GENIE ENERGY LTD. The following information should be read in conjunction with the accompanying consolidated financial statements and the associated notes thereto of this Quarterly Report, and the audited consolidated financial statements and the notes thereto and our Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , as filed with theU.S. Securities and Exchange Commission (orSEC ).
As used below, unless the context otherwise requires, the terms "the Company,"
"Genie," "we," "us," and "our" refer to
Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words "believes," "anticipates," "expects," "plans," "intends," and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed below under Part II, Item IA and under Item 1A to Part I "Risk Factors" in our Annual Report on Form 10-K for the year endedDecember 31, 2021 . The forward-looking statements are made as of the date of this report and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with theSEC pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our Annual Report on Form 10-K for the year endedDecember 31, 2021 . Overview
We are comprised of
GRE owns and operates retail energy providers ("REPs"), including IDT Energy ,
Residents Energy, Town Square Energy ("TSE"), Southern Federal and Mirabito
Natural Gas . GRE's REP businesses resell electricity and natural gas primarily
to residential and small business customers, with the majority of the customers
in the Eastern and Midwestern United States and Texas .
GRE International holds the Company's interest in REPs that serve
retail customers in Scandinavia. It holds 90.8% controlling interest in
Lumo Energia Oyj ("Lumo Finland"), a REP serving residential customers in
Finland and 97.7% interest in Lumo Energi AB ("Lumo Sweden"). GREI previously
held 98.8% in Genie Japan that was sold in May 2021 . GRE International also
holds a 100% ownership of Orbit Energy, a REP operating in the U.K. , which was
discontinued in November 2021 as discussed below.
Genie Renewables holds Genie Solar Energy, a rooftop solar system sales and
general contracting company, a 93.5% interest in CityCom Solar, a marketer of
community solar energy solutions, Diversegy LLC ("Diversegy"), an energy broker
for commercial, and a 60.0% controlling interest in Prism Solar, a solar
solutions company that is engaged in U.S. manufacturing of solar panels, solar
installation design and solar energy project management.
As part of our ongoing business development efforts, we seek out new
opportunities, which may include complementary operations or businesses that
reflect horizontal or vertical expansion from our current operations. Some of
these potential opportunities are considered briefly and others are examined in
further depth. In particular, we seek out acquisitions to expand the geographic
scope and size of our REP businesses.
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Discontinued Operations
In 2021, the natural gas and energy market in theUnited Kingdom deteriorated which prompted us to suspend the spin-off and start the process of orderly withdrawal from theUnited Kingdom market. InOctober 2021 , as part of the orderly exit process from theUnited Kingdom market,Orbit andShell U.K. Limited ("Shell") agreed to terminate the exclusive supply contract between them. As part of the termination agreement, Orbit was required to unwind all physical forward hedges with Shell which resulted in net cash proceeds after settlement of all related liabilities with Shell. A portion of the net cash proceeds was transferred to us (see Note 5, Discontinued Operations and Divestiture, to our financial statements included elsewhere in this Quarterly Report on Form 10-Q). Following the termination of the contract with Shell, we filed a petition with theHigh Court of Justice Business and Property of England andWales (the "Court") to declare Orbit insolvent based on the Insolvency Act of 1986. OnNovember 29, 2021 , the Court declared Orbit insolvent based on the Insolvency Act of 1986, revoked Orbit's license to supply electricity and natural gas in theUnited Kingdom , ordered that Orbit's current customers be transferred to a "supplier of last resort" and transferred the administration of Orbit to Administrators effectiveDecember 1, 2021 . All of the customers of Orbit were transferred to a third-party supplier effectiveDecember 1, 2021 as ordered by the Court. All assets and liabilities of Orbit, including cash and receivables remain with Orbit, the management and control of which was transferred to Administrators. We determined that exiting theUnited Kingdom represented a strategic shift that would have a major effect on our operations and accordingly, presented the results of operations and related cash flows as discontinued operations for all periods presented. The assets and liabilities of the discontinued operations have been presented separately, and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as ofMarch 31, 2022 andDecember 31, 2021 .
