Last twelve month payout ratio of 53% ensures stability of distributions while enabling growth
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, Aug. 13, 2015 /CNW/ - Crius Energy Trust ("Crius Energy" or the "Trust") (TSX: KWH.UN), today announced its financial results as at and for the three and six month period ended June 30, 2015. All figures are in U.S. dollars unless otherwise noted.
Q2 2015 HIGHLIGHTS
- Continued strong financial performance
- Adjusted EBITDA of $13.8 million, compared to $13.2 million in Q2 2014
- Last twelve months Adjusted EBITDA of $57.9 million, representing a last twelve months payout ratio of 52.6%
- Gross margin of $39.9 million, or 24.0% of revenue, compared to $33.7 million, or 25.2% of revenue, in Q2 2014
- Quarterly payout ratio of 44.8%, based on distributable cash of $10.0 million, and total distributions paid of $4.5 million.
- Continued net organic growth in customers with 9,000 added in the quarter
- Customer adds of 88,000, above the last twelve months average of 82,500 driven by strong network and direct marketing activities
- Customer drops of 79,000, below the last twelve months average of 85,000 due to transition of customer portfolio to more fixed-price and commercial customers.
- Completed TriEagle Energy LP acquisition
- Completed the acquisition on April 1, 2015 of TriEagle Energy LP ("TriEagle Energy"), a Houston-based energy retailer with approximately 200,000 customers in New Jersey, Pennsylvania and Texas, for a purchase price of $19.3 million
- Cash flow accretion is expected within the year, with significant growth upside through commercial customer growth and geographic expansion into Texas.
- Expanded credit facility with Macquarie Energy LLC to accommodate growth initiatives
- Increased overall exposure limit from $150.0 million to $250.0 million.
- Reduced fee structure through adjustments to the volumetric fee and elimination of certain other fees.
- Improved flexibility to procure energy from market counterparties and an increased ability to enter into fixed-price products for a term up to 60 months.
HIGHLIGHTS SUBSEQUENT TO QUARTER-END
- Completed bought deal offering of 6.8 million units for gross proceeds of C$46.1 million
- Net proceeds primarily used to increase indirect ownership of Crius Energy, LLC to 43.1% from 26.8%.
- Remaining net proceeds of approximately $5.3 million retained for general corporate purposes.
- Beneficial to unitholders through improved market float and trading liquidity.
- Began expansion of distribution channels into Texas
- In July 2015, Crius Energy expanded the TriEagle Energy electricity license to include the Viridian Energy and Comcast Energy Rewards trade names.
- Expansion into Texas will enable introduction of Comcast strategic partnership and network marketing channels into the state, which is expected to be operational by the fourth quarter of 2015.
- Completed acquisition of approximately 2,000 electricity customers in New Hampshire and Rhode Island
- Purchased from Gulf Oil, LP for $0.2 million.
- Customers serviced by existing infrastructure with minimal incremental costs.
"We are very pleased with our second quarter results, representing our fifth consecutive quarter of strong financial performance. Our performance is another validation of management's strategy to focus on stabilizing and improving the business operations and risk management with a view to position Crius Energy for growth," commented Michael Fallquist, CEO of Crius Energy Trust. "Looking forward to the rest of 2015 and beyond, we are confident that the business is positioned for growth through investments we are making in our network marketing channel and our stated growth initiatives focused on commercial customer growth, geographic expansion into Texas, investment in our new partnership with Comcast and continued solar growth."
Review of Quarterly Results
The second quarter of 2015 highlights the overall strength of the Crius Energy platform as Management delivered strong financial results and net customer growth in the period.
Total revenue for the quarter was $166.3 million, a 24.2% increase from the second quarter of 2014, primarily reflecting higher average customer numbers as a result of the TriEagle Energy acquisition. Electricity revenue was $156.7 million, representing an increase of 28.3% and natural gas revenue was $6.0 million representing a decrease of 35.0% from the prior comparable quarter. Natural gas revenue decline in the quarter was a result of a 13.9% lower average retail rate per unit along with a 24.5% decrease in volume.
Gross sales of solar energy products were strong and in line with expectations. Solar net revenues in the quarter were in line with the $1.7 million reported in the second quarter of 2014. Crius Energy recognizes solar revenue based on executed customer contracts less expected cancellations prior to installation. In the second quarter of 2015, additional cancellations related to sales reported in prior periods that had not gone to installation reduced net reported revenues. Crius Energy is actively working with its partner, SolarCity, to reduce customer cancellations as a result of delayed installations.
Gross margin was $39.9 million in the second quarter of 2015, representing 24.0% of revenue, an 18.5% increase from $33.7 million in second quarter of 2014, representing 25.2% of revenue. Gross margin benefited from increased average customer numbers due to the TriEagle Energy acquisition, with the slight reduction in gross margin as a percentage of revenue in the current quarter primarily a result of the increased proportion of lower margin commercial customers as a result of this acquisition.
Adjusted EBITDA in the quarter was $13.8 million, a 4.1% increase compared to $13.2 million in the second quarter of 2014 taking the last twelve months Adjusted EBITDA to $57.9 million. Distributable Cash was $10.0 million, compared to $11.1 million in the second quarter of 2014. The Trust paid $4.5 million in distributions in the period, representing a payout ratio of 44.8% and the fifth consecutive quarter with a payout ratio less than 75%. On a trailing twelve-month basis, the Trust's payout ratio was 52.6%.
The second quarter of 2015 was the second consecutive quarter of organic customer growth with 9,000 net customers added, following 12,000 net customers added in the first quarter of 2015. Customer adds in the quarter, at 88,000, were 6.7% higher than the last twelve-month average as a result of success from the direct marketing channel and commercial sales activity. Customer attrition rates continued to decline as the customer portfolio has transitioned to more fixed-price and commercial customers over the past 24 months.
