Company Quick10K Filing
Quick10K
Spark Energy
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$9.52 14 $135
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
8-K 2019-09-25 Officers, Regulation FD, Exhibits
8-K 2019-08-27 Officers, Regulation FD, Exhibits
8-K 2019-08-07 Earnings, Exhibits
8-K 2019-07-11 Enter Agreement, Leave Agreement, Regulation FD, Exhibits
8-K 2019-06-13 Enter Agreement, Off-BS Arrangement, Officers, Regulation FD, Exhibits
8-K 2019-05-22 Officers, Shareholder Vote, Other Events, Exhibits
8-K 2019-05-06 Earnings, Exhibits
8-K 2019-03-04 Earnings, Exhibits
8-K 2018-12-13 Officers, Regulation FD, Exhibits
8-K 2018-11-01 Earnings, Exhibits
8-K 2018-10-19 Enter Agreement, Exhibits
8-K 2018-08-10 Accountant, Exhibits
8-K 2018-08-02 Earnings, Exhibits
8-K 2018-07-17 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-05-23 Shareholder Vote
8-K 2018-01-26 Enter Agreement, Regulation FD, Exhibits
8-K 2018-01-22 Earnings, Regulation FD, Exhibits
8-K 2018-01-16 Enter Agreement, Off-BS Arrangement, Regulation FD, Exhibits
DUK Duke Energy 66,507
XEL Xcel Energy 33,248
PEG Public Service Enterprise Group 29,977
ED Consolidated Edison 28,830
AEE Ameren 18,867
EVRG Evergy 15,810
GNE Genie Energy 199
VVPR VivoPower 19
ENO Enodis 0
ENJ Entergy New Orleans 0
SPKE 2019-06-30
Part I. - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits
EX-31.1 certceoexh311-q22019.htm
EX-31.2 certcfoexh312-q22019.htm
EX-32 certceoandcfoexh32-q22019.htm

Spark Energy Earnings 2019-06-30

SPKE 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 a2019-q2x10q.htm 10-Q Q2 2019 Document
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
 
ý      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended June 30, 2019
 
o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from          to          
 
Commission File Number: 001-36559
Spark Energy, Inc.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
Delaware
 
 
 
46-5453215
(State or other jurisdiction of
incorporation or organization)
 
 
 
(I.R.S. Employer
Identification No.)
12140 Wickchester Ln, Suite 100
Houston, Texas 77079

(Address of principal executive offices)
 
(713) 600-2600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbols(s)
 
Name of exchange on which registered
Class A common stock, par value $0.01 per share
 
SPKE
 
The NASDAQ Global Select Market
8.75% Series A Fixed-to-Floating Rate

Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share
 
SPKEP
 
The NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x    No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.        
Large accelerated filer o                  Accelerated filer x 
Non-accelerated filer o Smaller reporting company o



Emerging Growth Company x

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.x
    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o    No x

There were 14,379,553 shares of outstanding Class A common stock, 20,800,000 shares of Class B common stock and 3,702,756 shares of Series A Preferred Stock outstanding as of August 6, 2019.




SPARK ENERGY, INC.
 
 
INDEX TO QUARTERLY REPORT ON FORM 10-Q
 
 
For the Quarter Ended June 30, 2019
 
 
 
 
Page No.
PART I. FINANCIAL INFORMATION
 
 
ITEM 1. FINANCIAL STATEMENTS
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2019 AND DECEMBER 31, 2018 (unaudited)
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (unaudited)
 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (unaudited)
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (unaudited)
 
 
 
 
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 
 
 
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
ITEM 4. CONTROLS AND PROCEDURES
 
PART II. OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
ITEM 1A. RISK FACTORS
 
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
ITEM 6. EXHIBITS
 
SIGNATURES
 


1


Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Report”) 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 Report, 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 Report and may include statements about business strategy and prospects for growth, customer acquisition costs, legal proceedings, 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 Report 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 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 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 changes by, the ISOs in the regions we operate;
competition; and
the "Risk Factors" in our Annual Report Form 10-K for the year ended December 31, 2018, in our Quarterly Reports, and other public filings and press releases.

You should review the risk factors and other factors noted throughout or incorporated by reference in this Report 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 Report. 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.


2


PART I. — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share counts)
(unaudited)

June 30, 2019

December 31, 2018
Assets



Current assets:



Cash and cash equivalents
$
27,579


$
41,002

Restricted cash
1,001


8,636

Accounts receivable, net of allowance for doubtful accounts of $3,720 at June 30, 2019 and $3,353 at December 31, 2018
103,680


150,866

Accounts receivable—affiliates
3,882


2,558

Inventory
2,020


3,878

Fair value of derivative assets
52


7,289

Customer acquisition costs, net
13,004


14,431

Customer relationships, net
15,467


16,630

Deposits
9,331


9,226

Renewable energy credit asset
11,664


25,717

Other current assets
14,810


11,747

Total current assets
202,490


291,980

Property and equipment, net
3,575


4,366

Fair value of derivative assets


3,276

Customer acquisition costs, net
4,856


3,893

Customer relationships, net
23,810


26,429

Deferred tax assets
31,847


27,321

Goodwill
120,343


120,343

Other assets
10,163


11,130

Total assets
$
397,084


$
488,738

Liabilities, Series A Preferred Stock and Stockholders' Equity



Current liabilities:



Accounts payable
$
48,985


$
68,790

Accounts payable—affiliates
2,475


2,464

Accrued liabilities
23,165


10,845

Renewable energy credit liability
25,384


42,805

Fair value of derivative liabilities
25,848


6,478

Current payable pursuant to tax receivable agreement—affiliates
11,239


1,658

Current contingent consideration for acquisitions
1,328


1,328

Current portion of Note Payable


6,936

Other current liabilities
1,132


647

Total current liabilities
139,556


141,951

Long-term liabilities:





Fair value of derivative liabilities
4,578


106

Payable pursuant to tax receivable agreement—affiliates
16,336


25,917

Long-term portion of Senior Credit Facility
94,000


129,500

Subordinated debt—affiliate


10,000

Other long-term liabilities
260


212

Total liabilities
254,730


307,686

Commitments and contingencies (Note 13)





Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,707,256 issued and 3,702,756 outstanding at June 30, 2019 and 3,707,256 issued and outstanding at December 31, 2018
90,649


90,758

Stockholders' equity:





       Common Stock:





Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 14,478,999 issued, and 14,379,553 outstanding at June 30, 2019 and 14,178,284 issued and 14,078,838 outstanding at December 31, 2018
145


142

Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 20,800,000 issued and outstanding at June 30, 2019 and December 31, 2018
209


209

       Additional paid-in capital
42,329


46,157

       Accumulated other comprehensive (loss) income
(38
)

2

       Retained (deficit) earnings
(7,053
)

1,307

       Treasury stock, at cost, 99,446 shares at June 30, 2019 and December 31, 2018
(2,011
)

(2,011
)
       Total stockholders' equity
33,581


45,806

Non-controlling interest in Spark HoldCo, LLC
18,124


44,488

       Total equity
51,705


90,294

Total liabilities, Series A Preferred Stock and Stockholders' equity
$
397,084


$
488,738


The accompanying notes are an integral part of the condensed consolidated financial statements.

3


SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except per share data)
(unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018
Revenues:







Retail revenues
$
177,805


$
231,488


$
417,959


$
515,489

Net asset optimization (expense) revenues
(56
)

763


2,496


3,450

Total Revenues
177,749


232,251


420,455


518,939

Operating Expenses:







Retail cost of revenues
158,759


162,669


354,014


452,545

General and administrative
37,247


27,780


66,723


57,827

Depreciation and amortization
10,312


12,861


22,467


25,880

Total Operating Expenses
206,318


203,310


443,204


536,252

Operating (loss) income
(28,569
)

28,941


(22,749
)

(17,313
)
Other (expense)/income:







Interest expense
(1,995
)

(2,316
)

(4,218
)

(4,561
)
Interest and other income
494


553


683


754

Total other expenses
(1,501
)

(1,763
)

(3,535
)

(3,807
)
(Loss) income before income tax (benefit) expense
(30,070
)

27,178


(26,284
)

(21,120
)
Income tax (benefit) expense
(4,586
)

3,251


(3,545
)

(3,216
)
Net (loss) income
$
(25,484
)

$
23,927


$
(22,739
)

$
(17,904
)
Less: Net (loss) income attributable to non-controlling interests
(18,369
)

15,142


(16,406
)

(15,584
)
Net (loss) income attributable to Spark Energy, Inc. stockholders
$
(7,115
)

$
8,785


$
(6,333
)

$
(2,320
)
Less: Dividend on Series A Preferred Stock
2,027


2,027


4,054


4,054

Net (loss) income attributable to stockholders of Class A common stock
$
(9,142
)

$
6,758


$
(10,387
)

$
(6,374
)
Other comprehensive (loss) income, net of tax:







Currency translation (loss) gain
$
(63
)

$
25


$
(98
)

$
(58
)
Other comprehensive (loss) income
(63
)

25


(98
)

(58
)
Comprehensive (loss) income
$
(25,547
)

$
23,952


$
(22,837
)

$
(17,962
)
Less: Comprehensive (loss) income attributable to non-controlling interests
(18,407
)

15,157


(16,464
)

(15,620
)
Comprehensive (loss) income attributable to Spark Energy, Inc. stockholders
$
(7,140
)

$
8,795


$
(6,373
)

$
(2,342
)








Net (loss) income attributable to Spark Energy, Inc. per share of Class A common stock







       Basic
$
(0.64
)

$
0.51


$
(0.73
)

$
(0.48
)
       Diluted
$
(0.73
)

$
0.51


$
(0.73
)

$
(0.52
)










Weighted average shares of Class A common stock outstanding









       Basic
14,246


13,229


14,191


13,183

       Diluted
35,046


13,246


34,991


34,668













The accompanying notes are an integral part of the condensed consolidated financial statements.

4


SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in thousands)
(unaudited)
SIX MONTHS ENDED JUNE 30, 2019
 
Issued Shares of Class A Common Stock
Issued Shares of Class B Common Stock
Treasury Stock
Class A Common Stock
Class B Common Stock
Treasury Stock
Accumulated Other Comprehensive Loss
Additional Paid-in Capital
Retained Earnings (Deficit)
Total Stockholders' Equity
Non-controlling Interest
Total Equity
Balance at December 31, 2018
14,178

20,800

(99
)
$
142

$
209

$
(2,011
)
$
2

$
46,157

$
1,307

$
45,806

$
44,488

$
90,294

Stock based compensation
301







2,511


2,511


2,511

Restricted stock unit vesting



3




(1,107
)

(1,104
)

(1,104
)
Consolidated net loss








(6,333
)
(6,333
)
(16,406
)
(22,739
)
Foreign currency translation adjustment for equity method investee






