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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended September 30, 2020
 
         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from          to          
 
Commission File Number: 001-36559
Spark Energy, Inc.
(Exact name of registrant as specified in its charter)
Delaware 46-5453215
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
12140 Wickchester Ln, Suite 100
Houston, Texas 77079

(Address of principal executive offices)
 
(713) 600-2600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbols(s) Name of exchange on which registered
Class A common stock, par value $0.01 per share SPKE The NASDAQ Global Select Market
8.75% Series A Fixed-to-Floating Rate

Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share
SPKEP The NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes     No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes     No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.        
Large accelerated filer                  Accelerated filer  
Non-accelerated filer Smaller reporting company



Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
    
    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
        Yes     No

There were 14,627,284 shares of Class A common stock, 20,800,000 shares of Class B common stock and 3,567,543 shares of Series A Preferred Stock outstanding as of November 2, 2020.



SPARK ENERGY, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended September 30, 2020
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2020 AND DECEMBER 31, 2019 (unaudited)
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (unaudited)
 
4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (unaudited)
 
5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 (unaudited)
 
9
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)  
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
38
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
58
ITEM 4. CONTROLS AND PROCEDURES
60
PART II. OTHER INFORMATION
61
ITEM 1. LEGAL PROCEEDINGS
61
ITEM 1A. RISK FACTORS
61
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
64
ITEM 6. EXHIBITS
66
SIGNATURES
68

1

Table of Contents
Cautionary Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. These forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), can be identified by the use of forward-looking terminology including “may,” “should,” “could,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “project,” or other similar words. All statements, other than statements of historical fact included in this Report, regarding strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. Forward-looking statements appear in a number of places in this Report and may include statements about expected impacts of COVID-19, business strategy and prospects for growth, customer acquisition costs, legal proceedings, ability to pay cash dividends, cash flow generation and liquidity, availability of terms of capital, competition and government regulation and general economic conditions. We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct.
The forward-looking statements in this Report are subject to risks and uncertainties. Important factors that could cause actual results to materially differ from those projected in the forward-looking statements include, but are not limited to:

evolving risks, uncertainties and impacts relating to COVID-19, including the geographic spread, the severity of the disease, the scope and duration of the COVID-19 outbreak, actions that may be taken by governmental authorities to contain the COVID-19 outbreak or to treat its impact, and the potential for continuing negative impacts of COVID-19 on economies and financial markets;
changes in commodity prices;
the sufficiency of risk management and hedging policies and practices;
the impact of extreme and unpredictable weather conditions, including hurricanes and other natural disasters;
federal, state and local regulations, including the industry's ability to address or adapt to potentially restrictive new regulations that may be enacted by public utility commissions;
our ability to borrow funds and access credit markets;
restrictions in our debt agreements and collateral requirements;
credit risk with respect to suppliers and customers;
changes in costs to acquire customers as well as actual attrition rates;
accuracy of billing systems;
our ability to successfully identify, complete, and efficiently integrate acquisitions into our operations;
significant changes in, or new changes by, the independent system operators ("ISOs") in the regions we operate;
competition; and
the "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019, in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and in "Item 1A— Risk Factors" of this Report, and in our other public filings and press releases.

You should review the risk factors and other factors noted throughout or incorporated by reference in this Report that could cause our actual results to differ materially from those contained in any forward-looking statement. All forward-looking statements speak only as of the date of this Report. Unless required by law, we disclaim any obligation to publicly update or revise these statements whether as a result of new information, future events or otherwise. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

2

Table of Contents
PART I. — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
SPARK ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share counts)
(unaudited)
September 30, 2020 December 31, 2019
Assets
Current assets:
Cash and cash equivalents $ 75,347  $ 56,664 
Restricted cash 33  1,004 
Accounts receivable, net of allowance for doubtful accounts of $5,156 at September 30, 2020 and $4,797 at December 31, 2019
63,810  113,635 
Accounts receivable—affiliates 4,579  2,032 
Inventory 1,796  2,954 
Fair value of derivative assets 761  464 
Customer acquisition costs, net 8,326  8,649 
Customer relationships, net 12,083  13,607 
Deposits 5,636  6,806 
Renewable energy credit asset 15,296  24,204 
Other current assets 9,090  6,109 
Total current assets 196,757  236,128 
Property and equipment, net 2,867  3,267 
Fair value of derivative assets 75  106 
Customer acquisition costs, net 885  9,845 
Customer relationships, net 8,710  17,767 
Deferred tax assets 26,499  29,865 
Goodwill 120,343  120,343 
Other assets 4,992  5,647 
Total assets $ 361,128  $ 422,968 
Liabilities, Series A Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable $ 29,360  $ 48,245 
Accounts payable—affiliates 355  1,009 
Accrued liabilities 28,682  37,941 
Renewable energy credit liability 20,179  33,120 
Fair value of derivative liabilities 3,405  19,943 
Other current liabilities 1,308  1,697 
Total current liabilities 83,289  141,955 
Long-term liabilities:
Fair value of derivative liabilities 459  495 
Long-term portion of Senior Credit Facility 100,000  123,000 
Other long-term liabilities 51  217 
Total liabilities 183,799  265,667 
Commitments and contingencies (Note 12)
Series A Preferred Stock, par value $0.01 per share, 20,000,000 shares authorized, 3,707,256 shares issued and 3,567,543 shares outstanding at September 30, 2020 and 3,707,256 shares issued and 3,677,318 shares outstanding at December 31, 2019
87,288  90,015 
Stockholders' equity:
       Common Stock:
Class A common stock, par value $0.01 per share, 120,000,000 shares authorized, 14,771,878 shares issued and 14,627,284 shares outstanding at September 30, 2020 and 14,478,999 shares issued and 14,379,553 shares outstanding at December 31, 2019
148  145 
Class B common stock, par value $0.01 per share, 60,000,000 shares authorized, 20,800,000 shares issued and outstanding at September 30, 2020 and 20,800,000 shares issued and outstanding at December 31, 2019
209  209 
       Additional paid-in capital 54,169  51,842 
       Accumulated other comprehensive loss (40) (40)
       Retained earnings 12,284  1,074 
       Treasury stock, at cost, 144,594 shares at September 30, 2020 and 99,446 shares at December 31, 2019
(2,406) (2,011)
       Total stockholders' equity 64,364  51,219 
Non-controlling interest in Spark HoldCo, LLC 25,677  16,067 
       Total equity 90,041  67,286 
Total liabilities, Series A Preferred Stock and Stockholders' equity $ 361,128  $ 422,968 

