Attached files
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| 8-K - CURRENT REPORT - Genie Energy Ltd. | f8k050416_genieenergyltd.htm |
Exhibit 99.1
Genie Energy Ltd. Reports First Quarter 2016 Results
NEWARK, NJ — May 4, 2016: Genie Energy Ltd. (NYSE: GNE, GNEPRA) reported first quarter 2016 revenue of $58.1 million, Adjusted EBITDA* of $8.1 million and net income attributable to common stockholders of $6.1 million -- $0.26 per diluted share.
1Q16 HIGHLIGHTS
| ● | Afek Oil and Gas Ltd. (“Afek”) applied for and was granted a one year extension of its multi-well oil and gas exploration license in Northern Israel from the Israeli Ministry of Energy and Water through April 9, 2017. |
| ● | Afek is currently conducting flow tests at the Devorah 1(Ness 2) well. To date, the flow tests in certain intervals have yielded gaseous hydrocarbons and Afek has extracted small amounts of heavy hydrocarbons. Afek’s scientific team, in conjunction with leading international experts, continues to analyze the flow test and other data. |
| ● | Genie Retail Energy increased its meter base for the fourth consecutive quarter and generated $11.7 million in Adjusted EBITDA on the strength of improved margins and reduced SG&A expense. |
| ● | The Genie Energy Board of Directors has approved a 1Q16 dividend of $0.06 per share for on its Class A and Class B common stock. The dividend will be paid on or about May 20, 2016 to common stockholders of record as of the close of business on May 16, 2016. The ex-dividend date is May 12, 2016. The distribution will be treated as a return of capital for income tax purposes. |
MANAGEMENT COMMENTS
Howard Jonas, Genie Energy’s Chairman and CEO, said, “Genie Energy had a very strong quarter, both operationally and financially. Our retail energy provider business was firing on all cylinders and achieved the highest level of Adjusted EBITDA since we were spun-off from IDT. Genie Retail Energy increased its meter base for the fourth consecutive quarter and continued to diversify its portfolio of product offerings. Afek is currently conducting well flow tests on a second well to enhance our knowledge of the license area’s subsurface geology and lithology. Based on the data gathered to date and our preliminary analysis, we remain optimistic that the target reservoir system contains significant oil and gas resources.”
GENIE ENERGY 1st QUARTER 2016 CONSOLIDATED RESULTS
| $ in millions, except EPS | 1Q16 | 4Q15** | 1Q15** | 1Q16 - 1Q15 Change | ||||||||||||
| Revenue | $ | 58.1 | $ | 43.9 | $ | 74.4 | (21.9 | )% | ||||||||
| Gross profit | $ | 24.9 | $ | 15.5 | $ | 16.5 | +51.0 | % | ||||||||
| Gross margin percentage | 42.8 | % | 35.4 | % | 22.1 | % | +2070 BP | |||||||||
| SG&A expense (including stock-based compensation ) | $ | 16.0 | $ | 17.0 | $ | 16.6 | (3.8 | )% | ||||||||
| Stock-based compensation | $ | 1.2 | $ | 1.2 | $ | 1.2 | NC | |||||||||
| Research and development expense | $ | 0.1 | $ | 0.3 | $ | 0.7 | (81.9 | )% | ||||||||
| Exploration expense*** | $ | 1.7 | $ | 2.2 | $ | 1.6 | +7.5 | % | ||||||||
| Adjusted EBITDA* | $ | 8.1 | $ | (3.0 | ) | $ | (1.1 | ) | +$9.2 | |||||||
| Income (loss) from operations | $ | 6.8 | $ | (4.2 | ) | $ | (2.4 | ) | +$9.3 | |||||||
| Net income (loss) attributable to Genie Energy common stockholders | $ | 6.1 | $ | (4.2 | ) | $ | (2.4 | ) | +$8.5 | |||||||
| Diluted earnings (loss) per share attributable to Genie Energy common stockholders | $ | 0.26 | $ | (0.19 | ) | $ | (0.11 | ) | +$0.37 | |||||||
| Net cash provided by (used in) operating activities | $ | 9.1 | $ | (3.6 | ) | $ | (9.3 | ) | +$18.4 | |||||||
| Capitalized exploration costs*** | $ | 8.0 | $ | 9.2 | $ | 4.3 | +76.0 | % |
*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 Measure at the end of this release for a complete explanation of Adjusted EBITDA and reconciliation to the most directly comparable GAAP measure.
