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)) |
Exhibit No. | Description |
99.1 | Press Release of Spark Energy, Inc. dated May 6, 2019 |
Exhibit No. | Description |
99.1 |
Spark Energy, Inc. | ||
By: | /s/ Nathan Kroeker | |
Name: | Nathan Kroeker | |
Title: | President and Chief Executive Officer |
• | Achieved $25.1 million in Adjusted EBITDA, $56.6 million in Retail Gross Margin, and a $2.7 million in Net Income for the first quarter |
• | Total RCE count of 865,000 as of March 31, 2019 |
• | Continued optimization of large C&I portfolio, resulting in average monthly attrition of 5.4% |
• | Winter hedging strategy performed extremely well |
• | Successful ramp-up of organic customer acquisition |
($ in thousands) | March 31, 2019 | ||
Cash and cash equivalents | $ | 32,436 | |
Senior Credit Facility Availability (1) | 25,305 | ||
Subordinated Debt Availability (2) | 25,000 | ||
Total Liquidity | $ | 82,741 |
• | changes in commodity prices; |
• | the sufficiency of risk management and hedging policies and practices; |
• | the impact of extreme and unpredictable weather conditions, including hurricanes and other natural disasters; |
• | federal, state and local regulation, including the industry's ability to address or adapt to potentially restrictive new regulations that may be enacted by public utility commissions; |
• | 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; |
• | changes in costs to acquire customers as well as actual attrition rates; |
• | accuracy of billing systems; |
• | our ability to successfully identify, complete, and efficiently integrate acquisitions into our operations; |
• | significant changes in, or new charges by, the ISOs in the regions in which we operate; |
• | competition; and |
• | the “Risk Factors” in our latest Annual Report on Form 10-K for the year ended December 31, 2018, in our Quarterly Reports on Form 10-Q, and other public filings and press releases. |
March 31, 2019 | December 31, 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 32,436 | $ | 41,002 | ||||
Restricted cash | 2,767 | 8,636 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $3,323 at March 31, 2019 and $3,353 at December 31, 2018 | 130,887 | 150,866 | ||||||
Accounts receivable—affiliates | 2,631 | 2,558 | ||||||
Inventory | 235 | 3,878 | ||||||
Fair value of derivative assets | 2,203 | 7,289 | ||||||
Customer acquisition costs, net | 14,455 | 14,431 | ||||||
Customer relationships, net | 16,565 | 16,630 | ||||||
Deposits | 8,043 | 9,226 | ||||||
Renewable energy credit asset | 34,417 | 25,717 | ||||||
Other current assets | 11,031 | 11,747 | ||||||
Total current assets | 255,670 | 291,980 | ||||||
Property and equipment, net | 3,871 | 4,366 | ||||||
Fair value of derivative assets | 146 | 3,276 | ||||||
Customer acquisition costs, net | 4,736 | 3,893 | ||||||
Customer relationships, net | 27,319 | 26,429 | ||||||
Deferred tax assets | 27,261 | 27,321 | ||||||
Goodwill | 120,343 | 120,343 | ||||||
Other assets | 9,517 | 11,130 | ||||||
Total assets | $ | 448,863 | $ | 488,738 | ||||
Liabilities, Series A Preferred Stock and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 54,515 | $ | 69,631 | ||||
Accounts payable—affiliates | 2,447 | 2,464 | ||||||
Accrued liabilities | 7,336 | 10,004 | ||||||
Renewable energy credit liability | 50,370 | 42,805 | ||||||
Fair value of derivative liabilities | 5,518 | 6,478 | ||||||
Current payable pursuant to tax receivable agreement—affiliates | 1,658 | 1,658 | ||||||
Current contingent consideration for acquisitions | 1,328 | 1,328 | ||||||
Current portion of Note Payable | 5,900 | 6,936 | ||||||
Other current liabilities | 1,037 | 647 | ||||||
