Crius Energy Trust Reports Fourth Quarter and 2012 Year-End Financial Results

- First quarter of operations since IPO, highlighted by strong organic customer growth -

/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/

TORONTO, March 26, 2013 /CNW/ - Crius Energy Trust (TSX: KWH.UN) ("Crius Energy" or the "Trust"), today announced its audited financial results for the period from establishment of the Trust to December 31, 2012. The Trust was established on September 7, 2012 and commenced operations on November 13, 2012 with the acquisition of  a 26.8% ownership interest in Crius Energy, LLC (the "Company") by the Trust's wholly-owned subsidiary (the "Company Interest Acquisition").  In this news release, references to "Crius Energy" or the "Trust" include the Trust and its operating subsidiaries.  All figures in U.S. dollars unless otherwise noted.

"We were very pleased to have completed our IPO and begin trading on the TSX as a publicly traded company during the fourth quarter," said Michael Fallquist, President and CEO of Crius Energy Trust.  "Our organic customer growth continued to be strong during the period, which we believe validates our industry unique market strategy, however, those gains were not fully realized in our financial results as we experienced a series of unusual weather and market related conditions in November and December that impacted our results.  Despite these recent challenges, we continue to be encouraged by the market opportunities, both organically and through acquisitions, that support our business model and growth strategy."

FY2012 Operational and Financial Highlights

• Completed initial public offering on November 13, 2012 for gross proceeds of C$100 million through the issuance of 10 million trust units at C$10.00 per unit and completed the Company Interest Acquisition for approximately $89.7 million.
  
  
• Residential customer equivalents totaled 534,564 at the end of the fourth quarter, up from 504,225 at the end of the third quarter, including 93,356 gross adds.¹
  
  
• Sold 676,480 MWh of electricity and 665,057 Mmbtu from the period of November 13, 2012 to December 31, 2012.
  
  
• Revenue of $56.3 million for the period from inception to December 31, 2012.
  
  
• Gross margin of $11.9 million or 21.1% of revenue for the period from inception to December 31, 2012.
  
  
• Adjusted EBITDA of $3.5 million or 6.2% of revenue for the period from inception to December 31, 2012.
  
  
• Cash balance of $30.3 million and no long term debt as of December 31, 2012.

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^1	Reflects customer aggregation data for the Company for the period from January 1, 2012 to December 31, 2012 which includes customer data for the Company, Regional Energy Holdings, Inc., Public Power, LLC and their wholly-owned subsidiaries prior to the Acquisition of the Company Interest by the Trust on November 13, 2012.

Highlights Subsequent to Year-End

• Paid its first distribution to unitholders on January 15, 2013 for the initial period from November 13, 2012 to December 31, 2012 in the amount of C$0.1326 per unit and paid subsequent monthly distributions of C$0.0833 per unit on February 15 and March 15, 2013.
  
  
• In February 2013, the Company, through its wholly-owned subsidiary FairPoint Energy LLC, entered into an agreement with PNE Energy Supply LLC to acquire a portfolio of residential and small commercial customer accounts in New Hampshire.

Review of Financial Results

The Trust was established on September 7, 2012 and completed the Offering and the Acquisition of the Company Interest on November 13, 2012.  Accordingly, the fourth quarter of 2012 reflects operations of the Company from the close of the Acquisition of the Company Interest on November 13, 2012 through December 31, 2012.

Crius Energy's results for the period ending December 31, 2012 were impacted by unusual weather conditions that affected the eastern seaboard of the United States and resulted in an increase in wholesale electricity prices and volatility.  Those weather conditions included Hurricane Sandy, the largest Atlantic hurricane on record, and a November 7^th Nor'easter snow storm which brought extreme cold temperature to the Northeast.

In response to market conditions, and consistent with the Company's variable rate customer contracts, Management increased retail rates charged to its variable rate customers in December 2012. However, the retail rate increases did not fully recover the lost margin in the fourth quarter as the result of the time lag to implement price changes with the local utility and other management considerations including product competitiveness, seasonality and customer attrition.

For the period ending December 31, 2012 revenue was $56.3 million.  Revenue from electricity sales during the period was $53.0 million based on volumes of 676,480 MWh, accounting for 94.1% of total revenue.  Revenue from natural gas sales during the period ending December 31, 2012, was $2.8 million based on volumes of 665,057 Mmbtu, and accounted for 5.0% of total revenue.   Fee revenue consists of sign-up fees and other monthly fees received from independent contractors in the network marketing channel.  For the period ending December 31, 2012, fee revenue was $0.5 million and accounted for 0.9% of total revenue.

The Company has a Risk Management Policy, which is continually reviewed, that governs its risk management operations.  The Company's primary risk management objective is to maintain a volumetric and price neutral position in energy markets.  The Company maintains a forward hedging program for all fixed price products.  The Company's hedging strategy is to match exposures with offsetting physical and financial hedges in each delivery month and location whenever possible.  The Company forecasts the load for each state in which the Company serves customers, basing its forecasts on load profiles for applicable customer classifications, number of meters and seasonal weather patterns.

