IDT Energy Sees Net Customer Churn as Acquisition Efforts Suspended During, After Hurricane Sandy

IDT Energy saw a net decline in customers from September 30, 2012 to December 31, 2012, resulting from the suspension of customer acquisitions during and in the immediate aftermath of Hurricane Sandy.

From September 30, 2012 to December 31, 2012, IDT Energy saw its customer count decrease by a net of 21,000 meters. This compares to net growth of 28,000 meters from June 30, 2012 to September 30, 2012.

IDT Energy reported that it had suspended customer acquisition activities during Hurricane Sandy and the aftermath. As a result, gross meter additions during the three months ended December 31, 2012 fell to 79,000, compared to 118,000 in the prior sequential quarter and 89,000 in the year-ago quarter.

IDT Energy also said that customer acquisition was slower in Maryland, which as previously reported IDT Energy entered during the third quarter of 2012, compared to the Pennsylvania territories the company had entered recently in the year-ago quarter.

For the full year 2012, IDT Energy acquired 403,000 gross meters compared to 302,000 in 2011.

As of December 31, 2012, IDT Energy was serving 502,000 meters, down from 523,000 as of September 30, 2012 but up from 438,000 a year ago.

Electric meters as of December 31, 2012 were 331,000, versus 343,000 as of September 30, 2012 and 254,000 a year ago.

Natural gas meters as of December 31, 2012 were 171,000, versus 180,000 as of September 30, 2012 and 184,000 a year ago

Total IDT Energy Residential Customer Equivalents were 312,000 as of December 31, 2012, versus 322,000 as of September 30, 2012, and 248,000 a year ago.

IDT Energy reported that at year-end, it had approximately 30,000 green energy customers enrolled, versus virtually no such customers a year ago.

IDT Energy cited Illinois, Washington, D.C., and Connecticut as markets it plans to enter by the end of 2013, with the ComEd territory in Illinois likely the first new expansion.

Average monthly churn was 6.8% in 4Q12, unchanged from 4Q11 and an increase from 6.6% in 3Q12.

IDT Energy generated $7.9 million in income from operations during 4Q12, compared to $1.4 million in 4Q11.

Gross profit increased to $18.5 million in 4Q12, compared to $10.7 million in 4Q11, driven primarily by the increase in kWh sold, which offset compressed unit margins for electricity.

IDT Energy said during the three months ended December 31, 2012, gross margin per kilowatt-hour sold decreased slightly reflecting a slight increase in per kilowatt-hour cost and a slight decrease in revenue per kilowatt-hour sold as it lowered its margin to facilitate customer acquisition in Hurricane Sandy's aftermath.

On the gas side, gross profit per therm sold increased significantly as wholesale costs declined faster than retail pricing. The return of more normalized weather earlier in the winter compared to the year ago period more than offset the declines in meters and RCEs served.