Earnings calls are all too often can’t-say-don’t-know-won’t-tell.  Not so with Lamar.  CEO Sean Reilly was direct, factual and upbeat on yesterday’s call.  Read his comments and you’ll understand why Lamar stock went up 18% yesterday.

Sean Reilly on the now versus 2008-2009

I was the chief operating officer of the company back then…I walked around for six months with a feeling of dread in the pit of my stomach…I have not felt that way throughout this…It does not feel as it felt back then…Our scale is bigger, our platform is broader, our inventory is in far far greater demand…We went into that thing levered at about 6X.  We had to scramble and were running about getting covenant relief.  It was just a much more difficult time.

The impact of Covid on Lamar’s revenues

I can tell you how April went.  Revenues were approximately $116 million a decline of approximately 20% from…April 2019…May will be a tough month also.  Likely a little tougher than April.  But as we look through the windshield at the road ahead we see encouraging signs.  Our audience is the driving public and in many many of our markets drivers are hitting the roads again…Traffic is way up in Baton Rouge from a month ago.  And many of our managers tell me the same is true in their markets as well.  Since this began we have been tracking driving activity in our markets using driving data provided by Geopath…Travel activity across our markets…fell far less sharply and has rebounded far quicker than the top DMA’s like New York City…The rebound in traffic is dramatic…Eyeballs are not customers but on the customer front we have turned the corner.  Meaning we are having fewer discussions about contract relief via cancellation or campaign deferrals or flexible invoicing and more conversations about renewals and new contracts.

…We think May will be a tad worse than April.  Not dramatically…I don’t want to guide to the quarter but we don’t see it as dire as some of the analysts had us.

Verticals which have shown renewed activity

Services, quick serve restaurants, healthcare, financial institutions and education.  To that list I would add a few things like online education, home improvement, beer and wine and with less air travel and more road travel this summer regional tourism, maybe not Vegas or Disneyworld, think Myrtle Beach and Hershey Pennsylvania.  It is clear that people are going to hit the road this summer.  It’s also clear that the traditional regional roadside businesses will do well…It’s also clear from my calls with management that the nation’s heartland is recovering faster than the I-95 corridor or the far west.  Middle and smaller sized markets are showing more sales activity than the top 10 markets in the country.

On cutting expenses

We have reduced our capex budgets from $130 million to approximately $58 million and we expect to reduce consolidated opexp by at least $50 million from 2019’s proforma total of approximately $980 million.  The big ticket items in the reduction in expenses are $16.5 million in executive and management bonuses, at least $13 million in lease portfolio savings and reduced payments to transit and airport authorities, approximately $9 million in sales commissions and $6.5 million in travel and entertainment.

Programmatic is recovering

The shorter the cycle the quicker the downturn but the quicker the bounce.  Programmatic is our shortest cycle business…Programmatic got hit pretty bad in April…It’s the only channel wherein we guarantee impressions.  When we sell a bulletin on the interstate for the month there’s lots of data around the traffic…but we don’t guarantee a set number of impressions.  In programmatic we do.  And in April we could not do that…As of I believe tomorrow we’re going to have data that allows us…by digital inventory to guarantee impressions.  And the programmatic activity has really picked up.  We are going to see a lift from that in May.

In response to a question about traffic patterns.

I would really encourage you to go to our website…and go look at the traffic activity highlights in our investor section on our website.  It will astound you how many people are on the road as we speak…We’ve got smaller markets where traffic is up 40%…The headline number…is that in markets that contributed 80% of our billboard revenue last year their travel activity and miles driving is already up to 75% of last year’s average.

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