On Thursday, Genie Energy (NYSE:GNE) discussed second-quarter financial results during its earnings call. The full transcript is provided below.

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View the webcast at https://genie.com/investors/quarterly-earnings/

Summary

Genie Energy Limited reported a 4.6% decrease in consolidated revenue to $100.4 million but achieved a 43.4% increase in gross profit to $33.7 million, driven by strong margin and adjusted EBITDA expansion at Genie Retail Energy (GRE) and profitability at Genie Renewables (GRU).

GRE saw a 5% revenue decline due to the expiration of low-margin aggregation deals, while investment in higher-cost acquisition channels led to acquiring higher lifetime value customers.

GRU's Diversegy Energy Brokerage and Genie Solar businesses contributed to positive EBITDA, with Diversegy experiencing double-digit growth and leveraging AI for customer acquisition.

The company's new recycling technology at Roded showed progress with plans for international expansion, supported by a commitment from the Israeli government to finance a larger facility.

Genie Energy expects continued cash generation improvement and value return to shareholders through stock purchases and dividends, with a strong balance sheet of $204.3 million in cash and minimal debt.

Management remains optimistic about capitalizing on current market conditions and maintaining profitability despite increased SG&A expenses.

Full Transcript

OPERATOR

Good morning and welcome to the Genie Energy Limited's second quarter 2026 earnings call. In today's presentation, Genie Energy management will discuss Genie's financial and operational results for the three months ended June 30, 2026 during prepared remarks by Genie Energy's Chief Executive Officer Michael Stein and Chief Financial Officer Avi Goldin. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

After Avi Goldin's remarks, Michael and Avi will take questions from investors. Any forward-looking statements made during this conference call, either in the prepared remarks or in the Q&A session, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates. These risks and uncertainties include, but are not limited to, the specific risks and uncertainties discussed in the reports that Genie Energy files periodically with the SEC.

Genie Energy assumes no obligation either to update any forward-looking statements that they may have made or may make, or to update the factors that may cause actual results to differ materially from those that they forecast in their presentation or in the Q&A session. Genie Energy's management may refer to adjusted EBITDA and other non-GAAP measures. A schedule provided in the Genie Energy earnings release reconciles adjusted EBITDA to the nearest corresponding GAAP measures.

Please note that the Genie Energy earnings release is available on the Investor Relations page of the Genie website. The earnings release has also been filed on Form 8-K with the SEC. I will now turn the conference over to Michael Stein.

Michael Stein, Chief Executive Officer

Thank you, operator. In the second quarter, Genie delivered strong bottom-line results in both operating segments while continuing to invest in growth opportunities across our businesses and return value to shareholders. At Genie Retail Energy, relatively normalized wholesale energy market conditions enabled us to achieve gross margin on a level comparable to our long-term historical average and that drove a significant year-over-year improvement in our bottom-line results.

GRE's top line declined 5%, primarily reflecting the expiration of aggregation deals over the past year. The deals typically generate low-margin revenue, so the impact of their expiration on our bottom line was minimal. At quarter end we served 345,000 RCEs and 363,000 meters compared to 413,000 RCEs and 419,000 meters a year earlier. During the second quarter we added 65,000 gross new customers compared to 70,000 a year earlier. Total customer acquisition expense increased materially as we acquired a higher percentage of customers through higher-cost acquisition channels and fewer through lower-cost channels.

We approach these low-cost channels opportunistically as they generate lower-margin customers compared to higher-cost channels. We allow low-cost channel acquisition volumes to fluctuate depending on how competitive market rates compare to the incumbent utilities' offerings. In the second quarter, with these low-cost channels underperforming, we increased our investment in acquisitions through higher-cost channels, increasing our base of higher lifetime value customers and building a tailwind that we expect to positively impact the coming quarters.

Acquisitions through high-cost channels also enabled us to prioritize further diversification of our customer base through strong growth in some of our newer markets including Texas's power market and California's gas market. At GRU, the top line was flat year over year. However, contributions from our Diversegy Energy Brokerage and Genie Solar businesses enabled the segment to achieve positive EBITDA. Diversegy had a particularly strong quarter as it continues to execute its growth strategy.

Both Diversegy and Genie Solar are on track to further expand their bottom lines in the coming quarters. Diversegy continues to build its book of business at a double-digit annualized growth rate. Even better, because new business frequently entails upfront customer payments, growth from a cash perspective has been stronger than what is reflected in EBITDA. Moreover, this new business will drive revenue growth for several years to come as we earn revenue over the lifetime of the contracts.

