Just Energy Reports Number Of Customers Dropped To Default Service Due To New Regulations In New York

Just Energy Grows Mass Market RCEs, Excluding Customers Lost Due To New Product Limits In New York

Quarterly Results Lower On Decreased RCE Count, Investment In Digital Marketing

August 16, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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Just Energy reported results for the three months ended June 30, 2021 (first quarter of fiscal year 2022)

Just Energy Base EBITDA decreased by 43% to $23.0 million for the three months ended June 30, 2021 compared to $40.5 million for the three months ended June 30, 2020 (all $ Canadian unless otherwise noted). The decrease was driven by lower Base gross margin and increased investment in digital marketing, partially offset by lower administrative, selling commission and bad debt expenses, the Company said

Just Energy's Mass Markets segment Base EBITDA decreased by 47% to $35.0 million for the three months ended June 30, 2021 compared to $66.0 million for the three months ended June 30, 2020. The decrease was driven by lower Base gross margin primarily due to a decline in the customer base and increased investment in digital marketing partially offset by a lower selling commission and bad debt expenses. Commercial segment Base EBITDA increased by $8.8 million to $5.3 million for the three months ended June 30, 2021 compared to a negative $3.5 million for the three months ended June 30, 2020. The increase in Commercial segment Base EBITDA is driven by lower selling commission and bad debt expenses.

Just Energy's Base gross margin decreased by 27% to $99.6 million for the quarter ended June 30, 2021 compared to $136.3 million for the quarter ended June 30, 2020. The decrease was primarily driven by a lower customer base, unfavourable exchange rate fluctuations and favourable resettlements during the prior comparable quarter.

Mass Markets Base gross margin decreased by 32% to $75.0 million for the three months ended June 30, 2021 compared to $111.0 million for the three months ended June 30, 2020. The decline in Base gross margin was primarily driven by a decline in the customer base, lower exchange rate and favorable resettlements during the prior comparable quarter.

Commercial Base gross margin decreased by 2% to $24.6 million for the three months ended June 30, 2021 compared to $25.3 million for the three months ended June 30, 2020. The decrease in Commercial Base gross margin was driven primarily by a decline in the customer base, favorable resettlements during prior comparable quarter and lower exchange rate, partially offset by lower capacity obligation across several markets.

Just Energy sales decreased by 11% to $608.7 million for the three months ended June 30, 2021 compared to $686.0 million for the three months ended June 30, 2020. "The decrease was primarily driven by a decline in the customer base due to 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 channels previously posed by the COVID-19 pandemic; and by competitive pressures on pricing and COVID-19 pandemic in the commercial segment," Just Energy said

As of June 30, 2021, Just Energy's commodity business was serving 2.861 million RCEs, down from 2,960,000 RCEs as of April 1, 2021

For the three months ending June 30, 2021, gross RCE additions were 124,000, with attrition of 87,000 RCEs and 136,000 RCEs failing to renew

As of June 30, 2021, Just Energy was serving 1.127 million Mass Market RCEs, versus 1.133 million as of April 1, 2021.

For the three months ending June 30, 2021, gross Mass Markets RCE additions increased were 81,000, compared to 19,000 for the three months ended June 30, 2020. The increase is due to increased investment in Digital Marketing and increases in direct face-to-face channels. The COVID-19 pandemic had substantial impacts in the three months ended June 30, 2020.

"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.

For the three months ending June 30, 2021, Mass Markets RCE attrition was 63,000, compared to 44,000 for the three months ended June 30, 2020.

Just Energy said that, "The increase in attrition is driven by regulatory constraints in New York coming into effect in April 2021 requiring certain variable rate customers to be dropped to the utility." Specifically, the New York regulations results in a loss of 29,000 RCEs since April 1, 2021

"Excluding the one-time 29,000 loss related to the regulatory changes in New York coming into effect in April 2021, Mass Markets RCE Net Adds for the three months ended June 30, 2021 was a positive 23,000," Just Energy said

As of June 30, 2021, Just Energy was serving 1.734 million Commercial RCEs, versus 1.827 million as of April 1, 2021.

On a customer count basis, Just Energy was serving 930,000 customers at June 30, 2021, versus 1,061,000 customers a year ago.

On an RCE basis, Just Energy's Mass Markets attrition rate for the three months ended June 30, 2021 increased three percentage points to 6% from 3% for the three months ended June 30, 2020, driven by regulatory constraints in New York coming into effect in April 2021. The Commercial attrition rate for the three months ended June 30, 2021 decreased by three percentage point to 1% from 4% compared to the three months ended June 30, 2020 reflecting improvement in customer retention following the reduction of restrictions due to the COVID-19 pandemic.

Just Energy's Mass Markets renewal rate for the three months ended June 30, 2021, increased to 78% from 69% for the three months ended June 30, 2020 driven by improved retention offerings and increased focus on the customer experience. The Commercial renewal rate for the three months ended June 30, 2021 decreased to 49% from 55% for the three months ended June 30, 2020.

Just Energy's Mass Markets average acquisition cost (customer signed by sales agents including sales through digital channel) decreased by 10% to $235/RCE for the twelve months ended June 30, 2021 compared to $261/RCE reported for the twelve months ended June 30, 2020, primarily from lower exchange rate and a change in channel mix towards lower cost channels.

The Commercial average customer acquisition cost (Commercial customers signed by brokers) decreased by 4% to $45/RCE for the twelve months ended June 30, 2021 compared to $47/RCE for the twelve months ended June 30, 2020, due to lower exchange rate.

For the three months ended June 30, 2021, Just Energy's average gross margin per RCE for the customers added or renewed by the Mass Markets segment was $239/RCE, a decrease of 12% from $273/RCE for the three months ended June 30, 2020 due to change in channel mix including lower cost of acquisition channels.

For the Commercial segment, the average gross margin per RCE for the customers signed during the three months ended June 30, 2021 was $86/RCE, an increase of 139% from $36/RCE for the three months ended June 30, 2020 due to the mix of the type of contracts added or renewed in the prior comparable quarter.

Just Energy had $184.3 million of total liquidity, comprised of cash and cash equivalents as of June 30, 2021. 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 ending June 30, 2021.

As previously reported, Just Energy anticipates that it will recover up to approximately USD $100 million of eligible costs under the Texas uplift financing program

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