Just Energy Reports Fiscal Third Quarter 2022 Results
February 17 2022 - 5:00PM
Just Energy Group Inc. (“Just Energy” or the “Company”) (TSXV:JE;
OTC:JENGQ), a retail energy provider specializing in electricity
and natural gas commodities and bringing energy efficient
solutions, carbon offsets and renewable energy options to
customers, today announced its third quarter results for fiscal
year 2022.
“Although our third quarter financial results were impacted by
ongoing competitive headwinds and a rising commodity price
environment, the Company delivered sequentially higher net positive
Mass Markets RCE additions over the prior quarter, continuing to
validate our strategic investment in digital marketing and
face-to-face retail channels, and further strengthened by our
higher customer renewal rates,” said Scott Gahn, Just Energy’s
President and Chief Executive Officer.
“Our operational performance during the third quarter
demonstrates our continued commitment to our customers, employees,
partners, and our pursuit of growth in key markets”, added Mr.
Gahn, continuing, “we are also continuing to work closely with our
valued stakeholders towards a successful restructuring plan.”
Third Quarter FY 2022 Performance
- Base EBITDA of $22.3 million
decreased by 60% from the prior comparable quarter, primarily
driven by lower Base gross margin, higher bad debt and
non-commission selling expenses.
- Base Gross Margin of $106.9 million decreased by 19% from the
prior comparable quarter, primarily driven by lower Mass Markets
realized Base Gross Margins due to higher commodity supply prices
and competitive pricing to support growth and retention.
- Mass Markets RCE Net Adds for the
quarter was a gain of 24,000 compared to a decrease of 19,000 for
the three months ended December 31, 2020, driven by the increase in
gross additions while holding attrition and Failed to renew
flat.
- The Company ended the quarter with
$175.4 million of total liquidity, comprised of cash and cash
equivalents. The Company owes $158.5 million under its DIP facility
and has $1,049.7 million of total liabilities subject to
compromise.
- Loss from continuing operations was
$139.2 million, compared to a loss from continuing operations of
$52.3 million during the prior comparable quarter, primarily driven
by an increase in unrealized mark to market losses on derivative
financial instruments associated with supply contracts and
Reorganization Costs related to the proceedings under the
Companies’ Creditors Arrangement Act (Canada) (the “CCAA
Proceedings”) and similar proceedings in the United States,
partially offset by the USD $147.5 million costs reimbursement
related to the February 2021 winter storm under Texas House Bill
4492 (“HB 4492”) that was recognized during the third quarter and
expected to be received in the spring of 2022. Unrealized mark to
market gains and losses on derivative financial instruments relate
to the supply the Company has purchased to deliver contracted
future customer usage at fixed prices1.
1See “Non-IFRS financial measures” in the
MD&A.
Fiscal
Third Quarter Financial Highlights: |
|
|
For the three months ended December 31 |
|
|
|
$ in thousands, except
customer data |
Fiscal 2022 |
Fiscal 2021 |
Change |
Sales |
$650,691 |
$627,016 |
4% |
Base Gross Margin1 |
$106,938 |
$131,608 |
-19% |
Base EBITDA1 |
$22,320 |
$55,785 |
-60% |
Unlevered Free Cash Flow (Year
to date) |
($13,779) |
$27,813 |
-150% |
Cash and cash equivalents |
$175,392 |
$66,635 |
163% |
RCE Mass Markets ending count |
1,173,000 |
1,187,000 |
-1% |
RCE Mass Markets net adds for
the quarter |
24,000 |
(19,000) |
NMF2 |
RCE Commercial ending
count |
1,588,000 |
1,776,000 |
-11% |
|
|
|
|
1 See “Non-IFRS financial measures” in the
MD&A2 Not a meaningful figure
- Sales: Increase
was primarily driven by an increase in the Texas Mass Markets
customer base, as well as higher Commercial revenue in Canada.
- Base gross margin:
Decrease was primarily driven by lower Mass Markets realized Base
Gross Margin due to higher commodity supply prices and competitive
pricing to support growth and retention.
