Via Renewables(VIA) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The unaudited condensed consolidated financial statements detail the company's financial position, operations, equity changes, and cash flows for recent periods Condensed Consolidated Balance Sheets Total assets and liabilities decreased from December 31, 2024, to June 30, 2025, while total equity slightly increased | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $316,343 | $344,939 | | Total Liabilities | $156,247 | $180,757 | | Total Equity | $81,664 | $80,961 | | Cash and cash equivalents | $62,142 | $53,150 | | Accounts receivable, net | $47,972 | $65,442 | | Total current assets | $178,103 | $203,771 | | Total current liabilities | $56,094 | $74,702 | | Long-term portion of Senior Credit Facility | $100,000 | $106,000 | Condensed Consolidated Statements of Operations Net income decreased for the three and six months ended June 30, 2025, despite higher revenues, due to increased costs | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $90,029 | $86,696 | $232,286 | $200,752 | | Retail cost of revenues | $63,055 | $42,997 | $158,448 | $111,959 | | Operating income | $6,052 | $20,627 | $30,896 | $46,348 | | Net income | $3,151 | $15,695 | $21,618 | $34,759 | | Net income attributable to Via Renewables, Inc. stockholders | $2,739 | $7,624 | $11,537 | $16,191 | | Basic EPS (Class A common stock) | $0.09 | $1.51 | $1.86 | $3.32 | | Diluted EPS (Class A common stock) | $0.09 | $1.51 | $1.86 | $3.32 | Condensed Consolidated Statement of Changes in Equity Total equity increased from December 31, 2024, to June 30, 2025, driven by net income offset by distributions and dividends | Metric (in thousands) | Balance at Dec 31, 2024 | Consolidated Net Income | Distributions to Non-controlling Unit Holders | Dividends Paid to Preferred Stockholders | Balance at June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $66,733 | $11,537 | — | $(4,727) | $68,205 | | Non-controlling Interest | $14,228 | $10,081 | $(12,780) | — | $13,459 | | Total Equity | $80,961 | $21,618 | $(12,780) | $(4,727) | $81,664 | - The Company's equity ownership in Spark HoldCo increased by 2.82% on December 31, 2024, and by 3.59% on March 31, 2025, due to cash distributions to non-controlling interest holders and subsequent share transfers[67][68] Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased significantly, while cash used in investing and financing activities also rose | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $43,948 | $28,327 | | Net cash used in investing activities | $(14,952) | $(730) | | Net cash used in financing activities | $(32,388) | $(14,303) | | Increase in Cash, cash equivalents and Restricted cash | $(3,392) | $13,294 | | Cash, cash equivalents and Restricted cash—end of period | $66,867 | $55,889 | Notes to the Condensed Consolidated Financial Statements These notes provide detailed disclosures on accounting policies, financial instruments, debt, equity, and other significant financial aspects 1. Formation and Organization Via Renewables, Inc is an independent retail energy services company providing natural gas and electricity across the U.S - Via Renewables, Inc is an independent retail energy services company offering natural gas and electricity to residential and commercial customers in competitive markets across the United States[39] - The Company operates through several brands including Electricity Maine, Electricity N.H., Major Energy, Provider Power Massachusetts, Spark Energy, and Verde Energy[39] 2. Basis of Presentation and Summary of Significant Accounting Policies The financial statements are prepared under GAAP and SEC rules, consolidating all controlled subsidiaries and disclosing related party transactions - The condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim financial statements, consolidating all wholly-owned and controlled subsidiaries[40] - W. Keith Maxwell, III, the CEO, director, and owner of all common stock voting power, controls affiliates with which the company engages in transactions to reduce risk and administrative expense[44][45][46] - The company is evaluating the impact of new accounting standards: ASU No. 2023-09 (Income Taxes) effective