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Just Energy Group Inc (JE-T) Quote - Press Release

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Just Energy Reports Fiscal First Quarter 2020 Results

GlobeNewswire - Wed Aug 14, 8:40PM CDT

Previously Announced Strategic Review Progressing

Base EBITDA from Continuing Operations of $24.2 Million

Business Remains Strong with Embedded Gross Margin of $2.1 Billion

Common Share Dividend Suspended as part of Strategic Review

Walter M. Higgins III has been appointed to the Board of Directors

Just Energy Group Inc. (TSX:JE; NYSE:JE) ("Just Energy" or the "Company"), a leading consumer company focused on essential needs including electricity and natural gas commodities, health and well-being products, and utility conservation, today announced results for its first quarter fiscal 2020.

Key Developments:

Financial Highlights
For the three months ended June 30
(thousands of dollars, except where indicated and per share amounts)
                                                                                                                  % increase
                                                                                       Fiscal 2020                (decrease)   Fiscal 2019
Sales                                                                                  $           670,165        (5)%         $     702,515
Gross margin                                                                                       132,292        -                  132,594
Administrative expenses                                                                            40,803         2%                 39,931
Selling and marketing expenses                                                                     61,704         47%                41,965
Restructuring costs                                                                                -                                 1,917
Finance costs                                                                                      23,546         44%                16,313
Profit (loss) from continuing operations                                                           (269,971    )  NMF                (64,028   )
Profit (loss) from discontinued operations                                                         (5,189      )  NMF                22,605
Profit (loss)                                                                                      (275,160    )  NMF                (41,423   )
Profit (loss) per share from continuing operations available to shareholders - basic               (1.82       )                     (0.45     )
Profit (loss) per share from continuing operations available to shareholders - diluted             (1.82       )                     (0.45     )
Dividends/distributions                                                                            22,070         (1)%               22,261
Base EBITDA from continuing operations                                                             24,185         (31)%              34,807
Base Funds from continuing operations                                                              1,370          (94)%              23,750
Payout ratio on Base Funds from continuing operations                                              1,611       %                     94        %
Embedded gross margin from continuing operations                                                   1,914,900      12%                1,713,000
Total customers (RCEs)                                                                             3,565,000      (4)%               3,716,000
Total gross customer (RCE) additions                                                               196,000        (32)%              290,000
Total net customer (RCE) additions                                                                 (73,000     )  NMF                24,000

Profit (loss) includes the impact of unrealized gains (losses), which represents the mark to market of future commodity supply acquired to cover future customer demand as well as weather hedge contracts as part of the risk management practice. The supply has been sold to customers at fixed prices, minimizing any realizable impact of mark to market gains and losses.

See "Non-IFRS financial measures" on page 2 of the MD&A.

Not a meaningful figure

"While Just Energy's first fiscal quarter financial performance was impacted by the previously announced impairment as well as the implementation of IFRS 15, we mitigated some of the decline through our strategic improvement initiatives that supported margin and supply optimization, and improved internal controls," said Just Energy's president and chief executive officer, Scott Gahn. "Since the day we launched our strategic review for the future of Just Energy, the process has been effective and remains on track while we continue to operate the business. Our core committed business remains strong and we believe we are returning to sales run rates that are in line with our initial expectations for the year. We must make significant progress in signing high quality customers with our suite of value-added products and services, while simultaneously reducing our costs by eliminating redundancies and improving processes."

Mr. Gahn continued, "I am honored to help guide the organization through this critical junction in our history. I am committed to helping drive our strategic review and make the tough decisions required to maximize shareholder value. Having served on the board of directors since 2013 and previously served as Just Energy's chair operating officer, in my new role as president and chief executive office, I have hit the ground running to work with each of our critical business leaders to understand how we can better drive efficiencies, improve performance, and ultimately maximize shareholder value. I look forward to updating the market on the progress of our strategic review."

Embedded Gross Margin
Management's estimate of the future embedded gross margin is as follows:
(millions of dollars)
                                           As at          As at    June 30 vs.        As at    2019 vs.
                                     June 30,       March 31,      March 31     June 30,       2018
                                     2019                 2019     variance     2018           variance
Commodity EGM                        $     1,870.8  $     2,056.9  (9)%         $     1,713.1  9%
VAPS EGM                                   44.1           40.8     8%                 -        -
Total EGM from continuing operations $     1,914.9  $     2,097.7  (9)%         $     1,713.1  12%
Discontinued operations EGM          $     175.6    $     173.4    1%           $     250.6    (30)%
Total EGM                            $     2,090.5  $     2,271.1  (8)%         $     1,963.7  6%
Annual Gross Margin per RCE
                                               Q1 Fiscal  Number of     Q1 Fiscal  Number of
                                        2020              RCEs       2019          RCEs
Consumer customers added and renewed    $      357        218,000    $  229        279,000
Consumer customers lost                        309        194,000       216        150,000
Commercial customers added and renewed         76         182,000       81         305,000
Commercial customers lost                      80         105,000       79         169,000

Annual gross margin per RCE excludes margins from Interactive Energy Group and large Commercial and Industrial customers.

