Genie Energy Ltd. (GNE) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I “Risk Factors” in this Annual Report. The forward-looking statements are made as of the date of this Annual Report, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our reports on Forms 10-Q and 8-K.

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report.

Overview

We are comprised of Genie Retail Energy ("GRE") and Genie Renewables ("GREW"). Prior to the third quarter of 2022, we had a segment, Genie Retail Energy International, or GRE International, which supplied electricity to residential and small business customers in Scandinavia. In the third quarter of 2022, we discontinued the operations of Lumo Finland and Lumo Sweden, and GRE International ceased to be a segment and the remaining assets and liabilities and results of any continuing operations of GRE International were combined with corporate.

GRE owns and operates retail energy providers ("REPs"), including IDT Energy, Residents Energy, Town Square Energy ("TSE"), Southern Federal and Mirabito Natural Gas. GRE's REPs' businesses resell electricity and natural gas primarily to residential and small business customers, with the majority of the customers in the Midwestern and Eastern United States and Texas.

GREW holds a 95.5% interest in Genie Solar, an integrated solar energy company that develops, constructs and operates utility-scale solar energy projects, a 92.8% interest in CityCom Solar, a marketer of community solar and alternative products and services complementary to our energy offerings, and a 96.0% interest in Diversegy, an energy procurement advisor for industrial, commercial and municipal customers.

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Discontinued Operations in Finland and Sweden

Prior to the third quarter of 2022, the Company had a third segment, Genie Retail Energy International, or GRE International, which supplied electricity to residential and small business customers in Scandinavia. However, as result of volatility in the energy market in Europe, in the third quarter of 2022, we decided to discontinue the operations of Lumo Energia Oyj ("Lumo Finland") and Lumo Energi AB ("Lumo Sweden"). In July 2022, the Company entered into a series of transactions to sell most of the electricity swap instruments held by Lumo Sweden for a gross aggregate amount of €41.1 million (equivalent to approximately $41.4 million at the dates of the transactions) before fees and other costs. The sale price is being settled monthly based on the monthly commodity volume specified in the instruments from September 2022 to March 2025. The Company also entered into a series of transactions to transfer the customers of Lumo Finland and Lumo Sweden to other suppliers.

We determined that the discontinued operations in Finland and Sweden represented a strategic shift that would have a major effect on our operations and financial statements. We account for these businesses as discontinued operations and accordingly, present the results of operations and related cash flows as discontinued operations for all periods presented. Any remaining assets and liabilities of the discontinued operations are presented separately and are reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of December 31, 2024 and 2023. Lumo Finland and Lumo Sweden are continuing to liquidate their remaining receivables and settle any remaining liabilities.

On November 7, 2022, Lumo Finland filed a petition for bankruptcy, which was approved by the Helsinki District Court on November 9, 2022. The administration of Lumo Finland was transferred to an administrator (the "Lumo Administrator"). All assets and liabilities of Lumo Finland remain with Lumo Finland, in which we retain our ownership interest, however, the management and control of Lumo Finland were transferred to the Lumo Administrator. Since the Company lost control of the management of Lumo Finland in favor of the Lumo Administrator, the accounts of Lumo Finland were deconsolidated effective November 9, 2022.

Net loss from discontinued operations of Lumo Finland and Lumo Sweden, net of taxes was $2.5 million and $0.4 million for the years ended December 31, 2024 and 2023, respectively.

Following the discontinuance of operations of Lumo Finland and Lumo Sweden, GRE International ceased to be a segment and the remaining assets and liabilities and the results of continuing operations of GRE internal were combined with corporate.

On November 8, 2023, the Lumo Administrator, acting on behalf of the Bankruptcy Estate, filed a claim in the District Court of Helsinki against Genie Nordic, a wholly owned subsidiary of the Company and the parent company of Lumo Finland, its directors, officers and affiliates, in which it alleges that the gain from the sale of swap instruments owned by Lumo Sweden amounting to €35.2 million (equivalent to $36.6 million as of December 31, 2024) belongs to the Bankruptcy Estate. The Bankruptcy Estate filed an additional claim with the District Court on May 27, 2024 against Lumo Sweden for €4.8 million (equivalent to $5.0 million as of December 31, 2024), also alleging that the gain from the sale of the swap instruments belongs to the Bankruptcy Estate, bringing the aggregate sum of claims related to the gain from sale of swap instruments to €40.0 million (equivalent to $41.6 million as of December 31, 2024). We believe that the Lumo Administrator's position is without merit, and we are vigorously defending our position.

We are also notified that the Lumo Administrator filed a claim against one of Lumo Finland’s suppliers, seeking to recover payments made by Lumo Finland amounting to €4.2 million (equivalent to $4.4 million as of December 31, 2023) prior to the bankruptcy. The Lumo Administrator has also filed a recovery claim jointly against us and the supplier amounting to €1.6 million (equivalent to $1.7 million as of December 31, 2023) alleging that a portion of the payment by Lumo Finland effectively reduced our liability under the terms of a previously supplied parental guarantee (this €1.6 million is included within and not additive to the €4.2 million). The Lumo Administrator alleges that the payments represented preferential payments and therefore belong to the bankruptcy estate which are recoverable under the laws of Finland. We are challenging the Lumo Administrator's claims.

We believe that
the maximum exposure for these cases would likely be limited by the potential
amount of the customers' claims in the bankruptcy case. Based on the progress
made in assessing those claims,  we expect those claims to be in the range of €2.0 million and €4.0 million. Although we do not believe that
we are legally obligated to pay anything, given the likelihood of negotiating a
settlement to minimize further costs of challenging the claims, we recognized an estimated loss
of  €2.5 million (equivalent to $2.6 million at the date of the transaction) recorded in
the fourth quarter of 2024. The estimated loss is
included in the loss from discontinued operations, net account in the
consolidated statement of operations for the year ended December
31, 2024.

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Discontinued U.K. Operations

On November 29, 2021 Orbit Energy Limited ("Orbit"), a subsidiary of the Company which operated in United Kingdom was declared insolvent and its customers were transferred to a “supplier of last resort.” Effective December 1, 2021, the administration of Orbit was transferred to a third party administrator (the "Orbit Administrator"). The accounts of Orbit were deconsolidated from those of the Company effective December 1, 2021.

We determined that the discontinued operations of Orbit represented a strategic shift that would have a major effect on our operations and financial statements. Since the appointment of the Orbit Administrator, we accounted Orbit's  business as discontinued operations and accordingly, have presented the results of operations and related cash flows as discontinued operations. Any remaining assets and liabilities of the discontinued operations have been presented separately, and are reflected within assets and liabilities from discontinued operations in our consolidated balance sheets as of December 31, 2024 and 2023. Since the Company lost control of the management of Orbit in favor of the Orbit Administrator, the accounts of Orbit were deconsolidated effective December 1, 2021.

On November 28, 2023, the administration of Orbit ceased and the control of Orbit reverted back to the Company from the Orbit Administrator. The accounts of Orbit were consolidated with those of the Company effective November 28, 2023.

Genie Retail Energy

GRE operates REPs that resell electricity and/or natural gas to residential and small business customers in California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Texas and Washington, D.C. GRE’s revenues represented approximately 94.9% and 97.3% of our consolidated revenues in the years ended December 31, 2024 and 2023, respectively.

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GRE’s cost of revenues consists primarily of natural gas and electricity purchased for resale. Certain of GRE’s REPs are party to an Amended and Restated Preferred Supplier Agreement with BP Energy Company, or BP, which is in effect through November 30, 2023. Those REPs’ ability to purchase electricity and natural gas under this agreement is subject to satisfaction of certain conditions including the maintenance of certain covenants.

