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 LICT Corporation Reports Preliminary Fourth Quarter and Full Year 2019 Results

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%

 

 

 

 

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 A

Page 2 of 3

 

Three Months Ended
December 31,

Twelve Months Ended
December 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
Statements of Operations and Selected Balance Sheet Data-Continued
(in thousands, Except Per Share Data)

 

Exhibit A

Page 3 of 3

 

 

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

Contacts:

Daniel E. Hopkins, President & CFO
Stephen J. Moore, Vice President-Finance
914-921-8821

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