NUVR 10-Q

Nuvera Communications, Inc. (NUVR)

10-Q 2024-08-14 For: 2024-06-30

View Original

Added on April 06, 2026

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

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1	Financial Statements	4 - 10

	Consolidated Statements of Income (unaudited) for the Three and Six Months Ended June 30, 2024, and 2023	4

	Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2024, and 2023	5

	Consolidated Balance Sheets (unaudited) as of June 30, 2024, and December 31, 2023	6 - 7

	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2024, and 2023	8

	Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Six Months ended June 30, 2024, and 2023	9 - 10

	Condensed Notes to Consolidated Financial Statements (unaudited)	11 - 33

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33 - 47

Item 3	Quantitative and Qualitative Disclosures about Market Risk	47

Item 4	Controls and Procedures	47

PART II – OTHER INFORMATION

Item 1	Legal Proceedings	48

Item 1A	Risk Factors	48 - 57

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	57

Item 3	Defaults upon Senior Securities	58

Item 4	Mine Safety Disclosures	58

Item 5	Other Information	58

Item 6	Exhibits Listing	58

	Signatures	59

	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,
	2024		2023		2024		2023
OPERATING REVENUES:
Voice Service	$	1,199,823	$	1,293,258	$	2,431,551	$	2,605,851
Network Access		909,516		955,459		1,856,626		2,050,751
Video Service		2,973,791		3,063,857		5,963,740		6,115,154
Data Service		7,526,344		6,874,570		14,775,117		13,691,119
A-CAM/FUSF		3,476,234		2,990,581		6,891,700		5,978,860
Other Non-Regulated		1,092,146		1,106,962		2,204,245		2,205,899
Total Operating Revenues		17,177,854		16,284,687		34,122,979		32,647,634

OPERATING EXPENSES:
Plant Operations (Excluding Depreciation and Amortization)		4,083,289		3,941,949		7,962,795		7,922,436
Cost of Video		2,315,155		2,417,912		4,668,381		4,883,232
Cost of Data		1,208,697		1,326,717		2,349,235		2,392,895
Cost of Other Nonregulated Services		382,602		393,589		805,353		789,976
Depreciation and Amortization		4,449,136		3,734,449		8,803,795		7,421,481
Selling, General and Administrative		2,756,482		2,656,926		5,630,814		5,236,272
Total Operating Expenses		15,195,361		14,471,542		30,220,373		28,646,292

OPERATING INCOME		1,982,493		1,813,145		3,902,606		4,001,342

OTHER INCOME (EXPENSE)
Interest Expense		(2,573,375)		(1,556,065)		(5,087,698)		(2,758,988)
Interest/Dividend Income		22,600		55,771		135,430		145,046
Interest During Construction		189,103		137,744		434,390		196,243
Gain on Sale of Investments		(257,807)		(26,710)		(257,807)		4,060,497
CoBank Patronage Dividends		-		-		1,196,948		692,371
Other Investment Income		34,879		61,451		96,223		150,987
Total Other Income (Expense)		(2,584,600)		(1,327,809)		(3,482,514)		2,486,156

INCOME BEFORE INCOME TAXES		(602,107)		485,336		420,092		6,487,498

INCOME TAXES EXPENSE		(168,591)		135,908		117,623		1,816,511

NET INCOME (LOSS)	$	(433,516)	$	349,428	$	302,469	$	4,670,987

NET INCOME (LOSS) PER SHARE
Basic	$	(0.08)	$	0.07	$	0.06	$	0.91
Diluted	$	(0.08)	$	0.07	$	0.06	$	0.91

DIVIDENDS PER SHARE	$	0.0000	$	0.1400	$	0.0000	$	0.2800

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		5,163,476		5,117,342		5,148,342		5,106,220
Diluted		5,315,827		5,178,323		5,286,303		5,157,569

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,
	2024		2023		2024		2023

Net Income (Loss)	$	(433,516)	$	349,428	$	302,469	$	4,670,987

Other Comprehensive Gain (Loss):
Unrealized Gain (Loss) on Interest Rate Swaps		(208,230)		348,866		(222,965)		(97,642)
Income Tax (Expense) Benefit Related to Unrealized Gain (Loss) on Interest Rate Swaps		59,429		(99,566)		63,634		27,867
Other Comprehensive Gain (Loss):		(148,801)		249,300		(159,331)		(69,775)

Comprehensive Income (Loss)	$	(582,317)	$	598,728	$	143,138	$	4,601,212
The accompanying notes are an integral part of these consolidated financial statements.

