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Date

Thursday, Nov. 6, 2025, at 9 a.m. ET

Call participants

  • Chief Executive Officer — Sean E. Reilly
  • Chief Financial Officer — Jay Lecoryelle Johnson
  • Operator — [Name not specified]

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Takeaways

  • Acquisition-adjusted revenue growth -- Acquisition-adjusted revenue rose 2.9% in Q3 2025, an acceleration of 100 basis points from Q2 2025, driven by national programmatic advertising growth and strength in the Atlantic (3.8%) and Northeast (3.3%) billboard regions on an acquisition-adjusted basis.
  • Programmatic revenue growth -- Programmatic revenue grew over 13% in Q3 2025, representing the strongest quarter since Q2 2022 for this channel.
  • Digital billboard revenue -- with same-store digital revenue up 3.4% quarter-over-quarter; digital now accounts for roughly 31% of billboard billing across more than 5,400 faces in 155 markets.
  • Segment performance -- Services, healthcare, financials, and insurance showed solid gains; beverages, real estate, and government/nonprofit underperformed due to Washington, D.C. policy uncertainties.
  • Airport division growth -- Airport division acquisition-adjusted growth was 5.8% in Q3 2025, outpacing other business lines; Logo signage division rose 5.2% in Q3 2025.
  • Operating expenses -- Acquisition-adjusted operating expenses rose 3.7% in Q3 2025, including approximately 125 basis points from terminated Vancouver transit contract severance and phase two technology implementation costs; Full-year acquisition-adjusted operating expense growth outlook remains 2.5%-2.75%.
  • EBITDA -- EBITDA was $280.8 million in Q3 2025, despite higher operating expenses.
  • Diluted AFFO per share -- Diluted AFFO per share increased 2.0% in Q3 2025 over the prior year.
  • Capital expenditures -- Capital expenditures were $50 million in Q3 2025 ($13.9 million maintenance); Year-to-date CapEx totaled $118 million ($37 million maintenance) for the first three quarters of 2025; Full-year 2025 CapEx is projected at $180 million, with maintenance at $60 million.
  • Acquisitions -- Verde asset integration progressing; $47 million in additional acquisitions during Q3 2025, Year-to-date acquisition spend neared $134 million at the end of September 2025; Full-year total, excluding Verde, is likely north of $175 million for 2025, Including Verde, the full-year total is around $300 million for 2025.
  • Debt and liquidity -- Quarter-end total leverage was 3.0 times net debt to EBITDA in Q3 2025; Secured leverage was 0.65 times in Q3 2025, both well below credit facility covenants; Total consolidated debt was $3.4 billion as of Q3 2025, AR securitization outstanding was $180 million as of Q3 2025.
  • Dividend policy -- A special year-end cash distribution of approximately $0.25 per share is anticipated for Q4 2025, to be paid Dec. 31 with regular dividend.
  • Guidance and forward-looking statement -- Management projects meeting prior 2025 guidance despite difficult political advertising comparables in October and signals favorable 2026 outlook supported by positive pacings and major customer commitments.
  • Technology and AI -- Enterprise conversion remains on track for completion in mid-2026; expenditures related to consultants and technology upgrades expected to moderate afterward, setting the stage for AI-driven operational benefits in 2027.

Summary

Lamar Advertising (LAMR +1.49%) reported accelerating acquisition-adjusted revenue growth in Q3 2025, with notable strength in digital and programmatic channels, with management highlighting resilience despite macroeconomic uncertainty. Segment-specific performance revealed pronounced growth in airport advertising, with revenue in this segment increasing 5.8%. Continued expansion of the digital billboard network is contributing materially to the billing mix, and overall debt metrics are comfortably within covenant limits.

