Genie Energy Ltd. Q1 2023 Earnings Call
Okay.
Good morning, and welcome to Genie Energy's first quarter 2023 earnings call.
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After todays presentation by Genie Energy's management, there will be an opportunity to ask questions.
Please note. This event is being recorded I will now turn the call over to Brian Segal of Hayden IR.
Thank you operator with me today are Michael Stein, Genie Energy's, CEO , and Avi Goldin Genie Energy's CFO , who will discuss operational and financial results.
Forward looking statements made during this conference call, whether general or specific in nature are subject to risks and uncertainties that may cause actual results to differ materially from those statements. These risks and uncertainties include but are not limited to those discussed in the reports that we filed periodically with the SEC.
<unk> assumes no obligation to update any forward looking statements that we have made or may make or to update the factors that may cause actual results to differ materially from those that we forecast.
<unk> assumes no obligation to update any forward looking statements that we have made or may make or to update the factors that may cause actual results to differ materially from those that we forecast.
During their remarks management makes reference to adjusted EBITDA, a non-GAAP measure.
I believe that it's a measure of adjusted EBITDA provides useful information to both management and investors that supplement our core operating results our earnings release, which is posted on the Jamie Dotcom IR page includes a reconciliation of consolidated adjusted EBITDA, which nearest comparable GAAP measures consolidated net income and income from operations.
For all periods presented in addition, adjusted EBITDA for applicable segments are reconciled in the earnings release to their respective segments income from operations for all periods presented.
I'll now turn the conference over to Michael Stein Genie, <unk>, Chief Executive Officer. Thank.
Thank you, Brian and welcome to Genie Energy's first quarter earnings call.
As those of you who have been following US know in 2022, we achieved remarkable financial results. Those results were driven by our ability to be nimble with customer acquisition and renewals, while our risk management team did an excellent job managing market volatility.
It was a banner year, but it came at a cost throughout 2021 and 2022, we saw the size of our customer base rate as due to extraordinary volatility in the wholesale energy markets, we scaled back our customer acquisition efforts. However, during that period, we repeatedly stated that when the volatility subsided, we would be ready to return to growth in the first quarter of <unk>.
'twenty three we delivered on that promise allow me to elaborate in the first quarter, our our EP business GRE increased its meter base by 63000, an increase of 22% over last year and the customer base grew by 92000, <unk>, a 35% increase from <unk>.
Last year.
With this increase in just one quarter, we were able to climb to within 3000 rfps of the highest domestic RPE counts in the Companys history. Meanwhile, our SG&A expense decreased compared to the year ago quarter.
Yeah.
Financial results were also excellent while not at the level of last year's Q1 extraordinary performance, we were able to deliver the next best Q1 bottom line results in <unk> history.
Looking ahead, we expect solid growth and strong financial results to continue in the second quarter.
Renewables or grew increased revenue, reflecting our increased services to third party customers. Additionally, we expanded our resource investment and support our vertically integrated strategy to develop and own solar power generation projects, which led to negative adjusted EBITDA for the segment of note we moved.
Closer to notice to proceed or MTP with construction on several projects and after the end of the quarter, we broke ground on our first project.
We're also moving toward gaining site control on more potential community solar and utility scale solar projects. In this quarter's earnings release, we are disclosing our current development pipeline, which consists of approximately 78 megawatts across 10 projects at different stages of the development process.
We intend to continue updating that table on a quarterly basis as we continue to win new projects and move them forward through the development cycle.
We are excited about this business opportunity and expect it to drive significant value in the future transitioning to our 2023 outlook. We are on target to generate consolidate adjusted EBITDA in the $40 million to $50 million range, well above our pre 2022 normalized 25% to $30 million range.
In addition, we expect to continue to significantly grow our customer base organically looking to the second quarter with wholesale energy cost stabilized at lower levels relative to the past year, we continue to see an outstanding arbitrage opportunity versus the incumbent utilities, we will continue to exploit this by adding customers, albeit likely at a lower growth rate than we saw in the first.
Quarter.
Looking to the full year for group, we expect to complete construction on several genie owned projects, while continuing to evaluate a large pipeline of potential opportunities. As a result, we intended for grew to become a major national player in the solar generation and consultative energy spaces in years to come.
In summary, we continued to deliver strong results in the first quarter and have taken several steps forward in our efforts to generate long term growth in our emerging renewables businesses and finally, we continue to fulfill our commitment to return capital to our shareholders.
