Lamar(US:LAMR)2025-02-20 19:49Part I Business Lamar Advertising, a leading U.S. outdoor advertising REIT, operates billboard, logo sign, and transit segments, emphasizing local sales and digital investment Company Operations Company operations are segmented into billboard, logo sign, and transit advertising, with digital billboards and state-contracted logo signs being key revenue drivers - As of December 31, 2024, the company operated approximately 159,000 billboard displays. Digital billboards, numbering around 5,000, generated approximately 32% of the total billboard advertising net revenue3540 - Lamar is the largest provider of logo sign services in the U.S., operating 23 of the 26 privatized state logo contracts. As of December 31, 2024, four of its 24 logo sign contracts are subject to renewal or expiration in 20254447 - The company operates approximately 47,500 transit advertising displays in over 80 markets. Contracts are typically with local municipalities and airport authorities for terms of 3-10 years50 Advertising Tenants The company's diverse tenant base ensures no single client dominates, with top industries like Services, Health Care, and Restaurants collectively contributing 72% of billboard advertising net revenues Top Billboard Advertising Industries by Revenue (FY 2024) | Category | Percentage of Net Billboard Advertising Revenues | | :--- | :--- | | Service | 17% | | Health Care | 10% | | Restaurants | 9% | | Retailers | 8% | | Automotive | 5% | | Amusement/Attractions | 5% | | Gaming | 4% | | Financial — Banks, Credit Unions | 4% | | Education | 4% | | Total from Top Industries | 72% | Human Capital Resources Lamar employs over 3,500 people, emphasizing employee development and diversity, with local account executives and management averaging 12 years of tenure - As of December 31, 2024, the workforce was approximately 37% female, and 18% of employees identified as minorities. At the executive level, 33% of named executive officers were minorities, and 33% of the Board of Directors was female79 - The company has a small unionized workforce of approximately 100 employees and reports a favorable relationship, with no history of strikes or work stoppages75 Advertising Display Portfolio as of December 31, 2024 | Display Type | Count | States/Provinces | Source Chunks | | :--- | :--- | :--- | :--- | | Billboards | ~159,000 | 45 states and Canada | [19] | | - Digital Billboards | ~5,000 | 43 states and Canada | [20] | | Logo Signs | >138,200 | 23 states and Ontario, Canada | [21] | | Transit Displays | ~47,500 | 23 states and Canada | [22] | - The company reorganized into an Umbrella Partnership Real Estate Investment Trust (UPREIT) structure in 2022, which allows property owners to contribute appreciated properties on a tax-deferred basis24 - Key operating strategies include: - Local Focus: Approximately 79% of outdoor net revenues in 2024 came from local advertising, supported by about 975 local account executives - Internal Growth: Focus on improving occupancy rates and increasing advertising rates in existing markets - Capital Investment: Invested approximately $1.24 billion in capital expenditures since January 1, 2015, to upgrade and construct displays - Digital & Programmatic: Reinvesting in digital technology ($60.7 million in 2024) and growing the programmatic out-of-home channel, which currently represents 2% of the outdoor business262931 Risk Factors The company faces risks across capital structure, business operations, industry dynamics, and REIT status, including substantial debt, acquisition challenges, economic sensitivity, and REIT compliance Risks Related to Our Capital Structure Significant indebtedness of $3.21 billion limits operational flexibility and financing, while the Reilly family's 62% voting power allows control over major corporate decisions - As of December 31, 2024, Lamar Media had approximately $3.21 billion of total debt outstanding, with the ability to incur substantially more debt under its existing agreements84 - The Reilly family and their affiliates hold approximately 62% of the voting power of Lamar Advertising's outstanding capital stock, giving them control over the election of the board and the outcome of any corporate transaction requiring stockholder approval94 Risks Related to Our Business Business risks include acquisition strategy challenges, goodwill impairment, contract renewal dependencies, uninsured losses, and realizing benefits from digital technology investments - The company's growth strategy relies on acquisitions, with approximately $45.4 million spent in 2024. This strategy faces risks such as a dwindling pool