- Continued Customer Growth and Expanded Product Offerings -
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, Nov. 14, 2013 /CNW/ - Crius Energy Trust(TSX: KWH.UN) ("Crius Energy"
or the "Trust"), today announced its financial results for the three-month
period ended September 30, 2013. The Trust commenced operations on November
13, 2012 with the acquisition of a 26.8% ownership interest in Crius Energy,
LLC (the "Company") by the Trust's wholly-owned subsidiary. All figures in
U.S. dollars unless otherwise noted.
"The third quarter was highlighted by continued organic customer growth and
the expansion of our suite of energy products," said Michael Fallquist,
President and CEO of Crius Energy Trust. "We added customers across our brands
while reducing overall attrition and continuing to diversify our business as
we've nearly doubled our natural gas customers since the beginning of the
year. We believe our third-quarter performance further validates our
multi-channel marketing strategy which experienced continued growth despite
the traditionally slowest quarter for the network marketing industry.
Furthermore, and importantly, we continue to have the financial resources
available which allow us to capitalize on our unique position to respond
quickly to market opportunities in our evolving industry, make investments in
our business that promote long-term organic growth, and pursue accretive
"We are optimistic about our reseller agreement with SolarCity, which was
launched at our Viridian Energy brand's PowerUp! annual convention in
September, and is off to a great start. Partnering with the number one
full-service solar provider in the U.S. opens up a range of opportunities for
our company to expand into new markets and broaden the range of products we
offer to customers across our brands. Just as importantly, this expansion of
services is a demonstration of our long-term vision of being a comprehensive
energy solutions partner providing a broad suite of energy products and
services that make it easier for consumers to make informed decisions that
address their energy needs."
Q3 2013 Financial and Operational Highlights
-- Residential customer equivalents ("RCEs") totaled 610,459 at
the end of the third quarter, up 2.4% quarter-over-quarter and
-- Adjusted EBITDA of $10.5 million, representing 7.2% of revenue
and was impacted by $5.0 million due to weather variation from
historical norms in July and August. Normalizing for weather
impacts, Adjusted EBITDA for the quarter would have been $15.5
-- Distributions paid in the quarter of $9.0 million represent a
payout ratio of 100% measured on an Adjusted EBITDA less cash
financing costs and taxes basis.
-- Sold 1.5 million MWh of electricity and 0.4 million MMBtu of
-- Revenue of $145.6 million
-- Gross margin of $30.0 million, representing 20.6% of revenue
-- Total cash and availability of $33.9 million consisting of
$16.8 million of cash, no long-term debt and availability under
the credit facility with Macquarie Energy of $17.1 million as
of September 30, 2013.
-- Expanded our product suite to include residential solar energy
products and services through a reseller agreement with
SolarCity (NASDAQ: SCTY), the number one full-service solar
provider in the U.S. Crius Energy is marketing SolarCity
products and services initially through its network marketing
brand, Viridian Energy.
-- Expanded service offerings under multiple brands as Viridian
Energy started offering natural gas products in Maryland,
Virginia and the District of Columbia, FTR Energy Service
started offering electricity in Illinois and Public Power
expanded into three new electric utility service areas in
-- Strengthened the management team through the following
o Chaitu Parikh was appointed to the position of Chief Operating
Officer. Mr. Parikh has 16 years of experience in the retail energy
industry, most recently serving as CEO/President of MXEnergy.
o Meredith Berkich was promoted to the role of President of Viridian
Energy to support the continued growth of our network marketing
channel. Mrs. Berkich has more than 18 years of experience in the
direct selling industry on both the distributor and corporate side
with notable companies such as Princess House (a Colgate Palmolive
Company) and Univera. Subsequent to quarter end, Mrs. Berkich was
appointed an Officer of the Trust.
o Cami Boehme was promoted to the newly created position of Chief
Strategy Officer. In her new role, Ms. Boehme will oversee
strategic product innovation and help plan the overall strategic
direction of the Company. Prior to her promotion, Ms. Boehme served
as Senior Vice-President Marketing and Brand Strategy for Crius
Highlights Subsequent to Quarter-End
-- Appointed Pradeep Tiwari to the position of Vice President of
Information Technology. Mr. Tiwari has nine years of experience
in the retail energy industry with energy retailers including
MXEnergy and Constellation.
-- Received electricity and natural gas licenses for Viridian
Energy to market in Ohio.
Review of Financial Results
Revenue for the third quarter was $145.6 million. Revenue was driven by
customer growth in the strategic marketing partnership and network marketing
channels and seasonally higher electricity volumes. The Company grew its
customer base in the third quarter, increasing RCEs by 2.4% over the second
quarter to a total of 610,459, and by 21.1% on a year-over-year basis.
Revenue from electricity sales during the third quarter was $142.4 million
based on volume of 1,499,569 MWh, and accounted for 97.8% of total revenue.
Revenue from natural gas sales was $2.1 million based on volume of 433,936
MMBtu, and accounted for 1.4% of total revenue. Fee revenue consisting of
sign-up fees and other monthly fees received from independent contractors in
the network marketing channel was $1.0 million, accounting for 0.7% of total
Gross margin for the period was $30.0 million, representing 20.6% of revenue.
Monthly gross margins were 19.4% in July, 16.4% in August and 27.9% in
September. The gross margin percentages achieved in July and August were lower
than expected as a result of the impact of weather variation from historical
norms while September weather conditions generally returned to normal which
led to a materially higher gross margin percentage.
