Okay. We're on? Can you hear me? All right. Good morning, everyone. My name's Cameron McVeigh. I cover media and advertising at Morgan Stanley. My pleasure to welcome Sean Reilly, President and CEO of Lamar Advertising, to the conference. Sean? Appreciate it, Cameron. Always a pleasure. And before I start, please note important disclosures, including my personal holdings disclosures and Morgan Stanley disclosures. All appear in a handout available in the registration area and on the Morgan Stanley public website. All right. With that, Sean, you posted recent solid fourth-quarter results. Organic growth was over 4%. FFO growth was maybe a little lower than we had expected. And it sounds like to start the year local, maybe a little softer than expected. How are you feeling about the current advertising market and Lamar's positioning? Yeah. First quarter is going to be a little light, certainly light of our guidance that we issued. Combination of things there. We had a real anomaly with February of last year. We were up 10% in a month, which doesn't happen very often. And part of it was leap year. It sounds weird. I never in my business career thought I'd be talking about leap year, but it had an impact on the quarter and that month for sure. And we also had the Super Bowl in Las Vegas that really we crushed it. I mean, we've got a big office in Vegas, and we do the Vegas Airport. So I mean, it was measurable. We did well in New Orleans as well, but we just don't have as much inventory there. But anyway, so first quarter is going to be in the one-ish range. And then the rest of the year looks really good. We're seeing sequential improvement every quarter. And you can do the arithmetic, right? It has to be that way or we don't get to three. Pacings right now are a little north of that three mark. So we're pacing towards the upper end of the guidance, not just the middle, which feels pretty good. So I've been getting a lot of questions about what happens with tariffs and what happens with the recession. And right now, we're just not seeing anything flashing yellow. So feels good. That's great. Yeah. How's your visibility now that we're in, made it to March? Yeah. It's good. So we've got just about 62% of our goal for the year contracted already. So it's in hand. That's not perfect visibility, particularly into Q4, but it's good. It's good visibility. And if we were seeing something that was wobbly out there, it would show up in our digital inventory first because that's the shortest cycle sale. And right now, we're sitting in March, and our digital platform is pacing ahead of the overall platform, right? So that makes me feel good. So yeah, I mean, it's just steady as she goes. Got it. As you look ahead into the remainder of the year, what are the priorities for you, Jay, and the rest of the team? We got to get through this enterprise ERP conversion. It seems like I've been talking about it for a year and a half, and I have, and I'm going to have to talk about it for about another year. We're done with phase one. It was successful, but it was the easier part of the lift. It was financial, accounting, control, back office stuff. Now we're doing the stuff that touches all of the other aspects of the business: the sales process, ops, and the like, and it causes a little disruption in the organization. Change is hard, so I'm holding a lot of hands, but we're going to get through it, and it's going to be really, really good for Lamar. We were dealing with legacy systems that were homegrown and decades old. I mean, if ever anybody had a tech stack that was decrepit, it was us. So I'm excited to get it behind me, though. Could you maybe quantify the potential margin impact you might expect from the ERP? Sure. Yeah. So 2027 is when it's really going to kick in, and I'll be very disappointed if we don't pick up at least a point. So we're at margins now of 46.7-ish, and we should be at 48. And assuming we get there, it would have been worth. On the expense side, it would have been worth the pain and agony. But what I'm really excited about is what we believe can happen on the top line because it'll make our account executives vastly more productive. And that means more local touches, better local touches, getting in front of more people. And that's what it's about. It's really about enhancing our ability to get in front of more clients. Sean, Lamar has been a publicly traded company for nearly 30 years. We're going to ring the bell at the Nasdaq next year. That'll be our 30th anniversary. Growth over that time has varied depending on the ad market, stage of the business cycle. Last year, growth was 4.2%. On the earnings call, you guided to 3%, around 3%. Is this consistent with how you think about growth long term and what factors might exhibit higher or lower growth rate trends over time? Yeah. So we're tethered to GDP, so let's start there. The macro matters when it comes to Lamar. We should beat GDP because traditionally, U.S. ad spend has. I see Ben out there. He can correct me if I'm wrong. So GDP first, then get to a trusted source on what you think U.S. domestic ad spend is going to be, particularly in the traditional space. Morgan Stanley does a great report that actually