Category: Press Releases

HOUSTON, Jan. 17, 2019 (GLOBE NEWSWIRE) — Spark Energy, Inc. (“Spark” or the “Company”) (NASDAQ: SPKE), an independent retail energy services company, announced today that its Board of Directors has declared a quarterly cash dividend for the fourth quarter of 2018 in the amount of $0.18125 per share on its Class A Common Stock. This amount represents an annualized dividend of $0.725 per share. The fourth quarter dividend will be paid on March 15, 2019 to holders of record of Spark’s Class A Common Stock on March 1, 2019.

Additionally, in accordance with the terms of the 8.75% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Stock”) of the Company, the Board of Directors has declared a quarterly cash dividend in the amount of $0.546875 per share on the Series A Preferred Stock. This amount represents an annualized dividend of $2.1875 per share. The dividend will be paid on April 15, 2019 to holders of record of Spark’s Series A Preferred Stock on April 1, 2019.

Conference Call and Webcast

The Company has also announced today that it plans to present its fourth quarter and full year 2018 financial results in a conference call and webcast on Monday, March 4, 2019 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 ir.sparkenergy.com/events-and-presentations. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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

Contact: Spark Energy, Inc.

Investors:

Christian Hettick, 832-200-3727

Media:

Kira Jordan, 832-255-7302

Source: Spark Energy, Inc

HOUSTON, Dec. 14, 2018 (GLOBE NEWSWIRE) — Spark Energy, Inc. (“Spark” or the “Company”) (NASDAQ: SPKE), an independent retail energy services company, today announced the resignation of Gil Melman, Spark’s Vice President, General Counsel, and Corporate Secretary.  Mr. Melman is resigning to pursue other opportunities, effective December 31, 2018.

“It is with mixed feelings that we have accepted Gil’s resignation,” said Nathan Kroeker, Spark’s President and Chief Executive Officer.  “He has been an important member of Spark’s management team for the past five years, and has been instrumental in our growth, our acquisitions, and our initial public offering.  We wish him the best of luck in his future endeavors.”

C. Alexis Keene, currently Spark’s Deputy General Counsel, will be Spark’s Interim General Counsel and Corporate Secretary.  Spark has begun a process to appoint a permanent successor for Mr. Melman.

“We are very fortunate to have Alexis here at Spark,” continued Kroeker.  “With nearly three decades of experience, a deep knowledge of our business, and the trust and respect of her colleagues within the organization and throughout the industry, we expect a very smooth transition.”

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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

Cautionary Note Regarding Forward Looking Statements

This press release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. All statements, other than statements of historical fact included in this press 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 press 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 press release are subject to risks and uncertainties. Important factors that could cause actual results to materially differ from those projected in the forward-looking statements include, but are not limited to:

• changes in commodity prices and the sufficiency of risk management and hedging policies;
• extreme and unpredictable weather conditions, and the impact of hurricanes and other natural disasters;
• federal, state and local regulation, including the industry’s ability to address or adapt to potentially restrictive new regulations that may be enacted by the New York Public Service Commission;
• our ability to borrow funds and access credit markets and restrictions in our debt agreements and collateral requirements;
• credit risk with respect to suppliers and customers;
• changes in costs to acquire customers and actual customer attrition rates;
• accuracy of billing systems;
• whether our majority stockholder or its affiliates offer us acquisition opportunities on terms that are commercially acceptable to us;
• ability to successfully identify and complete, and efficiently integrate acquisitions into our operations;
• competition; and
• the “Risk Factors” in our latest Annual Report on Form 10-K, and in our quarterly reports, other public filings and press releases.

You should review the risk factors and other factors noted throughout or incorporated by reference in this press release that 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 press 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.

Contact: Spark Energy, Inc.

Investors:
Christian Hettick, 832-200-3727
Media:
Kira Jordan, 832-255-7302

Source: Spark Energy, Inc.

 

Acquired 60,000 residential RCEs; on track to exceed high end of cost reduction guidance

HOUSTON, Nov. 01, 2018 (GLOBE NEWSWIRE) — Spark Energy, Inc. (“Spark” or the “Company”) (NASDAQ: SPKE), an independent retail energy services company, today reported financial results for the quarter ended September 30, 2018.

          Key Highlights

• Achieved $18.6 million in Adjusted EBITDA, $45.8 million in Retail Gross Margin, and a $18.8 million in Net Income for the third quarter
• Expects to exceed upper end of cost reduction guidance range by 10 to 20 percent
• Total RCE count of 979,000 as of September 30, 2018
• Acquired 60,000 residential RCEs subsequent to the close of fiscal third quarter 2018

“Our third quarter was highlighted by continued improvement in organic customer acquisitions as well as significant strides in realizing the brand and platform consolidations that we expect to lead to stronger margins,” said Nathan Kroeker, Spark Energy’s President and Chief Executive Officer. “Efforts to improve customer mix and migrate customers to more cost-effective billing platforms are more than halfway complete and our cost saving actions are tracking ahead of our expectations.”

Kroeker continued, “Since the closing of our third quarter, we announced our acquisition of up to 60,000 residential RCEs in the Midwest and Mid-Atlantic regions. This acquisition will be immediately accretive to 2018 earnings and will require minimal integration activity.”

Summary Third Quarter 2018 Financial Results

For the quarter ended September 30, 2018, Spark reported Adjusted EBITDA of $18.6 million compared to Adjusted EBITDA of $19.6 million for the quarter ended September 30, 2017. This decrease of $1.0 million was driven by a lower Retail Gross Margin.

For the quarter ended September 30, 2018, Spark reported Retail Gross Margin of $45.8 million compared to Retail Gross Margin of $50.6 million for the quarter ended September 30, 2017. This decrease of $4.8 million is primarily attributable to lower natural gas volumes and electricity unit margins.

Net income for the quarter ended September 30, 2018, was $18.8 million compared to net income of $12.9 million for the quarter ended September 30, 2017. The increase in performance compared to the prior year was primarily the result of non-cash gains on our derivative instruments.

Liquidity and Capital Resources

($ in thousands)	September 30, 2018
Cash and cash equivalents	$	42,796
Senior Credit Facility Availability (1)	19,281
Subordinated Debt Availability (2)	15,000
Total Liquidity	$	77,077

(1) Subject to Senior Credit Facility borrowing base and covenant restrictions.
(2) The availability of the Subordinated Facility is dependent on our Founder’s financial position and liquidity.

Dividend

Spark’s Board of Directors declared quarterly dividends of $0.18125 per share of Class A common stock payable on December 14th, 2018, and $0.546875 per share of Series A Preferred Stock payable on January 15, 2019.

Business Outlook

Kroeker concluded, “As we look to fiscal 2019, we expect to see the benefits of improved customer mix and normalized RCE counts. We expect our Adjusted EBITDA to positively reflect the success of our synergy and cost reduction initiatives. Year-to-date we have implemented significant general and administrative cost savings, and we will continue to evaluate opportunities to improve long-term profitability.”

Conference Call and Webcast

Spark will host a conference call to discuss third quarter 2018 results on Friday, November 2, 2018, 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-and-presentations. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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

Cautionary Note Regarding Forward Looking Statements

This earnings release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. All statements, other than statements of historical fact included in this earnings release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this earnings release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

The forward-looking statements in this earnings release are subject to risks and uncertainties. Important factors that could cause actual results to materially differ from those projected in the forward-looking statements include, but are not limited to:

• changes in commodity prices and the sufficiency of risk management and hedging policies;
• extreme and unpredictable weather conditions, and the impact of hurricanes and other natural disasters;
• federal, state and local regulation, including the industry’s ability to address or adapt to potentially restrictive new regulations that may be enacted by the New York Public Service Commission;
• our ability to borrow funds and access credit markets and restrictions in our debt agreements and collateral requirements;
• credit risk with respect to suppliers and customers;
• changes in costs to acquire customers and actual customer attrition rates;
• accuracy of billing systems;
• whether our majority stockholder or its affiliates offer us acquisition opportunities on terms that are commercially acceptable to us;
• ability to successfully identify and complete, and efficiently integrate acquisitions into our operations;
• significant changes in, or new charges by, the ISOs in the regions in which we operate;
• competition; and
• the “Risk Factors” in our latest Annual Report on Form 10-K, and in our quarterly reports, other public filings and press releases.

You should review the risk factors and other factors noted throughout or incorporated by reference in this earnings release that 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 earnings release. Unless required by law, we disclaim any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise. It is not possible for us to predict all risks, nor can we assess the impact of all factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 AS OF SEPTEMBER 30, 2018 AND DECEMBER 31, 2017
(in thousands, except share counts)
(unaudited)

	September 30, 2018				December 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	42,796			$	29,419
Accounts receivable, net of allowance for doubtful accounts of $4,324 at September 30 and $4,023 at December 31	134,183				158,814
Accounts receivable—affiliates	3,807				3,661
Inventory	4,077				4,470
Fair value of derivative assets	23,427				31,191
Customer acquisition costs, net	15,600				22,123
Customer relationships, net	18,360				18,653
Deposits	12,631				7,701
Other current assets	31,074				20,706
Total current assets	285,955				296,738
Property and equipment, net	5,383				8,275
Fair value of derivative assets	1,873				3,309
Customer acquisition costs, net	3,466				6,949
Customer relationships, net	28,247				34,839
Deferred tax assets	24,935				24,185
Goodwill	120,343				120,154
Other assets	11,075				11,500
Total assets	$	481,277			$	505,949
Liabilities, Series A Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable	$	55,496			$	77,510
Accounts payable—affiliates	2,836				4,622
Accrued liabilities	45,518				33,679
Fair value of derivative liabilities	269				1,637
Current portion of Senior Credit Facility	—				7,500
Current payable pursuant to tax receivable agreement—affiliates	2,508				5,937
Current contingent consideration for acquisitions	2,980				4,024
Other current liabilities	856				2,675
Current portion of note payable	10,535				13,443
Total current liabilities	120,998				151,027
Long-term liabilities:
Fair value of derivative liabilities	489				492
Payable pursuant to tax receivable agreement—affiliates	26,067				26,355
Long-term portion of Senior Credit Facility	112,000				117,750
Subordinated debt—affiliate	10,000				—
Long-term portion of note payable	—				7,051
Contingent consideration for acquisitions	—				626
Other long-term liabilities	—				172
Total liabilities	269,554				303,473
Commitments and contingencies (Note 13)
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,707,256 shares issued and outstanding at September 30 and 1,704,339 shares issued and outstanding at December 31	90,758				41,173
Stockholders’ equity:
Common Stock:
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 13,493,158 issued, and 13,393,712 outstanding at September 30 and 13,235,082 issued and 13,135,636 outstanding at December 31	135				132
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 21,485,126 issued and outstanding at September 30 and December 31	216				216
Additional paid-in capital	25,387				26,914
Accumulated other comprehensive loss	(15		)		(11		)
Retained earnings	2,885				11,008
Treasury stock, at cost, 99,446 shares at September 30 and December 31	(2,011		)		(2,011		)
Total stockholders’ equity	26,597				36,248
Non-controlling interest in Spark HoldCo, LLC	94,368				125,055
Total equity	120,965				161,303
Total liabilities, Series A Preferred Stock and stockholders’ equity	$	481,277			$	505,949

