GlobeNewswire Inc | Feb 26, 2021 06:00AM EST

February 26, 2021

Three Month Results

-- Net revenue was $428.5 million -- Net income was $108.7 million -- Adjusted EBITDA was $207.9 million

Twelve Month Results

-- Net revenue was $1.57 billion -- Net income was $243.4 million -- Adjusted EBITDA was $671.5 million

BATON ROUGE, La., Feb. 26, 2021 (GLOBE NEWSWIRE) -- Lamar Advertising Company (Nasdaq: LAMR) (Lamar or the Company), a leading owner and operator of outdoor advertising and logo sign displays, announces the Companys operating results for the fourth quarter and year ended December 31, 2020.

We concluded 2020 with a strong fourth quarter, aided by a recovery in national advertising and a surge in political spending, as well as further good work on the expense side," Chief Executive Sean Reilly said. "We have begun to invest again in our platform, and, with the strongest balance sheet in the industry, we are positioned well to benefit as the advertising market recovers further in 2021.

Fourth Quarter Highlights

-- Total operating expenses decreased 10.6% -- Adjusted EBITDA margin of 48.5% -- Free cash flow increased 18.3% -- Diluted AFFO per share increased 4.3%

Fourth Quarter Results

Lamar reported net revenues of $428.5 million for the fourth quarter of 2020 versus $462.7 million for the fourth quarter of 2019, a 7.4% decrease. Operating income for the fourth quarter of 2020 decreased $0.2 million to $141.2 million as compared to $141.4 million for the same period in 2019. Lamar recognized net income of $108.7 million for the fourth quarter of 2020 as compared to net income of $102.8 million for the same period in 2019, an increase of $6.0 million. Net income per diluted share was $1.08 and $1.02 for the three months ended December 31, 2020 and 2019, respectively.

Adjusted EBITDA for the fourth quarter of 2020 was $207.9 million versus $215.6 million for the fourth quarter of 2019, a decrease of 3.6%.

Cash flow provided by operating activities was $208.4 million for the three months ended December 31, 2020, a decrease of $14.5 million as compared to the same period in 2019. Free cash flow for the fourth quarter of 2020 was $160.1 million as compared to $135.3 million for the same period in 2019, an 18.3% increase.

For the fourth quarter of 2020, funds from operations, or FFO, was $167.6 million versus $161.1 million for the same period in 2019, an increase of 4.0%. Adjusted funds from operations, or AFFO, for the fourth quarter of 2020 was $172.1 million compared to $165.4 million for the same period in 2019, an increase of 4.0%. Diluted AFFO per share increased 4.3% to $1.71 for the three months ended December 31, 2020 as compared to $1.64 for the same period in 2019.

Acquisition-Adjusted Three Months Results

Acquisition-adjusted net revenue for the fourth quarter of 2020 decreased 6.8% as compared to acquisition-adjusted net revenue for the fourth quarter of 2019. Acquisition-adjusted EBITDA for the fourth quarter of 2020 decreased 2.8% as compared to acquisition-adjusted EBITDA for the fourth quarter of 2019. Acquisition-adjusted net revenue and acquisition-adjusted EBITDA include adjustments to the 2019 period for acquisitions and divestitures for the same time frame as actually owned in the 2020 period. See Reconciliation of Reported Basis to Acquisition-Adjusted Results, which provides reconciliations to GAAP for acquisition-adjusted measures.

Twelve Months Results

Lamar reported net revenues of $1.57 billion for the twelve months ended December 31, 2020 versus $1.75 billion for the same period in 2019, a 10.5% decrease. Operating income for the twelve months ended December 31, 2020 was $410.1 million as compared to $517.7 million for the same period in 2019. Lamar recognized net income of $243.4 million for the twelve months ended December 31, 2020 as compared to net income of $372.1 million for the same period in 2019. Net income per diluted share decreased to $2.41 for the twelve months ended December 31, 2020 as compared to $3.71 for the same period in 2019. In addition, adjusted EBITDA for the twelve months ended December 31, 2020 was $671.5 million versus $784.9 million for the same period in 2019, a 14.4% decrease.

