GlobeNewswire Inc | Aug 6, 2020 06:00AM EDT

August 06, 2020

Three Month Results

-- Net revenue was $347.7 million -- Net income was $31.4 million -- Adjusted EBITDA was $133.2 million

Six Month Results

-- Net revenue was $754.2 million -- Net income was $71.9 million -- Adjusted EBITDA was $293.0 million

BATON ROUGE, La., Aug. 06, 2020 (GLOBE NEWSWIRE) -- Lamar Advertising Company (Nasdaq: LAMR), a leading owner and operator of outdoor advertising and logo sign displays, announces the Companys operating results for the second quarter ended June 30, 2020.

As we anticipated, business picked up during the quarter as stay-at-home orders were lifted, drivers hit the roads and many businesses reopened. As we put concerns about the size of the OOH audience in the rear-view mirror, our customers began to spend again. This recovery in contract activity continued into the third quarter, and although the second surge of COVID-19 cases has taken a little wind out of our sails, we remain cautiously optimistic about the revenue outlook for the balance of 2020," said CEO Sean Reilly. "On the expense side, we are seeing the benefits of our efforts to contain costs and adjust our operations to the current environment."

Second Quarter Highlights

-- Total operating expenses decreased 7.7% -- Acquisition-adjusted consolidated expenses decreased 12.2% -- Total liquidity increased to $1.1 billion

Second Quarter Results

Lamar reported net revenues of $347.7 million for the second quarter of 2020 versus $448.7 million for the second quarter of 2019, a 22.5% decrease. Operating income for the second quarter of 2020 decreased $77.7 million to $66.5 million as compared to $144.1 million for the same period in 2019. Lamar recognized net income of $31.4 million for the second quarter of 2020 as compared to net income of $118.4 million for same period in 2019, a decrease of $87.0 million. Net income per diluted share was $0.31 and $1.18 for the three months ended June 30, 2020 and 2019, respectively.

Adjusted EBITDA for the second quarter of 2020 was $133.2 million versus $207.9 million for the second quarter of 2019, a decrease of 35.9%.

Cash flow provided by operating activities was $147.7 million for the three months ended June 30, 2020, a decrease of $28.6 million as compared to the same period in 2019. Free cash flow for the second quarter of 2020 was $88.1 million as compared to $133.0 million for the same period in 2019, a 33.7% decrease.

For the second quarter of 2020, funds from operations, or FFO, was $92.1 million versus $159.3 million for the same period in 2019, a decrease of 42.2%. Adjusted funds from operations, or AFFO, for the second quarter of 2020 was $96.1 million compared to $154.1 million for the same period in 2019, a decrease of 37.7%. Diluted AFFO per share decreased 38.3% to $0.95 for the three months ended June 30, 2020 as compared to $1.54 for the same period in 2019.

Acquisition-Adjusted Three Months Results

Acquisition-adjusted net revenue for the second quarter of 2020 decreased 23.4% as compared to acquisition-adjusted net revenue for the second quarter of 2019. Acquisition-adjusted EBITDA for the second quarter of 2020 decreased 36.4% as compared to acquisition-adjusted EBITDA for the second 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.

Six Months Results

Lamar reported net revenues of $754.2 million for the six months ended June 30, 2020 versus $833.2 million for the same period in 2019, a 9.5% decrease. Operating income for the six months ended June 30, 2020 was $163.0 million as compared to $234.9 million for the same period in 2019. Lamar recognized net income of $71.9 million for the six months ended June 30, 2020 as compared to net income of $169.6 million for the same period in 2019. Net income per diluted share decreased to $0.71 for the six months ended June 30, 2020 as compared to $1.69 for the same period in 2019. In addition, adjusted EBITDA for the six months ended June 30, 2020 was $293.0 million versus $354.1 million for the same period in 2019, a 17.2% decrease.

Cash flow provided by operating activities decreased to $210.7 million for the six months ended June 30, 2020, as compared to $237.0 million in the same period in 2019. Free cash flow for the six months ended June 30, 2020 decreased 14.1% to $185.2 million as compared to $215.6 million for the same period in 2019.

