Lamar Advertising Q1 2025 Earnings Report

Lamar Advertising EPS Results

• Actual EPS: $1.60
• Consensus EPS: $1.54
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: N/A

Lamar Advertising Revenue Results

• Actual Revenue: $505.43 million
• Expected Revenue: $509.72 million
• Beat/Miss: Missed by -$4.29 million
• YoY Revenue Growth: N/A

Lamar Advertising Announcement Details

• Quarter: Q1 2025
• Date: 5/8/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 9:00AM ET

Lamar Advertising (NASDAQ:LAMR) Company operates as an outdoor advertising company in the United States and Canada. The company owns and operates billboards, logo signs, and transit advertising displays, as well as rents space for advertising on billboards, buses, shelters, benches, logo plates, and in airport terminals. Lamar Advertising Company was founded in 1902 and is headquartered in Baton Rouge, Louisiana.

Lamar Advertising Q1 2025 Earnings Call Transcript

Key Takeaways

• Lamar delivered its 16th consecutive quarter of acquisition-adjusted revenue growth, with Q1 revenue up 1.1% despite leap-year and Super Bowl comparatives, as local and programmatic sales rose while national was slightly down.
• Programmatic revenue surged by nearly 30% (about $2 million), and digital billboards grew 4%, now comprising roughly 30% of total billboard revenue.
• Lamar completed 10 acquisitions in Q1 for about $22 million and has deployed over $70 million year-to-date, with the pipeline expected to exceed the $150 million annual M&A budget.
• The company repurchased $150 million of stock (approximately 1.39 million shares at >$108 each) under a 10b5-1 plan, with $100 million remaining, underscoring management’s confidence and accretion to AFFO.
• Adjusted funds from operations per share rose 3.9% to $1.60, and Lamar reaffirmed its full-year AFFO guidance of $8.13–$8.28 while keeping expense growth around 3% for 2025.

Presentation

[Operator]

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. 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 general economic conditions, including inflationary pressures on the company's business, financial condition and results of operations.

[Operator]

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. Lamar has identified important factors that could cause actual results to differ materially from those discussed in this call in the company's first quarter twenty twenty five earnings release and its most recent annual report on Form 10 ks. Lamar refers you to those documents. Lamar's first quarter twenty twenty five earnings release, which contains information required by Regulation G regarding certain non GAAP financial measures, was furnished to the SEC on a Form eight ks this morning and is available on the Investors section of Lamar's website, www.lamar.com. I would now like to turn the conference over to Sean Reilly. Mr. Reilly, you may begin.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Thank you, Ressa. Good morning all and welcome to Lamar's Q1 twenty twenty five earnings call. In the first quarter, we delivered our sixteenth consecutive quarter of acquisition adjusted revenue growth with an increase of 1.1%. Both local and programmatic revenue were higher, while national was slightly down year over year. Recall that Q1 twenty twenty four had an extra day of revenue due to leap year and the twenty twenty four Super Bowl was in Las Vegas, our largest airport market and one of our largest billboard markets.

[Sean Reilly, President and CEO at Lamar Advertising Company]

With those headwinds in mind, revenue growth for Q1 twenty twenty five came in about as we had anticipated. As noted in the release, we are still pacing to reach our previously provided guidance for full year AFFO per share. We are obviously keeping a close eye on the broader economy, but out of home has historically proven to be a resilient medium in times of uncertainty and we are not seeing any cancellations or hearing anything from local or national customers that suggest we're headed for trouble. To the contrary, I just returned from our industry confidence in Boston and our larger agency customers are telling us that it is steady as she goes. Okay, back to Q1.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Categories of strength included services, retail, construction and oil and gas, while gaming, restaurants and amusement showed relative weakness. Local regional sales were up about 1%, while national was down slightly as mentioned. Programmatic was again a bright spot with year over year increases of about $2,000,000 which translated into nearly 30% growth. Overall, digital billboard revenue was up 4% and accounted for approximately 30% of our billboard revenue. On a same board basis, digital was slightly up.

