Spark Energy, Inc. Reports Fourth Quarter and Full Year 2019 Financial Results

HOUSTON, TX / ACCESSWIRE /  March 4, 2020 / Spark Energy, Inc. (“Spark” or the “Company”) (NASDAQ: SPKE), an independent retail energy services company, today reported financial results for the year ended December 31, 2019.

Key Business Highlights

  • Recorded $25.7 million in Adjusted EBITDA, $64.3 million in Retail Gross Margin, and $0.7 million in Net Loss for the fourth quarter 2019
  • Recorded $92.4 million in Adjusted EBITDA, $220.7 million in Retail Gross Margin, and $14.2 million in Net Income for the year ended 2019
  • Total RCE count of 672,000 as of December 31, 2019
  • Average monthly attrition of 5.0% for the year ended December 31, 2019
  • Settled several significant legacy litigation items
  • Sold our Japanese joint venture for a pre-tax gain of $4.9 million, not included in Adjusted EBITDA
  • Total liquidity of $138.7 million
  • Approximately 70% of all new sales in 2019 were fully renewable electricity or carbon neutral natural gas

“2019 was a strong year for Spark and we have continued to improve the quality of our customer book by continuing to shed low margin, large C&I customers. We see the significant increase in unit margins from last year as a result of our winter and summer insurance hedging strategy. With a strong push to simplify our platform in 2019, we completed the final steps of our brand and system consolidations and achieved our goal of G&A run-rate savings. Despite record price volatility in ERCOT this summer, our insurance hedging strategy continues to prove successful supporting our expanded electricity and natural gas unit margins. Earlier in the year we terminated our Tax Receivable Agreement on very favorable terms, amended and extended our senior credit and subordinated debt facilities, and we also resolved four significant litigation and regulatory cases,” said Nathan Kroeker, Spark’s President and Chief Executive Officer.

Summary Fourth Quarter 2019 Financial Results

For the quarter ended December 31, 2019, Spark reported Adjusted EBITDA of $25.7 million compared to Adjusted EBITDA of $20.1 million for the quarter ended December 31, 2018. This increase was primarily due to the higher Retail Gross Margin partially offset by lower customer counts.

For the quarter ended December 31, 2019, Spark reported Retail Gross Margin of $64.3 million compared to Retail Gross Margin of $50.2 million for the quarter ended December 31, 2018. This increase is due to electricity unit margins and volumes returning to normal after a downturn in 2018, offset by lower customer counts.

Net loss for the quarter ended December 31, 2019, was $0.7 million, heavily impacted by mark to market losses in the last few days of the year, driven by a warm front at year end in our primary markets. This compares to a net loss of $15.3 million for the quarter ended December 31, 2018.

Summary Full Year 2019 Financial Results

For the year ended December 31, 2019, Spark reported Adjusted EBITDA of $92.4 million compared to Adjusted EBITDA of $70.7 million for the year ended December 31, 2018. The increase was primarily due to higher Retail Gross Margin despite an increase in G&A related to non-recurring litigation settlements, bad debt and legal fees.

For the year ended December 31, 2019, Spark reported Retail Gross Margin of $220.7 million compared to Retail Gross Margin of $185.1 million for the year ended December 31, 2018. The increase was primarily due to higher electricity unit margins, offset by a smaller customer counts.

Net income for the year ended December 31, 2019, was $14.2 million compared to net loss of $(14.4) million for the year ended December 31, 2018, driven by higher retail gross margins, effective summer hedging, and the gain on sale of our joint venture in Japan.

Liquidity and Capital Resources

 
  December 31,  
($ in thousands)
  2019  
Cash and cash equivalents
  $ 56,664  
Senior Credit Facility Availability (1)
    57,068  
Subordinated Debt Facility Availability (2)
    25,000  
Total Liquidity
  $ 138,732  

(1) Reflects amount of Letters of Credit that could be issued based on existing covenants as of December 31, 2019.
(2) The availability of the Subordinated Debt Facility is dependent on our Founder’s financial position and ability to lend.

Dividend

Spark’s Board of Directors declared quarterly dividends of $0.18125 per share of Class A common stock payable on March 16, 2020, and $0.546875 per share of Series A Preferred Stock payable on April 15, 2020.

Conference Call and Webcast

Spark will host a conference call to discuss fourth quarter and full year 2019 results on Thursday, March 5, 2020, 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 https://ir.sparkenergy.com/events-and-presentations. 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 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

We use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Investors should note that new materials, including press releases, updated investor presentations, and financial and other filings with the Securities and Exchange Commission are posted on the Spark Energy Investor Relations website at ir.sparkenergy.com. Investors are urged to monitor our website regularly for information and updates about the Company.

