•
|
Achieved $30.3 million in Adjusted EBITDA, $55.5 million in Retail Gross Margin, and $10.1 million in Net Income for the first quarter
|
•
|
Total RCE count of 585,000 as of March 31, 2020
|
•
|
Average monthly attrition of 5.7%
|
Liquidity and Capital Resources
|
|
||
($ in thousands)
|
March 31, 2020
|
||
Cash and cash equivalents
|
$
|
54,466
|
|
Senior Credit Facility Availability (1)
|
72,356
|
|
|
Subordinated Debt Facility Availability (2)
|
25,000
|
|
|
Total Liquidity
|
$
|
151,822
|
|
•
|
potential risks and uncertainties relating to the ultimate impact of COVID-19, including the geographic spread, the severity of the disease, the duration of the COVID-19outbreak, actions that may be taken by governmental authorities to contain the COVID-19 outbreak or to treat its impact, and the potential negative impacts of COVID-19 on the global economy and financial markets;
|
•
|
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, 2019, in our Quarterly Reports on Form 10-Q, and other public filings and press releases.
|
|
Three Months Ended March 31,
|
|||||||
|
2020
|
|
2019
|
|||||
Revenues:
|
|
|
|
|||||
Retail revenues
|
$
|
166,360
|
|
|
|
$
|
240,154
|
|
Net asset optimization revenues
|
321
|
|
|
|
2,552
|
|
||
Total Revenues
|
166,681
|
|
|
|
242,706
|
|
||
Operating Expenses:
|
|
|
|
|||||
Retail cost of revenues
|
118,823
|
|
|
|
195,255
|
|
||
General and administrative
|
25,676
|
|
|
|
29,476
|
|
||
Depreciation and amortization
|
8,796
|
|
|
|
12,155
|
|
||
Total Operating Expenses
|
153,295
|
|
|
|
236,886
|
|
||
Operating income
|
13,386
|
|
|
|
5,820
|
|
||
Other (expense)/income:
|
|
|
|
|||||
Interest expense
|
(1,553
|
|
)
|
|
(2,223
|
)
|
||
Interest and other income
|
160
|
|
|
|
189
|
|
||
Total other expenses
|
(1,393
|
|
)
|
|
(2,034
|
)
|
||
Income before income tax expense
|
11,993
|
|
|
|
3,786
|
|
||
Income tax expense
|
1,925
|
|
|
|
1,041
|
|
||
Net income
|
$
|
10,068
|
|
|
|
$
|
2,745
|
|
Less: Net income attributable to non-controlling interests
|
5,589
|
|
|
|
1,963
|
|
||
Net income attributable to Spark Energy, Inc. stockholders
|
$
|
4,479
|
|
|
|
$
|
782
|
|
Less: Dividend on Series A Preferred Stock
|
1,500
|
|
|
|
2,027
|
|
||
Net income (loss) attributable to stockholders of Class A common stock
|
$
|
2,979
|
|
|
|
$
|
(1,245
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|||||
Currency translation loss
|
$
|
—
|
|
|
|
$
|
(35
|
)
|
Other comprehensive loss
|
—
|
|
|
|
(35
|
)
|
||
Comprehensive income
|
$
|
10,068
|
|
|
|
$
|
2,710
|
|
Less: Comprehensive income attributable to non-controlling interests
|
5,589
|
|
|
|
1,943
|
|
||
Comprehensive income attributable to Spark Energy, Inc. stockholders
|
$
|
4,479
|
|
|
|
$
|
767
|
|
|
|
|
|
|||||
Net income (loss) attributable to Spark Energy, Inc. per share of Class A common stock
|
|
|
|
|||||
Basic
|
$
|
0.21
|
|
|
|
$
|
(0.09
|
)
|
Diluted
|
$
|
0.20
|
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|||||
Weighted average shares of Class A common stock outstanding
|
|
|
|
|||||
Basic
|
14,381
|
|
|
|
14,135
|
|
||
Diluted
|
14,784
|
|
|
|
14,135
|
|
||
|
|
|
|
Selected Balance Sheet Data
|
|
|
|
||||
(in thousands)
|
March 31, 2020
|
|
December 31, 2019
|
||||
Cash and cash equivalents
|
$
|
54,466
|
|
|
$
|
56,664
|
|
Working capital
|
69,327
|
|
|
94,173
|
|
||
Total assets
|
389,632
|
|
|
422,968
|
|
||
Total debt
|
95,000
|
|
|
123,000
|
|
||
Total liabilities
|
234,617
|
|
|
265,667
|
|
||
Total stockholders' equity
|
51,827
|
|
|
51,219
|
|
Selected Cash Flow Data
|
|
|
|
||||
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Cash flows provided by operating activities
|
$
|
39,389
|
|
|
$
|
30,049
|
|
Cash flows used in investing activities
|
(536
|
)
|
|
(6,123
|
)
|
||
Cash flows used in financing activities
|
(41,050
|
)
|
|
(38,361
|
)
|
Operating Segment Results
|
|
|
|
||||
|
Three Months Ended March 31,
|
||||||
(in thousands, except volume and per unit operating data)
|
2020
|
|
2019
|
||||
Retail Electricity Segment
|
|
|
|
||||
Total Revenues
|
$
|
121,768
|
|
|
$
|
182,092
|
|
Retail Cost of Revenues
|
100,383
|
|
|
165,888
|
|
||
Less: Net loss on non-trading derivatives, net of cash settlements
|
(9,421
|
)
|
|
(13,769
|
)
|
||
Retail Gross Margin (1) — Electricity
|
$
|
30,806
|
|
|
$
|
29,973
|
|
Volumes — Electricity (MWhs)
|
1,091,425
|
|
|
1,728,083
|
|
||
Retail Gross Margin (2) — Electricity per MWh
|
$
|
28.23
|
|
|
$
|
17.35
|
|
|
|
|
|
||||
Retail Natural Gas Segment
|
|
|
|
||||
Total Revenues
|
$
|
44,592
|
|
|
$
|
58,062
|
|
Retail Cost of Revenues
|
18,440
|
|
|
29,367
|
|
||
Less: Net gain on non-trading derivatives, net of cash settlements
|
1,497
|
|
|
2,091
|
|
||
Retail Gross Margin (1) — Gas
|
$
|
24,655
|
|
|
$
|
26,604
|
|
Volumes — Gas (MMBtus)
|
5,282,299
|
|
|
6,951,610
|
|
||
Retail Gross Margin (2) — Gas per MMBtu
|
$
|
4.67
|
|
|
$
|
3.83
|
|
(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.
