Q1 2018 Just Energy Group Inc Earnings Call

Aug 10, 2017 AM CEST
JE.TO - Just Energy Group Inc
Q1 2018 Just Energy Group Inc Earnings Call
Aug 10, 2017 / 02:00PM GMT 

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Corporate Participants
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   *  Deborah Merril
      Just Energy Group Inc. - Co-CEO, Co-President and Director
   *  James W. Lewis
      Just Energy Group Inc. - Co-CEO, Co-President and Director
   *  Patrick McCullough
      Just Energy Group Inc. - CFO
   *  Ubavka Rebecca MacDonald
      Just Energy Group Inc. - Co-Founder and Executive Chair

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Conference Call Participants
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   *  Amit Dayal
      Rodman & Renshaw Research - Analyst
   *  Carter William Driscoll
      FBR Capital Markets & Co., Research Division - Analyst
   *  Damir Gunja
      TD Securities Equity Research - Director
   *  Sophie Ksenia Karp
      Guggenheim Securities, LLC, Research Division - Senior Analyst

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Presentation
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Operator   [1]
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 Good day, and welcome to the Just Energy First Quarter 2018 Conference Call and Webcast. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Deb Merril, co-CEO. Please go ahead.

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 Deborah Merril,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [2]
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 Good morning, and thank you for joining us for our fiscal 2018 first quarter earnings conference call. My name is Deb Merril, I'm the co-CEO of Just Energy, and I have with me today, our Executive Chair, Rebecca MacDonald; my co-CEO, James Lewis; as well as Pat McCullough, our CFO. Pat and I will discuss the results for the quarter as well as our expectations for the future. We will then open the call to questions.

 Before we begin, let me preface the call by telling you that our earnings release and potentially our answers to your questions will 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 release.

 I will start today's discussion by first providing some perspective on the near-term results in operations. I will conclude the call with some of the exciting longer term activities that tie into our growth strategy centered around Just Energy's position as a trusted adviser to our customers.

 Our first quarter results are exactly what we expected and puts us on track to deliver fiscal 2018 guidance. As planned, we made investments during this quarter to support our growth strategy. We expect these OpEx investments to continue throughout the fiscal year, and we remain confident we are setting the stage for prolonged profitable growth on a global scale.

 During the quarter, our combined attrition rate improved to 14% and our renewal rates remained flat versus prior year. At the segment level, we achieved positive net additions in our very profitable Consumer business for the second quarter in row.

 Consumer net additions of 13,000 RCEs improved as compared with 7,000 net additions last quarter and net attrition of 28,000 RCEs 1 year ago. This result was driven primarily by our U.K. business, which posted its largest sales quarter of all time. The U.K. business continues to perform at a very high level and is positioned to be a key growth engine for us this year and beyond.

 Offsetting some of the success we have seen -- offsetting some of this success, we've seen consumer renewal headwinds associated with the regulatory changes in Ontario. The new rules challenge our ability to communicate with customers, which prevent us from actively pursuing renewals. This was the main reason behind weaker -- this weaker metric, otherwise, we saw results in line -- good results in all other jurisdictions.

 Consumer attrition improved 21% in the quarter. This compares to 24% last quarter and 26% a year ago. This clearly demonstrates that our customer-centric approach and value-driven products are motivating our customers to stay longer with us. We are seeing steady improvements in internally tracked Net Promoter Score, which is a leading customer loyalty metric. Overall, our more profitable Consumer business is turning the corner towards sustained growth.

 On the commercial side, we continue to see very competitive pricing driving negative net additions. This is driven by large number of customers up for renewal in Q1 and heavy competition driving margins below acceptable levels. Our commercial renewal rate remains steady at 54%.

 As a management team, we remain disciplined, ensuring each customer account is profitable. We've demonstrated that we will walk away from unprofitable business. The way to win the game in the commercial space is to sell not only on price, but offering real differentiated value.

