(COMTEX) B: IDT Reports Record Third Quarter FY 99 Results Company Po
B: IDT Reports Record Third Quarter FY 99 Results Company Posts Record $191.8
Million in Revenues; EBITDA of $11.6 Million; Strong Gross Margins
HACKENSACK, N.J. (June 3) BUSINESS WIRE -June 3, 1999-- Third Quarter
Highlights - Q399 Consolidated Revenues up 120.1% from Q398, up
19.3%
quarter-over-quarter - EBITDA Up 59.8% From Q398, up 9.6%
quarter-over-quarter - Continued Strong Demand in Wholesale and
Retail Businesses - Improvement in Both Wholesale and Retail Margins
IDT Corporation (NASDAQ: IDTC) today reported record revenues of
$191.8 million for the third quarter ended April 30, 1999, a 120.1%
increase over same period year-ago revenues of $87.1 million. EBITDA
for the third quarter was $11.6 million, or $0.32 per share on a
diluted basis, a 59.7% increase on a gross basis over same quarter
year-ago EBITDA of $7.3 million, or $0.27 per diluted share. Net income
for the quarter was $2.1 million or $0.06 per diluted share as compared
with the same quarter year-ago net income of $4.8 million or $0.18 per
diluted share. EPS was negatively impacted by a higher than usual
effective tax rate for GAAP reporting purposes, which reduced EPS by
one cent from $0.07 per share. The Company had no cash tax liability
for the quarter, and continues to have over $8.0 million in tax-loss
carry-forwards to offset future cash tax liabilities.
On a quarter-to-quarter basis, revenues were up an impressive 19.3% to
$191.8 million from $160.7 million in the prior quarter. EBITDA in the
third quarter increased 11.6% sequentially to $11.6 million or $0.33
per diluted share as compared to $10.4 million or $0.29 per diluted
share in the prior quarter. Net income for the quarter was $2.3
million, or $0.06 per diluted share as compared to the prior quarter's
net income of $2.1 million, or $0.06 per share.
"I am very proud of the growth in our core businesses, particularly
the acceleration of growth in our carrier business which posted results
well in excess of our internal targets," said Howard Jonas, Chairman
and CEO of IDT. "We continue to see very strong demand across both our
wholesale and retail divisions."
This past quarter, IDT continued its expansion efforts throughout
Europe. European Telecom revenues as a whole increased three-fold
compared with last quarter, with over $12 million in revenues for the
third quarter. In addition, the United Kingdom, as the Company's hub
for European operations, continues to demonstrate explosive growth in
both retail and carrier efforts.
"Our continued focus on network investment is an integral part of our
business plan, and should provide us with a platform for continued
strong growth and increased market share in both wholesale and retail
markets," noted Jim Courter, IDT's President & Vice Chairman. "We plan
to replicate our UK business model to lead our expansion throughout
Europe."
IDT's Paris operations were launched this past quarter, and are
beginning to show solid growth. Through the recent acquisition of Orion
Telekom BV, IDT is currently launching Netherlands-based operations. In
addition, operations should be underway shortly in Germany and Austria,
with other European countries to follow. TELECOMMUNICATIONS SERVICES
IDT's core telecommunications business continued its strong pace of
growth during the third quarter. Continued network investment is
allowing the Company's wholesale and retail businesses to enhance their
competitive position in the marketplace. During the third quarter,
IDT's network facilities were successfully provisioned on several new
routes, allowing greater penetration for both carrier and retail
traffic to these new markets. Today, IDT maintains approximately 60
operating and/or terminating agreements with traditional (PTT) and
competitive carriers, allowing for termination of traffic "on-net" in
approximately 40 countries. By aggressively negotiating additional
operating and terminating agreements, IDT can maintain a competitive
advantage in the wholesale market, and will continue to serve as a
major source of capacity for over 150 domestic and foreign carrier
customers, including 16 of the top 25 global Telecom carriers.
"We are very proud of the quality of our carrier customer base, which
now includes more of the top-tier global carriers and RBOC's," said Hal
Brecher, Chief Operating Officer of IDT. "We will continue to pursue
relationships with major carriers worldwide as we build-out and
optimize our global network facilities."
Telecom revenues of $179.2 million for the quarter increased 126.7%
over same period year-ago telecom revenues of $79.0 million, and were
up 20.1% from $149.2 million reported last quarter. Telecom gross
margins remained strong at 19.9% for the quarter, in-line with last
quarter despite an accelerated revenue growth rate. Telecom minutes of
use grew to approximately 806 million minutes for the quarter, a 263%
increase over 222 million minutes of use in the same quarter last year,
and an 18% increase over the prior quarter's 685 million minutes.
CARRIER
IDT's carrier business posted impressive results, with $75.4 million
in total revenues for the quarter, a gain of 69.9% over the same period
last year, and up 37.5% from last quarter. While managing impressive
top-line results, the Carrier group increased gross margins by 10 basis
points, ending the quarter with 15.6% gross margins, compared with
15.5% last quarter.