Coronavirus Disease (COVID 19)
Starting in the first quarter 2020, the world and
For the year endedDecember 31, 2021 , the impacts of COVID-19 are evident in several key aspects of our business operations and the corresponding financial impact has been mixed. Our consolidated income from operations for the three months endedMarch 31, 2022 increased by$29.9 million compared to the same period in 2021. Our customer base is predominantly residential, so we benefited from the increased demand for electricity when customers are working from their homes. On the other hand, like other retail energy providers, we suspended our face-to-face customer acquisition programs inMarch 2020 as public health measures were implemented to combat COVID-19, resulting in a decrease in gross meter acquisitions and a decrease inU.S. domestic meters served. The reduction in gross meter acquisitions decreased our customer acquisition expense in the year endedDecember 31, 2021 and 2020 compared to the period before the pandemic. Churn for three months endedMarch 31, 2022 and 2021, is below historical levels, in part, due to our competitors reducing face to face marketing programs. We did not experience any significant changes in our workforce composition and were able to implement our business continuity plans with no significant impact to our ability to maintain our operations. We continue to maintain strong physical and cybersecurity measures in order to both serve our operational needs with a remote workforce and to ensure that we continue to provide services to our customers. We face challenges due to the need to operate with a remote workforce and are continuing to address those challenges so as to minimize the impact on our ability to operate. Beginning in 2021, public health restrictions were eased in most of our markets which has allowed us to resume face-to-face sales and marketing. Looking ahead, we expect to see a modest rebound in meter acquisition, however, any reversal of the easing of restrictions would impact that expected rebound. There are many uncertainties regarding the impacts of the COVID-19 pandemic, and we are closely monitoring those impacts of on all aspects of its business, including how it will impact our customers, employees, suppliers, vendors, and business partners. We are currently unable to predict the impact that COVID-19 will have on our financial position and operating results due to the complexities of the impacts and numerous uncertainties that are beyond the Company's control. We expect to continue to assess the evolving impact of COVID-19 on our business and assets and intend to make adjustments accordingly. 31
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GRE operates REPs that resell electricity and/or natural gas to residential and small business customers inConnecticut ,Delaware ,Georgia ,Illinois ,Maine ,Maryland ,Massachusetts ,New Hampshire ,New Jersey , NewYork, Ohio ,Pennsylvania ,Florida ,Texas ,Rhode Island , andWashington, D.C. GRE's revenues represented approximately 85.1% and 84.3% of our consolidated revenues in the three months endedMarch 31, 2022 and 2021, respectively.
Seasonality and Weather; Climate Change
The weather and the seasons, among other things, affect GRE's REPs' revenues. Weather conditions have a significant impact on the demand for natural gas used for heating and electricity used for heating and cooling. Typically, colder winters increase demand for natural gas and electricity, and hotter summers increase demand for electricity. Milder winters and/or summers have the opposite effects. Unseasonable temperatures in other periods may also impact demand levels. Potential changes in global climate may produce, among other possible conditions, unusual variations in temperature and weather patterns, resulting in unusual weather conditions, more intense, frequent and extreme weather events and other natural disasters. Some climatologists believe that these extreme weather events will become more common and more extreme which will have a greater impact on our operations. Natural gas revenues typically increase in the first quarter due to increased heating demands and electricity revenues typically increase in the third quarter due to increased air conditioning use. Approximately 44.5% and 47.9% of GRE's natural gas revenues for the relevant years were generated in the first quarter of 2021 and 2020, respectively, when demand for heating was highest. Although the demand for electricity is not as seasonal as natural gas (due, in part, to usage of electricity for both heating and cooling), approximately 30.8% and 31.8% of GRE's electricity revenues for 20212020, respectively, were generated in the third