Category: Press Releases

HOUSTON, May 23, 2017 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark” or the “Company”), announced today its Board of Directors declared a two-for-one stock split of its issued Class A and Class B Common Stock, to be effected in the form of a stock dividend. Shareholders of record at the close of business on June 5, 2017 will be issued one additional share of Common Stock of the Company for each share of Common Stock held by such shareholders on that date. Such additional shares of Common Stock will be distributed on June 16, 2017.

“We believe that this stock split will result in greater market liquidity for our Class A Common Stock across a wider investor base,” said Nathan Kroeker, Spark’s President and Chief Executive Officer.

The stock split will not change a shareholder’s proportional ownership in the Company.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing 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. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 91 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

 

Contact: Spark Energy, Inc.
Investors:
Robert Lane, 832-200-3727
Media:
Eric Melchor, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, May 22, 2017 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark” or the “Company”), announced today the closing of a new $120 million senior secured borrowing base credit facility (the “Facility” or the “Agreement”) to replace the existing senior secured credit facility.

The Facility, which includes a $30 million accordion, replaces the current $107.5 million credit facility, which was set to mature July 2017. This new larger facility will include Verde Energy as a co-borrower upon the closing of that transaction in the coming months.

Coöperatieve Rabobank U.A., New York Branch will act as Joint Lead Arranger, Sole Bookrunner, and Administrative Agent. BBVA Compass will act as Joint Lead Arranger and Syndication Agent. Other financial institutions who have joined the facility include Woodforest National Bank, Credit Agricole Corporate & Investment Bank, and Brown Brothers Harriman & Co.

“This new larger facility has additional features and flexibility that will better support our continued growth initiatives, and provides increased financial flexibility to capitalize on opportunities to enhance shareholder value,” said Nathan Kroeker, Spark’s President and Chief Executive Officer. “We want to thank our lenders for their commitment to Spark’s continued growth.”

“We appreciate Rabobank and BBVA Compass’s leadership in helping us to close this new credit facility,” said Robert Lane, Spark’s Vice President and Chief Financial Officer. “As Spark has continued to grow our footprint and demonstrate strong financial performance, we are pleased that our banks worked with us to create a facility that reflects our strong financial position.”

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing 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. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 91 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Spark Energy, Inc.

Investors:
Robert Lane, 832-200-3727

Media:
Eric Melchor, 281-833-4151



Source: Spark Energy, Inc.

HOUSTON, May 08, 2017 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark” or the “Company”), today reported financial results for the three months ended March 31, 2017 and announced the acquisition of Verde Energy (“Verde”).

Highlights

• Recorded $34.2 million in Adjusted EBITDA, $64.3 million in Retail Gross Margin, and $11.4 million in Net Income for the three months ended March 31, 2017
• Achieved record total RCE count of 789,000 as of March 31, 2017
• Announced the closing of Perigee Energy in April, adding 60,000 RCEs
• Signed purchase agreement to acquire Verde Energy, which is expected to add approximately 145,000 RCEs and $25 million in annual Adjusted EBITDA
• Improved attrition to 3.8% for the three months ended March 31, 2017, a 12% improvement from 2016
• Continued improvement in overall attrition to 3.8% for the three months ended March 31, 2017
• Net increase of 15,000 RCEs in organic growth for the first quarter 2017
• Sold 1,610,000 shares of Series A Preferred Stock for gross proceeds of $40.3 million, including the full exercise of the underwriters’ overallotment option
• Declared first quarter dividend of $0.3625 per share of Class A common stock payable on June 14, 2017
• Declared initial cash dividend of $0.72917 per share of Series A Preferred Stock for the period from issuance through June 30, 2017, payable on July 15, 2017

For the three months ended March 31, 2017, Spark reported record Adjusted EBITDA of $34.2 million, record Retail Gross Margin of $64.3 million, and Net Income of $11.4 million. This compares to Adjusted EBITDA of $21.1 million, Retail Gross Margin of $39.6 million, and Net Income of $15.7 million for the three months ended March 31, 2016, representing changes of 62%, 63%, and (28)%, respectively.

“Spark has continued to build on our successes in 2016 with our strongest first quarter in the company’s history,” said Nathan Kroeker, Spark Energy’s President and Chief Executive Officer. “Once again, we have delivered record Adjusted EBITDA and Retail Gross Margin and reached another high-water mark with 789,000 RCEs. In April we closed on the acquisition of Perigee Energy and exercised an option for additional customers that combined will add another 60,000 RCEs. This transaction establishes our presence in Delaware, bringing our totals to 91 utilities in 19 states.

“We are also pleased to announce today the pending acquisition of Verde Energy. We expect this acquisition to add approximately $25 million of annual Adjusted EBITDA after synergies and will add approximately 145,000 RCEs to our portfolio, bringing our total RCE count to nearly 1,000,000 RCEs. Verde provides us with a 100% renewable energy brand and additional capabilities with an established presence in 40 utility service territories across eight states. Verde is expected to close in the second half of 2017.

“As we complete the onboarding process for the customers acquired in the Perigee Energy transactions and prepare to close on and integrate Verde, we continue to anticipate growth through organic means and additional M&A opportunities throughout the rest of the year.”

2017 Financial Guidance

Spark is maintaining 2017 Adjusted EBITDA guidance in the range of $110.0 to $120.0 million, which includes the recent Perigee Energy transactions but excludes the pending Verde acquisition.

Strategic Update

As discussed above, Spark announced today that it has entered into a purchase and sale agreement for the acquisition of Verde, which operates in eight states selling 100% renewable electricity and natural gas products under the “Verde” brand. Spark will pay cash of $45 million at closing and installment payments totaling $20 million over 18 months. There is an additional earnout that is subject to Verde’s ability to achieve defined performance metrics. The Company expects to close the Verde acquisition in the second half of 2017 utilizing a combination of cash on hand along with additional borrowings under Spark’s credit facilities. This transaction is subject to lender consent and customary regulatory approvals.

Summary First Quarter 2017 Financial Results

For the quarter ended March 31, 2017, Spark reported Adjusted EBITDA of $34.2 million compared to Adjusted EBITDA of $21.1 million for the quarter ended March 31, 2016. This increase of $13.1 million is primarily attributable to increased Retail Gross Margin in the Company’s electricity and natural gas segments, partially offset by increased spending on customer acquisitions and increased general and administrative expenses due to Spark’s increased RCE count.

For the quarter ended March 31, 2017, Spark reported Retail Gross Margin of $64.3 million compared to Retail Gross Margin of $39.6 million for the quarter ended March 31, 2016. This increase of $24.7 million is primarily attributable to the increased volumes of retail electricity and natural gas following the acquisitions of Major and Provider.

Net income for the quarter ended March 31, 2017 was $11.4 million compared to net income of $15.7 million for the quarter ended March 31, 2016, due primarily to non-cash losses on Spark’s hedge portfolio of $14.0 million in the quarter.

Liquidity and Capital Resources

($ in thousands)	March 31, 2017
Cash and cash equivalents	$	24,931
Senior Credit Facility Working Capital Line Availability	43,172
Senior Credit Facility Acquisition Line Availability	2,763
Subordinated Debt Availability	25,000
Total Liquidity	$	95,866

Conference Call and Webcast

Spark will host a conference call to discuss first quarter 2017 results on Monday, May 8, 2017 at 10:00 AM Central Time (11:00 AM Eastern).

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

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing 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. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 91 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Cautionary Note Regarding Forward Looking Statements

This earnings release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These 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 “guidance,” “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. All statements, other than statements of historical fact included in this release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

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

• changes in commodity prices,
• extreme and unpredictable weather conditions,
• the sufficiency of risk management and hedging policies,
• customer concentration,
• federal, state and local regulation, including the industry’s ability to prevail on its challenge to the New York Public Service Commission’s order enacting new regulations that sought to impose significant new restrictions on retail energy providers operating in New York,
• key license retention,
• increased regulatory scrutiny and compliance costs,
• our ability to borrow funds and access credit markets,
• restrictions in our debt agreements and collateral requirements,
• credit risk with respect to suppliers and customers,
• level of indebtedness,
• changes in costs to acquire customers,
• actual customer attrition rates,
• actual bad debt expense in non-POR markets,
• actual results of the companies we acquire,
• accuracy of billing systems,
• ability to successfully navigate entry into new markets,
• whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
• ability to successfully and efficiently integrate acquisitions into our operations,
• ability to achieve expected future results attributable to acquisitions,
• changes in the assumptions we used to estimate our 2017 Adjusted EBITDA, including weather and customer acquisition costs,
• competition, and
• the “Risk Factors” in our Form 10-K for the year ended December 31, 2016, and in our quarterly reports, other public filings and press releases.

