Good morning, and welcome to Genie Energy Limited's Second Quarter 2025 Earnings Call. In this presentation, Genie Energy management will go over the company's financial and operational results for the three months that ended on June 30, 2025. The prepared remarks will be made by Genie Energy's Chief Executive Officer, Michael Stein, and Chief Financial Officer, Avi Goldin. After Avi Goldin's remarks, Michael and Avi will be available to answer questions from investors. Any forward-looking statements mentioned during this call, whether in the prepared remarks or during the Q&A session, may be affected by risks and uncertainties that could lead to actual results differing significantly from the company's expectations. These risks and uncertainties include those discussed in the reports that Genie Energy files with the SEC. Genie Energy does not have an obligation to update any forward-looking statements or the factors that may cause actual results to differ from forecasts. During the presentation or Q&A session, the management may refer to non-GAAP measures, such as adjusted EBITDA, non-GAAP net income, and non-GAAP earnings per share. A schedule in Genie Energy's earnings release provides a reconciliation of these non-GAAP measures to the nearest corresponding GAAP measures. The Genie Energy earnings release can be found on the Investor Relations page of the Genie website and has also been filed on Form 8-K with the SEC. I will now turn the conference over to Michael Stein. The floor 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 at GRE, 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 year-over-year increase of 15% and 20% in meters and RCEs, respectively. Churn in the second quarter dropped to 4.8% from 5.5% 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 PJM and MISO interconnection zones. The volatility in the quarter was driven by policy concerns and warmer-than-usual weather, particularly in June. There have been times over the past few years where wholesale price volatility has led to margin upside for the company. However, this quarter, the impact was against us. GREW delivered very strong results. Revenue increased 44% and the segment approached breakeven even as we invested in some of our newly developing businesses. At Diversegy, our brokerage and energy advisory business, revenue increased year-over-year by over 50% and profitability increased by almost 3,000%. At Genie Solar, revenue jumped over 6 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 Genie Solar'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 stage development pipeline projects to reevaluate 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 GREW, we continue to invest carefully in promising initiatives outside of the solar generation space. Most notably, we have had early success leveraging our insurance capabilities and marketing expertise to offer tailored insurance products to retail customers. We are also optimistic about our majority-owned venture utilizing recycled plastic waste to make pallets and other products. We hope to have more to share about both businesses in the coming quarters. Turning back to Genie on a consolidated basis. During the second quarter, we again returned value directly to our shareholders by repurchasing approximately 159,000 shares and paying our regular quarterly dividend of $0.075 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 GREW, we confirm Genie's 2025 consolidated adjusted EBITDA guidance at $40 million to $50 million.

Thank you, Michael, and thanks to everyone on the call for joining us this morning. My remarks today cover our financial results for the 3 months ended June 30, 2025. In my commentary, I will compare the results for the second quarter of 2025 to the second quarter of 2024 to remove from consideration the seasonal factors that impact our results, particularly within our retail energy business. The second quarter is 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 service areas. Our second quarter financial results were headlined by a challenging pricing environment in the retail energy business; we experienced higher-than-usual costs leading to margin pressure. Consolidated revenue in the second quarter increased 16% to $105.3 million, driven by growth at both Genie Retail and Genie Renewables. At GRE, revenue increased 14% to $99 million in the second quarter, reflecting the year-over-year growth of our customer base that Mike will detail for you. Per meter consumption was roughly in line with year-ago levels. Electricity revenue climbed 15% to $89.9 million, representing 91% of GRE's revenues. Kilowatt hours sold increased by 17%, while our revenue per kilowatt hour sold decreased to 2%. Natural gas revenue increased 8% to $9.1 million. Therm sold increased 5%, while our revenue per therm sold increased 3%. At GREW, second quarter revenue increased 57% to $6.3 million. The revenue increase was led by continued strong growth within our retail brokerage and advisory service, Diversegy, and at Genie Solar. Consolidated gross profit decreased 30% to $23.5 million, while gross margin decreased 1,400 basis points to 22%. At GRE, gross profit declined 34% to $21.3 million, reflecting increases in our wholesale electricity and natural gas costs. Our cost of electricity per kilowatt hour sold increased 20% compared to the year-ago quarter, particularly within the PJM and MISO interconnection zones. Our cost per therm of gas also increased up 52% year-over-year, albeit on relatively low consumption levels. Consolidated SG&A decreased 4% to $21.2 million on reduced payroll and customer acquisition expenses. Consolidated income from operations for the quarter came in at $2 million with adjusted EBITDA of $3 million, down from $9.5 million and $12.5 million, respectively, in the second quarter of 2024. The declines were primarily driven by the reduced gross profit at GRE that I discussed earlier. At GRE, income from operations decreased 73% to $4 million and adjusted EBITDA decreased 74% to $4.4 million. At GREW, the second quarter loss from operations narrowed to $181,000 from $1.4 million in the year-ago quarter, while adjusted EBITDA improved from negative $1.1 million to negative $97,000. The improvements were driven by accelerating profitability at Diversegy and a narrowing loss from Genie Solar. Consolidated net income attributable to Genie common stockholders was $2.8 million or $0.11 per share compared to $9.6 million or $0.36 per share a year earlier. Turning now to the balance sheet. At June 30, 2025, cash, cash equivalents, long and short-term restricted cash, which includes cash held by our tax insurance subsidiary and marketable equity securities totaled $201.6 million. Working capital was $115 million. Our net current and noncurrent debt totaled $9 million, primarily from the financing of our solar portfolio. We repurchased approximately 159,000 shares of our Class B common stock in the second quarter for $2.7 million and paid our regular quarterly dividend, returning $4 million in value to our stockholders so far this year. Wrapping up, despite the challenging pricing environment within retail, the underlying business fundamentals remain strong. We are well positioned for the remainder of the year and expect to meet our full adjusted EBITDA guidance of $40 million to $50 million, assuming normalized weather conditions.

