SOURCE: EnerCare Inc.

Enercare Inc.

May 12, 2017 07:00 ET

Enercare Reports Record First Quarter Revenue of $278 Million

Highest Ever Organic Contract Growth(1)

TORONTO, ON--(Marketwired - May 12, 2017) -

(All amounts are in Canadian dollars unless otherwise stated)

Enercare Inc. ("Enercare") (TSX: ECI), one of North America's leading providers of essential home and commercial services and energy solutions, reported its financial results for the first quarter ended March 31, 2017.

First Quarter 2017 Highlights

  • First quarter revenue of $278 million, an increase of 95% compared to the same period in 2016
  • EBITDA of $50 million, down $1.4 million or 3%, mainly as a result of the seasonality associated with Service Experts, not present in the first quarter of 2016. In addition, EBITDA was further impacted by the following one-time expenses:
    • stock based compensation of $2 million as a result of an approximate $2 share price appreciation,
    • purchase price accounting for the Service Experts transaction for $0.7 million, and
    • a write-off of $0.8 million associated with stranded technology.
  • Had these one-time expenses not been incurred, EBITDA would have increased by 4%
  • Home Services reported seventh consecutive quarter of net growth in rental units
  • Sub-metering contract additions grew by 25%
  • Service Experts csompletes rental roll-out in three provinces and four states

Financial Highlights
(in millions of Canadian dollars except per unit amounts)2

  Three months ended March 31,
  2017  2016  B/(W)
 Total revenue $277.8  $142.6  95%
 EBITDA $50.5  $51.9  (3%)
 Acquisition Adjusted EBITDA3 $52.5  $58.1  (10%)
 Net earnings $(3.0)  $8.2  (136%)
 Basic earnings per share $(0.03)  $0.09  (133%)
 Payout ratio - maintenance3 96%  61%  (35)*
 Payout ratio3 380%  129%  (251)*
 Rental attrition (units) 7,700  7,500  (3%)
 Rental additions net of attrition 1,000  1,000  - %
 Sub-metering contracted units 10,000  8,000  25%

*percentage points

1 Includes net rental units, net protection plans and net sub-metering contracts, excluding acquisitions.
2 Unless otherwise noted, amounts are reported in thousands, except customers, units, shares and per share amounts and percentages. Dollar amounts are expressed in Canadian currency except as otherwise noted.
3 Adjusted EBITDA, Acquisition Adjusted EBITDA, Payout Ratio and Payout Ratio - Maintenance are non-IFRS financial measures. Refer to the Non-IFRS Financial and Performance Measures section in the MD&A.

John Macdonald, President and CEO, said:

"The launch of the rental program in Service Experts, both in Canada and the US, represents another opportunity for us to grow our customer relationships. This unit growth, in combination with our strong sales in sub-metering and our solid rental growth in Home Services, builds on our long-term recurring revenue model."

Results of Operations

Earnings Statement

Three months ended March 31, 2017 (000's)  Enercare Home Services  Service Experts   Sub-metering   Corporate   Total  
Revenues:                    
 Contracted revenue  $104,402  $11,377   $37,146   $-   $152,925  
 Sales and other services   6,546   116,377    1,704    -    124,627  
 Investment income   249   10    2    -    261  
Total revenue  $111,197  $127,764   $38,852   $-   $277,813  
Expenses:                         
Cost of goods sold:                         
 Commodity   -   -    29,495    -    29,495  
 Maintenance & servicing costs   16,264   9,089    -    -    25,353  
 Sales and other services   5,551   75,377    1,153    -    82,081  
Total cost of goods sold   21,815   84,466    30,648    -    136,929  
SG&A expenses   27,699   46,873    5,674    8,224    88,470  
Foreign exchange   78   (3 )  (39 )  -    36  
Amortization expense   30,880   5,150    1,770    599    38,399  
Net loss/(gain) on disposal   1,863   (16 )  10    -    1,857  
Interest expense:                         
 Interest expense payable in cash                      9,640  
 Make-whole charge on early redemption of debt                      5,049  
 Non-cash interest expense                      1,155  
Total interest expense                      15,844  
Total expenses                      281,535  
Earnings/(loss) before income taxes                      (3,722 )
Current tax (expense)                      (5,415 )
Deferred tax recovery                      6,105  
Net earnings/(loss)                     $(3,032 )
EBITDA  $59,742  $(3,556 ) $2,559   $(8,224 ) $50,521  
Adjusted EBITDA  $61,605  $(3,572 ) $2,569   $(8,224 ) $52,378  
Acquisition Adjusted EBITDA  $61,605  $(3,468 ) $2,569   $(8,224 ) $52,482  
                