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(in thousands)
(unaudited)

	Three Months Ended September 30,								Nine Months Ended September 30,
	2018				2017				2018				2017
Revenues:
Retail revenues	$	258,127			$	215,856			$	773,616			$	563,960
Net asset optimization revenues/(expense)	348				(320		)		3,798				(681		)
Total Revenues	258,475				215,536				777,414				563,279
Operating Expenses:
Retail cost of revenues	193,409				160,373				645,954				420,771
General and administrative	25,695				25,566				83,522				69,405
Depreciation and amortization	13,917				11,509				39,797				30,435
Total Operating Expenses	233,021				197,448				769,273				520,611
Operating income	25,454				18,088				8,141				42,668
Other (expense)/income:
Interest expense	(2,762		)		(2,863		)		(7,323		)		(8,760		)
Interest and other income (loss)	(47		)		168				707				102
Total other expenses	(2,809		)		(2,695		)		(6,616		)		(8,658		)
Income before income tax expense	22,645				15,393				1,525				34,010
Income tax expense	3,818				2,451				602				5,265
Net income	$	18,827			$	12,942			$	923			$	28,745
Less: Net income attributable to non-controlling interests	13,218				10,595				140				23,049
Net income attributable to Spark Energy, Inc. stockholders	$	5,609			$	2,347			$	783			$	5,696
Less: Dividend on Series A preferred stock	2,027				932				6,081				2,106
Net income (loss) attributable to stockholders of Class A common stock	$	3,582			$	1,415			$	(5,298	)		$	3,590
Other comprehensive income, net of tax:
Currency translation gain (loss)	$	47			$	(13	)		$	(11	)		$	(88	)
Other comprehensive income (loss)	47				(13		)		(11		)		(88		)
Comprehensive income	$	18,874			$	12,929			$	912			$	28,657
Less: Comprehensive income attributable to non-controlling interests	13,247				10,587				133				22,994
Comprehensive income attributable to Spark Energy, Inc. stockholders	$	5,627			$	2,342			$	779			$	5,663

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018
(in thousands)
(unaudited)

	Issued Shares of Class A Common Stock		Issued Shares of Class B Common Stock		Treasury Stock		Class A Common Stock			Class B Common Stock			Treasury Stock			Accumulated Other Comprehensive Loss			Additional Paid-in Capital			Retained Earnings (Deficit)			Total Stockholders’ Equity			Non-controlling Interest			Total Equity
Balance at December 31, 2017	13,235		21,485		(99	)	$	132		$	216		$	(2,011	)	$	(11	)	$	26,914		$	11,008		$	36,248		$	125,055		$	161,303
Stock based compensation	—		—		—		—			—			—			—			3,596			—			3,596			—			3,596
Restricted stock unit vesting	258		—		—		3			—			—			—			(715		)	—			(712		)	—			(712		)
Consolidated net income	—		—		—		—			—			—			—			—			783			783			140			923
Foreign currency translation adjustment for equity method investee	—		—		—		—			—			—			(4		)	—			—			(4		)	(7		)	(11		)
Distributions paid to non-controlling unit holders	—		—		—		—			—			—			—			—			—			—			(23,701		)	(23,701		)
Dividends paid to Class A common stockholders	—		—		—		—			—			—			—			(2,381		)	(4,852		)	(7,233		)	—			(7,233		)
Dividends to Preferred Stock	—		—		—		—			—			—			—			(2,027		)	(4,054		)	(6,081		)	—			(6,081		)
Acquisition of Customers from Affiliate	—		—		—		—			—			—			—			—						—			(7,119		)	(7,119		)
Balance at September 30, 2018	13,493		21,485		(99	)	$	135		$	216		$	(2,011	)	$	(15	)	$	25,387		$	2,885		$	26,597		$	94,368		$	120,965

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(in thousands)
(unaudited)

	Nine Months Ended September 30,
	2018				2017
Cash flows from operating activities:
Net income	$	923			$	28,745
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense	38,538				30,584
Deferred income taxes	(749		)		681
Change in TRA liability	79				—
Stock based compensation	3,707				4,023
Amortization of deferred financing costs	1,243				750
Excess tax benefit related to restricted stock vesting	(101		)		179
Change in Fair Value of Earnout liabilities	(63		)		(9,423		)
Accretion on fair value of Earnout liabilities	—				3,787
Bad debt expense	8,480				3,436
Loss on derivatives, net	1,371				34,225
Current period cash settlements on derivatives, net	6,189				(20,816		)
Accretion of discount to convertible subordinated notes to affiliate	—				1,004
Payment of the Major Energy Companies Earnout	—				(1,104		)
Payment of the Provider Companies Earnout	—				(677		)
Other	(489		)		123
Changes in assets and liabilities:
Decrease in accounts receivable	21,029				18,056
Increase in accounts receivable—affiliates	(390		)		(2,508		)
Decrease (increase) in inventory	475				(1,936		)
Increase in customer acquisition costs	(8,949		)		(18,642		)
(Increase) decrease in prepaid and other current assets	(10,999		)		1,536
Increase in intangible assets—customer acquisitions	(86		)		(32		)
Decrease (increase) in other assets	92				(664		)
Decrease in accounts payable and accrued liabilities	(11,062		)		(9,301		)
(Decrease) increase in accounts payable—affiliates	(1,786		)		1,165
(Decrease) increase in other current liabilities	(5,140		)		22
Decrease in other non-current liabilities	(459		)		(1,170		)
Net cash provided by operating activities	41,853				62,043
Cash flows from investing activities:
Purchases of property and equipment	(1,097		)		(1,438		)
Acquisitions of Perigee and other customers	—				(11,464		)
Acquisition of the Verde Companies	—				(65,785		)
Verde working capital settlement	470				—
Acquisition of HIKO	(14,290		)		—
Acquisition of Customers from Affiliate	(8,776		)		—
Net cash used in investing activities	(23,693		)		(78,687		)
Cash flows from financing activities:
Proceeds from issuance of Series A Preferred Stock, net of issuance costs paid	48,490				40,312
Borrowings on notes payable	277,800				139,400
Payments on notes payable	(281,050		)		(119,664		)
Payment of the Major Energy Companies Earnout	(1,607		)		(6,299		)
Payment of the Provider Companies Earnout and installment consideration	—				(7,061		)
Payments on the Verde promissory note	(6,573		)		(2,149		)
Proceeds from disgorgement of stockholders short-swing profits	244				872
Restricted stock vesting	(2,589		)		(2,009		)
Payment of Tax Receivable Agreement liability	(3,577		)		—
Payment of dividends to Class A common stockholders	(7,233		)		(7,137		)
Payment of distributions to non-controlling unitholders	(23,701		)		(24,270		)
Payment of Dividends to Preferred Stock	(4,987		)		(1,174		)
Purchase of Treasury Stock	—				(1,888		)
Net cash (used in) provided by financing activities	(4,783		)		8,933
Increase (decrease) in Cash and cash equivalents	13,377				(7,711		)
Cash and cash equivalents—beginning of period	29,419				18,960
Cash and cash equivalents—end of period	$	42,796			$	11,249
Supplemental Disclosure of Cash Flow Information:
Non-cash items:
Contingent consideration—earnout obligations incurred in connection with the Verde Companies acquisition	$	—			$	5,400
Net contribution by NG&E in excess of cash	$	—			$	1,019
Installment consideration incurred in connection with the Verde Companies acquisition	$	—			$	17,851
Property and equipment purchase accrual	$	(123	)		$	41
Cash paid during the period for:
Interest	$	5,955			$	4,113
Taxes	$	7,461			$	7,769

SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS
FOR THE THREE AND NINE MONTHS ENDED September 30, 2018 AND 2017
(in thousands, except volume and per unit operating data)
(unaudited)

	Three Months Ended September 30,								Nine Months Ended September 30,
	2018				2017				2018				2017
	(in thousands, except volume and per unit operating data)
Retail Electricity Segment
Total Revenues	$	246,182			$	202,259			676,528				$	467,861
Retail Cost of Revenues	186,449				153,594				587,949				364,518
Less: Net gains (losses) on non-trading derivatives, net of cash settlements	19,481				4,170				(4,034		)		(12,786		)
Retail Gross Margin (1) — Electricity	$	40,252			$	44,495			$	92,613			$	116,129
Volumes — Electricity (MWhs)	2,432,314				2,063,894				6,784,345				4,828,629
Retail Gross Margin (2) — Electricity per MWh	$	16.55			$	21.56			$	13.65			$	24.05
Retail Natural Gas Segment
Total Revenues	$	12,293			$	13,277			$	100,886			$	95,418
Retail Cost of Revenues	6,960				6,779				58,005				56,253
Less: Net Asset Optimization Revenues (Expenses)	348				(320		)		3,798				(681		)
Less: Net gains (losses) on non-trading derivatives, net of cash settlements	(558		)		743				(3,243		)		(2,344		)
Retail Gross Margin (1) — Gas	$	5,543			$	6,075			$	42,326			$	42,190
Volumes — Gas (MMBtus)	1,395,377				1,706,132				11,913,180				12,554,497
Retail Gross Margin (2) — Gas per MMBtu	$	3.97			$	3.56			$	3.55			$	3.36

(1) Reflects the Retail Gross Margin attributable to our Retail Natural Gas Segment or Retail Electricity Segment, as applicable. Retail Gross Margin is a non-GAAP financial measure. See “Other Performance Measures” in our Form 10-Q for a reconciliation of Adjusted EBITDA and Retail Gross Margin to their most directly comparable financial measures presented in accordance with GAAP.
(2) Reflects the Retail Gross Margin for the Retail Natural Gas Segment or Retail Electricity Segment, as applicable, divided by the total volumes in MMBtu or MWh, respectively.

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 and non-recurring operating items. EBITDA is defined as net income (loss) before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs (representing spending for organic customer acquisitions) in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the period in which they are incurred, even though we capitalize 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 do not deduct the cost of customer acquisitions through acquisitions of business or portfolios of customers in calculated Adjusted EBITDA. We deduct our net gains (losses) on derivative instruments, excluding current period cash settlements, from the Adjusted EBITDA calculation in order to remove the non-cash impact of net gains and losses on 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 our ability to incur and service debt, pay dividends and fund capital expenditures. Adjusted EBITDA is a supplemental financial measure that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following:

• our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure or historical cost basis;
• the ability of our assets to generate earnings sufficient to support our proposed cash dividends; 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 (loss) plus (i) depreciation and amortization expenses and (ii) general and administrative expenses, less (i) net asset optimization revenues, (ii) net gains (losses) on non-trading derivative instruments, and (iii) net current period cash settlements on non-trading derivative instruments. Retail gross margin is included as a supplemental disclosure because it is a primary performance measure used by our management to determine the performance of our retail natural gas and electricity business by removing the impacts of our asset optimization activities and net non-cash income (loss) impact of our economic hedging activities. As an indicator of our retail energy business’ operating performance, retail gross margin should not be considered an alternative to, or more meaningful than, operating income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP.