|
Reconciliation of Adjusted EBITDA to Net income:
|
|
|
|
||||
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Net income
|
$
|
10,068
|
|
|
$
|
2,745
|
|
Depreciation and amortization
|
8,796
|
|
|
12,155
|
|
||
Interest expense
|
1,553
|
|
|
2,223
|
|
||
Income tax expense
|
1,925
|
|
|
1,041
|
|
||
EBITDA
|
22,342
|
|
|
18,164
|
|
||
Less:
|
|
|
|
||||
Net, loss on derivative instruments
|
(24,587
|
)
|
|
(19,541
|
)
|
||
Net cash settlements on derivative instruments
|
16,608
|
|
|
8,025
|
|
||
Customer acquisition costs
|
1,345
|
|
|
5,789
|
|
||
Plus:
|
|
|
|
||||
Non-cash compensation expense
|
1,324
|
|
|
1,172
|
|
||
Adjusted EBITDA
|
30,300
|
|
|
25,063
|
|
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
|
|
|
|
||||
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Net cash provided by operating activities
|
$
|
39,389
|
|
|
$
|
30,049
|
|
Amortization of deferred financing costs
|
(250
|
)
|
|
(268
|
)
|
||
Bad debt expense
|
(2,355
|
)
|
|
(3,849
|
)
|
||
Interest expense
|
1,553
|
|
|
2,223
|
|
||
Income tax expense
|
1,925
|
|
|
1,041
|
|
||
Changes in operating working capital
|
|
|
|
||||
Accounts receivable, prepaids, current assets
|
(17,975
|
)
|
|
(10,364
|
)
|
||
Inventory
|
(2,690
|
)
|
|
(3,643
|
)
|
||
Accounts payable and accrued liabilities
|
10,818
|
|
|
10,950
|
|
||
Other
|
(115
|
)
|
|
(1,076
|
)
|
||
Adjusted EBITDA
|
30,300
|
|
|
25,063
|
|
||
Cash Flow Data:
|
|
|
|
||||
Cash flows provided by operating activities
|
39,389
|
|
|
30,049
|
|
||
Cash flows used in investing activities
|
(536
|
)
|
|
(6,123
|
)
|
||
Cash flows used in financing activities
|
(41,050
|
)
|
|
(38,361
|
)
|
|
Three Months Ended March 31,
|
||||||
(in thousands)
|
2020
|
|
2019
|
||||
Reconciliation of Retail Gross Margin to Operating income:
|
|
|
|
||||
Operating income
|
$
|
13,386
|
|
|
$
|
5,820
|
|
Plus:
|
|
|
|
||||
Depreciation and amortization
|
8,796
|
|
|
12,155
|
|
||
General and administrative expense
|
25,676
|
|
|
29,476
|
|
||
Less:
|
|
|
|
||||
Net asset optimization revenues
|
321
|
|
|
2,552
|
|
||
Loss on non-trading derivative instruments
|
(24,533
|
)
|
|
(19,803
|
)
|
||
Cash settlements on non-trading derivative instruments
|
16,609
|
|
|
8,125
|
|
||
Retail Gross Margin
|
$
|
55,461
|
|
|
$
|
56,577
|
|
Retail Gross Margin - Retail Electricity Segment
|
$
|
30,806
|
|
|
$
|
29,973
|
|
Retail Gross Margin - Retail Natural Gas Segment
|
$
|
24,655
|
|
|
$
|
26,604
|
|
|
|
|
|
|
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)
|
¨
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
¨
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
¨
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
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 May 5, 2020
|
Exhibit No.
|
Description
|
|
|
99.1
|
|
||
|
|
|
Spark Energy, Inc.
|
||
|
||
By:
|
|
/s/ James G. Jones II
|
Name:
|
|
James G Jones II
|
Title:
|
|
Chief Financial Officer
|