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Spark Energy, Inc. Reports Third Quarter 2020 Financial Results

·18-min read


Houston, 11/03/2020 / 17:00, EST/EDT - EQS Newswire - Spark Energy, Inc. (Nasdaq)


HOUSTON, TX / ACCESSWIRE / November 3, 2020 / Spark Energy, Inc. ("Spark" or the "Company") (NASDAQ:SPKE), an independent retail energy services company, today reported financial results for the quarter ended September 30, 2020.

Key Highlights

"We had a strong third quarter while dealing with the continued impacts of COVID-19. We are continuing to pivot away from high usage, lower margin C&I contracts which has led to stronger average unit margins, partially offsetting the decrease in volumes compared to the third quarter of 2019. Our overall customer book is much healthier, but we are currently unable to reinstate several marketing channels, which will cause our customer book to continue to shrink. We will continue to simplify our platform and look for ways to streamline the business until we can begin to add customers in a way that's consistent with our internal goals," said Keith Maxwell, Spark's President and Chief Executive Officer.

Summary Third Quarter 2020 Financial Results

Net income for the quarter ended September 30, 2020, was $22.6 million compared to net income of $37.7 million for the quarter ended September 30, 2019. The decrease compared to the prior year was primarily the result of reduced gross margin and the non-cash mark-to-market accounting associated with the hedges we put in place to lock in margins on our retail contracts, partially offset with a decrease in G&A, and income tax expense. We had a mark-to-market gain this quarter of $9.0 million, compared to a mark-to-market gain of $25.3 million a year ago.

For the quarter ended September 30, 2020, Spark reported Adjusted EBITDA of $27.7 million compared to Adjusted EBITDA of $28.1 million for the quarter ended September 30, 2019. While gross margin was lower year-over-year, the decrease in gross margin was offset by decreases in G&A expenses and Customer Acquisition Cost spending.

For the quarter ended September 30, 2020, Spark reported Retail Gross Margin of $47.0 million compared to Retail Gross Margin of $58.2 million for the quarter ended September 30, 2019. This decrease of $11.2 million was primarily attributable to fewer customers in our overall portfolio.

(1) Reflects maximum cash availability or amount of Letters of Credit that could be issued based on existing covenants as of September 30, 2020.
(2) The accordion of the Senior Credit Facility was exercised on October 30, 2020 from $187.5 million, to $202.5 million, which will positively affect liquidity in future quarters.
(3) The availability of the Subordinated Facility is dependent on our Founder's willingness and ability to lend. See "-Sources of Liquidity- Subordinated Debt Facility.".

Dividend

On October 19, 2020, Spark's Board of Directors declared quarterly dividends of $0.18125 per share of Class A common stock payable on December 15, 2020, to holders of record on December 1, 2020, and $0.546875 per share of Series A Preferred Stock payable on January 15, 2021 to holders of record on January 1, 2021.

Business Outlook

Mr. Maxwell concluded, "As we stated the last two quarters, our employees and management are working hard to serve our customers in these unprecedented economic times. We will continue to manage and evaluate all facets of the business including alternative sales channels, additional cost savings initiatives, efficiencies with supply management, as well as the payment of future dividends to ensure Spark emerges from the COVID-19 pandemic with ample liquidity and a platform that will allow us to return to growth."

Conference Call and Webcast

Spark will host a conference call to discuss third quarter 2020 results on Wednesday, November 4, 2020, at 10:00 AM Central Time (11:00 AM Eastern).

A live webcast of the conference call can be accessed from the Events & Presentations page of the Spark Energy Investor Relations website at http://ir.sparkenergy.com/events-and-presentations. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 100 utility service territories across 19 states and the District of Columbia. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

We use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Investors should note that new materials, including press releases, updated investor presentations, and financial and other filings with the Securities and Exchange Commission are posted on the Spark Energy Investor Relations website at ir.sparkenergy.com. Investors are urged to monitor our website regularly for information and updates about the Company.

