Five Things About Lamar

Here are 5 things Insider learned about Lamar Advertising after reading the Lamar’s 2018 10-k

Management Continuity. Lamar’s team has been intact forever.  The 10k states “our regional managers have been with us for an average of 33 years.”  33 years with Lamar, not 33 years experience.

The Reillys are very much in control. Kevin Reilly Jr is Chairman and President.  Sean Reilly is CEO. At December 31, 2018 members of the Reilly family and their affiliates control 63% of the voting power of Lamar Advertising’s outstanding stock.  The 10k dryly notes: “The Reilly family may have interests that are different than yours…”  Reilly control, however, has been good for shareholders.  $100 invested in Lamar stock in March 2014 became $171 by the end of 2018 versus $149 for the S&P 500, $116 for Clear Channel Outdoor and $94 for Outfront.

There’s money in logo signs. Lamar is the largest provider of logo signs in the US.  It operates logo sign contracts with 149,000 faces in 25 states and in Canada. The logo business accounted for $84 million or 5.2% of Lamar’s revenue during 2018.  Reilly said last week that the logo business has a 35% cashflow margin which means it contributes $30 million to Lamar’s cashflow each year.   The 10k states “we plan to pursue additional tourist oriented directional sign programs in both the United States and Canada.”

Short-term leases. Lamar’s leases are surprisingly short term.  The 10k says: “Approximately 67% of our leases will expire or be subject to renewal in the next five years, 20% will expire or be subject to renewal in 6-10 years and 13% thereafter. ” This is surprising although a lease subject to renewal (Lamar will almost certainly exercise renewal right) is not the same as an expiring lease.

Revenues are geographically diverse. Lamar’s top 5 markets account for only 11.4% of total billboard revenues.  The fact that Pittsburgh, PA and Gary, IN are in Lamar’s top 5 markets underscores a focus on small to mid-markets.  Contrast this with Outfront whose top 5 markets (New York, Los Angeles, Miami, San Francisco and New Jersey) account for 49% of Outfront’s revenue.

Lamar’s Top Five Markets account for 11.4% of Total Lamar Revenue

Las Vegas, NV     2.7%

New York, NY     2.5%

Pittsburgh, PA   2.4%

Seattle WA  2.1%

Gary, IN       1.7%

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