TORONTO, ONTARIO--(Marketwired - Nov. 12, 2015) - Just Energy Group, Inc. JEJE, an energy management solutions provider specializing in electricity, natural gas, solar and green energy, today announced results for its second quarter fiscal 2016.
Key Fiscal 2016 Second Quarter Highlights:
-- Sales of $1,087.3 million for the second quarter of fiscal 2016, an
increase of 18% from $918.3 million in the second quarter of fiscal
2015.
-- Gross Margin of $167.2 million an increase of 26% year over year, driven
by the successful implementation of a margin per customer improvement
initiative.
-- Base EBITDA of $45.7 million, an increase of 44% year over year.
-- Payout ratio on Base Funds from continuing operations was 50% for the
second quarter, a significant improvement from 78% one year ago as a
Base Funds from continuing operations increased by 59% year over year to
$37.8 million.
-- Cash and cash equivalents were $88.6 million as of September 30, 2015,
an increase of 197% from $29.8 million reported in the same quarter a
year ago.
-- During the quarter, the Company announced the successful renegotiation
of its credit facility, resulting in an increase of its line of credit
to $277.5 million from $210.0 million. The credit facility was also
extended for an additional three years through September 1, 2018 under
favorable terms. No cash was withdrawn on the facility as of September
30, 2015.
-- Long-term debt as of September 30, 2015 was $685.5 million, a decrease
of 16% compared to $811.8 million as of September 30, 2014. Book value
net debt was under 3.0x for the trailing 12 month Base EBITDA,
significantly improved from 4.3x just one year ago.
-- Gross customer additions for the second quarter of fiscal 2016 were
290,000, a decrease of 18% compared to 354,000 customers added in the
second quarter of fiscal 2015. Net additions were 4,000 for the second
quarter of fiscal 2016, compared with 67,000 net customer additions in
the second quarter of fiscal 2015.
-- Company reaffirms fiscal 2016 Base EBITDA guidance range of $193 million
to $203 million. Guidance equates to a 20% year-over-year increase when
adjusted for the change in classification of customer acquisition costs
in fiscal 2016.
Financial highlights
For the three months ended September 30
(thousands of dollars, except where indicated and per share amounts)
% increase
Fiscal 2016 (decrease) Fiscal 2015
------------------------------------------
Sales $1,087,256 18% $918,260
Gross margin 167,155 26% 132,515
Administrative expenses 40,294 5% 38,246
Selling and marketing expenses 65,248 23% 53,088
Finance costs 17,641 (6)% 18,700
Loss from continuing operations(1) (88,258) NMF(2) (94,255)
Loss from discontinued operations - NMF(2) (40,901)
Loss(1) (88,258) NMF(2) (135,156)
Loss per share from continuing
operations available to
shareholders - basic (0.62) (0.67)
Loss per share from continuing
operations available to
shareholders - diluted (0.62) (0.67)
Dividends/distributions 18,701 -- 18,622
Base EBITDA 45,685 44% 31,734
Base Funds from operations 37,775 59% 23,756
Payout ratio on Base Funds from
operations 50% 78%
For the six months ended September 30
(thousands of dollars, except where indicated and per share amounts)
% increase
Fiscal 2016 (decrease) Fiscal 2015
------------------------------------------
Sales $2,020,271 16% $1,739,309
Gross margin 318,062 24% 255,905
Administrative expenses 77,892 9% 71,262
Selling and marketing expenses 128,029 18% 108,295
Finance costs 34,497 (8)% 37,471
Profit (loss) from continuing
operations(1) 41,413 NMF(2) (139,998)
Profit (loss) from discontinued
operations -- NMF(2) (34,072)
Profit (loss)(1) 41,413 NMF(2) (174,070)
Profit (loss) per share from
continuing operations available
to shareholders - basic 0.24 (0.98)
Profit (loss) per share from
continuing operations available
to shareholders - diluted 0.23 (0.98)
Dividends/distributions 37,400 (25)% 49,555
Base EBITDA 84,560 37% 61,920
Base Funds from operations 67,594 72% 39,346
Payout ratio on Base Funds from
operations 55% 126%
Embedded gross margin 1,957,000 11% 1,755,200
Total customers (RCEs) 4,613,000 -- 4,604,000
----------------------------------------------------------------------------
(1) Profit (loss) includes the impact of unrealized gains (losses), which
represents the mark to market of future commodity supply acquired to
cover future customer demand. The supply has been sold to customers at
fixed prices, minimizing any realizable impact of mark to market gains
and losses.
