Lamar(US:LAMR)2020-11-05 16:53Financial Data and Key Metrics Changes - In Q3 2020, acquisition-adjusted revenue declined by 15.5% year-over-year, while adjusted EBITDA decreased by 20.7% to $170.7 million compared to $215.2 million in 2019 [11][12] - Fully diluted AFFO contracted by 18.5% to $1.32 per share, with adjusted EBITDA margin at 44.2% [11][12] - The company expects to achieve at least $75 million in expense savings off a pro forma expense base of approximately $980 million from 2019 [7][11] Business Line Data and Key Metrics Changes - Local advertising revenue declined in the high single digits, while national advertising revenue fell nearly 30%, with local revenue accounting for 80% of sales in Q3 [12][13] - Categories showing relative strength included insurance, gaming, hospitals, healthcare, and automotive, while event-based advertising and retail remained weak [7][12][26] Market Data and Key Metrics Changes - The political advertising category outperformed, with spending up over 80% compared to 2018, and full-year 2020 political ad spending expected to exceed $19 million, a 75% increase over 2018 [16] - Cash collections exceeded internal expectations, with free cash flow down only 8% versus last year [14] Company Strategy and Development Direction - The company plans to deploy over 300 new digital billboards in 2021, reflecting confidence in the demand for out-of-home advertising [8][25] - The focus remains on maintaining a strong balance sheet and capital structure, with an emphasis on operational flexibility and disciplined CapEx [18][23] Management's Comments on Operating Environment and Future Outlook - Management noted a rebound in local advertising and a normalization of local markets, while expressing concerns about the recovery of independent restaurants and small retailers [12][50] - The company anticipates a strong finish to 2020 and expects to carry momentum into 2021, with a positive outlook for national advertising as RFP activity returns to 2019 levels [6][9][25] Other Important Information - The company ended Q3 with approximately $771 million in liquidity and a total leverage of 4.1 times net debt to EBITDA [19][20] - A cash dividend of $0.50 per share was declared for Q3, with a recommendation for the same amount for Q4, leading to a full-year dividend of $2.50 per share [22] Q&A Session Summary Question: M&A Landscape and Opportunities - Management indicated that small and mid-market competitors are performing well, leading to fewer sellers in the market, and there is a divergence in price expectations [32][37] Question: Expense Savings and P&L Impact - The company expects to retain about half of the $75 million in expense savings as they return to normal compensation structures next year [38] Question: Callable Debt and Interest Savings - Management noted the potential for significant interest savings on callable bonds, with current market rates being lower than their existing coupon [40] Question: Performance in Larger Markets - Management observed that suburban inventory in larger markets is in high demand, indicating a rebound in those areas [44] Question: Recovery of Small Regional Businesses - While some small regional businesses are recovering, management expressed ongoing concerns for independent restaurants and small retailers [50][51]