FY 2014 Adjusted EBITDA up 20% over 2013
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, March 25, 2015 /CNW/ - Crius Energy Trust (TSX: KWH.UN) (the "Trust"), today announced fourth quarter and year-end financial results for the three- and twelve-month periods ended December 31, 2014. All figures are in U.S. dollars unless otherwise noted.
2014 and Q4 2014 Highlights:
- Fourth quarter financial performance represents third consecutive quarter of year-over-year improvement
- $134.3 million in revenue, up 4.5% from $128.6 million in Q4 2013
- 28.4% gross margin, up from 19.3% in Q4 2013
- $14.4 million in adjusted EBITDA, an increase of 136.1% from $6.1 million in Q4 2013
- Payout ratio of 56.0%
- Crius Energy delivers strong financial performance despite challenging market conditions
- $600.5 million in revenue, up 18.4% from $507.1 million in 2013
- 21.5% gross margin, up from 20.4% in 2013
- $38.5 million in Adjusted EBITDA, an increase of 19.6% from $32.2 million in 2013
- Payout ratio of 98.8%
- High-margin solar energy business continues rapid growth trajectory
- Contributed $6.1 million in revenue and $3.4 million in Adjusted EBITDA on total generation capacity sold of 10.7 MW in 2014
- Gross system sales grew over 280% from approximately 350 systems in the first quarter of 2014 to nearly 1,000 in Q4 2014
- Expanded into the commercial solar segment in the fourth quarter of 2014
- Innovative product offerings accelerate portfolio diversification strategy
- Fixed-rate customer base grew to 52% of total portfolio, an increase of 200% over 2013
- Commercial customer base grew to 28% of total portfolio, an increase of 17% over 2013
- Solar energy sales grew by 500% over 2013
"In 2014, we demonstrated the strength of our business model as we recovered from a very challenging first quarter of the year to deliver three consecutive quarters of strong financial performance," said Michael Fallquist, Chief Executive Officer of the Trust. "We have created positive momentum entering 2015 and expect continued success as we grow our solar business, execute on new strategic partnership opportunities and ramp up entry into Texas and expansion in the commercial customer segment through our recently announced acquisition of TriEagle Energy."
Highlights Subsequent To Year-End:
- Announced acquisition of TriEagle Energy LP, providing efficient entry into Texas, the largest deregulated energy market in the U.S., and expanded commercial operations
- Houston-based energy retailer with approximately 200,000 customers in New Jersey, Pennsylvania and Texas
- Expected to close early in the second quarter of 2015 and be accretive to distributable cash in its first full year
- Transaction expected to drive growth by leveraging established commercial broker network of more than 300 brokers across larger Crius Energy geographic footprint and providing entry into the Texas market for our other brands, such as Viridian Energy
- Enhanced solar energy sales agreement with SolarCity will expand geographic reach and increase revenue contribution
- Opened new markets in Q1 2015 including Nevada and Pennsylvania, with plans to add additional markets throughout the year
- Term of agreement extended to December 31, 2016, with increased margin contribution from solar energy sales including residual payments received over a 15-year period
- Reflects the proven ability of Crius's multi-channel platform to establish long-term, high-value customer relationships
Review of Financial Results
For the three months ended December 31, 2014
Total revenue for the fourth quarter of 2014 was $134.3 million, an increase of 4.5% from $128.6 million in the same period in the prior year, driven by increased contributions from our natural gas and solar energy businesses, combined with higher average retail prices paid by customers. Electricity revenue was $119.7 million, natural gas revenue was $12.3 million, solar energy revenue was $1.5 million and fee revenue was $0.8 million.
Gross margin was $38.2 million for the fourth quarter of 2014, a 53.4% increase from $24.9 million in the same period in the prior year, representing 28.4% of total revenue and an increase from 19.3% for the fourth quarter of 2013. This period-over-period increase in gross margin is due to higher electricity and natural gas gross margins per unit achieved and growth in solar energy revenues.
Adjusted EBITDA was $14.4 million in the fourth quarter of 2014, a 136.1% increase from $6.1 million in the fourth quarter of 2013, representing the third consecutive quarter of strong financial performance. Distributable cash of $11.1 million and total distributions paid of $6.2 million in the fourth quarter of 2014 represented a payout ratio of 56.0%, compared to 195.9% in the same period in the prior year.
Customer growth returned to normalized levels in the fourth quarter as the Company added approximately 82,000 customers. However net customer count decreased by approximately 10,000 customers as attrition was higher than expected. In the period, customer drops in the lower margin commercial segment increased as we exercised pricing discipline in this market segment. The Company also was impacted by higher than normal numbers of contracts coming up for renewal, despite achieving strong average renewal rates of more than 70%.
