Genie Energy (GNE) 7 Nov 222022 Q3 Earnings call transcript

Good morning, and welcome to Genie Energy’s Third Quarter 2022 Earnings Call. All participants’ will be in listen-only mode. [Operator Instructions] After today's presentation by Genie Energy's management, there will be an opportunity to ask questions. Please note this event is being recorded. I will now turn the call over to Brian Siegel of Hayden IR.

you. Thank period are CFO, Energy’s and who for three today Goldin, and financial Stein, XXXX. the Energy’s XXth, Genie will months Michael me CEO; Genie Avi results With September ended discuss operational Any forward-looking call, or cause and in anticipates. specific which actual risks this results are to materially that wheter the from subject those general nature, uncertainties made statements during conference may to differ company the uncertainties and and but are that to, with limited periodically risks in include, not uncertainties specific the discussed These reports filed we risks SEC. we update cause Genie to may made obligation forecast. differ update to assumes those or results actual no any either forward-looking make from may statements that they materially have the to that factors that or

adjusted that information supplement Management non-GAAP During their EBITDA, investors management results. remarks, a its provides useful of management believes adjusted to EBITDA both core operating that and to measure. our may measure reference make

on adjusted comparable a which includes our periods is page earnings presented. consolidated measures, operations GAAP to Our EBITDA income for net income all posted release from IR and consolidated its of reconciliation nearest

EBITDA for adjusted all segment’s presented. in for are from segments to their addition, In respective the earnings income periods operations reconciled release applicable

Stein, were that will now historical third turn the Finally, Energy please Energy’s reflect over during I Executive move. Genie and Michael call Chief this reported accounted Genie for discussed operations International's today quarter note discontinued results results Officer. under our Retail the and on to this conference

from increases were high reduced significant with in third efforts Thank energy and remain acquisition were quarter margins GRE, gross volatility. this cash you, net earnings adjusted perspective We and as management EBITDA, year-over-year quarter XXXX profit, call. able flow at and customer We Brian. income to risk with operations. to we quarter well achieved combination record our generate third in Welcome Genie from Energy's prices positioned a increased profits

$XX million record generated nearly of and segments, $XX of gross Energy adjusted or million. QX our profit Retail Genie GRE EBITDA at a Looking

operations Over no we servicing of in quarter, customers spend are and the to market. plan the longer course Scandinavian third executed our the

GREI's it result, financial in a exciting calling or statements. have to had reflected discontinued operations As in GREW an are as Genie taken quarter. our results we Renewables now

several quarter vertically build generation and build also solar site arrays or we backlog integrated First, third potentially ourselves or sunlight of where contracts significantly customers, business. significant we new grew Pennsylvania. In York acquire signed strategy which rights we progress commercial to existing which our in through build solar for will Separately, made in GREW New energy the solar of farms megawatts investments. on to secured the our XX

second expect model This the construction be leverage full wholly-owned in and project of will quarter. as expect to generating business the sheet. vertically Once solar power integrated receive solar be by which project, begins, as operated balance for our necessary soon first approvals community the construction we the to strong fourth GREW the field XXXX. and farm, We quarter will

coming a regular stockholders during value base as to outstanding projects significant quarter. apprised returned our other common November redeem XXth, in $X additional leveraging we preferred this we quarter, stockholders. intend we preferred strong preferred stock approximately stock, on value to to the outstanding. million as dividend quarterly at this capital stock million the quarter, stated to paying total of in on announced increase future stock advance and $X.XXX of par million our common they flows while dividend sheet preferred with balance preferred project, you that our the cash $X.XX an for available the would a on our $X.X After of keep the will the achieved After basis We $X.X Also well million We of further in a stock of be as of milestones quarterly will process. on least through permitting in progress there redemption, XXth million our redeemed redeeming November continue the worth $X quarters.

provide response strategy. of portfolio retail providers We Washington and customers service some our or risk and customer operates actively to within have energy done drive and mitigation periods obligations margins to our during while growth geographies. will price market Underlying GRE Now XX strategy in I'll volatility. both of REPs hedges in evolving during XX is other reducing conditions, that quick growth which business among retail of year. and manage bases to D.C. we our customers our a team, of margins investment states times overview a or in geographically customer this forward deregulated things REPs In higher periods, as acquisition our during we invest obligations other our preserve to

light customer to of expect we share areas In new our current strategy the conditions, offer into existing our market terms of programs over of acquisition, In and base. to energy generally increase customer margin products seek expand market territories, and services our in preservation continue to near-term. additional

areas However, more within seeing are to despite certain current aggressive volatility, in be the customer potentially opportunities we acquisition.

