LAMR

**Operator:**  
Excuse me, everyone, we now have Sean Reilly and Jay Johnson 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 distribution to stockholders and the impacts and effects of general economic conditions, including inflationary pressures 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 first quarter 2026 earnings release and its most recent annual report on Form 10-K. Lamar refers you to those documents. Lamar's first quarter 2026 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, you may begin.

**Sean Reilly:**  
Thank you, Katie. Good morning all, and welcome to Lamar's Q1 2026 Earnings Call. The year is shaping up quite well for us. Our first quarter results exceeded our internal expectations on both the top and bottom lines with strength from both local and particularly national customers. And our forward bookings are very promising. We are pacing to the top end, if not above, the guidance that we previously provided for full year AFFO per share. If that trend continues, we will need to revisit that guidance on the August call. I am particularly encouraged by the momentum on the national side, which, as you know, was bumpy through 2023 and 2024 before beginning to recover last year. For the first quarter, national revenue increased 5.8% versus the first quarter of 2025, with programmatic growing by nearly 25% to approximately $11 million for the quarter. Ex programmatic, national was up 4.1%. Pacings for the balance of 2026 are even stronger than that. We are seeing increased spend from some long-time national customers as well as activity from new accounts and categories. What it tells me is that in an increasingly algorithm-driven world, out-of-home's ability to reach customers at scale with memorable messages at affordable prices is resonating with both big brands and local advertisers. Back to Q1. Consolidated revenue increased 3.9% on an acquisition-adjusted basis with growth across all divisions, billboards, airports, transit and logos and across all of our regions. Our pacing suggests that revenue growth will accelerate into Q2. For the quarter just completed, EBITDA grew by 5.2% on an acquisition-adjusted basis, on a margin that improved by approximately 130 basis points versus the year earlier quarter. Categories of strength in Q1 included services, restaurants, gaming, political and insurance, while education and telecom were a tad weaker. In addition to national growth mentioned earlier, local grew 3%. Digital again led the way with revenues increasing 5% on a same board basis and accounting for more than 30% of our revenue in the quarter. Rates on our analog bulletins and posters meanwhile, showed a healthy growth of 3%. On the M&A front, we are off to an active start. So far in 2026, we have completed 19 acquisitions for a total cash purchase price of $80 million, and we have a solid pipeline working and potential for more accretive billboard deals. Meanwhile, we have ramped up our efforts to secure easements beneath our best-performing locations, and we are optimistic about what we will be able to accomplish there in 2026. That's a great use of our capital, by the way. All in all, I could not be more pleased with how 2026 has begun. With that, I will turn it over to Jay to walk you through some additional numbers. Jay?

