HOUSTON, TX — Spark Energy, Inc. (“Spark” or the “Company”) (SPKE), an independent retail energy services company, today reported financial results for the quarter ended June 30, 2019.
- 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
“We had a strong second quarter despite some milder than normal weather in a few of our geographies as we saw our unit margins continue to expand. We are nearing the end of our brand and system consolidation efforts and are on track to deliver over $22 million in run-rate G&A savings by year-end. We terminated our Tax Receivable Agreement on very favorable terms. Additionally, we resolved four significant cases that represented the majority of our ongoing litigation exposure. Collectively, these initiatives will enable us to reduce future costs and streamline our story.”Said Nathan Kroeker, Spark Energy’s President and Chief Executive Officer.
Summary Second Quarter 2019 Financial Results
For the quarter ended June 30, 2019, Spark reported Adjusted EBITDA of $13.6 million compared to Adjusted EBITDA of $16.1 million for the quarter ended June 30, 2018. This decrease of $2.5 million was driven by mild temperatures across much of our footprint, as well as increased customer acquisition spending.
For the quarter ended June 30, 2019, Spark reported Retail Gross Margin of $41.7 million compared to Retail Gross Margin of $43.4 million for the quarter ended June 30, 2018. This decrease of $1.7 million was primarily attributable to decreased electricity and natural gas volumes, partially offset by increased electricity and gas unit margins. Electricity unit margins increased significantly year over year due to lower capacity costs and the continued attrition of our low margin C&I customers.
Net loss for the quarter ended June 30, 2019, was $25.5 million compared to net income of $23.9 million for the quarter ended June 30, 2018. The decrease in performance compared to the prior year was primarily the result of the decrease in the non-cash mark to market position of our hedge portfolio of $22.7 million compared with the increase in the non-cash mark to market position of our hedge portfolio of $25.4 million in the second quarter of 2018, as well as $10.8 million of non-recurring general and administrative costs associated with the settlement of significant litigation. These impacts were partially offset by an income tax benefit of $4.6 million in the quarter ended June 30, 2019, compared with an income tax expense of $3.3 million in the quarter ended June 30, 2018.
Corporate Governance Changes
The Company is also pleased to announce the formation of a Nominating and Corporate Governance Committee consisting solely of independent directors, and a change in the composition of the Compensation Committee resulting in it consisting solely of independent directors. The Nominating and Corporate Governance Committee consists of Kenneth M. Hartwick and Nick W. Evans, Jr., with Mr. Evans serving as Chair, and the Compensation Committee now consists of Mr. Hartwick and Mr. Evans, with Mr. Hartwick serving as Chair. Mr. Hartwick now also serves as the Chair of the Audit Committee.
“All of the actions announced today reflect the Board’s thoughtful and deliberate efforts to strengthen corporate governance. The decisions were well thought through considering feedback from the Company’s shareholders and other stakeholders, and reflect our commitment to continued evaluation of governance practices” said Mr. Kroeker.
Liquidity and Capital Resources
(1) Reflects amount of Letters of Credit that could be issued based on existing covenants as of June 30, 2019.
(2) The availability of the Subordinated Debt Facility is dependent on our Founder’s willingness and ability to lend.
On July 17, 2019, Spark’s Board of Directors declared quarterly dividends of $0.18125 per share of Class A common stock payable on September 16, 2019, to holders of record on September 2, 2019, and $0.546875 per share of Series A Preferred Stock payable on October 15, 2019 to holders of record on October 1, 2019.
Kroeker concluded, “Based on all our work consolidating our brands and systems, settling outstanding litigation and regulatory matters, the termination of the TRA, and our healthy unit margins, we expect a very strong second half of 2019.”
Conference Call and Webcast
Spark will host a conference call to discuss second quarter 2019 results on Thursday, August 8, 2019, at 10:00 AM Central Time (11:00 AM Eastern).
Source: Spark Energy, Inc.
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