Genie Energy Ltd. Reports Second Quarter 2017 Results
NEWARK, N.J., Aug. 3, 2017 /PRNewswire/ -- Genie Energy Ltd. (NYSE: GNE, GNEPRA) reported second quarter 2017 revenue of $52.2 million and a net loss attributable to common stockholders of $11.8 million -- $0.50 per basic and diluted share -- including a $9.0 million legal accrual.
2Q17 OPERATIONAL AND FINANCIAL HIGHLIGHTS
-- Genie Retail Energy (GRE) accelerated its organic customer growth,
adding twelve thousand meters and two thousand RCEs, respectively,
compared to March 31, 2017;
-- GRE increased revenue to $52.2 million from $44.6 million (+17.2%) in
2Q16. 2Q17 was GRE's fifth consecutive quarter of year-over-year revenue
increases;
-- GRE accrued $9.0 million related to an agreement to settle class action
lawsuits stemming from the polar vortex of 2013-2014. The agreement is
subject to approval by the court;
-- GRE reported a loss from operations of $8.2 million and negative
Adjusted EBITDA* of $7.6 million including the impact of the $9.0
million legal accrual. In 2Q16, income from operations and Adjusted
EBITDA* were $5.2 million and $5.3 million, respectively;
-- Management believes GRE is well-positioned to deliver strong performance
in the second half of 2017 and expects GRE to generate between $20
million and $25 million in Adjusted EBITDA* for all of 2017, exclusive
of the $9 million legal accrual;
-- In Israel, Genie Energy's Afek subsidiary expects to resume drilling its
Ness 10 exploratory well in the Northern region of its license area
shortly;
-- Genie Energy's Board of Directors has declared a quarterly dividend of
$0.075 per share on Genie Energy's Class A and Class B common stock to
be paid on or about August 25, 2017.
COMMENTS OF HOWARD JONAS, CHAIRMAN AND CEO OF GENIE ENERGY
"During the second quarter, we took significant steps to accelerate Genie Retail Energy's long-term growth trajectory. We invested successfully in new meter acquisitions - adding 12,000 net meters while continuing to diversify our meter base. Following the quarter close, we formed a joint venture to enter our first international market - Great Britain - with over 50 million addressable electricity and gas meters. We also reached a preliminary agreement to settle the class-action lawsuits related to the 2013-2014 polar vortex. A final settlement would remove a source of uncertainty as we pursue exciting growth opportunities ahead. In Israel, Afek is preparing to resume drilling the Ness 10 exploratory well in the Northern portion of our license area after an unexpected delay."
CONSOLIDATED RESULTS
$ in millions, except EPS 2Q17 1Q17 2Q16 2Q17 -2Q16
Change
(%/$)
--- -----
Revenue** $52.2 $69.4 $44.6 +17.2%
-------- ----- ----- ----- -----
Gross profit $13.4 $23.6 $18.1 (26.3)%
------------ ----- ----- ----- ------
Gross margin percentage 25.6% 34.0% 40.7% (1510) BP
----------------------- ---- ---- ---- ---------
SG&A expense (including stock-based compensation) $24.7 $18.8 $15.9 +55.3%
------------------------------------------------ ----- ----- ----- -----
Stock-based compensation $1.1 $1.2 $1.1 +1.3%
------------------------ ---- ---- ---- ----
Research and development expense - - $0.1 $(0.1)
-------------------------------- --- --- ---- -----
Exploration expense*** $1.0 $0.9 $1.4 (33.3)%
--------------------- ---- ---- ---- ------
(Loss) income from operations $(12.3) $4.0 $1.9 $(14.2)
----------------------------- ------ ---- ---- ------
Adjusted EBITDA* $(10.6) $5.7 $1.9 $(12.5)
--------------- ------ ---- ---- ------
Net (loss) income attributable to Genie Energy $(11.8) $3.1 $2.4 $(14.2)
common stockholders
-------------------
Diluted (loss) earnings per share attributable to Genie $(0.50) $0.13 $0.10 $(0.60)
Energy common stockholders
--------------------------
Capitalized exploration costs $2.2 $1.1 $4.7 $(2.5)
----------------------------- ---- ---- ---- -----
Net cash (used in) provided by operating activities $(6.9) $3.6 $4.2 $(11.1)
--------------------------------------------------- ----- ---- ---- ------
*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 Measures at the end of this release for an explanation of Adjusted EBITDA and reconciliation to the most directly comparable GAAP measure.
