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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
 
         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from          to          
 
Commission File Number: 001-36559
Via Renewables, Inc.
(Exact name of registrant as specified in its charter)
Delaware 46-5453215
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
12140 Wickchester Ln, Suite 100
Houston, Texas 77079

(Address of principal executive offices)
 
(713) 600-2600
(Registrant's telephone number, including area code)

Spark Energy, Inc.
(Former name, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbols(s) Name of exchange on which registered
Class A common stock, par value $0.01 per share VIA The NASDAQ Global Select Market
8.75% Series A Fixed-to-Floating Rate

Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share
VIASP The NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes     No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes     No




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.        
Large accelerated filer Accelerated filer  
Non-accelerated filer Smaller reporting company
Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
    
    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
        Yes     No

There were 15,572,388 shares of Class A common stock, 20,000,000 shares of Class B common stock and 3,567,543 shares of Series A Preferred Stock outstanding as of November 2, 2021.



VIA RENEWABLES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended September 30, 2021
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020 (unaudited)
4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (unaudited)
5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (unaudited)
6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (unaudited)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 1A. RISK FACTORS
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 6. EXHIBITS
SIGNATURES

1

Cautionary Note Regarding Forward Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) 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,” “could,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “project,” or other similar words. Forward-looking statements appear in a number of places in this Report. All statements, other than statements of historical fact, included in this Report are forward-looking statements. The forward-looking statements include statements regarding the impacts of COVID-19 and the 2021 severe weather event, cash flow generation and liquidity, business strategy, prospects for growth and acquisitions, outcomes of legal proceedings, ability to pay cash dividends, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives, beliefs of management, availability and terms of capital, competition, governmental 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 Report 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:
evolving risks, uncertainties and impacts relating to COVID-19, including the geographic spread, the severity of the disease, the scope and duration of the COVID-19 outbreak, actions that may be taken by governmental authorities to contain the COVID-19 outbreak or to treat its impact, and the potential for continuing negative impacts of COVID-19 on economies and financial markets;
the ultimate impact of the 2021 severe weather event, including resolution of outstanding pricing and volume settlement data from ERCOT; the results of formal disputes regarding pricing and volume settlement data received to date; and any corrective action by the State of Texas, ERCOT, the Railroad Commission of Texas, or the Public Utility Commission of Texas;
changes in commodity prices;
the sufficiency of risk management and hedging policies and practices;
the impact of extreme and unpredictable weather conditions, including hurricanes and other natural disasters;
federal, state and local regulations, including the industry's ability to address or adapt to potentially restrictive new regulations that may be enacted by public utility commissions;
our ability to borrow funds and access credit markets;
restrictions in our debt agreements and collateral requirements;
credit risk with respect to suppliers and customers;
changes in costs to acquire customers as well as actual attrition rates;
accuracy of billing systems;
our ability to successfully identify, complete, and efficiently integrate acquisitions into our operations;
significant changes in, or new changes by, the independent system operators (“ISOs”) in the regions we operate;
competition; and
the “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, and in our other public filings and press releases.

You should review the risk factors and other factors noted throughout or incorporated by reference in this Report 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 Report. 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.
2

PART I. — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
3

VIA RENEWABLES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share counts)
(unaudited)
September 30, 2021 December 31, 2020
Assets
Current assets:
Cash and cash equivalents $ 89,422  $ 71,684 
Restricted cash 8,697  — 
Accounts receivable, net of allowance for doubtful accounts of $2,529 at September 30, 2021 and $3,942 at December 31, 2020
47,644  70,350 
Accounts receivable—affiliates 3,406  5,053 
Inventory 2,544  1,496 
Fair value of derivative assets 44,218  311 
Customer acquisition costs, net 1,200  5,764 
Customer relationships, net 9,708  12,077 
Deposits 5,438  5,655 
Renewable energy credit asset 16,373  20,666 
Other current assets 13,778  11,818 
Total current assets 242,428  204,874 
Property and equipment, net 4,518  3,354 
Fair value of derivative assets 1,090  — 
Customer acquisition costs, net 295  306 
Customer relationships, net 3,505  5,691 
Deferred tax assets 17,344  27,960 
Goodwill 120,343  120,343 
Other assets 2,959  4,139 
Total assets $ 392,482  $ 366,667 
Liabilities, Series A Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable $ 27,422  $ 27,322 
Accounts payable—affiliates 412  826 
Accrued liabilities 25,057  34,164 
Renewable energy credit liability 14,901  19,549 
Fair value of derivative liabilities 1,092  7,505 
Other current liabilities 2,258  1,295 
Total current liabilities 71,142  90,661 
Long-term liabilities:
Fair value of derivative liabilities 77  227 
Long-term portion of Senior Credit Facility 130,000  100,000 
Subordinated debt—affiliates 10,000  — 
Other long-term liabilities 231  30 
Total liabilities 211,450  190,918 
Commitments and contingencies (Note 12)
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,707,256 shares issued and 3,567,543 shares outstanding at September 30, 2021 and December 31, 2020
87,288  87,288 
Stockholders' equity:
       Common Stock:
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 15,716,982 shares issued and 15,572,388 shares outstanding at September 30, 2021 and 14,771,878 shares issued and 14,627,284 shares outstanding at December 31, 2020
157  148 
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 20,000,000 shares issued and outstanding at September 30, 2021 and 20,800,000 shares issued and outstanding at December 31, 2020
201  209 
       Additional paid-in capital 53,551  55,222 
       Accumulated other comprehensive loss (40) (40)
       Retained earnings 18,103  11,721 
       Treasury stock, at cost, 144,594 shares at September 30, 2021 and December 31, 2020
(2,406) (2,406)
       Total stockholders' equity 69,566  64,854 
Non-controlling interest in Spark HoldCo, LLC 24,178  23,607 
       Total equity 93,744  88,461 
Total liabilities, Series A Preferred Stock and Stockholders' equity $ 392,482  $ 366,667 
The accompanying notes are an integral part of the condensed consolidated financial statements.
4

VIA RENEWABLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Revenues:
Retail revenues $ 98,267  $ 141,188  $ 293,721  $ 436,166 
Net asset optimization (expense) revenue (288) (558) (542) (319)
Total Revenues 97,979  140,630  293,179  435,847 
Operating Expenses:
Retail cost of revenues 40,298  85,118  198,642  269,546 
General and administrative 9,719  19,080  33,053  66,087 
Depreciation and amortization 5,049  7,278  16,498  24,084 
Total Operating Expenses 55,066  111,476  248,193  359,717 
Operating income 42,913  29,154  44,986  76,130 
Other (expense)/income:
Interest expense (1,298) (1,487) (4,161) (4,233)
Interest and other income 63  80  228  293 
Total other expenses (1,235) (1,407) (3,933) (3,940)
Income before income tax expense 41,678  27,747  41,053  72,190 
Income tax expense 7,021  5,141  9,160  12,739 
Net income $ 34,657  $ 22,606  $ 31,893  $ 59,451 
Less: Net income attributable to non-controlling interests 19,774  12,993  14,158  34,200 
Net income attributable to Via Renewables, Inc. stockholders $ 14,883  $ 9,613  $ 17,735  $ 25,251 
Less: Dividend on Series A Preferred Stock 1,951  1,951  5,853  5,490 
Net income attributable to stockholders of Class A common stock $ 12,932  $ 7,662  $ 11,882  $ 19,761 
Net income attributable to Via Renewables, Inc. per share of Class A common stock
       Basic $ 0.83  $ 0.52  $ 0.79  $ 1.36 
       Diluted $ 0.82  $ 0.52  $ 0.79  $ 1.35 
Weighted average shares of Class A common stock outstanding
       Basic 15,572  14,653  14,965  14,531 
       Diluted 15,686  14,671  15,099  14,655 

