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Executives

Kevin P. Reilly - Chairman, President, Chairman of Lamar Media Corporation, Chief Executive Officer of Lamar Media Corporation and President of Lamar Media Corporation

Keith A. Istre - Chief Financial Officer, Principal Accounting Officer and Treasurer

Sean E. Reilly - Chief Executive Officer

Analysts

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

James Dix - Wedbush Securities Inc., Research Division

Jaime Morris - UBS Investment Bank, Research Division

Nadia Lovell - JP Morgan Chase & Co, Research Division

Jason B. Bazinet - Citigroup Inc, Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

David W. Miller - Caris & Company, Inc., Research Division

Douglas M. Arthur - Evercore Partners Inc., Research Division

Bishop Cheen - Wells Fargo Securities, LLC, Research Division

Lamar Advertising (LAMR) Q1 2012 Earnings Call May 3, 2012 3:00 PM ET

Operator

Excuse me, everyone, we now have Kevin Reilly, Sean Reilly and Keith Istre in conference. [Operator Instructions] In the course of this discussion, Lamar may make forward-looking statements regarding the company, including statements about its future financial performance, strategic goals and plans.

Lamar has identified important factors that could cause actual results to differ materially from those discussed in this call and the company's reports on Forms 10-K and 10-Q and the registration statements that Lamar files with the SEC from time to time. Lamar refers you to those documents.

Lamar's first quarter 2012 earnings release, which contains the information required by Regulation G, was furnished to the SEC on a Form 8-K this morning and is available on Lamar's website, www.lamar.com.

I would now like to turn the conference over to Kevin Reilly. Mr. Reilly, you may begin.

Kevin P. Reilly

Kerry, thank you. I want to welcome all of our analysts, shareholders and friends to our Q1 call. We're pleased with our Q1 performance. And as we look at the entire year, even though the month-to-month is a little choppy, and Sean will address that, we feel like our book is shaping up quite well and that all of our shareholders will be pleased with our top line growth. Throughout the rest of this year, we will continue to invest in our digital platform and we expect to achieve the CapEx full year guidance that we've -- gave on our last call. And we will also continue to repay debt. Our leverage at year end will, in all likelihood, be below 4x.

And with that, I'd like to call -- turn the call over to Keith Istre to walk us through the numbers.

Keith A. Istre

Thanks, Kevin. Just to highlight a couple of the metrics for the first quarter results. On the revenue side, as you know, we guided to revenue pro forma growth of up 3% for the quarter and we came in slightly better than that at up 4%. National and local both added to that result. They were both up in the mid-single digits. Again, Sean will address that later on.

We did guide to revenue growth of up 3% for the second quarter, a little bit less than Q1. And just to reiterate our position on guidance, we always give the market the best guidance that we have at the moment, that we do this call. We've exceeded our guidance over the past few quarters. And we've been cautious in giving out guidance because since the second quarter of last year, our quarters, on a monthly basis, have been -- have shown peaks and valleys in the growth. In years past, in normal times, if we posted a 7% top line growth, it was pretty much 7% each month during the quarter. And we're just -- we're seeing more volatility since Q2 of last year, so we are intentionally trying to be cautious, not to misguide anyone in a positive or in a negative sort of way.

To touch on the expenses real quick. I had mentioned on the last call that for the first quarter, I thought we'd be up about 5% in expense growth on a consolidated basis. We came in a little better than that at 3.5%. There were 2 categories that really contributed to that performance: number one, our lease expense on the billboard side was approximately $1 million for the quarter, less than what we had projected. Our guys are still managing that lease portfolios. We started that back at the end of '08 and they continue to groom that. We dismantled 700 structures in the first quarter that didn't meet profitability hurdles and that contributed to the reduction in that lease cost.

Also the bad debt expense category was about $0.5 million less than we were expecting, which I think is just a sign that the economy continues to improve and our customers are in pretty good shape.

