UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

xQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2017

March 31, 2023

or

☐

¨Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 1-36756

Lamar Advertising Company

Commission File Number 1-12407

Lamar Media Corp.

(Exact name of registrants as specified in their charters)

Delaware

72-1449411

Delaware

72-1205791

47-0961620

Delaware

72-1205791
(State or other jurisdiction of incorporation or organization)

(I.R.S Employer Identification No.)

5321 Corporate Blvd., Baton Rouge, LA

70808

(Address of principal executive offices)

(Zip Code)

Registrants’ telephone number, including area code: (225) 926-1000  

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.001 par valueLAMRThe NASDAQ Stock Market, LLC
Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒x    No  ☐

¨

Indicate by check mark whether each registrant has submitted electronically, and posted on their corporate web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒x    No  ☐

¨

Indicate by check mark whether Lamar Advertising Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

x

Accelerated filer

☐

¨

Non-accelerated filer

☐

¨

(Do not check if a smaller reporting company)

Smaller reporting company

☐

¨

Emerging growth company

☐

¨

If an emerging growth company, indicate by check mark if Lamar Advertising Company has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether Lamar Media Corp. is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐

Large accelerated filer

☐

¨

Accelerated filer

☐

¨

Non-accelerated filer

☒

x

(Do not check if a smaller reporting company)

Smaller reporting company

☐

¨

Emerging growth company

☐

¨

If an emerging growth company, indicate by check mark if Lamar Media Corp. has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

¨

Indicate by check mark whether Lamar Advertising Company is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ☐¨    No  ☒

x

Indicate by check mark whether Lamar Media Corp. is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ☐¨    No  ☒

x

The number of shares of Lamar Advertising Company’s Class A common stock outstanding as of November 1, 2017: 84,011,614

April 28, 2023: 87,487,301 

The number of shares of the Lamar Advertising Company’s Class B common stock outstanding as of November 1, 2017:April 28, 2023: 14,420,085

The number of shares of Lamar Media Corp. common stock outstanding as of November 1, 2017:April 28, 2023: 100

This combined Form 10-Q is separately filed by (i) Lamar Advertising Company and (ii) Lamar Media Corp. (which is a wholly owned subsidiary of Lamar Advertising Company). Lamar Media Corp. meets the conditions set forth in general instruction H(1) (a) and (b) of Form 10-Q and is, therefore, filing this form with the reduced disclosure format permitted by such instruction.

instruction.


NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included in this report is forward-looking in nature within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. This report uses terminology such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “should,” “estimates,” “predicts,” “potential,” “continue” and similar expressions to identify forward-looking statements. Examples of forward-looking statements in this report include statements about:

•our future financial performance and condition;

•our business plans, objectives, prospects, growth and operating strategies;

•our future capital expenditures and level of acquisition activity;

•our ability to integrate acquired assets and realize operating efficiency from acquisitions;

•market opportunities and competitive positions;

•our future cash flows and expected cash requirements;

•estimated risks;

•our ability to maintain compliance with applicable covenants and restrictions included in Lamar Media’s senior credit facility, Accounts Receivable Securitization Program and the indentures relating to its outstanding notes;

•stock price;

•estimated future dividend distributions; and

•our ability to remain qualified as a Real Estate Investment Trust (“REIT”).

Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors, including but not limited to the following, any of which may cause the actual results, performance or achievements of Lamar Advertising Company (referred to herein as the “Company” or “Lamar Advertising”) or Lamar Media Corp. (referred to herein as “Lamar Media”) to differ materially from those expressed or implied by the forward-looking statements:

•the state of the economy and financial markets generally and their effects on the markets in which we operate and the broader demand for advertising;

advertising, including inflationary pressures;

•the levels of expenditures on advertising in general and outdoor advertising in particular;

•risks and uncertainties relating to our significant indebtedness;

•the demand for outdoor advertising and its continued popularity as an advertising medium;

•our need for, and ability to obtain, additional funding for acquisitions, operations and debt refinancing;

•increased competition within the outdoor advertising industry;

•the regulation of the outdoor advertising industry by federal, state and local governments;

•our ability to renew expiring contracts at favorable rates;

•the integration of businesses and assets that we acquire and our ability to recognize cost savings and operating efficiencies as a result of these acquisitions;

•our ability to successfully implement our digital deployment strategy;

•the market for our Class A common stock;

•changes in accounting principles, policies or guidelines;

•our ability to effectively mitigate the threat of and damages caused by hurricanes and other kinds of severe weather;

•our ability to qualify as a REIT and maintain our status as a REIT; and

•changes in tax laws applicable to REIT’sREITs or in the interpretation of those laws.

The forward-looking statements in this report are based on our current good faith beliefs, however, actual results may differ due to inaccurate assumptions, the factors listed above or other foreseeable or unforeseeable factors. Consequently, we cannot
2

guarantee that any of the forward-looking statements will prove to be accurate. The forward-looking statements in this report speak only as of the date of this report, and Lamar Advertising and Lamar Media expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained in this report, except as required by law.


For a further description of these and other risks and uncertainties, the Company encourages you to read carefully Item 1A to the combined Annual Report on Form 10-K for the year ended December 31, 20162022 of the Company and Lamar Media (the “2016“2022 Combined Form 10-K”), filed on February 24, 20172023, and as such risk factors may be further updated or supplemented, from time to time, in our future combined Quarterly Reports on Form 10-Q.

10-Q and Current Reports on Form 8-K.

3


CONTENTS

Page

Page

5

5

Lamar Advertising Company

Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2023 and December 31, 201206

22

5

Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2023 and 201620

22

6

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2023 and 2022
7
Condensed Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2023 and 201206

22

7

8

Notes to Condensed Consolidated Financial Statements

8-15

9

Lamar Media Corp.

Condensed Consolidated Balance Sheets as of September 30, 2017March31, 2023 and December 31, 2016202

2

16

19

Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2017March 31, 2023 and 2012026

2

17

20

Condensed Consolidated Statements of Stockholder's Equity for the threemonths ended March 31, 2023 and 2022
21
Condensed Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017March 31, 2023 and 2012026

2

18

22

Notes to Condensed Consolidated Financial Statements

19-27

23

28-43

30

44

43

45

43

45

44

45

44

45

44

45

44

45-46

44



4
Table of Contents
PART I — FINANCIALFINANCIAL INFORMATION

ITEM 1. — FINANCIAL STATEMENTS

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

 

September 30, 2017

 

 

December 31, 2016

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,419

 

 

$

35,530

 

Receivables, net of allowance for doubtful accounts of $11,529 and $9,356 in 2017 and

   2016, respectively

 

 

223,088

 

 

 

189,935

 

Prepaid lease expenses

 

 

72,816

 

 

 

48,815

 

Other current assets

 

 

45,187

 

 

 

39,973

 

Total current assets

 

 

370,510

 

 

 

314,253

 

Property, plant and equipment

 

 

3,354,962

 

 

 

3,294,251

 

Less accumulated depreciation and amortization

 

 

(2,174,393

)

 

 

(2,111,536

)

Net property, plant and equipment

 

 

1,180,569

 

 

 

1,182,715

 

Goodwill

 

 

1,740,469

 

 

 

1,726,358

 

Intangible assets

 

 

668,667

 

 

 

637,153

 

Other assets

 

 

43,015

 

 

 

38,405

 

Total assets

 

$

4,003,230

 

 

$

3,898,884

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Trade accounts payable

 

$

18,054

 

 

$

17,653

 

Current maturities of long-term debt, net of deferred financing costs of $5,085 and $5,459

   in 2017 and 2016, respectively

 

 

17,415

 

 

 

33,916

 

Accrued expenses

 

 

99,548

 

 

 

134,433

 

Deferred income

 

 

103,670

 

 

 

91,322

 

Total current liabilities

 

 

238,687

 

 

 

277,324

 

Long-term debt, net of deferred financing costs of $24,888 and $23,510 in 2017 and 2016,

   respectively

 

 

2,432,014

 

 

 

2,315,267

 

Deferred income tax liabilities

 

 

326

 

 

 

279

 

Asset retirement obligation

 

 

212,141

 

 

 

210,889

 

Other liabilities

 

 

29,536

 

 

 

25,597

 

Total liabilities

 

 

2,912,704

 

 

 

2,829,356

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Series AA preferred stock, par value $.001, $63.80 cumulative dividends,

   5,720 shares authorized; 5,720 shares issued and outstanding at 2017 and 2016

 

 

—

 

 

 

—

 

Class A common stock, par value $.001, 362,500,000 shares authorized; 84,007,335 and

   83,038,831 shares issued at 2017 and 2016, respectively; 83,676,051 and 82,822,743

   issued and outstanding at 2017 and 2016, respectively

 

 

84

 

 

 

83

 

Class B common stock, par value $.001, 37,500,000 shares authorized, 14,420,085 and

   14,610,365 shares issued and outstanding at 2017 and 2016, respectively

 

 

14

 

 

 

15

 

Additional paid-in capital

 

 

1,754,892

 

 

 

1,713,312

 

Accumulated comprehensive income (loss)

 

 

1,480

 

 

 

(624

)

Accumulated deficit

 

 

(644,644

)

 

 

(630,955

)

Cost of shares held in treasury, 331,284 and 216,088 shares at 2017 and 2016,

   respectively

 

 

(21,300

)

 

 

(12,303

)

Stockholders’ equity

 

 

1,090,526

 

 

 

1,069,528

 

Total liabilities and stockholders’ equity

 

$

4,003,230

 

 

$

3,898,884

 

March 31,
2023		December 31,
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$33,522 $52,619 
Receivables, net of allowance for doubtful accounts of $10,661 and $11,418 in 2023 and 2022, respectively259,443 285,039 
Other current assets45,475 26,894 
Total current assets338,440 364,552 
Property, plant and equipment4,144,289 4,109,146 
Less accumulated depreciation and amortization(2,634,370)(2,609,447)
Net property, plant and equipment1,509,919 1,499,699 
Operating lease right of use assets1,279,602 1,271,631 
Financing lease right of use assets13,324 14,037 
Goodwill2,035,272 2,035,269 
Intangible assets, net1,181,407 1,206,625 
Other assets83,821 83,401 
Total assets$6,441,785 $6,475,214 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable$16,894 $19,643 
Current maturities of long-term debt, net of deferred financing costs of $559 and $593 in 2023 and 2022, respectively234,624 249,785 
Current operating lease liabilities177,830 205,838 
Current financing lease liabilities1,331 1,331 
Accrued expenses82,722 117,593 
Deferred income146,579 131,847 
Total current liabilities659,980 726,037 
Long-term debt, net of deferred financing costs of $30,522 and $32,022 in 2023 and 2022, respectively3,134,505 3,063,020 
Operating lease liabilities1,030,959 1,035,655 
Financing lease liabilities15,613 15,945 
Deferred income tax liabilities8,498 9,651 
Asset retirement obligation391,206 390,442 
Other liabilities40,337 39,090 
Total liabilities5,281,098 5,279,840 
Stockholders’ equity:
Series AA preferred stock, par value $0.001, $63.80 cumulative dividends, 5,720 shares authorized; 5,720 shares issued and outstanding at 2023 and 2022— — 
Class A common stock, par value $0.001, 362,500,000 shares authorized; 88,327,805 and 88,110,928 shares issued at 2023 and 2022, respectively; 87,487,301 and 87,327,232 outstanding at 2023 and 2022, respectively88 88 
Class B common stock, par value $0.001, 37,500,000 shares authorized, 14,420,085 shares issued and outstanding at 2023 and 202214 14 
Additional paid-in capital2,084,102 2,061,671 
Accumulated comprehensive loss(661)(659)
Accumulated deficit(855,892)(804,382)
Cost of shares held in treasury, 840,504 and 783,696 shares at 2023 and 2022, respectively(67,304)(61,358)
Non-controlling interest340 — 
Stockholders’ equity1,160,687 1,195,374 
Total liabilities and stockholders’ equity$6,441,785 $6,475,214 
See accompanying notes to condensed consolidated financial statements.


5

Table of Contents
LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except share and per share data)

 

Three months ended

September 30,

 

 

Nine months ended

September 30,

 

Three Months Ended
March 31,

 

2017

 

 

2016

 

 

2017

 

 

2016

 

20232022

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statements of Income

Net revenues

 

$

399,345

 

 

$

387,516

 

 

$

1,142,785

 

 

$

1,113,577

 

Net revenues$471,332 $451,388 

Operating expenses (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (income)

Direct advertising expenses (exclusive of depreciation and

amortization)

 

 

134,977

 

 

 

131,778

 

 

 

401,896

 

 

 

393,228

 

Direct advertising expenses (exclusive of depreciation and amortization)168,432 157,772 

General and administrative expenses (exclusive of depreciation

and amortization)

 

 

68,500

 

 

 

67,487

 

 

 

206,452

 

 

 

200,734

 

General and administrative expenses (exclusive of depreciation and amortization)85,135 83,084 

Corporate expenses (exclusive of depreciation and

amortization)

 

 

15,088

 

 

 

19,359

 

 

 

48,451

 

 

 

55,432

 

Corporate expenses (exclusive of depreciation and amortization)28,527 22,012 

Depreciation and amortization

 

 

51,796

 

 

 

49,307

 

 

 

155,003

 

 

 

152,729

 

Depreciation and amortization73,125 68,627 

Gain on disposition of assets

 

 

(2,734

)

 

 

(189

)

 

 

(4,377

)

 

 

(12,221

)

Gain on disposition of assets(2,688)(563)

 

 

267,627

 

 

 

267,742

 

 

 

807,425

 

 

 

789,902

 

352,531 330,932 

Operating income

 

 

131,718

 

 

 

119,774

 

 

 

335,360

 

 

 

323,675

 

Operating income118,801 120,456 

Other expense (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income)

Loss on extinguishment of debt

 

 

—

 

 

 

—

 

 

 

71

 

 

 

3,198

 

Interest income

 

 

(2

)

 

 

(2

)

 

 

(6

)

 

 

(6

)

Interest income(461)(215)

Interest expense

 

 

32,064

 

 

 

31,102

 

 

 

95,526

 

 

 

92,469

 

Interest expense41,444 26,786 
Equity in earnings of investeeEquity in earnings of investee(178)(746)

 

 

32,062

 

 

 

31,100

 

 

 

95,591

 

 

 

95,661

 

40,805 25,825 

Income before income tax expense

 

 

99,656

 

 

 

88,674

 

 

 

239,769

 

 

 

228,014

 

Income before income tax expense77,996 94,631 

Income tax expense

 

 

3,325

 

 

 

3,613

 

 

 

9,257

 

 

 

9,730

 

Income tax expense1,798 2,480 

Net income

 

 

96,331

 

 

 

85,061

 

 

 

230,512

 

 

 

218,284

 

Net income76,198 92,151 
Earnings attributable to non-controlling interestEarnings attributable to non-controlling interest157 — 
Net income attributable to controlling interestNet income attributable to controlling interest76,041 92,151 

Cash dividends declared and paid on preferred stock

 

 

91

 

 

 

91

 

 

 

273

 

 

 

273

 

Cash dividends declared and paid on preferred stock91 91 

Net income applicable to common stock

 

$

96,240

 

 

$

84,970

 

 

$

230,239

 

 

$

218,011

 

Net income applicable to common stock$75,950 $92,060 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

Basic earnings per share

 

$

0.98

 

 

$

0.87

 

 

$

2.35

 

 

$

2.25

 

Basic earnings per share$0.75 $0.91 

Diluted earnings per share

 

$

0.98

 

 

$

0.87

 

 

$

2.34

 

 

$

2.23

 

Diluted earnings per share$0.74 $0.91 

Cash dividends declared per share of common stock

 

$

0.83

 

 

$

0.76

 

 

$

2.49

 

 

$

2.26

 

Cash dividends declared per share of common stock$1.25 $1.10 

Weighted average common shares used in computing earnings

per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares used in computing earnings per share:

Weighted average common shares outstanding basic

 

 

98,044,523

 

 

 

97,254,125

 

 

 

97,855,642

 

 

 

97,056,456

 

Weighted average common shares outstanding basic101,792,317 101,339,558 

Weighted average common shares outstanding diluted

 

 

98,490,277

 

 

 

97,881,878

 

 

 

98,340,248

 

 

 

97,631,606

 

Weighted average common shares outstanding diluted101,963,563 101,540,213 

Statements of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statements of Comprehensive Income

Net income

 

$

96,331

 

 

$

85,061

 

 

$

230,512

 

 

$

218,284

 

Net income$76,198 $92,151 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) incomeOther comprehensive (loss) income

Foreign currency translation adjustments

 

 

1,216

 

 

 

(328

)

 

 

2,104

 

 

 

1,151

 

Foreign currency translation adjustments(2)314 

Comprehensive income

 

$

97,547

 

 

$

84,733

 

 

$

232,616

 

 

$

219,435

 

Comprehensive income76,196 92,465 
Earnings attributable to non-controlling interestEarnings attributable to non-controlling interest(157)— 
Comprehensive income attributable to controlling interestComprehensive income attributable to controlling interest$76,039 $92,465 

See accompanying notes to condensed consolidated financial statements.


6

Table of Contents
LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

Stockholders’ Equity

(Unaudited)

(In thousands) 

 

 

Nine months ended

September 30,

 

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

230,512

 

 

$

218,284

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

155,003

 

 

 

152,729

 

Stock-based compensation

 

 

7,060

 

 

 

19,650

 

Amortization included in interest expense

 

 

3,866

 

 

 

3,993

 

Gain on disposition of assets and investments

 

 

(4,377

)

 

 

(12,221

)

Loss on extinguishment of debt

 

 

71

 

 

 

3,198

 

Deferred tax expense (benefit)

 

 

259

 

 

 

(150

)

Provision for doubtful accounts

 

 

6,009

 

 

 

5,831

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

(Increase) decrease in:

 

 

 

 

 

 

 

 

Receivables

 

 

(38,083

)

 

 

(39,072

)

Prepaid lease expenses

 

 

(23,281

)

 

 

(21,700

)

Other assets

 

 

(4,334

)

 

 

5,923

 

Increase (decrease) in:

 

 

 

 

 

 

 

 

Trade accounts payable

 

 

401

 

 

 

(761

)

Accrued expenses

 

 

(21,768

)

 

 

(5,623

)

Other liabilities

 

 

9,300

 

 

 

7,745

 

Net cash provided by operating activities

 

 

320,638

 

 

 

337,826

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Acquisitions

 

 

(119,936

)

 

 

(526,029

)

Capital expenditures

 

 

(74,446

)

 

 

(78,825

)

Proceeds from disposition of assets and investments

 

 

3,340

 

 

 

7,753

 

Decrease in notes receivable

 

 

13

 

 

 

16

 

Net cash used in investing activities

 

 

(191,029

)

 

 

(597,085

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Cash used for purchase of treasury stock

 

 

(8,997

)

 

 

(6,204

)

Net proceeds from issuance of common stock

 

 

19,817

 

 

 

18,278

 

Principal payments on long-term debt

 

 

(11,250

)

 

 

(15,015

)

Payment on revolving credit facility

 

 

(407,000

)

 

 

(302,000

)

Proceeds received from revolving credit facility

 

 

317,000

 

 

 

408,000

 

Proceeds received from note offering

 

 

—

 

 

 

400,000

 

Payment on senior credit facility term loans

 

 

(247,500

)

 

 

(300,000

)

Proceeds received from senior credit facility term loans

 

 

450,000

 

 

 

300,000

 

Debt issuance costs

 

 

(4,941

)

 

 

(9,391

)

Distributions to non-controlling interest

 

 

(415

)

 

 

(315

)

Dividends/distributions

 

 

(244,201

)

 

 

(219,857

)

Net cash (used in) provided by financing activities

 

 

(137,487

)

 

 

273,496

 

Effect of exchange rate changes in cash and cash equivalents

 

 

1,767

 

 

 

915

 

Net (decrease) increase in cash and cash equivalents

 

 

(6,111

)

 

 

15,152

 

Cash and cash equivalents at beginning of period

 

 

35,530

 

 

 

22,327

 

Cash and cash equivalents at end of period

 

$

29,419

 

 

$

37,479

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

104,966

 

 

$

91,952

 

Cash paid for foreign, state and federal income taxes

 

$

9,969

 

 

$

11,023

 

See accompanying notes to condensed consolidated financial statements.


LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

Series AA
PREF
Stock		Class A
CMN
Stock		Class B
CMN
Stock		Treasury
Stock		Add’l
Paid in
Capital		Accumulated Comprehensive
Income (Loss)		Accumulated
Deficit		Non-controlling interestTotal
Balance, December 31, 2022$— $88 $14 $(61,358)$2,061,671 $(659)$(804,382)— $1,195,374 
Non-cash compensation— — — — 3,305 — — — 3,305 
Issuance of 161,050 shares of common stock through stock awards— — — — 15,934 — — — 15,934 
Exercise of 10,595 shares of stock options— — — — 678 — — — 678 
Issuance of 45,232 shares of common stock through employee purchase plan— — — — 3,530 — — — 3,530 
Purchase of 56,808 shares of treasury stock— — — (5,946)— — — — (5,946)
Foreign currency translation— — — — — (2)— — (2)
Net income— — — — — — 76,041 157 76,198 
Reallocation of capital— — — — (1,016)— — 397 (619)
Dividends ($1.25 per common share) and other distributions— — — — — — (127,460)(214)(127,674)
Dividends ($15.95 per preferred share)— — — — — — (91)— (91)
Balance, March 31, 2023$— $88 $14 $(67,304)$2,084,102 $(661)$(855,892)$340 $1,160,687 
Series AA
PREF
Stock		Class A
CMN
Stock		Class B
CMN
Stock		Treasury
Stock		Add’l
Paid in
Capital		Accumulated
Comprehensive
Income		Accumulated
Deficit		Non-controlling interestTotal
Balance, December 31, 2021$— $88 $14 $(50,852)$2,001,399 $855 $(734,415)— $1,217,089 
Non-cash compensation— — — — 1,405 — — — 1,405 
Issuance of 241,750 shares of common stock through stock awards— — — — 30,145 — — — 30,145 
Exercise of 26,190 shares of stock options— — — — 1,307 — — — 1,307 
Issuance of 36,347 shares of common stock through employee purchase plan— — — — 3,589 — — — 3,589 
Purchase of 95,091 shares of treasury stock— — (10,446)— — — — (10,446)
Foreign currency translation— — — — — 314 — — 314 
Net income— — — — — — 92,151 — 92,151 
Dividends/distributions to common shareholders ($1.10 per common share)— — — — — — (111,602)— (111,602)
Dividends ($15.95 per preferred share)— — — — — — (91)— (91)
Balance, March 31, 2022$— $88 $14 $(61,298)$2,037,845 $1,169 $(753,957)$— $1,223,861 
See accompanying notes to condensed consolidated financial statements.
7
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
March 31,
20232022
Cash flows from operating activities:
Net income$76,198 $92,151 
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization73,125 68,627 
Stock-based compensation8,040 1,780 
Amortization included in interest expense1,642 1,471 
Gain on disposition of assets(2,688)(563)
Equity in earnings of investee(178)(746)
Deferred tax benefit(1,152)(342)
Provision for doubtful accounts1,397 (39)
Changes in operating assets and liabilities
Decrease (increase) in:
Receivables24,208 14,394 
Prepaid expenses(10,833)(5,537)
Other assets(7,523)(8,265)
(Decrease) increase in:
Trade accounts payable(1,911)(1,496)
Accrued expenses(24,010)(22,500)
Operating lease liabilities(40,801)(30,786)
Other liabilities13,198 (6,111)
Net cash provided by operating activities108,712 102,038 
Cash flows from investing activities:
Acquisitions(13,627)(55,293)
Capital expenditures(42,285)(28,759)
Proceeds from disposition of assets and investments3,248 710 
Net cash used in investing activities(52,664)(83,342)
Cash flows from financing activities:
Cash used for purchase of treasury stock(5,947)(10,446)
Net proceeds from issuance of common stock4,208 4,897 
Principal payments on long-term debt(93)(92)
Principal payments on financing leases(333)(333)
Payments on revolving credit facility(20,000)(50,000)
Proceeds received from revolving credit facility90,000 165,000 
Proceeds received from accounts receivable securitization program9,800 — 
Payments on accounts receivable securitization program(25,000)— 
Debt issuance costs(25)— 
Distributions to non-controlling interest(214)(46)
Dividends/distributions(127,551)(111,693)
Net cash used in financing activities(75,155)(2,713)
Effect of exchange rate changes in cash and cash equivalents10 107 
Net (decrease) increase in cash and cash equivalents(19,097)16,090 
Cash and cash equivalents at beginning of period52,619 99,788 
Cash and cash equivalents at end of period$33,522 $115,878 
Supplemental disclosures of cash flow information:
Cash paid for interest$39,430 $25,378 
Cash paid for foreign, state and federal income taxes$3,182 $3,716 
See accompanying notes to condensed consolidated financial statements.
8
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share data)

1. Significant Accounting Policies

The information included in the foregoing interim condensed consolidated financial statements is unaudited. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. These interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and the notes thereto included in the 20162022 Combined Form 10-K. Subsequent events, if any, are evaluated through the date on which the financial statements are issued.

