Core Insights - Lamar Advertising (LAMR) has acquired Verde Outdoor assets, adding over 1,500 billboard faces, including 80 digital displays, across 10 states in key markets [1][9] - The acquisition was executed as an Umbrella Partnership Real Estate Investment Trust (UPREIT) transaction, marking a first in the billboard industry [2] - Verde Outdoor owners will receive dividends equivalent to Lamar's common stock and can convert their units into cash or shares of Class A common stock [3] Company Overview - Lamar holds a significant national presence in outdoor advertising and is a leading provider of logo signs in the U.S. [4] - The acquisition emphasizes Lamar's strategy to enhance its digital platform through acquisitions and technological advancements in the out-of-home (OOH) advertising sector [4] - The company has expanded its digital network to approximately 5,100 displays, positioning itself to leverage growing programmatic advertising channels [5] Market Performance - Over the past three months, Lamar's shares have increased by 7.4%, slightly trailing the industry's growth of 7.8% [6]

Financial Data and Key Metrics Changes - The company achieved its sixteenth consecutive quarter of acquisition adjusted revenue growth with an increase of 1.1% in Q1 2025 [4] - Adjusted EBITDA was $210.2 million, slightly down from $211.9 million in 2024, with an adjusted EBITDA margin of approximately 41.6% [11] - Adjusted funds from operations (AFFO) totaled $164.3 million, an increase of 3.8% from $158.2 million last year, with diluted AFFO per share growing 3.9% to $1.60 [11][17] - Acquisition adjusted consolidated expenses increased by 2.6% in Q1, slightly better than anticipated [10] Business Line Data and Key Metrics Changes - Local and regional sales accounted for approximately 82% of billboard revenue in Q1, growing for the sixteenth consecutive quarter [11] - Programmatic revenue increased by about $2 million, translating into nearly 30% growth [6] - Digital billboard revenue was up 4%, accounting for approximately 30% of total billboard revenue [6] Market Data and Key Metrics Changes - Categories of strength included services (up 11%), retail (up 6%), and construction (up 15%), while gaming (down 9%) and restaurants (down 4%) showed relative weakness [19][20] - The Central and Midwest regions showed relative strength, while the Southwest region, including Las Vegas, showed relative weakness [19] Company Strategy and Development Direction - The company is focused on maintaining its leadership status in the out-of-home advertising industry, with a strong balance sheet and a commitment to acquisitions [8][14] - The company plans to exceed its projected $150 million in acquisition spending for the year, with a year-to-date spend of over $70 million [8][43] - The company aims to maintain a dividend policy of distributing 100% of taxable income, with a cash dividend of $1.55 per share recommended for the second quarter [18] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the out-of-home advertising medium's resilience in uncertain economic conditions, with no cancellations reported from local or national customers [5] - The company is closely monitoring the broader economy but has not seen significant negative impacts on its business [5] - Management expressed confidence in the performance of programmatic advertising and digital billboards as they move into Q2 [19] Other Important Information - The company has repurchased $150 million of its stock at an average price of just over $108 per share, indicating confidence in its market position [8][16] - Total consolidated debt at quarter-end was approximately $3.2 billion, with a weighted average interest rate of 4.6% [13] Q&A Session Summary Question: Expectations for organic revenue growth and national softness - Management is currently 75% booked to the goal of approximately 3% organic revenue growth for the year, with national weakness attributed to changes in large customers' buying habits [25][26][27] Question: Economic slowdown and indicators of weakness - Management noted that shorter cycle sales, particularly in digital, serve as indicators, and current performance is solid, providing confidence [32] Question: M&A landscape and expense growth expectations - Management expects to exceed $200 million in acquisition activity for the year and maintains a 3% expense growth expectation [42][43] Question: Addressing national weakness and digital conversion pace - Management is pacing to meet digital conversion goals and noted that national spending can fluctuate based on customer changes [50][51] Question: AFFO per share guidance and expense growth drivers - Management affirmed that the AFFO guidance remains unchanged despite share repurchases, with elevated expenses attributed to one-time items and health insurance costs [56][59]