We believe retail gross margin provides information useful to investors as an indicator of our retail energy business’s operating performance.

The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by operating activities. The GAAP measure most directly comparable to Retail Gross Margin is operating income (loss). Our non-GAAP financial measures of Adjusted EBITDA and Retail Gross Margin should not be considered as alternatives to net income (loss), net cash provided by operating activities, or operating income (loss). Adjusted EBITDA and Retail Gross Margin are not presentations made in accordance with GAAP and have important limitations as analytical tools. You should not consider Adjusted EBITDA or Retail Gross Margin in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA and Retail Gross Margin exclude some, but not all, items that affect net income (loss) and net cash provided by operating activities, and are defined differently by different companies in our industry, our definition of Adjusted EBITDA and Retail Gross Margin may not be comparable to similarly titled measures of other companies.

Management compensates for the limitations of Adjusted EBITDA and Retail Gross Margin as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these data points into management’s decision-making process.

The following tables present a reconciliation of Adjusted EBITDA to net income (loss) and net cash provided by operating activities for each of the periods indicated.

APPENDIX TABLES A-1 AND A-2
ADJUSTED EBITDA RECONCILIATIONS
(in thousands)
(unaudited)

	Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands)	2018				2017				2018				2017
Reconciliation of Adjusted EBITDA to Net Income:
Net income	$	18,827			$	12,942			$	923			$	28,745
Depreciation and amortization	13,917				11,509				39,797				30,435
Interest expense	2,762				2,863				7,323				8,760
Income tax expense	3,818				2,451				602				5,265
EBITDA	39,324				29,765				48,645				73,205
Less:
Net, Gain (losses) on derivative instruments	18,117				(2,752		)		(1,371		)		(34,225		)
Net, Cash settlements on derivative instruments	922				7,457				(5,823		)		18,808
Customer acquisition costs	2,695				6,568				8,949				18,642
Plus:
Non-cash compensation expense	1,021				1,118				3,707				4,023
Adjusted EBITDA	$	18,611			$	19,610			$	50,597			$	74,003

 

	Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands)	2018				2017				2018				2017
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by operating activities	$	5,443			$	16,418			$	41,853			$	62,043
Amortization of deferred financing costs	(631		)		(219		)		(1,243		)		(750		)
Allowance for doubtful accounts and bad debt expense	(2,755		)		(2,517		)		(8,480		)		(3,436		)
Interest expense	2,762				2,863				7,323				8,760
Income tax expense	3,818				2,451				602				5,265
Changes in operating working capital
Accounts receivable, prepaids, current assets	16,248				4,457				(9,640		)		(17,084		)
Inventory	2,218				2,246				(475		)		1,936
Accounts payable and accrued liabilities	(5,946		)		(12,857		)		17,988				8,114
Other	(2,546		)		6,768				2,669				9,155
Adjusted EBITDA	$	18,611			$	19,610			$	50,597			$	74,003
Cash Flow Data:
Cash flows provided by operating activities	$	5,443			$	16,418			$	41,853			$	62,043
Cash flows provided by (used in) investing activities	$	307			$	(3,178	)		$	(23,693	)		$	(78,687	)
Cash flows provided by (used in) financing activities	$	1,344			$	(16,036	)		$	(4,783	)		$	8,933

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

APPENDIX TABLE A-3
RETAIL GROSS MARGIN RECONCILIATION
(in thousands)
(unaudited)

	Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands)	2018				2017				2018				2017
Reconciliation of Retail Gross Margin to Operating Income:
Operating income	$	25,454			$	18,088			$	8,141			$	42,668
Depreciation and amortization	13,917				11,509				39,797				30,435
General and administrative	25,695				25,566				83,522				69,405
Less:
Net asset optimization revenues (expenses)	348				(320		)		3,798				(681		)
Net, gains (losses) on non-trading derivative instruments	17,888				(2,568		)		(2,223		)		(34,146		)
Net, Cash settlements on non-trading derivative instruments	1,035				7,481				(5,054		)		19,016
Retail Gross Margin	$	45,795			$	50,570			$	134,939			$	158,319
Retail Gross Margin – Retail Electricity Segment	$	40,252			$	44,495			$	92,613			$	116,129
Retail Gross Margin – Retail Natural Gas Segment	$	5,543			$	6,075			$	42,326			$	42,190

Contact: Spark Energy, Inc.

Investors:

Christian Hettick, 832-200-3727

Media:

Kira Jordan, 832-255-7302

Source: Spark Energy, Inc.

NEW YORK, Oct. 26, 2018 (GLOBE NEWSWIRE) — In new independent research reports released early this morning, Market Source Research released its latest key findings for all current investors, traders, and shareholders of Chesapeake Utilities Corporation (NYSE:CPK), Schlumberger Limited (NYSE:SLB), American Eagle Outfitters, Inc. (NYSE:AEO), Spark Energy, Inc. (NASDAQ:SPKE), Maximus, Inc. (NYSE:MMS), and Novartis AG (NYSE:NVS), including updated fundamental summaries, consolidated fiscal reporting, and fully-qualified certified analyst research.

Complimentary Access: Research Reports

Full copies of recently published reports are available to readers at the links below.

CPK DOWNLOAD: http://MarketSourceResearch.com/register/?so=CPK
SLB DOWNLOAD: http://MarketSourceResearch.com/register/?so=SLB
AEO DOWNLOAD: http://MarketSourceResearch.com/register/?so=AEO
SPKE DOWNLOAD: http://MarketSourceResearch.com/register/?so=SPKE
MMS DOWNLOAD: http://MarketSourceResearch.com/register/?so=MMS
NVS DOWNLOAD: http://MarketSourceResearch.com/register/?so=NVS

(You may have to copy and paste the link into your browser and hit the [ENTER] key)

The new research reports from Market Source Research, available for free download at the links above, examine Chesapeake Utilities Corporation (NYSE:CPK), Schlumberger Limited (NYSE:SLB), American Eagle Outfitters, Inc. (NYSE:AEO), Spark Energy, Inc. (NASDAQ:SPKE), Maximus, Inc. (NYSE:MMS), and Novartis AG (NYSE:NVS) on a fundamental level and outlines the overall demand for their products and services in addition to an in-depth review of the business strategy, management discussion, and overall direction going forward. Several excerpts from the recently released reports are available to today’s readers below.

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Important Notice: the following excerpts are not designed to be standalone summaries and as such, important information may be missing from these samples. Please download the entire research report, free of charge, to ensure you are reading all relevant material information. All information in this release was accessed October 24th, 2018. Percentage calculations are performed after rounding. All amounts in millions (MM), except per share amounts.

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CHESAPEAKE UTILITIES CORPORATION (CPK) REPORT OVERVIEW

Chesapeake Utilities’ Recent Financial Performance

For the three months ended June 30th, 2018 vs June 30th, 2017, Chesapeake Utilities reported revenue of $136.66MM vs $125.08MM (up 9.26%) and analysts estimated basic earnings per share $0.39 vs $0.37 (up 5.41%). For the twelve months ended December 31st, 2017 vs December 31st, 2016, Chesapeake Utilities reported revenue of $617.58MM vs $498.86MM (up 23.80%) and analysts estimated basic earnings per share $3.56 vs $2.87 (up 24.04%). Analysts expect earnings to be released on November 8th, 2018. The report will be for the fiscal period ending September 30th, 2018. The reported EPS for the same quarter last year was $0.42. The estimated EPS forecast for the next fiscal year is $3.67 and is expected to report on February 27th, 2019.

To read the full Chesapeake Utilities Corporation (CPK) report, download it here: http://MarketSourceResearch.com/register/?so=CPK

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SCHLUMBERGER LIMITED (SLB) REPORT OVERVIEW

Schlumberger’s Recent Financial Performance

For the three months ended June 30th, 2018 vs June 30th, 2017, Schlumberger reported revenue of $8,303.00MM vs $7,462.00MM (up 11.27%) and analysts estimated basic earnings per share $0.31 vs -$0.05. For the twelve months ended December 31st, 2017 vs December 31st, 2016, Schlumberger reported revenue of $30,440.00MM vs $27,810.00MM (up 9.46%) and analysts estimated basic earnings per share -$1.08 vs -$1.24. Analysts expect earnings to be released on January 18th, 2019. The report will be for the fiscal period ending December 31st, 2018. Reported EPS for the same quarter last year was $0.48. The estimated EPS forecast for the next fiscal year is $2.25 and is expected to report on January 18th, 2019.

To read the full Schlumberger Limited (SLB) report, download it here: http://MarketSourceResearch.com/register/?so=SLB

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AMERICAN EAGLE OUTFITTERS, INC. (AEO) REPORT OVERVIEW

American Eagle Outfitters’ Recent Financial Performance

For the three months ended July 31st, 2018 vs July 31st, 2017, American Eagle Outfitters reported revenue of $964.85MM vs $844.56MM (up 14.24%) and analysts estimated basic earnings per share $0.34 vs $0.12 (up 183.33%). For the twelve months ended January 31st, 2018 vs January 31st, 2017, American Eagle Outfitters reported revenue of $3,795.55MM vs $3,609.87MM (up 5.14%) and analysts estimated basic earnings per share $1.15 vs $1.17 (down 1.71%). Analysts expect earnings to be released on December 5th, 2018. The report will be for the fiscal period ending October 31st, 2018. Reported EPS for the same quarter last year was $0.37. The estimated EPS forecast for the next fiscal year is $1.65 and is expected to report on March 14th, 2019.

To read the full American Eagle Outfitters, Inc. (AEO) report, download it here: http://MarketSourceResearch.com/register/?so=AEO

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SPARK ENERGY, INC. (SPKE) REPORT OVERVIEW

Spark Energy’s Recent Financial Performance

For the three months ended June 30th, 2018 vs June 30th, 2017, Spark Energy reported revenue of $232.25MM vs $151.44MM (up 53.37%) and basic earnings per share $0.41 vs $0.01 (up 4,000.00%). For the twelve months ended December 31st, 2017 vs December 31st, 2016, Spark Energy reported revenue of $798.06MM vs $546.70MM (up 45.98%) and analysts estimated basic earnings per share $1.20 vs $1.27 (down 5.51%). Analysts expect earnings to be released on November 2nd, 2018. The report will be for the fiscal period ending September 30th, 2018. The reported EPS for the same quarter last year was $0.11. The estimated EPS forecast for the next fiscal year is $0.29 and is expected to report on March 8th, 2019.