 In line with this focus, we are very excited to announce that we have purchased and launched a startup B2B energy efficiency and LED retrofit business branded Just Energy Advanced Solutions. With this platform, we offer commercial customers commodity as well as savings through energy efficiency devices through a no-CapEx, high-return business model.

 In the short period of time we've had the business, we've already seen our sales exceed expectations in Ontario and we're actively pursuing expansion into key states in the United States. This will be one of the primary drivers to delivering differentiated value to our commercial customers.

 Pat will now take us through some of the financial highlights.

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 Patrick McCullough,  Just Energy Group Inc. - CFO   [3]
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 Thanks, Deb. Although the Q1 EBITDA was less than 1 year ago, we have planned for a lower profit quarter, primarily driven by a smaller customer book and investments in our channel and geographic growth.

 Gross margin for the Consumer division decreased 7% from prior year due to a decrease in customers. Average realized gross margin for the Consumer division for the trailing 12 months ending June 30, 2017, was $252 per RCE, slightly lower than last quarter. This was associated with the new channel U.K. switching site transfer of customers at lower margins and lower costs of acquisition but delivering a strong payback period.

 Gross margin for the Commercial division increased by 11% from the prior year as a result of the implementation of operational improvements to increase the margin of new customers added. Average realized gross margin for the trailing 12 months ending June 30, 2017, was $93 per RCE, an increase of 22% from 1 year ago.

 As Deb mentioned, our margin discipline is prevailing in a very competitive marketplace. Base EBITDA for the quarter was $32.5 million. While planned, it was less than a year ago, due to GM reduction based on lower customer counts, SG&A investment in new channels and markets, and partially offset by foreign exchange.

 Moving to the balance sheet. Base funds from operations for the first quarter decreased 20% to $21 million, which was a direct result of lower EBITDA from a year ago. Dividends and distributions for the quarter were $22 million, an increase of 16%, reflecting dividend payments of $3 million to preferred shareholders following the issuance of preferred shares in February 2017.

 The payout ratio on base funds from operations was 65% for the trailing 12 months, in line with our external financial commitments. With an improved balance sheet and a strong cash position, we remain committed to this very sustainable dividend. We have confidence in these levels of dividend payment in the present and the foreseeable future.

 Our shareholders continue to benefit from a very high yield and safe financial fundamentals to support its ongoing payment. We retained a robust cash and equivalents position this quarter at $81 million with the balance declining $2.6 million as strong operating cash flows offset the bulk of investing and financing activity during the quarter.

 Long-term debt increased from $498 million as of March 31, to $521 million as of June 30, as a result of the withdrawal of $25 million on our credit facility. We ended the quarter with book value net debt of 2.0x base EBITDA, in line with our external commitments.

 The company repurchased and retired $11.4 million worth of common shares in the first quarter. The company remains committed to monitoring and opportunistically repurchasing shares in the future, if we feel the shares are under value. Given the high yields, the commitment to the common share dividend and the low share price, management believes that it is a prudent use of funds and beneficial to shareholders.

 Before I wrap up my prepared remarks, I would like to reaffirm our fiscal year 2018 guidance of base EBITDA in the range of $210 million to $220 million. These expectations reflect continued growth investments in fiscal 2018.

 With that, I will turn it back over to Deb.

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 Deborah Merril,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [4]
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 Thanks, Pat. We spent the last year refining and innovating new differentiated value-driven products. Having successfully piloted and launched many new products, the challenge shifts to deploying them through multiple channels in all of our markets.

 We're excited to update you on our retail channel strategy. As of July, we've expanded our footprint into 85 new stores across 9 retail partners. We are pleased to announce a new partnership with Sam's Club. As of this week, we are operating in 42 Sam's Club locations in various states.

 We are proud of partnering with Sam's Club, a premier retail leader to provide class leading value and customer experience. These 9 new retail partnerships provide the platform to scale to 700 stores by July 1, 2018. This retail channel is being augmented with additional alternative channel partners that will further expand our ability to reach more customers and achieve our growth targets.

 Our international geographic expansion remains on track. We will be fully launching Ireland in September, and we continue business development efforts in Germany and Japan. Today, we are capable of delivering more value to customers than ever in our history, and we are squarely on the path to future sustained growth.

