Just Energy Reports Higher Earnings on Weather, Customer Additions

May 20, 2011
Email This Story

Just Energy Group Inc. reported adjusted EBITDA of $118.3 million for the quarter ending March 31, 2011 (fourth quarter of fiscal 2011), up from $109.0 million a year ago (all figures Canadian).

On a GAAP basis, net income was $177 million versus a net loss of $79 million a year ago, reflecting the reversal in the year-ago unrealized loss on hedging instruments.

Seasonally adjusted gross margin in the fourth quarter increased by 18% to $144.0 million, up from $121.9 million in the same period last year. Gross margin was aided by a colder than normal weather, though the benefits were partially offset by Just Energy's use of weather options to mitigate the cost of unseasonably warm winter weather in the future.

Just Energy reported that margin was negatively affected by $2 million due to the February Texas weather event.

Just Energy has launched a distributed solar generation installation program for commercial customers in New Jersey, under the Hudson Solar brand. In time, the program may be expanded to residential customers.

Just Energy added a net of 73,000 Residential Customer Equivalents (RCEs) from December 31, 2010 through March 31, 2011, with its March 31, 2011 customer count standing at 3.314 million RCEs. The total excludes 22,000 RCEs categorized as variable and short-term in nature.

U.S. electric RCEs were 1.348 million as of March 31, 2011, up 96,000 versus December 31, 2010. U.S. gas RCEs were 574,000 as of March 31, 2011, up 3,000 versus December 31, 2010.

Gross customer additions during the fourth quarter were 224,000.

During an earnings call, executives cited New York, Texas, Ohio, and Michigan as drivers for mass market growth in fiscal 2012, while also highlighting Pennsylvania and Massachusetts as additional growth markets.

Executives also said that while Just Energy is routinely approached with acquisition opportunities, Just Energy is in "no rush" to participate in M&A, but is open to possibilities. Just Energy had been focused last year on integrating the Hudson book into its operations, and is prepared to integrate another book.

For the full fiscal 2011 (ending March 31, 2011), U.S. electric attrition was 17%, and U.S. gas attrition was 23%.

Fiscal 2011 renewal rates were 66% for U.S. electricity and 73% for U.S. gas.

During fiscal 2011, Just Energy had Texas, Illinois and New York electricity customers up for renewal, and the U.S. electricity renewal rate was below the target rate of 75% due to lower renewal rates in New York.

Gas renewals for the U.S. consisted mostly of Illinois customers with a small number of Indiana and New York customers, and were slightly below management's target of 75% due to lower renewal rates in Indiana and New York.

The actual aggregation costs for the year ended March 31, 2011 per customer for residential and commercial customers signed by independent representatives and commercial customers signed by brokers were as follows:

Residential customers
- United States Gas: $177/RCE
- United States Electricity: $150/RCE

Commercial customers
- United States Gas: $126/RCE
- United States Electricity: $85/RCE

Commercial broker customers
- United States Gas: $19/RCE
- United States Electricity: $40/RCE

Annual gross margin per customer added, renewed, or lost during fiscal 2011 was as follows:

Residential and small commercial customers added in the year
- United States Gas: $217
- United States Electricity: $189

Residential and small commercial customers renewed in the year
- United States Gas: $196
- United States Electricity: $177

Residential and small commercial customers lost in the year
- United States Gas: $208
- United States Electricity: $227

- Large commercial customers added in the year: $88

- Large commercial customers lost in the year: $118

For the fiscal year 2011, Just Energy reported higher adjusted EBITDA of $267.2 million versus $236.3 million in fiscal 2010. The increase is attributable to higher gross margin resulting from a 20% increase in per unit sales as a result of the expanded customer base year over year.

Bad debt as a percent of revenue decreased in fiscal 2011 to 2.7%, versus 2.8% in the prior fiscal year. Credit losses in Texas as a percentage of total revenues have declined due to aggressive collection efforts and quicker disconnection for delinquent customers. Continued improvements in Illinois collection efforts and lower default rates for acquired Hudson commercial customers have also contributed to the improvement in the bad debt rate versus the prior year.

Management expects that bad debt expense will remain in the range of 2% to 3% for the next fiscal year assuming that the housing market in the U.S. continues to show signs of improvement.

Bad debt expense for fiscal 2011 was $27.7 million, which was 54% higher in absolute terms versus the prior year due to a 59% increase in revenues from markets where Just Energy assumes the bad debt risk.

Just Energy announced that COO Scott Gahn has elected to step down, effective June 10, 2011. James Lewis will be appointed COO effective that date.

Email This Story

HOME

Copyright 2010-11 Energy Choice Matters.  If you wish to share this story, please email or post the website link; unauthorized copying, retransmission, or republication prohibited.

 

Be Seen By Energy Professionals in Retail and Wholesale Marketing

Run Ads with Energy Choice Matters

Call Paul Ring

954-205-1738

 

 

 

 

 

Energy Choice
                            

Matters