Investor Presentation JUNE 2013 TSX: KWH.UN

Transcription

1 Investor Presentation JUNE 2013 TSX: KWH.UN

2 Forward-Looking Statements The Company s presentations may contain forward-looking statements including statements pertaining to customer revenues and margins, customer additions and renewals, customer consumption levels, distributable cash and treatment under governmental regulatory regimes. These statements are based on current expectations that involve a number of risks and uncertainties which could cause actual results to differ from those anticipated. These risks include, but are not limited to, impact of weather, levels of customer natural gas and electricity consumption, rates of customer additions and renewals, fluctuations in natural gas and electricity prices, changes in regulatory regimes and decisions by regulatory authorities, competition and dependence on certain suppliers. Additional information on these and other factors that could affect the Company's operations, financial results or distribution levels are included in the Company s AIF dated March 28, 2013 which can be accessed through the SEDAR website at 2

3 RETAILERS OF ELECTRICITY AND NATURAL GAS 583,132 RESIDENTIAL CUSTOMER EQUIVALENTS (RCEs) $100M GROSS PROCEEDS OF NOV. 13, 2012 IPO $24.6M CASH BALANCE AS OF MAR. 31,

4 A Compelling Investment Opportunity One of America s largest independent energy retailers Large, underpenetrated retail electricity and natural gas markets Strong multi-channel sales and marketing platform Mitigated credit and commodity price risk Proven organic and acquisition growth strategies ATTRACTIVE YIELD OPPORTUNITY 4

5 Crius Executive Team Executive Michael Fallquist CEO Roop Bhullar CFO Jan Fox SVP & General Counsel Cami Boehme SVP of Marketing & Brand Strategy Michael Chester VP of Operations Background Founder of Regional Energy, one of the two predecessor companies that formed to become Crius Energy. Former COO of Commerce Energy Group. Also worked for the Macquarie Group as a member of the Central Executive Strategy group and in various roles with Macquarie Cook Energy. Former CFO of Regional Energy. Previously the Finance Director at Commerce Energy Group. Former Tax Manager at Deloitte where he provided consulting advice to energy clients and co-headed the specialist M&A group. Former SVP & General Counsel of Regional Energy. Founder and President of JLK Energy Consulting. Previously the General Counsel at Strategic Energy, a subsidiary of Great Plains Energy. Former SVP of Marketing and Brand Strategy at Regional Energy. Prior to that she was the Associate Director of Marketing for the Huntsman School of Business at Utah State University. Former VP of Operations at Regional Energy. Prior to that was the Director of Billing and Credit Management at First Choice Power. Was the Director of Billing and Credit Management at Commerce Energy Group. 5

6 Crius Board of Directors Director Robert Gries Chairman Michael Fallquist Director & CEO James Ajello Independent Director Daniel Sullivan Independent Director David Kerr Independent Director Brian Burden Independent Director Robert Huggard Independent Director Background Founded Public Power, LLC in 2009 and grew it organically and through acquisitions to over 240,000 customers before merging with Regional Energy to become Crius. See management bios. Chairman of U.S. Department of Energy s Environmental Management Advisory Board. Executive VP, CFO, Treasurer & Chief Risk Officer of Hawaiian Electric Industries, Inc., (NYSE: HE). Former Senior VP of Business Development and Senior VP & GM of Commercial and Industrial Marketing President of Reliant Energy Solutions, LLC. Director, Ontario Teachers Pension Plan. Director, Allied Properties Real Estate Investment Trust. Former Consul General for Canada in New York. CEO, Thorium Power Canada Inc. Founder, Algonquin Power Income Fund. Former CFO, TransAlta Corp. Former CFO, Molson Coors. President of Lindaura Consulting. Former President, Direct Energy Canada. Former President, Direct Energy Home and Business Services. 6

7 Current Service Territories Electricity: 11 states and District of Columbia Natural gas: 5 states Electricity Natural Gas Electricity and Natural Gas ADDITIONAL EXPANSION PLANNED IN

8 Large Growth Opportunity In Existing Markets ELECTRICITY POTENTIAL RESIDENTIAL CUSTOMERS 27.1M ELIGIBLE RCEs 18% MARKET PENETRATION NATURAL GAS 12.4M ELIGIBLE RCEs 21% NOTE: Data as reported by KEMA as of August 2011, reflecting states in which Crius operated in at time of filing of final prospectus STRONG GROWTH THROUGH INCREASED MARKET PENETRATION 8

9 Crius Value Proposition Bundled product offering Competitively priced green energy Rewards and loyalty program DISTINCT FOR EACH BRAND 9

10 Crius is Growing Rapidly 180, ,000 RCE Adds Cumulative RCEs ResCom Acquisition 700, ,000 Quarterly Customer Additions 140, , ,000 80,000 60,000 40, , , , ,000 Cumulative Customers 20, ,000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q % ORGANIC GROWTH IN Q1 10