breaks out their view of out-of-home. And it's good. It's pretty much the best, I think. And then because we have this digital rollout every year, which we count as organic, right, we should beat U.S. domestic ad spend, right? So that's my bogey that I look at. But yeah, I mean, year in and year out, it's going to ebb and flow a little bit because, again, we're tethered to the broader macro. Got it. When you describe local, it sounds it's lower beta, steady as she goes, while national has fluctuated in the past couple of years. Past couple of decades. Past couple of decades, yeah. And local has grown for the past 15 quarters now. What do you think is the key to unlocking more national dollars than we've seen in the past? And as you think about your business mix, is there an ideal mix between the two? I shudder to think how long I've been doing this, but it's basically three decades, and when I started with Lamar, our business was 80% local and 20% national. What is it today? It's 80% local, 20% national, and in that time period, we've had subtle changes in our footprint. Back then, we were pure small, middle, right, and now we have exposure to New York and exposure to Atlanta and Chicago, etc., and it's still 80/20, and I like it that way. I don't have an M&A strategy that's targeted towards getting more national dollars or, quite frankly, more local dollars. If it's a high-quality REIT-qualified asset, we're going to be there, and because of the nature of our footprint, we are the highest and best buyer for virtually anything with paint on it in the country, so that's helpful too. Definitely. Okay. On your recent earnings call, you said you expect national to be flattish with sequential improvement over the year. Are there any specific verticals that you'd call out or that maybe you've seen an improvement since then? You've never heard me say this before, but my courteous and faithful staff is now breaking out top 20 instead of just top 10 verticals for me, and the reason is verticals 20 through 11 last year grew faster than verticals 10 through one, and it's interesting. Dollars aren't as big, but the growth rates are more, so what I'm seeing is, yeah, you get an ebb and flow. Healthcare was down a little bit, but it'll be up a little bit, etc., and service is doing this because of our friendly neighborhood lawyers, but what was really interesting to me was the growth rates I'm seeing in those smaller categories, which I think is more indicative of the health of Main Street, quite frankly. That's interesting. To your point, healthcare and insurance were soft in the fourth quarter. Public service, building, construction were strong, which, by the way, in that lower 10. Yeah. Right. Is there a risk that you see at a certain vertical pulling back some ad spend, or is there more exhibiting cyclicality on average? Well, again, if you look at our verticals over time, they're remarkably stable, right? Remarkably stable. You will get a change in a CMO at a large account, and that can have an impact on us, both positive and negative. They can decide they want to shift their spend from here to here. That's fine. That just does this. That's the reason for that more volatility on the national bucket. So I can't really, when I'm going into this year, there's nothing that looks like it didn't look last year. I will say this: GEICO's back, which is nice to see. And they are coming in through the programmatic channel, which they never used to do. They used to only buy static, and they bought a lot of static posters. Now they're not spending as much. They're spending about a third of what they spent in their heyday with us. But they are back. They're not abandoning the medium. And that's good to see. That's great. I'm glad you brought up programmatic. And it sounds like you're budgeting it to be up mid-teens in 2025. Could you maybe discuss that further and explore the opportunity for programmatic growth? So I'm actually anticipating we'll beat that guide a little bit. But it is a channel that if we didn't have, there are digital buyers that would not buy. That's the most important thing, right? If we didn't have that capability for them to use, we just wouldn't get the business. They don't pick up the phone and reserve space. That's just not the way they think. Everything they do is dropping a digital dollar into an algorithm. So I think that in the B2B world, that's going to grow. It just is. And we are beta testing that type of channel. It's not as robust. It's more automated buying than programmatic buying, but we're beta testing it for some local customers. And so if it plays out the way I think it's going to play, you're going to see it explode, right? But it's not going to be a net new dollar. It's just making it easier for our current customers to buy at the local level. Is there any local programmatic spend currently, or is that all potential future incremental growth? So no, other than the beta testing that we're doing, right? And again, I can't promise you it's a net new dollar because it is our existing customers utilizing that channel to buy. But it only stands to reason if it's easier to buy us, then they'll spend more. That's the thesis. Great. There were