JE - Earnings call transcript Q2 2021 | Just Energy Group Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone, and welcome to the Just Energy Group’s Fiscal 2021 Second Quarter Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to turn the call over to Michael Cummings with the Alpha IR Group.

Michael Cummings

operator. you, Thank

results XXXX released XXXX second of quarter the Just September for XX, year ended closed. XX, XXXX, fiscal market Energy the on after November

being press a our If Chief not section Executive and President Carter, Investor today's of webcast investors.justenergy.com. Michael from copy call release, at Relations you Chief website Officer; This me section of the you Relations and archived Investor website. may receive call be Financial and our in With did our are it obtain Gahn, is earnings will Officer. on Scott the of

Certain statements. may by XXXX. including Before from results known of Actual certain the described anticipated may release over matters could and of quarter uncertainties the relating for unknown is risk that would forward-looking year that in Energy's could I database that incorporated today's I control the recent www.sedar.com call, most financial on the company. form information reference Energy statements turn annual Just and are call and risks available the record this financial which conference and to fiscal to those performance, Scott, Energy, which Just or business discussed constitute be materially at to listeners is public to Just call the the affect in future the of subject announcing of SEDAR disclosure results on remind factors beyond results press forward-looking like second are differ in the

to like the Just dollars. are a all MD&A will I be Unless figures Canadian discussed. mentioned some call Scott. are discussion would otherwise measures to measures. for Listeners Additionally, latest Scott? to turn now non-IFRS refer noted, encouraged over to Energy's in of these financial

Scott Gahn

Mike. Thanks

like team perseverance their an times. valued of Through our Michael to than update work and performance, services for a minute difficult has and and finance also safety new years and to I'd experience. dedicated short thank Michael acknowledge Again, to unprecedented CFO. to of and Carter, XX brings month into provide Just Michael has I'd welcome commitment. leadership more And ensuring I the continued that during customers job, your take the felt calm, on and in by already our hard Energy Before our qualified He's Michael confidence stakeholders utmost recent his is thank our all team. us. for his our been and continued like all with presence employees. on incredible all employees have these highly jump made key and this, of the we while and industry hires health all essential the you

On company needs and an as were second closing the and hallmarked the reconstitution us critical, our XX, provider. important customers’ this Board sustainable, of deliver independent to by of more retailer our We're the several positioned is of better The the of was ultimately of of moving Directors for September forward management and as appointment retail milestones, quarter leader. announced profitable reconstitution energy We reestablishing successful a of financially mission meet stronger and stakeholders. and company as closing new value plan, nimble industry competitive growth believe our plan the we position to a XXXX, leadership that recapitalization our stable, Board including the Directors. and

and continue brought strong to we performance financial challenges COVID-XX operational the deliver performance, specific ongoing by pandemic. to the Turning on despite

million a range end of original upper EBITDA we tracking to $XXX As our increased base year EBITDA million. XXXX and are of guidance to base expectations for a have $XXX our the result, fiscal to

now behind functions core the our of undivided turned recapitalization its management the to With us, business. has attention

business recent and to but just acquisition cost for selling selling. is the customers’ customer with once attract growth our capture means discipline direct our But challenges have our on assured current ensure improving must strong improve returns our function on by retention core is business reviving return renewal fit, be investment. to these culture other fundamental efforts. retail by and value can't sales more. industry-leading to high another strong insight us customers among focus face-to-face continue and greater experience, And pandemic, taught This this First our of the complicated especially our we We our function. business and our

initiatives Just with have business us business level. will customers with that reduce doing several every the friction at easier making underway do We Energy, to of it

these performance. can in be strong success another in seen far areas Our quarter so

During our delivering controlling XX,XXX We attrition saw the results. maintaining focus green customer October. while see ways were QX. and TerraPass improvements expectations now second to in meet this to and profitable continue in XX,XXX accomplished future renewable sustainability. And we've pursue and quarter, total flow regarding customer cash additions strong in costs recent and while energy through from our our rates, debt We improvements bad brand renewal gross And in on new growth. continued RCE the and to and customer initiatives we

