Via Renewables, Inc. SEC 10-K Report
Via Renewables, Inc., an independent retail energy services company, has released its 2024 Form 10-K report, detailing its financial and operational performance over the past year. The company, which provides alternative choices for natural gas and electricity to residential and commercial customers across the United States, operates in 102 utility service territories across 20 states and the District of Columbia. The report highlights significant improvements in financial metrics, strategic initiatives aimed at enhancing market position, and the challenges and risks faced by the company.
Financial Highlights
Total Revenues: $398.9 million, a decrease of approximately $36.3 million, or 8%, from the previous year, primarily due to lower electricity and gas unit revenue.
Gross Profit: $168.1 million, an increase from the previous year, reflecting improved cost management and higher electricity and gas volumes sold.
Operating Income: $84.2 million, an increase from $46.5 million in the previous year, driven by reduced operating expenses and improved gross margins.
Net Income: $61.1 million, a significant increase from $26.1 million in the previous year, attributed to higher operating income and lower interest expenses.
Net Income Per Share: $5.48, up from $1.36 in the previous year, reflecting the overall improvement in net income and financial performance.
Business Highlights
Company Overview: Via Renewables, Inc. is an independent retail energy services company providing residential and commercial customers in competitive markets across the United States with alternative choices for natural gas and electricity. The company operates in 102 utility service territories across 20 states and the District of Columbia.
Operating Segments: The business consists of two main segments: Retail Electricity and Retail Natural Gas. The Retail Electricity Segment accounted for approximately 75% of retail revenues in 2024, while the Retail Natural Gas Segment contributed about 25%.
Geographical Performance: The Mid-Atlantic region is the largest market, representing 44% of total Residential Customer Equivalents (RCEs), followed by the Southwest at 27%, New England at 17%, and the Midwest at 12%.
Customer Growth: The company added approximately 127,000 RCEs through organic sales channels and 82,000 RCEs through acquisitions in 2024. The total RCE count increased by 16% from 2023 to 2024.
Sales Units: The Retail Electricity Segment sold 2,035,597 MWh in 2024, an increase from 2,008,947 MWh in 2023. The Retail Natural Gas Segment sold 11,603,745 MMBtu in 2024, up from 11,252,862 MMBtu in 2023.
Customer Attrition: The average monthly attrition rate in 2024 was 3.9%, slightly higher than 3.4% in 2023, primarily due to proactive non-renewals in New York and increased attrition from new customer book acquisitions.
Customer Acquisition Costs: The company spent $9.5 million on customer acquisition costs in 2024, up from $6.7 million in 2023, reflecting increased sales activity.
Future Outlook: The company expects continued customer growth but acknowledges challenges due to market conditions and regulatory constraints. It remains focused on organic growth and strategic acquisitions to enhance its customer base.
Strategic Initiatives
Strategic Initiatives: Via Renewables, Inc. has undertaken several strategic initiatives to enhance its market position and operational efficiency. The company completed a merger with Retailco, LLC, which resulted in Mr. Maxwell and his affiliates owning all issued and outstanding shares of the company's Class A and Class B common stock. This strategic move is expected to streamline operations and align the company's strategic direction with its leadership. Additionally, the company has focused on customer growth through both organic sales channels and acquisitions, adding 127,000 RCEs organically and 82,000 RCEs through acquisitions in 2024. The company also initiated a tender offer to purchase up to 200,000 shares of its Series A Preferred Stock, reflecting a strategic decision to manage its equity structure actively.
Capital Management: In terms of capital management, Via Renewables has been active in managing its debt and equity structure. The company maintains a Senior Credit Facility with a borrowing capacity of $205 million, of which $131.6 million was outstanding as of December 31, 2024. The company also has an amended and restated subordinated debt facility allowing for advances up to $25 million. In 2024, the company repurchased 193,456 shares of its Series A Preferred Stock for a total of $4.2 million, demonstrating a commitment to optimizing its capital structure. Furthermore, the company paid $10.9 million in dividends to holders of its Series A Preferred Stock and $0.5 million in dividends to Class A common stockholders, although the quarterly cash dividend on Class A common stock was temporarily suspended in April 2023.
Future Outlook: Looking ahead, Via Renewables plans to continue focusing on customer growth and optimizing its capital structure. The company aims to sustain its operations and pay required taxes through cash generated from operations and available liquidity sources. The company also intends to maintain compliance with covenants under its Senior Credit Facility, which may impact its ability to pay dividends on its Series A Preferred Stock. The strategic focus will remain on enhancing liquidity, managing debt, and exploring opportunities for customer acquisitions to drive sustainable growth.
Challenges and Risks
Commodity Price Risk: The company faces significant commodity price risk due to the unpredictable and fluctuating market prices for natural gas and electricity. Factors such as weather conditions, demand for energy commodities, and changes in regulatory policies can impact these prices. Additionally, the company may not be able to pass along price changes to customers, which could lead to consumer class actions and regulatory actions.
Weather and Demand Risks: Weather conditions and changes in consumer demand also pose risks. Extreme weather events can lead to significant fluctuations in demand, potentially resulting in reduced margins or losses if the company cannot effectively manage supply and demand.
Risk Management and Hedging: The company's risk management policies and hedging procedures may not fully mitigate risks, particularly in volatile wholesale energy markets. Basis risk and the inability to hedge small volumes economically are notable concerns.
Regulatory Risks: Regulatory risks are increasing, with heightened scrutiny and potential for significant fines from state regulatory agencies. Changes in laws and regulations could adversely impact the company's operations and financial condition.
Credit Risk: The company is exposed to credit risk, particularly in markets without Purchase of Receivables (POR) programs, where it bears the risk of customer non-payment.
Cybersecurity Risks: Cybersecurity risks are a growing concern, with potential for significant disruptions to business operations and financial losses due to cyberattacks and data breaches.
Customer Growth Challenges: The company is experiencing challenges in customer growth due to market conditions and regulatory constraints. Customer attrition remains a concern, particularly in New York due to regulatory changes.
Increased Costs: Customer acquisition costs have increased, impacting profitability. The company is focused on recovering these costs within a 12-month period through disciplined market entry and pricing strategies.
General and Administrative Expenses: The company is also facing increased general and administrative expenses, primarily due to stock compensation and legal fees related to a merger.
Market Risks: The company is exposed to market risks related to changes in commodity prices, which can impact revenues and cost of sales. The use of financial derivatives to hedge these risks introduces additional complexity and potential for volatility in financial results.
Interest Rate Risks: Interest rate fluctuations pose a risk, particularly with the transition from LIBOR to the Three-Month CME Term SOFR, which could affect the dividend rate on the Series A Preferred Stock.
SEC Filing: Via Renewables, Inc. [ SLE1 ] - 10-K - Mar. 06, 2025