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Genie Retail Energy Reports Higher Earnings, Lower Churn

August 7, 2018

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

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Genie Retail Energy (GRE) reported income from operations of $3.3 million in the quarter ending June 30, 2018 (second quarter), compared to a loss from operations of $9.4 million a year ago. Adjusted EBITDA increased to $3.8 million in 2Q18 compared to negative Adjusted EBITDA of $8.9 million a year ago. GRE's results in the year-ago quarter were impacted by a legal accrual of $9 million

Genie Retail Energy in the U.S. was serving 363,000 meters as of June 30, 2018, versus 373,000 as of March 31, 2018 and 430,000 a year ago. The year-over-year decreases reflect the regulatorily mandated relinquishment of certain low-income customers in New York served by retail energy providers to the incumbent utilities as well as GRE's strategic decision to pull back customer acquisition efforts in certain territories to reduce regulatory risk.

As of June 30, 2018, electricity meters served by GRE were 282,000 and natural gas meters served were 81,000.

On a residential customer equivalent (RCE) basis, Genie Retail Energy was serving 283,000 RCEs as of June 30, 2018, versus 285,000 as of March 31, 2018 and 289,000 a year ago

Gross meter acquisitions during the quarter ending June 30, 2018 totaled 57,000 compared to 55,000 in the quarter ending March 31, 2018, versus 98,000 a year ago. The year-over-year decrease resulted in part from a refocusing of customer acquisition programs to emphasize higher value customers while reducing regulatory risk in certain jurisdictions. This shift has led to a steady increase in average consumption per meter in recent quarters, GRE said

GRE's average monthly customer churn decreased to 5.7% from 7.6% in the first quarter of 2018 and from 6.3% in the year-ago quarter. The decreases primarily reflect lower rates of new customer acquisitions in recent periods, as new customers exhibit higher churn rates than longer tenured customers, and the impact of customer retention programs, and, sequentially, the relinquishment of certain customers in New York State during the first quarter of 2018.

GRE said that the 5.7% monthly customer churn rate for 2Q18 was the first time in a couple of years that the churn rate was below 6%.

GRE's revenue increased to $56.4 million in 2Q18, from $50.2 million a year ago, reflecting higher commodity prices and the impact of the settlement of class-action lawsuits related to the 'polar vortex' of the winter of 2013-2014. In connection with those settlements, GRE had reduced 2Q17 revenue by $3.6 million for estimated payments to customers.

GRE gross profit for 2Q18 was higher at $16.1 million, up from $12.1 million a year ago

GRE's gross margin percentage increased to 28.5% in 2Q18 from 24.1% a year ago as revenue per unit of both electricity and gas sold increased more rapidly than their respective costs.

GRE's SG&A expense decreased to $12.1 million in 2Q18 from $21.5 million a year ago as the result of the absence of a $5.4 million expense incurred for the settlement of the class-action lawsuits recorded in 2Q17, and the reduced level of customer acquisitions in the current quarter.

GRE's income from operations increased to $3.3 million in 2Q18 compared to a loss from operations of $9.4 million a year ago. Adjusted EBITDA increased to $3.8 million in 2Q18 from negative Adjusted EBITDA of $8.9 million a year ago. The improved results were driven by the legal settlements in the year-ago quarter (noted above), the strengthened gross margins, and the reduction in customer acquisition expense.

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