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 Spark Energy, Inc. Reports Third Quarter 2018 Financial Results
   Thursday, November 01, 2018 4:56:00 PM ET

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 31134,183  158,814 
Accounts receivable—affiliates3,807  3,661 
Inventory4,077  4,470 
Fair value of derivative assets23,427  31,191 
Customer acquisition costs, net15,600  22,123 
Customer relationships, net18,360  18,653 
Deposits12,631  7,701 
Other current assets31,074  20,706 
Total current assets285,955  296,738 
Property and equipment, net5,383  8,275 
Fair value of derivative assets1,873  3,309 
Customer acquisition costs, net3,466  6,949 
Customer relationships, net28,247  34,839 
Deferred tax assets24,935  24,185 
Goodwill120,343  120,154 
Other assets11,075  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—affiliates2,836  4,622 
Accrued liabilities45,518  33,679 
Fair value of derivative liabilities269  1,637 
Current portion of Senior Credit Facility  7,500 
Current payable pursuant to tax receivable agreement—affiliates2,508  5,937 
Current contingent consideration for acquisitions2,980  4,024 
Other current liabilities856  2,675 
Current portion of note payable10,535  13,443 
Total current liabilities120,998  151,027 
Long-term liabilities:   
Fair value of derivative liabilities489  492 
Payable pursuant to tax receivable agreement—affiliates26,067  26,355 
Long-term portion of Senior Credit Facility112,000  117,750 
Subordinated debt—affiliate10,000   
Long-term portion of note payable  7,051 
Contingent consideration for acquisitions  626 
Other long-term liabilities  172 
Total liabilities269,554  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 3190,758  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 31135  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 31216  216 
    
    
Additional paid-in capital25,387  26,914 
Accumulated other comprehensive loss(15) (11)
Retained earnings2,885  11,008 
Treasury stock, at cost, 99,446 shares at September 30 and December 31(2,011) (2,011)
Total stockholders' equity26,597  36,248 
Non-controlling interest in Spark HoldCo, LLC94,368  125,055 
Total equity120,965  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 Revenues258,475  215,536  777,414  563,279 
Operating Expenses:       
Retail cost of revenues193,409  160,373  645,954  420,771 
General and administrative25,695  25,566  83,522  69,405 
Depreciation and amortization13,917  11,509  39,797  30,435 
Total Operating Expenses233,021  197,448  769,273  520,611 
Operating income25,454  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 expense22,645  15,393  1,525  34,010 
Income tax expense3,818  2,451  602  5,265 
Net income$18,827  $12,942  $923  $28,745 
Less: Net income attributable to non-controlling interests13,218  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 stock2,027  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 interests13,247  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 StockIssued Shares of Class B Common StockTreasury StockClass A Common StockClass B Common StockTreasury StockAccumulated Other Comprehensive LossAdditional Paid-in CapitalRetained Earnings (Deficit)Total Stockholders' EquityNon-controlling InterestTotal Equity
Balance at December 31, 201713,235 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 vesting258   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, 201813,493 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 expense38,538  30,584 
Deferred income taxes(749) 681 
Change in TRA liability79   
Stock based compensation3,707  4,023 
Amortization of deferred financing costs1,243  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 expense8,480  3,436 
Loss on derivatives, net1,371  34,225 
Current period cash settlements on derivatives, net6,189  (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 receivable21,029  18,056 
Increase in accounts receivable—affiliates(390) (2,508)
Decrease (increase) in inventory475  (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 assets92  (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 activities41,853  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 settlement470   
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 paid48,490  40,312 
Borrowings on notes payable277,800  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 profits244  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 equivalents13,377  (7,711)
Cash and cash equivalents—beginning of period29,419  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 Revenues186,449  153,594  587,949  364,518 
Less: Net gains (losses) on non-trading derivatives, net of cash settlements19,481  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 Revenues6,960  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 amortization13,917  11,509  39,797  30,435 
Interest expense2,762  2,863  7,323  8,760 
Income tax expense3,818  2,451  602  5,265 
EBITDA39,324  29,765  48,645  73,205 
Less:       
Net, Gain (losses) on derivative instruments18,117  (2,752) (1,371) (34,225)
Net, Cash settlements on derivative instruments922  7,457  (5,823) 18,808 
Customer acquisition costs2,695  6,568  8,949  18,642 
Plus:       
Non-cash compensation expense1,021  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 expense2,762  2,863  7,323  8,760 
Income tax expense3,818  2,451  602  5,265 
Changes in operating working capital       
Accounts receivable, prepaids, current assets16,248  4,457  (9,640) (17,084)
Inventory2,218  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 amortization13,917  11,509  39,797  30,435 
General and administrative25,695  25,566  83,522  69,405 
Less:       
Net asset optimization revenues (expenses)348  (320) 3,798  (681)
Net, gains (losses) on non-trading derivative instruments17,888  (2,568) (2,223) (34,146)
Net, Cash settlements on non-trading derivative instruments1,035  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

Spark Energy Logo

Source: Spark Energy, Inc.


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