Release Date: November 08, 2024
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% increase in consolidated revenue for Q3 2024, marking the 14th consecutive quarter of growth.
- The company saw strong performance in local and regional sales, which grew by 4.9%, offsetting the decline in national sales.
- Digital revenue grew by nearly 5% in the quarter, with programmatic sales increasing over 70% from the previous year.
- Lamar Advertising Co (LAMR) raised its full-year AFFO per share guidance to a range of $7.85 to $7.95, reflecting a nearly 6% increase over 2023.
- The company maintained a strong adjusted EBITDA margin of 48.1% for the quarter, well above pre-pandemic levels.
Negative Points
- Operating expenses increased by 5.4% on an acquisition-adjusted basis, driven by spikes in medical costs and contract labor.
- National sales declined by 2.9%, presenting a headwind to overall revenue growth.
- The Gulf Coast region showed relatively flat revenue growth, only increasing by approximately 50 basis points.
- The company experienced a slowdown in M&A activity in 2024, which may impact future growth opportunities.
- Programmatic sales, while growing, have a higher cost of sale at 10%, compared to the overall cost of sales at 6%, impacting margins.
Q & A Highlights
Q: As you look ahead into 2025, how are you thinking about the growth opportunity and potential growth drivers?
A: Sean Reilly, President and CEO, stated that they are looking to programmatic advertising as a growth contributor and expect a rebound in national advertising. They are also seeing new customers in programmatic channels, such as consumer packaged goods and pharma, which traditionally haven't been big players in out-of-home advertising.
Q: Could you discuss the current state of programmatic ad spending out-of-home and its long-term industry impacts?
A: Sean Reilly explained that Lamar limits its programmatic channel to national customers and digital specialist buying agencies. The universe of buyers is growing, and programmatic advertising is expected to become more important as it opens up to traditional ad players and eventually to local and regional books.
Q: The AFFO guidance is up, but the earnings number fell. Could you explain the dichotomy between earnings and AFFO?
A: Jay Johnson, CFO, explained that the difference is due to stock compensation plans, which are non-cash. The stock price is significantly higher than last year, impacting the value of the stock compensation plan. Additionally, the company is tracking better against budget, leading to higher payout percentages.
Q: Can you provide insights on the political contribution for Q4 and whether you picked up any ad dollars from TV broadcasters' political crowd out?
A: Sean Reilly mentioned that political contributions are expected to be around $15 million in Q4, totaling close to $30 million for the year. While it's difficult to measure, some ad dollars from TV broadcasters likely shifted to Lamar due to political crowd out.
Q: What are the potential revenue uplifts from adding more digital billboards next year?
A: Sean Reilly explained that converting a static unit to digital typically increases revenue by 5 to 6 times. A static unit generating about $3,000 a month can be converted to a digital unit, costing over $200,000, and generate approximately $15,000 a month.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
