Boston Omaha Corporation (NYSE:BOC) is a diversified conglomerate with operations spanning outdoor advertising, surety insurance, broadband services, and asset management. Despite facing headwinds in certain segments, the company has demonstrated resilience, leveraging its diversified business model to navigate the evolving market landscape.

Business Overview

Boston Omaha's outdoor advertising division, Link Media Holdings, operates approximately 4,000 billboards with 7,600 advertising faces across the Midwest and Southeast regions of the United States. The company's surety insurance business, General Indemnity Group, provides surety bonds and insurance products to a wide range of clients, while its broadband services division, Boston Omaha Broadband, delivers high-speed internet to customers primarily in Arizona, Florida, Nevada, and Utah. Additionally, the company's asset management arm, Boston Omaha Asset Management, oversees investments in various sectors, including real estate and private aviation infrastructure.

Financials

In the fiscal year ended December 31, 2023, Boston Omaha reported annual revenue of $96,253,736, a decrease of 3.2% compared to the prior year. The company's net income for the year was -$7,004,009, and its operating cash flow was $16,059,125, with free cash flow of -$35,807,215. These results reflect the challenges faced by the company's various business segments, as well as the ongoing investments in growth initiatives.

Quarterly Performance

For the first quarter of fiscal 2024, Boston Omaha reported total revenues of $25,552,731, an increase of 12.0% compared to the first quarter of fiscal 2023. The company's net loss for the quarter was $2,808,081, or $0.09 per diluted share, compared to a net loss of $3,321,154, or $0.11 per diluted share, in the same period last year. Operating cash flow for the quarter was $2,415,294, while free cash flow was -$6,030,794.

Segment Performance

Boston Omaha's outdoor advertising segment, Link Media Holdings, generated revenues of $10,696,660 in the first quarter of fiscal 2024, a 3.8% increase from the same period in the prior year. The segment's income from operations was $1,502,932, or 14.1% of segment revenues. The company's surety insurance business, General Indemnity Group, reported revenues of $5,041,777, a 26.9% increase year-over-year, with segment income from operations of $430,575, or 8.6% of segment revenues.

The company's broadband services division, Boston Omaha Broadband, reported revenues of $9,683,429 in the first quarter of fiscal 2024, a 13.4% increase from the same period in the prior year. However, the segment reported a loss from operations of $1,650,252, or -17.0% of segment revenues, as the company continues to invest in infrastructure and customer acquisition. Boston Omaha's asset management segment, Boston Omaha Asset Management, reported revenues of $130,865 in the first quarter of fiscal 2024, with a loss from operations of $766,967.

Liquidity and Capital Resources

As of March 31, 2024, Boston Omaha had approximately $17 million in unrestricted cash and $14 million in short-term treasury securities. The company also has access to a $30 million credit facility with First National Bank of Omaha, which it has used to finance acquisitions and capital expenditures. In the first quarter of fiscal 2024, the company generated $2,415,294 in operating cash flow and used $8,446,088 in capital expenditures, primarily for its broadband services division.

Risks and Challenges

Boston Omaha faces several risks and challenges, including the potential for further economic headwinds, increased competition in its various business segments, and the ongoing integration of acquired businesses. The company's reliance on acquisitions to drive growth also exposes it to integration risks and the potential for overpaying for target companies. Additionally, the company's investments in unconsolidated affiliates, such as Sky Harbour Group, could be subject to market volatility and other risks beyond the company's control.

Outlook

Boston Omaha has not provided specific financial guidance for the upcoming fiscal year. However, the company has stated that it remains committed to its long-term growth strategy, which includes continued investment in its existing business segments and the pursuit of strategic acquisitions. The company's management has emphasized the importance of maintaining a diversified business model to mitigate the impact of challenges in any one segment.

Conclusion

Boston Omaha Corporation is a diversified conglomerate navigating a complex market environment. While the company has faced headwinds in certain business segments, its resilient and diversified business model has enabled it to weather the challenges. As the company continues to invest in growth initiatives and pursue strategic acquisitions, investors will be closely watching its ability to execute on its long-term strategy and deliver sustainable value.