Monday, June 17, 2024

OUTFRONT Media reports a 6% increase in revenue in Q1, 2023, to $395.8 million

Wednesday, May 3, 2023

“We’re pleased to report first quarter revenues came in slightly ahead of our expectations, as our business pace improved through the quarter,” said Jeremy Male, Chairman and Chief Executive Officer of OUTFRONT Media. “Despite a somewhat uncertain macroeconomic environment we remain encouraged by what we see in the business and expect continued momentum as we move forward.”

Three Months Ended
March 31,

$ in Millions, except per share amounts

2023

2022

Revenues

$395.8

$373.5

Organic revenues

392.9

372.4

Operating income

10.2

28.5

Adjusted OIBDA

60.2

70.2

Net income (loss) before allocation to non-controlling interests

(28.7)

0.1

Net loss1

(28.9)

(0.1)

Net loss per share1,2,3

($0.19)

($0.04)

Funds From Operations (FFO)1

17.1

41.8

Adjusted FFO (AFFO)1

8.8

35.5

Shares outstanding3

164.5

152.0

Notes: See exhibits for reconciliations of non-GAAP financial measures; 1) References to “Net loss”, “Net loss per share”, “FFO” and “AFFO” mean “Net loss attributable to OUTFRONT Media Inc.”, “Net loss attributable to OUTFRONT Media Inc. per common share”, “FFO attributable to OUTFRONT Media Inc.” and “AFFO attributable to OUTFRONT Media Inc.,” respectively; 2) References to “per share” mean per common share for diluted earnings per weighted average share; 3) Diluted weighted average shares outstanding.

First Quarter 2023 Results

Consolidated
Reported revenues of $395.8 million increased $22.3 million, or 6.0%, for the first quarter of 2023 as compared to the same prior-year period. Organic revenues of $392.9 million increased $20.5 million, or 5.5%.

Reported billboard revenues of $320.6 million increased $22.4 million, or 7.5%, due primarily to the impact of new and lost billboards in the period, including acquisitions, higher proceeds from condemnations, and an increase in average revenue per display (yield). Organic billboard revenues of $317.7 million increased $20.4 million, or 6.9%.

Reported transit and other revenues of $75.2 million decreased $0.1 million, or 0.1%, due primarily to a decrease in average revenue per display (yield), driven by weaker market conditions in national advertising, which primarily impacted advertising sales on certain above-ground advertising displays, and the impact of foreign currency exchange rates, partially offset by the impact of a new transit franchise contract. Organic transit and other revenues of $75.2 million increased $0.1 million, or 0.1%.

Total operating expenses of $235.5 million increased $22.7 million, or 10.7%, due primarily to an out-of-period adjustment of $5.2 million recorded in the first quarter of 2023 related to variable billboard property lease expenses, costs associated with higher billboard revenues and higher guaranteed minimum annual payments to the New York Metropolitan Transportation Authority (the “MTA”). Selling, General and Administrative expenses (“SG&A”) of $107.9 million increased $9.5 million, or 9.7%, primarily due to higher professional fees, the impact of market fluctuations on an unfunded equity-linked retirement plan offered by the Company to certain employees, higher compensation-related expenses, including salaries and net of lower commissions, and increased post-COVID-19 pandemic travel resulting in higher travel and entertainment expenses.

Adjusted OIBDA of $60.2 million decreased $10.0 million, or 14.2%, compared to the same prior-year period.

Segment Results

U.S. Media
Reported revenues of $376.4 million increased $22.2 million, or 6.3%, due primarily to higher billboard revenues, partially offset by lower transit and other revenues. Billboard revenues increased 8.0% and Transit and other revenues decreased 0.7%. Organic revenues increased $19.3 million, or 5.4%.

Operating expenses increased $23.2 million, or 11.6%, due to higher billboard property lease expenses, including an out-of-period adjustment of $5.2 million recorded in the first quarter of 2023 related to variable billboard property lease expenses, higher minimum annual guarantee payments to the MTA, higher maintenance and utilities cost, higher compensation-related expenses, and increased activity resulting in higher materials cost, partially offset by lower posting and rotation costs. SG&A expenses increased $7.0 million, or 9.4%, due primarily to higher compensation-related expenses, higher professional fees, and increased post-COVID-19 pandemic travel resulting in higher travel and entertainment expenses.

Adjusted OIBDA of $72.1 million decreased $8.0 million, or 10.0%, compared to the same prior-year period.

Other
Reported revenues of $19.4 million increased $0.1 million, or 0.5%, due primarily to an increase in yield compared to the same prior-year period, as we have experienced an increase in demand for our services, offset by the impact of foreign currency exchange rates. Organic revenues increased $1.2 million, or 6.6%.