For the year, we still stand by our expense growth guidance from the last call of approximately 3%. And in Q2, we think that the expense growth will be somewhere in the 4% range for the quarter, which was what we expected. It's not that it's an increase -- an unexpected increase over the second quarter. When I told you that the expense growth would be approximately 3% for the year, we were expecting roughly 5% for the first quarter, 4% for the second and then low second digits in the back half.

So with that, Sean?

Sean E. Reilly

Thank you, Keith, and I want to thank everybody for accommodating our later-than-usual call time. We all -- we're flying back from the OAAA convention this morning, and it was a great convention. There's some solid industry initiatives going on and it was an exciting place to be, and you could feel the energy in the room.

Let me go over the typical stats that we give you, and then as Keith alluded to, I'll talk a little bit to the guidance.

So digital. Number of units, as of today, we have 1,478 units in the air. That would be 789 bulletins and 689 posters. The digital platform continues to perform extremely well. Our digital book of business was up 20% in Q1. And as Kevin alluded to, we expect to have this year look about like last year by the time it's finished in terms of our digital CapEx and our overall CapEx.

Rate and occupancy. Occupancy for posters was up 3% for the quarter, and occupancy for bulletins was up 3% in the quarter. So Q1 '12 for posters, 61% occupancy versus 58% last year. Q1 '12 occupancy for bulletins, 74% versus 71% last year. The rate story is a little different, essentially flat. Q1 '12, $415 average rate per panel for posters, which was exactly the same as Q1 of last year. For bulletins, Q1 '12, $1,083 per panel average rate versus $1,095 average rate Q1 of last year.

National versus local sales were essentially 75/25, same as Q1 of last year in terms of local national. As Keith mentioned, local was up 4.1% for the quarter and national was up 5.2%.

On categories of business. Retail was very strong in the first quarter, up 16%. Hospitals and health care was up 11%. Amusement, entertainment and sports was up 6.5%. Gambling was up 6.5%. So those are the up highlights.

Automotive was a little disappointing at only up 1% and we certainly would like to see that do a little better as the year progresses. Telecom was a disappointment in Q1 as it was down 10%.

And as Keith alluded to, we've seen a phenomenon in our book since the second quarter of last year that's a little unusual, and that's the monthly volatility as the quarter comes together. I mean, there's a couple of ways to get to up 4%. You can string together months that look like 3.5% and 4.5% or you can string together months that look like 6% and 2% or 7% and 1%. And since the second quarter of last year, that volatility has kicked in and it looks more like number two. And as Keith mentioned, this is causing us to err on the side of caution. We're not trying to game our guidance. We're just trying to read the tea leaves as carefully as we can.

One question you might have is why is this happening, and we can probably trace it back to 2 factors. The economic uncertainty that we've been living with is causing our customers to commit later and buy shorter, and of course our digital platform allows them to do this. And number two, again, since the second quarter of last year, we've seen a lot more volatility, monthly volatility, in the national book of business. So those 2 factors are probably what's contributing to the phenomenon.

So with that, happy to open it up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Marci Ryvicker from Wells Fargo.

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

Two questions. Kevin, at the beginning of the call, you mentioned that shareholders will be pleased with growth for the full year, so I don't know if you can just give us a little bit of color. Are you thinking that the core business is going to accelerate post the second quarter. And also with regards to digital, what you're thinking about there either. If you can give us a number of boards, maybe Sean that you're thinking of putting up now that we're in or past the first quarter, that would be great. And then, the second question would be your rate was flat and occupancy is higher. So are you giving up rate to get occupancy? That's the question we've gotten from investors.

Kevin P. Reilly

I'll take your first question and I'll let Sean answer the rest. The point in my comment was to highlight the fact that even though we're seeing volatility in our book from month-to-month and that our -- even though our guidance for Q2 suggests a decelerization in our top line business, we don't feel that way. And we feel that as the year progresses, provided that we get a little help from the macro elements that are out there, that our shareholders are going to be very pleased with the top line growth. So it's -- we're not pounding the table because we don't have that level buildup in the book that gives us the kind of confidence that we used to have in years back. Because we could see it -- we could see the trend and there was never any volatility in those trends. Our position now is that in spite of the volatility that we're seeing month-to-month, we are still very optimistic that our book is going to build throughout the rest of the year.

