Rye, NY – April 26, 2013 – LICT Corporation (Pink Sheets®: LICT) today announced its fourth quarter and full year 2012 earnings and preliminary results for the first quarter of 2013.
FULL YEAR RESULTS – For the year ended December 31, 2012, LICT recorded $95.1million in revenue and $39.6 million in EBITDA, which is prior to corporate costs but includes cash distributions from unconsolidated subsidiaries, versus $92.6 million in revenues in 2011 and $39.1 million in EBITDA, respectively. Adjusting for unusual items, net earnings per share were $336.46 in 2012, an 11% increase over the $303.55 achieved in 2011.
FOURTH QUARTER RESULTS -During the fourth quarter of 2012, our revenues were $23.8 million as compared to $24.2 million in 2011, a decrease of $0.4 million. EBITDA was $9.7 million, as compared to $9.4 million in 2011.
In accord with the Company’s long-term goals, non-regulated revenues increased by $390,ooo, or 4.5%, during the fourth quarter, due primarily to increased broadband and competitive local exchange carrier (“CLEC”) penetration. Regulated revenues were $14.1 million in the quarter, versus $15.6 million in the prior year quarter. Operating costs increased by $385,000. Corporate expenses were $897,000, an increase of $133,000 compared to the 2011 quarter.
Net income per share during the fourth quarter was $77.85 in 2012 and versus a loss of $77.40 in 2011. Adjusting for unusual items, net income per share during the fourth quarter was $68.39 in 2012 and $72.92 in 2011.
Lenny Higgins, Chief Operating Officer, said “We made progress on several fronts in 2012. We continued to grow our non-regulated business, offsetting the challenges in our regulated business due to changes in technology and regulation. Our local management teams are making in-roads into nearby, but out-of-territory markets. We also have a number of initiatives underway that are delivering growth in the broadband, CLEC, cell backhaul, fixed wireless and video business segments. Non regulated revenues in 2012 were $35.3 million, or 37% of total revenues, versus $31.5 million, or 34% of total revenues in 2011.”
FIRST QUARTER – 2013 PRELIMINARY RESULTS – LICT is currently expecting revenues of approximately $23.4 million and EBITDA of $9.2 million in the first quarter of 2013 as compared to $23.1 million and $9·7 million in 2012. EBITDA in 2012 included $0.6 million in cash distributions from our equity affiliates. There were no cash distributions received in 2013. Adjusting for unusual items, earnings per share for the first quarter of 2013, is expected to be $101.92 versus $83.45 in the first quarter of 2012. The per share change is traceable to lower interest and depreciation expense.
CAPITAL EXPENDITURES AND DEPRECIATION EXPENSE – Capital expenditures were $13.9 million for 2012 compared to $16.5 million in 2011. During 2012, we expanded our abilities to serve our communities, as we invested in soft switches, which are capable of providing VOIP (Voice over Internet Protocol) and other enhanced capabilities, and increased the fiber outreach of our network to provide higher bandwidth speeds. We currently expect that 2013 capital expenditures will be in the range of $12 to $17 million.
BROADBAND REGULATION – In November 2011, the Federal Communications Commission (“FCC”) ordered significant modifications to Intercarrier Compensation (‘ICC’) and the Universal Service Fund (“USF”), and issued a Further Notice of Proposed Rulemaking (“FNPRM”). Due to the numerous items in the FNPRM impacting “rate-of-return carriers”, including many of our companies, it is not possible to fully predict the impact 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, in part due to our cost structure necessary to serve our rural communities. We believe that government policy will continue to encourage and subsidize communication services in rural areas, but there is no certainty that such subsidies will be maintained at historical levels. Because of this and because of the opportunities created by new technologies, including the internet, we have focused on developing non-regulated businesses, such as DSL service, to supplement our traditional rural telephone services.
OPERATING STATISTICS – As of December 31, 2012, the company’s in-territory DSL penetration, based on total ILEC voice lines, was 65.3%, compared to 62.1% as of December 31, 2011. Our summary operating statistics are as follows:
| Dec. 31, 2012 | Dec. 31, 2011 | Increase (Decrease) | Percent Increase (Decrease) | |
| ILEC voice lines | 38,078 | 40,690 | (1,612) | (4.0%) |
| CLEC voice lines | 7,154 | 6,535 | 619 | 9.5% |
| Total voice lines | 46,232 | 47,225 | (993) | (2.1%) |
| Broadband lines | 27,175 | 25,623 | 1,552 | 6.1% |
| LD Resale lines | 24,077 | 22,750 | 1,327 | 5.8% |
| Video Subscribers | 7,399 | 7,594 | (195) | (2.6%) |
BALANCE SHEET – As of December 31, 2012, the company had approximately $9.0 million in cash and $78.2 million in total debt, resulting in net debt of $69.2 million , compared to net debt of $88.6 million as of December 31, 2011. The debt reduction was achieved through operating cash flows and the sale of some surplus spectrum.
STRATEGIC INITIATIVES – Our operating subsidiaries are in the process of developing and launching several wireless and wireline broadband initiatives. These initiatives will provide an excellent complement to our strong RLEC base, and provide the communities that we serve with the telephony and broadband tools necessary to compete in today’s economy. There are some costs being expensed currently with such development that we believe will produce revenues in future periods. We currently estimate such costs at approximately $450,000 in the first quarter of 2013.
REFINANCING THE COMPANY – Despite the repayment of bank debt mentioned above, our debt structure still consists of a maze of loans from federally-backed institutions, commercial banks, and seller notes. This structure is cumbersome and costly in terms of maintenance of facilities and flexibility with regard to terms of potential mergers, acquisitions, dispositions and other shareholder initiatives. As such, the company is considering various forward looking initiatives which will enhance our ability to take the operational steps necessary to position the organization for future success.
SHARE REPURCHASES – LICT repurchased 413 shares for $917,321 in 2012, at an average price of $2,221 per share. Of this, 209 shares were purchased in the fourth quarter at an average price of $2,244. As of December 31, 2012 and 2011, shares outstanding were 23,125 and 23,538, respectively.
* * * *
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
914/921-8821
Release: 13-2