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Press release from GlobeNewswire (a Nasdaq OMX company)

Lamar Advertising Company Announces Second Quarter 2013 Operating Results

Thursday, August 08, 2013

Lamar Advertising Company Announces Second Quarter 2013 Operating Results

03:00 EDT Thursday, August 08, 2013

BATON ROUGE, La., Aug. 8, 2013 (GLOBE NEWSWIRE) -- 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, 2013.

Three Months Results

Lamar reported net revenues of $324.7 million for the second quarter of 2013 versus $304.9 million for the second quarter of 2012, a 6.5% increase. Operating income for the second quarter of 2013 was $70.3 million as compared to $64.5 million for the same period in 2012. Lamar recognized $21.3 million in net income for the second quarter of 2013 compared to a net income of $13.9 million for the second quarter of 2012.

Adjusted 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 second quarter of 2013 was $148.4 million versus $138.2 million for the second quarter of 2012, a 7.3% increase.

Free cash flow (defined as Adjusted 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 2013 was $86.7 million as compared to $73.7 million for the same period in 2012, a 17.7% increase.

Pro forma net revenue for the second quarter of 2013 increased 2.7% and pro forma Adjusted EBITDA increased 3.5% as compared to the second quarter of 2012. Pro forma net revenue and Adjusted EBITDA include adjustments to the 2012 period for acquisitions and divestitures for the same time frame as actually owned in the 2013 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 $608.2 million for the six months ended June 30, 2013 versus $571.1 million for the same period in 2012, a 6.5% increase. Operating income for the six months ended June 30, 2013 was $96.2 million as compared to $90.3 million for the same period in 2012. Adjusted EBITDA for the six months ended June 30, 2013 was $258.4 million versus $238.1 million for the same period in 2012. In addition, Lamar recognized net income of $15.2 million for the six months ended June 30, 2013 as compared to a net loss of $8.9 million for the same period in 2012.

Free Cash Flow for the six months ended June 30, 2013 increased 15.9% to $136.7 million as compared to $117.9 million for the same period in 2012.

Liquidity

As of June 30, 2013, Lamar had $361.9 million in total liquidity that consists of $243.0 million available for borrowing under its revolving senior credit facility and approximately $118.9 million in cash and cash equivalents.     

Real Estate Investment Trust Update

As previously announced, we are actively considering an election to real estate investment trust (REIT) status and are currently evaluating the steps necessary to implement conversion to a REIT. In conjunction with this review, we submitted a private letter ruling request to the U.S. Internal Revenue Service (the "IRS") in November of 2012 regarding a potential REIT election. As disclosed in June 2013, we have been advised by the IRS that it has decided to study the current legal standards it uses to define "real estate" for purposes of the REIT provisions of the U.S. Internal Revenue Code. We have received no additional information from the IRS to date with respect to the status of our private letter ruling request and the duration of the IRS's study could delay the issuance of the private letter ruling. Based on current information, we have no reason to conclude that we will not be in a position to convert to a REIT effective for the taxable year beginning January 1, 2014.

Our decision to proceed with a REIT election is subject to the approval of our board of directors. A favorable IRS ruling, if received, does not guarantee that we would succeed in qualifying as a REIT and there is no certainty as to the timing of a REIT election. We may not ultimately pursue a conversion to a REIT, and we can provide no assurance that a REIT conversion, if completed, will be successfully implemented or achieve the intended benefits.

Guidance

For the third quarter of 2013 the Company expects net revenue to be approximately $320 million to $323 million. On a pro forma basis this represents an increase of approximately 1% to 2%.

Forward Looking Statements

This press release contains forward-looking statements, including the statements regarding guidance for the third quarter of 2013 and our consideration of an election to real estate investment trust status. 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 state of the economy and financial markets generally and the effect of the broader economy 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) our ability to qualify as a REIT. For additional information regarding factors that may cause actual results to differ materially from those indicated in our forward-looking statements, we refer you to the risk factors included in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012, as supplemented by any risk factors contained in our Quarterly Reports on Form 10-Q. 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

Adjusted 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 income (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 Adjusted 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 8, 2013 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 1-334-323-9871
Pass Code: Lamar
   
Replay: 1-334-323-7226
Pass Code: 36185060
  Available through Tuesday, August 13, 2013 at 11:59 p.m. eastern time
   
Live Webcast: www.lamar.com
   
Webcast Replay: www.lamar.com
  Available through Tuesday, August 13, 2013 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 approximately 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,
  2013 2012 2013 2012
         
Net revenues $ 324,684 $ 304,872 $ 608,163 $ 571,110
         
Operating expenses (income)        
Direct advertising expenses (exclusive of depreciation and amortization) 110,723 105,071 217,242 208,494
General and administrative expenses (exclusive of depreciation and amortization and non-cash compensation) 52,131 49,590 106,393 100,904
Corporate expenses (exclusive of depreciation and amortization and non-cash compensation) 13,444 11,972 26,145 23,631
Non-cash compensation 6,422 4,421 17,195 7,033
Depreciation and amortization 72,408 72,995 146,309 145,368
Gain on disposition of assets (701) (3,634) (1,307) (4,570)
  254,427 240,415 511,977 480,860
Operating income  70,257 64,457 96,186 90,250
         
Other expense (income)        
Loss on extinguishment of debt 29,972
Interest income (51) (65) (79) (123)
Interest expense 37,887 38,633 74,587 78,547
  37,836 38,568 74,508 108,396
         
Income (loss) before income tax  32,421 25,889 21,678 (18,146)
Income tax expense (benefit)  11,166 11,967 6,493 (9,252)
         
