Boston Omaha(BOC) - 2022 Q3 - Quarterly Report

Part I – Financial Information Item 1. Consolidated Financial Statements (Unaudited) This section presents unaudited consolidated financial statements, showing asset decreases and a sharp decline in net income despite revenue growth Consolidated Balance Sheets Total assets decreased to $674.7 million from $807.1 million, primarily due to SPAC deconsolidation, while equity remained stable Consolidated Balance Sheet Highlights (Unaudited) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $130,889,226 | $390,709,928 | | Total Assets | $674,659,150 | $807,053,793 | | Total Current Liabilities | $52,435,229 | $54,025,683 | | Total Liabilities | $159,313,479 | $166,458,071 | | Total Stockholders' Equity | $499,961,486 | $496,325,219 | Consolidated Statements of Operations Revenues grew to $58.6 million, but net income sharply declined to $3.4 million due to investment losses offsetting revenue gains Statement of Operations Summary (Nine Months Ended Sep 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenues | $58,635,509 | $41,883,047 | | Net Loss from Operations | ($4,961,915) | ($5,340,248) | | Other investment (loss) income | ($14,777,985) | $85,694,668 | | Gain on deconsolidation of SPAC | $24,977,740 | - | | Net Income Attributable to Common Stockholders | $3,397,733 | $66,799,096 | | Diluted Net Income per Share | $0.11 | $2.32 | Statement of Operations Summary (Three Months Ended Sep 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenues | $21,447,546 | $14,498,147 | | Net Loss Attributable to Common Stockholders | ($1,408,521) | ($26,276,094) | | Diluted Net Loss per Share | ($0.05) | ($0.89) | Consolidated Statements of Changes in Stockholders' Equity Total stockholders' equity increased to $500.0 million, primarily driven by the period's net income - Total Stockholders' Equity grew to $499,961,486 as of September 30, 2022, from $496,325,219 at the end of 2021[28] - The primary driver for the equity increase during the first nine months of 2022 was the net income attributable to common stockholders of $3,397,733[22][28] Consolidated Statements of Cash Flows Net cash decreased by $21.0 million, with operating activities using cash, investing activities providing, and financing activities using significant amounts Cash Flow Summary (Nine Months Ended Sep 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | ($9,575,058) | $6,620,097 | | Net Cash Provided by Investing Activities | $104,613,633 | $10,564,107 | | Net Cash (Used in) Provided by Financing Activities | ($116,015,206) | $52,177,885 | | Net (Decrease) Increase in Cash | ($20,976,631) | $69,362,089 | Notes to Consolidated Financial Statements This section details accounting policies, business acquisitions like InfoWest & Go Fiber, intangible assets, investments, debt, and SPAC deconsolidation - The company's operations include outdoor advertising (Link Media), surety insurance (General Indemnity Group), and broadband services (Fiber is Fast, LLC), along with minority investments[38] - On April 1, 2022, the company acquired fiber and wireless internet service providers InfoWest and Go Fiber for a total purchase price of $48.6 million, adding over 20,000 customers[72][73] - The company deconsolidated its special purpose acquisition company, Yellowstone, on January 25, 2022, following its business combination with Sky Harbour, resulting in a non-cash gain of $25.0 million[171] - As of September 30, 2022, the company holds a 22.96% equity investment in Sky Harbour Group Corporation, accounted for under the equity method[171] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses strong revenue growth across segments, a sharp decline in net income due to investment losses, and sufficient liquidity for the next 12 months Overview The company operates in outdoor advertising, broadband, and surety insurance, pursuing market expansion through acquisitions and organic growth - The company's primary businesses are outdoor advertising (Link Media), surety insurance (GIG), and broadband services (FIF)[181][182][183] - A key business objective is to acquire additional billboard assets, and as of September 30, 2022, the company operated approximately 3,900 billboards with 7,400 advertising faces[181] - The broadband business was significantly expanded in April 2022 with the acquisition of InfoWest and Go Fiber, adding over 20,000 customers[183] Results of Operations Total revenues increased 40.0% to $58.6 million, but net income significantly declined due to investment losses compared to prior year gains Revenue Comparison (Nine Months Ended Sep 30) | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $58,635,509 | $41,883,047 | +40.0% | | Billboard Rentals, net | $28,906,159 | $23,129,582 | +25.0% | | Broadband Services | $20,258,461 | $11,329,220 | +78.8% | | Premiums Earned | $7,556,423 | $5,554,297 | +36.0% | - The increase in broadband revenue was mainly driven by the InfoWest and Go Fiber acquisitions completed in April 2022[228] - Net income for the first nine months of 2022 was $3.4 million, a significant decrease from $66.8 million in the prior year, primarily due to a $14.8 million investment loss in 2022 versus an $85.7 million investment gain in 2021[241][244] Liquidity and Capital Resources The company maintains sufficient liquidity with $39 million cash and $38 million securities, supported by a $500 million shelf registration for future growth - As of September 30, 2022, the company had approximately $39 million in unrestricted cash and $38 million in U.S. Treasury trading securities[294] - A shelf registration statement filed in April 2022 allows the company to offer up to $500 million in various securities to fund future growth and acquisitions[299] - The Link subsidiary has a term loan with $28.9 million outstanding as of September 30, 2022, with covenants including leverage and fixed charge coverage ratios[307] Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the company qualifies as a "smaller reporting company" - The company is a "smaller reporting company" and is therefore not required to provide these disclosures[336] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, excluding recently acquired businesses currently undergoing integration - Management concluded that disclosure controls and procedures were effective as of September 30, 2022[338] - The assessment of internal controls over financial reporting excluded the recently acquired InfoWest and Go Fiber businesses, as permitted for up to one year post-acquisition[340] Part II – Other Information Item 1. Legal Proceedings The company is involved in routine litigation, none of which is expected to materially impact financial condition or operations - The company states that no pending litigation is expected to have a material adverse effect on its financial condition or operations[346] Item 1A. Risk Factors This item is not applicable as the company is a "smaller reporting company," with risk factors detailed in its Annual Report on Form 10-K - As a "smaller reporting company," this section is not applicable; risk factors are detailed in the Annual Report on Form 10-K[347] Other Items (2, 3, 4, 5, 6) The company reported no unregistered sales of equity securities, defaults on senior securities, or other material information, with exhibits indexed in Item 6 - The company reported no unregistered sales of equity securities, defaults upon senior securities, or other material information for the period[349][351][355]