Q3 2012 Just Energy Group Inc Earnings Conference Call
Feb 09, 2012 AM EST
Thomson Reuters StreetEvents Event Transcript
E D I T E D V E R S I O N
JE.TO - Just Energy Group Inc
Q3 2012 Just Energy Group Inc Earnings Conference Call
Feb 09, 2012 / 07:00PM GMT
==============================
Corporate Participants
==============================
* Rebecca MacDonald
Just Energy Group Inc
* Ken Hartwick
Just Energy Group Inc - CEO
* Beth Summers
Just Energy Group Inc - CFO
==============================
Conference Call Participants
==============================
* Unidentified Participant
- Analyst
==============================
Presentation
------------------------------
Operator [1]
------------------------------
Good Afternoon ladies and gentlemen and welcome to the Just Energy Group Inc. conference call to discuss the third quarter results for the period ending December 31, 2011. Please note that all your lines are on listen only mode, and there will be time for a question and answer session towards the conclusion of this meeting.
(Operator Instructions) And now, I would like to turn the call over to Ms. Rebecca MacDonald, go ahead Ms. MacDonald.
------------------------------
Rebecca MacDonald, Just Energy Group Inc [2]
------------------------------
Good Afternoon, everyone. With me this afternoon reporting our third-quarter conference call is Ken Hartwick, our CEO; and Beth Summers, our CFO. Ken and I will make a short presentation, and then we will open the call to questions. Let me preface the call by telling you that our earnings release and potentially our answers to your questions might contain forward-looking financial information. This information may eventually prove to be inaccurate, so please read the disclaimer regarding such information at the bottom of our press releases. Our third-quarter results show how changes we have made to our business over the past years have brought on a bright future for our shareholders. In 2007, 100% of our new customers were generated door to door by our sales force, with our offer being a five-year fixed price contract to residential and small commercial customers. Since then, we have seen the worst market environment for that business, flat to declining commodity prices with little or no volatility. Had we not taken steps to diversify our business, we would have faced little growth in our customer base and squeezed prices with lower margins.
Instead, today our business is thriving. We have diversified our products and markets and we are announcing by far the largest customer additions in Company's history. How was this accomplished? First we diversified. Three years ago we started with National Home Services, our water heater, HVAC rental business. Today, it has 153,000 installed customers, up 39% year-over-year. It's gross margin is up 65% year-over-year. Most important, the future margin embedded in its rental contracts has grown to CAD352 million at quarter end. This from a business which had a very small customer base when we acquired it through Universal three years ago. This is one diversification away from our core product, and it has generated more than CAD300 million in value. Our acquisition of Hudson put us into the commercial market. We were aware that this was a lower margin market, but that we would have a lower customer aggregation and ongoing customer service calls in the future. We have gone from 33% commercial customers to 48% in seven quarters we have had the Hudson platform.
We now offer our JustGreen and JustClean environmentally friendly gas and electricity products. Currently 33% of our new residential customers are taking Green for an average of 87% of the supply. While it takes time to work through our long-term customer base, currently 12% of our residential power and 9% of our residential gas [book] of green supply. We have participated in more than 25 green projects across our markets, and we believe that our green business is one of the most profitable in the world. Our Fulcrum acquisition has moved us into affinity marketing space, and we are already expanding this platform from Texas to new markets. Our Memphis network marketing unit has also seen tremendous growth. The unit had 4000 agents, two quarters ago, 11,000 agents three months ago and 25,000 agents at the quarter end. Again, a diversification into new marketing channel which has been tremendously successful. Through these diversifications today, only 50% of our customers are generated through the door-to-door channel. We are looking to expand telemarketing, internet sales and direct mail. Combining this with diversified product offerings, variable rates and short-term contracts where our customers demand them, has ramped up our customer growth to the point where it has more than offset the lower margins on our commercial customer base.
