Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 2, 2019

 

 

LAMAR ADVERTISING COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36756   72-1449411

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

5321 Corporate Blvd.

Baton Rouge, Louisiana 70808

(Address of Principal Executive Offices) (Zip Code)

(225) 926-1000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Class A common stock, $0.001 par value   LAMR   The NASDAQ Stock Market, LLC

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On May 2, 2019, Lamar Advertising Company announced via press release its results for the quarter ended March 31, 2019. A copy of Lamar’s press release is hereby furnished to the Commission and incorporated by reference herein as Exhibit 99.1.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
No.

  

Description

99.1    Press Release of Lamar Advertising Company, dated May 2, 2019, reporting Lamar’s financial results for the quarter ended March 31, 2019.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: May 2, 2019     LAMAR ADVERTISING COMPANY
    By:  

/s/ Keith A. Istre

      Keith A. Istre
      Treasurer and Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

5321 Corporate Boulevard

Baton Rouge, LA 70808

Lamar Advertising Company Announces

First Quarter 2019 Operating Results

Three Month Results

 

   

Net revenue increased 6.5% to $384.5 million

 

   

Net income increased $36.2 million to $51.3 million

 

   

Adjusted EBITDA increased 5.2% to $146.1 million

Three Month Acquisition-Adjusted Results

 

   

Acquisition-adjusted net revenue increased 2.2%

 

   

Acquisition-adjusted EBITDA increased 0.2%

Baton Rouge, LA – May 2, 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 first quarter ended March 31, 2019.

“The first quarter played out largely as we anticipated, with acquisition-adjusted revenue growth a little over 2%,” Chief Executive Sean Reilly said. “I’m particularly pleased by the continued strong performance of our digital platform, and I’m optimistic about the balance of 2019.”

First Quarter Highlights

 

   

Local revenue increased 4.3%

 

   

Same unit digital revenue increased 4.9%

 

   

AFFO increased 2.7%

 

   

Diluted AFFO per share increased 1.0%

First Quarter Results

Lamar reported net revenues of $384.5 million for the first quarter of 2019 versus $361.0 million for the first quarter of 2018, a 6.5% increase. Operating income for the first quarter of 2019 increased $24.9 million to $90.8 million as compared to $65.9 million for the same period in 2018. Lamar recognized net income of $51.3 million for the first quarter of 2019 compared to net income of $15.1 million for same period in 2018. Net income per diluted share was $0.51 and $0.15 for the three months ended March 31, 2019 and 2018, respectively.

Adjusted EBITDA for the first quarter of 2019 was $146.1 million versus $138.9 million for the first quarter of 2018, an increase of 5.2%.

Cash flow provided by operating activities was $60.7 million for the three months ended March 31, 2019, an increase of $20.0 million as compared to the same period in 2018. Free cash flow for the first quarter of 2019 was $82.7 million as compared to $81.3 million for the same period in 2018, a 1.6% increase.

For the first quarter of 2019, Funds From Operations, or FFO, was $105.0 million versus $78.7 million for the same period in 2018, an increase of 33.4%. Adjusted Funds From Operations, or AFFO, for the first quarter of 2019 was $98.9 million compared to $96.3 million for the same period in 2018, an increase of 2.7%. Diluted AFFO per share increased 1.0% to $0.99 for the three months ended March 31, 2019 as compared to $0.98 for the same period in 2018.

 

1


Acquisition-Adjusted Three Months Results

Acquisition-adjusted net revenue for the first quarter of 2019 increased 2.2% over Acquisition-adjusted net revenue for the first quarter of 2018. Acquisition-adjusted EBITDA for the first quarter of 2019 increased 0.2% as compared to Acquisition-adjusted EBITDA for the first 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.

Liquidity

As of March 31, 2019, Lamar had $389.7 million in total liquidity that consisted of $356.9 million available for borrowing under its revolving senior credit facility and approximately $32.8 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.

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.

 

2


   

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 assets or divested 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, 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.

Our measurement of Adjusted EBITDA, FFO, AFFO, 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, Outdoor Operating Income and Acquisition-Adjusted Results to the most directly comparable GAAP measures have been included herein.

