Three Month Results

  • Net revenue increased 4.8% to $418.5 million
  • Net income was $94.1 million
  • Adjusted EBITDA increased 5.3% to $192.5 million

Three Month Acquisition-Adjusted Results

  • Acquisition-adjusted net revenue increased 3.1%  
  • Acquisition-adjusted EBITDA increased 3.0%

                                                             

BATON ROUGE, La., Nov. 08, 2018 (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 third quarter ended September 30, 2018.

"We delivered healthy revenue growth in the third quarter and are encouraged by our Q4 pacings, which indicate even more robust sales growth," said Chief Executive Sean Reilly. "Consequently, we are tracking to finish 2018 at the upper end of or slightly above our revised guidance for full year diluted AFFO of $5.30 to $5.40 per share."  

Third Quarter Highlights

  • Same unit digital revenue increased 7.2%
  • AFFO increased 9.1%
  • Diluted AFFO per share increased 7.9%

Third Quarter Results
Lamar reported net revenues of $418.5 million for the third quarter of 2018 versus $399.3 million for the third quarter of 2017, a 4.8% increase.  Operating income for the third quarter of 2018 decreased $3.4 million to $128.4 million as compared to $131.7 million for the same period in 2017, primarily due to increases in non-cash stock-based compensation expense of $6.6 million and depreciation and amortization expense of $3.3 million. Lamar recognized net income of $94.1 million for the third quarter of 2018 compared to net income of $96.3 million for same period in 2017.  Net income per diluted share was $0.95 and $0.98 for the three months ended September 30, 2018 and 2017, respectively.

Adjusted EBITDA for the third quarter of 2018 was $192.5 million versus $182.8 million for the third quarter of 2017, an increase of 5.3%.

Cash flow provided by operating activities was $154.3 million for the three months ended September 30, 2018, an increase of $28.4 million as compared to the same period in 2017.  Free cash flow for the third quarter of 2018 was $130.7 million as compared to $122.2 million for the same period in 2017, a 7.0% increase. 

For the third quarter of 2018, Funds From Operations, or FFO, was $146.6 million versus $142.4 million for the same period in 2017, an increase of 3.0%.   Adjusted Funds From Operations, or AFFO, for the third quarter of 2018 was $150.1 million compared to $137.5 million for the same period in 2017, an increase of 9.1%.   Diluted AFFO per share increased 7.9% to $1.51 for the three months ended September 30, 2018 as compared to $1.40 for the same period in 2017.

Acquisition-Adjusted Three Months Results
Acquisition-adjusted net revenue for the third quarter of 2018 increased 3.1% over Acquisition-adjusted net revenue for the third quarter of 2017.  Acquisition-adjusted EBITDA for the third quarter of 2018 increased 3.0% as compared to Acquisition-adjusted EBITDA for the third quarter of 2017.  Acquisition-adjusted net revenue and Acquisition-adjusted EBITDA include adjustments to the 2017 period for acquisitions and divestitures for the same time frame as actually owned in the 2018 period.  See “Reconciliation of Reported Basis to Acquisition-Adjusted Results”, which provides reconciliations to GAAP for Acquisition-adjusted measures.

Nine Months Results
Lamar reported net revenues of $1.20 billion for the nine months ended September 30, 2018 versus $1.14 billion for the same period in 2017, a 4.9% increase.  Operating income for the nine months ended September 30, 2018 decreased to $329.9 million as compared to $335.4 million for the same period in 2017, primarily due to increases in non-cash stock-based compensation expense of $15.7 million and depreciation and amortization expense of $12.2 million.  Lamar recognized net income of $209.5 million for the nine months ended September 30, 2018 as compared to net income of $230.5 million for the same period in 2017.  Net income per diluted share decreased to $2.12 for the nine months ended September 30, 2018 as compared to $2.34 for the same period in 2017.  In addition, Adjusted EBITDA for the nine months ended September 30, 2018 was $527.2 million versus $493.0 million for the same period in 2017, a 6.9% increase.

