NEWARK, N.J., June 6, 2017 /PRNewswire/ -- IDT Corporation
(NYSE: IDT) reported a loss per share of $0.21 and Non-GAAP earnings per share (EPS)* of
$0.28 on revenue of $370.0 million for the third quarter of its
fiscal year 2017, the three months ended April 30, 2017.
HIGHLIGHTS
(Results for 3Q17 compared
to 3Q16)
- Revenue of $370.0 million
compared to $355.2 million;
- Loss from operations of $6.5
million, including a charge of $10.2
million for a legal settlement, compared to income from
operations of $5.7 million, including
a gain of $1.1 million on the sale of
Fabrix;
- Adjusted EBITDA* of $9.1 million
compared to $10.3 million;
- Loss per share of $0.21 compared
to EPS of $0.19;
- Non-GAAP EPS* of $0.28 compared
to $0.38;
- IDT has declared a dividend of $0.19 per share for 3Q17 to be paid on or about
June 30, 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 reconciliations to the most
directly comparable GAAP measure.
REMARKS BY SHMUEL JONAS, CEO
OF IDT CORPORATION
"I am very pleased by the growth of our early stage business
initiatives during the third quarter, even as we took steps to
strengthen our core business offerings and further streamline
operations.
"National Retail Solutions continues to expand rapidly and is
developing new ways to leverage our point-of-sale network to create
additional value for our retailers, consumer package good suppliers
and our BR Club members. At net2phone, our cloud-based PBX
offering is on track to double the number of seats it serves in the
first six months of the year. We also successfully launched the
offering in Brazil in January and
in Argentina in May.
"Our Boss Revolution money transfer business completed its best
quarter ever. We expect to drive additional retail growth by
gradually expanding our presence beyond our original focus on ten
states. In addition, the fastest increase in transaction
volumes is coming from our direct to consumer digital channel,
including the Boss Revolution Money app, which is doubling in
volume every three to four months and already contributes more
than one in four transactions.
"From a corporate perspective, we continue to streamline our
operations and tighten our strategic focus. As part of this
effort, we expect to spin-off our real estate assets together with
our interests in Rafael Pharmaceuticals, Inc. (formerly Cornerstone
Pharmaceuticals, Inc.) and certain other investments as Rafael
Holdings later this year."
3Q17 CONSOLIDATED RESULTS
Results
(in millions,
except EPS)
|
3Q17
|
2Q17
|
3Q16
|
3Q17 -
3Q16
Change
(%/$)
|
Revenue
|
$370.0
|
$367.6
|
$355.2
|
+4.2%
|
Direct cost of
revenue
|
$314.7
|
$310.9
|
$293.2
|
+7.3%
|
Direct cost of
revenue as a percentage of revenue
|
85.0%
|
84.6%
|
82.6%
|
+240 BP
|
SG&A
expense
|
$46.2
|
$47.3
|
$51.6
|
(10.5)%
|
Depreciation and
amortization
|
$5.5
|
$5.3
|
$5.5
|
(0.8)%
|
Other (losses)
gains
|
$(10.2)
|
$(0.9)
|
$1.1
|
$(11.3)
|
(Loss) income from
operations
|
$(6.5)
|
$3.1
|
$5.7
|
$(12.2)
|
Adjusted
EBITDA*
|
$9.1
|
$9.3
|
$10.3
|
$(1.2)
|
Net (loss) income
attributable to IDT
|
$(4.8)
|
$0.9
|
$4.2
|
$(9.0)
|
(Loss) earnings per
share
|
$(0.21)
|
$0.04
|
$0.19
|
$(0.40)
|
Non-GAAP net
income*
|
$6.5
|
$6.1
|
$8.6
|
$(2.1)
|
Non-GAAP diluted
EPS*
|
$0.28
|
$0.27
|
$0.38
|
$(0.10)
|
Consolidated results in 3Q16 include the results of Zedge, which
was spun off to IDT stockholders on June
1, 2016. Zedge contributed $2.6
million in revenue, $239
thousand in income from operations, and $392 thousand in Adjusted EBITDA in 3Q16.
Zedge did not contribute to results in fiscal 2017.
Consolidated results for all periods presented include corporate
overhead. In 3Q17, corporate G&A expense decreased 30.2%
to $2.0 million from $2.8 million in the year ago quarter.
Consolidated results also included a loss of $10.1 million in 3Q17, resulting from the
previously announced agreement with Straight Path Communications
Inc. (SPCI), to settle potential liabilities and claims under
agreements related to the spin-off of SPCI from IDT in 2013, as
well as associated legal costs.
At April 30, 2017, IDT had
$132.3 million in unrestricted cash,
cash equivalents and marketable securities. In addition, the
company reported $93.3 million in
current restricted cash and cash equivalents, nearly all of which
represents customer deposits held by IDT's Gibraltar-based bank. Current assets
totaled $327.0 million and current
liabilities were $332.7 million.
Net cash provided by operating activities during 3Q17 was
$1.3 million compared to $10.7 million in 3Q16. For the same periods,
capital expenditures were $6.5
million compared to $4.7
million, respectively.
3Q17 RESULTS BY SEGMENT
(Results are for 3Q17 unless otherwise noted).
Results
(in
millions)
|
TPS
|
UCaaS
|
CPS
|
ALL
OTHER
|
3Q17
|
3Q16
|
3Q17
|
3Q16
|
3Q17
|
3Q16
|
3Q17
|
3Q16
|
Revenue
|
$360.8
|
$344.2
|
$7.4
|
$6.2
|
$1.3
|
$1.7
|
$0.6
|
$3.1
|
Direct cost of
revenue
|
$311.1
|
$289.2
|
$2.9
|
$3.0
|
$0.6
|
$0.7
|
-
|
$0.3
|
SG&A
expense
|
$39.8
|
$43.8
|
$3.9
|
$3.0
|
$0.5
|
$0.6
|
$0.2
|
$1.5
|
Depreciation and
amortization
|
$4.0
|
$4.2
|
$1.1
|
$0.7
|
-
|
-
|
$0.4
|
$0.6
|
Income (loss) from
operations
|
$5.8
|
$6.9
|
$(0.5)
|
$(0.5)
|
$0.2
|
$0.4
|
-
|
$1.8
|
Adjusted
EBITDA*
|
$9.8
|
$11.3
|
$0.6
|
$0.2
|
$0.2
|
$0.4
|
$0.4
|
$1.3
|
Telecom Platform Services (TPS)
The Telecom Platform
Services segment accounted for 97.5% of IDT's revenue in 3Q17
compared to 96.9% in 3Q16. 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 3Q17 were 6.98 billion, an increase
of 3.1% from 6.77 billion in 3Q16. Retail Communications' MOU
decreased 20.4% compared to the year ago quarter, while Wholesale
Carrier Services' MOU increased 12.8%.
TPS' revenue in 3Q17 was $360.8
million, a 4.8% increase from $344.2
million in the year ago quarter.
TPS Revenue by
Business
Vertical
($ in
millions)
|
3Q17
|
2Q17
|
3Q16
|
3Q17
-3Q16
% Change in
Revenue
|
3Q17-3Q16
% Change in
Minutes of Use
|
3Q17 Revenue as a
%
of all TPS Revenue
|
Retail
Communications
|
$148.6
|
$153.2
|
$163.1
|
(8.9)%
|
(20.4)%
|
41.2%
|
Wholesale Carrier
Services
|
$152.1
|
$145.7
|
$126.1
|
+20.6%
|
+12.8%
|
42.2%
|
Payment
Services
|
$60.1
|
$59.6
|
$55.0
|
+9.2%
|
na
|
16.6%
|
Total
TPS
|
$360.8
|
$358.5
|
$344.2
|
+4.8%
|
+3.1%
|
100.0%
|
Retail Communications' revenue declined 8.9% year over year to
$148.6 million. TPS' dominant
offering, the popular BOSS Revolution® calling service, has been
negatively impacted by increased competition from wireless
operators' "unlimited" offerings and the rise of over-the-top voice
and messaging.
Wholesale Carrier Services' revenue increased 20.6% year over
year to $152.1 million, reflecting
growth in traffic carried to higher revenue per minute destinations
in Africa and the Middle
East.
Payment Services' revenue increased 9.2% to $60.1 million. Sales of international
mobile top-up services, the dominant offering in this vertical,
increased 8.0% year over year, while revenues generated by IDT's
international money transfer and retail point-of-sale network
businesses, both of which are early stage initiatives with
immaterial impact on TPS' overall results, increased
robustly.
TPS' direct cost of revenue in 3Q17, expressed as a percentage
of TPS' revenue, increased to 86.2% from 84.0%, reflecting
continuing competitive margin pressure on both our BOSS Revolution
and wholesale carrier offerings.
TPS' SG&A expense in 3Q17 was $39.8
million compared to $43.8
million in 3Q16, a decrease of $4.0
million primarily resulting from reduced headcount. In
3Q17, TPS' SG&A expense expressed as a percentage of revenue
was 11.0%, a 170 basis points decrease compared to the year ago
quarter.
TPS' depreciation and amortization expense was $4.0 million compared to $4.2 million in the year ago period.
TPS' income from operations was $5.8
million in 3Q17 compared to $6.9
million in 3Q16, while Adjusted EBITDA for the same periods
was $9.8 million and $11.3 million, respectively, primarily as a
result of the margin contraction, which was mostly offset by the
reduction in SG&A expense.
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 3Q17 increased to $7.4
million from $6.2 million in
3Q16, including a 189% 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 to 39.7% from 48.7% in 3Q16 as its business
continued to scale.
SG&A expense for the UCaaS segment increased to $3.9 million in 3Q17 from $3.0 million (+30.0%) in 3Q16. As a
percentage of UCaaS' revenue, SG&A in 3Q17 increased 420 basis
points year over year to 52.2%, as net2phone ramped up its
investment in technology, expanded its product suite and boosted
its sales and marketing programs.
UCaaS' loss from operations narrowed to $456 thousand in 3Q17 from $531 thousand in 3Q16 while Adjusted EBITDA
increased to $601 thousand from
$204 thousand over the same
period.
Consumer Phone Services (CPS)
The Consumer Phone
Services segment sells postpaid 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.
CPS' financial results are provided in the segment results
chart above and 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 Rafael Pharmaceuticals,
Inc., (formerly Cornerstone Pharmaceuticals, Inc.).
Rafael Pharmaceuticals 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 financial results are provided in the segment
results chart above and conformed to expectations.
IDT expects to spin-off the real estate and pharmaceutical
holdings included in All Other to its shareholders in CY 2017 under
the name Rafael Holdings.
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 3Q17 to be paid on or about June 30, 2017. The dividend will be paid to
stockholders of record as of the close of business on June 19th. The ex-dividend date
will be June 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 beginning one
hour after the call concludes through June
13, 2017 by dialing 1-844-512-2921 (toll free from the US)
or 1-412-317-6671 (international) and providing this pin code:
10106686. 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
|
|
|
|
|
April 30,
2017
|
July 31,
2016
|
|
(Unaudited)
|
|
|
(in
thousands)
|
Assets
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$
71,452
|
$
109,537
|
Restricted cash and
cash equivalents
|
93,250
|
98,822
|
Marketable
securities
|
60,821
|
52,949
|
Trade accounts
receivable, net of allowance for doubtful accounts of $4,442 at
April 30, 2017 and $4,818 at July 31, 2016
|
67,108
|
49,283
|
Prepaid
expenses
|
15,446
|
15,189
|
Other current
assets
|
18,951
|
13,273
|
|
|
|
Total current
assets
|
327,028
|
339,053
|
Property, plant and
equipment, net
|
89,752
|
87,374
|
Goodwill
|
11,168
|
11,218
|
Other intangibles,
net
|
691
|
843
|
Investments
|
23,953
|
14,024
|
Deferred income tax
assets, net
|
24,572
|
9,554
|
Other
assets
|
7,672
|
7,592
|
|
|
|
Total
assets
|
$
484,836
|
$
469,658
|
|
|
|
Liabilities and
equity
|
|
|
Current
liabilities:
|
|
|
Trade accounts
payable
|
$
36,016
|
$
30,253
|
Accrued
expenses
|
120,323
|
117,434
|
Deferred
revenue
|
79,124
|
86,178
|
Customer
deposits
|
91,689
|
95,843
|
Income taxes
payable
|
575
|
578
|
Other current
liabilities
|
4,942
|
13,534
|
|
|
|
Total current
liabilities
|
332,669
|
343,820
|
Other
liabilities
|
1,676
|
1,635
|
|
|
|
Total
liabilities
|
334,345
|
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 April 30, 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 22,253 and 21,452 shares
outstanding at April 30, 2017 and July 31, 2016,
respectively
|
255
|
254
|
Additional paid-in
capital
|
397,270
|
396,243
|
Treasury stock, at
cost, consisting of 1,698 and 1,698 shares of Class A common stock
and 3,297 and 3,931 shares of Class B common stock
at April 30, 2017 and July 31, 2016, respectively
|
(102,889 )
|
(115,316 )
|
Accumulated other
comprehensive loss
|
(5,051)
|
(3,744)
|
Accumulated
deficit
|
(148,810 )
|
(153,673 )
|
|
|
|
Total IDT Corporation
stockholders' equity
|
140,808
|
123,797
|
Noncontrolling
interests
|
9,683
|
406
|
|
|
|
Total
equity
|
150,491
|
124,203
|
|
|
|
Total liabilities and
equity
|
$
484,836
|
$
469,658
|
|
|
|
IDT
CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three Months
Ended
April 30,
|
Nine Months
Ended
April 30,
|
|
2017
|
2016
|
2017
|
2016
|
|
(in thousands,
except per share data)
|
|
|
Revenues
|
$
370,035
|
$
355,154
|
$
1,106,742
|
$
1,128,186
|
Costs and
expenses:
|
|
|
|
|
Direct cost of
revenues (exclusive of depreciation and amortization)
|
314,704
|
293,220
|
938,646
|
937,455
|
Selling, general and
administrative (i)
|
46,196
|
51,594
|
138,958
|
155,738
|
Depreciation and
amortization
|
5,474
|
5,518
|
16,075
|
15,543
|
Severance
|
—
|
232
|
—
|
232
|
|
|
|
|
|
Total costs and
expenses
|
366,374
|
350,564
|
1,093,679
|
1,108,968
|
Other operating
expenses
|
(10,163)
|
—
|
(11,251)
|
(326)
|
Gain on sale of
interest in Fabrix Systems Ltd
|
—
|
1,086
|
—
|
1,086
|
|
|
|
|
|
(Loss) income from
operations
|
(6,502)
|
5,676
|
1,812
|
19,978
|
Interest income,
net
|
295
|
244
|
905
|
936
|
Other (expense)
income, net
|
(407)
|
120
|
1,565
|
(723)
|
|
|
|
|
|
(Loss) income before
income taxes
|
(6,614)
|
6,040
|
4,282
|
20,191
|
Benefit from
(provision for) income taxes
|
2,162
|
(1,339)
|
14,817
|
(6,250)
|
|
|
|
|
|
Net (loss)
income
|
(4,452)
|
4,701
|
19,099
|
13,941
|
Net income
attributable to noncontrolling interests
|
(323 )
|
(464 )
|
(1,081)
|
(1,445)
|
|
|
|
|
|
Net (loss) income
attributable to IDT Corporation
|
$
(4,775)
|
$
4,237
|
$
18,018
|
$
12,496
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share attributable to IDT Corporation common
stockholders:
|
|
|
|
|
Basic
|
$
(0.21)
|
$
0.19
|
$
0.79
|
$
0.55
|
|
|
|
|
|
Diluted
|
$
(0.21)
|
$
0.19
|
$
0.78
|
$
0.55
|
|
|
|
|
|
Weighted-average
number of shares used in calculation of (loss) earnings
per share:
|
|
|
|
|
Basic
|
23,054
|
22,635
|
22,845
|
22,790
|
|
|
|
|
|
Diluted
|
23,054
|
22,680
|
22,989
|
22,816
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
0.19
|
$
0.19
|
$
0.57
|
$
0.56
|
|
|
|
|
|
|
|
|
|
|
(i) Stock-based
compensation included in selling, general and administrative
expenses
|
$
666
|
$
673
|
$
2,793
|
$
2,317
|
|
|
|
|
|
|
|
|
|
|
IDT
CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Nine Months
Ended
April 30,
|
|
2017
|
2016
|
|
(in
thousands)
|
Operating
activities
|
|
|
Net income
|
$
19,099
|
$
13,941
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
16,075
|
15,543
|
Deferred income
taxes
|
(14,979)
|
5,913
|
Provision for doubtful
accounts receivable
|
433
|
600
|
Gain on sale of
interest in Fabrix Systems Ltd
|
—
|
(1,086)
|
Realized gain on
marketable securities
|
(331)
|
(543)
|
Interest in the equity
of investments
|
(402)
|
379
|
Stock-based
compensation
|
2,793
|
2,317
|
Change in assets and
liabilities:
|
|
|
Restricted cash and
cash equivalents
|
3,532
|
(14,657)
|
Trade accounts
receivable
|
(18,883)
|
1,758
|
Prepaid expenses,
other current assets and other assets
|
(6,065)
|
6,450
|
Trade accounts
payable, accrued expenses, other current liabilities and other
liabilities
|
8,488
|
(14,907)
|
Customer
deposits
|
(2,403)
|
17,028
|
Deferred
revenue
|
(6,843)
|
3,097
|
|
|
|
Net cash provided by
operating activities
|
514
|
35,833
|
Investing
activities
|
|
|
Capital
expenditures
|
(17,050 )
|
(13,964)
|
Proceeds from sale of
interest in Fabrix Systems Ltd
|
—
|
4,769
|
Payment for
acquisition, net of cash acquired
|
(1,827)
|
—
|
Cash used for
investments
|
(8,527)
|
(1,850)
|
Proceeds from sale and
redemption of investments
|
—
|
632
|
Purchases of
marketable securities
|
(38,720 )
|
(29,800)
|
Proceeds from
maturities and sales of marketable securities
|
30,836
|
24,176
|
|
|
|
Net cash used in
investing activities
|
(35,288)
|
(16,037)
|
Financing
activities
|
|
|
Dividends
paid
|
(13,155)
|
(12,983)
|
Distributions to
noncontrolling interests
|
(1,139 )
|
(1,545)
|
Sale of Class B common
stock
|
10,000
|
—
|
Proceeds from sale of
interest and rights in Rafael Pharmaceuticals, Inc
|
1,000
|
—
|
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
|
(3,047)
|
(25,654)
|
Effect of exchange
rate changes on cash and cash equivalents
|
(264)
|
(3,368)
|
|
|
|
Net decrease in cash
and cash equivalents
|
(38,085)
|
(9,226)
|
Cash and cash
equivalents at beginning of period
|
109,537
|
110,361
|
|
|
|
Cash and cash
equivalents at end of period
|
$
71,452
|
$
101,135
|
|
|
|
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 Third 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 3Q17, 2Q17 and 3Q16, 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, add depreciation and amortization,
severance expense and other operating expense, and subtract the
gain on sale of interest in Fabrix Systems Ltd.
IDT's measure of non-GAAP net income starts with net income in
accordance with GAAP and adds depreciation and amortization,
severance expense, stock-based compensation and other operating
expense, and subtracts the gain on sale of interest in Fabrix
Systems Ltd. and the tax benefit from the release of the valuation
allowance and full recognition of deferred tax assets.
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.
Severance expense is also excluded from the calculation of
Adjusted EBITDA, non-GAAP net income and non-GAAP EPS. Severance
expense is reflective of decisions made by management in each
period regarding the aspects of IDT's and its segments' businesses
to be focused on in light of changing market realities and other
factors. While there may be similar charges in other periods, the
nature and magnitude of these charges can fluctuate markedly and do
not reflect the performance of IDT's core and continuing
operations.
Other operating expense and gain on the sale of interest in
Fabrix Systems Ltd. are components of income from operations. In
fiscal 2017, other operating expense includes a non-routine expense
for a settlement and mutual release, and the associated legal fees,
related to potential liabilities and claims under agreements
related to the spin-off of SPCI from IDT in 2013. In fiscal 2016,
other operating expense includes a loss on disposal of property,
plant and equipment. Other operating expense and gain on the sale
of interest in Fabrix Systems Ltd. are 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 disposal of certain assets. In
addition, IDT may select and incubate promising early stage
businesses outside of its core business for eventual sale or
spin-off to its stockholders. 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 income tax benefit in fiscal 2017 from the release of the
valuation allowance and full recognition of deferred tax assets 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. The income tax benefit was recorded by
Elmion Netherlands B.V., a Netherlands subsidiary. This release was due
to an internal reorganization and will not be a reoccurring
item.
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 (Loss) 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
April 30, 2017
(3Q17)
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
9.1
|
|
$
9.8
|
$
0.6
|
$
0.2
|
$
0.4
|
$
(2.0)
|
Subtract:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
5.5
|
|
4.0
|
1.1
|
-
|
0.4
|
-
|
Other
operating expense
|
10.2
|
|
-
|
-
|
-
|
-
|
10.1
|
(Loss) income from
operations
|
(6.5)
|
|
$
5.8
|
$
(0.5)
|
$
0.2
|
$
-
|
$
(12.1)
|
Interest
income, net
|
0.3
|
|
|
|
|
|
|
Other
expense, net
|
(0.4)
|
|
|
|
|
|
|
Loss before income
taxes
|
(6.6)
|
|
|
|
|
|
|
Benefit
from income taxes
|
2.2
|
|
|
|
|
|
|
Net loss
|
(4.5)
|
|
|
|
|
|
|
Net income
attributable to noncontrolling
interests
|
(0.3)
|
|
|
|
|
|
|
Net loss attributable
to IDT Corporation
|
$
(4.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
(Add):
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
April 30, 2016
(3Q16)
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
10.3
|
|
$
11.3
|
$
0.2
|
$
0.4
|
$
1.3
|
$
(2.8)
|
Subtract:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
5.5
|
|
4.2
|
0.7
|
-
|
0.6
|
-
|
Severance
expense
|
0.2
|
|
0.2
|
-
|
-
|
-
|
-
|
Gain on sale of
interest in Fabrix Systems
Ltd.
|
(1.1)
|
|
-
|
-
|
-
|
(1.1)
|
-
|
Income (loss) from
operations
|
5.7
|
|
$
6.8
|
$
(0.5)
|
$
0.4
|
$
1.8
|
$
(2.8)
|
Interest
income, net
|
0.2
|
|
|
Other
income, net
|
0.1
|
|
|
Income before income
taxes
|
6.0
|
|
|
Provision for income
taxes
|
(1.3)
|
|
|
Net income
|
4.7
|
|
|
Net income
attributable to noncontrolling
interests
|
(0.5)
|
|
|
Net income
attributable to IDT Corporation
|
$
4.2
|
|
|
|
|
|
|
|
|
|
|
|
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
|
Nine Months Ended
April 30, 2017
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
29.1
|
|
$
31.2
|
$
1.6
|
$
0.8
|
$
1.4
|
$
(5.8)
|
Subtract:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
16.1
|
|
12.1
|
2.7
|
-
|
1.3
|
-
|
Other
operating expense
|
11.3
|
|
0.1
|
-
|
-
|
-
|
11.2
|
Income (loss) from
operations
|
1.8
|
|
$
19.0
|
$
(1.1)
|
$
0.8
|
$
0.2
|
$
(17.0)
|
Interest
income, net
|
0.9
|
|
|
|
|
|
|
Other
income, net
|
1.6
|
|
|
|
|
|
|
Income before income
taxes
|
4.3
|
|
|
|
|
|
|
Benefit
from income taxes
|
14.8
|
|
|
|
|
|
|
Net income
|
19.1
|
|
|
|
|
|
|
Net income
attributable to noncontrolling
interests
|
(1.1)
|
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$
18.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT
Corporation
|
|
Telecom
Platform
Services
|
UCaaS
|
Consumer
Phone
Services
|
All
Other
|
Corporate
|
Nine Months Ended
April 30, 2016
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
35.0
|
|
$
36.2
|
$
0.7
|
$
1.0
|
$
4.5
|
$
(7.4)
|
Subtract
(Add):
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
15.5
|
|
11.9
|
2.1
|
-
|
1.5
|
-
|
Severance
expense
|
0.2
|
|
0.2
|
-
|
-
|
-
|
-
|
Gain on sale of
interest in Fabrix Systems
Ltd.
|
(1.1)
|
|
-
|
-
|
-
|
(1.1)
|
-
|
Other operating
expense
|
0.3
|
|
0.3
|
-
|
-
|
-
|
-
|
Income (loss) from
operations
|
20.0
|
|
$
23.7
|
$
(1.4)
|
$
1.0
|
$
4.1
|
$
(7.4)
|
Interest
income, net
|
0.9
|
|
|
|
|
|
|
Other
expense, net
|
(0.7)
|
|
|
|
|
|
|
Income before income
taxes
|
20.2
|
|
|
|
|
|
|
Provision for income taxes
|
(6.3)
|
|
|
|
|
|
|
Net income
|
13.9
|
|
|
|
|
|
|
Net income
attributable to noncontrolling
interests
|
(1.4)
|
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$
12.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDT
Corporation
Reconciliations of
Net (Loss) 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.
|
|
3Q17
|
2Q17
|
3Q16
|
Nine
Months
Ended
April 30,
2017
|
Nine
Months
Ended
April 30,
2016
|
|
|
|
|
|
|
Net (loss)
income
|
$
(4.5)
|
$
1.3
|
$
4.7
|
$
19.1
|
$
13.9
|
Adjustments (add)
subtract:
|
|
|
|
|
|
Stock-based
compensation
|
(0.7)
|
(1.4)
|
(0.7)
|
(2.8)
|
(2.3)
|
Depreciation and
amortization
|
(5.5)
|
(5.3)
|
(5.5)
|
(16.1)
|
(15.5)
|
Gain on sale of
interest in Fabrix
Systems
Ltd.
|
-
|
-
|
1.1
|
-
|
1.1
|
Severance
expense
|
-
|
-
|
(0.2)
|
-
|
(0.2)
|
Other operating
expense
|
(10.2)
|
(0.9)
|
-
|
(11.3)
|
(0.3)
|
Income tax
benefit
|
-
|
-
|
-
|
16.6
|
-
|
Total
adjustments
|
(16.4)
|
(7.6)
|
(5.3)
|
(13.6)
|
(17.3)
|
Income tax effect of
total adjustments
|
5.4
|
2.8
|
1.4
|
13.0
|
5.5
|
|
11.0
|
4.8
|
3.9
|
0.6
|
11.7
|
Non-GAAP net
income
|
$
6.5
|
$
6.1
|
$
8.6
|
$
19.7
|
$
25.6
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic
|
$
(0.21)
|
$
0.04
|
$
0.19
|
$
0.79
|
$
0.55
|
Total
adjustments
|
0.49
|
0.23
|
0.19
|
0.07
|
0.57
|
Non-GAAP EPS -
basic
|
$
0.28
|
$
0.27
|
$
0.38
|
$
0.86
|
$
1.12
|
|
|
|
|
|
|
Weighted-average number of shares used in
calculation of basic earnings per
share
|
23.1
|
22.8
|
22.6
|
22.8
|
22.8
|
|
|
|
|
|
|
Diluted
|
$
(0.21)
|
$
0.04
|
$
0.19
|
$
0.78
|
$
0.55
|
Total
adjustments
|
0.49
|
0.23
|
0.19
|
0.08
|
0.57
|
Non-GAAP EPS -
diluted
|
$
0.28
|
$
0.27
|
$
0.38
|
$
0.86
|
$
1.12
|
|
|
|
|
|
|
Weighted-average number of shares used in
calculation of diluted earnings per
share
|
23.1
|
23.0
|
22.7
|
23.0
|
22.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/idt-corporation-reports-third-quarter-fiscal-2017-results-300469805.html
SOURCE IDT Corporation