for annual periods after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosures) effective for annual periods after December 15, 2026[47][48] 3. Revenues Revenues are primarily from energy sales recognized upon delivery and are disaggregated by market, customer type, and credit risk - Revenues are primarily derived from the sale of natural gas and electricity, recognized when the product is delivered and control passes to the customer[50][52] - The company's credit risk is substantially linked to utilities in POR programs, which generally have investment-grade ratings[59][60][61] Total Reportable Segments Revenue (in thousands) | Period | Total Reportable Segments Revenue | | :--- | :--- | | Three Months Ended June 30, 2025 | $90,635 | | Three Months Ended June 30, 2024 | $86,960 | | Six Months Ended June 30, 2025 | $235,138 | | Six Months Ended June 30, 2024 | $201,348 | Accounts Receivable and Bad Debt Expense (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Beginning balance accounts receivables | $70,442 | $55,852 | | Ending balance of accounts receivables | $47,972 | $49,085 | | Bad debt expense (six months) | $833 | $1,321 | | Allowance for credit losses (June 30, 2025) | $(2,606) | | 4. Equity The company's ownership in Spark HoldCo increased, and following a merger, all common stock is now privately held - The Company's equity ownership in Spark HoldCo increased by 2.82% on December 31, 2024, and by 3.59% on March 31, 2025, due to cash distributions to non-controlling interest holders and subsequent share transfers[67][68] - Following the June 13, 2024 merger, Mr. Maxwell and his affiliates own all Class A and Class B common stock, and Class A common stock ceased trading on NASDAQ[72] - Spark HoldCo is identified as a variable interest entity (VIE), with Via Renewables, Inc. as the primary beneficiary, consolidating its financial results[76] Economic Interests in Spark HoldCo | Entity | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | The Company | 51.79 % | 48.20 % | | Affiliated Owners | 48.21 % | 51.80 % | Basic and Diluted EPS (Class A Common Stock) (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to stockholders of Class A common stock | $340 | $4,911 | $6,810 | $10,768 | | Basic earnings per share | $0.09 | $1.51 | $1.86 | $3.32 | | Diluted earnings per share | $0.09 | $1.51 | $1.86 | $3.32 | 5. Preferred Stock Series A Preferred Stock dividends are based on a floating rate, and the company has recently repurchased and redeemed shares - Series A Preferred Stock dividends accrue at an annual rate equal to Three-Month CME Term SOFR plus 6.578% (or 0.26161% tenor spread)[79][80] - The company repurchased 6,353 shares of Series A Preferred Stock in February 2025 at $22.50 per share and 13,924 shares in April 2025 at $24.00 per share[83][84] - 168,008 shares of Series A Preferred Stock were redeemed on June 9, 2025, at $25.00 per share, and 319,216 shares were announced for redemption on August 15, 2025[85][86] Series A Preferred Stock Dividends Paid (in millions) | Period | Dividends Paid | | :--- | :--- | | Three Months Ended June 30, 2025 | $2.3 | | Six Months Ended June 30, 2025 | $4.8 | Preferred Equity Balance (in thousands) | Metric | Amount | | :--- | :--- | | Balance at December 31, 2024 | $83,221 | | Repurchase of Series A Preferred Stock | $(493) | | Redemption of Series A Preferred Stock | $(4,081) | | Accumulated dividends on Series A Preferred Stock | $(215) | | Balance at June 30, 2025 | $78,432 | 6. Derivative Instruments The company uses derivative instruments to manage commodity price exposure, with changes in fair value impacting revenues - Derivative instruments are used to manage cash flow exposure to market fluctuations in electricity and natural gas prices, basis differences, storage charges, RECs, and capacity charges[88] - Derivative assets and liabilities are presented net in the condensed consolidated balance sheets when executed with the same counterparty under a master netting arrangement[89] Net Notional Volumes of Open Derivative Financial Instruments (in thousands) | Commodity | Notional | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | :--- | | Natural Gas (Non-trading) | MMBtu | 5,634 | 5,716 | | Electricity (Non-trading) | MWh | 937 | 987 | | Natural Gas (Trading) | MMBtu | 1,194 | 2,988 | Gains (Losses) on Derivative Instruments (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | (Loss) gain on non-trading derivatives, net | $(6,400) | $3,160 | $154 | $(1,136) | | (Loss) gain on trading derivatives, net | $(12) | $20 | $(2,180) | $111 | | Total current period settlements on derivatives | $1,288 | $7,767 | $(2,612) | $23,192 | 7. Property and Equipment Property and equipment consist primarily of information technology assets, with a net value of $6.4 million - Depreciation expense was $0.4 million for the three months ended June 30, 2025 (vs. $0.3 million in 2024) and $0.7 million for the six months ended June 30, 2025 (vs. $0.6 million in 2024)[98] Property and Equipment (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Information technology | $10,108 | $8,141 | | Total | $10,177 | $8,210 | | Accumulated depreciation | $(3,733) | $(2,979) | | Property and equipment—net | $6,444 | $5,231 | 8. Intangible Assets Intangible assets primarily include goodwill and customer relationships, with ongoing amortization for the latter Intangible Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Goodwill | $120,343 | $120,343 | | Customer relationships—Other, net | $11,396 | $11,520 | | Trademarks, net | $1,818 | $2,020 | Estimated Future Amortization Expense (in thousands) | Year ending December 31, | Amount | | :--- | :--- | | 2025 (remaining six months) | $5,772 | | 2026 | $6,230 | | 2027 | $404 | | 2028 | $404 | | 2029 | $404 | | > 5 years | — | | Total | $13,214 | 9. Debt The company's long-term debt consists of a Senior Credit Facility, which was recently increased and matures in June 2027 - The Senior Credit Facility's borrowing capacity was increased to $250.0 million from $205.0 million on June 25, 2025, and it matures on June 30, 2027[103][104] - The weighted average interest rate on the Senior Credit Facility was 7.58% at June 30, 2025[100] - The Subordinated Debt Facility, with a principal amount of up to $25.0 million, had zero outstanding borrowings as of June 30, 2025, and December 31, 2024[115][118] Debt (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Senior Credit Facility | $100,000 | $106,000 | | Subordinated Debt | — | — | | Total long-term debt | $100,000 | $106,000 | Financial Covenants Compliance (as of June 30, 2025) | Covenant | Required Ratio | Company's Ratio | | :--- | :--- | :--- | | Minimum Fixed Charge Coverage Ratio | Not less than 1.10 to 1.00 | 1.54 to 1.00 | | Maximum Total Leverage Ratio | No more than 3.00 to 1.00 | 1.51 to 1.00 | 10. Fair Value Measurements Fair value is measured using a three-level hierarchy, with most commodity derivatives valued using Level 2 inputs - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 quoted prices), and Level 3 (unobservable inputs)[122] Fair Value of Commodity Derivative Instruments (in thousands) | Metric | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | June 30, 2025 | | | | | | Total commodity derivative assets | $567 | $2,709 | $— | $3,276 | | Total commodity derivative liabilities | $— | $(528) | $— | $(528) | | December 31, 2024 | | | | | | Total commodity derivative assets | $445 | $8,718 | $— | $9,163 | | Total commodity derivative liabilities | $(180) | $(1,576) | $— | $(1,756) | 11. Income Taxes The company's effective tax rate is influenced by state taxes and the partnership tax treatment of its primary subsidiary - The company reports federal and state income taxes for its share of Spark HoldCo's partnership income and for CenStar and Verde Corp, while Spark HoldCo is generally treated as a flow-through entity[125][126] - As of June 30, 2025, the company had a net deferred tax asset of $4.8 million, primarily from the initial step-up in tax basis from the Spark HoldCo unit purchase[129] Effective U.S. Federal and State Income Tax Rates | Period | Effective Tax Rate | | :--- | :--- | | Three Months Ended June 30, 2025 | 30.5% | | Three Months Ended June 30, 2024 | 17.0% | | Six Months Ended June 30, 2025 | 21.7% | | Six Months Ended June 30, 2024 | 18.6% | 12. Commitments and Contingencies The company is involved in various legal and regulatory proceedings, with