|
|
|
|
|
Delaware
|
|
001-36559
|
|
46-5453215
|
(State or Other Jurisdiction
of Incorporation)
|
|
(Commission
File Number)
|
|
(IRS Employer
Identification Number)
|
¨
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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¨
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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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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Title of each class
|
|
Trading Symbols(s)
|
|
Name of exchange on which registered
|
|
Class A common stock, par value $0.01 per share
|
|
SPKE
|
|
The NASDAQ Global Select Market
|
|
8.75% Series A Fixed-to-Floating Rate
Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share
|
SPKEP
|
|
|
The NASDAQ Global Select Market
|
Exhibit No.
|
Description
|
|
|
99.1
|
Press Release of Spark Energy, Inc. dated August 7, 2019
|
Exhibit No.
|
Description
|
|
|
99.1
|
|
||
|
|
|
Spark Energy, Inc.
|
||
|
||
By:
|
|
/s/ James G. Jones II
|
Name:
|
|
James G Jones II
|
Title:
|
|
Chief Financial Officer
|
•
|
Achieved $13.6 million in Adjusted EBITDA, $41.7 million in Retail Gross Margin, and $25.5 million in Net Loss for the second quarter
|
•
|
Total RCE count of 818,000 as of June 30, 2019
|
•
|
Average monthly attrition of 3.8%, a 30% improvement from the first quarter
|
•
|
Settled several significant legacy litigation items
|
•
|
Amended and extended Senior Credit Facility and Subordinated Debt Facility; current liquidity of $108 million
|
•
|
Terminated Tax Receivable Agreement ("TRA"), which will result in an increase in stockholders equity and a reduction in future cash payments
|
($ in thousands)
|
June 30, 2019
|
||
Cash and cash equivalents
|
$
|
27,579
|
|
Senior Credit Facility Availability
(1)
|
55,488
|
|
|
Subordinated Debt Facility Availability
(2)
|
25,000
|
|
|
Total Liquidity
|
$
|
108,067
|
|
•
|
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.
|
|
June 30, 2019
|
|
December 31, 2018
|
|||||
Assets
|
|
|
|
|||||
Current assets:
|
|
|
|
|||||
Cash and cash equivalents
|
$
|
27,579
|
|
|
|
$
|
41,002
|
|
Restricted cash
|
1,001
|
|
|
|
8,636
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $3,720 at June 30, 2019 and $3,353 at December 31, 2018
|
103,680
|
|
|
|
150,866
|
|
||
Accounts receivable—affiliates
|
3,882
|
|
|
|
2,558
|
|
||
Inventory
|
2,020
|
|
|
|
3,878
|
|
||
Fair value of derivative assets
|
52
|
|
|
|
7,289
|
|
||
Customer acquisition costs, net
|
13,004
|
|
|
|
14,431
|
|
||
Customer relationships, net
|
15,467
|
|
|
|
16,630
|
|
||
Deposits
|
9,331
|
|
|
|
9,226
|
|
||
Renewable energy credit asset
|
11,664
|
|
|
|
25,717
|
|
||
Other current assets
|
14,810
|
|
|
|
11,747
|
|
||
Total current assets
|
202,490
|
|
|
|
291,980
|
|
||
Property and equipment, net
|
3,575
|
|
|
|
4,366
|
|
||
Fair value of derivative assets
|
—
|
|
|
|
3,276
|
|
||
Customer acquisition costs, net
|
4,856
|
|
|
|
3,893
|
|
||
Customer relationships, net
|
