OUT - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Please standby. Good day ladies and gentlemen and welcome to the OUTFRONT Media Fourth Quarter and Full Year 2017 Earnings Call. Today's call is being recorded. At this time, I'd like to turn the conference over to Greg Lundberg. Please go ahead sir.

Gregory Lundberg

afternoon. Good joining quarter for earnings full XXXX call. our you and fourth year Thank

today Jeremy a President usual Chief the up of as On call we'll results, are Officer. a and open Shassian, our financial Financial lines Executive Donald Male, session. Executive Chief Vice for and the After discussion question-and-answer Officer; and Chairman

audio XX-K. of factors can these in our archive listed forward-looking has on the release call. of the on We'll and find and of the and earnings I'll on that, release and call financial available. be our a measures other references materials on Any You Form an reconciliations also cause financial certain today materially are statements. earnings today's Relations in presentation, turn will to slide XXXX results non-GAAP adjusted our measures page This call to our website, over concluded, include from After presentation appendix will differ statements With to an this refer that for outfrontmedia.com. today's may OIBDA the our actual website. it Investor forward-looking conference earnings non-GAAP could OIBDA Relevant in slide including Jeremy. to made the be And filings, basis. SEC are

Jeremy John Male

afternoon Thanks, good Greg and everyone.

fourth reported was revenue up growth X%. Our quarter

the billboard at transit. was weaker offset This Our local advertising anticipated. of business prior a once again than continued we little the and in quarters by solid growth the we've across seen being quarter national backend

the decrease controllable X%. expenses side, helped discipline our On expense cost

generated OIBDA AFFO X.X% and despite the these from growth levels revenues, and pressure With of good we national growth of X.X%. expense

economy I later its as some feel our quarter usual will XXXX, prospects outlook I'll we our in guidance now quarterly components. give on and our increasingly you review and strategic our on Looking trends revenue give results and XXXX positive call. discuss Don more first on about our this a also on update the our forward, and and you initiatives. AFFO commentary an detailed additional will of

Donald R. Shassian

for today. slide and next summary everyone which one of a of still on Thank results you, performance call high you Latin Good metrics. turn note afternoon to thank financial year-over-year the that key Please on XX some being quarter our of of our Jeremy. our month in X will reporting. America which level trend out is shows quarter's Please XXXX

For organic revenues. quarter, is primarily were lower the revenues which national flat due to billboard

on by helped increased X.X% flat. detail control organic drive expense good more AFFO. OIBDA review U.S. in national I'll organic offset Media revenues organic decline beginning X.X% However, advertising, with in quarter slide growth X.X% reflects revenues now of in Total compared growth revenues XXXX. and X. reported and growth the performance advertising. in billboard both U.S. local our on financials basis. to fourth were down billboard reported revenues and were This X.X% X%, in increased a

U.S. impact net declines the by driven contracts, of with of principally won was yields lost transit the due primarily up MBTA This was the during manage we same positive the fourth On in demand XXXX. in quarter, quite wasn't go rates to an side, Demand of forward in and in to the occupancy. were X.X% the up, increase Boston. as down in and overall and continue rates in quarter. we as there however, overall were other anticipation board addition

due last offset June, national offset In up decline. partially also our were out we we're reported revenues marketing in solid revenue of digital Latin in clearly, U.S. by U.S. digital the slight revenue of see our decline Canada revenues chart billboard and in a SEC key see Van of the this we to business. growth, X Since revenues key begin revenue can transit now of our driven After is acquisition Slide principally large reflecting growth to the operating more local by a XXXX. America, components that size XXXX, quarter view total We Wagner able chose Media some fourth with you sports of the filings, new of to Media primarily growth break drivers. digital portfolio sale in the business billboards. a growth from other, saw in again our X.X%, acquisition have in our been our

or static Please and disposed overall presentation York these MTA isolates same board This were as and the expenses. as Media an the on the in X, overview quarter XXXX increased turn terms of increase transit due billboard drivers contract partially our this of the by an segment slide MTA to to contract well over But digital our basis, as well conversions two the and impact New over years overall declined some of U.S. decrease of change New billboard the Marketing November period for the an both Our effective York with impact billboards new contract, yield renewal to of XXXX. as in both offset X of new annual sites. time XXXX. on terms lost year-to-date, in which net on Sports for

