Q4 2023 Genie Energy Ltd Earnings Call
Good morning, and welcome to Genie Energy's fourth quarter and year end 2023 earnings call.
Operator: Good morning and welcome to Genie Energy's fourth quarter and year-end 2020. Until the Q&A portion of the call, all participants will be in a listening mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by. After today's presentation, there will be an opportunity for questions.
Till the Q&A portion of the call all participants will be in a listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
After todays presentation by Genie Energy's management, there will be an opportunity to ask questions.
Brian S. Siegel: Turn it on, turn it out, turn the call on. 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. Any 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 file periodically with the SEC.
Please note this event is being recorded.
I will now turn the call over to Brian Segal of Hayden IR.
Yeah.
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.
Brian S. Siegel: Genie is under no obligation to update any forward-looking statements that it has made or may make or to update the factors that may cause actual results to differ materially from those that we forecast. In their remarks, management makes reference to adjusted EVDA, a non-GAP measure. Management believes that it's a measure of adjustability that provides useful information to both management and investors that supplements our core operating results. Our earnings release, which is posted on the genie.com IR page, includes a reconciliation of consolidated adjusted EBITDA to its nearest comparable gap measures, consolidated net income, and income from operations for all periods presented. In addition, adjusted EBITDA for applicable segments is reconciled in the earnings release to their respective segments' income from operations for all periods presented. I will now turn the conference over to Michael Stein, Genie's Chief Executive Officer. Thank you, Brian.
<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 Jeremy.
Jeremy or their remarks management makes reference to adjusted EBITDA, a non-GAAP measure.
Magic believes that it is a measure of adjusted EBITDA provides useful information to both management and investors.
Our core operating results.
Earnings release, which is posted on the Jamie Dotcom IR page includes a reconciliation of consolidated adjusted EBITDA to its 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 <unk>.
Operations for all periods presented.
I'll now turn the conference over to Michael Stein Genie, <unk>, Chief Executive Officer.
Thank you, Brian and welcome to Genie Energy's fourth quarter earnings call I'm happy that we achieved record revenue for the fourth quarter and full year 2023, while exceeding our adjusted EBITDA guidance with $57 million for the full year. This achievement was a result of the extraordinary efforts of our team and several strategic moves we made over the <unk>.
Michael M. Stein: Welcome to Genie Energy's fourth quarter earnings call. I'm happy that we achieved record revenue for the fourth quarter and full year 2023 while exceeding our adjusted EBITDA guidance with $57 million for the full year. This achievement was the result of the extraordinary efforts of our team and several strategic moves we made over the course of 2022 and 2023 that took advantage of the volatility and the global energy market. We are extremely pleased with the performance of the company as we accomplished our 2023 goal of materially growing the size of our customer book while establishing a new baseline of financial performance. At GRE, we ended the year with 361,000 customers and 350,000 RCPs, representing increases of 31% and 34%, respectively, over the prior year end. Our success in aggressively growing our customer base in the early part of the year drove record levels of annual consumption, enabling record revenue. sequentially, our customer accounts decreased somewhat, reflecting the expiration of a customer aggregation deal in Massachusetts.
Course of 2022, and 2023 that took advantage of the volatility in global energy markets.
We're extremely pleased with the performance of the company as we accomplished our 2023 goal of materially growing the size of our customer book, while establishing a new baseline of financial performance.
At GRE, we ended the year with 361000 customers and 350000, Rcs, representing increases of 31% and 34% respectively over the prior year and our success in aggressively growing our customer base in the early part of the year drove record levels of annual consumption any.
Billing record revenues sequentially, our customer counts decreased somewhat reflecting the expiration of a customer aggregation deal in Massachusetts.