We have also looked at our operations to improve our business. Two winters ago our markets experienced the warmest weather on record and it cost us CAD35 million or about 10% of our margin. We did not want to repeat -- a repeat of this event, and in November of this year we entered into weather derivatives, hedges at the cost of CAD2 million which would cover up to [CAD15 million] in losses from warm weather. As you are well aware, this winter has again been mild. Without options, we would have forgone margins of CAD12 million attributable to November and December which would be realized over Q3 and Q4. CAD9 million of this loss margin has been offset by the options so far, and the remainder of the CAD15 million will be offset further cost of the warm January. I can't predict February or March weather, but we are pleased that we were able to mitigate much of the forgone margins so far. As you'll see when Ken talks about the numbers, we're in a great position heading into Q4. Let me turn it over to Ken.
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [3]
------------------------------
Thanks, Rebecca. I will run through our results, and then we'll open the floor to questions. Rebecca has talked about the changes that have taken place in the business. We have never been more confident in the future of our business, given the positive impact of our diversification. Looking at the top line our sales declined by 3% year-over-year. This should come as no surprise. Gas prices for customers coming off five year contracts were double the renewal prices today. The result is a lower sales volume. Margins, on the other hand, continue to show the solid growth seen throughout the year. For both the quarter and the nine months, margins are up 9% per share, well ahead of our published 5% growth guidance. This was accomplished in a number of ways. First we added a record 310,000 new customers through marketing in the quarter, up 30% from the 238,000 adds in Q2. The growth was seen across both our divisions with commercial additions up 29% and our residential adds up 33%. Net additions were 115,000 RCs, which, when combined with the 240,000 customers we acquired from Fulcrum, meant that our total customer base increased 10% in the quarter.
Record additions were also supported by another quarter of low attrition rates, but we were challenged by lower than hoped for renewals. We believe that we will see improved renewals in fiscal 2013 as prices on renewal contracts will be much more in line with the current market. With 10% more customers in the quarter, we were able to grow our energy marketing margins by 5% despite the decline in sales due to lower prices. Our growth in home services and improved operations at our ethanol plant brought the year-over-year Q3 margin growth to 9%. As we have in the past, we tightly control administrative costs to ensure that our adjusted EBITDA growth is greater than our growth in margin and sales. We had a jump in costs reflecting the administration of recently added Fulcrum and the rapid growth of Momentous. Bad debt expense remained at target levels at 2.5%, down slightly from 2.6% a year earlier. Overall, adjusted EBITDA, the best measure of our business success was up 12% per share for the quarter and 18% per share for the nine months. This is well ahead of our published guidance of 5% growth per share for the year.
We have a strong fiscal 2011 Q4 to compare to, and the remaining winter weather is uncertain, but we are very confident that our annual results will meet or exceed our guidance for both margin and adjusted EBITDA. There are those in the market community who continue to speculate that we will have difficulty maintaining our dividend. Let me provide the following figures with respect to this. In Q3, our payout ratio on adjusted EBITDA was 50% down from 55% a year ago. For the nine months, the payout ratio was 75% versus 88% a year earlier. Our payout ratio has been lower each of three quarters this year compared to the prior year, a year in which we comfortably paid $1.24. We have higher margin, higher EBITDA and lower payout ratio. Just Energy is in a very sound financial position. A major step for Just Energy was taken January 30 with our listing on the New York Stock Exchange. This listing will simplify the purchase of our shares for US retail investors. This should result in greater liquidity and more transparent value for our shareholders. A recent article in Forbes Magazine identified Just Energy as one of its best yield ideals for 2012. We believe that this type of greater visibility associated with our listings should result in a better trading range for our shares. We thank our shareholders for their continued support. We are confident that Just Energy is very well-positioned for a bright future. We will now open for questions.
==============================
Questions and Answers
------------------------------
Operator [1]
------------------------------
(Operator Instructions) [Nelson's location].
------------------------------
Unidentified Participant, - Analyst [2]
------------------------------
Thanks, just in terms of the weather derivatives, so you mentioned there is a CAD15 million maximum, so based, on if the, if the expected warm weather were to continue, would you expect the full CAD15 million would be paid out?
