“We were extremely pleased with our second quarter results, which were even stronger than we had anticipated” was how Lamar CEO Sean Reilly lead off the second quarter earnings call.  Here are the highlights from Lamar’s 2nd quarter 2022 earnings release and earnings call.

• Net revenue increased by 16% to $518 million during the second quarter of 2022.  Organic revenues grew 11% and acquisitions added the remainder of growth.  Local revenue grew 10%.  National revenue grew 8%.  Lamar CEO Reilly said Lamar was able to push rate increase in the high single digits in Q2 2022 versus Q2 2021.  Lamar CFO Jay Johnson said May revenues were the highest of any month in Lamar’s history.
• Adjusted EBIDTA increased 12% to $243 million.
• For the first half of the year Lamar has acquired 40 companies owning 3,900 faces at a total purchase price of $234 million.  Burkhart accounted for 3,200 faces or 82% of the acquired signs.
• Lamar had $3.2 billion of debt at June 30, 2022 with a weighted average cost of 3.6% and a weighted averaged maturity of 5.9 years.  65% of debt is fixed rate.  Net debt/EBIDTA is a low 3.2 times.
• Capital expenditures totaled $47 million during the second quarter.  The company added 114 new digital faces and finished the quarter with 4,159 digital units.

Lamar CEO Sean Reilly on acquisitions

The M&A market is a little less frenetic and less frothy than it was six months ago, but we remain busy on that front. Our integration of assets from the Burkhart deal, which we completed in May, is ahead of schedule, and the pipeline of additional deals remains full. Year-to-date, we have completed about $275 million worth of deals and by the end of the year, that total should top $350 million.

Lamar CEO Sean Reilly and strong categories

Service, which is our largest vertical at 13% of our book of business was up about 18%. Restaurants, a very important category for us. It’s about a little more than 9% of our book of business was up 11%. Retail was up 18% and of course, amusements, entertainment, and sports continues its recovery. It was up 42% in Q2. Education up 21%, gaming up 12% so really, as I mentioned, all of our top 10 verticals are performing nicely.

Lamar CFO Jay Johnson on why Lamar’s recent conversion to an UPREIT offers benefits to sellers.

 So ultimately, OP units are convertible on a one-for-one basis into Lamar common stock. The issuance of OP units, though to the seller is not a taxable transaction. So that’s the benefit for the seller to defer their taxes. After holding the units for a year, they’re eligible to convert those one-for-one for Lamar stock. At our option, we can redeem those with either Lamar stock or cash. So we kind of control that side of the transaction, whether we elect to issue equity or pay the equivalent in cash.

Billboard Insider’s take:  Lamar’s upreit offers significant tax benefits to you if you’re selling out of home assets.  You can sell your out of home company, accept upreit shares, convert those share to Lamar common stock after a year and you pay taxes only when you sell the Lamar shares.  If you do a cash for assets sale you have to pay taxes immediately.

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