Cash flow provided by operating activities decreased to $569.9 million for the twelve months ended December 31, 2020, as compared to $630.9 million in the same period in 2019. Free cash flow for the twelve months ended December 31, 2020 decreased 3.4% to $472.5 million as compared to $489.2 million for the same period in 2019.

For the twelve months ended December 31, 2020, FFO was $477.2 million versus $584.9 million for the same period in 2019, an 18.4% decrease. AFFO for the twelve months ended December 31, 2020 was $514.8 million compared to $581.4 million for the same period in 2019, an 11.5% decrease. Diluted AFFO per share decreased to $5.10 for the twelve months ended December 31, 2020, as compared to $5.80 in the same period in 2019, a decrease of 12.1%.

Liquidity

As of December 31, 2020, Lamar had $910.1 million in total liquidity that consisted of $736.0 million available for borrowing under its revolving senior credit facility, $52.5 million available under the Accounts Receivable Securitization Program and approximately $121.6 million in cash and cash equivalents. There were no borrowings outstanding under the Companys revolving credit facility and $122.5 million in borrowings outstanding under our Accounts Receivable Securitization Program as of December 31, 2020.

Recent Developments and COVID-19 Update

On January 22, 2021 Lamar Media Corp., the Companys wholly owned subsidiary, issued $550.0 million in aggregate principal 3 5/8% Senior Notes due 2031 (the 3 5/8% Senior Notes). The 3 5/8% Senior Notes resulted in proceeds of approximately $542.5 million which were used, together with cash on hand and borrowings under the revolving credit facility and Accounts Receivable Securitization Program to redeem in full all of our $650.0 million in aggregate principal outstanding 5 3/4% Senior Notes due 2026 on February 3, 2021.

On February 25, 2021 our Board of Directors approved a quarterly dividend of $0.75 per common share to be paid on March 31, 2021. Subject to approval by the Board of Directors we expect our aggregate distributions to stockholders for 2021, including the dividend payable on March 31, 2021, will total $3.00 per common share.

Lamar continues to actively monitor the effects of the COVID-19 pandemic on our business, employees and the business of our advertisers. In response to the viruss effect on the overall economy and decreased demand for outdoor advertising, we have taken measures to reduce our operating costs and increase our liquidity.

As we continue to actively monitor the situation, we may take further actions to alter our business operations as may be required by federal, state or local authorities, or that we determine are in the best interest of our employees, customers, partners and shareholders.

Guidance

We expect net income per diluted share for fiscal year 2021 to be between $2.76 and $3.02, with diluted AFFO per share between $5.20 and $5.50. See Supplemental Schedules and Unaudited Reconciliations of Non-GAAP Measures for a reconciliation to GAAP.

Forward-Looking Statements

This press release contains forward-looking statements, including statements regarding sales trends. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. These risks and uncertainties include, among others: (1) our significant indebtedness; (2) the severity and duration of the novel coronavirus (COVID-19) pandemic and its impact on our business, financial condition and results of operations; (3) the state of the economy and financial markets generally, including the impact caused by the novel coronavirus (COVID-19) pandemic and the effect of the broader economy on the demand for advertising; (4) the continued popularity of outdoor advertising as an advertising medium; (5) our need for and ability to obtain additional funding for operations, debt refinancing or acquisitions; (6) our ability to continue to qualify as a Real Estate Investment Trust (REIT) and maintain our status as a REIT; (7) the regulation of the outdoor advertising industry by federal, state and local governments; (8) the integration of companies and assets that we acquire and our ability to recognize cost savings or operating efficiencies as a result of these acquisitions; (9) changes in accounting principles, policies or guidelines; (10) changes in tax laws applicable to REITs or in the interpretation of those laws; (11) our ability to renew expiring contracts at favorable rates; (12) our ability to successfully implement our digital deployment strategy; and (13) the market for our Class A common stock. For additional information regarding factors that may cause actual results to differ materially from those indicated in our forward-looking statements, we refer you to the risk factors included in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented by any risk factors contained in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K and as updated in our Annual Form 10-K for the year ended December 31, 2020 when filed. We caution investors 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 we undertake no obligation to update or revise the statements, except as may be required by law.