[Sean Reilly, President and CEO at Lamar Advertising Company]

On the M and A front, we have been busy. In Q1, we closed 10 deals for about $22,000,000 We have since closed several more including the acquisition of a nice portfolio with a good digital footprint in the Northeast last week. Our year to date spend is now north of 70,000,000 pipeline, I'm confident that we will exceed the $150,000,000 in spend that we projected in February. Finally, as you saw in the release, we have repurchased $150,000,000 of our stock at an average price a little over $108 This effort began in March and concluded through a 10b5-one program in April. Our decision to do this is evidence of our conviction that out of home has never been stronger and that at Lamar, we are particularly well positioned from a product, market portfolio and balance sheet perspective to build on our industry leadership status.

[Sean Reilly, President and CEO at Lamar Advertising Company]

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

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

Thanks, Sean. Good morning, everyone, and thank you for joining us. Our first quarter results exceeded internal expectations across revenue, adjusted EBITDA and AFFO.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

Growth in AFFO continued in the first quarter, which was nice to see given AFFO grew almost 10% in Q1 a year ago. Acquisition adjusted revenue increased 1.1% from the same period last year, following a very strong first quarter in '20 '20 '4 when pro form a revenue growth came in north of five percent. Our billboard regions experienced low single digit top line growth with the exception of the Southwest, which was essentially flat year over year. The company's airport and logos divisions outpaced the broader portfolio, growing revenue 2.82.3% respectively. Acquisition adjusted consolidated expenses increased 2.6% in the first quarter, which was slightly better than anticipated and should be in the 3% range for the full year.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

Adjusted EBITDA was $210,200,000 compared to $211,900,000 in 2024, declining 80 basis points in the quarter. Adjusted EBITDA decreased 1% on an acquisition adjusted basis, while adjusted EBITDA margin remained strong at approximately 41.6%. Adjusted funds from operations totaled $164,300,000 in the first quarter compared to $158,200,000 last year, an increase of 3.8%. Diluted AFFO per share grew 3.9% to $1.6 per share versus $1.54 in the first quarter of twenty twenty four. Local and regional sales accounted for approximately 82% of billboard revenue in Q1, growing for the sixteenth consecutive quarter.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

Q1 of twenty twenty one, a COVID impacted quarter was the last in which we saw a year over year decline in local and regional sales. This consistent performance exhibits the resilience of our core local advertising business and differentiates the company from our peer group. On the capital expenditure front, total spend for the quarter was $29,900,000 including $9,400,000 of maintenance CapEx. And for the full year, we anticipate total CapEx of approximately $195,000,000 with maintenance comprising $60,000,000 Moving to our balance sheet. We have a well laddered debt maturity schedule with no maturities until the Term Loan B in February 2027, followed by the company's AR securitization later that year in October.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

At quarter end, we had approximately $3,200,000,000 in total consolidated debt and a weighted average interest rate was 4.6% with a weighted average debt maturity of three point six years. We ended the quarter with total leverage of 2.85 times net debt to EBITDA as defined on our credit facility, which remains amongst the lowest level ever for the company. Our secured debt leverage was 0.83 times and we're comfortably in compliance with both our total debt incurrence and secured debt maintenance test against covenants of seven times and 4.5 times respectively. For the full year, we expect total leverage at or below three times with secured leverage consistent as well at or below one times net debt to EBITDA. Our LTM interest coverage through March 31 was 6.6 times adjusted EBITDA to cash interest.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

While we do not have an interest coverage covenant in any of our debt agreements, we do monitor this important financial metric. The healthy coverage exemplifies the strength of our balance sheet and the ability to service our debt. As a result of the focus on our balance sheet, the company is well positioned and we have resumed more normal acquisition activity with an investment capacity well over $1,000,000,000 In addition, we have the ability to deploy this capital while remaining at or below the high end of our target leverage range of 3.5 to four times net debt to EBITDA. Our liquidity and access to capital remains strong as the company continues to enjoy access to both the debt and equity capital markets. As of March 31, we had just over $490,000,000 in total liquidity comprised of $36,100,000 of cash on hand and $455,000,000 available under our revolving credit facility.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

