/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE
SERVICES/
- Higher Gross Margins and Continued Customer Growth -
TORONTO, Aug. 7, 2013 /CNW/ - Crius Energy Trust (TSX: KWH.UN) ("Crius Energy" or the "Trust"), today announced its financial results
for the three-month period ended June 30, 2013. The Trust commenced
operations on November 13, 2012 with the acquisition of a 26.8%
ownership interest in Crius Energy, LLC (the "Company") by the Trust's
wholly-owned subsidiary. All figures in U.S. dollars unless otherwise
noted.
"The second quarter was highlighted by improved gross margin performance
and continued organic growth in our customer base helped by the
continued success of Viridian and the ramping up of our FTR Energy
Services brand," said Michael Fallquist, President and CEO of Crius
Energy Trust. "We were pleased with the improved gross margin
performance in the period, particularly in April and May, which
resulted in good financial results considering the operational
challenges experienced and impact of seasonality on energy usage.
Furthermore, our improved balance sheet will help to create more
opportunities to invest in organic customer growth, strategic
initiatives and positions us for acquisition opportunities in a market
ready for consolidation.
"We strengthened our management team with the addition of two highly
experienced executives--Chaitu Parikh in the position of Chief
Operating Officer and Seth Zuckerman as Senior Vice President of
Finance—who are charged with streamlining operations and helping
position the Company for long-term growth to support distributions.
We believe attracting top industry talent combined with our continued
success validates us as a market leader in the retail energy industry.
Our unique go-to-market strategy, through a family of brands approach,
is paramount to our success and will continue to differentiate us in
the industry going forward."
Q2 2013 Financial and Operational Highlights
-
Residential customer equivalents ("RCEs") totaled 595,899 at the end of
the second quarter, up 2.2% quarter-over-quarter and 20.2%
year-over-year
-
Sold 1.1 million MWh of electricity and 0.7 million MMBtu of natural gas
-
Revenue of $113.9 million
-
Gross margin of $27.6 million
-
Gross margin as a percentage of revenue of 24.2%
-
Adjusted EBITDA of $10.1 million, which accounted for 8.9% of revenue
-
Total cash availability of $32.1 million, up from $28.2 million in the
prior quarter, consisting of $18.5 million of cash, no long-term debt,
and availability on the working capital line of credit with Macquarie
Energy of $13.6 million as of June 30, 2013
-
Three-year extension of the exclusive marketing relationship with
Cincinnati Bell Inc. (NYSE:CBB) to continue to market natural gas and
electricity through the Cincinnati Bell Energy brand
-
Appointed Seth Zuckerman as a Senior Vice President of Finance. Mr.
Zuckerman has over 15 years of experience in the retail energy
industry, serving as the Chief Financial Officer of several energy
retailers including Gateway Energy Services and Your Energy
Highlights Subsequent to Quarter-End
-
Appointed Chaitu Parikh to the position of Chief Operating Officer. Mr.
Parikh has more than 16 years of experience in the retail energy
industry, most recently serving as CEO/President of MXEnergy
-
Launched Viridian Energy natural gas products in select markets in
Maryland, Virginia and the District of Columbia
-
Expanded the reach of the Public Power electricity brand in
Pennsylvania, entering three new utility service areas
-
FairPoint Energy celebrated its first anniversary of offering
electricity products in Maine and New Hampshire. The brand performed
above expectations by achieving a penetration rate well in excess of 5%
of FairPoint Communications' eligible customer base in the first year
Review of Financial Results
Revenue for the quarter ending June 30, 2013 was $113.9 million, and was
driven by robust customer growth in the first half of the year and
higher retail rates.
Revenue from electricity sales during the period was $108.6 million
based on volume of 1,132,102 MWh, accounting for 95.4% of total
revenue. Revenue from natural gas sales was $4.3 million based on
volume of 719,216 MMbtu, accounting for 3.7% of total revenue. Fee
revenue consists of sign-up fees and other monthly fees received from
independent contractors in the network marketing channel. Fee revenue
for the period was $1.0 million, accounting for 0.9% of total revenue.
Gross margin for the period was $27.6 million, representing 24.2% of
revenue. Monthly gross margins were 24.3% in April, 26.9% in May and
22.1% in June. Gross margins returned to more typical levels during the
period, although the June gross margin percentage was lower than
expected due to hedging losses resulting from lower-than-forecasted
electricity usage due to unusually cool weather and lower wholesale
prices in the month. Management's ability to limit future volatility
in earnings was enhanced by the first-quarter addition of a new
executive-level position charged with gross margin realization,
including responsibility for price forecasting and energy procurement.
Gross margin realization also benefitted from input from a third-party
provider of energy forecasting services. Management expects the Company
to realize the full impact of these additions to its forecasting
capacity in the third quarter of 2013.
Adjusted EBITDA for the period was $10.1 million, or 8.9% of revenue.
Adjusted EBITDA was negatively impacted by an estimated $0.9 million
due to lower-than-normal electricity volumes in June, $0.9 million as a
result of customer rate increases not implemented as part of the
transition of billing systems in April 2013, and $1.9 million related
to non-recurring expenses stemming from the investment in the
integration of pre-IPO legacy IT platforms. This integration has taken
longer than anticipated, and is expected to continue into the third
quarter of the year. However, management is confident this
non-recurring IT investment will generate cost savings, streamline
processes and promote long-term organic growth.
