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LICT Corporation Reports Second Quarter 2021 Results

LICT

  • Revenues increased 5.8% to $32.3 from $30.5 million.
  • EBITDA from operations was $14.8 versus $13.8 million.
  • EPS from operations rose 13% to $346 from $307 per share.
  • Capital Expenditure increases accelerate our broadband deployment

LICT Corporation (“LICT” or the “Company”; OTC Pink®: LICT) reports unaudited, financial results for the quarter ended June 30, 2021.

COVID-19 - LICT continues to closely monitor developments of the new variants of COVID -19. We continue to take steps to mitigate the potential risks related to the COVID-19 pandemic to our teammates and customers.

SECOND QUARTER – In 2021, LICT’s second quarter revenues were $32.3 million compared to $30.5 million for the corresponding quarter in 2020. EBITDA was $14.8 million in the second quarter of 2021 as compared to $13.8 million in 2020.

Non-regulated revenues increased 12%, or $1.8 million, to $16.8 million from the prior year’s second quarter $15.0 million, driven by broadband and cable modem sales. Non-regulated EBITDA rose just over 12% to $7.3 million, from $6.5 million.

Regulated revenues totaled $15.5 million in the second quarter of both 2021 and 2020. Regulated EBITDA was $7.5 million compared to $7.3 million last year.

In April 2021, CentraCom, the Company’s Utah operation, closed on the acquisition of assets and operations of NeboNet, a fixed wireless Internet Service Provider located in Nephi, Utah. NeboNet offered high speed wireless Internet service in the counties of Juab and Boxer Elder, Utah. CentraCom will expand and enhance the bandwidth capabilities of the network throughout these communities.

OTHER INCOME – Other income/(expense) for the second quarter of 2021 and 2020 totaled $0.3 million, mostly due to the $50 million drawdown from CoBank in the prior year, which we have reduced to $10 million.

EARNINGS PER SHARE Earnings per share from operations for the second quarter of 2021 were $346 per share as compared to $307 per sharein the prior year’s second quarter.

ALTERNATIVE – CONNECT AMERICA COST MODEL (“A-CAM”) PROGRAM – LICT included $8.0 million in the second quarter of 2021 for A-CAM and A-CAM II revenues, about the same as the $8.1 million in the second quarter of 2020.

All LICT telephone companies have elected to participate in the Federal Communications Commission’s (“FCC”) A-CAM and A-CAM II programs. The A-CAM program commenced January 1, 2017, with revisions in 2018 and 2019. A-CAM II was implemented by the FCC in 2019, which LICT adopted in Wisconsin. The A-CAM program is designed to accelerate and expand the deployment of broadband capabilities throughout the nation’s rural areas with mandatory build-out requirements for receipt of support. LICT is actively building and expanding broadband facilities. A-CAM and A-CAM II replaced two prior USF mechanisms for companies electing A-CAM.

EMERGENCY BROADBAND BENEFIT (“EBB”) PROGRAM – LICT is actively participating in the FCC’s $3.2 billion EBB Program 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 with a broadband credit of up to $50 per month (up to $75 for households on Tribal Lands) towards their qualifying internet plan for the duration of the program.

FCC AUCTIONS – During the second quarter of 2021 we continued our efforts to deploy the spectrum licenses we were awarded in Auction 105 of last year which will enable us to reach some of our more remote customers with increased speeds. In addition, we are engaged in the filing process required by the FCC for the markets we were awarded in Auction 904, the Rural Digital Opportunities Fund auction, as well as planning to participate in the upcoming Auction 110.

2021 OUTLOOK – LICT’s guidance for 2021 revenue and EBITDA remains unchanged with revenues of $127 - $131 million and EBITDA in the range of $58 to $60 million. LICT’s guidance on capital expenditures is increasing to a range of $31 and $33 million as we have increased deployment of fiber in the communities we serve. The effect of the COVID-19 pandemic may impact revenue growth, in the second half of 2021.

STRATEGIC REVIEW - As previously stated, the Company continues to systematically seek, analyze and evaluate a full range of means to expand the scope and scale of its businesses to accelerate growth across all of them, and thereby enhance our shareholders’ value.

