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    Lamar Advertising Co (LAMR)

    Q1 2024 Earnings Summary

    Reported on Feb 24, 2025 (Before Market Open)
    Pre-Earnings Price$117.50Last close (May 1, 2024)
    Post-Earnings Price$117.93Open (May 2, 2024)
    Price Change
    $0.43(+0.37%)

    What went well

    • The company is exceeding internal performance goals, leading to increased stock-based compensation, which indicates strong operational performance and management confidence.
    • Expectations of increased shareholder distributions in the back half of the year due to the depletion of Net Operating Losses (NOLs), suggesting a potential increase in dividends as the company seeks to distribute 100% of its taxable income in compliance with its REIT policy.
    • Positive outlook for the remainder of the year, with the back half expected to be materially better, boosted by anticipated political advertising revenue, and consistent growth in key sectors like quick-service restaurants, which were up 6%, demonstrating resilience despite economic concerns.

    What went wrong

    • The company expects increased operating expenses in 2024 due to the absence of COVID-19 relief grants and peak ERP spending, which could pressure margins.
    • The company is running out of net operating loss carryforwards (NOLs), which have been used to moderate taxable income since 2014. Without NOLs, future taxable income will increase, potentially impacting cash flow and reducing funds available for investment or debt repayment.
    • Stock-based compensation is expected to increase by about $15 million for the year due to exceeding internal goals, leading to higher expenses.

    Q&A Summary

    1. NOL Usage Impact on Distributions
      Q: When will NOLs run out, and how will that affect distributions?
      A: We are essentially running out of NOLs this year. This will be the last year we can use them to moderate taxable income. As a result, you'll see a jump in distributions in the back half as we aim to distribute 100% of our taxable income in compliance with our policy.

    2. Organic Growth Outlook with Election Impact
      Q: How do you expect organic growth to shape up, considering the upcoming election?
      A: April's growth was roughly the same as Q1. Q2 might be slightly lower in pro forma growth than Q1, but we anticipate the back half will be materially better due to the lift from political advertising. Overall, the quarters should be relatively in the same ballpark.

    3. Cost Guidance Drivers
      Q: What factors could push cost growth to the high end of guidance?
      A: If we maintain the strong performance in local sales seen in Q1 and experience a modest recovery in national sales, we'll reach the upper end of the 3% to 5% growth range. On the expense side, major drivers include the return of COVID-19 relief grants and peak ERP spending.

    4. Increase in Stock-Based Compensation
      Q: Why did expected stock-based compensation increase by $15 million?
      A: Last year, we didn't hit our internal goals and had fewer performance stock awards. This year, we are going to exceed our internal goals, leading to higher stock-based compensation.

    5. Signs of Economic Stress in Business
      Q: Are any areas showing stress despite strong ad numbers?
      A: We're not seeing signs of stress in our business. For example, quick-service restaurants were up 6% in our book, indicating consumer strength.

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