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

VIA RENEWABLES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in thousands)
(unaudited)
Nine Months Ended September 30, 2021
Issued Shares of Class A Common Stock Issued Shares of Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Accumulated Other Comprehensive Loss Additional Paid-in Capital Retained Earnings (Deficit) Total Stockholders' Equity Non-controlling Interest Total Equity
Balance at December 31, 2020 14,772  20,800  (144) $ 148  $ 209  $ (2,406) $ (40) $ 55,222  $ 11,721  $ 64,854  $ 23,607  $ 88,461 
Stock based compensation —  —  —  —  —  —  —  1,792  —  1,792  —  1,792 
Restricted stock unit vesting 145  —  —  —  —  (588) —  (587) —  (587)
Consolidated net income —  —  —  —  —  —  —  —  17,735  17,735  14,158  31,893 
Distributions paid to non-controlling unit holders —  —  —  —  —  —  —  —  —  —  (13,811) (13,811)
Dividends paid to Class A common stockholders ($0.54375 per share)
—  —  —  —  —  —  —  (2,651) (5,500) (8,151) —  (8,151)
Dividends paid to Preferred Stockholders —  —  —  —  —  —  —  —  (5,853) (5,853) —  (5,853)
Exchange of shares of Class B common stock to shares of Class A common stock 800  (800) —  (8) —  —  320  —  320  (320) — 
Changes in ownership interest —  —  —  —  —  —  —  (544) —  (544) 544  — 
Balance at September 30, 2021 15,717  20,000  (144) $ 157  $ 201  $ (2,406) $ (40) $ 53,551  $ 18,103  $ 69,566  $ 24,178  $ 93,744 

The accompanying notes are an integral part of the condensed consolidated financial statements.










6


Three Months Ended September 30, 2021
Issued Shares of Class A Common Stock Issued Shares of Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Accumulated Other Comprehensive Loss Additional Paid-in Capital Retained Earnings (Deficit) Total Stockholders' Equity Non-controlling Interest Total Equity
Balance at June 30, 2021 14,917 20,800 (144) $ 149  $ 209  $ (2,406) $ (40) $ 52,878  $ 7,994  $ 58,784  $ 8,312  $ 67,096 
Stock based compensation —  389 389 389
Restricted stock unit vesting
Consolidated net income —  —  —  —  —  —  —  —  14,883 14,883 19,774 34,657
Distributions paid to non-controlling unit holders (3,624) (3,624)
Dividends paid to Class A common stockholders ($0.18125 per share)
(2,823) (2,823) (2,823)
Dividends paid to Preferred Stockholders (1,951) (1,951) (1,951)
Exchange of shares of Class B common stock to shares of Class A common stock 800 (800) 8 (8) 320 320 (320)
Changes in Ownership Interest (36) (36) 36
Balance at September 30, 2021
15,717  20,000  (144) $ 157  $ 201  $ (2,406) $ (40) $ 53,551  $ 18,103  $ 69,566  $ 24,178  $ 93,744 

The accompanying notes are an integral part of the condensed consolidated financial statements.















7

Nine Months Ended September 30, 2020
Issued Shares of Class A Common Stock Issued Shares of Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Accumulated Other Comprehensive Loss Additional Paid-in Capital Retained Earnings (Deficit) Total Stockholders' Equity Non-controlling Interest Total Equity
Balance at December 31, 2019 14,479  20,800  (99) $ 145  $ 209  $ (2,011) $ (40) $ 51,842  $ 1,074  $ 51,219  $ 16,067  $ 67,286 
Impact of adoption of ASC 326
—  —  —  —  —  —  —  —  (633) (633) —  (633)
Balance at January 1,2020 14,479  20,800  (99) 145  209  (2,011) (40) 51,842  441  50,586  16,067  66,653 
Stock based compensation —  —  —  —  —  —  —  2,061  —  2,061  —  2,061 
Restricted stock unit vesting 293  —  —  —  —  —  (915) —  (912) —  (912)
Consolidated net income —  —  —  —  —  —  —  —  25,251  25,251  34,200  59,451 
Distributions paid to non-controlling unit holders —  —  —  —  —  —  —  —  —  —  (23,409) (23,409)
Dividends paid to Class A common stockholders ($0.54375 per share)
—  —  —  —  —  —  —  —  (7,917) (7,917) —  (7,917)
Dividends paid to Preferred Stockholders —  —  —  —  —  —  —  —  (5,491) (5,491) —  (5,491)
Treasury Shares —  —  (45) —  —  (395) (395) (395)
Changes in ownership interest —  —  —  —  —  —  —  1,181  —  1,181  (1,181) — 
Balance at September 30, 2020 14,772  20,800  (144) $ 148  $ 209  $ (2,406) $ (40) $ 54,169  $ 12,284  $ 64,364  $ 25,677  $ 90,041 

The accompanying notes are an integral part of the condensed consolidated financial statements.














8

Three Months Ended September 30, 2020
Issued Shares of Class A Common Stock Issued Shares of Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Accumulated Other Comprehensive Loss Additional Paid-in Capital Retained Earnings (Deficit) Total Stockholders' Equity Non-controlling Interest Total Equity
Balance at June 30, 2020 14,772  20,800  (99) $ 148  $ 209  $ (2,011) $ (40) $ 53,409  $ 7,275  $ 58,990  $ 22,829  $ 81,819 
Stock based compensation —  —  —  —  —  —  —  289  —  289  —  289 
Consolidated net income —  —  —  —  —  —  —  —  9,613  9,613  12,993  22,606 
Distributions paid to non-controlling unit holders —  —  —  —  —  —  —  —  —  —  (9,674) (9,674)
Dividends paid to Class A common stockholders ($0.18125 per share)
—  —  —  —  —  —  —  —  (2,652) (2,652) —  (2,652)
Dividends paid to Preferred Stockholders —  —  —  —  —  —  —  —  (1,952) (1,952) —  (1,952)
Treasury Shares —  —  (45) —  —  (395) (395) (395)
Changes in ownership interest —  —  —  —  —  —  —  471  —  471  (471) — 
Balance at September 30, 2020 14,772  20,800  (144) $ 148  $ 209  $ (2,406) $ (40) $ 54,169  $ 12,284  $ 64,364  $ 25,677  $ 90,041 

The accompanying notes are an integral part of the condensed consolidated financial statements.












