IDT Energy Sees Net Customer Churn Continue on Paused Expansion

IDT Energy reported a third consecutive quarter of net customer attrition, attributed to a pause in expansion to new markets and service areas.

IDT Energy was serving 475,000 meters as of June 30, 2013, versus 485,000 as of March 31, 2013 and 495,000 a year ago.

The net decline of 10,000 meters since March 31, 2013 narrows the net loss of 17,000 meters from December 31, 2012 to March 31, 2013.

Gross meter acquisitions actually increased to 71,000 in the three months ended June 30, 2013, versus 66,000 in the three months ended March 31, 2013. But gross meter additions were down versus gross additions in the year-ago period, attributed to the lack of geographic expansion into new territories in recent quarters.

The only new territory into which IDT Energy has recently entered has been Commonwealth Edison, which had been exclusively reported by Matters in June. However, due to market conditions, IDT Energy does not expect significant customer growth at ComEd in the near term, and is testing different products in the service area.

IDT Energy continues to focus on expanding to new service areas within Pennsylvania, Maryland, and the District of Columbia, with expansion to new states Massachusetts and Connecticut also a goal. IDT Energy is waiting for the start of Pepco-DC purchase of receivables on October 1 for entry into that market.

IDT Energy's customer count consisted of 314,000 electric meters and 161,000 natural gas meters as of June 30, 2013.

While the number of meters served decreased, Residential Customer Equivalents increased, from serving higher-usage residential customers in Pennsylvania and Maryland. RCEs were 357,000 as of June 30 2013, versus 329,000 as of March 31, 2013.

Average monthly churn was 6.3% in 2Q13, unchanged from the prior quarter and a decrease from the 6.6% rate in 2Q12.

Gross profit decreased to $10.0 million in 2Q13 from $11.6 million in 2Q12, driven primarily by a decline in margin per kWh sold.

IDT Energy's SG&A expense in 2Q13 decreased 10.8% year over year to $9.4 million compared to $10.6 million in the year ago period. Customer acquisition costs, severance expense and stock-based compensation expense all decreased, partially offset by increases in billing and purchase of receivable fees.

EBITDA and income from operations decreased to $0.5 million in 2Q13, compared to $1.1 million 2Q12. The decrease primarily reflected the decrease in gross margin on sales of electricity, augmented by the decrease in SG&A expense.