The Future of Power™

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The Future of Power™ THE FUTURE OF POWER ™ 2018 ANNUAL REPORT SparkPower_FINAL_V7_print.indd 1 2019-05-10 9:48:56 AM Customer Choice THE Sustainable FUTURE Reliable & Resilient OF POWER Cost-Effective IS Widely Distributed Changing 2 SPARK POWER SparkPower_FINAL_V7_print.indd 2 2019-05-10 9:48:56 AM CHAIRMAN’S MESSAGE TO SHAREHOLDERS Customer Choice DEAR FELLOW SHAREHOLDERS, On behalf of the Board of Directors I want to On going public, insider ownership of Spark welcome you all to the Spark Power group of Power was approximately 60% of the issued companies. and outstanding shares of the Company. We Sustainable believe that such high ownership on the part of In September 2018, Spark Power took an the board and management team represents a important step forward in our corporate journey powerful endorsement of our potential and will as we made the transition from private to support strong and lasting alignment with the public company, listing on the Toronto Stock interests of all shareholders. That said, over time Reliable & Resilient Exchange. We made the decision to go public we intend to further diversify our shareholder because we felt it was the best way to support base and reduce insider ownership to more the organization’s next phase of growth and modest levels, increasing our public float. to achieve our long-term vision of becoming the leading independent provider of integrated As a power solutions provider to industry, safety Cost-Effective power solutions across North America. must be a primary consideration. Additionally, the board has taken a careful look at how best Spark Power is committed to integrity and to compensate senior management, balancing ethical dealing in all we do and as a newly the need to generate profitable growth with Widely Distributed public company our first task was to establish the desire to prudently manage risk. We strong governance practices consistent with have established both short and longer-term the culture we have built. Six of Spark’s current compensation structures that, coupled with directors served on the Company’s Advisory sound execution against the broader strategy Board when it was private and bring significant are expected to support retention of key Changing public company experience to their new roles individuals, extension of Spark’s innovative and on the Board of Directors. In parallel with the youthful culture and translate into improving go-public transaction we welcomed two new financial performance. board members, both with extensive capital markets and board experience. The governance In closing, I want to say how proud and excited framework is now in place and we will continue we are to be a part of the Spark Power story. to refine it periodically in the future. We agreed to serve as directors of Spark Power because we understand both the challenges As a board we are also responsible for and the opportunities facing the broader power overseeing the development and execution sector and the Company. We feel that Spark of Spark Power’s long-term growth strategy. Power is uniquely well positioned to play a Collectively, the board has strong relationships leadership role in shaping the Future of Power™ and decades of entrepreneurial and operational and we look forward to making that a reality in experience in both the power and broader the quarters and years ahead. industrial sectors across North America, and together we look forward to contributing to the SINCERELY, creation of meaningful shareholder value over the longer term. Larry D. Taylor Chairman SPARK POWER 1 SparkPower_FINAL_V7_print.indd 1 2019-05-10 9:48:56 AM CO-CEO’S MESSAGE TO SHAREHOLDERS DEAR FELLOW SHAREHOLDERS, We founded Spark Power nearly 10 years their power infrastructure, or are trying to ago to capitalize on the Green Energy understand the impact of the fast-paced legislation introduced in Ontario in 2009. transition of the grid on their business, we Beyond the compelling initial opportunity want to be their first call. We believe the dual that emerging renewable technologies tailwinds of grid transition and advanced offered at the time, we felt that this was an manufacturing will be key drivers of Spark important development that would help Power’s growth for years to come. define the Future of Power™. Fast forward a decade and, as anticipated, today we find 2018 marked the start of another period an array of forces – technological, social, of transition for Spark Power, as we economic and political – fundamentally went public, listing on the Toronto Stock changing the way power is generated, Exchange. After considering our options, delivered and consumed. we felt this was the best way to build the Company while maintaining meaningful Over that same period Spark Power control of our overall strategic direction as has also evolved, transitioning from a we embark on our next phase of growth. In renewables development office to a fully parallel with the go-public transaction, we integrated and independent power solutions also consolidated our secured debt facilities provider serving industrial, commercial and under a single lender, accessing a $90 million institutional users of power across North funding package from Bank of Montreal America. As the pace of transition away that includes a yet undrawn $25 million from the traditional grid accelerates, we Acquisition Facility. In combination, our have built Spark with a “customer first” public listing and debt facilities offer us real mentality focused on helping industry choice and flexibility in how to fund growth. manage their critical power infrastructure This is especially important as we deliver and the transition to the Grid of the Future. on a strategy that balances sound organic Industrial-scale consumers of electricity are growth with selective strategic acquisitions. increasingly demanding more sustainable, more reliable, higher quality (clean) and We executed well on this strategy in 2018, cost-effective sources of power, especially generating organic growth of 17% over the as they incorporate advanced manufacturing prior year, while closing three strategic technologies including robotics, automated acquisitions in rapid succession mid-year processing and materials handling into that contributed $25.8 million to our top- their operations. We enable that by offering line. Organic growth was supported by solutions ranging from technical services and new branch openings, as well as greater power equipment to power advisory and penetration with existing customers and sustainability consulting. When customers the signing of new ones. In July 2018 we need to plan, design, build or maintain announced the acquisitions of two New 2 SPARK POWER SparkPower_FINAL_V7_print.indd 2 2019-05-10 9:48:56 AM CO-CEO’S MESSAGE TO SHAREHOLDERS Electric branches in California, establishing Looking ahead, we want to reiterate our a presence in the western U.S.; Orbis sense of excitement at the opportunity Engineering in Edmonton, AB, adding before us as we work to execute our high voltage engineering capabilities and ambitious growth strategy and take a a presence in western Canada with further leadership role in shaping the path of the offices in Calgary, AB, Vancouver, BC, and power industry. To that end, we recently Saskatoon, SK; and Bullfrog Power, the hosted our inaugural Future of Power™ leading green energy provider in Canada event in Toronto on April 9th, 2019 at the that will serve as the foundation for our Evergreen Brick Works. The event brought power advisory and sustainability business together visionaries, innovators, disruptors, going forward. OEMs and, most importantly, the major users of power – the customer, together As a company, our focus remains on for meaningful conversations on a host of sustainable and profitable growth. One of power-related topics. our core differentiators is that we prioritize mandates that yield a steady stream of In closing, we want to welcome our new high-value-add, re-occurring work over shareholders and thank them for sharing often lower margin large individual projects. our vision. We also want to thank our Spread across a blue-chip base of more than board for their ongoing efforts and wise 6,500 customers, this provides a very strong counsel, which will be invaluable as we foundation from which to grow. For the full move forward. Finally, we want to recognize fiscal year, our revenue increased 50% to our employees who invest alongside us $120 million and Adjusted EBITDA increased through our Employee Stock Ownership $5.2 million, or 33%, to $20.5 million. Pro- Plan. At Spark, we have diligently worked to forma Revenue was $146.5 million and Pro- establish a high-energy, innovation-focused forma Adjusted EBITDA was $25.4 million, and youthful culture. 2018 was an incredibly in-line with our $25.0 million guidance. In busy year and all we accomplished was the the year ahead we are working to duplicate direct result of an immense amount of hard this strong performance by opening multiple work on the part of our growing team of new branches across North America as we more than 750 employees. The future looks look to penetrate new geographies and bright and we are confident that we have the serve both existing and new customers. right strategy and team in place to achieve We also continue to review a pipeline of our long-term vision of becoming the potential acquisition opportunities with a leading independent provider of integrated focus on adding new customers, establishing power solutions to industrial, commercial, a presence
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