Wed, 13 Nov 2019

HOUSTON, TX / ACCESSWIRE / November 5, 2019 / Spark Energy, Inc. ('Spark' or the 'Company') (NASDAQ: SPKE), an independent retail energy services company, today reported financial results for the quarter ended September 30, 2019.

Key Highlights

• Achieved $28.1 million in Adjusted EBITDA, $58.2 million in Retail Gross Margin, and $37.7 million in Net Income for the third quarter

• Total RCE count of 772,000 as of September 30, 2019

• Average monthly attrition of 4.0%

• ERCOT summer insurance hedging strategy performed very well

'Our third quarter was strong, with significant improvements compared to the third quarter of last year. As expected, higher unit margins more than offset the slight increase we saw in G&A compared to the third quarter of 2018. Our overall customer book is much healthier with attrition in line with prior year. We are approaching the final steps of our brand and system consolidations and still expecting over $22 million in run-rate savings by year end 2019. We have greatly simplified our platform and expect to realize improved economies of scale and empower Spark's story going forward,' said Nathan Kroeker, Spark's President and Chief Executive Officer.

Summary Third Quarter 2019 Financial Results

For the quarter ended September 30, 2019, Spark reported Adjusted EBITDA of $28.1 million compared to Adjusted EBITDA of $18.6 million for the quarter ended September 30, 2018. This increase of $9.5 million was driven by an increase in retail gross margin, more than offsetting increases in customer acquisition spending compared to the third quarter of 2018.

For the quarter ended September 30, 2019, Spark reported Retail Gross Margin of $58.2 million compared to Retail Gross Margin of $45.8 million for the quarter ended September 30, 2018. This increase of $12.4 million was primarily attributable to a 78% increase in electricity unit margins and a 13% increase in gas unit margins. Our ERCOT summer insurance hedging strategy combined with an increased percentage of residential customers in the overall customer book contributed to the successful quarter.

Net income for the quarter ended September 30, 2019, was $37.7 million compared to net income of $18.8 million for the quarter ended September 30, 2018. The increase in performance compared to the prior year was primarily the result of the increase in the non-cash mark to market position of our hedge portfolio of $25.3 million compared with the non-cash mark to market position of our hedge portfolio of $18.9 million in the third quarter of 2018. This combined with the $12.4 million increase in retail gross margin allowed for significant increased performance.

Liquidity and Capital Resources

($ in thousands)

September 30, 2019

Cash and cash equivalents

$ 42,580

Senior Credit Facility Availability (1)

63,113

Subordinated Debt Facility Availability (2)

14,496

Total Liquidity

$ 120,189

(1) Reflects amount of Letters of Credit that could be issued based on existing covenants as of September 30, 2019.

(2) The availability of the Subordinated Debt Facility is dependent on our Founder's willingness and ability to lend.

Dividend

On October 21, 2019, Spark's Board of Directors declared quarterly dividends of $0.18125 per share of Class A common stock payable on December 16, 2019, to holders of record on December 2, 2019, and $0.546875 per share of Series A Preferred Stock payable on January 15, 2020 to holders of record on January 1, 2020.

Business Outlook

Mr. Kroeker concluded, 'Based on all our work consolidating our brands and systems and our strong unit margins, we expect a strong finish to 2019.'

Conference Call and Webcast

Spark will host a conference call to discuss third quarter 2019 results on Wednesday, November 6, 2019, at 10:00 AM Central Time (11:00 AM Eastern).

A live webcast of the conference call can be accessed from the Events & Presentations page of the Spark Energy Investor Relations website at http://ir.sparkenergy.com/events-and-presentations. An archived replay of the webcast will be available for twelve months following the live presentation.

About Spark Energy, Inc.

Spark Energy, Inc. is an independent retail energy services company founded in 1999 that provides residential and commercial customers in competitive markets across the United States with an alternative choice for their natural gas and electricity. Headquartered in Houston, Texas, Spark currently operates in 19 states and serves 94 utility territories. Spark offers its customers a variety of product and service choices, including stable and predictable energy costs and green product alternatives.

We use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Investors should note that new materials, including press releases, updated investor presentations, and financial and other filings with the Securities and Exchange Commission are posted on the Spark Energy Investor Relations website at ir.sparkenergy.com. Investors are urged to monitor our website regularly for information and updates about the Company.

Cautionary Note Regarding Forward Looking Statements

This 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,' '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, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this earnings release and may include statements about business strategy and prospects for growth, customer acquisition costs, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government 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:

• 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 regulation, 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 charges by, the ISOs in the regions in which we operate;

• competition; and

• the 'Risk Factors' in our latest Annual Report on Form 10-K for the year ended December 31, 2018, in our Quarterly Reports on Form 10-Q, and other public filings and press releases.

You should review the risk factors and other factors noted throughout or incorporated by reference in 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:

Mike Barajas, 832-200-3727

Media Relations:

Kira Jordan, 832-255-7302

SPARK ENERGY, INC.

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