Retail Supplier Parent Discloses Acquisition of Broker Contract Book, Purchase Price -- EnergyChoiceMatters.com

Retail Supplier Parent Discloses Acquisition of Broker Contract Book, Purchase Price

Retail Supplier Offering Smart Home Transformation Product

May 5, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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Via Renewables, Inc. reported financial results for the quarter ended March 31, 2022.

In doing so, Via reported that, in January 2022, Via entered into an asset purchase agreement and agreed to acquire the rights to broker contracts for approximately 1,000 customers for a cash price of $0.4 million, which was paid upon execution of the contract.

In reporting earnings, Via reported that its total RCE count was 387,000 as of March 31, 2022, compared to 408,000 as of December 31, 2021, and 367,000 a year ago

For the quarter ending March 31, 2022, gross RCE additions were 23,000, and attrition was 44,000

Via said that average monthly attrition was 3.7% for the quarter ending March 31, 2022, compared to 4.2% in the first quarter of 2021

In a 10-Q Via said, "Our customer attrition was slightly lower than the prior year because of our pro-active non-renewal of some of the larger C&I customers in the prior year, which did not re-occur in 2022. Although customer attrition was slightly lower during the first quarter of 2022, we are unable to predict the ultimate impact on overall customer attrition over the remainder of the year, at this time."

"Via experienced an increase in organic sales for the first quarter of 2022. Covid-19 impacts are subsiding and we were able to substantially increase our customer acquisition efforts in the first quarter year over year. We also saw a decline in attrition versus the first quarter of 2021. While our customer adds are beginning to ramp up, we are continually searching for new opportunities to grow our book either through acquisitions or new product offerings." said Keith Maxwell, Via Renewables’ President and Chief Executive Officer.

"We’re currently experiencing positive growth in our organic sales channels. Via is also offering new products such as a surge protection plan in Texas, and a smart home transformation product. We’ve received favorable responses from our customers thus far and will continue to explore these types of diverse and accretive products," Maxwell said

In a 10-Q, Via said, "During the three months ended March 31, 2022, we added approximately 23,000 RCEs primarily through our various organic sales channels. We expect to acquire customers organically in future periods but it will be slower in the near term, however we expect this number to increase on a monthly basis."

In a 10-Q, Via said, "During the three months ended March 31, 2022, we did not add any RCEs as a result of asset purchase agreements. Our ability to realize returns from acquisitions that are acceptable to us is dependent on our ability to successfully identify, negotiate, finance and integrate acquisitions. We will continue to evaluate potential acquisitions during the remainder of 2022."

For the quarter ended March 31, 2022, Via Renewables reported Adjusted EBITDA of $10.8 million compared to Adjusted EBITDA of $32.7 million for the quarter ended March 31, 2021. Lower year over year Adjusted EBITDA was driven by lower power and gas unit margins due to rising commodity prices and higher G&A expenses.

For the quarter ended March 31, 2022, Via Renewables reported Retail Gross Margin of $28.8 million compared to Retail Gross Margin of $50.0 million for the quarter ended March 31, 2021. Although RCE count (year-over-year) and volume increased, increasing commodity prices led to a decrease in Retail Gross Margin, the company said

For the quarter ending March 31, 2022, retail gross margin for electricity was $25.08 per MWh, versus $49.21 per MWh a year ago (the year-ago figure excludes Winter Storm Uri impact for the three months ended March 31, 2021)

For the quarter ending March 31, 2022, retail gross margin for natural gas was $2.48 per MMBtu, versus $5.07 per MMBtu a year ago.

Net income for the quarter ended March 31, 2022, was $31.0 million compared to net loss of $(27.6) million for the quarter ended March 31, 2021. The increase compared to the prior year was primarily the result of the $(64.9) million impact from winter storm Uri in the first quarter of 2021 partially offset by an increase in income tax expense.

Via reported that, "Our bad debt expense for the three months ended March 31, 2022 and 2021 was 2.0% and (0.9)% respectively, for non-purchase of receivable market ("non-POR") revenues. An increased focus on collection efforts, timely billing and credit monitoring for new enrollments in non-POR markets beginning in late 2020 have led to an improvement in the bad debt expense over the past several months, including the three months ended March 31, 2022. We have also been able to collect on debts that were previously written off, which has further reduced our bad debt expense during the three months ended March 31, 2022."

Via reported total liquidity of $96.0 million as of March 31, 2022

Via provided an update on the purchase price for a prior book acquisition.

In May 2021, Via entered into a series of asset purchase agreements and agreed to acquire up to approximately 56,900 RCEs for a cash purchase price of up to a maximum of $11.5 million. These customers began transferring in August 2021, and are located in Via's existing markets. As of March 31, 2022, a total of $6.8 million was paid for approximately 45,000 RCEs ($9.2 million for acquired customer contracts, net of $2.4 million related holdbacks under the terms of the purchase agreement). In addition, approximately $2.2 million was released back to Via for a reduction in RCEs to be acquired.

As part of the acquisitions, Via funded an escrow account, the balance of which is reflected as restricted cash in Via's consolidated balance sheet. As Via acquires customers, Via makes payments to the sellers from the escrow account. As of March 31, 2022, the balance in the escrow account was $2.4 million, and these funds are expected to be released to the sellers as acquired customers transfer from the sellers to the Company in accordance with the asset purchase agreement, and any unallocated balance will be returned to the Company once the acquisition is complete, Via said

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