Lamar Advertising (LAMR) 3 Nov 212021 Q3 Earnings call transcript

Excuse me, everyone. We now have Sean Reilly and Jay Johnson in conference. Please be aware that each of your lines is in a listen-only mode. 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 effect of the COVID-19 pandemic on the Company’s business, financial conditions and results of operations. results. risks, control contingencies, actual and differ from involve are of results statements materially Lamar’s beyond which anticipated forward-looking uncertainties, many and which to All may cause cause Lamar report XX-K. actual those has on in in earnings Form quarter call, Company’s this factors most release identified that and discussed results differ its materially important to from third XXXX the could recent annual refers documents. you Lamar to those financial on G measures earnings XXXX which information regarding release, SEC certain Regulation Form website and non-GAAP section furnished Lamar’s this third quarter Lamar’s on was required contains the the to morning by of www.lamar.com. X-K is Investors available I conference over would the turn like now to Sean to Reilly. Mr. you begin. Reilly, may

report Good to out-of-home the and are welcome in way returning to Olivia. exceed earnings ad entertainment as Lamar’s market you, work, their continues call. and cost all expectations. a morning, to embracing the happy routines. are that reach Advertisers clearly audiences school to recovery XXXX Thank impactful to effective our as QX I our am we

where other our spring is are business the and place left only COVID now great line, when was we ways, XXXX up a surpassing In recovery virtually complete, feels margins in AFFO. in have picked right recall, topline, across in off. bottom if XXXX struck it words, and of metric; our you many we we not As every

XXXX $X.XX hit now and end. expect AFFO $X.XX $X.XX was per share COVID the QX how per to AFFO per see initial that unfolded in issued Given guidance full-year Recall on we that this guidance for our and we what will share year top for AFFO book, $X.XX share. before land our $X.XX per was share the for between and we

and have stellar recovery So by Jay metric. back cuts on our good results XXXX balance and the are the we winsome. demand, been work rapid and that team reshaping that the his did sheet, year's to last and expense in Thanks measure, that

the from review seven third billboard the more quarter consolidated in quarter. Once again, did build XXXX the The basis, they two than billing of digital a third Canadian X% our of the across for On XXXX. way. and returned in third billboard of led more XXXX than on same absolute digital quarter In All XX% regions was to the Let's quarter transit footprint. years X%. our the nearly our was to U.S. our ago. was and up the third basis, up. the has operations continue increase the same-store up transit and businesses now both of perk monthly pre-COVID dollars, airport billing was a Meanwhile, from quarter billing levels strength

We to XXXX. be expect in those businesses sometime to pre-pandemic back two levels

On in On took that XXXX. level up with which expenses a the XX.X%, strong third combined side, topline mentioned, of were we the measures in expense consolidated are operating from translated for we slightly margins QX record for basis, quarter into from EBITDA Lamar. as the benefiting I a XXXX, growth QX

XXXX. which quarter were of gaming, the more entertainment far off be XX% Louisiana category. QX in still estate, to of levels. third up the it’s spending and and gaming number specific continue strongest though been and alarm recover for categories, states, a for sharpening were real to the has The of As betting should continues Amusement, pre-pandemic than including sports all a of in versus sports healthcare launch

vendor contractors office the to of Each to step our for are sites strength than delivery electrical in sign actual we getting hard in the the process slower to deploy to take units, the units Given digital, from and pressing a paperworks, little anticipated. getting than to seems it's but longer from additional the arranging usual going we permit partners.

a of forward supply we digital So bit next and to do are but when that are year. chain have it through we comes deployment, looking working to issue to we continue a

of As about order units about September, added now. of right the have we units XXX year had end XX digital on and organically we this

will but we XXXX, deployments that enter very approve steam not those the get all on to new units intend of air with we likely a in We XXXX to we are and in head aggressive continuing front. of and should be

is now to right very are turning Finally, M&A. The we. so active and market

million. total the line family we a for had really closed was over nice plant Included at a end QX, billboard in California that called of acquisitions $XXX Star]. As just XX [old in Northern

one. that about excited are We

a in deal will value early We close have several larger $XXX And to QX. in purchases by finalized year-end, transactions also close expect total we QX of of excess in and smaller million. number have have that we will that

should strength very given they a the and have a seems nicely bit been With about Jay it Now, we the I historically. ones are market business, now. to are through walk turn excited over couple numbers. in And are of to the out-of-home we that, of right potential be the higher seller's a deals, they be than we've it will to on accretive. that, passed Multiples because but doing