Cautionary Note Regarding Forward Looking Statements

This earnings release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") can be identified by the use of forward-looking terminology including "may," "should," "could," "likely," "will," "believe," "expect," "anticipate," "estimate," "continue," "plan," "intend," "project," or other similar words. All statements, other than statements of historical fact included in this earnings release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this earnings release and may include statements about expected impacts of COVID-19, business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

The forward-looking statements in this earnings release are subject to risks and uncertainties. Important factors that could cause actual results to materially differ from those projected in the forward-looking statements include, but are not limited to:

You should review the risk factors and other factors noted throughout or incorporated by reference in this earnings release that could cause our actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements speak only as of the date of this earnings release. Unless required by law, we disclaim any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise. It is not possible for us to predict all risks, nor can we assess the impact of all factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

For further information, please contact:

Investor Relations:

Mike Barajas, 832-200-3727

Media Relations:

Kira Jordan, 832-255-7302

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except per share data)
(unaudited)

 

 

(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 "Reconciliation of GAAP to Non-GAAP Measures" section below 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.

Reconciliation of GAAP to Non-GAAP Measures

Adjusted EBITDA

We define "Adjusted EBITDA" as EBITDA less (i) customer acquisition costs incurred in the current period, plus or minus (ii) net gain (loss) on derivative instruments, and (iii) net current period cash settlements on derivative instruments, plus (iv) non-cash compensation expense, and (v) other non-cash and non-recurring operating items. EBITDA is defined as net income (loss) before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs (representing spending for organic customer acquisitions) in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the period in which they are incurred, even though we capitalize such costs and amortize them over two years. We do not deduct the cost of customer acquisitions through acquisitions of business or portfolios of customers in calculating Adjusted EBITDA. We deduct our net gains (losses) on derivative instruments, excluding current period cash settlements, from the Adjusted EBITDA calculation in order to remove the non-cash impact of net gains and losses on derivative instruments. We also deduct non-cash compensation expense as a result of restricted stock units that are issued under our long-term incentive plan due to the non-cash nature of the expense. Finally, we also adjust from time to time other non-cash or unusual and/or infrequent charges due to either their non-cash nature or their infrequency.

We believe that the presentation of Adjusted EBITDA provides information useful to investors in assessing our liquidity and financial condition and results of operations and that Adjusted EBITDA is also useful to investors as a financial indicator of our ability to incur and service debt, pay dividends and fund capital expenditures. Adjusted EBITDA is a supplemental financial measure that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following:

Retail Gross Margin

We define retail gross margin as operating income (loss) plus (i) depreciation and amortization expenses and (ii) general and administrative expenses, less (iii) net asset optimization revenues (expenses), (iv) net gains (losses) on non-trading derivative instruments, and (v) net current period cash settlements on non-trading derivative instruments. Retail gross margin is included as a supplemental disclosure because it is a primary performance measure used by our management to determine the performance of our retail natural gas and electricity segments. As an indicator of our retail energy business' operating performance, retail gross margin should not be considered an alternative to, or more meaningful than, operating income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP.

We believe retail gross margin provides information useful to investors as an indicator of our retail energy business's operating performance.

The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by operating activities. The GAAP measure most directly comparable to Retail Gross Margin is operating income (loss). Our non-GAAP financial measures of Adjusted EBITDA and Retail Gross Margin should not be considered as alternatives to net income (loss), net cash provided by operating activities, or operating income (loss). Adjusted EBITDA and Retail Gross Margin are not presentations made in accordance with GAAP and have important limitations as analytical tools. You should not consider Adjusted EBITDA or Retail Gross Margin in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA and Retail Gross Margin exclude some, but not all, items that affect net income (loss) and net cash provided by operating activities, and are defined differently by different companies in our industry, our definition of Adjusted EBITDA and Retail Gross Margin may not be comparable to similarly titled measures of other companies.

Management compensates for the limitations of Adjusted EBITDA and Retail Gross Margin as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these data points into management's decision-making process.

The following tables present a reconciliation of Adjusted EBITDA to net income (loss) and net cash provided by operating activities for each of the periods indicated.

 

 

The following table presents a reconciliation of Retail Gross Margin to operating income (loss) for each of the periods indicated.

