|
|
|
|
|
Delaware
|
|
001-36559
|
|
46-5453215
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS Employer
Identification Number)
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[ ]
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Exhibit No.
|
Description
|
|
|
99.1
|
Press Release of Spark Energy, Inc. dated May 6, 2019
|
Exhibit No.
|
Description
|
|
|
99.1
|
|
||
|
|
|
Spark Energy, Inc.
|
||
|
||
By:
|
|
/s/ Nathan Kroeker
|
Name:
|
|
Nathan Kroeker
|
Title:
|
|
President and Chief Executive Officer
|
•
|
Achieved $25.1 million in Adjusted EBITDA, $56.6 million in Retail Gross Margin, and a $2.7 million in Net Income for the first quarter
|
•
|
Total RCE count of 865,000 as of March 31, 2019
|
•
|
Continued optimization of large C&I portfolio, resulting in average monthly attrition of 5.4%
|
•
|
Winter hedging strategy performed extremely well
|
•
|
Successful ramp-up of organic customer acquisition
|
($ in thousands)
|
March 31, 2019
|
||
Cash and cash equivalents
|
$
|
32,436
|
|
Senior Credit Facility Availability
(1)
|
25,305
|
|
|
Subordinated Debt Availability
(2)
|
25,000
|
|
|
Total Liquidity
|
$
|
82,741
|
|
•
|
changes in commodity prices;
|
•
|
the sufficiency of risk management and hedging policies and practices;
|
•
|
the impact of extreme and unpredictable weather conditions, including hurricanes and other natural disasters;
|
•
|
federal, state and local regulation, including the industry's ability to address or adapt to potentially restrictive new regulations that may be enacted by public utility commissions;
|
•
|
our ability to borrow funds and access credit markets;
|
•
|
restrictions in our debt agreements and collateral requirements;
|
•
|
credit risk with respect to suppliers and customers;
|
•
|
changes in costs to acquire customers as well as actual attrition rates;
|
•
|
accuracy of billing systems;
|
•
|
our ability to successfully identify, complete, and efficiently integrate acquisitions into our operations;
|
•
|
significant changes in, or new charges by, the ISOs in the regions in which we operate;
|
•
|
competition; and
|
•
|
the “Risk Factors” in our latest Annual Report on Form 10-K for the year ended December 31, 2018, in our Quarterly Reports on Form 10-Q, and other public filings and press releases.
|
|
March 31, 2019
|
|
December 31, 2018
|
|||||
Assets
|
|
|
|
|||||
Current assets:
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
32,436
|
|
|
|
$
|
41,002
|
|
Restricted cash
|
2,767
|
|
|
|
8,636
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $3,323 at March 31, 2019 and $3,353 at December 31, 2018
|
130,887
|
|
|
|
150,866
|
|
||
Accounts receivable—affiliates
|
2,631
|
|
|
|
2,558
|
|
||
Inventory
|
235
|
|
|
|
3,878
|
|
||
Fair value of derivative assets
|
2,203
|
|
|
|
7,289
|
|
||
Customer acquisition costs, net
|
14,455
|
|
|
|
14,431
|
|
||
Customer relationships, net
|
16,565
|
|
|
|
16,630
|
|
||
Deposits
|
8,043
|
|
|
|
9,226
|
|
||
Renewable energy credit asset
|
34,417
|
|
|
|
25,717
|
|
||
Other current assets
|
11,031
|
|
|
|
11,747
|
|
||
Total current assets
|
255,670
|
|
|
|
291,980
|
|
||
Property and equipment, net
|
3,871
|
|
|
|
4,366
|
|
||
Fair value of derivative assets
|
146
|
|
|
|
3,276
|
|
||
Customer acquisition costs, net
|
4,736
|
|
|
|
3,893
|
|
||
Customer relationships, net
|
27,319