X% comp for expenses There highlight year. to several want flat items and here. reported Our stock year-over-year excluding for the the I based were quarter are up

was the segment new expenses of Media Boston contract franchise January the in includes the that and in XXXX. First, other effective U.S. MBTA fees

net with reflects had with on York year contracts Secondly, the We X, that New U.S. were Media MTA. share MTA late renew effective new expenses contracts the segment lower last both two the from XXXX. revenue lower November

display many our that share was reduced base concluded be the revenues MTA York New on these revenue some and be us will to operations we equipment on bidding months revenues incurred retained installation. by incremental of note will spending digital is the expenses negotiation, important our transit and with cover contract many, that after First, transit as digital displays. deploy It digital are and to incremental

This managing billboard right for MTA We contract increased revenues continue million. the New of the revenue has the MTA. $XX York of the approximately property. contract was contract to second share to The MTA in the renewal billboards

also are great The a to contracts the two for was area these effect new of We billboards our billboards months both same the about year. locations net of of property. existing develop metro digital and went across many franchise MTA on that in reduction the million the the $X.X effective day lease excited in very opportunity on digitize two last and costs

the Third the last Canada. long to identify billboards savings segment, highlight, in of contracts consultant want item in in wage the XXXX. year, the in America prior XXXX higher XX fourth non-wage organization. cost reflects – and several other invested to to I Fourth, term on digital quarter XXXX, renewals lastly, sports related divested across XXXX and marketing Latin in expenses X, And of recent April acquisition we a the was

As these all that see the year. can expense for comparable more of two down which you our can our so and expenses understand at year-to-date, X% of stated that a on basis, has we been have controllable bottom the the quarter items, isolated charts, you the goal approximately were for

million incremental $X in XX, Please by in expenses compared strategic development program We with quarter. development business future selling our our are revenue location progress we based and also the to million of growth $XX.X development million audience the of for per increase streams. to showed quarter see note X.X% adjusted can significant initiatives in to for XXXX, On business and during continuing in $XX.X expenses make XXXX revenue of XXXX. growth are likely that with OIBDA you million associated these new million other $X quarter that as to slide invest strategic $X.X the positive

XX, to expenditures total during capital maintenance total quarter X% spending revenues. or X.X%. and was the X.X% of Growth $XX.X Turning slide of million were was revenues

below previous $XX.X guidance. CapEx was million spending Our our slightly total of

we in of quarter, small in the and are on or we Boston. additional we the we billboards built XXX. other in pursue in conversions and a conversion available be at the U.S. to XX of certainly levels the factors, Liveboards, two digital format The become internal due and rates we continue to achieving would over During XXXX have the of expect attractive pipeline or return approvals continued approximately these regulatory years, opportunities expansion converted conversion Canada If them. primarily experienced

no I for expenditures $XX also deployment of in York. to to maintenance agreement that CapEx For million million at guidance growth our change would maintenance New XXXX, million. transit out XXXX CapEx include at and like and with capital our not million. $XX in new significant of under $XX mix MTA this is digital point our There's the does $XX approximately displays growth to guidance $XX million

This reflects of outlays revenues balance agreement, incremental prepaid be and outlays display As economic digital MTA as which of recorded as over structure communicated capital the for deployment the for not our recorded recovery previously, intangible will our to assets these and of assets. related retention installation through allows level. sheet cash expenditures. will These be on base the the equipment

can for X,XXX you New the in both Rail payments X,XXX slide the deployment City see for deployed digital commuter of display for We for displays current be Island to As Metro-North expect plans these approximately rail stations and on manufactured million. spending over with subway displays stations our will Commuter Road. call $XXX XXXX on XXXX, Railroad being XXXX down and equipment the on in York MTA across XX, be and Long currently our that

evolves deployment year with from as was You MTA. X.X% Please throughout to build XX turn should us expect the up slide at quarter. this for updates the program the now on in periodic which AFFO, look the

the the AFFO higher partially AFFO cash each As was maintenance chart, CapEx sequential offset lower you and QX, lower improvement taxes, in can higher driven In in expense. performance in interest by see in we've lift demonstrated by year-over-year quarter OIBDA, year. this bottom

