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 November 11, 2015 |
Dated: November 12, 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 November 11, 2015 |
• | $5.6 million in Adjusted EBITDA and $26.7 million in Retail Gross Margin |
• | Closed CenStar Energy and Oasis Energy transactions |
• | Amended and restated existing senior credit facility |
• | Expanded margins in retail electricity and retail natural gas segments |
• | Invested $5.8 million in organic customer acquisitions |
• | Paid second quarter dividend of $0.3625 per share of Class A common stock on September 14, 2015 |
• | Declared third quarter dividend of $0.3625 per share of Class A common stock payable on December 14, 2015 |
(in thousands) | September 30, 2015 | |||
Cash and cash equivalents | $ | 7,355 | ||
Senior Credit Facility Working Capital Line Availability (1) | 13,300 | |||
Senior Credit Facility Acquisition Line Availability (2) | 3,775 | |||
Total Liquidity | $ | 24,430 | ||
(1) Subject to Senior Credit Facility borrowing base restrictions | ||||
(2) Subject to Senior Credit Facility covenant 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, our Form 10-Q for the quarter ended June 30, 2015 and in our other public filings and press releases. |
SPARK ENERGY, INC. | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
AS OF SEPTEMBER 30, 2015 AND DECEMBER 31, 2014 | ||||||
(in thousands) | ||||||
(unaudited) | ||||||
September 30, 2015 | December 31, 2014 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 7,355 | $ | 4,359 | ||
Restricted cash | - | 707 | ||||
Accounts receivable, net of allowance for doubtful accounts of $3.0 million and $8.0 million as of September 30, 2015 and December 31, 2014 | 50,284 | 63,797 | ||||
Accounts receivable - affiliates | 1,447 | 1,231 | ||||
Inventory | 5,230 | 8,032 | ||||
Fair value of derivative assets | 129 | 216 | ||||
Customer acquisition costs, net | 15,260 | 12,369 | ||||
Intangible assets - customer acquisitions, net | 1,439 | 486 | ||||
Acquired customer intangibles - current, net | 5,979 | - | ||||
Prepaid assets | 420 | 1,236 | ||||
Prepaid assets - affiliates | 120 | - | ||||
Deposits | 6,952 | 10,569 | ||||
Current deferred tax asset | 803 | - | ||||
Other current assets | 4,503 | 2,987 | ||||
Total current assets | 99,921 | 105,989 | ||||
Property and equipment, net | 4,422 | 4,221 | ||||
Customer acquisition costs | 4,618 | 2,976 | ||||
Intangible assets - customer acquisitions | 1,971 | 1,015 | ||||
Acquired customer intangibles | 5,979 | - | ||||
Trademarks | 1,226 | - | ||||
Deferred tax assets | 23,196 | 24,047 | ||||
Goodwill | 18,385 | - | ||||
Other assets | 735 | 149 | ||||
Total assets | $ | 160,453 | $ | 138,397 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 28,731 | $ | 38,210 | ||
Accounts payable - affiliates | 1,867 | 1,017 | ||||
Accrued liabilities | 10,409 | 7,195 | ||||
Fair value of derivative liabilities | 6,437 | 11,526 | ||||
Current portion of Senior Credit Facility | 31,306 | 33,000 | ||||
Other current liabilities | 834 | 1,868 |
Total current liabilities | 79,584 | 92,816 | ||||
Long-term liabilities: | ||||||
Fair value of derivative liabilities | 873 | 478 | ||||
Payable pursuant to tax receivable agreement - affiliates | 20,767 | 20,767 | ||||
Long-term portion of Senior Credit Facility | 15,919 | - | ||||
Non-current deferred tax liability | 824 | - | ||||
Convertible subordinated notes to affiliate | 6,307 | - | ||||
Other long-term liabilities | 1,605 | 219 | ||||
Total liabilities | 125,879 | 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 September 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 September 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 September 30, 2015 and December 31, 2014 | - | - | ||||
Additional paid-in capital | 11,933 | 9,296 | ||||
Retained deficit | (224) | (775) | ||||
Total stockholders' equity | 11,848 | 8,659 | ||||
Non-controlling interest in Spark HoldCo, LLC | 22,726 | 15,458 | ||||
Total equity | 34,574 | 24,117 | ||||
Total liabilities and stockholders' equity | $ | 160,453 | $ | 138,397 | ||
SPARK ENERGY, INC. | |||||||||||||
