LICT achieves another quarter of solid revenue growth, stable EBITDA, and strong cash from operations; balance sheet strengthens as net cash grows
Fourth Quarter
- Revenues increased 10% to $31.2 million from $28.4 million.
- EBITDA grew to $14.7 million from $13.4 million.
- EPS rose 25% to $344 per share from $275 per share.
Full Year
- Revenues climbed 3.8% to a record $118.4 million from $114.1 million.
- EBITDA was $53.4 million versus $53.3 million.
- EPS rose to $1,353 per share from $1,256 per share.
Rye, NY – February 24, 2020 – LICT Corporation (“LICT” or the “Company”; OTC Pink®: LICT) reports preliminary, unaudited, financial results for the year ended December 31, 2019.
FOURTH QUARTER RESULTS – In 2019, LICT’s fourth quarter revenues increased $2.8 million to $31.2 million compared to $28.4 million for the corresponding quarter in 2018. Reported EBITDA was $14.7 million in the fourth quarter of 2019 as compared to $13.4 million in the fourth quarter of 2018.
Non-regulated revenues gained 10.3%, to $14.2 million from the prior year’s $12.8 million due to increased broadband and competitive local exchange carrier (“CLEC”) revenues. Regulated revenues increased by 9.8%, to $17.1 million in the fourth quarter of 2019 from the prior year’s $15.5 million. Non-regulated EBITDA rose by 3.6% to $5.7 million, from $5.5 million, while regulated EBITDA increased to $9.1 million, from $8.1 million.
In the fourth quarter, LICT completed the sale of its New Hampshire operation to CIBL. LICT is treating the results of the New Hampshire operation as a discontinued operation and its contributions to LICT’s consolidated operating results have been excluded from amounts previously reported.
FULL YEAR RESULTS – The Company recorded revenues of $118.4 million for 2019 and EBITDA of $53.4 million compared to 2018 revenues of $114.1 million and EBITDA of $53.3. The 2018 full year revenue and EBITDA includes the recording of additional A-CAM revenues of $2.9 million which were retroactive to 2017. Adjusting for this, on-going full year revenues were $111.2 million, and EBITDA was $50.4 million for the full year of 2018.
EARNINGS PER SHARE – Diluted earnings per share from ongoing operations, during the fourth quarter were $344 per share in 2019 as compared to $275 per share in 2018. The full year diluted earnings per share were $1,353 in 2019 and $1,256 in 2018. Shares outstanding at December 31, 2019 were 19,188 versus 19,931 at December 31, 2018.
ALTERNATIVE – CONNECT AMERICA COST MODEL (“A-CAM”) PROGRAM – Effective January 1, 2017, ten of LICT’s rural telephone companies elected to participate in the Federal Communications Commission’s (FCC) A-CAM program. The A-CAM program is designed to increase speed and expand the deployment of broadband capabilities throughout the nation’s rural areas. This program replaced two prior Universal Service Fund mechanisms for companies electing A-CAM. During 2018, the FCC expanded the A-CAM program retroactive to January 1, 2017. Accordingly, in 2018, LICT recorded additional A-CAM revenues of $5.8 million, of which $2.9 million related to the year ended December 31, 2017.
On February 25, 2019, the FCC expanded the A-CAM program for those companies whose support was initially capped and offered LICT companies $4.6 million in additional annual A-CAM funding, which was retroactive to January 1, 2019. With this increase, these capped companies have now been offered the fully funded support contemplated by the initial A-CAM program. In addition, the FCC extended the A-CAM annual support payments, for two additional years to December 31, 2028. Acceptance of these additions requires the companies to provide increased broadband speed to a greater number of locations. The Company’s subsidiaries have accepted this A-CAM expansion program and received the year to date incremental funding of $2.3 million in the second quarter of 2019.
On May 2, 2019, the FCC further expanded the A-CAM program (“A-CAM II”) to companies still receiving legacy universal service support in their service territories. LICT has three companies that have elected to participate and received $1.3 million in annual A-CAM II funding for the full year ending December 31, 2019. The Company’s subsidiaries received the 2019 year to date incremental funding in the 3rd quarter of 2019. As of 2019, all of LICT’s rural telephone companies have elected A-CAM regulation.
