The coronavirus pandemic has rattled the global economy and financial markets have been subject to volatility. The outdoor advertising space has been no different. Taking this into account, Lamar Advertising Company LAMR recently withdrew its 2020 guidance and informed about the board’s re-evaluation of the dividend policy and detailed liquidity measures.
The company had earlier projected 2020 adjusted FFO per share of $6.05-$6.20, suggesting 4.3-7% year-over-year growth. However, Lamar is not the only one to withdraw guidance. Recently, another outdoor advertising company, OUTFRONT Media Inc. OUT, has withdrawn its 2020 guidance amid the macroeconomic uncertainty induced by the coronavirus pandemic.
Moreover, evaluation of Lamar’s previously-communicated plans to pay quarterly distributions in an aggregate amount of $4 per share in 2020 became essential as the long-term health of the company needs to be prioritized at this moment. This is because efforts to curb the coronavirus spread are affecting the broader economy, forcing many businesses to curtail their advertising expenses with customers staying at homes rather than shopping or dining outside.
To address its liquidity situation, the company in March made use of its $750 million revolving credit facility and drew down $535 million from it, giving it liquidity and financial headroom. Consequently, the company had about $490 million in cash in hand after the payment of its first-quarter dividend and the drawdown.
With efforts to improve the liquidity position and strengthen the balance sheet, the company remains well poised to meet its obligations. It has no scheduled amortization in 2020, while its remaining debt outstanding is interest-only. Moreover, its next maturity is the $175-million accounts receivable securitization due December 2021.
Further, the company has decided to lower its capital expenditures to about $58 million for 2020, down from its prior projection of $130 million. Out of the $58 million, $26 million is earmarked for maintenance capital expenditures. The company has also kept on hold its acquisition activities.
With prudent balance sheet management efforts and reduced capital expenditure, the company seems well poised to tide through these uncertain times.
Shares of Lamar Advertising, a Zacks Rank #3 (Hold) company, have plunged 55.6% so far this year compared with industry declined 24.2%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Stocks to Consider
Piedmont Office Realty Trust, Inc.’s PDM funds from operations (FFO) per share estimates for the ongoing year has been revised 3.2% upward to $1.96 over the past two months. The stock currently carries a Zacks Rank of 2 (Buy).
Plymouth Industrial REIT’s PLYM Zacks Consensus Estimate for 2020 FFO per share moved up nearly 1.5% to $2.08 over the past month. The stock currently holds a Zacks Rank of 2.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Lamar Advertising Company (LAMR): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.