8-K
LAMAR ADVERTISING CO/NEW false 0001090425 0001090425 2020-02-20 2020-02-20

 

 

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): February 20, 2020

 

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))

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

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.  

 

 


Item 2.02 Results of Operations and Financial Condition.

On February 20, 2020, Lamar Advertising Company announced via press release its results for the quarter and year ended December 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 February 20, 2020, reporting Lamar’s financial results for the quarter and year ended December 31, 2019.

         
 

104

   

Cover Page Interactive Data File - (embedded within the Inline XBRL document).


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: February 20, 2020

 

    LAMAR ADVERTISING COMPANY

             

 

 

By:

 

/s/ Jay L. Johnson

 

 

 

Jay L. Johnson

 

 

 

Executive Vice President, Chief Financial Officer and Treasurer

EX-99.1

Exhibit 99. 1

 

LOGO

5321 Corporate Boulevard

Baton Rouge, LA 70808

Lamar Advertising Company Announces

Fourth Quarter and Year End 2019 Operating Results

Three Month Results

 

   

Net revenue increased 8.1% to $462.7 million

 

   

Net income increased $7.1 million to $102.8 million

 

   

Adjusted EBITDA increased 10.4% to $215.6 million

Twelve Month Results

 

   

Net revenue increased 7.8% to $1.75 billion

 

   

Net income increased 21.9% to $372.1 million

 

   

Adjusted EBITDA increased 8.6% to $784.9 million

Baton Rouge, LA – February 20, 2020 - 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, 2019.

“Looking back on 2019, we had a solid year on both the top and bottom lines, enabling us to finish near the top of our guidance for full year Diluted AFFO per share,” CEO Sean Reilly said. “Looking forward to 2020, our coast-to-coast platform, expanding digital footprint and best-in-class balance sheet, coupled with robust fundamentals in the out-of-home industry, have us well positioned for futher growth in sales, EBITDA and Diluted AFFO per share.”

Fourth Quarter Highlights

 

   

National/Programmatic revenue increased 7.7%

 

   

Same unit digital revenue increased 4.6%

 

   

AFFO increased 12.1%

 

   

Diluted AFFO per share increased 10.8%

Fourth Quarter Results

Lamar reported net revenues of $462.7 million for the fourth quarter of 2019 versus $427.9 million for the fourth quarter of 2018, an 8.1% increase. Operating income for the fourth quarter of 2019 increased $10.8 million to $141.4 million as compared to $130.6 million for the same period in 2018. Lamar recognized net income of $102.8 million for the fourth quarter of 2019 compared to net income of $95.7 million for same period in 2018. Net income per diluted share was $1.02 and $0.96 for the three months ended December 31, 2019 and 2018, respectively.

Adjusted EBITDA for the fourth quarter of 2019 was $215.6 million versus $195.3 million for the fourth quarter of 2018, an increase of 10.4%.

Cash flow provided by operating activities was $222.9 million for the three months ended December 31, 2019, an increase of $28.1 million as compared to the same period in 2018. Free cash flow for the fourth quarter of 2019 was $135.3 million as compared to $126.0 million for the same period in 2018, a 7.3% increase.

For the fourth quarter of 2019, Funds From Operations, or FFO, was $161.1 million versus $150.8 million for the same period in 2018, an increase of 6.8%. Adjusted Funds From Operations, or AFFO, for the fourth quarter of 2019 was $165.4 million compared to $147.5 million for the same period in 2018, an increase of 12.1%. Diluted AFFO per share increased 10.8% to $1.64 for the three months ended December 31, 2019 as compared to $1.48 for the same period in 2018.

 

1


Acquisition-Adjusted Three Months Results

Acquisition-adjusted net revenue for the fourth quarter of 2019 increased 2.7% over Acquisition-adjusted net revenue for the fourth quarter of 2018. Acquisition-adjusted EBITDA for the fourth quarter of 2019 increased 4.7% as compared to Acquisition-adjusted EBITDA for the fourth 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.