** Genie Retail Energy reclassified $0.7 million and $0.6 million previously included in “Financing fees” in the three months ended March 31, 2015 and December 31, 2015, respectively, to “Cost of revenues” to conform to the current year’s presentation.
*** Genie Energy’s Afek 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 March 31, 2016, Genie Energy had $159.3 million in total assets, including $59.8 million in cash, cash equivalents, restricted cash (short and long term), and certificates of deposit. Liabilities totaled $38.4 million, and working capital (current assets less current liabilities) totaled $73.1 million.
Net cash provided by operating activities in 1Q16 was $9.1 million compared to net cash used in operating activities of $9.3 million in the year ago quarter.
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RESULTS BY SEGMENT
| $ in millions | 1Q16 | 4Q15* | 1Q15* | 1Q16 - 1Q15 Change | ||||||||||||
| Genie Retail Energy | ||||||||||||||||
| Total revenue | $ | 58.1 | $ | 43.9 | $ | 74.4 | (21.9 | )% | ||||||||
| Electricity revenue | $ | 44.4 | $ | 36.8 | $ | 47.3 | (6.2 | )% | ||||||||
| Natural gas revenue | $ | 13.4 | $ | 7.3 | $ | 26.2 | (48.9 | )% | ||||||||
| Other revenue | $ | 0.4 | $ | (0.2 | ) | $ | 0.9 | (58.3 | )% | |||||||
| Gross profit | $ | 24.9 | $ | 15.5 | $ | 16.5 | +51.0 | % | ||||||||
| Gross margin percentage | 42.8 | % | 35.4 | % | 22.1 | % | +2070 BP | |||||||||
| SG&A expense | $ | 13.3 | $ | 14.6 | $ | 13.7 | (2.5 | )% | ||||||||
| Adjusted EBITDA | $ | 11.7 | $ | 1.0 | $ | 2.9 | +$8.8 | |||||||||
| Income from operations | $ | 11.5 | $ | 0.9 | $ | 2.8 | +$8.7 | |||||||||
| Afek | ||||||||||||||||
| G&A expense | $ | 0.1 | $ | 0.2 | $ | 0.2 | (22.3 | )% | ||||||||
| Exploration expense | $ | 1.7 | $ | 2.2 | $ | 1.6 | +7.5 | % | ||||||||
| Adjusted EBITDA | $ | (1.8 | ) | $ | (2.4 | ) | $ | (1.8 | ) | NC | ||||||
| Loss from operations | $ | (1.8 | ) | $ | (2.4 | ) | $ | (1.8 | ) | NC | ||||||
| Capitalized exploration costs | $ | 8.0 | $ | 9.2 | $ | 4.3 | +76.0 | % | ||||||||
| GOGAS | ||||||||||||||||
| G&A expense | $ | 0.1 | - | $ | 0.3 | (52.4 | )% | |||||||||
| Research and development expense | $ | 0.1 | $ | 0.3 | $ | 0.7 | (80.4 | )% | ||||||||
| Equity in the net loss of AMSO, LLC | $ | 0.2 | $ | 0.3 | - | +$0.2 | ||||||||||
| Adjusted EBITDA | $ | (0.5 | ) | $ | (0.6 | ) | $ | (0.8 | ) | +$0.3 | ||||||
| Loss from operations | $ | (0.5 | ) | $ | (0.6 | ) | $ | (0.9 | ) | +$0.4 | ||||||
| Corporate | ||||||||||||||||
| G&A expense | $ | 2.4 | $ | 2.1 | $ | 2.5 | (4.5 | )% | ||||||||
| Non-cash compensation in G&A | $ | 1.1 | $ | 1.1 | $ | 1.1 | NC | |||||||||
| Adjusted EBITDA | $ | (1.3 | ) | $ | (1.0 | ) | $ | (1.4 | ) | +$0.1 | ||||||
| Loss from operations | $ | (2.4 | ) | $ | (2.1 | ) | $ | (2.5 | ) | +$0.1 |
* Genie Retail Energy reclassified $0.7 million and $0.6 million previously included in “Financing fees” in the three months ended March 31, 2015 and December 31, 2015, respectively, to “Cost of revenues” to conform to the current year’s presentation.