 Our team is in the process of successfully executing a global enterprise strategy that is aggressively pursuing profitable growth. In the year ahead, we will continue guiding the business forward by capitalizing on where we see the energy sector heading. Just Energy is well positioned as a market leader to deliver energy solutions worldwide.

 And now we'll open up to any questions you might have for us.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions) And our first question comes from Damir Gunja with TD Securities.

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 Damir Gunja,  TD Securities Equity Research - Director   [2]
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 Just on the retail channel. Can you talk a little bit about your experience thus far, maybe relative to your preliminary expectations? And are there any other retailers of note in addition to Sam's Club that you can talk about?

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 Deborah Merril,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [3]
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 Yes, sure. We -- when we went into this, we felt like we would -- good result for this would be one store -- one sale per store per day. So as we ramped up -- we started with a very small number of stores. And as we ramped up, what we found is that we're actually achieving better than targeted number of sales per day, which is a really good indication for us that the new processes and the iPad system that we rolled out to ensure that the customer has a great experience in the retail store is actually working.

 So as we look at it, the results are actually better than what we expected. They're much, much, much higher. So we feel very confident in that. I think from the other names, we'll be able to, over the year -- over the month as we continue to roll it out, we'll be able to give you some more detail on those.

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 Damir Gunja,  TD Securities Equity Research - Director   [4]
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 Okay. Maybe just switching to international expansion. Are you seeing some traction now in Germany? Or it sounds like you're perhaps still in the development stage there? I thought post the acquisition things might have ramped a little bit more quickly?

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 Deborah Merril,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [5]
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 Yes. We're actually looking to do a full hard launch in the next 60 to 90 days. So we've been doing a lot of work preparing the sales channels and getting our products up. Germany is a very competitive market and what we want to make sure is that we have differentiated products.

 So we don't want to go in there with what everybody else has. So we're going in there with our flat bill and some of our energy efficiency products as well, which will be what differentiates us and allows us to grow that market. So we're being very, I guess, prudent about the products we're launching, ensuring we're ready to do that in a very meaningful way.

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 Ubavka Rebecca MacDonald,  Just Energy Group Inc. - Co-Founder and Executive Chair   [6]
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 Damir, I would just like to add one thing on Germany. When we make an acquisition, I'm just going to remind you, we bought really the company that [start up that] had the license. And as a management team which has spent quite a bit of time in Germany, it's a very different market and we don't want to rush with products that, in our opinion, are not going to differentiate us. And that pointed out that we are we really well positioned to introduce a North American solution to European market. And we want to do that and launch it in a very responsible manner.

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 Damir Gunja,  TD Securities Equity Research - Director   [7]
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 Okay, appreciate that. And maybe just a final one. How should we think about the timing for Japan? I guess it's early days there, but is that more of a next year story?

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 James W. Lewis,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [8]
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 Yes, Damir. I think, what you'll see us -- we're well on target here. We'll probably have a soft launch in the next 90 days and we're going to see the benefit for fiscal '19 year.

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 Damir Gunja,  TD Securities Equity Research - Director   [9]
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 So flowing customers probably next year rather than this year?

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 James W. Lewis,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [10]
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 We will start flowing customers end of this year, in the beginning of next year for calendar year, and then we'll have a meaningful impact probably fiscal '19.

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Operator   [11]
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 Our next question comes from Carter Driscoll with FBR Capital Markets.

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 Carter William Driscoll,  FBR Capital Markets & Co., Research Division - Analyst   [12]
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 First question, if I may, is -- can you talk about the acquisition you made for energy efficiency. I guess you would call it maybe energy auditing effort to target acceleration. In the Commercial business, obviously, you guys pay a heavy emphasis on differentiation from a product perspective. Can you talk about how that applies, how you expect to roll it roll out, maybe the near-term impact?

