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Lamar (LAMR) to Raise $400M by Private Senior Notes Offering

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Lamar Advertising Company (LAMR - Free Report) announced that it will raise $400 million through a private placement of senior unsecured notes by its wholly-owned subsidiary, Lamar Media Corp.

 The 4 7/8% senior notes are due in 2029. Subject to customary closing norms, the offering is expected to close on or about May 13, 2020.

The proceeds, after considering the payment of fees and expenses, are expected to be $394.5 million. 

During first-quarter 2020, the company withdrew $535 million on its revolver. Lamar intends to use proceeds from the notes offering to‎ repay outstanding balances under the revolving portion of the company’s senior credit facility. The remaining proceeds will be used to fund working capital needs or for general corporate purposes.

Although the notes offering will bolster the company’s liquidity position, it increases long-term debt. Moreover, the coronavirus outbreak has impacted outdoor advertising spending. This is expected to reduce outdoor advertising revenues and cash flow from operations for the company. This will lead to higher leverage levels.

Notably, at the end of first-quarter 2020, Lamar 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. Further, the company expects a fall in capital expenditure from $130 million to about $58 million this year.

Additionally, it reported funds from operations (FFO) per share of $1.12 for the first quarter, up 13.3% from the prior-year quarter’s 99 cents. However, the figure narrowly missed the Zacks Consensus Estimate of $1.13. The company withdrew its 2020 guidance in the wake of the coronavirus crisis.

Shares of this Zacks Rank #3 (Hold) company have lost 22.3% compared with its industry’s decline of 10.9% over the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

 

Better-Ranked Stocks to Consider

Gladstone Land Corporation’s (LAND - Free Report) FFO per share estimates for 2020 remained unchanged at 62 cents over the past month. Further, it currently carries a Zacks Rank of 2 (Buy).

Lexington Realty Trust’s (LXP - Free Report) Zacks Consensus Estimate for 2020 FFO per share has been unchanged 76 cents over the past month. Also, it currently carries a Zacks Rank of 2.

Farmland Partners Inc.’s (FPI - Free Report) FFO per share estimate for the ongoing year has been unchanged at 25 cents over the past 30 days. Additionally, it carries a Zacks Rank of 2 at present.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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