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LICT Corporation Reports First Quarter 2022 Results

LICT | June 2, 2022

LICT Corporation (“LICT” or the “Company”; OTC Pink®: LICT) reports unaudited, financial results for the quarter ended March 31, 2022.

Non-regulated revenues for the first quarter of 2022 increased by 6.7%, or $1.1 million, to $17.5 million from the prior year’s first quarter $16.4 million, driven by broadband and cable modem sales. Non-regulated EBITDA was $7.1 million, unchanged from 2021.

Regulated revenues were $15.0 million in the first quarter of 2022 versus the prior year’s first quarter of $15.6 million. Regulated EBITDA was $6.9 million compared to $7.3 million last year.

Total revenues in the first quarter of 2022 were $32.5 million compared to $32.0 million for the corresponding quarter in 2021. EBITDA was $14.0 million in the first quarter of 2022 as compared to $14.4 million in 2021.

OTHER INCOME (EXPENSE) – Other income increased approximately $0.1 million to $0.7 million versus $0.6 million in the prior year’s first quarter. This reflects a dividend of $0.5 million from a minority investment in Aureon vs. $0.2 million in the prior year. (We carry this investment at the historical cost of $3.0 million, however, LICT’s share of the book value of the investment is probably closer to $9.0 million.) This was offset by a decrease of Patronage Capital and affiliated income of $0.2 million.

EARNINGS PER SHARE – Diluted earnings per share from operations for the first quarter of 2022 were $347 per share as compared to $378 per sharein 2021.

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 first quarters of 2022 and 2021 for A-CAM and A-CAM II revenues. LICT is actively building and expanding broadband facilities.

AFFORDABLE CONNECTIVITY PROGRAM – LICT is actively participating in the FCC Affordable Connectivity Program (“ACP”) (previously the Emergency Broadband Benefit 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 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.

BALANCE SHEET – During the first quarter of 2022, LICT received back $12.3 million from its 2021 deposit of $20.0 million related to FCC Spectrum Auction 110. LICT also paid down $25.0 million of the CoBank revolving credit facility.

2022 OUTLOOK – LICT’s guidance for 2022 revenues, EBITDA and capital expenditures remains unchanged and are estimated at approximately $131 million and $58 million respectively. In addition, capital expenditures are expected to exceed the $32 million of 2021. Full year earnings per share are expected to be about $1,350 per share in 2022.

FCC SPECTRUM AUCTIONS - LICT Wireless Broadband Company, LLC (“LICT Wireless”), a wholly owned subsidiary, participated in FCC Auction 110 – 3.45- 3.55 GHz band licenses which ended on November 16, 2021. The FCC announced the results of this auction on January 14, 2022, and LICT acquired twelve licenses of $7.7 million. During the first quarter we continued our efforts to deploy the spectrum licenses we have acquired through various auctions, which will enable us to reach some of our more remote customers with increased speeds.

CAPITAL EXPENDITURES – In the first quarter of 2022, capital expenditures were $7.4 million, of which $3.5 million was for non-regulated and $3.9 million for regulated projects. 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 March 31, 2022, LICT owns and operates 5,759 miles of fiber optic cable, 11,515 miles of copper cable, 778 miles of coaxial cable and 84 towers.

SHARE REPURCHASES – During the three months ended March 31, 2022, the Company repurchased 245 shares for $5.9 million, with an average price of $24,153 per share. On March 31, 2022, 17,626 shares were outstanding.

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 a make a contribution to that charity. From 2016 through 2021, the company donated $100 per share on behalf of its registered shareholders to their designated charities. LICT is committed to giving back to our communities and since the inception of the program, has made over $7.5 million in charitable contributions.

OPERATING STATISTICS / BROADBAND DEPLOYMENT - As of March 31, 2022, the Company’s broadband penetration in its franchised telephone service territories, based on its total Incumbent Local Exchange Carrier (“ILEC”) voice lines, was 95.6%, as compared to 93.3% at December 31, 2021. During the first quarter, the Company’s broadband lines grew by 1.3% to just over 44,500 units. This increase offset our voice and video line loss.

