Lamar Advertising (LAMR) risk factors, FY2024 10-K

Risks Related to Our Capital Structure

1. 01The Company’s substantial debt may adversely affect its business, financial condition and financial results
2. 02The Company may be unable to generate sufficient cash flow to satisfy its significant debt service obligations
3. 03Restrictions 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
4. 04The 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
5. 05Our UPREIT structure may result in potential conflicts of interest

Risks Related to Our Business

1. 06The Company has historically grown through acquisitions. During the year ended December 31, 2024, we completed acquisitions for a total cash purchase price of approximately $45.4 million
2. 07The Company could suffer losses due to asset impairment charges for goodwill and other intangible assets
3. 08The Company’s logo sign contracts are subject to state award and renewal
4. 09The Company’s transit advertising contracts are subject to the Company’s ability to obtain and renew favorable contracts with municipalities and airport authorities
5. 10If the Company’s contingency plans relating to hurricanes and other natural disasters fail, the resulting losses could hurt the Company’s business
6. 11The 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
7. 12Our cash distributions are not guaranteed and may fluctuate
8. 13The 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

Risks Related to Our Industry

1. 14The 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
2. 15The Company rents advertising space on outdoor structures to generate revenues. 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
3. 16The Company faces competition from larger and more diversified outdoor advertisers and other forms of advertising that could hurt its performance
4. 17Additional content-based restrictions on the categories of customers that can advertise on our outdoor advertising structures may be implemented by governmental authorities
5. 18Federal, state and local regulation impact the Company’s operations, financial condition and financial results
6. 19Our business and operations could suffer in the event of cybersecurity breaches and we may incur significant legal and financial exposure
7. 20with remediation efforts, investigations and legal proceedings, which could lead to the need for additional resources in our security and system protection measures
8. 21We could be negatively impacted by environmental, social and governance (ESG) and sustainability matters

Risks Related to Our Status as a REIT

1. 22If 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
2. 23Even 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
3. 24Dividends payable by REITs generally do not qualify for the reduced tax rates on dividend income from non-REIT corporations
4. 25Gain on disposition of assets deemed held for sale in the ordinary course of business is subject to 100% tax
5. 26Failure to make sufficient distributions would jeopardize Lamar Advertising’s qualification as a REIT and/or would subject it to U.S. federal income and excise taxes
6. 27Covenants specified in our existing and future debt instruments may limit Lamar Advertising’s ability to make required REIT distributions
7. 28Lamar 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
8. 29Complying with REIT requirements may cause Lamar Advertising, its subsidiaries (other than TRSs) to forego otherwise attractive opportunities
9. 30Ownership limitations contained in the Lamar Advertising charter may restrict stockholders from acquiring or transferring certain amounts of shares
10. 31If Lamar Advertising’s operating partnership does not qualify as a partnership, its income may be subject to taxation, and Lamar Advertising would no longer qualify as a REIT
11. 32The 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
12. 33Lamar Advertising may potentially be unable to deduct the full amount of its interest expense pursuant to the TCJA and the CARES Act
13. 34Legislative changes or other actions affecting REITs could have a negative effect on Lamar Advertising and its subsidiaries
14. 35The ability of the Board of Directors of Lamar Advertising to revoke its REIT election, without stockholder approval, may cause adverse consequences to its stockholders