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 and the impacts in effects of the COVID 19 pandemic on the Company's business, financial condition, and results of operations.

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 Fourth Quarter 2021 earnings release. And its most recent annual report on Form 10-K. Lamar refers you to those documents.

Lamar fourth-quarter 2021 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 the conference over to Sean Reilly. Mr.

Reilly, please go ahead..

Thank you, Katy. Good morning, all, and welcome to Lamar’s Q4, 2021 earnings call. As we close out 2021 and welcome 2022, I'm pleased to say that our industry in general and Lamar in particular are in the best shape ever. Tailwinds are as strong as I've ever seen.

Our customers have emerged from COVID with a tremendous appreciation for the ability of out-of-home to reach their customers, with the right message at the right time, in the right place. You can see that in the way our business roared back to, and now well past the levels we were at before COVID came.

Secular trends that are a threat to our traditional local media competitors are benefiting us, and our balance sheet was strongest in the industry, is allowing us to invest in our digital expansion and expand our footprint via accretive acquisitions. As greatest 2021 was our best days are yet to come.

Q4 was a win all the way around with strength across all products, analog and digital, transit airports and logos, and all categories. Particular categories of strength included gaming, healthcare, finance, and education. Amusement and entertainment continued its rebound, growing 60% above Q4 2020 levels.

Digital continued to lead the way with revenue up 25% overall versus Q4 2020, and up 16% on a like-for-like basis. Recall that when 2021 began, we hoped we could return to 2019 levels of revenue in 2 years. Instead, we did it in one.

And that rapid rebound combined with the continued benefit of some expense cuts we implemented in 2020 translated into record EBITDA total of over $827 million and at 46.3%, the highest operating margins in the company's history.

We also set a record for full-year AFFO at $6.59 per share, more than 6% above the upper end of the original guidance we provided for 2020. So a great year on the financial front. Turning to 2022, we have great sales momentum with pacings indicating acquisition adjusted growth for the full year will be in the seven plus percent range.

It is important to note, however, that we are still normalizing from COVID levels of activity both on the revenue line and the expense line. This will be particularly evident in Q1 as we comp against Q1 of last year when the ad market recovery was not yet complete.

For Q1 2022, we anticipate year-over-year revenue growth that will be in the mid-teens, and expense growth that will be only a percent or two below that revenue increase. Major contributors to the unusual expense growth include the return of guaranteed payments to our transit and airport partners as those business normalized and stabilized.

Recall that we negotiated reductions in many of these payments, converting some to revenue-share only arrangements while still in the throes of COVID. While these trends are related, increases are not quite one-time expenses, they do represent one-time growth in expenses.

Another contributor to expense growth in 2022 will be some IT projects and other corporate initiatives that Jay will explain in more detail. Taking the analysis out for the full year of 2022, as I mentioned, we expect the top line to grow seven plus percent on an acquisition adjusted basis with expenses growing approximately 6.5%.

If not for the return of transit payments and IT projects at seven plus percent revenue growth, the expense growth would likely have been approximately 3.5% this year. As the business normalizes through 2022, the year-over-year growth in both revenue and expenses should taper in the back half of the year.

It is important to note that nothing has changed fundamentally in our operating model and I would expect us to return to our customary 2% to 3% annual in speed in expense trajectory in 2023. And importantly, we expect consolidated 2022 operating margins to remain at that 46% level.

At all of our 2022 expectations together and we see full-year AFFO per share this year, landing between $7.3 $7.18 per share. With our 2021 digital success in mind, we will be aggressive this year on our digital roll-out. We were hampered last year by production and permitting delays, so we fell short of our target of 300 new units in 2021.

We have again set a target of 300 organic developments in 2022, and we're off to a faster start this year. I'm confident we'll get there, to the 300 level in 2022. On the M&A front, we anticipate another active year in 2022 after closing 45 deals in 2021 for a total purchase price of $312 million.

I will now turn it over to Jay to walk through some more numbers..

