LAMR - Earnings call transcript Q3 2017 | Lamar Advertising Company

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Operator

Excuse me, everyone. We now have Sean Reilly and Keith Istre in conference. [Operator Instructions] 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. 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 the 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 2017 earnings release and its most recent annual report on Form 10-K, as updated or supplemented by its quarterly reports on Form 10-Q. those to you refers documents. Lamar Form XXXX Lamar's Investors required furnished section which and on information of Lamar's release, Regulation third to available G the SEC was quarter by measures, regarding contains financial morning www.lamar.com. earnings certain on this X-K website the is non-GAAP the like Sean over Reilly. would now conference I to turn to Mr. you may begin, Reilly, sir.

Sean Reilly

on slightly much Thank little. a QX board, Earnings Call. XXXX to Lamar's you, QX the coupled basis, Brandon, and forma up minus is across came pro good X%, better in with morning, up controls. a expected and or plus X% the welcome all expense about than QX tight same, tracking

Regarding assessing numbers should maintenance maintenance remarks. million Puerto between hurricane and $X CapEx those three with the Irma Rico, $X his but come Harvey, Maria, CapEx We're million. touch damage in damage. and our will on in in still Counting the all hold storms, associated damage Keith up. should

towards are However, in spite tracking guidance. share AFFO of end we the still our per of the damage, upper

But or also may QX We It the now, Puerto in effects of hurricane the numbers. our be impacts plus for Rico. pro operational Rico. The will minor. assessing noise our forma some Puerto QX minus white create one still in Keith? for excludes are

Keith Istre

everyone. morning, Good

a of Just quick here. things couple

the Sean damage. gave plus only the guidance what The the consolidated we a about which our tenths higher, last QX. said, year, Maintenance mentioned, expense for for was in full material we Sean forma four hurricanes. well expecting are three was year, about percent and QX or surprises. were we Sean in expected. well. over so better-than- slightly no in it'll on was pro expecting million X%, as as $X that bad be mentioned, from approximately came $XX third did There the As nice quarter a performance were CapEx million metrics, and growth. is We No you surprise, there of as only as a It surprise

Puerto Rico forma our when far earnings pro present our numbers on Rico quarter, a As in release Puerto will report, and our next without we basis. goes, with fourth next the and have as we call

But numbers. quarter. you in saw another the fourth million again, and approximately one $XX were million et acquisitions that because impact the why fourth if that little, condition still have we'll we will is immaterial. the all quarter third in, we quarter. Puerto it's very that's close revenue we contract that separate is in But the have in release personnel, In under close immaterial. leases, You ongoing the we will out the be for so will island in closed in we operating the fourth These year. be will we market. that the $XXX expenses fill-ins cetera, see in Last, of those in stand-alone, That's generated Rico, and press that price from the have that there the will any, quarter, – before on purchase

Sean? So with that,

Sean Reilly

On Thanks, are year-to-date some of added Keith. familiar we're on XXX I'll newbuilds. about the quickly newbuilds XXX those acquisitions with. digital, touch that year-to-date. metrics and of through we

X% digital in for growth same-board just same platform. whole came at as Our forma about basically pro the QX, the

a XXXX. of in going XX% result the little That was local at shifted on mix a national. sales bit, trend touch that XX% minute. in We national/local and came throughout I'll has Our on that a been basically

been stronger local book book. national has than our Our

book X.X%. Our flat basically local and up our year-to-date, national is book is

of which experienced struggling weakness XX%; are down little bit category, top you them a X%. the our up bit telcom, X%, open the XX% performers a take all platform. sort you We same our it In together, verticals. Brandon, with up and still add little as X%, Strong verticals, of education terms whole it up can of now. of And automotive, it's again, were in was up service, book, XX XX%. if was and questions for down

Operator

first Wells come will from [Operator Instructions] Marci question Fargo. The with Ryvicker

Marci Ryvicker

Thanks. so clarifications. Rico? about expense couple also much. talk quarter, Keith, in the when Thank you you a excluding X% I Puerto have growth that fourth the of is

Keith Istre

Puerto No Rico. that is including

Marci Ryvicker

Okay, but the revenue was excluding? Okay.

Keith Istre

Correct.

