Q1 2023 Lamar Advertising Co Earnings Call

What do you stand by your program is about to begin.

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At the conclusion after the company's presentation, which will open the floor for questions.

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And of course, all of this discussion Lamar may make forward looking statements regarding the company, including statements about its future financial performance.

Strategic goals and objectives, including that with respect to the amount and timing of any distributions to stockholders and the impact and effects of general economic conditions, including inflationary pressures on the company's business financial condition and results of operations.

Oh for we're looking statements involved risks uncertainties inconveniences, many of which are beyond Lamar to control and which may cause actual results to differ materially from anticipated results.

Lamar has identified important factors that could cause actual results to differ materially from those discussed in these calls in the company's first quarter 2000 twenty-three earnings release and its most important in his most recent annual report on Form 10-K Lamar refers you to those documents.

The first quarter of 2023 earnings release, which contains information required by regulation G regarding certain non-GAAP financial measures was furnished to the SEC On a farm aid Kv's morning, and he's available on the investors section of the website Www Dot Walmart Dot com.

I would now like to turn the conference over to Shaun Browley Mister Riley you may begin.

Good morning, and welcome to Lamar first quarter of 2023 earnings call.

I'm quite proud of how our business in general and our industries have what.

What remains of challenging operating environment for media owners generally.

Our first quarter unfolded, largely as we expected with consolidated revenue expenses and adjusted EBITDA, all up slightly on an acquisition adjusted basis.

Strengthen local sales offset weakness in national particularly early in the floor.

Q1, Rfps and buy some national customers picked up as a quarter went on and the tone from local customers remains largely constructed.

However, as mentioned in the release April saw since like Salt.

May and June seemed to affirm depths of cute too should be fine.

Meanwhile, we feel really good about the trajectory of full year expenses.

That we continue to pay towards the middle of our previously provided full year guidance Frank.

Q1 categories have particular strengths included services Amusements entertainment and sports and restaurants.

Real estate predominantly local vertical was relatively weak and insurance, which is primarily a national category was also week.

Our strongest regions wearing the Atlantic in Gulf Coast, and continued to trend that way the northeast, which is more reliant on national advertising trailed or other reader.

We added 71 net digital billboards in the quarter, bringing our quarter in total 240 536 large format units.

On the same board basis digital was down 3.5%. So we're going to monitor that going forward, but we are still working toward a full year goal of 300 digital conversions.

On the M&A front the year is off to a quiet start we closed 11 deals for about $14 million in the first quarter, we have some additional transactions and the diligence and closing stages, but continued to anticipate that this will be a modest acquisition year for us with spending $100 million 150 million dollar range.

Good morning, everyone and thank you for joining us.

We had solid results in the quarter internal expectations on the top line and exceeded expectations for both operating expenses and adjusted EBITDA.

However, due to the rising interest rate environment.

<unk> declined year over year for the first time since the third quarter of 2020.

And the first quarter acquisition adjusted revenue increased 1.5% from the same period last year against a difficult comparison in which pro forma revenue growth was 18.6% in the first quarter of 2022.

Our Billboard reasons came in essentially flat to upload single digits with the exception of the northeastern region, which contracted year over year as a result of its exposure to national advertising.

Acquisition adjusted operating expenses increased 2% in the first quarter better than anticipated due to expense controls and our Billboard Division.

Well, it's COVID-19 relief grants from our airport partners.

On an acquisition adjusted basis, adjusted EBITDA expanded 80 basis points.

Adjusted EBITDA margin for the quarter remains strong at approximately 42%.

Notably our margins in the quarter Hill contracting only 40 basis points from Q1, 2022, and perhaps the most inflationary environment in the past 40 years.

Despite the inflationary pressures adjusted EBITDA margin was one of the strongest for first quarter in recent history at approximately 400 basis points. They had a pre pandemic levels.

Adjusted funds from operations total $144 $1 million in the first quarter.

Cash interest was a headwind of approximately 14 cents per share is diluted FFL for sure decreased 6% to $1.41 cents versus $1.50 per share in the first quarter of 2022.

Local or regional sales grew for the eighth consecutive quarter, increasing 2.3%.

Softness in our National sales began last year and cared into the first quarter.

But the business appears to be moving in the right direction with a more modest decline in Q1, then in Q4.

In spite of the national backdrop, we are encouraged by the resilience of local and regional sales, which accounted for approximately 81% of Billboard revenue in the first quarter.

Volume in our acquisition pipeline is moderated as expected following two extremely active years on the M&A front.

During the quarter, we close on $14 million of acquisitions.

Followed by the securitization in July of that year.

And we have no bond maturity's until 2028.

As you May recall, we view the T L. A as a bridge to a deck capital markets transaction to.

Based on that outstanding a quarter and a weighted average interest rate was 4.8% with.

With a weighted average debt maturity of five years.

Ah secured debt leverage was 1.09 times at quarter and.

Companies dividend policy remains to distribute 100% of our taxable income.

Quick note on Capex in Q1 slightly elevated due to an acquisition we close late in the year last year and some spending we had to do to bring that inventory.

Hi, Thanks, guys.

Sure.

April was was a little disappointing for us and.

Got it thank you.

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