Boston Omaha(BOC) - 2025 Q2 - Quarterly Report

Billboard Operations - As of June 30, 2025, the company operates approximately 3,950 billboards with about 7,570 advertising faces, having increased its billboard count from 2,900 through acquisitions since 2015[185] - The company aims to grow its outdoor billboard advertising business through further acquisitions of billboard assets in the United States[185] - Billboard rentals remained flat at $11,440,033, accounting for 40.6% of total revenues, while broadband services revenue increased by 4.6% to $10,233,463, representing 36.3% of total revenues[200] - Billboard operating revenues for the second quarter of fiscal 2025 were $11,440,033, remaining constant compared to $11,437,468 in the second quarter of fiscal 2024[223] - Billboard rentals for the first six months of fiscal 2025 were $22,204,508, a slight increase from $22,134,128 in the same period of fiscal 2024[232] - The gross margin for billboard operations was 66.0% in the first six months of fiscal 2025, compared to 65.3% in the same period of fiscal 2024[232] Broadband Services - The broadband services segment has approximately 48,400 broadband customers, including 17,800 fiber subscribers, and 43,400 fiber passings completed as of June 30, 2025[187] - The company plans to continue expanding its broadband services in Arizona, Florida, Nevada, Utah, and other locations, focusing on fiber-to-the-home infrastructure[187] - Broadband revenues increased by 4.6% to $10,233,463 in the second quarter of fiscal 2025, up from $9,787,983 in the second quarter of fiscal 2024, driven by subscriber growth[225] - Total operating revenues for the first six months of fiscal 2025 increased by 5.6% to $20,553,593 compared to $19,471,412 in fiscal 2024, driven by subscriber growth[235] - Broadband segment gross margin improved to 77.2% in fiscal 2025 from 74.5% in fiscal 2024, reflecting a decrease in network operations and data costs as a percentage of revenues from 13.6% to 12.6%[235] Insurance Operations - Premiums earned from the UCS insurance subsidiary rose by 17.5% to $5,565,360, contributing 19.7% to total revenues[200] - Premiums earned in the insurance segment rose by 27.3% to $11,129,133 in fiscal 2025, compared to $8,740,115 in fiscal 2024, primarily due to increased production[237] - Total operating revenues for the insurance segment increased by 21.1% to $13,158,398 in fiscal 2025 from $10,864,375 in fiscal 2024[237] - Losses and loss adjustment expenses in the insurance segment increased from 12.4% to 22.4% of total segment operating revenues, mainly due to higher claim payments[237] Financial Performance - In the second quarter of fiscal 2025, total revenues increased by 4.1% to $28,203,670 compared to $27,087,783 in the second quarter of fiscal 2024[200] - Total revenues for the first six months of fiscal 2025 were $55,934,164, representing a 6.3% increase from $52,640,514 in the same period of fiscal 2024[211] - Total costs and expenses decreased from $31,484,398 in the second quarter of fiscal 2024 to $29,024,160 in the second quarter of fiscal 2025, with the percentage of total revenues dropping from 116.2% to 102.9%[202] - The net loss from operations for the first six months of fiscal 2025 was $1,617,893, or 2.9% of total revenues, significantly improved from a net loss of $6,454,896, or 12.3% of total revenues in the same period of fiscal 2024[216] - Net income attributable to common stockholders for Q2 2025 was $819,497, representing 12.6% of total revenues, compared to $660,332 or 11.3% in Q2 2024[227] Investments and Acquisitions - The acquisition of 24th Street Asset Management LLC was completed for a total consideration of $5,016,494, which included $2,759,072 in cash at closing and 45,644 shares of Class A common stock[190] - The company invested $10 million in Dream Finders Holdings LLC, which has generated gross proceeds of approximately $81 million from the sale of shares since its initial public offering[191] - The company has invested approximately $19 million in CB&T Holding Corporation, representing 15.6% of its outstanding common stock, primarily in the subprime automobile lending sector[191] - The company plans to continue acquiring billboard locations, insurance businesses, and broadband service providers, expecting to finance future acquisitions with cash, debt, and equity securities[246] Cash Flow and Liquidity - Net cash provided by operating activities increased to $7,114,835 for the first six months of fiscal 2025, up from $6,920,547 in the same period of fiscal 2024, driven by improved cash flow in the broadband business and lower expenses in asset management[242] - Net cash used in investing activities was $11,381,922 for the first six months of fiscal 2025, compared to net cash provided of $30,155,714 in the same period of fiscal 2024, primarily due to $14,158,366 in capital expenditures in broadband businesses[243] - Net cash provided by financing activities was $9,909,797 in the first six months of fiscal 2025, a significant improvement from net cash used of $39,086,411 in the same period of fiscal 2024, mainly from $7,500,000 in borrowings on BOB's credit facility[244] - As of June 30, 2025, the company had approximately $29.7 million in unrestricted cash and $18.4 million in short-term U.S. Treasury securities, indicating strong liquidity[246] Debt and Financial Covenants - Long-term debt as of June 30, 2025, included approximately $26,100,000 in Term Loan borrowings and $9,100,000 related to the revolving line of credit[255] - The company is required to maintain a consolidated leverage ratio of not greater than 3.50 to 1.00, which will decrease to 3.00 to 1.00 by December 31, 2027, and was in compliance with these covenants as of June 30, 2025[256] - The BOB Credit Agreement allows subsidiaries to borrow up to $20,000,000 for capital expenditures, with loans secured by all assets of the borrowers[259] - The credit facilities impose financial covenants, including a consolidated leverage ratio not greater than 3.50 to 1.00 and a minimum fixed charge coverage ratio of 1.15 to 1.00[261] Asset Management - The asset management subsidiary, Boston Omaha Asset Management, is winding down operations and focusing on managing real estate funds while implementing cost-cutting measures[188] - The BFR Fund subsidiary was wound down earlier than planned due to market challenges, with a focus on selling entitled land assets to public homebuilders[195] - Professional fees in the asset management segment increased significantly due to a services agreement related to the wind down of operations, with total expenses reaching $144,142 in Q2 2025[230] - The asset management segment reported a net loss attributable to common stockholders of $1,052,247 in fiscal 2025, compared to a loss of $481,429 in fiscal 2024[240] Other Financial Information - The company has no significant exposure to foreign currency exchange rate risk as operations are conducted entirely within the U.S.[275] - The company does not have off-balance sheet financing arrangements, except for normal operating leases[273] - The company may incur debt or issue additional equity to maintain compliance with the Investment Company Act, which could adversely affect its financial condition[269]