IDT Energy Customer Growth Accelerates

IDT Energy recorded a significant acceleration in its customer growth rate during the three months ended March 31, 2012.

IDT Energy was serving 475,000 meters as of March 31, 2012, versus 438,000 meters as of December 31, 2011, and 377,000 a year ago.

The net growth 37,000 meters from December 31, 2011 to March 31, 2012 is up from the growth of 8,000 meters from September 30, 2011 to December 31, 2011, and is in line with the growth seen earlier in 2011.

Electricity meters as of March 31, 2012 were 289,000, versus 254,000 as of December 31, 2011 and 210,000 a year ago.

Natural gas meters were 186,000 as of March 31, 2012, versus 184,000 as of December 31, 2011 and 167,000 a year ago.

IDT Energy's residential customer equivalents (RCEs) increased to approximately 258,000 as of March 31, 2012, versus 248,000 as of December 31, 2011 and 208,000 a year ago.

During an earnings call, executives said that IDT Energy would continue an aggressive expansion into new markets, including some 14 service areas in Pennsylvania (where IDT is currently active in several territories), Maryland, Massachusetts, Illinois, Connecticut, and the District of Columbia. However, such market entry is contingent on market conditions, including the status of POR.

IDT Energy plans to launch in Maryland this summer.

IDT Energy's income from operations for the quarter ending March 31, 2012 was $7.4 million, versus $9.9 million a year ago, on higher customer acquisition costs.

IDT Energy acquired 108,000 gross new meters in the three months ended March 31, 2012 compared to 49,000 in the year-ago quarter. During the quarter ended March 31, 2012, IDT Energy invested $2.7 million in customer acquisition beyond the level of investment needed to replace meters lost to churn.

Gross profit was $18.0 million for the quarter, versus $17.2 million a year ago. Executives said that electric gross margin increased on customer growth, which offset a decline in per unit margins, as margins were reduced to facilitate customer acquisition and reduce churn. Natural gas per unit margins increased due to lower supply costs, though overall natural gas gross profit was relatively flat due to lower volumes from the mild weather.

IDT Energy's average monthly churn was 6.4% in the three months ended March 31, 2012, a decrease from the 6.8% average monthly churn rate in the three months ended December 31, 2011, but an increase compared to the 4.6% monthly churn in the three months ended March 31, 2011. Year over year, the increase in churn primarily resulted from both the increase in the rate of gross customer acquisitions as new customers tend to have higher initial churn rates and increased competition in some key utility markets, IDT Energy said.

IDT Energy's revenues during the first quarter of 2012 were $57.5 million, compared to $63.4 million in the year ago quarter.