Sean E. Reilly

Yes, Marci, as I alluded to, I think at the end of the year, we'll be roughly the same number of digital units that we put up last year. And that seems to be where the field is shaking out, so I feel good about that. I certainly feel good about the way the platform's performing. And even in choppy times, it's doing quite well. So that's -- that gives us a little bit of confidence going forward.

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

Okay, and then just the rate versus occupancy. It's kind of like a chicken and egg, but [indiscernible].

Sean E. Reilly

Yes, we're certainly not purposely not going after rate. As you may know, traditionally, when we're going through a downturn, we traditionally try to hold rate and suffer on occupancy because occupancy comes back faster. I think we would all agree that this particular recovery has come with its challenges, and we're probably not back to an environment where we can drive rate for a couple of reasons: number one, we haven't quite reached normalized occupancy; and number two, when you're living in a world of 0 interest rates, little inflation, it's just real hard to have "pound the table" rate discussion with your customers. So until we get a little inflation back into this economy and get a little more growth, more robust growth, back into the economy, it's tough to have those real rate discussions with our good customers.

Kevin P. Reilly

But having said that, we've got plenty of capacity. And even if rates were flat and if we can move that capacity, we can deliver the type of top line growth that our shareholders expect.

Operator

Our next question comes from James Dix from Wedbush.

James Dix - Wedbush Securities Inc., Research Division

A couple questions. I guess just going back, Keith, maybe to your book, what's the highest growth month you've seen since kind of you saw this change in the consistency of core -- of months in the second quarter of last year? And...

Sean E. Reilly

Yes, I'll take that. We don't like to go month-by-month-by-month, right, so I don't want to just retrace the quarter. But we've seen some up 7 and up 1s. And -- right, you know what I mean? And everything in between.

James Dix - Wedbush Securities Inc., Research Division

Yes, that's helpful. And then on the display side, what was your same display growth for digital in the first quarter? And then if you stripped out digitals, what would your analog business have grown on a pro forma basis in the quarter? And then I just have one follow-up.

Sean E. Reilly

Sure. The vast majority will be up 20% with added capacity. So it'd probably break out in the neighborhood of 17% being the added capacity and the 3% being same board on the digital side. And on the traditional side, it was up approximately 2%. So yes, the up 4%, 20% was driven by digital and 2% was driven by traditional platform.

James Dix - Wedbush Securities Inc., Research Division

Okay. And then my follow-up is just do you have any insight into technology challenges or threats to the business? I know they come up periodically with investors about whether you think that local platforms like Groupon are having any impact or whether mobile is having an impact. I know in the past, you've given some color on why you thought hotel/motel hasn't come back maybe quite as much in your book as you would have expected. Just any color that you have on the trends you're seeing in terms of technology and its impact on billboard share of the overall ad budget.

Sean E. Reilly

Sure. I mean, if you step back and look at it from 50,000 feet against all media and look back to last year, you'll see that essentially -- and continuing into this year that outdoor's in #3 -- in third place behind the Internet and television. And then every other in media that you could pick through is some place behind that. So in general, we're holding our own. Now drilling down a little bit on things like social media, our folks in the field aren't afraid of any of them. And clearly, Groupon is not really doing anything or having any impact on us. We're actually selling in a complementary way to other forms of social media. We try to extend what our customers are doing in Facebook and Twitter. And if you look at our digital book of business, ad spend that is connected to a social media effort is up tremendously. So that's actually getting through to the greater advertising universe and we're pretty pleased with that, and we're coaching our AEs to play on that theme. So in other words, we're not going in and saying do this instead of what you're doing in social media, but do it by us to extend and complement what you're doing with social media. And that sales pitch is catching on. Now, sort of, regarding mobile and secular trends, I continue to believe that hotel/motel is going to be a challenge for us because of what they're doing in the mobile world. I'm not seeing that in any other of the verticals in terms of the mobile world. In fact, just the contrary. If you look at restaurants, for example, we're having great campaigns with restaurants and they're up in our book. So that story kind of remains the same, I guess, James. I will say one thing. In Q1 of 2009, hotel/motel was 6% of our book. Q1 of '10, it went to 5%. Q1 of '11, it went to 4%. So you're trending down, right, 1 point a year. Q1 of '12, it was still at 4%. So we have reason to believe that maybe that's stabilizing and it's primarily because that category of business is using us like other businesses. They're using us for brand. They're using us for differentiation. They're not just using us for directional. So there's reason to be a little optimistic about what's going on in the hotel/motel book.