The Company's balance sheet improved in the period with total cash
availability increasing to $32.1 million. The total cash availability
consists of $18.5 million in cash, no long-term debt and availability
of $13.6 million under the Company's working capital facility.
The Company continued to grow its customer base in the second quarter,
increasing RCEs by 2.2% over the first quarter and by 20.2% on a
year-over-year basis. Overall customer growth was dampened by
higher-than-typical attrition driven primarily by the higher rates
charged during the period at the Public Power brand, which is marketed
through traditional door-to-door and telemarketing channels.
Management made meaningful progress in ramping up the FTR Energy
Services brand, which enrolled over 2,000 customers during the quarter
and is now licensed to enroll customers in New York, Ohio, Illinois and
Indiana. The Company also completed its first year of marketing under
the FairPoint Energy brand, which is marketed through a partnership
agreement with FairPoint Communications (NYSE: FRP), in Maine and New
Hampshire. FairPoint Energy achieved customer penetration well in
excess of the 5% target of Fairpoint Communications' addressable
customer base during its first year of operations.
The Company's Viridian Energy brand added more than 35,000 customers and
3,800 independent contractors to its network marketing channel. The
second and third quarters are historically weaker periods for customer
and contractor additions for the network marketing industry due to the
summer season. Sales efforts for the network marketing channel will
ramp up again in September at the company's annual convention,
PowerUp!®, in Washington D.C. Management sees the higher-usage,
higher-retention Viridian marketing channel as a key source of
long-term revenue growth that will help support distributions in the
future.
The Trust's consolidated financial statements for the period ended June
30, 2013 and accompanying management's discussion and analysis ("MD&A")
have been filed with the securities regulators and are available via
SEDAR at www.sedar.com and are available on the Trust's website at www.criusenergytrust.ca.
Conference Call Notice
The Trust will hold a conference call to discuss its second quarter 2013
financial results today August 7, 2013 at 10:00 a.m. Eastern.
To access the conference call by telephone, dial 647-427-7450 or
1-888-231-8191. Please connect approximately 15 minutes prior to the
beginning of the call to ensure participation.
A live audio webcast of the conference call will be available at www.cnw.ca. Please connect at least 15 minutes prior to the conference call to
ensure adequate time for any software download that may be required to
join the webcast. The webcast will be archived at the above web site
for 30 days.
A taped rebroadcast will be available to listeners until 12 a.m. Eastern
on August 14, 2013. To access the rebroadcast, please dial 416-849-0833
or 1-855-859-2056 and enter passcode 22862548, followed by the number
sign.
About Crius Energy
Crius Energy has been established to provide investors with a stable and
consistent distribution-producing investment through the acquisition of
a 26.8% ownership interest in Crius Energy LLC (the "Company"). The
Company is one of the largest independent energy retailers operating in
the United States, with approximately 590,000 residential customer
equivalents. The Company serves residential and small to medium-size commercial
customers in the United States and markets its products through a
variety of sales channels and brand names. The Company currently sells
electricity in 11 states and the District of Columbia and natural gas
in seven states and the District of Columbia.
Crius Energy intends to qualify as a "mutual fund trust" under the Income Tax Act (Canada) (the "Tax Act"). The Trust will not be a "SIFT trust" (as
defined in the Tax Act), provided that the Trust complies at all times
with its investment restriction which precludes the Trust from holding
any "non-portfolio property" (as defined in the Tax Act). Material
information pertaining to Crius Energy may be found on www.sedar.com or www.criusenergytrust.ca.
Forward-Looking Statements
This news release contains forward-looking information that involves
substantial known and unknown risks and uncertainties, most of which
are beyond the control of Crius Energy, including, without limitation,
those listed under "Risk Factors" and "Forward-Looking Statements" in
Crius Energy's Annual Information Form dated March 28, 2013
(collectively, "forward-looking information"). Forward-looking
information in this news release includes, but is not limited to, Crius
Energy's objectives and status as a mutual fund trust and not a SIFT
trust, results of operations, financial position or cash flows,
customer revenues and margins, customer additions and renewals,
customer attrition, customer consumption levels, general and
administrative expenses, treatment under governmental regulatory
regimes, distributable cash and Crius Energy's expectations and
estimates regarding the payment of distributions to unit holders. Crius
Energy cautions investors of Crius Energy's securities about important
factors that could cause Crius Energy's actual results to differ
materially from those projected in any forward-looking statements
included in this news release. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives,
assumptions or future events or performance are not historical facts
and may be forward-looking and may involve estimates, assumptions and
uncertainties which could cause actual results or outcomes to differ
materially from those expressed in such forward-looking statements. No
assurance can be given that the expectations set out in this news
release will prove to be correct and accordingly, prospective investors
should not place undue reliance on these forward-looking statements.
These statements speak only as of the date of this news release and
Crius Energy does not assume any obligation to update or revise them to
reflect new events or circumstances.
SOURCE Crius Energy Trust
