Note 5 - Acquisitions and Discontinued Operations

6 Months Ended

Jun. 30, 2025

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Note 5—Acquisitions and Discontinued Operations

Consolidation of Roded

In December 2022, the Company, entered into an investment agreement with Roded Recycling Industries Ltd. ("Roded") and its owners to acquire a 45.0% noncontrolling interest in Roded for New Israel Shekel ("NIS") 5.0 million (equivalent to $1.5 million at the date of the transaction). Roded is engaged in business of recycling used plastic materials into usable industrial products. The Company accounts for its ownership interest in Roded using the equity method.

From December 2022 to April 2024, the Company contributed an aggregate of $0.4 million to Roded gradually increasing its interest to a 51.2% controlling interest on April 12, 2024. Prior to April 12, 2024, the net book value of the Company's investment in Roded was $1.3 million. Following the transaction, the Company has control over the activities of Roded.

The Company recorded minimal revenues for Roded in its condensed consolidated statements of operations and comprehensive income for three and six months ended June 30, 2025. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it is in the process of being integrated into the Company's operations.

The Company conducted an assessment of assets and liabilities related to the acquisition of Roded. The impact of the acquisition's purchase price allocations on the Company’s condensed consolidated balance sheets and the acquisition date fair value of the total consideration transferred were as follows (amounts in thousands):

Cash and other current liabilities	$	200
Property, plant and equipment (1 to 10-year useful life)		573
Goodwill		2,660
Liabilities		(850	)
Noncontrolling interest		(1,243	)
Net assets	$	1,340

Goodwill was allocated to the GREW segment. Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenues and costs synergies of the combined company and assembled workforce. Goodwill recognized as a result of the acquisition is not deductible for income tax purposes.

Acquisition of Solar System Facilities

On  November 3, 2023, the Company acquired ten special-purpose entities that own and operate solar system facilities in Ohio and Michigan. The Company paid a total of $7.5 million, including $1.0 million held in escrow which was released in June 2024.

The acquisition is accounted for as asset acquisition and the Company recorded $7.7 million in total purchase price, including $0.2 million of direct transaction costs allocated to solar array assets included in the property and equipment account in the condensed consolidated balance sheets with estimated useful lives of 14 to 30 years.

On  November 3, 2023, the Company 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 acquisition has been accounted for as asset acquisition and the Company recorded $1.3 million to solar array assets included in the property and equipment account in the condensed consolidated balance sheets with estimated useful lives of 30 years.

The acquired assets are allocated to the GREW segment.

Lumo Finland and Lumo Sweden Operations

As a result of the sustained volatility of the energy market in Europe, in the third quarter of 2022, the Company decided to discontinue the operations 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. The sale price was fixed and was settled monthly based on the monthly commodity volume specified in the instruments between September 2022 and  March 2025.

The Company determined that the discontinuation of 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 condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024. Lumo Sweden is continuing to liquidate its remaining assets and to 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 equity 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 effective November 9, 2022.

The following table represents summarized balance sheet information of assets and liabilities of the discontinued operations of Lumo Sweden:

	June 30, 2025		December 31, 2024
	(in thousands)
Assets
Cash	$	1,000	$	1,314
Receivables from the settlement of derivative contract—current		—		2,280
Other current assets		423		—
Current assets of discontinued operations	$	1,423	$	3,594
Other noncurrent assets		5,537		3,240
Noncurrent assets of discontinued operations	$	5,537	$	3,240
Liabilities
Income taxes payable		789		734
Accounts payable and other current liabilities		2,951		2,644
Current liabilities of discontinued operations	$	3,740	$	3,378
Deferred tax liabilities		744		665
Noncurrent liabilities of discontinued operations	$	744	$	665

The summary of the results of operations of the discontinued operations of Lumo Sweden were as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2025		2024			2025			2024
	(in thousands)					(in thousands)
Net income (loss) from discontinued operations, net of taxes	$	47	$	(145	)	$	(57	)	$	(410	)
Income (loss) before income taxes attributable to Genie Energy Ltd.	$	58	$	(60	)	$	(50	)	$	(503	)

The following table presents a summary of cash flows of the discontinued operations of Lumo Sweden:

	Six Months Ended June 30,
	2025			2024
	(in thousands)
Net loss	$	(57	)	$	(410	)
Non-cash items		(50	)		398
Changes in assets and liabilities		2,381			7,023
Cash flows provided by operating activities of discontinued operations	$	2,274		$	7,011

Prior to being treated as discontinued operations or being deconsolidated, the assets and liabilities of Lumo Finland and Lumo Sweden were included in the (former) GRE International segment.

On November 8, 2023, the Lumo Administrators, acting on behalf of the Lumo Finland 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 they allege that the gain from the sale of swap instruments owned by Lumo Sweden amounting to €35.2 million (equivalent to $41.5 million as of June 30, 2025) 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 $5.7 million as of June 30, 2025), 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 $47.2 million as of June 30, 2025). The Company believes that the Lumo Administrators' position is without merit, and is vigorously defending its position.

The Lumo Administrators 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 $5.0 million as of June 30, 2025) prior to the bankruptcy. The Lumo Administrators have also filed a recovery claim jointly against the Company and the supplier amounting to €1.6 million (equivalent to $1.9 million as of June 30, 2025) alleging that a portion of the payment by Lumo Finland effectively reduced the Company's 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 Administrators allege that the payments represented preferential payments and therefore belong to the Bankruptcy Estate which are recoverable under the laws of Finland. The Company is challenging the Lumo Administrator's claims.

The Company believes 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, the Company expects those claims to be in the range of €2.0 million to €4.0 million. Although the Company does not believe that it is legally obligated to pay anything in respect of the claims, given the likelihood of negotiating a settlement to minimize further costs of challenging the claims, the Company 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 was included in the loss from discontinued operations, net account in the condensed consolidated statement of operations for the year ended December 31, 2024.