- Base EBITDA:
Decrease was primarily driven by lower Base Gross Margin, higher
bad debt and non-commission selling expenses.
- Unlevered free cash
flow: Decrease is related to higher payments to ERCOT
associated with the Weather Event, together with professional and
advisory costs related to the CCAA Proceedings, partially offset by
the non–payment of trade and other payables subject to compromise
under the CCAA.
Fiscal Third Quarter Expense Detail: |
|
|
|
For the three months ended
December 31 |
|
|
|
($ thousands) |
Fiscal 2022 |
Fiscal 2021 |
Change |
Administrative expenses1 |
$32,473 |
$30,408 |
7% |
Selling commission
expenses |
$27,196 |
$30,485 |
-11% |
Selling non-commission and
marketing expense |
$16,374 |
$11,784 |
39% |
Bad debt expense |
$8,866 |
$3,358 |
164% |
|
|
|
|
1 Includes $1.6 million of Strategic Review
costs for the third quarter of fiscal 2021.
- Administrative
expenses: The increase was primarily driven by credits in
the prior year related to the Canadian wage subsidy that was no
longer available to the Company in the current quarter.
- Selling commission
expenses: The decrease is primarily due to lower
Commercial sales in prior periods.
- Selling non-commission and
marketing expenses: The increase was driven by investment
in digital marketing and sales agent costs to drive increase in
customer additions.
- Bad debt expense:
The increase in bad debt was driven from the higher revenues in
Texas Mass Markets from an increase in the customer base and
release of credit reserves in the prior year.
Mass Markets Segment Performance
Operating Highlights: |
|
|
|
For the three months ended
December 31 |
|
|
|
|
Fiscal 2022 |
Fiscal 2021 |
Change |
Mass Markets gross margin on
added/renewed |
$274/RCE |
$306/RCE |
-10% |
Embedded Gross Margin1 ($
millions) |
$1,058.3 |
$1,023.0 |
3% |
Total gross Mass Markets (RCE)
additions |
91,000 |
45,000 |
102% |
Attrition (trailing 12
months) |
18% |
17% |
6% |
Renewals (trailing 12
months) |
77% |
73% |
5% |
|
|
|
|
1See “Non-IFRS financial measures” in the MD&A
-
Average Mass Markets gross margin per RCE added or
renewed: The decrease was due to higher supply costs and
competitive pricing to support customer growth and retention.
-
Mass Markets Embedded Gross Margin: The increase
was primarily driven by growth in the Texas Mass Markets customer
base.
-
Mass Markets gross RCE additions: The increase was
driven by investment in digital marketing and sales agent
headcount, as well as continued improvement in direct face–to–face
sales channels. The COVID–19 pandemic had substantial impacts in
the three months ended December 31, 2020.
-
Mass Markets attrition rate: The minor increase in
attrition is due to higher sales in the current period.
-
Mass Markets renewal rate: The increase in renewal
rate was driven by improved retention offerings and continued focus
on the customer experience.
Mass Markets RCE Summary:
|
10/1/2021 |
Additions |
Attrition |
Failed torenew |
12/31/2021 |
Change |
Gas |
238,000 |
10,000 |
(8,000) |
(5,000) |
235,000 |
-1% |
Electricity |
911,000 |
81,000 |
(39,000) |
(15,000) |
938,000 |
3% |
Total Mass Markets RCEs |
1,149,000 |
91,000 |
(47,000) |
(20,000) |
1,173,000 |
2% |
|
|
|
|
|
|
|
Commercial Segment Performance
Operating Highlights: |
|
|
|
For the three months ended
December 31 |
|
|
|
|
Fiscal 2022 |
Fiscal 2021 |
Change |
Commercial gross margin on
added/renewed |
$90/RCE |
$91/RCE |
-1% |
Embedded Gross Margin1 ($
millions) |
$325.8 |
$360.0 |
-10% |
Total gross Commercial (RCE)
additions |
43,000 |
38,000 |
13% |
Attrition (trailing 12
months) |
8% |
14% |
-43% |
Renewals (trailing 12
months) |
47% |
51% |
-8% |
|
|
|
|
1See “Non-IFRS financial measures” in the MD&A
-
Average Commercial gross margin per RCE added or
renewed: In line with the prior year comparable
period.