(40
)


(40
)
(58
)
(98
)
Distributions paid to non-controlling unit holders










(7,978
)
(7,978
)
Dividends paid to Class A common stockholders ($0.3625 per share)







(5,170
)

(5,170
)

(5,170
)
Changes in ownership interest







1,912


1,912

(1,912
)

Dividends paid to Preferred Stock







(2,029
)
(2,027
)
(4,056
)

(4,056
)
Proceeds from disgorgement of stockholder short-swing profits







55


55


55

Acquisition of Customers from Affiliate










(10
)
(10
)
Balance at June 30, 2019
14,479

20,800

(99
)
$
145

$
209

$
(2,011
)
$
(38
)
$
42,329

$
(7,053
)
$
33,581

$
18,124

$
51,705








5




THREE MONTHS ENDED JUNE 30, 2019
 
Issued Shares of Class A Common Stock
Issued Shares of Class B Common Stock
Treasury Stock
Class A Common Stock
Class B Common Stock
Treasury Stock
Accumulated Other Comprehensive Loss
Additional Paid-in Capital
Retained Earnings (Deficit)
Total Stockholders' Equity
Non-controlling Interest
Total Equity
Balance at March 31, 2019
14,241

20,800

(99
)
$
142

$
209

$
(2,011
)
$
(12
)
$
45,769

$
62

$
44,159

$
41,591

$
85,750

Stock based compensation
238







1,440


1,440


1,440

Restricted stock unit vesting



3




(1,107
)

(1,104
)

(1,104
)
Consolidated net loss








(7,115
)
(7,115
)
(18,369
)
(25,484
)
Foreign currency translation adjustment for equity method investee






(26
)


(26
)
(37
)
(63
)
Distributions paid to non-controlling unit holders










(4,208
)
(4,208
)
Dividends paid to Class A common stockholders ($0.18125 per share)







(2,606
)

(2,606
)

(2,606
)
Dividends to Preferred Stock







(2,029
)

(2,029
)

(2,029
)
Proceeds from disgorgement of stockholder short-swing profits







9


9


9

Changes in ownership interest







853


853

(853
)

Balance at June 30, 2019
14,479

20,800

(99
)
$
145

$
209

$
(2,011
)
$
(38
)
$
42,329

$
(7,053
)
$
33,581

$
18,124

$
51,705














6




SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in thousands)
(unaudited)
SIX MONTHS ENDED JUNE 30, 2018
 
Issued Shares of Class A Common Stock
Issued Shares of Class B Common Stock
Treasury Stock
Class A Common Stock
Class B Common Stock
Treasury Stock
Accumulated Other Comprehensive Loss
Additional Paid-in Capital
Retained Earnings (Deficit)
Total Stockholders' Equity
Non-controlling Interest
Total Equity
Balance at December 31, 2017
13,235

21,485

(99
)
$
132

$
216

$
(2,011
)
$
(11
)
$
47,811

$
11,399

$
57,536

$
101,559

$
159,095

Stock based compensation







2,646


2,646


2,646

Restricted stock unit vesting
258



3




(715
)

(712
)

(712
)
Consolidated net loss








(2,320
)
(2,320
)
(15,584
)
(17,904
)
Foreign currency translation adjustment for equity method investee






(22
)


(22
)
(36
)
(58
)
Distributions paid to non-controlling unit holders










(19,501
)
(19,501
)
Dividends paid to Class A common stockholders ($0.3625 per share)








(4,805
)
(4,805
)

(4,805
)
Dividends to Preferred Stock








(4,055
)
(4,055
)

(4,055
)
Acquisition of Customers from Affiliate










(6,138
)
(6,138
)
Changes in ownership interest







(3,027
)

(3,027
)
3,027


Balance at June 30, 2018
13,493

21,485

(99
)
$
135

$
216

$
(2,011
)
$
(33
)
$
46,715

$
219

$
45,241

$
63,327

$
108,568






7


THREE MONTHS ENDED JUNE 30, 2018
 
Issued Shares of Class A Common Stock
Issued Shares of Class B Common Stock
Treasury Stock
Class A Common Stock
Class B Common Stock
Treasury Stock
Accumulated Other Comprehensive Loss
Additional Paid-in Capital
Retained Earnings (Deficit)
Total Stockholders' Equity
Non-controlling Interest
Total Equity
Balance at March 31, 2018
13,238

21,485

(99
)
$
132

$
216

$
(2,011
)
$
(43
)
$
47,900

$
(4,114
)
$
42,080

$
66,674

$
108,754

Stock based compensation







1,829


1,829


1,829

Restricted stock unit vesting
255



3




(701
)

(698
)

(698
)
Consolidated net income








8,785

8,785

15,142

23,927

Foreign currency translation adjustment for equity method investee






10



10

15

25

Distributions paid to non-controlling unit holders










(14,679
)
(14,679
)
Dividends paid to Class A common stockholders ($0.18125 per share)








(2,424
)
(2,424
)

(2,424
)
Dividends to Preferred Stock








(2,028
)
(2,028
)

(2,028
)
Acquisition of Customers from Affiliate










(6,138
)
(6,138
)
Changes in ownership interest







(2,313
)

(2,313
)
2,313


Balance at June 30, 2018
13,493

21,485

(99
)
$
135

$
216

$
(2,011
)
$
(33
)
$
46,715

$
219

$
45,241

$
63,327

$
108,568

The accompanying notes are an integral part of the condensed consolidated financial statements.