Genie Retail Energy
Genie Retail Energy increased its base of meters served for the fourth consecutive quarter. Meters served increased slightly to 393,000 at March 31, 2016. Genie Retail Energy added 65,000 gross meters in 1Q16 compared to 52,000 meters in 1Q15 and 70,000 meters in 4Q15.
RCEs increased year over year while declining on a sequential basis to 247,000 at March 31, 2016. The average temperature in the first quarter of this year was significantly higher than the year ago quarter resulting in lower average per meter consumption over the trailing twelve months.
| 3 |
| Meters and RCEs at End of Quarter (in thousands) | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | |||||||||||||||
| Electricity meters | 267 | 264 | 261 | 250 | 232 | |||||||||||||||
| Natural gas meters | 126 | 128 | 127 | 127 | 126 | |||||||||||||||
| Total meters | 393 | 392 | 388 | 377 | 358 | |||||||||||||||
| Electricity RCEs | 175 | 178 | 178 | 168 | 158 | |||||||||||||||
| Natural gas RCEs | 72 | 81 | 82 | 83 | 83 | |||||||||||||||
| Total RCEs | 247 | 259 | 260 | 251 | 241 | |||||||||||||||
Meters enrolled in offerings with fixed rate characteristics constituted approximately 16% of GRE’s electric load at March 31, 2015.
Genie Retail Energy’s average monthly customer churn increased to 6.4% in 1Q16 from 6.3% in 4Q15 and 5.9% in 1Q15.
Genie Retail Energy’s quarterly revenue decreased $16.3 million year over year to $58.1 million primarily on reduced gas sales as the winter was considerably warmer than the year ago period. In addition, market rates for both natural gas and electricity decreased significantly.
Sales of electricity in 1Q16 decreased to $44.4 million from $47.3 million in 1Q15 driven primarily by a decrease in revenue per kilowatt hour sold partially offset by an increase in kilowatt hours sold reflecting the year over year increase in the meters served.
Sales of natural gas in 1Q16 decreased to $13.4 million from $26.2 million in 1Q15 driven by decreases in both therms sold resulting from the milder winter weather compared to the year ago and a decrease in average revenue per therm sold resulting from market-wide reductions in gas rates.
Genie Retail Energy’s gross margin in 1Q16 was 42.8% compared to 22.1% in the year ago quarter reflecting substantial reductions in wholesale commodity costs.
Genie Retail Energy’s SG&A expense in 1Q16 decreased to $13.3 million from $13.7 million in 1Q15 primarily due to a decrease in regulatory and legal costs which was partially offset by higher customer acquisition spending.
Genie Retail Energy generated Adjusted EBITDA of $11.7 million in 1Q16 compared to $2.9 million in the year ago quarter. The increase primarily reflects the improved gross profit and gross margin augmented by the reduction in SG&A expense.
Genie Retail Energy’s income from operations in 1Q16 was $11.5 million, compared to $2.8 million in 1Q15.
On February 23, 2016, the New York Public Service Commission (PSC) issued an order enacting new regulations that would impose significant new restrictions on retail energy providers (REPs) operating in New York, including Genie Retail Energy. A group of parties from the REP industry subsequently sought and obtained a temporary restraining order (TRO) to block implementation of the PSC’s order pending a definitive judicial review of the industry’s challenges. The TRO is in effect until May 20, 2016 and discussions between industry representatives and the PSC are on-going.
