Via Renewables, Inc. (VIASP) Q1 2024 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the Via Renewables, Inc., First Quarter 2024 Earnings Conference Call. My name is Paul, and I will be your operator for today. As a reminder, this conference is being recorded for replay purposes, and this call will be posted to Via Renewables Inc.'s website. I would now like to turn the conference over to Mr. Stephen Rabalais with Via Renewables. Please go ahead.

Thank you. Good morning, and welcome to Via Renewables' First Quarter 2024 Earnings Call. This call is also being broadcast via webcast, which can be located in the Investor Relations section of our website. With us today from management is our CEO, Keith Maxwell; and our CFO, Mike Barajas. Please note that today's discussion may contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. We urge everyone to review the safe harbor statement in yesterday's earnings release as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law. In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most comparable GAAP measures, please refer to yesterday's earnings release. With that, I'll turn the call over to Keith Maxwell, our CEO.

Thank you, Stephen. I want to welcome everyone to today's call. I'll begin by providing a summary of results for the first quarter. Then our CFO, Mike Barajas will provide more details on the financials. In the first quarter, we reported adjusted EBITDA of $15.1 million, which is a $3.7 million decrease from the prior year of $18.8 million, due to lower unit margins compounded by mild weather, which resulted in lower gas volumes. On a positive note, we grew our customer book to 338,000 RCEs compared to 335,000 RCEs at the start of the year. We also increased the percentage of our customer-based POR markets compared to the first quarter of 2023, which lowers our credit risk and bad debt exposure. Looking forward to our second quarter, we're happy to announce that we entered into an agreement to acquire approximately 12,500 RCEs in our existing markets. This acquisition will be accretive to our bottom line beginning in the second quarter of this year. This marks our first customer acquisition since the end of 2022, and we will continue to be open to any potential future tuck-in acquisitions, and we are committed to growing our customer base in line with long-term growth strategies. That concludes my prepared remarks. And now I'll turn the call over to Mike for his financial review. Mike?

Thanks, Keith. Good morning. In the first quarter, we achieved $15.1 million in adjusted EBITDA compared to last year's first quarter of $18.8 million. Retail gross margin for the quarter was $35.7 million compared with $40.3 million last year. In our retail electricity segment, gross margin was $18.9 million compared to $20.5 million in the first quarter last year. The decrease is due to lower unit margins, partially offset by higher volumes due to an increased RCE count. In our retail natural gas segment, gross margin was $16.2 million compared to $19.9 million in the first quarter last year. This was due to both lower unit margins and volumes year-over-year. G&A expenses were $17.3 million compared to $17.2 million in the first quarter last year, primarily due to increased sales and marketing expenses and legal fees. This was partially offset by a reduction in bad debt. We ended the quarter at 338,000 RCEs compared to 339,000 RCEs at the end of the first quarter of 2023 and up from 335,000 RCEs on December 31, 2023. Our attrition was 3.9%, which remained flat compared to the first quarter of 2023 due to lower attrition in our mass market book, offset by an uptick in commercial attrition. Our net income for the quarter was $19.1 million or income of $1.81 per fully diluted share compared to a net loss of $6.8 million or a loss of $1.26 per fully diluted share for the first quarter of 2023. The increase is mainly due to an increase in the mark-to-market on our hedges that we put in place to lock in margins on our retail contracts. We had a mark-to-market gain this quarter of $11.2 million compared to a mark-to-market loss of $22.6 million a year ago. We also had reductions in net asset optimization, depreciation, and interest expenses of $1.4 million, $1.3 million, and $800,000, respectively. The increase in net income was partially offset by a decrease in retail gross margin and increases in income tax and G&A expenses. Income tax expense increased to $4.8 million in the first quarter of 2024 compared to a benefit of $2 million in 2023. On April 15, we paid the quarterly cash dividend on our Series A preferred stock. On April 17, we declared a dividend in the amount of $0.76051 per share on our preferred stock to be paid on July 15. That's all I have. Back to Keith.

Thanks, Mike. I want to thank our employees for their care and dedication to growing and supporting Via, and to our suppliers for their continued support. I want to thank our customers for choosing us as their energy provider. We are excited about the future and look forward to connecting with you soon on our next call.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.