OUT - Earnings call transcript Q1 2018

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

Operator

Please standby, we’re about to begin. Good day and welcome to the OUTFRONT Media Incorporated First Quarter 2018 Earnings Call. At this time, I'd like to turn the conference over to Greg Lundberg. Please go ahead.

Greg Lundberg

Good afternoon everyone. our quarter joining call. for you XXXX earnings first Thank

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

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

Jeremy Male

good Greg everyone. afternoon Thanks, and

and was digital including quarter. down strong true quarter on reported advertising by the in a transit Boston. growth billboard Growth good was digital, deployments growth particularly billboard remained the U.S. which also quarter in healthy; story strength U.S. new to led screen about our advertising first for Our growth returned revenue growth this still national assets; X.X%. for local was revenues transit was really our up was revenues slightly this both of

were start contract a similar in project solidifies week down called. to rapid with our have final the with to which business and been Our it’s U.S. Francisco It York awarded as in will reported before transit years. subject the key Bay significantly advertising another this digitization expectation growth system is over New point X.X. to run XXXX October, up of transformation outcome, through OIBDA all, X.X long-term a mentioned will we’ve the and for and plus All believe City and of million may exciting seen and further pleased coming flow we our We’ve last year. Boston for San our to digital to AFFO opportunity around manage a franchise and the with as the transit a the this decent very line BART in we Also, add metrics rate this area it’s cash revenues or increase operating lead XX commencing market. we’re you

positive business We outlook pleased pricing our color quarter to second passing are I our October quarter. on the Don. more to detail, growth and more review a digital over initiatives, for And our you bit results in company let's before see give some

Donald Shassian

turn Please year-over-year thank and being some and which key for everyone on today. Slide our call a to the metrics. summary high-level afternoon of Good financial you of X our shows performance

Partially reported revenues the basis. on billboard and were of both reported analysis an revenues a up to an billboard, revenue U.S. media growth was increase U.S. revenues and Total but down billboard by in were will we quarter mentioned XXXX. both conversions and start strength increased underlying quarter, XXXX saw Please national very in just increased Slide also X.X% driven with static significantly, media in organic revenues For we low digital. condemnations yields We growth, digital Jeremy X.X% OIBDA as the local in slight QX level growth organic organic offsetting true revenues of X.X%. and in transit the by billboard to was a X AFFO QX a growth board this and does in saw organic XXXX. U.S. offset declines the advertising in quarter while Billboard the the X%. this same that including generated were X.X% during up had both first billboard is X.X% not more compared up reflect turn underlying increased X.X% fact advertising. we and business

leases account removal billboard. existing You the World recall change have Plasma generated out these we example, of the bought which amounts we as requires of an

other been which Excluding a condemnation is the X% and during U.S. market. primarily from have digital remarkably Boston the our revenue XXXX transit would quarter by QX driven U.S. up better. in on basis, was billboard growth growth reported

on again growth billboard like revenues In revenue local In segment good to accounting XXXX, saw acquisition every and quarter also reflecting the other, by of we offset decline. of public the the our in a Bs impacts accounting principally were digital new last addressing I’d the to change. guidance other company on the moment principle-based national had up portfolio recognition. the We Canada our first XX.X%, sports operating spend standard a marketing of like adopt June. reported five

But The have of of revenues This without sports better resulted an did Please no also Slide not business. marketing that business. impact. in in for got changed nor to and expenses $X.X We revenues all for impact X first with it isolates OIBDA some expenses. quarter, our the underlying recognition of new turn segment five of drivers million require quarter the overview prior business standards presentation a did our the of and analysis additional any this retroactive restatements in years. impact or adoption slightly transit operating of our as billboard guidance we

the expenses, compensation up year-over-year quarter. were excluding stock-based reported X.X% for Our

of couple you. a for So, out call I’d like items to

cost XXXX for consultant quarter the one-time sports First, amend acquisition marketing Canada and just the in the other secondly to in segment extend June agreement. expenses mentioned, our higher credit year’s segment and expenses in accounting operating and relating last I change XXXX in third, first our

to million business our million at $X.X see up up were charts, and to our recognize development expenses initiatives XXXX positive $X the the that quarter. the controllable expenses due million agreement. one-time $X XXXX can location-based what would expenses lower for increase related million quarter As compensation exclude during professional of quarter with It one On new related digit of related previously Slide with to quarter. were and other the that therefore associated streams. were extending such the mid-single by important decreased selling see margins including our is $X.X X.X% and incremental Corporate to to expenses credit $X.X you consistent strategic been communicated costs costs essentially in is you development to year-over-year fees, the amending showed expenses OIBDA X strategic flat. million and will This Obviously a in growth in while for this some the we the adjusted range. if and up program OIBDA revenue are in have each increase of X.X% investment increase quarter our were that bottom expenses can audience to

