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LICT Corporation Reports Second Quarter 2023 Results and August 31 Spin-off of Michigan Property – 150 Shares of MachTen Per One Share of LICT Corporation

RYE, N.Y.–(BUSINESS WIRE)–LICT Corporation (“LICT” or the “Company”; OTC Pink®: LICT) reports unaudited, financial results for the quarter ended June 30, 2023.

Driven by broadband sales, non-regulated revenues for the second quarter of 2023 increased 3.7%, to $18.4 million from the prior year’s second quarter $17.7 million. Non-regulated EBITDA was $7.6 million, versus the $7.5 million earned in the same period last year.

Regulated revenues were $14.7 million in the second quarter of 2023 versus the prior year’s second quarter of $15.0 million. Regulated EBITDA was $6.4 million compared to $7.2 million last year.

Total revenues in the second quarter of 2023 were $33.1 million compared to $32.7 million for the corresponding quarter in 2022. EBITDA was $14.0 million in the second quarter of 2023 as compared to $14.6 million in 2022. The reduction is driven by labor and material costs.

Other Income (Expense) – Other income/expenses were $500,000 in the second quarter of 2023, versus $400,000 in the prior year’s second quarter. Due in part by $483,000 higher interest expense.

EARNINGS PER SHARE – Earnings per share from operations for the second quarter of 2023 were $294 per share as compared to $336 per share in 2022.

MICHIGAN SPINOFF – As previously announced 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. The Company will maintain a 19% stake in MachTen or approximately 605,980 shares. In addition, the Michigan operations declared a $15 million dividend due to LICT. On August 29, 2023, Mach Ten posted a Press Release detailing information regarding the spin-off. The proforma LICT net debt just after the spin-off is expected to be approximately $8.1 million.

ALTERNATIVE – CONNECT AMERICA COST MODEL (“A-CAM”) PROGRAM – All LICT telephone companies participate in the Federal Communications Commission’s (“FCC’s”) A-CAM and A-CAM II programs. The A-CAM program is designed to increase broadband speed and expand the deployment of broadband capabilities throughout the nation’s rural areas with mandatory build-out requirements for receipt of support. LICT received $8.0 million in each of the second quarters of 2023 and 2022 for A-CAM and A-CAM II revenues. LICT is actively building and expanding broadband facilities. On July 24, 2023, the FCC released a voluntary Enhanced A-CAM program which would extend through 2038 with increased A-CAM revenues and the requirement to build-out at least 100/20 Mbps by 12/31/2028 to all locations in the ILEC area that cannot receive 100/20 Mbps. The Company has commenced analyzing the FCC’s Enhanced A-CAM program on a state-by-state basis with an FCC deadline to elect Enhanced A-CAM of October 1, 2023. Additionally, the Company is preparing for the final announcement regarding the next round of FCC support, Enhanced ACAM.

AFFORDABLE CONNECTIVITY PROGRAM – LICT continues to be active participants in the FCC’s Affordable Connectivity Program (“ACP”) to support our ongoing commitment to provide affordable broadband to the rural communities we serve and help close the digital divide. This program provides consumers who are eligible, a broadband credit of up to $30 per month (up to $75 for households on Tribal Lands) towards their qualifying internet plan. We offer a variety of broadband options that qualify under the ACP. The FCC recently proposed increasing the $30 monthly credit to $75 for certain qualifying consumers. The Company will closely monitor the implementation of the enhanced ACP $75 credit, when and if it occurs.

CAPITAL EXPENDITURES – In the second quarter of 2023, capital expenditures were $11.0 million as compared to $8.9 million in the second quarter of 2022. Our capital spending will enable us to offer enhanced broadband speeds, increase the overall fiber route miles in our network and meet and exceed our A-CAM requirements. The Company expects this broadband growth to accelerate as we deploy additional Fiber-To-The-Home (“FTTH”) to more locations, including locations being built partially or completely with grant funding. As of June 30, 2023, LICT owns and operates 6,864 miles of fiber optic cable, 11,164 miles of copper cable, 942 miles of coaxial cable and 87 towers. An additional 784 miles of fiber optics were built since the second quarter of 2022.

As previously announced, LICT has been awarded $157.5 million for seven United States Department of Agriculture (USDA) ReConnect III and ReConnect IV grants to build fiber with a total project cost of $171 million. This excludes three grants awarded to our Michigan operations. The Company is actively working on obtaining environmental clearance on six of the seven grants that have been awarded. Five of these grants provide 100% funding to build fiber projects totaling $117 million in our New Mexico and California operations. The Company has also been awarded grants Kansas and New Mexico in which we will receive 75% funding totaling $55 million and LICT is required to match 25% or $14 million of the total project. We have commenced an $8.4 million project in Kansas to build fiber to provide 1 Gig broadband service.

In addition, the Federal Communications Commission has recently accepted our notice to withdraw from the Rural Digital Opportunity Fund (RDOF) support program for both Cuba City and Cal-Ore Communications. The decision to withdraw from this program is due to substantial cost increases and other significant changes within the organization since we first participated and won in the RDOF public auction.

SHARE REPURCHASES – During the six months ended June 30, 2023, the Company repurchased 176 shares for $3.3 million, with an average price of $18,954 per share. On June 30, 2023, 17,165 shares were outstanding.