The accompanying notes are an integral part of the condensed consolidated financial statements.
3

Table of Contents
SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Revenues:
Retail revenues $ 141,188  $ 207,341  $ 436,166  $ 625,300 
Net asset optimization (expense) revenues (558) (254) (319) 2,242 
Total Revenues 140,630  207,087  435,847  627,542 
Operating Expenses:
Retail cost of revenues 85,118  123,867  269,546  477,881 
General and administrative 19,080  27,629  66,087  94,352 
Depreciation and amortization 7,278  9,496  24,084  31,963 
Total Operating Expenses 111,476  160,992  359,717  604,196 
Operating income 29,154  46,095  76,130  23,346 
Other (expense)/income:
Interest expense (1,487) (2,174) (4,233) (6,392)
Interest and other income 80  322  293  1,005 
Total other expenses (1,407) (1,852) (3,940) (5,387)
Income before income tax expense 27,747  44,243  72,190  17,959 
Income tax expense 5,141  6,567  12,739  3,022 
Net income $ 22,606  $ 37,676  $ 59,451  $ 14,937 
Less: Net income attributable to non-controlling interests 12,993  22,142  34,200  5,736 
Net income attributable to Spark Energy, Inc. stockholders $ 9,613  $ 15,534  $ 25,251  $ 9,201 
Less: Dividends on Series A Preferred Stock 1,951  2,026  5,490  6,080 
Net income attributable to stockholders of Class A common stock $ 7,662  $ 13,508  $ 19,761  $ 3,121 
Other comprehensive income, net of tax:
Currency translation loss $ —  $ (45) $ —  $ (143)
Other comprehensive loss —  (45) —  (143)
Comprehensive income $ 22,606  $ 37,631  $ 59,451  $ 14,794 
Less: Comprehensive income attributable to non-controlling interests 12,993  22,116  34,200  5,652 
Comprehensive income attributable to Spark Energy, Inc. stockholders $ 9,613  $ 15,515  $ 25,251  $ 9,142 
Net income attributable to Spark Energy, Inc. per share of Class A common stock
       Basic $ 0.52  $ 0.94  $ 1.36  $ 0.22 
       Diluted $ 0.52  $ 0.93  $ 1.35  $ 0.22 
Weighted average shares of Class A common stock outstanding
       Basic 14,653  14,380  14,531  14,254 
       Diluted 14,671  14,514  14,655  14,429 

The accompanying notes are an integral part of the condensed consolidated financial statements.
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SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in thousands)
(unaudited)
Nine Months Ended September 30, 2020
Issued Shares of Class A Common Stock Issued Shares of Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Accumulated Other Comprehensive Loss Additional Paid-in Capital Retained Earnings (Deficit) Total Stockholders' Equity Non-controlling Interest Total Equity
Balance at December 31, 2019 14,479  20,800  (99) $ 145  $ 209  $ (2,011) $ (40) $ 51,842  $ 1,074  $ 51,219  $ 16,067  $ 67,286 
Impact of adoption of ASC 326
—  —  —  —  —  —  —  —  (633) (633) —  (633)
Balance at January 1, 2020 14,479  20,800  (99) 145  209  (2,011) (40) 51,842  441  50,586  16,067  66,653 
Stock based compensation —  —  —  —  —  —  2,061  —  2,061  —  2,061 
Restricted stock unit vesting 293  —  —  —  —  —  (915) —  (912) —  (912)
Consolidated net income —  —  —  —  —  —  —  —  25,251  25,251  34,200  59,451 
Distributions paid to non-controlling unit holders —  —  —  —  —  —  —  —  —  —  (23,409) (23,409)
Dividends paid to Class A common stockholders ($0.54375 per share)
—  —  —  —  —  —  —  —  (7,917) (7,917) —  (7,917)
Dividends paid to Preferred Stockholders —  —  —  —  —  —  —  —  (5,491) (5,491) —  (5,491)
Treasury Shares —  —  (45) —  —  (395) (395) (395)
Changes in ownership interest —  —  —  —  —  —  —  1,181  —  1,181  (1,181) — 
Balance at September 30, 2020 14,772  20,800  (144) $ 148  $ 209  $ (2,406) $ (40) $ 54,169  $ 12,284  $ 64,364  $ 25,677  $ 90,041 














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Three Months Ended September 30, 2020
Issued Shares of Class A Common Stock Issued Shares of Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Accumulated Other Comprehensive Loss Additional Paid-in Capital Retained Earnings (Deficit) Total Stockholders' Equity Non-controlling Interest Total Equity
Balance at June 30, 2020
14,772 20,800 (99) $ 148  $ 209  $ (2,011) $ (40) $ 53,409  $ 7,275  $ 58,990  $ 22,829  $ 81,819 
Stock based compensation 289 289 289
Restricted stock unit vesting
Consolidated net income 9,613 9,613 12,993 22,606
Distributions paid to non-controlling unit holders (9,674) (9,674)
Dividends paid to Class A common stockholders ($0.18125 per share)
(2,652) (2,652) (2,652)
Dividends paid to Preferred Stockholders (1,952) (1,952) (1,952)
Treasury Shares (45) (395) (395) (395)
Changes in Ownership Interest 471 471 (471)
Balance at September 30, 2020 14,772 20,800 (144) $ 148  $ 209  $ (2,406) $ (40) $ 54,169  $ 12,284  $ 64,364  $ 25,677  $ 90,041 