 

3


Conference Call Information

A conference call will be held to discuss the Company’s operating results on Thursday, May 2, 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:    46662495
   Available through Thursday, May 9, 2019 at 11:59 p.m. eastern time
Live Webcast:    www.lamar.com
Webcast Replay:    www.lamar.com
   Available through Thursday, May 9, 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 approximately 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 3,100 displays.

 

4


LAMAR ADVERTISING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

     Three months ended
March 31,
 
     2019     2018  

Net revenues

   $ 384,457     $ 361,026  
  

 

 

   

 

 

 

Operating expenses (income)

    

Direct advertising expenses

     144,244       138,293  

General and administrative expenses

     77,512       68,085  

Corporate expenses

     16,577       15,713  

Stock-based compensation

     2,233       7,514  

Impact of ASC 842 adoption (lease accounting standard)

     (3,774     —    

Depreciation and amortization

     61,506       56,840  

(Gain) loss on disposition of assets

     (4,624     8,701  
  

 

 

   

 

 

 
     293,674       295,146  
  

 

 

   

 

 

 

Operating income

     90,783       65,880  

Other (income) expense

    

Loss on extinguishment of debt

     —         15,429  

Interest income

     (153     (24

Interest expense

     37,595       33,579  
  

 

 

   

 

 

 
     37,442       48,984  
  

 

 

   

 

 

 

Income before income tax expense

     53,341       16,896  

Income tax expense

     2,088       1,844  
  

 

 

   

 

 

 

Net income

     51,253       15,052  

Preferred stock dividends

     91       91  
  

 

 

   

 

 

 

Net income applicable to common stock

   $ 51,162     $ 14,961  
  

 

 

   

 

 

 

Earnings per share:

    

Basic earnings per share

   $ 0.51     $ 0.15  
  

 

 

   

 

 

 

Diluted earnings per share

   $ 0.51     $ 0.15  
  

 

 

   

 

 

 

Weighted average common shares outstanding:

    

- basic

     99,710,406       98,301,551  

- diluted

     99,915,443       98,726,934  

OTHER DATA

    

Free Cash Flow Computation:

    

Adjusted EBITDA

   $ 146,124     $ 138,935  

Interest, net

     (36,110     (32,313

Current tax expense

     (1,296     (1,931

Preferred stock dividends

     (91     (91

Total capital expenditures

     (25,951     (23,252
  

 

 

   

 

 

 

Free Cash Flow

   $ 82,676     $ 81,348  
  

 

 

   

 

 

 

 

5


OTHER DATA (continued):

 

     March 31,
2019
    December 31,
2018
 

Selected Balance Sheet Data:

    

Cash and cash equivalents

   $ 32,828     $ 21,494  

Working capital

   $ (263,381   $ (91,366

Total assets

   $ 5,794,544     $ 4,544,641  

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

   $ 3,026,554     $ 2,888,688  

Total stockholders’ equity

   $ 1,109,578     $ 1,131,784  
     Three months ended
March 31,
 
     2019     2018  

Selected Cash Flow Data:

    

Cash flows provided by operating activities

   $ 60,726     $ 40,772  

Cash flows used in investing activities

   $ 91,075     $ 28,853  

Cash flows provided by (used in) financing activities

   $ 41,583     $ (117,047

 

6


SUPPLEMENTAL SCHEDULES

UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES

(IN THOUSANDS)

 

     Three months ended
March 31,
 
     2019     2018  

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

    

Cash flows provided by operating activities

   $ 60,726     $ 40,772  

Changes in operating assets and liabilities

     54,169       66,125  

Total capital expenditures

     (25,951     (23,252

Preferred stock dividends

     (91     (91

Impact of ASC 842 adoption (lease accounting standard)

     (3,774     —    

Other

     (2,403     (2,206
  

 

 

   

 

 

 

Free cash flow

   $ 82,676     $ 81,348  
  

 

 

   

 

 

 

Reconciliation of Net Income to Adjusted EBITDA:

    

Net Income

   $ 51,253     $ 15,052  

Loss on extinguishment of debt

     —         15,429  

Interest income

     (153     (24

Interest expense

     37,595       33,579  

Income tax expense

     2,088       1,844  
  

 

 

   

 

 

 

Operating Income

     90,783       65,880  

Stock-based compensation

     2,233       7,514  

Impact of ASC 842 adoption (lease accounting standard)

     (3,774     —    

Depreciation and amortization

     61,506       56,840  

(Gain) loss on disposition of assets

     (4,624     8,701  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 146,124     $ 138,935  
  

 

 

   

 

 

 

Capital expenditure detail by category:

    

Billboards - traditional

   $ 9,262     $ 6,787  

Billboards - digital

     11,619       8,302  

Logo

     1,412       2,452  

Transit

     1,179       372  

Land and buildings

     488       3,431  

Operating equipment

     1,991       1,908  
  

 

 

   

 

 

 

Total capital expenditures

   $ 25,951     $ 23,252  
  

 

 

   

 

 

 

 

7


SUPPLEMENTAL SCHEDULES

UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES

(IN THOUSANDS)

 

     Three months ended
March 31,
        
     2019      2018      % Change  

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

        

Net revenue

   $ 384,457      $ 361,026        6.5

Acquisitions and divestitures

     —          15,300     
  

 

 

    

 

 

    

Acquisition-adjusted net revenue

   $ 384,457      $ 376,326        2.2

Reported direct advertising and G&A expenses (b)

   $ 221,756      $ 206,378        7.5

Acquisitions and divestitures

     —          8,412     
  

 

 

    

 

 

    

Acquisition-adjusted direct advertising and G&A expenses

   $ 221,756      $ 214,790        3.2

Outdoor operating income

   $ 162,701      $ 154,648        5.2

Acquisitions and divestitures

     —          6,888     
  

 

 

    

 

 

    

Acquisition-adjusted outdoor operating income

   $ 162,701      $ 161,536        0.7

Reported corporate expenses

   $ 16,577      $ 15,713        5.5

Acquisitions and divestitures

     —          —       
  

 

 

    

 

 

    

Acquisition-adjusted corporate expenses

   $ 16,577      $ 15,713        5.5

Adjusted EBITDA

   $ 146,124      $ 138,935        5.2

Acquisitions and divestitures

     —          6,888     
  

 

 

    

 

 

    

Acquisition-adjusted EBITDA

   $ 146,124      $ 145,823        0.2
  

 

 

    

 

 

    

 

(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 $3,774 reduction of expense due to impact of ASC 842 for lease accounting.

 

     Three months ended
March 31,
 
     2019     2018  

Reconciliation of Net Income to Outdoor Operating Income:

    

Net Income

   $ 51,253     $ 15,052  

Interest expense, net

     37,442       33,555  

Income tax expense

     2,088       1,844  

Loss on extinguishment of debt

     —         15,429  
  

 

 

   

 

 

 

Operating Income

     90,783       65,880  

Corporate expenses

     16,577       15,713  

Stock-based compensation

     2,233       7,514  

Impact of ASC 842 adoption (lease accounting standard)

     (3,774     —    

Depreciation and amortization

     61,506       56,840  

(Gain) loss on disposition of assets

     (4,624     8,701  
  

 

 

   

 

 

 

Outdoor Operating Income

   $ 162,701     $ 154,648  
  

 

 

   

 

 

 

 

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
March 31,
 
     2019     2018  

Net income

   $ 51,253     $ 15,052  

Depreciation and amortization related to real estate

     58,000       53,725  

(Gain) loss from disposition of real estate assets

     (4,474     9,693  

Adjustment for unconsolidated affiliates and non-controlling interest

     198       195  
  

 

 

   

 

 

 

Funds From Operations

   $ 104,977     $ 78,665  
  

 

 

   

 

 

 

Straight-line income

     (236     (277

Impact of ASC 842 adoption (lease accounting standard)

     (3,774     —    

Stock-based compensation expense

     2,233       7,514  

Non-cash portion of tax provision expense (benefit)

     792       (1,022

Non-real estate related depreciation and amortization

     3,506       3,115  

Amortization of deferred financing costs

     1,332       1,242  

Loss on extinguishment of debt

     —         15,429  

Capitalized expenditures—maintenance

     (9,707     (8,125

Adjustment for unconsolidated affiliates and non-controlling interest

     (198     (195
  

 

 

   

 

 

 

Adjusted Funds From Operations

   $ 98,925     $ 96,346  
  

 

 

   

 

 

 

Divided by weighted average diluted common shares outstanding

     99,915,443       98,726,934  
  

 

 

   

 

 

 

Diluted AFFO per share

   $ 0.99     $ 0.98  
  

 

 

   

 

 

 

 

9