Lamar Advertising Company (LAMR) Earnings

Management highlights

- First quarter results exceeded internal expectations on top and bottom lines with strength from local and national customers. Forward bookings promising, pacing to top end or above full year AFFO per share guidance. - National revenue up 5.8% Y/Y, programmatic up nearly 25% to ~$11M. Pacings for balance of 2026 stronger. - Consolidated revenue up 3.9% on acquisition-adjusted basis with growth across all divisions and regions. Pacing suggests revenue growth to accelerate into Q2. - EBITDA up 5.2% on acquisition-adjusted basis, margin improved ~130 basis points. - Local grew 3%, digital led with 5% growth on same board basis, accounting for over 30% of revenue. Rates on analog bulletins and posters up 3%. - Active M&A in 2026: 19 acquisitions completed with total cash purchase price $80M, solid pipeline for more accretive billboard deals. Ramped up efforts to secure easements beneath best-performing locations.

Guidance

- Pacing to top end or above full year AFFO per share guidance, may revisit guidance on August call. - Affirmed full year AFFO guidance of $8.50 to $8.70 per share. - Cash interest in guidance totals $154M and assumes no change in short-term floating interest rates for balance of year. - Maintenance CapEx budgeted at $64M in 2026. - Cash taxes projected at ~$11.5M, slightly higher than original expectations. - Management recommends declaring $1.60 per share dividend for second quarter, subject to Board approval. Full year dividend expected at least $6.40 per share. Likely to revisit full year AFFO per share guidance on August call if current trend continues.

Segment performance

Consolidated revenue increased 3.9% on an acquisition-adjusted basis. National revenue increased 5.8% vs Q1 2025, with programmatic growing nearly 25% to ~$11M. Ex programmatic, national was up 4.1%. Local grew 3%, with digital leading at 5% growth on a same board basis, accounting for over 30% of revenue. Digital now has over 5,657 spaces, up 104 from year-end 2025. Airport business had acquisition-adjusted revenue up 15.5% in Q1, logos up 6.3%. Billboard regions had low to mid-single-digit growth, with Midwest up 5.7% and Atlantic up 4.8%. EBITDA grew 5.2% on an acquisition-adjusted basis, margin improved ~130 basis points. Q1 categories of strength: services, restaurants, gaming, political, insurance; education and telecom weaker. Local and regional sales for billboard were up, with 5-year streak without Y/Y decline except due to COVID. Acquisition-adjusted consolidated expenses increased 3% in Q1, expected 3% for full year. Adjusted EBITDA was $226.3M vs $210.2M in 2025, up 7.7%, margin expanded 130 basis points to 42.9%. Adjusted funds from operations totaled $177.5M, up 8% Y/Y. Diluted AFFO per share grew 7.5% to $1.72. Total CapEx for Q1 was $33.1M, including $9.3M maintenance CapEx; full year CapEx ~$186M, maintenance CapEx $64M. Balance sheet: well-laddered debt maturity, no maturities until Oct 2027 for AR securitization and Feb 2028 for senior notes; total consolidated debt ~$3.5B, weighted average interest rate 4.5%, weighted average debt maturity 4.3 years; total leverage 3x net debt-to-EBITDA, secured debt leverage 0.7x; LTM interest coverage 7x; liquidity over $700M as of March 31.

Analyst Q&A

• Q: Curious if you could give us just a -- you've mentioned, but a high-level broader view on your view of the macro and any notable verticals that are driving the strength in the national ad market. And I know you said you expect revenue to accelerate into the second quarter. But just curious at this point, if you'd expect that strength to continue over the course of the year from what you can tell and how that cadence might look?

  A: Sure. Last question first. Q2, 3, 4 are all looking very good, Cameron, and pacing, I would call, roughly the same pro forma revenue growth. And regarding the first part of the question, it's really across the board. That's why I mentioned that if you look at all of our top 10 verticals, they're all doing well. There are going to be ebbs and flows through the course of the year and across the years. But that top 10, as I mentioned, was up 5.4%. So yes, we're seeing health across the board.

• Q: And just one follow-up. Sean, I'm curious how you're thinking about the upcoming tailwinds, including the World Cup and the midterms and if your views have changed or evolved around the sizing of those?

  A: So I think the World Cup is -- that basically is in our book, and it's done and it's contracted for. And I'd say, in general, that's helping our national. And it's coming in, give or take, where we expected. I think the surprise, Cameron, is how strong political is. We were, I think, understandably a little bit conservative on our guide to that when we opened up -- began the year because it's a midterm year, not a presidential year, but we are pacing well ahead of 2024, the presidential year. And assuming that continues, that will be the first time that's ever happened.

• Q: Beyond revenue coming in ahead of your expectations, were there any other contributors to the margin strength that you saw in Q1? And then maybe as a follow-up, how should we think about your margin expansion for the full year compared to '25, especially given your commentary around easements.

  A: Yes. Good question. So there are a couple of factors in there. Obviously, revenue growth helps. Recall that we lost that Vancouver franchise last year. That was essentially a no-margin business. So that is now out of our portfolio, and that has contributed somewhat. We layer -- when we layer in acquisitions, and we did quite a few of them last year, those may come in at a margin contribution of approximately 65%. So that also obviously is helping. Now we're going to lap some of that activity as we go into the back half. But I would anticipate, and I would be disappointed if we don't have at least a full point -- percentage point of margin expansion for the full year. Last year, it was 46.7%. And I'm looking for something in the 47.7% range for the full year this year.

• Q: Can you discuss monthly dynamics through the quarter? You talked about massive 6% revenue growth in December with demand cooling off in January, February. And did you witness acceleration in March or the overall beat this quarter is largely explained by that strong momentum at the beginning of the quarter? And how much of the beat was national versus local?

  A: So on the second part of the question, I would say national was the surprise that led to the beat. Clearly, we had some large buys from some large customers that were not contracted for when we last spoke, but now are on the books and contributed nicely. And also political came in better and continues to come in better than we anticipated at the beginning of the year. And in general, to the tone of the question, we're seeing the book build nicely as we look at our pacings for the rest of the year. I would anticipate that by the time we get to the August call, as I mentioned in my prepared remarks, we'll be looking at hopefully revising that guidance upward as we go through the year.

• Q: Yes. Can I ask one more?

  A: Sure.

• Q: Last year, you talked about the deep pipeline of private targets across various size ranges and the Verde UPREIT transaction was clearly well received. So with the stock where it is today, we would expect you to be very interested to do such deals. Are you seeing seller interest in the UPREIT structure today?

  A: Good question. Yes, we are. We've had several inbound inquiries, and we're hopeful that we'll -- we can get a couple of UPREIT deals done this year. And it's a very, very attractive structure for sellers. It's very tax efficient. And of course, they get to hitch their wagon to Lamar, diversify their exposure to out-of-home, and we've been a good bet so far.

• Q: Great. And can you remind what's embedded in the full year guidance for AFFO with respect to acquisitions that you have completed in the first quarter already?

  A: When we guide to AFFO -- I'll pump that over to Jay for a second. But when we guide to AFFO per share, we don't anticipate layering in acquisitions. Jay Johnson: Yes. And so if you think about acquisitions from a top line pro forma growth, it's probably adding 20 to 25 basis points this year from an actual versus pro forma.