Lamar Advertising Co Reports Growth Amid Challenges

Lamar Advertising Co ((LAMR)) has held its Q1 earnings call. Read on for the main highlights of the call.

Lamar Advertising Co’s recent earnings call painted a picture of continued growth and strategic confidence, despite facing some challenges. The company showcased strong performance in its digital and programmatic segments, supported by robust mergers and acquisitions (M&A) activity and a solid balance sheet. However, a slight decline in adjusted EBITDA and national revenue weakness were noted. The company’s confidence in its strategic position was reflected in its share repurchase program.

16th Consecutive Quarter of Revenue Growth

Lamar Advertising Co reported its 16th consecutive quarter of acquisition-adjusted revenue growth, achieving a 1.1% increase. This consistent growth underscores the company’s ability to maintain upward momentum in a competitive market.

Strong Performance in Digital and Programmatic Segments

The digital and programmatic segments were standout performers, with programmatic revenue growing nearly 30% and digital billboard revenue increasing by 4%. These segments now account for approximately 30% of Lamar’s total billboard revenue, highlighting their importance to the company’s overall strategy.

Robust M&A Activity

Lamar’s aggressive M&A strategy continues to pay off, with 10 deals closed in the first quarter alone, totaling about $22 million. The company expects to exceed $150 million in M&A spending for the year, with year-to-date acquisitions already surpassing $70 million.

Share Repurchase Program

Reflecting its confidence in the business, Lamar repurchased $150 million worth of stock at an average price of $108 per share. This move signals the company’s belief in its long-term value and strategic direction.

Solid AFFO Growth

Adjusted funds from operations (AFFO) saw a healthy increase of 3.8%, with diluted AFFO per share growing 3.9% to $1.60. This growth in AFFO is a positive indicator of the company’s financial health and operational efficiency.

Strong Balance Sheet

Lamar ended the quarter with a strong balance sheet, maintaining total leverage at 2.85 times net debt to EBITDA. With ample liquidity and investment capacity exceeding $1 billion, the company is well-positioned for future growth opportunities.

Slight Decline in Adjusted EBITDA

Despite the positive trends, adjusted EBITDA experienced a slight decline of 80 basis points from the previous year, totaling $210.2 million. This decline highlights some operational challenges that the company is addressing.

Challenges in National Revenue

National revenue faced a slight year-over-year decline, attributed to changes in the buying habits of large customers. This shift presents a challenge that Lamar is actively working to overcome.

Weakness in Specific Categories

The gaming and restaurant categories showed relative weakness, with gaming revenue down 9% and restaurant revenue down 4%. These declines indicate areas where the company may need to adjust its strategies.

Forward-Looking Guidance

Lamar provided a positive outlook for fiscal year 2025, despite some challenges. The company maintained its full-year guidance for AFFO per share between $8.13 and $8.28 and expects total leverage to remain at or below 3 times net debt to EBITDA. With over $490 million in total liquidity at the end of Q1, Lamar is well-equipped to navigate the future.

In summary, Lamar Advertising Co’s earnings call reflected a balanced view of growth and challenges. While the company continues to achieve revenue growth and strengthen its digital and programmatic segments, it also faces hurdles such as a slight decline in adjusted EBITDA and national revenue. However, with a robust M&A strategy and strong balance sheet, Lamar remains confident in its strategic direction and future prospects.