You should review the Risk Factors and other factors noted throughout or incorporated by reference in this earnings release that could cause our actual results to differ materially from those contained in any forward-looking statement. The Adjusted EBITDA guidance for 2017 is an estimate as of May 8, 2017. This estimate is based on assumptions believed to be reasonable as of that date. 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.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2017 AND DECEMBER 31, 2016
(in thousands)
(unaudited)
	March 31, 2017				December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	24,931			$	18,960
Accounts receivable, net of allowance for doubtful accounts of $2.4 million and $2.3 million as of March 31, 2017 and December 31, 2016, respectively		108,754				112,491
Accounts receivable—affiliates		2,013				2,624
Inventory		430				3,752
Fair value of derivative assets		2,388				8,344
Customer acquisition costs, net		18,515				18,834
Customer relationships, net		12,474				12,113
Prepaid assets		2,319				1,361
Deposits		6,264				7,329
Other current assets		13,595				12,175
Total current assets		191,683				197,983
Property and equipment, net		4,389				4,706
Fair value of derivative assets		—				3,083
Customer acquisition costs, net		8,776				6,134
Customer relationships, net		18,537				21,410
Deferred tax assets		54,335				55,047
Goodwill		79,407				79,147
Other assets		8,690				8,658
Total assets	$	365,817			$	376,168
Liabilities, Series A Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable	$	40,315			$	52,309
Accounts payable—affiliates		3,217				3,775
Accrued liabilities		40,022				36,619
Fair value of derivative liabilities		1,723				680
Current portion of Senior Credit Facility		22,236				51,287
Current contingent consideration for acquisitions		12,103				11,827
Current portion of note payable		8,185				15,501
Convertible subordinated notes to affiliates		—				6,582
Other current liabilities		2,230				5,476
Total current liabilities		130,031				184,056
Long-term liabilities:
Fair value of derivative liabilities		4,964				68
Payable pursuant to tax receivable agreement—affiliates		49,886				49,886
Subordinated debt—affiliate		—				5,000
Deferred tax liability		139				938
Contingent consideration for acquisitions		4,083				10,826
Other long-term liabilities		1,333				1,658
Total liabilities	$	190,436			$	252,432
Commitments and contingencies (Note 11)
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 1,610,000 shares issued and outstanding at March 31, 2017 and zero shares issued and outstanding at December 31, 2016		38,346
Stockholders’ equity:
Common Stock:
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 6,499,504 issued and outstanding at March 31, 2017 and 6,496,559 issued and outstanding at December 31, 2016		65				65
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 10,742,563 issued and outstanding at March 31, 2017 and 10,224,742 issued and outstanding at December 31, 2016		108				103
Additional paid-in capital		33,812				25,413
Accumulated other comprehensive (income)/loss		(7	)			11
Retained earnings		4,625				4,711
Total stockholders’ equity		38,603				30,303
Non-controlling interest in Spark HoldCo, LLC		98,432				93,433
Total equity		137,035				123,736
Total liabilities, Series A Preferred Stock and stockholders’ equity	$	365,817			$	376,168

 

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
(in thousands)
(unaudited)
	Three Months Ended March 31,
		2017				2016
Revenues:
Retail revenues	$	194,539			$	110,019
Net asset optimization (expense)/revenues (1)		(194	)			527
Total Revenues		194,345				110,546
Operating Expenses:
Retail cost of revenues (2)		143,698				68,800
General and administrative (3)		24,377				17,380
Depreciation and amortization		9,232				6,789
Total Operating Expenses		177,307				92,969
Operating income		17,038				17,577
Other (expense)/income:
Interest expense		(3,445	)			(753	)
Interest and other income		199				(95	)
Total other expenses		(3,246	)			(848	)
Income before income tax expense		13,792				16,729
Income tax expense		2,406				988
Net income	$	11,386			$	15,741
Less: Net income attributable to non-controlling interests		9,117				11,568
Net income attributable to Spark Energy, Inc. stockholders	$	2,269			$	4,173
Other comprehensive loss, net of tax:
Currency translation loss		(49	)			—
Other comprehensive loss		(49	)			—
Comprehensive income	$	11,337			$	15,741
Less: Comprehensive income attributable to non-controlling interests		9,086				11,568
Comprehensive income attributable to Spark Energy, Inc. stockholders	$	2,251			$	4,173

(1)  Net asset optimization revenues (expenses) includes asset optimization revenues —affiliates of $0 and $113 for the three months ended March 31, 2017 and 2016, respectively, and asset optimization revenues—affiliates cost of revenues of $0 and $1,258 for the three months ended March 31, 2017 and 2016, respectively.
(2)  Retail cost of revenues includes retail cost of revenues—affiliates of $0 and less than $100 for the three months ended March 31, 2017 and 2016.
(3)  General and administrative includes general and administrative expense—affiliates of $7,300 and $4,400 for the three months ended March 31, 2017 and 2016, respectively.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2017
(in thousands)
(unaudited)
	Issued Shares of Class A Common Stock		Issued Shares of Class B Common Stock		Class A Common Stock			Class B Common Stock			Accumulated Other Comprehensive Income (Loss)				Additional Paid-in Capital			Retained Earnings (Deficit)			Total Stockholders’ Equity			Non-controlling Interest			Total Equity
Balance at December 31, 2016	6,497		10,225		$	65		$	103		$	11			$	25,413		$	4,711		$	30,303		$	93,433		$	123,736
Stock based compensation	—		—			—			—			—				531			—			531			—			531
Restricted stock unit vesting	3		—			—			—			—				78			—			78			—			78
Consolidated net income	—		—			—			—			—				—			2,269			2,269			9,117			11,386
Foreign currency translation adjustment for equity method investee	—		—			—			—			(18		)		—			—			(18	)		(31	)		(49	)
Distributions paid to non-controlling unit holders	—		—			—			—			—				—			—			—			(4,347	)		(4,347	)
Net contribution of the Major Energy Companies	—		—			—			—			—				—			—			—			260			260
Dividends paid to Class A common stockholders	—		—			—			—			—				—			(2,355	)		(2,355	)		—			(2,355	)
Conversion of Convertible Subordinated Notes to Class B Common Stock	—		518			—			5			—				7,790			—			7,795			—			7,795
Balance at March 31, 2017	6,500		10,743		$	65		$	108		$		(7	)	$	33,812		$	4,625		$	38,603		$	98,432		$	137,035

 

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
(in thousands)
(unaudited)
	Three Months Ended March 31,
		2017				2016
Cash flows from operating activities:
Net income	$	11,386			$	15,741
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense		8,167				6,789
Deferred income taxes		(87	)			841
Stock based compensation		1,367				618
Amortization of deferred financing costs		248				117
Change in Fair Value of Earnout Liabilities		1,936				1,000
Bad debt expense		356				907
Loss on derivatives, net		21,456				9,749
Current period cash settlements on derivatives, net		(6,178	)			(10,457	)
Accretion of discount to convertible subordinated notes to affiliate		1,004				35
Other		7				235
Changes in assets and liabilities:
Decrease in accounts receivable		3,381				5,060
Increase in accounts receivable—affiliates		(55	)			(273	)
Decrease in inventory		3,322				3,484
Increase in customer acquisition costs		(7,690	)			(2,305	)
Increase in prepaid and other current assets		(1,597	)			(1,180	)
Decrease in other assets		—				265
Decrease in accounts payable and accrued liabilities		(9,348	)			(7,340	)
(Decrease) increase in accounts payable—affiliates		(558	)			1,949
(Decrease) increase in other current liabilities		(2,413	)			156
(Decrease) increase in other non-current liabilities		(324	)			111
Net cash provided by operating activities		24,380				25,502
Cash flows from investing activities:
Purchases of property and equipment		(112	)			(665	)
Payment of the Major Energy Companies Earnout		(7,403	)			—
Payment of the Provider Companies Earnout and Installment Note		(2,097	)			—
Contribution to equity method investment in eRex Spark		—				(168	)
Net cash used in investing activities		(9,612	)			(833	)
Cash flows from financing activities:
Proceeds from issuance of Series A Preferred Stock, net of issuance costs		38,607				—
Borrowings on notes payable		5,625				—
Payments on notes payable		(46,993	)			(18,825	)
Proceeds from disgorgement of stockholders short-swing profits		666				—
Payment of dividends to Class A common stockholders		(2,355	)			(1,493	)
Payment of distributions to non-controlling unitholders		(4,347	)			(5,876	)
Net cash used in financing activities		(8,797	)			(26,194	)
Increase in cash and cash equivalents		5,971				(1,525	)
Cash and cash equivalents—beginning of period		18,960				4,474
Cash and cash equivalents—end of period	$	24,931			$	2,949
Supplemental Disclosure of Cash Flow Information:
Non-cash items:
Property and equipment purchase accrual	$	76			$	57
Tax impact from tax receivable agreement upon exchange of units of Spark HoldCo, LLC to shares of Class A Common Stock	$	0			$	1,707
Cash paid during the period for:
Interest	$	888			$	539
Taxes	$	118			$	842

SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
(in thousands, except per unit operating data)
(unaudited)
	Three Months Ended March 31,
		2017				2016
	(in thousands, except volume and per unit operating data)
Retail Natural Gas Segment
Total Revenues	$	62,612			$	48,613
Retail Cost of Revenues		36,918				22,500
Less: Net Asset Optimization (Expenses) Revenues		(194	)			527
Less: Net Gains on non-trading derivatives, net of cash settlements		(1,940	)			1,430
Retail Gross Margin — Gas	$	27,828			$	24,156
Volumes — Gas (MMBtus)		8,158,966				6,112,431
Retail Gross Margin — Gas per MMBtu	$	3.41			$	3.95
Retail Electricity Segment
Total Revenues		131,733				61,933
Retail Cost of Revenues		106,780				46,300
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements		(11,523	)			227
Retail Gross Margin — Electricity	$	36,476			$	15,406
Volumes — Electricity (MWhs)		1,360,430				586,677
Retail Gross Margin — Electricity per MWh	$	26.81			$	26.26

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, (ii) net gain (loss) on derivative instruments, and (iii) net current period cash settlements on derivative instruments, plus (iv) non-cash compensation expense, and (v) other non-cash and non-recurring operating items. EBITDA is defined as net income (loss) before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs (representing spending for organic customer acquisitions) in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the period in which they are incurred, even though we capitalize such costs and amortize them over two years in accordance with our accounting policies. The deduction of current period customer acquisition costs is consistent with how we manage our business, but the comparability of Adjusted EBITDA between periods may be affected by varying levels of customer acquisition costs. For example, our Adjusted EBITDA is lower in years of customer growth reflecting larger customer acquisition spending. We do not deduct the cost of customer acquisitions through acquisitions of business or portfolios of customers in calculated Adjusted EBITDA. We deduct our net gains (losses) on derivative instruments, excluding current period cash settlements, from the Adjusted EBITDA calculation in order to remove the non-cash impact of net gains and losses on derivative instruments. We also deduct non-cash compensation expense as a result of restricted stock units that are issued under our long-term incentive plan.

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

• our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure or historical cost basis;
• the ability of our assets to generate earnings sufficient to support our proposed cash dividends; and
• our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt.

Reconciliation of Spark’s estimate of Adjusted EBITDA for the year ended December 31, 2017 to the relevant GAAP line items is not being provided as Spark is not providing 2017 guidance for net income (loss), net cash provided by operating activities, or the reconciling items between these GAAP financial measures and Adjusted EBITDA. Spark does not provide guidance for such items because it is not possible to forecast the future non-cash impacts of net gains and losses on derivative instruments and non-cash compensation expense attributable to grants of equity under our Long Term Incentive Plan. Additionally, it is not possible to forecast our provision for income taxes due to the potential for change in our non-controlling interests’ ownership percentage, given the nature of our Up-C structure. Accordingly, a reconciliation to net income (loss) or net cash provided by operating activities is not available without unreasonable effort.

Retail Gross Margin

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

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

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

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

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

APPENDIX TABLES A-1 AND A-2
ADJUSTED EBITDA RECONCILIATIONS
(in thousands)
(unaudited)
	Three Months Ended March 31,
(in thousands)		2017				2016
Reconciliation of Adjusted EBITDA to Net Income (Loss):
Net income	$	11,386			$	15,741
Depreciation and amortization		9,232				6,789
Interest expense		3,445				753
Income tax expense		2,406				988
EBITDA		26,469				24,271
Less:
Net, Losses on derivative instruments		(21,456	)			(9,749	)
Net, Cash settlements on derivative instruments		7,414				11,272
Customer acquisition costs		7,690				2,305
Plus:
Non-cash compensation expense		1,367				618
Adjusted EBITDA	$	34,188			$	21,061

	Three Months Ended March 31,
(in thousands)		2017				2016
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by operating activities	$	24,380			$	25,502
Amortization of deferred financing costs		(248	)			(117	)
Allowance for doubtful accounts and bad debt expense		(356	)			(907	)
Interest expense		3,445				753
Income tax expense		2,406				988
Changes in operating working capital
Accounts receivable, prepaids, current assets		(1,729	)			(3,607	)
Inventory		(3,322	)			(3,484	)
Accounts payable and accrued liabilities		9,906				5,391
Other		(294	)			(3,458	)
Adjusted EBITDA	$	34,188			$	21,061
Cash Flow Data:
Cash flows provided by operating activities	$	24,380			$	25,502
Cash flows used in investing activities		(9,612	)			(833	)
Cash flows used in financing activities		(8,797	)			(26,194	)

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

APPENDIX TABLE A-3
RETAIL GROSS MARGIN RECONCILIATION
(in thousands)
(unaudited)
	Three Months Ended March 31,
(in thousands)		2017				2016
Reconciliation of Retail Gross Margin to Operating Income (Loss):
Operating income	$	17,038			$	17,577
Depreciation and amortization		9,232				6,789
General and administrative		24,377				17,380
Less:
Net asset optimization (expenses) revenues		(194	)			527
Net, Losses on non-trading derivative instruments		(21,037	)			(9,620	)
Net, Cash settlements on non-trading derivative instruments		7,574				11,277
Retail Gross Margin	$	64,304			$	39,562
Retail Gross Margin – Retail Natural Gas Segment	$	27,828			$	24.156
Retail Gross Margin – Retail Electricity Segment	$	36,476			$	15.406

Contact: Spark Energy, Inc.

Investors:

Robert Lane, 832-200-3727

Media:

Eric Melchor, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, April 25, 2017 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), announced today that it plans to present its First Quarter 2017 financial results in a conference call and webcast on Monday, May 8, 2017 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 Spark Energy Investor Relations website at http://ir.sparkenergy.com/events.cfm. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing 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. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 91 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Contact:  Spark Energy, Inc.

Investors:
Robert Lane, 832-200-3727

Media:
Eric Melchor, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, April 19, 2017 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark” or the “Company”), announced today that its Board of Directors has declared a quarterly cash dividend for the first quarter of 2017 in the amount of $0.3625 per share of common stock. This amount represents an annualized dividend of $1.45 per share. The first quarter dividend will be paid on June 14, 2017 to holders of record on May 30, 2017 of Spark’s Class A Common Stock.

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 an initial cash dividend for the period from the date of issuance of the Series A Preferred Stock through June 30, 2017 in the amount of $0.72917 per share of the Series A Preferred Stock. This amount represents an annualized dividend of $2.1875 per share. The dividend will be paid on July 15, 2017 to holders of record on July 1, 2017 of Spark’s Class A Preferred Stock.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing 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. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 91 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Contact: Spark Energy, Inc.

Investors:
Robert Lane, 832-200-3727

Media:
Eric Melchor, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, April 03, 2017 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark” or the “Company”), announced today that it has closed on the previously announced acquisition of 19,000 RCEs from National Gas & Electric, LLC (“NG&E”) and has exercised an option to acquire an additional 41,000 RCEs from a third party in connection with this acquisition. These acquisitions will add the state of Delaware, along with one new utility territory to Spark’s existing footprint. The transaction was reviewed and approved by a special committee of the Board of Directors consisting solely of independent directors.