For the six months ended June 30, 2020, FFO was $189.7 million versus $264.3 million for the same period in 2019, a 28.2% decrease. AFFO for the six months ended June 30, 2020 was $209.3 million compared to $253.0 million for the same period in 2019, a 17.3% decrease. Diluted AFFO per share decreased to $2.08 for the six months ended June 30, 2020, as compared to $2.53 in the same period in 2019, a decrease of 17.8%.

Liquidity

As of June 30, 2020, Lamar had $1.1 billion in total liquidity that consisted of $737.2 million available for borrowing under its revolving senior credit facility, $171.8 million available under the Accounts Receivable Securitization Program and approximately $177.1 million in cash and cash equivalents. There were no borrowings outstanding on the Companys revolving credit facility or Accounts Receivable Securitization Program as of June 30, 2020.

Recent Developments and COVID-19 Update

On July 30, 2020, Lamar Media announced its intent to redeem $267.5 million in aggregate principal amount of its outstanding 5% Senior Subordinated Notes due 2023 (the 5% Notes) on August 31, 2020. Following the redemption, $267.5 million of the original $535.0 million in aggregate principal amount of the 5% Notes will remain outstanding under the indenture.

On May13, 2020, Lamar Media issued $400.0million in aggregate principal amount of 4 7/8% Senior Notes due2029. The issuance resulted in net proceeds to Lamar Media of approximately $395.0million. Net proceeds from the issuance, along with cash on hand, were used to pay in full outstanding borrowings under our revolving credit facility. Additionally, during the quarter the Company repaid the remaining outstanding balance on the Accounts Receivable Securitization Program.

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 the following measures to reduce our operating costs and increase our liquidity:

-- issued $400.0 million in 4 7/8% Senior Notes increasing our total liquidity to $1.1 billion as of June 30, 2020; -- amended billboard land lease agreements to reduce fixed lease expenses, which, together with reduced revenue share lease expenses due to declines in revenue, resulted in acquisition-adjusted lease expense savings of $3.7 million for the three months ended June 30, 2020 as compared to the same period in 2019; -- negotiated temporary franchise fee relief from our transit and airport franchise partners. In conjunction with revenue share reductions due to declines in revenue, total franchise fees decreased by $6.5 million during the three months ended June 30, 2020 as compared to the same period in 2019; and -- reduced our workforce by approximately 5% through attrition and selected layoffs.

We will continue to actively monitor the situation and 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.

Revised Guidance

We are revising our 2020 guidance to incorporate the impact of the COVID-19 pandemic on our business. We now expect net income per diluted share for fiscal year 2020 will be between $1.55 and $1.93, with diluted AFFO per share between $4.16 and $4.56. 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. 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. -- 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 revenue 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 Thursday, August 6, 2020 at 8:00 a.m. central time. Instructions for the conference call and Webcast are provided below:

Conference Call

All Callers: 1-334-777-6991Passcode: 65248056 Replay: 1-334-323-0140 or 1-877-919-4059Passcode: 71379105 Available through Wednesday, August 12, 2020 at 11:59 p.m. eastern time Live Webcast: www.lamar.com Webcast www.lamar.comReplay: Available through Wednesday, August 12, 2020 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 approximately 385,000 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 Six months ended June 30, June 30, 2020 2019 2020 2019 Net revenues $ 347,652 $ 448,742 $ 754,221 $ 833,199 Operatingexpenses (income)Directadvertising 133,023 148,990 282,517 293,234 expensesGeneral andadministrative 66,104 75,687 145,612 153,199 expensesCorporate 15,329 16,130 33,079 32,707 expensesStock-based 2,725 5,273 6,162 7,506 compensationImpact of ASC842 adoption(lease ? 1,009 ? 1,930 accountingstandard)Capitalizedcontract 1,036 (3,609 ) 1,036 (8,304 )fulfillmentcosts, netDepreciationand 63,998 61,693 126,311 123,199 amortizationGain ondisposition of (1,015 ) (537 ) (3,519 ) (5,161 )assetsTotaloperating 281,200 304,636 591,198 598,310 expenseOperating 66,452 144,106 163,023 234,889 incomeOther expense (income)Loss onextinguishment 5 ? 18,184 ? of debtInterest (179 ) (232 ) (369 ) (385 )incomeInterest 35,437 38,322 71,990 75,917 expense 35,263 38,090 89,805 75,532 Income beforeincome tax 31,189 106,016 73,218 159,357 (benefit)expenseIncome tax(benefit) (240 ) (12,380 ) 1,296 (10,292 )expenseNet income 31,429 118,396 71,922 169,649 Preferredstock 91 91 182 182 dividendsNet incomeapplicable to $ 31,338 $ 118,305 $ 71,740 $ 169,467 common stockEarnings per share:Basic earnings $ 0.31 $ 1.18 $ 0.71 $ 1.70 per shareDilutedearnings per $ 0.31 $ 1.18 $ 0.71 $ 1.69 shareWeightedaverage common sharesoutstanding:- basic 100,765,681 100,012,827 100,677,510 99,862,452 - diluted 100,861,881 100,222,682 100,818,347 100,058,054 OTHER DATA Free Cash Flow Computation:Adjusted $ 133,196 $ 207,935 $ 293,013 $ 354,059 EBITDAInterest, net (33,758 ) (36,752 ) (68,743 ) (72,862 )Current tax (654 ) (3,533 ) (2,609 ) (4,829 )expensePreferredstock (91 ) (91 ) (182 ) (182 )dividendsTotal capital (10,565 ) (34,609 ) (36,274 ) (60,560 )expendituresFree cash flow $ 88,128 $ 132,950 $ 185,205 $ 215,626

June 30, December31, Selected Balance 2020 2019 Sheet Data:Cash and cash $ 177,093 $ 26,188 equivalentsWorking capital $ 50,375 $ (362,639 )surplus (deficit)Total assets $ 5,981,581 $ 5,941,155 Total debt, net ofdeferred financingcosts (including $ 3,155,899 $ 2,980,118 currentmaturities)Totalstockholders? $ 1,123,371 $ 1,180,306 equity Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 Selected Cash Flow Data:Cash flowsprovided by $ 147,745 $ 176,323 $ 210,677 $ 237,049 operatingactivitiesCash flows used ininvesting $ 22,089 $ 46,070 $ 57,677 $ 137,145 activitiesCash flows used infinancing $ 445,542 $ 145,930 $ 1,903 $ 104,347 activities

SUPPLEMENTAL SCHEDULES UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES (IN THOUSANDS)

Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 Reconciliation of CashFlows Provided by Operating Activities toFree Cash Flow:Cash flows provided by $ 147,745 $ 176,323 $ 210,677 $ 237,049 operating activitiesChanges in operating (44,872 ) (3,819 ) 18,279 50,350 assets and liabilitiesTotal capital (10,565 ) (34,609 ) (36,274 ) (60,560 )expendituresPreferred stock (91 ) (91 ) (182 ) (182 )dividendsImpact of ASC 842adoption (lease ? 1,009 ? 1,930 accounting standard)Capitalized contract 1,036 (3,609 ) 1,036 (8,304 )fulfillment costs, netOther (5,125 ) (2,254 ) (8,331 ) (4,657 )Free cash flow $ 88,128 $ 132,950 $ 185,205 $ 215,626 Reconciliation of NetIncome to Adjusted EBITDA:Net income $ 31,429 $ 118,396 $ 71,922 $ 169,649 Loss on extinguishment 5 ? 18,184 ? of debtInterest income (179 ) (232 ) (369 ) (385 )Interest expense 35,437 38,322 71,990 75,917 Income tax (benefit) (240 ) (12,380 ) 1,296 (10,292 )expenseOperating income 66,452 144,106 163,023 234,889 Stock-based 2,725 5,273 6,162 7,506 compensationImpact of ASC 842adoption (lease ? 1,009 ? 1,930 accounting standard)Capitalized contract 1,036 (3,609 ) 1,036 (8,304 )fulfillment costs, netDepreciation and 63,998 61,693 126,311 123,199 amortizationGain on disposition of (1,015 ) (537 ) (3,519 ) (5,161 )assetsAdjusted EBITDA $ 133,196 $ 207,935 $ 293,013 $ 354,059 Capital expenditure detail by category:Billboards - $ 1,503 $ 13,431 $ 8,023 $ 22,693 traditionalBillboards - digital 5,227 14,418 16,802 26,037 Logo 670 2,492 3,545 3,904 Transit 289 617 1,855 1,796 Land and buildings 1,022 1,208 2,258 1,696 Operating equipment 1,854 2,443 3,791 4,434 Total capital $ 10,565 $ 34,609 $ 36,274 $ 60,560 expenditures