SOURCE: Spark Energy, Inc. via EQS Newswire



11/03/2020 EQS Newswire / EQS Group AG


Liquidity and Capital Resources

 

 

 

($ in thousands)

 

September 30, 2020

 

Cash and cash equivalents

 

$

75,347

 

Senior Credit Facility Availability (1)

 

 

55,733

 

Subordinated Debt Facility Availability (2) (3)

 

 

25,000

 

Total Liquidity

 

$

156,080

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Retail revenues

 

$

141,188

 

 

$

207,341

 

 

$

436,166

 

 

$

625,300

 

Net asset optimization (expense) revenues

 

 

(558

)

 

 

(254

)

 

 

(319

)

 

 

2,242

 

Total Revenues

 

 

140,630

 

 

 

207,087

 

 

 

435,847

 

 

 

627,542

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail cost of revenues

 

 

85,118

 

 

 

123,867

 

 

 

269,546

 

 

 

477,881

 

General and administrative

 

 

19,080

 

 

 

27,629

 

 

 

66,087

 

 

 

94,352

 

Depreciation and amortization

 

 

7,278

 

 

 

9,496

 

 

 

24,084

 

 

 

31,963

 

Total Operating Expenses

 

 

111,476

 

 

 

160,992

 

 

 

359,717

 

 

 

604,196

 

Operating income

 

 

29,154

 

 

 

46,095

 

 

 

76,130

 

 

 

23,346

 

Other (expense)/income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,487

)

 

 

(2,174

)

 

 

(4,233

)

 

 

(6,392

)

Interest and other income

 

 

80

 

 

 

322

 

 

 

293

 

 

 

1,005

 

Total other expenses

 

 

(1,407

)

 

 

(1,852

)

 

 

(3,940

)

 

 

(5,387

)

Income before income tax expense

 

 

27,747

 

 

 

44,243

 

 

 

72,190

 

 

 

17,959

 

Income tax expense

 

 

5,141

 

 

 

6,567

 

 

 

12,739

 

 

 

3,022

 

Net income

 

$

22,606

 

 

$

37,676

 

 

$

59,451

 

 

$

14,937

 

Less: Net income attributable to non-controlling interests

 

 

12,993

 

 

 

22,142

 

 

 

34,200

 

 

 

5,736

 

Net income attributable to Spark Energy, Inc. stockholders

 

$

9,613

 

 

$

15,534

 

 

$

25,251

 

 

$

9,201

 

Less: Dividends on Series A Preferred Stock

 

 

1,951

 

 

 

2,026

 

 

 

5,490

 

 

 

6,080

 

Net income attributable to stockholders of Class A common stock

 

$

7,662

 

 

$

13,508

 

 

$

19,761

 

 

$

3,121

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation loss

 

$

-

 

 

$

(45

)

 

$

-

 

 

$

(143

)

Other comprehensive loss

 

 

-

 

 

 

(45

)

 

 

-

 

 

 

(143

)

Comprehensive income

 

$

22,606

 

 

$

37,631

 

 

$

59,451

 

 

$

14,794

 

Less: Comprehensive income attributable to non-controlling interests

 

 

12,993

 

 

 

22,116

 

 

 

34,200

 

 

 

5,652

 

Comprehensive income attributable to Spark Energy, Inc. stockholders

 

$

9,613

 

 

$

15,515

 

 

$

25,251

 

 

$

9,142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Spark Energy, Inc. per share of Class A common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.52

 

 

$

0.94

 

 

$

1.36

 

 

$

0.22

 

Diluted

 

$

0.52

 

 

$

0.93

 

 

$

1.35

 

 

$

0.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,653

 

 

 

14,380

 

 

 

14,531

 

 

 

14,254

 

Diluted

 

 

14,671

 

 

 

14,514

 

 

 

14,655

 

 

 

14,429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Balance Sheet Data

 

 

 

 

 

 

(in thousands)

 

September 30, 2020

 

 

December 31, 2019

 

Cash and cash equivalents$

 

$

75,347

 

 

$

56,664

 

Working capital

 

 

113,468

 

 

 

94,173

 

Total assets

 

 

361,128

 

 

 

422,968

 

Total debt

 

 

100,000

 

 

 

123,000

 

Total liabilities

 

 

183,799

 

 

 

265,667

 

Total stockholders' equity

 

 

64,364

 

 

 

51,219

 

Selected Cash Flow Data

 

 

 

 

 

 

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2020

 

 

2019

 

Cash flows provided by operating activities$

 

$

83,948

 

