Lamar Advertising Company

Excuse me, everyone. We now have Sean Riley and Jay Johnson in conference. Please be aware that each of your line 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, please press star 1 on your telephone keypad. To leave the queue at any time, please press star 2. 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 distribution 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 first quarter 2026 earnings release and its most recent annual report on Form 10-K. Lamar refers you to those documents. Lamar's first quarter 2026 earnings release which contains information required by Regulation G regarding certain non-GAAP financial measures, was furnished to the SEC on a Form 8K 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 Riley. Mr. Riley, you may begin.

Thank you, Katie. Good morning, all, and welcome to Lamar's Q1 2026 earnings call. The year is shaping up quite well for us. Our first quarter results exceeded our internal expectations on both the top and bottom lines, with strength from both local and particularly national customers. And our forward bookings are very promising. We are pacing to the top end, if not above, the guidance that we previously provided for full year AFFO per share. If that trend continues, we will need to revisit that guidance on the August call. I am particularly encouraged by the momentum on the national side, which, as you know, was bumpy through 2023 and 2024 before beginning to recover last year. For the first quarter, national revenue increased 5.8% versus the first quarter of 2025, with programmatic growing by nearly 25% to approximately $11 million for the quarter. Ex-programmatic, national was up 4.1%. Pacings for the balance of 2026 are even stronger than that. We are seeing increased spend from some long-time national customers as well as activity from new accounts and categories. What it tells me is that in an increasingly algorithm-driven world, out-of-homes ability to reach customers at scale with memorable messages at affordable prices is resonating with both big brands and local advertisers. Back to Q1. Consolidated revenue increased 3.9% on an acquisition-adjusted basis with growth across all divisions, billboards, airports, transit, and logos, and across all of our regions. Our pacing suggests that revenue growth will accelerate into Q2. For the quarters completed, EBITDA grew by 5.2% on an acquisition-adjusted basis on a margin that improved by approximately 130 basis points. versus the year earlier quarter. Categories of strength in Q1 included services, restaurants, gaming, political, and insurance, while education and telecom were a tad weaker. In addition to national growth mentioned earlier, local grew 3%. Digital again led the way with revenues increasing 5% on a same-board basis and accounting for more than 30% of our revenue in the quarter. Rates on our analog bulletins and posters, meanwhile, showed a healthy growth, of 3%. On the M&A front, we are off to an active start. So far in 2026, we have completed 19 acquisitions for a total cash purchase price of $80 million, and we have a solid pipeline working and potential for more accretive billboard deals. Meanwhile, we have ramped up our efforts to secure easements beneath our best performing locations, and we are optimistic about what we will be able to accomplish there in 2026. That's a great use of our capital, by the way. All in all, I could not be more pleased with how 2026 has begun. With that, I will turn it over to Jay to walk you through some additional numbers. Jay?

Thanks, John. Good morning, everyone, and thank you for joining us. We had a solid first quarter and are extremely pleased with our results, which exceeded our own estimates across revenue, adjusted EBITDA, and AFFO. The airport business led the way with acquisition adjusted revenue increasing 15.5%, in Q1 versus last year, followed by Logos, which was up 6.3% in the quarter. Our billboard regions all experienced low- to mid-single-digit top-line growth, driven by the Midwest and Atlantic, which were up 5.7% and 4.8% respectively. In addition, the positive momentum continued in April, with revenue increasing 4.8%, outpacing our original budget. April's strong performance brings acquisition-adjusted revenue to 4.1% through the first four months of the year, and we are excited about our booking pace for the balance of the second quarter. Acquisition-adjusted consolidated expenses increased 3% in the quarter, which was better than expected and should be in the 3% range for the full year. Adjusted EBITDA was $226.3 million compared to $210.2 million in 2025, an increase of 7.7% in the quarter. improving 5.2% on an acquisition-adjusted basis. This was the strongest growth we've seen in almost two years. Adjusted EBITDA margin expanded 130 basis points over a year ago to 42.9%. Adjusted funds from operations totaled $177.5 million in the first quarter compared to $164.3 million last year, an increase of 8%. Diluted AFFO per share grew 7.5% to $1.72 per share versus $1.60 in the first quarter of 2025. Local and regional sales accounted for approximately 82% of billboard revenue in Q1, growing for the 20th consecutive quarter. In fact, it has been five years since the portfolio last experienced a year-over-year decline in local and regional sales, which was due to COVID. On the capital expenditure front, total spend for the quarter was $33.1 million, including $9.3 million of maintenance capex. And for the full year, we anticipate total capex of approximately $186 million, with maintenance capex comprising $64 million. As for our balance sheet, we have a well-laddered debt maturity schedule, with no maturities until the AR securitization in October 2027, and no senior notes maturity until February 2028. We will likely extend the securitization later this year, assuming market conditions remain favorable. The company currently has approximately $3.5 billion in total consolidated debt, and our weighted average interest rate is 4.5%, with a weighted average debt maturity of 4.3 years. As defined under our credit facility, we ended the quarter with total leverage of three times net debt to EBITDA, which remains amongst the lowest level ever for the company. Our secured debt leverage was 0.7 times at quarter end, and we're in compliance with both our total debt and currents and secured debt maintenance tests against covenants of seven times and 4.5 times, respectively. For the full year, we expect total leverage to hover around three turns, with secured leverage coming in comfortably below one-time net debt to EBITDA. In addition, our LTM interest coverage through March 31st was seven times adjusted EBITDA to cash interest, further demonstrating the strength of the company's balance sheet. As Sean mentioned, M&A has been active thus far in 2026. We continue to benefit from an investment capacity well over $1 billion, with the ability to deploy this capital while remaining at or below the high end of our target leverage range of 3.5 to 4 times net debt to EBITDA. Our liquidity and access to capital both remain strong. As of March 31st, we had just over $700 million in total liquidity, comprised of $39.3 million of cash on hand and $662.2 million available under our revolver. The company's AR securitization had $242.1 million outstanding at quarter end. Subsequent to quarter end, the company repaid $40 million on the revolving credit facility, and we currently have $40 million outstanding. Also, the AR securitization is now fully drawn at $250 million. In this morning's release, we affirmed our four-year AFFO guidance of $8.50 to $8.70 per share. Cash interest in our guidance totals $154 million and assumes no change in short-term floating interest rates for the balance of the year. As I touched on earlier, maintenance capex is budgeted for $64 million in 2026, and cash taxes are projected to come in around $11.5 million, which is slightly higher than our original expectations. And finally, our dividend. We paid a cash dividend of $1.60 per share in the first quarter. Management's recommendation at the upcoming board meeting will be to declare a cash dividend of $1.60 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. For the full year, we still expect to distribute a regular dividend of at least $6.40 per share. On an annualized basis, the second quarter proposed dividend represents a yield of 4.5% at yesterday's closing stock price. Given the outperformance in Q1 and expectations for Q2, it is likely management will request that the Board approve increasing the dividend in the back half of the year. However, and 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 are pleased with a strong start to the beginning of the year, as well as the momentum that has continued into the second quarter, and we look forward to executing on our strategy throughout 2026. I'll now turn the call back over to Sean.