As an operator of REPs, GRE does not own electrical power generation, transmission, or distribution facilities, or natural gas production, pipeline or distribution facilities. Instead, GRE’s REPs contract with various pipeline and distribution companies for natural gas pipeline, storage and transportation services, and utilizes NYISO, PJM, ISO New England and MISO for electric transmission and distribution. GRE’s cost of revenues includes scheduling costs, ISO fees, pipeline costs and utility service charges for the purchase of these services.

For risk management purposes, GRE’s REPs utilize put and call options and swaps as hedges against unfavorable fluctuations in market prices of electricity and natural gas and to reduce exposure from price fluctuations. The put and call options and swaps are recorded at fair value as a current asset or liability and any changes in fair value are recorded in cost of revenues. The impact of these options and swaps on cost of revenues is relatively small in comparison to the purchases of gas and electricity for resale.

The electricity transmission and distribution operators perform real-time load balancing for each of the electrical power grids in which GRE’s REPs operate. Similarly, the utility or the local distribution company, or LDC, performs load balancing for each of the natural gas markets in which GRE’s REPs operate. Load balancing ensures that the amount of electricity and natural gas that GRE’s REPs purchase is equal to the amount necessary to service their customers’ demands at any specific point in time. GRE’s REPs manage the differences between the actual electricity and natural gas demands of its customers and its bulk or block purchases by buying and selling in the spot market, and through monthly cash settlements and/or adjustments to futures deliveries in accordance with the load balancing performed by utilities, LDCs, and electricity transmission and distribution operators. Suppliers and the LDC’s charge or credit GRE for balancing the electricity and natural gas purchased and sold for its account.

Local utilities generally meter and deliver electricity and natural gas to GRE’s REPs' customers. The local utilities also provide billing and collection services on GRE’s REPs behalf for most of customers and certain local utilities offer purchase of receivables, or POR, programs. GRE’s REPs receive the proceeds less the utility’s fees for purchase of receivables billing and other ancillary services, where applicable.

Volatility in the electricity and natural gas markets affects the wholesale cost of the electricity and natural gas that GRE’s REPs sell to customers. GRE’s REPs may not always choose to pass along increases in costs to their customers for various reasons including competitive pressures and for overall customer satisfaction. In addition, GRE’s REPs offer fixed rate products or guaranteed pricing and may be unable to change their sell rates offered to fixed rate and guaranteed pricing customers in response to volatility in the prices of the underlying commodities. This can adversely affect GRE’s gross margins and results of operations. Alternatively, increases in GRE’s REPs rates charged to customers may lead to increased customer churn.

GRE’s REPs’ selling expense consists primarily of sales commissions paid to independent agents and marketing costs, which are the primary costs associated with the acquisition of customers. Selling, general and administrative expenses include compensation, benefits, utility fees for billing and collection, professional fees, rent and other administrative costs.

Seasonality and Weather; Climate Change

The weather and the seasons, among other things, affect GRE’s REPs’ revenues. Weather conditions have a significant impact on the demand for natural gas used for heating and electricity used for heating and cooling. Typically, colder winters increase demand for natural gas and electricity, and hotter summers increase demand for electricity. Milder winters and/or summers have the opposite effect. Unseasonable temperatures in other periods may also impact demand levels. Potential changes in global climate may produce, among other possible conditions, unusual variations in temperature and weather patterns, resulting in unusual weather conditions, more intense, frequent and extreme weather events and other natural disasters. Some climatologists believe that these extreme weather events will become more common and more extreme, which will have a greater impact on our operations. Natural gas revenues typically increase in the first quarter due to increased heating demands and electricity revenues typically increase in the third quarter due to increased air conditioning use. Approximately 43.0%, 48.1% and 39.7% of GRE’s natural gas revenues for the relevant years were generated in the first quarter of 2024, 2023 and 2022, respectively, when demand for heating was highest. Although the demand for electricity is not as seasonal as natural gas (due, in part, to usage of electricity for both heating and cooling), approximately 28.7%, 32.5% and 30.5% of GRE’s electricity revenues for 2024, 2023 and 2022, respectively, were generated in the third quarters of those years. GRE’s REPs’ revenues and operating income are subject to material seasonal variations, and the interim financial results are not necessarily indicative of the estimated financial results for the full year. In addition, extraordinary weather has and can lead to extreme spikes in the prices of wholesale electricity and natural gas in markets where GRE and other retail providers purchase their supply, or in challenges to the grid or supply markets in affected areas. Such events could have material impact on our margins and operations.

In addition to the direct physical impact that climate change may have on our business, financial condition and results of operations because of the effect on pricing, demand for our offerings and/or the energy supple markets, we may also be adversely impacted by other environmental factors, including: (i) technological advances designed to promote energy efficiency and limit environmental impact; (ii) increased competition from alternative energy sources; (iii) regulatory responses aimed at decreasing greenhouse gas emissions; and (iv) litigation or regulatory actions that address the environmental impact of our energy products and services.

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Purchase of Receivables

Utility companies offer purchase of receivables, or POR, programs in most of the service territories in which we operate. GRE’s REPs reduce their customer credit risk by participating in POR programs for a majority of their receivables. In addition to providing billing and collection services, utility companies purchase those REPs’ receivables and assume all credit risk without recourse to those REPs. GRE’s REPs’ primary credit risk in these jurisdictions is therefore nonpayment by the utility companies. In the years ended December 31, 2024, 2023 and 2022, the associated cost was approximately 1.2% ,0.9% and 1.1% of GRE's revenue, respectively. At December 31, 2024 and 2023, 83.6% and 84.4% of GRE’s net accounts receivable were under POR programs, respectively.

Concentration of Customers and Associated Credit Risk

GRE’s REPs reduce their customer credit risk by participating in purchase of receivable programs for a majority of their receivables. In addition to providing billing and collection services, some utility companies purchase those REPs’ receivables and assume all credit risk without recourse to those REPs for those purchased receivables. GRE’s REPs primary credit risk with respect to those purchased receivables is therefore nonpayment by the utility companies. Certain of the utility companies represent significant portions of our consolidated revenues and consolidated gross trade accounts receivable balance during certain periods, and such concentrations increase our risk associated with nonpayment by those utility companies.

The following table summarizes the percentage of consolidated trade receivable by customers that equal or exceed 10.0% of consolidated net trade receivables at December 31, 2024 and 2023 (no other single customer accounted for 10.0% or greater of our consolidated net trade receivable as of December 31, 2024 and 2023).

na—less than 10.0% of consolidated net trade receivables

The following table summarizes the percentage of consolidated revenues from customers that equal or exceed 10% or greater of the Company’s consolidated revenues in the period (no other single customer accounted for more than 10% of consolidated revenues in these periods):

na—less than 10.0% of consolidated revenues in the period

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Legal Proceedings

Although GRE endeavors to maintain best sales and marketing practices, such practices have been the subject of certain class action lawsuits in the past.

See Notes 16, Legal and Regulatory Proceedings, in the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K, which is incorporated by reference.

Agency and Regulatory Proceedings

From time to time, the Company responds to inquiries or requests for information or materials from public utility commissions or other governmental regulatory or law enforcement agencies related to investigations under statutory or regulatory schemes. The Company cannot predict whether any of those matters will lead to claims or enforcement actions or whether the Company and the regulatory parties will enter into settlements before a formal claim is made. See Note 15, Legal and Regulatory Proceedings, in the  Notes to Consolidated Financial Statements in this Annual Report on Form 10-K, which is incorporated by reference, for further detail on agency and regulatory proceedings.

