Genie Energy Ltd. Q2 FY2026 earnings call

Customer Acquisition & Retail Energy Strategy

• GRE saw a 5% YoY top line decline driven by the expiration of low-margin aggregation deals, which had minimal impact on bottom-line results. Customer counts declined to 345,000 RCEs and 363,000 meters at quarter end, from 413,000 RCEs and 419,000 meters YoY.
• The company shifted customer acquisition to higher-cost channels that deliver higher lifetime-value, higher-margin customers, resulting in materially higher total acquisition expense in Q2. This shift also supported diversification into newer growth markets including Texas' power market and California's gas market, building future tailwinds for performance.

GRU Core Business Growth

• Diversity energy brokerage delivered a strong quarter, with double-digit annualized book-of-business growth. New business includes upfront customer payments, leading to stronger cash growth than reflected in current EBITDA, and will drive recurring revenue for future years via long-term contracts. AI is leveraged to optimize customer acquisition and tailor offerings to customer needs, supporting the segment's expansion.
• Genie Solar completed its second community solar project in New York State in late Q2, which will begin contributing positive results starting in Q3. Both Diversity and Genie Solar are already cash-generating businesses on track for further bottom-line expansion.

Early Stage Growth Initiative (Rodead Recycling)

• Rodead, which uses patented technology to produce plastic products from waste plastic, expanded production in its existing Israel facility to meet strong local demand for recycled plastic pallets, and is already nearing current production capacity. The Israeli Minister of Environment has committed to underwrite a material share of the cost of a new, larger manufacturing plant.
• Rodead has begun preparation to launch a second product using the same recycled feedstock, and received certification to produce and monetize plastic credits via Verra's global Plastic Waste Reduction Standard, which will improve profitability.
• Rodead is advancing international expansion, having identified multiple potential manufacturing sites in the U.S. Southeast, and is working to select a final site, hire leadership, and design products for the North American market.

Capital Return & Balance Sheet

• As of June 30 2026, the company held $204.3 million in cash, cash equivalents, and marketable securities, with net debt of $6.8 million (mostly for operational solar array financing). In Q2, Genie repurchased 47,000 Class B common shares for $659,000 and paid $2 million in quarterly dividends to return value to shareholders.

Genie Energy has two core operating segments for Q2 2026: 1. Genie Retail Energy (GRE): Revenue decreased 4.9% year-over-year (YoY) to $94.1 million, contributing 93.7% of consolidated Q2 2026 revenue. Gross profit increased 42.2% YoY to $30.3 million, with a gross margin of 32.2% (aligned with long-term historical averages under normalized wholesale market conditions). Income from operations increased 108.3% YoY to $8.3 million, and adjusted EBITDA increased 96.7% YoY to $8.7 million. Electricity sales, which make up 89% of GRE revenue, decreased 7% to $83.6 million, while natural gas revenue decreased 16.2% to $10.6 million. 2. Genie Renewable Energy (GRU): Revenue was flat YoY at $6.3 million, contributing 6.3% of consolidated Q2 2026 revenue. Gross profit increased 55% YoY to $3.3 million. The segment turned a small profit in Q2 2026: income from operations was $100,000, compared to a $200,000 operating loss YoY; adjusted EBITDA was $200,000, compared to a $97,000 adjusted EBITDA loss YoY. Strong contributions from the Diversity energy brokerage and Genie Solar businesses drove the segment's improved performance. Consolidated overall results: Q2 2026 revenue decreased 4.6% YoY to $100.4 million, gross profit increased 43.4% YoY to $33.7 million (gross margin 33.5%), consolidated operating income increased $4.3 million YoY to $6.5 million, adjusted EBITDA increased $4.5 million YoY to $7.5 million, and net income attributable to shareholders was $11.4 million ($0.43 per diluted share), up from $2.3 million ($0.09 per share) YoY.

• Management reaffirmed the full-year 2026 guidance provided at the start of the year, stating that the company is well-positioned to meet its original full-year targets regardless of current energy market conditions. • The company expects the Q2 2026 shift to higher-margin customer acquisition to deliver positive operational and financial tailwinds in upcoming quarters. • Diversity and Genie Solar are on track to continue expanding their bottom lines through the remainder of 2026. • Management expects the positive contribution from other investment income to continue through the end of the year, though exact amounts cannot be predicted due to market volatility.

• All forward-looking statements are subject to inherent market risks and uncertainties that may cause actual results to differ materially from management expectations, including volatility in wholesale natural gas and electricity prices that impact GRE profitability. • The company notes that it has no obligation to update forward-looking statements after this call. • Future profitability from the Rodead plastic recycling business depends on successful completion of new manufacturing facilities and ability to gain market share against incumbent competitors, even with expected cost advantages.

Q: The analyst asks for a breakdown of the large other income line on the income statement, and for management's outlook for this line through the end of 2026. / A: The CFO explains that other income comes mostly from unrealized and realized gains on short-term investments of the company's excess balance sheet cash. He adds that while it is difficult to predict future quarter-to-quarter changes in this line, management expects other income to remain positive for the full year.\nQ: The analyst notes that Q2 2026 gas prices were lower, which helped boost profitability, and asks if management expects this favorable trend to continue for the rest of the year, or if performance will soften. / A: The CEO acknowledges that energy market prices are inherently unpredictable, but confirms the company is well positioned to meet its original full-year guidance regardless of market movements, and can capitalize on current market conditions.\nQ: The analyst asks for confirmation that the higher SG&A expense this quarter reflects a strategic shift to acquiring higher-margin, more profitable customers that will pay off in future periods. / A: The CEO confirms the interpretation, explaining that Genie uses a mix of lower-cost channels that yield lower-margin customers and higher-cost channels that yield higher-margin customers. In Q2 2026, the mix shifted heavily toward the higher-cost, higher-margin channels, which drove higher SG&A, in contrast to the higher share of low-cost, low-margin acquisitions in the year-ago quarter.\nQ: The analyst asks for an overview of the market size for Rodead's recycled plastic products in the company's current and target markets. / A: The CEO declines to share specific numerical estimates, but confirms the North American pallet market alone is extremely large, as pallets are used for nearly all shipped goods. He notes that Rodead has a significant raw material cost advantage over competitors producing virgin plastic pallets, enabling the company to gain meaningful market share as it scales manufacturing. The underlying technology can produce a wide range of plastic products beyond pallets, creating very large long-term market potential.