8


SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
  
Six Months Ended June 30,
  
2019

2018
Cash flows from operating activities:



Net loss
$
(22,739
)

$
(17,904
)
Adjustments to reconcile net loss to net cash flows provided by operating activities:



Depreciation and amortization expense
22,480


24,639

Deferred income taxes
(4,527
)

(3,396
)
Change in TRA liability


79

Stock based compensation
2,432


2,686

Amortization of deferred financing costs
505


612

Excess tax benefit related to restricted stock vesting


(101
)
Change in Fair Value of Earnout liabilities


(63
)
Bad debt expense
6,015


5,725

Loss on derivatives, net
54,997


19,488

Current period cash settlements on derivatives, net
(19,891
)

7,170

Other
(399
)

(554
)
Changes in assets and liabilities:



Decrease in accounts receivable
41,171


25,957

Increase in accounts receivable—affiliates
(1,324
)

(10
)
Decrease in inventory
1,858


2,693

Increase in customer acquisition costs
(9,185
)

(6,254
)
Decrease (increase) in prepaid and other current assets
11,545


(59
)
(Increase) decrease in other assets
(786
)

97

Decrease in accounts payable and accrued liabilities
(30,391
)

(20,140
)
Increase (decrease) in accounts payable—affiliates
11


(2,249
)
Decrease in other current liabilities
(792
)

(1,545
)
Increase (decrease) in other non-current liabilities
49


(461
)
Net cash provided by operating activities
51,029


36,410

Cash flows from investing activities:



Purchases of property and equipment
(460
)

(1,163
)
Acquisition of Starion customers
(5,913
)


Acquisition of HIKO


(15,041
)
Acquisition of Customers from Affiliate


(7,796
)
Net cash used in investing activities
(6,373
)

(24,000
)
Cash flows from financing activities:



Proceeds from (buyback) issuance of Series A Preferred Stock, net of issuance costs paid
(111
)

48,490

Borrowings on notes payable
118,500


146,800

Payments on notes payable
(164,000
)

(160,050
)
Payment of the Major Energy Companies Earnout


(1,607
)
Payments on the Verde promissory note
(2,036
)

(6,573
)
Proceeds from disgorgement of stockholders short-swing profits
55


244

Restricted stock vesting
(1,348
)

(2,589
)
Payment of Tax Receivable Agreement liability


(3,577
)
Payment of dividends to Class A common stockholders
(5,170
)

(4,805
)
Payment of distributions to non-controlling unitholders
(7,540
)

(19,501
)
Payment of Preferred Stock dividends
(4,054
)

(2,959
)
Payment to affiliates for acquisition of customer book
(10
)


Net cash used in financing activities
(65,714
)

(6,127
)
(Decrease) increase in Cash, cash equivalents and Restricted cash
(21,058
)

6,283

Cash, cash equivalents and Restricted cash—beginning of period
49,638


29,419

Cash, cash equivalents and Restricted cash—end of period
$
28,580


$
35,702

Supplemental Disclosure of Cash Flow Information:



Non-cash items:





        Property and equipment purchase accrual
$
4


$
(123
)
        Holdback for Verde Note—Indemnified Matters
$
4,900


$

Cash paid during the period for:



Interest
$
3,723


$
3,884

Taxes
$
1,440


$
5,399

The accompanying notes are an integral part of the condensed consolidated financial statements.

9


SPARK ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Formation and Organization
Organization

We are an independent retail energy services company that provides residential and commercial customers in competitive markets across the United States with an alternative choice for natural gas and electricity. Spark Energy, Inc. (the "Company") is a holding company whose sole material asset consists of units in Spark HoldCo, LLC (“Spark HoldCo”). The Company is the sole managing member of Spark HoldCo, is responsible for all operational, management and administrative decisions relating to Spark HoldCo’s business and consolidates the financial results of Spark HoldCo and its subsidiaries. Spark HoldCo is the direct and indirect owner of the subsidiaries through which we operate. We conduct our business through several brands across our service areas, including Electricity Maine, Electricity N.H., Major Energy, Provider Power Massachusetts, Respond Power, Spark Energy, and Verde Energy.

Emerging Growth Company Status

The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other regulatory requirements. The Company will remain an “emerging growth company” until the last day of 2019.
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC") as it applies to interim financial statements. This information should be read along with our consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”). Our unaudited condensed consolidated financial statements are presented on a consolidated basis and include all wholly-owned and controlled subsidiaries. We account for investments over which we have significant influence but not a controlling financial interest using the equity method of accounting. All significant intercompany transactions and balances have been eliminated in the unaudited condensed consolidated financial statements.
In the opinion of the Company's management, the accompanying condensed consolidated financial statements reflect all adjustments that are necessary to fairly present the financial position, the results of operations, the changes in equity and the cash flows of the Company for the respective periods. Such adjustments are of a normal recurring nature, unless otherwise disclosed.

