HOUSTON, TX / ACCESSWIRE / June 13, 2024 / Via Renewables, Inc. (“Via Renewables” or the “Company”) (NASDAQ:VIA)(NASDAQ:VIASP), an independent retail energy services company, announced today the completion of the merger (the “Merger”) contemplated by the previously announced Agreement and Plan of Merger, dated as of December 29, 2023 (the “Merger Agreement”), by and among the Company, Retailco, LLC, a Texas limited liability company (“Parent”), and NuRetailco LLC, a Delaware limited liability company and wholly-owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub was merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the Merger (the “Surviving Corporation”), following which William Keith Maxwell, III and his affiliates became the registered or beneficial owners of all of the shares of the Surviving Corporation’s issued and outstanding (a) Class A common stock, par value $0.01 per share (the “Class A Common Stock”) and (b) Class B common stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”).
The Merger, originally announced on January 2, 2024, was approved by the Company’s shareholders at a special meeting held on June 7, 2024. The Merger became effective at 4:15 p.m. Eastern Time on June 13, 2024 (the “Effective Time”). Under the terms of the Merger Agreement, at the Effective Time:
each outstanding share of Class A Common Stock was canceled and converted into the right to receive $11.00 in cash per share, without interest (the “Merger Consideration”) other than shares of Class A Common Stock: (i) (a) held by the Company or any subsidiary of the Company, or (b) held or beneficially owned by Mr. Maxwell and any person or entity controlled by Mr. Maxwell, including Parent, Merger Sub and NuDevco Retail, LLC (such shares described in (i)(a) and (i)(b), the “Excluded Shares”), and (ii) shares of Class A Common Stock held by any holder of record of Class A Common Stock who did not vote in favor of the Merger and demanded appraisal of such shares of Class A Common Stock pursuant to, and complied in all respects with, Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”) (the “Dissenting Shares”);
all Excluded Shares (other than the shares of Class A Common Stock held or beneficially owned by Mr. Maxwell and any person or entity controlled by Mr. Maxwell, including Parent, Merger Sub and NuDevco Retail, LLC (the “Maxwell Shares”)) were canceled without payment of any consideration thereof;
each Dissenting Share was canceled and converted into the right to receive payment of such amounts that are payable in accordance with Section 262 of the DGCL and have no right to receive the Merger Consideration, unless and until such shareholder loses, waives or withdraws its rights as a dissenting shareholder;
each Maxwell Share issued and outstanding immediately prior to the Effective Time was unchanged and remains issued and outstanding as Class A Common Stock of the Surviving Corporation;
each share of Class B Common Stock issued and outstanding immediately prior to the Effective Time was unchanged and remains issued and outstanding as Class B Common Stock of the Surviving Corporation;
all of the (i) the outstanding restricted stock units of the Company (the “Company RSUs”), other than the restricted stock units of the Company held by Mr. Maxwell (the “Maxwell RSUs”), all of which were held by current and former employees and directors of the Company, including its executive officers, were, by virtue of the Merger and without any action by Parent, Merger Sub, the Company or the holders of such Company RSUs, canceled, extinguished and converted into the right to receive an amount in cash, without interest, equal to the product of (a) the Merger Consideration multiplied by (b) the total number of shares of Common Stock underlying the Company RSUs, and (ii) Maxwell RSUs were, by virtue of the Merger and without any action by Parent, Merger Sub, the Company or the holder of such Maxwell RSUs, canceled and extinguished, and no consideration was delivered or will be deliverable therefor;
each share of the Company’s 8.75% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”) issued and outstanding immediately prior to the Effective Time was unchanged and remains issued and outstanding as preferred stock of the Surviving Corporation; and
each share of capital stock of Merger Sub was converted into and represent one fully-paid and nonassessable share of Class A Common Stock, such that, following the Effective Time, Parent is the holder of all of the issued and outstanding shares of Class A Common Stock (other than the Maxwell Shares).
As a result of the completion of the Merger, the Class A Common Stock became privately held and will be delisted from and will no longer trade on the Nasdaq Global Select Market (“NASDAQ”) effective at the close of trading on June 13, 2024. At the Effective Time, each holder of outstanding shares of Class A Common Stock, other than the Maxwell Shares, ceased to have any rights as a shareholder of the Company other than the right to receive the Merger Consideration (or in the case of Dissenting Shares, the right to receive payment of such amounts that are payable in accordance with Section 262 of the DGCL, unless and until such shareholder loses, waives or withdraws its rights as a dissenting shareholder). The Company intends to file with the Securities and Exchange Commission a notice on Form 15 of termination of registration of the Class A Common Stock. The Merger did not have any impact on the registration of the Series A Preferred Stock under the Exchange Act or the continued listing of the Series A Preferred Stock on NASDAQ.
Shareholders will soon receive a letter of transmittal and instructions for use in effecting the surrender of any stock certificates (or effective affidavits of loss in lieu thereof), book-entry shares and/or such other documents as may be required in exchange for the Merger Consideration. Shareholders should wait to receive the letter of transmittal before surrendering their share certificates. Shareholders of the Company that hold shares in street name will receive the Merger Consideration in their brokerage or similar accounts.
B. Riley Securities, Inc. served as the sole financial advisor to the Special Committee. Jones Walker LLP served as legal counsel to the Special Committee. Mr. Maxwell, Parent and Merger Sub were advised by their own financial advisors and legal counsel, Cokinos | Young.
About Via Renewables, Inc.
Via Renewables, 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, Via Renewables currently operates in 105 utility service territories across 20 states and the District of Columbia. Via Renewables 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 Via Renewables Investor Relations website at https://viarenewables.com/. Investors are urged to monitor our website regularly for information and updates about the Company.
This communication contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond the Company’s control. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of 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 communication related to the Merger, including its timing and effects, are forward looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurance that such expectations will prove correct.
The forward-looking statements in this communication 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: the occurrence of any event, change or other circumstances that could give rise to the failure to pay the Merger Consideration; the outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted against the Company and others relating to the Merger or otherwise; the effect of the announcement of the completed Merger on the Company’s relationships with its contractual counterparties, operating results and business generally; and the amount of the costs, fees, expenses and charges related to the foregoing.
Additional factors that may cause results to differ materially from those described in the forward-looking statements are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, under the heading “Item 1A. Risk Factors,” and in subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
You should review the risk factors and other factors noted throughout this communication that could cause the Company’s 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 communication. Unless required by law, the Company disclaims 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 the Company to predict all risks, nor can it 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.
HOUSTON, TX / ACCESSWIRE / May 14, 2024 / Via Renewables, Inc. (“Via Renewables” or the “Company“) (NASDAQ:VIA; VIASP), an independent retail energy services company, announced today that leading independent proxy advisory firms Institutional Shareholder Services, Inc. (“ISS“) and Glass Lewis & Co. (“Glass Lewis“) have both recommended that the Company’s shareholders vote “FOR” each of: (1) the approval of the Agreement and Plan of Merger, dated as of December 29, 2023 (the “Merger Agreement“), by and among the Company, Retailco, LLC, a Texas limited liability company (“Parent“), and NuRetailco LLC, a Delaware limited liability company and wholly-owned subsidiary of Parent (“Merger Sub“) (the “Merger Proposal“), pursuant to which Merger Sub would merge with and into the Company with the Company surviving the merger, following which all of the issued and outstanding shares of the Company’s Class A common stock, par value $0.01 per share (the “Class A Common Stock“), would be acquired by Parent for $11.00 per share in cash (except for the shares of Class A Common Stock held or beneficially owned by (i) (a) the Company or any subsidiary of the Company, or (b) William Keith Maxwell, III and any person or entity controlled by Mr. Maxwell, including Parent, Merger Sub and NuDevco Retail, LLC, and (ii) any holder of record of Class A Common Stock who did not vote in favor of the Merger Proposal and is entitled to demand and validly demands appraisal of such shares of Class A Common Stock pursuant to, and complies in all respects with, Section 262 of the General Corporation Law of the State of Delaware; and (2) the approval, on a non-binding, advisory basis, of the compensation that may become payable to the Company’s named executive officers in connection with the Merger.
In its May 10, 2024 report, ISS noted[1]:
“The merger consideration represents a premium of 17.0 percent over the price on the day prior to the announcement, and a premium of 51.3 percent over the stock price two months prior to the announcement. [. . . ] Investors reacted positively to the announcement, driving the VIA share price up by 14.1 percent to close at $10.73 per share, compared to a 0.8percent rise in the S&P 600 Electric Utilities Index on the same day. VIA shares have appreciated by 16.1 percent since the announcement through May 6, 2024, 11.6 percentage points above the S&P 600 Electric Utilities Index over the same period. The outperformance against the index indicates a potential downside risk of non-approval.”
“A vote FOR this transaction is warranted. The board appears to have taken reasonable steps to mitigate potential conflicts of interest and, although the sales process did not include either a formal auction or a market check process, the special committee negotiated a go-shop period following the transaction announcement during which it received no further bids. Further, the cash form of consideration provides liquidity and certainty of value and there is a potential downside risk to non-approval.”
“Support is warranted for the golden parachute proposal as cash severance is double trigger and no excise tax gross-ups are payable.”
[1] Permission to use quotes neither sought nor obtained.
On May 10, 2024, the Federal Energy Regulatory Agency (“FERC“) also approved the Merger. FERC’s approval satisfies one of the conditions necessary to the closing of the Merger, which remains subject to the satisfaction and/or waiver of the remaining conditions.
The Special Meeting of Shareholders will be held at 10:00 AM, Central Time, on Thursday, May 23, 2024. Shareholders of record as of March 25, 2024 will be able to attend the Special Meeting, vote, and submit your questions during the Special Meeting via live webcast by visiting https://url.us.m.mimecastprotect.com/s/PNCRC4xkpmc7y5ZYujKOlN?domain=virtualshareholdermeeting.com. To attend the Special Meeting via live webcast, you must have your sixteen-digit control number that is shown on the proxy card accompanying the enclosed proxy statement. You will not be able to attend the Special Meeting in person.
About Via Renewables, Inc.
