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Subtitles by the Amara.org community © transcript Emily Beynon

Excuse me, everyone. We now have Sean Reilly and Jay Johnson in conference. Please be aware that each of your line is in a listen only mode. At the conclusion of the company's presentation, we will open the floor for questions. To ask a question, please press star one at any time. In the course of this discussion, Lamar may make forward-looking statements regarding the company, including statements about its future financial performance, strategic goals, plans and objectives, including with respect to the amount and timing of any distributions to stockholders and the impacts and effects of the general economic conditions, including inflationary Business, Financial Condition, and Results of Operations. All forward-looking statements involve risks, uncertainties, and contingencies, many of which are beyond Lamar's control, and which may cause actual results to differ materially from anticipated results. Lamar has identified important factors that could cause actual results to differ materially from those discussed in this call in the company's third quarter 2026 earnings release, and its most recent annual report on Form 10-K. Lamar refers to those documents. Lamar's third quarter 2026 earnings release, which contains information required by Regulation G regarding certain non-GAAP financial measures, was furnished to the SEC on a Form 8-K this morning and is available on the Investors section of Lamar's website, www.lamar.com. I would now like to turn the conference over to Sean Reilly.

Thank you, Katie. Thank you, Katie, and good morning all, and welcome to Lamar's Q3 2026 earnings call. We continue to be very pleased with how the year is playing out. For the third quarter, revenue growth ticked up 6.2% on an acquisition-adjusted basis, driven by strong demand from national customers, political spend, and our digital platform. Revenue increased across billboards, airports, transits, and logos. while expense growth moderated to 4.4% on an acquisition-adjusted basis. That all translated to an EBITDA margin for Q3 of 49.1%. October was even better with revenue topping $232 million, reflecting year-over-year growth of more than 14% on an acquisition-adjusted basis. Notably, ex-political, the growth was just shy of 7%. With those results in hand, today we are raising our guidance for full year AFFO to a range of $8.87 to $8.97 per share, representing at the midpoint an increase of 8% over 2025. In September, the Board increased the quarterly distribution by 5 cents to $1.65 per share, We will recommend a similar dividend for Q4 and, given our pacings, anticipate recommending that we pay a special dividend of at least 30 cents at the end of December. Back to Q3. In addition to political, categories of strength included services, retail, auto, and telecom, while healthcare and amusements were flattish. Our national revenue increased nearly 20%, while local and regional revenues were up 4.2%. Both of those rates of growth accelerated from Q2. A word on political. It's clear to us that with every cycle, we are without a doubt gaining momentum and market share as campaigns and PACs recognize the value of our audience. Nationally, political ad spend across all media is expected to grow about 30% this year over 2022 and modestly over 2024. We will do far better than that. Our political spend this year will top 40 million, more than double what we generated in 2022 and up 40% over 2024. Nearly half of that spend will show up in Q4. Our digital platform, the largest in the industry, is a key driver of our growth for the political category. It accounts for about half It's also obviously driving growth for our business as a whole. Digital now generates more than a third of our billboard revenue and on a same store basis digital billing increased 6.5% in Q3 with programmatic up more than 40% in Q3.

On the M&A front, we've been busy year-to-date. We have closed 54 billboard acquisitions, and we've spent more than $55 million enhancing the security of our real estate portfolio by person use. In addition, we completed our second upgrade transaction in August for the next couple of months. Overall, we're ending 2026 with a lot of momentum. Thanks, Sean. Good morning, everyone, and thank you for joining us. We have a strong third quarter and are extremely pleased with our census estimates across revenue, adjusted EBITDA, and AFFO. Our billboard regions all exceed, which were up 9.2% and 8% respectively. The airport business continued to outperform with acquisitions last year, followed by transit, which was up 8.1%. In addition, the positive momentum, which is the best month on record for the company. October's performance brings acquisitions. As of October 31st, we had 99.7% of our budget on the books, with November consolidated expenses increased 4.4% in the third quarter, which grew more than our original budget, but was driven by variable expense pay full-year acquisition-adjusted operating expense growth in the 4.25, Thank you for joining us. Adjusted funds from operations totaled $249.3 million in the third quarter, compared to 200%. Diluted AFFO per share grew 9.5% to $2.41 per share, versus $2.22. Regional sales grew for the 22nd consecutive quarter, and accounted for approximately 75% of billboard revenue in Q3, fine in local and regional sales, which was due to COVID. National sales performance was extremely robust as quarter. On the capital expenditure front, total spend for the quarter was $45 million, including 16 to pay total capex of approximately $186 million, with maintenance capex comprising $65 million.

Turning to our balance sheet, on October 1st, we closed on the amendment in extension of $250 million AR securitization. The facility now matures in October 2029, and the margin improved by 10 basis points. The new program also includes structural enhancements that increase flexibility and availability. The securitization was our nearest maturity, and we now have no debt maturing until our $600 million of senior notes due in February 2028, followed by the revolving credit facility in July of that same year. The company currently has approximately $3.5 billion in total consolidated debt, and our weighted average interest rate is 4.5%, with a weighted average debt maturity of 3.9 years.

As defined under our credit facility, we ended the quarter with a total leverage of 2.84 times. Our secured debt leverage was 0.64 times at quarter end, and we were against covenants of 7 times and 4.5 times respectively. For the full year, we exclusively below one-time net debt to EBITDA. In addition, our LCM interest coverage is further demonstrating the strength of the company's balance sheet. As Sean mentioned, from an investment capacity well over $1 billion with the ability to deploy this capital while remaining four times net debt to EBITDA. Our liquidity and access to capital both remain held in total liquidity, comprised of $54 million of cash on hand, and 606 tools fully drawn with $250 million outstanding. Subsequent to quarter end, the company repaid $40 million on the Golden Credit Facility. In this morning's release, we revised our four-year outlook and now expect diluted AFFO per share of $8.87 at the midpoint.