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Nine Months Ended September 30, 2019
Issued Shares of Class A Common Stock Issued Shares of Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Accumulated Other Comprehensive Loss Additional Paid-in Capital Retained Earnings (Deficit) Total Stockholders' Equity Non-controlling Interest Total Equity
Balance at December 31, 2018
14,178  20,800  (99) $ 142  $ 209  $ (2,011) $ $ 46,157  $ 1,307  $ 45,806  $ 44,488  $ 90,294 
Stock based compensation —  —  —  —  —  —  —  3,888  —  3,888  —  3,888 
Restricted stock unit vesting 301  —  —  —  —  —  (1,107) —  (1,104) —  (1,104)
Consolidated net income —  —  —  —  —  —  —  —  9,201  9,201  5,736  14,937 
Foreign currency translation adjustment for equity method investee —  —  —  —  —  —  (59) —  —  (59) (84) (143)
Gain on settlement of TRA, net of tax —  —  —  —  —  —  —  12,179  —  12,179  —  12,179 
Distributions paid to non-controlling unit holders —  —  —  —  —  —  —  —  —  —  (28,108) (28,108)
Dividends paid to Class A common stockholders ($0.54375 per share)
—  —  —  —  —  —  —  (5,170) (2,606) (7,776) —  (7,776)
Changes in ownership interest —  —  —  —  —  —  —  (223) —  (223) 223  — 
Dividends to Preferred Stockholders —  —  —  —  —  —  —  (2,029) (4,053) (6,082) —  (6,082)
Proceeds from disgorgement of stockholder short-swing profits —  —  —  —  —  —  —  55  —  55  —  55 
Acquisition of Customers from Affiliate —  —  —  —  —  —  —  —  —  —  (10) (10)
Balance at September 30, 2019
14,479  20,800  (99) $ 145  $ 209  $ (2,011) $ (57) $ 53,750  $ 3,849  $ 55,885  $ 22,245  $ 78,130 




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Three Months Ended September 30, 2019
Issued Shares of Class A Common Stock Issued Shares of Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Accumulated Other Comprehensive Loss Additional Paid-in Capital Retained Earnings (Deficit) Total Stockholders' Equity Non-controlling Interest Total Equity
Balance at June 30, 2019
14,479  20,800  (99) $ 145  $ 209  $ (2,011) $ (38) $ 42,329  $ (7,053) $ 33,581  $ 18,124  $ 51,705 
Stock based compensation —  —  —  —  —  —  —  1,377  —  1,377  —  1,377 
Consolidated Net income —  —  —  —  —  —  —  —  15,534  15,534  22,142  37,676 
Foreign currency translation adjustment for equity method investee —  —  —  —  —  —  (19) —  —  (19) (26) (45)
Gain on settlement of TRA, net of tax —  —  —  —  —  —  —  12,179  —  12,179  —  12,179 
Distributions paid to non-controlling unit holders —  —  —  —  —  —  —  —  —  —  (20,130) (20,130)
Dividends paid to Class A common stockholders ($0.18125 per share)
—  —  —  —  —  —  —  —  (2,606) (2,606) —  (2,606)
Dividends to Preferred Stockholders —  —  —  —  —  —  —  —  (2,026) (2,026) —  (2,026)
Changes in ownership interest —  —  —  —  —  —  —  (2,135) —  (2,135) 2,135  — 
Balance at September 30, 2019 14,479  20,800  (99) $ 145  $ 209  $ (2,011) $ (57) $ 53,750  $ 3,849  $ 55,885  $ 22,245  $ 78,130 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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SPARK ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
  
Nine Months Ended September 30,
   2020 2019
Cash flows from operating activities:
Net income $ 59,451  $ 14,937 
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization expense 24,084  31,965 
Deferred income taxes 3,366  34 
Stock based compensation 2,134  4,053 
Amortization of deferred financing costs 966  1,002 
Bad debt expense 4,613  9,185 
Loss on derivatives, net 14,015  42,690 
Current period cash settlements on derivatives, net (32,682) (32,593)
Other —  (608)
Changes in assets and liabilities:
Decrease in accounts receivable 44,579  40,008 
(Increase) decrease in accounts receivable—affiliates (2,546) 1,139 
Decrease in inventory 1,158  298 
Increase in customer acquisition costs (1,763) (13,608)
Decrease in prepaid and other current assets 6,268  9,211 
Increase in other assets (316) (394)
Decrease in accounts payable and accrued liabilities (39,997) (27,721)
Decrease in accounts payable—affiliates (655) (2,114)
Increase (decrease) in other current liabilities 1,439  (374)
Decrease in other non-current liabilities (166) (25)
Net cash provided by operating activities 83,948  77,085 
Cash flows from investing activities:
Purchases of property and equipment (1,219) (577)
Acquisition of Customers from Affiliate —  (5,913)
Net cash used in investing activities (1,219) (6,490)
Cash flows from financing activities:
Buyback of Series A Preferred Stock (2,282) (111)
Borrowings on notes payable 420,000  224,500 
Payments on notes payable (443,000) (245,000)
Net borrowings on subordinated debt facility —  504 
Payments on the Verde promissory note —  (2,036)
Proceeds from disgorgement of stockholders short-swing profits —  55 
Purchase of Treasury Stock (395) — 
Restricted stock vesting (1,107) (1,348)
Payment for acquired customers (972) — 
Payment of Tax Receivable Agreement liability —  (11,239)
Payment of dividends to Class A common stockholders (7,917) (7,776)
Payment of distributions to non-controlling unitholders (23,409) (28,108)
Payment of Preferred Stock dividends (5,935) (6,082)
Payment to affiliates for acquisition of customer book —  (10)
Net cash used in financing activities (65,017) (76,651)
Increase (decrease) in Cash, cash equivalents and Restricted cash 17,712  (6,056)
Cash, cash equivalents and Restricted cash—beginning of period 57,668  49,638 
Cash, cash equivalents and Restricted cash—end of period $ 75,380  $ 43,582 
Supplemental Disclosure of Cash Flow Information:
Non-cash items:
        Property and equipment purchase accrual $ $ 89 
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        Holdback for Verde Note—Indemnified Matters $ —  $ 4,900 
        Write-off of tax benefit related to tax receivable agreement liability—affiliates $ —  $ 4,157 
        Gain on settlement of tax receivable agreement liability—affiliates $ —  $ (16,336)
Cash paid during the period for:
Interest $ 3,198  $ 5,245 
Taxes $ 13,074  $ 5,097 
The accompanying notes are an integral part of the condensed consolidated financial statements.
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SPARK ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Formation and Organization
Organization

