Crius Energy Trust Reports Strong Second Quarter 2014 Results

Crius Energy Trust August 14, 2014 7:00 AM

Achieves $13.2 million Adjusted EBITDA and 67.5% Payout Ratio

/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/

TORONTO , Aug. 14, 2014 /CNW/ - Crius Energy Trust (KWH-UN.TO) ("Crius Energy" or the "Trust"), today announced its financial results as at and for the three month period ended June 30, 2014 . All figures in U.S. dollars unless otherwise noted.

Q2 2014 Highlights
(All comparable metrics are to Q2 2013 except where noted)

• Sold 1.1 million MWh of electricity, 1.2 million MMBtu of natural gas and solar systems with total generation capacity of 3.0 MW, compared to 1.1 million MWh of electricity and 0.7 million MMBtu of natural gas.
• Ended quarter with 600,363 electricity and natural gas customers, up from 587,532 as at March 31, 2014 , representing a net gain of 12,831 customers, or 2.2% net quarter-over-quarter growth compared to net customer adds of 12,767 or 2.2% net quarter-over-quarter growth in the prior comparable period.
• Revenue of $134.0 million , a 17.6% increase over $113.9 million .
• Gross margin of $33.7 million , representing 25.2% of revenue, compared to $27.6 million , representing 24.2% of revenue.
• Adjusted EBITDA of $13.2 million , representing 9.9% of revenue compared to $10.1 million , representing 8.9% of revenue.
• Distributions paid in the quarter of $7.9 million , representing a payout ratio of 67.5% based on the Adjusted EBITDA less cash financing costs and cash taxes metric, compared to $9.5 million and 110.5%.
• Total cash and availability of $46.1 million consisting of $10.8 million of cash and cash equivalents and $35.3 million of credit facility availability. This compares to $32.1 million consisting of $18.5 million of cash and cash equivalents and $13.6 million of credit facility availability.
• Acquired a portfolio of approximately 38,000 electric and natural gas customers together with other assets from Superior Plus Energy Services for an aggregate purchase price of approximately $3.8 million .
• Acquired a portfolio of approximately 16,000 electric customers from HOP Energy LLC for an aggregate purchase price of approximately $1.5 million .

"Our best financial results since IPO, including more than $13 million in Adjusted EBITDA and a low payout ratio, are indicative of the inherent strength of our business and its ability to generate sustainable distributions," said Michael Fallquist , CEO of Crius Energy Trust. "We are delivering growth, organically across all channels and through strategic and accretive acquisitions, while we create increasingly higher-value customer relationships through product diversification such as solar energy and fixed-rate products. We are confident in our long-term prospects and, in the short-term, will continue our recovery from the polar vortex conditions of the first quarter as we benefit from normalized gross margins, our acquisitions, continued diversification and the rapid growth of our solar business."

Review of Quarterly Results

Crius Energy Trust delivered strong financial performance and sales growth in the second quarter of 2014. Adjusted EBITDA of $13.2 million , up from $10.1 million in the prior comparable period, and payout ratio of 67.5% represent the Company's strongest performance since its IPO in November 2012 . This performance was primarily the result of management's decision to minimize customer attrition and improve long-term customer value by spreading increased wholesale energy costs incurred early in the year to customers over multiple quarters. While this decision negatively impacted first quarter results, it was a key driver of results in the second quarter and will continue to influence performance over the balance of the year.

In addition to the Company's successful rate strategy, wholesale energy market conditions were generally favorable in the period resulting in unit gross margins of $26.75 per MWh for electricity and $1.76 per MMBtu for natural gas. The unit gross margins realized in the second quarter resulted in year-to-date unit gross margins of $16.93 per MWh and $1.79 per MMBtu. The higher electricity unit gross margins helped to offset the lower volumes of energy consumed in the second quarter, which is seasonally the lowest usage period for the Company's customer base.

The Company continued to deliver growth across its multi-channel platform, despite the challenging selling environment. The Company grew to more than 600,000 customers, up 2.2% quarter-over-quarter, highlighted by multiple acquisitions completed in the quarter and the continued growth in the Network Marketing channel with more than 42,000 new customers enrolled. Customer attrition also decreased 22% quarter-over-quarter as more customers enrolled on fixed rate products.

Further demonstrating the Company's ability to cross-sell essential energy products through its proprietary distribution channels, the solar energy business experienced rapid growth in the second quarter. Solar revenue was $1.7 million , up from $0.9 million realized in the prior quarter. The increase was the result of higher sales volumes, up 89% quarter-over-quarter to 3.0 MW of generation capacity, driven primarily by continued optimization of the solar sales process and a higher lead-to-close conversion rate in the period.