Genie Energy Reports Mixed Q4 Results Amid Margin Pressures
Shares of Genie Energy Ltd. (GNE) have decreased by 6.3% since the announcement of fourth-quarter 2024 results, in contrast to a 2.8% decline in the S&P 500 index during the same period. Over the past month, the stock has slipped 1.7%, whereas the S&P 500 has fallen by 8.3%.
Fourth Quarter Financial Overview
Genie Energy reported earnings per share (EPS) of 24 cents for the fourth quarter of 2024, which reflects a significant decrease of 33.9% compared to 37 cents in the prior-year quarter.
The company’s consolidated revenues in Q4 2024 were $102.9 million, representing a year-over-year decline of 1.9% from $104.9 million. Gross profit reached $33.5 million, a slight decrease of 0.5% from the previous year. However, gross margin improved, rising to 32.5% from 32.1%. Notably, the loss from operations substantially narrowed to $20.8 million, down from a loss of $34.2 million the year before, primarily due to a reduced non-cash charge related to its captive insurance operations.
The net loss attributable to common shareholders was $15.3 million, or $0.58 per diluted share. This compares favorably to a loss of $24.5 million, or $0.90 per diluted share, from the same quarter last year. On a non-GAAP basis, which excludes the influence of the insurance loss reserve, net income stood at $6.5 million, down from $10 million in Q4 2023.
For the fiscal year, revenues dipped by 0.8% to $425.2 million. Gross profit fell 5.3% to $138.5 million, with gross margin contracting to 32.6% from 34.1%. Adjusted EBITDA was $48.5 million, at the higher end of management’s projections but below 2023’s $58.2 million. Net income attributable to common shareholders decreased to $12.6 million, down from $19.2 million a year earlier.
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Performance of Retail Energy and Renewables Segments
Genie Retail Energy (GRE), which provides electricity and natural gas to residential and small business consumers, reported revenues of $98.4 million in the quarter, remaining flat compared to last year. Notably, electricity sales held steady at $82.1 million, while natural gas revenues increased by 7.5% to $16.2 million. However, revenue per kilowatt-hour reduced some of GRE’s gains despite the growth in customer meters. In this segment, income from operations decreased by 15.9% to $12.6 million, and adjusted EBITDA dropped 13% to $13.4 million, reflecting shrinking electricity margins and elevated customer acquisition costs.
Throughout the year, GRE’s revenues fell 1.6% year over year to $403.3 million, with electricity sales totaling $350.5 million and natural gas revenues declining 6.9% to $52.1 million. Income from operations plummeted 21.4% to $56.5 million, while adjusted EBITDA declined by 20.4% to $58.4 million.
Genie Renewables (GREW), focusing on solar energy projects, witnessed a sharp revenue decline of 30.1% to $4.5 million in Q4, attributable to a strategic pivot away from commercial solar ventures. On a brighter note, the segment’s operational loss reduced to $0.7 million from a $1.3 million loss a year prior. The adjusted EBITDA loss also narrowed to $0.5 million from $1.3 million in Q4 2023, aided by the expansion of its Diversegy energy procurement business.
For the entire year, GREW’s revenues surged 16.1% year over year to $21.9 million, while gross profit soared 122.5% to $6.3 million. The operational loss decreased to $3 million from $5.8 million in 2023, and the adjusted EBITDA loss improved to $2.2 million from $5.4 million.
Management Insights
CEO Michael Stein underscored Genie Energy’s ongoing growth within retail and renewables. The addition of over 60,000 net meters in 2024 marked a 17% year-over-year increase, driven by effective customer acquisition and retention strategies. During the fourth quarter alone, GRE added 23,000 net meters. However, the benefits were slightly offset by a decrease in electricity consumption linked to mild weather conditions.
Stein also pointed to the expansion in Texas and California as essential areas for growth. In renewable energy, Genie Solar is transitioning towards utility-scale projects, a move anticipated to secure long-term revenue growth.
Factors Impacting Results
Earnings were pressured by lower electricity margins, influenced by GNE’s gradual shift towards fixed-price meters and aggregation contracts. Nonetheless, fourth-quarter electricity margins remained above historical seasonal averages.
The company’s captive insurance subsidiary recorded a $30.9 million non-cash loss reserve charge in the quarter, down from $45.1 million in the previous fiscal year. This reduction contributed to a narrower net loss. Excluding this effect, GNE’s adjusted earnings and EBITDA demonstrated a more stable underlying performance.
Future Guidance and Financial Strategy
For 2025, Genie Energy reaffirmed its consolidated adjusted EBITDA guidance in the range of $40-$50 million, consistent with 2024 expectations. The company plans to sustain its dividend while taking advantage of share repurchase opportunities, having repurchased 661,000 shares for $10.4 million in 2024.
At the end of the year, Genie Energy held $201 million in cash, cash equivalents, restricted cash, and marketable securities, an increase of $37.6 million from the previous year. The balance sheet was further bolstered by a solar financing deal that generated approximately $7 million in cash.
Recent Developments
In the fourth quarter, Genie Solar finalized its initial financing deal for its active solar array portfolio, yielding a return of $7 million. The company intends to implement similar asset-backed financing methods to support future solar expansions.
Genie has also been enhancing its Roded environmental technology recycling business, which converts agricultural and industrial plastic waste into new industrial products. While Roded accounted for about 25% of GREW’s total operational loss, the company is optimistic that its patented technology will drive growth.
In summary, Genie Energy’s fourth-quarter results indicate solid operational execution in the face of margin pressures. As the company continues to invest in customer acquisition and renewable projects, it faces challenges in achieving profitability due to declining electricity margins and strategic shifts within its solar division.
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Originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