Via Renewables, 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, Via Renewables currently operates in 105 utility service territories across 20 states and the District of Columbia. Via Renewables 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 Via Renewables Investor Relations website at https://url.us.m.mimecastprotect.com/s/2KnWC68mrohGEmRVu9m4I6?domain=viarenewables.com. Investors are urged to monitor our website regularly for information and updates about the Company.
Additional Information and Where to Find It
More detailed and updated information regarding the Merger and Transactions is set forth in the Definitive Proxy Statement and other materials filed or to be filed with the SEC in connection with the Merger. Shareholders can obtain the Definitive Proxy Statement, any amendments or supplements to the Definitive Proxy Statement and other documents filed by the Company with the SEC for no charge at the SEC’s website at https://url.us.m.mimecastprotect.com/s/AoU6C73nv8FWvNrEukI-tw?domain=sec.gov. Copies are also available at no charge at the Company’s website at https://url.us.m.mimecastprotect.com/s/Ia8lC82ow8uwlqmOI4TjmE?domain=viarenewables.com. SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ THE DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT MATERIALS IN THEIR ENTIRETY BEFORE MAKING A VOTING DECISION AS THEY CONTAIN IMPORTANT INFORMATION.
Participants in the Solicitation
The Company, its directors and certain of its executive officers may be deemed to be participants in the solicitation of proxies from the Company’s shareholders in connection with the Merger and Transactions. Information regarding the ownership of the Company’s directors and executive officers in the Company’s Common Stock is included in its SEC filings on Forms 3, 4, and 5, which can be found through the Company’s website (https://url.us.m.mimecastprotect.com/s/Ia8lC82ow8uwlqmOI4TjmE?domain=viarenewables.com), or through the SEC’s website at https://url.us.m.mimecastprotect.com/s/AoU6C73nv8FWvNrEukI-tw?domain=sec.gov. More detailed and updated information regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, are set forth in the Definitive Proxy Statement and other materials filed with the SEC in connection with the Merger.
This communication contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond the Company’s control. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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 communication related to the Merger, including its timing and effects, conditions to closing and approval requirements, are forward looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurance that such expectations will prove correct.
The forward-looking statements in this communication 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: the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement or change in vote recommendation; the inability to complete the proposed Merger due to the failure to obtain shareholder approval for the proposed Merger or the failure to satisfy other conditions to completion of the proposed Merger; the failure of the proposed Merger to close for any other reason; risks related to disruption of management’s attention from the Company’s ongoing business operations due to the transactions contemplated by the Merger Agreement, including the Merger; the outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted against the Company and others relating to the Merger Agreement or otherwise; the risk that the pendency of the proposed Merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the pendency of the proposed Merger; the effect of the announcement of the proposed Merger on the Company’s relationships with its contractual counterparties, operating results and business generally; and the amount of the costs, fees, expenses and charges related to the proposed Merger.
Additional factors that may cause results to differ materially from those described in the forward-looking statements are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, under the heading “Item 1A. Risk Factors,” and in subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
You should review the risk factors and other factors noted throughout this communication that could cause the Company’s 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 communication. Unless required by law, the Company disclaims 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 the Company to predict all risks, nor can it 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.
HOUSTON, TX / ACCESSWIRE / February 20, 2024 / Via Renewables, Inc. (“Via Renewables” or the “Company”) (NASDAQ:VIA), an independent retail energy services company, announced today that it plans to present its full-year and fourth quarter 2023 financial results in a conference call and webcast on Thursday, February 29, 2024 at 10:00 AM Central (11:00 AM Eastern).
A live webcast of the conference call can be accessed from the Events & Presentations page of the Via Renewables Investor Relations website at ViaRenewables.com. An archived replay of the webcast will be available for twelve months following the live presentation.
About Via Renewables, Inc.
Via Renewables, 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 their natural gas and electricity under our well-established and well-regarded brands, including Spark Energy, Major Energy, Provider Power, and Verde Energy. Headquartered in Houston, Texas, Via Renewables currently operates in 20 states and serves 105 utility territories. Via Renewables 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 Via Renewables Investor Relations website at ViaRenewables.com. Investors are urged to monitor our website regularly for information and updates about the Company.
HOUSTON, TX / ACCESSWIRE / March 29, 2023 / Via Renewables, Inc. (“Via Renewables” or the “Company”) (NASDAQ:VIA)(NASDAQ:VIASP), an independent retail energy services company, today reported financial results for the year ended December 31, 2022.
Key Business Highlights
Recorded $(27.5) million in Net Loss and $12.6 million in Adjusted EBITDA for the fourth quarter
Recorded $(7.1) million in Gross Loss and $31.9 million in Retail Gross Margin for the fourth quarter
Achieved $11.2 million in Net Income and $51.8 million in Adjusted EBITDA for the year ended 2022
Achieved $103.4 million in Gross Profit and $114.8 million in Retail Gross Margin for the year ended 2022
Average monthly attrition of 3.8%
Total liquidity of $76.9 million as of December 31, 2022
Summary Fourth Quarter 2022 Financial Results 1
Net Loss for the quarter ended December 31, 2022, was $(27.5) million, which is driven by a $(37.9) million mark-to-market loss on our hedges. This compares to Net Loss of $(37.3) million for the quarter ended December 31, 2021 which included a $(46.2) million loss on the mark-to-market for the hedges. The decrease in Net Loss was primarily the result of a $9.7 million increase in cash settlements on derivative instruments.
For the quarter ended December 31, 2022, Via Renewables reported Adjusted EBITDA of $12.6 million compared to Adjusted EBITDA of $11.6 million for the quarter ended December 31, 2021. The increase in Adjusted EBITDA was due to higher gross margin quarter over quarter, partially offset by increases in customer acquisition spend and an increase in G&A expense. While G&A increased in 2022, this was mainly due to 2021 legal expenses being lower than our normal run-rate as a result of favorable settlements of older legal cases.
For the quarter ended December 31, 2022, Via Renewables reported Gross Loss of $(7.1) million compared to Gross Loss of $(24.3) million in for the quarter ended December 31, 2021. The increase was mainly due to a reduction on the mark-to-market loss on our hedges and higher Retail Gross Margin.
For the quarter ended December 31, 2022, Via Renewables reported Retail Gross Margin of $31.9 million compared to Retail Gross Margin of $25.2 million for the quarter ended December 31, 2021. This increase was attributable to higher electric unit margins combined with higher natural gas volumes, partially offset by lower electric volumes and lower natural gas unit margins.
1 We expect to report a material weakness in the design and operation of the controls over our calculation of deferred tax assets and liabilities, and income tax expense, in our Annual Report on Form 10-K and immaterial corrections for the years ended December 31, 2021 and 2020. The information presented herein gives effect to the immaterial corrections. Please see Appendix Table A-4 and Note 2 in the Notes to the Consolidated Financial Statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2022 for a description of the adjustments.
Summary Full Year 2022 Financial Results
Net Income for the year ended December 31, 2022, was $11.2 million compared to a Net Loss of $(5.4) million for the year ended December 31, 2021. The increase compared to the prior year was primarily the result of a $64.4 million loss in 2021 due to winter storm Uri. In addition, Via Renewables had a mark-to-market loss this year of $(18.0) million, compared to a mark-to-market gain of $5.5 million a year ago.
For the year ended December 31, 2022, Via Renewables reported Adjusted EBITDA of $51.8 million compared to Adjusted EBITDA of $80.7 million for the year ended December 31, 2021. The decrease is the result of a reduction in Retail Gross Margin, increases in general and administrative expenses and customer acquisition spend. General and administrative expenses were higher due to an increase in bad debt expense in 2022 and lower employee costs in 2021 due to employee retention credits related to the CARES Act that did not re-occur in 2022.
For the year ended December 31, 2022, Via Renewables reported Gross Profit of $103.4 million compared to Gross Profit of $70.3 million for the year ended December 31, 2021. The increase is due to a $(64.4) million loss from winter storm Uri in 2021 partially offset by a $23.5 million reduction in the mark-to-market on our hedges.
For the year ended December 31, 2022, Via Renewables reported Retail Gross Margin of $114.8 million compared to Retail Gross Margin of $132.5 million for the year ended December 31, 2021. The decrease was primarily attributable to lower electric volumes and unit margins as high commodity prices impacted our margins and caused our industry to raise rates which increased attrition. This was combined with lower natural gas unit margins also due to rising commodity prices and was partially offset by higher natural gas volumes mainly resulting from a book acquisition in the third quarter.
Liquidity and Capital Resources
December 31,
($ in thousands)
2022
Cash and cash equivalents
$
33,658
Senior Credit Facility Availability (1)
38,225
Subordinated Debt Facility Availability (2)
5,000
Total Liquidity
$
76,883
(1) Reflects amount of Letters of Credit that could be issued based on existing covenants as of December 31, 2022.
(2) The availability of Subordinated Facility is dependent on our Founder’s discretion.
Dividend
Via Renewables’ Board of Directors declared quarterly dividends of $0.90625 per share of Class A common stock (retrospectively restated to effect the Company’s March 21, 2023 Reverse Stock Split at a ratio of 1 to 5 shares of common stock) paid on March 15, 2023 to holders of record as of March 1, 2023, and $0.71298 per share of Series A Preferred Stock payable on April 17, 2023 to holders of record as of April 1, 2023.
Business Outlook
“Looking forward to 2023, we’re positioned very well to attract new customers. Numerous utilities have raised their rates and we’re able to be more competitive with our offerings as commodity prices retreat off record highs. We’ve made it past a volatile high price environment and see opportunities for growth. As always, we will remain open to any potential tuck in acquisitions as well, while growing our organic sales channels ” said Keith Maxwell, Via Renewables’ Chief Executive Officer.
Conference Call and Webcast
Via Renewables will host a conference call to discuss fourth quarter and full year 2022 results on Thursday, March 30, 2023, 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 Via Renewables website at https://viarenewables.com/. An archived replay of the webcast will be available for twelve months following the live presentation.
About Via Renewables, Inc.
Via Renewables, 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, Via Renewables currently operates in 103 utility service territories across 20 states and the District of Columbia. Via Renewables 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 Via Renewables Investor Relations website at https://viarenewables.com/ . Investors are urged to monitor our website regularly for information and updates about the Company.