generate high growth Our opportunities Genie returns to from Renewables potential related segment generation. multiple outsized seeks solar to energy

of provide procurement services to and Our billing businesses acquisition, solar currently services. operators management and farm ranging third-party and to from suite customer owners solar services full installation

to and one of integration Genie the Genie two solar we since strategy. with We we furtherance during own of quarters. as and during this expect that forward evident forward note, acquired took our at projects, steps Energy of to these projects farms. become the rights On next provide Sunlight in strength these operated or quarter and and vertical also will ground owned more services our move site potential the several strategy megawatts break third we the generation XX As to

active process, We and/or remainder work of currently Genie's we X flow hunt early own gigawatt we of over to opportunities. and additional projects mature well As permitting projects the additional or sheet in Sunlight continue with negotiations more these to of assets. due of to our with producing with investments stages to XX rights Energy's projects in through have to are evaluate projects pipeline. for megawatts or cash advance site These either the under diligence operate evaluation opportunities balance range the in exclusive various from

Looking to fourth to adjusted and exceed EBITDA remain the strong expect GRE historical currently we to at quarter, seasonal averages.

the In more for summary, adjusted addition, quarter. of consolidated first available. we line strong we progress year-over-year bottom we we the to another fourth the in quarters updating generate in contribute In and you record solar the becomes continue and three expect increase in expect forward Genie to had on business results EBITDA Renewables strong will year to revenue that remainder the of as information our look

we We to efforts capital have renewables fulfill return long-term growth backholders. commitment to to steps in our forward also several taken emerging And in finally, our businesses. to our continue generate

financial Now, our I'll the Avi turn over call QX results. his discussion to of for

to remarks, joining My of XXXX. the you, the September financial and for Thank will I three third this everyone the months today call thanks quarter remarks Throughout ended our cover on quarter XXXX. us third Michael, of to XXth, compare my morning. results for XXXX

seasonal rather business. characteristic our comparisons, Focusing retail removes sequential of than on energy the year-over-year factors,

levels with highest third consumption per gas The the usage. lowest consumption, of the electricity is of and per is by the dependent levels typically peak meter on which associated highly quarter cooling season characterized heating meter

as the half an prior exit strong businesses REP quarter for businesses quarter in this operations reported also include the quarter. of reflect results Results this quarter our exceptionally of results which financial ago Genie This continued the Scandinavian for momentum XXXX. the these are first from from in third during the U.K., results for year periods. posted discontinued the Our on in positive building third operations our the were the year. discontinued from all quarter,

States. to the book be in by and value of late positively wholesale our electricity customer responsive XXXX prices continue volatility results reducing optimize hedge our by Our the to in in load decision impacted forward United

of a profit, result, quarter record gross our income. include consolidated As levels and net EBITDA results adjusted third

Michael we of preferred shareholders our return stock. continued our to As dividends also redemptions noted, to and through capital

our primarily third in electricity reflecting lowered from combination sales P&L. increased to count, Turning quarter sales decreased gas reduction GRE X.X% $XX.X electricity to sales. rates electric and Consolidated $XX.X a now by offset revenue fell of million, million. to substantially At meter X.X% our higher

As I over the substantially have gas quarter, past risen year. prices noted last

the to the In prior $XX,XXX, SG&A thus compared environment. million. quarters increasing the gross increased profit gross profit Consolidated Consolidated our driven The XX.X% highlighted to high remarks. was in energy $XX.X Renewables Gross to increased in improved investment $XX.X XX.X% income to driven of partly is management risk meters, entering project million expense, margin reflect XX.X% GRE In including new corporate Consolidated from to year. at profit after reflecting markets, GRE's position largely gross $XX.X the markets activities consumption Genie we and at gas operations to to and increased million, increased income by Revenue of margin per were ago. projects increase renewables gas onset to as his million and operations gas ongoing average the strong a by gross XX.X%. increased increased optimization to increased gross consumption more overhead from XX.X% million, these we're to during develop $XX.X XX.X% results consumption The increased of $X.X $XX.X development year XX.X%. Genie portfolio X.X% gas gasoline high At average $XXX,XXX our million. meter for GRE. generation selling we've solar to that margins the Michael coming up. in addition, price higher target stronger Genie us relatively grow loss renewables. putting

$X.X $X.X in of increased XX.X% of million EBITDA, projects. in third have a EBITDA first the from quarters to income adjusted quarter. operations attributable three of $X.XX a in at Genie promising of reflecting million loss to to quarter quarter. of the Consolidated solar we generation increased loss year, year XXXX million, jumped earlier, million Genie million adjusted generated million the earnings to compared in investments the share diluted loss of $X.XX initial $XX.X our the $XX.X $XX.X quarter to year compared to $XX.X the While ago to from share this loss same per Renewables, increased and in Energy a XXXX. third the period a per our in from Net To $XXX,XXX

does million equity million. working Net Turning capital not figure now XXth, to $XXX.X cash, totaled restricted within securities include marketable additional sheet. $XX.X This operations. an held million. discontinued balance cash was $X.X our September and On

Genie to Renewables. solar strong in invest our GRE, continue quarter fourth while has building Geni Looking we for project at portfolio ahead, positioned

ensure to efforts Looking opportunities ahead At generate develop related our range with customer they provides utility are up flexibility acquisition to to XXXX, and that and our about GRE at and excited market Renewables, ample businesses commercial balance to we long-term projects returns conditions we shareholders. scale of the working very and remain for attractive Genie will sheet warrant. ramp depth solar