9

VIA RENEWABLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
  
Nine Months Ended September 30,
   2021 2020
Cash flows from operating activities:
Net income $ 31,893  $ 59,451 
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense 16,498  24,084 
Deferred income taxes 10,616  3,366 
Stock based compensation 2,012  2,134 
Amortization of deferred financing costs 792  966 
Bad debt expense 379  4,613 
(Gain) loss on derivatives, net (57,726) 14,015 
Current period cash settlements on derivatives, net 6,050  (32,682)
Changes in assets and liabilities:
Decrease in accounts receivable 22,327  44,579 
Decrease (increase) in accounts receivable—affiliates 1,647  (2,546)
(Increase) decrease in inventory (1,048) 1,158 
Increase in customer acquisition costs (765) (1,763)
Decrease in prepaid and other current assets 1,331  6,268 
Decrease in intangible assets—customer acquisition 27  — 
Decrease (increase) in other assets 577  (316)
Decrease in accounts payable and accrued liabilities (16,920) (39,997)
Decrease in accounts payable—affiliates (414) (655)
Increase in other current liabilities 1,525  1,439 
Decrease in other non-current liabilities (29) (166)
Net cash provided by operating activities 18,772  83,948 
Cash flows from investing activities:
Purchases of property and equipment (2,170) (1,219)
Acquisition of Customers (1,519) — 
Net cash used in investing activities (3,689) (1,219)
Cash flows from financing activities:
Buyback of Series A Preferred Stock —  (2,282)
Borrowings on notes payable 575,000  420,000 
Payments on notes payable (545,000) (443,000)
Net borrowings on subordinated debt facility 10,000  — 
Purchase of Treasury Stock —  (395)
Restricted stock vesting (833) (1,107)
Payment for acquired customers   (972)
Payment of dividends to Class A common stockholders (8,151) (7,917)
Payment of distributions to non-controlling unitholders (13,811) (23,409)
Payment of Preferred Stock dividends (5,853) (5,935)
Net cash provided (used) in financing activities 11,352  (65,017)
Increase in Cash, cash equivalents and Restricted cash 26,435  17,712 
Cash, cash equivalents and Restricted cash—beginning of period 71,684  57,668 
Cash, cash equivalents and Restricted cash—end of period $ 98,119  $ 75,380 
Supplemental Disclosure of Cash Flow Information:
Non-cash items:
        Property and equipment purchase accrual $ 287  $
Cash paid (received) during the period for:
Interest $ 3,143  $ 3,198 
Taxes $ (5,076) $ 13,074 
10

The accompanying notes are an integral part of the condensed consolidated financial statements.
11

VIA RENEWABLES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Formation and Organization
Company's Name Change

In August 2021, Spark Energy, Inc. changed its name from Spark Energy, Inc. to Via Renewables, Inc. (the "Company").

Organization

We are an independent retail energy services company that provides residential and commercial customers in competitive markets across the United States with an alternative choice for natural gas and electricity. The Company is a holding company whose sole material asset consists of units in Spark HoldCo, LLC (“Spark HoldCo”). The Company is the sole managing member of Spark HoldCo, is responsible for all operational, management and administrative decisions relating to Spark HoldCo’s business and consolidates the financial results of Spark HoldCo and its subsidiaries. Spark HoldCo is the direct and indirect owner of the subsidiaries through which we operate. We conduct our business through several brands across our service areas, including Electricity Maine, Electricity N.H., Major Energy, Provider Power Massachusetts, Spark Energy, and Verde Energy.
2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) as it applies to interim financial statements. This information should be read along with our consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”). Our unaudited condensed consolidated financial statements are presented on a consolidated basis and include all wholly-owned and controlled subsidiaries. We account for investments over which we have significant influence but not a controlling financial interest using the equity method of accounting. All significant intercompany transactions and balances have been eliminated in the unaudited condensed consolidated financial statements.

In the opinion of the Company's management, the accompanying condensed consolidated financial statements reflect all adjustments that are necessary to fairly present the financial position, the results of operations, the changes in equity and the cash flows of the Company for the respective periods. Such adjustments are of a normal recurring nature, unless otherwise disclosed.

Use of Estimates and Assumptions
The preparation of our condensed consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements and the reported amounts of revenues and expenses during the period. Actual results could materially differ from those estimates.

Relationship with our Founder and Majority Shareholder

W. Keith Maxwell, III (our "Founder") is the Company's Chief Executive Officer, a director, and the owner of a majority of the voting power of our common stock through his ownership of NuDevco Retail, LLC ("NuDevco Retail") and Retailco, LLC ("Retailco"). Retailco is a wholly owned subsidiary of TxEx Energy Investments, LLC ("TxEx"), which is wholly owned by Mr. Maxwell. NuDevco Retail is a wholly owned subsidiary of NuDevco
12

Retail Holdings LLC ("NuDevco Retail Holdings"), which is a wholly owned subsidiary of Electric HoldCo, LLC, which is also a wholly owned subsidiary of TxEx.

New Accounting Standards Recently Adopted

There have been no changes to our significant accounting policies as disclosed in our 2020 Form 10-K, except as follows:

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes ("ASU 2019-12"). These amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. For public business entities, the amendments in ASU 2019-12 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We adopted ASU 2019-12 effective January 1, 2021 and the adoption did not have a material impact on our consolidated financial statements.

Standards Being Evaluated/Standards Not Yet Adopted

Below are accounting standards that have been issued by the FASB but have not yet been adopted by the Company at September 30, 2021. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform ("ASU 2021-01"), which clarifies the scope and application of certain optional expedients and exceptions regarding the original guidance. The amendments in these ASUs were effective upon issuance and can be applied prospectively through December 31, 2022. The Company's Senior Credit Facility is the only agreement that makes reference to a LIBOR rate and the agreement outlines the specific procedures that will be undertaken once an appropriate alternative benchmark is identified. We do not expect adoption of the new standard to have a material impact to our consolidated financial statements.

3. Revenues
Our revenues are derived primarily from the sale of natural gas and electricity to customers, including affiliates. Revenue is measured based upon the quantity of gas or power delivered at prices contained or referenced in the customer's contract, and excludes any sales incentives (e.g. rebates) and amounts collected on behalf of third parties (e.g. sales tax).

Our revenues also include asset optimization activities. Asset optimization activities consist primarily of purchases and sales of gas that meet the definition of trading activities per FASB ASC Topic 815, Derivatives and Hedging. They are therefore excluded from the scope of FASB ASC Topic 606, Revenue from Contracts with Customers.