Now I'll turn the call over to Avi for his discussion of our Q1 financial results.
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 March 31 2023.
Throughout my remarks, I will primarily compare first quarter 2023 results to the first quarter of 2022.
Sure moved from consideration the seasonal factors that are characteristic of our retail energy businesses.
The first quarter is typically characterized by seasonally elevated levels per meter electricity and gas consumption. As it includes the year's peak heating months and most of our RVP service areas.
<unk> first quarter financial results reflected our retail business is very strong underlying fundamentals and continued investment to build out a renewables platform.
Last year, the elevated level of volatility in global energy markets, we disclosed that we would generate stronger than usual margins Jerry by moderating our customer acquisition engine to reduce consumption and.
In addition to lowering our customer acquisition spend this enabled us to monetize a portion of our foreign commodity hedges and reduce our effective supply cost, but also had the impact of reducing the size of our customer book.
We said at the time that would work to rebuild our customer base when market conditions warranted and we were as Michael discussed remarkably successful in the first quarter.
92000 Rcs.
Yes, without increasing your acquisition expense by aggressively pursuing lower cost marketing channels.
From a balance sheet perspective, our strong operating results this quarter enabled us to further fortify our financial position, even as we continued to return value to stockholders through quarterly common stock dividends and redemption of our preferred stock.
Now, let's look at the quarter's results in more detail.
First quarter consolidated revenue increased 23% to 105 million from $86 million, a year ago quarter, driven by our retail businesses.
At GRE first quarter revenue increased by 21% to 101 million led by a 25% increase in electricity sales to $74 million.
Average revenue per kilowatt sold increased by 20%, reflecting higher market rates across virtually all of our retail electricity markets.
Although the mild winter contributed to a 10% reduction in per meter electricity consumption. Our meter growth helped boost overall kilowatt hours sold by four 5% compared to the year ago quarter.
Gas sales increased 10% to $27 million, an 11% increase in revenue per therm sold.
Our renewables, our first quarter revenue increased to $3 9 million from 2 million, primarily reflecting increased revenue from our community solar marketing business supplemented by sales growth of diversity, our energy brokerage business.
Consolidated basis in the first quarter decreased 29% to 33 million from $47 million in the first quarter of 2022.
At GRE gross profit decreased to 33 million from $47 million and gross margin decreased to 32% compared to 56%, reflecting the extraordinary nature of the ergo quarters environment that I discussed earlier.
Consolidated SG&A increased 9% to 22 million from $20 million.
At GRE SG&A decreased to $16 1 million from $16 4 million, although we acquired 85000 more meters. This quarter the year ago period much of that growth was generated through lower cost acquisition channels.
To continue to build our book as we head further into the year or any more stable in normalized market and we expect that our per meter acquisition expense will improve.
Corporate SG&A increased to $4 million from $2 7 million, primarily driven by non routine expenses incurred in the wind down of our former international operations with the residual impact of those operations now included within corporate.
Consolidated income from operations decreased to $11 3 million in the first quarter from 27 million and consolidated adjusted EBITDA decreased to $12 4 million from $28 million, reflecting the outsized performance in the first quarter of 2022.
At Genie retail operations was $16 4 million and adjusted EBITDA was $16 8 million, which reflects our strong first quarter result, albeit below last year's records of 30.2, and $30 5 million respectively.
Genie renewables income from operations and adjusted EBITDA was negative $1 1 million and negative 857000, respectively compared to negative 478000 of negative 468000, a year ago period.
The change reflects the increase in SG&A as we invested to grow our platform and expand our operational capabilities.
Genius diluted EPS was <unk> 54 per share and net income attributable Genie common stockholders of $14 3 million compared to EPS of <unk> 67 on net income attributable to Genie common stockholders of $17 5 million in the year ago quarter.
Net income in the quarter was positively impacted by one time gains within discontinued operations and at corporate.
Turning now to our balance sheet at March 31st cash restricted cash and marketable equity securities totaled $113 7 million an increase from $105 1 million at December 31st of last year.
Working capital was $142 4 million and non current liabilities totaled just $2 6 million.
To wrap up we kicked off 2023 with a strong first quarter highlighted by the financial performance at GRE, including robust margins and impressive customer growth.
We expect to continue to leverage our strong balance sheet to build a retail book and pursue other growth opportunities in both our retail and renewables businesses in the coming quarters, while further strengthening our balance sheet and continuing to take her valued to holders of our common stock now operator back to you for Q&A.
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