Crius Energy Trust Reports First Quarter 2014 Financial Results
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, May 14, 2014 /CNW/ - Crius Energy Trust (TSX: KWH.UN) ("Crius Energy" or the "Trust"), today announced its financial results for the three-month period ended March 31, 2014. All figures in U.S. dollars unless otherwise noted.
"The severe weather experienced across much of the U.S. in the first three months of 2014 had an industry-wide impact which caused multiple market participants to exit, either voluntarily or by defaulting on wholesale energy obligations," said Michael Fallquist, CEO of Crius Energy Trust. "Like many of our peers, we had a difficult quarter with negative earnings and a net loss in customers. However, while others have exited the market in these challenging times, we believe the market conditions have created tremendous opportunities for growth, both organically and through acquisition. Our financial strength, with more than $46 million of cash and availability, enables us to make investments that capitalize on the market opportunities.
"Subsequent to quarter-end, we completed an acquisition that mitigates the customer attrition in the first quarter, expanded our strategic partnership with Frontier Communications and launched a new solar brand to capture market share in the growing solar market. Together, we expect these initiatives will result in positive results in both the first half of the year and long-term."
Q1 2014 Highlights
- Sold 1.3 million MWh of electricity, 2.9 million MMBtu of natural gas and solar systems with total generation capacity of 1,760 KW compared to 1.3 million MWh of electricity and 1.7 million MMBtu of natural gas for the prior comparable period.
- Ended quarter with 587,532 electricity and natural gas customers, down from 615,373 as at December 31, 2013, representing a net loss of 27,841 customers, or -4.5% net quarter-over-quarter growth compared to net customer adds of 48,568 or 9.1% net quarter-over-quarter growth in the prior comparable period.
- Revenue of $177.6 million, compared to $119.0 million in the prior comparable period.
- Gross margin of $19.1 million, representing 10.7% of revenue compared to $20.9 million in the prior comparable period, representing 17.5% of revenue.
- Adjusted EBITDA of $(4.3) million, representing -2.4% of revenue compared to $5.5 million in the prior comparable period, representing 4.7% of revenue.
- Distributions paid in the quarter of $7.9 million compared to $11.5 million for the prior comparable period.
- Total cash and availability of $46.8 million, consisting of $15.3 million of cash and cash equivalents, no long-term debt and availability under the credit facility with Macquarie Energy of $31.5 million. This compares to $28.2 million in the prior comparable period, consisting of $24.6 million of cash and cash equivalents and availability under the credit facility with Macquarie Energy of $3.6 million.
- Expanded our working capital facility with Macquarie Energy LLC from $25.0 million to $60.0 million, with the base interest rate remaining unchanged at LIBOR plus 5.5%. By more than doubling the working capital available to our business, the expansion significantly improves the financial capacity of the Company and allows us to take advantage of organic and acquisitive opportunities that arise in the market while also supporting distributions to our unit holders.
Highlights Subsequent to Quarter-End
- Launched a new stand-alone solar brand, Citra Solar™, to focus on capturing value in the fast-growing solar sector and complement the company's portfolio of energy brands, product offerings and distribution channels. Citra Solar™ services are initially being offered through the company's strategic marketing partnership channel
- Executed the acquisition of a portfolio of approximately 40,000 electric and natural gas customers from Superior Plus Energy Services, a division of Superior Plus Corp. (TSX: SPB), for a purchase price of up to $120 per customer. The acquisition strengthens our geographic footprint in New York and Pennsylvania and furthers the ongoing diversification of our customer mix by increasing the company's commercial and fixed-price product customers. Pro-forma customer count, adjusting for the acquisition, is approximately 627,500 representing an increase of 2% over December 31, 2013.
Review of Financial Results
Revenue for the period ending March 31, 2014 was $177.6 million, a 49.2% increase from $119.0 reported in the first quarter of 2013.
Electricity revenue for the quarter ended March 31, 2014 was $151.1 million, representing an increase of 38.5% from $109.1 million for the quarter ended March 31, 2013, primarily as a result of 30.9% higher average retail rates per unit combined with the 5.8% increase in volume. Electricity revenues for the quarter ended March 31, 2014 accounted for 85% of total revenue representing a decrease from 91.7% for the quarter ended March 31, 2013.
