IDT Corporation
Q1 2012 Earnings Call Transcript

Published: 13 Dec 2011

[Bill Ulrey:]

Welcome to IDT Corporation's First Quarter Fiscal 2012 Earnings Presentation. This is Bill Ulrey, IDT's Investor Relations Officer. In this presentation, IDT's Chairman and Chief Executive Officer, Howard Jonas; and Chief Operating Officer, Samuel Jonas, will discuss IDT's financial and operational results for the 3 months ended October 31, 2011. Both this audio file consisting of management's prerecorded remarks and our earnings release are available on the Investor Relations page of the IDT Corporation website, www.idt.net. The earnings release has also been filed on a Form 8-K with the SEC. If you have any questions for management related to the announced results after listening to management's presentation and reading the company's earnings release, please e-mail them to us at the following address

[Howard S. Jonas:]

Thank you, Bill. On October 28, IDT completed the spinoff of Genie Energy to our shareholders. The spinoff reflects years of effort here at IDT. We built an entire new and exciting business segment from scratch, then we separated from IDT where its long-term potential for shareholders could best be realized. We have generated value for our shareholders in various ways during our history. From the IPO of Net2Phone to selling IDT Entertainment to paying dividends and now spinning off Genie Energy, we find the opportunities to take the bold moves necessary to realize value. With Genie now standing on its own, IDT offers a more focused investment opportunity. There is a remarkable transformation going on within IDT Telecom that holds tremendous promise. And now, we can also shine a brighter light on Fabrix surge and our Spectrum licenses and our Net2Phone IP, all of which have upside potential. Samuel Jonas, our Chief Operating Officer, will be going over the quarter's financial results with you shortly, but I want to point out the profitability of the first quarter of fiscal 2012 was impacted by the $10 million settlement of an outstanding legal claim by T-Mobile resulting from a dispute over a wholesale supply contract. Also in the quarter, IDT paid fiscal 2011 performance compensation to certain employees which were accrued in the course of last year totaling $5.7 million. That payment, along with the T-Mobile settlement, represented about a $16 million reduction in cash flow from operations. Had it not been for these items, our cash from operations would have been positive on the quarter. In light of these results and our continued confidence in the profitability of our operating businesses, earlier today, IDT's Board of Directors declared a dividend of $0.13, slightly under $3 million for the first quarter. This reflects our determination to continue to return value to shareholders as the company's performance, financial resources and strategic situation permits. Now I'd like to talk at a high level about IDT Telecom. There are 2 competing storylines within our core businesses. One is the decline of some of the lines of business traditionally associated with IDT Telecom, our Consumer Phone Service businesses, traditional prepaid calling card sold in independent retail stores and bodegas, and our cable telephony businesses are in secular decline. Here, our strategy is simple

[Samuel Jonas:]

Thank you. IDT's revenues for the first quarter of fiscal 2012 were $376.8 million, a 21.6% increase year-over-year and a 4.3% increase quarter-over-quarter. 98% of our revenue is generated by the Telecom Platform Services segment or TPS within IDT Telecom. Therefore, I will focus my remarks mostly on the results at TPS. Minutes of use at TPS increased to 7.3 billion minutes for the quarter, a 20% increase year-over-year and a 4.5% increase quarter-over-quarter. Both the year-over-year and quarter-over-quarter growth were led by our Wholesale Terminations business. TPS revenue for the quarter totaled $369.1 million, a 22.9% increase year-over-year and a 4.5% increase quarter-over-quarter. Following the spin-off of Genie Energy, we have broken down TPS into 4 categories that share certain common elements in order to better describe our operations and results