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Lamar Advertising Co. (LAMR)
Q2 2008 Earnings Call Transcript
August 06, 2008 11:00 am ET
Kevin Reilly - CEO
Sean Reilly - COO
Keith Istre - CFO
Jason Helfstein - Oppenheimer and Company
Marci Ryvicker - Wachovia Securities
Mark Wienkes - Goldman Sachs
Jim Boyle - C.L. King
James Farrant - Morgan Stanley
Katrina Garnett - Citi
Kit Spring - Stifel Nicolaus
Bishop Sheen - Wachovia
Previous Statements by LAMR
» Lamar Advertising Company Q1 2009 Earnings Call Transcript
» Lamar Advertising Company., Q4 2008 Earnings Call Transcript
» Lamar Advertising Company Q3 2008 Earnings Call Transcript
In the course of this discussion Lamar may make forward-looking statements regarding the Company including statements about its future financial performance, strategic goals and plans. Lamar has identified important factors that could cause actual results to differ materially from those discussed in this call and on the Company's report on Form 10-K and 10-Q and the registration statements that Lamar files with the SEC from time-to-time. Lamar refers you to those documents. Lamar second quarter and 2008 earnings release which contains the information required by Regulation G was furnished to the SEC on a Form 8-K this morning and is available on Lamar's website on www.lamar.com.
It is now my pleasure to turn this conference over to Kevin Reilly. Mr. Reilly you may begin.
[Chantal], thank you. I want to welcome all to our Q2 call, as it is our custom, I'll make a few brief remarks and then turn the call over to Keith and Sean for the financial and operational highlights. I thought, I would address how we plan to manage in this downturn broadly.
First, let me say that we've been down five points before for a quarter, and we are going to manage this downturn just like we have in others over line on price and occupancy drift down, and we'll aggressively manage expenses. The only difference that I see here versus '01 is that we've been extremely successful in our digital deployment and that leaves me to believe that when we start coming out of this thing, that we will come out very quickly and very aggressively. We have got enough confidence in our digital experience so far that in spite of a possible sagging of the entire flat perform in '09, we plan to deploy as many or more units as we will deploy in '08.
With that I'd like to go ahead and turn the call over to Keith Istre for the financials.
Okay. Good morning, everybody. Just a couple of quick highlights, a little color on the quarter. Just to remind everybody, we have guided the pro forma revenue growth without twist in the second quarter between 0 and 1% up. We came in at 0.3% positive for the quarter. On the direct and G&A operating expenses in the field we were up 3.7%. That actually was slightly below our run-rate, our pro forma expense run-rate between 4% and 6% and as we look out into the third and fourth quarter, we don't see that changing very much. So, if you are updating your models on the expense side, you should be seeing growth in that range for the back half of the year.
On corporate overhead you might have noticed that spiked in the quarter. There were two extraordinary items that occurred to that affected corporate overhead expense. One was a jury verdict regarding a tree cutting incident in Ohio several years ago and the other was a settlement of the certain employee with employment related claims as a result of net additional expense to corporate overhead for the quarter was approximately $2 million.
Guidance for Q3, as you saw was down 5 on a pro forma basis for revenue. That does include Vista, and as Kevin mentioned we've been there before. If you go back to 2001, the first and second quarter of that year, we were in positive growth territory as far as our pro forma revenue.
In the third and fourth quarter, we were in negative growth for our pro forma revenue, and we ended up the year at down 2%. So, this is not uncharacteristic the way that '08 is unfolding. We've been there before, and we've dealt with it then.
Sean with that I guess you are up.
Sure, thanks Keith. Let me go through some of the key operating stats that we typically go through and give a little color, but the headline statistics is what is going on with national sales.
As we've spoken to on the last couple of quarterly calls, originally this downturn was driven by softness in local sales and national seem to be strong. In fact, our Q2 national book was up 11%. However, as we look forward, that's changed and so I guess if there's the other shoe that drops, national sales is that other shoe. And you've heard that from other platforms, other media companies, and we are certainly not immune.
As we look forward Q3 national is flat, and Q4 looks slightly down. So that is the headline statistics. This downturn has now beginning to affect national sales broadly. With a little bit of regional color, this shouldn't be a shock to anybody given our comments and some of the comments you are hearing from others, but regionally the western region, Southern California, Las Vegas, continues to struggle. Southeast, Florida and central Michigan, Minnesota and the like continue to be parts of the country that struggled the most. In fact year-to-date, our western region is down 8%. And so that gives you little flavor for how tough things are out there.