Genie Energy Ltd. GNE reported a mixed performance for the second quarter of 2024, reflecting both challenges and strengths within its core operations.
While the retail energy segment struggled with declining revenues and margins, the renewables segment showed promising growth and improved profitability. The company reported year-over-year declines in earnings per share and total revenues, reflecting the impacts of reduced electricity meter counts and the normalization of electricity sales margins. However, cost-management efforts and strategic investments in renewables helped offset some of the adverse impacts.
Genie Energy Ltd. Price, Consensus and EPS Surprise
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Q2 Results
Genie Energy reported a second-quarter 2024 earnings per share of 37 cents, declining 17.8% from 45 cents in the year-ago quarter.
Total quarterly revenues fell 3% to $90.7 million from $93.5 million in the prior-year quarter.
The weak quarterly results were primarily caused by reduced revenues in the retail energy segment.
Dividend Payment
A quarterly dividend of 7.5 cents per share was declared, payable on Aug 22, 2024, to stockholders of record as of Aug 14, 2024.
Segment Information
The company specializes in energy services, managing its operations through two primary segments — Genie Retail Energy and Genie Renewables.
Retail Energy Segment: The retail energy segment saw a 3.4% year-over-year decline in revenues to $86.7 million in the second quarter. The decrease was led by a reduction in electricity meters served, although higher consumption per meter partially offset this impact. The gross margin for the segment decreased to 37.2% from 41.8% in the year-ago quarter due to the normalization of electricity sales margins.
Renewables Segment: The renewables segment performed strongly, with revenues increasing 6.6% to $4 million in the second quarter of 2024, driven by 53.3% growth at Diversegy and contributions from Genie Solar’s operating portfolio. This segment also saw a gross margin expansion to 26.8% in the second quarter of 2024 from 19.6% a year ago.
Profitability
The gross profit margin contracted to 36.8% in the second quarter from 40.9% in the year-ago quarter, a significant drop attributed to the normalization of electricity sales margins from unusually high levels in the previous year.
As a result, gross profit declined 12.8% to $33.3 million from $38.2 million in the year-ago quarter. Operating income decreased 29.7% to $10.6 million from $15 million, and adjusted EBITDA dropped 24% to $12 million from $15.8 million in the prior-year quarter.
Net income attributable to common stockholders fell 35.8% year over year to $9.6 million in the second quarter.
Operating Expenses
Operating expenses, a critical metric for assessing business efficiency, showed a mixed trend. Selling, general and administrative expenses decreased slightly year over year to $22 million from $23.2 million, reflecting the impacts of cost-management efforts.
However, the provision for captive insurance liability and impairment of assets added $0.8 million in additional expenses, impacting overall profitability.
Cash & Debt
As of Jun 30, 2024, the company’s cash and cash equivalents, including short and long-term restricted cash and marketable securities, were $178.3 million, increasing from $162.4 million at the end of the first quarter of 2024. This increase was achieved despite ongoing investments, dividend payments and share repurchases.
Cash flow from operating activities was robust, increasing 486.9% to $17.6 million from $3 million in the second quarter of 2023.
Management Guidance
CEO Michael Stein highlighted that the company is on track to meet its full-year adjusted EBITDA guidance of $40-$50 million. This projection reflects the company's efforts in growing meter and RCE (Residential Customer Equivalents) counts, and stabilizing its retail energy environment. The ongoing investments in the renewables segment, particularly in solar projects and the expansion of the Diversegy business, are expected to contribute significantly to future growth.
Other Developments
In the second quarter, Genie Energy undertook several strategic initiatives. The company repurchased approximately 169,000 shares of its Class B common stock for $2.6 million, demonstrating a commitment to returning value to shareholders. Genie Renewables advanced two community solar projects in New York to the permitting stage and continued to build out its development pipeline, which includes a total potential production capacity of 85 MW across 14 projects.
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