Genie Energy expects margins to strengthen into 2026 while targeting $40M–$50M adjusted EBITDA

Earnings Call Insights: Genie Energy Ltd. (GNE) Q3 2025

MANAGEMENT VIEW

* Michael Stein, Chief Executive Officer, reported "another quarter of double-digit top line growth, leading to record high third quarter revenue" and highlighted that the increase was driven by higher per meter electricity consumption, rising commodity prices, and RCE-based growth at GRE.
* Stein noted that "challenging market conditions that impacted GRE's second quarter results persisted in the third quarter and again weighed on our bottom line with diluted EPS decreasing to $0.26 per share from $0.38 per share."
* He explained that the rapid rise in energy commodity prices had outpaced the protection from commodity hedges, especially affecting fixed price contracts in the retail book, notably a large municipal aggregation deal, which is set to expire during Q4. He stated that "margin volatility is inherent in our retail business, and we do expect conditions to improve. In fact, we are seeing indications that, that process is underway now in Q4, and we expect that margins will continue to strengthen as we get further into 2026."
* The company grew its electricity customer base at GRE to approximately 318,000 RCEs, a 5.4% year-over-year increase. While the gas book contracted, total RCEs rose 4.2% to 396,000 and total meters increased 0.8% to 402,000.
* Stein mentioned progress in Genie Solar's Lansing Community solar project, which is expected to begin generating revenue in the fourth quarter, and ongoing build-out of the Perry, New York array. He also highlighted Diversegy's continued revenue and profit growth, projecting it could contribute $5 million to $6 million to GREW's bottom line in 2026.
* Regarding shareholder returns, Stein said, "we continued to return value to our shareholders, repurchasing approximately 124,000 shares for $2 million and paying our regular quarterly dividend of $0.075 per share."
* For the full year 2025, Stein stated, "we expect to achieve our annual guidance range of $40 million to $50 million in adjusted EBITDA, albeit at the lower end of the range as GRE's margin environment gradually improves."
* Avi Goldin, Chief Financial Officer, reported "record revenue, continued margin compression in our retail business and investment in growth initiatives in our Renewables segment."
* Goldin stated, "Consolidated revenue in the third quarter increased 24% to $138.3 million, driven by sales at our retail supply business, GRE. GRE's revenue increased 25% to $132.4 million."

OUTLOOK

* Management expects "to achieve the low end of our full year guidance of $40 million to $50 million in consolidated adjusted EBITDA."
* Stein indicated that margin conditions are improving and expects "margins will continue to strengthen as we get further into 2026."
* No explicit comparison to analysts' estimates was provided due to lack of sufficient estimates data.

FINANCIAL RESULTS

* Goldin reported consolidated gross profit decreased 21% to $30 million, with gross margin down to 21.7% from 33.9%.
* At GRE, gross profit declined 23% to $27.6 million due to increased wholesale electricity and natural gas costs. Electricity revenue increased 26% to $126.6 million. Kilowatt hours sold increased by 21% and revenue per kilowatt hour sold increased 4%.
* Natural gas revenue increased 15% to $5.8 million. Therm sold was "substantially unchanged," while revenue per therm sold increased 14%. Gross margins on gas sales turned negative.
* Consolidated SG&A decreased 10% to $22.6 million.
* Consolidated income from operations decreased 41% to $6.9 million, and adjusted EBITDA decreased 40% to $8.2 million.
* Consolidated net income attributable to Genie common stockholders was $6.7 million or $0.26 per share compared to $10.2 million or $0.38 per share a year earlier.
* Cash, cash equivalents, restricted cash, and marketable equity securities totaled $206.6 million, up from $201.6 million three months earlier. Working capital was $113.3 million. Total debt was $8.8 million.

Q&A

* Operator announced there were no questions on the lines and concluded the call. No Q&A content was provided in the current quarter.

SENTIMENT ANALYSIS

* Analysts did not pose any questions during the call, and no sentiment can be inferred from the Q&A.
* Management maintained a confident tone in prepared remarks, emphasizing experience navigating margin cycles and expectations for improvement: "we are confident in its long-term profitability."
* Compared to the previous quarter, the absence of analyst questions this quarter contrasts with last quarter's more skeptical and pressing analyst tone regarding margin recovery and hedging strategies.

QUARTER-OVER-QUARTER COMPARISON

* The company reiterated its annual adjusted EBITDA guidance of $40 million to $50 million, now expecting to achieve the lower end, versus a firmer guidance language in the previous quarter.
* Margin compression persisted, with management now explicitly noting intensified challenges and a decrease in EPS to $0.26 per share from $0.38 per share year-over-year.
* Customer base growth slowed compared to the previous quarter, with a decrease in gas RCEs and a modest increase in meters.
* Management's tone remained confident but shifted to acknowledge more persistent market headwinds and a longer recovery horizon for margins.
* Analysts were less engaged this quarter, with no questions asked, compared to the prior quarter's focus on margin recovery and new business viability.

RISKS AND CONCERNS

* Stein highlighted ongoing "challenging market conditions" and the impact of rising commodity prices, which outpaced protection from hedging strategies.
* The CFO detailed "significant increases in our wholesale electricity and natural gas costs" and noted negative gas margins driven by mark-to-market adjustments on winter supply positions.
* Management cited the expiration of a large municipal aggregation deal and margin volatility as key risks, but reported seeing early signs of margin improvement.

FINAL TAKEAWAY

Genie Energy's third quarter was marked by record revenue and continued investment in renewables and new business initiatives, but margin compression and higher input costs weighed on profitability. Management reaffirmed confidence in the company's ability to navigate market cycles, targeting the lower end of its $40 million to $50 million adjusted EBITDA guidance for 2025 and anticipating margin recovery as 2026 progresses. The company continues to prioritize growth in high-consumption electric meters, project expansions in renewables, and disciplined capital returns to shareholders, despite challenging commodity price dynamics and increased volatility in fixed-price contract margins.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/gne/earnings/transcripts]

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