Lamar Revenues and Cashflow Grow in 1Q 2018

“We are seeing a nice acceleration in our topline growth.”  That’s how CEO Sean Reilly summarized the company’s first quarter   Here are the highlights of the earnings release and earnings call.

  • Revenue increased 4.2% to $361 million for the first quarter of 2018 due to the impact of acquisitions.  Organic revenue increased 1.1%.    Local and national were both up.  Growth has accelerated from the first quarter due to political.  Sean Reilly said political is tracking 20-25% ahead of the last midterm cycle.  Reilly says the second quarter pacings are up 2.5%.
  • Cashflow (EBIDTA) increased 8.3% to $139 million due to an increase in revenue following acquisitions.  Acquisition adjusted cashflow was up 4.9% due to tight expense controls.
  • The company built 24 new digital billboards during the quarter.  Same board digital revenue growth was 3.2% which suggests digital signs aren’t canabilizing existing signs.
  • Lamar has filed a registration to raise up to $400 million via the sale of equity during the next three years.  Reilly said the company could do $250 million/year in small acquisitions and the new equity will help the company stay below its 4:1 Debt/Cashflow target.
  • During the quarter the company retired $500 million in high yield  5 7/8’s senior notes and added a new $600 million term loan to reduce interest expense.
  • Lamar took an $8.7 million loss during the first quarter of 2018 on the sale of all of its assets in Puerto Rico.  Reilly gave this rationale for the sale: “It’s been a drag on our performance.  I hated to do it.  We love our folks down there.  It was an outstanding performer for us.  But the island never recovered from the great recession and the last straw was Hurricane Maria.”

Insider’s take:  Lamar is assembling a war chest for acquisitions.  The timing is smart, especially if we hit a recession and multiples shrink.  Lamar has a 4:1 Debt/Cashflow target.  Outfront has a 3.5-4.0:1.0 Debt/Cashflow target.  Clear Channel Outdoor are you listening?

Lamar finished the day up 3.5% to $66.98.

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