|
|
|
|
26,429
|
|
||
Deferred tax assets
|
27,261
|
|
|
|
27,321
|
|
||
Goodwill
|
120,343
|
|
|
|
120,343
|
|
||
Other assets
|
9,517
|
|
|
|
11,130
|
|
||
Total assets
|
$
|
448,863
|
|
|
|
$
|
488,738
|
|
Liabilities, Series A Preferred Stock and Stockholders' Equity
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|||||
Accounts payable
|
$
|
54,515
|
|
|
|
$
|
69,631
|
|
Accounts payable—affiliates
|
2,447
|
|
|
|
2,464
|
|
||
Accrued liabilities
|
7,336
|
|
|
|
10,004
|
|
||
Renewable energy credit liability
|
50,370
|
|
|
|
42,805
|
|
||
Fair value of derivative liabilities
|
5,518
|
|
|
|
6,478
|
|
||
Current payable pursuant to tax receivable agreement—affiliates
|
1,658
|
|
|
|
1,658
|
|
||
Current contingent consideration for acquisitions
|
1,328
|
|
|
|
1,328
|
|
||
Current portion of Note Payable
|
5,900
|
|
|
|
6,936
|
|
||
Other current liabilities
|
1,037
|
|
|
|
647
|
|
||
Total current liabilities
|
130,109
|
|
|
|
141,951
|
|
||
Long-term liabilities:
|
|
|
|
|||||
Fair value of derivative liabilities
|
5,284
|
|
|
|
106
|
|
||
Payable pursuant to tax receivable agreement—affiliates
|
25,917
|
|
|
|
25,917
|
|
||
Long-term portion of Senior Credit Facility
|
110,500
|
|
|
|
129,500
|
|
||
Subordinated debt—affiliate
|
—
|
|
|
|
10,000
|
|
||
Other long-term liabilities
|
545
|
|
|
|
212
|
|
||
Total liabilities
|
272,355
|
|
|
|
307,686
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|||||
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,707,256 shares issued and outstanding at March 31, 2019 and at December 31, 2018
|
90,758
|
|
|
|
90,758
|
|
||
Stockholders' equity:
|
|
|
|
|||||
Common Stock:
|
|
|
|
|||||
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 14,241,318 issued, and 14,141,872 outstanding at March 31, 2019 and 14,178,284 issued and 14,078,838 outstanding at December 31, 2018
|
142
|
|
|
|
142
|
|
||
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 20,800,000 issued and outstanding at March 31, 2019 and December 31, 2018
|
209
|
|
|
|
209
|
|
||
Additional paid-in capital
|
45,769
|
|
|
|
46,157
|
|
||
Accumulated other comprehensive (loss) income
|
(12
|
|
)
|
|
2
|
|
||
Retained earnings
|
62
|
|
|
|
1,307
|
|
||
Treasury stock, at cost, 99,446 shares at March 31, 2019 and December 31, 2018
|
(2,011
|
|
)
|
|
(2,011
|
)
|
||
Total stockholders' equity
|
44,159
|
|
|
|
45,806
|
|
||
Non-controlling interest in Spark HoldCo, LLC
|
41,591
|
|
|
|
44,488
|
|
||
Total equity
|
85,750
|
|
|
|
90,294
|
|
||
Total liabilities, Series A Preferred Stock and Stockholders' equity
|
$
|
448,863
|
|
|
|
$
|
488,738
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenues:
|
|
|
|
||||
Retail revenues
|
$
|
240,154
|
|
|
$
|
284,001
|
|
Net asset optimization revenues
|
2,552
|
|
|
2,687
|
|
||
Total Revenues
|
242,706
|
|
|
286,688
|
|
||
Operating Expenses:
|
|
|
|
||||
Retail cost of revenues
|
195,255
|
|
|
289,876
|
|
||
General and administrative
|
29,476
|
|
|
30,047
|
|
||
Depreciation and amortization
|
12,155
|
|
|
13,019
|
|
||
Total Operating Expenses
|
236,886
|
|
|
332,942
|
|
||
Operating income (loss)
|
5,820
|
|
|
(46,254
|
)
|
||
Other (expense)/income:
|
|
|
|
||||
Interest expense
|
(2,223
|
)
|
|
(2,245
|
)
|
||
Interest and other income
|
189
|
|
|
201
|
|
||
Total other expenses
|
(2,034
|
)
|
|
(2,044
|
)
|
||