Immaterial Corrections to Prior Year Financial Information

The condensed consolidated income statements and our statements of changes in stockholders' equity reflect immaterial adjustments, as disclosed in our 2018 Form 10-K, to the historical balances in additional paid-in capital, non-controlling interest, retained earnings, net (loss) income attributable to non-controlling interest, and earnings per share for the three and six months ended June 30, 2018. We made these adjustments in accordance with GAAP, to reflect the amounts the owners of our Class A and Class B common stock would receive, respectively, if the assets of our subsidiary, Spark HoldCo, were sold and its liabilities were settled at their recorded book values as of each balance sheet date. In addition, we adjusted income for the three and six months ended June 30, 2018 to make certain immaterial corrections to the allocation of income between non-controlling interests and income available

10


for common shareholders. Our adjustments had no impact on the manner in which distributions were paid during the three and six months ended June 30, 2018. The Company evaluated the materiality of the errors from quantitative and qualitative perspectives, and concluded that the errors were immaterial to the Company’s prior period interim and annual consolidated financial statements. Since the revision was not material to the prior period interim or annual consolidated financial statements, no amendments to previously filed interim or annual periodic reports were required. Consequently, the Company revised the historical condensed consolidated financial information presented herein.

Below are amounts as reported and as adjusted for each period presented (in thousands):
 
 
June 30, 2018
 
 
As Reported
 
Adjustments
 
As Adjusted
Additional paid-in capital
 
$
28,846

 
$
17,869

 
$
46,715

Retained earnings
 
(2,678
)
 
2,897

 
219

Total Stockholders' Equity
 
24,475

 
20,766

 
45,241

Non-controlling interest in Spark HoldCo, LLC
 
86,302

 
(22,975
)
 
63,327

Total equity
 
$
110,777

 
$
(2,209
)
 
$
108,568

 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2018
Net income attributable to stockholders of Class A common stock
 
$
5,473

 
$
1,285

 
$
6,758

Net income attributable to non-controlling interests
 
16,427

 
(1,285
)
 
15,142

Net income attributable to Spark Energy, Inc. stockholders
 
$
7,500

 
$
1,285

 
$
8,785

 
 
 
 
 
 
 
Net income attributable to Spark Energy, Inc. per share of Class A common stock
 
 
 
 
 
 
Basic
 
$
0.41

 
$
0.10

 
$
0.51

Diluted
 
$
0.41

 
$
0.10

 
$
0.51

 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2018
Net loss attributable to stockholders of Class A common stock
 
$
(8,880
)
 
$
2,506

 
$
(6,374
)
Net loss attributable to non-controlling interests
 
(13,078
)
 
(2,506
)
 
(15,584
)
Net loss attributable to Spark Energy, Inc. stockholders
 
$
(4,826
)
 
$
2,506

 
$
(2,320
)
 
 
 
 
 
 
 
Net loss attributable to Spark Energy, Inc. per share of Class A common stock
 
 
 
 
 
 
Basic
 
$
(0.67
)
 
$
0.19

 
$
(0.48
)
Diluted
 
$
(0.67
)
 
$
0.15

 
$
(0.52
)
Subsequent Events

Subsequent events have been evaluated through the date these financial statements are issued. Any material subsequent events that occurred prior to such date have been properly recognized or disclosed in the condensed consolidated financial statements.

Use of Estimates and Assumptions
The preparation of our condensed consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements and the reported amounts of revenues and expenses during the period. Actual results could materially differ from those estimates.

Relationship with our Founder and Majority Shareholder


11


W. Keith Maxwell, III (our "Founder") is the owner of a majority of the voting power of our common stock through his ownership of NuDevco Retail, LLC ("NuDevco Retail") and Retailco, LLC ("Retailco"). Retailco is a wholly owned subsidiary of TxEx Energy Investments, LLC ("TxEx"), which is wholly owned by Mr. Maxwell. NuDevco Retail is a wholly owned subsidiary of NuDevco Retail Holdings LLC ("NuDevco Retail Holdings"), which is a wholly owned subsidiary of Electric HoldCo, LLC, which is also a wholly owned subsidiary of TxEx.

New Accounting Standards Recently Adopted

There have been no changes to our significant accounting policies as disclosed in our 2018 Form 10-K, except as follows:

In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under this update, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 should be applied on a prospective basis and is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted ASU 2017-04 effective January 1, 2019, and the adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting ("ASU 2018-07"). ASU 2018-07 primarily expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. We adopted ASU 2018-07 effective January 1, 2019, and the adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). Under this new guidance, lessees will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of greater than twelve months. The guidance requires qualitative disclosures along with certain specific quantitative disclosures for both lessees and lessors. The FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, and ASU No. 2019-01, Leases (Topic 842): Codification Improvements, to provide additional guidance for the adoption of Topic 842. ASU 2016-02 and its related amendments are effective for fiscal years beginning after December 15, 2018, with early adoption permitted, and are effective for interim periods in the year of adoption. ASU 2016-02 should be applied using a modified retrospective approach, which requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented with an option to use certain practical expedients, which we elected to use. We evaluated the impact of this new guidance and reviewed lease or possible lease contracts and evaluated contract related processes. We adopted ASU 2016-02 effective January 1, 2019, and recorded right-of-use assets and liabilities for our real estate operating leases of approximately $1.0 million.

Standards Being Evaluated/Standards Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 requires entities to use a current expected credit loss ("CECL") model, which is a new impairment model based on expected losses rather than incurred losses on financial assets, including accounts receivables, loans, and held-to-maturity debt securities, among others. The model requires financial assets measured at an amortized cost be presented at the net amount

12


expected to be collected. The measurement of expected credit losses is based on relevant information about past events, historical experience, current conditions, and reasonable forecasts. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The FASB also issued subsequent amendments to the initial guidance: ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ("ASU 2019-04") in April 2019, and ASU 2019-05, Financial Instruments - Credit Losses (Topic 326), Targeted Transition Relief ("ASU 2019-05") in May 2019. ASU 2019-04 provides clarifications and minor improvements related to these topics. ASU 2019-05 provides entities that have certain instruments with an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments - Overall, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of Topic 326. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.

