Over the past 60 years, American consumers have felt the impact of inflation, particularly when it comes to energy usage. One of the most common ways costs is through gas prices. Back in 1960, an American consumer was only paying $0.25 per gallon of gasoline. As of November 2016, the U.S. national average price for a gallon of gasoline was $2.17. This is a price increase of 768% between 1960 and 2016, and gas prices are not even as high as they were back around 2008!
However, inflation has hit all forms of energy over the past decades. Electricity is another regularly used form of energy, which has seen prices soar. According to the U.S. Energy Information Administration, the American household was paying an average price of 2.6 Cents per kilowatthour, including taxes, back in 1960. In 2015, the average price for residential electricity soared to 12.67 Cents per kilowatthour in the United States, a 387.31% increase from 1960.
There is however, hope for American energy consumers, as energy deregulation continues to pick up steam. Not to mention, with an energy-friendly president-elect, and Congress, consumers could start to see some relief with energy prices. Warren Buffett believes that “energy deregulation will be the largest transfer of wealth in history,” and General Electric Company (NYSE: GE)’s Jack Welch has called energy deregulation “the next biggest thing since the internet.” With experts estimating that all 50 states will have some form of energy deregulation participation by 2020, the question is: who will reap the benefits of the estimated $500 billion new industry? Premier Holding Corp. (OTCQB: PRHL) is in a prime position to continue benefitting from energy deregulation across the United States.
Overview: Premier Holding Corp. (OTCQB: PRHL)
Premier Holding Corp. (OTCQB: PRHL), through its subsidiaries, engages in the business of offering electricity and gas to consumers across deregulated energy markets. The energy company operates three main subsidiaries:
- Energy Efficiency Experts (E3): The company’s energy efficiency business, focus on cutting energy costs through efficient energy infrastructure and materials.
- The Power Company (TPC): TPC helps connect consumers with energy cost management tools, competitive energy pricing, energy market monitor services. Ultimately, TPC helps assist energy customers with finding the best service for the best prices. Deployment of company’s proprietary ESP Portal, which is being called the “Amazon of energy.”
- American Illuminating Company (AIC): The power-supplying arm of Premier Holding Corp., AIC stands to be a major revenue-producing business for the parent company. The company projects receiving 90,000 residential contacts for power supply through 2017 (contracts range in value from $300-600 per contract).
The parent company, Premier Holding Corp.’s (OTCQB: PRHL) slogan is “Everything Energy,” as the energy company looks to become a one-stop-shop for energy customers across deregulated markets.
PRHL: Scalable Energy Businesses and Complimentary Subsidiaries
We have established that Premier Holding Corp. has an extensive corporate portfolio of business subsidiaries, but it is the way these businesses work together that really could help generate strong revenue growth.
Starting with the Energy Efficiency Experts (E3) business, this gives Premier Holding Corp. a strong method to conduct business across the country, regardless of energy deregulation status. Businesses are consistently looking for ways to cut costs in today’s slow-growth environment. One of the easiest ways companies can cut costs without cutting jobs is through energy reduction and efficiency solutions. The E3 business supplies companies with energy monitoring solutions, HVAC, lighting, power generation, and various other energy conservation solutions.
For example, by switching to E3’s E-Series energy saving lights, a company could see an estimated investment of $125,500. However, this investment will yield an estimates $93,100 in annual energy savings, which amounts to a net capital expenditure payback period of 1.09 years. This is just one example of how E3’s energy conservation solutions can provide companies with serious energy cost savings.
The Power Company (TPC) provides another method for energy customers to reduce and closely manage their energy expenses. However, rather than providing cost savings from a conservation standpoint, TPC enables close monitoring of actual energy prices. Furthermore, through the company’s Energy Services Portal (ESP), customers will be able to shop for energy in a very Amazon, Inc. (NASDAQ: AMZN)-like environment and platform. ESP is really a fantastic tool for not only consumers, but also Premier Holding Corp. As the portal provides automatic, real-time energy pricing, Premier Holding Corp. is able to see the specifications and needs of that particular consumer. If the customer’s energy needs are attractive, Premier Holding Corp. can place a slightly lower bidding price to help lock-in that business. Therefore, as the parent company can see the prices of its competitors, the company can strategically underbid its competitors to land highly-desired energy contracts. The best part of this method for consumers, is that it not only saves them money, but it is the same exact power and service as they would receive with their old energy provider.
Currently, TPC operates across 14 States and is well positioned to continue benefitting from additional States that deregulate their energy markets. Throughout its operating territory, TPC has given customers a chance to experience real energy savings.
American Illuminating Company (AIC) is a more recent addition to the Premier Holding Corp. family. AIC serves as the parent company’s power supplying company and allows the company to capitalize on the portal that was described above. As TPC is able underbid its competitors for key contracts, AIC will be able to deliver the actual power to the customers. Premier Holding Corp. estimates it can secure around 5,000 contracts per month using this marketing method. As previously touched upon above, with roughly 90,000 residential contracts estimated in 2017 and at a value of $300-600 per contract, the parent company could stand to see very strong asset growth in 2017. To prove the capability, management has run analysis of the results that would have been realized in 2015 if AIC had been acquired and put in operation then.
