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LAMAR ADVERTISING CO/NEW (LAMR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 delivered modest growth: net revenue $579.3M (+2.5% YoY), adjusted EBITDA $278.4M (+2.5% YoY), AFFO $225.3M (+5.5% YoY), and diluted EPS $1.52 (+13% YoY) . EBITDA margin held strong at 48.1% .
  • Versus S&P Global consensus, revenue was roughly in line/slightly below while EPS was above; adjusted EBITDA was essentially in line with consensus* .
  • Full‑year diluted AFFO/share guidance was trimmed to $8.10–$8.20 (from $8.13–$8.28) on softer operations and non‑operational items including the Vancouver Transit exit; operating expense growth and capex were lowered to ~2.5% and ~$180M, respectively .
  • Strategic catalysts: first‑ever UPREIT acquisition (Verde Outdoor) broadens the M&A toolkit; management expects to reuse this structure, with notable inbound seller interest .
  • Setup for 2H: Airports outperform; national programmatic expected to rebound in Q3; however political comps are a headwind (≈100 bps in Q3, ≈200 bps in Q4; ~$20M in 2H’24 political revenue to lap) and management is “particularly cautious about October” .

What Went Well and What Went Wrong

  • What Went Well

    • Margin resilience and steady local demand: Adjusted EBITDA margin reached 48.1% (among strongest Q2s), and local/regional sales grew for the 17th consecutive quarter, underscoring the resilience of the core local business .
    • Airports outperformed and digital footprint expanded: Airport division is “pacing the company,” and Lamar ended Q2 with 5,255 digital units (+152 QoQ), with 325–350 additions targeted for 2025 .
    • Capital structure strength and liquidity: Net leverage 2.95x; interest coverage 6.8x; liquidity $363M; no debt maturities until 2027—supporting continued M&A capacity “well over $1B” .

  • What Went Wrong

    • Guidance trim and softer macro than hoped: Management reduced AFFO/share guidance to $8.10–$8.20 and characterized conditions as “solid, but not spectacular,” pointing to increased activity but ongoing advertiser caution .
    • Vancouver Transit exit drag: Full‑year AFFO headwind $0.06/share, mostly severance ($0.04); operational impact ~$0.02 for the year, with ~$0.01 in the back half .
    • Political comps and category softness: Political headwinds of ~100 bps in Q3 and ~200 bps in Q4; beverage and telecom were notably weak (−16% and −17% YoY, respectively) .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Net Revenues ($MM)$565.3 $505.4 $579.3
Net Income ($MM)$137.6 $139.2 $155.0
Diluted EPS ($)$1.34 $1.35 $1.52
Adjusted EBITDA ($MM)$271.6 $210.2 $278.4
Adjusted EBITDA Margin %—41.6% 48.1%
AFFO ($MM)$213.5 $164.3 $225.3
Diluted AFFO/Share ($)$2.08 $1.60 $2.22
Revenue Consensus Mean* ($MM)$565.031*$508.789*$580.794*
Primary EPS Consensus Mean* ($)$1.3699*$1.3368*$1.4486*
EBITDA Consensus Mean* ($MM)$267.903*$231.053*$278.267*

*Values retrieved from S&P Global.

KPIs and Operating Metrics

KPIQ2 2024Q1 2025Q2 2025
Digital Billboard Units (end of period)——5,255
Digital Units Added (QoQ)——+152
FY Digital Additions Outlook—~350 325–350
Programmatic Growth YoY (Billboard)—~30% ~10%
National Programmatic Outlook (Q3)——+2.5% to +3%
Static Bulletin Rate YoY——+4%
Booked vs Plan (Q3 / FY25)——91% / 88%
Category Strength (Q2)——Services +8.2%; Financial +11%; Building & Construction +16.3%; Insurance +22%
Category Weakness (Q2)——Education −3.8%; Beverages −16%; Telecom −17%
Political Headwind——Q3 ~100 bps; Q4 ~200 bps; 2H’24 political ~$20M
Net Debt / EBITDA—2.85x 2.95x
Liquidity$506.7M (FY24) $491.3M $363.0M
Total Debt / Rate / WAM—~$3.19B / 4.6% / 3.6 yrs ~$3.4B / 4.7% / 3.4 yrs

