VIASP 8-K
Via Renewables, Inc. (VIASP)
8-K
2022-11-03
For: 2022-11-02
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Added on
April 06, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 2, 2022
| (Exact Name of Registrant as Specified in its Charter) | ||||||||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) | ||||||
(Address of principal executive offices)
(713 ) 600-2600
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols(s) | Name of exchange on which registered | ||||||
Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share | ||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
2
Item 2.02 Results of Operations and Financial Condition.
On November 2, 2022, Via Renewables, Inc. (the “Company”) issued a press release announcing third quarter 2022 earnings (the “Press Release”). The Press Release is being furnished as Exhibit 99.1 to this Current Report and is incorporated by reference herein.
The information in Item 2.02 of this Current Report on Form 8-K is being “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, and is not incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, unless specifically identified therein as being incorporated by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | ||||
| 99.1 | Press Release of Via Renewables, Inc. November 2, 2022. | ||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
3
EXHIBIT INDEX
| Exhibit No. | Description | ||||
| 99.1 | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: November 3, 2022
| Via Renewables, Inc. | |||||
| By: | /s/ Mike Barajas | ||||
| Name: | Mike Barajas | ||||
| Title: | Chief Financial Officer | ||||
5
Via Renewables, Inc. Reports Third Quarter 2022 Financial Results
HOUSTON, November 2, 2022 (ACCESSWIRE) -- Via Renewables, Inc. ("Via Renewables" or the "Company") (NASDAQ: VIA, VIASP), an independent retail energy services company, today reported financial results for the quarter ended September 30, 2022.
Key Highlights
•Reported $(4.9) million in Net Loss and $15.1 million in Adjusted EBITDA for the third quarter
•Achieved $16.6 million in Gross Profit and $30.5 million in Retail Gross Margin for the third quarter
•Total RCE count of 336,000 as of September 30, 2022
•Total Liquidity of $67.7 million as of September 30, 2022
"Via is pleased to announce that in August 2022 we entered into an agreement to acquire a book of retail natural gas customers consisting of approximately 18,700 RCEs in the Florida market. There was no upfront cost and the acquisition will be immediately accretive to Adjusted EBITDA beginning in the third quarter of 2022. In addition, to grow the book, Via significantly increased its customer acquisition spend, spending $1.7 million in the third quarter of 2022 compared to $0.3 million in the third quarter of 2021." said Keith Maxwell, Via Renewables’ President and Chief Executive Officer.
Summary Third Quarter 2022 Financial Results
Net Loss for the quarter ended September 30, 2022, was $(4.9) million compared to Net Income of $34.7 million for the quarter ended September 30, 2021. $41.9 million of the decrease was the result of a reduction in the mark-to-market on our hedges, compared to the prior year. The decrease in Net Income was partially offset by a reduction in both income tax expense and depreciation and amortization expense.
For the quarter ended September 30, 2022, Via Renewables reported Adjusted EBITDA of $15.1 million compared to Adjusted EBITDA of $22.0 million for the quarter ended September 30, 2021. Lower Adjusted EBITDA was driven mainly by a reduction of a legal accrual and a payroll tax credit in the third quarter of 2021. In addition we also had higher customer acquisition spend.
For the quarter ended September 30, 2022, Via Renewables reported Gross Profit of $16.6 million compared to Gross Profit of $57.7 million for the quarter ended September 30, 2021. The decrease, compared to the prior year, was largely the result of a reduction in the mark-to-market on our hedges.
For the quarter ended September 30, 2022, Via Renewables reported Retail Gross Margin of $30.5 million compared to Retail Gross Margin of $30.9 million for the quarter ended September 30, 2021. Higher volumes offset by lower unit margins resulted in a decrease in our Gas Retail Gross Margin. Lower volumes offset by higher unit margins resulted in an increase in our Electric Retail Gross Margin.
| Liquidity and Capital Resources | |||||
| ($ in thousands) | September 30, 2022 | ||||
| Cash and cash equivalents | $ | 40,403 | |||
Senior Credit Facility Availability (1) | 22,247 | ||||
Subordinated Debt Facility Availability (2) | 5,000 | ||||
| Total Liquidity | $ | 67,650 | |||
(1) Reflects amount of Letters of Credit that could be issued based on existing covenants as of September 30, 2022.
(2) The availability of the Subordinated Facility is dependent on our Founder's discretion.
Dividend
On October 20, 2022, Via Renewables’ Board of Directors declared quarterly dividends of $0.18125 per share on its Class A common stock payable on December 15, 2022 to holders of record on December 1, 2022, and $0.666071 per share on its Series A Preferred Stock payable on January 17, 2023 to holders of record on January 1, 2023.
