Lamar Advertising (LAMR) 5 Aug 212021 Q2 Earnings call transcript

Excuse me, everyone, we now have Sean Reilly and Jay Johnson in conference. [Operator Instructions] At the conclusion of the company's presentation, we will open the floor for questions. [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, plans and objectives, including with respect to the amount and timing of any distributions to stockholders and the impacts and effects of the COVID-19 pandemic on the company's business, financial conditions and results of operations. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond Lamar's control and which may cause actual results to differ materially from anticipated results. release factors those cause in XX-K. discussed second XXXX important differ results the identified recent quarter from most materially in earnings has that on actual could to company's annual Lamar report its Form and this call refers measures, second XXXX the was Form the on which those furnished earnings conference G regarding X-K documents. Lamar's by Lamar's Sean website now of over would turn a and section on information to Investors required Regulation to is this certain you release, Lamar lamar.com. I quarter to contains non-GAAP available Reilly. to morning financial SEC at like the Mr. Reilly, you begin. may

Thank welcome and Earnings you, Good Call. XXXX morning, to Lamar's Olivia. QX

red good The are as we to Advertisers don't market are benefiting their brands, right scrambling economic to the a get on get way. they so and I'll of products miss in news. front right out services hot the major and their customers, their now. have advertising heard, their is, you in may recovery,

expectations, momentum results the the suggest Our second the quarter current exceeded sales into bookings and continue of easily XXXX. our end through will quarter our

and their surpass We that year are will for that billboard XXXX's way on airport transit total the are XXXX well back. and full revenue confident increasingly

in As And believe now full raising are as $X.XX in on you again. $X.XX last saw share and call, we year come the our I will might guidance between release, per we per the suggested share. we AFFO

eye there, Delta it. that EBITDA out obviously, generated that would the range you'll is you we a we're If keeping of do The XXXX. mean numbers, reaching close and the end see on top the in exceeding variant

activities a we our on with have not noticeable impact So far, us. seen customers'

data latest that to our Here's point. point

half in July in second The of XXXX. occurred July. than of July were higher bookings XXXX in billboard that about the increase of July bulk million of in $XX Our

business So remains solid.

the revenue second second the trend, in bookings up. and by quarter revenue and products. travel in we way, surpassed strength transit of has the a for accelerated all saw has Billboard Turning improved, to as across U.S. XXXX, weeks that quarter, the our businesses summer picked airport recent the only

We've Of delivered on has course, platform, demand steady analog the really performance. our business occupancy solid where tightened. its seen typical also logo

But digital recovery is real story. the

solid recall, up market that furthest fastest recovered. of The also you would $XX If digital and of nearly second XXXX, been in it million the increase QX we fell same-store units, has sales dramatic. versus rebound as XXXX back that digital the and but an included XXXX, In was the increase a The bulk about XX%. was in quarter, more versus anticipated growth bounce it quarter.

national digital demand for in We the local are particular from seeing both side. with arm and tremendous on customers programmatic providing shot the a national

pre-COVID specific strongest go insurance, amusement, of major for As and category to ways still up estate, gaming a including you and that categories, XXXX, categories to services, real were in although expect, get has levels. as QX all our QX over the to although QX back XXXX sports, entertainment were might

build trends issues. chain are some platform, the can we we we Given but as digital, been by supply a to out in as bit hard slowed pushing have that

year. you units set of we XXX As goal recall, installing a this

is XXX arranging strong. But I be XXX. like will get in are and delays don't our as on-site markets to think as work the we'll long from during our usual connections, twice in managers It Given XXXX. delivery as times, such which and about demand electrical more

XXX a than We and into on deployment of pace order have of brisk XXXX and more units through end expect the XXXX.

the while it buyers to for dissipated on and have with more bid-ask spread a The considerably. difficult of made up as gained picked sellers recovery. the prices comfort has market acquisition agreement the reach Meanwhile, that has shape

didn't close we deals numbers, books time deal our XX, we from deals see $XXX contract. million the on be number but under a lot get of by by will of total the we value. in we And a north of you June XXXX, have closed As suspect well will I

over before One Jay. note I to final turn it

you investment may our move early which been should, both with of $XX will seen, tools we As we strategic they years, involved, in of working have buyers key help one sellers. have partners, benefit July we that Media. our media Vistar of turn, built Lamar. that programmatic for We owners about in buyers We've out-of-home X in been help and for technology like the and as million and announced the impressed investing were programmatic for Vistar to the everyone and development see grow, a Vistar have with accelerate

to With through to that, will walk it turn some over I Jay numbers.