The Carrier division bolstered its interconnect agreements with
foreign PTT's and other dominant carriers across the world during the
quarter, booking a greater volume of traffic originating in foreign
countries. In addition, new agreements with carriers in the Near/Far
East and Africa has allowed the Company to increase its revenues on
these high revenue-per-minute/high-margin routes. Through the efforts
of Carrier head Geoff Rochwarger, SVP of Telecom, and several senior
staff members who joined IDT during the first quarter, the Company has
been working effectively toward building out its global infrastructure,
particularly in Europe. Global network expansion is under the direction
of Yoav Krill, formerly President of Bezeq Globe Ltd., together with a
team of industry veterans including: Sol Lawner, a 28-year industry
veteran from MCI WorldCom (NASDAQ: WCOM) and Sprint (NYSE: FON);
Arcangelo Arduini, a 25-year veteran from Sprint, US Telephone and GTE;
and Maria Shiao, who joined IDT from AT&T's (NYSE: T) European offices
to lead the Company's expansion efforts into France. We expect
continued penetration in Europe to be a major source of carrier traffic
going forward, allowing the Company to further optimize network
facilities through better balance of traffic. This will serve to
complement the strong traffic load originating in North and South
America that terminates across Europe through our Network Operations
Center (NOC) in the United Kingdom. RETAIL
IDT's retail division continues to sustain very strong sales levels,
validating our long-term positive views of this market. In particular,
the Company's prepaid business continues to be a strong source of high
margin business, allowing the Company to augment its carrier business
with higher-margin retail traffic. In addition, prepaid calling allows
for an efficient and targeted way to build traffic on specific routes
where IDT maintains and builds network facilities, through marketing
"destination-specific" cards.
One of the company's most valuable assets is its calling card
distribution channel that enables penetration into over 75,000 retail
outlets across the country. Controlling the distribution, and all other
facets of the prepaid calling business from the debit card platform to
the graphic art on the cards, allows the Company to quickly and
aggressively grow traffic on targeted routes where it has negotiated
favorable operating and terminating agreements. For example, the
Company's popular Dominicall card, with an aggressive rate structure
for calls to the Dominican Republic, complements the Company's core
strength in the wholesale market to the Dominican Republic. In
addition, The Exclusiva Puerto Rico card was introduced in Puerto Rico
this quarter, targeting calls to other parts of Latin America from
Puerto Rico. The Company has an extensive line of cards geared toward
individual states, that now focuses on 17 different states and
demographically targets specific international calling patterns from
each state. IDT's state cards include New York, Washington, D.C.,
Illinois, Florida, North Carolina, and Nevada, among others. The
expanding mix of retail business allows IDT to further enhance its
overall Telecom margins, and allow for further network optimization
through greater balancing of both retail and carrier traffic.
For the third quarter, IDT's retail division posted a record $98.8
million in revenues. For the quarter, prepaid calling revenue was up an
impressive 255.6% over the same period last year, and a strong 11.5%
quarter-over-quarter. With the expansion of the Company's network
facilities, gross margins on IDT-branded calling cards increased by 120
basis points during the third quarter, to 26.9% for Q3, up from 25.7%
during the second quarter of this year. INTERNET
The Company has recently expanded its Internet division to offer a
more diverse suite of services. In addition, IDT recently launched
Nuestra Voz, the nation's first pre-paid bilingual Internet service. By
leveraging IDT's top-rated Internet backbone together with its highly
successful nationwide calling card distribution network, Nuestra Voz
targets the domestic Hispanic community with user-friendly, prepaid
bilingual Internet access. In addition, it further enhances the strong
IDT brand-name in the Hispanic community, serving a greater array of
communications needs. Nuestra Voz offers prepaid Internet access at the
unprecedented price point of $9.95 per month, and allows even those
computer owners without credit cards to enjoy all the Internet has to
offer. With relatively low customer acquisition costs, the Company
expects Nuestra Voz to be a major driver of growth for the Internet
division as a whole, and for the dial-up business in particular.
IDT's Internet division reported revenues of $4.2 million, just below
the prior quarter's revenues of $4.3 million, and a 19% decrease from
$5.2 million in the same quarter last year. FINANCIAL DETAILS
Gross margins for the third quarter were up 50 basis points to 21.7%
as compared to 21.2% for the prior quarter. Selling, General &
Administrative expenses for the quarter were $30.0 million as compared
to the same quarter year-ago SG&A of $20.3 million, and SG&A of $23.8
million last quarter. As a percentage of revenues, SG&A was 15.6% for
the quarter, up 80 basis points over the prior quarter of 14.8%, and
down from the 23.4% reported in the same quarter last year. The
increase in SG&A was primarily attributable to increased staffing at
our Network Operations Centers in the U.S. and UK, additional customer
service personnel, and increased selling expenses related to the
marketing of retail services in Europe. The Company feels the staffing
additions were necessary to facilitate and support continued revenue
growth, particularly in Europe.
EBITDA margins for the third quarter were 6.5% as compared to 11.4% in
the prior quarter. Operating margins were 2.5%, compared with 2.6% in
the prior quarter. Depreciation and amortization was $6.9 million for
the quarter, compared with $2.8 million in the third quarter last year,
and $6.3 million last quarter. As a percentage of revenues,
depreciation was 3.6% of revenues for the quarter as compared to 3.2%
in the same quarter year-ago, and 3.9% for the second quarter this
year. BALANCE SHEET
The Company finished the quarter with a strong cash position of $102
million, which it believes is sufficient to fund current and future
capital expenditures. Shares used to calculate diluted earnings per
share for the third quarter were 35.7 million.
Subsequent to the quarter-end, on May 11, 1999, IDT consummated the
tender offer for its 8.75% Senior Notes due 2006. To fund the tender,
and for future capital expenditures and working capital needs, the
Company secured and closed a $150 million credit facility. The facility
has been successfully syndicated by the administrative agent. The
Company believes it is the first Emerging Multinational Carrier to
successfully complete a syndicated bank facility.
IDT CORPORATION
Selected Consolidated Financial and Operating Data
NINE MONTHS ENDED
04-30-99 04-30-98
---------- ----------
STATEMENT OF OPERATIONS DATA
Revenues $485,769,653 $212,815,337
Costs and expenses:
Direct cost of revenues 377,848,927 151,814,495
Selling,general
and administrative 70,771,839 44,050,129
Depreciation and
amortization 18,637,001 6,553,165
----------- -----------
Total costs and expenses 467,257,767 202,417,789
Income from operations 18,511,886 10,397,548
Income and other (net) (9,141) (445,587)
----------- -----------
Income before provision for
income taxes and minority
interest 18,502,745 9,951,961
Provision for income taxes 6,896,976 0
Minority interest expense 2,604,775 0
----------- -----------
Net income $9,000,994 $9,951,961
=========== ===========
EBITDA $37,148,887 $16,950,713
Net income per share (diluted) $0.25 $0.32
Weighted average no. of shares
used in calculation of
diluted EPS 35,404,696 30,808,692
Net income per share (basic) $0.27 $0.36
Weighted average no. of shares
used in calculation of
basic EPS 33,431,628 27,528,325
THREE MONTHS ENDED
04-30-99 04-30-98
STATEMENT OF OPERATIONS DATA
Revenues $191,750,746 $87,111,571
Costs and expenses:
Direct cost of revenues 150,183,148 59,504,684
Selling,general
and administrative 29,965,754 20,343,714
Depreciation and
amortization 6,901,812 2,765,592
----------- -----------
Total cost and expenses 187,050,714 82,613,990
Income from operations 4,700,032 4,497,581
Income and other (net) (152,642) 337,806
----------- -----------
Income before provision for
income taxes and minority
interest 4,547,390 4,835,387
Provision for income taxes 2,071,196 0
Minority interest expense 419,616 0
----------- -----------
Net income $2,056,578 $4,835,387
=========== ===========
EBITDA $11,601,844 $7,263,173
Net income per share (diluted) $0.06 $0.15
Weighted average no. of shares
used in calculation of
diluted EPS 35,730,964 32,693,177
Net income per share (basic) $0.06 $0.17
Weighted average no. of shares
used in calculation of
basic EPS 33,648,800 28,881,382
BALANCE SHEET DATA:
04-30-99 01-31-99
-------- --------
Cash, cash equivalents and
marketable securities $102,940,841 $139,906,666
Fixed assets (net) $103,783,372 $100,059,173
Total assets $462,456,006 $450,591,001
Total stockholders' equity $257,541,034 $247,730,515
IDT CORPORATION
IDT is a leading emerging multinational carrier that combines its
position as an international telecommunications operator and its
experience as an Internet service provider to provide a broad range of
telecommunications services to its wholesale and retail customers
worldwide. The company provides its customers with integrated and
competitively priced international and domestic long distance, pre-paid
calling cards, Internet access and, through its Net2Phone product
offerings, Internet telephony services.
Except for historical information, all of the expectations and
assumptions contained in the foregoing are forward-looking statements
involving risks and uncertainties. These statements refer to our plans
to implement our growth strategy, improve our financial performance,
expand our infrastructure, develop new products and services, expand
our customer base and enter international markets. The forward looking
statements also include our expectations concerning factors affecting
the markets for our products, including the demand for long distance
telecommunications, and Internet access services. These forward looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially from the results that we
anticipate. These risks and uncertainties include, but are not limited
to, those risks discussed in this release. In addition to the factors
specifically noted in the forward looking statements, other important
factors that could result in those differences include (a) general
economic conditions in the telecommunications and Internet markets,
including inflation, recession, interest rates, and other economic
factors; (b) casualty to or other disruption of our facilities and
operations; and (c) other factors that generally affect the business of
telecommunications, Internet and other communications companies. We
assume no obligation to update these forward looking statements or to
update the reasons actual results could differ materially from the
results anticipated in the forward looking statements.
-0- mj/ny* nmb
CONTACT: IDT Corporation, Hackensack
David Brainson, Finance
201/928-4363
KEYWORD: NEW JERSEY
INDUSTRY KEYWORD: TELECOMMUNICATIONS COMPUTERS/ELECTRONICS COMED
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