Rye, NY – November 25, 2013 – LICT Corporation (“LICT”; Pink Sheets®: LICT) today announced its third quarter 2013 earnings. See attachment A.
THIRD QUARTER RESULTS –During the third quarter of 2013, our revenues were $24.2 million, essentially the same as the 2012 third quarter. EBITDA before corporate costs was $9.2 million versus $10.1 million, or down by $0.9 million as compared to 2012. This was due primarily to lower cash distributions from our equity affiliates of $426,000, from $679,000 to $253,000, and to lower earnings from operations.
Regulated revenues were $14.3 million in the 2013 quarter, versus $15.3 million in the prior year quarter. Non-regulated revenues increased to $9.8 million, up $947,000 from $8.9 million, or 10.6%, during the third quarter. This was due primarily to increased broadband and competitive local exchange carrier (“CLEC”) sales. Operating costs increased by $468,000, from $14.8 million to $15.3 million, due primarily to start-up costs in non-regulated activities. Corporate expenses were $824,000, an increase of $41,000 compared to the third quarter of 2012.
Net income per share during the third quarter was $85.99 in 2013 versus $95.67 in 2012.
FULL YEAR FORECAST – LICT currently expects 2013 revenues to be approximately $97 million compared to $95 million in 2012. Prior to corporate costs, EBITDA, including cash received from our equity affiliates, is expected to be about $38 million in 2013, compared to $39.6 million in 2012. Earnings per share, excluding unusual items, are estimated to be $390 in 2013, as compared to $336 in 2012.
CAPITAL EXPENDITURES AND DEPRECIATION EXPENSE – Capital expenditures were $13.2 million for the nine months ended September 30, 2013 compared to $10.8 million in 2012. 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. We will continue to review capital spending carefully throughout 2013, focusing a significant portion of the approximately $20 million of expected net expenditures on “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 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 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. 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 DSL service, to supplement our traditional rural telephone services.
OPERATING STATISTICS – As of September 30, 2013, the company’s in-territory DSL penetration, based on total ILEC voice lines, was 69.0%, compared to 65.3% as of December 31, 2012. Our summary operating statistics are as follows:
| 09/30/2013 | 12/31/2012 | Increase (Decrease) | Percent Increase (Decrease) | |
| ILEC voice lines | 37,959 | 39,078 | (1,119) | (2.9%) |
| CLEC voice lines | 7,619 | 7,154 | 465 | 6.5% |
| Total voice lines | 45,914 | 46,232 | (654) | (1.4%) |
| Broadband lines | 28,374 | 27,175 | 1,199 | 4.4% |
| LD Resale lines | 26,495 | 24,077 | 2,418 | 10.0% |
| Video Subscribers | 6,636 | 7,399 | (763)a | (10.3%) |
(a) In February 2013, we sold a 500 subscriber CATV operation in Ely, Nevada.
BALANCE SHEET – As of Sept 30, 2013, the company had $8.3 million in cash and $72.0 million in total debt, resulting in net debt of $64.1 million, compared to net debt of $69.2 million as of December 31, 2012. The debt reduction was achieved through operating cash flows.
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. Net costs associated with these initiatives of approximately $400,000 were incurred in the third quarter.
H BLOCK AUCTION – On November 15, 2013, a wholly owned subsidiary of LICT applied to participate in FCC Auction Number 93 – H Block Auction. This Auction, which is scheduled to begin on January 22, 2014, is for 176 licenses of 10 MHz of spectrum in the 1.9 MHz band.
REFINANCING THE COMPANY – Despite the repayment of bank debt mentioned above, our debt structure still consists of a number of loans from federally-backed institutions, commercial banks, and seller notes. This structure is cumbersome in terms of maintenance of facilities and flexibility with regard to potential mergers, acquisitions, dispositions and other shareholder initiatives. The company continues to evaluate measures which would enhance our ability to take the financial and operational steps necessary to position the organization for future success.
SHARE REPURCHASES – During the first nine months of 2013, we repurchased 629 shares for $1.5 million at an average price of $2,398 per share. As of September 30, 2013, 22,486 shares were outstanding.
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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: 13-6