Strong billboard sales over the first three months of the year caused Baton Rouge-based Lamar Advertising Co.’s adjusted funds from operations to shoot up 34% in this year’s first quarter versus the first quarter of 2014.
Adjusted funds from operations, or AFFO, is a measure that helps predict a real estate investment trust’s ability to pay dividends. Lamar converted to a REIT last year, and as a result the company’s net income skyrocketed in 2014 to $253.5 million, up 532% from $40.1 million in 2013. A REIT is not required to pay income taxes on profits if at least 90% are paid to shareholders through dividends.
The first-quarter report shows local revenue on billboard sales increased 6.7%, while national revenue rose 2.5%. Those gains helped push net revenues to $302.5 million on the quarter, up 6.2% over first-quarter 2014 revenue of $284.9 million.
AFFO for the first quarter totalled $78.9 million, or 82 cents a share. In the first three months of last year, Lamar’s AFFO was $58.8 million, or 62 cents a share.
“We are encouraged by our first-quarter results, which have us tracking to the high end of our previously provided full-year goals for sales and AFFO,” says Lamar CEO Sean Reilly in a prepared statement. “We were able to build on the sales momentum we saw at the end of 2014 while limiting expense growth. In particular, I am pleased by the continued growth in our local billboard sales.”
In March, Reilly said Lamar expects its AFFO for 2015 to settle in the range of $417 million to $427 million, or $4.34 to $4.45 a share. According to Business Report’s 2015 listing of top 20 public companies (based on 2013 revenue), Lamar ranked No. 8 with revenue of roughly $1.25 billion.
As of 3 p.m., shares of Lamar were up $1.55, or 1.7%, to $58.96 in trading on the Nasdaq.
—Steve Sanoski
