Lamar released financials for the third quarter 2016.  Here are the highlights.

• Revenue increased 10.5% to $388 million during the third quarter due to additional revenue from the Clear Channel Outdoor acquisitions.

• Revenue increased 3.6% when adjusted for acquisitions due to healthy increase in digital sign revenue (up 6.6%) and increased political advertising.  Lamar grew 1.25 times faster than US GDP which was up 2.9% during the third quarter of 2016.

• Cashflow increased by 12% to $178 million during the third quarter of 2016.  Cashflow increased 3.9% on an acquisition adjusted basis.

• Sean Reilly said the markets acquired from Clear Channel in early 2016 are integrated and performing well.  The company is seeing the strongest growth on the coasts and the weakest growth in the oil patch.

• The company had 2,542 digital billboards at September 2016.  Lamar expects to add 110 new digital billboards via new construction during 2016 and expects to accelerate builds during 2017.  Here are Reilly’s comments on digital signs:

“Traditionally I’ve said that 30% of a market’s revenue coming from digital seems to be about where things are shaking out…It you look at our whole footprint we’re at about 20%…But those are guesstimates..In the UK digital billing for out of home has surpassed 50%…Even if digital revenues top out at 30% we’re still at 20% so we’ve got plenty of growth.”

• Lamar is seeing a longer than expected life on its digital signs and lower than expected maintenance costs of digital signs.  The company is seeing a 10 year life from digital signs deployed in 2007 and 2008 versus company expectations of a 7 year life.

• Reilly was asked what he’s learned from the Clear Channel acquisitions and here’s what he said:  We went in and installed some systems on the expense side…We’re operating at better margins than we inherited…We’re hitting our stride.  If you go to any of those markets you’ll see that the boards have been spruced up.. and they’ve fully integrated.”

• Sales are 77% local, 23% national.  Local revenues grew 2.3%.  National revenues grew 5.4%.  Insider supposes this is due to political advertising.  Reilly described political revenues as “coming in a little late, but coming in strong.”

Insider’s take:  Nice performance with lots of pluses.  Lamar continues to grow outdoor revenues faster than GDP.  Lamar is operating at higher cashflows on the Clear Channel assets.  Lamar is growing 1.25 times faster than US GDP during the third quarter.  Interesting to hear Reilly say that digital signs are lasting longer and costing less to replace than Lamar expected and that he thinks digital is mature when it accounts for 30% of revenues in a market.

Paid Ad