decline higher direct talent to pool. there discipline financial is environment. channel building tremendous from opportunity channels, these said, a utilizing to on to proactive our digital believe sales utilizing our through performing dealing is with our our saw our momentum, partners, our for a manner profitable keenly from the also We growth, COVID-XX relationships Just sales our focus sales rebuild other today's through a positioning customer external our our contactless We and internal continue level customer a match provide sales our customers we well existing growth external subsides. efforts. agents more we're to impact continue harsh build impact in investments, and to our and our our channel We to of of advance growth channels. and our well realities channels decision uncertain us to relationships decline and commercial have quarter. channels a ability decision these of for allowed sales believe with the our in on sell future, driving to sales capabilities of impacted better year digital due to slow and sales during COVID sophisticated direct in to strategy, last pandemic, resilient in and these diversifying enrollment to even by cross-train parallel, focused Energy in-person the last leveraging this business our our by accelerate profitable platform applying as the reinvigorating In decision as constraining on the pandemic results. base expanding foundation better That environment among the base focus operating While We're in to residential substantially channels as evolving the working

remain up growth. these we enrollment as As future the of to actions our And team has safe Just and of believe shape provide sales to efforts, a a existing part poised of to for to help ramp these also our great working competencies done Energy's with staying customers. We partners position a job our of will conditions core and achieve profitable experience allow. close company all the

efforts, approach customers what that focused while of what a excellence Through are customers upon to we’ll to deep need we Michael be. ultimately is understanding some we to on our path, our stabilized, Looking I'd It to consistent, the profitable ahead delivering the future, delivering detail to striving executing Carter, sales across culture reviving We while customers’ where deliver to competitive our adherence us our to want. understand strategy a to in experience get it our by performance. won't over these and experience pivot disciplined our got performance. continue profitable business business operational we With take simplified, who our through maintaining organization gain more sustainable our will our driving to necessarily that, now the us customer's growth. turn on Improving here team right on financial growth. and to our on and incumbent strengthen Michael? to like predictable provide and

Michael Carter

Thank you, Scott.

I transformation. late on focus to which to a us our joining to such pivotal completed express we financial how the an recapitalization core I excited We strategy. with on at profitable emphasis are and Before growth, quarter, the September, the Energy I'd a results provides in to time be which for company's management. business like capital our am discuss step With on completed, strategically important cost positioned improving our this execute sustainable tenants with structure of our Just

reductions base period. This which achieved period, lower resulting gain me partially base gross margin and financial bad decline our prior one-time expense non-reoccurring the our We $XX.X and XX% debt cost legal million, the a lower of containment compared million year was is specifics second EBITDA in to a cost $XX by offset prior results. cover Now result of efforts. $X provision, let the from of million quarter a down

legal of and provision the year-over-year. impacts year, gain up the Excluding one-time one-time operations EBITDA continuing million base from $X was the last

We're quarter margin margin quarter was gross by Second which XX% base, cost. for partially decrease primarily decreased year-over-year, hedge smaller offset by XX% our billion, optimization million, of $XXX.X to partially was channels stronger resources we driven U.S. do are believe customers existing appropriate our capture offset value customer decline investing by continuing and base, and in our in dollar. from to the by so. a gross driven customer Embedded base weather a $X.XX that the to

our balance KPIs. customer I important address for to sheet, the Before of base we the use want few quality the improving of review

unknown renewables the sequentially, to the sales in We a up an seeing our by of percentage quarter points increase customers. XX% due also on efforts our continue is with pricing competitive through XX% from effects direct to X margin sales COVID additions market. strong a known fourth XX% business add on increased commercial were our to we're year-over-year profitable customers a down seller pricing from renewals impacts and On the ago sales increase posed driven to channels. On to XX% a market. renewal RCE U.S. per year-over-year, RCE row year our levels challenged and in at and We basis, rates additions focus by remain the down and activity RCE higher consumer of sequentially, average due with retail quality RCE the consumer pressures of down were $XXX, the which quality COVID due and gross around and but higher COVID-XX. the XX% in quarter additions up consumer XX% quarter. and XX,XXX constraints a for Commercial competitive XX,XXX, ago basis, on improving other and fit RCE target XX% improvement We're U.S. digital renew year were manage in to to restarting

challenging the One of diligently our amid work to We're to invest selling manage our costs, we our top while environment. working costs prudently initiatives. priorities is we control in to growth can

expenses compared selling marketing $XX to Our prior offset XX% suspension by quarter of year $XX.X the door-to-door as partially investments decline associated quarter, platform. million, to and our comparable residential with quarter non-commissioned Bad the million, totaled and fell for in additional operational digital we selling, our to enhanced the debt and a the quarter, activities. for implement continue enrollment processes to year from prior controls XX% the collection due

the We expected in as our since further credit last gaps enrollment control discussed seeing we improvements are remediating losses identifying year. and

