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Financial report summary
?Risks
- The Company’s substantial debt may adversely affect its business, financial condition and financial results.
- The Company may be unable to generate sufficient cash flow to satisfy its significant debt service obligations.
- Restrictions in the Company’s and Lamar Media’s debt agreements reduce operating flexibility and contain covenants and restrictions that create the potential for defaults, which could adversely affect the Company’s business, financial condition and financial results.
- The Company is controlled by significant stockholders who have the power to determine the outcome of all matters submitted to the stockholders for approval and whose interest in the Company may be different than yours.
- Our UPREIT structure may result in potential conflicts of interest.
- The Company’s growth through acquisitions may be difficult, which could adversely affect our future financial performance. In addition, if we are unable to successfully integrate any completed acquisitions, our financial performance would also be adversely affected.
- The Company could suffer losses due to asset impairment charges for goodwill and other intangible assets.
- The Company’s logo sign contracts are subject to state award and renewal.
- If the Company’s contingency plans relating to hurricanes and other natural disasters fail, the resulting losses could hurt the Company’s business.
- Our cash distributions are not guaranteed and may fluctuate.
- The Lamar Advertising charter, the Lamar Advertising bylaws and Delaware law may inhibit a takeover that stockholders consider favorable and could also limit the market price of Lamar Advertising stock.
- The Company’s revenues are sensitive to the state of the economy and the financial markets generally and other external events beyond the Company’s control.
- The Company faces competition from larger and more diversified outdoor advertisers and other forms of advertising that could hurt its performance.
- Federal, state and local regulation impact the Company’s operations, financial condition and financial results.
- If Lamar Advertising fails to remain qualified as a REIT, both Lamar Advertising and Lamar Media would be taxed as regular C corporations and would not be able to deduct distributions to the stockholders of Lamar Advertising when computing their taxable income.
- Even if it qualifies as a REIT, certain of Lamar Advertising’s and its subsidiaries’ business activities will be subject to U.S. and foreign taxes which will continue to reduce its cash flows, and it will have potential deferred and contingent tax liabilities.
- Covenants specified in our existing and future debt instruments may limit Lamar Advertising’s ability to make required REIT distributions.
- Lamar Advertising and its subsidiaries may be required to borrow funds, sell assets, or raise equity to satisfy its REIT distribution requirements or maintain the asset tests.
- Complying with REIT requirements may cause Lamar Advertising, its subsidiaries (other than TRSs) to forego otherwise attractive opportunities.
- Ownership limitations contained in the Lamar Advertising charter may restrict stockholders from acquiring or transferring certain amounts of shares.
- The Tax Cuts and Jobs Act, the CARES Act and the Inflation Reduction Act, as well as any future tax legislation, may impact the Company’s business and security holders.
- Lamar Advertising may potentially be unable to deduct the full amount of its interest expense pursuant to the TCJA and the CARES Act.
- Legislative changes or other actions affecting REITs could have a negative effect on Lamar Advertising and its subsidiaries.
- The ability of the Board of Directors of Lamar Advertising to revoke its REIT election, without stockholder approval, may cause adverse consequences to its stockholders.
Management Discussion
- Net revenues increased $78.8 million or 3.9% to $2.11 billion for the year ended December 31, 2023 from $2.03 billion for the same period in 2022. This increase was attributable to an increase in billboard net revenues of $63.8 million, an increase in transit net revenues of $12.8 million and an increase in logo net revenues of $2.2 million over the prior year.
- Net revenues for the year ended December 31, 2023, as compared to acquisition-adjusted net revenues for the comparable period in 2022, increased $43.4 million, or 2.1%. This increase was attributable to an increase of $28.4 million in billboard net revenues, an increase of $12.8 million in transit net revenues and an increase of $2.2 million in logo net revenues. See “Reconciliations” below.
- Total operating expenses, exclusive of depreciation and amortization and gain on disposition of assets, increased $27.2 million, or 2.4% to $1.15 billion for the year ended December 31, 2023 from $1.12 billion in the same period in 2022. The $27.2 million increase over the prior year is primarily comprised of an increase in total direct, general and administrative and corporate expenses (excluding stock-based compensation and transaction expenses) of $31.4 million primarily related to the operations of our outdoor advertising assets, partially offset by a $3.8 million decrease in transaction expenses related to acquisitions and the write-off of deferred offering costs.