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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
 
         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
Via Renewables, Inc.
(Exact name of registrant as specified in its charter)
Delaware46-5453215
(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 classTrading Symbols(s)Name of exchange on which registered
Class A common stock, par value $0.01 per shareVIAThe NASDAQ Global Select Market
8.75% Series A Fixed-to-Floating Rate

Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share
VIASPThe 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     No

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     No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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      Accelerated filer



Non-accelerated filer                                     Smaller reporting company
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.
    
    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
        Yes     No

There were 3,232,701 shares of Class A common stock, 4,000,000 shares of Class B common stock and 3,567,543 shares of Series A Preferred Stock outstanding as of April 30, 2024.



VIA RENEWABLES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended March 31, 2024
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2024 AND DECEMBER 31, 2023 (unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (unaudited)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (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 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,” “could,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “project,” or other similar words. Forward-looking statements appear in a number of places in this Report. All statements, other than statements of historical fact, included in this Report are forward-looking statements. The forward-looking statements include statements regarding the impacts of Winter Storm Uri, cash flow generation and liquidity, business strategy, prospects for growth and acquisitions, outcomes of legal proceedings, the timing, availability, ability to pay and implied 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, 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:

the ultimate impact of the Winter Storm Uri, 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, heat waves 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 costs 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;
our ability to successfully obtain the requisite shareholder approval of and to consummate the merger and transactions contemplated by the Merger Agreement (as defined below) and other risks related thereto, including but not limited to, the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, the failure to satisfy other conditions to completion of the proposed merger, the failure of the proposed merger to close for any other reason, the outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted against us and others relating to the Merger Agreement or otherwise, the amount of the costs, fees, expenses and charges related to the proposed merger, the effect of the announcement of the proposed merger on our relationships with our contractual counterparties, operating results and business generally, the risk that the pendency of the proposed merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the pendency of the
2

proposed merger, risks related to disruption of management’s attention from our ongoing business operations due to the merger and transactions contemplated by the Merger Agreement; and
the “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, in our Quarterly Reports on Form 10-Q in “Item 1A — Risk Factors” of this Report, and in our 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.



3

PART I. — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
4

VIA RENEWABLES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share counts)
(unaudited)
March 31, 2024December 31, 2023
Assets
Current assets:
Cash and cash equivalents$50,423 $42,595 
Accounts receivable, net of allowance for credit losses of $3,548 at March 31, 2024 and $4,496 at December 31, 2023
55,852 63,246 
Accounts receivable—affiliates4,463 4,683 
Inventory1,363 3,124 
Fair value of derivative assets, net1,272 909 
Customer acquisition costs, net5,686 5,154 
Customer relationships, net342 342 
Deposits6,813 6,897 
Renewable energy credit asset26,393 25,456 
Other current assets6,734 6,567 
Total current assets159,341 158,973 
Property and equipment, net4,909 4,710 
Fair value of derivative assets, net12 91 
Customer acquisition costs, net2,115 1,835 
Customer relationships, net53 139 
Deferred tax assets13,721 15,282 
Goodwill120,343 120,343 
Other assets2,168 2,461 
Total assets$302,662 $303,834 
Liabilities, Series A Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable$21,292 $29,524 
Accounts payable—affiliates598 472 
Accrued liabilities17,900 15,094 
Renewable energy credit liability18,850 15,706 
Fair value of derivative liabilities, net9,350 19,141 
Other current liabilities59 59 
Total current liabilities68,049 79,996 
Long-term liabilities:
Fair value of derivative liabilities, net100 54 
Long-term portion of Senior Credit Facility91,000 97,000 
Total liabilities159,149 177,050 
Commitments and contingencies (Note 12)
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,567,543 shares issued and outstanding at March 31, 2024 and December 31, 2023
88,047 88,065 
Stockholders’ equity:
       Common Stock:

Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 3,261,620 shares issued and 3,232,701 shares outstanding at March 31, 2024 and 3,261,620 shares issued and 3,232,701 shares outstanding at December 31, 2023
32 32 
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 4,000,000 shares issued and outstanding at March 31, 2024 and December 31, 2023
40 40 
       Additional paid-in capital40,726 40,002 
       Accumulated other comprehensive loss(40)(40)
       Retained earnings 14,829 8,972 
       Treasury stock, at cost, 28,919 shares at March 31, 2024 and December 31, 2023
(2,406)(2,406)
     Total stockholders’ equity53,181 46,600 
Non-controlling interest in Spark HoldCo, LLC2,285 (7,881)
       Total equity55,466 38,719 
Total liabilities, Series A Preferred Stock and Stockholders’ equity$302,662 $303,834 
The accompanying notes are an integral part of the condensed consolidated financial statements.
5


VIA RENEWABLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended March 31,
20242023
Revenues:
Retail revenues$114,388 $135,125 
Net asset optimization expense(1,597)(3,273)
Other revenue1,265  
Total Revenues114,056 131,852 
Operating Expenses:
Retail cost of revenues68,962 117,441 
General and administrative 17,333 17,225 
Depreciation and amortization2,040 3,336 
Total Operating Expenses88,335 138,002 
Operating income (loss)25,721 (6,150)
Other (expense):
Interest expense(1,929)(2,697)
Interest and other income 24 80 
Total other expenses(1,905)(2,617)
Income (loss) before income tax expense 23,816 (8,767)
Income tax expense (benefit)4,752 (1,996)
Net income (loss)$19,064 $(6,771)
Less: Net income (loss) attributable to non-controlling interests10,497 (6,584)
Net income (loss) attributable to Via Renewables, Inc. stockholders$8,567 $(187)
Less: Dividend on Series A Preferred Stock2,710 2,544 
Net income (loss) attributable to stockholders of Class A common stock$5,857 $(2,731)
Net income (loss) attributable to Via Renewables, Inc. per share of Class A common stock
       Basic$1.81 $(0.86)
       Diluted$1.81 $(1.26)
Weighted average shares of Class A common stock outstanding
       Basic3,233 3,173 
       Diluted3,233 7,173 


