TORONTO, ON–(Marketwired – March 07, 2017) – Enercare Inc. (“Enercare”) (TSX: ECI), one of North America’s leading providers of essential home and commercial services and energy solutions, today reported its financial results for the fourth quarter and year ended December 31, 2016.

(All amounts are in Canadian dollars unless otherwise stated)

2016 Highlights

• Grew EBITDA by 20%
• Increased total revenue by 77%
• Achieved 30% accretion to 2016 Normalized Pro Forma Distributable Cash per Share¹ from the acquisition of Service Experts by Enercare, through an indirect wholly-owned subsidiary of Enercare Solutions Inc. (“Enercare Solutions”), on May 11, 2016 (the “SE Transaction”)
• Increased heating, ventilation and air conditioning (“HVAC”) rental transactions by 31%
• Grew the number of annual sub-metering contracted and billing additions by 50% and 86%, respectively
• Reported sixth consecutive quarters of net growth in rental units

Financial Highlights
(in thousands of Canadian dollars except per unit amounts)²

		Three months ended December 31,						Twelve months ended December 31,
		2016		2015		Change		2016		2015		Change
Total revenue		$293.2		$141.6		107%		$995.9		$563.8		77%
EBITDA		$71.3		$56.5		26%		$265.8		$222.3		20%
Acquisition Adjusted EBITDA(3)		$72.7		$58.1		25%		$285.1		$234.7		21%
Net earnings		$17.6		$13.7		28%		$61.1		$51.0		20%
Basic earnings per share		$0.17		$0.15		13%		$0.62		$0.56		11%
Tax Normalized Payout ratio – maintenance3		35%		48%		(1300 bps)		45%		51%		(600 bps)
Tax Normalized Payout ratio3		69%		80%		(1100 bps)		77%		80%		(300 bps)
Rentals attrition (units)		8,300		8,800		(6%)		30,000		35,000		(14%)
Rental additions net of attrition		3,000		1,000		200%		8,000		(2,000)		500%
Sub-metering contracted units		3,000		5,000		(40%)		30,000		20,000		50%

John Macdonald, President and CEO, said:

“The successful acquisition of Service Experts exceeded our expectations, and all three of our business segments exceeded their annual objectives, driving record revenue, net earnings, and EBITDA for 2016. Looking forward, we will continue to invest in building our long-term recurring revenue. Having had a fantastic year, we’re delighted to maintain our track record of returning significant capital to our shareholders, and increased our dividend by 4%.”

¹ Excludes transaction costs estimated to be $16.5 million, potential synergies in the SE Transaction, shares issued under the over-allotment option and has been normalized by $19 million in 2015 and 2016 to account for timing differences in taxes paid related to the OHCS acquisition. Normalized pro forma Distributable Cash and Normalized pro forma Distributable Cash per common share are non-IFRS measures. Refer to the Non-IFRS Financial and Performance Measures section in Enercare’s management’s discussion and analysis for the year ended December 31, 2016.
² Unless otherwise noted, amounts are reported in thousands, except customers, units, shares and per share amounts and percentages. Dollar amounts are expressed in Canadian currency except as otherwise noted.
³ Adjusted EBITDA, Acquisition Adjusted EBITDA, Distributable Cash, Normalized Distributable Cash per Share, Payout Ratio, Payout Ratio – Maintenance and Operating Cash Flow are non-IFRS financial measures. Refer to the Non-IFRS Financial and Performance Measures section in the MD&A.

