RYE, N.Y.-(BUSINESS WIRE1)-LICT Corporation (“LICT”; OTC Pink(R):LICT) reports preliminary, unaudited results for the fourth quarter and full year ended December 31, 2016. FOURTH QUARTER RESULTS – In 2016, fourth quarter revenues increased by $1.4 million, or 6.2%, to $23.7 million compared to the corresponding quarter in 2015. Non-regulated revenues grew by 12.2% to $11.0 million from the prior year’s $9.8 million due to increased broadband and competitive local exchange carrier (“CLEC”) revenues. Regulated revenues rose to $12.8 million from $12.6 million in 2015, due to increased intra-state revenues, primarily at our New Mexico operation offset by lower interstate revenues at most rest of our other RLECs. EBITDA before corporate costs was $9.8 million, as compared to $9.3 million in the previous year’s fourth quarter.
Non-regulated EBITDA, including affiliate distributions, increased $0.7 million to $5.1 million, while regulated EBITDA declined by $0.2 million. Unallocated Corporate expenses of $649,000 were reported in the fourth quarter of 2016 as compared to $494,000 in the fourth quarter of 2015. ALTERNATIVE CONNECT AMERICA COST MODEL (“A-CAM”) – As we previously disclosed, beginning in early 2017, the Federal Communications Commission (“FCC”) instituted a revised, voluntary Universal Service Fund (“USF”) mechanism for rate-of-return Incumbent Local Exchange Carriers (“ILECs”) called A-CAM. A-CAM replaces the prior Interstate Common Line Support (“ICLS”) and High Cost Loop Support (“HCLS”) cost-based methods, which were based on specific company or industry actual yearly expenditures for operations and capital. The A-CAM program was designed by the FCC to expedite the deployment of broadband capabilities throughout the nation’s rural areas, that are served by rate-of-return carriers. Seven of LICT’s nine operating areas elected to participate in A-CAM. The A-CAM program will provide a fixed amount of annual funding for a period of ten years, effective back to January 1, 2017.
As part of the A-CAM model, our ILECs must meet certain service requirements over the ten-year period. FULL YEAR RESULTS – For the year ended December 31, 2016, LICT recorded revenues of $90.7 million and EBITDA, prior to corporate costs but including cash received from our equity affiliates, of $36.5 million, as compared to revenues of $86.7 million and EBITDA of $36.4 million in 2015. Reflecting the A-CAM elections, the company is currently estimating that revenues in 2017 will be approximately $106 million and EBITDA, prior to corporate costs but including cash received from our equity affiliates, will be approximately $50 million. EARNINGS PER SHARE – Basic earnings during the fourth quarter were $95 per share in 2016 versus $86 per share in 2015. On a full year basis, basic earnings per share, from continuing operations, were $362 in 2016, prior to the after-tax effects of our charitable contribution program discussed in more detail below, as compared to $350 in 2015.
In 2016, basis earnings per share were $331 after reflecting the effects of the charitable contribution program. Shares outstanding at December 31, 2016, were 21,739 versus 22,272 at December 31, 2015. CAPITAL EXPENDITURES AND DEPRECIATION EXPENSE – In 2016, capital expenditures were $5.1 million for the fourth quarter and $16.1 million for the full year, with $8.8 million related to our regulated activities and $7.3 million focused on our non-regulated activities. This reflects our commitment to provide the communities we serve with enhanced communication capabilities. We are accomplishing this through our continued investment in the improvement of our products and network infrastructure, particularly our broadband networks. Through upgraded electronics and fiber extensions deeper into our networks, we have improved the speed, the capacity and the reliability of our broadband service offerings.
At December 31, 2016, LICT operations are currently deploying 4,206 miles of fiber optic cable, 11,430 miles of copper cable, and 513 miles of coaxial cable. SHAREHOLDER DESIGNATED CHARITABLE CONTRIBUTION PROGRAM –In September 2016, the Company completed its 2016 Shareholder Designated Contribution Program. Under this program, each registered shareholder was eligible to designate a charity to which the Company would make a donation of $100 per share on behalf of the shareholder. A total of $991,000 of contributions were made to charitable organizations under this program, which reduced our full year earnings per share by $31, after income tax effects.
OTHER BROADBAND REGULATION – In the same Order the FCC adopted A-CAM, in March 2016, it also modified the rules for RLECs that do not elect to participate in A-CAM. If a company does not adopt A-CAM, or is not eligible to adopt A-CAM, HCLS will continue for that RLEC; however, effective January 1, 2017, ICLS was eliminated and replaced with a new Connect America Fund – Broadband Loop Support (“CAF-BLS”) mechanism. CAF-BLS includes a series of new caps and limitations for operating expense, capital expenditures, overall support and support in areas served by unsubsidized competitors, but adds support for data-only broadband. CAF-BLS companies may also have specific broadband build-out requirements if their percentage of broadband deployment is not at the FCC required levels. LICT’s three smallest RLECs now receive CAF-BLS support. BALANCE SHEET – The Company’s net debt (total debt less liquid assets) was $21.6 million at December 30, 2016 as compared to $30.1 million on December 31, 2015.
REFINANCING THE COMPANY -The Board of Directors and management have implemented measures which have improved liquidity and reduced the Company’s debt position. At this time, the Board is considering whether the Company should acquire additional leverage which would enable us to explore broader opportunities both within and outside our current industry segments. SHARE REPURCHASES – During the year ended December 31, 2016, the Company repurchased 622 shares for $2.6 million at an average price of $5,244 per share. As of December 31, 2016, 21,282 shares were outstanding. On that date, there were 2,980 shares remaining under our stock repurchase program as authorized by the Board of Directors.
