Delaware | 001-36559 | 46-5453215 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits. |
Exhibit No. | Description |
99.1 | Press Release of Spark Energy, Inc. dated August 12, 2015 |
Dated: August 13, 2015 | Spark Energy, Inc. | |||
By: | /s/ Georganne Hodges | |||
Name: | Georganne Hodges | |||
Title: | Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) |
Exhibit No. | Description |
99.1 | Press Release of Spark Energy, Inc. dated August 12, 2015 |
• | $4.6 million in Adjusted EBITDA and $23.1 million in Retail Gross Margin |
• | Enhanced margins in retail electricity and retail natural gas segments |
• | Strong cash flow during the quarter allowed us to reduce the working capital facility loan balance by $11.0 million |
• | Invested $6.2 million in organic customer acquisitions |
• | Paid first quarter dividend of $0.3625 per share of Class A common stock on June 15, 2015 |
• | Declared second quarter dividend of $0.3625 per share of Class A common stock payable on September 14, 2015 |
• | Amended and restated existing senior credit facility on July 8 |
• | Closed CenStar Energy and Oasis Energy transactions in July, bringing our total residential customer equivalent count to over 400,000 |
(in thousands) | June 30, 2015 | ||
Cash and cash equivalents | $ | 4,237 | |
Senior Credit Facility Availability (1) | 50,155 | ||
Total Liquidity | $ | 54,392 | |
(1) Subject to Senior Credit Facility borrowing base restrictions |
• | changes in commodity prices, |
• | extreme and unpredictable weather conditions, |
• | the sufficiency of risk management and hedging policies, |
• | customer concentration, |
• | federal, state and local regulation, |
• | key license retention, |
• | increased regulatory scrutiny and compliance costs, |
• | our ability to borrow funds and access credit markets, |
• | restrictions in our debt agreements and collateral requirements, |
• | credit risk with respect to suppliers and customers, |
• | level of indebtedness, |
• | changes in costs to acquire customers, |
• | actual customer attrition rates, |
• | actual bad debt expense in non-POR markets, |
• | accuracy of internal billing systems, |
• | ability to successfully navigate entry into new markets, |
• | whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us, |
• | ability to successfully and efficiently integrate acquisitions into our operations, |
• | competition, and |
• | other factors discussed in "Risk Factors" in our Form 10-K for the year ended December 31, 2014. |
SPARK ENERGY, INC. | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
AS OF JUNE 30, 2015 AND DECEMBER 31, 2014 | ||
(in thousands) | ||
(unaudited) | ||
June 30, 2015 | December 31, 2014 | |
Assets | ||
Current assets: | ||
Cash and cash equivalents | $ 4,237 | $ 4,359 |
Restricted cash | -- | 707 |
Accounts receivable, net of allowance for doubtful accounts of $4.1 million and $8.0 million as of June 30, 2015 and December 31, 2014, respectively | 40,011 | 63,797 |
Accounts receivable—affiliates | 534 | 1,231 |
Inventory | 2,945 | 8,032 |
Fair value of derivative assets | 924 | 216 |
Customer acquisition costs, net | 14,514 | 12,369 |
Intangible assets - customer acquisitions, net | 1,421 | 486 |
Prepaid assets | 789 | 1,236 |
Prepaid assets—affiliates | 173 | -- |
Deposits | 5,335 | 10,569 |
Other current assets | 2,615 | 2,987 |
Total current assets | 73,498 | 105,989 |
Property and equipment, net | 4,448 | 4,221 |
Fair value of derivative assets | -- | -- |
Customer acquisition costs | 4,450 | 2,976 |
Intangible assets - customer acquisitions | 2,292 | 1,015 |
Deferred tax assets | 23,770 | 24,047 |
Other assets | 82 | 149 |
Total Assets | $ 108,540 | $ 138,397 |
Liabilities and Member's Equity | ||
Current liabilities: | ||
Accounts payable | $ 26,504 | $ 38,210 |
Accounts payable—affiliates | 789 | 1,017 |
Accrued liabilities | 7,032 | 7,195 |
Fair value of derivative liabilities | 8,825 | 11,526 |
