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Retail Supplier Looking For Additional Acquisitions

Parent of Retail Supplier Names New COO

March 8, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Genie Retail Energy, which as previously reported in the fourth quarter of 2016 closed on its acquisition of the Town Square Energy retail suppliers, is looking for additional acquisition opportunities

"We are looking for additional acquisitions to grow our meter base, marketing channels, and products and services while enhancing our profitability," Michael Stein, CEO of Genie Retail Energy said during an earnings call.

Stein said that the company would also continue to pursue organic growth

Stein has also been named to the position of COO of Genie Retail Energy's parent Genie Energy Ltd. He will continue to serve as CEO of Genie Retail Energy

As previously reported, in November 2016, Genie Retail Energy acquired the Town Square Energy retail suppliers for cash of $9.5 million plus working capital. In reporting earnings today, Genie Retail Energy provided a further update, disclosing that the net working capital included in the acquisition price amounted to $1.6 million

At the time of the acquisition, the Town Square Energy companies were serving approximately 47,000 electricity residential customer equivalents (RCEs) in eight states

At December 31, 2016, Genie Retail Energy was serving 283,000 RCEs, versus 241,000 RCEs as of September 30, 2016 and 259,300 RCEs a year ago. RCEs at December 31, 2016 were 218,000 electric RCEs and 65,000 natural gas RCEs

Excluding the impact of the Town Square Energy acquisition, Genie Retail Energy's customer count declined by 7,000 RCEs from September 30, 2016 to December 31, 2016. For comparison, from June 30, 2016 to September 30, 2016, Genie Retail Energy had seen a net increase of 2,000 RCEs.

At December 31, 2016, Genie Retail Energy was serving 412,000 meters, versus 383,000 meters as of September 30, 2016 and 392,000 meters a year ago

Genie Retail Energy's (GRE) average monthly customer churn increased to 6.7% in 4Q16 compared to 6.3% in the year ago quarter, and increased from 6.4% in 3Q16. For the full year 2016, average monthly churn increased to 6.4% compared to 6.3% in 2015.

GRE's gross profit in 4Q16 was $14.6 million compared to $15.5 million in 4Q15.

GRE's gross margin percentage in 4Q16 was 28.3% compared to 34.8% in 4Q15. The gross margin on electricity sales declined from 39.3% in 4Q15 to 27.1% in 4Q16. The average revenue per kilowatt-hour sold declined even as the underlying commodity cost increased reflecting intensification of competition in key markets, and an increase in the proportion of customers on plans with fixed rate characteristics, the company said

Meters enrolled in offerings with fixed rate characteristics constituted approximately 32% of GRE's electric load during December 2016 compared to 15% of GRE's electric load during September 2016. The increase resulted from the addition of the Town Square Energy electric meters, a significant portion of which have fixed rate characteristics.

GRE's income from operations increased to $2.7 million in 4Q16 from $894,000 in the year ago quarter reflecting a reduction in SG&A expense that more than offset the decline in gross profit. Adjusted EBITDA increased to $3.1 million in 4Q16 from $1.0 million in 4Q15

GRE's 4Q16 revenue increased to $51.5 million from $44.6 million in 4Q15 on increased sales of both electricity and natural gas.

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