 

$

77,085

 

Cash flows used in investing activities

 

 

(1,219

)

 

 

(6,490

)

Cash flows used in financing activities

 

 

(65,017

)

 

 

(76,651

)

Operating Segment Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands, except volume and per unit operating data)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Retail Electricity Segment

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

$

132,958

 

 

$

197,010

 

 

$

366,981

 

 

$

539,878

 

Retail Cost of Revenues

 

 

82,061

 

 

 

119,100

 

 

 

241,712

 

 

 

433,175

 

Less: Net gain (loss) on non-trading derivatives, net of cash settlements

 

 

8,135

 

 

 

24,767

 

 

 

16,128

 

 

 

(10,027

)

Retail Gross Margin (1) - Electricity

 

$

42,762

 

 

$

53,143

 

 

$

109,141

 

 

$

116,730

 

Volumes - Electricity (MWhs)

 

 

1,165,500

 

 

 

1,808,276

 

 

 

3,235,222

 

 

 

5,052,498

 

Retail Gross Margin (2) - Electricity per MWh

 

$

36.69

 

 

$

29.39

 

 

$

33.74

 

 

$

23.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Natural Gas Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

$

8,230

 

 

$

10,331

 

 

$

69,185

 

 

$

85,422

 

Retail Cost of Revenues

 

 

3,057

 

 

 

4,767

 

 

 

27,834

 

 

 

44,706

 

Less: Net gain on non-trading derivatives, net of cash settlements

 

 

904

 

 

 

525

 

 

 

3,006

 

 

 

963

 

Retail Gross Margin (1) - Gas

 

$

4,269

 

 

$

5,039

 

 

$

38,345

 

 

$

39,753

 

Volumes - Gas (MMBtus)

 

 

949,088

 

 

 

1,119,126

 

 

 

8,198,827

 

 

 

10,127,857

 

Retail Gross Margin (2) - Gas per MMBtu

 

$

4.50

 

 

$

4.50

 

 

$

4.68

 

 

$

3.93

 

Reconciliation of Adjusted EBITDA to Net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

22,606

 

 

$

37,676

 

 

$

59,451

 

 

$

14,937

 

Depreciation and amortization

 

 

7,278

 

 

 

9,496

 

 

 

24,084

 

 

 

31,963

 

Interest expense

 

 

1,487

 

 

 

2,174

 

 

 

4,233

 

 

 

6,392

 

Income tax expense

 

 

5,141

 

 

 

6,567

 

 

 

12,739

 

 

 

3,022

 

EBITDA

 

 

36,512

 

 

 

55,913

 

 

 

100,507

 

 

 

56,314

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net, gain (loss) on derivative instruments

 

 

2,451

 

 

 

12,307

 

 

 

(14,015

)

 

 

(42,690

)

Net cash settlements on derivative instruments

 

 

6,425

 

 

 

12,721

 

 

 

32,997

 

 

 

33,515

 

Customer acquisition costs

 

 

207

 

 

 

4,423

 

 

 

1,762

 

 

 

13,608

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash compensation expense

 

 

320

 

 

 

1,622

 

 

 

2,134

 

 

 

4,054

 

Non-recurring legal and regulatory settlements

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,807

 

Adjusted EBITDA

 

$

27,749

 

 

$

28,084

 

 

$

81,897

 

 

$

66,742

 

Reconciliation of Adjusted EBITDA to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net cash provided by operating activities

 

$

12,165

 

 

$

26,056

 

 

$

83,948

 

 

$

77,085

 

Amortization of deferred financing costs

 

 

(476

)

 

 

(497

)

 

 

(966

)

 

 

(1,002

)

Bad debt expense

 

 

(880

)

 

 

(3,170

)

 

 

(4,613

)

 

 

(9,185

)

Interest expense

 

 

1,487

 

 

 

2,174

 

 

 

4,233

 

 

 

6,392

 

Income tax expense

 

 

5,141

 

 

 

6,567

 

 

 

12,739

 

 

 

3,022

 

Changes in operating working capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, prepaids, current assets

 

 

1,709

 

 

 

1,034

 

 

 

(48,301

)

 

 

(50,358

)

Inventory

 

 

823

 

 

 

1,560

 

 

 

(1,158

)

