Nuvera Communications, Inc 10-Q for FY2023 Q2

Nuvera Communications, Inc. (NUVR)

10-Q 2023-08-14 For: 2023-06-30

Added on April 06, 2026

About this 10-Q

Nuvera Communications, Inc filed this 10-Q on August 14, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $16.28M; down 0.9% from $16.44M a year earlier
Net income: $349.43K; down 79.5% from net income of $1.7M a year earlier
Diluted EPS: $0.07; down 78.8% from $0.33 a year earlier

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Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock - $1.66 par value	NUVR	OTCQB Marketplace

PART I – FINANCIAL INFORMATION

Item 1	Financial Statements	4 - 10

	Consolidated Statements of Income (unaudited) for the Three and Six Months Ended June 30, 2023 and 2022	4

	Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2023 and 2022	5

	Consolidated Balance Sheets (unaudited) as of June 30, 2023 and December 31, 2022	6 - 7

	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2023 and 2022	8

	Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Six Months ended June 30, 2023 and 2022	9 - 10

	Condensed Notes to Consolidated Financial Statements (unaudited)	11 - 32

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32 - 44

Item 3	Quantitative and Qualitative Disclosures about Market Risk	45

Item 4	Controls and Procedures	45

PART II – OTHER INFORMATION

Item 1	Legal Proceedings	45

Item 1A	Risk Factors	45 - 54

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 3	Defaults upon Senior Securities	54

Item 4	Mine Safety Disclosures	54

Item 5	Other Information	54

Item 6	Exhibits Listing	55

	Signatures	56

	Exhibits

NUVERA COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
OPERATING REVENUES:
Voice Service	$	1,293,258	$	1,447,979	$	2,605,851	$	2,916,157
Network Access		955,459		1,202,965		2,050,751		2,494,275
Video Service		3,063,857		3,178,388		6,115,154		6,319,880
Data Service		6,874,570		6,774,036		13,691,119		13,490,888
A-CAM/FUSF		2,990,581		2,890,500		5,978,860		5,785,087
Other Non-Regulated		1,106,962		946,495		2,205,899		1,908,848
Total Operating Revenues		16,284,687		16,440,363		32,647,634		32,915,135

OPERATING EXPENSES:
Plant Operations (Excluding Depreciation and Amortization)		3,941,949		3,665,195		7,922,436		7,092,441
Cost of Video		2,417,912		2,549,030		4,883,232		5,098,882
Cost of Data		1,326,717		1,072,489		2,392,895		2,101,023
Cost of Other Nonregulated Services		393,589		410,112		789,976		788,306
Depreciation and Amortization		3,734,449		3,493,070		7,421,481		6,991,354
Selling, General and Administrative		2,656,926		2,645,472		5,236,272		5,306,935
Total Operating Expenses		14,471,542		13,835,368		28,646,292		27,378,941

OPERATING INCOME		1,813,145		2,604,995		4,001,342		5,536,194

OTHER INCOME (EXPENSE)
Interest Expense		(1,556,065)		(526,408)		(2,758,988)		(1,023,063)
Interest/Dividend Income		55,771		59,363		145,046		236,408
Interest During Construction		137,744		60,636		196,243		92,840
Gain on Sale of Investments		(26,710)		-		4,060,497		-
CoBank Patronage Dividends		-		-		692,371		567,468
Other Investment Income		61,451		163,076		150,987		287,377
Total Other Income (Expense)		(1,327,809)		(243,333)		2,486,156		161,030

INCOME BEFORE INCOME TAXES		485,336		2,361,662		6,487,498		5,697,224

INCOME TAXES EXPENSE		135,908		661,261		1,816,511		1,595,217

NET INCOME	$	349,428	$	1,700,401	$	4,670,987	$	4,102,007

NET INCOME PER SHARE
Basic	$	0.07	$	0.33	$	0.91	$	0.81
Diluted	$	0.07	$	0.33	$	0.91	$	0.80

DIVIDENDS PER SHARE	$	0.1400	$	0.1400	$	0.2800	$	0.2800

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		5,117,342		5,077,972		5,106,220		5,094,797
Diluted		5,178,323		5,097,055		5,157,569		5,110,798

The accompanying notes are an integral part of these consolidated financial statements.