Use of Non-GAAP Financial Measures

The Company has presented the following measures that are not measures of performance under accounting principles generally accepted in the United States of America (GAAP): adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), free cash flow, funds from operations (FFO), adjusted funds from operations (AFFO), diluted AFFO per share, outdoor operating income, acquisition-adjusted results and acquisition-adjusted consolidated expense. Our management reviews our performance by focusing on these key performance indicators not prepared in conformity with 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.

Our Non-GAAP financial measures are determined as follows:

-- We define adjusted EBITDA as net income before income tax expense (benefit), interest expense (income), loss (gain) on extinguishment of debt and investments, stock-based compensation, depreciation and amortization, gain or loss on disposition of assets and investments, capitalized contract fulfillment costs, net and the impact of adopting FASB Accounting Standard Update No. 2016-02 Codified as ASC 842, Leases. -- Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenues. -- Free cash flow is defined as adjusted EBITDA less interest, net of interest income and amortization of deferred financing costs, current taxes, preferred stock dividends and total capital expenditures. -- We use the National Association of Real Estate Investment Trusts definition of FFO, which 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 income and expense; (ii) impact of ASC 842 adoption;(iii) capitalized contract fulfillment costs, net (iv) stock-based compensation expense; (v)non-cash portion of tax provision; (vi)non-real estate related depreciation and amortization; (vii)amortization of deferred financing costs; (viii)loss on extinguishment of debt; (ix)non-recurring infrequent or unusual losses (gains); (x)less maintenance capital expenditures; and (xi)an adjustment for unconsolidated affiliates and non-controlling interest. -- Diluted AFFO per share is defined as AFFO divided by weighted average diluted common shares outstanding. -- Outdoor operating income is defined as operating income before corporate expenses, stock-based compensation, depreciation and amortization and loss (gain) on disposition of assets. -- Acquisition-adjusted results adjusts our net revenue, direct and general and administrative expenses, outdoor operating income, corporate expense and EBITDA for the prior period by adding to, or subtracting from, the corresponding revenue or expense generated by the acquired or divested assets before our acquisition or divestiture of these assets for the same time frame that those assets were owned in the current period. In calculating acquisition-adjusted results, therefore, we include revenue and expenses generated by assets that we did not own in the prior period but acquired in the current period. We refer to the amount of pre-acquisition revenue and expense generated by or subtracted from 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-adjusted results. -- Acquisition-adjusted consolidated expense adjusts our total operating expense to remove the impact of stock-based compensation, depreciation and amortization, capitalized contract fulfillment costs, net and loss (gain) on disposition of assets and investments. The prior period is also adjusted for the impact of adopting FASB Accounting Standard Update No. 2016-02 Codified as ASC 842, Leases and to include the expense generated by the acquired or divested assets before our acquisition or divestiture of such assets for the same time frame that those assets were owned in the current period.

Adjusted EBITDA, FFO, AFFO, diluted AFFO per share, outdoor operating income, acquisition-adjusted results and acquisition-adjusted consolidated expense are not intended to replace other performance measures determined in accordance with GAAP. Free cash flow, FFO and AFFO do not 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. Adjusted EBITDA, free cash flow, FFO, AFFO, diluted AFFO per share, outdoor operating income, acquisition-adjusted results and acquisition-adjusted consolidated expense are presented as we believe each is a useful indicator of our current operating performance. Specifically, 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 making and for evaluating our core operating results; (2)adjusted EBITDA is widely used in the industry to measure operating performance as it excludes the impact of depreciation and amortization, which may vary significantly among companies, depending upon accounting methods and useful lives, particularly where acquisitions and non-operating factors are involved; (3) adjusted EBITDA, FFO, AFFO, diluted AFFO per share and acquisition-adjusted consolidated expense each provides investors with a meaningful measure for evaluating our period-over-period operating performance by eliminating items that are not operational in nature and reflect the impact on operations from trends in occupancy rates, operating costs, general and administrative expenses and interest costs; (4)acquisition-adjusted results is a supplement to enable investors to compare period-over-period results on a more consistent basis without the effects of acquisitions and divestitures, which reflects our core performance and organic growth (if any) during the period in which the assets were owned and managed by us; (5) free cash flow is an indicator of our ability to service debt and generate cash for acquisitions and other strategic investments;(6) outdoor operating income provides investors a measurement of our core results without the impact of fluctuations in stock-based compensation, depreciation and amortization and corporate expenses; and (7) each of our Non-GAAP measures provides investors with a measure for comparing our results of operations to those of other companies.

