Just Energy Group Results Lifted by Higher Gross Margin

Just Energy Group reported higher Adjusted EBITDA for the three months ended June 30, 2012 of $42.3 million, versus $37.4 million a year ago, on increased gross margin, partially offset by higher operating expenses (all $ in this story Canadian).

Gross margin for the quarter was $114.3 million, versus $94.3 million a year ago.

For the three months ended June 30, 2012, the Energy Marketing segment reported gross margin of $97.6 million, and Adjusted EBITDA of $29.3 million.

Just Energy customer count details as of June 30, 2012 were first reported by Matters yesterday.

In the U.S., Just Energy Group's annual gas attrition for the quarter ending June 30, 2012 was 24%, up from the 21% experienced in the prior-year quarter.

Electricity attrition in the U.S. was 13% for the quarter ending June 30, 2012, a slight decrease from 15% reported in the year-ago quarter, due to the increasing commercial customer base, which has historically experienced lower attrition rates.

The actual aggregation costs per customer for the three months ended June 30, 2012 for residential and commercial customers signed by independent representatives and commercial customers signed by brokers were as follows:

Residential customers
- U.S. Gas: $202/RCE
- U.S. Electricity: $126/RCE

Commercial customers
- U.S. Gas: $113/RCE
- U.S. Electricity: $82/RCE

Commercial broker customers
- U.S. Gas: $36/RCE
- U.S. Electricity: $32/RCE

Annual gross margin per customer added, renewed, or lost during the quarter ended June 30, 2012 was as follows (gross number of customers in parenthesis):

Residential and small commercial customers added in the quarter
- U.S. Gas: $196 (34,000)
- U.S. Electricity: $176 (105,000)

Residential and small commercial customers renewed in the quarter
- U.S. Gas: $198 (9,000)
- U.S. Electricity: $170 (60,000)

Residential and small commercial customers lost in the quarter
- U.S. Gas: $168 (32,000)
- U.S. Electricity: $196 (46,000)

- Large commercial customers added in the quarter: $76 (176,000)

- Large commercial customers lost in the quarter: $114 (100,000)

Bad debt expense for the three months ended June 30, 2012, was $8.6 million, an increase of 27% from $6.8 million expensed for the prior quarter ended June 30, 2011. The bad debt expense increase was a result of a 37% increase in total revenues for the current year for the markets where Just Energy bears the credit risk.

For the three months ended June 30, 2012, the bad debt expense of $8.6 million represents 2.6% of relevant revenue, lower than the bad debt for the comparable quarter in fiscal 2012, which represented 2.8% of relevant revenue. Management expects that bad debt expense will remain in the range of 2% to 3% of relevant revenue.

Just Energy reported that its green and carbon offset products were taken by 29% of new residential customers, who took green supply for an average of 81% of their consumption. The products now make up 12% of Just Energy's small customer electricity portfolio (up from 10% a year ago) and 11% of its small customer gas portfolio (up from 9% a year ago).

Other products which Just Energy is evaluating include load management, through thermostats and other controls, and opportunities created through the adoption of electric vehicles

The Momentis network marketing channel has grown to 66,000 independent representatives, up 18,200 from March 31, 2012.