Q1 2021 Lamar Advertising Co Earnings Call
Okay.
Yeah.
[noise] excuse me everyone. We now have Sean Holley Gerri Johnson, a big topic.
Please be aware that each of your line to do that.
After completion of the company's presentation, we will open the floor for questions.
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And of course, it gets discussion that <unk> may make forward looking statements regarding the company, including statements about its future financial performance strategic goals plans and objectives, including with respect to the amount and timing of any distributions to stockholders.
The impacts of COVID-19.
COVID-19, pandemic company's business financial conditions and results of operations.
All forward looking statements involve risks uncertainties and contingencies, many of which are beyond our control and which may cause actual results to differ materially from anticipated yields the.
Lamar has identified important factors that could cause actual results to differ materially from day to discuss in this call and choppy first quarter 2021 price release and its most recent annual report on form 10-K Lamar refers you to those documents.
First quarter 2021 earnings release, each could change information required by regulation G regarding certain non-GAAP financial measures.
Furnished to the U S. Do you see on a form 8-K. This morning and is available on the investors section of the <unk> website at Www Dot Lamar backdrop, I'll now turn the conference over to Sean Reilly Mr. Reilly.
Thank you Travis good morning, all and you're up between Q1 2021 earnings call.
Simply put business is very good and the year is off to a much stronger start from you expected when you talked in late February.
Can you hear me out the community our customers make local and national advertising.
Okay.
Either customers returning to their old habits of shopping traveling.
And we're planning for even more activity spring into summer in summer into fall, we could see.
Be it in our numbers.
While first quarter revenue was down relative to the strong first quarter starting from 2020.
We saw improvement through the period.
Drilling in March and April.
It is essentially back to 2019 levels, even adjusting for acquisitions, we've done since Q1 2019.
In transit and airport business, where there is a lagging recovery in the back half of 2020 activity with good revenue.
Overall.
In both March and April in other words total contract value.
Good morning.
For the rest of 2021 exceeded book.
And the same day.
2019 with.
Fortunately there yet for the remainder of 2021.
As we've done what we did revise our guidance for full year per.
Sure.
Given the strength we saw in April and then for the rest of the year to date guidance already be a conservative from it.
Excluding momentum between is it more likely to market volume, coupled again come out of it.
Also more likely than not that we would be considering an increase in the distribution in Q3 as well.
Turning to the first quarter, we had.
We flagged on the call in February.
Given the spread from Q1 of 2020.
Roughly 8% year over year revenue decline, but nevertheless that is expected to pick up in March.
The strength in the quarter income due to health care gaming in real estate, which were up slightly.
A year ago reported.
The automotive and electronics, which was slightly down.
Over a year ago.
Our music and entertainment.
Category continued to lag, but we are seeing improvement, but even there in recent weeks.
Great.
Good day.
I continue to be pleased by our discipline on expenses.
Revenues improved EBIT.
We've done escalation in managing volume due to commission expense and revenue share leases, but we anticipated that more proppant per vehicle.
Moving to benefit from some of the cost control steps, we took in 2020.
Finally, we announced several weeks ago that we will be sponsoring a corporate tabak.
Mark.
<unk> Corporation. The rationale is simple as a week Lamar to parents is somewhat limited constrained yet with.
We have water and we've quantified that Mick.
The world of Alexander advertising is much bigger than that.
Digital spending as they may not be qualified because of their location or add cash to drive EBITDA screen enabled programmatic or international asset.
We believe we have insights and expertise across a range of acquisition opportunities.
I believe the states that we serve.
The growth.
Tom.
And we believe we can bring that expertise to bear for the benefit of our shareholders.
Lamar partners.
In registration with the SEC and under the rules I cannot really from a more at this point, but I would direct you to the death.
With that I'll turn it every day.
Thanks.
Thanks, John.
Morning, everyone and thank you for joining us.
I will begin with brief comments on the quarter, then review our balance sheet.
Pleased with the discussion of our current market position and taking a little more detail without materially revise guidance.
We had a solid first quarter exceeding internal expectations of growth revenue adjusted EBITDA and EBIT.
We had year over year growth.
For the second consecutive quarter.
From two 7%.
This is a six year on a per diluted basis against Q1.
Yeah.
In the first quarter acquisition adjusted revenue declined eight 2% from the same period last year.
As you May recall, we began Q2.
And it's grown in January February price.
It is onset of the COVID-19 pandemic.
As a result, the first quarter represents the companys most difficult comparison year over year.
Despite this challenge.
We're quite pleased with results.
We continue to see the resilience of our business.
