OAKVILLE, ON / ACCESSWIRE / June 30, 2022 / Spark Power Group Inc. ("Spark Power" or the "Company") (TSX:SPG) is pleased to provide this update on management's continued efforts to aggressively execute on its business-wide integration and ongoing performance improvement actions to achieve targeted synergies and optimize financial performance.
Spark Power's positive momentum towards operational effectiveness, improving gross margin trends, safety performance and revenue growth continues with the final integration of all previously acquired companies under a consolidated One Spark operating model.
This "last-mile" integration will consolidate Spark Power's operating enterprise across all lines of business, fully unifying our go-to-market strategy across the organization, resulting in the unlocking of operational efficiencies in our management structure, simplifying business processes and eliminating complexity - ultimately providing for more enhanced service delivery to our valued customers. The integration of the Company's Canadian operations is expected to be complete in H2 2022, with U.S. operations to be fully integrated in early 2023.
"Organizational change is necessary to better position our business as the Trusted Partner in Power™ for our customers and achieve the Company's strategic vision," said Tom Duncan, Executive Vice President & COO, Spark Power Corp. "Our Senior Leadership Team is confident that we are moving in the right direction as we transform for effectiveness, enhanced collaboration and moving our teams closer to our customers."
The Company has been actively executing a comprehensive performance improvement program consisting of targeted initiatives to expand margins and optimize S,G&A. One such initiative includes the consolidation and closure of underperforming branches based on market density and profitability. To date, five branch locations have been closed with further markets under review.
The Company also continues to monitor the inflationary cost pressures in the market and refine its pricing approach to support higher margin realization.
Beyond near-term initiatives to improve performance, the Company continues to execute on its enterprise-wide systems integration - Project Darwin. This will bring all operating companies onto one single platform, including common processes and operating protocols. The expected benefits include improved customer experience, unlocking operational efficiencies both in the field as well as the back office, and a scalable platform to support the next stage of growth for the Company. The first go-live is scheduled for Q3, followed by a phased rollout to start 2023.
Based on the integration activities currently underway, and coupled with the ongoing performance improvement initiatives implemented through the first quarter, the Company estimates annualized S,G&A cost reductions in the range of $5.5 - $6.5M will have been effected as of the end of Q2 2022, including a reduction in headcount in the range of 17-20% and completion of the final stage of the previously announced founder transition.
"As we enter the third quarter, we are optimistic about the trajectory of all Spark Power's lines of business," said Richard Jackson, President & CEO, Spark Power Corp. "These important operational changes we are making, along with other initiatives such as the closure or consolidation of low-yielding branches, will improve the Company's profitability and liquidity position. We are building a stable and scalable operating platform and are highly focused on our targeted, growth-oriented markets, setting us up for the roll-out later this year of a revised three-year strategic plan that we are confident will deliver tremendous value for all stakeholders," added Jackson.
About Spark Power
Spark Power, a wholly owned subsidiary of Spark Power Group Inc. (TSX: SPG), is a leading independent provider of end-to-end electrical contracting, 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.
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 expected future reductions in S,G&A. They also include statements regarding demand for the Company's services, the Company's opportunities for future growth, margin realizations, future liquidity and other statements that are not historical fact. 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. The material risk to the forecast S,G&A reduction is timing of related headcount reductions. 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.
Investor and Regulatory Inquiries
Richard Perri, Executive Vice President & Chief Financial Officer
+1 (905) 829-3336
Bryan Sparks, Manager, Corporate Communications& Brand
+1 (905) 829-3336
SOURCE: Spark Power Group Inc.