Total current liabilities | 130,109 | 141,951 | ||||||
Long-term liabilities: | ||||||||
Fair value of derivative liabilities | 5,284 | 106 | ||||||
Payable pursuant to tax receivable agreement—affiliates | 25,917 | 25,917 | ||||||
Long-term portion of Senior Credit Facility | 110,500 | 129,500 | ||||||
Subordinated debt—affiliate | — | 10,000 | ||||||
Other long-term liabilities | 545 | 212 | ||||||
Total liabilities | 272,355 | 307,686 | ||||||
Commitments and contingencies (Note 13) | ||||||||
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,707,256 shares issued and outstanding at March 31, 2019 and at December 31, 2018 | 90,758 | 90,758 | ||||||
Stockholders' equity: | ||||||||
Common Stock: | ||||||||
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 14,241,318 issued, and 14,141,872 outstanding at March 31, 2019 and 14,178,284 issued and 14,078,838 outstanding at December 31, 2018 | 142 | 142 | ||||||
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 20,800,000 issued and outstanding at March 31, 2019 and December 31, 2018 | 209 | 209 | ||||||
Additional paid-in capital | 45,769 | 46,157 | ||||||
Accumulated other comprehensive (loss) income | (12 | ) | 2 | |||||
Retained earnings | 62 | 1,307 | ||||||
Treasury stock, at cost, 99,446 shares at March 31, 2019 and December 31, 2018 | (2,011 | ) | (2,011 | ) | ||||
Total stockholders' equity | 44,159 | 45,806 | ||||||
Non-controlling interest in Spark HoldCo, LLC | 41,591 | 44,488 | ||||||
Total equity | 85,750 | 90,294 | ||||||
Total liabilities, Series A Preferred Stock and Stockholders' equity | $ | 448,863 | $ | 488,738 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenues: | |||||||
Retail revenues | $ | 240,154 | $ | 284,001 | |||
Net asset optimization revenues | 2,552 | 2,687 | |||||
Total Revenues | 242,706 | 286,688 | |||||
Operating Expenses: | |||||||
Retail cost of revenues | 195,255 | 289,876 | |||||
General and administrative | 29,476 | 30,047 | |||||
Depreciation and amortization | 12,155 | 13,019 | |||||
Total Operating Expenses | 236,886 | 332,942 | |||||
Operating income (loss) | 5,820 | (46,254 | ) | ||||
Other (expense)/income: | |||||||
Interest expense | (2,223 | ) | (2,245 | ) | |||
Interest and other income | 189 | 201 | |||||
Total other expenses | (2,034 | ) | (2,044 | ) | |||
Income (loss) before income tax expense (benefit) | 3,786 | (48,298 | ) | ||||
Income tax expense (benefit) | 1,041 | (6,467 | ) | ||||
Net income (loss) | $ | 2,745 | $ | (41,831 | ) | ||
Less: Net income (loss) attributable to non-controlling interests | 1,963 | (30,726 | ) | ||||
Net income (loss) attributable to Spark Energy, Inc. stockholders | $ | 782 | $ | (11,105 | ) | ||
Less: Dividend on Series A Preferred Stock | 2,027 | 2,027 | |||||
Net loss attributable to stockholders of Class A common stock | $ | (1,245 | ) | $ | (13,132 | ) | |
Other comprehensive income (loss), net of tax: | |||||||
Currency translation loss | $ | (35 | ) | $ | (83 | ) | |
Other comprehensive loss | (35 | ) | (83 | ) | |||
Comprehensive income (loss) | $ | 2,710 | $ | (41,914 | ) | ||
Less: Comprehensive income (loss) attributable to non-controlling interests | 1,943 | (30,777 | ) | ||||
Comprehensive income (loss) attributable to Spark Energy, Inc. stockholders | $ | 767 | $ | (11,137 | ) | ||
Net loss attributable to Spark Energy, Inc. per share of Class A common stock | |||||||
Basic | $ | (0.09 | ) | $ | (1.00 | ) | |
Diluted | $ | (0.09 | ) | $ | (1.04 | ) | |
Weighted average shares of Class A common stock outstanding | |||||||
Basic | 14,135 | 13,136 | |||||
Diluted | 14,135 | 34,621 | |||||
Three Months Ended March 31, | |||||||||
2019 | 2018 | ||||||||