Thanks, Sean. Good morning, everyone, and thank you for joining us. Continuing the momentum, we experienced throughout 2021, we are extremely pleased with our quarterly results, which once again, exceeded internal expectations, as well as consensus estimates for revenue, adjusted EBITDA, and AFFO.

Not only did Lamar exceed internal expectations and consensus, we'd be 2019 on all three fronts as well. The company achieved AFFO growth for the fifth consecutive quarter, improving 4.1% to $1.78 per share on a fully diluted basis versus Q4 2020.

In the fourth quarter, acquisition adjusted revenue increased 14% from the same period last year, demonstrating the benefits of our operating model with a portfolio heavily concentrated in billboards. Our billboard revenue came in ahead of Q4 2019 by approximately 8%.

Q4 acquisition adjusted revenue and adjusted EBITDA both exceeded the fourth quarter of 2019 for the company. With the second half of 2021 returning to more normal business activity, acquisition adjusted operating expenses increased approximately 17% for the quarter, driven primarily by variable expenses tied to revenue.

We reduced operating expenses by approximately $80 million in 2020 to mitigate the impact of the COVID-19 pandemic on our business. With revenue performance far exceeding our expectations from the beginning of the year, approximately $63 million of operating expenses returned in 2021, which was above our most recent revised forecast of $55 million.

Despite this acceleration and expenses, the company's still achieved strong adjusted EBITDA margins in the fourth quarter and for the full year. Adjusted EBITDA for the quarter was $230.7 million compared to $207.9 million in 2020, which was. an increase of 11%. On an acquisition adjusted basis, the increase was 10.4%.

For the full year, acquisition adjusted revenue increased 13.8% to $1.79 billion, compared to $1.57 billion in 2020. Adjusted EBITDA was $827.3 million, which represents an increase of 22.7% on an acquisition adjusted basis. Adjusted EBITDA margin was 46.6% in the fourth quarter.

And for the full year, 2021 adjusted EBITDA margin was 46.3%, expanding 150 basis points versus full year 2019. The company ended the year above the high-end of our AFFO outlook with full-year AFFO of $6.59 per diluted share. The work we've done on our balance sheet continues to prove beneficial as lower interest contribute to AFFO growth.

For the 12 months that ended December 31, diluted AFFO per share increased 29.2% compared to full-year 2020, and increased 13.6% against full-year 2019. We experienced acceleration in both local and national business across our portfolio for the third consecutive quarter.

Our local and regional revenue improved 12.4%, while national business, including programmatic, increased by almost 15%. Consistent with historical levels, local and regional sales accounted for 75% of billboard revenue in the quarter while national and programmatic represented 25%.

On the capital expenditure front, total spend for the quarter was approximately $55 million, including $26 million with maintenance Capex. And for the full-year, Capex totaled $126 million, which included $58 million of maintenance.

Volume in our acquisition pipeline accelerated beginning in late spring and continued throughout the remainder of the year, culminating in a very active Q4. We closed on $205 million of acquisitions in the fourth quarter, bringing the full year total to $312 million which exceeded our internal expectations.

We continue to see a robust acquisition pipeline. However, our intent is to remain prudent as we have consistently in the past and deploy capital in an efficient manner for our shareholders. Turning to our balance sheet, which continues to provide a competitive advantage for the company.

We are quite pleased with the financial strength of Lamar and our balance sheet is well-positioned going forward. We have a well laddered debt maturity schedule with no maturities until the AR securitization in July 2024, followed by the revolving portion of our credit facility in February 2025. And we have no bond maturities until 2028.

Net interest expenses totaled $24.1 million in the quarter, which is approximately $4.9 million more than Q4 2020. Over the last 24 months, the company has refinanced $3.6 billion of debt, recapitalizing the entire balance sheet, extending our maturity profile, lowering interest, and eliminating amortization.

