IDT Corporation (IDT)

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IDT Corporation (IDT)

F1Q2011 Earnings Call Transcript

December 9, 2010 5:15 pm ET

Executives

Bill Ulrey – IR Officer

Howard Jonas – Chairman & CEO

Bill Pereira – CFO & Treasurer

Presentation

Bill Ulrey

Welcome to IDT Corporation’s first quarter fiscal 2011 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 October 31, 2010.

We will follow the same announcement format as in prior quarters. Both this audio file consisting of management’s pre-recorded remarks and our earning release are available on the Investor Relations page of the IDT Corporation Web site www.idt.net. The earnings release has also been filed on a Form 8-K with the SEC.

If after listening to management’s presentation and reading the company’s earnings release, you have any questions from management related to the announced results, please email them to us at the following address, invest@idt.net, no later than the close of business on Monday, December 13th. Please include your name and firm name, if applicable, in your email.

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 Web site as early as next Thursday, December 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 audio presentation or in the written Q&A, whether generic 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 reports that we file periodically with the SEC.

We assume no obligation either 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 have forecast.

In this presentation and in our written responses to questions thereafter, we may make reference to adjusted EBITDA. 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, restructuring and severance charges, and gains on settlements another net.

Adjusted EBITDA is one of several key financial metrics management uses to evaluate the operating performances of the company and its segments.

A 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 net income for the company as a whole.

Now, 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, and thank you everyone for listening and for your interest in IDT. The first quarter of IDT’s fiscal year 2011 was another strong quarter for the company and in several respects it was outstanding. Not only did we report net income of $15.6 million but we also achieved our fourth consecutive quarter of sequential revenue increases.

Unlike many companies we are improving bottom line results only by cost cutting our recent improvements have been directly related to increases in revenue and gross profit. In fact, our SG&A was virtually unchanged from the year ago quarter while our bottom line improved dramatically.

Revenues in the first quarter increased 9.2% year-over-year, and also rose sequentially to $357.4 million. We achieved that sequential revenue increase despite the fact that the three months that comprise our first quarter, August, September and October are typically relatively low level demand (inaudible) months in both the Telecom and Retail Energy businesses.

At IDT Telecom, minutes of use increased 30% year-over-year and 9% quarter-over-quarter, to 6.1 billion minutes. Year-over-year growth in minutes of use came from virtually every major line of business, helping Telecom’s revenues to increase 8.5% to $309.9 million. Revenues were also slightly higher compared to the prior quarter.

In the U.S. and elsewhere, we’re seeing a gradual continued erosion of our traditional prepaid calling card products, although at reduced rates of decline, increasingly offset by improved contributions from new products and services. I believe that trend will continue.

For example, we achieved very strong growth from our innovative Boss Revolution service and from our global reseller business this quarter. Looking ahead, we are testing international money transfer services. I believe that potentially could be a huge market for us.

At IDT Energy, we sold 4.5% more kilowatt hours of electricity this quarter, compared to the first quarter of 2010, which helped IDT Energy to increase revenues by 12.9% year-over-year. We’re continuing to acquire new customers in New Jersey and Pennsylvania, and I am cautiously optimistic we will begin to grow our aggregate customer base again during the current fiscal year.

We are growing revenues and profits organically, even as we work on a spin-off of Genie and deliver on other value building initiatives we announced there is a lot of planning, effort, and work going into the preparation and execution of these initiatives, and it’ll be very easy for management to become distracted.

But I’m very pleased by the way that both our Energy and Telecom teams, as well as corporate management have kept their focus and managed to advance these initiatives without losing any of the energy put into our operations.

Read the rest of this transcript for free on seekingalpha.com