Rye, NY – May 20, 2013 – LICT Corporation (Pink Sheets®: LICT) today announced its first quarter 2013 earnings. See attachment A.
FIRST QUARTER RESULTS –During the first quarter of 2013, our revenues were $23.5 million as compared to $23.1 million in 2012, an increase of $0.3 million. EBITDA at $9.1 million was down by $0.6 million compared to 2012 due to the absence of $0.6 million in cash distributions from our equity affiliates in 2012.
Non-regulated revenues increased $770,000, or 9.25%, during the first quarter, due primarily to increased broadband and competitive local exchange carrier (“CLEC”) sales. Regulated revenues were $14.3 million in the 2013 quarter, versus $14.7 million in the prior year quarter. Operating costs increased by $333,000, from $14.0 million to $14.3 million. Corporate expenses were $754,000, a decrease of $145,000 compared to the first quarter of 2012.
Net income during the first quarter was $100.65 per share in 2013 versus $83.45 per share in the comparative quarter of 2012. On a consolidated basis, net income per share during the first quarter was $111.44 in 2013 versus $421.67 in 2012.
Lenny Higgins, Chief Operating Officer, said “We continued to grow our non- regulated business, offsetting planned secular dynamics in our regulated business due to changes in technology and regulation. Our local management teams are making in-roads into nearby, out-of-territory markets by delivering revenue growth in broadband, CLEC, cell backhaul, fixed wireless and video business segments.”
CAPITAL EXPENDITURES AND DEPRECIATION EXPENSE – Capital expenditures were $3.4 million for the first three months of 2013 compared to $2.3 million in 2012, reflecting our continued investment in the improvement of our products and investment in our network infrastructure, in particular, our broadband networks. Through upgraded electronics and extended fiber deeper into our networks, we have improved both the speed and capacity of our broadband service offerings. We will continue to review capital spending throughout 2013, focusing a significant portion of the $12 to $17 million of expected expenditures to “success based” fiber and cell backhaul projects.
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, high speed businesses, such as Broadband through DSL service, to supplement our traditional rural telephone services.
OPERATING STATISTICS – As of March 31, 2013, the company’s in-territory DSL penetration, based on total ILEC voice lines, was 65.3%, compared to 65.3% as of December 31, 2012.Our summary operating statistics are as follows:
| 03/31/2013 | 12/31/2011 | Increase (Decrease) | Percent Increase (Decrease) | |
| ILEC voice lines | 38,494 | 39,078 | (584) | (1.50%) |
| CLEC voice lines | 7,338 | 7,154 | 184 | 2.6% |
| Total voice lines | 45,832 | 46,232 | (400) | (0.91%) |
| Broadband lines | 27,663 | 27,175 | 488 | 1.8% |
| LD Resale lines | 24,314 | 24,077 | 337 | 1.0% |
| Video Subscribers | 6,803 | 7,399 | (596)a | (8.1%) |
(a) In February 2013, we sold a 500 subscriber CATV operation in Ely, Nevada.
BALANCE SHEET – As of March 31, 2013, the company had $9.9 million in cash and $75.9 million in total debt, resulting in net debt of $66.0 million, compared to net debt of $69.2 million as of December 31, 2012. The debt reduction was achieved through operating cash flows and the sale of assets.
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. Such costs were 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 – During the first quarter of 2013, we repurchased 226 shares for $536,857 at an average price of $2,375 per share. As of March 31, 2013, shares outstanding were 22,899.
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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
914/921-8821
Release: 13-3