 

 

(298

)

Accounts payable and accrued liabilities

 

 

9,374

 

 

 

(963

)

 

 

39,213

 

 

 

30,209

 

Other

 

 

(1,594

)

 

 

(4,677

)

 

 

(3,198

)

 

 

10,877

 

Adjusted EBITDA

 

$

27,749

 

 

$

28,084

 

 

$

81,897

 

 

$

66,742

 

Cash Flow Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided by operating activities

 

$

12,165

 

 

$

26,056

 

 

$

83,948

 

 

$

77,085

 

Cash flows used in investing activities

 

$

(640

)

 

$

(117

)

 

$

(1,219

)

 

$

(6,490

)

Cash flows used in financing activities

 

$

(15,769

)

 

$

(10,937

)

 

$

(65,017

)

 

$

(76,651

)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Reconciliation of Retail Gross Margin to Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

29,154

 

 

$

46,095

 

 

$

76,130

 

 

$

23,346

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,278

 

 

 

9,496

 

 

 

24,084

 

 

 

31,963

 

General and administrative expense

 

 

19,080

 

 

 

27,629

 

 

 

66,087

 

 

 

94,352

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset optimization (expense) revenues

 

 

(558

)

 

 

(254

)

 

 

(319

)

 

 

2,242

 

Gain (loss) on non-trading derivative instruments

 

 

2,550

 

 

 

12,528

 

 

 

(14,019

)

 

 

(42,741

)

Cash settlements on non-trading derivative instruments

 

 

6,489

 

 

 

12,764

 

 

 

33,153

 

 

 

33,677

 

Retail Gross Margin

 

$

47,031

 

 

$

58,182

 

 

$

147,486

 

 

$

156,483

 

Retail Gross Margin - Retail Electricity Segment

 

$

42,762

 

 

$

53,143

 

 

$

109,141

 

 

$

116,730

 

Retail Gross Margin - Retail Natural Gas Segment

 

$

4,269

 

 

$

5,039

 

 

$

38,345

 

 

$

39,753

 

Liquidity and Capital Resources

 

 

 

($ in thousands)

 

September 30, 2020

 

Cash and cash equivalents

 

$

75,347

 

Senior Credit Facility Availability (1)

 

 

55,733

 

Subordinated Debt Facility Availability (2) (3)

 

 

25,000

 

Total Liquidity

 

$

156,080

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Retail revenues

 

$

141,188

 

 

$

207,341

 

 

$

436,166

 

 

$

625,300

 

Net asset optimization (expense) revenues

 

 

(558

)

 

 

(254

)

 

 

(319

)

 

 

2,242

 

Total Revenues

 

 

140,630

 

 

 

207,087

 

 

 

435,847

 

 

 

627,542

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail cost of revenues

 

 

85,118

 

 

 

123,867

 

 

 

269,546

 

 

 

477,881

 

General and administrative

 

 

19,080

 

 

 

27,629

 

 

 

66,087

 

 

 

94,352

 

Depreciation and amortization

 

 

7,278

 

 

 

9,496

 

 

 

24,084

 

 

 

31,963

 

Total Operating Expenses

 

 

111,476

 

 

 

160,992

 

 

 

359,717

 

 

 

604,196

 

Operating income

 

 

29,154

 

 

 

46,095

 

 

 

76,130

 

 

 

23,346

 

Other (expense)/income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,487

)

 

 

(2,174

)

 

 

(4,233

)

 

 

(6,392

)

Interest and other income

 

 

80

 

 

 

322

 

 

 

293

 

 

 

1,005

 

Total other expenses

 

 

(1,407

)

 

 

(1,852

)

 

 

(3,940

)

 

 

(5,387

)

Income before income tax expense

 

 

27,747

 

 

 

44,243

 

 

 

72,190

 

 

 

17,959

 

Income tax expense

 

 

5,141

 

 

 

6,567

 

 

 

12,739

 

 

 

3,022

 

Net income

 

$

22,606

 

 

$

37,676

 

 

$

59,451

 

 

$

14,937

 

Less: Net income attributable to non-controlling interests

 

 

12,993

 

 

 

22,142

 

 

 

34,200

 

 

 

5,736

 

Net income attributable to Spark Energy, Inc. stockholders

 

