Genie Energy Experiences Year-over-Year Drops in Earnings and Revenue for Q3 2024

Genie Energy Ltd. (GNE) has recently published its earnings results for the third quarter of 2024, revealing both challenges and opportunities as it adapts to changing market dynamics. The company is focused on lowering customer acquisition costs and expanding its renewables division to capitalize on growth opportunities in the energy market.

Q3 Financial Performance

For the third quarter of 2024, Genie Energy reported earnings per share of 38 cents, marking a notable decline of 28.3% compared to the 53 cents reported in the same quarter last year. Additionally, total revenue for the quarter reached $111.9 million, which is a 10.5% decrease from $125 million during the same period last year.

The decline in revenue can be largely attributed to reduced electricity consumption per meter due to milder summer weather and increased customer acquisition costs in the retail energy segment.

Performance by Segment

Genie Energy operates mainly through two segments:

Genie Retail Energy (GRE): This retail energy segment saw a revenue drop of 12.1% year-over-year, with total revenues falling to $105.8 million from $120.3 million. The decrease was driven primarily by reduced electricity consumption per meter and higher costs associated with acquiring new customers. Operating income for GRE decreased by 31.6%, from $22 million in the prior-year quarter to $15 million in Q3 2024. Adjusted EBITDA also fell by 30.7% to $15.5 million.

Genie Renewables (GREW): In contrast, Genie’s renewables segment performed positively, with revenues growing by 29.2% to $6.1 million, up from $4.7 million in the same quarter last year. This growth was fueled by significant contributions from Diversegy, Genie’s energy advisory service, which nearly doubled its revenues, as well as increased revenue from utility-scale solar projects. Operating loss in this segment narrowed to $0.2 million compared to the $2.1 million loss in Q3 2023.

Profitability Overview

Gross profit for the quarter was reported at $37.9 million, down 7.7% from $41.1 million in the prior-year quarter. However, the gross margin improved slightly to 33.9% from 32.9%, driven by performance in the renewables segment. Operating income fell by 34.7% to $11.7 million, influenced by higher customer acquisition costs and lower consumption levels in the retail energy segment.

Adjusted EBITDA for this quarter stood at $13.6 million, which is a 26.7% drop from $18.5 million a year ago, reflecting rising selling and administrative costs and declining revenues.

Cost Analysis

The cost of revenues decreased to $74 million in Q3 2024, down from $84 million a year earlier, in line with the reduced electricity usage in the retail segment. Meanwhile, selling, general, and administrative (SG&A) expenses rose to $25.2 million, up from $23.2 million due to increased costs tied to customer acquisition activities.

Cash and Liabilities

As of September 30, 2024, Genie Energy reported total cash and cash equivalents of $191.7 million, an increase from $178.3 million as of June 30, 2024. Total liabilities were reported at $141.4 million, showing improvements in cash management despite an 18.4% decline in cash provided by operating activities compared to the previous year.

Future Outlook

Management has reiterated its adjusted EBITDA guidance for 2024, projecting it to be in the range of $40-$50 million, with expectations to land at the higher end of this spectrum. The company is also optimistic about growth opportunities in California's gas market.

Recent Developments

In the quarter, Genie Energy repurchased about 123,000 shares of Class B common stock for approximately $2 million and upheld a quarterly dividend of 7.5 cents per share for both Class A and Class B shareholders. The increase in meter count by 36,000 was overshadowed by rising acquisition costs and reduced electricity consumption, which impacted revenue and profitability in the GRE segment. Conversely, GREW’s pivot to utility-scale solar projects is expected to improve gross margin and minimize SG&A expenses moving forward.

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