Moving we quarter our million $XX finished cash additional secured capacity includes facility. available balance available to which the sheet, in liquidity, under in $XXX million and $XX in credit senior with an million the

position we combined of decreased closing the as March our $XX XX, million million from approximately the our on $XXX to repayment secured million facility, with as XXXX September a $XXX of senior XXXX. XX, With of debt credit total recapitalization

unlevered our $XX restructuring costs, in to in with as free fiscal million year our million certain Turning the payables. We recapitalization supplier months paying well six as closed first down $XX cash after and flow. paying $XX of million

our forward initiatives. our potential our growth unprecedented look level believe are critical investments targeted We plans, in financial investment discipline to our these success we're allocation we customers. capital As applying reaching of and and on

a to fiscal year million narrowing increasing impact to full includes customer guidance do off significantly we legal we're of the million we year and strong book Turning fiscal uncertainties $XXX $XX of success new of also fiscal our expected million between at million $XXX upper that XXXX. year $XXX the We've strong our coupled his to million health and between to overall We're the updated to that, million Scott build call our with fiscal year quarter. our guidance. I our cash improving over prior expected range back to provision closing XXXX. provides EBITDA guidance confidence remarks. start this had to flow $XX while range free as COVID-XX, of will be to XXXX. the a narrowing with achieved improved With fiscal XXXX, Despite quality continuing million our associated second the $XXX for the and turn of achieve to acknowledge million our a to control want that the our in $XXX costs end for financial range to base XXXX to We're one-time year in to of ability the new $XXX guidance guidance start unlevered $X us the million during of I for expected of guidance. Scott?

Scott Gahn

us. I reemphasize absolutely to challenges relates as just core selling which function as it the like in said we an fundamental Michael. want a the to you, COVID-XX it's Thank just business earlier, business I for face environment

we other some I thank deal rates I COVID-XX, the can make distancing, I But of the selling for been from that session. safety. return questions possibility time Q&A COVID-XX with team the get forward those our for a everyone the challenges protocols done, that working all will to the recent the to office, would we have employees for historic of of activity. of our earlier, we advances continue and everything through We as And I challenging home, in working our Thank the look forward the had social announcements and in committed context you. us thank to improvements to all some to regarding in and have some stakeholders any the to to pandemic, direct side other vaccine like that we've navigate and in the to to all, said But that they've look that. want from having our very highly run

Michael Cummings

hand the you. over That Q&A. and to concludes the Thank it remarks operator our prepared I'll for

Operator

with And our first Ng Capital comes Nelson RBC from question Markets.

open. Your is line

Nelson Ng

morning, good and everyone. Thanks Great.

Scott Gahn

morning. Good

Nelson Ng

predict in do like of since XXXX. the provisions, processes, Just that court and it of on case like, again be terms would has million going looks to Just but the reading $X I been of when know court think payable? legal amount kind it's difficult you background that

just I closure quarters. if the wondering you some upcoming in So was see

Michael Carter

and and to are with we're money that you'll see, – appeal, as could the when appeal they going it Well, to that we accept not this they sure will Court, exactly if Supreme don't have if just case, it see year, they But to that be be early decide process take to long year. paid next as the as could takes. we'll do how then to wait next

Nelson Ng

pretty terms Okay. whether to terms Got saw you you the channels from? started of sales color just in suspended of have channels background increase or you're the customer nice able which it. growth a sales a bit And rough we some quarter. a guys wasn't then them give of very too can they've again, sure seeing I in this Are additions, give just been whether face-to-face there? more

Scott Gahn

Yes.

had that we we summer. of the of suspension, then And had and shut reps. beginning So again months it's year, over first six an the reopening interesting deployment been the of

bit So bumpy. little been it's a

We sales on in selling effectiveness. visor protocols direct are with smile a able is as being customer with the words, a deployed a same limit that selling other behind to In not retail at mask potential without mask. a

we Texas, come there States Texas, certain for instance, us in to they we we are other face-to-face of back selling have markets in are are regions allowed to important us in allow sell in our for again. So where to waiting

said, is and it's like Northeast is So more Northern limited. driven, geography there, the Texas really I Midwest