SHAREHOLDER DESIGNATED CHARITABLE CONTRIBUTION PROGRAM — In 2016, the Company adopted a Shareholder Designated Charitable Contribution Program. Under the Program, all registered shareholders are eligible to designate charities and the company will contribute to that charity. In 2016 through 2019, the company made $100 per share contributions on behalf of its shareholders to their designated charities. In 2019 and 2018, total contributions under this Program, amounted to $1.3 million and $2.5 million, respectively, and the after-tax earnings per share effect of these contributions was $67 per share in 2019 versus $122 per share in 2018.
BALANCE SHEET – LICT’s balance sheet continued to improve in 2019 as a result of strong cash from operations. The balance sheet at yearend 2019 reflects the milestone event of the cash exceeding outstanding debt with net cash of $3.7 million at December 31, 2019 compared to net debt $7.4 million on December 31, 2018. The Company anticipates that cash will continue to increase through 2020 as a result of continued strong cash from operations combined with the proceeds from the MODOC Partnership sale.
$50 MILLION UNSECURED REVOLVING CREDIT FACILITY – LICT closed on a new 5-year, $50 million unsecured Revolving Credit Facility with CoBank. In addition to extending the Revolving Credit Facility through 2025, the new loan facility is unsecured, provides for lower borrowing rates, and has more flexible terms.
FCC SPECTRUM AUCTIONS – LICT Wireless Broadband Company, LLC (“LICT Wireless”), a wholly owned subsidiary of the Company, is a qualified bidder in the FCC auction for spectrum, Auction 103 – 37 GHz, 39 GHz, 47.2 GHz. These spectrum bands are designated to be used for provision of 5G wireless services. This auction began on December 10, 2019 and is still in process. FCC rules restrict information that bidders may disclose about their participation in these Auctions, including the amount of their upfront payment.
SALE OF NEW HAMPSHIRE OPERATION TO CIBL – LICT completed the sale of its New Hampshire operation to CIBL, a publicly traded company that was spun- off by LICT in 2007. The transaction was announced in August of 2019 and closed at year end 2019. The New Hampshire operation consists of the Bretton Woods Telephone Company a Rural Local Exchange Carrier serving the Mt. Washington/Carroll, NH area, and World Surfer, Inc., a Competitive Local Exchange Carrier serving the same area. These companies are leading providers of broadband and communications services to an approximately 35 square-mile area in northern New Hampshire, including the Omni Mount Washington Hotel and Resort, and The Mount Washington Cog Railway. LICT now owns approximately 6% of CIBL’s outstanding common stock.
SALE OF MODOC PARTNERSHIP – The Company completed the sale of its minority interest in the MODOC RSA Limited Partnership to Verizon Wireless. The sale closed on January 2, 2020.
CAPITAL EXPENDITURES – For 2019, capital expenditures were $24.7 million, of which $13.8 million was for non-regulated activities and $10.9 million for regulated activities. In order to expand the Company’s non-regulated fiber initiatives and provide quality broadband services to our customers in the rural areas of the United States, our current plan calls for capital expenditures of $25 to $27 million in 2020. As of December 31, 2019, LICT operations deployed 4,861 miles of fiber optic cable, 11,455 miles of copper cable, and 745 miles of coaxial cable.
2020 OUTLOOK – LICT expects to continue its strong financial performance in 2020 with total revenues of $120 to $124 million, EBITDA in the range of $$54 to $56 million, and total capital expenditures between $25 and $27 million. The balance sheet is expected to continue to improve throughout 2020 as a result of solid cash generation from operations and cash proceeds from the MODOC Partnership sale.
SHARE REPURCHASES – During the year ended December 31, 2019, the Company repurchased 743 shares for $12.4 million, with an average price of $16,739 per share.