(2) Not a meaningful figure.
"During the second quarter our business continued to perform very well, delivering results that demonstrate the significantly improved profitability profile of the Company and highlight our ability to generate meaningful cash flow," commented Co-CEO Deb Merril. "Our profitability profile continued to improve as a result of our margin per customer improvement initiative. As a result, we were able to convert solid top-line sales growth of 18% during the period to a 44% increase in Base EBITDA. In addition to adding more profitable customers, our results were aided by the introduction of new products with incremental margins, increased fees and service income and lower realized commodity costs resulting from our effective hedging strategies."
"The improved profitability in the business drove significantly improved cash flow and increased Base Funds from continuing operations. We ended the quarter with $89 million in cash and cash equivalents, up from $79 million at the end of fiscal year 2015 and up from $30 million 12 months ago. We grew our cash position while also repurchasing $6.0 million of the $330 million convertible debenture under the normal course issuer bid program during the past year. Base Funds from continuing operations increased by 59% during the quarter and are up 72% during the first six months of the year compared to last year."
"We continue to operate from a greatly improved financial position, which we expect will continue to strengthen. Our financial flexibility, combined with our commitment to maintaining a capital light model, supports our ability to pursue our growth strategy, which focuses on new geographies, innovative products that meet customers' changing demands, and new energy management solutions that will continue to disrupt the traditional utility model."
"Our first-half performance puts us on track to achieve our full-year expectations, as we are now beginning our largest seasonal sales generating quarters," added Co-CEO James Lewis. "During the second quarter, gross margin increased 26% to $167 million with both the Consumer and Commercial divisions growing double-digits. We remain focused on increasing the gross margin per customer added for commercial customers and as a result, have been more selective in the margin added per customer. The net customer additions were down year over year, driven by our sales channel rationalization that better aligns with our pursuits of driving more profitable customer additions and a commitment to only accept new customers that meet our profitability profile. We were able to add 290,000 gross customers and 4,000 on a net basis during the quarter. On a sequential basis, net additions improved 81,000 from the first quarter of this fiscal year and we are confident net customer additions will increase next quarter as a result of the successful introduction of some of our new products that fit into our long-term strategy of offering more complete energy management solutions to our customers."
Second Quarter Operating Performance
Profitability
The quarter and year-to-date have demonstrated strong, performance-driven results. A sales increase of 18% year-over-year was driven by the foreign exchange impact on higher U.S. selling prices. Just Energy's continued focus on increasing gross margin through a more selective sales and renewal process has also resulted in increased levels of profitability across the business.
-- The Consumer division's sales increased by 20% while the Commercial
division's sales increased by 16% primarily as a result of the currency
conversion impact on U.S. dollar denominated sales.
-- Gross margin improved 26% due to higher realized margin per customer as
a result of more disciplined pricing strategies.
-- The Consumer division contributed an increase of 33% resulting from
higher margin per customer earned primarily on variable rate
products and JustGreen contributions.
-- The Commercial division increased by 10% resulting from higher sales
per customer earned as well as lower commodity costs experienced
through effective hedging strategies.
-- Just Energy is increasing margins on new customers while also removing
lower margin customers from the books, as illustrated in the table
below. Higher new customer margins reflect strong margins on new
products including bundled offerings.
ANNUAL GROSS MARGIN PER CUSTOMER
Fiscal Number of Fiscal Number of
2016 customers 2015 customers
------------------------------------------
Consumer customers added and
renewed $ 209 227,000 $ 188 275,000
Consumer customers lost 188 166,000 183 169,000
Commercial customers added and
renewed 84 249,000 80 322,000
Commercial customers lost 64 120,000 73 118,000
---------------------------------------
-- Administrative expenses for the quarter increased by $2.0 million, or
5%. The increase reflects higher costs associated with the customer
growth in the UK as well as higher costs associated with the exchange
rate on the U.S. denominated administrative costs.