bit guidance November. X.X% which the better you in in AFFO was came year, the For a than we gave down

billboards, in have fourth was we annual discussed prior continued AFFO on by quarter. XXXX performance our on advertising primarily which soft calls, As national impacted the

and due the our tick to of connection AFFO XX higher cash $XX commitments contract. look included expect up in interest taxes of new fiscal new single rates be transit dividend of MTA Slide maintenance fees $XXX.X Drivers of AFFO we XXXX and forward, would capital grow letter we year shows higher low-to-mid of note an ratio annual will that under a approximately the with in million in XXXX in $XX expenditures to and $XX also million, payout range. OBIDA, adjusted to million expense credit I improvement digit million. XX%. As a the

XX% our payout ratio Our this in was cash million however flow $XXX.X free dividend to XX% XXXX metric XXX% was and and compared in XXXX on XXXX.

As was by discussed previous increased cash impacted working calls, earnings XXXX on capital have use. flow free we

timing through on the went to the back the a ratio XXXX XX, payout change share investment we and MTA year, XXXX, areas Board its in in contract historic RFP to growth MTA payable the dividend this unchanged and the flow at most quarterly due business new of $X.XX billboard the X. as of February range. on dividend approved process see March our we new cash from Higher currently as million payments of waiting in awarded. the cash is the dividend shareholders revenue opportunities, Directors This a record business to XX, should all acquisitions close reduction. On levels was on of of use extension additional For for control attractive per of of other expense level, to of our debt to returns March prior from contract the free be the our savings while $XX.X from continued drive

dividend excess in of REIT payout. comfortably are our required XX% We

As overview and debt our growth in a we'll and to Slide profitability quarterly of our both income. value our through shareholder growing and allocation And committed an Board during continue basis. review dividend AFFO capital on our business XX shows expands XXXX, to liquidity. is

position of million net of credit million, quarter, of our revolving outstanding of As $XX.X of $XXX end cash of the the on including credit. $XXX.X letters and availability liquidity our million was million $XXX.X facility,

financing we $XX.X from and to-date. equity REITs, $XXX June program in ATM, or place of availability limit offering issue corporate in market, into it, open currently have the been is with is shares shares requirement accounts entered liquidity an addition, our or among This proceeds time, in and way securitization use In new debt million under repayment, XX. of corporate put November. no we cash no receivable have common issued at-the-market, is there The vehicle on is million An other facility purposes. the source no for ATM efficient to acquisitions to has additional

and times, debt longstanding achieved X.X will on last was XX December OIBDA times, be in at our focused ratio leverage net to which from Our quarter. paydown. remain through growth X.X slightly target this of times goal reduce to down range X to We our

Let to me Jeremy. now turn it back over

Jeremy John Male

to Thank on you, Don, moving and XX. slide

give our Let on color first me quarter. now you some

we quarter. importantly, and view up only in this This time, growth expect billboard. in digits, growth low will fourth represents transit single in to outlook the constant this be achieved a and reflect revenue stronger both We it's than dollar on our point at basis. And

little As you time XXXX looking ad our categories, fourth the therefore a had been an have cautious see always back we've the quarter categories what at at know, swings months. look to XX so for quarterly appropriate is greatest the in impact and

XX-K, Our filed also will be which give view three-year this. a tomorrow, will you of

be the leisure, travel other about technology, three for to our positive both the and We scale, revenue and increasingly professional services, of bottom end important year-on-year technology, frequently transit year-over-year the retail. year and At across the XXXX, talk and categories auto, billboard on were For three U.S. continues categories revenue our biggest impact an that were had category advertising pharma. it us. the health and increase during in change

category was the by improved the Although auto year quarter the weakest it significantly. fourth for overall, had

wasn't it throughout trend year. certainly it quite While positive, the an improving was

see detail. discuss our our Turning was more revenues. XX, quarter, to trajectory slide in digital to overview And an new like and digital assets I'd a of you last can which bit

deployment approaching came the growth Our XX% up of ending growth Liveboards digital billboard and boards video acquisitions, conversions Washington. the XXX revenue during This from inventory year digital were year-end revenue the XX.X%. with in-transit and and both at in of Boston was format displays up Small XX%, growth with over XXX units of and XX%. through

