Positive customer addition trends continue
Successful execution of retail channel expansion strategy
Provides fiscal 2019 Base EBITDA guidance
TORONTO, May 16, 2018 (GLOBE NEWSWIRE) -- Just Energy Group, Inc. (TSX:JE) (NYSE:JE), a leading consumer company specializing in electricity and natural gas commodities, energy efficiency solutions, and renewable energy options, today announced results for its fourth quarter and full year of fiscal 2018.
Key Highlights:
1 The Company updated the definition of Base EBITDA to include gains and losses from the Company’s portfolio of equity investments which are presented in the Company’s consolidated statements of comprehensive income. The Company regularly invests in early stage business for the purpose of profiting from capital appreciation of the asset. These investments are generally in companies that manufacture or distribute value added products that Just Energy markets to customers, or information technology related. Upon adoption of IFRS 9 “Financial Instruments” effective April 1, 2018, the Company will continue to record the portfolio of investments at fair value, with changes in the fair value included in earnings on the consolidated statements of income and will continue to include these gains and losses in Base EBITDA. There is no gain or loss on these investments in the fiscal years 2016 and 2017.
Fourth quarter financial highlights | ||||||||||
For the three months ended March 31 | ||||||||||
(thousands of dollars, except where indicated and per share amounts) | ||||||||||
%increase | ||||||||||
Fiscal 2018 | (decrease) | Fiscal 2017 | ||||||||
Sales | $ | 1,014,734 | 7 | % | $ | 947,281 | ||||
Gross margin | 169,396 | (3 | )% | 175,412 | ||||||
Administrative expenses | 48,873 | 51 | % | 32,448 | ||||||
Selling and marketing expenses | 60,840 | 13 | % | 53,727 | ||||||
Finance costs (net of non-cash finance charges) | 11,483 | (6 | )% | 12,279 | ||||||
Profit (loss)1 | 265,773 | NMF 3 | (38,220 | ) | ||||||
Profit (loss) per share available to shareholders - basic | 1.80 | (0.30 | ) | |||||||
Profit (loss) per share available to shareholders - diluted | 1.40 | (0.30 | ) | |||||||
Dividends/distributions | 21,555 | 6 | % | 20,344 | ||||||
Base EBITDA2 | 68,876 | (8 | )% | 75,018 | ||||||
Base Funds from Operations2 | 25,472 | (11 | )% | 28,588 | ||||||
Payout ratio on Base Funds from Operations2 | 85 | % | 71 | % | ||||||
Total gross customer (RCE) additions | 312,000 | 37 | % | 228,000 | ||||||
Total net customer (RCE) additions | 49,000 | NMF 3 | (25,000 | ) |
Financial highlights | |||||||||
For the years ended March 31 | |||||||||
(thousands of dollars, except where indicated and per share amounts) | |||||||||
% increase | |||||||||
Fiscal 2018 | (decrease) | Fiscal 2017 | |||||||
Sales | $ | 3,626,570 | (3 | )% | $ | 3,757,054 | |||
Gross margin | 640,927 | (8 | )% | 695,971 | |||||
Administrative expenses | 194,699 | 16 | % | 168,433 | |||||
Selling and marketing expenses | 233,040 | 3 | % | 226,308 | |||||
Finance costs (net of non-cash finance charges) | 41,425 | (25 | )% | 54,879 | |||||
Profit 1 | 518,574 | NMF 3 | 470,883 | ||||||
Profit per share available to shareholders - basic | 3.41 | 3.02 | |||||||
Profit per share available to shareholders - diluted | 2.62 | 2.42 | |||||||
Dividends/distributions | 86,307 | 12 | % | 76,751 | |||||
Base EBITDA2 | 174,440 | (22 | )% | 224,499 | |||||
Base Funds from Operations2 | 91,202 | (29 | )% | 127,758 | |||||
Payout ratio on Base Funds from Operations2 | 95 | % | 60 | % | |||||
Embedded gross margin2 | 1,900,500 | 8 | % | 1,757,000 | |||||
Total customers (RCEs) | 4,163,000 | (1 | )% | 4,202,000 | |||||
Total gross customer (RCE) additions | 1,171,000 | 40 | % | 839,000 | |||||
Total net customer (RCE) additions | (48,000 | ) | 85 | % | (318,000 | ) |
1 Profit (loss) 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. Profit also includes the investment gain recorded in the consolidated statements of income.
2 See “Non-IFRS financial measures” on page 2 of the MD&A.
3 Not a meaningful figure.
“Fiscal 2018 was an important year for Just Energy as we successfully executed very meaningful growth initiatives and made critical steps along our path of transforming from a retail energy provider to a consumer company,” said Just Energy’s CEO, Pat McCullough. “We did face some significant headwinds related to unique weather events, one-time expense items and intense competitive pressures, while also investing in our future growth. However, we were able to overcome most of this adversity and deliver on our stated financial objectives for the year. We also exceeded an aggressive goal in our retail channel expansion strategy, establishing a presence in 500 stores across 18 different retail partners by year end. During the quarter, we continued to deliver strong customer addition and positive net RCE additions in total during each of the past three quarters. We believe we can continue this momentum into fiscal 2019 and beyond as Just Energy deploys a more consistent value creation product strategy across our consumer business and, ultimately, transform from an historical offering of price-based commodities sold through third-parties to a future of a more profitable offering of value add products and services where Just Energy owns and controls the customer relationships.”
