EX-99.1 2 d785416dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

5321 Corporate Boulevard

Baton Rouge, LA 70808

Lamar Advertising Company Announces

Second Quarter 2019 Operating Results

Three Month Results

 

   

Net revenue increased 6.9% to $448.7 million

 

   

Net income increased $18.0 million to $118.4 million

 

   

Adjusted EBITDA increased 6.2% to $207.9 million

Three Month Acquisition-Adjusted Results

 

   

Acquisition-adjusted net revenue increased 2.4%

 

   

Acquisition-adjusted EBITDA increased 2.1%

Baton Rouge, LA – Wednesday, August 7, 2019 - 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, 2019.

“While June finished up a little softer than we anticipated, we are seeing stronger pacings in the back half of 2019 and are maintaining our previously provided guidance for full year AFFO per share,” said CEO Sean Reilly. “In addition, the acquisition pipeline remains robust with over $200 million in outdoor assets purchased so far this year.”

Second Quarter Highlights

 

   

Local revenue increased 4.3%

 

   

Same unit digital revenue increased 4.3%

 

   

AFFO increased 2.4%

 

   

Diluted AFFO per share increased 1.3%

Second Quarter Results

Lamar reported net revenues of $448.7 million for the second quarter of 2019 versus $419.8 million for the second quarter of 2018, a 6.9% increase. Operating income for the second quarter of 2019 increased $8.4 million to $144.1 million as compared to $135.7 million for the same period in 2018. Lamar recognized net income of $118.4 million for the second quarter of 2019 compared to net income of $100.4 million for same period in 2018. Net income per diluted share was $1.18 and $1.02 for the three months ended June 30, 2019 and 2018, respectively.

Adjusted EBITDA for the second quarter of 2019 was $207.9 million versus $195.8 million for the second quarter of 2018, an increase of 6.2%.

Cash flow provided by operating activities was $176.3 million for the three months ended June 30, 2019, an increase of $1.3 million as compared to the same period in 2018. Free cash flow for the second quarter of 2019 remained consistent with the same period in 2018 at $132.9 million.

For the second quarter of 2019, Funds From Operations, or FFO, was $159.3 million versus $150.9 million for the same period in 2018, an increase of 5.5%. Adjusted Funds From Operations, or AFFO, for the second quarter of 2019 was $154.1 million compared to $150.5 million for the same period in 2018, an increase of 2.4%. Diluted AFFO per share increased 1.3% to $1.54 for the three months ended June 30, 2019 as compared to $1.52 for the same period in 2018.

 

1


Acquisition-Adjusted Three Months Results

Acquisition-adjusted net revenue for the second quarter of 2019 increased 2.4% over Acquisition-adjusted net revenue for the second quarter of 2018. Acquisition-adjusted EBITDA for the second quarter of 2019 increased 2.1% as compared to Acquisition-adjusted EBITDA for the second quarter of 2018. Acquisition-adjusted net revenue and Acquisition-adjusted EBITDA include adjustments to the 2018 period for acquisitions and divestitures for the same time frame as actually owned in the 2019 period. See “Reconciliation of Reported Basis to Acquisition-Adjusted Results”, which provides reconciliations to GAAP for Acquisition-adjusted measures.

Six Months Results

Lamar reported net revenues of $833.2 million for the six months ended June 30, 2019 versus $780.8 million for the same period in 2018, a 6.7% increase. Operating income for the six months ended June 30, 2019 was $234.9 million as compared to $201.6 million for the same period in 2018. Lamar recognized net income of $169.6 million for the six months ended June 30, 2019 as compared to net income of $115.5 million for the same period in 2018. Net income per diluted share increased to $1.69 for the six months ended June 30, 2019 as compared to $1.17 for the same period in 2018. In addition, Adjusted EBITDA for the six months ended June 30, 2019 was $354.1 million versus $334.7 million for the same period in 2018, a 5.8% increase.

Cash flow provided by operating activities increased to $237.0 million for the six months ended June 30, 2019, as compared to $215.8 million in the same period in 2018. Free cash flow for the six months ended June 30, 2019 increased 0.6% to $215.6 million as compared to $214.3 million for the same period in 2018.

