Enercare, Inc. CSUWF

TD

[retiredcf]

This is their preliminary response but given that it's a beat at both ends in addition to an increased dividend, I would expect them to raise their current $21 target when the follow-up report follows in the next couple of days. GLTA

Enercare Inc.

(ECI-T) C$19.10

Q4/16 First Look Event

• Enercare reported Q4/16 revenue of $293.2mm (up 107% y/y), versus our estimate of $288.2mm and consensus of $287.0mm.

• Acquisition Adjusted EBITDA for the quarter was $72.7mm (up 25% y/y), versus our estimate of $67.0mm and consensus of $69.5mm.

• The company announced a 4% increase in its dividend to $0.96/share (annualized), from $0.924/share previously.

  The company will host a conference call this morning at 10:00 a.m. ET (647-427-2311 or 1-866-521-4909).

  Impact: POSITIVE

• Results came in ahead of our expectations in what is considered a seasonally weaker period for the recently acquired Service Experts business, on the slightly higher than anticipated revenue, with expenses broadly in line with our forecast.

• The company's Home Services rental portfolio added 11,000 units in the quarter (up 10% y/y) versus 8,000 units lost to attrition (down 6% y/y), making Q4/16 the sixth consecutive quarter of net unit growth.

• In the sub-metering business, contracted units increased by 15% y/y in Q4/16, installed units increased by 6% y/y, and billable units increased by 13% y/y, with billable units still only representing ~50% of contracted units, continuing to offer material embedded growth for the segment.

• Service Experts began roll-out of the rental program for HVAC units and water heaters in Canada in October 2016 and completed the rollout in February 2017, with an initial rental mix of ~20% in Ontario and ~10% in Western Canada. The company also began a rental pilot program in two U.S. states in Q1/17 and expects to add two additional states in H1/17. We expect adoption of the rental program in these new areas to be slow, but believe that this roll-out will ultimately be incremental to earnings, given the higher DCF value of a rental versus a sale.

• Enercare continues to focus on driving organic growth, increasing its weighted average rental rate in Home Services by 3.1% in January 2017 and introducing new products and services including a financing plan and, in late December, an electrical protection plan pilot program. Management plans to continue investing in platforms for innovation and growth (including smart home products) in 2017 

[autofocus111]

Looks great thanks. Introduction of rental services in the USA market could be a nice driver going forward. Will be interesting to see how that expansion plan develops.