Excuse me everyone. We now have Sean Reilly and Jay Johnson in conference.Please be aware that each of your lines is in a listen-only mode. At the conclusion of the company’s presentation, we will open the floor for questions.

[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 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 2019 earnings release, and its most recent Annual Report on Form 10K-A as updated or supplemented by a quarterly reports on Form 10-Q, and current reports on Form 8-K.

Lamar refers you to those documents.Lamar’s third quarter 2019 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 this conference over to Sean Reilly.

Mr. Reilly, you may begin..

Thank you, Chantal. Good morning everyone and welcome to the Lamar’s Q3, 2019 Earnings Call.Q3 was strong across virtually all lines and every metric. Consequently we were able to grow AFFO over 8% and AFFO per share over 7%.

Our team continues to execute well on controlling expenses, on integrating acquisitions and on optimizing our digital platform and programmatic channel.Looking ahead, we see acquisition adjusted growth for Q4 coming in at around the same as Q3, let’s call it 3% to 3.5%. Keep in mind we are comping against the 5.6% growth last Q4.

Assuming Q4 comes in the way we anticipate, we will end of the year at the top-end of our AFFO per share guidance.Finally, an early word on 2020. I believe the set up for 2020 looks good.

Number one, political, which was a slight headwind this year, will be a tailwind next year; and number two; we anticipate that acceleration in our programmatic channel will provide an additional tailwind.

Jay?.

Thanks Sean, and good morning, everyone. First, I would like to say what an honor and privilege it is to join Lamar as CFO. I look forward to getting to know our investors and spending more time with analysts and cover the company.

I would like to congratulate Keith on an exceptional career at Lamar, leading the finance organization and thank him personally for his knowledge during this transition period through the end of the year.I was excited to join Lamar because of its outstanding team, high-quality portfolio, size and scale within the out-of-home advertising space, as well as its balance sheet and financial strength, all of which should continue to position the company for growth.As Sean indicated, we had a good third quarter.

Acquisition adjusted revenue growth accelerated, while holding consolidated expenses under control with an increase of only 1.4%.

Consolidated expenses were elevated slightly in the first half of the year, particularly in the first quarter, due primarily to acquisition activity.We anticipated these expenses would moderate in the back half of the year and we should continue to experience that moderation in the fourth quarter.

As mentioned previously, we are forecasting consolidated expense growth for the full year to come in around the historical 2% levels.Acquisition-adjusted EBITDA also accelerated in the quarter, increasing 5.6%, while AFFO grew 8.6% to $163 million or $1.62 per share.

On the capital expenditure front, total spend for the quarter was approximately $37 million, comprised of $24 million of growth CapEx and $13 million of maintenance CapEx.

For the full year, we expect $80 million of growth CapEx and $48 million of maintenance for a total of approximately $128 million.Before turning the call back over to Sean, I would like to touch on our balance sheet. Our financial position remains strong as Lamar enjoys excellent access to capital, in both the debt and equity markets.

The company ended the quarter with total leverage of 3.66x net debt-to-EBITDA as defined under the senior credit facility.Furthermore, we had approximately $345 million of liquidity, comprised of $322 million available under our revolving credit facility and $23 million of cash-on-hand.

In addition, the company has a well laddered debt maturity schedule, with no maturities until December of 2021.Again, I am thrilled to be on Board. I look forward to working with you all, and to contributing to the continued success of the company.

Sean?.

Great! Thanks, Jay. Before I open up for questions, I’ll touch on some of those metrics that you’re familiar with. I’ll start with where we are with our digital deployment, and same-board digital performance.We ended Q3 with 3,485 units in the air; that includes a number by acquisition.

We’ll end up the year at approximately 350 new digitals added to our platform, 200 of those approximately will be ones we put up on our own organically, and about 125 will have been added by acquisition.Same-board digital performance continues to shine; it’s up 6.9%, so we’re pleased to see that number.

In terms of local, national, our Q3, 2019 local book was 74% of our total book. Our national book was 26% of our total book. Local was up 3.1% and national/programmatic was up 6.9%.

Note that that is billboard space only for those numbers, and also note that we are quoting national and programmatic together on growth for now, because programmatic is virtually all national as we speak.In terms of acquisitions, year-to-date we’ve closed about $215 million in acquisitions.

We’ve got another $20 million to $25 million or so in the queue that we’ll close by year end. So we’ll end the year at roughly $235 million to $240 million in total acquisitions for 2019.In terms of verticals, service continues to shine at up 8%, hospitals also up 8%, financial up 11%, and insurance up 41% in Q3 of this year, over Q3 of last year.

The insurance really came on strong for us. The one soft spot was gaming, which was down 5% in Q3, 2019.So with that Chantal, we’re happy to open it up for questions..

Thank you very much. [Operator Instructions].Our first question will come from Marci Ryvicker, Wolfe Research..

I want to dig a little deeper into programmatic and try to understand how big of a contribution this was; if there is any visibility going forward either for Q4 or for 2020?.