Three months ended March 31, 2016 (000's)  Enercare Home Services  Service Experts  Sub-metering  Corporate  Total
Revenues:               
 Contracted revenue  $100,331  $-  $35,217  $-   $135,548  
 Sales and other services   6,098   -   903   -    7,001  
 Investment income   78   -   22   -    100  
Total revenue  $106,507  $-  $36,142  $-   $142,649  
Expenses:                       
Cost of goods sold:                       
 Commodity   -   -   27,747   -    27,747  
 Maintenance & servicing costs   16,268   -   -   -    16,268  
 Sales and other services   5,281   -   364   -    5,645  
Total cost of goods sold   21,549   -   28,111   -    49,660  
SG&A expenses   25,892   -   4,690   8,556    39,138  
Foreign exchange   20   -   15   (12 )  23  
Amortization expense   30,036   -   1,622   649    32,307  
Net loss on disposal   1,925   -   6   -    1,931  
Interest expense:                       
 Interest expense payable in cash                    7,926  
 Non-cash interest expense                    427  
Total interest expense                    8,353  
Total expenses                    131,412  
Earnings before income taxes                    11,237  
Current tax (expense)                    (12,256 )
Deferred tax recovery                    9,214  
Net earnings                   $8,195  
EBITDA  $57,121  $-  $3,320  $(8,544 ) $51,897  
Adjusted EBITDA  $59,046  $-  $3,326  $(8,544 ) $53,828  
Acquisition Adjusted EBITDA  $63,339  $-  $3,326  $(8,544 ) $58,121  

Revenues

Total revenues of $277,813 for the first quarter of 2017 increased by $135,164 or 95% compared to the same period in 2016, primarily as a result of the acquisition of Service Experts by Enercare, through an indirect wholly-owned subsidiary of Enercare Solutions Inc. ("Enercare Solutions"), on May 11, 2016 (the "SE Transaction").

Enercare Home Services revenues, excluding investment income, of $110,948 for the first quarter of 2017 increased by $4,519 or 4%, compared to the same period in 2016, primarily as a result of a rental rate increase implemented in January 2017, changes in asset mix and growth in heating, ventilation and air conditioning ("HVAC") rental units. Contracted revenue in Enercare Home Services represents revenue generated by the Rentals portfolio and protection plan contracts, while sales and other services revenue mainly pertains to one-time sales and installations of residential furnaces, boilers and air conditioners, as well as plumbing, duct cleaning and other services.

Enercare's strategy to emphasize HVAC rentals over outright sales resulted in significant increases in recurring revenue at the expense of sales and other services revenue.

Service Experts revenues, excluding investment income, were $127,754 during the first quarter of 2017. Service Experts revenues were lowered by $3,386 as a result of purchase accounting adjustments of deferred revenue associated with the SE Transaction.

Sub-metering revenues, excluding investment income, were $38,850 in the first quarter of 2017, an increase of $2,730 or 8% over the same period in 2016, primarily as a result of higher billable units. Sub-metering revenue includes total flow through commodity charges of $29,495 in the quarter, increases of $1,748 or 6% compared to the first quarter of 2016.

In the second half of 2016, Sub-metering negotiated renewals with four large property management companies representing approximately 21,000 metering units. These properties were either at or near the end of their original contracts and the renewals were completed at lower net revenue per meter point due to competitive pressures. This resulted in a reduction in revenue of approximately $450 in the quarter. The typical term for these renewals is between 10 to 15 years.

Investment income was $261 in the first quarter of 2017, an increase of $161, when compared to the same period in 2016. The change in investment income was primarily attributable to the investment of the proceeds from the $275,000 of 3.38% Series 2017-1 Senior Unsecured Notes of Enercare Solutions, due February 21, 2022 (the "2017-1 Notes") and the $225,000 of 3.99% Series 2017-2 Senior Unsecured Notes of Enercare Solutions, due February 21, 2024 (the "2017-2 Notes") (collectively the "2017 Notes"), for approximately 30 days prior to the redemption of the $210,000 4 year variable rate, non-revolving term loan facility of Enercare Solutions (the "2014 Term Loan") and the repayment of the $250,000 of 4.30% Series 2012-1 Senior Unsecured Notes of Enercare Solutions (the "2012 Notes").