Our first question is from Scott, who is a private investor.

Two questions. The first one, what gives you hope or confidence that your retail margins or rather your wholesale margins will return to normal? Obviously, the world has changed quite a bit over the last 6 months, and this is a relatively tough quarter for Genie. So maybe starting with that one, what gives you hope that your margins will return close to normal and reaffirming your guidance for the year?

Thank you for the question. So 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 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 you could take and hope on weather is not a great strategy.

We typically hedge our business at a very high percentage, covering our expected load extensively, with only a small portion that may fluctuate based on weather conditions. There are definitely factors beyond our control, but overall, the majority of our power has already been secured.

So how do the margins work? I'm a bit confused about how weather can affect your margins so much if you're significantly hedged. Doesn’t a small amount make that big of a difference?

Yes. If the weather significantly deviates from historical patterns, even a 15% to 20% change can greatly impact our margins. This is what we experienced over the past few months, as the market reacts to high temperatures. When it's very hot at the start of the season, the wholesale markets respond unpredictably. However, if heat occurs later in the season, the market typically doesn't react as strongly as it does at the beginning. We are confident that our hedging, combined with our current position in the middle to end of summer when heat is expected, will keep us in a good situation.

Okay. Got it. And then just on your solar projects, is there a viable path for new solar projects today, I understand the pause as everybody sorts through it. And maybe 2 questions on the solar. What's the amount of capital that's locked up in those projects that may not go forward as a potential loss? And is there a growth path currently without the tax credits?

So very little capital is locked up in the new projects. Generally, the way these projects work is that the development part where you're trying to get permits, interconnection approvals, engineering viability is 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 projects that we are not viable. In terms of new projects, like I said, we're pausing. We're trying to figure out if there is a path forward for future projects that have a timeline that goes beyond when the Big Beautiful Bill dictated that the ITC credits go away. And we'll obviously be able to update you when we make those determinations.

Our next question is coming from Jim Hayden who is a private investor.

My question is about the captive insurance subsidiary. At a high level, how would you summarize its performance in terms of policies sold, revenue, or profit? What is the typical investment mix? Additionally, how do these aspects compare to your expectations from a few years ago?

We're very, very conservative with how we manage the cash in the captive; mostly sits in cash. We have a little bit in alternative investments. It's doing just fine.

What lines are you selling? Is my understanding correct that this represents a revenue opportunity, not just for captive purposes, but also for cost savings for employees? What specific lines of insurance are you offering?

We have just started our health insurance sales, and it's still early in the process. We are utilizing our existing marketing channels to offer health insurance.

Is there any plans to expand from that?

Yes. We're still in 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 are 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.

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.