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 Deborah Merril,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [13]
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 Sure. So it was a small business in Ontario, not meaningful necessarily to the bottom line, but really starts to put us on the path to deliver that differentiated value for commercial. And -- as we've been talking about commercial for quarters and how it's all about everything beating down on margins. And it's just -- because we're not really offering anything different other than just a commodity.

 So this is really our first foray on the commercial side to show something different for customers. And what we've seen is that it's got a great value proposition for the customer, a very strong payback for -- and basically guaranteed savings from the installation of LED, the new LED systems. But also gives us the ability to bundle commodity with that and really roll it out across new markets as well.

 That's probably the most exciting thing where we can really connect with the business owner, bring something of value to them that they wouldn't be able to really finance themselves or to be thinking about themselves. So we are the experts coming in there and telling them how they can save some money and run their business in a more efficient way from a cost perspective.

 So we've really seen some great traction on that from customers. We're seeing great conversion, very high engagement as well. So which is -- those are all the things that will help us combat some of this, I would say, complacency on renewal and really shrinking margins on the commercial side.

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 Ubavka Rebecca MacDonald,  Just Energy Group Inc. - Co-Founder and Executive Chair   [14]
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 I would just like to add. After all these years starting different businesses in energy space, I have never seen a business that has performed so well so quickly. It really is like a hockey stick result with this acquisition and we're very, very happy.

 And another thing that, as a management, we are really pleased when we look at our margins that we have been able to achieve with the Commercial segment. Sometimes it's really, really tough to walk away from the business that you could profitably rationalize you should keep. But we made a commitment a couple of years ago and we are sticking to it. And when you look at the $92 margin, that is a really, really high margin for commercial sector. So I can tell you, we are really pleased with this acquisition and it's going to differentiate us in the long run.

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 Carter William Driscoll,  FBR Capital Markets & Co., Research Division - Analyst   [15]
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 So do you anticipate this actually contributing to increased margin expansion on the commercial side? And/or could this be ported over to the residential side of the business as well?

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 Patrick McCullough,  Just Energy Group Inc. - CFO   [16]
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 Yes. So the idea here where you're getting into an energy audit and really customizing solutions for individual premises, it works very well B2B because you have a larger premise which is utilizing more electricity and gas. But we think it's also applicable to residential, especially if you're thinking high value items, think Solar, think storage, think other energy efficiencies. So it's definitely a part of our strategy.

 And as you think about the margins specifically to the Commercial business, as Rebecca was talking about, we just reported $93 per RCE in commercial, that was $76 one year ago. That is significantly higher, 20%. And as we're thinking about the drop-through on that, you're basically dropping through the old $76 per RCE and trying to cover $40 or $50 of direct selling cost per year.

 Now when you're working with $93, you've amplified the bottom line on the Commercial business with more prudency around the commodity. Then if you can layer on top of that these energy efficiency solutions, you're going to expand products and margin even more significantly, because you're no longer talking about price with the customer, you're talking about savings over a period of time.

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 Ubavka Rebecca MacDonald,  Just Energy Group Inc. - Co-Founder and Executive Chair   [17]
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 And I'm sorry to jump in. I just wanted to add one more thing. Very often, our analysts, in particular, look at our business and they think, oh my god, this is such a complex business. Complexities around the business can be sometimes discouraging when you try to analyze it. I want to flip this.

 There are complexities in our business on the back end, but when you look at the front end and look what we are doing with energy solutions, with other bundled products, it really doesn't add another level of complexity. In our opinion, it actually simplifies our relationship with a customer and cements their commitment to us and our commitment to them.

 So these are all add-on products that I don't want analysts or public to think it's adding another layer of complexity. It is not. It's a really simple add-on for us.

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 Carter William Driscoll,  FBR Capital Markets & Co., Research Division - Analyst   [18]
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 Okay. Maybe shifting gears a little bit. So you've seen good traction in your initial pilots and the roll out of your retail store channel. I think you said you're exceeding expectations. Can you maybe quantify how much you're exceeding expectations and has that set a new bar for what you think you can achieve per store when you roll out to your fully realized platform in roughly 10 months or so?