SUPPLEMENTAL SCHEDULES UNAUDITED RECONCILIATIONS OF NON-GAAP MEASURES (IN THOUSANDS)

Three months ended Six months ended June 30, June 30, 2020 2019 % 2020 2019 % Change ChangeReconciliation ofReported Basis to Acquisition-AdjustedResults ^(a):Net revenue $ 347,652 $ 448,742 (22.5 ) $ 754,221 $ 833,199 (9.5 ) % %Acquisitions and ? 5,075 ? 10,209 divestituresAcquisition-adjusted $ 347,652 $ 453,817 (23.4 ) $ 754,221 $ 843,408 (10.6 )net revenue % % Reported direct ) )advertising and G&A $ 199,127 $ 224,677 (11.4 % $ 428,129 $ 446,433 (4.1 %expenses ^(b)Acquisitions and ? 3,469 ? 7,641 divestituresAcquisition-adjusted ) )direct advertising $ 199,127 $ 228,146 (12.7 % $ 428,129 $ 454,074 (5.7 %and G&A expenses Outdoor operating $ 148,525 $ 224,065 (33.7 ) $ 326,092 $ 386,766 (15.7 )income % %Acquisitions and ? 1,606 ? 2,568 divestituresAcquisition-adjusted ) )outdoor operating $ 148,525 $ 225,671 (34.2 % $ 326,092 $ 389,334 (16.2 %income Reported corporate $ 15,329 $ 16,130 (5.0 ) $ 33,079 $ 32,707 1.1 %expenses^(b) %Acquisitions and ? ? ? ? divestituresAcquisition-adjusted $ 15,329 $ 16,130 (5.0 ) $ 33,079 $ 32,707 1.1 %corporate expenses % Adjusted EBITDA $ 133,196 $ 207,935 (35.9 ) $ 293,013 $ 354,059 (17.2 ) % %Acquisitions and ? 1,606 ? 2,568 divestituresAcquisition-adjusted $ 133,196 $ 209,541 (36.4 ) $ 293,013 $ 356,627 (17.8 )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 expenses (income) of $1,036 for the three and six months ended June 30, 2020 and $(2,600) and $(6,374) for the three and six months ended June 30, 2019, respectively, related to the impact of ASC 842 for lease accounting and capitalization contract fulfillment costs, net.

Three months ended Six months ended June 30, June 30, 2020 2019 % 2020 2019 % Change ChangeReconciliationof Net Incometo Outdoor OperatingIncome:Net income $ 31,429 $ 118,396 (73.5 ) $ 71,922 $ 169,649 (57.6 ) % %Loss onextinguishment 5 ? 18,184 ? of debtInterest 35,258 38,090 71,621 75,532 expense, netIncome tax(benefit) (240 ) (12,380 ) 1,296 (10,292 ) expenseOperating 66,452 144,106 (53.9 ) 163,023 234,889 (30.6 )income % %Corporate 15,329 16,130 33,079 32,707 expensesStock-based 2,725 5,273 6,162 7,506 compensationImpact of ASC842 adoption(lease ? 1,009 ? 1,930 accountingstandard)Capitalizedcontract 1,036 (3,609 ) 1,036 (8,304 ) fulfillmentcosts, netDepreciationand 63,998 61,693 126,311 123,199 amortizationGain ondisposition of (1,015 ) (537 ) (3,519 ) (5,161 ) assetsOutdoor ) )operating $ 148,525 $ 224,065 (33.7 % $ 326,092 $ 386,766 (15.7 %income