Benefits from our operating model, we reported that local market.
The activity concentrated in debate.
Turning to the cost reduction initiatives.
And in response to COVID-19 continues to prove effective with consolidated operating income declined 9%.
Adjusted EBITDA for the quarter was $132 4 million.
Compared with $159 8 million EBITDA.
Decrease of four 6%.
From an acquisition adjusted basis the decline in steel prices.
Jim.
Adjusted EBITDA margin was 41, 1% expanded 180 basis points versus the third quarter of 2020.
In addition to the cost reductions lower interest expense contributed to a proposal.
Free cash flow also improved.
Accretion income 6% in the quarter.
We choose to historically from our sales activity, both local and national markets within our portfolio.
Relative to the first quarter of last year.
Revenue growth outpaced national cycling against a difficult comparison from national which grew in the low double digits in Q1 two percentage points.
2019.
Consistent with last year record sales accounted for 79% EBITDA revenue in first quarter with national representing 21%.
Last year in response to COVID-19.
We demonstrated lamar as operational flexibility, including a disciplined approach to capex.
In 2021, we expect to return to the regular year in terms of capital deployment.
Capex is anticipated to total approximately $150 million per the full year.
$55 million of maintenance Capex.
During the first quarter total capex was $15 $3 million with maintenance comprises $79 million.
Q1 is seasonally low in capex.
So in the coming quarters.
Given our strong financial position.
The recovery in our business.
At least our appetite for acquisitions, beginning in the fourth quarter of last year.
While we are aggressively pursuing acquisition.
Early stages of EBITDA, the remainder of the valuation gap between buyers and sellers.
Consequently.
There was a modest impact.
In the first quarter.
Our acquisition pipeline, we've seen an uptick in particular opportunities in the last several weeks.
We continue to anticipate.
Given that 2021 day looking in every year.
Now turning to our balance sheet.
We continue to be a critical focus for the company and core to our strategy and competitive advantage.
We are quite pleased with the demerger trains a day marketing through the COVID-19 pandemic.
Our balance sheet is well positioned going forward.
The chart in the history of the company.
By far the strongest amongst our public company peers.
With our most recent bond issuance during the first quarter revenue.
Secondly, refinancing our balance sheet at the beginning of the clear Kevin.
This resulted in an interest expense reduction of eight.
$4 million in the fourth quarter.
Relative to the first quarter income.
Our debt maturity schedule as well not at a position to take advantage of the economic recovery post COVID-19.
King.
After the Arctic litigation, which will mature in December.
Our nearest term maturity is the revolving credit facility in 2025.
Based on current debt outstanding our weighted average interest rate is three 3%.
The weighted average maturity of seven two years.
We ended the quarter with total leverage of four times net debt to EBITDA.
Non under our credit facility.
Adjusted EBITDA dropped in the first quarter with the full year reported impacted results now included Levy.
It should improve going forward and we plan to finish the year, we will work with times target.
Our secured debt leverage is low 0.9 times accordingly, with respect to our secured debt remained at one time for the balance of the year.
We are comfortably in compliance with both total debt and try to execute that maintenance.
Again covenant of seven times in fits and starts.
Respectively.
As we ended the quarter, we had approximately $765 million of liquidity.
Price of $43 million of cash on hand.
$11 million available revenue securitization line and $711 million available under our revolver.
As Kevin mentioned and included in this morning's release, we increased our EBITDA guidance based on strong performance in the first quarter.
This exceeded our expectations.
The revised EBITDA guidance of $5 into the $5 56 per share representing an increase of 50 cents at the midpoint.
Looking at the balance of the year.
We anticipate the second and third quarters to be disclosed on a comparable basis.
Given our solid performance in Q4, 2020, we complete a political and our president per year.
Q4, 2021.
Difficult comparison year over year.
Furthermore, because of our efforts around the balance sheet cash.
Cash interest in 2020 to be approximately $105 million.
For about $25 million lower than full year 2000, Kevin.
Cash that should come in slightly below our 2000 $11 million reported 11 peak ablate Trs per ton.
Clearly our airport division.
Expect it to be slower to recover.
Moving to our dividend policy.
In the first quarter, we paid a cash dividend of 75 cents per share.
Management's recommendation at the upcoming board meeting with EBITDA.
A cash dividend of 75 for the second quarter as well.
This recommendation is subject to board approval, we will communicate the book, which is the ordinary growth.
Following the board of Directors meeting later this month.
As John mentioned is that the value of our dividends strategic weighted diluted.
Q2 results.