Results of Operations

Earnings Statement

Year ended December 31, 2016 (000’s)			Enercare Home Services		Service Experts		Sub-metering		Corporate		Total
Revenues:
	Contracted revenue		$410,018		$ 22,574		$142,239		$ –		$574,831
	Sales and other services		28,600		388,161		3,750		–		420,511
	Investment income		349		28		30		192		599
Total revenue			$438,967		$410,763		$146,019		$ 192		$995,941
Expenses:
Cost of goods sold:
	Commodity		–		–		(111,482)		–		(111,482)
	Maintenance & servicing costs		(66,994)		(17,711)		–		–		(84,705)
	Sales and other services		(22,274)		(239,415)		(1,845)		–		(263,534)
Total cost of goods sold			(89,268)		(257,126)		(113,327)		–		(459,721)
SG&A expenses			(100,343)		(114,593)		(19,323)		(32,091)		(266,350)
Foreign exchange			215		(35)		51		97		328
Amortization expense			(122,194)		(13,825)		(6,719)		(2,586)		(145,324)
Net (loss)/gain on disposal			(4,464)		(19)		77		–		(4,406)
Interest expense:
	Interest expense payable in cash										(32,709)
	Non-cash interest expense										(1,892)
Total interest expense											(34,601)
Total expenses											(910,074)
Earnings before income taxes											85,867
Current tax (expense)											(54,381)
Deferred tax recovery											29,644
Net earnings											$ 61,130
EBITDA			$ 245,107		$ 38,990		$ 13,497		$(31,802)		$265,792
Adjusted EBITDA			$ 249,571		$ 39,009		$ 13,420		$(31,802)		$270,198
Acquisition Adjusted EBITDA			$ 252,964		$ 50,494		$ 13,420		$(31,802)		$285,076

Year ended December 31, 2015 (000’s)			Enercare Home Services		Service Experts		Sub-metering		Corporate		Total
Revenues:
	Contracted revenue		$ 390,509		$ –		$133,652		$ –		$524,161
	Sales and other services		35,962		–		3,498		–		39,460
	Investment income		186		–		19		–		205
Total revenue			$426,657		$ –		$137,169		$ –		$563,826
Expenses:
Cost of goods sold:
	Commodity		–		–		(106,203)		–		(106,203)
	Maintenance & servicing costs		(61,164)		–		–		–		(61,164)
	Sales and other services		(25,448)		–		(2,090)		–		(27,538)
Total cost of goods sold			(86,612)		–		(108,293)		–		(194,905)
SG&A expenses			(104,858)		–		(16,906)		(22,504)		(144,268)
Foreign exchange			(107)		–		60		4		(43)
Amortization expense			(118,011)		–		(5,849)		(1,556)		(125,416)
Net (loss) on disposal			(5,354)		–		2,484		–		(2,870)
Interest expense:
	Interest expense payable in cash										(26,105)
	Non-cash interest expense										(1,970)
Total interest expense											(28,075)
Total expenses											(495,577)
Other income							580				580
Earnings before income taxes											68,829
Current tax (expense)											(10,197)
Deferred tax (expense)											(7,677)
Net earnings											$50,955
EBITDA			$ 229,726		$ –		$ 15,094		$(22,500)		$222,320
Adjusted EBITDA			$ 235,080		$ –		$ 12,610		$(22,500)		$225,190
Acquisition Adjusted EBITDA			$ 244,248		$ –		$ 12,989		$(22,500)		$ 234,737

Revenues

Total revenues of $995,941 for 2016 increased by $432,115 or 77% compared to 2015, primarily as a result of the SE Transaction.

Enercare Home Services revenues, excluding investment income, increased during the year by $12,147 to $438,618, compared to 2015, primarily as a result of a rental rate increase implemented in January 2016 and changes in asset mix and growth in rental HVAC units. Contracted revenue in Enercare Home Services represents revenue generated by the rentals portfolio and protection plan contracts, while sales and other services revenue mainly pertains to one-time sales and installations of residential furnaces, boilers and air conditioners, as well as plumbing, duct cleaning and other services. HVAC sales and rentals in 2016 were significantly impacted by weather trends throughout the year. The unseasonably warmer temperatures experienced during the fourth quarter of 2015 continued into the first quarter of 2016, leading to fewer furnace breakdowns and therefore lower demand for HVAC replacements and repairs. The onset of warmer spring weather during the second quarter was also delayed, compared to historic norms, leading to lower demand for air conditioning sales and rentals in the early part of the second quarter. Demand for air conditioning sales and rentals increased significantly starting towards the end of the second quarter and continuing throughout the third quarter, which experienced 71% higher cooling degree days⁸ compared to the 25 year average. Warm weather trends continued during the first half of the fourth quarter before returning to more seasonable temperatures in December. The cooler weather experienced in December, combined with strong sales execution, resulted in a 3% increase in the demand for HVAC sales and rentals during the fourth quarter, compared to the same period in 2015.