NUVERA COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)

ASSETS
	June 30, 2024		December 31, 2023
	June 30, 2024		December 31, 2023
CURRENT ASSETS:
Cash	$	1,200,029	$	1,259,904
Receivables, Net		2,514,890		3,411,892
Income Taxes Receivable		118,778		-
Materials, Supplies, and Inventories		30,730,837		34,438,857
Prepaid Expenses and Other Current Assets		2,740,125		2,245,160
Total Current Assets		37,304,659		41,355,813

INVESTMENTS & OTHER ASSETS:
Goodwill		40,603,029		40,603,029
Intangibles		13,462,491		14,488,608
Other Investments		8,159,345		8,322,252
Right of Use Asset		1,158,686		1,348,290
Financial Derivative Instruments		1,119,663		1,342,628
Other Assets		885,024		884,122
Total Investments and Other Assets		65,388,238		66,988,929

PROPERTY, PLANT & EQUIPMENT:
Communications Plant		293,329,027		277,357,371
Other Property & Equipment		33,470,926		32,433,191
Video Plant		19,161,420		18,848,612
Total Property, Plant and Equipment		345,961,373		328,639,174
Less Accumulated Depreciation		180,864,481		173,088,602
Net Property, Plant & Equipment		165,096,892		155,550,572

TOTAL ASSETS	$	267,789,789	$	263,895,314

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

NUVR 10-Q

NUVERA COMMUNICATIONS, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Overview

Other Income (Expense) and Interest Expense

Income Taxes

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

LIABILITIES AND STOCKHOLDERS' EQUITY

	June 30, 2024		December 31, 2023
	June 30, 2024		December 31, 2023
CURRENT LIABILITIES:
Current Portion of Long-Term Debt, Net of Unamortized Loan Fees	$	-	$	-
Accounts Payable		10,396,300		12,803,435
Checks Written in Excess of Cash Balances		1,751,261		2,270,832
Accrued Income Taxes		-		581,098
Other Accrued Taxes		249,602		253,490
Deferred Compensation		44,935		45,797
Accrued Compensation		1,902,806		1,562,115
Other Accrued Liabilities		614,550		1,059,163
Total Current Liabilities		14,959,454		18,575,930

LONG-TERM DEBT, Net of Unamortized Loan Fees		129,840,654		122,891,638

NONCURRENT LIABILITIES:
Deferred Income Taxes		22,968,465		23,032,099
Other Accrued Liabilities		1,049,246		1,132,799
Deferred Compensation		234,568		256,605
Total Noncurrent Liabilities		24,252,279		24,421,503

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, 5,178,176 and 5,133,207 Shares Issued and Outstanding		8,630,293		8,555,345
Accumulated Other Comprehensive Gain		800,111		959,442
Retained Earnings		89,306,998		88,491,456
Total Stockholders' Equity		98,737,402		98,006,243

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	267,789,789	$	263,895,314

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, 2024		June 30, 2023
	June 30, 2024		June 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	302,469	$	4,670,987
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		8,947,852		7,524,709
(Gains) Losses on Investments		257,807		(4,060,497)
Undistributed Earnings of Other Equity Investments		(94,305)		(166,132)
Noncash Patronage Refund		(141,819)		(106,769)
Stock Issued in Lieu of Cash Payment		199,008		273,175
Distributions from Equity Investments		127,529		28,048
Stock-based Compensation		178,560		100,631
Changes in Assets and Liabilities:
Receivables		871,167		(628,725)
Income Taxes Receivable		(118,778)		283,665
Inventory for Resale		107,945		22,221
Prepaid Expenses		(284,512)		(651,605)
Other Assets		30,802		(258,233)
Accounts Payable		(59,300)		51,985
Checks Written in Excess of Cash Balance		(519,571)		-
Accrued Income Taxes		(581,098)		1,292,347
Other Accrued Taxes		(3,888)		5,567
Other Accrued Liabilities		2,129		(931,963)
Deferred Compensation		(22,899)		(88,128)
Net Cash Provided by Operating Activities		9,199,098		7,361,283