  • CEO Reilly highlighted that "Our pacings bear that optimism out" regarding 2026, noting markedly stronger advance bookings compared with the same point in 2025.
  • Management emphasized clean revenue comparability for 2026 given offsetting impacts from the Verde acquisition and Vancouver contract exit, as discussed in the context of pro forma revenue expectations, stating EBITDA contribution from Verde will "Significantly better." improve flow-through relative to Vancouver.
  • Jay Lecoryelle Johnson confirmed the year-end special distribution would be "all cash" and aligned with prior practices, addressing shareholder return mechanisms presented during the call.
  • Management indicated that technology investments and related costs will taper post enterprise conversion, potentially unlocking operating leverage as AI integration accelerates in 2027.

Industry glossary

  • AFFO (Adjusted Funds From Operations): A REIT financial measure reflecting cash available for distribution, adjusting FFO for capital expenditures and other key expenses.
  • Programmatic advertising: Automated, data-driven purchasing of digital ad placements, often in real time, primarily through specialized online platforms.
  • AR securitization: Asset-backed financing secured by accounts receivable, providing liquidity by pledging or selling future cash flows to investors.
  • UPREIT transaction: Structure allowing property owners to contribute assets in exchange for operating partnership units, often used in M&A to defer taxes and align interests.

Full Conference Call Transcript

Sean E. Reilly: The growth improved to 2.9% on an acquisition-adjusted basis led by national programmatic, which had its strongest period of growth since Q2 of 2022. On the local level, a cautious vibe still prevails, and as a result, Q3 looked a lot like the rest of 2025 has, with year-over-year growth in the low single digits. As we noted in the release, we are pacing to reach our previously provided guidance despite difficult political comps in October. Our pacings for November and December are encouraging, as are our conversations thus far with customers about 2026. So far, our pacings bear that optimism out, which for a variety of reasons, we believe sets up to be a good year.

Back to Q3, categories of strength included services, healthcare, and financial, while beverages and real estate were weaker, as was our government/nonprofit category, which has been hampered by some of the uncertainty emanating from Washington, D.C. With growth of 5.5%, while local was plus 1.6%, national and programmatic led the way. Insurance was very strong, and we benefited from our largest-ever pharmaceutical buy, which launched towards the back end of Q3 and extends through most of Q4, and includes both analog and digital inventory.

Our experience with that campaign has provided valuable insights into the data that we need to deliver to help pharma customers make their buying decisions, and we are hopeful that pharma will continue to be a growth vertical for us. As we have discussed before, national can be a bit lumpy, and we had a lot of political that came our way through national channels in 2024. As a result, national is likely to be flattish in Q4 2025. Ex-political, however, national should be up nicely in Q4, and we do like what we are hearing about 2026 from national buyers. Our digital platform continues to be very popular with both local and national advertisers.

For the quarter, digital billing grew 5%, including 3.4% on a same-store basis and represents today about 31% of our billboard billing. We now have more than 5,400 digital billboard faces across 155 Lamar Advertising Company markets. On the M&A front, the integration of the Verde assets, which we acquired in an UPREIT transaction in early July, the first ever in the out-of-home space, is going very well. We closed another 18 purchases for nearly $47 million in Q3, bringing the year-to-date cash spend to nearly $134 million at the end of September. For the full year acquisition spend, excluding Verde, it's likely to be north of $175 million.

Including Verde, we'll end the year spending plus or minus $300 million on accretive transactions. Overall, I'm pleased with how resilient the business is proving to be in a period of fairly significant macroeconomic uncertainty, and I am confident that we will finish 2025 successfully, experiencing positive momentum in our portfolio during the third quarter.

Jay Lecoryelle Johnson: Acquisition-adjusted revenue increased 2.9% from the same period last year, accelerating 100 basis points over the second quarter. Our billboard regions all grew in the low single-digit range, led by the Atlantic and Northeast, which improved 3.8% and 3.3%, respectively. Our airport and logos divisions also outpaced the broader portfolio, with airport growing 5.8%, followed by logos, which increased 5.2%. Acquisition-adjusted operating expenses increased 3.7% in the third quarter, including one-time severance costs associated with the termination of our Vancouver transit contract on July 31, as well as increased costs from Phase two of our technology implementation.

