Strongest Quarter since Initial Public Offering Reduces Payout Ratio to 49%
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, Nov. 14, 2014 /CNW/ - Crius Energy Trust (TSX: KWH.UN) ("Crius Energy" or the "Trust"), today announced its financial results as at and for the period ended September 30, 2014. All figures in U.S. dollars unless otherwise noted.
Q3 2014 Highlights
(All comparable metrics are to Q3 2013 except where noted)
- Best quarterly performance since IPO in November of 2012 driven by improved operational effectiveness and strong commodity margins
- $37.9 million in gross margin or 24.5% of revenue, compared to $30.0 million or 20.6% of revenue, despite energy consumption being lower than historical averages
- $15.2 million in Adjusted EBITDA, a 44.8% increase over $10.5 million
- 49% payout ratio, compared to 102% in Q3 2013 and 67.5% in Q2 2014
- Continued rapid growth in residential solar energy offering
- $2.0 million in solar energy revenue, up 18% from Q2 2014
- Solar energy products contributed $1.4 million to Adjusted EBITDA, a 55% increase over $0.9 million in Q2 2014
- Customer attrition rates continued to normalize following impact of polar vortex in Q1 2014
- Customer drops were lower by 8.5% and 28.9% than in each of the previous two quarters as a result of the Company focusing on providing long-term, fixed rate products and continued investment in technology and process to enhance the customer experience
- 580,363 customers at the end of the quarter
- Strengthened financial capability to support distributions and long-term growth
- $58.1 million of total cash and availability at the end of the quarter, compared to $46.1 million at June 30, 2014 and $33.9 million at September 30, 2013
- $6.5 million in distributions paid in the quarter
- Q3 2014 cash availability consists of $10.4 million of cash and cash equivalents and $47.7 million of availability under the credit facility with Macquarie Energy LLC
"Despite lower than typical electricity volumes in the quarter, sound risk management processes and improved operational effectiveness enabled Crius to deliver our best performance since IPO," said Michael Fallquist, CEO of Crius Energy Trust. "We believe our second consecutive strong quarterly result, highlighted by strong operating cash flows and a payout ratio of 49%, firmly demonstrates our ability to deliver long-term sustainable distributions."
Review of Quarterly Results
Crius Energy Trust delivered its best quarterly performance since IPO and its second consecutive quarter of strong financial results, driven by commodity margins and continued operational improvements as a result of ongoing investment in people, process and technology.
These operational improvements, particularly with regards to risk management, contributed to the Company's record performance amidst lower than normal summer energy usage. Cooler-than-normal temperatures reduced the cooling load on the electrical grid, which typically peaks in the summer months of July and August. During those months, Cooling Degree Days were 19% lower than the 10-year average in markets served by the Company. Through this period, the Company was able to pro-actively manage its energy supply portfolio such that it effectively mitigated pricing and volumetric risk.
Crius Energy also continued with its strategy to minimize customer attrition and improve long-term customer value by spreading increased wholesale energy costs incurred in the first quarter to customers over multiple quarters. Electricity margins were $26.73 per MWh, compared to $19.26 per MWh in the third quarter of 2013, reflecting both the staggered pass-through strategy as well as effective management of the wholesale supply book. Natural gas margin was $1.89 per MMBtu in the third quarter of 2014 compared to a loss of $0.02 per MMBtu in the third quarter of 2013. Total gross margin increased to $37.9 million or 24.5% percent of revenue, compared to $30.0 million or 20.6% in the third quarter of 2013.
Adjusted EBITDA increased by 44.8% to $15.2 million, compared to $10.5 million reported in the third quarter of 2013 and the highest since the Company's IPO. Payout ratio in the quarter was 49% (on an Adjusted EBITDA less cash financing costs and cash taxes basis) an improvement from 102% a year earlier and 67.5% in the second quarter of 2014.
Revenue from the Company's residential solar offering continued its rapid growth, increasing by 18% to $2.0 million in the third quarter of 2014, from $0.1 million in the third quarter of 2013 and $1.7 million for the second quarter of 2014. Solar energy is a high margin product offering for the Company, with the business contributing a net margin of $1.4 million in the quarter, a 56% increase over the $0.9 million contributed in the second quarter of 2014.
Operating cash flows in the quarter strengthened the Company's financial capability. Total cash and cash availability increased to $58.1 million at the end of the quarter from $46.1 million at June 30, 2014 and $33.9 million at September 30, 2013, while total distributions paid during the quarter were $6.5 million. Cash and cash availability consisted of $10.4 million in cash and cash equivalents, no long term debt and $47.7 million available under the credit facility.
As anticipated by Management, customer attrition continued to normalize in the quarter following elevated levels caused by increased prices received by consumers as a result of the polar vortex. Customer drops in Q3 2014 were 8.5% less than the second quarter of 2014 and 28.9% lower than the first quarter of 2014. However, on a net basis, the Company's customers declined by 3.3% to 580,363 compared to the previous quarter.
The Trust's consolidated financial statements as at and for the period ended September 30, 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 third quarter 2014 financial results today, November 14, 2014 at 8:30 a.m. ET.
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 November 21, 2014. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 21485208, 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 approximately 600,000 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 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 Crius Energy may be found on 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 26, 2014 (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:
(416) 815-0700 ext. 290