Operator

Our next question comes from Jaime Morris from UBS.

Jaime Morris - UBS Investment Bank, Research Division

I just wanted to ask a quick question on the CapEx side. I know you said that the guidance was for flattish CapEx year-over-year, but 1Q was down pretty significantly from a year ago and specifically on the traditional billboard side. And I just wanted to try and get an understanding of whether you think that $5 million run rate is sustainable.

Sean E. Reilly

I think at the end of the day, Jamie, we end up in the same place. I mean the field hasn't come to me and said, it looks like we're not going to spend what we thought. I just haven't heard that yet. So it could just be timing issues.

Jaime Morris - UBS Investment Bank, Research Division

Okay. And any change in the cost of a digital board that you could point out from this year versus last year? I mean I know pricing has come down. But have we stabilized at this point or are prices continue to come down?

Sean E. Reilly

It's been pretty stable. I mean we have a lot of good, most favored nation pricing agreements with our vendors on that side. And they run a lot of costs out. And so I'm not looking for dramatic improvements on that front unless there's some sort of new technology that comes down the pipe.

Operator

Our next question comes from Nadia Lovell from JPMorgan.

Nadia Lovell - JP Morgan Chase & Co, Research Division

I just have a few. I was hoping that if you can give some color on geographical regional performance?

Sean E. Reilly

It's been the same. It's been the same answer every quarter, essentially, with the possible exception that maybe there's a little more light in the Southeast, in places like Florida and Georgia than has been the case in the past, but you're still looking at pretty tough economies in places like Las Vegas and Southern California.

Nadia Lovell - JP Morgan Chase & Co, Research Division

Okay. And then national outperformed local despite a slightly a tougher comp. I think national last year quarter was up 9% and local was up 3%. Can you give us some color on that and what's driving that? Is it mostly coming from digital? What's the breakout for digital?

Sean E. Reilly

Are you talking about local national?

Nadia Lovell - JP Morgan Chase & Co, Research Division

Exactly, yes. The comp was much tougher for national in the quarter. National was up plus 9% last year. But yet it still outperformed.

Sean E. Reilly

Sure. On the digital side, we're seeing a lot of good national buys, particularly in the entertainment space and it is growing faster in our digital book, national that is, is growing faster in our digital book than it is in our regular book. So it's clear to me that our investments there in a broad platform is paying off and we're going to continue to. On the local side, really just 2 comments. You got a little less volatility in the book, as I mentioned. It seems to be building a little more steadily, if you will. And the -- I think that fare -- that bodes well for us.

Operator

Our next question comes from Jason Bazinet from Citi.

Jason B. Bazinet - Citigroup Inc, Research Division

I just had 3 quick questions, if you don't mind. You mentioned, and my models sort of have the same thing, we sort of get down to that sort of 4x leverage as you get towards the end of '12. And I just can't figure out to do with my model as I move to '13, if I should I be sort of holding that leverage constant? You guys sort of say, well, 4x is the right amount of leverage given everything we know about economy and our business or whether I should sort of keep delevering. That's my first question. Just any comments on that. And then my second question is I get these e-mails from Thomson Reuters and all that telling me that my estimates are so crazy on earnings. I don't think you're an earnings story, but I keep defending my earnings estimates, but I think it's because I got D&A going down dramatically, and I don't know if I'm crazy or not. But if you can just sort of comment on the likely trajectory of D&A.

