Lamar Advertising Company (LAMR) reported its financial results for the first quarter of the fiscal year 2011 on May 4. Earnings per share in the quarter were a loss of 14 cents, an improvement over a loss of 27 cents reported in the first quarter of 2010 and the Zacks Consensus Estimate of 20 cents.
Revenue
In the first quarter, pro forma net revenue increased 4.5% year over year to $255.2 million and registered a pro forma revenue growth of 4.2%. The results were roughly slightly below management’s revenue guidance of $256 million and pro forma growth forecast of 4.5%.
Margins
Direct advertising and G&A expenses were $148.9 million, up 3.0% year over year on a pro forma basis. Operating income in the quarter was $25.6 million, up from $10.8 million in the comparable quarter of 2010.
Interest expense declined 11.6% year over year to $43.6 million in the quarter due to a lower dent level and decrease in interest rate because of refinancing of senior credit facility. Adjusted EBITDA in the first quarter was $95.2 million versus $90.8 million in the year-ago quarter of 2010. Tax rate in the quarter was 26.4%.
Balance Sheet
Exiting the first quarter, Lamar Advertising had cash and cash equivalents of approximately $32.4 million down from $91.7 million in the previous quarter. Total debt, including current maturities decreased to $2,356.6 million from $2,409.1 million in the first quarter of 2010.
Cash Flow
Cash flow from operating activities in the quarter was approximately $25.8 million, representing an improvement of over $7.7 million in the year-ago quarter. Capital spending amounted to $28.8 million, up from $8.3 million in the first quarter of 2010. The company invested roughly 59.4 of the amount to upgrade its billboards business while the rest was spent for logo, transit, land and buildings, and operating equipment businesses. Free cash flow was $26.7 million versus $36.4 million in the first quarter of 2010.
Outlook
For the second quarter of 2011, management expects net revenue to be approximately $296.0 million and up roughly 3.0% on a pro forma basis. Capital expenditure for the full year is likely to be approximately $100 million.
Lamar Advertising Company is one of the largest owners and operators of outdoor advertising structures in the U.S. It provides advertising services to restaurants, retailers, automotive, real estate, health care, gaming, service, hotel and motel, telecommunication, and amusement industries, including entertainments and sports. The company faces stiff competition from Clear Channel Outdoor Holdings Inc. (CCO) and CBS Outdoor.
We currently maintain a Neutral recommendation on the stock.
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