Category: Press Releases

HOUSTON, Nov. 24, 2015 (GLOBE NEWSWIRE) — National Gas & Electric, LLC (“NG&E”) has entered into agreements for the purchase of a Northeast retail customer base from an undisclosed seller operating in over twenty gas and power markets.

W. Keith Maxwell III, CEO of NG&E, commented, “We are excited with our purchase of the Northeast customer base. We have a strong working relationship with this seller and are confident that they will continue to be successful in their growth strategy. This type of parent-level acquisition is a second for our family of retail companies, and we believe there are many similar acquisitions to be executed on in the space.”

Spark Energy, Inc. (“Spark”) (NASDAQ:SPKE) an affiliated company, successfully closed on its first dropdown acquisition of Oasis Energy, from the parent-level on July 31, 2015. While NG&E intends to offer these customers to Spark, there is no assurance that such a transaction will be completed as it remains subject to negotiation and necessary board approvals.

About National Gas & Electric, LLC

NG&E is wholly owned by W. Keith Maxwell III, who is also the Founder and Chairman of Spark Energy. NG&E is working alongside Spark to develop a strategy that maximizes Spark’s ability to aggressively pursue additional growth through M&A.

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 16 states and serves 66 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

Forward-Looking Statements

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical fact, included herein that address activities, events, developments or transactions that NG&E or Spark expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations, including required approvals by regulatory agencies, the possibility that the anticipated benefits from such activities, events, developments or transactions cannot be fully realized, the possibility that costs or difficulties related thereto will be greater than expected, the impact of competition, and other risk factors included in Spark’s reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Except as required by law, neither NG&E nor Spark intend to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

 

National Gas & Electric, LLC

Michael Tsang, VP of Finance
832-320-2917

Spark Energy, Inc.

Investors:
Andy Davis, 832-200-3727

Media:
Jenn Korell, 281-833-4151

Source: National Gas & Electric, LLC

HOUSTON, Nov. 11, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), today reported financial results for the quarter ended September 30, 2015.

For the third quarter of 2015, Adjusted EBITDA was $5.6 million and Retail Gross Margin was $26.7 million on revenue of $91.3 million, compared to Adjusted EBITDA of $(4.4) million and Retail Gross Margin of $14.6 million for the third quarter of 2014.

“We are very pleased with our third quarter results,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “With enhanced margins in our retail electricity and retail natural gas segments and the addition of our Oasis Energy and CenStar Energy acquisitions, we earned $5.6 million of Adjusted EBITDA and $26.7 million of Retail Gross Margin.

“The CenStar Energy and Oasis Energy acquisitions added over 100,000 residential customer equivalents, bringing our total to over 400,000. In addition to these transactions, we also amended and restated our senior credit facility during the quarter to support our continued growth initiatives.”

Third Quarter 2015 Highlights

• $5.6 million in Adjusted EBITDA and $26.7 million in Retail Gross Margin
• Closed CenStar Energy and Oasis Energy transactions
• Amended and restated existing senior credit facility
• Expanded margins in retail electricity and retail natural gas segments
• Invested $5.8 million in organic customer acquisitions
• Paid second quarter dividend of $0.3625 per share of Class A common stock on September 14, 2015
• Declared third quarter dividend of $0.3625 per share of Class A common stock payable on December 14, 2015

Summary Third Quarter 2015 Financial Results

For the quarter ended September 30, 2015, Spark reported Adjusted EBITDA of $5.6 million on $91.3 million of revenue compared to Adjusted EBITDA of $(4.4) million for the quarter ended September 30, 2014. This increase of $10.0 million is primarily attributable to increased retail gross margin in our electricity segment, decreased customer acquisition costs, and our CenStar Energy and Oasis Energy acquisitions, partially offset by increased general and administrative expenses.

For the quarter ended September 30, 2015, Spark reported Retail Gross Margin of $26.7 million compared to Retail Gross Margin of $14.6 million for the quarter ended September 30, 2014. This increase of $12.1 million is primarily attributable to expanded retail electricity unit margins and increased retail electricity volumes. Favorable supply costs across several of our markets were a key driver of these elevated unit margins in the third quarter.

Net income for the quarter ended September 30, 2015 was $5.9 million, or $0.31 per diluted common share compared to net income of $0.4 million, or $0.03 per diluted common share for the quarter ended September 30, 2014.

Liquidity and Capital Resources

(in thousands)	September 30, 2015
Cash and cash equivalents	$	7,355
Senior Credit Facility Working Capital Line Availability (1)		13,300
Senior Credit Facility Acquisition Line Availability (2)		3,775
Total Liquidity	$	24,430
(1) Subject to Senior Credit Facility borrowing base restrictions
(2) Subject to Senior Credit Facility covenant restrictions

 

Conference Call and Webcast

Spark will host a conference call to discuss third quarter 2015 results on Thursday, November 12, 2015 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 http://ir.sparkenergy.com/events.cfm. 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 16 states and serves 66 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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 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,” “project,” or other similar words. All statements, other than statements of historical fact included in this 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 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 report are subject to risks and uncertainties. Important factors which 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,
• extreme and unpredictable weather conditions,
• the sufficiency of risk management and hedging policies,
• customer concentration,
• federal, state and local regulation,
• key license retention,
• increased regulatory scrutiny and compliance costs,
• 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,
• level of indebtedness,
• changes in costs to acquire customers,
• actual customer attrition rates,
• actual bad debt expense in non-POR markets,
• accuracy of internal billing systems,
• ability to successfully navigate entry into new markets,
• whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
• ability to successfully and efficiently integrate acquisitions into our operations,
• competition, and
• other factors discussed in “Risk Factors” in our Form 10-K for the year ended December 31, 2014, our Form 10-Q for the quarter ended June 30, 2015 and in our other public filings and press releases.

You should review the risk factors and other factors disclosed throughout our Report on Form 10-K for the year ended December 31, 2014 and the Form 10-Q for the quarter ended September 30, 2015, both of which are filed with the Securities and Exchange Commission, which could cause our actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements speak only as of the date of this 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.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2015 AND DECEMBER 31, 2014
(in thousands)
(unaudited)
	September 30, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	7,355		$	4,359
Restricted cash		–			707
Accounts receivable, net of allowance for doubtful accounts of $3.0 million and $8.0 million as of September 30, 2015 and December 31, 2014		50,284			63,797
Accounts receivable—affiliates		1,447			1,231
Inventory		5,230			8,032
Fair value of derivative assets		129			216
Customer acquisition costs, net		15,260			12,369
Intangible assets—customer acquisitions, net		1,439			486
Acquired customer intangibles—current, net		5,979			–
Prepaid assets		420			1,236
Prepaid assets—affiliates		120			–
Deposits		6,952			10,569
Current deferred tax asset		803			–
Other current assets		4,503			2,987
Total current assets		99,921			105,989
Property and equipment, net		4,422			4,221
Customer acquisition costs		4,618			2,976
Intangible assets—customer acquisitions		1,971			1,015
Acquired customer intangibles		5,979			–
Trademarks		1,226			–
Deferred tax assets		23,196			24,047
Goodwill		18,385			–
Other assets		735			149
Total assets	$	160,453		$	138,397
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	28,731		$	38,210
Accounts payable—affiliates		1,867			1,017
Accrued liabilities		10,409			7,195
Fair value of derivative liabilities		6,437			11,526
Current portion of Senior Credit Facility		31,306			33,000
Other current liabilities		834			1,868
Total current liabilities		79,584			92,816
Long-term liabilities:
Fair value of derivative liabilities		873			478
Payable pursuant to tax receivable agreement—affiliates		20,767			20,767
Long-term portion of Senior Credit Facility		15,919			–
Non-current deferred tax liability		824			–
Convertible subordinated notes to affiliate		6,307			–
Other long-term liabilities		1,605			219
Total liabilities		125,879			114,280
Stockholders’ equity:
Common Stock:
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 3,097,193 issued and outstanding at September 30, 2015 and 3,000,000 issued and outstanding at December 31, 2014		31			30
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 10,750,000 issued and outstanding at September 30, 2015 and 10,750,000 issued and outstanding at December 31, 2014		108			108
Preferred Stock:
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized, zero issued and outstanding at September 30, 2015 and December 31, 2014		–			–
Additional paid-in capital		11,933			9,296
Retained deficit		(224	)		(775	)
Total stockholders’ equity		11,848			8,659
Non-controlling interest in Spark HoldCo, LLC		22,726			15,458
Total equity		34,574			24,117
Total liabilities and stockholders’ equity	$	160,453		$	138,397