Enercare’s strategy to emphasize HVAC rentals over outright sales resulted in significant increases in recurring revenue at the expense of sales and other services revenue.

Service Experts revenues, excluding investment income, of $410,735 for 2016 since the May 11, 2016 acquisition date were stronger than anticipated, driven primarily by favourably warm weather conditions across the United States and higher average dollars per contract.

Temperatures across the United States during 2016 were one of the top three warmest in the past 25 years(4). Favourably warm weather conditions across the United States during the second and third quarters, led to a significant increase in the demand for air conditioning sales, service and repairs. Temperatures across the United States in June, July, August and September were each one of the top three warmest, compared to the same months, in the past 25 years⁴. Similar warm weather trends during the fourth quarter led to lower heating demand. Service Experts sales in Eastern Canada were also positively impacted by the same weather trends experienced by the Enercare Home Services segment. Higher revenues were also driven by Service Experts initiatives to shift sales towards higher value products, which have contributed to improvements in the average selling prices of installed units. Service Experts revenues were lower by $20,833 of 2016, as a result of purchase accounting adjustments of deferred revenue associated with the SE Transaction.

Sub-metering revenues, excluding investment income, were $145,989 in 2016, an increase of $8,839 or 6% over 2015, primarily as a result of higher billable units. The increase compared to 2015 was also impacted by revenues generated from the acquisition of Triacta Power Technologies Inc. (“Triacta”). Sub-metering revenue includes total pass through energy charges of $111,482 in the year, increases of $5,279 or 5% over 2015. The acquisition of Triacta in the third quarter of 2015 resulted in $3,431 of revenues in 2016, an increase of $1,193.

Investment income was $599 in 2016, an increase of $394, when compared to 2015. The change in investment income was primarily attributable to non-recurring interest earned in the second quarter of 2016 from the proceeds of Enercare’s bought deal offering of subscription receipts (the “SE Subscription Receipts”) received in connection with the SE Transaction combined with interest income from the registered pension plan, which was in an asset balance instead of a net obligation during 2016.

⁴ Weather trends from Weather Trends International.

Cost of Goods Sold

Total cost of goods sold for 2016 was $459,721, an increase of $264,816 or 136%, compared to 2015, primarily as a result of the SE Transaction.

Enercare Home Services cost of goods sold increased by $2,656 in 2016 compared to 2015, primarily from approximately $1,300 of non-recurring supplier reimbursements and other items recorded in the second quarter of 2015 and growth in the rentals business. Maintenance and servicing costs in Enercare Home Services primarily consist of protection plan expenses and servicing costs related to the rentals portfolio, while sales and other services expenses mainly pertain to one-time sales and installations of residential furnaces, boilers, air conditioners and small commercial products as well as plumbing, duct cleaning and other chargeable services.

Service Experts cost of goods sold amounted to $257,126 in 2016 since the May 11, 2016 acquisition date. Service Experts cost of goods sold were lower by $16,549 during the year, as a result of purchase accounting adjustments for the service obligation associated with the SE Transaction.

Sub-metering cost of goods sold of $113,327 in 2016, increased by $5,034 or 5%, as a result of an increase in pass through energy charges over the same periods in 2015. Sales and other services expenses for sub-metering relate to Triacta meter sales and the sale and installation of water conservation products in apartments and condominiums.

Selling, General & Administrative Expenses

Total selling, general and administrative expenses (“SG&A”) were $266,350 in 2016, an increase of $122,082, compared to 2015.

Enercare Home Services SG&A expenses of $100,343 in the year, decreased by $4,515, compared to 2015. The $4,515 decrease was primarily as a result of approximately $4,900 in lower selling and marketing expenses, $3,000 of professional fees, both primarily from one time integration and rebranding activities in 2015, and $500 in claims expense, partly offset by $2,600 increases in wages and benefits, $600 in office expenses and $700 in bad debts. During 2016, there were acquisition related items totaling $930, compared to $1,400 in 2015, resulting in improvements to SG&A expense. The improvements in both periods arose from revisions to estimates.