revenue, the extremely as around our Good thank pleased everyone, again, and AFFO. achieved expectations Once company XXXX. benefits versus year, with September a XX.X% over our with as adjusted morning's slower period increased improving of brief growth with consecutive demonstrating business concentrated AFFO quarter, the balance of on for the and current including basis for billboards. resilience sheet a estimates QX fully will portfolio are The business, EBITDA morning, and as adjusted quarter with EBITDA. well acquisition third from our revenue we the you quarter, July, and per well quarterly on recovering the Sean. $X.XX same position, results, XXXX. comments revenue which adjusted on of a internal XX.X% last as our QX EBITDA each adjusted the detail to of quarter, the transit fourth topline than a for more In consensus and model guidance. acquisition revised rest exceeded operating exceeded diluted I of and share XXXX the Thanks, airport this then discussion our the improved and of our little in us. operations both heavily the joining third begin financial review conclude Despite August

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

period expectations would variable Adjusted to basis half versus third anticipated the of We EBITDA quarter With in which second sheet have $XX and returned to to in versus quarter XX.X%. third approximately the experienced quarter flow growth. reduced was also tied those adjusted primarily in work period quarters million to increased of revenue. operating AFFO and beneficial million as XX.X%. expenses expenses rebounded. Adjusted revenue of done $XXX.X in increasing business and across coming Free year, XX.X% XX.X% the The XXX million expenses the adjusted forecast operating prove quarter acquisition to about million. XXXX XXXX portfolio. EBITDA the to balance now normal interest exceeding expenses adjusted more points was last maintain margins $XXX million quarter was acquisition XX.X% around our million to revenue the compared the by the our full-year. an and $XXX.X both XXXX, of third were million acceleration driven was for from same significantly company by expenses, basis in in on increase full-year margin our in improved, million return the as for the strong of expenses of still levels, $XX XX.X% EBITDA we the $XX On ahead expects year. acceleration of cash XXXX With expenses increase of beginning another local Despite this XXXX. same continues contributes with lower $XXX in in We national performance operating the returned we $XX to in an

have our flexibility many total And the $XX with CapEx maintenance national more year-to-date CapEx. to including the outpaced CapEx quarter, during were a billboard is revenue year, CapEx our million historical we represented and on Consistent XX% local faster $XX quarter CapEx. growth Total we While comprising Xx third million, $XX.X programmatic to approximately second over approximately including In Lamar's million revenue regional XXXX, to we total was national fronts, expect capital for program. disciplined deployment the year, in sales This to maintenance while both $XX with for quarter, relative levels, spend of quarter. third of operational full-year up typical demonstrated than approach third and and the million roughly grew the of returned by million. for $XXX and local XX%. accounted local consecutive last significantly,

closed we spring XX. our the $XXX our more third the on September we activity on discussed acquisitions, activity of beginning The quite in promising of active accelerated the and million on summer. are is acquisition front In for $XXX million and one last will years call, as the year-to-date late pipeline total our throughout acquisition quarter, we the should anticipate As acquisition in $XX to exceed year. seeing be through million bringing XXXX continued volume

is our we have intent deploy remain in our shareholders. consistently capital to However, prudent manner the as efficient for an in past and

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

We are sheet the balance Lamar is forward. our well strength of and with financial going quite pleased positioned

both a with corporate from In from operating Moody's and performance, outlook. the upgraded to our our to BB stable S&P and evident during negative based of quarter. now S&P recovery our flat result BaX rating quarter. the a BaX, to the upgraded investment-grade in and with at improved declining rating BaaX. both from credit third also a ratings our secured September, BB The minus As conservative leverage, family actions and rating Moody's in upgraded revenue BaaX rating on capital were again outlook and Lamar's third were structure improvement

We stronger focus and sheet Moody's and the pleased constant balance from with with see are to rating ratings the both S&P. agencies rewarded on are in dialogue our

laddered was the $XX.X X.X average Based QX is the XXXX. maturities end, well the debt debt debt quarter, interest until interest maturity rated have on which securitization in a quarter of no AR revolving by with followed XXXX our we no rate XXXX, credit maturity $X.X facility than totaled July a of have million Net We weighted million portion with maturities X.X% outstanding our in and February schedule until XXXX. approximately bond expenses years. in average lower at

defined with company's is our As XXXX. of lowest ended fourth net debt-to-EBITDA, we the total quarter credit under since quarter X.Xx leverage the of which the facility,