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant, and Equipment, Net		(23,033,815)		(15,092,419)
Materials and Supplies for Construction		3,601,375		(17,541,898)
Proceeds from Sale of Equity Investments		-		5,578,788
Other, Net		239,797		203,168
Net Cash Used in Investing Activities		(19,192,643)		(26,852,361)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt		(125,000,000)		-
Loan Proceeds		125,000,000		20,000,000
Loan Origination Fees		(1,662,893)		(9,912)
Changes in Revolving Credit Facility		8,467,851		(53,182)
Grants Received for Construction of Plant		3,128,712		1,070,948
Dividends Paid		-		(1,430,771)
Net Cash Provided by Financing Activities		9,933,670		19,577,083

NET CHANGE IN CASH		(59,875)		86,005

CASH at Beginning of Period		1,259,904		310,556

CASH at End of Period	$	1,200,029	$	396,561

Supplemental cash flow information:
Cash paid for interest	$	5,110,800	$	3,657,439
Net cash paid for income taxes	$	817,500	$	240,500

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, 2024
				Accumulated Other Comprehensive Gain

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

BALANCE on March 31, 2024	5,133,207	$	8,555,345	$	948,912	$	-	$	89,297,343	$	98,801,600

Director's Stock Plan	44,099		73,498						326,480		399,978
Restricted Stock Grant	870		1,450						8,033		9,483
Non-Cash, Share-Based Compensation									108,658		108,658
Net Loss									(433,516)		(433,516)
Dividends											-
Unrealized Loss on Interest Rate Swap					(148,801)						(148,801)

BALANCE on June 30, 2024	5,178,176	$	8,630,293	$	800,111	$	-	$	89,306,998	$	98,737,402


	THREE MONTHS ENDED JUNE 30, 2023
				Accumulated
				Other
	Common Stock			Comprehensive		Unearned		Retained		Total
	Shares	Amount		Gain		Compensation		Earnings		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

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, 2024
				Accumulated Other Comprehensive Gain

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

BALANCE on December 31, 2023	5,133,207	$	8,555,345	$	959,442	$	-	$	88,491,456	$	98,006,243

Directors' Stock Plan	44,099		73,498						326,480		399,978
Employee Stock Plan	870		1,450						8,033		9,483
Restricted Stock Grant											-
Non-Cash, Share-Based Compensation									178,560		178,560
Net Income									302,469		302,469
Dividends											-
Unrealized Loss on Interest Rate Swap					(159,331)						(159,331)

BALANCE on June 30, 2024	5,178,176	$	8,630,293	$	800,111	$	-	$	89,306,998	$	98,737,402


	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 Grants							(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

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

	Three Months Ended June 30, 2024				Three Months Ended June 30, 2023				Six Months Ended June 30, 2024				Six Months Ended June 30, 2023
	Three Months Ended June 30, 2024				Three Months Ended June 30, 2023				Six Months Ended June 30, 2024				Six Months Ended June 30, 2023
	Basic		Diluted		Basic		Diluted		Basic		Diluted		Basic		Diluted

Net Income	$	(433,516)	$	(433,516)	$	349,428	$	349,428	$	302,469	$	302,469	$	4,670,987	$	4,670,987

Weighted-average common shares outstanding		5,163,476		5,315,827		5,117,342		5,178,323		5,148,342		5,286,303		5,106,220		5,157,569

Net income per share	$	(0.08)	$	(0.08)	$	0.07	$	0.07	$	0.06	$	0.06	$	0.91	$	0.91

	Three Months Ended June 30,
	2024		2023
Voice Service¹	$	1,327,509	$	1,427,841
Network Access¹		932,336		989,294
Video Service¹		2,973,791		3,063,857
Data Service¹		6,904,858		6,269,017
Directory²		135,850		148,031
Other Contracted Revenue³		722,537		710,324
Other⁴		463,469		444,146