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 forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) can be identified by the use of forward-looking terminology including “may,” “should,” “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 earnings 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 earnings 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 and the related earnings call 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
  • 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 and actual attrition rates;
  • accuracy of billing systems;
  • ability to successfully identify, complete, and efficiently integrate acquisitions into our operations;
  • significant changes in, or new changes by, the ISOs in the regions we operate;
  • competition; and
  • the “Risk Factors” in our latest Annual Report on Form 10-K, and in our quarterly reports, other public filings and press releases.

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.

further discussion.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2019 AND DECEMBER 31, 2018
(in thousands, except share counts)

 
  December 31, 2019     December 31, 2018  
Assets
           
Current assets:
           
Cash and cash equivalents
  $ 56,664     $ 41,002  
Restricted cash
    1,004       8,636  
Accounts receivable, net of allowance for doubtful accounts of $4,797 and $3,353 as of December 31, 2019 and 2018, respectively
    113,635       150,866  
Accounts receivable-affiliates
    2,032       2,558  
Inventory
    2,954       3,878  
Fair value of derivative assets
    464       7,289  
Customer acquisition costs, net
    8,649       14,431  
Customer relationships, net
    13,607       16,630  
Deposits
    6,806       9,226  
Renewable energy credit asset
    24,204       25,717  
Other current assets
    6,109       11,747  
Total current assets
    236,128       291,980  
Property and equipment, net
    3,267       4,366  
Fair value of derivative assets
    106       3,276  
Customer acquisition costs, net
    9,845       3,893  
Customer relationships, net
    17,767       26,429  
Deferred tax assets
    29,865       27,321  
Goodwill
    120,343       120,343  
Other assets
    5,647       11,130  
Total Assets
  $ 422,968     $ 488,738  
Liabilities, Series A Preferred Stock and Stockholders’ Equity
               
Current liabilities:
               
Accounts payable
  $ 48,245     $ 68,790  
Accounts payable-affiliates
    1,009       2,464  
Accrued liabilities
    37,941       10,845  
Renewable energy credit liability
    33,120       42,805  
Fair value of derivative liabilities
    19,943       6,478  
Current payable pursuant to tax receivable agreement-affiliates
          1,658  
Current contingent consideration for acquisitions
          1,328  
Current portion of note payable
          6,936  
Other current liabilities
    1,697       647  
Total current liabilities
    141,955       141,951  
Long-term liabilities:
               
Fair value of derivative liabilities
    495       106  
Payable pursuant to tax receivable agreement-affiliates
          25,917  
Long-term portion of Senior Credit Facility
    123,000       129,500  
Subordinated debt-affiliate
          10,000  
Other long-term liabilities
    217       212  
Total liabilities
    265,667       307,686  
Commitments and contingencies (Note 14)
               
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,707,256 shares issued and 3,677,318 shares outstanding at December 31, 2019 and 3,707,256 shares issued and outstanding at December 31, 2018
    90,015       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 December 31, 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 December 31, 2019 and 20,800,000 issued and outstanding at December 31, 2018
    209       209  
Additional paid-in capital
    51,842       46,157  
Accumulated other comprehensive (loss)/income
    (40       2  
Retained earnings
    1,074       1,307  
Treasury stock, at cost, 99,446 shares at December 31, 2019 and December 31, 2018
    (2,011       (2,011 )
Total stockholders’ equity
    51,219       45,806  
Non-controlling interest in Spark HoldCo, LLC
    16,067       44,488  
Total equity
    67,286       90,294  
Total Liabilities, Series A Preferred Stock and stockholders’ equity
  $ 422,968     $ 488,738  

SPARK ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 and 2017
(in thousands, except per share data)

 
  Year Ended December 31,  
 
  2019     2018     2017  
Revenues:
                 
Retail revenues
  $ 810,954     $ 1,001,417     $ 798,772  
Net asset optimization revenues (expense)
    2,771       4,511       (717  
Total revenues
    813,725       1,005,928       798,055  
Operating expenses:
                       
Retail cost of revenues
    615,225       845,493       552,167  
General and administrative
    133,534       111,431       101,127  
Depreciation and amortization
    40,987       52,658       42,341  
Total operating expenses
    789,746       1,009,582       695,635  
Operating income (loss)
    23,979       (3,654 )     102,420  
Other (expense)/income:
                       
