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Discontinued Operations | 9 Months Ended
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Sep. 30, 2023
Discontinued Operations and Divestiture [Abstract] |
Discontinued Operations and Divestiture | Note 5—Discontinued Operations Lumo Finland and Lumo Sweden Operations As a result of the sustained volatility of the energy market in Europe, in July 2022, the Company initiated a plan to dispose of certain assets and liabilities of Lumo Finland and Lumo Sweden. From July 13, 2022 to July 19, 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 has been, and is expected to continue to be settled monthly based on the monthly commodity volume specified in the instruments from September 2022 to March 2025. In July 2022, Lumo Sweden entered into a transaction to transfer, effective August 5, 2022, its customers to a third party for a nominal consideration. In August 2022, Lumo Finland entered into a transaction to transfer its variable rate customers to a third party for €1.9 million (equivalent to $2.0 million) and terminated the contracts of fixed rate customers. The Company determined that the discontinued operations of Lumo Finland and Lumo Sweden represented a strategic shift that would have a major effect on the Company's operations and financial statements and accordingly, the results of operations and related cash flows are presented as discontinued operations for all periods presented. The assets and liabilities of the discontinued operations are presented separately and reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of September 30, 2023 and December 31, 2022. Lumo Finland and Lumo Sweden are continuing to liquidate their remaining receivables and settle any remaining liabilities. In November 2022, Lumo Finland declared bankruptcy and the administration of Lumo Finland was transferred to the Lumo Administrators. All assets and liabilities of Lumo Finland remain with Lumo Finland, in which Genie retains its ownership interest, however, the management and control of Lumo Finland were transferred to the Lumo Administrators. Since the Company lost control of the management of Lumo Finland in favor of the Lumo Administrators, the accounts of Lumo Finland were deconsolidated effect November 9, 2022. The following table represents summarized balance sheet information of assets and liabilities of the discontinued operations of Lumo Sweden:
|  | September 30, 2023 |  |  | December 31, 2022 |
|  | (in thousands) |
Assets |  |  |  |  |  |
Cash |  | $ | 4,075 |  |  | $ | 1,503 |
Receivables from the settlement of derivative contract—current |  |  | 12,337 |  |  |  | 23,351 |
Current assets of discontinued operations |  | $ | 16,412 |  |  | $ | 24,854 |
Receivables from the settlement of derivative contract—noncurrent |  | $ | 4,165 |  |  | $ | 12,689 |
Other noncurrent assets |  |  | 3,388 |  |  |  | 3,616 |
Noncurrent assets of discontinued operations |  | $ | 7,553 |  |  | $ | 16,305 |
Liabilities |  |  |  |  |  |  |  |
Income taxes payable |  |  | 10,644 |  |  |  | 10,894 |
Accounts payable and other current liabilities |  |  | 92 |  |  |  | 42 |
Current liabilities of discontinued operations |  | $ | 10,736 |  |  | $ | 10,936 |
Deferred tax liabilities |  |  | 668 |  |  |  | 686 |
Noncurrent liabilities of discontinued operations |  | $ | 668 |  |  | $ | 686 |
The summary of the results of operations of the discontinued operations of Lumo Finland and Lumo Sweden were as follows:
|  | Three Months Ended September 30, |  |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  |  | 2022 |  |  |  | 2023 |  |  |  | 2022 |
|  | (in thousands) |  |  | (in thousands) |
Revenues | $ | — |  |  | $ | 4,558 |  |  | $ | — |  |  | $ | 25,247 |
Cost of revenues |  | — |  |  |  | 7,042 |  |  |  | — |  |  |  | (8,358 | )
Gross profit |  | — |  |  |  | (2,484 | ) |  |  | — |  |  |  | 33,605 |
Selling, general and administrative expenses |  | — |  |  |  | 3,275 |  |  |  | — |  |  |  | 5,190 |
Income from operations |  | — |  |  |  | (5,759 | ) |  |  | — |  |  |  | 28,415 |
Other (loss) income |  | (395 | ) |  |  | 7,792 |  |  |  | 800 |  |  |  | 7,792 |
Income before income taxes |  | (395 | ) |  |  | 2,033 |  |  |  | 800 |  |  |  | 36,207 |
Provision for income taxes |  | 91 |  |  |  | (3,492 | ) |  |  | (314 | ) |  |  | (10,278 | )
Net income from discontinued operations, net of taxes | $ | (304 | ) |  | $ | (1,459 | ) |  | $ | 486 |  |  | $ | 25,929 |
Income before income taxes attributable to Genie Energy Ltd. | $ | (395 | ) |  | $ | 4,836 |  |  | $ | 800 |  |  | $ | 36,206 |
The following table presents a summary of cash flows of the discontinued operations of Lumo Finland and Lumo Sweden:
|  |  |  |  |  | Nine Months Ended September 30, |
|  |  |  |  |  |  |  |  |  | 2023 |  |  |  | 2022 |
|  |  |  |  | (in thousands) |
Net income |  |  |  |  |  |  |  |  | $ | 486 |  |  | $ | 25,929 |
Non-cash items |  |  |  |  |  |  |  |  |  | 1,170 |  |  |  | 1,546 |
Changes in assets and liabilities |  |  |  |  |  |  |  |  |  | 17,805 |  |  |  | (19,325 | )
Cash flows provided by operating activities of discontinued operations |  |  |  |  |  |  |  |  | $ | 19,461 |  |  | $ | 8,150 |