 

SPARK ENERGY, INC.
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(in thousands, except per share data)
(unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015 (1)			2014
Revenues:
Retail revenues (including retail revenues—affiliates of $0 for both the three months ended September 30, 2015 and 2014, respectively and retail revenues—affiliates of $0 and $2,170 for the nine months ended September 30, 2015 and 2014, respectively)	$	91,812		$	68,358		$	261,996		$	238,453
Net asset optimization (expenses) revenues (including asset optimization revenues—affiliates of $263 and $3,208 for the three months ended September 30, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $3,382 and $6,450 for the three months ended September 30, 2015 and 2014, respectively and asset optimization revenues—affiliates of $928 and $10,341 for the nine months ended September 30, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $9,589 and $25,004 for the nine months ended September 30, 2015 and 2014, respectively)		(545	)		(141	)		1,317			1,681
Total Revenues		91,267			68,217			263,313			240,134
Operating Expenses:
Retail cost of revenues (including retail cost of revenues—affiliates of $0 and $0.1 million for the three months ended September 30, 2015 and 2014, respectively and retail cost of revenues-affiliates of less than $0.1 million and $0.1 million for the nine months ended September 30, 2015 and 2014, respectively)		60,967			51,863			176,000			192,371
General and administrative (including general and administrative expense—affiliates of $0 and $0.1 million for the three months ended September 30, 2015 and 2014, respectively and general and administrative expense—affiliates of $0 and $0.1 million for the nine months ended September 30, 2015 and 2014, respectively)		15,493			10,634			43,909			28,494
Depreciation and amortization		7,557			4,113			17,873			10,324
Total Operating Expenses		84,017			66,610			237,782			231,189
Operating income		7,250			1,607			25,531			8,945
Other (expense)/income:
Interest expense		(800	)		(615	)		(1,415	)		(1,150	)
Interest and other income		5			40			326			111
Total other expenses		(795	)		(575	)		(1,089	)		(1,039	)
Income before income tax expense		6,455			1,032			24,442			7,906
Income tax expense		580			613			1,599			777
Net income	$	5,875		$	419		$	22,843		$	7,129
Less: Net income (loss) attributable to non-controlling interests		4,561			(642	)		18,959			6,068
Net income attributable to Spark Energy, Inc. stockholders	$	1,314		$	1,061		$	3,884		$	1,061
Net income attributable to Spark Energy, Inc. per share of Class A common stock
Basic	$	0.42		$	0.35		$	1.27		$	0.35
Diluted	$	0.31		$	0.03		$	1.09		$	0.35
Weighted average shares of Class A common stock outstanding
Basic		3,097			3,000			3,053			3,000
Diluted		14,232			13,750			13,948			3,000
(1) Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC on May 12, 2015 from an affiliate.

 

 

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
(in thousands)
(unaudited)
	Issued Shares of Class A Common Stock	Issued Shares of Class B Common Stock	Issued Shares of Preferred Stock			Class A Common Stock			Class B Common Stock			Additional Paid In Capital			Retained Earnings (Deficit)			Total Stockholders Equity			Non-controlling Interest			Total Equity
Balance at December 31, 2014	3,000	10,750	$	–		$	30		$	108		$	9,296		$	(775	)	$	8,659		$	15,458		$	24,117
Stock based compensation	–	–		–			–			–			1,366			–			1,366			–			1,366
Restricted stock unit vesting	97	–		–			1			–			353			–			354			–			354
Contribution from NuDevco	–	–		–			–			–			129			–			129			–			129
Consolidated net income (1)	–	–		–			–			–			–			3,884			3,884			18,959			22,843
Beneficial conversion feature	–	–		–			–			–			789			–			789			–			789
Distributions paid to Class B non-controlling unit holders	–	–		–			–			–			–			–			–			(11,691	)		(11,691	)
Dividends paid to Class A common shareholders	–	–		–			–			–			–			(3,333	)		(3,333	)		–			(3,333	)
Balance at September 30, 2015	3,097	10,750		–		$	31		$	108		$	11,933		$	(224	)	$	11,848		$	22,726		$	34,574
(1) Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC on May 12, 2015 from an affiliate.

SPARK ENERGY, INC.
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(in thousands)
(unaudited)
	Nine Months Ended September 30,
		2015 (1)			2014
Cash flows from operating activities:
Net income	$	22,843		$	7,129
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense		17,873			10,324
Deferred income taxes		872			638
Stock based compensation		1,992			362
Amortization of deferred financing costs		295			580
Bad debt expense		6,082			3,973
Gain (loss) on derivatives, net		6,118			(262	)
Current period cash settlements on derivatives, net		(15,120	)		7,252
Accretion of discount to subordinated convertible notes to affiliate		21			–
Changes in assets and liabilities:
Decrease in restricted cash		707			–
Decrease in accounts receivable		18,566			9,741
Decrease (increase) in accounts receivable—affiliates		(216	)		6,310
Decrease (increase) in inventory		2,978			(5,338	)
Increase in customer acquisition costs		(17,725	)		(20,366	)
Decrease (increase) in prepaid and other current assets		11,110			(4,658	)
Increase in intangible assets – customer acquisitions		(2,776	)		–
Increase in other assets		(256	)		(146	)
Decrease in accounts payable and accrued liabilities		(14,610	)		(5,890	)
Increase in accounts payable—affiliates		849			851
Increase (decrease) in other current liabilities		(1,534	)		1,465
Increase in other non-current liabilities		1,606			–
Net cash provided by operating activities		39,675			11,965
Cash flows from investing activities:
Purchases of property and equipment		(1,255	)		(2,214	)
Acquisition of CenStar and Oasis net assets		(41,234	)		–
Investment in eRex joint venture		(330	)		–
Net cash used in investing activities		(42,819	)		(2,214	)
Cash flows from financing activities:
Borrowings on credit facilities		52,225			60,280
Payments on credit facilities		(38,000	)		(38,280	)
Member contributions (distributions), net		–			(36,406	)
Contributions from NuDevco		129			–
Proceeds from issuance of Class A common stock		–			50,220
Distributions of proceeds from Offering to affiliate		–			(47,554	)
Payment of Note Payable to NuDevco		–			(50	)
Offering costs		–			(2,667	)
Issuance of convertible subordinated notes to affiliate		7,075			–
Restricted stock vesting		(265	)		–
Payment of dividends to Class A common shareholders		(3,333	)		–
Payment of distributions to Class B unitholders		(11,691	)		–
Net cash provided by (used in) financing activities		6,140			(14,457	)
Increases (decreases) in cash and cash equivalents		2,996			(4,706	)
Cash and cash equivalents—beginning of period		4,359			7,189
Cash and cash equivalents—end of period	$	7,355		$	2,483
Supplemental Disclosure of Cash Flow Information:
Non cash items:
Property and equipment purchase accrual	$	11		$	81
CenStar Earnout accrual	$	500			–
Cash paid during the period for:
Interest	$	1,061		$	484
Taxes	$	157		$	150
(1) Financial information has been recast to include results attributable to the acquisition of Oasis Power Holdings LLC on May 12, 2015 from an affiliate.

SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(in thousands, except per unit operating data)
(unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015			2014
Retail Natural Gas Segment
Total Revenues	$	14,354		$	16,469		$	93,253		$	102,166
Retail Cost of Revenues		10,180			10,235			53,136			77,374
Less: Net Asset Optimization Revenues (Expenses)		(545	)		(141	)		1,317			1,681
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements		(3,034	)		(1,475	)		3,241			(2,564	)
Retail Gross Margin—Gas	$	7,753		$	7,850		$	35,559		$	25,675
Volume of Gas (MMBtu)		1,672,120			1,779,610			10,527,078			10,892,362
Retail Gross Margin-Gas ($/MMBtu)	$	4.64		$	4.41		$	3.38		$	2.36
Retail Electricity Segment
Total Revenues	$	76,913		$	51,748		$	170,060		$	137,968
Retail Cost of Revenues		50,787			41,628			122,864			114,997
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements		7,201			3,351			3,526			(1,548	)
Retail Gross Margin—Electricity	$	18,925		$	6,769		$	43,670		$	24,519
Volume of Electricity (MWh)		719,758			447,729			1,519,011			1,201,345
Retail Gross Margin—Electricity ($/MWh)	$	26.29		$	15.12		$	28.75		$	20.41

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, (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 operating items. EBITDA is defined as net income before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the year in which they are incurred, even though we capitalize such costs and amortize them over two years in accordance with our accounting policies. The deduction of current period customer acquisition costs is consistent with how we manage our business, but the comparability of Adjusted EBITDA between periods may be affected by varying levels of customer acquisition costs. 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 derivative instruments. We also deduct non-cash compensation expense as a result of restricted stock units that were issued under our long-term incentive plan.

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 a company’s 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 condensed combined and consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following, among other measures:

• 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.

Retail Gross Margin

We define retail gross margin as operating income 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, its most directly comparable financial measure calculated and presented in accordance with GAAP.

The GAAP measures most directly comparable to Adjusted EBITDA are net income and net cash provided by operating activities. The GAAP measure most directly comparable to Retail Gross Margin is operating income. Our non-GAAP financial measures of Adjusted EBITDA and Retail Gross Margin should not be considered as alternatives to net income, net cash provided by operating activities, or operating income. 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 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 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)
	Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015			2014
Reconciliation of Adjusted EBITDA to Net Income:
Net income	$	5,875		$	419		$	22,843		$	7,129
Depreciation and amortization		7,557			4,113			17,873			10,324
Interest expense		800			615			1,415			1,150
Income tax expense		580			613			1,600			777
EBITDA		14,812			5,760			43,731			19,380
Less:
Net, Gains (losses) on derivative instruments		61			(1,178	)		(6,118	)		262
Net, Cash settlements on derivative instruments		4,163			3,004			12,887			(7,252	)
Customer acquisition costs		5,825			8,698			17,725			20,366
Plus:
Non-cash compensation expense		838			362			1,374			362
Adjusted EBITDA	$	5,601		$	(4,402	)	$	20,611		$	6,366

 

	Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015			2014
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by operating activities	$	(15,887	)	$	(13,693	)	$	39,675		$	11,965
Amortization of deferred financing costs		(194	)		(355	)		(295	)		(580	)
Allowance for doubtful accounts and bad debt expense		(1,903	)		(1,946	)		(6,082	)		(3,973	)
Interest expense		800			615			1,415			1,150
Income tax expense		580			613			1,599			777
Changes in operating working capital
Accounts receivable, prepaids, current assets		(3,677	)		2,505			(29,460	)		(11,393	)
Inventory		2,103			5,649			(2,978	)		5,338
Accounts payable and accrued liabilities		21,690			1,277			13,761			5,039
Other		2,089			933			2,976			(1,957	)
Adjusted EBITDA	$	5,601		$	(4,402	)	$	20,611		$	6,366

 

 

The following table presents a reconciliation of Retail Gross Margin to operating income for each of the periods indicated.

APPENDIX TABLE A-3
RETAIL GROSS MARGIN RECONCILIATION
(in thousands)
(unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
		2015			2014			2015			2014
Reconciliation of Retail Gross Margin to Operating Income:
Operating income	$	7,250		$	1,607		$	25,531		$	8,945
Depreciation and amortization		7,557			4,113			17,873			10,324
General and administrative		15,493			10,634			43,909			28,494
Less:
Net asset optimization revenues (expenses)		(545	)		(141	)		1,317			1,681
Net, Gains (losses) on non-trading derivative instruments		132			(1,163	)		(5,876	)		5,847
Net, Cash settlements on non-trading derivative instruments		4,035			3,039			12,643			(9,959	)
Retail Gross Margin	$	26,678		$	14,619		$	79,229		$	50,194

Contact: Spark Energy, Inc.

Investors: Andy Davis, 832-200-3727

Media: Jenn Korell, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, Oct. 27, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), announced today that it plans to present its Third Quarter 2015 financial results in a conference call and webcast on Thursday, November 12, 2015 at 10:00 AM Central (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 http://ir.sparkenergy.com/events.cfm. 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 16 states and serves 66 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

 

Contact:  Spark Energy, Inc.

Investors:
Andy Davis, 832-200-3727

Media:
Jenn Korell, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, Oct. 22, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (the “Company”), announced today that its Board of Directors has declared a quarterly cash dividend for the third quarter of 2015 in the amount of $0.3625 per share of Class A common stock. This amount represents an annualized dividend of $1.45 per share. The dividend will be paid on December 14, 2015 to holders of record of the Class A common stock on November 30, 2015.

“Our third quarter was a significant one, as we closed on two transactions, CenStar Energy and Oasis Energy, and also amended and restated our credit facility,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “We are very pleased with our third quarter financial results, especially when you factor in the seasonal nature of our business.”

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 16 states and serves 66 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

 

Contact:  Spark Energy, Inc.

Investors:
Andy Davis, 832-200-3727

Media:
Jenn Korell, 281-833-4151

Source: Spark Energy, Inc.

HOUSTON, Aug. 12, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), today reported financial results for the quarter ended June 30, 2015.

For the second quarter of 2015, Adjusted EBITDA was $4.6 million and Retail Gross Margin was $23.1 million on revenue of $65.4 million, compared to Adjusted EBITDA of $1.4 million and Retail Gross Margin of $17.9 million for the second quarter of 2014.

“The second quarter yielded positive results for us, both organically and from an M&A perspective,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “Our retail gross margin and Adjusted EBITDA were enhanced as a result of lower supply costs across several of our markets. We added approximately 25,000 customers from our Entrust transaction that, along with the Connecticut customers we acquired at the end of last year, will continue to be accretive to Adjusted EBITDA.

“More recently, we closed on the CenStar Energy and Oasis Energy transactions, and also amended and restated our credit facility in order to provide us with the capacity to acquire companies and large books of customers in order to continue to execute on our strategy to grow the business. The Oasis and CenStar acquisitions added over 100,000 residential customer equivalents, bringing our total to over 400,000. In addition, these acquisitions enable us to access twenty new markets to support our continued organic growth efforts.”