         
Net income (loss) 21,255 13,922 15,185 (8,894)
Preferred stock dividends 91 91 182 182
Net income (loss) applicable to common stock $ 21,164 $ 13,831 $ 15,003 ($ 9,076)
         
Earnings per share:        
Basic income (loss) per share $ 0.22 $ 0.15 $ 0.16 ($ 0.10)
Diluted income (loss) per share $ 0.22 $ 0.15 $ 0.16 ($ 0.10)
         
Weighted average common shares outstanding:        
- basic 94,337,967 93,257,798 94,157,464 93,186,036
- diluted 94,813,138 93,543,471 94,593,760 93,498,748
         
OTHER DATA         
Free Cash Flow Computation:        
Adjusted EBITDA $ 148,386 $ 138,239 $ 258,383 $ 238,081
Interest, net (33,650) (34,294) (67,416) (69,653)
Current tax expense (972) (338) (1,385) (783)
Preferred stock dividends (91) (91) (182) (182)
Total capital expenditures (1) (26,933) (29,795) (52,721) (49,542)
Free cash flow $ 86,740 $ 73,721 $ 136,679 $ 117,921
(1)See the capital expenditures detail included        
 below for a breakdown by category.        
       June 30,  December 31,
      2013 2012
Selected Balance Sheet Data:        
Cash and cash equivalents     $ 118,880 $ 58,911
Working capital (deficit)     (157,999) 103,778
Total assets     3,558,521 3,514,030
Total debt (including current maturities)     2,148,918 2,160,854
Total stockholders' equity     909,197 874,833
     
     
  Three months ended   Six months ended
  June 30,   June 30,
  2013 2012 2013 2012
         
Other Data:        
Cash flows provided by operating activities $ 100,233 $ 97,321 $ 151,954 $ 134,023
Cash flows used in investing activities (52,897) (35,054) (82,252) (59,094)
Cash flows (used in) provided by financing activities (3,360) 1,143 (8,811) (9,452)
         
         
Reconciliation of Free Cash Flow to Cash Flows Provided by Operating Activities:        
Cash flows provided by operating activities $ 100,233 $ 97,321 $ 151,954 $ 134,023
Changes in operating assets and liabilities 15,355 8,063 40,729 36,362
Total capital expenditures (26,933) (29,795) (52,721) (49,542)
Preferred stock dividends (91) (91) (182) (182)
Other (1,824) (1,777) (3,101) (2,740)
Free cash flow $ 86,740 $ 73,721 $ 136,679 $ 117,921
         
         
Reconciliation of Adjusted EBITDA to Net income (loss):        
Adjusted EBITDA $ 148,386 $ 138,239 $ 258,383 $ 238,081
Less:        
Non-cash compensation 6,422 4,421 17,195 7,033
Depreciation and amortization 72,408 72,995 146,309 145,368
Gain on disposition of assets (701) (3,634) (1,307) (4,570)
Operating Income 70,257 64,457 96,186 90,250
         
Less:        
Interest income (51) (65) (79) (123)
Loss on extinguishment of debt 29,972
Interest expense 37,887 38,633 74,587 78,547
Income tax expense (benefit) 11,166 11,967 6,493 (9,252)
Net income (loss) $ 21,255 $ 13,922 $ 15,185 ($ 8,894)
         
     
     
  Three months ended  
  June 30,  
  2013 2012 % Change 
Reconciliation of Reported Basis to Pro Forma (a) Basis:      
Reported net revenue $ 324,684 $ 304,872 6.5%
Acquisitions and divestitures 11,417  
Pro forma net revenue $ 324,684 $ 316,289  2.7%
       
Reported direct advertising and G&A expenses $ 162,854 $ 154,661 5.3%
Acquisitions and divestitures 6,225  
Pro forma direct advertising and G&A expenses $ 162,854 $ 160,886 1.2%
       
Reported outdoor operating income $ 161,830 $ 150,211 7.7%
Acquisitions and divestitures 5,192  
Pro forma outdoor operating income $ 161,830 $ 155,403 4.1%
       
Reported corporate expenses $ 13,444 $ 11,972 12.3%
Acquisitions and divestitures  
Pro forma corporate expenses $ 13,444 $ 11,972 12.3%
       
Reported Adjusted EBITDA $ 148,386 $ 138,239 7.3%
Acquisitions and divestitures 5,192  
Pro forma Adjusted EBITDA $ 148,386 $ 143,431 3.5%
 
(a) Pro forma net revenues, direct advertising and general and administrative expenses, outdoor operating income, corporate expenses and Adjusted EBITDA include adjustments to 2012 for acquisitions and divestitures for the same time frame as actually owned in 2013.
   
  Three months ended
  June 30,
  2013 2012
Reconciliation of Outdoor Operating Income to Operating Income:    
 Outdoor operating income $ 161,830 $ 150,211
 Less: Corporate expenses 13,444 11,972
Non-cash compensation 6,422 4,421
Depreciation and amortization 72,408 72,995
 Plus: Gain on disposition of assets 701 3,634
Operating income $ 70,257 $ 64,457
     
     
  Three months ended  Six months ended
  June 30, June 30,
  2013 2012 2013 2012
Capital expenditure detail by category        
Billboards - traditional $ 6,258 $ 9,955 $ 12,476 $ 15,021
Billboards - digital 11,980 12,152 23,603 20,062
Logo 2,244 1,961 4,107 3,280
Transit 8 63 28 84
Land and buildings 2,824 3,230 5,608 4,915
Operating equipment 3,619 2,434 6,899 6,180
Total capital expenditures $ 26,933 $ 29,795 $ 52,721 $ 49,542
CONTACT: Keith A. Istre
Chief Financial Officer
(225) 926-1000
KI@lamar.com

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