Genie Energy Q2 2025 Earnings Call Transcript

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August 7, 2025

Key Takeaways

  • Positive Sentiment: At GRE, customer base expanded to approximately 419,000 meters served (414,000 RCEs), marking a 15–20% year-over-year increase, and quarterly churn improved to 4.8% from 5.5%.
  • Negative Sentiment: GRE’s margins were compressed by wholesale power price spikes in the PJM and MISO markets and warmer-than-usual weather, driving gross profit down 34% and adjusted EBITDA down 74% year-over-year.
  • Positive Sentiment: Genie Solar’s revenue surged over six times year-ago levels to $1 billion, bottom line losses narrowed by 90%, and the Lansing community solar project is on track to commission in Q3.
  • Positive Sentiment: The company reaffirmed full-year consolidated adjusted EBITDA guidance of $40–50 million, assuming a normalized commodity environment and continued growth at GRE.
  • Positive Sentiment: Genie Energy returned capital to shareholders by repurchasing ~159,000 shares for $2.7 million and paying a regular $0.75 per share quarterly dividend.
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Earnings Conference Call
Genie Energy Q2 2025
00:00 / 00:00

There are 3 speakers on the call.

Operator

Good morning, and welcome to the Genie Energy Limited Second Quarter twenty twenty five Earnings Call. In today's presentation, Genie Energy management will discuss Genie's financial and operational results for the three months ended 06/30/2025. During prepared remarks by Genie Energy's Chief Executive Officer, Michael Stein, and Chief Financial Officer, Avi Golden, all participants will be in a listen only mode. After Avi Golden'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 and 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.

Operator

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 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 and A session, Genie Energy's management may refer to non GAAP measures, including adjusted EBITDA, non GAAP net income, and non GAAP earnings per share. The schedule provided in the Genie Energy's earnings release reconciles adjusted EBITDA, non GAAP net income, and non GAAP earnings per share 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.

Operator

The earnings release has also been filed on Form eight ks with the SEC. I will now turn the conference over to Michael Stein. Sir, the floor is yours.

Speaker 1

Thank you, operator. Our second quarter yielded mixed results. On the one hand, it was highlighted by solid operational progress and double digit top line growth. On the other hand, our bottom line was impacted by significant margin compression at GRE, which weighed on our bottom line results. At GRE, we expanded our customer base in the second quarter to approximately 419,000 meters served, comprising approximately 414,000 RCEs, representing a year over year increase of 1520% in meters and RCEs, respectively.

Speaker 1

Churning the second quarter dropped to 4.8% from 5.5% in the first quarter, and I think we can and will continue to make progress as we further improve our customer retention operations. GRE's bottom line, however, was impacted by wholesale power price increases in some of the supply markets, most notably within the PJM and MISO interconnection zones. The volatility in the quarter was driven by policy concerns and by warmer than usual weather, particularly in June. There have been times over the past few years where wholesale price volatility has led to margin upside for the company. However, this quarter, the impact was against us.

Speaker 1

GRU delivered very strong results. Revenue increased 44% and the segment approached breakeven even as we invested in some of our newly developing businesses. Brokerage and energy advisory business, revenue increased year over year by over 50% At and profitability increased by almost 3000%. At Genie Solar, revenue jumped over six times the year ago level to $1,000,000,000 reflecting a solid quarter from its portfolio of operating arrays and the bottom line loss decreased by 90% as we also significantly reduced SG and A. Turning now to Genie Solar's development pipeline.

Speaker 1

We are making

Operator

on the more advanced projects, including our Lansing community solar project, which I'm excited to say, Genie we

Speaker 1

expect to commission in the third quarter. Meanwhile, we have paused work on several of the earlier stage development pipeline projects to reevaluate their economics in light of recent changes in the development landscape. On the one hand, we anticipate unprecedented demand for power from data centers and industry in the coming years. On the other hand, accelerated sunset of solar generation tax incentives included in the recently enacted federal tax and budget legislation, the One Big Beautiful Bill, will impact a few projects at the tail end of our current pipeline that are in the earliest stages of development. We are currently working to gauge the impact of those changes on these early stage projects and determine whether and how it makes sense to move ahead with them.

Speaker 1

Also because of the legislation, we are pausing efforts projects to our development pipeline. Also within GRU, we continue to invest carefully in promising initiatives outside of the solar generation space. Most notably, we have had an early success leveraging our insurance capabilities and marketing expertise to offer tailored insurance products to retail customers. We are also optimistic about Rosette, our majority owned venture utilizing recycled plastic waste to make pallets and other products. We hope to have more to share about both businesses in the coming quarters.

