Just Energy Reports Fiscal First Quarter 2022 Results
August 16 2021 - 8:00AM
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
announced its first quarter results for fiscal year 2022.
“Although the Company continues to see the
impacts of the loss of customers last year in our financial
results, our Q1 FY 2022 sales continue to validate our strategy as
our mass markets RCE additions grew to 81,000 compared to 66,000 in
Q4 FY 2021. We continue to see results from our increased
investment in digital marketing as well as rebuilding our
face-to-face retail channel following the impacts of the COVID-19
pandemic,” said Scott Gahn, Just Energy’s President and Chief
Executive Officer.
“Our operational performance during the first
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.”
First Quarter FY 2022 Performance
- Base EBITDA decreased by 43% from
the prior comparable quarter to $23.0 million due to lower Base
gross margin and increased investment in digital marketing,
partially offset by lower administrative, selling commission and
bad debt expenses.
- Base gross margin decreased by 27%
from the prior comparable quarter to $99.6 million, with the
decrease primarily driven by a lower customer base, unfavourable
exchange rate fluctuations and favourable resettlements during the
prior comparable quarter.
- Total Mass Markets RCE decreased by
1% during the quarter to 1,127,000, due to the one-time 29,000 loss
related to regulatory changes in New York coming into effect in
April 2021. Excluding the impacts of the New York regulatory
change, Total Mass Markets RCE increased by 23,000 or 2% during the
quarter.
- The Company ended the quarter with
$184.3 million of total liquidity, comprised of cash and cash
equivalents. The Company owes $154.9 million under its DIP facility
and has $997.2 million of total liabilities subject to compromise.
The Company also recorded $20.0 million of reorganization costs
during the quarter.
- Profit from continuing operations
was $275.3 million, compared to a profit from continuing operations
of $82.1 million during the prior comparable quarter primarily
driven by unrealized gains on derivative financial instruments
associated with supply contracts.
- The Company continues to work with
its stakeholders under the Companies’ Creditors Arrangement Act
(Canada) (“CCAA”) proceedings.
|
|
|
Fiscal First Quarter Financial Highlights: |
|
|
For the three months ended June 30 |
|
|
|
$ in
thousands, except customer data |
Fiscal 2022 |
Fiscal 2021 |
Change |
Sales |
$608,672 |
$685,694 |
-11% |
Base gross
margin1 |
$99,617 |
$136,279 |
-27% |
Base
EBITDA1 |
$23,021 |
$40,479 |
-43% |
Unlevered
free cash flow 1 |
$7,610 |
$21,897 |
-65% |
Total
liquidity |
$184,271 |
$80,540 |
229% |
RCE Mass
Markets count |
1,127,000 |
1,261,000 |
-11% |
RCE
Commercial count |
1,734,000 |
1,922,000 |
-10% |
1 See “Non-IFRS financial measures” in the
MD&A
- Sales: Decrease
primarily driven by a decline in the customer base due to the
Company’s continued strategy to increase the onboarding of
high-quality customers, regulatory restrictions in Ontario, New
York and California; and selling constraints in direct in-person
sales channels previously posed by the COVID-19 pandemic; and by
competitive pressures on pricing and COVID-19 pandemic in the
commercial segment.
- Base gross margin:
Decrease was primarily driven by a lower customer base,
unfavourable exchange rate fluctuations and favourable
resettlements during the prior comparable quarter.
- Base EBITDA:
Decrease was primarily driven by lower Base gross margin and
increased investment in digital marketing, partially offset by
lower administrative, selling commission and bad debt
expenses.
- Unlevered free cash
flow: Decrease was primarily driven by higher payments to
ERCOT associated with the February winter weather event, partially
offset by the non-payment of trade and other payables subject to
compromise under the CCAA.
|
Fiscal
First Quarter Expense Detail: |
For the three months ended June 30 |
|
|
|
($ thousands) |
Fiscal 2022 |
Fiscal 2021 |
Change |
Administrative expenses1 |
$29,770 |
$39,953 |
-25% |
Selling commission
expenses |
$25,294 |
$35,979 |
-30% |
Selling
non-commission and marketing expense |
$14,378 |
$10,981 |
31% |
Bad debt
expense |
$7,418 |
$11,940 |
-38% |
1 Includes $3.6 million of Strategic Review
costs for the first quarter of fiscal 2021.
- Administrative
expenses: Decrease was primarily driven primarily driven
by strategic review costs in the prior quarter, lower wages
expense, and lower professional and legal fees.
