Just Energy Reports Second Quarter Fiscal 2017 Results
Strong Operating Performance Drives Gross Margin Increase of 10% and Base EBITDA Growth of 24%; Payout Ratio on Base Funds from Operations at 36%; Net Debt at 2.4 times Trailing 12-month Base EBITDA, down from 3.0 times a year ago; Reaffirms Fiscal 2017 Base EBITDA Guidance of $223 million to $233 million
(firmenpresse) - TORONTO, ONTARIO -- (Marketwired) -- 11/09/16 -- Just Energy Group Inc. (TSX: JE)(NYSE: JE), an energy management solutions provider specializing in electricity, natural gas, solar and green energy, today announced results for its second quarter fiscal 2017.
Key Highlights:
"Fiscal 2017 is off to a good start as the first half results have placed Just Energy on a clear path to achieving our financial expectations for the year while demonstrating significant progress along our strategic initiatives for the Company," commented Co-CEO Deb Merril. "The strong second quarter results reflect the operational performance improvements and ongoing margin improvement initiative we''ve been pursuing as an organization, while also demonstrating our ability to generate meaningful cash flow. Over the first six months of fiscal 2017, we''ve been able to grow base funds from operations by an impressive 39%. Our cash flow generation capability, combined with our balance sheet improvement strategy has allowed us to improve our debt ratios significantly and drive our payout ratio down to 36% during the quarter, the lowest single quarter payout ratio in Company history. We were particularly pleased to see such strong overall performance despite a difficult comparison to a very good second quarter last year."
Co-CEO, James Lewis added, "Our ongoing ability to drive gross margin and earnings growth in a competitive environment is a strong testament that our strategies in place are delivering the intended results. While we experienced customer declines during the quarter, we remain steadfast in our belief that the refusal to engage in risky pricing tactics that have developed within the industry during the current commodity price environment is the appropriate strategy for Just Energy. We are changing the business foundation and repositioning the Company to capture more accretive profit and cash flow by not allowing our team to chase market share at the expense of margin. The success of this strategy continues to be evident in our results this quarter as we grew gross margin by double-digits and delivered Base EBITDA growth of 24%, or 34% when normalizing for the prepaid commission expense. Moving forward, we feel confident that our ability to embrace the customer and build longer-term loyalty programs through the offering of a differentiated product suite will continue to secure our leading market positions."
Co-CEO, Deb Merril concluded, "We are entering our seasonally strongest fiscal third and fourth quarter with confidence that we can build off the strong first half and deliver on our previously provided Base EBITDA guidance for the full year. We are experiencing great customer acceptance of our value-additive product suite and long-term loyalty programs, and our geographic expansion plans in Europe are on track to expand into two new nations this year. Our differentiated product suite will drive our market position growth in a very profitable manner moving forward and solidify our position as a world-class energy management solutions provider globally."
Second Quarter & YTD Operating Performance:
Just Energy delivered another quarter of strong operating and financial performance as the ongoing focus on increasing gross margin through a more selective sales and renewal process continues to drive profitability across the business and allowed the Company to overcome prepaid commission expense and perform in line with a very strong comparable second quarter of 2016.
ANNUAL GROSS MARGIN PER RCE
Customer Aggregation
Margin per RCE improvements during the quarter demonstrated continued success of Just Energy''s margin improvement initiatives. The Company remains focused on maintaining its profitable customers and ensuring that variable rate customers meet base profitability profiles, even if this results in higher attrition. This improved profitability per RCE will add to the Company''s future margins over and above any growth in the customer base.
Balance Sheet & Liquidity
The Company continued to pursue aggressive debt reductions in the second quarter of fiscal 2017. As of September 30, 2016 Just Energy''s book value net debt was 2.4x Base EBITDA, lower than both the 2.6x and 3.0x reported for March 31, 2016 and the prior comparable period, respectively.
Outlook
Just Energy continues to deploy its strategy to become a world-class consumer enterprise delivering superior value to its customers through a range of energy management solutions and a multi-channel approach. Growth plans center on geographic expansion, structuring superior product value propositions, and enhancing the portfolio of energy management offerings. The Company''s geographic expansion is centered on Europe where the Company expects to expand into two new European markets in fiscal 2017 and remains committed to evaluating further potential expansion in continental Europe and beyond over the longer-term. Superior value propositions such as Just Energy''s new flat-bill product; solar energy management solutions; its new commercial energy storage pilot; and recently launched Just Energy Perks customer loyalty program are generating great interest and expected to contribute towards its double-digit percentage Base EBITDA target in fiscal year 2017.