Commodity RCE Summary
                      Apr. 1,                                    Failed to      Jun. 30,      %             Jun. 30,      % increase
                      2019          Additions     Attrition      renew          2019          decrease      2018          (decrease)
Consumer
Gas                   406,000       13,000        (28,000      ) (7,000       ) 384,000       (5)%          472,000       (19)%
Electricity           993,000       62,000        (75,000      ) (23,000      ) 957,000       (4)%          1,050,000     (9)%
Total Consumer RCEs   1,399,000     75,000        (103,000     ) (30,000      ) 1,341,000     (4)%          1,522,000     (12)%
Commercial
Gas                   436,000       15,000        (12,000      ) (4,000       ) 435,000       -             408,000       7%
Electricity           1,803,000     106,000       (52,000      ) (68,000      ) 1,789,000     (1)%          1,786,000     -
Total Commercial RCEs 2,239,000     121,000       (64,000      ) (72,000      ) 2,224,000     (1)%          2,194,000     1%
Total RCEs            3,638,000     196,000       (167,000     ) (102,000     ) 3,565,000     (2)%          3,716,000     (4)%
The starting position of fiscal 2020 reflects an adjustment made from a default RCE valuation of 0.72 RCEs to the actual RCE valuation resulting in an adjustment of negative 24,000 RCEs to the total customer count.

Balance Sheet & Liquidity

Outlook

On June 6, 2019, Just Energy announced it was initiating a strategic review of the business. The special committee is pleased with the progress of the review. The special committee's aim is to complete its strategic review in a time frame that optimizes the value of the Company and provides the optimal outcome for shareholders.

While Just Energy remains focused on best in class service to its customers, the strategic review has provided insights into how best to unlock value from the business through a comprehensive review of capital expenditures, streamlining the organization, enhance internal controls, and further refinement of the geographic footprint. As part of this process the Company has decided to dispose of the U.K. business.

Due to the reclassification of the U.K. business, the accounts receivable impairment, and first quarter fiscal 2020 performance, management is revising its fiscal year 2020 base EBITDA from continuing operations to now be in the range of $180 million to $200 million, as well as fiscal 2020 free cash flow guidance of between $50 million to $70 million, defined as cash flow from operating activities minus cash flow from investing activities and excluding U.K. discontinued operations.

Earnings Call

The Company will host a conference call and live webcast with Chief Executive Officer, R. Scott Gahn, Chief Financial Officer, Jim Brown and Executive Chair, Rebecca MacDonald to review the fiscal first quarter results beginning at 10:00 a.m. Eastern Time on August 15, 2019.

-- Just Energy Conference Call and Webcast:

-- Thursday, August 15, 2019

-- 10:00 a.m. ET

Those who wish to join the conference call may do so by dialing 1-877-501-3160 in the U.S. and Canada. International callers may join the call by dialing 1-786-815-8442. The Conference ID# is 2394795. The call will also be webcast live over the internet at the following link:

https://edge.media-server.com/mmc/p/rpwc65h8

A webcasted replay for the call will also be archived on the JE investor relations website a few hours after the event.

About Just Energy Group Inc.

Just Energy (TSX:JE; NYSE:JE) is a leading consumer company focused on essential needs, including electricity and natural gas commodities; health and well-being, such as water quality and filtration devices; and utility conservation, bringing energy efficient solutions and renewable energy options to consumers. Currently operating in the United States, Canada and the United Kingdom, Just Energy serves residential and commercial customers. Just Energy is the parent company of Amigo Energy, EdgePower Inc., Filter Group Inc., Green Star Energy, Hudson Energy, Interactive Energy Group, Just Energy Advanced Solutions, Tara Energy, and Terrapass. Visit www.justenergy.com to learn more.

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are based on current expectations that involve a number of risks and uncertainties which could cause actual results to differ from those anticipated. These risks include, but are not limited to, general economic and market conditions, levels of customer natural gas and electricity consumption, rates of customer additions and renewals, rates of customer attrition, fluctuations in natural gas and electricity prices, changes in regulatory regimes, results of litigation and decisions by regulatory authorities, competition and dependence on certain suppliers. Additional information on these and other factors that could affect Just Energy's operations, financial results or dividend levels are included in Just Energy's annual information form and other reports on file with Canadian securities regulatory authorities which can be accessed through the SEDAR website at www.sedar.com on the U.S. Securities and Exchange Commission's website at www.sec.gov or through Just Energy's website at https://investors.justenergy.com.

Neither the Toronto Stock Exchange nor the New York Stock Exchange has approved nor disapproved of the information contained herein.

NON-IFRS MEASURES

The financial measure such as "EBITDA", "Base EBITDA", "FFO", "Base FFO", "Base FFO Payout Ratio", "FCF" and "Embedded Gross Margin" do not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and may not be comparable to similar measures presented by other companies. This financial measure should not be considered as an alternative to, or more meaningful than, net income (loss), cash flow from operating activities and other measures of financial performance as determined in accordance with IFRS, but the Company believes that these measures are useful in providing relative operational profitability of the Company's business. Please refer to "Key Terms" in the Just Energy Fiscal 2019 Annual Report's management's discussion and analysis for the Company's definition of "EBITDA" and other non-IFRS measures.

Neither the Toronto Stock Exchange nor the New York Stock Exchange has approved nor disapproved of the information contained herein.

FOR FURTHER INFORMATION PLEASE CONTACT:

Jim Brown

Chief Financial Officer

Just Energy

713-544-8191

jbrown@justenergy.com

or

Michael Cummings

Investor Relations

Alpha IR Group

617-982-0475

michael.cummings@alpha-ir.com

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