2. Revenues
Advertising revenues: The majority of our revenues are derived from contracts for advertising space on billboard, logo and transit displays. Contracts which do not meet the criteria of a lease under ASC 842, Leases are accounted for under ASC 606, Revenue from Contracts with Customers. The majority of our advertising space contracts do not meet the definition of a lease under ASC 842 and are therefore accounted for under ASC 606. The contract revenues are recognized ratably over their contract life. Costs to fulfill a contract, which include our costs to install advertising copy onto billboards, are capitalized and amortized to direct advertising expenses (exclusive of depreciation and amortization) in the Condensed Consolidated Statements of Income and Comprehensive Income.
Other revenues: Our other component of revenue primarily consists of production services which includes creating and printing the advertising copy. Revenue for production contracts is recognized under ASC 606. Contract revenues for production services are recognized upon satisfaction of the contract which is typically less than one week.
Arrangements with multiple performance obligations: Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on the relative standalone selling price. We determine standalone selling prices based on the prices charged to customers using expected cost plus margin.
Deferred revenues: We record deferred revenues when cash payments are received or due in advance of our performance obligation. The term between invoicing and when a payment is due is not significant. For certain services we require payment before the product or services are delivered to the customer. The balance of deferred income is considered short-term and will be recognized in revenue within twelve months.
Practical expedients and exemptions: TheCompany is utilizing the following practical expedients and exemptions from ASC 606. We generally expense sales commissions when incurred because the amortization period is one year or less. These costs are recorded within direct advertising expenses (exclusive of depreciation and amortization). We do not disclose the value of unsatisfied performance obligations as the majority of our contracts with customers have an original expected length of less than one year. For contracts with customers which exceed one year, the future amount to be invoiced to the customer corresponds directly with the value to be received by the customer.
The following table presents our disaggregated revenue by source for the three months ended March 31, 2023 and 2022.
Three Months Ended
March 31,
20232022
Billboard advertising$417,175 $401,739 
Logo advertising20,310 19,745 
Transit advertising33,847 29,904 
Net revenues$471,332 $451,388 

9
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share data)
3. Leases
During the three months ended March 31, 2023 and 2022, we had operating lease costs of $79,446 and $75,820, respectively, and variable lease costs of $12,374 and $12,204, respectively. These operating lease costs are recorded in direct advertising expenses (exclusive of depreciation and amortization). For the three months ended March 31, 2023 and 2022, we recorded a loss (gain) of $145 and $(40), respectively, in gain on disposition of assets related to the amendment and termination of lease agreements. Cash payments of $117,332 and $106,014 were made reducing our operating lease liabilities for the three months ended March 31, 2023 and 2022, respectively, and are included in cash flows provided by operating activities in the Condensed Consolidated Statements of Cash Flows.
We elected the short-term lease exemption which applies to certain of our vehicle agreements. This election allows the Company to not recognize lease right of use assets ("ROU assets") or lease liabilities for agreements with a term of twelve months or less. We recorded $2,411 and $1,738 in direct advertising expenses (exclusive of depreciation and amortization) for these agreements during the three months ended March 31, 2023 and 2022, respectively.
Our operating leases have a weighted-average remaining lease term of 12.5 years. The weighted-average discount rate of our operating leases is 4.8%. Also, during the periods ended March 31, 2023 and 2022, we obtained $4,942 and $8,246, respectively, of leased assets in exchange for new operating lease liabilities, which includes liabilities obtained through acquisitions.
The following is a summary of the maturities of our operating lease liabilities as of March 31, 2023:
2023$157,635 
2024198,772 
2025169,453 
2026144,328 
2027121,617 
Thereafter869,057 
Total undiscounted operating lease payments1,660,862 
Less: Imputed interest(452,073)
Total operating lease liabilities$1,208,789 
During the three months ended March 31, 2023 and 2022, $713 of amortization expense for each period and $130 and $140 of interest expense relating to our financing lease liabilities were recorded in depreciation and amortization and interest expense, respectively, in the Condensed Consolidated Statements of Income and Comprehensive Income. Cash payments of $333 were made reducing our financing lease liabilities for each of the three months ended March 31, 2023 and 2022 and are included in cash flows used in financing activities in the Condensed Consolidated Statements of Cash Flows. Our financing leases have a weighted-average remaining lease term of 4.7 years and a weighted-average discount rate of 3.1%.
Due to our election not to reassess conclusions about lease identification as part of the adoption of ASC 842, Leases, our transit agreements were accounted for as leases on January 1, 2019. As we enter into new or renew current transit agreements, those agreements do not meet the criteria of a lease under ASC 842, therefore they are no longer accounted for as a lease. For the three months ended March 31, 2023 and 2022, non-lease variable transit payments were $20,318 and $17,278, respectively. These transit expenses are recorded in direct advertising expenses (exclusive of depreciation and amortization) on the Condensed Consolidated Statements of Income and Comprehensive Income.
4. Stock-Based Compensation

Equity Incentive Plan. Lamar Advertising’s 1996 Equity Incentive Plan, as amended, (the “Incentive Plan”) has reserved 15.517.5 million shares of Class A common stock for issuance to directors and employees, including shares underlying granted options and common stock reserved for issuance under its performance-based incentive program. Options granted under the plan expire ten years from the grant date with vesting terms ranging from three to five years and include 1) options that vest in one-fifth
10
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share data)
increments beginning on the grant date and continuing on each of the first four anniversaries of the grant date and 2) options that cliff-vest on the fifth anniversary of the grant date. All grants are made at fair market value based on the closing price of our Class A common stock as reported on the NASDAQNasdaq Global Select Market on the date of grant.

We use a Black-Scholes-Merton option pricing model to estimate the fair value of share-based awards. The Black-Scholes-Merton option pricing model incorporates various and highly subjective assumptions, including expected term and expected volatility. The Company granted options for an aggregate of 87,5009,000 shares of its Class A common stock during the ninethree months ended September 30, 2017.March 31, 2023. At September 30, 2017March 31, 2023 a total of 1,174,9061,739,671 shares were available for future grant.

Stock Purchase Plan. On May 30, 2019, our shareholders approved Lamar Advertising’s 20092019 Employee Stock Purchase Plan or 2009 ESPP was approved by our shareholders on May 28, 2009.(the “2019 ESPP”). The number of shares of Class A common stock available under the 20092019 ESPP was automatically increased by 82,82387,327 shares on January 1, 20172023 pursuant to the automatic increase provisions of the 20092019 ESPP.

The following is a summary of 20092019 ESPP share activity for the ninethree months ended September 30, 2017: 

March 31, 2023:

Shares

Shares
Available for future purchases, January 1, 2017

2023

301,971 

250,573

Additional shares reserved under 20092019 ESPP

87,327 

82,823

Purchases

(45,232)

(84,005

)

Available for future purchases, September 30, 2017

March 31, 2023

344,066 

249,391

Performance-based stock compensation. Unrestricted shares of our Class A common stock may be awarded to key officers, employees and directors under our 1996 Equitythe Incentive Plan. The number of shares to be issued, if any, will be dependent on the level of achievement of performance measures for key officers and employees, as determined by the Company’s Compensation Committee based on our 20172023 results. Any shares issued based on the achievement of performance goals will be issued in the first quarter of 2018.2024. The shares subject to these awards can range from a minimum of 0% to a maximum of 100% of the target number of shares depending on the level at which the goals are attained. For the ninethree months ended September 30, 2017,March 31, 2023 and 2022, the Company has recorded $3,837$4,590 and $247, respectively, as stock-based compensation expense related to performance-based awards.
LTIP Units. In addition to performance-based stock compensation, the Company may issue LTIP Units of Lamar Advertising Limited Partnership (the "OP"), a subsidiary of the Company, to certain officers, employees and directors under the Incentive Plan of the Company. Such LTIP Units are subject to vesting and forfeiture conditions based on performance criteria approved by the Compensation Committee, which mirrors the performance criteria applicable to the Company's performance-based stock compensation, as described above. LTIP Units are a class of units intended to qualify as “profits interests” of the OP. The LTIP Units convert into Common Units of the OP upon the occurrence of certain events. Common Units are redeemable by the holder for shares of the Company's Class A common stock after a holding period of twelve months, or may be paid out in cash at the option of the general partner of the OP. As of the March 31, 2023, the OP issued a total of 176,000 LTIP Units to the Company’s executive officers, of which 88,000 LTIP units have vested. For the three months ended March 31, 2023, the Company recorded $1,891 as stock-based compensation expense related to these LTIP Units.
Restricted stock compensation. Annually, each non-employee director automatically receives upon election or re-election a restricted stock award of our Class A common stock.stock upon election or re-election. The awards vest 50% on grant date and 50% on the last day of the directors’directors' one year term. TheFor the three months ended March 31, 2023 and 2022, the Company recorded a $326$101 and $60, respectively, in stock-based compensation expense related to these awards for the nine months ended September 30, 2017.

3. Acquisitions

During the nine months ended September 30, 2017, the Company completed several acquisitionsawards.

11
Table of outdoor advertising assets for a total purchase price of $122,815, of which $119,936 was in cash and $2,879 was in non-cash consideration consisting principally of exchanges of outdoor advertising assets. As a result of these acquisitions, a gain of $2,389 was recorded during the nine months ended September 30, 2017 related to the transactions that involved the exchange of outdoor advertising assets.

8

Contents

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

Each of these acquisitions was accounted for under the acquisition method of accounting, and, accordingly, the accompanying consolidated financial statements include the results of operations of each acquired entity from the date of acquisition. The acquisition costs have been allocated to assets acquired and liabilities assumed based on preliminary fair market value estimates at the dates of acquisition. The allocations are pending final determination of the fair value of certain assets and liabilities. The following is a summary of the preliminary allocation of the acquisition costs in the above transactions.

 

 

Total

 

Property, plant and equipment

 

$

14,305

 

Goodwill

 

 

13,925

 

Site locations

 

 

82,262

 

Non-competition agreements

 

 

325

 

Customer lists and contracts

 

 

10,224

 

Acquisition costs

 

 

194

 

Current assets

 

 

2,465

 

Current liabilities

 

 

(510

)

Other liabilities

 

 

(375

)

 

 

$

122,815

 

4. 5. Depreciation and Amortization

The Company includes all categories of depreciation and amortization on a separate line in its Condensed Consolidated Statements of Income and Comprehensive Income. The amounts of depreciation and amortization expense excluded from the following operating expenses in its Condensed Consolidated Statements of Income and Comprehensive Income are: 

are as follows:

 

Three months ended

September 30,

 

 

Nine months ended

September 30,

 

Three Months Ended
March 31,

 

2017

 

 

2016

 

 

2017

 

 

2016

 

20232022

Direct advertising expenses

 

$

47,168

 

 

$

46,163

 

 

$

144,171

 

 

$

142,228

 

Direct advertising expenses$68,316 $64,237 

General and administrative expenses

 

 

955

 

 

 

900

 

 

 

2,857

 

 

 

2,683

 

General and administrative expenses1,280 1,176 

Corporate expenses

 

 

3,673

 

 

 

2,244

 

 

 

7,975

 

 

 

7,818

 

Corporate expenses3,529 3,214 

 

$

51,796

 

 

$

49,307

 

 

$

155,003

 

 

$

152,729

 

$73,125 $68,627 

5.

6. Goodwill and Other Intangible Assets

The following is a summary of intangible assets at September 30, 2017March 31, 2023 and December 31, 2016:  

2022:

 

Estimated

 

 

September 30, 2017

 

 

December 31, 2016

 

Estimated
Life
(Years)		March 31, 2023December 31, 2022

 

Life

(Years)

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

Gross Carrying
Amount		Accumulated
Amortization		Gross Carrying
Amount		Accumulated
Amortization

Amortizable intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortizable intangible assets:

Customer lists and contracts

 

7—10

 

 

$

570,073

 

 

$

501,556

 

 

$

559,513

 

 

$

490,514

 

Customer lists and contracts7—10$720,053 $621,381 $720,051 $614,840 

Non-competition agreements

 

3—15

 

 

 

64,976

 

 

 

63,861

 

 

 

64,646

 

 

 

63,692

 

Non-competition agreements3—1571,649 65,849 71,599 65,647 

Site locations

 

 

15

 

 

 

1,937,725

 

 

 

1,354,594

 

 

 

1,885,554

 

 

 

1,318,976

 

Site locations152,873,946 1,808,603 2,864,854 1,781,164 

Other

 

2—15

 

 

 

45,406

 

 

 

29,502

 

 

 

14,174

 

 

 

13,552

 

Other2—1552,237 40,645 52,164 40,392 

 

 

 

 

 

$

2,618,180

 

 

$

1,949,513

 

 

$

2,523,887

 

 

$

1,886,734

 

$3,717,885 $2,536,478 $3,708,668 $2,502,043 

Unamortizable intangible assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unamortizable intangible assets:

Goodwill

 

 

 

 

 

$

1,994,005

 

 

$

253,536

 

 

$

1,979,894

 

 

$

253,536

 

Goodwill$2,288,808 $253,536 $2,288,805 $253,536 

9

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

6.

7. Asset Retirement Obligations

The Company’s asset retirement obligations include the costs associated with the removal of its structures, resurfacing of the land and retirement cost, if applicable, related to the Company’s outdoor advertising portfolio. The following table reflects information related to our asset retirement obligations:

Balance at December 31, 2016

 

$

210,889

 

Additions to asset retirement obligations

 

 

1,103

 

Accretion expense

 

 

3,182

 

Liabilities settled

 

 

(3,033

)

Balance at September 30, 2017

 

$

212,141

 

Balance at December 31, 2022$390,442 
Additions to asset retirement obligations431 
Accretion expense1,767 
Liabilities settled(1,434)
Balance at March 31, 2023$391,206 

7.

8. Distribution Restrictions

Lamar Media’s ability to make distributions to Lamar Advertising is restricted under both the terms of the indentures relating to Lamar Media’s outstanding notes and by the terms of its senior credit facility. As of September 30, 2017March 31, 2023 and December 31, 2016,2022, Lamar Media was permitted under the terms of its outstanding senior subordinated and senior notes to make transfers to Lamar Advertising in the form of cash dividends, loans or advances in amounts up to $2,834,543$4,199,834 and $2,702,633,$4,187,593, respectively.

12
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share data)
As of September 30, 2017,March 31, 2023, Lamar Media’s senior credit facility allows it to make transfers to Lamar Advertising in any taxable year up to the amount of Lamar Advertising’s taxable income (without any deduction for dividends paid). In addition, as of September 30, 2017,March 31, 2023, transfers to Lamar Advertising are permitted under Lamar Media’s senior credit facility and as defined therein up to the available cumulative credit, as long as no default has occurred and is continuing and, after giving effect to such distributions, (i) the total debt ratio is less than 6.57.0 to 1 and (ii) the secured debt ratio does not exceed 3.04.5 to 1. As of September 30, 2017,March 31, 2023, the total debt ratio was less than 6.57.0 to 1 and Lamar Media’s secured debt ratio was less than 3.04.5 to 1, and the available cumulative credit was $1,666,430.

8. $2,950,314.

9. Earnings Per Share

The calculation of basic earnings per share excludes any dilutive effect of stock options, while diluted earnings per share includes the dilutive effect of stock options. There were no dilutive shares excluded from this calculation resulting from their anti-dilutive effect for the three and nine months ended September 30, 2017March 31, 2023 or 2016.

9. 2022.

10. Long-term Debt

Long-term debt consists of the following at September 30, 2017March 31, 2023 and December 31, 2016:  

2022:

 

September 30, 2017

 

March 31, 2023

 

Debt

 

 

Deferred

financing costs

 

 

Debt, net of

deferred

financing costs

 

DebtDeferred
financing costs		Debt, net of
deferred
financing costs

Senior Credit Facility

 

$

534,375

 

 

$

8,133

 

 

$

526,242

 

Senior Credit Facility$1,064,033 $7,470 $1,056,563 

5 7/8% Senior Subordinated Notes

 

 

500,000

 

 

 

6,162

 

 

 

493,838

 

5% Senior Subordinated Notes

 

 

535,000

 

 

 

5,127

 

 

 

529,873

 

5 3/8% Senior Notes

 

 

510,000

 

 

 

5,155

 

 

 

504,845

 

5 3/4% Senior Notes

 

 

400,000

 

 

 

5,396

 

 

 

394,604

 

Accounts Receivable Securitization ProgramAccounts Receivable Securitization Program234,800 559 234,241 
3 3/4% Senior Notes3 3/4% Senior Notes600,000 5,735 594,265 
3 5/8% Senior Notes3 5/8% Senior Notes550,000 6,796 543,204 
4% Senior Notes4% Senior Notes549,457 6,267 543,190 
4 7/8% Senior Notes4 7/8% Senior Notes400,000 4,254 395,746 

Other notes with various rates and terms

 

 

27

 

 

 

—

 

 

 

27

 

Other notes with various rates and terms1,920 — 1,920 

 

 

2,479,402

 

 

 

29,973

 

 

 

2,449,429

 

3,400,210 31,081 3,369,129 

Less current maturities

 

 

(22,500

)

 

 

(5,085

)

 

 

(17,415

)

Less current maturities(235,183)(559)(234,624)

Long-term debt, excluding current maturities

 

$

2,456,902

 

 

$

24,888

 

 

$

2,432,014

 

Long-term debt, excluding current maturities$3,165,027 $30,522 $3,134,505 

10


December 31, 2022
DebtDeferred
financing costs		Debt, net of
deferred
financing costs
Senior Credit Facility$993,970 $8,171 $985,799 
Accounts Receivable Securitization Program250,000 593 249,407 
3 3/4% Senior Notes600,000 6,000 594,000 
3 5/8% Senior Notes550,000 6,982 543,018 
4% Senior Notes549,437 6,459 542,978 
4 7/8% Senior Notes400,000 4,410 395,590 
Other notes with various rates and terms2,013 — 2,013 
 3,345,420 32,615 3,312,805 
Less current maturities(250,378)(593)(249,785)
Long-term debt, excluding current maturities$3,095,042 $32,022 $3,063,020 
13

Table of Contents
LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

 

 

December 31, 2016

 

 

 

Debt

 

 

Deferred

financing costs

 

 

Debt, net of

deferred

financing costs

 

Senior Credit Facility

 

$

433,125

 

 

$

4,769

 

 

$

428,356

 

5 7/8% Senior Subordinated Notes

 

 

500,000

 

 

 

7,071

 

 

 

492,929

 

5% Senior Subordinated Notes

 

 

535,000

 

 

 

5,709

 

 

 

529,291

 

5 3/8% Senior Notes

 

 

510,000

 

 

 

5,662

 

 

 

504,338

 

5 3/4% Senior Notes

 

 

400,000

 

 

 

5,758

 

 

 

394,242

 

Other notes with various rates and terms

 

 

27

 

 

 

—

 

 

 

27

 

 

 

 

2,378,152

 

 

 

28,969

 

 

 

2,349,183

 

Less current maturities

 

 

(39,375

)

 

 

(5,459

)

 

 

(33,916

)

Long-term debt, excluding current maturities

 

$

2,338,777

 

 

$

23,510

 

 

$

2,315,267

 

5 7/8% Senior Subordinated Notes

On February 9, 2012, Lamar Media completed an institutional private placement of $500,000 aggregate principal amount of 5 7/8% Senior Subordinated Notes, due 2022 (the “5 7/8% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $489,000.

On or after February 1, 2017, Lamar Media may redeem the 5 7/8% Notes, in whole or in part, in cash at redemption prices specified in the 5 7/8% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5 7/8% Notes at a price equal to 101% of the principal amount of the 5 7/8% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

5% Senior Subordinated Notes

On October 30, 2012, Lamar Media completed an institutional private placement of $535,000 aggregate principal amount of 5% Senior Subordinated Notes due 2023 (the “5% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $527,100.

At any time prior to May 1, 2018, Lamar Media may redeem some or all of the 5% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon, plus a make-whole premium. On or after May 1, 2018, Lamar Media may redeem the 5% Notes, in whole or in part, in cash at redemption prices specified in the 5% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5% Notes at a price equal to 101% of the principal amount of the 5% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

5 3/8% Senior Notes

On January 10, 2014, Lamar Media completed an institutional private placement of $510,000 aggregate principal amount of 5 3/8% Senior Notes due 2024 (the “5 3/8% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $502,300.

At any time prior to January 15, 2019, Lamar Media may redeem some or all of the 5 3/8% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon plus a make-whole premium. On or after January 15, 2019, Lamar Media may redeem the 5 3/8% Notes, in whole or in part, in cash at redemption prices specified in the 5 3/8% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5 3/8% Notes at a price equal to 101% of the principal amount of the 5 3/8% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

11

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

5 3/4% Senior Notes

On January 28, 2016, Lamar Media completed an institutional private placement of $400,000 aggregate principal amount of 5 3/4% Senior Notes due 2026 (the “5 3/4% Notes”). The institutional private placement resulted in net proceeds to Lamar Media of approximately $394,500.

Lamar Media may redeem up to 35% of the aggregate principal amount of the 5 3/4% Notes, at any time and from time to time, at a price equal to 105.750% of the aggregate principal amount so redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before February 1, 2019, provided that following the redemption, at least 65% of the 5 3/4% Notes that were originally issued remain outstanding and any such redemption occurs within 120 days following the closing of any such public equity offering. At any time prior to February 1, 2021, Lamar Media may redeem some or all of the 5 3/4% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon plus a make-whole premium. On or after February 1, 2021, Lamar Media may redeem the 5 3/4% Notes, in whole or in part, in cash at redemption prices specified in the 5 3/4% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 5 3/4% Notes at a price equal to 101% of the principal amount of the 5 3/4% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.

Senior Credit Facility

On May 15, 2017,February 6, 2020, Lamar Media entered into a Third Restatement Agreement (“Restatement Agreement”) to its SecondFourth Amended and Restated Credit Agreement (“existing senior credit facility”(the “Fourth Amended and Restated Credit Agreement”) dated as of February 3, 2014 with the Company, certain of Lamar Media’s subsidiaries as guarantors, JPMorgan Chase Bank, N.A. as administrative agent and the lenders party thereto, under which the parties agreed to amend and restate Lamar Media’s existing senior credit facility.

Lamar Media’sThe Fourth Amended and Restated Credit Agreement amended and restated the Third Amended and Restated Credit Agreement dated as of May 15, 2017, (asas amended (the “Third Amended and Restated Credit Agreement”).

The senior credit facility, as established by the Fourth Amended and Restated Credit Agreement (the “senior credit facility”), consists of (i) a new $450,000$750,000 senior secured revolving credit facility which will mature on May 15, 2022,February 6, 2025 (the “revolving credit facility”), (ii) a new $450,000$600,000 Term AB loan facility (the “Term AB loans”) which will mature on May 15, 2022,February 6, 2027, and (iii) an incremental facility (the “Incremental Facility”) pursuant to which Lamar Media may incur additional term loan tranches or increase its revolving credit facility subject to a pro forma compliance with the secured debt ratio financial maintenance covenant described below.

Under the senior credit facilityof 4.50 to 1.00, as well as certain other conditions including lender approval. Lamar Media borrowed all $450,000$600,000 in Term AB loans on May 15, 2017.February 6, 2020. The entire amount of the Term B loans will be payable at maturity. The net proceeds from the Term B loans, together with borrowingborrowings under the revolving portion of the senior credit facility and cash on hand,a portion of the proceeds of the issuance of the 3 3/4% Senior Notes due 2028 and 4% Senior Notes due 2030 (both as described below), were used to repay all outstanding amounts under the existing senior credit facility,Third Amended and Restated Credit Agreement, and all revolving commitments under that facility were terminated.

The Term A Loans began amortizingB loans mature on September 30, 2017 in quarterly installments on each December 31, March 31, June 30 and September 30 thereafter.February 6, 2027 with no required amortization payments. The remaining quarterly installments scheduled to be paid are as follows: 

Principal Payment Date

 

Principal Amount

 

December 31, 2017-June 30, 2019

 

$

5,625.0

 

September 30, 2019-June 30, 2020

 

$

8,437.5

 

September 30, 2020-March 31, 2022

 

$

16,875.0

 

Term A Loan Maturity Date

 

$

253,125.0

 

For each borrowing of Term A loans or revolving credit loans, Lamar Media can elect whether suchB loans bear interest at (i)rates based on the Adjusted LIBO Rate (“Eurodollar term loans”) or the Adjusted Base Rate (“Base Rate term loans”), at Lamar Media’s option. Eurodollar term loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 1.50%. Base Rate term loans bear interest at a rate per annum equal to the Adjusted Base Rate plus (a) 0.75%0.50%.

The revolving credit facility bears interest at rates based on the Adjusted LIBO Rate (“Eurodollar revolving loans”) or the Adjusted Base Rate (“Base Rate revolving loans”), or (b) 0.50%at Lamar Media’s option. Eurodollar revolving loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 1.50% (or the Adjusted LIBO Rate plus 1.25% at any time thatthe Total Debt Ratio is less than or equal to 3.25 to 1). Base Rate revolving loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 0.50% (or the Adjusted Base Rate plus 0.25% at any time the total debt ratio is less than or equal to 3.25 to 1 as of the last day of the most recently ended fiscal quarter for which Lamar Media has delivered financial statements, or (ii) the Adjusted LIBO Rate plus (a) 1.75%, or (b) 1.50% at any time that the total debt ratio is less than 3.25 to 1 as of the last day of the most recently ended fiscal quarter for which Lamar Media has delivered financial statements.1). The guarantees, covenants, events of default and other terms of the senior credit facility apply to the Term AB loans and revolving credit facility.

