NEWARK, N.J., March 6, 2017 /PRNewswire/ -- IDT
Corporation (NYSE: IDT) reported diluted earnings per share (EPS)
of $0.04 and Non-GAAP diluted EPS* of
$0.27 on revenue of $367.6 million for the second quarter of its
fiscal year 2017, the three months ended January 31, 2017.
HIGHLIGHTS
(Results for 2Q17 compared to
2Q16)
- Revenue of $367.6 million
compared to $382.5 million;
- Income from operations of $3.1
million compared to $6.4
million;
- Adjusted EBITDA* of $9.3 million
compared to $11.7 million;
- Diluted EPS of $0.04 compared to
$0.18;
- Non-GAAP diluted EPS* of $0.27
compared to $0.39;
- IDT has declared a dividend of $0.19 per share for 2Q17 to be paid on or about
March 24, 2017.
*Throughout this release, Non-GAAP EPS, Adjusted EBITDA,
and Non-GAAP Net Income for all periods presented are Non-GAAP
measures intended to provide useful information that supplements
IDT's or the relevant segment's core results in accordance with
GAAP. Please refer to the Reconciliation of Non-GAAP
Financial Measures at the end of this release for an explanation of
these terms and their respective reconciliation to the most
directly comparable GAAP measure.
REMARKS BY SHMUEL JONAS, CEO
OF IDT CORPORATION
"We made good progress in the second quarter building, deploying
and scaling up the applications that will drive our growth going
forward. We introduced the BOSS Revolution Money app
including our flagship international money transfer service and
released a major update of the BOSS Revolution calling app
including messaging and free peer-to-peer calling. The two
apps now work in tandem to provide a seamless user experience and
convenient access to many of our consumer voice and payment
offerings. We also continued rolling out the new Boss
Revolution retailer portal across our nationwide network of stores.
This upgrade makes it much easier for retailers to sell all BOSS
Revolution products and services.
"Our National Retail Solutions (NRS) and our net2phone UCaaS
businesses are posting excellent results. NRS has increased the
number of bodegas and retailers operating its POS terminals 10-fold
over the past year, while net2phone quadrupled its customer base
during the same period.
"Financial results for the second quarter were fairly consistent
with recent trends. Year over year, our cost cutting
initiatives partially offset the impact to our bottom line
resulting from the decrease in revenue. Sequentially, we held
revenue relatively flat, while SG&A expense increased as we
stepped up investment in our growth initiatives. Going forward, we
will continue to keep a close eye on our overhead expense."
2Q17 CONSOLIDATED RESULTS
Results
(in millions,
except EPS)
|
2Q17
|
1Q17
|
2Q16
|
2Q17 -
2Q16
Change
(%/$)
|
Revenue
|
$367.6
|
$369.2
|
$382.5
|
(3.9)%
|
Direct cost of
revenue
|
$310.9
|
$313.0
|
$319.7
|
(2.8)%
|
Direct cost of
revenue as a percentage of revenue
|
84.6%
|
84.8%
|
83.6%
|
+100 BP
|
SG&A
expense
|
$47.3
|
$45.4
|
$51.1
|
(7.3)%
|
Depreciation and
amortization
|
$5.3
|
$5.3
|
$5.0
|
+6.6%
|
Income from
operations
|
$3.1
|
$5.2
|
$6.4
|
$(3.3)
|
Adjusted
EBITDA*
|
$9.3
|
$10.7
|
$11.7
|
$(2.4)
|
Net income
attributable to IDT
|
$0.9
|
$21.9
|
$4.1
|
$(3.2)
|
Diluted earnings per
share
|
$0.04
|
$0.96
|
$0.18
|
$(0.14)
|
Non-GAAP net
income*
|
$6.1
|
$10.1
|
$9.0
|
$(2.9)
|
Non-GAAP diluted
EPS*
|
$0.27
|
$0.44
|
$0.39
|
$(0.12)
|
Consolidated results in 2Q16 include the results of Zedge, which
was spun off to IDT stockholders on June
1, 2016. Zedge contributed $3.5
million in revenue, $1.7
million in income from operations, and $1.6 million in Adjusted EBITDA in 2Q16, and had
no contribution in fiscal 2017.
Consolidated results for all periods presented include corporate
overhead. In 2Q17, corporate G&A expense increased to
$2.8 million from $2.1 million (+35.4%) in the year ago quarter,
primarily as a result of a $0.6
million increase in non-cash compensation.
At January 31, 2017, IDT had
$130.8 million in unrestricted cash,
cash equivalents and marketable securities. In addition, the
company reported $89.4 million in
current restricted cash and cash equivalents, nearly all of which
represented customer deposits held by IDT's Gibraltar-based bank. Current assets
totaled $304.9 million and current
liabilities were $310.9 million.
