Lamar Advertising Company · NASDAQ:LAMR
Lamar Advertising — Lamar Advertising Co/New — Investor Presentation (June 2014)
33 slides from Lamar Advertising's investor presentation, Jun 3, 2014
Slide 1: Filed by Lamar Advertising Company pursuant to Rule 425
Filed by Lamar Advertising Company Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities and Exchange Act of 1934, as amended Subject Company: Lamar Advertising Company Commission File No. 000-30242 The following are copies of slides that
Slide 2: Investor Presentation June 2014
June 2014 INVESTOR PRESENTATION
Slide 3: Disclaimer
Disclaimer Forward-looking Statements This presentation contains forward-looking statements, including our financial guidance for 2014, the statements regarding our consideration of an election to real estate investment trust status; our ability to complete the REIT conversion effective for the taxa
Slide 4: Agenda
Agenda Company background 3 REIT conversion highlights 22 Value creation and opportunities for growth 26 Appendix 29 3
Slide 5: Introduction: Experienced management team
Introduction Experienced management team Name Title Years with Lamar Kevin Reilly, Jr. Chairman of the Board and President 35 Sean Reilly Chief Executive Officer 23 Keith Istre Chief Financial Officer and Treasurer 35 Regional Managers (average years) 31 Lamar’s management team has been with the com
Slide 6: Company profile
Company profile Established in 1902 – over 110 years of operating experience Largest outdoor advertising company in the US based on number of displays – Operates approximately 145,000 billboard displays in 44 states, Canada and Puerto Rico – Operates over 128,000 logo sign advertising displays in 23
Slide 7: Key REIT investment considerations
Key REIT investment considerations Largest pure-play outdoor operator with expansive national footprint and over 145,000 billboard displays Significant barriers to entry due to permitting restrictions which make real estate portfolio nearly impossible to replicate Diversified base of 40,000+ tenants
Slide 8: Expansive national footprint with approximately 145,000 billboards
Expansive national footprint with approximately 145,000 billboards Canada Puerto Rico 7
Slide 9: Largest provider of logo signs in the US
Largest provider of logo signs in the US Operates nearly 89% of privatized state logo contracts covering over 128,000 displays 8
Slide 10: Lamar maintains a leading share of the U.S. outdoor advertising market
Lamar maintains a leading share of the U.S. outdoor advertising market Other 18% 47% ~$2bn in high-quality, REIT-eligible billboard assets 19% 16% Potential acquisitions could expand market share and increase AFFO Source: Company filings; Outdoor Advertising Association of America Note: Market share
Slide 11: Out-of-home regulations provide high barriers to entry
Out-of-home regulations provide high barriers to entry Lamar typically owns permits that allow OOH advertising at each location – Control of permit protects current inventory and prevents encroachment from other players in local and national markets – Permits are the most valuable assets typically o
Slide 12: No advertising tenant accounts for more than 1% of total revenue
No advertising tenant accounts for more than 1% of total revenue Net advertising revenue breakdown FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Restaurants 10% 10% 12% 12% 13% 13% 13% Retailers 10% 11% 10% 10% 10% 11% 11% Healthcare 7% 7% 8% 9% 9% 10% 10% Service 6% 6% 7% 8% 8% 8% 9% Amus
Slide 13: Diversified underlying real-estate portfolio
Diversified underlying real-estate portfolio 18% of billboard revenue generated on structures on Lamar-owned property Lamar has opportunistically purchased easements beneath key locations, including many digital structures Diversification and regulatory regime help preserve footprint and limit infla
Slide 14: Focus on local advertising spending differentiates Lamar
Focus on local advertising spending differentiates Lamar Local focus National performance Local demand less influenced Diversified, blue chip customer by economic swings base National Large on-the-ground sales 22% Fifty member sales team force cultivates strong across nine cities manages relationshi
Slide 15: Outdoor remains a low cost, wide reaching advertising medium
Outdoor remains a low cost, wide reaching advertising medium Relative average cost to reach 1,000 adults between ages 25 and 54 (CPM) OOH Radio Online Broadcast TV Cable TV Magazines Newspapers Direct Mail Source: Outdoor Advertising Association of America 14
Slide 16: Diverse product mix across digital and analog assets
Diverse product mix across digital and analog assets Company profile Revenue contribution FYE 2013 ($mm) (%) Analog bulletin displays $657 53% Analog poster displays 263 21% Digital posters & bulletins 184 15% Transit displays 75 6% Logos 67 5% Total $1,246 100% 15
