NEWARK, N.J., Oct. 9, 2018 /PRNewswire/ -- IDT Corporation
(NYSE: IDT) reported EPS of $0.33 per
share and non-GAAP EPS* of $0.40 on
revenue of $392.6 million for the
fourth quarter of FY 2018, the three months ended July 31, 2018.
For FY 2018, IDT reported EPS of $0.17 and non-GAAP EPS of $0.51 on revenue of $1.5
billion.
Fourth quarter and fiscal year 2018 consolidated and Telecom
& Payment Services (TPS) segment revenue increased $9.5 million as a result of changes to estimates
for recognizing certain breakage revenue, and TPS' direct cost
increased by $4.5 million as a result
of a change in accrued regulatory fee expense. TPS' revenue less
direct cost increased by the net of the changes, $5.0 million.
HIGHLIGHTS
(4Q18 results are compared to 4Q17.
FY 2018 results refer to full fiscal year 2018 results and
are compared to FY 2017)
- 4Q18 revenue of $392.6 million
compared to $395.0 million. FY
2018 revenue increased to $1,547.5
million compared to $1,501.7
million;
- 4Q18 income from operations increased to $10.5 million compared to $3.7 million. FY 2018 income from
operations increased to $8.4 million
compared to $5.5 million;
- 4Q18 Adjusted EBITDA* increased to $16.8
million compared to $8.6
million. FY 2018 Adjusted EBITDA increased to
$38.2 million compared to
$37.7 million;
- 4Q18 EPS of $0.33 compared to a
loss per share of $0.41. FY
2018 EPS of $0.17 compared to
$0.35;
- 4Q18 non-GAAP EPS* increased to $0.40 compared to $0.07. FY 2018 non-GAAP EPS of
$0.51 was unchanged compared to FY
2017;
- Following the quarter close, IDT's net2phone subsidiary
acquired Versature, a provider of unified communications services
to Canadian businesses;
- Beginning in July and continuing through October 5th, 2018, IDT repurchased approximately
1.1 million shares of its Class B Common stock for $5.8 million pursuant to an outstanding
repurchase authorization of 8.0 million shares;
- IDT has discontinued its quarterly dividend, electing instead
to return value to stockholders through share repurchases while
investing in its growth business initiatives.
REMARKS BY SHMUEL JONAS, CEO
OF IDT CORPORATION
"The fourth quarter overall was consistent with recent trends,
but our top and bottom lines were positively impacted by the growth
in our early stage businesses. The resilience in many of our
core offerings also collectively increased profitability despite
facing industry-wide headwinds for paid voice minutes.
"Following the quarter close, net2phone took a big leap forward
with the launch of a new technology platform – net2phone 2.0. The
new platform is built on an internally developed, proprietary stack
instead of a third-party platform. It incorporates many of the
groundbreaking technologies that we pioneered at IDT and net2phone
over the past 25 years as well as those we attained with the Live
Ninja acquisition. We expect to integrate additional
disruptive technologies including those obtained through the HD
Messaging and Versature acquisitions in the near term.
"The need for additional capital to invest in our growth
initiatives as they scale and the current low valuation of the
company prompted IDT's Board of Directors to discontinue our
quarterly dividend and execute a stock buyback program. The
Board determined, and I agree, that we can more effectively enhance
long-term shareholder value by using the cash generated by our core
offerings to increase investment in our early stage initiatives
while retaining the flexibility to return value to shareholders
through stock repurchases when warranted by market conditions,
available resources, and our business outlook and
results.
"Over the past three months, we have bought back 1.1 million
shares of our Class B Common stock in the open market for
$5.8 million."