CRITICAL ACCOUNTING POLICIES

Our financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses as well as the disclosure of contingent assets and liabilities. Critical accounting policies are those that require application of management’s most subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies include those related to the allowance for doubtful accounts, goodwill and income taxes. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. See Note 1 to the Consolidated Financial Statements in this Annual Report for a complete discussion of our significant accounting policies.

Revenue Recognition

Revenues from the Sale of Electricity and Natural Gas

Revenue from the single performance obligation to deliver a unit of electricity and/or natural gas is recognized as the customer simultaneously receives and consumes the benefit. Variable quantities in requirements contracts are considered to be options for additional goods and services because the customer has a current contractual right to choose the amount of additional distinct goods to purchase. GRE records unbilled revenues for the estimated amount customers will be billed for services rendered from the time meters were last read to the end of the respective accounting period. The unbilled revenue is estimated each month based on available per day usage data, the number of unbilled days in the period and historical trends.

Many utility companies in the U.S. offer purchase of receivable, or POR, programs in most of the service territories in which we operate, and GRE’s REPs participate in POR programs for a majority of their receivables. We estimate variable consideration related to our rebate programs using the expected value method and a portfolio approach. Our estimates related to rebate programs are based on the terms of the rebate program, the customer’s historical electricity and natural gas consumption, the customer’s rate plan, and a churn factor. Taxes that are imposed on our sales and collected from customers are excluded from the transaction price.

We recognize the incremental costs of obtaining a contract with a customer as an asset if it expects the benefit of those costs to be longer than one year. We determined that certain sales commissions to acquire customers meet the requirements to be capitalized. For GRE, we apply a practical expedient to expense costs as incurred for sales commissions to acquire customers as the period would have been one year or less.

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Revenues from Solar Panels

Our revenues from sales of solar panels are recognized at a point in time following the transfer of control of the solar panels to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. For sales contracts that contain multiple performance obligations, such as the shipment or delivery of solar modules, we allocate the transaction price to each performance obligation identified in the contract based on relative standalone selling prices, or estimates of such prices, and recognize the related revenue as control of each individual product is transferred to the customer, in satisfaction of the corresponding performance obligations.

Revenues from Solar Projects

Genie Solar enters into contracts to identify, develop, and in some cases operate solar generation sites to provide solar electricity to customers. Solar project contracts consist of a series of tasks and components and accordingly are accounted for as multiple performance obligations. Because our performance creates and enhances assets that are controlled by, and specific to, customers, we recognize construction services revenue over time. Revenue for these performance obligations is recognized using the input method based on the cost incurred as a percentage of total estimated contract costs. Due to the significance of the costs associated with solar panels to the total project, our judgment on when such costs should be included in the measure of progress has a material impact on revenue recognition. Contract costs include all direct material and labor costs related to contract performance.

Solar Energy Generation

Energy generation revenue is earned from both the sale of electricity generated from solar projects and the sale of renewable energy credits. Revenue from energy generation is recognized when we satisfy the performance obligation, which occurs at the time of the delivery of electricity at the contractual rates as stipulated in the power purchase entered into with the customers. We apply for and receive Solar Renewable Energy Credit ("SREC") in certain jurisdictions for power generated by solar energy systems it owns. There are no direct costs allocated to SRECs upon generation. We typically sell SRECs to different customers from those purchasing the energy. The sale of each SREC is a distinct performance obligation satisfied at a point in time and the performance obligation related to each SREC is satisfied when each SREC is delivered to the customer.

Others

Revenues from commissions from selling third-party products to customers, entry and other fees from the energy brokerage are recognized at the time the performance obligations are met. Our contracts with customers for commission revenue contain a single performance obligation and are satisfied at a point in time.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses that result from the inability or unwillingness of our customers to make required payments. The allowance for doubtful accounts was $8.1 million at December 31, 2024 and $6.6 million at December 31, 2023. Our allowance is determined based on known troubled accounts, historical experience and other currently available evidence. Our estimates of recoverability of customer accounts may change due to new developments, changes in assumptions or changes in our strategy, which may impact our allowance for doubtful accounts balance. We continually assess the likelihood of potential amounts or ranges of recoverability and adjust our allowance accordingly, however, actual collections and write-offs of trade accounts receivable may materially differ from our estimates.

Goodwill

Our goodwill balances were $12.7 million and $10.0 million at December 31, 2024 and 2023, respectively. Goodwill is not amortized since it is deemed to have an indefinite life. It is reviewed annually (or more frequently under various conditions) for impairment using a fair value approach.

Goodwill is the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. Goodwill and other indefinite lived intangible assets are not amortized. These assets are reviewed annually (or more frequently under various conditions) for impairment using a fair value approach.

The fair value of the reporting unit is estimated using discounted cash flow methodologies, as well as considering third party market value indicators. Calculating the fair value of the reporting units requires significant estimates and assumptions by management. Should the estimates and assumptions regarding the fair value of the reporting units prove to be incorrect, the Company may be required to record impairments to its goodwill in future periods and such impairments could be material.

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We perform our annual goodwill impairment test as of October 1. In reviewing goodwill for impairment, we have the option, for any or all of our reporting units that carry goodwill - to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If we elect to perform a qualitative assessment and determine that an impairment is more likely than not, we are then required to perform the quantitative impairment test, otherwise, no further analysis is required. We also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. The ultimate outcome of the goodwill impairment review for a reporting unit should be the same whether we choose to perform the qualitative assessment or proceed directly to the quantitative impairment test. In each of 2024 and 2023, we elected to perform a qualitative analysis for our GRE reporting unit as of October 1. The Company determined, after performing a qualitative analysis, that there was no evidence that it is more likely than not that the fair value of the identified reporting unit was less than the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test.

The determination of the fair value of our reporting units is based on an income approach that utilizes discounted cash flows for each reporting unit and other Level 3 inputs as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosure. Under the income approach, we determine fair value based on the present value of the most recent cash flow projections for the reporting unit as of the date of the analysis and calculate a terminal value utilizing a terminal growth rate. The significant assumptions under this approach include, among others: income projections, which are dependent on future sales, new customers, customer behavior, competitor pricing, operating expenses, the discount rate, and the terminal growth rate. The cash flows used to determine fair value are dependent on a number of significant management assumptions such as the expectations of future performance and the expected future economic environment, which are partly based upon our historical experience. The estimates are subject to change given the inherent uncertainty in predicting future results. Additionally, the discount rate and the terminal growth rate are based on judgment of the rates that would be utilized by a hypothetical market participant.

Income Taxes

Our current and deferred income taxes and associated valuation allowance are impacted by events and transactions arising in the normal course of business as well as in connection with special and non-routine items. Assessment of the appropriate amount and classification of income taxes is dependent on several factors, including estimates of the timing and realization of deferred income tax assets, the results of Internal Revenue Service audits of our federal income tax returns, and changes in tax laws or regulations.

The valuation allowance on our deferred income tax assets was $10.3 million and $10.1 million at December 31, 2024 and 2023, respectively. We employ a tax strategy that enables us to currently deduct losses from our foreign subsidiaries against our profitable U.S. operations and we assess the realizability of deferred taxes quarterly. Because of our current projections, we concluded that we are more likely than not to utilize our deferred federal income tax assets in the foreseeable future and have released the valuation on those assets that we expect to utilize.

We use a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. We determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, we presume that the appropriate taxing authority that has full knowledge of all relevant information will examine the position. Tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of tax benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability. We review and adjust our liability for unrecognized tax benefits based on our best estimate and judgment given the facts, circumstances and information available at each reporting date. To the extent that the outcome of these tax positions is different from the amounts recorded, such differences may affect income tax expense and actual tax payments.

