|
Markets' uncertainty helps
Toronto
marketer set records
Specializes in 5-year contracts
Energy Savings Income Fund set records despite higher than usual
gas prices.
The
gas and power marketer signed 117,000 new customers in the three
months ending Dec 31.
That’s
more than she had signed, said Rebecca McDonald, in the firm's entire
first year as a public company, she told a conference call yesterday
and double the business it wrote in the previous quarter.
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Energy
Savings has reached 89% of its target for the fiscal year in just
nine months, added Brennan Mulcahy, CEO.
Gas
customers in Ontario actually fell in the quarter as Ontario Energy
Savings guided its sales force to sign up new power customers, Mulcahy
explained.
They
were happy to sign up new shoppers for both energies.
Ontario's
power market just re-opened this year and Mulcahy sees the firm
"gaining momentum."
But
the "star of the second quarter show" was the US where
Energy Savings signed up 40,000 new customers in the quarter, Mulcahy
added.
That's
double the new business they signed in the previous three months.
The
firm has four offices in Illinois, he added, and hit the US figure
with only one office in the New York market.
They'll
have three by spring.
He
figures the US with 18 million potential customers will be the "growth
driver" over the next 10 years.
The
firm plans to begin selling this fall at another New York utility
and may add Indiana where one utility (Northern Indiana Public Service)
has opened its gas market.
They're
gearing up for those new markets now, McDonald said.
By
"every measure," Mulcahy pointed to a great quarter with
the highest sales in the firm's history and gross margin up 23%
year-over-year.
Margins
on new customers have been at or above targets and attrition is
where they expected it to be.
Of
course low gas use will show up in the fourth quarter figures, he
warned, but should have little impact on Energy Savings' results.
The
firm licked its bad-debt problem in Illinois by requiring a higher
credit score for new customers.
It's
being more aggressive about contacting slow payers too, Mulcahy
explained.
Sales
reached C$329 million in the quarter, up from C$232 million in last
year's quarter with sales for the nine months rising to C$863 million,
up from C$639 million.
Gross
margin in the quarter was $52 million, up from $42 million last
year. For the nine months, gross margin fell to $134 million from
$118 million (all in Canadian dollars).
New
customers signups so far this fiscal year (312,000) are 39% ahead
of last year's record pace. Energy Savings 2006 fiscal year ends
next month.
Sales
in Canada at $295 million were up 31% from the year-ago quarter
with margins higher by 9%.
Gas
sales and margins were up 18% over the year-ago quarter but electricity
sales rose 61%.
Some
of the growth came from buying customers from First Source Energy
and Epcor Utilities that represented 11% of Energy Savings' electricity
volumes.
When
those contracts -- average remaining life 1.5 years -- expire they
will be rewritten with higher margins, the firm intends.
Energy
Savings figures new Canadian customers will exceed its target margins
of $170 for residential gas customers and $100 for electricity customers
during the agreements.
US
sales in the quarter reached $34 million and $46 million for the
first nine months showing the spectacular third-quarter (October-December)
growth spurt.
Its
margin targets for US customers are $140 for gas and $100 for electricity.
The
firm started the quarter with 622,000 Ontario gas customers and
ended it with 614,000, Energy Savings reported.
In
other Canadian markets, it started with 156,000 and ended the year
with 177,000.
Canadian
power customers grew to 510,000 from 475,000 at the start of the
quarter.
US
gas customers started at 74,000 and ended at 112,000.
Total
customers grew to 1.4 million from 1.3 million at the end of September.
Renewals
in the quarter have been "consistent," the firm reported,
with its 80% target renewal rate.
Energy
Savings makes a distinction between customers who fail to renew
and attrition -- customers who die or move.
Originally
published in Restructuring
Today on February 9, 2006
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