• Lamar Advertising Company Announces First Quarter Ended March 31, 2023 Operating Results

    Source: Nasdaq GlobeNewswire / 04 May 2023 06:00:00   America/New_York

    Three Month Results

    • Net revenue was $471.3 million
    • Net income was $76.2 million
    • Adjusted EBITDA was $198.0 million

    BATON ROUGE, La., May 04, 2023 (GLOBE NEWSWIRE) -- Lamar Advertising Company (the “Company” or “Lamar”) (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, 2023.

    "The first quarter unfolded largely as expected, with steady local sales offsetting weakness on the national front," Lamar chief executive Sean Reilly said. "Looking ahead, while April saw some slight softening in business activity, we remain confident in the midpoint of our guidance because of the hard work our team has done managing expenses."

    First Quarter Highlights

    • Net revenue increased 4.4%
    • Adjusted EBITDA increased 3.5%
    • Diluted AFFO per share decreased 6.0%

    First Quarter Results

    Lamar reported net revenues of $471.3 million for the first quarter of 2023 versus $451.4 million for the first quarter of 2022, a 4.4% increase. Operating income for the first quarter of 2023 decreased $1.7 million to $118.8 million as compared to $120.5 million for the same period in 2022. Lamar recognized net income of $76.2 million for the first quarter of 2023 as compared to net income of $92.2 million for same period in 2022, a decrease of $16.0 million, primarily related to an increase in interest expense of $14.7 million over the same period in 2022. Net income per diluted share was $0.74 and $0.91 for the three months ended March 31, 2023 and 2022, respectively.

    Adjusted EBITDA for the first quarter of 2023 was $198.0 million versus $191.2 million for the first quarter of 2022, an increase of 3.5%.

    Cash flow provided by operating activities was $108.7 million for the three months ended March 31, 2023 versus $102.0 million for the first quarter of 2022, an increase of $6.7 million. Free cash flow for the first quarter of 2023 was $113.3 million as compared to $134.5 million for the same period in 2022, a 15.8% decrease.

    For the first quarter of 2023, funds from operations, or FFO, was $143.5 million versus $156.3 million for the same period in 2022, a decrease of 8.2%. Adjusted funds from operations, or AFFO, for the first quarter of 2023 was $144.1 million compared to $151.9 million for the same period in 2022, a decrease of 5.2%. Diluted AFFO per share decreased 6.0% to $1.41 for the three months ended March 31, 2023 as compared to $1.50 for the same period in 2022.

    Acquisition-Adjusted Three Months Results

    Acquisition-adjusted net revenue for the first quarter of 2023 increased 1.5% over acquisition-adjusted net revenue for the first quarter of 2022. Acquisition-adjusted EBITDA for the first quarter of 2023 increased 0.8% as compared to acquisition-adjusted EBITDA for the first quarter of 2022. Acquisition-adjusted net revenue and acquisition-adjusted EBITDA include adjustments to the 2022 period for acquisitions and divestitures for the same time frame as actually owned in the 2023 period. See “Reconciliation of Reported Basis to Acquisition-Adjusted Results”, which provides reconciliations to GAAP for acquisition-adjusted measures.

    Liquidity

    As of March 31, 2023, Lamar had $663.0 million in total liquidity that consisted of $625.9 million available for borrowing under its revolving senior credit facility, $3.6 million under its Accounts Receivable Securitization Program and $33.5 million in cash and cash equivalents. There were $115.0 million in borrowings outstanding under the Company’s revolving credit facility and $234.8 million outstanding under the Accounts Receivable Securitization Program as of the same date.

    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, including inflationary pressures 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 for the year ended December 31, 2022, 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 earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), free cash flow, funds from operations (“FFO”), adjusted funds from operations (“AFFO”), diluted AFFO per share, outdoor operating income, acquisition-adjusted results and acquisition-adjusted consolidated expense. 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, equity in earnings (loss) of investees, stock-based compensation, depreciation and amortization, gain or loss on disposition of assets, transaction expenses and investments and capitalized contract fulfillment costs, net.
    • Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenues.
    • 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) capitalized contract fulfillment costs, net; (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) transaction expenses; (ix) non-recurring infrequent or unusual losses (gains); (x) less maintenance capital expenditures; and (xi) 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, capitalized contract fulfillment costs, net, transaction expenses, 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”.
    • Acquisition-adjusted consolidated expense adjusts our total operating expense to remove the impact of stock-based compensation, depreciation and amortization, transaction expenses, capitalized contract fulfillment costs, net, and loss (gain) on disposition of assets and investments. The prior period is also adjusted to include the expense generated by the acquired or divested assets before our acquisition or divestiture of such assets for the same time frame that those assets were owned in the current period.