** Revenue and cost of revenue were adjusted in the amount of $0.6 million in 2Q16 for a correction in treatment of gross receipt tax that was previously recorded as a reduction in electricity revenue. Also, cost of revenue in 2Q16 was increased in the amount of $0.7 million that previously was recorded as prepaid expense.
*** Genie Energy's Afek Oil & Gas 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".
BALANCE SHEET AND CASH FLOW HIGHLIGHTS
At June 30, 2017, Genie Energy had $121.2 million in total assets, including $35.2 million in cash, cash equivalents and restricted cash (short and long term). Liabilities totaled $52.3 million, and working capital (current assets less current liabilities) totaled $39.6 million.
Genie Energy's net cash used in operating activities in 2Q17 was $6.9 million compared to net cash provided by operating activities of $4.2 million in the year ago quarter. Cash expenditures were driven in part by working capital requirements at Town Square.
DIVIDEND ON GENIE ENERGY COMMON STOCK
On August 2, 2017, Genie Energy's Board of Directors declared a 2Q17 dividend of $0.075 per share of Class A and Class B common stock with a record date of August 15, 2017. The dividend will be paid on or about August 25, 2017. The ex-dividend date will be August 11, 2017. The distribution will be treated as a return of capital for income tax purposes.
RESULTS BY SEGMENT
$ in millions 2Q17 1Q17 2Q16 2Q17-2Q16
Change
(%/$)
--- -----
Genie Retail Energy
-------------------
Total revenue** $52.2 $69.4 $44.6 +17.2%
-------------- ----- ----- ----- -----
Electricity revenue** $45.0 $52.5 $38.3 +17.4%
-------------------- ----- ----- ----- -----
Natural gas revenue $6.8 $16.5 $5.8 +17.5%
------------------- ---- ----- ---- -----
Other revenue $0.4 $0.5 $0.5 (4.1)%
------------- ---- ---- ---- -----
Gross profit $13.4 $23.6 $18.1 (26.3)%
------------ ----- ----- ----- ------
Gross margin percentage 25.6% 34.0% 40.7% (1510) BP
----------------------- ---- ---- ---- ---------
SG&A expense $21.5 $15.9 $12.9 +66.2%
------------ ----- ----- ----- -----
(Loss) income from operations $(8.2) $7.7 $5.2 $(13.4)
----------------------------- ----- ---- ---- ------
Adjusted EBITDA* $(7.6) $8.3 $5.3 $(12.9)
--------------- ----- ---- ---- ------
Afek
----
G&A expense $0.4 $0.4 $0.4 (0.3)%
----------- ---- ---- ---- -----
Exploration expense*** $1.0 $0.9 $1.4 (33.3)%
--------------------- ---- ---- ---- ------
(Loss) from operations $(1.3) $(1.3) $(1.8) +$0.5
---------------------- ----- ----- ----- -----
Adjusted EBITDA* $(1.2) $(1.3) $(1.8) +$0.6
--------------- ----- ----- ----- -----
Capitalized exploration costs*** $2.2 $1.1 $4.7 $(2.5)
------------------------------- ---- ---- ---- -----
GOGAS
-----
G&A expense $0.1 $0.1 $0.3 (72.3)%
----------- ---- ---- ---- ------
Research and development expense - - $0.1 ($0.1)
-------------------------------- --- --- ---- -----
(Loss) income from operations $(0.1) $(0.1) $0.8 $(0.9)
----------------------------- ----- ----- ---- -----
Adjusted EBITDA* $(0.1) $(0.1) $(0.4) +$0.3
--------------- ----- ----- ----- -----
Corporate
---------
G&A expense $2.8 $2.4 $2.3 +21.0%
----------- ---- ---- ---- -----
Non-cash compensation in G&A $1.0 $1.1 $1.0 (0.6)%
---------------------------- ---- ---- ---- -----
Loss from operations $(2.8) $(2.4) $(2.3) $(0.5)
-------------------- ----- ----- ----- -----
Adjusted EBITDA* $(1.7) $(1.3) $(1.3) $(0.4)
--------------- ----- ----- ----- -----
Genie Retail Energy
Genie Retail Energy - 2Q17 Results of Operations
Genie Retail Energy's customer base as measured in residential customer equivalents (RCEs) increased to 289,000, while meters served increased to 430,000, at June 30, 2017 compared to June 30, 2016. The increases in both RCEs and meters served primarily reflected strong new meter acquisition performance in the territories GRE entered through the acquisition of Town Square Energy in November of 2016.