Interest expense
    (8,621 )     (9,410       (11,134 )
Change in tax receivable agreement liability
                22,267  
Gain on disposal of eRex
    4,862              
Total other income/(expense)
    1,250       749       256  
Total other (expense)/income
    (2,509 )     (8,661 )     11,389  
Income (loss) before income tax expense
    21,470       (12,315 )     113,809  
Income tax expense
    7,257       2,077       38,765  
Net income (loss)
  $ 14,213     $ (14,392 )   $ 75,044  
Less: Net income (loss) attributable to non-controlling interest
    5,763       (13,206 )     55,799  
Net income (loss) attributable to Spark Energy, Inc. stockholders
  $ 8,450     $ (1,186 )   $ 19,245  
Less: Dividend on Series A preferred stock
    8,091       8,109       3,038  
Net income (loss) attributable to stockholders of Class A common stock
  $ 359     $ (9,295 )   $ 16,207  
Other comprehensive (loss) income, net of tax:
                       
Currency translation (loss) gain
    (102 )     31       (59 )
Other comprehensive (loss) income
    (102 )     31       (59 )
Comprehensive income (loss)
  $ 14,111     $ (14,361 )   $ 74,985  
Less: Comprehensive income (loss) attributable to non-controlling interest
    5,703       (13,188 )     55,762  
Comprehensive income (loss) attributable to Spark Energy, Inc. stockholders
  $ 8,408     $ (1,173 )   $ 19,223  
 
                       
Net income (loss) attributable to Spark Energy, Inc. per share of Class A common stock
                       
Basic
  $ 0.03     $ (0.69     $ 1.23  
Diluted
  $ 0.02     $ (0.69     $ 1.21  
 
                       
Weighted average shares of Class A common stock outstanding
                       
Basic
    14,286       13,390       13,143  
Diluted
    14,568       13,390       13,346  

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2019
, 2018 AND 2017
(in thousands)

 
  Year Ended December 31,  
 
  2019     2018     2017  
Cash flows from operating activities:
                 
Net income (loss)
  $ 14,213     $ (14,392 )   $ 75,044  
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
                       
Depreciation and amortization expense
    41,002       51,436       42,666  
Deferred income taxes
    (6,929 )     (2,328 )     29,821  
Change in TRA liability
                (22,267 )
Stock based compensation
    5,487       5,879       5,058  
Amortization of deferred financing costs
    1,275       1,291       1,035  
Change in fair value of earnout liabilities
    (1,328 )     (1,715 )     (7,898 )
Accretion on fair value of earnout liabilities
                4,108  
Excess tax expense (benefit) related to restricted stock vesting
    50       (101 )     179  
Bad debt expense
    13,532       10,135       6,550  
Loss (gain) on derivatives, net
    67,749       18,170       (5,008 )
Current period cash settlements on derivatives, net
    (41,919 )     11,038       (19,598 )
Accretion of discount to convertible subordinated notes to affiliate
                1,004  
Earnout payments
                (1,781 )
Gain on disposal of eRex
    (4,862 )            
Other
    (776 )     (882 )     (5 )
Changes in assets and liabilities:
                       
Decrease (increase) in accounts receivable
    23,699       2,692       (32,361 )
Decrease (increase) in accounts receivable-affiliates
    526       859       (1,459 )
Decrease (increase) in inventory
    924       674       (718 )
Increase in customer acquisition costs
    (18,685 )     (13,673 )     (25,874 )
Decrease (increase) in prepaid and other current assets
    9,250       (14,033 )     1,915  
Decrease (increase) in other assets
    55       (335 )     (465 )
(Decrease) increase in accounts payable and accrued liabilities
    (8,620 )     10,301       14,831  
(Decrease) increase in accounts payable-affiliates
    (1,455 )     (2,158 )     51  
Decrease in other current liabilities
    (1,459 )     (3,050 )     (1,210 )
Increase (decrease) in other non-current liabilities
    6       41       (1,487 )
Decrease in intangible assets-customer acquisitions
          (86 )      
Net cash provided by operating activities
    91,735       59,763       62,131  
Cash flows from investing activities:
                       
Purchases of property and equipment
    (1,120 )     (1,429 )     (1,704 )
Cash paid for acquisitions
          (17,552 )     (75,854 )
Acquisition of Starion Customers
    (5,913 )            
Disposal of eRex investment
    8,431              
Net cash provided by (used in) investing activities
    1,398       (18,981 )     (77,558 )
Cash flows from financing activities:
                       