Nelson Ng

select a I or from Texas, stores. perspective is guess various fully retail And open in

Scott Gahn

in governments, are affecting stores it, things the policies decision of a they there us. that Again, direct selling it's how the to open, then – what activity. so customers open we're two One to the about their is about the but themselves and are Texas stores exposing potentially of actually course are have feel make

rep of when look others. that had as to retail thing our are have find position in. finding months, based project that, important there allowed we salesforce But and else So back than four The is shut consider our are store a that most down us partners to sales that they've different you to do. is taken a to that our are – for is forward some stores we commission had store partners, have something

with that partners And through so we are and recruiting rebuilding our salesforce taking time. it's

So even when stores though store staffed us, we in have we that available are are for not every yet.

process levels we are not it's that, that we and back existed but in So to doing gotten taking the the staffing time. have of pre-pandemic,

Nelson Ng

million about coming $X off to down would Okay. G&A? run admin to further then in be going provisions a you're million, the and expecting legal fair there the million, realize that rate is terms That that take $XX makes reductions cost year? of $XX of Or in for of sense. we if costs go And forward

Michael Carter

given this rate a forward. going our point, fairly At that's strategy, believe I fair run

Nelson Ng

Got in know this Okay. big one seasonal. last And there it. working terms probably of then positive working believe I capital, it's a is quarter, question, capital I just

to of So the expect quarter, do winter? you that as some into head in we this reverse coming

Michael Carter

the I – things, there the seasonal that same but as years, certain very would think as winter. of it’s last year, go pattern we seasonality definitely, is it much as to because have typically expect in we would you a seen type not similar be back prior into

Nelson Ng

Okay, I'll there. great. Thanks. it leave

Operator

Markets. from Thank you. next [Operator with CIBC Mark Our Capital Instructions] Jarvi question comes

Your line is open.

Mark Jarvi

morning Good everyone. Thanks.

up? looked some to question just or curious segment, sales gas the prices that's so you rising addition in margins. commercial a I'm your and shape seeing how an with to guys months, commercial like was that It positive the gas what Just doing recent segment are there

Scott Gahn

Yes.

business, gas believe is will And good – see tightness. that a our supply on team commercial. and prices that natural we thing our for some particularly we So bullish is

commercial and us prices the is uncertain businesses for up, them not it One rising the encourage that are business. are potential on things about signing about despite will future their the the of their contracts. volatility uncertainly that of term customers side the and Price lock to hurt

a And us, get we that can it's in so generally help hope will energy selling some for when we do positive our volatility markets.

Mark Jarvi

Have indication going somebody there activity, yet in you think coming to the is up or any increased pick months? you or seen

Scott Gahn

pick the it'll think up We coming months. in

Mark Jarvi

there any first just lag – up do the in historically, consumer there this of and just that of sort terms how relationship consumer? then also showing timing Is of or, commercial maybe then you residential in And segment? see a in

Scott Gahn

it it's more market are in so because consumers attention. in first a And sees much Commercial more market. the just commercial astute contestable little the paying just

I in think coming be the there's almost take winter, where a once season, lag winter, the of we a lag. wanting out bit entire Generally, winter see might customers of impact see go a could sort through of of could that the you action. lag we to

Mark Jarvi

business And more performing took is the Okay. guys resilient obviously, guidance well you then sort through the of fairly resilient. pretty and COVID, up and

the So does results deleveraging? Is you some kind cash couple it incremental and plan if where if of you on there to of incremental next investments flow exceed or maybe like add do dollar faster Is your goes, where dollar just end and towards think the EBITDA, quarters? do processes free in better? technology the of that go just top you'd the incremental hit or on see guidance

Michael Carter

two there. Well, think I parts there's

side. plans do on the digital You have

a see said, platform. investing We platform. in we growth that that we As as are

will, we So continues it then we continue to to will in expect to digital. the promise that invest there's – show extent that

and documents our senior as credit step our restrict you far as in secured requirements facility. far have, see our – as commitment downs As in can we

over borrowed degree, we facility. $XXX that to some million So have under

pay we'll cash. extra we that have down generally, So if

Mark Jarvi

investments in So is digital, debt you… how first, further kind of then

Michael Carter

I that. say No, wouldn't

view they're extent, we'll the talked we've as make our that going within fund – we'll debt down sure pay definitely done be within the to our we that growth and and that then requirements and initiatives keep are – we looking that think And to we're about. then the to cash I meeting them profitable we keep that pay to commitments. down once

