Spark Energy Inc.on May 4 announced that it will acquire two retail energy businesses that will addapproximately 335,000 residential customer equivalents, or RCEs, to its portfolio.
Spark Energy and its affiliate National Gas & Electric on April 15 agreed to acquireMajor Energy, a retailenergy business with roughly 210,000 RCEs. Spark Energy said it is preparing MajorEnergy as a dropdown to Spark, which will issue $40.0 million of shares to NGE asup-front payment.
Spark will also acquire Provider Power LLC, a retail companywith 125,000 RCEs primarily in Maine and New Hampshire. Spark will be issuing $18.0million of shares to Retailco LLC as up-front payment.
"We expect these two transactions to add approximately $30.0million of annual adjusted EBITDA, excluding integration costs, which are expectedto be complete by the end of this year. Collectively, we anticipate these transactionswill add approximately 335,000 RCEs to our portfolio, bringing our total RCE countto approximately 750,000," Spark Energy President and CEO Nathan Kroeker said.
On May 4, Spark announced its first-quarter financial results.Adjusted EBITDA for the period doubled to $21.1 million, compared to $10.2 millionin the first quarter of 2015, primarily due to higher retail gross margin in thecompany's electricity and natural gas segments as well as lower customer acquisitioncosts.
Retail gross margin climbed to $39.6 million, an increase of$11.7 million from the prior-year quarter, reflecting wider natural gas unit marginsand higher retail electricity volumes.
First-quarter net income rose to $15.7 million from $12.9 millionwhile operating income increased to $17.6 million from $13.7 million from the 2015first quarter.
The company said it is re-evaluating its 2016 adjusted EBITDAtarget of $44.0 millionto $48.0 million to reflect the upcoming acquisitions that are expected to be completedin the third quarter.
Spark Energy is majority owned by NuDevco Partners LLC.