Marci Ryvicker

cycle you through do education? when Sean

Sean Reilly

actually a tough cycled we this through I is It in have thought would quarter. question.

have up in So just real Marci. how see for to we'll don't a answer precise QX. have holds it I that

Marci Ryvicker

this of at Okay, have, into if next gotten couple you morning year? point, we’ve do visibility What and this going they at questions XXXX. all, on

Sean Reilly

be little the good It year, headwind; for political a feel we more activity. normal accretive to a tailwind. we've be longer will And are Keith, really our be some think – that is it'll good up as we've a a no also, acquisitions good I early teed talking XXXX. about up than teed

a I teed good in again, So year like XXXX. for feel it up we,

Marci Ryvicker

you. thank Okay

Operator

question The Morgan ahead. you Swinburne come next from go will question. with Thank Please the Ben Stanley. for

Ben Swinburne

Hey, good morning questions. of Couple guys.

than work I'm some usual as you're decent got money think, more driving, to have accretion in deals you've becoming a rate from it Just since of at and like maybe and deal AFFO the if you year the I or Is about a putting M&A hurdle Sean. in sticking what curious changed this softer thinking than seems the you more last given or just these your a you're so? reasonable. more all of how you you fourth year sellers bit has on organic you what amount But need M&A deals. theme, growth little the are sort the done And mentioned before, quarter. from been to see

Sean Reilly

the has I don't think environment changed.

don't Descriptively, think most the I came usual And there's of around all of those – within basically in one sort of where – our just country, as fill-in a There fill-ins a of the these were than describe in why it's more think predictable years would I really shift I been they of that just terms couple exceptional pipeline. are stuff. the were transactions footprint, about. environment. touching

range You guys you've that math, pretty, familiar and our familiar in are with. going right been acquisition pretty are that to these with be

Ben Swinburne

Do you when deals in from much, Okay. and AFFO year? is get all a per sense done, said of this share how you'll have

Sean Reilly

I'm of guess of the an additional we be – going to it per neighborhood $X.XX should in share. AFFO that

Ben Swinburne

okay. Yes,

Okay, cool. And then I don't Rico. know wanted if us Keith Puerto give to

Just in the just our a might perspective business helpful the on or size of from a year quarter modeling. be

Sean Reilly

that quick. on touch real I'll Sure,

Ben Swinburne

Okay, Sean.

Sean Reilly

zero You're revenues, million talking in to give month $XXX,XXX year or in revenues. EBITDA between annual contribution. $X $X million $XX in so million about, – to contribution, a Marginal and EBITDA $XXX,XXX a take,

the could, create a to would forma noise little it our we – as So pro again, revenue in it's but business, not mentioned, white material our what be overall growth. otherwise

Ben Swinburne

Your, while Puerto under with costs damage? Are coming out your in this other associated variable weather-related business, is that out direct whatever, as or expense then is coming lease costs QX that with well Rico? also

Sean Reilly

as – now, all of hard It's right those expenses. carrying we're

They many to static. customers the ready like with of the from now. And size questions challenges don't answers commit and our going One right to lives just together. Right yet. – problem those digital back The of have of to now, what's customers put Rico our aren't their that the the a aren't is we're have right and Puerto business? to service year is does now, look ability we what we have

Ben Swinburne

If Yes, I question. last could one ask great. just

the best-performing look and wide days? are that you at Just weakest? are And portfolio where markets gap regionally, is the so Sean, these the where how if

Sean Reilly

our strength we're It's an of little used I anomaly a And gap the of than little bit – given seeing. can national wider to it's a business.

that because strong. York our It West patterns So the trying on national coasts, are to Coast and And – they're we're performer, the buying track are a Northwest. of up New experiencing buying like down in – large actually book best-performing places is the Chicago. a weakness Gulf bit markets, the little the markets the – being strongest national the little we're and Where bit is following deeper. being

of of And is. of I some national largest as strength categorize having traditional that where classify But being our categories bit relative – a weakness. yes, we're most national other coastal accounts. the some in the as so stronger And are it we're little general, being would we markets than

Ben Swinburne

you Got it, very thank much.

Sean Reilly

Yes.

Operator

David question. Please go question from your Loop for with Capital The ahead. next Markets. you will come Thank Miller

David Miller

results. guys, hey congratulations the Yes, on stellar

priorities. on question Just regard previous up national year. with the your obviously, book the M&A Sean, to following X.X% for up is

you local you it. a core Or kind of priorities buyers? want media The acquisition to of need core to you feel Thanks around forward? your national locally. more Steen Do have cities of retain of kind front more And given still seemed guys flat big presence. will media Appreciate feel of sense like national you going like much. sort center very M&A a be flavor? do the of to of the just Philadelphia the media You're kind of buy in buy

Sean Reilly

Yes.

