Just Energy (JE) Q1 Earnings Beat Estimates, Sales Miss

Just Energy Group Inc. (TO:JE) reported adjusted earnings of 14 cents per share in the first quarter of fiscal 2018, beating the Zacks Consensus Estimate earnings of 4 cents. Reported earnings were also significantly higher than the prior-year quarter loss of 4 cents per share.

Total Revenue

Just Energy reported sales of $630 million (C$847.7 million) for the first quarter of fiscal 2018, a decrease of 9.6% from sales of $697 million (C$898.4 million) in the prior year. Further the company missed the Zacks Consensus Estimate of $701 million by 11.3%.

This year over year drop in revenues reflects 7% decrease in both customer base and lower commodity market prices.

Highlights of the Release

Administrative expenses increased 8.7% from C$44.7 million to C$48.6 million ($36.4 million) as a result of higher costs required to support customer growth in the U.K., international expansion and efforts relating to new strategic initiatives.

Gross margin contracted 3.1% to C$157.6 million (US$118.1 million) from C$162.7 million prior-comparable quarter primarily driven by the decline in the customer base, partially offset by a positive impact of C$3.6 million from foreign exchange.

Base EBITDA fell 21% to C$32.5 million (US$24.3 million) from the year-ago tally of C$41.1 million due to the impact of foreign exchange, primarily from the strengthening U.S. dollar.

Just Energy Group, Inc. Price, Consensus and EPS Surprise

Financial Screening

Cash and short-term investments were $62.4 million (C$81.0 million) as of Jun 30, 2017, a decrease of 3% from $162.7 million (C$83.6 million) as of Mar 31, 2017.The decrease in cash is primarily attributable to cash is primarily attributable to the lower gross margin earned in the current period.

Long-term debt of $400.9 million (C$520.6 million) as of Jun 30, 2017, increased 7.22% from $373.9 million (C$498.1 million) as of March 31, 2017. This increase is a result of the withdrawal of additional credit facility.

Guidance

Just Energy reaffirmed its fiscal 2018 EBITDA guidance of C$210–$220 million.

Performance of Peers

Among other players from the same industry that have reported second-quarter earnings so far, estimates of ONE Gas, Inc. (NYSE:OGS) and Sempra Energy (NYSE:SRE) were in line with Zacks Consensus Estimate, while that of New Jersey Resources Corp. (NYSE:NJR) missed its Zacks Consensus Estimate.

Zacks Rank

Just Energy Group carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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