Enercare Home Services SG&A expenses in 2016 included $2,312 of integration and business transformation costs related to the acquisition of the Ontario home and small commercial services business (“OHCS”) of Direct Energy Marketing Limited (“DE”) by Enercare on October 20, 2014 (the “DE Acquisition”), primarily from information technology integration activities to optimize the information technology platforms and marketing spend related to continued rebranding. In 2015, SG&A expenses included $9,168 of integration costs associated with the DE Acquisition, primarily from marketing spend related to rebranding activities.

Service Experts SG&A expenses in 2016 amounted to $114,593 since the May 11, 2016 acquisition date. Included in SG&A expenses were $11,485 of acquisition related expenditures associated with the SE Transaction, primarily related to professional fees and integration costs. The costs included $2,834 of pre-acquisition expenditures incurred by Enercare Home Services.

Sub-metering SG&A expenses in 2016 were $19,323, an increase of $2,417 over 2015, primarily as a result of $2,400 of higher wage and benefit expenses. Sub-metering SG&A expenses in 2015 included $379 of costs associated with the acquisition of Triacta, primarily related to professional fees.

Corporate expenses of $32,091 in 2016, increased by $9,587, compared to 2015. The $9,587 increase was primarily as a result of approximately $4,700 in higher wages and benefits, $500 in stock based compensation due to an increase in the Share price, and $4,200 of higher office expenses resulting primarily from increased information technology costs.

Corporate SG&A expenses in 2016 included $1,081 of integration and business transformation costs related to the DE Acquisition, primarily from information technology integration activities to optimize the information technology platforms.

Amortization Expense

Amortization expense increased by $19,908 or 16% in 2016, primarily due to an increasing capital asset base from asset mix changes in the rentals portfolio, the SE Transaction and increased Sub-metering capital investments, which are amortized over a shorter life than those of the Enercare Home Services business.

Net Loss on Disposal of Equipment

Enercare reported a net loss on disposal of equipment of $4,406 in 2016, an increase of $1,536 or 54%, over 2015. The net loss on disposal amount is influenced by the number of assets retired, proceeds on disposal of equipment, changes in the retirement asset mix and the age of the assets retired.

Interest Expense

(000’s)			2016		2015
Interest expense payable in cash			$30,294		$26,105
Interest payable on subscription receipts			2,217		–
Equity bridge financing fees			198		–
Non-cash items:
	Notional interest on employee benefit plans, net		840		1,096
	Amortization of financing costs		1,052		874
Interest expense			$34,601		$28,075

Interest expense payable in cash increased by $4,189 to $30,294 in 2016, compared to 2015. The increase was primarily related to the increase from the USD $200,000 4 year variable rate term credit facility (the “2016 Term Loan”), maturing on May 11, 2020, related to the financing of the SE Transaction, partially offset by the conversion of the 6.25% convertible unsecured subordinated debentures of Enercare (“Convertible Debentures”) to Enercare common shares.

Notional interest of $840 in 2016 relates to the defined benefit employee benefits plans. Amortization of financing costs includes the previously unamortized costs associated with the $250,000 of 4.30% Series 2012-1 Senior Unsecured 2012 Notes of Enercare Solutions, which mature on November 30, 2017, $225,000 of 4.60% Series 2013-1 Senior Unsecured, 2013 Notes of Enercare Solutions, which mature on February 3, 2020, the Convertible Debentures, the $210,000 4 year variable rate, non-revolving 2014 term loan of Enercare Solutions (the “2014 Term Loan”), which was repaid on February 23, 2017, and the 2016 Term Loan.

As part of the SE Transaction, SE Subscription Receipts were issued during the first quarter of 2016 and subsequently exchanged for Enercare common shares upon the closing of the SE Transaction on May 11, 2016. While the SE Subscription Receipts remained outstanding, they were classified as debt, resulting in interest expense of $2,217, which was the equivalent to the dividend payments on such SE Subscription Receipts if they had been Enercare common shares. Equity bridge financing fees of $198 were also incurred as part of the SE Transaction.

Other Income

Other income decreased compared to 2015 as a result of a one-time settlement of $580 recognized in 2015 from a supplier of sub-metering equipment.

Income Taxes

Enercare reported current tax expenses of $54,381 in 2016, an increase of $44,184 over the same period in 2015, primarily as a result of a one year tax deferral recognized in 2015, available through a subsidiary of Enercare Solutions, and the acquisition of Service Experts. The deferred income tax recovery of $29,644, an increase of $37,321 compared to the deferred tax expense recorded in 2015, were primarily as a result of temporary difference reversals in the Enercare Home Services, Service Experts and Sub-metering businesses.

