Lamar Advertising Company

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 will open the floor for questions. To ask a question at that time, please press star 1 on your telephone. 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. 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 fourth quarter 2024 earnings release and its most recent annual report on Form 10-K. Lamar refers you to those documents. Lamar's fourth quarter 2024 earnings release, which contains information required by Regulation G regarding certain non-GAAP financial measures, was furnished to the SEC on a Form 8-K 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 Mr. Sean Riley. Please go ahead, sir.

Thank you, Bo. Good morning and welcome to Lamar's Q4 2024 earnings call. We ended 2024 on a positive note. Revenue growth accelerated from Q3 aided by political with local and programmatic again leading the way. For the quarter, revenue was up 4.1% on an acquisition adjusted basis compared to Q4 of 2023. increases across all our lines of business, outdoor, logos, transit, and airports. IBTRAC grew 3.9% on the same acquisition-adjusted basis. As a result, we delivered full-year AFFO of $7.99 per share, 4 cents above the top end of the revised guidance range that we provided at the end of Q3, and 17 cents above the top end of our original guidance for 2024. For the full year, AFFO per share increased 7%, bolstered by acquisition-adjusted revenue growth of 4.2%, EBITDA growth of 4.5%, and a slight improvement in our EBITDA margin to 46.8%, all of which allowed us to increase our distribution by 13%. As we think about 2025, we anticipate another year of growth. Local sales remain solid, and it feels like national is firming up after a couple of tough years. As you saw in the release, we are guiding to full-year AFFO per share in the range of $8.13 to $8.28. Embedded within that guidance is an expectation for acquisition, adjusted revenue growth in the range of 3%, with a similar percentage increase in operating expenses. Year-over-year revenue growth will be more modest in the first quarter. Recall that we had an extra sales day last year due to the leap year. but our pacings show that growth is picking up as the year unfolds, and last night we announced another significant increase in our dividend for 2025 to a run rate of $6.20 per share. Back to Q4. In addition to political, categories of strength included service, buildings and construction, and government and nonprofits, while health care and insurance were weaker. For the billboard business, both local and national slash programmatic, grew 3.5% for the quarter. Digital, of course, led the way in Q4, increasing nearly 8% versus the year earlier quarter, including a 3.7% same store growth, with particular strength in programmatic, which was up nearly $3 million, or 30%. That same store growth, the best of any quarter in 2024, gives us confidence that it is the right decision to reaccelerate our rollout of new units, new digital units, in 2025 with a goal of deploying at least 350 new displays organically. We will, of course, also add digital displays through M&A as well in 2025. As you know, the market was relatively quiet in 2024, and we tempered our own activity as we focused on further improving our already strong balance sheets. We ultimately spent about $45 million in acquisitions in 2024. We anticipate a more active year in 2025. If I had to call it now, I would say count on about $150 million in deals, though it could be even more than that. Now, we're more accustomed to being a buyer, not a seller in the M&A world. But as noted in the release earlier this year, we divested our 20% interest in Vistar Media, the leading programmatic platform for out-of-homes. We sold to T-Mobile as part of their acquisition of all of Vistar. It was a resoundingly successful investment for Lamar. We paid $30 million in 2021 for our 20% stake, and we received $115 million from T-Mobile earlier this month, with $15 million more due once escrows are released. I want to commend Ross Riley, who led the Vistar investment for us. Jay will have more to say about our plans for the Vistar proceeds, But I want to note that the decision by T-Mobile, one of the best-known consumer brands and most sophisticated marketers around, to acquire Vistar is a testament to their faith in out-of-home as a powerful communications medium with a promising future. We are confident that they can utilize their data and market insights to take Vistar and programmatic out-of-home to new heights. Finally, before I turn it over to Jay, I want to thank everyone across Lamar Land for their hard work and dedication in 2024. I can't say it enough. We have the best team in out of home, and I can't wait to see what more we will be able to accomplish together in 2025.