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 are forward-looking statements. The forward-looking statements include statements regarding the impacts of the 2021 severe weather event, cash flow generation and liquidity, business strategy, prospects for growth and acquisitions, outcomes of legal proceedings, ability to pay and amount of cash dividends and distributions on our Class A common stock and Series A Preferred Stock, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives, beliefs of management, availability of and terms of capital, competition, 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:
our ability to remediate the material weakness in our internal control over financial reporting, the identification of additional material weaknesses in the future or otherwise failing to maintain an effective system of internal controls;
the ultimate impact of the 2021 severe weather event, including future benefits or costs related to ERCOT market Securitization efforts, and any corrective action by the State of Texas, ERCOT, the Railroad Commission of Texas, or the Public Utility Commission of Texas;
changes in commodity prices, the margins we achieve, and interest rates;
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 regulations, 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 and covenants in our debt agreements and collateral requirements;
credit risk with respect to suppliers and customers;
our ability to acquire customers and actual attrition rates;
changes in costs to acquire customers;
accuracy of billing systems;
our ability to successfully identify, complete, and efficiently integrate acquisitions into our operations;
significant changes in, or new changes by, the independent system operators (“ISOs”) in the regions we operate;
competition; and
the “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and other public filings and press releases.
You should review the risk factors and other factors noted throughout 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:
Stephen Rabalais,
832-200-3727
Media Relations:
Kira Jordan,
832-255-7302
VIA RENEWABLES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2022 AND DECEMBER 31, 2021 (in thousands, except share counts)
December 31, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
33,658
$
68,899
Restricted cash
1,693
6,421
Accounts receivable, net of allowance for doubtful accounts of $4,335 and $2,368 as of December 31, 2022 and 2021, respectively
81,466
66,676
Accounts receivable-affiliates
6,455
3,819
Inventory
4,405
1,982
Fair value of derivative assets
1,632
3,930
Customer acquisition costs, net
3,530
946
Customer relationships, net
2,520
8,523
Deposits
10,568
6,664
Renewable energy credit asset
24,251
14,691
Other current assets
8,749
14,129
Total current assets
178,927
196,680
Property and equipment, net
4,691
4,261
Fair value of derivative assets
666
340
Customer acquisition costs, net
1,683
453
Customer relationships, net
481
5,660
Deferred tax assets (1)
20,437
22,398
Goodwill
120,343
120,343
Other assets
3,722
3,624
Total Assets (1)
$
330,950
$
353,759
Liabilities, Series A Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable
$
53,296
$
43,285
Accounts payable-affiliates
265
491
Accrued liabilities (1)
8,431
19,588
Renewable energy credit liability
13,722
13,548
Fair value of derivative liabilities
16,132
4,158
Other current liabilities
322
1,707
Total current liabilities (1)
92,168
82,777
Long-term liabilities:
Fair value of derivative liabilities
2,715
36
Long-term portion of Senior Credit Facility
100,000
135,000
Subordinated debt-affiliate
20,000
–
Other long-term liabilities
18
109
Total liabilities (1)
214,901
217,922
Commitments and contingencies
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,567,543 shares issued and outstanding at December 31, 2022 and December 31, 2021
87,713
87,288
Stockholders’ equity:
Common Stock (2)
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 3,200,472 shares issued and 3,171,553 shares outstanding at December 31, 2022 and 3,158,204 shares issued and 3,129,285 shares outstanding at December 31, 2021
32
32
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 4,000,000 issued and outstanding at December 31, 2022 and December 31, 2021
40
40
Additional paid-in capital (1)
42,871
53,918
Accumulated other comprehensive loss
(40
)
(40
)
Retained earnings (1)
2,073
173
Treasury stock, at cost, 28,918 at December 31, 2022 and December 31, 2021
(2,406
)
(2,406
)
Total stockholders’ equity (1)
42,570
51,717
Non-controlling interest in Spark HoldCo, LLC (1)
(14,234
)
(3,168
)
Total equity (1)
28,336
48,549
Total Liabilities, Series A Preferred Stock and stockholders’ equity (1)
$
330,950
$
353,759
Amounts have been adjusted to reflect certain immaterial prior period adjustments. Please see Appendix Table A-4 and Note 2 in the Notes to the Consolidated Financial Statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2022 for a description of the adjustments.
All share amounts have been retrospectively restated to effect the Company’s March 21, 2023 Reverse Stock Split at a ratio of 1 to 5 shares of common stock.
VIA RENEWABLES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 and 2020 (in thousands, except per share data)
Year Ended December 31,
2022
2021
2020
Revenues:
Retail revenues
$
462,815
$
397,728
$
555,547
Net asset optimization (expense) revenues
(2,322
)
(4,243
)
(657
)
Total revenues
460,493
393,485
554,890
Operating expenses:
Retail cost of revenues
357,096
323,219
344,592
General and administrative
61,933
44,279
90,734
Depreciation and amortization
16,703
21,578
30,767
Total operating expenses
435,732
389,076
466,093
Operating income
24,761
4,409
88,797
Other (expense)/income:
Interest expense
(7,204
)
(4,926
)
(5,266
)
Interest and other income
129
370
423
Total other (expense)/income
(7,075
)
(4,556
)
(4,843
)
Income (loss) before income tax expense
17,686
(147
)
83,954
Income tax expense (1)
6,483
5,266
17,880
Net income (loss) (1)
$
11,203
$
(5,413
)
$
66,074
Less: Net income (loss) attributable to non-controlling interest (1)
3,625
(9,146
)
38,761
Net income attributable to Via Renewables, Inc. stockholders (1)
$
7,578
$
3,733
$
27,313
Less: Dividend on Series A preferred stock
8,054
7,804
7,441
Net (loss) income attributable to stockholders of Class A common stock (1)
$
(476
)
$
(4,071
)
$
19,872
Other comprehensive income (loss), net of tax:
Comprehensive income (loss) (1)
$
11,203
$
(5,413
)
$
66,074
Less: Comprehensive income (loss) attributable to non-controlling interest (1)
3,625
(9,146
)
38,761
Comprehensive income attributable to Via Renewables, Inc. stockholders (1)
$
7,578
$
3,733
$
27,313
Net (loss) income attributable to Via Renewables, Inc. per share of Class A common stock
Basic (1)(2)
$
(0.15
)
$
(1.35
)
$
6.83
Diluted (1)(2)
$
(0.15
)
$
(1.35
)
$
6.75
Weighted average shares of Class A common stock outstanding
Basic (2)
3,156
3,026
2,911
Diluted (2)
3,156
3,026
2,943
Amounts have been adjusted to reflect certain immaterial prior period adjustments. Please see Appendix Table A-4 and Note 2 in the Notes to the Consolidated Financial Statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2022 for a description of the adjustments.
All shares and per share amounts have been retrospectively restated to effect the Company’s March 21, 2023 Reverse Stock Split at a ratio of 1 to 5 shares of common stock.
VIA RENEWABLES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 , 2021 AND 2020 (in thousands)
Year Ended December 31,
2022
2021
2020
Cash flows from operating activities:
Net income (loss)(1)
$
11,203
$
(5,413
)
$
66,074
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Depreciation and amortization expense
16,703
21,578
30,767
Deferred income taxes (1)
1,962
5,507
3,764
Stock based compensation
3,252
3,448
2,503
Amortization of deferred financing costs
1,125
997
1,210
Bad debt expense
6,865
445
4,692
(Loss) gain on derivatives, net
(17,821
)
(21,200
)
23,386
Current period cash settlements on derivatives, net
35,643
15,692
(37,414
)
Other
26
–
–
Changes in assets and liabilities:
(Increase) decrease in accounts receivable
(21,620
)
3,229
37,960
(Increase) decrease in accounts receivable-affiliates
(2,636
)
1,234
(3,020
)
(Increase) decrease in inventory
(2,423
)
(486
)
1,458
Increase in customer acquisition costs
(5,870
)
(1,415
)
(1,513
)
(Increase) decrease in prepaid and other current assets
(10,475
)
654
(2,120
)
Decrease in intangible assets-customer acquisition
–
27
–
(Increase) decrease in other assets
(502
)
(190
)
288
Increase (decrease) in accounts payable and accrued liabilities (1)
2,707
(10,213
)
(37,012
)
Decrease in accounts payable-affiliates
(226
)
(335
)
(184
)
(Decrease) increase in other current liabilities
(1,597
)
(705
)
1,180
Decrease in other non-current liabilities
(109
)
(152
)
(188
)
Net cash provided by operating activities
16,207
12,702
91,831
Cash flows from investing activities:
Purchases of property and equipment
(2,153
)
(2,713
)
(2,154
)
Acquisition of Customers
(4,718
)
(3,797
)
–
Net cash used in investing activities
(6,871
)
(6,510
)
(2,154
)
Cash flows from financing activities:
Buyback of Series A Preferred Stock
–
–
(2,282
)
Borrowings on notes payable
289,000
774,000
612,000
Payments on notes payable
(324,000
)
(739,000
)
(635,000
)
Net borrowings on subordinated debt facility
20,000
–
–
Payment for acquired customers
–
–
(972
)
Restricted stock vesting
(663
)
(1,329
)
(1,107
)
Payment of dividends to Class A common stockholders
(11,461
)
(10,987
)
(10,569
)
Payment of distributions to non-controlling unitholders
(14,553
)
(17,436
)
(29,450
)
Payment of Preferred Stock dividends
(7,628
)
(7,804
)
(7,886
)
Purchase of Treasury Stock
–
–
(395
)
Net cash used in financing activities
(49,305
)
(2,556
)
(75,661
)
(Decrease) increase in Cash and cash equivalents and Restricted Cash
(39,969
)
3,636
14,016
Cash and cash equivalents and Restricted cash-beginning of period
75,320
71,684
57,668
Cash and cash equivalents and Restricted cash-end of period
$
35,351
$
75,320
$
71,684
Supplemental Disclosure of Cash Flow Information:
Non-cash items:
Property and equipment purchase accrual
$
(4
)
$
(38
)
$
46
Cash paid (received) during the period for:
Interest
$
5,561
$
3,754
$
3,859
Taxes
$
865
$
(1,788
)
$
23,890
Amounts have been adjusted to reflect certain immaterial prior period adjustments. Please see Appendix Table A-4 and Note 2 in the Notes to the Consolidated Financial Statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2022 for a description of the adjustments.