Now to operator, Q&A. for back you

We Mountain will [Operator Shafter now live. begin Aaron Great for your line question from Your Cap. Aaron, the Instructions] is is question-and-answer first session. today at

operator. the Guys, on thanks, doing quarter, very Hi, timeline on like gross congratulations and the margins. you're and what improvement another really solid

release that you back shares. today the you've of So and lot preferred in bought noted both a

basically another if $X million recently -- guess and preferred left. have of within shares redeem years, two the is if that preferred amount You've correct each shares no plan quarter, do I wrong to have me you less -- than you'll your I'm

the projected game I plan? So that's that, am correct

is any of has Yes, years. million done at you be done, that an obviously is Hi, a time, current to wishes. authorized would but that then, the ongoing for now, to two be warm yes, quarter in to the as subject preferred know, only were that Board be plan. change And if Aaron. the the $X Thanks

any of I Okay. you buybacks notice common shares. And the of didn't I see any didn't --

if common really, to If be shares expect take buybacks. the quarter the increased and share cash because latest the any if amounts despite preferred, a put PE together, it -- on and when trailing look I'm the you looking bargain, your really can we I'm buybacks really is see -- hand. low you've you this and your to wondering,

can that? share anything on You

as to the always up said, decent Board to Again, a as with at. we've buybacks, be it's do we buy know, to look always low do you our And we amount We authority try something pretty so. opportunistic as that possible. from have

that. know, say I sometimes, some we here So what about and maybe that's much But windows miss you can pretty there.

have Okay. line? that And building about I'm you've about costs one, If and you're start it to adding the you bottom be see you that. that curious, on eventually talked that how field will projected solar to financed? any the when

Yes.

just would itself. profitability, equity The So encumber be would only wouldn't our purely have debt the They financed equity on most wouldn't any be with combination it debt. recourse likely to the other it'll project of a project of -- debt. parent be our and level

throwing if of approvals starts fully off could second when start to call soon I it when think or the on. it gets we're terms as get we it potentially and this be In get it, quarter, generating first profitability? could quarter that's as quarter, turned revenues built, it approvals going and this

So that's the timeline. general

of we'll later probably terms I a date. think size the project, In at that the of share

Sweden. you've mentioned had I guess, that you Finland, because up And the thoughts it were until what to gotten Okay. that exited And deciding your this had Scandinavian market, out been before point, market? totally of -- you on just exit

made wind in operation, for needed operation. one marketing the plans, us we to have consider our shout that don't But two immediate discontinued an again if start Remember, short-term out headquarters. doesn't as discontinued. where the the it six sense to months that are We was we or since businesses, opportunity on the to position should it that we what's that mean there's accountants wouldn't. nine received and auditors we were it that months, of we a one like Really, entities we both down consider operating today in

Okay. of getting any back And on chance your to cash a increase? dividend finally, hand, seeing

Again, future on periodically. the comment preferred the did can't buybacks to going the meeting, of are say that quarters. increase dividend. on what's topics along not happen in I and and that with had At sure Board we last for the we those conversation

much. very another on Thanks quarter. again All strong congratulations right. And Okay.

Thank you.

Your is from Brett Management. next Centennial for question coming at today Rush

question of, solar then targeted Quick terms solar And cash these say, in the cash to Hey, Are guys returns able just, projects? guys. stabilized on of, you what profit business. you for expect on kind margins? kind of

take and going a we use interesting actually to are do at typically, be to so that the I that different going to to margin, solar debt hard high out exact very these it's to I project to to teens ready or And when finance we relevant that help be But try IRRs us, the profile, different and rates projects, projects the target we're look mean, in we loan, to it's the also, different to when at has say. projects determining financials. that be have calculations, low-XXs. we each what interest the Yes. is these return think extent will time

we'll that a to So little and comes is fruition bit see each what but project that's different, if targeting. we're

you. Got

high that is so And the IRRs, high that teens IRRs from a coming percentage driving there value -- is IRR of when you're targeting that cash terminal some these majority IRR? that's of or current of the sort

Avi, do one? take that want to you

sure. Yes,

you tax reason the little the there's that back a it's form the just really are are of, lot actual kinds value so some -- a programs, which of part of location, are that can not is bit projects upfront those, monetization comes the and incentives come the these cash because the through some of returns yield So on programs. of that mix and exciting in through equity to and through are other other various of tax depending in a

projects it's to as and some So minimize cash in required, front-end a capital right on tail amount form the well. to the all stack the the equities of there's the refinance get find ability of that to then back that's

way attractive So we're talking why able a bit that's target abstract, aggressively I and to little we're but know I'm returns. it the approaching those

it. Got

Thanks Okay. guys.

Sure.

for This attending session [Operator conference concludes our presentation. Thank and you question-and-answer Instructions] call. today's

disconnect. now may You