4Q18 AND FY 2018
CONSOLIDATED RESULTS
|
|
Results
(in millions,
except EPS)
|
4Q18**
|
3Q18**
|
4Q17
|
4Q18 -
4Q17
Change
(%/$)
|
FY
2018
|
FY
2017
|
FY 2018 -FY
2017 Change
(%/$)
|
Revenue
|
$392.6
|
$365.4
|
$395.0
|
(0.6)%
|
$1,547.5
|
$1,501.7
|
+3.0%
|
Direct cost of
revenue
|
$325.1
|
$307.2
|
$337.1
|
(3.5)%
|
$1,306.0
|
$1,275.7
|
+2.4%
|
Direct cost of
revenue as
a percentage of revenue
|
82.8%
|
84.1%
|
85.3%
|
(250) BP
|
84.4%
|
84.9%
|
(50) BP
|
SG&A
expense
|
$50.7
|
$50.1
|
$49.3
|
+2.7%
|
$203.3
|
$188.3
|
+7.9%
|
Depreciation and
amortization
|
$5.6
|
$5.8
|
$5.6
|
(0.6)%
|
$22.8
|
$21.7
|
+5.1%
|
Severance
expense
|
$0.3
|
$3.7
|
-
|
+$0.3
|
$4.6
|
-
|
+$4.6
|
Other (losses)
gains
|
$(0.4)
|
$(0.3)
|
$0.8
|
$(1.2)
|
$(2.4)
|
$(10.5)
|
+$8.1
|
Income (loss)
from
operations
|
$10.5
|
$(1.7)
|
$3.7
|
+$6.7
|
$8.4
|
$5.5
|
+$2.8
|
Adjusted
EBITDA*
|
$16.8
|
$8.1
|
$8.6
|
+$8.2
|
$38.2
|
$37.7
|
+$0.5
|
Net income (loss)
attributable to IDT
|
$8.2
|
$(3.5)
|
$(9.8)
|
$18.1
|
$4.2
|
$8.2
|
$(4.0)
|
Diluted earnings
(loss)
per share
|
$0.33
|
$(0.14)
|
$(0.41)
|
$0.74
|
$0.17
|
$0.35
|
$(0.18)
|
Non-GAAP net
income*
|
$9.8
|
$1.8
|
$1.8
|
$8.0
|
$12.5
|
$11.9
|
$0.6
|
Non-GAAP
EPS*
|
$0.40
|
$0.07
|
$0.07
|
$0.33
|
$0.51
|
$0.51
|
N.C.
|
|
*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.
|
|
** Note that 4Q18
had 92 days compared to 89 days in 3Q18
|
Notes on Consolidated Results and Balance
Sheet
Consolidated results for all periods presented include corporate
overhead. In 4Q18, corporate G&A expense increased 22.6%
to $2.6 million from $2.1 million in the year ago quarter. For
FY 2018, corporate G&A expense increased 25.2% to $9.8 million from $7.8
million in FY 2017.
At July 31, 2018, IDT held
$74.1 million in unrestricted cash,
cash equivalents and marketable securities. Current assets totaled
$328.9 million and current
liabilities totaled $367.0
million. Reflecting IDT's agreement to sell its
Gibraltar-based bank, all of the
bank's assets and liabilities at July 31,
2018 and 2017 are classified as "Held for sale" in the
consolidated balance sheets.
Net cash provided by operating activities during 4Q18 was
$22.3 million compared to
$18.5 million in 4Q17. In the
corresponding periods, capital expenditures were $4.6 million and $5.9
million, respectively. FY 2018 net cash provided by
operating activities was $6.9 million
compared to $19.0 million in FY 2017.
In the corresponding periods, capital expenditures were
$20.6 million and $22.9 million, respectively.
4Q18 AND FY 2018
RESULTS BY SEGMENT
|
(Results are for
4Q18 unless otherwise noted).
|
|
Results by
Segment
(in
millions)
|
TPS
|
net2phone -
UCaaS
|
4Q18
|
4Q17
|
FY
2018
|
FY
2017
|
4Q18
|
4Q17
|
FY
2018
|
FY
2017
|
Revenue
|
$383.0
|
$386.5
|
$1,511.5
|
$1,470.0
|
$9.7
|
$7.8
|
$34.9
|
$29.4
|
Direct cost of
revenue
|
$322.1
|
$334.3
|
$1,294.7
|
$1,263.8
|
$3.1
|
$2.8
|
$11.3
|
$12.0
|
SG&A
expense
|
$42.7
|
$42.5
|
$170.1
|
$164.5
|
$5.4
|
$4.5
|
$20.9
|
$15.5
|
Depreciation and
amortization
|
$4.0
|
$4.0
|
$16.3
|
$16.1
|
$1.6
|
$1.2
|
$5.3
|
$3.9
|
Severance
expense
|
$0.3
|
-
|
$4.5
|
-
|
-
|
-
|
-
|
-
|
Income (loss)
from
operations
|
$13.8
|
$5.8
|
$25.8
|
$25.5
|
$(0.4)
|
$(0.8)
|
$(2.7)
|
$(1.9)
|
Adjusted
EBITDA
|
$18.2
|
$9.7
|
$46.7
|
$41.7
|
$1.2
|
$0.4
|
$2.7
|
$2.0
|
Telecom & Payment Services (TPS)
The TPS segment
contributed 97.5% of IDT's revenue in 4Q18 and 97.7% of IDT's
revenue in FY 2018. TPS markets and distributes multiple
communications and payment services across three verticals, each of
which is comprised of multiple offerings: Retail Communications,
Wholesale Carrier Services and Payment Services.