Revenues for electricity and natural gas sales are recognized under the accrual method when our performance obligation to a customer is satisfied, which is the point in time when the product is delivered and control of the product passes to the customer. Electricity and natural gas products may be sold as fixed-price or variable-price products. The typical length of a contract to provide electricity and/or natural gas is twelve months. Customers are billed and typically pay at least monthly, based on usage. Electricity and natural gas sales that have been delivered but not billed by period end are estimated and recorded as accrued unbilled revenues based on estimates of customer usage since the date of the last meter read provided by the utility. Volume estimates are based on forecasted volumes and estimated residential and commercial customer usage. Unbilled revenues are calculated by multiplying these volume estimates by the applicable rate by customer class (residential or commercial). Estimated amounts are adjusted when actual usage is known and billed.
13


The following table discloses revenue by primary geographical market, customer type, and customer credit risk profile (in thousands). The table also includes a reconciliation of the disaggregated revenue to revenue by reportable segment (in thousands).
Reportable Segments
Three Months Ended September 30, 2021 Three Months Ended September 30, 2020
Retail Electricity Retail Natural Gas Total Reportable Segments Retail Electricity Retail Natural Gas Total Reportable Segments
Primary markets (a)
New England $ 25,406  $ 748  $ 26,154  $ 46,464  $ 1,361  $ 47,825 
Mid-Atlantic 30,122  1,354  31,476  46,878  2,243  49,121 
Midwest 12,473  1,367  13,840  16,933  1,540  18,473 
Southwest 24,103  2,694  26,797  22,683  3,086  25,769 
$ 92,104  $ 6,163  $ 98,267  $ 132,958  $ 8,230  $ 141,188 
Customer type
Commercial $ 12,395  $ 2,076  $ 14,471  $ 34,180  $ 2,705  $ 36,885 
Residential 82,778  3,781  86,559  103,092  5,082  108,174 
Unbilled revenue (b) (3,069) 306  (2,763) (4,314) 443  (3,871)
$ 92,104  $ 6,163  $ 98,267  $ 132,958  $ 8,230  $ 141,188 
Customer credit risk
POR $ 53,670  $ 2,151  $ 55,821  $ 87,439  $ 3,010  $ 90,449 
Non-POR 38,434  4,012  42,446  45,519  5,220  50,739 
$ 92,104  $ 6,163  $ 98,267  $ 132,958  $ 8,230  $ 141,188 











14

Reportable Segments
Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
Retail Electricity Retail Natural Gas Total Reportable Segments Retail Electricity Retail Natural Gas Total Reportable Segments
Primary markets (a)
New England $ 73,045  $ 6,527  $ 79,572  $ 133,218  $ 11,144  $ 144,362 
Mid-Atlantic 81,981  18,032  100,013  131,463  23,976  155,439 
Midwest 32,894  14,515  47,409  46,428  19,338  65,766 
Southwest 54,628  12,099  66,727  55,872  14,727  70,599 
$ 242,548  $ 51,173  $ 293,721  $ 366,981  $ 69,185  $ 436,166 
Customer type
Commercial $ 38,782  $ 18,574  $ 57,356  $ 103,603  $ 25,512  $ 129,115 
Residential 213,440  39,911  253,351  275,229  53,410  328,639 
Unbilled revenue (b) (9,674) (7,312) (16,986) (11,851) (9,737) (21,588)
$ 242,548  $ 51,173  $ 293,721  $ 366,981  $ 69,185  $ 436,166 
Customer credit risk
POR $ 145,924  $ 26,731  $ 172,655  $ 246,046  $ 34,423  $ 280,469 
Non-POR 96,624  24,442  121,066  120,935  34,762  155,697 
$ 242,548  $ 51,173  $ 293,721  $ 366,981  $ 69,185  $ 436,166 

(a) The primary markets include the following states:

New England - Connecticut, Maine, Massachusetts, New Hampshire;
Mid-Atlantic - Delaware, Maryland (including the District of Colombia), New Jersey, New York and Pennsylvania;
Midwest - Illinois, Indiana, Michigan and Ohio; and
Southwest - Arizona, California, Colorado, Florida, Nevada, and Texas.

(b) Unbilled revenue is recorded in total until it is actualized, at which time it is categorized between commercial and residential customers.

We record gross receipts taxes on a gross basis in retail revenues and retail cost of revenues. During the three months ended September 30, 2021 and 2020, our retail revenues included gross receipts taxes of $0.3 million and $0.3 million, respectively, and our retail cost of revenues included gross receipts taxes of $1.2 million and $1.6 million, respectively. During the nine months ended September 30, 2021 and 2020, our retail revenues included gross receipts taxes of $0.8 million and $1.0 million, respectively, and our retail cost of revenues included gross receipts taxes of $3.4 million and $4.7 million, respectively.

Accounts receivables and Allowance for Credit Losses

The Company conducts business in many utility service markets where the local regulated utility purchases our receivables, and then becomes responsible for billing the customer and collecting payment from the customer (“POR programs”). These POR programs result in substantially all of the Company’s credit risk being linked to the applicable utility, which generally has an investment-grade rating, and not to the end-use customer. The Company monitors the financial condition of each utility and currently believes its receivables are collectible.
15

In markets that do not offer POR programs or when the Company chooses to directly bill its customers, certain receivables are billed and collected by the Company. The Company bears the credit risk on these accounts and records an appropriate allowance for doubtful accounts to reflect any losses due to non-payment by customers. The Company’s customers are individually insignificant and geographically dispersed in these markets. The Company writes off customer balances when it believes that amounts are no longer collectible and when it has exhausted all means to collect these receivables.

For trade accounts receivables, the Company accrues an allowance for doubtful accounts by business segment by pooling customer accounts receivables based on similar risk characteristics, such as customer type, geography, aging analysis, payment terms, and related macro-economic factors. Expected credit loss exposure is evaluated for each of our accounts receivables pools. Expected credits losses are established using a model that considers historical collections experience, current information, and reasonable and supportable forecasts. The Company writes off accounts receivable balances against the allowance for doubtful accounts when the accounts receivable is deemed to be uncollectible.

A rollforward of our allowance for credit losses for the nine months ended September 30, 2021 are presented in the table below (in thousands):

Balance at December 31, 2020 $ (3,942)
Current period bad debt provision (139)
Write-offs 1,907 
Recovery of previous write offs (355)
Balance at September 30, 2021 $ (2,529)

4. Equity

Non-controlling Interest

We hold an economic interest and are the sole managing member in Spark HoldCo, with affiliates of our Founder holding the remaining economic interests in Spark HoldCo. As a result, we consolidate the financial position and results of operations of Spark HoldCo, and reflect the economic interests owned by these affiliates as a non-controlling interest. The Company and affiliates owned the following economic interests in Spark HoldCo at September 30, 2021 and December 31, 2020, respectively.

