Genie Energy Expects To Bring On First Texas Customers This Month Under Soft Launch

Genie Energy Reports Customer Growth

Domestic Earnings Higher On Margin Improvement

May 6, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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Genie Energy reported customer growth and higher Adjusted EBITDA for the first quarter of 2019.

Globally, Genie was serving 399,000 meters as of March 31, 2019, up from 323,000 as of December 31, 2018 and 373,000 a year ago

Globally, Genie was serving 322,000 electricity meters and 77,000 natural gas meters as of March 31 2019

On a Residential Customer Equivalent (RCE) basis, globally, Genie was serving 333,000 RCEs as of March 31, 2019, up from 256,000 as of December 31, 2018 and 285,000 a year ago

The global totals include RCEs and meters acquired and served by Genie Energy's domestic and international retail energy provider businesses including its JV operating in the UK, Orbit Energy.

Genie said that its global customer base increased sequentially and year-over-year driven by the previously reported acquisition of Finnish electricity provider Lumo Energia during the quarter, the expansion of Orbit Energy, a joint venture supplying electricity and natural gas in the UK, and robust domestic customer base growth driven, in part, by a municipal aggregation agreement in New Jersey

GRE International served 33,000 RCEs and 55,000 meters at March 31st, 2019, compared to 4,000 RCEs and 8,000 meters at December 31st, 2018. The increases resulted from the acquisition of Lumo Energy and organic growth at Orbit Energy

In Genie's U.S. retail supply business (segment Genie Retail Energy, or GRE), gross meter adds during the quarter totaled 85,000 including a municipal aggregation deal in New Jersey which added approximately 34,000 meters

At GRE, average monthly average churn for the first quarter decreased to 5.3% from 7.1% in 4Q18. Churn was favorably impacted by the municipal aggregation agreement as these meters are typically characterized by relatively low rates of churn, and by relatively low rates of new customer acquisition in recent quarters. The churn rate in the prior quarter was negatively impacted by the expiration of a municipal aggregation agreement. Excluding the impact of that expiration, average monthly churn for the prior quarter would have been approximately 6.1%. Average monthly churn in the year ago quarter was 7.6% including the impact of a regulatorily mandated relinquishment of low-income customers in New York.

GRE reiterated that it expects to launch service in Texas in the second quarter of 2019, specifically starting this month with a soft launch to friends and family, as is customary, followed by a larger roll-out one to two months later.

GRE increased income from operations to $13.5 million for the first quarter of 2019, from $11.0 million in 1Q18. Adjusted EBITDA increased to $13.8 million for the first quarter of 2019, from $11.6 million in 1Q18. The increases reflect margin improvement on natural gas sales and decreased customer acquisition expense.

GRE revenue in 1Q19 was $76.5 million, versus $88.8 million a year ago.

GRE gross profit for the first quarter of 2019 was $24.7 million, versus $24.2 million a year ago

Genie Energy Services (GES), which includes Genie Solar, Prism Solar Technologies, and Diversegy, a retail brokerage and advisory business, reported increased revenue of $5.3 million for the first quarter of 2019, from $502,000 a year ago, reflecting the impact of the Prism Solar acquisition in 4Q18. GES' loss from operations was $232,000 in 1Q19 compared to a loss from operations $92,000 in 1Q18.

Genie Retail Energy International (GRE International), Genie's segment for its international retail suppliers, reported increased revenue to $4.8 million for the first quarter of 2019, compared to nil in 1Q18, from the Lumo Energia acquisition

GRE International's loss from operations increased to $1.7 million from a loss from operations of $91,000 in 1Q18. Negative Adjusted EBITDA was $2.3 million compared to $597,000 in 1Q18. The increased losses reflect increased meter acquisition expense at Orbit Energy and Lumo Energia and buildout operations at Genie Japan. Equity in the loss of Orbit Energy was $1.1 million in 1Q19 compared to $506,000 in 1Q18

On a consolidated basis, Genie Energy Ltd.'s consolidated income from operations increased to $9.8 million in 1Q19, from $7.1 million in 1Q18, and Adjusted EBITDA increased to $10.4 million in 1Q19, from $8.6 million a year ago.

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