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Afek
Afek continues to execute on its oil and gas exploration program in Northern Israel. Well flow testing within the second test well - Devorah 1 (Ness 2) - is currently underway, with testing completed on three of five planned depth level zones. To date, the flow tests at Devorah 1 have yielded gaseous hydrocarbons and Afek has extracted small amounts of heavy hydrocarbons. The gaseous hydrocarbons at Devorah 1 were sufficiently concentrated to flare. Testing at the first site, Ness 3, provided valuable data that has enhanced the quality of subsequent testing and ongoing exploration activities without yielding hydrocarbons demonstrative of a commercially viable resource.
Preliminary results from the analysis conducted to date are consistent with Afek’s initial model for the basin and suggest that there may be large resources of gas. Additionally, robust amounts of light liquid hydrocarbons may be concentrated in regional “sweet spots” within a complex, multifaceted reservoir. Afek has engaged leading experts to conduct further analysis and additional exploratory work in order to better understand the resource and its commercial potential.
Afek’s scientific team, in conjunction with leading international experts, continues to analyze the well test and other data to enhance its model of the reservoir, optimize the well flow tests and determine the next steps in the exploration program. Potential next steps may include flow testing at additional completed wells, undertaking additional seismic work, drilling new exploratory wells or initiating other activities.
The exploration program’s next steps are intended to enhance the understanding of the geology and resources present in the license area, identify the locations of the “sweet spots” within the basin, suggest potential approaches to production engineering of the identified reservoir and explore other plays within the license area. The ultimate goal of the exploratory program is to prove that the license area contains commercially viable hydrocarbons and support the declaration of a “discovery” under Israel’s Petroleum Law.
Afek has begun to seek additional financing to support further exploration activities, potentially by accessing the public markets, which could spearhead a process by which Afek would become an independent entity.
In 1Q16, Afek’s loss from operations was $1.8 million, substantially unchanged from 1Q15.
Afek capitalized $8.0 million of drilling costs in 1Q16 compared to $4.3 million in the year ago quarter.
Genie Oil and Gas (GOGAS)
The GOGAS segment is comprised of oil shale projects in Mongolia and Israel’s Shfela Basin, as well as Genie Energy’s minority stake in a joint venture for in situ development of oil shale in Colorado’s Piceance Basin, AMSO, LLC. GOGAS has suspended operations in the Shfela and in Mongolia.
In February 2016, Total notified AMSO, LLC that it had discontinued its share of funding of the project. On March 23, 2016, Total gave AMSO its notice of withdrawal from AMSO, LLC. The effective date of the withdrawal was April 30, 2016. GOGAS is currently decommissioning the project.
GOGAS’s AMSO subsidiary and Total are obligated to fund certain remediation and reclamation costs upon ending operations. AMSO estimates that its share of such costs will be under $2 million.
The GOGAS segment’s loss from operations in 1Q16 was $469 thousand compared to $904 thousand in 1Q15.
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Corporate
Genie Energy’s corporate loss from operations in 1Q16 was $2.4 million including stock-based compensation expense of $1.1 million. The loss from operations in 1Q15 was $2.5 million including stock based compensation of $1.1 million.
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, 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 1-877-870-5176 (US toll free) or 1-858-384-5517 (international) through May 11, 2016. Callers should ask for conference call #10084396. 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) operates two primary businesses - Genie Retail Energy (GRE) and Genie Oil and Gas (GOGAS). GRE operates retail energy provider, brokerage and marketing services. GRE’s retail energy provider businesses market electricity and natural gas to residential and small business customers primarily in the Eastern United States. GOGAS, through its Afek Oil & Gas subsidiary, is conducting an oil and gas exploration project in Northern Israel pursuant to an exclusive exploration license issued by the government of Israel, along with other smaller operations. 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.
Contact:
Genie Energy Investor Relations
Bill Ulrey
P: (973) 438-3848
E-mail: invest@genie.com
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GENIE
ENERGY LTD.