------------------------------
Beth Summers, Just Energy Group Inc - CFO [3]
------------------------------
Yes. With respect to the weather derivatives, by the end of January, we are at a state where the whole CAD15 million -- we would have reached that cap.
------------------------------
Unidentified Participant, - Analyst [4]
------------------------------
I see. So was the CAD9 million recognized in Q3 in terms of the -- I think in the third quarter you mentioned there was CAD9 million -- was it recognized in Q3, or does it kind of carry forward into Q4?
------------------------------
Beth Summers, Just Energy Group Inc - CFO [5]
------------------------------
The CAD9 million was recognize as it reflect in the gross margin in Q3, yes.
------------------------------
Unidentified Participant, - Analyst [6]
------------------------------
Okay, perfect. And then just for in terms of the various business segments, about three of the four energy segments have seen a small decline in the past quarter with the exception of I guess the US electricity segment being the bright spot. Do you expect the three segments to continue to see a small reduction going forward?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [7]
------------------------------
No. I think that certainly, we are now in the US, in particular, more electricity markets just because there are more electricity markets de-regulated. So some of our growth of that product relative to gas is going to be bigger because of the markets. But again, we believe that each of the sales channels that we have operating right now are performing very well and that we will have growth across the segments both gas and electricity. And, in Canada, as we've always said, it is smaller market, more saturated. So again a bit more of a challenge to get that back to a flat book, but is something like I said with the growth in sales channels we feel confident we can do.
------------------------------
Unidentified Participant, - Analyst [8]
------------------------------
Okay. And then just one more question. On the solar business you have about I guess CAD62.5 million of commitments to date. What your target the next 12 months?
------------------------------
Rebecca MacDonald, Just Energy Group Inc [9]
------------------------------
Solar business targets.
------------------------------
Beth Summers, Just Energy Group Inc - CFO [10]
------------------------------
Solar business for the next 12 months we will continue to look at that market and grow.
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [11]
------------------------------
Yes. I think sort of at the pace we are adding them now, if you count on [CAD62] - so we should again in the quarter probably be in the range of [CAD80] to [CAD100] on an annual basis. And that's probably a pace that we might look at longer-term and say assuming the tax rules stay the way are and tax incentives stay in place, we would be very comfortable been in that range.
------------------------------
Unidentified Participant, - Analyst [12]
------------------------------
Okay and then just in terms of financing the solar projects, I believe you are currently just using your balance sheet? Are you looking to set up some kind of non-recourse financing for the solar business?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [13]
------------------------------
Yes, again very similar to how we have set up our other businesses, National Home Services, is we will -- and are some ways along in setting up that financing, but we will want a specific end recourse to that business.
------------------------------
Unidentified Participant, - Analyst [14]
------------------------------
Okay, great. Thanks. Those are all my questions.
------------------------------
Operator [15]
------------------------------
(Operator Instructions) [Trevor]
------------------------------
Unidentified Participant, - Analyst [16]
------------------------------
Good afternoon, folks, congrats on the quarter. Just a couple quick questions with regards to the Momentis, momentum you're getting the last few quarters in terms of the number of agents. Can you just talk to the recruiting efforts you're doing, and what exactly is drawing folks to come in and work with JE on this front?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [17]
------------------------------
Yes, it's as a sales channel that we have, or business we have been building really. And, as you've seen from just a growth in independent representatives over the last three quarters, that is something we are very encouraged by. And, very similar to our door-to-door model, we know that as we build that rep base both - it helps build itself and more importantly, or as importantly to us, we will then bring in the customer growth to come with it.
So, it's an area that we are very positive on. We have a very solid leadership group there that is helping to drive that forward, and the growth you have seen from Q2 to Q3 is something we would anticipate again from Q3 to Q4 and forward. So, very encouraged and very early stages which is why we believe it will be a major contributor, particularly to our residential base which is really the primary focus of that business model versus smaller commercial.