Mark Jarvi

Okay.

joined quarters with in has Now in and the reconstituted lot the obviously board changed company. recent recapitalization, Michael, a you

judged, Management performance are you sort metrics some I'm quite of are in compensation Circular, curious, in with of So being those of us Information sort just terms share measured guys the metric, compensation how maybe in terms you and and stale. of and of targets? Can now

Scott Gahn

catch Can last you the you – bit I'm of asked? what sorry, I didn't

Mark Jarvi

is I'm benchmark from of cash seeing of terms now? free what specifically is you is short-term are compensation just like in are sort it what till and guys flow guys you EBITDA, metrics, shareholder targets, total compensation it generation? long-term it like a curious, Is being return, what

Scott Gahn

Yes, I you. share Absolutely. with can that

we're think the what written financial really are – customer now. So – you've you there us results. right it are It's things I is have And for two that guys stabilizing base. important it, consistent

other we're So growth. what our employees it's on and our EBITDA compensating we're combination are telling customer EBITDA, of teams, what executives a key and

those important, but just both to mean, blowing that back and by consistent right. targets, EBITDA need because has seen growth I can to company right. need my down, are we the company we EBITDA So the historically. can bring We our the meet shut grow. then we I can meet sales

of – so both compensating we're in on executives And those metrics incenting our parallel. our

the trying to EBITDA base. – consistent we're on we're That's customer written, it's what what do. you've and So performance stabilizing

Mark Jarvi

question, your that bit And now sort done you or down, leverage the you just, think reduce save more that don't my give the Have you've sort past, any in of costs? has can there's been risk and hedging costs. hedging how can the qualification risk, of able margin take on management bit to last of more you maybe a any that, Okay. been come guys on us I you of the a indication then have little dividend, on

Michael Carter

think need and that of a we one an significant some more get didn't than we Historically, purchased there's had there's major we policy – we too, money premium way. paid I that two it, Well, back. insurance

our of amount weather EBITDA. variability, other things, due So limit overall that really to the to would and

insurance year. premium it's going that forward. we because we because going the do it future to do liquidity. that years pay not can didn't company to risk so, We're we not as this in that wear that And we're a going And have

to We handle capital have structure that. that

that's one we're doing So it. that way

little to other, summer, extra potentially does have The like markets in an That weren't, where that volatility. us power volatile were hedge is they of not give the part are we they see cost – look, the wholesale as this did a of we opportunity positions make the and we around weather when during bit the the from overall, on margin optimization the exposure. just – in winter have especially during the summer

Mark Jarvi

And in any cost coming of we or quarters? is subsequent seen have those the reductions in this that quarter

Michael Carter

of benefit I that mean, a as we as huge the one but base it's lower costs. a said, driver, we did driver, was talked hedge our things about, a was weather it from driver, EBITDA not

So see this benefit some expect that us benefit to we'd of we And in think point, summer. continue see I the did some future. at of that in to the

Mark Jarvi

cash taken Oakland any Okay. turnover? of door. that now the of a compensation question, And for costs any there around more people, terms all And or any the all then remaining or just outflows cash is of severance in one sort at care with last is

Michael Carter

I'm our we payments it's believe, in left correctly, paid side $X I disclose are Yes, so immaterial. still million to not on cash that about of statements, severance the that financial additional if be recalling

Mark Jarvi

Thanks guys. That's great. Okay.

Scott Gahn

you. Thank

Operator

this turn at to further Gahn showing I'd I'm Thank for you. the back Scott And like call to remarks. closing questions no time.

Scott Gahn

Thank you, operator.

our and our rebuilding prospects with sales with the the of recapitalization effectively So digital. turnaround direct be of optimistic to – about and we the continue

historic of to have and wear to other side risks but financial look rates it performance. to the significant get COVID-XX We you. forward growth Thank back we'll continue company the of to and

Operator

gentlemen, concludes Thank and today's call. participating. conference for this you Ladies

a have now day. disconnect. You may great Everyone,

Just Energy (JENGQ) 12 Nov 202021 Q2 Earnings call transcript