Lamar Advertising Company Announces Fourth Quarter and Year End 2013 Operating Results BATON ROUGE, La., Feb. 27, 2014 (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, 2013. Fourth Quarter Results Lamar reported net revenues of $320.4 million for the fourth quarter of 2013 versus $306.6 million for the fourth quarter of 2012, a 4.5% increase. See "Immaterial Correction of Prior Period Amounts" below. Operating income for the fourth quarter of 2013 was $63.8 million as compared to $65.1 million for the same period in 2012. Lamar recognized $10.2 million in net income for the fourth quarter of 2013 compared to net income of $7.9 million for the fourth quarter of 2012. Adjusted EBITDA (defined as operating income before non-cash compensation, depreciation and amortization and gain on disposition of assets) for the fourth quarter of 2013 was $145.0 million versus $136.9 million for the fourth quarter of 2012, a 5.9% 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) for the fourth quarter of 2013 was $85.0 million as compared to $73.1 million for the same period in 2012, a 16.3% increase. Pro forma net revenue for the fourth quarter of 2013 increased 0.3% and pro forma Adjusted EBITDA decreased 0.9% as compared to the fourth quarter of 2012. Pro forma net revenue and pro forma Adjusted EBITDA include adjustments to the 2012 period for acquisitions and divestitures for the same time frame as actually owned in the 2013 period. Pro forma net revenue, pro forma Adjusted EBITDA and pro forma outdoor operating income have also been adjusted to eliminate the effect of the immaterial correction in both the 2012 and 2013 periods.^1 See "Immaterial Correction of Prior Period Amounts" below. ^1 Adjusted EBITDA, free cash flow, pro forma results and outdoor operating income are non-GAAP Financial Measures.Please see "Use of Non-GAAP Measures" and 'Supplemental Schedules—Reconciliations of non-GAAP Financial Measures" below on pages 6-8. Twelve Months Results Lamar reported net revenues of $1.25 billion for the twelve months ended December 31, 2013 versus $1.18 billion for the same period in 2012, a 5.6% increase.Operating income for the twelve months ended December 31, 2013 was $223.4 million as compared to $214.5 million for the same period in 2012.Adjusted EBITDA increased 6.6% for the twelve months ended December 31, 2013 to $545.1 million from $511.3 million for the same period in 2012.There was net income of $40.1 million for the twelve months ended December 31, 2013 as compared to net income of $7.9 million for the same period in 2012. Free Cash Flow for the twelve months ended December 31, 2013 increased 14.8% to $303.6 million as compared to $264.4 million for the same period in 2012. Immaterial Correction of Prior Period Amounts The Company has historically recognized revenue on a monthly basis over the term of each advertising contract which produced results that were consistent with generally accepted accounting principles in all material respects.Commencing with the fourth quarter of 2013, revenue is recognized on a daily basis and will be going forward.An example that illustrates monthly versus daily revenue recognition is included on page 8. The Company evaluated the effect of this correction under Staff Accounting Bulletin Nos. 99 and 108 and concluded that it is immaterial to the current and prior periods.Actual reported revenue for the fourth quarter and all prior periods presented in this earnings release have been adjusted to reflect this immaterial correction.In line with its historical practice, the Company will continue to present pro forma results and quarterly guidance based on monthly revenue recognition.See "Reconciliation of Reported Basis to Pro Forma Basis" on page 7 of this release, which presents pro forma net revenue after acquisition adjustments and prior to the correction.As noted in this schedule, pro forma net revenue on a monthly basis for the fourth quarter of 2013 is $313.3 million, a 0.3% increase over the fourth quarter of 2012.A schedule comparing net revenue recognized on a monthly