TPS' 4Q18 revenue decreased 0.9% to $383.0 million from $386.5
million, while TPS' revenue less direct costs increased
16.6% to $60.9 million. For FY
2018, TPS' revenue increased by 2.8% to $1,511.5 million, while revenue less direct costs
increased 5.1% to $216.7 million.
4Q18 and FY 2018 revenue increased $9.5
million as a result of changes to estimates for recognizing
certain breakage revenue, and direct cost increased by $4.5 million as a result of a change in accrued
regulatory fee expense.
TPS Revenue
by Business
Vertical
($ in
millions)
|
4Q18
|
3Q18
|
4Q17
|
4Q18 -
4Q17
%
Change
|
4Q18-4Q17
% Change
in Minutes
of Use
|
4Q18
Revenue
as % of
all TPS
|
FY
2018
|
FY
2017
|
FY 2018 –
FY 2017
% Change
|
Retail
Communications
|
$148.9
|
$142.0
|
$152.6
|
(2.4)%
|
(16.1)%
|
38.9%
|
$582.3
|
$615.6
|
(5.4)%
|
Wholesale
Carrier Services
|
$158.4
|
$144.2
|
$167.9
|
(5.7)%
|
(7.2)%
|
41.3%
|
$645.5
|
$609.1
|
+6.0%
|
Payment
Services
|
$75.7
|
$70.2
|
$66.0
|
+14.7%
|
na
|
19.8%
|
$283.7
|
$245.3
|
+15.7%
|
Total
TPS
|
$383.0
|
$356.4
|
$386.5
|
(0.9)%
|
(9.3)%
|
100.0%
|
$1,511.5
|
$1,470.0
|
+2.8%
|
Retail Communications:
IDT's flagship BOSS Revolution® calling service – which
accounted for over 90% of Retail Communications' revenue in 4Q18
and full fiscal year 2018- continued to be negatively impacted by
persistent, market-wide trends including the proliferation of
unlimited calling plans offered by wireless carriers and MVNOs,
increasing penetration of free and paid over-the-top voice and
messaging services and decreased immigration into the U.S.
Revenue from other Retail Communications offerings, including the
sale of traditional 'hard' prepaid calling cards in the U.S. and
overseas, continued to decline in line with expectations.
Wholesale Carrier
Services: Wholesale Carrier Services' revenue decreased
compared to the year ago quarter largely as a result of diminished
volumes on certain heavily trafficked, low margin-per-minute
routes. For the full fiscal year, Wholesale Carrier Services
revenue increased as the business gained market share.
Wholesale Carrier Services' operations are managed to maximize the
TPS segment's gross profit. Revenues in this vertical have
historically been more volatile than in Retail Communications, and
changes in revenue do not necessarily generate corresponding
changes in profitability.
Payment Services:
Payment Services' revenue increased year-over-year primarily
reflecting growth in mobile top-up sales, which comprised nearly
90% of Payment Services' revenue in 4Q18 and full fiscal year
2018. Sales generated by the BOSS Revolution money transfer
service - primarily from its direct-to-consumer offering (app and
web) - and from NRS' point of sale (POS) terminal-based services
also increased.
TPS' direct cost of revenue in 4Q18, expressed as a percentage
of TPS' revenue, decreased to 84.1% from 86.5% in 4Q17, and to
85.7% in FY 2018 from 86.0% in FY 2017.
TPS' SG&A expense in 4Q18 - $42.7
million – increased 0.5% from the year ago quarter.
TPS' full fiscal year SG&A expense increased 3.4% to
$170.1 million primarily due to
higher employee compensation costs and credit card charges,
partially offset by a decrease in marketing expense. TPS' SG&A
expense expressed as a percentage of revenue increased 10 basis
points to 11.1% in 4Q18 compared to the year ago quarter. For
FY 2018, TPS' SG&A expense as a percentage of revenue also
increased 10 basis points to 11.3% compared to the prior year.
TPS' income from operations increased to $13.8 million in 4Q18 from $5.8 million in 4Q17. TPS' FY 2018 income
from operations was $25.8 million,
including severance expense of $4.5
million, compared to income from operations of $25.5 million in FY 2017 when no severance
expense was incurred. The increases were primarily attributable to
the net $5.0 million increase in
income from operations in 4Q18 resulting from the changes in
accounting estimates discussed above.