OPERATING STATISTICS / BROADBAND DEPLOYMENT – As of December 31, 2019, the Company’s DSL penetration in its franchised telephone service territories, based on its total Incumbent Local Exchange Carrier (“ILEC”) voice lines, was 84.8%, as compared to 79.5% at December 31, 2018. Our capital spending will enable us to meet A-CAM requirements, offer enhanced broadband speeds, and increase the overall fiber route miles in our network. Our summary operating statistics excluding New Hampshire Operations in 2019 and 2018 are as follows:
| December 31, | Percent | |||
| Increase | Increase | |||
| 2019 | 2018 | (Decrease) | (Decrease) | |
| Broadband lines | 35,393 | 33,276 | 2,117 | 6.4% |
| Voice Lines | ||||
| ILEC | 24,520 | 25,722 | (1,202) | (4.7%) |
| Out of Area | 7,525 | 7,301 | 224 | 3.1% |
| Total | 32,045 | 33,023 | (978) | (3.0%) |
| Video Subscribers | 4,628 | 5,009 | (381) | (7.6%) |
| Revenue Generating Units | 72,066 | 71,308 | 758 | 1.1% |
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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 anticipated financial results, 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. Such forward-looking 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 OTC Pink® under the symbol LICT. For further information visit our website at http://www.lictcorp.com.
| LICT CORPORATION | Exhibit A | ||||
| Statements of Operations and Selected Balance Sheet Data | Page 1 of 3 | ||||
| (In Thousands, Except Per Share Data) | |||||
| STATEMENTS OF OPERATIONS | |||||
| Three Months Ended | Twelve Months Ended | ||||
| December 31, | December 31, | ||||
| 2019 | 2018 | 2019 | 2018 | ||
| Revenues | $31,238 | $28,390 | $118,383 | $114,135 | |
| Cost and Expenses: | |||||
| Cost of revenue, excluding depreciation | 13,627 | 12,007 | 51,853 | 47,770 | |
| Selling, general and administration | 2,850 | 2,790 | 11,681 | 11,273 | |
| Corporate Office Expenses | 660 | 921 | 3,895 | 4,006 | |
| Charitable Contributions | 1,298 | 1,200 | 1,298 | 2,477 | |
| Depreciation and amortization | 5,208 | 5,067 | 19,256 | 19,590 | |
| Total Costs and Expenses | 23,643 | 21,985 | 87,983 | 85,116 | |
| Operating profit | 7,595 | 6,405 | 30,400 | 29,019 | |
| Other Income (Expense) | |||||
| Investment income | 23 | 65 | 332 | 612 | |
| Interest expense | (380) | (466) | (1,487) | (1,741) | |
| Equity in earnings of affiliated companies | 770 | 820 | 2,744 | 2,732 | |
| Other | 100 | (55) | 2,603 | 3,276 | |
| 513 | 364 | 4,192 | 4,879 | ||
| Income Before Income Tax Provision | 8,108 | 6,769 | 34,592 | 33,898 | |
| (Provision) Benefit for Income Taxes | (1,502) | (1,272) | (8,235) | (8,480) | |
| Net Income from Continuing Operations | $6,606 | $5,497 | $26,357 | $25,418 | |
| Income from Discontinued Operations Before Income Tax Provision | 33 | 110 | 255 | 476 | |
| Gain on Sale of Discontinued Operations | 250 | — | 250 | — | |
| (Provision) Benefit for Income Taxes | (68) | (27) | (121) | (114) | |
| Net Income from Discontinued Operations | $215 | $83 | $384 | $362 | |
| Net Income | $6,821 | $5,580 | $26,741 | $25,780 | |
| Earnings Per Share | $355 | $279 | $1,373 | $1,259 | |
| Capital Expenditures | $6,415 | $7,515 | $24,668 | $22,494 | |
| Exhibit APage 2 of 3 | ||||||||||
| Three Months EndedDecember 31, | Twelve Months EndedDecember 31, | |||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||
| Weighted Average Shares: | ||||||||||
| Basic | 19,235 | 19,994 | 19,479 | 20,232 | ||||||
| Diluted | 19,270 | 20,029 | 19,514 | 20,269 | ||||||