CONSOLIDATED BALANCE SHEETS
| March 31, 2016 | December 31, 2015 | |||||||
| (Unaudited) | ||||||||
| (in thousands) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 37,899 | $ | 38,786 | ||||
| Restricted cash—short-term | 10,795 | 10,894 | ||||||
| Certificates of deposit | 8,868 | 8,850 | ||||||
| Trade accounts receivable, net of allowance for doubtful accounts of $177 and $182 at March 31, 2016 and December 31, 2015, respectively | 27,817 | 27,222 | ||||||
| Inventory | 6,799 | 11,440 | ||||||
| Prepaid expenses | 9,146 | 11,328 | ||||||
| Other current assets | 6,850 | 6,104 | ||||||
| Total current assets | 108,174 | 114,624 | ||||||
| Property and equipment, net | 1,351 | 1,347 | ||||||
| Capitalized exploration costs—unproved oil and gas property | 35,969 | 26,878 | ||||||
| Goodwill | 3,663 | 3,663 | ||||||
| Restricted cash—long-term | 2,246 | 1,802 | ||||||
| Deferred income tax assets, net | 1,642 | 1,642 | ||||||
| Other assets | 6,268 | 5,859 | ||||||
| Total assets | $ | 159,313 | $ | 155,815 | ||||
| Liabilities and equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 11,681 | $ | 12,642 | ||||
| Accrued expenses | 19,021 | 19,424 | ||||||
| Advances from customers | 613 | 1,055 | ||||||
| Income taxes payable | 1,623 | 923 | ||||||
| Due to IDT Corporation | 185 | 438 | ||||||
| Energy hedging contracts | 1,336 | 2,192 | ||||||
| Other current liabilities | 665 | 878 | ||||||
| Total current liabilities | 35,124 | 37,552 | ||||||
| Revolving credit loan payable | 2,000 | 2,000 | ||||||
| Other liabilities | 1,236 | 1,566 | ||||||
| Total liabilities | 38,360 | 41,118 | ||||||
| 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 March 31, 2016 and December 31, 2015 | 19,743 | 19,743 | ||||||
| Class A common stock, $.01 par value; authorized shares—35,000; 1,574 shares issued and outstanding at March 31, 2016 and December 31, 2015 | 16 | 16 | ||||||
| Class B common stock, $.01 par value; authorized shares—200,000; 23,260 and 23,239 shares issued and 23,059 and 23,041 shares outstanding at March 31, 2016 and December 31, 2015, respectively | 233 | 232 | ||||||
| Additional paid-in capital | 125,658 | 124,449 | ||||||
| Treasury stock, at cost, consisting of 201 shares and 198 shares of Class B common stock at March 31, 2016 and December 31, 2015, respectively | (1,599 | ) | (1,570 | ) | ||||
| Accumulated other comprehensive income | 1,414 | 154 | ||||||
| Accumulated deficit | (15,010 | ) | (19,647 | ) | ||||
| Total Genie Energy Ltd. stockholders’ equity | 130,455 | 123,377 | ||||||
| Noncontrolling interests: | ||||||||
| Noncontrolling interests | (7,835 | ) | (7,013 | ) | ||||
| Receivable for issuance of equity | (1,667 | ) | (1,667 | ) | ||||
| Total noncontrolling interests | (9,502 | ) | (8,680 | ) | ||||
| Total equity | 120,953 | 114,697 | ||||||
| Total liabilities and equity | $ | 159,313 | $ | 155,815 | ||||
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GENIE ENERGY LTD.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| (in thousands, except per share data) | ||||||||
| Revenues: | ||||||||
| Electricity | $ | 44,385 | $ | 47,336 | ||||
| Natural gas | 13,366 | 26,164 | ||||||
| Other | 387 | 929 | ||||||
| Total revenues | 58,138 | 74,429 | ||||||
| Cost of revenues | 33,274 | 57,963 | ||||||
| Gross profit | 24,864 | 16,466 | ||||||
| Operating expenses and losses: | ||||||||
| Selling, general and administrative (i) | 16,008 | 16,639 | ||||||
| Research and development | 127 | 703 | ||||||
| Exploration | 1,691 | 1,573 | ||||||
| Equity in the net loss of AMSO, LLC | 222 | — | ||||||
