Lamar(US:LAMR)2022-11-04 19:12Financial Data and Key Metrics Changes - The headline pro forma sales growth for Q3 2022 was reported at 6%, with local revenue showing significant strength over national revenue [4][10] - Adjusted Funds From Operations (AFFO) grew 6.8% to $2.03 per share, marking the eighth consecutive quarter of growth [10][12] - Adjusted EBITDA for the quarter was $251.2 million, an increase of 8.9% compared to $230.7 million in Q3 2021 [12] Business Line Data and Key Metrics Changes - Sales grew across all business lines, with traditional poster and bulletin pricing up mid to high single digits compared to Q3 2021 [6][12] - Local and regional sales accounted for 77% of billboard revenue, growing 6.4% year-over-year, while national sales, including programmatic, increased by only 0.3% [12][23] - Programmatic sales were disappointing, expected to contribute about $27 million, a 10% decrease from the previous year [7][12] Market Data and Key Metrics Changes - The Gulf Coast and Southwest regions showed the greatest relative strength, while the Northeast region, reliant on national business, showed the least [21] - Digital revenues accounted for 29.1% of outdoor revenues, up from 28.4% in Q3 2021, with 4,285 digital units at the end of the quarter [22] Company Strategy and Development Direction - The company remains active in M&A, with completed deals around $300 million and expectations to exceed $400 million for the year [8][14] - The company plans to maintain a strong balance sheet and continue to take advantage of acquisition opportunities in 2023 [15][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the visibility of advertiser demand, with strong forward bookings for 2023 [30] - The company anticipates a decent holiday season, projecting mid-single-digit performance for the upcoming months [35] Other Important Information - A special dividend of $0.30 per share is recommended, bringing the total distribution for 2022 to $5 per share, with a new quarterly run rate of $1.25 anticipated for 2023 [5][19] - The company maintained a strong adjusted EBITDA margin of 47.6%, leading the out-of-home industry [11] Q&A Session Summary Question: Is the increase in rate largely inflation driven or due to higher demand among advertisers? - Management indicated that the increase is primarily demand-driven, with a combination of inflation expectations leading to higher rate increases [28][29] Question: How is visibility into advertiser demand looking across both traditional and digital? - Management stated that visibility remains strong based on forward bookings and field insights, feeling good about the outlook for the end of the year and into 2023 [30] Question: Did political revenue crowd out any normal revenue in October? - Management acknowledged some crowding out but noted that core verticals performed well even without political contributions [33] Question: What verticals are expected to ramp up in November and beyond? - Management indicated that while gaming apps showed weakness, other verticals remained strong, and they expect a decent holiday season [35] Question: Are there pricing changes in M&A expected to affect future deals? - Management noted that while asset values were higher at the beginning of the year, they plan to take advantage of the current environment and remain active in M&A [36]