Again, we are extremely pleased with this quarter's performance.
They are optimistic about the outlook for the remainder of the year.
Our balance sheet remains strong.
Excellent access to both the debt and equity capital markets.
Our strong balance sheet this quarter, our operating strategy and serves as a significant competitive advantage.
With our intense focus on the company's capital structure and increased flexibility. Despite the COVID-19 pandemic Lamar.
Lamar is well positioned to take advantage of opportunities as they arise.
I will now turn the call back over to Kevin. Thanks.
Hey.
I am looking API strength and are low.
Reported revenues.
For 2019 income as you know using our profit up individually and Martin and I, certainly look forward not drawing comps strategic priority.
These are known as the patents.
I'm going to give you some encouraging growth.
And our bottom line.
Number one.
April of 2021 programmatic was 100% higher than April of 2019.
April digital drilling for 2021 growth above 10% over April of 2019.
And while we still have some challenged geographies.
This has led to a fabulous from Las Vegas.
And Hartford, and New York City in the East which trails.
April.
2021.
From the 2019 by about 20%.
All of those markets have shown significant improvement in line.
<unk> 2019 levels as drilling sometime in the back half.
Our U S Transit Division should offer growth 2019 levels is building from.
The back half.
Unfortunately, our airport in Canadian and kind of visibility.
Im showing signs of recovery, we're probably not fully yet.
Till 2022.
Turning to our digital deployment, we ended Q1 with.
3692 digital units in the air and increased 42.
While that was a bit.
The flow start for Q1, you are still targeting something north of 300, new units per year and feel good about that number.
Finally in my opening discussed Q1 category showing relative strength and weakness.
As you can tell the theme of this call will be forward looking back from them.
Goodbye.
We're seeing strength across the board across all verticals and across local and national average.
We look to the rest of 2021.
With that product, we can open it up for questions.
Richard just a magnitude of asking a question. Please press star one star one to ask a question.
Our first question comes from Dan Moore.
Standard.
Okay.
Okay.
Hi, Dan.
Hey, guys good morning.
Thanks for all the for all of the data point, Shawn I guess, maybe I wanted to ask you I think the same question answer last quarter, usually you guys have pretty good visibility into the current quarter.
You reported a couple of months and I think even as of last quarter the business scope of from pretty late.
Sort of harder to read the patient data.
See around the corner it sounds like visibility has improved but I wish I was hoping I could get your.
The answer to share what the world looks like in terms of COVID-19.
<unk> versus normal at this point.
Yes, I think thats a good observation visibility has improved.
Approximately revert reserving space.
September October.
You bet.
That's just a really bright line between.
As you know when you talk about.
Total new contract value.
March and April that that's not a true pacing number one thats, just an indication of business activity and momentum.
So from a purely.
Definition of taste, and which would include.
January and February which was up two months per rep.
And all of the businesses with low down in Mexico, we havent quite caught up to 2019.
But.
We like what we're seeing.
We are closing on that number.
Our private parts now.
The different product designs and kind of because they are on different.
On a recovery trajectory.
But the activity were seeing across all the product.
Moving.
The Airport Division.
It is impressive.
Just in time line from Vegas and weighted airport.
Presenting to you actually starting to book in September and October.
So.
All in all this.
Strength was seen in years.
Kevin You mentioned has exceeded our expectations.
Yes.
And then.
I was always surprised you can you talk about revisiting the dividend from the third quarter is that a function.
Youre required payout based on a tour as income.
Or is that just.
Sure.
Is that the business is outperforming.
Dividends are an important part of shareholder we're trying to limit to match match up.
In a relatively short term basis I'm just wondering if you can maybe expand a little bit on that comment.
Sure.
And then if you look at it both ways.
If you do the written CFO.
David.
Going to be north of the profit under the range of the guidance that you just gave me or even at the top end of the line.
It would be.
We would have net net income EBITDA exceeded our distributions from <unk>.
<unk>.
There is the requirement for that side of the quantity.
But another part of the analysis is just what is the right percentage of <unk> per share to be discretely.
Whether it is a requirement for a moment.
I believe that.
The momentum continues.
We do indeed exceed the guidance, we just gave you.
Yeah.
I think the appropriate level of Norton.
Let's call it.
55% day after day.
Brian.
So again I think.
We're looking at it both growth and I think that the.
Would we be looking at growth.
And I think our shareholder expectations, we'd look at it.
Jeff.
Good luck getting lots of M&A understood. Thanks, a lot.
Yes.
Our next question comes from from next year.
Got it.
J P Morgan.
I think now I think a couple of questions.
