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National Retail Supplier Files For IPO
Spark Energy has filed with the SEC to conduct an initial public offering.
In the IPO filing, Spark listed the proposed maximum aggregate offering price as $92 million, though this was estimated solely for the purpose of calculating the registration fee.
Spark generated net income of $31.4 million and $26.1 million and Adjusted EBITDA of $33.5 million and $40.7 million for the years ended December 31, 2013 and 2012, respectively.
Revenues were $317 million for the year 2013.
As of March 31, 2014, Spark operated in 46 utility service territories across 16 states and had approximately 222,500 residential customers and 18,500 commercial customers, which translates to over 383,000 residential customer equivalents (RCEs).
Each RCE was defined as representing annual consumption of 100 MMbtu of natural gas or 10 MWh of electricity.
Spark added over 30,400 customers, net of attrition, during the first quarter of 2014.
As of March 31, 2014, approximately 85% of Spark customers were located in five states. Specifically, 29%, 25%, 14%, 11% and 6% of Spark customers were located in Illinois, California, Texas, New York and Pennsylvania, respectively.
As of March 31, 2014, approximately 51% of Spark natural gas customers had fixed-price contracts, and the remaining 49% of its natural gas customers had variable-price contracts. As of March 31, 2014, approximately 43% of Spark electricity customers had fixed-price contracts, and the remaining 57% of its electricity customers had variable-price contracts.
For the year ended December 31, 2013, approximately 60% of Spark retail revenues were derived from the sale of electricity, and the remainder were derived from the sale of natural gas.
For the year ended December 31, 2013, approximately 47% of retail revenues were derived from territories in which substantially all of Spark's credit risk was directly linked to local regulated utility companies (POR markets).
"Following the consummation of this offering, we expect to have approximately $10.0 million of indebtedness outstanding under our new $60.0 million revolving credit facility, as well as approximately $15.0 million outstanding in letters of credit. We believe our liquidity will provide us with the financial flexibility to quickly and opportunistically take advantage of market entry and strategic acquisition opportunities," Spark said.
"Management believes that the current environment of small, private energy retailers presents significant acquisition opportunities to consolidate smaller retailers into our larger and more scalable platform and increase market share," Spark said.
"We expect to see continued innovation in products and a greater emphasis on bundled offers in the retail energy industry. We intend to begin offering bundled products in the third quarter of 2014. Many retail energy providers have begun offering bundled products and utilizing co-marketing relationships in order to provide customers with a variety of services at lower prices and with the convenience of a single billing system. For example, we recently entered into an agreement to offer customers the option to bundle their energy services with other products such as surge and line protection through our relationship with Cross Country Home Services. We also have a co-marketing relationship with DirecTV in which we co-market their services to our customers. At present, these products and services do not generate material earnings," Spark said.
"The industry is also seeing an increased interest in 'distributed generation' alternatives, in which end users are able to rely on their own generation capabilities for all or a part of their electricity needs. Home solar programs are a primary driver of this trend. Energy efficiency products such as smart thermostats and remote thermostat programming that give the consumer the ability to change settings during non-peak usage periods are also being integrated into traditional retail energy offerings," Spark said.
Spark would be listed on the Nasdaq.
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May 30, 2014
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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
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