Spark Energy, Inc. ("Spark" or the "Company") (NASDAQ:SPKE), an
independent retail energy services company, announced today that is
has updated its guidance on 2017 Adjusted EBITDA.
While still finalizing results for the year
ended December 31, 2017, Spark is providing revised Adjusted EBITDA
guidance of between $100.0 and $105.0 million for fiscal year 2017,
which is consistent with the Company’s guidance update provided on
its third quarter earnings call. The Company also expects
residential customer equivalents (RCEs) in excess of 1,000,000 as
of December 31, 2017.
“2017 was a strong year for us,” said
Nathan Kroeker, Spark’s President and Chief Executive Officer. “In
our three fiscal years as a public company, we increased our RCE
count by over three times as well as brought our Adjusted EBITDA
from just over $11 million to over $100 million. Those are
remarkable accomplishments.”
These estimates and related matters in the
reconciliation table below may change materially as Spark finalizes
its results for 2017, including income tax expense actually
recognized after taking into account effects related to the recent
tax reform. Spark is also announcing today that it plans to present
its Full Year and Fourth Quarter 2017 financial results in a
conference call and webcast on Friday, March 9, 2018 at 10:00 AM
Central (11:00 AM Eastern).
A live webcast of the conference call can be
accessed from the Spark Energy Investor Relations website at
ir.sparkenergy.com. 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 press release includes forward-looking
statements and projections, made in reliance on the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements can be identified by the use of forward-looking
terminology including "may," "should," "likely," "will," "believe,"
"expect," "anticipate," "estimate," "continue," "plan," "intend,"
"project," or other similar words. 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. However, a variety of factors could cause
actual results to differ materially from those projected in the
forward-looking statements, including (i) restrictions in our debt
agreements and collateral requirements, (ii) our ability to borrow
funds and access credit markets, (iii) our level of indebtedness,
(iv) our ability to successfully and efficiently integrate
acquisitions into our operations, (iv) federal, state and local
regulation, including the industry's ability to address or adapt to
the enactment of any new regulations by the New York Public
Service Commission that may seek to impose significant new
restrictions on retail energy providers operating in New York,
(v) other business risks affecting our liquidity and results of
operations. Additional important risk factors that could cause
actual results to differ materially from expectations are disclosed
in Item 1A of Spark's Form 10-K for the year ended December
31, 2016 and subsequent Form 10-Qs and other reports filed
with the SEC. While Spark makes these statements and
projections in good faith, neither Spark nor its management or
affiliates can guarantee that anticipated future results will be
achieved. Spark assumes no obligation to publicly update or revise
any forward-looking statements made herein or any other
forward-looking statements made by Spark, whether as a result of
new information, future events, or otherwise. The Company’s
year-end estimates are preliminary and based on the most current
information available to it at this time. These estimates are
subject to completion of the Company’s financial statements and the
audit thereof which the Company expects to report in March 2018.
The Company’s actual results may differ materially from these
estimates.
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.
The GAAP measure most directly comparable to
Adjusted EBITDA is net income (loss). Our non-GAAP financial
measure of Adjusted EBITDA should not be considered as an
alternative to net income (loss). Adjusted EBITDA is not a
presentation made in accordance with GAAP and has important
limitations as an analytical tool. You should not consider Adjusted
EBITDA in isolation or as a substitute for analysis of our results
as reported under GAAP. Because Adjusted EBITDA excludes some, but
not all, items that affect net income (loss), and is defined
differently by different companies in our industry, our definition
of Adjusted EBITDA may not be comparable to similarly titled
measures of other companies.
Management compensates for the limitations of
Adjusted EBITDA as an analytical tool by reviewing the comparable
GAAP measure, understanding the differences between the measures,
and incorporating these data points into management’s
decision-making process.
The following table presents a reconciliation of
Adjusted EBITDA to net income (loss) for the period indicated.
|
APPENDIX TABLE A-1ADJUSTED
EBITDA RECONCILIATION(in
thousands)(unaudited) |
|
|
|
Year Ended December 31, |
|
2017 |
Reconciliation
of Adjusted EBITDA to Net Income: |
|
Net income |
$ |
67,000
– 82,000 |
Depreciation and
amortization |
42,000 – 43,000 |
Interest expense |
11,000 – 13,000 |
Income tax expense |
27,000 – 40,000 |
EBITDA |
158,000 – 168,000 |
Less: |
|
Net, Gains (losses) on
derivative instruments |
5,000 – 6,000 |
Net, Cash settlements
on derivative instruments |
16,000 – 17,000 |
Customer acquisition
costs |
26,000 – 27,000 |
One-time change in TRA
liability due to tax reform
|
15,000 – 25,000 |
Plus: |
|
Non-cash compensation
expense |
5,000 – 6,000 |
|
|
Adjusted
EBITDA |
$ |
100,000 – 105,000 |
Contact: Spark Energy, Inc.
Investors:
Christian Hettick, 832-200-3727
Media:
Eric Melchor, 281-833-4151
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