Nuvera Communications, Inc 10-Q for FY2022 Q1

Nuvera Communications, Inc. (NUVR)

10-Q 2022-05-10 For: 2022-03-31

Added on April 06, 2026

About this 10-Q

Nuvera Communications, Inc filed this 10-Q on May 10, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $16.47M; unchanged from $16.48M a year earlier
Net income: $2.4M; down 53.6% from net income of $5.18M a year earlier
Diluted EPS: $0.47; down 52.5% from $0.99 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

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 - 9

	Consolidated Statements of Income (unaudited) for the Three Months Ended March 31, 2022 and 2021	4

	Consolidated Statements of Comprehensive Income (unaudited) for the Three Months Ended March 31, 2022 and 2021	5

	Consolidated Balance Sheets (unaudited) as of March 31, 2022 and December 31, 2021	6 - 7

	Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2022 and 2021	8

	Consolidated Statements of Stockholders’ Equity (unaudited) for the Three Months Ended March 31, 2022 and 2021	9

	Condensed Notes to Consolidated Financial Statements (unaudited)	10 - 30

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30 - 43

Item 3	Quantitative and Qualitative Disclosures about Market Risk	43

Item 4	Controls and Procedures	44

PART II – OTHER INFORMATION

Item 1	Legal Proceedings	44

Item 1A	Risk Factors	44 - 53

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	53 - 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 March 31,
	Three Months Ended March 31,
	2022		2021

OPERATING REVENUES:
Voice Service	$	1,468,178	$	1,551,278
Network Access		1,291,310		1,582,440
Video Service		3,141,492		3,028,877
Data Service		6,716,852		6,267,971
A-CAM/FUSF		2,894,587		2,968,195
Other Non-Regulated		962,353		1,079,362
Total Operating Revenues		16,474,772		16,478,123

OPERATING EXPENSES:
Plant Operations (Excluding Depreciation and Amortization)		3,427,246		3,417,738
Cost of Video		2,549,852		2,756,343
Cost of Data		1,028,534		923,514
Cost of Other Nonregulated Services		378,194		409,246
Depreciation and Amortization		3,498,284		3,071,572
Selling, General and Administrative		2,661,463		2,663,890
Total Operating Expenses		13,543,573		13,242,303

OPERATING INCOME		2,931,199		3,235,820

OTHER INCOME (EXPENSE)
Interest Expense		(496,655)		(565,374)
Interest/Dividend Income		177,045		101,402
Interest During Construction		32,204		9,992
Gain on Debt Forgiveness		-		2,912,433
CoBank Patronage Dividends		567,468		625,490
Other Investment Income		124,301		66,048
Total Other Income (Expense)		404,363		3,149,991

INCOME BEFORE INCOME TAXES		3,335,562		6,385,811

INCOME TAXES EXPENSE		933,956		1,205,100

NET INCOME	$	2,401,606	$	5,180,711

NET INCOME PER SHARE
Basic	$	0.47	$	1.00
Diluted	$	0.47	$	0.99

DIVIDENDS PER SHARE	$	0.14	$	0.13

WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		5,111,622		5,202,832
Diluted		5,124,540		5,210,554

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

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

	Three Months Ended March 31,
	Three Months Ended March 31,
	2022		2021

Net Income	$	2,401,606	$	5,180,711

Other Comprehensive Income:
Unrealized Gains on Interest Rate Swaps		1,799,825		945,061
Income Tax Expense Related to Unrealized Gains on Interest Rate Swaps		(513,670)		(269,720)
Other Comprehensive Income:		1,286,155		675,341

Comprehensive Income	$	3,687,761	$	5,856,052

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

NUVERA COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)

ASSETS

	March 31, 2022		December 31, 2021
	March 31, 2022		December 31, 2021

CURRENT ASSETS:
Cash	$	878,078	$	2,306,149
Receivables, Net of Allowance for Doubtful Accounts of $80,000 and $80,000		2,535,002		2,426,009
Income Taxes Receivable		471,666		1,405,622
Materials, Supplies, and Inventories		7,327,046		5,357,380
Prepaid Expenses and Other Current Assets		2,095,856		1,886,810
Total Current Assets		13,307,648		13,381,970

