SPKE - Earnings call transcript Q3 2017

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Operator

Good morning, ladies and gentlemen. Welcome to the Spark Energy Inc.

Third Quarter 2017 Earnings Conference Call. My name is Bruce and I'll be your operator for today. At this time, all participants are in a listen-only mode. a and conduct at will will time. that we question-and-answer instructions session follow Later a conference posted reminder, for As Instructions] [Operator this and Inc. call Energy replay is this will Spark be on purposes recorded being website. I would conference Mr. turn over to like now to the Hettick Energy Inc. Spark with Christian ahead. go Please

Christian Hettick

assumptions this Investor that reasonable to discussion call. over be to Good morning statements, CFO, the the CEO, Please performance With from website that Presentations via which risks and Vice can of earnings Management our phone contain under our Spark call date. Events statements results note is believe in President that Lane. condition. third materially Robert quarter Kroeker; Energy, cause economic Nathan operations, subject management and to projections section make and and morning's future statements. as expectations, today's Inc.'s being located at financial these actual and concerning today welcome differ and be and These us and XXXX could forward-looking based our statements of is to of may forward-looking This Relations broadcast we live webcast, may President our sparkenergy.com. on which uncertainties are are from

future revise otherwise, no a forward-looking as as the events, to earnings to as statements, well the factors everyone that as review assurance or information, by our reasonable, we law. the that such Harbor except expectations give of release believe we We contained risk urge any forward-looking Safe Although provided or no new realized. be such in required reflected result obligation statements yesterday's in We are expectations filings. in publicly statement update will SEC undertake whether

and both results. call, morning's refer will operating measures financial this During of the Company's GAAP and financial to non-GAAP we

that to our is to For and with and like With GAAP measures we over use release. I'll nonpublic invite would FD, that, you Chief to website please the our address comparable web also We President disclose non-GAAP Regulation and to yesterday's measures, Kroeker, directly call regarding to Officer. regularly under financial Executive material check ir.sparkenergy.com. comply because to our most Nathan reconciliation the it information to refer our obligations earnings information turn

Nathan Kroeker

welcome you, I call. analysts shareholders and Christian. Thank want to today's our earnings to

Although XXXX details XXXX. highlight the as near exciting are did we we quarter the the quarter well developments represents up drivers. $XX.X ahead not X% to our the the as results achieved primary EBITDA Lane adjusted our of we EBITDA quite who Rob some over look live record our on will will to of of I third adjusted in as third expectations. an the the over will decrease seeing also million, overview call quarter quarter quarter I give XX.X recorded provide million a in We before to in the financials. I which turn CFO, of

year-over-year due three XXXX, volumes gross retail months high third margin the for XX, three million an ended September for reached with results quarter of quarter footprint of on addition full-quarter this on our coupled downward provider larger to and our two and Nature Perigee Mother the with the all-time months, first which Our fronts. Verde third year. the represents XX.X results pressure increased provided a

down a Harvey down blow and of the And cooling country footprint degree dealt being extremely days approximately of year-over-year end secondly, saw XX% approximately the XX% to customers compared most across recent across our the resulted our throughout we Gulf significant Coast First to Hurricane quarter the five-year at all temperatures the mild August. average. in

strength of community to of generosity we the and are release, in their awe the storm. press a in mentioned previously entire response the As in

generosity in in customers. well, Despite and New insider a to operate retail disruption gross in allowing quarter. who losses affected on third our the our Hurricane as employees for financial bad for to proud were well our to otherwise in included staff and in our debt employees them well This as the of our am all loads that over dozens program, business EBITDA XX adjusted us working adversely X.X% standpoint, third we the Harvey and and and with to able line hours our had continuity operations which drivers $XXX,XXX executed our that back with ERCOT averaged Connecticut We an the in employees were York Gulf historical virtually monthly and Key From operational is execution, to and matching of home forecasted fellow able X.X% increase allowed members range for our margin in as of emergency and care board with no in experienced quarter. Coast. the to prepared to we from financial employees landfall selling center, making significant X.X%. majority planning have personal offset at of contributed Maine, our quarter, I plan electricity we in loss, the the our tell employees. that loss business lost we teams raise attrition Between and While the our results focus through of were along norms you hurricane the company pitched our the offsite sales on prior customers. our would on to to grid in and to working

