Good morning and welcome to Genie Energy's Fourth Quarter and Full Year 2022 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I will now turn the call over to Brian Siegel of Hayden IR.

Thank you. With me today are Michael Stein, Genie Energy's CEO; and Avi Goldin, its CFO, who will discuss operational and financial results for the 3 months and full year ended December 31, 2022. Any forward-looking statements may differ during this conference call for the general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those statements. These risks and uncertainties include but are not limited to, those discussed in the reports that we file periodically with the SEC. Genie assumes no obligation to update any forward-looking statements that we have made or may make or to update the factors that may cause actual results to differ materially from those that we forecast. During their remarks, management makes reference to adjusted EBITDA, a non-GAAP measure. Management believes that its measure of adjusted EBITDA provides useful information to both management and investors that supplement our core operating results. Our earnings release which is posted on the genie.com IR page, includes a reconciliation of consolidated adjusted EBITDA to its nearest comparable GAAP measures. Consolidated net income and income from operations for all periods presented. In addition, adjusted EBITDA for applicable segments are reconciled in the earnings release to their respective segment's income from operations for all periods presented. I will now turn the conference over to Michael Stein, Genie's Chief Executive Officer.

Thank you, Brian. Welcome to Genie Energy's year-end 2022 earnings call. This quarter capped off a very strong year in which we delivered record fourth quarter and full year gross margins and profits. While energy prices remained high, we saw less volatility than the previous quarters and we were able to continue to benefit from the combination of being well positioned from a risk management perspective and our limited customer acquisition efforts at GRE. Looking at our 2 segments, Genie Retail Energy, or GRE, generated a record Q4 gross profit margin of 44.4% and adjusted EBITDA of $20.9 million. During the quarter, our retail book grew modestly as we largely remain on the sidelines in terms of customer acquisition, excluding a small acquisition of book customers in the Midwest and Northeast. Genie Renewables, or GREW, revenue growth reflected an increase in the services we provided to third-party customers. Additionally, we made some investments in resources to support our vertically integrated strategy to develop [indiscernible] solar power generation projects. From a capital allocation perspective, we redeemed $8.4 million in par value of preferred stock while paying our regular $0.075 quarterly common dividend and the base dividend on the outstanding preferred stock for a total of approximately $10.5 million in capital returned to stockholders during the quarter. Now, I'll provide a quick overview of our business and strategy. GRE owns and operates Retail Energy Providers, or REPs, that service a portfolio of retail customers in 17 of 28 deregulated states and Washington, D.C. We actively manage our REPs and their customer bases, both geographically and within geographies. In response to evolving market conditions, we will invest in customer acquisition and growth during some periods, while reducing our growth investment or obligations to customers during other periods to drive higher margins as we…

Thank you, Michael and thanks to everyone on the call for joining us this morning. My remarks today cover our financial results for the 3 and 12 months ended December 31, 2022. Throughout my remarks, when discussing the quarterly results, I will compare the fourth quarter of 2022 to the fourth quarter of 2021 to remove from consideration the seasonal factors that are characteristic of our Retail Energy business. The fourth quarter is typically characterized by seasonally reduced levels of customer consumption as it falls between the third quarter's peak cooling months and the first quarter's peak heating months. With our strong fourth quarter results, Genie capped off an exceptional year, highlighted by record levels of gross profit, income from operations, adjusted EBITDA and earnings per share. Throughout the year, we executed on our strategy of optimizing the value of our market position and build the foundation for future growth of our Retail Energy and Renewables businesses, all while further enhancing our already strong balance sheet and returning significant value to our common stockholders. Now, let's look at the quarter and full year results. Fourth quarter consolidated revenue jumped 17.6% to $81 million from $69 million in 2021. At GRE, fourth quarter revenue increased by 13% to $77 million, increased per unit electricity and gas revenues more than compensated for the decrease in electricity volume sold. As we discussed in recent quarters, most of 2022, we moderated our meter acquisition spend as part of our larger strategy to manage consumption in a rising commodity price environment. At Genie Renewables, fourth quarter revenue climbed to $4.4 million from $1.3 million as a number of our Genie solar projects reached critical milestones in the quarter. Full year 2022 consolidated revenue decreased 2.4% to $316 million from $323 million in 2021. At GRE,…

[Operator Instructions] Your first question for today is coming from Aaron Shafter at Great Mountain Capital Management.

Congrats on another really strong quarter. I noticed that it was explained that the difference between Q4 in 2022 and Q4 in 2021, the difference in earnings per share was because of discontinued operations. But I didn't see that in the general press release and I'm wondering why it wasn't included in the general press release because it paints a better picture, then you don't have to drill down somewhat into the gross margins and the operating margins and et cetera, to see that it was really strong quarter.

We probably could have done a better job of marketing ourselves. You're right. We're pretty straightforward group. So sometimes we don't really think of like moving numbers around. That would make them look better even when in reality maybe it's even more indicative of how well the business is doing.

