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 first quarter ended March
31, 2014.
First Quarter Results
Lamar reported net revenues of $284.9 million for the first
quarter of 2014 versus $276.6 million for the first quarter of
2013, a 3.0% increase. Operating income for the first quarter of
2014 was $31.1 million as compared to $19.1 million for the same
period in 2013. Lamar recognized a net loss of $4.8 million for the
first quarter of 2014 compared to a net loss of $10.3 million for
same period in 2013.
Adjusted EBITDA (defined as operating income before non-cash
compensation, depreciation and amortization and gain on disposition
of assets) for the first quarter of 2014 was $104.4 million versus
$103.1 million for the first quarter of 2013, a 1.2% 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) for the
first quarter of 2014 was $51.1 million as compared to $43.1
million for the same period in 2013, a 18.6% increase.
Pro forma adjusted net revenue for the first quarter of 2014
increased 1.9% and pro forma Adjusted EBITDA increased 0.4% as
compared to the first quarter of 2013. Pro forma adjusted net
revenue and pro forma Adjusted EBITDA include adjustments to the
2013 period for acquisitions and divestitures for the same time
frame as actually owned in the 2014 period. Pro forma adjusted net
revenue, pro forma Adjusted EBITDA and pro forma adjusted outdoor
operating income in the 2013 and 2014 periods have also been
adjusted to reflect revenue recognition on a monthly basis over the
term of each advertising contract. Commencing with the fourth
quarter of 2013, the Company is recognizing revenue on a daily
basis. See "Reconciliation of Reported Basis to Pro Forma Basis" on
page 7 of this release, which presents pro forma adjusted net
revenue after acquisition adjustments and without giving effect to
the change to daily revenue recognition.
The Company is introducing the following metrics, which are
widely recognized by REIT investors: Funds From Operations (FFO)
and Adjusted Funds From Operations (AFFO). For the first quarter of
2014, FFO was $60.4 million versus $59.3 million for the first
quarter of 2013, a 1.8% increase. AFFO for the first quarter of
2014 was $58.8 million compared to $50.2 million for the same
period in 2013, a 17.2% increase.1 Our calculations of FFO and AFFO
have not been adjusted to reflect changes to our tax expense that
will be made if we qualify and elect to be taxed as a REIT. In
which case, our tax expense would be lower than our historical
effective tax rates.
1 See "Use of Non‑GAAP Financial Measures" below for additional
information and the Company's definitions of FFO and AFFO.
Guidance
For the second quarter of 2014, the Company expects adjusted net
revenue (recognized on a monthly basis) to be approximately $331
million to $334 million. On a pro forma adjusted basis this
represents an increase of approximately 1% to 2%. The Company will
continue to provide adjusted net revenue guidance for 2014 based on
monthly revenue recognition consistent with past practice.
Liquidity
As of March 31, 2014, Lamar had $461.7 million in total
liquidity that consists of $393.0 million available for borrowing
under its revolving senior credit facility and approximately $68.7
million in cash and cash equivalents.
Recent Transactions
Term A Loans and Note Redemption. On April 18, 2014, the senior
credit facility of Lamar's wholly owned subsidiary, Lamar Media
Corp., was amended to create a new $300 million Term A Loan
facility. Lamar Media borrowed all $300 million in Term A loans on
April 18, 2014 and the net loan proceeds, together with borrowings
under the revolving portion of its senior credit facility and cash
on hand, were used to fund the redemption of all $400 million in
aggregate principal amount of Lamar Media's 7 7/8% Senior
Subordinated Notes due 2018 on April 21, 2014.