- Commercial Embedded Gross
Margin: The decline resulted from the decrease in the
customer base compared to the prior period.
-
Commercial gross RCE additions: The decrease was
driven by a reduction in large Commercial & Industrial
customers due to competitive market pricing.
-
Commercial attrition rate: The decrease reflects
continued improvement in attrition, in line with the general
recovery in economic activity.
-
Commercial renewal rate: The decline was driven by
fewer RCE expiring in the current period.
Commercial RCE Summary:
|
10/1/2021 |
Additions |
Attrition |
Failed torenew |
12/31/2021 |
Change |
Gas |
408,000 |
10,000 |
(39,000) |
(7,000) |
372,000 |
-9% |
Electricity |
1,253,000 |
33,000 |
(24,000) |
(46,000) |
1,216,000 |
-3% |
Total Commercial RCEs |
1,661,000 |
43,000 |
(63,000) |
(53,000) |
1,588,000 |
-4% |
|
|
|
|
|
|
|
About Just Energy Group
Inc.
Just Energy is a retail energy provider
specializing in electricity and natural gas commodities and
bringing energy efficient solutions, carbon offsets and renewable
energy options to customers. Currently operating in the United
States and Canada, Just Energy serves residential and commercial
customers. Just Energy is the parent company of Amigo Energy,
Filter Group Inc., Hudson Energy, Interactive Energy Group, Tara
Energy, and Terrapass. Visit https://investors.justenergy.com to
learn more.
FORWARD-LOOKING STATEMENTSThis press release
may contain forward-looking statements, including with respect to
the amount of cost recovery proceeds Just Energy expects to receive
from ERCOT under HB 4492. These statements are based on current
expectations that involve several risks and uncertainties which
could cause actual results to differ from those anticipated. These
risks may include, but are not limited to, risks with respect to
the recovery of and timing for the Company to receive any proceeds
from ERCOT; the ability of the Company to continue as a going
concern; the outcome of proceedings under the CCAA proceedings and
similar legislation in the United States; the outcome of any
potential litigation with respect to the Weather Event, the outcome
of any invoice dispute with ERCOT; the Company’s discussions with
key stakeholders regarding the CCAA proceedings and the outcome
thereof; the impact of the evolving COVID-19 pandemic on the
Company’s business, operations and sales; reliance on suppliers;
uncertainties relating to the ultimate spread, severity and
duration of COVID-19 and related adverse effects on the economies
and financial markets of countries in which the Company operates;
the ability of the Company to successfully implement its business
continuity plans with respect to the COVID-19 pandemic; the
Company’s ability to access sufficient capital to provide liquidity
to manage its cash flow requirements; general economic, business
and market conditions; the ability of management to execute its
business plan; levels of customer natural gas and electricity
consumption; extreme weather conditions; rates of customer
additions and renewals; customer credit risk; rates of customer
attrition; fluctuations in natural gas and electricity prices;
interest and exchange rates; actions taken by governmental
authorities including energy marketing regulation; increases in
taxes and changes in government regulations and incentive programs;
changes in regulatory regimes; results of litigation 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 or financial results 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 and on the
U.S. Securities and Exchange Commission’s website at www.sec.gov or
through Just Energy’s website
at www.investors.justenergy.com.
NON-IFRS MEASURESThe financial measures such as
“EBITDA”, “Base EBITDA”, “Base Gross Margin”, “Free Cash Flow”,
“Unlevered Free Cash Flow” 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 these measures are useful
in providing relative operational profitability of the Company’s
business. Please refer to “Key Terms” in the Just Energy Q3 Fiscal
2022’s Management’s Discussion and Analysis for the Company’s
definition of “EBITDA” and other non-IFRS measures.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
FOR FURTHER INFORMATION PLEASE
CONTACT:
Michael CarterChief Financial OfficerJust
Energymcarter@justenergy.com
or
InvestorsMichael CummingsAlpha
IRPhone: (617) 982-0475 JE@alpha-ir.com
MonitorFTI Consulting
Inc.Phone: 416-649-8127 or
1-844-669-6340justenergy@fticonsulting.com
MediaBoyd ErmanLongview
CommunicationsPhone: 416-523-5885berman@longviewcomms.ca
Source: Just Energy Group
Inc.