Second Quarter 2015 Highlights

• $4.6 million in Adjusted EBITDA and $23.1 million in Retail Gross Margin
• Enhanced margins in retail electricity and retail natural gas segments
• Strong cash flow during the quarter allowed us to reduce the working capital facility loan balance by $11.0 million
• Invested $6.2 million in organic customer acquisitions
• Paid first quarter dividend of $0.3625 per share of Class A common stock on June 15, 2015
• Declared second quarter dividend of $0.3625 per share of Class A common stock payable on September 14, 2015

Strategic Developments

• Amended and restated existing senior credit facility on July 8
• Closed CenStar Energy and Oasis Energy transactions in July, bringing our total residential customer equivalent count to over 400,000

Summary Second Quarter 2015 Financial Results

For the quarter ended June 30, 2015, Spark reported Adjusted EBITDA of $4.6 million on $65.4 million of revenue compared to Adjusted EBITDA of $1.4 million for the quarter ended June 30, 2014. This increase of $3.2 million is primarily attributable to increased retail gross margin across both our electricity and natural gas segments, partially offset by increased general and administrative expenses, including increased billing and other variable costs associated with increased customer count and increased costs associated with being a public company.

For the quarter ended June 30, 2015, Spark reported Retail Gross Margin of $23.1 million compared to Retail Gross Margin of $17.9 million for the quarter ended June 30, 2014. This increase of $5.2 million is primarily attributable to higher retail natural gas and retail electricity unit margins. Favorable supply costs across several of our markets were a key driver of these elevated unit margins in the second quarter.

Net income and EPS for the quarter ended June 30, 2015 were $4.6 million and $0.23, respectively. An unrealized gain on the hedge portfolio valuation of our future supply positions positively impacted net income and EPS by $0.3 million and $0.02, respectively. Net income for the quarter ended June 30, 2014 was $0.2 million and contained an unrealized loss on the hedge portfolio valuation of $(4.5) million.

Liquidity and Capital Resources

(in thousands)	June 30, 2015
Cash and cash equivalents	$ 4,237
Senior Credit Facility Availability (1)	50,155
Total Liquidity	$ 54,392
(1) Subject to Senior Credit Facility borrowing base restrictions

Conference Call and Webcast

Spark will host a conference call to discuss second quarter 2015 results on Thursday, August 13, 2015 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 http://ir.sparkenergy.com/events.cfm. 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 16 states and serves 66 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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 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,” “project,” or other similar words. All statements, other than statements of historical fact included in this 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 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 report are subject to risks and uncertainties. Important factors which 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,
• extreme and unpredictable weather conditions,
• the sufficiency of risk management and hedging policies,
• customer concentration,
• federal, state and local regulation,
• key license retention,
• increased regulatory scrutiny and compliance costs,
• 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,
• level of indebtedness,
• changes in costs to acquire customers,
• actual customer attrition rates,
• actual bad debt expense in non-POR markets,
• accuracy of internal billing systems,
• ability to successfully navigate entry into new markets,
• whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
• ability to successfully and efficiently integrate acquisitions into our operations,
• competition, and
• other factors discussed in “Risk Factors” in our Form 10-K for the year ended December 31, 2014.

You should review the risk factors and other matters disclosed throughout our Report on Form 10-K for the year ended December 31, 2014 and the Form 10-Q for the quarter ended June 30, 2015, both of which are filed with the Securities and Exchange Commission, which could cause our actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements speak only as of the date of this 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.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2015 AND DECEMBER 31, 2014
(in thousands)
(unaudited)
	June 30, 2015	December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$ 4,237	$ 4,359
Restricted cash	—	707
Accounts receivable, net of allowance for doubtful accounts of $4.1 million and $8.0 million as of June 30, 2015 and December 31, 2014, respectively	40,011	63,797
Accounts receivable—affiliates	534	1,231
Inventory	2,945	8,032
Fair value of derivative assets	924	216
Customer acquisition costs, net	14,514	12,369
Intangible assets – customer acquisitions, net	1,421	486
Prepaid assets	789	1,236
Prepaid assets—affiliates	173	—
Deposits	5,335	10,569
Other current assets	2,615	2,987
Total current assets	73,498	105,989
Property and equipment, net	4,448	4,221
Fair value of derivative assets	—	—
Customer acquisition costs	4,450	2,976
Intangible assets – customer acquisitions	2,292	1,015
Deferred tax assets	23,770	24,047
Other assets	82	149
Total Assets	$ 108,540	$ 138,397
Liabilities and Member’s Equity
Current liabilities:
Accounts payable	$ 26,504	$ 38,210
Accounts payable—affiliates	789	1,017
Accrued liabilities	7,032	7,195
Fair value of derivative liabilities	8,825	11,526
Note payable	9,000	33,000
Other current liabilities	673	1,868
Total current liabilities	52,823	92,816
Long-term liabilities:
Fair value of derivative liabilities	531	478
Payable pursuant to tax receivable agreement—affiliates	20,767	20,767
Other long-term liabilities	1,553	219
Total liabilities	75,674	114,280
Stockholders’ equity:
Common Stock:
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 3,097,193 issued and outstanding at June 30, 2015 and 3,000,000 issued and outstanding at December 31, 2014	31	30
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 10,750,000 issued and outstanding at June 30, 2015 and 10,750,000 issued and outstanding at December 31, 2014	108	108
Preferred Stock:
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized, zero issued and outstanding at June 30, 2015 and December 31, 2014	—	—
Additional paid-in capital	10,494	9,296
Retained earnings (deficit)	132	(775)
Total stockholders’ equity	10,745	8,659
Non-controlling interest in Spark HoldCo, LLC	22,101	15,458
Total equity	32,866	24,117
Total Liabilities and Stockholders’ Equity	$ 108,540	$ 138,397

SPARK ENERGY, INC.
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands, except per share data)
(unaudited)
	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Revenues:
Retail revenues (including retail revenues—affiliates of $0 and $681 for the three months ended June 30, 2015 and 2014, respectively and retail revenues—affiliates of $0 and $2,170 for the six months ended June 30, 2015 and 2014, respectively)	$ 65,500	$ 65,743	$ 165,375	$ 170,095
Net asset optimization (expenses) revenues (including asset optimization revenues—affiliates of $176 and $4,634 for the three months ended June 30, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $3,114 and $10,654 for the three months ended June 30, 2015 and 2014, respectively and asset optimization revenues—affiliates of $665 and $7,134 for the six months ended June 30, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $6,207 and $18,554 for the six months ended June 30, 2015 and 2014, respectively)	(67)	197	1,862	1,821
Total Revenues	65,433	65,940	167,237	171,916
Operating Expenses:
Retail cost of revenues (including retail cost of revenues—affiliates of less than $0.1 million for both the three months and six months ended June 30, 2015 and 2014)	42,120	52,387	111,207	140,508
General and administrative (including general and administrative expense—affiliates of $0 and $6 for the three months ended June 30, 2015 and 2014, respectively and general and administrative expense—affiliates of $0 and $12 million for the six months ended June 30, 2015 and 2014, respectively)	12,978	9,747	27,683	17,860
Depreciation and amortization	5,231	3,252	9,508	6,211
Total Operating Expenses	60,329	65,386	148,398	164,579
Operating income	5,104	554	18,839	7,337
Other (expense)/income:
Interest expense	(207)	(222)	(588)	(535)
Interest and other income	187	1	322	71
Total other expenses	(20)	(221)	(266)	(464)
Income before income tax expense	5,084	333	18,573	6,873
Income tax expense	459	132	1,019	164
Net income	$ 4,625	$ 201	$ 17,554	$ 6,709
Less: Net income attributable to non-controlling interests	3,917	—	14,437	—
Net income attributable to Spark Energy, Inc. stockholders	$ 708	$ 201	$ 3,117	$ 6,709
Net income attributable to Spark Energy, Inc. per share of Class A common stock
Basic	$ 0.23		$ 1.03
Diluted	$ 0.23		$ 0.83
Weighted average shares of Class A common stock outstanding
Basic	3,062		3,031
Diluted	3,062		13,781