Cost of Goods Sold

Total cost of goods sold for the first quarter of 2017 was $136,929, an increase of $87,269 or 176%, compared to the same period in 2016, primarily as a result of the SE Transaction.

Enercare Home Services cost of goods sold in the first quarter of 2017 was consistent with that of the same period in 2016, increasing by $266 or 1% as a result of an increased emphasis on managing costs. Maintenance and servicing costs in Enercare Home Services primarily consist of protection plan expenses and servicing costs related to the Rentals portfolio, while sales and other services expenses mainly pertain to one-time sales and installations of residential furnaces, boilers, air conditioners and small commercial products as well as plumbing, duct cleaning and other chargeable services.

Service Experts cost of goods sold amounted to $84,466 in the first quarter of 2017. Service Experts cost of goods sold was lowered by $2,683 as a result of purchase accounting adjustments for the service obligation associated with the SE Transaction.

Sub-metering cost of goods sold was $30,648 in the first quarter of 2017, increasing by $2,537 or 9%, primarily due to an increase in flow through commodity charges over the same period in 2016. Sales and other services expenses for Sub-metering relate to Triacta Power Technologies Inc. ("Triacta") meter sales and the sale and installation of water conservation products in apartments and condominiums.

Selling, General & Administrative Expenses

Total selling, general and administrative expenses ("SG&A") were $88,470 in the first quarter of 2017, an increase of $49,332 compared to the same period in 2016, primarily as a result of the SE Transaction.

Enercare Home Services SG&A expenses of $27,699 in the first quarter increased by $1,807 compared to the same period in 2016. The $1,807 increase was primarily as a result of increases of approximately $3,000 in higher wages and benefits, driven partly by higher stock-based compensation costs resulting from an increase in the price of the common shares of Enercare ("Share"), $1,400 in support costs, $700 in sales and marketing expenses, $415 in claims expense and $260 in bad debt expense, partly offset by lower office expense of $1,150 and professional fees of $2,900.

Enercare Home Services SG&A expenses in the first quarter of 2016 included $2,834 of acquisition related expenditures associated with the SE Transaction, primarily consisting of professional fees. SG&A expenses also included $1,459 of integration and business transformation costs related to the acquisition of the Ontario home and small commercial services business of Direct Energy Marketing Limited by Enercare on October 20, 2014 (the "DE Acquisition"), primarily from information technology integration activities to optimize the information technology platforms and marketing spend related to continued rebranding.

Service Experts SG&A expenses in the first quarter of 2017 amounted to $46,873, primarily comprised of approximately $28,500 of wages and benefits, $11,200 of sales and marketing related costs and $5,200 of office related expenses. Service Experts SG&A expenses in the first quarter of 2017 included integration related expenditures of $104, primarily consisting of professional fees associated with the integration of the SE Transaction.

Sub-metering SG&A expenses in the first quarter of 2017 were $5,674, an increase of $984 over the same period in 2016, primarily as a result of $640 of higher wages, driven partly by higher stock-based compensation costs resulting from an increase in Share price, $150 of higher office expenses and $140 of higher billing and servicing costs.

Corporate expenses of $8,224 in the first quarter of 2017 decreased by $332 or 4%, compared to the same period in 2016. The $332 decrease was primarily as a result of approximately $200 in higher wages and benefits, driven by higher stock-based compensation costs resulting from an increase in Share price, $215 of higher office expenses, resulting from an increase in information technology costs, and $280 in higher sales and marketing expenses, partly offset by a decrease in professional fees of $1,025.

Corporate SG&A expenses in the first quarter of 2016 included $657 of integration and business transformation costs related to the DE Acquisition, primarily from information technology integration activities to optimize the information technology platforms.

Amortization Expense

Amortization expense increased by $6,092 or 19% in the first quarter of 2017 compared to the same period in 2016, primarily due to the SE Transaction, an increasing capital asset base from asset mix changes in the Rentals portfolio and increased Sub-metering capital investments, which are amortized over a shorter life than those of the Enercare Home Services business.

Net Loss on Disposal of Equipment

Enercare reported a net loss on disposal of equipment of $1,857 in the first quarter of 2017, a decrease of $74 or 4% over the same period in 2016. The net loss on disposal amount is influenced by the number of assets retired, proceeds on disposal of equipment, changes in the retirement asset mix and the age of the assets retired. During the first quarter of 2017, net loss on disposal included a non-recurring write down of $845 relating to stranded technology investments resulting from going concern issues with a supplier that was developing software solutions for the Enercare Home Services business.