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 Patrick McCullough,  Just Energy Group Inc. - CFO   [19]
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 Yes, we'll be helpful here, Carter. So as Deb mentioned, we're in 85 stores today. We're trying to get to 200 stores in September, 500 stores by the end of the fiscal year and 700 stores by July 1 of next year. We can make this business work with one sale per store per day, but we're seeing significantly more than that in the short term, think 2x.

 But again, I would caution that, that's on 85 stores, that's not on 700 stores. And the footprint that we have in retail right now with our 9 retail brand partners is a footprint of 5,000 stores to choose the best 14%. That's what we're aiming to do.

 So if we could hold, let's say, 2x that amount, two sales per store per day, that on an annual basis is 500,000 new contracts. That is bigger than our door-to-door segment by a long shot right now. So this is a very significant channel, it's going to be very meaningful for us.

 We're looking at design margins that are similar to what we experience in the Residential business on aggregate today. But we also recognize that this is a channel where we're going to have to put money towards the retail partner, towards rent and towards direct commission.

 So you're going to see a 3- to 4-quarter payback on that gross margin as it tries to cover direct selling costs. But it's very similar economics to what we experienced today. It's very similar to the door-to-door economics without the nature of that selling process and we're very excited about it, obviously.

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 Ubavka Rebecca MacDonald,  Just Energy Group Inc. - Co-Founder and Executive Chair   [20]
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 And we are not stepping away from door-to-door. But I would like to make it very clear, yes, this company started as a door-to-door organization, 100%. But what you can expect from us in the future is, no more than 18% to 20% coming from door-to-door. 80% of our business now is coming from different channels and that was by design and we feel long run that that's really the ratio that we would like to keep -- other channels versus door-to-door.

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 Carter William Driscoll,  FBR Capital Markets & Co., Research Division - Analyst   [21]
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 Got it. Okay. So then maybe let me just follow up there. So we have Sam's Club, Walmart, just kind of throwing that out there. And/or -- you talked about maybe some -- any national wireless retailer channels, any color, hint that you could offer us today?

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 Deborah Merril,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [22]
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 I spoke earlier a little bit about we are pursuing additional channels and we've been talking a lot about retail. But if you think about us, we're in big box like Sam, we also are looking at -- we have grocery stores that we've launched in from a retail perspective.

 But we're also looking at authorized agents, kind of agreements that we're pursuing as well. Nothing of significance at this point. But that's also something that we're very much pursuing and looking at ways that we can partner with, maybe cellphone stores or various different kind of partnerships. So we're absolutely looking at pursing those as well.

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 Carter William Driscoll,  FBR Capital Markets & Co., Research Division - Analyst   [23]
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 Okay. Maybe just last one for me, if I may. You bought a decent amount of shares back. How do you balance your investments, obviously, to build out this new channel, which is obviously yielding very strong early results versus a repurchase, versus the need to maintain a reasonable payout ratio and the dividend? Obviously, it's in a nice fat juicy yield right now. And I just want to give people confidence that you're not taking out the ball on the dividend either.

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 Patrick McCullough,  Just Energy Group Inc. - CFO   [24]
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 No. The upfront OpEx costs associated with building out these new channels is already built into our guidance. There is no incremental cost that we're pursuing. In fact, we were a bit conservative with how much this would cost and we're tracking really well. We've got some confidence in our guidance given the fact that retail and the U.K. business, as mentioned in our disclosure, are both tracking super well.

 So in fact, we've got -- the commentary that I provided in the earnings bit upfront was really to reinforce the $0.50 a share on the common shares. And the preferred dividend, in our minds, are rock solid today. Things can change, but we've got a lot of confidence that cash flow and that dividend is going to be there.

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Operator   [25]
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 Our next question comes from Amit Dayal with Rodman and Renshaw.

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 Amit Dayal,  Rodman & Renshaw Research - Analyst   [26]
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 Just a question around gross margin expectations for the next 3 quarters, I guess. On the Commercial division, it seems like we're losing higher GM customers and gaining sort of lower GM customers. How should we look at these trends sort of playing out over the next few quarters?

