Lamar Advertising Company (LAMR) reported its financial results for the fourth quarter and the fiscal year 2010 on February 23. Earnings per share in the quarter were a loss of 8 cents, an improvement from a loss of 22 cents as reported in the fourth quarter of 2009. The results, however, lagged the Zacks Consensus Estimate of a loss of 7 cents per share.
In the fiscal year 2010, the company reported a loss of 44 cents per share versus a loss of 64 cents in 2009 and the Zacks Consensus Estimate of 42 cents’ loss per share.
Revenue
In the fourth quarter, net revenue increased 5.1% year over year to $275.7 million and registered a pro forma revenue growth of 4.4%. The results were roughly in line with management’s revenue guidance of $275 million and pro forma growth forecast of 4.0%.
In the fiscal year 2010, net revenue totaled $1,092.3 million, up 3.4% year over year.
As a percentage of revenue, operating expenses dipped 4.1% to $242.9 million in the quarter. Operating income in the quarter was $32.8 million, up from $20.4 million in the comparable quarter of 2009. Operating margin improved to 11.9% versus 7.8% in the year-ago quarter. Interest expense declined 13.9% year over year to $44.7 million in the quarter.
Adjusted EBITDA in the fourth quarter was $115.4 million versus $106.8 million in the year-ago quarter of 2009.
Balance Sheet
Exiting the fourth quarter, Lamar Advertising had cash and cash equivalents of approximately $91.7 million versus $38.4 million in the previous quarter. Total debt, including current maturities decreased to $2,409.1 million down compared with $2,472.8 million in the third quarter of 2010.
Cash flow from operating activities in the fourth quarter was approximately $132.6 million, up 29.6% year over year. Capital spending in the quarter amounted to $15.7 million, up 60.5% year over year. The company invested roughly 56% of the amount to upgrade its billboards business while the rest was spent for logo, transit, land and buildings, and operating equipment businesses. Free cash flow was $59.2 million versus $50.4 million in the fourth quarter of 2009.
In the fiscal year 2010, cash flow from operating activities was approximately $322.8 million and capital expenditures were $43.5 million.
Outlook
For the first quarter of 2011, management expects net revenue to be approximately $256.0 million and up roughly 4.5% on a pro forma basis.
Lamar Advertising Company is one of the largest owners and operators of outdoor advertising structures in the U.S. It provides advertising services to restaurants, retailers, automotive, real estate, health care, gaming, service, hotel and motel, telecommunication, and amusement industries, including entertainments and sports. The company faces stiff competition from Clear Channel Outdoor Holdings Inc. (CCO) and CBS Outdoor.
We currently maintain a Neutral recommendation on the stock.
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