We are an independent retail energy services company that provides residential and commercial customers in competitive markets across the United States with an alternative choice for natural gas and electricity. Spark Energy, Inc. (the "Company") is a holding company whose sole material asset consists of units in Spark HoldCo, LLC (“Spark HoldCo”). The Company is the sole managing member of Spark HoldCo, is responsible for all operational, management and administrative decisions relating to Spark HoldCo’s business and consolidates the financial results of Spark HoldCo and its subsidiaries. Spark HoldCo is the direct and indirect owner of the subsidiaries through which we operate. We conduct our business through several brands across our service areas, including Electricity Maine, Electricity N.H., Major Energy, Provider Power Massachusetts, Respond Power, Spark Energy, and Verde Energy.
2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC") as it applies to interim financial statements. This information should be read along with our consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”). Our unaudited condensed consolidated financial statements are presented on a consolidated basis and include all wholly-owned and controlled subsidiaries. We account for investments over which we have significant influence but not a controlling financial interest using the equity method of accounting. All significant intercompany transactions and balances have been eliminated in the unaudited condensed consolidated financial statements.

In the opinion of the Company's management, the accompanying condensed consolidated financial statements reflect all adjustments that are necessary to fairly present the financial position, the results of operations, the changes in equity and the cash flows of the Company for the respective periods. Such adjustments are of a normal recurring nature, unless otherwise disclosed.

Use of Estimates and Assumptions
The preparation of our condensed consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements and the reported amounts of revenues and expenses during the period. Actual results could materially differ from those estimates.

Restricted Cash

As part of the acquisition of residential customer equivalents (“RCEs") from Starion Energy, Inc., Starion NY Inc. and Starion Energy PA Inc. (collectively "Starion") in 2018, we funded an escrow account, the balance of which is reflected as restricted cash in our consolidated balance sheet. As of September 30, 2020 and December 31, 2019, the balance in the escrow account related to the Starion acquisition was less than $0.1 million and $1.0 million, respectively. Approximately $1.0 million was released to the seller in July 2020 related to holdback amounts for acquired customers, subject to the terms of the asset purchase agreement. As of September 30, 2020, the balance remaining in escrow represents the amounts pending settlement between the Company and the seller.

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Relationship with our Founder and Majority Shareholder

W. Keith Maxwell, III (our "Founder") is the owner of a majority of the voting power of our common stock through his ownership of NuDevco Retail, LLC ("NuDevco Retail") and Retailco, LLC ("Retailco"). Retailco is a wholly owned subsidiary of TxEx Energy Investments, LLC ("TxEx"), which is wholly owned by Mr. Maxwell. NuDevco Retail is a wholly owned subsidiary of NuDevco Retail Holdings LLC ("NuDevco Retail Holdings"), which is a wholly owned subsidiary of Electric HoldCo, LLC, which is also a wholly owned subsidiary of TxEx.

On November 2, 2020, the Board of Directors (the "Board") of the Company appointed W. Keith Maxwell III as Chief Executive Officer.

New Accounting Standards Recently Adopted

There have been no changes to our significant accounting policies as disclosed in our 2019 Form 10-K, except as follows:

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 requires entities to use a current expected credit loss ("CECL") model, which is a new impairment model based on expected losses rather than incurred losses on financial assets, including trade accounts receivables. The model requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We adopted ASU 2016-13 and the related amendments effective January 1, 2020, and the adoption resulted in $0.6 million adjustment to retained earnings on January 1, 2020.

Standards Being Evaluated/Standards Not Yet Adopted

Below are accounting standards that have been issued by the FASB but have not yet been adopted by the Company at September 30, 2020. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes ("ASU 2019-12"). These amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. For public business entities, the amendments in ASU 2019-12 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. We do not expect adoption of the new standard to have a material impact to our consolidated statement of operations.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We do not expect adoption of the new standard to have a material impact to our consolidated statement of operations.

3. Revenues
Our revenues are derived primarily from the sale of natural gas and electricity to customers, including affiliates. Revenue is measured based upon the quantity of gas or power delivered at prices contained or referenced in the customer's contract, and excludes any sales incentives (e.g. rebates) and amounts collected on behalf of third parties (e.g. sales tax).
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Our revenues also include asset optimization activities. Asset optimization activities consist primarily of purchases and sales of gas that meet the definition of trading activities per FASB ASC Topic 815, Derivatives and Hedging. They are therefore excluded from the scope of FASB ASC Topic 606, Revenue from Contracts with Customers.

Revenues for electricity and natural gas sales are recognized under the accrual method when our performance obligation to a customer is satisfied, which is the point in time when the product is delivered and control of the product passes to the customer. Electricity and natural gas products may be sold as fixed-price or variable-price products. The typical length of a contract to provide electricity and/or natural gas is twelve months. Customers are billed and typically pay at least monthly, based on usage. Electricity and natural gas sales that have been delivered but not billed by period end are estimated and recorded as accrued unbilled revenues based on estimates of customer usage since the date of the last meter read provided by the utility. Volume estimates are based on forecasted volumes and estimated residential and commercial customer usage. Unbilled revenues are calculated by multiplying these volume estimates by the applicable rate by customer class (residential or commercial). Estimated amounts are adjusted when actual usage is known and billed.