That as RCEs. and attrition a were XXX,XXX able our organically we RCEs XXX,XXX new continued the well as the third new XXX,XXX pace a to transaction RCEs organic at Verde in with channels. of slower quarter added a been add total have of to we only to also We said, we some as focus being compared growth markets shifting total

M&A, ten to in you our down know Turning as since closed XXXX. IPO acquisitions we've

are very move our to in process shareholders. continue potential opportunities that only as we're selective We're immediately and While continued our expectations accretive seller’s upwards. evaluate to have we'll we transactions, fewer seeing pursue transactions evaluation to

We with over exceeding and on opportunities discussions international additional our growth we're case. continue original we the investment to UK intent in in several customers front executed strong of and see for countries different XX,XXX group in are currently We're a investment and currently footprint the in a a Canada, few in Ireland. Japan, has seeing an equity and have counter a parties that serving letter

with Looking ahead, will of international smaller anticipate are form growth equity growth I in potential. would significant that be the investments,

as we Although as opportunities they well. other at look arise will creative

of wanted have seamlessly already Speaking integrated effort our integration and X. quick and give update a of we The on currently functions. underway accounting, the successfully supply, and we risk acquired Verde integration you July I on which Verde Energy treasury to M&A, is

to realizing Although integrate existing the additional the business over our is restricted synergies continue ability months. coming to somewhat the we completely expect earn-out, to due

and as our mentioned opt-in brands Finally, family web-based of Verde’s begun positive channel call, have on to the we I extremely last across results. realize out already rolling were about we excited

With our a next and the an expected uplift using integration on there to initiative providing process potential further slowdown next two referenced over in on efficiencies driving call. earnings significant opportunity our is a plan related we're I and acquisitions, I result M&A years previous additional earlier, this integrate synergies. these activity to of We believe update adjusted on our activities this as EBITDA the

XXX we we in note modestly to in the call results previously that annual XXX experienced million QX, to to below our facility recently amended upsize we for With come XXXX expect credit weather Rob. provided. I our over turn mild of Harvey Hurricane capacity. guidance One and the the to before that had effects of million agreement final We

to into Texas year, historical credit two Bank a new which we in put is this syndicated Additionally, to With facility good be new in stewards and three now capital. our to welcome months. really banks Bank testament of last we've our added have four banks of Amegy that the the the this, trust facility our performance credit and banks us

thunder I'm that financial steal turn and really organization. with will just to proud support Rob, of banking all to over the Rob? banking review. who And relationships call to I our our his Rob the for new continue partners of now Sorry

Robert Lane

Thank $XX.X in of quarter, $XX.X Retail margin $XX.X last mindful comparison this million year, a $XX.X for There morning. in EBITDA, compared X% million was to last last quarter two are compared of the In million to XX%. we year. the million. an increase you decrease of with gross year's of to quarter be Dave. Good achieved adjusted third issues

acquisitions First, have the we the additional we serving our are following customers. Perigee Verde load and

the increase by is that effects of expected quarter milder offset and weather Harvey. Hurricane than However, third the significantly

the commissions debt. G&A our side, the to certain an increase expenses revaluation $XX.X and Harvey serve, associated last the On an some was we one-time customers larger increased commercial from charges paid the of book, payments year million associated partially companies. by increase to a This purchase bad increase to with offset performance in with due number primarily increased in major of Hurricane of XX%

mentioned, from we The to over with a Company. Verde second Nathan the the to of and XXX,XXX additional acquisition drive the the two cost As expect synergies third of the years. increase business quarter up next businesses ended existing primary out was record our savings the this We RCEs, manage XX% driver quarter. of

compared spent primarily of from million expense Interest to for noncash expense note. before we $X.X the XXXX, for the accretion during because million million for quarter million for the quarter $X.X to RCEs quarter. $X.X sellers the as increased to of to of In earn-out taxes rose XXX,XXX and million quarter. higher liabilities $X.X due the million tax acquire addition, quarter $X.X primarily $X.X Income net income to of organically third our