of suitable candidates and increased competition for assets9798 - A significant portion of revenue is dependent on contracts that require periodic renewal. In 2024, approximately 4% of revenues came from state-awarded logo sign contracts and 8% from transit advertising contracts100102 Risks Related to Our Industry Industry risks include advertising spending sensitivity to economic conditions, intense competition, and extensive government regulation, which restricts expansion and may require billboard removal - Advertising spending is highly sensitive to economic changes, and a decline in general advertising expenditures could significantly depress company revenues111115 - The outdoor advertising industry is subject to significant regulation at federal, state, and local levels, which can restrict expansion and may require the removal of existing billboards116117 Risks Related to Our Status as a REIT Maintaining REIT status involves complex tax rules; failure would result in corporate taxation and reduced cash, while the 90% distribution requirement may limit retained earnings or necessitate borrowing - If the company fails to qualify as a REIT, it would be taxed as a corporation and could not re-elect REIT status for four years, which would substantially reduce cash available for distributions126 - To maintain REIT status, the company must distribute at least 90% of its REIT taxable income annually. This requirement may necessitate borrowing funds or selling assets to fund distributions, increasing leverage132135 Cybersecurity The company manages cybersecurity risks through an enterprise risk management process, involving a dedicated information security team, proactive assessments, and board oversight - The cybersecurity program is overseen by the Senior Vice President of Technology and Innovation and the Vice President of Network Infrastructure and Cyber Strategy151 - While no material financial losses from cyber-attacks have occurred to date, the company acknowledges that risks and exposures are expected to remain high due to the evolving nature of threats150 Properties The company's real estate portfolio includes headquarters, owned and leased operating facilities, and approximately 71,500 leased advertising sites with an annualized lease expense of $334.5 million in 2024 - As of December 31, 2024, the company leased approximately 71,500 outdoor sites for its advertising structures, representing an annualized lease expense of about $334.5 million, or 17% of billboard advertising net revenues153 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Lamar's Class A common stock trades on NASDAQ, while Class B is privately held; as a REIT, the company must distribute 90% of taxable income, and a $250.0 million stock repurchase program was extended with no repurchases made - The Board of Directors authorized a repurchase program for up to $250.0 million of Class A common stock, which has been extended through March 31, 2026. No shares were repurchased under this program as of December 31, 2024161 Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Lamar Advertising and Lamar Media's FY2024 financial condition and results, covering revenue, expenses, segment performance, non-GAAP measures, liquidity, and capital resources Lamar Advertising Company - Results of Operations In FY2024, net revenues grew 4.6% to $2.21 billion, but operating income decreased by $143.4 million to $532.0 million due to a $169.5 million increase in depreciation, resulting in net income of $362.9 million Financial Performance Summary (FY 2024 vs. FY 2023) | Metric | 2024 (in millions) | 2023 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $2,207.1 | $2,111.0 | +$96.1 | +4.6% | | Operating Income | $532.0 | $675.4 | -$143.4 | -21.2% | | Net Income | $362.9 | $496.8 | -$133.9 | -26.9% | - The primary driver for the decrease in operating income was a $169.5 million increase in depreciation and amortization, resulting from a revised cost estimate for asset retirement obligations181 Key Performance Indicators (Non-GAAP) | Metric | 2024 (in millions) | 2023 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $1,033.1 | $985.7 | +$47.4 | +4.8% | | FFO | $798.4 | $767.9 | +$30.5 | +4.0% | | AFFO | $819.0 | $762.3 | +$56.7 | +7.4% | Lamar Advertising Company - Liquidity and Capital Resources As of December 31, 2024, total liquidity was $506.7 million, with cash from operations at $873.6 million; key cash uses included $125.3 million in capital expenditures, $45.4 million for acquisitions, and $578.8 million in dividends - Total liquidity as of December 31, 2024, was $506.7 million, consisting of $49.5 million