The following table discloses revenue by primary geographical market, customer type, and customer credit risk profile (in thousands). The table also includes a reconciliation of the disaggregated revenue to revenue by reportable segment (in thousands).
Reportable Segments
Three Months Ended September 30, 2020 Three Months Ended September 30, 2019
Retail Electricity Retail Natural Gas Total Reportable Segments Retail Electricity Retail Natural Gas Total Reportable Segments
Primary markets (a)
  New England $ 46,464  $ 1,361  $ 47,825  $ 76,995  $ 1,631  $ 78,626 
  Mid-Atlantic 46,878  2,243  49,121  69,763  2,940  72,703 
  Midwest 16,933  1,540  18,473  23,310  2,146  25,456 
  Southwest 22,683  3,086  25,769  26,942  3,614  30,556 
$ 132,958  $ 8,230  $ 141,188  $ 197,010  $ 10,331  $ 207,341 
Customer type
  Commercial $ 34,180  $ 2,705  $ 36,885  $ 69,081  $ 3,378  $ 72,459 
  Residential 103,092  5,082  108,174  134,763  6,696  141,459 
  Unbilled revenue (b) (4,314) 443  (3,871) (6,834) 257  (6,577)
$ 132,958  $ 8,230  $ 141,188  $ 197,010  $ 10,331  $ 207,341 
Customer credit risk
  POR $ 87,439  $ 3,010  $ 90,449  $ 136,683  $ 4,037  $ 140,720 
  Non-POR 45,519  5,220  50,739  60,327  6,294  66,621 
$ 132,958  $ 8,230  $ 141,188  $ 197,010  $ 10,331  $ 207,341 


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Reportable Segments
Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019
Retail Electricity Retail Natural Gas Total Reportable Segments Retail Electricity Retail Natural Gas Total Reportable Segments
Primary markets (a)
New England $ 133,218  $ 11,144  $ 144,362  $ 221,134  $ 13,311  $ 234,445 
Mid-Atlantic 131,463  23,976  155,439  191,077  29,643  220,720 
Midwest 46,428  19,338  65,766  62,890  27,371  90,261 
Southwest 55,872  14,727  70,599  64,777  15,097  79,874 
$ 366,981  $ 69,185  $ 436,166  $ 539,878  $ 85,422  $ 625,300 
Customer type
Commercial $ 103,603  $ 25,512  $ 129,115  $ 196,015  $ 32,079  $ 228,094 
Residential 275,229  53,410  328,639  356,950  64,307  421,257 
Unbilled revenue (b) (11,851) (9,737) (21,588) (13,087) (10,964) (24,051)
$ 366,981  $ 69,185  $ 436,166  $ 539,878  $ 85,422  $ 625,300 
Customer credit risk
POR $ 246,046  $ 34,423  $ 280,469  $ 375,890  $ 45,260  $ 421,150 
Non-POR 120,935  34,762  155,697  163,988  40,162  204,150 
$ 366,981  $ 69,185  $ 436,166  $ 539,878  $ 85,422  $ 625,300 

(a) The primary markets include the following states:

New England - Connecticut, Maine, Massachusetts, New Hampshire;
Mid-Atlantic - Delaware, Maryland (including the District of Colombia), New Jersey, New York and Pennsylvania;
Midwest - Illinois, Indiana, Michigan and Ohio; and
Southwest - Arizona, California, Colorado, Florida, Nevada, and Texas.

(b) Unbilled revenue is recorded in total until it is actualized, at which time it is categorized between commercial and residential customers.

We record gross receipts taxes on a gross basis in retail revenues and retail cost of revenues. During the three months ended September 30, 2020 and 2019, our retail revenues included gross receipts taxes of $0.3 million and $0.4 million, respectively, and our retail cost of revenues included gross receipts taxes of $1.6 million and $2.2 million, respectively. During the nine months ended September 30, 2020 and 2019, our retail revenues included gross receipts taxes of $1.0 million and $1.1 million, respectively, and our retail cost of revenues included gross receipts taxes of $4.7 million and $6.7 million, respectively.

Accounts receivables and Allowance for Credit Losses

As discussed in Note 2, “Basis of Presentation”, we adopted the new accounting standards for measuring credit losses effective January 1, 2020.

The Company conducts business in many utility service markets where the local regulated utility purchases our receivables, and then becomes responsible for billing the customer and collecting payment from the customer (“POR programs”). These POR programs result in substantially all of the Company’s credit risk being linked to the
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applicable utility, which generally has an investment-grade rating, and not to the end-use customer. The Company monitors the financial condition of each utility and currently believes its receivables are collectible.

In markets that do not offer POR programs or when the Company chooses to directly bill its customers, certain receivables are billed and collected by the Company. The Company bears the credit risk on these accounts and records an appropriate allowance for doubtful accounts to reflect any losses due to non-payment by customers. The Company’s customers are individually insignificant and geographically dispersed in these markets. The Company writes off customer balances when it believes that amounts are no longer collectible and when it has exhausted all means to collect these receivables.

For trade accounts receivables, the Company accrues an allowance for doubtful accounts by business segment by pooling customer accounts receivables based on similar risk characteristics, such as customer type, geography, aging analysis, payment terms, and related macro-economic factors. Expected credit loss exposure is evaluated for each of our accounts receivables pools. Expected credits losses are established using a model that considers historical collections experience, current information, and reasonable and supportable forecasts. The Company writes off accounts receivable balances against the allowance for doubtful accounts when the accounts receivable is deemed to be uncollectible.

A rollforward of our allowance for credit losses for the nine months ended September 30, 2020 are presented in the table below (in thousands):

Balance 12/31/19 $ (4,797)
Impact of adoption of ASC 326 (633)
Current period bad debt provision (3,151)
Write-offs 4,006 
Recovery of previous write offs (581)
Balance 9/30/20 $ (5,156)


4. Equity

Non-controlling Interest

We hold an economic interest and are the sole managing member in Spark HoldCo, with affiliates of our Founder, majority shareholder and Chief Executive Officer holding the remaining economic interests in Spark HoldCo. As a result, we consolidate the financial position and results of operations of Spark HoldCo, and reflect the economic interests owned by these affiliates as a non-controlling interest. The Company and affiliates owned the following economic interests in Spark HoldCo at September 30, 2020 and December 31, 2019, respectively.
The Company Affiliated Owners
September 30, 2020 41.53  % 58.47  %
December 31, 2019 41.04  % 58.96  %

The following table summarizes the portion of net income (loss) and income tax expense (benefit) attributable to non-controlling interest (in thousands):

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Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
     
Net income allocated to non-controlling interest $ 14,909  $ 25,003  $ 38,717  $ 7,108 
Income tax expense allocated to non-controlling interest 1,916  2,861  4,517  1,372 
Net income attributable to non-controlling interest $ 12,993  $ 22,142  $ 34,200  $ 5,736 

Class A Common Stock and Class B Common Stock

Holders of the Company's Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or by our certificate of incorporation.