VIA RENEWABLES, INC. OPERATING SEGMENT RESULTS FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 and 2020 (in thousands, except volume and per unit operating data) (unaudited)
Year Ended December 31,
2022
2021
2020
(in thousands, except volume and per unit operating data)
Retail Electricity Segment
Total Revenues
$
352,750
$
322,594
$
461,393
Retail Cost of Revenues
275,701
284,794
306,012
Less: Net (Losses) Gains on non-trading derivatives, net of cash settlements
(15,265
)
6,194
12,148
Non-recurring event – winter storm Uri
9,565
(64,403
)
–
Retail Gross Margin (1) -Electricity
$
82,749
$
96,009
$
143,233
Volumes-Electricity (MWhs) (3)
2,433,906
2,677,681
4,049,543
Retail Gross Margin (2) (4) -Electricity per MWh
$
34.00
$
35.86
$
35.37
Retail Natural Gas Segment
Total Revenues
$
110,065
$
75,134
$
94,154
Retail Cost of Revenues
81,395
38,425
38,580
Less: Net (Losses) Gains on non-trading derivatives, net of cash settlements
(3,396
)
184
2,334
Retail Gross Margin (1) -Gas
$
32,066
$
36,525
$
53,240
Volumes-Gas (MMBtus)
11,558,952
8,611,285
11,100,446
Retail Gross Margin (2) -Gas per MMBtu
$
2.77
$
4.24
$
4.80
(1) Reflects the Retail Gross Margin attributable to our Retail Electricity Segment or Retail Natural Gas Segment, as applicable. Retail Gross Margin is a non-GAAP financial measure. See “Reconciliation of GAAP to Non-GAAP Performance” for a reconciliation of Retail Gross Margin to most directly comparable financial measures presented in accordance with GAAP.
(2) Reflects the Retail Gross Margin for the Retail Electricity Segment or Retail Natural Gas Segment, as applicable, divided by the total volumes in MWh or MMBtu, respectively.
(3) Excludes volumes (8,402 MWhs) related to winter storm Uri impact for the year ended December 31, 2021.
(4) Retail Gross Margin – Electricity per MWh excludes winter storm Uri impact.
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 (loss) gain 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 the provision for income taxes, interest expense and depreciation and amortization. This conforms to the calculation of Adjusted EBITDA in our Senior Credit Facility.
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 and amortize such costs over two years. We do not deduct the cost of customer acquisitions through acquisitions of businesses 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 these instruments. We also deduct non-cash compensation expense that results from the issuance of restricted stock units under our long-term incentive plan due to the non-cash nature of the expense.
We 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 have historically included the financial impact of weather variability in the calculation of Adjusted EBITDA. We will continue this historical approach, but during the first quarter of 2021 we incurred a net pre-tax financial loss of $64.9 million due to winter storm Uri. This loss was incurred due to uncharacteristic extended sub-freezing temperatures across Texas combined with the impact of the pricing caps ordered by ERCOT. We believe this event is unusual, infrequent, and non-recurring in nature.
As our Senior Credit Facility is considered a material agreement and Adjusted EBITDA is a key component of our material covenants, we consider our covenant compliance to be material to the understanding of our financial condition and/or liquidity. Our lenders under our Senior Credit Facility allowed $60.0 million of the $64.9 million pre-tax storm loss incurred in the first quarter of 2021 to be added back as a non-recurring item in the calculation of Adjusted EBITDA for our Debt Covenant Calculations. We received a $0.4 million credit from ERCOT for winter storm related losses during the third quarter of 2021, resulting in a net pre-tax storm loss of $64.4 million for the year ended December 31, 2021. In June 2022, we received $9.6 million from ERCOT related to PURA Subchapter N Securitization financing. For consistent presentation of the financial impact of winter storm Uri, $5.2 million of the $9.6 million is reflected as non-recurring items reducing Adjusted EBITDA for the year ended December 31, 2022.
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 consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following:
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;
our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt; and
our compliance with financial debt covenants in our Senior Credit Facility.
Retail Gross Margin
We define Retail Gross Margin as gross profit less (i) net asset optimization revenues (expenses), (ii) net gains (losses) on non-trading derivative instruments, (iii) net current period cash settlements on non-trading derivative instruments and (iv) gains (losses) from non-recurring events (including non-recurring market volatility). 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’s operating performance, Retail Gross Margin should not be considered an alternative to, or more meaningful than, gross profit, 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.
We have historically included the financial impact of weather variability in the calculation of Retail Gross Margin. We will continue this historical approach, but during the first quarter of 2021 we added back the $64.9 million net financial loss incurred related to winter storm Uri, as described above, in the calculation of Retail Gross Margin because the extremity of the Texas storm combined with the impact of unprecedented pricing mechanisms ordered by ERCOT is considered unusual, infrequent, and non-recurring in nature. In June 2022, we received $9.6 million from ERCOT related to PURA Subchapter N Securitization financing. The $9.6 million is reflected as a non-recurring item reducing Retail Gross Margin for the year ended December 31, 2022 for consistent presentation of the financial impacts of winter storm Uri.
The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. The GAAP measure most directly comparable to Retail Gross Margin is gross profit. 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 (used in) operating activities, or gross profit. 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), net cash provided by (used in) operating activities, and gross profit, 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.
APPENDIX TABLES A-1 AND A-2 ADJUSTED EBITDA RECONCILIATIONS (in thousands) (unaudited)
Year Ended December 31,
Quarter Ended December 31,
(in thousands)
2022
2021
2022
2021
Reconciliation of Adjusted EBITDA to Net Income (Loss):
Net income (loss) (1)
$
11,203
$
(5,413
)
$
(27,488
)
$
(37,306
)
Depreciation and amortization
16,703
21,578
3,313
5,080
Interest expense
7,204
4,926
2,075
765
Income tax expense (benefit) (1)
6,483
5,266
(2,243
)
(3,894
)
EBITDA
41,593
26,357
(24,343
)
(35,355
)
Less:
Net, gain (loss) on derivative instruments
17,821
21,200
(37,994
)
(36,526
)
Net, cash settlements on derivative instruments
(35,801
)
(15,692
)
121
(9,642
)
Customer acquisition costs
5,870
1,415
1,596
650
Plus:
Non-cash compensation expense
3,252
3,448
662
1,436
Non-recurring event – winter storm Uri
(5,162
)
60,000
–
–
Non-recurring legal and regulatory settlements
–
(2,225
)
–
–
Adjusted EBITDA
$
51,793
$
80,657
$
12,596
$
11,599
Year Ended December 31,
Quarter Ended December 31,
(in thousands)
2022
2021
2022
2021
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by (used in) operating activities
$
16,207
$
12,702
$
(5,004
)
$
(6,070
)
Amortization of deferred financing costs
(1,125
)
(997
)
(206
)
(205
)
Bad debt expense
(6,865
)
(445
)
(3,970
)
(66
)
Interest expense
7,204
4,926
2,075
765
Income tax expense (benefit) (1)
6,483
5,266
(2,243
)
(3,894
)
Non-recurring event – winter storm Uri
(5,162
)
60,000
–
–
Non-recurring legal settlement
–
(2,225
)
–
–
Changes in operating working capital
Accounts receivable, prepaids, current assets
34,731
(5,117
)
41,960
20,188
Inventory
2,423
486
(869
)
(562
)
Accounts payable, accrued liabilities, current liabilities (1)
(884
)
11,253
(22,190
)
(4,556
)
Other (1)
(1,219
)
(5,192
)
3,0432
5,999
Adjusted EBITDA
$
51,793
$
80,657
$
12,596
$
11,599
Cash Flow Data:
Cash flows provided by (used in) operating activities
$
16,207
$
12,702
$
(5,004
)
$
(6,070
)
Cash flows used in investing activities
$
(6,871
)
$
(6,510
)
$
(471
)
$
(2,821
)
Cash flows used in financing activities
$
(49,305
)
$
(2,556
)
$
(1,525
)
$
(13,908
)
Amounts have been adjusted to reflect certain immaterial prior period adjustments. Please see Appendix Table A-4 and Note 2 in the Notes to the Consolidated Financial Statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2022 for a description of the adjustments.
The following table presents a reconciliation of Retail Gross Margin to gross profit for each of the periods indicated.
APPENDIX TABLE A-3 RETAIL GROSS MARGIN RECONCILIATION (in thousands) (unaudited)
Year Ended December 31,
Quarter Ended December 31,
(in thousands)
2022
2021
2022
2021
Reconciliation of Retail Gross Margin to Gross Profit (Loss):
Total Revenues
$
460,493
$
393,485
$
117,381
$
100,306
Less:
Retail cost of revenues
357,096
323,219
124,475
124,577
Gross Profit (Loss)
$
103,397
$
70,266
$
(7,094
)
$
(24,271
)
Less:
Net asset optimization expense
(2,322
)
(4,243
)
(1,842
)
(3,701
)
Net, gain (loss) on non-trading derivative instruments
17,305
22,130
(37,265
)
(36,084
)
Net, cash settlements on non-trading derivative instruments
(1) Retail Gross Margin for the year ended December 31, 2021 includes a $0.5 million reduction related to the Winter Storm Uri credit settlements received and includes a $64.4 million add back related to Winter Storm Uri.
(2) Retail Gross Margin for year ended December 31, 2022 includes a deduction of $9.6 million related to proceeds received under an ERCOT (winter storm Uri) securitization mechanism in June 2022.