Interest Expense

Three months ended March 31,
(000's) 2017 2016
Interest expense payable in cash $ 9,640 $6,629
Interest payable on subscription receipts - 1,108
Equity bridge financing fees - 189
Make-whole payment on early redemption of senior debt 5,049 -
Non-cash items:    
 Notional interest on employee benefit plans 210 210
 Amortization of financing costs 945 217
Interest expense $15,844 $8,353

Interest expense payable in cash increased by $3,011 to $9,640 in the first quarter of 2017, compared to the same period in 2016. This increase was primarily related to the addition of the USD $200,000 from the two 4-year non-revolving, non-amortizing variable rate term credit facilities (the "2016 Term Loan"), maturing on May 11, 2020, related to the financing of the SE Transaction and the issuance of 2017 Notes during the first quarter of 2017, partially offset by the conversion of the 6.25% convertible unsecured subordinated debentures of Enercare ("Convertible Debentures") to Shares. A make-whole payment for the early redemption of the 2012 Notes during the first quarter of 2017 resulted in a one-time interest expense of $5,049.

Notional interest of $210 in the first quarter of 2017 relates to the defined benefit employee benefits plans. Amortization of financing costs includes the previously unamortized costs associated with the 2012 Notes, which were redeemed on March 23, 2017, the $225,000 of 4.60% Series 2013-1 Senior Unsecured Notes of Enercare Solutions, which mature on February 3, 2020, the Convertible Debentures, the 2014 Term Loan, which was repaid on February 23, 2017, the 2016 Term Loan and the 2017 Notes. The 2017-1 Notes were sold at a price of 99.982% of the principal amount, with an effective yield of 3.384% per annum if held to maturity and the 2017-2 Notes were sold at 99.982% of the principal amount, with an effective yield of 3.993% per annum if held to maturity.

As part of the SE Transaction, Enercare issued subscription receipts (the "SE Subscription Receipts") during the first quarter of 2016 and subsequently exchanged them for Shares upon the closing of the SE Transaction on May 11, 2016. While the SE Subscription Receipts remained outstanding, they were classified as debt, resulting in interest expense of $1,108, which was the equivalent to the dividend payments on such SE Subscription Receipts if they had been Shares. Equity bridge financing fees of $189 in the first quarter of 2016 were also incurred as part of the SE Transaction.

Income Taxes

Enercare reported current tax expense of $5,415 in the first quarter of 2017, a decrease of $6,841 over the same period in 2016, primarily due to higher taxes paid in the first quarter of 2016 as a result of a one year tax deferral originated in 2015 and additional interest expense incurred in the first quarter of 2017. The deferred income tax recovery of $6,105 decreased by $3,109 over the same period in 2016, primarily as a result of temporary difference reversals in the Enercare Home Services, Service Experts and Sub-metering businesses.

Net Earnings

The net loss of $3,032 in the first quarter of 2017 was lower than the net earnings of $8,195 in the first quarter of 2016, as previously described.

EBITDA, Adjusted EBITDA and Acquisition Adjusted EBITDA

The following table summarizes comparative quarterly results for the last eight quarters, and reconciles net earnings, an IFRS measure, to EBITDA, Adjusted EBITDA and Acquisition Adjusted EBITDA.

(000's) Q1/17 Q4/16 Q3/16 Q2/16 Q1/16 Q4/15 Q3/15  Q2/15
Net (loss)/earnings $(3,032 )$17,552  $19,332  $16,051  $8,195  $13,725  $13,124  $16,204
Deferred tax (recovery)/expense  (6,105 ) (5,275 ) (7,522 ) (7,633 ) (9,214 ) 1,069   2,376   1,323
Current tax expense  5,415   11,534   15,332   15,259   12,256   2,784   2,169   2,290
Amortization expense  38,399   38,892   38,329   35,796   32,307   31,917   31,606   31,044
Interest expense  15,844   8,554   8,507   9,187   8,353   6,988   6,955   7,021
EBITDA(a)  50,521   71,257   73,978   68,660   51,897   56,483   56,230   57,882
Add: Net loss/(gain) on disposal  1,857   850   734   891   1,931   (1,455 ) 1,001   1,572
Adjusted EBITDA(b)  52,378   72,107   74,712   69,551   53,828   55,028   57,231   59,454
Add: Acquisition SG&A  104   603   4,854   5,128   4,293   3,028   3,946   1,961
Acquisition Adjusted EBITDA $52,482  $72,710  $79,566  $74,679  $58,121  $58,056  $61,177  $61,415
  1. Historical EBITDA has been conformed to the current presentation which includes investment income and other income.
  2. Historical Adjusted EBITDA has been conformed to the current presentation which includes investment income and other income and excludes net loss on disposal.