Our measurement of adjusted EBITDA, FFO, AFFO, diluted AFFO per share, outdoor operating income, acquisition-adjusted results and acquisition-adjusted consolidated expense may not, however, be fully comparable to similarly titled measures used by other companies. Reconciliations of adjusted EBITDA, FFO, AFFO, diluted AFFO per share, outdoor operating income, acquisition-adjusted results and acquisition-adjusted consolidated expense to the most directly comparable GAAP measures have been included herein.

Conference Call Information

A conference call will be held to discuss the Companys operating results on Friday, February 26, 2021 at 8:00 a.m. central time. Instructions for the conference call and Webcast are provided below:

Conference Call

All Callers: 1-334-777-6991 or 1-800-338-4880Passcode: 65248056 Replay: 1-334-323-0140 or 1-877-919-4059Passcode: 31632466 Available through Friday, March 5, 2021 at 11:59 p.m. Eastern time Live Webcast: www.lamar.com Webcast Replay: www.lamar.com Available through Friday, March 5, 2021 at 11:59 p.m. Eastern time Company Buster KantrowContact: Director of Investor Relations (225) 926-1000 bkantrow@lamar.com

General Information

Founded in 1902, Lamar Advertising (Nasdaq: LAMR) is one of the largest outdoor advertising companies in North America, with over 354,500 displays across the United States and Canada. Lamar offers advertisers a variety of billboard, interstate logo, transit and airport advertising formats, helping both local businesses and national brands reach broad audiences every day. In addition to its more traditional out-of-home inventory, Lamar is proud to offer its customers the largest network of digital billboards in the United States with over 3,600 displays.

LAMAR ADVERTISING COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Three months ended Twelve months ended December 31, December 31, 2020 2019 2020 2019 Net revenues $ 428,525 $ 462,659 $ 1,568,856 $ 1,753,644 Operatingexpenses (income)Directadvertising 138,448 152,741 557,274 595,525 expensesGeneral andadministrative 66,494 77,079 275,145 307,648 expensesCorporate 15,730 17,200 64,901 65,588 expensesStock-based 7,726 11,569 18,772 29,647 compensationImpact of ASC842 adoption(lease ? 865 ? 3,894 accountingstandard)Capitalizedcontract (649 ) 798 387 (9,186 )fulfillmentcosts, netDepreciationand 63,748 62,878 251,296 250,028 amortizationGain ondisposition of (4,203 ) (1,881 ) (9,026 ) (7,241 )assetsTotaloperating 287,294 321,249 1,158,749 1,235,903 expenseOperating 141,231 141,410 410,107 517,741 incomeOther expense (income)Loss onextinguishment ? ? 25,235 ? of debtInterest (180 ) (211 ) (797 ) (764 )incomeInterest 30,565 36,376 137,623 150,616 expense 30,385 36,165 162,061 149,852 Income beforeincome tax 110,846 105,245 248,046 367,889 expense(benefit)Income taxexpense 2,140 2,492 4,660 (4,222 )(benefit)Net income 108,706 102,753 243,386 372,111 Preferredstock 92 92 365 365 dividendsNet incomeapplicable to $ 108,614 $ 102,661 $ 243,021 $ 371,746 common stockEarnings per share:Basic earnings $ 1.08 $ 1.02 $ 2.41 $ 3.71 per shareDilutedearnings per $ 1.08 $ 1.02 $ 2.41 $ 3.71 shareWeightedaverage common sharesoutstanding:- basic 100,856,139 100,459,969 100,756,361 100,130,721 - diluted 100,884,464 100,672,782 100,902,700 100,320,574 OTHER DATA Free Cash Flow Computation:Adjusted $ 207,853 $ 215,639 $ 671,536 $ 784,883 EBITDAInterest, net (28,943 ) (34,812 ) (130,917 ) (144,487 )Current tax (1,067 ) (2,163 ) (5,457 ) (9,908 )expensePreferredstock (92 ) (92 ) (365 ) (365 )dividendsTotal capital (17,639 ) (43,276 ) (62,272 ) (140,956 )expendituresFree cash flow $ 160,112 $ 135,296 $ 472,525 $ 489,167

