LICT Corp. · OTC:LICT
LICT — Shareholder Meeting (May 2020)
30 slides from LICT's shareholder meeting presentation, May 28, 2020
Slide 1: 2020 Annual Meeting
2020 Annual Meeting May 28,2020 1
Slide 2: LICT Corporation (OTC Pink)
LICT Corporation (OTC Pink) LICT 2
Slide 3: Presenters
Presenters Daniel E. Hopkins President and CFO Stephen J. Moore Vice President of Finance 3
Slide 4: Safe Harbor Statement
Safe Harbor Statement Safe Harbor Statement The information contained herein is current only as of the date hereof; however, unless otherwise indicated, financial information contained herein is as of December 31, 2019. The business, prospects, financial condition or performance of LICT Corporation
Slide 5: Background and History
Background and History • Current management assumed control of Lynch Corporation in 1985 • Began as an LBO Fund in Public Format • Focused on rural America – Broadband – Television stations • Made first Rural Local Exchange Carrier (RLEC) acquisition in 1989 – 34 acquisitions, 12 dispositions and 8
Slide 6: Business Overview
Business Overview • Broadband provider in rural United States • Incumbent Local Exchange Carrier status in 7 states • Broadband Service Provider in 10 States • Balanced organic growth • Maximize Regulated Revenue Opportunity • Drive Growth in Non-Regulated Broadband Revenue o Expansion of Out of Ter
Slide 7: LICT Today
LICT Today 7
Slide 8: COVID Impact
COVID 19 Impact • Keep America Connected Pledge o Not Disconnecting Past Due Customers that are impacted o Providing Free Service to Families to Facilitate Remote Learning o Providing Free Community WI-FI Hot Spots • Workplace Changes o Remote Working for All Administrative and Office Staff o Expand
Slide 9: Key Strengths
Key Strengths • Experienced Management • Solid Base of Operations • Balanced Operating Formula o Stability - ILEC o Growth – Out of Territory • Strong Free Cash Flow • Excellent Balance Sheet Position • Significant Value in Other Investments 9
Slide 10: Diverse Markets and Revenue
Diverse Markets and Revenue • Geographically Diverse Markets o Rural Territories in Western and Mid-Western States • Very Rural Local Exchange Territories • Higher Growth Out of Territory Markets • Diversified Revenue Streams o Regulated • Retail / Consumer Broadband • Enterprise • Federal and State
Slide 11: Revenue and Geographic Diversity
Revenue and Geographic Diversity 2019 Total Revenue by Market Central Utah Western New Cal-Ore Iowa Kansas Michigan Wisconsin Mexico Reg Non-Reg 11
Slide 12: Growth Strategy
Growth Strategy • Increase Broadband Capabilities • Offer the Fastest Speed to the Maximum Number of Customers • Grow Fiber Network Beyond Incumbent Areas • Grow Out of Territory Operations • Expand Product and Service Offerings • Growth Priorities • Invest in Network to Expand Geographic Territory
Slide 13: Strategic Advantages
Strategic Advantages • Long Time Incumbent – Strong Community Ties – Strong Government Relationships • Low Population Density Markets – Less Vulnerable to Competition • Supportive Regulatory Environment – Rural Broadband Initiatives • Brand Recognition / Leverage Incumbent Brand • Leverage Existing
Slide 14: Investing in Growth
Investing in Growth Revenue and CAPEX (000s) $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 2013 2014 2015 2016 2017 2018 2019 Revenue CAPEX 14
Slide 15: Improving Revenue Mix
Improving Revenue Mix (000s) FY 2013 FY 2019 Regulated Revenue Non-Regulated Revenue Regulated Revenue Non-Regulated Revenue $28,332 35% $54,981 46% $52,753 65% $65,067, 54% Over the past 6 years, LICT has: • grown non-regulated revenue from 35% to 46%; and • grown total revenue from $80M to $118M 1
Slide 16: Regulatory Dynamics
