried to be strategic about it. So you know it all depends on the pricing and a you know where we think we are in the water.

Okay and during the call it was mentioned that.

You are going to going some entering some new territories.

Can you.

Specify which new territories, you're going to be artery.

I prefer not to to specify we'd like to keep that pretty pretty close but we have mentioned in the past that we you know we have been license in Michigan in Georgia and those are among the two states, where where we're going to start operating and then there are a bunch utility utility territories within that.

The states that we already operate.

Where we hadnt, yet had customers and started to get going there too.

Okay and firmly about a topic in the enough and well did I hear correctly that were we we won't get another update until you reported third quarter results.

I'll now we will have an update yeah I'm, hoping we'll have an update before then but I just want a you know said set expectations. We were really close we thought we were going to be able to do the test. This past a this past quarter. You know we thought we had all the visas in place or we were about to get all the.

He is in place and we're missing one approval and that's all because of the coated the cobot environment, we weren't able to get a visa for an essential worker and.

Sure as we get that we should be able to yeah. He's got to quarantine in his role for a few weeks and then we should be able to get rolling out.

We can we just wait until we get the approval.

So so we're just waiting on the visa for one worker and he gets the two weeks and.

Important team and then you should be ready to go is that whatever is there.

I understand that correctly.

That's that's all we're hoping that's what we've been told.

Okay. So the new Corona roads are whatever they're calling them and Israel announced that.

He wants to open up the.

The country to work at least from certain countries or air travel by here.

And then next week or two so.

I guess, we can we can only hope.

Right, we can all that's it.

Thanks again for raw.

For answering my questions and congratulations again, another great quarter.

All right take care, Thanks, a lot.

Again, if you have a question please press the one.

The four.

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Great. Thanks.

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