quarters of those years. GRE's REP's revenues and operating income are subject to material seasonal variations, and the interim financial results are not necessarily indicative of the estimated financial results for the full year. In addition to the direct physical impact that climate change may have on our business, financial condition and results of operations because of the effect on pricing, demand for our offerings and/or the energy supple markets, we may also be adversely impacted by other environmental factors, including: (i) technological advances designed to promote energy efficiency and limit environmental impact; (ii) increased competition from alternative energy sources; (iii) regulatory responses aimed at decreasing greenhouse gas emissions; and (iv) litigation or regulatory actions that address the environmental impact of our energy products and services. Winter Storm inTexas In February of 2021, theState of Texas experienced unprecedented cold weather and snow, which was named Winter Storm Uri. With the grid overtaxed due to demand and weather-related reduced supply and rolling blackouts being enforced, by order of theElectricity Reliability Council of Texas ("ERCOT"), real-time commodity prices during the crisis escalated significantly. Although GRE's commitment for their customers inTexas was hedged for foreseen winter weather conditions, the market conditions exposed the Company to significant unexpected cost increases. In the year endedDecember 31, 2021 , GRE recognized approximately$13.0 million in additional costs related to the situation, which were included in the cost of revenue in the consolidated statements of operation. InJune 2021 , the state legislature of theState of Texas passed House Bill 4492 ("HB 4492") which includes certain provisions for financing certain costs associated with electric markets caused by Winter Storm Uri. Pursuant to HB 4492, two categories of charges associated with Winter Storm Uri are to be securitized and the proceeds of the securitization will be provided to the load serving entities who originally incurred the charges. Under HB 4492, the Company is entitled to recover a portion of the costs incurred from the effect of Winter Storm Uri with a calculated range of$1.5 million to$2.6 million . In the second quarter of 2021, the Company recorded a reduction in cost of revenues of$1.5 million . 32
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InSeptember 2021 , thePublic Utility Commission of Texas ("PUC") approved the Debt Obligation Order to grantERCOT's application for a debt financing mechanism to pay for certain costs associated with Winter Storm Uri. Under the Debt Obligation Order, the amount that the Company is entitled to recover increased to approximately$3.4 million . In the third quarter of 2021, the Company recorded an additional reduction in the cost of revenues of$1.9 million for an aggregate amount of$3.4 million for the year endedDecember 31, 2021 .
Purchase of Receivables and Concentration of Credit Risk
Utility companies offer purchase of receivable, or POR, programs in most of the service territories in which GRE operates. GRE's REPs reduce their customer credit risk by participating in POR programs for a majority of their receivables. In addition to providing billing and collection services, utility companies purchase those REPs' receivables and assume all credit risk without recourse to those REPs. GRE's REPs' primary credit risk is therefore nonpayment by the utility companies. In the three months endedMarch 31, 2022 the associated cost was approximately 1.2% of GRE's revenue. AtMarch 31, 2022 , 80.6% of GRE's net accounts receivables were under a POR program. Certain of the utility companies represent significant portions of our consolidated revenues and consolidated gross trade accounts receivable balance during certain periods, and such concentrations increase our risk associated with nonpayment by those utility companies.
For the three months ended
The following table summarizes the percentage of consolidated trade receivable by customers that equal or exceed 10.0% of consolidated net trade receivables atMarch 31, 2022 andDecember 31, 2021 (no other single customer accounted for 10.0% or greater of our consolidated net trade receivable asMarch 31, 2022 orDecember 31, 2021 ): March 31, 2022 December 31, 2021 Customer A 12 % na %
na-less than 10.0% of consolidated revenue in the period
Legal Proceedings
Although GRE endeavors to maintain best sales and marketing practices, such practices have been the subject of certain class action lawsuits.
See Note 18, Commitments and Contingencies, in this Quarterly Report on Form 10-Q, which is incorporated by reference.