RECENTLY ISSUED ACCOUNTING STANDARDS

Information regarding new accounting pronouncements is included in Note 1 — Description of Business and Summary of Significant Accounting Policies, to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

RESULTS OF OPERATIONS

We evaluate the performance of our operating business segments based primarily on income (loss) from operations. Accordingly, the income and expense line items below income (loss) from operations are only included in our discussion of the consolidated results of operations.

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Year Ended December 31, 2024 compared to Year Ended December 31, 2023

Genie Retail Energy Segment

Revenues. GRE’s electricity revenues slightly decreased in 2024 compared to 2023. The slight decrease in electricity revenues in 2024 compared to 2023 was the result of a decrease in average price charged to customers offset by an increase in electricity consumption. The average rate per kilowatt hour sold decreased by 3.0% in 2024 compared to 2023 due to general market conditions. Electricity consumption by GRE's REPs' customers increased by 3.0% in 2024 compared to 2023. The increase in electricity consumption reflected an increase in the average number of meters served, which increased by 4.8% in 2024 compared to 2023, partially offset by a 1.7% decrease in average electricity consumption per meter in 2024 compared to 2023. The increase in meters
served was driven by strong customer acquisitions during 2024. Electricity consumption per
meter decreased in 2024 compared to 2023 due to cooler than
usual weather during the 2024 summer cooling season and standard fluctuations
in customer consumption patterns.

GRE’s natural gas revenues decreased in 2024 compared to 2023. The decrease in natural gas revenues in 2024 compared to 2023 was a result of decrease in the average revenue per therm sold partially offset by an increase in natural gas consumption. The average rate per therm sold decreased by 11.6% in 2024 compared to 2023. due to general market conditions. Natural gas consumption of GRE's REPs' customers increased by 5.3% in 2024 compared to 2023 due to a 7.0% increase in average meters served in 2024 compared to 2023 partially offset by a decrease in average consumption per meter in 2024 compared to 2023. The increase in meters served was driven by customer acquisition efforts during 2023 and continued through 2024.

Other revenues in 2024 included revenues from the sale of petroleum products in Israel up to May 2024 and customer termination fees from commercial customers.

The customer base for GRE's REPs as measured by meters serviced consisted of the following:

Gross meter acquisitions in 2024 were 326,000 compared to 316,000 in 2023.  In the first quarter of 2023, we resumed customer acquisition activities
using a variety of new and existing channels after a "strategic
pause" implemented from the fourth quarter of 2021
through 2022. Gross meter acquisitions in 2024 increased compared to 2023 primarily due to a customer aggregation deal that started in September 2024. In 2024, customer acquisition efforts were conducted at a historically normalized level.

The number of meters served on December 31, 2024 increased by 62,000 meters or 17.2% from December 31, 2023. The increase in the number of meters served at December 31, 2024 compared to December 31, 2023 was
due to a significant aggregation deal that started in September 2024.

In 2024, average monthly churn increased to 5.4% compared to 4.9% in 2023, as a result of higher churn rates related to newly acquired customers.

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The average rates of annualized energy consumption, as measured by residential customer equivalents, or RCEs, are presented in the chart below. An RCE represents a natural gas customer with annual consumption of 100 mmbtu or an electricity customer with annual consumption of 10 MWh. Because different customers have different rates of energy consumption, RCEs are an industry standard metric for evaluating the consumption profile of a given retail customer base.

RCEs increased by 10.8% at December 31, 2024 compared to December 31, 2023. The increase is due to the customer acquisition activities discussed above.

Cost of Revenues and Gross Margin Percentage. GRE’s cost of revenues and gross margin percentage were as follows:

nm—not meaningful

Cost of revenues for electricity increased in 2024 compared to 2023 primarily because of increases in the average unit cost of electricity and electricity consumption. The average unit cost of electricity increased by 5.7% in 2024 compared to 2023 due to higher wholesale prices of electricity during 2024 compared to 2023. Electricity consumption by GRE's REPs' customers increased by 3.0% in 2024 compared to 2023. The gross margin on electricity decreased in 2024 compared to 2023, because the average cost of electricity increased while the rates charged to customers decreased.

Cost of revenues for natural gas decreased in 2024 compared to 2023 primarily because of a decrease in the average unit cost of natural gas partially offset by a decrease in total natural gas consumption. The average unit cost of natural gas decreased 31.8% in 2024 compared to 2023 due to a decrease in the average wholesale price of natural gas during 2024 compared
to 2023. Natural gas consumption by GRE’s REPs’ customers decreased by 5.3% in 2024 compared to 2023. Gross margin on natural gas sales increased in 2024 compared
to 2023 because
the average unit cost of natural gas decreased more than the decrease in
the average rate charged to customers.

The cost of other revenues in 2024 included the cost of petroleum products sold in Israel.

Selling, General and Administrative. The increase in selling, general and administrative expenses in 2024 compared to 2023 was primarily due to increases in marketing and customer acquisition costs, employee-related costs, billing and POR program fees and management fees. Marketing and customer acquisition expenses increased by $1.3 million in 2024 compared to 2023 as a result of an increase in the number of meters acquired during 2024. Employee-related expenses increased by $0.5 million in 2024 compared to 2023 primarily due to an increase in the number of employees and commissions earned by employees from commercial sales. Billing and POR program fees and regulatory fees increased by $1.9 million in 2024 compared to 2023  as a result of changes in
rates implemented by several utilities. Management fees increased
by $0.6 million in 2024 compared to 2023 as
a result of a favorable results at GRE's Mirabito business unit. As a percentage of GRE’s total revenues, selling, general and administrative expenses increased to 18.7% in 2024 from 17.4% in 2023.

35

Genie Renewables

The GREW (formerly GES) segment is composed of Genie Solar, CityCom Solar and Diversegy. Genie Solar is an integrated solar energy company that develops, constructs and operates utility-scale solar energy projects. CityCom Solar is a marketer of community solar and alternative products and services complementary to our energy offerings. Diversegy is a provider of energy procurement advisory services to industrial, commercial and municipal customers.

On November 3, 2023, Genie Solar acquired ten special-purpose entities that own and operate solar system facilities in Ohio and Michigan for an aggregate purchase price of $7.5 million. On November 3, 2023, Genie Solar also
signed an agreement to purchase from the sellers of the Ohio and Michigan facilities another special purpose entity
that owns and operates a solar system facility in Indiana, for
$1.3 million, subject to the satisfaction of certain closing conditions.
In February 2024, the purchase of the solar system facility in Indiana was
completed.

The acquisitions have been
accounted for as asset acquisitions with a total purchase price of
$9.0 million, including $0.2 million of direct transaction cost
allocated to solar arrays assets included in the property and equipment account
in our consolidated balance sheets.

The Company recorded revenue from the solar array acquisitions of approximately $1.2 million and $0.1 million in its consolidated statements of operations and comprehensive income for the year ended December 31, 2024 and 2023.

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Revenue. GREW's revenues increased in 2024 compared to 2023.  The increase in revenues were the result of
increased revenues generated by Diversegy that includes
commissions, entry fees and other fees revenue, contributions from the portfolio
of operating solar projects at Genie Solar and  revenues from
the development of solar projects for customers from Genie Solar, partially
offset by a decrease in revenues from commissions from selling alternative
products and services to customers by CityCom Solar.