Income (loss) before income tax expense (benefit)
|
3,786
|
|
|
(48,298
|
)
|
||
Income tax expense (benefit)
|
1,041
|
|
|
(6,467
|
)
|
||
Net income (loss)
|
$
|
2,745
|
|
|
$
|
(41,831
|
)
|
Less: Net income (loss) attributable to non-controlling interests
|
1,963
|
|
|
(30,726
|
)
|
||
Net income (loss) attributable to Spark Energy, Inc. stockholders
|
$
|
782
|
|
|
$
|
(11,105
|
)
|
Less: Dividend on Series A Preferred Stock
|
2,027
|
|
|
2,027
|
|
||
Net loss attributable to stockholders of Class A common stock
|
$
|
(1,245
|
)
|
|
$
|
(13,132
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Currency translation loss
|
$
|
(35
|
)
|
|
$
|
(83
|
)
|
Other comprehensive loss
|
(35
|
)
|
|
(83
|
)
|
||
Comprehensive income (loss)
|
$
|
2,710
|
|
|
$
|
(41,914
|
)
|
Less: Comprehensive income (loss) attributable to non-controlling interests
|
1,943
|
|
|
(30,777
|
)
|
||
Comprehensive income (loss) attributable to Spark Energy, Inc. stockholders
|
$
|
767
|
|
|
$
|
(11,137
|
)
|
|
|
|
|
||||
Net loss attributable to Spark Energy, Inc. per share of Class A common stock
|
|
|
|
||||
Basic
|
$
|
(0.09
|
)
|
|
$
|
(1.00
|
)
|
Diluted
|
$
|
(0.09
|
)
|
|
$
|
(1.04
|
)
|
|
|
|
|
||||
Weighted average shares of Class A common stock outstanding
|
|
|
|
||||
Basic
|
14,135
|
|
|
13,136
|
|
||
Diluted
|
14,135
|
|
|
34,621
|
|
||
|
|
|
|
|
Three Months Ended March 31,
|
||||||||
|
2019
|
|
2018
|
||||||
Cash flows from operating activities:
|
|
|
|
||||||
Net income (loss)
|
$
|
2,745
|
|
|
|
$
|
(41,831
|
|
)
|
Adjustments to reconcile net income to net cash flows provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization expense
|
12,159
|
|
|
|
11,632
|
|
|
||
Deferred income taxes
|
59
|
|
|
|
(6,549
|
|
)
|
||
Stock based compensation
|
1,172
|
|
|
|
1,131
|
|
|
||
Amortization of deferred financing costs
|
268
|
|
|
|
295
|
|
|
||
Bad debt expense
|
3,849
|
|
|
|
2,423
|
|
|
||
Loss on derivatives, net
|
19,541
|
|
|
|
36,542
|
|
|
||
Current period cash settlements on derivatives, net
|
(7,106
|
|
)
|
|
16,442
|
|
|
||
Other
|
(137
|
|
)
|
|
(248
|
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||||
Decrease in accounts receivable
|
16,129
|
|
|
|
9,737
|
|
|
||
(Increase) decrease in accounts receivable—affiliates
|
(73
|
|
)
|
|
354
|
|
|
||
Decrease in inventory
|
3,643
|
|
|
|
4,070
|
|
|
||
Increase in customer acquisition costs
|
(5,789
|
|
)
|
|
(4,274
|
|
)
|
||
Increase in prepaid and other current assets
|
(5,692
|
|
)
|
|
(22,719
|
|
)
|
||
Increase in other assets
|
(102
|
|
)
|
|
(58
|
|
)
|
||
Decrease in accounts payable and accrued liabilities
|
(11,322
|
|
)
|
|
(9,091
|
|
)
|
||
Decrease in accounts payable—affiliates
|
(18
|
|
)
|
|
(572
|
|
)
|
||
Increase (decrease) in other current liabilities
|
390
|
|
|
|
(6,653
|
|
)
|
||
Increase (decrease) in other non-current liabilities
|
333
|
|
|
|
(171
|
|
)
|
||
Net cash provided by (used in) operating activities
|
30,049
|
|
|
|
(9,540
|
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||||
Purchases of property and equipment
|
(254
|
|
)
|
|
(754
|
|
)
|
||
Acquisition of Starion customers
|
(5,869
|
|
)
|
|
—
|
|
|
||
Acquisition of HIKO
|
—
|
|
|
|
(15,041
|
|
)
|
||
Net cash used in investing activities
|
(6,123
|
|
)
|
|
(15,795
|
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||||