Forward Looking Statements
This press release contains forward-looking statements,
including the statements regarding guidance for the second quarter
of 2014. 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) our ability to qualify as a REIT and maintain our
status as a REIT assuming we successfully qualify; (6) the
regulation of the outdoor advertising industry by federal, state
and local governments; (7) the integration of companies that we
acquire and our ability to recognize cost savings or operating
efficiencies as a result of these acquisitions; (8) changes in
accounting principles, policies or guidelines; (9) changes in tax
laws applicable to REITs or in the interpretation of those laws;
(10) our ability to renew expiring contracts at favorable rates;
(11) our ability to successfully implement our digital deployment
strategy; and (12) the market for our Class A common stock. 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, 2013, 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 Financial Measures
The Company has presented the following measures that are not
measures of performance under accounting principles generally
accepted in the United States of America ("GAAP"): Adjusted EBITDA,
Free Cash Flow, Funds From Operations, Adjusted Funds From
Operations, adjusted pro forma results and outdoor operating
income. The Company defines Funds From Operations as net income
before real estate depreciation and amortization, gains on loss
from disposition of real estate assets and investments and an
adjustment to eliminate non‑controlling interest. The Company
defines Adjusted Funds From Operations as Funds From Operations
before straight‑line (revenue) expense, stock‑based compensation
expense, non‑cash tax expense (benefit), non‑real estate related
depreciation and amortization, amortization of deferred financing
and debt issuance costs, loss on extinguishment of debt,
non-recurring, infrequent or unusual losses (gains), less
maintenance capital expenditures and an adjustment for
non‑controlling interest. These measures are not intended to
replace financial performance measures determined in accordance
with GAAP and should not be considered alternatives to operating
income, net income, 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, Funds From Operations, Adjusted Funds From
Operations, adjusted 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. Management
also deems the presentation of monthly revenue recognition useful
to allow investors to see the impact of an immaterial change to its
revenue recognition policy and to provide pro forma results that
are comparable with prior periods and in line with the Company's
presentation of market guidance. Our presentation of these measures
may not be comparable to similarly titled measures used by other
companies. See "Supplemental Schedules—Reconciliations of Non-GAAP
Measures," which provides reconciliations of each of these measures
to the most directly comparable GAAP measure.
Conference Call Information
A conference call will be held to discuss the Company's
operating results on Wednesday, May 7, 2014 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: |
1-334-323-0140 |
Pass
Code: |
39098824 |
|
Available through Wednesday, May 14, 2014 at
11:59 p.m. eastern time |
|
|
Live
Webcast: |
www.lamar.com |
|
|
Webcast
Replay: |
www.lamar.com |
|
Available through Wednesday, May 14, 2014 at
11:59 p.m. eastern time |
|
|
Company Contact: |
Buster Kantrow |
|
Director of Investor Relations |
|
(225) 926-1000 |
|
bkantrow@lamar.com |
|
|
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 23 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 March 31, |
|
2014 |
2013 |
|
|
|
Net revenues |
$ 284,933 |
$ 276,605 |
|
|
|
|
|
|
Operating expenses (income) |
|
|
Direct advertising
expenses |
111,508 |
106,519 |
General and administrative
expenses |
54,949 |
54,262 |
Corporate expenses |
14,100 |
12,701 |
