Lamar Q1: 400 Laid Off; "We're Going to Bump Along the Bottom for a While"

Lamar Advertising revealed it has laid off about 400 employees as its revenues tumbled and losses widened in Q1 2009.

The basics: Revenues sunk 13 percent to $247 million; net loss widened from $3.2 million to $21.3 million. Cash flow was up $179 million but most of that was from a $315 million note offering. The result was slightly better than expected because Lamar had predicted a 15 percent slip in revenues.

Lamar has been on a cost-cutting frenzy over the last three months, and that means the pink slips have been flying. Here’s what the company told investors:

CEO Kevin P. Reilly Jr.: We actually ended up with more layoffs than we previously thought we were going to accomplish. I think we’re up to about 370, we’re up to 400 on the head count reduction. And that’s on a base of 3,500.

That means more than 10 percent of Lamar’s entire workforce is gone. But the company has not become any more productive. If you strip out all the non-business expenses (such as taxes and interest payments) and just ask the question, How much revenue does Lamar generate in return for every dollar spent on running the business?, the answer is: $1.02. Lamar was earning $1.29 back in 2007. When companies sink below the $1 level, they start to flirt with non-viability.

Reilly sounded almost Churchillian in his address to Wall Street. He promised investors nothing but blood, sweat and tears:

… the way we see the rest of the year shaping up is it looks like we’re going to bump along the bottom for a while. Don’t know exactly when we are going to come out, but we don’t see a real sharp V here…

We just need to keep the lights burning and the copy fresh …

Reilly noted two points of light on the horizon. One is newspapers. As they decline, local advertisers will be forced onto billboards, he said.

I’m convinced that as the fundamentals of the newspaper industry continue to deteriorate, which represents in many of our markets almost 60 to 65% of local ad spend, that we are going to be the beneficiary of some of that

The second is digital billboards: sales are up year to year in that segment.

• Previous BNET coverage of Lamar:
• Lamar Execs Got Bonuses for Shrinking Revenue; Their Families Got to Use the Corporate Jets
• Lamar Doesn’t See Auto Bailout Money Helping Dealer Ads
• Lamar Takes on More Debt as It Warns of Goodwill Losses
• Lamar: Revenues Will Decline 15% This Quarter
• Analyst: Lamar Revenue to Decline 9%; More on the Way
• Lamar Advertising Manager Guilty of Embezzling $200,000
• Lamar Advertising Still Embroiled in Pittsburgh Ethics Scandal
• Investors at Odds Over Lamar Advertising’s Future
• Lamar Advertising: The Canary in the Coal Mine