TPS' Adjusted EBITDA increased to $18.2
million in 4Q18 from $9.7
million in 4Q17. TPS's FY 2018 Adjusted EBITDA
increased to $46.7 million from
$41.7 million in FY 2017.
net2phone - Unified Communications as a Service
(UCaaS)
The net2phone - UCaaS segment is comprised of
offerings from IDT's net2phone division, including its cloud
communications and SIP trunking offerings for businesses and its
cable telephony service.
net2phone - UCaaS' 4Q18 revenue increased to $9.7 million from $7.8
million in 4Q17. net2phone - UCaaS' FY 2018 revenue
increased to $34.9 million from
$29.4 million in FY 2017. The
quarterly and full year revenue growth was driven predominantly by
sales of net2phone's cloud-based communications offering, which
increased by over 150% compared to the year ago quarter and prior
year. Less than two years ago, net2phone launched an
international expansion program by introducing service in
Brazil and Argentina. With
the acquisition of Versature, and the launch in Mexico following the quarter close, net2phone
now operates throughout North
America as well as in certain South American, Asian and
European countries.
net2phone - UCaaS' loss from operations in 4Q17 narrowed to
$445 thousand from $771 thousand in 4Q17. net2phone - UCaaS'
loss from operations in FY 2018 increased to $2.7 million from $1.9
million in FY 2017. The increase in the full year loss
primarily was driven by increased employee compensation costs and
commission expense reflecting increased investment in net2phone
sales and technical personnel, as well as increased depreciation
and amortization expense.
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 October 16, 2018 by dialing 1-844-512-2921 (toll
free from the US) or 1-412-317-6671 (international) and providing
this pin code: 10123225. 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) 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.
IDT
CORPORATION
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
July 31
(in thousands, except per share data)
|
|
2018
|
2017
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
|
$
68,089
|
$
90,344
|
Marketable
securities
|
|
5,972
|
58,272
|
Trade accounts
receivable, net of allowance for doubtful accounts of $3,166
and
$2,657 at July 31, 2018 and 2017,
respectively
|
|
69,481
|
64,979
|
Prepaid
expenses
|
|
19,550
|
14,506
|
Other current
assets
|
|
28,517
|
18,749
|
Assets held for
sale
|
|
137,272
|
124,267
|
TOTAL CURRENT
ASSETS
|
|
328,881
|
371,117
|
Property, plant and
equipment, net
|
|
36,068
|
88,994
|
Goodwill
|
|
11,315
|
11,326
|
Investments
|
|
6,633
|
26,894
|
Deferred income tax
assets, net
|
|
5,668
|
11,841
|
Other
assets
|
|
5,326
|
3,657
|
Assets held for
sale
|
|
5,706
|
5,134
|
TOTAL
ASSETS
|
|
$
399,597
|
$
518,963
|
LIABILITIES AND
EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Trade accounts
payable
|
|
$
45,124
|
$
40,989
|
Accrued
expenses
|
|
129,818
|
125,359
|
Deferred
revenue
|
|
55,003
|
76,451
|
Other current
liabilities
|
|
8,269
|
4,659
|
Liabilities held for
sale
|
|
128,770
|
115,318
|
TOTAL CURRENT
LIABILITIES
|
|
366,984
|
362,776
|
Other
liabilities
|
|
768
|
1,080
|
Liabilities held for
sale
|
|
542
|
550
|
TOTAL
LIABILITIES
|
|
368,294
|
364,406
|
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, 2018 and 2017
|
|
33
|
33
|
Class B common stock,
$.01 par value; authorized shares—200,000; 25,594 and
25,561 shares issued and 22,872 and
23,264 shares outstanding at July 31, 2018
and 2017, respectively
|
|
256
|
256
|
Additional paid-in
capital
|
|
294,047
|
394,462
|
Treasury stock, at
cost, consisting of 1,698 and 1,698 shares of Class A
