Fourth consecutive quarter of strong financial results drives payout ratio for the last twelve months to 60% of Distributable Cash
NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES
TORONTO, May 13, 2015 /CNW/ - Crius Energy Trust (TSX: KWH.UN) ("Crius Energy" or the "Trust"), today announced its financial results as at and for the period ended March 31, 2015. All figures in U.S. dollars unless otherwise noted.
Q1 2015 Highlights
- Fourth consecutive quarter of strong financial performance
- Adjusted EBITDA of $14.5 million, compared to a loss of $4.3 million in the first quarter of 2014.
- Gross margin of $40.3 million, or 23.9% of revenue, compared to $19.1 million, or 10.7% of revenue, in the first quarter of 2014.
- Distributable cash of $8.6 million and total distributions paid of $4.8 million, representing a quarterly payout ratio of 55.4%.
- Net growth of 12,000 customers representing a 2.1% increase in the Company's electricity and natural gas portfolio
- Customer growth highlighted by strong contributions from Direct Marketing and Commercial channels.
- Customer attrition nominally lower relative to the fourth quarter of 2014, negatively impacted by non-renewals, particularly in the Company's Commercial segment.
- Continued strong growth in solar energy business
- Solar revenue of $2.3 million, a 146.7% increase from $0.9 million in the first quarter of 2014 and 54% greater than $1.5 million in the fourth quarter of 2014.
- Commercial solar sales, which were initiated in the fourth quarter of 2014, represented over half of the total 9.8 MW in solar generation capacity sold in the first quarter of 2015.
- Entered into a strategic partnership with Comcast
- Entered into an exclusive three-year agreement with Comcast Corporation (Nasdaq: CMCSA, CMCSK) ("Comcast") to offer electricity and natural gas products to Comcast customers under the white label brand "Energy Rewards".
- Comcast is the largest video, high-speed Internet and phone provider to residential customers in the U.S.
- Started offering energy products to Comcast customers in Pennsylvania and Illinois in April 2015.
- Enhanced relationship with SolarCity
- Entered into an amended agreement with SolarCity to expand geography and increase revenue contribution from solar sales.
- Added new markets, including New Mexico, Nevada, and Pennsylvania, with plans to add additional markets throughout 2015.
- Increased margin contribution from solar sales with additional long-term revenue received over a 15-year period.
"In the first quarter of 2015, we delivered strong financial performance and net customer growth highlighting the strength of our business model," commented Michael Fallquist, CEO of Crius Energy Trust. "Looking ahead to 2015, we expect continued strong financial performance to result in a favorable payout ratio giving the company added flexibility to execute on strategic growth initiatives. We expect our entry into the Texas electricity market, expansion in the commercial customer segment, execution on our strategic partnership with Comcast and continued solar growth to drive long-term unitholder value as we expand our business."
HIGHLIGHTS SUBSEQUENT TO QUARTER END
- Completed largest acquisition since IPO
- On April 1, 2015, the Company closed on the acquisition 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 $19.1 million.
- The acquisition is expected to provide cash flow accretion in the year for the Trust's unitholders with significant growth upside through commercial customer growth and geographic expansion.
- Expanded credit facility with Macquarie Energy LLC
- Crius Energy expanded its credit facility with Macquarie Energy LLC ("Macquarie Energy") to accommodate future growth initiatives and the addition of TriEagle Energy's business.
- 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.
Review of Quarterly Results
The first quarter of 2015 highlights the overall strength of the Crius Energy platform as Management delivered strong financial results and net electricity and natural gas customer growth in the period.
Total revenue for the quarter was $168.3 million, a decline of 5.2% from the first quarter of 2014, primarily reflecting higher volumes in the previous quarter. Electricity revenue was $141.0 million and natural gas revenue was $24.2 million representing declines of 6.6% and 2.3% respectively.
Solar revenues continued to grow in the first quarter of 2015. Revenues increased to $2.3 million, up 146.7% from $0.9 million in the first quarter of 2014 and up 53% from $1.5 million in the fourth quarter of 2014. The increased revenue was driven by record sales as the Company sold systems with a total generation capacity of 9.8 MW in the period and reflects continued success in the residential solar market coupled with the Company's fourth quarter 2014 initiative to enter the commercial solar market.
Gross margin was $40.3 million in the first quarter of 2015, or 23.9% of revenue, a 111.1% increase from $19.1 million in first quarter of 2014, primarily attributable to improved energy procurement and risk management in the current quarter together with the severe impacts of the "polar vortex" weather event experienced in the first quarter of last year and an increased contribution from solar energy sales. Gross margins in the quarter benefited from increased electricity and natural gas usage per customer due to colder than normal temperatures together with low energy prices and volatility.
Adjusted EBITDA in the quarter was $14.5 million compared to a loss of $4.3 million in the first quarter of 2014. On a trailing twelve-month basis, Adjusted EBITDA was $57.3 million, the highest for any twelve-month period in the Company's history. Distributable Cash was $8.6 million, compared to a loss of $5.3 million in the first quarter of 2014. The Trust paid $4.8 million in distributions in the period, representing a payout ratio of 55.4% in the period and the fourth consecutive quarter with a payout ratio less than 75%. On a trailing twelve-month basis, the Trust's payout ratio was approximately 60%.
In the quarter, the Company had a 2.1% increase in customers, its first net organic growth in customers since the fourth quarter of 2013 as the Company has managed through the challenges resulting from the "polar vortex" weather event in early 2014. Customer growth was driven by key contributions from the Direct Marketing and Commercial channels. Gross customer attrition trended down slightly in the first quarter of 2015 when compared with the fourth quarter of 2014 and was down materially over the first quarter of 2014. However, attrition was higher than expected by Management and negatively impacted by customer losses, particularly in the Commercial segment that had been added through the Superior and HOP acquisitions, as the Company chose not to compete with low margin competitive offerings. The Trust had approximately 800,000 customers pro-forma the acquisition of TriEagle Energy which closed on April 1, 2015.
The Company finished the quarter in a strong cash position. The Trust has no long-term debt and total cash and cash availability increased to $48.2 million at the end of the quarter from $46.3 million at December 31, 2014. Cash and cash availability consisted of $13.1 million in cash and cash equivalents and $35.1 million available under the credit facility. Cash flows from operating activities for the quarter ending March 31, 2015 were $7.3 million, compared to negative $2.3 million in the first quarter of 2014.
The Trust's consolidated financial statements as at and for the period ended March 31, 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 first quarter 2015 financial results today, May 13, 2015 at 10:00 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 taped rebroadcast will be available to listeners until 11:59 p.m. EDT on May 20, 2015. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 32762367, 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, 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 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 25, 2015 (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: Michael Fallquist, Chief Executive Officer, [email protected], (203) 663-7545; Roop Bhullar, Chief Financial Officer, [email protected], (203) 883-9900; Craig MacPhail, TMX Equicom, [email protected], (416) 815-0700 ext. 290