or were was of Turning revenues, $XX.X to Slide X.X%. total was capital and total of spending XX, growth maintenance million X% in the revenues X.X% expenditures quarter

boards small digital Canada the During converted and quarter Liveboards XX of and primarily the continued format built the Boston. XX in expansion or we U.S. in in

guidance maintenance at growth with $XX million. to XXXX at million $XX $XX at and to million capital For our million $XX expenditures million unchanged $XX is

our agreement belong in were a yields transit digital statements on Please digital our the of CapEx is cash see items MTA mentioned prepaid note not under balance plant new costs. does I York. is new we MTA. the and our categorized line IRR's that two reporting to item are the will of as include good so our XXXX new for sheet ultimately a As equipment. or entitled quarter the is not This property this on displays equipment line in expenditures to because With spending there MTA quarter's to up or related MTA assets flow accounted continue deployment this conversions. capital guidance And the deployment New part

these in $X.X in the called $X.X section in and equipment the new activities item in totaled the capital These quarter. totaled in increase million franchise First working the called MTA line quarter, new there’s a deployment rights. there’s prepaid section million costs, MTA line investing secondly,

on the would announced to slide we displays year XX. the deployment deploy during and and details the are payments of be these We displays expect last over that million. down MTA for being the $XXX for quarter, manufactured that on X,XXX equipment Additional regarding spending our XXXX approximately

very this We’re contract. the deployment still multiyear in stages the early of of

year. MTA. will and other later Please at of will the work the initial Slide design with of the this in more end this back to payments look purchase deployment electrical planning occur expansive in doing screens XX and and to be a screen deployments will commence AFFO. the second the Down quarter, turn and sites now spring selecting We’re

This of drivers caused higher AFFO our debt the credit as from that key fees this MTA from impact decline interest quarter the our rates as debt arising slight letter was structure expense. of in has of interest balances rising third of One increased well and a outstanding higher new contract.

payout low expect we REITs. million shows previously XX%, the improvement guidance in $XXX.X for advertising, is to rate publicly digit to of major also payout months which last ratio dividend forward year. on our coincidently increase XX to traded a look of our dividend billboards XX us of the growth continued average we of As announced Slide AFFO drive and and the the especially AFFO mid-single growth

business. funded debt XX, Slide of of XX our the of recruited payable debt year have adjusted give in contract cash as issue revenues our flow lacked been we business our in by excludes the quarterly free MTA generated April This understanding deployment a of MTA Our that flow of costs the board flow be sequential cash underlying On order to dividend from created record contract. a XX free last the Disappointment flow an shows calculation QX X. MTA true Please June of on improvement our significant better from the LTM close we MTA will cash adjusted free liquidity. per was from related of have has approved XX%. under timing and coverage cash note payments payout directors is incremental the to a to equipment overview XXXX, one-time previously of cash $X.XX shareholders discussed you share and of various on with June extensions. ratio

at additional is no and ATM market shares timeline of ATM in An offering $XXX or to date. program was our There was of been As our on position revolving of of outstanding our outstanding balance of letters liquidity million availability $XX.X $XXX.X and end of the million $XX of facility million, including million. credit place and cash in have we or the net $XXX source put no the the November. credit million million requirement liability equity usage on $XXX issued quarter of

XX quarter. Our March net We slightly focus of up this X.X to on remained long-standing range X growth OIBDA paydown. our achieved leverage ratio which from at debt reduce last X.X was times to will through target be our to times in and goal

it Let turn me back to now Jeremy. over

Jeremy Male

Thank onto you, Don, moving Slide and XX.

which you quarter, point at time. give second color some represents our now our me view Let on this in

We the billboard growth single expect to in be an strength revenue in and low reflecting increased local. rate up continued growth digits in

our growth, about in expansion thinking transit of the still longer-term both are digital displays and continued as billboard. We

certainly As of advertising everything digital and do it's spend. of is part bigger a know part a every we bigger you all day all

see is half OUTFRONTs can markets a around assets revenues. the of XX and digital revenues home of world. digital On Slide out other in important current more overview top than the some you of For becoming

our from business the continues driver as quarter business. same XX.X% underlying revenues quarter the an XXXX of transformation in last During expected and as our of an was total of with the But of XX.X% increase digital percentage in year. first revenues the digital up total

this at composition Looking of growth. the

of Our at XX% was and year boards first revenue growth and acquisitions, digital conversions through with end of XX%. quarter the during the billboard both X,XXX inventory up the