Revenue from customers		13,460,350		13,052,510

Subsidy and other revenue outside scope of ASC 606⁵		3,717,504		3,232,177

Total revenue	$	17,177,854	$	16,284,687

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,
	2024		2023
Voice Services¹	$	2,699,896	$	2,867,867
Network Access¹		1,900,622		2,118,379
Video Service¹		5,963,740		6,115,154
Data Service¹		13,580,698		12,522,213
Directory²		276,615		303,290
Other Contracted Revenue³		1,398,371		1,365,713
Other⁴		934,005		896,952

Revenue from customers		26,753,947		26,189,568

Subsidy and other revenue outside scope of ASC 606⁵		7,369,032		6,458,066

Total revenue	$	34,122,979	$	32,647,634

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.

1.	The performance obligation is part of a contract that has an original expected duration of one year or less.

2.	Revenue is recognized from the satisfaction of the performance obligations in the amount billable to the customer in accordance with ASC 606-10-55-18.

Right of Use Assets	Balance June 30, 2024		Balance December 31, 2023
Operating Lease Right-Of-Use Assets	$	1,158,686	$	1,348,290

Operating Lease Liabilities	Balance June 30, 2024		Balance December 31, 2023
Short-Term Operating Lease Liabilities	$	214,814	$	352,969
Long-Term Operating Lease Liabilities		967,558		1,029,910
Total	$	1,182,372	$	1,382,879

	June 30, 2024		December 31, 2023
	June 30, 2024		December 31, 2023

Accounts receivable, net - beginning balance	$	1,966,012	$	1,477,692
Accounts receivable, net - ending balance		1,769,009		1,966,012

Contract assets - beginning balance		1,458,631		794,193
Contract assets - ending balance		1,489,265		1,458,631

Contract liabilities - beginning balance		551,995		626,306
Contract liabilities - ending balance		395,570		551,995

Maturity Analysis	Balance June 30, 2024
2024 (remaining)	$	160,573
2025		243,974
2026		200,777
2027		151,629
2028		153,824
Thereafter		613,091
Total		1,523,868
Less Imputed interest		(341,496)
Present Value of Operating Leases	$	1,182,372

Weighted Average Remaining Lease Term (Years)	7.62
Weighted Average Discount Rate	6.32%

Level 1:	Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2:	Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs that are derived principally from or corroborated by observable market data.

Level 3:	Inputs are derived from valuation techniques where one or more significant inputs or value drivers are unobservable.

		June 30, 2024				December 31, 2023
			Gross			Gross
	Useful		Carrying	Accumulated		Carrying		Accumulated
	Lives		Amount	Amortization		Amount		Amortization
Definite-Lived Intangible Assets
Customers Relationships	14-15 yrs	$	42,878,445	$	32,865,188	$	42,878,445	$	32,053,361
Regulatory Rights	15 yrs		4,000,000		4,000,000		4,000,000		4,000,000
Video Franchise			3,000,000		428,580		3,000,000		214,290
Trade Name	3-5 yrs		310,106		310,106		310,106		310,106
Indefinitely-Lived Intangible Assets
Spectrum			877,814		-		877,814		-
Total		$	51,066,365	$	37,603,874	$	51,066,365	$	36,577,757

Net Identified Intangible Assets				$	13,462,491			$	14,488,608

• (July 1 – December 31)	$	1,026,117
• 2025	$	2,047,312
• 2026	$	2,042,389
• 2027	$	1,335,247
• 2028	$	1,335,247
• 2029	$	1,335,247

●	Communications Companies:
	•	Nuvera Communications, Inc., the parent company.
	•	Hutchinson Telephone Company, 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) – 7.64% subsidiary equity ownership interest. FM is a Minnesota state-wide network that provides connectivity for regional businesses.