The acquisition of TriEagle Energy was completed on April 1, 2015 for a purchase price of $19.3 million. TriEagle Energy provides a key platform to allow Crius Energy to grow in Texas, the largest deregulated energy market in the United States. It has also increased Crius Energy's proportion of commercial customers and added a commercial brokerage network platform, which Crius Energy intends to deploy throughout its territory. Approximately 200,000 customers were added through the TriEagle Energy acquisition.
At June 30, 2015, Crius Energy had 790,000 customers, up from 581,000 at the beginning of the quarter as a result of both organic and acquisitive growth.
At June 30, 2015, the Trust had cash and cash availability of $20.6 million. This consisted of $11.8 million of cash and $8.8 million available under the credit facility. This compares to cash and cash availability of $48.2 million at March 31, 2015. Crius Energy utilized its strong cash position in the second quarter of 2015 to acquire TriEagle Energy. The TriEagle Energy purchase price included $15.9 million in cash along with $3.4 million in phantom unit rights to be settled in cash in tranches over 24 months from the acquisition date. Additionally, quarter-end availability was negatively impacted by $6.5 million in short-term transitional letter of credit requirements related to the TriEagle Energy acquisition. Subsequent to the close of the second quarter, Crius Energy's cash position improved by $11.8 million as a result of the $5.3 million raised as funds available for general corporate purposes from the bought deal equity offering completed on July 2, 2015 and the return of the $6.5 million in short-term transition letter of credit requirements.
The Trust's interim condensed consolidated financial statements as at and for the period ended June 30, 2015 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 2015 financial results on August 14, 2015 at 8:00 a.m. (EDT).
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 question and answer session for analysts will follow management's presentation.
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 recorded rebroadcast will be available to listeners until 11:59 p.m. (EDT) on August 21, 2015. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 85711803, followed by the number sign.
About Crius Energy
Crius Energy Trust was established to provide investors with a distribution-producing investment through its 43.1% ownership interest in Crius Energy, LLC. With approximately 800,000 residential customer equivalents, Crius Energy, LLC is a comprehensive energy solutions partner that provides electricity, natural gas and solar products to residential and commercial customers. Crius Energy, LLC 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, LLC currently sells energy products in 20 states and the District of Columbia with plans to continue expanding its geographic reach.
The Trust intends to continue 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 the Trust may be found on http://www.sedar.com or www.criusenergytrust.ca.
Caution Regarding Forward-Looking Statements
This news release contains forward-looking statements and forward-looking information (collectively, "Forward-Looking Statements") that involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Crius Energy, including, without limitation, those risks described in the Annual Information Form of the Trust dated March 25, 2015 (under the headings "Risk Factors" and "Forward-Looking Statements") and in the MD&A of the Trust for the period ended June 30, 2015. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words of phrases such as "will likely result", "are expected to", "expects", "will continue", "is anticipated", "anticipates", "believes", "estimated", "intends", "plans", "forecast", "projection" and "outlook") are not historical facts and may be Forward-Looking Statements 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. Forward-Looking Statements in this news release include, but are not limited to, the Trust'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, geographical expansion, customer consumption levels, general and administrative expenses, treatment under governmental regulatory regimes, distributable cash, growth of the business, improvement to the Company's risk management and operations, growth initiatives, customer cancellations, delayed installations, Canada-United States dollar foreign exchange rate, size and expansion opportunities in the Texas market, growth of the solar market portfolio, Crius Energy's expectations and estimates regarding the impact on Crius Energy of the recently completed transactions discussed herein, including the TriEagle Energy acquisition, the bought deal financing and the strategic partnership with Comcast and Crius Energy's expectations and estimates regarding the payment of distributions to unitholders. Crius Energy cautions investors of the Trust'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. 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, except as required by law.
Non-IFRS Financial Measures
Statements in this news release make reference to Adjusted EBITDA, Distributable Cash and payout ratio, which are non-IFRS financial measures commonly used by financial analysts in evaluating the financial performance of companies, including companies in the energy industry. Accordingly, Management believes Adjusted EBITDA, Distributable Cash and payout ratio 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 Adjusted EBITDA, Distributable Cash and payout ratio, these terms as used herein are not necessarily comparable to similarly titled measures of other companies. Adjusted EBITDA, Distributable Cash and payout ratio have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net (loss) income or other data prepared in accordance with IFRS. Adjusted EBITDA is calculated as EBITDA adjusted to exclude any change in the fair value of derivative instruments, change in fair value of non-controlling interest, change in fair value of warrant liability, unit-based compensation, goodwill impairment and distributions to non-controlling interest. The items excluded from Adjusted EBITDA are significant in assessing the Trust's operating results and liquidity. See the MD&A of the Trust for the period ended June 30, 2015 (under the heading "Reconciliation of Net Loss and Comprehensive Loss to EBITDA and Adjusted EBITDA") for a reconciliation of Adjusted EBITDA to net loss and comprehensive loss, as calculated under IFRS for the relevant periods, the most directly comparable measure in the consolidated financial statements of the Trust. See the MD&A of the Trust for the period ended June 30, 2015 (under the heading "Distributable Cash and Payout Ratio") for a reconciliation of Distributable Cash to cash flows provided by (used in) operating activities as calculated under IFRS, the most directly comparable measure in the consolidated financial statements of the Trust.
SOURCE Crius Energy Trust
For further information: Michael Fallquist, Chief Executive Officer, [email protected], (203) 663-7545; Roop Bhullar, Chief Financial Officer, [email protected], (203) 883-9900; Kelly Castledine, Investor Relations, [email protected], (416) 576-8158