Just Energy Posts Fifth Consecutive Quarter Of Net Mass Market Growth; Provision For Expected Credit Loss Increases By 469% -- EnergyChoiceMatters.com

Just Energy Posts Fifth Consecutive Quarter Of Net Mass Market Growth; Base EBITDA & Gross Margin Up

Provision For Expected Credit Loss Increases By 469%

November 29, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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Just Energy Group Inc. reported results for the quarter ending September 30, 2022 (second fiscal quarter)

In its commodity business, Just Energy had 2,796,000 RCEs as of September 30, 2022, up from 2,750,000 as of July 1, 2022

In terms of the Mass Markets commodity business, at September 30, 2022, Just Energy had 1,266,000 Mass Markets RCEs, up from 1,239,000 as of July 1, 2022.

The approximately 27,000 RCE net growth in commodity Mass Markets RCEs from July 1, 2022 to September 30, 2022 compares to about 43,000 RCE net growth in commodity Mass Markets RCEs from March 31, 2022 to June 30, 2022; net growth of 27,000 Mass Markets RCEs from December 31, 2021 to March 31, 2022; net growth of 24,000 mass market RCEs from October 1, 2021 to December 31, 2021; and net growth of 9,000 mass market RCEs from July 1, 2021 to September 30, 2021

During the quarter ending September 30, 2022, gross Mass Markets RCE additions were 117,000. This compares to gross Mass Markets RCE additions of 139,000 from April 1, 2022 to June 30, 2022, but is 36% higher than the gross Mass Markets RCE additions of 86,000 for the three months ended September 30, 2021. The year-over-year increase is driven by investment in digital marketing, as well as continued improvement in direct face–to–face channels, Just Energy said

Mass markets average acquisition cost decreased by 6% to $180/RCE for the trailing twelve months ended September 30, 2022 compared to $192/RCE reported for the twelve months ended September 30, 2021, due to a change in channel mix towards lower cost channels.

Mass markets RCE attrition increased by 24% to 62,000 for the three months ended September 30, 2022 as compared to 50,000 for the three months ended September 30, 2021. The increase was driven by higher sales and a higher RCE customer base.

The mass markets attrition rate for the trailing twelve months ended September 30, 2022 decreased by one percentage points to 17% compared to the 18% for the twelve months ended September 30, 2021.

Mass markets failed to renew RCEs increased by 4% to 28,000 for the three months ended September 30, 2022 compared to 27,000 for the three months ended September 30, 2021

In terms of the Commercial commodity business, at September 30, 2022, Just Energy had 1,530,000 Commercial RCEs, up from 1,511,000 as of July 1, 2022.

Commercial RCE gross additions increased by 83% to 75,000 for the three months ended September 30, 2022 compared to 41,000 for the three months ended September 30, 2021.

Commercial average customer acquisition cost increased by 19% to $42/RCE for the trailing twelve months ended September 30, 2022 compared to $35/RCE for the twelve months ended September 30, 2021. The increase is consistent with the increase in average gross margin per RCE for Commercial adds and renewals, Just Energy said

Commercial RCE attrition decreased by 12% to 29,000 for the three months ended September 30, 2022 compared to 33,000 for the three months ended September 30, 2021.

The commercial attrition rate for the trailing twelve months ended September 30, 2022 increased by three percentage points to 11% compared to the 8% for the twelve months ended September 30, 2021.

Commercial Failed to renew RCEs decreased by 37% to 27,000 RCEs for the three months ended September 30, 2022 compared to 43,000 RCEs for the three months ended September 30, 2021.

For the three months ended September 30, 2022, Just Energy's Base EBITDA increased by 31% to $32.1 million, compared to $24.5 million for the three months ended September 30, 2021. The increase was primarily driven by higher Base Gross Margin, partially offset by higher provision for expected credit loss.

Mass Markets segment Base EBITDA decreased by 9% to $31.1 million for the three months ended September 30, 2022 compared to $34.3 million for the three months ended September 30, 2021. Higher Base Gross Margin was offset by a higher provision for expected credit losses and administrative cost to support a higher customer base.

Commercial segment Base EBITDA increased 126% to $18.8 million for the three months ended September 30, 2022 compared to $8.3 million for the three months ended September 30, 2021. The increase was primarily driven by higher Base Gross Margin.

On a consolidated basis, Just Energy's Base Gross Margin increased by 23% to $113.6 million for the three months ended September 30, 2022 compared to $92.4 million for the three months ended September 30, 2021. The increase was primarily driven by higher realized margins and growth in mass markets customer base.

Mass Markets Base Gross Margin increased by 16% to $79.8 million for the three months ended September 30, 2022 compared to $68.6 million for the three months ended September 30, 2021. The increase was primarily driven by higher mass market volumes due to increase in customer base.

Mass Markets average realized Base Gross Margin for the trailing 12 months ended September 30, 2022 decreased 15% to $214 per RCE compared to $252 for the trailing 12 months ended September 30, 2021. The decrease is primarily attributable to higher supply costs and competitive market pricing to support customer growth and retention

For the three months ended September 30, 2022, the mass markets average gross margin per RCE for the customers added or renewed was $345/RCE, an increase of 64% from $211/RCE for the three months ended September 30, 2021, due to change in channel strategy and channel mix.

Commercial Base Gross Margin increased by 42% to $33.8 million for the three months ended September 30, 2022 compared to $23.8 million for the three months ended September 30, 2021. The increase was primarily driven by higher realized margins partially offset by lower customer base.

Commercial average realized Base Gross Margin for the trailing 12 months ended September 30, 2022 increased 20% to $90 per RCE compared to $75 for the trailing 12 months ended September 30, 2021.

For the three months ended September 30, 2022, the Commercial average gross margin per RCE for the customers added or renewed was $91/RCE, up from $70/RCE for the three months ended September 30, 2021

On a consolidated basis, Just Energy's revenue increased by 22% to $685.0 million for the three months ended September 30, 2022 compared to $559.4 million for the three months ended September 30, 2021. The increase was primarily driven by an increase in the Texas mass market customer base and warmer weather in Texas.

Provision for expected credit loss increased by 469% to $16.8 million for the three months ended September 30, 2022 compared to $2.9 million for the three months ended September 30, 2021. The increase was driven by regulatory requirements due to extended hot weather in Texas, as well as higher sales in Texas from an increase in the mass market customer base, and a release of reserves in the prior year, Just Energy said

Just Energy ended the quarter with $182.0 million of total liquidity, comprised of cash and cash equivalents

"The Company owes $55.0 million under its DIP facility after a $70.0 million repayment during the quarter and has $852.3 million of total liabilities subject to compromise," Just Energy said

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