In addition, the Company has raised its 2017 Adjusted EBITDA guidance to $110.0 million – $120.0 million for the year ended December 31, 2017. This new guidance represents more than a 20% increase on the midpoint of Spark’s initial 2017 Adjusted EBITDA guidance of $90.0 million – $100.0 million.

“We are having a very strong start to the year both in terms of RCE count and gross margin,” said Nathan Kroeker, Spark Energy’s President and Chief Executive Officer. “With better than anticipated performance and synergies on our recent acquisitions, and the continued execution of our growth plan, we believe our first quarter results and our performance for the remainder of 2017 will significantly exceed previous expectations. These positive first quarter results, together with the additional 60,000 RCEs we are acquiring in the transactions announced today, support an updated 2017 estimated Adjusted EBITDA guidance range of $110.0 million to $120.0 million.

“In addition, with our recently closed preferred offering, including the exercise of the underwriters’ overallotment option, we believe that we are well positioned to continue our growth and finance additional M&A activity without the need for us to access the common equity markets.”

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing 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. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 91 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Cautionary Note Regarding Forward-Looking Statements

This press release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “project,” or other similar words. 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. However, a variety of factors could cause actual results to differ materially from those projected in the forward-looking statements, including (i) restrictions in our debt agreements and collateral requirements, (ii) our ability to borrow funds and access credit markets, (iii) our level of indebtedness, (iv) our ability to successfully and efficiently integrate acquisitions into our operations, (iv) federal, state and local regulation, including the industry’s ability to prevail on its challenge to the New York Public Service Commission’s orders enacting new regulations that seek to impose significant new restrictions on retail energy providers operating in New York, (v) other business risks affecting our liquidity and results of operations. Additional important risk factors that could cause actual results to differ materially from expectations are disclosed in Item 1A of Spark’s Form 10-K for the year ended December 31, 2016 and subsequent Form 10-Q’s filed with the SEC. While Spark makes these statements and projections in good faith, neither Spark nor its management or affiliates can guarantee that anticipated future results will be achieved. Spark assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by Spark, whether as a result of new information, future events, or otherwise.

The Adjusted EBITDA guidance for 2017 is an estimate as of April 3, 2017. This estimate is based on assumptions believed to be reasonable as of that date. All forward-looking statements speak only as of the date of this 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.

Reconciliation of Spark’s estimate of Adjusted EBITDA for the year ended December 31, 2017 to the relevant GAAP line items is not being provided as Spark is not providing 2017 guidance for net income (loss), net cash provided by operating activities, or the reconciling items between these GAAP financial measures and Adjusted EBITDA. Spark does not provide guidance for such items because is not possible to forecast the future non-cash impacts of net gains and losses on derivative instruments and non-cash compensation expense attributable to grants of equity under our Long Term Incentive Plan. Additionally, it is not possible to forecast our provision for income taxes due to the potential for change in our non-controlling interests’ ownership percentage, given the nature of our Up-C structure. Accordingly, a reconciliation to net income (loss) or net cash provided by operating activities is not available without unreasonable effort.

 

Contact: Spark Energy, Inc.

Investors:

Robert Lane, 832-200-3727

Media:

Eric Melchor, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, March 08, 2017 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE) (“Spark”) today announced the pricing of its public offering of 1,400,000 shares of 8.75% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Stock”) at a price of $25.00 per share.

The underwriters have been granted a 30-day option to purchase up to 210,000 additional shares of Series A Preferred Stock from Spark, exercisable in whole or in part, at the public offering price less the underwriting discount. Dividends on the Series A Preferred Stock will be payable at a rate of 8.75% per annum of the stated liquidation preference of $25.00 from the date of issuance up to (but excluding) April 15, 2022, and from (and including) that date at a floating rate equal to three-month LIBOR plus a spread of 6.578% per annum. The offering is scheduled to close on March 15, 2017.

Spark expects to receive net proceeds of approximately $33.6 million (or approximately $38.7 million if the underwriters exercise in full their option to purchase an additional 210,000 shares of Series A Preferred Stock), after deducting underwriting discounts and a structuring fee but before estimated offering expenses, from the offering. Spark intends to use the net proceeds of this offering for general corporate purposes, which may include, among other things, funding working capital, capital expenditures, liquidity for operational contingencies, debt repayments and acquisitions. Pending these uses, the net proceeds may be temporarily invested in short- and medium-term securities. RBC Capital Markets, LLC and FBR Capital Markets & Co. are acting as joint book-running managers of the offering. Janney Montgomery Scott LLC and Wunderlich Securities, Inc. are acting as senior co-managers. BB&T Capital Markets, a division of BB&T Securities, LLC, Ladenburg Thalmann & Co. Inc., National Securities Corporation and USCA Securities LLC are acting as co-managers.

The offering may be made only by means of a prospectus and related prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933, as amended. A copy of the final prospectus supplement and accompanying base prospectus meeting such requirements relating to this offering may be obtained from any of the underwriters, including the offices of:

RBC Capital Markets, LLC		FBR Capital Markets & Co.
Attn: Syndicate Operations		Attn: Syndicate Prospectus Department
200 Vesey Street, 8th Floor		1300 North 17th Street, Suite 1400
New York, NY 10281-8098		Arlington, VA 22209
Phone: (866) 375-6829		Phone: (703) 312-9726
Email: rbcnyfixedincomeprospectus@rbccm.com		Email: prospectuses@fbr.com

You may also obtain these documents for free when they are available by visiting the Securities and Exchange Commission’s Web site at www.sec.gov.

The shelf registration statement relating to these securities has previously been filed with the SEC and declared effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing 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. Headquartered in Houston, Texas, Spark currently operates in 18 states and serves 90 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Cautionary Note Concerning Forward Looking Statements

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 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,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. All statements, other than statements of historical fact included in this release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

The forward-looking statements in this press 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:

• changes in commodity prices,
• extreme and unpredictable weather conditions,
• the sufficiency of risk management and hedging policies,
• customer concentration,
• federal, state and local regulation, including the industry’s ability to prevail on its challenge to the New York Public Service Commission’s order enacting new regulations that sought to impose significant new restrictions on retail energy providers operating in New York,
• key license retention,
• increased regulatory scrutiny and compliance costs,
• our ability to borrow funds and access credit markets,
• restrictions in our debt agreements and collateral requirements,
• credit risk with respect to suppliers and customers,
• level of indebtedness,
• changes in costs to acquire customers,
• actual customer attrition rates,
• actual bad debt expense in non-POR markets,
• accuracy of billing systems,
• ability to successfully navigate entry into new markets,
• whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
• ability to successfully and efficiently integrate acquisitions into our operations,
• competition, and
• the “Risk Factors” appearing under the caption “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and in our quarterly reports, other public filings and press releases.

You should review the Risk Factors and other factors noted throughout or incorporated by reference in this press 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 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.

Contact: Spark Energy, Inc.
Investors:
Andy Davis, 832-200-3727

Media:
Eric Melchor, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, March 08, 2017 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE) (“Spark”) today announced that it has commenced a public offering of Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Stock”) pursuant to an effective shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission (the “SEC”).

Spark will grant the underwriters a 30-day option to purchase additional Series A Preferred Stock. It is anticipated that the preferred rate will be fixed for 5 years from the date of original issuance of the Series A Preferred Stock and thereafter will be adjusted on a quarterly basis based on a spread to three-month LIBOR.

Spark intends to use the net proceeds of this offering for general corporate purposes, which may include, among other things, funding working capital, capital expenditures, liquidity for operational contingencies, debt repayments and acquisitions. Pending these uses, the net proceeds may be temporarily invested in short- and medium-term securities. RBC Capital Markets, LLC and FBR Capital Markets & Co. will act as joint book-running managers of the offering. Janney Montgomery Scott LLC and Wunderlich Securities, Inc. will act as senior co-managers. BB&T Capital Markets, a division of BB&T Securities, LLC, Ladenburg Thalmann & Co. Inc., National Securities Corporation and USCA Securities LLC will act as co-managers.