Net Earnings

Net earnings were $61,130 in 2016, an increase of $10,175 compared to 2015.

EBITDA, Adjusted EBITDA and Acquisition Adjusted EBITDA

The following table summarizes comparative quarterly results for the last eight quarters, and reconciles net earnings, an IFRS measure, to EBITDA, Adjusted EBITDA and Acquisition Adjusted EBITDA.

(000’s)		Q4/16		Q3/16		Q2/16		Q1/16		Q4/15		Q3/15		Q2/15		Q1/15
Net earnings		$17,552		$19,332		$16,051		$8,195		$13,725		$13,124		$16,204		$ 7,902
Deferred tax (recovery)/expense		(5,275)		(7,522)		(7,633)		(9,214)		1,069		2,376		1,323		2,909
Current tax expense		11,534		15,332		15,259		12,256		2,784		2,169		2,290		2,954
Amortization expense		38,892		38,329		35,796		32,307		31,917		31,606		31,044		30,849
Interest expense		8,554		8,507		9,187		8,353		6,988		6,955		7,021		7,111
EBITDA(a)		71,257		73,978		68,660		51,897		56,483		56,230		57,882		51,725
Add: Net loss/(gain) on disposal		850		734		891		1,931		(1,455)		1,001		1,572		1,752
Adjusted EBITDA(b)		72,107		74,712		69,551		53,828		55,028		57,231		59,454		53,477
Add: Acquisition SG&A		603		4,854		5,128		4,293		3,028		3,946		1,961		612
Acquisition Adjusted EBITDA		$72,710		$79,566		$74,679		$58,121		$58,056		$61,177		$61,415		$54,089

(a)		Historical EBITDA has been conformed to the current presentation which includes investment income and other income.
(b)		Historical Adjusted EBITDA has been conformed to the current presentation which includes investment income and other income and excludes net loss on disposal.

Outlook

The forward-looking statements contained in this section are not historical facts but, rather, reflect Enercare’s current expectations regarding future results or events and are based on information currently available to management.

Enercare Home Services Segment

• Our strategy to emphasize HVAC rentals over outright sales in order to create a long-term customer revenue stream and provide valuable cross-selling opportunities continues to be successful. While this strategy has resulted in a significant increase in recurring HVAC rental revenues, we anticipate the negative short-term impact on non-recurring sales and other services revenue to continue throughout 2017.
• In January 2017, Enercare increased its weighted average rental rate by 3.1%.
• In October 2016, Enercare launched the Enercare Finance Plan (“ECFP”) to consumers across Ontario. Replacing our current external finance provider, ECFP is a new in-house financing program that provides finance options to residential HVAC customers who choose to purchase their equipment from Enercare. By bringing financing in-house, we retain a customer relationship and enhance the customer experience, by completing the entire sales transaction conveniently with one service provider. During the fourth quarter of 2016, approximately 7.5% of all HVAC sales were sold to customers who took advantage of the ECFP.
• In late December 2016, Enercare implemented an electrical protection plan pilot program available to customers in Ontario. The electrical protection plan provides customers coverage for specified residential home electrical components, including diagnosis, repair, replacement and adjustment. The pilot program will continue to be rolled out in early 2017, with a full launch planned for the second quarter of 2017.
• One of our key strategies is to continue to transform the customer experience through digital enhancements such as Enercare’s new mobile and iPad apps. In late September 2016, Enercare became the first Canadian home services company to launch a self-service mobile app, enabling customers who in the past would have contacted the call centre, to now use the mobile app to easily access their personalized account details, book maintenance, plumbing or service appointments and to be notified when a technician is on route to their home or business. In early October 2016, Enercare launched its new iPad app that makes processing finance credit applications and rental credit approvals more convenient and efficient for customers. Both of these initiatives significantly improve the ease with which customers can use digital tools to manage their experience with Enercare and enables us to improve the customer experience by providing a faster and more efficient and convenient experience, while reducing calls to the service centers. As we continue to invest in new and innovative digital tools, and differentiate the customer experience through technology solutions, we feel we are well positioned to offer our customers more products and services through an interactive experience.

