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Crius Energy Enters Agreement For Mobile Phone Service Provider To Sell Crius Services

Crius Reports Negative Impact On Q3 Results From Mild Weather

November 13, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Crius Energy Trust reported Adjusted EBITDA of $18.3 million in the third quarter of 2017, representing a decrease from $20.6 million achieved in the third quarter of 2016.

The decrease in Adjusted EBITDA for the third quarter of 2017 was primarily attributable to lower average usage per customer due to mild weather conditions experienced in the third quarter together with decreased gross margin per unit resulting from a previously reported trend in changing customer portfolio mix, as Crius now serves an increased mix of lower-margin commercial and municipal aggregation customers in the portfolio

Gross margin for the third quarter of 2017 was $55.0 million, an increase from $47.8 million of gross margin in the third quarter of 2016, impacted by the material variance in year-over-year summer temperatures, partially offset by the incremental gross margin from the acquired USG&E business. As a percentage of total revenue, gross margin was 20.4% in the third quarter of 2017, a decrease from 21.5% in the same quarter of the previous year. The decrease in gross margin as a percentage of revenue in the quarter is consistent with recent trends as a result of the increased mix of lower-margin commercial and municipal aggregation customers in the portfolio, partially offset by the addition of the higher-margin USG&E customer portfolio.

Crius management estimated that the reduced customer volumes as compared to the prior comparable quarter had a negative impact of $9.2 million on gross margin, with an estimated $4.7 million being attributable to the cooler-than-normal 2017 summer and an estimated $4.5 million being attributable to the warmer-than-normal 2016 summer, which benefited gross margins in the prior comparable quarter.

Crius announced in reporting earnings that it has entered into a three-year agreement with CREDO Mobile, an American mobile virtual network operator headquartered in San Francisco with a network of approximately three million subscribers, to offer energy products to CREDO Mobile's customers through the Crius-Comcast Energy Rewards Integrated Energy Platform (see background on the platform here)

"The three-year partnership will allow access to CREDO Mobile's network of subscribers, with a focus on sales of green energy and residential solar, in keeping with CREDO Mobile's environmental commitment," Crius said

CREDO describes itself as, "America's only progressive phone company."

In its retail electric and natural gas businesses, Crius was serving 1.446 million RCEs as of September 30, 2017, versus 1.028 million as of June 30, 2017 and 962,000 a year ago.

The net growth of 418,000 RCEs from June 30, 2017 reflects net organic growth of 68,000 and approximately 350,000 RCEs added through the previously reported acquisition of USG&E. The 350,000 RCEs added from USG&E were lower than the expected 375,000 RCEs previously announced due to differing accounting methodologies adopted by Crius upon acquisition.

Gross organic additions were 197,000 for the quarter, representing an increase over the average in the prior four quarters of 128,000.

Gross customer drops in 3Q 2017 of 129,000 customers were higher than the average in the prior four quarters of 107,000. On a comparable period basis, the increased absolute number of customer drops is expected due to the expanded size of the portfolio as a result of the acquisition of USG&E. On a percentage basis, customer drops were 9.9% for the third quarter of 2017, which compares favorably to the average quarterly attrition of 10.3% for the trailing four quarters.

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