- Continued Customer Growth and Expanded Product Offerings -
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE
SERVICES/
TORONTO, Nov. 14, 2013 /CNW/ - Crius Energy Trust (TSX: KWH.UN) ("Crius Energy" or the "Trust"), today announced its financial results
for the three-month period ended September 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 third quarter was highlighted by continued organic customer growth
and the expansion of our suite of energy products," said Michael
Fallquist, President and CEO of Crius Energy Trust. "We added customers
across our brands while reducing overall attrition and continuing to
diversify our business as we've nearly doubled our natural gas
customers since the beginning of the year. We believe our third-quarter
performance further validates our multi-channel marketing strategy
which experienced continued growth despite the traditionally slowest
quarter for the network marketing industry. Furthermore, and
importantly, we continue to have the financial resources available
which allow us to capitalize on our unique position to respond quickly
to market opportunities in our evolving industry, make investments in
our business that promote long-term organic growth, and pursue
accretive acquisitions.
"We are optimistic about our reseller agreement with SolarCity, which
was launched at our Viridian Energy brand's PowerUp! annual convention
in September, and is off to a great start. Partnering with the number
one full-service solar provider in the U.S. opens up a range of
opportunities for our company to expand into new markets and broaden
the range of products we offer to customers across our brands. Just as
importantly, this expansion of services is a demonstration of our
long-term vision of being a comprehensive energy solutions partner
providing a broad suite of energy products and services that make it
easier for consumers to make informed decisions that address their
energy needs."
Q3 2013 Financial and Operational Highlights
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Residential customer equivalents ("RCEs") totaled 610,459 at the end of
the third quarter, up 2.4% quarter-over-quarter and 21.1%
year-over-year.
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Adjusted EBITDA of $10.5 million, representing 7.2% of revenue and was
impacted by $5.0 million due to weather variation from historical norms
in July and August. Normalizing for weather impacts, Adjusted EBITDA
for the quarter would have been $15.5 million.
-
Distributions paid in the quarter of $9.0 million represent a payout
ratio of 100% measured on an Adjusted EBITDA less cash financing costs
and taxes basis.
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Sold 1.5 million MWh of electricity and 0.4 million MMBtu of natural gas
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Revenue of $145.6 million
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Gross margin of $30.0 million, representing 20.6% of revenue
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Total cash and availability of $33.9 million consisting of $16.8 million
of cash, no long-term debt and availability under the credit facility
with Macquarie Energy of $17.1 million as of September 30, 2013.
-
Expanded our product suite to include residential solar energy products
and services through a reseller agreement with SolarCity (NASDAQ:
SCTY), the number one full-service solar provider in the U.S. Crius
Energy is marketing SolarCity products and services initially through
its network marketing brand, Viridian Energy.
-
Expanded service offerings under multiple brands as Viridian Energy
started offering natural gas products in Maryland, Virginia and the
District of Columbia, FTR Energy Service started offering electricity
in Illinois and Public Power expanded into three new electric utility
service areas in Pennsylvania.
-
Strengthened the management team through the following appointments:
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Chaitu Parikh was appointed to the position of Chief Operating Officer.
Mr. Parikh has 16 years of experience in the retail energy industry,
most recently serving as CEO/President of MXEnergy.
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Meredith Berkich was promoted to the role of President of Viridian
Energy to support the continued growth of our network marketing
channel. Mrs. Berkich has more than 18 years of experience in the
direct selling industry on both the distributor and corporate side with
notable companies such as Princess House (a Colgate Palmolive Company)
and Univera. Subsequent to quarter end, Mrs. Berkich was appointed an
Officer of the Trust.
-
Cami Boehme was promoted to the newly created position of Chief Strategy
Officer. In her new role, Ms. Boehme will oversee strategic product
innovation and help plan the overall strategic direction of the
Company. Prior to her promotion, Ms. Boehme served as Senior
Vice-President Marketing and Brand Strategy for Crius Energy.