These efforts resulted in over $30 million of cash interest savings in 2021 versus full-year 2020. As defined under our credit facility, we ended the quarter with total leverage of 3.3 times net debt to EBITDA, which is one of the lowest levels ever for the company.

Our secured debt leverage was 0.8 times at quarter-end, and we are comfortably in compliance with both our total debt incurrence and secured debt maintenance test against confidence of seven times and 4.5 times respectively.

Based on current debt outstanding, our weighted average interest rate is 3.2% with a weighted average debt maturity of 6.5 years. At the end of the quarter, we had approximately $663 million of liquidity comprised of $100 million of cash on hand, and $563 million available under our revolver.

In addition to the AR securitization, it was also fully drawn with a balance of $175 million. As Sean mentioned, and included this morning's release, we provided full-year AFFO guidance of between $7.3 and $7.18 per share. That represents an increase of roughly 8% at the midpoint of the outlook range compared to 2021, and it's 22.5% over 2019.

Based on momentum from last year, and the pace of bookings, we expect strong revenue growth on the top line and anticipate expenses will increase accordingly. In addition, minimum guarantees in our transient airport business will fully return in 2022.

Of the $80 million of operating expenses reduced in 2020 in response to COVID-19, approximately $15 million is permanent. In addition to those expenses tied to revenue growth and the normalization of [Indiscernible] airport, we are undertaking a number of corporate initiatives designed to position Lamar well for future growth.

These initiatives are focused on the ability to more efficiently scale our business.

They include modernizing and rationalizing our technology setup and future state enterprise capabilities, most notably, our financial information systems with the ultimate goal of moving from primarily on-premise legacy systems to the cloud over the next couple of years.

Because of our efforts around the balance sheet, cash interest in 2021 should be approximately $105 million, still historically low for the company. The maintenance Capex budget for the year is $65 million, and taxes should come in around $11 million with a return of operations in our taxable REITs subsidiaries. Now, moving to our dividend.

As you may recall, in 2020 prior to the pandemic, we anticipate a dividend of $4 per share for the full year. From the onset of COVID-19, the company's goal was to return to that level of distribution as soon as possible.

With a $0.50 per share special dividend at year-end, along with our regular $1 per share quarterly dividend, we reached that goal in 2021 and distributed $4 per share to our shareholders.

Yesterday, we announced a first quarter dividend of $1.10 per share and anticipated a full-year cash dividend of $4.40 per share in 2022, a 10% increase on a per-share basis. Again, we are extremely pleased with this quarter's performance and are optimistic about the outlook for 2022.

Our balance sheet is strong and we maintain excellent access to both the debt and equity capital markets. A strong balance sheet is core to our operating strategy and serves as a significant competitive advantage. With our intense focus on the company's capital structure, Lamar remains well-positioned to take advantages of opportunities as they arise.

I will now turn the call back over to Sean..

Thanks. Thanks, Jay. I'm going to highlight a couple of things around rate increases that we're seeing in Q4. Just to highlight the pricing power in our platform, both digital and analog inventory. We ended the year of 2021 with 3,932 digital units in the air. That was an increase of 212 for the year.

Interestingly, even in light of the added capacity, our same unit digital yield was up 16% in Q4 and 23% for the full year of 2021. So clearly, we have pricing power with our digital unit. But one of the best stats we saw coming out of Q4 2021 is our analog posters. Our rate was up 5% and our largest product, Bulletin's rate was up 6.6% in Q4.

Again, that gives us tremendous confidence, number one, that in an inflationary environment, we have pricing power. And number two, that again, as our Transit and Airport divisions continue their recovery, we should see out sized growth across the whole platform in 2022. So with that, Kathy, you can open it up for questions..

Thank you, sir. At this time, we will open the floor for questions. [Operator Instructions] Thank you. Our first question will come from Ben Swinburne with Morgan Stanley..

Hey, Ben..

Thanks. Good morning. Hey, Sean. Hey, Jay. Hope you guys are doing well..

Good morning..

