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Spark Energy CEO: Not Seeing A Lot Of Competition For Book Purchases

Company Approaches 1 Million RCEs With Latest Acquisition

May 9, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Spark Energy, which as previously reported announced yesterday that it had signed a purchase agreement to acquire Verde Energy, said that it is not seeing a lot of competition on some of its M&A transactions.

The Verde acquisition follows Spark's recent acquisition of RCEs from Perigee Energy

"We're not seeing a lot of competition out there right now on some of these deals," Nathan Kroeker, Spark Energy's President and Chief Executive Officer, said during an earnings call

Kroeker also said that Spark still has a pipeline of potential acquisitions.

With the addition of 145,000 RCEs from the pending Verde acquisition, Spark Energy will approach 1,000,000 RCEs.

As of March 31, 2017, Spark was serving 789,000 RCEs, which does not include the RCEs acquired from Perigee or another third party that was part of the transaction. That compares to 774,000 RCEs as of December 31, 2016

Spark's RCE count also excludes customers under its joint venture with eREX in Japan, which has now passed 50,000 customers

For the quarter ended March 31, 2017, Spark reported Adjusted EBITDA of $34.2 million compared to Adjusted EBITDA of $21.1 million for the quarter ended March 31, 2016. This increase of $13.1 million is primarily attributable to increased Retail Gross Margin in the company's electricity and natural gas segments, partially offset by increased spending on customer acquisitions and increased general and administrative expenses due to Spark's increased RCE count.

For the quarter ended March 31, 2017, Spark reported Retail Gross Margin of $64.3 million compared to Retail Gross Margin of $39.6 million for the quarter ended March 31, 2016. This increase of $24.7 million is primarily attributable to the increased volumes of retail electricity and natural gas following the acquisitions of Major and Provider.

Net income for the quarter ended March 31, 2017 was $11.4 million compared to net income of $15.7 million for the quarter ended March 31, 2016, due primarily to non-cash losses on Spark's hedge portfolio of $14.0 million in the quarter.

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