These items accounted for approximately 125 basis points of expense growth over the comparable period in 2024 and were both included in our revised guidance in August. We still anticipate full-year acquisition-adjusted operating expense growth in the 2.5% to 2.75% range. EBITDA for the quarter was $280.8 million, despite the growth in operating expenses.

Sean E. Reilly: Diluted AFFO per share increased 2.0%.

Jay Lecoryelle Johnson: On the capital expenditure front, total spend for the quarter was approximately $50 million, including $13.9 million of maintenance CapEx. Through the first three quarters of the year, CapEx totaled $118 million, $37 million of which was maintenance. For the full year, we anticipate total CapEx of $180 million, with maintenance comprising $60 million. We ended the quarter with total leverage of three times net debt to EBITDA as defined under our credit facility, which remains amongst the lowest levels ever for the company. Our secured debt leverage improved to 0.65 times, and we are comfortably in compliance with both our total debt incurrence and secured debt maintenance tests against covenants of seven times and 4.5 times, respectively.

For the full year, we expect total leverage to remain at three times, with secured leverage consistent as well below one times net debt to EBITDA.

Sean E. Reilly: Lamar Advertising Company continues to enjoy access to both the debt and equity capital markets.

Jay Lecoryelle Johnson: During the facility and $70 million available on the AR securitization. At quarter-end, there were no borrowings outstanding on the revolver. We had approximately $3.4 billion in total consolidated debt and $180 million outstanding under the AR securitization program, and our weighted average interest rate was 8.25% per diluted share. Cash interest in our guidance totaled $152 million and assumes SOFR remains flat for the balance of the year.

Sean E. Reilly: The tailwind in 2026 and 2027 as opposed to a headwind that it represented this year. A quick word on October and political. 42 digital units in an increase of approximately 450 year-to-date over last year to date. This includes acquired units. Also, as I mentioned, same board digital revenue grew 3.4%, Q over Q. Programmatic grew a little over 13% in Q3. I do not usually take off customers, but I do believe that an impressive list of accounts really are indicative of how we are feeling about national year over year and going into 2026.

The top five accounts in terms of increases in their spend with us in Q3 are as follows: GEICO, Progressive Insurance, JPMorgan Chase, Coca-Cola, and Johnson & Johnson. Again, a list of blue-chip customers, I believe, points to our optimism going into 2026.

Sean E. Reilly: With that, Katie, let's open it up for questions.

Operator: Thank you. Our first question will come from Cameron Alan McVeigh with Morgan Stanley. Your line is open.

Cameron Alan McVeigh: Hey, good morning, Sean E. Reilly and Jay Lecoryelle Johnson. How are you doing?

Operator: Hey, Cameron Alan McVeigh. How are you doing?

Cameron Alan McVeigh: Our first question, I was curious as you look ahead into 2026, you know, how you're thinking about the growth opportunity and what you see for your business as the primary growth drivers next year. And then secondly, also curious how you're thinking about the M&A environment and if we should expect another acquisitive year ahead. Thanks.

Sean E. Reilly: Yeah, Cameron Alan McVeigh. Regarding the acquisition activity, yes, we do feel good. We feel like this has been a great year. When we look into 2026 and the momentum from the approximately $300 million we spent this year, that's certainly a growth driver for AFFO per share. Other growth drivers are just our pacings, which are stronger, markedly stronger as we peer into 2026. This day in 2025, last year on the same day, as we were looking into 2025, pacings were good, but not near the strength that we're seeing going into next year. Then, of course, as I mentioned, we'll have political as a tailwind. And, you know, that makes a difference.

So for all those reasons, 2026, the setup is real good.

Cameron Alan McVeigh: Great. And then I also just wanted to ask about, you know, potential AI company-related advertising exposure. Has that been an influence on, you know, the national growth we saw at all this quarter? And is that something maybe an opportunity going forward?

