Lamar Advertising Co. LAMR reported second-quarter 2015 adjusted Funds from Operations (“FFO”) of $1.22 per share, surpassing the Zacks Consensus Estimate of $1.12 and ahead of the year-ago quarter tally of $1.08.
Net revenue for the quarter increased 4.2% year over year to $344.2 million, exceeding the Zacks Consensus Estimate of $343 million.
Quarter in Detail
Operating income rose to $99.3 million from $73 million recorded in the comparable prior-year period. The company’s local revenue on billboards increased 4.3%, while a hike of 2.5% was experienced in national revenue on billboards. During the quarter, pro forma direct and G&A operating expense inched up 1.6%, reflecting prudent cost management.
Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) climbed 3.8% year over year to $155.4 million. Moreover, free cash flow increased 18.7% year over year to $101.2 million.
Lamar had total liquidity of $307.6 million at quarter-end, of which $280.1 million was available under its revolving senior credit facility and $27.5 million in cash and cash equivalents.
Our Take
Lamar, backed by an improving operational performance, continues to trend the growth track. The company’s transformation to a real estate investment trust (“REIT”), its diversified tenant base, impressive national footprint and a healthy balance sheet bode well for the long term.
Lamar currently has a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like Ashford Hospitality Trust, Inc. AHT, CoreSite Realty Corporation COR and Getty Realty Corp. GTY. All these stocks sport a Zacks Rank #1 (Strong Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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