The offering may be made only by means of a prospectus and related prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933, as amended. A copy of the preliminary prospectus supplement and accompanying base prospectus meeting such requirements relating to this offering may be obtained from any of the underwriters, including the offices of:

RBC Capital Markets, LLC	FBR Capital Markets & Co.
Attn: Syndicate Operations	Attn: Syndicate Prospectus Department
200 Vesey Street, 8th Floor	1300 North 17th Street, Suite 1400
New York, NY 10281-8098	Arlington, VA 22209
Phone: (866) 375-6829	Phone: (703) 312-9726
Email: rbcnyfixedincomeprospectus@rbccm.com	Email: prospectuses@fbr.com

You may also obtain these documents for free when they are available by visiting the Securities and Exchange Commission’s Web site at www.sec.gov.

The shelf registration statement relating to these securities has previously been filed with the SEC and declared effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing 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. Headquartered in Houston, Texas, Spark currently operates in 18 states and serves 90 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Cautionary Note Concerning Forward Looking Statements

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 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,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. All statements, other than statements of historical fact included in this release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

The forward-looking statements in this press 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:

• changes in commodity prices,
• extreme and unpredictable weather conditions,
• the sufficiency of risk management and hedging policies,
• customer concentration,
• federal, state and local regulation, including the industry’s ability to prevail on its challenge to the New York Public Service Commission’s order enacting new regulations that sought to impose significant new restrictions on retail energy providers operating in New York,
• key license retention,
• increased regulatory scrutiny and compliance costs,
• our ability to borrow funds and access credit markets,
• restrictions in our debt agreements and collateral requirements,
• credit risk with respect to suppliers and customers,
• level of indebtedness,
• changes in costs to acquire customers,
• actual customer attrition rates,
• actual bad debt expense in non-POR markets,
• accuracy of billing systems,
• ability to successfully navigate entry into new markets,
• whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
• ability to successfully and efficiently integrate acquisitions into our operations,
• competition, and
• the “Risk Factors” appearing under the caption “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and in our quarterly reports, other public filings and press releases.

You should review the Risk Factors and other factors noted throughout or incorporated by reference in this press 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 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.

 

Contact: Spark Energy, Inc.
Investors:
Andy Davis, 832-200-3727
Media:
Eric Melchor, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, March 02, 2017 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), today reported financial results for the year ended December 31, 2016.

Highlights

• Achieved record Net Income and Adjusted EBITDA for both the fourth quarter and full year 2016
• Achieved record total RCE count of 774,000 as of December 31, 2016
• Recorded $81.9 million in Adjusted EBITDA, $182.4 million in Retail Gross Margin and $65.7 million in Net Income for the year ended December 31, 2016, representing year-over-year increases of 122%, 61%, and 153%, respectively
• Achieved $24.8 million in Adjusted EBITDA, $58.8 million in Retail Gross Margin and $24.1 million in Net Income for the quarter ended December 31, 2016, representing year-over-year increases of 52%, 71%, and 677%, respectively
• Reaffirmed 2017 Adjusted EBITDA guidance range of $90.0 – $100.0 million
• Realized consistently strong unit margins in both retail natural gas and electricity segments
• Continued improvement in overall attrition to 4.3% for the year ended December 31, 2016, representing a reduction of approximately 16% year-over-year
• Net increase of 359,000 RCEs year-over-year, representing an 82% net growth due to acquisitions and 5% net growth due to organic additions
• Declared fourth quarter dividend of $0.3625 per share of Class A common stock payable on March 16, 2016

“2016 was truly a transformational year for us,” said Nathan Kroeker, Spark Energy’s President and Chief Executive Officer. “We delivered record Adjusted EBITDA and Retail Gross Margin and achieved record RCEs of 774,000 through both acquisitions and organic growth. We are confident in our ability to continue our organic growth into 2017 as well as take advantage of a robust M&A pipeline. As we move through the first quarter of 2017, we continue to see strong results.”

For 2016, Spark reported record Adjusted EBITDA of $81.9 million, record Retail Gross Margin of $182.4 million, and record Net Income of $65.7 million. This compares to Adjusted EBITDA of $36.9 million, Retail Gross Margin of $113.6 million, and Net Income of $26.0 million for 2015, representing increases of 122%, 61%, and 153%, respectively.

For the fourth quarter of 2016, Adjusted EBITDA was $24.8 million, Retail Gross Margin was $58.8 million, and Net Income was $24.1 million, compared to Adjusted EBITDA of $16.3 million, Retail Gross Margin of $34.4 million, and Net Income of $3.1 million for the fourth quarter of 2015.

2017 Financial Guidance

We are currently reaffirming our initial 2017 Adjusted EBITDA guidance in the range of $90.0 to $100.0 million, based upon projected customer acquisition costs of $27.0 to $33.0 million, which does not include the impact of pending or potential acquisitions.

Strategic Update

The Company has entered into a letter agreement with National Gas & Electric, LLC (“NG&E”) for the acquisition of approximately 19,000 RCEs with an option to acquire an additional 41,000 RCEs. The Company will pay approximately $2.2 million in cash, subject to working capital adjustments. The transaction, which was reviewed and approved by a special committee of the board of directors, will also increase the number of states the Company serves to nineteen.

Summary Full Year 2016 Financial Results

For the year ended December 31, 2016, Spark reported Adjusted EBITDA of $81.9 million compared to Adjusted EBITDA of $36.9 million for the year ended December 31, 2015. This increase of $45.0 million is primarily attributable to the acquisitions of Major and Provider, partially offset by increased general and administrative expenses and customer acquisition costs.

For the year ended December 31, 2016, Spark reported Retail Gross Margin of $182.4 million compared to Retail Gross Margin of $113.6 million for the year ended December 31, 2015. This increase of $68.8 million is primarily attributable to the acquisitions of Major and Provider, expanded natural gas unit margins, and increased retail electricity and natural gas volumes. Favorable supply costs across several of our markets were a key driver of these elevated unit margins in 2016.

Net income for the year ended December 31, 2016 was $65.7 million compared to net income of $26.0 million for the year ended December 31, 2015.

Summary Fourth Quarter 2016 Financial Results

For the quarter ended December 31, 2016, Spark reported Adjusted EBITDA of $24.8 million compared to Adjusted EBITDA of $16.3 million for the quarter ended December 31, 2015. This increase of $8.5 million is primarily attributable to the acquisitions of Major and Provider, partially offset by increased general and administrative expenses and customer acquisition costs.

For the quarter ended December 31, 2016, Spark reported Retail Gross Margin of $58.8 million compared to Retail Gross Margin of $34.4 million for the quarter ended December 31, 2015. This increase of $24.4 million is primarily attributable to the acquisitions of Major and Provider and increased retail electricity and natural gas volumes. Favorable supply costs across several of our markets were a key driver of these elevated unit margins in the fourth quarter.

Net income for the quarter ended December 31, 2016 was $24.1 million compared to net income of $3.1 million for the quarter ended December 31, 2015.

Liquidity and Capital Resources

(in thousands)	December 31, 2016
Cash and cash equivalents	$	18,960
Senior Credit Facility Working Capital Line Availability (1)		11,366
Senior Credit Facility Acquisition Line Availability (2)		2,712
Subordinated Debt Availability		20,000
Total Liquidity	$	53,038
(1) Subject to Senior Credit Facility borrowing base restrictions.
(2) Subject to Senior Credit Facility covenant restrictions.

Conference Call and Webcast

Spark will host a conference call to discuss full year and fourth quarter 2016 results on Friday, March 3, 2017 at 10:00 AM Central Time (11:00 AM Eastern).

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

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing 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. Headquartered in Houston, Texas, Spark currently operates in 18 states and serves 90 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Cautionary Note Regarding Forward Looking Statements

This earnings release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These 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 “guidance,” “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. All statements, other than statements of historical fact included in this release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

The forward-looking statements in this report 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:

• changes in commodity prices,
• extreme and unpredictable weather conditions,
• the sufficiency of risk management and hedging policies,
• customer concentration,
• federal, state and local regulation, including the industry’s ability to prevail on its challenge to the New York Public Service Commission’s order enacting new regulations that sought to impose significant new restrictions on retail energy providers operating in New York,
• key license retention,
• increased regulatory scrutiny and compliance costs,
• our ability to borrow funds and access credit markets,
• restrictions in our debt agreements and collateral requirements,
• credit risk with respect to suppliers and customers,
• level of indebtedness,
• changes in costs to acquire customers,
• actual customer attrition rates,
• actual bad debt expense in non-POR markets,
• accuracy of billing systems,
• ability to successfully navigate entry into new markets,
• whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
• ability to successfully and efficiently integrate acquisitions into our operations,
• changes in the assumptions we used to estimate our 2017 Adjusted EBITDA, including weather and customer acquisition costs,
• competition, and
• the “Risk Factors” in our Form 10-K for the year ended December 31, 2016, and in our quarterly reports, other public filings and press releases.