So was and M&A a Columbia, core What Steen and places sort to with, were us of South reflecting Grande Lamar. Alabama, and Valley in fill-ins feel solid markets, Georgia thing. to – traditional markets. DMA. If be Tuscaloosa, Lamar deliver in Steen sort the local in that, this the did major national only DMA is South presence like real that's places in certain it in activity, I'll for us a for I'd and like the that Carolina good of was was again, Texas All a start Rio give number so the ones Macon, country, a other important good able advertisers' to on year's look

activity say would fits everything we assets, on main and year that did M&A focus is this our our bucket. certainly virtually I in that requalified So high-quality

David Miller

Okay, wonderful. you. Thank

Sean Reilly

Yes.

Operator

will your question for The come go question. with you Thank ahead. from Quadrani Please next Alexia JPMorgan.

Alexia Quadrani

Hi, thank you.

theme. you'll to the bit of in sort the local I structural? versus a of relative typical any in think strength seeing it's local mean, more and of you softness look sort come? local see the staying in Or this think and a do into something do is been of on that at why has normalized been you've sort sort is obviously cycle just you perhaps a you revert you quarters mix change, Or when it weak? national Just permanent national, of relative When

Sean Reilly

have past, So for we've flows in the One is we that and year. us, didn't versus thing is local national. in this it seen keep mind ebb local, coded to and political these

growth. bit thinking as created little anomaly X% is the pro our by I'm forma a of that lack political, So is being of

for it political, be closer X%. adjust to we'd you If

think little that I again, a the of cycle is political that So effect. creating

Alexia Quadrani

this cost in sort expenses the the will When but look can an And then sort you expense there at of side, containment maybe out, you with terms is we of a have of where you look of at run the rate on impressive fall think get comfortable XXXX, sort far in – is too quarter. we when out?

Sean Reilly

I don't to surprises in going any see absolute basis you're on an think expenses.

a to because a ourselves performance tough certainly on on year going that's in comp in expense the consistent pride and side X.X%, surprises we relatively said, that's and As to That around us we is next cycle we QX. control. no can what comp being for create what

Alexia Quadrani

Thank you very much.

Operator

from next The come with will go Jason Citi. question Please ahead. Bazinet

Jason Bazinet

didn't up two unwind ends than color. restructure tax not contemplating provide seemed bit And this rate normal. the the the a structure? a I – if being it Yes. larger indeed you reform you're questions. I to question falls if of in is pass, would just bit of REIT of REIT going little tax just XX%. still bit does my then reform – the little drag the through, or sort advantage second simple If a corporate diminished I quarter if are like you capital had sort could of If is seems do a working because know tax advantage, math, the unwinding

$XXX was million. it think I

Keith Istre

the owed with and funded million of in out a that line the Obviously, throughout acquisitions of working are $XX our that we've from Well, revolver. lot these we of year. capital we

go – quarter we will the next we free fourth we as into the and So year through pay with cash flow. that

Jason Bazinet

Okay.

Sean Reilly

interesting reform So is an the tax question one.

know we far effect terms in REIT. Here's what on so of its

would the purposes are REITs be taxation flow-through currently flow-through personal that association, as told Nareit, entities drafted, We by for of deemed of income. being

that from see it still at advantage, look right. of that view, a you'll a tremendous take point you if think I there's

Jason Bazinet

Yes.

Sean Reilly

yes, – at personally flow-through be you'll the be. whatever you're otherwise Because rate XX% instead of taxed would what

Jason Bazinet

Understood.

Okay. Thank you.

Operator

Handler with Please Thank you. The go Eric Partners. next ahead. come question from MKM will

Eric Handler

question. Yes, taking thanks for my

take Alexia begin higher? to going maybe occur think to at pro it What's at you're So X%. you you although need going to do X% X%, closer that on saying, organic or order see to to closer what in even to little tracking X%, – political, look it's forma what like back take out you or you bit to will or if X% look a your growth, said probably – was

Sean Reilly

and as There's a healthy. health direction I'd know, an more in lot a believe that care to the of that I I that There's had think they're verticals policy dollars. don't care all I've the see that's also ad think how of is spoken I uncertainty, bit couple going challenged. secular. health past. vertical their to it's little our little education in, is the impact spending also like on a in you a

it's We're think a with some we with year, going we're we to to point. by of making front. challenges GDP that, also I Last over it's on against sure year, beat it's they cyclical, little the This – trail I GDP. think that. having regulatory do the up that just Other had can keep it. comping than a

up. next think I back we'll year, catch

Eric Handler

you. thank Great,

Operator

conference over at further I'll Sean. this no to now the back turn are There you. Thank time. questions

Sean Reilly

for Great. Thank forward chatting next and in, and look thank listening all you, tuning you year. Brandon, to and

Operator

and gentlemen, today's conference. this Ladies you. concludes Thank

disconnect may now You lines. your

Lamar Advertising (LAMR) 6 Nov 172017 Q3 Earnings call transcript