Spark Power Announces Record Revenue and EBITDA for Second Consecutive Quarter and Full Year 2019
Fourth Quarter revenue grows 53% Year over Year to $58.0 million
Fourth Quarter Adjusted EBITDA grows 36.7% Year over Year to $8.4 million
(Spark Power reports in Canadian dollars unless otherwise specified)
OAKVILLE, ON, March 24, 2020 /PRNewswire/ - Spark Power Group Inc. (TSX: SPG), parent company of Spark Power Corp. ("Spark Power" or the "Company"), today announced record financial results for the three and twelve-month periods ended December 31, 2019.
"We had a terrific year at Spark Power. With our acquisitions and the effects of our successful cost out program, our annual revenue run rate is now $222 million with $37 million of run rate EBITDA, up from $210 million and $33 million respectively as of last quarter," said Jason Sparaga, Co-Founder and Co-CEO, Spark Power Corp.
"We worked hard over the past year to establish our regional and distributed operating model and on strengthening our financial position. These efforts have resulted in a more efficient, robust, and resilient business, allowing our experienced and cohesive management team to quickly adapt to both growth opportunities and market challenges. As we face the COVID-19 crisis, we are responding with aggressive, but measured, actions focused on protecting the health of our employees, serving our customers, mitigating financial impacts and ensuring that we come out of the crisis strong. We are seeing the benefits of our efforts over the past few years to build a diversified customer base, with reduced exposure to cyclical industries. Substantial portions of our commercial and industrial customers include food and beverage suppliers, data centers and ecommerce warehousing - each of which are relatively less affected by economic cycles and crises such as COVID-19. Still, we are seeing material project delays and impact to our operations. We are prepared for this to get worse before it gets better - and we are ready," added Sparaga.
Financial Highlights - 4(th) Quarter
-- Record quarterly revenue at $58.0 million, as compared to $37.9 million
from the comparable quarter in 2018 representing an increase of 53.0%.
-- Record quarterly adjusted EBITDA at $8.4 million, as compared to $6.0
million from the comparable quarter in 2018 representing an increase of
38.5%.
-- Quarterly revenue growth balanced between organic growth of 35.1%, and
growth from acquisitions of 17.9%.
-- Continued focus on managing selling, general and administration costs,
now at 23.6% of revenue in the fourth quarter as compared to 28.3% in
the comparable quarter in 2018.
-- Gross margin declined in the fourth quarter to 30.8% as compared to
37.8% in the comparable quarter in 2018, primarily from changes in
revenue mix.
-- During the quarter, the Company completed a Rights Offering resulting in
the issuance of 5,587,105 shares for gross proceeds of $5.4 million.
Financial Highlights - Fiscal 2019
-- Record pro forma annual revenue for fiscal 2019 of $222.3 million, as
compared to $179.4 million in 2018 representing an increase of 23.9%.
-- Record annual pro forma adjusted EBITDA for fiscal 2019 of $31.7
million, as compared to $30.7 million in 2018 representing an increase
of 3.2%.
-- Record annual revenue for fiscal 2019 of $188.6 million, as compared to
$119.8 million in 2018 representing an increase of 57.5%.
-- Record annual adjusted EBITDA for fiscal 2019 of $25.3 million, as
compared to $20.5 million in 2018 representing an increase of 23.4%.
-- Strong year on year revenue growth, balanced between organic growth of
26.7% and growth from acquisitions of 30.7%.
-- Incurred a total of $2.0 million in one-time costs during the third and
fourth quarters associated with Integration cost reduction plan that
resulted in an annual $6.5 million reduction in underlying selling,
general and administration costs.
-- Gross margin declined in fiscal 2019 to 34.0% as compared to 36.7% in
fiscal 2018, primarily from changes in revenue.
-- During the year, the Company enhanced various elements of its Credit
Agreement with its lender, Bank of Montreal, that included:i) An
increase of $10.0 million in the demand revolving credit facility to
$30.0 million,ii) The addition of a capital expenditure demand
revolving credit facility of $5.0 million to finance growth capital
expenditures,iii) The addition of a $25.0 million acquisition line to
fund acquisitions,iv) A paydown of $4.5 million under the
non-revolving term loan from partial proceeds of the Rights offering
completed in the fourth quarter and reduction in quarterly principal
amortization for the duration of the term loan.
