Friday, July 19, 2024

Analyzing Lamar Advertising Company’s Strong Performance in Q4 2023 Despite Macroeconomic Uncertainties


Lamar Advertising Company (NASDAQ:LAMR) Q4 2023 Earnings Call Transcript

Good morning, and welcome to Lamar Advertising Company’s Fourth Quarter 2023 Earnings Call. I’m pleased to share an overview of our performance for the past year, particularly the fourth quarter, which saw some noteworthy developments.

The year 2023 was solid for Lamar Advertising Company, demonstrating our resilience in the face of macroeconomic uncertainties and a downturn in national advertising spending. Despite these challenges, our local managers exhibited exceptional cost control, contributing to a record adjusted EBITDA margin of 46.7%. This achievement underscores the strength and dedication of our team throughout the year.

In the fourth quarter, we saw revenue increase by 2.5% on an acquisition-adjusted basis, with December showing the strongest year-over-year growth for any month in 2023 at 4%. This growth, alongside virtually flat acquisition-adjusted expenses, led to a 5.1% increase in EBITDA and an impressive EBITDA margin of 48.2% for the quarter.

Our Adjusted Funds From Operations (AFFO) also surpassed our revised guidance, reaching $7.47 per share for the full year—landing at the midpoint of our initial forecast. For 2024, we anticipate an AFFO per share range of $7.67 to $7.82, reflecting a projected increase of about 3.7%. This outlook is based on expected same-store revenue growth of approximately 3.2% and similar growth in consolidated expenses.

The fourth quarter showcased strength in several categories, notably services, automotive, and amusement and entertainment, while retail, gaming, and insurance saw a decline, largely due to a heavier national focus which decreased by 4.3%. However, our local business continued to grow, increasing by 3.3%. The disparity between local and national ad spending is expected to persist into 2024, though we remain optimistic about our performance moving forward.

Programmatic advertising was a highlight in the fourth quarter, with a 10% increase, and political advertising, as expected, was lower compared to the same period in 2022. Digital billboard revenue also continued to grow, accounting for 31% of our billboard billings, albeit at a slightly lower rate on a same-store basis compared to the fourth quarter of 2022.

Throughout 2023, we completed 36 acquisitions totaling $139 million and anticipate a quieter year on the acquisition front for 2024. Our focus will be on using a significant portion of our free cash flow to pay down our term loan A, thereby reducing interest expenses and enhancing our financial position for future opportunities.

We are proud of our achievements in 2023 and are well-prepared for continued growth in 2024. With the strength of our team and our focus on performance and efficiency, we are positioned for success in the evolving advertising landscape.

Turning to our financials, we ended the fourth quarter with strong results, surpassing expectations in revenue, adjusted EBITDA, and AFFO. Notably, AFFO per share saw a remarkable 9.9% increase to $2.10 on a fully diluted basis. Despite the challenges posed by rising interest rates, we closed the year above our revised AFFO outlook.

Our balanced debt maturity schedule, with no maturities until 2025, combined with plans to pay down our Term Loan A this year, demonstrates our prudent financial management. We are committed to maintaining a strong balance sheet, providing us with significant investment capacity while keeping within our target leverage range.

In closing, I’d like to express my gratitude to our exceptional team members for their extraordinary efforts in 2023, which have set the stage for promising growth in 2024. We continue to lead in the out-of-home advertising space, propelled by our commitment to excellence and strategic focus.

Thank you for your continued support and interest in Lamar Advertising Company. We look forward to sharing more of our successes as we progress through 2024.

Jordan Clark
Jordan Clark
Jordan Clark brings a dynamic and investigative approach to business reporting. Holding a degree in Business Administration and a certification in Data Analysis, Jordan has an eye for detail and a knack for uncovering the stories behind the numbers. His career began in the bustling world of Silicon Valley startups, giving him firsthand experience in tech entrepreneurship and venture capital. Jordan's reports often focus on technology's impact on business, startup culture, and emerging

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