| Income (loss) from operations | 6,816 | (2,449 | ) | |||||
| Interest income | 82 | 99 | ||||||
| Other (expense) income, net | (135 | ) | 11 | |||||
| Income (loss) before income taxes | 6,763 | (2,339 | ) | |||||
| Provision for income taxes | (1,096 | ) | (91 | ) | ||||
| Net income (loss) | 5,667 | (2,430 | ) | |||||
| Net loss attributable to noncontrolling interests | 819 | 420 | ||||||
| Net income (loss) attributable to Genie Energy Ltd. | 6,486 | (2,010 | ) | |||||
| Dividends on preferred stock | (370 | ) | (370 | ) | ||||
| Net income (loss) attributable to Genie Energy Ltd. common stockholders. | $ | 6,116 | $ | (2,380 | ) | |||
| Earnings (loss) per share attributable to Genie Energy Ltd. common stockholders: | ||||||||
| Basic | $ | 0.27 | $ | (0.11 | ) | |||
| Diluted | $ | 0.26 | $ | (0.11 | ) | |||
| Weighted-average number of shares used in calculation of earnings (loss) per share: | ||||||||
| Basic | 22,791 | 22,107 | ||||||
| Diluted | 23,684 | 22,107 | ||||||
| Dividends declared per common share | $ | 0.06 | $ | 0.06 | ||||
| (i) Stock-based compensation included in selling, general and administrative expense | $ | 1,210 | $ | 1,237 | ||||
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GENIE ENERGY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| (in thousands) | ||||||||
| Operating activities | ||||||||
| Net income (loss) | $ | 5,667 | $ | (2,430 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | 97 | 104 | ||||||
| Provision for doubtful accounts receivable | (3 | ) | 8 | |||||
| Stock-based compensation | 1,210 | 1,237 | ||||||
| Equity in the net loss of AMSO, LLC | 222 | — | ||||||
| Change in assets and liabilities: | ||||||||
| Restricted cash | (294 | ) | (1,373 | ) | ||||
| Trade accounts receivable | (592 | ) | (8,117 | ) | ||||
| Inventory | 4,640 | 2,646 | ||||||
| Prepaid expenses | 2,220 | (2,648 | ) | |||||
| Other current assets and other assets | (1,055 | ) | (2,603 | ) | ||||
| Trade accounts payable, accrued expenses and other current liabilities | (2,998 | ) | 4,507 | |||||
| Advances from customers | (442 | ) | (268 | ) | ||||
| Due to IDT Corporation | (253 | ) | (407 | ) | ||||
| Income taxes payable | 701 | 58 | ||||||
| Net cash provided by (used in) operating activities | 9,120 | (9,286 | ) | |||||
| Investing activities | ||||||||
| Capital expenditures | (84 | ) | (289 | ) | ||||
| Investments in capitalized exploration costs—unproved oil and gas property | (8,031 | ) | (4,308 | ) | ||||
| Capital contributions to AMSO, LLC | (63 | ) | — | |||||
| Net cash used in investing activities | (8,178 | ) | (4,597 | ) | ||||
| Financing activities | ||||||||
| Dividends paid | (1,849 | ) | (1,840 | ) | ||||
| Repurchases of Class B common stock from employees | (29 | ) | (22 | ) | ||||
| Payment for acquisitions | (104 | ) | (63 | ) | ||||
| Net cash used in financing activities | (1,982 | ) | (1,925 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 153 | (64 | ) | |||||
| Net decrease in cash and cash equivalents | (887 | ) | (15,872 | ) | ||||
| Cash and cash equivalents at beginning of period | 38,786 | 71,895 | ||||||
| Cash and cash equivalents at end of period | $ | 37,899 | $ | 56,023 | ||||
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Reconciliation of Non-GAAP Financial Measure for the First Quarter 2016 and 2015
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 first quarter of 2016, 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 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 and stock-based compensation.
