VIA RENEWABLES(VIASP) - 2025 Q2 - Quarterly Report

Cautionary Note Regarding Forward Looking Statements This section highlights that the report contains forward-looking statements subject to various risks and uncertainties beyond the company's control - The report contains forward-looking statements identifiable by terms like 'may,' 'will,' 'expect,' and 'anticipate,' which are subject to risks and uncertainties beyond the company's control[10] - Key risk factors include the impact of Winter Storm Uri, changes in commodity prices and interest rates, sufficiency of risk management, extreme weather conditions, regulatory changes, access to credit markets, and competition[12] PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis ITEM 1. FINANCIAL STATEMENTS This section presents unaudited condensed consolidated financial statements, covering balance sheets, operations, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Assets: | | | | Total current assets | $178,103 | $203,771 | | Total assets | $316,343 | $344,939 | | Liabilities & Equity: | | | | Total current liabilities | $56,094 | $74,702 | | Total liabilities | $156,247 | $180,757 | | Series A Preferred Stock | $78,432 | $83,221 | | Total stockholders' equity | $68,205 | $66,733 | | Non-controlling interest | $13,459 | $14,228 | | Total equity | $81,664 | $80,961 | | Total liabilities, Series A Preferred Stock and Stockholders' equity | $316,343 | $344,939 | - Total assets decreased by $28.6 million (8.3%) from December 31, 2024, to June 30, 2025, primarily driven by a decrease in current assets[16] - Total liabilities decreased by $24.5 million (13.6%) over the same period, mainly due to a reduction in current liabilities[16] Condensed Consolidated Statements of Operations This section details the company's financial performance over specific periods, including revenues, expenses, and net income Condensed Consolidated Statements of Operations (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 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $90,029 | $86,696 | $232,286 | $200,752 | | Total Operating Expenses | $83,977 | $66,069 | $201,390 | $154,404 | | 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 | | Net income attributable to stockholders of Class A common stock | $340 | $4,911 | $6,810 | $10,768 | | 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 | - Total revenues increased by 3.8% for the three months ended June 30, 2025, and by 15.7% for the six months ended June 30, 2025, compared to the respective prior-year periods[19] - Operating income significantly decreased by 70.6% for the three months and 33.4% for the six months ended June 30, 2025, primarily due to a substantial increase in retail cost of revenues[19] Condensed Consolidated Statement of Changes in Equity This section outlines changes in the company's equity over specific periods, reflecting net income, distributions, and ownership adjustments Condensed Consolidated Statement of Changes in Equity (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Balance at December 31 (prior year) | $80,961 | $38,719 | | Consolidated net income | $21,618 | $34,759 | | Distributions paid to non-controlling unit holders | $(12,780) | $(4,495) | | Distribution to controlling interest | $(3,408) | — | | Dividends paid to Preferred Stockholders | $(4,727) | $(5,423) | | Changes in ownership interest | $(1,930) | — | | Balance at June 30 | $81,664 | $65,637 | - Total equity increased from $80,961 thousand at December 31, 2024, to $81,664 thousand at June 30, 2025, primarily driven by consolidated net income offset by distributions and dividends[21] - 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 This section details the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | 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 (decrease) in Cash, cash equivalents and Restricted cash | $(3,392) | $13,294 | | Cash, cash equivalents and Restricted cash—end of period | $66,867 | $55,889 | - Net cash provided by operating activities increased by $15.6 million (55.2%) for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to changes in working capital[37][260] - Net cash used in investing activities increased significantly by $14.2 million, from $730 thousand in 2024 to $14,952 thousand in 2025, mainly due to payments for customer book acquisitions[37][261] - Net cash used in financing activities increased by $18.1 million, from $14,303 thousand in 2024 to $32,388 thousand in 2025, driven by higher distributions to non-controlling interests, Senior Credit Facility paydowns, and Series A Preferred Stock buybacks[37][262] Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations of accounting policies, financial instruments, debt, equity, and other significant financial details 1. Formation and Organization This note describes the company's business as an independent retail energy services provider and its holding company structure - 