Cost of Revenue. The variations in the cost of revenues in 2024 compared to 2023 are due to changes in the
mix of products from which the revenues were generated during the periods. In
the first quarter of 2024, we recorded a $0.4 million charge to the cost of revenues of
Genie Solar to write down the carrying value of solar panel inventories to the
estimated net realizable value.

Selling, General and Administrative. Selling, general and administrative expenses increased in 2024 compared to 2023  primarily due to increases
in headcount in Genie Solar and Diversegy, consulting fees, warehousing
costs at Genie Solar and depreciation from the solar arrays acquired by Genie
Solar in November 2023 and February 2024.

Impairment of assets. The impairment of assets
recorded in 2024 relates to capitalized cost at Genie Solar for solar
projects that were discontinued in the 2024.

36

Corporate

As discussed above, the remaining accounts of GRE International were transferred to corporate starting in the third quarter of 2022 (when GRE International ceased being treated as a separate segment). Entities under corporate do not generate any revenues, nor does it incur any cost of revenues. Corporate costs include unallocated compensation, consulting fees, legal fees, business development expenses and other corporate-related general and administrative expenses.

The increase in Corporate general and administrative expenses in 2024 compared to 2023 was primarily because of
decreases in employee-related cost and professional and consulting fees. As a percentage of our consolidated revenues, corporate general and administrative expenses decreased from 2.6% in 2023 to 2.0% in 2024.

In December 2023, we established a wholly-owned captive insurance subsidiary (the "Captive") with the primary purpose of enhancing our risk financing strategies. The Captive insures against certain risks unique
to our operations for which insurance may
not be currently available or economically feasible in today's insurance
marketplace. The covered risks are both current and related to historical
business activities.

In the fourth quarter of
2024, we expanded our self-insurance risk management strategy to cover
additional risk related to its current and historical business operations. The coverage is being provided on an occurrence basis, with an initial
policy that reflects 1) exposure, for occurrences in the year prior to implementation, to
claims made subsequent to program inception, to the extent recoveries were
still possible under relevant statutes of limitation, and 2) exposure for
annual periods commencing with implementation of the program.

With input from external experts, we estimated the expected ultimate cost of: 1)
claims defense cost, settlements and penalties resulting from insured risk, and
2) stranded risk which includes economic losses
due to regulatory restrictions or unanticipated reduction of demand, as well as
the level cost associated with contesting such restrictions. In assessing the loss contingency, we estimated the
severity and frequency of expected losses based on our activities. A
range of margins was selected so that the cumulative expenses plus risk of
losses over a given number of years equal the expected magnitude. This produced a range of annual premium options for the protective period. The contribution
of a priori expected plus risk margin losses from each of these periods is
multiplied by a current remaining probability factor, which recognizes the
relative likelihood that a claim will still be brought subsequent to program
inception. These are added together to obtain estimated required reserves and
required premiums (net of expenses) at program inception-related exposure prior
to program inception.

The amount of the expected loss liability for
each risk is based on an analysis performed by a third-party actuary which
assumed historical patterns. The key assumptions used in developing these estimates
are subject to variability.

In 2024 and 2023, we paid premiums of $39.6 million and  $51.2 million, respectively, to the Captive which amounts are included in restricted cash in our consolidated balance sheets as of December 31, 2024 and 2023. The Captive must maintain a sufficient level of cash to fund future reserve payments and secure the Captive's liabilities, particularly those related to the insured risks. We also recognized $33.6 million and $45.1 million provisions for captive insurance liability for 2024 and 2023, respectively, related to the Captive's exposure for the insured risks.

37

Consolidated

Selling, General and Administrative. Stock-based compensation expense included in consolidated selling, general and administrative expenses was $2.3 million and $2.8 million in 2024 and 2023, respectively. At December 31, 2024, aggregate unrecognized compensation cost related to non-vested stock-based compensation was $5.9 million. The unrecognized compensation cost expected to be recognized over the average service period of 2.5 years.

As a percentage of our consolidated revenues, selling, general and administrative expenses increased from 21.3% in 2023 to 22.0% in 2024.

The following is a discussion of our consolidated income and expense line items below loss from operations.

Interest income. Interest income increased in 2024, compared to 2023 primarily due to increases in average cash, cash equivalents and restricted cash during the period and significant increases in average effective interest rates on those balances.

Gain on Marketable Equity Securities and Investments. The gain on marketable equity securities and investment for the year ended December 31, 2024 pertains to the change in fair value of the Company's investments various entities.

Other income, net. Other income , net in 2024 consisted primarily of foreign currency
transactions and equity in net loss in equity method investees. Other
income (loss) income, net, consisted of a one-time tax
credit related to payroll taxes incurred in prior years, foreign currency transactions and equity in net loss in equity method investees.

Provision for Income Taxes. The decrease in provision for income tax in 2024 compared to 2023 is primarily due to decreases in the amount of taxable income in the various taxing jurisdictions. Income before income taxes increased to $19.9 million in 2024 compared to $18.1 million in 2023.

(Loss) income from discontinued operations, net of tax. Loss from discontinued operations, net of tax in the year ended December 31, 2024 is mainly from an estimated loss resulting from legal cases filed by the Lumo Administrator, as discussed above, partially offset by provision for taxes and foreign exchange differences in Lumo Sweden. Income from discontinued operations, net of tax in year ended December 31, 2023 is mainly from an increase in the estimated value of our investments in Orbit and foreign exchange differences in Lumo Sweden.

Net Loss (Income) Attributable to Noncontrolling Interests. Net loss attributable to noncontrolling interests for the year ended December 31, 2024 primarily consist2 of net income from Citizens Choice ("CCE") partially offset by losses incurred in various businesses in Renewables segments. Net income attributable to noncontrolling interests for the year ended December 31, 2023 primarily consists of net income from CCE and various businesses in Renewables segments.

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Year Ended December 31, 2023 compared to Year Ended December 31, 2022

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Revenues. GRE’s electricity revenues increased in 2023 compared to 2022. The increase in electricity revenues in 2023 compared to 2022 was the result of an increase in electricity consumption partially offset by a decrease in the average price charged to customers. Electricity consumption by GRE's REPs' customers increased by 47.8% in 2023 compared to 2022. The increase in electricity consumption reflected an increase in the average number of meters served, which increased by 41.7% in 2023 compared to 2022 and a 4.3% increase in average electricity consumption per meter in 2023 compared to 2022. The increase in meters served was driven by strong customer acquisitions during 2023, while customer acquisition efforts had been reduced during 2022. Electricity consumption per meter increased in 2023 due to warmer weather conditions in our service areas compared to 2022. The average rate per kilowatt hour sold decreased by 1.9% in 2023 compared to 2022. The decrease in the average rate per kilowatt hour sold is due to a decrease in the average wholesale price of electricity in 2023 compared to 2022.

GRE’s natural gas revenues decreased in 2023 compared to 2022. The decrease in natural gas revenues in 2023 compared to 2022 was a result of decreases in natural gas consumption and the average revenue per therm sold. Natural gas consumption of GRE's REPs customers decreased by 0.4% in 2023 compared to 2022. Average consumption per meter decreased by 6.6% in 2023 compared to 2022 while the average meters served increased by 6.6% in 2023 compared to 2022. The average rate per therm sold decreased by 9.5% in 2023 compared to 2022. The decrease in the average revenue per therm sold is due to the decrease in the average wholesale price of natural gas in 2023 compared to 2022.

Other revenues in 2023 included revenues from the sale of petroleum products in Israel.