June 30, March 31, December 31, September 30, June 30,
RCEs and Meters at End 2017 2017 2016 2016 2016
of Quarter (in thousands)
---
Electricity RCEs 219 220 218 174 172
---------------- --- --- --- --- ---
Natural gas RCEs 70 67 65 67 67
---------------- --- --- --- --- ---
Total RCEs 289 287 283 241 239
---------- --- --- --- --- ---
Electricity meters 317 307 296 263 268
------------------ --- --- --- --- ---
Natural gas meters 113 111 116 120 122
------------------ --- --- --- --- ---
Total meters 430 418 412 383 390
------------ --- --- --- --- ---
Gross meter acquisitions in 2Q17 increased to 98,000 from 58,000 in the year ago quarter. Meters enrolled in offerings with fixed rate characteristics constituted approximately 29% of GRE's electric load during June 2017 compared to 15% of GRE's electric load during June 2016.
GRE's average monthly customer churn increased to 6.3% in 2Q17 from 5.8% in the year ago quarter, and from 6.1% in 1Q17. The increase reflects the higher rate of gross customer additions in recent quarters as well as the expiration of an aggregation deal in Illinois.
As in prior quarters, GRE generated all of Genie Energy's revenue and gross profit.
GRE's revenue increased to $52.2 million in 2Q17 (including a revenue reduction of $3.6 million for estimated payments as a result of the expected legal settlement) from $44.6 million in 2Q16 on increased sales of both electricity and natural gas.
Electricity revenue increased to $45.0 million in 2Q17 from $38.3 million in 2Q16. Kilowatt hours sold increased substantially on the increase in electricity meters served and an increase in consumption per meter. These factors more than offset a decrease in average revenue per kilowatt hour sold.
Natural gas sales increased to $6.8 million in 2Q17 from $5.8 million in 2Q16 as the underlying commodity cost increased, resulting in higher market rates and an increase in revenue per therm sold. This increase more than offset a decrease in therms sold reflecting both a decline in gas meters served and average consumption per meter.
GRE's gross margin percentage decreased to 25.6% in 2Q17 (including the revenue reduction for estimated payments to customers) from 40.7% in 2Q16. The gross margin on electricity sales declined to 24.5% in 2Q17 from 38.0% in 2Q16. The average revenue per kilowatt hour sold declined even as the underlying commodity cost increased - continuing a recent trend of intensified competition in key markets and an increase in the proportion of customers on plans with fixed rate characteristics.
The gross margin on natural gas sales decreased to 31.9% from 55.9% in 2Q16 reflecting a rapid escalation in the underlying commodity cost, which more than doubled compared to the year ago quarter.
GRE's gross profit in 2Q17 was $13.4 million compared to $18.1 million in 2Q16 reflecting the narrowing of margins on sales of both electricity and natural gas and the decline in therms sold and the revenue reduction of $3.6 million for estimated payments related to the expected legal settlement partially offset by the increase in kWh sold.
GRE's SG&A expense increased to $21.5 million in 2Q17 from $12.9 million in 2Q16. The increase was primarily the result of $5.4 million in legal expense recorded in 2Q17 after reaching a preliminary settlement agreement to resolve class action lawsuits stemming from the polar vortex of the winter of 2013-2014. SG&A expense also increased due to higher meter acquisition expenses compared to 2Q16.
The payments to customers and legal counsel pursuant to the preliminary agreement to settle the class action lawsuits are expected to be disbursed in tranches during the first half of 2018. The actual amount to be paid out will depend on several factors, including the number of customers who claim settlement payments.
GRE's loss from operations was $8.2 million in 2Q17 compared to income from operations of $5.2 million in the year ago quarter reflecting the $9.0 million legal accrual and the increased levels of customer acquisition activity, as well as the decrease in gross profit.
Adjusted EBITDA was negative $7.6 million in 2Q17 compared to Adjusted EBITDA of $5.3 million in 2Q16.
Genie Retail Energy - New York Regulatory Update
In December 2016, the New York State Public Service Commission (NY PSC) issued an order prohibiting retail energy providers (REPs) in New York State from serving customers enrolled in utility low-income assistance programs (low-income customers).