in cash and $457.2 million available under the revolving credit facility193 Capital Expenditures (FY 2024) | Category | Amount (in millions) | | :--- | :--- | | Growth | $63.5 | | Maintenance | $52.0 | | Other non-recurring | $9.8 | | Total | $125.3 | - During 2024, the company completed 24 acquisitions for a total of $45.4 million and paid dividends of $5.65 per share, totaling $578.8 million234235 - On July 31, 2024, Lamar Media fully repaid its $350.0 million in Term A loans using borrowings from its revolving credit facility and cash on hand229 Lamar Media - Results of Operations Lamar Media's FY2024 results mirrored its parent, with net revenues growing 4.6% to $2.21 billion, but operating income decreased to $532.6 million due to higher depreciation, resulting in net income of $363.5 million Lamar Media Financial Performance (FY 2024 vs. FY 2023) | Metric | 2024 (in millions) | 2023 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $2,207.1 | $2,111.0 | +$96.1 | +4.6% | | Operating Income | $532.6 | $675.9 | -$143.3 | -21.2% | | Net Income | $363.5 | $497.3 | -$133.8 | -26.9% | Lamar Media Key Performance Indicators (Non-GAAP) | Metric | 2024 (in millions) | 2023 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $1,033.6 | $986.2 | +$47.5 | +4.8% | | FFO | $799.0 | $768.4 | +$30.6 | +4.0% | | AFFO | $819.6 | $762.8 | +$56.8 | +7.4% | Quantitative and Qualitative Disclosures About Market Risk The company faces market risk from interest rate fluctuations on its variable-rate debt, with $1.13 billion (35.0%) subject to variable rates, where a 200 basis point increase would raise 2024 interest expense by $23.8 million - At year-end 2024, approximately $1.13 billion (35.0%) of the company's long-term debt was subject to variable interest rates271 - A 200 basis point increase in interest rates would have resulted in an estimated $23.8 million increase in interest expense for fiscal year 2024271 Financial Statements This section presents the consolidated financial statements for Lamar Advertising and Lamar Media, including independent auditor reports, balance sheets, income statements, equity statements, cash flow statements, and detailed notes Lamar Advertising Company Financial Statements Presents Lamar Advertising Company's audited consolidated financial statements for FY2024, with total assets of $6.59 billion and net income of $362.9 million Consolidated Balance Sheet Highlights (December 31, 2024) | Account | Amount (in thousands) | | :--- | :--- | | Total Current Assets | $425,268 | | Net Property, Plant and Equipment | $1,600,809 | | Goodwill | $2,035,082 | | Total Assets | $6,586,549 | | Total Current Liabilities | $778,474 | | Long-term Debt (net) | $2,961,058 | | Total Liabilities | $5,538,529 | | Total Stockholders' Equity | $1,048,020 | Consolidated Statement of Income (Year Ended December 31, 2024) | Account | Amount (in thousands) | | :--- | :--- | | Net Revenues | $2,207,103 | | Operating Income | $532,040 | | Income Before Income Tax | $367,470 | | Net Income | $362,939 | | Diluted EPS | $3.52 | Lamar Media Corp. Financial Statements Presents Lamar Media Corp.'s audited consolidated financial statements for FY2024, with total assets of $6.57 billion and net income of $363.5 million Consolidated Balance Sheet Highlights (December 31, 2024) | Account | Amount (in thousands) | | :--- | :--- | | Total Assets | $6,569,807 | | Total Liabilities | $5,527,868 | | Total Stockholder's Equity | $1,041,939 | Consolidated Statement of Income (Year Ended December 31, 2024) | Account | Amount (in thousands) | | :--- | :--- | | Net Revenues | $2,207,103 | | Operating Income | $532,608 | | Net Income | $363,507 | Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with no material changes identified during the fourth quarter - Management concluded that both disclosure controls and procedures and internal control over financial reporting were effective as of the end of the fiscal year583584 Part III Directors, Compensation, Security Ownership, and Accountant Fees Information for Items 10-14, covering directors, compensation, security ownership, related party transactions, and accounting fees, is incorporated by reference from the forthcoming 2025 Proxy Statement - Detailed information regarding corporate governance, executive compensation, and security ownership is not included directly in this 10-K but is incorporated by reference from the forthcoming 2025 Proxy Statement594596597 Part IV Exhibits, Financial Statement Schedules This section lists the financial statements, schedules, and exhibits filed as part of the Annual Report, with a full list provided in the Exhibit Index