Michael M. Stein: At GRU, we closed on the acquisition of a 9.4 megawatt operating portfolio during the quarter, our first acquisition of its kind. The IRR in this transaction was especially attractive for an operating portfolio, and we felt it moved our strategy forward. Note that as we grow this business, we intend to be opportunistic about potential acquisitions at all stages of the development cycle, including operating assets. www.genieenergy.com. With regard to our development pipeline, we advanced on our projects in development and saw the addition of new projects while others dropped out due to lack of viability. This is not uncommon, given that many pipeline projects are early stage opportunities where we are still in the process of acquiring site rights.
It grew we closed on the acquisition of a nine four megawatt operating portfolio during the quarter, our first acquisition of its time.
The IRR in this transaction is especially attractive for an operating portfolio and we felt and moved our strategy forward note that as we grow out this business, we intend to be opportunistic about potential acquisitions at all stages of the development cycle, including operating assets.
With regards to our development pipeline, we advanced on our projects in development and saw the addition of new projects, while others dropped out due to lack of viability. This is not uncommon given that many pipeline projects are early stage opportunities, where we are still in the process of acquiring sat rates. However, we recently invested in our team and capabilities.
Michael M. Stein: However, we recently invested in our team and capabilities here and believe this will help us to build a larger solar pipeline and bring more projects to completion. As a reminder, our solar project development strategy is intended to be a long-term value driver for the company. Developing projects from site rights acquisition through construction and into operations can, in some cases, take years.
Here and believe this will help us to build a larger solar pipeline and bring more projects to completion.
As a reminder, our solar project development strategy is intended to be a long term value driver for the company developed.
Developing projects from site rights acquisition through construction and into operations and in some cases take years. However, we are focused on the identification and development of projects with robust return potential that we expect will provide growing recurring revenue streams to the company for many years to come.
Michael M. Stein: However, we are focused on the identification and development of projects with robust return potential that we expect will provide growing recurring revenue streams to the company for many years to come. Building off our strong performance in 2023, we are targeting $40 to $50 million in company-wide consolidated adjusted EBITDA for 2024. This represents a significant increase from our pre-2022 normalized adjusted EBITDA range of $25 to $30 million, even after allowing for our planned investment in GRU. Our higher expectations reflect our expanded customer base at GRE, our pivot to operating exclusively in domestic retail markets, and our focus on continuously enhancing our analytical and operational capabilities. Our 2024 projections also include continued investment in new retail customer acquisition. While wholesale energy costs remain at lower levels, we will continue to pursue acquisition opportunities created by the higher legacy cost-based rates of certain income and utilities.
Building off our strong performance in 2023, we are targeting $40 million to $50 million and company wide consolidated adjusted EBITDA for 2024. This represents a significant increase from our 2022 normalized adjusted EBITDA range of $25 million to $30 million, even after allowing for our planned investment in group.
Our higher expectations reflect our expanded customer base at GRE, our pivot to operating exclusively in domestic retail markets and our focus on continuously enhancing our analytical and operation capabilities.
Our 2024 projections also include continued investment in new retail customer acquisition, while wholesale energy costs remain at lower levels. We will continue to pursue acquisition opportunities created by the higher legacy cost based rates of certain incumbent utilities. This organic targeted growth strategy should enable us to expand our meter base.
Michael M. Stein: This organic targeted growth strategy should enable us to expand our meter base cost effectively, albeit likely at a lower growth rate than we saw in 2020. This year at GRU, we will continue to move forward in the completion of our Perry, New York, and Lansing, New York solar farms. Additionally, we expect our upgraded project development team to continue to expand our pipeline and move existing projects ahead expeditiously.
Effectively, albeit likely at a lower growth rate and we saw in 2023.
This year at group, we will continue to move forward and completion of our power in New York Atlanta, New York Solar farms. Additionally, we expect our upgraded project development team to continue to expand our pipeline and move existing projects ahead expeditiously.
Michael M. Stein: Our DiversiG business continues to grow at accelerated levels and provides recurring revenues. We expect that DiversiG and our other third-party services businesses can modestly enhance our growth and profitability in the years to come. To wrap up, we delivered another year of strong operational and financial results while continuing to position ourselves to create incremental median to long-term value with our solar pipeline. Now, I'll turn the call over to Avi for his discussion of our financial results. Thank you, Michael.