million Subsequent revolver. X.Xx the comfortably available of $XXX programs quarter XXXX. our with the million $XXX incurrence the $XX in secured Terms maintenance quarter, X.Xx of AR and have $XXX we leverage debt and debt we each. Our on conditions and At March at end our hand to remain extended test respectively. common cash securitization indebtedness Xx secured quarter of total on are $XXX liquidity was of any approximately $XX and through million we both end same stock million comprised repaid had outstanding. under the against covenants share currently our and debt quarter, and to we in compliance of million the debt end, may outstanding and company repurchase up Also million repurchase the and and

in to under near-term, While strategy preserving as view maintaining of key finance program financial either and we do flexibility. not part both programs anticipate our activity corporate we the

release, guidance outlook strong $X.XX the to quarters and compared As our $X.XXX represents The in AFFO midpoint an morning's guidance the mentioned, three of increase increased Sean share based we released on in at year, for included guidance revised per first AFFO the to QX. of our the this $X.XX of in performance August. and

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

than slower million our in we million primarily balance interest transit in in XXXX’s full-year performance of than million have QX divisions said approximately the QX we around solid rest and airport are business. in should or lower due the EBITDA presidential to XXXX. Taxes total to to $XX level operations efforts a done, TRS, XXXX, more than our exceed and comparison cash included slightly $XX our a the our that year-over-year. lower be this XXXX of With the Given easily XXXX full-year of $XXX $XXX year, all to expect historical million difficult come which $XX political expect about recovering Because sheet, and million. should

the addition, above the original guidance the today's AFFO top-end of to In $X.XX XXXX prior our of low-end guidance is revised pandemic.

paid $X upcoming dividend at a We the Management's the share second Now our moving per each dividend. meeting of we recommendation $X.XX per to approval, and dividend December. dividend and quarters Board's meeting to and Board of XX% QX of to first will share recommendation of Directors as a to declare increased subject the the cash in $X communicate in share. be will the This Board quarter per well. for cash decision following the Board fourth in is

our fourth XXXX extremely exceed XXXX should XXXX been have for bring to $X level level to As the with pleased a quarter's of for are full-year you will not the both performance anticipated share that on results are the that dividend XXXX may pandemic. dividend goal the this possible. outlook prior the has soon dividend with recall, of EBITDA $X pandemic, AFFO. per optimistic prior per full-year that in and back the anticipated same to full-year about ruled Again, company's to quarter a in and we we and special return we as share distribution the to recommending end, Board to as that out the To

advantage. strong the sheet operating debt Our equity back markets. to company's With they balance focus significant balance now the call Sean. access our arise. the to to is our a sheet excellent capital capital over both as opportunities Lamar structure remains positioned serves maintained well increased strong core I’ll flexibility, competitive take intense strategy as remained of to advantage and and and turn and A we on

Thanks, Jay.

is open the quick few up the questions. with theme to at knocked resiliency And a resilient a before going regional you stronger illustrate that pro hit clear And really I'm that business it recovered. Lamar And Just model of getting has. got And we that the it's up. statistics. when comments couple about but growth, forma about and incredibly look in they again, increasingly back performance harder regions now XXXX, getting it's the down, for

Western which in by did you was hard year region, all which as XX% hit over COVID. last in was of know Northeast And our this year quarter by over up example, QX region, XX%. last grew For quarter same EBITDA, this hardest was this as hit year of the EBITDA year terms equally their north COVID,

stronger up. hit got are recovering they and So got hard, they but back

XXXX up think I up take same local business. over out for year, XX%. whopping year. over as you QX XX% holds QX Jay national But about local and last our XXXX and last it's pointed a the is national programmatic,

again, completely one So amusement the but and mat knocked vertical would back And point yet, to get get that hasn't up. gotten is resilient, down, I off finally which entertainment.

illustrative about still down it's there we upside pre-pandemic book. As for have and us a With of expect I from to X% grow model. mentioned, It's constitutes our it's results that will We kind book, in questions. levels and gratifying again, we to that very open think about our just it up back of it turned in XX% all of very here QX. Olivia, the to we Lamar so X% have of business of that, just, did for we resilient at

from Stanley. first Please go Ben [Operator Thank comes question we you. floor with Our for Swinburne open At ahead. questions. this the time, will Instructions] Morgan

doing? morning, How Good you Hey. are guys.

