Via Renewables, Inc. (NASDAQ:VIASP) is an independent retail energy services company that has been providing residential and commercial customers across the United States with alternative choices for natural gas and electricity since 1999. The company operates through two main segments - Retail Electricity and Retail Natural Gas - and has established a strong presence in 20 states and the District of Columbia, serving approximately 388,000 residential customer equivalents (RCEs) as of December 31, 2024.
Business Overview and Company History
Via Renewables was founded in 1999 with the goal of offering customers in competitive energy markets an alternative to the incumbent utility providers. The company initially focused on the retail electricity market, purchasing electricity supply through physical and financial transactions and selling it to residential and commercial consumers. In the early 2000s, Via Renewables expanded into the retail natural gas segment, following a similar business model of purchasing natural gas supply and reselling it to end-users.
Over the years, Via Renewables has grown both organically and through strategic acquisitions. In 2016, the company made significant strides in expanding its business through the acquisitions of Provider Power, LLC and National Gas & Electric, LLC. These acquisitions allowed Via Renewables to broaden its customer base and geographic footprint. However, the company faced challenges in 2017 and 2018 as it worked to integrate these acquired businesses and manage the rapid growth.
In 2020, Via Renewables encountered a significant challenge when Winter Storm Uri caused major disruptions and volatility in the Texas energy market. The company successfully navigated this crisis by collaborating closely with regulators and ERCOT to mitigate the impacts. This event underscored the importance of Via Renewables' geographic diversification strategy, as the majority of its customer base was located outside of Texas.
As of December 31, 2024, Via Renewables operates in 102 utility service territories across 20 states and the District of Columbia. The company serves natural gas customers in sixteen states and electricity customers in twelve states and the District of Columbia using six brands - Electricity Maine, ENH Power, Major Energy, Provider Power Mass, Spark Energy, and Verde Energy.
The company has developed a diversified customer base, with a mix of residential and commercial/industrial (C&I) accounts. As of December 31, 2024, the company's customer mix was 63% residential and 37% C&I. Geographically, Via Renewables' largest concentrations of customers are in the Northeast, Mid-Atlantic, and Southwest regions, which account for 44%, 27%, and 27% of its total RCEs, respectively.
In 2024, Via Renewables completed a transformative merger that resulted in W. Keith Maxwell III, the company's founder, becoming the sole owner of the Class A and Class B common stock. This transaction provided the company with additional financial flexibility and resources to continue its growth initiatives.
Financial Performance
Via Renewables has demonstrated resilient financial performance, even in the face of challenging market conditions. For the fiscal year ended December 31, 2024, the company reported total revenues of $398.87 million, a decrease of 8.3% compared to the prior year, primarily due to lower electricity and natural gas prices. However, the company was able to maintain strong profitability, with a gross profit of $168.08 million and a net income of $61.08 million.
The company's performance is divided into two main segments: Retail Electricity and Retail Natural Gas. The Retail Electricity segment generated $300.35 million in total revenues for the year ended December 31, 2024, accounting for approximately 75% of the company's total retail revenues. The retail cost of revenues for this segment was $186.25 million, resulting in a retail gross margin of $93.67 million, or $46.02 per MWh. Electricity sales volumes for this segment were 2.04 million MWhs for the year.
The Retail Natural Gas segment generated $99.07 million in total revenues for the year ended December 31, 2024, accounting for approximately 25% of the company's total retail revenues. The retail cost of revenues for this segment was $43.23 million, resulting in a retail gross margin of $47.87 million, or $4.12 per MMBtu. Natural gas sales volumes for this segment were 11.60 million MMBtus for the year.
For the quarter ended March 31, 2024, Via Renewables reported revenue of $104.62 million and net income of $42.75 million.
Liquidity
The company's liquidity position remains solid, with $53.15 million in cash and cash equivalents and $73.38 million in available borrowing capacity under its $205 million senior secured credit facility as of December 31, 2024. Via Renewables' leverage ratio, as measured by the total debt to EBITDA, was 2.01x at the end of 2024, well within the covenants of its credit facility.
As of December 31, 2024, Via Renewables had a debt-to-equity ratio of 0. The company's current ratio was 2.73 and its quick ratio was 2.70, indicating strong short-term liquidity.
Growth Strategies and Outlook
Via Renewables' growth strategy is centered around a dual approach of organic customer acquisition and strategic acquisitions. The company's organic growth initiatives focus on offering competitively priced products, providing price certainty, and expanding its portfolio of green energy offerings to meet the evolving needs of its customer base.
In addition to organic growth, Via Renewables has been actively pursuing acquisitions of other retail energy companies and customer portfolios. The company completed several acquisitions in 2024, adding approximately 82,000 RCEs to its customer base. Management has indicated that they will continue to evaluate accretive acquisition opportunities to further expand the company's geographic reach and customer base.
Looking ahead, Via Renewables has provided guidance for the full year 2025, expecting to achieve total revenues in the range of $410 million to $430 million and adjusted EBITDA between $60 million and $65 million. The company's focus on operational efficiency, risk management, and prudent capital allocation should help it navigate the dynamic retail energy market and deliver long-term value for its shareholders.
Industry Trends
The retail energy services industry has seen moderate growth, with a compound annual growth rate (CAGR) of approximately 3-5% over the past three years. This growth has been driven by increasing deregulation in energy markets, growing consumer awareness of energy choices, and the rising demand for renewable energy options.
Risks and Challenges
As with any energy-related business, Via Renewables is exposed to various risks, including commodity price volatility, customer credit risk, regulatory changes, and competition from larger, well-capitalized players in the industry. The company's risk management policies and hedging strategies aim to mitigate these risks, but some exposure remains.
Additionally, the retail energy industry is highly regulated, and changes in state-level policies, such as the recent Maryland legislation that imposed significant restrictions on retail energy providers, could adversely impact Via Renewables' operations and financial performance in certain markets.
Conclusion
Via Renewables has established itself as a diversified and resilient retail energy services provider, leveraging its strong customer relationships, geographic diversification, and prudent risk management strategies to navigate the dynamic industry landscape. The company's focus on organic growth, strategic acquisitions, and operational efficiency positions it well to continue delivering value for its shareholders in the years ahead. With a solid financial foundation, a diverse customer base across multiple states, and a strategic focus on both electricity and natural gas segments, Via Renewables is well-positioned to capitalize on the moderate growth trends in the retail energy services industry.