IDT Energy Reports Earnings, Expects Continued Churn in N.Y.

IDT Energy posted income from operations of $8.8 million for the three months ending October 31, 2010 (first fiscal quarter of 2011), down from $10.5 million a year ago, on lower gross margins.

Gross margins were reduced from higher electric costs which outpaced retail price increases, increased competition in New York, and expansion into New Jersey and Pennsylvania, where margin was sacrificed to facilitate customer acquisitions.

IDT Energy served approximately 365,000 meters as of October 31, 2010, down slightly from 369,000 as of July 31, 2010 and 372,000 a year ago.

A breakdown of meters by commodity follows:

As of Oct. 31, 2010 July 31, 2010 Oct. 31, 2009
Electric 207,000 210,000 213,000
Gas 158,000 159,000 159,000

The 4,000 net meter attrition versus July 31, 2010 compares to a net gain of 5,000 meters from April 30, 2010 to July 31, 2010.

Gross meter acquisitions in the quarter ending October 31, 2010 were 42,000 compared to 13,600 in the same period a year ago.

IDT Energy has started reporting customers on a Residential Customer Equivalent (RCE) basis this quarter, which it said is more representative of its business. IDT defines an RCE as a natural gas customer with annual consumption of 100 MMBtus or an electricity customer with annual consumption of 10 MWhrs.

RCE totals were:

As of Oct. 31, 2010 July 31, 2010 Oct. 31, 2009
Electric 129,169 123,044 95,175
Gas 87,609 89,047 86,291
Total 216,778 212,091 181,466

The 20% year-over-year growth in RCEs reflects a gradual shift in IDT's customer base to customers with higher electric consumption per meter as a result of targeted customer acquisition programs, IDT said.

"Looking ahead, IDT Energy intends to pursue targeted customer acquisition programs in select utility territories in both New Jersey and Pennsylvania, while anticipating a continued decline in its New York State meter count as a result of intensified competition and escalating customer acquisition costs," IDT added.

Gross margin percentage for IDT Energy was 32.4% for the quarter, versus 36.3% a year ago. Gross margin percentage improved sequentially versus the 24.0% recorded for the quarter ending July 31, 2010.

Gross profit was $14.7 million for the quarter, versus $14.6 million a year ago.

Total revenues were $45.5 million for the quarter, versus $40.3 million a year ago. Electric revenues in 1Q11 were $38.7 million, an 18.0% increase compared to 1Q10 as a result of increases in both average revenue per kWh and kWh sold. Natural gas revenues in 1Q11 were $6.8 million, a 9.5% decline year over year, on lower volumes.

Selling, general and administrative expenses were $5.9 million, versus $4.1 million in the year-ago quarter, reflecting increases in customer acquisition costs incurred in New Jersey and Pennsylvania.