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 is a holding company and the sole managing member of Spark HoldCo, LLC, consolidating its financial results and operating through various brands such as Electricity Maine, Major Energy, and Spark Energy[39] 2. Basis of Presentation and Summary of Significant Accounting Policies This note outlines the financial statement preparation basis, consolidation principles, key estimates, and evaluation of new accounting standards - 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 expenses[44][45] - The company is evaluating the impact of ASU No. 2023-09 (Income Tax Disclosures, effective after Dec 15, 2024) and ASU 2024-03 (Expense Disaggregation Disclosures, effective after Dec 15, 2026) on its financial statements[47][48] 3. Revenues This note details revenue recognition from natural gas and electricity sales, disaggregation by market and customer type, and credit loss provisions - Revenues are primarily derived from the sale of natural gas and electricity to residential and commercial customers, recognized upon product delivery[50][52] Retail Revenue by Primary Market (in thousands) | Market | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | New England | $17,601 | $22,843 | $44,068 | $54,807 | | Mid-Atlantic | $34,962 | $33,426 | $94,046 | $79,380 | | Midwest | $9,866 | $8,625 | $30,204 | $23,305 | | Southwest | $28,206 | $22,066 | $66,820 | $43,856 | | Total | $90,635 | $86,960 | $235,138 | $201,348 | Retail Revenue by Customer Type (in thousands) | Customer Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Commercial | $25,631 | $21,293 | $71,478 | $53,372 | | Residential | $64,227 | $65,659 | $168,947 | $155,248 | | Unbilled revenue | $777 | $8 | $(5,287) | $(7,272) | | Total | $90,635 | $86,960 | $235,138 | $201,348 | - Bad debt expense decreased to $0.8 million for the six months ended June 30, 2025, from $1.3 million in the prior year, reflecting decreased sales activities in non-POR markets and focused collection efforts[63][201] 4. Equity This note covers non-controlling interest, common stock ownership, EPS calculation, and the company's role as primary beneficiary of Spark HoldCo - The company holds a 51.79% economic interest in Spark HoldCo, LLC as of June 30, 2025, up from 48.20% at December 31, 2024, due to share transfers from non-controlling interest holders following cash distributions[67][68][71] - Following the June 13, 2024 merger, Mr. Maxwell and his affiliates own all issued and outstanding Class A and Class B common stock, and Class A common stock ceased trading on NASDAQ[46][72] Earnings Per Share (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 EPS | $0.09 | $1.51 | $1.86 | $3.32 | | Diluted EPS | $0.09 | $1.51 | $1.86 | $3.32 | - Spark HoldCo is a variable interest entity (VIE) due to its lack of rights for significant financial and operating decisions, with Via Renewables, Inc. identified as the primary beneficiary[76] 5. Preferred Stock This note details Series A Preferred Stock characteristics, including dividend rates, voting rights, redemption provisions, and recent repurchases - Series A Preferred Stock accrues dividends at a floating annual rate equal to Three-Month CME Term SOFR plus 6.578%, following the cessation of LIBOR[79][80] - The company paid $2.3 million and $4.8 million in dividends to Series A Preferred Stockholders for the three and six months ended June 30, 2025, respectively[82] - During the six months ended June 30, 2025, the company repurchased 6,353 shares and 13,924 shares of Series A Preferred Stock through tender offers and redeemed 168,008 shares on June 9, 2025[83][84][85] - As of June 30, 2025, the Series A Preferred Stock balance was $78,432 thousand, a decrease from $83,221 thousand at December 31, 2024, due to repurchases and redemptions[87] 6. Derivative Instruments This note explains the use of derivative instruments for managing commodity price risk and asset optimization, detailing notional volumes and gains/losses - Derivative instruments are used to manage cash flow exposure to commodity price risks (electricity, natural gas, RECs) and for asset optimization trading activities[88] Net Notional Volumes of Open Derivative Financial Instruments | Commodity | Notional Unit | June 30, 2025 | December 31, 2024 | | :---------- | :------------ | :------------ | :------------------ | | Non-trading: | | | | | Natural Gas | MMBtu | 5,634 | 5,716 | | Electricity | MWh | 937 | 987 | | Trading: | | | | | Natural Gas | 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 | | (Loss) gain on derivatives, net | $(6,412) | $3,180 | $(2,026) | $(1,025) | | Current period settlements on non-trading derivatives | $1,288 | $7,683 | $(2,612) | $22,925 | | Current period settlements on trading derivatives | — | $84 | — | $267 | | Total current period settlements on derivatives | $1,288 | $7,767 | $(2,612) | $23,192 | 7. Property and Equipment This note details the company's property and equipment, primarily