Certain REPs and industry groups challenged this order in the New York Supreme Court, Albany County, on a variety of legal grounds. In late June, the Court rejected the challenges and upheld the order while affirming the NY PSC's power to regulate the REP industry. In late July, a coalition of REPs filed a Notice of Appeal, seeking to overturn the Court's decision. In the interim, the order took effect on July 26(th). Pending the outcome of the appeal, low-income customers in New York are forbidden to select a REP for either their electricity or gas supply. Additionally, unless a stay of the order is obtained, REPs will be required to return service of their current low-income customers to the relevant local incumbent utility beginning in August.
The NY PSC has also undertaken additional initiatives which might further restrict the operations of REPs in New York State.
Afek
In April 2017, Afek spudded its sixth exploratory well, Ness 10, which is the first well located in the portion of Afek's license area that is north of the Sheikh-Ali Fault. Reprocessed seismic and other data indicate that the source rock containing immature organics which Afek identified in all five exploratory wells drilled in the southern portion of the license area also extends north of the fault, but at significantly greater depths. The drilling at Ness 10 seeks to confirm the presence of organics at the northern site and to determine whether the geological conditions necessary to convert early-stage maturated organics to light crude are present.
In late May, drilling operations at Ness 10 were suspended following an accident at the drill site involving injuries to two workers. Both workers are expected to make complete recoveries. Following investigations, equipment repairs and testing of the equipment on the site, the Ministry of Energy has authorized Afek to resume operations and drilling, and Afek expects to resume drilling within the next few days. Afek has revised its schedule of operations accordingly and plans to complete drilling of Ness 10 as early as the third quarter.
G&A expense at Afek was $364 thousand in 2Q17, virtually unchanged from $363 thousand in 2Q16. Exploration expense was $952 thousand compared to $1.4 million in the comparable period.
Afek's loss from operations and negative Adjusted EBITDA improved to $1.3 million and $1.2 million, respectively, in 2Q17 from $1.8 million in 2Q16 reflecting measures taken to reduce expenses during the drilling hiatus.
During 2Q17, Afek's capitalized exploration costs were $2.2 million compared to $4.7 million in 2Q16.
Genie Oil and Gas (GOGAS)
The GOGAS segment is comprised of inactive oil shale projects. The GOGAS segment's loss from operations in 2Q17 was $94 thousand compared to income from operations of $838 thousand in 2Q16. In 2Q16, GOGAS recognized a gain of $1.3 million from the acquisition of the joint venture interests in AMSO, LLC that it did not own and the resulting consolidation of AMSO, LLC.
Corporate
Genie Energy's consolidated results include corporate overhead. In 2Q17, corporate G&A expense was $2.8 million including $1.0 million in non-cash compensation compared to G&A expense of $2.3 million including $1.0 million in non-cash compensation in 2Q16. The G&A expense increase was primarily driven by a severance accrual.
GENIE ENERGY EARNINGS CONFERENCE CALL
This release is available for download in the "Investors" section of the Genie Energy website (www.genie.com/investors/investor-relations) and has been filed on a current report (Form 8-K) with the SEC.
At 8:30 AM Eastern time today, August 3, 2017, Genie Energy's management will host a conference call to discuss financial and operational results, business outlook and strategy. The call will begin with management's remarks followed by Q&A with analysts and investors.
To participate in the call, dial toll-free 1-888-348-6472 (from the US) or 1-412-902-4240 (international) and request the Genie Energy conference call.
A replay of the call will be available at 1-844-512-2921 (US toll free) or 1-412-317-6671 (international) through August 10, 2017. The replay identification number is: 10109946. An audio file recording of the call - in MP3 format - will also be posted on the "Investors" section of the Genie Energy website.
Investors can sign up through the Genie Energy website http://genie.com/investors/email-alerts/ to have earnings releases and other press releases emailed directly to them.
ABOUT GENIE ENERGY LTD.
Genie Energy Ltd. (NYSE: GNE, GNEPRA) is comprised of two operating divisions, Genie Retail Energy (GRE) and Genie Oil and Gas (GOGAS). GRE operates retail energy providers and brokerage and marketing services. GRE's retail energy providers market electricity and natural gas to residential and small business customers in deregulated markets in the United States. GOGAS is a global oil and gas exploration company operating an exploratory program in Northern Israel. For more information, visit www.genie.com.
In this press release, all statements that are not purely about historical facts, including, but not limited to, those in which we use the words "believe," "anticipate," "expect," "plan," "intend," "estimate, "target" and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors, including, but not limited to, those described in our most recent report on SEC Form 10-K (under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations"), which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. We are under no obligation, and expressly disclaim any obligation, to update the forward-looking statements in this press release, whether as a result of new information, future events or otherwise.