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

6

VIA RENEWABLES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in thousands)
(unaudited)
Three Months Ended March 31, 2024
Issued Shares of Class A Common StockIssued Shares of Class B Common StockTreasury StockClass A Common StockClass B Common StockTreasury StockAccumulated Other Comprehensive LossAdditional Paid-in CapitalRetained EarningsTotal Stockholders' EquityNon-controlling InterestTotal Equity
Balance at December 31, 2023
3,262 4,000 (29)$32 $40 $(2,406)$(40)$40,002 $8,972 $46,600 $(7,881)$38,719 
Stock based compensation— — — — — — 486 — 486 — 486 
Consolidated net income — — — — — — — — 8,567 8,567 10,497 19,064 
Distributions paid to non-controlling unit holders— — — — — — — — — — (93)(93)
Dividends paid to Preferred Stockholders— — — — — — — — (2,710)(2,710)— (2,710)
Changes in ownership interest— — — — — — — 238 — 238 (238) 
Balance at March 31, 20243,262 4,000 (29)$32 $40 $(2,406)$(40)$40,726 $14,829 $53,181 $2,285 $55,466 

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











7

Three Months Ended March 31, 2023
Issued Shares of Class A Common StockIssued Shares of Class B Common StockTreasury StockClass A Common StockClass B Common StockTreasury StockAccumulated Other Comprehensive LossAdditional Paid-in CapitalRetained Earnings (Deficit)Total Stockholders' EquityNon-controlling InterestTotal Equity
Balance at December 31, 20223,201 4,000 (29)$32 $40 $(2,406)$(40)$42,871 $2,073 $42,570 $(14,234)$28,336 
Stock based compensation— — — — — — — 681 — 681 — 681 
Consolidated net loss— — — — — — — — (187)(187)(6,584)(6,771)
Stock issued - reverse stock split14 — — — — — — — — — — — 
Distributions paid to non-controlling unit holders— — — — — — — — — — (3,625)(3,625)
Dividends paid to Class A common stockholders $0.90625 per share)
— — — — — — — (2,874)— (2,874)— (2,874)
Dividends paid to Preferred Stockholders— — — — — — — (2,544)— (2,544)— (2,544)
Changes in ownership interest— — — — — — — 110 — 110 (110) 
Balance at March 31, 20233,215 4,000 (29)$32 $40 $(2,406)$(40)$38,244 $1,886 $37,756 $(24,553)$13,203 

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













8

VIA RENEWABLES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Three Months Ended March 31,
  20242023
Cash flows from operating activities:
Net income (loss)$19,064 $(6,771)
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense2,040 3,336 
Deferred income taxes1,562 (2,744)
Stock based compensation514 685 
Amortization of deferred financing costs206 206 
Bad debt expense304 955 
Loss on derivatives, net4,205 42,770 
Current period cash settlements on derivatives, net(15,425)(20,137)
Other64  
Changes in assets and liabilities:
Decrease in accounts receivable7,091 15,202 
Decrease in accounts receivable—affiliates219 650 
Decrease in inventory1,761 3,849 
Increase in customer acquisition costs(2,444)(1,773)
Increase in prepaid and other current assets(37)(1,777)
Decrease in other assets191 215 
Decrease in accounts payable and accrued liabilities(2,342)(21,404)
Increase in accounts payable—affiliates126 57 
Decrease in other current liabilities (240)
Decrease in other non-current liabilities (19)
Net cash provided by operating activities17,099 13,060 
Cash flows from investing activities:
Purchases of property and equipment(450)(374)
Net cash used in investing activities(450)(374)
Cash flows from financing activities:
Borrowings on notes payable109,000 63,000 
Payments on notes payable(115,000)(52,000)
Net paydown on subordinated debt facility (5,000)
Payment of dividends to Class A common stockholders (2,874)
Payment of distributions to non-controlling unitholders(93)(3,625)
Payment of Preferred Stock dividends(2,728)(2,376)
Net cash used in financing activities(8,821)(2,875)
Increase in Cash, cash equivalents and Restricted cash7,828 9,811 
Cash, cash equivalents and Restricted cash—beginning of period42,595 35,351 
Cash, cash equivalents and Restricted cash—end of period$50,423 $45,162 
Supplemental Disclosure of Cash Flow Information:
Non-cash items:
        Property and equipment purchase accrual$32 $6 
Cash paid during the period for:
Interest $1,821 $2,317 
Taxes $110 $137 
The accompanying notes are an integral part of the condensed consolidated financial statements.
9

VIA RENEWABLES, 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. The Company is a holding company whose primary 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, Spark Energy, and Verde Energy. Via Energy Solutions (“VES”) is a wholly owned subsidiary of the Company that offers broker services for retail energy customers. Via Wireless is a wholly owned subsidiary of the Company that offers wireless services and equipment to wireless customers.

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, 2023 (the “2023 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.

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, Majority Shareholder, and Chief Executive Officer

W. Keith Maxwell, III is the Chief Executive Officer, a director, and 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
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(“NuDevco Retail Holdings”), which is a wholly owned subsidiary of Electric HoldCo, LLC, which is also a wholly owned subsidiary of TxEx.

