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Genie Energy Ltd.
8/7/2025
Good morning and welcome to the G&E Energy Limited's second quarter 2025 earnings call. In today's presentation, G&E Energy Management will discuss G&E's financial and operational results for the three months ended June 30th, 2025. During prepared remarks by G&E Energy's Chief Executive Officer Michael Stein and Chief Financial Officer Avi Golden, all participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing this third key followed by zero. 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&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 G&E Energy files periodically with DSCC. G&E 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&A session, G&E 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 G&E Energy 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 G&E Energy earnings release is available on the investor relations page of the G&E website. The earnings release has also been filed on Form 8K with DSCC. I will now turn the conference over to Michael Stein. Sir, the story is yours.
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 SGREs, 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 -over-year increase of 15% and 20% in meters and RCEs respectively. Shown in the second quarter dropped to .8% from .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 TGM and MISO interconnection zones. The volatility in the quarter was driven by policy concerns and by -than-usual weather, particularly in June. There have been times over the past few years where wholesale price volatility has led to margin upsides for the company. However, this quarter the impact was against us. GRE delivered very strong results. Revenue increased 44% and the segment approach break even even as we invested in some of our newly developing businesses. At the VersaG, our brokerage and energy advisory business, revenue increased -over-year by over 50% and profitability increased by almost 3,000%. As Unisolar, revenue jumped over six times the year ago level to $1 billion, reflecting a solid quarter from its portfolio of operating arrays, and the bottom line loss decreased by 90% as we also significantly reduced SG&A. Turning now to Unisolar's development pipeline. We are making good progress on the more advanced projects, including our Lansing Community Solar Project, which, I'm excited to say, we expect to commission in the third quarter. Meanwhile, we have paused work on several of the earliest-staged development pipeline projects to re-evaluate 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, the 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. Also, because of the legislation, we are pausing efforts to add 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 RoDET, our majority-owned venture utilizing recycled plastic waste to make Alice and other products. We hope to have more to share about both businesses in the coming quarters. Turning back to Gini on a consolidated basis, during the second quarter, we again return our 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 at GRU, we confirm Gini's 2025 consolidated adjusted EBITDA guidance at $40-50 million. Now, here
is
our
balance. 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, 2025. In my comments, we all prepared the results for the second quarter 2025 to the second quarter 2024 to remove from consideration the seasonal factors that impact our results, particularly within our retail energy business. Second quarters 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 shared areas. Our second quarter financial results are outlined by a challenging targeting environment in the retail energy business, which brings higher than usual costs, leading to margin pressure. Solid revenue in the second quarter increased 15% to $105.8 million, driven by growth at both Gini Resale and Gini Enables. At GRE, revenue increased 14% to $99 million in the second quarter, reflecting the -over-year growth of our customer base at Michael B-Sale for you. Fertilizer consumption was roughly in line with -over-year levels. Electricity revenue climbed 15% to $89.9 million, representing 91% of the various revenues. Kilowatt-hour sold increased by 17% while our revenue for kilowatt-hour sold was increased to 2%. Natural gas revenue increased 8% to $9.1 million. Terms sold increased 5% while our revenue for berms sold increased 3%. At GRE, second quarter revenue increased 57% to $6.3 million. The revenue increases led by continued strong growth within our retail, brokerage, and advisory service, Durisji, and at Gini Solar. Consolid reverse profits increased 30% to $23.5 million while gross margins increased 1,400 basis points to 22%. At GRE, reverse profits declined 34% to $21.3 million, reflecting increases in our wholesale or shipping natural gas costs. Our cost of electricity for kilowatt-hour sold increased 20% compared to -over-year growth particularly within the PJM and micro-interconnection zones. Our cost for vermic draft also increased up to 52% -over-year, albeit on relatively low consumption levels. Consolid S&A decreased 4% to $21.2 million on reduced payroll and customer acquisition. Consolid usual cooperation for the quarter came in at $2 million with adjusted ETH at $3 million, down from $9.5 million and $12.5 million respectively in the second quarter of 2024. The declines were primarily driven by reduced gross profit at GRE that I discussed earlier. At GRE, income from operations increased 73% to $4 million and adjusted EBITDA increased 74% to $4.4 million. As per the second quarter loss from operations narrowed to $181,000 from $1.4 million in the year-goal quarter, while adjusted EBITDA improved from -1.1 million to $97,000. The improvements were driven by accelerating profitability, diversity and a narrowing losses from GDSolar. Solidated net income attributed to the GDSolar staff holders was $2.8 million or $0.11 per share compared to $9.6 million or $0.36 per share a year earlier. Turning out of balance sheet, at June 30, 2025, cash, cash equivalents, long insured term restricted cash, which includes cash held by a tax insurance subsidiary, marked the total of $201.6 million. Working capital was $115 million. Our net current and non-current debt totaled $9 million, primarily from the financing of our GDSolar portfolio. We repurchased approximately 159,000 shares of our class-B common stock in the second quarter for $2.7 million and pay our regular quarterly dividend, turning $4 million in value for our stockholders so far this year. Wrapping up, despite the challenging pricing environment within retail, the underlying business fundamentals are contained strong. We are well positioned for the remainder of the year and expect to meet our full adjusted debt values of $40-50 million to normalize weather conditions. Operator, back to you for Q&A.