Kevin P. Reilly

Let Keith do this.

Sean E. Reilly

Keith, you do the D&A and I'll do the leverage.

Keith A. Istre

Okay. On the D&A, I mean we're going to be all at a run rate of -- in the neighborhood of $300 million for this year and maybe a little less than that. But, yes, D&A is going to be rolling off. We did a roughly $2 billion in acquisitions in '99 and then another $1 billion over 2000 -- over the period 2000 to 2007, '06 or '07, whatever. So that stuff is generally written off over 15 years. So a lot of that will be trailing off, which is why that we've alerted the market that in 2015, we can probably be a federal taxpayer at that time. D&A will still be significant, but it won't be if our EBITDA projections are correct as far as the growth enough to shelter it all as it has in the past.

Jason B. Bazinet - Citigroup Inc, Research Division

What's the -- do you mind just giving a ballpark number for the '15 D&A just so I can make sure or not, off the top of...

Keith A. Istre

You're probably looking at about $0.25 billion -- $225 million to $0.25 billion.

Sean E. Reilly

So here's how I think you ought to think about the leverage. I don't think you ought to have a target ratio because we're not thinking about it that way. The way we're thinking about it is what are the piece parts of our balance sheet where we can reduce our cost of capital. And if you look at it, we did a great -- we did a great high-yield issue, first quarter. It was a fantastic execution. And where the use of proceeds was to tender for the 6 5/8% bonds. And we didn't get them all in. We got in all at about, what, Keith, $260 million, something like that? So probably, the wisest thing for us to do is when the call premium drops in August, use our free cash flow and revolver to go ahead and call the rest of those in, all right? And you can just sort of anticipate the effect of that, and given our CapEx, we're probably going to have a net delevering of that in the neighborhood of $250 million to $275 million, all right? So that's this year. What does '13 look like? Well, we've got the senior secureds that aren't callable until the fourth quarter of '13.

Keith A. Istre

First quarter of '14.

Sean E. Reilly

No, no, no. December '14, right? December '13.

Keith A. Istre

Senior.

Sean E. Reilly

The senior secured.

Keith A. Istre

$250 million.

Sean E. Reilly

Yes.

Keith A. Istre

The once we issued in '09?

Sean E. Reilly

Yes, we are going to...

Keith A. Istre

It's April '14.

Sean E. Reilly

Yes, but we can take them out in December, right?

Keith A. Istre

Yes, we can take them out.

Sean E. Reilly

Yes, so I'm just trying to chronicle it for you, right? So we can take them out in December, right? And that would probably be a wise thing to do. It's an expensive piece of paper. So we would save our free cash flow and use the revolver toward that end next year. That's sort of a prudent thing to do.

Operator

Our next question comes from Ben Swinburne from Morgan Stanley.

Benjamin Swinburne - Morgan Stanley, Research Division

I know you guys are trying to be conservative with your guidance. And at the same time, I think you sound like you may be seeing some, dare I say, green shoots in the economy because you've talked pretty bullish about the year. Can you say anything about April? Is April above the 3% range that you guided to for the quarter so you've baked in some of that natural volatility that you've talked about? I mean not natural -- unnatural volatility you've seen over the last couple of years?

Sean E. Reilly

We hate to do that, break it out by month. It just kind of -- everybody starts speculating and reaching wrong conclusions.

Kevin P. Reilly

The whole point of dealing with this volatility is to expand our time frame, so that people look at this in a rational way. The more you compress your time frame, the less visibility you have and the more chaotic the book looks. The greater the time frame, the more normalized the book looks.

Benjamin Swinburne - Morgan Stanley, Research Division

And you gave some explanation about why the volatility has come in. You talked about economic uncertainty and you talked about national being volatile. And I thought that was interesting because I would have guessed that national advertising, in general, has been less volatile than local, and you guys feel free to disagree with that. But I just was curious if you had a theory as to why national was particularly volatile for you guys. I mean it's just a law of small numbers -- smaller numbers and something along those lines. But...