Business Outlook
Mr. Maxwell concluded, "We're beginning to see Utilities raise rates to keep up with rising energy prices, which presents an opportunity for Via to be a more competitive option. Heading into the winter, we're positioned well to navigate these rising commodity prices. At the same time, Via is also enjoying an uptick in organic sales while also evaluating potential book acquisitions. Via's goal is to leverage our industry knowledge and business relationships to continue to grow our book and drive long term sustainable growth."
Conference Call and Webcast
Via will host a conference call to discuss third quarter 2022 results on Thursday, November 3, 2022, at 10:00 AM Central Time (11:00 AM Eastern).
A live webcast of the conference call can be accessed from the Events page of the Via Renewables Investor Relations website at https://viarenewables.com/. An archived replay of the webcast will be available for twelve months following the live presentation.
About Via Renewables, Inc.
Via Renewables, Inc. is an 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 natural gas and electricity. Headquartered in Houston, Texas, Via Renewables currently operates in 102 utility service territories across 19 states and the District of Columbia. Via Renewables 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 Via Renewables Investor Relations website at https://viarenewables.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,” "could," “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “project,” or other similar words. All statements, other than statements of historical fact included in this earnings release are forward-looking statements. The forward-looking statements include statements regarding the impacts of the 2021 severe weather event, cash flow generation and liquidity, business strategy, prospects for growth and acquisitions, outcomes of legal proceedings, ability to pay and amount of cash dividends and distributions on our Class A common stock and Series A Preferred Stock, 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 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:
•the ultimate impact of the 2021 severe weather event, including future benefits or costs related to ERCOT market securitization efforts, 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 margins we achieve, and interest rates;
•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 and covenants in our debt agreements and collateral requirements;
•credit risk with respect to suppliers and customers;
•our ability to acquire customers and actual attrition rates;
•changes in cost to acquire customers;
•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, 2021, and other public filings and press releases.
You should review the risk factors and other factors noted throughout 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.
For further information, please contact:
Investor Relations:
Stephen Rabalais,
832-200-3727
Media Relations:
Kira Jordan,
832-255-7302
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, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Retail revenues | $ | 117,187 | $ | 98,267 | $ | 343,592 | $ | 293,721 | |||||||||||||||
| Net asset optimization revenue (expense) | 1,672 | (288) | (480) | (542) | |||||||||||||||||||
| Total Revenues | 118,859 | 97,979 | 343,112 | 293,179 | |||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||
| Retail cost of revenues | 102,212 | 40,298 | 232,621 | 198,642 | |||||||||||||||||||
| General and administrative | 16,302 | 9,719 | 44,820 | 33,053 | |||||||||||||||||||
| Depreciation and amortization | 3,270 | 5,049 | 13,390 | 16,498 | |||||||||||||||||||
| Total Operating Expenses | 121,784 | 55,066 | 290,831 | 248,193 | |||||||||||||||||||
| Operating (loss) income | (2,925) | 42,913 | 52,281 | 44,986 | |||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||
| Interest expense | (2,002) | (1,298) | (5,129) | (4,161) | |||||||||||||||||||
| Interest and other income | 11 | 63 | 265 | 228 | |||||||||||||||||||
| Total other expenses | (1,991) | (1,235) | (4,864) | (3,933) | |||||||||||||||||||
| (Loss) income before income tax expense | (4,916) | 41,678 | 47,417 | 41,053 | |||||||||||||||||||
| Income tax (benefit) expense | (48) | 7,021 | 8,726 | 9,160 | |||||||||||||||||||
| Net (loss) income | $ | (4,868) | $ | 34,657 | $ | 38,691 | $ | 31,893 | |||||||||||||||