11 Simple Business Model Multi-Channel Sales & Marketing Platform Prudent Risk Management 11

12 Multi-Channel Sales and Marketing Platform UNIQUE DISTRIBUTION AND CUSTOMER VALUE PROPOSITIONS TELEMARKETING & DOOR-TO-DOOR NETWORK MARKETING EXCLUSIVE MARKETING PARTNERSHIPS DIVERSIFIED WITH REACH IN ALL CUSTOMER SEGMENTS 12

13 Telemarketing & Door-to-Door RELATIONSHIPS WITH: Telemarketing Companies Door-to-Door Companies Flexible product offerings Customer reward and loyalty program Highly focused marketing efforts FLEXIBILITY & AGILITY TO CAPITALIZE ON MARKET OPPORTUNITIES 13

14 Network Marketing ~17,700 exclusive independent contractors Average 14 customers per independent contractor Leading green energy brand Targets friends and family Ideal channel to market sustainable energy products PROVEN SCALABILITY IN NEW MARKETS 14

15 Exclusive Telecom Marketing Partnerships LEVERAGE BRANDS AND DISTRIBUTION Licensed from Cincinnati Bell Inc. (NYSE: CBB) Licensed from FairPoint Communications Inc. (NYSE: FRP) Licensed from Frontier Communications Corporation (NYSE: FTR) Low cost-to-acquire and low cost-to-service Customer contracts owned by Crius ~3.5M ELIGIBLE SUBSCRIBERS ~5% FIRST YEAR ANNUAL PENETRATION RATE FOR ELECTRICTY CUSTOMERS LARGEST PARTNER RAMPING UP 15

16 Simple Business Model Diversified Sales & Marketing Platform Prudent Risk Management 16

17 Prudent Risk Management Customer Credit Commodity Exposure Liquidity 91% backstopped by utilities with investment grade credit 91% of contracts are variably priced Macquarie Energy exclusively supplies energy and hedging products through a 5-year, $200M procurement facility and $25M working capital facility NOTE: Percentages as of December 31, 2012 MITIGATED CREDIT & COMMODITY PRICE RISK 17

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19 Growth Strategies Expand in existing markets and into new states Aggressively pursue new exclusive marketing partnerships Strategic acquisitions of small energy retailers PROVEN ORGANIC & ACQUISITION GROWTH CAPABILITIES 19

20 Expand in Existing Markets and Into New States Expand in Existing Markets 39.5M RCEs with <21% penetration Rollout brands into all states Cross sell electricity and natural gas Enter 5 New States and District of Columbia in M Eligible RCEs NOTE: Data as of time of filing of final prospectus PLAN FOR NATIONAL EXPANSION 20

21 Aggressively Pursue New Exclusive Marketing Partnerships Build on first mover advantage with telcos Enter partnerships with cablecos Licensed from Cincinnati Bell Inc. (NYSE: CBB) Licensed from FairPoint Communications Inc. (NYSE: FRP) Licensed from Frontier Communications Corporation (NYSE: FTR) TARGETING LARGER SUBSCRIBER BASES 21

22 Strategic Acquisitions of Small Energy Retailers FOCUS ON SMALL ENERGY RETAILERS Highly Fragmented Market: 69 Energy Retailers 48 HAVE <200,000 CUSTOMERS Opportunity to Consolidate NOTE: Data as of time of filing of final prospectus PROVEN TO BE HIGHLY ACCRETIVE WITH LOW INCREMENTAL COSTS 22

23 PNE Acquisition February acquisition of PNE Energy Supply, LLC Residential and small commercial customer accounts located in New Hampshire Highly accretive Difficult market conditions facilitated acquisition 23

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25 Q Highlights 583,132 RCEs, up 9.1% from Q4-12 and 26.5% from Q1-12 Revenue of $119.0M Gross margin of $20.9M or 17.5% of revenue (28.1% in March) Adjusted EBITDA of $5.5M or 4.7% of revenue Cash balance of $24.6M and no long term debt 25

26 Other Financial Highlights Simple financing structure No long-term debt $200M supply facility $25M working capital facility Financial presentation Expensing of all selling costs Limited number of EBITDA adjustments STRAIGHTFORWARD & TRANSPARENT 26

27 A Compelling Investment Opportunity One of America s largest independent energy retailers Large, underpenetrated retail electricity and natural gas markets Strong multi-channel sales and marketing platform Mitigated credit and commodity price risk Proven organic and acquisition growth strategies ATTRACTIVE YIELD OPPORTUNITY 27

28 Analyst Coverage George Doumet Scotia Capital Nelson Ng RBC Capital Markets Julien Dumoulin-Smith UBS Securities

29 Contact Information Michael Fallquist Chief Executive Officer Roop Bhullar Chief Financial Officer

30 Investor Presentation JUNE 2013 TSX: KWH.UN