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IDT Energy Reports Higher Fourth Quarter Income, Starts Growing Book Again

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October 15, 2010

IDT Energy recorded higher income from operations for the fourth quarter of 2010 (ending July 31, 2010) of $5.6 million, up from $5.0 million a year ago, on higher electric revenues.

For fiscal 2010, income from operations was lower at $37.8 million versus $45.4 million a year ago.

Gross profit at IDT Energy in the fourth quarter was $11.2 million, up from $9.4 million a year ago.

Gross margin percentage was 24.0% in the fourth quarter of 2010, versus 25.3% in the fourth quarter of 2009, and 29.1% in the third quarter of 2010.

For fiscal 2010, gross profit was $57.8 million, versus $72.2 million a year ago. The levels of gross margin obtained throughout fiscal 2010 may not be sustainable going forward, IDT said.

Total meters served as of July 31, 2010 were approximately 369,000, versus 364,000 as of April 30, 2010 and 397,000 as of July 31, 2009. The sequential increase is the first net growth since IDT conducted its previously reported sales restructuring efforts to limit marketing to higher quality customers and reduce churn.

As of July 31, 2010, IDT Energy served approximately 210,000 electric meters compared to 205,000 as of April 30, 2010 and 228,000 as of July 31, 2009.

IDT Energy served approximately 159,000 gas meters as of July 31, 2010, even with the April 30, 2010 total, and down from the 169,000 served as of July 31, 2009.

The sequential increase in meters reflects the impact of customer acquisitions in new markets. IDT began testing offerings in New Jersey and Pennsylvania in 2010 and said that it should complete its evaluation of these markets, and whether to pursue full market entry, during fiscal 2011.

While gross new customers additions fell year over year as a result of the sales restructuring undertaken in the fourth quarter of fiscal 2009, the average net churn rate also declined from 4.9% in fiscal 2009 to 3.1% in fiscal 2010.

SG&A expense (including bad debt expense) for the fourth quarter of 2010 increased to $5.5 million, up from $4.3 million a year ago. The year over year increase was primarily due to the impact of customer acquisition programs in New Jersey and Pennsylvania.

For fiscal 2010, SG&A expense (including bad debt expense) decreased to $19.8 million, from $25.7 million in fiscal 2009. The reduction was primarily due to lower customer acquisition costs and POR fees reflecting, in part, the lower pace of gross customer acquisitions following the sales and marketing restructuring effort. IDT Energy anticipates that its SG&A expense will increase in fiscal 2011 as a result of continuing customer acquisition programs in new markets.

IDT Energy revenues were $46.5 million for the fourth quarter of 2010, up from $37.0 million a year ago. Electric revenue of $40.8 million increased 26.9% compared to 4Q09. Gas revenue in Q4 increased to $5.7 million, 17.4% higher than in 4Q09.

For the year fiscal 2010, revenue was $201.4 million, down from $264.7 million a year ago. For fiscal 2010, electric revenue was $132.1 million, a 15.9% decline compared to fiscal 2009. For fiscal 2010, gas revenues were $69.2 million, a 35.6% decline compared to fiscal 2009

IDT said that it recently signed an extension of its preferred supplier agreement with BP for another three years, providing it with favorable rates for electric and gas supply, and freeing up cash on its balance sheet.

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