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(in thousands)
(unaudited)
	Issued Shares of Class A Common Stock	Issued Shares of Class B Common Stock	Issued Shares of Preferred Stock	Class A Common Stock	Class B Common Stock	Additional Paid In Capital	Retained Earnings (Deficit)	Total Stockholders Equity	Non-controlling Interest	Total Equity
Balance at 12/31/14:	3,000	10,750	$ —	$ 30	$ 108	$ 9,296	$ (775)	$ 8,659	$ 15,458	$ 24,117
Stock based compensation	—	—	—	—	—	716	—	716	—	716
Restricted stock unit vesting	97	—	—	1	—	353		354		354
Contribution from NuDevco	—	—	—	—	—	129	—	129	—	129
Consolidated net income	—	—	—	—	—	—	3,117	3,117	14,437	17,554
Distributions paid to Class B non-controlling unit holders	—	—	—	—	—	—	—	—	(7,794)	(7,794)
Dividends paid to Class A common shareholders	—	—	—	—	—	—	(2,210)	(2,210)	—	(2,210)
Balance at 6/30/15:	3,097	10,750	—	$ 31	$ 108	$ 10,494	$ 132	$ 10,765	$ 22,101	$ 32,866

SPARK ENERGY, INC.
CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands)
(unaudited)
	Six Months Ended June 30,
	2015	2014
Cash flows from operating activities:
Net income	$ 17,554	$ 6,709
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense	9,508	6,211
Deferred income taxes	277	—
Stock based compensation	1,159	—
Amortization of deferred financing costs	101	225
Bad debt expense	4,179	2,027
Gain (loss) on derivatives, net	5,360	(1,440)
Current period cash settlements on derivatives, net	(8,547)	10,256
Changes in assets and liabilities:
Decrease in restricted cash	707	—
Decrease in accounts receivable	19,608	12,266
Decrease in accounts receivable—affiliates	698	6,754
Decrease in inventory	5,087	311
Increase in customer acquisition costs	(11,809)	(11,668)
Decrease (increase) in prepaid and other current assets	5,610	(5,250)
Increase in intangible assets – customer acquisitions	(2,720)	—
Decrease in other assets	65	58
Decrease in accounts payable and accrued liabilities	(12,087)	(3,895)
Increase (decrease) in accounts payable—affiliates	(228)	261
Increase (decrease) in other current liabilities	(1,195)	2,833
Increase in other non-current liabilities	1,553	—
Net cash provided by operating activities	34,880	25,658
Cash flows from investing activities:
Purchases of property and equipment	(857)	(1,404)
Net cash used in investing activities	(857)	(1,404)
Cash flows from financing activities:
Borrowings on notes payable	6,000	48,550
Payments on notes payable	(30,000)	(35,000)
Contributions from NuDevco	129	—
Member contributions (distributions), net	—	(43,506)
Restricted stock vesting	(270)	—
Payment of dividends to Class A common shareholders	(2,210)	—
Payment of distributions to Class B unitholders	(7,794)	—
Net cash used in financing activities	(34,145)	(29,956)
Decreases in cash and cash equivalents	(122)	(5,702)
Cash and cash equivalents—beginning of period	4,359	7,189
Cash and cash equivalents—end of period	$ 4,237	$ 1,487
Supplemental Disclosure of Cash Flow Information:
Non cash items:
Property and equipment purchase accrual	$ 179	$ —
Cash paid during the period for:
Interest	$ 598	$ 395
Taxes	$ 150	$ 150

SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands, except per unit operating data)
(unaudited)
	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Retail Natural Gas Segment
Total Revenues	$ 21,361	$ 23,169	$ 78,716	$ 85,697
Retail Cost of Revenues	9,375	16,634	42,842	67,138
Less: Net Asset Optimization Revenues (Expenses)	(67)	197	1,862	1,821
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements	2,622	(780)	6,267	(1,088)
Retail Gross Margin—Gas	$ 9,431	$ 7,118	$ 27,745	$ 17,826
Volume of Gas (MMBtu)	2,262,749	2,519,172	8,826,794	9,112,752
Retail Gross Margin-Gas ($/MMBtu)	$ 4.17	$ 2.83	$ 3.14	$ 1.96
Retail Electricity Segment
Total Revenues	44,072	42,771	88,521	86,219
Retail Cost of Revenues	32,745	35,753	68,365	73,370
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements	(2,335)	(3,755)	(3,066)	(4,900)
Retail Gross Margin—Electricity	$ 13,662	$ 10,773	$ 23,222	$ 17,749
Volume of Electricity (MWh)	378,403	369,341	751,254	753,616
Retail Gross Margin—Electricity ($/MWh)	$ 36.10	$ 29.17	$ 30.91	$ 23.55

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, (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 operating items. EBITDA is defined as net income before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the year in which they are incurred, even though we capitalize such costs and amortize them over two years in accordance with our accounting policies. The deduction of current period customer acquisition costs is consistent with how we manage our business, but the comparability of Adjusted EBITDA between periods may be affected by varying levels of customer acquisition costs. For example, our Adjusted EBITDA is lower in years of customer growth reflecting larger customer acquisition spending. 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 derivative instruments. We also deduct non-cash compensation expense as a result of restricted stock units that are issued under our long-term incentive plan.

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 a company’s 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 condensed combined and consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following, among other measures:

• 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.

Retail Gross Margin

We define retail gross margin as operating income 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, its most directly comparable financial measure calculated and presented in accordance with GAAP.

The GAAP measures most directly comparable to Adjusted EBITDA are net income and net cash provided by operating activities. The GAAP measure most directly comparable to Retail Gross Margin is operating income. Our non-GAAP financial measures of Adjusted EBITDA and Retail Gross Margin should not be considered as alternatives to net income, net cash provided by operating activities, or operating income. 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 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 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)
	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Reconciliation of Adjusted EBITDA to Net Income:
Net income	$ 4,625	$ 201	$ 17,554	$ 6,709
Depreciation and amortization	5,231	3,252	9,508	6,211
Interest expense	207	222	588	535
Income tax expense	459	132	1,019	164
EBITDA	10,522	3,807	28,669	13,619
Less:
Net, Gains (losses) on derivative instruments	(4,055)	(4,019)	(5,360)	1,440
Net, Cash settlements on derivative instruments	4,357	(59)	8,547	(10,256)
Customer acquisition costs	6,180	6,441	11,809	11,668
Plus:
Non-cash compensation expense	609	—	1,159	—
Adjusted EBITDA	$ 4,649	$ 1,444	$ 14,832	$ 10,767

	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by operating activities	$ 15,634	$ 19,448	$ 34,880	$ 25,658
Amortization of deferred financing costs	(51)	(112)	(101)	(225)
Bad debt expense	(1,232)	(1,462)	(4,179)	(2,027)
Interest expense	207	222	588	535
Income tax expense	459	132	1,019	164
Changes in operating working capital
Accounts receivable, prepaids, current assets	(19,120)	(40,878)	(23,903)	(13,770)
Inventory	2,434	4,011	(5,087)	(311)
Accounts payable and accrued liabilities	6,504	21,969	12,315	3,634
Other	(186)	(1,886)	(700)	(2,891)
Adjusted EBITDA	$ 4,649	$ 1,444	$ 14,832	$ 10,767

The following table presents a reconciliation of Retail Gross Margin to operating income for each of the periods indicated.