		Targeted	Closing
	Time-Based	Performance-Based	Stock		Vesting
	RSU's	RSU's	Price		Date
Balance at December 31, 2022	3,364	4,701
Forfeited	(516)	(923)
Exercised	(2,848)	(3,778)	$	10.48	12/31/2023
Balance at December 31, 2023	0	-
Forfeited	-	-
Exercised	-	-
Balance at June 30, 2024	0	0

	2024 Grants		2023 Grants		2022 Grants

Exercise Price	$	11.00	$	14.70	$	21.20
Risk-Free Rate of Interest		3.866%		2.957%		1.515%
Expected Term (Years)		10		10		10
Expected Stock Price Volatility		36.6%		20.7%		18.1%
Dividend Yield		2.11%		2.83%		2.44%

				Weighted	Aggregate
	Number of	Weighted		Average	Intrinsic
	Shares	Average		Remaining	Value
	Excercisable	Exercise Price		Term (Years)	(in Thousands)
Outstanding as of December 31, 2021	-	$	-	-	$	-
Granted	121,743		21.20	8.03		-
Forfeited	-		-	-		-
Outstanding as of December 31, 2022	121,743	$	21.20	8.03	$	-
Granted	154,294		14.70	9.00		-
Forfeited	-		-	-		-
Outstanding as of December 31, 2023	276,037	$	17.57	8.58	$	-
Granted	107,453		11.00	10.00		-
Forfeited	-		-	-		-
Outstanding as of June 30, 2024	383,490	$	15.73	8.98	$	-
Exercisable as of June 30, 2024	132,591	$	15.73	8.98	$	-

●	On June 21, 2024, 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 credit facility in the aggregate principal amount of $180.0 million. Under the Agreements, among other things, (i) the Company received a $125.0 million term loan to replace existing debt, (ii) a $25.0 million delayed draw term loan, (iii) the Company’s revolving loan was decreased from $40.0 million to $30.0 million, (iv) the maturity dates of the term loans and revolving loan were set at June 21, 2029, and (v) the Company’s operating subsidiaries agreed to extend their previous guarantees, security interests and mortgages to cover the increased amount of the credit facility. 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 June 25, 2024, for further details regarding the credit agreements with CoBank.

●	On December 12. 2023, the Company announced that it confirmed eligibility for CBOL funding through the USAC. The incremental funding will be used to continue to support the Company’s multi-year fiber construction initiative. The Company began receiving a monthly benefit in November of 2023 with the first payment receipt confirmed in December. On an annualized basis this new program will provide $3.9 million of new funding based on the tariff filing and the Company’s expected line counts. The monthly CBOL subsidy formula is reviewed and subject to revision on an annual basis and subject to change based on updated USAC funding criteria July 1 of each year.

●	On September 29, 2023, the BOD of Nuvera announced that it was suspending dividend payments to its shareholders and will not declare or pay a dividend in the 2023 third quarter. The BOD’s action reflects the Company’s commitment to maximize available capital for the foreseeable future as it executes on its Nuvera Gig Cities™ project. This decision focuses available capital on deploying fiber and capturing the growth opportunity in new and existing markets in southern Minnesota. Nuvera believes this investment in the largest infrastructure project in Company history is strengthening its competitive position as a regional provider.

●	On March 31, 2023, Nuvera and the other owners of FiberComm sold 100% of their interest in FiberComm to ImOn Communications, LLC. FiberComm has been providing high quality Internet and voice services to businesses in the Sioux City, Iowa market for over 20 years. Nuvera owned a 20% interest in FiberComm through its wholly owned subsidiary PTC. Nuvera announced the execution of the FiberComm sale agreement in January 2023. Nuvera recognized a gain of $4,060,775, net of escrow true ups, in book value in connection with the sale of the FiberComm interest. Prior to the sale of Nuvera’s equity investment in FiberComm, Nuvera had guaranteed a portion of a ten-year loan owed by FiberComm, set to mature on April 30, 2026. On March 31, 2023, upon closing of the sale, the loan was paid and Nuvera was released from their guarantee of loan.

●	On March 5, 2024, the Company was awarded a grant from the DEED. This Low-Density Broadband grant will provide up to 75% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved and underserved communities in the Company’s service area. The Company is eligible to receive $1,884,429 of approximately $2,512,572 total project costs. The Company will provide the remaining 25% of the matching funds. The Company has not received any funds for this project as of June 30, 2024.

