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Friday, March 13, 2020
Genie Energy Ltd. (GNE)
Quarterly results reflect growing pains
Genie Energy Ltd, through its subsidiaries, operates as a retail energy provider; and an oil and gas exploration company. Its segments are Genie Retail Energy (GRE) which is the key revenue generator, Genie Energy Services (GES), and Genie Oil and Gas (GOGAS). GRE owns and operates retail energy providers (REPs), including IDT Energy, Residents Energy, Town Square Energy, and Mirabito. Its REP businesses resell electricity and natural gas to residential and small business customers in the Eastern and Midwestern United States. GES designs, manufactures and distributes solar panels and also offers energy brokerage and advisory services. GOGAS is an oil and gas exploration company that owns an interest in a contracted drilling services operation and interest in Afek Oil and Gas (Afek).
Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Results for 4Q and 2019 were below expectations. Genie Energy reported 4Q and 2019 EPS of $0.00 and $0.18 versus our estimates of $0.18 and $0.28. Adjusted EBITDA ($ million) were $0.8 and $10.1 versus our estimates of $11.0 and $23.2. No one line item explained the shortfall. Revenue was a few million below forecast. Operating costs were a few million above forecast. Genie’s expansion into international operations incurred slightly larger losses than expected. Genie’s Energy Services was disappointing.
The good news is that the company continues to grow. Global RCE (Retail Consumer Equivalent) units rose 45% year over year as the company expanded into Japan and Texas. It is not unusual for energy marketing companies to report first year losses when moving into new areas as evidenced by adjusted 2019 ebitda for Genie International of $(10.7) vs $(4.2). Management believes it will reach critical mass to turn profitable in the U.K. and Scandinavia in 2020 and…
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
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