common
stock and 2,722 and 2,297 shares of
Class B common stock at July 31, 2018 and
2017, respectively
|
|
(85,597)
|
(83,304)
|
Accumulated other
comprehensive loss
|
|
(4,972)
|
(2,343)
|
Accumulated
deficit
|
|
(173,103)
|
(163,370)
|
Total IDT Corporation
stockholders' equity
|
|
30,664
|
145,734
|
Noncontrolling
interests
|
|
639
|
8,823
|
TOTAL
EQUITY
|
|
31,303
|
154,557
|
TOTAL LIABILITIES
AND EQUITY
|
|
$
399,597
|
$
518,963
|
IDT
CORPORATION
|
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
Year ended July
31
(in thousands, except per share data)
|
|
2018
|
2017
|
2016
|
REVENUES
|
|
$
1,547,495
|
$
1,501,729
|
$
1,496,261
|
COSTS AND
EXPENSES:
|
|
|
|
|
Direct cost of
revenues (exclusive of depreciation and amortization)
|
|
1,306,037
|
1,275,708
|
1,246,594
|
Selling, general and
administrative (i)
|
|
203,251
|
188,293
|
204,655
|
Depreciation and
amortization
|
|
22,801
|
21,704
|
20,535
|
Severance
|
|
4,630
|
—
|
6,510
|
TOTAL COSTS AND
EXPENSES
|
|
1,536,719
|
1,485,705
|
1,478,294
|
Other operating
(losses) gains, net
|
|
(2,398)
|
(10,412)
|
760
|
(Adjustment to) gain
on sale of member interest in Visa Europe Ltd
|
|
—
|
(63)
|
7,476
|
Income from
operations
|
|
8,378
|
5,549
|
26,203
|
Interest income,
net
|
|
1,071
|
1,254
|
1,216
|
Other (expense)
income, net
|
|
(1,348)
|
817
|
2,049
|
Income before income
taxes
|
|
8,101
|
7,620
|
29,468
|
(Provision for)
benefit from income taxes
|
|
(2,902)
|
2,021
|
(4,110)
|
NET
INCOME
|
|
5,199
|
9,641
|
25,358
|
Net income
attributable to noncontrolling interests
|
|
(991)
|
(1,464)
|
(1,844)
|
NET INCOME
ATTRIBUTABLE TO IDT CORPORATION
|
|
$
4,208
|
$
8,177
|
$
23,514
|
|
|
|
|
|
Earnings per share
attributable to IDT Corporation common stockholders:
|
|
|
|
|
Basic
|
|
$
0.17
|
$
0.35
|
$
1.03
|
Diluted
|
|
$
0.17
|
$
0.35
|
$
1.03
|
|
|
|
|
|
Weighted-average number
of shares used in calculation of earnings per share:
|
|
|
|
|
Basic
|
|
24,655
|
23,182
|
22,765
|
Diluted
|
|
24,718
|
23,309
|
22,815
|
|
|
|
|
|
(i) Stock-based
compensation included in selling, general and
administrative
expenses
|
|
$
3,581
|
$
3,740
|
$
2,680
|
IDT
CORPORATION
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
Year ended July
31
(in
thousands)
|
2018
|
2017
|
2016
|
OPERATING
ACTIVITIES
|
|
|
|
Net income
|
$
5,199
|
$
9,641
|
$
25,358
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
22,801
|
21,704
|
20,535
|
Deferred income
taxes
|
6,174
|
(2,329)
|
3,809
|
Provision for doubtful
accounts receivable
|
2,199
|
686
|
1,519
|
Gain on sale of
interest in Fabrix Systems Ltd
|
—
|
—
|
(1,086)
|
Gain on sale of member
interest in Visa Europe Ltd
|
—
|
—
|
(7,476)
|
Net realized loss
(gain) from marketable securities
|
16
|
(323)
|
(543)
|
Interest in the equity
of investments
|
(9)
|
(356)
|
362
|
Stock-based
compensation
|
3,581
|
3,740
|
2,680
|
Change in assets and
liabilities:
|
|
|
|
Restricted cash and
cash equivalents
|
(13,500)
|
(17,702)
|
(22,548)
|
Trade accounts
receivable
|
(6,668)
|
(17,972)
|
616
|
Prepaid expenses,
other current assets and other assets
|
(18,889)
|
(4,856)
|
8,372
|
Trade accounts
payable, accrued expenses, other current liabilities and other
liabilities
|
12,769
|
17,344
|
(10,099)
|
Customer
deposits
|
14,660
|
18,980
|
25,344
|
Deferred
revenue
|
(21,439)
|
(9,543)
|
2,211
|
Net cash provided by
operating activities
|
6,894
|
19,014
|
49,054
|
INVESTING
ACTIVITIES
|
|
|
|
Capital
expenditures
|
(20,567)
|
(22,949)
|
(18,370)
|
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)
|
—
|
—
|
Payment for
acquisition, net of cash acquired
|
—
|
(1,827)
|
—
|
Proceeds from sale of