12

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes

On July 29, 2022, Lamar Media entered into Amendment No. 2 (the "Amendment No. 2") to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except sharethe Fourth Amended and per share data)

Restated Credit Agreement with certain of Lamar Media's subsidiaries as guarantors, JPMorgan Chase Bank, N.A. as administrative agent and the lenders party thereto. Amendment No. 2 established a new $350,000 Senior Secured Term Loan A loan (the "Term A loans") as a new class of incremental term loans. The Term A loans will mature on February 6, 2025 with no required amortization payments prior to maturity and bear interest at rates based on the Term Secured Overnight Financing Rate ("Term SOFR") plus 1.25% and a credit spread adjustment of 0.10%. The covenants, events of default and other terms of the senior credit facility apply to the Term A loans. Lamar Media borrowed all $350,000 in Term A loans on July 29, 2022. The entire amount of the Term A loans will be payable at maturity. Proceeds from the Term A loans were used to repay outstanding balances on the revolving credit facility and a portion of the outstanding balance on the Accounts Receivable Securitization Program.

As of September 30, 2017,March 31, 2023, there was $90,000were $115,000 in borrowings outstanding under the revolving credit facility. Availability under the revolving credit facility is reduced by the amount of any letters of credit outstanding. Lamar Media had $13,091$9,052 in letters of credit outstanding as of September 30, 2017March 31, 2023 resulting in $346,909$625,948 of availability under its revolving credit facility. Revolving credit loans may be requested under the revolving credit facility at any time prior to its maturity on May 15, 2022.

February 6, 2025.

The terms of Lamar Media’s senior credit facility and the indentures relating to Lamar Media’s outstanding notes restrict, among other things, the ability of Lamar Advertising and Lamar Media to:

•dispose of assets;

•incur or repay debt;

14
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share data)

•create liens;

•make investments; and

•pay dividends.

The senior credit facility contains provisions that allow Lamar Media to conduct its affairs in a manner that allows Lamar Advertising to qualify and remain qualified as a REIT, including by allowing Lamar Media to make distributions to Lamar Advertising required for the Company to qualify and remain qualified for taxation as a REIT, subject to certain restrictions.

Lamar Media’s ability to make distributions to Lamar Advertising is also restricted under the terms of these agreements. Under Lamar Media’s senior credit facility, the Company must maintain a specified seniorsecured debt ratio at all timesas long as a revolving credit commitment, revolving loan or letter of credit remains outstanding, and in addition, must satisfy a total debt ratio in order to incur debt, make distributions or make certain investments.

Lamar Advertising and Lamar Media were in compliance with all of the terms of their indentures and the senior credit facility provisions during the periods presented.

10.

Accounts Receivable Securitization Program
On December 18, 2018, Lamar Media entered into a $175,000 Receivable Financing Agreement (the “Receivable Financing Agreement”) with its wholly-owned special purpose entities, Lamar QRS Receivables, LLC and Lamar TRS Receivables, LLC (the “Special Purpose Subsidiaries”) (the "Accounts Receivable Securitization Program"). The Accounts Receivable Securitization Program is limited to the availability of eligible accounts receivable collateralizing the borrowings under the agreements governing the Accounts Receivable Securitization Program.
Pursuant to two separate Purchase and Sale Agreements dated December 18, 2018, each of which is among Lamar Media as initial Servicer, certain of Lamar Media’s subsidiaries and a Special Purpose Subsidiary, the subsidiaries sold substantially all of their existing and future accounts receivable balances to the Special Purpose Subsidiaries. The Special Purpose Subsidiaries use the accounts receivable balances to collateralize loans pursuant to the Accounts Receivable Securitization Program. Lamar Media retains the responsibility of servicing the accounts receivable balances pledged as collateral under the Accounts Receivable Securitization Program and provides a performance guaranty.
On June 24, 2022, Lamar Media and the Special Purpose Subsidiaries entered into the Sixth Amendment (the "Sixth Amendment") to the Receivables Financing Agreement. The Sixth Amendment increased the Accounts Receivable Securitization Program from $175,000 to $250,000 and extended the maturity date of the Accounts Receivable Securitization Program to July 21, 2025. Additionally, the Sixth Amendment provides for the replacement of LIBOR-based interest rate mechanics with Term SOFR based interest rate mechanics for the Accounts Receivable Securitization Program.
As of March 31, 2023 there was $234,800 outstanding aggregate borrowings under the Accounts Receivable Securitization Program. Based on the availability of eligible accounts, Lamar Media had an additional $3,600 available for borrowing under the Accounts Receivable Securitization Program as of March 31, 2023. The commitment fees based on the amount of unused commitments under the Accounts Receivable Securitization Program were immaterial during the three months ended March 31, 2023.
The Accounts Receivable Securitization Program will mature on July 21, 2025. Lamar Media may amend the facility to extend the maturity date, enter into a new securitization facility with a different maturity date, or refinance the indebtedness outstanding under the Accounts Receivable Securitization Program using borrowings under its senior credit facility or from other financing sources.
The Accounts Receivable Securitization Program is accounted for as a collateralized financing activity, rather than a sale of assets, and therefore: (i) accounts receivable balances pledged as collateral are presented as assets and the borrowings are presented as liabilities on our Condensed Consolidated Balance Sheets, (ii) our Condensed Consolidated Statements of Income
15
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share data)
and Comprehensive Income reflect the associated charges for bad debt expense (a component of general and administrative expenses) related to the pledged accounts receivable and interest expense associated with the collateralized borrowings and (iii) receipts from customers related to the underlying accounts receivable are reflected as operating cash flows and borrowings and repayments under the collateralized loans are reflected as financing cash flows within our Condensed Consolidated Statements of Cash Flows.
4% Senior Notes
On February 6, 2020, Lamar Media completed an institutional private placement of $400,000 aggregate principal amount of 4% Senior Notes due 2030 (the “Original 4% Notes”). The institutional private placement on February 6, 2020 resulted in net proceeds to Lamar Media of approximately $395,000.
On August 19, 2020, Lamar Media completed an institutional private placement of an additional $150,000 aggregate principal amount of its 4% Notes (the “Additional 4% Notes”, and together with the Original 4% Notes, the "4% Notes"). Other than with respect to the date of issuance and issue price, the Additional 4% Notes have the same terms as the Original 4% Notes. The institutional private placement on August 19, 2020 resulted in net proceeds to Lamar Media of approximately $146,900.
At any time prior to February 15, 2025, Lamar Media may redeem some or all of the 4% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon and a make-whole premium. On or after February 15, 2025, Lamar Media may redeem the 4% Notes, in whole or in part, in cash at redemption prices specified in the 4% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 4% Notes at a price equal to 101% of the principal amount of the 4% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.
3 3/4% Senior Notes
On February 6, 2020, Lamar Media completed an institutional private placement of $600,000 aggregate principal amount of 3 3/4% Senior Notes due 2028 (the “3 3/4% Notes”). The institutional private placement on February 6, 2020 resulted in net proceeds to Lamar Media of approximately $592,500.
On or after February 15, 2023, Lamar Media may redeem the 3 3/4% Notes, in whole or in part, in cash at redemption prices specified in the 3 3/4% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 3 3/4% Notes at a price equal to 101% of the principal amount of the 3 3/4% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.
4 7/8% Senior Notes
On May 13, 2020, Lamar Media completed an institutional private placement of $400,000 aggregate principal amount of 4 7/8% Senior Notes due 2029 (the “4 7/8% Notes”). The institutional private placement on May 13, 2020 resulted in net proceeds to Lamar Media of approximately $395,000.
Lamar Media may redeem up to 40% of the aggregate principal amount of the 4 7/8% Notes, at any time and from time to time, at a price equal to 104.875% of the aggregate principal amount redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before May 15, 2023, provided that following the redemption, at least 60% of the 4 7/8% Notes that were originally issued remain outstanding and any such redemption occurs within 120 days following the closing of any such public equity offering. At any time prior to January 15, 2024, Lamar Media may redeem some or all of the 4 7/8% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon and a make-whole premium. On or after January 15, 2024, Lamar Media may redeem the 4 7/8% Notes, in whole or in part, in cash at redemption prices specified in the 4 7/8% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder’s 4 7/8% Notes at a price equal to 101% of the principal amount of the 4 7/8% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.
16
Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share data)
3 5/8% Senior Notes
On January 22, 2021, Lamar Media completed an institutional private placement of $550,000 aggregate principal amount of 3 5/8% Senior Notes due 2031 (the “3 5/8% Notes”). The institutional private placement on January 22, 2021 resulted in net proceeds to Lamar Media of approximately $542,500.
Lamar Media may redeem up to 40% of the aggregate principal amount of the 3 5/8% Notes, at any time and from time to time, at a price equal to 103.625% of the aggregate principal amount so redeemed, plus accrued and unpaid interest thereon, with the net cash proceeds of certain public equity offerings completed before January 15, 2024 provided that following the redemption, at least 60% of the 3 5/8% Notes that were originally issued remain outstanding and any such redemption occurs within 120 days following the closing of any such public equity offering. At any time prior to January 15, 2026, Lamar Media may redeem some or all of the 3 5/8% Notes at a price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest thereon and a make-whole premium. On or after January 15, 2026, Lamar Media may redeem the 3 5/8% Notes, in whole or in part, in cash at redemption prices specified in the 3 5/8% Notes. In addition, if the Company or Lamar Media undergoes a change of control, Lamar Media may be required to make an offer to purchase each holder's 3 5/8% Notes at a price equal to 101% of the principal amount of the 3 5/8% Notes, plus accrued and unpaid interest, up to but not including the repurchase date.
Debt Repurchase Program
On March 16, 2020, the Company’s Board of Directors authorized Lamar Media to repurchase up to $250,000 in outstanding senior or senior subordinated notes and other indebtedness outstanding from time to time under its Fourth Amended and Restated Credit Agreement. On February 23, 2023, the Board of Directors authorized the extension of the repurchase program through September 30, 2024. There were no repurchases under the program as of March 31, 2023.
11. Fair Value of Financial Instruments

At September 30, 2017March 31, 2023 and December 31, 2016,2022, the Company’s financial instruments included cash and cash equivalents, marketable securities, accounts receivable, investments, accounts payable and borrowings. The fair values of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings and current portion of long-term debt approximated carrying values because of the short-term nature of these instruments. Investment contracts are reported at fair values. Fair values for investments held at cost are not readily available, but are estimated to approximate fair value. The estimated fair value of the Company’s long-term debt (including current maturities) was $2,578,645$3,142,603 which exceededdoes not exceed the carrying amount of $2,479,402$3,400,210 as of September 30, 2017.March 31, 2023. The majority of the fair value is determined using observed prices of publicly traded debt (level 1 in the fair value hierarchy) and the remaining is valued based on quoted prices for similar debt (level 2 in the fair value hierarchy).

11.

12. New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. Generally Accepted Accounting Principles (“GAAP”) when it becomes effective. In August 2015,October 2021, the FASB issued ASU No. 2015-14 deferring2021-08 Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which provides guidance on the effectiverecognition and measurement of contract assets and contract liabilities acquired in a business combination. At the acquisition date, from January 1, 2017 to January 1, 2018, while allowing for early adoption as of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is in the final stages of its review of contracts and we do not expect any material impact on our consolidated financial statementsacquirer should account for the adoption of ASU No. 2014-09. We currently believerelated revenue contracts as if the only contracts with customers which will be accountedacquirer had originated the contracts. The guidance also provides certain practical expedients for under ASU No. 2014-09 are our Transit advertising contractsacquirers when recognizing and production services. We have preliminarily determined to adopt the provisions of ASU No. 2014-09 using the cumulative effect transition method with an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application.

13

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

In November 2015, the FASB issued ASU No. 2015-17 Income taxes – Balance Sheet Classification of Deferred Taxes. The amendments in this update require deferred tax liabilities and assets be classified as noncurrent in the balance sheet. The amendments are effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company adopted the update in ASU No. 2015-17 as of January 1, 2017. The Company’s 2016 consolidated balance sheet has been adjusted to reflect retrospective adoption of the update and the impact was not considered material.

In February 2016, the FASB issued ASU No. 2016-02, Leases.  The update is to increase transparency and comparability among organizations by recognizing leasemeasuring acquired contract assets and contract liabilities on the balance sheet and disclosing key information about lease arrangements.  The amendmentsfrom revenue contracts in this update are effective beginning January 1, 2019 with retrospective application. The Company is in the process of assessing the impact ASU No. 2016-02 will have on our consolidated financial statements.  The Company expects the primary impact to our consolidated financial statements will be the recognition, on a discounted basis, of our minimum commitments under non-cancelable operating leases on our consolidated balance sheets, resulting in the recording of right of use assets and lease obligations.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments. The update clarifies how certain cash receipts and cash payments are presented in the statement of cash flows.  The updatebusiness combination. This guidance is effective for annual periods beginning January 1, 2018 with early adoption permitted. The Company adopted the update in ASU No. 2016-15public entities as of January 1, 2017.December 15, 2022. The adoption of this updateguidance did not have a material impact on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations: Clarifying the definition of a business.  The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or businesses.  The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods.  Early adoption is allowed for transactions which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company adopted the update in ASU 2017-01 for transactions which occurred on or after October 1, 2016. The adoption of this update did not have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and other (Topic 350): Simplifying the test for goodwill impairment. The update simplifies how a company completes its goodwill impairment test by eliminating the two-step process, which requires determining the fair value of assets acquired or liabilities assumed in a business combination. The update requires completing the goodwill impairment test by comparing the difference between the reporting unit’s carrying value and fair value.  Goodwill charges, if any, would be determined by reducing the goodwill balance by the excess of the reporting unit’s carrying value over its fair value.  The update is effective for annual and interim fiscal periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on or after January 1, 2017.  The Company plans to early adopt this update for its December 31, 2017 goodwill impairment test.

12.

13. Dividends/Distributions

During the three months ended September 30, 2017March 31, 2023 and September 30, 2016,2022, the Company declared and paid cash distributions of its REIT taxable income in an aggregate amount of $81,408$127,460 or $0.83$1.25 per share and $73,938$111,602 or $0.76 per share, respectively. During the nine months ended September 30, 2017 and September 30, 2016, the Company declared and paid cash distributions of its REIT taxable income in an aggregate amount of $243,928 or $2.49 per share and $219,584 or $2.26$1.10 per share, respectively. The amount, timing and frequency of future distributions will be at the sole discretion of the Board of Directors and will be declared based upon various factors, a number of which may be beyond the Company’s control, including financial condition and operating cash flows, the amount required to maintain REIT status and reduce any income and excise taxes that the Company otherwise would be required to pay, limitations on distributions in our existing and future debt instruments, the Company’s ability to utilize net operating losses
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Table of Contents
LAMAR ADVERTISING COMPANY
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share data)
to offset, in whole or in part, the Company’s distribution requirements, limitations on its ability to fund distributions using cash generated through its taxable REIT subsidiaries (TRSs), the impact of general economic conditions on the Company’s operations and other factors that the Board of Directors may deem relevant. During the three months ended September 30, 2017March 31, 2023 and September 30, 2016,2022, the Company paid cash dividend distributions to holders of its Series AA Preferred Stock in an aggregate amount of $91 or $15.95 per share. During the nine months ended September 30, 2017 and September 30, 2016, the Company paid cash dividend distributions to holders of its Series AA Preferred Stock in an aggregate amount of $273 or $47.85 per share.

14

LAMAR ADVERTISING COMPANY

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share data)

13. for each period.

14. Information about Geographic Areas

Revenues from external customers attributable to foreign countries totaled $24,335$6,076 and $24,076$6,197 for the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, respectively. Net carrying value of long livedlong-lived assets located in foreign countries totaled $4,121$12,575 and $4,893$11,763 as of September 30, 2017March 31, 2023 and December 31, 2016,2022, respectively. All other revenues from external customers and long livedlong-lived assets relate to domestic operations.

15. Stockholders’ Equity
Sales Agreement. On May 1, 2018, the Company entered into an equity distribution agreement (the “Sales Agreement”) with J.P. Morgan Securities LLC, Wells Fargo Securities LLC, and SunTrust Robinson Humphrey, Inc. as its sales agents. Under the terms of the Sales Agreement, the Company could have, from time to time, issued and sold shares of its Class A common stock, having an aggregate offering price of up to $400,000, through the sales agents party thereto as either agents or principals. The Sales Agreement expired by its terms on May 1, 2021 and as of that date, 842,412 shares of our Class A common stock were sold under the Sales Agreement.
On June 21, 2021, the Company entered into a new equity distribution agreement (the "2021 Sales Agreement") with J.P. Morgan Securities LLC, Wells Fargo Securities LLC, Truist Securities, Inc., SMBC Nikko Securities America, Inc. and Scotia Capital (USA) Inc. as our sales agents (each a "Sales Agent", and collectively, the "Sales Agents"), which replaced the prior Sales Agreement with substantially similar terms. Under the terms of the 2021 Sales Agreement, the Company may, from time to time, issue and sell shares of its Class A common stock, having an aggregate offering price of up to $400,000, through the Sales Agents as either agents or principals.
Sales of the Class A common stock, if any, may be made in negotiated transactions or transactions that are deemed to be "at-the-market offerings" as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made directly on or through the Nasdaq Global Select Market and any other existing trading market for the Class A common stock, or sales made to or directly through a market maker other than on an exchange. The Company has no obligation to sell any of the Class A Common stock under the 2021 Sales Agreement and may at any time suspend solicitations and offers under the 2021 Sales Agreement.
As of March 31, 2023, no shares of our Class A common stock have been sold under the 2021 Sales Agreement and accordingly $400,000 remained available to be sold under the 2021 Sales Agreement as of March 31, 2023.
Shelf Registration. On June 21, 2021, the Company filed an automatically effective shelf registration statement that allows Lamar Advertising to offer and sell an indeterminate amount of additional shares of its Class A common stock. During the three months ended March 31, 2023 and the year ended December 31, 2022, the Company did not issue any shares under this shelf registration.
Stock Repurchase Program. On March 16, 2020, the Company’s Board of Directors authorized the repurchase of up to $250,000 of the Company’s Class A common stock. On February 23, 2023, the Board of Directors authorized the extension of the repurchase program through September 30, 2024. There were no repurchases under the program as of March 31, 2023.
18
Table of Contents


LAMAR MEDIA CORP.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share data)

 

 

September 30, 2017

 

 

December 31, 2016

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

28,919

 

 

$

35,030

 

Receivables, net of allowance for doubtful accounts of $11,529 and $9,356 in 2017

   and 2016, respectively

 

 

223,088

 

 

 

189,935

 

Prepaid lease expenses

 

 

72,816

 

 

 

48,815

 

Other current assets

 

 

45,187

 

 

 

39,973

 

Total current assets

 

 

370,010

 

 

 

313,753

 

Property, plant and equipment

 

 

3,354,962

 

 

 

3,294,251

 

Less accumulated depreciation and amortization

 

 

(2,174,393

)

 

 

(2,111,536

)

Net property, plant and equipment

 

 

1,180,569

 

 

 

1,182,715

 

Goodwill

 

 

1,730,318

 

 

 

1,716,207

 

Intangible assets

 

 

668,197

 

 

 

636,685

 

Other assets

 

 

37,731

 

 

 

33,120

 

Total assets

 

$

3,986,825

 

 

$

3,882,480

 

LIABILITIES AND STOCKHOLDER’S EQUITY

 

 

 

 

��

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Trade accounts payable

 

$

18,054

 

 

$

17,653

 

Current maturities of long-term debt, net of deferred financing costs of $5,085 and

   $5,459 in 2017 and 2016, respectively

 

 

17,415

 

 

 

33,916

 

Accrued expenses

 

 

95,715

 

 

 

131,171

 

Deferred income

 

 

103,670

 

 

 

91,322

 

Total current liabilities

 

 

234,854

 

 

 

274,062

 

Long-term debt, net of deferred financing costs of $24,888 and $23,510 in 2017 and

   2016, respectively

 

 

2,432,014

 

 

 

2,315,267

 

Deferred income tax liabilities

 

 

326

 

 

 

279

 

Asset retirement obligation

 

 

212,141

 

 

 

210,889

 

Other liabilities

 

 

29,536

 

 

 

25,597

 

Total liabilities

 

 

2,908,871

 

 

 

2,826,094

 

Stockholder’s equity:

 

 

 

 

 

 

 

 

Common stock, par value $.01, 3,000 shares authorized, 100 shares issued and

   outstanding at 2017 and 2016

 

 

—

 

 

 

—

 

Additional paid-in-capital

 

 

2,825,333

 

 

 

2,783,753

 

Accumulated comprehensive income (loss)

 

 

1,480

 

 

 

(624

)

Accumulated deficit

 

 

(1,748,859

)

 

 

(1,726,743

)

Stockholder’s equity

 

 

1,077,954

 

 

 

1,056,386

 

Total liabilities and stockholder’s equity

 

$

3,986,825

 

 

$

3,882,480

 

March 31,
2023		December 31,
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$33,022 $52,119 
Receivables, net of allowance for doubtful accounts of $10,661 and $11,418 in 2023 and 2022, respectively259,443 285,039 
Other current assets45,475 26,894 
Total current assets337,940 364,052 
Property, plant and equipment4,144,289 4,109,146 
Less accumulated depreciation and amortization(2,634,370)(2,609,447)
Net property, plant and equipment1,509,919 1,499,699 
Operating lease right of use assets1,279,602 1,271,631 
Financing lease right of use assets13,324 14,037 
Goodwill2,025,121 2,025,117 
Intangible assets, net1,180,939 1,206,158 
Other assets78,199 77,778 
Total assets$6,425,044 $6,458,472 
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Trade accounts payable$16,894 $19,643 
Current maturities of long-term debt, net of deferred financing costs of $559 and $593 in 2023 and 2022, respectively234,624 249,785 
Current operating lease liabilities177,830 205,838 
Current financing lease liabilities1,331 1,331 
Accrued expenses73,627 108,724 
Deferred income146,579 131,847 
Total current liabilities650,885 717,168 
Long-term debt, net of deferred financing costs of $30,522 and $32,022 in 2023 and 2022, respectively3,134,505 3,063,020 
Operating lease liabilities1,030,959 1,035,655 
Financing lease liabilities15,613 15,945 
Deferred income tax liabilities8,498 9,651 
Asset retirement obligation391,206 390,442 
Other liabilities40,337 39,090 
Total liabilities5,272,003 5,270,971 
Stockholder's equity:
Common stock, par value $0.01, 3,000 shares authorized, 100 shares issued and outstanding at 2023 and 2022— — 
Additional paid-in-capital3,154,609 3,132,178 
Accumulated comprehensive loss(661)(659)
Accumulated deficit(2,001,247)(1,944,018)
Non-controlling interest340 — 
Stockholder's equity1,153,041 1,187,501 
Total liabilities and stockholder's equity$6,425,044 $6,458,472 
See accompanying notes to condensed consolidated financial statements.


19

Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except share and per share data)

 

Three months ended

September 30,

 

 

Nine months ended

September 30,

 

Three Months Ended
March 31,

 

2017

 

 

2016

 

 

2017

 

 

2016

 

20222022

Statements of Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statements of Income

Net revenues

 

$

399,345

 

 

$

387,516

 

 

$

1,142,785

 

 

$

1,113,577

 

Net revenues$471,332 $451,388 

Operating expenses (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (income)

Direct advertising expenses (exclusive of depreciation and

amortization)

 

 

134,977

 

 

 

131,778

 

 

 

401,896

 

 

 

393,228

 

Direct advertising expenses (exclusive of depreciation and amortization)168,432 157,772 

General and administrative expenses (exclusive of depreciation

and amortization)

 

 

68,500

 

 

 

67,487

 

 

 

206,452

 

 

 

200,734

 

General and administrative expenses (exclusive of depreciation and amortization)85,135 83,084 

Corporate expenses (exclusive of depreciation and

amortization)

 

 

14,982

 

 

 

19,252

 

 

 

48,154

 

 

 

55,143

 

Corporate expenses (exclusive of depreciation and amortization)28,391 21,876 

Depreciation and amortization

 

 

51,796

 

 

 

49,307

 

 

 

155,003

 

 

 

152,729

 

Depreciation and amortization73,125 68,627 

Gain on disposition of assets

 

 

(2,734

)

 

 

(189

)

 

 

(4,377

)

 

 

(12,221

)

Gain on disposition of assets(2,688)(563)

 

 

267,521

 

 

 

267,635

 

 

 

807,128

 

 

 

789,613

 

352,395 330,796 

Operating income

 

 

131,824

 

 

 

119,881

 

 

 

335,657

 

 

 

323,964

 

Operating income118,937 120,592 

Other expense (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income)

Loss on extinguishment of debt

 

 

—

 

 

 

—

 

 

 

71

 

 

 

3,198

 

Interest income

 

 

(2

)

 

 

(2

)

 

 

(6

)

 

 

(6

)

Interest income(461)(215)

Interest expense

 

 

32,064

 

 

 

31,102

 

 

 

95,526

 

 

 

92,469

 

Interest expense41,444 26,786 
Equity in earnings of investeeEquity in earnings of investee(178)(746)

 

 

32,062

 

 

 

31,100

 

 

 

95,591

 

 

 

95,661

 

40,805 25,825 

Income before income tax expense

 

 

99,762

 

 

 

88,781

 

 

 

240,066

 

 

 

228,303

 

Income before income tax expense78,132 94,767 

Income tax expense

 

 

3,325

 

 

 

3,613

 

 

 

9,257

 

 

 

9,730

 

Income tax expense1,798 2,480 

Net income

 

$

96,437

 

 

$

85,168

 

 

$

230,809

 

 

$

218,573

 

Net income76,334 92,287 
Earnings attributable to non-controlling interestEarnings attributable to non-controlling interest157 — 
Net income attributable to controlling interestNet income attributable to controlling interest$76,177 $92,287 

Statements of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statements of Comprehensive Income

Net income

 

$

96,437

 

 

$

85,168

 

 

$

230,809

 

 

$

218,573

 

Net income$76,334 $92,287 

Other comprehensive (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income

Foreign currency translation adjustments

 

 

1,216

 

 

 

(328

)

 

 

2,104

 

 

 

1,151

 

Foreign currency translation adjustments(2)314 

Comprehensive income

 

$

97,653

 

 

$

84,840

 

 

$

232,913

 

 

$

219,724

 

Comprehensive income76,332 92,601 
Earnings attributable to non-controlling interestEarnings attributable to non-controlling interest(157)— 
Comprehensive income attributable to controlling interestComprehensive income attributable to controlling interest$76,175 $92,601 

See accompanying notes to condensed consolidated financial statements.