Non-cash compensation |
3,912 |
10,773 |
Depreciation and
amortization |
69,526 |
73,901 |
Gain on disposition of
assets |
(206) |
(606) |
|
253,789 |
257,550 |
Operating income |
31,144 |
19,055 |
|
|
|
|
|
|
Other expense (income) |
|
|
Interest income |
(45) |
(28) |
Loss on extinguishment of
debt |
5,176 |
— |
Other-than-temporary impairment
of investment |
4,069 |
— |
Interest expense |
30,268 |
36,700 |
|
39,468 |
36,672 |
Loss before income tax benefit |
(8,324) |
(17,617) |
Income tax benefit |
(3,487) |
(7,354) |
|
|
|
|
|
|
Net loss |
(4,837) |
(10,263) |
Preferred stock dividends |
91 |
91 |
Net loss applicable to common stock |
$ (4,928) |
$ (10,354) |
|
|
|
|
|
|
Earnings per share: |
|
|
Basic loss per share |
$ (0.05) |
$ (0.11) |
Diluted loss per share |
$ (0.05) |
$ (0.11) |
|
|
|
Weighted average common shares
outstanding: |
|
|
- basic |
94,906,018 |
93,974,956 |
- diluted |
95,368,995 |
94,350,240 |
|
|
|
OTHER DATA |
|
|
Free Cash Flow Computation: |
|
|
Adjusted EBITDA |
$ 104,376 |
$ 103,123 |
Interest, net |
(28,940) |
(33,766) |
Current tax expense |
(1,878) |
(413) |
Preferred stock dividends |
(91) |
(91) |
Total capital expenditures |
(22,398) |
(25,788) |
Free cash flow |
$ 51,069 |
$ 43,065 |
|
|
|
|
|
|
OTHER DATA
(continued): |
|
|
|
|
|
|
March 31, |
December 31, |
Selected Balance Sheet Data: |
2014 |
2013 |
Cash and cash equivalents |
$ 68,741 |
$ 33,212 |
Working capital |
$ 140,503 |
$ 36,705 |
Total assets |
$ 3,426,578 |
$ 3,401,618 |
Total debt (including current
maturities) |
$ 1,946,761 |
$ 1,938,802 |
Total stockholders' equity |
$ 942,058 |
$ 932,946 |
|
|
|
|
|
|
|
Three months ended March
31, |
|
2014 |
2013 |
Selected Cash Flow Data: |
|
|
Cash flows provided by operating
activities |
$ 62,584 |
$ 51,721 |
Cash flows used in investing activities |
$ (25,772) |
$ (29,355) |
Cash flows used in financing activities |
$ (637) |
$ (5,451) |
|
|
|
|
|
SUPPLEMENTAL SCHEDULES |
UNAUDITED RECONCILIATIONS OF
NON-GAAP MEASURES |
(IN THOUSANDS) |
|
|
Three months ended March
31, |
Reconciliation of Free Cash Flow to Cash
Flows Provided by Operating Activities: |
2014 |
2013 |
Cash flows provided by operating
activities |
$ 62,584 |
$ 51,721 |
Changes in operating assets and
liabilities |
12,574 |
18,500 |
Total capital expenditures |
(22,398) |
(25,788) |
Preferred stock dividends |
(91) |
(91) |
Other |
(1,600) |
(1,277) |
Free cash flow |
$ 51,069 |
$ 43,065 |
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to Net
Loss: |
|
|
Adjusted EBITDA |
$ 104,376 |
$ 103,123 |
Less: |
|
|
Non-cash compensation |
3,912 |
10,773 |
Depreciation and
amortization |
69,526 |
73,901 |
Gain on disposition of
assets |
(206) |
(606) |
Operating Income |
31,144 |
19,055 |
|
|
|
|
|
|
Less: |
|
|
Interest income |
(45) |
(28) |
Loss on extinguishment of
debt |
5,176 |
— |
Other-than-temporary impairment
of investment |
4,069 |
— |
Interest expense |
30,268 |
36,700 |
Income tax benefit |
(3,487) |
(7,354) |
Net loss |
$ (4,837) |
$ (10,263) |
|
|
|
|
|
|
Capital expenditure detail by category: |
|
|
Billboards - traditional |
$ 4,618 |
$ 6,218 |
Billboards - digital |
9,798 |
11,623 |
Logo |
1,868 |
1,863 |
Transit |
90 |
20 |
Land and buildings |
3,301 |
2,784 |
Operating Equipment |
2,723 |
3,280 |
Total capital expenditures |
$ 22,398 |
$ 25,788 |
|
|
|
|
|
SUPPLEMENTAL SCHEDULES |
UNAUDITED RECONCILIATIONS OF
NON-GAAP MEASURES |
(IN THOUSANDS) |
|
|
Three months ended March
31, |
|
|
2014 |
2013 |
% Change |
Reconciliation of Reported Basis to Pro
Forma(a) Basis: |
|
|
|
Net revenue (daily basis) |
$ 284,933 |
$ 276,605 |
3.0% |
Conversion from daily to monthly |
7,841 |
6,874 |
|
Adjusted net revenue |
$ 292,774 |
$ 283,479 |
3.3% |
Acquisitions and divestitures |
— |
3,957 |
|
Pro forma adjusted net revenue (monthly
basis) |
$ 292,774 |
$ 287,436 |
1.9% |
|
|
|
|
Reported direct advertising and G&A
expenses |
$ 166,457 |
$ 160,781 |
3.5% |
Acquisitions and divestitures |