Twelve Months Results

Lamar reported net revenues of $1.75 billion for the twelve months ended December 31, 2019 versus $1.63 billion for the same period in 2018, a 7.8% increase. Operating income for the twelve months ended December 31, 2019 was $517.7 million as compared to $460.6 million for the same period in 2018. Lamar recognized net income of $372.1 million for the twelve months ended December 31, 2019 as compared to net income of $305.2 million for the same period in 2018. Net income per diluted share increased to $3.71 for the twelve months ended December 31, 2019 as compared to $3.08 for the same period in 2018. In addition, Adjusted EBITDA for the twelve months ended December 31, 2019 was $784.9 million versus $722.5 million for the same period in 2018, an 8.6% increase.

Cash flow provided by operating activities increased to $630.9 million for the twelve months ended December 31, 2019, as compared to $564.8 million in the same period in 2018. Free cash flow for the twelve months ended December 31, 2019 increased 3.8% to $489.2 million as compared to $471.1 million for the same period in 2018.

For the twelve months ended December 31, 2019, FFO was $584.9 million versus $527.0 million for the same period in 2018, an 11.0% increase. AFFO for the twelve months ended December 31, 2019 was $581.4 million compared to $544.5 million for the same period in 2018, a 6.8% increase. Diluted AFFO per share increased to $5.80 for the twelve months ended December 31, 2019, as compared to $5.50 in the same period in 2018, an increase of 5.5%.

Liquidity

As of December 31, 2019, Lamar had $413.5 million in total liquidity that consisted of $387.3 million available for borrowing under its revolving senior credit facility and approximately $26.2 million in cash and cash equivalents. As previously announced, on February 6, 2020, Lamar completed a comprehensive refinancing transaction, which included an amendment and restatement of its credit facility that, among other things, increased its borrowing capacity under the revolving portion of the credit facility by an additional $200.0 million in aggregate principal amount.

Guidance

We expect net income per diluted share for fiscal year 2020 will be between $3.55 and $3.69, with Diluted AFFO per share expected to be between $6.05 and $6.20, representing growth of approximately 4.3% to 7.0% over 2019. See “Supplemental Schedules and Unaudited Reconciliations of Non-GAAP Measures,” for a reconciliation to GAAP.

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 and as updated in our Annual Form 10-K for the year ended December 31, 2019 when filed in 2020. 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.

 

2


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, 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, 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.

 

   

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 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 first to remove the impact of 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. The prior period is further 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, 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

 

3


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, 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, 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, February 20, 2020 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:    37443773
   Available through Thursday, February 27, 2020 at 11:59 p.m. eastern time
Live Webcast:    www.lamar.com
Webcast Replay:    www.lamar.com
   Available through Thursday, February 27, 2020 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 over 390,000 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 3,500 displays.

 

4


LAMAR ADVERTISING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

     Three months ended
December 31,
    Twelve months ended
December 31,
 
     2019     2018     2019     2018  

Net revenues

   $ 462,659     $ 427,898     $ 1,753,644     $ 1,627,222  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses (income)

        

Direct advertising expenses

     152,741       142,072       595,525       561,848  

General and administrative expenses

     77,079       73,160       307,648       278,894  

Corporate expenses

     17,200       17,379       65,588       63,987  

Stock-based compensation

     11,569       6,698       29,647       29,443  

Impact of ASC 842 adoption (lease accounting standard)

     1,663       —         (5,292     —    

Depreciation and amortization

     62,878       58,010       250,028       225,261  

(Gain) loss on disposition of assets

     (1,881     (32     (7,241     7,233  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expense

     321,249       297,287       1,235,903       1,166,666  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     141,410       130,611       517,741       460,556  

Other expense (income)

        

Loss on extinguishment of debt

     —         —         —         15,429  

Interest income

     (211     (221     (764     (534

Interest expense

     36,376       32,411       150,616       129,732  
  

 

 

   

 

 

   

 

 

   

 

 

 
     36,165       32,190       149,852       144,627  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax expense

     105,245       98,421       367,889       315,929  

Income tax expense (benefit)

     2,492       2,728       (4,222     10,697  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     102,753       95,693       372,111       305,232  

Preferred stock dividends

     92       92       365       365  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income applicable to common stock

