RYE, N.Y.--(BUSINESS WIRE)--LICT Corporation ("LICT" or the "Company"; OTC Pink®: LICT) reports financial results for the quarter ended September 30, 2024. Data for all periods has been adjusted for the spin-off of MachTen on August 31, 2023, whose 2023 results are presented as discontinued operations.
Total revenues in the third quarter of 2024 increased by $4.9 million to $33.7 million versus $28.8 million in the same quarter a year ago.
Regulated revenues were $14.8 million in the third quarter of 2024, an increase of $3.5 million versus the prior year's third quarter of $11.3 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 third quarter of 2024 increased 8% to $18.9 million from the prior year's third quarter $17.5 million driven by sales of broadband services and high-speed data circuits. Further, our results for the third quarter of 2024 include $750K in revenues from the Manti Non-Regulated entities which were acquired on December 1, 2023.
Total EBITDA was $13.7 million in the third quarter of 2024 as compared to $10.8 million in the third quarter of 2023. The $2.9 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 third quarter of 2024 was $7.0 million compared to $4.1 million during the same period last year, driven by E-ACAM and offset by increases in operating expenses.
Non-regulated EBITDA was unchanged at $6.7 million compared to the same period last year.
OTHER INCOME/(EXPENSES) - Other expenses increased by $1.4 million in the third quarter of 2024 compared to 2023 primarily driven by a $0.6 million rise in interest expense.
EARNINGS PER SHARE - Earnings per share from continuing operations for the third quarter of 2024 were $228 per share compared to $195 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. Shareholders of record on November 15, 2024, will be eligible to designate a 501 (c) (3) charity to which a $100 per share donation 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 9 years, LICT has made more than $10 million in charitable contributions.
Share Repurchase Program
During the three months ended September 30, 2024, the Company repurchased 134 shares for $1.8 million, with an average price of $13,629 per share. For the nine months ended September 30, 2024, the company has repurchased 431 shares for $6.6 million, with an average price of $15,223 per share. As of September 30, 2024, 16,540 shares were outstanding. Between October 1st and the date of this press release (November 11th), the Company repurchased 180 shares for $2.5 million, with an average price of $13,655 per share.
FCC Programs and Other Capital Expenditures
I. | ENHANCED ALTERNATIVE CONNECT AMERICA COST MODEL (E-ACAM) PROGRAM: |
Effective January 1, 2024, all of LICT's Rural Local Exchange Carriers (RLECs) voluntarily elected the Federal Communications Commission's (FCC) Enhanced ACAM program which provides funding for build-out by December 31, 2028 of at least 100/20 Mbps to almost 20,000 mandatory E-ACAM locations lacking 100/20 Mbps broadband service. The Company's RLECs are aggressively designing, engineering, and constructing facilities to be in compliance with the FCC's E-ACAM program. 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 true-up in 2025 for more precise E-ACAM location counts) as compared to $23.2 million received in both 2023 and 2022 for ACAM that would have ended December 31, 2028. The total gross capital expenditures to meet the E-ACAM buildout requirements, along with Federal and State grants are estimated at $511 million ($349 million net of grant funding). | |
II. | LICT EXTENDED THE FCC'S AFFORDABLE CONNECTIVITY PROGRAM (ACP): |
ACP was terminated in May 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 the third quarter of 2024, LICT provided approximately 1,544 ACP eligible customers with the same credits for which they were previously eligible, at the Company's expense. | |
III. | 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. | |
IV. | PETITIONS TO SUPREME COURT TO REVIEW FIFTH CIRCUIT USF DECISION: |
The Department of Justice, FCC, various industry associations and public interest groups filed petitions before the Supreme Court requesting it review the decision by the U.S. Court of Appeals for the Fifth Circuit that found the Universal Service Fund (USF) contribution mechanism to be unconstitutional related to delegation to the FCC and sub-delegation to the USF Administrator. The ruling of the full Fifth Circuit that the program was unconstitutional differs from the rulings of the Sixth and Eleventh Circuits, which ruled in favor of the USF. Management is monitoring the impacts of this the Fifth Circuit ruling on the business of the company and USF funding. |
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 share of LICT and LICT retained 19% of MachTen (605,980 shares). MachTen repaid LICT a $15 million note in August 2024.
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.
LICT's sale of its remaining 12% ownership of Brick Skirt was completed on August 31, 2024, and the company now owns 450 shares of CIBL.
