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Just Energy Reports Second Quarter Fiscal 2016 Results

The following excerpt is from the company's SEC filing.

Second Quarter Sales up 18%; Gross Margin Increases 26%; Base EBITDA grows 44%

Strong Performance Drives Significant Cash Flow and Base Funds from Continuing Operations Growth

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 2016.

Key Fiscal 2016 Second Quarter Highlights:

Sales of $1,087.3 million for the second quarter of fiscal 2016, an increase of 18% from $918.3 million in the seco nd quarter of fiscal 2015.

Gross Margin of $167.2 million an increase of 26% year over year, driven by the successful implementation of a margin per customer improvement initiative.

Base EBITDA of $45.7 million, an increase of 44% year over year.

Payout ratio on Base Funds from continuing operations was 50% for the second quarter, a significant improvement from 78% one year ago as a Base Funds from continuing operations increased by 59% year over year to $37.8 million.

Cash and cash equivalents were $88.6 million as of September 30, 2015, an increase of 197% from $29.8 million reported in the same quarter a year ago.

During the quarter, the Company announced the successful renegotiation of its credit facility, resulting in an increase of its line of credit to $277.5 million from $210.0 million. The credit facility was also extended for an additional three years through September 1, 2018 under favorable terms. No cash was withdrawn on the facility as of September 30, 2015.

Long-term debt as of September 30, 2015 was $685.5 million, a decrease of 16% compared to $811.8 million as of September 30, 2014. Book value net debt was under 3.0x for the trailing 12 month Base EBITDA, significantly improved from 4.3x just one year ago.

Gross customer additions for the second quarter of fiscal 2016 were 290,000, a decrease of 18% compared to 354,000 customers added in the second quarter of fiscal 2015. Net additions were 4,000 for the second quarter of fiscal 2016, compared with 67,000 net customer additions in the second quarter of fiscal 2015.

Company reaffirms fiscal 2016 Base EBITDA guidance range of $193 million to $203 million. Guidance equates to a 20% year-over-year increase when adjusted for the change in classification of customer acquisition costs in fiscal 2016.

Financial highlights

For the three months ended September 30

(thousands of dollars, except where indicated and per share amounts)

% increase

(decrease)

Fiscal 2015

1,087,256

918,260

Gross margin

167,155

132,515

Administrative expenses

40,294

38,246

Selling and marketing expenses

65,248

53,088

Finance costs

17,641

18,700

Loss from continuing operations

(88,258

(94,255

Loss from discontinued operations

(40,901

(135,156

Loss per share from continuing operations available to shareholders - basic

Loss per share from continuing operations available to shareholders - diluted

Dividends/distributions

18,701

18,622

45,685

31,734

Base Funds from operations

37,775

23,756

Payout ratio on Base Funds from operations

For the six months ended September 30

2,020,271

1,739,309

318,062

255,905

77,892

71,262

128,029

108,295

34,497

37,471

Profit (loss) from continuing operations

41,413

(139,998

Profit (loss) from discontinued operations

(34,072

(174,070

Profit (loss) per share from continuing operations available to shareholders - basic

Profit (loss) per share from continuing operations available to shareholders -diluted

37,400

49,555

84,560

61,920

67,594

39,346

Embedded gross margin

1,957,000

1,755,200

Total customers (RCEs)

4,613,000

4,604,000

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.

Not a meaningful figure.

"During the second quarter our business continued to perform very well, delivering results that demonstrate the significantly improved profitability profile of the Company and highlight our ability to generate meaningful cash flow," commented Co-CEO Deb Merril. "Our profitability profile continued to improve as a result of our margin per customer improvement initiative. As a result, we were able to convert solid top-line sales growth of 18% during the period to a 44% increase in Base EBITDA. In addition to adding more profitable customers, our results were aided by the introduction of new products with incremental margins, increased fees and service income and lower realized commodity costs resulting from our effective hedging strategies."

"The improved profitability in the business drove significantly improved cash flow and increased Base Funds from continuing operations. We ended the quarter with $89 million in cash and cash equivalents, up from $79 million at the end of fiscal year 2015 and up from $30 million 12 months ago. We grew our cash position while also repurchasing $6.0 million of the $330 million convertible debenture under the normal course issuer bid program during the past year. Base Funds from continuing operations increased by 59% during the quarter and are up 72% during the first six months of the year compared to last year."

"We continue to operate from a greatly improved financial position, which we expect will continue to strengthen. Our financial flexibility, combined with our commitment to maintaining a capital light model, supports our ability to pursue our growth strategy, which focuses on new geographies, innovative products that meet customers' changing demands, and new energy management solutions that will continue to disrupt the traditional utility model."

"Our first-half performance puts us on track to achieve our full-year expectations, as we are now beginning our largest seasonal sales generating quarters," added Co-CEO James Lewis. "During the second quarter, gross margin increased 26% to $167 million with both the Consumer and Commercial divisions growing double-digits. We remain focused on increasing the gross margin per customer added for commercial customers and as a result, have been more selective in the margin added per customer. The net customer additions were down year over year, driven by our sales channel rationalization that better aligns with our pursuits of driving more profitable customer additions and a commitment to only accept new customers that meet our profitability profile. We were able to add 290,000 gross customers and 4,000 on a net basis during...


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