LAMAR ADVERTISING CONEW

RESULTS OF OPERATIONS

The following table presents certain items in the Consolidated Statements of Income as a percentage of net revenues for the years ended December 31, 2024 and 2023:

Year ended December 31, 2024 compared to Year ended December 31, 2023

Net revenues increased $96.1 million or 4.6% to $2.21 billion for the year ended December 31, 2024 from $2.11 billion for the same period in 2023. This increase was attributable to an increase in billboard net revenues of $78.4 million, an increase in transit net revenues of $16.1 million and an increase in logo net revenues of $1.7 million over the prior year.

Net revenues for the year ended December 31, 2024, as compared to acquisition-adjusted net revenues for the comparable period in 2023, increased $89.1 million, or 4.2%. This increase was attributable to an increase of $71.2 million in billboard net revenues, an increase of $16.2 million in transit net revenues and an increase of $1.7 million in logo net revenues. See “Reconciliations” below.

Total operating expenses, exclusive of depreciation and amortization and gain on disposition of assets, increased $70.5 million, or 6.1% to $1.22 billion for the year ended December 31, 2024 from $1.15 billion in the same period in 2023. The $70.5 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 expense) of $48.7 million primarily related to the operations of our outdoor advertising assets, as well as an increase in stock-based compensation expense of $21.9 million.

Depreciation and amortization expense increased $169.5 million to $463.0 million for the year ended December 31, 2024 as compared to $293.4 million for the same period in 2023. The increase is primarily due to the revision in the cost estimate included in the calculation of asset retirement obligations during 2024.

For the year ended December 31, 2024, the Company recognized a gain on disposition of assets of $6.1 million as compared to a gain on disposition of assets of $5.5 million for the same period in 2023. The gain on disposition of assets for the year ended December 31, 2024 primarily resulted from transactions related to the sale of billboard locations and displays.

Due to the above factors, operating income decreased $143.4 million to $532.0 million for the year ended December 31, 2024 compared to $675.4 million for the same period in 2023.

Interest expense decreased $2.8 million for the year ended December 31, 2024 to $171.7 million as compared to $174.5 million for the year ended December 31, 2023. The decrease in interest expense is related to the repayment of the Term A loans outstanding under the senior credit facility during the year ended December 31, 2024.

Equity in earnings of investee was $5.1 million and $3.7 million for the years ended December 31, 2024 and 2023, respectively.

The decrease in operating income, partially offset by the decrease in interest expense over the comparable period in 2023, resulted in a $139.1 million decrease in net income before income taxes.

The Company recorded income tax expense of $4.5 million for the year ended December 31, 2024 as compared to income tax expense of $9.8 million for the same period in 2023. The $4.5 million equates to an effective tax rate for the year ended December 31, 2024 of approximately 1.2%, which differs from the federal statutory rate primarily due to our qualification for taxation as a REIT and adjustments for foreign items.

As a result of the above factors, the Company recognized net income for the year ended December 31, 2024 of $362.9 million, as compared to net income of $496.8 million for the same period in 2023.

Reconciliations:

Because acquisitions occurring after December 31, 2022 have contributed to our net revenue results for the periods presented, we provide 2023 acquisition-adjusted net revenue, which adjusts our 2023 net revenue for the year ended December 31, 2023 by adding to or subtracting from it the net revenue generated by the acquired or divested assets prior to our acquisition or divestiture of these assets for the same time frame that those assets were owned in the year ended December 31, 2024.

Reconciliations of 2023 reported net revenue to 2023 acquisition-adjusted net revenue for the year ended December 31, 2023 as well as a comparison of 2023 acquisition-adjusted net revenue to 2024 reported net revenue for the year ended December 31, 2024, are provided below:

Reconciliation and Comparison of Reported Net Revenue to Acquisition-Adjusted Net Revenue

Key Performance Indicators

Net Income/Adjusted EBITDA

Adjusted EBITDA for the year ended December 31, 2024 increased 4.8% to $1.03 billion. The increase in adjusted EBITDA was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization and capitalized contract fulfillment costs, net) of $65.0 million, and was partially offset by an increase in general and administrative and corporate expenses of $17.6 million, excluding the impact of stock-based compensation expense.

Segmented Adjusted EBITDA

(a) Logo and transit advertising do not meet the criteria to be reportable segments, and accordingly, are included in Other.

(b)Corporate operations are not an operating segment. Corporate expenses include expenses related to infrastructure and support, including information technology, human resources, legal, finance and administrative functions of the Company, as well as overall executive, administrative and support functions.

Adjusted EBITDA for the year ended December 31, 2024 increased 4.8% to $1.03 billion. The increase in adjusted EBITDA was primarily attributable to the increase in our billboard advertising adjusted EBITDA of $60.6 million, offset by a decrease in other adjusted EBITDA of $6.0 million and an increase in corporate expenses of $7.2 million, excluding the impact of stock-based compensation expense.

Net Income/FFO/AFFO

FFO for the year ended December 31, 2024 was $798.4 million as compared to FFO of $767.9 million for the same period in 2023. AFFO for the year ended December 31, 2024 increased 7.4% to $819.0 million as compared to $762.3 million for the same period in 2023. The increase in AFFO was primarily attributable to the increase in our gross margin (net revenue less direct advertising expense, exclusive of depreciation and amortization and capitalized contract fulfillment costs, net), partially offset by an increase in total general and administrative and corporate expenses (excluding the effect of stock-based compensation expense).