GENIE ENERGY LTD.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2017 2016
---- ----
(Unaudited)
(in thousands)
Assets
Current assets:
Cash and cash equivalents............................................................................................................................................. $33,430 $35,192
Restricted cash-short-term........................................................................................................................................... 277 10,813
Trade accounts receivable, net of allowance for doubtful accounts of $456 and $171 at June 30, 2017 and December 31, 2016, 37,507 36,858
respectively...........................................................................................................................................................
Inventory................................................................................................................................................................... 4,719 5,989
Prepaid expenses......................................................................................................................................................... 6,443 4,026
Other current assets...................................................................................................................................................... 5,812 4,932
----- -----
Total current assets............................................................................................................................................ 88,188 97,810
Property and equipment, net..................................................................................................................................................... 4,132 1,617
Capitalized exploration costs-unproved oil and gas property......................................................................................................... 3,436 -
Goodwill.............................................................................................................................................................................. 8,728 8,728
Other intangibles, net.............................................................................................................................................................. 3,653 4,277
Restricted cash-long-term...................................................................................................................................................... 1,489 1,047
Deferred income tax assets, net................................................................................................................................................. 2,324 1,781
Other assets........................................................................................................................................................................... 9,235 6,553
----- -----
Total assets...................................................................................................................................................... $121,185 $121,813
======== ========
Liabilities and equity
Current liabilities:
Revolving line of credit................................................................................................................................................ $ - $711
Trade accounts payable................................................................................................................................................. 15,175 17,274
Accrued expenses......................................................................................................................................................... 26,555 16,301
Income taxes payable.................................................................................................................................................... 685 2,426
Due to IDT Corporation................................................................................................................................................ 201 141
Other current liabilities................................................................................................................................................. 5,969 4,292
----- -----
Total current liabilities....................................................................................................................................... 48,585 41,145
Revolving line of credit........................................................................................................................................................... 2,506 -
Other liabilities...................................................................................................................................................................... 1,237 803
----- ---
Total liabilities................................................................................................................................................. 52,328 41,948
Commitments and contingencies
Equity:
Genie Energy Ltd. stockholders' equity:
Preferred stock, $.01 par value; authorized shares-10,000:
Series 2012-A, designated shares-8,750; at liquidation preference, consisting of 2,322 shares issued and outstanding at June 30, 19,743 19,743
2017 and December 31, 2016..............................................................................................................................
Class A common stock, $.01 par value; authorized shares-35,000; 1,574 shares issued and outstanding at June 30, 2017 and 16 16
December 31, 2016.................................................................................................................................................
Class B common stock, $.01 par value; authorized shares-200,000; 23,307 and 23,274 shares issued and 23,102 and 23,073 shares 233 233
outstanding at June 30, 2017 and December 31, 2016, respectively........................................................................
Additional paid-in capital.............................................................................................................................................. 129,249 128,243
Treasury stock, at cost, consisting of 205 shares and 201 shares of Class B common stock at June 30, 2017 and December 31, 2016, (1,622) (1,599)
respectively..................................................................................................................................................
