Operator: Good morning and welcome to the Genie Energy Ltd’s third quarter 2026 earnings call. In today’s presentation, Genie Energy management will discuss Genie’s financial and operational results for the three months ended September 30th, 2026. During the prepared remarks by Genie Energy’s Chief Executive Officer, Michael Stein, and Chief Financial Officer, Avi Goldin, all participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing 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 from 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 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, 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 Genie website. The earnings release has also been filed on a Form 8-K with the SEC. I will now turn the call over to Michael Stein. Please go ahead.
Michael Stein: Thank you, operator, and welcome everyone. Genie delivered solid results, including margin expansion and bottom line gains in the third quarter versus the year-ago quarter. Income from operations climbed 72% year-over-year to $12.7 million, and EPS increased by $0.14 to $0.39 per share. Adjusted EBITDA increased 67% to $13.7 million, putting us in a position to overcome the impacts of the challenging retail energy markets at the start of the year and achieve our 2026 guidance range.
The gains this quarter versus the relatively weak year-ago quarter highlight the resilient cash generation of our retail energy business and the rapidly improving economics at GREW, which includes both maturing cash-generated businesses, notably Diversegy and Genie Solar, and investment stage initiatives such as Roded. At Genie Retail Energy, our improved performance reflects the expansion of our gross margin to a level comparable to our long-term average under normalized market conditions. In the year-ago quarter, we encountered exceptional energy price volatility that eroded our margins. This year, under more typical market conditions, the margin expansion across electricity and gas sales more than offset the impacts of a decrease in our customer meter base and increased customer acquisition spend.
Total RCEs and meters declined by 15% and 13% respectively at quarter’s end compared to the year-ago quarter’s end. The decreases reflect the expiration of low-margin aggregation deals in the fourth quarter of last year and elevated customer attrition. At the quarter’s end, we served 337,000 RCEs and 351,000 meters. During the third quarter, we had more opportunities to add customers at appealing ROIs, and we took advantage to add 61,000 m compared to 47,000 m a year earlier. That is slightly below the level we need to maintain our current customer base, given the current rate of churn, which reached 6.3% this quarter, in line with our expectations given current market conditions.
At GREW, our improved bottom line results reflect increasing profitability at Diversegy and Genie Solar, partially offset by increasing investment in Roded and other early-stage business initiatives. Diversegy’s strong performance reflects the continued collection of residuals on its existing book while it adds new customers at a healthy rate. We expect its positive contribution and customer base to continue growing in the coming quarters. At Genie Solar, the community solar arrays at Lansing, New York, and Perry, New York, are now both fully operational, and their operations are contributing cash. At Genie Solar, we are also advancing our final community solar project in Delhi, New York, and expect to bring it online in late 2027.
Roded, our recycled plastic manufacturing initiative utilizing a proprietary plastic waste recycling technology for pallets and other industrial products, is developing rapidly. We set up and began production on a second manufacturing line in Israel during the third quarter. We have orders for all of our current output and are in the process of ordering machinery that should double our capacity by the third quarter of 2027. In the next few weeks, we expect to submit our architectural plans for approval of a new Roded production facility in Israel that would more than triple our current capacity.
To date, the national and local governments in Israel have been supportive, providing a financial commitment to facilitate the construction of the proposed new facility. We intend to expand Roded internationally, beginning with a business in the U.S. operating under the brand Evercore Composites. We have already started the process of ordering machinery for our first two U.S. production lines, and we are also close to selecting a site in the southeastern part of the U.S. In summary, Genie built on the momentum we picked up last quarter with strong gains in profitability year-over-year as a result of margin expansion at Genie Retail, augmented by strong growth at Diversegy and Genie Solar.
We are on track to deliver full-year Adjusted EBITDA in our guidance range, even as we invest in Roded’s expansion in Israel and the U.S., and in other early-stage initiatives. We also continue to return capital to our stockholders. In the third quarter, we repurchased 128,000 shares of our Class B common stock for $2 million and paid our regular quarterly dividend. Now I will turn the call over to Avi for his thoughts on our financial results.
Avi Goldin: 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 September 30, 2026. In my commentary, I compare the results for the third quarter of 2026 to the third quarter of 2025 to remove from consideration the seasonal factors that impact our results, particularly our retail energy business. The third quarter, which includes the late summer cooling season, is typically characterized by the year’s highest level of electricity consumption and lowest natural gas consumption. Genie Energy’s third quarter financial results were highlighted by significantly improved profitability compared to the year-ago quarter, driven by increased contributions from both GRE and GREW.