------------------------------
Rebecca MacDonald, Just Energy Group Inc [18]
------------------------------
And just to add to that, that channel is really not interfering with our door-to-door channel on residential side because it's targeting more a warm sale, and it's more of a living room type of sale versus cold calling. So there is always going to be a group of people that are not receptive to door-to-door, and we recognize that. And, this is where we are going to be getting the penetration to the group that we normally would not get through our door-to-door channel.
------------------------------
Unidentified Participant, - Analyst [19]
------------------------------
Got you. And in terms of the cash flow profile, these customers that the Momentis agents are signing up, it is very similar to the legacy door-to-door RCE with the profile?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [20]
------------------------------
It will have a similar characteristic from a margin expectation, but the one feature that we think might be very different or actually know is very different, is the attrition off of a Momentis customer is we believe going to be less than attrition off of a customer brought in through the door-to-door channel. In part because it is a friend, a family member, an associate of sorts of that representative who is incented to keep the customer flowing because they get paid a residual based on a customer flowing. So it has some characteristics that are actually very favorable to us.
------------------------------
Unidentified Participant, - Analyst [21]
------------------------------
Great. Sorry, just - these are typically all retail customers not business -- businesses?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [22]
------------------------------
I'd say it's predominantly a residential channel. It will pick up some smaller, sole proprietor type of businesses on the small end of commercial. But, yes, it's predominantly residential.
------------------------------
Unidentified Participant, - Analyst [23]
------------------------------
And, obviously, the derivative program kicked in nicely in these winter months. Is this something that's going to continue for potentially the summer? I realize the impact isn't quite as extreme then on JE, but is this a hedging tool that we can expect going beyond just winter?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [24]
------------------------------
Yes. It's actually, we used it in Texas last summer as well and again in the Northeast markets we'll look to use the winter Hedges. In the south market we'll look to use the opposite of the weather hedge. And, again, we view our business as getting a customer, knowing what the margin is for the customer, and we will pay the insurance premium to remove as much of the risk of weather related volatility's, what we can. Which we don't know -- we don't the prices of commodity which were they are going to go or the weather. So, we just think it's part of what we want to do as a business.
------------------------------
Unidentified Participant, - Analyst [25]
------------------------------
Okay. I guess just kind of big picture question here but in terms of kind of the black box that fuels JE behind the scenes. As winters come and go and you get a different weather pattern be it heating degree days et cetera, does JE's model adapt to that so that every year it takes in the most recent data?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [26]
------------------------------
Yes. A lot of our supply assumptions are typically driven off of ten year patterns. But again it is why we put things like whether hedges in place. So we've had between two years ago and this year, two of the warmest winters on record in the last 100 years -- so far in February, now who knows how the rest of February and March end up. So, while we look at that from a supply curve standpoint, like I say, we will gladly pay the insurance premium to just remove the risk from it and be quite happy just getting the margins that we expect from the customer. So it's, okay were very risk adverse when it comes to what the weather might or might not be.
------------------------------
Unidentified Participant, - Analyst [27]
------------------------------
Okay. Thanks. And then just finally, obviously we see the numbers coming in, and the are pretty good from customer adds. But in terms of just anecdotal evidence from your front line, salespeople, are they finding it easier to sell gas contracts in this environment? Any evidence of that coming back to you folks?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [28]
------------------------------
I think it's been interesting for those that read out of the Globe and Mail or Toronto Star, and Rebecca and I were talking about this. Both papers recommend that people lock into a fixed price gas contract. And it is the first time I think any of us have seen it ever happen. So it's again I think as gas prices have gone as low as they have now I think we are beginning to see custer set -customer sentiment shift to yes their low so why not just lock in for the next five-year period. So, that is encouraging on the gas side of the business.
------------------------------
Rebecca MacDonald, Just Energy Group Inc [29]
------------------------------
And the other encouraging side for us is that, with this last couple of years in particular oil price environment, a number of competitors have exited the marketplace. So from a competitive point of view, particularly here in Ontario, it's very clean landscape for us.