We enter into transactions with and pay certain costs on behalf of affiliates that are commonly controlled by Mr. Maxwell, and these affiliates enter into transactions with and pay certain costs on our behalf. We undertake these transactions in order to reduce risk, reduce administrative expense, create economies of scale, create strategic alliances and supply goods and services among these related parties.

These transactions include, but are not limited to, employee benefits provided through the Company’s benefit plans, insurance plans, leased office space, certain administrative salaries, management due diligence, recurring management consulting, and accounting, tax, legal, or technology services. Amounts billed under these arrangements are based on services provided, departmental usage, or headcount, which are considered reasonable by management. As such, the accompanying condensed consolidated financial statements include costs that have been incurred by the Company and then directly billed or allocated to affiliates, and costs that have been incurred by our affiliates and then directly billed or allocated to us, and are recorded net in general and administrative expense on the condensed consolidated statements of operations with a corresponding accounts receivable—affiliates or accounts payable —affiliates, respectively, recorded in the consolidated balance sheets. Additionally, the Company enters into transactions with certain affiliates for sales or purchases of natural gas and electricity, which are recorded in retail revenues, retail cost of revenues, and net asset optimization revenues in the condensed consolidated statements of operations with a corresponding accounts receivable—affiliate or accounts payable—affiliate in the consolidated balance sheets. The allocations and related estimates and assumptions are described more fully in Note 13 “Transactions with Affiliates.”

On December 29, 2023, we entered into a merger agreement (the “Merger Agreement”) with Retailco, LLC, a Texas limited liability company (“Retailco”), and NuRetailco LLC, a Delaware limited liability company and wholly-owned subsidiary of Retailco (“Merger Sub”), whereby all of our Class A common stock (except for as described below), will be acquired by Retailco for $11.00 per share. Retailco is an entity owned by TxEx, which is wholly owned by Mr. Maxwell.

The transaction will be effected by a merger of Merger Sub, with and into the Company, with the Company surviving the merger. Under the terms of the Merger Agreement, all of our Class A common stock, except for shares of Class A common stock for which appraisal rights have been properly and validly exercised under Delaware law and certain additional shares, including those held by the Company or any of its subsidiaries (or held in the Company’s treasury), Retailco or Merger Sub or any of their respective subsidiaries, or Mr. Maxwell, and any person or entity controlled by him, will be converted into the right to receive the cash consideration.

The Class A common stock, currently traded under the symbol VIA, will cease to trade on NASDAQ upon consummation of the transaction. We expect that the Series A Preferred Stock, currently traded under the symbol VIASP, will continue to trade on NASDAQ following the transaction. Accordingly, Via Renewables will remain subject to the reporting requirements of the Exchange Act.

The transaction was negotiated on behalf of the Company by a Special Committee of its Board of Directors with the assistance of independent financial and legal advisors. The Special Committee is comprised of entirely disinterested and independent directors. Following the Special Committee’s unanimous recommendation in support of the merger, the Company’s Board of Directors (other than Mr. Maxwell) approved the Merger Agreement and recommended that the Company’s stockholders adopt and approve the Merger Agreement and the merger.

The merger is subject to approval by a majority of shareholders of the issued and outstanding shares of the Company’s Class A common stock and Class B common stock.



11

In addition, the merger is subject to a non-waivable requirement of approval by the holders of at least a majority of the issued and outstanding Class A common stock and Class B common stock not owned by Mr. Maxwell and his affiliated entities or the directors, officers or their immediate family members. Mr. Maxwell and affiliated entities have entered into a support agreement to vote their shares in favor of the transaction and against any competing transaction. The Merger Agreement is not subject to a financing condition, but is subject to customary closing conditions. The special meeting will be held on May 23, 2024 or the date of any postponement or adjournment. The transaction is expected to close in the second quarter of 2024.

New Accounting Standards Being Evaluated/Standards Not yet adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in the ASU improve reportable segment disclosures by adding and enhancing annual and interim disclosure requirements, clarifying circumstances in which entities can disclose multiple segment measures of profit or loss, providing new segment disclosure requirements for entities with a single reportable segment, and adding other disclosure requirements. ASU 2023-07 will be effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. We are evaluating the impact of adoption on our consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires enhanced income tax disclosures, particularly related to a reporting entity's effective tax rate reconciliation and income taxes paid. For the rate reconciliation, the update requires additional categories of information about federal, state, and foreign taxes and details about significant reconciling items, subject to a quantitative threshold. Income taxes paid must be similarly disaggregated by federal, state, and foreign based on a quantitative threshold. The ASU will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply retrospectively. We are evaluating the impact of adoption on our consolidated financial statements.

The Company considers the applicability and impact of all ASUs. New ASUs were assessed and determined to be either not applicable or are expected to have minimal impact on our 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.

Other revenue is derived from contracts with customers through the provision of wireless and other services and the sale of wireless equipment.