position, this morning, around our us. comments our Sean. Good sheet guidance. thank you everyone, brief the for then review balance will I including Thanks, more little conclude quarter a morning's financial with and joining detail on with a of begin current revised discussion and

extremely acquisition-adjusted pleased acquisition-adjusted XXXX. which second portfolio benefits expectations resilience diluted quarter, year, essentially with billboards. our for The In heavily consecutive results as XX.X% business $X.XX a to model improving and with adjusted with AFFO increased our estimates share as EBITDA exceeded the are and We of second basis. company internal revenue both against the was in slightly last on third quarter per demonstrating revenue, the of a XX.X% from quarter the AFFO. second and the our flat achieved QX behind revenue XXXX, concentrated fully consensus May results, well quarter, of growth only June same period for the operating

response several XXXX. COVID-XX, cost recall, we As you during implemented initiatives to reduction may in

expenses $XX $XX expenses in forecast of $XXX quarter expenses increased normal anticipate were expenses rebounded. for to our the X.X% million expenses those in primarily second with or variable returning $XX million half acquisition-adjusted by million more by tied now from operating returned driven full year. We about operating to expectations $XXX will revenue performance million the operating year, to and reduced approximately XXXX revenue. as million revenue levels, the around of coming With return in expenses beginning of approximately we With exceeding the XXXX,

Adjusted EBITDA to acquisition-adjusted was basis EBITDA versus an compared for XXXX, in an XX% in ahead period the million second On XX.X%. quarter points $XXX.X the margin increase was was which the increase in XXXX Adjusted of XXX XX.X% $XXX.X basis, of was same XXXX. million the XX.X%. and of quarter

AFFO sheet XX.X% in year. The prove on improved, cash work interest versus balance as period beneficial flow to we've our to the Free last significantly quarter contributed increasing done also same lower the growth. continues

acceleration and local quarter of both our national experienced another We in portfolio. business across

significantly pandemic. quarter national our revenue percentage double-digit XX%. the quarter, account local representing with outpaced second last the time of up were local both historical points the and than national to with year, levels, second since faster growth While Consistent of COVID-XX in sales for for relative XX% billboard the first local by revenue grew

demonstrated program. to we CapEx. flexibility a fronts, Lamar's capital XXXX, more approach disciplined typical In operational including to we are deployment our many on returning This year,

quarter, to half approximately the maintenance comprising with Total second total CapEx $XX spend the of year-to-date million, in we approximately CapEx $XX expect back the is and was accelerate year. During CapEx million, million. $XX.X

$XX our total CapEx $XXX million year, budget full including the of million, now maintenance CapEx. For is

$XX and we promising past, as year XXXX consistently $XX pipeline Lamar belief of the the total and volume further will in closed are an pursue deploy manner million. acquisitions in The Since have opportunities Lamar's and QX, on acquisition the for solidifies will significantly. front. has shareholders. first May, [ call be prudent, activity seeing in continue active tuck-in ] bringing within We the is in to million efficient quite to we our accelerated an our investment our actively acquisition that on remain half capital

company focus core competitive a to continues advantage. our strategy to Turning the sheet, to and our for balance which be critical and

We going balance pleased pandemic, the strength with Lamar of forward. well are the quite sheet our considering positioned is COVID-XX and financial

with outlook structure a and improvement negative the in flat of the As with leverage, BB- from rating a a credit BB evident to declining improved both our our S&P subsequent capital our revenue quarter at on Based operating performance, now outlook. rating recovery to second was conservative upgraded end. S&P in result stable and quarter, and

see with sheet agencies balance pleased S&P. stronger are at rating the in the to on focus a constant dialogue with We rating our rewarded are and

balance resulted quarter second in efforts amendment With AR we refinanced entire expense securitization, the These beginning have interest company's quarter the since second of billion. of of sheet the in extension an to approximately and the the XXXX. of $X over million reduction totaling XXXX $X relative

of laddered positioned and maturity addition, advantage take economic to our In recovery. the is schedule well debt

XXXX, We And AR our we the February maturities have until securitization followed facility have XXXX. bond no by revolving maturities no in XXXX. in of until portion credit July the

of X.X our is outstanding, debt X.X% a rate with weighted maturity average on Based interest average current weighted years.

