- EBITDA Up 21% to $14.2 million from $11.7 million in prior year
- Share Buyback Authorization Increased
- Designated Charitable Contribution of $100 per Share for Registered Shareholders Approved
2024-Unaudited Second Quarter Results
Rye, NY – August 12, 2024 – LICT Corporation (“LICT” or the “Company”; OTC Pink®: LICT) reports financial results for the quarter ended June 30, 2024. Data for all periods has been adjusted for the spin-off of MachTen on August 31, 2023, and 2023 results are presented as discontinued operations.
Total revenues in the second quarter of 2024 increased by $4.6 million to $33.7 million versus $29.1 million in the same quarter a year ago.
Regulated revenues were $14.9 million in the second quarter of 2024, an increase of $3.2 million versus the prior year’s second quarter of $11.7 million. The acceptance of Enhanced ACAM (E-ACAM) accounted for a $3.5 million increase in regulated revenues for the quarter.
Non-regulated revenues for the second quarter of 2024 increased 8% to $18.8 million from the prior year’s second quarter $17.4 million driven by sales of broadband services and high-speed data circuits. Further, our results for the second quarter of 2024 include $750K in revenues from the Manti Non-Regulated entities which were acquired on December 1, 2023.
Total EBITDA was $14.2 million in the second quarter of 2024 as compared to $11.7 million in the second quarter of 2023. The $2.5 million increase in EBITDA was driven by the election of E-ACAM as well as an increase in our non-regulated business, which was offset by higher operating expenses, including labor costs, professional and engineering expenses.
Regulated EBITDA in the second quarter of 2024 was $7.2 million compared to $4.5 million during the same period last year, driven by E-ACAM and offset by increases in operating expenses.
Non-regulated EBITDA in the second quarter was $7.0 million compared to $7.2 million last year. The decrease was driven by an increase in operating expenses, offset by an increase in internet revenues.
OTHER INCOME/(EXPENSES) – Other income/expenses remained flat at $0.5 million in the second quarter of 2024 versus 2023.
EARNINGS PER SHARE – Earnings per share from continuing operations for the second quarter of 2024 were $293 per share compared to $220 per share in the same period last year.
Shareholder Designated Charitable Contribution Program
LICT Corporation (OTC Pink: LICT) will continue its Shareholder Charitable Contribution program for all registered shareholders. Each registered shareholder will be eligible to designate a 501 c3 charity to which a $100 per share donation on behalf of the shareholder will be made.
We believe charitable giving is a cornerstone of society and an obligation for those with means to make a difference in the world. As an organization, LICT will have no control over the donations, but we are happy to make them on behalf of our shareholders.
Over the past 7 years, LICT has made more than $7.5 million in charitable contributions.
Details will be announced before year end regarding the details of the contribution.
Share Repurchase Program
During the three months ended June 30, 2024, the Company repurchased 205 shares for $3.2 million, with an average price of $15,559 per share. For the six months ended June 30, 2024, the company has repurchased 297 shares for $4.7 million, with an average price of $15,943 per share. As of June 30, 2024, 16,674 shares were outstanding.
LICT’s Board of Directors increased the Company’s authorization to repurchase shares by an additional 400 shares, bringing the total to 514 authorized for repurchase. We will continue to repurchase shares on an opportunistic basis.
FCC Programs and Other Capital Expenditures
With the acceptance of the FCC’s E-ACAM program effective January 1, 2024, LICT now has buildout requirements to a minimum speed of 100/20 Mbps to almost 20,000 locations which must be completed by December 31, 2028 (the company has already commenced the buildout process). E-ACAM increased LICT’s federal Universal Service Fund (USF) revenues an incremental $14 million per year ($3.5 million per quarter) to a total of $37.2 million annually through 2038 (subject to a one-time true-up in 2025 for more precise E-ACAM location counts). The total gross capital expenditures to meet the buildout requirements for E-ACAM, along with Federal (ReConnect III & IV) and State grants are estimated at $511 million ($349 million net of grant funding).
I. SUPREME COURT ENDS THE CHEVRON DEFERENCE DOCTRINE
On June 28, 2024 the U.S. Supreme Court ended the Chevron deference doctrine. With this ruling, the Supreme Court cut back sharply on the power of federal agencies to interpret the laws they administer and ruled that courts should rely on their own interpretation of ambiguous laws. Management will continue to monitor the impacts of this ruling on the business of the company and specifically any funding provided by government programs.
II. ENHANCED ALTERNATIVE CONNECT AMERICA COST MODEL (E-ACAM) PROGRAM
The Federal Communications Commission proposed an increase in ACAM funding through a program known as E-ACAM, which began January 1, 2024.
In the new program LICT entities will receive $37.2 million per year through 2038, as compared to $23.2 million received in both 2023 and 2022, with minimum speed requirements of 100/20 Mbps.
III. RECONNECT III and RECONNECT IV–
As previously announced, LICT has been awarded $157.5 million for seven United States Department of Agriculture (USDA) ReConnect III and ReConnect IV grants with a total project cost of $171.2 million, of which, our share of cost will be approximately $13.7 million. These grants require us to provide 1 Gig of fiber broadband speed. Five of the seven awards are still pending environmental clearance approval before construction can commence.
IV. LICT EXTENDED THE FCC’S AFFORDABLE CONNECTIVITY PROGRAM (ACP)
ACP was terminated in May of 2024. LICT informed its ACP customers that the Company will continue an equivalent credit through January 31, 2025, at LICT’s cost. Eligible ACP customers received a continuation of their broadband credit of up to $30 per month (up to $75 for households on Tribal Lands) towards their qualifying internet plan. During June 2024, LICT provided approximately 1,544 ACP eligible customers with the same credits for which they were previously eligible, at the company’s expense.
Strategic Initiatives
The spin-off of our Michigan entity, MachTen (OTC Pink: MACT), occurred on August 31, 2023. At the time of the spin-off each shareholder of LICT received 150 shares of MachTen per one share of LICT. We continue to own 20% of MachTen as well as holding a note receivable of $15 million plus accrued interest.
LICT’s acquisition of Manti Telephone Communications Company (MTCC), and AFConnect (AFI) is complete, the non-regulated facet of the Manti transaction closed on December 1, 2023. The regulated portion, Manti Telephone Company (MTC) transaction is still pending regulatory approval.
As previously reported, during the fourth quarter of 2023, LICT completed the sale of 40% of its 20% ownership of Brick Skirt Holding Company (formerly DFT Communications) to CIBL, Inc. LICT’s sale of its remaining 12% ownership of Brick Skirt, is still pending 4 regulatory approval. Bretton Woods continues to utilize Brick Skirt for certain administrative functions as it has since 2014.
FIXED WIRELESS – Sound Broadband LLC, the wireless subsidiary of LICT Corporation specializing in fixed wireless solutions, has successfully completed 5G deployments in its existing service areas and expanded into new markets across New Mexico, California, and Utah. The company is now poised to introduce additional 5G deployments in Kansas and Oregon this year. Ongoing analysis aims to further extend 5G wireless broadband services across all operational regions, enhancing broadband speeds and connectivity for communities served by LICT.
OPERATING STATISTICS/BROADBAND DEPLOYMENT – LICT owns and operates 6,713 miles of fiber optic cable, 9,040 miles of copper cable, 841 miles of coaxial cable and 95 towers.