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Press release from Business Wire

Lamar Advertising Company Announces Third Quarter 2010 Operating Results

Thursday, November 04, 2010

Lamar Advertising Company Announces Third Quarter 2010 Operating Results06:00 EDT Thursday, November 04, 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 third quarter ended September 30, 2010. Three Months Results Lamar reported net revenues of $286.1 million for the third quarter of 2010 versus $271.8 million for the third quarter of 2009, a 5.3% increase. Operating income for the third quarter of 2010 was $46.6 million as compared to $39.3 million for the same period in 2009. There was net income of $0.8 million for the third quarter of 2010 compared to a net loss of $4.8 million for the third 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 income (loss) at the end of this release) for the third quarter of 2010 was $128.0 million versus $122.5 million for the third quarter of 2009, a 4.5% 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 third quarter of 2010 was $75.2 million as compared to $83.0 million for the same period in 2009, a 9.4% decrease. Pro forma net revenue for the third quarter of 2010 increased 4.6% and pro forma EBITDA increased 4.2% as compared to the third 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. Nine Months Results Lamar reported net revenues of $816.6 million for the nine months ended September 30, 2010 versus $793.8 million for the same period in 2009, a 2.9% increase. Operating income for the nine months ended September 30, 2010 was $106.7 million as compared to $77.2 million for the same period in 2009. EBITDA increased to $349.8 million for the nine months ended September 30, 2010 versus $334.6 million for the same period in 2009. There was a net loss of $33.0 million for the nine months ended September 30, 2010 as compared to a net loss of $38.4 million for the same period in 2009. Free cash flow for the nine months ended September 30, 2010 increased 0.8% to $192.3 million as compared to $190.7 million for the same period in 2009. Liquidity As of September 30, 2010 and currently, Lamar had approximately $276 million in total liquidity that consists of $238 million available for borrowing under its revolving senior credit facility and approximately $38 million in cash. Guidance For the fourth quarter of 2010 the Company expects net revenue to be approximately $275 million. On a pro forma basis this represents an increase of approximately 4%. Forward Looking Statements This press release contains forward-looking statements, including the statements regarding guidance for the fourth 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 November 4, 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:81735836 Available through Monday, November 8, 2010 at 11:59 p.m. eastern time   Live Webcast: www.lamar.com   Webcast Replay: www.lamar.com Available through Monday, November 8, 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 22 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     Nine months ended September 30, September 30, 2010     20092010     2009   Net revenues $   286,138   $   271,766   $   816,607   $   793,750     Operating expenses (income) Direct advertising expenses 99,595 97,630 297,972 298,055 General and administrative expenses 48,551 42,223 138,919 131,883 Corporate expenses 10,024 9,401 29,950 29,261 Non-cash compensation 4,915 2,946 12,715 9,687 Depreciation and amortization 77,617 83,529 234,124 252,792 Gain on disposition of assets ( 1,137 ) ( 3,222 ) ( 3,756 ) ( 5,095 ) 239,565 232,507 709,924 716,583 Operating income 46,573 39,259 106,683 77,167   Other expense (income) Gain on disposition of investment — ( 1,445 ) — ( 1,445 ) (Gain) loss on extinguishment of debt — ( 131 ) 17,398 ( 3,670 ) Interest income ( 14 ) ( 128 ) ( 190 ) ( 442 ) Interest expense 45,352 52,090 141,322 145,085 45,338 50,386 158,530 139,528 Income (loss) before income tax 1,235 ( 11,127 ) ( 51,847 ) ( 62,361 ) Income tax expense (benefit) 454 ( 6,346 ) ( 18,864 ) ( 24,005 )   Net income (loss) 781 ( 4,781 ) ( 32,983 ) ( 38,356 ) Preferred stock dividends 91 91 273 273 Net income (loss) applicable to common stock $ 690 ($ 4,872 ) ($ 33,256 ) ($ 38,629 )   Earnings per share: Basic earnings (loss) per share $ 0.01 ($ 0.05 ) ($ 0.36 ) ($ 0.42 ) Diluted earnings (loss) per share $ 0.01 ($ 0.05 ) ($ 0.36 ) ($ 0.42 )   Weighted average common shares outstanding: - basic 92,315,046 91,770,644 92,183,591 91,679,539 - diluted 92,728,863 91,994,981 92,649,166 91,710,406   OTHER DATAFree Cash Flow Computation:EBITDA $ 127,968 $ 122,512 $ 349,766 $ 334,551 Interest, net ( 40,801 ) ( 47,624 ) ( 128,553 ) ( 128,920 ) Current tax benefit (expense) 119 15,731 ( 969 ) 14,354 Preferred stock dividends ( 91 ) ( 91 ) ( 273 ) ( 273 ) Total capital expenditures (1) ( 12,024 ) ( 7,539 ) ( 27,712 ) ( 29,010 ) Free cash flow $ 75,171 $ 82,989 $ 192,259 $ 190,702 (1) See the capital expenditures detail included below for a breakdown by category.       September 30, December 31, 2010 2009 Selected Balance Sheet Data: Cash and cash equivalents $ 38,415 $ 112,253 Working capital 153,180 104,229 Total assets 3,718,944 3,943,541 Total debt (including current maturities) 2,472,806 2,674,912 Total stockholders' equity   816,401   831,798         Three months ended Nine months ended September 30, September 30, 2010     20092010     2009   Other Data: Cash flows provided by operating activities $   97,009   $   75,011   $   190,179   $   191,422   Cash flows used in investing activities 11,808 5,042 24,927 18,827 Cash flows used in financing activities 73,794 180,018 239,393 139,377     Reconciliation of Free Cash Flow to Cash Flows Provided by Operating Activities:   Cash flows provided by operating activities $ 97,009 $ 75,011 $ 190,179 $ 191,422 Changes in operating assets and liabilities ( 8,145 ) 18,551 35,422 37,001 Total capital expenditures ( 12,024 ) ( 7,539 ) ( 27,712 ) ( 29,010 ) Preferred stock dividends ( 91 ) ( 91 ) ( 273 ) ( 273 ) Other ( 1,578 ) ( 2,943 ) ( 5,357 ) ( 8,438 ) Free cash flow $ 75,171 $ 82,989 $ 192,259 $ 190,702     Reconciliation of EBITDA to Net income (loss): EBITDA $ 127,968 $ 122,512 $ 349,766 $ 334,551 Less: Non-cash compensation 4,915 2,946 12,715 9,687 Depreciation and amortization 77,617 83,529 234,124 252,792 Gain on disposition of assets ( 1,137 ) ( 3,222 ) ( 3,756 ) ( 5,095 ) Operating Income 46,573 39,259 106,683 77,167   Less: Interest income ( 14 ) ( 128 ) ( 190 ) ( 442 ) Gain on disposition of investment — ( 1,445 ) — ( 1,445 ) (Gain) loss on extinguishment of debt — ( 131 ) 17,398 ( 3,670 ) Interest expense 45,352 52,090 141,322 145,085 Income tax expense (benefit) 454 ( 6,346 ) ( 18,864 ) ( 24,005 ) Net income (loss) $ 781 ($ 4,781 ) ($ 32,983 ) ($ 38,356 )       Three months ended September 30,     2010     2009 % Change Reconciliation of Reported Basis to Pro Forma (a) Basis: Reported net revenue $   286,138 $   271,766 5.3 % Acquisitions and divestitures — 1,678 Pro forma net revenue $ 286,138 $ 273,444 4.6 %   Reported direct advertising and G&A expenses $ 148,146 $ 139,853 5.9 % Acquisitions and divestitures — 1,361 Pro forma direct advertising and G&A expenses $ 148,146 $ 141,214 4.9 %   Reported outdoor operating income $ 137,992 $ 131,913 4.6 % Acquisitions and divestitures — 317 Pro forma outdoor operating income $ 137,992 $ 132,230 4.4 %   Reported corporate expenses $ 10,024 $ 9,401 6.6 % Acquisitions and divestitures — — Pro forma corporate expenses $ 10,024 $ 9,401 6.6 %   Reported EBITDA $ 127,968 $ 122,512 4.5 % Acquisitions and divestitures — 317 Pro forma EBITDA $ 127,968 $ 122,829 4.2 %   (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 September 30, 2010     2009 Reconciliation of Outdoor Operating Income to Operating Income: Outdoor operating income $   137,992 $   131,913 Less: Corporate expenses 10,024 9,401 Non-cash compensation 4,915 2,946 Depreciation and amortization 77,617 83,529 Plus: Gain on disposition of assets 1,137 3,222 Operating income $ 46,573 $ 39,259         Three months ended September 30, Nine months ended September 30, 2010     2009 2010     2009 Capital expenditure detail by category Billboards - traditional $ 2,832 $ 1,386 $ 5,341 $ 6,447 Billboards - digital 3,905 3,345 8,575 11,592 Logo 2,119 1,205 6,187 3,276 Transit 52 113 726 3,123 Land and buildings 142 165 721 549 Operating equipment 2,974 1,325 6,162 4,023 Total capital expenditures $ 12,024 $ 7,539 $ 27,712 $ 29,010 Lamar Advertising CompanyKeith A. Istre, 225-926-1000Chief Financial OfficerKI@lamar.com