NUVERA COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Net Income	$	349,428	$	1,700,401	$	4,670,987	$	4,102,007

Other Comprehensive Gain (Loss):
Unrealized Gain (Loss) on Interest Rate Swaps		348,866		673,936		(97,642)		2,473,761
Income Tax (Expense) Benefit Related to Unrealized Gain (Loss) on Interest Rate Swaps		(99,566)		(192,341)		27,867		(706,011)
Other Comprehensive Gain (Loss):		249,300		481,595		(69,775)		1,767,750

Comprehensive Income	$	598,728	$	2,181,996	$	4,601,212	$	5,869,757

The accompanying notes are an integral part of these consolidated financial statements.

NUVERA COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)

ASSETS
	June 30, 2023		December 31, 2022
	June 30, 2023		December 31, 2022
CURRENT ASSETS:
Cash	$	396,561	$	310,556
Receivables, Net of Allowance for Doubtful Accounts of $120,000 and $140,000		4,285,433		3,725,422
Income Taxes Receivable		-		283,665
Materials, Supplies, and Inventories		39,841,957		23,617,800
Prepaid Expenses and Other Current Assets		2,736,030		1,886,480
Total Current Assets		47,259,981		29,823,923

INVESTMENTS & OTHER ASSETS:
Goodwill		49,903,029		49,903,029
Intangibles		15,520,355		16,363,192
Other Investments		8,388,282		11,016,246
Right of Use Asset		1,169,931		1,341,029
Financial Derivative Instruments		2,116,820		2,214,462
Other Assets		701,474		461,445
Total Investments and Other Assets		77,799,891		81,299,403

PROPERTY, PLANT & EQUIPMENT:
Communications Plant		242,333,138		219,891,050
Other Property & Equipment		30,717,234		29,836,775
Video Plant		17,416,292		16,096,032
Total Property, Plant and Equipment		290,466,664		265,823,857
Less Accumulated Depreciation		166,210,937		159,632,293
Net Property, Plant & Equipment		124,255,727		106,191,564

TOTAL ASSETS	$	249,315,599	$	217,314,890
The accompanying notes are an integral part of these consolidated financial statements.

Nuvera Communications, Inc 10-Q for FY2023 Q2

About this 10-Q

Headline figures

NUVERA COMMUNICATIONS, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Income (Expense) and Interest Expense

Income Taxes

NUVERA COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS (continued) (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY
	June 30, 2023		December 31, 2022
	June 30, 2023		December 31, 2022
CURRENT LIABILITIES:
Current Portion of Long-Term Debt, Net of Unamortized Loan Fees	$	-	$	-
Accounts Payable		15,321,353		7,012,264
Accrued Income Taxes		1,292,347		-
Other Accrued Taxes		249,532		243,965
Accrued Compensation		2,221,747		2,051,316
Other Accrued Liabilities		1,310,259		2,354,395
Total Current Liabilities		20,395,238		11,661,940

LONG-TERM DEBT, Net of Unamortized Loan Fees		98,592,332		78,552,197

NONCURRENT LIABILITIES:
Loan Guarantees		-		169,565
Deferred Income Taxes		22,709,663		22,737,530
Unrecognized Tax Benefit		23,304		23,304
Other Accrued Liabilities		1,271,018		1,588,502
Total Noncurrent Liabilities		24,003,985		24,518,901

COMMITMENTS AND CONTINGENCIES:		-		-

STOCKHOLDERS' EQUITY:
Preferred Stock - $1.66 Par Value, 10,000,000 Shares Authorized, No Shares Issued and Outstanding		-		-
Common Stock - $1.66 Par Value, 90,000,000 Shares Authorized, 5,126,581 and 5,093,213 Shares Issued and Outstanding		8,544,302		8,488,689
Accumulated Other Comprehensive Gain		1,512,680		1,582,455
Unearned Compensation		78,231		79,892
Retained Earnings		96,188,831		92,430,816
Total Stockholders' Equity		106,324,044		102,581,852

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	249,315,599	$	217,314,890
Certain historical numbers have changed to conform with the current year's presentation.
The accompanying notes are an integral part of these consolidated financial statements.