Our diversity business continues to grow at accelerated levels and provides recurring revenues, we expect the diversity in our other third party services businesses.
Modestly enhance our growth and profitability in the years to come to wrap up we delivered another year of strong operational and financial results, while continuing to position ourselves to create incremental medium to long term value with our solar pipeline now I'll turn the call over to Avi for his discussion of our financial results.
Thank you Michael and thanks to everyone on the call for joining us this morning.
Avi Goldin: And thanks to everyone on the call for joining us this morning. My remarks today cover financial results for the 3 and 12 months ended December 31st, 2020. Throughout my remarks, when I discuss the quarterly results, I will compare the fourth quarter of 2023 to the fourth quarter of 2022 to remove seasonal factors that impact our retail energy. The fourth quarter is typically characterized by seasonally reduced levels of per meter electricity and gas consumption as it falls between the third quarter's peak cooling months and the first quarter's peak heating months.
Should I cover our financial results for the three and 12 months ended December 31 2023.
Throughout my remarks, when I discuss the quarterly results I will compare the fourth quarter of 2023 to the fourth quarter of 2022 to remove consideration the seasonal factors that impact our retail energy business.
Fourth quarter is typically characterized by seasonally reduced levels of per meter electricity and gas consumption as it falls between the third quarter's peak cooling months and first quarter's peak heating months.
Avi Goldin: Genie's strong fourth quarter and full year 2023 financial results were highlighted by record revenue, solid adjusted EBITDA generation, and significant further strengthening of our balance sheet, all while continuing to return value to our common stockholders through our quarterly dividends. Before we turn to the quarter and full year results, please note that, as we previously disclosed, we recorded a non-cash charge of $45.1 million in the fourth quarter, reflecting the loss reserved by our new captive insurance. The charge didn't impact adjusted EBITDA, but it's reflected in our GAAP income from operations and bottom line. To provide investors with a consistent perspective on the underlying performance of our business, we are providing non-GAAP earnings and earnings per share. That number excludes the impact of the loss. Now, let's look at the results.
Judy strong fourth quarter and full year 2023 financial results were highlighted by record revenue solid adjusted EBITDA generation and significant further strengthening of our balance sheet, all while continuing to return value of our common stock holders through our quarterly dividend.
Before we turn to the quarter and full year results. Please note that as we previously disclosed we were.
Accorded a noncash charge of $45 1 million in the fourth quarter, reflecting the loss reserve by a new captive insurance subsidiary the charged didn't impact adjusted EBITDA, but as reflected in our GAAP income from operations and bottom line results.
To provide investors with a consistent perspective on the underlying performance of our business, we are providing non-GAAP earnings and earnings per share.
That excludes the impact of the loss reserve.
Now, let's look at the results.
Avi Goldin: 4th quarter consolidated revenue jumped 29% to $105 million from $81 million a year earlier, and GRE fourth quarter revenue increased by 28% to 98 million from 77 million a year ago, also a fourth quarter. The increases were driven by the powerful year-over-year growth in our meter base that Michael discussed, as well as increased consumption per meter. The resulting increasing consumption was partially offset by decreases in the average price per unit sold for both electricity and natural gas.
Fourth quarter consolidated revenue jumped 29% to $105 million from 81 million a year earlier.
At GRE fourth quarter revenue increased by 28% to $98 million from 77 million a year ago.
Also a fourth quarter record.
The increases were driven by powerful year over year growth in our meter base that Michael discussed as well as increased consumption per meter.
The resulting increase in consumption was partially offset by decreases in average price per unit sold for both electricity and natural gas.
Our renewable segment fourth quarter revenue increased 48% to $6 5 million from $4 4 million driven by growth of energy brokerage and community solar marketing ventures.