December December31, 31,Selected Balance 2020 2019 Sheet Data:Cash and cash $ 121,569 $ 26,188 equivalentsWorking capital $ (167,302 ) $ (362,639 )deficitTotal assets $ 5,791,441 $ 5,941,155 Total debt, net ofdeferred financingcosts (including $ 2,886,516 $ 2,980,118 currentmaturities)Totalstockholders? $ 1,202,768 $ 1,180,306 equity Three months ended Twelve months ended December 31, December 31, 2020 2019 2020 2019 Selected Cash Flow Data:Cash flowsprovided by $ 208,416 $ 222,895 $ 569,873 $ 630,865 operatingactivitiesCash flows used ininvesting $ 29,207 $ 52,215 $ 96,888 $ 362,034 activitiesCash flows used infinancing $ 126,653 $ 167,855 $ 377,917 $ 264,357 activities

SUPPLEMENTAL SCHEDULESUNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES (IN THOUSANDS)

Three months ended Twelve months ended December 31, December 31, 2020 2019 2020 2019 Reconciliation of CashFlows Provided by Operating Activitiesto Free Cash Flow:Cash flows provided by $ 208,416 $ 222,895 $ 569,873 $ 630,865 operating activitiesChanges in operating (26,637 ) (42,893 ) (22,369 ) 15,523 assets and liabilitiesTotal capital (17,639 ) (43,276 ) (62,272 ) (140,956 )expendituresPreferred stock (92 ) (92 ) (365 ) (365 )dividendsImpact of ASC 842adoption (lease ? 865 ? 3,894 accounting standard)Capitalized contract (649 ) 798 387 (9,186 )fulfillment costs, netOther (3,287 ) (3,001 ) (12,729 ) (10,608 )Free cash flow $ 160,112 $ 135,296 $ 472,525 $ 489,167 Reconciliation of NetIncome to Adjusted EBITDA:Net income $ 108,706 $ 102,753 $ 243,386 $ 372,111 Loss on extinguishment ? ? 25,235 ? of debtInterest income (180 ) (211 ) (797 ) (764 )Interest expense 30,565 36,376 137,623 150,616 Income tax expense 2,140 2,492 4,660 (4,222 )(benefit)Operating income 141,231 141,410 410,107 517,741 Stock-based 7,726 11,569 18,772 29,647 compensationImpact of ASC 842adoption (lease ? 865 ? 3,894 accounting standard)Capitalized contract (649 ) 798 387 (9,186 )fulfillment costs, netDepreciation and 63,748 62,878 251,296 250,028 amortizationGain on disposition of (4,203 ) (1,881 ) (9,026 ) (7,241 )assetsAdjusted EBITDA $ 207,853 $ 215,639 $ 671,536 $ 784,883 Capital expenditure detail by category:Billboards - $ 2,430 $ 13,607 $ 11,131 $ 48,194 traditionalBillboards - digital 3,196 17,021 22,618 57,519 Logo 7,710 3,609 13,108 10,762 Transit 540 15 3,212 2,308 Land and buildings 2,835 6,939 6,303 13,453 Operating equipment 928 2,085 5,900 8,720 Total capital $ 17,639 $ 43,276 $ 62,272 $ 140,956 expenditures

SUPPLEMENTAL SCHEDULESUNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES (IN THOUSANDS)

