- First quarter of operations since IPO, highlighted by strong organic
customer growth -
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE
TORONTO, March 26, 2013 /CNW/ - Crius Energy Trust (TSX: KWH.UN) ("Crius Energy" or the "Trust"), today announced its audited financial results for the period from
establishment of the Trust to December 31, 2012. The Trust was
established on September 7, 2012 and 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 (the
"Company Interest Acquisition"). In this news release, references to
"Crius Energy" or the "Trust" include the Trust and its operating
subsidiaries. All figures in U.S. dollars unless otherwise noted.
"We were very pleased to have completed our IPO and begin trading on the
TSX as a publicly traded company during the fourth quarter," said
Michael Fallquist, President and CEO of Crius Energy Trust. "Our
organic customer growth continued to be strong during the period, which
we believe validates our industry unique market strategy, however,
those gains were not fully realized in our financial results as we
experienced a series of unusual weather and market related conditions
in November and December that impacted our results. Despite these
recent challenges, we continue to be encouraged by the market
opportunities, both organically and through acquisitions, that support
our business model and growth strategy."
FY2012 Operational and Financial Highlights
Completed initial public offering on November 13, 2012 for gross
proceeds of C$100 million through the issuance of 10 million trust
units at C$10.00 per unit and completed the Company Interest
Acquisition for approximately $89.7 million.
Residential customer equivalents totaled 534,564 at the end of the
fourth quarter, up from 504,225 at the end of the third quarter,
including 93,356 gross adds.1
Sold 676,480 MWh of electricity and 665,057 Mmbtu from the period of
November 13, 2012 to December 31, 2012.
Revenue of $56.3 million for the period from inception to December 31,
Gross margin of $11.9 million or 21.1% of revenue for the period from
inception to December 31, 2012.
Adjusted EBITDA of $3.5 million or 6.2% of revenue for the period from
inception to December 31, 2012.
Cash balance of $30.3 million and no long term debt as of December 31,
Reflects customer aggregation data for the Company for the period from
January 1, 2012 to December 31, 2012 which includes customer data for
the Company, Regional Energy Holdings, Inc., Public Power, LLC and
their wholly-owned subsidiaries prior to the Acquisition of the Company
Interest by the Trust on November 13, 2012.
Highlights Subsequent to Year-End
Paid its first distribution to unitholders on January 15, 2013 for the
initial period from November 13, 2012 to December 31, 2012 in the
amount of C$0.1326 per unit and paid subsequent monthly distributions
of C$0.0833 per unit on February 15 and March 15, 2013.
In February 2013, the Company, through its wholly-owned subsidiary
FairPoint Energy LLC, entered into an agreement with PNE Energy Supply
LLC to acquire a portfolio of residential and small commercial customer
accounts in New Hampshire.
Review of Financial Results
The Trust was established on September 7, 2012 and completed the
Offering and the Acquisition of the Company Interest on November 13,
2012. Accordingly, the fourth quarter of 2012 reflects operations of
the Company from the close of the Acquisition of the Company Interest
on November 13, 2012 through December 31, 2012.
Crius Energy's results for the period ending December 31, 2012 were
impacted by unusual weather conditions that affected the eastern
seaboard of the United States and resulted in an increase in wholesale
electricity prices and volatility. Those weather conditions included
Hurricane Sandy, the largest Atlantic hurricane on record, and a
November 7th Nor'easter snow storm which brought extreme cold temperature to the
In response to market conditions, and consistent with the Company's
variable rate customer contracts, Management increased retail rates
charged to its variable rate customers in December 2012. However, the
retail rate increases did not fully recover the lost margin in the
fourth quarter as the result of the time lag to implement price changes
with the local utility and other management considerations including
product competitiveness, seasonality and customer attrition.
For the period ending December 31, 2012 revenue was $56.3 million.
Revenue from electricity sales during the period was $53.0 million
based on volumes of 676,480 MWh, accounting for 94.1% of total
revenue. Revenue from natural gas sales during the period ending
December 31, 2012, was $2.8 million based on volumes of 665,057 Mmbtu,
and accounted for 5.0% of total revenue. Fee revenue consists of
sign-up fees and other monthly fees received from independent
contractors in the network marketing channel. For the period ending
December 31, 2012, fee revenue was $0.5 million and accounted for 0.9%
of total revenue.
The Company has a Risk Management Policy, which is continually reviewed,
that governs its risk management operations. The Company's primary
risk management objective is to maintain a volumetric and price neutral
position in energy markets. The Company maintains a forward hedging
program for all fixed price products. The Company's hedging strategy
is to match exposures with offsetting physical and financial hedges in
each delivery month and location whenever possible. The Company
forecasts the load for each state in which the Company serves
customers, basing its forecasts on load profiles for applicable
customer classifications, number of meters and seasonal weather
In accordance with the Risk Management Policy, 90% to 100% of the fixed
price customer load is hedged. In accordance with the same Policy, the
variable month to month customer load may or may not be hedged.
Wholesale hedging strategies for month to month customer load and
retail customer prices are determined by Management at month end for
the following month, and are revisited during the month. Among other
things, Management relies on historical information and experience to
make hedging decisions for the variable load.
Management is encouraged by the customer growth across all marketing
channels in the fourth quarter. The customer growth, highlighted by
the Viridian Energy and FairPoint Energy brands, continued into the
first quarter of 2013 resulting in a larger revenue base to support
future distributions to our unit holders.
However, the Company continued to experience challenging market
conditions in the first quarter of 2013 which included the impacts of
Winter Storm Nemo. As was the case in the fourth quarter of 2012, the
result of these challenging market conditions was an increase in
wholesale electricity prices, volatility and customer usage.
Conference Call Notice
The Trust will hold a conference call to discuss its fiscal Q4 2012
financial results today March 26, 2013 at 8:30 a.m. ET. Michael
Fallquist, Crius Energy's Chief Executive Officer, will host the call.
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
April 2, 2013. To access the rebroadcast, please dial 416-849-0833 or
1-855-859-2056 and enter passcode 22277765, followed by the number
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 more than 530,000 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 five 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..
Non-IFRS Financial Measures
Statements throughout this news release make reference to EBITDA and
Adjusted EBITDA which are non-International Financial Reporting
Standards ("IFRS") financial measures commonly used by financial analysts in evaluating
financial performance of companies, including companies in the energy
retailing industry. Accordingly, management believes EBITDA and
Adjusted EBITDA may be useful metrics for evaluating the Trust's
financial performance as they are measures that management uses
internally to assess performance, in addition to IFRS measures. As
there is no generally accepted method of calculating EBITDA and
Adjusted EBITDA, these terms as used herein are not necessarily
comparable to similarly titled measures of other companies. The items
excluded from EBITDA are significant in assessing the Trust's operating
results and liquidity. EBITDA and Adjusted EBITDA have limitations as
analytical tools and should not be considered in isolation from, or as
an alternative to, net income or other data prepared in accordance with
IFRS. EBITDA is calculated as earnings before interest, taxes,
depreciation and amortization. Adjusted EBITDA is calculated as EBITDA
adjusted to exclude any change in the fair value of derivative
instruments. A reconciliation of EBITDA and Adjusted EBITDA to net
income as calculated under IFRS for the period ended December 31, 2012
is provided in the management's discussion and analysis ("MD&A") for the period ended December 31, 2012 and is available under the
Trust's issuer profile on the SEDAR website at www.sedar.com and on the Trust's website at 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 26, 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 unitholders. 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
For further information:
Chief Executive Officer
Chief Financial Officer
(416) 815-0700 ext. 253