Sean E. Reilly

Sure, yes. It could be the law of smaller numbers, but let me go back a decade. For most of the existence of U.S. ad spend, it's actually been the case that national is -- has higher beta than local. And you can kind of go back and see that through the decade. Through this recovery, the opposite has been true. For most of the recovery from the depths of '09, national has been stronger and steadier. We saw that change again about halfway through last year. And if you go back and look at our third quarter call and fourth quarter call, we kind of signaled that, that local was firming and performing a little better. I don't have a reason for the volatility in the national book. I just know it's there. And so hopefully, we can get both of them to a place where confidence lends itself to stability and lends itself to more predictable and stronger growth.

Benjamin Swinburne - Morgan Stanley, Research Division

I know you had called out, I think, telecom last year, I think, good and bad and maybe that had to do with AT&T T-Mobile merger. Is that part of what continues to be -- you mentioned telecom was down this quarter, I don't know if that was the...

Sean E. Reilly

Yes, it was a disappointment in the first. We do have reason to believe that Q3, just given again what my Head of National Sales, John Miller tells me. There just seems to be a lot of chatter and activity that suggests that for AT&T and Verizon that Q3 is going to be a pretty good number quarter for them.

Kevin P. Reilly

It's all about 4G and bars on your phone.

Benjamin Swinburne - Morgan Stanley, Research Division

There you go. And then if I can just ask one last one since you guys did just come from the conference. Is there anything you'd sort of call out to us as being particularly exciting from either a technology perspective or any sort of things that you think we should be keeping our eyes on in the industry that might be important in the next couple of years?

Sean E. Reilly

Well, a part of it is about the whole industry looking in the mirror and making itself more customer friendly, more -- or should I say easier to buy, easier to plan and bring the promise of measurement to a reality. And there was a lot of buzz around that in the -- at the conference. The buzzword was repositioning the industry. And we're doing it around the lexicon we use, how we talk about measurement. We want to talk about it in a way that's more like other media. We are striving to perform better in the field such that categories that don't use us will feel more comfortable using us. For example, for our traditional 30 sheets, we pretty much insist on a monthly contract. There are categories of customers that would use us if we could commit to shorter flights and guaranteed postings on the start date of a contract. That's a little bit of inside tool. But at the end of the day, those are performance standards in the field that we won't guarantee today across the whole country and we're going to try to, as an industry, get ourselves to that place.

Operator

Our next question comes from David Miller from Caris & Company.

David W. Miller - Caris & Company, Inc., Research Division

So with your stock down 8.6% right now, I think what investors on this call are sort of scratching their heads over is I mean you had some very positive comments issued by Les Moonves at CBS earlier this week at which he talked about local really kind of humming along, doing really well, local businesses wanting to advertise more of local leads, the rest of country out of a recession, so on and so forth. And also your -- I believe you guys have a very easy comparison from last year due to the wet weather that you experienced in the South, particularly in the South there in April of last year because you couldn't put up any digital boards due to the weather. And then also you guys got really killed by the Alabama tornadoes. So you have a very easy comparison here and you have local, at least per the commentary out of CBS, really showing signs of life. I guess folks are just sort of scratching their heads at the level of conservatism in the guidance. And I hate to beat a dead horse here, but I'm just wondering if you could comment in light of what I just mentioned.

Kevin P. Reilly

Our guidance and our performance speaks for itself and you can compare it to CBS, their guidance and their performance.

David W. Miller - Caris & Company, Inc., Research Division

Right. But you guys do have an easy comparison yielded from last year's results, do you not, because of the weather issues that you talked about last year?

Kevin P. Reilly

You're always going to have, from quarter-to-quarter, easier comps and tougher comps. And again, our guidance speaks for itself and it's one quarter in a lifetime.