Dividends declared for the Company's Class A common stock are reported as a reduction of retained earnings, or a reduction of additional paid in capital to the extent retained earnings are exhausted. During the nine months ended September 30, 2020, we paid $7.9 million in dividends to the holders of the Company's Class A common stock. This dividend represented a quarterly rate of $0.18125 per share on each share of Class A common stock.

In order to pay our stated dividends to holders of our Class A common stock, our subsidiary, Spark HoldCo is required to make corresponding distributions to holders of its units, including those holders that own our Class B common stock (our non-controlling interest holder). As a result, during the nine months ended September 30, 2020, Spark HoldCo made corresponding distributions of $11.3 million to our non-controlling interest holders.

Share Repurchase Program

On August 18, 2020, our Board of Directors authorized a share repurchase program of up to $20.0 million of Class A common stock through August 18, 2021. We are funding the program through available cash balances, our Senior Credit Facility and operating cash flows.

The shares of Class A common stock may be repurchased from time to time in the open market at prevailing market prices or in privately negotiated transactions based on ongoing assessments of capital needs, the market price of the stock, and other factors, including general market conditions. The repurchase program does not obligate us to acquire any particular amount of Class A common stock, may be modified or suspended at any time, and could be terminated prior to completion.

During the three and nine months ended September 30, 2020, we repurchased 45,148 shares of our Class A common stock at a weighted average price of $8.75 per share, for a total cost of $0.4 million.

Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income attributable to stockholders (the numerator) by the weighted-average number of Class A common shares outstanding for the period (the denominator). Class B common shares are not included in the calculation of basic earnings per share because they are not participating securities and have no economic interests. Diluted earnings per share is similarly calculated except that the denominator is increased by potentially dilutive securities.

The following table presents the computation of basic and diluted income (loss) per share for the three and nine months ended September 30, 2020 and 2019 (in thousands, except per share data):
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Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net income attributable to Spark Energy, Inc. stockholders $ 9,613  $ 15,534  $ 25,251  $ 9,201 
Less: Dividends on Series A preferred stock 1,951  2,026  5,490  6,080 
Net income attributable to stockholders of Class A common stock $ 7,662  $ 13,508  $ 19,761  $ 3,121 
Basic weighted average Class A common shares outstanding 14,653  14,380  14,531  14,254 
Basic income per share attributable to stockholders $ 0.52  $ 0.94  $ 1.36  $ 0.22 
Net income attributable to stockholders of Class A common stock $ 7,662  $ 13,508  $ 19,761  $ 3,121 
Effect of conversion of Class B common stock to shares of Class A common stock —  —  —  — 
Diluted net income attributable to stockholders of Class A common stock $ 7,662  $ 13,508  $ 19,761  $ 3,121 
Basic weighted average Class A common shares outstanding 14,653  14,380  14,531  14,254 
Effect of dilutive Class B common stock —  —  —  — 
Effect of dilutive restricted stock units 18  134  124  175 
Diluted weighted average shares outstanding 14,671  14,514  14,655  14,429 
Diluted income per share attributable to stockholders $ 0.52  $ 0.93  $ 1.35  $ 0.22 

The computation of diluted earnings per share for the three and nine months ended September 30, 2020 excludes 20.8 million shares of Class B common stock because the effect of their conversion was antidilutive. The Company's outstanding shares of Series A Preferred Stock were not included in the calculation of diluted earnings per share because they contain only contingent redemption provisions that have not occurred.

Variable Interest Entity

Spark HoldCo is a variable interest entity due to its lack of rights to participate in significant financial and operating decisions and its inability to dissolve or otherwise remove its management. Spark HoldCo owns all of the outstanding membership interests in each of our operating subsidiaries. We are the sole managing member of Spark HoldCo, manage Spark HoldCo's operating subsidiaries through this managing membership interest, and are considered the primary beneficiary of Spark HoldCo. The assets of Spark HoldCo cannot be used to settle our obligations except through distributions to us, and the liabilities of Spark HoldCo cannot be settled by us except through contributions to Spark HoldCo. The following table includes the carrying amounts and classification of the assets and liabilities of Spark HoldCo that are included in our condensed consolidated balance sheet as of September 30, 2020 and December 31, 2019 (in thousands):
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September 30, 2020 December 31, 2019
Assets
Current assets:
   Cash and cash equivalents $ 75,248  $ 56,598 
   Accounts receivable 63,810  113,635 
   Other current assets 53,881  64,476 
   Total current assets 192,939  234,709 
Non-current assets:
   Goodwill 120,343  120,343 
   Other assets 19,390  37,826 
   Total non-current assets 139,733  158,169 
   Total Assets $ 332,672  $ 392,878 
Liabilities
Current liabilities:
   Accounts payable and accrued liabilities $ 58,004  $ 86,097 
   Other current liabilities 43,015  65,863 
   Total current liabilities 101,019  151,960 
Long-term liabilities:
   Long-term portion of Senior Credit Facility 100,000  123,000 
   Other long-term liabilities 511  712 
   Total long-term liabilities 100,511  123,712 
   Total Liabilities $ 201,530  $ 275,672 

5. Preferred Stock

In May 2019, we commenced a share repurchase program (the "Repurchase Program") of our Series A Preferred Stock. The Repurchase Program allowed us to purchase our Series A Preferred Stock through May 20, 2020, and there was no dollar limit on the amount of Series A Preferred Stock that may be repurchased, nor did the Repurchase Program obligate the Company to make any repurchases.

In November 2019, we amended and extended our Repurchase Program of our Series A Preferred Stock. The Repurchase Program allows us to purchase Series A Preferred Stock through December 31, 2020, at prevailing prices, in open market or negotiated transactions, subject to market conditions, maximum share prices and other considerations. The Repurchase Program does not obligate us to make any repurchases and may be suspended at any time.