NUVERA COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
	June 30, 2023		June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	4,670,987	$	4,102,007
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		7,524,709		7,043,518
Gains on Investments		(4,060,497)		-
Undistributed Earnings of Other Equity Investments		(166,132)		(264,034)
Noncash Patronage Refund		(106,769)		(118,223)
Stock Issued in Lieu of Cash Payment		273,175		200,507
Distributions from Equity Investments		28,048		110,917
Stock-based Compensation		100,631		13,281
Changes in Assets and Liabilities:
Receivables		(628,725)		324,722
Income Taxes Receivable		283,665		1,405,622
Inventory for Resale		22,221		(254,787)
Prepaid Expenses		(651,605)		(48,577)
Other Assets		(258,233)		(7,129)
Accounts Payable		51,985		(25,860)
Accrued Income Taxes		1,292,347		54,595
Other Accrued Taxes		5,567		(1,077)
Other Accrued Liabilities		(931,963)		65,433
Deferred Compensation		(88,128)		(14,150)
Net Cash Provided by Operating Activities		7,361,283		12,586,765

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant, and Equipment, Net		(15,092,419)		(10,012,147)
Materials and Supplies for Construction		(17,541,898)		(4,649,328)
Proceeds from Sale of Equity Investments		5,578,788		-
Other, Net		203,168		6,788
Net Cash Used in Investing Activities		(26,852,361)		(14,654,687)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt		-		(2,305,200)
Loan Proceeds		20,000,000		-
Loan Origination Fees		(9,912)		(49,473)
Changes in Revolving Credit Facility		(53,182)		7,631,066
Grants Received for Construction of Plant		1,070,948		-
Repurchase of Common Stock		-		(3,187,500)
Dividends Paid		(1,430,771)		(1,420,248)
Net Cash Provided by Financing Activities		19,577,083		668,645

NET CHANGE IN CASH		86,005		(1,399,277)

CASH at Beginning of Period		310,556		2,306,149

CASH at End of Period	$	396,561	$	906,872

Supplemental cash flow information:
Cash paid for interest	$	3,657,439	$	951,333
Net cash paid for income taxes	$	240,500	$	135,000

Certain historical numbers have changed to conform with the current year's presentation.

The accompanying notes are an integral part of these consolidated financial statements.

NUVERA COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

	THREE MONTHS ENDED JUNE 30, 2023
					Accumulated Other Comprehensive Gain

		Common Stock					Unearned Compensation		Retained Earnings		Total Equity
		Shares	Amount				Unearned Compensation		Retained Earnings		Total Equity

BALANCE on March 31, 2023		5,098,865	$	8,498,109	$	1,263,380	$	69,763	$	96,145,946	$	105,977,198

Director's Stock Plan		27,716		46,193						341,277		387,470
Restricted Stock Grant								8,468				8,468
Non-Cash, Share-Based Compensation										69,901		69,901
Net Income										349,428		349,428
Dividends										(717,721)		(717,721)
Unrealized Gain on Interest Rate Swap						249,300						249,300

BALANCE on June 30, 2023		5,126,581	$	8,544,302	$	1,512,680	$	78,231	$	96,188,831	$	106,324,044


		THREE MONTHS ENDED JUNE 30, 2022
						Accumulated Other Comprehensive Gain

		Common Stock					Unearned Compensation		Retained Earnings		Total Equity
		Shares	Amount				Unearned Compensation		Retained Earnings		Total Equity
BALANCE on March 31, 2022		5,064,760	$	8,441,267	$	654,902	$	262,735	$	89,187,861	$	98,546,765

Director's Stock Plan		19,818		33,030						354,412		387,442
Restricted Stock Grant								(19,293)				(19,293)
Non-Cash, Share-Based Compensation								28,792				28,792
Net Income										1,700,401		1,700,401
Dividends										(711,841)		(711,841)
Unrealized Gain on Interest Rate Swap						481,595						481,595

BALANCE on June 30, 2022		5,084,578	$	8,474,297	$	1,136,497	$	272,234	$	90,530,833	$	100,413,861

The accompanying notes are an integral part of these consolidated financial statements.