To read the full Spark Energy, Inc. (SPKE) report, download it here: http://MarketSourceResearch.com/register/?so=SPKE

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MAXIMUS, INC. (MMS) REPORT OVERVIEW

Maximus’ Recent Financial Performance

For the three months ended June 30th, 2018 vs June 30th, 2017, Maximus reported revenue of $597.86MM vs $600.45MM (down 0.43%) and analysts estimated basic earnings per share $0.91 vs $0.87 (up 4.60%). For the twelve months ended September 30th, 2017 vs September 30th, 2016, Maximus reported revenue of $2,450.96MM vs $2,403.36MM (up 1.98%) and analysts estimated basic earnings per share $3.19 vs $2.71 (up 17.71%). Analysts expect earnings to be released on November 8th, 2018. The report will be for the fiscal period ending September 30th, 2018. The reported EPS for the same quarter last year was $0.81. The estimated EPS forecast for the next fiscal year is $3.41 and is expected to report on November 8th, 2018.

To read the full Maximus, Inc. (MMS) report, download it here: http://MarketSourceResearch.com/register/?so=MMS

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NOVARTIS AG (NVS) REPORT OVERVIEW

Novartis AG’s Recent Financial Performance

For the three months ended September 30th, 2018 vs September 30th, 2017, Novartis AG reported revenue of $13,121.00MM vs $12,692.00MM (up 3.38%) and analysts estimated basic earnings per share $0.70 vs $0.89 (down 21.35%). For the twelve months ended December 31st, 2017 vs December 31st, 2016, Novartis AG reported revenue of $50,135.00MM vs $49,436.00MM (up 1.41%) and analysts estimated basic earnings per share $3.28 vs $2.82 (up 16.31%). Analysts expect earnings to be released on January 23rd, 2019. The report will be for the fiscal period ending December 31st, 2018. The reported EPS for the same quarter last year was $1.20. The estimated EPS forecast for the next fiscal year is $5.50 and is expected to report on January 23rd, 2019.

To read the full Novartis AG (NVS) report, download it here: http://MarketSourceResearch.com/register/?so=NVS

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ABOUT MARKET SOURCE RESEARCH

Market Source Research delivers the key research reports that helps serious investors, registered brokers, professional traders, and personal investment advisers find reliable information in today’s markets. Market Source Research’s team is comprised of financial professionals, many of which hold Chartered Financial Analyst® (CFA®) designations and FINRA® BrokerCheck® certifications. Whether identifying emerging trends, or discovering new opportunity, the team at Market Source Research is dedicated to providing accurate, informative, and objective content that’s ahead of the curve. With insights on individual companies as well as sectors, readers get the industry’s best available combination of big-picture perspective as well as granular detail.

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Source: Market Source Research

HOUSTON, Oct. 22, 2018 (GLOBE NEWSWIRE) — Spark Energy, Inc. (“Spark” or the “Company”) (NASDAQ: SPKE), an independent retail energy services company, today announced that the Company has signed a definitive agreement to acquire approximately 60,000 residential RCEs from a retail energy provider in the Mid-Atlantic and Midwest regions.

“This tuck-in acquisition is a perfect example of the types of transactions we continue to pursue,” said Nathan Kroeker, Spark’s President and Chief Executive Officer. “The transaction represents excellent value and we expect it to be accretive to Adjusted EBITDA in the fourth quarter of this fiscal year.  We believe this acquisition, along with our recent organic sales activity and the consolidation of our brands onto more efficient, cost-effective platforms will drive long-term, sustainable growth and value for shareholders.”

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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

Cautionary Note Regarding Forward Looking Statements

This press release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. All statements, other than statements of historical fact included in this press 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 press 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 press release are subject to risks and uncertainties. Important factors that could cause actual results to materially differ from those projected in the forward-looking statements include, but are not limited to:

• changes in commodity prices and the sufficiency of risk management and hedging policies;
• extreme and unpredictable weather conditions, and the impact of hurricanes and other natural disasters;
• federal, state and local regulation, including the industry’s ability to address or adapt to potentially restrictive new regulations that may be enacted by the New York Public Service Commission;
• our ability to borrow funds and access credit markets and restrictions in our debt agreements and collateral requirements;
• credit risk with respect to suppliers and customers;
• changes in costs to acquire customers and actual customer attrition rates;
• accuracy of billing systems;
• whether our majority stockholder or its affiliates offer us acquisition opportunities on terms that are commercially acceptable to us;
• ability to successfully identify and complete, and efficiently integrate acquisitions into our operations;
• competition; and
• the “Risk Factors” in our latest Annual Report on Form 10-K, and in our quarterly reports, other public filings and press releases.

You should review the risk factors and other factors noted throughout or incorporated by reference in this press release that 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 press 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.

Contact: Spark Energy, Inc.

Investors:

Christian Hettick, 832-200-3727

Media:

Kira Jordan, 832-255-7302

Source: Spark Energy, Inc.

Third Quarter 2018 Financial Results to be presented on Friday, November 2, 2018

HOUSTON, Oct. 18, 2018 (GLOBE NEWSWIRE) — Spark Energy, Inc. (“Spark” or the “Company”) (NASDAQ: SPKE), an independent retail energy services company (“Spark” or the “Company”), announced today that its Board of Directors has declared a quarterly cash dividend for the third quarter of 2018 in the amount of $0.18125 per share of Class A Common Stock. This amount represents an annualized dividend of $0.725 per share. The third quarter dividend will be paid on December 14, 2018 to holders of record of Spark’s Class A Common Stock on November 30, 2018.

Additionally, in accordance with the terms of the 8.75% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Stock”) of the Company, the Board of Directors has declared a quarterly cash dividend in the amount of $0.546875 per share of the Series A Preferred Stock. This amount represents an annualized dividend of $2.1875 per share. The dividend will be paid on January 15, 2019 to holders of record of Spark’s Series A Preferred Stock on January 1, 2019.

Conference Call and Webcast

The company has also announced today that it plans to present its third quarter 2018 financial results in a conference call and webcast on Friday, November 2, 2018 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 ir.sparkenergy.com/events-and-presentations. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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

Contact: Spark Energy, Inc.

Investors:

Christian Hettick, 832-200-3727

Media:

Kira Jordan, 832-255-7302

Source: Spark Energy, Inc.

HOUSTON, Aug. 02, 2018 (GLOBE NEWSWIRE) — Spark Energy, Inc. (“Spark” or the “Company”) (NASDAQ: SPKE), an independent retail energy services company, today reported financial results for the quarter ended June 30, 2018.

Key Highlights

• Achieved $16.1 million in Adjusted EBITDA, $43.4 million in Retail Gross Margin, and a $23.9 million in Net Income for the second quarter
• Total RCE count increased 26.9% year-over-year to 1,049,000 as of June 30, 2018
• Overall monthly attrition of 3.7% for the second quarter
• Continuing to simplify, streamline, and optimize the organization to improve long-term margin profile

“We made considerable progress in our synergy and brand consolidation efforts during the second quarter, achieving our target of annualized general and administrative cost savings of $15 million through facility and headcount reductions,” said Nathan Kroeker, Spark Energy’s President and Chief Executive Officer. “We successfully migrated a total of 110,000 customers to more cost-effective billing platforms and notified another 62,000 customers of planned platform switches that should be complete by end of the third quarter.

“Despite strong operating cost controls, our second-quarter results were negatively impacted by lower electricity unit margins. This was a result of the hedges we had to purchase during the first few weeks of the year, additional hedges we used to insure against adverse weather in ERCOT this summer, and increases in capacity costs in New England. While we are disappointed with our first half performance, we are implementing the appropriate strategies that we expect will improve profitability and Adjusted EBITDA performance.

“As we enter the second half of the year, we expect to drive an additional $5 million in annualized cost savings through a series of targeted projects. We’re also focusing on organic growth through recently integrated Verde sales channels, as well as new retail sales channels that we believe will help us increase our mass-market concentration and improve margins as we pivot away from larger, lower-margin C&I customers.”

Summary Second Quarter 2018 Financial Results

For the quarter ended June 30, 2018, Spark reported Adjusted EBITDA of $16.1 million compared to Adjusted EBITDA of $20.0 million for the quarter ended June 30, 2017. This decrease of $3.9 million is primarily attributable to lower electricity unit margins as well as higher G&A due to a larger customer portfolio.

For the quarter ended June 30, 2018, Spark reported Retail Gross Margin of $43.4 million compared to Retail Gross Margin of $43.1 million for the quarter ended June 30, 2017. Spark attributes this increase of $0.3 million primarily to higher electricity volumes, primarily as a result of acquisitions completed over the prior twelve months, largely offset by lower electricity margins.

Net income for the quarter ended June 30, 2018, was $23.9 million compared to net income of $4.7 million for the quarter ended June 30, 2017. The increase in performance compared to the prior year was primarily the result of unrealized mark to market hedge gain in the second quarter.

Liquidity and Capital Resources

($ in thousands)		June 30, 2018
Cash and cash equivalents	$	35,702
Senior Credit Facility Availability (1)		36,281
Subordinated Debt Availability (2)		15,000
Total Liquidity	$	86,983

 

(1)	Subject to Senior Credit Facility borrowing base and covenant restrictions.
(2)	The availability of the Subordinated Facility is dependent on our Founder’s financial position and liquidity.

Dividend

Spark’s Board of Directors declared quarterly dividends of $0.18125 per share of Class A common stock payable on September 13th, 2018, and $0.546875 per share of Series A Preferred Stock payable on October 15, 2018.

Conference Call and Webcast

Spark will host a conference call to discuss second quarter 2018 results on Friday, August 3, 2018, 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-and-presentations. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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

Cautionary Note Regarding Forward Looking Statements

This earnings release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. All statements, other than statements of historical fact included in this earnings release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this earnings release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

The forward-looking statements in this earnings release are subject to risks and uncertainties. Important factors that could cause actual results to materially differ from those projected in the forward-looking statements include, but are not limited to:

• changes in commodity prices and the sufficiency of risk management and hedging policies;
• extreme and unpredictable weather conditions, and the impact of hurricanes and other natural disasters;
• federal, state and local regulation, including the industry’s ability to address or adapt to potentially restrictive new regulations that may be enacted by the New York Public Service Commission;
• our ability to borrow funds and access credit markets and restrictions in our debt agreements and collateral requirements;
• credit risk with respect to suppliers and customers;
• changes in costs to acquire customers and actual customer attrition rates;
• accuracy of billing systems;
• whether our majority stockholder or its affiliates offer us acquisition opportunities on terms that are commercially acceptable to us;
• ability to successfully identify and complete, and efficiently integrate acquisitions into our operations;
• significant changes in, or new charges by, the ISOs in the regions in which we operate;
• competition; and
• the “Risk Factors” in our latest Annual Report on Form 10-K, and in our quarterly reports, other public filings and press releases.

