Excuse me, everyone. We now have Sean Reilly and Jay Johnson in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of the company's presentation, we will open the floor for questions. To ask a question, you can press star one on your telephone keypad. In the course of this discussion, Lamar may make forward-looking statements regarding the company, including statements about its future financial performance, strategic goals, plans, and objectives, including with respect to the amount and timing of any distributions to stockholders and the impacts and effects of the novel coronavirus on the company's business, financial condition, and results of operations. All forward-looking statements involve risks, uncertainties, and contingencies, many of which are beyond Lamar's control and which may cause actual results to differ materially from anticipated results.
Lamar has identified important factors that could cause actual results to differ materially from those discussed in the call in the company's third quarter 2020 earnings release and its most recent annual report on Form 10-K, as updated or supplemented by its quarterly reports on Form 10-Q and current reports on Form 8-K. Lamar refers you to those documents. Lamar's third quarter 2020 earnings release, which contains information required by Regulation G regarding certain non-GAAP financial measures, was furnished to the SEC on Form 8-K this morning and is available on the investor section of Lamar's website at www.lamar.com. I would now like to turn the conference over to Sean Reilly. Mr. Reilly, you may begin.
Thank you, Samantha. Good morning, all, and welcome to Lamar's Q3 2020 Earnings Call. As you've seen in our release, our business continues to rebound with momentum building from July through September, and I can tell you that October, helped by what will be a record-setting year for us in political advertising, was exceptionally strong. A number of our plants and even one of our regions exceeded their October 2019 sales in October 2020. Another strong data point was the recovery of our programmatic channel, as October had a record-setting month for programmatic billing. In the vast majority of our markets, our local advertising has normalized across most categories, and while national advertising lagged local again in Q3, national activity, measured by the number of RFPs we are asked to respond to, returned to 2019 levels toward the end of the quarter and has remained robust.
National should be substantially improved in Q4. Categories of relative strength in Q3 included insurance, gaming, hospitals and healthcare, and, encouragingly, automotive. Event-based advertising remained soft, and retail was also relatively weak to the rest of the book. Meanwhile, our initiatives to align our expense base continue to pay off. We now believe we will achieve at least $75 million in expense savings off the 2019 pro forma expense base of about $980 million. I have to give a lot of credit to our employees, who have done a terrific job of staying close to our customers and watching expenses through this year. With the sales recovery and the expense savings, we are now confident that we will exceed guidance that we provided in August. As you saw in our release, we issued new guidance for AFFO to come in between $4.65 and $4.85 per share.
The midpoint of that range implies full-year revenue declines of approximately 12%. With business improving, we are back on our front foot as far as our digital deployment. We are moving forward in the final two months of 2020 with some of the digital conversions we put on hold in the spring, and I have challenged our team to deploy over 300 new digitals in 2021. The resilience of the business this year and the recovery so far demonstrate the confidence that advertisers have in out-of-home as a cost-effective, powerful channel for reaching their audiences. We are looking forward to finishing 2020 strong and carrying the momentum into 2021. With that, I will turn it over to Jay, who will walk you through the details.
Thanks, Sean. Good morning, everyone, and thank you for taking the time to join our call. I will begin with brief comments on the quarter, then review our balance sheet, and conclude with a discussion of our current financial position, including liquidity and our dividend policy. In the third quarter, acquisition-adjusted revenue declined 15.5% from the same period last year. We continue to see benefits from our cost reduction initiatives as acquisition-adjusted consolidated expenses declined 11.5%. This was driven primarily through reduced transit and airport franchise fees, a decline in ground lease expenses, as well as lower salaries and sales commissions. Adjusted EBITDA for the quarter was $170.7 million, compared to $215.2 million in 2019, which is a decrease of 20.7%. On an acquisition-adjusted basis, that decline was 20.1%. Fully diluted AFFO contracted by 18.5% to $1.32 per share.
Lamar's business has proven resilient over time, generating consistent cash flow through various market cycles. This quarter was an excellent example. Despite pressure on revenue, adjusted EBITDA margin in the quarter was 44.2%, a testament to our operating model, which focuses on local markets with a portfolio heavily weighted toward the billboard segment of the out-of-home industry. The bifurcation between national and local advertising continued in the quarter. With employers in major cities encouraging employees to continue working from home and urban areas experiencing more dramatic decreases in tourism, entertainment, and other activity, our local business significantly outperformed national. The percentage decline in national was over three times that of our local business, with the impact particularly pronounced along the East and West Coast.