| Actual shares outstanding at end of period | 19,188 | 19,931 | 19,188 | 19,931 | ||||||
| Earnings Per Share: | ||||||||||
| Basic Net Income: | ||||||||||
| Net income from continuing operations | $344 | $275 | $1,353 | $ 1,256 | ||||||
| Net income from discontinued operations | 11 | 4 | 20 | $ 18 | ||||||
| Net income attributable to LICT Corporation | $355 | $279 | $1,373 | $1,274 | ||||||
| Dilutive Earnings Per Share: | ||||||||||
| Net income from continuing operations | $343 | $274 | $1,351 | $1,254 | ||||||
| Net income from discontinued operations | 11 | 4 | 20 | 18 | ||||||
| Net income attributable to LICT Corporation | $354 | $278 | $1,371 | $1,272 | ||||||
| Dilutive Earnings Per Share by Component: | ||||||||||
| On-going operations | $431 | $352 | $1,357 | $1,166 | ||||||
| Out of period items | (21) | (17) | 60 | 90 | ||||||
| Charitable contributions | (67) | (60) | (67) | (122) | ||||||
| Gain on sale of assets in a minority position | – | – | – | 120 | ||||||
| Reported | $343 | $274 | $1,351 | $1,254 | ||||||
| LICT Corporation Exhibit A Statements of Operations and Selected Balance Sheet Data-Continued Page 3 of 3(in thousands, Except Per Share Data) | |||||||||||||||
| SELECTED BALANCE SHEET DATA | Dec. 31, | Dec. 31, | |||||||||||||
| 2019 | 2018 | ||||||||||||||
| Cash and Cash Equivalents | $8,414 | $7,554 | |||||||||||||
| Other short-term investments | $20,000 | $20,000 | |||||||||||||
| Notes receivable | — | $2,890 | |||||||||||||
| Long-Term Debt (including current portion) | $24,678 | $30,976 | |||||||||||||
| Liabilities, including taxes, other than debt | $34,610 | $33,747 | |||||||||||||
| Shareholders’ Equity | $155,033 | $140,369 | |||||||||||||
| Shares Outstanding at Date | 19,188 | 19,931 | |||||||||||||
| EBITDA | |||||||||||||||
| EBITDA is an established measure of operating performance and liquidity that is commonly reported and widely used by analysts, investors, and other interested parties in the telecommunications industry because it eliminates many differences in financial, capitalization, and tax structures, as well as non-cash and non-operating charges to earnings. We believe that EBITDA trends are a valuable indicator of whether our operations are able to produce sufficient operating cash flow to fund working capital needs, service debt obligations, and fund capital expenditures. | |||||||||||||||
| EBITDA is calculated as Operating Profit from Continuing Operations plus depreciation and amortization expense and charitable contributions. EBITDA also includes the cash distributions received from the equity in earnings of affiliated companies. Although we do not have majority voting control of such companies, we do have the ability to influence financial and accounting policies. | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| EBITDA Reconciliation: | |||||||||||||||
| Operating Profit from Continuing Operations | $ 7,595 | $ 6,405 | $ 30,400 | $ 29,019 | |||||||||||
| Additions: | |||||||||||||||
| Depreciation and amortization | 5,208 | 5,067 | 19,256 | 19,590 | |||||||||||
| Charitable contributions | 1,298 | 1,200 | 1,298 | 2,477 | |||||||||||
| Corporate Expenses | 660 | 921 | 3,895 | 4,006 | |||||||||||
| Cash received from equity affiliates | 594 | 725 | 2,456 | 2,200 | |||||||||||
| EBITDA from Operations Before Corporate Expenses | 15,355 | 14,318 | 57,305 | 57,292 | |||||||||||
| Corporate Expenses | (660) | (921) | (3,895) | (4,006) | |||||||||||
| EBITDA | $ 14,695 | $ 13,397 | $ 53,410 | $ 53,286 | |||||||||||