APPENDIX TABLE A-3
RETAIL GROSS MARGIN RECONCILIATION
(in thousands)
(unaudited)
	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Reconciliation of Retail Gross Margin to Operating Income:
Operating income	$ 5,104	$ 554	$ 18,839	$ 7,337
Depreciation and amortization	5,231	3,252	9,508	6,211
General and administrative	12,978	9,747	27,683	17,860
Less:
Net asset optimization revenues (expenses)	(67)	197	1,862	1,821
Net, Gains (losses) on non-trading derivative instruments	(4,041)	(4,438)	(5,241)	7,010
Net, Cash settlements on non-trading derivative instruments	4,328	(97)	8,442	(12,998)
Retail Gross Margin	$ 23,093	$ 17,891	$ 50,967	$ 35,575

CONTACT: Spark Energy, Inc.
         Investors:
         Andy Davis, 832-200-3727
         Media:
         Jenn Korell, 281-833-4151

Source: Spark Energy

HOUSTON, Aug. 4, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), announced today it has closed its previously announced acquisition of Oasis Energy. A retail energy company with approximately 40,000 natural gas and electricity customers in six states, Oasis Energy brings seven new utilities to Spark, providing additional organic growth opportunities.

The purchase price is $20.0 million, subject to working capital adjustments. As part of the transaction, the Company has issued a $5.0 million convertible subordinated note with a term of five years and an annual interest rate of 5% to the seller, an affiliate of Spark’s founder and majority shareholder. The convertible subordinated note is convertible into shares of Class B common stock at a conversion price of $14.00 following an 18-month holding period.

A special committee of the Board of Directors, consisting solely of independent directors, approved this transaction, which is part of Spark’s strategy to accelerate the growth of its customer base through acquisitions with the help of its founder. Management believes that the acquisition will immediately be accretive to Spark’s Adjusted EBITDA and will further secure Spark’s dividend. Spark intends to operate the business as a standalone brand given Oasis’s proven ability to realize strong gross margins through pricing and product mix.

“We are very excited to have closed the Oasis Energy transaction,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “In addition to purchasing a strong customer portfolio, we are also receiving the benefit of a solid brand, established vendor relationships, and the ability to grow in several new markets as we expand our footprint.”

Conference Call and Webcast

Spark will host a conference call to discuss Second Quarter 2015 financial results on Thursday, August 13, 2015 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 http://ir.sparkenergy.com/events.cfm. 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 16 states and serves 66 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

CONTACT: Spark Energy, Inc.
         Investors:
         Andy Davis, 832-200-3727
         Media:
         Jenn Korell, 281-833-4151

Source: Spark Energy

HOUSTON, July 28, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), announced today that it plans to present its Second Quarter 2015 financial results in a conference call and webcast on Thursday, August 13, 2015 at 10:00 AM Central (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 http://ir.sparkenergy.com/events.cfm. 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 16 states and serves 59 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

CONTACT: Spark Energy, Inc.

         Investors:
         Andy Davis, 832-200-3727

         Media:
         Jenn Korell, 281-833-4151

Source: Spark Energy

HOUSTON, July 23, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (the “Company”), announced today that its Board of Directors has declared a quarterly cash dividend for the second quarter of 2015 in the amount of $0.3625 per share of Class A common stock. This amount represents an annualized dividend of $1.45 per share. The dividend will be paid on September 14, 2015 to holders of record of the Class A common stock on August 31, 2015.

“We are extremely pleased with our second quarter results, which reflect the underlying strength of the business to support our dividend,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “With our acquisition of CenStar Energy earlier this month, the forthcoming addition of Oasis Energy this quarter, and our organic growth, we continue to execute on our strategy to grow the business.”

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 16 states and serves 59 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

CONTACT: Spark Energy, Inc.

         Investors:
         Andy Davis, 832-200-3727

         Media:
         Jenn Korell, 281-833-4151

Source: Spark Energy

HOUSTON, July 9, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), a Delaware corporation (“Spark”), announced today that it has acquired CenStar Energy, a retail energy company with approximately 75,000 residential customer equivalents. CenStar serves natural gas and electricity customers across 20 utilities in New York, New Jersey, and Ohio.

In conjunction with the acquisition of CenStar Energy, Spark also announced today that it has amended and upsized its senior credit facility. The previous $70.0 million senior secured revolving working capital credit facility increased to $85.0 million and now includes a line of credit to be used specifically for the financing of M&A transactions, including the closing of the Oasis acquisition which is expected later this quarter. In addition, Spark has the ability to add additional banks to the syndicate and increase the amount of available credit, subject to lender approval.

The purchase price of CenStar is $8.3 million, subject to working capital adjustments. As part of the transaction, $2.1 million will be financed by an affiliate of Spark’s founder and majority shareholder in the form of a 5% convertible subordinated note with a term of five years. The convertible subordinated note is convertible into shares of Class B common stock of Spark, along with units of Spark HoldCo, LLC, at a conversion price of $16.57 following an 18-month holding period.

“The acquisition of CenStar Energy is another example of our strong commitment to grow our business,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “CenStar Energy brings a solid customer portfolio, a fantastic management team, and an established and reputable brand. In addition, this acquisition gives us instant access to thirteen new utility service territories and several new products to support our continued organic growth efforts.”

CenStar Energy will continue its operations out of its New York corporate headquarters, maintaining its brand, management team, and employees. “We are very excited to join the Spark Energy family,” said Yoni Garber, CenStar’s Chief Operating Officer. “Our CenStar customers will continue to receive stellar customer service from our existing customer service team. In addition, we look forward to being able to enhance and expand the quality of products and services that our CenStar customers currently enjoy and also facilitate growth and expansion of the CenStar Energy brand.”

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 16 states and serves 46 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

CONTACT: Spark Energy, Inc.

         Investors:
         Andy Davis, 832-200-3727

         Media:
         Jenn Korell, 281-833-4151

 

Source: Spark Energy

HOUSTON, May 13, 2015 (GLOBE NEWSWIRE) — Spark Energy, Inc. (Nasdaq:SPKE), a Delaware corporation (“Spark”), today reported financial results for the quarter ended March 31, 2015.

For the first quarter of 2015, Adjusted EBITDA was $10.2 million and Retail Gross Margin was $27.9 million on revenue of $101.8 million, compared to Adjusted EBITDA of $9.3 million and Retail Gross Margin of $17.7 million for the first quarter of 2014. We invested $5.6 million in organic customer acquisition costs for the quarter ended March 31, 2015 compared to $5.2 million for the quarter ended March 31, 2014.

“We are very pleased with our first quarter results,” said Nathan Kroeker, Spark Energy, Inc.’s President and Chief Executive Officer. “With expanded margins in our retail electricity and retail natural gas segments from our continued focus on maximizing customer lifetime value along with the favorable weather conditions and low commodity price environment, we were able to earn $10.2 million of Adjusted EBITDA and $27.9 million of Retail Gross Margin. On the M&A front, yesterday we announced the acquisition of Oasis Energy from an affiliate of our founder. This acquisition represents approximately 40,000 customers in six states across 19 utilities, some of which are new markets for us and provide organic growth opportunities to Spark Energy. The purchase price for the acquisition of $20.0 million reflects a valuation of approximately three times our projected Adjusted EBITDA run rate. This transaction is an excellent example of our commitment to grow our business through the framework developed with our founder. Additionally, in the first quarter we acquired approximately 30,700 natural gas customers in Northern California and saw positive results from the Connecticut power customers we acquired at the end of last year.”

