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Lamar Advertising Slashes Q2 Dividend on Coronavirus Scare

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Lamar Advertising Company (LAMR - Free Report) has announced a quarterly dividend of 50 cents per share, reflecting a reduction from its earlier payment of $1 per share on Mar 31, 2020. This dividend will be payable on Jun 30, to shareholders of record as of Jun 22, 2020.

Per management, the company witnessed an upswing in the customer activity in the first quarter but the business environment remains uncertain for the remainder of the year. Taking this into account, the company had previously noted that its plan to pay quarterly distributions in an aggregate amount of $4 per share in 2020 needs to be evaluated quarterly. This is because efforts to contain the spread of coronavirus are hurting the broader economy, forcing many businesses to curtail their advertising expenses, with customers staying at homes most of the time.

The company slashed the dividend in a bid to fortify its liquidity position and strengthen the balance sheet.

Due to the coronavirus pandemic and the resultant macroeconomic uncertainty, the company has withdrawn the 2020 guidance, and informed about the board’s re-evaluation of the dividend policy and detailed liquidity measures.

Consequently, the company made use of its $750-million revolving credit facility and drew down $535 million from it in March, giving it liquidity and financial headroom, in order to address the liquidity situation.

At the end of first-quarter 2020, Lamar Advertising had total liquidity of $608.5 million, of which $111.9 million was available for borrowing under its revolving senior credit facility, and $496.6 million in cash and cash equivalents. It has no scheduled amortization in 2020 and its next maturity is in 2021.

With a national footprint and diversified tenant base, Lamar is in a strong footing to sail through these uncertain times. However, the adverse impact of the pandemic on the company’s operating environment remains a concern. The reduction in dividend also acts as a deterrent for shareholders.

Shares of Lamar Advertising, a Zacks Rank #3 (Hold) company, have depreciated 23.3% so far this year, while its industry has declined 9.5%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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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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