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Genie Energy Ltd. Reports Third Quarter 2015 Results

The following excerpt is from the company's SEC filing.

: Genie Energy Ltd. (NYSE: GNE, GNEPRA) reported third quarter 2015 revenue of $52.2 million, Adjusted EBITDA* of $5.2 million, and net income attributable to common stockholders of $2.5 million -- $0.10 per diluted share.

Genie Energy’s Afek subsidiary is nearing completion of drilling on the third well of its multi-well exploratory program in Northern Israel. The company hopes to spud its fourth well and begin a well flow test program before the en d of the calendar year;

On November 2, 2015, Israel’s Northern Regional Planning and Building Committee proposed issuance of a two-year extension of Afek’s drilling permit commencing a 60 day public comment period. If the permits are finalized, the extension could cover the remainder of Afek’s exploratory program of up to ten wells;

Genie Retail Energy (GRE), which operates Genie Energy’s retail provider businesses, increased its meter base by net 11,000 meters during the quarter to 388,000, the second consecutive quarter of net meter growth;

Consolidated revenue, generated entirely by GRE, increased to $52.2 million from $46.2 million (+13.1%) in 3Q14;

GRE generated Adjusted EBITDA* of $8.7 million in 3Q15 compared to $5.8 million (+50.7%) in the year ago quarter;

Consolidated income from operations increased to $3.8 million compared to a loss from operations of $4.1 million 3Q14.


Howard Jonas, Genie Energy’s Chairman and CEO, said, “Our retail energy business had a terrific quarter, adding 11,000 new meters, boosting revenue by thirteen percent, and delivering $8.7 million in Adjusted EBITDA. In Northern Israel, our Afek subsidiary has nearly completed drilling its third exploratory well. Analysis of the resultant data is already underway, and we expect to spud our fourth well before the year is out. In addition, we plan to launch a well flow test program late this year. The well flow test program, in combination with our ongoing drilling and analysis, will provide a better understanding of the resource’s commercial potential.”



$ in millions, except EPS

3Q15 - 3Q14

Change (%/$)


Gross profit

Gross margin percentage

+320 BP

SG&A expense (including stock-based compensation)

Stock-based compensation

Research and development expense**

Exploration expense**

Income (loss) from operations

Net income (loss) attributable to Genie Energy common stockholders

Diluted earnings (loss) per share attributable to Genie Energy’s common stockholders


Net cash provided by (used in) operating activities

* Adjusted EBITDA for all periods is a non-GAAP measure intended to provide useful information that supplements the core operating results in accordance with GAAP of Genie Energy or the relevant segment. Please refer to the Reconciliation of Non-GAAP Financial Measure at the end of this release for a complete explanation of Adjusted EBITDA and reconciliation to the most directly comparable GAAP measure.

** Genie Energy’s Afek subsidiary accounts for its oil and gas exploration activities under the “successful efforts” method of accounting. Under this method, acquisition costs, costs of drilling exploratory wells, and exploratory-type stratigraphic test wells are capitalized on the balance sheet as “Capitalized exploration costs – unproved oil and gas property” pending determination of whether the well has found proved reserves. Exploration costs, other than exploration drilling costs, are charged to expense in the statement of operations as “Exploration expense”. In the three months ended September 30, 2015, Afek capitalized $6.8 million of drilling expenses and recorded $1.5 million of “Exploration expense” in the consolidated statements of operations.

In addition, in the consolidated statements of operations, $1.6 million in the three months ended September 30, 2014 relating to Afek’s oil and gas activities previously included as “Research and development expense” were reclassified to “Exploration expense” to conform to the current year’s presentation.


At September 30, 2015, Genie Energy had $150.2 million in total assets, including $69.2 million in cash, cash equivalents, restricted cash (short and long term), and certificates of deposit. Liabilities totaled $34.1 million with no long term debt, and working capital (current assets less current liabilities) totaled $88.6 million.

Net cash provided by operating activities in 3Q15 was $4.0 million compared to net cash used in operating activities of $1.0 million in 3Q14 and net cash provided by operating activities of $5.8 million in 2Q15. The change from the previous year reflects the improved results of operations in 3Q15 compared to 3Q14.


$ in millions

Genie Retail Energy

Total revenue

Electricity revenue

Natural gas revenue

Other revenue

+320 BP

Bad debt expense

Income from operations

Loss from operations


Non-cash compensation in G&A

Genie Retail Energy

Genie Retail Energy increased its customer base for the second consecutive quarter, adding 11,000 net meters and 9,000 RCE’s during the third quarter. Genie Retail Energy added 74,000 gross meters compared to 79,000 meters in 2Q15 and 56,000 meters in 3Q14. Gross meter adds in 3Q15 and 2Q15 include approximately 10,000 and 11,000 net electric meters, respectively, acquired via a new sales channel that offers geographically concentrated opportunities for meter acquisitions with reduced customer acquisition costs and fixed rates.

Meters and RCEs at End

of Quarter (in thousands)

September 30,

June 30,

March 31,

December 31,

Electricity meters

Natural gas meters

Total meters

Electricity RCEs

Natural gas RCEs

Total RCEs

Genie Retail Energy’s average monthly customer churn increased to 6.7% in 3Q15 from 6.3% in 2Q15 and 6.2% in 3Q14. The increase in churn reflects, in part, the accelerated pace of meter acquisitions in recent quarters. On average, newly acquired meters exhibit higher rates of churn than long tenured meters and variable rate meters churn more quickly than fixed rate meters. Meters acquired through the new sales channel also typically exhibit high initial churn rates. Meters enrolled in fixed rate offerings constituted approximately 15% of GRE’s electric load at September 30, 2015.

Genie Retail Energy’s quarterly revenue increased $6.1 million year over year to $52.2 million. The increase was entirely attributable to increased sales of electricity, which totaled $49.4 million, an increase of $6.9 million compared to the year ago quarter. Sales of natural gas decreased $0.5 million to $2.2 million. The increase in electric revenue was driven both by a 13.6% increase in kWh sold and a 2.3% increase in revenue per kWh sold. The increase in kWh sold reflects increases in the average numbers of meter served during the quarter compared to the year ago quarter and in consumption per meter. The per meter consumption increase reflects the warmer summer of 2015 compared to 2014, and meter acquisition efforts targeted to regions with relatively higher per meter consumption.

Genie Retail Energy’s gross margin in 3Q15 climbed to 41.8% from 38.6% in the year ago quarter. The primary driver was increased gross margin on electricity...