Speaker 1

Turning back to Genie on a consolidated basis. During the second quarter, we again returned value directly to our shareholders by repurchasing approximately 159,000 shares and paying our regular quarterly dividend of $0.75 per share. Looking ahead to the balance of the year, we are expecting GRE's margins to return closer to historical levels. Assuming a normalized commodity environment and with continued improvement in growth that grew, we confirm GE's 2025 consolidated adjusted EBITDA guidance at 40,000,000 to $50,000,000 Now here is Avi. Thank you, Michael, and thanks to everyone on the call for joining us this morning.

Speaker 1

My remarks today cover our financial results for the three months ended 06/30/2025. In my commentary, I will prepare the results for the 2025 to the 2024 to remove from consideration the seasonal factors that impact our results, particularly within our retail energy business. Second quarter is typically characterized by relatively low levels of electricity and gas consumption as it falls mostly between the first quarter's peak heating season and the third quarter's peak cooling season in many of our service areas. Our second quarter financial results were headlined by a challenging pricing environment in the retail energy business, where we experienced higher than usual costs leading to margin pressure. Solid revenue in the second quarter increased 16% to $105,300,000 driven by growth of both GE Retail and GE Renewables.

Speaker 1

At GRE, revenue increased 14% to $99,000,000 in the second quarter, reflecting the year over year growth of our customer base that Mike will detail for you. Per meter consumption is roughly in line with year ago levels. Electricity revenue climbed 15% to $89,900,000 representing 91% of GRE's revenues. Kilowatt hours sold increased by 17%, while our revenue per kilowatt hours sold decreased 2%. Natural gas revenue increased 8% to $9,100,000 Terms sold increased 5%, while our revenue per term sold increased 3%.

Speaker 1

At GRU, second quarter revenue increased 57% to $6,300,000 The revenue increase was led by continued strong growth within our retail brokerage and advisory service, Diversity and the Genie Solar. Consolidated gross profit decreased 30% to $23,500,000 while gross margin decreased 1,400 basis points to 22%. At GRE, gross profit declined 34% to $21,300,000 reflecting increases in our wholesale electricity and natural gas costs. Our cost of electricity per kilowatt hours sold increased 20% compared to year ago quarter, particularly within the PJM and MISO interconnection zones. Our cost per serve of gas also increased, up 52% year over year, albeit on relatively low consumption levels.

Speaker 1

Consolidated SG and A decreased 4% to $21,200,000 on reduced payroll and customer acquisition expense. Consolidated income from operations for the quarter came in at $2,000,000 with adjusted EBITDA of $3,000,000 down from $9,500,000 and $12,500,000 respectively, in the 2024. The declines were primarily driven by the reduced gross profit GRE that I discussed earlier. At GRE, income from operations decreased 73% to $4,000,000 and adjusted EBITDA decreased 74% to $4,400,000 As per the second quarter loss from operations narrowed to $181,000 from $1,400,000 the year ago quarter, while adjusted EBITDA improved from negative $1,100,000 to negative $97,000 The improvements were driven by accelerating profitability of Diversity and narrowing losses from Genie Solar. Consolidated net income attributable to new common stockholders was $2,800,000 or $0.11 per share compared to $9,600,000 or $0.36 per share a year earlier.

Speaker 1

Turning now to the balance sheet. At 06/30/2025, cash, cash equivalents, long insurance or restricted cash, which includes cash held by our active insurance subsidiary and marketable equity securities totaled 201,600,000.0. Working capital was 115,000,000. Our debt current and noncurrent debt totaled 9,000,000, primarily from the financing of our solar portfolio. We repurchased approximately 159,000 shares of our Class B common stock in the second quarter for $2,700,000 and paid a regular quarterly dividend of $24,000,000 in value to our stockholders so far this year.

Speaker 1

Wrapping up, despite the challenging pricing environment within retail, the underlying business fundamentals remain strong. We are well positioned for the remainder of the year and expect to meet our full adjusted EBITDA guidance of 40,000,000 to $50,000,000 assuming normalized weather conditions. Operator, back to you for Q and A.

Operator

Thank you. We will now

Speaker 1

begin our Q and A session.

Operator

To withdraw your question, please press 2. Thank you. We will pause momentarily to assemble our roster. Our first question is coming from Syed Saif, who is an investor. Saeed, your line is live, sir.

Operator

There appears to be nobody available on that line. We have a question from Scott Blake, who is a payment investor. Your line is live.