23,810
|
|
|
|
26,429
|
|
||
Deferred tax assets
|
31,847
|
|
|
|
27,321
|
|
||
Goodwill
|
120,343
|
|
|
|
120,343
|
|
||
Other assets
|
10,163
|
|
|
|
11,130
|
|
||
Total assets
|
$
|
397,084
|
|
|
|
$
|
488,738
|
|
Liabilities, Series A Preferred Stock and Stockholders' Equity
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|||||
Accounts payable
|
$
|
48,985
|
|
|
|
$
|
68,790
|
|
Accounts payable—affiliates
|
2,475
|
|
|
|
2,464
|
|
||
Accrued liabilities
|
23,165
|
|
|
|
10,845
|
|
||
Renewable energy credit liability
|
25,384
|
|
|
|
42,805
|
|
||
Fair value of derivative liabilities
|
25,848
|
|
|
|
6,478
|
|
||
Current payable pursuant to tax receivable agreement—affiliates
|
11,239
|
|
|
|
1,658
|
|
||
Current contingent consideration for acquisitions
|
1,328
|
|
|
|
1,328
|
|
||
Current portion of Note Payable
|
—
|
|
|
|
6,936
|
|
||
Other current liabilities
|
1,132
|
|
|
|
647
|
|
||
Total current liabilities
|
139,556
|
|
|
|
141,951
|
|
||
Long-term liabilities:
|
|
|
|
|||||
Fair value of derivative liabilities
|
4,578
|
|
|
|
106
|
|
||
Payable pursuant to tax receivable agreement—affiliates
|
16,336
|
|
|
|
25,917
|
|
||
Long-term portion of Senior Credit Facility
|
94,000
|
|
|
|
129,500
|
|
||
Subordinated debt—affiliate
|
—
|
|
|
|
10,000
|
|
||
Other long-term liabilities
|
260
|
|
|
|
212
|
|
||
Total liabilities
|
254,730
|
|
|
|
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 issued and 3,702,756 outstanding at June 30, 2019 and 3,707,256 issued and outstanding at December 31, 2018
|
90,649
|
|
|
|
90,758
|
|
||
Stockholders' equity:
|
|
|
|
|||||
Common Stock:
|
|
|
|
|||||
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 14,478,999 issued, and 14,379,553 outstanding at June 30, 2019 and 14,178,284 issued and 14,078,838 outstanding at December 31, 2018
|
145
|
|
|
|
142
|
|
||
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 20,800,000 issued and outstanding at June 30, 2019 and December 31, 2018
|
209
|
|
|
|
209
|
|
||
Additional paid-in capital
|
42,329
|
|
|
|
46,157
|
|
||
Accumulated other comprehensive (loss) income
|
(38
|
|
)
|
|
2
|
|
||
Retained (deficit) earnings
|
(7,053
|
|
)
|
|
1,307
|
|
||
Treasury stock, at cost, 99,446 shares at June 30, 2019 and December 31, 2018
|
(2,011
|
|
)
|
|
(2,011
|
)
|
||
Total stockholders' equity
|
33,581
|
|
|
|
45,806
|
|
||
Non-controlling interest in Spark HoldCo, LLC
|
18,124
|
|
|
|
44,488
|
|
||
Total equity
|
51,705
|
|
|
|
90,294
|
|
||
Total liabilities, Series A Preferred Stock and Stockholders' equity
|
$
|
397,084
|
|
|
|
$
|
488,738
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Retail revenues
|
$
|
177,805
|
|
|
$
|
231,488
|
|
|
$
|
417,959
|
|
|
$
|
515,489
|
|
Net asset optimization (expense) revenues
|
(56
|
)
|
|
763
|
|
|
2,496
|
|
|
3,450
|
|
||||
Total Revenues
|
177,749
|
|
|
232,251
|
|
|
420,455
|
|
|
518,939
|
|
||||
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Retail cost of revenues
|
158,759
|
|
|
162,669
|
|
|
354,014
|
|
|
