Q3 2020 Genie Energy Ltd Earnings Call

Good day, and welcome to Genie Energys third quarter 2020 earnings call.

All participants will be in listen only mode.

Should you need assistance. Please teleconference specialist by pressing star key followed by zero.

And its presentation Genie Energys management team will discuss operational and financial results for the three month period ended September Thirtyth 2020.

Any forward looking statements made during this conference call either in the prepared remarks or in the Q and a session whether general purpose specific in nature are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates.

These risks and uncertainties include but are not limited to specific risks and uncertainties discussed in the reports that Genie energy files periodically with the FCC.

Genie energy assumes no obligation either to update any forward looking statements that they have made or may make or to update the factors that they.

That may cause actual results to differ materially from those that they forecast.

During their remarks management may make reference to adjusted EBITDA and pro forma revenue.

The pro forma income from operations for at Genie retail Energy International segment, both our non-GAAP measures.

Management believes that Genie energys measure of adjusted EBITDA and Genie retail energy International's pro forma results provide useful information to both management and investors the supplement Genie Energys.

I'm the Genie energy retail.

International segment core operating results.

The Genie energy earnings.

Earnings release includes a reconciliation of adjusted EBITDA to net income.

And on a pro forma Genie retail energy International results.

To their nearest comparable GAAP measures.

The earnings release is posted on the Investor Relations page of the Genie Corporation website <unk>.

The U.W.W. Dot Genie Dot com and has been filed on a form 8-K with the FCC.

After todays presentation by Genie Energys.

Management.

There will be an opportunity to ask question.

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Please note this event is being recorded.

I will now turn the conference over to Michael Stein Genie Energys Chief Executive Officer. Please go ahead Mr. Stein.

Thank you operator, welcome to Genie Energys third quarter 2020 earnings call.

Today, we will discuss our operational and financial results for the three months ended September Thirtyth 2020.

As in prior quarters, My remarks will focus on our operational results and key performance indicators Avi Goldin, our chief Financial Officer will follow with a deeper dive into the quarter's financial results.

Following Ali's remarks, we would be glad to take your questions.

The energy added 21000, net overseas and 22000 meters during the quarter inclusive of orbit energy. We ended the third quarter with the largest global customer base more history 443000 hours he's in 550000 views.

Our continued expansion has been driven by our long term investment in customer acquisition and geographic diversification across our RTT business.

This quarter, we again delivered growth in our growing global customer base, while returning cash to our stockholders and reporting improved bottom line results.

Let's start with our domestic retail supply business Genie retail energy.

She already added 7000, net overseas and a thousand meters during the quarter.

Jerry its gross domestic meter ads in the third quarter totaled 44000, 40000 meter increased from the previous quarter, but still a 32000 meter decreased from the pre COVID-19 level, we achieved in the third quarter of last year.

No relaxation of some public health measures over the summer enables us to resume modest levels of in person customer acquisition programs in some markets, we should be able to return to more robust growth in upcoming quarters. As we begin marketing in a few new utility territories provided that governments continue to relax koolaid selling restrictions.

Finally average trends all the 3.7% from 3.9% last quarter and from 5.3% in the year ago quarter decreases reflect our internal efforts to enhance customer retention the slower pace of gross meter adds since COVID-19, the pandemic related reductions in customer acquisition efforts by our competitors and the migration of.

Our book towards fixed rate plans, which typically experienced lower churn rates than variable rate plans do.

You always third quarter financial results were key to buy a surge in average electricity consumption per meter, which more than offset modest margin declines. This summer is warm weather and the transition to stay at home during the pandemic both significantly boosted residential demand.

At Genie International we again delivered strong customer base expansion. Despite the challenges of the COVID-19 impacted environment.

We added 14000, net Rcs and 21000 meters during the quarter.

At September Thirtyth, our international book held at 92 sales northeast and 182000 meters contributing a fifth of our goal our sees a third of our global leaders International growth was led by our businesses and Scandinavia in the UK, well pandemic restrictions severely constrained our ability to market in Japan.

One area, our Helsinki based supply business delivered an especially strong quarter and entered a significant new markets. We're in.

In the UK, where we operate to our orbit energy joint venture our metering RC counts, both increased more than 70% compared to the third quarter year ago, and generating revenue at an annual rate of more than $50 million in light of Orbitz rapid growth in promising potential we bought out our JV partner's interest for $1.7 million.

Last month and beginning in the first fourth quarter, we will consolidate orbitz results as a wholly owned subsidiary.

Adding to that size of the UK market the capable local management team in place and the favorable return on invested we've experienced to date orbit is on track to become EBITDA accretive within the next few years and to be a significant contributor to chase growth for many years to come.

At Genie oil and gas, we were able to get our testing and I'm sick Ness tenant drilling site in Israel's Golan Heights last week. The wells initial results were ambiguous and it is the last thing go guys exploratory program, where we can still find clear cut evidence of a commercially viable resource we could have test results. This month and if it was materially.

Just to share we will share it before turning the call over to hobby to review our financial results I again want to express my deep thanks to our employees, who continue to do a fantastic job working primarily from all our continued progress would not be possible without their dedication and flexibility take it away abhi.

Thank you Michael and thanks to everyone on the call for joining us this morning.

My remarks today cover our financial results for the three months ended September Thirtyth 2023.

Throughout my remarks, I compared the third quarter of 2020 results to the third quarter of 2019 so.

Focusing on the year over year, rather than the sequential comparisons removed some consideration to seasonal factors that are characteristic of our retail energy business.