Cash flows from operating activities: | |||||||||
Net income (loss) | $ | 2,745 | $ | (41,831 | ) | ||||
Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||
Depreciation and amortization expense | 12,159 | 11,632 | |||||||
Deferred income taxes | 59 | (6,549 | ) | ||||||
Stock based compensation | 1,172 | 1,131 | |||||||
Amortization of deferred financing costs | 268 | 295 | |||||||
Bad debt expense | 3,849 | 2,423 | |||||||
Loss on derivatives, net | 19,541 | 36,542 | |||||||
Current period cash settlements on derivatives, net | (7,106 | ) | 16,442 | ||||||
Other | (137 | ) | (248 | ) | |||||
Changes in assets and liabilities: | |||||||||
Decrease in accounts receivable | 16,129 | 9,737 | |||||||
(Increase) decrease in accounts receivable—affiliates | (73 | ) | 354 | ||||||
Decrease in inventory | 3,643 | 4,070 | |||||||
Increase in customer acquisition costs | (5,789 | ) | (4,274 | ) | |||||
Increase in prepaid and other current assets | (5,692 | ) | (22,719 | ) | |||||
Increase in other assets | (102 | ) | (58 | ) | |||||
Decrease in accounts payable and accrued liabilities | (11,322 | ) | (9,091 | ) | |||||
Decrease in accounts payable—affiliates | (18 | ) | (572 | ) | |||||
Increase (decrease) in other current liabilities | 390 | (6,653 | ) | ||||||
Increase (decrease) in other non-current liabilities | 333 | (171 | ) | ||||||
Net cash provided by (used in) operating activities | 30,049 | (9,540 | ) | ||||||
Cash flows from investing activities: | |||||||||
Purchases of property and equipment | (254 | ) | (754 | ) | |||||
Acquisition of Starion customers | (5,869 | ) | — | ||||||
Acquisition of HIKO | — | (15,041 | ) | ||||||
Net cash used in investing activities | (6,123 | ) | (15,795 | ) | |||||
Cash flows from financing activities: | |||||||||
Proceeds from issuance of Series A Preferred Stock, net of issuance costs paid | — | 48,490 | |||||||
Borrowings on notes payable | 64,500 | 83,800 | |||||||
Payments on notes payable | (93,500 | ) | (102,550 | ) | |||||
Payment of the Major Energy Companies Earnout | — | (1,607 | ) | ||||||
Payments on the Verde promissory note | (1,036 | ) | (3,261 | ) | |||||
Proceeds from disgorgement of stockholders short-swing profits | 46 | 244 | |||||||
Payment of dividends to Class A common stockholders | (2,564 | ) | (2,381 | ) | |||||
Payment of distributions to non-controlling unitholders | (3,770 | ) | (4,822 | ) | |||||
Payment of Dividends to Preferred Stock | (2,027 | ) | (932 | ) | |||||
Payment to affiliates for acquisition of customer book | (10 | ) | — | ||||||
Net cash (used in) provided by financing activities | (38,361 | ) | 16,981 | ||||||
Decrease in Cash and cash equivalents | (14,435 | ) | (8,354 | ) | |||||
Cash and cash equivalents and Restricted cash—beginning of period | 49,638 | 29,419 | |||||||
Cash and cash equivalents and Restricted cash—end of period | $ | 35,203 | $ | 21,065 | |||||
Supplemental Disclosure of Cash Flow Information: | |||||||||
Non-cash items: | |||||||||
Property and equipment purchase accrual | $ | 2 | $ | 180 | |||||
Cash paid (received) during the period for: | |||||||||
Interest | $ | 2,099 | $ | 1,854 | |||||
Taxes | $ | (3,147 | ) | $ | 1,268 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(in thousands, except volume and per unit operating data) | |||||||
Retail Electricity Segment | |||||||
Total Revenues | $ | 182,092 | $ | 220,899 | |||
Retail Cost of Revenues | 165,888 | 249,547 | |||||
Less: Net losses on non-trading derivatives, net of cash settlements | (13,769 | ) | (48,367 | ) | |||
Retail Gross Margin (1) — Electricity | $ | 29,973 | $ | 19,719 | |||
Volumes — Electricity (MWhs) | 1,728,083 | 2,252,024 | |||||