We ended the quarter with $286,000,000 outstanding on the revolver and $223,500,000 drawn on the company's AR securitization. As Sean mentioned, we began taking advantage of dislocation in the capital markets during March with repurchases of our Class A common stock and continued into April. To date, we have repurchased 1,390,000.00 shares at approximately $108 per share. The repurchases are accretive to AFFO with returns well in excess of the company's cost of capital. We have $100,000,000 remaining under the share repurchase program, but plan to seek Board approval to increase that authorization back to its historical $250,000,000 level.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

In this morning's release, we affirmed our full year AFFO guidance of $8.13 to $8.28 per share. Cash interest in our guidance totaled $152,000,000 and assumed sulfur remains flat for the balance of the year. As I touched on earlier, maintenance CapEx is budgeted for $60,000,000 and cash taxes are projected to come in around $10,000,000 which excludes any taxes related to disposition of our interest in Vistar Media earlier this year. And finally, our dividend. We paid a cash dividend of $1.55 per share in the first quarter.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

Management's recommendation at the upcoming board meeting will be to declare a cash dividend of $1.55 per share for the second quarter as well. This recommendation is subject to Board approval and we will communicate the Board's decision following the Board of Directors meeting later this month. The company's dividend policy remains to distribute 100% of our taxable income And for the full year, we still expect to distribute a regular dividend of at least $6.2 per share, excluding any required distribution resulting from the Vistar sale. Again, are pleased with our financial position and strong balance sheet, which should help mitigate any uncertainty that could arise in the broader economic environment. I will now turn the call back over to Sean.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Thank you, Jay. I will cover some familiar earnings metrics, and then open it up for questions. In terms of relative regional strength and weakness, our Central And Midwest regions showed relative strength in Q1, while our Southwest region, which of course includes Las Vegas and our Gulf Coast region showed relative weakness. As I already mentioned, programmatic grew almost 30% in Q1 and it continues to perform well as we move into Q2. Digital overall also continues to perform well as we move through Q2.

[Sean Reilly, President and CEO at Lamar Advertising Company]

In terms of sales mix for Q1, '80 '2 percent was local regional, while 18% was national programmatic. I mentioned categories of relative strength. Those included services, which was up 11% in Q1 retail, up 6% building and construction, up 15%. Categories of relative weakness included restaurants, down 4% and gaming, down 9%. With that, let's open it up for questions.

[Operator]

We'll take our first question from Cameron McVeigh with Morgan Stanley. Your line is open.

[Cameron McVeigh, Analyst at Morgan Stanley]

Hey, good morning.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

Hey, Cameron.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Good morning.

[Cameron McVeigh, Analyst at Morgan Stanley]

Wanted to ask if you're still expecting the 3% organic revenue growth for the year and maybe how you would expect the quarters to trend based off your current visibility? And then secondly, in your view, Sean, what do think is causing the national softness this quarter? Or was that all comp related? Thanks.

[Sean Reilly, President and CEO at Lamar Advertising Company]

So just a little color on our pacings and where we are today relative to that goal that you mentioned of being up approximately 3% or let's call it the midpoint of the range ish. Right now, are 75% booked to that goal as we sit today. So the visibility is pretty good. It's not perfect, but I'd say that's pretty good. That's pretty much on par with where we would be every year about this time.

[Sean Reilly, President and CEO at Lamar Advertising Company]

The national weakness is it's been with us for a little bit. Fortunately, as programmatic grows, which is a national piece of our book, it kind of makes up for some of that national weakness. You've heard me say it before. Some of it's just some large customers that have changed their buying habits. I've pointed out insurance.

[Sean Reilly, President and CEO at Lamar Advertising Company]

As I mentioned in my comments, the conference we had in Boston was actually very bullish. And I came away from it feeling better about how National was going to perform as we move through the year.

[Cameron McVeigh, Analyst at Morgan Stanley]

Got it. Thank you.

