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Lamar Advertising Company Announces Fourth Quarter and Year End 2012 Operating Results

BATON ROUGE, La., Feb. 27, 2013 (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 fourth quarter ended December 31, 2012.

Fourth Quarter Results

Lamar reported net revenues of $305.5 million for the fourth quarter of 2012 versus $288.2 million for the fourth quarter of 2011, a 6.0% increase. Operating income for the fourth quarter of 2012 was $63.9 million as compared to $45.9 million for the same period in 2011. Lamar recognized $7.2 million in net income for the fourth quarter of 2012 compared to net income of $6.4 million for the fourth quarter of 2011.

Adjusted EBITDA, (defined as operating income before non-cash compensation, depreciation and amortization and gain on disposition of assets - see reconciliation to net income at the end of this release) for the fourth quarter of 2012 was $135.8 million versus $125.8 million for the fourth quarter of 2011, a 7.9% 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 - see reconciliation to cash flows provided by operating activities at the end of this release) for the fourth quarter of 2012 was $71.9 million as compared to $63.9 million for the same period in 2011, a 12.6% increase.

Pro forma net revenue for the fourth quarter of 2012 increased 2.6% and pro forma Adjusted EBITDA increased 3.6% as compared to the fourth quarter of 2011. Pro forma net revenue and Adjusted EBITDA include adjustments to the 2011 period for acquisitions and divestitures for the same time frame as actually owned in the 2012 period, excluding new markets acquired as a result of the acquisition of NextMedia Outdoor, Inc., (the "Next markets"), which closed on October 31, 2012. As a result, our pro forma results for the 2012 period exclude the operating results from the Next markets and no adjustment has been made to the 2011 period with respect to the acquisition of the Next markets. Tables that reconcile reported results to pro forma results and operating income to outdoor operating income are included at the end of this release.

Twelve Months Results

Lamar reported net revenues of $1.2 billion for the twelve months ended December 31, 2012 versus $1.1 billion for the same period in 2011, a 4.4% increase. Operating income for the twelve months ended December 31, 2012 was $217.7 million as compared to $186.4 million for the same period in 2011. Adjusted EBITDA for the twelve months ended December 31, 2012 was $514.4 million versus $487.1 million for the same period in 2011. There was net income of $9.8 million for the twelve months ended December 31, 2012 as compared to net income of $8.6 million for the same period in 2011.

Free Cash Flow for the twelve months ended December 31, 2012 increased 19.0% to $267.5 million as compared to $224.8 million for the same period in 2011.

Liquidity

As of December 31, 2012, Lamar had $301.2 million in total liquidity that consists of $242.3 million available for borrowing under its revolving senior credit facility and approximately $58.9 million in cash and cash equivalents.

Recent Significant Transactions

Notes Offering. On October 30, 2012, Lamar's wholly owned subsidiary, Lamar Media Corp., closed a private placement of $535 million in aggregate principal amount of 5% Senior Subordinated Notes due 2023, which resulted in net proceeds to Lamar Media of approximately $527 million.

NextMedia Acquisition. On October 31, 2012, the Company used a portion of the proceeds from the 5% Senior Subordinated Notes offering to purchase all of the outstanding common stock of NextMedia Outdoor, Inc. for $145 million in cash.

Early Extinguishment of Debt. During November 2012, Lamar Media used a portion of the proceeds from the 5% Senior Subordinated Notes offering to redeem in full all its outstanding 6 5/8% Senior Subordinated Notes due 2015 (approximately $137.2 million in aggregate principal amount) at a redemption price of 101.104% plus accrued and unpaid interest up to but not including the applicable redemption date for an aggregate redemption price of approximately $141.1 million. In addition, on December 14, 2012, Lamar Media repaid $295 million of the Term B loan outstanding under its senior credit facility. Approximately $22 million remains outstanding under the Term B loan as of December 31, 2012.

In connection with the prepayments described above, the Company recorded a loss on early extinguishment of debt of $9.7 million for the fourth quarter of 2012, of which $4.3 million related to the write off of previously capitalized and unamortized debt issuance fees.

Real Estate Investment Trust Update

As previously disclosed, we are actively considering an election to real estate investment trust (REIT) status. On November 16, 2012, in conjunction with our review regarding a potential REIT election, we submitted a private letter ruling request to the Internal Revenue Service. If we receive a favorable response and decide to proceed with a REIT election, we intend to make the election for the taxable year beginning January 1, 2014, subject to the approval of our board of directors. A favorable IRS ruling, if received, does not guarantee that we would succeed in qualifying as a REIT and there is no certainty as to the timing of a REIT election or whether we will ultimately decide to make a REIT election.

