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

Rhea-AI Summary

LICT Corporation reports unaudited financial results for Q2 2023. Non-regulated revenues increased 3.7% to $18.4 million. Regulated revenues decreased to $14.7 million. Total revenues were $33.1 million. EBITDA was $14.0 million. Other income was $500,000. Earnings per share decreased to $294. Michigan spin-off occurred, LICT maintains 19% stake. LICT received $8.0 million in A-CAM revenues. LICT actively participates in the FCC's Affordable Connectivity Program. Capital expenditures were $11.0 million. LICT owns 6,864 miles of fiber optic cable. LICT has been awarded $157.5 million in USDA ReConnect grants. LICT repurchased 176 shares for $3.3 million. Broadband lines grew by 2.9%.

Positive

• Non-regulated revenues increased 3.7% to $18.4 million
• Total revenues were $33.1 million
• EBITDA was $14.0 million
• LICT received $8.0 million in A-CAM revenues
• LICT actively participates in the FCC's Affordable Connectivity Program
• LICT owns 6,864 miles of fiber optic cable
• LICT has been awarded $157.5 million in USDA ReConnect grants
• Broadband lines grew by 2.9%

Negative

• Regulated revenues decreased to $14.7 million
• Earnings per share decreased to $294
• Michigan spin-off occurred, LICT maintains 19% stake
• Capital expenditures were $11.0 million
• LICT repurchased 176 shares for $3.3 million
• Video subscribers decreased by 7.0%

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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230901841207/en/

Stephen J. Moore

Vice President-Finance

914-921-8821

www.lictcorp.com

Source: LICT Corporation