-- Selling and marketing expenses for the quarter were up $12.2 million, or
23%, due to the impact of foreign exchange on the U.S.-based commission
expenses as well as the expenses becoming more directly correlated to
the growing portion of the customer base for which selling costs are
recorded over the life of the contract (commercial brokers and online
sales channels).
-- Bad debt expense was up 33% during the quarter, primarily driven by the
strong revenue increase in markets where Just Energy bears the
collection risk and the impact from foreign exchange. At 2.6% bad debt
expense as a percentage of revenue is well within management's targeted
range of 2% to 3%.
-- Finance costs of $17.6 million decreased 6% as a result of the reduction
in long-term debt associated with the sale of NHS in the prior year and
the repayment of long term debt of approximately $6.0 million through
the normal course issuer bid (NCIB) over the past year.
-- The impact of the decline in the value of the Canadian dollar versus the
U.S. dollar had a favorable impact of $5.3 million on Base EBITDA during
the second quarter.
-- Base EBITDA of $45.7 million for the second quarter increased 44%,
reflecting sharply higher margins, partially offset by higher operating
expenses.
-- Consumer division Base EBITDA of $29.5 million increased 75% and
Commercial division Base EBITDA of $16.2 million increased 9%,
driven by increased gross margin year over year as a result of
higher selling prices, lower commodity costs and the strengthening
of the U.S dollar.
Customer Aggregation
The company continues to focus on maintaining its profitable customers and ensuring that variable rate customers meet base profitability profiles even if this results in higher attrition. The margin per customer improvements in both the residential and commercial business are directly related to the ongoing commitment to Just Energy's margin improvement initiative. While competition is certain to come and go from the space over time, the Company believes it can continue to drive margin improvement that can be sustained over the long term as a result of the Company's innovative new products with more appeal and value for customers. This improved profitability per customer will add to the Company's future margins over and above any growth in the customer base.
July 1, Failed to
2015 Additions Attrition renew
----------------------------------------------------------------------------
Consumer Energy
Gas 699,000 39,000 (35,000) (13,000)
Electricity 1,233,000 100,000 (88,000) (30,000)
----------------------------------------------------------------------------
Total Consumer RCEs 1,932,000 139,000 (123,000) (43,000)
----------------------------------------------------------------------------
Commercial Energy
Gas 241,000 15,000 (1,000) (15,000)
Electricity 2,436,000 136,000 (31,000) (73,000)
----------------------------------------------------------------------------
Total Commercial
RCEs 2,677,000 151,000 (32,000) (88,000)
----------------------------------------------------------------------------
Total RCEs 4,609,000 290,000 (155,000) (131,000)
----------------------------------------------------------------------------
Sept. 30 % increase Sept. 30 % increase
2015 (decrease) 2014 (decrease)
----------------------------------------------------------------------------
Consumer Energy
Gas 690,000 (1)% 727,000 (5)%
Electricity 1,215,000 (1)% 1,220,000 --
----------------------------------------------------------------------------
Total Consumer RCEs 1,905,000 (1)% 1,947,000 (2)%
----------------------------------------------------------------------------
Commercial Energy
Gas 240,000 -- 208,000 15%
Electricity 2,468,000 1% 2,449,000 1%
----------------------------------------------------------------------------
Total Commercial
RCEs 2,708,000 1% 2,657,000 2%
----------------------------------------------------------------------------
Total RCEs 4,613,000 -- 4,604,000 --
----------------------------------------------------------------------------
-- Just Energy's total customer base is currently 4.6 million RCEs, a
slight increase from one year ago. The Consumer base includes 49,000
smart thermostats that are bundled with a commodity contract and tend to
have lower attrition and higher overall profitability. Further expansion
of smart-thermostats is a key driver for continued growth for Just
Energy.