●	In 2023, the Company was awarded a grant from Redwood County under the Community Development Block Grant administered by the Southwest Minnesota Housing Partnership. The grant was to be used to build broadband fiber to residential customers in areas that qualify as low to moderate income. The Company was awarded $1,559,643 to complete this project. The Company has received $1,559,643 for this project as of June 30, 2024.

●	In 2022, the Company was awarded two separate county grants from Nicollet County and Goodhue County to cover costs of building fiber connections to homes and businesses for improved high-speed Internet in unserved and underserved communities. The Company was initially eligible to receive up to $2,139,562 to complete these projects. The Company has received $1,354,855 for these projects as of June 30, 2024. The Goodhue County project was completed under budget and the Company is now eligible to receive up to $2,088,485 to complete these projects.

●	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 began in the spring of 2023. The Company has received $223,213 for these projects as of June 30, 2024.

●	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. The Company will continue to build and deploy the Gig-speed service over the next few years. Nuvera’s goal is to bring Gig-speed service to as many communities as possible.

	In 2024, we plan to upgrade 10,400 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, 2024, we have upgraded 4,362 of the planned 10,400 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 matching funds. Construction and expenditures for these projects began in the spring of 2021. The Company has received $1,918,037 for these projects as of June 30, 2024.

●	Net loss for the second quarter of 2024 totaled $433,516, which was a $782,944, or 224.06% decrease compared to the second quarter of 2023. This decrease was primarily due to an increase in interest expense, partially offset by increases in operating revenues and operating income, all of which are described below.

●	Consolidated revenue for the second quarter of 2024 totaled $17,177,854, which was a $893,167 or 5.48% increase compared to the second quarter of 2023. This increase was primarily due to increases in data services and governmental support revenues, partially offset by decreases in legacy service revenues, video services and other revenue, all of which are described below.

Nuvera Communications, Inc. Reporting by Technology
Nuvera Communications, Inc. Reporting by Technology

		Q2 2023				Q3 2023				Q4 2023				Q1 2024				Q2 2024
Premise Passings
Fiber - NuFiber/Gig-Cities		22,135				27,429				35,173				37,957				39,535
Non-Fiber		41,389				37,436				31,755				29,743				28,519
Total Passings		63,524				64,865				66,928				67,700				68,054
% Fiber Coverage		34.8%				42.3%				52.6%				56.1%				58.1%

Internet/Broadband Connections/Share
Fiber Gig-Cities
Residential		6,962				8,075				9,525				10,995				12,482
Business		729				795				903				1,036				1,142
Totals		7,691		34.7%		8,870		32.3%		10,428		29.6%		12,031		31.7%		13,624		34.5%
Non-Fiber
Residential		18,267				17,267				16,159				15,077				14,025
Business		1,575				1,475				1,381				1,238				1,202
Totals		19,842		47.9%		18,742		50.1%		17,540		55.2%		16,315		54.9%		15,227		53.4%
Total Broadband Connections		27,533		43.3%		27,612		42.6%		27,968		41.8%		28,346		41.9%		28,851		42.4%
% Broadband on Fiber		27.9%				32.1%				37.3%				42.4%				47.2%

Broadband Customer Revenue/ARPU
Internet/BB Revenue/ARPU Fiber Gig-Cities
Residential	$	1,357,318	$	65.84	$	1,521,998	$	66.62	$	1,824,719	$	67.10	$	2,272,559	$	72.89	$	2,679,483	$	73.96
Business	$	410,323	$	213.52	$	456,968	$	219.40	$	471,078	$	182.70	$	516,762	$	174.05	$	574,883	$	171.91	*
Totals	$	1,767,641	$	79.69	$	1,978,966	$	79.69	$	2,295,797	$	77.11	$	2,789,321	$	81.68	$	3,254,366	$	82.24
Non-Fiber
Residential	$	3,291,003	$	59.69	$	3,139,666	$	59.33	$	2,895,759	$	58.54	$	2,771,199	$	59.57	$	2,573,466	$	59.88
Business	$	551,931	$	105.97	$	530,347	$	107.05	$	503,995	$	118.20	$	463,458	$	119.88	$	434,154	$	114.95
Totals	$	3,842,934	$	63.41	$	3,670,013	$	63.41	$	3,399,754	$	63.27	$	3,234,657	$	64.20	$	3,007,620	$	64.33
Total Internet/BB Revenue	$	5,610,575			$	5,648,979			$	5,695,551			$	6,023,978			$	6,261,986
% Revenue from Fiber		31.5%				35.0%				40.3%				46.3%				52.0%