APPENDIX TABLE A-4 PRIOR PERIOD ADJUSTMENTS
The consolidated balance sheets, consolidated statements of operations and comprehensive income (loss), consolidated statements of changes in equity and consolidated statements of cash flows reflect immaterial adjustments to the historical balances of deferred tax assets, accrued liabilities, additional paid in capital, retained earnings, non-controlling interest in Spark HoldCo, income tax expense, net (loss) income attributable to Via Renewables, Inc. stockholders, net (loss) income attributable to stockholders of Class A common stock, comprehensive income (loss) and earnings per share as of and for the years ended December 31, 2021 and 2020. We made these adjustments in accordance with GAAP, to adjust the amount of deferred tax assets attributable to Via based on its ownership percentage in Spark HoldCo.
The Company evaluated the materiality of the errors from both a quantitative and qualitative perspective and concluded that the errors were immaterial to the Company’s prior period annual consolidated financial statements, but that recording adjustments to correct the errors in that current period would materially misstate the financial statements as of and for the year ended December 31, 2022, Since the revision was not material to any prior period annual consolidated financial statements, no amendments to the previously filed annual reports was required. Consequently, the Company revised the historical consolidated financial information presented herein. Below are amounts as reported and as adjusted for each of the years (in thousands).
December 31, 2020
December 31, 2021
As Reported
Adjustments
As Adjusted
As Reported
Adjustments
As Adjusted
Deferred Tax Assets
$
27,960
$
(1,859
)
$
26,101
$
23,915
$
(1,517
)
$
22,398
Total Assets
366,667
(1,859
)
364,808
355,276
(1,517
)
353,759
Accrued liabilities
34,164
285
34,449
19,303
285
19,588
Additional Paid in Capital
55,507
–
55,507
54,950
(1,032
)
53,918
Retained Earnings
11,721
(1,977
)
9,744
776
(603
)
173
Total stockholders’ equity
64,854
(1,977
)
62,877
53,352
(1,635
)
51,717
Non controlling interest in Spark HoldCo
23,607
(167
)
23,440
(3,001
)
(167
)
(3,168
)
Total Equity
88,461
(2,144
)
86,317
50,351
(1,802
)
48,549
Total Liabilities, Series A Preferred Stock and stockholders’ equity
366,667
(1,859
)
364,808
355,276
(1,517
)
353,759
Income tax expense
15,736
2,144
17,880
3,804
1,462
5,266
Net income (loss)
68,218
(2,144
)
66,074
(3,951
)
(1,462
)
(5,413
)
Net income (loss) attributable to non controlling interest
38,928
(167
)
38,761
(9,146
)
–
(9,146
)
Net Income Available to Via Renewables, Inc. stockholders
29,290
(1,977
)
27,313
5,195
(1,462
)
3,733
Net (loss) income attributable to stockholders of Class A common stock
21,849
(1,977
)
19,872
(2,609
)
(1,462
)
(4,071
)
Comprehensive income (loss)
68,218
(2,144
)
66,074
(3,951
)
(1,462
)
(5,413
)
Comprehensive income (loss) attributable to non controlling interests
38,928
(167
)
38,761
(9,146
)
–
(9,146
)
Comprehensive Income attributable to Via Renewables, Inc. stockholders
29,290
(1,977
)
27,313
5,195
(1,462
)
3,733
Net income (loss) attributable to Via Renewables, Inc. per share of Class A common stock
Basic (1)
7.50
(0.67
)
6.83
(0.85
)
(0.50
)
(1.35
)
Diluted (1)
7.40
(0.65
)
6.75
(0.85
)
(0.50
)
(1.35
)
Cash flows from operating activities:
Net income (loss)
68,218
(2,144
)
66,074
(3,951
)
(1,462
)
(5,413
)
Deferred income taxes
1,905
1,859
3,764
4,045
1,462
5,507
Accounts payable and accrued liabilities
(37,297
)
285
(37,012
)
(10,213
)
–
(10,213
)
Net cash provided by operating activities
91,831
–
91,831
12,702
–
12,702
All shares and per share amounts have been retrospectively restated to effect the Company’s March 21, 2023 Reverse Stock Split at a ratio of 1 to 5 shares of common stock.
HOUSTON, TX / ACCESSWIRE / March 20, 2023 / Via Renewables, Inc. (“Via Renewables” or the “Company”) (NASDAQ:VIA)(NASDAQ:VIASP), an independent retail energy services company, announced that its shareholders overwhelmingly approved a proposal by the Company’s Board of Directors to consummate a reverse stock split of the Company’sClass A common stock, par value $0.01 per share (the “Class A common stock”), at a ratio between 1 for 2 to 1 for 5 and (ii) Class B common stock, par value $0.01 per share (the “Class B common stock” and, together with the Class A common stock, the “Common Stock”), at a ratio between 1 for 2 to 1 for 5, with such ratios to be determined by the Chief Executive Officer or the Chief Financial Officer of the Company, or to determine not to proceed with the reverse stock split, without further approval or authorization of the Company’s shareholders, during a period of time not to exceed the one-year anniversary of the date on which the reverse stock split is approved by the Company’s shareholders (the “Reverse Stock Split”).
The Company plans to file today with the Delaware Secretary of State the Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to effect the Reverse Stock Split for each share of Common Stock issued and outstanding as of March 21, 2023 at 5:30 PM ET. Other than the Reverse Stock Split, no changes were made to the Company’s Amended and Restated Certificate of Incorporation.
As a result of the Reverse Stock Split, every five shares of issued and outstanding Common Stock will be automatically combined into one issued and outstanding share of Common Stock, without any change in the par value per share. No fractional shares will be issued as a result of the Reverse Stock Split. Any fractional shares that would otherwise have resulted from the Reverse Stock Split will be rounded up the next whole number. The number of authorized shares of Common Stock under the Company’s Amended and Restated Certificate of Incorporation as amended by the Certificate of Amendment, will remain unchanged at 120,000,000 shares of Class A common stock and 60,000,000 shares of Class B common stock.
In connection with the Reverse Stock Split, the CUSIP number for the Company’s Class A common stock will change. At the beginning of trading on March 22, 2023 or as soon thereafter as practicable (the “Marketplace Effective Date”), the Company’s Class A common stock is expected to begin trading on a reverse stock split-adjusted basis on the NASDAQ Global Select Market under the CUSIP number 92556D304. The trading symbol for the Class A common stock will remain “VIA.”
For more information about the Reverse Stock Split, see the Company’s definitive proxy statement filed with the U.S. Securities and Exchange Commission on February 27, 2023, the relevant portions of which are incorporated herein by reference.
About Via Renewables, Inc.
Via Renewables, 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, Via Renewables currently operates in 103 utility service territories across 20 states and the District of Columbia. Via Renewables 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 Via Renewables Investor Relations website at https://viarenewables.com/. Investors are urged to monitor our website regularly for information and updates about the Company.
This press 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 press release are forward-looking statements. The forward-looking statements include statements regarding the anticipated filing of the Certificate of Amendment to consummate the Reverse Stock Split and the expected Marketplace Effective Date for the Reverse Stock Split. 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 press release are subject to risks and uncertainties. All forward-looking statements speak only as of the date of this press 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:
Stephen Rabalais,
832-200-3727
Expects to File Notification of Late Filing on Form 12b-25 with the SEC and plans to file Form 10-K for the fiscal year ended December 31, 2022, within 15-day grace period
HOUSTON, TX / ACCESSWIRE / March 16, 2023 / Via Renewables, Inc. (“Via Renewables” or the “Company”) (NASDAQ:VIA; VIASP), an independent retail energy services company, today reported preliminary unaudited financial results for the year ended December 31, 2022.
The Company plans to release its full fourth quarter and full year 2022 financial results before the 12b-25 extended deadline, and to host a conference call to discuss fourth quarter and full year 2022 results the following day.
Key Business Highlights
Expected $(27.5) million in Net Loss and $12.6 million in Adjusted EBITDA for the fourth quarter
Expected $(7.1) million in Gross Loss and $31.9 million in Retail Gross Margin for the fourth quarter
Expected $11.2 million in Net Income and $51.8 million in Adjusted EBITDA for the year ended 2022
Expected $103.4 million in Gross Profit and $114.8 million in Retail Gross Margin for the year ended 2022
Expected average monthly attrition of 3.8%
Expected total liquidity of $76.9 million as of December 31, 2022
“Looking back on 2022, Via was able to weather some of the highest sustained commodity price increases we’ve ever seen. We were able to quickly react to the rising price environment and offer competitive rates where we saw opportunities. This allowed us to increase our customer acquisition spend from the prior year and helped us counter rising attrition that resulted from the high commodity prices. We were also able to acquire approximately 18,700 RCEs in the Florida gas market in the second half of the year. Finally, we restructured our credit facility and positioned ourselves to have ample liquidity for these turbulent market conditions” said Keith Maxwell, Via Renewables’ Chief Executive Officer.
Preliminary and Unaudited Financial Results; Material Weakness
The Company’s audited financial statements for the year ended December 31, 2022 are not yet available. Accordingly, the Company’s preliminary and unaudited financial results are subject to completion. Actual financial results that will be reflected in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”), including audited financial statements, when they are completed and publicly disclosed may differ from these preliminary and unaudited results.
The Company expects to report in its Form 10-K a material weakness in the design and operation of the controls over its calculation of deferred tax assets and liabilities, and income tax expense, and immaterial corrections for the years ended December 31, 2021 and 2020. The information presented herein gives effect to the immaterial corrections. Please see Note 2 in the Notes to the Consolidated Financial Statements appearing in our Form 10-K for the year ended December 31, 2022 for a description of the adjustments.
Late Filing on Form 12b-25
The Company expects to file a Notification of Late Filing on Form 12b-25 with the SEC as it determined it would be unable to file its Form 10-K by its due date of March 16, 2023. The Company expects to file its Form 10-K within the extension period of 15 calendar days as provided by Rule 12b-25 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
About Via Renewables, Inc.
Via Renewables, 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, Via Renewables currently operates in 103 utility service territories across 20 states and the District of Columbia. Via Renewables 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 Via Renewables Investor Relations website at https://viarenewables.com/. Investors are urged to monitor our website regularly for information and updates about the Company.
