Via Renewables, Inc. (NASDAQ:VIA) Q4 2022 Earnings Call Transcript March 31, 2023
Stephen Rabalais: Good morning, and welcome to Via Renewables Fourth Quarter and Full Year 2022 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 our 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 our 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 our earnings release. With that, I’ll turn the call over to Keith Maxwell, our CEO.
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Keith Maxwell: Thank you, Stephen. I want to welcome everyone to today’s earning call. I’ll begin with providing a summary of our full year results. And then our CFO, Mike Barajas, will provide more details on the financials. 2022 started off with an intensified bid to increase organic sales. We tacked on a few book acquisitions in 2021 that we wanted to keep the momentum going. We spent approximately $4.5 million more on customer acquisitions than the prior year to grow our customer base and added approximately 67,000 RCEs through our various organic sales channels. Despite rapidly rising commodity prices, which compressed our industry’s margins, we are still able to announce an agreement to acquire 18,700 RCEs in the Florida gas market.
Our new credit agreement has given us the opportunity to grow the business for the first time in years as well as giving us M&A options in a volatile energy market. For the full year of 2022, we reported adjusted EBITDA of $51.8 million, down from $80.7 million in 2021. The decrease is mainly due to the compression in the first half of the year due to the rapidly rising commodities prices. G&A also increased in 2022 mainly due to nonrecurring expenses reductions that occurred in 2021, pertaining to employee costs and legal expenses, along with an increase of bad debt. Our outlook for 2023 is optimistic. We’re in a position to offer more competitive prices now that the utilities have raised rates across the industry, and we’re attracting customers at a faster pace than we have in years.
Via is continuing, our commitment towards our goal of a more sustainable future. This concludes my prepared remarks, and I will turn the call over to Mike for a financial review. Mike?
Mike Barajas: Thank you, Keith. Good morning. In the fourth quarter of 2022, we achieved $12.6 million in adjusted EBITDA compared to last year’s fourth quarter of $11.6 million. Retail gross margin for the quarter was $31.9 million compared with $25.2 million last year. Adjusted EBITDA increased due to retail gross margin partially offset with an increase in G&A expenses. The increase in retail gross margin is mainly due to higher unit margins on our electric load, coupled with increased volumes for natural gas, partially offset by decreased volumes for electricity and decreased margins for natural gas. Full year adjusted EBITDA ended at $51.8 million compared to $80.7 million for 2021, while full year retail gross margin ended at $114.8 million for 2022 compared to $132.5 million in 2021.
The decrease in adjusted EBITDA was due to lower gross margin year-over-year; coupled with increases in G&A expenses and customer acquisition spend. G&A for 2022 was approximately $61.9 million compared to $44.3 million for 2021. This increase was primarily attributed to higher employee costs and higher bad debt expense in 2022 and lower employee expenses in 2021 due to employee retention credits related to the CARES Act that did not reoccur in 2022. We ended the year with 331,000 RCEs down from 408,000 RCEs at the end of 2021, which was due to rising attrition caused by a spike in commodity prices and proactive nonrenewal of less profitable C&I customers. For the year, we spent $5.9 million in customer acquisition costs compared to $1.4 million in the prior year.
Meanwhile, our monthly average customer attrition was 3.8% for the year. Interest expense for the year rose from $4.9 million in 2021 to $7.2 million in 2022 primarily because of increases in benchmark rates. Income tax expense increased to $6.5 million in 2022 from $5.3 million in 2021 driven by winter storm Uri’s impact to our bottom line in 2021. Our net income for the year was $11.2 million with $18 million mark-to-market loss compared to a net loss of $5.4 million in 2021, which included a $5.5 million mark-to-market gain. Looking at our balance sheet, we had a net debt of $86.3 million and total liquidity of $76.9 million at year-end 2022. On December 15, 2022, and January 17, 2023, we paid the quarterly cash dividend on our Class A common stock and our Series A preferred stock, respectively.
On January 18, we announced our fourth quarter dividend of $0.18125 per share on our common stock and $0.71298 per share of preferred stock to be paid on March 15 and April 17, respectively. That’s all I have. Back to you, Keith.
Keith Maxwell: Thanks Mike. I’m proud of everyone here at Via for the work that we put in and the continued success of our business over the course of the last year. We’re very excited about 2023 as we explore new products and service offerings while increasing our focus on our mass market business. I want to thank our employees and suppliers for their hard work producing a good quarter and a strong year. And I want to thank Spark’s customers for choosing us as their energy provider. We look forward to connecting with you on our next call. Thank you.
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