basis to net revenue recognized on a daily basis for the years ended December 31, 2013, 2012 and 2011 is also included in the release. See "Revenue Comparison Monthly vs Daily" on page 8. Guidance For the first quarter of 2014, the Company expects net revenue as recognized on a monthly basis without giving effect to the correction to be approximately $290 million to $293 million.On a pro forma basis this represents an increase of approximately 1% to 2%.The Company will continue to provide net revenue guidance for 2014 based on monthly revenue recognition consistent with past practice. Liquidity As of December 31, 2013, Lamar had $126.2 million in total liquidity that consists of $93.0 million available for borrowing under its then-existing $250 million revolving senior credit facility and approximately $33.2 million in cash and cash equivalents.Currently, Lamar has approximately $243 million available for borrowing under its revolving senior credit facility.See "Recent Transactions—Senior Credit Facility" below. Recent Transactions Senior Credit Facility. On February 3, 2014, the senior credit facility of Lamar's wholly owned subsidiary, Lamar Media Corp., was amended to increase the revolving credit facility from $250 million to $400 million and extend its maturity date to February 2, 2019.The incremental facility was also increased from $300 million to $500 million.In addition, the senior credit facility was amended to include provisions that would allow Lamar Media to conduct its affairs in a manner that would allow Lamar Advertising to qualify and remain qualified as a real estate investment trust (REIT). Notes Offering.On January 10, 2014, Lamar Media Corp., closed a private placement of $510 million in aggregate principal amount of 5 3/8% Senior Notes due 2024, which resulted in net proceeds to Lamar Media of approximately $502 million.Lamar Media used the proceeds of the offering to pay off all loan balances outstanding under its senior credit facility. Early Extinguishment of Debt.On December 4, 2013, Lamar Media redeemed in full all its outstanding 9 3/4% Senior Notes due 2014 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 up to but not including the applicable redemption date for an aggregate redemption price of approximately $366.4 million. The redemption was funded using cash on hand of $182.4 million and borrowings under Lamar Media's revolving credit facility of $184 million.In connection with the redemption, the Company recorded a loss on early extinguishment of debt of $14.3 million for the fourth quarter of 2013, of which $3.9 million related to the write off of previously capitalized and unamortized debt issuance fees. Real Estate Investment Trust Update As previously announced, Lamar is actively considering an election to convert to a REIT status. 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 addressing certain matters relevant to its contemplated qualification as a REIT. After a delay caused by internal IRS procedures and considerations, in November 2013 Lamar was advised by the IRS that it will resume issuing private letter rulings regarding the REIT provisions of the Internal Revenue Code of 1986, as amended, and that the IRS is actively working on Lamar's private letter ruling request.Based on current information, Lamar believes that it will be in a position to convert to a REIT effective January 1, 2014. 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. Forward Looking Statements This press release contains forward-looking statements, including the statements regarding guidance for the first quarter of 2014; consideration of an election to real estate investment trust status; and the ability to complete the REIT conversion effective for the taxable year beginning January 1, 2014 and remain qualified as a REIT assuming a conversion is successfully completed.