While our local business experienced a revenue decline in the high single digits, the decline in national was almost 30%, though national improved as we progressed through the quarter. As a result of this divergence, local revenue accounted for 80% of sales in the third quarter, while national business represented only 20%. Our revenue mix of local versus national and billboard versus transit and airport contribute to our industry-leading best-in-class operating margins. Along with our balance sheet, differentiate us significantly from our peer group. Since the onset of the COVID-19 pandemic, cash collections have exceeded our internal expectations. Lamar has remained cash flow positive, and free cash flow for the third quarter was down only 8% versus last year. Demonstrating our disciplined approach to CapEx and operational flexibility, we have reduced our 2020 CapEx budget significantly by 50%.
We now expect to end the year at approximately $65 million, despite our decision to move forward in the fourth quarter with some digital conversions put on hold in April. Maintenance CapEx for the full year will total $24 million. Total spend for the quarter was approximately $8.4 million, comprised of $5.3 million in growth CapEx and approximately $3.1 million of maintenance CapEx. Year-to-date, total CapEx was $44.6 million, $27 million in growth, and $17.6 million of maintenance. We anticipate CapEx for the balance of the year will be roughly $20 million. The political category outperformed in the quarter with spend up over 80% versus 2018, the last federal election cycle and most relevant comp. We now expect full-year 2020 political ad spend to exceed $19 million, which represents a 75% increase over full-year 2018. Beginning in March, we curtailed acquisitions and have seen limited activity through the third quarter.
Acquisitions completed in the quarter totaled only $2.6 million. However, given our strong financial position, in the past several weeks, we have considered a few smaller opportunities. Despite our shift, it is pretty clear there remains a valuation gap between buyers and sellers, and we have been unable to reach agreement on any of the transactions considered. Turning to our balance sheet, we continue to benefit from the steps we took earlier this year, as well as during the pandemic, to fortify the company's capital structure. Lamar enjoys excellent access to the capital markets, as evidenced by our ability to access the debt markets throughout the COVID-19 pandemic. In August, we issued $150 million of additional 4% senior notes due 2030. Proceeds from the offering, along with cash on hand and draws under our AR securitization and revolver, were used to redeem all $535 million of 5% subordinated notes.
We no longer have sub-notes as part of our capital structure. 2020 has been a transformative year for our balance sheet. We have raised $2.9 billion of debt, mostly refinancing higher-cost capital while extending maturities, eliminating over $50 million of scheduled amortization, and maintaining appropriate leverage even during the COVID-19 pandemic. This aggressive and opportunistic approach to our capital structure will result in approximately $20 million of cash interest savings next year. At the end of the quarter, we had approximately $771 million of liquidity, comprised of $69 million of cash, $35 million available on the securitization line, and $667 million of availability under our revolving credit facility. Subject to quarter end, we repaid the revolver in full, and it is currently undrawn with $737 million of availability.
The company ended the quarter with total leverage of 4.1 x net debt to EBITDA as defined under our credit facility. Our secured debt ratio remained just below one times as we ended the quarter at 0.87 x. We have two significant financial covenants, a 4.5 x secured debt maintenance test, and a 7x total debt incurrence test. The secured debt covenant is only applicable to our revolving credit facility and does not apply to the Term Loan B or our senior notes. Given our current level of debt, EBITDA would have to decline in excess of 80% from 2019 to breach the 4.5 x secured debt test and approximately 50% to breach the total debt covenant. As you may recall, we experienced a minor breach of the dilution ratio under our AR facility in Q2 and received a waiver and covenant relief for 90 days from our lender.
Though the dilution ratio is back in line with the original covenant level, in October, we executed an amendment of the facility to provide flexibility through maturity at the end of next year. The amendment permanently increased the covenant levels for both the dilution and delinquency ratios. Furthermore, we agreed to increase the minimum funding threshold to 70% of the total commitment or $122.5 million, which is the current amount outstanding. Our debt maturity schedule is well-laddered and positioned to withstand the current economic environment. After the AR securitization, which matures in December of 2021, our nearest term maturity is a revolving credit facility in 2025. On the fixed income side, our next maturity is $650 million of 5.75% senior notes in 2026. Those bonds are callable beginning in February. Finally, our dividend policy. All dividends are approved and declared by the company's Board of Directors.