For the six months ended June 30, 2019, FFO was $264.3 million versus $229.6 million for the same period in 2018, a 15.1% increase. AFFO for the six months ended June 30, 2019 was $253.0 million compared to $246.9 million for the same period in 2018, a 2.5% increase. Diluted AFFO per share increased to $2.53 for the six months ended June 30, 2019, as compared to $2.50 in the same period in 2018, an increase of 1.2%.

Liquidity

As of June 30, 2019, Lamar had $429.2 million in total liquidity that consisted of $411.9 million available for borrowing under its revolving senior credit facility and approximately $17.3 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 and assets 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/A for the year ended December 31, 2018, 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.

 

2


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, gain or loss on disposition of assets and investments and the impact of adopting FASB Accounting Standard Update No. 2016-02 Codified as ASC 842, Leases.

 

   

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) impact of ASC 842 adoption; (iii) stock-based compensation expense; (iv) non-cash portion of tax provision; (v) non-real estate related depreciation and amortization; (vi) amortization of deferred financing costs; (vii) loss on extinguishment of debt; (viii) non-recurring infrequent or unusual losses (gains); (ix) less maintenance capital expenditures; and (x) 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 or divested assets 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, Diluted AFFO per share, Outdoor Operating Income and Acquisition-Adjusted Results are not intended to replace other performance measures determined in accordance with GAAP. Free Cash Flow, FFO and AFFO do not 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 divestitures, 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.

 

3


Our measurement of Adjusted EBITDA, FFO, AFFO, Diluted AFFO per share, 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, Diluted AFFO per share, 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 Wednesday, August 7, 2019 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:    30864334
   Available through Wednesday, August 14, 2019 at 11:59 p.m. eastern time
Live Webcast:    www.lamar.com
Webcast Replay:    www.lamar.com
   Available through Wednesday, August 14, 2019 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 over 360,000 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 3,400 displays.

 

4


LAMAR ADVERTISING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

     Three months ended
June 30,
    Six months ended
June 30,
 
     2019     2018     2019     2018  

Net revenues

   $ 448,742     $ 419,800     $ 833,199     $ 780,826  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses (income)

        

Direct advertising expenses

     148,990       140,784       293,234       279,077  

General and administrative expenses

     75,687       67,435       153,199       135,520  

Corporate expenses

     16,130       15,791       32,707       31,504  

Stock-based compensation

     5,273       6,607       7,506       14,121  

Impact of ASC 842 adoption (lease accounting standard)

     (2,600     —         (6,374     —    

Depreciation and amortization

     61,693       55,322       123,199       112,162  

(Gain) loss on disposition of assets

     (537     (1,843     (5,161     6,858  
  

 

 

   

 

 

   

 

 

   

 

 

 
     304,636       284,096       598,310       579,242  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     144,106       135,704       234,889       201,584  

Other expense (income)

        

Loss on extinguishment of debt

     —         —         —         15,429  

Interest income

     (232     (132     (385     (156

Interest expense

     38,322       31,892       75,917       65,471  
  

 

 

   

 

 

   

 

 

   

 

 

 
     38,090       31,760       75,532       80,744  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

     106,016       103,944       159,357       120,840  

Income tax (benefit) expense

     (12,380     3,513       (10,292     5,357  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     118,396       100,431       169,649       115,483  

Preferred stock dividends

     91       91       182       182  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income applicable to common stock

   $ 118,305     $ 100,340     $ 169,467     $ 115,301  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic earnings per share

   $ 1.18     $ 1.02     $ 1.70     $ 1.17  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 1.18     $ 1.02     $ 1.69     $ 1.17  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

- basic

     100,012,827       98,532,110       99,862,452       98,417,467  

- diluted

     100,222,082       98,834,588       100,058,054       98,725,475  

OTHER DATA

        

Free Cash Flow Computation:

        