   $ 102,661     $ 95,601     $ 371,746     $ 304,867  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic earnings per share

   $ 1.02     $ 0.97     $ 3.71     $ 3.09  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 1.02     $ 0.96     $ 3.71     $ 3.08  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

- basic

     100,459,969       99,472,422       100,130,721       98,817,525  

- diluted

     100,672,782       99,759,674       100,320,574       99,086,160  

OTHER DATA

        
Free Cash Flow Computation:         

Adjusted EBITDA

   $ 215,639     $ 195,287     $ 784,883     $ 722,493  

Interest, net

     (34,812     (30,932     (144,487     (124,278

Current tax expense

     (2,163     (2,765     (9,908     (9,159

Preferred stock dividends

     (92     (92     (365     (365

Total capital expenditures

     (43,276     (35,464     (140,956     (117,638
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow

   $ 135,296     $ 126,034     $ 489,167     $ 471,053  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

5


OTHER DATA (continued):

         
                  December 31,     December 31,  
                  2019     2018  

Selected Balance Sheet Data:

         

Cash and cash equivalents

        $ 26,188     $ 21,494  

Working capital deficit

        $ (362,639   $ (91,366

Total assets

        $ 5,941,155     $ 4,544,641  

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

        $ 2,980,118     $ 2,888,688  

Total stockholders’ equity

        $ 1,180,306     $ 1,131,784  
     Three months ended
December 31,
     Twelve months ended
December 31,
 
     2019     2018      2019     2018  

Selected Cash Flow Data:

         

Cash flows provided by operating activities

   $ 222,895     $ 194,757      $ 630,865     $ 564,846  

Cash flows used in investing activities

   $ 52,215     $ 463,822      $ 362,034     $ 584,148  

Cash flows (used in) provided by financing activities

   $ (167,855   $ 280,380      $ (264,357   $ (73,563

 

6


SUPPLEMENTAL SCHEDULES

UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES

(IN THOUSANDS)

 

     Three months ended
December 31,
    Twelve months ended
December 31,
 
     2019     2018     2019     2018  

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

        

Cash flows provided by operating activities

   $ 222,895     $ 194,757     $ 630,865     $ 564,846  

Changes in operating assets and liabilities

     (42,893     (30,729     15,523       32,195  

Total capital expenditures

     (43,276     (35,464     (140,956     (117,638

Preferred stock dividends

     (92     (92     (365     (365

Impact of ASC 842 adoption (lease accounting standard)

     1,663       —         (5,292     —    

Other

     (3,001     (2,438     (10,608     (7,985
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 135,296     $ 126,034     $ 489,167     $ 471,053  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Net Income to Adjusted EBITDA:

        

Net Income

   $ 102,753     $ 95,693     $ 372,111     $ 305,232  

Loss on extinguishment of debt

     —         —         —         15,429  

Interest income

     (211     (221     (764     (534

Interest expense

     36,376       32,411       150,616       129,732  

Income tax expense (benefit)

     2,492       2,728       (4,222     10,697  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     141,410       130,611       517,741       460,556  

Stock-based compensation

     11,569       6,698       29,647       29,443  

Impact of ASC 842 adoption (lease accounting standard)

     1,663       —         (5,292     —    

Depreciation and amortization

     62,878       58,010       250,028       225,261  

(Gain) loss on disposition of assets

     (1,881     (32     (7,241     7,233  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 215,639     $ 195,287     $ 784,883     $ 722,493  
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital expenditure detail by category:

        

Billboards - traditional

   $ 13,607     $ 13,983     $ 48,194     $ 37,905  

Billboards - digital

     17,021       12,728       57,519       45,938  

Logo

     3,609       4,438       10,762       11,438  

Transit

     15       987       2,308       5,364  

Land and buildings

     6,939       1,798       13,453       8,420  

Operating equipment

     2,085       1,530       8,720       8,573  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total capital expenditures

   $ 43,276     $ 35,464     $ 140,956     $ 117,638  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

7


SUPPLEMENTAL SCHEDULES

UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES

(IN THOUSANDS)

 