continue MTA As the Don be call invest in digital to for Canada. also currently mentioned to latter Liveboard units during the across our plans over of part with earlier, And country X,XXX billboards and deployed XXXX. the in we

to In XXXX and digital our doubling story underlying format trading So of what revenue accounted both going an digital investing all be digital of around in the gaining for significantly combination is Don it markets our growth billboards and really be total for management, where was revenue Based The and content revenue increasingly mentioned, expect on and increasing total, we up our digital traction. total we of small world, insights be XXXX, displays for in we're platform. percentage the higher, the from see to future as our driver in and digital to revenues. percentage XX.X% of revenues. XX.X% other automated is in company

of already investment benefits for for these pace XXXX, in important the increase to you we As generating business. it's understand of the initiatives we're that our

cellular now both also us and These and other in position screens Mobile critical future New were the York in a Our year XX was contract Liveboard were markets. MTA us win leasing Winning big in the and display revenues. helping urban for other New for a us contract. part that. a York revenue in huge initiatives Liveboards XXXX significant and Two deployments strategic are of retain growth revenues, the MTA OUTFRONT generating

changing operate to While hyper media in exceptional advertisers in were In audiences quarter, technology across saying work automated advertising an we give for continue our over affluent year. believe fragmented data look a the an top tools, brand their We across age. to returns At the they in market. them exceptional this of fraud, to its increasingly OUTFRONT that our still XX% customers our will audiences an and are less close for to transit mobile are are the is safety, in an We're a new technological improve a client and billboard advertising fast audience you to DMAs. about to data today it's throughout deliver competitive than $XX And blockers position clients. ad and continuing rightfully very urban sales selected grow. targeted already sources remembering that alpha and showing and our on are strong necessity XX sales country mass processes, centers and up transformations improving can time local I'll absolute forward position we investments. or these on concerned maintain launching choice when million XXXX and this are we progress digital by and important, We while we with combined, and new worth together assets young in

questions. let's that, with operator, the So open line for

Operator

Our Alexia JPMorgan. first will with Quadrani from come question

Alexia S. Quadrani

Thank you.

Just a couple of questions.

you I local is First of that the reason you but of some you you've Lamar do and the you've being seen guess say for bit main in mean the the strength how versus just was quarter what on there? growth categories saw national fourth sort you relative seen your strengthened little talked area what would a what mix I in and about saw we performance the in with fourth the the the to And seen being your compare quarter, different, for with peers? you've the

Jeremy John Male

obviously Thanks can that Alexia. why understand I you And yes, asked question.

there's a I of I here. assets. different we couple different have most importantly guess pieces think

that is major different reported morning. a geographies. of major our transit different peer this have business that in from We obviously who We're

different have clients. We

For example, Apple. Lamar previously that largest Barrel their is have we is said and our national Cracker said largest client client have before

reporting I And feel actually you difference of have in understand, we that methodology. we So, sort can example. I a thus as think importantly we can think there, sort what from the also of think, different

line So the draw that point I But the important each a between quarter. shouldn't is it's every to further – two sort we the of think I a what between line differences guess complicates is difficult companies. and between businesses two draw

about the over I'd right one getting to on our a reorganizing We there's performance. in two of effort to regards made bit motivation, accountability. a think been local that sales reorganization into in – force, thing months. within quite last other the of sort our people of year comment of to XX back with We've the I training, like terms sort or going the in And the that over last believe of capture our benefits actually we've of terms terms I lot of starting business. talk

Alexia S. Quadrani

contributor a political of just guys as potential you this Lamar about for regions mentioned given well? more base that and what also of I not would client so meaningful necessarily, between said to morning, your a guess becoming tailwind Or And political see you more your differences business. such? is the you and their

Jeremy John Male

had over to the always back if based benefit an footprint. – incremental look Lamar their Yeah, just on ourselves, or larger past, to than political has we a incremental

So won't political. we significant expectation any tailwind be highlighting of from

Alexia S. Quadrani

very Okay. Thank much. you

Operator

question next Our will from come Wells Fargo. Ryvicker with Marci

Marci L. Ryvicker

Can Did you digits? pace bit guide of are to Thanks. a up more national little talk up, total year national then digit QX for a of on and digit growth, turn? And billboard low-single you assuming business? positive full single the mid-single low AFFO your

