Lamar Advertising Company (LAMR) reported its financial results for the second quarter of fiscal year 2011 on August 4. Earnings per share in the quarter were 12 cents, an improvement over a loss of 10 cents reported in the second quarter of 2010 and the Zacks Consensus Estimate of 8 cents.
Revenue
In the second quarter, pro forma net revenue increased 2.4% year over year to $293.3 million and registered a pro forma revenue growth of 2.1%. The results were slightly below management’s revenue guidance of $296 million and pro forma growth forecast of 3.0%.
Expenses/Income
Direct advertising and G&A expenses were $149.5 million, up 2.0% year over year on a pro forma basis. Operating income in the quarter was $59.4 million, up from $49.3 million in the comparable quarter of 2010.
Interest expense declined 7.1% year over year to $43.3 million in the quarter due to a lower debt level. Adjusted EBITDA in the second quarter was $133.5 million versus $131.0 million in the year-ago quarter of 2010.
Balance Sheet
Exiting the second quarter, Lamar Advertising had cash and cash equivalents of approximately $18.7 million down from $32.4 million in the previous quarter. Total debt, including current maturities decreased to $2,285.7 million from $2,356.6 million in the second quarter of 2010.
Cash Flow
Cash flow from operating activities in the quarter was approximately $84.6 million, down 1.2% year over year. Capital spending amounted to $25.8 million, up from $7.3 million in the second quarter of 2010.
The company invested about 78.5% 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 $68.2 million versus $80.7 million in the second quarter of 2010.
Outlook
For the third quarter of 2011, management expects net revenue to be approximately $293.0 million and up roughly 2.0% on a pro forma basis.
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 entertainment 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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