One of the key drivers for Diversegy's expansion has been our ability to leverage AI to optimize our customer acquisition efforts across channels, analyzing the energy requirements of our customers and their industries so that we can tailor our offerings to meet their needs with greater precision. At Genie Solar, we turned on our second community solar project in New York State late in the second quarter and that will positively impact results starting in the third quarter.

GRU's second quarter results also reflected our continued investment in several early-stage growth initiatives, most notably at Roded. As we've discussed previously, Roded utilizes a patented recycling technology to manufacture useful plastic products from agricultural and other plastic waste. At Roded, we made terrific progress during the quarter. The company continued to expand production in Israel to meet strong local demand for its pallet products.

In fact, we already are approaching the production capacity of our current facility and received a commitment from the Israeli Minister of Environment to underwrite a material portion of the cost of constructing a larger manufacturing plant. To diversify Roded's revenue, we are preparing to begin manufacturing of a second product utilizing the same recycled plastic feedstock. Also, the company was certified as a producer of plastic credits through Verra's Plastic Waste Reduction Standard Program, a global platform to incentivize businesses to utilize the vast quantities of waste plastic that otherwise would end up in our oceans or our landfills.

This certification will enable Roded to enhance profitability through the monetization of credits it receives for the plastic it collects and converts to finished product. Looking a little further ahead, Roded is moving forward on an international expansion. The company has identified several potential manufacturing sites in the southeastern US and is now working to select the final site, hire key managers, and design the initial pallets it will offer for the North American market.

To wrap up at Genie Energy, for the balance of the year we're looking to boost cash generation across GRE, Diversegy and Genie Solar, make good on operational progress in our growth initiatives, and return value to shareholders through opportunistic stock purchases and our quarterly dividends. Now I will turn the call over to Avi for his discussion of our financial results.

Avi Goldin, Chief Financial Officer

Thank you, Michael, and thanks to everyone on the call for joining us this morning. My remarks today cover our financial results for the three months ended June 30, 2026. In my commentary, I'll compare the results for the second quarter 2026 to the second quarter of 2025 to remove from consideration the seasonal factors that impact our results, particularly our retail energy business. The second quarter, which includes spring and the early stages of the summer cooling season, is typically characterized by moderate levels of electricity consumption and low levels of natural gas consumption.

The quarter's financial results were highlighted by strong margin and adjusted EBITDA expansion at GRE and profitability at GRU, both of which helped to drive an increase in our consolidated bottom-line performance. Consolidated revenue in the second quarter decreased 4.6% to $100.4 million. GRE revenue decreased 4.9% to $94.1 million as our customer base contracted through the expiration of low-margin aggregation deals. The resulting decrease in consumption was partially offset by increased revenue per unit sold for both electricity and natural gas.

Sales of electricity, which contributed 89% of GRE's revenues, decreased 7% to $83.6 million. Kilowatt hours sold decreased by 17%, while revenue per kilowatt hour sold increased 12%. Natural gas revenue decreased 16.2% to $10.6 million. Therms sold decreased 23% while revenue per therm sold increased 50%. At GRU, second quarter revenue was relatively unchanged at $6.3 million. Consolidated gross profit increased 43.4% to $33.7 million while gross margin increased to 33.5%.

At GRE, gross profit increased 42.2% to $30.3 million and gross margin increased to 32.2%. GRE achieved a gross margin within historical range given normalized commodity market conditions. Note that the year-ago second quarter was impacted by unusually low natural gas profitability. At GRU, gross profit increased 55% to $3.3 million driven by increased contributions from both Diversegy and Genie Solar, two more mature businesses within the segment, both of which are already generating cash.

Consolidated SG&A increased 28% to $27.2 million, largely reflecting a mix shift of Genie Retail's customer acquisition channels towards higher per-acquisition-cost methods. Despite their higher costs up front, these channels typically generate customer cohorts with higher customer lifetime values. The gross profit increase at GRE drove a $4.3 million year-over-year increase in consolidated income from operations to $6.5 million and a $4.5 million increase in adjusted EBITDA to $7.5 million.

At GRE, income from operations increased 108.3% to $8.3 million and adjusted EBITDA increased 96.7% to $8.7 million. Strong contributions from Diversegy and Genie Solar enabled GRU to achieve profitability. Income from operations increased to $100,000 from a loss from operations of $200,000 a year earlier and adjusted EBITDA increased to $300,000 from an adjusted EBITDA loss of $97,000 in the second quarter of 2025. Consolidated net income attributable to Genie common stockholders was $11.4 million or $0.43 per diluted share compared to $2.3 million or $0.09 per share a year earlier.

Turning to the balance sheet, at June 30, 2026, cash, cash equivalents, long- and short-term restricted cash and marketable equity securities totaled $204.3 million. Working capital was $199.6 million. Our net debt totaled $6.8 million, the largest component of which is the financing for our portfolio of operational solar arrays. We repurchased approximately 47,000 shares of our Class B common stock in the second quarter for $659,000 and we paid our regular quarterly dividends, returning an additional $2 million directly to our stockholders.