accrued liabilities of $10.2 million as of June 30, 2025 - The Glikin v. Major Energy class action lawsuit in Maryland was dismissed by the PSC in May 2025, finding no fraudulent conduct, and the company intends to seek federal court dismissal[134] - Two TCPA-based lawsuits (Clark v. Via Renewables, Inc. and Grant v. Via Renewables, Inc.) are pending, which the company is vigorously defending[135] - Two class action complaints (Amburgey Action and Taylor Action) were filed in Delaware Chancery Court alleging breaches of fiduciary duties related to the June 2024 Merger[138][139] - Regulatory matters include a lawsuit by the Illinois Attorney General against Spark Energy, LLC, a settlement with the Maine Commission involving customer refunds and a fine, and new legislative/regulatory proposals in Maryland and Massachusetts impacting retail energy providers[141][142][143][144][145] Accrued Liabilities for Litigation and Regulatory Matters (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accrued liabilities related to litigation and regulatory matters | $10,200 | $11,900 | | Accrued liabilities related to indirect tax audits | $0 | $800 | 13. Transactions with Affiliates The company engages in transactions with commonly controlled affiliates for operational efficiency and risk reduction - Transactions with affiliates, commonly controlled by Mr. Maxwell, include shared employee benefits, insurance, office space, administrative salaries, and energy sales/purchases[150] - Net amount direct billed and allocated to/(from) affiliates was $(0.5) million for the three months ended June 30, 2025, and $(1.0) million for the six months ended June 30, 2025[153] Asset and Liability Balances with Affiliates (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accounts Receivable - affiliates | $3,941 | $4,119 | | Accounts Payable - affiliates | $478 | $157 | | Subordinated Debt - affiliates | — | — | Net Asset Optimization (NAO) Revenue from Affiliates (in thousands) | Period | Net NAO - affiliates | | :--- | :--- | | Three Months Ended June 30, 2025 | $102 | | Three Months Ended June 30, 2024 | $126 | | Six Months Ended June 30, 2025 | $760 | | Six Months Ended June 30, 2024 | $607 | 14. Segment Reporting The company operates in retail electricity and retail natural gas segments, with performance assessed using retail gross margin - The company's reportable business segments are retail electricity (electricity sales and transmission) and retail natural gas (natural gas sales, transportation, and distribution) to residential and commercial customers[161] - Retail gross margin, a key performance metric, is defined as gross profit less net asset optimization, net gains/losses on non-trading derivative instruments, and current period cash settlements on non-trading derivatives[162] Retail Gross Margin by Segment (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Retail Electricity | $23,531 | $25,311 | $44,945 | $44,222 | | Retail Natural Gas | $9,170 | $8,016 | $34,214 | $24,213 | | Total Retail Gross Margin | $32,722 | $33,387 | $79,181 | $69,132 | 15. Customer Acquisitions The company has recently completed several customer book acquisitions to expand its customer base - Approximately 9,300 RCEs were transferred from an April 2024 acquisition, with the escrow balance returned in Q1 2025[175] - From October 2024 agreements, approximately 99,000 RCEs were transferred by June 30, 2025, with $1.0 million remaining in escrow[176] - New agreements in April and May 2025 to acquire up to 16,800 gas RCEs resulted in approximately 9,300 transfers by June 30, 2025, with $1.4 million in escrow[177] 16. Subsequent Events Subsequent events include a preferred stock dividend declaration, a partial redemption, and the signing of new tax legislation - A quarterly cash dividend of $0.69732 per share for Series A Preferred Stock was declared on July 16, 2025, payable October 15, 2025[178] - The company announced the redemption of 319,216 shares of Series A Preferred Stock at $25.00 per share, effective August 15, 2025[179] - The One Big Beautiful Bill Act (OBBB), signed July 4, 2025, will provide some reductions in cash taxes but is not anticipated to materially impact income tax expense, with