Revenues for electricity and 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. Electricity and natural gas products may be sold as fixed-price or variable-price products. The typical length of a contract to provide electricity and/or natural gas is 12 months. Customers are billed and typically pay at least monthly, based on usage. Electricity and 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
12

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).
Reportable Segments
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
Retail Electricity (c)Retail Natural GasTotal Reportable SegmentsRetail Electricity (c)Retail Natural GasTotal Reportable Segments
Primary markets (a)
New England$27,339 $4,625 $31,964 $32,887 $3,913 $36,800 
Mid-Atlantic30,699 15,255 45,954 27,509 19,346 46,855 
Midwest7,309 7,371 14,680 8,139 9,805 17,944 
Southwest11,982 9,808 21,790 14,292 19,234 33,526 
$77,329 $37,059 $114,388 $82,827 $52,298 $135,125 
Customer type
Commercial$11,365 $20,714 $32,079 $10,293 $28,679 $38,972 
Residential70,948 18,641 89,589 77,237 31,275 108,512 
Unbilled revenue (b)(4,984)(2,296)(7,280)(4,703)(7,656)(12,359)
$77,329 $37,059 $114,388 $82,827 $52,298 $135,125 
Customer credit risk
POR$50,289 $19,469 $69,758 $49,143 $25,054 $74,197 
Non-POR27,040 17,590 44,630 33,684 27,244 60,928 
$77,329 $37,059 $114,388 $82,827 $52,298 $135,125 
Reportable Segments
(a) The primary markets include the following states:

New England - Connecticut, Maine, Massachusetts and New Hampshire;
Mid-Atlantic - Delaware, Maryland (including the District of Columbia), New Jersey, New York, Pennsylvania and Virginia;
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.

(c) Retail Electricity includes Services





13

Reconciliation to Consolidated Financial Information

A reconciliation of the reportable segment operating revenues to consolidated revenues is as follows:

Three Months Ended March 31,
2024
2023
Total Reportable Segments Revenue$114,388 $135,125 
Net asset optimization expense(1,597)(3,273)
Other Revenue1,265  
Total Revenues$114,056 $131,852 

We record gross receipts taxes on a gross basis in retail revenues and retail cost of revenues. During the three months ended March 31, 2024 and 2023, our retail revenues included gross receipts taxes of $0.3 million and $0.3 million, respectively, and our retail cost of revenues included gross receipts taxes of $1.4 million and $1.3 million, respectively.

Accounts receivables and Allowance for Credit Losses

The Company conducts business in many utility service markets where the local regulated utility purchases our receivables, and then becomes responsible for billing the customer and collecting payment from the customer (“POR programs”). These POR programs result in substantially all of the Company’s credit risk being linked to the applicable utility, which generally has an investment-grade rating, and not to the end-use customer. The Company monitors the financial condition of each utility and currently believes its receivables are collectible.

In markets that do not offer POR programs or when the Company chooses to directly bill its customers, certain receivables are billed and collected by the Company. The Company bears the credit risk on these accounts and records an appropriate allowance for doubtful accounts to reflect any losses due to non-payment by customers. The Company’s customers are individually insignificant and geographically dispersed in these markets. The Company writes off customer balances when it believes that amounts are no longer collectible and when it has exhausted all means to collect these receivables.

For trade accounts receivables, the Company accrues an allowance for credit losses by business segment by pooling customer accounts receivables based on similar risk characteristics, such as customer type, geography, aging analysis, payment terms, and related macro-economic factors. Expected credit loss exposure is evaluated for each of our accounts receivables pools. Expected credits losses are established using a model that considers historical collections experience, current information, and reasonable and supportable forecasts. The Company writes off accounts receivable balances against the allowance for credit losses when the accounts receivable is deemed to be uncollectible.

A rollforward of our allowance for credit losses for the three months ended March 31, 2024 are presented in the table below (in thousands):
Balance at December 31, 2023$(4,496)
Current period credit loss provision(304)
Write-offs1,297 
Recovery of previous write-offs(45)
Balance at March 31, 2024$(3,548)





14

4. Equity

Non-controlling Interest

We hold an economic interest and are the sole managing member in Spark HoldCo, with affiliates of Mr. Maxwell 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 March 31, 2024 and December 31, 2023, respectively.

The CompanyAffiliated Owners
March 31, 202444.92 %55.08 %
December 31, 202344.92 %55.08 %

The following table summarizes the portion of net income and income tax expense attributable to non-controlling interest (in thousands):
Three Months Ended March 31,
20242023
Net income (loss) before taxes allocated to non-controlling interest$11,360 $(6,334)
Less: Income tax expense allocated to non-controlling interest863 250 
Net income (loss) attributable to non-controlling interests$10,497 $(6,584)

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.

Reverse Stock Split

On March 20, 2023, the Company’s shareholders approved at a special meeting a proposal by the Company’s Board of Directors to consummate a reverse stock split of the Company’s Class A common stock and Class B common stock at a ratio between 1 for 2 to 1 for 5, with such ratios to be determined by the Chief Executive Officer or the Chief Financial Officer, or to determine not to proceed with the reverse stock split, during a period of time not to exceed the one-year anniversary of the special meeting date (the “Reverse Stock Split”).

On March 20, 2023, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Delaware Secretary of State to effect the Reverse Stock Split at a ratio of 1 to 5 for each issued and outstanding share of Class A common stock and Class B common stock as of March 21, 2023 at 5:30 PM ET. The Class A common stock began trading on a post-split basis on March 22, 2023.

No fractional shares were issued as a result of the Reverse Stock Split and it did not impact the par value of the Class A common stock or Class B common stock. Any fractional shares that would otherwise have resulted from the Reverse Stock Split were rounded up to the next whole number. The number of authorized shares of Class A common stock and Class B common stock were not impacted by the Reverse Stock Split and remained unchanged at 120,000,000 shares of Class A common stock and 60,000,000 shares of Class B common stock.

All shares of Class A common stock and Class B common stock and per share amounts in the accompanying consolidated financial statements and related notes have been retrospectively restated to reflect the effect of the Reverse Stock Split effective March 21, 2023.