Outlook

The forward-looking statements contained in this section are not historical facts but, rather, reflect Enercare's current expectations regarding future results or events and are based on information currently available to management (see "Cautionary Note Regarding Forward-looking Statements" in this news release).

Enercare Home Services Segment

  • Our main priority for the business in 2017 is to grow EBITDA. In order to grow EBITDA in the Enercare Home Services business, our key priority is to continue to grow the number of rental contracts. We believe that we have the opportunity to continue to grow the number of contract additions in excess of Attrition throughout 2017. Other key priorities for the Enercare Home Services business include growing the protection plan portfolio, enabled by the full launch of the electrical protection plans, investing in the replacement of key infrastructure and IT systems that support our vision for sustainable growth and further enhancing our customer satisfaction levels. We will also continue to build on the innovation of our mobile app with further enhancements to the customer experience throughout the year.
  • Our strategy to emphasize HVAC rentals over outright sales in order to create a long-term customer revenue stream and provide valuable cross-selling opportunities continues to be successful. While this strategy has resulted in a significant increase in recurring HVAC rental revenues, we anticipate the negative short-term impact on non-recurring sales and other services revenue to continue throughout 2017.
  • In late December 2016, Enercare implemented an electrical protection plan pilot program available to customers in Ontario. The electrical protection plan provides customers coverage for specified residential home electrical components, including diagnosis, repair, replacement and adjustment. The pilot program was rolled out in early 2017 and the full launch occurred in March.
  • Our collective bargaining agreement in respect of Enercare Home Services with UNIFOR Local 975 expired on March 31, 2017. Enercare and the union began renegotiations in March and anticipate their continuing until at least the end of May.

Service Experts Segment

  • Consistent with previous guidance, cost synergies relating to the SE Transaction are estimated to be in the range of $0.05 to $0.08 per Share on an annualized basis by the end of 2017, primarily as a result of a reduction in sourcing costs.
  • Our key priority for the Service Experts business in 2017 is to grow revenues and EBITDA while continuing to expand the rental programs for HVAC and water heater products in both Canada and the U.S. Service Experts will also continue to explore strategic acquisition opportunities.
  • In October 2016, Service Experts introduced a rental program for HVAC products and water heaters in several centers within Canada. This rollout was completed at all 15 locations in Canada in February 2017, and while the program is still in the very early stages, Enercare is encouraged by the initial results which show an initial rental mix of approximately 15% to 20% in Ontario and 7% to 10% in Western Canada where the rental model is a new concept. The successful introduction of our recurring revenue rental model in Canada is part of our plan to integrate rentals throughout Service Experts residential heating and cooling operations over the next two years to create recurring revenue. During the first quarter of 2017, Service Experts extended the rental HVAC offerings through a pilot in two U.S. states and subsequently rolled out to two additional states in late March and one in early May. The U.S. rental program is similar to Enercare's existing Canadian rental program, except that due to U.S. regulations, the rental contracts in the United States will be for a definitive term, which in the piloted states is 10 years. Enercare anticipates that the form of the contract, as driven by the U.S. regulatory environment, will result in a slower adoption of the rental program in the U.S. The preliminary rental mix of total HVAC origination in the United States was in the 3% to 5% range after our soft launch.
  • The business of Service Experts is subject to greater seasonality than Enercare Home Services as a result of it having fewer recurring revenue sources. Revenue and EBITDA tend to be seasonally highest in the second quarter of the year, followed by the third quarter, and substantially less in the fourth and first quarters, due primarily to the geography where Service Experts operates and weather patterns. The heating season (roughly November through February) and cooling season (roughly May through August) are periods when consumers transition their buying patterns from one season to the next. In most of the states that Services Experts operates, cooling equipment as opposed to heating equipment represents a substantial portion of its annual HVAC sales and service revenue. Conversely, in the three provinces that Service Experts operates, heating equipment represents a large portion of its Canadian sales and service revenue. The sales are also impacted by seasonal weather patterns; in periods of extreme heat and cold, installation and demand service revenue tend to increase. This results in higher sales in the second and third quarters due to the higher volume in the cooling season relative to the heating season and the lowest revenue and substantially reduced EBITDA, relative to other quarters, in the first quarter. Service Experts normally generates a neutral level of profitability in the first quarter of the year and as a result the working capital needs are generally greater in the first quarter, followed by higher operating cash inflows in the second and third quarters.