Net cash used in operating activities during 2Q17 was
$6.3 million, compared to net cash
provided by operating activities of $11.2
million in 2Q16. For the same periods, capital expenditures
were $5.0 million compared to
$3.7 million, respectively.
2Q17 RESULTS BY SEGMENT
(Results are for 2Q17
unless otherwise noted).
Results
(in
millions)
|
TPS
|
UCaaS
|
CPS
|
ALL
OTHER
|
2Q17
|
2Q16
|
2Q17
|
2Q16
|
2Q17
|
2Q16
|
2Q17
|
2Q16
|
Revenue
|
$358.5
|
$370.6
|
$7.1
|
$6.1
|
$1.4
|
$1.8
|
$0.5
|
$4.0
|
Direct cost of
revenue
|
$307.3
|
$315.5
|
$2.9
|
$3.2
|
$0.6
|
$0.8
|
-
|
$0.3
|
SG&A
expense
|
$40.2
|
$43.9
|
$3.8
|
$2.8
|
$0.5
|
$0.7
|
-
|
$1.6
|
Depreciation and
amortization
|
$4.0
|
$4.0
|
$0.9
|
$0.7
|
-
|
-
|
$0.4
|
$0.3
|
Income (loss) from
operations
|
$6.9
|
$6.9
|
$(0.5)
|
$(0.6)
|
$0.2
|
$0.3
|
$0.1
|
$1.8
|
Adjusted
EBITDA*
|
$10.9
|
$11.2
|
$0.4
|
$0.1
|
$0.2
|
$0.3
|
$0.5
|
$2.2
|
Telecom Platform Services (TPS)
The Telecom Platform Services segment accounted for 97.5% of
IDT's revenue in 2Q17 compared to 96.9% in 2Q16. TPS markets
and distributes multiple communications and payment services across
three broad business categories: Retail Communications, Wholesale
Carrier Services and Payment Services.
TPS' minutes of use (MOU) in 2Q17 were 6.77 billion, a decrease
from 6.84 billion (-1.1%) in 2Q16.
TPS' revenue in 2Q17 was $358.5
million, a decrease from $370.6
million (-3.3%) in the year ago quarter.
Within TPS, Retail Communications' revenue declined 8.2% year
over year to $153.2 million.
TPS' dominant offering, the popular BOSS Revolution® calling
service, has been impacted by increased competition from wireless
operators' "unlimited" offerings and the rise of over-the-top voice
and messaging. The industry-wide steep pricing declines on
the US to Mexico corridor in
recent years also contributed to the year over year decrease in
TPS' revenue, but were not a significant factor sequentially. BOSS
Revolution calls from the US to Mexico generated less than 2% of TPS' revenue
in 2Q17.
Wholesale Carrier Services' revenue decreased 3.1% year over
year to $145.8 million, primarily
because of a decrease in sales to small and medium sized carrier
customers who utilize IDT's self-service, web-based prepaid
termination services platform, and due to the absence of certain
exchange rate driven arbitrage-pricing opportunities that existed
in the year ago quarter.
Payment Services' revenue jumped 11.8% to $59.6 million. The increase in Payment Services
revenue was generated predominantly by growth in our international
mobile top up and money transfer businesses.
TPS' direct cost of revenue in 2Q17, expressed as a percentage
of TPS' revenue, was 85.7%, an increase of 60 basis points year
over, primarily reflecting competitive margin pressure on both our
BOSS Revolution and wholesale carrier offerings.
TPS' SG&A expense in 2Q17 of $40.2
million represented 11.2% of TPS' revenue in 2Q17, a 70
basis points decrease compared to the year ago quarter, primarily
resulting from reduced headcount.
TPS' income from operations was $6.9
million in both 2Q17 and 2Q16, while Adjusted EBITDA for the
same periods were $10.9 million and
$11.2 million, respectively, as the
reduction in SG&A expense mostly offset the impact of the
decrease in revenue.
Unified Communications as a Service (UCaaS)
The UCaaS segment is comprised of offerings from IDT's
net2phone® division, including (1) cable telephony, (2)
hosted PBX, (3) SIP trunking, which supports inbound and outbound
domestic and international calling from an IP PBX, and (4) PicuP, a
highly-automated business phone service that answers, routes and
manages voice calls.
UCaaS' revenue in 2Q17 increased to $7.1
million from $6.1 million in
2Q16, including a 230.6% increase in revenue from net2phone's
hosted PBX offering. The segment's two largest offerings -
cable telephony and SIP trunking - also posted year over year
gains.