Retail Gross Margin (2) — Electricity per MWh | $ | 17.35 | $ | 8.76 | |||
Retail Natural Gas Segment | |||||||
Total Revenues | 58,062 | 63,102 | |||||
Retail Cost of Revenues | 29,367 | 40,329 | |||||
Less: Net gains (losses) on non-trading derivatives, net of cash settlements | 2,091 | (3,227 | ) | ||||
Retail Gross Margin (1) — Gas | $ | 26,604 | $ | 26,000 | |||
Volumes — Gas (MMBtus) | 6,951,610 | 7,677,082 | |||||
Retail Gross Margin (2) — Gas per MMBtu | $ | 3.83 | $ | 3.39 |
(1) | Reflects the Retail Gross Margin attributable to our Retail Natural Gas Segment or Retail Electricity Segment, as applicable. Retail Gross Margin is a non-GAAP financial measure. See “Non-GAAP Performance Measures” in our Form 10-Q for a reconciliation of Adjusted EBITDA and Retail Gross Margin to their most directly comparable financial measures presented in accordance with GAAP. |
(2) | Reflects the Retail Gross Margin for the Retail Natural Gas Segment or Retail Electricity Segment, as applicable, divided by the total volumes in MMBtu or MWh, respectively. |
• | 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. |
Three Months Ended March 31, | |||||||
(in thousands) | 2019 | 2018 | |||||
Reconciliation of Adjusted EBITDA to Net Income (loss): | |||||||
Net income (loss) | $ | 2,745 | $ | (41,831 | ) | ||
Depreciation and amortization | 12,155 | 13,019 | |||||
Interest expense | 2,223 | 2,245 | |||||
Income tax expense (benefit) | 1,041 | (6,467 | ) | ||||
EBITDA | 18,164 | (33,034 | ) | ||||
Less: | |||||||
Net, losses on derivative instruments | (19,541 | ) | (36,542 | ) | |||
Net, Cash settlements on derivative instruments | 8,025 | (15,537 | ) | ||||
Customer acquisition costs | 5,789 | 4,274 | |||||
Plus: | |||||||
Non-cash compensation expense | 1,172 | 1,131 | |||||
Adjusted EBITDA | $ | 25,063 | $ | 15,902 |
Three Months Ended March 31, | |||||||
(in thousands) | 2019 | 2018 | |||||
Reconciliation of Adjusted EBITDA to net cash provided by operating activities: | |||||||
Net cash provided by (used in) operating activities | $ | 30,049 | $ | (9,540 | ) | ||
Amortization of deferred financing costs | (268 | ) | (295 | ) | |||
Bad debt expense | (3,849 | ) | (2,423 | ) | |||
Interest expense | 2,223 | 2,245 | |||||
Income tax expense (benefit) | 1,041 | (6,467 | ) | ||||
Changes in operating working capital | |||||||
Accounts receivable, prepaids, current assets | (10,364 | ) | 12,628 | ||||
Inventory | (3,643 | ) | (4,070 | ) | |||
Accounts payable and accrued liabilities | 10,950 | 16,316 | |||||
Other | (1,076 | ) | 7,508 | ||||
Adjusted EBITDA | $ | 25,063 | $ | 15,902 | |||
Cash Flow Data: | |||||||
Cash flows provided by (used in) operating activities | $ | 30,049 | $ | (9,540 | ) | ||
Cash flows used in investing activities | $ | (6,123 | ) | $ | (15,795 | ) | |
Cash flows (used in) provided by financing activities | $ | (38,361 | ) | $ | 16,981 |
Three Months Ended March 31, | |||||||
(in thousands) | 2019 | 2018 | |||||
Reconciliation of Retail Gross Margin to Operating Income (loss): | |||||||
Operating income (loss) | $ | 5,820 | $ | (46,254 | ) | ||
Plus: | |||||||
Depreciation and amortization | 12,155 | 13,019 | |||||
General and administrative expense | 29,476 | 30,047 | |||||
Less: | |||||||
Net asset optimization revenues | 2,552 | 2,687 | |||||
Net, losses on non-trading derivative instruments | (19,803 | ) | (36,712 | ) | |||
Net, Cash settlements on non-trading derivative instruments | 8,125 | (14,882 | ) | ||||
Retail Gross Margin | $ | 56,577 | $ | 45,719 | |||
Retail Gross Margin - Retail Electricity Segment | $ | 29,973 | $ | 19,719 | |||
Retail Gross Margin - Retail Natural Gas Segment | $ | 26,604 | $ | 26,000 |