    Adjusted EBITDA, FFO, AFFO, diluted AFFO per share, free cash flow, outdoor operating income, acquisition-adjusted results and acquisition-adjusted consolidated expense 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, acquisition-adjusted results and acquisition-adjusted consolidated expense 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, diluted AFFO per share and acquisition-adjusted consolidated expense 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.

    Our measurement of adjusted EBITDA, FFO, AFFO, diluted AFFO per share, free cash flow, outdoor operating income, acquisition-adjusted results and acquisition-adjusted consolidated expense may not, however, be fully comparable to similarly titled measures used by other companies. Reconciliations of adjusted EBITDA, FFO, AFFO, diluted AFFO per share, free cash flow, outdoor operating income, acquisition-adjusted results and acquisition-adjusted consolidated expense 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, May 4, 2023 at 8:00 a.m. central time. Instructions for the conference call and Webcast are provided below:

    Conference Call

    All Callers:1-800-420-1271 or 1-785-424-1634
    Passcode:63104
      
    Live Webcast:www.lamar.com/About/Investors/Presentations
      
    Webcast Replay:www.lamar.com/About/Investors/Presentations
     Available through Thursday, May 11, 2023 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 approximately 363,000 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 4,500 displays.


    LAMAR ADVERTISING COMPANY AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (UNAUDITED)
    (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
     
     Three Months Ended
    March 31,
      2023   2022 
    Net revenues$471,332  $451,388 
    Operating expenses (income)   
    Direct advertising expenses 167,758   156,826 
    General and administrative expenses 80,882   81,763 
    Corporate expenses 24,740   21,553 
    Stock-based compensation 8,040   1,780 
    Capitalized contract fulfillment costs, net 674   946 
    Depreciation and amortization 73,125   68,627 
    Gain on disposition of assets (2,688)  (563)
    Total operating expense 352,531   330,932 
    Operating income 118,801   120,456 
    Other expense (income)   
    Interest income (461)  (215)
    Interest expense 41,444   26,786 
    Equity in earnings of investee (178)  (746)
      40,805   25,825 
    Income before income tax expense 77,996   94,631 
    Income tax expense 1,798   2,480 
    Net income 76,198   92,151 
    Earnings attributable to non-controlling interest 157    
    Net income attributable to controlling interest 76,041   92,151 
    Preferred stock dividends 91   91 
    Net income applicable to common stock$75,950  $92,060 
    Earnings per share:   
    Basic earnings per share$0.75  $0.91 
    Diluted earnings per share$0.74  $0.91 
    Weighted average common shares outstanding:   
    Basic 101,792,317   101,339,558 
    Diluted 101,963,563   101,540,213 
    OTHER DATA   
    Free Cash Flow Computation:   
    Adjusted EBITDA$197,952  $191,246 
    Interest, net (39,341)  (25,100)
    Current tax expense (2,950)  (2,822)
    Preferred stock dividends (91)  (91)
    Total capital expenditures (42,285)  (28,759)
    Free cash flow$113,285  $134,474 




    SUPPLEMENTAL SCHEDULES
     
    SELECTED BALANCE SHEET AND CASH FLOW DATA
    (IN THOUSANDS)
     
     March 31,
    2023
     December 31,
    2022
    Selected Balance Sheet Data:   
    Cash and cash equivalents$33,522  $52,619 
    Working capital deficit$(321,540) $(361,485)
    Total assets$6,441,785  $6,475,214 
    Total debt, net of deferred financing costs (including current maturities)$3,369,129  $3,312,805 
    Total stockholders’ equity$1,160,687  $1,195,374 


     Three Months Ended
    March 31,
      2023   2022 
    Selected Cash Flow Data:   
    Cash flows provided by operating activities$108,712  $102,038 
    Cash flows used in investing activities$52,664  $83,342 
    Cash flows used in financing activities$75,155  $2,713 



    SUPPLEMENTAL SCHEDULES
    UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES
    (IN THOUSANDS)
     
     Three Months Ended
    March 31,
      2023   2022 
    Reconciliation of Cash Flows Provided by Operating Activities to Free Cash Flow:   
    Cash flows provided by operating activities$108,712  $102,038 
    Changes in operating assets and liabilities 47,672   60,301 
    Total capital expenditures (42,285)  (28,759)
    Preferred stock dividends (91)  (91)
    Capitalized contract fulfillment costs, net 674   946 
    Other (1,397)  39 
    Free cash flow$113,285  $134,474 
        
    Reconciliation of Net Income to Adjusted EBITDA:   
    Net income$76,198  $92,151 
    Interest income (461)  (215)
    Interest expense 41,444   26,786 
    Equity in earnings of investee (178)  (746)
    Income tax expense 1,798   2,480 
    Operating income 118,801   120,456 
    Stock-based compensation 8,040   1,780 
    Capitalized contract fulfillment costs, net 674   946 
    Depreciation and amortization 73,125   68,627 
    Gain on disposition of assets (2,688)  (563)
    Adjusted EBITDA$197,952  $191,246 
        