Proceeds from (buyback) issuance of Series A Preferred Stock, net of issuance costs paid
    (743 )     48,490       40,241  
Payment to affiliates for acquisition of customer book
    (10 )     (7,129 )      
Borrowings on notes payable
    356,000       417,300       206,400  
Payments on notes payable
    (362,500 )     (403,050 )     (152,939 )
Earnout Payments
          (1,607 )     (18,418 )
Net paydown on subordinated debt facility
    (10,000 )            
Payments on the Verde promissory note
    (2,036 )     (13,422 )      
Restricted stock vesting
    (1,348 )     (2,895 )     (3,091 )
Proceeds from disgorgement of stockholders short-swing profits
    55       244       1,129  
Payment of Tax Receivable Agreement Liability
    (11,239 )     (6,219 )      
Payment of dividends to Class A common stockholders
    (10,382 )     (9,783 )     (9,519 )
Payment of distributions to non-controlling unitholders
    (34,794 )     (35,478 )     (33,800 )
Payment of Preferred Stock dividends
    (8,106 )     (7,014 )     (2,106 )
Purchase of Treasury Stock
                (2,011 )
Net cash (used in) provided by financing activities
    (85,103 )     (20,563 )     25,886  
Increase in Cash and cash equivalents and Restricted Cash
    8,030       20,219       10,459  
Cash and cash equivalents and Restricted cash-beginning of period
    49,638       29,419       18,960  
Cash and cash equivalents and Restricted cash-end of period
  $ 57,668     $ 49,638     $ 29,419  
Supplemental Disclosure of Cash Flow Information:
                       
Non-cash items:
                       
Property and equipment purchase accrual
  $ 92     $ (123 )   $ 91  
Holdback for Verde NoteIndemnified Matters
  $ 4,900     $     $  
Write-off of tax benefit related to tax receivable agreement liabilityaffiliates
  $ 4,384     $     $  
Gain on settlement of tax receivable agreement liabilityaffiliates
  $ 16,336     $     $  
Net contribution by NG&E in excess of cash
  $     $     $ 274  
Installment consideration incurred in connection with the Verde Companies acquisition and Verde Earnout Termination Note
  $     $     $ 19,994  
Tax benefit from tax receivable agreement
  $     $ (1,508 )   $ (1,802 )
Liability due to tax receivable agreement
  $     $ 1,642     $ 4,674  
 
                       
Cash paid during the period for:
                       
Interest
  $ 6,634     $ 7,883     $ 5,715  
Taxes
  $ 7,516     $ 8,561     $ 11,205  

SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS
FOR THE YEARS ENDED December 31, 2019, 2018 and 2017
(in thousands, except per unit operating data)
(unaudited)

 
  Year Ended December 31,  
 
  2019     2018     2017  
 
  (in thousands, except volume and per unit operating data)  
Retail Electricity Segment
                 
Total Revenues
  688,451     863,451     657,566  
Retail Cost of Revenues
    552,250       762,771       477,012  
Less: Net (Losses) Gains on non-trading derivatives, net of cash settlements
    (24,339 )     (23,988 )     22,086  
Retail Gross Margin (1) -Electricity
  160,540     124,668     158,468  
Volumes-Electricity (MWhs)
    6,416,568       8,630,653       6,755,663  
Retail Gross Margin (2) -Electricity per MWh
  25.02     14.44     23.46  
 
                       
Retail Natural Gas Segment
                       
Total Revenues
  122,503     137,966     141,206  
Retail Cost of Revenues
    62,975       82,722       75,155  
Less: Net (Losses) Gains on non-trading derivatives, net of cash settlements
    (672 )     (5,197 )     10  
Retail Gross Margin (1) -Gas
  60,200     60,441     66,041  
Volumes-Gas (MMBtus)
    14,543,563       16,778,393       18,203,684  
Retail Gross Margin (2) -Gas per MMBtu
  4.14     3.60     3.63  

(1) Reflects the Retail Gross Margin attributable to our Retail Electricity Segment or Retail Natural Gas Segment, as applicable. Retail Gross Margin is a non-GAAP financial measure. See “-Non-GAAP Performance Measures” for a reconciliation of Retail Gross Margin to most directly comparable financial measures presented in accordance with GAAP.
(2) Reflects the Retail Gross Margin for the Retail Electricity Segment or Retail Natural Gas Segment, as applicable, divided by the total volumes in MWh or MMBtu, respectively.