effects reflected in Q3 financial statements[180] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management provides its perspective on the company's financial condition, operational results, liquidity, and key performance metrics Overview Via Renewables is an independent retail energy company operating in two segments, with recent developments including stock redemptions and an increased credit facility - Via Renewables, Inc is an independent retail energy services company providing natural gas and electricity to residential and commercial customers in competitive markets across 21 states and the District of Columbia[183] - The company's business consists of two operating segments: Retail Electricity (74% of retail revenues for Q2 2025) and Retail Natural Gas (26% of retail revenues for Q2 2025)[187] - Recent developments include the redemption of 168,008 Series A Preferred Stock shares on June 9, 2025, and an announced redemption of 319,216 shares on August 15, 2025[184][185] - The company acquired NGE Texas, LLC to obtain its Texas retail electricity license[186] - The borrowing capacity under the Senior Credit Facility was increased to $250.0 million from $205.0 million on June 25, 2025[188] Residential Customer Equivalents (RCEs) Total RCEs decreased slightly quarter-over-quarter but increased year-to-date, driven by growth in the natural gas segment RCEs by Segment (in thousands) | Segment | March 31, 2025 | Additions (Q2) | Attrition (Q2) | June 30, 2025 | % Change (QoQ) | | :--- | :--- | :--- | :--- | :--- | :--- | | Retail Electricity | 212 | 29 | 29 | 212 | 0% | | Retail Natural Gas | 195 | 8 | 13 | 190 | (3)% | | Total Retail | 407 | 37 | 42 | 402 | (1)% | | Segment | December 31, 2024 | Additions (YTD) | Attrition (YTD) | June 30, 2025 | % Change (YTD) | | :--- | :--- | :--- | :--- | :--- | :--- | | Retail Electricity | 232 | 48 | 68 | 212 | (9)% | | Retail Natural Gas | 156 | 59 | 25 | 190 | 22% | | Total Retail | 388 | 107 | 93 | 402 | 4% | RCEs by Geographic Location (as of June 30, 2025, in thousands) | Geographic Location | Electricity | % of Total | Natural Gas | % of Total | Total | % of Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | New England | 47 | 22% | 14 | 7% | 61 | 15% | | Mid-Atlantic | 107 | 50% | 51 | 27% | 158 | 39% | | Midwest | 25 | 12% | 33 | 17% | 58 | 14% | | Southwest | 33 | 16% | 92 | 49% | 125 | 32% | | Total | 212 | 100% | 190 | 100% | 402 | 100% | Drivers of Our Business Key business drivers include customer growth, attrition management, credit risk, gross profit, weather, and asset optimization - Customer growth is driven by organic acquisitions (approximately 27,700 RCEs added in Q2 2025) and customer portfolio/business acquisitions (approximately 9,300 RCEs transferred in Q2 2025 from new agreements)[196][197] - Average monthly customer attrition was 3.5% for the three months ended June 30, 2025, slightly up from 3.4% in the prior year[200] - Customer credit loss expense for non-POR revenues decreased to 0.4% for Q2 2025 (from 2.1% in Q2 2024) and 0.8% for YTD 2025 (from 1.4% in YTD 2024) due to decreased sales activities in non-POR markets and focused collection efforts[201] - Net asset optimization resulted in a loss of $0.6 million for Q2 2025 (vs. $0.5 million loss in Q2 2024) and a loss of $2.9 million for YTD 2025 (vs. $2.1 million loss in YTD 2024)[207] Non-GAAP Performance Measures The company uses Adjusted EBITDA and Retail Gross Margin to evaluate operating results, with both showing year-to-date improvement - Adjusted EBITDA is defined as EBITDA adjusted for customer acquisition costs, net gains/losses on derivative instruments (excluding cash settlements), non-cash compensation, and other non-cash/non-recurring items[209][210][211][212] - Retail Gross Margin is defined as gross profit less net asset optimization revenues (expenses), net gains (losses) on non-trading derivative instruments, and net current period cash settlements on non-trading derivative instruments[217] Adjusted EBITDA and Retail Gross Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $13,960 | $12,363 | $41,674 | $27,431 | | Retail Gross Margin | $32,722 | $33,387 | $79,181 | $69,132 | Consolidated Results of Operations