$X.XX mark our per to compared on adjusted this contracts. in with the mark lock $X.X loss of put to net was a is to margins to quarter $XX.X income gain associated $XX.X primarily net diluted a quarter market The driven third hedges of million year share market for million million and $X.X by a had compared per income or $X.XX share on mark million in of ago. of loss non-cash We the the quarter we place split Our market a fully basis. accounting a for to XXXX retail diluted in fully increase to

does price in we receive cash being other curve mark we we reminded that expect actual fixed equal the the non-cash to ultimately As all when the market investors change not those experienced to things past, contract. have on commodity gain falls a

completed our of up the we facility credit in our an our us to to Turning facility total on exercise last Since accordion commitments. have recently $XXX our amendment allows to million that and executed call, credit liquidity. increase

welcome which total to million. facility, pleased new the $XXX are banks commitments We to to two brings our

our common A winter season our customers. October serve and into On capital and flexibility our cash the December stock on XX, cash quarterly be we On per approximately grow paid A quarterly move stock needs our paid on have our customer stock. of meet dividend XX, to dividend our continue the Series third to per September XX be to on cents to we January dividend paid XX.XXX best the on paid we on the working common Class As preferred to base, quarter October believe share we we order on stock the our XX.X and on XX, preferred our in dividend of share XX. cents announced we

to Nathan. past, these expect Back forward dividends on That’s you have. As to we we've stated basis. in go a all the I quarterly pay

Nathan Kroeker

to business, huge We're since quarter. our in our three and success tripling Rob. much company's for hurdles at here we're almost contribution the and Nature despite this everyone still at to very Thanks, greater size years Due Mother EBITDA, ago. the scale adjusted their proud diversity able threw $XX Spark of million IPO that the of generate our in us

from Operator? fully We as with are but well will now the we evaluate the acquisitions, on previous continue numerous to we scale focused significant will analysts. open of for acquisitions forward. line questions And realizing as synergies up economies from as go our that, potential our

Operator

Instructions] our from line from first of question Carter And the B. comes Riley. Driscoll [Operator

Carter Driscoll

international of tend an even is, So multiple it about multiples you LOI in to with past. mentioned be issue opportunity have my have and first be a least terms may like they the higher question in group recent internationally because You been ability similar you at terms accretive to talk you can the experience seems internationally, timing? in the of most

amount at year, even maybe should assuming contribution. dollar some the that you're 'XX, investments talking half at some expected broadly? about second equity then then maybe maybe just additional And of maybe So of targeting timing markets you're it XXXX. I'm of be and least

Nathan Kroeker

Sure.

you understand strategy think the I pretty well.

businesses changed we've some is looked here previously back why planning our and have multiples at acquisitions approach. they kind to are trade point, businesses, which involved managing game identify growth management that skin international at to need of than to What expertise, domestic lot We maybe do pulled are size a where of proven that in the somewhat in and teams management can your of higher is that equity tend of we're be investments. didn't small share but we capital teams have make have that type business, the and in

that with up local But In to terms buy for are the guessing investments to kind in and initially grow those for of digit get in size, single opportunity there. these with be I'm XX% to interest us from that's XX% ownership to million markets. an opportunity the team going management of

start line. contribution, In going it's to these mean of I hit a before EBITDA to the point, terms year us bottom things your take dropping and

markets. question was there's mean on other -- The there's obviously I Canada.

it close aspect and has There's handful Europe a that it's very market, companies While of to the are US it. and to a of pretty about. it's it’s talking a the markets commercial in lot a similar healthy not huge

Zealand well. would You've got that That's pretty consider. the Australia and New as footprint much we

Carter Driscoll

can have in then guided mild obviously, impact where just talk to built you're the the And weather? may of, of then effects your believe part your profile, may the And lower a or you had what very XQ -- some range? XQ? Okay. Obviously, on end in maybe have the not for maybe you XQ? you maybe expectations were very expectations not for from summer Northeast, And about what for going a you're of probably to that led practically, that it was come have Harvey latter for it you particular going towards to that high the

Nathan Kroeker

So functioning. on electricity was talking getting week house their weeks in to two on homes, was and since meters Harvey turned give were were firsthand a the actually and my my going about for water. had just going I'm yet you meter some What flooded under but experience customers to back you not

that, out to supply while or revenue on provide for with have associated lost we COGS So we that. to continue