The customer base for GRE's REPs as measured by meters serviced consisted of the following:

Gross meter acquisitions in 2023 were 316,000 compared to 159,000 in 2022.  The number of meters served on December 31, 2023 increased by 86000 meters or 31.3% from December 31, 2022. The increase in the gross meter acquisitions for the year ended December 31, 2023 compared to 2022 was due to a “strategic pause” on certain customer acquisition channels that started in the fourth quarter of 2021 and continued through 2022. In the first quarter of 2023, we resumed customer acquisition activities using a variety of new and existing channels.

In 2023, average monthly churn slightly increased to 4.9% compared to 4.8% in 2022.

The average rates of annualized energy consumption, as measured by residential customer equivalents, or RCEs, are presented in the chart below. An RCE represents a natural gas customer with annual consumption of 100 mmbtu or an electricity customer with annual consumption of 10 MWh. Because different customers have different rates of energy consumption, RCEs are an industry standard metric for evaluating the consumption profile of a given retail customer base.

39

RCEs increased by 33.6% at December 31, 2023 compared to December 31, 2022. The increase is due to the resumption of customer acquisition activities in 2023 as discussed above.

Cost of Revenues and Gross Margin Percentage. GRE’s cost of revenues and gross margin percentage were as follows:

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Cost of revenues for electricity increased in 2023 compared to 2022 primarily because of increases in electricity consumption and the average unit cost of electricity. The average unit cost of electricity increased by 39.0% in 2023 compared to 2022 due to loss recognized from derivatives in 2023 from the fluctuation of the wholesale price of electricity, while we recognized a significant gain from derivatives in 2022. Electricity consumption by GRE's REPs' customers increased by 47.8% in 2023 compared to 2022. The gross margin on electricity decreased in 2023 compared to 22022, because the average cost of electricity increased while the rate charged to customers decreased. While the average unit cost of electricity decreased in 2023 compared to 2022, the cost of revenue in 2022 was reduced by the favorable results of hedges.

Cost of revenues for natural gas increased in 2023 compared to 2022 primarily because of an increase in the average unit cost of natural gas partially offset by a decrease in total natural gas consumption. The average unit cost of natural gas increased 1.3% in 2023 compared to 2022. Natural gas consumption by GRE’s REPs’ customers decreased by 0.4% in 2023 compared to 2022. Gross margin on natural gas sales decreased in 2023 compared to 2022 because the average unit cost of natural gas increased while the average rate charged to customers decreased.

The cost of other revenues in 2023 included the cost of petroleum products sold in Israel.

Selling, General and Administrative. The increase in selling, general and administrative expenses in 2023 compared to 2022 was primarily due to increases in marketing and customer acquisition costs and employee-related costs partially offset by a decrease in legal settlement costs. Marketing and customer acquisition expenses increased by $6.1 million in 2023 compared to 2022 as a result of an increase in the number of meters acquired. Employee-related expenses increased by $2.2 million in 2023 compared to 2022 primarily due to an increase in the number of employees, commissions earned by employees from commercial sales and share based compensation expenses. Processing and regulatory fees increased by $1.9 million in 2023 compared to 2022 as a result of a higher level of activities from an increase in the number of meters. We also paid $0.5 million in legal fees and settlements in Connecticut in 2023. No legal settlements were paid in 2022. As a percentage of GRE’s total revenues, selling, general and administrative expenses decreased to 17.4% in 2023 from 19.9% in 2022.

40

Genie Renewables

On November 3, 2023, the Company acquired ten special-purpose entities that own and operate solar system facilities in Ohio and Michigan for an aggregate purchase price of $7.5 million. The acquisition is accounted for as an asset acquisition and recognized $7.7 million, including $0.2 million of direct transaction cost to solar arrays assets included in the property and equipment account in the consolidated balance sheet.

The Company recorded revenue from the solar array acquisitions of approximately $0.1 million in its consolidated statements of operations and comprehensive income for the year ended December 31, 2023.

Revenue. GREW's revenues increased in 2023 compared to 2022. The increases in revenues were the result of increases in revenues from commissions from selling third-party products to customers by CityCom Solar and revenues from Diversegy that includes commissions, entry fees and other fees from our energy procurement and marketing services businesses.

Cost of Revenue. The variations in the cost of revenues in 2023 compared to 2022 are consistent with the variations in revenues of CityCom Solar and Diversegy. In 2023, we recorded a $1.1 million charge to the cost of revenues of Genie Solar to write down the carrying value of solar panel inventories to the estimated net realizable value.

Selling, General and Administrative. Selling, general and administrative expenses increased in 2023 compared to 2022 primarily due to increases in headcount in Genie Solar and Diversegy and consulting fees and warehousing costs at Genie Solar.

Corporate

As discussed above, the remaining accounts of GRE International were transferred to corporate starting in the third quarter of 2022. Entities under corporate do not generate any revenues, nor does it incur any cost of revenues. Corporate costs include unallocated compensation, consulting fees, legal fees, business development expense and other corporate-related general and administrative expenses.

The increase in Corporate general and administrative expenses in 2023 compared to 2022 was primarily due increases in employee related cost and stock-based compensation expenses. As a percentage of our consolidated revenues, corporate general and administrative expenses slightly decreased from 2.9% in 2022 to 2.6% in 2023.

In December 2023, we established a wholly-owned captive insurance subsidiary (the "Captive") with the primary purpose of enhancing our risk financing strategies. In December 2023, we paid $51.2 million premiums to Captive, which amount is included in restricted cash in our consolidated balance sheet as of December 31, 2023. The Captive must maintain a sufficient level of cash to fund future reserve payment and secure the insurer's liabilities, particularly those related to the insured risks. We also recognized a $45.1 million provision for captive insurance liability for the year ended December 31, 2023 related to Captive's exposure for the insured risks.

41

In December 2022, the Company suspended the development of business operations of Petrocycle, Ltd. ("Petrocycle"), a pre-operating entity engaged in the development of a process to recycle used engine oil into usable gasoline,  after it was determined that the current operations will not meet the expected results. Petrocycle provided full impairment of its property and equipment and notes and other receivables from its minority interest partner for an aggregate amount of $2.1 million.

Consolidated

Selling, General and Administrative. Stock-based compensation expense included in consolidated selling, general and administrative expenses were $2.8 million and $3.0 million in 2023 and 2022, respectively. At December 31, 2023, aggregate unrecognized compensation cost related to non-vested stock-based compensation was $1.2 million. The unrecognized compensation cost expected to be recognized over the average service period of 0.9 years.

As a percentage of our consolidated revenues, selling, general and administrative expenses decreased from 23.8% in 2022 to 21.3% in 2023.

The following is a discussion of our consolidated income and expense line items below loss from operations.

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Interest income. Interest income increased in year ended December 31, 2023, compared to the same period in 2022 primarily due to increases in average cash, cash equivalents and restricted cash during the period and significant increases in average effective interest rates on those balances.

Gain (loss) on Marketable Equity Securities and Investments. The gain on marketable equity securities and investment for the year ended December 31, 2023 pertains to the change in fair value of the Company's investments various entities including investments in common stock of Rafael Holdings, Inc. ("Rafael") which the Company acquired in December 2020.

Other income (loss), net. Other income (loss), net in the year ended December 31, 2023 consisted primarily of on-time tax credit related to payroll taxes incurred in prior years. .

Provision for Income Taxes. The decrease in provision for income tax in 2023 compared to 2022 is primarily due to decreases in the amount of taxable income in the various taxing jurisdictions. Income before income taxes decreased to $18.1 million in 2023 compared to $77.5 million in 2022.

Net (Income) Loss Attributable to Noncontrolling Interests. Net income attributable to noncontrolling interests for the year ended December 31, 2023 is primarily consist of net income from Citizens Choice ("CCE") partially offset by losses incurred in various businesses in Renewables segments. Net loss attributable to noncontrolling interests for the year ended December 31, 2022 primarily consists of net losses from CCE and various businesses in Renewables segments.