NUVERA COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

	SIX MONTHS ENDED JUNE 30, 2023
				Accumulated Other Comprehensive Gain

	Common Stock					Unearned Compensation		Retained Earnings		Total Equity
	Shares	Amount				Unearned Compensation		Retained Earnings		Total Equity

BALANCE on December 31, 2022	5,093,213	$	8,488,689	$	1,582,455	$	79,892	$	92,430,816	$	102,581,852

Directors' Stock Plan	27,716		46,193						341,277		387,470
Employee Stock Plan	5,652		9,420						74,230		83,650
Restricted Stock Grant							(1,661)				(1,661)
Non-Cash, Share-Based Compensation									102,292		102,292
Net Income									4,670,987		4,670,987
Dividends									(1,430,771)		(1,430,771)
Unrealized Loss on Interest Rate Swap					(69,775)						(69,775)

BALANCE on June 30, 2023	5,126,581	$	8,544,302	$	1,512,680	$	78,231	$	96,188,831	$	106,324,044


	SIX MONTHS ENDED JUNE 30, 2022
				Accumulated Other Comprehensive Gain (Loss)

	Common Stock					Unearned Compensation		Retained Earnings		Total Equity
	Shares	Amount				Unearned Compensation		Retained Earnings		Total Equity
BALANCE on December 31, 2021	5,210,053	$	8,683,422	$	(631,253)	$	259,620		90,338,806	$	98,650,595

Directors' Stock Plan	19,818		33,030						354,412		387,442
Employee Stock Plan	4,676		7,793						92,741		100,534
Restricted Stock Grant							(15,511)				(15,511)
Non-Cash, Share-Based Compensation							28,792				28,792
Exercise of RSU's	31		52				(667)		615		-
Repurchase of Common Stock	(150,000)		(250,000)						(2,937,500)		(3,187,500)
Net Income									4,102,007		4,102,007
Dividends									(1,420,248)		(1,420,248)
Unrealized Gain on Interest Rate Swap					1,767,750						1,767,750

BALANCE on June 30, 2022	5,084,578	$	8,474,297	$	1,136,497	$	272,234	$	90,530,833	$	100,413,861

The accompanying notes are an integral part of these consolidated financial statements.

	Three Months Ended June 30, 2023				Three Months Ended June 30, 2022				Six Months Ended June 30, 2023				Six Months Ended June 30, 2022
	Basic		Diluted		Basic		Diluted		Basic		Diluted		Basic		Diluted

Net Income	$	349,428	$	349,428	$	1,700,401	$	1,700,401	$	4,670,987	$	4,670,987	$	4,102,007	$	4,102,007

Weighted-average common shares outstanding		5,117,342		5,178,323		5,077,972		5,097,055		5,106,220		5,157,569		5,094,797		5,110,798

Net income per share	$	0.07	$	0.07	$	0.33	$	0.33	$	0.91	$	0.91	$	0.81	$	0.80

	Three Months Ended June 30,
	2023		2022
Voice Service¹	$	1,427,841	$	1,587,265
Network Access¹		989,294		1,240,045
Video Service¹		3,063,857		3,178,388
Data Service¹		6,269,017		6,184,006
Directory²		148,031		164,646
Other Contracted Revenue³		710,324		692,951
Other⁴		444,146		293,706

Revenue from customers		13,052,510		13,341,007

Subsidy and other revenue outside scope of ASC 606⁵		3,232,177		3,099,356

Total revenue	$	16,284,687	$	16,440,363

¹ Month-to-Month contracts billed and consumed in the same month.
² Directory revenue is contracted annually, however, this revenue is recognized monthly over the contract period as the advertising is used.
³ This includes long-term contracts where the revenue is recognized monthly over the term of the contract.
⁴ This includes CPE and other equipment sales.
⁵ This includes governmental subsidies and lease revenue outside the scope of ASC 606.

	Six Months Ended June 30,
	2023		2022
Voice Services¹	$	2,867,867	$	3,198,323
Network Access¹		2,118,379		2,565,682
Video Service¹		6,115,154		6,319,740
Data Service¹		12,522,213		12,333,466
Directory²		303,290		325,738
Other Contracted Revenue³		1,365,713		1,364,558
Other⁴		896,952		599,207

Revenue from customers		26,189,568		26,706,714

Subsidy and other revenue outside scope of ASC 606⁵		6,458,066		6,208,421

Total revenue	$	32,647,634	$	32,915,135

¹ Month-to-Month contracts billed and consumed in the same month.
² Directory revenue is contracted annually, however, this revenue is recognized monthly over the contract period as the advertising is used.
³ This includes long-term contracts where the revenue is recognized monthly over the term of the contract.
⁴ This includes CPE and other equipment sales.
⁵ This includes governmental subsidies and lease revenue outside the scope of ASC 606.

