Just Energy Group Inc (fka JENGQ)

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Just Energy Reports Third Quarter Fiscal 2014 Results
- Base EBITDA increases 31% year over year, in line with guidance - Base Funds from operations increases 10% year over year - Management reaffirms fiscal 2014 Base EBITDA guidance of $220 million
TORONTO, ONTARIO--(Marketwired - Feb. 13, 2014) - Just Energy Group, Inc. (TSX:JE)(NYSE:JE), a competitive retailer of electricity and natural gas, today announced results for its third quarter of fiscal 2014.
Key 3Q Highlights:
-- Customer additions and installs of 345,000, which represents the ninth
consecutive quarter over 300,000. Net customer additions of 50,000,
resulting in a total customer base of 4.6 million, increased 7% year over
year.

-- Gross Margin of $162.8 million, increased 16% year over year.

-- Embedded Gross Margin of $2.4 billion, increased 9% year over year.

-- Base EBITDA from continuing operations of $72.2 million, increased 31%
year over year.

-- Base Funds from continuing operations of $38.8 million, increased 10%
year over year. Payout ratio on Base Funds from operations of 80% was
reduced from 126% in fiscal 2013.

-- Third quarter and year to date results are consistent with achieving the
Company's published guidance for Base EBITDA of $220 million and a
dividend payout ratio on Funds from continuing operations of less than
100% in fiscal 2014.


For the three months ended December 31 Fiscal 2014 Fiscal 2013
(Millions of dollars except where
indicated and per share amounts)
-------------------------------------- ------------ ------------
Sales $ 859.0 $ 736.6
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Gross margin 162.8 140.3
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Administrative expenses 35.7 34.9
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Selling & marketing expenses 48.6 49.9
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Finance costs 23.0 18.2
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Profit from continuing operations 160.2 41.8
-------------------------------------- ----------- -----------
Profit (loss) from discontinued
operations 17.3 (1.6)
-------------------------------------- ----------- -----------
Profit 177.5 40.2
-------------------------------------- ----------- -----------
Earnings per share from continuing
operations - basic 1.12 0.30
-------------------------------------- ----------- -----------
Earnings per share from continuing
operations - diluted 0.96 0.28
-------------------------------------- ----------- -----------
Dividends/distributions 30.9 44.6
-------------------------------------- ----------- -----------
Base EBITDA from continuing operations 72.2 55.2
-------------------------------------- ----------- -----------
Base Funds from continuing operations 38.8 35.3
-------------------------------------- ----------- -----------
Payout ratio on Base Funds from
continuing operations 80% 126%
-------------------------------------- ----------- -----------
For the nine months ended December 31 Fiscal 2014 Fiscal 2013
(Millions of dollars except where
indicated and per share amounts)
-------------------------------------- ----------- -----------
Sales $ 2,458.1 $ 2,107.1
-------------------------------------- ----------- -----------
Gross margin 410.7 368.2
-------------------------------------- ----------- -----------
Administrative expenses 106.9 102.1
-------------------------------------- ----------- -----------
Selling & marketing expenses 148.9 158.8
-------------------------------------- ----------- -----------
Finance costs 67.9 52.9
-------------------------------------- ----------- -----------
Profit from continuing operations 6.0 398.3
-------------------------------------- ----------- -----------
Profit (loss) from discontinued
operations 18.0 (6.4)
-------------------------------------- ----------- -----------
Profit 24.0 392.0
-------------------------------------- ----------- -----------
Earnings per share from continuing
operations - basic 0.04 2.85
-------------------------------------- ----------- -----------
Earnings per share from continuing
operations - diluted 0.04 2.46
-------------------------------------- ----------- -----------
Dividends/distributions 92.5 133.4
-------------------------------------- ----------- -----------
Base EBITDA from continuing operations 140.4 102.8
-------------------------------------- ----------- -----------
Base Funds from continuing operations 80.9 49.0
-------------------------------------- ----------- -----------
Payout ratio on Base Funds from
continuing operations 114% 272%
-------------------------------------- ----------- -----------
Embedded gross margin 2,386 2,197
-------------------------------------- ----------- -----------
Energy customers (RCEs) 4,360,000 4,124,000
-------------------------------------- ----------- -----------
Home Services customers (installed
units) 287,000 225,000
-------------------------------------- ----------- -----------
Total customers (RCEs and installed
units) 4,647,000 4,349,000
-------------------------------------- ----------- -----------


Chief Executive Officer Ken Hartwick, commenting on the quarterly results, stated: "Our plan for fiscal 2014 was simple. We would grow our margin by double digits reflecting the customer base growth built over the past two years. We intended to combine this growth in margin with flat or lower spending on administrative and selling and marketing costs. The result would be a 26% year over year increase in Base EBITDA. I am pleased to say that, year to date, we are right on track for these results."
Executive Chair Rebecca MacDonald added: "We continue to control costs and grow our top line. The result is a much lower payout ratio supporting our dividend moving forward. As many of our shareholders rely on these dividends for a portion of their income, your management team will continue to work to further reduce the payout ratio over time. This will allow us to support the dividend as well as utilize cash flow to reduce debt and fund growth in the future."
Third Quarter Operating Performance
The third quarter financial results were a continuation of the plan laid out in the Company's guidance for fiscal 2014. For nine consecutive quarters, Just Energy has added more than 300,000 customers. The resulting build-up of embedded gross margin continued to deliver substantial gross margin growth which, combined with tight cost control, led to a third consecutive quarter of Base EBITDA and Base Funds from operations growth.
Customers Additions
Customer additions in the third quarter were 345,000, down 2% from those added in Q3 of fiscal 2013. The overall customer base, including installations for the Home Services division grew to 4.6 million, up 7% from a year earlier.
New additions were composed of 165,000 new residential customers, up 9% from the 151,000 added in the third quarter of fiscal 2013. The result was 17,000 Consumer division net customers added, reversing a longstanding downtrend in these higher margin customers. Commercial gross additions totaled 168,000, down 12% from 190,000 added in the prior comparable quarter. The Company has made a conscious effort to maintain new customer margins at the expense of signing high volume/low margin customers that would otherwise be available. While this results in lower net additions, analysis shows that this improves the overall profitability of the Company. The Home Services division saw a 28% year over year growth in total installations growing to 287,000 customers. Included in this total are 23,000 smart thermostats installed either in product bundles or on a stand-alone basis. When combined with our commodity products, this bundle represents a significantly more valuable customer.
To view Figure 1, "Quarterly Customer Additions," please visit the following link: http://media3.marketwire.com/docs/JE13Fig1.pdf.
The Company maintains its focus on the preservation and profitability of the energy customer base. A total of 295,000 customers were lost through attrition and failure to renew during the quarter and replaced by new customers. This compares to 241,000 customer losses in the prior comparable period and 304,000 lost in Q2, fiscal 2014.
(MORE TO FOLLOW) Dow Jones Newswires
February 13, 2014 16:39 ET (21:39 GMT)