Avi Goldin: In the renewable segment, fourth quarter revenue increased 48% to $6.5 million from $4.4 million, driven by growth in the energy brokerage and community solar market. Full Year 2023 Consolidated Revenue Increase 36% 429,000,316,000 In 2020, at GRE, full year revenue increased 35% to $410 million from $304 million, largely due to our successful efforts to expand GRE's customer base. At Group, full year 2023 revenue climbed 63% to $18.8 million from $11.6 million, again driven by expansion of our energy brokerage and community solar market. Turning now to gross product, consolidated gross profit in the fourth quarter decreased 3% to $34 million. The decrease is due to lower gross profit per unit of electricity and natural gas sold, which is only partially offset by the growth of GREs.
Full year 2023, consolidated revenue increased 36% to $429 million from $316 million in 2022.
At GRE full year revenue increased 35% to $410 million from $304 million largely due to our successful efforts to expand <unk> customer base.
That group full year 2020 revenue from 63% to $18 8 million from $11 6 million again, driven by expansion of our energy brokerage and community solar marketing businesses.
Turning now to gross profit.
Consolidated gross profit in the fourth quarter decreased 3% to $34 million. The decrease was due to lower gross profit per unit of electricity and natural gas sold which was only partially offset by the growth in gre's customer base.
Avi Goldin: For the fourth quarter, GRE's gross profit decreased 5% to $32.5 million, while GRE's gross profit margin decreased to 33% from $44.5 million, and fourth quarter gross profit more than doubled to $1.1 million from $500,000 in 2000. Full Year 2023 Consolidated Gross Profit was $146 million, a 6% decrease from the record $155 million we achieved in 2020. Full Year 2023 consolidated gross profit was 146 million, a 6% decrease from the record 155 million we achieved in 2020. Jerry's gross profit dipped 6% to $143 million, while Gru's gross profit climbed 58% to $2.8. Increased rates of customer acquisition and personnel costs drove quarterly and full year increases in consolidated SG&A. For the fourth quarter, SG&A increased 32% to $22.7 million from $17.2 million. For the full year, SG&A increased 22% to $91.1 million from $75. Solidated loss from operations in the fourth quarter was $34.2 million, compared to income from operations of $15.5 million a year ago. The decrease primarily reflects a $45.1 million non-cash insurance charge and higher SG&A.
For the fourth quarter Jeremy's gross profit decreased 5% to $32 5 million well, Jeremy as gross profit margin decreased to 33% from 44.4.
At grew fourth quarter gross profit more than doubled to $1 1.500 million in 2022.
Full year 2023, consolidated gross profit was $146 million, a 6% decrease from the record 155 million we achieved in 2022.
Full year 2023 consolidated gross profit was 146 million% to 6% decrease from the record 165 million, we achieved in 2020 to.
Jeremy It's gross profit, it's 6% to $143 million, while Bruce gross profit climbed 58% to $2 8 million.
Increased rates of customer acquisition and personnel costs drove quarterly and full year increases in consolidated SG&A.
For the fourth quarter, SG&A increased 32% to $22 7 million from $17 2 million for the full year SG&A increased 22% to $91 1 million from $75.
The consolidated loss from operations in the fourth quarter was $34 2 million compared to income from operations of $15 5 million a year ago quarter.
The decrease primarily reflects the $45 1 million noncash insurance charge and higher SG&A costs at.
Avi Goldin: At GRE, fourth-quarter income from operations decreased 27% to $15 million from $20.6 million, reflecting both the higher margins we were able to capture in 2022 as well as the higher rate of investment in customer acquisition in the fourth quarter of this year. At Guru, the fourth quarter launch from operations widened to $1.3 million from $1 million a year earlier, reflecting the upgrades we have made to our operational teams and capabilities, as well as investment in solar projects. Full year 2023 consolidated income from operations was $10 million compared to 77.8 million in 2022. The results included the impact of the assurance reserve in 2020 and 2022 exceptional retail margins and our investment in meter acquisition. At GRE, for the full year 2023, income from operations decreased 22% to $71.9 million, compared to $92.6 million in 2020. The full year loss from operations was $5.8 million compared to $3.5 million in 2000.