Adjusted EBITDA for the period was $10.5 million, or 7.2% of revenue. Adjusted
EBITDA was impacted by $5.0 million due to weather variation from historical
norms, primarily in July and August, and the corresponding hedge and real-time
price impact. Normalizing for weather impacts, Adjusted EBITDA for the quarter
would have been $15.5 million.
The Company has cash and availability of $33.9 million as of September 30,
2013, which consisted of $16.8 million in cash, no long-term debt and
availability of $17.1 million under the Company's working capital facility
with Macquarie Energy.
The Company experienced continued growth in customer enrolments through its
strategic marketing partnership channel initial partners, Cincinnati Bell
(under the Cincinnati Bell Energy brand) and FairPoint Communications (under
the FairPoint Energy brand), and experienced an increased contribution from
its newest and largest partner, Frontier Communications (under the FTR Energy
Services brand), which had its best customer acquisition quarter since
launching last November. In addition to customer growth in the channel, the
Company launched initiatives with each partner that further integrate its
products and services into the marketing and sales activities of its channel
partners, including: a pilot program to sell electricity and natural gas
products through three of Frontier Communications' inbound call centers; a
pilot program for the Cincinnati Bell Energy brand that will utilize digital
customer enrolment kiosks to be located in Cincinnati Bell retail store
locations; and, a trial digital marketing campaign through its FairPoint
The Company's Viridian Energy brand added both customers and independent
contractors during the third quarter, which is the historically weaker period
for customer and contractor additions for the network marketing industry.
Sales efforts for the network marketing channel ramped up in September at
Viridian Energy's annual convention, PowerUp!®, in Washington D.C. with the
announcement of a reseller agreement with SolarCity, the number one
full-service solar provider in the U.S. Management sees the higher-usage,
higher-retention Viridian marketing channel as a key source of long-term
revenue growth, and the addition of solar products and services will further
promote long-term customer relationships within the channel. In addition,
Viridian Energy also began offering natural gas products in select markets in
Maryland, Virginia and the District of Columbia during the period.
The Public Power brand expanded its market penetration in the quarter,
entering three new electric utility service areas in Pennsylvania, and the
Company has multiple initiatives underway to expand Public Power's marketing
Customer attrition was lower in the quarter and represented the lowest
percentage attrition rate during the last twelve-month period. Management
expects the Company will benefit as more new customers are originated through
higher-retention strategic marketing partnerships and the network marketing
Financial Statements and MD&A
The Trust's consolidated financial statements for the period ended September
30, 2013 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
Conference Call Notice
The Trust will hold a conference call to discuss its third quarter 2013
financial results today, November 14, 2013 at 10:00 a.m. Eastern.
To access the conference call by telephone, dial 647-427-7450 or
1-888-231-8191. Please connect approximately 15 minutes prior to the beginning
of the 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 web site for 30 days.
A taped rebroadcast will be available to listeners until 12 a.m. Eastern on
November 21, 2013. To access the rebroadcast, please dial 416-849-0833 or
1-855-859-2056 and enter passcode 22862548, followed by the number sign.
About Crius Energy
Crius Energy has been established to provide investors with a stable and
consistent distribution-producing investment through the acquisition of a
26.8% ownership interest in Crius Energy LLC (the "Company"). The Company is
one of the largest independent energy retailers operating in the United
States, with approximately 610,000 residential customer equivalents. The
Company serves residential and small to medium-size commercial customers in
the United States and markets its products through a variety of sales channels
and brand names. The Company currently sells electricity in 11 states and the
District of Columbia, natural gas in seven states and the District of Columbia
and solar energy products and services in six states.
Crius Energy 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 Crius Energy may be found on www.sedar.com or
This news release contains forward-looking information that involves
substantial known and unknown risks and uncertainties, most of which are
beyond the control of Crius Energy, including, without limitation, those
listed under "Risk Factors" and "Forward-Looking Statements" in Crius
Energy's Annual Information Form dated March 28, 2013 (collectively,
"forward-looking information"). Forward-looking information in this news
release includes, but is not limited to, Crius Energy's objectives and status
as a mutual fund trust and not a SIFT trust, results of operations, financial
position or cash flows, customer revenues and margins, customer additions and
renewals, customer attrition, customer consumption levels, general and
administrative expenses, treatment under governmental regulatory regimes,
distributable cash and Crius Energy's expectations and estimates regarding the
payment of distributions to unit holders. Crius Energy cautions investors of
Crius Energy's securities about important factors that could cause Crius
Energy's actual results to differ materially from those projected in any
forward-looking statements included in this news release. Any statements that
express, or involve discussions as to, expectations, beliefs, plans,
objectives, assumptions or future events or performance are not historical
facts and may be forward-looking 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. No
assurance can be given that the expectations set out in this news release will
prove to be correct and accordingly, prospective investors should not place
undue reliance on these forward-looking statements. These statements speak
only as of the date of this news release and Crius Energy does not assume any
obligation to update or revise them to reflect new events or circumstances.
SOURCE Crius Energy Trust
Michael Fallquist Chief Executive Officer (203) 663-7545
Roop Bhullar Chief Financial Officer (203) 883-9900
Frank Condron TMX Equicom email@example.com (416) 815-0700 ext. 233
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