Just Energy Reports Third Quarter Fiscal 2017 Results
Reaffirms Fiscal 2017 Base EBITDA Guidance of $223 million to $233 million
TORONTO, ONTARIO – March 20, 2018
Just Energy Group, Inc. (TSX:JE; NYSE:JE), a leading retail energy provider specializing in electricity and natural gas commodities, energy efficiency solutions, and renewable energy options, announced results for its third quarter fiscal 2017.
Cash and cash equivalents were $77.5 million at December 31, 2016, a decrease from $118.8 million at September 30, 2016, primarily due to cash utilized on portions of the early repayment of $225 million on the 6.0% convertible debentures and repayment of the remaining $55 million on the senior unsecured notes, along with normal working capital needs during the quarter. These repayments were offset by the issuance of $160 million in 6.75% convertible debentures and the withdrawal of $90.3 million on the credit facility.
Total debt was $612.3 million as of December 31, 2016, a decrease from $660.5 million as of March 31, 2016. Book value net debt to trailing 12-month EBITDA was 2.5x, lower than both the 2.6x and 2.9x reported for March 31, 2016 and the prior comparable period, respectively.
Gross margin was $174.4 million, down 3% year over year, driven by a mix of factors related to foreign currency on U.K.-based customers and the decrease in customer base.
Base EBITDA of $51.5 million represented a decrease of 8% year over year primarily as a result of increased prepaid commission expenses and the impact of foreign currency translation. Base EBITDA remains up 7% year to date.
Base Funds from Operations ("Base FFO") decreased 22% to $20.9 million from the $26.8 million reported in the prior comparable period. The decrease in Base FFO was greater than the decrease in Base EBITDA due to the $2.7 million in additional finance charges related to the early debt repayment during the quarter. Base FFO remains up 5% year to date, reflecting a payout ratio of 57%.
Gross customer additions for the third quarter were 210,000, a sequential increase from 196,000 added in the second quarter and down from the 313,000 customers added in the third quarter of fiscal 2016. Net additions were a negative 84,000 for the quarter, compared with negative 46,000 net customer additions in the third quarter of fiscal 2016.
Management reaffirms its full year fiscal 2017 Base EBITDA guidance of $223 million to $233 million, reflecting continued growth year over year. Fiscal 2017 guidance includes deductions to Base EBITDA of approximately $30.0 to $35.0 million for prepaid commercial commissions, which represents a $12.0 to $17.0 million increase over fiscal 2016 and reflects a go forward run rate for this incremental deduction in future years.
1Profit includes the impact of unrealized gains (losses), which represents the mark to market of future commodity supply acquired to cover future customer demand. The supply has been sold to customers at fixed prices, minimizing any realizable impact of mark to market gains and losses.
2See "Non-IFRS financial measures" in unaudited interim condensed consolidated MD&A for the three and nine months ended December 31, 2016.
3Not a meaningful figure.
"During the quarter, our gross margin per customer continued to increase and our attrition rate improved," commented Co-CEO Deb Merril. "Our gross margin per customer improvement initiative yielded desirable results once again this quarter in both our Consumer and Commercial businesses, and our attrition rate continues to improve. We believe the combination of these trends is a strong testament that our strategy to provide value to our customers is working and will support our future growth objectives. While we made significant progress along a number of important strategic, operational, and financial objectives that are enabling us to continue pursuing profitable growth, our total sales and customer addition goals were challenged during the third quarter. These challenges came as a result of lower than anticipated levels of customer switching activity due to relative price stability in gas and electricity markets, and the effect of increased competition that typically occurs in low-commodity-price environments. Fortunately, our business has delivered strong results year to date and remains healthy so that we remain well positioned to achieve our fiscal 2017 guidance while also delivering meaningful cash flow."
Co-CEO, James Lewis added, "We are coming through a very important period in our Company's recent history where we've been able to transform the profitability profile of the business while also repairing our balance sheet and overall financial position. The successful execution of these initiatives is allowing us to pivot from a period of internal repair to a period of what we believe will be prolonged growth. During the third quarter, we announced a very exciting and important entry into Germany, the largest energy market in continental Europe, through the acquisition of SWDirekt. Our future geographic expansion plans in Europe are on track, we are experiencing great customer acceptance of our growing product suite and long term loyalty programs, and our pipeline of value-additive products and opportunities for channel expansion are robust. Today, we are capable of delivering more value to customers than ever in our history and we are squarely on the path to future sustained growth."
Co-CEO, Deb Merril concluded, "We are in a very exciting period for Just Energy. We are aggressively pursuing a growth strategy centred on increasing the number of customer contracts, expanding our geographic presence, transforming our brand, enhancing our sales channels, pursuing strategic acquisitions, and providing new products and structures that meet the changing needs of today's consumers. Moving forward, we feel the successful execution of our strategy will continue to generate great interest in our offerings and result in significant net customer contract additions."
Just Energy's press releases may contain forward-looking statements. These statements are based
on current expectations that involve a number of risks and uncertainties which could cause actual
results to differ from those anticipated. These risks include, but are not limited to, the levels of
customer natural gas and electricity consumption, rates of customer additions and renewals, rates
of customer attrition, fluctuations in natural gas and electricity prices, changes in regulatory
regimes and decisions by regulatory authorities, competition and dependence on certain suppliers.
Additional information on these and other factors that could affect Just Energy's operations,
financial results or dividend levels are included in Just Energy's annual information form and
other reports on file with Canadian securities regulatory authorities which can be accessed
through the SEDAR website at www.sedar.com, on the U.S. Securities Exchange Commission’s
website at www.sec.gov or through Just Energy's website at www.justenergygroup.com.
Neither the Toronto Stock Exchange nor the New York Stock Exchange has approved nor
disapproved of the information contained herein.
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Phone: (617) 461-1101