Rye, NY – August 11, 2014 – LICT Corporation (“LICT”; Pink Sheets®: LICT) announces its results for the second quarter of 2014.
SECOND QUARTER RESULTS –Revenues increased by $1.5 million, or 6.4% to $25.2 million compared to the corresponding quarter in 2013. EBITDA before corporate costs was $9.7 million versus $8.8 million, an increase of $0.9 million, or 10.2%, compared to 2013.
Regulated revenues were $14.4 million in the 2014 quarter, versus $14.1 million in the prior year quarter. Non-regulated revenues increased 13.2% to $10.8 million from the prior year’s $9.5 million, principally due to increased broadband and competitive local exchange carrier (“CLEC”) revenues. Operating costs, excluding depreciation, increased by $0.6 million from $15.7 million to $16.4 million. Corporate expenses were $0.8 million, essentially the same as the second quarter of 2013.
Earnings per share, excluding unusual items, during the Second quarter were $84.80 in 2014 versus $76.39 in 2013. Shares outstanding at June 30, 2014, were 22,327 versus 22,684 at June 30, 2013.
FULL YEAR RESULTS –LICT continues to estimate that 2014 revenues and EBITDA, prior to corporate costs but including cash received from our equity affiliates, will be roughly $100 million and $41 million, respectively, as compared to 2013 revenues of $96.2 million and EBITDA of $37.2 million. These 2014 estimates include the results of DFT Communications Corporation for the full year, of $15.0 million in revenue and $3.0 million in EBITDA. LICT previously announced it has a contract to sell DFT inan “MBO”. We anticipate that the transaction will be completed in the fourth quarter of 2014.
CAPITAL EXPENDITURES AND DEPRECIATION EXPENSE – Capital expenditures were $5.0 million for the second quarter compared to $4.2 million in 2013. This reflects our continued investment in the improvement of our products and investment in our network infrastructure, particularly our broadband networks. Through upgraded electronics and fiber extensions deeper into our networks, we have improved both the speed and capacity of our broadband service offerings. Our capital budget for 2014 is under review to determine our best use of capital.
UTAH- CENTRA-COM- GROWTH INITIATIVE- On July 8, 2014, LICT’s Utah operation, CentraCom, announced the acquisition of fiber optics in downtown Salt Lake City from Syringa networks, LLC (“Syringa”). No financial terms are being disclosed and the closing of the transaction is subject to regulatory approvals. Eddie Cox, President of CentraCom, said: “We are very pleased with the acquisition of the fiber in Salt Lake City which will significantly expand our ability to provide businesses with high capacity broadband services. In addition, in a separate but related transaction, we are transferring to Syringa our Logan PCS Spectrum. We look forward to partnering with Syringa in the future on various expansion opportunities.”
WAPSI WIRELESS L.L.C. – An Iowa subsidiary of LICT owned a 1/7th interest in a limited liability company which provides wireless communications and data services to Scott County, Iowa, WAPSI WIRELESS L.L.C. During the second quarter of 2014, the owners of WAPSI completed a transaction to sell all of WAPSI’s assets and distribute the net proceeds to the owners. LICT’s subsidiary received $875,000 from WAPSI and recognized a pre-tax gain of $50,000.
BROADBAND REGULATION – In April 2013, the Federal Communications Commission (“FCC”) ordered further modifications to Intercarrier Compensation (‘ICC’) and the Universal Service Fund (“USF”), and issued a Further Notice of Proposed Rulemaking (“FNPRM”). Due to the many unresolved items in the FNPRM, which may impact “rate-of-return carriers” including many of our companies, it is not possible to predict the impact that the FCC’s ICC and USF reforms will have on LICT’s future revenues at this time. ICC and USF programs generate, on a combined basis, approximately 40% of our revenues. We believe that government policy will continue to encourage and support communication services in rural areas, but there is no certainty that such support will be maintained at historical levels. As a result of this, as well as opportunities created from new technologies, including the Internet, we have focused on developing non-regulated, high speed businesses, such as broadband DSL service, to supplement our traditional rural telephone services.
OPERATING STATISTICS – As of June 30, 2014, the company’s in-territory DSL penetration, based on total ILEC voice lines, was 71.7%, compared to 69.5% as of December 31, 2013. Our summary operating statistics are as follows:
|ILEC voice lines||36,833||37,276||(443)||(1.2%)|
|CLEC voice lines||8,433||8,002||431||5.4%|
|Total voice lines||45,266||45,278||(12)||— %|
|LD Resale lines||26,334||26,224||110||0.4%|
BALANCE SHEET – As of June 30, 2014, the company had approximately $13.1 million in cash and $70.3 million in total debt, resulting in net debt of $57.2 million, compared to net debt of $62.4 million as of December 31, 2013, and $66.0 million at June 30, 2013. Pro Forma for the sale of DFT Communications, including estimated tax payments, the Company’s net debt as of June 30, 2014 is estimated at $41.5 million. The net debt at December 31, 2013 excluded a loan from an affiliate that enabled LICT to participate in the FCC Spectrum Auction 96 in early 2014 (see below). This debt was repaid on March 7, 2014.
REFINANCING THE COMPANY – In May 2014, the Company secured a $25 million line of credit agreement, from an affiliated partner to replace its existing $ 17.5 million line of credit. This replacement line expires on June 30, 2015. The Company continues to pursue refinancing of this line, which will enhance its ability to take the financial and operational steps necessary for future growth.
SHARE REPURCHASES – During the first six months of 2014, we repurchased 159 shares for $0.5 million at an average price of $3,211 per share. As of June 30, 2014, 22,327 shares were outstanding. On June 4, 2014, the Board of Directors authorized an additional 1,000 shares to our repurchase program.
CORPORATE STAFF – The organization was recently bolstered by the addition of two individuals at the corporate level. John Aoki has been appointed Corporate Controller and Stephen Moore joins us as Vice President of Finance. Both gentlemen will work closely with our teammates company-wide to increase value for all of our stakeholders.
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This release contains certain forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation future financial results, anticipated financing, capital expenditures and corporate transactions. It should be recognized that such information is based upon certain assumptions, projections and forecasts, including without limitation business conditions and financial markets, regulatory and other approvals, and the cautionary statements set forth in documents filed by LICT on its website, www.lictcorp.com. As a result, there can be no assurance that any possible transactions will be accomplished or be successful or that financial targets will be met, and such information is subject to uncertainties, risks and inaccuracies, which could be material.
LICT Corporation is a holding company with subsidiaries in broadband and other telecommunications services that actively seeks acquisitions, principally in its existing business areas.
LICT Corporation is listed on the Pink Sheets® under the symbol LICT. Its World Wide Web address is: http://www.lictcorp.com.
Contact: Robert E. Dolan
Executive Vice President and Chief Financial Officer