Genie Retail Energy Reports Record Adjusted EBITDA, Expects Robust Margin In Upcoming Winter Season

November 4, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Genie Energy Ltd. reported that its Genie Retail Energy (GRE) segment generated record income from operations and Adjusted EBITDA of $19.7 million and $20.0 million, respectively, for 3Q21 compared to $12.2 million and $12.5 million in 3Q20

The increases were driven by strong margins in the retail book and mark-to-market increases in the value of its forward commodity positions after both electricity and natural gas prices rose sharply.

Genie said that, "Heading into the winter heating season, Genie is positioned to mitigate foreseeable volatility in wholesale energy prices through its risk-management program including hedging and forward commodity contract positioning. As a result of commodity price increases, Genie expects to generate robust margins from its retail supply businesses. Moreover, the company expects to reduce supply requirements by narrowing its customer acquisition program to higher margin customers. This strategy optimizes margins while dampening customer acquisition expense."

In addition, Genie recorded a $1.9 million credit to the cost of sales reflecting expected reimbursement from the State of Texas for charges imposed by ERCOT during the severe winter storm in February 2021.

Genie Retail Energy served 361,000 meters as of September 30, 2021, flat versus June 30, 2021 and versus 375,000 a year ago

Genie Retail Energy served 336,000 RCEs as of September 30, 2021, versus 330,000 RCEs as of June 30, 2021 and 350,000 a year ago

Monthly churn, at 4.0%, was below typical pre-COVID levels while increasing from 3.8% for Q2 2021

As previously reported, Genie is exiting the U.K. market and suspended the spin-off of its international segment. Genie does not expect to incur additional material, cash charges as a result

Genie Retail Energy gross margin in 3Q21 was 39.6%, versus 29.0% a year ago

"In our international business, as we previously announced, we are withdrawing from the U.K. market as a result of the impact of structural market limitations in the current high-cost environment. Although we have set aside plans for the spin-off, looking ahead, we expect no new material negative cash impact as a result of the exit. In fact, retiring from that market obviates the need to invest additional growth capital," the company said

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