-- Gross customer additions of 290,000 decreased 18% from the 354,000
customers added in the second quarter of fiscal 2015.
-- Consumer customer additions of 139,000 decreased from the 174,000
added in the prior year, primarily due to market conditions as the
commodity prices were lower and therefore, more competitive across
all markets.
-- Commercial customer additions of 151,000 decreased from the 180,000
gross customer additions in the prior year, primarily due to
competitiveness in pricing.
-- Sales channels continue to diversify, as gross customer additions were
generated through door-to-door sales (26%), commercial brokers (44%) and
online and other non-door-to-door sales channels (30%). This compares
favorably to the prior year when 22% of 354,000 customer additions were
generated using door-to-door sales, 46% from commercial brokers and 32%
from online and other sales channels.
-- Just Energy's geographical footprint continues to diversify outside of
North America. U.S., Canadian and U.K. segments accounted for 71%, 23%
and 6% of the customer base, respectively, in the second quarter of
fiscal 2016. This compares to U.S., Canadian and U.K. segments
represented 72%, 25% and 3% of the customer base, respectively, one year
ago.
-- Net customer additions of 4,000 in the second quarter were down from
67,000 net additions in the same period of last year, but improved
sequentially from the negative 77,000 net customer additions in the
first quarter of this fiscal year.
-- The combined trailing 12 month attrition rate of 17% increased two
percentage points from 15% one year ago.
-- Consumer attrition rates remained consistent at 27% compared to the
prior year, which includes the impact from higher customer defaults
in markets where Just Energy bears collection risk.
-- Commercial attrition rates increased four percentage points to 10%
compared to the prior year, primarily due to loss of short term
variable rate customers, increased competition as the Company
continues to focus on maintaining its profitable customers and
ensuring that variable rate customers meet base profitability
profiles even if this results in higher attrition.
-- The trailing 12 month renewal rate of 64% was down four percentage
points from 68% one year ago.
-- Consumer renewal rate showed an improvement of one percentage point
to 76%. Commercial renewal rate decreased by five percentage points
to 59% due to very competitive markets for Commercial renewals with
competitors pricing aggressively and Just Energy's maintaining its
focus on average customer profitability rather than pursuing low
margin growth.
Balance Sheet & Liquidity
The strong, performance-driven results are generating solid cash flows and providing the Company the financial flexibility to pursue aggressive debt reductions. As of September 30, 2015 Just Energy's book value net debt was 2.96x the trailing 12 month Base EBITDA, significantly improved from 4.33x just one year ago.
-- Cash increased $9.8 million, or 12%, to $88.6 million since March 31,
2015 despite the fiscal second quarter being a challenging quarter for
seasonal working capital.
-- During the quarter, Just Energy announced the successful renegotiation
of its credit facility, resulting in an increase of its line to $277.5
million, compared with the previous availability of $210 million. The
extension of the credit facility was for an additional three years until
September 1, 2018.
-- Long-term debt (excluding the current portion) of $685.5 million as of
September 30, 2015 decreased 16%, over the last year, but has increased
1% since fiscal year-end due to the foreign currency impact on the U.S-
based $150m convertible bonds.
-- Under the NCIB program, Just Energy repurchased $3.3 million of the $330
million convertible debentures during the quarter. Life to date, the
company has repurchased $6.0 million of the instrument.
-- Base Funds from continuing operations for the quarter were $37.8
million, an increase of 59% over last year, driven by the 44% increase
in Base EBITDA as well as a 6% decrease in finance costs. For the six
months ended September 30, 2015, Base FFO was $67.6 million, an increase
of 72% from the prior comparable period where Base FFO was $39.3
million.
-- Dividends/distributions paid were $18.7 million, the same as the prior
comparable period based on an annual dividend rate of $0.50 per share
effective July 1, 2014.
-- The payout ratio on Base Funds from continuing operations was 50% for
the three months ended September 30, 2015, compared to 78% in the prior
comparable quarter. For the six months ended September 30, 2015, the
payout ratio was 55% compared with 126% in the prior comparable period.