------------------------------
Unidentified Participant, - Analyst [30]
------------------------------
That's very helpful. Thanks for the color.
------------------------------
Operator [31]
------------------------------
[Damir]
------------------------------
Unidentified Participant, - Analyst [32]
------------------------------
Thank you, I just wanted to touch on -
------------------------------
Rebecca MacDonald, Just Energy Group Inc [33]
------------------------------
[Damir], how did you like our quarter?
------------------------------
Unidentified Participant, - Analyst [34]
------------------------------
That was good. It was good, very good.
------------------------------
Rebecca MacDonald, Just Energy Group Inc [35]
------------------------------
Is this a quarter you liked?
------------------------------
Unidentified Participant, - Analyst [36]
------------------------------
I did.
------------------------------
Rebecca MacDonald, Just Energy Group Inc [37]
------------------------------
Good.
------------------------------
Unidentified Participant, - Analyst [38]
------------------------------
I just want to touch on the seasonality. I guess with the shift of the business to electricity, that will arguably smooth out the adjusted EBITDA throughout the year. Can you just maybe talk about that?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [39]
------------------------------
I think it begins to shift it a little bit. So -- but even within the Northeast if you go into New York, they have a dual peak for electricity both summer and winter. But, yes, I think, in particular, as you look to the Texas business growing and Georgia and Maryland and then a little bit less - to a lesser degree in New York, it does shift it a little bit. But we still will have a lot of seasonality because, even in the winter months, what is our fourth quarter, January, February, March, you will get the gas heating load, but you also have those people in Texas heating as well.
------------------------------
Unidentified Participant, - Analyst [40]
------------------------------
So I guess if one wanted to ballpark it would - I guess the two winter quarters would still be, I don't know, 60/40 versus the summer or --?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [41]
------------------------------
Yes. I think you are still in that range. Yes.
------------------------------
Unidentified Participant, - Analyst [42]
------------------------------
Okay. And maybe just a second follow-up. On the tax side, maybe for Beth, how should we think about the timing for you guys to start paying I guess more meaningful cash taxes?
------------------------------
Beth Summers, Just Energy Group Inc - CFO [43]
------------------------------
I think, as you look at next year, one of the impacts you're going to see on taxes as that solar business builds, it generates based on that structure significant investment tax credits. So, you will see, I am going to say, going forward lower than the corporate tax rates in Canada and the US as a result of that.
------------------------------
Unidentified Participant, - Analyst [44]
------------------------------
Okay. Thanks very much.
------------------------------
Operator [45]
------------------------------
[Kevin]
------------------------------
Unidentified Participant, - Analyst [46]
------------------------------
A quick question just on the derivative again. How did you guys get to the maximum of CAD15 million? Is that a number that gets reviewed on an annual basis?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [47]
------------------------------
Yes, it's - when putting the derivative in place, again, we look at the size of the book that we have and determine what the relative pricing sort of premium is to get the derivative itself. And, then just look at what our -- what we think the trade-off between the two is. So, CAD15 million is something based on historic patterns a little bit that we talked about earlier as well as the - what we saw two winters ago when we had the more severe impact that we thought that was a reasonable level to be at.
And I think, looking at it -- the fact that it's covered out November, December January for us. And, like I say, we'll leave the balance of the winter months to be a relatively immaterial amount to the extent that we don't have a winter show up. Maybe it points to it about being the right number for us. (Indiscernible - multiple speakers). As we grow we might do something different.
------------------------------
Unidentified Participant, - Analyst [48]
------------------------------
Okay, and that was my next question as your book gets bigger I guess in theory that maximum number should also grow with that?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [49]
------------------------------
Right, yes the maximum number can go with it but as well our sensitivity -- as the business doubles your sensitivity to the amount of the impact becomes changed as well so it is a bit of an iterative process.