interest in Fabrix Systems Ltd
|
—
|
—
|
9,557
|
Proceeds from sale of
member interest in Visa Europe Ltd
|
(53)
|
—
|
5,597
|
Cash used for
purchase of investments
|
—
|
(9,438)
|
(2,002)
|
Proceeds from sales
and redemptions of investments
|
—
|
15
|
634
|
Purchases of
marketable securities
|
(22,523)
|
(53,402)
|
(46,909)
|
Proceeds from
maturities and sales of marketable securities
|
41,502
|
47,996
|
35,011
|
Net cash used in
investing activities
|
(1,641)
|
(39,605)
|
(16,482)
|
FINANCING
ACTIVITIES
|
|
|
|
Dividends
paid
|
(13,941)
|
(17,874)
|
(17,358)
|
Distributions to
noncontrolling interests
|
(1,040)
|
(1,482)
|
(1,834)
|
Sales of Class B
common stock to Howard S. Jonas
|
—
|
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
|
8,750
|
Cash deconsolidated
as a result of spin-off
|
(9,287)
|
—
|
(6,381)
|
Proceeds from sale of
Zedge equity prior to the spin-off
|
—
|
—
|
374
|
Proceeds from
exercise of stock options
|
—
|
836
|
—
|
Proceeds from
borrowings under revolving credit facility
|
22,320
|
—
|
—
|
Repayments of
borrowings including revolving credit facility
|
(22,320)
|
—
|
(6,353)
|
Repurchases of Class
B common stock
|
(2,293)
|
(1,838)
|
(4,773)
|
Net cash (used in)
provided by financing activities
|
(26,561)
|
6,822
|
(27,575)
|
Effect of exchange
rate changes on cash and cash equivalents
|
(771)
|
292
|
(5,821)
|
Net decrease in cash
and cash equivalents
|
(22,079)
|
(13,477)
|
(824)
|
Cash and cash
equivalents at beginning of year, including $5,716, $5,536 and $571
held for sale at July 31,
2017, 2016 and 2015, respectively
|
96,060
|
109,537
|
110,361
|
Cash and cash
equivalents at end of year, including $5,892, $5,716 and $5,536
held for sale at July 31,
2018, 2017 and 2016,
respectively
|
$
73,981
|
$
96,060
|
$
109,537
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
Cash payments made for
interest
|
$
94
|
$
288
|
$
345
|
Cash payments made for
income taxes
|
$
192
|
$
576
|
$
779
|
SUPPLEMENTAL
SCHEDULE OF NON-CASH FINANCING AND INVESTING
ACTIVITIES
|
|
|
|
Net assets excluding
cash and cash equivalents deconsolidated as a result of
spin-off
|
$
(105,632)
|
$
—
|
$
(4,681)
|
Reclassification of
liability for member interests in CS Pharma Holdings,
LLC
|
$
—
|
$
8,750
|
$
—
|
Shares of Visa Inc.
Series C preferred stock received from sale of member interest in
Visa Europe Ltd
|
$
—
|
$
—
|
$
1,580
|
Reconciliation of Non-GAAP Financial Measures for
the Fourth Quarter Fiscal 2018 and 2017
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 4Q18, 3Q18 and 4Q17, 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 revenues less
direct cost of revenues and selling, general and administrative
expense. Another way of calculating Adjusted EBITDA is to start
with income (loss) from operations, add depreciation and
amortization, severance expense, other operating losses, and the
adjustment to the gain on the sale of member interest in Visa
Europe Ltd., and subtract other operating gains.
IDT's measure of non-GAAP net income starts with net income
(loss) in accordance with GAAP and adds severance expense,
stock-based compensation, other operating losses, the adjustment to
the gain on the sale of member interest in Visa Europe Ltd., and
income tax expense from the increase in the valuation allowance on
deferred tax assets, and subtracts the income tax benefits from The
Tax Cuts and Jobs Act, a release of the valuation allowance and
full recognition of deferred tax assets, and other operating
gains.
IDT's measure of non-GAAP earnings per share is calculated by
dividing non-GAAP net income by the basic or diluted
weighted-average shares.