First Quarter 2015 Highlights

• $10.2 million in Adjusted EBITDA and $27.9 million in Retail Gross Margin
• Expanded margins in retail electricity and retail natural gas segments
• Completed customer portfolio acquisition of approximately 30,700 natural gas customers
• Strong cash flow during the quarter allowed us to reduce the working capital facility loan balance by $13.0 million
• Invested $5.6 million in organic customer acquisitions
• Paid fourth quarter dividend of $0.3625 per share of Class A common stock on March 16, 2015

Summary First Quarter 2015 Financial Results

For the quarter ended March 31, 2015, Spark reported Adjusted EBITDA of $10.2 million on $101.8 million of revenue compared to Adjusted EBITDA of $9.3 million for the quarter ended March 31, 2014. This increase of $0.9 million is primarily attributable to increased retail gross margin across both our electricity and natural gas segments, partially offset by increased general and administrative expenses, including increased billing and other variable costs associated with increased customer count, increased bad debt expense, and increased costs associated with being a public company.

For the quarter ended March 31, 2015, Spark reported Retail Gross Margin of $27.9 million compared to Retail Gross Margin of $17.7 million for the quarter ended March 31, 2014. This increase of $10.2 million is primarily attributable to considerably higher retail natural gas unit margins, along with increased retail electricity unit margins. Favorable weather across several of our markets in the first quarter was a key driver of these elevated unit margins, as we were able to manage our hedge position to allow us to take advantage of decreasing spot market prices.

Net income and EPS for the quarter ended March 31, 2015 were $12.9 million and $0.80, respectively. An unrealized gain on the hedge portfolio valuation of our future supply positions positively impacted net income and EPS by $2.9 million and $0.19, respectively. Net income for the quarter ended March 31, 2014 was $6.5 million and contained an unrealized loss on the hedge portfolio valuation of $(1.5) million which results in a quarter-over-quarter change in hedge portfolio valuation of $4.4 million.

Liquidity and Capital Resources

(in thousands)	March 31, 2015
Cash and cash equivalents	$ 5,179
Senior Credit Facility Availability (1)	37,500
Total Liquidity	$ 42,679
(1) Subject to Senior Credit Facility borrowing base restrictions

Conference Call and Webcast

Spark will host a conference call to discuss first quarter 2015 results on Thursday, May 14, 2015 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 http://ir.sparkenergy.com/events.cfm. 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 16 states and serves 46 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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 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,” “project,” or other similar words. All statements, other than statements of historical fact included in this 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 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 report are subject to risks and uncertainties. Important factors which 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,
• extreme and unpredictable weather conditions,
• the sufficiency of risk management and hedging policies,
• customer concentration,
• federal, state and local regulation,
• key license retention,
• increased regulatory scrutiny and compliance costs,
• 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,
• level of indebtedness,
• changes in costs to acquire customers,
• actual customer attrition rates,
• actual bad debt expense in non-POR markets,
• accuracy of internal billing systems,
• ability to successfully navigate entry into new markets,
• whether our majority shareholder or its affiliates offers us acquisition opportunities on terms that are commercially acceptable to us,
• competition, and
• other factors discussed in “Risk Factors” in our Form 10-K for the year ended December 31, 2014.

You should review the risk factors and other matters disclosed throughout our Report on Form 10-K for the year ended December 31, 2014 and the Form 10-Q for the quarter ended March 31, 2015, both of which are filed with the Securities and Exchange Commission, which could cause our actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements speak only as of the date of this 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.

SPARK ENERGY, INC. CONDENSED COMBINED AND CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2015 AND DECEMBER 31, 2014 (in thousands) (unaudited)
	March 31, 2015	December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$ 5,179	$ 4,359
Restricted cash	—	707
Accounts receivable, net of allowance for doubtful accounts of $3.2 million and $8.0 million as of March 31, 2015 and December 31, 2014, respectively	58,926	63,797
Accounts receivable—affiliates	1,025	1,231
Inventory	511	8,032
Fair value of derivative assets	57	216
Customer acquisition costs, net	13,762	12,369
Intangible assets – customer acquisitions, net	739	486
Prepaid assets	1,208	1,236
Deposits	8,128	10,569
Other current assets	2,787	2,987
Total current assets	92,322	105,989
Property and equipment, net	4,263	4,221
Customer acquisition costs	3,499	2,976
Intangible assets—customer acquisitions	1,253	1,015
Deferred tax assets	24,206	24,047
Other assets	148	149
Total Assets	$ 125,691	$ 138,397
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$ 31,534	$ 38,210
Accounts payable—affiliates	1,432	1,017
Accrued liabilities	7,743	7,195
Fair value of derivative liabilities	8,472	11,526
Note payable	20,000	33,000
Other current liabilities	2,541	1,868
Total current liabilities	71,722	92,816
Long-term liabilities:
Fair value of derivative liabilities	487	478
Payable pursuant to tax receivable agreement—affiliates	20,767	20,767
Other long-term liabilities	315	219
Total liabilities	93,291	114,280
Stockholders’ equity:
Common Stock:
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 3,000,000 issued and outstanding at March 31, 2015 and 3,000,000 issued and outstanding at December 31, 2014	30	30
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 10,750,000 issued and outstanding at March 31, 2015 and 10,750,000 issued and outstanding at December 31, 2014	108	108
Preferred Stock:
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized, zero issued and outstanding at March 31, 2015 and December 31, 2014	—	—
Additional paid-in capital	9,635	9,296
Retained earnings (deficit)	546	(775)
Total stockholders’ equity	10,319	8,659
Non-controlling interest in Spark HoldCo, LLC	22,081	15,458
Total equity	32,400	24,117
Total Liabilities and Stockholders’ Equity	$ 125,691	$ 138,397

SPARK ENERGY, INC. CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (in thousands, except per share data)  (unaudited)
	Three Months Ended March 31,
	2015	2014
Revenues:
Retail revenues (including retail revenues—affiliates of $0 and $1,489 for the three months ended March 31, 2015 and 2014, respectively)	$ 99,874	$ 104,352
Net asset optimization revenues (expenses) (including asset optimization revenues—affiliates of $489 and $2,500 for the three months ended March 31, 2015 and 2014, respectively, and asset optimization revenues—affiliates cost of revenues of $3,093 and $8,089 for the three months ended March 31, 2015 and 2014, respectively)	1,929	1,624
Total Revenues	101,803	105,976
Operating Expenses:
Retail cost of revenues (including retail cost of revenues—affiliates of less than $0.1 million for both the three months ended March 31, 2015 and 2014)	69,085	88,121
General and administrative (including general and administrative expense—affiliates of $0 and $0.1 million for the three months ended March 31, 2015 and 2014, respectively)	14,704	8,113
Depreciation and amortization	4,278	2,959
Total Operating Expenses	88,067	99,193
Operating income	13,736	6,783
Other (expense)/income:
Interest expense	(381)	(313)
Interest and other income	135	70
Total other expenses	(246)	(243)
Income before income tax expense	13,490	6,540
Income tax expense	561	32
Net income	$ 12,929	$ 6,508
Less: Net income attributable to non-controlling interests	10,520	—
Net income attributable to Spark Energy, Inc. stockholders	$ 2,409	$ 6,508
Net income attributable to Spark Energy, Inc. per share of Class A common stock
Basic	$ 0.80
Diluted	$ 0.80
Weighted average shares of Class A common stock outstanding
Basic	3,000
Diluted	3,000

