Lamar Advertising Company

Excuse me, everyone. We now have Sean Riley 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'll open the floor for questions. To ask a question, you may press the star and one on your telephone keypad. In the course of this discussion, Lamar may make four 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 on the company's business, financial condition, and result of operations. All four looking statements involve risk, uncertainties, and contingencies, many of which are beyond the MARS control. 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 the company's third quarter 2024 earnings release and its most recent annual report on Form 10-K. Lamar refers you to those documents. Lamar's third quarter 2024 earnings release, which contains information required by Regulation G regarding certain non-GAAP financial measures was furnished to the SEC on form 8K this morning and is available on the investor section of Lamar's website, www.lamar.com. I would now like to turn the conference over to Sean Riley. Mr. Riley, you may begin.

Thank you, Brittany. Good morning to all and welcome to Lamar's Q3 2024 earnings call. Business trends continue to be encouraging as we near year end. For the third quarter, demand from local and regional advertisers remained robust, and we saw particular strength from our programmatic sales channel, which helped offset broader weakness from our national advertising base. For the quarter, consolidated revenue grew 4% or 3.6% on an acquisition-adjusted basis, the 14th straight quarter of growth for Lamar. Revenue increased across all products, billboards, transit, airport, and logos, and all operating regions. Expenses, meanwhile, ran a little bit hot, increasing 5.4% on an acquisition-adjusted basis versus the year earlier period. Recall that we had a tough comp as a result of some COVID relief grants we received in Q3 of 2023. We also saw some spikes in medical costs and in contract labor costs. in this year's third quarter that contributed to the increase. Some of this was a simple matter of timing. The good news is that we see expense trends correcting in Q4, and Q4 revenue is pacing handily ahead of Q3, aided by record levels of political spend. As a result, as you saw, we have raised our guidance for full-year AFFO per share to a range of $7.85 to $7.95 per share. which at the midpoint would be an increase of nearly 6% over 2023. For the full year, consolidated EBITDA margins should come in right around 47%. Back to Q3, in addition to political, categories of particular strength were services, building and construction, and government and nonprofit. All of these categories skew local. Some of the categories that were weaker, insurance and restaurants, tend to skew national. On a consolidated basis, our local slash regional revenue was up 4.9%, while national was off 2.9%. Our digital revenue grew by nearly 5% in the quarter, with particular strength, as I mentioned, from our programmatic channel, where revenue increased over 70% from the year earlier quarter. We are continuing to see new customers in new categories, such as consumer packaged goods and pharma, in the programmatic out-of-home space. On a same store basis for large format billboard digital, revenue was up 2.1%. Our customers continue to appreciate the flexibility that digital provides, so after somewhat of a slowdown in deployment in 2024, our plan is to reaccelerate our rollout of new units for 2025 with an internal goal of 375 to 400 new digitals. 2024 has been a quiet year on the M&A front, as we expected it would be. Deal flow, however, has begun to pick up, and we anticipate much more activity for tuck-in transactions in 2025. In short, I like how we are finishing 2024, and although it is too soon to make any firm predictions, I believe 2025 is shaping up to be another successful year. I'll leave it there for now and turn it over to Jay to walk you through some more numbers.

Jay? Thanks, Sean. Good morning, everyone, and thank you for joining us. We continue to experience solid top line growth in our portfolio during the third quarter. Our billboard regions grew acquisition adjusted revenue in the low to mid single digits, with the exception of the Gulf Coast, which is relatively flat, growing approximately 50 basis points. Adjusted EBITDA for the quarter was $271.2 million compared to $265.7 million in 2023, which was an increase of 2.1%. or 1.8% on an acquisition adjusted basis. Despite the growth in operating expenses, adjusted EBITDA margin for the quarter was strong at 48.1% and remains well above pre-pandemic levels. Adjusted funds from operations totaled $220.7 million in the third quarter compared to $208.8 million last year, an increase of 5.7%. Diluted AFFO per share increased 5.4% to $2.15 versus $2.04 in the third quarter of 2023. This quarter continued the solid AFFO growth we have experienced this year, with short-term interest rates stabilizing. We have also benefited from mid-single-digit growth on the top line during the first nine months of the year. Local and regional sales grew for the 14th consecutive quarter, but softness in national sales continues to be a headwind to our overall revenue growth. In spite of the backdrop of the national business, we are encouraged by the resilience of local and regional sales which accounted for approximately 79% of billboard revenue in the third quarter. On the capital expenditure front, total spend for the quarter was $30.1 million, including $11.3 million of maintenance CapEx. Through the first three quarters of the year, CapEx totaled $82.3 million, about $36 million of which was maintenance. And for the full year, we anticipate total CapEx of $125 million, with maintenance comprising approximately $50 million. Last month, we extended the company's $250 million AR securitization for three years, and the facility now matures in October 2027. The company maintains a well-lettered debt maturity schedule, and we have no maturities until our $600 million term loan B in February of 2027, with no bond maturities until February of 2028. Based on debt outstanding at quarter end, our weighted average interest rate was approximately 5%, with a weighted average debt maturity of four years. As defined under our credit facility, we ended the quarter with total leverage of 2.91 times net debt to EBITDA, which remains amongst the lowest in the history of the company. Our secured debt leverage was 0.88 times at quarter end, 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. At the end of the quarter, we had approximately $451 million in total liquidity, comprised of $29.5 million of cash on hand and $421.2 million available under our revolving credit facility. Earlier in the quarter, we repaid the company's $350 million term loan aid using cash on hand and a draw on our revolving credit facility. We continue to monitor the debt capital markets, which have improved significantly, and we may take advantage of this favorable environment to issue new senior notes. The use of proceeds from an offering would be to reduce outstandings under the revolver and for general corporate purposes. In September, our Board of Directors approved the extension of our debt and equity repurchase programs, each for up to $250 million. While we do not anticipate activity under either program in the near term, maintaining both preserves our flexibility and is part of our corporate finance strategy. As Sean mentioned, this morning we increased our full-year AFFO guidance for the second time this year. We now expect an AFFO range of $7.85 to $7.95 per share, an increase of 7.5 cents at the midpoint, and up 15.5 cents from our original guidance at the beginning of the year. Full-year cash interest in this morning's guidance totals $166 million, and as I touched on earlier, maintenance capex is budgeted for $50 million, while cash taxes are projected to come in around $10 million. the company paid a cash dividend of $1.30 per share in each of the first and second quarters. In Q3, we increased the dividend to $1.40 per share, and management plans to recommend the same regular dividend, subject to Board approval, for the fourth quarter as well. In addition, and based on current expectations, we will likely recommend a special dividend at year-end of approximately $0.20 per share, depending on the company's operating results. This special dividend which also is subject to Board approval, will ensure we distribute 100% of our taxable income in line with our dividend policy. If both the regular and special dividends are approved, the result will be a full-year cash dividend of $5.60 per share. Once again, we are pleased with the strength of our local and regional sales through the first three quarters, as well as the momentum we saw in October's results, and look forward to executing on our business plan for the balance of the year. I'll now turn the call back over to Sean. Thanks, Jay.