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Genie Energy : Investor Presentation - December 2020

12/30/2020 | 04:53pm EDT

Genie Energy Ltd


Investor Presentation

December 2020

Safe Harbor Statement

This presentation contains forward-looking statements. Statements that are not historical facts are forward-looking statements and such forward-lookingstatements are statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include:

  • statements about Genie's and its divisions' future performance;
  • projections of Genie's and its divisions' results of operations or financial condition; and
  • statements regarding Genie's plans, objectives or goals, including those relating to its strategies,initiatives, competition, acquisitions,dispositions and/or its products and offerings.

Words such as "believe," "anticipate," "plan," "expect," "intend," "target," "estimate," "project," "predict," "forecast," "guideline," "aim," "will," "should," "likely," "continue" and similar expressionsare intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Readers are cautioned not to place undue reliance on these forward-looking statements and all such forward- looking statements are qualified in their entirety by reference to the following cautionary statements.

Forward-looking statements are based on Genie's current expectations, estimates and assumptions and because forward-looking statements address future results, events and conditions, they, by their very nature, involve inherent risks and uncertainties, many of which are unforeseeable and beyond the Genie's control. Such known and unknown risks, uncertainties and other factors may cause Genie's actual results, performance or other achievementsto differ materially from the anticipated results, performance or achievements expressed, projected or implied by these forward-looking statements.

These factors include those discussed under the headings "Risk Factors" and "Management'sDiscussion and Analysis of Financial Condition and Results of Operations in Genie's periodic filings made with the Securities and Exchange


Genie cautions that such factors are not exhaustive and that other risks and uncertaintiesmay cause actual results to differ materially from those in forward-looking statements.

Forward-looking statements speak only as of the date they are made and are statements of Genie's current expectations concerning future results, events and conditions and Genie is under no obligation to update any of the forward- looking statements, whether as a result of new information, future events or otherwise.


Genie Energy

At a glance

Genie Energy Ltd.*



Genie Retail Energy

Genie Retail Energy


Genie Energy Services

  • Genie Oil and Gas (GOGAS) and Afek not included. The company has discontinued its oil and gas exploration operations accounted for in those business units

Genie Energy Class B Common Stock



Stock Price¹


Shares Outstanding²

26.2 million

Dividend Yield¹


Market Capitalization1,2

$203 million

Genie Energy Series 2012-A Preferred Stock



Stock Price¹


Shares Outstanding²

2.3 million

Dividend Yield1


Consolidated Financials & Results


$49.2 million


$2.0 million

Revenue (TTM)⁵

$358.4 million

Income from operations (TTM)⁵

$22.9 million

Adjusted EBITDA (TTM)⁵,⁶

$24.2 million

Full time employees


¹ As of December 24, 2020

  • Shares outstanding as of November 4, 2020. Includes 1.6 million shares of Class A common stock not publicly traded

³ Includes cash, cash equivalents and restricted cash

  • As of September 30, 2020

⁵ Trailing twelve months ended September 30, 2020

⁶ Non-GAAP measure. See reconciliation to corresponding GAAP measure later in this presentation


Investment Thesis

Powerful Financial Performance

  • Domestic energy supply delivers consistent strong financial performance
  • Diversified operations mitigate market and regulatory risk

Attractive Dividends

  • Common stock dividend increased 13% in 2020
  • Yield on Genie Energy common and preferred stocks supported by stable cash flows and solid balance sheet with ample cash and no debt

Strong International Growth

  • Genie's investment to build businesses in deregulated international markets provides abundant, diversified growth opportunities
  • Maturing international supply businesses with improving financial performance


Retail Energy Supply

Business Overview

Retail energy provider business supplies electricity and natural gas to residential and commercial customers in deregulated markets in US and International markets

Market Framework

Deregulated markets: in US, state by state regulatory structure

Competition: incumbent utility and other competitive suppliers

Utilities: handle distribution and, in most markets, billing


Retail Energy Supply

Business Overview

Key Enterprise Functions

Sales and marketing - Across multiple channels to residential and small commercial

Commodity supply - Wholesale markets to meet retail demand Portfolio of offerings

Green (carbon offsets) and conventional sourcing Fixed and variable rates

Risk mitigation

Customer care and retention


Retail Energy Supply

Value Creation

  • Multiple sales channels

Customer Acquisition Model

Green energy and fixed rate highlight portfolio of offerings

  • Deep data analysis to identify market opportunities and optimize offerings
  • Hedging strategies reduce commodity volatility risk

Risk Management

In purchase of receivable markets, utilities assume bad debt risk

  • Geographic diversity reduces weather and regulatory risks
  • Attractive margin and cash flow cycle