Accumulated other comprehensive income........................................................................................................................ 2,784 1,465
Accumulated deficit .................................................................................................................................................... (63,993) (51,567)
------- -------
Total Genie Energy Ltd. stockholders' equity......................................................................................................... 86,410 96,534
Noncontrolling interests:
Noncontrolling interests............................................................................................................................................ (15,886) (15,002)
Receivable for issuance of equity................................................................................................................................. (1,667) (1,667)
------ ------
Total noncontrolling interests.......................................................................................................................... (17,553) (16,669)
------- -------
Total equity..................................................................................................................................................... 68,857 79,865
------ ------
Total liabilities and equity.................................................................................................................................. $121,185 $121,813
======== ========
GENIE ENERGY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2017 2016 2017 2016
---- ---- ---- ----
(Revised see Note) (Revised see
Note)
(in thousands, except per share data)
Revenues:
Electricity............................................................................................................ $44,972 $38,312 $97,446 $83,438
Natural gas........................................................................................................................ 6,791 5,781 23,258 19,147
Other.................................................................................................................... 449 468 949 856
--- --- --- ---
Total revenues.............................................................................................................. 52,212 44,561 121,653 103,441
Cost of revenues.............................................................................................................. 38,859 26,446 84,678 61,278
------ ------ ------ ------
Gross profit.................................................................................................................... 13,353 18,115 36,975 42,163
Operating expenses, (gains) and losses:
Selling, general and administrative (i).................................................................................... 24,742 15,934 43,544 31,943
Research and development................................................................................................... - 83 - 210
Exploration......................................................................................................... 952 1,426 1,803 3,117
Gain on consolidation of AMSO, LLC...................................................................................... - (1,262) - (1,262)
Equity in the net loss of AMSO, LLC....................................................................................... - - - 222
--- --- --- ---
(Loss) income from operations........................................................................................................... (12,341) 1,934 (8,372) 7,933
Interest income............................................................................................................. 70 104 156 186
Other expense, net..................................................................................................................... (274) (27) (561) (162)
---- --- ---- ----
(Loss) income before income taxes..................................................................................................................... (12,545) 2,011 (8,777) 7,957
Benefit from (provision for) income taxes................................................................................ 700 (594) (33) (1,690)
--- ---- --- ------
Net (loss) income................................................................................................................. (11,845) 1,417 (8,810) 6,267
Net loss attributable to noncontrolling interests....................................................................... 381 1,344 824 2,163
--- ----- --- -----
Net (loss) income attributable to Genie Energy Ltd................................................................................... (11,464) 2,761 (7,986) 8,430
Dividends on preferred stock................................................................................................................. (370) (370) (740) (740)
---- ---- ---- ----
Net (loss) income attributable to Genie Energy Ltd. common $(11,834) $2,391 $(8,726) $7,690
stockholders........................................................................................................
(Loss) earnings per share attributable to Genie Energy Ltd. common
stockholders:
Basic.................................................................................................................... $(0.50) $0.10 $(0.37) $0.34
====== ===== ====== =====
Diluted................................................................................................................. $(0.50) $0.10 $(0.37) $0.33
====== ===== ====== =====
Weighted-average number of shares used in calculation of (loss)
earnings per share:
Basic.................................................................................................................... 23,467 22,795 23,458 22,793
====== ====== ====== ======
Diluted................................................................................................................. 23,467 23,603 23,458 23,644
====== ====== ====== ======
Dividends declared per common share............................................................................................. $0.075 $0.06 $0.15 $0.12
====== ===== ===== =====
(i) Stock-based compensation included in selling, general and $1,141 $1,127 $2,379 $2,337
administrative expenses..............................................................................................................
GENIE ENERGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
--------
2017 2016
---- ----
(Revised see Note)
(in thousands)
Operating activities
Net (loss) income......................................................................................................................................................... $(8,810) $6,267
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization.......................................................................................................................................... 1,041 196
Provision for doubtful accounts receivable............................................................................................................................................... 186 -
Deferred income taxes........................................................................................................................................................ (543) -
Stock-based compensation........................................................................................................................................ 1,969 2,337
Loss on disposal of property.................................................................................................................................................. - 25
Gain on consolidation of AMSO, LLC......................................................................................................................................................... - (1,262)
Equity in the net loss of AMSO, LLC......................................................................................................................................................... - 222
Change in assets and liabilities:
Restricted cash......................................................................................................................................................... 205 540
Trade accounts receivable............................................................................................................................................... (834) (2,622)
Inventory........................................................................................................................................................ 1,271 4,135
Prepaid expenses................................................................................................................................................. (2,401) 3,730
Other current assets and other assets....................................................................................................................................................... (3,796) 507
