LAMR Lamar Advertising Company

Three Month Results

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, 2015.

“We are encouraged by our first quarter results, which have us tracking to the high end of our previously provided full-year goals for sales and AFFO,” said Lamar chief executive, Sean Reilly.  “We were able to build on the sales momentum we saw at the end of 2014 while limiting expense growth.  In particular, I am pleased by the continued growth in our local billboard sales.”

First Quarter Highlights

- Local revenue on billboards increased 6.7%- National revenue on billboards increased 2.5%- Pro forma analog bulletin revenue grew 3.5%- Pro forma consolidated expense growth held to 1.0%

First Quarter Results

Lamar reported net revenues of $302.5 million for the first quarter of 2015 versus $284.9 million for the first quarter of 2014, a 6.2% increase.  Operating income for the first quarter of 2015 was $67.3 million as compared to $31.1 million for the same period in 2014.  Lamar recognized net income of $40.7 million for the first quarter of 2015 compared to a net loss of $4.8 million for same period in 2014.  Net income (loss) per basic and diluted share was $0.42 per share and $(0.05) per share for the three months ended March 31, 2015 and 2014, respectively.

Adjusted EBITDA for the first quarter of 2015 was $118.5 million versus $104.4 million for the first quarter of 2014, a 13.6% increase. 

Free Cash Flow for the first quarter of 2015 was $62.9 million as compared to $51.1 million for the same period in 2014, a 23.1% increase. 

For the first quarter of 2015, Funds From Operations, or FFO, was $84.6 million versus $60.4 million for the same period in 2014, an increase of 40.0%.   Adjusted Funds From Operations, or AFFO, for first quarter of 2015 was $78.9 million compared to $58.8 million for the same period in 2014, a 34.1% increase.  Diluted AFFO per share was $0.82 per share and $0.62 per share for the three months ended March 31, 2015 and 2014, respectively.

Q1 Pro Forma Results Pro forma adjusted net revenue for the first quarter of 2015 increased 5.2% over pro forma adjusted net revenue for the first quarter of 2014.  Pro forma adjusted EBITDA increased 12.3% as compared to pro forma adjusted EBITDA for the first quarter of 2014.  Pro forma adjusted net revenue and pro forma adjusted EBITDA include adjustments to the 2014 period for acquisitions and divestitures for the same time frame as actually owned in the 2015 period.  See “Reconciliation of Reported Basis to Pro Forma Basis”, which provides reconciliations to GAAP for adjusted and pro forma measures included in  this release.

Liquidity

As of March 31, 2015, Lamar had $303.7 million in total liquidity that consisted of $271.2 million available for borrowing under its revolving senior credit facility and approximately $32.5 million in cash and cash equivalents. 

Forward Looking Statements

This press release contains forward-looking statements, including statements regarding guidance for fiscal year 2015 and 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 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, 2014, 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, (AFFO), Diluted AFFO per share, adjusted pro forma results and outdoor operating income.  Adjusted EBITDA is defined as net income before income tax expense (benefit), interest expense (income), gain (loss) 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 financing costs, current taxes, preferred stock dividends and total capital expenditures.  Funds From Operations is defined as net income before real estate depreciation and amortization, gains or loss from disposition of real estate assets and investments and an adjustment to eliminate non‑controlling interest, which is the definition used by the National Association of Real Estate Investment Trusts (NAREIT).  Adjusted Funds From Operations is defined as Funds From Operations adjusted for 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.  Diluted AFFO per share is defined as AFFO divided by the weighted average diluted common shares outstanding.  Outdoor operating income is defined as operating income before corporate expenses, stock-based compensation, depreciation and amortization and gain on disposition of assets.  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, Diluted AFFO per share, 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.   Our presentation of these non-GAAP measures, including AFFO and FFO, may not be comparable to similarly titled measures used by similarly situated companies. See “Supplemental Schedules—Unaudited Reconciliation of Non-GAAP Measures” and “Supplemental Schedules—Unaudited REIT Measures and Reconciliations to GAAP Measures”, which provides a reconciliation 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 6, 2015 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 1-334-323-9871Pass Code: LamarReplay: 1-334-323-0140 or 1-877-919-4059Pass Code: 13746130Available through Wednesday, May 13, 2015 at 11:59 p.m. eastern time

Live Webcast: www.lamar.comWebcast Replay: www.lamar.comAvailable through Wednesday, May 13, 2015 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 23 states and the province of Ontario, Canada and approximately 70 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,
					2015				2014
Net revenues			$		302,477		$		284,933
Operating expenses (income)
Direct advertising expenses					113,232				111,508
General and administrative expenses					56,527				54,949
Corporate expenses					14,169				14,100
Stock-based compensation					3,901				3,912
Depreciation and amortization					49,230				69,526
Gain on disposition of assets					(1,836	)			(206	)
					235,223				253,789
Operating income					67,254				31,144
Other expense (income)
Interest income					(2	)			(45	)
Loss on extinguishment of debt				—					5,176
Other-than-temporary impairment of investment				—					4,069
Interest expense					24,532				30,268
					24,530				39,468
Income (loss) before income tax expense (benefit)					42,724				(8,324	)
Income tax expense (benefit)					2,008				(3,487	)
Net income (loss)					40,716				(4,837	)
Preferred stock dividends					91				91
Net income (loss) applicable to common stock			$		40,625		$		(4,928	)
Earnings per share:
Basic earnings (loss) per share			$		0.42		$		(0.05	)
Diluted earnings (loss) per share			$		0.42		$		(0.05	)
Weighted average common shares outstanding:
- basic					95,704,850				94,906,018
- diluted					95,742,148				95,368,995
OTHER DATA
Free Cash Flow Computation:
Adjusted EBITDA			$		118,549		$		104,376
Interest, net					(23,372	)			(28,940	)
Current tax expense					(3,195	)			(1,878	)
Preferred stock dividends					(91	)			(91	)
Total capital expenditures					(29,041	)			(22,398	)
Free cash flow			$		62,850		$		51,069
OTHER DATA (continued):
				March 31,				December 31,
Selected Balance Sheet Data:					2015				2014
Cash and cash equivalents			$		32,546		$		26,035
Working capital			$		103,708		$		47,803
Total assets			$		3,355,224		$		3,318,818
Total debt (including current maturities)			$		1,953,171		$		1,899,895
Total stockholders’ equity			$		981,188		$		981,466
				Three months ended
				March 31,
					2015				2014
Selected Cash Flow Data:
Cash flows provided by operating activities			$		54,731		$		62,584
Cash flows used in investing activities			$		(44,270	)	$		(25,772	)
Cash flows used in financing activities			$		(2,819	)	$		(637	)

