Good morning, welcome to the Genie Energy Ltd.'s first quarter 2026 earnings call. In today's presentation, Genie Energy Management will discuss Genie's financial and operational results for the three months ended March 31st, 2026. During prepared remarks by Genie'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 the star key followed by 0. 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 which the company anticipates.
These risks and uncertainties include, but are not limited to, the specific risks and uncertainties discussed in the report 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 may forecast. In their presentation or in the Q&A session, Genie Energy's management may refer to adjusted EBITDA and 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 the Genie website. The earnings release has also been filed on a Form 8-K with the SEC. I will now turn the conference over to Michael Stein. Sir, you may begin.
Thank you, operator. Genie's first quarter results were mixed as investments in customer acquisition at GRE and in new business initiatives at GREW combined with weakness in retail margins negatively impacted our bottom line despite record quarterly revenue. As a result, we are lowering full year 2026 guidance to $32.5 million-$40 million in adjusted EBITDA from the prior range of $40 million-$50 million. At GRE, challenging commodity market conditions in the first 2 months of the quarter caused by extreme cold compressed margins for both electricity and gas. Thankfully, in March, margins returned to normalized levels in line with our long-run historical averages. We also increased our customer acquisition spend this quarter to acquire 84,000 new retail customers during the first quarter.
As of March 31, we had 354,000 RCEs and 364,000 meters, achieving net increases of 25,000 RCEs and 18,000 meters in just the first quarter of the year. Unlike last year at this time when we held a significant number of meters through municipal aggregation deals, our current meters are of higher value. Over the past 12 months, we have significantly reduced the number of low-margin municipal aggregation customers in our book. At GREW, our performance in the first quarter reflected increased investment in several early-stage growth initiatives and a further write-down of our solar panel inventory. Despite the tough first quarter, we expect to see significant improvement throughout 2026. GRE is a resilient, strongly cash-generated business that by its nature will have episodes of margin compression like this one, but also opportunities for exceptional profitability.
Assuming normal wholesale market conditions and with our proven customer acquisition engine, we expect strong performance from GRE for the rest of the year. At GREW, all three strategic areas of our business are in good shape. Diversegy continues to grow its book of business and generate cash. Genie Solar is on track to be profitable for the remainder of the year and beyond. We expect that our key early-stage initiatives collectively will gradually pivot towards profitability as they gain scale in the coming quarters. Among these initiatives, I'm particularly excited by the potential of Roded, our majority-owned venture that has pioneered new techniques for transforming agricultural waste plastics into commercial plastic products with an initial focus on plastic pallet production. Roded has begun to sell its recycled plastic pallets in Israel and has already maxed out the capacity of its first production line.
We are building a second line on the same site, and that line is expected to start production in the current quarter, Q2. Meanwhile, we are also evaluating expansion opportunities to add production capacity both here in the U.S. and in Europe. Collectively, Roded and our other early-stage ventures are gaining scale. By year-end, we plan for them to be at the point they will require lower levels of investment. Across Genie, we are working hard to maximize the potential in each of our businesses. We are very excited by the opportunities to build both our established and nascent units, and we expect to drive improved performance for the remainder of the year and beyond. Now, I will turn the call over to Avi for his discussion of our financial results.
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 March 31st, 2026. In my commentary, I'll compare the results for the first quarter of 2026 to the first quarter of 2025 to remove from consideration the seasonal factors that impact our results, particularly within our retail energy business. The first quarter is typically characterized by relatively high levels of per meter electric power and gas consumption as it includes most of the winter's peak heating period in our service areas. Our first quarter's financial results were weaker than usual as volatility within the power markets hurt margins from Genie Retail in the first two months of the quarter.
This was compounded by higher levels of investment spending in customer acquisition at GRE and in growing our new business initiatives at GREW. As Michael discussed, we already saw improvement in the operating environment in March and are expecting the balance of the year to be more in line with historical performance. Consolidated revenue in the first quarter increased 4% to $142 million, driven by the commodity pricing environment in our retail business and increased sales of our remaining inventory of solar panels of Genie Solar, although it reduced margins. GRE revenue increased 2% to $134.8 million in the first quarter, driven by a 24% increase in gas sales, partially offset by a 4% decrease in electricity sales.
