Genie Energy Ltd.
Q1 2021 Earnings Call Transcript

Published: 7 May 2021

[Operator:]

Good morning and welcome to Genie Energy’s First Quarter 2021 Earnings Call. On this morning’s call, Michael Stein, Genie Energy’s Chief Executive Officer and Avi Goldin, Genie Energy’s Chief Financial Officer will discuss operational and financial results for the 3-month period ended March 31, 2021. Any forward-looking statements made during this conference call either in the prepared remarks or in the Q&A session, whether general or 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 SEC. 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 may cause actual results to differ materially from those that they forecast.

[Michael Stein:]

Thank you, operator. Welcome to Genie Energy’s first quarter 2021 earnings call. Today, we will discuss our operational and financial results for the 3 months ended March 31, 2021. Avi Goldin, our Chief Financial Officer will follow with a deeper dive into the quarter’s financial results. Following Avi’s remarks, we will be glad to take your questions. As we discussed when we reported last quarter’s earnings, the first quarter was impacted by unusually severe weather events that led to massive spikes in wholesale electricity prices in Texas and Japan. The severe winter storms in Texas and Japan had an aggregate negative impact on income from operations of approximately $15.5 million. In Texas, where the impact of the storm this quarter was approximately $13 million, our industry has borne a disproportionate share of the financial burden. We remain hopeful that perspective legislation and regulatory changes and/or litigation will provide material relief. Because of our ongoing commitment to financial strength and liquidity, while avoiding debt, our balance sheet remains in good shape. Moreover, we have set ourselves the goal of finishing the year with a stronger balance sheet than we had at the start despite the impact of the first quarter’s weather events. Our underlying business remains very strong. On a consolidated basis, we achieved a record first quarter revenue and added to our meter and RCE counts, even though the first quarter is a historically slow quarter for customer acquisition. RCEs increased by 10,000 to 450,000 and meters increased by 7,000 to 572,000.

[Avi Goldin:]

Thank you, Michael and thanks to everyone on the call for joining us this morning. My remarks today cover our financial results for the 3 months ended March 31, 2021. Throughout my remarks, I compare first quarter 2021 to the results for the first quarter of 2020, focusing on the year-over-year, rather than the sequential comparisons, removes some consideration of the seasonal factors that are characteristic of our retail energy business. As Michael mentioned, our revenue in this quarter was the highest in our history. Bottom line results would have been similarly strong had it not been for the losses incurred as a result of the winter storm Uri in Texas and extreme weather in Japan. Nevertheless, our careful forward hedging and demand management programs, the diversification of our business operations and a strong balance sheet enable us to not only manage through the volatility, but to finish the quarter with sufficient capital and liquidity to finance and prioritize our growth initiatives. Consolidated revenue increased 30% to $135 million. Revenue at Genie Retail Energy increased 15% to $91 million. Electricity and natural gas consumption per meter increased, boosted by the shift to work from home as a result of COVID-19 pandemic as well as colder winter weather, including the impact of winter storm Uri. These factors more than compensated for decreased per unit average revenue on sales in both electricity and natural gas. At Genie Retail Energy International, revenue increased to $42 million from $7 million in the year ago quarter. The $35 million increase predominantly reflects our purchase of the outstanding stake in our Orbit joint venture in the UK during the fourth quarter of 2020 and the consolidation of its results. For comparison purposes, Orbit Energy generated $19.6 million in revenue in the year ago quarter. Additionally, expansion of our customer bases in Scandinavia and the UK also contributed meaningfully to the revenue increase. Genie Renewables revenue was $2.5 million, a decrease from $18 million in the year ago quarter when Prism Solar delivered the bulk of a large solar panel order. Consolidated gross profit decreased $11.4 million to $17.5 million. We estimate that the winter storms in Texas and Japan together impacted gross profit by approximately $15.5 million and except for their impact the quarter’s results would have been very strong. Consolidated SG&A increased to $24.1 million from $19.5 million. The increase was entirely incurred at GRE International and reflects the consolidation of Orbit Energy, including Orbit’s customer acquisition expense. Consolidated loss from operations totaled $6.6 million compared to income from operations of $9.2 million in the year ago quarter, a decrease of $15.8 million. Adjusted EBITDA was negative $4.5 million compared to positive $10.3 million in the year ago quarter, a decrease of $14.9 million primarily due to the Texas and Japan weather and the consolidation of Orbit Energy.

[Operator:]