Baton Rouge-based Lamar Advertising expects to pay a dividend of $2.50 per share in 2014, and the company’s adjusted funds from operations, a key performance measure for Real Estate Investment Trusts, will range from $4.03 to $4.13 per share, according to a filing with the U.S. Securities and Exchange Commission.
Investors in Real Estate Investment Trusts, or REITs, use Adjusted Funds from Operations per share instead of earnings per share. The AFFO includes the costs for maintaining the trust’s underlying assets — in Lamar’s case billboards — and is considered a better predictor of a company’s ability to pay dividends.
The earnings projections are part of an investor presentation Lamar is making to REIT investors this week.
The company is not releasing how many of the presentations it has scheduled or the audience for those presentations.
However, Marci Ryvicker, senior analyst for Wells Fargo Securities, described Lamar’s AFFO projections as conservative.
Wells Fargo expects an AFFO of $4.10 per share this year and $4.51 in 2015, Ryvicker said in a report on the company’s first-quarter earnings.
Lamar’s 2014 results may get a further boost from mergers and acquisitions, Ryvicker said. Lamar management said the company is eying an acquisition or acquisitions in the $75 million to $100 million range.
The presentation shows Lamar is:
- The largest outdoor advertising company in the United States based on the number of displays. Lamar operates about 145,000 billboards, more than 128,000 logo signs and more than 40,000 transit signs.
- No. 2 in market share with 18 percent, trailing Clear Channel Outdoor’s 19 percent of the market.
- Expected to generate $1.25 billion in revenue in 2014, an increase of 5.6 percent.
Lamar plans to convert to a REIT retroactive to Jan. 1. Lamar plans to merge the existing company into a new subsidiary that will comply with the trust rules. The company’s board and shareholders must approve the shift, but the company has already completed the internal restructuring necessary for the conversion.
To see the advantages for Lamar, one has to look no further than the most recent earnings report.
In its current form as a domestic C Corporation, Lamar reported a loss of $4.8 million, or 5 cents per share. As a REIT, Lamar’s Adjusted Funds From Operation would have been $58.8 million, or 62 cents per share.
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