You should review the risk factors and other factors noted throughout or incorporated by reference in this earnings release that 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 earnings release. Unless required by law, we disclaim any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise. It is not possible for us to predict all risks, nor can we assess the impact of all factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 AS OF JUNE 30, 2018 AND DECEMBER 31, 2017
(in thousands)
(unaudited)

	June 30, 2018				December 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	35,702			$	29,419
Accounts receivable, net of allowance for doubtful accounts of $3.6 million and $4.0 million as of June 30, 2018 and December 31, 2017, respectively	132,011				158,814
Accounts receivable—affiliates	3,427				3,661
Inventory	1,860				4,470
Fair value of derivative assets	11,526				31,191
Customer acquisition costs, net	17,123				22,123
Customer relationships, net	20,669				18,653
Prepaid assets	3,575				1,028
Deposits	12,109				7,701
Other current assets	18,863				19,678
Total current assets	256,865				296,738
Property and equipment, net	7,190				8,275
Fair value of derivative assets	595				3,309
Customer acquisition costs, net	5,315				6,949
Customer relationships, net	31,600				34,839
Deferred tax assets	27,581				24,185
Goodwill	120,343				120,154
Other assets	11,360				11,500
Total assets	$	460,849			$	505,949
Liabilities, Series A Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable	$	59,393			$	77,510
Accounts payable—affiliates	2,373				4,622
Accrued liabilities	32,330				33,679
Fair value of derivative liabilities	2,079				1,637
Current portion of Senior Credit Facility	—				7,500
Current payable pursuant to tax receivable agreement—affiliates	2,508				5,937
Current contingent consideration for acquisitions	2,980				4,024
Other current liabilities	1,282				2,675
Current portion of note payable	13,921				13,443
Total current liabilities	116,866				151,027
Long-term liabilities:
Fair value of derivative liabilities	4,380				492
Payable pursuant to tax receivable agreement—affiliates	26,067				26,355
Long-term portion of Senior Credit Facility	102,000				117,750
Subordinated debt—affiliate	10,000				—
Contingent consideration for acquisitions	—				626
Other long-term liabilities	1				172
Long-term portion of note payable	—				7,051
Total liabilities	259,314				303,473
Commitments and contingencies (Note 13)
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,707,256 shares issued and outstanding at June 30, 2018 and 1,704,339 shares issued and outstanding at December 31, 2017	90,758				41,173
Stockholders’ equity:
Common Stock (1) :
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 13,493,158 issued, and 13,393,712 outstanding at June 30, 2018 and 13,235,082 issued and 13,135,636 outstanding at December 31, 2017	135				132
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 21,485,126 issued and outstanding at June 30, 2018 and December 31, 2017	216				216
Additional paid-in capital	28,846				26,914
Accumulated other comprehensive loss	(33		)		(11		)
Retained earnings	(2,678		)		11,008
Treasury stock, at cost, 99,446 shares at June 30, 2018 and December 31, 2017	(2,011		)		(2,011		)
Total stockholders’ equity	24,475				36,248
Non-controlling interest in Spark HoldCo, LLC	86,302				125,055
Total equity	110,777				161,303
Total liabilities, Series A Preferred Stock and stockholders’ equity	$	460,849			$	505,949

 

(1)	Outstanding shares of common stock reflect the two-for-one stock split, which took effect on June 16, 2017. See 5 “Equity” in our 10-Q for further discussion.
(2)	See Note 5 “Equity” in our 10-Q for disclosure of our variable interest entity in Spark HoldCo, LLC.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(in thousands)
(unaudited)

	Three Months Ended June 30,								Six Months Ended June 30,
	2018				2017				2018				2017
Revenues:
Retail revenues	$	231,488			$	151,604			$	515,489			$	348,104
Net asset optimization revenues/(expense) (1)	763				(168		)		3,450				(361		)
Total Revenues	232,251				151,436				518,939				347,743
Operating Expenses:
Retail cost of revenues	162,669				114,637				452,545				260,398
General and administrative (2)	27,780				19,346				57,827				43,839
Depreciation and amortization	12,861				9,656				25,880				18,926
Total Operating Expenses	203,310				143,639				536,252				323,163
Operating income (loss)	28,941				7,797				(17,313		)		24,580
Other (expense)/income:
Interest expense	(2,316		)		(2,452		)		(4,561		)		(5,897		)
Interest and other income	553				(265		)		755				(66		)
Total other expenses	(1,763		)		(2,717		)		(3,807		)		(5,963		)
Income (loss) before income tax expense (benefit)	27,178				5,080				(21,120		)		18,617
Income tax expense (benefit)	3,251				409				(3,216		)		2,814
Net income (loss)	$	23,927			$	4,671			$	(17,904	)		$	15,803
Less: Net income (loss) attributable to non-controlling interests	16,427				3,592				(13,078		)		12,454
Net income (loss) attributable to Spark Energy, Inc. stockholders	$	7,500			$	1,079			$	(4,826	)		$	3,349
Less: Dividend on Series A preferred stock	2,027				991				4,054				1,174
Net income (loss) attributable to stockholders of Class A common stock	$	5,473			$	88			$	(8,880	)		$	2,175
Other comprehensive income (loss), net of tax:
Currency translation gain (loss)	$	25			$	(26	)		$	(58	)		$	(75	)
Other comprehensive income (loss)	25				(26		)		(58		)		(75		)
Comprehensive income (loss)	$	23,952			$	4,645			$	(17,962	)		$	15,728
Less: Comprehensive income (loss) attributable to non-controlling interests	16,442				3,576				(13,114		)		12,407
Comprehensive income (loss) attributable to Spark Energy, Inc. stockholders	$	7,510			$	1,069			$	(4,848	)		$	3,321

(1)

Net asset optimization revenues (expenses) includes asset optimization revenues—affiliates of $340 and $0 for the three months ended June 30, 2018 and 2017, respectively, and asset optimization revenues—affiliates cost of revenues of $24 and $0 for the three months ended June 30, 2018 and 2017, respectively, and asset optimization revenues—affiliates of $988 and $0 for the six months ended June 30, 2018 and 2017, respectively, and asset optimization revenue—affiliates cost of revenues of $36 and $0 for the six months ended June 30, 2018 and 2017, respectively.

(2)

General and administrative expense includes general and administrative expense—affiliates of $1,600 and $6,100 for the three months ended June 30, 2018 and 2017, respectively, and $8,000 and $13,400 for the six months ended June 30, 2018 and 2017, respectively.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 FOR THE SIX MONTHS ENDED JUNE 30, 2018
(in thousands)
(unaudited)

	Issued Shares of Class A Common Stock		Issued Shares of Class B Common Stock		Treasury Stock		Class A Common Stock			Class B Common Stock			Treasury Stock			Accumulated Other Comprehensive Loss			Additional Paid-in Capital			Retained Earnings (Deficit)			Total Stockholders’ Equity			Non- controlling Interest			Total Equity
Balance at December 31, 2017	13,235		21,485		(99	)	$	132		$	216		$	(2,011	)	$	(11	)	$	26,914		$	11,008		$	36,248		$	125,055		$	161,303
Stock based compensation	—		—		—		—			—			—			—			2,647			—			2,647			—			2,647
Restricted stock unit vesting	258		—		—		3			—			—			—			(715		)	—			(712		)	—			(712		)
Consolidated net loss	—		—		—		—			—			—			—			—			(4,826		)	(4,826		)	(13,078		)	(17,904		)
Foreign currency translation adjustment for equity method investee	—		—		—		—			—			—			(22		)	—			—			(22		)	(36		)	(58		)
Distributions paid to non-controlling unit holders	—		—		—		—			—			—			—			—			—			—			(19,501		)	(19,501		)
Dividends paid to Class A common stockholders	—		—		—		—			—			—			—			—			(4,805		)	(4,805		)	—			(4,805		)
Dividends to Preferred Stock	—		—		—		—			—			—			—			—			(4,055		)	(4,055		)	—			(4,055		)
Acquisition of NG&E Customers	—		—		—		—			—			—			—			—						—			(6,138		)	(6,138		)
Balance at June 30, 2018	13,493		21,485		(99	)	$	135		$	216		$	(2,011	)	$	(33	)	$	28,846		$	(2,678	)	$	24,475		$	86,302		$	110,777

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(in thousands)
(unaudited)

	Six Months Ended June 30,
	2018				2017
Cash flows from operating activities:
Net (loss) income	$	(17,904	)		$	15,803
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense	24,639				18,411
Deferred income taxes	(3,396		)		3
Change in TRA liability	79				—
Stock based compensation	2,686				2,905
Amortization of deferred financing costs	614				531
Excess tax benefit related to restricted stock vesting	(101		)		179
Change in Fair Value of Earnout liabilities	(63		)		(2,568		)
Accretion on fair value of Earnout liabilities	—				2,660
Bad debt expense	5,725				919
Loss on derivatives, net	19,487				31,473
Current period cash settlements on derivatives, net	7,170				(11,828		)
Accretion of discount to convertible subordinated notes to affiliate	—				1,004
Payment of the Major Energy Companies Earnout	—				(1,104		)
Payment of the Provider Companies Earnout	—				(677		)
Other	(555		)		224
Changes in assets and liabilities:
Decrease in accounts receivable	25,957				18,072
Increase in accounts receivable—affiliates	(10		)		(1,925		)
Decrease in inventory	2,693				310
Increase in customer acquisition costs	(6,254		)		(12,074		)
(Increase) decrease in prepaid and other current assets	(59		)		5,394
Decrease (increase) in other assets	97				(788		)
Decrease in accounts payable and accrued liabilities	(20,140		)		(18,422		)
(Decrease) increase in accounts payable—affiliates	(2,249		)		313
Decrease in other current liabilities	(1,545		)		(2,862		)
Decrease in other non-current liabilities	(461		)		(328		)
Net cash provided by operating activities	36,410				45,625
Cash flows from investing activities:
Purchases of property and equipment	(1,163		)		(371		)
Acquisitions of Perigee and other customers	—				(9,353		)
Deposit for Verde Acquisition	—				(65,785		)
Acquisition of HIKO	(15,041		)		—
Acquisition of NG&E customers	(7,796		)		—
Net cash used in investing activities	(24,000		)		(75,509		)
Cash flows from financing activities:
Proceeds from issuance of Series A Preferred Stock, net of issuance costs paid	48,490				37,937
Borrowings on notes payable	146,800				121,000
Payments on notes payable	(160,050		)		(93,789		)
Payment of the Major Energy Companies Earnout	(1,607		)		(6,299		)
Payment of the Provider Companies Earnout and installment consideration	—				(6,676		)
Payments on the Verde promissory note	(6,573		)		—
Proceeds from disgorgement of stockholders short-swing profits	244				666
Restricted stock vesting	(2,589		)		(2,009		)
Payment of Tax Receivable Agreement liability	(3,577		)		—
Payment of dividends to Class A common stockholders	(4,805		)		(4,754		)
Payment of distributions to non-controlling unitholders	(19,501		)		(19,822		)
Payment of Dividends to Preferred Stock	(2,959		)		—
Purchase of Treasury Stock	—				(1,285		)
Net cash (used in) provided by financing activities	(6,127		)		24,969
Increase (decrease) in Cash and cash equivalents	6,283				(4,915		)
Cash and cash equivalents—beginning of period	29,419				18,960
Cash and cash equivalents—end of period	$	35,702			$	14,045
Supplemental Disclosure of Cash Flow Information:
Non-cash items:
Property and equipment purchase accrual	$	(123	)		$	50
Cash paid during the period for:
Interest	$	3,884			$	1,395
Taxes	$	5,399			$	7,232

SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 AND 2017
(in thousands, except per unit operating data)
(unaudited)

	Three Months Ended June 30,								Six Months Ended June 30,
	2018				2017				2018				2017
	(in thousands, except volume and per unit operating data)
Retail Electricity Segment
Total Revenues	$	209,446			$	131,908			430,346				$	265,602
Retail Cost of Revenues	151,953				102,079				401,500				210,923
Less: Net gains (losses) on non-trading derivatives, net of cash settlements	24,852				(5,034		)		(23,515		)		(16,955		)
Retail Gross Margin (1) — Electricity	$	32,642			$	34,863			$	52,361			$	71,634
Volumes — Electricity (MWhs)	2,100,007				1,379,051				4,352,031				2,764,165
Retail Gross Margin (2) — Electricity per MWh	$	15.54			$	25.28			$	12.03			$	25.92
Retail Natural Gas Segment
Total Revenues	$	22,804			$	19,528			$	88,593			$	82,141
Retail Cost of Revenues	10,716				12,558				51,045				49,475
Less: Net Asset Optimization Revenues (Expenses)	763				(168		)		3,450				(361		)
Less: Net gains (losses) on non-trading derivatives, net of cash settlements	542				(1,148		)		(2,685		)		(3,088		)
Retail Gross Margin (1) — Gas	$	10,783			$	8,286			$	36,783			$	36,115
Volumes — Gas (MMBtus)	2,840,721				2,629,087				10,517,802				10,848,366
Retail Gross Margin (2) — Gas per MMBtu	$	3.80			$	3.15			$	3.50			$	3.33

 

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

 

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 and non-recurring operating items. EBITDA is defined as net income (loss) before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs (representing spending for organic customer acquisitions) in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the period in which they are incurred, even though we capitalize 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 do not deduct the cost of customer acquisitions through acquisitions of business or portfolios of customers in calculated Adjusted EBITDA. We deduct our net gains (losses) on derivative instruments, excluding current period cash settlements, from the Adjusted EBITDA calculation in order to remove the non-cash impact of net gains and losses on 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 our ability to incur and service debt, pay dividends and fund capital expenditures. Adjusted EBITDA is a supplemental financial measure that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following:

• our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure or historical cost basis;
• the ability of our assets to generate earnings sufficient to support our proposed cash dividends; 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 (loss) plus (i) depreciation and amortization expenses and (ii) general and administrative expenses, less (i) net asset optimization revenues, (ii) net gains (losses) on non-trading derivative instruments, and (iii) net current period cash settlements on non-trading derivative instruments. Retail gross margin is included as a supplemental disclosure because it is a primary performance measure used by our management to determine the performance of our retail natural gas and electricity business by removing the impacts of our asset optimization activities and net non-cash income (loss) impact of our economic hedging activities. As an indicator of our retail energy business’ operating performance, retail gross margin should not be considered an alternative to, or more meaningful than, operating income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP.

We believe retail gross margin provides information useful to investors as an indicator of our retail energy business’s operating performance.

The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by operating activities. The GAAP measure most directly comparable to Retail Gross Margin is operating income (loss). Our non-GAAP financial measures of Adjusted EBITDA and Retail Gross Margin should not be considered as alternatives to net income (loss), net cash provided by operating activities, or operating income (loss). Adjusted EBITDA and Retail Gross Margin are not presentations made in accordance with GAAP and have important limitations as analytical tools. You should not consider Adjusted EBITDA or Retail Gross Margin in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA and Retail Gross Margin exclude some, but not all, items that affect net income (loss) and net cash provided by operating activities, and are defined differently by different companies in our industry, our definition of Adjusted EBITDA and Retail Gross Margin may not be comparable to similarly titled measures of other companies.

Management compensates for the limitations of Adjusted EBITDA and Retail Gross Margin as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these data points into management’s decision-making process.

The following tables present a reconciliation of Adjusted EBITDA to net income (loss) and net cash provided by operating activities for each of the periods indicated.

APPENDIX TABLES A-1 AND A-2
ADJUSTED EBITDA RECONCILIATIONS
(in thousands)
(unaudited)

	Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	2018				2017				2018				2017
Reconciliation of Adjusted EBITDA to Net Income:
Net income (loss)	$	23,927			$	4,671			$	(17,904	)		$	15,803
Depreciation and amortization	12,861				9,656				25,880				18,926
Interest expense	2,316				2,452				4,561				5,897
Income tax expense (benefit)	3,251				409				(3,216		)		2,814
EBITDA	42,355				17,188				9,321				43,440
Less:
Net, Gain (losses) on derivative instruments	17,054				(9,677		)		(19,488		)		(31,473		)
Net, Cash settlements on derivative instruments	8,792				3,996				(6,745		)		11,351
Customer acquisition costs	1,980				4,384				6,254				12,074
Plus:
Non-cash compensation expense	1,555				1,538				2,686				2,905
Adjusted EBITDA	$	16,084			$	20,023			$	31,986			$	54,393

 

	Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	2018				2017				2018				2017
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash provided by operating activities	$	45,950			$	22,331			$	36,410			$	45,625
Amortization of deferred financing costs	(319		)		(283		)		(614		)		(531		)
Allowance for doubtful accounts and bad debt expense	(3,302		)		(563		)		(5,725		)		(919		)
Interest expense	2,316				2,452				4,561				5,897
Income tax expense (benefit)	3,251				409				(3,216		)		2,814
Changes in operating working capital
Accounts receivable, prepaids, current assets	(38,516		)		(19,159		)		(25,888		)		(21,541		)
Inventory	1,377				3,012				(2,693		)		(310		)
Accounts payable and accrued liabilities	7,618				7,895				23,934				20,971
Other	(2,291		)		3,929				5,217				2,387
Adjusted EBITDA	$	16,084			$	20,023			$	31,986			$	54,393
Cash Flow Data:
Cash flows provided by operating activities	$	45,950			$	22,331			$	36,410			$	45,625
Cash flows used in investing activities	$	(8,205	)		$	(75,397	)		$	(24,000	)		$	(75,509	)
Cash flows (used in) provided by financing activities	$	(23,108	)		$	42,162			$	(6,127	)		$	24,969

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

APPENDIX TABLE A-3
RETAIL GROSS MARGIN RECONCILIATION
(in thousands)
(unaudited)

	Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)	2018				2017				2018				2017
Reconciliation of Retail Gross Margin to Operating Income (loss):
Operating income (loss)	$	28,941			$	7,797			$	(17,313	)		$	24,580
Depreciation and amortization	12,861				9,656				25,880				18,926
General and administrative	27,780				19,346				57,827				43,839
Less:
Net asset optimization revenues (expenses)	763				(168		)		3,450				(361		)
Net, gains (losses) on non-trading derivative instruments	16,601				(10,202		)		(20,111		)		(31,578		)
Net, Cash settlements on non-trading derivative instruments	8,793				4,020				(6,089		)		11,535
Retail Gross Margin	$	43,425			$	43,149			$	89,144			$	107,749
Retail Gross Margin – Retail Electricity Segment	$	32,642			$	34,863			$	52,361			$	71,634
Retail Gross Margin – Retail Natural Gas Segment	$	10,783			$	8,286			$	36,783			$	36,115

Contact: Spark Energy, Inc.

Investors:

Christian Hettick, 832-200-3727

Media:

Kira Jordan, 832-255-7302

Source: Spark Energy, Inc.

HOUSTON, July 19, 2018 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), an independent retail energy services company (“Spark” or the “Company”), announced today that its Board of Directors has declared a quarterly cash dividend for the second quarter of 2018 in the amount of $0.18125 per share of Class A Common Stock. This amount represents an annualized dividend of $0.725 per share. The second quarter dividend will be paid on September 13, 2018 to holders of record of Spark’s Class A Common Stock on August 30, 2018.

Additionally, in accordance with the terms of the 8.75% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock (“Series A Preferred Stock”) of the Company, the Board of Directors has declared a quarterly cash dividend in the amount of $0.546875 per share of the Series A Preferred Stock. This amount represents an annualized dividend of $2.1875 per share. The dividend will be paid on October 15, 2018 to holders of record of Spark’s Series A Preferred Stock on October 1, 2018.

Conference Call and Webcast

The company has also announced today that it plans to present its second quarter 2018 financial results in a conference call and webcast on Friday, August 3, 2018 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 ir.sparkenergy.com/events-and-presentations. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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

Contact:  Spark Energy, Inc.

Investors:
Christian Hettick, 832-200-3727

Media:
Kira Jordan, 832-255-7302

 

Source: Spark Energy, Inc.

HOUSTON, May 09, 2018 (GLOBE NEWSWIRE) — Spark Energy, Inc. (“Spark” or the “Company”) (NASDAQ:SPKE), an independent retail energy services company, today reported financial results for the quarter ended March 31, 2018.

Key Highlights

• Achieved $15.9 million in Adjusted EBITDA, $45.7 million in Retail Gross Margin, and a $(41.8) million Net Loss for the first quarter
• Total RCE count increased 1% to a record 1,055,000 as of March 31, 2018
• Average monthly attrition of 4.2% for the first quarter
• Closed on two acquisitions, adding approximately 80,000 RCEs
• Continue to simplify, streamline, and optimize the organization
• Expanded the senior credit facility to $200.0 million in commitments
• Issued two million shares of Series A Preferred Stock for net proceeds of approximately $48.9 million

“Since the start of the year, we closed on two acquisitions, completed the integration of Verde Energy, implemented additional integration and cost-reduction initiatives, and further increased our liquidity,” said Nathan Kroeker, Spark Energy’s President and Chief Executive Officer. “That said, first quarter results were tempered by an unexpected burst of cold weather in early January that adversely affected Spark and our entire industry. This prolonged cold weather negatively impacted our financial results, especially compared to last year, when warmer-than-normal weather resulted in very strong unit margins for the winter months.