You should review the Risk Factors and other factors noted throughout or incorporated by reference in this earnings release that could cause our actual results to differ materially from those contained in any forward-looking statement. The Adjusted EBITDA guidance for 2017 is an estimate as of March 2, 2017. This estimate is based on assumptions believed to be reasonable as of that date. 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.

SPARK ENERGY, INC.
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2016 AND 2015
(in thousands)
	December 31, 2016		December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	18,960	$	4,474
Accounts receivable, net of allowance for doubtful accounts of $2.3 million and $1.9 million as of December 31, 2016 and 2015, respectively		112,491		59,936
Accounts receivable—affiliates		2,624		1,840
Inventory		3,752		3,665
Fair value of derivative assets		8,344		605
Customer acquisition costs, net		18,834		13,389
Customer relationships, net		12,113		6,627
Prepaid assets (1)		1,361		700
Deposits		7,329		7,421
Other current assets		12,175		4,023
Total current assets		197,983		102,680
Property and equipment, net		4,706		4,476
Fair value of derivative assets		3,083		–
Customer acquisition costs, net		6,134		3,808
Customer relationships, net		21,410		6,802
Deferred tax assets		55,047		23,380
Goodwill		79,147		18,379
Other assets		8,658		2,709
Total Assets	$	376,168	$	162,234
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	52,309	$	29,732
Accounts payable—affiliates		3,775		1,962
Accrued liabilities		36,619		12,245
Fair value of derivative liabilities		680		10,620
Current portion of Senior Credit Facility		51,287		27,806
Current contingent consideration for acquisitions		11,827		500
Current portion of note payable		15,501		–
Convertible subordinated notes to affiliates		6,582		–
Other current liabilities		5,476		1,323
Total current liabilities		184,056		84,188
Long-term liabilities:
Fair value of derivative liabilities		68		618
Payable pursuant to tax receivable agreement—affiliates		49,886		20,713
Long-term portion of Senior Credit Facility		–		14,592
Subordinated debt—affiliate		5,000		–
Deferred tax liability		938		853
Convertible subordinated notes to affiliates		–		6,339
Contingent consideration for acquisitions		10,826		–
Other long-term liabilities		1,658		1,612
Total liabilities		252,432		128,915
Stockholders’ equity:
Common Stock:
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 6,496,559 issued and outstanding at December 31, 2016 and 3,118,623 issued and outstanding at December 31, 2015		65		31
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 10,224,742 and 10,750,000 issued and outstanding at December 31, 2016 and 2015		103		108
Preferred Stock:
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized, zero issued and outstanding at December 31, 2016 and 2015		–		–
Additional paid-in capital		25,413		12,565
Accumulated other comprehensive loss		11		–
Retained deficit		4,711		(1,366	)
Total stockholders’ equity		30,303		11,338
Non-controlling interest in Spark HoldCo, LLC		93,433		21,981
Total equity		123,736		33,319
Total Liabilities and Stockholders’ Equity	$	376,168	$	162,234
(1) Prepaid assets includes prepaid assets—affiliates of $0 and $210 as of December 31, 2016 and 2015, respectively.

 

SPARK ENERGY, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2016, 2015, AND 2014
(in thousands)
	Year Ended December 31,
	2016 (1)			2015 (2)				2014
Revenues:
Retail revenues (3)	$	547,283		$	356,659		$	320,558
Net asset optimization (expense)/revenues (4)		(586	)		1,494			2,318
Total Revenues		546,697			358,153			322,876
Operating Expenses:
Retail cost of revenues (5)		344,944			241,188			258,616
General and administrative (6)		84,964			61,682			45,880
Depreciation and amortization		32,788			25,378			22,221
Total Operating Expenses		462,696			328,248			326,717
Operating income (loss)		84,001			29,905			(3,841	)
Other (expense)/income:
Interest expense		(8,859	)		(2,280	)		(1,578	)
Interest and other income		957			324			263
Total other expenses		(7,902	)		(1,956	)		(1,315	)
Income (loss) before income tax expense		76,099			27,949			(5,156	)
Income tax expense (benefit)		10,426			1,974			(891	)
Net income (loss)	$	65,673		$	25,975		$	(4,265	)
Less: Net income (loss) attributable to non-controlling interests		51,229			22,110			(4,211	)
Net income (loss) attributable to Spark Energy, Inc. stockholders	$	14,444		$	3,865		$	(54	)
Other comprehensive income (loss):
Currency translation gain	$	41		$	–		$	–
Other comprehensive income		41			–			–
Comprehensive income (loss)	$	65,714		$	25,975		$	(4,265	)
Less: Comprehensive income attributable to non-controlling interests	$	51,259		$	22,110		$	(4,211	)
Comprehensive income attributable to Spark Energy, Inc. stockholders	$	14,455		$	3,865		$	(54	)
(1) Financial information has been recast to include results attributable to the acquisition of Major Energy Companies by an affiliate on April 15, 2016.
(2) Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC from an affiliate on May 12, 2015.
(3)  Retail revenues includes retail revenues—affiliates of $0, $0 and $2,170 for the years ended December 31, 2016, 2015 and 2014, respectively.
(4) Net asset optimization revenues includes asset optimization (expense)/revenues—affiliates of $154, $1,101 and $12,842 for the years ended December 31, 2016, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $1,633, $11,285 and $30,910 for the years ended December 31, 2016, 2015 and 2014, respectively.
(5) Retail cost of revenues includes retail cost of revenues—affiliates of $9, $17 and $13 for the years December 31, 2016, 2015 and 2014, respectively.
(6) General and administrative includes general and administrative expense—affiliates of $15,700, $0 and less than $100 for the years ended December 31, 2016, 2015 and 2014, respectively.

SPARK ENERGY, INC.

COMBINED AND CONSOLIDATED STATEMENT OF CHANGES IN EQUITY  FOR THE YEARS ENDED DECEMBER 31, 2016, 2015, AND 2014

(in thousands)

Member’s Equity

Issued Shares of Class A Common Stock

Issued Shares of Class B Common Stock

Issued Shares of Preferred Stock

Class A Common Stock

Class B Common Stock

Accumulated Other Comprehensive Income

Additional Paid-In Capital

Retained Earnings (Deficit)

Total Stockholders’ Equity

Non-controlling Interest

Total Equity

Balance at 12/31/2013:

$

35,913

–

–

–

$

–

$

–

$

–

$

–

$

–

$

–

$

–

$

35,913

Capital contributions from member and liabilities retained by affiliate

54,201

–

–

–

–

–

–

–

–

–

–

54,201

Distributions to member

(61,607

)

–

–

–

–

–

–

–

–

–

–

(61,607

)

Net loss prior to the IPO

(21

)

–

–

–

–

–

–

–

–

–

–

(21

)

Balance prior to Corporate Reorganization and the IPO:

$

28,486

–

–

–

$

–

$

–

$

–

$

–

$

–

$

–

$

–

$

28,486

Reorganization Transaction:

Issuance of Class B common stock

(28,486

)

–

10,750

–

–

108

–

28,378

–

28,486

–

–

IPO Transactions:

IPO costs paid

–

–

–

–

–

–

–

(2,667

)

–

(2,667

)

–

(2,667

)

Issuance of Class A Common Stock, net of underwriters discount

–

3,000

–

–

30

–

–

50,190

–

50,220

–

50,220

Distribution of IPO proceeds and payment of note payable to affiliate

–

–

–

–

–

–

–

(47,604

)

–

(47,604

)

–

(47,604

)

Initial allocation of non-controlling interest of Spark Energy, Inc. effective on date of IPO

–

–

–

–

–

–

–

(22,232

)

–

(22,232

)

22,232

–

Tax benefit from tax receivable agreement

–

–

–

–

–

–

–

23,636

–

23,636

–

23,636

Liability due to tax receivable agreement

–

–

–

–

–

–

–

(20,915

)

–

(20,915

)

–

(20,915

)

Balance at inception of public company (8/1/2014):