X.Xx our under EBITDA, since ended facility, XXXX. leverage quarter the net we the to with lowest of target defined the our the end total low of As debt fourth range quarter credit and of

secured test leverage Our secured balance remain end, was below to our debt expect the at debt for of and X.Xx year. Xx the we quarter

against our X.Xx, and with respectively. Xx comfortable both of in total compliance incurrence maintenance debt are debt covenants We secured test and

the program. same agreement million of the of the on and end $XX.X million under $XXX we revolver. million prior $XXX available $XXX in hand, quarter, of on which The securitization the liquidity, program, the a size May. of $XX comprised established available ATM the was expired At and we line our new in cash million million quarter, new replaces had Also, approximately

with not program financial financial do key flexibility of capital maintain we near ATM needs. equity term, to our the we anticipate as strategy While the and will part an issuing company's corporate preserving to respect in

of revised in in increased $X.XX expectations. first and the increase the strong based we represents in included morning's As $X.XX guidance the The AFFO which at midpoint mentioned an on share to our of of AFFO year, exceeded compared Sean our released performance guidance May. guidance this to per release, half $X.XX our

to we on a the second our be on third As the stated comparable and last strongest quarters still basis. call, anticipate

QX which comparison to in Given performance the solid more included year, year-over-year. a a we political presidential QX difficult XXXX XXXX, have expect and

efforts XXXX. historical and recovering about million $XX $XX around lower taxes come primarily the And slower to million are in cash our slightly transit that than the in to $XX the division than of million rest full airport approximately sheet, due business. our balance million level our be of TRS, our because operations should in interest should year Furthermore, than $XXX lower XXXX or

a to and decision cash policy. per will per Management's second Moving We meeting recommendation Board dividend be upcoming to dividend we This $X.XX following the approval, first in recommendation is to subject meeting the communicate will the for share Board the $X September. of share Board Directors' a of quarter. cash at dividend the third Board's of paid in each our and declare quarters. of

income. taxable will We our of continue dividend policy to intend maintain distributing and of to evaluate our XXX%

are and remain with performance we year the remaining -- the for uptick recent outlook pleased cautious. extremely this of optimistic Again, cases, the with quarter's remainder in about the are we though, COVID-XX

debt a is equity maintain flexibility, our With they A sheet serves to strong, advantage significant Lamar access intense balance is of and excellent and increased well sheet Our to arise. capital to take the advantage. positioned strong our we capital as balance structure focus operating and and strategy both core competitive markets. as company's is on opportunities

I over turn back Sean. to call will now the

Thanks, Jay.

a me Let the to for we'll of points, more then a add up and data color questions. open little it few

hardest have of to the recovery. but the interesting board In the compared harder was there course, across -- terms regional that that COVID strength strongest it strength, hit proforma of the the note year, got felt regions to by last was

year year. last this year. the hardest. Again, For that region And that QX was was note example, in year the got up region just the recovery to hit those this is XX% over Northeast sort Western QX over QX -- up swiftest was XX% the interesting QX of last regions

terms Turning we units. I have digital in some Again, experienced digital supply deployment. as to ordering disruption mentioned, of

on XXX. up year. move As we in digital year XX as that we've put the into around units expect I and release, -- we order, will we air about units so got as But more catch up at units we the far XXX to we in end the new than mentioned, And noted this XXXX. that, believe

to Same do comparing QX unit Again, of to anyway. digital this QX it's last year revenue. year, I'm going kind it silly but

local local, our Our year national of QX was late. revenues year, When come has strong national. QX mentioned were up up on that of XX% mix, last Jay over year I XX% QX regional year also digital Jay XX% last QX look to this of this XX%. mentioned year. sales this and over programmatic was up QX XX%. business QX last over National year