3. Revenues
Our revenues are derived primarily from the sale of natural gas and electricity to customers, including affiliates. Revenue is measured based upon the quantity of gas or power delivered at prices contained or referenced in the customer's contract, and excludes any sales incentives (e.g. rebates) and amounts collected on behalf of third parties (e.g. sales tax).

Our revenues also include asset optimization activities. Asset optimization activities consist primarily of purchases and sales of gas that meet the definition of trading activities per FASB ASC Topic 815, Derivatives and Hedging. They are therefore excluded from the scope of FASB ASC Topic 606, Revenue from Contracts with Customers.

The following is a description of our principal revenue generating activities.

Retail Electricity

Revenues for electricity sales are recognized under the accrual method when our performance obligation to a customer is satisfied, which is the point in time when the product is delivered and control of the product passes to the customer. Electricity products may be sold as fixed or variable rate products. The typical length of a contract to provide electricity is 12 months. Customers are billed and typically pay at least monthly, based on usage. Electricity sales that have been delivered but not billed by period end are estimated. Accrued unbilled revenues are based on estimates of customer usage since the date of the last meter read provided by the utility. Volume estimates are based on forecasted volumes and estimated residential and commercial customer usage. Unbilled revenues are calculated by multiplying these volume estimates by the applicable rate by customer class (residential or commercial). Estimated amounts are adjusted when actual usage is known and billed.

Retail Natural Gas

Revenues for natural gas sales are recognized under the accrual method when our performance obligation to a customer is satisfied, which is the point in time when the product is delivered and control of the product passes to the customer. Natural gas products may be sold as fixed-price or variable-price products. The typical length of a contract to provide natural gas is 12 months. Customers are billed and typically pay at least monthly, based on usage. Natural gas sales that have been delivered but not billed by period end are estimated and recorded as accrued unbilled revenues based on estimates of customer usage since the date of the last meter read provided by the utility. Volume estimates are based on forecasted volumes and estimated residential and commercial customer usage. Unbilled revenues are calculated by multiplying these volume estimates by the applicable rate by customer class (residential or commercial). Estimated amounts are adjusted when actual usage is known and billed.

The following table discloses revenue by primary geographical market, customer type, and customer credit risk profile (in thousands). The table also includes a reconciliation of the disaggregated revenue to revenue by reportable segment (in thousands).

13



 
Reportable Segments
 
Three Months Ended June 30, 2019
 
Three Months Ended June 30, 2018
 
Retail Electricity

Retail Natural Gas

Total Reportable Segments
 
Retail Electricity

Retail Natural Gas

Total Reportable Segments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Primary markets (a)
 
 
 
 
 
 
 
 
 
 
 
  New England
$
67,905

 
$
3,152

 
$
71,057

 
$
93,926

 
$
3,228

 
$
97,154

  Mid-Atlantic
54,503

 
5,334

 
59,837

 
67,928

 
9,419

 
77,347

  Midwest
17,473

 
4,736

 
22,209

 
18,085

 
5,428

 
23,513

  Southwest
20,895

 
3,807

 
24,702

 
29,508

 
3,966

 
33,474


$
160,776

 
$
17,029

 
$
177,805

 
$
209,447

 
$
22,041

 
$
231,488


 
 
 
 

 
 
 
 
 
 
Customer type
 
 
 
 
 
 
 
 
 
 
 
  Commercial
$
59,699

 
$
8,834

 
$
68,533

 
$
77,255

 
$
10,877

 
$
88,132

  Residential
97,419

 
16,516

 
113,935

 
115,110

 
20,341

 
135,451

  Unbilled revenue (b)
3,658

 
(8,321
)
 
(4,663
)
 
17,082

 
(9,177
)
 
7,905


$
160,776

 
$
17,029

 
$
177,805

 
$
209,447

 
$
22,041

 
$
231,488


 
 
 
 
 
 
 
 
 
 
 
Customer credit risk
 
 
 
 

 
 
 
 
 
 
  POR
$
110,270

 
$
7,928

 
$
118,198

 
$
144,239

 
$
12,782

 
$
157,021

  Non-POR
50,506

 
9,101

 
59,607

 
65,208

 
9,259

 
74,467


$
160,776

 
$
17,029

 
$
177,805

 
$
209,447

 
$
22,041

 
$
231,488



14


 
Reportable Segments
 
Six Months Ended June 30, 2019
 
Six Months Ended June 30, 2018
 
Retail Electricity

Retail Natural Gas

Total Reportable Segments
 
Retail Electricity

Retail Natural Gas

Total Reportable Segments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Primary markets (a)




 
 
 
 
 
 
 
  New England
$
144,139


$
11,680


$
155,819

 
$
195,024


$
12,579

 
$
207,603

  Mid-Atlantic
121,314


26,703


148,017

 
145,483


35,350

 
180,833

  Midwest
39,580


25,225


64,805

 
35,920


24,686

 
60,606

  Southwest
37,835


11,483


49,318

 
53,919


12,528

 
66,447


$
342,868

 
$
75,091

 
$
417,959

 
$
430,346

 
$
85,143

 
$
515,489


 
 
 
 
 
 
 
 
 
 
 
Customer type




 
 
 
 
 
 
