Crius Earnings Lower On Solar Exit, Merger Costs; Retail Energy Adjusted Earnings Higher
Customer Count Decreases On Margin Discipline, Movement Away From Municipal Aggregation
May 10, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
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Crius Energy Trust ("Crius Energy", the "Company", or the "Trust") today announced its financial results for the three month period ended March 31, 2019 (first quarter of 2019). All figures are in U.S. dollars unless otherwise noted.
Crius reported a net loss of $26.4 million in the first quarter of 2019, compared to a net income of $4.3 million in the first quarter of 2018.
Crius reported Adjusted EBITDA of $19.8 million in the first quarter of 2019, in line with $19.8 million achieved in the first quarter of 2018. During the quarter, the deregulated energy business contributed Adjusted EBITDA of $26.2 million after normalizing for non-recurring costs related to the acquisition by Vistra (as defined below) and the negative contribution from the winddown of the solar business. This represents an improvement of $3.0 million from the prior comparable period.
Crius reported gross margin of $58.7 million for the first quarter of 2019, compared to gross margin of $59.9 million in the first quarter of 2018.
Crius reported revenue of $296.4 million in the first quarter of 2019, representing a 7.9% decrease from $321.8 million in the first quarter of 2018.
Crius reported net customer attrition of 14,000 in the first quarter of 2019, with customer count (all customer data on an RCE basis) totaling 1,190,000 at the end of the first quarter of 2019. Crius was serving 1,204,000 RCEs at the end of 2018
Crius added 116,000 customers organically from sales and marketing channels in the first quarter of 2019 compared to the average in the prior four quarters of 120,000.
Gross customer drops in the first quarter were 130,000 customers, compared to the average in the prior four quarters of 181,000.
As of the end of the first quarter of 2019, the Company is in the advanced stages of winding down its Verengo solar installation business, and expects to complete the wind-down by the end of the second quarter.
"In the first quarter of 2019, the Company continued to benefit from the improvement of the profitability of our deregulated energy business through cost-reduction, high-margin customer growth, and increasing customer lifetime value through portfolio optimization. Our strategic initiatives have contributed to the overall value of the portfolio, increasing by $5.8 million or 1.1% in the first quarter of 2019, as measured by Embedded Margin, which we believe contributes to long-term Unitholder value," Crius said
"Overall revenues decreased 7.9% in the first quarter of 2019 to $296.4 million from $321.8 million in the prior comparable period. The decrease was primarily attributable to 14.5% lower average customer numbers than in the first quarter of 2018," Crius said
"Gross margin for the first quarter of 2019 was $58.7 million, representing a decrease from $59.9 million of gross margin in the first quarter of 2018. As a percentage of total revenue, gross margin was 19.8% in the first quarter of 2019, an increase from 18.6% of total revenue in the prior comparable quarter. The quarter-over-quarter reduction in gross margin was primarily attributable to lower average customer numbers, with the higher gross margin as a percentage of revenue being the result of the focused strategy of adding higher-margin customers to the portfolio," Crius said
Adjusted EBITDA in the first quarter of 2019 was $19.8 million, in line with the first quarter of 2018. "Current quarter Adjusted EBITDA represents a normalized deregulated energy result of $26.2 million -- an improvement of $3.0 million from the prior comparable period -- after excluding the negative $0.5 million contribution from the solar business and $5.9 million in non-recurring general and administrative expenses incurred in the quarter primarily related to the acquisition by Vistra (the 'Vistra Transaction')," Crius said
Crius Energy ended the quarter with net debt of $81.9 million, representing a leverage ratio of 1.2x based on net debt to last twelve months Adjusted EBITDA.
As at March 31, 2019, Crius Energy had 1,190,000 customers compared to 1,204,000 at the end of 2018, representing a net customer decline of 14,000 during the first quarter of 2019. Gross additions of 116,000 customers, were lower than the average in the prior four quarters of 120,000, impacted by the decision to not participate in the municipal aggregation segment, which was a key contributor to customer additions in prior periods, and increased margin requirements across all sales channels. Gross customer drops in the first quarter of 2019 totaled 130,000 customers compared to the average in the prior four quarters of 181,000.
Update on Vistra Transaction and Payment of Declared Distribution for Q1 2019
"Crius Energy and Vistra are awaiting approval from the Federal Energy Regulatory Commission ('FERC') in order to consummate the Vistra Transaction. The parties expect to close the Vistra Transaction no later than the fifth business day after the receipt of such FERC approval, subject to the satisfaction or waiver of other customary closing conditions," Crius said
Given the uncertainty on timing to receive FERC approval, Crius said that the payment of the previously-declared distribution of C$0.209 per trust unit of the Trust for the first quarter of 2019 has been amended such that (a) the distribution record date will be March 26, 2019 (as previously announced), and (b) the distribution payment date will be the closing date of the Vistra Transaction.