/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
- Customer growth up 9% from Q4 and 27% year-over-year -
TORONTO, May 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 March 31, 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 first quarter was highlighted by continued strong organic customer growth." said Michael Fallquist, President and CEO of Crius Energy Trust. "We believe the kind of growth we are experiencing is not only a testament to our multi- channel sales approach, but is also indicative of future revenue growth, which will support future distributions. After challenging market conditions in January and February, March and April have returned to normal levels and we are encouraged with our outlook for the remainder of the year. We are continuing to execute on our organic growth strategy and are currently evaluating acquisition opportunities in the marketplace."
Q1 2013 Operational and Financial Highlights
- Residential customer equivalents ("RCEs") totaled 583,132 at the end of the first quarter, up 9.1% quarter-over-quarter and 26.5% year-over-year.
- Revenue of $119.0 million.
- Sold 1.3 million MWh of electricity and 1.7 million Mmbtu.
- Gross margin of $20.9 million or 17.5% of revenue.
- Adjusted EBITDA of $5.5 million or 4.7% of revenue.
- Net income of $29.6 million.
- Grew the number of new sales associates in the network marketing channel by more than 4,400.
- Acquired the residential and small commercial customer accounts from PNE Energy Supply LLC, located in New Hampshire, through its wholly-owned subsidiary FairPoint Energy, LLC.
- Cash balance of $24.6 million and no long term debt as of March 31, 2013.
- Maintained initial C$0.0833 per unit monthly distribution level.
Highlights Subsequent to Quarter-End
- Announced a three-year extension of the exclusive marketing relationship with Cincinnati Bell Inc. (NYSE: CBB), effective April, 12, 2013, to continue to market natural gas and green electricity through the brand Cincinnati Bell Energy.
- Created a new role of Vice President of Risk Management to provide a dedicated resource responsible for gross margin realization and overseeing forecasting, pricing and procurement.
- Completed a thorough search process to select a leading third party provider of energy forecasting services, streamlining the forecasting system beginning in the second quarter of 2013.
Review of Financial Results
The Trust commenced operations on November 13, 2012. Accordingly, no financial results from the previous fiscal first quarter are available for comparative purposes.
Revenue for the period ending March 31, 2013 was $119.0 million. Revenue was in line with management's expectations. Revenue is a reflection of good customer growth in the fourth quarter of 2012 and in the first quarter of 2013.
Revenue from electricity sales during the period was $109.1 million based on volumes of 1.3 million MWh, accounting for 91.7% of total revenue. Revenue from natural gas sales during the period was $8.9 million based on volumes of 1.7 million Mmbtu, and accounted for 7.5% 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 March 31, 2013, fee revenue was $1.0 million and accounted for 0.8% of total revenue.
First quarter 2013 gross margin was $20.9 million, representing 17.5% of revenue. On a monthly basis, gross margin was 16.7% of revenue in January, 7.3% of revenue in February and 28.1% of revenue in March. As indicated in connection with December 31, 2012 results, the first quarter 2013 financial results were impacted by challenging market conditions and differences between forecasted electricity volumes and actual electricity volumes, known as volumetric risk.
While the Company's business is always subject to volumetric risk, management has taken a number of steps to help limit future volatility in earnings which include: (1) creating a dedicated role of Vice President of Risk Management responsible for gross margin realization, which includes overseeing forecasting, pricing and energy procurement, and (2) completing a thorough search process to select a leading third party provider of energy forecasting services that will streamline the forecasting system starting in the second quarter of 2013. Together with these changes and a return to typical market conditions as evident in March's gross margins, management is confident that the second quarter's gross margins will return to its typical levels.
Selling expenses amounted to $7.0 million or 5.9% of revenue for the period ending March 31, 2013. These costs consist of upfront customer acquisition commissions of $4.0 million (amounting to $38.70 per customer acquired) and residual based commissions of $3.0 million. Upfront customer commissions were higher than historical levels and included $0.9 million in non-recurring sales promotions to drive increased customer growth, which amounted to approximately $8.30 per customer enrolled. General & Administrative expenses amounted to $8.3 million or 6.9% of revenue in the period and were impacted by non-recurring technology integration costs of approximately $0.5 million in the quarter.
Adjusted EBITDA for the first quarter of 2013 was $5.5 million or 4.7% of revenue. Adjusted EBITDA was impacted by the items affecting gross margins as well as the combined impact of $1.4 million of non-recurring Selling and General & Administrative expenses.
For the period ending March 31, 2013, net income was $29.6 million.
On March 31, 2013, the Trust had no long term debt and cash and working capital balance of $24.6 million and $30.1 million, respectively. This compares to a cash and working capital position of $30 million and $40.5 million, respectively, at December 31, 2012.
The Trust's consolidated financial statements for the period ended March 31, 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 first quarter 2013 financial results today May 14, 2013 at 10:00 a.m. Eastern. 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. Eastern on May 21, 2013. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 60355313, 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 580,000 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.
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 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