452,545
|
|
||||
General and administrative
|
37,247
|
|
|
27,780
|
|
|
66,723
|
|
|
57,827
|
|
||||
Depreciation and amortization
|
10,312
|
|
|
12,861
|
|
|
22,467
|
|
|
25,880
|
|
||||
Total Operating Expenses
|
206,318
|
|
|
203,310
|
|
|
443,204
|
|
|
536,252
|
|
||||
Operating (loss) income
|
(28,569
|
)
|
|
28,941
|
|
|
(22,749
|
)
|
|
(17,313
|
)
|
||||
Other (expense)/income:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(1,995
|
)
|
|
(2,316
|
)
|
|
(4,218
|
)
|
|
(4,561
|
)
|
||||
Interest and other income
|
494
|
|
|
553
|
|
|
683
|
|
|
754
|
|
||||
Total other expenses
|
(1,501
|
)
|
|
(1,763
|
)
|
|
(3,535
|
)
|
|
(3,807
|
)
|
||||
(Loss) income before income tax (benefit) expense
|
(30,070
|
)
|
|
27,178
|
|
|
(26,284
|
)
|
|
(21,120
|
)
|
||||
Income tax (benefit) expense
|
(4,586
|
)
|
|
3,251
|
|
|
(3,545
|
)
|
|
(3,216
|
)
|
||||
Net (loss) income
|
$
|
(25,484
|
)
|
|
$
|
23,927
|
|
|
$
|
(22,739
|
)
|
|
$
|
(17,904
|
)
|
Less: Net (loss) income attributable to non-controlling interests
|
(18,369
|
)
|
|
15,142
|
|
|
(16,406
|
)
|
|
(15,584
|
)
|
||||
Net (loss) income attributable to Spark Energy, Inc. stockholders
|
$
|
(7,115
|
)
|
|
$
|
8,785
|
|
|
$
|
(6,333
|
)
|
|
$
|
(2,320
|
)
|
Less: Dividend on Series A Preferred Stock
|
2,027
|
|
|
2,027
|
|
|
4,054
|
|
|
4,054
|
|
||||
Net (loss) income attributable to stockholders of Class A common stock
|
$
|
(9,142
|
)
|
|
$
|
6,758
|
|
|
$
|
(10,387
|
)
|
|
$
|
(6,374
|
)
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Currency translation (loss) gain
|
$
|
(63
|
)
|
|
$
|
25
|
|
|
$
|
(98
|
)
|
|
$
|
(58
|
)
|
Other comprehensive (loss) income
|
(63
|
)
|
|
25
|
|
|
(98
|
)
|
|
(58
|
)
|
||||
Comprehensive (loss) income
|
$
|
(25,547
|
)
|
|
$
|
23,952
|
|
|
$
|
(22,837
|
)
|
|
$
|
(17,962
|
)
|
Less: Comprehensive (loss) income attributable to non-controlling interests
|
(18,407
|
)
|
|
15,157
|
|
|
(16,464
|
)
|
|
(15,620
|
)
|
||||
Comprehensive (loss) income attributable to Spark Energy, Inc. stockholders
|
$
|
(7,140
|
)
|
|
$
|
8,795
|
|
|
$
|
(6,373
|
)
|
|
$
|
(2,342
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to Spark Energy, Inc. per share of Class A common stock
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.64
|
)
|
|
$
|
0.51
|
|
|
$
|
(0.73
|
)
|
|
$
|
(0.48
|
)
|
Diluted
|
$
|
(0.73
|
)
|
|
$
|
0.51
|
|
|
$
|
(0.73
|
)
|
|
$
|
(0.52
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of Class A common stock outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
14,246
|
|
|
13,229
|
|
|
14,191
|
|
|
13,183
|
|
||||
Diluted
|
35,046
|
|
|
13,246
|
|
|
34,991
|
|
|
34,668
|
|
||||
|
|
|
|
|
|
|
|
Non-cash items:
|
|
|
|
||||||
Property and equipment purchase accrual
|
$
|
4
|
|
|
|
$
|
(123
|
|
)
|
Holdback for Verde Note—Indemnified Matters
|
$
|
4,900
|
|
|
|
$
|
—
|
|
|
Cash paid during the period for:
|
|
|
|
||||||
Interest
|
$
|
3,723
|
|
|
|
$
|
3,884
|
|
|
Taxes
|
$
|
1,440
|
|
|
|
$
|
5,399
