Lamar expects $8.10–$8.20 AFFO per share for 2025 while projecting strong 2026 momentum backed by $300M in acquisitions

Earnings Call Insights: Lamar Advertising Company (LAMR) Q3 2025

MANAGEMENT VIEW

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Sean Reilly, CEO & President, reported "solid operating results with consolidated revenue growth improving to 2.9% on an acquisition-adjusted basis, led by national/programmatic, which had its strongest period of growth since Q2 of 2022." He highlighted that "we are pacing to reach our previously provided guidance for full year AFFO per share" and expressed confidence that the company will finish 2025 successfully and carry momentum into 2026. Reilly identified services, health care, and financial as categories of strength, with beverages and real estate as weaker segments. He underscored that "national and programmatic led the way with growth of 5.5%, while local was plus 1.6%." He also discussed the company's largest ever pharmaceutical buy, which extends into Q4 and spans both analog and digital inventory, providing new insights into pharma customer needs.

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Reilly noted the integration of the Verde assets, acquired in an UPREIT transaction, is "going very well," and that Q3 saw 18 additional purchases for nearly $47 million, bringing year-to-date cash spend to nearly $134 million. He stated, "Including Verde, we'll end the year spending plus or minus $300 million on accretive transactions."

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Jay Johnson, Executive VP, CFO & Treasurer, stated, "Acquisition-adjusted revenue increased 2.9% from the same period last year, accelerating 100 basis points over the second quarter." He detailed that "adjusted EBITDA for the quarter was $280.8 million compared to $271.2 million in 2024, which was an increase of 3.5%. On an acquisition-adjusted basis, adjusted EBITDA increased 2%." Johnson added, "Adjusted funds from operations totaled $226.5 million in the third quarter compared to $220.7 million last year, an increase of 2.6%. Diluted AFFO per share increased 2.3% to $2.20 versus $2.15 in the third quarter of 2024." He also mentioned successful capital market transactions, including raising $1.1 billion and refinancing the company's $600 million Term Loan B, upsized to $700 million, and a $400 million senior notes offering.

OUTLOOK

* Johnson affirmed, "we expect AFFO to finish the year between $8.10 and $8.20 per diluted share." He added, "Cash interest in our guidance totaled $152 million and assumes SOFR remains flat for the balance of the year." Reilly indicated optimism for 2026, citing stronger pacings and political tailwinds, as well as continued growth from recent acquisitions.

FINANCIAL RESULTS

* Acquisition-adjusted operating expenses increased 3.7% in the third quarter, including one-time severance costs linked to the termination of the Vancouver transit contract and increased costs from Phase 2 of technology implementation. Adjusted EBITDA margin for the quarter was 48%, essentially flat year-over-year. Maintenance CapEx was $13.9 million for the quarter, with total CapEx at $50 million. At quarter end, Lamar had $834 million in total liquidity and approximately $3.4 billion in total consolidated debt, with a weighted average interest rate of 4.6% and an average debt maturity of about 5 years.

Q&A

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Cameron McVeigh, Morgan Stanley, asked about growth drivers for 2026 and M&A outlook. Reilly responded that momentum from the current year's $300 million in acquisitions, stronger pacings, and political tailwinds are expected to drive growth, stating "for all those reasons, 2026, the setup is real good."

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McVeigh also asked about AI-related advertising exposure. Reilly explained an enterprise conversion to realize AI benefits in 2027 and said, "AI is certainly good at 2 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."

*
Jason Bazinet, Citi, inquired about the offsetting effects of the Verde acquisition and Vancouver exit. Reilly replied, "you're directionally correct...in terms of absolute revenue expectations for 2026. It's a pretty decent offset." Johnson added that the Vancouver contract had lower EBITDA contribution, so "should see better flow-through from the Verde transaction."

*
David Karnovsky, JPMorgan, asked about the sustainability of strength in the insurance vertical and political comparisons. Reilly noted the return of large insurance advertisers and the growing importance of the programmatic channel, providing historical political revenue context.

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Jonnathan Navarrete, TD Cowen, queried demand for the 2026 World Cup. Reilly expressed optimism: "when you add political to that mix of the World Cup, that gives us a lot of optimism around how 2026 is going to shape up."

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Daniel Osley, Wells Fargo, asked about national customer spending inflection and airport RFPs. Reilly reported "good momentum ex political in the back half of this year is going to carry in, we believe, carry over into 2026," and confirmed continued pursuit of middle market airport contracts.

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Navarrete also asked about the Vistar sale distribution. Johnson clarified, "It will be all cash as we've done in previous years...anticipate that's going to be around $0.25, give or take $0.01."

SENTIMENT ANALYSIS

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Analysts focused on growth drivers for 2026, M&A pipeline, AI readiness, and national account trends, with a generally constructive but probing tone. Questions about the sustainability of advertising verticals, impact of acquisitions, and event-driven demand (World Cup, political) indicated interest in forward momentum but some skepticism about macro headwinds and segment volatility.

*
Management maintained a confident and optimistic tone, particularly regarding 2026 prospects and balance sheet strength. Phrases such as "I'm pleased with how resilient the business is proving to be" and "the setup is real good" were prevalent. In Q&A, management acknowledged headwinds but emphasized offsetting growth drivers, and repeatedly cited improved pacings and strong customer engagement.

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Compared to the previous quarter, management’s tone shifted from "solid but not spectacular" and "cautious about October" to more confident in the outlook for both Q4 and 2026, reflecting stronger national/programmatic performance and successful capital raises. Analysts' tone remained inquisitive, with increased focus on execution and sustainability for 2026 growth.

QUARTER-OVER-QUARTER COMPARISON

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Guidance for AFFO per share remained at $8.10 to $8.20, consistent with the revised range from Q2. Management's language evolved from "cautious about October" and "not quite as strong as our earlier expectations" to a more optimistic view on year-end performance and 2026 setup.

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National/programmatic growth accelerated to 5.5% compared to Q2’s expected 2.5–3% for Q3, while local/regional sales growth remained steady. Acquisition activity increased, with year-to-date spend rising from $110 million at Q2 to nearly $134 million at Q3, and full-year accretive transaction spend projected at $300 million including Verde.

*
Analysts shifted from questions about political comps and M&A tools (UPREIT) to more forward-looking themes for 2026, such as AI, World Cup demand, and national account spending.

RISKS AND CONCERNS

* Macroeconomic uncertainty, segment-specific softness (beverages, real estate, government/nonprofit), and the loss of the Vancouver transit contract were cited as challenges. Management noted one-time severance and technology implementation costs. Reilly acknowledged "a cautious vibe still prevails" locally. Johnson indicated that expense growth from technology implementation and the Vancouver exit was included in guidance. Management expressed confidence in replacing political revenue with other verticals and pointed to resilience and balance sheet strength as mitigants.

FINAL TAKEAWAY

Lamar Advertising Company delivered acquisition-adjusted revenue and AFFO growth in Q3 2025 and affirmed full-year guidance of $8.10–$8.20 AFFO per share. Management emphasized successful M&A execution, a strong balance sheet, and positive momentum into 2026, citing robust national/programmatic performance, expanded digital inventory, and optimism around event-driven advertising demand. The company projects continued growth through disciplined capital deployment, digital innovation, and anticipated political and sports event tailwinds in 2026.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/lamr/earnings/transcripts]

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