Crius Energy Reports Customer Growth, Lower Gross Margin on Increases C&I Sales

Crius Energy reported that it recorded net customer growth of 26,000 customers (all data is in RCEs) from March 31, 2016 to June 30, 2016

As at June 30, 2016, Crius had 942,000 customers, up from 916,000 at the beginning of the quarter and 790,000 a year ago

Net customer adds in the quarter benefited from the success of the direct marketing channel and included several municipal aggregations in New Jersey.

During the three months ended March 31, 2016, net customer additions had approached 100,000, but was influenced by inorganic acquisitions (namely, 75,000 RCEs from Kona Energy)

During the quarter ending June 30, 2016, Crius added a gross of 110,000 customers from sales and marketing channels, which represents an increase over average quarterly organic customer gross adds over the last 12 months of 93,000 customers

While gross customer drops of 84,000 during the quarter ending June 30, 2016 were slightly higher than the quarterly average over the last 12 months, the trend of lower customer attrition rates, as a percentage of customer numbers, remains intact due to the increased size of the customer portfolio, the company said

Crius said that it launched electricity service in Connecticut early in the second quarter of 2016 under the Comcast Energy Rewards brand.

Crius suppliers also received new licenses in several states, including Michigan (Comcast Energy Rewards, Viridian Energy), Georgia (Comcast Energy Rewards), Massachusetts (Comcast Energy Rewards, Public Power) and New Hampshire (Comcast Energy Rewards)

Crius reported Adjusted EBITDA of $13.6 million during the second quarter, largely in line with the $13.8 million of Adjusted EBITDA achieved in the second quarter of 2015. After adjusting for a net non-recurring gain of $1.6 million related to the acquisition of TriEagle Energy, LP, Adjusted EBITDA was $12.0 million

Gross margin for the quarter was $33.1 million, representing a 17.0% decrease from the $39.9 million in the second quarter of 2015. As a percentage of total revenue, gross margin was 19.5% in the second quarter of 2016, down from 24.0% in the same quarter of the previous year. The decline in gross margin as a percentage of revenue was primarily a result of the increased proportion of commercial customers the company now services following the acquisitions of TriEagle Energy and Iron Energy d/b/a/ Kona Energy and is consistent with recent trends and management expectation, the company said. Commercial customers provide diversification to the customer portfolio and have a higher retention profile than residential customers, although with lower average unit margins, the company said

Gross margins in the second quarter were also adversely impacted by gross margins achieved in the fixed-price commercial customer portfolio acquired from Kona Energy in the prior quarter. While the customer portfolio acquired was fully hedged, the hedged margins were materially lower in the second quarter compared to the remainder of the term of the portfolio, impacting gross margins in the current quarter by an estimated $1.5 million, which equates to approximately $1.00/MWh in overall electric unit margin, the company said