Consolidated revenue in the third quarter decreased 8% to $127.2 million. GRE revenue decreased 8.7% to $120.8 million, as our customer base contracted, mainly due to the expiration of low-margin aggregation deals in the fourth quarter of 2025 and customer churn, which was in line with our expectations given the current market conditions. The decrease in aggregate consumption from this smaller base was partially offset by increased revenue per unit sold for both electricity and natural gas. Sales of electricity, which contributed 94% of GRE’s revenues, decreased 10.5% to $113.2 million. Kilowatt hours sold decreased by 18%, while revenue per kilowatt hour sold increased 9%. Natural gas revenue increased 31% to $7.6 million.
Therms sold decreased 3%, while revenue per therm sold increased 35%. At GREW, third quarter revenue increased 8% to $6.4 million. This quarter, we are breaking out GREW’s revenue, income from operations, and Adjusted EBITDA between its more established profitable businesses, predominantly Diversegy, our energy brokerage and advisory business, and Genie Solar, which holds our solar generation assets, from our early-stage investment initiatives, which include Roded. The breakout is intended to provide investors with additional clarity and insight into this rapidly evolving segment. In the third quarter of 2026, profitable entities generated revenue of $6 million, a 1.7% year-over-year increase. The early-stage entities contributed $410,000 in revenue compared to $32,000 the year-ago quarter.
Consolidated gross profit increased 37.4% to $41.2 million, while gross margin increased to 32.4% from 21.7%. At GRE, gross profit increased 36% to $37.5 million, and gross margin increased to 31% from 20.8%. The increase represents a return of GRE’s gross margin to within historical ranges we’ve been able to achieve given normalized commodity market conditions compared to a relatively weak year-ago quarter characterized by high commodity price volatility that compressed our electricity margins and led to negative gas margins. At GREW, gross profit increased 53% to $3.8 million, and gross margin increased 58.5% from 41.3%, powered by increased contributions from both Diversegy and Genie Solar. Consolidated SG&A increased 26% to $28.5 million.
The increase largely reflects our stepped-up spend on customer acquisition at Genie Retail that Michael mentioned. Also, as in the last quarter, cost per acquisition increased because of mix shift towards channels with higher per-customer acquisition costs. Despite their increased upfront costs, meters added through these channels typically have higher lifetime values. The gross profit increase at GRE and GREW drove a 72% year-over-year increase in consolidated income from operations to $12.7 million and a 67% increase in consolidated Adjusted EBITDA to $13.7 million. At GRE, the expansion of gross margin drove a 46.5% increase in income from operations to $14.9 million and a 45.2% increase in Adjusted EBITDA to $15.2 million.
As Michael noted, we remain on track to achieve our guidance range. Contributions from Diversegy and Genie Solar enabled GREW to improve from a loss from operations of $345,000 the year-ago quarter to income from operations of $777,000. Adjusted EBITDA improved from a loss of $201,000 to positive $1.1 million. The operating profitable entities contributed Adjusted EBITDA of $2 million in the third quarter, 8x their $220,000 contribution during the year-ago quarter. That improvement more than offset the Adjusted EBITDA loss from early-stage entities of $861,000. Consolidated net income attributable to Genie common stockholders was $10.2 million, or $0.39 per diluted share, compared to $6.4 million, or $0.25 per diluted share a year earlier. Turning now to the balance sheet.
At September 30th, cash equivalents, restricted cash, and marketable equity securities totaled $213.8 million, an increase of $9.5 million from the $204.3 million at the close of the second quarter on June 30th. Working capital is $203.7 million at quarter end. Our debt, current and non-current, totaled $6.7 million at September 30th, the largest component of which was financing for our portfolio of operational arrays completed earlier this year. In the third quarter, we repurchased approximately 128,000 shares of our Class B common stock for $2 million and paid our regular quarterly dividend, returning an additional $2 million directly to our stockholders. Wrapping up, the third quarter built on momentum we established in the second quarter.
Normalized energy commodity market conditions helped us to restore margins at GRE to our long-term target range, while GREW generated positive Adjusted EBITDA even as we continue to invest in Roded and other early-stage growth initiatives. The strong results helped us enhance our profitability and further strengthen our balance sheet. Operator, back to you for Q&A.
Operator: Thank you. The floor is now open for questions. If you wish to join the queue to ask a question at this time, simply press star one on your telephone keypad. We do ask if listening on speakerphone today, please pick up your handset while asking your questions to provide optimal sound quality. Once again, please press star one to ask your question at this time. Please hold a moment while we poll for questions. Once again, it is star one if you have a question. As there are no questions, this concludes today’s conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.
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