42

Income from discontinued operations, net of tax. Income from discontinued operations, net of tax in year ended December 31, 2023 is mainly from an increase in the estimated value of our investments in Orbit and foreign exchange differences in Lumo Sweden. Income from discontinued operations, net of tax in the year ended December 31, 2022 is mainly due to result of operations of Lumo Finland and Lumo Sweden.

LIQUIDITY AND CAPITAL RESOURCES

General

We currently expect that our cash flows from operations in the next twelve months and the $104.5 million balance of unrestricted cash and cash equivalents that we held at December 31, 2024 will be sufficient to meet our currently anticipated cash requirements for at least the period ending March 14, 2026.

At December 31, 2024, we had working capital (current assets less current liabilities) of $117.6 million.

Operating Activities

Cash, cash equivalents and restricted cash provided by continuing operating activities were $60.3 million, $50.9 million and $66.0 million in the years ended December 31, 2024, 2023 and 2022, respectively. Net income from continuing operations after non-cash adjustments increased to $52.4 million in 2024 compared to $67.3 million in 2023 and 64.3 in 2022.

Our cash flow from operations varies significantly from quarter to quarter and from year to year, depending on our operating results and the timing of operating cash receipts and payments, specifically trade accounts receivable and trade accounts payable. Changes in working capital increased cash flows by $23.1 million for 2024, compared to 2023 and decreased by $19.8 million for 2023, compared to 2022. Changes in other assets increased cash flows by $1.2 million for 2024 compared to $1.7 million increase in 2023 compared to 2022.

Certain of GRE's REPs are party to an Amended and Restated Preferred Supplier Agreement with BP, which is to be in effect through November 30, 2023. Under the agreement, the REPs purchase electricity and natural gas at market rate plus a fee. The obligations to BP are secured by a first security interest in deposits or receivables from utilities in connection with their purchase of the REP’s customer’s receivables, and in any cash deposits or letters of credit posted in connection with any collateral accounts with BP. The ability to purchase electricity and natural gas under this agreement is subject to satisfaction of certain conditions including the maintenance of certain covenants. At December 31, 2024, we were in compliance with such covenants. At December 31, 2024, restricted cash—short-term of $1.1 million and trade accounts receivable of $68.8 million were pledged to BP as collateral for the payment of trade accounts payable to BP of $24.2 million at December 31, 2024.

We had purchase commitments of $134.7 million at December 31, 2024, of which $123.0 million was for purchases of electricity.

As discussed above, in December 2023, we established the Captive insurance company and, and in 2024, expanded provided by the Captive. At December 31, 2024, the balance of short-term and long-term restricted of the Captive are $18.8 million and $69.6 million, respectively. We also recognized $33.6 million and $45.1 million provision for captive insurance liability for the years ended December 31, 2024 and 2023, related to the Captive's exposure for the insured risks. At December 31, 2024, the current and noncurrent captive insurance liabilities were $9.1 million and $69.6 million, respectively. The amount of the expected loss liability for each risk is based on an analysis performed by a third-party actuary which assumed historical patterns. The key assumptions used in developing these estimates are subject to variability.

43

We are a lessee under operating lease agreements primarily for office space in locations where we operate and for our solar development projects with lease periods expiring between 2024 and 2052. Our future lease payments under the operating leases as of December 31, 2024 were 3.6 million.

GRE has performance bonds issued through a third party for the benefit of certain utility companies and for various states in order to comply with the states’ financial requirements for retail energy providers. At December 31, 2024, we had outstanding aggregate performance bonds of $27.5 million and a minimal amount of unused letters of credit.

From time to time, we receive inquiries or requests for information or materials from public utility commissions or other governmental regulatory or law enforcement agencies related to investigations under statutory or regulatory schemes, and we respond to those inquiries or requests. We cannot predict whether any of those matters will lead to claims or enforcement actions.

Investing Activities

Our capital expenditures were $6.7 million, $1.4 million and $1.0 million in 2024, 2023 and 2022, respectively. The increase in capital expenditures in 2024 compared to 2023 is due to construction in progress in Genie Solar. In the year ended December 31, 2024, we transferred solar panels with carrying value of $1.0 million that are intended to be used in Genie Solar projects from inventories to construction in progress. We currently anticipate that our total capital expenditures in the year ending December 31, 2025 will be between $10.0 million and $20.0 million mostly related to the solar projects at GREW.

On November 3, 2023,
we acquired ten special-purpose
entities that own and operate solar system facilities in Ohio and Michigan
for an aggregate purchase price of $7.5 million. The
acquisition has been accounted for as an asset acquisition with a total
purchase price of $7.7 million, including $0.2 million of direct transaction cost allocated
to solar arrays assets included in the property and equipment account in our
consolidated balance sheets.

On November 3, 2023,
we also signed an agreement to purchase from the sellers of the Ohio and Michigan facilities another special
purpose entity that owns and operates a solar system facility in Indiana, for
$1.3 million, subject to the satisfaction of
certain closing conditions. In February 2024, the purchase of the solar
system facility in Indiana was completed after the closing conditions were
met. The acquisition has been accounted for as asset acquisitions and we recorded $1.3 million to
solar arrays assets included in the property and equipment account in the
consolidated balance sheet.

In February 2024, we
purchased from a certain investor 0.5%
interest in Genie Energy International Corporation ("GEIC"), which
holds our interest in our operating subsidiaries for $1.2 million. Following this transaction, GEIC is a
wholly owned subsidiary of the Company.

In July 2024, the Company acquired an
investment property with an aggregate cost of $3.6 million. The investment
property was acquired through a subsidiary in which the Company
holds a 51.0% interest with the remaining 49.0% held by Howard
Jonas, the Chairman of our Board of Directors. The Company paid
$1.8 million to the seller and made a note payable to the seller
for $1.8 million, payable in full on February 1, 2026. The note
payable carries a 5.0% interest rate payable in full on February 1,
2026. In the third quarter of 2024, Howard Jonas, reimbursed the
Company $0.9 million, representing the purchase price for his 49.0%
share in the investment property and is included in the noncontrolling interest
in our consolidated balance sheets. At December 31, 2024,
$3.6 million was outstanding under the note payable with an effective
interest rate of 5.0%.

In 2024, 2023 and 2022, we acquired minimal interests in various
ventures for an aggregate amount of investments of $6.1 million, $11.0 million and $2.7 million, respectively.

In 2020 and 2021, we invested an aggregate of $6.0 million for 261,984 shares of Class B common stock of Rafael. Rafael, a publicly-traded company and a related party. In the year ended December 31, 2024, we sold 195,501 shares of Class B common stock of Rafael for $0.3 million. In the year ended December 31, 2023, we acquired 150,001 shares of Class B common stock of Rafael for $0.3 million. We do not exercise significant influence over the operating or financial policies of Rafael. At December 31, 2024, the carrying value of the remaining investments in the Class B common stock of Rafael was $0.4 million.

In the first quarter of 2023, we invested $4.6 million to purchase the common stock of a publicly-traded company which we sold for $3.9 million during the third quarter of 2023.

In 2023, we invested $4.4 million to purchase investments in total return swap which we sold for $5.5 million during the same period.