Supplemental Tables:
Financial and operating
highlights
For the three months ended
December 31.(thousands of dollars, except where indicated and
per share amounts)
|
|
|
|
|
|
% increase |
|
|
|
|
|
|
|
Fiscal 2022 |
|
|
(decrease) |
|
|
Fiscal 2021 |
|
Sales |
|
$ |
650,691 |
|
|
4 |
|
% |
$ |
627,016 |
|
Base Gross Margin1 |
|
|
106,938 |
|
|
(19 |
) |
% |
|
131,608 |
|
Administrative expenses2 |
|
|
32,473 |
|
|
7 |
|
% |
|
30,408 |
|
Selling commission
expenses |
|
|
27,196 |
|
|
(11 |
) |
% |
|
30,485 |
|
Selling non-commission and
marketing expense |
|
|
16,374 |
|
|
39 |
|
% |
|
11,784 |
|
Bad debt expense |
|
|
8,866 |
|
|
164 |
|
% |
|
3,358 |
|
Reorganization Costs |
|
|
40,984 |
|
|
NMF |
|
3 |
|
– |
|
Finance costs |
|
|
14,271 |
|
|
(19 |
) |
% |
|
17,677 |
|
Loss from continuing
operations |
|
|
(139,231 |
) |
|
NMF |
|
3 |
|
(52,327 |
) |
Base EBITDA1 |
|
|
22,320 |
|
|
(60 |
) |
% |
|
55,785 |
|
RCE Mass Markets count |
|
|
1,173,000 |
|
|
(1 |
) |
% |
|
1,187,000 |
|
RCE Mass Markets net adds |
|
|
24,000 |
|
|
NMF |
|
3 |
|
(19,000 |
) |
RCE
Commercial count |
|
|
1,588,000 |
|
|
(11 |
) |
% |
|
1,776,000 |
|
1 See “Non–IFRS financial measures” in the
MD&A.2 Includes $1.6 million of Strategic Review costs for the
third quarter of fiscal 2021.3 Not a meaningful figure.
Balance sheet
(thousands of dollars) |
|
As at |
|
As at |
|
|
|
December 31, |
|
March 31, |
|
|
|
2021 |
|
2021 |
|
Assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
175,392 |
|
$ |
215,989 |
|
Trade and other receivables,
net |
|
|
549,065 |
|
|
340,201 |
|
Total fair value of derivative
financial assets |
|
|
306,730 |
|
|
35,626 |
|
Other current assets |
|
|
183,704 |
|
|
163,405 |
|
Total assets |
|
|
1,542,453 |
|
|
1,091,806 |
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
Trade and other payables |
|
$ |
993,621 |
|
$ |
921,595 |
|
Total fair value of derivative
financial liabilities |
|
|
36,114 |
|
|
75,146 |
|
Total debt |
|
|
623,596 |
|
|
655,740 |
|
Total
liabilities |
|
|
1,669,214 |
|
|
1,686,628 |
|
SUMMARY OF CASH FLOWS
For the nine months ended December 31.
(thousands of dollars)
|
|
Fiscal 2022 |
|
|
Fiscal 2021 |
|
Operating activities from continuing operations |
|
$ |
(39,256 |
) |
|
$ |
(11,030 |
) |
Investing activities from
continuing operations |
|
|
42,821 |
|
|
|
(3,353 |
) |
Financing activities from
continuing operations |
|
|
(45,330 |
) |
|
|
61,820 |
|
Effect of foreign currency
translation |
|
|
1,168 |
|
|
|
(6,895 |
) |
Increase (decrease) in
cash |
|
|
(40,597 |
) |
|
|
40,542 |
|
Cash and cash equivalents –
beginning of period |
|
|
215,989 |
|
|
|
26,093 |
|
Cash
and cash equivalents – end of period |
|
$ |
175,392 |
|
|
$ |
66,635 |
|
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