| Less: Net (loss) income attributable to non-controlling interests | (3,987) | 19,774 | 21,981 | 14,158 | |||||||||||||||||||
| Net (loss) income attributable to Via Renewables, Inc. stockholders | $ | (881) | $ | 14,883 | $ | 16,710 | $ | 17,735 | |||||||||||||||
| Less: Dividend on Series A Preferred Stock | 2,026 | 1,951 | 5,677 | 5,853 | |||||||||||||||||||
| Net (loss) income attributable to stockholders of Class A common stock | $ | (2,907) | $ | 12,932 | $ | 11,033 | $ | 11,882 | |||||||||||||||
| Net (loss) income attributable to Via Renewables, Inc. per share of Class A common stock | |||||||||||||||||||||||
| Basic | $ | (0.18) | $ | 0.83 | $ | 0.70 | $ | 0.79 | |||||||||||||||
| Diluted | $ | (0.18) | $ | 0.82 | $ | 0.70 | $ | 0.79 | |||||||||||||||
| Weighted average shares of Class A common stock outstanding | |||||||||||||||||||||||
| Basic | 15,858 | 15,572 | 15,754 | 14,965 | |||||||||||||||||||
| Diluted | 15,858 | 15,686 | 15,863 | 15,099 | |||||||||||||||||||
| Selected Balance Sheet Data | |||||||||||
| (in thousands) | September 30, 2022 | December 31, 2021 | |||||||||
| Cash and cash equivalents | $ | 40,403 | $ | 68,899 | |||||||
| Working capital | 120,322 | 114,188 | |||||||||
| Total assets | 328,154 | 355,276 | |||||||||
| Total debt | 113,000 | 135,000 | |||||||||
| Total liabilities | 174,931 | 217,637 | |||||||||
| Total stockholders' equity | 58,020 | 53,352 | |||||||||
| Selected Cash Flow Data | |||||||||||
| Nine Months Ended September 30, | |||||||||||
| (in thousands) | 2022 | 2021 | |||||||||
| Net cash provided by operating activities | $ | 21,211 | $ | 18,772 | |||||||
| Net cash used in investing activities | $ | (6,400) | $ | (3,689) | |||||||
| Net cash (used in) provided by financing activities | $ | (47,780) | $ | 11,352 | |||||||
| Operating Segment Results | |||||||||||||||||||||||
| (in thousands, except volume and per unit operating data) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Retail Electricity Segment | |||||||||||||||||||||||
| Total Revenues | $ | 104,970 | $ | 92,104 | $ | 275,301 | $ | 242,548 | |||||||||||||||
| Retail Cost of Revenues | 92,816 | 41,035 | 189,092 | 179,762 | |||||||||||||||||||
| Less: Net (loss) gain on non-trading derivatives, net of cash settlements | (16,353) | 22,359 | 14,240 | 46,711 | |||||||||||||||||||
| Non-recurring event - Winter Storm Uri | — | 497 | 9,565 | (64,403) | |||||||||||||||||||
Retail Gross Margin (1) — Electricity | $ | 28,507 | $ | 28,213 | $ | 62,404 | $ | 80,478 | |||||||||||||||
Volumes — Electricity (MWhs) (3) | 694,035 | 777,340 | 1,982,684 | 2,013,468 | |||||||||||||||||||
Retail Gross Margin (2) (4) — Electricity per MWh | $ | 41.07 | $ | 36.29 | $ | 31.47 | $ | 39.97 | |||||||||||||||
| Retail Natural Gas Segment | |||||||||||||||||||||||
| Total Revenues | $ | 12,217 | $ | 6,163 | $ | 68,291 | $ | 51,173 | |||||||||||||||
| Retail Cost of Revenues | 9,396 | (737) | 43,529 | 18,880 | |||||||||||||||||||
| Less: Net gain on non-trading derivatives, net of cash settlements | 872 | 4,243 | 4,263 | 5,449 | |||||||||||||||||||
Retail Gross Margin (1) — Gas | $ | 1,949 | $ | 2,657 | $ | 20,499 | $ | 26,844 | |||||||||||||||
| Volumes — Gas (MMBtus) | 1,170,857 | 668,063 | 7,771,468 | 5,765,588 | |||||||||||||||||||
Retail Gross Margin (2) — Gas per MMBtu | $ | 1.67 | $ | 3.98 | $ | 2.64 | $ | 4.66 | |||||||||||||||
(1) Reflects the Retail Gross Margin attributable to our Retail Electricity Segment or Retail Natural Gas Segment, as applicable. Retail Gross Margin is a non-GAAP financial measure. See "Non-GAAP Performance Measures" for a reconciliation of Retail Gross Margin to its most directly comparable financial measures presented in accordance with GAAP.
(2) Reflects the Retail Gross Margin for the Retail Electricity Segment or Retail Natural Gas Segment, as applicable, divided by the total volumes in MWh or MMBtu, respectively.
(3) Excludes volumes (8,402 MWhs) related to Winter Storm Uri impact for the nine months ended September, 30, 2021.
(4) Retail Gross Margin - Electricity per MWh excludes Winter Storm Uri impact for the nine months ended September 30, 2021.
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, plus or minus (ii) net (loss) gain 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 the provision for income taxes, interest expense and depreciation and amortization. This conforms to the calculation of Adjusted EBITDA in our Senior Credit Facility.