Three months ended Twelve months ended December 31, December 31, 2020 2019 % 2020 2019 % Change ChangeReconciliation ofReported Basis to Acquisition-AdjustedResults ^(a):Net revenue $ 428,525 $ 462,659 (7.4 ) $ 1,568,856 $ 1,753,644 (10.5 ) % %Acquisitions and ? (3,077 ) ? 6,438 divestituresAcquisition-adjusted $ 428,525 $ 459,582 (6.8 ) $ 1,568,856 $ 1,760,082 (10.9 )net revenue % % Reported direct ) )advertising and G&A $ 204,942 $ 229,820 (10.8 % $ 832,419 $ 903,173 (7.8 %expenses ^(b)Acquisitions and ? (1,330 ) ? 7,210 divestituresAcquisition-adjusted ) )direct advertising $ 204,942 $ 228,490 (10.3 % $ 832,419 $ 910,383 (8.6 %and G&A expenses Outdoor operating $ 223,583 $ 232,839 (4.0 ) $ 736,437 $ 850,471 (13.4 )income % %Acquisitions and ? (1,747 ) ? (772 ) divestituresAcquisition-adjusted ) )outdoor operating $ 223,583 $ 231,092 (3.2 % $ 736,437 $ 849,699 (13.3 %income Reported corporate $ 15,730 $ 17,200 (8.5 ) $ 64,901 $ 65,588 (1.0 )expenses^(b) % %Acquisitions and ? ? ? ? divestituresAcquisition-adjusted $ 15,730 $ 17,200 (8.5 ) $ 64,901 $ 65,588 (1.0 )corporate expenses % % Adjusted EBITDA $ 207,853 $ 215,639 (3.6 ) $ 671,536 $ 784,883 (14.4 ) % %Acquisitions and ? (1,747 ) ? (772 ) divestituresAcquisition-adjusted $ 207,853 $ 213,892 (2.8 ) $ 671,536 $ 784,111 (14.4 )EBITDA % %

(a) Acquisition-adjusted net revenue, direct advertising and general and administrative expenses, outdoor operating income, corporate expenses and EBITDA include adjustments to 2019 for acquisitions and divestitures for the same time frame as actually owned in 2020.

(b) Does not include (income) expense of $(649) and $387 for the three and twelve months ended December 31, 2020 and $1,663 and $(5,292) for the three and twelve months ended December 31, 2019, respectively, related to the impact of ASC 842 for lease accounting and capitalization contract fulfillment costs, net.



Three months ended Twelve months ended December 31, December 31, 2020 2019 % 2020 2019 % Change ChangeReconciliationof Net Incometo Outdoor OperatingIncome:Net income $ 108,706 $ 102,753 5.8 % $ 243,386 $ 372,111 (34.6 ) %Loss onextinguishment ? ? 25,235 ? of debtInterest 30,385 36,165 136,826 149,852 expense, netIncome taxexpense 2,140 2,492 4,660 (4,222 ) (benefit)Operating 141,231 141,410 (0.1 ) 410,107 517,741 (20.8 )income % %Corporate 15,730 17,200 64,901 65,588 expensesStock-based 7,726 11,569 18,772 29,647 compensationImpact of ASC842 adoption(lease ? 865 ? 3,894 accountingstandard)Capitalizedcontract (649 ) 798 387 (9,186 ) fulfillmentcosts, netDepreciationand 63,748 62,878 251,296 250,028 amortizationGain ondisposition of (4,203 ) (1,881 ) (9,026 ) (7,241 ) assetsOutdoor ) )operating $ 223,583 $ 232,839 (4.0 % $ 736,437 $ 850,471 (13.4 %income

SUPPLEMENTAL SCHEDULESUNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES (IN THOUSANDS)

