Shares of Boston Omaha (NASDAQ: BOMN) are down nearly 14% since it announced first-quarter 2018 results last month. But shareholders certainly shouldn't take that to mean the financial holding company's promising long-term plans aren't still intact.
Now that the dust has settled, let's dig deeper to see what Boston Omaha accomplished over the past few months, and what investors should expect looking forward.
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Boston Omaha results: The raw numbers
GAAP net income (loss) attributable to common shareholders
GAAP earnings (loss) per share
DATA SOURCE: BOSTON OMAHA 8-K SEC FILING.
What happened with Boston Omaha this quarter?
- Book value per share was $12.79 as of March 31, 2018, up 24.8% from $10.25 at the end of last quarter. Similar to what we saw in 2017, the increase was driven entirely by stock issued at a premium to book value (more on that below), which more than offset the company's losses.
- Within Boston Omaha's top line:
- Billboard rental revenue grew 52.8% year over year to $1.55 million.
- Premiums earned declined 3.1% to $477,304.
- Insurance commissions increased 129.7% to $765,184.
- Investment and other income rose 1.8% to $30,266.
- In February, Boston Omaha announced the private placement of up to $150 million of Class A common stock, with all shares being sold at $23.30 per share. Per the agreement, 3.3 million shares were sold in early March for an aggregate price of $76.89 million.
- Boston Omaha ended the quarter with unrestricted cash and investments of $175.3 million and no debt.
- Subsequent to the end of the quarter (on May 15, 2018), the remaining 3,137,768 shares were sold for an aggregate price of $73.11 million. This purchase brought the company's estimated book value to over $14 per share.
- Boston Omaha intends to use the proceeds of the sales for future acquisitions, boosting its holdings in existing minority investments, and/or other investment opportunities as it sees fit.
- To that end, on May 31, 2018 Boston Omaha announced a $19 million equity investment in Crescent Bank & Trust parent company CB&T Holding Corporation -- a stake representing roughly 14.99% of CB&T's outstanding common stock. Crescent generates most of its revenue through indirect auto lending, as well as retail and business banking services to customers in southeastern Louisiana.
Boston Omaha management didn't offer updated statements on their latest performance. But it stands to reason that their thinking outlined in the company's most recent annual letter to shareholders still stands.
In particular, recall management offered perspective on Boston Omaha's lack of bottom-line profits, pledging to keep costs down at the parent company while continuing to build their core billboard and surety insurance operations to "manage a lot more business than they currently handle [...]."
"Until that additional revenue is brought on board," management added, "ongoing, normal course expenses will continue to be high as a percentage of revenue."
Of course, this quarter's results clearly demonstrate that Boston Omaha is not only steadily building its revenue base, but also positioning the company for future growth by bolstering its balance sheet and making fresh investments in other high-quality businesses. So, I think long-term shareholders should be more than happy with what Boston Omaha had to say. And I suspect its recent pullback will prove merely a blip in the radar down the road.
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