Service Experts Segment

• Consistent with previous guidance, cost synergies relating to the SE Transaction are estimated to be in the range of $0.05 to $0.08 per Share on an annualized basis by the end of 2017, primarily as a result of a reduction in sourcing costs.
• In October 2016, Service Experts introduced a rental program for HVAC products and water heaters in several centers within Canada. This rollout was completed at all 15 locations in Canada in February 2017, and while the program is still in the very early stages, Enercare is encouraged by the initial results which show an initial rental mix of approximately 20% in Ontario and 10% in Western Canada where the rental model is a new concept. The successful introduction of our recurring revenue rental model in Canada is part of our plan to integrate rentals throughout Service Experts residential heating and cooling operations over the next two years to create continued organic growth. During the first quarter of 2017, Service Experts has extended the rental HVAC offerings through a pilot in two U.S. states and expects to rollout in two additional states during the first half of 2017. The U.S. rental program is similar to Enercare’s existing Canadian rental program, except that due to U.S. regulations, the rental contracts in the United States will be for a definitive term, which in the piloted states is 10 years. Enercare anticipates that the form of the contract, as driven by the U.S. regulatory environment, will result in a slower adoption of the rental program in the U.S.
• The business of Service Experts is subject to greater seasonality than Enercare Home Services as a result of it having fewer recurring revenue sources. Revenue and EBITDA tend to be seasonally highest in the second quarter of the year, followed by the third quarter, and substantially less in the fourth and first quarters, due primarily to the geography where Service Experts operates and weather patterns. The heating season (roughly November through February) and cooling season (roughly May through August) are periods when consumers transition their buying patterns from one season to the next. In most of the states that Services Experts operates, cooling equipment as opposed to heating equipment represents a substantial portion of its annual HVAC sales and service revenue. Conversely, in the 3 provinces that Service Experts operates, heating equipment represents a large portion of its Canadian sales and service revenue. The sales are also impacted by seasonal weather patterns; in periods of extreme heat and cold, installation and demand service revenue tend to increase. This results in higher sales in the second and third quarters due to the higher volume in the cooling season relative to the heating season and the lowest revenue and substantially reduced EBITDA, relative to other quarters, in the first quarter. Service Experts normally generates a neutral level of profitability in the first quarter of the year and as a result the working capital needs are generally greater in the first quarter, followed by higher operating cash inflows in the second and third quarters.

Sub-metering Segment

• Approximately one-half of units contracted during 2016 were for thermal, gas or water sub-metering. We anticipate this will continue, which should contribute to lower billing costs over time as multiple products are invoiced on a single bill.
• Sub-metering sales opportunities continue to be strong and skewed towards multi-commodity products within the new construction and condominium segments. During 2016, approximately three-quarters of the newly contracted services have come from new construction condominiums. Although the buildings related to these contracts have yet to be constructed and as a result the bulk of the capital and all of the related revenues will occur in 24 to 36 months, once constructed, all units within these buildings will start billing on initial move-in. This is in contrast to retrofit apartment contracts for which installation starts sooner, but billing lags as it is reliant on tenant turnover.
• During the third quarter, sub-metering launched a new billing feature that allows consolidated billing across multiple metering points. This billing requirement occurs frequently in mixed use (commercial/residential) buildings. Our first deployment of this service has been completed, with over 1,000 meters billed on the enhanced platform and an additional 12 buildings scheduled for 2017. We anticipate that this automation of the billing process will reduce billing costs over time.

2017 Income Taxes

• Enercare’s current income tax expense for 2016 was in line with previous estimates at $54 million. Current tax expense was approximately $19,001 higher in 2016, as a result of a one year tax deferral available through a subsidiary of Enercare Solutions during 2015 that reversed in 2016.
• Enercare estimates that it will recognize approximately $23 million to $29 million in current income tax expense for the fiscal year ending December 31, 2017. This estimate is based on taxable income normalized for a full year of Service Experts and assumes corporate tax rates of approximately 26.5% in Canada and 39% in the US. Taxable income is principally impacted by changes in revenue, operating expenses, potential acquisitions or divestitures, appropriate tax planning and capital expenditures through the capital cost allowance deduction.
• The SE Transaction was structured to permit Enercare to “step up” the tax basis of Service Experts’ assets in the United States through a “338 election” under US tax rules. At acquisition, Enercare estimated the resulting tax shelter value to be approximately US $65 million on a net present value basis. This tax shelter is estimated to result in a reduction of US taxable income of approximately $24 million to $28 million per year for the next 15 years.

