What changed in this filing

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Item 1A. Risk Factors

2025-02-20 compared with 2024-02-23 · 59 added, 39 removed, 257 unchanged (28% of the section changed)

2 unchanged sentences

The Company has borrowed substantially in the past and will continue to borrow in the future.

At December 31, 2023, Lamar Advertising Company’s wholly owned subsidiary, Lamar Media, had approximately $3.34 billion of total debt outstanding, net of deferred financing costs, consisting of approximately $1.01 billion in bank debt outstanding under Lamar Media’s senior credit facility, $2.08 billion in various series of senior notes, $249.6 million under the Accounts Receivable Securitization Program and $1.6 million in other seller notes.

At December 31, 2024, Lamar Advertising Company’s wholly owned subsidiary, Lamar Media, had approximately $3.21 billion of total debt outstanding, net of deferred financing costs, consisting of approximately $877.9 million in bank debt outstanding under Lamar Media’s senior credit facility, $2.08 billion in various series of senior notes, $249.4 million under the Accounts Receivable Securitization Program and $1.2 million in other seller notes.

Despite the level of debt presently outstanding, the terms of the indentures governing Lamar Media’s notes and the terms of the senior credit facility and Accounts Receivable Securitization Program allow Lamar Media to incur substantially more debt, including approximately $457.2 million available for borrowing under the revolving credit facility as of December 31, 2024.

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Lamar Media has variable rate debt outstanding under the senior credit facility and its Accounts Receivable Securitization Program.

Increases in the interest rates applicable to these borrowings have recently resulted in increased interest expense, which has impacted the Company's net income.

Increases in the interest rates applicable to these borrowings have resulted in increased interest expense, which has impacted the Company's net income.

Interest rates may continue to increase as a result of macroeconomic factors outside of our control.

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The Company continues to assess whether factors or indicators become apparent that would require an interim impairment test between our annual impairment test dates.

For instance, if our market capitalization is below our equity book value for a period of time without recovery, we believe there is a strong presumption that would indicate a triggering event has occurred and it is more likely than not that the fair value of one or both of our reporting units is below the carrying amount.

For instance, if our market capitalization is below our equity book value for a period of time without recovery, we believe there is a strong presumption that would indicate a triggering event has occurred and it is more likely than not that the fair value of one or more of our reporting units is below the carrying amount.

This would require us to test the reporting units for impairment of goodwill.

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Depending on the contract, the logo provider may or may not be entitled to compensation for the structures at the end of the contract term.

Of the Company’s 24 logo sign contracts in place at December 31, 2023, 4 are subject to renewal or expiration in 2024.

Of the Company’s 24 logo sign contracts in place at December 31, 2024, four are subject to renewal or expiration in 2025.

The Company may be unable to renew its expiring contracts.

The Company may also lose the bidding on new contracts.

The Company’s transit advertising contracts are subject to the Company’s ability to obtain and renew favorable contracts with municipalities and airport authorities.

In 2024, the Company generated approximately 8% of its revenues from transit advertisements, which requires the Company to obtain, support, and renew its transit contracts.

Transit contracts are generally with the local municipalities and airport authorities and allow us the exclusive right to rent advertising space to customers in airports and on buses, benches or shelters.

We currently rent transit advertising displays in airport terminals and on bus shelters, benches and buses in over 80 transit markets.

The terms of the contracts vary, but generally range between three to ten years, many with renewable options for contract extension.

However, the Company may be unable to renew its expiring transit contracts or may lose the bidding on new contracts.

If the Company’s contingency plans relating to hurricanes and other natural disasters fail, the resulting losses could hurt the Company’s business.

The Company has determined that it is uneconomical to insure against losses resulting from hurricanes and other natural disasters for its outdoor or logo structure assets.

Although the Company has developed contingency plans designed to mitigate the threat posed by hurricanes and other forms of inclement weather to its real estate portfolio (e.g., removing advertising faces at the onset of a storm, when possible, which better permits the structures to withstand high winds during the storm), these plans could fail and significant losses could result.

Although the Company has fortified many of its advertising structures and developed contingency plans designed to mitigate the threat posed by hurricanes and other forms of inclement weather to its real estate portfolio (e.g., removing advertising faces at the onset of a storm, when possible, which better permits the structures to withstand high winds during the storm), these plans could fail and significant losses could result.

To the extent that such natural disaster events become more frequent or destructive because of climate change, we may incur increased costs related to storm remediation and preparation.

