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Spark Power Announces Record Quarterly Revenue and EBITDA

Third Quarter revenue grows 36% Year over Year to $52.1 million
Third Quarter Adjusted EBITDA grows 12.5% Year over Year to $8.2 million

(Spark Power reports in Canadian dollars unless otherwise specified)

OAKVILLE, ON , Nov. 12, 2019 /CNW/ - Spark Power Group Inc. (SPG.TO), parent company of Spark Power Corp. ("Spark Power" or the "Company"), today announced record financial results for the three and nine-month periods ended September 30 , 2019.  

Spark Power Group Inc logo (CNW Group/Spark Power Group Inc.)

"Going into the year, we committed to investing in building an operating platform that could scale through the next few years of growth.  I am very proud of the team's accomplishments throughout this year.  Building this platform while significantly growing the business presented significant challenges during the first half of the year.  However, as a result of the team's hard work and perseverance, we are now seeing Spark Power really start to take shape as an integrated platform," said Jason Sparaga , Co-Founder and Co-CEO, Spark Power Corp. 

"With the majority of capital expenditures behind us, the evidence is clear in the financial results—including the acquisitions of 3-Phase and One Wind , and the recent integration benefits, Spark Power now has an annual run rate in excess of $210 million of revenue and $33.5 million of EBITDA, with further gains expected in the coming quarters. The business is very well positioned, both financially and operationally, and I am truly excited by what we will accomplish in 2020," added Sparaga.   

"Our record performance in the third quarter is a direct result of our ongoing investments in growth and integration initiatives.  We have focused on maintaining our momentum, while exercising the discipline to manage our costs to ensure our growth remains scalable and profitable. We will leverage the strong foundation we are building to generate strong free cash flow supported by focused working capital management and prudent capital allocation to support our growth objectives" said Dan Ardila , CFO, Spark Power Corp. "Making these investments requires the continued support of our financial stakeholders.    The expanded debt facilities from Bank of Montreal and the $5.5 million raised in the Rights Offering from our committed, long-term shareholders provided the capital to complete our most recent acquisition and fund other growth initiatives and clearly demonstrates an ongoing confidence in our team."

Financial Highlights

  • Record quarterly revenue at $52.1 million , as compared to $38.3 million from the comparable quarter in 2018 representing a $13.8 million (36%) increase.
  • Strong dual-pronged year-over-year revenue growth with organic growth of 23%, and growth from acquisitions of 12.5%.
  • Proceeds from Rights Offering of $5.5 million along with recent amendments to the Company's credit facilities, support deleveraging and improved liquidity.
  • Managed selling, general and administration costs to $13.2 million (25.3% of revenue) representing a decline of 3.8% from 29.1% in the second quarter of 2019 (at 29.1% of revenue).


Business Highlights—Operations

  • Launched a reorganization of our business units, along Regional Lines, creating opportunities for structural cost reductions and supporting the longer-term scalability of the business
  • Ended the quarter with 25 branches in Canada and 4 branches in the United States
  • Launched our Trusted Partner in PowerTM brand promise, positioning Spark as our customers' first and only choice for all their power needs.


Business Highlights—Corporate Development

  • The Company successfully executed a Rights Offering, raising gross proceeds of $5.5M
  • Acquired 3-Phase, further expanding our geographic coverage in Western Canada and rounding out our capabilities in base building construction and low-voltage electrical services in the region.
  • Subsequent to the close of the quarter, announced the acquisition of One Wind (effective November 1, 2019 ):


Quarterly Conference Call

Management is hosting an investor conference call and webcast tomorrow, November 13, 2019 , at 8:30 a.m. ET to discuss its financial results in greater detail. To join by telephone dial: +1 (888) 231-8191 (toll-free in North America ) or +1 (647) 427-7450 (local and international), with conference ID: 3476509. To listen to a live webcast of the call, please visit the investor relations section of Spark Power's website at https://sparkpowercorp.com/about-us/investor-relations/. An archived replay of the webcast will be available following the conclusion of the call.

Please dial in or log on 10 minutes prior to the start time to provide sufficient time to register for the event.