Management believes that Genie Energy’s Adjusted EBITDA provides useful information to both management and investors by excluding certain expenses 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 is considered an operating cost under GAAP, it primarily represents 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 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.
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.
| 10 |
Genie Energy Ltd.
Reconciliation of Adjusted EBITDA to Net Income (Loss)
(unaudited)
$ in thousands
| Total | Genie Retail Energy | GOGAS | Afek | Corporate | ||||||||||||||||
Three Months Ended March 31, 2016 (1Q16) | ||||||||||||||||||||
| Adjusted EBITDA | $ | 8,123 | $ | 11,692 | $ | (452 | ) | $ | (1,797 | ) | $ | (1,320 | ) | |||||||
| Subtract: | ||||||||||||||||||||
| Stock-based compensation | 1,210 | 118 | 9 | - | 1,083 | |||||||||||||||
| Depreciation | 97 | 59 | 8 | 30 | - | |||||||||||||||
| Income (loss) from operations | 6,816 | $ | 11,515 | $ | (469 | ) | $ | (1,827 | ) | $ | (2,403 | ) | ||||||||
| Interest income | 82 | |||||||||||||||||||
| Other expense, net | (135 | ) | ||||||||||||||||||
| Provision for income taxes | (1,096 | ) | ||||||||||||||||||
| Net income | 5,667 | |||||||||||||||||||
| Net loss attributable to noncontrolling interests | 819 | |||||||||||||||||||
| Net income attributable to Genie Energy Ltd. | $ | 6,486 | ||||||||||||||||||
| Total | Genie Retail Energy | GOGAS | Afek | Corporate | ||||||||||||||||
Three Months Ended December 31, 2015 (4Q15) | ||||||||||||||||||||
| Adjusted EBITDA | $ | (2,984 | ) | $ | 1,018 | $ | (599 | ) | $ | (2,371 | ) | $ | (1,032 | ) | ||||||
| Subtract: | ||||||||||||||||||||
| Stock-based compensation | 1,155 | 65 | 28 | - | 1,062 | |||||||||||||||
| Depreciation | 103 | 59 | 8 | 36 | - | |||||||||||||||
| (Loss) income from operations | (4,242 | ) | $ | 894 | $ | (635 | ) | $ | (2,407 | ) | $ | (2,094 | ) | |||||||
| Interest income | 105 | |||||||||||||||||||
| Other expense, net | (83 | ) | ||||||||||||||||||
| Benefit from income taxes | 114 | |||||||||||||||||||
| Net loss | (4,106 | ) | ||||||||||||||||||
| Net loss attributable to noncontrolling interests | 311 | |||||||||||||||||||
| Net loss attributable to Genie Energy Ltd. | $ | (3,795 | ) | |||||||||||||||||
| Total | Genie Retail Energy | GOGAS | Afek | Corporate | ||||||||||||||||
Three Months Ended March 31, 2015 (1Q15) | ||||||||||||||||||||
| Adjusted EBITDA | $ | (1,107 | ) | $ | 2,880 | $ | (761 | ) | $ | (1,787 | ) | $ | (1,439 | ) | ||||||
| Subtract: | ||||||||||||||||||||
| Stock-based compensation | 1,238 | 40 | 120 | - | 1,078 | |||||||||||||||
| Depreciation | 104 | 69 | 23 | 12 | - | |||||||||||||||
| (Loss) income from operations | (2,449 | ) | $ | 2,771 | $ | (904 | ) | $ | (1,799 | ) | $ | (2,517 | ) | |||||||
| Interest income | 99 | |||||||||||||||||||
| Other income, net | 11 | |||||||||||||||||||
| Provision for income taxes | (91 | ) | ||||||||||||||||||
| Net loss | (2,430 | ) | ||||||||||||||||||
| Net loss attributable to noncontrolling interests | 420 | |||||||||||||||||||
| Net loss attributable to Genie Energy Ltd. | $ | (2,010 | ) | |||||||||||||||||
11