Three months ended Twelve months ended December 31, December 31, 2020 2019 % 2020 2019 % Change ChangeReconciliation ofTotal OperatingExpense to Acquisition-AdjustedConsolidatedExpense:Total operating $ 287,294 $ 321,249 (10.6 ) $ 1,158,749 $ 1,235,903 (6.2 )expense % %Gain on disposition 4,203 1,881 9,026 7,241 of assetsDepreciation and (63,748 ) (62,878 ) (251,296 ) (250,028 ) amortizationImpact of ASC 842adoption (lease ? (865 ) ? (3,894 ) accounting standard)Capitalized contractfulfillment costs, 649 (798 ) (387 ) 9,186 netStock-based (7,726 ) (11,569 ) (18,772 ) (29,647 ) compensationAcquisitions and ? (1,330 ) ? 7,210 divestituresAcquisition-adjusted $ 220,672 $ 245,690 (10.2 ) $ 897,320 $ 975,971 (8.1 )consolidated expense % %

SUPPLEMENTAL SCHEDULESUNAUDITED REIT MEASURESAND RECONCILIATIONS TO GAAP MEASURES(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Three months ended Twelve months ended December 31, December 31, 2020 2019 2020 2019 Adjusted Funds From Operations:Net income $ 108,706 $ 102,753 $ 243,386 $ 372,111 Depreciation andamortization related to 60,048 59,882 238,932 235,802 real estateGain from disposition of (1,368 ) (1,727 ) (5,790 ) (6,775 )real estate assetsNon-cash tax benefit for ? ? ? (17,031 )REIT converted assetsAdjustment forunconsolidated 173 210 629 771 affiliates andnon-controlling interestFunds from operations $ 167,559 $ 161,118 $ 477,157 $ 584,878 Straight-line expense 982 (144 ) 3,597 (361 )(income)Impact of ASC 842adoption (lease ? 865 ? 3,894 accounting standard)Capitalized contract (649 ) 798 387 (9,186 )fulfillment costs, netStock-based compensation 7,726 11,569 18,772 29,647 expenseNon-cash portion of tax 1,073 329 (797 ) 2,901 provisionGain from the one-timesale of non-real estate (3,197 ) ? (3,197 ) ? assetsNon-real estate relateddepreciation and 3,700 2,996 12,364 14,226 amortizationAmortization of deferred 1,442 1,353 5,909 5,365 financing costsLoss on extinguishment ? ? 25,235 ? of debtCapitalized (6,412 ) (13,267 ) (24,028 ) (49,155 )expenditures?maintenanceAdjustment forunconsolidated (173 ) (210 ) (629 ) (771 )affiliates andnon-controlling interestAdjusted funds from $ 172,051 $ 165,407 $ 514,770 $ 581,438 operations Divided by weightedaverage diluted common 100,884,464 100,672,782 100,902,700 100,320,574 shares outstandingDiluted AFFO per share $ 1.71 $ 1.64 $ 5.10 $ 5.80

SUPPLEMENTAL SCHEDULESAND UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Projected 2021 Adjusted Funds From Operations:

Year ended December 31, 2021 Low High Net income $ 280,900 $ 307,400 Depreciation and amortization related to 236,000 236,000 real estateGain from disposition of real estate assets (6,000 ) (6,000 )and investmentsAdjustment for unconsolidated affiliates 700 700 and non-controlling interestFunds From Operations $ 511,600 $ 538,100 Straight-line expense 3,500 3,500 Capitalized contract fulfillment costs, net ? (500 )Stock-based compensation expense 30,000 35,000 Non-cash portion of tax provision 750 750 Non-real estate related depreciation and 12,000 12,000 amortizationAmortization of deferred financing costs 6,000 6,000 Loss on extinguishment of debt 21,600 21,600 Capitalized expenditures?maintenance (55,000 ) (55,000 )Adjustment for unconsolidated affiliates (700 ) (700 )and non-controlling interestAdjusted Funds From Operations $ 529,750 $ 560,750 Weighted average diluted shares outstanding 101,900,000 101,900,000 Diluted earnings per share $ 2.76 $ 3.02 Diluted AFFO per share $ 5.20 $ 5.50

The guidance provided above is based on a number of assumptions that management believes to be reasonable and reflects our expectations as of February 2021. Actual results may differ materially from these estimates as a result of various factors, and we refer to the cautionary language regarding forward-looking statements included in the press release when considering this information.