$

9,613

 

 

$

15,534

 

 

$

25,251

 

 

$

9,201

 

Less: Dividends on Series A Preferred Stock

 

 

1,951

 

 

 

2,026

 

 

 

5,490

 

 

 

6,080

 

Net income attributable to stockholders of Class A common stock

 

$

7,662

 

 

$

13,508

 

 

$

19,761

 

 

$

3,121

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation loss

 

$

-

 

 

$

(45

)

 

$

-

 

 

$

(143

)

Other comprehensive loss

 

 

-

 

 

 

(45

)

 

 

-

 

 

 

(143

)

Comprehensive income

 

$

22,606

 

 

$

37,631

 

 

$

59,451

 

 

$

14,794

 

Less: Comprehensive income attributable to non-controlling interests

 

 

12,993

 

 

 

22,116

 

 

 

34,200

 

 

 

5,652

 

Comprehensive income attributable to Spark Energy, Inc. stockholders

 

$

9,613

 

 

$

15,515

 

 

$

25,251

 

 

$

9,142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Spark Energy, Inc. per share of Class A common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.52

 

 

$

0.94

 

 

$

1.36

 

 

$

0.22

 

Diluted

 

$

0.52

 

 

$

0.93

 

 

$

1.35

 

 

$

0.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

14,653

 

 

 

14,380

 

 

 

14,531

 

 

 

14,254

 

Diluted

 

 

14,671

 

 

 

14,514

 

 

 

14,655

 

 

 

14,429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Balance Sheet Data

 

 

 

 

 

 

(in thousands)

 

September 30, 2020

 

 

December 31, 2019

 

Cash and cash equivalents$

 

$

75,347

 

 

$

56,664

 

Working capital

 

 

113,468

 

 

 

94,173

 

Total assets

 

 

361,128

 

 

 

422,968

 

Total debt

 

 

100,000

 

 

 

123,000

 

Total liabilities

 

 

183,799

 

 

 

265,667

 

Total stockholders' equity

 

 

64,364

 

 

 

51,219

 

Selected Cash Flow Data

 

 

 

 

 

 

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2020

 

 

2019

 

Cash flows provided by operating activities$

 

$

83,948

 

 

$

77,085

 

Cash flows used in investing activities

 

 

(1,219

)

 

 

(6,490

)

Cash flows used in financing activities

 

 

(65,017

)

 

 

(76,651

)

Operating Segment Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands, except volume and per unit operating data)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Retail Electricity Segment

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

$

132,958

 

 

$

197,010

 

 

$

366,981

 

 

$

539,878

 

Retail Cost of Revenues

 

 

82,061

 

 

 

119,100

 

 

 

241,712

 

 

 

433,175

 

Less: Net gain (loss) on non-trading derivatives, net of cash settlements

 

 

8,135

 

 

 

24,767

 

 

 

16,128

 

 

 

(10,027

)

Retail Gross Margin (1) - Electricity

 

$

42,762

 

 

$

53,143

 

 

$

109,141

 

 

$

116,730

 

Volumes - Electricity (MWhs)

 

 

1,165,500

 

 

 

1,808,276

 

 

 

3,235,222

 

 

 

5,052,498

 

Retail Gross Margin (2) - Electricity per MWh

 

$

36.69

 

 

$

29.39

 

 

$

33.74

 

 

$

23.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Natural Gas Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

$

8,230

 

 

$

10,331

 

 

$

69,185

 

 

$

85,422

 

Retail Cost of Revenues

 

 

3,057

 

 

 

4,767

 

 

 

27,834

 

 

 

44,706

 

Less: Net gain on non-trading derivatives, net of cash settlements

 

 

904

 

 

 

525

 

 

 

3,006

 

 

 

963

 

Retail Gross Margin (1) - Gas

 

$

4,269

 

 

$

5,039

 

 

$

38,345

 

 

$

39,753

 

Volumes - Gas (MMBtus)

 

 

949,088

 

 

 

1,119,126

 

 

 

8,198,827

 

 

 

10,127,857

 

Retail Gross Margin (2) - Gas per MMBtu

 

$

4.50

 

 

$

4.50

 

 

$

4.68

 

 

$

3.93

 

Reconciliation of Adjusted EBITDA to Net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