20

Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

Stockholder's Equity

(Unaudited)

(In thousands) 

thousands, except share and per share data)

 

 

Nine months ended

September 30,

 

 

 

2017

 

 

2016

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

230,809

 

 

$

218,573

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

155,003

 

 

 

152,729

 

Stock-based compensation

 

 

7,060

 

 

 

19,650

 

Amortization included in interest expense

 

 

3,866

 

 

 

3,993

 

Gain on disposition of assets and investments

 

 

(4,377

)

 

 

(12,221

)

Loss on extinguishment of debt

 

 

71

 

 

 

3,198

 

Deferred tax expense (benefit)

 

 

259

 

 

 

(150

)

Provision for doubtful accounts

 

 

6,009

 

 

 

5,831

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

(Increase) decrease in:

 

 

 

 

 

 

 

 

Receivables

 

 

(38,083

)

 

 

(39,072

)

Prepaid lease expenses

 

 

(23,281

)

 

 

(21,700

)

Other assets

 

 

(4,334

)

 

 

5,923

 

Increase (decrease) in:

 

 

 

 

 

 

 

 

Trade accounts payable

 

 

401

 

 

 

(761

)

Accrued expenses

 

 

(21,768

)

 

 

(5,623

)

Other liabilities

 

 

(13,033

)

 

 

(16,410

)

Net cash provided by operating activities

 

 

298,602

 

 

 

313,960

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Acquisitions

 

 

(119,936

)

 

 

(526,029

)

Capital expenditures

 

 

(74,446

)

 

 

(78,825

)

Proceeds from disposition of assets and investments

 

 

3,340

 

 

 

7,753

 

Decrease in notes receivable

 

 

13

 

 

 

16

 

Net cash used in investing activities

 

 

(191,029

)

 

 

(597,085

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Principal payments on long-term debt

 

 

(11,250

)

 

 

(15,015

)

Payment on revolving credit facility

 

 

(407,000

)

 

 

(302,000

)

Proceeds received from revolving credit facility

 

 

317,000

 

 

 

408,000

 

Proceeds received from note offering

 

 

—

 

 

 

400,000

 

Payment on senior credit facility term loans

 

 

(247,500

)

 

 

(300,000

)

Proceeds received from senior credit facility term loans

 

 

450,000

 

 

 

300,000

 

Debt issuance costs

 

 

(4,941

)

 

 

(9,391

)

Distributions to non-controlling interest

 

 

(415

)

 

 

(315

)

Contributions from parent

 

 

41,580

 

 

 

41,872

 

Dividend to parent

 

 

(252,925

)

 

 

(225,789

)

Net cash (used in) provided by financing activities

 

 

(115,451

)

 

 

297,362

 

Effect of exchange rate changes in cash and cash equivalents

 

 

1,767

 

 

 

915

 

Net (decrease) increase in cash and cash equivalents

 

 

(6,111

)

 

 

15,152

 

Cash and cash equivalents at beginning of period

 

 

35,030

 

 

 

21,827

 

Cash and cash equivalents at end of period

 

$

28,919

 

 

$

36,979

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

104,966

 

 

$

91,952

 

Cash paid for foreign, state and federal income taxes

 

$

9,969

 

 

$

11,023

 

Common
Stock		Additional
Paid-In
Capital		Accumulated
Comprehensive
Income (Loss)		Accumulated
Deficit		Non-controlling interestTotal
Balance, December 31, 2022$— $3,132,178 $(659)$(1,944,018)$— $1,187,501 
Contribution from parent— 23,447 — — — 23,447 
Reallocation of capital— (1,016)— — 397 (619)
Foreign currency translations— — (2)— — (2)
Net income— — — 76,177 157 76,334 
Dividend to parent— — — (133,406)(214)(133,620)
Balance, March 31, 2023$— 3,154,609 (661)(2,001,247)340 $1,153,041 


Common
Stock		Additional
Paid-In
Capital		Accumulated
Comprehensive
Income		Accumulated
Deficit		Non-controlling interestTotal
Balance, December 31, 2021$— $3,071,905 $855 $(1,864,414)$— $1,208,346 
Contribution from parent— 36,447 — — — 36,447 
Foreign currency translations— — 314 — — 314 
Net income— — — 92,287 — 92,287 
Dividend to parent— — — (122,047)— (122,047)
Balance, March 31, 2022$— 3,108,352 1,169 (1,894,174)— $1,215,347 
See accompanying notes to condensed consolidated financial statements.


21

Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
March 31,
20232022
Cash flows from operating activities:
Net income$76,334 $92,287 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization73,125 68,627 
Non-cash compensation8,040 1,780 
Amortization included in interest expense1,642 1,471 
Gain on disposition of assets(2,688)(563)
Equity in earnings of investee(178)(746)
Deferred tax expense(1,152)(342)
Provision for doubtful accounts1,397 (39)
Changes in operating assets and liabilities:
(Increase) decrease in:
Receivables24,208 14,394 
Prepaid expenses(10,833)(5,537)
Other assets(7,523)(8,265)
(Decrease) increase in:
Trade accounts payable(1,911)(1,496)
Accrued expenses(24,010)(22,500)
Operating lease liabilities(40,801)(30,786)
Other liabilities(6,269)(37,889)
Net cash provided by operating activities89,381 70,396 
Cash flows from investing activities:
Acquisitions(13,627)(55,293)
Capital expenditures(42,285)(28,759)
Proceeds from disposition of assets and investments3,248 710 
Net cash used in investing activities(52,664)(83,342)
Cash flows from financing activities:
Principal payments on long-term debt(93)(92)
Principal payments on financing leases(333)(333)
Payments on revolving credit facility(20,000)(50,000)
Proceeds received from revolving credit facility90,000 165,000 
Proceeds received from accounts receivable securitization program9,800 — 
Payments on accounts receivable securitization program(25,000)— 
Debt issuance costs(25)— 
Distributions to non-controlling interest(214)(46)
Contributions from parent23,447 36,447 
Dividend to parent(133,406)(122,047)
Net cash (used in) provided by financing activities(55,824)28,929 
Effect of exchange rate changes in cash and cash equivalents10 107 
Net (decrease) increase in cash and cash equivalents(19,097)16,090 
Cash and cash equivalents at beginning of period52,119 99,288 
Cash and cash equivalents at end of period$33,022 $115,378 
Supplemental disclosures of cash flow information:
Cash paid for interest$39,430 $25,378 
Cash paid for foreign, state and federal income taxes$3,182 $3,716 
See accompanying notes to condensed consolidated financial statements.
22
Table of Contents
LAMAR MEDIA CORP.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In Thousands, Except for Share Data)

1. Significant Accounting Policies

The information included in the foregoing interim condensed consolidated financial statements is unaudited. In the opinion of management all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of Lamar Media’s financial position and results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. These interim condensed consolidated financial statements should be read in conjunction with Lamar Media’s consolidated financial statements and the notes thereto included in the 20162022 Combined Form 10-K.

Certain notes are not provided for the accompanying condensed consolidated financial statements as the information in notes 1, 2, 3, 4, 5, 6, 7, 9,8, 10, 11, 12, 14, and 1315 to the condensed consolidated financial statements of Lamar Advertising included elsewhere in this report is substantially equivalent to that required for the condensed consolidated financial statements of Lamar Media. Earnings per share data is not provided for Lamar Media, as it is a wholly owned subsidiary of the Company.

2. Summarized Financial Information of Subsidiaries

Separate condensed consolidating financial information for Lamar Media, subsidiary guarantors and non-guarantor subsidiaries areis presented below. Lamar Media and its subsidiary guarantors have fully and unconditionally guaranteed Lamar Media’s obligations with respect to its publicly issued notes. All guarantees are joint and several. As a result of these guarantee arrangements, we are required to present the following condensed consolidating financial information. The following condensed consolidating financial information should be read in conjunction with the accompanying consolidated financial statements and notes. The condensed consolidating financial information is provided as an alternative to providing separate financial statements for guarantor subsidiaries. Separate financial statements of Lamar Media’s subsidiary guarantors are not included because the guarantees are full and unconditional and the subsidiary guarantors are 100% owned and jointly and severally liable for Lamar Media’s outstanding publicly issued notes. The accounts for all companies reflected herein are presented using the equity method of accounting for investments in subsidiaries.



23
Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In Thousands, Except for Share Data)

Condensed Consolidating Balance Sheet as of September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

 

 

(unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

$

3,405

 

 

$

327,313

 

 

$

39,292

 

 

$

—

 

 

$

370,010

 

Net property, plant and equipment

 

 

—

 

 

 

1,158,402

 

 

 

22,167

 

 

 

—

 

 

 

1,180,569

 

Intangibles and goodwill, net

 

 

—

 

 

 

2,368,590

 

 

 

29,925

 

 

 

—

 

 

 

2,398,515

 

Other assets

 

 

3,575,806

 

 

 

11,450

 

 

 

8

 

 

 

(3,549,533

)

 

 

37,731

 

Total assets

 

$

3,579,211

 

 

$

3,865,755

 

 

$

91,392

 

 

$

(3,549,533

)

 

$

3,986,825

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

17,415

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

17,415

 

Other current liabilities

 

 

25,597

 

 

 

168,779

 

 

 

23,063

 

 

 

—

 

 

 

217,439

 

Total current liabilities

 

 

43,012

 

 

 

168,779

 

 

 

23,063

 

 

 

—

 

 

 

234,854

 

Long-term debt

 

 

2,432,014

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,432,014

 

Other noncurrent liabilities

 

 

26,231

 

 

 

215,029

 

 

 

56,898

 

 

 

(56,155

)

 

 

242,003

 

Total liabilities

 

 

2,501,257

 

 

 

383,808

 

 

 

79,961

 

 

 

(56,155

)

 

 

2,908,871

 

Stockholders’ equity

 

 

1,077,954

 

 

 

3,481,947

 

 

 

11,431

 

 

 

(3,493,378

)

 

 

1,077,954

 

Total liabilities and stockholders’ equity

 

$

3,579,211

 

 

$

3,865,755

 

 

$

91,392

 

 

$

(3,549,533

)

 

$

3,986,825

 


Condensed Consolidating Balance Sheet as of March 31, 2023

Lamar
Media Corp.		Guarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		EliminationsLamar Media
Consolidated
(unaudited)
ASSETS
Total current assets$24,444 $50,340 $263,156 $— $337,940 
Net property, plant and equipment— 1,493,130 16,789 — 1,509,919 
Operating lease right of use assets— 1,262,254 17,348 — 1,279,602 
Intangibles and goodwill, net— 3,189,081 16,979 — 3,206,060 
Other assets4,565,312 305,407 234,279 (5,013,475)91,523 
Total assets$4,589,756 $6,300,212 $548,551 $(5,013,475)$6,425,044 
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt$— $383 $234,241 $— $234,624 
Current operating lease liabilities— 170,371 7,459 — 177,830 
Other current liabilities35,923 190,398 12,110 — 238,431 
Total current liabilities35,923 361,152 253,810 — 650,885 
Long-term debt3,132,967 1,538 — — 3,134,505 
Operating lease liabilities— 1,022,280 8,679 — 1,030,959 
Other noncurrent liabilities268,165 417,137 286,349 (515,997)455,654 
Total liabilities3,437,055 1,802,107 548,838 (515,997)5,272,003 
Stockholder's equity1,152,701 4,498,105 (287)(4,497,478)1,153,041 
Total liabilities and stockholder's equity$4,589,756 $6,300,212 $548,551 $(5,013,475)$6,425,044 
24
Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In Thousands, Except for Share Data)

Condensed Consolidating Balance Sheet as of December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

$

13,886

 

 

$

268,091

 

 

$

31,776

 

 

$

—

 

 

$

313,753

 

Net property, plant and equipment

 

 

—

 

 

 

1,161,205

 

 

 

21,510

 

 

 

—

 

 

 

1,182,715

 

Intangibles and goodwill, net

 

 

—

 

 

 

2,321,160

 

 

 

31,732

 

 

 

—

 

 

 

2,352,892

 

Other assets

 

 

3,453,161

 

 

 

10,379

 

 

 

116

 

 

 

(3,430,536

)

 

 

33,120

 

Total assets

 

$

3,467,047

 

 

$

3,760,835

 

 

$

85,134

 

 

$

(3,430,536

)

 

$

3,882,480

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

��

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

33,916

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

33,916

 

Other current liabilities

 

 

38,904

 

 

 

180,107

 

 

 

21,135

 

 

 

—

 

 

 

240,146

 

Total current liabilities

 

 

72,820

 

 

 

180,107

 

 

 

21,135

 

 

 

—

 

 

 

274,062

 

Long-term debt

 

 

2,315,267

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,315,267

 

Other noncurrent liabilities

 

 

22,574

 

 

 

213,916

 

 

 

53,609

 

 

 

(53,334

)

 

 

236,765

 

Total liabilities

 

 

2,410,661

 

 

 

394,023

 

 

 

74,744

 

 

 

(53,334

)

 

 

2,826,094

 

Stockholders’ equity

 

 

1,056,386

 

 

 

3,366,812

 

 

 

10,390

 

 

 

(3,377,202

)

 

 

1,056,386

 

Total liabilities and stockholders’ equity

 

$

3,467,047

 

 

$

3,760,835

 

 

$

85,134

 

 

$

(3,430,536

)

 

$

3,882,480

 

Condensed Consolidating Balance Sheet as of December 31, 2022

Lamar Media
Corp.		Guarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		EliminationsLamar Media
Consolidated
ASSETS
Total current assets$39,829 $36,667 $287,556 $— $364,052 
Net property, plant and equipment— 1,483,395 16,304 — 1,499,699 
Operating lease right of use assets— 1,252,414 19,217 — 1,271,631 
Intangibles and goodwill, net— 3,214,284 16,991 — 3,231,275 
Other assets4,514,221 325,052 250,056 (4,997,514)91,815 
Total assets$4,554,050 $6,311,812 $590,124 $(4,997,514)$6,458,472 
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt$— $378 $249,407 $— $249,785 
Current operating lease liabilities— 198,320 7,518 — 205,838 
Other current liabilities23,360 222,871 15,314 — 261,545 
Total current liabilities23,360 421,569 272,239 — 717,168 
Long-term debt3,061,385 1,635 — — 3,063,020 
Operating lease liabilities— 1,025,385 10,270 — 1,035,655 
Other noncurrent liabilities281,804 418,163 301,957 (546,796)455,128 
Total liabilities3,366,549 1,866,752 584,466 (546,796)5,270,971 
Stockholder's equity1,187,501 4,445,060 5,658 (4,450,718)1,187,501 
Total liabilities and stockholder's equity$4,554,050 $6,311,812 $590,124 $(4,997,514)$6,458,472 


25

Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In Thousands, Except for Share Data)

Condensed Consolidating Statements of Income and Comprehensive Income for the Three Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

Statement of Income

 

(unaudited)

 

Net revenues

 

$

—

 

 

$

387,095

 

 

$

13,303

 

 

$

(1,053

)

 

$

399,345

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct advertising expenses (1)

 

 

—

 

 

 

128,175

 

 

 

7,408

 

 

 

(606

)

 

 

134,977

 

General and administrative expenses (1)

 

 

—

 

 

 

66,467

 

 

 

2,033

 

 

 

—

 

 

 

68,500

 

Corporate expenses (1)

 

 

—

 

 

 

14,705

 

 

 

277

 

 

 

—

 

 

 

14,982

 

Depreciation and amortization

 

 

—

 

 

 

49,475

 

 

 

2,321

 

 

 

—

 

 

 

51,796

 

(Gain) loss on disposition of assets

 

 

—

 

 

 

(2,737

)

 

 

3

 

 

 

—

 

 

 

(2,734

)

 

 

 

—

 

 

 

256,085

 

 

 

12,042

 

 

 

(606

)

 

 

267,521

 

Operating income (loss)

 

 

—

 

 

 

131,010

 

 

 

1,261

 

 

 

(447

)

 

 

131,824

 

Equity in (earnings) loss of subsidiaries

 

 

(128,500

)

 

 

—

 

 

 

—

 

 

 

128,500

 

 

 

—

 

Other expenses (income)

 

 

32,063

 

 

 

(2

)

 

 

448

 

 

 

(447

)

 

 

32,062

 

Income (loss) before income tax expense

 

 

96,437

 

 

 

131,012

 

 

 

813

 

 

 

(128,500

)

 

 

99,762

 

Income tax expense (2)

 

 

—

 

 

 

2,659

 

 

 

666

 

 

 

—

 

 

 

3,325

 

Net income (loss)

 

$

96,437

 

 

$

128,353

 

 

$

147

 

 

$

(128,500

)

 

$

96,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

96,437

 

 

$

128,353

 

 

$

147

 

 

$

(128,500

)

 

$

96,437

 

Total other comprehensive loss, net of tax

 

 

—

 

 

 

—

 

 

 

1,216

 

 

 

—

 

 

 

1,216

 

Total comprehensive income (loss)

 

$

96,437

 

 

$

128,353

 

 

$

1,363

 

 

$

(128,500

)

 

$

97,653

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Caption is exclusive of depreciation and amortization.

 

(2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.

 



Condensed Consolidating Statements of Income and Comprehensive Income
for the Three Months Ended March 31, 2023
Lamar Media
Corp.		Guarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		EliminationsLamar Media
Consolidated
Statement of Income(unaudited)
Net revenues$— $462,493 $9,395 $(556)$471,332 
Operating expenses (income)
Direct advertising expenses(1)
— 161,503 7,485 (556)168,432 
General and administrative expenses(1)
— 82,724 2,411 — 85,135 
Corporate expenses(1)
— 27,992 399 — 28,391 
Depreciation and amortization— 72,277 848 — 73,125 
Gain on disposition of assets— (2,688)— — (2,688)
— 341,808 11,143 (556)352,395 
Operating income (loss)— 120,685 (1,748)— 118,937 
Equity in (earnings) loss of subsidiaries(114,235)— 114,235 — 
Interest expense (income), net38,058 (456)3,381 — 40,983 
Equity in earnings of investee— (178)— — (178)
Income (loss) before income tax expense (benefit)76,177 121,319 (5,129)(114,235)78,132 
Income tax expense(2)
— 1,707 91 — 1,798 
Net income (loss)76,177 119,612 (5,220)(114,235)76,334 
Earnings attributable to non-controlling interest— 20 137 — 157 
Net income attributable to controlling interest$76,177 $119,592 $(5,357)$(114,235)$76,177 
Statement of Comprehensive Income
Net income (loss)$76,177 $119,612 $(5,220)$(114,235)$76,334 
Total other comprehensive loss, net of tax— — (2)— (2)
Total comprehensive income (loss)76,177 119,612 (5,222)(114,235)76,332 
Earnings attributable to non-controlling interest— (20)(137)— (157)
Comprehensive income attributable to controlling interest$76,177 $119,592 $(5,359)$(114,235)$76,175 
(1)Caption is exclusive of depreciation and amortization.
(2)The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.
26
Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In Thousands, Except for Share Data)

Condensed Consolidating Statements of Income and Comprehensive Income for the Three Months Ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

Statement of Income

 

(unaudited)

 

Net revenues

 

$

—

 

 

$

374,909

 

 

$

13,510

 

 

$

(903

)

 

$

387,516

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct advertising expenses (1)

 

 

—

 

 

 

124,609

 

 

 

7,793

 

 

 

(624

)

 

 

131,778

 

General and administrative expenses (1)

 

 

—

 

 

 

64,949

 

 

 

2,538

 

 

 

—

 

 

 

67,487

 

Corporate expenses (1)

 

 

—

 

 

 

18,895

 

 

 

357

 

 

 

—

 

 

 

19,252

 

Depreciation and amortization

 

 

—

 

 

 

47,491

 

 

 

1,816

 

 

 

—

 

 

 

49,307

 

(Gain) loss on disposition of assets

 

 

—

 

 

 

(217

)

 

 

28

 

 

 

—

 

 

 

(189

)

 

 

 

—

 

 

 

255,727

 

 

 

12,532

 

 

 

(624

)

 

 

267,635

 

Operating income (loss)

 

 

—

 

 

 

119,182

 

 

 

978

 

 

 

(279

)

 

 

119,881

 

Equity in (earnings) loss of subsidiaries

 

 

(116,264

)

 

 

—

 

 

 

—

 

 

 

116,264

 

 

 

—

 

Other expenses (income)

 

 

31,096

 

 

 

(2

)

 

 

285

 

 

 

(279

)

 

 

31,100

 

Income (loss) before income tax expense

 

 

85,168

 

 

 

119,184

 

 

 

693

 

 

 

(116,264

)

 

 

88,781

 

Income tax expense (2)

 

 

—

 

 

 

3,014

 

 

 

599

 

 

 

—

 

 

 

3,613

 

Net income (loss)

 

$

85,168

 

 

$

116,170

 

 

$

94

 

 

$

(116,264

)

 

$

85,168

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

85,168

 

 

$

116,170

 

 

$

94

 

 

$

(116,264

)

 

$

85,168

 

Total other comprehensive loss, net of tax

 

 

—

 

 

 

—

 

 

 

(328

)

 

 

—

 

 

 

(328

)

Total comprehensive income (loss)

 

$

85,168

 

 

$

116,170

 

 

$

(234

)

 

$

(116,264

)

 

$

84,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Caption is exclusive of depreciation and amortization.

 

(2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.

 


Condensed Consolidating Statements of Income and Comprehensive Income

LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In Thousands, Except for Share Data)

 

Condensed Consolidating Statements of Income and Comprehensive Income for the Nine Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

Statement of Income

 

(unaudited)

 

Net revenues

 

$

—

 

 

$

1,107,583

 

 

$

38,191

 

 

$

(2,989

)

 

$

1,142,785

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct advertising expenses (1)

 

 

—

 

 

 

381,317

 

 

 

22,330

 

 

 

(1,751

)

 

 

401,896

 

General and administrative expenses (1)

 

 

—

 

 

 

199,979

 

 

 

6,473

 

 

 

—

 

 

 

206,452

 

Corporate expenses (1)

 

 

—

 

 

 

47,320

 

 

 

834

 

 

 

—

 

 

 

48,154

 

Depreciation and amortization

 

 

—

 

 

 

148,357

 

 

 

6,646

 

 

 

—

 

 

 

155,003

 

(Gain) loss on disposition of assets

 

 

—

 

 

 

(4,377

)

 

 

—

 

 

 

—

 

 

 

(4,377

)

 

 

 

—

 

 

 

772,596

 

 

 

36,283

 

 

 

(1,751

)

 

 

807,128

 

Operating income (loss)

 

 

—

 

 

 

334,987

 

 

 

1,908

 

 

 

(1,238

)

 

 

335,657

 

Equity in (earnings) loss of subsidiaries

 

 

(326,401

)

 

 

—

 

 

 

—

 

 

 

326,401

 

 

 

—

 

Other expenses (income)

 

 

95,592

 

 

 

(5

)

 

 

1,242

 

 

 

(1,238

)

 

 

95,591

 

Income (loss) before income tax expense

 

 

230,809

 

 

 

334,992

 

 

 

666

 

 

 

(326,401

)

 

 

240,066

 

Income tax expense (2)

 

 

—

 

 

 

7,528

 

 

 

1,729

 

 

 

—

 

 

 

9,257

 

Net income (loss)

 

$

230,809

 

 

$

327,464

 

 

$

(1,063

)

 

$

(326,401

)

 

$

230,809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

230,809

 

 

$

327,464

 

 

$

(1,063

)

 

$

(326,401

)

 

$

230,809

 

Total other comprehensive income, net of tax

 

 

—

 

 

 

—

 

 

 

2,104

 

 

 

—

 

 

 

2,104

 

Total comprehensive income (loss)

 

$

230,809

 

 

$

327,464

 

 

$

1,041

 

 

$

(326,401

)

 

$

232,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Caption is exclusive of depreciation and amortization.