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 and maintain our status as a REIT assuming we successfully qualify; (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, 2013, 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, 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.Management also deems the presentation of the effect of the correction in its method of revenue recognition useful to allow investors to see the impact of the correction and to provide pro forma results that are comparable with prior periods and in line with the Company's presentation of market guidance.Our presentations of these measures may not be comparable to similarly titled measures used by other companies.See "Supplemental Schedules—Reconciliations of Non-GAAP Measures," which provides reconciliations 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 Thursday, February 27, 2014 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: 1-334-323-0140 Pass Code: 94615468 Available through Thursday, March 6, 2014 at 11:59 p.m. eastern time Live Webcast: www.lamar.com Webcast Replay: www.lamar.com Available through Thursday, March 6, 2014 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, 2013 2012 2013 2012 Net revenues $320,352 $306,639 $1,245,842 $1,179,736 Operating expenses (income) Direct advertising expenses 109,962 106,199 436,844 418,538 General and administrative 52,880 51,994 213,087 203,065 expenses Corporate expenses 12,468 11,537 50,763 46,875 Non-cash compensation 1,829 3,564 24,936 14,466 Depreciation and amortization 81,087 76,800 300,579 296,083 Gain on disposition of assets (1,710) (8,508) (3,804) (13,817) 256,516 241,586 1,022,405 965,210 Operating income 63,836 65,053 223,437 214,526 Other expense (income) Loss on extinguishment of debt 14,345 9,676 14,345 41,632 Interest income (44) (61) (165) (331) Interest expense 34,013 40,012 146,277 157,093 48,314 49,627 160,457 198,394 Income before income tax 15,522 15,426 62,980 16,132 Income tax expense 5,336 7,515 22,841 8,242 Net income 10,186 7,911 40,139 7,890 Preferred stock dividends 92 92 365 365 Net income applicable to $10,094 $7,819 $39,774 $7,525 common stock Earnings per share: Basic income per share $0.11 $0.08 $0.42 $0.08 Diluted income per share $0.11 $0.08 $0.42 $0.08 Weighted average common shares outstanding: - basic 94,697,622 93,717,650 94,387,230 93,379,246 - diluted 95,091,780 94,075,642 94,745,515 93,666,641 OTHER DATA Free Cash Flow Computation: Adjusted EBITDA $145,042 $136,909 $545,148 $511,258 Interest, net (30,656) (35,311) (131,445) (139,021) Current tax expense (1,339) (622) (4,092) (1,926) Preferred stock dividends (92) (92) (365) (365) Total capital expenditures (27,973) (27,823) (105,650) (105,570) Free cash flow $84,982 $73,061 $ 303,596 $264,376 OTHER DATA (continued): December 31, December 31, Selected Balance Sheet 2013 2012 Data: Cash and cash equivalents $33,212 $58,911 Working capital 36,705 82,127 Total assets 3,401,618 3,514,030 Total debt (including 1,938,802 2,160,854 current maturities) Total stockholders' equity $932,946 $861,625 Three months ended Twelve months ended December 31, December 31, 2013 2012 2013 2012 Selected Cash Flow Data: Cash flows provided by $100,021 $122,560 $394,705 $375,909 operating activities Cash flows used in (34,826) (176,055) (191,869) (303,399) investing activities Cash flows (used in) provided by financing (213,902) 74,165 (227,195) (47,417) activities Reconciliation ofFree Cash Flow to Cash FlowsProvided by Operating Activities Cash flows provided by $ 100,021 $ 122,560 $ 394,705 $ 375,909 operating activities Changes in operating assets 14,111 (20,408) 20,940 (114) and liabilities Total capital expenditures (27,973) (27,823) (105,650) (105,570) Preferred stock dividends (92) (92) (365) (365) Other (1,085) (1,176) (6,034) (5,484) Free cash flow $84,982 $73,061 $303,596 $264,376 SUPPLEMENTAL SCHEDULES—RECONCILIATIONS OF NON-GAAP MEASURES (IN THOUSANDS) Three months ended Twelve months ended December 31, December 31, 2013 2012 2013 2012 Reconciliation ofAdjusted EBITDA to Net income: Adjusted EBITDA $145,042 $136,909 $545,148 $511,258 Less: Non-cash compensation 1,829 3,564 24,936 14,466 Depreciation and 81,087 76,800 300,579 296,083 amortization Gain on disposition of (1,710) (8,508) (3,804) (13,817) assets