Boston Omaha’s Durable Assets Anchor a Diversified Growth Strategy Amid Volatility

Boston Omaha Corporation (BOM) has long been a contrarian investor’s darling, celebrated for its eclectic mix of businesses and investments. But beneath its eccentric surface lies a portfolio of durable assets—physical, regulatory, and financial—that provide a sturdy foundation for its growth strategy. While its equity investments, particularly in Sky Harbour, create short-term volatility, the core businesses—outdoor billboards, broadband, and surety insurance—exhibit traits of resilience and scalability. This analysis explores how Boston Omaha’s mix of stability and opportunism positions it as a compelling, albeit uneven, investment.

Billboard Advertising: A Low-Cost, High-Barrier Asset Base

Boston Omaha’s billboard division is its financial workhorse, generating $45.15 million in 2024 revenue (up 5% from 2023) through a network of 4,000 billboards with 7,600 advertising faces. The segment’s durability stems from regulatory barriers—local zoning laws and right-of-way easements—that limit competition—combined with steady demand from advertisers seeking cost-effective reach.

The division’s strategy of acquiring smaller competitors to expand its footprint has paid off. For instance, its recent purchase of regional billboard firms in the Southeast expanded its market share in high-growth corridors. While billboard revenue growth has moderated compared to earlier years, the segment’s low maintenance costs (depreciation/amortization of $22.18 million in 2024) and inflation-resistant pricing power make it a reliable cash generator.

Broadband Services: High-Growth, High-Beta

Boston Omaha’s broadband division, led by subsidiaries like Boston Omaha Broadband (BOB) and AireBeam, is the fastest-growing segment, with revenue rising 11% to $39.10 million in 2024. This segment targets underserved rural areas in Arizona and Utah, deploying fiber-to-the-home networks and fixed wireless infrastructure to serve over 40,000 customers.

The division’s strategic partnerships with build-for-rent developers—where it pre-installs fiber infrastructure in new communities—positions it to capitalize on rising demand for high-speed internet. However, this growth comes with risks: expanding into new markets requires significant upfront capital, and the segment’s debt load (contributing to a $11.88 million increase in liabilities since 2023) could strain cash flows if subscriber growth slows.

Surety Insurance: A Niche with Wide Moats

The surety insurance division, operating through General Indemnity Group (GIG) and BOSS Bonds™, reported a 42% jump in premium revenue to $19.76 million in 2024. This segment sells surety bonds—critical for contractors, developers, and government projects—to mitigate financial risks.

The business benefits from regulatory fragmentation: licenses in all 50 states and a network of independent agents allow it to service a fragmented customer base. While the segment’s margins are narrower than billboards, its low capital intensity and recurring revenue model make it a stable contributor.

Asset Management: A Double-Edged Sword

Boston Omaha’s asset management arm includes a 16.4% equity stake in Sky Harbour, valued at $94.5 million on the balance sheet but estimated at $170.5 million using market prices. The discrepancy reflects the volatility of equity-method accounting, which forced a $17.3 million non-cash loss in 2024 due to fair-value adjustments.

While Sky Harbour’s potential upside is tempting, the lack of dividend payouts and the unpredictability of its valuation create earnings volatility. Other investments, such as real estate funds and aviation hangars, add diversification but contribute unevenly to cash flow.

Financial Position: Leverage and Liquidity in Balance

Boston Omaha’s balance sheet shows $41.66 million in unrestricted cash and investments, providing a liquidity buffer. Total debt stands at $165.63 million, a 9% increase from 2023, primarily driven by billboard and broadband expansion. Debt-to-equity remains modest at 30%, suggesting manageable risk.

Risks and Considerations

• Sky Harbour Volatility: The equity stake’s swings could distort earnings, as seen in 2024’s $17.3 million loss.
• Debt-Driven Growth: While manageable now, debt levels may rise if the company pursues large billboard acquisitions or broadband infrastructure projects.
• Regulatory Overhang: Broadband expansion depends on favorable policies for rural providers, while insurance operations face state-level regulatory scrutiny.

Conclusion: A Portfolio of Contrasts, but a Compelling Core

Boston Omaha’s durable assets—billboards, broadband infrastructure, and surety licenses—anchor a business model with steady cash flow and scalable growth. The billboard division’s 5% revenue growth and broadband’s 11% expansion demonstrate resilience even in a slowing economy. Meanwhile, the company’s $1.6 million in share repurchases and disciplined capital deployment signal confidence.

However, investors must weigh these strengths against the risks of its equity investments and debt exposure. Sky Harbour’s potential $170.5 million fair value represents a significant unrealized gain, but its volatility complicates earnings predictability.

For long-term investors seeking a mix of stability and growth, Boston Omaha’s core businesses justify cautious optimism. The company’s ability to convert its physical and regulatory assets into steady cash flows positions it as a durable play in a volatile market—provided management navigates debt and equity swings with discipline.