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 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 are forward-looking statements. The forward-looking statements include statements regarding the timing of the earnings release, the Form 10-K and the earnings call, the impact to any of the preliminary financial information reported herein as a result of the finalization of the Form 10K, the impacts of the 2021 severe weather event, cash flow generation and liquidity, business strategy, prospects for growth and acquisitions, outcomes of legal proceedings, ability to pay and amount of cash dividends and distributions on our Class A common stock and Series A Preferred Stock, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives, beliefs of management, availability of and terms of capital, competition, 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:
our ability to finalize our Form 10-K within the time period permitted by Form 12b-25;
our ability to remediate the material weakness in our internal control over financial reporting, the identification of additional material weaknesses in the future or otherwise failing to maintain an effective system of internal controls;
the ultimate impact of the 2021 severe weather event, including future benefits or costs related to ERCOT market Securitization efforts, and any corrective action by the State of Texas, ERCOT, the Railroad Commission of Texas, or the Public Utility Commission of Texas;
changes in commodity prices, the margins we achieve, and interest rates;
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 regulations, 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 and covenants in our debt agreements and collateral requirements;
credit risk with respect to suppliers and customers;
our ability to acquire customers and actual attrition rates;
changes in costs to acquire customers;
accuracy of billing systems;
our ability to successfully identify, complete, and efficiently integrate acquisitions into our operations;
significant changes in, or new changes by, the independent system operators (“ISOs”) in the regions we operate;
competition; and
the “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and other public filings and press releases.
You should review the risk factors and other factors noted throughout 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:
Stephen Rabalais,
832-200-3727
Media Relations:
Kira Jordan,
832-255-7302
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 (loss) gain 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 the provision for income taxes, interest expense and depreciation and amortization. This conforms to the calculation of Adjusted EBITDA in our Senior Credit Facility.
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 and amortize such costs over two years. We do not deduct the cost of customer acquisitions through acquisitions of businesses 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 these instruments. We also deduct non-cash compensation expense that results from the issuance of restricted stock units under our long-term incentive plan due to the non-cash nature of the expense.
We 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 have historically included the financial impact of weather variability in the calculation of Adjusted EBITDA. We will continue this historical approach, but during the first quarter of 2021 we incurred a net pre-tax financial loss of $64.9 million due to winter storm Uri. This loss was incurred due to uncharacteristic extended sub-freezing temperatures across Texas combined with the impact of the pricing caps ordered by ERCOT. We believe this event is unusual, infrequent, and non-recurring in nature.
As our Senior Credit Facility is considered a material agreement and Adjusted EBITDA is a key component of our material covenants, we consider our covenant compliance to be material to the understanding of our financial condition and/or liquidity. Our lenders under our Senior Credit Facility allowed $60.0 million of the $64.9 million pre-tax storm loss incurred in the first quarter of 2021 to be added back as a non-recurring item in the calculation of Adjusted EBITDA for our Debt Covenant Calculations. We received a $0.4 million credit from ERCOT for winter storm related losses during the third quarter of 2021, resulting in a net pre-tax storm loss of $64.4 million for the year ended December 31, 2021. In June 2022, we received $9.6 million from ERCOT related to PURA Subchapter N Securitization financing. For consistent presentation of the financial impact of winter storm Uri, $5.2 million of the $9.6 million is reflected as non-recurring items reducing Adjusted EBITDA for the year ended December 31, 2022.
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 consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following:
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;
our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt; and
our compliance with financial debt covenants in our Senior Credit Facility.
Retail Gross Margin
We define Retail Gross Margin as gross profit less (i) net asset optimization revenues (expenses), (ii) net gains (losses) on non-trading derivative instruments, (iii) net current period cash settlements on non-trading derivative instruments and (iv) gains (losses) from non-recurring events (including non-recurring market volatility). 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’s operating performance, Retail Gross Margin should not be considered an alternative to, or more meaningful than, gross profit, 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.
We have historically included the financial impact of weather variability in the calculation of Retail Gross Margin. We will continue this historical approach, but during the first quarter of 2021 we added back the $64.9 million net financial loss incurred related to winter storm Uri, as described above, in the calculation of Retail Gross Margin because the extremity of the Texas storm combined with the impact of unprecedented pricing mechanisms ordered by ERCOT is considered unusual, infrequent, and non-recurring in nature. In June 2022, we received $9.6 million from ERCOT related to PURA Subchapter N Securitization financing. The $9.6 million is reflected as a non-recurring item reducing Retail Gross Margin for the year ended December 31, 2022 for consistent presentation of the financial impacts of winter storm Uri.
The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. The GAAP measure most directly comparable to Retail Gross Margin is gross profit. 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 (used in) operating activities, or gross profit. 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), net cash provided by (used in) operating activities, and gross profit, 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. Historical information is based upon our preliminary unaudited financial information.
APPENDIX TABLES A-1 AND A-2 ADJUSTED EBITDA RECONCILIATIONS (in thousands) (unaudited)
Year Ended December 31,
Quarter Ended December 31,
(in thousands)
2022
2021
2022
2021
Reconciliation of Adjusted EBITDA to Net Income (Loss):
Net income (loss) (1)
$
11,203
$
(5,413)
$
(27,488)
$
(37,306)
Depreciation and amortization
16,703
21,578
3,313
5,080
Interest expense
7,204
4,926
2,075
765
Income tax expense (benefit) (1)
6,483
5,266
(2,243)
(3,894)
EBITDA
41,593
26,357
(24,343)
(35,355)
Less:
Net, gain (loss) on derivative instruments
17,821
21,200
(37,994)
(36,526)
Net, cash settlements on derivative instruments
(35,801)
(15,692)
121
(9,642)
Customer acquisition costs
5,870
1,415
1,596
650
Plus:
Non-cash compensation expense
3,252
3,448
662
1,436
Non-recurring event – winter storm Uri
(5,162)
60,000
–
–
Non-recurring legal and regulatory settlements
–
(2,225)
–
–
Adjusted EBITDA
$
51,793
$
80,657
$
12,596
$
11,599
Year Ended December 31,
Quarter Ended December 31,
(in thousands)
2022
2021
2022
2021
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by (used in) operating activities
$
16,207
$
12,702
$
(5,004)
$
(6,070)
Amortization of deferred financing costs
(1,125)
(997)
(206)
(205)
Bad debt expense
(6,865)
(445)
(3,970)
(66)
Interest expense
7,204
4,926
2,075
765
Income tax expense (benefit) (1)
6,483
5,266
(2,243)
(3,894)
Non-recurring event – winter storm Uri
(5,162)
60,000
–
–
Non-recurring legal settlement
–
(2,225)
–
–
Changes in operating working capital
Accounts receivable, prepaids, current assets
34,731
(5,117)
41,960
20,188
Inventory
2,423
486
(869)
(562)
Accounts payable, accrued liabilities, current liabilities (1)
(884)
11,253
(22,190)
(4,556)
Other (1)
(1,219)
(5,192)
3,0432
5,999
Adjusted EBITDA
$
51,793
$
80,657
$
12,596
$
11,599
Cash Flow Data:
Cash flows provided by (used in) operating activities
$
16,207
$
12,702
$
(5,004)
$
(6,070)
Cash flows used in investing activities
$
(6,871)
$
(6,510)
$
(471)
$
(2,821)
Cash flows used in financing activities
$
(49,305)
$
(2,556)
$
(1,525)
$
(13,908)
(1) Amounts have been adjusted to reflect certain immaterial prior period adjustments in the following amounts: (1) for the year ended December 31, 2021, net loss has been adjusted from $3,951 by $1,462 to $5,413; income tax expenses has been adjusted from $3,804 by $1,462 to $5,266; and other has been adjusted from $(3,730) by $(1,462) to $(5,192), and (2) for the quarter ended December 31, 2021 net loss has been adjusted from $(35,844) by $(1,462) to $(37,306); income tax benefit has been adjusted from $(5,356) by $1,462 to $(3,894); and other has been adjusted from $7,461 by $(1,462) to $5,999. Please see Note 2 in the Notes to the Consolidated Financial Statements appearing in our Annual Report on Form 10-K for the year ended December 31, 2022 for a description of the adjustments.
The following table presents a reconciliation of Retail Gross Margin to gross profit for each of the periods indicated. Historical information is based upon our preliminary unaudited financial information.
APPENDIX TABLE A-3 RETAIL GROSS MARGIN RECONCILIATION (in thousands) (unaudited)
Year Ended December 31,
Quarter Ended December 31,
(in thousands)
2022
2021
2022
2021
Reconciliation of Retail Gross Margin to Gross Profit (Loss):
Total Revenues
$
460,493
$
393,485
$
117,381
$
100,306
Less:
Retail cost of revenues
357,096
323,219
124,475
124,577
Gross Profit (Loss)
$
103,397
$
70,266
$
(7,094)
$
(24,271)
Less:
Net asset optimization expense
(2,322)
(4,243)
(1,842)
(3,701)
Net, gain (loss) on non-trading derivative instruments
17,305
22,130
(37,265)
(36,084)
Net, cash settlements on non-trading derivative instruments
(1) Retail Gross Margin for the year ended December 31, 2021 includes a $0.5 million reduction related to the Winter Storm Uri credit settlements received and includes a $64.4 million add back related to Winter Storm Uri.
(2) Retail Gross Margin for year ended December 31, 2022 includes a deduction of $9.6 million related to proceeds received under an ERCOT (winter storm Uri) securitization mechanism in June 2022.
HOUSTON, TX / ACCESSWIRE / March 1, 2023 / Via Renewables, Inc. (“Via Renewables” or the “Company”) (NASDAQ:VIA)(NASDAQ:VIASP), an independent retail energy services company, today announced that it has rescheduled its fourth quarter and full year 2022 earnings conference call. The Company will announce its earnings and conference call schedule in a future press release.
The earnings release and conference call is being rescheduled due to a delay in finalizing the Company’s Form 10-K for the year ended December 31, 2022. The rescheduling will provide for additional time for the Company to review and finalize its calculation of its deferred tax asset and liabilities and related impact on income tax expense for the year ended December 31, 2022 and assess the impact to prior years, if any, as well as complete the Company’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022
While the work is not yet finalized, the Company does not expect any changes to the Adjusted EBITDA, Gross Profit/Loss or Retail Gross Margin it expected to report in December 31, 2022, or in prior fiscal years.
