IDT Energy Sees Loss of 36,000 Meters in Q1

IDT Energy saw a net decline of 36,000 meters from December 31, 2013 to March 31, 2014, it disclosed in reporting earnings this week.

While driven in part by the polar vortex, the net churn is not significantly higher than the net decline of 29,000 meters from September 30, 2013 to December 31, 2013, where the loss was attributed to slower gross additions from the lack of new geographic entry during that prior quarter (geographic expansion was also stagnant in Q1 2014).

Average monthly churn increased to 7.2% in 1Q14 from 6.3% during 4Q13 due to the polar vortex pricing.

Some of the churn impacts of the polar vortex may not become visible in meter count until the second quarter, due to the lag in billing and then meter reading to effectuate any vortex-driven switches.

As of March 31, 2014, IDT Energy was serving 391,000 meters, versus 427,000 as of December 31, 2013, and 485,000 a year ago.

As of March 31, 2014, IDT Energy was serving 256,000 electric meters, and 135,000 gas meters.

RCEs as of March 31, 2014 were 288,000 versus 315,000 as of December 31, 2013 and 329,000 a year ago.

IDT Energy management expects customer acquisitions to "improve significantly" over the remainder of the year. IDT Energy reported that its customer acquisition program in the ComEd territory, which as previously reported the company had entered on a pilot basis, has gained traction.

IDT Energy also received approval to enter new states or service areas in existing states, and expects to enter new natural gas utility territories in Pennsylvania, Maryland and the District of Columbia by year-end.

IDT Energy also highlighted the Massachusetts electric market as a target for expansion, given the introduction of POR.

Apart from geographic expansion, IDT Energy sees an opportunity to return to customer growth from a thinning of competitors.

"The difficult operating environment will winnow out weak operators who are not able to adapt to the needs of a wary customer base, leaving the remaining companies with the opportunity to gain more market share," said Michael Stein, Senior Vice President of Operations at IDT Energy parent Genie Energy.

IDT Energy generated an Adjusted EBITDA loss of $0.8 million in the three months ended March 31, 2014, compared to Adjusted EBITDA of $9.1 million in the year-ago quarter

The loss was primarily attributed to reduced gross profit, as IDT Energy provided $3.5 million in rebates to customers due to volatile wholesale prices.

Gross profit on electric sales fell to $8.8 million from $10.3 million in the year-ago quarter. Gross margin on electric sales decreased to 9.1% in 1Q14 from 19.0% in the year-ago quarter