**Jay Johnson:**  
Thanks, Sean. Good morning, everyone, and thank you for joining us. We had a solid first quarter and are extremely pleased with our results, which exceeded our own estimates across revenue, adjusted EBITDA and AFFO. The airport business led the way with acquisition-adjusted revenue increasing 15.5% in Q1 versus last year, followed by logos, which was up 6.3% in the quarter. Our billboard regions all experienced low to mid-single-digit top line growth, driven by the Midwest and Atlantic, which were up 5.7% and 4.8%, respectively. In addition, the positive momentum continued in April with revenue increasing 4.8% outpacing our original budget. April's strong performance brings acquisition-adjusted revenue to 4.1% through the first 4 months of the year, and we are excited about our booking pace for the balance of the second quarter. Acquisition-adjusted consolidated expenses increased 3% in the quarter, which was better than expected and should be in the 3% range for the full year. Adjusted EBITDA was $226.3 million compared to $210.2 million in 2025, an increase of 7.7% in the quarter, improving 5.2% on an acquisition-adjusted basis. This was the strongest growth we've seen in almost 2 years. Adjusted EBITDA margin expanded 130 basis points over a year ago to 42.9%. Adjusted funds from operations totaled $177.5 million in the first quarter compared to $164.3 million last year, an increase of 8%. Diluted AFFO per share grew 7.5% to $1.72 per share versus $1.60 in the first quarter of 2025. Local and regional sales accounted for approximately 82% of billboard revenue in Q1, growing for the 20th consecutive quarter. In fact, it has been 5 years since the portfolio last experienced a year-over-year decline in local and regional sales, which was due to COVID. On the capital expenditure front, total spend for the quarter was $33.1 million, including $9.3 million of maintenance CapEx. And for the full year, we anticipate total CapEx of approximately $186 million with maintenance CapEx comprising $64 million. As for our balance sheet, we have a well-laddered debt maturity schedule with no maturities until the AR securitization in October 2027 and no senior notes maturity until February 2028. We will likely extend the securitization later this year, assuming market conditions remain favorable. The company currently has approximately $3.5 billion in total consolidated debt, and our weighted average interest rate is 4.5%, with a weighted average debt maturity of 4.3 years. As defined under our credit facility, we ended the quarter with total leverage of 3x net debt-to-EBITDA, which remains amongst the lowest level ever for the company. Our secured debt leverage was 0.7x at quarter end, and we're in compliance with both our total debt incurrence and secured debt maintenance tests against covenants of 7x and 4.5x, respectively. For the full year, we expect total leverage to hover around 3 turns with secured leverage coming in comfortably below 1x net debt-to-EBITDA. In addition, our LTM interest coverage through March 31 was 7x adjusted EBITDA to cash interest, further demonstrating the strength of the company's balance sheet. As Sean mentioned, M&A has been active thus far in 2026. We continue to benefit from an investment capacity well over $1 billion with the ability to deploy this capital while remaining at or below the high end of our target leverage range of 3.5 to 4x net debt-to-EBITDA. Our liquidity and access to capital, both remain strong. As of March 31, we had just over $700 million in total liquidity, comprised of $39.3 million of cash on hand and $662.2 million available under our revolver. The company's AR securitization had $242.1 million outstanding at quarter end. Subsequent to quarter end, the company repaid $40 million on the revolving credit facility, and we currently have $40 million outstanding. Also, the AR securitization is now fully drawn at $250 million. In this morning's release, we affirmed our full year AFFO guidance of $8.50 to $8.70 per share. Cash interest in our guidance totals $154 million and assumes no change in short-term floating interest rates for the balance of the year. As I touched on earlier, maintenance CapEx is budgeted for $64 million in 2026 and cash taxes are projected to come in around $11.5 million, which is slightly higher than our original expectations. And finally, our dividend. We paid a cash dividend of $1.60 per share in the first quarter. Management's recommendation at the upcoming Board meeting will be to declare a cash dividend of $1.60 per share for the second quarter as well. This recommendation is subject to Board approval, and we will communicate the Board's decision following the Board of Directors meeting later this month. For the full year, we still expect to distribute a regular dividend of at least $6.40 per share. On an annualized basis, the second quarter proposed dividend represents a yield of 4.5% at yesterday's closing stock price. Given the outperformance in Q1 and expectations for Q2, it is likely management will request that the Board approve increasing the dividend in the back half of the year. However, and as a reminder, the company's dividend is based on taxable income, subject to Board approval, and our dividend policy remains to distribute 100% of our taxable income. Again, we are pleased with the strong start to the beginning of the year as well as the momentum that has continued into the second quarter, and we look forward to executing on our strategy throughout 2026. I'll now turn the call back over to Sean.

### Q&A Section

**Sean Reilly:**  
Thank you, Jay. And as Jay mentioned, the strongest region in Q1 was our Midwest region with pro forma revenue growth up 5.7%. The region showing relative weakness was our Gulf Coast region with revenues up 1%. I would note that looking forward, all regions are pacing well at up mid-single digits. Also of note, and as mentioned by Jay, our airports division was particularly strong, up 15.5%, and our logos division came in up 6.3%. Also as mentioned, same-board digital was up 5% and digital constituted almost 31% of our billboard billing in Q1. We ended Q1 with 5,657 digital spaces, an increase of 104 over the year-end 2025. As we have said on many of our recent calls, our pro forma revenue growth was mostly driven by rate on our static units and overall same board yield on our digital units. It also bears repeating that national/programmatic sales growth was a solid 5.8%. This was aided by programmatic's strong showing of 25% quarter-over-quarter growth. As of May 1, we were 75% booked to our total revenue goal for the year. That's the strongest laid down bookings that we've seen since COVID. I've already mentioned categories of relative strength and weakness. To that, I would add that all of our top 10 verticals are healthy and happy. There are ebbs and flows, of course, but collectively, our top 10, which generates 75% of our revenues in Q1 were up 5.4%. Finally, political this year is pacing well ahead of where it was in 2024 and should continue to be a nice tailwind. With that, Katie, I'll open it up to questions.

**Operator:**  
[Operator Instructions] Our first question will come from Cameron McVeigh with Morgan Stanley.

**Cameron McVeigh:**  
Curious if you could give us just a -- you've mentioned, but a high-level broader view on your view of the macro and any notable verticals that are driving the strength in the national ad market. And I know you said you expect revenue to accelerate into the second quarter. But just curious at this point, if you'd expect that strength to continue over the course of the year from what you can tell and how that cadence might look?

