Updated:
Spark Energy Names New CEO

Earlier:
Spark Energy Reports Higher Electricity Unit Margins, Offset By Lower Volumes

Adjusted EBITDA Essentially Flat Year-Over-Year

November 4, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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Updated, 10:07 a.m., Nov. 4

On November 2, 2020, Spark Energy's Board of Directors appointed W. Keith Maxwell III as Chief Executive Officer.

Maxwell had been serving as Spark's Interim Chief Executive Officer

Earlier:

Spark Energy, Inc. ("Spark" or the "Company") reported financial results for the quarter ended September 30, 2020 (third quarter).

For the quarter ended September 30, 2020, Spark reported Adjusted EBITDA of $27.7 million, compared to Adjusted EBITDA of $28.1 million for the quarter ended September 30, 2019.

"While gross margin was lower year-over-year, the decrease in gross margin was offset by decreases in G&A expenses and Customer Acquisition Cost spending," Spark said

For the quarter ended September 30, 2020, Spark reported Retail Gross Margin of $47.0 million, compared to Retail Gross Margin of $58.2 million for the quarter ended September 30, 2019.

"This decrease of $11.2 million was primarily attributable to fewer customers in our overall portfolio," Spark said

Spark's total Residential Customer Equivalent (RCE) count was 499,000 as of September 30, 2020, compared to 534,000 as of June 30, 2020 and 772,000 as of September 30, 2019, as the company continues to shift away from lower margin C&I accounts.

The net loss of 35,000 RCEs from June 30, 2020 to September 30, 2020 compares to a net loss of 51,000 RCEs from March 31, 2020 to June 30, 2020, and a net loss of 87,000 RCEs from December 31, 2019 to March 31, 2020

Spark reported average monthly attrition of 3.0%

"We had a strong third quarter while dealing with the continued impacts of COVID-19. We are continuing to pivot away from high usage, lower margin C&I contracts which has led to stronger average unit margins, partially offsetting the decrease in volumes compared to the third quarter of 2019. Our overall customer book is much healthier, but we are currently unable to reinstate several marketing channels, which will cause our customer book to continue to shrink. We will continue to simplify our platform and look for ways to streamline the business until we can begin to add customers in a way that's consistent with our internal goals," said Keith Maxwell, Spark's President and Chief Executive Officer.

Electricity Retail Gross Margin was $42.8 million for the three months ended September 30, 2020, versus $53.1 million a year ago

Electricity Retail Gross Margin per MWh was $36.69 per MWh for the three months ended September 30, 2020, versus $29.39 per MWh a year ago

Electricity volumes were 1,165,500 MWhs in the three months ended September 30, 2020, versus 1,808,276 MWhs a year ago

Natural gas Retail Gross Margin was $4.3 million for the three months ended September 30, 2020, versus $5.0 million a year ago

Natural gas Retail Gross Margin per MMBtu was $4.50 per MMBtu for the three months ended September 30, 2020, which was flat versus the year-ago period

Natural gas volumes were 949,088 MMBtus in the three months ended September 30, 2020, versus 1,119,126 MMBtus a year ago

Net income for the quarter ended September 30, 2020, was $22.6 million compared to net income of $37.7 million for the quarter ended September 30, 2019. The decrease compared to the prior year was primarily the result of reduced gross margin and the non-cash mark-to-market accounting associated with the hedges put in place to lock in margins on our retail contracts, partially offset with a decrease in G&A, and income tax expense. Spark had a mark-to-market gain of $9.0 million in the quarter ending September 30, 2020, compared to a mark-to-market gain of $25.3 million a year ago.

Revenues for the three months ended September 30, 2020 were $140.6 million, versus $207.1 million a year ago

Retail electricity revenues were $133.0 million for the months ended September 30, 2020, versus $197.0 million a year ago

Retail natural gas revenues were $8.2 million for the months ended September 30, 2020, versus $10.3 million a year ago

Maxwell added, "As we stated the last two quarters, our employees and management are working hard to serve our customers in these unprecedented economic times. We will continue to manage and evaluate all facets of the business including alternative sales channels, additional cost savings initiatives, efficiencies with supply management, as well as the payment of future dividends to ensure Spark emerges from the COVID-19 pandemic with ample liquidity and a platform that will allow us to return to growth."

Spark reported Total Liquidity as $156,080,000

Spark noted that it has increased its senior credit facility with a working capital commitment of $202.5 million

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