Highlights Subsequent to Quarter-End
-
Appointed Pradeep Tiwari to the position of Vice President of
Information Technology. Mr. Tiwari has nine years of experience in the
retail energy industry with energy retailers including MXEnergy and
Constellation.
-
Received electricity and natural gas licenses for Viridian Energy to
market in Ohio.
Review of Financial Results
Revenue for the third quarter was $145.6 million. Revenue was driven by
customer growth in the strategic marketing partnership and network
marketing channels and seasonally higher electricity volumes. The
Company grew its customer base in the third quarter, increasing RCEs by
2.4% over the second quarter to a total of 610,459, and by 21.1% on a
year-over-year basis.
Revenue from electricity sales during the third quarter was $142.4
million based on volume of 1,499,569 MWh, and accounted for 97.8% of
total revenue. Revenue from natural gas sales was $2.1 million based on
volume of 433,936 MMBtu, and accounted for 1.4% of total revenue. Fee
revenue consisting of sign-up fees and other monthly fees received from
independent contractors in the network marketing channel was $1.0
million, accounting for 0.7% of total revenue.
Gross margin for the period was $30.0 million, representing 20.6% of
revenue. Monthly gross margins were 19.4% in July, 16.4% in August and
27.9% in September. The gross margin percentages achieved in July and
August were lower than expected as a result of the impact of weather
variation from historical norms while September weather conditions
generally returned to normal which led to a materially higher gross
margin percentage.
Adjusted EBITDA for the period was $10.5 million, or 7.2% of revenue.
Adjusted EBITDA was impacted by $5.0 million due to weather variation
from historical norms, primarily in July and August, and the
corresponding hedge and real-time price impact. Normalizing for weather
impacts, Adjusted EBITDA for the quarter would have been $15.5 million.
The Company has cash and availability of $33.9 million as of September
30, 2013, which consisted of $16.8 million in cash, no long-term debt
and availability of $17.1 million under the Company's working capital
facility with Macquarie Energy.
Operational Review
The Company experienced continued growth in customer enrolments through
its strategic marketing partnership channel initial partners,
Cincinnati Bell (under the Cincinnati Bell Energy brand) and FairPoint
Communications (under the FairPoint Energy brand), and experienced an
increased contribution from its newest and largest partner, Frontier
Communications (under the FTR Energy Services brand), which had its
best customer acquisition quarter since launching last November. In
addition to customer growth in the channel, the Company launched
initiatives with each partner that further integrate its products and
services into the marketing and sales activities of its channel
partners, including: a pilot program to sell electricity and natural
gas products through three of Frontier Communications' inbound call
centers; a pilot program for the Cincinnati Bell Energy brand that will
utilize digital customer enrolment kiosks to be located in Cincinnati
Bell retail store locations; and, a trial digital marketing campaign
through its FairPoint Energy brand.
The Company's Viridian Energy brand added both customers and independent
contractors during the third quarter, which is the historically weaker
period for customer and contractor additions for the network marketing
industry. Sales efforts for the network marketing channel ramped up in
September at Viridian Energy's annual convention, PowerUp!®, in
Washington D.C. with the announcement of a reseller agreement with
SolarCity, the number one full-service solar provider in the U.S.
Management sees the higher-usage, higher-retention Viridian marketing
channel as a key source of long-term revenue growth, and the addition
of solar products and services will further promote long-term customer
relationships within the channel. In addition, Viridian Energy also
began offering natural gas products in select markets in Maryland,
Virginia and the District of Columbia during the period.
The Public Power brand expanded its market penetration in the quarter,
entering three new electric utility service areas in Pennsylvania, and
the Company has multiple initiatives underway to expand Public Power's
marketing program.
Customer attrition was lower in the quarter and represented the lowest
percentage attrition rate during the last twelve-month period.
Management expects the Company will benefit as more new customers are
originated through higher-retention strategic marketing partnerships
and the network marketing channels.
Financial Statements and MD&A
The Trust's consolidated financial statements for the period ended
September 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 third quarter 2013
financial results today, November 14, 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 November 21, 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 610,000 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, natural gas in
seven states and the District of Columbia and solar energy products and
services in six states.
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