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Agency and Regulatory Proceedings
From time to time, the Company responds to inquiries or requests for information or materials from public utility commissions or other governmental regulatory or law enforcement agencies related to investigations under statutory or regulatory schemes. The Company cannot predict whether any of those matters will lead to claims or enforcement actions or whether the Company and the regulatory parties will enter into settlements before a formal claim is made. See Notes 18, Commitments and Contingencies, in this Quarterly Report on Form 10-Q, which is incorporated by reference, for further detail on agency and regulatory proceedings.
Town Square OnSeptember 19, 2018 , theState of Connecticut Public Utilities Regulatory Authority ("PURA") commenced an investigation intoTown Square following customer complaints of allegedly misleading and deceptive sales practices on the part ofTown Square .The Connecticut Office of Consumer Counsel joined in the investigation. OnJune 17, 2020 , the PURA notifiedTown Square that it was advancing it's investigation by assigning Prosecutorial ("PRO") staff for the purpose of investigatingTown Square's compliance with licensed electric supplier billing, marketing, and licensing requirements, and, if appropriate, facilitating settlement discussions among the parties. AlthoughTown Square denies any basis for those complaints and any wrongdoing on its part, inMay 2021 , the parties reached a settlement in principle, subject to finalization of a definitive settlement agreement, pursuant to whichTown Square paid$0.4 million .Town Square has also volunteered to refrain, from door-to-door marketing activities inConnecticut for a period of 15 months. As ofMarch 31, 2022 ,Town Square's Connecticut customer base represented 6.9% of GRE's total meters served and 8.1% of the total RCEs of GRE's customer base. For three months endedMarch 31, 2022 and 2021,Town Square's gross revenues from sales inConnecticut were$3.7 million and$9.4 million , respectively. An RCE represents a natural gas customer with annual consumption of 100 mmbtu or an electricity customer with annual consumption of 10 MWh. Because different customers have different rates of energy consumption, RCEs are an industry standard metric for evaluation the consumption profile of a given retail customer base. 34
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Residents Energy
In August of 2020, Residents Energy began marketing retail energy services inConnecticut . For the year endedDecember 31, 2021 Residents Energy's gross revenues from sales inConnecticut was$0.2 million . During the fourth quarter of 2020, the enforcement division of PURA contacted Residents Energy concerning customer complaints received in connection with alleged door-to-door marketing activities in violation of various rules and regulations. OnMarch 12, 2021 , the enforcement division filed a motion against Resident Energy with the adjudicating body of PURA, seeking the assessment of$1.5 million in penalties, along with a suspension of license for eighteen months, auditing of marketing practices upon reinstatement and an invitation for settlement discussions. InMay 2021 , the parties reached a settlement, pursuant to which Residents will pay$0.3 million . Residents Energy has also volunteered to withdraw from the market inConnecticut for a period of 36 months. Critical Accounting Policies Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted inthe United States of America , orU.S. GAAP. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require the application of management's most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to revenue recognition, allowance for doubtful accounts, acquisitions, goodwill, and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. For additional discussion of our critical accounting policies, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year endedDecember 31, 2021 .
Recently Issued Accounting Standards
Information regarding new accounting pronouncements is included in Note 20-Recently Issued Accounting Standards, to the current period's consolidated financial statements.