- Selling commission
expenses: Decrease was primarily driven by lower sales
from direct in-person channels related to the impacts of the
COVID-19 pandemic and lower commercial sales driven by competitive
pressures and the COVID-19 pandemic in prior periods.
- Selling non-commission and
marketing expenses: Increase was due to increased
investment in digital marketing.
- Bad debt expense:
Decrease was driven by lower revenues from overall lower customer
base and improvements in the commercial segment.
Mass Markets Segment Performance
Operating
Highlights: |
For the three
months ended June 30 |
|
Fiscal 2022 |
Fiscal 2021 |
Change |
Mass Markets gross margin on
added/renewed |
$239/RCE |
$273/RCE |
-12% |
Embedded gross margin1 ($ millions) |
$1,017 |
$1,204 |
-15% |
Total gross (RCE) additions |
81,000 |
19,000 |
326% |
Attrition (trailing 12
months) |
18% |
22% |
-18% |
Renewals (trailing 12
months) |
76% |
72% |
6% |
1See “Non-IFRS financial measures” in the MD&A
-
Average Mass Markets gross margin per RCE added or
renewed: The decrease was due to a change in channel mix,
including lower cost of acquisition channels.
-
Mass Markets embedded gross margin: The decline
resulted from the lower customer base and the unfavorable foreign
exchange.
-
Mass Markets gross RCE additions: The increase is
due to increased investment in digital marketing and increases in
direct in-person channels. The COVID-19 pandemic had substantial
impacts on the three months ended June 30, 2020.
-
Mass Markets attrition rate: The improvements in
attrition reflect the benefits of focus sales to higher quality
customers and increased focus on the customer experience.
-
Mass Markets renewal rate: The increase was driven
by improved retention offerings and increased focus on the customer
experience.
Mass Markets RCE Summary:
|
4/1/2021 |
Additions |
Attrition |
Failed to renew |
6/30/2021 |
Change |
Gas |
262,000 |
6,000 |
(24,000) |
(4,000) |
240,000 |
-8% |
Electricity |
871,000 |
75,000 |
(39,000) |
(20,000) |
887,000 |
2% |
Total Mass Markets RCEs |
1,133,000 |
81,000 |
(63,000) |
(24,000) |
1,127,000 |
-1% |
Commercial Segment Performance
Operating
Highlights: |
For the three
months ended June 30 |
|
Fiscal 2022 |
Fiscal 2021 |
Change |
Commercial gross
margin on added/renewed |
$86/RCE |
$36/RCE |
139% |
Embedded gross
margin1 ($ millions) |
$333 |
$439 |
-24% |
Total gross
commercial (RCE) additions |
43,000 |
26,000 |
65% |
Attrition
(trailing 12 months) |
9% |
12% |
-25% |
Renewals (trailing
12 months) |
49% |
55% |
-11% |
1See “Non-IFRS financial measures” in the MD&A
-
Average Commercial gross margin per RCE added or
renewed: The increase was due to the change in mix of
contracts.
- Commercial embedded gross
margin: The decline resulted from the lower customer base
and the unfavorable foreign exchange.
-
Commercial gross RCE additions: The increase over
the prior comparable quarter reflects the substantial COVID-19
pandemic impact on the three months ended June 30, 2020.
-
Commercial attrition rate: The increase reflects
the improvement in customer retention post COVID-19 pandemic.
-
Commercial renewal rate: The decrease reflects a
competitive market for Commercial renewals.