Long-Term, Valuable Customers

Targeted payback period tailored to product and customer type

  • Customer rewards program


Genie Retail Energy

US Markets

Genie Retail Energy

Markets Served

Deregulated Markets



Domestic Customer Portfolio*

* Domestic residential customer equivalents (RCEs) at September 30, 2020


Genie Retail Energy

US Markets


US Markets

Genie Retail Energy Financial Results


* TTM - Trailing twelve months ended September 30, 2020

Genie International

Diversification through expansion of REP business to deregulated markets globally

Great Britain

Finland + Sweden


Entered in 4Q17

Acquired Lumo Energia (Finland)

Launched in 1Q19

Electricity and natural gas

in 1Q19

TAM: 83 million electric meters

TAM: 50 million meters

TAM: 3.4 million meters in Finland

Market fully opened in 2020. Low

Platform to address 12+ million

REP penetration

meter Scandinavian market


Genie International

Strong Meter & RCE Growth


International Markets

GRE International Financial Results**








FY 2019


(in millions of USD)











Gross profit










SG&A Expense










Depreciation and amortization










Loss from operations










  • TTM - Trailing twelve months ended September 30, 2020.
  • Genie Energy accounted for its investments in Orbit Energy, its joint venture operating in the U.K., under the equity method of accounting. Revenue generated, and expenses incurred, are not reflected in segment revenue and operating expenses. RCE and meter counts do, however,

include Orbit Energy customers.


Genie Energy

COVID-19 Update

Trends through September 2020

  • Increased consumption per meter as residential customers spend more time at home
  • Decreased rate of new customer acquisition and decreased SG&A expense as a result of suspension of door-to-door marketing in 1Q20. Resumption of limited door-to-door in 2Q20-3Q20
  • Decreased rate of customer churn reflecting decreased competitive meter acquisition
  • Gradually declining commodity prices reflecting impact of decreased commercial consumption in broad commodity markets


Meters and RCEs



  • 2015-2016: Strong electric meter, RCE growth through domestic expansion
  • 2016: Acquired domestic REP Town Square Energy in Q4
  • 2017: Organic RCE growth
  • 2018: Reduced investment and regulatory compliance accelerate attrition
  • 2019-2020: Domestic and international growth with shift to higher consumption meters in domestic markets

Residential Customer Equivalents (RCEs)



Genie Energy

Consolidated P&L


* TTM - Trailing twelve months ended September 30, 2020

Reconciliation of Non-GAAP Financials

In addition to including financial results that are determined in accordance with generally accepted accounting principles in the United States of America (GAAP), Genie Energy's investor presentation included Adjusted EBITDA, which is a non-GAAP financial 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 equity method investees, 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, stock-based compensation, impairment, other operating loss, and the write-off of capitalized exploration costs, and other operating gain. These additions and deductions are non-cash and/or non-routine items in the relevant periods.

Management believes that Genie's Adjusted EBITDA measure provides useful information to both

management and investors by excluding certain expenses and non-routine gains or losses that may not be indicative of Genie'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'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. Adjusted EBITDA may also be an indicator of the strength and performance of Genie's and the segment's ongoing business operations, including the ability to fund capital expenditures, and meet working capital needs from current operations (as opposed to cash resources), and to incur and service debt.

Management refers to Adjusted EBITDA, as well as the GAAP measures gross profit and income (loss) from operations, on a segment and/or consolidated level to facilitate internal and external comparisons to the segments' and Genie'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 write-off of capitalized exploration costs, which is a component of income (loss) from operations, is also excluded from the calculation of Adjusted EBITDA. The write-off of capitalized exploration costs is primarily dictated by events and circumstances outside the control of management that trigger an impairment analysis. While there may be similar charges in other periods, the nature and magnitude of these charges can fluctuate markedly and do not reflect the performance of Genie Energy's continuing operations.

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) or other measures of liquidity and financial performance prepared in accordance with GAAP. In addition, Genie's measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Following are reconciliations of Adjusted EBITDA to the most directly comparable GAAP measure, Income from Operations:


Reconciliation of Non-GAAP Financials


* TTM - Trailing twelve months ended September 30, 2020

Michael Stein

Chief Executive Officer

Avi Goldin

Chief Financial Officer


Genie Energy Ltd. published this content on 30 December 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 December 2020 21:52:03 UTC

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Financials (USD)
Sales 2020 379 M - -
Net income 2020 13,2 M - -
Net cash 2020 36,2 M - -
P/E ratio 2020 16,4x
Yield 2020 3,54%
Capitalization 171 M 171 M -
EV / Sales 2019 0,58x
EV / Sales 2020 0,40x
Nbr of Employees 202
Free-Float 69,7%
Duration : Period :
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Managers and Directors
Michael Menachem Stein Chief Executive Officer
Avi Goldin CFO, Treasurer & Principal Accounting Officer
Howard S. Jonas Chairman
William Wesley Perry Lead Independent Director
Allan Sass Independent Outside Director
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