• Sean Reilly on Digital Billboards and M&A

    Three interesting comments by Lamar CEO Sean Reilly during last week’s third quarter earnings call.

    On digital sign revenues.

    Digital continues to be a great story for the company. Our same-board digital performance continues to shine, up 7.2% in Q3. By the end of Q3, we had added an additional 129 new digital units. We expect that number to be roughly 175 by year-end.

    In response to a question about how the digital sign market is changing and whether digital capex is averaging $185,000 per board.

    ..There’s different sized boards.  A digital poster… is going to come in at around the  $60,000 range and a 14 by 48 is going to be somewhere in the neighborhood that you quoted…Costs are…not dropping as dramatically as you’ve seen over the last 4,5,6 years… What is happening is performance is dramatically increasing.  Performance in terms of useful life.  11-12 years from the earlier iterations where it was 7-8.  They’re lighter.  They’re brighter.  They use less energy.  I would categorize it as greatly enhanced performance as new entrants come in rather than decreased costs.

    On the M&A Pipeline:

    Very robust.  As good as I’ve ever seen it…We have under various stages letters of agreement about $240 million that we expect to close early in 2019.

    Insider’s take: Reilly says the M&A pipeline is “as good as I’ve ever seen it.”  Insider hears rumors that Lamar is in the hunt for Fairway/Adams assets.  Lamar has the debt and equity facilities to fund a transaction and has shown a willingness to bid for the right assets (12.5 times cashflow for the 2016 Clear Channel Outdoor purchase). Insider will be listening to see if Fairway comes up when Reilly speaks at the Wells Fargo Conference on November 15.

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