Lamar Advertising Company Announces Third Quarter 2013 Operating Results BATON ROUGE, La., Nov. 6, 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 third quarter ended September 30, 2013. Three Months Results Lamar reported net revenues of $323.2 million for the third quarter of 2013 versus $306.3 million for the third quarter of 2012, a 5.5% increase. Operating income for the third quarter of 2013 was $69.3 million as compared to $63.5 million for the same period in 2012. Lamar recognized $18.3 million in net income for the third quarter of 2013 compared to net income of $11.5 million for the third quarter of 2012. 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 third quarter of 2013 was $147.6 million versus $140.6 million for the third quarter of 2012, a 5.0% 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 third quarter of 2013 was $87.8 million as compared to $77.7 million for the same period in 2012, a 13.0 % increase. Pro forma net revenue for the third quarter of 2013 increased 2.1% and pro forma Adjusted EBITDA increased 1.6% as compared to the third quarter of 2012. Pro forma net revenue and Adjusted EBITDA include adjustments to the 2012 period for acquisitions and divestitures for the same time frame as actually owned in the 2013 period. Tables that reconcile reported results to pro forma results and operating income to outdoor operating income are included at the end of this release. Nine Months Results Lamar reported net revenues of $931.3 million for the nine months ended September 30, 2013 versus $877.4 million for the same period in 2012, a 6.1% increase. Operating income for the nine months ended September 30, 2013 was $165.5 million as compared to $153.8 million for the same period in 2012. Adjusted EBITDA for the nine months ended September 30, 2013 was $406.0 million versus $378.6 million for the same period in 2012. There was net income of $33.5 million for the nine months ended September 30, 2013 as compared to net income of $2.6 million for the same period in 2012. Free Cash Flow for the nine months ended September 30, 2013 increased 14.8% to $224.5 million as compared to $195.6 million for the same period in 2012. Liquidity As of September 30, 2013, Lamar had $425.7 million in total liquidity that consists of $243.0 million available for borrowing under its revolving senior credit facility and approximately $182.7 million in cash and cash equivalents. Senior Notes Redemption As previously announced, the Company's wholly owned subsidiary, Lamar Media Corp., intends to redeem in full all $350 million in aggregate principal amount of its 9 3/4% Senior Notes due 2014 (the "Notes") on December 4, 2013 (the "Redemption Date") at a redemption price equal to 100% of the aggregate principal amount of outstanding Notes plus a make whole amount and accrued and unpaid interest to (but not including) the Redemption Date. The redemption will be made in accordance with the terms of the indenture governing the Notes. This announcement is for informational purposes only and is not an offer to purchase or a solicitation of an offer to purchase or sell with respect to the Notes or any other securities. Real Estate Investment Trust Update As previously announced, Lamar is actively considering an election to real estate investment trust (REIT) status and is currently evaluating the steps necessary to implement conversion to a REIT. In conjunction with this review, Lamar submitted a private letter ruling request to the U.S. Internal Revenue Service (the "IRS") in November of 2012 regarding a potential REIT election. Lamar has been advised by the IRS that its study of the current legal standards it uses to define "real estate" for purposes of the REIT provisions of the U.S. Internal Revenue Code is ongoing and that Lamar's private letter ruling request remains under review. The timing of any response to Lamar's ruling request is uncertain and may be delayed due to the ongoing IRS study. Based on current information, Lamar has no reason to conclude that it will not be in a position to convert to a REIT effective for the taxable year beginning January 1, 2014. Lamar intends to complete a corporate restructuring to be in compliance with REIT rules prior to December 31, 2013. Lamar's decision to proceed with a REIT election is subject to the approval of its board of directors. A favorable IRS ruling, if received, does not guarantee that Lamar would succeed in qualifying as a REIT and there is no certainty as to the timing of a REIT election. Lamar may not ultimately pursue a conversion to a REIT, and it can provide no assurance that a REIT conversion, if completed, will be successfully implemented or achieve the intended benefits. Guidance For the fourth quarter of 2013 the Company expects net revenue to be approximately $314 million to $317 million. On a pro forma basis this represents an increase of approximately 0.5% to 1.5%. Forward Looking Statements This press release contains forward-looking statements, including the statements regarding guidance for the fourth quarter of 2013; our consideration of an election to real estate investment trust status; our ability to complete the REIT conversion effective for the taxable year beginning January 1, 2014; and our expected senior notes redemption. 