Spark Energy to Report Tomorrow

Energy retailer Spark Energy (NASDAQ:SPKE) will be reporting 1st quarter results tomorrow morning at 10 am central.

We are most anxious to see what we hope is good results.  Spark Energy 8.75% Fixed-to-Floating (NASDAQ:SPKEP) is one of our largest personal holdings and we hold it in the High Yield Portfolio as well.

The preferred has traded weakly since a secondary offering a few months ago, but had previously traded as high as $27.  Our personal purchase prices average around $24/share.  The initial IPO was a year ago and a follow on was executed recently and involved 2 million shares.

The company has hired an adviser to potentially ‘shop’ the company as they have been unhappy with the current common stock price which has been trading around $11.50/share today.

14 thoughts on “Spark Energy to Report Tomorrow”

  1. I listened to the CC which “sounded” reasonable in the sense that the winter weather event was indeed a very rare event (I think they said a 4 or 5 sigma event, which is true). But they have been hit by similar events in the past, although smaller in scale, and so why didn’t they have protective measures, e.g. better hedges, in place? Anyway, I don’t know much about what they really do so hopefully someone here (maybe Tim) is going to dig a little deeper into their quarterly report.

    1. Hi Leonard–I listened to the call last night and didn’t find anything too scary. I hope I can find time to write at length on it. The whole quarter simply was one of huge demand which Spark had to supply off the open market at a high price–but they were unable to pass the high costs along. As you said this happens from time to time.

      Actually the company is just an energy retailer–they generate nothing–just sell power. Gridbird calls them a fake utility.

      I looked over the business and all data–I also looked over Just Energy (which is another energy retailer) and I don’t find too much out of the ordinary

      I added a measly 100 shares this morning. I would like more but I am up to 700 shares and much more puts me above the comfort level in terms of allocation of cash–the vast majority of the time I try to stay around 1 or 2% in a single investment and I am at the level now.

      I think I will watch a bit on this one and possibly add another 100 or 200 in the next couple of weeks–but in spite of what I think in terms of a great yield with modest yield I can’t go crazier.

      1. Tim, glad you were able to listen to the call. Maybe I’m gullible but the two speakers (the CEO and CFO I believe) both came across as very credible, honest sounding guys. I’ve listened to other CC’s that sounded like pure BS, but these two guys seemed like straight shooters. The part of having to mark to market the energy values at the higher levels because that was the going rate during the weather anomaly was an important component of their loss in Q1 which should reset to normal this quarter. The common SPKE is looking better today and I think its due to the large short interest starting to cover (was 42% of float a couple days ago). Short interest in SPKEP was very light so no major covering going on. I too added 100 shares at $22.21 which brings my total to 650 which is a more than I normally like with such a volatile stock. Speaking of JE, I have 300 of JE-A and I play this one about once a month, having been lucky so far at buying low and selling higher and also occasionally collecting a div as well. Wish I had been luckier with SPKEP but maybe it will end well.

  2. I’ll wait and see what they say in the CC today at 10 AM CST. Will have to catch the transcript later since i don’t have time to dial in. Anybody here going to listen at 10 AM? If so, your comments appreciated.

    1. Leonard–I am not going to listen live–maybe tonight. The interesting part is revenues were WAY up, BUT cost of energy was OUT OF THIS WORLD.

      This leads me to believe they have fixed rate customers but they had to pay a premium price for energy because of the spike in demand and were unable to raise prices to cover the costs.

      1. Exactly, Tim. Revenues up over 40%.

        Portends a very bad Summer for them if it’s going to be hotter than usual.

        On another note, down we go again with the 10yr towards 2.95%.

    1. SPKEP down 2.4+%

      To add or not to add. Probably best to wait and see what downgrades SPKE gets today and tomorrow, then revisit on Monday.

      1. GW–my trigger finger is a bit itchy–but you are likely right to wait just a bit and let this news be digested.

        1. dang finger… my mouse lowballed a buy for 22.55 and it hit at the exact low on the day (so far)

          price already moving up

          i’m pushing this market around (chest thumping)

  3. Some results just hit the wire and SPKE is down -6.5% in after hour trading. Key highlights from Etrade:
    — Achieved $15.9 million in Adjusted EBITDA, $45.7 million in Retail Gross
    Margin, and a $(41.8) million Net Loss for the first quarter
    — Total RCE count increased 1% to a record 1,055,000 as of March 31, 2018
    — Average monthly attrition of 4.2% for the first quarter
    — Closed on two acquisitions, adding approximately 80,000 RCEs
    — Continue to simplify, streamline, and optimize the organization
    — Expanded the senior credit facility to $200.0 million in commitments
    — Issued two million shares of Series A Preferred Stock for net proceeds of
    approximately $48.9 million

    1. Uggh – blamed on cold weather issues. Disappointing to see more pfd stock issued. No wonder SPKEP can’t gain traction and move much closer to par.

      1. Hi GW–the 2 million they refer to in this release were the shares we already knew about and the cause of the SPKEP fall originally.

    2. Thanks Leonard–obviously I had the timing wrong on this release. This release doesn’t help the cause for the preferreds.

      Maybe I am wrong on this one–well at this moment I am in pretty deep to the preferreds so will have to ride it out (or buy a little more at the right price).

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