     Three months ended
December 31,
           Twelve months ended
December 31,
        
     2019      2018      %     2019      2018      %  

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

                

Net revenue

   $ 462,659      $ 427,898        8.1   $ 1,753,644      $ 1,627,222        7.8

Acquisitions and divestitures

     —          22,777          —          80,745     
  

 

 

    

 

 

      

 

 

    

 

 

    

Acquisition-adjusted net revenue

   $ 462,659      $ 450,675        2.7   $ 1,753,644      $ 1,707,967        2.7

Reported direct advertising and G&A expenses (b)

   $ 229,820      $ 215,232        6.8   $ 903,173      $ 840,742        7.4

Acquisitions and divestitures

     —          12,051          —          44,003     
  

 

 

    

 

 

      

 

 

    

 

 

    

Acquisition-adjusted direct advertising and G&A expenses

   $ 229,820      $ 227,283        1.1   $ 903,173      $ 884,745        2.1

Outdoor operating income

   $ 232,839      $ 212,666        9.5   $ 850,471      $ 786,480        8.1

Acquisitions and divestitures

     —          10,726          —          36,742     
  

 

 

    

 

 

      

 

 

    

 

 

    

Acquisition-adjusted outdoor operating income

   $ 232,839      $ 223,392        4.2   $ 850,471      $ 823,222        3.3

Reported corporate expenses(b)

   $ 17,200      $ 17,379        (1.0 )%    $ 65,588      $ 63,987        2.5

Acquisitions and divestitures

     —          —            —          —       
  

 

 

    

 

 

      

 

 

    

 

 

    

Acquisition-adjusted corporate expenses

   $ 17,200      $ 17,379        (1.0 )%    $ 65,588      $ 63,987        2.5

Adjusted EBITDA

   $ 215,639      $ 195,287        10.4   $ 784,883      $ 722,493        8.6

Acquisitions and divestitures

     —          10,726          —          36,742     
  

 

 

    

 

 

      

 

 

    

 

 

    

Acquisition-adjusted EBITDA

   $ 215,639      $ 206,013        4.7   $ 784,883      $ 759,235        3.4
  

 

 

    

 

 

      

 

 

    

 

 

    

 

(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 expense (income) of $1,663 and ($5,292) for the three months ended and twelve months ended December 31, 2019, related to the impact of ASC 842 for lease accounting.

 

     Three months ended
December 31,
          Twelve months ended
December 31,
        
     2019     2018     %     2019     2018      %  

Reconciliation of Net Income to Outdoor Operating Income:

             

Net Income

   $ 102,753     $ 95,693       7.4   $ 372,111     $ 305,232        21.9

Loss on extinguishment of debt

     —         —           —         15,429     

Interest expense, net

     36,165       32,190         149,852       129,198     

Income tax expense (benefit)

     2,492       2,728         (4,222     10,697     
  

 

 

   

 

 

     

 

 

   

 

 

    

Operating Income

     141,410       130,611       8.3     517,741       460,556        12.4

Corporate expenses

     17,200       17,379         65,588       63,987     

Stock-based compensation

     11,569       6,698         29,647       29,443     

Impact of ASC 842 adoption (lease accounting standard)

     1,663       —           (5,292     —       

Depreciation and amortization

     62,878       58,010         250,028       225,261     

(Gain) loss on disposition of assets

     (1,881     (32       (7,241     7,233     
  

 

 

   

 

 

     

 

 

   

 

 

    

Outdoor Operating Income

   $ 232,839     $ 212,666       9.5   $ 850,471     $ 786,480        8.1
  

 

 

   

 

 

     

 

 

   

 

 

    

 

     Three months ended
December 31,
          Twelve months ended
December 31,
       
     2019     2018     %     2019     2018     %  

Reconciliation of Total Operating Expense to Acquisition-Adjusted Consolidated Expense:

            

Total Operating Expense

   $ 321,249     $ 297,287       8.1   $ 1,235,903     $ 1,166,666       5.9

Gain (loss) on disposition of assets

     1,881       32         7,241       (7,233  

Depreciation and amortization

     (62,878     (58,010       (250,028     (225,261  

Impact of ASC 842 adoption (lease accounting standard)

     (1,663     —           5,292       —      

Stock-based compensation

     (11,569     (6,698       (29,647     (29,443  

Acquisitions and divestitures

     —         12,051         —         44,003    
  

 

 

   

 

 

     

 

 

   

 

 

   

Acquisition-Adjusted Consolidated Expense

   $ 247,020     $ 244,662       1.0   $ 968,761     $ 948,732       2.1
  

 

 

   

 

 

     

 

 

   

 

 

   

 

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     Twelve months ended  
     December 31,     December 31,  
     2019     2018     2019     2018  

Net income

   $ 102,753     $ 95,693     $ 372,111     $ 305,232  

Depreciation and amortization related to real estate

     59,882       54,516       235,802       212,457  

(Gain) loss from disposition of real estate assets

     (1,727     339       (6,775     8,689  

Non-cash tax benefit for REIT converted assets

     —         —         (17,031     —    

Adjustment for unconsolidated affiliates and non-controlling interest

     210       263       771       648  
  

 

 

   

 

 

   

 

 

   

 

 

 

Funds From Operations

   $ 161,118     $ 150,811     $ 584,878     $ 527,026  
  

 

 

   

 

 

   

 

 

   

 

 

 

Straight-line income

     (144     (1,816     (361     (2,036

Impact of ASC 842 adoption (lease accounting standard)

     1,663       —         (5,292     —    

Stock-based compensation expense

     11,569       6,698       29,647       29,443  

Non-cash portion of tax provision

     329       (37     2,901       660  

Non-real estate related depreciation and amortization

     2,996       3,494       14,226       12,804  

Amortization of deferred financing costs

     1,353       1,258       5,365       4,920  

Loss on extinguishment of debt

     —         —         —         15,429  

Capitalized expenditures—maintenance

     (13,267     (12,655     (49,155     (43,108

Adjustment for unconsolidated affiliates and non-controlling interest

     (210     (263     (771     (648
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Funds From Operations

   $ 165,407     $ 147,490     $ 581,438     $ 544,490  
  

 

 

   

 

 

   

 

 

   

 

 

 

Divided by weighted average diluted common shares outstanding

     100,672,782       99,759,674       100,320,574       99,086,160  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted AFFO per share

   $ 1.64     $ 1.48     $ 5.80     $ 5.50  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

9


SUPPLEMENTAL SCHEDULES AND

UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Projected 2020 Adjusted Funds From Operations:

 

     Year ended December 31, 2020  
     Low     High  

Net income

   $ 359,250     $ 373,750  

Depreciation and amortization related to real estate

     237,000       237,000  

Gain from disposition of real estate assets and investments

     (4,000     (4,000

Adjustment for unconsolidated affiliates and non-controlling interest

     200       200  
  

 

 

   

 

 

 

Funds From Operations

   $ 592,450     $ 606,950  
  

 

 

   

 

 

 

Straight-line expense

     1,000       2,000  

Stock-based compensation expense

     32,800       32,800  

Non-cash portion of tax provision

     700       700  

Non-real estate related depreciation and amortization

     12,400       12,400  

Amortization of deferred financing costs

     5,600       5,600  

Loss on extinguishment of debt

     18,250       18,250  

Capitalized expenditures—maintenance

     (51,000     (51,000

Adjustment for unconsolidated affiliates and non-controlling interest

     (200     (200
  

 

 

   

 

 

 

Adjusted Funds From Operations

   $ 612,000     $ 627,500  
  

 

 

   

 

 

 

Weighted average diluted shares outstanding

     101,200,000       101,200,000  
  

 

 

   

 

 

 

Diluted earnings per share

   $ 3.55     $ 3.69  
  

 

 

   

 

 

 

Diluted AFFO per share

   $ 6.05     $ 6.20  
  

 

 

   

 

 

 

 

The guidance provided above is based on a number of assumptions that management believes to be reasonable and reflect our expectations as of February 2020. Actual results may differ materially from these estimates as a result of various factors, and we refer to the cautionary language regarding “forward looking” statements included in the press release when considering this information.

 

10