Business Highlights--Operations
-- Reorganization of our business units, along Regional Lines for
structural cost reductions and longer-term scalability of the business
has been fully realized. As of January 1, 2020, we will be reporting our
financial results on this regional basis, to reflect the way we are
operating the business.
-- Ended the year with 35 locations, including 18 branches in Canada and 6
branches in the United States.
-- Significantly progressed U.S. expansion strategy, diversifying
operations and extending footprint across regions identified as highly
strategic to the Company's long-term growth.
-- Achieved approximately $8.2 million in annual revenue, compared with
negligible revenue in the prior year, with organic growth
representing 61% of the increase.
-- Acquired One Wind, with over 80% of its revenues and employees in
its U.S. operations. adding over 200 U.S. based technical and
management team members, now accounting for approximately 15% of the
total Spark Power workforce.
-- Completed significant work for existing Canadian customers with
facilities in the U.S., prioritizing branch openings to support
these customers.
Business Highlights--Corporate Development
-- To further support our Trusted Partner in Power(TM) brand promise, Spark
Power launched its rebranding initiative to integrate 11 subsidiary
brands into Spark Power Corp®
-- Brand integration is expected to be fully realized across North
America by the end of 2020.
-- We will continue to invest in our Bullfrog brand and position it as
Spark Power's sustainability brand.
-- Marketing and selling teams are already operating as integrated
organizations, supported by relaunched marketing materials, inside
sales and a new corporate wide sales training program.
Quarterly Conference Call
As previously communicated, given the significant and ongoing developments surrounding COVID-19, Spark Power Corp has decided not to host a conference call to discuss these results. The company plans to schedule a conference call to discuss our results when more appropriate.
Spark Power's 2019 Audited Consolidated Financial Statements and 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(TM). 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 twelve months ended December 31, 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 Mr. Sparaga.
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 December 31, Twelve months ended December 31,
2019 2018
% Change 2019 2018
% Change
Revenue $57,999,185 $37,909,647 53.0% $188,591,284 $119,759,443 57.5%
Gross Profit 17,845,007 14,346,387 24.4% 64,159,633 43,941,104 46.0%
Gross Profit Margin 30.8% 37.8% 34.0% 36.7%
Selling, General & Administration 13,694,571 10,737,124 27.5% 51,448,141 32,497,388 58.3%
Income from Operations 4,150,436 3,609,263 15.0% 12,711,492 11,443,716 11.1%
EBITDA (1) 6,259,482 4,629,378 -35.2% 18,144,847 (51,407,978) 135.3%
EBITDA Margin (1) 10.8% 12.2% 9.6% (42.9%)
Adjusted EBITDA (1) 8,371,073 6,043,302 38.5% 25,309,393 20,516,406 23.4%
Adjusted EBITDA Margin (1) 14.4% 15.9% 13.4% 17.1%
Pro-forma Adjusted EBITDA (1) 9,091,712 6,765,495 34.4% 31,650,351 30,664,312 3.2%
Pro-forma Adjusted EBITDA Margin (1) 14.8% 14.6% 14.2% 17.1%
Pro-forma Revenue (1) 61,558,114 46,407,023 32.6% 222,295,614 179,407,501 23.9%
Twelve months ended December 31,
2019 2018
Bank Indebtedness 21,597,304 11,666,604
Senior Secured Long-term Debt 62,515,814 44,000,000
Total Debt (2) 84,113,118 55,666,604
---
1 EBITDA, 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.
2 Total debt includes Bank
indebtedness, long-term debt and
promissory notes.