UCaaS' direct cost of revenue expressed as a percentage of
revenue decreased from 51.7% in 2Q16 to 41.0% in 2Q17, an
improvement of 1070 basis points, as its business continued to
scale.
SG&A expense for the UCaaS segment increased to $3.8 million in 2Q17 from $2.8 million (+33.5%) in 2Q16. As a
percentage of UCaaS' revenue, SG&A in 2Q17 increased 660 basis
points year over year to 53.0%, as net2phone ramped up its
investment in technology and expanded the scope of its sales and
marketing efforts.
UCaaS' loss from operations narrowed to $464 thousand in 2Q17 from $576 thousand in 2Q16. Adjusted EBITDA
increased to $430 thousand in 2Q17
from $117 thousand over the same
period.
Consumer Phone Services (CPS)
The Consumer Phone Services segment sells local and long
distance services in the U.S., marketed under the brand name IDT
America. CPS has been in harvest mode for more than a decade
- maximizing revenue from current customers while maintaining
SG&A and other expenses at the minimum levels essential to
operate the business. Results this quarter conformed to
expectations.
All Other
All Other includes IDT's real estate holdings, comprised of its
public garage in Newark and
commercial properties in Newark,
Piscataway and Jerusalem, as well as other small businesses
and investments, including an investment in Cornerstone
Pharmaceuticals, Inc.
Cornerstone is a clinical stage, oncology-focused pharmaceutical
company committed to the development and commercialization of
therapies that exploit the metabolic differences between normal
cells and cancer cells.
All Other previously included Zedge, a platform and mobile app
centered on self-expression. Zedge was fully spun off from
IDT to IDT's shareholders on June 1,
2016. Because the disposition of IDT's interest in Zedge did
not meet the criteria to be reported as a discontinued operation,
Zedge's results of operations and cash flows continue to be
included in prior comparative periods.
All Other's revenue in 2Q17 was $0.5
million, a decrease from $4.0
million (-87.7%) in 2Q16. Exclusive of Zedge, revenue in
2Q16 was $0.5 million.
All Other's income from operations in 2Q17 was $82 thousand compared to $1.8 million (-95.6%) in 2Q16. Exclusive of
Zedge, income from operations in 2Q16 was $115 thousand.
DIVIDEND
IDT's Board of Directors has declared a quarterly dividend of
$0.19 per share of Class A and Class
B common stock for 2Q17 to be paid on or about March 24, 2017. The dividend will be paid
to stockholders of record as of the close of business on
March 17th. The
ex-dividend date will be March
15th. This distribution will be treated as
a return of capital for tax purposes.
IDT EARNINGS ANNOUNCEMENT & SUPPLEMENTAL
INFORMATION
This release is available for download in the "For Investors"
section of the IDT Corporation website (http://idt.net/ir)
and has been filed on a current report (Form 8-K) with the SEC.
IDT will host an earnings conference call beginning at
5:30 PM ET today with management's
discussion of results, outlook and strategy followed by Q&A
with investors.
To listen to the call and participate in the Q&A, dial
toll-free 1-888-348-8417 (from U.S.) or 1-412-902-4243
(international) and request the IDT Corporation call.
A recording of the conference call can be accessed one hour
after the call, and will be available through March 13, 2017, by dialing 1-844-512-2921 (toll
free from the US) or 1-412-317-6671 (international) and providing
this pin code: 10101016. The recording will also be available
via streaming audio at the IDT investor relations website
(www.idt.net/ir) following the call.
About IDT:
IDT Corporation (NYSE: IDT), through its IDT Telecom division,
provides telecommunications and payment services to individuals and
businesses primarily through its flagship BOSS
Revolution® and net2phone® brands. IDT
Telecom's wholesale business is a leading global carrier of
international long distance calls. For more information on
IDT, visit www.idt.net.
All statements above that are not purely about historical
facts, including, but not limited to, those in which we use the
words "believe," "anticipate," "expect," "plan," "intend,"
"estimate," "target" and similar expressions, are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. While these forward-looking statements
represent our current judgment of what may happen in the future,
actual results may differ materially from the results expressed or
implied by these statements due to numerous important
factors. Our filings with the SEC provide detailed
information on such statements and risks, and should be consulted
along with this release. To the extent permitted under applicable
law, IDT assumes no obligation to update any forward-looking
statements.