 
  Commercial
$
126,934


$
28,701


$
155,635

 
$
174,148


$
35,176

 
$
209,324

  Residential
222,187


57,611


279,798

 
263,104


66,070

 
329,174

  Unbilled revenue (b)
(6,253
)

(11,221
)

(17,474
)
 
(6,906
)

(16,103
)
 
(23,009
)

$
342,868

 
$
75,091

 
$
417,959

 
$
430,346

 
$
85,143

 
$
515,489


 
 
 
 
 
 
 
 
 
 
 
Customer credit risk




 
 
 
 
 
 
 
  POR
$
239,207


$
41,223


$
280,430

 
$
301,240


$
49,552

 
$
350,792

  Non-POR
103,661


33,868


137,529

 
129,106


35,591

 
164,697


$
342,868

 
$
75,091

 
$
417,959

 
$
430,346

 
$
85,143

 
$
515,489



(a) The primary markets noted above include the following states:

New England - Connecticut, Maine, Massachusetts, New Hampshire;
Mid-Atlantic - Delaware, Maryland (including the District of Colombia), New Jersey, New York and Pennsylvania;
Midwest - Illinois, Indiana, Michigan and Ohio; and
Southwest - Arizona, California, Colorado, Florida, Nevada, and Texas.

(b) Unbilled revenue is recorded in total until it is actualized, at which time it is categorized between commercial and residential customers.

We record gross receipts taxes on a gross basis in retail revenues and retail cost of revenues. During the three months ended June 30, 2019 and 2018, our retail revenues included gross receipts taxes of $0.3 million and $0.4 million, respectively, and our retail cost of revenues include gross receipts taxes of $1.8 million and $2.3 million, respectively. During the six months ended June 30, 2019 and 2018, our retail revenues included gross receipts taxes of $0.8 million and $0.8 million, respectively, and our retail cost of revenues included gross receipts taxes of $4.5 million and $5.1 million, respectively.
4. Acquisitions
Acquisition of HIKO
In March 2018, we entered into a Membership Interest Purchase Agreement under which we acquired all of the membership interests of HIKO Energy, LLC ("HIKO"), a New York limited liability company, for a total purchase price of $6.0 million in cash, plus working capital. At the time of acquisition, HIKO had a total of approximately

15


29,000 RCEs located in 42 markets in seven states. The acquisition was accounted for under the acquisition method. Our preliminary allocation of the purchase price was based upon the estimated fair value of the tangible and identified intangible assets acquired and liabilities assumed in the acquisition. The allocation of the purchase consideration is as follows (in thousands):
 
Reported as of December 31, 2018
Cash and restricted cash
$
375

Intangible assets—customer relationships
6,031

Net working capital, net of cash acquired
8,465

Fair value of derivative liabilities
(205
)
Total
$
14,666


Acquisition from Related Parties

In March 2018, we entered into an asset purchase agreement with an affiliate pursuant to which we agreed to acquire up to 50,000 RCEs for a cash purchase price of $250 for each RCE, or up to $12.5 million in the aggregate. These customers began transferring after April 1, 2018 and are located in 24 markets in eight states. For the year ended December 31, 2018, we paid $8.8 million under the terms of the purchase agreement for approximately 35,000 RCEs. We do not anticipate any additional customer transfers or consideration will be paid on this transaction. The acquisition was treated as a transfer of assets between entities under common control, and accordingly, the assets were recorded at our affiliate's historical value at the date of transfer, which was $1.7 million. The transaction resulted in $7.1 million recorded in equity as a net distribution to affiliate as of December 31, 2018. Of the $8.8 million paid to our affiliate, $1.7 million was an investing cash outflow and the remaining $7.1 million was deemed a distribution to our non-controlling interest and classified as financing activity.

Acquisitions of Customer Books

In October 2018, we entered into an asset purchase agreement pursuant to which we agreed to acquire up to 60,000 RCEs from Starion Energy Inc., Starion Energy NY Inc. and Starion Energy PA Inc. (collectively "Starion") for a cash purchase price of up to a maximum of $10.7 million. These customers began transferring in December 2018, and are located in our existing markets. As of June 30, 2019, a total of $8.0 million was paid under the terms of the purchase agreement for approximately 51,000 RCEs.

As part of the acquisition, we funded an escrow account, the balance of which is reflected as restricted cash in our consolidated balance sheet. As of June 30, 2019 and December 31, 2018, the balance in the escrow account was $1.0 million and $8.6 million, respectively. The balance remaining as of June 30, 2019 represents a holdback of amounts due to the seller for acquired customers that will be released to the seller in April 2020, subject to certain adjustments outlined in the asset purchase agreement.

5. Equity

Non-controlling Interest

We hold an economic interest and are the sole managing member in Spark HoldCo, with affiliates of our Founder and majority shareholder holding the remaining economic interests in Spark HoldCo. As a result, we consolidate the financial position and results of operations of Spark HoldCo, and reflect the economic interests owned by these affiliates as a non-controlling interest. The Company and affiliates owned the following economic interests in Spark HoldCo at December 31, 2018 and June 30, 2019, respectively.


16


 
The Company
Affiliated Owners
December 31, 2018
40.53
%
59.47
%
June 30, 2019
41.04
%
58.96
%

The following table summarizes the portion of net income (loss) and income tax expense (benefit) attributable to non-controlling interest (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018
 


 



 
Net (loss) income allocated to non-controlling interest
$
(18,888
)

$
15,523


$
(17,895
)

$
(15,586
)
Income tax (benefit) expense allocated to non-controlling interest
(519
)

381


(1,489
)

(2
)
Net (loss) income attributable to non-controlling interest
$
(18,369
)

$
15,142


$
(16,406
)

$
(15,584
)

Class A Common Stock and Class B Common Stock

Holders of the Company's Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or by our certificate of incorporation.