Results of Operations We evaluate the performance of our operating business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations. 35
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Three Months EndedMarch 31, 2022 and Compared to Three Months EndedMarch 31, 2021 Genie Retail Energy Segment Three months ended March 31, Change (amounts in thousands) 2022 2021 $ % Revenues: Electricity$ 59,380 $ 73,387 $ (14,007 ) (19.1 )% Natural gas 24,504 17,280 7,224 41.8 Total revenues 83,884 90,667 (6,783 ) (7.5 ) Cost of revenues 37,301 75,701 (38,400 ) (50.7 ) Gross profit 46,583 14,966 31,617 211.3 Selling, general and administrative expenses 16,407 13,762 2,645 19.2 Income from operations$ 30,176 $ 1,204 $ 28,972 (2,406.3 )% Revenues. Electricity revenues decreased by 19.1% in three months endedMarch 31, 2022 compared to the same period in 2021. The decrease is due to a decline in electricity consumption partially offset by an increase in the average price charged per kilowatt hour charged to customers in the three months endedMarch 31, 2022 compared to the same period in 2021. Electricity consumption by GRE's REPs' customers decreased by 36.7% in the three months endedMarch 31, 2022 , compared to the same period in 2021. The decrease in electricity consumption reflected a 5.1% decrease in average consumption per meter and a 33.3% decrease in the average number of meters served. The decrease in per meter consumption reflects a decrease in residential electricity consumption as many COVID-19 "stay-at-home" measures have been lifted thus reversing prior year increased levels of consumption related to those measures. The reduction in meters served was driven, in part, by the decision to pause certain customer acquisitions efforts and allow certain lower margin customers, including those acquired through municipal aggregation deals to move to other suppliers. The average rate per kilowatt hour sold increased 27.8% in the three months endedMarch 31, 2022 compared to the same period in 2021. The increase is due to the increase in the wholesale price of electricity in the three months endedMarch 31, 2022 compared to the same period in 2021. GRE's natural gas revenues increased by 41.8% in the three months endedMarch 31, 2022 compared to the same period in 2021. The increase in natural gas revenues in the three months endedMarch 31, 2022 compared to the same period in 2021 was a result of increases in natural gas consumption partially offset by a decrease in average revenue per therm sold. Natural gas consumption by GRE's REPs' customers increased by 20.0% in the three months endedMarch 31, 2022 compared to the same period in 2021, reflecting a 13.6% increase in average consumption per meter partially and a 5.7% increase in average meters served in the three months endedMarch 31, 2022 compared to the same period in 2021. The average revenue per therm sold increased by 18.1% in the three months endedMarch 31, 2022 , compared to the same period in 2021.
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The customer base for GRE's REPs as measured by meters served consisted of the
following:
March December 31, September 30,
(in thousands) 31, 2022 2021 2021 June 30, 2021 March 31, 2021Meters at end of quarter: Electricity customers 209 210 289 292 308 Natural gas customers 77 75 72 69 65 Total meters 286 285 361 361 373 Gross meter acquisitions in three months endedMarch 31, 2022 , were 44,000 compared to 62,000 for the same period in 2021. The decrease in the gross meter acquisitions for the three months endedMarch 31, 2022 compared to the same period in 2021 was due to a "strategic pause" on certain customer acquisition channels to protect margins due to unfavorable market conditions that started in the fourth quarter 2021. Meters served slightly increased by 1,000 meters or 0.4% fromDecember 31, 2021 toMarch 31, 2022 . The increase in the number of meters served atMarch 31, 2022 compared toDecember 31, 2021 was due to a decrease in average churn during the period. In three months endedMarch 31, 2022 , average monthly churn decreased to 4.5% compared to 4.9% for same period in 2021. Meters served decreased by 87,000 meters or 25.1% fromMarch 31, 2021 toMarch 31, 2022 . The decrease in the number of meters served atMarch 31, 2021 compared toMarch 31, 2021 was due to the "strategic pause" discussed above. GRE's REPs also returned some customers to their underlying utility in certain markets in the fourth quarter of 2021 to minimize the impact of expected higher prices on our margins.
The average rates of annualized energy consumption, as measured by RCEs, are presented in the chart below. An RCE represents a natural gas customer with annual consumption of 100 mmbtu or an electricity customer with annual consumption of 10 MWh. Because different customers have different rates of energy consumption, RCEs are an industry standard metric for evaluating the consumption profile of a given retail customer base.