These additions and subtractions are non-cash and/or non-routine
items in the relevant fiscal 2018 and fiscal 2017 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 income (loss) from operations and net income (loss), 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 losses, other operating gains, and the
adjustment to the gain on the sale of member interest in Visa
Europe Ltd. are components of income (loss) from operations. In
fiscal 2018, other operating losses included legal fees related to
Straight Path Communications Inc.'s stockholders' putative class
action and derivative complaint, fees related to other legal
matters, and other losses. In fiscal 2017, other operating losses
included a non-routine expense for the settlement and mutual
release, and the associated legal fees, related to potential
liabilities and claims under agreements related to the Straight
Path spin-off. In 4Q17, the other operating gain was primarily the
result of insurance proceeds related to the claims. Other operating
losses, other operating gains, and the adjustment to the gain on
the sale of member interest in Visa Europe Ltd. are excluded from
the calculation of Adjusted EBITDA, non-GAAP net income and
non-GAAP earnings per share. From time-to-time, IDT may incur costs
related to non-routine legal and regulatory matters or disposal 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 non-routine legal and regulatory 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 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 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. In 1Q17, IDT recorded a foreign
income tax benefit of $16.6 million
from the release of the valuation allowance and full recognition of
certain deferred tax assets, and in 4Q17, IDT recorded a federal
income tax expense of $11.1 million
from the increase in the valuation allowance on deferred tax
assets. The income tax benefits and expense are excluded from IDT's
calculation of non-GAAP net income and non-GAAP earnings per share
because they were not directly related to the current 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 (loss), 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.
Beginning in the 3Q18, All Other includes only IDT's real estate
holdings and other investments that were included in the Rafael
Holdings spin-off. Other smaller businesses that were previously
included in All Other have been reclassified to Telecom &
Payment Services, and certain other cost centers have been
reclassified to Corporate. Comparative results have been
reclassified and restated as if these businesses and costs were
included in Telecom & Payment Services or Corporate in all
periods presented.
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, income
(loss) from operations for IDT's reportable segments and net income
(loss) for IDT on a consolidated basis, (b) for non-GAAP net
income, net income (loss), and (c) for non-GAAP earnings per share,
basic and diluted earnings per share.
IDT
Corporation Reconciliation of Adjusted EBITDA to Net Income
(Loss) (unaudited) in
millions Figures may not foot
or cross-foot due to rounding to millions.
|
|
|
Total IDT
Corporation
|
|
Telecom
&
Payment
Services
|
net2phone
-UCaaS
|
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
|
|
$
13.9
|
$
(0.5)
|
$
-
|
$
(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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT
Corporation
|
|
Telecom
&
Payment
Services
|
net2phone
-UCaaS
|
All
Other
|
Corporate
|
Three Months Ended
April 30, 2018 (3Q18)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
8.1
|
|
$
10.9
|
$
0.5
|
$
(0.8)
|
$
(2.5)
|
Subtract:
|
|
|
|
|
|
|
Depreciation and
amortization
|
5.8
|
|
4.2
|
1.2
|
0.4
|
-
|
Severance
expense
|
3.7
|
|
3.6
|
-
|
-
|
0.1
|
Other
operating loss
|
0.3
|
|
-
|
-
|
-
|
0.3
|
(Loss) income from
operations
|
(1.7)
|
|
$
3.1
|
$
(0.8)
|
$
(1.1)
|
$
(2.9)
|
Interest
income, net
|
0.2
|
|
|
|
|
|
Other
expense, net
|
(0.7)
|
|
|
|
|
|
Loss before income
taxes
|
(2.2)
|
|
|
|
|
|
Provision for income taxes
|
(1.0)
|
|
|
|
|
|
Net loss
|
(3.2)
|
|
|
|
|
|
Net income
attributable to noncontrolling
interests
|
(0.2)
|
|
|
|
|
|
Net loss attributable
to IDT Corporation
|
$
(3.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
IDT
Corporation Reconciliation of Adjusted EBITDA to Net
Loss (unaudited)
in millions
Figures may not foot or cross-foot due to rounding to
millions.
