Spark Power Builds Momentum With Solid Second Quarter Performance

Gross Profit Margins Continue to Improve; 25.6% Realized in the Quarter
Core Business Adjusted EBITDA of $5.6 million
Net Working Capital reduction of $2.3 million in the Quarter
(Spark Power reports in Canadian dollars unless otherwise specified)

OAKVILLE, ON / ACCESSWIRE / August 10, 2023 / Spark Power Group Inc. (TSX:SPG), parent company of Spark Power ("Spark Power" or the "Company"), has announced its financial results for the three and six month periods ended June 30, 2023. All amounts are in Canadian dollars unless otherwise specified.

"We are building positive momentum as we come out of our second quarter and we are starting to realize early wins from the rollout of our new go-to-market plan, particularly in the US market. We will continue to execute on the key strategic initiatives in support of our Let's Grow Better strategy, and we will prioritize sales channel expansion and the next phase of our Project Darwin rollout for Canada," said Richard Jackson, President & CEO of Spark Power. "We have added key leadership talent to support the maturing of the Company, and we are seeing the efforts of our teams in operations, sales, and overall management come to life through the ongoing expansion of our US business in Technical and Renewable Services - with significant customer acquisitions in both segments," added Jackson.

"With our intentional shift to higher margin service work, we are seeing steady improvement in gross margin realizations over the last several quarters, despite challenging prior year revenue comparatives tied to large projects," said Richard Perri, Executive Vice President & CFO of Spark Power. "We also generated positive free cash flow in the quarter as a result of lower net working capital and our focus on speed to cash. We have aggressive plans to continue decreasing net working capital through the second half of the year through targeted reductions in days sales outstanding for both accounts receivable and contract assets," added Perri.

Financial Highlights - Q2 2023

• Revenue from continuing operations was $66.2 million in Q2 2023, as compared to $70.6 million in Q2 2022, representing a decrease of 6.3% year-over-year. The year-over-year change was anticipated as it reflects the ramp-up of our go-to-market strategy to pursue smaller ticket, higher margin service work and prior period comparatives include large project work in the Technical Services and Renewables segments.
• Gross Profit Margins from continuing operations, excluding depreciation and amortization, were 25.6% in Q2 2023, as compared to 26.0% in Q2 2022 and 25.1% in Q1 2023. The decrease from prior year is tied to a shift in the Renewables mix, while the sequential improvements over the prior two quarters reflects the ramp up of our go to market strategy.
• Selling, General and Administration (S,G&A) expenses from continuing operations, excluding depreciation and amortization, were $11.4 million, down $0.6 million, or 5.0% from Q2 2022, demonstrating the benefits of the actions executed in 2022 to scale the business for growth.
• Adjusted EBITDA from continuing operations was $5.6 million or 8.5% of revenue in Q2 2023, excluding foreign exchange losses of $0.4 million in the quarter. This compares to Adjusted EBITDA of $6.5 million or 9.2% of revenue in Q2 2022. The year-over-year change reflects lower volumes due to large projects in the prior year, partially offset by lower S,G&A costs.
• Cash flow from continuing operations was $5.0 million in the quarter, compared to cash used by operations of $4.2 million in Q2 2022 tied to a reduction in net working capital of $8.3 million as compared to Q2 2022.

Business Highlights - Q2 2023