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014 | |||||||||||||
(in thousands, except per share data) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
2015 | 2014 | 2015 (1) | 2014 | ||||||||||
Revenues: | |||||||||||||
Retail revenues (including retail revenues - affiliates of $0 for both the three months ended September 30, 2015 and 2014, respectively and retail revenues - affiliates of $0 and $2,170 for the nine months ended September 30, 2015 and 2014, respectively) | $ | 91,812 | $ | 68,358 | $ | 261,996 | $ | 238,453 | |||||
Net asset optimization (expenses) revenues (including asset optimization revenues - affiliates of $263 and $3,208 for the three months ended September 30, 2015 and 2014, respectively, and asset optimization revenues - affiliates cost of revenues of $3,382 and $6,450 for the three months ended September 30, 2015 and 2014, respectively and asset optimization revenues - affiliates of $928 and $10,341 for the nine months ended September 30, 2015 and 2014, respectively, and asset optimization revenues - affiliates cost of revenues of $9,589 and $25,004 for the nine months ended September 30, 2015 and 2014, respectively) | (545) | (141) | 1,317 | 1,681 | |||||||||
Total Revenues | 91,267 | 68,217 | 263,313 | 240,134 | |||||||||
Operating Expenses: | |||||||||||||
Retail cost of revenues (including retail cost of revenues - affiliates of $0 and $0.1 million for the three months ended September 30, 2015 and 2014, respectively and retail cost of revenues-affiliates of less than $0.1 million and $0.1 million for the nine months ended September 30, 2015 and 2014, respectively) | 60,967 | 51,863 | 176,000 | 192,371 |
General and administrative (including general and administrative expense - affiliates of $0 and $0.1 million for the three months ended September 30, 2015 and 2014, respectively and general and administrative expense - affiliates of $0 and $0.1 million for the nine months ended September 30, 2015 and 2014, respectively) | 15,493 | 10,634 | 43,909 | 28,494 | |||||||||
Depreciation and amortization | 7,557 | 4,113 | 17,873 | 10,324 | |||||||||
Total Operating Expenses | 84,017 | 66,610 | 237,782 | 231,189 | |||||||||
Operating income | 7,250 | 1,607 | 25,531 | 8,945 | |||||||||
Other (expense)/income: | |||||||||||||
Interest expense | (800) | (615) | (1,415) | (1,150) | |||||||||
Interest and other income | 5 | 40 | 326 | 111 | |||||||||
Total other expenses | (795) | (575) | (1,089) | (1,039) | |||||||||
Income before income tax expense | 6,455 | 1,032 | 24,442 | 7,906 | |||||||||
Income tax expense | 580 | 613 | 1,599 | 777 | |||||||||
Net income | $ | 5,875 | $ | 419 | $ | 22,843 | $ | 7,129 | |||||
Less: Net income (loss) attributable to non-controlling interests | 4,561 | (642) | 18,959 | 6,068 | |||||||||
Net income attributable to Spark Energy, Inc. stockholders | $ | 1,314 | $ | 1,061 | $ | 3,884 | $ | 1,061 | |||||
Net income attributable to Spark Energy, Inc. per share of Class A common stock | |||||||||||||
Basic | $ | 0.42 | $ | 0.35 | $ | 1.27 | $ | 0.35 | |||||
Diluted | $ | 0.31 | $ | 0.03 | $ | 1.09 | $ | 0.35 | |||||
Weighted average shares of Class A common stock outstanding | |||||||||||||
Basic | 3,097 | 3,000 | 3,053 | 3,000 | |||||||||
Diluted | 14,232 | 13,750 | 13,948 | 3,000 | |||||||||
(1) Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC on May 12, 2015 from an affiliate. |
SPARK ENERGY, INC. | ||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||||||||||||||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 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 December 31, 2014 | 3,000 | 10,750 | $ | - | $ | 30 | $ | 108 | $ | 9,296 | $ | (775) | $ | 8,659 | $ | 15,458 | $ | 24,117 | ||||||||
Stock based compensation | - | - | - | - | - | 1,366 | - | 1,366 | - | 1,366 | ||||||||||||||||
Restricted stock unit vesting | 97 | - | - | 1 | - | 353 | - | 354 | - | 354 | ||||||||||||||||
Contribution from NuDevco | - | - | - | - | - | 129 | - | 129 | - | 129 | ||||||||||||||||
Consolidated net income (1) | - | - | - | - | - | - | 3,884 | 3,884 | 18,959 | 22,843 | ||||||||||||||||
Beneficial conversion feature | - | - | - | - | - | 789 | - | 789 | - | 789 | ||||||||||||||||