In the third quarter, the board declared and we paid a cash dividend of $0.50 per share. Management's recommendation at the upcoming board meeting will be to declare a cash dividend of $0.50 per share for the fourth quarter as well. This recommendation is subject to board approval, and we intend to communicate the board's decision in the ordinary course following the board of directors meeting next month. If approved, our full year 2020 dividend will be $2.50 per share. Looking into 2021, as operations improve, we would expect to grow the dividend appropriately off that $2.50 per share base. Our balance sheet remains strong, and we maintain excellent access to both the debt and equity capital markets. As we have mentioned previously, a strong balance sheet is core to our operating strategy and serves as a significant competitive advantage.
With our intense focus on the company's capital structure and resulting fortress balance sheet with increased flexibility, we are well-positioned to take advantage of opportunities as they arise. I will now turn the call back over to Sean.
Thanks, Jay. Just to give a little color on some of the stats, particularly around national sales. As Jay mentioned, in Q3, local was down about 9% and national was down about 30%. However, we saw some very encouraging signs as the quarter progressed, particularly in RFP activity, as I mentioned. I would also note that anecdotally, renewal activity for 2021 on the national side looks encouraging as well. The headline on the digital front is our aggressive and expressed new goal of deploying over 300 next year. Our team feels good about that number, and they also feel good about sufficient demand to support that kind of deployment. Again, just to talk about the verticals, which as I mentioned, are normalizing at the local level. Relative strength in hospitals and insurance and gaming and automotive. We're still struggling when it comes to event-driven business.
Our amusement, entertainment, and sports category was down 55% in Q3. I just see a lot of room for improvement as we move into next year. Another strong category for us, of course, has been beverages. MillerCoors, Anheuser-Busch, InBev, have really been good to us in Q3, and that continued into Q4. With that, Samantha, we will open it up for questions.
Thank you. At this time, we will open the floor for questions. If you would like to ask a question, please press the star key followed by the one key on your touch-tone phones now. Questions will be taken in the order in which they are received. If at any time you would like to remove yourself from the questioning queue, just press star two. Again, to ask a question, please press star one at this time. Our first question will come from Ben Swinburne with Morgan Stanley.
Hey, good morning, guys. Nice to hear from you.
Hey .
Hey. Jay's work on the balance sheet this year, you guys are now at a leverage level. I certainly didn't think you'd be back at 4x this quickly. I'm just wondering, you talked a little bit about picking up in M&A activity. I would've thought there'd be more sellers out there. Maybe the market's more efficient than I think. It would seem like given what we've been through in the last six months, there'd be more available to do, and you guys seem really like you've got the capital position to move. I'm just wondering if you could give us a little more color on the M&A landscape and whether you see opportunities out there without negotiating against yourself on this call. Just secondly-
Sure
I just wanted to confirm, maybe you could just revisit how we should think about the expense savings on the P&L this year and what kind of does and doesn't carry into next year. Thank you.
Great. Thanks, Ben. On the M&A front, one thing that we have seen, and you've seen it in our book and our results, is that in small and middle markets, business is pretty good and pretty strong. When you think about that part of our footprint, which is upwards of 80% of what we do, the small competitors are also doing well. They're not really looking to sell. Right? As Jay mentioned, the price expectations there's a little bit of divergence between what we would like to pay and what they will sell for. That'll right itself as the world gets a little more normal next year. I think next year's going to be a good year for us on the M&A front.
On the expense savings, I think the best way to think about it is we're going to save give or take $75 million off of our pro forma expense base from last year. I think we retain about half that, if I had to sort of guess as we go into next year. We did some fairly draconian things on the executive and management bonus side. We changed our comp structure this year, which was quite a great deal of savings. I think going into next year, we'll go back to our normal executive and GM comp structure. You'll see those expenses on the cash side come back. Presumably, revenues are going to rebound substantially, we have some expenses that flex with revenues, mostly around compensation for our sales force in terms of commission.
Structurally, again, I think we will have saved, about half that will not come back. Does that make sense?
If I could just throw one at Jay on next year's callable piece of paper. At this point, do you see an opportunity to save a little bit on interest there based on where those bonds are trading and what you could get in the marketplace? Just wondering if you have any expectation at this point. I know it's still a ways out.
