Crius Energy Trust Reports Third Quarter 2013 Financial Results
- 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
Residential customer equivalents ("RCEs") totaled 610,459 at the end of
the third quarter, up 2.4% quarter-over-quarter and 21.1%
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.
Sold 1.5 million MWh of electricity and 0.4 million MMBtu of natural gas
Revenue of $145.6 million
Gross margin of $30.0 million, representing 20.6% of revenue
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:
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.
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
- 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.
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.
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 TrustFor further information:
Chief Executive Officer
Chief Financial Officer
(416) 815-0700 ext. 233