Lamar(US:LAMR)2022-08-03 16:54Financial Data and Key Metrics Changes - The company achieved AFFO growth of 10.9% to $1.94 per share on a fully diluted basis, marking the seventh consecutive quarter of growth [11][12] - Acquisition-adjusted revenue increased by 12.2% year-over-year, with revenue and adjusted EBITDA setting new records for any quarter [12][14] - Adjusted EBITDA for the quarter was $243.3 million, a 14% increase from $213.5 million in 2021 [14] Business Line Data and Key Metrics Changes - Billboard revenue grew over 10% on an acquisition-adjusted basis, with digital billing increasing by more than 10% year-over-year on a same-store basis [4][5] - Local and regional sales accounted for 79% of billboard revenue, with local revenue up 10.4% and national business increasing by 8.4% [15][28] - Categories of strength included education, retail, service, amusement, entertainment, and sports, with notable growth in these sectors [6][29] Market Data and Key Metrics Changes - The company reported strong performance across all regions, with pro forma revenue growth ranging from high single-digits to mid-teens [12] - Political advertising is pacing up 82% compared to 2020, with about 50% of that spend on digital platforms [8] Company Strategy and Development Direction - The company is focused on maintaining a strong balance sheet and pursuing acquisitions, with a robust pipeline expected to exceed last year's total of $312 million [17][20] - The conversion to an UPREIT structure is seen as a competitive advantage for future acquisitions [17][48] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the second half of 2022, expecting revenue growth to normalize to 3% to 5% and expense growth to 2% to 3% [5][30] - The company is not currently seeing signs of a slowdown, despite general macroeconomic concerns [3][30] Other Important Information - The company paid a cash dividend of $1.20 per share for Q2, a 9% increase from Q1, with a total expected distribution of $4.70 per share for the full year [23] - Total liquidity as of July 31 was over $835 million, positioning the company well to weather potential macroeconomic headwinds [20] Q&A Session Summary Question: What changes might affect capital allocation or operations? - Management indicated that they will continue to pursue M&A and digital build-out regardless of macroeconomic conditions [38] Question: How are rate increases being driven? - Rate increases are attributed to new advertisers and the turnover of contracts every four months, allowing for regular rate discussions [40] Question: What is the margin profile of recent acquisitions? - Most traditional billboard acquisitions are expected to contribute incremental margins between 45% and 60%, with the exception of the Colossal acquisition [44] Question: What is the impact of the UPREIT structure? - The UPREIT structure provides flexibility in addressing sellers' tax situations, allowing for various forms of consideration [46][48] Question: What is the outlook for the broader ad market? - Management noted that large national advertisers are pulling back from traditional digital platforms due to privacy concerns, which may benefit out-of-home advertising [52][53] Question: How does local versus national revenue impact guidance? - Guidance is based on strong local performance, which constitutes 80% of revenue, and political advertising is expected to provide additional support [56][57]