This is Brian Haney.
Talk about the momentum in Japan.
<unk> Martin from partners I'm curious.
To that point.
They've got really come from more of the same.
And it demonstrates the bollinger trend back towards that.
No not tier three line.
One of the areas that are currently bachman co.
Entertainment, you pointed out that reach out the correcting itself.
Just sort of anymore.
What are your expectation for this channel.
And then my second question is very good.
M&A funds.
With cash.
Thank you guys.
It has been low.
Kevin banner.
Sure.
And more growth.
Is that coming from.
From a.
Disconnect.
Kerry.
Maybe you guys could just really offer from a somewhat smaller.
Got it.
How much it can be met from.
Yeah.
Not the latter actually.
The independents that were talking to are doing well.
Talk to numerous medium.
Smaller independent.
And for the most part we're seeing what we're seeing in their business some of them actually starts with moving up given that data.
The same market and the treatment that we have.
The smaller DNA smaller footprint globally.
Some of them.
Our actuaries.
Highly confident going into 2019 weighted.
We have a trial.
Yes.
Our expectations from an EBITDA.
Yeah.
So again the world of independent Billboard operators.
That's a really good recovery.
And again in some cases.
Because of geography, or a product with even stronger than that.
The optimism with the line.
As the year progresses.
There is obviously still some risk weighted.
The COVID-19 balance.
Some kind of Capex.
Yes.
Good thing driving the fall from current.
The COVID-19.
Yes.
As you know that the profitability.
But what we're seeing right now.
Just a year.
Pent up demand.
Funds.
Literally all of our vertically.
Even even our growth.
<unk>.
Amusement entertainment and sports.
I mentioned.
Business activity for the Vegas airport picking up because they're going to.
Beginning to book conventions in the fourth quarter.
That is a year.
Market for us per foot overall.
Returning to normal.
And activity.
Around.
Gathering issues in Japan.
Just anecdotally, we've got a call from there.
Bachmann Las Vegas later, they're planning for 100% attendance.
And there are open again.
And so it's really that kind of <unk>.
Alaska.
That there's pent up demand.
And the economy in general can really deliver.
From a capex.
Close to us.
<unk> recovered.
And from I guess two back to back.
The optimum.
Geographic region from synergy.
Understood.
Right.
Is that coming from that.
And then from there.
Operating income for 2300 <unk> might be.
Hi.
Yeah, so to benchmark it off of the 10 months in 2019.
Net income for April those geographies were down 2%.
Line.
The next day.
But they're just kind of looking at.
Those individual market pacing to them.
Reaction.
There's going to be high single digit improvement in that.
Number on that just from a rising as we progress through the summer.
It just looks like by the economy approach the fourth quarter day, those geographies with.
Pretty much on par with where they are low in 2019 in terms of.
Their revenue.
For that month.
Profit for 2019.
To continue become much COVID-19.
Our next question comes from Stephan Bisson Wolfe research.
Yes.
Really the per Diem I was wondering could you give us a little bit of color on the pricing occupancy and maybe using standard.
Yes.
So we don't we don't give rate and occupancy numbers anymore.
Obviously, the average general proposition.
According to Miller, who heads up our national sales.
This is antonio.
We actually think in <unk>.
Terms of buyer.
Primetime.
Let's call, a and B plus inventory.
Moving to one album.
I mean, the demand from the occupancy growth prime inventory is going to be.
During this call.
That tells me that we have.
Beginning to drive growth.
Volume.
On those product line.
Hum.
That build out through the rest of our inventory you fill up the OMB inventory first and then some of them maybe mastercard from inventories and begin to go up.
It feels really good.
That's great to hear and then I expect.
Oftentimes, we get same board digital.
Maybe this is mackie.
Same board digital in April versus March June was up 10%.
I don't have it for the first but we're not really focused too much on the first.
Yes.
Yes.
With the year on the year and pulling it forward.
Down here.
So down from Q1.
Both as a whole platform advantage fare relative outperformance.
And then they are more forward looking with regard.
Guidance.
From a regulatory former guidance from five 6% revenue growth, Kevin have been representing Ciber momentum.
The development.
And not to get back with you on that.
Okay.
Thanks, so much room business.
Yes. Thanks.
There are no further questions in the queue at this time I would now like to turn the call over back to Sean Reilly for closing remarks.
Yeah.
Thank you our commitment.
We really do look forward to visiting again in August with our Q3 release.
Well, that's all we have private funds.
Thank you Sir.
Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.
Please disconnect from other loans now.
Good day receiver.
Yeah.