Genie Energy's Q3 2025: Contradictions Emerge on Weather-Driven Margins, Solar Tax Credits, and Expansion Strategies

Date of Call: September 30, 2025

Financials Results

• Revenue: $138.3M, up 24% YOY
• EPS: $0.26 per share, down from $0.38 in the prior year
• Gross Margin: 21.7%, compared to 33.9% in the prior year

Guidance:

• Full-year 2025 adjusted EBITDA expected to be $40M to $50M, likely at the lower end.
• Margins expected to improve in Q4 and continue strengthening into 2026.
• Genie Solar's Lansing Community project expected to begin generating revenue in Q4.
• GREW Diversegy expected to contribute $5M–$6M to GREW's 2026 bottom line.

Business Commentary:

* Revenue Growth and Market Conditions: - Genie Energy Limited reported record revenue of $138.3 million for Q3 2025, up 24% compared to the previous year. - The growth was driven by an increase in per meter electricity consumption and rising commodity prices, although challenging market conditions impacted GRE's bottom line with diluted EPS decreasing to $0.26 per share from $0.38 per share.

• Margin Compression and Hedge Position Impact:
• Genie's consolidated gross margin decreased from 33.9% to 21.7%, primarily due to significant increases in wholesale electricity and natural gas costs.

• The company's financial results were affected by a rapid run-up in energy commodity prices, which outstripped the protection afforded by their commodity hedges.

• Renewables and Growth Initiatives:

• Genie Renewables, GREW, reported a slight decrease in revenue to $6 million, while their energy advisory and brokerage business continued to grow.

• The decrease in revenue was due to investments in early-stage growth initiatives, including the Roded recycled plastic pallet business in Israel, which started generating revenue.

• Shareholder Returns and Financial Guidance:

• Genie Energy returned value to shareholders by repurchasing approximately 124,000 shares for $2 million and paying a regular quarterly dividend of $0.075 per share.
• The company maintained its full-year adjusted EBITDA guidance range of $40 million to $50 million, despite expecting results at the lower end of the range due to gradual margin improvement.

Sentiment Analysis:

Overall Tone: Neutral

• Company reported record Q3 revenue of $138.3M (up 24% YOY) but diluted EPS declined to $0.26 from $0.38 and consolidated gross margin fell to 21.7% from 33.9%. Management cited commodity-price-driven margin pressure yet expressed confidence margins will strengthen in Q4 and into 2026.

Contradiction Point 1

Weather Impact on Margins and Hedges

It directly impacts expectations regarding the company's financial stability and risk management, affecting investor trust and stock price volatility.

No specific question was asked by the operator. - Operator

20251103-2025 Q3: The revenue increase was fueled by an increase in per meter electricity consumption, rising commodity prices and RCE-based growth at GRE. - Michael Stein(CEO)

What gives you confidence that your wholesale margins will normalize? - Unknown Attendee

2025Q2: The major impact to our financial results in the quarter was associated with weather, particularly the unseasonably warm weather in the Great Lakes region. - Unknown Executive

Contradiction Point 2

Solar Projects and Tax Credits

It involves the company's outlook on solar projects and the impact of tax credit changes, which are crucial for understanding the company's renewable energy strategy and investment decisions.

Is there a specific question from the operator? - Operator

20251103-2025 Q3: We held discussions with respect to the possibility of additional funds for development of distributed solar projects. - Michael Stein(CEO)

Can you summarize the captive insurance subsidiary's performance in terms of policies sold, revenue, and profit? What is the investment mix? How do these metrics compare to expectations from a few years ago? - Unknown Attendee

2025Q2: The company is evaluating the impact of tax credit changes on future projects and plans to update investors accordingly. - Unknown Executive

Contradiction Point 3

Revenue Growth and Market Conditions

It reflects differing perspectives on the company's revenue growth and market conditions, which are crucial for investor expectations and strategic planning.

No specific question mentioned? - Operator

20251103-2025 Q3: Genie Energy achieved another quarter of double-digit top line growth, leading to record high third quarter revenue. - Michael Stein(CEO)

Can you clarify if there were any specific questions mentioned? - Operator

2025Q1: Our results were quite good, highlighted by strong top line growth and significantly improved bottom line performance. Consolidated revenue in the quarter increased 14.3% or $17.1 million to $136.8 million. - Avi Goldin(CFO)

Contradiction Point 4

Investment and Expansion Strategies

It highlights differing strategies regarding investments and expansion, which are key to the company's future growth and competitiveness.

No question provided. - Operator

20251103-2025 Q3: The revenue increase was fueled by an increase in per meter electricity consumption, rising commodity prices and RCE-based growth at GRE. - Michael Stein(CEO)

No specific question mentioned - Operator

2025Q1: At GREW, the first quarter's loss from operations increased to $900,000 from $600,000 in the year-ago quarter. The increase in losses primarily reflects our investment in building out our solar generation project development pipeline. - Avi Goldin(CFO)