Via Renewables , Inc. (NYSE: VIA), a player in the renewable energy sector, reported a decline in adjusted EBITDA for the first quarter of 2024 during its earnings call today. CEO Keith Maxwell and CFO Mike Barajas presented the company's financial results, which showed a decrease in adjusted EBITDA to $15.1 million from $18.8 million in the prior year.
The dip was attributed to lower unit margins and mild weather affecting gas volumes. Despite the downturn, the company grew its customer base and announced an upcoming acquisition expected to bolster the bottom line from the second quarter.
Key Takeaways
- Adjusted EBITDA fell to $15.1 million, down from $18.8 million year-over-year.
- Customer base increased to 338,000 RCEs, up from 335,000 at the start of the year.
- An agreement to acquire approximately 12,500 RCEs in existing markets will be accretive starting the second quarter.
- Net income for the quarter was $19.1 million, a significant reversal from a net loss of $6.8 million in the first quarter of 2023.
Company Outlook
- Via Renewables expects the acquisition of 12,500 RCEs to positively impact earnings from Q2 2024 onwards.
- Management remains open to potential tuck-in acquisitions aligned with long-term growth strategies.
Bearish Highlights
- Lower unit margins and mild weather led to reduced gas volumes and a decrease in adjusted EBITDA.
- Retail gross margin declined in both electricity and natural gas segments compared to the previous year.
Bullish Highlights
- Customer base growth is a positive sign, indicating expansion in the company's market presence.
- The percentage of customer-based POR markets has increased, reducing credit risk and bad debt exposure.
Misses
- Adjusted EBITDA and retail gross margins fell short of last year's figures.
- General and administrative expenses edged up slightly due to increased sales, marketing, and legal fees.
Q&A Highlights
- The earnings call did not provide a Q&A section in the provided summary. Therefore, there are no Q&A highlights to report.
Via Renewables' first quarter results reflect a challenging period with mixed financial outcomes. While the company faced headwinds in unit margins and weather-related volume decreases, strategic customer base growth and a forthcoming acquisition offer a potential boost to future earnings.
The company's focus on increasing its customer base in POR markets and its proactive hedging strategies have helped to mitigate risks and position it for potential growth. As Via Renewables continues to navigate the renewable energy market, stakeholders will be closely monitoring the impact of its acquisition strategy and market expansion efforts on its financial performance in the coming quarters.
InvestingPro Insights
Via Renewables, Inc. is trading at attractive valuation multiples, with a current P/E Ratio of 8.23 and an adjusted P/E Ratio for the last twelve months as of Q1 2024 at 6.11. This indicates that the company's earnings are priced lower relative to the market, which may interest value investors. Moreover, the PEG Ratio for the same period stands at 0.02, suggesting that the company's earnings growth is potentially undervalued when considering its low price-to-earnings growth ratio.
The company's stock has experienced a large price uptick over the last six months, as reflected by the 66.87% price total return, signaling a strong market performance in the recent period. This contrasts with the reported decline in adjusted EBITDA and could be indicative of investor confidence in the company's long-term strategy and upcoming acquisition.
InvestingPro Tips highlight that Via Renewables is also trading at a low revenue valuation multiple, with a Revenue of 417.4M USD and a Revenue Growth of -10.27% over the last twelve months as of Q1 2024. Despite the decline in revenue, the company remains profitable with a Gross Profit Margin of 38.41%, which could be a reassuring factor for investors looking at the company's ability to generate earnings.
Investors interested in further analysis and additional InvestingPro Tips can explore https://www.investing.com/pro/VIA, where they can find 7 more tips to gain a comprehensive understanding of Via Renewables' financial health and stock performance. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which can help in making more informed investment decisions.
Full transcript - Via Renewables Inc (NASDAQ:VIA) Q1 2024:
Stephen Rabalais: Good morning, and welcome to Via Renewables' First Quarter 2024 Earnings Call. This call is also being broadcast via webcast, which can be located in the Investor Relations section of our website at viarenewables.com. With us today from management is our CEO, Keith Maxwell; and our CFO, Mike Barajas. Please note that today's discussion may contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. We urge everyone to review the safe harbor statement in yesterday's earnings release as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law. In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to yesterday's earnings release. With that, I'll turn the call over to Keith Maxwell, our CEO.
Keith Maxwell: Thank you, Stephen. I want to welcome everyone to today's call. I'll begin by providing a summary of results for the first quarter. And then our CFO, Mike Barajas will provide more details on the financials. In the first quarter, we reported adjusted EBITDA of $15.1 million which is a $3.7 million decrease from the prior year of $18.8 million, due to lower unit margins compounded by mild weather, which resulted in lower gas volumes. On a positive note, we grew our customer book to 338,000 RCEs compared to 335,000 RCEs at the start of the year. We also increased the percentage of our customer-based POR markets, which compared to the first quarter of 2023, which lowers our credit risk and bad debt exposure. Looking forward to our second quarter, we're happy to announce that we entered into an agreement to acquire approximately 12,500 RCEs in our existing markets. This acquisition will be accretive to our bottom line beginning in the second quarter of this year. This marks our first customer [indiscernible] acquisition since the end of 2022, and we will continue to be open to any potential future tuck-in acquisitions, and we are committed to growing our customer base in line with long-term growth strategies. That concludes my prepared remarks. And now I'll turn the call over to Mike for his financial review. Mike?
Mike Barajas: Thanks, Keith. Good morning. In the first quarter, we achieved $15.1 million in adjusted EBITDA compared to last year's first quarter of $18.8 million. Retail gross margin for the quarter was $35.7 million compared with $40.3 million last year. In our retail electricity segment, gross margin was $18.9 million compared to $20.5 million in the first quarter last year. The decrease due to lower unit margins, partially offset by higher volumes due to a higher RCE count. In our retail natural gas segment, gross margin was $16.2 million compared to $19.9 million in the first quarter last year. This was due to both lower unit margins and volumes year-over-year. G&A expenses were $17.3 million compared to $17.2 million in the first quarter last year, primarily due to increased sales and marketing expenses and legal fees. This was partially offset by a reduction in bad debt. We ended the quarter at 338,000 RCEs compared to 339,000 RCEs to end the first quarter of 2023 and up from 335,000 RCEs on December 31, 2023. Our attrition was 3.9%, which remained flat compared to the first quarter of 2023 due to lower attrition in our mass market book, offset by an uptick in commercial attrition. Our net income for the quarter was $19.1 million or income of $1.81 per fully diluted share compared to a net loss of $6.8 million or a loss of $1.26 per fully diluted share for the first quarter of 2023. The increase is mainly due to an increase in the mark-to-market on our hedges that we put in place to lock in margins on our retail contracts. We had a mark-to-market gain this quarter of $11.2 million compared to a mark-to-market loss of $22.6 million a year ago. We also had reductions in net asset optimization, depreciation and interest expenses of $1.4 million, $1.3 million and $800,000, respectively. The increase in net income was partially offset by a decrease in retail gross margin and increases in income tax and G&A expenses. Income tax expense increased to $4.8 million in the first quarter of 2024 compared to a benefit of $2 million in 2023. On April 15, we paid the quarterly cash dividend on our Series A preferred stock. On April 17, we declared a dividend in the amount of $0.76051 per share on our preferred stock to be paid on July 15. That's all I have. Back to Keith.
Keith Maxwell: Thanks, Mike. I want to thank our employees and the care and the dedication to growing and supporting Via and to our suppliers and their continued support. I want to thank our customers for choosing us as their energy provider. We are excited about the future and look forward to connecting with you soon on our next call.
Operator:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.