Jay? Thanks, Sean. I couldn't agree with you more. Good morning, everyone, and thank you for joining us. We had a solid fourth quarter and are pleased with our results, which exceeded internal expectations across revenue, adjusted EBITDA, and AFFO. Growth in AFFO continued in the fourth quarter. Diluted AFFO per share increased 5.2%. to $2.21 versus $2.10 in the fourth quarter of 2023. In addition, the company ended the year above the high end of our revised FFO outlook, which we increased following both the first and third quarters last year. Despite growth in operating expenses, adjusted EBITDA margin for the quarter held strong at 48.1% and continues to exceed pre-COVID levels. Adjusted EBITDA for the quarter was $278.5 million, compared to $268.2 million in 2023, which was an increase of 3.9%. Free cash flow also improved in the quarter, growing 8.5% over Q4 2023. In the quarter, depreciation and amortization expense increased $164.9 million, growing over 230%. This was primarily due to a revision in the cost estimate included in calculation of the company's asset retirement obligations, ARO accounts for Lamar's obligation to dismantle and remove over 71,000 billboard structures on lease plan and restore the sites to original condition. We test our ARO estimate annually, and the cost to retire these assets has risen substantially, which led to an increase in our depreciation and amortization expense during the quarter. However, the expense is a non-cash item and does not impact the company's adjusted EBITDA or AFFO. For the full year, acquisition adjusted revenue increased 4.2% to $2.21 billion compared to $2.11 billion the prior year. Operating expenses grew approximately 4% against a difficult 2023 comparison in which acquisition adjusted expenses increased only 1%. Adjusted EBITDA was $1.03 billion, which represents an increase of 4.5% on an acquisition adjusted basis. Adjusted EBITDA margin was 46.8% for the full year, expanding 10 basis points versus a year ago. We were pleased to see margin hold steady, given upward pressure on the expense side. The company ended 2024 with full-year diluted AFFO of $7.99 per share, which was above the top end of our advised guidance. For the 12 months ended December 31st, diluted AFFO per share increased 7% compared to full-year 2023. The acceleration in AFFO growth was driven by a strong top line, and we also benefited from the pause in short-term interest rate hikes. We faced significant interest rate headwinds in both 2022 and 2023 that subsided last year, with cash interest remaining relatively flat in 2024. Local and regional sales accounted for approximately 78% of billboard revenue in Q4, similar to the same period in 2023, and growing for the 15th consecutive quarter. In fact, the first quarter of 2021 was the last quarter in which we saw a year-over-year decline in local and regional sales, a COVID-impacted quarter in comparison to the pre-COVID period a year prior in 2020. This consistent performance exhibits the resilience of our core local advertising business and differentiates the company from our peer group. Moving to capital expenditures, total spend for the quarter was approximately $43 million, including $16.3 million of maintenance CapEx. And for the full year, CapEx total $125.3 million with maintenance CapEx comprising $52 million. As for our balance sheet, we have a well-laddered debt maturity schedule with no maturities until the term loan B in 2027. Last year, we used a substantial amount of our cash flow after distribution to repay outstandings under the term loan A and reduced overall debt by $136 million. We currently have approximately $3 billion in total consolidated debt, and our weighted average interest rate is 4.6%, with a weighted average debt maturity of 3.8 years. As defined under our credit facility, we ended the quarter with total leverage of 2.83 times net debt to EBITDA, which remains amongst the lowest level ever for the company. Our secured debt leverage was 0.82 times at quarter end, and we're comfortably in compliance with both our total debt incurrence and secured debt maintenance debts, against covenants of 7 times and 4.5 times, respectively. As a result of the focus on our balance sheet, the company is well positioned to resume more normal acquisition activity with an investment capacity well over $1 billion. In addition, we have the ability to deploy this capital while remaining at or below the high end of our total leverage range of 3.5 to 4 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 December 31st, we had just over $500 million in total liquidity, comprised of $49.5 million of cash on hand, and $457 million available under our revolver. As Sean mentioned, subsequent to quarter end, T-Mobile acquired 100% of Vistar Media, a company in which we had a 20% investment. Lamar received $115 million as consideration for the sale and we may receive an additional $15 million from escrow following certain post-closing conditions. Proceeds from the sale were used to repay out standings under our revolving credit facility and the current balance on our revolver is $119 million. The $130 million in total consideration is return of over four times our initial investment and the company will recognize a taxable gain of approximately $100 million on the transaction. The Vistar investment was held within our taxable REIT subsidiary, and the gain is subject to federal and state income taxes prior to distribution to the REIT. As part of distributing funds to the REIT, we plan to use a portion of the cash after taxes to repay intercompany loans from the REIT to the TRS. We also intend to utilize additional tax deductions at the REIT, which will further reduce our taxable income. As a result, we currently estimate our distribution requirement associated with the Vistar sale to be in the $15 to $20 million range and will likely be distributed in the form of a special dividend at year end. In this morning's press release, we provided four-year AFFO guidance of $8.13 to $8.28 per share, reflecting AFFO growth of 1.8 to 3.6% over 2024. At the midpoint of guidance, We expect top-line growth of about 3%, and operating expenses should grow slower in 2024. As we did last year, we are assuming SOFR remains flat for purposes of cash interest and have included $152 million in our guidance. Our maintenance capex budget for the year is anticipated to be $60 million in 2025, which is $8 million more than last year. And finally, cash taxes are projected to come in at approximately $10 million. Yesterday, our board of directors approved a first quarter dividend of $1.55 per share, and we expect to distribute a regular dividend of at least $6.20 per share in 2025. This excludes any required distribution resulting from the Vistar sale. On an annualized basis, the Q1 dividend represents a yield of 4.7% at yesterday's closing stock price. As a reminder, the company's dividend is based on taxable income, subject to board approval. And our dividend policy remains to distribute 100% of our taxable income. Again, we're pleased with our fourth quarter performance and the strong finish to 2024. And we look forward to executing on our strategy in 2025. I'll now turn the call back over to Sean.