Speaker 2

Good morning. Thanks for thanks for the comments. Two questions. The first one, what gives you hope or confidence that your retail margins or rather your wholesale margins will return to normal? Obviously, world seems quite a bit over the last six months, and this is a relatively tough quarter for Genie.

Speaker 2

So maybe starting with that one, what gives you hope that your margins will return close to normal and reaffirming your guidance for the year? Hi. Thank you. Thanks for the question. So our margins were hurt in the quarter by definitely some political factors, but I think mostly by weather.

Speaker 2

It has been a particularly hot end of spring and beginning of summer, which kind of pushed prices higher. We think things are starting to come down on the wholesale front, and that gives us confidence that we should be able to pull off our guidance. So it's really just a hope on weather. Are there any hedging strategies or trading strategies you could take? And hope on weather is not a great not a great strategy.

Speaker 2

Pretty hot in the South. So typically, the way we hedge, we hedge our business at a very high percentage. Meaning, hedge out our expected load at a very high percentage and it's just kind of a small percentage that we that could vary depending on very, very depending on weather. So there is some that is definitely out of our control. But by and large, the highest percent, you know, the vast majority of our of our power is already purchased.

Operator

So how

Speaker 2

do how are the margins? I guess I'm just a little not depressed, but I'm a little confused then. How does weather impact your margins so significantly if you're materially hedged? It Does that small amount make that big of a difference? Yeah.

Speaker 2

It's if weather is is significantly different than historicals, then even that, call it, 20% can make a very big difference in the margins. And that's what happened to us over the last few months. And how the market obviously reacts to the fact that it's very hot. When it's very hot early in the season, typically what you see is that the rest of the season or typically, sorry, when it's very hot in the beginning of the season, the wholesale markets react in an uncertain kind of a way. But when you see heat toward the end of the season or when you expect to see that heat, usually, the market doesn't react as much as it did in the beginning of the season.

Speaker 2

So we feel pretty confident that the amount that we hedge and given that we're already in kind of middle toward the end of the summer where people expect the heat, we should be in good shape. Okay. Got it. And then just on your solar project, is there a viable path for new solar projects? But today, I understand the pause as everybody sorts sorts through it.

Speaker 2

And then maybe a few questions on the solar. What's the amount of capital that's locked up in those projects that may not go forward as in potential loss? And is there a growth path currently without the tax credits? So very little capital is locked up in the new projects. Generally, the way the way these projects work is that, the development part where you're trying to get permits, interconnection approvals, engineering viability, the amount you spend on that is a very, very small percentage of the overall total spend on the project.

Speaker 2

95% of what you spend on the project is once you start construction. So very little capital is tied up in projects that we are not viable. In terms of new projects, like I said, we're pausing. We're trying to figure out if there is a path forward for future projects that have a time line that goes beyond when the big beautiful bill dictated that the ITC credits go away. And, you know, we'll obviously be able we'll we'll obviously be able to update you when we make we make those determinations.

Speaker 2

Got it. Okay. Thank you.

Operator

Thank you. Our next question is coming from Jim Harden, who is a private investor. Your line is live.

Speaker 2

My questions are around the captive insurance subsidiary. Just starting at a high level, how would you summarize performance there, better policy sold or revenue or profit? You know, what's what's generally the investment mix? And and how does that compare? You know, both of those things, how does it compare to your expectations a few years ago?

Speaker 2

We're very, very conservative with how we manage the cash in the captive. Mostly sits in cash. We have a little bit in alternative investments. It's doing just fine. And what what lines are you selling?

Speaker 2

And what's my understanding is this is a revenue opportunity, not just maybe a captive. It's for, you know, cost savings for employees. Is that is that accurate? And how are you and what are you actually selling as far as lines of insurance? We're we are starting we just started.

Speaker 2

It's it's still very early as I alluded to in my remarks, but we are doing some health insurance sales, leveraging our existing marketing channels to sell some health insurance. Is there any plan to expand from that to other clients? Yes. We're we're we're still we're still early stages. I don't wanna say what yet, but the the plan is to, you is to get into more.

Speaker 2

But to be clear, the captive insurance at this stage is not underwriting the actual insurance risk behind those health insurance plans. Right now, we're acting as a broker. There is a possibility that that will change at some point, but it it will I think it'll be a few years before we do something like that. Got it. Thank you.

Operator

Thank you. As we have no further questions on the lines at this time, this will conclude today's call. You may disconnect your lines at this time, and have a wonderful day, And we thank you for your participation.

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