Operating Lease Liabilities	Balance June 30, 2023		Balance December 31, 2022
Short-Term Operating Lease Liabilities	$	366,858	$	356,400
Long-Term Operating Lease Liabilities		840,715	$	1,026,978
Total	$	1,207,573	$	1,383,378

Maturity Analysis		Balance June 30, 2023
2023 (remaining)	$	215,280
2024		319,215
2025		130,863
2026		128,822
2027		131,626
Thereafter		572,681
Total		1,498,487
Less Imputed interest		(290,914)
Present Value of Operating Leases	$	1,207,573

Weighted Average Remaining Lease Term (Years)	6.90
Weighted Average Discount Rate	6.00%

	June 30, 2023		June 30, 2022
	June 30, 2023		June 30, 2022

Accounts receivable, net - beginning balance	$	1,477,692	$	1,512,369
Accounts receivable, net - ending balance		3,106,417		2,038,790

Contract assets - beginning balance		794,193		662,437
Contract assets - ending balance		1,165,391		711,156

Contract liabilities - beginning balance		626,306		602,007
Contract liabilities - ending balance		535,458		608,626

		June 30, 2023				December 31, 2022
	Useful Lives	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Definite-Lived Intangible Assets
Customers Relationships	14-15 yrs	$	42,878,445	$	31,241,534	$	42,878,445	$	30,429,708
Regulatory Rights	15 yrs		4,000,000		4,000,000		4,000,000		4,000,000
Trade Name	3-5 yrs		310,106		304,476		310,106		273,465
Indefinitely-Lived Intangible Assets
Video Franchise			3,000,000		-		3,000,000		-
Spectrum			877,814		-		877,814		-
Total		$	51,066,365	$	35,546,010	$	51,066,365	$	34,703,173

Net Identified Intangible Assets				$	15,520,355			$	16,363,192

● (July 1 – December 31)	$	817,458
● 2024	$	1,623,654
● 2025	$	1,618,732
● 2026	$	1,613,809
● 2027	$	906,667
● 2028	$	906,667

●	Communications Companies:
	•	Nuvera Communications, Inc., the parent company.
	•	Hutchinson Telephone Company (HTC), a wholly owned subsidiary of Nuvera.
	•	Peoples Telephone Company, a wholly owned subsidiary of Nuvera.
	•	Scott-Rice Telephone Co., a wholly owned subsidiary of Nuvera.
	•	Sleepy Eye Telephone Company, a wholly owned subsidiary of Nuvera.
	•	Western Telephone Company, a wholly owned subsidiary of Nuvera; and
	•	Hutchinson Telecommunications, Inc., a wholly owned subsidiary of HTC, located in Litchfield and Glencoe, Minnesota.
●	Our investments and interests in the following entities include some management responsibilities:
	•	Broadband Visions, LLC (BBV) – 24.30% subsidiary equity ownership interest. BBV provides video headend and Internet services.
	•	Independent Emergency Services, LLC (IES) – 14.29% subsidiary equity ownership interest. IES is a provider of E-911 services to the State of Minnesota as well as a number of counties located in Minnesota; and
	•	Fiber Minnesota, LLC (FM) – 7.54% subsidiary equity ownership interest. FM is a Minnesota state-wide network that provides connectivity for regional businesses.

	Time-Based RSU's	Targeted Performance-Based RSU's	Closing Stock Price		Vesting Date


Balance at December 31, 2021	9,440	13,270
Forfeited	(1,685)	(4,325)
Exercised	(4,391)	(4,244)	$	17.18	12/31/2022
Balance at December 31, 2022	3,364	4,701
Forfeited	-	-
Exercised	-	-
Balance at June 30, 2023	3,364	4,701

		Closing Stock Price		Vesting Date

	Options
Balance at December 31, 2021	-
Issued	40,577	$	21.20	4/11/2023
Issued	40,583	$	21.20	4/11/2024
Issued	40,583	$	21.20	4/11/2025
Balance at December 31, 2022	121,743
Issued	51,431	$	14.70	3/31/2024
Issued	51,431	$	14.70	3/31/2025
Issued	51,432	$	14.70	3/31/2026
Balance at June 30, 2023	276,037