The Company Affiliated Owners
September 30, 2021 44.00  % 56.00  %
December 31, 2020 41.53  % 58.47  %

The following table summarizes the portion of net income and income tax expense attributable to non-controlling interest (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net income allocated to non-controlling interest $ 21,959  $ 14,909  $ 18,884  $ 38,717 
Income tax expense allocated to non-controlling interest 2,185  1,916  4,726  4,517 
Net income attributable to non-controlling interest $ 19,774  $ 12,993  $ 14,158  $ 34,200 

16

Class A Common Stock and Class B Common Stock
Holders of the Company's Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or by our certificate of incorporation.

Conversion of Class B Common Stock to Class A Common Stock

In July 2021, holders of Class B common stock exchanged 800,000 of their Spark HoldCo units (together with a corresponding number of shares of Class B common stock) for shares of Class A common stock at an exchange ratio of one share of Class A common stock for each Spark HoldCo unit (and corresponding share of Class B common stock) exchanged.

Dividends on Class A Common Stock

Dividends declared for the Company's Class A common stock are reported as a reduction of retained earnings, or a reduction of additional paid in capital to the extent retained earnings are exhausted. During the nine months ended September 30, 2021, we paid $8.2 million in dividends to the holders of the Company's Class A common stock. This dividend represented a quarterly rate of $0.18125 per share on each share of Class A common stock.

In order to pay our stated dividends to holders of our Class A common stock, our subsidiary, Spark HoldCo is required to make corresponding distributions to holders of its units, including those holders that own our Class B common stock (our non-controlling interest holder). As a result, during the nine months ended September 30, 2021, Spark HoldCo made corresponding distributions of $11.2 million to our non-controlling interest holders.

Share Repurchase Program

On August 18, 2020, our Board of Directors authorized a share repurchase program of up to $20.0 million of Class A common stock through August 18, 2021. Purchases could be made with available cash balances, our Senior Credit Facility and operating cash flows.

The shares of Class A common stock could be repurchased from time to time in the open market at prevailing market prices or in privately negotiated transactions based on ongoing assessments of capital needs, the market price of the stock, and other factors, including general market conditions. The repurchase program did not obligate us to acquire any particular amount of Class A common stock, could be modified or suspended at any time, and could be terminated prior to completion.

During the nine months ended September 30, 2021, we did not repurchase our Class A common stock. The share repurchase program expired on August 18, 2021 pursuant to an agreement with lenders under our Senior Credit Facility, and our Senior Credit Facility was subsequently amended, terminating the provision for borrowings specific to Class A common stock repurchases. See Note 9 "Debt" for further discussion.

Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income attributable to stockholders (the numerator) by the weighted-average number of Class A common shares outstanding for the period (the denominator). Class B common shares are not included in the calculation of basic earnings per share because they are not participating securities and have no economic interests. Diluted earnings per share is similarly calculated except that the denominator is increased by potentially dilutive securities.

The following table presents the computation of basic and diluted income per share for the three and nine months ended September 30, 2021 and 2020 (in thousands, except per share data):
17

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net income attributable to Via Renewables, Inc. stockholders $ 14,883  $ 9,613  $ 17,735  $ 25,251 
Less: Dividend on Series A Preferred Stock 1,951  1,951  5,853  5,490 
Net income attributable to stockholders of Class A common stock $ 12,932  $ 7,662  $ 11,882  $ 19,761 
Basic weighted average Class A common shares outstanding 15,572  14,653  14,965  14,531 
Basic income per share attributable to stockholders $ 0.83  $ 0.52  $ 0.79  $ 1.36 
Net income attributable to stockholders of Class A common stock $ 12,932  $ 7,662  $ 11,882  $ 19,761 
Effect of conversion of Class B common stock to shares of Class A common stock —  —  —  — 
Diluted net income attributable to stockholders of Class A common stock $ 12,932  $ 7,662  $ 11,882  $ 19,761 
Basic weighted average Class A common shares outstanding 15,572  14,653  14,965  14,531 
Effect of dilutive Class B common stock —  —  —  — 
Effect of dilutive restricted stock units 114  18  134  124 
Diluted weighted average shares outstanding 15,686  14,671  15,099  14,655 
Diluted income per share attributable to stockholders $ 0.82  $ 0.52  $ 0.79  $ 1.35 

The computation of diluted earnings per share for the three and nine months ended September 30, 2021, respectively, excludes 20.0 million shares of Class B common stock because the effect of their conversion was antidilutive. The Company's outstanding shares of Series A Preferred Stock were not included in the calculation of diluted earnings per share because they contain only contingent redemption provisions that have not occurred.

Variable Interest Entity

Spark HoldCo is a variable interest entity due to its lack of rights to participate in significant financial and operating decisions and its inability to dissolve or otherwise remove its management. Spark HoldCo owns all of the outstanding membership interests in each of our operating subsidiaries. We are the sole managing member of Spark HoldCo, manage Spark HoldCo's operating subsidiaries through this managing membership interest, and are considered the primary beneficiary of Spark HoldCo. The assets of Spark HoldCo cannot be used to settle our obligations except through distributions to us, and the liabilities of Spark HoldCo cannot be settled by us except through contributions to Spark HoldCo. The following table includes the carrying amounts and classification of the assets and liabilities of Spark HoldCo that are included in our condensed consolidated balance sheet as of September 30, 2021 and December 31, 2020 (in thousands):
18

September 30, 2021 December 31, 2020
Assets
Current assets:
   Cash and cash equivalents $ 89,276  $ 71,442 
   Accounts receivable 47,644  70,350 
   Other current assets 99,963  55,575 
   Total current assets 236,883  197,367 
Non-current assets:
   Goodwill 120,343  120,343 
   Other assets 12,747  15,259 
   Total non-current assets 133,090  135,602 
   Total Assets $ 369,973  $ 332,969 
Liabilities
Current liabilities:
   Accounts payable and accrued liabilities $ 52,442  $ 61,436 
   Other current liabilities 46,818  43,676 
   Total current liabilities 99,260  105,112 
Long-term liabilities:
   Long-term portion of Senior Credit Facility 130,000  100,000 
   Subordinated debt affiliate
10,000  — 
   Other long-term liabilities 308  256 
   Total long-term liabilities 140,308  100,256 
   Total Liabilities $ 239,568  $ 205,368 

5. Preferred Stock

Holders of the Series A Preferred Stock have no voting rights, except in specific circumstances of delisting or in the case the dividends are in arrears as specified in the Series A Preferred Stock Certificate of Designations. The Series A Preferred Stock accrue dividends at an annual percentage rate of 8.75%, and the liquidation preference provisions of the Series A Preferred Stock are considered contingent redemption provisions because there are rights granted to the holders of the Series A Preferred Stock that are not solely within our control upon a change in control of the Company. Accordingly, the Series A Preferred Stock is presented between liabilities and the equity sections in the accompanying condensed consolidated balance sheet.

