• Lamar Revenues and Cashflow Grow in 2Q 2018

    Lamar had a strong second quarter.  CEO Sean Reilly summarized results: “Q2 was a good all around quarter for Lamar.  Everything clicked, every business unit, billboards, transit, airports, and logos all lines of business exceeded plan on the top and bottom.”  Here are the highlights from the earnings call and 2Q 2018 earnings release.

    • Net revenue increased 5.7% to $420 million due to the positive impact of acquisitions and increases in digital board revenues.   Acquisition adjusted revenues increased 3.4%.  Same unit digital sign revenue increased 6.3%.
    • Cashflow (EBIDTA) increased 7.6% to $196 million during the second quarter due to increased revenues and tight expense controls.  Lamar’s litigation costs are down after a heavy litigation year in 2017.  CFO Keith Istre mentions that that the EBIDTA margin was 47% during the second quarter of 2018 up from 46% during the second quarter of 2017.
    • The company added 72 new digital units in the second quarter to end the quarter with 2905 digital units.  Reilly said the company is rolling out new digital units as fast as it can.
    • The company has $319 million available to borrow for acquisitions under its revolving line of credit.  The company’s Debt/Cashflow (EBIDTA) is a moderate 3.6.
    • Lamar has $100 million of acquisitions in letter of intent, under contract or closed year to date.  The acquisitions will be funded with revolver draws ($75 million) and stock ($25 million).  Reilly explained Lamar’s approach to acquisitions:  “Seller’s have a trailing multiple that looks pretty racy.  When we do these fill-in acquisitions we’re really just acquiring advertising contracts structures and ground leases…We don’t need trucks and people and the like.”

    Insider’s take: Lamar is getting benefits from acquisitions.  Revenue is up, expenses are barely growing which translates into a healthy increase in cashflow.   A bit dismaying to see that Lamar’s organic revenue growth of 3.4% trailed US GDP growth of 4% during the second quarter but Lamar is doing better than Outfront or Clear Channel Outdoor at pacing GDP.  The market liked what it heard.  Lamar stock finished the day up 0.32% compared to Clear Channel Outdoor (down 1.11%), Outfront (down 1.3%) and the S&P 500 (down 0.03%).

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