Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lamar Advertising Co (LAMR, Financial) reported a 4.1% increase in revenue on an acquisition-adjusted basis for Q4 2024 compared to Q4 2023.
- The company achieved a full-year AFFO per share of $7.99, exceeding the top end of their revised guidance.
- Lamar Advertising Co (LAMR) increased its distribution by 13% for the year.
- The company plans to deploy at least 350 new digital displays in 2025, indicating a strong commitment to expanding its digital footprint.
- Lamar Advertising Co (LAMR) successfully divested its 20% interest in Vistar Media, resulting in a significant return on investment.
Negative Points
- The company's 2025 AFFO guidance was below Street estimates, attributed to lower expected net income and higher maintenance CapEx.
- Depreciation and amortization expenses increased significantly due to a revision in asset retirement obligations, impacting financial results.
- Lamar Advertising Co (LAMR) faces challenges in replacing political advertising revenue, which was substantial in Q4 2024.
- National advertising growth has lagged behind peers, partly due to Lamar's footprint not being as robust in top DMAs like New York and L.A.
- The company anticipates a modest revenue growth of 3% in 2025, which is lower than some industry estimates for out-of-home ad revenue growth.
Q & A Highlights
Q: Amex good to hear the national ad spend, it's perking up a bit. Curious if that's driven by any specific vertical or if it's more broad-based? And in your view, what may be driving the turnaround there? And then secondly, the 2025 AFFO guidance was a bit below Street estimates. It seems to be a function of lower expected net income. Is that driving most of this? Or are you expecting higher costs anywhere?
A: Sean Reilly, CEO: The AFFO guidance reflects a few factors. We won't have the Vistar net income benefit this year, and there's slightly higher maintenance CapEx. We're also in peak spend for our ERP conversion, which will continue until Q1 next year. Revenue growth will be softer in Q1 but is expected to accelerate throughout the year.
Q: Sean, you noted $150 million of potential M&A this year. Can you speak a bit to the pipeline right now? Should we assume that figure comprises mostly small deals?
A: Sean Reilly, CEO: The M&A pipeline includes a range of deal sizes, from $2 million to $50 million. We are seeing typical Lamar tuck-in activity and are being active and aggressive. Regarding T-Mobile's acquisition of Vistar, it bodes well for the industry as they have unique insights into consumer behavior and marketing.
Q: When comparing your national growth to some of your peers, it looks like the recovery has lagged behind a bit. Can you help us unpack why that may be?
A: Sean Reilly, CEO: Our footprint is less robust in top DMAs like New York and L.A., where national ad spend is focused. Additionally, categories like entertainment, which are recovering, tend to focus on L.A., where our peers have a stronger presence.
Q: I have two questions on CapEx. Could you give us a sense for the expected cadence of digital conversions spend? And would you expect the pattern of increased Q4 CapEx to repeat in 2025?
A: Sean Reilly, CEO: The cadence of digital spend will be ratable through the year. Total CapEx will increase due to extraordinary CapEx in our logo division and building refurbishments. The Q4 uptick last year was partly due to hurricane-related expenses.
Q: On the '25 guidance, the revenue growth is 3%. How does this compare to industry estimates of 5% domestic out-of-home ad revenue growth?
A: Sean Reilly, CEO: Industry estimates include broader out-of-home categories not in our portfolio, like retail television networks and cinema advertising. Our projected growth reflects our specific portfolio and market conditions.
Q: Regarding the deployment of new digital signs, what do you consider the limiting factor for the pace of static digital conversions?
A: Sean Reilly, CEO: Regulatory permitting is a major factor, as it requires time and effort. Construction projects also involve retrofitting structures, ensuring no supply chain issues, and coordinating crews and power hookups. If we hit 375 deployments, it will be a record year for us.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