information technology assets, and associated depreciation expense Property and Equipment (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Information technology | $10,108 | $8,141 | | Other | $69 | $69 | | Total | $10,177 | $8,210 | | Accumulated depreciation | $(3,733) | $(2,979) | | Property and equipment—net | $6,444 | $5,231 | - Property and equipment, net, increased by $1.2 million (23.2%) from December 31, 2024, to June 30, 2025[97] - Depreciation expense was $0.4 million for Q2 2025 (vs $0.3 million in Q2 2024) and $0.7 million for YTD Q2 2025 (vs $0.6 million in YTD Q2 2024)[98] 8. Intangible Assets This note details intangible assets, including goodwill, customer relationships, and trademarks, along with their amortization schedule Intangible Assets (in thousands) | Category | 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 This note describes the Senior Credit Facility, its borrowing capacity, outstanding balance, interest rate, and compliance with financial covenants Debt Balances (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :------------------ | | Senior Credit Facility | $100,000 | $106,000 | | Subordinated Debt | — | — | | Total long-term debt | $100,000 | $106,000 | - 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] - As of June 30, 2025, the weighted average interest rate on the Senior Credit Facility was 7.58%, and the company was in compliance with its financial covenants (Minimum Fixed Charge Coverage Ratio of 1.54 to 1.00 and Maximum Total Leverage Ratio of 1.51 to 1.00)[100][108][110] - 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] 10. Fair Value Measurements This note explains fair value measurements for commodity derivatives, categorized by input observability, with most classified as Level 2 - Fair value is defined as the exit price in an orderly transaction between market participants, prioritizing Level 1 (quoted prices in active markets) and minimizing Level 3 (unobservable inputs)[119][120] Assets and Liabilities Measured at Fair Value (in thousands) - June 30, 2025 | Category | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :------ | | Non-trading commodity derivative assets | $567 | $2,607 | — | $3,174 | | Trading commodity derivative assets | — | $102 | — | $102 | | Total commodity derivative assets | $567 | $2,709 | — | $3,276 | | Non-trading commodity derivative liabilities | — | $(417) | — | $(417) | | Trading commodity derivative liabilities | — | $(111) | — | $(111) | | Total commodity derivative liabilities | — | $(528) | — | $(528) | - No transfers between fair value levels occurred during the six months ended June 30, 2025, or the year ended December 31, 2024[123] 11. Income Taxes This note details the company's income tax accounting, deferred tax assets, and effective tax rates for its corporate and flow-through entities - The company reports federal and state income taxes for its share of Spark HoldCo's partnership income and for its corporate subsidiaries (CenStar and Verde Corp)[125][126] - As of June 30, 2025, the company had a net deferred tax asset of $4.8 million, primarily from the initial tax basis step-up from the Spark HoldCo unit purchase[129] Effective 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 This note outlines ongoing legal, tax, and regulatory proceedings, including class action lawsuits and state inquiries, and accrued liabilities - The Glikin v. Major Energy class action lawsuit in Maryland was granted dismissal by the Court in September 2024, with the Maryland PSC ruling in favor of the company in May 2025, finding no fraudulent conduct[134] - The Illinois Attorney General commenced a lawsuit against Spark Energy, LLC and Spark Energy Gas, LCC on January 16, 2025, regarding marketing and sales practices, with settlement negotiations ongoing[141] - Maryland SB1, enacted in May 2024, prohibits residential purchase of receivables (POR) for contracts executed or renewed after December 31, 2024, making it difficult for retail energy providers to offer energy choice[144] - Accrued liabilities for litigation and regulatory matters were $10.2 million as of June 30, 2025, and $11.9 million as of December 31, 2024[149] 13. Transactions with Affiliates This note details various transactions with commonly controlled affiliates, including shared services, energy sales/purchases, and a recent acquisition - Transactions with affiliates include shared employee benefits, insurance, office space, administrative salaries, management consulting, and accounting/tax/legal/technology services, as well as sales and purchases of natural gas and electricity[150] Asset and Liability Balances with Affiliates (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Accounts Receivable - affiliates | $3,941 | $4,119 | | Accounts Payable - affiliates | $478 | $157 | | Subordinated Debt - affiliates | — | — | - The total net amount direct billed and allocated to/(from) affiliates was $(0.5) million for Q2 2025 (vs $(4.5) million in Q2 2024) and $(1.0) million for YTD Q2 2025 (vs $(4.1) million in YTD Q2 2024)[153] - On May 23, 2025, the company acquired 100% of NGE Texas, LLC from an affiliate for a nominal purchase price of $1 plus a working capital payment of approximately $1.0 million, primarily to obtain a Texas retail electricity license[158] 14. Segment Reporting This note presents financial data for the retail electricity and retail natural gas segments, with retail gross margin as the key performance metric - The two reportable business segments are retail electricity and retail natural gas, with retail gross margin as the primary performance metric[161][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 | | Corporate and Other | $21 | $60 | $22 | $697 | | Total Retail Gross Margin | $32,722 | $33,387 | $79,181 | $69,132 | Total Assets and Goodwill by Segment (in thousands) - June 30, 2025 | Segment | Total Assets | Goodwill | | :---------------- | :----------- | :------- | | Retail Electricity | $2,062,179 | $117,813 | | Retail Natural Gas | $197,693 | $2,530 | | Corporate and Other | $334,443 | — | | Eliminations | $(2,277,972) | — | | Consolidated | $316,343 | $120,343 | 15. Customer Acquisitions This note details recent customer book acquisitions, including the number of RCEs acquired and associated costs - In April 2024, the company acquired approximately 9,300 residential customer equivalents (RCEs) for up to $2.3 million, completing the acquisition by December 31, 2024[175] - In October 2024, two agreements were made to acquire up to 100,600 RCEs for up to $16.9 million; approximately 99,000 RCEs were transferred by June 30, 2025[176] - In April and May 2025, two new agreements were signed to acquire up to 16,800 gas RCEs for up to $1.8 million; approximately 9,300 RCEs were transferred by June 30, 2025[177] 16. Subsequent Events This note describes events occurring after the reporting period, including dividend declarations, stock redemptions, and new legislation impacts - On July 16, 2025, a quarterly cash dividend of $0.69732 per share was declared for Series A Preferred Stock, payable on October 15, 2025[178] - On July 16, 2025, 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 on July 4, 2025, will make permanent full expensing of tangible personal property and restore EBITDA-based calculations for business interest deduction, expected to reduce cash taxes but not materially impact income tax expense[180] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's analysis of the company's financial condition, operational results, key drivers, and liquidity assessment Overview This section provides a general description of the company's business as a retail energy services provider across multiple states - Via Renewables, Inc. is an independent retail energy services company providing natural gas and electricity to residential and commercial customers in 106 utility service territories across 21 states and the District of Columbia[183] - The business operates in two segments: Retail Electricity (approximately 74% of Q2 2025 retail revenues) and Retail Natural Gas (approximately 26% of Q2 2025 retail revenues)[187] Recent Developments This section highlights significant recent events, including preferred stock redemptions, acquisitions, and credit facility adjustments - The company announced the redemption of 168,008 shares of Series A Preferred Stock on May 9, 2025, and an additional 319,216 shares on July 16, 2025[184][185] - On May 23, 2025, the company acquired NGE Texas, LLC to obtain a Texas retail electricity license for a nominal purchase price and a working capital payment of approximately $1.0 million[186] - The borrowing capacity under the Senior Credit Facility was increased to $250.0 million from $205.0 million on June 25, 2025[188] - In April and May 2025, the company entered into agreements to acquire up to 16,800 RCEs, with approximately 9,300 RCEs transferred by June 30, 2025[189] Residential Customer Equivalents (RCEs) This section provides a breakdown of residential customer equivalents by segment and geographic location, detailing additions and attrition RCEs by Segment (in thousands) | Segment | March 31, 2025 | Additions | Attrition | June 30, 2025 | % Increase (Decrease) (QoQ) | | :---------------- | :------------- | :-------- | :-------- | :------------ | :---------------------------- | | Retail Electricity | 212 | 29 | 29 | 212 | —% | | Retail Natural Gas | 195 | 8 | 13 | 190 | (3)% | | Total Retail | 407 | 37 | 42 | 402 | (1)% | RCEs by Segment (in thousands) | Segment | December 31, 2024 | Additions | Attrition | June 30, 2025 | % Increase (Decrease) (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 (in thousands) - June 30, 2025 | 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 This section discusses factors influencing business performance, including customer acquisition, attrition rates, credit loss expense, and asset optimization - Customer