Commercial RCE Summary:
|
4/1/2021 |
Additions |
Attrition |
Failed to renew |
6/30/2021 |
Change |
Gas |
413,000 |
4,000 |
(3,000) |
(7,000) |
407,000 |
-1% |
Electricity |
1,414,000 |
39,000 |
(21,000) |
(105,000) |
1,327,000 |
-6% |
Total Commercial RCEs |
1,827,000 |
43,000 |
(24,000) |
(112,000) |
1,734,000 |
-5% |
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 STATEMENTS
This press release may contain forward-looking
statements, including, without limitation, statements with respect
to increased investment in digital marketing, rebuilding the
Company’s face-to-face retail channel following the impacts of the
COVID-19 pandemic and working closely with the Company’s
stakeholders towards a successful restructuring plan. 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 include, but are not limited
to, risks with respect to the decisions to be made by the Public
Utility Commission of Texas (the “Commission”) in connection with
Texas House Bill HB 4492 regarding financing mechanisms to recover
certain costs incurred during the February 2021 extreme weather
event in Texas (the “Weather Event”), and any potential litigation
with respect to such financing mechanism potentially established by
the Commission; the ability of the Company to continue as a going
concern; the outcome of proceedings under the CCAA proceedings with
respect to the Company and similar legislation in the United
States; the outcome of any legislative or regulatory actions with
respect to the Weather Event; the outcome of any invoice dispute
with the Electric Reliability Council of Texas ; the outcome of
potential litigation in connection with the Weather Event; the
quantum of the financial loss to the Company from the Weather Event
and its impact on the Company’s liquidity; the Company’s
discussions with key stakeholders regarding the Weather Event and
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 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 MEASURES
The 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 Q1 Fiscal 2022’s Management’s
Discussion and Analysis for the Company’s definition of “EBITDA”
and other non-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: 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 June 30 |
|
|
|
(thousands of
dollars, except where indicated) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% increase |
|
|
|
|
Fiscal 2022 |
|
(decrease) |
|
Fiscal 2021 |
Sales |
$ |
608,672 |
|
(11 |
)% |
|
$ |
685,964 |
Base gross margin1 |
|
99,617 |
|
(27 |
)% |
|
|
136,279 |
Administrative expenses2 |
|
29,770 |
|
(25 |
)% |
|
|
39,953 |
Selling commission
expenses |
|
25,294 |
|
(30 |
)% |
|
|
35,979 |
Selling non-commission and
marketing expense |
|
14,378 |
|
31 |
% |
|
|
10,981 |
Bad debt expense |
|
7,418 |
|
(38 |
)% |
|
|
11,940 |
Reorganization costs |
|
20,009 |
|
NMF3 |
|
|
- |
Finance costs |
|
12,913 |
|
(41 |
)% |
|
|
21,853 |
Profit from continuing
operations |
|
275,299 |
|
NMF3 |
|
|
82,098 |
Base EBITDA1 |
|
23,021 |
|
(43 |
)% |
|
|
40,479 |
Unlevered free cash flow1 |
|
7,610 |
|
(65 |
)% |
|
|
21,897 |
EGM Mass Market |
|
1,017,300 |
|
(15 |
)% |
|
|
1,203,800 |
EGM Commercial |
|
332,500 |
|
(24 |
)% |
|
|
438,700 |
RCE Mass Markets count |
|
1,127,000 |
|
(11 |
)% |
|
|
1,261,000 |
RCE
Commercial count |
|
1,734,000 |
|
(10 |
)% |
|
|
1,922,000 |
1 See “Non-IFRS financial measures” in the
MD&A.2 Includes $3.6 million of Strategic Review costs for the
first quarter of fiscal 2021. 3 Not a meaningful figure.
Balance sheet
(thousands of dollars)
|
As at |
|
|
As at |
|
6/30/2021 |
|
|
3/31/2021 |
Assets: |
|
|
|
|
|
Cash |
$ |
184,271 |
|
$ |
215,989 |
Trade and other receivables,
net |
|
365,766 |
|
|
340,201 |
Total fair value of derivative
financial assets |
|
270,755 |
|
|
35,626 |
Other current assets |
|
148,826 |
|
|
163,405 |
Total assets |
|
1,311,278 |
|
|
1,091,806 |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Trade and other payables |
$ |
945,977 |
|
$ |
921,595 |
Total fair value of derivative
financial liabilities |
|
19,338 |
|
|
75,146 |
Total debt |
|
623,186 |
|
|
655,740 |
Total
liabilities |
|
1,622,815 |
|
|
1,686,628 |
|
|
|
|
|
|
SUMMARY OF CASH
FLOWS |
|
|
|
|
|
For the three months ended
June 30 |
|
|
|
|
|
(thousands of dollars) |
|
|
|
|
|
|
Fiscal 2022 |
|
Fiscal 2021 |
Operating activities from continuing operations |
$ |
(1,314) |
|
$ |
10,649 |
Investing activities from
continuing operations |
|
(1,809) |
|
|
(1,686) |
Financing activities from
continuing operations |
|
(26,234) |
|
|
(14,353) |
Effect of foreign currency
translation |
|
(2,361) |
|
|
(697) |
Decrease in cash |
|
(31,718) |
|
|
(6,087) |
Cash and cash equivalents –
beginning of period |
|
215,989 |
|
|
26,093 |
Cash
and cash equivalents – end of period |
$ |
184,271 |
|
$ |
20,006 |
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