 

(2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.

 

for the Three Months Ended March 31, 2022



Lamar Media
Corp.		Guarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		EliminationsLamar Media
Consolidated
Statement of Income(unaudited)
Net revenues$— $442,528 $9,095 $(235)$451,388 
Operating expenses (income)
Direct advertising expenses(1)
— 150,853 7,154 (235)157,772 
General and administrative expenses(1)
— 81,298 1,786 — 83,084 
Corporate expenses(1)
— 21,615 261 — 21,876 
Depreciation and amortization— 67,788 839 — 68,627 
Gain on disposition of assets— (563)— — (563)
— 320,991 10,040 (235)330,796 
Operating income— 121,537 (945)— 120,592 
Equity in (earnings) loss of subsidiaries(118,524)— — 118,524 — 
Interest expense (income), net26,237 (21)355 — 26,571 
Equity in earnings of investee— (746)— — (746)
Income (loss) before income tax expense92,287 122,304 (1,300)(118,524)94,767 
Income tax expense (benefit)(2)
— 2,563 (83)— 2,480 
Net income (loss)$92,287 $119,741 $(1,217)$(118,524)$92,287 
Statement of Comprehensive Income
Net income (loss)$92,287 $119,741 $(1,217)$(118,524)$92,287 
Total other comprehensive income, net of tax— — 314 — 314 
Total comprehensive income (loss)$92,287 $119,741 $(903)$(118,524)$92,601 

(1)Caption is exclusive of depreciation and amortization.
(2)The income tax expense (benefit) reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.
27
Table of Contents
LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In Thousands, Except for Share Data)

Condensed Consolidating Statements of Income and Comprehensive Income for the Nine Months Ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

Statement of Income

 

(unaudited)

 

Net revenues

 

$

—

 

 

$

1,077,116

 

 

$

39,228

 

 

$

(2,767

)

 

$

1,113,577

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct advertising expenses (1)

 

 

—

 

 

 

371,915

 

 

 

23,139

 

 

 

(1,826

)

 

 

393,228

 

General and administrative expenses (1)

 

 

—

 

 

 

192,631

 

 

 

8,103

 

 

 

—

 

 

 

200,734

 

Corporate expenses (1)

 

 

—

 

 

 

54,079

 

 

 

1,064

 

 

 

—

 

 

 

55,143

 

Depreciation and amortization

 

 

—

 

 

 

147,158

 

 

 

5,571

 

 

 

—

 

 

 

152,729

 

(Gain) loss on disposition of assets

 

 

—

 

 

 

(12,482

)

 

 

261

 

 

 

—

 

 

 

(12,221

)

 

 

 

—

 

 

 

753,301

 

 

 

38,138

 

 

 

(1,826

)

 

 

789,613

 

Operating income (loss)

 

 

—

 

 

 

323,815

 

 

 

1,090

 

 

 

(941

)

 

 

323,964

 

Equity in (earnings) loss of subsidiaries

 

 

(314,228

)

 

 

—

 

 

 

—

 

 

 

314,228

 

 

 

—

 

Other expenses (income)

 

 

95,655

 

 

 

(6

)

 

 

953

 

 

 

(941

)

 

 

95,661

 

Income (loss) before income tax expense

 

 

218,573

 

 

 

323,821

 

 

 

137

 

 

 

(314,228

)

 

 

228,303

 

Income tax expense (2)

 

 

—

 

 

 

8,248

 

 

 

1,482

 

 

 

—

 

 

 

9,730

 

Net income (loss)

 

$

218,573

 

 

$

315,573

 

 

$

(1,345

)

 

$

(314,228

)

 

$

218,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

218,573

 

 

$

315,573

 

 

$

(1,345

)

 

$

(314,228

)

 

$

218,573

 

Total other comprehensive income, net of tax

 

 

—

 

 

 

—

 

 

 

1,151

 

 

 

—

 

 

 

1,151

 

Total comprehensive income (loss)

 

$

218,573

 

 

$

315,573

 

 

$

(194

)

 

$

(314,228

)

 

$

219,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Caption is exclusive of depreciation and amortization.

 

(2) The income tax expense reflected in each column does not include any tax effect of the equity in earnings from subsidiaries.

 


Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2023

LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In Thousands, Except for Share Data)

 

Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

 

 

(unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

227,195

 

 

$

398,200

 

 

$

5,472

 

 

$

(332,265

)

 

$

298,602

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

 

—

 

 

 

(119,936

)

 

 

—

 

 

 

—

 

 

 

(119,936

)

Capital expenditures

 

 

—

 

 

 

(69,665

)

 

 

(4,781

)

 

 

—

 

 

 

(74,446

)

Proceeds from disposition of assets and investments

 

 

—

 

 

 

3,340

 

 

 

—

 

 

 

—

 

 

 

3,340

 

Investment in subsidiaries

 

 

(119,936

)

 

 

 

 

 

 

 

 

 

 

119,936

 

 

 

—

 

(Increase) decrease in intercompany notes receivable

 

 

(2,713

)

 

 

—

 

 

 

—

 

 

 

2,713

 

 

 

—

 

Decrease in notes receivable

 

 

13

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

13

 

Net cash (used in) provided by investing activities

 

 

(122,636

)

 

 

(186,261

)

 

 

(4,781

)

 

 

122,649

 

 

 

(191,029

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal payments on long-term debt

 

 

(11,250

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,250

)

Payment on revolving credit facility

 

 

(407,000

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(407,000

)

Proceeds received from revolving credit facility

 

 

317,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

317,000

 

Payment on senior credit facility

 

 

(247,500

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(247,500

)

Proceeds received from senior credit facility

 

 

450,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

450,000

 

Debt issuance costs

 

 

(4,941

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,941

)

Intercompany loan proceeds (payments)

 

 

—

 

 

 

—

 

 

 

2,713

 

 

 

(2,713

)

 

 

—

 

Distributions to non-controlling interest

 

 

—

 

 

 

—

 

 

 

(415

)

 

 

—

 

 

 

(415

)

Contributions from (to) parent

 

 

41,580

 

 

 

119,936

 

 

 

—

 

 

 

(119,936

)

 

 

41,580

 

Dividends (to) from parent

 

 

(252,925

)

 

 

(332,265

)

 

 

—

 

 

 

332,265

 

 

 

(252,925

)

Net cash (used in) provided by financing activities

 

 

(115,036

)

 

 

(212,329

)

 

 

2,298

 

 

 

209,616

 

 

 

(115,451

)

Effect of exchange rate changes in cash and cash equivalents

 

 

—

 

 

 

—

 

 

 

1,767

 

 

 

—

 

 

 

1,767

 

Net (decrease) increase in cash and cash equivalents

 

 

(10,477

)

 

 

(390

)

 

 

4,756

 

 

 

—

 

 

 

(6,111

)

Cash and cash equivalents at beginning of period

 

 

12,762

 

 

 

1,201

 

 

 

21,067

 

 

 

—

 

 

 

35,030

 

Cash and cash equivalents at end of period

 

$

2,285

 

 

$

811

 

 

$

25,823

 

 

$

—

 

 

$

28,919

 

Lamar Media
Corp.		Guarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		EliminationsLamar Media
Consolidated
(unaudited)
Cash flows from operating activities:
Net cash provided by (used in) operating activities$56,096 $100,431 $13,954 $(81,100)$89,381 
Cash flows from investing activities:
Acquisitions— (13,627)— — (13,627)
Capital expenditures— (40,952)(1,333)— (42,285)
Proceeds from disposition of assets and investments— 3,248 — — 3,248 
Investment in subsidiaries(13,627)— — 13,627 — 
(Increase) decrease in intercompany notes receivable(17,895)— — 17,895 — 
Net cash (used in) provided by investing activities(31,522)(51,331)(1,333)31,522 (52,664)
Cash flows from financing activities:
Proceeds received from revolving credit facility90,000 — — — 90,000 
Payment on revolving credit facility(20,000)— — — (20,000)
Principal payments on long-term debt— (93)— — (93)
Principal payments on financing leases— (333)— — (333)
Payment on accounts receivable securitization program— — (25,000)— (25,000)
Proceeds received from accounts receivable securitization program— — 9,800 — 9,800 
Debt issuance costs— — (25)— (25)
Intercompany loan (payments) proceeds— 18,499 (604)(17,895)— 
Distributions to non-controlling interest— (110)(104)— (214)
Dividends (to) from parent(133,406)(81,100)— 81,100 (133,406)
Contributions from (to) parent23,447 13,627 — (13,627)23,447 
Net cash (used in) provided by financing activities(39,959)(49,510)(15,933)49,578 (55,824)
Effect of exchange rate changes in cash and cash equivalents— — 10 — 10 
Net decrease in cash and cash equivalents(15,385)(410)(3,302)— (19,097)
Cash and cash equivalents at beginning of period39,729 1,285 11,105 — 52,119 
Cash and cash equivalents at end of period$24,344 $875 $7,803 $— $33,022 

28

LAMAR MEDIA CORP.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(In Thousands, Except for Share Data)

 

Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lamar Media Corp.

 

 

Guarantor Subsidiaries

 

 

Non-Guarantor Subsidiaries

 

 

Eliminations

 

 

Lamar Media Consolidated

 

 

 

(unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

240,727

 

 

$

402,988

 

 

$

4,412

 

 

$

(334,167

)

 

$

313,960

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions

 

 

—

 

 

 

(526,029

)

 

 

—

 

 

 

—

 

 

 

(526,029

)

Capital expenditures

 

 

—

 

 

 

(76,468

)

 

 

(2,357

)

 

 

—

 

 

 

(78,825

)

Proceeds from disposition of assets and investments

 

 

—

 

 

 

7,753

 

 

 

—

 

 

 

—

 

 

 

7,753

 

Investment in subsidiaries

 

 

(526,029

)

 

 

—

 

 

 

—

 

 

 

526,029

 

 

 

—

 

(Increase) decrease in intercompany notes receivable

 

 

(462

)

 

 

—

 

 

 

—

 

 

 

462

 

 

 

—

 

Decrease in notes receivable

 

 

16

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

16

 

Net cash (used in) provided by investing activities

 

 

(526,475

)

 

 

(594,744

)

 

 

(2,357

)

 

 

526,491

 

 

 

(597,085

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal payments on long-term debt

 

 

(15,015

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(15,015

)

Payment on revolving credit facility

 

 

(302,000

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(302,000

)

Proceeds received from revolving credit facility

 

 

408,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

408,000

 

Proceeds received from note offering

 

 

400,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

400,000

 

Payment on senior credit facility

 

 

(300,000

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(300,000

)

Proceeds received from senior credit facility

 

 

300,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

300,000

 

Debt issuance costs

 

 

(9,391

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(9,391

)

Intercompany loan proceeds (payments)

 

 

—

 

 

 

—

 

 

 

462

 

 

 

(462

)

 

 

—

 

Distributions to non-controlling interest

 

 

—

 

 

 

—

 

 

 

(315

)

 

 

—

 

 

 

(315

)

Contributions from (to) parent

 

 

41,872

 

 

 

526,029

 

 

 

—

 

 

 

(526,029

)

 

 

41,872

 

Dividends (to) from parent

 

 

(225,789

)

 

 

(334,167

)

 

 

—

 

 

 

334,167

 

 

 

(225,789

)

Net cash provided by (used in) financing activities

 

 

297,677

 

 

 

191,862

 

 

 

147

 

 

 

(192,324

)

 

 

297,362

 

Effect of exchange rate changes in cash and cash equivalents

 

 

—

 

 

 

—

 

 

 

915

 

 

 

—

 

 

 

915

 

Net increase in cash and cash equivalents

 

 

11,929

 

 

 

106

 

 

 

3,117

 

 

 

—

 

 

 

15,152

 

Cash and cash equivalents at beginning of period

 

 

4,955

 

 

 

454

 

 

 

16,418

 

 

 

—

 

 

 

21,827

 

Cash and cash equivalents at end of period

 

$

16,884

 

 

$

560

 

 

$

19,535

 

 

$

—

 

 

$

36,979

 


LAMAR MEDIA CORP.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In Thousands, Except for Share Data)
Condensed Consolidating Statement of Cash Flows for the Three Months Ended March 31, 2022
Lamar Media
Corp.		Guarantor
Subsidiaries		Non-
Guarantor
Subsidiaries		EliminationsLamar Media
Consolidated
(unaudited)
Cash flows from operating activities:
Net cash provided by (used in) operating activities$44,116 $97,816 $(2,500)$(69,036)$70,396 
Cash flows from investing activities:
Acquisitions— (55,293)— — (55,293)
Capital expenditures— (27,851)(908)— (28,759)
Proceeds from disposition of assets and investments— 710 — — 710 
Investment in subsidiaries(55,293)— — 55,293 — 
Decrease (increase) in intercompany notes receivable(6,090)— — 6,090 — 
Net cash (used in) provided by investing activities(61,383)(82,434)(908)61,383 (83,342)
Cash flows from financing activities:
Proceeds received from revolving credit facility165,000 — — — 165,000 
Payment on revolving credit facility(50,000)— — — (50,000)
Principal payments on long-term debt— (92)— — (92)
Principal payments on financing leases— (333)— — (333)
Intercompany loan (payments) proceeds— 94 5,996 (6,090)— 
Distributions to non-controlling interest— — (46)— (46)
Dividends (to) from parent(122,047)(69,036)— 69,036 (122,047)
Contributions from (to) parent36,447 55,293 — (55,293)36,447 
Net cash (used in) provided by financing activities29,400 (14,074)5,950 7,653 28,929 
Effect of exchange rate changes in cash and cash equivalents— — 107 — 107 
Net decrease in cash and cash equivalents12,133 1,308 2,649 — 16,090 
Cash and cash equivalents at beginning of period91,023 3,494 4,771 — 99,288 
Cash and cash equivalents at end of period$103,156 $4,802 $7,420 $— $115,378 
29
ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements. Actual results could differ materially from those anticipated by the forward-looking statements due to risks and uncertainties described in the section of this combined report on Form 10-Q entitled “Note Regarding Forward-Looking Statements” and in Item 1A to the 20162022 Combined Form 10-K filed on February 24, 2017, 2023, and as supplemented by anysuch risk factors containedas further updated or supplemented, from time to time, in our combined Quarterly Reports on Form 10-Q.10-Q and Current Reports on Form 8-K. You should carefully consider each of these risks and uncertainties in evaluating the Company’s and Lamar Media’s financial conditions and results of operations. Investors are cautioned not to place undue reliance on the forward-looking statements contained in this document. These statements speak only as of the date of this document, and the Company undertakes no obligation to update or revise the statements, except as may be required by law.

LAMAR ADVERTISING COMPANY

The following is a discussion of the consolidated financial condition and results of operations of the Company for the nine months and three months ended September 30, 2017March 31, 2023 and 2016.2022. This discussion should be read in conjunction with the condensed consolidated financial statements of the Company and the related notes thereto.

Overview

The Company’s net revenues are derived primarily from the rental of advertising space on outdoor advertising displays owned and operated by the Company. Revenue growth is based on many factors that include the Company’s ability to increase occupancy of its existing advertising displays; raise advertising rates; and acquire new advertising displays and its operating results are therefore affected by general economic conditions, as well as trends in the advertising industry. Advertising spending is particularly sensitive to changes in general economic conditions which affect the rates that the Company is able to charge for advertising on its displays and its ability to maximize advertising sales or occupancy on its displays.

Acquisitions and capital expenditures
Historically, the Company has made strategic acquisitions of outdoor advertising assets to increase the number of outdoor advertising displays it operates in existing and new markets. The Company continues to evaluate and pursue strategic acquisition opportunities as they arise. The Company has financed its historical acquisitions and intends to finance any future acquisition activity from available cash, borrowings under its senior credit facility or the issuance of debt or equity securities. See “Liquidity and Capital Resources-Sources of Cash” for more information.
During the ninethree months ended September 30, 2017,March 31, 2023, the Company completed severalmultiple acquisitions for a total cash purchase price of approximately $119.9$13.6 million. See—“See Uses of Cash – Acquisitions” for more information.

The Company’s business requires expenditures for maintenance and capitalized costs associated with the construction of new billboard displays, the entrance into and renewal of logo sign and transit contracts, and the purchase of real estate and operating equipment.

The following table presents a breakdown of capitalized expenditures for the three and nine months ended September 30, 2017March 31, 2023 and 2016:

2022:

 

Three months ended

September 30,

(in thousands)

 

 

Nine months ended

September 30,

(in thousands)

 

Three Months Ended
March 31,

 

2017

 

 

2016

 

 

2017

 

 

2016

 

20232022

Total capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total capital expenditures:

Billboard — traditional

 

$

10,161

 

 

$

10,950

 

 

$

23,700

 

 

$

34,322

 

Billboard — traditional$13,538 $8,132 

Billboard — digital

 

 

8,605

 

 

 

9,283

 

 

 

29,568

 

 

 

24,757

 

Billboard — digital17,432 13,336 

Logos

 

 

2,498

 

 

 

2,160

 

 

 

6,409

 

 

 

5,421

 

Logos3,140 2,408 

Transit

 

 

290

 

 

 

387

 

 

 

578

 

 

 

603

 

Transit719 490 

Land and buildings

 

 

3,682

 

 

 

2,956

 

 

 

8,196

 

 

 

8,504

 

Land and buildings4,174 1,489 

Operating equipment

 

 

1,374

 

 

 

1,576

 

 

 

5,995

 

 

 

5,218

 

Operating equipment3,282 2,904 

Total capital expenditures

 

$

26,610

 

 

$

27,312

 

 

$

74,446

 

 

$

78,825

 

Total capital expenditures$42,285 $28,759 






30
Table of Contents
Umbrella Partnership Real Estate Investment Trust

As previously announced, on July 1, 2022, the Company completed a tax reorganization to a specific type of REIT known as an Umbrella Partnership Real Estate Investment Trust ("UPREIT"). The UPREIT structure allows property owners of appreciated properties to contribute property to the operating partnership of the REIT, on a tax-deferred basis, in exchange for a partnership interest in the form of operating partnership units. This reorganization is not expected to have any material impact on the Company's combined financial statements or business operations.
Non-GAAP Financial Measures

Our management reviews our performance by focusing on several key performance indicators not prepared in conformity with Generally Accepted Accounting Principles in the United States (“GAAP”). We believe these non-GAAP performance indicators are meaningful supplemental measures of our operating performance and should not be considered in isolation of, or as a substitute for, their most directly comparable GAAP financial measures.

Included in our analysis of our results of operations are discussions regarding earnings before interest, taxes, depreciation and amortization (“Adjustedadjusted EBITDA”), Funds From Operationsfunds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts, Adjusted Funds From Operationsadjusted funds from operations (“AFFO”) and acquisition-adjusted net revenue.

We define Adjustedadjusted EBITDA as net income before income tax expense (benefit), interest expense (income), gainequity in earnings (loss) of investees, loss (gain) on extinguishment of debt and investments, stock-based compensation, depreciation and amortization, and gain or loss (gain) on disposition of assets and investments.

investments, transaction expenses and capitalized contract fulfillment costs, net.

FFO is defined as net income before gains or losses from the sale or disposal of real estate assets and investments and real estate related depreciation and amortization and including adjustments to eliminate unconsolidated affiliates and non-controlling interest.

We define AFFO as FFO before (i) straight-line revenueincome and expense; (ii) capitalized contract fulfillment costs, net (iii) stock-based compensation expense; (iii)(iv) non-cash portion of tax provision; (iv)expense (benefit); (v) non-real estate related depreciation and amortization; (v)(vi) amortization of deferred financing costs; (vi)(vii) loss on extinguishment of debt; (vii)(viii) transaction expenses; (ix) non-recurring infrequent or unusual losses (gains); (viii)(x) less maintenance capital expenditures; and (ix)(xi) an adjustment for unconsolidated affiliates and non-controlling interest.

Acquisition-adjusted net revenue adjusts our net revenue for the prior period by adding to it the net revenue generated by the acquired assets before our acquisition of these assets for the same time frame that those assets were owned in the current period. In calculating acquisition-adjusted revenue, therefore, we include revenue generated by assets that we did not own in the period but acquired in the current period. We refer to the amount of pre-acquisition revenue generated by the acquired assets during the prior period that corresponds with the current period in which we owned the assets (to the extent within the period to which this report relates) as “acquisition net revenue”. In addition, we also adjust the prior period to subtract revenue generated by the assets that have been divested since the prior period and, therefore, no revenue derived from those assets is reflected in the current period.

Adjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue are not intended to replace net income or any other performance measures determined in accordance with GAAP. Neither FFO nor AFFO represent cash flows from operating activities in accordance with GAAP and, therefore, these measures should not be considered indicative of cash flows from operating activities as a measure of liquidity or of funds available to fund our cash needs, including our ability to make cash distributions. Rather, Adjustedadjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue are presented as we believe each is a useful indicator of our current operating performance. We believe that these metrics are useful to an investor in evaluating our operating performance because (1) each is a key measure used by our management team for purposes of decision makingdecision-making and for evaluating our core operating results; (2) Adjustedadjusted EBITDA is widely used in the industry to measure operating performance as depreciation and amortization may vary significantly among companies depending upon accounting methods and useful lives, particularly where acquisitions and non-operating factors are involved; (3) acquisition-adjusted net revenue is a supplement to net revenue to enable investors to compare period over periodperiod-over-period results on a more consistent basis without the effects of acquisitions and divestures,divestitures, which reflects our core performance and organic growth (if any) during the period in which the assets were owned and managed by us; (4) Adjustedadjusted EBITDA, FFO and AFFO each providesprovide investors with a meaningful measure for evaluating our period-to-period operating performance by eliminating items that are not operational in nature; and (5) each provides investors with a measure for comparing our results of operations to those of other companies.

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Our measurement of Adjustedadjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue may not, however, be fully comparable to similarly titled measures used by other companies. Reconciliations of Adjustedadjusted EBITDA, FFO, AFFO and acquisition-adjusted net revenue to net income, the most directly comparable GAAP measure, have been included herein.



RESULTS OF OPERATIONS

Nine Months

Three months ended September 30, 2017March 31, 2023 compared to Nine Monthsthree months ended September 30, 2016

March 31, 2022

Net revenues increased $29.2$19.9 million or 2.6%4.4% to $1.14 billion$471.3 million for the ninethree months ended September 30, 2017March 31, 2023 from $1.11 billion$451.4 million for the same period in 2016.2022. This increase was primarily attributable primarily to an increase in billboard net revenues of $21.8$15.4 million which representsand an increase in transit net revenues of 2.2%$3.9 million over the same period in 2016.  In addition, logo sign revenue increased $3.3 million, which represents an increase of 5.6% over the prior period and transit revenue increased $4.1 million which represents an increase of 5.1% over the same period in 2016.

2022.

For the ninethree months ended September 30, 2017,March 31, 2023, there was a $15.3$7.0 million increase in net revenues as compared to acquisition-adjusted net revenue for the ninethree months ended September 30, 2016,March 31, 2022, which represents an increase of 1.4%1.5%. See “Reconciliations”"Reconciliations" below. The $15.3$7.0 million increase in revenue primarily consists of a $9.6 million increase in billboard revenue which is largelyprimarily due to an increase of $3.4 million in digital revenue, a $3.8 million increase in logo revenue and a $1.9 millionbillboard net revenues as well as an increase in transit revenuenet revenues of $3.1 million over the acquisition-adjusted net revenue for the comparablesame period in 2016.  

2022.

Total operating expenses, exclusive of depreciation and amortization and gain on saledisposition of assets, increased $7.4$19.2 million, or 1.1%7.3%, to $656.8$282.1 million for the ninethree months ended September 30, 2017March 31, 2023 from $649.4$262.9 million infor the same period in 2016.2022. The $7.4$19.2 million increase over the prior year is comprised of a $17.0$13.0 million increase in total direct, and general and administrative operatingand corporate expenses (excluding stock-based compensation and transaction expenses) primarily related to the operations of our outdoor advertising assets, and ana $6.3 million increase of $3.0 million in corporate expenses (excluding stock-based compensation expense), offset by a $12.6 million decrease in stock-based compensation expense.

compensation.

Depreciation and amortization expense increased $2.3$4.5 million to $155.0$73.1 million for the ninethree months ended September 30, 2017March 31, 2023 as compared to $152.7$68.6 million for the same period in 2016.

2022, primarily related to acquisitions and capital expenditures completed during 2022.

For the ninethree months ended September 30, 2017,March 31, 2023, the Company recognized a gain on disposition of assets decreased $7.8of $2.7 million to $4.4 million as compared to $12.2 million for the same period in 2016.  The decrease in gain on disposition of assets is primarily resulting from transactions related to a $5.9 million decrease in gain recognized for acquisition swap transactions in 2017 as compared to the same period in 2016.

sale of billboard locations and displays.

Due to the above factors, operating income increaseddecreased by $11.7$1.7 million to $335.4$118.8 million for the ninethree months ended September 30, 2017March 31, 2023 as compared to $323.7$120.5 million for the same period in 2016.

During the nine months ended September 30, 2017 the Company recognized a $0.1 million loss on extinguishment of debt, related to the amendment of Lamar Media’s senior credit facility.  See “Sources of Cash” for more information.

2022.