growth is driven by organic acquisitions through sales channels (27,700 RCEs added in Q2 2025) and customer portfolio acquisitions (9,300 RCEs transferred in Q2 2025)[195][196][197] - Average monthly customer attrition was 3.5% for Q2 2025, slightly up from 3.4% in Q2 2024[200] - Credit loss expense for non-POR revenues decreased to 0.4% for Q2 2025 (from 2.1% in Q2 2024) and to 0.8% for YTD Q2 2025 (from 1.4% in YTD Q2 2024) due to reduced sales in non-POR markets and improved collection efforts[201] - Net asset optimization resulted in losses of $0.6 million for Q2 2025 (vs $0.5 million loss in Q2 2024) and $2.9 million for YTD Q2 2025 (vs $2.1 million loss in YTD Q2 2024)[207] Non-GAAP Performance Measures This section defines and presents non-GAAP measures like Adjusted EBITDA and Retail Gross Margin, used for evaluating operating results and liquidity - Adjusted EBITDA and Retail Gross Margin are non-GAAP measures used to evaluate operating results, liquidity, and compliance with debt covenants[208][209][213][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 | - Adjusted EBITDA increased by 12.9% for Q2 2025 and 52.0% for YTD Q2 2025, while Retail Gross Margin decreased by 2.0% for Q2 2025 and increased by 14.5% for YTD Q2 2025[208] Consolidated Results of Operations This section analyzes the company's overall financial performance, including revenue, cost of revenues, operating expenses, and net income Consolidated Results of Operations (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 | $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 | - Total revenues increased by $3.3 million (3.8%) for Q2 2025 and $31.5 million (15.7%) for YTD Q2 2025, driven by higher gas volumes and rates, partially offset by lower electricity volumes/rates[225][232] - Retail cost of revenues increased significantly by $20.1 million (46.7%) for Q2 2025 and $46.4 million (41.4%) for YTD Q2 2025, primarily due to changes in derivative portfolio value, higher gas volumes, and increased natural gas and electricity costs[227][233] - General and administrative expense decreased by $5.3 million (25.4%) for Q2 2025 and $5.6 million (14.6%) for YTD Q2 2025, mainly due to lower bad debt and legal expenses, and non-recurring stock compensation in 2024[228][234] - Depreciation and amortization expense increased by $3.1 million (140.9%) for Q2 2025 and $6.0 million (141.2%) for YTD Q2 2025, due to higher amortization of customer relationship intangibles from acquisitions[229][235] Operating Segment Results This section analyzes the financial performance of the retail electricity and retail natural gas segments, including revenues, costs, and gross margins Retail Electricity Segment Performance (in thousands, except per unit 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 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | 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 | $23,531 | $25,311 | $44,945 | $44,222 | | Volumes (MWhs) | 447,662 | 489,369 | 1,005,279 | 993,676 | | Retail Gross Margin per MWh | $52.56 | $51.72 | $44.71 | $44.50 | - Retail Electricity Segment revenues decreased by $4.3 million (6%) for Q2 2025, primarily due to lower electricity volumes, while retail gross margin decreased by $1.8 million (7%)[238][240] Retail Natural Gas Segment Performance (in thousands, except per unit 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 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | 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 | $9,170 | $8,016 | $34,214 | $24,213 | | Volumes (MMBtus) | 2,975,132 | 2,074,924 | 10,429,207 | 6,327,869 | | Retail Gross Margin per MMBtu | $3.08 | $3.86 | $3.28 | $3.83 | - Retail Natural Gas Segment revenues increased by $8.0 million (51%) for Q2 2025, driven by higher gas volumes and rates, and retail gross margin increased by $1.2 million (14%)[242][244] Liquidity and Capital Resources This section assesses the company's liquidity sources, requirements, and cash flow activities, including debt facility availability and capital expenditures - Primary liquidity sources are cash from operations and borrowings under the Senior Credit Facility. Liquidity requirements fluctuate with customer acquisition costs, acquisitions, collateral needs, and working capital[256] Available Liquidity (in thousands) - June 30, 2025 | Metric | Amount | | :-------------------------- | :----- | | Cash and cash equivalents | $62,142 | | Senior Credit Facility Availability | $61,276 | | Subordinated Debt Facility Availability | $25,000 | | Total Liquidity | $148,418 | - Net cash provided by operating activities increased by $15.6 million for YTD Q2 2025, while net cash used in investing activities increased by $14.2 million, and net cash used in financing activities increased by $18.1 million[260][261][262] - As of June 30, 2025, $131.2 million was outstanding under the $250.0 million Senior Credit Facility (including $31.2 million in letters of credit), with $61.3 million available for borrowing[263][264] - The company spent $2.6 million on organic customer acquisitions for both Q2 2025 and Q2 2024, and capital expenditures for information systems improvements were $2.0 million for YTD Q2 2025 (vs $0.7 million in YTD Q2 2024)[269][270] Off-Balance Sheet Arrangements This section confirms that the company had no material off-balance sheet arrangements as of the reporting date - As of June 30, 2025, the company had no material off-balance sheet arrangements[276] Related Party Transactions This section refers to Note 13 for a detailed discussion of transactions with affiliates - For a discussion of related party transactions, refer to Note 13 'Transactions with Affiliates' in Part I, Item 1 of this Report[276] Critical Accounting Policies and Estimates This section states that there have been no changes to critical accounting policies and estimates since the prior annual report - There have been no changes to the critical accounting policies and estimates since the 2024 Form 10-K[277] Contingencies This section refers to Note 12 for a discussion of current legal and regulatory matters - For a discussion of the status 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 This section details the company's exposure to market risks, including commodity price, credit, and interest rate risks, and their management strategies Commodity Price Risk This section describes how the company manages exposure to market fluctuations in natural gas and electricity prices through derivative instruments - The company manages commodity price risk through derivative and non-derivative instruments (forwards, futures, swaps, options) to hedge future cash flows from fixed-price sales and purchases of natural gas and electricity[281] Net (Loss)/Gain on Non-Trading Derivative Instruments (in millions) | Period | Net (Loss)/Gain | | :------------------------------- | :-------------- | | 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 | - A 10% increase in market prices for natural gas would decrease the fair value of the net non-trading energy portfolio by $0.1 million, while a 10% increase in electricity prices would increase it by less than $0.1 million, as of June 30, 2025[284] Credit Risk This section discusses the company's credit risk exposure, particularly in POR and non-POR markets, and wholesale counterparty exposure - Approximately 56% of retail revenues for Q2 2025 (vs 59% in Q2 2024) were from territories with Purchase of Receivables (POR) programs, where credit risk is primarily with investment-grade utilities[285] - Bad debt expense for non-POR market retail revenues was 0.4% for Q2 2025 (vs 2.1% in Q2 2024) and 0.8% for YTD Q2 2025 (vs 1.4% in YTD Q2 2024)[288] - As of 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 This section addresses the company's exposure to interest rate fluctuations on its variable rate Senior Credit Facility and Series A Preferred Stock - The company is exposed to interest rate fluctuations on its $100.0 million variable rate Senior Credit Facility and Series A Preferred Stock[290][291] - 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 and $0.2 million in additional quarterly dividends on Series A Preferred Stock[291][292] ITEM 4. CONTROLS AND PROCEDURES This section reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting 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 This section states that there were no material changes in internal control over financial reporting during the reporting period - There were no changes in internal control over financial reporting during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[295] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits ITEM 1. LEGAL PROCEEDINGS This section refers to Note 12 for a detailed description of the company's legal proceedings and regulatory matters - For a description of certain litigation, legal proceedings, and regulatory matters, refer to Note 12 'Commitments and Contingencies' in Part I, Item 1 of this Report[298] ITEM 1A. RISK FACTORS This section advises Series A Preferred Stockholders to review risk factors from the prior annual report, noting no material changes - Holders of Series A Preferred Stock should review the risk factors in the 2024 Form 10-K, as there have been no material changes to these risks[299] ITEM 6. EXHIBITS This section provides an index of exhibits filed with the Quarterly Report on Form 10-Q, including various agreements and certifications - The exhibits required by Item 6 are set forth in the Exhibit Index, which includes various agreements, certifications, and XBRL instance documents[300][301][302][303] SIGNATURES This section contains the official signatures, certifying the due authorization and filing of the Quarterly Report on Form 10-Q - The report is duly signed on behalf of Via Renewables, Inc. by Mike Barajas, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), on July 31, 2025[305][307]