    Capital expenditure detail by category:   
    Billboards - traditional$13,538  $8,132 
    Billboards - digital 17,432   13,336 
    Logo 3,140   2,408 
    Transit 719   490 
    Land and buildings 4,174   1,489 
    Operating equipment 3,282   2,904 
    Total capital expenditures$42,285  $28,759 



    SUPPLEMENTAL SCHEDULES
     
    UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES
    (IN THOUSANDS)
     
      Three Months Ended
    March 31,
       2023   2022  % Change
    Reconciliation of Reported Basis to Acquisition-Adjusted Results(a):      
    Net revenue $471,332  $451,388  4.4%
    Acquisitions and divestitures     12,949   
    Acquisition-adjusted net revenue $471,332  $464,337  1.5%
    Reported direct advertising and G&A expenses $248,640  $238,589  4.2%
    Acquisitions and divestitures     7,900   
    Acquisition-adjusted direct advertising and G&A expenses $248,640  $246,489  0.9%
    Outdoor operating income $222,692  $212,799  4.6%
    Acquisition and divestitures     5,049   
    Acquisition-adjusted outdoor operating income $222,692  $217,848  2.2%
    Reported corporate expense $24,740  $21,553  14.8%
    Acquisitions and divestitures        
    Acquisition-adjusted corporate expenses $24,740  $21,553  14.8%
    Adjusted EBITDA $197,952  $191,246  3.5%
    Acquisitions and divestitures     5,049   
    Acquisition-adjusted EBITDA $197,952  $196,295  0.8%


    (a) Acquisition-adjusted net revenue, direct advertising and general and administrative expenses, outdoor operating income, corporate expenses and EBITDA include adjustments to 2022 for acquisitions and divestitures for the same time frame as actually owned in 2023.



    SUPPLEMENTAL SCHEDULES
    UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES
    (IN THOUSANDS)
     
     Three Months Ended
    March 31,
      2023   2022  % Change
    Reconciliation of Net Income to Outdoor Operating Income:     
    Net income$76,198  $92,151  (17.3)%
    Interest expense, net 40,983   26,571   
    Equity in earnings of investee (178)  (746)  
    Income tax expense 1,798   2,480   
    Operating income 118,801   120,456  (1.4)%
    Corporate expenses 24,740   21,553   
    Stock-based compensation 8,040   1,780   
    Capitalized contract fulfillment costs, net 674   946   
    Depreciation and amortization 73,125   68,627   
    Gain on disposition of assets (2,688)  (563)  
    Outdoor operating income$222,692  $212,799  4.6%



    SUPPLEMENTAL SCHEDULES
    UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES
    (IN THOUSANDS)
     
     Three Months Ended
    March 31,
      2023   2022  % Change
    Reconciliation of Total Operating Expense to Acquisition-Adjusted Consolidated Expense:     
    Total operating expense$352,531  $330,932  6.5%
    Gain on disposition of assets 2,688   563   
    Depreciation and amortization (73,125)  (68,627)  
    Capitalized contract fulfillment costs, net (674)  (946)  
    Stock-based compensation (8,040)  (1,780)  
    Acquisitions and divestitures    7,900   
    Acquisition-adjusted consolidated expense$273,380  $268,042  2.0%



    SUPPLEMENTAL SCHEDULES
    UNAUDITED REIT MEASURES
    AND RECONCILIATIONS TO GAAP MEASURES
    (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
     
     Three Months Ended
    March 31,
      2023   2022 
    Adjusted Funds from Operations:   
    Net income$76,198  $92,151 
    Depreciation and amortization related to real estate 70,350   65,526 
    Gain from sale or disposal of real estate, net of tax (2,720)  (454)
    Adjustments for unconsolidated affiliates and non-controlling interest (335)  (895)
    Funds from operations$143,493  $156,328 
    Straight-line expense 957   915 
    Capitalized contract fulfillment costs, net 674   946 
    Stock-based compensation expense 8,040   1,780 
    Non-cash portion of tax provision (1,152)  (342)
    Non-real estate related depreciation and amortization 2,775   3,101 
    Amortization of deferred financing costs 1,642   1,471 
    Capitalized expenditures-maintenance (12,692)  (13,185)
    Adjustments for unconsolidated affiliates and non-controlling interest 335   895 
    Adjusted funds from operations$144,072  $151,909 
    Divided by weighted average diluted common shares outstanding 101,963,563   101,540,213 
    Diluted AFFO per share$1.41  $1.50 


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