[Operator]

Our next question comes from Jason Bazinet with Citi. Your line is open.

[Jason Bazinet, Analyst at Citigroup]

Thanks. I guess I can't think of too many times in the past where investors are quite convinced we're going to go into economic slowdown. And every company that reports, including yours, indicates that there is no weakness going on. So my question is, does this period of time, can you draw any analogies to what this feels like in terms of the disconnect between investors and what you're seeing on the ground? And if investors are indeed right, what's the early sort of indicator that you get?

[Jason Bazinet, Analyst at Citigroup]

Is it cancellations or is it is it more nuanced than that? Thanks.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Yeah. You know, I I think you've heard me say this before. Typically, it's our shorter cycle sale that could be the canary in the coal mine. So, you know, we look at how digital, which is our shortest cycle sale, is performing, how it's performing relative to the overall footprint. And the news there is solid.

[Sean Reilly, President and CEO at Lamar Advertising Company]

So that gives us some confidence as we sit today. There was a moment in time in I guess it was I can't remember whether it was '24 or '23 where everybody I can't remember when we were last together and and we were talking about recession recession. And and, you know, the questions I was getting was, well, how do your verticals how do they perform when you go into a recession? And of course, I'm still getting those questions. Now they're more like how do your verticals perform when you have a tariff war, which I've never been through a tariff war.

[Sean Reilly, President and CEO at Lamar Advertising Company]

But right now, again, it's all I can say is it's basically steady as she goes.

[Jason Bazinet, Analyst at Citigroup]

That's great. Yep. Can can I just ask one follow-up question?

[Sean Reilly, President and CEO at Lamar Advertising Company]

Sure. Sure.

[Jason Bazinet, Analyst at Citigroup]

Maybe I'm maybe I'm wrong about this, but I feel like the the sort of legal vertical has become far more prominent today than it was in the past. Is that is that a fair characterization?

[Sean Reilly, President and CEO at Lamar Advertising Company]

Yeah. Absolutely. So we break it out as services.

[Jason Bazinet, Analyst at Citigroup]

And Okay.

[Sean Reilly, President and CEO at Lamar Advertising Company]

That that category is approximately 20% of our book and legal services makes up approximately 50% of that. So legal services have grown to give or take 10% of our book. They're very I'll say this about our lawyer friends. They are very savvy in the way they use our medium. They're very good at it.

[Sean Reilly, President and CEO at Lamar Advertising Company]

They're very good at buying in the right places and buying in bulk. They keep their presence up all year, and it's working for them.

[Jason Bazinet, Analyst at Citigroup]

That's great. Thank you for the color.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Yes.

[Operator]

Our next question comes from David Karnovsky with JPMorgan. Your line is open.

[David Karnovsky, Senior Research Analyst at JP Morgan]

Thanks. Sean, you noted you're busy on the M and A front. I just wanted to see if you could kind of dig into the landscape a bit, what type of deals are available at the moment? And I don't if you can frame how to think about the inorganic contribution to revenue growth should you execute on that for 01/1950? And then can you just update us on the expectation for expense growth for the year? Think last time you framed it around 3%. Thanks.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Yes. So we're still pacing around that 3% expense growth, right, Jack? Pretty much there. I think we're going to be well north of $200,000,000 in acquisition activity by the time we close out this year. We've got one that I can't mention on the phone call right now, but we're really excited about over here.

[Sean Reilly, President and CEO at Lamar Advertising Company]

So yes, it's going to be a good contributor. And I think we'll be able to give you more color on the inorganic contribution in August.

[David Karnovsky, Senior Research Analyst at JP Morgan]

Thanks.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Yes.

[Operator]

Our next question comes from Daniel Ostlie with Wells Fargo. Your line is open.

[Daniel Osley, Vice President, Equity Research at Wells Fargo]

Thanks. Good morning.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Good morning.

[Daniel Osley, Vice President, Equity Research at Wells Fargo]

So following up on your commentary on National, what are some of the ways that you can address the continued weakness there outside of general programmatic growth? And then how should we think about the pace of digital conversion throughout the remainder of the year?

