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Genie Retail More Than Doubles Adjusted EBITDA To Record Level

Sells Part Of International Book To Monetize Hedges, Evaluating Options To Further Optimize European Business Given Increased Value of Forward Hedges

August 8, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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In reporting earnings for the quarter ending June 30, 2022, Genie Energy, Ltd. said that the Genie Retail Energy (GRE) segment delivered record second quarter levels of gross profit, income from operations and Adjusted EBITDA, "highlighted by strong margins in its retail book."

GRE generated income from operations and Adjusted EBITDA of $14.4 million and $14.7 million for the quarter ending June 30, 2022, compared to $5.5 million and $5.8 million, respectively

GRE Gross Margin was 45.9% for 2Q22, up from 27.4% a year ago

"As in prior quarters, GRE moderated its customer acquisition efforts to maximize the value of its portfolio given the ongoing market volatility," Genie said

GRE was serving 280,000 meters as of June 30, 2022, versus 286,000 as of March 31, 2022, and 361,000 a year ago

GRE Retail Customer Equivalents (RCE) were approximately 263,000 as of June 30, 2022, versus 260,000 as of March 31, 2022, and 330,000 a year ago

GRE gross meters added were 34,000 in 2Q22, versus 44,000 for 1Q22, and 35,000 a year ago.

Average monthly churn increased to 4.4% from 3.8% in the year-ago quarter and decreased from 4.5% in the first quarter of 2022.

"GRE will continue to monitor the retail energy markets for customer acquisition opportunities. As volatility either moderates or becomes more palatable to customers, GRE expects to recalibrate its customer acquisition and retention programs to generate growth in the customer book," Genie said

In Genie's International segment (GREI), energy price volatility in Europe resulted in mark-to-market gains in GREI's forward hedge book of $35.8 million. "After the quarter close, GREI took initial steps to optimize its forward position," the company said

Genie sold its Swedish book of approximately 6,000 meters, "and is evaluating additional actions for the remaining customers."

Genie executives said that value of the forward hedge position was higher than serving the Swedish retail book, and decided to monetize the value of the hedges

GREI was serving 62,000 meters as of June 30, 2022

Genie Energy CEO Michael Stein commented, "In light of the continued volatility in energy markets as well as global economic and political uncertainty, we took steps to enhance our position through the sale of our Swedish book of business to another market participant. We are continuing to evaluate ways in which to reduce our obligations in Europe and will provide further updates on our third-quarter earnings call."

"Looking ahead to the remainder of 2022, we anticipate that energy price volatility will continue to impact our domestic retail provider business in the near term. Until we return to a normalized environment, we will focus on maximizing margins and cash flow while moderating our investment in customer acquisition," Stein said

Genie noted its previously reported formation of Sunlight Energy Investments, (Sunlight Energy), "an investment vehicle structured to generate stable, predictable returns for participants through ownership of both Genie Renewables-originated solar generation projects as well as projects developed by third parties."

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