some big M&A out-of-home news with the Vistar sale to T-Mobile. Lamar had their 20% stake. Do you think that will be a growth driver for programmatic and out-of-home generally? And I guess, why do you think T-Mobile made the acquisition? First of all, T-Mobile is an extremely entrepreneurial organization, right? I mean, this is not your daddy's phone company. They know what they're doing, and they love out-of-home. They really do. And I had a little bit of mixed emotions about the Vistar deal because we had a seat on their board. We gleaned unique insights because of that, because of our access to their data. And so I'm sorry to see that go, but it's nice to turn $30 million into $130 million. And by the way, T-Mobile plans on running Vistar exactly the same way that it's run today. It's going to be branded Vistar. The whole management team went over there. They've got golden handcuffs on them, three-year contracts, which, again, gives me comfort that it's not going to get the big company bear hug and get screwed up somehow. And look, T-Mobile couldn't be a better buyer for our industry because the industry today buys its data from third-party vendors that get their data from whom, T-Mobile, right? So now we get to go straight to the source. T-Mobile is cutting out the intermediaries, and they're selling directly to the industry. And you would think, "Well, this is such a teeny industry in their world." And it is. But keep in mind that those rich data sources are bought by a lot of other industries as well. And when we run a programmatic campaign, it's our customers that are paying for the data feed, the data that proves out their campaign, right? And that opens up a whole new world, right, for T-Mobile. So I think they see it as a way to more effectively monetize their data. And they bought the right platform. They really did. Yeah. One of your competitors was up here, I think, yesterday, saying they were going to expand their partnership with Vistar. So it's good. It's good to It's good to hear. Okay. Great. In 2024, Lamar posted a 46.8% EBITDA margin, which I believe is a record. It was, yeah. Going to 48. I like it. Long term, how should we think about expense growth from here and Lamar's ability to drive margins higher? A good question. Start with the fact that we're spending $10 million a year on this enterprise project, right? That goes away, and then we start seeing the benefits of it, right, which will provide that margin enhancement that I referenced, but over the long run, the way we have enhanced our margins over time is the incremental EBITDA margin from digital expansion and tuck-in M&A, right? Because if we do an acquisition that's pure tuck-in, that comes in at an EBITDA margin of give or take 60%-65%, right, so by definition, the math ticks up. A digital deployment comes in at a margin contribution that's even north of that. It would be 65%-70%. So again, by definition, the math works your way up, so short run, it's the ERP conversion, and long run, it's just doing what we've been doing for the last umpteen decades. I wanted to ask, on those digital conversions, the math is still a 4x-5x uplift and then 2x corresponding costs or so. Is that? Oh, you mean to build one? Yeah. Yeah. So for the large format, let's call it $240,000-$250,000. And the arithmetic is fairly compelling. You're taking down something that's doing give or take $3,000. And that's the absolute cost to the customer. Then they have to buy the vinyl, right? And now you're putting up something where you have eight slots. The absolute cost to the customer for a slot is about the same, but now you're selling multiple, right? So let's be conservative with the arithmetic. Let's say we sell five or six slots. You were doing $3,000 a month. Now you're doing $15,000-$18,000 a month. The incremental margin contribution flows down at, let's call it 65%-70%. And you guys can do the arithmetic on the ROI, so. And the thing that's been most gratifying for Lamar is we've been doing this since 2004 when we put up the first one. That arithmetic has remained astonishingly consistent, even though we're adding more capacity. That's great. Sean, you said on your recent earnings call, you're targeting 350 organic digital conversions this year. And I think 375 was the stretch goal. This is up from 235 last year. In your view, what dictates how many boards you convert? Is there ever a concern about oversupply in a given market? Last year was about paying down our Term A. And so it was a conscious decision. It had nothing to do with demand. And we did that with our M&A. We did it with digital. We did it with overall CapEx. And I'm convinced it was the right decision because we weren't going to get buffeted about by the financial markets, which weren't good 18 months ago and still aren't great, right? So other than that conscious decision, we go as fast as we can, literally as fast as we can. Now, because we slowed down last year, we had the spade work done. So that's enabling us to accelerate a little bit into this year. As you know, historically, it's been right around 300-325. It has been the fastest we could go. This year, we're pushing a little harder and, again, have a little bit of pent-up demand. Great. I