Interest expense increased $3.0$14.7 million duringfor the ninethree months ended September 30, 2017March 31, 2023 to $95.5$41.4 million as compared to $92.5$26.8 million for the ninethree months ended September 30, 2016.  TheMarch 31, 2022 primarily due to the increase in interest expense is primarily related torates on the increased debt outstanding, primarily related to the refinancing of Lamar Media’sAccounts Receivable Securitization Program and senior credit facilityfacility.
Equity in 2017.

earnings of investee was $0.2 million and $0.7 million for the three months ended March 31, 2023 and 2022, respectively.

The increasedecrease in operating income, and a decrease in loss on debt extinguishment, offset byas well as the increase in interest expense, described above resulted in $239.8a $16.6 million decrease in net income before income taxes. The effective tax rate for the ninethree months ended September 30, 2017March 31, 2023 was 3.9%2.3%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

As a result of the above factors, the Company recognized net income for the nine months ended September 30, 2017 of $230.5 million, as compared to net income of $218.3 million for the same period in 2016.

Reconciliations:

Because acquisitions occurring after December 31, 2015 (the “acquired assets”) have contributed to our net revenue results for the periods presented, we provide 2016 acquisition-adjusted net revenue, which adjusts our 2016 net revenue for the nine months ended September 30, 2016 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the nine months ended September 30, 2017.


Reconciliations of 2016 reported net revenue to 2016 acquisition-adjusted net revenue for the nine months ended September 30, as well as a comparison of 2016 acquisition-adjusted net revenue to 2017 reported net revenue for the nine months ended September 30, are provided below:

Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue 

 

 

Nine months ended

September 30,

 

 

 

2017

 

 

2016

 

 

 

(in thousands)

 

Reported net revenue

 

$

1,142,785

 

 

$

1,113,577

 

Acquisition net revenue

 

 

—

 

 

 

13,932

 

Adjusted totals

 

$

1,142,785

 

 

$

1,127,509

 

Key Performance Indicators

Net Income/Adjusted EBITDA

(in thousands)

 

 

Nine Months Ended

September 30,

 

 

Amount of

Increase

 

 

Percent

Increase

 

 

 

2017

 

 

2016

 

 

(Decrease)

 

 

(Decrease)

 

Net income

 

$

230,512

 

 

$

218,284

 

 

$

12,228

 

 

 

5.6

%

Income tax expense

 

 

9,257

 

 

 

9,730

 

 

 

(473

)

 

 

 

 

Loss on debt extinguishment

 

 

71

 

 

 

3,198

 

 

 

(3,127

)

 

 

 

 

Interest expense (income), net

 

 

95,520

 

 

 

92,463

 

 

 

3,057

 

 

 

 

 

Gain on disposition of assets

 

 

(4,377

)

 

 

(12,221

)

 

 

7,844

 

 

 

 

 

Depreciation and amortization

 

 

155,003

 

 

 

152,729

 

 

 

2,274

 

 

 

 

 

Stock-based compensation expense

 

 

7,060

 

 

 

19,650

 

 

 

(12,590

)

 

 

 

 

Adjusted EBITDA

 

$

493,046

 

 

$

483,833

 

 

$

9,213

 

 

 

1.9

%

Adjusted EBITDA for the nine months ended September 30, 2017 increased 1.9% to $493.0 million. The increase in Adjusted EBITDA was primarily attributable to an increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization) of $20.5 million, and was offset by an increase in general administrative and corporate expenses of $11.3 million, excluding the impact of stock-based compensation expense.


 Net Income/FFO/AFFO

(in thousands)

 

 

Nine Months Ended

September 30,

 

 

Amount of

Increase

 

 

Percent

Increase

 

 

 

2017

 

 

2016

 

 

(Decrease)

 

 

(Decrease)

 

Net income

 

$

230,512

 

 

$

218,284

 

 

$

12,228

 

 

 

5.6

%

Depreciation and amortization related to real estate

 

 

145,999

 

 

 

142,394

 

 

 

3,605

 

 

 

 

 

Gain from sale or disposal of real estate

 

 

(4,114

)

 

 

(12,020

)

 

 

7,906

 

 

 

 

 

Adjustments for unconsolidated affiliates and

   non-controlling interest

 

 

580

 

 

 

318

 

 

 

262

 

 

 

 

 

FFO

 

$

372,977

 

 

$

348,976

 

 

$

24,001

 

 

 

6.9

%

Straight line (income) expense

 

 

(382

)

 

 

231

 

 

 

(613

)

 

 

 

 

Stock-based compensation expense

 

 

7,060

 

 

 

19,650

 

 

 

(12,590

)

 

 

 

 

Non-cash portion of tax provision

 

 

259

 

 

 

(150

)

 

 

409

 

 

 

 

 

Non-real estate related depreciation and amortization

 

 

9,004

 

 

 

10,335

 

 

 

(1,331

)

 

 

 

 

Amortization of deferred financing costs

 

 

3,866

 

 

 

3,993

 

 

 

(127

)

 

 

 

 

Loss on extinguishment of debt

 

 

71

 

 

 

3,198

 

 

 

(3,127

)

 

 

 

 

Capital expenditures – maintenance

 

 

(31,760

)

 

 

(25,942

)

 

 

(5,818

)

 

 

 

 

Adjustments for unconsolidated affiliates and

   non-controlling interest

 

 

(580

)

 

 

(318

)

 

 

(262

)

 

 

 

 

AFFO

 

$

360,515

 

 

$

359,973

 

 

$

542

 

 

 

0.2

%

FFO for the nine months ended September 30, 2017 increased 6.9% to $373.0 million as compared to FFO of $349.0 million for the same period in 2016. AFFO for the nine months ended September 30, 2017 increased 0.2% to $360.5 million as compared to $360.0 million for the same period in 2016. The increase in AFFO was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization) offset by an increase in maintenance capital expenditures, interest expense and general and administrative expenses and corporate expenses (excluding the effect of stock-based compensation expense).

Three Months ended September 30, 2017 compared to Three Months ended September 30, 2016

Net revenues increased $11.8 million or 3.1% to $399.3 million for the three months ended September 30, 2017 from $387.5 million for the same period in 2016. This increase was attributable primarily to an increase in billboard net revenues of $6.1 million, which represents an increase of 1.8% over the same period in 2016.  In addition, logo sign revenue increased $1.5 million, which represents an increase of 7.8% over the prior period and there was a $4.3 million increase in transit revenue, which represents an increase of 15.3% over the prior period.

For the three months ended September 30, 2017, there was a $4.1 million increase in net revenues as compared to acquisition-adjusted net revenue for the three months ended September 30, 2016, which represents an increase of 1.0%. See “Reconciliations” below. The 1.0% increase is primarily due to an increase in digital revenue and production revenue for three months ended September 30, 2017, as compared to the same period in 2016. The $4.1 million increase in revenue primarily consists of a $1.2 million increase in billboard revenue largely due to an increase in digital revenue, a $1.8 million increase in logo revenue, and a $1.2 million increase in transit revenue over the acquisition-adjusted net revenue for the comparable period in 2016.

Total operating expenses, exclusive of depreciation and amortization and gain on sale of assets, decreased $0.1 million for the three months ended September 30, 2017 as compared to the same period in 2016. The $0.1 million decrease over the prior year is comprised of a $6.3 million decrease in stock-based compensation expense offset by a $5.7 million increase in direct and general and administrative operating expenses related to the operations of our outdoor advertising assets and a $0.5 million increase in corporate expenses (excluding stock-based compensation expense).

Depreciation and amortization expense increased $2.5 million to $51.8 million for the three months ended September 30, 2017 as compared to $49.3 million for the same period in 2016.

For the three months ended September 30, 2017, gain on disposition of assets increased $2.5 million to $2.7 million as compared to $0.1 million for the same period in 2016.  The increase is primarily due to a $2.4 million gain resulting from acquisition swap transactions during the three months ended September 30, 2017.


The increase in operating income offset by a slight increase in interest expense resulted in a $11.0 million increase in net income before income taxes. The effective tax rate for the three months ended September 30, 2017 was 3.3%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

As a result of the above factors, the Company recognized net income for the three months ended September 30, 2017March 31, 2023 of $96.3$76.2 million, as compared to net income of $85.1$92.2 million for the same period in 2016.

2022.

Reconciliations:

Because acquisitions occurring after December 31, 2015 (the “acquired assets”)2021 have contributed to our net revenue results for the periods presented, we provide 20162022 acquisition-adjusted net revenue, which adjusts our 20162022 net revenue for the three months ended September 30, 2016March 31, 2022 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the three months ended September 30, 2017.

March 31, 2023.

Reconciliations of 20162022 reported net revenue to 20162022 acquisition-adjusted net revenue for the three months ended September 30,March 31, as well as a comparison of 20162022 acquisition-adjusted net revenue to 20172023 reported net revenue for the three months ended September 30,March 31, are provided below:

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Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue

 

Three months ended

September 30,

 

Three Months Ended
March 31,

 

2017

 

 

2016

 

20232022

 

(in thousands)

 

(in thousands)

Reported net revenue

 

$

399,345

 

 

$

387,516

 

Reported net revenue$471,332 $451,388 

Acquisition net revenue

 

 

—

 

 

 

7,736

 

Acquisition net revenue— 12,949 

Adjusted totals

 

$

399,345

 

 

$

395,252

 

Adjusted totals$471,332 $464,337 

Key Performance Indicators

Net Income/Adjusted EBITDA

(in thousands)

 

Three Months Ended

September 30,

 

 

Amount of

Increase

 

 

Percent

Increase

 

Three Months Ended
March 31,		Amount of Increase (Decrease)Percent Increase (Decrease)

 

2017

 

 

2016

 

 

(Decrease)

 

 

(Decrease)

 

20232022

Net income

 

$

96,331

 

 

$

85,061

 

 

$

11,270

 

 

 

13.2

%

Net income$76,198 $92,151 $(15,953)(17.3)%

Income tax expense

 

 

3,325

 

 

 

3,613

 

 

 

(288

)

 

 

 

 

Income tax expense1,798 2,480 (682)

Interest expense (income), net

 

 

32,062

 

 

 

31,100

 

 

 

962

 

 

 

 

 

Interest expense (income), net40,983 26,571 14,412 
Equity in earnings of investeeEquity in earnings of investee(178)(746)568 

Gain on disposition of assets

 

 

(2,734

)

 

 

(189

)

 

 

(2,545

)

 

 

 

 

Gain on disposition of assets(2,688)(563)(2,125)

Depreciation and amortization

 

 

51,796

 

 

 

49,307

 

 

 

2,489

 

 

 

 

 

Depreciation and amortization73,125 68,627 4,498 
Capitalized contract fulfillment costs, netCapitalized contract fulfillment costs, net674 946 (272)

Stock-based compensation expense

 

 

2,017

 

 

 

8,358

 

 

 

(6,341

)

 

 

 

 

Stock-based compensation expense8,040 1,780 6,260 

Adjusted EBITDA

 

$

182,797

 

 

$

177,250

 

 

$

5,547

 

 

 

3.1

%

Adjusted EBITDA$197,952 $191,246 $6,706 3.5 %

Adjusted EBITDA for the three months ended September 30, 2017March 31, 2023 increased 3.1%3.5% to $182.8$198.0 million. The increase in Adjustedadjusted EBITDA was primarily attributable to an increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization)amortization and capitalized contract fulfillment costs, net) of $8.6$9.0 million, and was offset by an increase in total general and administrative and corporate expenses of $3.1$2.3 million, excluding the impact of stock-based compensation expense.

expense and transaction expenses.

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Net Income/FFO/AFFO

(in thousands)

 

Three Months Ended

September 30,

 

 

Amount of

Increase

 

 

Percent

Increase

 

Three Months Ended
March 31,		Amount of Increase (Decrease)Percent Increase (Decrease)

 

2017

 

 

2016

 

 

(Decrease)

 

 

(Decrease)

 

20232022

Net income

 

$

96,331

 

 

$

85,061

 

 

$

11,270

 

 

 

13.2

%

Net income$76,198 92,151 $(15,953)(17.3)%

Depreciation and amortization related to real estate

 

 

48,613

 

 

 

46,327

 

 

 

2,286

 

 

 

 

 

Depreciation and amortization related to real estate70,350 65,526 4,824 

Gain from sale or disposal of real estate

 

 

(2,707

)

 

 

(546

)

 

 

(2,161

)

 

 

 

 

Gain from sale or disposal of real estate, net of taxGain from sale or disposal of real estate, net of tax(2,720)(454)(2,266)

Adjustments for unconsolidated affiliates and

non-controlling interest

 

 

190

 

 

 

52

 

 

 

138

 

 

 

 

 

Adjustments for unconsolidated affiliates and non-controlling interest(335)(895)560 

FFO

 

$

142,427

 

 

$

130,894

 

 

$

11,533

 

 

 

8.8

%

FFO$143,493 $156,328 $(12,835)(8.2)%

Straight line income

 

 

(287

)

 

 

(46

)

 

 

(241

)

 

 

 

 

Straight line expenseStraight line expense957 915 42 
Capitalized contract fulfillment costs, netCapitalized contract fulfillment costs, net674 946 (272)

Stock-based compensation expense

 

 

2,017

 

 

 

8,358

 

 

 

(6,341

)

 

 

 

 

Stock-based compensation expense8,040 1,780 6,260 

Non-cash portion of tax provision

 

 

229

 

 

 

(509

)

 

 

738

 

 

 

 

 

Non-cash portion of tax provision(1,152)(342)(810)

Non-real estate related depreciation and amortization

 

 

3,183

 

 

 

2,980

 

 

 

203

 

 

 

 

 

Non-real estate related depreciation and amortization2,775 3,101 (326)

Amortization of deferred financing costs

 

 

1,243

 

 

 

1,332

 

 

 

(89

)

 

 

 

 

Amortization of deferred financing costs1,642 1,471 171 

Capital expenditures – maintenance

 

 

(11,082

)

 

 

(9,005

)

 

 

(2,077

)

 

 

 

 

Capital expenditures - maintenanceCapital expenditures - maintenance(12,692)(13,185)493 

Adjustments for unconsolidated affiliates and

non-controlling interest

 

 

(190

)

 

 

(52

)

 

 

(138

)

 

 

 

 

Adjustments for unconsolidated affiliates and non-controlling interest335 895 (560)

AFFO

 

$

137,540

 

 

$

133,952

 

 

$

3,588

 

 

 

2.7

%

AFFO$144,072 $151,909 $(7,837)(5.2)%

FFO for the three months ended September 30, 2017 increased 8.8%March 31, 2023 decreased from $156.3 million in 2022 to $142.4 million as compared to FFO of $130.9$143.5 million for the same period in 2016.2023, a decrease of 8.2%. AFFO for the three months ended September 30, 2017 increased 2.7%March 31, 2023 decreased 5.2% to $137.5$144.1 million as compared to $134.0$151.9 million for the same period in 2016.2022. The increasedecrease in AFFO was primarily attributable to an increase in our interest expense of $14.7 million and an increase in total general and administrative and corporate expenses (excluding the effect of stock-based compensation expense and transaction expenses) offset by an increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization) offset by an increase in maintenance capital expenditures, interest expenseamortization and general and administrative expense and corporate expenses (excluding the effect of stock-based compensation expense)capitalized contract fulfillment costs, net).

LIQUIDITY AND CAPITAL RESOURCES

Overview

The Company has historically satisfied its working capital requirements with cash from operations and borrowings under the senior credit facility. The Company’s wholly owned subsidiary, Lamar Media Corp., is the borrower under the senior credit facility and maintains all corporate operating cash balances. Any cash requirements of the Company, therefore, must be funded by distributions from Lamar Media.

Sources of Cash

Total Liquidity. As of September 30, 2017March 31, 2023 we had approximately $376.3$663.0 million of total liquidity, which is comprised of approximately $29.4$33.5 million in cash and cash equivalents, and approximately $346.9$625.9 million of availability under the revolving portion of Lamar Media’s senior credit facility.facility and $3.6 million of availability under the Accounts Receivable Securitization Program. We expect our total liquidity to be adequate for the Company to meet its operational requirements for the next twelve months. We are currently in compliance with the maintenance covenant included in the senior credit facility and we would remain in compliance after giving effect to borrowing the full amount available to us under the revolving portion of the senior credit facility.

As of March 31, 2023 and December 31, 2022, the Company had a working capital deficit of $321.5 million and $361.5 million, respectively. The decrease in working capital deficit of $39.9 million is primarily due to increases in other current assets and decreases in payroll related accrued expenses, offset by decreases in receivables as of March 31, 2023.
Cash Generated by Operations. For the ninethree months ended September 30, 2017March 31, 2023 and 20162022, our cash provided by operating activities was $320.6$108.7 million and $337.8$102.0 million, respectively. The decreaseincrease in cash provided by operating activities for the ninethree months ended September 30, 2017March 31, 2023 over the same period in 20162022 primarily relates to an increase in revenues of $19.9 million offset by an increase in operating expenses (excluding stock-based compensation, gain on disposition of assets, and depreciation and amortization), and a net increase in operating assets and liabilities. of $13.0 million. We expect to generate cash flows from operations during 20172023 in excess of our cash needs for
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operations, capital expenditures and dividends, as described herein.

We believe we have sufficient liquidity available under our revolving credit facility to meet our operating cash needs for the next twelve months.

Accounts Receivable Securitization Program.  On June 24, 2022, Lamar Media and the Special Purpose Subsidiaries entered into the Sixth Amendment (the "Sixth Amendment") to the Receivables Financing Agreement. The Sixth Amendment increased the Accounts Receivable Securitization Program from $175.0 million to $250.0 million and extended the maturity date of the Accounts Receivable Securitization Program to July 21, 2025. Additionally, the Sixth Amendment provides for the replacement of LIBOR-based interest rate mechanics with Term Secured Overnight Financing Rate ("Term SOFR") based interest rate mechanics for the Accounts Receivable Securitization Program.
Borrowing capacity under the Accounts Receivable Securitization Program is limited to the availability of eligible accounts receivable collateralizing the borrowings under the agreements governing the Accounts Receivable Securitization Program. In connection with the Accounts Receivable Securitization Program, Lamar Media and certain of its subsidiaries (such subsidiaries, the “Subsidiary Originators”) sell and/or contribute their existing and future accounts receivable and certain related assets to one of two special purpose subsidiaries, Lamar QRS Receivables, LLC (the “QRS SPV”) and Lamar TRS Receivables, LLC (the “TRS SPV” and together with the QRS SPV the “Special Purpose Subsidiaries”), each of which is a wholly-owned subsidiary of Lamar Media. Existing and future accounts receivable relating to Lamar Media and its qualified REIT subsidiaries will be sold and/or contributed to the QRS SPV and existing and future accounts receivable relating to Lamar Media’s taxable REIT subsidiaries will be sold and/or contributed to the TRS SPV. Each of the Special Purpose Subsidiaries has granted the lenders party to the Accounts Receivable Securitization Program a security interest in all of its assets, which consist of the accounts receivable and related assets sold or contributed to them, as described above, in order to secure the obligations of the Special Purpose Subsidiaries under the agreements governing the Accounts Receivable Securitization Program. Pursuant to the Accounts Receivable Securitization Program, Lamar Media has agreed to service the accounts receivable on behalf of the two Special Purpose Subsidiaries for a fee. Lamar Media has also agreed to guaranty its performance in its capacity as servicer and originator, as well as the performance of the Subsidiary Originators, of their obligations under the agreements governing the Account Receivable Securitization Program. None of Lamar Media, the Subsidiary Originators or the Special Purpose Subsidiaries guarantees the collectability of the receivables under the Accounts Receivable Securitization Program. In addition, each of the Special Purpose Subsidiaries is a separate legal entity with its own separate creditors who will be entitled to access the assets of such Special Purpose Subsidiary before the assets become available to Lamar Media. Accordingly, the assets of the Special Purpose Subsidiaries are not available to pay creditors of Lamar Media or any of its subsidiaries, although collections from receivables in excess of the amounts required to repay the lenders and the other creditors of the Special Purpose Subsidiaries may be remitted to Lamar Media. 
As of March 31, 2023, there was $234.8 million in outstanding aggregate borrowings under the Accounts Receivable Securitization Program. Based on the availability of eligible accounts, Lamar Media had $3.6 million of unused availability under the Accounts Receivable Securitization Program as of March 31, 2023. The Accounts Receivable Securitization Program will mature on July 21, 2025.
“At-the-Market” Offering Program. On May 1, 2018, the Company entered into an equity distribution agreement (the “Sales Agreement”) with J.P. Morgan Securities LLC, Wells Fargo Securities LLC and SunTrust Robinson Humphrey, Inc. as our sales agents. Under the terms of the Sales Agreement, the Company could have, from time to time, issued and sold shares of its Class A common stock, having an aggregate offering price of up to $400.0 million through the sales agents as either agents or principals. The Sales Agreement expired by its terms on May 1, 2021. The Company did not issue any shares under this program in 2021.
On June 21, 2021, the Company entered into a new equity distribution agreement (the "2021 Sales Agreement"), with J.P. Morgan Securities LLC, Wells Fargo Securities LLC, Truist Securities, Inc., SMBC Nikko Securities America, Inc. and Scotia Capital (USA) Inc. as our sales agents (each a "Sales Agent", and collectively, the "Sales Agents"), which replaced the prior Sales Agreement with substantially similar terms. Under the terms of the 2021 Sales Agreement, the Company may, from time to time, issue and sell shares of its Class A common stock, having an aggregate offering price of up to $400.0 million through the Sales Agents as either agents or principals. Sales of the Class A common stock, if any, may be made in negotiated transactions or transactions that are deemed to be "at-the-market offerings" as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made directly on or through the Nasdaq Global Select Market and any other existing trading market for the Class A common stock, or sales made to or through a market maker other than on an exchange. The Company has no obligation to sell any of the Class A common stock under the 2021 Sales Agreement and may at any time suspend solicitations and offers under the 2021 Sales Agreement. The Company intends to use the net proceeds, if any, from the sale of the Class A common stock pursuant to the 2021 Sales Agreement for general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of existing indebtedness, working capital, capital expenditures, acquisition of
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outdoor advertising assets and businesses and other related investments. The Company did not issue any shares under this program from its inception through March 31, 2023.
Shelf Registration Statement.On June 21, 2021, the Company filed a new automatically effective shelf registration statement that allows Lamar Advertising to offer and sell an indeterminate amount of additional shares of its Class A common stock. During the three months ended March 31, 2023 and the year ended December 31, 2022, the Company did not issue any shares under either shelf registration.
Credit Facilities. On May 15, 2017,February 6, 2020, Lamar Media entered into a Third Restatement Agreement (“Restatement Agreement”) to its SecondFourth Amended and Restated Credit Agreement (“existing senior credit facility”(the “Fourth Amended and Restated Credit Agreement”) dated as of February 3, 2014 with the Company, certain of Lamar Media’s subsidiaries as guarantors, JPMorgan Chase Bank, N.A. as administrative agent and the lenders party thereto, under which the parties agreed to amend and restate Lamar Media’s existing senior credit facility.

Lamar Media’sTheFourth Amended and Restated Credit Agreementamended and restated the Third Amended and Restated Credit Agreement dated as of May 15, 2017, (asas amended (the “Third Amended and Restated Credit Agreement”).

On July 2, 2021, Lamar Media entered into Amendment No. 1 (the "Amendment"), to the Fourth Amended and Restated Credit Agreement. The Amendment amends the definition of "Subsidiary" to exclude each of Lamar Partnering Sponsor LLC and Lamar Partnering Corporation and any of their subsidiaries (collectively, the “Lamar Partnering Entities”) such that, after the giving effect to the Amendment, none of the Lamar Partnering Entities are subject to the Fourth Amended and Restated Credit Agreement covenants and reporting requirements, but any investment by Lamar Media in any of the Lamar Partnering Entities would be subject to the Fourth Amended and Restated Credit Agreement covenants. The Amendment also amends the definition of “EBITDA” to replace the existing calculation with a net income-based calculation, which excludes the income of non-Subsidiary entities such as the Lamar Partnering Entities, except to the extent that income of such entities is received by Lamar Media in the form of dividends or distributions.
The senior credit facility, as established by the Fourth Amended and Restated Credit Agreement (the “senior credit facility”), consists of (i) a new $450.0$750.0 million senior secured revolving credit facility which will mature on May 15, 2022,February 6, 2025 (the “revolving credit facility”), (ii) a new $450.0


$600.0 million Term AB loan facility (the “Term AB loans”)  which will mature on May 15, 2022,February 6, 2027, and (iii) an incremental facility (the “Incremental Facility”) pursuant to which Lamar Media may incur additional term loan tranches or increase its revolving credit facility subject to a pro forma compliance with the secured debt ratio financial maintenance covenantcalculated as described below.

Underunder “Restrictions under Senior Credit Facility” of 4.50 to 1.00, as well as certain other conditions including lender approval. Lamar Media borrowed all $600.0 million in Term B loans on February 6, 2020. The entire amount of the Term B loans will be payable at maturity.