IDT
CORPORATION
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
January 31,
2017
|
July 31,
2016
|
|
(Unaudited)
|
|
|
(in
thousands)
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$
77,524
|
$
109,537
|
Restricted cash and
cash equivalents
|
89,420
|
98,822
|
Marketable
securities
|
53,273
|
52,949
|
Trade accounts
receivable, net of allowance for doubtful accounts of $5,173 at
January 31, 2017 and $4,818 at July 31, 2016
|
55,464
|
49,283
|
Prepaid
expenses
|
14,994
|
15,189
|
Other current
assets
|
14,228
|
13,273
|
|
|
|
Total current
assets
|
304,903
|
339,053
|
Property, plant and
equipment, net
|
89,205
|
87,374
|
Goodwill
|
11,137
|
11,218
|
Other intangibles,
net
|
676
|
843
|
Investments
|
23,623
|
14,024
|
Deferred income tax
assets, net
|
22,450
|
9,554
|
Other
assets
|
7,372
|
7,592
|
|
|
|
Total
assets
|
$
459,366
|
$
469,658
|
|
|
|
Liabilities and
equity
|
|
|
Current
liabilities:
|
|
|
Trade accounts
payable
|
$
32,237
|
$
30,253
|
Accrued
expenses
|
101,316
|
117,434
|
Deferred
revenue
|
83,835
|
86,178
|
Customer
deposits
|
87,468
|
95,843
|
Income taxes
payable
|
494
|
578
|
Other current
liabilities
|
5,557
|
13,534
|
|
|
|
Total current
liabilities
|
310,907
|
343,820
|
Other
liabilities
|
1,627
|
1,635
|
|
|
|
Total
liabilities
|
312,534
|
345,455
|
Commitments and
contingencies
|
|
|
Equity:
|
|
|
IDT Corporation
stockholders' equity:
|
|
|
Preferred stock, $.01
par value; authorized shares—10,000; no shares issued
|
—
|
—
|
Class A common
stock, $.01 par value; authorized shares—35,000; 3,272 shares
issued and 1,574 shares outstanding at January 31, 2017 and July
31, 2016
|
33
|
33
|
Class B common stock,
$.01 par value; authorized shares—200,000; 25,550 and 25,383 shares
issued and 21,525 and 21,452 shares outstanding at January 31, 2017
and July 31, 2016, respectively
|
255
|
254
|
Additional paid-in
capital
|
401,055
|
396,243
|
Treasury stock, at
cost, consisting of 1,698 and 1,698 shares of Class A common stock
and 4,025 and 3,931 shares of Class B common stock at January 31,
2017 and July 31, 2016, respectively
|
(117,154 )
|
(115,316 )
|
Accumulated other
comprehensive loss
|
(6,210)
|
(3,744)
|
Accumulated
deficit
|
(139,644 )
|
(153,673 )
|
|
|
|
Total IDT Corporation
stockholders' equity
|
138,335
|
123,797
|
Noncontrolling
interests
|
8,497
|
406
|
|
|
|
Total
equity
|
146,832
|
124,203
|
|
|
|
Total liabilities and
equity
|
$
459,366
|
$
469,658
|
|
|
|
IDT
CORPORATION
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(Unaudited)
|
|
|
Three Months
Ended
January 31,
|
Six Months
Ended
January 31,
|
|
2017
|
2016
|
2017
|
2016
|
|
(in thousands,
except per share data)
|
Revenues
|
$ 367,556
|
$ 382,454
|
$ 736,707
|
$ 773,032
|
Costs and
expenses:
|
|
|
|
|
Direct cost of
revenues (exclusive of depreciation and amortization)
|
310,913
|
319,724
|
623,941
|
644,235
|
Selling, general and
administrative (i)
|
47,325
|
51,054
|
92,763
|
104,143
|
Depreciation and
amortization
|
5,301
|
4,973
|
10,601
|
10,025
|
|
|
|
|
|
Total costs and
expenses
|
363,539
|
375,751
|
727,305
|
758,403
|
Other operating
expense
|
(889)
|
(326)
|
(1,088)
|
(326)
|
|
|
|
|
|
Income from
operations
|
3,128
|
6,377
|
8,314
|
14,303
|
Interest income,
net
|
309
|
534
|
609
|
692
|
Other (expense)
income, net
|
(419)
|
(234)
|
1,974
|
(844)
|
|
|
|
|
|
Income before income
taxes
|
3,018
|
6,677
|
10,897
|
14,151
|
(Provision for)
benefit from income taxes
|
(1,761)
|
(2,014)
|
12,655
|
(4,911)
|
|
|
|
|
|
Net income
|
1,257
|
4,663
|
23,552
|
9,240
|
Net income
attributable to noncontrolling interests
|
(382 )
|
(598 )
|
(758)
|
(981)
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$
875
|
$
4,065
|
$
22,794
|
$
8,259
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to IDT Corporation common stockholders:
|
|
|
|
|
Basic
|
$
0.04
|
$
0.18
|
$
1.00
|
$
0.36
|
|
|
|
|
|
Diluted
|
$
0.04
|
$
0.18
|
$
0.99
|
$
0.36
|
|
|
|
|
|
Weighted-average
number of shares used in calculation of earnings per
share:
|
|
|
|
|
Basic
|
22,768
|
22,799
|
22,740
|
22,867
|
|
|
|
|
|
Diluted
|
22,963
|
22,799
|
22,931
|
22,884
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
0.19
|
$
0.19
|
$
0.38
|
$
0.37
|
|
|
|
|
|
|
|
|
|
|
(i) Stock-based
compensation included in selling, general and administrative
expenses
|
$
1,426
|
$
873
|
$
2,128
|
$
1,644
|
|
|
|
|
|
|
|
|
|
|
IDT
CORPORATION
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Six Months
Ended
January 31,
|
|
2017
|
2016
|
|
(in
thousands)
|
Operating
activities
|
|
|
Net income
|
$
23,552
|
$
9,240
|
Adjustments to
reconcile net income to net cash (used in) provided by operating
activities:
|
|
|
Depreciation and
amortization
|
10,601
|
10,025
|
Deferred income
taxes
|
(12,868)
|
4,708
|
Provision for doubtful
accounts receivable
|
126
|
486
|
Realized gain on
marketable securities
|
(305)
|
(543)
|
Interest in the equity
of investments
|
(295)
|
(79)
|
Stock-based
compensation
|
2,128
|
1,644
|
Change in assets and
liabilities:
|
|
|
Restricted cash and
cash equivalents
|
4,098
|
(5,360)
|
Trade accounts
receivable
|
(8,189)
|
(1,366)
|
Prepaid expenses,
other current assets and other assets
|
(1,432)
|
7,644
|
Trade accounts
payable, accrued expenses, other current liabilities and other
liabilities
|
(14,927)
|
(10,814)
|
Customer
deposits
|
(1,177)
|
8,200
|
Income taxes
payable
|
(83)
|
159
|
Deferred
revenue
|
(2,043)
|
1,202
|
|
|
|
Net cash (used in)
provided by operating activities
|
(814)
|
25,146
|
Investing
activities
|
|
|
Capital
expenditures
|
(10,543 )
|
(9,223)
|
Proceeds from sale of
interest in Fabrix Systems Ltd
|
—
|
4,769
|
Payment for
acquisition, net of cash acquired
|
(1,827)
|
—
|
Cash used for
investments
|
(8,308)
|
(350)
|
Proceeds from sale and
redemption of investments
|
4
|
626
|
Purchases of
marketable securities
|
(17,209 )
|
(24,480)
|
Proceeds from
maturities and sales of marketable securities
|
16,848
|
18,720
|
|
|
|
Net cash used in
investing activities
|
(21,035)
|
(9,938)
|
Financing
activities
|
|
|
Dividends
paid
|
(8,765)
|
(8,626)
|
Distributions to
noncontrolling interests
|
(817 )
|
(1,220)
|
Proceeds from sale of
member interests in CS Pharma Holdings, LLC
|
1,250
|
—
|
Proceeds from exercise
of stock options
|
835
|
—
|
Repayment of note
payable
|
—
|
(6,353)
|
Repurchases of Class B
common stock
|
(1,838 )
|
(4,773)
|
|
|
|
Net cash used in
financing activities
|
(9,335 )
|
(20,972)
|
Effect of exchange
rate changes on cash and cash equivalents
|
(829)
|
(5,083)
|
|
|
|
Net decrease in cash
and cash equivalents
|
(32,013)
|
(10,847)
|
Cash and cash
equivalents at beginning of period
|
109,537
|
110,361
|
|
|
|
Cash and cash
equivalents at end of period
|
$
77,524
|
$
99,514
|
|
|
|
Supplemental
schedule of non-cash investing and financing
activities
|
|
|
Reclassification of
liability for member interests in CS Pharma Holdings,
LLC
|
$
8,750
|
$
—
|
|
|
|
Reconciliation of Non-GAAP Financial Measures for
the Second Quarter Fiscal 2017 and 2016
In addition to disclosing financial results that are determined
in accordance with generally accepted accounting principles in
the United States of America
(GAAP), IDT also disclosed, for 2Q17, 1Q17 and 2Q16, Adjusted
EBITDA, non-GAAP net income and non-GAAP diluted earnings per
share, or EPS, which are non-GAAP measures. Generally, a non-GAAP
financial measure is a numerical measure of a company's
performance, financial position, or cash flows that either excludes
or includes amounts that are not normally excluded or included in
the most directly comparable measure calculated and presented in
accordance with GAAP.
IDT's measure of Adjusted EBITDA consists of revenues less
direct cost of revenues and selling, general and administrative
expense. Another way of calculating Adjusted EBITDA is to start
with income from operations and add depreciation and amortization
and other operating expense.
IDT's measure of non-GAAP net income starts with net income in
accordance with GAAP and adds depreciation and amortization,
stock-based compensation and other operating expense, and subtracts
the tax benefit from group relief.
IDT's measure of non-GAAP diluted EPS is calculated by dividing
non-GAAP net income by the diluted weighted-average shares.
These additions and subtractions are non-cash and/or non-routine
items in the relevant fiscal 2017 and fiscal 2016 periods.
Management believes that IDT's Adjusted EBITDA, non-GAAP net
income and non-GAAP EPS measures provide useful information to both
management and investors by excluding certain expenses and
non-routine gains and losses that may not be indicative of IDT's or
the relevant segment's core operating results. Management uses
Adjusted EBITDA, among other measures, as a relevant indicator of
core operational strengths in its financial and operational
decision making. In addition, management uses Adjusted EBITDA,
non-GAAP net income and non-GAAP EPS to evaluate operating
performance in relation to IDT's competitors. Disclosure of these
financial measures may be useful to investors in evaluating
performance and allows for greater transparency to the underlying
supplemental information used by management in its financial and
operational decision-making. In addition, IDT has historically
reported similar financial measures and believes such measures are
commonly used by readers of financial information in assessing
performance, therefore the inclusion of comparative numbers
provides consistency in financial reporting at this time.
Management refers to Adjusted EBITDA, as well as the GAAP
measures income (loss) from operations and net income, on a segment
and/or consolidated level to facilitate internal and external
comparisons to the segments' and IDT's historical operating
results, in making operating decisions, for budget and planning
purposes, and to form the basis upon which management is
compensated.
While depreciation and amortization are considered operating
costs under GAAP, these expenses primarily represent the non-cash
current period allocation of costs associated with long-lived
assets acquired or constructed in prior periods. IDT's operating
results exclusive of depreciation and amortization charges are
useful indicators of its current performance.
Other operating expense, which includes non-routine legal fees
related to an FCC inquiry in fiscal 2017 and loss on disposal of
property, plant and equipment in fiscal 2016, is a deduction from
income from operations. Other operating expense is excluded from
the calculation of Adjusted EBITDA, non-GAAP net income and
non-GAAP EPS. From time-to-time, IDT may incur costs related to
non-routine legal and regulatory matters or dispose of certain
assets. However, such legal and regulatory matters and disposals do
not occur each quarter. IDT does not believe the gains or losses
from asset sales or from non-routine legal and regulatory matters
should be included in IDT's or the relevant segment's core
operating results.
The other calculation of Adjusted EBITDA consists of revenues
less direct cost of revenues and selling, general and
administrative expense. As the other excluded items are not
reflected in this calculation, they are excluded automatically and
there is no need to make additional adjustments. This calculation
results in the same Adjusted EBITDA amount and its utility and
significance is as explained above.
Stock-based compensation recognized by IDT and other companies
may not be comparable because of the variety of types of awards as
well as the various valuation methodologies and subjective
assumptions that are permitted under GAAP. Stock-based compensation
is excluded from IDT's calculation of non-GAAP net income and
non-GAAP EPS because management believes this allows investors to
make more meaningful comparisons of the operating results per share
of IDT's core business with the results of other companies.
However, stock-based compensation will continue to be a significant
expense for IDT for the foreseeable future and an important part of
employees' compensation that impacts their performance.
The tax benefit from group relief is excluded from IDT's
calculation of non-GAAP net income and non-GAAP EPS because it is
not directly related to the current results of IDT's core
operations. Group relief is only available after all prior net
operating losses are utilized by one entity and that entity is able
to utilize the current period losses of a related entity. The
income tax benefit was recorded by Elmion Netherlands B.V., a
Netherlands subsidiary. Group
relief is not anticipated to be ongoing and Elmion Netherlands B.V.
is expected to have a valuation allowance in future periods.
Adjusted EBITDA, non-GAAP net income and non-GAAP EPS should be
considered in addition to, not as a substitute for, or superior to,
income (loss) from operations, cash flow from operating activities,
net income, basic and diluted earnings per share or other measures
of liquidity and financial performance prepared in accordance with
GAAP. In addition, IDT's measurements of Adjusted EBITDA, non-GAAP
net income and non-GAAP EPS may not be comparable to similarly
titled measures reported by other companies.
Following are reconciliations of Adjusted EBITDA, non-GAAP net
income and non-GAAP EPS to the most directly comparable GAAP
measure, which are, (a) for Adjusted EBITDA, income (loss) from
operations for IDT's reportable segments and net income for IDT on
a consolidated basis, (b) for non-GAAP net income, net income and,
(c) for non-GAAP EPS, basic and diluted earnings per share.
IDT
Corporation
Reconciliation of
Adjusted EBITDA to Net Income
(unaudited)
in
millions
Figures may not foot
or cross-foot due to rounding to millions.
|
|
Total IDT
Corporation
|
|
Telecom
Platform
Services
|
UCaaS
|
Consumer
Phone
Services
|
All
Other
|
Corporate
|
Three Months Ended
January 31, 2017
(2Q17)
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
9.3
|
|
$
10.9
|
$
0.4
|
$
0.2
|
$
0.5
|
$
(2.8)
|
Subtract:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
5.3
|
|
4.0
|
0.9
|
-
|
0.4
|
-
|
Other
operating expense
|
0.9
|
|
-
|
-
|
-
|
-
|
0.9
|
Income (loss) from
operations
|
3.1
|
|
$
6.9
|
$
(0.5)
|
$
0.2
|
$
0.1
|
$
(3.7)
|
Interest
income, net
|
0.3
|
|
|
|
|
|
|
Other
expense, net
|
(0.4)
|
|
|
|
|
|
|
Income before income
taxes
|
3.0
|
|
|
|
|
|
|
Provision for income taxes
|
(1.8)
|
|
|
|
|
|
|
Net income
|
1.3
|
|
|
|
|
|
|
Net income attributable
to noncontrolling interests
|
(0.4)
|
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT
Corporation
|
|
Telecom
Platform
Services
|
UCaaS
|
Consumer
Phone
Services
|
All
Other
|
Corporate
|
Three Months Ended
October 31, 2016
(1Q17)
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
10.7
|
|
$
10.4
|
$
0.6
|
$
0.3
|
$
0.5
|
$
(1.1)
|
Subtract
(Add):
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
5.3
|
|
4.2
|
0.7
|
-
|
0.4
|
-
|
Other
operating expense
|
0.2
|
|
-
|
-
|
-
|
-
|
0.2
|
Income (loss) from
operations
|
5.2
|
|
$
6.2
|
$
(0.1)
|
$
0.3
|
$
0.1
|
$
(1.3)
|
Interest
income, net
|
0.3
|
|
|
|
|
|
|
Other
income, net
|
2.4
|
|
|
|
|
|
|
Income before income
taxes
|
7.9
|
|
|
|
|
|
|
Benefit
from income taxes
|
14.4
|
|
|
|
|
|
|
Net income
|
22.3
|
|
|
|
|
|
|
Net income attributable
to noncontrolling interests
|
(0.4)
|
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$
21.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDT
Corporation
|
Reconciliation of
Adjusted EBITDA to Net Income
|
(unaudited)
|
in
millions
|
Figures may not foot
or cross-foot due to rounding to millions.
|
|
|
|
|
|
|
|
|
|
Total IDT
Corporation
|
|
Telecom
Platform
Services
|
UCaaS
|
Consumer
Phone
Services
|
All
Other
|
Corporate
|
Three Months Ended
January 31, 2016
(2Q16)
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
11.7
|
|
$
11.2
|
$
0.1
|
$
0.3
|
$
2.2
|
$
(2.1)
|
Subtract:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
5.0
|
|
4.0
|
0.7
|
-
|
0.3
|
-
|
Other
operating expense
|
0.3
|
|
0.3
|
-
|
-
|
-
|
-
|
Income (loss) from
operations
|
6.4
|
|
$
6.9
|
$
(0.6)
|
$
0.3
|
$
1.9
|
$
(2.1)
|
Interest
income, net
|
0.5
|
|
|
Other
expense, net
|
(0.2)
|
|
|
Income before income
taxes
|
6.7
|
|
|
Provision for income
taxes
|
(2.0)
|
|
|
Net income
|
4.7
|
|
|
Net income
attributable to noncontrolling interests
|
(0.6)
|
|
|
Net income
attributable to IDT Corporation
|
$
4.1
|
|
|
|
|
|
|
|
|
|
|
|
IDT
Corporation
Reconciliation of
Adjusted EBITDA to Net Income
(unaudited)
in
millions
Figures may not foot
or cross-foot due to rounding to millions.