wanted to ask about transit. It was up solid 8% in the fourth quarter. How should we think about long-term trends as growth rates start to normalize? And how much of an impact do ridership levels have on revenue? So most of what we do in the transit world, we wrap buses. And so the audience is not the people that ride the bus. It's the people walking and driving around the DMA that see it, with one exception. That one exception is Vancouver. Our Vancouver transit, which is large, it's about $30 million in billing, really struggled coming out of COVID. But it's back. And part of that 8% growth rate is the tail end of the recovery of Vancouver. All of our other transit operations have long since been normalized from COVID, with a little shout-out to airports. Airports grew a little faster than the overall platform. But you know the story of the recovery of air travel. It's been pretty dramatic. But when you kind of step back and look at our approach to that part of out-of-home, we don't consciously go out and buy those things. We had to learn how to run transit because when we bought billboard companies, sometimes they would come along with a little transit appendage. So we had to learn how to run it. If you put the airports and the transit together, it's about $160 million in revenues, a whole bunch of small and middle-sized market contracts, like a lot of them. No single contract represents a big deal to us. And you put about, on a good day, a 15%-18% margin on those things, and on a bad day, maybe a 9%-10%. The good news about being in that business is it's CapEx light. When you're wrapping buses, you don't have to spend anything, really, right? Great. Okay. I wanted to switch to political ad spend. It's a nice tailwind in the fourth quarter, almost $15 million. Curious broadly how you're thinking about political ad dollars in the out-of-home industry and if there's a crowding-out effect for other advertisers and if that potentially raises pricing. So there is a crowding-out. Other people would have bought that space if politicians didn't, or at least some portion of it. We don't know if they would have bought all of it. It's important to know that the real delta that we're looking at replacing is actually a little less than $20 million because we did $30 million in the even year that was last year. In odd years, we do about $11 or $12 million. So we do get some political in off-cycle years. And interestingly, when I look at our pacings as we sit right here today, our strongest quarter is the fourth. And I've been kind of telling people that I think the most important earnings call for Lamar is going to be the one in August because we will know if we did a good job of "replacing political" by then, right? And we either did or we didn't. Right now, it looks like we're doing a good job because the pacings are strong in Q4. And hopefully, that holds up. Yeah. That's a good point. We'll find out in August. Sticking with the politics theme, tariffs have been the headlines recently. Is Lamar exposed there at all, or how are you thinking about risk? I first think about, are the tariffs going to hurt the macro environment, right? Is it going to soften aggregate ad spend, or are we headed into a little bit of a tailspin in the macro? We're not seeing that, but that would be my first concern. In terms of our verticals, there's one that just screams out like auto, right? It's about 5% or 6% of our book. And auto for us is not GM corporate. It's hundreds and hundreds and hundreds of local dealerships. And what the dealers usually do when they don't have new cars to sell is they keep their billboards and advertise repair services because that's where they make their money anyway, right? So I feel like clearly they're exposed. It might cause them not to have as many new cars to sell, but they should keep their billboard spend. Makes sense. Before opening it up to Q&A, I have a couple of other questions. Lamar completed 24 acquisitions last year. Total purchase price was $45 million. This is after almost $140 million in spend in 2023 and a record $480 million in 2022. You noted on the 4Q call around there's around $150 million in potential M&A this year. How are you thinking about deal flow and current acquisition targets in the market? Really good. Really good. The pipeline of the smaller fill-in deals, $5 million, $10 million, $20 million, $45 million, they're coming through the door. And then we have a couple that are north of $100 million that we knock down one of those, we'll blow by that $150 million. I kind of throw that out as a placeholder. And if we exceed that, that'll be a good thing. Good. How's the current level of regulatory scrutiny for a large-scale acquisition and how are private market multiples trending? Yeah. The regulatory environment is a complete and total unknown. Nobody's really gone through in a long time, right? And the one that did go through didn't involve Lamar. It involved a couple of other companies and a swap. And it was a painful process for them. The definition of the relevant market was not conducive to a billboard deal. Now, I've been through in my career, I've been through four times, and I have had it be smooth sailing, and I've