Thank you. We will now begin our Q&A session. To ask a question, you may press star, then one on your touch screen. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star two. Thank you. We will
pause momentarily to assemble our roster. Thank you. Our first
question is coming from Syed Sayyed, who is an investor. Your line is line.
Syed, your line is line,
sir. There appears to be nobody available on that line. We have a question from Scott Blake, who is a private investor. Your line is line.
Hi, morning. Thanks for the comments. Two questions. The first one, what did you hope for confidence that your retail margins, or rather your wholesale margins will return to normal to the world soon? Quite a bit over the last six months, and this is a tough quarter for Gini. So maybe starting with that one, what did you hope that your margins will return close to normal and reaffirm your guidance for the year? Hi, thank you. Thanks for the question. So, you know, our margins were hurt in the quarter by definitely some political factors, but I think mostly by weather. It has been a particularly hot end of spring, you know, and beginning of summer, which kind of pushed prices higher. We think things are starting to calm down on the wholesale front, and that's what 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 we could take? And hope on weather is not a great strategy. All right. So typically the way we hedge, you know, we hedge our business at a very high percentage, meaning we hedge out our expected load at a very high percentage, and strip the kind of a small percentage that we, that could vary depending on, you know, very, very, depending on weather. So there is some that is definitely out of our control, but by and large the highest percentage, you know, the vast majority of our power is already purchased. So how would a margin, I guess I'm just a little not surprised, but I'm a little confused then, how does that impact your margins so significantly if you're, if you really hedge? Is that the only amount? Is that the only difference? Yes, if the weather is significantly different than historicals, then even that, call it 15-20%, can make a very big difference in the margins. And that's what happened to us over the last few months. You know, and how the market obviously reacts to the fact that it's very hot. So, you know, when it's very hot early in the season, typically what you see is that the rest of the season, you know, typically, sorry, when it's very hot in the beginning of the season, you know, 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 in March it doesn't react as much as it did, you know, in the beginning of the season. So we feel pretty confident that the amount that we hedge, and given that we're already 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? Today, I understand the pause as everybody sorts through it, and we need to keep questioning 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? Very little capital is locked up in the new projects. Generally, the way these projects work is that, you know, the development part, where you're trying to get permits, interconnection approvals, you know, engineering viability, you know, the amount you spend on that is a very, very small percentage of the overall total spend on the project. Probably 95% of what you spend on the project is once you start construction. So very little capital is tied up in, you know, in projects that we need, you know, are not viable. Okay. In terms of new projects, like you said, we're pausing. We're trying to figure out, you know, if there is a path forward for, you know, for future projects that have a timeline that goes beyond when the big, beautiful bill gets hit, that the ITC credits go away. And, you know, obviously we'll update you when we make those determinations. Got it.
Okay. Thank you.
Thank you. Our next question is coming from Jim Harden, who is a private investor. Your line is live.
Hey, good morning. My questions are around the captive insurance subsidiary. Just starting at a high level, how would you summarize performance there, whether it's policy sold or revenue or profit? What's generally the investment mix, and how does that compare, both of those things, how does it compare to your expectations a few years ago? We're very, very conservative with how we manage the cash in the captive, you know, mostly system cash. You know, we have a little bit of an alternative investment. It's doing just fine. What lines are you selling? My understanding is this is a revenue opportunity, not just maybe a captive, it's for cost savings for employees. Is that accurate? And what are you actually selling for lines of insurance? We are starting, we just started. It's still very early as I lose in my remarks, but we are doing some health insurance sales, leveraging our existing marketing channels to sell some health insurance. Are there any plans to expand from that? Yes, we're still early stages. I don't want to say what yet, but the plan is to get into more. 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 I think it will be a few years before we do something like
that. Thank you. 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.