[Sean Reilly, President and CEO at Lamar Advertising Company]

On the digital conversion question, we're still pacing to meet our goals, something north of three fifty deployments. National has been a bit of a quandary for us. It's we have sometimes big customers. There will there can be a turnover in a CMO and they want to make a change and so they'll they'll pull out their their out of home spend and maybe go to digital. But it works the other way too.

[Sean Reilly, President and CEO at Lamar Advertising Company]

For example, I had a great visit with the CMO of Cracker Barrel at the Boston Conference. And they seem to have successfully turned the corner on their business and are telling us that they're going to plus up a little bit on their buy. So it can ebb and flow as you've probably heard me say many times. The local dollar tends to be very steady and the national dollar tends to be a little more fickle. But at the end of the day, it's been my experience that if you smooth out the cycles, they grow at roughly the same pace. Thank you.

[Operator]

We'll take our next question from Jonathan Navred with TD Cowen. Your line is open.

[Analyst]

Hey, good morning.

[David Karnovsky, Senior Research Analyst at JP Morgan]

Hey, Jonathan.

[Analyst]

I wanted to so you kept your 2025 AFFO per share guidance unchanged despite repurchasing approximately 1,400,000.0 shares through April. Does this imply that your absolute AFFO dollar expectations have declined? Or is there another offset that I'm not considering?

[Sean Reilly, President and CEO at Lamar Advertising Company]

You got a little garbled on the last part of that question, but I'll let Jay hit the AFFO per share.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

Good morning, Jonathan. We repurchased those shares late in the quarter. And just from a conservative perspective, we haven't included that in the full year guide. So we still anticipate that even outside of those share repurchases that we would be affirming AFFO guidance.

[Analyst]

Okay. All right. Thanks. The second one is although revenue increased year over year, EBITDA dipped slightly. Can you provide any additional color on the primary drivers of this expense growth during the quarter?

[Analyst]

And specify if there were any notable onetime items that we should model going forward?

[Sean Reilly, President and CEO at Lamar Advertising Company]

Yeah. I'll let Jay hit that one as well. But keep in mind, we are going through an enterprise conversion that has elevated expenses here at corporate. But Jay, you wanna hit that?

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

And there are a couple of things, Jonathan, that were what I would call sort of one time on the sales commission front. We ran a sales contest to kind of make up for some of the headwinds in Q1. So that was kind of elevated. Health insurance continues to be an elevated cost and I think you're hearing that from most corporates. And then we had some one time expenses that came through in Q1 in a couple of our outdoor regions that we don't expect to continue going forward.

[Jay L. Johnson, EVP and CFO at Lamar Advertising Company]

We did beat our expectations in Q1. And again, for the full year, we still anticipate acquisition adjusted consolidated expenses to come in around 3% as budgeted.

[Analyst]

Got it. And just for my last one. So we have some detail on the premier outdoor asset acquisition. Could you give us some more color on the asset profiles of the 10 acquisitions that you did during the first quarter? Thank you.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Sure. It's the same old fill in that activity that you're familiar with. These are very predictable acquisitions. They're not large in and of themselves, but they add up to be quite accretive as we move through the year. I like to characterize them as high quality requalified assets that are within our existing footprint. Jonathan, you still there?

[Analyst]

Yes. Yes. Am. Thank you for the response.

[Operator]

It appears we have no further questions at this time. I'll turn the program back to Sean Reilly for closing remarks.

[Sean Reilly, President and CEO at Lamar Advertising Company]

Well, thank you all for listening, and we look forward to visiting again come August.

[Operator]

This does conclude today's program. Thank you for your participation, and you may disconnect at any time.

Participants

Executives

• Sean Reilly, President and CEO
• Jay L. Johnson, EVP and CFO

Analysts

• Cameron McVeigh, Analyst at Morgan Stanley
• Jason Bazinet, Analyst at Citigroup
• David Karnovsky, Senior Research Analyst at JP Morgan
• Daniel Osley, Vice President, Equity Research at Wells Fargo
• Analyst