Spark Power's Third-Quarter 2019 Interim Unaudited Condensed Consolidated Financial Statements and Notes of its Third-Quarter 2019 Management Discussion and Analysis are available on Spark Power's website at www.sparkpowercorp.com, and will be filed on SEDAR at www.sedar.com

About Spark Power

Spark Power is the leading independent provider of end-to-end electrical contracting, operations and maintenance services, and energy sustainability solutions to the industrial, commercial, utility, and renewable asset markets in North America . We work to earn the right to be our customers' Trusted Partner in Power™. Our highly skilled and dedicated people, located in the communities we serve, combined with our knowledge of the power industry, technology expertise, and commitment to safety, ensures we deliver the right solutions that keep our customers' operations up and running today and better equipped for tomorrow. Learn more at www.sparkpowercorp.com.

Non-IFRS Measures
The Company prepares and releases unaudited consolidated interim financial statements and audited consolidated annual financial statements prepared in accordance with IFRS. In this and other earnings releases and investor conference calls, as a complement to results provided in accordance with IFRS, the Company also discloses and discusses certain financial measures not recognized under IFRS and that do not have standard meanings prescribed by IFRS. These include "EBITDA", "Adjusted EBITDA", "Pro-forma Adjusted EBITDA", "EBITDA Margin", "Adjusted EBITDA Margin", "Pro-forma Adjusted EBITDA Margin", "Pro-forma Revenue", "Adjusted Working Capital", and "Adjusted Net and Comprehensive Income (Loss)". These non-IFRS measures are used to provide investors with supplemental measures of Spark Power's operating performance and highlight trends in Spark Power's business that may not otherwise be apparent when relying solely on IFRS measures. Spark also believes that providing such information to securities analysts, investors and other interested parties who frequently use non-IFRS measures in the evaluation of issuers will allow them to better compare Spark Power's performance against others in its industry. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. For a reconciliation of these non-IFRS measures see the Company's management's discussion and analysis for the three and six months ended September 30, 2019 . The non-IFRS measures should not be construed as alternatives to results prepared in accordance with IFRS.

Caution Regarding Forward-Looking Statements
This news release may contain forward-looking statements (within the meaning of applicable securities laws) which reflect Spark Power's current expectations regarding future events. Forward-looking statements are identified by words such as "believe", "anticipate", "project", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions. These statements are based on Spark Power's expectations, estimates, forecasts and projections and include, without limitation, statements regarding the future success of the Company's business, including revenue growth, synergistic savings expected to be realized, potential expansion of the business and include, without limitation, statements regarding the growth and financial performance of Spark Power's business and execution of its business strategy by Messrs. Sparaga and Ardila.

The forward-looking statements in this news release are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Several factors could cause actual results to differ materially from the results discussed in the forward-looking statements. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, Spark Power assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Selected Consolidated Financial Information


Three Months Ended September 30,


Nine Months Ended September 30,


2019

2018

% Change


2019

2018

% Change









Revenue

$52,045,402

$38,268,707

36.0%


$130,592,099

$81,849,796

59.6%

Gross Profit

18,314,485

13,769,593

33.0%


46,314,626

29,594,717

56.5%

Gross Profit Margin

35.2%

36.0%



35.5%

36.2%


Selling, General & Administration

13,176,567

8,750,192

50.6%


37,753,570

21,760,265

73.5%

Income from Operations

5,137,918

5,019,401

2.4%


8,561,056

7,834,452

9.3%









EBITDA (1)

6,812,120

(33,988,675)

120.0%


11,885,365

(56,037,357)

121.2%

EBITDA Margin (1)

13.1%

-88.8%



9.1%

(68.5%)


Adjusted EBITDA (1)

8,228,830

7,313,706

12.5%


16,938,320

14,473,103

17.0%

Adjusted EBITDA Margin (1)

15.8%

19.1%



13.0%

17.7%


Pro-forma Adjusted EBITDA (1)

8,546,854

7,891,971

8.3%


18,900,950

21,086,822

(10.4%)

Pro-forma Adjusted EBITDA Margin (1)

15.7%

18.3%



13.3%

19.4%


Pro-forma Revenue (1)

54,442,993

43,159,142

26.1%


141,931,385

108,528,479

30.8%


























Nine Months Ended September 30,







2019

2018














Bank Indebtedness

20,131,995

4,999,979






Senior Secured Long-term Debt

56,039,578

44,000,000






Total Debt (2)

92,194,964

60,733,506






























1EBITDA, Adjusted EBITDA, Pro-forma Adjusted EBITDA, Adjusted EBITDA Margin, 

Pro-forma Adjusted EBITDA Margin, Pro-forma Revenue, 

and Adjusted Working Capital are non-IFRS measures. Refer to Non-IFRS measures for definitions of these terms.

