Lamar Reports Net Loss

Recently, Lamar Advertising Company (LAMR: 31.57 +0.38 +1.22%), a leading owner and operator of outdoor advertising and logo sign displays, reported results for the fourth quarter and full year 2009.
 
During the quarter, net revenues were $262.3 million versus $279.3 million in the fourth quarter of 2008, a 6.1% decrease. Operating income was $20.4 million compared to $23.8 million for the same period in 2008. EBITDA was $106.8 million versus $114.4 million in the fourth quarter of 2008, a 6.7% decrease.
 
There was a net loss of $19.7 million for the fourth quarter of 2009 compared to a net loss of $8.6 million for the fourth quarter of 2008. Net loss per share was 22 cents compared to a net loss of 9 cents in the year-ago quarter. The reported loss per share was above the Zacks Consensus Estimate of a loss of 19 cents.
 
During 2009, net revenues were $1.06 billion versus $1.20 billion in the previous year, an 11.9% decrease. Operating income was $97.6 million compared to $178.8 million in 2008. EBITDA decreased to $441.4 million from $512.1 million in 2008.
 
There was a net loss of $58.0 million compared to a net income of $2.2 million in 2008. Net loss per share was 64 cents versus an EPS of 2 cents in 2008. However, the net loss was below the Zacks Consensus Estimate of a loss of 74 cents. For the first quarter of 2010, management expects net revenues to be approximately $245.0 million, down from $247 million in the first quarter of 2009 and $262.3 million in the previous quarter.
 
Lamar has a strong balance sheet with a free cash flow of $241.1 million at the end of December 31, 2009 compared to $171.3 million in 2008, an increase of 40.7%. Moreover, Lamar has reduced its outstanding debt under its senior credit facility by making principal prepayments of $43.5 million.
 
The prepayments consist of $26.2 million on the term portion of the senior credit facility, which would have fallen due on March 31, 2010 and $17.3 million for the entire principal amount outstanding under the Series C incremental term loan, which was scheduled for amortization by September 30, 2012.
 
Despite a difficult environment, a strong balance sheet and liquidity will help the company in future. We reiterate our Neutral recommendation on the stock.