So of it. that one was piece

overall went since piece other the to just were down normal load The slightly of result, our on in long a hedges as was we weather. it we hedge Houston and

some last deploying our some associated to back of then that second hedges. impacts, supply a just were it sell it. booked think debt. third little of going We then we having environment, quarter. of it bad debt job to event. slight low our are and bad disaster So the on a a of to we think back We've the good That the And loss recovery following taken done piece and seen piece We into expense longer that typically the commodity selling the had and out bit incremental receivables G&A estimating is a location. was we with that delays we've aging folks the is be out what in

QX. bleed of believe the and negative over significant I effects to the any into items all captured storm expect not would QX So we've in

weather. weather six of weather Your We're I November some normal. to started long next second models that but to over fairly us off days, supposed few QX. that October cold weeks, get to term, part it’s in telling question forecasting be mild okay. are unfortunately be was predicted the mean, seemed next the our on

the we’re full that of for kind when range a is little of year. I factored say think below the what’s be to I going All in

Carter Driscoll

sounds kind and/or line a XQ, impact, integrate ongoing a the effects -- Right, it's bit Maybe say acquisition should the thinking largely, of shouldn't as should basis? onetime be go-forward be -- from lastly, in hurricane right. within continue we that operational weather, like Perigee, sequestered XQ, that, just not it onetime are it to XQ perspective, but a Obviously, OpEx the to effects be finish in that on from up there you -- little Harvey, different continues XQ. I items onetime Verde perspective have mild modeling kept any and you cost it's an will about into customer

Nathan Kroeker

Yeah.

So year. million full end But think on the had to one million acquisition previously bad we spend to we don't customer were for well, I and payment of when $XX a different that communicated the was of utilizes standpoint, G&A accounting that than a Verde less number get going you that that sales things have CAC. is $XX we from why year, number. that? costs you're technical channel the was capture going Well, within between the structure to the a have to costs say, the slightly instead of and those

look the numbers the are the as opposed to CAC those year. G&A may costs some of now line. rolling the my this to at But what communicated it are year of acquisition line had So in we down beginning like CAC through effect, relative

So do that and do not the model, explain is internally about things we we make it how pull you one there it, of to easier that okay, how thinking for we're out, clarify yet. that we're guys but

Operator

[Operator from Sophie Instructions] next our Guggenheim. the comes Karp And from line question of

Sophie Karp

A for me. couple of questions

us on any thinking York regulatory First, potentially? you'd you levels New share there is tell on you that these what secondly, your buybacks think is is meaningful that at like the share? to proceeding in could And update

Nathan Kroeker

Okay.

for that is every buyback, anticipated we're share head of think So collateral highest we're to obviously mean, so as progressing quarter good we'll terms on winter. that the along how cognizant in share collateral and season, requirements that the of first closely the I stewards updates undervalued. watching the we It we're being requirement of into fact our be tends I be also provide to buyback. off stock very said, our currently But working mean capital we

New pieces there the York regulatory front, two On there. are

currently courts few turn I November. to customers and overall the Whatever X that's back of income There's have but going stay our moratorium. a revisit that low less is outcome the one on is low utility the to going to in next we're fully first that that X to X% and over are business. income a The the here the than over of to months, anticipate that

So resetting a for together late November ago. The relatively into hasn't two there's was requesting day, the of order is insignificant on gotten really piece. scheduled this broader this of with of piece and motion have commission dismiss In settlement to and enter the the and filed currently hearing the ESCOs group bigger a end to years meantime, it this us. at where on my from position to changed discussions nearly the

you're to continue up that you're included that have is or will allow to what but going marketplace. think of ongoing a with end proactively financial businesses retailers market, health overall to the improve rule to commitments work going to are and the of I healthy going get disclosure have in ourselves set requirements changes or that ESCOs, will commission the with

three, continuing in four, work we're I'm one, business a So, years cooperatively York. we'll with from five to have that two, and them hopeful good now New

Operator

[Operator further Instructions] I'm no questions. this showing time, At

Nathan Kroeker

today's All to soon. for right. Well to you again thanks everybody and participating talking we call look in forward

Operator

participating forward everybody. Thank call. soon. for talking great today’s day in Have a look you you to again to We

Via Renewables (VIASP) 3 Nov 172017 Q3 Earnings call transcript