Trade accounts payable, accrued expenses and other current liabilities.................................................................................. 10,124 (1,448)
Due to IDT Corporation............................................................................................................................................ 60 (327 )
Income taxes payable................................................................................................................................................... (1,740) 991
------ ---
Net cash (used in) provided by operating activities........................................................................................................................... (3,268) 13,291
Investing activities
Capital expenditures........................................................................................................................................ (2,876) (135)
Investments in capitalized exploration costs-unproved oil and gas property..................................................................... (3,311) (12,758)
Deposit for investment........................................................................................................................................... (94) -
Repayment of notes receivable............................................................................................................................................. 446 -
Proceeds from disposal of property................................................................................................................................................ - 27
Cash acquired from consolidation of AMSO, LLC......................................................................................................................................... - 702
Capital contribution to AMSO, LLC received from Total..................................................................................................................... - 3,000
Capital contributions to AMSO, LLC....................................................................................................................................................... - (63 )
--- ----
Net cash used in investing activities.......................................................................................................................................................... (5,835) (9,227)
Financing activities
Dividends paid....................................................................................................................................................... (4,440) (3,697)
Purchase of equity of subsidiary............................................................................................................................................. (278) -
Proceeds from revolving line of credit..................................................................................................................................................... 14,450 -
Repayment of revolving line of credit..................................................................................................................................................... (12,655) -
Decrease in restricted cash....................................................................................................................................................... 10,000 -
Exercise of stock options.................................................................................................................................................. 109 -
Repurchases of Class B common stock from employees............................................................................................................................................ (23) (29)
Payment for acquisitions.......................................................................................................................................... - (183)
--- ----
Net cash provided by (used in) financing activities.......................................................................................................................................................... 7,163 (3,909 )
Effect of exchange rate changes on cash and cash equivalents..................................................................................................................... 178 (69)
--- ---
Net (decrease) increase in cash and cash equivalents..................................................................................................................................................... (1,762) 86
Cash and cash equivalents at beginning of period.............................................................................................................................................................. 35,192 38,786
------ ------
Cash and cash equivalents at end of period.............................................................................................................................................................. $33,430 $38,872
======= =======
Reconciliation of Non-GAAP Financial Measures for the Second Quarter 2017 and 2016
In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States of America (GAAP), Genie Energy also disclosed for the second quarter of 2017, as well as for comparable periods, Adjusted EBITDA, which is a non-GAAP measure. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.
Genie Energy's measure of Adjusted EBITDA consists of gross profit less selling, general and administrative expense, research and development expense, exploration expense and equity in the net loss of AMSO, LLC, plus depreciation, amortization and stock-based compensation (which are included in selling, general and administrative expense). Another way of calculating Adjusted EBITDA is to start with income (loss) from operations and add depreciation, amortization, and stock-based compensation, and deduct the gain on consolidation of AMSO, LLC.
Management believes that Genie Energy's Adjusted EBITDA provides useful information to both management and investors by excluding certain expenses and gains that may not be indicative of Genie Energy's or the relevant segment's core operating results. Management uses Adjusted EBITDA, among other measures, as a relevant indicator of core operational strengths in its financial and operational decision making. In addition, management uses Adjusted EBITDA to evaluate operating performance in relation to Genie Energy's competitors. Disclosure of this financial measure may be useful to investors in evaluating performance and allows for greater transparency to the underlying supplemental information used by management in its financial and operational decision-making. In addition, Genie Energy has historically reported Adjusted EBITDA and believes it is commonly used by readers of financial information in assessing performance, therefore the inclusion of comparative numbers provides consistency in financial reporting at this time.
Management refers to Adjusted EBITDA, as well as the GAAP measures gross profit, income (loss) from operations and net income (loss), on a segment and/or consolidated level to facilitate internal and external comparisons to the segments' and Genie Energy's historical operating results, in making operating decisions, for budget and planning purposes, and to form the basis upon which management is compensated.
Although depreciation and amortization are considered operating costs under GAAP, they primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. While Genie Energy's oil and gas exploration business may be capital intensive, Genie Energy does not expect to incur significant depreciation or depletion expense for the foreseeable future. Genie Energy's operating results exclusive of depreciation and amortization is therefore a useful indicator of its current performance.
Stock-based compensation recognized by Genie Energy and other companies may not be comparable because of the various valuation methodologies, subjective assumptions and the variety of types of awards that are permitted under GAAP. Stock-based compensation is excluded from Genie Energy's calculation of Adjusted EBITDA because management believes this allows investors to make more meaningful comparisons of the operating results of Genie Energy's core business with the results of other companies. However, stock-based compensation will continue to be a significant expense for Genie Energy for the foreseeable future and an important part of employees' compensation that impacts their performance.
The gain on consolidation of AMSO, LLC, which is a component of income from operations, is excluded from the calculation of Adjusted EBITDA. Genie Energy's equity in the net loss of AMSO, LLC was included in Adjusted EBITDA because it was the result of ongoing operations of AMSO, LLC. The gain on consolidation of AMSO, LLC was a non-routine result of Total's withdrawal from AMSO, LLC. The gain is not part of Genie Energy's or the relevant segment's core operating results.