Based on the strong first half performance, management believes that the Company will achieve its previously provided fiscal 2017 Base EBITDA guidance range of $223 million to $233 million, reflecting continued double-digit percentage growth year over year. Fiscal 2017 guidance includes deductions to Base EBITDA of approximately $30.0 million to $35.0 million for prepaid commercial commissions, which would previously have been included as amortization within selling and marketing expenses. This represents a $12.0 million to $17.0 million increase over fiscal 2016. Just Energy expects to offset this headwind with continued strong gross margin performance.
Just Energy''s solar program commenced its initial pilot phases in California and New York during fiscal 2016, with expansion to New Jersey in fiscal 2017. Management''s initial estimates were that Solar and TerraPass would contribute $10 million towards the double-digit percentage Base EBITDA target in fiscal 2017. Given the secular challenges facing the solar industry today, management deems it prudent to remove these expectations for the current fiscal year. Management expects any shortfall to previous Base EBITDA contribution estimates will fully be absorbed by the ongoing outperformance of the core business for the remainder of the fiscal year.
Just Energy''s ability to drive profitability and cash generation is inherent to the repositioned business model, and thus provide management with the confidence and freedom to commit to future dividend distributions and balance sheet restructuring.
On November 7, 2016 Just Energy redeemed a principal amount of $225 million of its 6.0% Convertible Debentures scheduled to mature on June 30, 2017. Just Energy also redeemed the remaining principal amount of $55.0 million of its 9.75% senior unsecured notes due June 2018 at a redemption price of $59.1 million on October 6, 2016. The Company intends to address the remaining balance of the June 30, 2017 Convertible Debentures in the near-term through considerations including working capital financing options, senior notes, and cash on hand. Management''s balance sheet improvement initiatives have resulted in significantly improved debt ratios and management remains committed to further reducing and refinancing its debt in a shareholder-friendly manner.
Earnings Call
The Company will host a conference call and live webcast to review the second quarter results beginning at 10:00 a.m. Eastern Standard Time on Thursday, November 10, 2016, followed by a question and answer period. Rebecca MacDonald, Executive Chair, President & Co-Chief Executive Officers James Lewis and Deb Merril, and Chief Financial Officer Pat McCullough will participate on the call.
Just Energy Conference Call and Webcast
Those who wish to participate in the conference call may do so by dialing 1-888-465-5079 and entering pass code 9284222#. The call will also be webcasted live over the internet at the following link:
An audio tape rebroadcast will be available starting at 12:30 p.m. EST November 10th 2016 until December 10th, 2016 at 11:59 p.m. EST. To access the rebroadcast please dial 1-888-843-7419 and enter the participant code 9284222#.
About Just Energy Group Inc.
Established in 1997, Just Energy (NYSE: JE)(TSX: JE) is a leading retail energy provider specializing in electricity and natural gas commodities, energy efficiency solutions, and renewable energy options. With offices located across the United States, Canada, and the United Kingdom, Just Energy serves approximately two million residential and commercial customers providing homes and businesses with a broad range of energy solutions that deliver comfort, convenience and control. Just Energy Group Inc. is the parent company of Amigo Energy, Commerce Energy, Green Star Energy, Hudson Energy, Just Energy Solar, Tara Energy and TerraPass. Visit to learn more. Also, find us on and follow us on
FORWARD-LOOKING STATEMENTS
Just Energy''s press releases may contain forward-looking statements including statements pertaining to customer revenues and margins, customer additions and renewals, customer attrition, customer consumption levels, general and administrative expenses, dividends, distributable cash and treatment under governmental regulatory regimes. 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 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, results of litigation, 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 , on the U.S. Securities Exchange Commission''s website at or through Just Energy''s website at .
Neither the Toronto Stock Exchange nor the New York Stock Exchange has approved nor disapproved of the information contained herein.
Contacts:
Pat McCullough
Chief Financial Officer
Just Energy
713-933-0895
Michael Cummings
Investor Relations
Alpha IR Group
617-461-1101
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Datum: 09.11.2016 - 16:00 Uhr
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