Sub-metering Segment

  • In respect of Sub-metering, our priorities for 2017 will be to continue to grow EBITDA by increasing contract sales. Other key priorities include reducing the capital spend per unit for new installations and introducing new products and services.
  • During the first quarter of 2017, we continued to experience the trend that almost one-half of our contracted units were for thermal, gas or water sub-metering. The majority of all new construction contracts are for both electricity and water sub-metering services, which contributes to lower billing costs over time as multiple products will be invoiced on a single bill.
  • Sub-metering sales opportunities continue to be strong and skewed towards multi-commodity products within the new construction and condominium segments. During the first quarter of 2017, over three-quarters of the newly contracted services have come from new construction condominiums and rental properties. Although the buildings related to these contracts have yet to be constructed and as a result the bulk of the capital and all of the related revenues will occur in 24 to 36 months, once constructed, all units within these buildings will start billing on initial move-in. This is in contrast to retrofit apartment contracts for which installation starts sooner, but billing lags as it is reliant on tenant turnover.
  • Sub-metering plans to continue to negotiate new contracts with existing clients as they approach the end of their original contracts. Each of these negotiations are unique and competitive pressure will likely result in re-negotiated fees being below those of the original contracts.
  • During the first quarter, sub-metering introduced a new commercial service offering through a controlled launch process. This offering compliments our recently launched commercial consolidation billing solution and brings additional features, such as tenant level consumption reporting and client options to purchase the meters. This new offering will be installed in approximately 20 buildings over the remainder of 2017 and will be promoted to general availability in the third quarter of 2017.

Corporate

  • Consistent with previous guidance, Enercare estimates that it will recognize approximately $23 million to $29 million in current income tax expense for the fiscal year ending December 31, 2017. This estimate assumes corporate tax rates of approximately 26.5% in Canada and 39% in the US. Taxable income is principally impacted by changes in revenue, operating expenses, potential acquisitions or divestitures, appropriate tax planning and capital expenditures through the capital cost allowance deduction.
  • Consistent with previous guidance, Enercare is targeting a range of between $167 million and $192 million in capital investments in 2017, primarily reflecting higher unit costs due to higher end product originations, higher sales volumes and higher corporate spending on platforms for innovation and growth to enable future product offerings, including smart home products for a connected home.
 Capital Expenditure(1)Target Range for 2017 
 HVAC rentals $46M - $52M
 Water heater additions $35M - $39M
 Water heater exchanges $32M - $36M
 Sub-metering growth $17M - $21M
 In-house financing(2) $5M - $ 8M
 Corporate and building(3) $32M - $36M
 Total range $167M - $192M(4)

(1) Excludes acquisitions.
(2) In-house financing represents the increase in financing receivables related to the program.
(3) Corporate capital includes IT software and hardware, furniture and fixtures and other capital projects. The building relates to a new head office purchased in Q2 of 2016 including renovations continuing into the early part of 2017.
(4) The target range of capital spend for the Enercare Home Service and Service Experts businesses are largely based on the number and type of equipment originated (assumed to be approximately 26,000 water heater and water treatment rental additions, 42,000 water heater exchanges and 14,500 HVAC rental additions) and the mix between rental, sales and financing arrangements similar to actual results experienced in the last 12 months of operations. The target range for capital spend in the Sub-metering business is based on the number and type of metering equipment installed during the year assumed to be approximately 18,000 units.

Financial Statements and Management's Discussion and Analysis

Enercare's financial statements and management's discussion and analysis for the period ended March 31, 2017 are available on SEDAR at www.sedar.com or on Enercare's investor relations website at www.enercareinc.com.

Conference Call and Webcast

Management will host a conference call and live audio webcast to discuss Enercare's financial results for the first quarter ended March 31, 2017 this morning at 10:00 a.m. ET. John Macdonald, President and CEO, and Evelyn Sutherland, CFO, will review Enercare's results and discuss the quarter's operating highlights.

