OAKVILLE, ON / ACCESSWIRE / March 30, 2022 / Spark Power Group Inc. (TSX:SPG), parent company of Spark Power Corp. ("Spark Power" or the "Company"), today announced financial results for the three-and twelve-month periods, ended December 31, 2021. All amounts are in Canadian dollars unless otherwise specified.
"Throughout 2021, our business grew 12.1% year over year, organically; evidence of our strong branch network, competitive service offerings, and positive industry tailwinds," said Richard Jackson, President & CEO, Spark Power. "In our fourth quarter, we continued to face challenges with the surge of COVID-19's Omicron variant, in addition to the continuous global supply chain disruptions and rapidly rising inflation, all of which put significant pressures on our margins. We are taking proactive steps to transition our business to succeed in this environment, including raising $39.6 million of new equity capital. This additional financial flexibility will support our experienced operations-focused team to execute on our strategic initiatives to drive margin recovery and further organic growth, while taking advantage of the ongoing shifts to electrification," he added.
"As we gradually recover from the margin pressures perpetuated by the ongoing extreme macro-economic conditions, we are acutely focused on conservatively managing our liquidity and driving profitable revenue growth," said Richard Perri, EVP and CFO, Spark Power. "With the liquidity provided by the recent $39.6 million equity injection from our committed founders and our new institutional investors and the continued support of our bank, we are well positioned to complete the multi-year integration journey we are on, and ultimately realize on the benefits from a stable and scalable operating platform," he added.
After assuming the role as President and CEO of Spark Power in January 2021, Jackson focused on building a world class, operationally focused Senior Leadership Team, which was effectively achieved in the latter part of 2021 and early in 2022. Jackson also immediately launched Project Darwin, a two-year systems, process, and organizational integration plan that is expected to be completed by the end of 2022. This will result in Spark becoming a fully integrated operating platform using one brand, one organization structure and a common set of key business processes and systems that will improve operational predictability and provide scale for future growth as Spark transitions into the next stage of maturity.
Update on Liquidity, Outlook and Potential Covenant Beaches
Further to our communication on February 25, 2022, Management reports that the actual fourth quarter 2021 results have caused the Company to be in breach of its financial maintenance covenants under its existing secured credit facility (the "Facility") with its senior lender (the "Lender"). The Company continues to work constructively with the Lender to obtain a waiver and amendment agreement, waiving these covenant breaches and providing for an amendment to such near-term covenants, however, there can be no guarantee that a waiver and amendment will be obtained. In the meantime, the Company continues to operate under the terms of the Facility and will provide an update to the market as more details become available.
Financial Highlights - Fourth Quarter
Financial Highlights - Fiscal 2021
Business Highlights 2021
Quarterly Conference Call
Management is hosting an investor conference call and webcast tomorrow, March 31, 2022, at 8:30 a.m. ET to discuss its financial results in greater detail. To join by telephone dial: +1- 888-506-0062 (toll-free in North America) or +1- 973-528-0011 (local and international), with conference ID: 945170. To listen to a live webcast of the call, please visit the investor relations section of Spark Power's website at https://sparkpowercorp.com/about-us/investor-relations/. An archived replay of the webcast will be available following the conclusion of the call.
Please dial in or log on 10 minutes prior to the start time to provide sufficient time to register for the event.
Spark Power's Fourth-Quarter 2021 Interim Unaudited Condensed Consolidated Financial Statements and Notes of its Fourth-Quarter 2021 Management Discussion and Analysis are available on Spark Power's website at www.sparkpowercorp.com, and will be filed on SEDAR at www.sedar.com.
About Spark Power
Spark Power is a leading independent provider of end-to-end electrical services, operations and maintenance services, and energy sustainability solutions to the industrial, commercial, utility, and renewable asset markets in North America. We work to earn the right to be our customers' Trusted Partner in Power™. Our highly skilled and dedicated people, located in the communities we serve, combined with our knowledge of the power industry, technology expertise, and commitment to safety, ensures we deliver the right solutions that keep our customers' operations up and running today and better equipped for tomorrow. Learn more at www.sparkpowercorp.com.
