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Lamar Q2: Revenues Still Falling Faster Than Costs

Lamar Advertising saw revenue slip 15 percent to $275 million in Q2 2009, it posted a net loss of $12 million. It's the third-straight quarter of losses for the outdoor advertising company that loves hookers but hates atheists.

Worse than than that, however, is what is happening to its operating efficiency. Lamar is starting to flirt with the territory in which it cannot make an operating profit on its day-to-day transactions.

Lamar gets about $1.14 in revenues for every $1 it spends on worker salaries, direct advertising costs and all the other stuff it has to buy just to keep its business running. But that revenue yield is trending down. In Q1 it was $1.02 -- barely profitable. In Q4 2008 it was $1.09. Those numbers are down from a comfortable $1.29 in Q3 2007. This chart shows the trend: The more the blue line flirts with the $1 level, the less able Lamar is to make a simple profit on the sale of its billboards, even before tax and amortization and all those other things are taken into account.

It's not the employee costs. Those are down 12 percent -- the company laid off 400 people already. Rather, it's the direct advertising costs, the money Lamar must spend just to keep its ads in place. They only went down 10 percent.

If the adspend turnaround doesn't come soon, Lamar's inventory network will have to get a whole lot smaller.