Note payable | 9,000 | 33,000 |
Other current liabilities | 673 | 1,868 |
Total current liabilities | 52,823 | 92,816 |
Long-term liabilities: | ||
Fair value of derivative liabilities | 531 | 478 |
Payable pursuant to tax receivable agreement—affiliates | 20,767 | 20,767 |
Other long-term liabilities | 1,553 | 219 |
Total liabilities | 75,674 | 114,280 |
Stockholders' equity: | ||
Common Stock: |
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 3,097,193 issued and outstanding at June 30, 2015 and 3,000,000 issued and outstanding at December 31, 2014 | 31 | 30 |
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 10,750,000 issued and outstanding at June 30, 2015 and 10,750,000 issued and outstanding at December 31, 2014 | 108 | 108 |
Preferred Stock: | ||
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized, zero issued and outstanding at June 30, 2015 and December 31, 2014 | -- | -- |
Additional paid-in capital | 10,494 | 9,296 |
Retained earnings (deficit) | 132 | (775) |
Total stockholders' equity | 10,745 | 8,659 |
Non-controlling interest in Spark HoldCo, LLC | 22,101 | 15,458 |
Total equity | 32,866 | 24,117 |
Total Liabilities and Stockholders' Equity | $ 108,540 | $ 138,397 |
SPARK ENERGY, INC. | ||||
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014 | ||||
(in thousands, except per share data) | ||||
(unaudited) | ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||
2015 | 2014 | 2015 | 2014 | |
Revenues: | ||||
Retail revenues (including retail revenues—affiliates of $0 and $681 for the three months ended June 30, 2015 and 2014, respectively and retail revenues—affiliates of $0 and $2,170 for the six months ended June 30, 2015 and 2014, respectively) | $ 65,500 | $ 65,743 | $ 165,375 | $ 170,095 |
Net asset optimization (expenses) revenues (including asset optimization revenues—affiliates of $176 and $4,634 for the three months ended June 30, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $3,114 and $10,654 for the three months ended June 30, 2015 and 2014, respectively and asset optimization revenues—affiliates of $665 and $7,134 for the six months ended June 30, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $6,207 and $18,554 for the six months ended June 30, 2015 and 2014, respectively) | (67) | 197 | 1,862 | 1,821 |
Total Revenues | 65,433 | 65,940 | 167,237 | 171,916 |
Operating Expenses: | ||||
Retail cost of revenues (including retail cost of revenues—affiliates of less than $0.1 million for both the three months and six months ended June 30, 2015 and 2014) | 42,120 | 52,387 | 111,207 | 140,508 |
General and administrative (including general and administrative expense—affiliates of $0 and $6 for the three months ended June 30, 2015 and 2014, respectively and general and administrative expense—affiliates of $0 and $12 million for the six months ended June 30, 2015 and 2014, respectively) | 12,978 | 9,747 | 27,683 | 17,860 |
Depreciation and amortization | 5,231 | 3,252 | 9,508 | 6,211 |
Total Operating Expenses | 60,329 | 65,386 | 148,398 | 164,579 |
Operating income | 5,104 | 554 | 18,839 | 7,337 |
Other (expense)/income: |
Interest expense | (207) | (222) | (588) | (535) |
Interest and other income | 187 | 1 | 322 | 71 |
Total other expenses | (20) | (221) | (266) | (464) |
Income before income tax expense | 5,084 | 333 | 18,573 | 6,873 |
Income tax expense | 459 | 132 | 1,019 | 164 |
Net income | $ 4,625 | $ 201 | $ 17,554 | $ 6,709 |
Less: Net income attributable to non-controlling interests | 3,917 | -- | 14,437 | -- |
Net income attributable to Spark Energy, Inc. stockholders | $ 708 | $ 201 | $ 3,117 | $ 6,709 |
Net income attributable to Spark Energy, Inc. per share of Class A common stock | ||||
Basic | $ 0.23 | $ 1.03 | ||
Diluted | $ 0.23 | $ 0.83 | ||
Weighted average shares of Class A common stock outstanding | ||||
Basic | 3,062 | 3,031 | ||
