Just Energy Sheds Customers on Margin Discipline, Gross Margin Increases

Consistent with its previously reported strategy of focusing on higher margin customers, Just Energy saw a decline of 75,000 Residential Customer Equivalents from July 1, 2016 to September 30, 2016, but increased its gross margin and Base EBITDA for the quarter.

Just Energy was serving 4.311 million RCEs as of Sept. 30, 2016, versus 4.386 million RCEs as of June 30, 2016.

Just Energy had lost a net of 134,000 RCEs from March 31, 2016 to June 30, 2016.

Gross customer additions for the quarter ending Sept. 30, 2016 were 196,000, a decrease from the 290,000 customers added in the year-ago quarter

Just Energy gross margin for the quarter ending Sept. 30, 2016 increased 10% year-over-year to $183.5 million, from $167.1 million a year ago, as a result of continued margin improvement efforts and "strong contribution" from the U.S. markets (all $ Canadian)

Just Energy's Base EBITDA of $56.9 million increased 24% year-over-year primarily as a result of operational performance improvements. Base EBITDA includes $7.7 million of prepaid commission expense for the quarter compared with $3.4 million expensed in the same period of last year. Excluding this incremental expense, Base EBITDA increased by 34% to $61.2 million for the second quarter of fiscal 2017.

Just Energy Co-CEO James Lewis said, "Our ongoing ability to drive gross margin and earnings growth in a competitive environment is a strong testament that our strategies in place are delivering the intended results. While we experienced customer declines during the quarter, we remain steadfast in our belief that the refusal to engage in risky pricing tactics that have developed within the industry during the current commodity price environment is the appropriate strategy for Just Energy. We are changing the business foundation and repositioning the Company to capture more accretive profit and cash flow by not allowing our team to chase market share at the expense of margin. The success of this strategy continues to be evident in our results this quarter as we grew gross margin by double-digits and delivered Base EBITDA growth of 24%, or 34% when normalizing for the prepaid commission expense. Moving forward, we feel confident that our ability to embrace the customer and build longer-term loyalty programs through the offering of a differentiated product suite will continue to secure our leading market positions."