MXenergy Adjusted Earnings Lower on Gas Customer Attrition

MXenergy reported lower adjusted EBITDA for the quarter ending March 31, 2011 of $45.9 million, versus $49.7 million a year ago, due to lower natural gas gross profit and higher operating expenses.

The adjusted metric excludes unrealized hedging impacts. Net income, which reflects these unrealized impacts, was $17.2 million for the quarter, versus $5.3 million a year ago.

Gross profit, excluding unrealized impacts from risk management activities, was $65.0 million, versus $67.4 million a year ago.

Natural gas gross profit was lower at $54.9 million ($2.26/MMBtu) versus $61.7 million ($2.93/MMBtu) a year ago, reflecting lower volumes due to customer churn, particularly among commercial gas customers.

Electricity gross profit was higher at $10.1 million ($19.11/MWh), versus $5.7 million a year ago ($25.16/MWh). Improved electric gross profit was driven by customer additions, partially offset by lower unit margins reflecting competitive pricing environments.

MXenergy reported 612,000 Residential Customer Equivalents (RCEs) as of March 31, 2011, down from 618,000 as of December 31, 2010, but up versus 568,000 as of March 31, 2010. These totals, as well as the figures cited below, exclude customers served under the Columbia Gas of Ohio default service auction, which MXenergy no longer supplies as of March 31, 2011.

Natural gas customers as of March 31, 2011 were 407,000, down from 427,000 as of December 31, 2010, and 438,000 as of March 31, 2010.

Electric customers as of March 31, 2011 were 205,000, up from 191,000 as of December 31, 2010, and 130,000 as of March 31, 2010. Actual electricity RCEs as of March 31, 2011 include over 55,000 net RCEs as a result of expansion into Pennsylvania and Maryland during the last twelve months.

MXenergy's in-contract attrition percentage was up at 33% as of March 31, 2011, from 30% as of December 31, 2010 and 25% a year ago. MXenergy cited increased competitive pressure, particularly in Pennsylvania and Connecticut, for the increased attrition.

The customer renewal percentage was 91% during the quarter, versus 92% as of December 31, 2010 and 93% a year ago.

MXenergy said that its cost to acquire customers approximated $100 per RCE for the three months and nine months ended March 31, 2011, which was consistent with its cost to acquire customers during the same periods in the prior fiscal year.

Gas volumes for the quarter were 24.34 million MMBtu, versus 21.07 million MMBtu a year ago.

Quarterly electric volumes were 530,000 MWh, versus 227,000 MWh a year ago.