So, hey Marci. So for Q3 programmatic was at $3.9 million, which was you know a nice contribution to our organic growth. This year that number – I’m sorry, this quarter. For Q4 that number should be four and some change. It’s a little harder to predict exactly where programmatic is going to land. We bill it every two weeks in arrears.

So we don’t see it until the 15th and 30th of every month.We’re getting a little better at predicting it, but keep in mind this is the first inning of programmatic and out-of-home. So we’re all kind of getting used to it. We’ve seen good quarter-over-quarter growth, and so we hope to be able to carry that momentum into 2020..

And would you consider this completely incremental?.

Right now we are highly confident it’s a new digital dollar that we otherwise would not have captured. It’s again, first inning and the numbers are relatively small.

So we feel confident that when and as the numbers are small that it’s 100% incremental.As the numbers get bigger, we’ll have to see where the dollars are coming from, but right now these are digital dollars that would otherwise not be coming to our platform..

Got it! And then in general are you seeing some nice acceleration basically from Q2 to Q3 across everything, including same unit digital.

Any comment on where the strength is coming from? If it’s categories; if it’s just broad-based, like we heard from Outfront last night? And then sort of as a follow-on, you did not comment on the auto category, so wondering where that fits in between healthy and non-healthy categories. Thanks..

Yes, so I would say the strength was broad-based across the board. You know it was nice to see the way the insurance category came in. They are very sophisticated buyers, and they also buy deep.

They buy below the top 20 DMAs, and so that was a good healthy sign for us.I didn’t touch on auto, because it wasn’t a standout either way; it was absolutely flat. It’s 5% of our book and flat for the quarter..

Thank you..

Yes..

Thank you. Our next question will come from Ben Swinburne, Morgan Stanley..

Hey, good morning guys..

Hey, Ben..

Sean, could you give us a little bit of sense of the sort of regional performance in the business, how much sort of the bigger markets and coastal markets compared to middle of the country oil patch, just to give us a sense of how the business is trending around your footprint?.

Sure. I would say that in general, it’s coastal. The Atlantic Seaboard and the Pacific Seaboard performed marginally stronger than the central part of the United States. I would say, the divergence between big and small was still there, but less pronounced than the first half of the year; that’s how I’d describe it..

Okay, that’s helpful. And then just a couple on the sort of financial side. Any just rough guidance on OpEx trends for Q4? And then you guys have been quite active on the acquisition front.

I’m just wondering, if you look out over the next six months to 12 months, how would you sort of describe the pipeline, and sort of where sellers’ heads are at this point in terms of continuing to drive accretive acquisitions?.

Sure. On the acquisition front, you know this was a pretty strong year for what I would consider sort of our traditional sort of tuck-in activity. That said, looking out next year, it would be my anticipation that we would come in around the $150 million mark give or take if the pipeline holds up.

And on the OpEx side, Q4 should look a little bit like Q3. I think as Jay mentioned, we’ll come in for the year at that familiar right around 2%..

Okay. Okay, thank you..

Yes..

Thank you. [Operator Instructions] Our next question will come from David Miller, Imperial Capital..

Yes, hey guys. So the last analyst pretty much asked all the questions that I wanted to ask, so you guys can move on to the next analyst. Sorry, about that. Thank you..

Thanks David. That was an easy one..

[Operator Instructions] Our next question will come from Alexia Quadrani, JPMorgan..

Hi, this is Anna on for Alexia. Thank you so much for the question. Just wondering in terms of your digital billboard conversions and the acquisition of digital billboards, how much is your percent of revenue from digital now, and where do you think that penetration can go in the next few years? Thanks..

Hey, thanks Anna, good question. So this year digital is going to be somewhere north of $400 million in our book of business, and the total book is going to come in at around let’s call it $1.750 billion or so.

So give or take 22%, 23% is digital today and we’re going to try to grow that as fast as we can.In terms of where we think it can go, there’s lots of ways to think about that. For example, in the U.K., digital is over 50% of total out-of-home.

Now a lot of that’s driven by the fact that transit out-of-home tends to be a larger percentage of the digital. But that being the case, it just goes to show you that we probably have a lot of running room on building out our digital footprint.I hesitate to say this to folks, because they sometimes misinterpret it, but I’ll do it anyway.

We’ve got about 170,000 traditional billboard spaces and as I mentioned, only 3,845 of them or somewhere in the neighborhood of 2% are digital today. That also sort of indicates that we’ve got a lot of running room. So we are going to grow that platform absolutely fast as we can..

Great, thank you..

Yes..

Thank you very much. At this time we have no further questions in the queue. So I would like to turn the conference back over to Sean for closing remarks..

Well, thanks everyone for listening, and we look forward to visiting with you in 2020..

Thank you, very much. Ladies and gentlemen, at this time this now concludes today's conference. You may disconnect your phone lines and have a great rest of the week.Thank you..