Ben. Hey,

Good morning, Ben.

growth quarter the to been just potential you excited then small. – if look place about on of us usual. revenue. sort a is thinking your give of the the one to growth. investors and And curious bit questions. guess a next in in I'm rent about channel fourth also wondering if than us help a sure topic for because you real could I advertising I on sort a but just like side at for little becomes are both And couple I'd you side, of update the equation? of pretty acquisitions, Jay growing, kind Sean, we big then think since how still whether the love you own a employees. I are And there's it's lot of revenue out it? generally. as rates of because both on I'm or if it's I'm bigger some hurting stock rent you outpace inflation could I had that look then bigger just topic of then right your any ad the a And and just or Whether could programmatic $X.XX seems helping it's there, that's morning. and Good on OpEx think Jay. and know talk And that know I like inflation that accruals year with bonus probably just for in into your

help So there just any Thank great. be you. would

Thanks, Great. Ben.

friend. back been I'm and looking has historically our Ben. Inflation So – years, XX

If expense ground you that tends X%. largest The majority to have of non-inflationary times. around expense look it's those of are fixed know times that leases. the growth be as inflationary we at in and The base you our

relatively is a The expense. labor, wages, it's us fixed for next So expense employees.

side shop, lot the sales is like. On the revenues, of the of that a and to front commissions flexed comp

that's total the So wage little In base it's inflation a needle the really of expenses. enough in grow our of to back topline. with move going a terms the back shop, not there's the there, of to bit but of

I good the expense from the side. relatively insulated say, inflation. So would news on is We're

On REITs story compare good us to because the well. to the going I'm other revenue there side, as is

contracts right. shorter than tend REITs, be most to Our far

opposed to So something we opportunity our like five commercial on or months a every a virtually that. have three or office the to building as lease XX-year having space reprice

had the year. inflation, on topline, times we So time several the the rate would cards last we reprint during

in record programmatic about of theme that and for October it true excited falls, really holds God, friend. the again, XXXX in I certainly And recovers, inflation a but really again, if to our good. On set on history of in zero. programmatic. we're harder the spring that platform So We really, guess the Keeping future. the story quicker mind is the for that programmatic, it our is is our there went programmatic

$XX again, this zero of around a something a feels so I I in standing that basically, programmatic we're from think of think to good. start set $XX we year, million and goal terms to and going that's million billing all that exceed

then probably XX%. we'll into going again XXXX to probably Ben, flat QX outperform, an perspective growth be that in roughly low-double And see revenue from then against a XXXX, perspective put digits, with to that's OpEx continuing against And to QX. versus XXXX, it the for call

guys. you, Thank

comes ahead. you. [Operator question Please Alexia next Our Instructions] JPMorgan. go Quadrani with Thank from

Thank you.

for year. going some you early, fully than obviously on? still – in I I into given You've taking early I of continue timing had such recovered. about much the next some to guess not presenting hear – love a the year, hypothetical, curious of you touched visibility special you potentially next XXXX particularly improvements a then into I'm year. what there, With was. to the do dividend. momentum the have how and you all do revenues early into you advertising great to mentioned just better sort categories, but anticipated had know like timing curious, come thoughts potential just commenced have have certain the have I'm you account, And mention just that? you clarification, on Board I And would Did you know your thoughts it's also,

Sure. Hey, Alexia.

the in for XXXX peering time year, say little at in XXXX next for moment I can running early, in in ahead have of time some XXXX. down bookings bookings same but we kind our is next for this, into are moment of XXXX laid this So a year. it

special I momentum business like So is lot for ever of setup feel and base and sort at in right. We've core But at pre-pandemic, good of if of strong the my got of to generate net what in our wouldn’t comping to as requirement. here almost.” great about the of Lamar. sort of on complicated. REIT, And on going should kind going so moderate XXXX “special see our dividend as as that terms and I've is we and a after should going mandatory But and the the say NOLs into you again, look good year. awful have And status, things a seen have distribution use rules an looks have, also next let we income career it, front. I'll REIT going that I a to going that political we thinking touch the into in Jay driven it it. This we're call XXXX. all around setup special basically we it we're let by NOLs I'm to of have to “a then speak the very XXXX we REIT necessarily sort can have because call would year, dividend, dividend”; the macro get We good a Jay I it I

we as Sure. share Hi, our is get quickly goal Alexia. possible. to mentioned, Obviously, a back as to as $X

would and terms January. in of next the approval that year would then be timing, In that dividend we to obviously And the the anticipate special per early Board case and approval way from December. in work would seek the for Board would share, be this out subject was we actually $X.XX paid is would it

Okay. Thank you very much.

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

Great. the everybody finishing visiting strong forward in of again listening. We with February for to and XXXX. Thanks, you year look

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

You may now disconnect.