“2022 was the most successful year in the company’s history” was how an upbeat Lamar Advertising CEO Sean Reilly lead off the company’s earnings call.  Here are the results of the Lamar Advertising 4Q 22 earnings release and earnings call.

• Net revenue increased 8.3% to $535 during the fourth quarter of 2022 due to acquisitions and strong local sales. Acquisition adjusted revenue increased by 4.6% for the fourth quarter of 2022 as weakening national sales and declining programmatic sales offset strong local sales. Lamar CFO Jay Johnson said that rates on the company’s large format traditional bulletins increased by almost 8% in 2023 and occupancy remains historically high.
• Acquisition adjusted operating expenses increased by 3.2% in the fourth quarter of 2021.
• Cashflow (EBIDTA) increased by 9% to $252 million in the fourth quarter of 2022.
• Lamar completed $480 million in acquisitions during 2023.  There were $192 million in acquisitions across 19 transaction during the fourth quarter.  Lamar CFO Jay Johnson said the company expects to slow the pace of acquisitions in 2023 in order to integrate this years’s purchases.
• Lamar had $3.3 billion of debt at 12/31/23 with a weighted average interest rate of 4.6% and an average debt maturity of 5.3 years.  Net debt to cashflow is a low 3.2.  Billboard Insider considers anything under 5.0 as moderate.  Approximately 75% of debt is fixed.
• Lamar will pay a dividend of $1.25/share in March 2023 up from $1.20/share in December 2022.  That equates to a dividend yield of 4.9% based on a current share price of $102.05.

Sean Reilly says local sales lead the way.

I’d like to highlight a few trends from Q4 that are carrying over into Q1 of this year. Number one, local revenue remains solid as main street remains resilient. Number two, national weakness has persisted into Q1 of this year and we anticipate it will be down approximately the same as in Q4. That said, activity is picking up and we anticipate our national book of business will be modestly positive for the full year.

Reilly expects elevated corporate expenses this year as the company implements a new enterprise resource planning system

For this year and next year, you will see elevated expense growth at corporate for that reason. These things are complicated and they are expensive. But there is a payback and there is an ROI attached to the effort. We will get more efficient up here. At corporate, we’ll push less paper with fewer people…we have never done this before. I get embarrassed when I talk about our IT here because our customer-facing IT is definitely state-of-the-art. Back office IT hasn’t been touched in probably two decades so it’s time, and I’m excited about the project, and I know it’s going to pay dividends.

Billboard Insider’s take: 

Worrisome to see that Lamar’s acquisition adjusted revenue growth (4.6%) failed to match inflation (7%) during the fourth quarter.   Lamar will ease up on acquisitions next year after two years of heavy acquisitions.  An opportunity for Link and other independents with cash?  Lamar programmatic revenue declined in the fourth quarter.  Programmatic is the most volatile form of out of home spending.  First to lead in a recovery and first to decline in recession.  Could programmatic be signaling a recession in 2023?   Lamar finished the day down 2.8% while the S&P was down 1.2%, OUTFRONT down 3.3% and Clear Channel Outdoor down 4.0%

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