15

Dividends on Class A Common Stock

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 three months ended March 31, 2023, we paid zero dividends to the holders of the Company's Class A common stock. This dividend represented a quarterly rate of $0.90625 per share on each share of 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 three months ended March 31, 2023, Spark HoldCo made corresponding distributions of $3.6 million to our non-controlling interest holders.

In April 2023, we announced that our Board of Directors elected to temporarily suspend the quarterly cash dividend on the Class A common stock. During the three months ended March 31, 2024, we did not pay dividends to the holders of the Company’s Class A common stock and did not make corresponding distributions 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.

The following table presents the computation of basic and diluted income per share for the three months ended March 31, 2024 and 2023 (in thousands, except per share data):
Three Months Ended March 31,
20242023
Net income (loss) attributable to Via Renewables, Inc. stockholders$8,567 $(187)
Less: Dividend on Series A Preferred Stock2,710 2,544 
Net income (loss) attributable to stockholders of Class A common stock$5,857 $(2,731)
Basic weighted average Class A common shares outstanding3,233 3,173 
Basic income (loss) per share attributable to stockholders$1.81 $(0.86)
Net income (loss) attributable to stockholders of Class A common stock$5,857 $(2,731)
Effect of conversion of Class B common stock to shares of Class A common stock (6,327)
Diluted net income (loss) attributable to stockholders of Class A common stock$5,857 $(9,058)
Basic weighted average Class A common shares outstanding3,233 3,173 
Effect of dilutive Class B common stock 4,000 
Diluted weighted average shares outstanding3,233 7,173 
Diluted income (loss) per share attributable to stockholders$1.81 $(1.26)

The computation of diluted earnings per share for the three months ended March 31, 2024, excludes 4.0 million shares of Class B common stock and 0.2 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.
16

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 March 31, 2024 and December 31, 2023 (in thousands):
March 31, 2024December 31, 2023
Assets
Current assets:
   Cash and cash equivalents$49,535 $42,062 
   Accounts receivable55,443 62,548 
   Other current assets52,231 50,650 
   Total current assets157,209 155,260 
Non-current assets:
   Goodwill120,343 120,343 
   Other assets11,427 11,351 
   Total non-current assets131,770 131,694 
   Total Assets$288,979 $286,954 
Liabilities
Current liabilities:
   Accounts payable and accrued liabilities$38,577 $44,201 
   Other current liabilities67,160 71,994 
   Total current liabilities105,737 116,195 
Long-term liabilities:
   Long-term portion of Senior Credit Facility91,000 97,000 
   Subordinated debt affiliate
  
   Other long-term liabilities99 54 
   Total long-term liabilities91,099 97,054 
   Total Liabilities$196,836 $213,249 

5. Preferred Stock

Holders of the Series A Preferred Stock have no voting rights, except in specific circumstances of delisting or in the case the dividends are in arrears as specified in the Series A Preferred Stock Certificate of Designations. The Series A Preferred Stock accrued dividends at an annual percentage rate of 8.75% through April 14, 2022. The floating rate period for the Series A Preferred Stock began on April 15, 2022. The dividend on the Series A Preferred Stock will accrue at an annual rate equal to the sum of (a) Three-Month LIBOR (if it then exists), or an alternative reference rate as of the applicable determination date and (b) 6.578%, based on the $25.00 liquidation preference per share of the Series A Preferred Stock. The liquidation preference provisions of the Series A Preferred Stock are considered contingent redemption provisions because there are rights granted to the holders of the Series A Preferred Stock that are not solely within our control upon a change in control of the Company. Accordingly, the Series A Preferred Stock is presented between liabilities and the equity sections in the accompanying condensed consolidated balance sheets. As of April 15, 2022, we have the option to redeem our Series A Preferred Stock.

17

Following the cessation of the publication of U.S. LIBOR on June 30, 2023, we use Three Month CME Term SOFR plus a tenor spread of 0.26161 percent (or 26.161 bps) to calculate the dividend rate on the Series A Preferred Stock pursuant to the rules of the Adjustable Interest Rate (LIBOR) Act.

During the three months ended March 31, 2024, we paid $2.7 million in dividends to holders of the Series A Preferred Stock. As of March 31, 2024, we had accrued $2.7 million related to dividends to holders of the Series A Preferred Stock. This dividend was paid on April 15, 2024.

A summary of our preferred equity balance for the three months ended March 31, 2024 is as follows:
(In thousands)
Balance at December 31, 2023
$88,065 
Accumulated dividends on Series A Preferred Stock(18)
Balance at March 31, 2024
$88,047 

6. Derivative Instruments

We are exposed to the impact of market fluctuations in the price of electricity and natural gas, basis differences in the price of natural gas, storage charges, renewable energy credits (“RECs”), and capacity charges from independent system operators. We use derivative instruments in an effort to manage our cash flow exposure to these risks. These instruments are not designated as hedges for accounting purposes, and accordingly, changes in the market value of these derivative instruments are recorded in the cost of revenues. As part of our strategy to optimize pricing in our natural gas related activities, we also manage a portfolio of commodity derivative instruments held for trading purposes. Our commodity trading activities are subject to limits within our Risk Management Policy. For these derivative instruments, changes in the fair value are recognized currently in earnings in net asset optimization revenues.