Again, the speaking pipeline. acquisition to

and strong, of acquisition north the value. in is believe mentioned, we million Jay somewhere As pipeline we year the that will total end $XXX

verticals as I comping to we feel a business, book never the little and fully of that are our our be kind into in you And categories mentioned have on like But last and of of in we fall, we normalized year,can again, talking recovered, those will, silly. all is finally, of move coming virtually sports. for strong. the amusements, opening, comps except I to QX And and hope have again. my if fast entertainment as

So with open will questions. for that, Olivia, up we it

[Operator first Swinburne question Ben Instructions] with Our Stanley. comes from Morgan

ask. couple which of was One quarter. a guess margins, to is XX% I on I questions wanted this

margins operate, look those the trying permanent the numbers have you beyond these obviously savings guys talked in better where nicely used just you of to You margin savings. are out. COVID, think ahead as Are to than Because about about thought? sort business of you

Sean, don't know on on made hire. a you're thought little that the CTO side. impacting mandate the his the wanted you the you company. then, move bit technology title, you And the ask is an Can time? but I just business how to interesting over and about new thinking a for new expand I if right I about guys hire that's

Thanks, Sure. Ben.

on we're last So we on very we've year. to the on a with of question, to yes, the hang put the margin initiatives been place able that in lot side expense that pleased

back, What IT now a high watermark should And remain. history is think And when set stays we the XXXX, margins the our the be addition I records at into margins if we're [ up for team the So for the on full side. the company. going great stay think, wind that go picture finish macro the XXXX, year. I the again, will ] to for the on in to year, of this -- we vendor board. as Yes,

X we of without for, months. been have Head or So a give or IT take, X

edge it's but replace deploy have friendly we and that this is leading units. that. to never us of the But role. on think IT. to to been to been Lamar, a along lines set a all when business Sukhvinder the more Head that different we've fast do technology, And aligning comes try Sukhvinder going making journey brings a we So our of I At more be little we it help followers. the former technologies skill pretty to to And

investment. maybe it. follow-up one just Got the Vistar And on

about -- demand Do talked those maybe margins the revenue, to you path programmatic opportunity sort being business You've to, time Or but as efficient other additional core a your a you as can you nice of as in-house? the channels, source more and like sure sales of as but you your you'd do I'm matures, to not see business. that technology good it's over make channel improving bring think? see economics? as that aren't

A of and just programmatic traditional So XX%, cost of sales. our yes, of there, X-ish. sales to terms in to run in X% sale pure is cost delta of XX% about runs the channels X% Ben, terms

So us programmatic CPM is what gets that fired we're little are our that running really up about higher. a seeing

actually slightly are higher CPM do a traditional we than a on the programmatic So sale we channel. through getting

net-net, margin the the same. ends So being contribution up about

So that's good really, stuff. that's really -- all

Vistar in U.S. There presence, their the is programmatic that we global as we're certainly, other the the the market. globally. partners it I U.S. terms Vistar selling And are largest and well. the have domestic here domestic in about in U.S. second about bigger comes of when And buying programmatic of leader in provider. are that again, think programmatic out-of-home domestic inning to but we're is there, market

JPMorgan. Alexia Quadrani with [Operator next Our question from Instructions] comes

is on Alexia. This for Anna

rebound the Just you the airport very if variant strong of the now. what right light full seeing you're you the wondering in year for in was guidance terms your in that I and expect COVID across board transit Delta particularly and billboards, for of and discuss can

closely not right track us the hardest. customers, as it good So as where some monitoring it's at and think we at the the we're would airport we're bottom businesses our plane I business of little right? sense my the it's assuming When still true, to transits end, be airports. should of of the Obviously, to else we end, then different -- issued. seeing can, question. and everyone that if, our airport just if leading upper right that exceeding now about Delta Delta we the different fine. we're tried our as a obviously, now, our kind about going If that upper audience guidance that the continues, through just you of think the creates guidance is business about the as Great was be pace Delta -- well. we if ridership Delta is for But bit slightly end nicely. headwinds And hit we're And bouncing and can all boardings back stays variant, the

Thank conference remarks. you. for no closing Mr. further back Reilly to I turn will the With questions,

you, forward all. and to QX stay Olivia, you call, out November visiting all XXXX and you certainly safe our there. Thank thank We look with in

Thank you, This ladies teleconference. gentlemen. and today's concludes

You disconnect. may now