The Term B loans bear interest at rates based on the Adjusted LIBO Rate (“Eurodollar term loans”) or the Adjusted Base Rate (“Base Rate term loans”), at Lamar Media’s option. Eurodollar term loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 1.50%. Base Rate term loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 0.50%. The revolving credit facility bears interest at rates based on the Adjusted LIBO Rate (“Eurodollar revolving loans”) or the Adjusted Base Rate (“Base Rate revolving loans”), at Lamar Media’s option. Eurodollar revolving loans bear interest at a rate per annum equal to the Adjusted LIBO Rate plus 1.50% (or the Adjusted LIBO Rate plus 1.25% at any time the Total Debt Ratio is less than or equal to 3.25 to 1). Base Rate revolving loans bear interest at a rate per annum equal to the Adjusted Base Rate plus 0.50% (or the Adjusted Base Rate plus 0.25% at any time the total debt ratio is less than or equal to 3.25 to 1). The guarantees, covenants, events of default and other terms of the senior credit facility apply to the Term B loans and revolving credit facility.
On July 29, 2022, Lamar Media entered into Amendment No. 2 ("Amendment No. 2") to the Fourth Amended and Restated Credit Agreement with certain of Lamar Media's subsidiaries as guarantors, JPMorgan Chase Bank, N.A. as administrative agent and the lenders party thereto. Amendment No. 2 establishes a new $350.0 million Senior Secured Term Loan A loan (the “Term A loans”) as a new class of incremental term loans. The Term A loans will mature on February 6, 2025 and bear interest at Term SOFR plus 1.25% and a credit spread adjustment of 0.10%. The covenants, events of default and other terms of the senior credit facility apply to the Term A loans. Lamar Media borrowed all $450.0$350.0 million in Term A loans on May 15, 2017.  The net proceeds, together with borrowing underJuly 29, 2022. Proceeds from the revolving portion of senior credit facility and cash on hand,Term A loans were used to repay all outstanding amountsbalances on the revolving credit facility and a portion of the outstanding balance on our Accounts Receivable Securitization Program.
On April 26, 2023, Lamar Media entered into Amendment No. 3 ("Amendment No. 3") to the Fourth Amended and Restated Credit Agreement with certain of Lamar Media's subsidiaries as guarantors, JPMorgan Chase Bank N.A. as administrative agent and the lenders party thereto. Amendment No. 3 replaces the London Interbank Offered Rates as administered by the ICE Benchmark Administration with Term SOFR (as defined in the Fourth Amended and Restated Credit Agreement) as the
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successor rate, as set in the Fourth Amended and Restated Credit Agreement. All other material terms and conditions of the Fourth Amended and Restated Credit Agreement remain unchanged by Amendment No. 3.
As of March 31, 2023 the aggregate balance outstanding under the existing senior credit facility and all revolving commitments under that facility were terminated.

Aswas $1.07 billion, consisting of September 30, 2017, Lamar Media had $444.4$600.0 million outstandingin Term B loans aggregate principal balance, $350.0 million in Term A loans $90.0aggregate principal balance and $115.0 million outstanding borrowings under our revolving credit facility. Lamar Media had approximately $625.9 million of revolving credit loans and approximately $13.1 million in letters of credit outstandingunused capacity under the revolving credit facility.

Factors Affecting Sources of Liquidity

Internally Generated Funds. The key factors affecting internally generated cash flow are general economic conditions, specific economic conditions in the markets where the Company conducts its business and overall spending on advertising by advertisers.

We expect to generate cash flows from operations during 2023 in excess of our cash needs for operations, capital expenditures and dividends, as described herein, and we believe we have sufficient liquidity with cash on hand and availability under our revolving credit facility to meet our operating cash needs for the next twelve months.

Credit Facilities and Other Debt Securities. The Company and Lamar Mediamust comply with certain covenants and restrictions related to the senior credit facility, its outstanding debt securities and its Accounts Receivable Securitization Program.
Restrictions Under Debt Securities. The Company and Lamar Media must comply with certain covenants and restrictions related to its outstanding debt securities. Currently, Lamar Media has outstanding $500the $600.0 million 53 3/4% Senior Notes issued February 2020, the $550.0 million 4% Senior Notes issued February 2020 and August 2020, the $400.0 million 4 7/8% Senior Subordinated Notes issued in February 2012 (the “5 7/8% Senior Subordinated Notes”), $535May 2020 and the $550.0 million 5% Senior Subordinated Notes issued in October 2012 (the “5% Senior Subordinated Notes”), $510 million 5 3/3 5/8% Senior Notes issued in January 2014 (the “5 3/8% Senior Notes”) and the $400 million 5 3/4% Senior Notes issued in January 2016 (the “5 3/4% Senior Notes”) .

2021.

The indentures relating to Lamar Media’s outstanding notes restrict its ability to incur additional indebtedness, but permit the incurrence of indebtedness (including indebtedness under the senior credit facility), (i) if no default or event of default would result from such incurrence and (ii) if after giving effect to any such incurrence, the leverage ratio (defined as the sum of (x) total consolidated debt plus (y) the aggregate liquidation preference of any preferred stock of Lamar Media’s restricted subsidiaries to trailing four fiscal quarter EBITDA (as defined in the indentures)) would be less than 7.0 to 1.1.0. Currently, Lamar Media is not in default under the indentures of any of its outstanding notes and, therefore, would be permitted to incur additional indebtedness subject to the foregoing provision.

In addition to debt incurred under the provisions described in the preceding paragraph, the indentures relating to Lamar Media’s outstanding notes permit Lamar Media to incur indebtedness pursuant to the following baskets:

•up to $1.5$2.0 billion of indebtedness under the senior credit facility;

•indebtedness outstanding on the date of the indentures or debt incurred to refinance outstanding debt;

•inter-company debt between Lamar Media and its restricted subsidiaries or between restricted subsidiaries;

•certain purchase money indebtedness and capitalized lease obligations to acquire or lease property in the ordinary course of business that cannot exceed the greater of $50$50.0 million or 5% of Lamar Media’s net tangible assets; and

•additional debt not to exceed $75 million.

$75.0 million; and
•up to $500.0 million of permitted securitization financings.

Restrictions underUnder Senior Credit Facility.Lamar Media is required to comply with certain covenants and restrictions under the senior credit facility. If the Company or Lamar Media fails to comply with these tests, the lenders under the senior credit facility will be entitled to exercise certain remedies, including the termination of the lending commitments and the acceleration of the debt payments under the senior credit facility. At September 30, 2017,March 31, 2023 we were, and currently, we wereare, in compliance with all such tests under the senior credit facility.

Lamar Media must maintain a secured debt ratio, defined as total consolidated secured debt of Lamar Advertising, Lamar Media and its restricted subsidiaries (including capital lease obligations), minus the lesser of (x) $150$150.0 million and (y) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising, Lamar Media and its restricted subsidiaries (other than the Special Purpose Subsidiaries (as defined above under Sources of Cash – Accounts Receivable Securitization Program)) to EBITDA, as defined below, for the period of four consecutive fiscal quarters then ended, of less than or equal to 3.04.5 to 1.0.

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Lamar Media is restricted from incurring additional indebtedness subject to exceptions, one of which is that it may incur additional indebtedness not exceeding the greater of $250.0 million andor 6% of its total assets.

Lamar Media is also restricted from incurring additional unsecured senior indebtedness under certain circumstances unless, after giving effect to the incurrence of such indebtedness, it is in compliance with the secured debt ratio covenant and its seniorLamar Media would have a total debt ratio, defined as (a) total consolidated debt (excluding(including subordinated debt) of Lamar Advertising, Lamar Media and its restricted subsidiaries


as of any date minus the lesser of (i) $150$150.0 million and (ii) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising, Lamar Media and its restricted subsidiaries (other than the Special Purpose Subsidiaries) to (b) EBITDA, as defined below, for the most recent four fiscal quarters then ended, is less than 4.57.0 to 1.0.

Lamar Media is also restricted from incurring additional subordinated indebtedness under certain circumstances unless, after giving effect to the incurrence of such indebtedness, it is in compliance with the secured debt ratio covenant and its total debt ratio defined as (a) total consolidated debt (including subordinated debt) of Lamar Advertising, Lamar Media and its restricted subsidiaries as of any date minus the lesser of (i) $150 million and (ii) the aggregate amount of unrestricted cash and cash equivalents of Lamar Advertising, Lamar Media and its restricted subsidiaries to (b) EBITDA, as defined below, for the most recent four fiscal quarters then ended, is less than 6.57.0 to 1.0.

Under the senior credit facility, as amended, “EBITDA” means, for any period, operatingnet income, plus (a) to the extent deducted in determining net income for Lamar Advertising, Lamar Media and its restricted subsidiaries (determined on a consolidated basissuch period, the sum determined without duplication and in accordance with GAAP) for such period (calculated (A) beforeGAAP, of (i) taxes, (ii) interest expense, (iii) depreciation, (iv) amortization, (v) any other non-cash income or charges accrued for such period, (vi) charges and expenses in connection with the senior credit facility, any actual or proposed acquisition, disposition or investment (excluding, in each case, purchases and sales of advertising space and operating assets in the ordinary course of business) and any actual or proposed offering of securities, incurrence or repayment of indebtedness (or amendment to any agreement relating to indebtedness), including any refinancing thereof, or recapitalization, and (vii) any loss or gain relating to amounts paid or earned in cash prior to the stated settlement date of any swap agreement that has been reflected in operating income for such period), and (B) after giving effect(viii) any loss on sales of receivables and related assets to a securitization entity in connection with a permitted securitization financing, plus (b) the amount of cost savings, operating expense reductions and other operating improvements or synergies projected by Lamar Media in good faith to be realized as a result of any acquisition, investment, merger, amalgamation or disposition within 18 months of any such acquisition, investment, merger, amalgamation or disposition, net of the amount of actual benefits realized during such period from such action; provided,, (a) the aggregate amount for all such cost savings, operating expense reductions and other operating improvements or synergies shallwill not exceed an amount equal to 15% of EBITDA for the applicable four quarter period and (b) any such adjustment to EBITDA pursuant to this clause (b) may only take into account cost savings, operating expense reductions and other operating improvements or synergies that are (I) directly attributable to such acquisition, investment, merger, amalgamation or disposition, (II) expected to have a continuing impact on Lamar Media and its restricted subsidiaries and (III) factually supportable, in each case all as certified by the chief financial officer of Lamar Media) on behalf of Lamar Media, and excluding (exceptminus (c) to the extent received or paidincluded in cash by Lamar Advertising, Lamar Media or any of its restricted subsidiariesnet income or loss attributable to equity in affiliates for such period), excludingperiod (determined without duplication and in accordance with GAAP) (i) any extraordinary and unusual gains or losses during such period, and excluding(ii) the proceeds of any casualty events and dispositions. For purposes hereof,of this EBITDA definition, the effect thereon of any adjustments required under Statement of Financial Accounting Standards No. 141R shallwill be excluded.

If during any period for which EBITDA is being determined, Lamar Media shallwe have consummated any acquisition or disposition, EBITDA shallwill be determined on a pro forma basis as if such acquisition or disposition had been made or consummated on the first day of such period.

Under the senior credit facility, “net income” means for any period, the consolidated net income (or loss) of Lamar Advertising, us, and our restricted subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that the following is excluded from net income: (a) the income (or deficit) of any person accrued prior to the date it becomes a restricted subsidiary or is merged into or consolidated with Lamar Advertising, us or any of our restricted subsidiaries, and (b) the income (or deficit) of any person (other than any of our restricted subsidiaries) in which Lamar Advertising, we or any of our subsidiaries has an ownership interest, except to the extent that any such income is received by Lamar Advertising, us or any of our restricted subsidiaries in the form of dividends or similar distributions.
The Company believes that its current level of cash on hand, availability under the senior credit facility and future cash flows from operations are sufficient to meet its operating needs through fiscal 2017.for the next twelve months. All debt obligations are reflected on the Company’s balance sheet.

Restrictions under Accounts Receivable Securitization Program.  The agreements governing the Accounts Receivable Securitization Program contain customary representations and warranties, affirmative and negative covenants, and termination event provisions, including but not limited to those providing for the acceleration of amounts owed under the Accounts Receivable Securitization Program if, among other things, the Special Purpose Subsidiaries fail to make payments when due, Lamar Media, the Subsidiary Originators or the Special Purpose Subsidiaries become insolvent or subject to bankruptcy proceedings or certain judicial judgments, breach certain representations and warranties or covenants or default under other
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material indebtedness, a change of control occurs, or if Lamar Media fails to maintain the maximum secured debt ratio of 4.5 to 1.0 required under Lamar Media’s senior credit facility.
Uses of Cash

Capital Expenditures. Capital expenditures, excluding acquisitions, were approximately $74.4$42.3 million for the ninethree months ended September 30, 2017.March 31, 2023. We anticipate our 20172023 total capital expenditures willto be approximately $110$185.0 million.

Acquisitions. During the ninethree months ended September 30, 2017,March 31, 2023, the Company completed 36 acquisitions for a cashan aggregate purchase price of approximately $119.9$13.6 million, which included the acquisition of more than 480 billboard displays from Steen Outdoor Advertising.  The acquisition of the Steen displays expanded Lamar’s presence in Philadelphia and surrounding Pennsylvania suburbs, New Jersey and Delaware.  The acquisitions occurring during the nine months ended September 30, 2017 were financed using available cash on hand orand borrowings under its revolving credit facility.  

Term A Loans. The Term A Loans mature on May 15, 2022the Accounts Receivable Securitization Program and began amortizing on September 30, 2017. The remaining quarterly installments scheduled to be paid on each September 30, December 31, March 31 and June 30 are as follows:


Principal Payment Date

 

Principal Amount

 

December 31, 2017-June 30, 2019

 

$

5,625,000

 

September 30, 2019-June 30, 2020

 

$

8,437,500

 

September 30, 2020-March 31, 2022

 

$

16,875,000

 

Term A Loan Maturity Date

 

$

253,125,000

 

For each borrowing of Term A loans or revolving credit loans, Lamar Media can elect whether such loans bear interest at (i) the Adjusted Base Rate plus (a) 0.75%, or (b) 0.50% at any time that the total debt ratio is less than 3.25 to 1 as of the last day of the most recently ended fiscal quarter for which Lamar Media has delivered financial statements, or (ii) the Adjusted LIBO Rate plus (a) 1.75%, or (b) 1.50% at any time that the total debt ratio is less than 3.25 to 1 as of the last day of the most recently ended fiscal quarter for which Lamar Media has delivered financial statements. The guarantees, covenants, events of default and other terms of the senior credit facility apply to the Term A loans and revolving credit facility.

Dividends.

Dividends.On August 29, 2017, May 25, 2017 and February 23, 2017, Lamar Advertising Company’s2023, the Company's Board of Directors declared a quarterly cash dividendsdividend of $0.83$1.25 per share, payablepaid on September 29, 2017, June 30, 2017 and March 31, 2017, respectively,2023 to its stockholders of record of its Class A common stock and Class B common stock on September 15, 2017, June 15, 2017 and March 15, 2017, respectively.  The17, 2023. Subject to approval of the Company's Board of Directors, the Company expects aggregate quarterly distributions to stockholders in 2017,2023 will be $5.00 per share of common stock, including the dividend paid on September 29, 2017, June 30, 2017 and March 31, 2017 will total $3.32 per common share.

2023.

As a REIT, the Company must annually distribute to its stockholders an amount equal to at least 90% of its REIT taxable income (determined before the deduction for distributed earnings and excluding any net capital gain). The amount, timing and frequency of future distributions will be at the sole discretion of the Board of Directors and will be declared based upon various factors, a number of which may be beyond the Company’s control, including financial condition and operating cash flows, the amount required to maintain REIT status and reduce any income and excise taxes that the Company otherwise would be required to pay, limitations on distributions in our existing and future debt instruments, the Company’s ability to utilize net operating losses to offset, in whole or in part, the Company’s distribution requirements, limitations on its ability to fund distributions using cash generated through its Taxable REIT Subsidiaries (“TRSs”), the impact of general economic conditions on the Company’s operations and other factors that the Board of Directors may deem relevant.

Effect The foregoing factors may also impact management’s recommendations to the Board of Recent HurricanesDirectors as to the timing, amount and Named Storms

frequency of future distributions.

Stock and Debt Repurchasing Program. On March 16, 2020, the Company’s Board of Directors authorized the repurchase of up to $250.0 million of the Company’s Class A common stock. Additionally, the Board of Directors has authorized Lamar Media to repurchase up to $250.0 million in outstanding senior or senior subordinated notes and other indebtedness outstanding from time to time under its senior credit agreement. On February 23, 2023, the Board of Directors authorized the extension of the repurchase program through September 30, 2024. There were no repurchases under the program as of March 31, 2023.The Company’s management may opt not to make any repurchases under the program, or may make aggregate purchases less than the total amount authorized.
Material Cash Requirements
Our expected material cash requirements for the twelve months following March 31, 2023 and thereafter are comprised of contractual obligations, required annual distributions and other opportunistic expenditures.
Debt and Contractual Obligations. The following table summarizes our future debt maturities, interest payment obligations, and contractual obligations including required payments under operating and financing leases as of March 31, 2023 (in millions):
Less than 1 yearThereafter
Debt maturities(1)
$234.6 $3,134.5 
Interest obligations on long-term debt(2)
163.0 596.1 
Contractual obligations, including operating and financing leases260.0 1,614.6 
Total payments due$657.6 $5,345.2 
(1)    Debt maturities assume there is no refinancing prior to the existing maturity date.
(2)    Interest rates on our variable rate instruments assume rates at the March 2023 levels.

Required Annual Distributions. As a REIT, the Company has operationsmust annually distribute to its stockholders an amount equal to at least 90% of its REIT taxable income (determined before the deduction for distributed earnings and excluding any net capital gain). On February 23, 2023, the Company's Board of Directors declared a quarterly cash dividend of $1.25 per share, paid on March 31, 2023 to its stockholders of record of its Class A common stock and Class B common stock on March 17, 2023.
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Subject to approval of the Company's Board of Directors, the Company expects aggregate quarterly distributions to stockholders in 2023 will be $5.00 per share of common stock, including the southeastern United Statesdividend paid on March 31, 2023.

Opportunistic Expenditures. As part of our capital allocation strategy, we plan to continue to allocate our available capital among investment alternatives that meet our return on investment criteria. We will continue to reinvest in our existing assets and the Caribbean islandexpand our outdoor advertising display portfolio through new construction. We will also continue to pursue strategic acquisitions of Puerto Rico,outdoor advertising businesses and as such, its operationsassets. This includes acquisitions in those geographical areas may be impactedour existing markets and in new markets where we can meet our return on investment criteria.

Cash Flows

The Company's cash flows provided by disruptions related to tropical storms, should they occur.

Duringoperating activities increased $6.7 million from $102.0 million for the three months ended September 30, 2017, there were three named storms which made landfall in the Southeastern portion of the United States and Puerto Rico.  Specifically, hurricane Harvey made landfall in August and primarily affected markets in southeast Texas; hurricane Irma made landfall on September 12, 2017 primarily affecting markets in Florida and Georgia; and hurricane Maria made landfall on September 20, 2017 affecting Puerto Rico.  

The Company has developed contingency plans designedMarch 31, 2022 to mitigate damage to our assets such as removing the faces prior to the storms making landfall, which better enables the structures to withstand high winds during the storm and this plan was largely successful.  The named storms affecting the markets in Florida, Georgia and Texas caused little or no damage to our structures and minimal affect to our revenue, operations and/or operating income$108.7 million for the three and nine months ended September 30, 2017. Our operations in those markets were fully operational as of September 30, 2017.

Our billboard structure inventory in Puerto Rico was also largely unaffected by hurricane Maria, however, the island was not.  Currently, the island is largely without power and we are continuing to assess the impact of the storm on our operations and the effect, if any, on our existing customers.  While it may take several months for our Puerto Rico operations to be fully functioning, the Company does not expect the impact of this storm to materially impact consolidated revenue, operating income or net income.  

Off Balance Sheet Arrangements

The Company has no off-balance sheet arrangements with the exception of operating leases.


Commitments and Contingencies

Debt Service and Contractual Obligations.  In our Quarterly Report on Form 10-Q for the six months ended June 30, 2017, Part I, Item 2, Management’s Discussion and Analysis of Financial Conditions and Results of Operations, under the heading “Debt Service and Contractual Obligations,” we described our commitments and contingencies.  There was no material change in our commitments and contingencies during the three months ended September 30, 2017.

Accounting Standards Update

In May 2014,March 31, 2023, primarily resulting from an increase in revenues of $19.9 million offset by an increase in operating expenses (excluding stock-based compensation, gain on disposition of assets, and depreciation and amortization) of $13.0 million, as compared to the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenuesame period in 2022.


Cash flows used in investing activities decreased $30.7 million from Contracts with Customers, which requires an entity$83.3 million for the three months ended March 31, 2022 to recognize$52.7 million for the three months ended March 31, 2023 primarily due to a net decrease in the amount of revenueassets acquired through acquisitions, investments and capital expenditures of $28.1 million, as compared to which it expects to be entitledthe same period in 2022.

The Company's cash flows used in financing activities were $75.2 million for the transferthree months ended March 31, 2023 as compared to $2.7 million for the three months ended March 31, 2022. The cash flows used in financing activities of promised goods or services$75.2 million for the three months ended March 31, 2023 is primarily due to customers. The ASU will replace most existing revenue recognition guidance in U.S. Generally Acceptedcash paid for dividends and distributions offset by net borrowings on the senior credit facility.
Critical Accounting Principles (“GAAP”) when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14 deferring the effective date from January 1, 2017 to January 1, 2018, while allowing for early adoption asEstimates
Our discussion and analysis of January 1, 2017. The standard permits the useour results of either the retrospective or cumulative effect transition method. The Company is in the final stages of its review of contractsoperations and we do not expect any material impactliquidity and capital resources are based on our condensed consolidated financial statements, forwhich have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the adoptionreported amounts of ASU No. 2014-09. We currently believe the only contracts with customers which will be accounted for under ASU No. 2014-09 are our Transit advertising contractsassets, liabilities, revenues and production services. Weexpenses. There have preliminarily determined to adopt the provisions of ASU No. 2014-09 using the cumulative effect transition method with an adjustmentbeen no material changes to the opening balancecritical accounting policies and estimates as previously disclosed in Item 7 of retained earnings of the annual reporting period that includes the date of initial application.

In November 2015, the FASB issued ASU No. 2015-17 Income taxes – Balance Sheet Classification of Deferred Taxes. The amendments in this update require deferred tax liabilitiesour 2022 Combined Form 10-K.

Accounting Standards and assets be classified as noncurrent in the balance sheet. The amendments are effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company adopted the update in ASU No. 2015-17 as of January 1, 2017. The Company’s 2016 consolidated balance sheet has been adjustedRegulatory Update
See Note 12, "New Accounting Pronouncements" to reflect retrospective adoption of the update and the impact was not considered material.

In February 2016, the FASB issued ASU No. 2016-02, Leases.  The update is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about lease arrangements.  The amendments in this update are effective beginning January 1, 2019 with retrospective application. The Company is in the process of assessing the impact ASU No. 2016-02 will have on our consolidated financial statements.  The Company expects the primary impact to ourcondensed consolidated financial statements will be the recognition, onincluded in Part 1, Item 1 of this report for a discounted basis,discussion of our minimum commitments under non-cancelable operating leases on our consolidated balance sheets, resulting in the recording of right of use assetsAccounting Standards and lease obligations.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments. The update clarifies how certain cash receipts and cash payments are presented in the statement of cash flows.  The update is effective for annual periods beginning January 1, 2018 with early adoption permitted. The Company adopted the update in ASU No. 2016-15 as of January 1, 2017.  The adoption of this update did not have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations: Clarifying the definition of a business.  The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or businesses.  The update is effective for annual periods beginning after December 15, 2017, including interim periods within those periods.  Early adoption is allowed for transactions which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company adopted the update in ASU 2017-01 for transactions which occurred on or after October 1, 2016. The adoption of this update did not have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and other (Topic 350): Simplifying the test for goodwill impairment. The update simplifies how a company completes its goodwill impairment test by eliminating the two-step process, which requires determining the fair value of assets acquired or liabilities assumed in a business combination. The update requires completing the goodwill impairment test by comparing the difference between the reporting units’ carrying value and fair value.  Goodwill charges, if any, would be determined by reducing the goodwill balance by the excess of the reporting unit’s carrying value over its fair value.  The update is effective for annual and interim fiscal periods beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed on or after January 1, 2017.  The Company plans to early adopt this update for its December 31, 2017 goodwill impairment test.

Regulatory Update.

LAMAR MEDIA CORP.

The following is a discussion of the consolidated financial condition and results of operations of Lamar Media for the nine months and three months ended September 30, 2017March 31, 2023 and 2016.2022. This discussion should be read in conjunction with the consolidated financial statements of Lamar Media and the related notes thereto.

RESULTS OF OPERATIONS

Nine Months

Three months ended September 30, 2017March 31, 2023 compared to Nine Monthsthree months ended September 30, 2016

March 31, 2022

Net revenues increased $29.2$19.9 million or 2.6%4.4% to $1.14 billion$471.3 million for the ninethree months ended September 30, 2017March 31, 2023 from $1.11 billion$451.4 million for the same period in 2016.2022. This increase was primarily attributable primarily to an increase in billboard net revenues of $21.8$15.4 million which representsand an increase in transit net revenues of 2.2%$3.9 million over the same period in 2016.  In addition, logo sign revenue increased $3.3 million, which represents an increase of 5.6% over the prior period and transit revenue increased $4.1 million, which represents an increase of 5.1% over the same period in 2016.

