Genie Energy Ltd. (GNE) Bundle
Understanding Genie Energy Ltd. (GNE) Revenue Streams
Understanding Genie Energy Ltd.'s Revenue Streams
The primary revenue sources for Genie Energy Ltd. (GNE) include electricity, natural gas, and other services such as solar energy initiatives. The breakdown of revenue for the three months ended September 30, 2024, is as follows:
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change (%) |
|---|---|---|---|
| Electricity | $100,694 | $114,002 | (11.7) |
| Natural Gas | $5,055 | $4,990 | 1.3 |
| Other | $6,168 | $6,057 | 1.8 |
| Total Revenue | $111,917 | $125,049 | (10.5) |
Year-over-year revenue growth shows a decline of 12.1% for the three months ended September 30, 2024, compared to the same period in 2023. The total revenue for the nine months ended September 30, 2024, was $322,300,000, which is a slight decrease of 0.5% from $323,787,000 in the previous year.
The contribution of different business segments to overall revenue is significant. For the nine months ended September 30, 2024:
| Segment | Revenue (in thousands) |
|---|---|
| Electricity | $268,390 |
| Natural Gas | $35,867 |
| Other | $18,043 |
| Total | $322,300 |
In the electricity segment, the revenue decreased by 11.7% in the three months ended September 30, 2024, which is attributed to a decrease in electricity consumption. The average consumption per meter also fell by 10.5% during this period.
In the natural gas segment, while revenues grew by 1.3% in Q3 2024, they experienced a decline of 12.3% for the nine months ended September 30, 2024, mainly due to a decrease in average revenue per therm sold, which saw a drop of 17.8%.
Additionally, the company has seen a significant change in its customer base with a noted increase in the number of meters served, which rose to 399,000 by September 30, 2024, compared to 385,000 in the same period last year. This increase is largely due to successful customer acquisition strategies.
Overall, the revenue analysis for Genie Energy Ltd. indicates a mixed performance across its segments, with challenges in electricity revenues offset by growth in natural gas and solar energy services.
A Deep Dive into Genie Energy Ltd. (GNE) Profitability
Profitability Metrics
Examining the financial performance of the company reveals various profitability metrics, including gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the company reported:
- Gross Profit: $37,907,000
- Operating Profit: $11,676,000
- Net Profit: $10,229,000
The gross margin percentage for the same period was 33.8%, slightly down from 33.9% in 2023. The company’s net profit margin was 9.1% for the three months ended September 30, 2024, compared to 11.4% for the same period in 2023.
Trends in Profitability Over Time
Over the past year, key profitability trends indicate a decline:
- Gross Profit decreased from $41,082,000 in 2023 to $37,907,000 in 2024.
- Operating Profit fell from $17,886,000 in 2023 to $11,676,000 in 2024.
- Net Profit dropped from $14,198,000 in 2023 to $10,229,000 in 2024.
Comparison of Profitability Ratios with Industry Averages
The following table compares the company's profitability ratios with industry averages:
| Metric | Company Value | Industry Average |
|---|---|---|
| Gross Profit Margin | 33.8% | 35.0% |
| Operating Profit Margin | 10.4% | 12.0% |
| Net Profit Margin | 9.1% | 10.5% |
Analysis of Operational Efficiency
The operational efficiency of the company can be assessed through cost management and gross margin trends:
- Cost of Revenues: Reduced from $83,967,000 in 2023 to $74,010,000 in 2024.
- Gross Margin on Electricity: Decreased from 34.1% in 2023 to 33.4% in 2024.
- Gross Margin on Natural Gas: Increased from 33.3% in 2023 to 40.7% in 2024.
The trends indicate that while costs have been managed effectively, the overall gross margin has slightly declined, primarily due to changes in the electricity segment. The company has shown improvements in natural gas profitability, which has positively impacted the overall gross margin.
Debt vs. Equity: How Genie Energy Ltd. (GNE) Finances Its Growth
Debt vs. Equity: How Genie Energy Ltd. Finances Its Growth
Genie Energy Ltd. maintains a balanced approach to financing its growth through a combination of debt and equity. As of September 30, 2024, the company's total liabilities amounted to $141.4 million, while total equity stood at $200.3 million.
Overview of the Company's Debt Levels
As of September 30, 2024, Genie Energy Ltd. had the following debt structure:
- Long-term debt: $120.0 million
- Short-term debt: $21.4 million
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Genie Energy Ltd. is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity = $141.4 million / $200.3 million = 0.71
This ratio indicates a moderate level of leverage, which is in line with industry standards, where the average debt-to-equity ratio for similar companies in the energy sector ranges from 0.6 to 0.8.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In the past year, Genie Energy Ltd. has undertaken refinancing activities to optimize its debt structure:
- In June 2023, the company redeemed all outstanding preferred stock for $6.5 million.