22,606

 

 

$

37,676

 

 

$

59,451

 

 

$

14,937

 

Depreciation and amortization

 

 

7,278

 

 

 

9,496

 

 

 

24,084

 

 

 

31,963

 

Interest expense

 

 

1,487

 

 

 

2,174

 

 

 

4,233

 

 

 

6,392

 

Income tax expense

 

 

5,141

 

 

 

6,567

 

 

 

12,739

 

 

 

3,022

 

EBITDA

 

 

36,512

 

 

 

55,913

 

 

 

100,507

 

 

 

56,314

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net, gain (loss) on derivative instruments

 

 

2,451

 

 

 

12,307

 

 

 

(14,015

)

 

 

(42,690

)

Net cash settlements on derivative instruments

 

 

6,425

 

 

 

12,721

 

 

 

32,997

 

 

 

33,515

 

Customer acquisition costs

 

 

207

 

 

 

4,423

 

 

 

1,762

 

 

 

13,608

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash compensation expense

 

 

320

 

 

 

1,622

 

 

 

2,134

 

 

 

4,054

 

Non-recurring legal and regulatory settlements

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,807

 

Adjusted EBITDA

 

$

27,749

 

 

$

28,084

 

 

$

81,897

 

 

$

66,742

 

Reconciliation of Adjusted EBITDA to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net cash provided by operating activities

 

$

12,165

 

 

$

26,056

 

 

$

83,948

 

 

$

77,085

 

Amortization of deferred financing costs

 

 

(476

)

 

 

(497

)

 

 

(966

)

 

 

(1,002

)

Bad debt expense

 

 

(880

)

 

 

(3,170

)

 

 

(4,613

)

 

 

(9,185

)

Interest expense

 

 

1,487

 

 

 

2,174

 

 

 

4,233

 

 

 

6,392

 

Income tax expense

 

 

5,141

 

 

 

6,567

 

 

 

12,739

 

 

 

3,022

 

Changes in operating working capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, prepaids, current assets

 

 

1,709

 

 

 

1,034

 

 

 

(48,301

)

 

 

(50,358

)

Inventory

 

 

823

 

 

 

1,560

 

 

 

(1,158

)

 

 

(298

)

Accounts payable and accrued liabilities

 

 

9,374

 

 

 

(963

)

 

 

39,213

 

 

 

30,209

 

Other

 

 

(1,594

)

 

 

(4,677

)

 

 

(3,198

)

 

 

10,877

 

Adjusted EBITDA

 

$

27,749

 

 

$

28,084

 

 

$

81,897

 

 

$

66,742

 

Cash Flow Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided by operating activities

 

$

12,165

 

 

$

26,056

 

 

$

83,948

 

 

$

77,085

 

Cash flows used in investing activities

 

$

(640

)

 

$

(117

)

 

$

(1,219

)

 

$

(6,490

)

Cash flows used in financing activities

 

$

(15,769

)

 

$

(10,937

)

 

$

(65,017

)

 

$

(76,651

)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Reconciliation of Retail Gross Margin to Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

29,154

 

 

$

46,095

 

 

$

76,130

 

 

$

23,346

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

7,278

 

 

 

9,496

 

 

 

24,084

 

 

 

31,963

 

General and administrative expense

 

 

19,080

 

 

 

27,629

 

 

 

66,087

 

 

 

94,352

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset optimization (expense) revenues

 

 

(558

)

 

 

(254

)

 

 

(319

)

 

 

2,242

 

Gain (loss) on non-trading derivative instruments

 

 

2,550

 

 

 

12,528

 

 

 

(14,019

)

 

 

(42,741

)

Cash settlements on non-trading derivative instruments

 

 

6,489

 

 

 

12,764

 

 

 

33,153

 

 

 

33,677

 

Retail Gross Margin

 

$

47,031

 

 

$

58,182

 

 

$

147,486

 

 

$

156,483

 

Retail Gross Margin - Retail Electricity Segment

 

$

42,762

 

 

$

53,143

 

 

$

109,141

 

 

$

116,730

 

Retail Gross Margin - Retail Natural Gas Segment

 

$

4,269

 

 

$

5,039

 

 

$

38,345

 

 

$

39,753

 


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