Q1 2023 Via Renewables Inc Earnings Call

Participants

Mike Barajas; CFO & Chief Risk Officer; Via Renewables, Inc.

Stephen Rabalais; Director of FP&A and IR; Via Renewables, Inc.

William Keith Maxwell; President, CEO & Executive Chairman; Via Renewables, Inc.

Presentation

Operator

Good morning, ladies and gentlemen. Welcome to the Via Renewables First Quarter 2023 Earnings Conference Call. My name is Melissa, and I will be your operator for today. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes, and this call will be posted on Via Renewable Inc.'s website. I would now like to turn the conference over to Mr. Stephen Rabalais with Via Renewables, Inc. Please go ahead, sir.

Stephen Rabalais

Thank you. Good morning, and welcome to Via Renewables First Quarter 2023 Earnings Call. This call is also being broadcast via webcast, which can be located in the Investor Relations section of our website at viarenewables.com.
With us today from management is our CEO, Keith Maxwell; and our CFO, Mike Barajas. Please note that today's discussion may contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. We urge everyone to review the safe harbor statement in yesterday's earnings release as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law. In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to yesterday's earnings release. With that, I'll turn the call over to Keith Maxwell, our CEO.

William Keith Maxwell

Thank you, Stephen. I want to welcome everyone to today's earnings call. I will begin by providing a summary of results for the first quarter, and then our CFO, Mike Barajas, will provide more details on the financials. In the first quarter, we reported an adjusted EBITDA of $18.8 million, which is a 74% increase from our prior first year quarter of $10.8 million. This was mainly due to an increase in the gross margin driven by commodity prices falling from their peaks. Also the first quarter, we grew our customer base organically, ending the quarter up 8,000 RCEs from the end of 2022.
The (technical difficulty) implement to our inorganic acquisitions. Our goal is to continue this trend and provide long-term sustainability growth. Looking further into (technical difficulty) financial flexibility. On April 19, the Board made a decision to suspend the dividend on our common stock. The decision was made so that we made better manageability while also strengthening our balance sheet. With the improved cash flow will provide more options for further both organically and inorganically. We are closely monitoring the market conditions and we thoroughly evaluate the best timing to reinstate the dividend on the Class A common stock.
We continue to believe in the future of the company and our ability to enhance long-term shareholder value and return. This concludes my prepared remarks. I'll now turn the call over to Mike for his financial review. Mike?

Mike Barajas

Thank you, Keith. Good morning. In the first quarter, we achieved $18.8 million in adjusted EBITDA compared to last year's first quarter of $10.8 million. Retail gross margin for the quarter was $40.3 million compared with $28.8 million last year. The increase in retail gross margin was primarily due to higher unit margins, offset by decreased volumes for both power and natural gas.
In our retail electricity segment, gross margin was $20.5 million compared to $17.2 million in the first quarter last year. This was due to higher unit margins caused by decreasing commodity prices, partially offset by lower volumes year-over-year.
In our retail natural gas segment, gross margin was $19.9 million compared to $11.6 million in the first quarter last year. This increase was also attributable to higher unit margins as a result of the decrease in commodity prices and partially offset by a decrease in volumes. G&A expenses of $17.2 million were higher compared to $14.9 million in the first quarter last year, primarily due to increases in sales and marketing expenses as we ramped up sales through a variety of different sales channels.
Total RCEs were $339,000 compared to $387,000 for the first quarter of 2022. Our attrition of 3.9% is up slightly from 3.7% in the first quarter of 2022 due to our increased customer acquisition efforts. For the first quarter of 2023, we recorded a net loss of $6.8 million or a loss of $1.26 per fully diluted share compared to net income of $31 million or $3.49 per fully diluted share for the first quarter of 2022. The decrease is mainly due to a reduction in the mark-to-market on our hedges that we put in place to lock in margins on our retail contracts.
This was partially offset by reduced income tax and depreciation and amortization expense. We had a mark-to-market loss this quarter of $22.6 million compared to a mark-to-market gain of $31.9 million a year ago. We recorded an income tax benefit of $2 million in the first quarter of 2023 compared to an expense of $6 million in 2022. On March 15 and April 17, we paid the quarterly cash dividends on our Class A common stock and Series A preferred stock, respectively. On April 19, we announced first quarter dividends of $0.73989 per share on our preferred stock to be paid on July 17. That's all I have. Back to you, Keith.

William Keith Maxwell

Thanks, Mike. As always, we want to thank our employees for their care and dedication in growing and supporting Via and to our suppliers for their continued support. I want to thank Via customers for choosing us as their energy provider, and I look forward to connecting with you on our next call. Thank you.