Diluted | 3,062 | 13,781 |
SPARK ENERGY, INC. | ||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2015 | ||||||||||
(in thousands) | ||||||||||
(unaudited) | ||||||||||
Issued Shares of Class A Common Stock | Issued Shares of Class B Common Stock | Issued Shares of Preferred Stock | Class A Common Stock | Class B Common Stock | Additional Paid In Capital | Retained Earnings (Deficit) | Total Stockholders Equity | Non-controlling Interest | Total Equity | |
Balance at 12/31/14: | 3,000 | 10,750 | $ -- | $ 30 | $ 108 | $ 9,296 | $ (775) | $ 8,659 | $ 15,458 | $ 24,117 |
Stock based compensation | -- | -- | -- | -- | -- | 716 | -- | 716 | -- | 716 |
Restricted stock unit vesting | 97 | -- | -- | 1 | -- | 353 | 354 | 354 | ||
Contribution from NuDevco | -- | -- | -- | -- | -- | 129 | -- | 129 | -- | 129 |
Consolidated net income | -- | -- | -- | -- | -- | -- | 3,117 | 3,117 | 14,437 | 17,554 |
Distributions paid to Class B non-controlling unit holders | -- | -- | -- | -- | -- | -- | -- | -- | (7,794) | (7,794) |
Dividends paid to Class A common shareholders | -- | -- | -- | -- | -- | -- | (2,210) | (2,210) | -- | (2,210) |
Balance at 6/30/15: | 3,097 | 10,750 | -- | $ 31 | $ 108 | $ 10,494 | $ 132 | $ 10,765 | $ 22,101 | $ 32,866 |
SPARK ENERGY, INC. | ||
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014 | ||
(in thousands) | ||
(unaudited) | ||
Six Months Ended June 30, | ||
2015 | 2014 | |
Cash flows from operating activities: | ||
Net income | $ 17,554 | $ 6,709 |
Adjustments to reconcile net income to net cash flows provided by operating activities: | ||
Depreciation and amortization expense | 9,508 | 6,211 |
Deferred income taxes | 277 | -- |
Stock based compensation | 1,159 | -- |
Amortization of deferred financing costs | 101 | 225 |
Bad debt expense | 4,179 | 2,027 |
Gain (loss) on derivatives, net | 5,360 | (1,440) |
Current period cash settlements on derivatives, net | (8,547) | 10,256 |
Changes in assets and liabilities: | ||
Decrease in restricted cash | 707 | -- |
Decrease in accounts receivable | 19,608 | 12,266 |
Decrease in accounts receivable—affiliates | 698 | 6,754 |
Decrease in inventory | 5,087 | 311 |
Increase in customer acquisition costs | (11,809) | (11,668) |
Decrease (increase) in prepaid and other current assets | 5,610 | (5,250) |
Increase in intangible assets - customer acquisitions | (2,720) | -- |
Decrease in other assets | 65 | 58 |
Decrease in accounts payable and accrued liabilities | (12,087) | (3,895) |
Increase (decrease) in accounts payable—affiliates | (228) | 261 |
Increase (decrease) in other current liabilities | (1,195) | 2,833 |
Increase in other non-current liabilities | 1,553 | -- |
Net cash provided by operating activities | 34,880 | 25,658 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (857) | (1,404) |
Net cash used in investing activities | (857) | (1,404) |
Cash flows from financing activities: | ||
Borrowings on notes payable | 6,000 | 48,550 |
Payments on notes payable | (30,000) | (35,000) |
Contributions from NuDevco | 129 | -- |
Member contributions (distributions), net | -- | (43,506) |
Restricted stock vesting | (270) | -- |
Payment of dividends to Class A common shareholders | (2,210) | -- |
Payment of distributions to Class B unitholders | (7,794) | -- |
Net cash used in financing activities | (34,145) | (29,956) |
Decreases in cash and cash equivalents | (122) | (5,702) |
Cash and cash equivalents—beginning of period | 4,359 | 7,189 |
Cash and cash equivalents—end of period | $ 4,237 | $ 1,487 |
Supplemental Disclosure of Cash Flow Information: |
Non cash items: | ||
Property and equipment purchase accrual | $ 179 | $ -- |
Cash paid during the period for: | ||
Interest | $ 598 | $ 395 |
Taxes | $ 150 | $ 150 |
SPARK ENERGY, INC. | ||||
OPERATING SEGMENT RESULTS | ||||
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014 | ||||
(in thousands, except per unit operating data) | ||||