Sean E. Reilly: So as Jay Lecoryelle Johnson mentioned and we've talked about for several quarters now, we are going through a pretty extensive enterprise conversion. And that is setting us up to realize the benefits of AI in 2027. We'll finish the conversion about halfway through next year. It's also going to have a lot of benefits. Once all the consultants leave the building, we won't have that additional OpEx and CapEx spend that we've had the last several quarters. In terms of AI driving our business, without speculating too much, I can say with some confidence that AI is certainly good at two things. Number one is words, and number two is pictures.

And when you think about what we do in the out-of-home space, that's what it is. It's words and pictures. So it can't help but help us. I also had a, I think, simple question on 2026. Other than the political tailwinds that you called out, am I right that the benefit you'll get next year from the Verde acquisition is about the same size as the headwind you'll see from the Vancouver exit? Like, those two offset each other, so it's just a clean year other than the political tailwinds.

Jay Lecoryelle Johnson: That's a good observation, Jason Boisvert Bazinet, and you're directionally correct. Now when we report same-store growth, we will adjust for the loss of Vancouver and the addition of Verde. So your pro forma numbers are going to be clean. But you're right in terms of absolute revenue expectations for '26. It's a pretty decent offset. The only thing I would add there, Jason Boisvert Bazinet, you're correct on the top line. If you recall, the Vancouver contract, while high revenue, had relatively low EBITDA contribution. I think it was below 10%. So you should see better flow through from the Verde transaction than you would from Vancouver.

Sean E. Reilly: Yep. Significantly better.

Jason Boisvert Bazinet: Understood. Makes sense. Thank you.

Operator: Thank you. Our next question will come from David Karnovsky with JPMorgan. Your line is open.

David Karnovsky: Hey. Thank you. Sean E. Reilly, with the auto insurance, your comments are consistent with what we heard from Clear Channel this morning, and I wanted to see if you could expand on what's going on with the vertical and whether you think the strength here is sustainable just given the category has been choppy over the past few years? And then can you just remind us how to think about political specifically during a midterm cycle and how that might compare to your prior presidential results? Thank you.

Sean E. Reilly: Yeah. Let me hit the political first because I think it is instructive on what an off-presidential year does. Okay. So in 2022, over 2021, we did approximately $21 million in political. And that's their own business and how they're feeling about their business. In 2026, I know that Jason DeCode experienced some good bump there when they had the Euro 2024. So just wondering how you guys are critical to that mix of revenue. So I guess the second third quarter also sees a nice bump there. And just the last question, can you remind us what is the potential distribution for the VISTA?

So can we expect it to be all cash if there is a distribution in stock? Like, how can we see this coming back to shareholders?

Jay Lecoryelle Johnson: Sure, sure. It'll be all cash as we've done in previous years where we've issued a special cash distribution at the end of the year. And we'll do that in Q4 on December 31 alongside our regular cash dividend. And right now, we anticipate that's going to be around $0.25, give or take a penny, depending on how the performance comes in, in November and December.

David Karnovsky: Great. Thank you.

Sean E. Reilly: Better. Went into next year at this time this year than it felt this time last year coming into 2025.

David Karnovsky: That's helpful. And as a quick follow-up, your transit segment continues to perform nicely. Just given the strength of airports advertising across the industry, do you expect to bid on any additional RFPs on the airport side? Thanks.

Sean E. Reilly: Great question. As I've said several times, when you think about Lamar Advertising Company and transit and airports, think about a large portfolio of small and middle-market transit and arena sort of outside the top 20 DMAs. Clear Channel is dominant in that top 20 DMA space for airports. They do a great job. And we kind of specialize in the smaller middle-market airport space. And it has been a good strong growth vehicle for us.

David Karnovsky: Thank you.

Operator: Thank you. At this time, this concludes our Q&A session. I'll now turn the meeting back over to Sean E. Reilly for any final or closing remarks.

Sean E. Reilly: Well, thank you all for your interest in Lamar Advertising Company, and we certainly look forward to visiting in February 2026.

Jay Lecoryelle Johnson: That's it, Katie. Thanks.

Operator: Thank you. That brings us to the end of today's meeting. We appreciate your time, and you may now disconnect. Thank you.