2017 Capital Investments

• In 2016, Enercare capital investments of $164 million were in line with previous guidance. The Internal Rate of Return from capital investments on both rental water heater and rental HVAC additions were also in line with management’s targets of between 15% to 20%.

Capital Expenditure(1)	2016
HVAC rentals	$46M
Water heater additions	$37M
Water heater exchanges	$36M
Sub-metering growth	$19M
In-house financing(2)	$3M
Corporate & Building(3)	$23M
Total Range	$164M

• Enercare is targeting a range of between $167 million and $192 million in capital investments in 2017, primarily reflecting higher unit costs due to higher end product originations, higher sales volumes and higher corporate spending on platforms for innovation and growth to enable future product offerings including smart home products for a connected home.

Capital Expenditure(1)	Target Range for 2017
HVAC rentals	$46M – $52M
Water heater additions	$35M – $39M
Water heater exchanges	$32M – $36M
Sub-metering growth	$17M – $21M
In-house financing(2)	$5M – $ 8M
Corporate & Building(3)	$32M – $36M
Total Range	$167M – $192M(4)

(1)		Excludes acquisitions.
(2)		In-house financing represents the increase in financing receivables related to the program.
(3)		Corporate capital includes IT software and hardware, furniture and fixtures and other capital projects. The building relates to a new head office purchased in Q2 of 2016 including renovations continuing into the early part of 2017.
(4)		The target range of capital spend for the Enercare Home Service and Service Experts businesses are largely based on the number and type of equipment originated (assumed to be approximately 26,000 water heater and water treatment rental additions, 42,000 water heater exchanges and 14,500 HVAC rental additions) and the mix between rental, sales and financing arrangements similar to actual results experienced in the last 12 months of operations. The target range for capital spend in the sub-metering business is based on the number and type of metering equipment installed during the year assumed to be approximately 18,000 units.

Corporate

• Enercare is pleased that the participation rate in its Dividend Reinvestment Plan is currently 30%.
• Enercare announced an increase in its monthly dividend to $0.08 per Share, an increase of approximately 4%, effective in respect of the dividend payable to shareholders of record on the applicable date in April 2017. The increase reflects Enercare’s strong overall performance and our confidence in the future of the Enercare Home Services, Service Experts and Sub-metering businesses.
• Enercare has set its annual general meeting of shareholders for May 1, 2017. Jim Pantelidis, Chair of the Board, along with management will provide an update to shareholders on Enercare’s achievements in 2016 and strategy to grow shareholder value.

Financial Statements and Management’s Discussion and Analysis

Enercare’s financial statements and management’s discussion and analysis for the year-ended December 31, 2016 are available on SEDAR at www.sedar.com or on Enercare’s investor relations website at www.enercareinc.com.

Conference Call and Webcast

Management will host a conference call and live audio webcast to discuss Enercare’s financial results for the fourth quarter and year ended December 31, 2016 this morning at 10:00 a.m. ET. John Macdonald, President and CEO, and Evelyn Sutherland, CFO, will review Enercare’s results and discuss the quarter’s operating highlights.

Those wishing to listen to the teleconference may access the live webcast as follows:

Date: Tuesday, March 7, 2017
Time: 10:00 a.m. – 11:00 a.m. (ET)
By telephone: 647.427.2311 or 1.866.521.4909
Please allow 10 minutes to be connected to the conference call.
Webcast: http://event.on24.com/wcc/r/1355902-1/606406FDC3A12E95B4D13E48A2968A6E
Note: this is a listen-only audio webcast. Media Player or Real Player is required to listen to the broadcast.
Replay: An archived audio webcast will be available at enercare.ca for one year following the original broadcast.
Note: A slide presentation intended for simultaneous viewing with the conference call will be available the morning of Tuesday, March 7, 2017 at enercare.ca.