September 30,
(in thousands) March 31, 2022 December 31, 2021 2021 June 30, 2021 March 31, 2021RCEs at end of quarter: Electricity customers 182 189 276 272 291 Natural gas customers 78 71 60 58 56 Total RCEs 260 260 336 330 347 37
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RCEs decreased 25.1% atMarch 31, 2022 compared toMarch 31, 2021 primarily due to the "strategic pause" on customer acquisitions and transfer of some customers to their underlying utilities as discussed above.
Cost of Revenues and Gross Margin Percentage. GRE's cost of revenues and gross margin percentage were as follows:
Three months endedMarch 31, Change
(amounts in thousands) 2022 2021 $ %
Cost of revenues:
Electricity $ 25,197 $ 66,460 $ (41,263 ) (62.1 )%
Natural gas 12,104 9,241 2,863 31.0
Total cost of revenues $ 37,301 $ 75,701 $ (38,400 ) (50.7 )%
Three months endedMarch 31,
(amounts in thousands) 2022 2021 Change
Gross margin percentage:
Electricity 57.6 % 9.4 % 48.2 %
Natural gas 50.6 46.5 4.1
Total gross margin percentage 55.5 % 16.5 % 39.0 %
Cost of revenues for electricity decreased in the three months ended March 31,
2022 compared to the same period in 2021 primarily because of decreases in
electricity consumption by GRE's REPs' customers and the average unit cost of
electricity. The average unit cost of electricity decreased 40.1% in the three
months ended March 31, 2022 compared to the same period in 2021. A significant
portion of the decrease in the average cost of electricity resulted from the
favorable results of hedging activities for the three months ended March 31,
2022 compared to the same period in 2021 and the incremental cost incurred in
the three months ended March 31, 2021 as an effect of a major winter storm in
Texas as discussed above. Gross margin on electricity sales increased in
the three months ended March 31, 2022 compared to the same period in
2021 because the average rate charged to customers increased while the average
unit cost of electricity decreased.
Cost of revenues for natural gas increased in the three months ended March 31,
2022 compared to the same period in 2021 primarily because of increases in
natural gas consumption by GRE's REPs' customers and in average unit cost of
natural gas. The average unit cost of natural gas increased 9.1% in the three
months ended March 31, 2022 compared to the same period in 2021. Gross margin on
natural gas sales increased in the three months ended March 31, 2022 compared to
the same period in 2021 because the average rate charged to customers increased
more than the increase in the average unit cost of natural gas.
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Selling, General and Administrative. The increase in selling, general and administrative expense in the three months endedMarch 31, 2022 compared to the same period in 2021 was primarily due to increases in marketing and customer acquisition costs and employee-related costs partially offset by a decrease in legal settlement costs. Employee-related expenses increased by$1.1 million in the three months endedMarch 31, 2022 compared to the same period in 2021 primarily due to an increase in accrued bonuses as a result of improved results of operations during the period. Marketing expenses increased by$2.0 million in three months endedMarch 31, 2022 compared to the same period in 2021 as a result of expansion of marketing activities to offset the effect of COVID-19 related to public health restrictions to traditional customer acquisition methods. As a percentage of GRE's total revenues, selling, general and administrative expense increased from 15.2% in the three months endedMarch 31, 2021 to 19.6% in the three months endedMarch 31, 2022 . GRE International Segment
InJanuary 2021 , weather volatility and the lack of adequate gas reserves drove the prices on the Japan Electric Power Exchange to$2,390 per megawatt hour for an extended period of time. Although our supply commitment for our customers inJapan was hedged reasonably for expected winter weather conditions, the extreme price spike exposed us to further unexpected cost increases. The impact on our 2021 consolidated result of operations was approximately$2.5 million . OnApril 26, 2021 , we entered into an Equity Purchase Agreement ("Purchase Agreement") withHanhwa Q Cells Japan Co., Ltd. ("Hanhwa"), pursuant to which, we agreed to sell our interest inGenie Japan for ¥570.0 million (equivalent to approximately$5.3 million atApril 26, 2021 ) subject to certain terms and conditions set forth in the Purchase Agreement. OnMay 11, 2021 , upon the terms and subject to the conditions of Purchase Agreement, we completed the divestiture ofGenie Japan for an aggregate cash consideration of ¥570.0 million (equivalent to approximately$5.2 million atMay 11, 2021 ). Hanhwa also assumed the outstanding loans payable ofGenie Japan . We paid$0.6 million of commission to certain former employees ofGenie Japan and recognized a pre-tax gain of$4.2 million from the divestiture. For the three months endedMarch 31, 2021 ,Genie Japan had revenues and cost of revenues of$3.2 million and$5.4 million , respectively. Three Months Ended March 31, Change (amounts in thousands) 2022 2021 $ % Revenues Electricity$ 12,404 $ 14,226 $ (1,822 ) (12.8 )% Others 199 109 90 82.6 Total revenues$ 12,603 $ 14,335 $ (1,732 ) (12.1 ) Cost of revenue 14,168 17,765 (3,597 ) (20.2 ) Gross loss (1,565 ) (3,430 ) 1,865 (54.4 ) Selling, general and administrative expenses 1,243 2,121 (878 ) (41.4 ) Loss from operations$ (2,808 ) $ (5,551 ) $ (2,743 ) (49.4 )% 39
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Meters served byGRE International's REPs decreased to 61,000 atMarch 31, 2022 from 67,000 atDecember 31, 2021 primarily a "strategic pause" on customer acquisition to protect margins due to unfavorable market conditions that started in the fourth quarter 2021.
RCEs of
Revenues.GRE International's revenues decreased in the three months endedMarch 31, 2022 compared to the same period in 2021 primarily due to the sale ofGenie Japan inMay 2021 partially offset by increases in revenues in Lumo Finland and Lumo Sweden. Revenues fromGenie Japan were$3.2 million for the three months endedMarch 31, 2021 . The increase in revenues from Lumo Finland and Lumo Sweden from the three months endedMarch 31, 2022 compared to the same period in 2021 was due to an increase in the average price charged to customers which increased by 138.0%, partially offset by the decrease in electricity consumption which decreased by 39.5%. The increase in the average price charged to customers in the three months endedMarch 31, 2022 compared to the same period in 2021 is due to a significant increase in the price of electricity in the wholesale market. Cost of Revenues.GRE International's cost of revenue decreased in three months endedMarch 31, 2022 compared to the same period in primarily due to the sale ofGenie Japan inMay 2021 partially offset by an increase in the cost of revenue in Lumo Finland and Lumo Sweden. Cost of revenue fromGenie Japan was$5.4 million for the three months endedMarch 31, 2021 . The increases in cost of revenues from Lumo Finland and Lumo Sweden from the three months endedMarch 31, 2022 compared to the same period in 2021 was due to an increase in the average cost of electricity which increased by 141.7%, partially offset by the decrease in electricity consumption as discussed above. Selling, General and Administrative Expenses. The decrease in selling, general and administrative expenses in three months endedMarch 31, 2022 compared to the same period in 2021 was primarily due to the sale ofGenie Japan inMay 2021 . Genie Renewables Segment The Genie Renewables (formerly GES) segment is composed ofGenie Solar , CityCom Solar, Diversegy and Prism, in which we hold a 60.0% controlling interest. Three Months Ended March 31, Change (amounts in thousands) 2022 2021 $ % Revenues $ 2,042$ 2,488 $ (446 ) (17.9 )% Cost of revenue 1,518 1,370 148 10.8 Gross profit 524 1,118 (594 ) (53.1 ) Selling, general and 1,003 559 444 79.4 administrative expenses (Loss) income from operations $ (479 )$ 559 $ 1,038 (185.7 )% 40
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Revenue. Genie Renewables' revenues decreased in the three months endedMarch 31, 2022 compared to the same period in 2021. The decrease in revenues was the result of a decrease in the activities ofGenie Solar projects and commissions from selling third-party products to customers by CityCom Solar. Revenues from Diversegy include commissions, entry fees and other fees from our energy brokerage and marketing services businesses. Cost of Revenues. Cost of revenue increased in the three months endedMarch 31, 2022 compared to the same period in 2021. The increase in cost revenues was due to an increase in commissions paid out by Diversegy.