2022.

For the ninethree months ended September 30, 2017,March 31, 2023, there was a $15.3$7.0 million increase in net revenues as compared to acquisition-adjusted net revenue for the ninethree months ended September 30, 2016,March 31, 2022, which represents an increase of 1.4%1.5%. See “Reconciliations”"Reconciliations" below. The $15.3$7.0 million increase in revenue primarily consists of a $9.6 million increase in billboard revenue which is largelyprimarily due to an increase of $3.4 million in digital revenue, a $3.8 million increase in logo revenue and a $1.9 millionbillboard net revenues as well as an increase in transit revenuenet revenues of $3.1 million over the acquisition-adjusted net revenue for the comparablesame period in 2016.  

2022.

Total operating expenses, exclusive of depreciation and amortization and gain on saledisposition of assets, increased $7.4$19.2 million, or 1.1%7.3%, to $656.5$282.0 million for the ninethree months ended September 30, 2017March 31, 2023 from $649.1$262.7 million infor the same period in 2016.2022. The $7.4$19.2 million increase over the prior year is comprised of a $17.0$13.0 million increase in total direct, and general and administrative operatingand
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corporate expenses (excluding stock-based compensation and transaction expenses) primarily related to the operations of our outdoor advertising assets, and ana $6.3 million increase of $3.0 million in corporate expenses (excluding stock-based compensation expense), offset by a $12.6 million decrease in stock-based compensation expense.

compensation.

Depreciation and amortization expense increased $2.3$4.5 million to $155.0$73.1 million for the ninethree months ended September 30, 2017March 31, 2023 as compared to $152.7$68.6 million for the same period in 2016.

2022, primarily related to acquisitions and capital expenditures completed during 2022.

For the ninethree months ended September 30, 2017,March 31, 2023, Lamar Media recognized a gain on disposition of assets decreased $7.8of $2.7 million, to $4.4 million as compared to $12.2 million for the same period in 2016.  The decrease in gain on disposition of assets is primarily resulting from transactions related to a $5.9 million decrease in gain recognized for acquisition swap transactions in 2017 as compared to the same period in 2016.

sale of billboard locations and displays.

Due to the above factors, operating income increaseddecreased by $11.7$1.7 million to $335.7$118.9 million for the ninethree months ended September 30, 2017March 31, 2023 as compared to $324.0$120.6 million for the same period in 2016.

During the nine months ended September 30, 2017 Lamar Media recognized a $0.1 million loss on extinguishment of debt, related to the amendment of its senior credit facility.  See “Sources of Cash” for more information.

2022.

Interest expense increased $3.0$14.7 million duringfor the ninethree months ended September 30, 2017March 31, 2023 to $95.5$41.4 million as compared to $92.5$26.8 million for the ninethree months ended September 30, 2016.  TheMarch 31, 2022 primarily due to the increase in interest expense is primarily related torates on the increased debt outstanding, primarily related to the refinancing of Lamar Media’sAccounts Receivable Securitization Program and senior credit facilityfacility.
Equity in 2017.

earnings of investee was $0.2 million and $0.7 million for the three months ended March 31, 2023 and 2022, respectively.

The increasedecrease in operating income, and a decrease in loss on debt extinguishment, offset byas well as the increase in interest expense, described above resulted in $240.1a $16.6 million decrease in net income before income taxes. The effective tax rate for the ninethree months ended September 30, 2017March 31, 2023 was 3.9%2.3%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

As a result of the above factors, Lamar Media recognized net income for the nine months ended September 30, 2017 of $230.8 million, as compared to net income of $218.6 million for the same period in 2016.

Reconciliations:

Because acquisitions occurring after December 31, 2015 (the “acquired assets”) have contributed to our net revenue results for the periods presented, we provide 2016 acquisition-adjusted net revenue, which adjusts our 2016 net revenue for the nine months ended September 30, 2016 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our


acquisition or divestiture of these assets for the same time frame that those assets were owned in the nine months ended September 30, 2017.

Reconciliations of 2016 reported net revenue to 2016 acquisition-adjusted net revenue for the nine months ended September 30, as well as a comparison of 2016 acquisition-adjusted net revenue to 2017 reported net revenue for the nine months ended September 30, are provided below:

Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue 

 

 

Nine months ended

September 30,

 

 

 

2017

 

 

2016

 

 

 

(in thousands)

 

Reported net revenue

 

$

1,142,785

 

 

$

1,113,577

 

Acquisition net revenue

 

 

—

 

 

 

13,932

 

Adjusted totals

 

$

1,142,785

 

 

$

1,127,509

 

Key Performance Indicators

Net Income/Adjusted EBITDA

(in thousands)

 

 

Nine Months Ended

September 30,

 

 

Amount of

Increase

 

 

Percent

Increase

 

 

 

2017

 

 

2016

 

 

(Decrease)

 

 

(Decrease)

 

Net income

 

$

230,809

 

 

$

218,573

 

 

$

12,236

 

 

 

5.6

%

Income tax expense

 

 

9,257

 

 

 

9,730

 

 

 

(473

)

 

 

 

 

Loss on debt extinguishment

 

 

71

 

 

 

3,198

 

 

 

(3,127

)

 

 

 

 

Interest expense (income), net

 

 

95,520

 

 

 

92,463

 

 

 

3,057

 

 

 

 

 

Gain on disposition of assets

 

 

(4,377

)

 

 

(12,221

)

 

 

7,844

 

 

 

 

 

Depreciation and amortization

 

 

155,003

 

 

 

152,729

 

 

 

2,274

 

 

 

 

 

Stock-based compensation expense

 

 

7,060

 

 

 

19,650

 

 

 

(12,590

)

 

 

 

 

Adjusted EBITDA

 

$

493,343

 

 

$

484,122

 

 

$

9,221

 

 

 

1.9

%

Adjusted EBITDA for the nine months ended September 30, 2017 increased 1.9% to $493.3 million. The increase in Adjusted EBITDA was primarily attributable to an increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization) of $20.5 million, and was offset by an increase in general administrative and corporate expenses of $11.3 million, excluding the impact of stock-based compensation expense.


Net Income/FFO/AFFO

(in thousands) 

 

 

Nine Months Ended

September 30,

 

 

Amount of

Increase

 

 

Percent

Increase

 

 

 

2017

 

 

2016

 

 

(Decrease)

 

 

(Decrease)

 

Net income

 

$

230,809

 

 

$

218,573

 

 

$

12,236

 

 

 

5.6

%

Depreciation and amortization related to real estate

 

 

145,999

 

 

 

142,394

 

 

 

3,605

 

 

 

 

 

Gain from sale or disposal of real estate

 

 

(4,114

)

 

 

(12,020

)

 

 

7,906

 

 

 

 

 

Adjustments for unconsolidated affiliates and

   non-controlling interest

 

 

580

 

 

 

318

 

 

 

262

 

 

 

 

 

FFO

 

$

373,274

 

 

$

349,265

 

 

$

24,009

 

 

 

6.9

%

Straight line (income) expense

 

 

(382

)

 

 

231

 

 

 

(613

)

 

 

 

 

Stock-based compensation expense

 

 

7,060

 

 

 

19,650

 

 

 

(12,590

)

 

 

 

 

Non-cash portion of tax provision

 

 

259

 

 

 

(150

)

 

 

409

 

 

 

 

 

Non-real estate related depreciation and amortization

 

 

9,004

 

 

 

10,335

 

 

 

(1,331

)

 

 

 

 

Amortization of deferred financing costs

 

 

3,866

 

 

 

3,993

 

 

 

(127

)

 

 

 

 

Loss on extinguishment of debt

 

 

71

 

 

 

3,198

 

 

 

(3,127

)

 

 

 

 

Capital expenditures – maintenance

 

 

(31,760

)

 

 

(25,942

)

 

 

(5,818

)

 

 

 

 

Adjustments for unconsolidated affiliates and

   non-controlling interest

 

 

(580

)

 

 

(318

)

 

 

(262

)

 

 

 

 

AFFO

 

$

360,812

 

 

$

360,262

 

 

$

550

 

 

 

0.2

%

FFO for the nine months ended September 30, 2017 increased 6.9% to $373.3 million as compared to FFO of $349.3 million for the same period in 2016. AFFO for the nine months ended September 30, 2017 increased 0.2% to $360.8 million as compared to $360.3 million for the same period in 2016. The increase in AFFO was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization) offset by an increase in maintenance capital expenditures, interest expense and general and administrative expenses and corporate expenses (excluding the effect of stock-based compensation expense).

Three Months ended September 30, 2017 compared to Three Months ended September 30, 2016

Net revenues increased $11.8 million or 3.1% to $399.3 million for the three months ended September 30, 2017 from $387.5 million for the same period in 2016. This increase was attributable primarily to an increase in billboard net revenues of $6.1 million, which represents an increase of 1.8% over the same period in 2016.  In addition, logo sign revenue increased $1.5 million, which represents an increase of 7.8% over the prior period and there was a $4.3 million increase in transit revenue, which represents an increase of 15.3% over the prior period.

For the three months ended September 30, 2017, there was a $4.1 million increase in net revenues as compared to acquisition-adjusted net revenue for the three months ended September 30, 2016, which represents an increase of 1.0%. See “Reconciliations” below. The 1.0% increase is primarily due to an increase in digital revenue and production revenue for three months ended September 30, 2017, as compared to the same period in 2016. The $4.1 million increase in revenue primarily consists of a $1.2 million increase in billboard revenue largely due to an increase in digital revenue, a $1.8 million increase in logo revenue, and a $1.2 million increase in transit revenue over the acquisition-adjusted net revenue for the comparable period in 2016.

Total operating expenses, exclusive of depreciation and amortization and gain on sale of assets, decreased $0.1 million for the three months ended September 30, 2017 as compared to the same period in 2016. The $0.1 million decrease over the prior year is comprised of a $6.3 million decrease in stock-based compensation expense offset by a $5.7 million increase in direct and general and administrative operating expenses related to the operations of our outdoor advertising assets and a $0.5 million increase in corporate expenses (excluding stock-based compensation expense).

Depreciation and amortization expense increased $2.5 million to $51.8 million for the three months ended September 30, 2017 as compared to $49.3 million for the same period in 2016.

For the three months ended September 30, 2017, gain on disposition of assets increased $2.5 million to $2.7 million as compared to $0.1 million for the same period in 2016.  The increase is primarily due to a $2.4 million gain resulting from acquisition swap transactions during the three months ended September 30, 2017.


Due to the above factors, operating income increased by $11.9 million to $131.8 million for the three months ended September 30, 2017 compared to $119.9 million for the same period in 2016.

The increase in operating income offset by a slight increase in interest expense resulted in a $11.0 million increase in net income before income taxes. The effective tax rate for the three months ended September 30, 2017 was 3.3%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

As a result of the above factors, Lamar Media recognized net income for the three months ended September 30, 2017March 31, 2023 of $96.4$76.3 million, as compared to net income of $85.2$92.3 million for the same period in 2016.

2022.

Reconciliations:

Because acquisitions occurring after December 31, 2015 (the “acquired assets”)2021 have contributed to our net revenue results for the periods presented, we provide 20162022 acquisition-adjusted net revenue, which adjusts our 20162022 net revenue for the three months ended September 30, 2016March 31, 2022 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the three months ended September 30, 2017. March 31, 2023.
Reconciliations of 20162022 reported net revenue to 20162022 acquisition-adjusted net revenue for the three months ended September 30,March 31, as well as a comparison of 20162022 acquisition-adjusted net revenue to 20172023 reported net revenue for the three months ended September 30,March 31, are provided below:

Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue

 

Three months ended

September 30,

 

Three Months Ended
March 31,

 

2017

 

 

2016

 

20232022

 

(in thousands)

 

(in thousands)

Reported net revenue

 

$

399,345

 

 

$

387,516

 

Reported net revenue$471,332 $451,388 

Acquisition net revenue

 

 

—

 

 

 

7,736

 

Acquisition net revenue— 12,949 

Adjusted totals

 

$

399,345

 

 

$

395,252

 

Adjusted totals$471,332 $464,337 

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Table of Contents
Key Performance Indicators

Net Income/Adjusted EBITDA

(in thousands)

 

Three Months Ended

September 30,

 

 

Amount of

Increase

 

 

Percent

Increase

 

Three Months Ended
March 31,		Amount of Increase (Decrease)Percent Increase (Decrease)

 

2017

 

 

2016

 

 

(Decrease)

 

 

(Decrease)

 

20232022

Net income

 

$

96,437

 

 

$

85,168

 

 

$

11,269

 

 

 

13.2

%

Net income$76,334 $92,287 $(15,953)(17.3)%

Income tax expense

 

 

3,325

 

 

 

3,613

 

 

 

(288

)

 

 

 

 

Income tax expense1,798 2,480 (682)

Interest expense (income), net

 

 

32,062

 

 

 

31,100

 

 

 

962

 

 

 

 

 

Interest expense (income), net40,983 26,571 14,412 
Equity in earnings of investeeEquity in earnings of investee(178)(746)568 

Gain on disposition of assets

 

 

(2,734

)

 

 

(189

)

 

 

(2,545

)

 

 

 

 

Gain on disposition of assets(2,688)(563)(2,125)

Depreciation and amortization

 

 

51,796

 

 

 

49,307

 

 

 

2,489

 

 

 

 

 

Depreciation and amortization73,125 68,627 4,498 
Capitalized contract fulfillment costs, netCapitalized contract fulfillment costs, net674 946 (272)

Stock-based compensation expense

 

 

2,017

 

 

 

8,358

 

 

 

(6,341

)

 

 

 

 

Stock-based compensation expense8,040 1,780 6,260 

Adjusted EBITDA

 

$

182,903

 

 

$

177,357

 

 

$

5,546

 

 

 

3.1

%

Adjusted EBITDA$198,088 $191,382 $6,706 3.5 %

Adjusted EBITDA for the three months ended September 30, 2017March 31, 2023 increased 3.1%3.5% to $182.9$198.1 million. The increase in Adjustedadjusted EBITDA was primarily attributable to an increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization)amortization and capitalized contract fulfillment costs, net) of $8.6$9.0 million, and was offset by an increase in total general and administrative and corporate expenses of $3.1$2.3 million, excluding the impact of stock-based compensation expense.

expense and transaction expenses.

Net Income/FFO/AFFO

(in thousands)

 

Three Months Ended

September 30,

 

 

Amount of

Increase

 

 

Percent

Increase

 

Three Months Ended
March 31,		Amount of Increase (Decrease)Percent Increase (Decrease)

 

2017

 

 

2016

 

 

(Decrease)

 

 

(Decrease)

 

20232022

Net income

 

$

96,437

 

 

$

85,168

 

 

$

11,269

 

 

 

13.2

%

Net income$76,334 $92,287 $(15,953)(17.3)%

Depreciation and amortization related to real estate

 

 

48,613

 

 

 

46,327

 

 

 

2,286

 

 

 

 

 

Depreciation and amortization related to real estate70,350 65,526 4,824 

Gain from sale or disposal of real estate

 

 

(2,707

)

 

 

(546

)

 

 

(2,161

)

 

 

 

 

Gain from sale or disposal of real estate, net of taxGain from sale or disposal of real estate, net of tax(2,720)(454)(2,266)

Adjustments for unconsolidated affiliates and

non-controlling interest

 

 

190

 

 

 

52

 

 

 

138

 

 

 

 

 

Adjustments for unconsolidated affiliates and non-controlling interest(335)(895)560 

FFO

 

$

142,533

 

 

$

131,001

 

 

$

11,532

 

 

 

8.8

%

FFO$143,629 $156,464 $(12,835)(8.2)%

Straight line income

 

 

(287

)

 

 

(46

)

 

 

(241

)

 

 

 

 

Straight line expenseStraight line expense957 915 42 
Capitalized contract fulfillment costs, netCapitalized contract fulfillment costs, net674 946 (272)

Stock-based compensation expense

 

 

2,017

 

 

 

8,358

 

 

 

(6,341

)

 

 

 

 

Stock-based compensation expense8,040 1,780 6,260 

Non-cash portion of tax provision

 

 

229

 

 

 

(509

)

 

 

738

 

 

 

 

 

Non-cash portion of tax provision(1,152)(342)(810)

Non-real estate related depreciation and amortization

 

 

3,183

 

 

 

2,980

 

 

 

203

 

 

 

 

 

Non-real estate related depreciation and amortization2,775 3,101 (326)

Amortization of deferred financing costs

 

 

1,243

 

 

 

1,332

 

 

 

(89

)

 

 

 

 

Amortization of deferred financing costs1,642 1,471 171 

Capital expenditures – maintenance

 

 

(11,082

)

 

 

(9,005

)

 

 

(2,077

)

 

 

 

 

Capital expenditures - maintenanceCapital expenditures - maintenance(12,692)(13,185)493 

Adjustments for unconsolidated affiliates and

non-controlling interest

 

 

(190

)

 

 

(52

)

 

 

(138

)

 

 

 

 

Adjustments for unconsolidated affiliates and non-controlling interest335 895 (560)

AFFO

 

$

137,646

 

 

$

134,059

 

 

$

3,587

 

 

 

2.7

%

AFFO$144,208 $152,045 $(7,837)(5.2)%

FFO for the three months ended September 30, 2017 increased 8.8%March 31, 2023 decreased from $156.5 million in 2022 to $142.5 million as compared to FFO of $131.0$143.6 million for the same period in 2016.2023, a decrease of 8.2%. AFFO for the three months ended September 30, 2017 increased 2.7%March 31, 2023 decreased 5.2% to $137.6$144.2 million as compared to $134.1$152.0 million for the same period in 2016.2022. The increasedecrease in AFFO was primarily attributable to an increase in our interest expense of $14.7 million and an increase in total general and administrative and corporate expenses (excluding the effect of stock-based compensation expense and transaction expenses) offset by an increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization) offset by an increase in maintenance capital expenditures, interest expenseamortization and general and administrative expense and corporate expenses (excluding the effectcapitalized contract fulfillment costs, net).
42
Table of stock-based compensation expense).


Contents

ITEM 3.

QUANTITATIVE AND QUALITATIVEITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Lamar Advertising Company and Lamar Media Corp.

The Company

Lamar Advertising is exposed to interest rate risk in connection with variable rate debt instruments issued by its wholly owned subsidiary Lamar Media. The information below summarizes the Company’s interest rate risk associated with its principal variable rate debt instruments outstanding at September 30, 2017,March 31, 2023, and should be read in conjunction with Note 911 of the Notes to the Company’s Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

LoansStatements.

Lamar Media has variable-rate debt outstanding under Lamar Media’sits senior credit facility bearand its Accounts Receivable Securitization Program. Because interest at variable rates equal to the Adjusted LIBO Rate or Adjusted Base Rate plus the applicable margin. Because the Adjusted LIBO Rate or Adjusted Base Rate may increase or decrease at any time, the Company is exposed to market risk as a result of the impact that changes in these baseinterest rates may have on the interest rate applicable to borrowings under the senior credit facility.outstanding. Increases in the interest rates applicable to these borrowings under the senior credit facility would result in increased interest expense and a reduction in the Company’s net income.

At September 30, 2017,March 31, 2023 there was approximately $534.4 million$1.30 billion of aggregate indebtedness outstanding under the senior credit facility and the Accounts Receivable Securitization Program, or approximately 21.8%38.2% of the Company’s outstanding long-term debt on that date, bearing interest at variable rates. The aggregate interest expense for the nine months ended September 30, 20172023 with respect to borrowings under the senior credit facility and the Accounts Receivable Securitization Program was $11.7$18.2 million, and the weighted average interest rate applicable to these borrowings under this credit facility during the nine months ended September 30, 20172023 was 3.0%5.8%. Assuming that the weighted average interest rate was 200-basis200 basis points higher (that is 5.0%7.8% rather than 3.0%5.8%), then the Company’s nine months ended September 30, 20172023 interest expense would have increased by $7.2 million.

approximately $6.1 million for the three months ended March 31, 2023.

The Company attemptedattempts to mitigate the interest rate risk resulting from its variable interest rate long-term debt instruments by issuing fixed rate long-term debt instruments and maintaining a balance over time between the amount of the Company’s variable rate and fixed rate indebtedness. In addition, the Company has the capability under the senior credit facility to fix the interest rates applicable to its borrowings at an amount equal to LIBORAdjusted LIBO Rate or Adjusted Term SOFR Rate (as applicable), or Adjusted Base Rate plus the applicable margin for periods of up to twelve months (in certain cases with the consent of the lenders), which would allow the Company to mitigate the impact of short-term fluctuations in market interest rates. In the event of an increase in interest rates, the Company may take further actions to mitigate its exposure. The Company cannot guarantee, however, that the actions that it may take to mitigate this risk will be feasible or that, if these actions are taken, that they will be effective.


ITEM 4.

CONTROLS AND PROCEDURES

ITEM 4.    CONTROLS AND PROCEDURES
a) Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures.

The Company’s and Lamar Media’s management, with the participation of the principal executive officer and principal financial officer of the Company and Lamar Media, have evaluated the effectiveness of the design and operation of the Company’s and Lamar Media’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report. Based on this evaluation, the principal executive officer and principal financial officer of the Company and Lamar Media concluded that these disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in the Company’s and Lamar Media’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods.

b) Changes in Internal Control Over Financial Reporting.

There washave been no changechanges in the internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) of the Company and Lamar Media identified in connection with the evaluation of the Company’s and Lamar Media’s internal control performed during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s and Lamar Media’s internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1A.

RISK FACTORS

ITEM 1A.    RISK FACTORS
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our combined Annual Report on Form 10-K for the year ended December 31, 2016,2022, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our Class A common stock. There have been no material changes to our risk factors since our combined Annual Report on Form 10-K for the year ended December 31, 2016.

2022.
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 5.    OTHER INFORMATION
None
ITEM 6.    EXHIBITS

ITEM. 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM. 5.

OTHER INFORMATION

On July 5, 2017, the Company adopted immaterial amendments to its 2009 Employee Stock Purchase Plan.  A copy of the plan as amended is attached as Exhibit 10.1.

ITEM 6.

EXHIBITS

Exhibit

Number

Description

Exhibit
Number

Description

3.1

3.1
Amended and Restated Certificate of Incorporation of Lamar Advertising Company (the “Company”), as filed with the Secretary of the State of Delaware effective as of November 18, 2014.  Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on November 19, 2014 and incorporated herein by reference.reference.

3.2

Certificate of Merger, effective as of November 18, 2014. Previously filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on November 19, 2014 and incorporated herein by reference.reference.

3.3

Amended and Restated Certificate of Incorporation of Lamar Media Corp. (“Lamar Media”)  Previously filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2007 (File No. 0-30242) filed on May 10, 2007 and incorporated herein by reference.reference.

3.4

Amended and Restated Bylaws of the Company, adopted as of November 18, 2014.  Previously filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on November 19, 2014 and incorporated herein by reference.reference.


Exhibit

Number

Description

3.5

Amended and Restated Bylaws of Lamar Media. Previously filed as Exhibit 3.1 to Lamar Media’s Quarterly Report on Form 10-Q for the period ended September 30, 1999 (File No. 1-12407) filed on November 12, 1999 and incorporated herein by reference.reference.

10.1

10.1*

Lamar Advertising Company 2009 Employee Stock Purchase Plan,Form of LTIP Unit Award Agreement. Previously filed as amended. Filed herewith.Exhibit 10.

1 to the Company’s Current Report on Form 8-K (File No. 1-36756) filed on March2, 2023 and incorporated herein by reference.

12(a)

Statement regarding computation of earnings to fixed charges for the Company. Filed herewith.

31.1

12(b)

Statement regarding computation of earnings to fixed charges for Lamar Media. Filed herewith.

31.1

Certification of the Chief Executive Officer of the Company and Lamar Media pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

31.2

Certification of the Chief Financial Officer of the Company and Lamar Media pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

32.1

Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

101

The following materialsfinancial statements from the combinedCompany’s Quarterly Report of the Company and Lamar Media on Form 10-Q for the nine monthsquarter ended September 30, 2017,March 31, 2023, formatted in XBRL (eXtensible Business Reporting Language):Inline XBRL: (i) Condensed Consolidated Balance Sheets, as of September 30, 2017 and December 31, 2016 of the Company and Lamar Media, (ii) Condensed Consolidated Statements of Income and Comprehensive Income, for the three and nine months ended September 30, 2017 and 2016(iii) Condensed Consolidated Statements of the Company and Lamar Media, (iii)Stockholders' Equity, (iv) Condensed Consolidated Statements of Cash Flows, for the nine months ended September 30, 2017 and 2016 of the Company and Lamar Media, and (iv)(v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of the Companytext and Lamar Media

including detailed tags.


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104Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101).

*Management compensatory agreement
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LAMAR ADVERTISING COMPANY

DATED: November 6, 2017

May 4, 2023

BY:

/s/ Keith A. Istre

Jay L. Johnson

Executive Vice President, Chief Financial and Accounting Officer and Treasurer

LAMAR MEDIA CORP.

DATED: November 6, 2017

May 4, 2023

BY:

/s/ Keith A. Istre

Jay L. Johnson

Executive Vice President, Chief Financial and Accounting Officer and Treasurer

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