2Total debt includes Bank indebtedness, long-term debt and promissory notes.


 

Reconciliation of net and comprehensive income (loss) to EBITDA, Adjusted EBITDA, and Pro-forma Adjusted EBITDA

Reconciliation of net and comprehensive income (loss) to
EBITDA, Adjusted EBITDA and Pro-forma Adjusted EBITDA

Three months ended September 30,


Nine months ended September 30,

2019

2018


2019

2018

Net and comprehensive income (loss)

$2,619,718

($37,619,051)


($38,821)

($64,923,409)

Adjustments:






Finance expense

1,281,597

1,477,690


3,878,405

3,473,243

Income tax expense

(68,560)

(126,058)


(247,193)

(196,117)

Amortization

2,979,365

2,278,744


8,292,974

5,608,926

EBITDA

6,812,120

(33,988,675)


11,885,365

(56,037,357)

EBITDA Margin

13.1%

-88.8%


9.1%

-68.5%

Adjustments:






Increase in value of Puttable Class A and Class 1 Special shares

-

20,654,400


-

47,771,600

Transaction costs

905,329

9,157,399


1,441,574

10,269,633

Excess of fair value over net asset acquired

-

12,660,331


-

12,660,331

Gain on retraction of class 1 special shares

-

(1,250,000)


-

(1,250,000)

Reorganization costs

511,381

-


1,511,381

-

Earn-out

-

-


2,100,000

-

Other non-recurring costs

-

80,251


-

1,058,896

Adjusted EBITDA

8,228,830

7,313,706


16,938,320

14,473,103

Adjusted EBITDA Margin

15.8%

19.1%


12.9%

17.7%

Other adjustments:






Pre-acquisition EBITDA from acquistions

318,024

578,265


1,962,630

6,675,232

Pro-forma Adjusted EBITDA

$8,546,854

$7,891,971


$18,900,950

$21,148,335

Pro-forma Adjusted EBITDA Margin

15.7%

18.3%


13.2%

17.4%


 

The following tables summarize Spark Power's results for the periods indicated:

Statement of Net Comprehensive Income (loss)

3 Months Ended September 30,


9 Months Ended September 30,

2019

2018


2019

2018







Revenue

$52,045,402

$38,268,707


$130,592,099

$81,849,796

Cost of sales

33,730,917

24,499,114


84,277,473

52,255,079

Gross profit

18,314,485

13,769,593


46,314,626

29,594,717

Selling, general and administrative expenses

13,176,567

8,750,192


37,753,570

21,760,265

Income from operations

5,137,918

5,019,401


8,561,056

7,834,452

Finance costs

(1,281,597)

(1,477,690)


(3,878,405)

(3,473,243)

Increase in value of Puttable Class A and Class 1 Special shares

-

(20,654,400)


-

(47,771,600)

Transaction costs

(905,329)

(9,157,399)


(1,441,574)

(10,269,633)

Excess of fair value over net asset acquired

-

(12,660,331)


-

(12,660,331)

Gain on retraction of Class 1 special shares

-

1,250,000


-

1,250,000

Reorganization costs

(511,381)

-


(1,511,381)

-

Earn-out

-

-


(2,100,000)

-

Other

111,547

(64,690)


84,290

(29,171)


(2,586,760)

(42,764,510)


(8,847,070)

(72,953,978)

Income (loss) before income taxes

2,551,158

(37,745,109)


(286,014)

(65,119,526)

Income tax expense (recovery):






Current

2,029,889

685,243


593,887

1,481,064

Deferred

(2,098,449)

(811,301)


(841,080)

(1,677,181)


(68,560)

(126,058)


(247,193)

(196,117)

Net and comprehensive income (loss)

$2,619,718

($37,619,051)


($38,821)

($64,923,409)







EBITDA

6,812,120

(33,988,675)


11,885,365

(56,037,357)

EBITDA margin

13.1%

-88.8%


9.1%

-68.5%







Adjusted EBITDA

8,228,830

7,313,706


16,938,320

14,473,103

Adjusted EBITDA margin

15.8%

19.1%


13.0%

17.7%







Pro-forma Adjusted EBITDA

8,546,854

7,891,971


18,900,950

21,086,822

Pro-forma Adjusted EBITDA margin

15.7%

18.3%


13.3%

17.4%







Pro-forma Revenue

54,442,993

43,159,142


141,931,385

121,283,724








 

SOURCE Spark Power Group Inc.


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