OPERATING STATISTICS/BROADBAND DEPLOYMENT – As of June 30, 2023, the Company’s broadband penetration in its franchised telephone service territories, based on its total Incumbent Local Exchange Carrier (“ILEC”) voice lines, was 100%, as compared to 99.1% at December 31, 2022. During 2023, the Company’s broadband lines grew by 2.9% to 47,306 from 45,966 units on December 31, 2022.

 

June 30,

December 31,

 

Percent

 

Increase

Increase

 

2023

2022

(Decrease)

(Decrease)

Broadband lines

47,306

45,966

1,340

2.9%

Voice Lines

 

 

 

 

ILEC

21,909

22,655

(746)

(3.3%)

Out of franchise

6,939

6,943

(4)

(0.1%)

Total

28,848

29,598

(750)

(2.5%)

Video Subscribers

3,412

3,670

(258)

(7.0%)

Revenue Generating Units

79,566

79,234

332

0.4%

 

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

 

 

 

Statements of Operations

 

 

 

(In Thousands, Except Per Share Data)

 

 

 

 

 

 

STATEMENTS OF OPERATIONS

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

2023

2022

 

2023

2022

 

 

 

Revenues

$33,073

$32,728

 

$65,949

$65,193

 

 

 

 

 

Cost and Expenses:

 

 

 

 

 

Cost of revenue

15,962

15,114

 

32,232

30,349

General and administrative costs at operations

3,100

2,970

 

6,084

6,193

Corporate office expenses

1,286

1,219

 

2,505

2,353

Charitable contributions

 

141

Depreciation and amortization

5,199

4,912

 

10,999

10,073

Total Costs and Expenses

25,547

24,215

 

51,820

49,109

 

 

 

 

 

 

Operating profit

7,526

8,513

 

14,129

16,084

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

Investment income

171

29

 

1,013

923

Interest expense

(629)

(285)

 

(1,266)

(576)

Equity in earnings of affiliated companies

24

23

 

24

73

Other

(49)

(182)

 

(110)

(111)

Total Other Income/(Expense)

(483)

(415)

 

(339)

309

 

 

 

 

 

 

Income Before Income Tax Provision

7,043

8,098

 

13,790

16,393

Provision for Income Taxes

(1,977)

(2,204)

 

(3,624)

(4,327)

Net Income

$5,066

$5,894

 

$10,166

$12,066

 

Capital Expenditures

$11,043

$8,852

 

$23,362

$16,585

 

 

 

 

 

Weighted Average Shares- Basic and Diluted

17,224

17,560

 

17,267

17,672

 

 

 

 

 

 

Actual shares outstanding at end of period

17,165

17,513

 

17,165

17,513

 

 

 

 

 

 

Earnings Per Share

$294

$336

 

$589

$683

 

 

 

 

 

 

 

LICT CORPORATION

 

 

Balance Sheet

 

 

 

(In Thousands)

 

 

 

 

June 30,

2023

December 31,

2022

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$17,216

$27,257

 

Accounts receivable, less allowances of $152 and $169, respectively

7,413

7,609

 

Material and supplies

14,567

11,307

 

Prepaid expenses, and other current assets

5,001

4,514

 

Total current assets

44,197

50,687

 

 

 

 

 

Property, plant, and equipment

161,577

151,789

 

Goodwill

42,348

42,348

 

Other intangibles

29,722

29,712

 

Investments in and advances to affiliated entities

2,738

2,318

 

Other assets

11,088

10,892

 

Total assets

$291,670

$287,746

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

Trade accounts payable

$5,729

$8,962

 

Accrued interest payable

205

11

 

Accrued liabilities

7,068

6,145

 

Current maturities of long-term debt

366

372

 

Total current liabilities

13,368

15,490

 

 

 

 

 

Long-term debt

37,922

38,252

 

Deferred income taxes

29,307

29,418

 

Other liabilities

8,643

8,983

 

Total liabilities

89,240

92,143

 

 

 

 

 

Total shareholders’ equity

202,430

195,603

 

Total liabilities and shareholders’ equity

$291,670

$287,746

 

LICT Corporation

Selected Balance Sheet Data-Continued

(In Thousands, Except Per Share Data)

 

 

 

SELECTED BALANCE SHEET DATA

June 30,

December 31,

 

 

 

2023

2022

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

$17,216

$27,257

 

 

 

 

 

 

 

 

 

Long-Term Debt (including current portion)

(38,288)

(38,624)

 

 

 

 

 

 

 

 

 

Net Debt

($21,072)

($11,367)

 

 

 

 

 

 

 

Shareholders’ Equity

$202,430

$195,603

 

 

 

 

 

 

 

 

 

Shares Outstanding

17,165

17,341

 

 

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. We believe that EBITDA trends are a valuable indicator of whether our operations can 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.

Three Months Ended

Six Months Ended

June 30,

June 30,

2023

2022

 

2023

 2022

EBITDA Reconciliation:

 

 

Operating Profit from Continuing Operations

$7,526

$8,513

 

$14,129

$16,084

 

Additions:

 

 

 

 

 

Corporate expenses

1,286

1,219

 

2,505

2,353

Charitable contributions

 

141

Depreciation and amortization

5,199

4,912

 

10,999

10,073

EBITDA from Operations Before Corporate Expenses

14,011

14,644

 

27,633

28,651

Corporate Expenses

(1,286)

(1,219)

 

(2,505)

(2,353)

Charitable contributions

 

(141)

 

EBITDA

$12,725

 $13,425

 

$25,128

$26,157

 

Contacts

Stephen J. Moore

Vice President-Finance

914-921-8821

www.lictcorp.com

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