	2023 Grants		2022 Grants
Exercise Price	$	14.70	$	21.20
Risk-Free Rate of Interest		2.957%		1.515%
Expected Term (Years)		10		10
Expected Stock Price Volatility		20.7%		18.1%
Dividend Yield		2.83%		2.44%

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Term (Years)	Aggregate Intrinsic Value (in Thousands)



Outstanding as of December 31, 2021	-	$	-	-	$	-
Granted	121,743		21.20	9.00		-
Forfeited	-		-	-		-
Outstanding as of December 31, 2022	121,743	$	21.20	9.00	$	-
Granted	154,294		14.70	9.75		-
Forfeited	-		-	-		-
Outstanding as of June 2023	276,037	$	17.57	9.42	$	-

●	On December 8, 2022, the Company was awarded four broadband grants from the DEED. The grants will provide up to 45.0% to 50.0% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved and underserved communities and businesses in the Company’s service area. The Company is eligible to receive $8,594,688 of approximately $18,139,749 total project costs. The Company will provide the remaining 55.0% to 50% matching funds. Construction and expenditures for these projects will begin in the spring of 2023. We have not received any funds for these projects as of June 30, 2023.
●	On July 15, 2022, Nuvera and CoBank entered into (i) an Agreement Regarding Amendments to Loan Documents and (ii) an Amended and Restated Revolving Loan Promissory Note. The agreements amended our existing credit facility with CoBank and secured a new credit facility in the aggregate principal amount of $130.0 million. Under the Agreements, among other things, (i) the Company received a $50.0 million term loan to replace existing debt, (ii) a $50.0 million delayed draw term loan, (iii) the Company’s revolving loan was increased from $20.0 million to $30.0 million, (iv) the maturity date of the term loans were set at July 15, 2029, and the maturity day of the revolving loan was set at July 15, 2027, and (iii) the Company operating subsidiaries’ agreed to extend their previous guarantees, security interests and mortgages to cover the increased amount of the revolving note. The financing was secured to facilitate the Company’s advanced fiber-build plans announced on December 15, 2021. Refer to the Company’s 8-K filing with the SEC on July 20, 2022, for further details regarding the new credit agreements with CoBank.
●	On December 15, 2021, the Company announced plans to build and deploy Gig fiber Internet across its network creating crucial access to the fastest speeds available for rural communities, small cities and suburban areas across Minnesota. “This is a transformational moment for Nuvera as we make a future-focused investment in the communities we serve by providing the most reliable FTTP access to Gig-speed services,” said Glenn Zerbe, CEO. “Our homes, businesses and communities need reliable and affordable connections to school, workplaces and entertainment, as an important and growing part of everyday life.” “Nuvera’s investment in fiber-to-the-home (FTTH) network infrastructure will allow more underserved communities across Minnesota to leverage the quality of life and economic opportunity that access to a state-of-the-art fiber network provides now and for years to come.” said State Sen. Nick Frentz, DFL-North Mankato. Nuvera’s Gig-speed end-to-end fiber network is building and rolling out now. Service will be available for thousands of customers in 2022. The company will continue to build and deploy the Gig-speed service over the next few years. “We’re excited to create ‘Nuvera Gig Cities’ in the communities we serve while also expanding access to fiber-based Internet service at a range of speeds,” said Zerbe. “Nuvera’s fiber network gives customers affordable access to a range of speeds from 100 megabytes per second to 1 Gig at prices that are the same whether you’re in rural Goodhue or suburban Prior Lake.” While Nuvera’s goal is to bring Gig-speed service to as many communities as possible, the initial buildout will focus on the following cities and surrounding communities:

	Nuvera’s fiber Internet prices range from $50 per month to $100 per month for Gig-speed services. Customers can choose the right speed at an affordable price, including low-income households through Federal programs.
	In 2023, we plan to upgrade 17,000 passings with fiber services and faster broadband speeds. These passings will include upgrading current customers from our old copper network and new edge out passings. As of June 30, 2023, we have upgraded 4,094 of the planned 17,000 passings with these fiber services.
●	On January 29, 2021, the Company was awarded five broadband grants from the DEED. The grants will provide up to 35.4% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved or underserved communities and businesses in the Company’s service area. The Company is eligible to receive $1,918,037 of the approximately $5,419,617 total project costs. The Company will provide the remaining 64.6% of the matching funds. Construction and expenditures for these projects began in the spring of 2021. We have received $1,467,308 for these projects as of June 30, 2023.
●	Net income for the second quarter of 2023 totaled $349,428, which was a $1,350,973, or 79.45% decrease compared to the second quarter of 2022. This decrease was primarily due to an increase in interest expense and a decrease in operating income, all of which are described below.
●	Consolidated revenue for the second quarter of 2023 totaled $16,284,687, which was a $155,676 or 0.95% decrease compared to the second quarter of 2022. This decrease was primarily due to decreases in voice service, network access revenues, and video services, partially offset by increases in data revenues, FUSF subsidies and other revenues.

Nuvera Communications, Inc.
Reporting by Technology

	Q3 2022				Q4 2022				Q1 2023				Q2 2023
Premise Passings
Fiber - NuFiber/Gig-Cities		10,670				18,041				19,714				22,135
Non-Fiber		51,709				44,572				43,512				41,389
Total Passings		62,379				62,613				63,226				63,524
% Fiber Coverage		17.1%				28.8%				31.2%				34.8%

Internet/Broadband Connections/Share
Fiber Gig-Cities
Residential		3,824				5,290				6,333				6,922
Business		575				634				653				721
Totals		4,399		41.2%		5,924		32.8%		6,986		35.4%		7,643		34.5%
Non-Fiber
Residential		21,270				19,827				18,820				18,333
Business		1,761				1,691				1,661				1,583
Totals		23,031		44.5%		21,518		48.3%		20,481		47.1%		19,916		48.1%
Total Broadband Connections		27,430		44.0%		27,442		43.8%		27,467		43.4%		27,559		43.4%
% Broadband on Fiber		16.0%				21.6%				25.4%				27.7%

Broadband Customer Revenue/ARPU
Internet/BB Revenue/ARPU
Fiber Gig-Cities
Residential	$	791,983	$	71.11	$	920,803	$	66.36	$	1,188,519	$	65.16	$	1,336,368	$	65.84
Business	$	386,518	$	232.00	$	418,805	$	226.14	$	423,173	$	219.15	$	448,394	$	213.52
Totals	$	1,178,501	$	92.04	$	1,339,608	$	85.18	$	1,611,692	$	79.90	$	1,784,762	$	79.69
Non-Fiber
Residential	$	3,811,900	$	59.22	$	3,634,461	$	59.15	$	3,438,274	$	60.11	$	3,311,883	$	59.69
Business	$	539,012	$	100.60	$	510,427	$	99.10	$	525,717	$	104.45	$	513,860	$	105.97
Totals	$	4,350,912	$	62.40	$	4,144,888	$	62.24	$	3,963,991	$	63.70	$	3,825,743	$	63.41
Total Internet/BB Revenue	$	5,529,413			$	5,484,496			$	5,575,683			$	5,610,505
% Revenue from Fiber		21.3%				24.4%				28.9%				31.8%

Other Internet Reveneue	$	1,267,916			$	1,255,619			$	1,240,866			$	1,264,065

Total Internet Revenue	$	6,797,329			$	6,740,115			$	6,816,549			$	6,874,570

All Other Revenue	$	9,683,798			$	9,578,092			$	9,546,398			$	9,410,117

Total Revenue	$	16,481,127			$	16,318,207			$	16,362,947			$	16,284,687

Communications Segment	Three Months Ended June 30,
	Three Months Ended June 30,
	2023		2022		Increase (Decrease)
Operating Revenues
Voice Service	$	1,293,258	$	1,447,979	$	(154,721)	-10.69%
Network Access		955,459		1,202,965		(247,506)	-20.57%
Video Service		3,063,857		3,178,388		(114,531)	-3.60%
Data Service		6,874,570		6,774,036		100,534	1.48%
A-CAM/FUSF		2,990,581		2,890,500		100,081	3.46%
Other		1,106,962		946,495		160,467	16.95%
Total Operating Revenues		16,284,687		16,440,363		(155,676)	-0.95%