had it be a trip to the dentist. And it's hard to predict. And I've gone through under Republican administrations, Democratic administrations, and it's just a crapshoot. So I don't like going down there. I don't want to go down there. And as a REIT, we don't have to file HSR anyway, so that's helpful. Yeah. I don't blame you. Okay. Let's open it up to Q&A and see if anyone in the audience. Let's wait for a mic for the webcast. Hi, Sean. You mentioned one here is some unusual factors around leap year approval. I guess, are you at all concerned that is a fictional indicator of something more nefarious? Obviously, you mentioned the August call will have much better clarity, but. Great. Thanks. Sorry. Just going back to the 1Q commentary, you mentioned a little worse than on the earnings call. You mentioned leap year and Super Bowl factors, but are you at all concerned that it could be a harbinger of something more nefarious? It's certainly not showing up in our pacings, right? What we have on the books for today, Q2, Q3, Q4, all of that looks, again, steady as she goes. I got the question about whether or not there was a post-election hangover that might have had somewhat of an impact. You could argue that if you correct for political, our otherwise growth was 2% in Q4. It wasn't 4.2%. You might could argue that we kind of limped out of the year, and maybe that was part of it, and maybe there's a little carryover into Q1. But when I talk to the field, I'm not hearing any sort of cautiousness on behalf of local buyers. And it's hard for me to, given that there is a crowd-out phenomenon in Q4 political, what would have our ex-political growth been, right? It's hard to say. So yeah, to answer your question, we're not seeing anything that suggests gathering storm clouds. And if I was going to see it, it would show up in digital first. And as we sit here in March, our digital platform is pro forma ahead of our overall platform. So that makes me feel good. Uh-oh. The heavy hitter has a question. No fat jokes. Sean, we've been talking about measurement in out-of-home for many, many years. And just going back to the T-Mobile acquisition, they're actually speaking this afternoon, shameless plug, and just the ability to sort of improve measurement to bring more national advertisers and attribution, all the things that digital does. How would you, if you were to give it a grade or a rating, how would you assess the quality of measurement in out-of-home today available to national advertisers who want to put money to work they can really attribute to things? And do you think there's a bull case where T-Mobile and Vistar help that get to the next level? I do. I do think there's a bull case for that. So there's two answers to the quality of measurement in the industry today. The most important answer is Geopath, our industry measurement tool, does a bad job, pure and simple. They're buying their data from vendors that are not the greatest in the world, and the data is stale and old in some cases, inaccurate in other cases. Now, that said, the buyers that buy programmatic, while there is a baseline Geopath data set, they layer over it very accurate, very current third-party data from the folks that are buying it from the telcos, right? And it's interesting. They'll buy it from different ones that make their marketing people happy. One size doesn't fit all. I think it can only be good, number one, if they're able to go straight to the source and not have a third party sprinkle whatever secret sauce they put on it, and number two, when Geopath gets out of the contract they're in with their current provider, if T-Mobile provided it, you kind of wonder what T-Mobile was thinking. I mean, we're a tiny little esoteric industry, right, relative to their thing, and so, for example, if they were the data provider to Geopath, the contract would be worth $12 million-$13 million more, so they got to have a grander vision, obviously, so we'll stay tuned on that one, and they just bought another little company that does stuff in our field, so. Did you know that? I was a little befuddled. I had to call Ross, my nephew, because he's our techie guy. What do these guys actually do, and he didn't really know either, so I asked T-Mobile what they do. Before handing that off for any closing remarks, I just wanted to ask about your leverage levels and maybe targets. I think you're at 3x. That's a great balance sheet. Is that a comfortable level, or would you like to see that sway either direction? Well, we've stated to the marketplace and to our bondholders that we're not going to go above four. I'd like to be a lot closer to four than we are today, right? That would mean that we did a nice, accretive large transaction that took us there. And for us to get there, it would be something north of $1 billion. Got it. Okay. This has been great. Any closing remarks to you? We've got a minute left. No. All good. We'll see you guys same time next year. I love this conference. I have to do the Citi REIT Conference same week, so it's nice to get out and see everybody all at once. Yeah. Definitely. Great to have you out here. All good. Yep. All good. Yep. All right, Sean. Thank you so much. Yep. Thank you guys.