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 Patrick McCullough,  Just Energy Group Inc. - CFO   [27]
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 Thanks for the question. So as we're thinking about gross margin, we are not trying to hit a specific dollar per customer. The way we think about the business that we take on, we think about the average annual gross margin and we compare that to the direct selling cost.

 So for example, if you had a commercial customer at $90 and a cost of acquisition at $45, that's a 2-quarter payback. If we had a $20 gross margin customer that we were looking at with a $5 cost of acquisition, we would like that business because it pays back in 1 quarter. So that's how we're thinking about the business that we take on.

 So for example, when you look at the U.K. switching site, we took 70,000 residential customers this past quarter at lower margins, roughly half of what we've been reporting, but the customer acquisition cost was near half of that. So it was paying back in just over 2 quarters. And we saw that as great business.

 If we see a business with a payback as I'm describing with 5, 6, 7 quarters, we really don't like it and we push it away and we think, we would rather our competition have that bit of business than take it ourselves.

 So as we -- as you're looking at the design margin that we report on incoming and you're seeing it slightly lower, know that because we're managing the payback between averaging of gross margin and direct selling cost that the EBITDA drop-through is going to be at least as good as it's always been, despite the fact that you may see a smaller gross margin in the short term.

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 Amit Dayal,  Rodman & Renshaw Research - Analyst   [28]
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 Understood. I was also curious, you mentioned, you have a pretty strong Net Promoter Score. I was wondering if you could maybe give us a little color on how this may have improved for you and what that score actually is. I think this is interesting color that probably investors will appreciate.

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 Deborah Merril,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [29]
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 Sure. Yes -- we're actually -- we're not publically talking about what the score is. But it's something we actually started about a 1.5 years ago as part of our pivot toward a customer-centric business. You have to understand whether your customers will promote your products to their friends and family. And what we're seeing is that, as an entire industry, utilities tend to be negative. And we, unfortunately, get lumped in with utilities, but that -- as an entire industry we see that as negative.

 We're seeing some really good trends and results. We have positive Net Promoter Scores in a lot of our areas that we operate in. But we're also finding that some of the programs like Just Energy Perks, which we've talked about in previous quarters, which is our loyalty program, we're seeing points that are between 4 and 5 times better on Perks versus not having Perks, which shows you that customers really are promoting our products with that.

 And I think that all of those investments we've made in service as well as our new products like the Unlimited Plan, we're starting to see those things show up in our results, which then you see in our attrition numbers as well. So all of those things that we've been talking about, making these investments in Perks and making -- really pivoting toward that consumer-friendly and really value-driven company is starting to show in the results as well.

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 Patrick McCullough,  Just Energy Group Inc. - CFO   [30]
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 If I can add on here. So if you focus on Resi, which we care most about because that's the majority of our EBITDA in the short term. When you see gross additions being higher than your attrition than your renewals, so you're actually putting those net additions on the board 2 quarters in a row and we've got some confidence that that's going to continue to grow throughout this year and next.

 In addition, with that lower attrition, at the same time, experiencing the higher Net Promoter Score and holding higher margins than we traditionally have, that's to me, evidence that we're value selling and creating a customer experience that has more value for our customers than we have been in the past and maybe that others are doing as well.

 Because normally, to have those 4 metrics, customer growth, profit, attrition and Net Promoter Score, all working towards the positive at once means that you got to be value selling, you've got to be doing something that customers like or you couldn't have those 4 moving together at once.

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 Ubavka Rebecca MacDonald,  Just Energy Group Inc. - Co-Founder and Executive Chair   [31]
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 Considering that I have been here forever, I can tell you, this management team that's been put in place a little bit over 3 years ago inherited a terrible balance sheet, inherited a very negative Net Promoter Scores with the customer. And when the team came up with a 2020 plan, they were very, very clear of getting ready to change all of that, and they have demonstrated.