Higher revenues were offset by a significant surge in retail cost of revenues, leading to a substantial drop in operating income - Total revenues for Q2 2025 increased by $3.3 million (4%) due to higher gas volumes and rates, offset by lower electricity volumes[225][226] - Retail cost of revenues for Q2 2025 increased by $20.1 million (47%) due to changes in derivative portfolio value, higher gas volumes, and increased natural gas and electricity costs[227][228] - General and administrative expense for Q2 2025 decreased by $5.3 million (25%) due to lower bad debt and legal expenses, and non-recurring stock compensation in 2024[228] - Depreciation and amortization expense for Q2 2025 increased by $3.1 million (141%) due to higher amortization of customer relationship intangibles[229] Consolidated Financial Performance (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $90,029 | $86,696 | $232,286 | $200,752 | | Retail cost of revenues | $63,055 | $42,997 | $158,448 | $111,959 | | General and administrative expense | $15,631 | $20,862 | $32,623 | $38,195 | | Depreciation and amortization | $5,291 | $2,210 | $10,319 | $4,250 | | Operating income | $6,052 | $20,627 | $30,896 | $46,348 | | Net income | $3,151 | $15,695 | $21,618 | $34,759 | Operating Segment Results The Retail Electricity segment's gross margin declined, while the Retail Natural Gas segment's gross margin increased in Q2 2025 - Retail Electricity Segment revenues decreased by $4.3 million (6%) in Q2 2025 due to lower electricity volumes, offset by higher rates[238] - Retail Natural Gas Segment revenues increased by $8.0 million (51%) in Q2 2025 due to higher gas volumes and rates[242] Retail Electricity Segment Performance (in thousands, except per MWh) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $66,810 | $71,148 | $147,530 | $148,477 | | Retail Cost of Revenues | $46,607 | $37,127 | $104,809 | $86,258 | | Retail Gross Margin — Electricity | $23,531 | $25,311 | $44,945 | $44,222 | | Volumes — Electricity (MWhs) | 447,662 | 489,369 | 1,005,279 | 993,676 | | Retail Gross Margin — Electricity per MWh | $52.56 | $51.72 | $44.71 | $44.50 | Retail Natural Gas Segment Performance (in thousands, except per MMBtu) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $23,825 | $15,812 | $87,608 | $52,871 | | Retail Cost of Revenues | $16,439 | $5,663 | $53,628 | $24,866 | | Retail Gross Margin — Gas | $9,170 | $8,016 | $34,214 | $24,213 | | Volumes — Gas (MMBtus) | 2,975,132 | 2,074,924 | 10,429,207 | 6,327,869 | | Retail Gross Margin — Gas per MMBtu | $3.08 | $3.86 | $3.28 | $3.83 | Liquidity and Capital Resources The company maintains liquidity through cash from operations and its Senior Credit Facility, with total liquidity at $148.4 million - Primary liquidity sources are cash generated from operations and borrowings under the Senior Credit Facility[256] - Net cash provided by operating activities increased by $15.6 million for the six months ended June 30, 2025, compared to the prior year[260] - Net cash used in investing activities increased by $14.2 million for the six months ended June 30, 2025, primarily due to customer book acquisitions[261] - Net cash used in financing activities increased by $18.1 million for the six months ended June 30, 2025, driven by increased distributions to non-controlling interest, Senior Credit Facility paydowns, and Series A Preferred Stock buybacks[262] - The Senior Credit Facility has a borrowing capacity of $250.0 million, with $131.2 million outstanding (including $31.2 million in letters of credit) as of June 30, 2025[263][264] - Dividends paid to Series A Preferred Stockholders were $2.3 million for Q2 2025 and $4.8 million for YTD 2025[271] Available Liquidity (as of June 30, 2025, in thousands) | Metric | Amount | | :--- | :--- | | Cash and cash equivalents | $62,142 | | Senior Credit Facility Availability | $61,276 | | Subordinated Debt Facility Availability | $25,000 | | Total Liquidity | $148,418 | Off-Balance Sheet Arrangements The company reported no material off-balance sheet arrangements as of June 30, 2025 - As of June 30, 2025, the company had no material 'off-balance sheet arrangements'[276] Critical Accounting Policies and Estimates No changes have