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IDT CEO Discusses F4Q2010 Results - Earnings Call Transcript

IDT CEO Discusses F4Q2010 Results - Earnings Call Transcript

IDT Corporation (IDT)

F4Q2010 Earnings Call Transcript

October 14, 2010 5:15 pm ET


Bill Ulrey – IR

Howard Jonas – CEO & Chairman

Bill Pereira – CFO & Treasurer


Bill Ulrey

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Previous Statements by IDT
» IDT Corporation F3Q10 (Qtr End 04/30/2010) Earnings Call Transcript
» IDT Corporation F2Q10 (Qtr End 01/31/10) Earnings Call Transcript
» IDT Corporation F1Q10 (Qtr End 10/31/09) Earnings Call Transcript

Welcome to IDT Corporation's fourth quarter and full year fiscal 2010 earnings presentation. This is Bill Ulrey, IDT's Investor Relations Officer. IDT's Chairman and Chief Executive Officer, Howard Jonas, and Chief Financial Officer, Bill Pereira, will be presenting IDT’s financial and operational results for the three months and full year ended July 31st, 2010.

We will follow the same format as in prior quarters. Both this audio file consisting of management’s pre-recorded remarks and our earnings release are available on the Investor Relations page of the IDT Corporation website, The earnings release has also been filed on a Form 8-K with the SEC.

If after listening to management’s presentation and reading the Company's earnings release, you have any questions for management related to the announced results, please e-mail them to us at the following address, no later than the close of business on Monday, October 18th. Please include your name and firm name, if applicable, in your e-mail. If we can constructively answer your question, we will post your question along with your name, your firm's name, and our answer on the Investor Relations page of the IDT website as early as next Thursday, October 21st, after market close. We will also file a Form 8-K with the SEC containing the questions-and-answers.

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Any forward-looking statements made during this audio presentation or in the written Q&A, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those which we anticipate. These risks and uncertainties include, but are not limited to, specific risks and uncertainties discussed in the reports that we file periodically with the SEC.

We assume no obligation either to update any forward-looking statements that we have made or may make, or to update the factors that may cause actual results to differ materially from those that we forecast.

In this presentation, and in our written responses to questions thereafter, we may make reference to adjusted EBITDA. Adjusted EBITDA for all periods discussed during our remarks is a non-GAAP measure representing operating income or loss from operations, exclusive of depreciation and amortization, impairments, restructuring charges, gains on settlements and the other net and gain on the sale of an interest in AMSO, LLC. Adjusted EBITDA is one of several key financial metrics management uses to evaluate the operating performance of the Company and its segments.

The schedule provided in the earnings release reconciles adjusted EBITDA to the nearest corresponding GAAP measure, income from operations, for each of our segments and to both income from operations and net income for the Company as a whole.

Now, to begin the discussion of our financial and operating results, here is IDT Corporation's Chairman and CEO, Howard Jonas.

Howard Jonas

Thank you, Bill. Good afternoon to everyone. Welcome to management’s discussion of our fourth and full year fiscal 2010 results. I want to begin by again congratulating our employees and management on the Company’s turnaround, which is now complete. We are not only a much leaner and more efficient company as a result of their efforts, we are also more intensely focused and executing with greater energy and enthusiasm than I’ve seen years.

This year, the turnaround program greatly improved our bottom line. Last year, fiscal 2009, our net loss was $155.4 million. This year we earned $20.3 million, $0.94 per diluted share while continuing to invest in several promising initiatives, and, most importantly, I am confident that we are poised to do even better in the years ahead.

IDT’s CFO, Bill Pereira will provide an analysis of our financial results for the quarter and our year following my remarks. As in past quarters, I will focus on the bigger picture and our overall growth strategy. Let me start with our core businesses, Telecom and Energy.

Some investors and analysts wrote off our Telecom business a long time ago. They focused on the challenges we face in the prepaid calling card industry, including low barriers to entry, technical substitution, change in immigration patterns, and pervasive fraudulent advertising. All these factors continued to pressure revenues and margins for honest facilities based operators like IDT.

But they overlooked both the opportunities still available to this business and our resolve to tackle these challenges head on. The management and employees at IDT Telecom have done a terrific job confounding the nay-sayers. Excluding our Consumer Phone Service, which has been harvest mode since the UNEP regulations were overturned five year ago, we’ve managed to stabilize revenue as well as adjusted EBITDA over the past seven quarters. And while margins are under pressure and not what they were in years past, we grew our gross margin percentage sequentially throughout fiscal 2010.

I am optimistic that we will continue to grow this business and overcome the headwinds in our traditional markets. How can we do that? The same way IDT has always prospered. By identifying and developing new opportunities and bringing them to consumers better, faster, and more cheaply than our competitors.

Our Telecom business is back on track because we are leveraging our two key competitive differentiators more effectively. First, our proprietary network platform. We have long handled billions of transactions each year associated with our retail calling cards and related services. Now, the entire retail world is moving to enable transactions on mobile devices and we are adapting our platform to handle more and more different kinds of transactions everyday. Second, we continue building and more effectively leveraging our national and international distribution networks to get our expanding line of products and services into a target market around the globe and particularly into the under-served small, independent neighborhood retail stores that serve immigrant communities. We intend to continue to develop and take advantage of these two market differentiators. And I believe they are the keys to revenue growth and success in our highly competitive markets.

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