The Company’s strategy involves continued investment in its digital platform, and we may fail to realize certain expected benefits of these investments and such investments may become more costly.

The success of the Company’s strategy of investing in its digital platform, and the realization of the benefits thereof, depends upon our ability to demonstrate the increased value and capabilities of digital advertising displays.

If we experience significant technological failures with respect to our digital displays or if our customers fail to realize the anticipated benefits of the digital platform, we may experience decreased demand for advertising on our digital billboards.

Additionally, we may experience increased costs related to our deployment of digital billboards, if the technological components used in our digital billboards increase in cost or if there are shortages of such components.

We may also face difficulties obtaining new permits for digital displays or we may be unable to renew permits for our existing digital displays due to a variety of factors, including due to potential new governmental regulations and restrictions on digital signs.

Any of these factors may make it more difficult to realize the benefits of our investments in our digital platform, which may have a negative impact on our financial condition and results of operations.

Our cash distributions are not guaranteed and may fluctuate.

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The Company rents advertising space on outdoor structures to generate revenues.

Advertising spending is particularly sensitive to changes in economic conditions.

Advertising spending is particularly sensitive to changes in economic conditions, and macroeconomic conditions such as rising interest rates and inflation may impact our industry more negatively than the economy as a whole.

Additionally, the occurrence of any of the following external events could further depress the Company’s revenues:

• a widespread reallocation of advertising expenditures to other available media by significant renters of the Company’s displays;

• a decline in the amount spent on advertising, in general, or outdoor advertising in particular as a result of macroeconomic factors.

• a decline in the amount spent on advertising, in general, or outdoor advertising in particular as a result of macroeconomic factors, which may occur during a recession or in periods of economic uncertainty.

The Company faces competition from larger and more diversified outdoor advertisers and other forms of advertising that could hurt its performance.

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The Company also competes against an increasing variety of out-of-home advertising media, such as advertising displays in shopping centers, malls, airports, stadiums, movie theaters and supermarkets, and on taxis, trains and buses.

To a lesser extent, the Company also faces competition from other forms of media, including radio, newspapers, direct mail advertising, telephone directories and the Internet.

The Company also faces competition from advertising in other forms of media including online (including display, search, and social media advertising);

applications used in conjunction with wireless devices;

broadcast, cable and streaming television;

direct mail marketing;

and traditional print media.

The industry competes for advertising revenue along the following dimensions:

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The Company may be unable to compete successfully along these dimensions in the future, and the competitive pressures that the Company faces could adversely affect its profitability or financial performance.

Additional content-based restrictions on the categories of customers that can advertise on our outdoor advertising structures may be implemented by governmental authorities.

Federal, state or local authorities may seek to restrict or prohibit the use of outdoor advertising with respect to certain products and services.

For instance, the use of billboards to advertise certain types of tobacco products is effectively banned in our markets, and in certain cases, state and local governments also prohibit or restrict the use of outdoor advertising for other types of products or services.

If additional content-based restrictions are implemented by governmental authorities, certain segments of our customers may not be able to utilize outdoor advertising in the future, which could have a negative impact on our business and results of operations.

Federal, state and local regulation impact the Company’s operations, financial condition and financial results.

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In addition, the public perception of the effectiveness of our security measures may be harmed and adversely affect our competitive position.

In the event of a security breach, we could suffer significant legal and financial exposure in connection with remediation efforts, investigations and legal proceedings, which could lead to the need for additional resources in our security and system protection measures.

In the event of a security breach, we could suffer significant legal and financial exposure in connection

with remediation efforts, investigations and legal proceedings, which could lead to the need for additional resources in our security and system protection measures.

We have been and expect to continue to be the target of fraudulent activities and security breaches;

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federal income tax purposes starting with its taxable year ended December 31, 2014 and for each subsequent taxable year thereafter.

REIT qualification involves the application of highly

technical and complex provisions of the U.S.

REIT qualification involves the application of highly technical and complex provisions of the U.S.

Internal Revenue Code of 1986, as amended, (the “Code”) to Lamar Advertising’s assets and operations as well as various factual determinations concerning matters and circumstances not entirely within our control.

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• it and its corporate subsidiaries, including Lamar Media, will be subject to applicable federal and state income tax, including any applicable state-level alternative minimum tax, on its taxable income at regular corporate rates;

• it and its REIT subsidiaries would be subject to a 15% corporate minimum tax under the Organization for Economic Co-Operation and Development (OECD) Global Anti-Base Erosion Rules (referred to as Pillar Two rules);

• it would be disqualified from REIT tax treatment for the four taxable years following the year during which it was so disqualified.