Adjusted EBITDA

   $ 207,935     $ 195,790     $ 354,059     $ 334,725  

Interest, net

     (36,752     (30,554     (72,862     (62,867

Current tax expense

     (3,533     (2,989     (4,829     (4,920

Preferred stock dividends

     (91     (91     (182     (182

Total capital expenditures

     (34,609     (29,221     (60,560     (52,473
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow

   $ 132,950     $ 132,935     $ 215,626     $ 214,283  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

5


OTHER DATA (continued):

 

     June 30,      December 31,  

Selected Balance Sheet Data:

   2019      2018  

Cash and cash equivalents

   $ 17,254      $ 21,494  

Working capital (deficit)

   $ (302,316    $ (91,366

Total assets

   $ 5,799,165      $ 4,544,641  

Total debt, net of deferred financing costs (including current maturities)

   $ 2,972,502      $ 2,888,688  

Total stockholders’ equity

   $ 1,139,295      $ 1,131,784  

 

     Three months ended
June 30,
     Six months ended
June 30,
 
     2019      2018      2019      2018  

Selected Cash Flow Data:

           

Cash flows provided by operating activities

   $ 176,323      $ 175,012      $ 237,049      $ 215,784  

Cash flows used in investing activities

   $ 46,070      $ 32,569      $ 137,145      $ 61,422  

Cash flows used in financing activities

   $ 145,930      $ 132,515      $ 104,347      $ 249,562  

 

6


SUPPLEMENTAL SCHEDULES

UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES

(IN THOUSANDS)

 

     Three months ended
June 30,
    Six months ended
June 30,
 
     2019     2018     2019     2018  

Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow:

        

Cash flows provided by operating activities

   $ 176,323     $ 175,012     $ 237,049     $ 215,784  

Changes in operating assets and liabilities

     (3,819     (11,031     50,350       55,094  

Total capital expenditures

     (34,609     (29,221     (60,560     (52,473

Preferred stock dividends

     (91     (91     (182     (182

Impact of ASC 842 adoption (lease accounting standard)

     (2,600     —         (6,374     —    

Other

     (2,254     (1,734     (4,657     (3,940
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 132,950     $ 132,935     $ 215,626     $ 214,283  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Net Income to Adjusted EBITDA:

        

Net Income

   $ 118,396     $ 100,431     $ 169,649     $ 115,483  

Loss on extinguishment of debt

     —         —         —         15,429  

Interest income

     (232     (132     (385     (156

Interest expense

     38,322       31,892       75,917       65,471  

Income tax (benefit) expense

     (12,380     3,513       (10,292     5,357  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     144,106       135,704       234,889       201,584  

Stock-based compensation

     5,273       6,607       7,506       14,121  

Impact of ASC 842 adoption (lease accounting standard)

     (2,600     —         (6,374     —    

Depreciation and amortization

     61,693       55,322       123,199       112,162  

(Gain) loss on disposition of assets

     (537     (1,843     (5,161     6,858  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 207,935     $ 195,790     $ 354,059     $ 334,725  
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital expenditure detail by category:

        

Billboards - traditional

   $ 13,431     $ 8,420     $ 22,693     $ 15,207  

Billboards - digital

     14,418       11,815       26,037       20,117  

Logo

     2,492       2,653       3,904       5,105  

Transit

     617       368       1,796       740  

Land and buildings

     1,208       2,598       1,696       6,029  

Operating equipment

     2,443       3,367       4,434       5,275  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total capital expenditures

   $ 34,609     $ 29,221     $ 60,560     $ 52,473  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

7


SUPPLEMENTAL SCHEDULES

UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES

(IN THOUSANDS)

 

     Three months ended
June 30,
        
     2019      2018      % Change  

Reconciliation of Reported Basis to Acquisition-Adjusted Results (a):

        

Net revenue

   $ 448,742      $ 419,800        6.9

Acquisitions and divestitures

     —          18,230     
  

 

 

    

 

 

    

Acquisition-adjusted net revenue

   $ 448,742      $ 438,030        2.4

Reported direct advertising and G&A expenses (b)