Right. I mean, I don't see it as moving numbers around it. I just see it, it's like making the -- clarifying the situation. So like when headlines across the wires and people see that earnings per share decreased a bunch, they don't think that it was because it's a problem. And when actually operations were managed very, very well. My other sort of complaint is that I'm wondering if you'd rethink holding the leasing earnings and holding the conference call the day after when daylight savings kicks in and people are still a little bit foggy.

I hear that especially for Avi Goldin, who is actually on the West Coast right now, who's speaking at 5 in the morning but duly noted.

Okay. So you mentioned how much preferred shares were redeemed. I'm wondering if you've got a ballpark figure about how much in preferred shares is still left out there?

There's about $7 million worth of preferred shares still outstanding. I expect that at some point this year, assuming we have a normal -- strong year as we expect, I assume by the end of the year, there'll be none left.

Okay. And the big thing in the news in the markets lately is the failures of SVB and Signature Bank. I'm wondering if Genie has any exposure to that. And if -- even if not, are you reviewing your bank deposit policies in light of the market turmoil?

Yes. Scary stuff what's going on. Thank God, we do not have any deposits with Signature or SVB. We tend to put our deposits with even larger financial institutions than those and the ones that are a little bit more run of the mill as opposed to more niche kinds of players. And our money is in very safe triple-pay-rate kinds of instruments. But yes, of course, we're constantly reviewing. And we've been exchanging the flurries of e-mails over the weekend just to make sure we're all on the same page about where things stand. And we feel pretty good about it, thank God.

Your next question is coming from [indiscernible], Private Investor.

Yes. Hello, can you hear me?

Yes.

Excellent. And I've been a shareholder for a long time. So like one question is like I'm trying to understand the solar farms you're building out. Is it like -- can you give an example, let's say, we take just like a cooked-up example using a $2 million investment? And how would it affect like the balance sheet and the income statement? So -- if it makes sense.

Sure. Absolutely. Avi, you want to take that one? I think the question is if we're putting in, let's say, a $2 million investment into a solar farm, what -- how does the results that flow from that affect the P&L and the balance sheet? Do you want to take that, Avi?

Absolutely. So when we're talking about the solar farms that we're expecting to own and operate, the ones that are going to be part of our long-term portfolio, so initially, let's say, if we're investing what we expect to be, ultimately, let's say, $2 million worth of equity. That's after recapitalizing for the tax equity that might have come in, the other incentives and the potential debt that we might put on the facility. So, if you think about it during the construction phase, we might be spending more than that unless we seek to find construction financing as well. And then once we recapitalize the solar field to take the equity piece down to what needs to be filled in from those other sources. And let's say, in this case, it will be the $2 million, that would be our equity investment. And then you would see revenue from the sale of power -- revenue from the sale of solar energy credits that were generated offset by cost of maintaining the facility which would then just -- which would then fall to taxes and paying off any cost of financing and that would be cash flow to Genie that would flow from the facility. So depending on the nature of the facility and the location which is placed -- what we're expecting and what we're seeing in the marketplace is that you could end up owning these facilities with anywhere from, let's call it, $15 million to $30 million -- 30% equity at the end. So using an example for $2 million, you could have a relatively large solar facility that did require some additional upfront investment but then got recapitalized down to only $2 million worth of equity. So I hope I'm answering the question. There's a few different pieces that are moving around there but that would be sort of a strong example.

Okay. So from the -- what I'm trying to understand is like when you start getting the money back, so let's say, you use like the tens and lower our rate, what kind of money can we expect coming from that -- like from the $2 million?

So what -- so we're looking at returns to equity on the types of investments that we're looking at, north of -- our targets are always north of double digits. And we're seeing as high as 20%, 25% in some opportunities that we're looking at. So those would be -- that's a way of thinking about what types of returns Genie is targeting for what ends up being the equity portion.

So just to add to what Avi is saying. So if, let's say, we are looking at a project and it has, let's say, somewhere between that 15% to 25% IRR, I think you've got to think also about the tax incentives and the renewable energy certificates, a lot of which comes back in the earlier years. So your payback on the investment might be a lot shorter than, let's say, 6 or 7 or 8 years. But that -- once you've gotten your money back, let's say, potentially in 3 years, then you're looking at kind of a return on no equity and might be a smaller percentage of the original equity. But again, your equity is fully out of the picture at that point.

And so it's like initially, when you build it out, it's like it goes like assets like real estate on the balance sheet? And does that make sense?

Yes, it's a capital asset on the balance sheet, yes.

Okay, great. And I have another question about the cash. Like you still have a lot of cash sitting in the -- abroad like in U.K. and -- so when do you expect to get all that back to you?

We expect a lot to come back over the next -- during 2023. Exactly when and how much, still to be determined but we're still expecting a decent amount of cash coming from those wind downs over the next, let's call it, 6 to 9 months.

And one other question I had is like now we are going to pay a lot of taxes. So have you considered like reducing the cost basis of your Rafael stock?

Not sure if we can comment but we are looking at all different options about how to minimize our tax exposure.

All right. Yes, once -- like thanks for the nice quarter and the dividends, we appreciate that. That's all I had.

Thank you for being a shareholder.

[Operator Instructions] This concludes our question-and-answer session and conference call. Thank you for attending today's presentation. You may now disconnect.