Adjusted EBITDA should be considered in addition to, not as a substitute for, or superior to, gross profit, income (loss) from operations, cash flow from operating activities, net income (loss), basic and diluted earnings (loss) per share or other measures of liquidity and financial performance prepared in accordance with GAAP. In addition, Genie Energy's measurements of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Following is the reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, which is income (loss) from operations for Genie Energy's reportable segments and net income (loss) for Genie Energy on a consolidated basis.
Genie Energy Ltd.
Reconciliation of Adjusted EBITDA to Net (Loss) Income
(unaudited)
$ in thousands
Total Genie GOGAS Afek Corporate
Retail
Energy
------
Three Months Ended June 30, 2017
(2Q17)
Adjusted EBITDA $(10,628) $(7,631) $(89) $(1,170) $(1,738)
Subtract:
Stock-based compensation 1,141 114 - - 1,027
Depreciation and amortization 572 422 5 145 -
--- --- --- --- ---
Loss from operations (12,341) $(8,167) $(94) $(1,315) $(2,765)
Interest income 70
Other expense, net (274)
Benefit from income taxes 700
---
Net loss (11,845)
Net loss attributable to noncontrolling interests 381
Net loss attributable to Genie Energy Ltd. $(11,464)
Total Genie Retail Energy GOGAS Afek Corporate
----- ------------------- ----- ---- ---------
Three Months Ended March 31, 2017
(1Q17)
Adjusted EBITDA $5,677 $8,296 $(86) $(1,253) $(1,280)
Subtract:
Stock-based compensation 1,238 118 6 - 1,114
Depreciation and amortization 471 432 6 33 -
--- --- --- --- ---
Income (loss) from operations 3,968 $7,746 $(98) $(1,286) $(2,394)
Interest income 86
Other expense, net (287)
Provision for income taxes (733)
----
Net income 3,034
Net loss attributable to noncontrolling interests 443
Net income attributable to Genie Energy Ltd. $3,477
------
Total Genie Retail Energy GOGAS Afek Corporate
----- ------------------- ----- ---- ---------
Three Months Ended June 30, 2016
(2Q16)
Adjusted EBITDA $1,898 $5,305 $(400) $(1,756) $(1,251)
Subtract (Add):
Stock-based compensation 1,127 78 16 - 1,033
Depreciation 99 59 8 32 -
Gain on consolidation of AMSO, LLC (1,262) - (1,262) - -
------ --- ------ --- ---
Income (loss) from operations 1,934 $5,168 $838 $(1,788) $(2,284)
Interest income 104
Other expense, net (27)
Provision for income taxes (594)
----
Net income 1,417
Net loss attributable to noncontrolling interests 1,344
-----
Net income attributable to Genie Energy Ltd. $2,761
-------------------------------------------- ------
Genie Energy Ltd.
Reconciliation of Adjusted EBITDA to Net (Loss) Income
(unaudited)
$ in thousands
Total Genie GOGAS Corporate
Retail
Energy Afek
------ ----
Six Months Ended June 30, 2017
Adjusted EBITDA $(4,952) $665 $(175) $(2,423) $(3,019)
Subtract:
Stock-based compensation 2,379 232 6 - 2,141
Depreciation and amortization 1,041 853 10 178 -
----- --- --- --- ---
Loss from operations (8,372) $(420) $(191) $(2,601) $(5,160)
Interest income 156
Other expense, net (561)
Provision for income taxes (33)
---
Net loss (8,810)
Net loss attributable to noncontrolling interests 824
Net loss attributable to Genie Energy Ltd. $(7,986)
Total Genie Retail Energy GOGAS Corporate
Afek
--- ---
Six Months Ended June 30, 2016
Adjusted EBITDA $9,204 $16,180 $(853) $(3,552) $(2,571)
Subtract (Add):
Stock-based compensation 2,337 196 25 - 2,116
Depreciation 196 118 15 63 -
Gain on consolidation of AMSO, LLC (1,262) - (1,262) - -
------ --- ------ --- ---
Income (loss) from operations 7,933 $15,866 $369 $(3,615) $(4,687)
Interest income 186
Other expense, net (162)
Provision for income taxes (1,690)
------
Net income 6,267
Net loss attributable to noncontrolling interests 2,163
-----
Net income attributable to Genie Energy Ltd. $8,430
-------------------------------------------- ------
View original content with multimedia:http://www.prnewswire.com/news-releases/genie-energy-ltd-reports-second-quarter-2017-results-300498934.html
SOURCE Genie Energy Ltd.