FIXED WIRELESS/5G -Sound Broadband LLC, the wireless subsidiary of LICT Corporation, has successfully completed 5G deployments in its existing markets and expanded into new regions, including New Mexico, California, Kansas, and Utah.
In addition to expanding Fixed Wireless 5G services, Sound Broadband is growing its Private 5G portfolio to meet the unique needs of businesses, government, and other organizations seeking secure, high-performance wireless networks. To support both public and private 5G growth, the company is applying for federal funding, including the BEAD program, to extend coverage into more remote areas. Sound Broadband remains committed to bridging the digital divide and delivering next-generation connectivity across diverse sectors and underserved regions.
OPERATING STATISTICS/BROADBAND DEPLOYMENT - LICT owns and operates 6,728 miles of fiber optic cable, 9,040 miles of copper cable, 843 miles of coaxial cable and 100 towers.
September 30, | December 31, | Increase | Percent Increase | |||||
2024 | 2023 | (Decrease) | (Decrease) | |||||
Broadband lines | 49,532 | 47,635 | 1,897 | 4.0% | ||||
Voice Lines | ||||||||
ILEC | 16,912 | 17,549 | (637) | (3.6%) | ||||
Out of franchise | 6,169 | 6,287 | (118) | (1.9%) | ||||
Total | 23,081 | 23,836 | (755) | (3.2%) | ||||
Video Subscribers | 3,489 | 3,341 | 148 | 4.4% | ||||
Revenue Generating Units | 76,102 | 74,812 | 1,290 | 1.7% |
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 | ||||||||
Statements of Operations | ||||||||
(In Thousands, Except Per Share Data) | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2024 (Unaudited) | 2023 (Unaudited) | 2024 (Unaudited) | 2023 (Unaudited) | |||||
Operating Revenues | $33,687 | $28,814 | $100,870 | $86,908 | ||||
Operating Expenses: | ||||||||
Cost of revenue | 17,318 | 15,227 | 50,153 | 44,759 | ||||
General and administrative costs at operations | 2,701 | 2,765 | 8,177 | 8,148 | ||||
Corporate office expenses | 1,040 | 1,395 | 3,478 | 3,626 | ||||
Depreciation and amortization | 5,562 | 4,591 | 17,369 | 14,656 | ||||
Total Operating Expenses | 26,621 | 23,978 | 79,177 | 71,189 | ||||
Operating Income | 7,066 | 4,836 | 21,693 | 15,719 | ||||
Other Income (Expense) | ||||||||
Investment income | 265 | 143 | 1,473 | 1,124 | ||||
Interest expense | (1,177) | (629) | (3,243) | (1,894) | ||||
Unrealized loss on investment | (151) | - | (788) | - | ||||
Equity in earnings of affiliated companies | - | 49 | 225 | 74 | ||||
Other | (863) | (134) | (828) | (245) | ||||
Total Other Income (Expense) | (1,926) | (571) | (3,161) | (941) | ||||
Income from continuing operations | 5,140 | 4,265 | 18,532 | 14,778 | ||||
Provision for Income Taxes | (1,357) | (935) | (4,898) | (3,186) | ||||
Net Income from continuing operations | 3,783 | 3,330 | 13,634 | 11,592 | ||||
Income (Loss) from discontinued operations | - | (157) | - | 2,270 | ||||
Tax Provision for discontinued operations | - | 34 | - | (489) | ||||
Income (Loss) from discontinued operations, net of tax | - | (123) | - | 1,781 | ||||
Net Income | $3,783 | $3,207 | $13,634 | $13,373 | ||||
Capital Expenditures | $15,375 | $12,598 | $43,490 | $29,905 | ||||
Basic & Diluted Weighted Average Shares | 16,624 | 17,109 | 16,780 | 17,213 | ||||
Actual shares outstanding at end of period | 16,540 | 17,069 | 16,540 | 17,069 | ||||
Earnings Per Share: | ||||||||
Income from continuing operations | $228 | $195 | $813 | $674 | ||||
Income (Loss) from discontinued operations | - | (7) | - | 103 | ||||
Basic & Diluted Earnings Per Share | $228 | $187 | $813 | $777 | ||||
LICT Corporation | ||||
Balance Sheet | ||||
(In Thousands, Except Per Share Data) | ||||
September 30, 2024 (Unaudited) | December 31, 2023 (Audited) | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $14,441 | $11,545 | ||