Distributions paid to Class B non-controlling unit holders | - | - | - | - | - | - | - | - | (11,691) | (11,691) | ||||||||||||||||
Dividends paid to Class A common shareholders | - | - | - | - | - | - | (3,333) | (3,333) | - | (3,333) | ||||||||||||||||
Balance at September 30, 2015 | 3,097 | 10,750 | - | $ | 31 | $ | 108 | $ | 11,933 | $ | (224) | $ | 11,848 | $ | 22,726 | $ | 34,574 | |||||||||
(1) Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC on May 12, 2015 from an affiliate. |
SPARK ENERGY, INC. | |||||||
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014 | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
Nine Months Ended September 30, | |||||||
2015 (1) | 2014 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 22,843 | $ | 7,129 | |||
Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||
Depreciation and amortization expense | 17,873 | 10,324 | |||||
Deferred income taxes | 872 | 638 | |||||
Stock based compensation | 1,992 | 362 | |||||
Amortization of deferred financing costs | 295 | 580 | |||||
Bad debt expense | 6,082 | 3,973 | |||||
Gain (loss) on derivatives, net | 6,118 | (262) | |||||
Current period cash settlements on derivatives, net | (15,120) | 7,252 | |||||
Accretion of discount to subordinated convertible notes to affiliate | 21 | - | |||||
Changes in assets and liabilities: | |||||||
Decrease in restricted cash | 707 | - | |||||
Decrease in accounts receivable | 18,566 | 9,741 | |||||
Decrease (increase) in accounts receivable - affiliates | (216) | 6,310 | |||||
Decrease (increase) in inventory | 2,978 | (5,338) | |||||
Increase in customer acquisition costs | (17,725) | (20,366) | |||||
Decrease (increase) in prepaid and other current assets | 11,110 | (4,658) | |||||
Increase in intangible assets - customer acquisitions | (2,776) | - | |||||
Increase in other assets | (256) | (146) | |||||
Decrease in accounts payable and accrued liabilities | (14,610) | (5,890) | |||||
Increase in accounts payable - affiliates | 849 | 851 | |||||
Increase (decrease) in other current liabilities | (1,534) | 1,465 | |||||
Increase in other non-current liabilities | 1,606 | - | |||||
Net cash provided by operating activities | 39,675 | 11,965 | |||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (1,255) | (2,214) | |||||
Acquisition of CenStar and Oasis net assets | (41,234) | - | |||||
Investment in eRex joint venture | (330) | - | |||||
Net cash used in investing activities | (42,819) | (2,214) | |||||
Cash flows from financing activities: |
Borrowings on credit facilities | 52,225 | 60,280 | |||||
Payments on credit facilities | (38,000) | (38,280) | |||||
Member contributions (distributions), net | - | (36,406) | |||||
Contributions from NuDevco | 129 | - | |||||
Proceeds from issuance of Class A common stock | - | 50,220 | |||||
Distributions of proceeds from Offering to affiliate | - | (47,554) | |||||
Payment of Note Payable to NuDevco | - | (50) | |||||
Offering costs | - | (2,667) | |||||
Issuance of convertible subordinated notes to affiliate | 7,075 | - | |||||
Restricted stock vesting | (265) | - | |||||
Payment of dividends to Class A common shareholders | (3,333) | - | |||||
Payment of distributions to Class B unitholders | (11,691) | - | |||||
Net cash provided by (used in) financing activities | 6,140 | (14,457) | |||||
Increases (decreases) in cash and cash equivalents | 2,996 | (4,706) | |||||
Cash and cash equivalents - beginning of period | 4,359 | 7,189 | |||||
Cash and cash equivalents - end of period | $ | 7,355 | $ | 2,483 | |||
Supplemental Disclosure of Cash Flow Information: | |||||||
Non cash items: | |||||||
Property and equipment purchase accrual | $ | 11 | $ | 81 | |||
CenStar Earnout accrual | $ | 500 | $ | - | |||
Cash paid during the period for: | |||||||
Interest | $ | 1,061 | $ | 484 | |||
Taxes | $ | 157 | $ | 150 | |||
(1) Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC on May 12, 2015 from an affiliate. |
SPARK ENERGY, INC. | |||||||||||||
OPERATING SEGMENT RESULTS | |||||||||||||
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014 | |||||||||||||
