Just Energy plays the attrition game
On November 11,2015 Just Energy reported it's second quarter results and they were not as good as the first quarter.Just Energy is an utility serving mostly Ontario but has some subsidiaries in southern United States;it had a good first quarter.They had an increase in sales from $918 million to $1087 million.Their gross margin was $167 million or up 26% from 2014.The base EBITDA of $46 million was a 44% increase from the same quarter in 2014. But they took an operating loss of $88 million compared to $135 million a year ago.
Chief Operating Statistics
As shown above their chief operating statistics have improved . In addition, they arranged for a new line of credit facility with a capacity of $277 million compared to a former capacity of $210 million.Long term debt was $686 million compared to $810 million in 2014.Furthermore their net debt was 3.0 times trailing base EBITDA compared to 4.3 times a year ago.And their payout ratio dropped from 78% to 50% in 2015.
Attrition
Just Energy has always been good at getting new customers for their system.But at the same time they always lose a lot of new customers;that is called attrition.Attrition has always been their biggest problem.This quarter they had net additions of 4000 customers compared to 67,000 a year ago.But they had a renewal rate of only 64% compared to 66% a year ago.And more importantly they had an attrition rate of 17% versus 15% one year ago.Still they were able to reaffirme their guidance for 2015 and raised guidance by 20% to $193 to $203 million for 2016.
Summary
Just Energy did get a 20 % increase in sales this quarter and base EBITDA did increase by 44% but they still experienced a substantial operating loss.However they did have positive net additions although only by a small amount.They must (like other utilities) find a way to lessen attrition from 17% to probably the 10 to 13% area.Certainly they do not want to see attrition rise as it did in this quarter.However EBITDA has shown a healthy increase in this quarter and will rise again for 2016.Just Energy will probably remain in it's present price range until the yearend.
see Blogdaleupsome for analysis of utilities;see Blogdaleupsome for corporate analysis
Chief Operating Statistics
As shown above their chief operating statistics have improved . In addition, they arranged for a new line of credit facility with a capacity of $277 million compared to a former capacity of $210 million.Long term debt was $686 million compared to $810 million in 2014.Furthermore their net debt was 3.0 times trailing base EBITDA compared to 4.3 times a year ago.And their payout ratio dropped from 78% to 50% in 2015.
Attrition
Just Energy has always been good at getting new customers for their system.But at the same time they always lose a lot of new customers;that is called attrition.Attrition has always been their biggest problem.This quarter they had net additions of 4000 customers compared to 67,000 a year ago.But they had a renewal rate of only 64% compared to 66% a year ago.And more importantly they had an attrition rate of 17% versus 15% one year ago.Still they were able to reaffirme their guidance for 2015 and raised guidance by 20% to $193 to $203 million for 2016.
Summary
Just Energy did get a 20 % increase in sales this quarter and base EBITDA did increase by 44% but they still experienced a substantial operating loss.However they did have positive net additions although only by a small amount.They must (like other utilities) find a way to lessen attrition from 17% to probably the 10 to 13% area.Certainly they do not want to see attrition rise as it did in this quarter.However EBITDA has shown a healthy increase in this quarter and will rise again for 2016.Just Energy will probably remain in it's present price range until the yearend.
see Blogdaleupsome for analysis of utilities;see Blogdaleupsome for corporate analysis
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