IDT Corporation (IDT)

IDT 
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IDT Corporation (IDT)

F3Q10 (Qtr End 04/30/2010) Earnings Call

June 10, 2010 5:15 PM ET

Executives

Bill Ulrey – Investor Relations Officer

Howard Jonas – Chairman and Chief Executive Officer

Bill Pereira – Chief Financial Officer,

Presentation

Operator

Bill Ulrey

Welcome to IDT Corporation's Third Quarter Fiscal 2010 Earnings Presentation. This is Bill Ulrey, IDT's Investor Relations Officer. IDT's Chairman and Chief Executive Officer, Howard Jonas; and Chief Financial Officer, Bill Pereira, will be presenting IDT’s financial and operational results for the three months ended April 30, 2010.

This quarter we are following the same announcement format we used in prior quarters. Our earnings release is available on the Investor Relations page of IDT Corporation's website, www.idt.net. The earnings release is also been filed on a Form 8-K with the SEC. These remarks are pre-recorded.

If after listening to management’s presentation and reading the company's earnings release, you have any questions for management, please e-mail them to us at the following address, invest@idt.net. We will accept questions through the close of business tomorrow, June 11th. Please include your name and firm name, if applicable, in your e-mail. If we can constructively answer your question, we will post your question along with your name, your firm's name, and our answer on the Investor Relations page of the IDT website as early as next Wednesday, June 16th, after market close. We will also file a Form 8-K with the SEC containing the questions-and-answers.

Any forward-looking statements made during this webcast or in the written Q&A, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which we anticipate. These risks and uncertainties include, but are not limited to, specific risks and uncertainties discussed in the reports that we file periodically with the SEC.

We assume no obligation to update any forward-looking statements that we have made or may make, or to update the factors that may cause actual results to differ materially from those that we forecast.

In the prepared remarks you’ll hear today, and also possibly in our written responses to questions thereafter, we will make reference to adjusted EBITDA, earnings before income taxes, depreciation and amortization. Adjusted EBITDA for all periods discussed during our remarks is a non-GAAP measure representing operating income or loss from operations, exclusive of depreciation and amortization, impairments, restructuring charges, net gains on settlements and the gain on the sale of an interest in AMSO, LLC. Adjusted EBITDA is one of several key financial metrics management uses to evaluate the company's and the different segments operating performances.

The schedule provided in the earnings release reconciles adjusted EBITDA to the nearest corresponding GAAP measure, income from operations for each of our segments and to both income from operations and to net income for the company as a whole.

To begin the discussion of our financial and operating results, here is IDT Corporation's Chairman and CEO, Howard Jonas.

Howard Jonas

Thank you, Bill. Good afternoon to everyone. I’m Howard Jonas, Chairman and CEO of IDT. Welcome to our management discussion of our third quarter 2010 results. Our CFO, Bill Pereira will take through the details of our performance and financial condition in a few minutes. So I will begin by discussing the big picture, both in terms of our results and where we are heading as a company, and update you on the status of several key growth initiatives.

For the third quarter of our 2010 fiscal year, we are reporting net income attributable to IDT of $12.6 million and earnings per diluted share of $0.58. This is our second consecutive quarter of positive net income and brings total net income attributable to IDT to the first three quarters of the year to $12.8 million or $0.60 per share.

By every key indicator of profitability and liquidity performance that we look at adjusted EBITDA, operating income, net income, cash flow and other balance sheet metrics, this was a good quarter. I very much appreciate all the hard work contributed by everyone here at IDT. A credit belongs to management and employees to our organization. I hope they would take pride and our accomplishment.

As a company, we remain focus first on improving operational performance and explaining growth opportunities within our core telecom and energy businesses, subject to the same fiscal discipline that drove our turnaround effort. And second, we are pursuing a handful of promising high growth opportunities through a careful and responsible allocation of capital. I’m going to focus my remarks on these opportunities.

Let me begin with IDT Energy, since we began this business, IDT Energy has operated exclusively in New York state. Our rapid growth has made us the largest independent residential energy supply company in New York, serving over 360,000 meters in virtually every territory in the state.

In the third quarter, we began testing operations and marketing and select utility territories in New Jersey and Pennsylvania. Many factors will determine the success of this plan geographic expansion and some of the most important ones including the particular regulatory regimes, the policies of the participating utilities and the competitive environment are not within the span of our control.

We also enrolled a small number of customers in both states. Revenues from these new customers will begin in Q4 but we’re likely not be impactful immediately. Also bear in mind that any sustain effort to build a customer base until significant customer acquisition costs and gross margin pressure. Keeping all this in mind, I do believe there is tremendous potential for IDT to grow our business outside of New York. Perhaps the most encouraging development at IDT over the past quarters has been the turnaround at IDT Telecom.

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