At GRE fourth quarter income from operations decreased 27% to $15 million from $20 6 million, reflecting both the higher margins, we were able to capture in 2022 as well as the high rate of investing against customer acquisition in the fourth quarter of this year.
Actually the fourth quarter loss from operations widen to $1 3 million from 1 million a year earlier, reflecting the upgrades, we have made to our operational teams and capabilities as well as investment in solar project development full.
Full year 2023 consolidated income from operations was 10 million compared to $77 8 million in 2022. The results included the impact of the insurance reserve in 2023, 2020, twos exceptional retail margins and our investment in meter acquisition. This year.
At GRE full year 2023 income from operations decreased 22% to $71 9 million compared to $92 6 million in Q2 2022.
The full year loss from operations was $5 8 million compared to $3 5 million in 2022.
This quarter consolidated adjusted EBITDA was $11 4 million compared to $18 5 million a year ago quarter and for the full year 2023, adjusted EBITDA was $58 2 million compared to $83 2 million in 2022.
Avi Goldin: The quarterly consolidated adjusted EBITDA was $11.4 million compared to $18.5 million a year ago. And for the full year of 2023, adjusted EBITDA was $58.2 million compared to $83.2 million in 2008. For the fourth quarter of 2023, Genie's loss per diluted share was $0.90 compared to diluted EPS of $0.59 a year earlier. In 2023, full-year diluted EPS was $0.74 compared to $3.26 in 2008. Our fourth-quarter non-GAAP diluted EPS was $0.37 compared to $0.59 a year earlier, and our full-year non-GAAP EPS was $2.06 compared to $3.26 in 2008. Turning out of the balance. At December 31st, cash, cash equivalents, long and short term restricted cash, and marketable equity securities totaled $163.4 million, an increase of $19.6 million during the quarter. Working capital was $131.6 million, and non-current liabilities totaled $47.8 million.
For the fourth quarter of 2020 through genius loss per diluted share was <unk> 19, compared to diluted EPS of <unk> 59 cents a year earlier in 2023 full year diluted EPS of <unk> 74, compared to $3 26 in 2022.
Our fourth quarter non-GAAP diluted EPS was <unk> 37, compared to 59 cents a year earlier.
Full year, non-GAAP, EPS was $2.06 compared to $3.26 in 2022.
Turning now to the balance sheet at December 31, cash cash equivalents long and short term restricted cash and marketable equity securities totaled $163 4 million, an increase of $19 $6 million during the quarter working capital was $131 6 million and non current liabilities totaled $47 8 million.
Over the course of 2023, J returned over $20 million to shareholders through dividends and repurchases of common stock and redemptions of the remaining outstanding shares of preferred stock.
Avi Goldin: Over the course of 2023, Genie returned over $20 million to shareholders through dividends for purchases of common stock and redemptions of the remaining outstanding shares of preferred into 2024. We expect another strong year with solid customer growth across all of our businesses. We are starting the year with a significantly larger retail energy customer base with higher average consumption than at the start of 2000. With the strength of our balance sheet, we are well positioned to pursue the abundant growth opportunities in both our retail and renewables businesses and continue returning value to our stock market.
Into 2024, we expect another strong year with solid customer growth across all of our businesses. We are starting the year with a significantly larger retail energy customer base with higher average consumption than at the start of 2023.
With the strength of our balance sheet, we are well positioned to pursue the abundant growth opportunities in both our retail and renewables businesses and continue returning value to our stockholders now operator back to you for Q&A.
Operator: Now, the operator will return to you for Q&A. Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone. A confirmation tone will indicate your line is busy. You may press star 2 if you would like to remove your question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 2. Once again, please press star 1 on your phone at this time, www.genieenergy.com. Please while we. Again, that's star one, for no question. That does conclude today's conference. You may disconnect your lines at this time. www.genieenergy.com
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