$

–

3,000

10,750

–

$

30

$

108

$

–

$

8,786

$

–

$

8,924

$

22,232

$

31,156

Stock based compensation

–

–

–

–

–

–

–

510

–

510

–

510

Consolidated net loss subsequent to the IPO

–

–

–

–

–

–

–

–

(54

)

(54

)

(4,190

)

(4,244

)

Distributions paid to Class B non-controlling unit holders

–

–

–

–

–

–

–

–

–

–

(2,584

)

(2,584

)

Dividends paid to Class A common shareholders

–

–

–

–

–

–

–

–

(721

)

(721

)

–

(721

)

Balance at 12/31/2014:

$

–

3,000

10,750

–

$

30

$

108

$

–

$

9,296

$

(775

)

$

8,659

$

15,458

$

24,117

Stock based compensation

–

–

–

–

–

–

–

2,165

–

2,165

–

2,165

Restricted stock unit vesting

–

119

–

–

1

–

–

186

–

187

–

187

Contribution from NuDevco

–

–

–

–

–

–

–

129

–

129

–

129

Consolidated net income

–

–

–

–

–

–

–

–

3,865

3,865

22,110

25,975

Beneficial conversion feature

–

–

–

–

–

–

–

789

–

789

–

789

Distributions paid to Class B non-controlling unit holders

–

–

–

–

–

–

–

–

–

–

(15,587

)

(15,587

)

Dividends paid to Class A common shareholders

–

–

–

–

–

–

–

–

(4,456

)

(4,456

)

–

(4,456

)

Balance at 12/31/2015:

$

–

3,119

10,750

–

$

31

$

108

$

–

$

12,565

$

(1,366

)

$

11,338

$

21,981

$

33,319

Stock based compensation

–

–

–

–

–

–

2,270

–

2,270

–

2,270

Restricted stock unit vesting

–

153

–

–

2

–

–

1,060

–

1,062

–

1,062

Excess tax benefit related to restricted stock vesting

–

–

–

–

–

–

–

186

–

186

–

186

Consolidated net income (1)

–

–

–

–

–

–

–

–

14,444

14,444

51,229

65,673

Foreign currency translation adjustment for equity method investee

–

–

–

–

–

–

11

–

–

11

30

41

Beneficial conversion feature

–

–

–

–

–

–

–

243

–

243

–

243

Distributions paid to non-controlling unit holders

–

–

–

–

–

–

–

–

–

–

(34,931

)

(34,931

)

Net contribution of the Major Energy Companies

–

–

–

–

–

–

–

–

–

–

3,873

3,873

Dividends paid to Class A common stockholders

–

–

–

–

–

–

–

–

(8,367

)

(8,367

)

–

(8,367

)

Proceeds from disgorgement of stockholder short-swing profits

–

–

–

–

–

–

–

1,605

–

1,605

–

1,605

Tax impact from tax receivable agreement upon exchange of units of Spark HoldCo, LLC to shares of Class A Common Stock

–

–

–

–

–

–

–

4,768

–

4,768

–

4,768

Exchange of shares of Class B common stock to shares of Class A common stock

3,225

(3,225

)

–

32

(32

)

–

2,716

–

2,716

(2,716

)

–

Issuance of Class B Common Stock

–

–

2,700

–

–

27

–

–

–

27

53,967

53,994

Balance at 12/31/2016:

$

–

6,497

10,225

–

$

65

$

103

$

11

$

25,413

$

4,711

$

30,303

$

93,433

$

123,736

(1) Financial information has been recast to include results attributable to the acquisition of Major Energy Companies by an affiliate on April 15, 2016.

SPARK ENERGY, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS  FOR THE YEARS ENDED DECEMBER 31, 2016, 2015, AND 2014
(in thousands)
	Year Ended December 31,
	2016 (1)			2015 (2)				2014
Cash flows from operating activities:
Net income (loss)	$	65,673		$	25,975		$	(4,265	)
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Depreciation and amortization expense		48,526			25,378			22,221
Deferred income taxes		3,382			1,340			(1,064	)
Stock based compensation		5,242			3,181			858
Amortization and write off of deferred financing costs		668			412			631
Change in fair value of earnout liabilities		(297	)		–			–
Accretion on fair value of Major Earnout and Provider Earnout liabilities		5,059			–			–
Bad debt expense		1,261			7,908			10,164
(Gain) loss on derivatives, net		(22,407	)		18,497			14,535
Current period cash settlements on derivatives, net		(24,427	)		(23,948	)		3,479
Other		(407	)		(1,320	)		–
Changes in assets and liabilities:
Decrease (increase) in restricted cash		–			707			(707	)
(Increase) decrease in accounts receivable		(12,088	)		7,876			(11,283	)
(Increase) in accounts receivable—affiliates		(118	)		(608	)		5,563
Decrease (increase) in inventory		542			4,544			(3,711	)
Increase in customer acquisition costs		(21,907	)		(19,869	)		(26,191	)
Decrease (increase) in prepaid and other current assets		71			10,845			(6,905	)
Decrease (increase) in other assets		1,321			(1,101	)		(90	)
Increase in customer relationships and trademarks		–			(2,776	)		(1,545	)
Increase (decrease) in accounts payable and accrued liabilities		14,831			(13,307	)		1,449
Increase in accounts payable—affiliates		458			944			1,017
Increase (decrease) in other current liabilities		2,364			(645	)		1,867
Decrease in other non-current liabilities		46			1,898			(149	)
Net cash provided by operating activities		67,793			45,931			5,874
Cash flows from investing activities:
Acquisitions of CenStar and Oasis		–			(39,847	)		–
Acquisition of Major Energy Companies and Provider Companies net assets		(31,641	)		–			–
Payment of CenStar Earnout		(1,343	)		–			–
Purchases of property and equipment		(2,258	)		(1,766	)		(3,040	)
Contribution to equity method investment in eRex Spark		(1,102	)		(330	)		–
Net cash used in investing activities		(36,344	)		(41,943	)		(3,040	)
Cash flows from financing activities:
Borrowings on notes payable		79,048			59,224			78,500
Payments on notes payable		(66,652	)		(49,826	)		(44,000	)
Issuance of convertible subordinated notes to affiliate		–			7,075			–
Restricted stock vesting		(1,183	)		(432	)		–
Contributions from NuDevco		–			129			–
Deferred financing costs		–			–			(402	)
Member contribution (distributions), net		–			–			(36,406	)
Proceeds from issuance of Class A common stock		–			–			50,220
Proceeds from issuance of Class B common stock		13,995			–			–
Proceeds from disgorgement of stockholders short-swing profits		941			–			–
Excess tax benefit related to restricted stock vesting		185			–			–
Distributions of proceeds from IPO to affiliate		–			–			(47,554	)
Payment of note payable to NuDevco		–			–			(50	)
IPO costs		–			–			(2,667	)
Payment of distributions to Class B non-controlling unit holders		(34,930	)		(15,587	)		(2,584	)
Payment of dividends to Class A common shareholders		(8,367	)		(4,456	)		(721	)
Net cash used in financing activities		(16,963	)		(3,873	)		(5,664	)
Increase (decrease) in cash and cash equivalents		14,486			115			(2,830	)
Cash and cash equivalents—beginning of period		4,474			4,359			7,189
Cash and cash equivalents—end of period	$	18,960		$	4,474		$	4,359
Supplemental Disclosure of Cash Flow Information:
Non-cash items:
Issuance of Class B common stock to affiliates for Major Energy Companies acquisition	$	40,000		$	–		$	–
Contingent consideration—earnout obligations incurred in connection with the Provider Companies and Major Energy Companies acquisitions	$	18,936		$	–		$	–
Assumption of legal liability in connection with the Major Energy Companies acquisition	$	5,000		$	–		$	–
Net contribution of the Major Energy Companies	$	3,873		$	–		$	–
Installment consideration incurred in connection with the Provider Companies acquisition	$	1,890		$	–		$	–
Issuance of Class B common stock	$	–		$	–		$	28,486
Liabilities retained by affiliate	$	–		$	–		$	29,000
Tax benefit from tax receivable agreement	$	31,490		$	(64	)	$	23,636
Liability due to tax receivable agreement	$	(26,722	)	$	(55	)	$	20,767
Initial allocation of non-controlling interest	$	–		$	–		$	22,232
Property and equipment purchase accrual	$	(32	)	$	45		$	19
CenStar Earnout accrual	$	–		$	500		$	–
Cash paid during the period for:
Interest	$	2,280		$	1,661		$	860
Taxes	$	7,326		$	216		$	85
(1) Financial information has been recast to include results attributable to the acquisition of the Major Energy Companies from an affiliate on August 23, 2016.
(2) Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC by an affiliate on May 12, 2015.