been made to the company's critical accounting policies and estimates since its 2024 Form 10-K filing - There have been no changes to the critical accounting policies and estimates since the 2024 Form 10-K[277] Contingencies Information regarding legal and regulatory contingencies is detailed in Note 12 of the financial statements - For a discussion of current legal and regulatory matters, refer to Note 12 'Commitments and Contingencies' in Part I, Item 1 of this Report[279] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company is exposed to commodity price, interest rate, and counterparty credit risks, which it manages through various strategies Commodity Price Risk Commodity price risk is managed through derivative instruments, with sensitivity analysis showing minimal impact from a 10% price change - The company hedges energy requirements using derivative and non-derivative instruments (forwards, futures, swaps, options) to manage commodity price risk from natural gas and electricity[281] - A 10% increase in natural gas market prices would decrease the fair value of the net non-trading energy portfolio by $0.1 million, while a 10% decrease would increase it by $0.1 million[284] - A 10% increase in electricity forward market prices would increase the fair value of the net non-trading energy portfolio by less than $0.1 million, while a 10% decrease would decrease it by less than $0.1 million[284] Net (Loss)/Gain on Non-Trading Derivative Instruments (in millions) | Period | Net (Loss)/Gain on Non-Trading Derivatives, Net of Cash Settlements | | :--- | :--- | | Three Months Ended June 30, 2025 | $(5.1) | | Three Months Ended June 30, 2024 | $10.8 | | Six Months Ended June 30, 2025 | $(2.5) | | Six Months Ended June 30, 2024 | $21.8 | Credit Risk Credit risk is largely mitigated by Purchase of Receivables programs, with bad debt expense for non-POR markets remaining low - Approximately 56% of retail revenues for the three months ended June 30, 2025, were derived from POR territories, where credit risk is primarily with investment-grade utilities[285] - Bad debt expense for non-POR markets was 0.4% of retail revenues for the three months ended June 30, 2025, and 0.8% for the six months ended June 30, 2025[288] - At June 30, 2025, approximately $0.9 million of the total $2.2 million wholesale counterparty exposure was with non-investment grade counterparties or unsecured[289] Interest Rate Risk The company is exposed to interest rate fluctuations on its variable-rate debt and preferred stock - A 1.0% increase in interest rates would result in an additional annual interest expense of approximately $1.0 million on the Senior Credit Facility's $100.0 million variable rate indebtedness[291] - A 1.0% increase in interest rates would result in additional quarterly dividends of $0.2 million on the Series A Preferred Stock[292] ITEM 4. CONTROLS AND PROCEDURES Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the period Evaluation of Disclosure Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[294] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting were identified during the most recent fiscal quarter - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[295] PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS This section refers to Note 12 for a detailed description of the company's legal proceedings and regulatory matters - Legal proceedings and regulatory matters are described in Note 12 'Commitments and Contingencies' to Part I, Item 1 of this Report[298] ITEM 1A. RISK FACTORS The company states there have been no material changes to the risk factors previously described in its 2024 Form 10-K - There has been no material change in the company's risk factors from those described in the 2024 Form 10-K[299] ITEM 6. EXHIBITS This section provides an index of all exhibits filed with the Quarterly Report on Form 10-Q - The report includes an index of exhibits, detailing various agreements, certifications, and XBRL data files[300][301] SIGNATURES The report is duly signed on behalf of the company by its Chief Financial Officer on July 31, 2025 - The report is signed by Mike Barajas, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) on July 31, 2025[307]