About Via Renewables, Inc.
Via Renewables, 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 under our well-established and well-regarded brands, including Spark Energy, Major Energy, Provider Power, and Verde Energy. Headquartered in Houston, Texas, Via Renewables currently operates in 102 utility service territories across 19 states and the District of Columbia. Via Renewables 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 Via Renewables Investor Relations website at https://viarenewables.com/. Investors are urged to monitor our website regularly for information and updates about the Company.
This press 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 are forward-looking statements. The forward-looking statements include statements regarding the anticipated timing of finalizing our Form 10-K for the year ended December 31, 2022, the earnings release and conference call and the impact of finalizing our audit. 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 press release are subject to risks and uncertainties. All forward-looking statements speak only as of the date of this press 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.
HOUSTON, TX / ACCESSWIRE / February 8, 2023 /Via Renewables, Inc. (“Via Renewables” or the “Company”) (NASDAQ:VIA), an independent retail energy services company, announced today that it plans to present its full year and fourth quarter 2022 financial results in a conference call and webcast on Thursday, March 2, 2023 at 10:00 AM Central (11:00 AM Eastern).
A live webcast of the conference call can be accessed from the Events & Presentations page of the Via Renewables Investor Relations website at ViaRenewables.com. An archived replay of the webcast will be available for twelve months following the live presentation.
About Via Renewables, Inc.Via Renewables, 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 their natural gas and electricity under our well-established and well-regarded brands, including Spark Energy, Major Energy, Provider Power, and Verde Energy. Headquartered in Houston, Texas, Via Renewables currently operates in 19 states and serves 102 utility territories. Via Renewables 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 Via Renewables Investor Relations website at ViaRenewables.com. Investors are urged to monitor our website regularly for information and updates about the Company.
HOUSTON, TX / ACCESSWIRE / January 18, 2023 /Via Renewables, Inc. (“Via Renewables” or the “Company”) (NASDAQ:VIA)(NASDAQ:VIASP), an independent retail energy services company, announced today that its Board of Directors has declared a quarterly cash dividend for the fourth quarter of 2022 in the amount of $0.18125 per share on its Class A Common Stock. This amount represents an annualized dividend of $0.725 per share. The fourth quarter dividend will be paid on March 15, 2023 to holders of record of Via Renewables’ Class A Common Stock on March 1, 2023.
Additionally, in accordance with the terms of the 8.75% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Stock”) of the Company, the Board of Directors has declared a quarterly cash dividend in the amount of $0.71298 per share on the Series A Preferred Stock. The dividend will be paid on April 17, 2023 to holders of record of Via Renewables’ Series A Preferred Stock on April 1, 2023. The floating rate period for the Series A Preferred Stock began on April 15, 2022.
About Via Renewables, Inc.
Via Renewables, 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 their natural gas and electricity under our well-established and well-regarded brands, including Spark Energy, Major Energy, Provider Power, and Verde Energy. Headquartered in Houston, Texas, Via Renewables currently operates in 19 states and serves 102 utility territories. Via Renewables 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 Via Renewables Investor Relations website at ViaRenewables.com. Investors are urged to monitor our website regularly for information and updates about the Company.
HOUSTON, TX / ACCESSWIRE / November 2, 2022 / Via Renewables, Inc. (“Via Renewables” or the “Company”) (NASDAQ:VIA)(NASDAQ:VIASP), an independent retail energy services company, today reported financial results for the quarter ended September 30, 2022.
Key Highlights
Reported $(4.9) million in Net Loss and $15.1 million in Adjusted EBITDA for the third quarter
Achieved $16.6 million in Gross Profit and $30.5 million in Retail Gross Margin for the third quarter
Total RCE count of 336,000 as of September 30, 2022
Total Liquidity of $67.7 million as of September 30, 2022
“Via is pleased to announce that in August 2022 we entered into an agreement to acquire a book of retail natural gas customers consisting of approximately 18,700 RCEs in the Florida market. There was no upfront cost and the acquisition will be immediately accretive to Adjusted EBITDA beginning in the third quarter of 2022. In addition, to grow the book, Via significantly increased its customer acquisition spend, spending $1.7 million in the third quarter of 2022 compared to $0.3 million in the third quarter of 2021.” said Keith Maxwell, Via Renewables’ President and Chief Executive Officer.
Summary Third Quarter 2022 Financial Results
Net Loss for the quarter ended September 30, 2022, was $(4.9) million compared to Net Income of $34.7 million for the quarter ended September 30, 2021. $41.9 million of the decrease was the result of a reduction in the mark-to-market on our hedges, compared to the prior year. The decrease in Net Income was partially offset by a reduction in both income tax expense and depreciation and amortization expense.
For the quarter ended September 30, 2022, Via Renewables reported Adjusted EBITDA of $15.1 million compared to Adjusted EBITDA of $22.0 million for the quarter ended September 30, 2021. Lower Adjusted EBITDA was driven mainly by a reduction of a legal accrual and a payroll tax credit in the third quarter of 2021. In addition we also had higher customer acquisition spend.
For the quarter ended September 30, 2022, Via Renewables reported Gross Profit of $16.6 million compared to Gross Profit of $57.7 million for the quarter ended September 30, 2021. The decrease, compared to the prior year, was largely the result of a reduction in the mark-to-market on our hedges.
For the quarter ended September 30, 2022, Via Renewables reported Retail Gross Margin of $30.5 million compared to Retail Gross Margin of $30.9 million for the quarter ended September 30, 2021. Higher volumes offset by lower unit margins resulted in a decrease in our Gas Retail Gross Margin. Lower volumes offset by higher unit margins resulted in an increase in our Electric Retail Gross Margin.
Liquidity and Capital Resources
($ in thousands)
September 30, 2022
Cash and cash equivalents
$
40,403
Senior Credit Facility Availability (1)
22,247
Subordinated Debt Facility Availability (2)
5,000
Total Liquidity
$
67,650
(1) Reflects amount of Letters of Credit that could be issued based on existing covenants as of September 30, 2022.
(2) The availability of the Subordinated Facility is dependent on our Founder’s discretion.
Dividend
On October 20, 2022, Via Renewables’ Board of Directors declared quarterly dividends of $0.18125 per share on its Class A common stock payable on December 15, 2022 to holders of record on December 1, 2022, and $0.666071 per share on its Series A Preferred Stock payable on January 17, 2023 to holders of record on January 1, 2023.
Business Outlook
Mr. Maxwell concluded, “We’re beginning to see Utilities raise rates to keep up with rising energy prices, which presents an opportunity for Via to be a more competitive option. Heading into the winter, we’re positioned well to navigate these rising commodity prices. At the same time, Via is also enjoying an uptick in organic sales while also evaluating potential book acquisitions. Via’s goal is to leverage our industry knowledge and business relationships to continue to grow our book and drive long term sustainable growth.”
Conference Call and Webcast
Via will host a conference call to discuss third quarter2022 results on Thursday, November 3, 2022, at 10:00 AM Central Time (11:00 AM Eastern).
A live webcast of the conference call can be accessed from the Events page of the Via Renewables Investor Relations website at https://viarenewables.com/ . An archived replay of the webcast will be available for twelve months following the live presentation.
About Via Renewables, Inc.
Via Renewables, 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, Via Renewables currently operates in 102 utility service territories across 19 states and the District of Columbia. Via Renewables 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 Via Renewables Investor Relations website at https://viarenewables.com/ . Investors are urged to monitor our website regularly for information and updates about the Company.
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 are forward-looking statements. The forward-looking statements include statements regarding the impacts of the 2021 severe weather event, cash flow generation and liquidity, business strategy, prospects for growth and acquisitions, outcomes of legal proceedings, ability to pay and amount of cash dividends and distributions on our Class A common stock and Series A Preferred Stock, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives, beliefs of management, availability and terms of capital, competition, governmental 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:
the ultimate impact of the 2021 severe weather event, including future benefits or costs related to ERCOT market securitization efforts, and any corrective action by the State of Texas, ERCOT, the Railroad Commission of Texas, or the Public Utility Commission of Texas;
changes in commodity prices, the margins we achieve, and interest rates;
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 regulations, 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 and covenants in our debt agreements and collateral requirements;
credit risk with respect to suppliers and customers;
our ability to acquire customers and actual attrition rates;
changes in cost to acquire customers;
accuracy of billing systems;
our ability to successfully identify, complete, and efficiently integrate acquisitions into our operations;
significant changes in, or new changes by, the independent system operators (“ISOs”) in the regions we operate;
competition; and
the “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, and other public filings and press releases.