Selling, General and Administrative. Selling, general and administrative
expenses increased in the three months ended
Corporate
Corporate does not generate any revenues, nor does it incur any cost of
revenues. Corporate costs include unallocated compensation, consulting fees,
legal fees, business development expense and other corporate-related general and
administrative expense.
(amounts in thousands) Three months ended March 31, Change
2022 2021 $ %
General and administrative
expenses and loss from
operations $ 2,456 $ 1,677 $ 779 46.5 %
Corporate general and administrative expenses increased in three months ended
March 31, 2022 compared to the same period in 2021 primarily because of
increases in employee related cost and in stock-based compensation expense. As a
percentage of our consolidated revenues, Corporate general and administrative
expense increased to 2.5% in the three months ended March 31, 2022 from 1.6% in
the three months ended March 31, 2021 .
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Consolidated
Selling, general and administrative expenses. Stock-based compensation expense included in consolidated selling, general and administrative expense was$0.8 million and$0.6 million in the three months endedMarch 31, 2022 and 2021, respectively. AtMarch 31, 2022 , aggregate unrecognized compensation cost related to non-vested stock-based compensation was$5.9 million . The unrecognized compensation cost is recognized over the expected service period.
The following is a discussion of our consolidated income and expense line items below income from operations:
Three months ended
March 31, Change
(amounts in thousands) 2022 2021 $ %
Income from operations $ 24,433 $ (5,465) $ 29,898 547.1 %
Interest income 17 84 (67 ) (79.8 )
Interest expense (50 ) (182 ) 132 (72.5 )
Other income (loss), net (498 ) 407 (905 ) (222.4 )
Unrealized gain on marketable
equity securities and (652 ) 4,107 (4,759 ) nm
investments
Provision for benefit from
income taxes (6,514 ) (535 ) (5,979 ) 1,117.6
Net income (loss) from
discontinued operations 16,736 (1,584 ) 18,320 1,156.6
Loss from discontinued - (1,110 ) 1,110 100.0
operations, net of tax
Net income (loss) 16,736 (2,694 ) 19,430 721.2
Net (loss) income
attributable to noncontrolling
interests (1,153 ) (708 ) (445 ) 62.9
Net income attributable to
Genie $ 17,889 $ (1,986 ) $ 19,875 1,000.8 %
nm-not meaningful
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Other Income (loss), net. Other income (loss), net in the three months ended
Provision for Income Taxes. The change in the reported tax rate for the three months endedMarch 31, 2022 compared to the same period in 2021, is a result of favorable results of operations in theU.S. and changes in the mix of jurisdiction in which taxable income was earned which was not offset by income tax benefit in some jurisdictions that had losses due to valuation allowances in those jurisdictions. Net Loss Attributable to Noncontrolling Interests. The increase in net loss attributable to noncontrolling interests in the three months endedMarch 31, 2022 compared to the same period in 2021 was primarily due to an increase in the share of noncontrolling interest in net losses of CCE. Unrealized gain on marketable equity securities and investments. The unrealized gain (loss) on marketable equity securities and investment for the three months endedMarch 31, 2022 pertains to the appreciation of the Company's investments in common stock of Rafael Holdings, Inc. ("Rafael") which the Company acquired inDecember 2020 .
Income from discontinued operations, net of tax. Income from discontinued
operations, net of tax in the three months ended
Liquidity and Capital Resources
General We currently expect that our cash flow from operations and the$88.2 million balance of unrestricted cash and cash equivalents that we held atMarch 31, 2022 will be sufficient to meet our currently anticipated cash requirements for at least the period fromApril 1, 2022 toMay 9, 2022 .
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