   $ 224,677      $ 208,219        7.9

Acquisitions and divestitures

     —          10,348     
  

 

 

    

 

 

    

Acquisition-adjusted direct advertising and G&A expenses

   $ 224,677      $ 218,567        2.8

Outdoor operating income

   $ 224,065      $ 211,581        5.9

Acquisitions and divestitures

     —          7,882     
  

 

 

    

 

 

    

Acquisition-adjusted outdoor operating income

   $ 224,065      $ 219,463        2.1

Reported corporate expenses

   $ 16,130      $ 15,791        2.1

Acquisitions and divestitures

     —          —       
  

 

 

    

 

 

    

Acquisition-adjusted corporate expenses

   $ 16,130      $ 15,791        2.1

Adjusted EBITDA

   $ 207,935      $ 195,790        6.2

Acquisitions and divestitures

     —          7,882     
  

 

 

    

 

 

    

Acquisition-adjusted EBITDA

   $ 207,935      $ 203,672        2.1
  

 

 

    

 

 

    

 

(a)

Acquisition-adjusted net revenue, direct advertising and general and administrative expenses, outdoor operating income, corporate expenses and EBITDA include adjustments to 2018 for acquisitions and divestitures for the same time frame as actually owned in 2019.

(b)

Does not include a $2,600 reduction of expense due to impact of ASC 842 for lease accounting.

 

     Three months ended
June 30,
 
     2019      2018  

Reconciliation of Net Income to Outdoor Operating Income:

     

Net Income

   $ 118,396      $ 100,431  

Interest expense, net

     38,090        31,760  

Income tax (benefit) expense

     (12,380      3,513  
  

 

 

    

 

 

 

Operating Income

     144,106        135,704  

Corporate expenses

     16,130        15,791  

Stock-based compensation

     5,273        6,607  

Impact of ASC 842 adoption (lease accounting standard)

     (2,600      —    

Depreciation and amortization

     61,693        55,322  

Gain on disposition of assets

     (537      (1,843
  

 

 

    

 

 

 

Outdoor Operating Income

   $ 224,065      $ 211,581  
  

 

 

    

 

 

 

 

8


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     Six months ended  
    June 30,     June 30,  
    2019     2018     2019     2018  

Net income

  $ 118,396     $ 100,431     $ 169,649     $ 115,483  

Depreciation and amortization related to real estate

    58,178       52,184       116,178       105,909  

(Gain) loss from disposition of real estate assets

    (410     (1,848     (4,884     7,845  

Non-cash tax benefit for REIT converted assets

    (17,031     —         (17,031     —    

Adjustment for unconsolidated affiliates and non-controlling interest

    156       147       354       342  
 

 

 

   

 

 

   

 

 

   

 

 

 

Funds From Operations

  $ 159,289     $ 150,914     $ 264,266     $ 229,579  
 

 

 

   

 

 

   

 

 

   

 

 

 

Straight-line expense (income)

    20       (680     (216     (957

Impact of ASC 842 adoption (lease accounting standard)

    (2,600           (6,374     —    

Stock-based compensation expense

    5,273       6,607       7,506       14,121  

Non-cash portion of tax provision expense (benefit)

    1,118       581       1,910       (441

Non-real estate related depreciation and amortization

    3,515       3,138       7,021       6,253  

Amortization of deferred financing costs

    1,338       1,206       2,670       2,448  

Loss on extinguishment of debt

    —         —         —         15,429  

Capitalized expenditures—maintenance

    (13,689     (11,080     (23,396     (19,205

Adjustment for unconsolidated affiliates and non-controlling interest

    (156     (147     (354     (342
 

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Funds From Operations

  $ 154,108     $ 150,539     $ 253,033     $ 246,885  
 

 

 

   

 

 

   

 

 

   

 

 

 

Divided by weighted average diluted common shares outstanding

    100,222,082       98,834,588       100,058,054       98,725,475  
 

 

 

   

 

 

   

 

 

   

 

 

 

Diluted AFFO per share

  $ 1.54     $ 1.52     $ 2.53     $ 2.50  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

9