Derivative assets and liabilities are presented net in our condensed consolidated balance sheets when the derivative instruments are executed with the same counterparty under a master netting arrangement. Our derivative contracts include transactions that are executed both on an exchange and centrally cleared, as well as over-the-counter, bilateral contracts that are transacted directly with third parties. To the extent we have paid or received collateral related to the derivative assets or liabilities, such amounts would be presented net against the related derivative asset or liability’s fair value. As of March 31, 2024 and December 31, 2023, we offset $3.5 million and $5.2 million, respectively, in collateral to net against the related derivative liability’s fair value. The specific types of derivative instruments we may execute to manage the commodity price risk include the following:

Forward contracts, which commit us to purchase or sell energy commodities in the future;
Futures contracts, which are exchange-traded standardized commitments to purchase or sell a commodity or financial instrument;
Swap agreements, which require payments to or from counterparties based upon the differential between two prices for a predetermined notional quantity; and
Option contracts, which convey to the option holder the right but not the obligation to purchase or sell a commodity.

The Company has entered into other energy-related contracts that do not meet the definition of a derivative instrument or for which we made a normal purchase, normal sale election and are therefore not accounted for at fair value including the following:

Forward electricity and natural gas purchase contracts for retail customer load;
Renewable energy credits; and
Natural gas transportation contracts and storage agreements.

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Volumes Underlying Derivative Transactions

The following table summarizes the net notional volumes of our open derivative financial instruments accounted for at fair value by commodity. Positive amounts represent net buys while bracketed amounts are net sell transactions (in thousands):
Non-trading 
CommodityNotionalMarch 31, 2024December 31, 2023
Natural GasMMBtu5,020 6,254 
ElectricityMWh807 1,029 
Trading
CommodityNotionalMarch 31, 2024December 31, 2023
Natural GasMMBtu630 1,016 
Gains (Losses) on Derivative Instruments

Gains (losses) on derivative instruments, net and current period settlements on derivative instruments were as follows for the periods indicated (in thousands):
Three Months Ended March 31,
  20242023
Loss on non-trading derivatives, net$(4,296)$(42,769)
Gain (loss) on trading derivatives, net91 (1)
Loss on derivatives, net$(4,205)$(42,770)
Current period settlements on non-trading derivatives15,242 20,123 
Current period settlements on trading derivatives18314 
Total current period settlements on derivatives$15,425 $20,137 

Gains (losses) on trading derivative instruments are recorded in net asset optimization revenues and gains (losses) on non-trading derivative instruments are recorded in retail cost of revenues on the condensed consolidated statements of operations.

Fair Value of Derivative Instruments
The following tables summarize the fair value and offsetting amounts of our derivative instruments by counterparty and collateral received or paid (in thousands):
  
March 31, 2024
DescriptionGross AssetsGross
Amounts
Offset
Net AssetsCash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives $1,547 $(417)$1,130 $ $1,130 
Trading commodity derivatives533 (391)142  142 
Total Current Derivative Assets2,080 (808)1,272  1,272 
Non-trading commodity derivatives212 (200)12  12 
Total Non-current Derivative Assets212 (200)12  12 
Total Derivative Assets$2,292 $(1,008)$1,284 $ $1,284 
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DescriptionGross 
Liabilities
Gross
Amounts
Offset
Net
Liabilities
Cash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives$(17,528)$4,970 $(12,558)$3,214 $(9,344)
Trading commodity derivatives(13)7 (6) (6)
Total Current Derivative Liabilities(17,541)4,977 (12,564)3,214 (9,350)
Non-trading commodity derivatives(769)335 (434)334 (100)
Trading commodity derivatives     
Total Non-current Derivative Liabilities(769)335 (434)334 (100)
Total Derivative Liabilities$(18,310)$5,312 $(12,998)$3,548 $(9,450)
  
December 31, 2023
DescriptionGross AssetsGross
Amounts
Offset
Net AssetsCash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives$1,926 $(1,046)$880 $ $880 
Trading commodity derivatives64 (35)29  29 
Total Current Derivative Assets1,990 (1,081)909  909 
Non-trading commodity derivatives173 (82)91  91 
Trading commodity derivatives     
Total Non-current Derivative Assets173 (82)91  91 
Total Derivative Assets$2,163 $(1,163)$1,000 $ $1,000 
DescriptionGross 
Liabilities
Gross
Amounts
Offset
Net
Liabilities
Cash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives$(29,730)$6,077 $(23,653)$4,679 $(18,974)
Trading commodity derivatives(173)6 (167) (167)
Total Current Derivative Liabilities(29,903)6,083 (23,820)4,679 (19,141)
Non-trading commodity derivatives(672)115 (557)503 (54)
Trading commodity derivatives     
Total Non-current Derivative Liabilities(672)115 (557)503 (54)
Total Derivative Liabilities$(30,575)$6,198 $(24,377)$5,182 $(19,195)


7. Property and Equipment

Property and equipment consist of the following (in thousands):
Estimated useful
lives (years)
March 31, 2024December 31, 2023
Information technology
2 – 5
$7,212 $6,983 
Total7,212 6,983 
Accumulated depreciation(2,303)(2,273)
Property and equipment—net$4,909 $4,710 

Information technology assets include software and consultant time used in the application, development and implementation of various systems including customer billing and resource management systems. As of March 31, 2024 and December 31, 2023, information technology includes $1.7 million and $1.5 million, respectively, of costs associated with assets not yet placed into service.