During the three and nine months ended September 30, 2021, we paid $1.9 million and $5.9 million in dividends to holders of the Series A Preferred Stock, respectively. As of September 30, 2021, we had accrued $2.0 million related to dividends to holders of the Series A Preferred Stock. This dividend was paid on October 15, 2021.

A summary of our preferred equity balance for the nine months ended September 30, 2021 is as follows:
(in thousands)
Balance at December 31, 2020 $ 87,288 
Repurchase of Series A Preferred Stock — 
Accumulated dividends on Series A Preferred Stock — 
Balance at September 30, 2021
$ 87,288 


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6. Derivative Instruments

We are exposed to the impact of market fluctuations in the price of electricity and natural gas, basis differences in the price of natural gas, storage charges, renewable energy credits ("RECs"), and capacity charges from independent system operators. We use derivative instruments in an effort to manage our cash flow exposure to these risks. These instruments are not designated as hedges for accounting purposes, and, accordingly, changes in the market value of these derivative instruments are recorded in the cost of revenues. As part of our strategy to optimize pricing in our natural gas related activities, we also manage a portfolio of commodity derivative instruments held for trading purposes. Our commodity trading activities are subject to limits within our Risk Management Policy. For these derivative instruments, changes in the fair value are recognized currently in earnings in net asset optimization revenues.
Derivative assets and liabilities are presented net in our condensed consolidated balance sheets when the derivative instruments are executed with the same counterparty under a master netting arrangement. Our derivative contracts include transactions that are executed both on an exchange and centrally cleared, as well as over-the-counter, bilateral contracts that are transacted directly with third parties. To the extent we have paid or received collateral related to the derivative assets or liabilities, such amounts would be presented net against the related derivative asset or liability’s fair value. As of September 30, 2021 and December 31, 2020, we offset $1.7 million and $0.1 million, respectively, in collateral to net against the related derivative asset and liability's fair value. The specific types of derivative instruments we may execute to manage the commodity price risk include the following:

Forward contracts, which commit us to purchase or sell energy commodities in the future;
Futures contracts, which are exchange-traded standardized commitments to purchase or sell a commodity or financial instrument;
Swap agreements, which require payments to or from counterparties based upon the differential between two prices for a predetermined notional quantity; and
Option contracts, which convey to the option holder the right but not the obligation to purchase or sell a commodity.

The Company has entered into other energy-related contracts that do not meet the definition of a derivative instrument or for which we made a normal purchase, normal sale election and are therefore not accounted for at fair value including the following:

Forward electricity and natural gas purchase contracts for retail customer load;
Renewable energy credits; and
Natural gas transportation contracts and storage agreements.

Volumes Underlying Derivative Transactions
The following table summarizes the net notional volumes of our open derivative financial instruments accounted for at fair value by commodity. Positive amounts represent net buys while bracketed amounts are net sell transactions (in thousands):
Non-trading 
Commodity Notional September 30, 2021 December 31, 2020
Natural Gas MMBtu 3,195  2,880 
Electricity MWh 1,804  1,845 
Trading
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Commodity Notional September 30, 2021 December 31, 2020
Natural Gas MMBtu 1,202  102 
Gains (Losses) on Derivative Instruments
Gains (losses) on derivative instruments, net and current period settlements on derivative instruments were as follows for the periods indicated (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
   2021 2020 2021 2020
Gain (Loss) on non-trading derivatives, net $ 32,262  $ 2,550  $ 58,214  $ (14,019)
(Loss) Gain on trading derivatives, net (464) (99) (488)
Gain (Loss) on derivatives, net 31,798  2,451  57,726  (14,015)
Current period settlements on non-trading derivatives (1)
$ (5,660) $ 6,489  $ (6,054) $ 33,153 
Current period settlements on trading derivatives —  (64) (156)
Total current period settlements on derivatives $ (5,660) $ 6,425  $ (6,050) $ 32,997 

(1) Excludes settlements of $(0.3) million, for the nine months ended September 30, 2020 related to power call options.
Gains (losses) on trading derivative instruments are recorded in net asset optimization revenues and gains (losses) on non-trading derivative instruments are recorded in retail cost of revenues on the condensed consolidated statements of operations.
Fair Value of Derivative Instruments
The following tables summarize the fair value and offsetting amounts of our derivative instruments by counterparty and collateral received or paid (in thousands):
  
September 30, 2021
Description Gross Assets Gross
Amounts
Offset
Net Assets Cash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives $ 57,181  $ (11,972) $ 45,209  $ (1,677) $ 43,532 
Trading commodity derivatives 1,303  (617) 686  —  686 
Total Current Derivative Assets 58,484  (12,589) 45,895  (1,677) 44,218 
Non-trading commodity derivatives 1,343  (253) 1,090  —  1,090 
Trading commodity derivatives —  —  —  —  — 
Total Non-current Derivative Assets 1,343  (253) 1,090  —  1,090 
Total Derivative Assets $ 59,827  $ (12,842) $ 46,985  $ (1,677) $ 45,308 
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Description Gross 
Liabilities
Gross
Amounts
Offset
Net
Liabilities
Cash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives $ —  $ —  $ —  $ —  $ — 
Trading commodity derivatives (1,405) 313  (1,092) —  (1,092)
Total Current Derivative Liabilities (1,405) 313  (1,092) —  (1,092)
Non-trading commodity derivatives (332) 255  (77) —  (77)
Trading commodity derivatives —  —  —  —  — 
Total Non-current Derivative Liabilities (332) 255  (77) —  (77)
Total Derivative Liabilities $ (1,737) $ 568  $ (1,169) $   $ (1,169)
  
December 31, 2020
Description Gross Assets Gross
Amounts
Offset
Net Assets Cash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives $ 308  $ (105) $ 203  $ —  $ 203 
Trading commodity derivatives 112  (4) 108  —  108 
Total Current Derivative Assets 420  (109) 311  —  311 
Non-trading commodity derivatives —  —  —  —  — 
Trading commodity derivatives —  —  —  —  — 
Total Non-current Derivative Assets —  —  —  —  — 
Total Derivative Assets $ 420  $ (109) $ 311  $   $ 311 
Description Gross 
Liabilities
Gross
Amounts
Offset
Net
Liabilities
Cash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives $ (11,139) $ 3,620  $ (7,519) $ 86  $ (7,433)
Trading commodity derivatives (74) (72) —  (72)
Total Current Derivative Liabilities (11,213) 3,622  (7,591) 86  (7,505)
Non-trading commodity derivatives (838) 611  (227) —  (227)
Trading commodity derivatives —  —  —  —  — 
Total Non-current Derivative Liabilities (838) 611  (227) —  (227)
Total Derivative Liabilities $ (12,051) $ 4,233  $ (7,818) $ 86  $ (7,732)





