In May 2020, we initiated a tender offer to purchase up to 1,000,000 shares of our Series A Preferred Stock. In June 2020, we accepted for purchase 36,827 shares of the Series A Preferred Stock at a purchase price of $22.00 per share, for an aggregate purchase price of approximately $0.8 million.

During the three months ended September 30, 2020, there were no repurchases of Series A Preferred Stock. During the nine months ended September 30, 2020, we repurchased 109,775 shares of Series A Preferred Stock at a weighted-average price of $20.79 per share (including shares purchased through the tender offer described above), for a total cost of approximately $2.3 million.

Holders of the Series A Preferred Stock have no voting rights, except in specific circumstances of delisting or in the case the dividends are in arrears as specified in the Series A Preferred Stock Certificate of Designations. The Series A Preferred Stock accrue dividends at an annual percentage rate of 8.75%, and the liquidation preference provisions of the Series A Preferred Stock are considered contingent redemption provisions because there are rights granted to
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the holders of the Series A Preferred Stock that are not solely within our control upon a change in control of the Company. Accordingly, the Series A Preferred Stock is presented between liabilities and the equity sections in the accompanying condensed consolidated balance sheet.

During the three and nine months ended September 30, 2020, we paid $2.0 million and $6.0 million in dividends to holders of the Series A Preferred Stock. As of September 30, 2020, we had accrued $1.9 million related to dividends to holders of the Series A Preferred Stock. This dividend was paid on October 15, 2020.

A summary of our preferred equity balance for the nine months ended September 30, 2020 is as follows:
(in thousands)
Balance at December 31, 2019 $ 90,015 
Accumulated dividends on Series A Preferred Stock (60)
Repurchase of Series A Preferred Stock (2,667)
Balance at September 30, 2020 $ 87,288 

6. Derivative Instruments

We are exposed to the impact of market fluctuations in the price of electricity and natural gas, basis differences in the price of natural gas, storage charges, renewable energy credits ("RECs"), and capacity charges from independent system operators. We use derivative instruments in an effort to manage our cash flow exposure to these risks. These instruments are not designated as hedges for accounting purposes, and, accordingly, changes in the market value of these derivative instruments are recorded in the cost of revenues. As part of our strategy to optimize pricing in our natural gas related activities, we also manage a portfolio of commodity derivative instruments held for trading purposes. Our commodity trading activities are subject to limits within our Risk Management Policy. For these derivative instruments, changes in the fair value are recognized currently in earnings in net asset optimization revenues.
Derivative assets and liabilities are presented net in our condensed consolidated balance sheets when the derivative instruments are executed with the same counterparty under a master netting arrangement. Our derivative contracts include transactions that are executed both on an exchange and centrally cleared, as well as over-the-counter, bilateral contracts that are transacted directly with third parties. To the extent we have paid or received collateral related to the derivative assets or liabilities, such amounts would be presented net against the related derivative asset or liability’s fair value. As of September 30, 2020 we had received $0.2 million and paid less than $0.1 million in collateral. As of December 31, 2019 we had paid $1.7 million in collateral. The specific types of derivative instruments we may execute to manage the commodity price risk include the following:

Forward contracts, which commit us to purchase or sell energy commodities in the future;
Futures contracts, which are exchange-traded standardized commitments to purchase or sell a commodity or financial instrument;
Swap agreements, which require payments to or from counterparties based upon the differential between two prices for a predetermined notional quantity; and
Option contracts, which convey to the option holder the right but not the obligation to purchase or sell a commodity.

The Company has entered into other energy-related contracts that do not meet the definition of a derivative instrument or for which we made a normal purchase, normal sale election and are therefore not accounted for at fair value including the following:

Forward electricity and natural gas purchase contracts for retail customer load;
Renewable energy credits; and
Natural gas transportation contracts and storage agreements.
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Volumes Underlying Derivative Transactions
The following table summarizes the net notional volumes of our open derivative financial instruments accounted for at fair value by commodity. Positive amounts represent net buys while bracketed amounts are net sell transactions (in thousands):
Non-trading 
Commodity Notional September 30, 2020 December 31, 2019
Natural Gas MMBtu 2,484  6,130 
Natural Gas Basis MMBtu —  42 
Electricity MWh 2,391  6,015 
Trading
Commodity Notional September 30, 2020 December 31, 2019
Natural Gas MMBtu 134  204 

Gains (Losses) on Derivative Instruments
Gains (losses) on derivative instruments, net and current period settlements on derivative instruments were as follows for the periods indicated (in thousands):

Three Months Ended September 30,
   2020 2019
Gain on non-trading derivatives, net $ 2,550  $ 12,528 
Loss on trading derivatives, net (99) (221)
Gain on derivatives, net 2,451  12,307 
Current period settlements on non-trading derivatives $ 6,489  $ 12,764 
Current period settlements on trading derivatives (64) (43)
Total current period settlements on derivatives $ 6,425  $ 12,721 

Nine Months Ended September 30,
   2020 2019
Loss on non-trading derivatives, net $ (14,019) $ (42,741)
Gain on trading derivatives, net 51 
Loss on derivatives, net (14,015) (42,690)
Current period settlements on non-trading derivatives (1)
$ 33,153  $ 33,677 
Current period settlements on trading derivatives (156) (162)
Total current period settlements on derivatives $ 32,997  $ 33,515 
(1) Excludes settlements of $(0.3) million and $(0.9) million, respectively, for the nine months ended September 30, 2020 and 2019 related to power call options.
Gains (losses) on trading derivative instruments are recorded in net asset optimization revenues and gains (losses) on non-trading derivative instruments are recorded in retail cost of revenues on the condensed consolidated statements of operations.
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Fair Value of Derivative Instruments
The following tables summarize the fair value and offsetting amounts of our derivative instruments by counterparty and collateral received or paid (in thousands):
  