Cash flow provided by operating activities increased to $370.1 million for the nine months ended September 30, 2018, as compared to $320.6 million in the same period in 2017. Free cash flow for the nine months ended September 30, 2018 increased 8.6% to $345.0 million as compared to $317.7 million for the same period in 2017.

For the nine months ended September 30, 2018, FFO was $376.2 million versus $373.0 million for the same period in 2017, a 0.9% increase.  AFFO for the nine months ended September 30, 2018 was $397.0 million compared to $360.5 million for the same period in 2017, a 10.1% increase.  Diluted AFFO per share increased to $4.02 for the nine months ended September 30, 2018, as compared to $3.67 in the same period in 2017, an increase of 9.5%.

Liquidity
As of September 30, 2018, Lamar had $342.6 million in total liquidity that consisted of $332.0 million available for borrowing under its revolving senior credit facility and approximately $10.6 million in cash and cash equivalents.

Forward Looking Statements
This press release contains forward-looking statements, including statements regarding sales trends.  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 continue to qualify as a Real Estate Investment Trust (“REIT”) and maintain our status as a REIT; (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, 2017, as supplemented by any risk factors contained in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K.  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 (earnings before interest, taxes, depreciation and amortization), Free Cash Flow, Funds From Operations (“FFO”), Adjusted Funds From Operations (“AFFO”), Diluted AFFO per share, Outdoor Operating Income and Acquisition-Adjusted Results.  Our management reviews our performance by focusing on these key performance indicators not prepared in conformity with GAAP. We believe these non-GAAP performance indicators are meaningful supplemental measures of our operating performance and should not be considered in isolation of, or as a substitute for their most directly comparable GAAP financial measures.

Our Non-GAAP financial measures are determined as follows:

  • We define Adjusted EBITDA as net income before income tax expense (benefit), interest expense (income), loss (gain) on extinguishment of debt and investments, stock-based compensation, depreciation and amortization and gain or loss on disposition of assets and investments.
     
  • Free Cash Flow is defined as Adjusted EBITDA less interest, net of interest income and amortization of deferred financing costs, current taxes, preferred stock dividends and total capital expenditures.

  • We use the National Association of Real Estate Investment Trusts definition of FFO, which is defined as net income before gains or losses from the sale or disposal of real estate assets and investments and real estate related depreciation and amortization and including adjustments to eliminate unconsolidated affiliates and non-controlling interest.

  • We define AFFO as FFO before (i) straight-line revenue and expense; (ii) stock-based compensation expense; (iii) non-cash portion of tax provision; (iv) non-real estate related depreciation and amortization; (v) amortization of deferred financing costs; (vi) loss on extinguishment of debt; (vii) non-recurring infrequent or unusual losses (gains); (viii) less maintenance capital expenditures; and (ix) an adjustment for unconsolidated affiliates and non-controlling interest.

  • Diluted AFFO per share is defined as AFFO divided by Weighted average diluted common shares outstanding.  

  • Outdoor Operating Income is defined as Operating Income before corporate expenses, stock-based compensation, depreciation and amortization and loss (gain) on disposition of assets. 

  • Acquisition-Adjusted Results adjusts our net revenue, direct and general and administrative expenses, outdoor operating income, corporate expense and EBITDA for the prior period by adding to, or subtracting from, the corresponding revenue or expense generated by the acquired assets or divested before our acquisition or divestiture of these assets for the same time frame that those assets were owned in the current period. In calculating Acquisition-Adjusted Results, therefore, we include revenue and expenses generated by assets that we did not own in the prior period but acquired in the current period. We refer to the amount of pre-acquisition revenue and expense generated by or subtracted from  the acquired assets during the prior period that corresponds with the current period in which we owned the assets (to the extent within the period to which this report relates) as “Acquisition-Adjusted Results”.