Proceeds from issuance of Series A Preferred Stock, net of issuance costs paid
|
—
|
|
|
|
48,490
|
|
|
||
Borrowings on notes payable
|
64,500
|
|
|
|
83,800
|
|
|
||
Payments on notes payable
|
(93,500
|
|
)
|
|
(102,550
|
|
)
|
||
Payment of the Major Energy Companies Earnout
|
—
|
|
|
|
(1,607
|
|
)
|
||
Payments on the Verde promissory note
|
(1,036
|
|
)
|
|
(3,261
|
|
)
|
||
Proceeds from disgorgement of stockholders short-swing profits
|
46
|
|
|
|
244
|
|
|
||
Payment of dividends to Class A common stockholders
|
(2,564
|
|
)
|
|
(2,381
|
|
)
|
||
Payment of distributions to non-controlling unitholders
|
(3,770
|
|
)
|
|
(4,822
|
|
)
|
||
Payment of Dividends to Preferred Stock
|
(2,027
|
|
)
|
|
(932
|
|
)
|
||
Payment to affiliates for acquisition of customer book
|
(10
|
|
)
|
|
—
|
|
|
||
Net cash (used in) provided by financing activities
|
(38,361
|
|
)
|
|
16,981
|
|
|
||
Decrease in Cash and cash equivalents
|
(14,435
|
|
)
|
|
(8,354
|
|
)
|
||
Cash and cash equivalents and Restricted cash—beginning of period
|
49,638
|
|
|
|
29,419
|
|
|
||
Cash and cash equivalents and Restricted cash—end of period
|
$
|
35,203
|
|
|
|
$
|
21,065
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
||||||
Non-cash items:
|
|
|
|
||||||
Property and equipment purchase accrual
|
$
|
2
|
|
|
|
$
|
180
|
|
|
Cash paid (received) during the period for:
|
|
|
|
||||||
Interest
|
$
|
2,099
|
|
|
|
$
|
1,854
|
|
|
Taxes
|
$
|
(3,147
|
|
)
|
|
$
|
1,268
|
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
|
(in thousands, except volume and per unit operating data)
|
||||||
Retail Electricity Segment
|
|
|
|
||||
Total Revenues
|
$
|
182,092
|
|
|
$
|
220,899
|
|
Retail Cost of Revenues
|
165,888
|
|
|
249,547
|
|
||
Less: Net losses on non-trading derivatives, net of cash settlements
|
(13,769
|
)
|
|
(48,367
|
)
|
||
Retail Gross Margin
(1)
— Electricity
|
$
|
29,973
|
|
|
$
|
19,719
|
|
Volumes — Electricity (MWhs)
|
1,728,083
|
|
|
2,252,024
|
|
||
Retail Gross Margin
(2)
— Electricity per MWh
|
$
|
17.35
|
|
|
$
|
8.76
|
|
|
|
|
|
||||
Retail Natural Gas Segment
|
|
|
|
||||
Total Revenues
|
58,062
|
|
|
63,102
|
|
||
Retail Cost of Revenues
|
29,367
|
|
|
40,329
|
|
||
Less: Net gains (losses) on non-trading derivatives, net of cash settlements
|
2,091
|
|
|
(3,227
|
)
|
||
Retail Gross Margin
(1)
— Gas
|
$
|
26,604
|
|
|
$
|
26,000
|
|
Volumes — Gas (MMBtus)
|
6,951,610
|
|
|
7,677,082
|
|
||
Retail Gross Margin
(2)
— Gas per MMBtu
|
$
|
3.83
|
|
|
$
|
3.39
|
|
(1)
|
Reflects the Retail Gross Margin attributable to our Retail Natural Gas Segment or Retail Electricity Segment, as applicable. Retail Gross Margin is a non-GAAP financial measure. See “Non-GAAP Performance Measures” in our Form 10-Q for a reconciliation of Adjusted EBITDA and Retail Gross Margin to their most directly comparable financial measures presented in accordance with GAAP.
|
(2)
|
Reflects the Retail Gross Margin for the Retail Natural Gas Segment or Retail Electricity Segment, as applicable, divided by the total volumes in MMBtu or MWh, respectively.
|
•
|
our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure or historical cost basis;
|
•
|
the ability of our assets to generate earnings sufficient to support our proposed cash dividends; and
|
•
|
our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt.