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(in thousands, except volume and per unit operating data)
|
||||||||||||||
Retail Electricity Segment
|
|
|
|
|
|
|
|
||||||||
Total Revenues
|
$
|
160,776
|
|
|
$
|
209,447
|
|
|
$
|
342,868
|
|
|
$
|
430,346
|
|
Retail Cost of Revenues
|
148,187
|
|
|
151,953
|
|
|
314,074
|
|
|
401,500
|
|
||||
Less: Net (loss) gain on non-trading derivatives, net of cash settlements
|
(21,025
|
)
|
|
24,852
|
|
|
(34,794
|
)
|
|
(23,515
|
)
|
||||
Retail Gross Margin
(1)
— Electricity
|
$
|
33,614
|
|
|
$
|
32,642
|
|
|
$
|
63,588
|
|
|
$
|
52,361
|
|
Volumes — Electricity (MWhs)
|
1,516,139
|
|
|
2,100,007
|
|
|
3,244,222
|
|
|
4,352,031
|
|
||||
Retail Gross Margin
(2)
— Electricity per MWh
|
$
|
22.17
|
|
|
$
|
15.54
|
|
|
$
|
19.60
|
|
|
$
|
12.03
|
|
|
|
|
|
|
|
|
|
||||||||
Retail Natural Gas Segment
|
|
|
|
|
|
|
|
||||||||
Total Revenues
|
17,029
|
|
|
22,041
|
|
|
75,091
|
|
|
85,143
|
|
||||
Retail Cost of Revenues
|
10,572
|
|
|
10,716
|
|
|
39,940
|
|
|
51,045
|
|
||||
Less: Net (loss) gain on non-trading derivatives, net of cash settlements
|
(1,653
|
)
|
|
542
|
|
|
438
|
|
|
(2,685
|
)
|
||||
Retail Gross Margin
(1)
— Gas
|
$
|
8,110
|
|
|
$
|
10,783
|
|
|
$
|
34,713
|
|
|
$
|
36,783
|
|
Volumes — Gas (MMBtus)
|
2,057,121
|
|
|
2,840,721
|
|
|
9,008,731
|
|
|
10,517,802
|
|
||||
Retail Gross Margin
(2)
— Gas per MMBtu
|
$
|
3.94
|
|
|
$
|
3.80
|
|
|
$
|
3.85
|
|
|
$
|
3.50
|
|
(1)
|
Reflects the Retail Gross Margin attributable to our Retail Natural Gas Segment or Retail Electricity Segment, as applicable. Retail Gross Margin is a non-GAAP financial measure. See “Reconciliation of GAAP to Non-GAAP Measures” section below for a reconciliation of Adjusted EBITDA and Retail Gross Margin to their most directly comparable financial measures presented in accordance with GAAP.
|
(2)
|
Reflects the Retail Gross Margin for the Retail Natural Gas Segment or Retail Electricity Segment, as applicable, divided by the total volumes in MMBtu or MWh, respectively.
|
•
|
our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure or historical cost basis;
|
•
|
the ability of our assets to generate earnings sufficient to support our proposed cash dividends;
|
•
|
our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt; and
|
•
|
our compliance with financial debt covenants.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||
Reconciliation of Adjusted EBITDA to Net (loss) income:
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income
|
$
|
(25,484
|
)
|
|
$
|
23,927
|
|
|
|
$
|
(22,739
|
)
|
|
$
|
(17,904
|
|
)
|
Depreciation and amortization
|
10,312
|
|
|
12,861
|
|
|
|
22,467
|
|
|
25,880
|
|
|
||||
Interest expense
|
1,995
|
|
|
2,316
|
|
|
|
4,218
|
|
|
4,561
|
|
|
||||
Income tax (benefit) expense
|
(4,586
|
)
|
|
3,251
|
|
|
|
(3,545
|
)
|
|
(3,216
|
|
)
|
||||
EBITDA
|
(17,763
|
)
|
|
42,355
|
|
|
|
401
|
|
|
9,321
|
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||||
Net, (loss) gain on derivative instruments
|
(35,456
|
)
|
|
17,054
|
|
|
|