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Depreciation expense recorded in the condensed consolidated statements of operations was $0.3 million and $0.4 million for the three months ended March 31, 2024 and 2023, respectively.
21


8. Intangible Assets
Goodwill, customer relationships and trademarks consist of the following amounts (in thousands):
March 31, 2024December 31, 2023
Goodwill$120,343 $120,343 
Customer relationshipsAcquired
$ $ 
Customer relationships—Other
Cost$968 $968 
Accumulated amortization(573)(487)
Customer relationshipsOther, net
$395 $481 
Cost$4,040 $4,040 
Accumulated amortization(1,717)(1,616)
Trademarks, net$2,323 $2,424 

Changes in goodwill, customer relationships (including non-compete agreements) and trademarks consisted of the following (in thousands):
Goodwill
Customer Relationships Other
Trademarks
Balance at December 31, 2023$120,343 $481 $2,424 
Additions    
Amortization  (86)(101)
Balance at March 31, 2024$120,343 $395 $2,323 

Estimated future amortization expense for customer relationships and trademarks at March 31, 2024 is as follows (in thousands):
Year ending December 31,
2024 (remaining nine months)$559 
2025543 
2026404 
2027404 
2028
404 
> 5 years404 
Total$2,718 
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9. Debt
Debt consists of the following amounts as of March 31, 2024 and December 31, 2023 (in thousands):
March 31, 2024December 31, 2023
Long-term debt:
  Senior Credit Facility (1) (2)
$91,000 $97,000 
  Subordinated Debt
  
Total long-term debt91,000 97,000 
Total debt$91,000 $97,000 
(1) As of March 31, 2024 and December 31, 2023, the weighted average interest rate on the Senior Credit Facility was 8.58% and 8.60%, respectively.
(2) As of March 31, 2024 and December 31, 2023, we had $22.8 million and $24.3 million in letters of credit issued, respectively.

Capitalized financing costs associated with our Senior Credit Facility were $1.0 million and $1.2 million as of March 31, 2024 and December 31, 2023, respectively. Of these amounts, $0.8 million and $0.8 million are recorded in other current assets, and $0.2 million and $0.4 million are recorded in other non-current assets in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively.
Interest expense consists of the following components for the periods indicated (in thousands):
Three Months Ended March 31,
20242023
Senior Credit Facility$1,335 $2,067 
Letters of credit fees and commitment fees384 403 
Amortization of deferred financing costs
206 206 
Other
4 21 
Interest Expense
$1,929 $2,697 

Senior Credit Facility

On June 30, 2022, the Company and Spark HoldCo, and together with certain subsidiaries of the Company and Spark Holdco, (the “Co-Borrowers”) entered into a Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for a senior secured credit facility (the “Senior Credit Facility”), which allows the Co- Borrowers to borrow up to $195.0 million on a revolving basis. The Senior Credit Facility provides for working capital loans, loans to fund acquisitions, swingline loans and letters of credit. The Senior Credit Facility expires on June 30, 2025, and all amounts outstanding thereunder are payable on the expiration date.

Borrowings under the Senior Credit Facility bear interest at the following rates depending on the classification of the borrowing and provided further that at no time shall the interest rate be less than four percent (4.0%) per annum:

The Base Rate (a rate per annum equal to the greatest of (a) the prime rate, (b) the Federal Funds Rate plus ½ of 1% and (c) Term Secured Overnight Financing Rate (“SOFR”) for a one month tenor plus 1.0%, provided, that the Base Rate shall not at any time be less than 0%), plus an applicable margin of 3.25% to 4.50% depending on the type of borrowing and the average outstanding amount of loans and letters of credit under the Credit Agreement at the end of the prior fiscal quarter;

The Term SOFR (a rate equal to the forward looking secured overnight financing rate published by the SOFR administrator on the website of the Federal Reserve Bank of New York or any successor source with either a comparable tenor (for any calculation with respect to a SOFR loan) or a one month tenor (for any calculation with respect to a Base Rate loan)), plus an applicable margin of 3.25% to 4.50% depending on
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the type of borrowing and the average outstanding amount of loans and letters of credit under the Credit Agreement at the end of the prior fiscal quarter; or

The Daily Simple SOFR (a rate equal to the forward looking secured overnight financing rate published by the SOFR administrator on the website of the Federal Reserve Bank of New York or any successor source and applied on a daily basis by the Agent in accordance with rate recommendations for daily loans), plus an applicable margin of 3.25% to 4.50% depending on the type of borrowing and the average outstanding amount of loans and letters of credit under the Credit Agreement at the end of the prior fiscal quarter, plus a liquidity premium added by the Agent to each borrowing.

The Co-Borrowers are required to pay a non-utilization fee of 0.50% quarterly in arrears on the unused portion of the Senior Credit Facility. In addition, the Co-Borrowers are subject to additional fees including an upfront fee, an annual administrative agency fee, an arrangement fee and letter of credit fees.

The Credit Agreement contains covenants that, among other things, require the maintenance of specified ratios or conditions including:

Minimum Fixed Charge Coverage Ratio. The Company must maintain a minimum fixed charge coverage ratio of not less than 1.10 to 1.00. The Minimum Fixed Charge Coverage Ratio is defined as the ratio of (a) Adjusted EBITDA to (b) the sum of, among other things, consolidated interest expense, letter of credit fees, non-utilization fees, earn-out payments, certain restricted payments, taxes, and payments made on or after July 31, 2020 related to the settlement of civil and regulatory matters if not included in the calculation of Adjusted EBITDA. Our Minimum Fixed Charge Coverage Ratio as of March 31, 2024 was 2.39 to 1.00.

Maximum Total Leverage Ratio. The Company must maintain a ratio of (x) the sum of all consolidated indebtedness (excluding eligible subordinated debt and letter of credit obligations), plus (y) gross amounts reserved for civil and regulatory liabilities identified filings with the SEC, to Adjusted EBITDA of no more than 2.50 to 1.00. Our Maximum Total Leverage Ratio as of March 31, 2024 was 1.85 to 1.00.

