IDT (IDT) Q4 2009 earnings summary

Executive summary

• FY09 turnaround actions narrowed operations toward telecommunications and energy, cut company-wide SG&A nearly 30% and reduced the operating loss by over 50% YoY; Q4 generated $1.8M operating income.

• Consolidated revenue was $1,538.6M, down 12.4% YoY; net loss narrowed to $155.4M from $224.3M, with $71.0M of impairment charges.

• The turnaround centered on overhead reduction, non-core disposals and funding or partnering key ventures; results reflect unusually favorable energy conditions and significant one-time charges.

Financial highlights

• FY09 revenue $1,538.6M vs $1,755.5M; operating loss $73.5M vs $162.1M; net loss $155.4M vs $224.3M.

• SG&A fell 29.8% to $293.7M from $418.2M; direct costs declined 14.7% to $1,173.6M.

• FY09 continuing-operations loss was $107.0M; discontinued operations contributed a $48.5M loss, including $34.3M on the debt-portfolio sale.

• Q4 FY09 operating income was $1.8M; quarterly net income was $7.2M, including a $16.0M reversal related to federal tax interest.

Outlook and guidance

• FY10 results expected to track underlying business performance more closely as impairment and restructuring charges decline materially from FY09.

• FY10 capital expenditures forecast at $7.5M-$12.5M, funded primarily from cash, cash equivalents and marketable securities on hand.

• Liquidity at July 31, 2009, together with expected operations, was projected to cover working capital, capex and segment cash deficits for at least 12 months, subject to operating and collection assumptions.

• Energy margins and customer growth were not expected to sustain FY09 levels; positive net meter additions were expected in H1 FY10, below H1 FY09 growth.

• A shale-oil pilot test was planned for late 2010; commercial potential remains dependent on technical results, approvals and lease conversion.