In accordance with the Risk Management Policy, 90% to 100% of the fixed price customer load is hedged.  In accordance with the same Policy, the variable month to month customer load may or may not be hedged.   Wholesale hedging strategies for month to month customer load and retail customer prices are determined by Management at month end for the following month, and are revisited during the month.  Among other things, Management relies on historical information and experience to make hedging decisions for the variable load.

Outlook

Management is encouraged by the customer growth across all marketing channels in the fourth quarter.  The customer growth, highlighted by the Viridian Energy and FairPoint Energy brands, continued into the first quarter of 2013 resulting in a larger revenue base to support future distributions to our unit holders.

However, the Company continued to experience challenging market conditions in the first quarter of 2013 which included the impacts of Winter Storm Nemo.  As was the case in the fourth quarter of 2012, the result of these challenging market conditions was an increase in wholesale electricity prices, volatility and customer usage.

Conference Call Notice

The Trust will hold a conference call to discuss its fiscal Q4 2012 financial results today March 26, 2013 at 8:30 a.m. ET.  Michael Fallquist, Crius Energy's Chief Executive Officer, will host the call.

To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191.  Please connect approximately 15 minutes prior to the beginning of the call to ensure participation.

A live audio webcast of the conference call will be available at www.cnw.ca.  Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.  The webcast will be archived at the above web site for 30 days.

A taped rebroadcast will be available to listeners until 12 a.m. ET on April 2, 2013. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 22277765, followed by the number sign.

About Crius Energy

Crius Energy has been established to provide investors with a stable and consistent distribution-producing investment through the acquisition of a 26.8% ownership interest in Crius Energy LLC (the "Company") . The Company is one of the largest independent energy retailers operating in the United States, with more than 530,000 residential customer equivalents. The Company serves residential and small to medium-size commercial customers in the United States and markets its products through a variety of sales channels and brand names. The Company currently sells electricity in 11 states and the District of Columbia and natural gas in five states.

Crius Energy intends to qualify as a "mutual fund trust" under the Income Tax Act (Canada) (the "Tax Act"). The Trust will not be a "SIFT trust" (as defined in the Tax Act), provided that the Trust complies at all times with its investment restriction which precludes the Trust from holding any "non-portfolio property" (as defined in the Tax Act). Material information pertaining to Crius Energy may be found on www.sedar.com or www.criusenergytrust.ca..

Non-IFRS Financial Measures

Statements throughout this news release make reference to EBITDA and Adjusted EBITDA which are non-International Financial Reporting Standards ("IFRS") financial measures commonly used by financial analysts in evaluating financial performance of companies, including companies in the energy retailing industry. Accordingly, management believes EBITDA and Adjusted EBITDA may be useful metrics for evaluating the Trust's financial performance as they are measures that management uses internally to assess performance, in addition to IFRS measures. As there is no generally accepted method of calculating EBITDA and Adjusted EBITDA, these terms as used herein are not necessarily comparable to similarly titled measures of other companies. The items excluded from EBITDA are significant in assessing the Trust's operating results and liquidity. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income or other data prepared in accordance with IFRS. EBITDA is calculated as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA adjusted to exclude any change in the fair value of derivative instruments. A reconciliation of EBITDA and Adjusted EBITDA to net income as calculated under IFRS for the period ended December 31, 2012 is provided in the management's discussion and analysis ("MD&A") for the period ended December 31, 2012 and is available under the Trust's issuer profile on the SEDAR website at www.sedar.com and on the Trust's website at www.criusenergytrust.ca.

Forward-Looking Statements

This news release contains forward-looking information that involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Crius Energy, including, without limitation, those listed under "Risk Factors" and "Forward-Looking Statements" in Crius Energy's  Annual Information Form dated March 26, 2013 (collectively, "forward-looking information"). Forward-looking information in this news release includes, but is not limited to, Crius Energy's objectives and status as a mutual fund trust and not a SIFT trust, results of operations, financial position or cash flows, customer revenues and margins, customer additions and renewals, customer attrition, customer consumption levels, general and administrative expenses, treatment under governmental regulatory regimes, distributable cash and Crius Energy's expectations and estimates regarding the payment of distributions to unitholders. Crius Energy cautions investors of Crius Energy's securities about important factors that could cause Crius Energy's actual results to differ materially from those projected in any forward-looking statements included in this news release. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. No assurance can be given that the expectations set out in this news release will prove to be correct and accordingly, prospective investors should not place undue reliance on these forward-looking statements. These statements speak only as of the date of this news release and Crius Energy does not assume any obligation to update or revise them to reflect new events or circumstances. 

 

SOURCE: Crius Energy Trust

Michael Fallquist
Chief Executive Officer
[phone]

Roop Bhullar
Chief Financial Officer
[phone]

Philip Dale
TMX Equicom
[email protected]
[phone] ext. 253