Dividends declared for the Company's Class A common stock are reported as a reduction of retained earnings, or a reduction of additional paid in capital to the extent retained earnings are exhausted. During the six months ended June 30, 2019, we paid $5.2 million in dividends to the holders of the Company's Class A common stock.

In order to pay our stated dividends to holders of our Class A common stock, our subsidiary, Spark HoldCo is required to make corresponding distributions to holders of its units, including those holders that own our Class B common stock (our non-controlling interest holder). As a result, during the six months ended June 30, 2019, Spark HoldCo made corresponding distributions of $7.5 million to our non-controlling interest holders.

Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income attributable to stockholders (the numerator) by the weighted-average number of Class A common shares outstanding for the period (the denominator). Class B common shares are not included in the calculation of basic earnings per share because they are not participating securities and have no economic interests. Diluted earnings per share is similarly calculated except that the denominator is increased by potentially dilutive securities.














17


The following table presents the computation of basic and diluted income (loss) per share for the three and six months ended June 30, 2019 and 2018 (in thousands, except per share data):


Three Months Ended June 30,
 
Six Months Ended June 30,

2019
 
2018
 
2019
 
2018
Net (loss) income attributable to Spark Energy, Inc. stockholders
$
(7,115
)
 
$
8,785

 
$
(6,333
)
 
$
(2,320
)
Less: Dividend on Series A preferred stock
2,027

 
2,027

 
4,054

 
4,054

Net (loss) income attributable to stockholders of Class A common stock
$
(9,142
)
 
$
6,758

 
$
(10,387
)
 
$
(6,374
)
 
 
 
 
 
 
 
 
Basic weighted average Class A common shares outstanding
14,246

 
13,229

 
14,191

 
13,183

Basic (loss) income per share attributable to stockholders
$
(0.64
)
 
$
0.51

 
$
(0.73
)
 
$
(0.48
)


 

 

 

Net (loss) income attributable to stockholders of Class A common stock
$
(9,142
)
 
$
6,758

 
$
(10,387
)
 
$
(6,374
)
Effect of conversion of Class B common stock to shares of Class A common stock
(16,557
)
 

 
(15,242
)
 
(11,601
)
Diluted net (loss) income attributable to stockholders of Class A common stock
$
(25,699
)
 
$
6,758

 
$
(25,629
)
 
$
(17,975
)
 
 
 
 
 
 
 
 
Basic weighted average Class A common shares outstanding
14,246

 
13,229

 
14,191

 
13,183

Effect of dilutive Class B common stock
20,800

 

 
20,800

 
21,485

Effect of dilutive restricted stock units

 
17

 

 

Diluted weighted average shares outstanding
35,046

 
13,246

 
34,991

 
34,668



 

 

 

Diluted (loss) income per share attributable to stockholders
$
(0.73
)
 
$
0.51

 
$
(0.73
)
 
$
(0.52
)

The computation of diluted earnings per share for the three and six months ended June 30, 2019 excludes 0.8 million restricted stock units because the effect of their conversion was antidilutive. The Company's outstanding shares of Series A Preferred Stock were not included in the calculation of diluted earnings per share because they contain only contingent redemption provisions that have not occurred.

Variable Interest Entity

Spark HoldCo is a variable interest entity due to its lack of rights to participate in significant financial and operating decisions and its inability to dissolve or otherwise remove its management. Spark HoldCo owns all of the outstanding membership interests in each of our operating subsidiaries. We are the sole managing member of Spark HoldCo, manage Spark HoldCo's operating subsidiaries through this managing membership interest, and are considered the primary beneficiary of Spark HoldCo. The assets of Spark HoldCo cannot be used to settle our obligations except through distributions to us, and the liabilities of Spark HoldCo cannot be settled by us except through contributions to Spark HoldCo. The following table includes the carrying amounts and classification of the assets and liabilities of Spark HoldCo that are included in our condensed consolidated balance sheet as of June 30, 2019 and December 31, 2018 (in thousands):


18



June 30, 2019
December 31, 2018
Assets

 
Current assets:

 
   Cash and cash equivalents
$
27,486

$
36,724

   Accounts receivable
103,680

150,866

   Other current assets
66,726

92,963

   Total current assets
197,892

280,553

Non-current assets:

 
   Goodwill
120,343

120,343

   Other assets
40,468

47,159

   Total non-current assets
160,811

167,502

   Total Assets
$
358,703

$
448,055



 
Liabilities

 
Current liabilities:

 
   Accounts payable and accrued liabilities
$
72,251

$
79,692

   Contingent consideration
1,328

1,328

   Other current liabilities
54,839

59,330

   Total current liabilities
128,418

140,350

Long-term liabilities:

 
   Long-term portion of Senior Credit Facility
94,000

129,500

   Subordinated debt  affiliate

10,000

   Other long-term liabilities
4,838

319

   Total long-term liabilities
98,838

139,819

   Total Liabilities
$
227,256

$
280,169


6. Preferred Stock

During the year ended December 31, 2018, we issued an aggregate of 2,917 shares of Series A Preferred Stock under an at-the-market issuance sales agreement (the "ATM Agreement"). We received net proceeds of $0.1 million and paid compensation to the sales agent of less than $0.1 million with res