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IDT Energy Continues Customer Growth, Posts Loss on Acquisition Costs, Tax Accrual
October 7, 2011
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IDT Energy continued to post net customer growth for the quarter ending July 31 (fourth fiscal quarter of 2011), with a net gain of 27,000 meters, its parent disclosed in reporting earnings yesterday.
IDT Energy meters were 405,000 as of July 31, 2011, versus 378,000 meters as of April 30, 2011, and 369,000 a year ago.
The net growth of 27,000 meters from the end of April to the end of July compares favorably to the growth of 5,000 meters from the end of January to the end of April.
Electric meters as of July 31, 2011 were 232,000, compared to 210,000 as of both April 30, 2011 and July 31, 2010. Gas meters as of July 31, 2011 were 173,000, versus 168,000 as of April 30, 2011 and 159,000 as of July 31, 2010.
In terms of Residential Customer Equivalents, IDT Energy recorded 235,000 RCEs as of July 31, 2011, versus 213,000 as of April 30, 2011 and 205,000 a year ago.
Although it was offset by gross additions, customer churn increased to 5.2% in the quarter ending July 31, 2011 compared to 3.5% in the year-ago quarter, reflecting, in part, the increased proportion of new customers resulting from accelerated rates of customer acquisition. New customers typically churn more frequently than long term customers, IDT said.
For the quarter ending July 31, 2011, IDT Energy recorded a loss from operations of $300,000, versus year-ago income of $5.6 million. Nearly all of the decline was from higher selling, general & administrative expense. Higher SG&A expenses reflected accruals related to ongoing tax audits as well as higher customer acquisition costs related to expansion.
Gross profit for the quarter ending July 31, 2011 was down slightly at $11.0 million for the quarter, versus $11.2 million a year ago, and down significantly from the $16.8 million recorded in the quarter ending April 30, 2011.
Lower gross profit resulted from two factors. First, IDT accepted lower margins during heat-driven price spikes during the quarter to keep its pricing in line with competing suppliers. Because IDT Energy procures its supplies primarily in the spot markets, rapid escalations in commodity price tend to make it less competitive with suppliers who hedge forward significant portions of their supplies.
Additionally, IDT Energy offered lower rates and accepted lower margins to facilitate customer acquisition and expansion.
The gross margin percentage at IDT Energy was 23.8% in the quarter ending July 31, 2011, versus 24.0% a year ago.
Quarterly revenue was $46.4 million, versus $46.5 million a year ago.
For the full fiscal year 2011, IDT Energy recorded income from operations of $22.5 million, versus $37.8 million a year ago. Annual gross profit was $53.8 million, versus $57.8 million a year ago.
The annual declines reflect increased competition, and the impact of expansion into new territories in New Jersey and Pennsylvania, where gross margin was sacrificed in an effort to facilitate new customer acquisitions.
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