“Looking forward to the remainder of the year, we will continue to execute on our synergy projects to achieve further economies of scale. We intend to remain cost-effective with our organic acquisitions, and we will continue to evaluate additional acquisition opportunities while maintaining discipline with respect to purchase prices and valuation. On balance, we still anticipate that full-year Adjusted EBITDA for 2018 should be similar to that of 2017.”

Summary First Quarter 2018 Financial Results

For the quarter ended March 31, 2018, Spark reported Adjusted EBITDA of $15.9 million compared to Adjusted EBITDA of $34.4 million for the quarter ended March 31, 2017. The Company attributes this decrease of $18.5 million primarily to unexpected extreme cold weather patterns that raised short-term commodity prices in January.

For the quarter ended March 31, 2018, Spark reported Retail Gross Margin of $45.7 million compared to Retail Gross Margin of $64.6 million for the quarter ended March 31, 2017. Spark attributes this decrease of $18.9 million primarily to unexpected extreme cold weather patterns that raised short-term commodity prices in January.

Net loss for the quarter ended March 31, 2018, was $(41.8) million compared to net income of $11.1 million for the quarter ended March 31, 2017, driven by higher non-cash mark-to-market losses.

Strategic Update

As previously announced, the termination of the Verde earnout agreement on January 15, 2018 has allowed Spark to integrate Verde’s operations on an accelerated basis. In addition, the Company expects the reintegration of Retailco Services into its operations, effective April 1, 2018, will allow it to realize synergies and cost reductions as early as the second quarter.  Finally, Spark’s internal brand consolidation and cost-cutting measures should also begin impacting 2018 results in the second quarter.

During the quarter, Spark increased the commitments on its credit facility to $200.0 million and issued an additional $48.9 million of its Series A Preferred Stock.

Liquidity and Capital Resources

($ in thousands)	March 31, 2018
Cash and cash equivalents	$	21,065
Senior Credit Facility Availability (1)	43,811
Subordinated Debt Availability (2)	25,000
Total Liquidity	$	89,876

(1) Subject to Senior Credit Facility borrowing base and covenant restrictions.
(2) The availability of the Subordinated Facility is dependent on our Founder’s financial position and liquidity.

Dividend

Spark’s Board of Directors declared quarterly dividends of $0.18125 per share of Class A common stock payable on June 14, 2018, and $0.546875 per share of Series A Preferred Stock payable on July 16, 2018.

Conference Call and Webcast

Spark will host a conference call to discuss first quarter 2018 results on Thursday, May 10, 2018, 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-and-presentations. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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

Cautionary Note Regarding Forward Looking Statements

This earnings release contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “projects,” or other similar words. All statements, other than statements of historical fact included in this earnings release, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this earnings release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.

The forward-looking statements in this earnings release are subject to risks and uncertainties. Important factors that could cause actual results to materially differ from those projected in the forward-looking statements include, but are not limited to:

• changes in commodity prices and the sufficiency of risk management and hedging policies;
• extreme and unpredictable weather conditions, and the impact of hurricanes and other natural disasters;
• federal, state and local regulation, including the industry’s ability to address or adapt to potentially restrictive new regulations that may be enacted by the New York Public Service Commission;
• our ability to borrow funds and access credit markets and restrictions in our debt agreements and collateral requirements;
• credit risk with respect to suppliers and customers;
• changes in costs to acquire customers and actual customer attrition rates;
• accuracy of billing systems;
• whether our majority stockholder or its affiliates offer us acquisition opportunities on terms that are commercially acceptable to us;
• ability to successfully identify and complete, and efficiently integrate acquisitions into our operations;
• competition; and
• the “Risk Factors” in our latest Annual Report on Form 10-K, and in our quarterly reports, other public filings and press releases.

You should review the risk factors and other factors noted throughout or incorporated by reference in this earnings release that 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 earnings release. Unless required by law, we disclaim any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise. It is not possible for us to predict all risks, nor can we assess the impact of all factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 AS OF MARCH 31, 2018 AND DECEMBER 31, 2017
(in thousands)
(unaudited)

	March 31, 2018				December 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	21,065			$	29,419
Accounts receivable, net of allowance for doubtful accounts of $4.4 million and $4.0 million as of March 31, 2018 and December 31, 2017, respectively		152,454				158,814
Accounts receivable—affiliates		3,063				3,661
Inventory		400				4,470
Fair value of derivative assets		7,965				31,191
Customer acquisition costs, net		20,181				22,123
Customer relationships, net		20,878				18,653
Prepaid assets		3,809				1,028
Deposits		28,763				7,701
Other current assets		22,001				19,678
Total current assets		280,579				296,738
Property and equipment, net		7,699				8,275
Fair value of derivative assets		262				3,309
Customer acquisition costs, net		6,698				6,949
Customer relationships, net		35,074				34,839
Deferred tax assets		30,734				24,185
Goodwill		120,154				120,154
Other assets		11,452				11,500
Total assets	$	492,652			$	505,949
Liabilities, Series A Preferred Stock and Stockholders’ Equity
Current liabilities:
Accounts payable	$	61,687			$	77,510
Accounts payable—affiliates		4,050				4,622
Accrued liabilities		40,259				33,679
Fair value of derivative liabilities		12,347				1,637
Current portion of Senior Credit Facility		—				7,500
Current payable pursuant to tax receivable agreement—affiliates		5,937				5,937
Current contingent consideration for acquisitions		3,043				4,024
Other current liabilities		2,484				2,675
Current portion of note payable		11,332				13,443
Total current liabilities		141,139				151,027
Long-term liabilities:
Fair value of derivative liabilities		11,038				492
Payable pursuant to tax receivable agreement—affiliates		26,355				26,355
Long-term portion of Senior Credit Facility		106,500				117,750
Contingent consideration for acquisitions		—				626
Other long-term liabilities		—				172
Long-term portion of note payable		5,900				7,051
Total liabilities	$	290,932			$	303,473
Commitments and contingencies (Note 13)
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,707,256 shares issued and outstanding at March 31, 2018 and 1,704,339 shares issued and outstanding at December 31, 2017		90,758				41,173
Stockholders’ equity:
Common Stock (1) :
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 13,237,981 issued, and 13,138,535 outstanding at March 31, 2018 and 13,235,082 issued and 13,135,636 outstanding at December 31, 2017		132				132
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 21,485,126 issued and outstanding at March 31, 2018 and December 31, 2017		216				216
Additional paid-in capital		27,717				26,914
Accumulated other comprehensive loss		(43	)			(11	)
Retained earnings		(5,726	)			11,008
Treasury stock, at cost, 99,446 shares at March 31, 2018 and December 31, 2017		(2,011	)			(2,011	)
Total stockholders’ equity		20,285				36,248
Non-controlling interest in Spark HoldCo, LLC		90,677				125,055
Total equity		110,962				161,303
Total liabilities, Series A Preferred Stock and stockholders’ equity	$	492,652			$	505,949

(1)   Outstanding shares of common stock reflect the two-for-one stock split, which took effect on June 16, 2017. See Note 5 “Equity” for further discussion.
(2)   See Note 5 “Equity” for disclosure of our variable interest entity in Spark HoldCo, LLC.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
(in thousands)
(unaudited)

	Three Months Ended March 31,
		2018				2017 (1)
Revenues:
Retail revenues	$	284,001				$	196,500
Net asset optimization revenues/(expense) (2)		2,687					(193		)
Total Revenues		286,688					196,307
Operating Expenses:
Retail cost of revenues		289,876					145,761
General and administrative (3)		30,047					24,493
Depreciation and amortization		13,019					9,270
Total Operating Expenses		332,942					179,524
Operating (loss) income		(46,254		)			16,783
Other (expense)/income:
Interest expense		(2,245		)			(3,445		)
Interest and other income		201					199
Total other expenses		(2,044		)			(3,246		)
(Loss) Income before income tax (benefit) expense		(48,298		)			13,537
Income tax (benefit)/expense		(6,467		)			2,405
Net (loss) income		(41,831		)		$	11,132
Less: Net (loss) income attributable to non-controlling interests		(29,505		)			8,862
Net (loss) income attributable to Spark Energy, Inc. stockholders	$		(12,326	)		$	2,270
Less: Dividend on Series A preferred stock		2,027					183
Net (loss) income attributable to stockholders of Class A common stock	$		(14,353	)		$	2,087
Other comprehensive loss, net of tax:
Currency translation loss	$	(83		)		$	(49		)
Other comprehensive loss		(83		)			(49		)
Comprehensive (loss) income	$	(41,914		)		$	11,083
Less: Comprehensive (loss) income attributable to non-controlling interests		(29,556		)			8,831
Comprehensive (loss) income attributable to Spark Energy, Inc. stockholders	$	(12,358		)		$	2,252

(1)   Financial information has been recast to include results attributable to the acquisition of Perigee Energy, LLC by an affiliate on February 3, 2017. See Notes 2 and 4, “Basis of Presentation and Summary of Significant Accounting Policies” and “Acquisitions,” respectively, for further discussion.
(2)   Net asset optimization revenues (expenses) includes asset optimization revenues—affiliates of $648 and $0 for the three months ended March 31, 2018 and 2017, respectively, and asset optimization revenues—affiliates cost of revenues of $12 and $0 for the three months ended March 31, 2018 and 2017, respectively.
(3)   General and administrative expense includes general and administrative expense—affiliates of $6,400 and $7,300 for the three months ended March 31, 2018 and 2017, respectively.