In furtherance of the Company's exit from the retail energy markets in Finland and Sweden and to facilitate the maximization of value at Lumo Sweden, on November 3, 2022, the Company acquired additional minority interests in Lumo Finland and Lumo Sweden from an employee in exchange for 132,302 restricted shares of Class B common stock of the Company, which are vesting ratably between November 2022 and May 2025. The Company increased its interest in Lumo Finland from 91.6% to 96.6% and in Lumo Sweden from 98.8% to 100%. Prior to being treated as discontinued operations or consolidated, the assets and liabilities of Lumo Finland and Lumo Sweden were included in GRE International segment. U.K. Operations In the third quarter of 2021, the natural gas and energy market in the United Kingdom deteriorated which prompted the Company to start the process of orderly withdrawal from the United Kingdom. In October 2021, as part of the orderly exit process, Orbit and Shell agreed to terminate the exclusive supply contract between them. As part of the termination agreement, Orbit was required to unwind all physical forward hedges with Shell which resulted in net cash proceeds after settlement of all related liabilities with Shell. Following the termination of the contract with Shell, Orbit filed a petition with the High Court of Justice Business and Property of England and Wales (the “Court”) to declare Orbit insolvent based on the Insolvency Act of 1986. On November 29, 2021, the Court declared Orbit insolvent, revoked Orbit's license to supply electricity and natural gas in the United Kingdom, ordered the current customers to be transferred to “supplier of last resort” and transfer the administration of Orbit to Administrators effective December 1, 2021, which transfer was effective December 1, 2021. All assets and liabilities of Orbit, including cash and receivables remain with Orbit and the management and control of which was transferred to Administrators. The Company expects that the administration of Orbit will be completed in 2023. In the fourth quarter of 2021, Orbit transferred to GEIC a net amount of $49.7 million from the proceeds of the settlement of the contract with Shell which is included in cash and cash equivalents in the consolidated balance sheet as of December 31, 2021. In January 2022, the Company transferred $21.5 million to the Administrators of Orbit Energy to fund the settlement of the expected remaining liabilities of Orbit of $30.8 million, which were included in the current liabilities of discontinued operations in the consolidated balance sheet as of December 31, 2021. In February 2022, the Company deposited $28.3 million into an attorney trust account to hold, preserve, and dispense funds to the extent needed in connection with the administration process. On February 24, 2022, the Administrators filed a petition under Chapter 15 of the U.S. Bankruptcy Code with the Bankruptcy Court of the Southern District of New York seeking (i) recognition of the U.K. administration proceeding as a foreign main proceeding and the U.K. Administrators as its foreign representatives, and (ii) entrusting distribution of the funds the Company deposited into its attorney’s trust fund to the U.K. Administrators. In the second quarter of 2022, the Administrators filed an application to transfer the funds back to the Administrators’ control in the United Kingdom. Subject to certain representations and expectations regarding use and application of the funds to efficiently and expeditiously pay off creditors and bring a timely close to the insolvency administration, the Company decided not to oppose the application, and the $28.3 million was transferred to the account of the Administrator. In the nine months ended September 30, 2023 and 2022, the Administrator paid the Company a partial return of its interest in Orbit of £2.0 million (equivalent to $2.6 million on the dates of transfer) and £4.6 million (equivalent to $5.4 million on the dates of transfer), respectively. The Company believes that the funds remaining with the Administrators are more than sufficient to pay any remaining creditors of Orbit (with any surplus, which the Company expects to be significant, to be returned to the Company). The Company determined that the discontinued operations of Orbit represented a strategic shift that would have a major effect on the Company's operations and financial statements and accordingly, the results of operations and related cash flows are presented as discontinued operations for all periods presented. The assets and liabilities of the discontinued operations are presented separately and reflected within assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of September 30, 2023 and December 31, 2022. As a result of loss of control, the Company deconsolidated Orbit effective December 1, 2021 and estimated the remaining liability related to its ownership of Orbit. There were no income or loss from discontinued operations recognized in the three months ended September 30, 2023 and 2022. In the nine months ended September 30, 2023, the Company recognized income from discontinued operation, net of taxes $5.4 million, mainly from the increase in the estimated value of our investments in Orbit due to a change in estimated net assets of Orbit after the Administrator settles the remaining liabilities. There was no income or loss from discontinued operations recognized in the nine months ended September 30, 2022. The carrying value of the Company's interest in Orbit was $17.5 million and $13.8 million as of September 30, 2023 and December 31, 2022, respectively. The carrying value was determined by estimating the net realizable values of assets and fair values of remaining liabilities which approximates its carrying values as of September 30, 2023 and December 31, 2022. Prior to being treated as discontinued operations and consolidated, the assets and liabilities of Orbit were included in the Company's former GRE International segment.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//360/tableOfContent + Details
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