------------------------------
Unidentified Participant, - Analyst [50]
------------------------------
Okay and then just going back to - on a comment in the prepared remarks you had mentioned your hopes of getting back to your target renewal rate, I guess roughly 70% next year. I guess there's a bit of a delta there. What are some of the things you think you need to do in order to get that renewal rate from the 60% it is currently sitting at to the 70%? Is it all going to be on the gas price, or, if you were to put in buckets I guess, how are you going to get that upswing in renewal?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [51]
------------------------------
Sure. I think it's the first part, as you mentioned, is exactly what we said on attrition. As our book of customers got re-priced closer to market, our attrition rates are coming in. And we have one more year to go on renewals where customers are on very high rates. And then we believe the same dynamic will begin to happen naturally so there would be some element of improvement just by that alone. Like anything, I think the second bucket is, as a management group, we can get better again at what we're doing, operationally better, better with the customer interaction, better with the offer to the customer coupling together other products to that customer, i.e. electricity or home services in Ontario to allow it happen.
And then the third part is that there is some element within that customer stream that will just begin to look and say, yes, maybe I didn't like the deal I had last time, but, if I get a competitive offer, I will respond to it. And I think what we are seeing is a better ability to provide different options on those offers to the customer. So, I don't want us to break up a three and say it's a third, a third, a third but it's between those three elements, we think we can move that rate back higher than where it is now back to what we have historically seen. I think there's other factors in there. Commercial has better renewal rates to some level. And, as I mentioned on Momentis, as those customers come in, although it won't affect us for next year or two, we believe there is a naturally better renewal rate for that customer book as well, based on what we see from others in the business.
------------------------------
Unidentified Participant, - Analyst [52]
------------------------------
That's very helpful. And then just a clarification point on the tax question earlier. When you mentioned I guess cash taxes next year, is that next fiscal year or next calendar year?
------------------------------
Beth Summers, Just Energy Group Inc - CFO [53]
------------------------------
Next fiscal year.
------------------------------
Unidentified Participant, - Analyst [54]
------------------------------
Fiscal year perfect that's what I thought. Perfect. Thank you very much.
------------------------------
Operator [55]
------------------------------
(Operator Instructions) [Elias]
------------------------------
Unidentified Participant, - Analyst [56]
------------------------------
I have a few questions I don't know if they are the appropriate ones. But one of them is this -- by the way I just wanted to thank you because I think you guys are doing great. This whole thing with Momentis is doing great. It has reduced my energy bill by almost 40% so thank you very much. The questions that I have -
------------------------------
Rebecca MacDonald, Just Energy Group Inc [57]
------------------------------
You're very welcome.
------------------------------
Unidentified Participant, - Analyst [58]
------------------------------
How much money -- I was trying to look through your report from two years ago how much money in terms of marketing money have you set aside for the Momentis structure? Is that going to continue on a yearly basis, or have you put a limit as to when you cut off - what are marketing expenses you are going to add to that? Can you comment a little bit?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [59]
------------------------------
Sure, maybe I'll - yes, I'll start, and then Rebecca can add to it. We've been in the business since 1997 in the retail business, have grown from zero customers to now almost 3.8 million customer equivalents. So we don't really put a cap on our marketing expense. If the sales channel is profitable, if the customers we are getting our profitable, and we will continue to grow the business, so that if we're double our size again in a number of years, we will be very happy doing that. So, like any decision we make, it is based on the profitability of our path to making those decisions. So we don't - we've never had an internal cap. Profitable businesses get all the money they need to expand their business.
------------------------------
Rebecca MacDonald, Just Energy Group Inc [60]
------------------------------
And I don't have anything else to add.
------------------------------
Unidentified Participant, - Analyst [61]
------------------------------
Okay, so basically right now there is an unlimited amount for the Momentis side of the businesses. Is that correct?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [62]
------------------------------
There is an unlimited amount for any successful part of the Just Energy business.