Adjusted EBITDA, FFO, AFFO, Outdoor Operating Income and Acquisition-Adjusted Results are not intended to replace other performance measures determined in accordance with GAAP.  Free Cash Flow, FFO nor AFFO represent cash flows from operating activities in accordance with GAAP and, therefore, these measures should not be considered indicative of cash flows from operating activities as a measure of liquidity or of funds available to fund our cash needs, including our ability to make cash distributions. Adjusted EBITDA, Free Cash Flow, FFO, AFFO, Diluted AFFO per share, Outdoor Operating Income and Acquisition-Adjusted Results are presented as we believe each is a useful indicator of our current operating performance. Specifically, we believe that these metrics are useful to an investor in evaluating our operating performance because (1) each is a key measure used by our management team for purposes of decision making and for evaluating our core operating results; (2) Adjusted EBITDA is widely used in the industry to measure operating performance as it excludes the impact of depreciation and amortization, which may vary significantly among companies, depending upon accounting methods and useful lives, particularly where acquisitions and non-operating factors are involved; (3) Adjusted EBITDA, FFO, AFFO and Diluted AFFO per share each provides investors with a meaningful measure for evaluating our period-over-period operating performance by eliminating items that are not operational in nature and reflect the impact on operations from trends in occupancy rates, operating costs, general and administrative expenses and interest costs; (4) Acquisition-Adjusted Results is a supplement to enable investors to compare period-over-period results on a more consistent basis without the effects of acquisitions and divestures, which reflects our core performance and organic growth (if any) during the period in which the assets were owned and managed by us; (5) Free Cash Flow is an indicator of our ability to service debt and generate cash for acquisitions and other strategic investments; (6) Outdoor Operating Income provides investors a measurement of our core results without the impact of fluctuations in stock-based compensation, depreciation and amortization and corporate expenses; and (7) each of our Non-GAAP measures provides investors with a measure for comparing our results of operations to those of other companies.

Our measurement of Adjusted EBITDA, FFO, AFFO, Outdoor Operating Income and Acquisition-Adjusted Results may not, however, be fully comparable to similarly titled measures used by other companies. Reconciliations of Adjusted EBITDA, FFO, AFFO, Outdoor Operating Income and Acquisition-Adjusted Results to the most directly comparable GAAP measures have been included herein.

Conference Call Information
A conference call will be held to discuss the Company’s operating results on Thursday, November 8, 2018 at 8:00 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
Passcode:  Lamar
   
Replay:    1-334-323-0140 or 1-877-919-4059
Passcode:
 
 70196432
Available through Thursday, November 15, 2018 at 11:59 p.m. eastern time 
   
Live Webcast:      www.lamar.com 
   
Webcast Replay:

 www.lamar.com 
Available through Thursday, November 15, 2018 at 11:59 p.m. eastern time
   
Company Contact:


 
 Buster Kantrow
Director of Investor Relations
(225) 926-1000
bkantrow@lamar.com
   


General Information

Founded in 1902, Lamar Advertising (Nasdaq: LAMR) is one of the largest outdoor advertising companies in North America, with more than 348,000 displays across the United States and Canada. Lamar offers advertisers a variety of billboard, interstate logo, transit and airport advertising formats, helping both local businesses and national brands reach broad audiences every day. In addition to its more traditional out-of-home inventory, Lamar is proud to offer its customers the largest network of digital billboards in the United States with over 2,900 displays.


LAMAR ADVERTISING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

  Three months ended
  September 30,
 Nine months ended
  September 30,
   2018   2017   2018   2017 
        
Net revenues$  418,498  $   399,345  $  1,199,324  $   1,142,785  
                 
        
Operating expenses (income)       
 Direct advertising expenses   140,699     134,977      419,776     401,896 
 General and administrative expenses   70,214     66,588      205,734     200,160 
 Corporate expenses    15,104     14,983      46,608      47,683 
 Stock-based compensation   8,624      2,017      22,745      7,060 
 Depreciation and amortization   55,089     51,796      167,251      155,003 
 Loss (gain) on disposition of assets    407      (2,734)      7,265      (4,377) 
                 
      290,137      267,627      869,379       807,425 
                 
 Operating income   128,361     131,718      329,945      335,360 
         
Other (income) expense       
 Loss on extinguishment of debt    —     —      15,429      71 
 Interest income    (157)     (2)      (313)      (6) 
 Interest expense    31,850      32,064      97,321      95,526 
      31,693      32,062      112,437      95,591 
                 
Income before income tax expense   96,668     99,656       217,508     239,769  
Income tax expense 2,612   3,325   7,969   9,257 
                 
Net income 94,056   96,331   209,539   230,512 
Preferred stock dividends 91   91   273   273 
Net income applicable to common stock$93,965  $96,240  $209,266  $230,239 
                 
        
Earnings per share:       
  Basic earnings per share$0.95  $0.98  $2.12  $2.35 
  Diluted earnings per share$0.95  $0.98  $2.12  $2.34 
                
Weighted average common shares outstanding:
  - basic
  - diluted
 98,943,535
   99,253,008
   98,044,523
 98,490,277
   98,596,828
  98,870,116
   97,855,642
   98,340,248
 
OTHER DATA 
Free Cash Flow Computation:
Adjusted EBITDA
Interest, net
Current tax expense 
Preferred stock dividends




192,481
(30,479)
  (1,474)
  (91)
  $


 
182,797
   (30,819)
   (3,096)
   (91)
 

 

 




 
527,206
  (93,346)
  (6,394)
  (273)
  $


 
 493,046
  (91,654)
  (8,998)
  (273)
 
Total capital expenditures (29,701)   (26,610)   (82,174)   (74,446) 
Free Cash Flow$130,736  $122,181  $345,019  $317,675 
                



       
  OTHER DATA (continued):      
       
 

 
    September 30,December 31,
  Selected Balance Sheet Data:    20182017
  Cash and cash equivalents    $10,609 $115,471
Working capital    $109,914 $94,525
Total assets    $4,124,620 $4,214,345
Total debt, net of deferred financing costs (including current maturities)    $2,545,881 $2,556,690
Total stockholders’ equity    $1,096,959 $1,103,493
       
       
 Three months ended
  September 30,
 Nine months ended
  September 30,
  2018  2017  2018  2017
Selected Cash Flow Data:      
Cash flows provided by operating activities$154,305 $125,885 $370,089 $320,638
Cash flows used in investing activities$58,904 $117,669 $120,326 $191,029
Cash flows used in financing activities$104,381 $22,650 $353,943 $137,487
       



SUPPLEMENTAL SCHEDULES
UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES
(IN THOUSANDS)

 Three months ended Nine months ended
 September 30, September 30,
  2018   2017   2018   2017 
Reconciliation of  Cash Flows Provided by Operating Activities       
   to Free Cash Flow:       
Cash flows provided by operating activities$154,305  $125,885  $370,089  $320,638 
Changes in operating assets and liabilities 7,830   25,610   62,924   77,765 
Total capital expenditures (29,701)  (26,610)  (82,174)  (74,446)
Preferred stock dividends (91)  (91)  (273)  (273)
Other (1,607)  (2,613)  (5,547)  (6,009)
  Free cash flow$130,736  $122,181  $345,019  $317,675 
        
        
        
Reconciliation of  Net Income to Adjusted EBITDA:       
Net Income$94,056  $96,331  $209,539  $230,512 
  Loss on extinguishment of debt       15,429   71 
  Interest income (157)  (2)  (313)  (6)
  Interest expense 31,850   32,064   97,321   95,526 
  Income tax expense  2,612   3,325   7,969   9,257 
Operating Income 128,361   131,718   329,945   335,360 
        
Stock-based compensation 8,624   2,017   22,745   7,060 
Depreciation and amortization 55,089   51,796   167,251   155,003 
  Loss (gain) on disposition of assets 407   (2,734)  7,265   (4,377)
Adjusted EBITDA$192,481  $182,797  $527,206  $493,046 
        
        
        
Capital expenditure detail by category:       
  Billboards - traditional$8,715  $10,161  $23,922  $23,700 
  Billboards - digital 13,093   8,605   33,210   29,568 
  Logo 1,895   2,498   7,000   6,409 
  Transit 3,637   290   4,377   578 
  Land and buildings 593   3,682   6,622   8,196 
  Operating equipment 1,768   1,374   7,043   5,995 
  Total capital expenditures$29,701  $26,610  $82,174  $74,446 
        



SUPPLEMENTAL SCHEDULES
UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES
(IN THOUSANDS)

   Three months ended
   September 30,
 
  2018  2017 % Change
Reconciliation of Reported Basis to Acquisition-Adjusted Results (a):     
 Net revenue$  418,498 $  399,345 4.8%
Acquisitions and divestitures   —     6,672   
Acquisition-adjusted net revenue$  418,498 $  406,017 3.1%
      
Reported direct advertising and G&A expenses$  210,913 $  201,565 4.6%
Acquisitions and divestitures   —      2,549   
Acquisition-adjusted direct advertising and G&A expenses$  210,913 $  204,114 3.3%
      
Outdoor operating income$  207,585 $  197,780 5.0%
Acquisitions and divestitures   —      4,123   
Acquisition-adjusted outdoor operating income$  207,585 $  201,903 2.8%
      
Reported corporate expenses$    15,104 $    14,983  0.8%
Acquisitions and divestitures   —     —   
Acquisition-adjusted corporate expenses$   15,104 $   14,983 0.8%
      
Adjusted EBITDA$  192,481 $  182,797 5.3%
Acquisitions and divestitures   —     4,123   
Acquisition-adjusted  EBITDA$  192,481 $  186,920 3.0%
      

 (a)  Acquisition-adjusted net revenue, direct advertising and general and administrative expenses, outdoor operating income, corporate expenses and EBITDA include adjustments to 2017 for acquisitions and divestitures for the same time frame as actually owned in 2018. 

  Three months ended
   September 30,
   2018  2017 
Reconciliation of  Net Income to Outdoor Operating Income:    
Net Income $   94,056 $   96,331 
  Interest expense, net     31,693    32,062 
  Income tax expense     2,612    3,325 
Operating Income     128,361     131,718 
     
Corporate expenses     15,104     14,983  
  Stock-based compensation     8,624     2,017 
  Depreciation and amortization     55,089    51,796  
  Loss (gain) on disposition of assets     407  (2,734)
Outdoor Operating Income $ 207,585 $197,780 
        


SUPPLEMENTAL SCHEDULES
UNAUDITED REIT MEASURES
AND RECONCILIATIONS TO GAAP MEASURES
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Adjusted Funds From Operations:

 Three months ended Nine months ended 
   September 30,    September 30, 
  2018     2017   2018     2017 
        
 Net income$94,056  $96,331  $209,539  $230,512 
 Depreciation and amortization related to real estate 52,032   48,613   157,941   145,999 
 Loss (gain) from disposition of real estate assets and investments (tax effected) 505   (2,707)  8,350   (4,114)
  Adjustment for unconsolidated affiliates and non-controlling interest 43   190   385   580 
Funds From Operations$146,636  $142,427  $376,215  $372,977 
        
 Straight-line expense (income) 737   (287)  (220)  (382)
 Stock-based compensation expense 8,624   2,017   22,745   7,060 
 Non-cash portion of tax provision 1,138   229   697   259 
 Non-real estate related depreciation and amortization  3,057   3,183   9,310   9,004 
 Amortization of deferred financing costs  1,214   1,243   3,662   3,866 
 Loss on extinguishment of debt       15,429   71 
 Capitalized expenditures—maintenance (11,248)  (11,082)  (30,453)  (31,760)
 Adjustment for unconsolidated affiliates and non-controlling interest (43)  (190)  (385)  (580)
        
Adjusted Funds From Operations$150,115  $137,540  $397,000  $360,515 
        
Divided by weighted average diluted common shares outstanding  99,253,008   98,490,277   98,870,116   98,340,248 
Diluted AFFO per share$  1.51  $1.40  $4.02  $3.67