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 and amortize such costs over two years. We do not deduct the cost of customer acquisitions through acquisitions of businesses or portfolios of customers in calculating 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 these instruments. We also deduct non-cash compensation expense that results from the issuance of restricted stock units under our long-term incentive plan due to the non-cash nature of the expense.
We adjust from time to time other non-cash or unusual and/or infrequent charges due to either their non-cash nature or their infrequency. We have historically included the financial impact of weather variability in the calculation of Adjusted EBITDA. We will continue this historical approach, but during the first quarter of 2021 we incurred a net pre-tax financial loss of $64.9 million due to Winter Storm Uri. This loss was incurred due to uncharacteristic extended sub-freezing temperatures across Texas combined with the impact of the pricing caps ordered by ERCOT. We believe this event is unusual, infrequent, and non-recurring in nature.
As our Senior Credit Facility is considered a material agreement and Adjusted EBITDA is a key component of our material covenants, we consider our covenant compliance to be material to the understanding of our financial condition and/or liquidity. Our lenders under our Senior Credit Facility allowed $60.0 million of the $64.9 million pre-tax storm loss incurred in the first quarter of 2021 to be added back as a non-recurring item in the calculation of Adjusted EBITDA for our Debt Covenant Calculations. We received a $0.4 million credit from ERCOT for winter storm related losses during the third quarter of 2021, resulting in a net pre-tax storm loss of $64.4 million for the year ended December 31, 2021. In June 2022, we received $9.6 million from ERCOT related to PURA Subchapter N Securitization financing. For consistent presentation of the financial impact of Winter Storm Uri, $5.2 million of the $9.6 million is reflected as non-recurring items reducing Adjusted EBITDA for the nine months ended September 30, 2022.
We believe that the presentation of Adjusted EBITDA provides information useful to investors in assessing our performance and results of operations and that Adjusted EBITDA is also useful for an understanding of our financial condition and/or liquidity due to its use in covenants in our Senior Credit Facility. Adjusted EBITDA is a supplemental financial measure that management and external users of our 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, historical cost basis and specific items not reflective of ongoing operations;
•the ability of our assets to generate earnings sufficient to support our proposed cash dividends;
•our ability to fund capital expenditures (including customer acquisition costs) and incur and service debt; and
•our compliance with financial debt covenants in our Senior Credit Facility.
Retail Gross Margin
We define retail gross margin as gross profit less (i) net asset optimization revenues (expenses), (ii) net gains (losses) on non-trading derivative instruments, (iii) net current period cash settlements on non-trading derivative instruments and (iv) gains (losses) from non-recurring events (including non-recurring market volatility). 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 segments as a result of recurring operations. As an indicator of our retail energy business’s operating performance, retail gross margin should not be considered an alternative to, or more meaningful than, gross profit, 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.
We have historically included the financial impact of weather variability in the calculation of Retail Gross Margin. We will continue this historical approach, but during the first quarter of 2021 we added back the $64.9 million financial loss incurred related to Winter Storm Uri, as described above, in the calculation of Retail Gross Margin because the extremity of the Texas storm combined with the impact of unprecedented pricing mechanisms ordered by ERCOT is considered unusual, infrequent, and non-recurring in nature. In June 2022, we received $9.6 million from ERCOT related to PURA Subchapter N Securitization financing. The $9.6 million is reflected as a non-recurring item reducing Retail Gross Margin for the nine months ended September 30, 2022 for consistent presentation of the financial impacts of Winter Storm Uri.
The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities. The GAAP measure most directly comparable to Retail Gross Margin is gross profit. 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 (used in) operating activities, or gross profit. Adjusted EBITDA and Retail Gross Margin are not presentations made in accordance with GAAP and have 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), net cash provided by (used in) operating activities, and gross profit, 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 (used in) operating activities for each of the periods indicated.
