Just Energy Group Inc., a retail energy provider specializing in electricity and natural gas commodities and bringing energy efficient solutions, carbon offsets and renewable energy options to customers, announced its second quarter results for fiscal year 2023.
Recent Developments
On October 17, 2022, the Company announced that the transaction (the “Transaction”) contemplated by the stalking horse transaction agreement entered into on August 4, 2022 (as amended from time to time, the “Transaction Agreement”) among Just Energy and the lenders under the Company’s debtor-in-possession financing facility, one of their affiliates and the holder of certain assigned secured claims (collectively, the “Purchaser”) was the successful bid pursuant to the previously announced sale and investment solicitation process (the “SISP”). On November 3, 2022, the Ontario Superior Court of Justice (Commercial List) issued an order (the “Reverse Vesting Order”) that approved the Transaction contemplated by the Transaction Agreement. For details on the Transaction or the Transaction Agreement, please visit: https://investors.justenergy.com or the website of FTI Consulting Canada Inc., the monitor for the Just Energy entities under the CCAA proceedings, at http://cfcanada.fticonsulting.com/justenergy.
Second Quarter FY 2023 Performance
The Company’s second fiscal quarter 2023 results and prior comparable periods are expressed in US dollars. As of March 31, 2022, the Company is considered a domestic filer instead of a foreign private issuer as defined by the Securities Exchange Commission, and now is required to prepare its consolidated financial statements in accordance with U.S. GAAP.
Revenue of $685.0 million increased by 22% from the prior comparable quarter, primarily driven by an increase in the Texas mass market customer base and warmer weather in Texas.
Base EBITDA of $32.1 million increased 31% from the prior comparable quarter, primarily driven by higher Base Gross Margin, partially offset by higher provision for expected credit loss.
Base Gross Margin of $113.6 million increased by 23% from the prior comparable quarter, primarily driven by higher realized margins and growth in mass markets customer base.
Mass Markets RCE Net Adds for the quarter was a gain of 27,000 compared to a gain of 9,000 for the prior comparable quarter, driven by the increase in customer additions.
The Company owes $55.0 million under its DIP facility after a $70.0 million repayment during the quarter and has $852.3 million of total liabilities subject to compromise.
The Company ended the quarter with $182.0 million of total liquidity, comprised of cash and cash equivalents.
Net loss was $205.6 million, compared to net income of $265.1 million during the prior comparable quarter, primarily driven by unrealized mark to market loss on derivative instruments of $289.8 million for the three months ended September 30, 2022. Net income for the three months ended September 30, 2021, was primarily driven by unrealized mark to market gain on derivative instruments of $233.0 million. Unrealized mark to market gains and losses on derivative financial instruments relate to the supply the Company has purchased to deliver in the future to existing customers at fixed contractual prices1.
Administrative expenses: Remained flat to the prior comparable quarter.
Selling commission expenses: The decrease was primarily due to lower prepaid commission amortization from lower sales in prior years.
Selling non-commission and marketing expenses: The increase was driven by investment in sales agent costs to drive customer additions and retention.
Provision for expected credit loss: The increase was driven by regulatory requirements due to extended hot weather in Texas, higher sales in Texas as well as higher sales in Texas from an increase in the mass market customer base, and a release of reserves from the prior year.
Mass Markets Segment Performance
Average Mass Markets gross margin per RCE added or renewed: The increase was largely due to a change in channel strategy and channel mix
Mass Markets Embedded Gross Margin: The increase was primarily driven by growth in the Texas Mass Markets customer base.
Mass Markets gross RCE additions: The increase is driven by investment in digital marketing, as well as continued improvement in direct face–to–face channels.
