Commerce Energy Group, Inc. (AMEX:EGR), a leading U.S. electricity
and natural gas marketing company, today announced its financial
results for the fiscal 2008 first quarter ended October�31,�2007.
First Quarter Results The company reported a net loss of $1.1
million or $0.04 per share, for the first quarter of fiscal 2008,
compared to net income of $384,000, or $0.01 per share, for the
first quarter of fiscal 2007. Net revenues increased 50% to
$105.6�million from $70.5 million for the same period last year,
driven primarily by higher retail electricity sales to customers in
Texas and Maryland. Gross profit increased to $16.4 million from
$10.1 million for the first quarter of fiscal 2007. Gross profit
from electricity grew to $15.0 million compared with $8.4 million
for the same period in fiscal 2007, due to customer growth in Texas
and Maryland. Gross profit from natural gas decreased to $1.4
million from $1.7 million in the first quarter of fiscal 2007. �We
are particularly pleased with the strong growth in gross profit
during the quarter, given the first quarter is typically a slower
quarter due to seasonality,� said Steven S. Boss, chief executive
officer. �However, bad-debt expense and higher-than-usual
professional fees negatively impacted our bottom-line results. We
have taken steps to address these issues, including the
implementation of more stringent requirements for signing up new
customers.� Selling and marketing expenses increased to $3.9
million in fiscal 2008 from $2.2 million in the comparable quarter
of fiscal 2007, reflecting higher telemarketing and third-party
sales expenses related to the company�s expanded customer
acquisition initiatives. General and administrative expenses were
$13.5 million in the first quarter of fiscal 2008 compared with
$7.8 million in the first quarter of fiscal 2007, primarily
reflecting increased bad debt expenses resulting from a 50%
increase in net revenues, higher bad debt reserves in Texas,
increased payroll expenses and higher professional services fees
related to its fiscal year-end SEC reports and the Company�s review
of its strategic alternatives. Liquidity At October 31, 2007, the
company had unrestricted and restricted cash and equivalents of
$15.5 million, $39.3 million of working capital and no debt.
Restricted cash and equivalents were principally comprised of $10.0
million deposited pursuant to the terms of the company�s credit
facility. Credit terms from energy suppliers may require the
company to post collateral against its forward energy supply
purchases. Such collateral obligations are funded with cash and
availability under the company�s credit facility. In November 2007,
the company entered into an amendment to the credit facility. The
amendment revised several provisions of the facility including
deleting the provision which required the company to have cash and
cash equivalents of $10.0 million on deposit at all times. Fiscal
2008 Earnings and Customer Growth Outlook Commerce reiterated its
fiscal 2008 earnings and customer growth outlook of net income in
the range of $6.1�-�$6.6 million, or $0.20 to $0.22 per share, and
an estimated 8% - 10% increase in year-over-year customer growth.
Completion of Review of Strategic Alternatives The Company
announced that it had completed its review of the Company's
strategic alternatives assisted by its financial advisor, RBC
Capital Markets, and determined that its best course of action to
maximize shareholder value is to focus on continued execution of
its business plan. This decision was the result of a detailed
review of the Company's major strategic alternatives, including a
sale of the Company. After this review, the Company has determined
that, in light of its present business model and its future
opportunities, it can deliver the highest shareholder value by
remaining a stand-alone company at this time. Chairman of the Board
of Directors The Board of Directors of the Company decided on
December 14, 2007 to rotate the position of Chairman of the Board.
Dennis R. Leibel, a current member of the Board, assumed the
position of Chairman, formerly held by Robert C. Perkins. Mr.
Perkins will remain on the Board. Annual Meeting of Stockholders
The Annual Meeting of Stockholders relating to the Fiscal Year
Ended July 31, 2007, or the Annual Meeting, will be held at 10:00
a.m. Pacific Time, on March 27, 2008, at the Hilton Costa Mesa,
located at 3050 Bristol Street, Costa Mesa, California. Additional
details can be found in the Company's 10-Q for the quarter ended
October 31, 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 December 24, 2007, and
can be accessed by dialing 888-286-8010 (domestic) or 617-801-6888
(international) and using the playback Passcode 35559901. 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 release, whether express or implied, are made in good faith
and the company believes such statements are based on 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
in the capital markets should we seek to raise additional capital,
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 October 31, 2007 � 2006 � Net revenue $ 105,597 $ 70,507
Direct energy costs 89,209 60,451 Gross profit 16,388 10,056
Selling and marketing expenses 3,932 2,235 General and
administrative expenses 13,460 7,849 Loss from operations (1,004)
(28) Other income (expense): Interest income 230 412 Interest
expense (313) � Total other income and expenses (83) 412 Net income
(loss) $ (1,087) $ 384 Income (loss) per common share: Basic $
(0.04) $ 0.01 Diluted $ (0.04) $ 0.01 Weighted-average shares
outstanding: Basic 30,380 29,639 Diluted 30,380 29,665 Volume and
Customer Count Data � Three Months Ended October 31, 2007 � 2006
Electric � Megawatt hour (MWh) 716,000 458,000 Natural Gas �
Dekatherms (DTH) 3,008,000 2,130,000 Customer Count 194,000 161,000
Condensed Consolidated Balance Sheets (In Thousands) � � October
31, 2007 July 31, 2007 (Unaudited) ASSETS Cash and equivalents $
5,442 $ 6,559 Accounts receivable, net 65,950 65,231 Natural gas
inventory 9,382 5,905 Prepaid expenses and other current 9,245
7,224 Total current assets 90,019 84,919 Restricted cash and
equivalents 10,104 10,457 Deposits and other assets 1,802 1,906
Property and equipment, net 8,970 8,662 Goodwill and other
intangible assets, net 10,193 10,632 Total assets $ 121,088 $
116,576 LIABILITIES AND STOCKHOLDERS� EQUITY Energy and accounts
payable $ 31,068 $ 37,926 Short-term borrowings 12,400 � Accrued
liabilities 7,209 8,130 Total current liabilities 50,677 46,056
Total stockholders� equity 70,411 70,520 Total liabilities and
stockholders� equity $ 121,088 $ 116,576
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