Cost of Services, Excluding Depreciation and Amortization		8,080,167		7,696,826		383,341	4.98%
Selling, General and Administrative		2,656,926		2,645,472		11,454	0.43%
Depreciation and Amortization Expenses		3,734,449		3,493,070		241,379	6.91%
Total Operating Expenses		14,471,542		13,835,368		636,174	4.60%

Operating Income	$	1,813,145	$	2,604,995	$	(791,850)	-30.40%

Net Income	$	349,428	$	1,700,401	$	(1,350,973)	-79.45%

Capital Expenditures	$	9,809,873	$	5,895,400	$	3,914,473	66.40%

Communications Segment
	Six Months Ended June 30,
	2023		2022		Increase (Decrease)
Operating Revenues
Voice Service	$	2,605,851	$	2,916,157	$	(310,306)	-10.64%
Network Access		2,050,751		2,494,275		(443,524)	-17.78%
Video Service		6,115,154		6,319,880		(204,726)	-3.24%
Data Service		13,691,119		13,490,888		200,231	1.48%
A-CAM/FUSF		5,978,860		5,785,087		193,773	3.35%
Other		2,205,899		1,908,848		297,051	15.56%
Total Operating Revenues		32,647,634		32,915,135		(267,501)	-0.81%

Cost of Services, Excluding Depreciation and Amortization		15,988,539		15,080,652		907,887	6.02%
Selling, General and Administrative		5,236,272		5,306,935		(70,663)	-1.33%
Depreciation and Amortization Expenses		7,421,481		6,991,354		430,127	6.15%
Total Operating Expenses		28,646,292		27,378,941		1,267,351	4.63%

Operating Income	$	4,001,342	$	5,536,194	$	(1,534,852)	-27.72%

Net Income	$	4,670,987	$	4,102,007	$	568,980	13.87%

Capital Expenditures	$	15,092,419	$	10,012,147	$	5,080,272	50.74%

Key metrics
Access Lines		14,520		16,300		(1,780)	-10.92%
Video Customers		8,639		9,887		(1,248)	-12.62%
Data Customers		32,769		32,741		28	0.09%

●					We may be required to use a substantial portion of our cash flow from operations to make principal and interest payments on our debt, which will reduce funds available for operations, capital expenditures, future business opportunities and strategic initiatives;

●					We may have limited flexibility to react to changes in our business and our industry;

●				It may be more difficult for us to satisfy our other obligations;

●			We may have a limited ability to borrow additional funds or to sell assets to raise funds if needed for working capital, capital expenditures to complete our FTTH initiatives, acquisitions or other purposes;

●		We may become more vulnerable to general adverse economic and industry conditions, including changes in interest rates; and

●	We may be at a disadvantage compared to our competitors that have less debt.

	●	Hazardous materials may have been released at properties that we currently own or formerly owned (perhaps through our predecessors). Under certain environmental laws, we could be held liable, without regard to fault, for the costs of investigating and remediating any actual or threatened contamination at these properties and for contamination associated with disposal by us, or by our predecessors, of hazardous materials at third-party disposal sites;

	●	We could incur substantial costs in the future if we acquire businesses or properties subject to environmental requirements or affected by environmental contamination. In particular, environmental laws regulating wetlands, endangered species and other land use and natural resources may increase the costs associated with future business or expansion or delay, alter or interfere with such plans;

	●	The presence of contamination can adversely affect the value of our properties and make it difficult to sell any affected property or to use it as collateral; and

	●	We could be held responsible for third-party property damage claims, personal injury claims or natural resource damage claims relating to contamination found at any of our current or past properties.

	NUVERA COMMUNICATIONS, INC.

Dated: August 14, 2023	By	/s/ Glenn H. Zerbe
	Glenn H. Zerbe, President and Chief Executive Officer

Dated: August 14, 2023	By	/s/ Curtis O. Kawlewski
	Curtis O. Kawlewski, Chief Financial Officer

Date: August 14, 2023	By	/s/ Glenn H. Zerbe
		Glenn H. Zerbe
		President and Chief Executive Officer

Date: August 14, 2023		/s/ Curtis O. Kawlewski
		Curtis O. Kawlewski
		Chief Financial Officer