Guidance

For the first quarter of 2013 the Company expects net revenue to be approximately $282 million to $285 million. On a pro forma basis this represents an increase of approximately 2% to 3%.

Forward Looking Statements

This press release contains forward-looking statements, including the statements regarding guidance for the first quarter of 2013 and our consideration to elect real estate investment trust status. 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) the regulation of the outdoor advertising industry; (6) the integration of companies that we acquire and our ability to recognize cost savings or operating efficiencies as a result of these acquisitions; and (7) 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 information contained in Item 1A of our Form 10-K for the year ended December 31, 2011. 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 Measures

Adjusted EBITDA, free cash flow, pro forma results and outdoor operating income are not measures of performance under accounting principles generally accepted in the United States of America ("GAAP") and should not be considered alternatives to operating income, net income (loss), 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, 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 management believes that excluding the operating results related to the Next markets from our pro forma results is useful to investors during the initial integration. Our presentations of these measures may not be comparable to similarly titled measures used by other companies. Reconciliations of these measures to GAAP are included at the end of this release.

Conference Call Information

A conference call will be held to discuss the Company's operating results on Wednesday, February 27, 2013 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: 1-334-323-7226
Pass Code: 20435467
Available through Monday, March 4, 2013 at 11:59 p.m. eastern time
Live Webcast: www.lamar.com
Webcast Replay: www.lamar.com
Available through Monday, March 4, 2013 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 22 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 Twelve months ended
December 31, December 31,
2012 2011 2012 2011
Net revenues $ 305,505 $ 288,239 $ 1,182,901 $ 1,133,487
Operating expenses (income)
Direct advertising expenses 106,199 103,243 418,538 409,052
General and administrative expenses 51,994 48,495 203,065 193,854
Corporate expenses 11,537 10,662 46,875 43,466
Non-cash compensation 3,564 4,312 14,466 11,650
Depreciation and amortization 76,800 78,185 296,083 299,639
Gain on disposition of assets (8,508) (2,581) (13,817) (10,548)
241,586 242,316 965,210 947,113
Operating income 63,919 45,923 217,691 186,374
Other expense (income)
Loss on extinguishment of debt 9,676 226 41,632 677
Interest income (61) (58) (331) (569)
Interest expense 40,012 41,636 157,093 171,093
49,627 41,804 198,394 171,201
Income before income tax 14,292 4,119 19,297 15,173
Income tax expense (benefit) 7,073 (2,253) 9,476 6,623
Net income 7,219 6,372 9,821 8,550
Preferred stock dividends 92 92 365 365
Net income applicable to common stock $ 7,127 $ 6,280 $ 9,456 $ 8,185
Earnings per share:
Basic income per share $ 0.08 $ 0.07 $ 0.10 $ 0.09
Diluted income per share $ 0.08 $ 0.07 $ 0.10 $ 0.09
Weighted average common shares outstanding: 93,717,650 92,976,771 93,379,246 92,851,067
- basic 94,075,642 93,171,888 93,666,641 93,173,785
- diluted
OTHER DATA
Free Cash Flow Computation:
Adjusted EBITDA $ 135,775 $ 125,839 $ 514,423 $ 487,115
Interest, net (35,311) (36,881) (139,021) (152,007)
Current tax expense (622) (1,072) (1,926) (2,921)
Preferred stock dividends (92) (92) (365) (365)
Total capital expenditures (1) (27,823) (23,888) (105,570) (107,070)
Free cash flow $ 71,927 $ 63,906 $ 267,541 $ 224,752
(1)See the capital expenditures detail included
below for a breakdown by category.
December 31, December 31,
2012 2011
Selected Balance Sheet Data:
Cash and cash equivalents $ 58,911 $ 33,503
Working capital 103,778 95,281
Total assets 3,514,030 3,427,353
Total debt (including current maturities) 2,160,854 2,158,528
