Enercare hangs onto Direct Energy business
This week Enercare came out with a slightly unusual announcement.Enercare, for those who don't know it,is a supplier of water heaters,furnaces and air condition units; it also designs and manufactures meters to measure consumption of water and electricity chiefly.This however is not a small business ;it has a market capitalization of almost $1.25 billion.Their announcement was that in the third quarter they had gained more new business than they had lost.They had a net growth of 1300 units.This was the first time since 2007.
More Direct Energy
In 2014 Enercare acquired the home and commercial business of Direct Energy.Service is a big component of this business and so it is not unusual to lose a portion of new business having been acquired.So it is somewhat unususal for Enercare to announce only three quarters away from the acquisition that they did not have a large attrition of rental units.In fact, they announced that attrition decreased over Q3 2014 by 3900 units and by 2200 units over Q2 2015.Enercare further announced that attrition has been decreasing since 2009.Lastly there was a net gain of 1300 units which is the largest since 2005.
Enercare announced that they didn't expect a quarterly net gain until 2016.Again this is because the Direct Energy business might move to another provider until they became accustomed to the Enercare service.So this net gain has happened about a year early.Enercare management states that there has been a shift to units with higher returns;they also add that the units that left had rents of 67% lower than their average unit.So Enercare is losing low value added units.This blog feels that the change in the asset mix to higher value units has helped them to retain business longer.
Summary
Enercare is the largest non-utility sub metering business in Alberta and Ontario and it is a significant provider of heating and cooling devices.It has in total 1.2 million customers and is still consolidating the recent acquisition of Direct Energy.This has been accretive business for Enercare and it will need to use the earnings to pay down debt a little more yet.However if Enercare has a few more positive quarters like the third quarter they may be on the way to make another acquisition in early 2016.This blog also feels that there new approach to higher value units and better service will indeed help to have more quarters with net gains.
See Blogdaleupsome for utility analysis;Use Blogdaleupsome for Utility Analysis
More Direct Energy
In 2014 Enercare acquired the home and commercial business of Direct Energy.Service is a big component of this business and so it is not unusual to lose a portion of new business having been acquired.So it is somewhat unususal for Enercare to announce only three quarters away from the acquisition that they did not have a large attrition of rental units.In fact, they announced that attrition decreased over Q3 2014 by 3900 units and by 2200 units over Q2 2015.Enercare further announced that attrition has been decreasing since 2009.Lastly there was a net gain of 1300 units which is the largest since 2005.
Enercare announced that they didn't expect a quarterly net gain until 2016.Again this is because the Direct Energy business might move to another provider until they became accustomed to the Enercare service.So this net gain has happened about a year early.Enercare management states that there has been a shift to units with higher returns;they also add that the units that left had rents of 67% lower than their average unit.So Enercare is losing low value added units.This blog feels that the change in the asset mix to higher value units has helped them to retain business longer.
Summary
Enercare is the largest non-utility sub metering business in Alberta and Ontario and it is a significant provider of heating and cooling devices.It has in total 1.2 million customers and is still consolidating the recent acquisition of Direct Energy.This has been accretive business for Enercare and it will need to use the earnings to pay down debt a little more yet.However if Enercare has a few more positive quarters like the third quarter they may be on the way to make another acquisition in early 2016.This blog also feels that there new approach to higher value units and better service will indeed help to have more quarters with net gains.
See Blogdaleupsome for utility analysis;Use Blogdaleupsome for Utility Analysis
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