CAPITAL EXPENDITURES – In the second quarter of 2021, capital expenditures were $7.5 million, of which $4.1 million was for non-regulated activities and $3.4 million for regulated activities. Our capital spending will enable us to meet and exceed our A-CAM requirements, offer enhanced broadband speeds, and increase the overall fiber route miles in our network.

As of June 30, 2021, LICT owns and operates 5,325 miles of fiber optic cable, 11,494 miles of copper cable, 770 miles of coaxial cable and 83 towers. During the quarter, we added 26 towers as a result of our acquisition of NeboNet in Utah.

SHARE REPURCHASES – During the six months ended June 30, 2021, the Company repurchased 453 shares for $10.1 million, with an average price of $22,200 per share. On June 30, 2021, 18,080 shares were outstanding.

OPERATING STATISTICS / BROADBAND DEPLOYMENT - As of June 30, 2021, the Company’s broadband penetration in its franchised telephone service territories, based on its total Incumbent Local Exchange Carrier (“ILEC”) voice lines, was 93.3%, as compared to 90.8% at December 31, 2020.

June 30,

December 31,

Percent

Increase

Increase

2021

2020

(Decrease)

(Decrease)

Broadband lines

40,607

39,825

782

2.0%

Voice Lines

ILEC

23,957

24,005

(48)

(0.2%)

Out of franchise

6,897

7,456

(559)

(7.5%)

Total

30,854

31,461

(607)

(1.9%)

Video Subscribers

4,307

4,406

(99)

(2.2%)

Revenue Generating Units

75,768

75,692

76

0.1%

**********************************************************************************

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 2

(In Thousands, Except Per Share Data)

STATEMENTS OF OPERATIONS

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Revenues

$32,287

$30,507

$64,302

$60,553

Cost and Expenses:

Cost of revenue, excluding depreciation

14,519

13,550

28,998

26,748

Selling, general and administration

3,016

3,176

6,189

6,275

Corporate Office Expenses

917

1,063

1,863

2,013

Charitable Contributions

183

247

183

247

Depreciation and amortization

4,655

4,074

9,291

8,414

Total Costs and Expenses

23,290

22,110

46,524

43,697

Operating profit

8,997

8,397

17,778

16,856

Other Income (Expense)

Investment income

22

154

784

267

Interest expense

(319)

(486)

(704)

(788)

Equity in earnings of affiliated companies

21

--

206

53

Gain from the sale of investment (a)

--

--

--

13,071

Other

(22)

25

36

(4)

(298)

(307)

322

12,599

Income Before Income Tax Provision

8,699

8,090

18,100

29,455

Provision for income taxes

(2,413)

(2,323)

(4,840)

(7,877)

Net Income

$6,286

$5,767

$13,260

$21,578

Capital Expenditures

$7,566

$7,852

$14,689

12,915

Weighted Average Shares- Basic and Diluted

18,185

18,803

18,318

18,953

Actual shares outstanding at end of period

18,080

18,719

18,080

18,719

Earnings Per Share:

$346

$307

$724

$1,139

Earnings Per Share excluding the gain from the sale of an investment(a)

$346

$307

$724

$631

(a) Please note for the six months ended June 30, 2020, includes the gain of $13.1 million stemming from the sale of MODOC which added $508 to earnings per share.

LICT Corporation

Statements of Operations and Selected Balance Sheet Data-Continued

(In Thousands, Except Per Share Data)

Exhibit A

Page 2 of 2

SELECTED BALANCE SHEET DATA

June 30,

December 31,

2021

2020

Cash and Cash Equivalents

$36,488

$67,324

Other short-term investments

-

$20,000

Long-Term Debt (including current portion)

22,325

$63,176

Net Cash

$14,163

$24,148

Shareholders' Equity

$183,795

$180,595

Shares Outstanding

18,080

18,533

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,

2021

2020

2021

2020

EBITDA Reconciliation:

Operating Profit from Continuing Operations

$ 8,997

$ 8,397

$ 17,778

$16,856

Additions:

Corporate expenses

917

1,063

1,863

2,013

Charitable contributions

183

247

183

247

Depreciation and amortization

4,655

4,074

9,291

8,414

EBITDA from Operations Before Corporate Expenses

14,752

13,781

29,115

27,530

Corporate Expenses

(917)

(1,063)

(1,863)

(2,013)

EBITDA

$ 13,835

$ 12,718

$ 27,252

$ 25,517



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