I had two questions. We don't often talk transit on our call, but feels like we should today. And I also want to ask about the acquisition impact in '22. So Sean, I think, if I go back to '19, that business did, I'm sure you know the numbers better than me, but maybe a $130 million of revenue all-in.

Can you just size the revenue from '21 to ' 22 in transit, and then the expense piece so we can understand how much of that's hitting margins, and then I'll follow up on the acquisition [Indiscernible].

Sure. Yeah, that's pretty close then the 130 when you add up airports, Canadian Transit, and our U.S. Transit division. In terms of their relative recoveries, we're pretty much there with our U.S. Transit divisions. We're not quite there with airports, although they're coming on pretty strong.

And then the biggest drag here is Canadian Transit division and our Vancouver operations. The good news is; those businesses will contribute significantly more in EBITDA to the overall company than they did last year.

So you're going to see, even in light of the return of the minimum annual guarantees, you're going to see margin expansion in those businesses. In terms of our overall margins, again, as I mentioned, we anticipate that it will be at that 46% level that you saw last year. So 2022 should come in at the same margins for the overall platform..

And then, I don't know if you guys are able to do this for us, but can you help us think about the impact from the acquisition accretion for deals that were completed last year into your guidance? And is there anything contemplated for acquisitions in '22 that's staked into the guidance or would that be potential upside if you guys were able to have an active year in '22?.

So for last year, you're going to see those predominantly fall in the Fourth Quarter. So we're going to get a good bump for the full year. As reported, revenue increased for this year should be in 9 to 8 - ish, or 9%..

Eight to ten..

Baked into the guidance is revenue growth of 8 to 10, so that's the as-reported with the impact of the acquisitions. Then again, a 46% operating margin. And no, the guidance does not bake in acquisition activity for 2022..

Are you guys [Indiscernible].

We see a full pipeline..

Yeah, sorry. Go ahead..

Yeah. I was just going to say we see a pretty full pipeline this year. It wouldn't surprise me if we rose to last year's level of dollar value of acquisition in this year. And last year, we did $312 million..

Right. So that would give you another -- I mean, I guess if last year's given you a couple 100 basis points, then you can maybe get another couple 100 out of this year in theory..

We're working hard on several as we speak..

Got it. Great. Thank you..

Yes. See you in a week..

Thank you. [Operator Instructions] Our next question will come from Anna Lou San (ph) from JP Morgan..

Hi, thank you for the question. You mentioned that you had added a little over 200 digital billboards during the year in 2021.

And with all the supply chain experience right now, what are you seeing in terms of delays to get the screens? And are you planning to target maybe acquiring more digital boards this year versus organic conversions?.

Hey, Anna. So we do still have supply chain issues, but we're managing through them, I think better this year than last. We have a pretty good queue of digital deployments lined up. We think we're going to get to 300 this year. In a typical year with no supply-chain issues, it takes 2 to 3 weeks to get a digital unit.

What we're seeing now is about double that. But we're managing it. And yes, we quite often end up purchasing digital units when we do our M&A activity and you'll see a lot of that as well this year..

Okay. Great. And just a follow-up on the tuck-in acquisitions.

Are there any particular areas you view as the most interesting geographically in terms of your exposure?.

When you look at our overall platform and I would encourage anyone to go on our website and hit the Find Inventory button on our website. And basically what you'll see, Anna, is that we're everywhere, and that virtually any billboard in the lower 48 is a fill in for us.

We really don't have targeted geography, our focus is going to be on high-quality re-qualified assets, and in particular ones that we can fold into our existing footprint, which as I said, if you go to the browse inventory section of our website, you'll see that that's pretty much everywhere..

Great. Thanks..

Thank you. At this time. I am showing no further questions. I would now like to turn the call back over to Mr. Reilly for closing remarks..

Well, thank you, Katie. Thank you all for listening. We're looking forward to another record-breaking year for Lamar in 2022, and we will talk to you again in about three months..

Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect..