Lamar Hurt by Economic Situation

Lamar Advertising Company (LAMR - Analyst Report) has announced decent operating results for the third quarter ended Sep 30, 2009. Lamar reported net revenues of $271.8 million for the third quarter of 2009 versus $312.5 million for the third quarter of 2008, a 13.0% decrease. 

Operating income for the quarter was $39.3 million compared to $53.2 million for the same period in 2008. There was a net loss of $4.8 million for the third quarter of 2009 compared to net income of $1.8 million for the third quarter of 2008. 

Adjusted EBITDA was $122.5 million versus $134.5 million for the third quarter of 2008, an 8.9% decrease. Free cash flow was $83.0 million compared to $42.9 million for the same period in 2008, a 93.4% increase. 

Lamar is a leading owner and operator of outdoor advertising and logo sign displays. Lamar has grown its localized billboard advertising business through a combination of organic growth and strategic acquisitions. 

After the current recession passes, the company should benefit from any rebound in demand for local advertising, which should lead to higher occupancy and increased advertising rates for the company’s billboard businesses. The company’s internal and external investment activities have allowed it to capture a considerable share of localized outdoor advertising markets, which account for more than 80% of its annualized net revenue. 

Given the company’s large and growing national presence, there is additional upside going forward as the company builds up its national sales presence and expands relationships with larger, national advertisers.