Just Energy Reports Fiscal Third Quarter 2020 Results

Previously Announced Strategic Review Remains Active and is Progressing; Decision Anticipated
No Later Than June 30, 2020
Base EBITDA from Continuing Operations of $38.0 million
Company Revises Fiscal Year 2020 Guidance

TORONTO, Feb. 10, 2020 (GLOBE NEWSWIRE) — Just Energy Group Inc. (“Just Energy” or the “Company”) (TSX:JE; NYSE:JE), announced results for its third quarter fiscal 2020 with lower gross margin and Base EBITDA from continuing operations in the current quarter largely driven by a reduction in sales, as a result of the Company’s focus on strengthening the quality of its customer base. The impact of a reduction in the Company’s residential customer base was partly offset by cost containment activities and improved collection performance.

“Over the past several months, we have focused intently on attracting higher quality customers and reducing bad debts,” said Just Energy’s President and Chief Executive Officer, R. Scott Gahn. “As a result of these efforts, our bad debt expense is trending positively and we have now turned our attention to driving measured and profitable sales growth. The enhancement of our customer base and our revised enrollment processes have negatively impacted our results in the near term; however, we remain confident that these efforts will result in a stronger organization that can deliver greater sales optimization and drive improved profitability.”

Key Developments:

(compared to third quarter fiscal 2019, unless otherwise stated)

The Company’s previously announced strategic review remains active and is advancing towards the Board’s goal of an outcome in the best interests of Just Energy and its stakeholders. In addition to identifying cost saving actions and refinement of the Company’s geographic footprint, the Company has been active in discussions with respect to strategic transaction opportunities. Just Energy anticipates announcing a decision on the strategic review by June 30, 2020. However, there is no assurance that a transaction will result from the strategic review.

The Company has made progress on narrowing its operations to focus on its higher margin, North American operations by closing the sale of its U.K., Ireland and Georgia operations.

Gross margin decreased 13% to $142.5 million, primarily due to a decline in the residential customer base related to the Company’s efforts to reduce non-paying customers in Texas and onboard higher quality customers through alternative channels as well as the exit from certain markets.

Administrative expenses, excluding strategic review costs, decreased 15% as a result of savings realized from restructuring actions that occurred in fiscal 2019 and the impact of additional cost cutting initiatives. Just Energy is on pace to realize approximately $60 million in administrative, selling and capital expenditure cost savings in fiscal 2020.

Base EBITDA of $38.0 million, decreased 34%, due to the decline in gross margin, as well as higher commission expense due to the ramp-up of the amortization of previously capitalized residential customer acquisition costs. Base EBITDA increased 68%, after excluding a one-time impairment add back in third quarter of fiscal 2020, reflecting the Company’s focus on attracting and retaining higher quality and higher margin customers.

Finance costs of $28.2 million increased 24% primarily driven by increased interest expense from higher debts and higher interest rates.

Total Residential Customer Equivalent (“RCE”) count from continuing operations decreased 5% year-over-year to 3.5 million RCEs, reflecting the transition from an RCE-driven focus to greater emphasis on attracting and retaining strong-fit customers that will deliver greater profitability.

Embedded gross margin of $1,839.8 million decreased 13% compared to the embedded gross margin for the three months ended December 31, 2018, as a result of the decline in the North American consumer commodity customer base.