Outlook
Management has reaffirmed previously provide the guidance of $193 million to $203 million of Base EBITDA for full year fiscal 2016, resulting in an expected double-digit growth over the prior year. This includes approximately $20 million of incremental deductions in Base EBITDA related to the recently implemented change to its commercial commission terms. When adjusted for the $20 million effect from the change in classification, year-over-year Base EBITDA is expected to increase 20% in fiscal 2016. Just Energy expects to offset this headwind with continued strong gross margin performance as evidenced by the year-to-date results of fiscal 2016. In fiscal year 2017, Just Energy expects to include incremental deductions in Base EBITDA of approximately $40 million of prepaid commercial commissions, which would previously have been included as amortization within the selling and marketing expense.
The Company believes net customer additions will increase in the third fiscal quarter and this improvement will become more evident longer-term as focus shifts from the margin improvement initiative to new initiatives designed to better leverage the Company's sales and deploy strategies to improve renewal and attrition rates.
Just Energy's solar program continues its initial pilot phases in California and New York, with the volume of customers signed during this initial pilot resulting in higher than expected profit. Based on the success of Just Energy's pilot launch, operations will continue to grow with further expansion in California and the Northeast U.S. Just Energy will continue its partnership with Clean Power Finance, which will be one of the largest providers of third-party residential solar financing and loans in the U.S upon completing its merger announced in July to Elevate Power.
Earnings Call
The Company will host a conference call and live webcast to review the second quarter results beginning at 2:00 p.m. ET on Thursday, November 12, 2015 followed by a question and answer period. Rebecca MacDonald, Executive Chair, President & Co-Chief Executive Officers James Lewis and Deb Merril and Chief Financial Officer Pat McCullough will participate on the call.
Just Energy Conference Call and Webcast
-- Thursday, November 12, 2015
-- 2:00 p.m. ET
Those who wish to participate in the conference call may do so by dialing 1-866-229-4144 and entering pass code 5662147#. The call will also be webcast live over the internet at the following link:
http://event.onlineseminarsolutions.com/r.htm?e=1083712&s=1&k=893BEA27758523E04231307FBD6A9F66
About Just Energy Group Inc.
Established in 1997, Just Energy JEJE is an energy management solutions provider specializing in electricity, natural gas, solar and green energy. With offices located across the United States, Canada, and the United Kingdom, Just Energy serves close to two million residential and commercial customers. The company offers a wide range of energy products and home energy management services including long-term fixed-price, variable price, and flat bill programs, smart thermostats, and residential solar panel installations. Just Energy Group Inc. is the parent company of Amigo Energy, Commerce Energy, Green Star Energy, Hudson Energy, JE Solar, Tara Energy and TerraPass. Visit justenergygroup.com to learn more.
FORWARD-LOOKING STATEMENTS
Just Energy's press releases may contain forward-looking statements including statements pertaining to customer revenues and margins, customer additions and renewals, customer attrition, customer consumption levels, general and administrative expenses, dividends, distributable cash and treatment under governmental regulatory regimes. These statements are based on current expectations that involve a number of risks and uncertainties which could cause actual results to differ from those anticipated. These risks include, but are not limited to levels of customer natural gas and electricity consumption, rates of customer additions and renewals, rates of customer attrition, fluctuations in natural gas and electricity prices, changes in regulatory regimes and decisions by regulatory authorities, competition and dependence on certain suppliers. Additional information on these and other factors that could affect Just Energy's operations, financial results or dividend levels are included in Just Energy's annual information form and other reports on file with Canadian securities regulatory authorities which can be accessed through the SEDAR website at www.sedar.com, on the U.S. Securities Exchange Commission's website at www.sec.gov or through Just Energy's website at www.justenergygroup.com.
Neither the Toronto Stock Exchange nor the New York Stock Exchange has approved nor disapproved of the information contained herein.
FOR FURTHER INFORMATION PLEASE CONTACT:
Pat McCullough
Chief Financial Officer
Just Energy
713-933-0895
pmccullough@justenergy.com
Michael Cummings
Investor Relations
Alpha IR
617-982-0475
michael.cummings@alpha-ir.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
Posted In: Press Releases
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in