 

SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS FOR THE YEARS ENDED DECEMBER 31, 2016, 2015, AND 2014
(in thousands, except per unit operating data)
(unaudited)
	Year Ended December 31,
		2016			2015			2014
Retail Natural Gas Segment
Total Revenues	$	129,468		$	128,663		$	146,470
Retail Cost of Revenues		58,149			70,504			109,164
Less: Net Asset Optimization Revenues		(586	)		1,494			2,318
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements		7,672			3,305			(9,339	)
Retail Gross Margin (1) —Gas	$	64,233		$	53,360		$	44,327
Volumes—Gas (MMBtus)		16,819,713			14,786,681			15,724,708
Retail Gross Margin (2) —Gas per MMBtu	$	3.82		$	3.61		$	2.82
Retail Electricity Segment
Total Revenues	$	417,229		$	229,490		$	176,406
Retail Cost of Revenues		286,795			170,684			149,452
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements		12,298			(1,449	)		(5,663	)
Retail Gross Margin (1) —Electricity	$	118,136		$	60,255		$	32,617
Volumes—Electricity (MWhs)		4,170,593			2,075,479			1,526,652
Retail Gross Margin (2) —Electricity per MWh	$	28.33		$	29.03		$	21.37
(1) Reflects the Retail Gross Margin attributable to our Retail Natural Gas Segment or Retail Electricity Segment, as applicable. Retail Gross Margin is a non-GAAP financial measures.
(2) Reflects the Retail Gross Margin for the Retail Natural Gas Segment or Retail Electricity Segment, as applicable, divided by the total volumes in MMBtu or MWh, respectively.

 

 

 

Reconciliation of GAAP to Non-GAAP Measures

Adjusted EBITDA

We define “Adjusted EBITDA” as EBITDA less (i) customer acquisition costs incurred in the current period, (ii) net gain (loss) on derivative instruments, and (iii) net current period cash settlements on derivative instruments, plus (iv) non-cash compensation expense, and (v) other non-cash and non-recurring operating items. EBITDA is defined as net income (loss) before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs (representing spending for organic customer acquisitions) in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the year in which they are incurred, even though we capitalize such costs and amortize them over two years in accordance with our accounting policies. The deduction of current period customer acquisition costs is consistent with how we manage our business, but the comparability of Adjusted EBITDA between periods may be affected by varying levels of customer acquisition costs. For example, our Adjusted EBITDA is lower in years of customer growth reflecting larger customer acquisition spending. We do not deduct the cost of customer acquisitions through acquisitions of business or portfolios of customers in calculated Adjusted EBITDA. We deduct our net gains (losses) on derivative instruments, excluding current period cash settlements, from the Adjusted EBITDA calculation in order to remove the non-cash impact of net gains and losses on derivative instruments. We also deduct non-cash compensation expense as a result of restricted stock units that are issued under our long-term incentive plan.

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 combined and 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; and
• our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt.

Reconciliation of Spark’s estimate of Adjusted EBITDA for the year ended December 31, 2017 to the relevant GAAP line items is not being provided as Spark is not providing 2017 guidance for net income (loss), net cash provided by operating activities, or the reconciling items between these GAAP financial measures and Adjusted EBITDA. Spark does not provide guidance for such items because it is not possible to forecast the future non-cash impacts of net gains and losses on derivative instruments and non-cash compensation expense attributable to grants of equity under our Long Term Incentive Plan. Additionally, it is not possible to forecast our provision for income taxes due to the potential for change in our non-controlling interests’ ownership percentage, given the nature of our Up-C structure. Accordingly, a reconciliation to net income (loss) or net cash provided by operating activities is not available without unreasonable effort.

Retail Gross Margin

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

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

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

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

APPENDIX TABLES A-1 AND A-2
ADJUSTED EBITDA RECONCILIATIONS
(in thousands)
(unaudited)
	Year Ended December 31,						Quarter Ended December 31,
		2016			2015			2016			2015
Reconciliation of Adjusted EBITDA to Net Income:
Net income	$	65,673		$	25,975		$	24,137		$	3,132
Depreciation and amortization		32,788			25,378			9,451			7,505
Interest expense		8,859			2,280			6,004			865
Income tax expense		10,426			1,974			3,574			374
EBITDA (1)		117,746			55,607			43,166			11,876
Less:
Net, Gains (losses) on derivative instruments		22,407			(18,497	)		19,520			(12,379	)
Net, Cash settlements on derivative instruments		(2,146	)		20,547			(5,573	)		7,660
Customer acquisition costs		24,934			19,869			9,717			2,144
Plus:
Non-cash compensation expense		5,242			3,181			1,215			1,807
Contract termination charge related to Major Energy Companies change of control		4,099			–			4,099			–
Adjusted EBITDA (1)	$	81,892		$	36,869		$	24,816		$	16,258
(1) Includes $1.1 million related to the change in fair value as the result of the revaluation of the of the Major Earnout liability at December 31, 2016.

 

	Year Ended December 31,						Quarter Ended December 31,
		2016			2015			2016			2015
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by operating activities	$	67,793		$	45,931		$	6,150		$	6,256
Amortization of deferred financing costs		(668	)		(412	)		(203	)		(117	)
Allowance for doubtful accounts and bad debt expense		(1,261	)		(7,908	)		(419	)		(1,826	)
Interest expense		8,859			2,280			6,004			865
Income tax expense		10,426			1,974			3,574			375
Changes in operating working capital
Accounts receivable, prepaids, current assets		12,135			(18,820	)		31,362			10,640
Inventory		542			4,544			1,110			7,522
Accounts payable and accrued liabilities		(17,653	)		13,008			(23,507	)		(753	)
Other		1,719			(3,728	)		745			(6,704	)
Adjusted EBITDA	$	81,892		$	36,869		$	24,816		$	16,258
Cash Flow Data:
Cash flows provided by operating activity	$	67,793		$	45,931		$	6,150		$	6,256
Cash flows (used in) provided by investing activity	$	(36,344	)	$	(41,943	)	$	(2,169	)	$	876
Cash flows used in financing activity	$	(16,963	)	$	(3,873	)	$	(1,928	)	$	(10,013	)

 

The following table presents a reconciliation of Retail Gross Margin to operating income (loss) 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,
		2016			2015			2016			2015
Reconciliation of Retail Gross Margin to Operating Income (Loss):
Operating income	$	84,001		$	29,905		$	33,098		$	4,374
Depreciation and amortization		32,788			25,378			9,451			7,505
General and administrative		84,964			61,682			29,776			17,773
Less:
Net asset optimization revenue		(586	)		1,494			(544	)		177
Net, Gains (losses) on non-trading derivative instruments		22,254			(18,423	)		19,735			(12,547	)
Net, Cash settlements on non-trading derivative instruments		(2,284	)		20,279			(5,625	)		7,636
Retail Gross Margin	$	182,369		$	113,615		$	58,759		$	34,386
Retail Gross Margin—Retail Natural Gas Segment	$	64,233		$	53,360		$	22,849		$	17,801
Retail Gross Margin—Retail Electricity Segment	$	118,136		$	60,255		$	35,910		$	16,585

 

Contact: Spark Energy, Inc.
Investors:
Andy Davis, 832-200-3727
Media:
Eric Melchor, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, Feb. 23, 2017 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark” or the “Company”), announced today that it has changed the date of its Full Year and Fourth Quarter 2016 conference call to Friday, March 3, 2017 at 10:00 AM Central (11:00 AM Eastern), from the previously scheduled March 9 date. Spark is in a position to file its Form 10-K for the year ended December 31, 2016 earlier than previously anticipated.

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

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing 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. Headquartered in Houston, Texas, Spark currently operates in 18 states and serves 90 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Contact: Spark Energy, Inc.
Investors:
Andy Davis, 832-200-3727
Media:
Eric Melchor, 281-833-4151

Source: Spark Energy, Inc.