Commerce Energy Group, Inc. (AMEX:EGR), a leading U.S. electricity
and natural gas marketing company, today announced its financial
results for the three and nine months ended April 30, 2007 and the
settlement of its previously reported arbitration with American
Communications Network, Inc. (ACN). ACN Arbitration Settlement On
June 11, 2007, the company and ACN entered into an agreement
settling their pending arbitration proceeding and any other
disputes between them. Pursuant to the settlement, the parties have
mutually released all claims, Commerce made a cash payment of $3.9
million to ACN and the arbitration will be dismissed. Commerce has
no future financial or other obligations to ACN, other than
customary covenants set forth in the settlement agreement. The $3.9
million arbitration settlement obligation was reflected as a
contract arbitration loss in the three-month period ended April 30,
2007. Third Quarter Fiscal 2007 Results Net income for the third
quarter of fiscal 2007 increased to $1.5 million, or $0.05 per
share, which included $0.02 per share related to the net effect of
a $5.1 million settlement payment received from APX, Inc., the $3.9
million ACN arbitration settlement and $0.5 million of legal
expenses associated with the ACN dispute. This compares to fiscal
2006 third quarter net income of $1.0 million, or $0.03 per share.
Net revenues rose 74% to $100.6 million from $57.8 million for the
same period in fiscal 2006, driven by higher retail electricity
sales to customers in Texas and Maryland, higher natural gas
revenues from the September 2006 acquisition of the approximately
300 commercial and industrial natural gas customers and revenue
from the APX settlement. �Our third quarter operating performance,
excluding the impact of the APX and ACN legal proceedings, was in
line with expectations,� said Steven S. Boss, chief executive
officer. �We achieved another good quarter of positive bottom-line
results and significantly added to our customer base. Total
customers at the end of the third quarter increased to 185,000, a
48% increase over the comparable quarter last year.� Gross profit
increased to $17.6 million for the third quarter of fiscal 2007
from $8.1 million for the third quarter of fiscal 2006. Gross
profit from electricity grew to $14.1 million compared with $3.7
million for the same quarter of fiscal 2006, reflecting the impact
of customer growth in the Texas and Maryland markets and the $5.1
million from the APX settlement. Gross profit from natural gas
declined to $3.5 million from $4.4 million in the third quarter of
fiscal 2006 due primarily to lower gross margins on new customers
in our Ohio markets and the impact of market exits in January,
2007. Selling and marketing expenses for the three months ended
April 30, 2007 increased to $2.6 million from $1.4 million in the
comparable quarter last year, reflecting higher telemarketing,
third-party commissions, advertising related to the company�s
increased customer acquisition initiatives. General and
administrative expenses were $9.8 million compared with $5.9
million in the prior year third quarter reflecting (1) higher
personnel, customer service and information technology costs
related to customer growth, (2) increased consulting, bad debt and
depreciation and amortization expenses and (3) legal expenses
related to the ACN arbitration. Year-to-Date Results for the Nine
Months Ended April 30, 2007 For the first nine months of fiscal
2007, net income was $4.5 million, or $0.15 per share. For the
comparable period of fiscal 2006, net loss was $2.9 million, or
$0.09 per share, which included a mark-to-market loss in the second
quarter related to unexpectedly high variances between forecasted
and actual natural gas usage and unprecedented volatility in
natural gas prices. Net revenues climbed 35% to $263.7 million for
the nine months ended April 30, 2007 from $194.8 million in the
same period in fiscal 2006, driven primarily by a 19% increase in
retail electricity sales due to increased customers in Texas and
Maryland and an 80% increase in natural gas revenues resulting from
the September 2006 acquisition of approximately 300 commercial and
industrial natural gas customers. Gross profit more than doubled to
$42.2 million for the first nine months of fiscal 2007 from $20.1
million for the first nine months of fiscal 2006. Gross profit from
electricity increased to $32.8 million from $15.8 million in the
first nine months of fiscal 2006, reflecting the impact of customer
growth in the Texas and Maryland markets and the APX settlement.
