On last week’s earnings call Lamar CEO Sean Reilly was asked about how Lamar integrates acquisitions and he said this:

When it’s a fill-in the expense synergies happen extremely quickly…on a fill in deal we’re just buying billboard structures, billboard permits, advertising contracts and ground leases and we don’t need the people or the trucks or the buildings and the like… so on the expense side it happens very quickly…the magic on the revenue side takes a little longer because number one we have to live with contracts in place that the previous owners had and then you know once those contracts roll off typically there’s a little bit of magic on the top as well.

SignValue’s take: This explains why Lamar gets higher margins as it expands. It increases ad revenue, utility costs, lease expenses and sales commissions but adds no labor costs. With the UPREIT transaction for Verde Outdoor, $110 million in cash acquisitions, so far, this year and a successful integration system for purchased assets, Lamar continues to strengthen themselves in the market place.

If you have questions, contact one of SignValue’s experienced analysts for a free and confidential consultation at info@signvalue.com or call 480-657-8400.

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