Forward-Looking Statements
This news release may contain forward-looking statements (within the meaning of applicable securities laws) which reflect Spark Power's current expectations regarding future events. Forward-looking statements are identified by words such as "believe," "anticipate", "project", "expect", "intend", "plan", "will", "may", "estimate" and other similar expressions. The forward-looking statements in this press release include statements regarding the Company's opportunities for future organic growth, margin recovery, cost reductions, improved business performance and other statements that are not historical fact, and without limitation, include statements by Messrs., Jackson and Perri regarding the success of the Company's responses to disruptions caused by COVID-19, supply chain disruption and inflation. The forward-looking statements in this news release are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Several factors could cause actual results to differ materially from the results discussed in the forward-looking statements. Such factors include, among others: the ability of the Company to find a suitable strategic partner, potential buyer or participants for a financing; currency fluctuations; disruptions or changes in the credit or security markets; results of operations; and general financing; market and industry conditions. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, these forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, Spark Power assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Non-IFRS Measures
The Company prepares and releases unaudited consolidated interim financial statements and audited consolidated annual financial statements prepared in accordance with IFRS. In this and other earnings releases and investor conference calls, a complement to results provided in accordance with IFRS, the Company also discloses and discusses certain financial measures not recognized under IFRS and that do not have standard meanings prescribed by IFRS. These include "EBITDA", Adjusted EBITDA", "Pro-forma Adjusted EBITDA", "EBITDA Margin", "Adjusted EBITDA Margin", "Pro-forma Adjusted EBITDA Margin", Pro-forma Adjusted Revenue", "Adjusted Working Capital", and "Adjusted Net and Comprehensive Income (Loss)". These non-IFRS measures are used to provide investors with supplemental measures of Spark Power's operating performance and highlight trends in Spark Power's business that may not otherwise be apparent when relying solely on IFRS measures. Spark also believes that providing such information to securities analysts, investors and other interested parties who frequently use non-IFRS measures in the evaluation of issuers will allow them to better compare Spark Power's performance against others in its industry. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. For a reconciliation of these non-IFRS measures see the Company's management discussion and analysis for the three-and twelve-months ended December 31, 2021. The non-IFRS measures should not be construed as alternatives to results prepared in accordance with IFRS.
Selected Consolidated Financial Information
(in $000's) | ||||||||||||||||
Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenue | $ | 65,424 | $ | 66,865 | $ | 255,815 | $ | 228,153 | ||||||||