Although we acquired a large number of customers in this quarter, our customer base was still below the year-ago level as we did not renew some municipal aggregation deals that expired during the year. At GREW, revenue increased 74% to $7.5 million, primarily reflecting the partial liquidation of Genie Solar's panel inventory and the completion of certain legacy projects as we wind down non-core operations there. Consolidated gross profit decreased 20% to $29.8 million for a gross profit margin of 21%, a decrease of 640 basis points compared to the year-ago quarter. At GRE, gross profit dipped 19% to $29.1 million, and gross profit margin decreased 550 basis points to 21.6%.
The decrease resulted from volatility in both our average power and gas costs, driven by the severe winter weather in the earlier part of the quarter. Power and gas costs increased by 28% and 55% per unit, respectively, in the first quarter. We were able to partially mitigate the impact on our results through our hedging and pricing strategies. At GREW, gross profit decreased 49% to $745,000. The decrease primarily reflected the write-down in value and sale of our solar panel inventory that Michael mentioned and the impact of our continued wind-down of legacy solar operations. Consolidated SG&A expense increased 17% to $27.9 million, driven primarily by the increased customer acquisition expense at GRE and investment in new initiatives in GREW.
Consolidated income operations and adjusted EBITDA, which totaled $1.9 million and $2.8 million on a consolidated basis, respectively, were below our expectations for the quarter for the reasons previously outlined. Diluted EPS for the quarter was $0.11 versus $0.40 a year ago. GRE contributed $6.6 million of income from operations and $7 million in adjusted EBITDA compared to $16.8 million and $17.1 million, respectively, in the year ago quarter. GREW's loss from operations increased to $2.4 million from $855,000 a year ago. GREW's adjusted EBITDA loss increased to $2.3 million from $673,000. The increased loss reflected the impact of the Genie Solar wind down and increased investment in Roded and other early-stage business initiatives. Turning now to the balance sheet.
On March 31, 2026, cash equivalents, restricted cash and marketable securities totaled $199.8 million, and working capital was $188.4 million. Our debt, current and non-current, totaled $6.8 million, the largest component of which was financing for our portfolio of operational solar arrays. To wrap up, this was a tough financial quarter whose impact we have reflected in our revised 2026 guidance. Looking forward, we expect margins to strengthen within retail and the investments that we're making in growth to drive strong results. We remain in a solid financial position with a strong balance sheet and adequate capitalization, and continue returning value to shareholders while executing on our growth plan. Operator, back to you for Q&A.
Thank you. We will now begin our question-and-answer session. To ask a question, you may press Star, then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the star keys. To withdraw your question, please press Star then two. We will now pause momentarily to assemble our roster. Thank you. We have a question from Matt Fate. Sir, please announce your affiliation and proceed with your question.
yes. Hi. Can you hear me?
Yes, we hear you.
Okay, great. Thank you so much. Thank you for the presentation. My question is about SG&A. At what extent it's related to the number of acquisitions that you have, and how do you see it going forward towards the end of the year? Will it be as expensive and as in first quarter or probably there is some other like additional factor which I have to take into consideration for looking forward? Thank you.
Yeah. Hi. The additional sales expense is somewhere in the neighborhood of $3 million for the quarter for the additional meters that we were able to acquire. Whether or not it'll continue throughout the year is dependent on if we can continue the accelerated pace of acquisition. I can't answer that yet. You know, we believe if it does, we believe it's a good investment in the future of the company.
Thank you. Again, if you have a question, please press Star then 1 on your telephone keypad. Thank you. We have a question from Jim Harden. Jim, please announce your affiliation and ask your question.
Hi. Yes. I'm a personal investor. Just quick question on the insurance subsidiary side. Just wondered if you had any sort of update on the operations there. Thank you.
Yeah. The operation has definitely grown primarily in the fourth quarter and the first quarter. A lot of the sales activity happened in the fourth quarter, and we're starting to recognize revenue. We're starting to recognize revenue in the first quarter. You know, we think that the revenues will continue to grow there. We're excited about the prospects.
Thank you.
Thank you. We have a question from Ibrahim Khan. Sir, please announce your affiliation and ask your question. Ibrahim, can you hear us? It appears we have lost Ibrahim's line for now. Okay. As there are no further questions, this will conclude today's question-and-answer session and conference call. We thank you for attending today's presentation, and you may now disconnect