Gross profit from natural gas increased to $9.4 million compared
with $4.3 million for the nine-month period ended April 30, 2006,
reflecting the impact of customer growth in the Ohio market,
contribution from the September 2006 acquisition of commercial and
industrial natural gas customers, offset by the mark-to-market loss
in last year�s second quarter on natural gas supply contracts.
Selling and marketing expenses for the nine months ended April 30,
2007 increased to $7.3 million from $3.3 million in the comparable
period last year, reflecting higher telemarketing, advertising and
personnel costs related to the company�s increased customer
acquisition initiatives. General and administrative expenses were
$27.4 million compared with $20.4 million in the first nine months
of last year due to increased personnel, information technology and
other customer service and consulting costs and higher costs
related to the company�s credit facility. Liquidity At April 30,
2007, the company had unrestricted and restricted cash and cash
equivalents of $31.6 million, $39.6 million of working capital and
no debt. Restricted cash and cash equivalents was principally
comprised of $10.0 million deposited pursuant to the terms of the
company�s credit facility. Credit terms from energy suppliers often
require the company to post collateral against its forward energy
supply purchases. Such collateral obligations are funded with
available cash and availability under the company�s credit
facility. 2007 Earnings and Customer Growth Outlook Commerce
revised its 2007 full-year earnings guidance range to $0.14 to
$0.15 per share. The earnings outlook does not include any impact
from the potential receipt of additional funds from the previously
announced APX settlement. Commerce slightly lowered its customer
estimate as of the end of fiscal 2007 to approximately 200,000
accounts. Boss said, given the seasonality of the company�s
business and continued customer acquisition initiatives, operating
earnings are expected at about breakeven to slightly negative for
the fourth quarter of fiscal 2007. Conference Call and Webcast
Commerce will host a conference call to discuss financial results
today at 5 p.m. ET (2 p.m. PT). The call will be available to all
interested parties through a live audio webcast at
www.CommerceEnergy.com and www.earnings.com. Please go to the Web
site at least 15 minutes prior to the start of the call to
register, download and install any necessary audio software. A
replay of the conference call will be archived and available at
www.CommerceEnergy.com for one year. A telephonic replay will be
available through June 19, 2007, and can be accessed by dialing
888-286-8010 (domestic) or 617-801-6888 (international) and using
the playback Passcode 17087908. About Commerce Energy Group, Inc.
Commerce Energy Group, Inc. (Commerce) is a leading independent
U.S. electricity and natural gas marketing company, operating
through its wholly-owned subsidiaries, Commerce Energy, Inc. and
Skipping Stone Inc. Commerce is publicly traded on the American
Stock Exchange (AMEX) under the symbol: EGR. Commerce Energy, Inc.
is licensed by the Federal Energy Regulatory Commission and by
state regulatory agencies as an unregulated retail marketer of
natural gas and electricity to homeowners, commercial and
industrial consumers and institutional customers. Headquartered in
Orange County, California, the company also has an office in
Dallas, Texas, as well as several area offices located around the
U.S. For nearly a decade, customers have relied on Commerce to
deliver competitive pricing, innovative product offerings and
personalized customer service, in addition to quality gas and
electric services. For more information, visit
www.CommerceEnergy.com. Forward-Looking Statements Except for
historical information contained in this release, statements in
this release, including those of Mr. Boss, may constitute
forward-looking statements regarding the company�s assumptions,
projections, expectations, targets, intentions or beliefs about
future events. Words or phrases such as �anticipates,� �believes,�
�estimates,� �expects,� �intends,� �plans,� �predicts,� �projects,�
�targets,� �will likely result,� �will continue,� �may,� �could� or
similar expressions identify forward-looking statements.
Forward-looking statements are not guarantees of future performance
and involve risks and uncertainties which could cause actual
results or outcomes to differ materially from those expressed.