Cost of sales | 55,907 | 48,342 | 203,564 | 162,417 | ||||||||||||
Gross profit | 9,517 | 18,523 | 52,251 | 65,736 | ||||||||||||
Selling, general and administrative expenses | 17,210 | 14,865 | 59,337 | 53,969 | ||||||||||||
Provision for expected credit losses | 517 | 1,405 | 630 | 1,458 | ||||||||||||
Change in fair value of derivative instruments | 157 | - | (2,716 | ) | - | |||||||||||
Reorganization costs | 1,862 | 1,947 | 3,492 | 3,178 | ||||||||||||
Realized gain on settlement of derivative instrument | 65 | - | (1,100 | ) | - | |||||||||||
Foreign exchange (gain) loss | 503 | (31 | ) | 981 | (305 | ) | ||||||||||
Loss from operations | (10,797 | ) | 337 | (8,373 | ) | 7,436 | ||||||||||
Finance costs | (2,233 | ) | (1,793 | ) | (7,126 | ) | (6,762 | ) | ||||||||
Transaction costs | (580 | ) | - | (2,141 | ) | - | ||||||||||
Discontinued Operations | - | - | (475 | ) | - | |||||||||||
Earn-out | - | (1,900 | ) | - | (1,900 | ) | ||||||||||
Impairment Loss | (4,000 | ) | - | (4,000 | ) | - | ||||||||||
(6,813 | ) | (3,693 | ) | (13,742 | ) | (8,662 | ) | |||||||||
Loss before income taxes | (17,610 | ) | (3,356 | ) | (22,115 | ) | (1,226 | ) | ||||||||
Income tax recovery (expense): | ||||||||||||||||
Current | 1,807 | (226 | ) | 506 | (3,047 | ) | ||||||||||
Deferred | (2,073 | ) | 276 | 316 | 2,594 | |||||||||||
(266 | ) | 50 | 822 | (453 | ) | |||||||||||
Net loss | (17,876 | ) | (3,306 | ) | (21,293 | ) | (1,679 | ) | ||||||||
Cumulative translation adjustment | 241 | 8 | 373 | (453 | ) | |||||||||||
Comprehensive loss | $ | (17,635 | ) | $ | (3,298 | ) | $ | (20,920 | ) | $ | (2,132 | ) | ||||
EBITDA | $ | (10,241 | ) | $ | 3,621 | $ | 4,615 | $ | 25,866 | |||||||
EBITDA margin | -15.7 | % | 5.4 | % | 1.8 | % | 11.3 | % | ||||||||
Adjusted EBITDA | 2,516 | 8,873 | 21,743 | 32,402 | ||||||||||||
Pro-forma Revenue | 65,424 | 66,865 | 255,815 | 228,153 | ||||||||||||
Pro-forma EBITDA margin | 3.8 | % | 13.3 | % | 8.5 | % | 14.2 | % | ||||||||
Adjusted revenue for change in estimate | 68,464 | 66,865 | 259,330 | 228,153 | ||||||||||||
Adjusted EBITDA margin for change in estimate | 3.7 | % | 13.3 | % | 8.4 | % | 14.2 | % |
Reconciliation of comprehensive income (loss) to EBITDA, Adjusted EBITDA, and Pro-forma Adjusted EBITDA:
(in $000's) | ||||||||||||||||
Reconciliation of net loss to EBITDA and Adjusted EBITDA | Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
Reconciliation of net loss to EBITDA and Adjusted EBITDA | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net loss | $ | (17,876 | ) | $ | (3,306 | ) | $ | (21,293 | ) | $ | (1,679 | ) | ||||
Adjustments: | ||||||||||||||||
Finance expense | 2,233 | 1,793 | 7,126 | 6,762 | ||||||||||||
Income tax expense | 266 | (50 | ) | (822 | ) | 453 | ||||||||||
Amortization and depreciation | 5,136 | 5,184 | 19,604 | 20,330 | ||||||||||||
EBITDA | $ | (10,241 | ) | $ | 3,621 | $ | 4,615 | $ | 25,866 | |||||||
EBITDA Margin | -15.7 | % | 5.4 | % | 1.8 | % | 11.3 | % | ||||||||
Adjustments: | ||||||||||||||||
Provision for expected credit loss | 517 | 1,405 | 630 | 1,458 | ||||||||||||
Reorganization costs | 1,862 | 1,947 | 3,492 | 3,178 | ||||||||||||
Transaction costs | 580 | - | 2,141 | - | ||||||||||||
Earn-out | - | 1,900 | - | 1,900 | ||||||||||||
