Commerce Energy Group Inc · OTC:CMNR
Commerce Energy — Q4 2006 Earnings Presentation
27 slides from Commerce Energy's earnings presentation, Oct 30, 2006
Slide 1: Fourth Quarter 2006 Earnings Conference
Fourth Quarter 2006 Earnings Conference October 30, 2006
Slide 2: Forward-Looking Statements
forward-looking statements This 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 could diff
Slide 3: Opening Remarks
Opening Remarks Steven Boss, CEO
Slide 4: Organic Customer Growth
Organic Customer Growth strategies for growth
Slide 5: National Electric Sales large market opportunity
National Electric Sales large market opportunity ^ $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 6: Market diversification by state
States - 12 California Gas and Power Georgia Gas Ohio Gas New Jersey Power New York Gas Maryland Gas and Power Michigan Power Pennsylvania Gas and Power Texas Power Nevada * Gas Florida * Gas Kentucky* Gas * HESCO acquisition, Sept. 2006 market diversification
Slide 7: Strategies for growth
strategies for growth Organic Customer Growth Investments in Infrastructure Mergers & Acquisitions Strategic Wholesale Supply Partners
Slide 8: 2006 highlights
2006 highlights Foundation laid for strong customer growth 21,000 Customer Adds in fourth quarter Solid Earnings Growth Q4 Gross Profit Up 77% Realization of Acquisition Synergies Full year G&A Down 14% Working Capital Credit Facility Key for volatile energy prices A Dedicated & Talented Team
Slide 9: Financial Review
Financial Review Lawrence Clayton, CFO
Slide 10: 4th quarter results
Net Income (loss) ^ $3.1M 4th quarter results - $ in charts in thousands $(2,405) $651 Gross Profit ^ $3.8M $8,678 $4,901 Net Revenues ^ $13.5M Volumes - Electricity Gas MWh DTH 553k 423k 658k 657k $52,303 $65,831
Slide 11: 4th quarter results: Sales & Marketing, G&A
4th quarter results - $ in charts in thousands Sales & Marketing ^ $0.8M $1,885 $1,095 G & A ^ $1.9M $8,475 $6,572
Slide 12: FY 2006 customer count
FY 2006 customer count 7/31/05 10/31/05 1/31/06 4/30/06 7/31/06 137,000 125,000 128,000 134,000 140,000 21,000 Customer Adds in Q4 2006 Annual Churn of 30%
Slide 13: Balance sheet summary
Assets $ Thousands 7/31/2006 7/31/2005 Unrestricted Cash & Equivalents $ 22,941 $ 33,344 Accounts Receivable 30,650 27,843 Other Current Assets 11,405 8,103 Restricted Cash and Deposits 19,623 19,569 PP&E, Intangibles and Other Assets 14,457 13,773 Total Assets $ 99,076 $ 102,632 Liabilities and Sto
Slide 14: 2007 annual earnings & customer guidance
2007 annual earnings & customer guidance 2005 Actual 2006 Actual 2007 Estimate Customers: 140,000 137,000 208,000 $(0.20) $(0.07) $600,000 to $2.1M, or EPS of $0.02 - $0.07
Slide 15: Sales & Marketing
Sales & Marketing Thomas Ulry SVP Sales & Marketing
Slide 16: Key growth markets
key growth markets Markets C&I Mass Markets Gas Power Gas Power California Maryland Ohio Texas
Slide 17: Mass market growth
mass market growth TX Customers: 5.6 m Revenue $12.7 b Gross Margin $1.4 b Customers: 1.2 m Revenue: $3.5 b Gross Margin: $380 m MD OH Customers: 3.2 m Revenue: $3.8 b Gross Margin: $390 m KEMA, Brown's Directory & Internal Estimates April 2006 TOTAL: Customers: 10 m Revenue: $20 b Gross Margin: $2+
Slide 18: Customer acquisition activities
customer acquisition activities Sales activities Professional Sales / Account Executives Telesales Door-to-door Network Marketing Brokers & Consultants Affinity Marketing activities Direct mail Advertising via print and radio
Slide 19: 2007 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 2007 customer acquisition Expected contribution from mass market channels
Slide 20: Customer acquisition mass market economics
customer acquisition mass market economics Payout Gross Margin* Cost to Acquire* (in Months)* Small Business $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 cha
Slide 21: 150% increase in 2007 customer adds
150% increase in 2007 customer adds Customer Adds & Drops 2007* 208,000 2006 137,000 2005 140,000 Year-End Customer Count 2006 2007 71,000 Net Customer Adds in 2007 Churn rate declines to 20% from 30% *forecasted
Slide 22: Gross margin from new customers
gross margin from new customers $18M originated in 2007 Origination improvement of 145% Backlog increase of 127% Origination Backlog (End of Year) $ 7.4M $ 7.5M $18.4M $16.8M* * Assumes 80% renewal of 2006 sales
Slide 23: Commentary
Commentary Steven Boss, CEO
Slide 24: Strategies for growth
strategies for growth Organic Customer Growth Investments in Infrastructure Mergers & Acquisitions Strategic Wholesale Supply Partners
Slide 25: HESCO acquisition
HESCO acquisition Purchased 300 C&I accounts for approximately $4 million Tripled natural gas volumes Anticipate annual natural gas revenues of nearly $100 million Expected to be immediately accretive to fiscal 2007 operating results Strategic Supply Partnership
Slide 26: Sustained growth at Commerce!
Sustained growth at Commerce! Phase 1 - Sustainable foundation Phase 2 - Strong customer growth Phase 3 - Leverage growth for profitability
Slide 27: Closing Comments
Closing Comments
Commerce Energy Group — Q4 2006 Earnings Presentation on 6ix