Any such corporate tax liability could be substantial and would reduce the amount of cash available for distributions to Lamar Advertising’s stockholders, may require it to borrow funds (under Lamar Media’s senior credit facility or otherwise) or liquidate some investments to pay any such additional tax liability.

Any such corporate tax liability could be substantial and would reduce the amount of cash available for distributions to Lamar Advertising’s stockholders, and may require it to borrow funds (under Lamar Media’s senior credit facility or otherwise) or liquidate some investments to pay any such additional tax liability.

This adverse impact could last for five or more years because, unless it is entitled to relief under certain statutory provisions, it will be taxable as a corporation, beginning in the year in which the failure occurs, and it will not be allowed to re-elect to be taxed as a REIT for the following four years.

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For taxable years beginning before January 1, 2026, non-corporate taxpayers may generally deduct 20% of certain pass-through business income, including “qualified REIT dividends” (generally, dividends received by a REIT shareholder that are not designated as capital gain dividends or qualified dividend income), subject to certain limitations.

Although this deduction

reduces the effective tax rate applicable to certain dividends paid by REITs, such tax rate may still be higher than the tax rate applicable to regular corporate qualified dividends.

Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs, such tax rate may still be higher than the tax rate applicable to regular corporate qualified dividends.

This may cause investors to view REIT investments as less attractive than investments in non-REIT corporations, which in turn may adversely affect the value of the stock of REITs, including our stock.

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For these purposes, Lamar Advertising is treated as owning the assets of and receiving or accruing the income of its subsidiaries (other than TRSs).

Thus, compliance with these tests will require Lamar Advertising and its subsidiaries to refrain from certain activities and may hinder their ability to make certain attractive investments, including investments in the businesses to be conducted by TRSs, and to that extent limit their

opportunities.

Furthermore, acquisition opportunities in domestic and international markets may be adversely affected if Lamar Advertising needs or requires the target company to comply with certain REIT requirements prior to closing.

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If the IRS would assert successfully that the Operating Partnership should be treated as a “publicly traded partnership” and substantially all of the Operating Partnership’s gross income did not consist of the specified types of passive income, the Internal Revenue Code would treat the Operating Partnership as an association taxable as a corporation.

In such event, Lamar Advertising would cease to qualify as a REIT.

In addition, the imposition of a corporate tax on the Operating Partnership would reduce the amount of distributions the Operating Partnership could make to Lamar Advertising and, in turn, reduce the amount of cash available to Lamar Advertising to pay dividends to our shareholders.

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.

On December 22, 2017, H.R.

1, informally titled the Tax Cuts and Jobs Act (the “TCJA”) was signed into law.

The TCJA made major changes to the Code, including a number of provisions of the Code that affect the taxation of REITs and their stockholders.

Among the changes made by the TCJA are permanently reducing the generally applicable corporate tax rate, generally reducing the tax rate applicable to individuals and other non-corporate taxpayers for tax years beginning after December 31, 2017 and before January 1, 2026, eliminating or modifying certain previously allowed deductions (including substantially limiting interest deductibility and, for individuals, the deduction for non-business state and local taxes).

On March 27, 2020, legislation intended to support the economy during the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), was signed into law.

The CARES Act made technical corrections, or temporary modifications, to certain of the provisions of the TCJA, including, without limitation, the provisions of the TCJA concerning NOLs and interest expense deductions.

Certain CARES Act related interest expense deduction changes are discussed in the following subsection.

With respect to NOLs, effective for taxable years beginning on or after January 1, 2018, the TCJA limited the deduction for NOL carryforwards to 80% of taxable income (before the deduction) and eliminated NOL carrybacks for individuals and non-REIT corporations (NOL carrybacks did not apply to REITs under prior law), but allows for indefinite NOL carryforwards.

The CARES Act repealed such 80% limitation for carryforwards to taxable years beginning before January 1, 2021.

The CARES Act also allows a five-year carryback for NOLs arising in 2018, 2019, or 2020.

The TCJA’s NOL limitations (even as modified by the CARES Act) may result in Lamar Advertising having to make additional distributions in order to comply with REIT distribution requirements or avoid taxes on retained income and gains.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (the “IRA”).

The IRA includes numerous tax provisions that impact corporations, including the implementation of a 15% corporate alternative minimum tax based on “adjusted financial statement income” exceeding $1 billion, as well as a 1% excise tax on certain stock repurchases and economically similar transactions.