(in thousands, except per unit operating data) | |||||||||||||
(unaudited) | |||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||
Retail Natural Gas Segment | |||||||||||||
Total Revenues | $ | 14,354 | $ | 16,469 | $ | 93,253 | $ | 102,166 | |||||
Retail Cost of Revenues | 10,180 | 10,235 | 53,136 | 77,374 | |||||||||
Less: Net Asset Optimization Revenues (Expenses) | (545) | (141) | 1,317 | 1,681 | |||||||||
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements | (3,034) | (1,475) | 3,241 | (2,564) | |||||||||
Retail Gross Margin - Gas | $ | 7,753 | $ | 7,850 | $ | 35,559 | $ | 25,675 | |||||
Volume of Gas (MMBtu) | 1,672,120 | 1,779,610 | 10,527,078 | 10,892,362 | |||||||||
Retail Gross Margin - Gas ($/MMBtu) | $ | 4.64 | $ | 4.41 | $ | 3.38 | $ | 2.36 | |||||
Retail Electricity Segment | |||||||||||||
Total Revenues | $ | 76,913 | $ | 51,748 | $ | 170,060 | $ | 137,968 | |||||
Retail Cost of Revenues | 50,787 | 41,628 | 122,864 | 114,997 | |||||||||
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements | 7,201 | 3,351 | 3,526 | (1,548) | |||||||||
Retail Gross Margin - Electricity | $ | 18,925 | $ | 6,769 | $ | 43,670 | $ | 24,519 | |||||
Volume of Electricity (MWh) | 719,758 | 447,729 | 1,519,011 | 1,201,345 | |||||||||
Retail Gross Margin - Electricity ($/MWh) | $ | 26.29 | $ | 15.12 | $ | 28.75 | $ | 20.41 | |||||
• | 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 September 30, | Nine Months Ended September 30, | ||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||
Reconciliation of Adjusted EBITDA to Net Income: | |||||||||||||
Net income | $ | 5,875 | $ | 419 | $ | 22,843 | $ | 7,129 | |||||
Depreciation and amortization | 7,557 | 4,113 | 17,873 | 10,324 | |||||||||
Interest expense | 800 | 615 | 1,415 | 1,150 | |||||||||
Income tax expense | 580 | 613 | 1,600 | 777 | |||||||||
EBITDA | 14,812 | 5,760 | 43,731 | 19,380 | |||||||||
Less: | |||||||||||||
Net, Gains (losses) on derivative instruments | 61 | (1,178) | (6,118) | 262 | |||||||||
Net, Cash settlements on derivative instruments | 4,163 | 3,004 | 12,887 | (7,252) | |||||||||
Customer acquisition costs | 5,825 | 8,698 | 17,725 | 20,366 | |||||||||
Plus: | |||||||||||||
Non-cash compensation expense | 838 | 362 | 1,374 | 362 | |||||||||
Adjusted EBITDA | $ | 5,601 | $ | (4,402) | $ | 20,611 | $ | 6,366 | |||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Reconciliation of Adjusted EBITDA to net cash provided by operating activities: | ||||||||||||
Net cash provided by operating activities | $ | (15,887) | $ | (13,693) | $ | 39,675 | $ | 11,965 | ||||
Amortization of deferred financing costs | (194) | (355) | (295) | (580) | ||||||||
Allowance for doubtful accounts and bad debt expense | (1,903) | (1,946) | (6,082) | (3,973) | ||||||||
Interest expense | 800 | 615 | 1,415 | 1,150 | ||||||||
Income tax expense | 580 | 613 | 1,599 | 777 | ||||||||
Changes in operating working capital | ||||||||||||
Accounts receivable, prepaids, current assets | (3,677) | 2,505 | (29,460) | (11,393) | ||||||||
Inventory | 2,103 | 5,649 | (2,978) | 5,338 | ||||||||
Accounts payable and accrued liabilities | 21,690 | 1,277 | 13,761 | 5,039 | ||||||||
Other | 2,089 | 933 | 2,976 | (1,957) | ||||||||
Adjusted EBITDA | $ | 5,601 | $ | (4,402) | $ | 20,611 | $ | 6,366 |
APPENDIX TABLE A-3 | ||||||||||||
RETAIL GROSS MARGIN RECONCILIATION | ||||||||||||
(in thousands) | ||||||||||||
(unaudited) | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Reconciliation of Retail Gross Margin to Operating Income: | ||||||||||||
Operating income | $ | 7,250 | $ | 1,607 | $ | 25,531 | $ | 8,945 | ||||
Depreciation and amortization | 7,557 | 4,113 | 17,873 | 10,324 | ||||||||
General and administrative | 15,493 | 10,634 | 43,909 | 28,494 | ||||||||
Less: | ||||||||||||
Net asset optimization revenues (expenses) | (545) | (141) | 1,317 | 1,681 | ||||||||
Net, Gains (losses) on non-trading derivative instruments | 132 | (1,163) | (5,876) | 5,847 | ||||||||
Net, Cash settlements on non-trading derivative instruments | 4,035 | 3,039 | 12,643 | (9,959) | ||||||||
Retail Gross Margin | $ | 26,678 | $ | 14,619 | $ | 79,229 | $ | 50,194 | ||||