Q4 2020 Spark Energy Inc Earnings Call

As of yesterday's earnings release.

That I will turn the call over to Keith Maxwell our CEO. Thank you, Mike and welcome everyone for today's earnings call.

And I began by providing a summary of our full year results and then our CFO, Jim Jones will provide more details on the financials.

Last year was what was our strongest year yet here at spark.

Through 2020, we are continuing to focus on improving our mass market business and the completing of shedding of low margin large commercial customers.

We are continuing to refine our organic sales channel.

Striving to grow affinity and high quality third party vendor relationships along with an increased focus on in house sales channel as we try to optimize our go to market strategy. This.

This will allow us lower CIC spending in 2021 and capitalize on the increased M&A opportunities that we're beginning to see.

As we finalize these initiatives, we expect to continue seeing significant improvements and the quality of our customer portfolio.

These major complements our accomplishments have had a direct impact on achieving the $106 $6 million adjusted EBITDA, a 15% increase over last year and a record and.

And the increase was not only of true hedging strategy, but also driven by savings and G&A bad debt and customer acquisition costs.

As we move into 2021, we are still evaluating the effects of winter storm here.

We are confident that spark is well positioned with ample liquidity to further pursue the market opportunities created by the scope.

We're very proud of the way our team work together and we're fortunate that the impact of event was contained only a few days without adversely affecting our forward.

Outlook of the company's performance.

We believe that our initiatives to streamline the business and continue to simplify our systems and our platform accompanied by the overall healthier book will lead to enhanced margins and profitability and 2021 and.

And with that I'll turn the call over to Jim for his financial review and Jim.

Thanks, Keith Good morning, and the fourth quarter of 2020, we achieved $24 7 million and adjusted EBITDA.

And 4% decrease compared to last year's fourth quarter of $25 $7 million.

Gross margin for the fourth quarter 2020 was $49 million compared.

Compared to $64 3 million last year.

The 24 parts of the 24% decrease and retail gross margin was primarily due to a lower volume as we strategically adjusted our customer mix.

Full year, adjusted EBITDA was up 15% to $106 6 million compared to $92 4 million for 2019, while full year retail gross margin was down 11%, 11% of $196 5 million for 2020 compared to 220.

$8 7.002 million 19.

The primary factors driving this increase and adjusted EBITDA was our efforts to successfully simplify our platform.

And that allowed us to achieve.

G&A savings.

Improved collection efforts.

And that had an enormous impact on our bad debt expense when compared year over year.

Our fourth quarter G&A expenses decreased by 37% year over year decreasing.

From $39 $2 million and 2019 to $24 6.002 million 20, due to one time charges for litigation settlements and bad debt and legal fees that occurred in 2019.

Fully expect to continue to achieve the G&A run rate going forward.

We ended the year with 400000 Rcs as a result of proactively non renewing some of our less profitable C&I customers for.

For the year, we spent $1 $5 million and customer acquisition costs compared to $18 7 million and the prior year.

Interest expense for the year fell from $8 6.002 million 19 to $5 $3 million and 2020, primarily because of repayments of long term indebtedness, which decreased from $123 million at the end of 2019 to 100 million at the year.

At the end of 2020 looking at our balance sheet, we had net debt of $28 3 million and total liquidity of $168 2 million at the end of 2020.

Income tax expense increased to $15 7.002 million 20 from $7 $3 million and 2019, driven by an increase and taxable income due.

And due to improved financial results are.

Our net income for the year was $68 2 million worth of $14 3 million mark to market gain compared to a net loss of $14 2.002 million 19, which included a $24 9 million mark to market loss.

On December the 15th and January the 15th we paid quarterly cash dividends on our class a common stock and our series a preferred stock respectively.

And on January 21, we announced our fourth quarter dividend of $18 125 per.

Our share on our common stock and 54 six <unk>.

Per share on the preferred stock to be paid March 15, and April 15, respectively. As we've stated in the past we expect to continue to pay these quarterly dividends on a go forward basis.

That's all I have back to the issue.

Thanks, Jim.

And I am proud of everyone here at spark for the work they've put in to continue the success of our business over the course of the last year.

We're very excited about 2021 as we continue to see further benefits from our simplified platform and increased focus on our mass market business I want to thank our employees and our suppliers for their hard work producing of great quarter and a strong year.

And I want to thank spark customers for choosing us as their energy provider. We're excited about the future and we look forward to connecting with you on our next call. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.