Jeremy John Male

is So for see when it look QX, that be. exactly looking we at the can we is where national Local certainly should improving. guide

So at three business line of And money we're in two the marketplace. the look is fine forward always years, sort rest years the terms to when in of booking, basis, the our going media or we over latest we on – national it's that on look that. increasingly book. last When our a at late forward of becoming with

see growth local an solid forward, what in expectation can So an national hope I the think of expectation growth we as will in can some we have be have throughout But certainly look we some we this year. year. that we will

Marci L. Ryvicker

you business the on strategic And a spent follow I $XX then million. Okay. think investment, up

revenue, where revenue conversion going there to be actually little start a business anemic? what's already strategic driving gotten point growth? accelerate? is spend Is we that the bit going You're Or through truly would you've consider development seeing will and revenue this year. Are to more still a you to which into

Jeremy John Male

billion, and couple piece. – think mini I pointed de the of we've bit areas cellular the scheme within mobile a see you the And it's growth. that's to mis where started $X.X when But a overall right revenue relatively in little to now. we of of

have how are particularly data And advertisers think media they're they're digital that comparable I assets and start get biggest billboard within insight much when current will agencies used a more when way. media, that the to within deploying and our in automated benefit we when world. we can and other at looking transit we is to the trade

if – I to, the think we're significantly like, what other you going increased the that's next going when where months in the enhanced XX more start we're of to achieve the we're hardware field putting like, with digital. I to buildout is and looking And that where that looking growth to much bump. the digital automated if Marrying see we'll do to that or the investments believe in really we're you marry, back-end insight capture so the data we're with a and is to rate. MTA over

Marci L. Ryvicker

Great, thank you.

Operator

Jason from hear Bazinet with We'll Citi.

Jason Boisvert Bazinet

in MTA York. one Yes, had contract I on just quick question new the New

You by all that a digital, sort sort reminded of any spending to flow OUTFRONT borne won't simple some if you But to the I it risks us as there is capital opposed a and sort this it cash through question, of are overruns what had way the of CapEx. as of there expenditures MTA? are I can appreciate upgrade cost you're frame if sort to

Donald R. Shassian

and the well. on if the of I think installation the but to done we're we're the risks that risk and the that, think we've then is to that the have a installation going – wrong, organized. of cost that to bear There something of well is we've risk some pretty bounded equipment there is probably think pretty we that on due I

a in challenge stay people this on got ability up bigger designs, all terms in contract. that MTA the project the of to of logistical that of got the that the locations that extend approval incur to us on not period and enables sure recover think time of are and to that when the we like that to is we cost, is able us the be this making they on I – where some to do need something they be And extent dollars locations. the to with

more time recover But it's to to pretty we bounded it. If got is then issue, to dollars due what eat something from -- managed So been the be I on to get we've and the project. them, estimated risk our by we've this our estimating think then them. has able if well

Jason Boisvert Bazinet

Would – at the of most least fair is that deployment that the ever done, you a complex? digital Okay. is you've sort characterization largest

Donald R. Shassian

done get advantageous deployment to world. quality an year in great I one are give we take smartly a two way environment And to right taking help done as can therefore to to done this to years five It the years, transit years. digital going for are they or we think It's work way, their more correctly, this working we multi-year it is experience very managing and these the with something ridership. do and to in and sell seriously this communications in in in MTA probably make with want and that's way. the smart improved the them and going then with to very thoughtful to screens we revenue get get that resources and be this us largest trying in six not a and very a

Jason Boisvert Bazinet

Understood.

Okay. Thank much. you very

Operator

questions in our turn back additional queue, or for floor no the you. Thank I'll With closing remarks. the over speakers any to additional

Jeremy John Male

today. you. weeks. at your investor for and you your questions Thank forward We the afternoon. Good look in many seeing coming to for you time of Thank events

Operator

that gentlemen, you conclude and participation. ladies you Thank for your all today's again conference. Thank does

You now disconnect. may

Outfront Media (OUT) 27 Feb 182017 Q4 Earnings call transcript