Lamar revenue up 9% in 4Q 2016

Lamar released fourth quarter 2016 financials yesterday.  Here are the highlights from the financials and the Seeking Alpha earnings call transcript.  All of the quotes come from the Seeking Alpha transcript.

  • Revenue increased 8.6% to $386 million.  Acquisition adjusted revenue increased 2% or slightly in excess of GDP. The rest of growth was attributable to the acquisition of 6 Clear Channel Outdoor markets which in the first quarter of 2016.
  • Adjusted cashflow increased 9.4% to $174 million.  The fact that cashflow increased more rapidly than revenue suggests Lamar is achieving economies in the assets purchased from Clear Channel Outdoor.  The company’s fourth quarter cashflow margin was 44.9% which is the highest in several years.
  • Lamar is moderately leveraged with Total Debt/Cashflow of 3.41 based on $2.4 billion of debt and $696 million in annualized fourth quarter 2016cashflow.  The company’s objective is to operate at Total Debt/Cashflow for 3.0 to 4.0.
  • Lamar will deploy 150 new digital displays in 2017 up from 115 new digital displays in 2015.
  • CEO Sean Reilly said that the company has reduced the multiple on the Clear Channel acquisitions with increased performance:

The largest acquisition that we can point to on valuation for the later course is what we did with Clear Channel last year at this time. The trailing announced multiple of EBITDA contribution was 12.5x; the forward multiple for us under our management, we promised to the market we bring it in in 2016 at about 11.5x. I’m pleased to report those markets performed slightly better than that, and the forward multiple we ended up paying was more around 11-ish.

  • Reilly also commented that today’s digital billboards have a life of up to 12 years and are cheaper.

When we started deploying digital units back in the 2005, 2006, 2007, 2008 timeframe, the expected life was seven or eight years. Today, because manufacturers are getting so much better at what they’re doing and they’re producing units that are more robust and have a longer life, the projected average life of a unit now is 12 years…And then you also have costs coming down. Now, the cost curve was dramatically dropping three or five years ago, but we’re still getting 5% to 10% reductions in the cost of deployment. So modest reductions in cost, but pretty dramatic increases in useful life.

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