IDT Energy Reports Customer Growth, Reduced Margin

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March 16, 2011  

IDT Energy reversed net churn experienced in the most recent quarter and served approximately 373,000 meters as of January 31, 2011, which is the end of IDT's second fiscal quarter.

The 373,000 meters represents growth of 8,000 net meters versus the 365,000 meters served as of October 31, 2010 and also compares favorably to the year-ago total of 366,000 meters. From July 31, 2010 to October 31, 2010, IDT had recorded a net loss of 4,000 meters, and had recorded a net gain of 5,000 meters from April 30, 2010 to July 31, 2010.

As of January 31, 2011, electric meters were 211,000 (versus 207,000 as of October 31, 2010), and gas meters were 162,000 (versus 158,000 as of October 31, 2010).

As of January 31, 20111, electric Residential Customer Equivalents were 124,000 and natural gas Residential Customer Equivalents were 91,000.

Gross meter acquisitions in the second quarter of 2011 were approximately 47,000, compared to 28,000 in the same period a year ago.

The customer growth was driven by pricing strategies and acquisition efforts which reduced gross margin. IDT Energy's gross margin for the second quarter was 19.6%, down from 26.9% a year ago. Second quarter 2011 gross margin for electric sales was 17.2%, a 1,420 basis point decline year-over-year, while the gross margin for natural gas was 22.0%, a 70 basis point decline year-over-year.

A major factor for the lower margins was IDT's decision to not pass through higher costs of electricity to customers in New York, citing "aggressive" pricing by competitors there. Gross margin was also sacrificed for customer acquisitions in IDT's new markets of Pennsylvania and New Jersey, and also sacrificed to reduce customer churn.

IDT said that it is increasing its marketing efforts to attract higher usage customers and continue its favorable churn trends.

Quarterly gross profit was $11.3 million versus $16.3 million a year ago.

Income from operations was $5.4 million, down from $11.8 million a year ago.

Revenues for the quarter were $57.8 million versus $60.7 million a year ago.

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