Operating expenses decreased $0.5 million, or 3.7%, due primarily to lower expenses in Canada. SG&A expenses increased $0.1 million, or 1.9%, driven primarily by higher expenses in Canada.

Adjusted OIBDA of $1.1 million increased $0.5 million, or 83.3%, compared to the same prior-year period.

Corporate
Corporate costs, excluding stock-based compensation, increased $2.5 million, or 23.8%, to $13.0 million, due primarily to the impact of market fluctuations on an equity-linked retirement plan offered by the Company to certain employees, higher compensation-related expenses, including salaries, and higher professional fees.

Interest Expense
Net interest expense in the first quarter of 2023 was $37.7 million, including amortization of deferred financing costs of $1.6 million, as compared to $30.7 million in the same prior-year period, including amortization of deferred financing costs of $1.6 million. The increase was due primarily to higher interest rates compared to the same prior-year period and a higher average debt balance. The weighted average cost of debt at March 31, 2023 was 5.4% and at March 31, 2022 was 4.3%.

Income Taxes
The provision for income taxes was $0.4 million compared to a benefit of $2.1 million in the same prior-year period due primarily to recording a valuation allowance against our U.S. taxable real estate investment trust subsidiary’s deferred tax assets. Cash paid for income taxes in the three months ended March 31, 2023 was $3.6 million.

Net Loss Attributable to OUTFRONT Media Inc.
Net loss attributable to OUTFRONT Media Inc. increased $28.8 million compared to same prior-year period. Diluted weighted average shares outstanding were 164.5 million for the first quarter of 2023 compared to 152.0 million for the same prior-year period. Net loss attributable to OUTFRONT Media Inc. per common share for diluted earnings per weighted average share was $0.19 in the first quarter of 2023 compared to $0.04 in the same prior-year period.

FFO & AFFO
FFO attributable to OUTFRONT Media Inc. decreased $24.7 million, or 59.1%, in the first quarter of 2023 compared to the same prior-year period, due primarily to lower operating income, lower amortization of direct lease acquisition costs and a provision for income taxes compared to a benefit for income taxes in the three months ended March 31, 2022 partially offset by a higher amortization of real estate-related intangible assets. AFFO attributable to OUTFRONT Media Inc. decreased $26.7 million, in the first quarter of 2023, or 75.2%, compared to the same prior-year period, due primarily to lower operating income and higher maintenance capital expenditures.

Cash Flow & Capital Expenditures
Net cash flow provided by operating activities decreased $11.1 million, or 54.1%, for the three months ended March 31, 2023, compared to the same prior-year period. Total capital expenditures increased $5.7 million, or 33.7%, to $22.6 million for the three months ended March 31, 2023, compared to the same prior-year period.

Dividends
In the three months ended March 31, 2023, we paid cash dividends of $52.0 million, including $49.8 million on our common stock and vested restricted share units granted to employees and $2.2 million on our Series A Convertible Perpetual Preferred Stock (the “Series A Preferred Stock”). We announced on May 3, 2023, that our board of directors has approved a quarterly cash dividend on our common stock of $0.30 per share payable on June 30, 2023, to stockholders of record at the close of business on June 2, 2023.

Balance Sheet and Liquidity
As of March 31, 2023, our liquidity position included unrestricted cash of $42.8 million, $493.6 million of availability under our $500.0 million revolving credit facility, net of $6.4 million of issued letters of credit against the letter of credit facility sublimit under the revolving credit facility, and $21.5 million of additional availability under our accounts receivable securitization facility. During the three months ended March 31, 2023, no shares of our common stock were sold under our at-the-market equity offering program, of which $232.5 million remains available. As of March 31, 2023, the maximum number of shares of our common stock that could be required to be issued on conversion of the outstanding shares of the Series A Preferred Stock was approximately 7.8 million shares. Total indebtedness as of March 31, 2023 was $2.8 billion, excluding $21.4 million of deferred financing costs, and includes a $600.0 million term loan, $2.1 billion of senior unsecured notes and $115.0 million of borrowings under our accounts receivable securitization facility.

Conference Call
We will host a conference call to discuss the results on May 3, 2023, at 4:30 p.m. Eastern Time. The conference call numbers are 866-580-3963 (U.S. callers) and 786-697-3501 (International callers) and the passcode for both is Outfront. Live and replay versions of the conference call will be webcast in the Investor Relations section of our website, www.outfront.com.

Supplemental Materials
In addition to this press release, we have provided a supplemental investor presentation which can be viewed on our website, www.outfront.com.

About OUTFRONT Media Inc. 
OUTFRONT leverages the power of technology, location and creativity to connect brands with consumers outside of their homes through one of the largest and most diverse sets of billboard, transit, and mobile assets in North America. Through its technology platform, OUTFRONT will fundamentally change the ways advertisers engage audiences on-the-go.

Published on Wednesday, May 3, 2023 at 9:58 PM

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