Samuel Jonas - Chief Operating Officer Howard S. Jonas - Founder, Chairman of The Board, Chief Executive Officer and Chairman of Nominating Committee Marcelo Fischer - Senior Vice President of Finance

Good morning and welcome to the IDT Corporation Fourth Quarter and Full Year Fiscal 2012 Earnings Conference Call. [Operator Instructions] In today's presentation, IDT's Chief Operating Officer, Samuel Jonas, will discuss IDT's financial and operational results for the 3-month and 12-month period ended July 31, 2012. Any forward-looking statements made during this conference call, either in the prepared remarks and in the Q&A sessions, is general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those, which the company anticipates. These risks and uncertainties include, but are not limited to, specific risks and uncertainties discussed in the reports that IDT files periodically with the SEC. IDT assumes no obligation either to update any forward-looking statements that they have made or may make, or to update the factors that may cause actual results to differ materially from those that they forecast. In their presentation or the Q&A, IDT's management may make reference to the non-GAAP measures, adjusted EBITDA, non-GAAP net income and non-GAAP EPS. The schedule provided in the earnings release reconciles adjusted EBITDA, non-GAAP net income and non-GAAP EPS to the nearest corresponding GAAP measures. Please note that the IDT earnings release is available on the Investor Relations page of the IDT Corporation website, www.idt.net. The earnings release has also been filed on the Form 8-K with the SEC. Finally, please note that this event is being recorded. I would now like to turn the conference over to IDT's Chief Operating Officer, Samuel Jonas.

Thank you, all, for joining the call and for your interest in IDT. In the fourth quarter of fiscal 2012, we again delivered strong year-over-year revenue growth. Revenues increased 6.6% to $384.9 million, while our gross margin declined 60 basis points to 15.8%. Those 2 factors netted out to a slight increase in gross profit to $60.9 million. The fourth quarter's SG&A, relatively flat year-over-year, the result was an increase in EBITDA to $6.4 million in the quarter, compared to $4.8 million in the fourth quarter of last year. Our TPS segment has generated between $36 million and $37 million a year in adjusted EBITDA for the past 2 years. Looking ahead to fiscal 2013, we expect to do as well, if not better. Our CPS segment, which is in harvest mode, generated $4 million in adjusted EBITDA in fiscal 2012 and we expect it to contribute approximately $3 million in adjusted EBITDA in fiscal 2013. This year, we invested a little over $2 million to grow the businesses in the all other segment, mostly in the form of additional R&D and other SG&A costs. We expect to continue investing in the growth of these breakout opportunities during fiscal 2013. Our corporate G&A run rate is approximately $13 million a year, and CapEx is likely to be between $10 million and $11 million in 2013. Finally, we are returning approximately $15 million a year in dividend to shareholders at the current dividend rate of $0.60 per share a year. Now, let's look at some of the key drivers behind the results and how we are working to exploit the opportunities we see in our businesses. The TPS segment within IDT Telecom generates 98% of IDT's total revenue. TPS results this quarter were consistent with recent quarter results. We continue to…

[Operator Instructions] The first question today comes from Jay Srivatsa of Chardan Capital Markets.

This is actually Pierce Hewes [ph] from Chardan Capital Markets. Well I've got a couple of first questions but the first one is how much penetration have you had with Boss Revolution products so far?

What do you mean?

Just in the overall market, how is it -- is it pushing forward or kind of you just expand on kind of its ability to take over the market space?

It's continuing to grow very nicely, and I think that it will continue to grow very nicely.

It's Marcelo. We have seen very nice growth on Boss Revolution here in the U.S., both sequentially, as well as versus a year ago. If you look at any type of metric, whether it's number of points of presence, number of active customers, number of transactions or revenue, they're all showing growth of about 15% in Q4 versus Q3, and almost 100% growth year-over-year. So we think that the product is doing very well and will continue to penetrate.

And then also kind of one of you, as you mentioned, one of your key competitor has filed for bankruptcy, when do you expect to see benefit of this?

I think we've already seen some of the benefit from it, and I think that we'll continue to see some of the benefit from it as things play out.

With them declining, I mean, you said like 40% or so, is it already somewhat priced in? Have you seen most of it or is there going to be any additional benefit in the coming year that's going to make a market difference?

Yes, I mean, I believe that there is a reason why they went into bankruptcy and the revenues are down by more than 40%. And I think part of that reason is the fact that we, at IDT, have more than doubled our sales in the U.S. over the past 2 years while they were going down. We do believe that probably a good portion of the former customer base had migrated to us, especially as that customer base is looking for the market [ph] information that came via PIN-Less [ph] services, which they do not really offer. So going forward, they really -- they really sell cards, which are like really not clean cards. The most of the cards that they sell [indiscernible] have a lot of fees in them, that's not really a market that we compete. Our cards have no fees. They are clean. Because we have great rates and we are able to drive those great rates because of our buying capacity, which they do not have. So I believe that probably customers aren't interested in cards which have fees, probably those customers will be taken over by some of our competitors who are willing to launch cards at a loss and see if they could turn the market around. We believe that we don’t have to do that, we don't have to lose money in launching cards at a loss to grab that market share. We are executing [ph] a good strategy right now by selling projects at a profit and we'll continue to grow that way.

And then, if you could just comment quickly on the status of the spin-off?

We don't have an update, at this time, on the status of it.

No problem. And I guess, finally, how do you see the Wholesale Carrier business scaling in next year?

Can you repeat the question?

How do you see the Wholesale Carrier business scaling up next year?

Yes, I mean, the Wholesale Carrier business is doing well. I think that we see more and more, in the marketplace, more of a focus on our voice products that offer high-quality termination. More and more of our customers migrating towards our gold and platinum quality offers. And I think that's been driven a lot by the fact that we continue to focus on serving operators that have their own retail traffic and, therefore, they require the highest level of service, and IDT has a good network and we are able to provide quality termination services, and we also -- I think more and more, Wholesale Carriers using more of our customer interactive portals that we have launched and we are developing new features on that, and these portals allow the customers to interact more with our quality management team. It allows them to develop the portals to allow greater degree of capability [ph] of other customers to give them better options in terms of pricing and quality on given routes. So we think that we have providing a good customer service experience to our customers, and we believe that as we try to grow the number of direct connections that we have -- interconnection with both fixed and mobile-operated around the world that will allow us to continue to provide high-quality voice services to them and continue to grow our market share in that space.

[Operator Instructions] There appears to be no further questions at this time. I'll hand call back over for any closing comments.

Thank you very much. If you have any questions in the coming days, please feel free to e-mail Bill Ulrey and we post them in an additional 8-K. Thank you.

Ladies and gentlemen, the conference has now concluded. You may disconnect your telephones. Thank you for joining and have a pleasant day. Goodbye.