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7. Property and Equipment
Property and equipment consist of the following (in thousands):
Estimated useful
lives (years)
September 30, 2021 December 31, 2020
Information technology
2 – 5
$ 6,405  $ 5,821 
Furniture and fixtures
2 – 5
957  957 
Total 7,362  6,778 
Accumulated depreciation (2,844) (3,424)
Property and equipment—net $ 4,518  $ 3,354 
Information technology assets include software and consultant time used in the application, development and implementation of various systems including customer billing and resource management systems. As of September 30, 2021 and December 31, 2020, information technology includes $0.4 million and $0.7 million, respectively, of costs associated with assets not yet placed into service. Depreciation expense recorded in the condensed consolidated statements of operations was $0.4 million and $0.4 million, respectively, for the three months ended September 30, 2021 and 2020 and $1.3 million and $1.6 million for the nine months ended September 30, 2021 and 2020, respectively.
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8. Intangible Assets
Goodwill, customer relationships and trademarks consist of the following amounts (in thousands):
September 30, 2021 December 31, 2020
Goodwill $ 120,343  $ 120,343 
Customer relationships—Acquired
Cost $ 58,688  $ 58,688 
Accumulated amortization (50,985) (44,175)
Customer relationshipsAcquired
$ 7,703  $ 14,513 
Customer relationships—Other
Cost $ 13,422  $ 8,988 
Accumulated amortization (7,912) (5,733)
Customer relationshipsOther, net
$ 5,510  $ 3,255 
Trademarks
Cost $ 7,040  $ 7,570 
Accumulated amortization (3,257) (2,972)
Trademarks, net $ 3,783  $ 4,598 

Changes in goodwill, customer relationships (including non-compete agreements) and trademarks consisted of the following (in thousands):
Goodwill
Customer Relationships Acquired
Customer Relationships Other
Trademarks
Balance at December 31, 2020 $ 120,343  $ 14,513  $ 3,255  $ 4,598 
Additions —  —  4,524  — 
Adjustments —  —  (28) — 
Amortization —  (6,810) (2,241) (815)
Balance at September 30, 2021 $ 120,343  $ 7,703  $ 5,510  $ 3,783 

Estimated future amortization expense for customer relationships and trademarks at September 30, 2021 is as follows (in thousands):
Year ending December 31,
2021 (remaining three months) $ 3,640 
2022 7,702 
2023 2,113 
2024 1,521 
2025 404 
> 5 years 1,616 
Total $ 16,996 
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9. Debt
Debt consists of the following amounts as of September 30, 2021 and December 31, 2020 (in thousands):
September 30, 2021 December 31, 2020
Long-term debt:
  Senior Credit Facility (1) (2)
$ 130,000  $ 100,000 
  Subordinated Debt
10,000  — 
Total long-term debt 140,000  100,000 
Total debt $ 140,000  $ 100,000 
(1) As of September 30, 2021 and December 31, 2020, the weighted average interest rate on the Senior Credit Facility was 3.75% and 3.75%, respectively.
(2) As of September 30, 2021 and December 31, 2020, we had $24.4 million and $31.0 million in letters of credit issued, respectively.

Capitalized financing costs associated with our Senior Credit Facility were $0.9 million and $1.6 million as of September 30, 2021 and December 31, 2020, respectively. Of these amounts, $0.9 million and $1.0 million are recorded in other current assets, and zero and $0.6 million are recorded in other non-current assets in the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020, respectively.
Interest expense consists of the following components for the periods indicated (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Senior Credit Facility $ 678  $ 477  $ 1,950  $ 1,904 
Letters of credit fees and commitment fees 351  244  1,088  1,073 
Amortization of deferred financing costs
275  476  792  966 
Other
(6) 290  331  290 
Interest Expense
$ 1,298  $ 1,487  $ 4,161  $ 4,233 

Senior Credit Facility

The Company, as guarantor, and Spark HoldCo (the “Borrower” and, together with each subsidiary of Spark HoldCo (“Co-Borrowers”)) maintain a senior secured borrowing base credit facility (as amended from time to time, “Senior Credit Facility”) that allows us to borrow on a revolving basis and has a maximum borrowing capacity of $227.5 million as of September 30, 2021. As further described below, on October 15, 2021, the Company entered into the Fifth Amendment to its Senior Credit Facility.

Prior to the Fifth Amendment and subject to applicable sub-limits and terms of the Senior Credit Facility, borrowings were available for the issuance of letters of credit (“Letters of Credit”), working capital and general purpose revolving credit loans (“Working Capital Loans”), and share buyback loans (“Share Buyback Loans”). Prior to the Fifth Amendment, the Senior Credit Facility matured in July 2022.

On October 15, 2021, the Company entered into the Fifth Amendment to its Senior Credit Facility, which, among other things extended the maturity date, added a provision for borrowings to fund acquisitions ("Acquisition Loans") subject to limits as defined in the agreement, and terminated the provision allowing for Share Buyback Loans. Pursuant to the Fifth Amendment, the Senior Credit Facility will mature on October 13, 2023, and all amounts outstanding thereunder will be payable on the maturity date. Borrowings under the Senior Credit Facility may be used to pay fees and expenses in connection with the Senior Credit Facility, finance ongoing working capital requirements and general corporate purpose requirements of the Co-Borrowers, and to provide partial funding for acquisitions, as allowed under terms of the Senior Credit Facility. The Fifth Amendment provides for Acquisition Loans not to exceed 75% of the adjusted purchase price of the acquisition, as defined in the agreement.
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Pursuant to the Senior Credit Facility, the interest rate for Working Capital Loans and Letters of Credit under the Senior Credit Facility is generally determined by reference to the Eurodollar rate plus an applicable margin of up to 3.25% per annum (based on the prevailing utilization) or an alternate base rate plus an applicable margin of up to 2.25% per annum (based on the prevailing utilization). The alternate base rate is equal to the highest of (i) the prime rate (as published in the Wall Street Journal), (ii) the federal funds rate plus 0.50% per annum, or (iii) the reference Eurodollar rate plus 1.00%.

Prior to the Fifth Amendment, borrowings under the Senior Credit Facility for Share Buyback Loans, were generally determined by reference to the Eurodollar rate plus an applicable margin of 4.50% per annum or the alternate base rate plus an applicable margin of 3.50% per annum.

Pursuant to the Fifth Amendment, borrowings under the Senior Credit Facility for Acquisition Loans are generally determined by reference to the Eurodollar rate plus an applicable margin of 4.00% per annum or the alternate base rate plus an applicable margin of 3.00% per annum.

The Co-Borrowers pay a commitment fee of 0.50% quarterly in arrears on the unused portion of the Senior Credit Facility. In addition, the Co-Borrowers are subject to additional fees including an upfront fee, an annual agency fee, and letter of credit fees based on a percentage of the face amount of letters of credit payable to any syndicate member that issues a letter of credit.

