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Lamar Advertising Company (LAMR - Analyst Report) reported its financial results for the fourth quarter and fiscal year 2011 on February 22. Earnings per share in the quarter were 7 cents, a remarkable improvement from a loss of 8 cents reported in the year-ago quarter and above the break-even Zacks Consensus Estimate.

In the fiscal year 2011, earnings per share were 9 cents versus a 44 cent loss reported in the previous fiscal year and the Zacks Consensus Estimate of earnings of 3 cents.


Pro forma net revenue in the fourth quarter jumped 4.0% year over year to $288.2 million and registered reported growth of 4.6%. The results were above management’s revenue guidance of $284 million and pro forma growth forecast of 2.5%.

In the fiscal year 2011, net revenue was $1,133.5 million, up 3.8% year over year.


Direct advertising and G&A expenses in the fourth quarter was $151.7 million, up 0.7% year over year on a pro forma basis. Operating income in the quarter was $45.9 million, up from $32.8 million in the comparable quarter of 2010.

Interest expense declined 6.9% year over year to $41.6 million in the quarter due to a lower debt level. Adjusted EBITDA in the fourth quarter was $125.8 million, up roughly 8.5% year over year.

Balance Sheet

Exiting the fourth quarter, Lamar Advertising had cash and cash equivalents of approximately $33.5 million versus $41.5 million in the previous quarter. Total debt, including current maturities decreased to $2,158.5 million from $2,223.2 million in the fourth quarter of 2010.

Cash Flow

In the fourth quarter 2011, cash flow from operating activities was approximately $96.1 million, down 27.5% year over year. Capital spending in the quarter amounted to $23.9 million, up 52.2% year over year. The company expended roughly 78.2% of the total amount on upgrading its billboards business while the rest was spent for logo, transit, land and buildings, and operating equipment businesses.

Free cash flow was $63.9 million versus $59.2 million in the fourth quarter of 2010.


For the first quarter of 2012, management expects net revenue to be approximately $264.0 million and up roughly 3.0% on a pro forma basis.

Lamar Advertising Company is one of the largest owners and operators of outdoor advertising structures in the U.S. It provides advertising services to restaurants, retailers, automotive, real estate, health care, gaming, service, hotel and motel, telecommunication, and amusement industries, including entertainments and sports. The company faces stiff competition from Clear Channel Outdoor Holdings Inc. (CCO - Snapshot Report) and CBS Outdoor.

We currently maintain a Neutral recommendation on the stock.

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