Commerce Energy Group Inc · OTC:CMNR
Commerce Energy — Southern California Investor Conference 2006
30 slides from Commerce Energy's conference presentation, Aug 11, 2006
Slide 1: Commerce Energy Southern California Investor Conference
Commerce Energy Southern California Investor Conference August 11, 2006
Slide 2: Lawrence Clayton, Jr., Chief Financial Officer
Commerce Energy Lawrence Clayton, Jr. Chief Financial Officer 3
Slide 3: Forward-looking statements
forward-looking statements The company's presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are based upon management's belief and assumptions made by, and information currently available to, management. Our actual results c
Slide 4: Company overview
Commerce Energy Group is a public company providing retail electricity, natural gas, and other products and services to the energy marketplace. We supply energy to homeowners and businesses, and provide technology and consulting services to utilities, governments and energy asset owners. Headquarter
Slide 5: Company highlights
company highlights A leading publicly-traded non-utility affiliated retail energy provider in the U.S. Retail marketing operations in 9 States and 20 Markets Nationwide 137,000 Electricity & Natural Gas Customers Management team with strong energy and retail marketing experience
Slide 6: Company highlights
Established: 1997 AMEX (EGR): July, 2004 Fiscal Year: July 31st Annual Revenue: $250 million Employees: 200 Customers: 137,000 (@ 7/31/06 - est.) company highlights
Slide 7: Financial highlights
$43 million of Total Cash & Deposits $63 million in Shareholders' Equity $50 million Line of Credit No Debt Financial Position (April 30, 2006) financial highlights
Slide 8: Financial highlights: Results of Operations
financial highlights Results of Operations Results of Operations
Slide 9: Key financial drivers
key financial drivers Customers & Margins Operating Expenses Sales & Marketing General & Administrative Gross Profit Customer Count 125,000 150,000 $8.1M $20.1M $7.7M $23.3M $23.0M $7.9M $5.9M $1.4M $3.3M $20.4M $3.0M $1.3M
Slide 10: Energy markets are volatile!
$5.00 $7.00 $9.00 $11.00 $13.00 $15.00 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Record Cooling Usage Jun-Aug Hurricane Katrina Hurricane Rita Record Low Usage 1st half Jan 06 Record Summer Heat and Hurricanes Together with Record Early Winter Trends Have Created Unprecedented Volatility $15.78 on 12/13 $6.12 o
Slide 11: AMEX since July, 2004
AMEX since July, 2004 Large retail investor base - 2,500 shareholders Small Insider Ownership Average daily volume - 51,600 shares (12mo.) http://finance.yahoo.com/ Copyright 2006 Yahoo! Inc. 2/1/05 - ACN Energy Acquired 8/1/05 - Steven S. Boss, New CEO 3/2/06 -ACN Sales contract cancellation 3/16/0
Slide 12: Market valuation discount
market valuation discount Amounts as of 4/30/06 Cash* Equity Cash & Equity ($ in thousands) $ 43,110 $ 63,111 Shares Outstanding (in thousands) 29,558 29,558 Per Share Amounts $1.46 $2.14 Closing Market Price @ August 9th $1.39 * Includes Restricted and Unrestricted Cash and Deposits
Slide 13: Focused strategy for growth
Organic customer growth driven by superior customer pricing options and enhanced customer service Energy prices are volatile! Fixed price value proposition Promoted through various sales channels Information technology critical to market growth Competitive lead on competitors Fast to market; ownersh
Slide 14: Thomas L. Ulry, Senior Vice President Sales & Marketing
Commerce Energy Thomas L. Ulry Senior Vice President Sales & Marketing 27
Slide 15: National Electric Sales: U.S. market size
National Electric Sales U.S. market size ^ $450 billion * DEO/EIA Annual Energy Outlook 2/2006 Natural Gas 21% 38% $150 Billion in 2006 sales * 41% Industrial Residential Commercial Electricity $300 Billion in 2006 sales * Residential Industrial Commercial 21% 37% 42%
Slide 16: Competitive energy markets
competitive energy markets Source: Department of Energy
Slide 17: Market presence
market presence 137,000 Customers; 9 States; 17 Utilities Significant Growth Opportunities in Existing Markets: Electricity: Texas and Maryland Natural gas: Georgia and Ohio Profit Stability In Other Existing Markets Maintain presence in existing markets for future growth opportunities Energy market
Slide 18: Market diversification
market diversification Gas Electricity Gas & Electricity
Slide 19: Market strategy for growth
market strategy for growth Total Revenue $35.6 B Total Gross Margin $3.5 B 5.6 Million Electric Customers 137,000 GWh 86 Retailers 1.5 Million Gas Customers 145 billion Ccf 10 Retailers GA TX OH NY 6.8 million Electric Customers 102,000 GWh 4.6 million Gas Customers 750 billion Ccf 50 Retailers Reve
Slide 20: Growth potential
Annual Annual Customers Revenues Gross Margin 18 Million $35 Billion $3.5 Billion 1 Million $1.8 Billion $175 Million Commerce Growth Potential Market Size growth potential 5% Market Share Commerce "Targeted" Growth Markets
Slide 21: Our retail marketing business
We're in the business of helping consumers control their energy cost Reseller of natural gas and electric power We own no production or generation Customer segmentation focus Multi-location commercial & industrial business Hospitality chains School districts Retail outlets Mass markets Small busines
Slide 22: Our retail marketing business: valued choices
Energy is an essential service Consumers are already buying & using energy No pills, potions or lotions High energy cost is on the minds of most consumers Consumers are looking for choices in controlling their energy costs We provide rate options not available from the incumbent utility Fixed-rate p
Slide 23: What do customers value?
what do customers value? Price - 43% Reliability - 19% Customer service - 12% Billing - 5% Advice to lower energy costs - 6% Financial strength - 6% Local office - 9% Internal Study Source: RKS Research & Consulting July 2006
Slide 24: Sales
sales Heavy focus on creating brand awareness and understanding Consultative sale Requires interaction with consumer Education is key to sales
Slide 25: Sales channels
sales channels Commercial & Industrial Division Professional direct sales team Brokers & Consultants Mass Market Division Outbound Telesales Inbound Sales ABCD Affinity program
Slide 26: Customer acquisition
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 20.4 27.4 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 customer acquisition Expected contribution from mass market channels
Slide 27: Customer acquisition: mass markets economics
customer acquisition mass markets economics Payout Gross Margin* Cost to Acquire* (in Months)* Commercial $170 - $320 $100 - $250 4 - 12 Residential $60 - $220 $20 - $125 4 - 12 Gross Margin varies between commodities and is dependent on location in the U.S. Cost to Acquire varies between our channe
Slide 28: Customer economics
customer economics * * Assumes 90% renewal rate
Slide 29: It's all about scale!
it's all about scale! Increase customers and volumes quickly Leverage significant system capabilities Declining cost to serve 125,000 Customers 250,000 Customers $180/customer* $50/customer* 500,000Customers $100/customer* * For illustrative purposes only: $180/customer $50/customer
Slide 30: Commerce Energy
Commerce Energy Commerce Energy
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