(54,997
|
)
|
|
(19,488
|
|
)
|
||||
Net cash settlements on derivative instruments
|
12,769
|
|
|
8,792
|
|
|
|
20,794
|
|
|
(6,745
|
|
)
|
||||
Customer acquisition costs
|
3,396
|
|
|
1,980
|
|
|
|
9,185
|
|
|
6,254
|
|
|
||||
Plus:
|
|
|
|
|
|
|
|
||||||||||
Non-cash compensation expense
|
1,260
|
|
|
1,555
|
|
|
|
2,432
|
|
|
2,686
|
|
|
||||
Non-recurring legal and regulatory settlements
|
10,807
|
|
|
—
|
|
|
|
10,807
|
|
|
—
|
|
|
||||
Adjusted EBITDA
|
$
|
13,595
|
|
|
$
|
16,084
|
|
|
|
$
|
38,658
|
|
|
$
|
31,986
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities
|
$
|
20,980
|
|
|
$
|
45,950
|
|
|
$
|
51,029
|
|
|
$
|
36,410
|
|
Amortization of deferred financing costs
|
(237
|
)
|
|
(317
|
)
|
|
(505
|
)
|
|
(612
|
)
|
||||
Bad debt expense
|
(2,166
|
)
|
|
(3,302
|
)
|
|
(6,015
|
)
|
|
(5,725
|
)
|
||||
Interest expense
|
1,995
|
|
|
2,316
|
|
|
4,218
|
|
|
4,561
|
|
||||
Income tax (benefit) expense
|
(4,586
|
)
|
|
3,251
|
|
|
(3,545
|
)
|
|
(3,216
|
)
|
||||
Changes in operating working capital
|
|
|
|
|
|
|
|
||||||||
Accounts receivable, prepaids, current assets
|
(41,028
|
)
|
|
(38,516
|
)
|
|
(51,392
|
)
|
|
(25,888
|
)
|
||||
Inventory
|
1,785
|
|
|
1,377
|
|
|
(1,858
|
)
|
|
(2,693
|
)
|
||||
Accounts payable and accrued liabilities
|
20,222
|
|
|
7,618
|
|
|
31,172
|
|
|
23,934
|
|
||||
Other
|
16,630
|
|
|
(2,293
|
)
|
|
15,554
|
|
|
5,215
|
|
||||
Adjusted EBITDA
|
$
|
13,595
|
|
|
$
|
16,084
|
|
|
$
|
38,658
|
|
|
$
|
31,986
|
|
Cash Flow Data:
|
|
|
|
|
|
|
|
||||||||
Cash flows provided by operating activities
|
$
|
20,980
|
|
|
$
|
45,950
|
|
|
$
|
51,029
|
|
|
$
|
36,410
|
|
Cash flows used in investing activities
|
$
|
(250
|
)
|
|
$
|
(8,205
|
)
|
|
$
|
(6,373
|
)
|
|
$
|
(24,000
|
)
|
Cash flows used in financing activities
|
$
|
(27,353
|
)
|
|
$
|
(23,108
|
)
|
|
(65,714
|
)
|
|
$
|
(6,127
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Reconciliation of Retail Gross Margin to Operating (loss) income:
|
|
|
|
|
|
|
|
||||||||
Operating (loss) income
|
$
|
(28,569
|
)
|
|
$
|
28,941
|
|
|
$
|
(22,749
|
)
|
|
$
|
(17,313
|
)
|
Plus:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
10,312
|
|
|
12,861
|
|
|
22,467
|
|
|
25,880
|
|
||||
General and administrative expense
|
37,247
|
|
|
27,780
|
|
|
66,723
|
|
|
57,827
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Net asset optimization (expenses) revenues
|
(56
|
)
|
|
763
|
|
|
2,496
|
|
|
3,450
|
|
||||
Net, (loss) gain on non-trading derivative instruments
|
(35,466
|
)
|
|
16,601
|
|
|
(55,269
|
)
|
|
(20,111
|
)
|
||||
Net, Cash settlements on non-trading derivative instruments
|
12,788
|
|
|
8,793
|
|
|
20,913
|
|
|
(6,089
|
)
|
||||
Retail Gross Margin
|
$
|
41,724
|
|
|
$
|
43,425
|
|
|
$
|
98,301
|
|
|
$
|
89,144
|
|
Retail Gross Margin - Retail Electricity Segment
|
$
|
33,614
|
|
|
$
|
32,642
|
|
|
$
|
63,588
|
|
|
$
|
52,361
|
|
Retail Gross Margin - Retail Natural Gas Segment
|
$
|
8,110
|
|
|
$
|
10,783
|
|
|
$
|
34,713
|
|
|
$
|
36,783
|
|