FCC SPECTRUM AUCTIONS – LICT Wireless Broadband Company, LLC (“LICT Wireless”), a wholly owned subsidiary of the Company, is participating in the forward auction phase of the FCC’s broadcast incentive auction – Auction 1002 (“Auction”). As required by the FCC, consistent with previous spectrum auctions, LICT made an upfront deposit on June 30, 2016 to participate in this Auction. FCC rules restrict information that bidders may disclose about their participation in this Auction, including the amount of their upfront payment. OPERATING STATISTICS – As of December 31, 2016, the Company’s DSL penetration in its franchised telephone service territories, based on total ILEC voice lines, was 78.6%, compared to 75.0% as of December 31, 2015. Our summary operating statistics are as follows:
31, Percent Dec.
31, Increase Increase
31,034 28,631 2,403 8.4 % Voice Lines ILEC 26,786 27,690 (904 ) (3.3 %) CLEC 5,920 5,353 567 10.6 % Total 32,706 33,043 (337 ) (1.0 %) Video Subscribers 6,219 6,467 (248 ) (3.8 %) Revenue Generating Units 69,959 68,141 1,818 2.7 %
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.com2. 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 Exhibit A Statements of Operations and Selected Balance Sheet Data Page 1 of 2 Preliminary and Un-Audited (In Thousands, Except Per Share Data) STATEMENTS OF OPERATIONS Three Months Ended Year Ended December 31, December 31, 2016 2015 2016 2015 Revenues $ 23,740 $ 22,349 $ 90,688 $ 86,680 Cost and Expenses: Cost of revenue, excluding depreciation 11,666 10,859 44,886 41,290 Selling, general and administration 2,965 2,804 11,284 11,332 Depreciation and amortization 4,820 4,392 17,973 17,730 Operating profit (before Corporate office expense) 4,290 4,294 16,546 16,328 Corporate Office Expense: Allocated Corporate office expense 417 317 1,499 1,148 Un- Allocated Corporate office expense 649 494 2,334 1,788 Total Corporate Office Expense 1,066 811 3,833 2,936 Operating profit 3,224 3,483 12,713 13,392 Other Income (Expense) Investment income 45 43 479 366 Interest expense (597 ) (710 ) (2,542 ) (2,923 ) Equity in earnings of affiliated companies 640 459 2,048 1,810 Other- charitable contributions in 2016 (41 ) 4 (1,024 ) 26 47 (204 ) (1,039 ) (721 ) Income Before Income Tax Provision 3,271 3,279 11,674 12,671 Provision For Income Taxes (1,257 ) (1,391 ) (4,586 ) (4,960 ) Net Income before discontinued operations 2,014 1,888 7,088 7,711 Net Income from discontinued operations — — — 117 Net Income attributable to LICT $ 2,014 $ 1,888 $ 7,088 $ 7,828 Capital Expenditures $ 5,084 $ 5,649 $ 16,129 $ 17,973 Weighted Average Shares: Basic 21,212.33 21,839.49 21,384.59 22,047.56 Diluted 21,335.33 21,928.49 21,498.86 22,136.59 Actual shares outstanding at end of period 21,282.37 21,650.37 21,282.37 21,650.37 Basic Earnings Per Share Net income $ 94.89 $ 86.45 $ 331.40 $ 349.74 Net Income from discontinued operations — — — 5.31 Net income attributable to LICT $ 94.89 $ 86.45 $ 331.40 $ 355.05 Dilutive Earnings Per Share Net Income $ 94.49 $ 86.10 $ 329.66 $ 348.34 Net Income from discontinued operations* — — — 5.28 Net Income attributable to LICT $ 94.49 $ 86.10 $ 329.66 $ 353.62
*As a result of the management buy-out of our New York operations
See EBITDA on page 2
Statements of Operations and Selected Balance Sheet Data-Continued
Page 2 of 2
Preliminary and Un-Audited
(in thousands, Except Per Share Data)
SELECTED BALANCE SHEET DATA
Cash and Cash Equivalents $ 8,470 $ 14,748 Note receivables and other deposits 14,250 3,250 Long-Term Debt (including current portion) 42,130 44,846
Liabilities, including taxes, other than debt
$ 35,019 $ 32,088 Shareholders’ Equity $ 108,431 $ 103,447 Shares Outstanding at Date 21,282.37 21,739.37
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, as well as non-cash and non-operating charges to earnings. 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 equals net income (loss), before interest expense, income tax expense (benefit), depreciation and amortization expense, investment income, equity in earnings of affiliated companies, gain (loss) on sale of investment, impairment charges, and net income from discontinued operations. EBITDA also now includes the cash distributions we receive from the equity in earnings of affiliated companies. Although we do not have majority voting control of such companies, we have the ability to significantly influence financial and accounting policies.
The inclusion of cash received from equity companies is a change from past practice.
Three Months Ended Year Ended Dec.
31, 2016 2015 2016 2015 EBITDA Operating Subsidiaries $ 9,107 $ 8,686 $ 34,516 $ 34,058 Cash received from equity affiliates 650 600 1,950 2,350 9,757 9,286 36,466 36,408 Corporate Office Expense (1,066 ) (811 ) (3,833 ) (2,936 ) Total EBITDA 8,691 8,475 32,633 33,472 Depreciation and amortization (4,820 ) (4,392 ) (17,973 ) (17,730 ) Less Cash received from equity affiliates, above (650 ) (600 ) (1,950 ) (2,350 ) Operating profit $ 3,221 $ 3,483 $ 12,710 $ 13,392