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Press release from Business Wire

Lamar Advertising Company Announces Second Quarter 2010 Operating Results

Thursday, August 05, 2010

Lamar Advertising Company Announces Second Quarter 2010 Operating Results06:00 EDT Thursday, August 05, 2010 BATON ROUGE, La. (Business Wire) -- Lamar Advertising Company (Nasdaq: LAMR), a leading owner and operator of outdoor advertising and logo sign displays, announces the Company's operating results for the second quarter ended June 30, 2010. Three Months Results Lamar reported net revenues of $286.4 million for the second quarter of 2010 versus $274.7 million for the second quarter of 2009, a 4.2% increase. Operating income for the second quarter of 2010 was $49.3 million as compared to $34.0 million for the same period in 2009. The Company also recorded an expense of $17.1 million related to the loss on early extinguishment of debt resulting from the refinancing of its senior credit facility and the repurchase of all outstanding 7 1/4% Senior Subordinated Notes due 2013, of which $12.3 million is a non-cash charge attributable to the write off of unamortized debt issuance fees. The 7 1/4% Notes were repurchased pursuant to a tender offer and subsequent redemption, both of which were funded by proceeds from the issuance in April 2010 of $400 million 7 7/8% Senior Subordinated Notes due 2018. There was a net loss of $8.9 million for the second quarter of 2010 compared to a net loss of $11.8 million for the second quarter of 2009. Adjusted EBITDA, which we refer to herein as EBITDA (defined as operating income before non-cash compensation, depreciation and amortization and gain on disposition of assets - see reconciliation to net loss at the end of this release) for the second quarter of 2010 was $131.0 million versus $121.5 million for the second quarter of 2009, a 7.9% increase. Free cash flow (defined as EBITDA less interest, net of interest income and amortization of financing costs, current taxes, preferred stock dividends and total capital expenditures - see reconciliation to cash flows provided by operating activities at the end of this release) for the second quarter of 2010 was $80.7 million as compared to $62.8 million for the same period in 2009, a 28.4% increase. Pro forma net revenue for the second quarter of 2010 increased 3.7% and pro forma EBITDA increased 7.7% as compared to the second quarter of 2009. Pro forma net revenue and EBITDA include adjustments to the 2009 period for acquisitions and divestitures for the same time frame as actually owned in the 2010 period. Tables that reconcile reported results to pro forma results and operating income to outdoor operating income are included at the end of this release. Six Months Results Lamar reported net revenues of $530.5 million for the six months ended June 30, 2010 versus $522.0 million for the same period in 2009, a 1.6% increase. Operating income for the six months ended June 30, 2010 was $60.1 million as compared to $37.9 million for the same period in 2009. EBITDA for the six months ended June 30, 2010 was $221.8 million versus $212.0 million for the same period in 2009. There was a net loss of $33.8 million for the six months ended June 30, 2010 as compared to a net loss of $33.6 million for the same period in 2009. Free Cash Flow for the six months ended June 30, 2010 increased 8.7% to $117.1 million as compared to $107.7 million for the same period in 2009. Liquidity As of June 30, 2010, Lamar had $190.0 million in total liquidity that consists of $163.1 million available for borrowing under its revolving senior credit facility and approximately $26.9 million in cash and cash equivalents. Currently, Lamar has approximately $208.0 million available for borrowing under its revolving senior credit facility, as a result of principal payments made under its revolving credit facility since June 30, 2010. Guidance For the third quarter of 2010 the Company expects net revenue to be approximately $284.0 million. On a pro forma basis this represents an increase of approximately 4.0%. Forward Looking Statements This press release contains forward-looking statements, including the statements regarding guidance for the third quarter of 2010. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. These risks and uncertainties include, among others; (1) our significant indebtedness; (2) the length and severity of the current recession and the effect that it has on the demand for advertising; (3) the continued popularity of outdoor advertising as an advertising medium; (4) our need for and ability to obtain additional funding for operations, debt refinancing or acquisitions; (5) the regulation of the outdoor advertising industry; (6) the integration of companies that we acquire and our ability to recognize cost savings or operating efficiencies as a result of these acquisitions; (7) the market for our Class A common stock and (8) other factors described in the reports on Forms 10-K and 10-Q and the registration statements that we file from time to time with the SEC. We caution investors not to place undue reliance on the forward-looking statements contained in this document. These statements speak only as of the date of this document, and we undertake no obligation to update or revise the statements, except as may be required by law. Use of Non-GAAP Measures EBITDA, free cash flow, pro forma results and outdoor operating income are not measures of performance under accounting principles generally accepted in the United States of America (“GAAP”) and should not be considered alternatives to operating income, net loss, cash flows from operating activities, or other GAAP figures as indicators of the Company's financial performance or liquidity. The Company's management believes that EBITDA, free cash flow, pro forma results and outdoor operating income are useful in evaluating the Company's performance and provide investors and financial analysts a better understanding of the Company's core operating results. The pro forma acquisition adjustments are intended to provide information that may be useful for investors when assessing period to period results. Our presentations of these measures may not be comparable to similarly titled measures used by other companies. Reconciliations of these measures to GAAP are included at the end of this release. Conference Call Information A conference call will be held to discuss the Company's operating results on Thursday, August 5, 2010 at 10:00 a.m. central time. Instructions for the conference call and Webcast are provided below: Conference Call   All Callers:       1-334-323-0520 or 1-334-323-9871Passcode:Lamar   Replay:1-334-323-7226Passcode:93244770 Available through Monday, August 9, 2010 at 11:59 p.m. eastern time.   Live Webcast: www.lamar.com   Webcast Replay: www.lamar.com Available through Monday, August 9, 2010 at 11:59 p.m. eastern time. General Information Lamar Advertising Company is a leading outdoor advertising company currently operating over 150 outdoor advertising companies in 44 states, Canada and Puerto Rico, logo businesses in 21 states and the province of Ontario, Canada and over 60 transit advertising franchises in the United States, Canada and Puerto Rico. LAMAR ADVERTISING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)     Three months ended   Six months ended June 30, June 30,   2010   20092010   2009   Net revenues $   286,366   $   274,736   $   530,469   $   521,984     Operating expenses (income) Direct advertising expenses 99,825 99,444 198,377 200,425 General and administrative expenses 45,608 44,283 90,368 89,660 Corporate expenses 9,904 9,539 19,926 19,860 Non-cash compensation 5,039 5,236 7,800 6,741 Depreciation and amortization 78,165 83,489 156,507 169,263 Gain on disposition of assets ( 1,446 ) ( 1,221 ) ( 2,619 ) ( 1,873 ) 237,095 240,770 470,359 484,076 Operating income 49,271 33,966 60,110 37,908   Other expense (income) Loss (gain) on extinguishment of debt 17,137 ( 3,539 ) 17,398 ( 3,539 ) Interest income ( 87 ) ( 169 ) ( 176 ) ( 314 ) Interest expense 46,640 56,645 95,970 92,995 63,690 52,937 113,192 89,142 Loss before income tax ( 14,419 ) ( 18,971 ) ( 53,082 ) ( 51,234 ) Income tax benefit ( 5,482 ) ( 7,134 ) ( 19,318 ) ( 17,659 )   Net loss ( 8,937 ) ( 11,837 ) ( 33,764 ) ( 33,575 ) Preferred stock dividends 91 91 182 182 Net loss applicable to common stock ($ 9,028 ) ($ 11,928 ) ($ 33,946 ) ($ 33,757 )   Earnings per share: Basic loss per share ($ 0.10 ) ($ 0.13 ) ($ 0.37 ) ($ 0.37 ) Diluted loss per share ($ 0.10 ) ($ 0.13 ) ($ 0.37 ) ($ 0.37 )   Weighted average common shares outstanding: - basic 92,202,404 91,686,753 92,115,868 91,633,232 - diluted 92,714,870 91,746,773 92,627,203 91,787,134   OTHER DATAFree Cash Flow Computation: EBITDA $ 131,029 $ 121,470 $ 221,798 $ 212,039 Interest, net ( 42,460 ) ( 46,373 ) ( 87,752 ) ( 81,296 ) Current tax expense ( 477 ) ( 759 ) ( 1,088 ) ( 1,377 ) Preferred stock dividends ( 91 ) ( 91 ) ( 182 ) ( 182 ) Total capital expenditures (1) ( 7,347 ) ( 11,413 ) ( 15,688 ) ( 21,471 ) Free cash flow $ 80,654 $ 62,834 $ 117,088 $ 107,713 (1)See the capital expenditures detail included below for a breakdown by category.   June 30, December 31, 20102009Selected Balance Sheet Data:   Cash and cash equivalents $ 26,876 $ 112,253 Working capital 166,362 104,229 Total assets 3,781,153 3,943,541 Total debt (including current maturities) 2,546,967 2,674,912 Total stockholders' equity   807,375   831,798       Three months ended   Six months ended June 30, June 30, 2010   20092010   2009   Other Data: Cash flows provided by operating activities $   85,519   $   97,050   $   93,170   $   116,411   Cash flows used in investing activities 5,077 10,197 13,119 13,785 Cash flows (used in) provided by financing activities ( 86,468 ) ( 123,294 ) ( 165,599 )   40,641     Reconciliation of Free Cash Flow to Cash Flows Provided by Operating Activities: Cash flows provided by operating activities $ 85,519 $ 97,050 $ 93,170 $ 116,411 Changes in operating assets and liabilities 4,341 ( 19,591 ) 43,567 18,450 Total capital expenditures ( 7,347 ) ( 11,413 ) ( 15,688 ) ( 21,471 ) Preferred stock dividends ( 91 ) ( 91 ) ( 182 ) ( 182 ) Other ( 1,768 ) ( 3,121 ) ( 3,779 ) ( 5,495 ) Free cash flow $ 80,654 $ 62,834 $ 117,088 $ 107,713     Reconciliation of EBITDA to Net loss: EBITDA $ 131,029 $ 121,470 $ 221,798 $ 212,039 Less: Non-cash compensation 5,039 5,236 7,800 6,741 Depreciation and amortization 78,165 83,489 156,507 169,263 Gain on disposition of assets ( 1,446 ) ( 1,221 ) ( 2,619 ) ( 1,873 ) Operating Income 49,271 33,966 60,110 37,908   Less: Interest income ( 87 ) ( 169 ) ( 176 ) ( 314 ) Loss (gain) on extinguishment of debt 17,137 ( 3,539 ) 17,398 ( 3,539 ) Interest expense 46,640 56,645 95,970 92,995 Income tax benefit ( 5,482 ) ( 7,134 ) ( 19,318 ) ( 17,659 ) Net loss ($ 8,937 ) ($ 11,837 ) ($ 33,764 ) ($ 33,575 )       Three months ended   June 30, 2010   2009% ChangeReconciliation of Reported Basis to Pro Forma (a) Basis: Reported net revenue $ 286,366 $ 274,736 4.2 % Acquisitions and divestitures -- 1,295 Pro forma net revenue $ 286,366 $ 276,031 3.7 %   Reported direct advertising and G&A expenses $ 145,433 $ 143,727 1.2 % Acquisitions and divestitures -- 1,066 Pro forma direct advertising and G&A expenses $ 145,433 $ 144,793 0.4 %   Reported outdoor operating income $ 140,933 $ 131,009 7.6 % Acquisitions and divestitures -- 229 Pro forma outdoor operating income $ 140,933 $ 131,238 7.4 %   Reported corporate expenses $ 9,904 $ 9,539 3.8 % Acquisitions and divestitures -- -- Pro forma corporate expenses $ 9,904 $ 9,539 3.8 %   Reported EBITDA $ 131,029 $ 121,470 7.9 % Acquisitions and divestitures -- 229 Pro forma EBITDA $ 131,029 $ 121,699 7.7 %   (a) Pro forma net revenues, direct advertising and general and administrative expenses, outdoor operating income, corporate expenses and EBITDA include adjustments to 2009 for acquisitions and divestitures for the same time frame as actually owned in 2010.       Three months ended June 30, 2010   2009Reconciliation of Outdoor Operating Income to Operating Income: Outdoor operating income $ 140,933 $ 131,009 Less: Corporate expenses 9,904 9,539 Non-cash compensation 5,039 5,236 Depreciation and amortization 78,165 83,489 Plus: Gain on disposition of assets 1,446 1,221 Operating income $ 49,271 $ 33,966       Three months ended   Six months ended June 30, June 30, 2010   20092010   2009Capital expenditure detail by category Billboards - traditional $ 873 $ 2,217 $ 2,509 $ 5,061 Billboards - digital 2,937 3,929 4,670 8,247 Logo 1,981 1,409 4,068 2,071 Transit 38 2,022 674 3,010 Land and buildings -- -- 579 384 Operating equipment 1,518 1,836 3,188 2,698 Total capital expenditures $ 7,347 $ 11,413 $ 15,688 $ 21,471