“Moving forward, we’re committed to executing a strategic shift from a retail energy provider to a consumer company. As a part of our transformation objectives, our stakeholders can expect Just Energy to take the necessary measures to remove the volatility and improve the transparency in our results. As we continuously expand our capability in risk management and incorporate a broad selection of risk management instruments, we become much more stable and predictable, which allows us to plan for our future of strong growth and performance.”
“In fiscal 2019, we will build upon the strategic growth investments we made over the past year, seek to drive sales growth through our primary channels while developing additional strategic, alternative channels, and deliver solid earnings growth. We remain committed to preserving our balance sheet strength, generating superior returns on our invested capital, and maintaining our dividend. Our exciting future as a consumer company centers on real value creation and value delivery, while we participate in the significant global growth opportunities.”
Fourth Quarter Operating Performance
Fiscal Year 2018 Operating Performance
Fourth quarter gross margin per RCE | ||||||||||
Q4 Fiscal | Number of | Q4 Fiscal | Number of | |||||||
2018 | customers | 2017 | customers | |||||||
Consumer customers added and renewed | $ | 216 | 242,000 | $ | 192 | 237,000 | ||||
Consumer customers lost | 200 | 117,000 | 196 | 127,000 | ||||||
Commercial customers added and renewed | 87 | 220,000 | 88 | 208,000 | ||||||
Commercial customers lost | 81 | 128,000 | 83 | 126,000 | ||||||
CUSTOMER SUMMARY (in thousands) | ||||
As at | As at | % increase | ||
March 31, 2018 | April 1, 2017 | (decrease) | ||
Consumer | 1,543 | 1,357 | 14 | % |
Commercial | 116 | 117 | (1 | )% |
Total customer count | 1,659 | 1,474 | 12 | % |
Balance Sheet & Liquidity
Outlook
Just Energy is executing a strategic shift from a retail energy provider to a consumer company focused on differentiated value-add products, unparalleled customer satisfaction, and profitable customer growth. Historically, Just Energy operated as a retail energy provider viewed as offering price-based invisible products which consumers didn’t fully understand. Today, Just Energy is transforming from an era of price-based commodities sold through third-parties to a future of customer centric consumer company with more profitable offering of tangible value add products and services where Just Energy owns and controls the customer relationships. Just Energy’s future as a consumer company centers on real value creation and value delivery, while participating in the significant growth opportunities supported by the Company’s sales, marketing and customer service expertise.
To achieve profitability and optimize growth in fiscal 2019 and beyond, Just Energy will drive sales growth through its retail and other primary channels while developing additional strategic, alternative channels. Just Energy will also deploy a consistent value creation product strategy across the consumer business.
Management provided guidance for fiscal 2019 Base EBITDA in the range of $200 million to $220 million. This expectation reflects the implementation of IFRS 15 for the full fiscal year.
The Company remains committed to its current dividend policy.
Earnings Call
The Company will host a conference call and live webcast to review the fourth quarter and fiscal year 2018 results beginning at 10:00 a.m. Eastern Standard Time on May 17th, 2018 followed by a question and answer period. Chief Executive Officer Patrick McCullough, and Chief Financial Officer Jim Brown 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 1-877-300-9306 and ask to be joined into the Just Energy call. The call will also be webcast live over the internet at the following link:
https://www.webcaster4.com/Webcast/Page/1731/25502
An audio tape rebroadcast will be available starting one hour after the conference and will be available until May 24th, 2018. To access the rebroadcast please dial 1-877-344-7529 and use replay access code 10119600. The webcast will also be archived on the JE investor relations website for one year.
About Just Energy Group Inc.
Established in 1997, Just Energy is a leading consumer company specializing in electricity and natural gas commodities, energy efficiency solutions, and renewable energy options. With offices located across the United States, Canada, the United Kingdom, Germany, Ireland and Japan, Just Energy serves approximately 1.6 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, Green Star Energy, Hudson Energy, EdgePower Inc., Tara Energy and terrapass. Visit justenergygroup.com to learn more. Also, find us on Facebook and follow us on Twitter.
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, 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.
NON-IFRS MEASURES
The financial measure such as “EBITDA”, Base EBITDA, FFO, Base FFO, Base FFO Payout Ratio and Embedded Gross Margin do not have a standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and may not be comparable to similar measures presented by other companies. This financial measure should not be considered as an alternative to, or more meaningful than, net income (loss), cash flow from operating activities and other measures of financial performance as determined in accordance with IFRS, but the Company believes that this measure is useful in providing relative operational profitability of the Company’s business. Please refer to “Key Terms” in the Company’s management’s discussion and analysis of financial condition and results of operations of the Corporation for the three and nine months ended December 31, 2017 for the Company’s definition of “EBITDA” and other none-IFRS measures.
Neither the Toronto Stock Exchange nor the New York Stock Exchange has approved nor disapproved of the information contained herein.
FOR FURTHER INFORMATION PLEASE CONTACT:
Jim Brown
Chief Financial Officer
Just Energy
713-544-8191
jbrown@justenergy.com
or
Michael Cummings
Investor Relations
Alpha IR Group
617-461-1101
michael.cummings@alpha-ir.com
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