| Reconciliation of Adjusted EBITDA to net income (loss): | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Net (loss) income | $ | (4,868) | $ | 34,657 | $ | 38,691 | $ | 31,893 | |||||||||||||||
| Depreciation and amortization | 3,270 | 5,049 | 13,390 | 16,498 | |||||||||||||||||||
| Interest expense | 2,002 | 1,298 | 5,129 | 4,161 | |||||||||||||||||||
| Income tax (benefit) expense | (48) | 7,021 | 8,726 | 9,160 | |||||||||||||||||||
EBITDA | 356 | 48,025 | 65,936 | 61,712 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Net (loss) gain on derivative instruments | (1,645) | 31,798 | 55,815 | 57,726 | |||||||||||||||||||
| Net cash settlements on derivative instruments | (14,078) | (5,660) | (35,922) | (6,050) | |||||||||||||||||||
| Customer acquisition costs | 1,684 | 309 | 4,274 | 765 | |||||||||||||||||||
| Plus: | |||||||||||||||||||||||
| Non-cash compensation expense | 668 | 441 | 2,590 | 2,012 | |||||||||||||||||||
| Non-recurring event - Winter Storm Uri | — | — | (5,162) | 60,000 | |||||||||||||||||||
| Non-recurring legal settlement | — | — | — | (2,225) | |||||||||||||||||||
| Adjusted EBITDA | $ | 15,063 | $ | 22,019 | $ | 39,197 | $ | 69,058 | |||||||||||||||
| Reconciliation of Adjusted EBITDA to net cash provided by operating activities: | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Net cash provided by operating activities | $ | 8,267 | $ | 9,604 | $ | 21,211 | $ | 18,772 | |||||||||||||||
| Amortization of deferred financing costs | (206) | (275) | (919) | (792) | |||||||||||||||||||
| Bad debt expense | (1,062) | (492) | (2,895) | (379) | |||||||||||||||||||
| Interest expense | 2,002 | 1,298 | 5,129 | 4,161 | |||||||||||||||||||
| Income tax (benefit) expense | (48) | 7,021 | 8,726 | 9,160 | |||||||||||||||||||
| Non-recurring event - Winter Storm Uri | — | — | (5,162) | 60,000 | |||||||||||||||||||
| Non-recurring legal settlement | — | — | — | (2,225) | |||||||||||||||||||
| Changes in operating working capital | |||||||||||||||||||||||
| Accounts receivable, prepaids, current assets | 2,144 | 6,456 | (7,229) | (25,305) | |||||||||||||||||||
| Inventory | 2,883 | 1,448 | 3,292 | 1,048 | |||||||||||||||||||
| Accounts payable and accrued liabilities | 508 | 2,952 | 21,306 | 15,809 | |||||||||||||||||||
| Other | 575 | (5,993) | (4,262) | (11,191) | |||||||||||||||||||
| Adjusted EBITDA | $ | 15,063 | $ | 22,019 | $ | 39,197 | $ | 69,058 | |||||||||||||||
| Cash Flow Data: | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 8,267 | $ | 9,604 | $ | 21,211 | $ | 18,772 | |||||||||||||||
| Net cash used in investing activities | $ | (1,240) | $ | (2,626) | $ | (6,400) | $ | (3,689) | |||||||||||||||
| Net cash (used in) provided by financing activities | $ | (10,199) | $ | (13,399) | $ | (47,780) | $ | 11,352 | |||||||||||||||
The following table presents a reconciliation of Retail Gross Margin to gross profit for each of the periods indicated.
| Reconciliation of Retail Gross Margin to Gross Profit | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Total Revenue | $ | 118,859 | $ | 97,979 | $ | 343,112 | $ | 293,179 | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Retail cost of revenues | 102,212 | 40,298 | 232,621 | 198,642 | |||||||||||||||||||
| Gross Profit | 16,647 | 57,681 | 110,491 | 94,537 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Net asset optimization revenue (expense) | 1,672 | (288) | (480) | (542) | |||||||||||||||||||
| (Loss) gain on non-trading derivative instruments | (1,413) | 32,262 | 54,570 | 58,214 | |||||||||||||||||||
| Cash settlements on non-trading derivative instruments | (14,068) | (5,660) | (36,067) | (6,054) | |||||||||||||||||||
| Non-recurring event - Winter Storm Uri | — | 497 | 9,565 | (64,403) | |||||||||||||||||||
| Retail Gross Margin | $ | 30,456 | $ | 30,870 | $ | 82,903 | $ | 107,322 | |||||||||||||||
Retail Gross Margin - Retail Electricity Segment (1)(2) | $ | 28,507 | $ | 28,213 | $ | 62,404 | $ | 80,478 | |||||||||||||||
| Retail Gross Margin - Retail Natural Gas Segment | $ | 1,949 | $ | 2,657 | $ | 20,499 | $ | 26,844 | |||||||||||||||
(1) Retail Gross Margin - Retail Electricity Segment for the three months ended September 30, 2021 includes a $0.5 million reduction related to the Winter Storm Uri credit settlements received and for the nine months ended September 30, 2021 includes a $64.9 million add back related to Winter Storm Uri.
(2) Retail Gross Margin for the nine months ended September 30, 2022 includes a deduction of $9.6 million related to proceeds received under an ERCOT (Winter Storm Uri) securitization mechanism in June 2022. See further discussion above.