Discontinued operations | - | - | 475 | - | ||||||||||||
Change in estimate | 3,740 | - | 6,390 | - | ||||||||||||
Year end provisions | 2,058 | - | - | - | ||||||||||||
Impairment Loss | 4,000 | - | 4,000 | - | ||||||||||||
Adjusted EBITDA | $ | 2,516 | $ | 8,873 | $ | 21,743 | $ | 32,402 | ||||||||
Adjusted EBITDA Margin | 3.8 | % | 13.3 | % | 8.5 | % | 14.2 | % | ||||||||
Adjusted EBITDA margin for change in estimate | 3.7 | % | 13.3 | % | 8.4 | % | 14.2 | % | ||||||||
LTM EBITDA | $ | 33,782 | $ | 32,118 | ||||||||||||
13.1 | % | 13.8 | % | -0.71645469 | ||||||||||||
LTM Revenue | $ | 257,257 | $ | 232,534 | ||||||||||||
Pro-forma Revenue | 65,424 | 66,865 | 255,815 | 228,153 |
The following table is a summary of Spark Power's results for the periods indicated:
(in $000's) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||||||||||
Revenue | $ | 65,424 | $ | 66,865 | (2.2 | %) | $ | 255,815 | $ | 228,153 | 12.1 | % | ||||||||||||
Gross Profit | 9,517 | 18,523 | (48.6 | %) | 52,251 | 65,736 | (20.5 | %) | ||||||||||||||||
Gross Profit Margin | 14.5 | % | 27.7 | % | 20.4 | % | 28.8 | % | ||||||||||||||||
Selling, General & Administration | 17,210 | 14,865 | 15.8 | % | 59,337 | 53,969 | 9.9 | % | ||||||||||||||||
Provision for expected credit losses | 517 | 1,405 | (63.2 | %) | 630 | 1,458 | (56.8 | %) | ||||||||||||||||
Change in fair value of derivative instruments | 157 | - | (2,716 | ) | - | |||||||||||||||||||
Reorganization costs | 1,862 | 1,947 | (4.4 | %) | 3,492 | 3,178 | 9.9 | % | ||||||||||||||||
Realized gain on settlement of derivative instruments | 65 | - | (1,100 | ) | - | |||||||||||||||||||
Foreign exchange (gain) loss | 503 | (31 | ) | (1,722.6 | %) | 981 | (305 | ) | (421.6 | %) | ||||||||||||||
Income (Loss) from Operations | $ | (10,797 | ) | $ | 337 | $ | (8,373 | ) | $ | 7,436 | (212.6 | %) | ||||||||||||
EBITDA (1) | $ | (10,241 | ) | $ | 3,621 | 382.9 | % | $ | 4,615 | $ | 25,866 | 82.2 | % | |||||||||||
EBITDA Margin (1) | -15.7 | % | 5.4 | % | 1.8 | % | 11.3 | % | ||||||||||||||||
Adjusted EBITDA (1) | $ | 2,516 | $ | 8,873 | (71.6 | %) | $ | 21,743 | $ | 32,402 | (32.9 | %) | ||||||||||||
Adjusted EBITDA Margin (1) | 3.8 | % | 13.3 | % | 8.5 | % | 14.2 | % | ||||||||||||||||
Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | ||||||||||||||||||||
Bank Indebtedness | $ | 29,344 | $ | 28,401 | $ | 19,806 | $ | 28,226 | $ | 25,444 | ||||||||||||||
Senior Secured Long-term Debt | $ | 62,459 | $ | 64,540 | $ | 66,622 | $ | 62,858 | $ | 66,706 | ||||||||||||||
Promissory Notes | $ | 10,738 | $ | 10,738 | $ | 10,738 | $ | 10,738 | $ | 10,738 | ||||||||||||||
Total Debt (2) | $ | 102,542 | $ | 103,679 | $ | 97,166# | $ | 101,822# | $ | 102,888 | ||||||||||||||
1 EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin are non-IFRS measures. Refer to Non-IFRS measures for definitions of these terms. | ||||||||||||||||||||||||
2 Total debt includes Bank indebtedness, senior secured long-term debt and promissory notes. |
CONTACT:
Investor and Regulatory Inquiries:
Richard Perri, Executive Vice President & Chief Financial Officer
investors@sparkpowercorp.com
+1 (905) 829-3336
Media Inquiries:
Kim Samlall, Director, Marketing Communications
media@sparkpowercorp.com
+1 (905)-829-3336
SOURCE: Spark Power Group Inc.