Results. This quarter were again very strong we delivered significant top and bottom line improvements in the year ago quarter, primarily due to strong domestic electricity demand and growth in our international markets by the end of quarter, we enjoy significantly fortified balance sheet enhance liquidity.

Consolidated revenue increased in the third quarter of 2020 by 12% to 96 million.

Revenue at Genie retail energy or G., Ari, our domestic our EAP segment increased 10% to 89 million.

The significant increase in average per meter electricity consumption that Michael mentioned strong electricity demand more than compensated for decrease in profit per kilowatt hours sold at Genie retail energy International segment comprises our RFP operations outside of the U.S. revenue increased 92% to $5.8 million on meter growth.

And higher average revenue per meter.

Consolidated gross profit predominantly generated by Jerry increased 4% to $27 million a decrease in kilowatt hours sold offset a decrease in gross profit per kilowatt hour sales gross.

Gross margin decreased 240 basis points to 20.4% on the decrease in gross profit per kilowatt hour sold dictionary.

Our consolidated EPS, United spend decreased 3% to $19 million as domestic restrictions on face to face customer acquisition programs. During this fantastic slowed the pace of gross meter adds which is only partially offset by higher spending on customer acquisition international ex.

Equity in the net loss in equity method Investees was $146000 this quarter compared to $230000 a year ago quarter, reflecting our share the results achieved in Israel, we did not put additional cash into our UK joint venture in the quarter nor into your board.

As Michael mentioned following quarter end, we acquired our partner's stake in the UK venture for $1.7 million as a result, we will be reporting our UK financials as part of our consolidated results going forward.

Consolidated income from operations increased 22% to 8.5 million, while adjusted EBITDA increased 19%.

9.5.

The increases resulted primarily from higher average consumption per meter decreased domestic customer acquisition spend actually carry income from operations increased 14% to 12.3 million and adjusted EBITDA increased 13% to 12.6.

Loss from operations of GE International was 1.6 million adjusted EBITDA loss came in at $1 million, both unchanged from levels in the year ago quarter Consol.

Consolidated earnings per diluted share increased to 24 cents from 18 cents a year ago quarter.

Those if you were interested our earnings release provides pro forma revenue and income from operations for junior National inclusive of our UK businesses results.

Cash generated by Jerry further strengthened our balance sheet cash cash equivalents restricted cash increased to $49 million at September Thirtyth play 20 from $42 million to close the second quarter working capital increased to 55 million from 49 million.

To wrap up she's delivered another very strong quarter remains well positioned to continue delivering on that.

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

We will now begin the question and answer session.

To ask a question you May Press Star then one on your Touchtone phone.

If you are using a speakerphone please pick up your handset before pressing the keys.

What's driving your question. Please press Star then to you.

At this time, we will pause momentarily to assemble our roster.

Our first question comes from Aaron Shafter with Great Mountain Capital Management. Please go ahead.

A gentleman congratulations on yet another great quarter, especially the broker customer numbers.

Regarding your acquisition of all of the of.

Your partners. So they can orbit I did I get that the you're correctly that you believe it will be accretive to earnings within two years.

Yes.

Okay.

What was that.

[laughter] overall losses.

2021.

<unk>.

[laughter].

[laughter].

The business.

Yeah.

Two years.

Good and I noticed that <unk> natural gas meters have not been increasing anywhere like all your electricity meters I realize there are a small fraction of your overall business and your revenues and I'm wondering if you ever given any thought to want to leave me that segment to focus your your.

Our resources and your your energies elsewhere.

Yeah, Great question so.

Natural gas business.

It's definitely a little bit of a harder business.

Oh.

Sure basis.

[laughter] business, but we do believe that it provides important.

[noise] opportunity more.

And our sales people.

You don't want to have more to sell.

On the phone.

<unk>.

So we certainly do not have any intention.

You know, leaving that business.

You know any anytime soon.

Okay and as far as a I'll stick is concerned when you said you were started the latest woltosz and Doug. The initial what did you say the initial information was unclear.

And you expect to get results Oh, possibly by the end of this month when is the latest than you'd expect to get anything definitive.

Hi, unless there is some kind of.

She can get again.

Hey, <unk>.

Related to something completely out of our control which of course is as possible. These days.

You know it could be later, but we are actively even today working on the site.

'cause it saps in Israel, but you know by.

By now but.

Starting back up again on Sunday, we were you know yesterday before we are actively working on it.

And we're not we're not planning to send information to two.

You know to tell us what the results.

We are.

Acting she either <unk> or not.

[laughter].

Okay also you are producing well a lot of cash.

Large and a your cash on hand, and no working capital and I'm wondering if we should expect.

Any more buybacks were raising the dividend.

Yeah sure. We got we did a very small amount of buybacks.

We set the.

<unk> price on our Tenbfive.

Little bit lower than maybe we could up we try to be very opportunistic.

Our.

With that or buybacks.

And you know we did just raised the dividend only two quarters ago. So.

Everything is always on the table.

No media plans right now.

And finally on you mentioned that you were planning to go into some new.

New territories domestically the there.

There isn't a problem with the COVID-19 regulations.

Can you tell us which are those territories there are they are.

Yeah George.

Sure Joe utility territories in the states that we operate.

Okay utility as.

[laughter] starting process.

Good.

To start marketing there.

But above and beyond some of those individual utility territories.

So we are marketing.

Those were lucky got.

Starting in Georgia and Michigan.

[laughter].

I would say they'll be additive, but I don't expect.

Fundamental.

Yes.

Okay.

Certainly.

Right, It's just starting right things and wishing you guys continued success.

Thanks.

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Showing no further questions. This concludes our question and answer session and the conference call. Thank.

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