Those wishing to listen to the teleconference may access the live webcast as follows:

Date:Friday, May 12, 2017
Time:10:00 a.m. - 11:00 a.m. (ET)
By telephone:647.427.2311 or 1.866.521.4909
 Please allow 10 minutes to be connected to the conference call.
Webcast:http://event.on24.com/wcc/r/1380375-1/47B8CB873B0C813B6A83B38216BAEC94
 Note: this is a listen-only audio webcast. Media Player or Real Player is required to listen to the broadcast.
Replay:An archived audio webcast will be available at www.enercareinc.com for one year following the original broadcast.
Note:A slide presentation intended for simultaneous viewing with the conference call will be available the morning of Friday, May 12, 2017 at www.enercareinc.com.

Cautionary Note Regarding Forward-looking Statements

This news release contains certain forward-looking statements within the meaning of applicable Canadian securities laws ("forward-looking statements" or "forward-looking information") that involve various risks and uncertainties and should be read in conjunction with Enercare's 2016 audited consolidated financial statements. Additional information in respect of Enercare, including the Annual Information Form of Enercare dated March 31, 2017 ("AIF"), can be found on SEDAR at www.sedar.com.

Statements other than statements of historical fact contained in this news release may be forward-looking statements, including, without limitation, management's expectations, intentions and beliefs concerning anticipated future events, results, circumstances, economic performance or expectations with respect to Enercare, including Enercare's business operations, business strategy and financial condition. When used herein, the words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "goal", "intends", "may", "might", "outlook", "plans", "projects", "schedule", "should", "strive", "target", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. These forward-looking statements may reflect the internal projections, expectations, future growth, results of operations, performance, business prospects and opportunities of Enercare and are based on information currently available to Enercare and/or assumptions that Enercare believes are reasonable. Many factors could cause actual results to differ materially from the results and developments discussed in the forward-looking information.

In developing these forward-looking statements, certain material assumptions were made. These forward-looking statements are also subject to certain risks. These factors include, but are not limited to:

  • actual future market conditions being different than anticipated by management;
  • the failure to realize the anticipated benefits of the SE Transaction, strategic initiatives and tax efficiencies;
  • the risk that the pilot and subsequent roll out of rental HVAC offerings in 5 states in the United States does not realize anticipated results as the rental model is a new concept in this industry in the United States; and
  • the risks and uncertainties described under "Risk Factors" in the AIF.

Material factors or assumptions that were applied to drawing a conclusion or making an estimate set out in forward-looking statements include:

  • the view of management regarding current and anticipated market conditions;
  • industry trends remaining unchanged;
  • the financial and operating attributes of Enercare and Service Experts as at the date hereof and the anticipated future performance of Enercare and Service Experts;
  • assumptions regarding the volume and mix of business activities remaining consistent with current trends;
  • assumptions regarding the interest rate of the 2016 Term Loan, foreign exchange rates and commodity prices; and
  • the number of Shares outstanding remaining constant.

There can be no assurance that the anticipated strategic benefits and operational, competitive and cost synergies from the SE Transaction will be realized. There can be no assurance that recent results from the introduction of the rental model to Service Experts in Canada and the United States are indicative of future results.

Readers are cautioned that the preceding list of material factors or assumptions is not exhaustive. Although forward-looking statements contained in this news release are based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Accordingly, readers should not place undue reliance on such forward-looking statements and assumptions as management cannot provide assurance that actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Enercare. All forward-looking information in this news release is made as of the date of this news release. These forward-looking statements are subject to change as a result of new information, future events or other circumstances, in which case they will only be updated by Enercare where required by law.

About Enercare

Enercare is headquartered in Toronto, Ontario, Canada and is publicly traded on the Toronto Stock Exchange (TSX: ECI). As one of North America's largest home and commercial services and energy solutions companies with approximately 4,500 employees under its Enercare and Service Experts brands, Enercare is a leading provider of water heaters, water treatment, furnaces, air conditioners and other HVAC rental products, plumbing services, protection plans and related services. With operations in Canada and the United States, Enercare serves approximately 1.6 million customers annually. Enercare is also the largest non-utility sub-meter provider, with electricity, water, thermal and gas metering contracts for condominium and apartment suites in Canada and through its Triacta brand, a premier designer and manufacturer of advanced sub-meters and sub-metering solutions.

For more information on Enercare visit www.enercare.ca. Additional information regarding Enercare is available on SEDAR at www.sedar.com.

Source: Enercare Inc.

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