|
|
|
Total IDT
Corporation
|
|
Telecom
&
Payment
Services
|
net2phone
-UCaaS
|
All
Other
|
Corporate
|
Three Months Ended
July 31, 2017 (4Q17)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
8.6
|
|
$
9.7
|
$
0.4
|
$
0.6
|
$
(2.1)
|
Subtract
(Add):
|
|
|
|
|
|
|
Depreciation
and amortization
|
5.6
|
|
4.0
|
1.2
|
0.4
|
-
|
Other operating
gain
|
(0.8)
|
|
-
|
-
|
-
|
(0.8)
|
Income (loss) from
operations
|
3.7
|
|
$
5.8
|
$
(0.8)
|
$
0.1
|
$
(1.4)
|
Interest
income, net
|
0.3
|
|
|
Other
expense, net
|
(0.7)
|
|
|
Income before income
taxes
|
3.3
|
|
|
Provision for income
taxes
|
(12.8)
|
|
|
Net loss
|
(9.5)
|
|
|
Net income
attributable to noncontrolling
interests
|
(0.4)
|
|
|
Net loss attributable
to IDT Corporation
|
$
(9.8)
|
|
|
|
|
|
|
|
|
|
|
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
-UCaaS
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total IDT
Corporation
|
|
Telecom
&
Payment
Services
|
net2phone
-UCaaS
|
All
Other
|
Corporate
|
Year Ended July
31, 2017 (FY 2017)
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
37.7
|
|
$
41.7
|
$
2.0
|
$
1.8
|
$
(7.8)
|
Subtract:
|
|
|
|
|
|
|
Depreciation and
amortization
|
21.7
|
|
16.1
|
3.9
|
1.7
|
-
|
Adjustment to gain on
sale of member
interest in Visa Europe
Ltd.
|
0.1
|
|
0.1
|
-
|
-
|
-
|
Other
operating loss
|
10.4
|
|
-
|
-
|
-
|
10.4
|
Income (loss) from
operations
|
5.5
|
|
$
25.5
|
$
(1.9)
|
$
0.1
|
$
(18.2)
|
Interest
income, net
|
1.3
|
|
|
|
|
|
Other
income, net
|
0.8
|
|
|
|
|
|
Income before income
taxes
|
7.6
|
|
|
|
|
|
Benefit
from income taxes
|
2.0
|
|
|
|
|
|
Net income
|
9.6
|
|
|
|
|
|
Net income
attributable to noncontrolling
interests
|
(1.5)
|
|
|
|
|
|
Net income
attributable to IDT Corporation
|
$
8.2
|
|
|
|
|
|
IDT
Corporation
Reconciliations of Net Income (Loss) to Non-GAAP Net Income and
Earnings (Loss) per share to Non-GAAP
Earnings per share
(unaudited)
in millions, except per share data
Figures may not foot due to rounding to millions.
|
|
4Q18
|
3Q18
|
4Q17
|
FY
2018
|
FY
2017
|
|
|
|
|
|
|
Net income
(loss)
|
$
8.5
|
$
(3.2)
|
$
(9.5)
|
$
5.2
|
$
9.6
|
Adjustments (add)
subtract:
|
|
|
|
|
|
Stock-based
compensation
|
(0.7)
|
(1.0)
|
(0.9)
|
(3.6)
|
(3.7)
|
Severance
expense
|
(0.3)
|
(3.7)
|
-
|
(4.6)
|
-
|
Other operating
(losses) gains
|
(0.4)
|
(0.3)
|
0.8
|
(2.4)
|
(10.4)
|
Adjustment to gain on
sale of member
interest in Visa Europe
Ltd.
|
-
|
-
|
(0.1)
|
-
|
(0.1)
|
Income tax (expense)
benefit
|
-
|
-
|
(11.1)
|
3.3
|
5.5
|
Total
adjustments
|
(1.5)
|
(5.0)
|
(11.3)
|
(7.3)
|
(8.7)
|
Income tax effect of
total adjustments
|
0.2
|
-
|
-
|
-
|
6.4
|
|
1.3
|
5.0
|
11.3
|
7.3
|
2.3
|
Non-GAAP net
income
|
$
9.8
|
$
1.8
|
$
1.8
|
$
12.5
|
$
11.9
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
Basic
|
$
0.33
|
$
(0.14)
|
$
(0.41)
|
$
0.17
|
$
0.35
|
Total
adjustments
|
0.07
|
0.21
|
0.48
|
0.34
|
0.16
|
Non-GAAP -
basic
|
$
0.40
|
$
0.07
|
$
0.07
|
$
0.51
|
$
0.51
|
|
|
|
|
|
|
Weighted-average
number of shares used in
calculation of basic earnings per
share
|
24.7
|
24.7
|
24.2
|
24.7
|
23.2
|
|
|
|
|
|
|
Diluted
|
$
0.33
|
$
(0.14)
|
$
(0.41)
|
$
0.17
|
$
0.35
|
Total
adjustments
|
0.07
|
0.21
|
0.48
|
0.34
|
0.16
|
Non-GAAP -
diluted
|
$
0.40
|
$
0.07
|
$
0.07
|
$
0.51
|
$
0.51
|
|
|
|
|
|
|
Weighted-average
number of shares used in
calculation of diluted earnings per
share
|
24.7
|
24.7
|
24.3
|
24.7
|
23.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE IDT Corporation