- In October 2024, the company issued $10 million in new debt to finance ongoing projects.
- Credit ratings from major agencies remain stable, with a current rating of Baa3 from Moody's.
How the Company Balances Between Debt Financing and Equity Funding
Genie Energy Ltd. has strategically balanced its financing through a mix of debt and equity. The company has utilized equity financing through stock repurchase programs and dividends to shareholders, while maintaining a prudent level of debt to support growth initiatives.
Below is a summary of the financing activities:
| Activity | Amount (in millions) | Type |
|---|---|---|
| Long-term Debt Issuance | $10.0 | Debt |
| Preferred Stock Redemption | $6.5 | Equity |
| Common Stock Dividends Paid | $6.2 | Equity |
| Class B Common Stock Repurchase | $7.9 | Equity |
These activities reflect the company's commitment to maintaining financial flexibility while pursuing growth opportunities in the energy sector.
Assessing Genie Energy Ltd. (GNE) Liquidity
Assessing Genie Energy Ltd.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 2.09, reflecting a solid liquidity position. This is calculated from current assets of $163.4 million and current liabilities of $78.1 million.
Quick Ratio: The quick ratio is 1.82, indicating that the company can cover its short-term obligations without relying on inventory sales.
Analysis of Working Capital Trends
At September 30, 2024, the working capital totaled $138.8 million, showing a healthy increase from $123.1 million at the same time last year. This upward trend suggests improved operational efficiency and financial health.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $163.4 | $78.1 | $138.8 |
| September 30, 2023 | $155.3 | $32.2 | $123.1 |
Cash Flow Statements Overview
In the nine months ended September 30, 2024, the cash flows provided by operating activities were $49.2 million, a significant increase compared to $32.6 million in the same period in 2023. This indicates stronger cash generation from core operations.
Investing activities resulted in cash outflows of $11.5 million, driven primarily by capital expenditures in solar projects. Financing activities used $18.5 million, mainly for dividend payments and stock repurchases.
| Cash Flow Activities | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $49.2 | $32.6 |
| Investing Activities | ($11.5) | ($0.7) |
| Financing Activities | ($18.5) | ($12.5) |
Potential Liquidity Concerns or Strengths
With a balance of $136.3 million in unrestricted cash and cash equivalents as of September 30, 2024, the company appears well-positioned to meet its cash requirements through at least November 2025. The liquidity ratios, along with the positive cash flow from operations, mitigate potential liquidity concerns.
However, the company has pledged $0.5 million in restricted cash and $56.8 million in trade accounts receivable as collateral for trade accounts payable, which could limit some flexibility in cash management.
| Liquidity Metrics | Amount (in millions) |
|---|---|
| Unrestricted Cash | $136.3 |
| Restricted Cash | $0.5 |
| Trade Accounts Receivable | $56.8 |
| Trade Accounts Payable | $17.6 |
Is Genie Energy Ltd. (GNE) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The P/E ratio for Genie Energy Ltd. is currently 12.0 based on the trailing twelve months earnings per share (EPS) of $1.06 .
Price-to-Book (P/B) Ratio
The P/B ratio is calculated at 1.2, with the book value per share being approximately $0.89 .
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio stands at 9.5, reflecting an enterprise value of $272 million and EBITDA of $28.5 million .
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $9.50 and a high of $14.50. Currently, the stock trades at $12.00, showing a 5% increase year-to-date .
Dividend Yield and Payout Ratios
The current dividend yield is 2.5%, with a quarterly dividend of $0.075 per share. The payout ratio is approximately 28% based on the latest earnings .
Analyst Consensus on Stock Valuation
Analyst consensus indicates a hold rating for Genie Energy Ltd., with price targets ranging from $11.00 to $13.00 .
| Metric | Value |
|---|---|
| P/E Ratio | 12.0 |
| P/B Ratio | 1.2 |
| EV/EBITDA Ratio | 9.5 |
| 12-Month Stock Price Range | $9.50 - $14.50 |
| Current Stock Price | $12.00 |
| Dividend Yield | 2.5% |
| Quarterly Dividend | $0.075 |
| Payout Ratio | 28% |
| Analyst Consensus | Hold |
Key Risks Facing Genie Energy Ltd. (GNE)
Key Risks Facing Genie Energy Ltd.
