Yahoo Finance Lamar Advertising Co (LAMR) Q1 2024 Earnings Call Transcript Highlights: Robust Growth and ...
Revenue Growth: 5.3% increase on an acquisition-adjusted basis.
EBITDA Growth: 6.5% increase on an acquisition-adjusted basis.
AFFO per Share Guidance: Raised to $7.75 - $7.90 for the full year.
Q2 Distribution: Recommended at $1.30 per share, potential increase in August and possible special dividend at year-end.
Local Sales Growth: Up 6.7% from the previous year.
Programmatic Revenue Growth: Increased by 27%.
National Ad Spend: Down approximately 5.5% from the previous year.
Political Revenue: $3.8 million, up nearly $3 million from Q1 2023.
Digital Revenue Share: Accounts for about 29% of billboard billing.
M&A Activity: Closed 4 deals totaling $18 million.
Debt Repayment Focus: Mainly on $350 million Term A loan to strengthen balance sheet.
Adjusted EBITDA: $211.9 million, up 7.1% year-over-year.
Diluted AFFO per Share: Increased 9.2% to $1.54.
CapEx: $29.5 million for the quarter; anticipated $125 million for the year.
Total Leverage: 3.14x, with a target to reduce below 3x by year-end.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Lamar Advertising Co (NASDAQ:LAMR) reported a 5.3% revenue growth on an acquisition-adjusted basis, marking the 12th consecutive quarter of pro forma revenue growth.
EBITDA increased by 6.5% on an acquisition-adjusted basis, demonstrating strong earnings before interest, taxes, depreciation, and amortization.
Local sales showed significant strength, increasing by 6.7% compared to the previous year, indicating robust regional market performance.
Programmatic digital advertising grew by 27%, highlighting Lamar Advertising Co (NASDAQ:LAMR)'s effective adaptation to digital trends.
The company raised its full-year AFFO per share guidance to $7.75 to $7.90, reflecting confidence in continued financial performance improvement.
Negative Points
National advertising spend was down by approximately 5.5% compared to the first quarter of 2023, indicating challenges in the national market segment.
Acquisition-adjusted operating expenses increased by 4.4%, driven by the normalization of minimum guarantees to airport partners.
The company noted a relative weakness in the healthcare and insurance sectors, which could indicate sector-specific market challenges.
Despite overall growth, the Midwest region's revenue was flat year-over-year, showing regional disparities in performance.
Lamar Advertising Co (NASDAQ:LAMR) anticipates another decline in national advertising in Q2, although it may improve slightly from Q1 levels.
Q & A Highlights
Q: As you look to the remainder of the year, how do you expect the cadence of organic growth to shape up, especially with consideration to the election in the back half of the year? A: Sean E. Reilly, CEO & President of Lamar Advertising Company, explained that the growth for April was similar to Q1 and projected that Q2 might see slightly lower pro forma growth than Q1. However, he anticipates stronger performance in the latter half of the year, boosted by political advertising. He expects the quarterly variations to be minimal, with all quarters performing relatively similarly.
Q: I noticed the expected stock-based compensation increased by about $15 million for the year. Is that tied to performance versus what was originally budgeted or maybe just more grants than you had expected? A: Sean E. Reilly clarified that the increase in stock-based compensation is due to surpassing internal goals this year, contrasting with last year where they did not meet these goals and had fewer performance stock awards.
Q: Do you have any further color on the expected timing of the NOL usage and how that might impact the distribution going forward? A: Sean E. Reilly mentioned that they are nearly out of NOLs (Net Operating Losses), which will lead to an increase in distributions in the latter half of the year. Jay Lecoryelle Johnson, Executive VP, CFO & Treasurer, added that 2024 is likely the last year they can use NOLs, and going forward, they will need to distribute 100% of their taxable income.
Q: Can you provide insights on the cost guidance for 2024, which you adjusted to between 3% to 3.5%? What are the factors that could push this to the higher or lower end of that range? A: Sean E. Reilly responded that achieving the upper end of the expense growth range would depend on continued strong performance in local sales and a modest recovery in national sales. Jay Lecoryelle Johnson noted that the return of COVID-19 relief grants and peak ERP spending are major drivers of this year's expense guidance.
Q: This may be a strange question, but given the general discontent about the economy and inflation, are there any areas in your business showing signs of stress? A: Sean E. Reilly indicated that Lamar's business does not currently show signs of stress related to economic discontent. He highlighted the strength in quick-service restaurants, which have seen a 6% increase, suggesting that consumer spending remains robust in these areas.
Q: What are your expectations for the impact of the election on your operations in the latter half of the year? A: Sean E. Reilly expects a significant boost from political advertising during the election period, which should positively impact the company's performance in the second half of the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
