NEWARK, N.J., Oct. 10, 2019 /PRNewswire/ -- IDT Corporation
(NYSE: IDT) reported EPS of $0.06 and
Non-GAAP EPS* of $0.15 on revenue of
$356.1 million for the fourth quarter
of FY 2019, the three months ended July 31,
2019. For the full fiscal year 2019, IDT reported EPS of
$0.01 and Non-GAAP EPS of
$0.38 on revenue of $1,409.2 million.
4Q19 & FISCAL YEAR OPERATIONAL HIGHLIGHTS
(4Q19 results are compared to 4Q18. FY 2019 results are compared
to FY 2018)
- net2phone's Unified Communications as a Service (UCaaS)
attained the 100,000-seat milestone. Growth was particularly strong
in Brazil and other South American
markets. net2phone-UCaaS revenue increased 78% to $7.0 million in 4Q19, and for FY 2019 increased
84% to $24.5 million. The
year-over-year increases include the impact of the acquisition of
Versature, a Canadian UCaaS provider, in 1Q19;
- National Retail Solutions (NRS) operated approximately 7,800
active terminals in its retailer point-of-sale (POS) network at
July 31, 2019 compared to 5,200 a
year earlier. Revenue increased 72% to $1.9
million in 4Q19 driven in part by relatively new offerings
to digital out-of-home advertisers and data analytics providers. FY
2019 revenue increased 56% to $6.2
million;
- BOSS Revolution international money transfer processed over one
million transactions in 4Q19. Money transfer revenue increased 42%
to $6.9 million in 4Q19. Revenue from
the direct-to-consumer (D2C) channel increased 88% to $4.4 million. FY 2019 revenue increased 33% to
$23.1 million powered by a 113%
increase in D2C channel revenue which increased to $14.4 million.
REMARKS BY SHMUEL JONAS,
CEO
"Our growth initiatives – net2phone's UCaaS offerings,
National Retail Solutions and our BOSS Revolution international
money transfer service – continued their rapid expansions in the
fourth quarter.
"As expected, revenue from our core Carrier Services and BOSS
Revolution Calling offerings continued to decrease as a result of
industry-wide headwinds in the paid minute communications market,
but the company-wide margin impact was dampened by increased
contributions from our growth initiatives. Consolidated revenue
less direct cost of revenue has increased sequentially in each of
the last three quarters.
"Consolidated Adjusted EBITDA* was $7.4
million in the fourth quarter. In the year ago quarter,
consolidated Adjusted EBITDA was $16.8
million -- a significant outlier to the upside as a result
of changes to estimates for recognizing breakage revenue. For the
full fiscal year, consolidated Adjusted EBITDA was $30.8 million compared to $38.2 million in fiscal 2018.
"Overall, the fourth quarter marked a consistent end to a solid
year, and I want to thank everyone in our company for all their
hard work. As fiscal 2020 gets underway, we are working from a
strong position to vigorously pursue our exciting growth
opportunities."
4Q19 AND FISCAL
YEAR 2019 CONSOLIDATED RESULTS
|
|
Results
(in millions,
except EPS)
|
4Q19
|
3Q19
|
4Q18
|
4Q19 -
4Q18
Change
(%/$)
|
|
Fiscal
Year
2019
|
Fiscal
Year
2018
|
FY2019
–
FY2018
Change
(%/$)
|
Revenue
|
$356.1
|
$341.3
|
$392.6
|
(9.3%)
|
|
$1,409.2
|
$1,547.5
|
(8.9%)
|
Direct cost of
revenue
|
$295.4
|
$282.8
|
$325.1
|
(9.2%)
|
|
$1,174.0
|
$1,306.0
|
(10.1%)
|
Revenue less direct
cost of
revenue
|
$60.8
|
$58.5
|
$67.5
|
(10.0%)
|
|
$235.2
|
$241.5
|
(2.6%)
|
Revenue less direct
cost of
revenue as a percentage of
revenue
|
17.1%
|
17.1%
|
17.2%
|
(0.1%)
|
|
16.7%
|
15.6%
|
+1.1%
|
SG&A
expense
|
$53.4
|
$49.5
|
$50.7
|
+5.3%
|
|
$204.4
|
$203.3
|
+0.5%
|
Depreciation and
amortization
|
$5.8
|
$5.5
|
$5.6
|
+2.8%
|
|
$22.6
|
$22.8
|
(0.7%)
|
Severance
expense
|
$0.9
|
$0.6
|
$0.3
|
+162.7%
|
|
$1.4
|
$4.6
|
(68.9%)
|
(Loss) income from
operations
|
$(1.2)
|
$0.4
|
$10.5
|
($11.7)
|
|
$(1.0)
|
$8.4
|
($9.4)
|
Adjusted
EBITDA*
|
$7.4
|
$8.9
|
$16.8
|
($9.4)
|
|
$30.8
|
$38.2
|
($7.4)
|
Net income
attributable to IDT
|
$1.6
|
$2.2
|
$8.2
|
($6.6)
|
|
$0.1
|
$4.2
|
($4.1)
|
Diluted earnings per
share
|
$0.06
|
$0.08
|
$0.33
|
($0.27)
|
|
$0.01
|
$0.17
|
($0.16)
|
Non-GAAP net
income*
|
$4.1
|
$5.2
|
$9.8
|
($5.7)
|
|
$9.7
|
$12.5
|
($2.8)
|
Non-GAAP earnings per
share*
|
$0.15
|
$0.20
|
$0.40
|
($0.25)
|
|
$0.38
|
$0.51
|
($0.13)
|
|
*Throughout this
release, Non-GAAP earnings per share, 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 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.