Maximum Senior Secured Leverage Ratio. The Company must maintain a Senior Secured Leverage Ratio of no more than 2.00 to 1.00. The Senior Secured Leverage Ratio is defined as the ratio of (a) all consolidated indebtedness that is secured by a lien on any property of any loan party (including the effective amount of all loans then outstanding under the Senior Credit Facility but excluding eligible subordinated debt and letter of credit obligations) to (b) Adjusted EBITDA for the most recent twelve month period then ended. Our Maximum Senior Secured Leverage Ratio as of March 31, 2024 was 1.71 to 1.00.

As of March 31, 2024, the Company was in compliance with financial covenants under the Senior Credit Facility. The Company continues to manage the impact of commodity costs on financial covenant compliance. Maintaining compliance with our covenants under our Senior Credit Facility may impact our ability to pay dividends on our Class A common stock and Series A Preferred Stock.

The Credit Agreement contains various customary affirmative covenants that require, among other things, the Company to maintain insurance, pay its obligations and comply with law. The Credit Agreement also contains customary negative covenants that limit the Company’s ability to, among other things, incur certain additional indebtedness, grant certain liens, engage in certain asset dispositions, merge or consolidate, make certain payments, distributions and dividends, investments, acquisitions or loans, materially modify certain agreements, and enter into transactions with affiliates.

The Senior Credit Facility is secured by pledges of the equity of the portion of Spark HoldCo owned by the Company, the equity of Spark HoldCo’s subsidiaries, the Co-Borrowers’ present and future subsidiaries, and substantially all of the Co-Borrowers’ and their subsidiaries’ present and future property and assets, including intellectual property assets, accounts receivable, inventory and liquid investments, and control agreements relating to bank accounts.
24


The Company is entitled to pay cash dividends to the holders of its Series A Preferred Stock and Class A common stock so long as: (a) no default exists or would result therefrom; (b) the Co-Borrowers are in pro forma compliance with all financial covenants before and after giving effect thereto; and (c) the outstanding amount of all loans and letters of credit do not exceed the borrowing base limits.

The Credit Agreement contains certain customary representations and warranties and events of default. Events of default include, among other things, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults and cross-acceleration to certain indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments in excess of $5.0 million, certain events with respect to material contracts, and actual or asserted failure of any guaranty or security document supporting the Senior Credit Facility to be in full force and effect. A default will also occur if at any time W. Keith Maxwell III ceases to, directly or indirectly, beneficially own at least fifty-one percent (51%) of the Company’s outstanding Class A common stock and Class B common stock on a combined basis, and a controlling percentage of the voting equity interest of the Company, and certain other changes in control. If such an event of default occurs, the lenders under the Senior Credit Facility would be entitled to take various actions, including the acceleration of amounts due under the facility and all actions permitted to be taken by a secured creditor.

Subordinated Debt Facility

The Company maintains an Amended and Restated Subordinated Promissory Note in the principal amount of up to $25.0 million (the “Subordinated Debt Facility”), by and among the Company, Spark HoldCo and Retailco. The Subordinated Debt Facility allows the Company to draw advances in increments of no less than $1.0 million per advance up to $25.0 million through January 31, 2026. Borrowings are at the discretion of Retailco. Advances thereunder accrue interest at an annual rate equal to the prime rate as published by the Wall Street Journal plus two percent (2.0%) from the date of the advance.

The Company has the right to capitalize interest payments under the Subordinated Debt Facility. The Subordinated Debt Facility is subordinated in certain respects to our Senior Credit Facility pursuant to a subordination agreement. The Company may pay interest and prepay principal on the Subordinated Debt Facility so long it is in compliance with the covenants under the Senior Credit Facility, is not in default under the Senior Credit Facility and has minimum availability of $5.0 million under the borrowing base under the Senior Credit Facility. Payment of principal and interest under the Subordinated Debt Facility is accelerated upon the occurrence of certain change of control or sale transactions.

As of March 31, 2024, and December 31, 2023, there were zero outstanding borrowings under the Subordinated Debt Facility.
10. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. Fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. This includes the credit standing of counterparties involved and the impact of credit enhancements.
We apply fair value measurements to our commodity derivative instruments based on the following fair value hierarchy, which prioritizes the inputs to the valuation techniques used to measure fair value into three broad levels:

Level 1—Quoted prices in active markets for identical assets and liabilities. Instruments categorized in Level 1 primarily consist of financial instruments such as exchange-traded derivative instruments.
Level 2—Inputs other than quoted prices recorded in Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other
25


than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 primarily include non-exchange traded derivatives such as over-the-counter commodity forwards and swaps and options.
Level 3—Unobservable inputs for the asset or liability, including situations where there is little, if any, observable market activity for the asset or liability. The Level 3 category includes estimated earnout obligations related to our acquisitions.

As the fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3), the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. These levels can change over time. In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. In these cases, the lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy.
Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present assets and liabilities measured and recorded at fair value in our condensed consolidated balance sheets on a recurring basis by and their level within the fair value hierarchy (in thousands):
Level 1Level 2Level 3Total
March 31, 2024    
Non-trading commodity derivative assets$ $1,142 $ $1,142 
Trading commodity derivative assets 142  142 
Total commodity derivative assets$ $1,284 $ $1,284 
Non-trading commodity derivative liabilities$ $(9,444)$ $(9,444)
Trading commodity derivative liabilities (6) (6)
Total commodity derivative liabilities$ $(9,450)$ $(9,450)
Level 1Level 2Level 3Total
December 31, 2023
Non-trading commodity derivative assets$ $971 $ $971 
Trading commodity derivative assets 29