Boston Omaha(BOC) - 2023 Q1 - Quarterly Report

Part I – Financial Information Item 1. Consolidated Financial Statements (Unaudited) Unaudited Q1 2023 financials show total assets at $706.4 million, a $3.4 million net loss, and 40% revenue growth Consolidated Balance Sheets As of March 31, 2023, total assets grew to $706.4 million, liabilities decreased, and equity increased to $538.5 million Consolidated Balance Sheet Summary (Unaudited) | Balance Sheet Items | March 31, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | Total Current Assets | $138,424,670 | $113,961,243 | | Total Assets | $706,356,202 | $683,717,859 | | Total Current Liabilities | $50,417,493 | $52,978,740 | | Total Liabilities | $152,188,736 | $157,068,480 | | Total Equity | $538,510,566 | $510,936,358 | Consolidated Statements of Operations Q1 2023 net loss was $3.3 million ($0.11 per share) due to a non-recurring SPAC gain absence, despite 40% revenue growth Q1 2023 vs. Q1 2022 Statement of Operations (Unaudited) | Metric | Q1 2023 ($) | Q1 2022 ($) | | :--- | :--- | :--- | | Total Revenues | $22,815,785 | $16,292,947 | | Net Loss from Operations | ($2,976,792) | ($2,449,736) | | Gain on deconsolidation of SPAC | - | $24,977,740 | | Net (Loss) Income Attributable to Common Stockholders | ($3,321,154) | $16,302,593 | | Diluted Net (Loss) Income per Share | ($0.11) | $0.55 | Consolidated Statements of Cash Flows Q1 2023 operating cash flow was $1.4 million, investing activities used $37.8 million, and financing provided $30.3 million Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2023 ($) | Three Months Ended March 31, 2022 ($) | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | $1,368,181 | ($15,677,555) | | Net Cash (Used in) Provided by Investing Activities | ($37,844,737) | $157,990,849 | | Net Cash Provided by (Used in) Financing Activities | $30,333,692 | ($121,684,048) | | Net (Decrease) Increase in Cash | ($6,142,864) | $20,629,246 | Notes to Consolidated Financial Statements Notes provide detailed disclosures on accounting policies, business segments, acquisitions, investments, and ATM stock offerings - The company's operations include outdoor advertising (Link Media), surety insurance (General Indemnity Group), broadband services (Boston Omaha Broadband), and minority investments[15] - No business acquisitions were completed in the first quarter of 2023. The company's 2022 acquisitions included broadband providers InfoWest & Go Fiber for $48.6 million and outdoor advertiser Elevation for $14.2 million[51][72][360] - The company's 22.95% equity investment in Sky Harbour is accounted for under the equity method. As of March 31, 2023, management concluded no other-than-temporary impairment was necessary. If accounted for at fair value, the investment would be valued at approximately $94.3 million[89][90][115] - In Q1 2023, the company sold 1,097,824 shares of Class A common stock under its ATM Program for gross proceeds of $28.1 million. Subsequent to quarter-end, it sold an additional 433,396 shares for net proceeds of approximately $9.1 million[141][204] - On May 1, 2023, the company's subsidiary, Boston Omaha Asset Management, LLC, acquired the remaining 52% of membership interests in 24th Street Asset Management LLC for approximately $5.0 million in cash and stock[160] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management discusses 40% revenue growth, explains net loss, and highlights strong liquidity and an acquisition strategy for billboards, insurance, and broadband Results of Operations Q1 2023 total revenues grew 40% to $22.8 million, driven by broadband, billboard, and insurance, with net loss from operations widening to $3.0 million Revenue by Source (Q1 2023 vs. Q1 2022) | Revenue Source | Q1 2023 ($) | Q1 2022 ($) | % Change (%) | | :--- | :--- | :--- | :--- | | Billboard rentals, net | $10,302,223 | $9,138,149 | +12.7% | | Broadband services | $8,539,906 | $4,076,946 | +109.5% | | Premiums earned | $3,107,273 | $2,288,449 | +35.8% | | Insurance commissions | $476,126 | $697,200 | -31.7% | | Total Revenues | $22,815,785 | $16,292,947 | +40.0% | - The net loss attributable to common stockholders was $3.3 million in Q1 2023, compared to a net income of $16.3 million in Q1 2022. The difference is primarily due to a $25.0 million gain on deconsolidation of a SPAC in 2022 and a $5.0 million equity loss from the Sky Harbour investment in 2023[225][286] Results of Operations by Segment Billboard segment revenue grew 12.7% with increased income, Broadband revenue surged 109.5% but operating loss widened, and Insurance revenue grew 29.1% swinging to operating income Segment Performance (Q1 2023 vs. Q1 2022) | Segment | Revenue (Q1 2023) ($) | Revenue (Q1 2022) ($) | Segment Income (Loss) from Operations (Q1 2023) ($) | Segment Income (Loss) from Operations (Q1 2022) ($) | | :--- | :--- | :--- | :--- | :--- | | Billboard (LMH) | $10,302,223 | $9,138,149 | $1,332,110 | $1,009,980 | | Broadband (BOB) | $8,539,906 | $4,076,946 | ($1,699,366) | ($423,701) | | Insurance (GIG) | $3,973,656 | $3,077,852 | $229,721 | ($194,182) | Liquidity and Capital Resources The company maintains liquidity through cash, short-term investments, operating cash flow, an ATM stock program, and a credit facility - As of March 31, 2023, the company had approximately $16 million in unrestricted cash and $58 million in short-term treasury securities[415] - The company has an active "at the market" (ATM) offering program to sell up to $100 million in Class A common stock. In Q1 2023, it raised gross proceeds of approximately $28.1 million through this program[245][271] - The Link subsidiary has a credit facility with a $30 million term loan, of which $28.1 million was outstanding as of March 31, 2023. The loan has a fixed interest rate of 4.00% and is subject to financial covenants, with which the company was in compliance[247][279] Item 3. Quantitative and Qualitative Disclosures About Market Risk. As a "smaller reporting company," this item is not applicable; primary market risks relate to publicly traded securities and debt interest rates - The company is a "smaller reporting company" and is not required to provide these disclosures[389][410] - The company's main market risks stem from its portfolio of marketable equity securities and interest rate risk associated with its debt[417] Item 4. Controls and Procedures. Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective[419] - No material changes were made to internal controls over financial reporting during the first quarter of 2023[408] Part II – Other Information Item 1. Legal Proceedings. The company is involved in routine litigation, but no pending legal matters are expected to materially adversely affect financial condition or results - The company is subject to routine litigation from time to time, but none is expected to be materially adverse[421] Item 1A. Risk Factors. As a "smaller reporting company," this item is not applicable; the company refers to its 2022 Form 10-K for risk factors - Not applicable as the company is a "smaller reporting company." For risk factors, the company refers to its 2022 Form 10-K[410] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. In Q1 2023, the company issued restricted Class A common stock to officers and directors as compensation for services rendered - On January 3, 2023, an aggregate of 19,319 shares of restricted Class A common stock were issued to officers and directors for services rendered[377] Other Items (3, 4, 5, 6) No information was reported for Item 3, Item 4, or Item 5; Item 6 lists the exhibits filed with the report - No information was reported for Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), or Item 5 (Other Information)[378][411][422]