Just Energy Announces Detailed 2014 Guidance

Just Energy Group Inc. announced initial fiscal 2014 guidance and commented on recent market activity, specifically the company's recent share price weakness and elevated trading volume.

Just Energy had previously guided that, based on its current $0.84 per share dividend (all $ Canadian), its payout ratio on Funds from Operations (FFO) would be less than 100% for the year ending March 31, 2014. To provide further clarity, Management has made a detailed analysis of the existing customer book and margins built into those contracts. Just Energy is providing the following further guidance based on that review. As regards Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA), the best estimate for fiscal 2014 is approximately $220 million ($1.57 per share).

Additionally, Just Energy advised that it is unaware of any adverse changes to its business or its prospects that would in any way justify the recent unusual trading volumes and decline in the Just Energy share price. Aside from general macroeconomic concerns, there have been no particular events or material changes in the affairs of the company to support the decline, Just Energy said.

Rebecca MacDonald, Executive Chair of Just Energy, said: "This is a very difficult time for our fellow shareholders. We are very disappointed with the recent decline in Just Energy's stock price and do not believe this reflects the underlying value of our business. We recognize that there are rumors in the market regarding a further dividend reduction as well as speculation concerning the ability to achieve our previously articulated cash flow guidance. These rumors are completely inconsistent with the information we shared during the recent third quarter earnings call and our near-term forecasts for the business. At this point, we do not expect any further changes to our dividend payout and the margin embedded in our existing customer book and the strong customer growth seen in fiscal 2013 will result in higher cash flow in fiscal 2014 allowing us to both fund growth and pay-down debt."

In February, Just Energy had announced a reduction in its dividend from $0.10333 to $0.07 per month ($0.84 per year) effective the April 30, 2013, in order to fund future growth initiatives and high return investments as well as debt reduction.

Ken Hartwick, Chief Executive Officer, added: "The long-term strategy of our business, which focuses on profitable growth remains unchanged. We expect to continue to gain market share throughout our existing footprint in North America and in the United Kingdom, increase customer value via product bundling, continue to pay an industry leading dividend, pay down debt and identify new methods to drive long-term growth. Just Energy has a strong track record of customer, gross margin and embedded margin growth and we believe this strategy will serve to further enhance these metrics over the long-term and un-lock shareholder value. Our expectations for fiscal 2014 will allow us to achieve both growth and debt reduction while maintaining the current dividend. In addition, the new customers we expect to add will further improve our balance sheet in future years."

Just Energy expects to incur approximately $76 million of interest expense and approximately $5 million in taxes for the year. EBITDA excludes approximately $7.5 million in non-cash stock based compensation. The estimate does not include EBITDA from Terra Grain Fuels, a non-core ethanol plant in Saskatchewan. The guidance is based on the Just Energy customer base margins adjusted for current levels of customer attrition, contract renewals and normal weather. To the extent that there is material variance in these measures from historical levels, the guidance may prove to be materially inaccurate, Just Energy said. Because of the seasonal nature of its energy business, Just Energy expects to generate approximately 30% of its EBITDA in the first 6 months of fiscal 2014 and approximately 70% in the last six months of the year.

"The forecast level of EBITDA comfortably supports the current dividend and will allow the Company to both grow and reduce its debt level. Just Energy has previously indicated that it expects its payout ratio on FFO to reach a target level of 60% - 65% in fiscal 2016. This would require significant further growth in cash flow resulting in further debt repayment over the coming years," the company said.