**Sean Reilly:**  
Sure. Last question first. Q2, 3, 4 are all looking very good, Cameron, and pacing, I would call, roughly the same pro forma revenue growth. And regarding the first part of the question, it's really across the board. That's why I mentioned that if you look at all of our top 10 verticals, they're all doing well. There are going to be ebbs and flows through the course of the year and across the years. But that top 10, as I mentioned, was up 5.4%. So yes, we're seeing health across the board.

**Cameron McVeigh:**  
That's great. And just one follow-up. Sean, I'm curious how you're thinking about the upcoming tailwinds, including the World Cup and the midterms and if your views have changed or evolved around the sizing of those?

**Sean Reilly:**  
So I think the World Cup is -- that basically is in our book, and it's done and it's contracted for. And I'd say, in general, that's helping our national. And it's coming in, give or take, where we expected. I think the surprise, Cameron, is how strong political is. We were, I think, understandably a little bit conservative on our guide to that when we opened up -- began the year because it's a midterm year, not a presidential year, but we are pacing well ahead of 2024, the presidential year. And assuming that continues, that will be the first time that's ever happened.

**Operator:**  
Our next question will come from Daniel Osley with Wells Fargo.

**Daniel Osley:**  
Beyond revenue coming in ahead of your expectations, were there any other contributors to the margin strength that you saw in Q1? And then maybe as a follow-up, how should we think about your margin expansion for the full year compared to '25, especially given your commentary around easements.

**Sean Reilly:**  
Yes. Good question. So there are a couple of factors in there. Obviously, revenue growth helps. Recall that we lost that Vancouver franchise last year. That was essentially a no-margin business. So that is now out of our portfolio, and that has contributed somewhat. We layer -- when we layer in acquisitions, and we did quite a few of them last year, those may come in at a margin contribution of approximately 65%. So that also obviously is helping. Now we're going to lap some of that activity as we go into the back half. But I would anticipate, and I would be disappointed if we don't have at least a full point -- percentage point of margin expansion for the full year. Last year, it was 46.7%. And I'm looking for something in the 47.7% range for the full year this year.

**Operator:**  
[Operator Instructions] Our next question will come from Alexey Philippov with JPMorgan.

**Alexey Philippov:**  
Can you discuss monthly dynamics through the quarter? You talked about massive 6% revenue growth in December with demand cooling off in January, February. And did you witness acceleration in March or the overall beat this quarter is largely explained by that strong momentum at the beginning of the quarter? And how much of the beat was national versus local?

**Sean Reilly:**  
So on the second part of the question, I would say national was the surprise that led to the beat. Clearly, we had some large buys from some large customers that were not contracted for when we last spoke, but now are on the books and contributed nicely. And also political came in better and continues to come in better than we anticipated at the beginning of the year. And in general, to the tone of the question, we're seeing the book build nicely as we look at our pacings for the rest of the year. I would anticipate that by the time we get to the August call, as I mentioned in my prepared remarks, we'll be looking at hopefully revising that guidance upward as we go through the year.

**Alexey Philippov:**  
Yes. Can I ask one more?

**Sean Reilly:**  
Sure.

**Alexey Philippov:**  
Yes. Last year, you talked about the deep pipeline of private targets across various size ranges and the Verde UPREIT transaction was clearly well received. So with the stock where it is today, we would expect you to be very interested to do such deals. Are you seeing seller interest in the UPREIT structure today?

**Sean Reilly:**  
Good question. Yes, we are. We've had several inbound inquiries, and we're hopeful that we'll -- we can get a couple of UPREIT deals done this year. And it's a very, very attractive structure for sellers. It's very tax efficient. And of course, they get to hitch their wagon to Lamar, diversify their exposure to out-of-home, and we've been a good bet so far.

**Alexey Philippov:**  
Great. And can you remind what's embedded in the full year guidance for AFFO with respect to acquisitions that you have completed in the first quarter already?

**Sean Reilly:**  
When we guide to AFFO -- I'll pump that over to Jay for a second. But when we guide to AFFO per share, we don't anticipate layering in acquisitions.

**Jay Johnson:**  
Yes. And so if you think about acquisitions from a top line pro forma growth, it's probably adding 20 to 25 basis points this year from an actual versus pro forma.

**Operator:**  
This concludes our Q&A session. I'll now turn the call back over to Sean Reilly for any final or closing remarks.

**Sean Reilly:**  
Well, thank you all for your interest in Lamar and for joining us on the call. And we look forward to another good call in August.

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