|
Notes on Consolidated Results and Balance Sheet
Income
from operations and net income include accruals of $2.6 million, $2.3
million and $8.0 million for
4Q19, 3Q19 and FY 2019, respectively, for non-income related taxes
pertaining to one of our foreign entities in our Telecom &
Payment Services (TPS) segment. Also within TPS, 4Q18 revenue
increased $9.5 million as a result of
changes to estimates for recognizing certain breakage revenue, and
direct cost increased by $4.5 million
as a result of a change in accrued regulatory fee expense.
Consolidated and TPS revenue less direct cost increased by the net
of the changes, $5.0 million.
Consolidated results for all periods presented include corporate
overhead. Corporate G&A expense decreased to $2.1 million in 4Q19 from $2.6 million in 4Q18, and decreased to
$9.2 million in FY 2019 from
$9.8 million in FY 2018.
At July 31, 2019, IDT held
$88.4 million in unrestricted cash,
cash equivalents, debt securities and current equity investments.
Current assets totaled $368.5 million
and current liabilities totaled $389.1
million. As of 3Q19, IDT no longer classifies its
Gibraltar-based bank's assets and
liabilities as "held for sale" in the consolidated balance sheets
for all periods presented.
On August 1, 2018, IDT adopted a
change in GAAP related to the classification and presentation of
changes in restricted cash in the statement of cash flows and has
conformed prior period results.
Net cash provided by operating activities during 4Q19 was
$37.8 million, including a
$26.0 million increase in customer
deposits at IDT's Gibraltar-based
bank, compared to $19.3 million in
the year ago quarter, including a $3.8
million reduction in customer deposits. In the corresponding
periods, capital expenditures were $5.0
million and $4.6 million,
respectively. FY 2019 net cash provided by operating activities was
$85.1 million including a
$59.1 million increase in customer
deposits at IDT's Gibraltar-based
bank, compared to $20.4 million in FY
2018 including a $14.7 million
increase in customer deposits. In the corresponding periods,
capital expenditures were $18.7
million and $20.6 million,
respectively.
4Q19 AND FISCAL YEAR 2019 RESULTS BY SEGMENT
(4Q19
results are compared to 4Q18 and FY 2019 results are compared to FY
2018).
Beginning with fiscal year 2019, IDT has modified the way it
reports its business verticals within its two reporting segments to
align more closely with IDT's business strategy and operational
structure, as follows:
Telecom & Payment Services (TPS)
IDT's TPS segment
accounted for 96.4% and 97.5% of IDT's consolidated revenue in 4Q19
and 4Q18, respectively, and 96.6% and 97.7% of consolidated revenue
in FY 2019 and FY 2018, respectively. The segment includes Core and
Growth verticals:
Core includes IDT's three largest communications and
payments offerings from both a revenue and cash generation
perspective: BOSS Revolution Calling, an international
long-distance calling service marketed primarily to immigrant
communities in the US; Carrier Services, which provides
international long-distance termination and outsourced traffic
management solutions to telecoms worldwide, and; Mobile Top-Up,
which enables customers to transfer airtime and bundles of airtime,
messaging and data credits to mobile phones overseas and within the
US. TPS Core also includes smaller communications and payments
offerings – some of which are in harvest mode.
Growth is comprised of NRS' retailer POS terminal-based
services, the BOSS Revolution international money transfer service,
and the BOSS Revolution Mobile service.
net2phone
IDT's net2phone segment accounted for 3.6%
and 2.5% of IDT's consolidated revenue in 4Q19 and 4Q18,
respectively, and 3.4% and 2.3% of FY 2019 and FY 2018 consolidated
revenue, respectively. The segment comprises two verticals:
net2phone-UCaaS comprises unified cloud communications in
the US and certain international markets and SIP-trunking offerings
in South America.
net2phone-Platform Services includes other offerings
leveraging a common technology platform to provide cable telephony
and other voice services.
Revenue in 4Q19, fiscal year 2019 and comparative periods for
all verticals and the most significant core offerings is provided
in the following chart:
Revenue by Segment
and
Vertical
(in
millions)
|
4Q19
|
3Q19
|
4Q18
|
4Q19-
4Q18 %
change
|
|
FY
2019
|
FY
2018
|
FY
2019-FY
2018
%
change
|
TPS
|
|
|
|
|
|
|
|
|
Core
|
$334.4
|
$321.2
|
$376.9
|
(11.3%)
|
|
$1,332.5
|
$1,490.2
|
(10.6%)
|
BOSS Revolution
Calling
|
$124.5
|
$120.5
|
$136.3
|
(8.6%)
|
|
$490.7
|
$529.7
|
(7.4%)
|
Carrier
Services
|
$123.1
|
$121.0
|
$156.9
|
(21.5%)
|
|
$514.2
|
$639.0
|
(19.5%)
|
Mobile
Top-Up
|
$74.8
|
$67.6
|
$67.4
|
+11.0%
|
|
$272.0
|
$253.6
|
+7.3%
|
Other
|
$11.9
|
$12.2
|
$16.4
|
(27.6%)
|
|
$55.6
|
$67.9
|
(18.1%)
|
Growth
|
$8.9
|
$7.7
|
$6.0
|
+48.0%
|
|
$29.4
|
$21.3
|
+38.1%
|
Total TPS
|
$343.3
|
$328.8
|
$383.0
|
(10.4%)
|
|
$1,361.9
|
$1,511.5
|
(9.9%)
|
net2phone
|
|
|
|
|
|
|
|
|
net2phone-UCaaS
|
$7.0
|
$6.7
|
$3.9
|
+77.6%
|
|
$24.5
|
$13.3
|
+84.4%
|
net2phone-Platform
Services
|
$5.9
|
$5.8
|
$5.7
|
+2.0%
|
|
$22.8
|
$21.6
|
+5.6%
|
Total
net2phone
|
$12.9
|
$12.4
|
$9.7
|
+32.8%
|
|
$47.3
|
$34.9
|
+35.6%
|
Segment level financial results are summarized in the following
chart:
Results by
Segment
(in
millions)
|
TPS
|
net2phone
|
4Q19
|
4Q18
|
FY2019
|
FY2018
|
4Q19
|
4Q18
|
FY2019
|
FY2018
|
Revenue
|
$343.3
|
$383.0
|
$1,361.9
|
$1,511.5
|
$12.9
|
$9.7
|
$47.3
|
$34.9
|
Direct cost of
revenue
|
$292.1
|
$322.1
|
$1,161.2
|
$1,294.8
|
$3.2
|
$3.1
|
$12.9
|
$11.3
|
Revenue less direct
cost of
revenue
|
$51.1
|
$60.9
|
$200.7
|
$216.7
|
$9.6
|
$6.6
|
$34.4
|
$23.6
|
SG&A
expense
|
$41.7
|
$42.7
|
$161.1
|
$170.1
|
$9.6
|
$5.4
|
$34.1
|
$20.9
|
Depreciation and
amortization
|
$4.2
|
$4.0
|
$16.1
|
$16.3
|
$1.5
|
$1.6
|
$6.5
|
$5.3
|
Severance
expense
|
$0.9
|
$0.3
|
$1.4
|
$4.5
|
-
|
-
|
-
|
-
|
Income (loss)
from
operations
|
$1.7
|
$13.8
|
$14.3
|
$25.8
|
($1.8)
|
($0.4)
|
($6.5)
|
($2.7)
|
Adjusted
EBITDA
|
$9.4
|
$18.2
|
$39.6
|
$46.7
|
-
|
$1.2
|
$0.3
|
$2.7
|
TPS Segment Takeaways - Core:
- 4Q19 revenue from core offerings decreased $42.5 million (11.3%) to $334.4 million reflecting continuing headwinds in
the paid minute communications market globally;
- FY 2019 revenue from core offerings decreased $157.7 million (10.6%) to $1,332.5 million. From a margin perspective, the
impact of the revenue decline was partially offset by an increase
in the percentage of margin contribution generated by Carrier
Services revenue and by the mix increase in the relatively higher
margin BOSS Revolution Calling revenue as a component of all Core
revenue.
TPS Segment Takeaways - Growth:
- NRS 4Q19 revenue increased by 71.9% compared to the year ago
quarter to $1.9 million, while FY
2019 revenue rose 55.9% to $6.2
million. The increases were driven by expansion of NRS' POS
network to additional retailers and emerging NRS offerings to other
participants, including sales of advertising capacity to
digital-out-of-home advertisers and transaction data to data
analytics and consumer package goods marketers;
- BOSS Revolution money transfer revenue increased 42.2% compared
to the year ago quarter to $6.9
million led by an 87.6% increase in sales through D2C
channels. FY 2019 money transfer revenue increased 33.3%
year-over-year to $23.1 million. D2C
sales contributed over 60% of money transfer revenue in FY
2019;
- IDT is optimizing its BOSS Revolution mobile offering including
enhanced marketing, training of IDT's direct to retailer sales
force and improving the user experience.
net2phone Segment Takeaways:
- net2phone-UCaaS revenue increased 77.5% compared to the year
ago quarter to $7.0 million led by
growth in South American markets and reflecting the acquisition of
Canadian provider Versature in 1Q19. Revenue totaled $24.5 million in FY 2019 compared to $13.3 million in FY 2018;
- net2phone-UCaaS served 100,000 seats at July 31st, compared to 89,000 at April 30th and 42,000 at July 31st of 2018.
IDT EARNINGS ANNOUNCEMENT & SUPPLEMENTAL
INFORMATION
This release is available for download in the
"Investors & Media" 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 Eastern 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 US) or 1-412-902-4243
(international) and request the IDT Corporation call.
A replay of the conference call will be available approximately
two hours after the call concludes through October 17, 2019. To access the replay, dial toll
free 1-844-512-2921 (from US) or 1-412-317-6671 (international) and
provide this replay number: 10134470. A replay will also be
accessible via streaming audio at the IDT investor relations
website (http://ir.idt.net/).
ABOUT IDT:
IDT Corporation (NYSE: IDT) provides
communications and payment services to individuals and businesses
primarily through its flagship Boss Revolution® and
net2phone® brands. IDT's wholesale carrier services
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.
CONSOLIDATED
BALANCE SHEETS
|
|
July 31
(in thousands, except per share data)
|
|
2019
|
2018
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
|
$
80,168
|
$ 73,981
|
Restricted cash and
cash equivalents
|
|
177,031
|
129,216
|
Debt
securities
|
|
2,534
|
5,612
|
Equity
investments
|
|
5,688
|
360
|
Trade accounts
receivable, net of allowance for doubtful accounts of $5,444 and
$5,358
at July 31, 2019 and 2018,
respectively
|
|
58,060
|
70,746
|
Prepaid
expenses
|
|
20,276
|
20,566
|
Other current
assets
|
|
24,704
|
28,400
|
TOTAL CURRENT
ASSETS
|
|
368,461
|
328,881
|
Property, plant and
equipment, net
|
|
34,355
|
36,080
|
Goodwill
|
|
11,209
|
11,315
|
Other intangibles,
net
|
|
4,196
|
496
|
Equity
investments
|
|
9,319
|
6,633
|
Deferred income tax
assets, net
|
|
4,589
|
5,668
|
Other
assets
|
|
11,574
|
10,524
|
TOTAL
ASSETS
|
|
$
443,703
|
$ 399,597
|
LIABILITIES AND
EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Trade accounts
payable
|
|
$
37,077
|
$ 45,900
|
Accrued
expenses
|
|
127,834
|
130,225
|
Deferred
revenue
|
|
42,479
|
55,015
|
Customer
deposits
|
|
175,028
|
127,571
|
Other current
liabilities
|
|
6,652
|
8,273
|
TOTAL CURRENT
LIABILITIES
|
|
389,070
|
366,984
|
Other
liabilities
|
|
1,076
|
1,310
|
TOTAL
LIABILITIES
|
|
390,146
|
368,294
|
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 July
31, 2019 and 2018
|
|
33
|
33
|
Class B common stock,
$.01 par value; authorized shares—200,000; 25,803 and 25,594
shares issued and 24,895 and 22,872
shares outstanding at July 31, 2019 and 2018,
respectively
|
|
258
|
256
|
Additional paid-in
capital
|
|
273,313
|
294,047
|
Treasury stock, at
cost, consisting of 1,698 and 1,698 shares of Class A common
stock
and 908 and 2,722 shares of Class B
common stock at July 31, 2019 and 2018,
respectively
|
|
(51,739)
|
(85,597)
|
Accumulated other
comprehensive loss
|
|
(4,858)
|
(4,972)
|
Accumulated
deficit
|
|
(160,763)
|
(173,103)
|
Total IDT Corporation
stockholders' equity
|
|
56,244
|
30,664
|
Noncontrolling
interests
|
|
(2,687)
|
639
|
TOTAL
EQUITY
|
|
53,557
|
31,303
|
TOTAL LIABILITIES
AND EQUITY
|
|
$
443,703
|
$ 399,597
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
Year ended July
31
(in thousands, except per share data)
|
|
2019
|
2018
|
2017
|
REVENUES
|
|
$
1,409,172
|
$
1,547,495
|
$
1,501,729
|
COSTS AND
EXPENSES:
|
|
|
|
|
Direct cost of
revenues (exclusive of depreciation and amortization)
|
|
1,174,015
|
1,306,037
|
1,275,708
|
Selling, general and
administrative (i)
|
|
204,366
|
203,251
|
188,293
|
Depreciation and
amortization
|
|
22,632
|
22,801
|
21,704
|
Severance
|
|
1,438
|
4,630
|
—
|
TOTAL COSTS AND
EXPENSES
|
|
1,402,451
|
1,536,719
|
1,485,705
|
Other operating
expense, net
|
|
(7,726)
|
(2,398)
|
(10,475)
|
(Loss) income from
operations
|
|
(1,005)
|
8,378
|
5,549
|
Interest income,
net
|
|
776
|
1,071
|
1,254
|
Other income
(expense), net
|
|
682
|
(1,348)
|
817
|
Income before income
taxes
|
|
453
|
8,101
|
7,620
|
(Provision for)
benefit from income taxes
|
|
(123)
|
(2,902)
|
2,021
|
NET
INCOME
|
|
330
|
5,199
|
9,641
|
Net income
attributable to noncontrolling interests
|
|
(196)
|
(991)
|
(1,464)
|
NET INCOME
ATTRIBUTABLE TO IDT CORPORATION
|
|
$
134
|
$ 4,208
|
$ 8,177
|
|
|
|
|
|
Earnings per share
attributable to IDT Corporation common stockholders:
|
|
|
|
|
Basic
|
|
$
0.01
|
$ 0.17
|
$ 0.35
|
Diluted
|
|
$
0.01
|
$ 0.17
|
$ 0.35
|
|
|
|
|
|
Weighted-average number
of shares used in calculation of earnings per share:
|
|
|
|
|
Basic
|
|
25,293
|
24,655
|
23,182
|
Diluted
|
|
25,308
|
24,718
|
23,309
|
|
|
|
|
|
(i) Stock-based
compensation included in selling, general and administrative
expenses
|
|
$
2,236
|
$ 3,581
|
$ 3,740
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
Year ended July
31
(in thousands)
|
2019
|
2018
|
2017
|
OPERATING
ACTIVITIES
|
|
|
|
Net income
|
$
330
|
$ 5,199
|
$ 9,641
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
22,632
|
22,801
|
21,704
|
Deferred income
taxes
|
285
|
6,174
|
(2,329)
|
Provision for doubtful
accounts receivable
|
2,028
|
2,199
|
686
|
Stock-based
compensation
|
2,236
|
3,581
|
3,740
|
Other
|
(1,765)
|
7
|
(679)
|
Change in assets and
liabilities:
|
|
|
|
Trade accounts
receivable
|
7,594
|
(6,668)
|
(17,972)
|
Prepaid expenses,
other current assets, and other assets
|
4,119
|
(18,889)
|
(4,856)
|
Trade accounts
payable, accrued expenses, other current liabilities, and other
liabilities
|
(7,546)
|
12,769
|
16,722
|
Customer deposits at
IDT Financial Services Limited, our Gibraltar-based bank
|
59,077
|
14,660
|
18,980
|
Deferred
revenue
|
(3,853)
|
(21,439)
|
(9,543)
|
Net cash provided by
operating activities
|
85,137
|
20,394
|
36,094
|
INVESTING
ACTIVITIES
|
|
|
|
Capital
expenditures
|
(18,681)
|
(20,567)
|
(22,949)
|
Proceeds from sale of
interest in Straight Path IP Group Holding, Inc
|
—
|
6,000
|
—
|
Purchase of IP
interest from Straight Path Communications Inc
|
—
|
(6,000)
|
—
|
Payments for
acquisitions, net of cash acquired
|
(5,526)
|
—
|
(1,827)
|
Cash used for
purchase of investments
|
(1,000)
|
(53)
|
(9,438)
|
Proceeds from
redemptions of investments
|
1,000
|
—
|
15
|
Purchases of
marketable securities
|
(7,276)
|
(22,523)
|
(53,402)
|
Proceeds from
maturities and sales of marketable securities
|
5,312
|
41,502
|
47,996
|
Net cash used in
investing activities
|
(26,171)
|
(1,641)
|
(39,605)
|
FINANCING
ACTIVITIES
|
|
|
|
Dividends
paid
|
—
|
(13,941)
|
(17,874)
|
Distributions to
noncontrolling interests
|
(1,520)
|
(1,040)
|
(1,482)
|
Repayment of other
liabilities acquired
|
(654)
|
—
|
—
|
Proceeds from sales
of Class B common stock to Howard S. Jonas
|
13,272
|
—
|
24,930
|
Proceeds from sale of
interest and rights in Rafael Pharmaceuticals, Inc. to Howard S.
Jonas
|
—
|
—
|
1,000
|
Proceeds from sale of
member interests in CS Pharma Holdings, LLC
|
—
|
—
|
1,250
|
Cash of Rafael
deconsolidated as a result of spin-off
|
—
|
(9,287)
|
—
|
Proceeds from
exercise of stock options
|
—
|
—
|
836
|
Proceeds from
borrowings under revolving credit facility
|
3,000
|
22,320
|
—
|
Repayments of
borrowings under revolving credit facility
|
(3,000)
|
(22,320)
|
—
|
Repurchases of Class
B common stock
|
(3,882)
|
(2,293)
|
(1,838)
|
Net cash provided by
(used in) financing activities
|
7,216
|
(26,561)
|
6,822
|
Effect of exchange
rate changes on cash, cash equivalents, and restricted cash and
cash equivalents
|
(12,180)
|
(957)
|
293
|
Net increase
(decrease) in cash, cash equivalents, and restricted cash and cash
equivalents
|
54,002
|
(8,765)
|
3,604
|
Cash, cash
equivalents, and restricted cash and cash equivalents at beginning
of year
|
203,197
|
211,962
|
208,358
|
Cash, cash
equivalents, and restricted cash and cash equivalents at end
of year
|
$
257,199
|
$ 203,197
|
$ 211,962
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
Cash payments made for
interest
|
$
186
|
$ 94
|
$ 288
|
Cash payments made for
income taxes
|
$
46
|
$ 192
|
$ 576
|
SUPPLEMENTAL
SCHEDULE OF NON-CASH FINANCING AND INVESTING
ACTIVITIES
|
|
|
|
Howard S. Jonas's
advance payment used for sale of Class B common stock
|
$
1,500
|
$ —
|
$ —
|
Net assets excluding
cash and cash equivalents of Rafael deconsolidated as a result of
spin-off
|
$ —
|
$
(105,632)
|
$ —
|
Reclassification of
liability for member interests in CS Pharma Holdings,
LLC
|
$ —
|
$ —
|
$ 8,750
|
Reconciliation of Non-GAAP Financial Measures for
the
Fourth Quarter and Full Fiscal Years 2019 and 2018
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 4Q19, 3Q19, 4Q18 and the full
fiscal years 2019 and 2018, Adjusted EBITDA, non-GAAP net income
and non-GAAP earnings per share, 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 revenue 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 deduct other gains,
net.
IDT's measure of non-GAAP net income starts with net income in
accordance with GAAP and adds severance expense, stock-based
compensation, and other operating expense, net, and subtracts the
income tax benefit from The Tax Cuts and Jobs Act.
IDT's measure of non-GAAP earnings per share 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 2019 and fiscal 2018 periods.
Management believes that IDT's Adjusted EBITDA, non-GAAP net
income and non-GAAP earnings per share 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 earnings per
share 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 (loss) income 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 Adjusted
EBITDA, which is exclusive of depreciation and amortization, is a
useful indicator of its current performance.
Severance expense is excluded from the calculation of Adjusted
EBITDA, non-GAAP net income and non-GAAP earnings per share.
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, net, which is a component of (loss)
income from operations, is excluded from the calculation of
Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per
share. In 4Q19, 3Q19 and fiscal 2019, other operating expense, net
included an accrual for non-income related taxes related to one of
our foreign entities. In fiscal 2019 and fiscal 2018, other
operating expense, net also included legal fees net of insurance
proceeds related to Straight Path Communications Inc.'s
stockholders' putative class action and derivative complaint. In
addition, in 2Q19, other operating expense, net included a gain on
the sale of a calling card business in Asia. From time-to-time, IDT may incur costs
related to non-routine tax, legal and regulatory matters or
disposal of certain assets. However, these matters and disposals do
not occur each quarter. IDT does not believe the gains or losses
from these non-routine matters or asset sales are components of
IDT's or the relevant segment's core operating results.
The other calculation of Adjusted EBITDA consists of revenue
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 earnings per share 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.
In 2Q18, IDT recorded an income tax benefit of $3.3 million for its anticipated AMT credit
refund due to The Tax Cuts and Jobs Act enacted in December 2017. This income tax benefit is
excluded from IDT's calculation of non-GAAP net income and non-GAAP
earnings per share because it was not directly related to the
results of IDT's core operations.
Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per
share 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 earnings per
share 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 earnings per share to the most directly
comparable GAAP measure, which are, (a) for Adjusted EBITDA, (loss)
income 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 earnings per share, 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
&
Payment
Services
|
net2phone
|
All
Other
|
Corporate
|
Three Months Ended
July 31, 2019
(4Q19)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 7.4
|
|
$ 9.4
|
$ -
|
$ -
|
$ (2.1)
|
Subtract
(Add):
|
|
|
|
|
|
|
Depreciation and
amortization
|
5.8
|
|
4.2
|
1.5
|
-
|
-
|
Severance
expense
|
0.9
|
|
0.9
|
-
|
-
|
-
|
Other operating
expense (gains), net
|
1.9
|
|
2.6
|
0.3
|
-
|
(1.0)
|
(Loss) income from
operations
|
(1.2)
|
|
$ 1.7
|
$ (1.8)
|
$ -
|
$ (1.1)
|
Interest income,
net
|
0.3
|
|
|
|
|
|
Other income,
net
|
1.2
|
|
|
|
|
|
Income before income
taxes
|
0.3
|
|
|
|
|
|
Benefit from income
taxes
|
0.6
|
|
|
|
|
|
Net income
|
0.9
|
|
|
|
|
|
Net loss attributable
to noncontrolling
interests
|
0.7
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$ 1.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT
Corporation
|
|
Telecom
&
Payment
Services
|
net2phone
|
All
Other
|
Corporate
|
Three Months Ended
April 30, 2019
(3Q19)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 8.9
|
|
$ 11.3
|
$ 0.1
|
$ -
|
$ (2.4)
|
Subtract:
|
|
|
|
|
|
|
Depreciation and
amortization
|
5.5
|
|
4.2
|
1.4
|
-
|
-
|
Severance
expense
|
0.6
|
|
0.6
|
-
|
-
|
-
|
Other operating
expense
|
2.4
|
|
2.3
|
-
|
-
|
0.1
|
Income (loss) from
operations
|
0.4
|
|
$ 4.2
|
$ (1.3)
|
$ -
|
$ (2.5)
|
Interest income,
net
|
0.2
|
|
|
|
|
|
Other income,
net
|
0.4
|
|
|
|
|
|
Income before income
taxes
|
1.0
|
|
|
|
|
|
Benefit from income
taxes
|
1.5
|
|
|
|
|
|
Net income
|
2.5
|
|
|
|
|
|
Net income
attributable to noncontrolling
interests
|
(0.3)
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$ 2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
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
&
Payment
Services
|
net2phone
|
All
Other
|
Corporate
|
Three Months Ended
July 31, 2018
(4Q18)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 16.8
|
|
$ 18.2
|
$ 1.2
|
$ -
|
$ (2.6)
|
Subtract:
|
|
|
|
|
|
|
Depreciation and
amortization
|
5.6
|
|
4.0
|
1.6
|
-
|
-
|
Severance
expense
|
0.3
|
|
0.3
|
-
|
-
|
-
|
Other operating
expense
|
0.4
|
|
-
|
0.1
|
-
|
0.3
|
Income (loss) from
operations
|
10.5
|
|
$ 13.8
|
$ (0.4)
|
$ -
|
$ (2.9)
|
Interest income,
net
|
0.2
|
|
|
Other expense,
net
|
(0.2)
|
|
|
Income before income
taxes
|
10.5
|
|
|
Provision for income
taxes
|
(2.0)
|
|
|
Net income
|
8.5
|
|
|
Net income
attributable to noncontrolling interests
|
(0.3)
|
|
|
Net income
attributable to IDT Corporation
|
$ 8.2
|
|
|
|
|
|
|
|
|
|
|
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
&
Payment
Services
|
net2phone
|
All
Other
|
Corporate
|
Year Ended July
31, 2019 (FY 2019)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 30.8
|
|
$ 39.6
|
$ 0.3
|
$ -
|
$ (9.2)
|
Subtract
(Add):
|
|
|
|
|
|
|
Depreciation and
amortization
|
22.6
|
|
16.1
|
6.5
|
-
|
-
|
Severance
expense
|
1.4
|
|
1.4
|
-
|
-
|
-
|
Other operating
expense (gains), net
|
7.7
|
|
7.8
|
0.3
|
-
|
(0.3)
|
(Loss) income from
operations
|
(1.0)
|
|
$ 14.3
|
$ (6.5)
|
$ -
|
$ (8.9)
|
Interest income,
net
|
0.8
|
|
|
|
|
|
Other income,
net
|
0.7
|
|
|
|
|
|
Income before income
taxes
|
0.5
|
|
|
|
|
|
Provision for income
taxes
|
(0.1)
|
|
|
|
|
|
Net income
|
0.3
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
(0.2)
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$ 0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT
Corporation
|
|
Telecom
&
Payment
Services
|
net2phone
|
All
Other
|
Corporate
|
Year Ended July
31, 2018 (FY 2018)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$ 38.2
|
|
$ 46.7
|
$ 2.7
|
$ (1.4)
|
$ (9.8)
|
Subtract:
|
|
|
|
|
|
|
Depreciation and
amortization
|
22.8
|
|
16.3
|
5.3
|
1.2
|
-
|
Severance
expense
|
4.6
|
|
4.5
|
-
|
-
|
0.1
|
Other operating
expense
|
2.4
|
|
-
|
0.1
|
-
|
2.3
|
Income (loss) from
operations
|
8.4
|
|
$ 25.8
|
$ (2.7)
|
$ (2.6)
|
$ (12.2)
|
Interest income,
net
|
1.1
|
|
|
|
|
|
Other expense,
net
|
(1.3)
|
|
|
|
|
|
Income before income
taxes
|
8.1
|
|
|
|
|
|
Provision for income
taxes
|
(2.9)
|
|
|
|
|
|
Net income
|
5.2
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
(1.0)
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$ 4.2
|
|
|
|
|
|
IDT
Corporation
|
Reconciliations of
Net Income to Non-GAAP Net Income and Earnings per share to
Non-GAAP Earnings per
share
|
(unaudited)
|
in millions, except
per share data
|
Figures may not foot
due to rounding to millions.
|
|
|
4Q19
|
3Q19
|
4Q18
|
FY
2019
|
FY
2018
|
|
|
|
|
|
|
Net income
|
$ 0.9
|
$ 2.5
|
$ 8.5
|
$ 0.3
|
$ 5.2
|
Adjustments (add)
subtract:
|
|
|
|
|
|
Stock-based
compensation
|
(1.0)
|
(0.3)
|
(0.7)
|
(2.2)
|
(3.6)
|
Severance
expense
|
(0.9)
|
(0.6)
|
(0.3)
|
(1.4)
|
(4.6)
|
Other operating
expense, net
|
(1.9)
|
(2.4)
|
(0.4)
|
(7.7)
|
(2.4)
|
Income tax
benefit
|
-
|
-
|
-
|
-
|
3.3
|
Total
adjustments
|
(3.8)
|
(3.3)
|
(1.5)
|
(11.4)
|
(7.3)
|
Income tax effect of
total adjustments
|
0.6
|
0.6
|
0.2
|
2.0
|
-
|
|
3.2
|
2.7
|
1.3
|
9.4
|
7.3
|
Non-GAAP net
income
|
$ 4.1
|
$ 5.2
|
$ 9.8
|
$ 9.7
|
$ 12.5
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic
|
$ 0.06
|
$ 0.08
|
$ 0.33
|
$ 0.01
|
$ 0.17
|
Total
adjustments
|
0.09
|
0.12
|
0.07
|
0.37
|
0.34
|
Non-GAAP -
basic
|
$ 0.15
|
$ 0.20
|
$ 0.40
|
$ 0.38
|
$ 0.51
|
|
|
|
|
|
|
Weighted-average
number of shares used
in calculation of basic earnings per share
|
26.3
|
26.3
|
24.7
|
25.3
|
24.7
|
|
|
|
|
|
|
Diluted
|
$ 0.06
|
$ 0.08
|
$ 0.33
|
$ 0.01
|
$ 0.17
|
Total
adjustments
|
0.09
|
0.12
|
0.07
|
0.37
|
0.34
|
Non-GAAP -
diluted
|
$ 0.15
|
$ 0.20
|
$ 0.40
|
$ 0.38
|
$ 0.51
|
|
|
|
|
|
|
Weighted-average
number of shares used
in calculation of diluted earnings per share
|
26.3
|
26.3
|
24.7
|
25.3
|
24.7
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE IDT Corporation