The Senior Credit Facility contains covenants that, among other things, require the maintenance of specified ratios or conditions including:

Minimum Fixed Charge Coverage Ratio. We must maintain a minimum fixed charge coverage ratio of not less than 1.25 to 1.00. The Minimum Fixed Charge Coverage Ratio is defined as the ratio of (a) Adjusted EBITDA to (b) the sum of consolidated (with respect to the Company and the Co-Borrowers) interest expense, letter of credit fees, commitment fees, acquisition earn-out payments (excluding earnout payments funded with proceeds from newly issued preferred or common equity), distributions, scheduled amortization payments, and payments made on or after the closing of the Fourth Amendment to the Senior Credit Facility (other than such payments made from escrow accounts which were funded in connection with a permitted acquisition) related to the settlement of civil and regulatory matters if not included in the calculation of Adjusted EBITDA. Our Minimum Fixed Charge Coverage Ratio as of September 30, 2021 was 1.95 to 1.00.

Maximum Total Leverage Ratio. We must maintain a ratio of (x) the sum of total indebtedness (excluding eligible subordinated debt and letter of credit obligations), plus (y) gross amounts reserved for civil and regulatory liabilities identified in SEC filings, to Adjusted EBITDA of no more than 2.50 to 1.00. Our Maximum Total Leverage Ratio as of September 30, 2021 was 1.59 to 1.00.

Maximum Senior Secured Leverage Ratio. We must maintain a Senior Secured Leverage Ratio of no more than 1.85 to 1.00. The Senior Secured Leverage Ratio is defined as the ratio of (a) all indebtedness of the loan parties on a consolidated basis that is secured by a lien on any property of any loan party (including the effective amount of all loans then outstanding under the Senior Credit Facility) to (b) Adjusted EBITDA. Our Maximum Senior Secured Leverage Ratio as of September 30, 2021 was 1.39 to 1.00.

The Senior Credit Facility contains various negative covenants that limit our ability to, among other things, incur certain additional indebtedness, grant certain liens, engage in certain asset dispositions, merge or consolidate, make certain payments, distributions, investments, acquisitions or loans, materially modify certain agreements, or enter into transactions with affiliates. The Senior Credit Facility also contains affirmative covenants that are customary for credit facilities of this type. As of September 30, 2021, we were in compliance with our various covenants under the Senior Credit Facility.

The Senior Credit Facility is secured by pledges of the equity of the portion of Spark HoldCo owned by us, the equity of Spark HoldCo’s subsidiaries, the Co-Borrowers’ present and future subsidiaries, and substantially all of
26


the Co-Borrowers’ and their subsidiaries’ present and future property and assets, including accounts receivable, inventory and liquid investments, and control agreements relating to bank accounts.

We are entitled to pay cash dividends to the holders of the Series A Preferred Stock and Class A common stock so long as: (a) no default exists or would result therefrom; (b) the Co-Borrowers are in pro forma compliance with all financial covenants before and after giving effect thereto; and (c) the outstanding amount of all loans and letters of credit does not exceed the borrowing base limits. Prior to the Fifth Amendment, which terminated Share Buyback Loans, we were entitled to repurchase up to an aggregate amount of 10,000,000 shares of our Class A common stock, and up to $92.7 million of Series A Preferred Stock through one or more normal course open market purchases through NASDAQ so long: (a) no default existed or would result therefrom; (b) the Co-Borrowers were in pro forma compliance with all financial covenants before and after giving effect thereto; and (c) the outstanding amount of all loans and letters of credit did not exceed the borrowing base limits.

The Senior Credit Facility contains certain customary representations and warranties and events of default. Events of default include, among other things, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults and cross-acceleration to certain indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments in excess of $5.0 million, certain events with respect to material contracts, and actual or asserted failure of any guaranty or security document supporting the Senior Credit Facility to be in full force and effect. A default will also occur if at any time W. Keith Maxwell III ceases to, directly or indirectly, own at least 13,600,000 Class A and Class B shares on a combined basis (to be adjusted for any stock split, subdivisions or other stock reclassification or recapitalization), and a controlling percentage of the voting equity interest of the Company, and certain other changes in control. If such an event of default occurs, the lenders under the Senior Credit Facility would be entitled to take various actions, including the acceleration of amounts due under the facility and all actions permitted to be taken by a secured creditor.

Subordinated Debt Facility

In October 2021, the Company entered into an Amended and Restated Subordinated Promissory Note in the principal amount of up to $25.0 million (the “Subordinated Debt Facility”), by and among the Company, Spark HoldCo and Retailco. The Subordinated Debt Facility amended and restated the Subordinated Promissory Note dated June 2019, by and among the Company, Spark HoldCo and Retailco, solely to extend the maturity date from January 31, 2023 to January 31, 2025.

The Subordinated Debt Facility allows us to draw advances in increments of no less than $1.0 million per advance up to the maximum principal amount of the Subordinated Debt Facility. Advances thereunder accrue interest at 5% per annum from the date of the advance. We have the right to capitalize interest payments under the Subordinated Debt Facility. The Subordinated Debt Facility is subordinated in certain respects to our Senior Credit Facility pursuant to a subordination agreement. We may pay interest and prepay principal on the Subordinated Debt Facility so long as we are in compliance with the covenants under our Senior Credit Facility, are not in default under the Senior Credit Facility and have minimum availability of $5.0 million under the borrowing base under the Senior Credit Facility. Payment of principal and interest under the Subordinated Debt Facility is accelerated upon the occurrence of certain change of control or sale transactions.

As of September 30, 2021, and December 31, 2020, there were $10.0 million and zero outstanding borrowings under the Subordinated Debt Facility.
10. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. Fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. This includes the credit standing of counterparties involved and the impact of credit enhancements.
27


We apply fair value measurements to our commodity derivative instruments based on the following fair value hierarchy, which prioritizes the inputs to the valuation techniques used to measure fair value into three broad levels:

Level 1—Quoted prices in active markets for identical assets and liabilities. Instruments categorized in Level 1 primarily consist of financial instruments such as exchange-traded derivative instruments.
Level 2—Inputs other than quoted prices recorded in Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 primarily include non-exchange traded derivatives such as over-the-counter commodity forwards and swaps and options.
Level 3—Unobservable inputs for the asset or liability, including situations where there is little, if any, observable market activity for the asset or liability.

As the fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3), the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. These levels can change over time. In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. In these cases, the lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present assets and liabilities measured and recorded at fair value in our condensed consolidated balance sheets on a recurring basis by and their level within the fair value hierarchy (in thousands):
Level 1 Level 2 Level 3 Total
September 30, 2021        
Non-trading commodity derivative assets $ 1,079  $ 43,543  $ —  $ 44,622 
Trading commodity derivative assets 28  658  —  686 
Total commodity derivative assets $ 1,107  $ 44,201  $   $ 45,308 
Non-trading commodity derivative liabilities $ —  $ (77) $ —  $ (77)
Trading commodity derivative liabilities —  (1,092) —  (1,092)
Total commodity derivative liabilities $   $ (1,169) $   $ (1,169)
Level 1 Level 2 Level 3 Total
December 31, 2020