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Diluted AFFO/ShareFY 2025$8.13–$8.28 $8.10–$8.20 Lowered
Net Income/Share (Diluted)FY 2025$6.01–$6.07 $6.09–$6.11 Raised slightly
Operating Expense Growth (Acq.-Adj.)FY 2025~3% ~2.5% Lowered
Total CapExFY 2025~${195}M ~$180M Lowered
Maintenance CapExFY 2025~$60M ~$60M Maintained
Cash InterestFY 2025~$152M ~$152M Maintained
Cash TaxesFY 2025~$10M ~$10M Maintained
Dividend/ShareQ3 2025Mgmt intended $1.55 Declared $1.55 (payable 9/30) Maintained
Regular Dividend (FY)FY 2025≥$6.20 ≥$6.20 reiterated Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Macro & PacingQ4’24: Strength in political/local/programmatic; 2025 AFFO guide $8.13–$8.28 . Q1’25: “Steady as she goes”; pacing to guidance .Environment “solid, but not spectacular”; back half better than 1H but below earlier expectations .Slightly softer than hoped
Local vs NationalQ1’25: Local steady; national slightly down; programmatic +~30% .Both local and national up; programmatic ~+10% .Improving national mix; programmatic moderating
Digital & PricingQ1’25: ~350 digital adds targeted .5,255 units; +152 QoQ; FY adds 325–350; static bulletin rate +4% .Execution on plan; positive pricing
Airports/Transit—Airports pacing the company; transit model focused on bus wraps; Vancouver exit .Airports strong; transit mixed
M&A/UPREITQ1’25: >$70M YTD spend; plan >$150M .~$110M cash YTD; Verde UPREIT (1.1875M OP units) as new template .Acceleration; strategic flexibility up
Costs/ExpensesQ1’25: Expense growth ~3% .Full‑year acq‑adj opex growth ~2.5% .Better cost control
Capital AllocationQ1’25: $150M buyback at ~$108; $1.55 dividend; ≥$6.20 FY dividend .Maintain $1.55 quarterly dividend; reiterate ≥$6.20 FY .Shareholder returns steady
Political Tailwinds/HeadwindsQ4’24 political strength .Political headwinds: Q3 ~100 bps; Q4 ~200 bps; 2H’24 political ~$20M to lap .Near-term headwind in comps
Balance SheetQ1’25: 2.85x leverage; strong liquidity .2.95x leverage; 6.8x interest coverage; $363M liquidity .Remains strong

Management Commentary

  • “I would categorize the current operating environment as solid, but not spectacular… back half growth… is not quite as strong as our earlier expectations. Consequently, we have revised our guidance for full year AFFO per share to a range of $8.10 to $8.20.” — Sean Reilly, CEO .
  • “Adjusted EBITDA margin for the quarter remained strong at 48.1%, one of the strongest second quarters in recent history.” — Jay Johnson, CFO .
  • “The UPREIT is a really compelling option for sellers… we expect that it will be a tool that we will use again and again.” — Sean Reilly .
  • “We ended the quarter with total leverage of 2.95x… LTM interest coverage 6.8x… investment capacity over $1B while remaining at or below our target leverage range.” — Jay Johnson .
  • “Static bulletin rate was up 4% in Q2… we believe national programmatic will be up 2.5% to 3% in Q3.” — Sean Reilly .
  • “Full year [Vancouver] impact to AFFO is approximately $0.06 per share… ~$0.04 severance, ~$0.02 operations; ~ $0.01 operational in the back half.” — Jay Johnson .

Q&A Highlights

  • Guidance reduction drivers: Mix of slightly softer operations and Vancouver exit; Verde and other acquisitions plus buyback provide offsets, but net effect aligns with the Vancouver impact at midpoint .
  • UPREIT significance: Expect to catalyze M&A with tax‑deferred units appealing to long‑held private owners; notable inbound interest post‑Verde .
  • Political comp dynamics: Headwind ~100 bps in Q3 and ~200 bps in Q4; 2H’24 saw ~$20M political revenue; October flagged as the most difficult month .
  • M&A integration timeline: Cost synergies realized quickly in fill‑in acquisitions; revenue uplift comes as legacy contracts roll .
  • Airports and transit: Airports benefiting from air travel rebound; Lamar’s transit model (bus wraps) targets community audiences; Vancouver was an outlier with slower ridership recovery .

Estimates Context

  • Q2 2025 actual revenue was roughly in line/slightly below S&P Global consensus, while diluted EPS was above, and adjusted EBITDA was essentially in line with S&P Global “EBITDA” consensus* .
  • Q1 2025 showed revenue below and EPS above consensus, consistent with cautious national spend but resilient local and cost control affecting per‑share outcomes* .
  • Given the guidance trim (AFFO/share to $8.10–$8.20) and lowered opex/capex, sell‑side models may shift mix toward stronger Airports, slightly slower 2H billboard growth vs prior assumptions, and modestly lower AFFO/share with better expense discipline .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Defensive local engine with margin resilience: 48.1% EBITDA margin and 17 straight quarters of local/regional growth support downside protection .
  • Airports strength a bright spot: Segment is pacing portfolio growth and offers cyclical tailwind into 2H .
  • Political comps and October caution temper 2H: Expect near‑term noise; rate card discipline (static +4%) and programmatic rebound in Q3 help offset .
  • UPREIT unlocks incremental M&A: Verde deal signals a scalable, tax‑efficient path to consolidate private inventory without cash constraints .
  • Balance sheet optionality: 2.95x net leverage, 6.8x coverage, and $363M liquidity underpin continued buybacks/M&A while keeping leverage within target .
  • Guidance reset appears measured: Vancouver and macro caution explain the trim; lower opex and capex guide should aid cash conversion and preserve dividend (≥$6.20 FY) .
  • Trading setup: Narrative leans to “quality compounder with tactical 2H overhang”; watch October pacing, Airports sustainability, and M&A cadence as stock catalysts .

Additional Relevant Press Releases (Q3 timing, pertinent to Q2 narrative)

  • Verde Outdoor UPREIT acquisition (July 2 close; 1,187,500 OP units issued; >1,500 faces, 80 digitals across 10 states) .
  • Q3 dividend declared $1.55/share, payable Sept 30, 2025; FY regular dividend expected ≥$6.20/share .