Lamar Organic Revenues Down 8.2% in 1Q 2021

Lamar continues to recover from covid with a stronger than exected first quarter.  Here are the results of the earnings release and conference call.

  • Revenues declined 8.8% to $371 million.  Organic or acquisition adjusted revenues declined 8.2%.
  • Adjusted EBIDTA was down 4.6% to $152 million during the first quarter of 2021.  The company’s EBIDTA margin (EBIDTA/Revenues) was 41.1% in the first quarter 0f 2021 up from 39.3% in the first quarter of 2020.
  • The company has refinanced the entire balance sheet since the beginning of 2020, saving $8 million per quarter in interest expense.  The company’s weighted average interest rate is 3.3%.  Debt/EBIDTA is 4 times in line with the company’s target.
  • Lamar CEO Sean Reilly said there’s a decent chance the company’s distribution will increase in the third quarter of 2021.
Sean Reilly, CEO, Lamar Advertising

Lamar CEO Sean Reilly on revenue momentum:

Business is very good and the year is off to a much stronger start than we expected when we talked in late February…while first quarter revenue was down relative to the strong first quarter start of 2020, we saw improvement through the period.  Our billboard billing in March and April was essentially back to 2019 levels even adjusting for acquisitions…in the transit and airport business transactions have picked up in recent weeks.

Reilly on what’s up and what’s down

Categories of relative strength in the first quarter were healthcare, gaming and real estate…Amusements and entertainment as a category tended to lag but we have seen bookings ever there in recent weeks.

Reilly on why Lamar formed a SPAC

As a REIT, Lamar the parent is somewhat limited – constrained if you will – to acquire REIT qualified assets in North America.  However, the world of out of home advertising is much bigger than that, be it digital screens that are not REIT qualified because of their location or ad tech that drives digital screens and enables programmatic or international assets…

Lamar CFO Jay Johnson says capital spending will return to normal but there were few new acquisitions in the first quarter.

In 2021 we expect to return to more regular year in terms of capital deployment.  Capexp is anticipated to total $150 million for the full year including $55 million of maintenance capexp…we increased our appetite for acquisitions beginning in the fourth quarter of last year.  While we are aggressively pursuing acquisitions, in the early stages of the year there remained a valuation gap between buyers and sellers.  Consequently there was only modest investment activity in the first quarter.

Insider’s take:  Lamar has the resources to acquire but is being conservative for the time being.  Insider is skeptical of the SPAC strategy.  Management focus has been a strength of Lamar.  We wonder if the SPAC will divert management attention from a great billboard business to more risky international ad tech businesses.  The more things you try to do the less well you do them.

Lamar finished the day down 1.5% while OUTFRONT declined 0.5%, the S&P declined 1.1% and Clear Channel Outdoor declined 3.4%

 

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