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Reconciliation of Adjusted EBITDA to Net Income (loss):
|
|
|
|
||||
Net income (loss)
|
$
|
2,745
|
|
|
$
|
(41,831
|
)
|
Depreciation and amortization
|
12,155
|
|
|
13,019
|
|
||
Interest expense
|
2,223
|
|
|
2,245
|
|
||
Income tax expense (benefit)
|
1,041
|
|
|
(6,467
|
)
|
||
EBITDA
|
18,164
|
|
|
(33,034
|
)
|
||
Less:
|
|
|
|
||||
Net, losses on derivative instruments
|
(19,541
|
)
|
|
(36,542
|
)
|
||
Net, Cash settlements on derivative instruments
|
8,025
|
|
|
(15,537
|
)
|
||
Customer acquisition costs
|
5,789
|
|
|
4,274
|
|
||
Plus:
|
|
|
|
||||
Non-cash compensation expense
|
1,172
|
|
|
1,131
|
|
||
Adjusted EBITDA
|
$
|
25,063
|
|
|
$
|
15,902
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
|
|
|
|
||||
Net cash provided by (used in) operating activities
|
$
|
30,049
|
|
|
$
|
(9,540
|
)
|
Amortization of deferred financing costs
|
(268
|
)
|
|
(295
|
)
|
||
Bad debt expense
|
(3,849
|
)
|
|
(2,423
|
)
|
||
Interest expense
|
2,223
|
|
|
2,245
|
|
||
Income tax expense (benefit)
|
1,041
|
|
|
(6,467
|
)
|
||
Changes in operating working capital
|
|
|
|
||||
Accounts receivable, prepaids, current assets
|
(10,364
|
)
|
|
12,628
|
|
||
Inventory
|
(3,643
|
)
|
|
(4,070
|
)
|
||
Accounts payable and accrued liabilities
|
10,950
|
|
|
16,316
|
|
||
Other
|
(1,076
|
)
|
|
7,508
|
|
||
Adjusted EBITDA
|
$
|
25,063
|
|
|
$
|
15,902
|
|
Cash Flow Data:
|
|
|
|
||||
Cash flows provided by (used in) operating activities
|
$
|
30,049
|
|
|
$
|
(9,540
|
)
|
Cash flows used in investing activities
|
$
|
(6,123
|
)
|
|
$
|
(15,795
|
)
|
Cash flows (used in) provided by financing activities
|
$
|
(38,361
|
)
|
|
$
|
16,981
|
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2019
|
|
2018
|
||||
Reconciliation of Retail Gross Margin to Operating Income (loss):
|
|
|
|
||||
Operating income (loss)
|
$
|
5,820
|
|
|
$
|
(46,254
|
)
|
Plus:
|
|
|
|
||||
Depreciation and amortization
|
12,155
|
|
|
13,019
|
|
||
General and administrative expense
|
29,476
|
|
|
30,047
|
|
||
Less:
|
|
|
|
||||
Net asset optimization revenues
|
2,552
|
|
|
2,687
|
|
||
Net, losses on non-trading derivative instruments
|
(19,803
|
)
|
|
(36,712
|
)
|
||
Net, Cash settlements on non-trading derivative instruments
|
8,125
|
|
|
(14,882
|
)
|
||
Retail Gross Margin
|
$
|
56,577
|
|
|
$
|
45,719
|
|
Retail Gross Margin - Retail Electricity Segment
|
$
|
29,973
|
|
|
$
|
19,719
|
|
Retail Gross Margin - Retail Natural Gas Segment
|
$
|
26,604
|
|
|
$
|
26,000
|
|