Lamar(US:LAMR)2023-08-03 18:53Financial Data and Key Metrics Changes - Revenue for Q2 2023 showed growth across all business segments, but a slowdown in activity was observed as the company entered Q3, leading to a revised revenue outlook for the second half of the year [4][5] - Adjusted funds from operations (AFFO) decreased by 1.2% year-over-year to $194.4 million, with cash interest increasing by $13.8 million compared to Q2 2022 [19] - Adjusted EBITDA for Q2 2023 was $253.9 million, an increase of 4.3% from the previous year, with an adjusted EBITDA margin of 46.9% [38] Business Line Data and Key Metrics Changes - The service category saw a strong increase of over 16%, while weaker categories included gaming (down over 4%), real estate (down over 9%), and insurance (down almost 21%) [5][46] - Digital revenue accounted for 30% of total revenue in Q2, with same-store sales down 1% for the quarter but up 3% for June [6] Market Data and Key Metrics Changes - Local revenue increased by 2.4% in Q2, while national revenue rose by 1.4%, excluding programmatic impacts [35] - The Northeast and Midwest regions contracted year-over-year due to their exposure to national advertising, while the Atlantic region and Gulf Coast saw good growth [7][35] Company Strategy and Development Direction - The company is focusing on expense control, with acquisition-adjusted expense growth expected to be around 1.5% for the full year [17][23] - The acquisition pipeline has moderated, with total CapEx for the year anticipated to be $185 million, including $63 million for maintenance [9][42] Management's Comments on Operating Environment and Future Outlook - Management noted a general softening in the advertising environment, affecting both local and national levels, but does not classify it as a recession [28] - The company revised its full-year AFFO guidance to a range of $7.13 to $7.28 per share, with revenue growth expectations adjusted to approximately 2% [17][22] Other Important Information - The company has a well-laddered debt maturity schedule, with no fixed income maturities until 2028, and a total liquidity of approximately $661 million at the end of the quarter [10][11] - A cash dividend of $1.25 per share was paid in Q2, with a recommendation for the same amount for Q3, subject to Board approval [42][43] Q&A Session Summary Question: What is the outlook for local business given the current economic environment? - Management described the current situation as a general softening rather than a recession, with customers showing hesitancy [28] Question: How significant is the amusement and entertainment category, and could strikes impact it? - This category represents a little over 5% of the business, primarily related to roadside attractions rather than major theatrical releases [29] Question: What are the new expectations for top-line growth for the year? - The new expectation is approximately 2% for the year, with organic growth being flat [66] Question: Could the hesitancy in local spending change if the economy improves? - Management anticipates that if the macroeconomic environment strengthens, local performance could improve [55] Question: What is the impact of programmatic advertising on revenue? - Programmatic advertising has been disappointing, expected to decline by 11% to 12% for the full year, affecting overall revenue growth [45]