INVESTMENTS & OTHER ASSETS:
Goodwill		49,903,029		49,903,029
Intangibles		17,827,483		18,315,567
Other Investments		10,531,863		10,417,563
Right of Use Asset		1,084,600		1,154,293
Financial Derivative Instruments		916,460		-
Other Assets		437,341		422,427
Total Investments and Other Assets		80,700,776		80,212,879

PROPERTY, PLANT & EQUIPMENT:
Communications Plant		192,098,334		189,990,012
Other Property & Equipment		27,760,245		27,439,201
Video Plant		11,321,216		11,306,071
Total Property, Plant and Equipment		231,179,795		228,735,284
Less Accumulated Depreciation		150,596,128		147,585,930
Net Property, Plant & Equipment		80,583,667		81,149,354

TOTAL ASSETS	$	174,592,091	$	174,744,203

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

Nuvera Communications, Inc 10-Q for FY2022 Q1

About this 10-Q

Headline figures

NUVERA COMMUNICATIONS, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Overview

See Consolidated Statements of Income (for discussion below)

Other Income (Expense) and Interest Expense

Income Taxes

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

LIABILITIES AND STOCKHOLDERS' EQUITY

	March 31, 2022		December 31, 2021
	March 31, 2022		December 31, 2021

CURRENT LIABILITIES:
Current Portion of Long-Term Debt, Net of Unamortized Loan Fees	$	4,509,044	$	4,511,844
Accounts Payable		2,434,553		3,244,472
Other Accrued Taxes		322,739		260,013
Deferred Compensation		63,424		63,829
Accrued Compensation		2,025,687		2,122,436
Other Accrued Liabilities		863,859		634,247
Total Current Liabilities		10,219,306		10,836,841

LONG-TERM DEBT, Net of Unamortized Loan Fees		44,110,542		43,114,772

NONCURRENT LIABILITIES:
Loan Guarantees		209,367		222,464
Deferred Income Taxes		19,998,170		19,484,500
Unrecognized Tax Benefit		42,775		42,775
Other Accrued Liabilities		1,066,428		1,112,343
Financial Derivative Instruments		-		883,365
Deferred Compensation		398,738		396,548
Total Noncurrent Liabilities		21,715,478		22,141,995

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, 5,064,760 and 5,210,053 Shares Issued and Outstanding		8,441,267		8,683,422
Accumulated Other Comprehensive Gain (Loss)		654,902		(631,253)
Unearned Compensation		262,735		259,620
Retained Earnings		89,187,861		90,338,806
Total Stockholders' Equity		98,546,765		98,650,595

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	174,592,091	$	174,744,203

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

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

	Three Months Ended
	March 31, 2022		March 31, 2021
	March 31, 2022		March 31, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	2,401,606	$	5,180,711
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		3,523,156		3,096,211
PPP Loan Forgiveness		-		(2,912,433)
Undistributed Earnings of Other Equity Investments		(121,963)		(64,423)
Noncash Patronage Refund		(118,223)		(129,177)
Stock Issued in Lieu of Cash Payment		140,518		39,984
Distributions from Equity Investments		100,000		150,000
Stock-based Compensation		3,782		178,081
Changes in Assets and Liabilities:
Receivables		(108,585)		(337,167)
Income Taxes Receivable		933,956		615,587
Inventories for Resale		(12,527)		(173,169)
Prepaid Expenses		(249,030)		(1,494,445)
Other Assets		(15,322)		(65,048)
Accounts Payable		862,316		174,178
Accrued Income Taxes		-		489,513
Other Accrued Taxes		62,726		61,962
Other Accrued Liabilities		156,641		389,210
Deferred Compensation		1,785		(69,775)
Net Cash Provided by Operating Activities		7,560,836		5,129,800

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant, and Equipment, Net		(4,116,747)		(1,740,415)
Materials and Supplies for Construction		(1,957,139)		(311,145)
Other, Net		12,788		(42,000)
Net Cash Used in Investing Activities		(6,061,098)		(2,093,560)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt		(1,152,600)		(1,152,600)
Loan Origination Fees		(28,000)		-
Changes in Revolving Credit Facility		2,148,698		-
Repurchase of Common Stock		(3,187,500)		-
Dividends Paid		(708,407)		(676,090)
Net Cash Used in Financing Activities		(2,927,809)		(1,828,690)

NET CHANGE IN CASH		(1,428,071)		1,207,550

CASH at Beginning of Period		2,306,149		8,617,660

CASH at End of Period	$	878,078	$	9,825,210


Supplemental cash flow information:
Cash paid for interest	$	466,226	$	782,399
Net cash paid for income taxes	$	0	$	100,000

Certain historical numbers have been changed to conform to 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 MARCH 31, 2022
				Accumulated Other Comprehensive
	Common Stock			Accumulated Other Comprehensive		Unearned		Retained		Total
	Shares	Amount		Income (Loss)		Compensation		Earnings		Equity

BALANCE on December 31, 2021	5,210,053	$	8,683,422	$	(631,253)	$	259,620	$	90,338,806	$	98,650,595

Employee Stock Plan	4,676		7,793						92,741		100,534
Restricted Stock Grant							3,782				3,782
Exercise of RSUs	31		52				(667)		615		-
Repurchase of Common Stock	(150,000)		(250,000)						(2,937,500)		(3,187,500)
Net Income									2,401,606		2,401,606
Dividends									(708,407)		(708,407)
Unrealized Gain on Interest Rate Swap					1,286,155						1,286,155

BALANCE on March 31, 2022	5,064,760	$	8,441,267	$	654,902	$	262,735	$	89,187,861	$	98,546,765




	THREE MONTHS ENDED MARCH 31, 2021
				Accumulated Other Comprehensive
	Common Stock			Accumulated Other Comprehensive		Unearned		Retained		Total
	Shares	Amount		Income (Loss)		Compensation		Earnings		Equity
BALANCE on December 31, 2020	5,200,689		8,667,816	$	(1,944,511)	$	149,100	$	80,748,301	$	87,620,706

Employee Stock Plan	4,594		7,657						101,083		108,740
Restricted Stock Grants							69,341				69,341
Exercise of RSUs	1,836		3,060				(43,458)		40,398		-
Net Income									5,180,711		5,180,711
Dividends									(676,090)		(676,090)
Unrealized Gain on Interest Rate Swap					675,341						675,341

BALANCE on March 31, 2021	5,207,119	$	8,678,533	$	(1,269,170)	$	174,983	$	85,394,403	$	92,978,749

	Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
	Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
	Basic		Diluted		Basic		Diluted

Net Income	$	2,401,606	$	2,401,606	$	5,180,711	$	5,180,711

Weighted-average common shares outstanding		5,111,622		5,124,540		5,202,832		5,210,554

Net income per share	$	0.47	$	0.47	$	1.00	$	0.99

	Three Months Ended March 31,
	2022		2021
Voice Service¹	$	1,611,058	$	1,785,080
Network Access¹		1,325,637		1,611,197
Video Service¹		3,141,352		3,027,547
Data Service¹		6,149,460		5,755,470
Directory²		161,092		178,119
Other Contracted Revenue³		671,607		624,494
Other⁴		305,501		301,088

Revenue from customers		13,365,707		13,282,995

Subsidy and other revenue outside scope of ASC 606⁵		3,109,065		3,195,128

Total revenue	$	16,474,772	$	16,478,123

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.

⁴This includes CPE and other equipment sales.

⁵This includes governmental subsidies and lease revenue outside the scope of ASC 606.

	Quarter Ended March 31,
	2022		2021
Accounts receivable, net	$	1,790,323	$	1,479,643
Contract assets		701,963		522,826
Contract liabilities		849,479		901,130

Right of Use Asset	Balance March 31, 2022		Balance December 31, 2021
Operating Lease Right-Of-Use Assets	$	1,084,600	$	1,154,293

Operating Lease Liability	Balance March 31, 2022		Balance December 31, 2021
Short-Term Operating Lease Liability	$	287,862	$	283,167
Long-Term Operating Lease Liability		831,780		905,528
Total	$	1,119,642	$	1,188,695

Maturity Analysis	Balance March 31, 2022
2022 (remaining)	$	261,129
2023		348,708
2024		236,948
2025		120,881
2026		71,023
Thereafter		309,800
Total		1,348,489
Less Imputed Interest		(228,847)
Present Value of Operating Leases	$	1,119,642

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.

		March 31, 2022					December 31, 2021
	Useful Lives		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Definite-Lived Intangible Assets
Customers Relationships	14-15 yrs		$	42,878,445	$	29,211,968	$	42,878,445	$	28,806,055
Regulatory Rights	15 yrs			4,000,000		3,799,965		4,000,000		3,733,299
Trade Name	3-5 yrs			310,106		226,949		310,106		211,444
Indefinitely-Lived Intangible Assets
Video Franchise				3,000,000		-		3,000,000		-
Spectrum				877,814		-		877,814		-
Total			$	51,066,365	$	33,238,882	$	51,066,365	$	32,750,798

Net Identified Intangible Assets					$	17,827,483			$	18,315,567

●	(April 1 – December 31)	$	1,464,292
●	2023	$	1,660,295
●	2024	$	1,623,654
●	2025	$	1,618,732
●	2026	$	1,613,809
●	2027	$	906,667

	Time-Based RSU's	Targeted Performance-Based RSU's		Closing Stock Price	Vesting Date
Balance at December 31, 2020	7,638	9,611
Issued	3,364	5,247	$	21.90	12/31/2023
Exercised	-	(1,588)	$	23.67	12/31/2020
Exercised	(1,562)	-	$	21.75	12/31/2021
Balance at December 31, 2021	9,440	13,270
Forfeited	-	(2,637)
Balance at March 31, 2022	9,440	10,633

●	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:
	▪	FiberComm, LC – 20.00% subsidiary equity ownership interest. FiberComm, LC is located in Sioux City, Iowa;
	▪	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.

	Options	Closing Stock Price		Vesting Date
Balance at December 31, 2021	-
Issued	40,879	$	21.20	4/11/2023
Issued	40,900	$	21.20	4/11/2024
Issued	40,890	$	21.20	4/11/2025
Balance at March 31, 2022	122,669

Communications Segment
	Three Months Ended March 31,
	2022		2021		Increase (Decrease)
Operating Revenues
Voice Service	$	1,468,178	$	1,551,278	$	(83,100)	-5.36%
Network Access		1,291,310		1,582,440		(291,130)	-18.40%
Video Service		3,141,492		3,028,877		112,615	3.72%
Data Service		6,716,852		6,267,971		448,881	7.16%
A-CAM/FUSF		2,894,587		2,968,195		(73,608)	-2.48%
Other		962,353		1,079,362		(117,009)	-10.84%
Total Operating Revenues		16,474,772		16,478,123		(3,351)	-0.02%

Cost of Services, Excluding Depreciation and Amortization		7,383,826		7,506,841		(123,015)	-1.64%
Selling, General and Administrative		2,661,463		2,663,890		(2,427)	-0.09%
Depreciation and Amortization Expenses		3,498,284		3,071,572		426,712	13.89%
Total Operating Expenses		13,543,573		13,242,303		301,270	2.28%

Operating Income	$	2,931,199	$	3,235,820	$	(304,621)	-9.41%

Net Income	$	2,401,606	$	5,180,711	$	(2,779,105)	-53.64%

Capital Expenditures	$	4,116,747	$	1,740,415	$	2,376,332	136.54%

Key metrics
Access Lines		16,801		19,088		(2,287)	-11.98%
Video Customers		10,100		10,766		(666)	-6.19%
Broadband Customers		32,752		31,883		869	2.73%

	●	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.

				Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

	Total Number of Shares Purchased as Part of Publicaly Announced Plans or or Programs (1)

		Average Price Paid per Share

Period
July 1 - December 30, 2020	19,487		N/A	$	3,647,263
January 1 - June 30, 2021	3,028	$	23.80	$	3,575,197
July 1 - December 31, 2021	4,000	$	23.85	$	-
Total July 1, 2019 - December 31, 2021	26,515

(1) The total number of shares purchased includes: (i) shares purchased under the Board's authorizations
described above, including market purchases and privately negotiated purchases.

	NUVERA COMMUNICATIONS, INC.

Dated: May 10, 2022	By	/s/ Glenn H. Zerbe
	Glenn H. Zerbe, President and Chief Executive Officer

Dated: May 10, 2022	By	/s/ Curtis O. Kawlewski
	Curtis O. Kawlewski, Chief Financial Officer

Date: May 10, 2022	By	/s/ Glenn H. Zerbe
		Glenn H. Zerbe
		President and Chief Executive Officer

Date: May 10, 2022		/s/ Curtis O. Kawlewski
		Curtis O. Kawlewski
		Chief Financial Officer