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Spark Announces Two Acquisitions, Adding 80,000 RCEs

Retains Financial Advisor To, "Explore Strategic Alternatives"

Spark Announces Record Earnings

March 8, 2018

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

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Note: This story was first published at 6:15 pm on March 8 with an alert to our email alert subscribers. Updated on March 9 With Financial Results

Spark Energy announced this evening two acquisitions which include a total of approximately 80,000 RCEs

Spark said that, on March 1, 2018, Spark acquired a retail electric provider with approximately 29,000 RCEs serving electricity and natural gas customers in the Northeast and Midwest. The transaction is immediately accretive to 2018 earnings and requires minimal integration, Spark said

Spark did not disclose the identity of this supplier. However, EnergyChoiceMatters.com had exclusively reported in February that Spark was set to acquire HIKO Energy, with the change in control scheduled to occur in early March

Spark also reported that on March 7, 2018, Spark entered into an agreement with National Gas & Electric, LLC, ("NG&E"), an affiliate of Retailco, LLC, the Company's majority owner, for the acquisition of approximately 50,000 RCEs for approximately $12.5 million in cash. The transaction, which was reviewed and approved by a special committee made up of independent members of the Company's board of directors, is scheduled to close in April of this year, Spark said

Spark Energy also announced that its Board of Directors has engaged Morgan Stanley as a financial advisor to, "explore strategic alternatives." "We believe that our stock price has not reflected the strong growth in financial performance we have shown over the past three and a half years as a public company, and look forward to examining additional opportunities to unlock shareholder value," said Nathan Kroeker, Spark Energy’s President and Chief Executive Officer.

For the quarter ended December 31, 2017, Spark reported Adjusted EBITDA of $28.9 million compared to Adjusted EBITDA of $24.8 million for the quarter ended December 31, 2016. This increase of $4.1 million is primarily attributable to additional volumes from the Verde and Perigee acquisitions.

For the quarter ended December 31, 2017, Spark reported Retail Gross Margin of $66.2 million compared to Retail Gross Margin of $58.8 million for the quarter ended December 31, 2016. This increase of $7.4 million is primarily attributable to the increased volumes of retail electricity following the Verde and Perigee acquisitions.

Net income for the quarter ended December 31, 2017, was $47.5 million compared to net income of $24.1 million for the quarter ended December 31, 2016, primarily due to higher retail gross margin and the revaluation of the Tax Receivable Agreement as a result of the new tax legislation.

For the full year 2017, Spark said that it achieved record Net Income, Retail Gross Margin and Adjusted EBITDA. Spark recorded $102.9 million in Adjusted EBITDA, $224.5 million in Retail Gross Margin, and $76.3 million in Net Income for the year ended 2017, representing year-over-year increases of 26%, 23%, and 16%, respectively

Spark's total Residential Customer Equivalent count increased 35% year-over-year to a record 1,042,000 as of December 31, 2017, the company said

Overall attrition was 4.3% for the year ended December 31, 2017

As previously reported, Spark in 2017 put a new credit facility in place and added six new banks and a total of $185.0 million in commitments, which has since grown to $200.0 million in early 2018.

"In addition, we recently completed a $50.0 million follow-on offering of our Series A Preferred Stock. We launched a company-wide initiative to further integrate acquisitions and realize significant cost-to-serve synergies, including the [previously reported] early termination of the Verde earnout," Spark said

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