Operator

Our next question comes from Doug Arthur from Evercore.

Douglas M. Arthur - Evercore Partners Inc., Research Division

Two questions. I'm wondering if you can amplify a little bit on auto in the first quarter. And listening to a lot of local media companies in the first quarter, auto was very choppy. And although a number of people have suggested that post-tsunami anniversary, business has picked up. So I'm wondering how you see that playing out and what were some of the causes of the weakness in Q1. And then secondly, in terms of the takedown on, I think you said, 700 structures, is that kind of something we should expect for the rest of the year? Or is that just going to be more on a one-off basis?

Kevin P. Reilly

Sure. Let me answer the second question first. Back in August, the world looked a little dire and not just Lamar's world, but people were talking about double dips and we wanted to put in place a game plan in case the economy turned and things got harsher. And so I asked our guys to come up with 2 approaches to the real estate portfolio. One that was sort of a common sense pruning where they would attack the portfolio with a scalpel. And the other was a Plan B in case the world got really tough and we had to do what we did in 2009. And as we turned the corner in the fourth quarter into the first quarter, I went ahead and asked them to go ahead and do the scalpel approach just because there's a certain amount of pruning that you want to do in your portfolio anyway. I wouldn't bake it in because it's something we, kind of, can turn off and turn on, depending on the strength of ad spend. So I wouldn't bake it in, but that's the explanation. Auto, as I looked at all the categories and reviewed how they came in, in the first quarter, auto was a little disappointing to me because it seemed that it was a little stronger in some of our other traditional media, sort of, I guess, the sort of upper single digits is what it seemed to be for them. And so I was hoping for something a little stronger. In talking to John Miller again, it appears that we did kind of hold our own on the local dealership side, but we didn't fare too well, at least, on his comps quarter under quarter on the national auto ad spend. So I had to go to causation on that one. It was probably that we didn't hold our end on the national side and it looks like we did okay on the local dealers.

Operator

Our next question comes from Bishop Cheen from Wells Fargo.

Bishop Cheen - Wells Fargo Securities, LLC, Research Division

M&A. I know that it is tough. Yet you managed to find some things to purchase. How tough is it out there? And do you see any signs of, especially perhaps in the digital front, of some more lucrative additions ahead?

Sean E. Reilly

Sure. It's pretty thin out there. I mean when you look at the landscape of companies that make good targets for someone like Lamar, there's really only a handful. And Bishop, these are folks that are running good businesses and don't have any need to sell or what they might perceive as an inopportune time in the cycle. So kind of what we're seeing is not a lot of activity and people are happy running their businesses. And really at the end of day, you could probably count on one hand the companies that have the scale and quality of assets where we would be interested.

Bishop Cheen - Wells Fargo Securities, LLC, Research Division

Sort of, lately, same as it ever was. Can I ask one qualification question? To your balance sheet, I think you were talking about taking out one of your higher coupon bonds and you said, I'm not sure if you were referring to the highest coupon, the senior notes for 9 3/4% or the 7 7/8%. Both have make wills in them and I thought you were talking about a December 2013 takeout?

Sean E. Reilly

Yes. It's my understanding that the takeout premium on those 9 is truly too onerous to even think about it until December of '13. They're actually due in April of '14.

Bishop Cheen - Wells Fargo Securities, LLC, Research Division

Yes, okay, that's what I thought you'd...

Sean E. Reilly

So yes, we wouldn't be looking at till then.

Bishop Cheen - Wells Fargo Securities, LLC, Research Division

Yes, because T plus 50 takeout.

Sean E. Reilly

Yes -- no, no, no. We're not going to do anything that doesn't pencil out.

Bishop Cheen - Wells Fargo Securities, LLC, Research Division

Onerous is the right word.

Kevin P. Reilly

I want to thank all of our shareholders and friends for tuning in. We've lost Kerry on the call, so this concludes the call. Thank you very much.

Operator

Thank you, ladies and gentlemen. This concludes today's conference. You may disconnect your lines now.

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