SPARK ENERGY, INC. CONDENSED COMBINED AND CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2015 (in thousands) (unaudited)
	Issued Shares of Class A Common Stock	Issued Shares of Class B Common Stock	Issued Shares of Preferred Stock	Class A Common Stock	Class B Common Stock	Additional Paid In Capital	Retained Earnings (Deficit)	Total Stockholders Equity	Non-controlling Interest	Total Equity
Balance at 12/31/14:	3,000	10,750	—	$ 30	$ 108	$ 9,296	$ (775)	$ 8,659	$ 15,458	$ 24,117
Stock based compensation	—	—	—	—	—	339	—	339	—	339
Consolidated net income	—	—	—	—	—	—	2,409	2,409	10,520	12,929
Distributions paid to Class B non-controlling unit holders	—	—	—	—	—	—	—	—	(3,897)	(3,897)
Dividends paid to Class A common shareholders	—	—	—	—	—	—	(1,088)	(1,088)	—	(1,088)
Balance at 3/31/15:	3,000	10,750	—	$ 30	$ 108	$ 9,635	$ 546	$ 10,319	$ 22,081	$ 32,400

SPARK ENERGY, INC. CONDENSED COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (in thousands) (unaudited)
	Three Months Ended March 31,
	2015	2014
Cash flows from operating activities:
Net income	$ 12,929	$ 6,508
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense	4,278	2,959
Deferred income taxes	(159)	—
Stock based compensation	550	—
Amortization of deferred financing costs	50	113
Bad debt expense	2,947	565
Gain (loss) on derivatives, net	1,305	(5,460)
Current period cash settlements on derivatives, net	(4,191)	10,197
Changes in assets and liabilities:
Decrease in restricted cash	707	—
Decrease (increase) in accounts receivable	1,924	(25,257)
Decrease (increase) in accounts receivable—affiliates	207	(535)
Decrease in inventory	7,521	4,322
Increase in customer acquisition costs	(5,629)	(5,227)
Decrease (increase) in prepaid and other current assets	2,621	(1,316)
Increase in intangible assets—customer acquisitions	(676)	—
Increase in other assets	—	(31)
Increase (decrease) in accounts payable and accrued liabilities	(6,226)	18,335
Increase in accounts payable—affiliates	415	—
Increase (decrease) in other current liabilities	673	1,036
Net cash provided by operating activities	19,246	6,209
Cash flows from investing activities:
Purchases of property and equipment	(441)	(787)
Net cash used in investing activities	(441)	(787)
Cash flows from financing activities:
Borrowings on notes payable	3,000	24,500
Payments on notes payable	(16,000)	(18,000)
Member contributions (distributions), net	—	(14,356)
Payment of dividends to Class A common shareholders	(1,088)	—
Payment of distributions to Class B unitholders	(3,897)	—
Net cash used in financing activities	(17,985)	(7,856)
Decreases in cash and cash equivalents	820	(2,434)
Cash and cash equivalents—beginning of period	4,359	7,189
Cash and cash equivalents—end of period	$ 5,179	$ 4,755
Supplemental Disclosure of Cash Flow Information:
Non cash items:
Property and equipment purchase accrual	$ 19	$ —
Cash paid during the period for:
Interest	$ 366	$ 267

SPARK ENERGY, INC. OPERATING SEGMENT RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (in thousands, except per unit operating data) (unaudited)
	Three Months Ended March 31,
	2015	2014
Retail Natural Gas Segment
Total Revenues	$ 57,354	$ 62,528
Retail Cost of Revenues	33,466	50,622
Less: Net Asset Optimization Revenues	1,929	1,624
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements	3,647	(308)
Retail Gross Margin—Gas	$ 18,312	$ 10,590
Volumes—Gas (MMBtu’s)	6,564,045	6,593,580
Retail Gross Margin—Gas ($/MMBtu)	$ 2.79	$ 1.61
Retail Electricity Segment
Total Revenues	$ 44,449	$ 43,448
Retail Cost of Revenues	35,619	37,499
Less: Net Gains (Losses) on non-trading derivatives, net of cash settlements	(732)	(1,145)
Retail Gross Margin—Electricity	$ 9,562	$ 7,094
Volumes—Electricity (MWh’s)	372,851	384,275
Retail Gross Margin—Electricity ($/MWh)	$ 25.65	$ 18.46

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, (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 operating items. EBITDA is defined as net income before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the year in which they are incurred, even though we capitalize such costs and amortize them over two years in accordance with our accounting policies. The deduction of current period customer acquisition costs is consistent with how we manage our business, but the comparability of Adjusted EBITDA between periods may be affected by varying levels of customer acquisition costs. For example, our Adjusted EBITDA is lower in years of customer growth reflecting larger customer acquisition spending. 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 derivative instruments. We also deduct non-cash compensation expense as a result of restricted stock units that are issued under our long-term incentive plan.

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 a company’s 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 condensed combined and consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following, among other measures:

• 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.

Retail Gross Margin

We define retail gross margin as operating income 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, its most directly comparable financial measure calculated and presented in accordance with GAAP.

The GAAP measures most directly comparable to Adjusted EBITDA are net income and net cash provided by operating activities. The GAAP measure most directly comparable to Retail Gross Margin is operating income. Our non-GAAP financial measures of Adjusted EBITDA and Retail Gross Margin should not be considered as alternatives to net income, net cash provided by operating activities, or operating income. 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 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 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)
	Three Months Ended March 31,
	2015	2014
Reconciliation of Adjusted EBITDA to Net Income:
Net income	$ 12,929	$ 6,508
Depreciation and amortization	4,278	2,959
Interest expense	381	313
Income tax expense	561	32
EBITDA	18,149	9,812
Less:
Net, Gains (losses) on derivative instruments	(1,305)	5,460
Net, Cash settlements on derivative instruments	4,191	(10,197)
Customer acquisition costs	5,629	5,227
Plus:
Non-cash compensation expense	550	—
Adjusted EBITDA	$ 10,184	$ 9,322

	Three Months Ended March 31,
	2015	2014
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by operating activities	$ 19,246	$ 6,209
Amortization and write off of deferred financing costs	(50)	(113)
Allowance for doubtful accounts and bad debt expense	(2,947)	(565)
Interest expense	381	313
Income tax expense	561	32
Changes in operating working capital
Accounts receivable, prepaids, current assets	(4,783)	27,108
Inventory	(7,521)	(4,322)
Accounts payable and accrued liabilities	5,811	(18,335)
Other	(514)	(1,005)
Adjusted EBITDA	$ 10,184	$ 9,322

The following table presents a reconciliation of Retail Gross Margin to operating income for each of the periods indicated.

APPENDIX TABLE A-3 RETAIL GROSS MARGIN RECONCILIATION (in thousands) (unaudited)
	Three Months Ended March 31,
	2015	2014
Reconciliation of Retail Gross Margin to Operating Income:
Operating income	$ 13,736	$ 6,783
Depreciation and amortization	4,278	2,959
General and administrative	14,704	8,113
Less:
Net asset optimization revenue	1,929	1,624
Net, Gains (losses) on non-trading derivative instruments	(1,200)	11,448
Net, Cash settlements on non-trading derivative instruments	4,115	(12,901)
Retail Gross Margin	$ 27,874	$ 17,684

CONTACT: Spark Energy, Inc.
         Investors:
         Andy Davis, 832-200-3727
         Media:
         Jenn Korell, 281-833-4151

Source: Spark Energy