Reconciliation of GAAP to Non-GAAP Measures

Adjusted EBITDA

We define “Adjusted EBITDA” as EBITDA less (i) customer acquisition costs incurred in the current period, plus or minus (ii) net 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 the 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 and amortize such costs over two years. We do not deduct the cost of customer acquisitions through acquisitions of businesses or portfolios of customers in calculating Adjusted EBITDA.We deduct our net gains (losses) on derivative instruments, excluding current period cash settlements, from the Adjusted EBITDA calculation in order to remove the non-cash impact of net gains and losses on these instruments. We also deduct non-cash compensation expense that results from the issuance of restricted stock units under our long-term incentive plan due to the non-cash nature of the expense. Finally, we also adjust from time to time other non-cash or unusual and/or infrequent charges due to either their non-cash nature or their infrequency.

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

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

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)

    Year Ended December 31,     Quarter Ended December 31,  
(in thousands)
  2019     2018     2019     2018  
Reconciliation of Adjusted EBITDA to Net Income (Loss):
                       
Net income (loss)
  $ 14,213     $ (14,392 )   $ (724 )   $ (15,315 )
Depreciation and amortization
    40,987       52,658       9,024       12,861  
Interest expense
    8,621       9,410       2,229       2,087  
Income tax expense
    7,257       2,077       4,235       1,475  
EBITDA
    71,078       49,753       14,764       1,108  
Less:
                               
Net, (Losses) gains on derivative instruments
    (67,749 )     (18,170 )     (25,059 )     (16,799 )
Net, Cash settlements on derivative instruments
    42,820       (10,587 )     9,305       (4,764 )
Customer acquisition costs
    18,685       13,673       5,077       4,724  
Plus:
                               
Non-cash compensation expense
    5,487       5,879       1,433       2,172  
Non-recurring legal and regulatory settlements
    14,457             3,650        
Gain on disposal of eRex
    (4,862 )           (4,862 )      
Adjusted EBITDA
  $ 92,404     $ 70,716     $ 25,662     $ 20,119  
    Year Ended December 31,     Quarter Ended December 31,  
(in thousands)
  2019     2018     2019     2018  
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
                       
Net cash provided by operating activities
  $ 91,735     $ 59,763     $ 14,650     $ 17,910  
Amortization of deferred financing costs
    (1,275 )     (1,291 )     (273 )     (48 )
Bad debt expense
    (13,532 )     (10,135 )     (4,347 )     (1,655 )
Interest expense
    8,621       9,410       2,229       2,087  
Income tax expense
    7,257       2,077       4,235       1,475  
Changes in operating working capital
                               
Accounts receivable, prepaids, current assets
    (33,475 )     10,482       16,883       20,122  
Inventory
    (924 )     (674 )     (626 )     (199 )
Accounts payable and accrued liabilities
    11,534       (5,093 )     (18,675 )     (23,081 )
Other
    22,463       6,177       11,586       3,508  
Adjusted EBITDA
  $ 92,404     $ 70,716     $ 25,662     $ 20,119  
Cash Flow Data:
                               
Cash flows provided by operating activities
  $ 91,735     $ 59,763     $ 14,650     $ 17,910  
Cash flows provided by (used in) investing activities
  $ 1,398     $ (18,981 )   $ 7,888     $ 4,712  
Cash flows (used in) provided by financing activities
  $ (85,103 )   $ (20,563 )   $ (8,452 )   $ (15,780 )

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,  
(in thousands)
  2019     2018     2019     2018  
Reconciliation of Retail Gross Margin to Operating Income (Loss):
                       
Operating income (loss)
  $ 23,979     $ (3,654 )   $ 633     $ (11,795 )
Plus:
                               
Depreciation and amortization
    40,987       52,658       9,024       12,861  
General and administrative expense
    133,534       111,431       39,182       27,909  
Less:
                               
Net asset optimization revenue (expense)
    2,771       4,511       529       713  
(Losses) gains on non-trading derivative instruments
    (67,955 )     (19,571 )     (25,214 )     (17,348 )
Cash settlements on non-trading derivative instruments
    42,944       (9,614 )     9,267       (4,560 )
Retail Gross Margin
  $ 220,740     $ 185,109     $ 64,257     $ 50,170  
Retail Gross Margin – Retail Electricity Segment
  $ 160,540     $ 124,668     $ 43,810     $ 32,055  
Retail Gross Margin – Retail Natural Gas Segment
  $ 60,200     $ 60,441     $ 20,447     $ 18,115  

Contact: Spark Energy, Inc.

Investors:
Mike Barajas, 832-200-3727

Media:
Kira Jordan, 832-255-7302

SOURCE: Spark Energy, Inc.

View source version on accesswire.com:
https://www.accesswire.com/579141/Spark-Energy-Inc-Reports-Fourth-Quarter-and-Full-Year-2019-Financial-Results

error: Content is protected !!