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 FOR THE THREE MONTHS ENDED MARCH 31, 2018
(in thousands)
(unaudited)

	Issued Shares of Class A Common Stock		Issued Shares of Class B Common Stock		Treasury Stock		Class A Common Stock			Class B Common Stock			Treasury Stock			Accumulated Other Comprehensive Loss			Additional Paid-in Capital			Retained Earnings (Deficit)				Total Stockholders’ Equity			Non-controlling Interest			Total Equity
Balance at December 31, 2017	13,235		21,485		(99	)	$	132		$	216		$	(2,011	)	$	(11	)	$	26,914		$	11,008			$	36,248		$	125,055		$	161,303
Stock based compensation	—		—		—			—			—		—			—				817			—				817			—			817
Restricted stock unit vesting	3		—		—			—			—		—			—				(14	)		—				(14	)		—			(14	)
Consolidated net loss	—		—		—			—			—		—			—				—			(12,326		)		(12,326	)		(29,505	)		(41,831	)
Foreign currency translation adjustment for equity method investee	—		—		—			—			—		—			(32		)		—			—				(32	)		(51	)		(83	)
Distributions paid to non-controlling unit holders	—		—		—			—			—		—			—				—			—				—			(4,822	)		(4,822	)
Dividends paid to Class A common stockholders	—		—		—			—			—		—			—				—			(2,381		)		(2,381	)		—			(2,381	)
Dividends to Preferred Stock	—		—		—			—			—		—			—				—			(2,027		)		(2,027	)		—			(2,027	)
Balance at March 31, 2018	13,238		21,485		(99	)	$	132		$	216		$	(2,011	)	$	(43	)	$	27,717		$		(5,726	)	$	20,285		$	90,677		$	110,962

SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
(in thousands)
(unaudited)

	Three Months Ended March 31,
	2018				2017 (1)
Cash flows from operating activities:
Net (loss) income	$	(41,831	)		$	11,132
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense	11,632				8,204
Deferred income taxes	(6,549		)		(87		)
Stock based compensation	1,131				1,367
Amortization of deferred financing costs	295				248
Change in Fair Value of Earnout liabilities	—				711
Accretion on fair value of Earnout liabilities	���				1,226
Bad debt expense	2,423				356
Loss on derivatives, net	36,542				21,796
Current period cash settlements on derivatives, net	16,442				(6,178		)
Accretion of discount to convertible subordinated notes to affiliate	—				1,004
Payment of the Major Energy Companies Earnout	—				(1,104		)
Other	(248		)		6
Changes in assets and liabilities:
Decrease in accounts receivable	9,737				3,738
Decrease (Increase) in accounts receivable—affiliates	354				(55		)
Decrease in inventory	4,070				3,322
Increase in customer acquisition costs	(4,274		)		(7,690		)
Increase in prepaid and other current assets	(21,465		)		(1,302		)
Increase in other assets	(58		)		—
Decrease in accounts payable and accrued liabilities	(10,345		)		(8,979		)
Decrease in accounts payable—affiliates	(572		)		(1,684		)
Decrease in other current liabilities	(6,653		)		(2,413		)
Decrease in other non-current liabilities	(171		)		(324		)
Net cash (used in) provided by operating activities	(9,540		)		23,294
Cash flows from investing activities:
Purchases of property and equipment	(754		)		(112		)
Acquisition of HIKO Energy	(15,041		)		—
Net cash used in investing activities	(15,795		)		(112		)
Cash flows from financing activities:
Proceeds from issuance of Series A Preferred Stock, net of issuance costs paid	48,490				38,607
Borrowings on notes payable	83,800				5,625
Payments on notes payable	(102,550		)		(46,993		)
Payment of the Major Energy Companies Earnout	(1,607		)		(6,299		)
Payment of the Provider Companies Earnout and installment consideration	—				(2,097		)
Payments on the Verde promissory note	(3,261		)		—
Proceeds from disgorgement of stockholders short-swing profits	244				666
Payment of dividends to Class A common stockholders	(2,381		)		(2,355		)
Payment of distributions to non-controlling unitholders	(4,822		)		(4,347		)
Payment of Dividends to Preferred Stock	(932		)		—
Net cash provided by (used in) financing activities	16,981				(17,193		)
(Decrease) increase in Cash and cash equivalents	(8,354		)		5,989
Cash and cash equivalents—beginning of period	29,419				18,960
Cash and cash equivalents—end of period	$	21,065			$	24,949
Supplemental Disclosure of Cash Flow Information:
Non-cash items:
Property and equipment purchase accrual	$	180			$	76
Cash paid during the period for:
Interest	$	1,854			$	888
Taxes	$	1,268			$	118

(1) Financial information has been recast to include results attributable to the acquisition of Perigee Energy, LLC by an affiliate on February 3, 2017.

SPARK ENERGY, INC.
OPERATING SEGMENT RESULTS
FOR THE THREE MONTHS ENDED March 31, 2018 AND 2017
(in thousands, except per unit operating data)
(unaudited)

	Three Months Ended March 31,
	2018				2017 (1)
	(in thousands, except volume and per unit operating data)
Retail Electricity Segment
Total Revenues	220,899				133,694
Retail Cost of Revenues	249,547				108,844
Less: Net Losses on non-trading derivatives, net of cash settlements	(48,367		)		(11,921		)
Retail Gross Margin — Electricity	19,719				36,771
Volumes — Electricity (MWhs)	2,252,024				1,385,114
Retail Gross Margin — Electricity per MWh	8.76				26.55
Retail Natural Gas Segment
Total Revenues	$	65,789			$	62,613
Retail Cost of Revenues	40,329				36,917
Less: Net Asset Optimization Revenues (Expenses)	2,687				(193		)
Less: Net Losses on non-trading derivatives, net of cash settlements	(3,227		)		(1,940		)
Retail Gross Margin — Gas	$	26,000			$	27,829
Volumes — Gas (MMBtus)	7,677,082				8,219,279
Retail Gross Margin — Gas per MMBtu	$	3.39			$	3.39

(1) Financial information has been recast to include results attributable to the acquisition of Perigee Energy, LLC by an affiliate on February 3, 2017.

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 and non-recurring operating items. EBITDA is defined as net income (loss) before provision for income taxes, interest expense and depreciation and amortization. We deduct all current period customer acquisition costs (representing spending for organic customer acquisitions) in the Adjusted EBITDA calculation because such costs reflect a cash outlay in the period in which they are incurred, even though we capitalize 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 do not deduct the cost of customer acquisitions through acquisitions of business or portfolios of customers in calculated Adjusted EBITDA. We deduct our net gains (losses) on derivative instruments, excluding current period cash settlements, from the Adjusted EBITDA calculation in order to remove the non-cash impact of net gains and losses on 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 our ability to incur and service debt, pay dividends and fund capital expenditures. Adjusted EBITDA is a supplemental financial measure that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following:

• our operating performance as compared to other publicly traded companies in the retail energy industry, without regard to financing methods, capital structure or historical cost basis;
• the ability of our assets to generate earnings sufficient to support our proposed cash dividends; 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 (loss) plus (i) depreciation and amortization expenses and (ii) general and administrative expenses, less (i) net asset optimization revenues, (ii) net gains (losses) on non-trading derivative instruments, and (iii) net current period cash settlements on non-trading derivative instruments. Retail gross margin is included as a supplemental disclosure because it is a primary performance measure used by our management to determine the performance of our retail natural gas and electricity business by removing the impacts of our asset optimization activities and net non-cash income (loss) impact of our economic hedging activities. As an indicator of our retail energy business’ operating performance, retail gross margin should not be considered an alternative to, or more meaningful than, operating income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP.

We believe retail gross margin provides information useful to investors as an indicator of our retail energy business’s operating performance.

The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by operating activities. The GAAP measure most directly comparable to Retail Gross Margin is operating income (loss). Our non-GAAP financial measures of Adjusted EBITDA and Retail Gross Margin should not be considered as alternatives to net income (loss), net cash provided by operating activities, or operating income (loss). Adjusted EBITDA and Retail Gross Margin are not presentations made in accordance with GAAP and have important limitations as analytical tools. You should not consider Adjusted EBITDA or Retail Gross Margin in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA and Retail Gross Margin exclude some, but not all, items that affect net income (loss) and net cash provided by operating activities, and are defined differently by different companies in our industry, our definition of Adjusted EBITDA and Retail Gross Margin may not be comparable to similarly titled measures of other companies.

Management compensates for the limitations of Adjusted EBITDA and Retail Gross Margin as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these data points into management’s decision-making process.

The following tables present a reconciliation of Adjusted EBITDA to net income (loss) and net cash provided by operating activities for each of the periods indicated.

APPENDIX TABLES A-1 AND A-2
ADJUSTED EBITDA RECONCILIATIONS
(in thousands)
(unaudited)

	Three Months Ended March 31,
(in thousands)		2018				2017 (1)
Reconciliation of Adjusted EBITDA to Net Income:
Net (loss) income	$		(41,831	)		$		11,132
Depreciation and amortization		13,019					9,270
Interest expense		2,245					3,445
Income tax (benefit) expense		(6,467		)			2,405
EBITDA		(33,034		)			26,252
Less:
Net, losses on derivative instruments		(36,542		)			(21,796		)
Net, Cash settlements on derivative instruments		(15,537		)			7,355
Customer acquisition costs		4,274					7,690
Plus:
Non-cash compensation expense		1,131					1,367
Adjusted EBITDA	$	15,902				$	34,370

(1) Financial information has been recast to include results attributable to the acquisition of Perigee Energy, LLC by an affiliate on February 3, 2017.

	Three Months Ended March 31,
(in thousands)	2018				2017 (1)
Reconciliation of Adjusted EBITDA to net cash provided by operating activities:
Net cash (used in) provided by operating activities	$	(9,540	)		$	23,294
Amortization of deferred financing costs	(295		)		(248		)
Allowance for doubtful accounts and bad debt expense	(2,423		)		(356		)
Interest expense	2,245				3,445
Income tax (benefit) expense	(6,467		)		2,405
Changes in operating working capital
Accounts receivable, prepaids, current assets	11,374				(2,381		)
Inventory	(4,070		)		(3,322		)
Accounts payable and accrued liabilities	17,570				13,076
Other	7,508				(1,543		)
Adjusted EBITDA	$	15,902			$	34,370
Cash Flow Data:
Cash flows (used in) provided by operating activities	$	(9,540	)		$	23,294
Cash flows used in investing activities	(15,795		)		(112		)
Cash flows provided by (used in) financing activities	16,981				(17,193		)

(1) Financial information has been recast to include results attributable to the acquisition of Perigee Energy, LLC by an affiliate on February 3, 2017.

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

APPENDIX TABLE A-3
RETAIL GROSS MARGIN RECONCILIATION
(in thousands)
(unaudited)

	Three Months Ended March 31,
(in thousands)	2018				2017 (1)
Reconciliation of Retail Gross Margin to Operating Income:
Operating (loss) income	$	(46,254	)		$	16,783
Depreciation and amortization	13,019				9,270
General and administrative	30,047				24,493
Less:
Net asset optimization revenues (expenses)	2,687				(193		)
Net, Losses on non-trading derivative instruments	(36,712		)		(21,376		)
Net, Cash settlements on non-trading derivative instruments	(14,882		)		7,515
Retail Gross Margin	$	45,719			$	64,600
Retail Gross Margin – Retail Electricity Segment	$	19,719			$	36,771
Retail Gross Margin – Retail Natural Gas Segment	$	26,000			$	27,829

(1) Financial information has been recast to include results attributable to the acquisition of Perigee Energy, LLC by an affiliate on February 3, 2017.

Contact: Spark Energy, Inc.

Investors:

Christian Hettick, 832-200-3727

Media:

Kira Jordan, 832-255-7302

Source: Spark Energy, Inc.

HOUSTON, April 23, 2018 (GLOBE NEWSWIRE) — Spark Energy, Inc. (NASDAQ:SPKE), an independent retail energy services company, (“Spark” or the “Company”), announced today that it plans to present its First Quarter 2018 financial results in a conference call and webcast on Thursday, May 10, 2018 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 ir.sparkenergy.com/events-and-presentations. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an established and growing independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

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

Contact:  Spark Energy, Inc.

Investors:
Christian Hettick, 832-200-3727

Media:
Kira Jordan, 832-255-7302

 

Source: Spark Energy, Inc.