Operating Income 63,836 65,053 223,437 214,526 Less: Interest income (44) (61) (165) (331) Loss on extinguishment 14,345 9,676 14,345 41,632 of debt Interest expense 34,013 40,012 146,277 157,093 Income tax expense 5,336 7,515 22,841 8,242 Net income $10,186 $7,911 $40,139 $7,890 Capital expenditure detail by category Billboards - $2,024 $8,123 $21,295 $29,061 traditional Billboards - digital 15,268 9,800 50,233 42,134 Logo 4,025 3,157 11,182 8,704 Transit 114 149 168 259 Land and buildings 3,435 3,396 9,471 12,797 Operating Equipment 3,107 3,198 13,301 12,615 Total capital $27,973 $27,823 $105,650 $105,570 expenditures Three months ended December 31, 2013 2012 % Change Reconciliation of Reported Basis to Pro Forma (a) Basis: Net revenue (daily $320,352 $306,639 4.5% basis) Adjustment for (7,005) (1,134) immaterial correction Adjusted net revenue, prior to immaterial 313,347 305,505 2.6% correction Acquisitions and — 6,845 divestitures Pro forma net revenue $313,347 $312,350 0.3% (monthly basis) Reported direct advertising and G&A $162,842 $158,193 2.9% expenses Acquisitions and — 3,304 divestitures Pro forma direct advertising and G&A $162,842 $161,497 0.8% expenses Outdoor operating $157,510 $148,446 6.1% income (daily basis) Adjustment for (7,005) (1,134) immaterial correction Adjusted outdoor operating income, prior 150,505 147,312 2.2% to immaterial correction Acquisitions and — 3,541 divestitures Pro forma outdoor operating income $150,505 $150,853 (0.2)% (monthly basis) Reported corporate $12,468 $11,537 8.1% expenses Acquisitions and — — divestitures Pro forma corporate $12,468 $11,537 8.1% expenses Adjusted EBITDA (daily $145,042 $136,909 5.9% basis) Adjustment for (7,005) (1,134) immaterial correction Adjusted EBITDA, prior to immaterial 138,037 135,775 1.7% correction Acquisitions and — 3,541 divestitures Pro forma Adjusted $138,037 $139,316 (0.9)% EBITDA (monthly basis) (a)Pro forma net revenue, 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.Pro forma net revenue, outdoor operating income and Adjusted EBITDA have also been adjusted to eliminate the effect of the immaterial correction in both the 2012 and 2013 periods. Three months ended December 31, 2013 2012 Reconciliation of Outdoor Operating Income to Operating Income: Outdoor operating $157,510 $148,446 income Less: Corporate 12,468 11,537 expenses Non-cash compensation 1,829 3,564 Depreciation and 81,087 76,800 amortization Plus: Gain on 1,710 8,508 disposition of assets Operating income $63,836 $65,053 REVENUE COMPARISON-MONTHLY VS DAILY 2013, 2012 AND 2011 QUARTERLY AND FYE 2013 Actual 2013 Actual 2013 (prior to correction) (after correction) + (-) Monthly Recognition % Converted to Daily % Difference Recognition Q1 283,479 22.8% 276,605 22.2% (6,874) Q2 324,684 26.0% 327,744 26.3% 3,060 Q3 323,184 26.0% 321,141 25.8% (2,043) Q4 313,347 25.2% 320,352 25.7% 7,005 Total 1,244,694 100.0% 1,245,842 100.0% 1,148 2012 Actual 2012 Actual 2012 (prior to correction) (after correction) + (-) Monthly Recognition % Converted to Daily % Difference Recognition Q1 266,238 22.5% 262,465 22.3% (3,773) Q2 304,872 25.8% 301,106 25.5% (3,766) Q3 306,286 25.9% 309,526 26.2% 3,240 Q4 305,505 25.8% 306,639 26.0% 1,134 Total 1,182,901 100.0% 1,179,736 100.0% (3,165) 2011 Actual 2011 Actual 2011 (prior to correction) (after correction) + (-) Monthly Recognition % Converted to Daily % Difference Recognition Q1 255,202 22.5% 250,546 22.2% (4,656) Q2 293,345 25.9% 289,367 25.6% (3,978) Q3 296,701 26.2% 296,568 26.2% (133) Q4 288,239 25.4% 294,233 26.0% 5,994 Total 1,133,487 100.0% 1,130,714 100.0% (2,773) EXAMPLE: MONTHLY VS DAILY BILLING RECOGNITION Contract Amount: $3,100 Contract Period: 31 days Contract Start Date: March 15 Invoice Date: March 15 Revenue Recognized March April Revenue Recognition, monthly $3,100 $0 Revenue Recognition, daily $1,700 $1,400 CONTACT: Keith A. Istre Chief Financial Officer (225) 926-1000 KI@lamar.com
Lamar Advertising Company Announces Fourth Quarter and Year End 2013 Operating Results
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