For the twelve months ended December 31, 2014
Total revenue for 2014 was $600.5 million, up 18.4% from $507.1 million in 2013, driven by increased contributions from our natural gas and solar energy businesses, combined with higher average retail prices paid by customers. Electricity revenue was $540.4 million, natural gas revenue was $50.3 million, solar energy revenue was $6.1 million and fee revenue was $3.6 million.
Gross margin was $128.9 million in 2014, a 24.7% increase from $103.4 million in 2013, representing 21.5% of revenue. The gross margin for the full year reflects the impact of the "polar vortex" in the first quarter of 2014 and our decision to mitigate churn and soften the impact to customers by implementing price increases on a staggered basis, which resulted in a lower gross margin in the first quarter ($19.1 million) of 2014, which was offset by higher gross margins in the second quarter ($33.7 million) of 2014, third quarter ($37.9 million) of 2014 and fourth quarter ($38.2 million) of 2014. Gross margin performance also benefited from enhancements to the energy procurement and risk management functions since the IPO.
Adjusted EBITDA in 2014 was $38.5 million, a 19.6% increase from $32.2 million in 2013. Full year Adjusted EBITDA was negatively impacted by $1.4 million in non-recurring due diligence and other related costs during the year associated with various acquisitions. The Trust's financial performance in recent quarters resulted in a full year payout ratio of 98.8% on total distributions paid of $28.4 million during the year.
Crius Energy had no long-term debt and total cash availability of $46.3 million at year-end, compared to $27.5 million at the end of 2013. Total cash availability consisted of cash of $14.3 million and $32.0 million of availability under our working capital facility with Macquarie Energy LLC.
Financial Statements and MD&A
The Trust's consolidated financial statements for the year ended December 31, 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 fourth quarter and year-end 2014 financial results today, March 25, 2015 at 8:30 a.m. Toronto time.
To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. You are encouraged to connect approximately 15 minutes prior to the beginning of the conference 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 website for 30 days.
A taped rebroadcast will be available to listeners until 11:59 p.m. ET on April 1, 2015. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 96390678, followed by the number sign.
About Crius Energy Trust
The Trust was established to provide investors with a distribution-producing investment through the acquisition of a 26.8% ownership interest in Crius Energy. Crius Energy, with approximately 800,000 residential customer equivalents (after giving effect to the closing of the TriEagle acquisition, which is expected to close early in the second quarter of 2015), is a comprehensive energy solutions partner that provides electricity, natural gas and solar energy products to residential and commercial customers in the United States. 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, which makes it easier for consumers to make informed decisions about their energy needs. Crius Energy sells energy products in 20 states and the District of Columbia (expected as of the closing of the TriEagle acquisition) with plans to continue expanding its geographic reach.
The Trust 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 the Trust may be found on SEDAR under the Trust's issuer profile at www.sedar.com or on the Trust's website at www.criusenergytrust.ca.
Certain statements contained in this press release constitute forward looking statements and forward-looking information (collectively, "forward-looking statements") that involve substantial known and unknown risks and uncertainties, most of which are beyond the control of the Trust and Crius Energy, including, without limitation, those listed under the "Risk Factors" and "Forward-Looking Statements" headings in the Annual Information Form of the Trust for dated March 2015 (for the year ended December 31, 2014), which is available on SEDAR under the Trust's issuer profile at www.sedar.com and on the Trust's website at www.criusenergytrust.ca. A statement may be considered a forward-looking statement when it uses what the Trust or Crius Energy knows or expects today to make a statement about the future. Forward-looking statements may be identified by words such as anticipate, assume, believe, could, expect, goal, guidance, intend, may, objective, outlook, plan, seek, should, strive, target, will or other similar expressions. Statements that are not historical facts may be considered 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 information in this press release includes, but is not limited to, statements pertaining to the closing of the TriEagle acquisition, adjusted EBITDA, distributable cash, total distributions, payout ratio, gross margin, revenue, expected 2015 business and financial performance, ability to succeed in challenging market conditions, the success of the business model of the Trust and Crius Energy, hedging strategies, treatment under governmental regulatory regimes (including statements pertaining to the Trust's objectives and status as a mutual fund trust and not a SIFT trust), and the future financial and business performance of the Trust and Crius Energy. Investors are cautioned that important factors could cause the Trust's actual results to differ materially from those contained in forward-looking statements. No assurance can be given that the expectations set-forth in this press release will ultimately prove to be accurate and, accordingly, such forward-looking statements should not be unduly relied upon. It is not possible for management to predict new factors that may emerge from time to time, or to assess in advance the impact of each such factor on the Trust's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in forward-looking statements. These forward-looking statements are given only as of the date of this press release and the Trust does not assume any obligation to update or revise any forward-looking statement to reflect new events or circumstances, except as may be expressly required by applicable securities laws.
SOURCE Crius Energy Trust
For further information:
Chief Executive Officer
Chief Financial Officer
(416) 815-0700 ext. 290