Total stockholders' equity 874,833 838,998
Three months ended Twelve months ended
December 31, December 31,
2012 2011 2012 2011
Other Data:
Cash flows provided by operating activities $ 122,560 $ 96,116 $ 375,909 $ 318,821
Cash flows used in investing activities 176,055 29,263 303,399 117,255
Cash flows provided by (used in) financing activities 74,165 (75,015) (47,417) (259,442)
Reconciliation of Free Cash Flow to Cash Flows Provided by Operating Activities:
Cash flows provided by operating activities $ 122,560 $ 96,116 $ 375,909 $ 318,821
Changes in operating assets and liabilities (21,542) (5,185) 3,051 20,957
Total capital expenditures (27,823) (23,888) (105,570) (107,070)
Preferred stock dividends (92) (92) (365) (365)
Other (1,176) (3,045) (5,484) (7,591)
Free cash flow $ 71,927 $ 63,906 $ 267,541 $ 224,752
Reconciliation of Adjusted EBITDA to Net income (loss):
Adjusted EBITDA $ 135,775 $ 125,839 $ 514,423 $ 487,115
Less:
Non-cash compensation 3,564 4,312 14,466 11,650
Depreciation and amortization 76,800 78,185 296,083 299,639
Gain on disposition of assets (8,508) (2,581) (13,817) (10,548)
Operating Income 63,919 45,923 217,691 186,374
Less:
Interest income (61) (58) (331) (569)
Loss on extinguishment of debt 9,676 226 41,632 677
Interest expense 40,012 41,636 157,093 171,093
Income tax expense (benefit) 7,073 (2,253) 9,476 6,623
Net income $ 7,219 $ 6,372 $ 9,821 $ 8,550
Three months ended
December 31,
2012 2011 % Change
Reconciliation of Reported Basis to Pro Forma (a) Basis:
Reported net revenue $ 305,505 $ 288,239 6.0%
Acquisitions and divestitures, excluding the Next markets 4,517
Less net revenue – Next markets 5,156
Pro forma net revenue, excluding the Next markets $ 300,349 $ 292,756 2.6%
Reported direct advertising and G&A expenses $ 158,193 $ 151,738 4.3%
Acquisitions and divestitures, excluding the Next markets 2,734
Less direct advertising and G&A expenses – Next markets 1,546
Pro forma direct advertising and G&A expenses, excluding the Next markets $ 156,647 $ 154,472 1.4%
Reported outdoor operating income $ 147,312 $ 136,501 7.9%
Acquisitions and divestitures, excluding the Next markets 1,783
Less outdoor operating income – Next markets 3,610
Pro forma outdoor operating income, excluding the Next markets $ 143,702 $ 138,284 3.9%
Reported corporate expenses $ 11,537 $ 10,662 8.2%
Acquisitions and divestitures, excluding the Next markets
Pro forma corporate expenses, excluding the Next markets $ 11,537 $ 10,662 8.2%
Reported Adjusted EBITDA $ 135,775 $ 125,839 7.9%
Acquisitions and divestitures, excluding the Next markets 1,783
Less EBITDA – Next markets 3,610
Pro forma Adjusted EBITDA, excluding the Next markets $ 132,165 $ 127,622 3.6%
(a) Pro forma net revenues, direct advertising and general and administrative expenses, outdoor operating income, corporate expenses and Adjusted EBITDA include adjustments to 2011 for acquisitions and divestitures for the same time frame as actually owned in 2012, excluding the operating results of the Next markets. As a result, our pro forma results for the 2012 period excludes the operating results from the Next markets and no adjustment has been made to the 2011 period with respect to the acquisition of the Next markets.
Three months ended
December 31,
2012 2011
Reconciliation of Outdoor Operating Income to Operating Income:
Outdoor operating income $ 147,312 $ 136,501
Less: Corporate expenses 11,537 10,662
Non-cash compensation 3,564 4,312
Depreciation and amortization 76,800 78,185
Plus: Gain on disposition of assets 8,508 2,581
Operating income $ 63,919 $ 45,923
Three months ended Twelve months ended
December 31, December 31,
2012 2011 2012 2011
Capital expenditure detail by category
Billboards - traditional $ 8,123 $ 9,514 $ 29,061 $ 34,425
Billboards - digital 9,800 9,169 42,134 41,250
Logo 3,157 2,684 8,704 10,141
Transit 149 177 259 817
Land and buildings 3,396 663 12,797 4,501
Operating equipment 3,198 1,681 12,615 15,936
Total capital expenditures $ 27,823 $ 23,888 $ 105,570 $ 107,070

CONTACT: Keith A. Istre Chief Financial Officer (225) 926-1000 KI@lamar.comSource:Lamar Advertising Company