September 30, 2020
Description Gross Assets Gross
Amounts
Offset
Net Assets Cash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives $ 3,747  $ (2,859) $ 888  $ (182) $ 706 
Trading commodity derivatives 87  (32) 55  —  55 
Total Current Derivative Assets 3,834  (2,891) 943  (182) 761 
Non-trading commodity derivatives 255  (180) 75  —  75 
Trading commodity derivatives —  —  —  —  — 
Total Non-current Derivative Assets 255  (180) 75  —  75 
Total Derivative Assets $ 4,089  $ (3,071) $ 1,018  $ (182) $ 836 
September 30, 2020
Description Gross 
Liabilities
Gross
Amounts
Offset
Net
Liabilities
Cash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives $ (8,598) $ 5,204  $ (3,394) $ 21  $ (3,373)
Trading commodity derivatives (32) —  (32) —  (32)
Total Current Derivative Liabilities (8,630) 5,204  (3,426) 21  (3,405)
Non-trading commodity derivatives (501) 42  (459) —  (459)
Trading commodity derivatives —  —  —  —  — 
Total Non-current Derivative Liabilities (501) 42  (459) —  (459)
Total Derivative Liabilities $ (9,131) $ 5,246  $ (3,885) $ 21  $ (3,864)
  
December 31, 2019
Description Gross Assets Gross
Amounts
Offset
Net Assets Cash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives $ 570  $ (275) $ 295  $ —  $ 295 
Trading commodity derivatives 170  (1) 169  —  169 
Total Current Derivative Assets 740  (276) 464  —  464 
Non-trading commodity derivatives 333  (227) 106  —  106 
Trading commodity derivatives —  —  —  —  — 
Total Non-current Derivative Assets 333  (227) 106  —  106 
Total Derivative Assets $ 1,073  $ (503) $ 570  $   $ 570 
December 31, 2019
Description Gross 
Liabilities
Gross
Amounts
Offset
Net
Liabilities
Cash
Collateral
Offset
Net Amount
Presented
Non-trading commodity derivatives $ (34,434) $ 12,859  $ (21,575) $ 1,632  $ (19,943)
Trading commodity derivatives (194) 194  —  —  — 
Total Current Derivative Liabilities (34,628) 13,053  (21,575) 1,632  (19,943)
Non-trading commodity derivatives (1,951) 1,422  (529) 34  (495)
Trading commodity derivatives —  —  —  —  — 
Total Non-current Derivative Liabilities (1,951) 1,422  (529) 34  (495)
Total Derivative Liabilities $ (36,579) $ 14,475  $ (22,104) $ 1,666  $ (20,438)
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7. Property and Equipment
Property and equipment consist of the following (in thousands):
Estimated useful
lives (years)
September 30, 2020 December 31, 2019
Information technology
2 – 5
$ 23,229  $ 22,005 
Furniture and fixtures
2 – 5
1,802  1,802 
Total 25,031  23,807 
Accumulated depreciation (22,164) (20,540)
Property and equipment—net $ 2,867  $ 3,267 
Information technology assets include software and consultant time used in the application, development and implementation of various systems including customer billing and resource management systems. As of each of September 30, 2020 and December 31, 2019, information technology includes $0.5 million and $0.6 million, respectively, of costs associated with assets not yet placed into service.
Depreciation expense recorded in the condensed consolidated statements of operations was $0.4 million and $0.6 million, respectively, for the three months ended September 30, 2020 and 2019 and $1.6 million and $1.8 million for the nine months ended September 30, 2020 and 2019, respectively.
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8. Intangible Assets
Goodwill, customer relationships and trademarks consist of the following amounts (in thousands):
September 30, 2020 December 31, 2019
Goodwill $ 120,343  $ 120,343 
Customer relationships—Acquired
Cost $ 64,083  $ 64,083 
Accumulated amortization (47,300) (40,231)
Customer relationshipsAcquired
$ 16,783  $ 23,852 
Customer relationships—Other
Cost $ 17,056  $ 17,056 
Accumulated amortization (13,046) (9,534)
Customer relationshipsOther, net
$ 4,010  $ 7,522 
Trademarks
Cost $ 7,570  $ 8,502 
Accumulated amortization (2,694) (2,794)
Trademarks, net $ 4,876  $ 5,708 

Changes in goodwill, customer relationships (including non-compete agreements) and trademarks consisted of the following (in thousands):
Goodwill
Customer Relationships Acquired
Customer Relationships Other
Trademarks
Balance at December 31, 2019 $ 120,343  $ 23,852  $ 7,522  $ 5,708 
Additions —  —  —  — 
Amortization —  (7,069) (3,512) (832)
Balance at September 30, 2020 $ 120,343  $ 16,783  $ 4,010  $ 4,876 

Estimated future amortization expense for customer relationships and trademarks at September 30, 2020 is as follows (in thousands):
Year ending December 31,
2020 (remaining three months) $ 3,304 
2021 13,142 
2022 6,194 
2023 605 
2024 404 
> 5 years 2,020 
Total $ 25,669 
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9. Debt
Debt consists of the following amounts as of September 30, 2020 and December 31, 2019 (in thousands):
September 30, 2020 December 31, 2019
Long-term debt:
  Senior Credit Facility (1) (2)
$ 100,000  $ 123,000 
Total long-term debt 100,000  123,000 
Total debt $ 100,000  $ 123,000 
(1) As of September 30, 2020 and December 31, 2019, the weighted average interest rate on the Senior Credit Facility was 3.75% and 4.71%, respectively.
(2) As of September 30, 2020 and December 31, 2019, we had $31.8 million and $37.4 million in letters of credit issued, respectively.

Capitalized financing costs associated with our Senior Credit Facility were $1.8 million and $1.3 million as of September 30, 2020 and December 31, 2019, respectively. Of these amounts, $1.0 million and $0.9 million are recorded in other current assets, and $0.8 million and $0.4 million are recorded in other non-current assets in the condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019, respectively.
Interest expense consists of the following components for the periods indicated (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Senior Credit Facility $ 477  $ 1,120  $ 1,904  $ 3,741 
Verde promissory note —  —  —  230 
Letters of credit fees and commitment fees 244  395  1,073  1,253 
Amortization of deferred financing costs
476  497  966  1,002 
Other
290  162  290  166