On February 21, 2022, we entered into a Loan and Security Agreement to extend up to 5.5 million New Israel Shekel, or NIS (equivalent to $1.5 million as at December 31, 2022) with Natan Ohayon (the "Ohayon Loan"). Natan Ohayon holds a minority interest in (Petrocycle Ltd ("Petrocycle"), a subsidiary of the Company. Petrocycle is a pre-operating entity engaged in the development of a process to recycle used engine oil into usable gasoline. The Ohayon Loan, which is secured by all assets that Mr. Ohayon acquired using the proceeds of the loan bears a minimum interest as set by the Income Tax Regulations of Israel (3.23% in 2022) and is due, together with the principal amount on or before December 31, 2024. In December 2022, the Company suspended the development of business operations of Petrocycle after it was determined that the current operations will not meet the expected results. Petrocycle fully impaired its property and equipment and notes and other receivables from its minority interest partner for an aggregate amount of $2.1 million.

44

Financing Activities

In each of the years ended December 31, 2024, 2023 and 2022, we paid dividends of $0.30 per share to holders of our Class A common stock and Class B common stock. We paid common stock dividends in an aggregate amount of $8.2 million, $8.0 million and $7.7 million in the years ended December 31, 2024, 2023 and 2022, respectively.

In the year ended December 31, 2023, we paid Base Dividends of $0.1594 per share on our Series 2012-A Preferred Stock or Preferred Stock. In the year ended December 31, 2022, we paid Base Dividends of $0.1594 per share on our Series 2012-A Preferred Stock or Preferred Stock. In the year ended December 31, 2022 we accrued Additional Dividends on our Preferred Stock of $0.5301 per share in respect of GRE's results of operations through December 31, 2022, which Additional Dividends we paid on May 15, 2023 to stockholders of record as of May 5, 2023. In the year ended December 31, 2022, we paid Base Dividends of $0.3188 per share of our 2012-A Preferred Stock or Preferred Stock. We paid $1.4 million and $0.9 million in dividends on our Preferred Stock in the years ended December 31, 2023 and 2022, respectively.

On February 26, 2025, we paid a dividend of $0.075 per share to holders of our Class A common Stock and Class B common stock to stockholders of record as of the close of business on February 18, 2025.

On March 11, 2013, our Board of Directors approved a program for the repurchase of up to an aggregate of 7.0 million shares of our Class B common stock. In the year ended December 31, 2024, we acquired 660,794 shares of Class B common stock under the stock purchase program for an aggregate amount of $10.4 million. In the year ended December 31, 2023, we acquired 3,778 Class B common stock under the repurchase program for an aggregate amount of $0.1 million. In the year ended December 31, 2022, we acquired 639,393 Class B common stock under the repurchase program for an aggregate amount of $4.4 million. At December 31, 2024, 4.0 million shares remained available for repurchase under the stock repurchase program.

On February 7, 2022, the Board of Directors of the Company authorized a program to redeem, beginning, in the second quarter of 2022, up to $1.0 million per quarter of our Preferred Stock at the liquidation preference of $8.50 per share. In  2023 and 2022, we redeemed 983,385 and 1,339,341 shares of Preferred Stock at the liquidation preference of $8.50 for an aggregate amount of $11.4 million and $ 8.4 million, respectively, and all outstanding shares of Preferred Stock were redeemed by the end of 2023. Following the redemption, there are no shares of Preferred Stock outstanding, all rights of Preferred Stockholders have terminated, and the Preferred Stock’s ticker symbol, "GNEPRA", has been retired.

In the year ended December 31, 2024, 2023 and 2022 we paid $3.6 million, $2.9 million and $0.6 million to repurchase shares, respectively, of our Class B common stock tendered by our employees to satisfy tax withholding obligations in connection with the lapsing of restrictions on awards of restricted stock. Such shares were repurchased by us based on their fair market value on the trading day immediately prior to the vesting date.

On November 18, 2024, our subsidiary, SUT Holdings, LLC entered into a Term Loan Agreement with National
Cooperative Bank, N.A. ("NCB") for $7.4
million (the "Term Loan"). The principal amount is payable in
installments every January 1, July 1 and October 1 of
each year starting on July 1, 2025. up to October 2031. Accrued interest on the unpaid balance is
payable on each January 1, April 1, July 1 and October 1, calculated using the 3-Month Term Secured Overnight Financing Rate
("SOFR") published by CME Group Benchmark Administration plus a
margin of 2.0% computed on the basis of actual
number of days over 360 days. We paid NCB a nonrefundable commitment
fee equal to 1.0% of the total principal amount equivalent to $0.1 million. We have the right to prepay
the Term Loan in whole or in part at any time as permitted under specific terms
in the Term Loan Agreement. The Term Loan is secured by our operating
solar systems located in Ohio, Indiana and Michigan.  The Term Loan is
subject to various financial and negative covenants and at December 31, 2024, we were in compliance
with all such covenants.  At December 31,
2024, there was $7.4 million outstanding
under the Term Loan at a weighted average interest rate of 6.5%. We also entered into a Cash Management
Agreement with NCB to manage the cash flows of the operations of collateralized
solar projects. The Cash Management Agreement also provided certain restriction
on certain cash accounts specified in the agreements. At December 31, 2024, an aggregate of $0.4 million are deposited in NCB and are subject to certain restrictions.

On November 2, 2023, we
made a charitable donation to the Genie Energy Charitable Foundation (the
"Genie Foundation") by issuing 50,000 shares of Class B common
stock from its treasury with value of on the date of the donation of approximately $1.0
million. On April 17, 2024, we repurchased 50,000 shares of Class B common
stock from the Genie Foundation for $0.8 million. The Company is the sole
member of the Genie Foundation and the Company's Chief Executive Officer and
Chief Financial Officer serve as members of the board of directors of the Genie
Foundation.

In June 2023, several holders of warrants exercised those warrants to purchase 1,048,218 shares of Class B common stock warrants for $5.0 million.

On December 13, 2018, we entered into a Credit Agreement with JPMorgan Chase Bank (“Credit Agreement”). On February 14, 2024, the Company entered into the third amendment of its existing Credit Agreement to extend the maturity date of December 31, 2024. The aggregate principal amount was retained at $3.0 million credit line facility (“Credit Line”). The Company pays a commitment fee of 0.1% per annum on the unused portion of the Credit Line as specified in the Credit Agreement. The borrowed amounts will be in the form of letters of credit which will bear interest of 1.0% per annum. The Company will also pay a fee for each letter of credit that is issued equal to the greater of $500 or 1.0% of the original maximum available amount of the letter of credit. We agreed to deposit cash in a money market account at JPMorgan Chase Bank as collateral for the line of credit equal to $3.1 million. As of December 31, 2024, there are $0.7 million in letters of credit from the Credit Line. At December 31, 2024, the cash collateral of $4.2 million was included in restricted cash—short-term in the consolidated balance sheet.

45

Cash flows from discontinued operations

Cash provided by operating activities of discontinued operations was $10.5 million, $11.5 million and $14.7 million in 2024, 2023 and 2022 respectively. The cash provided by operating activities of discontinued operations in the years ended December 31, 2024, 2023 and 2022 includes proceeds from the settlement of hedges of Lumo Sweden and favorable results of operations of Lumo Finland and Lumo Sweden in 2022. Net cash provided by investing activities of discontinued operations was $23.6 million in the year ended December 31, 2023 from the return of cash transferred to the Orbit Administrator in the prior year. The investing activities of discontinued operations in year ended December 31, 2022 is due to the transfer of cash proceeds from unwinding of the contract of Orbit with Shell to the Orbit Administrator in the first quarter of 2022 to settle its liabilities, net of cash received from the Orbit Administrator during the second half of 2022.

ENVIRONMENTAL MATTERS

For information concerning climate change, see "Climate Change" in Item I.