Cautionary Note Regarding Forward-looking Statements

This news release contains certain forward-looking statements within the meaning of applicable Canadian securities laws (“forward-looking statements” or “forward-looking information”) that involve various risks and uncertainties and should be read in conjunction with Enercare’s 2016 audited consolidated financial statements. Additional information in respect of Enercare, including the Annual Information Form of Enercare dated March 21, 2016 (“AIF”), can be found on SEDAR at www.sedar.com.

Statements other than statements of historical fact contained in this news release may be forward-looking statements, including, without limitation, management’s expectations, intentions and beliefs concerning anticipated future events, results, circumstances, economic performance or expectations with respect to Enercare, including Enercare’s business operations, business strategy and financial condition. When used herein, the words “anticipates”, “believes”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “goal”, “intends”, “may”, “might”, “outlook”, “plans”, “projects”, “schedule”, “should”, “strive”, “target”, “will”, “would” and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. These forward-looking statements may reflect the internal projections, expectations, future growth, results of operations, performance, business prospects and opportunities of Enercare and are based on information currently available to Enercare and/or assumptions that Enercare believes are reasonable. Many factors could cause actual results to differ materially from the results and developments discussed in the forward-looking information.

In developing these forward-looking statements, certain material assumptions were made. These forward-looking statements are also subject to certain risks. These factors include, but are not limited to:

• actual future market conditions being different than anticipated by management;
• the failure to realize the anticipated benefits of the SE Transaction, strategic initiatives and tax efficiencies;
• the risk that the pilot of rental HVAC offerings in 4 states in the United States does not realize anticipated results as the rental model is a new concept in this industry in the United States; and
• the risks and uncertainties described under “Risk Factors” in the AIF.

Material factors or assumptions that were applied to drawing a conclusion or making an estimate set out in forward-looking statements, including pro forma financial information, include:

• the view of management regarding current and anticipated market conditions;
• industry trends remaining unchanged;
• the financial and operating attributes of Enercare and Service Experts as at the date hereof and the anticipated future performance of Enercare and Service Experts;
• assumptions regarding the volume and mix of business activities remaining consistent with current trends;
• assumptions regarding the interest rates of the 2014 Term Loan and 2016 Term Loan, foreign exchange rates and commodity prices;
• the extent to which the SE Transaction is accretive, which may be impacted by the realization and timing of synergies and the operating performance of Enercare and Service Experts;
• assumptions regarding non-recurring transaction costs estimated to be incurred by Enercare in connection with the SE Transaction;
• assumptions regarding future selling, general and administration costs estimated to be incurred by Enercare, including in connection with the running of the Service Experts segment; and
• the number of common shares outstanding remaining constant.

There can be no assurance that the anticipated strategic benefits and operational, competitive and cost synergies from the SE Transaction will be realized. There can be no assurance that recent results from the introduction of the rental model to Service Experts in Canada are indicative of future results.

Readers are cautioned that the preceding list of material factors or assumptions is not exhaustive. Although forward-looking statements contained in this news release are based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Accordingly, readers should not place undue reliance on such forward-looking statements and assumptions as management cannot provide assurance that actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Enercare. All forward-looking information in this news release is made as of the date of this news release. These forward-looking statements are subject to change as a result of new information, future events or other circumstances, in which case they will only be updated by Enercare where required by law.

About Enercare

Enercare is headquartered in Toronto, Ontario, Canada and is publicly traded on the Toronto Stock Exchange (TSX: ECI). As one of North America’s largest home and commercial services and energy solutions companies with approximately 3,800 employees under its Enercare and Service Experts brands, Enercare is a leading provider of water heaters, water treatment, furnaces, air conditioners and other HVAC rental products, plumbing services, protection plans and related services. With operations in Canada and the United States, Enercare serves approximately 1.6 million customers annually. Enercare is also the largest non-utility sub-meter provider, with electricity, water, thermal and gas metering contracts for condominium and apartment suites in Canada and through its Triacta brand, a premier designer and manufacturer of advanced sub-meters and sub-metering solutions.

For more information on Enercare visit enercare.ca. Additional information regarding Enercare is available on SEDAR at www.sedar.com.

Source: Enercare Inc.

For further information, please contact:
Evelyn Sutherland
CFO
1.416.649.1860
[email protected]

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