However, REITs are excluded from the definition of an “applicable

corporation” and therefore are not subject to the corporate alternative minimum tax.

Additionally, the 1% excise tax specifically does not apply to stock repurchases by REITs.

Any taxable REIT subsidiaries of Lamar Advertising operate as standalone corporations and therefore could be adversely affected by the IRA.

Lamar Advertising will continue to analyze and monitor the application of the IRA to its business;

however, the effect of these changes on the value of Lamar Advertising’s assets, shares of Lamar Advertising stock or market conditions, generally, is uncertain.

In such event, the character of our assets and items of gross income would change and would likely prevent us from satisfying the REIT asset and income tests.

This, in turn, would likely prevent Lamar Advertising from qualifying as a REIT.

In addition, the imposition of a corporate tax on the Operating Partnership would reduce the amount of distributions the Operating Partnership

could make to Lamar Advertising and, in turn, reduce the amount of cash available to Lamar Advertising to pay dividends to our shareholders.

The Tax Cuts and Jobs Act, the CARES Act and the Inflation Reduction Act, OECD Global Anti-Base Erosion Rules, as well as any future tax legislation, may impact the Company’s business and security holders.

In recent years, numerous legislative, judicial, and administrative changes have been made in the provisions of federal and state income tax laws applicable to investments similar to an investment in our notes.

In particular, the comprehensive tax reform legislation enacted in December 2017 and commonly known as the Tax Cuts and Jobs Act (“TCJA”) made many significant changes to the U.S.

federal income tax laws that have profoundly impacted the taxation of individuals and corporations (including both regular C corporations and corporations that have elected to be taxed as REITs).

A number of changes that affect noncorporate taxpayers will expire at the end of 2025 unless Congress acts to extend them.

Among other changes, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), signed into law on March 27, 2020, makes certain changes to the TCJA.

These changes have impacted us and holders of our securities in various ways, some of which are adverse or potentially adverse compared to prior law.

Additional changes to tax laws were enacted with the Inflation Reduction Act (“IRA”) of 2022, signed into law on August 16, 2022.

Many of the material provisions of the IRA exempt REITs.

To date, the IRS has issued only limited guidance with respect to certain of the new provisions, and there are numerous interpretive issues that will require further guidance.

It is highly likely that technical corrections of legislation will be needed to clarify certain aspects of the new law and give proper effect to Congressional intent.

The individual and collective impact of the changes made by the TCJA, the CARES Act and the IRA on REITs and their security holders is uncertain and may not become evident for some period of time.

1 unchanged sentence

It is also possible additional tax legislation could be enacted in the future, as a result of the COVID-19 pandemic or otherwise, which could have an adverse effect on Lamar Advertising, its subsidiaries, and holders of its securities.

On December 20, 2021, the OECD published model rules to assist in the implementation of the Pillar Two minimum global tax rate of 15%.

The Pillar Two model rules are designed to provide governments with a template for implementing Pillar Two of the agreement reached by 137 countries and jurisdictions under the OECD/G20 Inclusive Framework on BEPS to address the tax challenges arising from digitalization of the economy.

Several OECD member countries have enacted Pillar Two related laws effective January 1, 2024, including Canada, where the Company operates.

It is still uncertain whether the U.S.

will enact Pillar Two legislation.

The Pillar Two Rules, however, do not apply to “Excluded Entities” considered “Real Estate Investment Vehicles” and certain subsidiaries of Excluded Entities.

We do not expect Pillar Two to have a material impact on the Company but additional legislation could be enacted in the future which could have an adverse effect on Lamar Advertising, its subsidiaries, and holders of its securities.

Lamar Advertising may potentially be unable to deduct the full amount of its interest expense pursuant to the TCJA and the CARES Act.

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Additional changes to the tax laws, regulations and administrative and judicial interpretations, which may have retroactive application, could adversely affect Lamar Advertising and its subsidiaries.

The Company cannot predict with certainty whether, when, in what forms, or with what effective dates, the tax laws, regulations and administrative and judicial interpretations applicable to Lamar Advertising may be changed.

The Company cannot predict with certainty whether, when, in what forms, or with what effective dates, the tax laws, regulations and administrative and judicial interpretations

applicable to Lamar Advertising may be changed.

Accordingly, the Company cannot assure you that any such change will not significantly affect Lamar Advertising’s ability to qualify for taxation as a REIT or the U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors