Genie Energy Ltd.

Good morning and welcome to Genie Energy's first quarter 2024 earnings call. All participants should be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation by Genie Energy's management, there will be an opportunity to ask questions. Please note this event is being recorded. I will now turn the call over to Brian Siegel of Hayden IR.

Thank you, Operator. With me today are Michael Stein, Genie Energy's CEO, and Avi Golden, Genie Energy's CFO, who will discuss operational and financial results. Any forward-looking statements made during this conference call, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those statements. These risks and uncertainties include, but are not limited to, those discussed in the reports that we file periodically with the SEC. Jeannie assumes no obligation to update any forward-looking statements that we have made or may make or to update the factors that may cause actual results to differ materially from those that we forecast. During the remarks, management makes reference to adjusted EBITDA, a non-GAAP measure. Management believes that its measure of adjusted EBITDA provides useful information to both management and investors that supplement our core operating results. Our earnings release, which is posted on the Jeannie.com IR page, includes a reconciliation of consolidated adjusted EBITDA to its nearest comparable gap measures, consolidated debt income and income from operations, for all periods presented. In addition, adjusted EBITDA for applicable segments are reconciled in the earnings release to their respective segments' income from operations for all periods presented. I will now turn the conference over to Michael Stein, GENIE's Chief Executive Officer.

Thank you, Brian. Welcome to GENIE Energy's first quarter 2024 earnings call. We reported a solid quarter this morning, with record first quarter revenue and gross profit. On top of our regular quarterly dividend, we repurchased 250,000 shares of common stock, which we believe is trading well below its fair value. At GRE, we ended the first quarter with 365,000 customers, up about 5%, and 348,000 RCEs, down about 1%, respectively, over the prior year. Within GRU, diversity had another very strong quarter, And at Genie Solar, we advanced several third-party-owned commercial projects into the construction phase, helping to drive a significant increase in segment revenue, quarterly gross profit, and adjusted EBITDA year-over-year. We also advanced several Genie-owned solar projects that are in development and added new projects to the pipeline, even as several others dropped out of our development plans due to lack of viability. This movement in and out of the pipeline is not uncommon for early stage solar opportunities. We are confident that the investments we've made to enhance our team and upgrade our operational capabilities should help us grow and optimize the pipeline while also moving existing projects through the pipeline more rapidly. As a reminder, our solar project development strategy is intended to be a long-term value driver for the company. Developing projects from site-right acquisitions through construction and into operations typically takes years. However, we are pursuing projects with robust ROI projections that we expect will provide growing recurring revenue streams to the company for years to come. Given the solid operational and financial start to the year, we remain on track to deliver $40 to $50 million in company-wide consolidated adjusted EBITDA for 2024. This range represents a significant increase from our pre-2022 normalized adjusted EBITDA range of $25 to $30 million, and includes significant ongoing investments in developing utility-scale solar projects at Group. Our upgraded expectations reflect our expanded customer base at GRE, our pivot away from international retail, and our focus on continuously enhancing our analytical and operational capabilities. Consistent with our 2024 projections, we expect to remain opportunistic with respect to potential new retail customer acquisitions, both organic and inorganic. This year at GRU, we will continue to move toward the completion of our Perry and Lansing solar farms, both in New York. Additionally, we expect our upgraded project development team to further expand our pipeline and move the viable projects through development process more quickly. Our diversity business continues to perform well, Diversity's revenue grew for the 10th straight quarter, and its gross profit reached its highest level ever for the fourth consecutive quarter. Overall, we expect that diversity will contribute to our enhanced growth and profitability in the coming years. To wrap up, we delivered another solid quarter, allocated capital to buy back shares at what we believe are deep value levels, and continue to make progress in our solar business. Now, I'll turn the call over to Avi for his discussion of our financial results.

Thank you, Michael, and thanks to everyone on the call for joining us this morning. My remarks today cover our financial results for the three months ended March 31st, 2024. Throughout my remarks, when I discuss the quarterly results, I will compare the first quarter of 2024 to the first quarter of 2023 to remove from consideration the seasonal factors that impact the results of our retail energy supply business. In that business, the first quarter is typically characterized by seasonally elevated levels of per-meter electricity and gas consumption as it includes the winter's peak heating months for much of our service area. Also during my remarks, I will discuss our measure of adjusted EBITDA, a non-GAAP measure, in order to provide investors with a consistent perspective on the underlying performance of our business. Genius Financial results were highlighted by record first quarter revenue and gross profit and solid adjusted EBITDA, while returning value to our common stockholders through repurchases of our Class B common stock as well as our quarterly dividends. First quarter consolidated revenue increased 14% to $120 million from $105 million in the first quarter of last year. At GRE, first quarter revenue increased by 11% to $112 million from $101 million a year ago. The increase was driven by the growth in our meter base that Michael mentioned, as well as increased consumption per meter. The increase in kilowatt hours sold was partially offset by decreases in the average price per unit sold of both electricity and natural gas. At a renewable segment, first quarter revenue increased by 87% to $7.2 million from $3.9 million, driven by increased sales of Genie Solar and Diversity. At Genie Solar, the revenue increase largely reflected attainment of a number of third-party commercial project development milestones in the quarter. Diversity continues to expand its advisory and brokerage business. Consolidated gross profit in the first quarter increased by 1.5% to $33.8 million from $33.3 million, while our gross margin decreased 340 basis points. 28.2% from 31.6%. At GRE, gross profit in the first quarter decreased 1.1% to $32.2 million, reflecting a decrease in our margin on electricity sales, substantially offset by an increase in kilowatt hours sold and a higher gross margin on gas sales. This dynamic led to an overall decline in GRE's gross margin at 350 basis points to 28.6% from 32.1%. At Genie Renewables, first quarter gross profit more than doubled to $1.6 million from $747,000, reflecting the contribution from DiversiG and the Genie Solar businesses. Solid at SG&A increased 4.1% to $22.9 million from $22 million in the first quarter of 2023 due to an increased rate of customer acquisitions and higher fees paid for participation in utility purchase and receivable programs, partially offset by a decrease in corporate expenses. Consolidated income from operations in the first quarter was $9.8 million compared to $11.3 million in the year-ago quarter. The decrease primarily reflects the increase in SG&A and a $1 million non-cash charge for an increase in captive insurance liabilities. At GRE, income from operations decreased to $14.2 million from $16.4 million in the year-ago quarter as a result of the increased rate of investment in customer acquisitions and the decrease in electricity margins. At Gini Renewables, the first quarter loss from operations narrowed to $645,000 from $1.1 million in the year-ago quarter on the strong increase in gross profit. First quarter consolidated adjusted EBITDA decreased to $11.7 million from $12.4 million in the year-ago quarter. Gini's earnings per share was $0.30 in the first quarter compared to a diluted earnings per share of $0.54 a year earlier. Discontinued operations contributed a $0.01 loss per share in this quarter compared to a $0.12 per share positive contribution to diluted earnings per share in the year-ago quarter. Turning now to the balance sheet, on March 31st, cash, cash equivalents, long- and short-term restricted cash, and marketable equity securities totaled $162.4 million. Working capital was $127.2 million. As Michael mentioned, we repurchased 250,000 shares of our Class B common stock during the quarter and returned $6.2 million in aggregate value to our stockholders through that buyback in our regular quarterly dividends. To wrap up, this was another solid quarter financially, highlighted by record first quarter revenue and gross profit. We remain committed to returning value to our stockholders, even as we invest significantly in long-term growth opportunities. Now, operator, back to you for Q&A.

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