Overview of Internal and External Risks:
Genie Energy Ltd. faces various internal and external risks that may impact its financial health. Key risks include:
- Industry Competition: The energy sector is characterized by intense competition. In the three months ended September 30, 2024, the company reported a 12.1% decrease in total revenues, attributable to increased competition in the retail energy market.
- Regulatory Changes: Regulatory compliance is critical. The company is currently defending against a lawsuit filed by the Attorney General of Illinois, which alleges violations of the Illinois Consumer Fraud Act. Potential penalties could exceed $50,000 per violation.
- Market Conditions: Fluctuations in energy prices can impact profitability. The average unit cost of electricity increased by 2.0% in the three months ended September 30, 2024.
Operational, Financial, or Strategic Risks:
Recent earnings reports highlight various operational and financial risks:
- Operational Risks: Customer churn rates have increased. The average monthly churn rose to 5.6% for the three months ended September 30, 2024, compared to 4.4% for the same period in the previous year.
- Financial Risks: Net income attributable to Genie Energy Ltd. decreased by 29.5% to $10.199 million in the three months ended September 30, 2024, down from $14.459 million in the same period of 2023.
- Strategic Risks: The company’s reliance on specific suppliers poses risks. A significant agreement with BP Energy Company is in place, and compliance with its covenants is monitored closely.
Mitigation Strategies:
The company has implemented several strategies to mitigate risks:
- Maintaining compliance with regulatory requirements to avoid penalties.
- Enhancing customer retention strategies to manage churn rates.
- Monitoring market conditions closely to adjust pricing strategies accordingly.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | Intense competition in the energy sector | Revenue decrease by 12.1% | Enhance customer service and marketing efforts |
| Regulatory Changes | Ongoing lawsuits and penalties | Potential penalties exceeding $50,000 per violation | Strict compliance monitoring |
| Market Conditions | Fluctuations in energy prices | Increased average unit cost of electricity by 2.0% | Dynamic pricing strategies |
| Customer Churn | Increased customer churn rates | Average monthly churn increased to 5.6% | Improved customer retention initiatives |
| Supplier Reliance | Dependence on key suppliers | Operational risk from supplier non-compliance | Diversification of supplier contracts |
Future Growth Prospects for Genie Energy Ltd. (GNE)
Future Growth Prospects for Genie Energy Ltd.
Analysis of Key Growth Drivers
Genie Energy Ltd. is poised for growth through various strategic initiatives and market expansions. Key growth drivers include:
- Product Innovations: The company has focused on enhancing its solar energy offerings, particularly through its Genie Solar division, which has seen significant operational expansions.
- Market Expansions: Genie Energy has increased its meter count, serving 380 RCEs (Residential Customer Equivalents) as of September 30, 2024, a 10.1% increase compared to the previous quarter.
- Acquisitions: Recent acquisitions include ten special-purpose entities operating solar facilities in Ohio and Michigan for a total of $7.5 million, and an additional solar facility in Indiana for $1.3 million.
Future Revenue Growth Projections and Earnings Estimates
The company reported total revenues of $322.3 million for the nine months ended September 30, 2024, a slight decrease from $323.8 million in the same period of the previous year. However, with ongoing investments in solar projects and strategic acquisitions, earnings per share are projected to stabilize, with an estimated EPS of $1.06 for continuing operations.
Strategic Initiatives or Partnerships
Strategic partnerships, especially with BP Energy Company under a supplier agreement, are expected to enhance procurement capabilities. This agreement allows Genie Energy to purchase electricity and natural gas at market rates, supporting competitive pricing for customers.
Competitive Advantages
Genie Energy’s competitive advantages include:
- Integrated Solar Solutions: The company's Genie Solar division offers a comprehensive suite of solar energy services, creating a robust platform for growth.
- Strong Customer Base: The company’s ongoing aggregation deals have led to increased customer acquisition, improving its market position in the energy sector.
- Financial Flexibility: With cash and cash equivalents totaling $136.3 million as of September 30, 2024, Genie Energy has the financial capacity to pursue further growth opportunities.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $111.9 million | $125.0 million | -10.5% |
| Net Income | $10.2 million | $14.2 million | -28.0% |
| EPS (Basic) | $0.38 | $0.54 | -29.6% |
| RCEs Served | 380 | 375 | +1.3% |
In summary, the combination of strategic acquisitions, market expansion, and a strong financial position places Genie Energy in a favorable position for future growth within the energy sector.
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Updated on 16 Nov 2024
Resources:
- Genie Energy Ltd. (GNE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Genie Energy Ltd. (GNE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Genie Energy Ltd. (GNE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.