Crius Energy Reports New Markets for Viridian, Says Strong Organic Growth Tempered By Weather Impacts

Crius Energy Trust reported that it saw "strong" organic customer growth during the period since commencing operations on November 13, 2012 through December 31, 2012, but that financial results were negatively impacted by unfavorable weather.

Crius Energy Trust is the ultimate parent of several retail energy brands, including Viridian Energy and Public Power.

Management said that it was encouraged by the customer growth across all marketing channels in the fourth quarter. The customer growth, highlighted by the Viridian Energy and FairPoint Energy brands, continued into the first quarter of 2013.

Residential customer equivalents totaled 535,000 at the end of the fourth quarter, up from 504,000 at the end of the third quarter, including 93,000 gross additions.

During an earnings call, management said that Viridian Energy would expand electric offerings to additional utility service areas in Massachusetts and Illinois in the near future, and expand Viridian's natural gas service to Massachusetts, Maryland, Virginia, and the District of Columbia.

Crius remains "active" in pursuing accretive acquisitions, and the retail energy industry remains "poised" for further consolidation, management said.

Crius said that it is in talks with multiple subscriber-based channels to further expand its brands similar to its existing marketing agreements with FairPoint Communications and Frontier Communications.

Crius Energy said that its results for the period ending December 31, 2012 were impacted by unusual weather conditions that affected the eastern seaboard of the United States and resulted in an increase in wholesale electricity prices and volatility. Those weather conditions included Hurricane Sandy and a November 7th Nor'easter snow storm which brought extreme cold temperature to the Northeast.

"In response to market conditions, and consistent with the Company's variable rate customer contracts, Management increased retail rates charged to its variable rate customers in December 2012. However, the retail rate increases did not fully recover the lost margin in the fourth quarter as the result of the time lag to implement price changes with the local utility and other management considerations including product competitiveness, seasonality and customer attrition," Crius said.

Crius said that it continued to experience challenging market conditions in the first quarter of 2013 which included the impacts of Winter Storm Nemo. As was the case in the fourth quarter of 2012, the result of these challenging market conditions was an increase in wholesale electricity prices, volatility and customer usage.

For the period November 13, 2012 to December 31, 2012, revenue was $56.3 million. Revenue from electricity sales during the period was $53.0 million based on volumes of 676,480 MWh, accounting for 94.1% of total revenue. Revenue from natural gas sales during the period ending December 31, 2012, was $2.8 million based on volumes of 665,057 Mmbtu, and accounted for 5.0% of total revenue. For the period ending December 31, 2012, fee revenue was $0.5 million and accounted for 0.9% of total revenue. Fee revenue consists of sign-up fees and other monthly fees received from independent contractors in the network marketing channel

Gross margin was $11.9 million or 21.1% of revenue for the period November 13, 2012 to December 31, 2012, and adjusted EBITDA was $3.5 million or 6.2% of revenue for the period November 13, 2012 to December 31, 2012