Wrapping up, normalized energy market conditions helped us to restore margins at GRE to their long-term range while GRU generated positive EBITDA even as we continue to invest in early-stage growth initiatives. The improved performance has helped to significantly enhance our profitability while our balance sheet remains strong with robust levels of cash and minimal debt. Operator, back to you for Q&A.

OPERATOR

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the star keys. To withdraw your question, please press star then two. We will now pause momentarily to assemble our roster. And first question today is coming from Matt Vaytides from Freedom Broker. Your line is live.

Matt Vaytides, Analyst at Freedom Broker

Yes, hi. Thank you so much. Congratulations with strong results. So my question is about the other income which is quite significantly impacting the bottom line. So can you elaborate a little bit the breakdown of this other income and how do you see it going forward towards the end of the year? Thank you.

Avi Goldin, Chief Financial Officer

Sure. This is Avi, and thank you for the question. So the other income line reflects the change in value of other investments that we have, primarily when we invest balance sheet cash. Those are where we have a very strong cash position. So when we make investments that are to use that cash position to get value, those flow through the other investment line. So it's difficult to predict what those are going to be, but we expect that to hopefully continue to be positive for the company.

Matt Vaytides, Analyst at Freedom Broker

Okay, great. Yeah, thank you. And one more question is, so we see that there is some sort of sensitivity of your profitability and the gas prices basically, which drives also electricity prices and now with the lower gas prices in second quarter, so we see positive impact also on your profitability, operating results. So how do you see it going forward towards the year end? So do you expect also this trend to continue or is it something to be revised from this point of view?

Thank you.

Michael Stein, Chief Executive Officer

Hi, thanks for the question. It's hard to predict obviously what markets are going to do, but we feel like we're in a good position right now through the rest of the year to capitalize on where the market is and again still achieve the guidance that we set out.

Matt Vaytides, Analyst at Freedom Broker

Yeah. Okay. Okay, great. And again, this higher general expenses is, as you said, as you mentioned, it's more expensive acquisition of new clients. So you also see it kind of to be paid back in the future as it's more profitable sort of clients you onboarding through this higher general expense, is it correct what I understood? Thank you.

Michael Stein, Chief Executive Officer

Yes. Our sales channels or our customer acquisition channels in general are a combination of our door to door, telemarketing and digital marketing, direct mail and other kinds of marketing efforts that we do. And some of those channels generally yield higher-margin customers, and some of those channels generally are lower cost and yield lower-margin customers. So what we were saying is that this quarter, let's say, versus last quarter, when we acquired a similar number of meters this quarter versus last year, the same quarter, the acquisition expense was significantly higher.

And that's because most of the customer acquisition that was done this quarter was dominated by acquiring those higher-margin customers. Whereas last year in the same quarter, there was a much higher percentage of that customer acquisition that was coming from the lower-cost but lower-margin acquisition channels.

Matt Vaytides, Analyst at Freedom Broker

Oh yeah, interesting. Thank you so much. And the last one, if you afford about this, your new plastic business, this like maybe you can share with us, like estimates what's the overall market value in Israel and Europe, like where you potentially could expand. So just a little bit more on this, on this particular market for the product you now develop. Thank you.

Michael Stein, Chief Executive Officer

Yeah, for sure. So without getting into specific numbers, what I can tell you is that we are currently, like you said, operating and like we mentioned on the call, we intend to expand to the US. The US being obviously a significantly larger market than Israel. And our plan all along has been to start with selling pallets. And pallets is a huge, huge market. I mean, everything that gets shipped essentially goes out on pallets. And it is our open intention to take market share in that space.

And because our cost of raw materials is significantly lower than that of our competitors who are also doing plastic pallets, even for the same level of performance, we think we can take a good deal of market share. Obviously it takes time with manufacturing, but that's our plan. But what's great about the technology and the patents that we have is that the patent is not on creating pallets. The patent is on creating any finished product. And as we mentioned on this call, we're already starting to make our second product custom for a customer.

We've already started designing it and working out the details with that customer, very interested. And we know a whole bunch of other customers who are also interested in that product. And our intention is to continue to diversify our portfolio of products using the same waste material and the same technology so that the market potential is as large as possible. But obviously as this thing gets more mature, we intend to share more numbers.

Matt Vaytides, Analyst at Freedom Broker

Sure. Yeah. Thank you so much. Have a nice day. Thank you.

OPERATOR

Thank you. And there are no more questions. This concludes our question and answer session and conference call. Thank you for attending today's presentation. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.