Via Renewables, Inc. (NASDAQ:VIA) Q3 2023 Earnings Call Transcript

Via Renewables, Inc. (NASDAQ:VIA) Q3 2023 Earnings Call Transcript November 4, 2023

Operator: Good morning, ladies and gentlemen. Welcome to the Via Renewables Inc. Third Quarter 2023 Earnings Conference Call. My name is John, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes, and this call will be posted on Via Renewable Inc.’s website. I would now like to turn the conference over to Mr. Stephen Rabalais with Via Renewables, Inc. Please go ahead, sir.

Stephen Rabalais: Thank you. Good morning, and welcome to Via Renewables’ third quarter 2023 earnings call. This call is also being broadcast via webcast, which can be located in the Investor Relations section of our website at viarenewables.com. With us today from management is our CEO, Keith Maxwell; and CFO, Mike Barajas. Please note that today’s discussion may contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. We urge everyone to review the safe harbor statement in yesterday’s earnings release as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law.

In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to yesterday’s earnings release. With that, I will turn the call over to Keith Maxwell, our CEO.

Keith Maxwell: Thank you, Stephen. I want to welcome everyone to today’s earnings call. I’ll begin by providing a summary of results for the third quarter, and then our CFO, Mike Barajas, will provide more details on the financials. In the third quarter, we reported EBITDA of $12.8 million, which is $2.3 million decrease from the prior year of $15.1 million. In the third quarter, we experienced relatively mild weather in the Northeast as well as 1 of the hottest summers on record in the ERCOT service area. However, we were able to successfully navigate the quarter due to our proven risk policies and portfolio diversification. We finished the quarter on both lower attrition and a slightly higher RCE count from the third quarter of 2022.

We continue to maintain our focus on organic growth channels and customer retention. We added approximately 24,000 RCEs this quarter. Furthermore, we remain committed to strengthening our balance sheet by paying down debt, which has improved our liquidity and working capital. Financial flexibility provides us with the ability to pursue strategic growth opportunities and mitigate the impacts of unforeseeable future weather events. This concludes my prepared remarks. Now I’ll turn it over to Mike for his financial review. Mike?

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Q&A Session

Mike Barajas: Thank you, Keith. Good morning. In the third quarter, we achieved $12.8 million in adjusted EBITDA compared to last year’s third quarter of $15.1 million. Retail gross margin for the quarter was $31.9 million compared with $30.5 million last year. In our Retail Electricity market, gross margin was $26 million compared to $28.5 million in the third quarter last year. The decrease was mostly due to lower volumes, which resulted from mild weather in the Northeast, but was partially offset by slightly higher unit margins year-over-year. In our Retail Natural Gas segment, gross margin was $5.2 million compared to $1.9 million in the third quarter last year. This was due to both higher volumes and unit margins year-over-year.

The higher volumes were due to a higher RCE count in 2023. G&A expenses were $17.1 million compared to $16.3 million in the third quarter last year, primarily due to increased sales and marketing expenses and broker fees. This was partially offset by a reduction in bad debt and legal expenses. We ended the quarter at 337,000 RCEs compared to 336,000 RCEs to end the third quarter of 2022. Our attrition was 3.1% compared to 4% in the third quarter of 2022, which resulted from lower attrition on our mass market book. Our net income for the quarter was $14.7 million or income of $1.47 per fully diluted share compared to a net loss of $4.9 million or negative $0.92 per fully diluted share for the third quarter of 2022. This is mainly due to an increase in the mark-to-market on our hedges that we put in place to lock in margins on our retail contracts.

We had a mark-to-market gain this quarter of $8.1 million compared to a mark-to-market loss of $15.7 million a year ago. We also had a $1.5 million reduction in depreciation expense. The increase was partially offset by increases in income tax, net asset optimization, and G&A expenses. Income tax expense was $3.4 million in the third quarter of 2023 compared to a benefit of $48,100 in the third quarter of 2022. On October 16, we paid the quarterly cash dividend on our Series A preferred stock. On October 18, we declared a dividend in the amount of $0.76459 per share on our preferred stock to be paid on January 16. That’s all I have. Back to you, Keith.

Keith Maxwell: Thanks Mike. I want to thank our employees for their care and dedication to growing and supporting Via and our suppliers for their continued support and the banks as well. I want to thank the customers for choosing us as their energy provider. We’re excited about the future and look forward to connecting with you all on the next call. Thank you.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.