Other Earnings Notes (Q1 2024)

[Previously regarding Lamar Advertising, Intercontinental Exchange, Marriott International, Royal Gold, and Sprouts Farmers Market.]

Lamar Advertising
The market capitalization of LAMR at $122 per share is $12.5 billion and the enterprise value is $16.8 billion. During the first quarter of 2024 (release), the company reported net income plus depreciation and amortization of $154 million, up 3% from $149 million a year earlier. The quarter's NI+D yield on the market capitalization annualizes to 4.9%. Revenue for the quarter was $498 million, which was up 5.7% from the prior year quarter.

Intercontinental Exchange
For the first quarter of 2024 (release), ICE earned $877 billion of adjusted free cash flow on $2.3 billion of total revenue (less transaction-based expenses) for a royalty-like 38% free cash flow margin. Revenue (less TBEs) was up 21% from the prior year and adjusted FCF was up 30%. (The diluted share count is up 2.5% y/y.) The current market capitalization of ICE is $79 billion and the enterprise value is around $100 billion, so at a 3.5% free cash flow yield on the enterprise value it is not super cheap. We like ICE's M&A goals: "deepen moats, gain intellectual property, increase customer wallet-share".

Marriott International
For the first quarter of 2024 (release), MAR earned $1.09 billion of adjusted EBITDA (less SBC) on $1.5 billion of total revenue (excluding cost reimbursements) for a royalty-like 71% margin. Revenue (excluding reimbursements) was up 5.2% from the prior year and adjusted EBITDA (less SBC) was up 2.6%. The current market capitalization of MAR is $67 billion and the enterprise value is around $80 billion. The adjusted EBITDA (less SBC) annualized yield on the enterprise value is 5.5%. The diluted share count was down 6.2% year-over-year. Despite being a $67 billion market capitalization company, Marriott spent only $109 million on capital expenditures in the first quarter. The company spent $1.1 billion on share repurchases and $151 million on dividends, for a shareholder yield of 7.7%.

Royal Gold
Reported results: Royal Gold's net income plus depreciation was $86 million for the first quarter of 2024 versus $110 million the prior year. The company spent $100 million on debt repayment and $26 million on dividends. Net liabilities are down to $55 million. The market capitalization is $8.45 million so the enterprise value is $8.5 billion. The NI+D yield on the market capitalization is 4.1% (annualized).

Sprouts Farmers Market
We wrote about Sprouts back in October 2023. At that point, the market capitalization was $4.3 billion and the enterprise value was $5.8 billion. Shares have been on a tear and the market capitalization is now $7.7 billion at $77 per share (+79% since we wrote about it.). 

The enterprise value is $7.7 billion if you ignore the non-current $1.4 billion of operating lease liability, since the landlords finance their stores and they have no net financial debt (see 10-Q). They generated $213 million of cash from operations less stock-based compensation in the first quarter, and spent $51 million on capital expenditures, for $162 million of FCF. (A 8.4% annualized yield on the EV, or 7.1% if you capitalize the store leases into EV.) They bought back $60 million of stock and built the cash balance by $110 million. (The cash build was because of restrictions on being able to buy back shares.) Share count is down 2.7% year over year. They earned $1.12 per share so P/E is 17x. Sprouts is a growth monster at a reasonable price. They opened 7 stores in Q1, bringing total to 414 in 23 states.