|
|
Total IDT
Corporation
|
|
Telecom
Platform
Services
|
UCaaS
|
Consumer
Phone
Services
|
All
Other
|
Corporate
|
Six Months Ended
January 31, 2017
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
20.0
|
|
$
21.3
|
$
1.0
|
$
0.5
|
$
1.0
|
$
(3.9)
|
Subtract:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
10.6
|
|
8.1
|
1.6
|
-
|
0.8
|
-
|
Other
operating expense
|
1.1
|
|
-
|
-
|
-
|
-
|
1.1
|
Income (loss) from
operations
|
8.3
|
|
$
13.2
|
$
(0.6)
|
$
0.5
|
$
0.2
|
$
(5.0)
|
Interest
income, net
|
0.6
|
|
|
|
|
|
|
Other
income, net
|
2.0
|
|
|
|
|
|
|
Income before income
taxes
|
10.9
|
|
|
|
|
|
|
Benefit
from income taxes
|
12.7
|
|
|
|
|
|
|
Net income
|
23.6
|
|
|
|
|
|
|
Net income attributable
to noncontrolling interests
|
(0.8)
|
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$
22.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT
Corporation
|
|
Telecom
Platform
Services
|
UCaaS
|
Consumer
Phone
Services
|
All
Other
|
Corporate
|
Six Months Ended
January 31, 2016
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
24.6
|
|
$
24.9
|
$
0.5
|
$
0.6
|
$
3.2
|
$
(4.6)
|
Subtract
(Add):
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
10.0
|
|
7.7
|
1.4
|
-
|
0.9
|
-
|
Other
operating expense
|
0.3
|
|
0.3
|
-
|
-
|
-
|
-
|
Income (loss) from
operations
|
14.3
|
|
$
16.9
|
$
(0.9)
|
$
0.6
|
$
2.3
|
$
(4.6)
|
Interest
income, net
|
0.7
|
|
|
|
|
|
|
Other
expense, net
|
(0.8)
|
|
|
|
|
|
|
Income before income
taxes
|
14.2
|
|
|
|
|
|
|
Provision for income taxes
|
(4.9)
|
|
|
|
|
|
|
Net income
|
9.3
|
|
|
|
|
|
|
Net income attributable
to noncontrolling interests
|
(1.0)
|
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$
8.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDT
Corporation
Reconciliations of
Net Income to Non-GAAP Net Income and Diluted EPS to
Non-GAAP Diluted EPS
(unaudited)
in millions, except
per share data
Figures may not foot
due to rounding to millions.
|
|
2Q17
|
1Q17
|
2Q16
|
Six
Months
Ended
January
31, 2017
|
Six
Months
Ended
January
31, 2016
|
|
|
|
|
|
|
Net income
|
$
1.3
|
$
22.3
|
$
4.7
|
$
23.6
|
$
9.2
|
Adjustments (add)
subtract:
|
|
|
|
|
|
Stock-based
compensation
|
(1.4)
|
(0.7)
|
(0.9)
|
(2.1)
|
(1.6)
|
Depreciation and
amortization
|
(5.3)
|
(5.3)
|
(5.0)
|
(10.6)
|
(10.0)
|
Other operating
expense
|
(0.9)
|
(0.2)
|
(0.3)
|
(1.1)
|
(0.3)
|
Tax benefit from group
relief
|
-
|
16.6
|
-
|
16.6
|
-
|
Total
adjustments
|
(7.6)
|
10.4
|
(6.2)
|
2.8
|
(11.9)
|
Income tax effect of
total adjustments
|
2.8
|
1.8
|
1.9
|
5.1
|
4.0
|
|
4.8
|
(12.2)
|
4.3
|
(7.9)
|
7.9
|
Non-GAAP net
income
|
$
6.1
|
$
10.1
|
$
9.0
|
$
15.7
|
$
17.1
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic
|
$
0.04
|
$
0.97
|
$
0.18
|
$
1.00
|
$
0.36
|
Total
adjustments
|
0.23
|
(0.53)
|
0.21
|
(0.31)
|
0.39
|
Non-GAAP EPS -
basic
|
$
0.27
|
$
0.44
|
$
0.39
|
$
0.69
|
$
0.75
|
|
|
|
|
|
|
Weighted-average
number of shares used in calculation of basic earnings per
share
|
22.8
|
22.7
|
22.8
|
22.7
|
22.9
|
|
|
|
|
|
|
Diluted
|
$
0.04
|
$
0.96
|
$
0.18
|
$
0.99
|
$
0.36
|
Total
adjustments
|
0.23
|
(0.52)
|
0.21
|
(0.31)
|
0.39
|
Non-GAAP EPS -
diluted
|
$
0.27
|
$
0.44
|
$
0.39
|
$
0.68
|
$
0.75
|
|
|
|
|
|
|
Weighted-average
number of shares used in calculation of diluted earnings per
share
|
23.0
|
22.9
|
22.8
|
22.9
|
22.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/idt-corporation-reports-second-quarter-fiscal-2017-results-300418694.html
SOURCE IDT Corporation