Profits at Lamar Advertising Surge 60 Percent in Third Quarter

Andrew Klips  |

Shares of Lamar Advertising Company (LAMR) are trying to reach their highest level since November 2007 on a third quarter earnings report that matched Wall Street’s profit view and edged above revenue forecasts.  Based in Baton Rouge, Louisiana, Lamar is an owner and operator of outdoor advertising and logo sign display companies throughout the United States, Canada and Puerto Rico.

For the quarter ended September 30, Lamar reported revenue of $323.2 million, up 5.5 percent from $306.3 million in the third quarter of 2012.  Earlier this year, the company forecast revenue of $323 million at the high-end of its guidance range.  Net income was $18.3 million, or 19 cents per share, compared to $11.5 million, or 12 cents per share, in the year prior quarter.

Analysts were expecting net income of 19 cents per share on revenue of $322.4 million.

For the first three quarters of 2013, the company posted net revenue of $931.3 million, a 6.1-percent improvement from $877.4 million for the same period last year.  Net income rose to $33.5 million versus only $2.6 million in the first nine months of 2012.

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The company has been pondering converting into a real estate investment trust, or REIT, but is still awaiting a decision from the Internal Revenue Service as it reviews its standards on REITs.  Lamar originally filed a letter with the IRS in November 2012 regarding a potential REIT move, with a goal of conversion by January 2014.  The conversion, which is still subject to board approval, is still on track as it awaits a response from the IRS, according to the company.  Lamar intends to complete a corporate restructure to be in compliance with REIT rules by the end of 2013.

REITs generally invest in mortgages or property and benefit by not paying corporate income tax on earnings, provided that at least 90 percent of profits go to shareholders.

At the end of the third quarter, Lamar had $425.7 million in total liquidity, consisting of $182.7 million in cash/cash equivalents and $243 million available for borrowing under its revolving senior credit facility.  Total assets were $3.63 billion, up form $3.51 billion at the same time last year.

Looking at the fourth quarter, the company sees net revenue in the range of $314 million to $317 million.

Shares spiked in early trading to $49.58 following the report, only 3 cents short of its highest level in six years, but have pulled back some to about $49 shortly after noon Eastern.  For the year so far, shares have advanced about 25 percent through Tuesday’s close at $48.31.

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