“Our recovery is now complete,” was how a bullish Sean Reilly lead off Lamar’s third quarter 2021 conference call. Here are the highlights from Lamar’s 3Q 21 earnings release and conference call.
- Revenues increased 24% to $476 million. Local revenue grew 18%. National and programmatic revenue grew 40%.
- Adjusted EBITDA increased 35% to $231 million.
- The company ended the quarter with moderate leverage. Net Debt/EBIDTA was 3.25. Moody’s and Standard and Poor upgraded Lamar’s debt during the quarter due to improved revenues, reduced leverage and a stable outlook.
Reilly on a hot acquisitions market
The market is very active right now and so are we…As of the end of Q3 we closed 22 acquisitions for just over $100 million. Included in that total was a really nice old line family billboard plant in Northern California called Stott. We’re excited about that one. We have finalized several smaller purchases that will close in early Q4 and we have a number of larger transactions that will also close in Q4. By year end we expect to have total deal value in excess of $250 million…It seems to be a sellers market right now. Multiples are a bit higher than they’ve been historically. Because of that we’ve passed on a couple of potential deals. But we’re very excited about the ones we’re doing.
Reilly says Lamar is insulated from inflation.
Inflation has been our friend. If you look at the largest expense that we have as you know it’s our ground leases. The majority of those are fixed in inflationary times and non-inflationary times. The growth of that expense base tends to be around 1%. So it’s a relatively fixed expense. The next expense for us is labor, wages, employees. On the front side of the shop, a lot of that comp is flexed to revenues, sales commissions and the like. So that’s going to grow with the topline. In the back of the shop, there’s a little bit of wage inflation back there, but it’s not enough of a base to really move the needle in terms of our total expenses. So I would say, the news is good on the expense side. We’re relatively insulated from inflation.
Reilly says amusement and entertainment is key to future revenue growth.
I finally would point to one vertical that hasn’t gotten completely off the mat yet, which is amusement and entertainment. As I mentioned, it’s still about 40% down from pre-pandemic levels and it constitutes about 4% of our book, we expect that to grow back to 7% of our book. We think we have upside there
Billboard Insider’s take.
Lots to like but one caution. Lamar’s revenue exceeds pre-covid levels. Moody’s and S&P upgraded Lamar debt. National and programmatic revenues are booming. Inflation has become an investor concern to judge from the analysts questions during the call. Are you thinking about how inflation might impact your out of home business?
Lamar was up 3.1% on a day while Clear Channel Outdoor rose 11.6%, OUTFRONT rose 2.3% and the S&P 500 rose 0.65%.
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