Natural gas revenue for the quarter ended March 31, 2014 was $24.7 million representing an increase of 178.8% from $8.9 million for the quarter ended March 31, 2013, primarily as a result of 58.8% higher average retail rate per unit combined with 75.6% increase in volume. Natural gas revenues for the quarter ended March 31, 2014 accounted for 13.9% of total revenue representing an increase from 7.5% for the quarter ended March 31, 2013.
Fee revenue consisting of sign-up fees and other monthly fees received from independent contractors in the network marketing channel for the quarter ended March 31, 2014 was $0.9 million representing a decrease of 8.0% from $1.0 million for the quarter ended March 31, 2013, reflecting lower promotional enrolment fees offered. Fee revenue for the quarter ended March 31, 2014 accounted for 0.5% of total revenue representing a decrease from 0.8% for the quarter ended March 31, 2013.
Solar revenue of $0.9 million, accounting for 0.5% of total revenue; the launch of solar products was in September 2013, and as such, there are no revenues in the prior comparative period. Solar revenues in the quarter represented solar systems with total generation capacity of 1,760 KW compared to 1,816 KW in the year ending December 31, 2013 from the time of launch in late September 2013.
For the quarter ended March 31, 2014 gross margin was $19.1 million representing a decrease of 8.5% from $20.9 million for the quarter ended March 31, 2013. Gross margin for the quarter ended March 31, 2014 was 10.7% of total revenue representing a decrease from 17.5% for the quarter ended March 31, 2013.
Adjusted EBITDA for the first quarter of 2014 was -$4.3 million representing -2.4% of revenue compared to $5.5 million in the first quarter of 2013, representing 4.7% of revenue. Adjusted EBITDA was impacted by lower gross margins, which were the direct result of the record low temperatures experienced in the first quarter caused by the "polar vortex", which drove energy prices to record levels as a result of higher consumer demand and supply disruptions resulting from natural gas pipeline constraints and unexpected generation outages. The Company made a strategic choice to manage customer retail rate increases to reflect the incremental costs borne and to cap price increases to reasonable levels and apply the increases on a staggered basis such that cost recovery and migration to higher rates occur over time in order to mitigate customer attrition.
As of March 31, 2014, the Trust had total cash and availability of $46.8 million, consisting of $15.3 million of cash and cash equivalents, no long-term debt and availability under the credit facility with Macquarie Energy of $31.5 million which increased from $27.5 million as at December 31, 2013.
The Trust's consolidated financial statements for the period ended March 31, 2014 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 first quarter 2014 financial results today May 14, 2014 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. ET on May 21, 2014. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 30761057, followed by the number sign.
About Crius Energy
Crius Energy Trust was established to provide investors with a distribution-producing investment through the acquisition of a 26.8% ownership interest in Crius Energy. With more than 585,000 residential customer equivalents, Crius Energy is a comprehensive energy solutions partner that provides electricity, natural gas and solar products to residential and commercial customers. Crius Energy connects with energy customers through an innovative family-of-brands strategy and multi-channel marketing approach. This unique combination creates multiple access points to a broad suite of energy products and services that make it easier for consumers to make informed decisions about their energy needs. Crius Energy currently sells energy products in 19 states and the District of Columbia with plans to continue expanding its geographic reach.
Crius Energy Trust 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.
Caution Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of applicable Canadian securities laws, including (but not limited to) statements about the Board's belief that the Bid may represent a responsible investment of funds on hand. A statement is forward-looking when it uses what Crius knows and expects today to make a statement about the future. Forward-looking statements may include words such as anticipate, assumption, believe, could, expect, goal, guidance, intend, may, objective, outlook, plan, seek, should, strive, target and will. These statements relate to future events or future performance and reflect current assumptions, expectations and estimates of management regarding growth, results of operations, performance, business prospects and opportunities, Canadian economic environment and liability to attract and retain customers. Such forward-looking statements reflect current assumptions, expectations and estimates of management and are based on information currently available to Crius as at the date of this press release.
Forward-looking statements are subject to certain risks and uncertainties, and should not be read as guarantees of future performance or results and actual results may differ materially from the conclusion, forecast or projection stated in such forward-looking statements. These risks, uncertainties and other factors include but are 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 unitholders. Such assumptions, expectations, estimates, risks and uncertainties are discussed under "Risk Factors" and "Forward-Looking Statements" in Crius Energy Trust's Annual Information Form dated March 26, 2014. Consequently, we cannot guarantee that any forward-looking statements will materialize. Readers should not place any undue reliance on such forward-looking statements.
SOURCE Crius Energy TrustFor further information:
(416) 815-0700 ext. 290