(unaudited) | ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||
2015 | 2014 | 2015 | 2014 | |
Retail Natural Gas Segment | ||||
Total Revenues | $ 21,361 | $ 23,169 | $ 78,716 | $ 85,697 |
Retail Cost of Revenues | 9,375 | 16,634 | 42,842 | 67,138 |
Less: Net Asset Optimization Revenues (Expenses) | (67) | 197 | 1,862 | 1,821 |
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements | 2,622 | (780) | 6,267 | (1,088) |
Retail Gross Margin—Gas | $ 9,431 | $ 7,118 | $ 27,745 | $ 17,826 |
Volume of Gas (MMBtu) | 2,262,749 | 2,519,172 | 8,826,794 | 9,112,752 |
Retail Gross Margin-Gas ($/MMBtu) | $ 4.17 | $ 2.83 | $ 3.14 | $ 1.96 |
Retail Electricity Segment | ||||
Total Revenues | 44,072 | 42,771 | 88,521 | 86,219 |
Retail Cost of Revenues | 32,745 | 35,753 | 68,365 | 73,370 |
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements | (2,335) | (3,755) | (3,066) | (4,900) |
Retail Gross Margin—Electricity | $ 13,662 | $ 10,773 | $ 23,222 | $ 17,749 |
Volume of Electricity (MWh) | 378,403 | 369,341 | 751,254 | 753,616 |
Retail Gross Margin—Electricity ($/MWh) | $ 36.10 | $ 29.17 | $ 30.91 | $ 23.55 |
• | our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure or historical cost basis; |
• | the ability of our assets to generate earnings sufficient to support our proposed cash dividends; and |
• | our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt. |
APPENDIX TABLES A-1 AND A-2 | ||||
ADJUSTED EBITDA RECONCILIATIONS | ||||
(in thousands) | ||||
(unaudited) | ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||
2015 | 2014 | 2015 | 2014 | |
Reconciliation of Adjusted EBITDA to Net Income: | ||||
Net income | $ 4,625 | $ 201 | $ 17,554 | $ 6,709 |
Depreciation and amortization | 5,231 | 3,252 | 9,508 | 6,211 |
Interest expense | 207 | 222 | 588 | 535 |
Income tax expense | 459 | 132 | 1,019 | 164 |
EBITDA | 10,522 | 3,807 | 28,669 | 13,619 |
Less: | ||||
Net, Gains (losses) on derivative instruments | (4,055) | (4,019) | (5,360) | 1,440 |
Net, Cash settlements on derivative instruments | 4,357 | (59) | 8,547 | (10,256) |
Customer acquisition costs | 6,180 | 6,441 | 11,809 | 11,668 |
Plus: | ||||
Non-cash compensation expense | 609 | -- | 1,159 | -- |
Adjusted EBITDA | $ 4,649 | $ 1,444 | $ 14,832 | $ 10,767 |
Three Months Ended June 30, | Six Months Ended June 30, | |||
2015 | 2014 | 2015 | 2014 | |
Reconciliation of Adjusted EBITDA to net cash provided by operating activities: | ||||
Net cash provided by operating activities | $ 15,634 | $ 19,448 | $ 34,880 | $ 25,658 |
Amortization of deferred financing costs | (51) | (112) | (101) | (225) |
Bad debt expense | (1,232) | (1,462) | (4,179) | (2,027) |
Interest expense | 207 | 222 | 588 | 535 |
Income tax expense | 459 | 132 | 1,019 | 164 |
Changes in operating working capital | ||||
Accounts receivable, prepaids, current assets | (19,120) | (40,878) | (23,903) | (13,770) |
Inventory | 2,434 | 4,011 | (5,087) | (311) |
Accounts payable and accrued liabilities | 6,504 | 21,969 | 12,315 | 3,634 |
Other | (186) | (1,886) | (700) | (2,891) |
Adjusted EBITDA | $ 4,649 | $ 1,444 | $ 14,832 | $ 10,767 |
APPENDIX TABLE A-3 | ||||
RETAIL GROSS MARGIN RECONCILIATION | ||||
(in thousands) | ||||
(unaudited) | ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||
2015 | 2014 | 2015 | 2014 | |
Reconciliation of Retail Gross Margin to Operating Income: | ||||
Operating income | $ 5,104 | $ 554 | $ 18,839 | $ 7,337 |
Depreciation and amortization | 5,231 | 3,252 | 9,508 | 6,211 |
General and administrative | 12,978 | 9,747 | 27,683 | 17,860 |
Less: | ||||
Net asset optimization revenues (expenses) | (67) | 197 | 1,862 | 1,821 |
Net, Gains (losses) on non-trading derivative instruments | (4,041) | (4,438) | (5,241) | 7,010 |
Net, Cash settlements on non-trading derivative instruments | 4,328 | (97) | 8,442 | (12,998) |
Retail Gross Margin | $ 23,093 | $ 17,891 | $ 50,967 | $ 35,575 |