Regulatory Dynamics • Alternative Connect America Cost Model (ACAM) Original ACAM: $ 23.3m Per year 1st Increase: 2.9m Incremental ($26.2M run rate) 2nd Increase: 4.6m Incremental ($30.8M run rate) ACAM II: 1.1m Incremental ($31.9M run rate) • State Universal Funds 2019 $8.2m 16
Slide 17: Giving Back
Giving Back Charitable Giving: • $5.5 million in charitable contributions over 4 years o Shareholder designated o Teammate match o Hundreds of Charities helping Thousands of People COVID Response: • $250,000 donated in response to COVID pandemic o Teammate directed donations o Benefited local studen
Slide 18: Financial Highlights
Financial Highlights Stephen J. Moore Vice President of Finance 18
Slide 19: Snapshot December 31, 2019
Snapshot December 31, 2019 Revenue (000’s) $117,958 EBITDA (000’s) $57,070 Net Cash (Total Cash less Debt - 000’s) $3,700 EPS $1,352 Shares Outstanding 19,188 19
Slide 20: Balanced Operating Results
Balanced Operating Results 2019 2013 (000’s) (000’s) CAGR Revenues: Regulated $65,067 $52,753 4.6% Non-regulated 54,981 28,332 11.7% Total $117,958 $80,758 6.6% EBITDA: Regulated $31,793 $23,505 7.0% Non-regulated 22,752 9,506 12.9% Affiliates 2,525 974 14.6% Total $57,070 $33,985 9.02% 20
Slide 21: Financial Growth
Financial Growth ($ 000’s) 2019 2013 CAGR Revenue $117,958 $80,758 6.52% EBITDA $57,070 $33,985 9.02% CAPEX $25,212 $17,950 5.83% Free Cash Flow * $31,858 $16,035 12.12% *EBITDA less Capital Expenditures 21
Slide 22: Solid Free Cash Flow
Solid Free Cash Flow ($ 000’s) $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2013 2014 2015 2016 2017 2018 2019 EBITDA Free Cash Flow Since 2013, FCF has doubled and LICT has generated over $145M of FCF which has been used to pay down debt, repurchase equity, pay tax and fund charitable
Slide 23: Liquidity and Leverage
Liquidity and Leverage March 31 December 31 $ 000’s $ 000’s $ 000’s 2020 2019 2013 Cash and Deposits $88,823 $28,414 $9,272 Debt O/S 64,357 24,678 71,756 Net Cash (Debt) $24,466 $3,736 ($62,484) 23
Slide 24: CoBank Credit Facility
CoBank Credit Facility • $50 Million Unsecured Revolving Credit Facility • Closed January 17, 2020 • 5 Year Term • Flexible Structure • LIBOR + 150 (current rate = 2.3%) • CoBank Patronage Capital Facility is currently fully drawn 24
Slide 25: Share Repurchases
Share Repurchases Year Ended December 31, # of Shares Year End Year Repurchased (in 000's) Shares O/S 2014 214 $774 22,272 2015 533 $3,302 21,739 2016 457 $2,575 21,282 2017 808 $8,935 20,509 2018 613 $8,322 19,931 2019 743 $12,437 19,188 $36,345 25
Slide 26: Investments
Investments • Modoc RSA Limited Partnership – Sold for $16.9MM in January of 2020 – Received final distribution of $542,000 in March of 2020 • Iowa Network Services / Aureon • AWS and PCS Spectrum • DFT Communications • CoBank Patronage Capital LICT Received $3.0m in Cash Distributions in 2019 26
Slide 27: Exceptional Shareholder Returns
Exceptional Shareholder Returns 12/16/85 12/31/19 CAGR LGL Group, Inc. $1,304,000 LICT Corporation 31,304,000 Spin Offs: • Tremont Advisers, Inc. 2,547,000 • East/West Communications 5,376,000 • Sunshine PCS/(ICTC Group, Inc.) 151,000 • Morgan Group 107,000 • CIBL 3,339,000 • ICTC Group, Inc. 1,475,
Slide 28: Comparable Analysis
Comparable Analysis SMID Cap Market Enterprise LTM EV/LTM RLECs Cap* Value EBITDA EBITDA In Millions ALSK $126 $342 $72 4.7x CBB 781 2,539 368 6.9x CNSL 413 2,631 515 5.1x FTR 8 17,688 3,337 5.3x LICT 320 320 57 5.6x NUVR 83 138 26 5.3x NORSA 173 232 30 7.7x OTEL 26 96 23 4.2x * Reflects stock price
Slide 29: LICT Summary
LICT Summary • Dominate Incumbent Markets o Maximize Data Speeds • Growth Execution o Fiber Expansion to Grow and Diversify Revenue • Use Fixed Wireless Broadband and Shortening Loop Lengths to Extend Speed Capabilities • Positive Regulated Environment o Rural Broadband is a Regulatory Priority • Fi
Slide 30: Closing Summary Question and Answer Session
Closing Summary Question and Answer Session 30