Revenue and earnings at Obie Media Corporation (Nasdaq: OBIE) were strong in the second fiscal quarter ending May 31, 2004. In a conference call with securities analysts on July 15, 2004, the company reported billboard revenue for the quarter at $2,092,556, compared to $1,581,634 in the same quarter last year. Management attributes the 32% increase to stronger demand for its higher-income signs. These include Walls, and Bulletins along the interstate highway system. Billboards account for only part of Obie’s overall sales income. The company generates over 80% of its revenue from other outdoor media, referred to as “Transit”, which includes bus wraps, bus benches and shelters, etc. Total revenue for the company was $11,887,892 in the second quarter of 2004, compared to $10,635,314 in the same period of 2003.
The growth in sales from the billboard division is consistent with the experience of other billboard operators this year. Lamar Advertising reported at a securities analysts meeting last month that some of their regions are achieving growth rates of 15% to 18% year-over-year. Many of Lamar’s billboards in the West are in non-metropolitan markets similar to those in which Obie Media operates. Lamar and other billboard operators report higher occupancy this year compared to 2003.
Occupancy for Obie Media’s overall billboard plant was reported to be around 85% at the end of May, versus 70% at the same point in 2003. Management attributes the higher occupancy to stronger sales efforts and the improving national economy. More than 95% of this year’s revenue capacity for Obie’s billboards has already been sold, or reserved by advertisers.
Revenue from the company’s billboards is expected to continue strong in the next few years. Obie Media is in the process of erecting new billboards in central Oregon and Washington pursuant to an agreement to locate new signs on railroad right-of-way. As the signs are built out over the next two years, overall billboard revenue will grow faster than the existing signs could produce. In addition, management is looking to acquire more signs through acquisition. The possible tuck-in acquisitions combined with the new boards on railroad right-of-way could significantly expand ad revenue. It is also possible that the new signs could help to widen profit margins. New advertising revenue can usually be added to an existing plant without a commensurate increase in fixed overhead expenses.
For further information, the company’s website is www.obie.com.