PRHL: Financial and Industry Analysis
Turning to Premier Holding Corp.’s financial and competitor analysis, the energy services company maintains a market cap of nearly $21.4 million, as of December 2016. Furthermore, the company has a share structure consisting of 450 million authorized shares, 328.6 million shares outstanding, and a float consisting of 89.25 million shares, as of November 2016. During the third quarter 2016, Premier Holding Corp. reported total revenue of $1.13 million and an EBIT loss of $1.02 million. Furthermore, Premier Holding Corp. reported total assets of $6.91 million and total liabilities of $2.67 million, as of the end of September 2016.
Premier Holding Corp. has reported total revenue of $3.65 million, through the past three quarters of 2016. Going off of averages of the past three quarterly results, the energy services company could expect to see fourth quarter total revenue of nearly $1.22 million. This would give Premier Holding Corp. an estimated total revenue of $4.87 million for full year 2016. Through the company’s proprietary portal technology and partnership with BlackRock (NYSE: BLK)-backed Sustainability Partners, Premier Holding Corp. estimates it will see total revenues jump to $40 million in full year 2017.
Here are five companies that have very similar operations to Premier Holding Corp. and may be a good way to gauge the company’s future potential:
MGE Energy, Inc. (NASDAQ: MGEE) operates five business segments through its subsidiaries: Regulated Electric Utility Operation, Regulated Gas Utility Operations, Non-regulated Energy Operations, Transmission Investments, and All Other. The company predominantly serves hundreds of thousands of utility customers across Wisconsin. As of December 2016, MGE Energy, Inc. (OTCQB: MGEE) has a market cap of $2.05 billion. Furthermore, the utility services company maintains a share structure consisting of 34.67 million shares outstanding and a float consisting of 34.59 million shares, as of December 2016. During the third quarter 2016, MGE Energy, Inc. (NASDAQ: MGEE) reported total revenue of $136.72 million and net income of $27.88 million.
NRG Energy, Inc. (NYSE: NRG) operates as a power services company with numerous investments in renewable energy sources, energy storage, electricity, and more. Through the company’s subsidiary, Reliant, the company sells energy and services directly to consumers in respective deregulated energy markets. As of December 2016, NRG Energy, Inc. (NYSE: NRG) has a market cap value of $3.58 billion. Furthermore, the energy company maintains a share structure consisting of 315.44 million shares outstanding and a float consisting of 313.42 million shares, as of December 2016. During the third quarter, NRG Energy, Inc. (NYSE: NRG) reported total revenue of $3.95 billion and net income of $402 million.
Calpine Corporation (NYSE: CPN) operates as a wholesale power generation company, specializing in natural gas and geothermal-based power. The company then sells the power it generates to utilities, retail power providers, enterprises, municipalities, and more. One of Calpine Corporation (NYSE: CPN)’s subsidiaries, Champion Energy Services, is engaged in deregulated electricity markets across the United States. As of December 2016, Calpine Corporation (NYSE: CPN) has a market cap valuation of $4 billion. In addition, the company maintains a share structure consisting of 359.09 million shares and a float of 334.67 million shares. During the third quarter 2016, the company reported total revenue of $2.36 billion and net income of $295 million.
Consolidated Edison, Inc. (NYSE: ED) is engaged in the regulated and deregulated electric, gas, and energy business and maintains a massive energy network across the U.S. Northeast and Midwest. Consolidated Edison, Inc. (NYSE: ED) maintains residential energy service operations in Connecticut, Maryland, New York, and Pennsylvania. In addition, the energy giant serves commercial energy needs across Connecticut, Illinois, Maryland, Massachusetts, New York, and Pennsylvania. Overall, Consolidated Edison, Inc. (NYSE: ED) maintains a market cap value of $21.26 billion and a share structure consisting of 304.73 million shares and a float of 304.53 million shares. During the third quarter 2016, Consolidated Edison, Inc. (NYSE: ED) reported total revenue of nearly $3.42 billion and net income of $497 million.
American Electric Power Company, Inc. (NYSE: AEP) operates as a utility company and engages in the generation, transmission, and distribution of electricity to retail and wholesale clients and customers. The company develops its power through coal, lignite, natural gas, nuclear, hydroelectric, and more. Furthermore, the company provides electricity to 5.4 million customers across 11 states. As of December 2016, American Electric Power Company, Inc. (NYSE: AEP) maintains a market cap valuation of $29.04 billion and a share structure consisting of 491.72 million shares outstanding and a float of 491.62 million shares. During the third quarter 2016, the American Electric Power Company, Inc. (NYSE: AEP) reported total revenue of $4.65 billion, but a net loss of $765.8 million.
Overall, the energy deregulation movement is set for serious expansion over the next several years, as experts predict all 50 U.S. States will have some form of deregulation by 2020. This gives Premier Holding Corp. (OTCQB: PRHL) a considerable upper hand, as the current state energy monopoly and price gouging continues to be on the decline. Furthermore, through the company’s three subsidiaries, the company provides a complete, one-stop shop for energy service customers.