Other Internet Reveneue	$	1,263,995			$	1,232,986			$	1,240,438			$	1,224,795			$	1,264,358

Total Internet Revenue	$	6,874,570			$	6,881,965			$	6,935,989			$	7,248,773			$	7,526,344

All Other Revenue	$	9,410,117			$	9,488,513			$	9,837,867			$	9,696,352			$	9,651,510

Total Revenue	$	16,284,687			$	16,370,478			$	16,773,856			$	16,945,125			$	17,177,854

* Nuvera has experienced a decrease in its Fiber Gig-Cities Business ARPU. This is primarily due to the aggressive conversion of our smaller business customers

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

Communications Segment	Three Months Ended June 30,				Increase (Decrease)
Communications Segment	2024		2023		Increase (Decrease)
Operating Revenues
Voice Service	$	1,199,823	$	1,293,258	$	(93,435)	-7.22%
Network Access		909,516		955,459		(45,943)	-4.81%
Video Service		2,973,791		3,063,857		(90,066)	-2.94%
Data Service		7,526,344		6,874,570		651,774	9.48%
A-CAM/FUSF		3,476,234		2,990,581		485,653	16.24%
Other		1,092,146		1,106,962		(14,816)	-1.34%
Total Operating Revenues		17,177,854		16,284,687		893,167	5.48%

Cost of Services, Excluding Depreciation and Amortization		7,989,743		8,080,167		(90,424)	-1.12%
Selling, General and Administrative		2,756,482		2,656,926		99,556	3.75%
Depreciation and Amortization Expenses		4,449,136		3,734,449		714,687	19.14%
Total Operating Expenses		15,195,361		14,471,542		723,819	5.00%

Operating Income	$	1,982,493	$	1,813,145	$	169,348	9.34%

Net Income	$	(433,516)	$	349,428	$	(782,944)	-224.06%

Capital Expenditures	$	11,945,088	$	9,809,873	$	2,135,215	21.77%

Communications Segment	Six Months Ended June 30,				Increase (Decrease)
Communications Segment	2024		2023		Increase (Decrease)
Operating Revenues
Voice Service	$	2,431,551	$	2,605,851	$	(174,300)	-6.69%
Network Access		1,856,626		2,050,751		(194,125)	-9.47%
Video Service		5,963,740		6,115,154		(151,414)	-2.48%
Data Service		14,775,117		13,691,119		1,083,998	7.92%
A-CAM/FUSF		6,891,700		5,978,860		912,840	15.27%
Other		2,204,245		2,205,899		(1,654)	-0.07%
Total Operating Revenues		34,122,979		32,647,634		1,475,345	4.52%

Cost of Services, Excluding Depreciation and Amortization		15,785,764		15,988,539		(202,775)	-1.27%
Selling, General and Administrative		5,630,814		5,236,272		394,542	7.53%
Depreciation and Amortization Expenses		8,803,795		7,421,481		1,382,314	18.63%
Total Operating Expenses		30,220,373		28,646,292		1,574,081	5.49%

Operating Income	$	3,902,606	$	4,001,342	$	(98,736)	-2.47%

Net Income	$	302,469	$	4,670,987	$	(4,368,518)	-93.52%

Capital Expenditures	$	23,033,815	$	15,092,419	$	7,941,396	52.62%

Key metrics
Access Lines		12,474		14,520		(2,046)	-14.09%
Video Customers		7,811		8,639		(828)	-9.58%
Data Customers		34,295		32,769		1,526	4.66%

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	XBRL Taxonomy Extension Label Linkbase Document

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

		NUVERA COMMUNICATIONS, INC.

Dated: August 14, 2024		By /s/ Glenn H. Zerbe
		Glenn H. Zerbe, President and Chief Executive Officer

Dated: August 14, 2024		By /s/ Curtis O. Kawlewski
		Curtis O. Kawlewski, Chief Financial Officer