Lamar Advertising Company Q3 2008 Earnings Call Transcript

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2008-11-06 14:01:13.0

Tags: Call Transcript, Wachovia Corp., Earnings, Games, Personal Technology, Seeking Alpha, Call Transcript, Wachovia Corp., Earnings, Games, Personal Technology, Seeking Alpha, Lamar Advertising Co.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions). Our first question will come from Marci Ryvicker from Wachovia.

Marci Ryvicker - Wachovia

Your suspension in your digital investment, is this a permanent suspension or just temporary during the current climate?

Sean Reilly

Let me take that. This is Sean. One thing that we remain is very bullish on the digital future. If you look at the third quarter and I meant to give this out to you guys, if you look at the third quarter approximately down 4%, digital contributed plus 2% same-store growth. So, we remain bullish on the business case, but we also have to be very cognizant of the environment we're operating in.

We could not, number one, add a tremendous amount of additional capacity, given what we see in the world of ad demand, and ad spend, and quite frankly given the concerns out there about total leverage, right now, if we're going to generate $200 million in free cash flow and pay down debt with those funds, we had to temporarily suspend much of our digital plans for next year.

Kevin Reilly

Remember, Marci, it's not just CapEx. We were investing very aggressively in our front end, and so we had a lot of ancillary other expenditures associated with this effort, which we as soon as we start see something daylight, we're going to crank that up.

Marci Ryvicker - Wachovia

Sean, can you talk about pricing on digital in Q3, and also what you're seeing in Q4, because I think you had mentioned at a conference it was down around 9%?

Sean Reilly

I think that sort of range is about where it is. Again, we have a lot of confidence in the digital model, but we have been adding tremendous amounts of capacity in the face of pretty tremendous headwinds. So, I think that the prudent thing for us to do is focus laser-like on selling the units we have in the air, rather than adding, potentially adding 50% to 60% more capacity in '09. So, that's our game plan, and we feel like it's the prudent game plan, and we also feel like that digital will probably be the first thing to lead us out as thins get better. Hopefully as we move into the summer.

Marci Ryvicker - Wachovia

All right. Thank you so much.

Operator

Thank you. Our next question will come from James Farrin [ph], Morgan Stanley.

 

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