Financial Data and Key Metrics Changes - The company reported a 1.1% increase in acquisition adjusted revenue for Q1 2025, marking the sixteenth consecutive quarter of growth [4][10] - Adjusted EBITDA was $210.2 million, a slight decline of 0.8% from $211.9 million in Q1 2024, with an adjusted EBITDA margin of approximately 41.6% [10][12] - Adjusted funds from operations (AFFO) totaled $164.3 million, up 3.8% from $158.2 million in the previous year, with diluted AFFO per share growing 3.9% to $1.60 [10][15] Business Line Data and Key Metrics Changes - Local and regional sales accounted for approximately 82% of billboard revenue, continuing to grow for the sixteenth consecutive quarter [10] - Programmatic revenue increased by about $2 million, translating to nearly 30% growth year over year [6][18] - Digital billboard revenue rose by 4%, representing around 30% of total billboard revenue [6] Market Data and Key Metrics Changes - The Central and Midwest regions showed relative strength, while the Southwest region, including Las Vegas, exhibited weakness [18] - Categories of strength included services (up 11%), retail (up 6%), and construction (up 15%), while gaming and restaurants showed declines of 9% and 4% respectively [18] Company Strategy and Development Direction - The company is focused on maintaining its leadership status in the out-of-home advertising industry, with a strong balance sheet and a commitment to acquisitions [7][12] - The company plans to exceed its projected $150 million in acquisition spending for the year, having already closed 10 deals worth approximately $22 million in Q1 [7][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the out-of-home advertising medium, noting no cancellations or significant concerns from customers [5][17] - The company affirmed its full-year AFFO guidance of $8.13 to $8.28 per share, indicating a stable outlook despite broader economic uncertainties [15][17] Other Important Information - The company repurchased $150 million of its stock at an average price of just over $108 per share, reflecting confidence in its market position [7][14] - Total consolidated debt stood at approximately $3.2 billion, with a weighted average interest rate of 4.6% and total leverage of 2.85 times net debt to EBITDA [12][13] Q&A Session Summary Question: Expectations for organic revenue growth and national softness - Management indicated they are 75% booked to their goal of approximately 3% organic revenue growth, with national weakness attributed to changes in large customers' buying habits [23][25] Question: Economic slowdown and indicators of weakness - Management noted that shorter cycle sales, particularly digital, serve as indicators, and current performance is solid, providing confidence [31][32] Question: M&A landscape and expense growth expectations - Management expects to exceed $200 million in acquisition activity for the year and maintains a 3% expense growth outlook [41][42] Question: Addressing national weakness and digital conversion pace - Management acknowledged national weakness but noted that programmatic growth helps offset it, with digital conversion goals still on track [47][48] Question: AFFO per share guidance and expense growth drivers - Management clarified that the AFFO guidance remains unchanged despite share repurchases, and elevated expenses were due to one-time items and health insurance costs [53][56]

Financial Data and Key Metrics Changes - Organic revenues increased by approximately 4% year-over-year, with billboard revenues up 3% driven by higher static and digital sales [7][10] - Adjusted OIBDA for Q4 was $155 million, and AFFO was $119 million, with 2024 AFFO growing 11.5% [9][10][29] - Total net leverage decreased to 4.7 times from 5.4 times at the end of 2023 [10][31] Business Line Data and Key Metrics Changes - Billboard segment revenue grew by 2%, with digital billboard revenue up 4.7% and static billboard revenue slightly increasing [11][15] - Transit revenues rebounded by nearly 9%, with the New York MTA growing by nearly 12% [8][12] - Other revenues, primarily from digital equipment sales, grew by $1.4 million [11] Market Data and Key Metrics Changes - Local revenues grew by just under 1%, while national revenues increased by 7%, driven by technology and financial sectors [14][15] - Digital revenue represented nearly 36% of total revenue, up from 34% the previous year, with automated sales growing over 40% [14][15] Company Strategy and Development Direction - The company aims to amplify the impact of out-of-home advertising, expand its share of U.S. ad spend, and accelerate digital capabilities [36] - The focus remains on enhancing the digital out-of-home space and integrating it into overall marketing campaigns [50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the performance of the MTA and noted that the first quarter of 2025 is off to a good start [40][70] - The company anticipates mid-single-digit growth in reported consolidated AFFO for 2025, driven by improved OIBDA [29][30] Other Important Information - The company closed the sale of its Canadian business for approximately $300 million, using the proceeds to reduce leverage [10] - A cash dividend of $0.30 per share was announced, payable on March 31 [32] Q&A Session Summary Question: Impact of congestion tax and work-from-home on MTA contract interest - Management noted that the MTA was a significant driver of revenue growth, with a 12% increase last year, and performance remains strong in Q1 2025 [39] Question: Reasons for softer local ad growth in Q4 - Management attributed softer local ad growth to strong comparisons from the previous year and macroeconomic uncertainties affecting mid-sized business customers [46] Question: Strength in national ad growth - Management highlighted strong national performance driven by various DMAs and events like the Super Bowl, with expectations for better pacing throughout the year [55] Question: Update on the CEO transition process - The board confirmed that a formal search process for a new CEO is underway, with the interim CEO actively involved during this period [62] Question: Strength in transit OIBDA - Management indicated that the strength in transit OIBDA was driven by the MTA's performance and noted that the fourth quarter is typically the largest revenue driver [70] Question: Pricing strength details - Most yield growth was attributed to pricing, indicating a positive sign for the current environment [77]