Accounts receivable, less allowances of $188 and $140, respectively | 10,943 | 7,123 | ||
Note receivable from affiliate, including accrued interest | -- | 15,345 | ||
Material and supplies | 14,049 | 16,825 | ||
Prepaid expenses, and other current assets | 4,041 | 4,417 | ||
Total current assets | 43,474 | 55,255 | ||
Property, plant, and equipment, net | 174,583 | 150,112 | ||
Goodwill | 48,251 | 48,251 | ||
Other intangibles | 34,236 | 34,590 | ||
Investments in Affiliated Companies | 7,152 | 7,396 | ||
Other assets | 15,197 | 11,436 | ||
Total assets | $322,893 | $307,040 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Trade accounts payable | $7,553 | $7,773 | ||
Accrued interest payable | 66 | 272 | ||
Accrued liabilities | 8,672 | 7,696 | ||
Current maturities of long-term debt (a) | 50,075 | 3,876 | ||
Total current liabilities | 66,366 | 19,617 | ||
Long-term debt | 11,329 | 49,576 | ||
Deferred income taxes | 28,790 | 28,898 | ||
Other liabilities | 14,656 | 14,261 | ||
Total liabilities | 121,141 | 112,352 | ||
Total shareholders' equity | 201,752 | 194,688 | ||
Total liabilities and shareholders' equity | $322,893 | $307,040 | ||
| Note (a): See 'Subsequent Events' for further information. |
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 | Nine Months Ended | |||||||
September 30, | September 30, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
EBITDA Reconciliation: | ||||||||
Operating Profit from Continuing Operations | $7,066 | $4,836 | $21,693 | $15,719 | ||||
Additions: | ||||||||
Corporate expenses | 1,040 | 1,395 | 3,478 | 3,626 | ||||
Depreciation and amortization | 5,562 | 4,591 | 17,369 | 14,656 | ||||
EBITDA from Operations | $13,668 | $10,822 | $42,540 | $34,001 | ||||
Sources and Uses of Cash:
(Unaudited) | ||||
September 30, 2024 | ||||
Three Months Ended | Nine Months Ended | |||
| Net Income | $ 3,783 | $ 13,634 | ||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||
| Cash Activity (Net Use of Cash) | 369 | (3,032) | ||
| Non-cash Activity (Depreciation, amortization & other activity) | 6,653 | 19,321 | ||
| Total Net Cash provided by Operating Activities | 10,805 | 29,923 | ||
| Cash Flows from Investing Activities | ||||
| Capital Expenditures | (15,375) | (43,490) | ||
| Other Investing Activities | (21) | 81 | ||
| Total Net Cash Used in Investing Activities | (15,396) | (43,409) | ||
| Cash Flows from Financing Activities | ||||
| Borrowing from Line of credit, net | (8,497) | 8,003 | ||
| Proceeds from repayment of affiliate notes receivable | 15,000 | 15,000 | ||
| Purchase of treasury stock | (1,835) | (6,570) | ||
| Payments to reduce long-term debt | (13) | (51) | ||
| Total Net Cash Provided by Financing Activities | 4,655 | 16,382 | ||
| Net Increase in Cash and Cash Equivalents | 64 | 2,896 | ||
| Cash & Cash Equivalents at the beginning of the period | 14,377 | 11,545 | ||
| Cash & Cash Equivalents at the end of the period | $ 14,441 | $ 14,441 | ||
CAPITAL EXPENDITURES - For the third quarter of 2024, capital expenditures were $15.4 million versus $12.6 million in the third quarter of 2023. Year to date capital expenditures totaled $43.5 million in 2024 vs. $29.9 million in 2023. This increase in capital spending was driven by the build out requirements of E-ACAM.
LIQUIDITY - For the period ended September 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). For the year ended 2024, as the new five-year facility has been closed (see 'Subsequent Events' below), the related borrowings will be reclassified as Long-term Debt on the balance sheet.
SUBSEQUENT EVENTS - On October 23, 2024 the company closed 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 previous $50 million revolving credit facility.
Contacts
401 Theodore Fremd Avenue
Rye, N.Y. 10580
914-921-8821
www.lictcorp.com
Stephen J. Moore
Vice President- Finance