Commerce Energy Group, Inc. cautions that while such statements in
this new release, whether express or implied, are made in good
faith and the company believes such statements are based upon
reasonable assumptions, including without limitation, management�s
examination of historical operating trends, data contained in
records, and other data available from third parties, the company
cannot assure that its projections will be achieved. In addition to
other factors and matters discussed from time to time in our
filings with the U.S. Securities and Exchange Commission (SEC),
some important factors that could cause actual results or outcomes
for Commerce Energy Group, Inc. or its subsidiaries to differ
materially from those discussed in forward-looking statements
include: higher than expected attrition of, and/or unforeseen
operating difficulties relating to, customer accounts, the
volatility of the energy market, competition, operating hazards,
uninsured risks, failure of performance by suppliers and
transmitters, changes in general economic conditions, seasonal
weather or force majeure events that adversely affect electricity
or natural gas supply or infrastructure, decisions by our energy
suppliers requiring us to post additional collateral for our energy
purchases, uncertainties relating to receipt of additional funds
from APX, Inc., uncertainties relating to federal and state
proceedings relating to other issues in the 2000-2001 California
energy crisis, increased or unexpected competition, adverse state
or federal legislation or regulation, or adverse determinations by
regulators, including failure to obtain regulatory approvals. Any
forward-looking statement speaks only as of the date on which such
statement is made, and, except as required by law, Commerce Energy
Group, Inc. undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it
is not possible for management to predict all such factors.
Commerce Energy Group, Inc. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In Thousands, Except Per Share Amounts) (Unaudited) �
Three Months Ended April 30, Nine Months Ended April 30, 2007�
2006� 2007� 2006� Revenue $ 95,518� $ 57,755� $ 258,670� $ 194,777�
APX settlement 5,057� �� 5,057� �� � Net revenue 100,575� 57,755�
263,727� 194,777� Direct energy costs 82,946� 49,643� 221,509�
174,664� � Gross profit 17,629� 8,112� 42,218� 20,113� Selling and
marketing expenses 2,568� 1,420� 7,317� 3,346� General and
administrative expenses 9,803� 5,911� 27,382� 20,367� � Income
(loss) from operations 5,258� 781� 7,519� (3,600) Other income
(expense): ACN arbitration settlement (3,900) �� (3,900) ��
Interest, net 185� 221� 846� 710� � Net income (loss) $ 1,543� $
1,002� $ 4,465� $ (2,890) � Income (loss) per common share: Basic
and diluted $ 0.05� $ 0.03� $ 0.15� $ (0.09) � Weighted-average
shares outstanding: Basic 29,938� 30,186� 29,763� 30,659� � Diluted
30,192� 30,328� 29,882� 30,659� VOLUME AND CUSTOMER COUNT DATA �
Three Months Ended April 30, Nine Months Ended April 30, 2007�
2006� 2007� 2006� Electric � Megawatt hour 485,000� 372,000�
1,391,000� 1,344,000� Natural Gas � Dekatherms 4,612,000�
1,646,000� 11,597,000� 4,485,000� Customer Count 185,000� 125,000�
185,000� 125,000� CONDENSED CONSOLIDATED BALANCE SHEETS (In
Thousands, Except Per Share Amounts) � ASSETS April 30, 2007 July
31, 2006 (Unaudited) Current assets: � Cash and cash equivalents $
21,133� $ 22,941� Accounts receivable, net 50,245� 30,650� Natural
gas inventory 994� 4,578� Prepaid expenses and other current 6,357�
6,827� � Total current assets 78,729� 64,996� Restricted cash and
cash equivalents 10,451� 17,117� Deposits 1,143� 2,506� Property
and equipment, net 8,121� 5,866� Goodwill and other intangible
assets, net 10,885� 8,591� � Total assets $ 109,329� $ 99,076� �
LIABILITIES AND STOCKHOLDERS� EQUITY � Accounts payable $ 28,462� $
26,876� Accrued liabilities 10,686� 5,867� � Total current
liabilities 39,148� 32,743� Total stockholders� equity 70,181�
66,333� � Total liabilities and stockholders� equity $ 109,329� $
99,076�
Commerce Energy (AMEX:EGR)
Historical Stock Chart
From May 2024 to Jun 2024
Commerce Energy (AMEX:EGR)
Historical Stock Chart
From Jun 2023 to Jun 2024