Reconciliation of comprehensive income (loss) to EBITDA, Adjusted EBITDA, and Pro-forma Adjusted EBITDA
Reconciliation comprehensive income (loss) to EBITDA, Adjusted Three months ended December 31, Twelve months ended December 31,
EBITDA and Pro-forma Adjusted EBITDA
===
2019 2018 2019 2018
===
Comprehensive income (loss) $1,374,782 $288,556 $1,335,960 ($64,634,852)
Adjustments:
Finance expense 1,393,305 1,736,717 5,271,710 5,209,960
Income tax expense (640,674) 61,185 (887,866) (134,932)
Amortization 4,132,069 2,542,920 12,425,043 8,151,846
---
EBITDA 6,259,482 4,629,378 18,144,847 (51,407,978)
EBITDA Margin 10.8% 12.2% 9.6% (42.9%)
Adjustments:
Increase in value of Puttable Class A and Class 1 Special shares 47,771,600
Transaction costs 630,957 2,072,531 10,269,633
Excess of fair value over net asset acquired 12,660,331
Gain on retraction of class 1 special shares (1,250,000)
Reorganization costs 1,480,634 1,413,924 2,992,015 1,413,924
Earn-out 2,100,000
Other non-recurring costs 1,058,896
---
Adjusted EBITDA 8,371,073 6,043,302 25,309,393 20,516,406
Adjusted EBITDA Margin 14.4% 15.9% 13.4% 17.1%
Other adjustments:
Pre-acquisition EBITDA for acquistions 720,639 722,193 6,340,958 10,147,906
---
Pro-forma Adjusted EBITDA $9,091,712 $6,765,495 $31,650,351 $30,664,312
Pro-forma Adjusted EBITDA Margin 14.8% 14.6% 14.2% 17.1%
===
Pro-forma Revenue 61,558,114 46,407,023 222,295,614 179,407,501
The following tables summarize Spark Power's results for the periods indicated:
Three months ended December 31, Twelve months ended December 31,
2019 2018 2019 2018
Revenue $57,999,185 $37,909,647 $188,591,284 $119,759,443
Cost of sales 40,154,178 23,563,260 124,431,651 75,818,339
Gross profit 17,845,007 14,346,387 64,159,633 43,941,104
Selling, general and
administrative expenses 13,694,571 10,737,124 51,448,141 32,497,389
Income from operations 4,150,436 3,609,263 12,711,492 11,443,715
Finance costs (1,393,305) (1,736,717) (5,271,710) (5,209,960)
Increase in value of
Puttable Class A and
Class 1 Special shares (47,771,600)
Transaction costs (630,957) (2,072,531) (10,269,633)
Excess of fair value over
net asset acquired (12,660,331)
Gain on retraction of
Class 1 special shares 1,250,000
Reorganization costs (1,480,634) (1,413,924) (2,992,015) (1,413,924)
Earn-out (2,100,000)
Other (71,602) (108,881) 12,688 (138,052)
(3,576,498) (3,259,522) (12,423,568) (76,213,500)
Income (loss) before
income taxes 573,938 349,741 287,924 (64,769,785)
Income tax expense
(recovery):
Current 595,711 (803,829) 1,189,599 677,235
Deferred (1,236,385) 865,014 (2,077,465) (812,167)
(640,674) 61,185 (887,866) (134,932)
Net income (loss) $1,214,612 $288,556 $1,175,790 ($64,634,853)
Cumulative translation
adjustment 160,170 160,170
Comprehensive income
(loss) $1,374,782 $288,556 $1,335,960 ($64,634,853)
EBITDA 6,259,482 4,629,378 18,144,847 (51,407,978)
EBITDA margin 10.8% 12.2% 9.6% (42.9%)
Adjusted EBITDA 8,371,073 6,043,302 25,309,393 20,516,406
Adjusted EBITDA margin 14.4% 15.9% 13.4% 17.1%
Pro-forma Adjusted EBITDA 9,091,712 6,765,495 31,650,351 30,664,312
Pro-forma Adjusted EBITDA
margin 14.8% 14.6% 14.2% 17.1%
Run Rate EBITDA (i) 37,100,351
Pro-forma Revenue 61,558,114 46,407,023 222,295,614 179,407,501
===
(i) Run rate EBITDA is
defined as Pro-forma
Adjusted EBITDA plus the
estimated $5.45 million
unrealized benefit of labor
reductions related to the
Integration Cost Reduction
Plan.
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SOURCE Spark Power Group Inc.