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 qualify as a REIT, including restructuring our operations to comply with applicable REIT rules; (6) the regulation of the outdoor advertising industry; (7) the integration of companies that we acquire and our ability to recognize cost savings or operating efficiencies as a result of these acquisitions; and (8) 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, 2012, 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 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 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, November 6, 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: 75659084 Available through Wednesday, November 13, 2013 at 11:59 p.m. eastern time Live Webcast: www.lamar.com Webcast Replay: www.lamar.com Available through Wednesday, November 13, 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 Nine months ended September 30, September 30, 2013 2012 2013 2012 Net revenues $ 323,184 $ 306,286 $ 931,347 $ 877,396 Operating expenses (income) Direct advertising expenses (exclusive of depreciation 109,640 103,845 326,882 312,339 and amortization) General and administrative expenses (exclusive of 53,814 50,167 160,207 151,071 depreciation, amortization and non-cash compensation) Corporate expenses (exclusive of depreciation, 12,150 11,707 38,295 35,338 amortization and non-cash compensation) Non-cash compensation 5,912 3,869 23,107 10,902 Depreciation and 73,183 73,915 219,492 219,283 amortization Gain on disposition of (787) (739) (2,094) (5,309) assets 253,912 242,764 765,889 723,624 Operating income 69,272 63,522 165,458 153,772 Other expense (income) Loss on extinguishment of — 1,984 — 31,956 debt Interest income (42) (147) (121) (270) Interest expense 37,677 38,534 112,264 117,081 37,635 40,371 112,143 148,767 Income before income tax 31,637 23,151 53,315 5,005 expense Income tax expense 13,297 11,655 19,790 2,403 Net income 18,340 11,496 33,525 2,602 Preferred stock dividends 91 91 273 273 Net income applicable to $ 18,249 $ 11,405 $ 33,252 $ 2,329 common stock Earnings per share: Basic income per share $ 0.19 $ 0.12 $ 0.35 $ 0.02 Diluted income per share $ 0.19 $ 0.12 $ 0.35 $ 0.02 Weighted average common shares outstanding: - basic 94,528,877 93,423,063 94,282,629 93,265,621 - diluted 94,927,069 93,729,512 94,692,129 93,550,891 OTHER DATA Free Cash Flow Computation: Adjusted EBITDA $ 147,580 $ 140,567 $ 405,963 $ 378,648 Interest, net (33,373) (34,057) (100,789) (103,710) Current tax expense (1,368) (521) (2,753) (1,304) Preferred stock dividends (91) (91) (273) (273) Total capital expenditures (24,956) (28,205) (77,677) (77,747) ^(1) Free cash flow $ 87,792 $ 77,693 $ 224,471 $ 195,614 ^(1)See the capital expenditures detail included below for a breakdown by category. September 30, December 31, 2013 2012 Selected Balance Sheet Data: Cash and cash equivalents $ 182,665 $ 58,911 Working capital (deficit) (136,973) 103,778 Total assets 3,625,422 3,514,030 Total debt (including 2,142,814 2,160,854 current maturities) Total stockholders' equity 933,491 874,833 Three months ended Nine months ended September 30, September 30, 2013 2012 2013 2012 Other Data: Cash flows provided by operating $ 142,730 $ 119,326 $ 294,684 $ 253,349 activities Cash flows used in investing (74,791) (68,250) (157,043) (127,344) activities Cash flows used in financing (4,482) (112,130) (13,293) (121,582) activities Reconciliation of Free Cash Flow to Cash Flows Provided by Operating Activities: Cash flows provided by operating $ 142,730 $ 119,326 $ 294,684 $ 253,349 activities Changes in operating assets and (28,043) (11,769) 12,686 24,593 liabilities Total capital expenditures (24,956) (28,205) (77,677) (77,747) Preferred stock dividends (91) (91) (273) (273) Other (1,848) (1,568) (4,949) (4,308) Free cash flow $87,792 $77,693 $ 224,471 $195,614 Reconciliation ofAdjusted EBITDA to Net income: Adjusted EBITDA $ 147,580 $ 140,567 $ 405,963 $ 378,648 Less: Non-cash compensation 5,912 3,869 23,107 10,902 Depreciation and amortization 73,183 73,915 219,492 219,283 Gain on disposition of assets (787) (739) (2,094) (5,309) Operating Income 69,272 63,522 165,458 153,772 Less: Interest income (42) (147) (121) (270) Loss on extinguishment of debt — 1,984 — 31,956 Interest expense 37,677 38,534 112,264 117,081 Income tax expense 13,297 11,655 19,790 2,403 Net income $ 18,340 $ 11,496 $ 33,525 $ 2,602 Three months ended September 30, 2013 2012 % Change Reconciliation of Reported Basis to Pro Forma (a) Basis: Reported net revenue $ 323,184 $ 306,286 5.5% Acquisitions and divestitures — 10,190 Pro forma net revenue $ 323,184 $ 316,476 2.1% Reported direct advertising and $ 163,454 $ 154,012 6.1% G&A expenses Acquisitions and divestitures — 5,467 Pro forma direct advertising and $ 163,454 $ 159,479 2.5% G&A expenses Reported outdoor operating income $ 159,730 $ 152,274 4.9% Acquisitions and divestitures — 4,723 Pro forma outdoor operating income $ 159,730 $ 156,997 1.7% Reported corporate expenses $ 12,150 $ 11,707 3.8% Acquisitions and divestitures — — Pro forma corporate expenses $ 12,150 $ 11,707 3.8% Reported Adjusted EBITDA $ 147,580 $ 140,567 5.0% Acquisitions and divestitures — 4,723 Pro forma Adjusted EBITDA $ 147,580 $ 145,290 1.6% (a)Pro forma net revenues, direct advertising and general and administrative expenses, outdoor operating income, corporate expenses and Adjusted EBITDA include adjustments to 2012 for acquisitions and divestitures for the same time frame as actually owned in 2013. Three months ended September 30, 2013 2012 Reconciliation of Outdoor Operating Income to Operating Income: Outdoor operating income $ 159,730 $ 152,274 Less:Corporate expenses 12,150 11,707 Non-cash compensation 5,912 3,869 Depreciation and amortization 73,183 73,915 Plus:Gain on disposition of assets 787 739 Operating income $ 69,272 $ 63,522 Three months ended Nine months ended September 30, September 30, 2013 2012 2013 2012 Capital expenditure detail by category Billboards - traditional $6,795 $5,917 $19,271 $20,938 Billboards - digital 11,362 12,272 34,965 32,334 Logo 3,050 2,267 7,157 5,547 Transit 26 26 54 110 Land and buildings 428 4,486 6,036 9,401 Operating equipment 3,295 3,237 10,194 9,417 Total capital expenditures $24,956 $28,205 $77,677 $77,747 CONTACT: Keith A. Istre Chief Financial Officer (225) 926-1000 KI@lamar.com
Lamar Advertising Company Announces Third Quarter 2013 Operating Results
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