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IDT Energy Customer Count Stabilizes As Churn Returns to Normal Levels; Will Roll Out New Green Brand

November 6, 2014

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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

The retail customer base of Genie Energy, parent of IDT Energy and new brand Residents Energy, essentially stabilized during the third quarter, as churn returned to normalized levels after the polar vortex.

Genie Retail Energy was serving 362,000 meters as of September 30, 2014, versus 364,000 as of June 30, 2014, and 456,000 a year ago.

The net loss of only 2,000 meters since June 30, 2014, compares to a net loss of 27,000 meters from March 31, 2014 to June 30, 2014.

Residential Customer Equivalents were 248,000 as of September 30, 2014, versus 260,000 as of June 30, 2014 and 337,000 a year ago. The RCE changes also reflect the impact of weather-driven changes in usage.

In 3Q14, Genie Retail Energy gross meter acquisitions were 56,000, versus 55,000 in 2Q14 and 64,000 in 3Q13. The company said that the sequential increase incorporates contributions from several early stage initiatives: Epiq Energy's network marketing program, the deployment of an in-house door-to-door sales force, utilization of a new brand (Residents Energy), and the expanded deployment of a 12-month guaranteed rate offering in some utility territories. The improving customer acquisition performance also reflected the resumption of sales activity in all markets following suspensions in some areas related to the polar vortex.

Genie Retail Energy's average monthly customer churn decreased significantly compared to the prior quarter, falling to 6.2% (representing 58,000) from 8.1% in 2Q14, reflecting a return to a "normalized" churn rate following the impact of last winter's polar vortex. The 3Q14 churn rate was also slightly below the year ago quarter's 6.3% churn rate.

During an earnings call, executives said that Genie Retail Energy would next year roll out a new brand based on green energy offerings

Genie Retail average revenue per kWh sold increased 2.3% year over year, even as the average cost per kWh decreased 14.8%. As a result, the gross margin percentage on electric sales increased to 39.7% compared to 27.5% in the year ago quarter. Gross profit on electric sales was $17.2 million compared to $18.4 million in the year ago quarter on lower volumes.

For natural gas, Genie Retail Energy's average cost per therm sold decreased 11.0%, declining more slowly than revenue per therm. As a result, the gross margin percentage on gas sales declined to 22.2% compared to 32.0% in the year ago quarter. Gross profit on gas sales was $0.6 million compared to $1.5 million in the year ago quarter.

Genie Retail Energy generated Adjusted EBITDA of $5.8 million in 3Q14 compared to $9.9 million in the year ago quarter, and income from operations of $5.6 million compared to $9.6 million in 3Q13. The decreases in Adjusted EBITDA and income from operations were driven primarily by lower electricity and natural gas gross profit and increased SG&A.

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