					Percent
	March 31,	December 31,	Increase		Increase
	2022	2021	(Decrease)		(Decrease)
Broadband lines	44,506	43,939	567		1.3	%
Voice Lines
ILEC	23,378	23,644	(266	)	(1.1	%)
Out of franchise	6,990	7,043	(53	)	(0.8	%)
Total	30,368	30,687	(319	)	(1.1	%)
Video Subscribers	4,019	4,117	(98	)	(2.4	%)
Revenue Generating Units	78,893	78,743	150		0.2	%

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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 Page 1 of 3
Statements of Operations
(In Thousands, Except Per Share Data)

STATEMENTS OF OPERATIONS
	Three Months Ended
	March 31,
	2022			2021

Revenues	$	32,465		$	32,015

Cost and Expenses:
Cost of revenue, excluding depreciation		15,235			14,479
Selling, general and administration		3,223			3,173
Corporate office expenses		1,134			946
Charitable contributions		141			-
Depreciation and amortization		5,161			4,636
Total Costs and Expenses		24,894			23,234

Operating profit		7,571			8,781

Other Income (Expense)
Investment income		894			762
Interest expense		(291	)		(385	)
Equity in earnings of affiliated companies		50			185
Other		71			58
		724			620

Income Before Income Tax Provision		8,295			9,401
Provision for Income Taxes		(2,123	)		(2,427	)
Net Income	$	6,172		$	6,974
Capital Expenditures	$	7,450		$	7,123

Weighted Average Shares- Basic and Diluted		17,786			18,458
Actual shares outstanding at end of period		17,626			18,399

Earnings Per Share:	$	347		$	378

LICT CORPORATION					Exhibit A Page 2 of 3
Balance Sheet
(In Thousands, Except Per Share Data)
	March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	27,049	$	42,466
Receivables, less allowances of $153 and $169, respectively		6,366		7,180
Material and supplies		9,176		8,212
Prepaid expenses and other current assets		5,350		24,068
Total current assets		47,941		81,926

Property, plant and equipment:		125,858		123,473

Goodwill		48,048		48,048
Other intangibles		24,134		16,392
Investments in and advances to affiliated entities		2,765		3,822
Other assets		10,548		10,476
Total assets	$	259,294	$	284,137

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Trade accounts payable	$	4,031	$	4,388
Accrued interest payable		12		154
Accrued liabilities		7,929		7,720
Current maturities of long-term debt		577		25,577
Total current liabilities		12,549		37,839

Long-term debt		21,748		21,748
Deferred income taxes		24,947		25,025
Other liabilities		9,593		9,323
Total liabilities		68,837		93,935

Total shareholders' equity		190,457		190,202
Total liabilities and shareholders’ equity	$	259,294	$	284,137

LICT Corporation Statements of Operations and Selected Balance Sheet Data-Continued (in thousands, Except Per Share Data)								Exhibit A Page 3 of 3

	SELECTED DATA	Mar. 31,			Dec. 31,
		2022			2021

	Cash and Cash Equivalents	$	27,049		$	42,466

	Other short-term investments		-			20,000

	Long-Term Debt (including current portion)		(22,325	)		(47,325	)

	Net Cash	$	4,724		$	15,141

	Shares Outstanding		17,626			17,871

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 charitable contributions.

	Three Months Ended
	March 31,
	2022			2021
EBITDA Reconciliation:
Operating Profit from Continuing Operations	$	7,571		$	8,781
Corporate Expenses		1,134			946
Charitable Contributions		141			--
Depreciation and amortization		5,161			4,636
EBITDA from Operations before Corporate Expenses		14,007			14,363
Corporate Expenses		(1,134	)		(946	)
Charitable Contributions		(141	)		--
EBITDA	$	12,732		$	13,417