Slide 17: Historically, Lamar has emerged strongly from economic downturns
Historically, Lamar has emerged strongly from economic downturns Annual pro forma financials Economic downturn Economic downturn Economic downturn 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Y/Y net revenue 1% (2)% 4% 11% 9% 7% 7
Slide 18: Historical financial information
Historical financial information Lamar Advertising Co. ($mm) FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Net revenues $1,209.6 $1,198.4 $1,055.1 $1,094.1 $1,130.7 $1,179.7 $1,245.8 % growth 8.0% (0.9%) (12.0%) 3.7% 3.3% 4.3% 5.6% Operating expenses1 653.7 686.3 614.7 627.1 646.4 668.4 70
Slide 19: Lamar is a strong free cash flow generator
Lamar is a strong free cash flow generator Lamar Advertising Co. ($mm) FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Adjusted EBITDA¹ $555.9 $512.1 $440.5 $467.0 $484.3 $511.3 $545.1 Less: Interest expense, net 155.3 153.0 177.1 168.7 152.0 139.0 131.4 Current tax expense (benefit) 31.0 (1
Slide 20: Capital expenditures overview
Capital expenditures overview $mm FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Billboards–Traditional 68.7 58.1 7.4 9.5 34.5 29.1 21.3 Billboards–Digital 92.1 103.7 15.2 13.2 41.3 42.1 50.2 Logos 10.2 7.6 5.3 8.5 10.1 8.7 11.2 Transit 2.0 1.0 5.4 0.9 0.8 0.3 0.2 Land and buildings 31.4 11
Slide 21: Strong balance sheet with no near term maturities
Strong balance sheet with no near term maturities $mm Capital structure highlights As of March 31, 2014 Amount¹ xEBITDA Redeemed $400mm 2018 Cash $28.4 subordinated notes in April 2014 with $400mm Revolving credit facility 80.0 $300mm new term debt, revolving New Term Loan A 300.0 credit borrowings
Slide 22: Key business initiatives
Key business initiatives Focus on financial discipline and capital allocation – Limited strategic acquisition activity – Continue to use free cash flow to reduce debt – Continue to invest in highly profitable digital billboards No approved stock buyback plan Focus on cost containment – No near term
Slide 23: Agenda
Agenda Company background 3 REIT conversion highlights 22 Value creation and opportunities for growth 26 Appendix 29 22
Slide 24: REIT conversion highlights
REIT conversion highlights Favorable IRS PLR received, final Board authorization expected – Expect to complete a merger of Lamar into a newly formed, wholly owned subsidiary to adopt a new REIT-compliant charter – Merger will be subject to stockholder approval Lamar REIT structural reorganization co
Slide 25: REIT conversion highlights (cont'd)
REIT conversion highlights (cont’d) Non-REIT E&P dividend – Accumulated non-REIT E&P: ~$40mm – Plan to distribute in cash along with three regular quarterly distributions to stockholders during 2014 2014 financial guidance – Projected earnings per diluted share: $2.81 to $2.91¹ – Projected Adjusted
Slide 26: Indicative timeline for 2014 Distributions
Indicative timeline for 2014 Distributions May 22, 2014 June 30, 2014 End December 2014 Cash dividend Quarterly dividend Quarterly cash dividend announced to be paid ($0.83) expected to be paid June 1, 2014 End September 2014 Record date for June 30 Quarterly cash dividend quarterly dividend expecte
Slide 27: Agenda
Agenda Company background 3 REIT conversion highlights 22 Value creation and opportunities for growth 26 Appendix 29 26
Slide 28: Significant opportunities for earnings growth and value creation
Significant opportunities for earnings growth and value creation Organic growth potential without the need to raise new capital – Continued investment in ROI efficient digital displays in new and existing markets to drive revenue growth – Rate and occupancy increases driven by focused local and nati
Slide 29: Lamar's capital allocation policy
Lamar’s capital allocation policy Maintain ample liquidity and solid balance sheet Target ~3.5x Leverage AFFO for dividend AFFO available for future growth Expected 2014 dividends of $2.50 per share¹ Invest in display acquisitions and development to grow earnings – $0.83 dividend declared, payable J
Slide 30: Agenda
Agenda Company background 3 REIT conversion highlights 22 Value creation and opportunities for growth 26 Appendix 29 29
Slide 31: Summary historical financials
Summary historical financials Adjusted EBITDA reconciliation (Lamar AdvertisingCo.) ($mm) For the three months ended March 31, LTM FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 2013 2014 Q1 2014 1 Adjusted EBITDA $555.9 $512.1 $440.5 $467.0 $484.3 $511.3 $545.1 $103.1 $104.4 $546.4 Non-cas
Slide 32: Reconciliation to AFFO per diluted share
Reconciliation to AFFO per diluted share $mm For the three months ended March 31, For the year ended December 31, 2014 Low end of High end of 2013¹ 2014¹ guidance guidance Net income (loss) $(10.3) $(4.8) $268.7 $278.3 Real estate related depreciation and amortization 69.9 65.2 230.5 230.5 (Gain) lo
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