You should review the risk factors and other factors noted throughout 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:
Stephen Rabalais,
832-200-3727
Media Relations:
Kira Jordan,
832-255-7302
VIA RENEWABLES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Revenues:
Retail revenues
$
117,187
$
98,267
$
343,592
$
293,721
Net asset optimization revenue (expense)
1,672
(288)
(480)
(542)
Total Revenues
118,859
97,979
343,112
293,179
Operating Expenses:
Retail cost of revenues
102,212
40,298
232,621
198,642
General and administrative
16,302
9,719
44,820
33,053
Depreciation and amortization
3,270
5,049
13,390
16,498
Total Operating Expenses
121,784
55,066
290,831
248,193
Operating (loss) income
(2,925)
42,913
52,281
44,986
Other (expense) income:
Interest expense
(2,002)
(1,298)
(5,129)
(4,161)
Interest and other income
11
63
265
228
Total other expenses
(1,991)
(1,235)
(4,864)
(3,933)
(Loss) income before income tax expense
(4,916)
41,678
47,417
41,053
Income tax (benefit) expense
(48)
7,021
8,726
9,160
Net (loss) income
$
(4,868)
$
34,657
$
38,691
$
31,893
Less: Net (loss) income attributable to non-controlling interests
(3,987)
19,774
21,981
14,158
Net (loss) income attributable to Via Renewables, Inc. stockholders
$
(881)
$
14,883
$
16,710
$
17,735
Less: Dividend on Series A Preferred Stock
2,026
1,951
5,677
5,853
Net (loss) income attributable to stockholders of Class A common stock
$
(2,907)
$
12,932
$
11,033
$
11,882
Net (loss) income attributable to Via Renewables, Inc. per share of Class A common stock
Basic
$
(0.18)
$
0.83
$
0.70
$
0.79
Diluted
$
(0.18)
$
0.82
$
0.70
$
0.79
Weighted average shares of Class A common stock outstanding
Basic
15,858
15,572
15,754
14,965
Diluted
15,858
15,686
15,863
15,099
Selected Balance Sheet Data
(in thousands)
September 30, 2022
December 31, 2021
Cash and cash equivalents
40,403
68,899
Working capital
120,322
114,188
Total assets
328,154
355,276
Total debt
113,000
135,000
Total liabilities
174,931
217,637
Total stockholders’ equity
58,020
53,352
Selected Cash Flow Data
Nine Months Ended September 30,
(in thousands)
2022
2021
Net cash provided by operating activities
$
21,211
$
18,772
Net cash used in investing activities
$
(6,400)
$
(3,689)
Net cash (used in) provided by financing activities
$
(47,780)
$
11,352
Operating Segment Results
(in thousands, except volume and per unit operating data)
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Retail Electricity Segment
Total Revenues
$
104,970
$
92,104
$
275,301
$
242,548
Retail Cost of Revenues
92,816
41,035
189,092
179,762
Less: Net (loss) gain on non-trading derivatives, net of cash settlements
(16,353)
22,359
14,240
46,711
Non-recurring event – Winter Storm Uri
–
497
9,565
(64,403)
Retail Gross Margin (1) – Electricity
$
28,507
$
28,213
$
62,404
$
80,478
Volumes – Electricity (MWhs) (3)
694,035
777,340
1,982,684
2,013,468
Retail Gross Margin (2) (4) – Electricity per MWh
$
41.07
$
36.29
$
31.47
$
39.97
Retail Natural Gas Segment
Total Revenues
$
12,217
$
6,163
$
68,291
$
51,173
Retail Cost of Revenues
9,396
(737)
43,529
18,880
Less: Net gain on non-trading derivatives, net of cash settlements
872
4,243
4,263
5,449
Retail Gross Margin (1) – Gas
$
1,949
$
2,657
$
20,499
$
26,844
Volumes – Gas (MMBtus)
1,170,857
668,063
7,771,468
5,765,588
Retail Gross Margin (2) – Gas per MMBtu
$
1.67
$
3.98
$
2.64
$
4.66
(1) Reflects the Retail Gross Margin attributable to our Retail Electricity Segment or Retail Natural Gas Segment, as applicable. Retail Gross Margin is a non-GAAP financial measure. See “Non-GAAP Performance Measures” for a reconciliation of Retail Gross Margin to its most directly comparable financial measures presented in accordance with GAAP.
(2) Reflects the Retail Gross Margin for the Retail Electricity Segment or Retail Natural Gas Segment, as applicable, divided by the total volumes in MWh or MMBtu, respectively.
(3) Excludes volumes (8,402 MWhs) related to Winter Storm Uri impact for the nine months ended September, 30, 2021.
(4) Retail Gross Margin – Electricity per MWh excludes Winter Storm Uri impact for the nine months ended September 30, 2021.
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 (loss) gain 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 the provision for income taxes, interest expense and depreciation and amortization. This conforms to the calculation of Adjusted EBITDA in our Senior Credit Facility.
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 and amortize such costs over two years. We do not deduct the cost of customer acquisitions through acquisitions of businesses 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 these instruments. We also deduct non-cash compensation expense that results from the issuance of restricted stock units under our long-term incentive plan due to the non-cash nature of the expense.
We 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 have historically included the financial impact of weather variability in the calculation of Adjusted EBITDA. We will continue this historical approach, but during the first quarter of 2021 we incurred a net pre-tax financial loss of $64.9 million due to Winter Storm Uri. This loss was incurred due to uncharacteristic extended sub-freezing temperatures across Texas combined with the impact of the pricing caps ordered by ERCOT. We believe this event is unusual, infrequent, and non-recurring in nature.
As our Senior Credit Facility is considered a material agreement and Adjusted EBITDA is a key component of our material covenants, we consider our covenant compliance to be material to the understanding of our financial condition and/or liquidity. Our lenders under our Senior Credit Facility allowed $60.0 million of the $64.9 million pre-tax storm loss incurred in the first quarter of 2021 to be added back as a non-recurring item in the calculation of Adjusted EBITDA for our Debt Covenant Calculations. We received a $0.4 million credit from ERCOT for winter storm related losses during the third quarter of 2021, resulting in a net pre-tax storm loss of $64.4 million for the year ended December 31, 2021. In June 2022, we received $9.6 million from ERCOT related to PURA Subchapter N Securitization financing. For consistent presentation of the financial impact of Winter Storm Uri, $5.2 million of the $9.6 million is reflected as non-recurring items reducing Adjusted EBITDA for the nine months ended September 30, 2022.
We believe that the presentation of Adjusted EBITDA provides information useful to investors in assessing our performance and results of operations and that Adjusted EBITDA is also useful for an understanding of our financial condition and/or liquidity due to its use in covenants in our Senior Credit Facility. Adjusted EBITDA is a supplemental financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following:
our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure, historical cost basis and specific items not reflective of ongoing operations;
the ability of our assets to generate earnings sufficient to support our proposed cash dividends;
our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt; and
our compliance with financial debt covenants in our Senior Credit Facility.
Retail Gross Margin
We define retail gross margin as gross profit less (i) net asset optimization revenues (expenses), (ii) net gains (losses) on non-trading derivative instruments, (iii) net current period cash settlements on non-trading derivative instruments and (iv) gains (losses) from non-recurring events (including non-recurring market volatility). 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 a result of recurring operations. As an indicator of our retail energy business’s operating performance, retail gross margin should not be considered an alternative to, or more meaningful than, gross profit, 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.
We have historically included the financial impact of weather variability in the calculation of Retail Gross Margin. We will continue this historical approach, but during the first quarter of 2021 we added back the $64.9 million financial loss incurred related to Winter Storm Uri, as described above, in the calculation of Retail Gross Margin because the extremity of the Texas storm combined with the impact of unprecedented pricing mechanisms ordered by ERCOT is considered unusual, infrequent, and non-recurring in nature. In June 2022, we received $9.6 million from ERCOT related to PURA Subchapter N Securitization financing. The $9.6 million is reflected as a non-recurring item reducing Retail Gross Margin for the nine months ended September 30, 2022 for consistent presentation of the financial impacts of Winter Storm Uri.
The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. The GAAP measure most directly comparable to Retail Gross Margin is gross profit. 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 (used in) operating activities, or gross profit. Adjusted EBITDA and Retail Gross Margin are not presentations made in accordance with GAAP and have 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), net cash provided by (used in) operating activities, and gross profit, 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 (used in) operating activities for each of the periods indicated.
Reconciliation of Adjusted EBITDA to net income (loss):
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands)
2022
2021
2022
2021
Net (loss) income
$
(4,868)
$
34,657
$
38,691
$
31,893
Depreciation and amortization
3,270
5,049
13,390
16,498
Interest expense
2,002
1,298
5,129
4,161
Income tax (benefit) expense
(48)
7,021
8,726
9,160
EBITDA
356
48,025
65,936
61,712
Less:
Net (loss) gain on derivative instruments
(1,645)
31,798
55,815
57,726
Net cash settlements on derivative instruments
(14,078)
(5,660)
(35,922)
(6,050)
Customer acquisition costs
1,684
309
4,274
765
Plus:
Non-cash compensation expense
668
441
2,590
2,012
Non-recurring event – Winter Storm Uri
–
–
(5,162)
60,000
Non-recurring legal settlement
–
–
–
(2,225)
Adjusted EBITDA
$
15,063
$
22,019
$
39,197
$
69,058
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands)
2022
2021
2022
2021
Net cash provided by operating activities
$
8,267
$
9,604
$
21,211
$
18,772
Amortization of deferred financing costs
(206)
(275)
(919)
(792)
Bad debt expense
(1,062)
(492)
(2,895)
(379)
Interest expense
2,002
1,298
5,129
4,161
Income tax (benefit) expense
(48)
7,021
8,726
9,160
Non-recurring event – Winter Storm Uri
–
–
(5,162)
60,000
Non-recurring legal settlement
–
–
–
(2,225)
Changes in operating working capital
Accounts receivable, prepaids, current assets
2,144
6,456
(7,229)
(25,305)
Inventory
2,883
1,448
3,292
1,048
Accounts payable and accrued liabilities
508
2,952
21,306
15,809
Other
575
(5,993)
(4,262)
(11,191)
Adjusted EBITDA
$
15,063
$
22,019
$
39,197
$
69,058
Cash Flow Data:
Net cash provided by operating activities
$
8,267
$
9,604
$
21,211
$
18,772
Net cash used in investing activities
$
(1,240)
$
(2,626)
$
(6,400)
$
(3,689)
Net cash (used in) provided by financing activities
$
(10,199)
$
(13,399)
$
(47,780)
$
11,352
The following table presents a reconciliation of Retail Gross Margin to gross profit for each of the periods indicated.
Reconciliation of Retail Gross Margin to Gross Profit
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands)
2022
2021
2022
2021
Total Revenue
$
118,859
$
97,979
$
343,112
$
293,179
Less:
Retail cost of revenues
102,212
40,298
232,621
198,642
Gross Profit
16,647
57,681
110,491
94,537
Less:
Net asset optimization revenue (expense)
1,672
(288)
(480)
(542)
(Loss) gain on non-trading derivative instruments
(1,413)
32,262
54,570
58,214
Cash settlements on non-trading derivative instruments
(1) Retail Gross Margin – Retail Electricity Segment for the three months ended September 30, 2021 includes a $0.5 million reduction related to the Winter Storm Uri credit settlements received and for the nine months ended September 30, 2021 includes a $64.9 million add back related to Winter Storm Uri.
(2) Retail Gross Margin for the nine months ended September 30, 2022 includes a deduction of $9.6 million related to proceeds received under an ERCOT (Winter Storm Uri) securitization mechanism in June 2022. See further discussion above.