Three months ended Six months ended June 30, June 30, 2020 2019 % 2020 2019 % Change ChangeReconciliation ofTotal OperatingExpense to Acquisition-AdjustedConsolidated Expense:Total operating $ 281,200 $ 304,636 (7.7 ) $ 591,198 $ 598,310 (1.2 )expense % %Gain on disposition 1,015 537 3,519 5,161 of assetsDepreciation and (63,998 ) (61,693 ) (126,311 ) (123,199 ) amortizationImpact of ASC 842adoption (lease ? (1,009 ) ? (1,930 ) accounting standard)Capitalized contractfulfillment costs, (1,036 ) 3,609 (1,036 ) 8,304 netStock-based (2,725 ) (5,273 ) (6,162 ) (7,506 ) compensationAcquisitions and ? 3,469 ? 7,641 divestituresAcquisition-adjusted $ 214,456 $ 244,276 (12.2 ) $ 461,208 $ 486,781 (5.3 )consolidated expense % %

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

Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 Adjusted Funds From Operations:Net income $ 31,429 $ 118,396 $ 71,922 $ 169,649 Depreciation andamortization related to 61,089 58,178 120,453 116,178 real estateGain from disposition of (555 ) (410 ) (3,098 ) (4,884 )real estate assetsNon-cash tax benefit for ? (17,031 ) ? (17,031 )REIT converted assetsAdjustment forunconsolidated 140 156 389 354 affiliates andnon-controlling interestFunds from operations $ 92,103 $ 159,289 $ 189,666 $ 264,266 Straight-line expense 679 20 1,733 (216 )(income)Impact of ASC 842adoption (lease ? 1,009 ? 1,930 accounting standard)Capitalized contract 1,036 (3,609 ) 1,036 (8,304 )fulfillment costs, netStock-based compensation 2,725 5,273 6,162 7,506 expenseNon-cash portion of tax (894 ) 1,118 (1,313 ) 1,910 provisionNon-real estate relateddepreciation and 2,909 3,515 5,858 7,021 amortizationAmortization of deferred 1,500 1,338 2,878 2,670 financing costsLoss on extinguishment 5 ? 18,184 ? of debtCapitalized (3,863 ) (13,689 ) (14,492 ) (23,396 )expenditures?maintenanceAdjustment forunconsolidated (140 ) (156 ) (389 ) (354 )affiliates andnon-controlling interestAdjusted funds from $ 96,060 $ 154,108 $ 209,323 $ 253,033 operations Divided by weightedaverage diluted common 100,861,881 100,222,082 100,818,347 100,058,054 shares outstandingDiluted AFFO per share $ 0.95 $ 1.54 $ 2.08 $ 2.53

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

Revised projected 2020 Adjusted Funds From Operations:

Year ended December 31, 2020 Low High Net income $ 156,500 $ 194,500 Depreciation and amortization related to 235,600 235,600 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 $ 386,800 $ 424,800 Straight-line expense 3,000 3,000 Capitalized contract fulfillment costs, net 1,000 1,000 Stock-based compensation expense 14,000 16,000 Non-cash portion of tax provision (1,000 ) (1,000 )Non-real estate related depreciation and 12,400 12,400 amortizationAmortization of deferred financing costs 6,150 6,150 Loss on extinguishment of debt 22,500 22,500 Capitalized expenditures?maintenance (24,000 ) (24,000 )Adjustment for unconsolidated affiliates (700 ) (700 )and non-controlling interestAdjusted Funds From Operations $ 420,150 $ 460,150 Weighted average diluted shares outstanding 100,900,000 100,900,000 Diluted earnings per share $ 1.55 $ 1.93 Diluted AFFO per share $ 4.16 $ 4.56

The guidance provided above is based on a number of assumptions that management believes to be reasonable and reflects our expectations as of August 2020. 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.