------------------------------
Unidentified Participant, - Analyst [63]
------------------------------
Okay sounds great, good. Good. Secondly I noticed that you can see, based on the promise that the solar energy has gone through, I can see that the gas price has come down quite sharply. And, as you know, you guys, we have set up a yearly renewal rate for residentials. Do you feel that a year from now, when you get all these renewals or the people that are trying -- all these renewals -- do you see that the energy gas price is going to come down a lot lower what it is today, and you will change the rates to make them even lower? You can compete better against the established energy companies?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [64]
------------------------------
Firstly, I think we are the established energy company, not the others. But, we do not have a view on energy prices. We don't take one. We don't know what gas prices are going to be a year from now or electricity prices or any other prices. We -- that's something we deal with as we move towards it. If prices go up, we'll make sure the product reflects what they should so our shareholders and customers are both aligned. And, if prices go down, then we adjust that accordingly as well. But we -- what happens a year from now from a pricing standpoint is something that we will look at one year from now. And, like I say, (it will be fair) for our consumers which we need to be as well as our shareholders.
------------------------------
Unidentified Participant, - Analyst [65]
------------------------------
Great. Third one -- in terms of the new markets -- I think I've heard, I don't know if I got into the call of little late, but are you planning to extend (Indiscernible - background noise) (meaning) in Latin America? In the next few months or years?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [66]
------------------------------
No. Like I say - (to the extent) - specific questions for Momentis, I would really encourage you to contact your - the regional director or the Momentis team. But, like I say, we are, as a company, we are very focused on being the top retailer in the markets that we're in. Once we've established that, then we look to move elsewhere, but we have a lot of work to do in North America for the time being.
------------------------------
Unidentified Participant, - Analyst [67]
------------------------------
Sounds great. The last one is, what do you see is affecting the attrition rate? Is it the fact that residential customers are not being -- feel that they are not being treated properly? Or, is it that the price has gone up, or what do you see is the - affecting the attrition rate in renewals on the residential market?
------------------------------
Ken Hartwick, Just Energy Group Inc - CEO [68]
------------------------------
For the attrition rates I would say, the predominant element of attrition of both Canada and the US is moves. So, that's just people moving whether it's moving in-state or in-province whether it's moving out-of-state out-of-province, moving between utilities. The second contributer, it tends to be default on payments. So, whether it's in a purchase market, purchase receivable market where the utility bears the risk but we still lose customers. Or in one of our non-PO markets like Texas where, if you fall behind on your payment, unfortunately we're not able to keep you -- keep that individual as a customer. Those tend to be the two predominate reasons for our - for attrition in general. And that's true of every market.
------------------------------
Unidentified Participant, - Analyst [69]
------------------------------
That's great. Thank you. That's very encouraging. (Multiple Speakers)
------------------------------
Operator [70]
------------------------------
That was our last question.
------------------------------
Rebecca MacDonald, Just Energy Group Inc [71]
------------------------------
If there are no more questions, thank you very much for joining us to this - for this conference call. We appreciate your support. If there are any further questions, feel free to call Ken, Beth or myself, and we look forward speaking to you when we report our last quarter. Thanks very much. Bye, bye.
------------------------------
Operator [72]
------------------------------
Ladies and gentleman, this concludes today's conference you may now disconnect from your telephone lines. Have a wonderful remainder of your afternoon.
------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the
Transcript has been published in near real-time by an experienced
professional transcriber. While the Preliminary Transcript is highly
accurate, it has not been edited to ensure the entire transcription
represents a verbatim report of the call.
EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional
editors have listened to the event a second time to confirm that the
content of the call has been transcribed accurately and in full.
------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other
information on this web site without obligation to notify any person of
such changes.
In the conference calls upon which Event Transcripts are based, companies
may make projections or other forward-looking statements regarding a variety
of items. Such forward-looking statements are based upon current
expectations and involve risks and uncertainties. Actual results may differ
materially from those stated in any forward-looking statement based on a
number of important factors and risks, which are more specifically
identified in the companies' most recent SEC filings. Although the companies
may indicate and believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate or
incorrect and, therefore, there can be no assurance that the results
contemplated in the forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2017 Thomson Reuters. All Rights Reserved.
------------------------------