 And just now, with the results to us turning positive in the Net Promoter Score, I'm really proud of the job that they have done, even though they did some unpopular things. But we are here on the long run. We are playing a long game. And we have a clear vision where we want to be in 2020. And so far, everything that has been put in place is actually getting up there. And I cannot be more pleased with the team than I am today.

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Operator   [32]
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 (Operator Instructions) And our next question comes from Sophie Karp with Guggenheim Securities.

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 Sophie Ksenia Karp,  Guggenheim Securities, LLC, Research Division - Senior Analyst   [33]
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 Could you maybe comment a little more about the regulatory environment across the territories where you operate. I know you mentioned Ontario and some changes there. Maybe you could give us a little more color on what's happening? And also, are you seeing any similarly potentially impactful regulatory changes pending elsewhere?

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 Patrick McCullough,  Just Energy Group Inc. - CFO   [34]
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 So Sophie, let me clarify the question. I heard that you're looking for color across the geographies in terms of the environment that we're competing in, and then specifically, regulatory issues in those environments. Do I have that, right?

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 Sophie Ksenia Karp,  Guggenheim Securities, LLC, Research Division - Senior Analyst   [35]
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 Yes the regulatory issues, specifically.

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 James W. Lewis,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [36]
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 We're seeing [regulatory anything] actually that's a good question. How do we get customers more engaged? And (inaudible) for us is we are active in those discussions. We are seeing some positive trends in the Mid-Atlantic region and Midwest. A surprising area we're seeing some additional discussion in the West (inaudible).

 So we are happy with the discussions. We're seeing regulators and legislators ask the question, "How do we get the customers more engaged? What things are customers interested in? How do we get some of the Internet of Things that relates to energy into consumers' homes?" And as we talked about with our first full ramp with our trusted energy advisers, we've been well ahead of the curve and [probably] a part of those discussions.

 On the flip side, Pat and Deb talked about Ontario. One of the things that popped up this year is we should only contact the customer once a month. And so while we understand some of that, our belief is that with our product and our solutions, we think customers are liking us, Rebecca talked about improving the Net Promoter Score there.

 So we'll continue to be a part of those discussions. But Ontario and New York, they're having some discussions there on how do they deliver to the consumers new innovation. We're part of those discussions, but those are the areas where we see some headwinds that could be negative.

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 Ubavka Rebecca MacDonald,  Just Energy Group Inc. - Co-Founder and Executive Chair   [37]
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 And I would just add on Ontario. Ontario was the first market that we regulate in the world. So it's a very, very mature market. The unfortunate thing about Ontario is the energy portfolio is highly politicized. And it's well known that I'm absolute not fan of the liberal government that we have in this province, that has really tried to stifle the competition.

 Long run, I think even the government that tried to stifle the competition will have to realize the best solution for the customer is giving customers of choice. And that's what we are trying to promote. We just want every customer to have an option of looking at different providers.

 Obviously, we would want to gain as much market share as we possibly can. But we welcome the competition across the board. We think it's healthy and it's very, very good for the customer. And I'm hoping that energy portfolio will 1 day get deeper insight in this province.

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Operator   [38]
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 And there are no further questions. So this concludes our question-and-answer session. I'd like to turn the conference back over to Deb Merril for any closing remarks.

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 Deborah Merril,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [39]
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 Thank you. Appreciate that. I appreciate everybody joining us and all the great questions. As we said earlier, we are really happy with the progress we are making on all the fronts for our future sustained growth. And look forward to delivering those results throughout the year.

 I also wanted to take a quick moment on behalf of Jay, Rebecca, Pat and myself to thank all of our employees. We talked about various businesses. We talked about the LED business. We talked about the U.K. We have so many things going right for us right now and so many employees who are really working hard to deliver this vision. And we couldn't be prouder of the team and the employees that we work with. So I want to take a moment to thank them. And we will talk to you all next quarter. Thank you.

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 James W. Lewis,  Just Energy Group Inc. - Co-CEO, Co-President and Director   [40]
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 Thank you.

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Operator   [41]
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 The conference is now concluded. Thank you for attending today's presentation. And you may now disconnect.




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