- Increase In Revenues of 15.8% for the Second Quarter
- 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
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 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.
June 30,
December 31,
Increase
Percent
Increase
2024
2023
(Decrease)
(Decrease)
Broadband lines
45,358
44,367
991
2.2%
Voice Lines
ILEC
17,114
17,549
(435)
(2.5%)
Out of franchise
6,280
6,287
(7)
(0.1%)
Total
23,394
23,836
(442)
(1.9%)
Video Subscribers
3,510
3,341
169
5.1%
Revenue Generating Units
72,262
71,544
718
1.0%
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.
LICT Corporation
Statements of Operations
(In Thousands, Except Per Share Data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
(Unaudited)
2023
(Unaudited)
2024
(Unaudited)
2023
(Unaudited)
Operating Revenues
$
33,684
$
29,088
$
67,183
$
58,093
Operating Expenses:
Cost of revenue
16,763
14,631
32,836
29,532
General and administrative costs at
operations
2,730
2,748
5,476
5,381
Corporate office expenses
1,158
1,166
2,437
2,230
Depreciation and amortization
5,803
4,767
11,807
10,065
Total Operating Expenses
26,454
23,312
52,556
47,208
Operating Income
7,230
5,776
14,627
10,885
Other Income (Expense)
Investment income
315
155
1,208
980
Interest expense
(1,096
)
(629
)
(2,066
)
(1,266
)
Unrealized loss on investment
(42
)
-
(636
)
-
Equity in earnings of affiliated
companies
252
24
225
24
Other
28
(49
)
67
(110
)
Total Other Income (Expense)
(543
)
(499
)
(1,202
)
(372
)
Income from continuing
operations
6,687
5,277
13,425
10,513
Provision for Income Taxes
(1,780
)
(1,484
)
(3,541
)
(2,773
)
Income from continuing operations, net
of tax
4,907
3,793
9,884
7,740
Income from discontinued
operations
-
1,766
-
3,277
Tax Provision for discontinued
operations
-
(493
)
-
(851
)
Income from discontinued operations,
net of tax
-
1,273
-
2,426
Net Income
$
4,907
$
5,066
$
9,884
$
10,166
Capital Expenditures
$
11,761
$
9,191
$
28,115
$
18,867
Basic & Diluted Weighted Average
Shares
16,775
17,224
16,859
17,267
Actual shares outstanding at end of
period
16,674
17,165
16,674
17,165
Earnings Per Share:
Income from continuing operations
$
293
$
220
$
586
$
448
Income from discontinued operations
-
74
-
141
Basic & Diluted Earnings Per
Share
$
293
$
294
$
586
$
589
LICT Corporation
Balance Sheet
(In Thousands, Except Per Share Data)
(Unaudited)
June 30,
2024
(Audited)
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
14,377
$
11,545
Accounts receivable, less allowances of
$137 and $140, respectively
9,719
7,123
Note receivable from affiliate, including
accrued interest
Material and supplies
16,202
14,533
15,345
16,825
Prepaid expenses, and other current
assets
4,453
4,417
Total current assets
59,284
55,255
Property, plant, and equipment, net
165,233
150,112
Goodwill
48,251
48,251
Other intangibles
34,363
34,590
Investments in Affiliated Companies
7,006
7,396
Other assets
13,671
11,436
Total assets
$
327,808
$
307,040
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Trade accounts payable
$
6,928
$
7,773
Accrued interest payable
400
272
Accrued liabilities
8,497
7,696
Current maturities of long-term debt
50,075
3,876
Total current liabilities
65,900
19,617
Long-term debt
19,839
49,576
Deferred income taxes
28,803
28,898
Other liabilities
13,429
14,261
Total liabilities
127,971
112,352
Total shareholders’ equity
199,837
194,688
Total liabilities and shareholders’
equity
$
327,808
$
307,040
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 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 corporate
expenses.
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
EBITDA Reconciliation:
Operating Profit from Continuing
Operations
$
7,230
$
5,776
$
14,627
$
10,885
Additions:
Corporate expenses
1,158
1,166
2,437
2,230
Depreciation and amortization
5,803
4,767
11,807
10,065
EBITDA from Operations
$
14,191
$
11,709
$
28,871
$
23,180
Sources and Uses
of Cash:
(Unaudited)
June 30, 2024
Three Months Ended
Six Months Ended
Net Income
$
4,907
$
9,884
Adjustments to reconcile net income to net
cash provided by operating activities
Cash Activity (Net Use of Cash)
(2,636
)
(3,401
)
Non-cash Activity (Depreciation,
amortization & other activity)
4,541
12,635
Total Net Cash provided by Operating
Activities
6,812
19,118
Cash Flows from Investing Activities
Capital Expenditures
(11,761
)
(28,115
)
Other Investing Activities
(67
)
102
Total Net Cash Used in Investing
Activities
(11,828
)
(28,013
)
Cash Flows from Financing Activities
Borrowing from Line of credit, net
12,000
16,500
Purchase of treasury stock
(3,189
)
(4,735
)
Payments to reduce long-term debt
(20
)
(38
)
Total Net Cash Provided by (Used in)
Financing Activities
8,791
11,727
Net Increase (Decrease) in Cash and Cash
Equivalents
3,775
2,832
Cash & Cash Equivalents at the
beginning of the period
10,602
11,545
Cash & Cash Equivalents at the end
of the period
$
14,377
$
14,377
LIQUIDITY - The company is in the process of closing on a new
$100 million secured revolving credit facility with CoBank for an
extended five-year term. This new facility will provide the company
with an additional $50 million in available liquidity with terms
similar to our current revolving credit facility, we expect the
facility to be closed by the end of August. For the period ended
June 30, 2024, the funds drawn on the existing $50 million CoBank
facility are presented on the balance sheet as Current Maturities
of Long-Term debt, as required under the terms of US Generally
Accepted Accounting Principles (US GAAP), as the debt is due within
one year of the financial statement date (due June 30, 2025). Once
the new five-year facility has been closed the related borrowings
will be classified as Long-term Debt on the balance sheet.
CAPITAL EXPENDITURES – For the second quarter of 2024, capital
expenditures were $11.7 million versus $9.2 million in the second
quarter of 2023. Year to date capital expenditures totaled $28.1
million in 2024 vs. $18.9 million in 2023. This increase in capital
spending was driven by the build out requirements of E-ACAM.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240812695338/en/
Stephen J. Moore Vice President- Finance 914-921-8821
www.lictcorp.com