— |
2,219 |
|
Pro forma direct advertising and G&A
expenses |
$ 166,457 |
$ 163,000 |
2.1% |
|
|
|
|
Outdoor operating income (daily basis) |
$ 118,476 |
$ 115,824 |
2.3% |
Conversion from daily to monthly |
7,841 |
6,874 |
|
Adjusted outdoor operating income |
$ 126,317 |
$ 122,698 |
2.9% |
Acquisitions and divestitures |
— |
1,738 |
|
Pro forma adjusted outdoor operating income
(monthly basis) |
$ 126,317 |
$ 124,436 |
1.5% |
|
|
|
|
Reported corporate expenses |
$ 14,100 |
$ 12,701 |
11.0% |
Acquisitions and divestitures |
— |
— |
|
Pro forma corporate expenses |
$ 14,100 |
$ 12,701 |
11.0% |
|
|
|
|
Adjusted EBITDA (daily basis) |
$ 104,376 |
$ 103,123 |
1.2% |
Conversion from daily to monthly |
7,841 |
6,874 |
|
Adjusted EBITDA |
$ 112,217 |
$ 109,997 |
2.0% |
Acquisitions and divestitures |
— |
1,738 |
|
Pro forma Adjusted EBITDA (monthly
basis) |
$ 112,217 |
$ 111,735 |
0.4% |
|
|
|
|
(a) Pro forma adjusted net revenue, direct advertising and
general and administrative expenses, outdoor operating income,
corporate expenses and Adjusted EBITDA include adjustments to 2013
for acquisitions and divestitures for the same time frame as
actually owned in 2014. Pro forma adjusted net revenue,
outdoor operating income and Adjusted EBITDA have also been
adjusted to reflect revenue recognition on a monthly basis
(eliminating the effect of an immaterial correction) in both the
2013 and 2014 periods.
|
Three months ended March
31, |
|
2014 |
2013 |
Reconciliation of Outdoor Operating Income to
Operating Income: |
|
|
Outdoor operating income |
$ 118,476 |
$ 115,824 |
Less: Corporate expenses |
14,100 |
12,701 |
Non-cash
compensation |
3,912 |
10,773 |
Depreciation and
amortization |
69,526 |
73,901 |
Plus: Gain on disposition of assets |
206 |
606 |
Operating income |
$ 31,144 |
$ 19,055 |
|
|
UNAUDITED PRO FORMA REIT
MEASURES |
AND RECONCILIATIONS TO GAAP
MEASURES |
(IN THOUSANDS) |
|
|
Three months ended |
|
March 31, |
|
2014 |
2013 |
|
|
|
Net loss |
$ (4,837) |
$ (10,263) |
Depreciation and amortization
related to advertising structures |
65,175 |
69,882 |
Gain from disposition of real
estate assets |
(24) |
(518) |
Adjustment for minority
interest – consolidated affiliates |
77 |
221 |
Funds From Operations |
$ 60,391 |
$ 59,322 |
Non-cash effect of
straight-line rent |
(52) |
(136) |
Stock-based compensation
expense |
3,912 |
10,773 |
Non-cash tax benefit |
(5,365) |
(7,767) |
Non-real estate related
depreciation and amortization |
4,351 |
4,019 |
Amortization of deferred
financing and debt issuance costs |
1,283 |
2,906 |
Loss on extinguishment of
debt |
5,176 |
— |
Loss from other-than-temporary
impairment of investment |
4,069 |
— |
Capitalized
expenditures—maintenance |
(14,874) |
(18,706) |
Adjustment for minority
interest – consolidated affiliates |
(77) |
(221) |
|
|
|
Adjusted Funds From Operations |
$ 58,814 |
$ 50,190 |
|
|
|
Given the Company's preparation for potential election of REIT
status for the taxable year beginning January 1, 2014, two widely
recognized metrics of operating performance for REITs, Funds From
Operations (FFO) and Adjusted Funds From Operations (AFFO), are
presented above. The calculation of FFO is based on the
definition as set forth by the National Association of Real Estate
Investment Trusts (NAREIT). A reconciliation of net income to
FFO and the calculation of AFFO, which are non‑GAAP financial
measures, are also presented above. The measures of FFO and
AFFO may not be comparable to those reported by REITs that do not
compute these measures in accordance with the NAREIT definitions,
or that interpret those definitions differently than the Company
does. Our net loss reflects our current status as a regular
domestic C Corporation for U.S. Federal Income Tax
purposes. If we qualify and elect to be taxed as a REIT, our
tax expense would be lower than our historical effective tax
rates.
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