LAMR

Lamar Advertising Company (LAMR)

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Lamar Advertising Company (LAMR)

Q1 2009 Earnings Call Transcript

May 7, 2009 11:00 am ET

Executives

Kevin P. Reilly Jr. – Chairman, President, Chief Executive Officer

Keith A. Istre – Chief Financial Officer

Sean E. Reilly – Chief Operating Officer & President – Outdoor Division

Analysts

Alexia Quadrani – JPMorgan

Jason Helfstein – Oppenheimer & Company

Benjamin Swinburne – Morgan Stanley

Marci Ryvicker – Wachovia/Wells Fargo

Mark Wienkes – Goldman Sachs

James Marsh – Piper Jaffray

James Dix – Wedbush

Marci Ryvicker – Wachovia/Wells Fargo

Presentation

Operator

Ladies and gentlemen thank you for your patience in holding. We now have our speakers in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of our speakers’ presentations we will open the floor for questions. Instructions will be given at that time on the procedure to follow if you would like to ask a question.

It is now my pleasure to turn this mornings conference over to Kevin Reilly. You may begin sir.

Kevin P. Reilly Jr.

Thank you. I’d like to welcome all of our Analyst friends and guests on our Q1 call. I had like to start out as is our custom with some sort of general comments about how we see the rest of the year playing out and then turn it over to Keith for some of the Q1 details and then to Sean for some operational information.

In general, the way we see the rest of the year shaping up is it looks like we’re going to bump along the bottom for a while. Don’t know exactly when we are going to come out, but we don’t see a real sharp V here. And on the cost control side, I expect that we will perform on the positive side there and I want to thank management and really all of our group for their meticulous attention to the cost saving side of our business. As we manage through the rest of the year in this trough, one important thing we need to do is protect our franchise and that is very simple. We just need to keep the lights burning and the copy fresh, and that’s no easy feat because we are operating as on the operation side about as lean as I’ve ever seen it in the last 30 years. My expectation when we do come out of this thing is that we will accelerate out probably faster than we have in the past and my reasons for that are two folds.

One is digital and two is newspaper industry. I’m convinced that as the fundamentals of the newspaper industry continue to deteriorate which represents in many of our markets almost 60 to 65% of local ad spend that we are going to be the beneficiary of some of that and our focus going forward will heavily be on the local side of ad spend and if we take care of our automotive customers for the rest of this year I do think that we will come out of this thing much quicker than we have in the past.

With that Keith, I’d like to turn the call over to you.

Keith A. Istre

Okay. I’m just going to briefly provide a little color on some of the metrics in the press release. I don’t really have anything else to add, but just a couple of highlights. As you saw in the sales side, our pro forma revenue was down 15% for the first quarter. That’s what we guided to. And that downward run rate was the same for all three months. There were no peaks and valleys, it was basically 15% across the board and that’s what we told investors on the last call last quarter that it would be fairly stable, no peaks and valleys like we had in the fourth quarter.

For the second quarter, guidance was basically the same down 16, again expectations are for a run rate that is consistent for all three months of the quarter as it was in the first quarter. No real peaks and valleys. On the expense side, again the press release pretty much speaks for itself. The pro forma expenses before corporate overhead were down 12% or $20 million, corporate overhead was down 19% or $2 million. Combined basis represents a 12.5% decrease in consolidated expenses. Just to remind everybody, on the last call the guidance for pro forma consolidated expenses for ‘09 was a decrease of between 5 and 7% over ’08. ’08 pro forma consolidated expenses, operating in corporate overhead was a total of $700 million even. So with the first quarter behind us, we’ve gotten off to a good head start towards that goal.

As you saw, free cash flow was $45 million for the quarter. That’s an increase of $24 million or 112%. That’s obviously due to all the cutbacks and CapEx operating expenses so forth and as we told you, all of this free cash flow is being used to reduce outstanding debt. Speaking of CapEx, that declined to $10 million in Q1 versus $50 million in Q1 ’08, 80% reduction. Just to restate our guidance for ‘09 for CapEx, it will be approximately $35 million for the entire year.

Lastly, during the first quarter, we addressed the previously pending concerns relating to our capital structure, as we outlined in the press release, the credit markets eased up a bit and as we told you on the last call when we saw an opportunity to access those markets and seek an amendment from our bank group, we would do that. So that action now allows us or allows management to focus all of its attention on the operations of the core business and operate through this environment as we’ve done so many times in the past. Sean?

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