LICT Corp. · OTC:LICT
LICT — Sidoti Fall Conference 2020
27 slides from LICT's conference presentation, Sep 23, 2020
Slide 1: Sidoti Fall Conference
Sidoti Fall Conference September 23, 2020 1
Slide 2: LICT Corporation (OTC Pink)
LICT Corporation (OTC Pink) LICT 2
Slide 3: 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 4: Sidoti Fall Conference
Sidoti Fall Conference September 23, 2020 4
Slide 5: Presenters
Presenters Stephen J. Moore Vice President of Finance 5
Slide 6: 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 7: Historical Shareholder Returns
Historical Shareholder Returns Initial Investment as of 12/16/1985 $1,000,000 LGL Group, Inc. $1,304,000 LICT Corporation 31,304,000 8 Spin Offs - Total 12,995,000 Investment as of 12/31/2019 $45,603,000 CGAR 16.84% Assumed purchase of approximately 87,000 shares of Lynch Corporation common stock fo
Slide 8: LICT Today
LICT Today 8
Slide 9: 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 • Drive Growth in Non-Regulated Broadband Revenue • Maximize Regulated Revenue Opportunity • 50% of Revenue is Non-R
Slide 10: Snapshot
Snapshot 12/31/19 06/30/20 Revenue (000’s) $117,958 $60,553 EBITDA (000’s) $57,070 $28,072 Net Cash $3,700 $21,000 (Total Cash less Debt - 000’s) EPS - ongoing operations $1,258 $631 Shares Outstanding 19,188 18,719 10
Slide 11: Key Strengths
Key Strengths • Base of Operations • Balanced Operating Formula o Stability - Regulated o Growth • Free Cash Flow • Balance Sheet Position 11
Slide 12: Diverse Markets and Revenue
Diverse Markets and Revenue • Geographically Diverse Markets o Rural Territories in Western and Mid-Western States • Diversified Revenue Streams – Fiber, Cable, Fixed Wireless Broadband o Regulated • Retail / Consumer Broadband • Enterprise • Federal and State USF funding o Non-Regulated / Expansion
Slide 13: 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 • Growth Priorities • Invest in Network to Expand Geographic Territory • Drive Organic Growth Through Sales Ef
Slide 14: Strategic Advantages
Strategic Advantages • Long Time Incumbent – Strong Community Ties & Government Relationships • Low Population Density Markets/Less Vulnerable to Competition • Supportive Regulatory Environment – Rural Broadband Initiatives • Brand Recognition / Leverage Incumbent Brand • Leverage Existing Networks
Slide 15: Regulatory Dynamics
Regulatory Dynamics • Alternative Connect America Cost Model (ACAM) Initial ACAM: $ 23.3m Per year 1st Increase: 2.9m Incremental 2nd Increase: 4.6m Incremental ACAM II: 1.1m Incremental • State Universal Funds 2019 $8.2m 15
Slide 16: Revenue Mix
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% $63,067 54% 16
Slide 17: Giving Back
Giving Back Charitable Giving: • $5.5 million in charitable contributions over 4 years o Shareholder designated & teammate match o Hundreds of charities o LICT Board has approved a 4th quarter 2020 shareholder designated charitable contributions COVID Response: • $500,000 in contributions in respons
Slide 18: Financial Growth
Financial Growth ($ 000’s) 2013 2019 CAGR Revenue $ 80,758 $ 117,958 6.52% EBITDA $ 33,985 $ 57,070 9.02% CAPEX $ 17,950 $ 25,212 5.83% Free Cash Flow* $ 16,035 $ 31,858 12.12% *EBITDA less Capital Expenditures 18
Slide 19: Balanced Operating Results
Balanced Operating Results 2013 2019 (000’s) (000’s) CAGR Revenues: Regulated $52,753 $63,067 4.6% Non-regulated 28,332 54,891 11.7% Total $81,085 $117,958 6.6% EBITDA: Regulated $23,505 $31,793 7.0% Non-regulated 9,506 22,752 12.9% Affiliates 974 2,525 14.6% Total $33,985 $57,070 9.02% 19
Slide 20: Free Cash Flow
Free Cash Flow ($ 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 $145M of FCF which has been used to pay down debt, repurchase equity, pay tax and fund charitable contr
Slide 21: Liquidity and Leverage
Liquidity and Leverage ($ 000’s) December 31 June 30 2013 2019 2020 Cash and Deposits $ 9,272 $ 28,414 $ 84,544 Debt O/S 71,756 24,678 63,177 Net Cash (Debt) $(62,484) $ 3,736 $ 21,367 21
Slide 22: CoBank Credit Facility
CoBank Credit Facility • $50 Million Unsecured Revolving Credit Facility • Closed January 17, 2020 • 5 Year Term • Flexible Structure • LIBOR + 200 (current rate = 2.16%) • CoBank Patronage Capital Facility is currently fully drawn 22
Slide 23: Owner Compensation
Owner Compensation Year Ended December 31, # of Shares 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 YTD June 30, 2020 469 7,724 18,719 Total $44,069 23
Slide 24: Investments
Investments • Iowa Network Services / Aureon • DFT Communications • CoBank Patronage Capital • Spectrum o Sale of Topeka, KS AWS in process 24
Slide 25: Comparable Analysis
Comparable Analysis SMID Cap Market Enterprise LTM EV/LTM RLECs Cap* Value EBITDA EBITDA In Millions CBB 760 2,911 393 7.4x CNSL 450 2,672 479 5.6x FTRCQ 19 15,124 2,965 5.1x LICT 333 315 50 6.3x NUVR 91 145 27 5.4x OTEL 39 102 21 4.8x * Reflects stock prices as of 9/1/2020 25
Slide 26: LICT Summary
LICT Summary History of Shareholder Value Creation • Giving back to strengthen communities • Incumbent markets • Growth execution o Fiber expansion to grow and diversify revenue • use fixed wireless broadband and shortening loop lengths to extend speed capabilities • Rural Broadband is a Regulatory
Slide 27: Sidoti Fall Conference
Sidoti Fall Conference September 23, 2020 27