Yeah, Ben, it's something we're focused on. Those bonds have a coupon of five and three quarters, and if we were to do a 10 year today, we're probably looking in the low 4% range.
Yeah.
An opportunity for quite a bit of interest savings there.
Yeah. Thank you.
Thank you. Our next question will come from Alexia Quadrani with JPMorgan.
Hi, thank you. I have just two questions. The first one, just circling back on your comments earlier about the divergence in performance between the smaller and the larger markets. I'm curious, I think you said you've seen some signs of sort of encouragement about the larger markets getting better, and I'm curious when you think we might see more normalized performance coming out of those larger markets, less of a divergence in what you've been seeing. My second question is, I think since the beginning of the pandemic, we were concerned that there'd be some businesses in the small regional level that really just wouldn't survive or wouldn't be able to come back. Yet, it does sound like in some of your smaller markets, things are almost back to normal.
I'm curious if that's no longer a concern and you think we can see even some of those higher-risk advertising categories fully recover.
Thanks, Alexia. The larger markets are interesting in this respect. It's getting pretty clear that people are still moving around and that they're driving. It's just where they're driving and when they're driving. For example, in our Manhattan office, services in New York PMA, and yes, that's downtown, and yes, that's the five boroughs, but it's also northern New Jersey and parts of Connecticut. What we're seeing is our suburban inventory, northern New Jersey, for example, is in high demand because people, while they may not be taking that typical commute into the city, they are still driving around the several zip codes that comprise their immediate neighborhood. That has been an interesting phenomenon.
I don't know how long that keeps going, but that's where we're seeing the rebound in our larger markets, and we're seeing it more with our suburban inventory that is outside the downtown core. The other question was around What was the other one, Alexia?
I think at the beginning of the pandemic, we were concerned that some of the-
Oh, yeah
smaller, small and regional, yeah, they wouldn't survive. I'm curious, it sounds like things are coming back.
They are, I still worry. I still worry about independent restaurants. I stay pretty close to those folks here at home, they're struggling. That, I think it could be an issue. Restaurants typically run about 10% of our book. Most of that is quick service, McDonald's and the like. About 20% of our restaurant business are those independent operators that are sit down, tablecloth, indoor dining. I still worry for them. I do. I don't think we're out of the woods there. Then I do worry a little bit for our small independent retailers. Retail was a relative underperformer in Q3, as I mentioned. We're just going to have to pay close attention to that.
I have been asked to compare this particular event in 2020 to the Great Recession in 2009 and what may have been different and what may be similar. I think when we close the book on this year, we will have outperformed that year. That looks clear. What also looks to me, this is encouraging, is it appears to look like a V to me in our book. That is encouraging. That could help stem the tide of small independent retailers and restaurants. That could save them next year.
All right. Thank you very much.
Thank you. Once again, at this time, if you would like to ask a question, please press star one on your telephone keypad. Our next question will come from Stephan Bisson with Wolfe Research.
Good morning. Glad to talk to you again. A couple of quick ones from me. On Q4 for the top-line revenue guidance, I know October was up year-over-year. What are you guys seeing ex-political in the quarter and how the months are progressing? As a follow-up, on the M&A side, should this be a protracted period of not being able to get the deals done just on the valuation, what are some potential alternative uses of the cash that you normally would spend on M&A?
The alternative uses of cash, I'll take that one first. Of course, we're going to ramp up our digital deployment next year. I think that's sort of the headline. As Jay mentioned, assuming we have a decent macro and a good recovery next year, we're going to be increasing our distribution as well. Your first part of your question was around what?
Ex-political revenue pacings in Q4, I think October was.
Oh, okay. Yeah.
You kind of broke up a little bit there. I'm sorry about that.
We are seeing ex-political, we're seeing a good strengthening in the book. I would add that, in terms of our programmatic book, that is exceptionally strong. Ex-political was up in October. That was encouraging. The categories that look to be recovering are hopefully in the event space. That's where we have the most room to grow. Also, I would really like for retail to show a little outperformance as we move into the holidays. That would be a good sign as well. We think we're seeing that.
Great. Thanks so much.
Thank you. I am not showing any further questions in the queue at this time. I'd like to turn the call back over to Sean Reilly for any closing remarks.
Well, great. Thank you, Samantha, and thank you all for being on and listening, and we certainly look forward to visiting again as we move into 2021.