 

 

SUPPLEMENTAL SCHEDULES
UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES
(IN THOUSANDS)
				Three months endedMarch 31,
Reconciliation of  Free Cash Flow to Cash Flows Provided by Operating Activities:					2015				2014
Cash flows provided by operating activities			$		54,731		$		62,584
Changes in operating assets and liabilities					38,923				12,574
Total capital expenditures					(29,041	)			(22,398	)
Preferred stock dividends					(91	)			(91	)
Other					(1,672	)			(1,600	)
Free cash flow			$		62,850		$		51,069
Reconciliation of  Adjusted EBITDA to Net Income (Loss):
Adjusted EBITDA			$		118,549		$		104,376
Less:
Stock-based compensation					3,901				3,912
Depreciation and amortization					49,230				69,526
Gain on disposition of assets					(1,836	)			(206	)
Operating income					67,254				31,144
Less:
Interest income					(2	)			(45	)
Loss on extinguishment of debt				—					5,176
Other-than-temporary impairment of investment				—					4,069
Interest expense					24,532				30,268
Income tax expense (benefit)					2,008				(3,487	)
Net income (loss)			$		40,716		$		(4,837	)
Capital expenditure detail by category:
Billboards - traditional			$		5,809		$		4,618
Billboards - digital					14,262				9,798
Logo					2,942				1,868
Transit					130				90
Land and buildings					3,171				3,301
Operating equipment					2,727				2,723
Total capital expenditures			$		29,041		$		22,398

SUPPLEMENTAL SCHEDULES
UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES
(IN THOUSANDS)
		Three months ended   March 31,
		2015		2014		% Change
Reconciliation of Reported Basis to Pro Forma(a) Basis:
Net revenue	$	302,477	$	284,933			6.2	%
Acquisitions and divestitures		—		2,722
Pro forma adjusted net revenue	$	302,477	$	287,655			5.2	%
Reported direct advertising and G&A expenses	$	169,759	$	166,457			2.0	%
Acquisitions and divestitures		—		1,552
Pro forma direct advertising and G&A expenses	$	169,759	$	168,009			1.0	%
Outdoor operating income	$	132,718	$	118,476			12.0	%
Acquisitions and divestitures		—		1,170
Pro forma adjusted outdoor operating income	$	132,718	$	119,646			10.9	%
Reported corporate expenses	$	14,169	$	14,100			0.5	%
Acquisitions and divestitures		—		—
Pro forma corporate expenses	$	14,169	$	14,100			0.5	%
Adjusted EBITDA	$	118,549	$	104,376			13.6	%
Acquisitions and divestitures		—		1,170
Pro forma adjusted EBITDA	$	118,549	$	105,546			12.3	%

 (a)  Pro forma adjusted net revenue, direct advertising and general and administrative expenses, outdoor operating income, corporate expenses and Adjusted EBITDA include adjustments to 2014 for acquisitions and divestitures for the same time frame as actually owned in 2015. 

		Three months ended March 31,
		2015		2014
Reconciliation of Outdoor Operating Income to Operating Income:
Outdoor operating income	$	132,718	$	118,476
Less:  Corporate expenses		14,169		14,100
Stock-based compensation		3,901		3,912
Depreciation and amortization		49,230		69,526
Plus:  Gain on disposition of assets		1,836		206
Operating income	$	67,254	$	31,144

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
					March 31,
						2015				2014
Net income (loss)				$		40,716		$		(4,837	)
Depreciation and amortization related to advertising structures						45,414				65,175
Gain from disposition of real estate assets						(1,742	)			(24	)
Adjustment for minority interest – consolidated affiliates						167				77
Funds From Operations				$		84,555		$		60,391
Straight-line expense						(36	)			(52	)
Stock-based compensation expense						3,901				3,912
Non-cash tax benefit						(1,187	)			(5,365	)
Non-real estate related depreciation and amortization						3,816				4,351
Amortization of deferred financing and debt issuance costs						1,158				1,283
Loss on extinguishment of debt					—					5,176
Loss from other-than-temporary impairment of investment					—					4,069
Capitalized expenditures-maintenance						(13,156	)			(14,874	)
Adjustment for minority interest–consolidated affiliates						(167	)			(77	)
Adjusted Funds From Operations				$		78,884		$		58,814
Divided by weighted average diluted shares outstanding						95,742,148				95,368,995
Diluted AFFO per share				$		0.82		$		0.62

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