Slide quarter half from and Importantly inventory the that over driver business was announced deployment on key in XXXX X,XXX growth digital came can new the transit year-over-year see Boston just growth on of We and Liveboards video of from yield the the of win a I ended at format XX. beginning an can revenue U.S. the late you in The and detail revenue a took Small displays MBTA deployed. XXXX. of bit board in where the units the came at tell the same basis, over XX%. balance increase you almost of from growth more

March XXX year of deployment. our in XXst, Liveboards As we’re operation and this way we total half had through

the For these revenues more doubled quarter digital than on new our displays.

which The displays not growth total overall elements for did and both are static in the MBTA drive displays commit that also strong the seeing clients digital larger that new advertisers are digital advertising the to previously Importantly, bringing system. helps advertised include plans previous franchise.

in the portfolio of other results context with MTA. New particularly pleased we’re this in digital our important We’re and deployments, the is York seeing in digital

September’s MTA from recall that double on expect conference period. we a XX-year You’ll our over to last call the revenue

in Our engine feeling continues is this current year. growth MTA contract closely contract for us, MTA billboard experience which The is of good indicator our the in the our Boston am positive New is revenue growth. company behind rollout. commence for local the on uncertainty as plans with launch the demonstrate the a certainly the improving, later working to I we In XXXX, largest and closing, is we’re digital about winning York

also growth for San be story. an will we’ve Our the to growth Francisco assets transit our digital and and performing added are increasing business, well driver

into call with thank is We last want company. for and Don having this inordinately his contributed him moving privilege it’s in been this and he’s on from to Q&A, likely announced hard a OUTFRONT quarterly working this is work to Shassian’s him dedication, to with call us, retirement Before be March. formally his

be in successor regard Looking course. due his announcement to making forward we’ll with

with operator, open So, questions. the let’s that for lines

Operator

first our from And Instructions] Ben [Operator from you. Stanley. Swinburne will Thank question come Morgan

Ben Swinburne

MTA the and a in you through you of are build be the calendar about in QX. debt and units about put your consider expect quarters the revenue deposits timing it place it a as interest the high maybe to to But mitigate I before sense to talk down putting rate in sheet of then just you of And fixed level? we guys in to go, year you in does How you about be curious of 'XX savings your [how can move little and floating Jeremy much are the expect? already today, the we any rate just going signal] and Don the thinking how bit let balance year you through rate think and the risk? I’m swapping make this know this environment CapEx are at

Jeremy Male

Don. take to the me hand you the and over first let then question So, of part

this April In in test year of MTA, sort terms we anticipate how undertaking in of are sessions build Brooklyn the the around of couple with be to deployments, physical about time. going we a

to if we actually year. course year those around backend to products get doesn’t to figure will are bit out of going I be of this like we timing XXX to cash right back that payments buildout installed said. gave this million won't we on as that the because But year down later starting screens going still XXXX could the sort very business be also timing schedule the you build that’s casual the end normal much We reflect year, necessarily towards somewhat be cashing out float. as will screens a screens install relate in we and that we as necessarily of anticipating that next now actual said the are we the around And moves still but

out. necessarily the So, said as you -- can't the actually doesn’t I reflect build cash

Ben Swinburne

And selling just follow it's quickly inventory start you as in that how can up, place? once

Jeremy Male

is of Oh, difference And that number us I in advertising the into no screens right already you or we Brooklyn. we Boston. are going those small we launch There be for making why away. to the if putting been are has for for think that the looking like are screens seen partners have reason

But terms in. can to as that soon we strong small said beer So, as of getting much revenues a generating think so of really towards about we quarter, timing XXXX as incremental start it's they relatively in its more are I revenues. start event, and

Donald Shassian

the a enable the start to up. I to is same not to and build need cadence going trials really ramping are cadence, think then some to think that time once restarting we like in to stations at really you about build many its and of to its going get the in have build

question we yes. balance curve term on that is to of more then be that some at to going. in REITs, of pushing of yes, think this year hedging loan sheet that your a ways To to second I or really going looking are get learning lock

Operator

Our Alexia come with question next will from JPMorgan. Quadrani

Alexia Quadrani

couple question. a of Just

any on is in in in of business color The billboard pickup up Francisco the of following the of that And influence one political the growth a QX. you terms a up little or first sort of guess San benefit acceleration follow new drivers second seeing from any any that more the the are the of I then component or question, spending on the contract. and bit on there? maybe in can structure color of you question that provide

Jeremy Male

as actually our not particular that local much So, as said they’re towards is that political acceleration other and businesses because at tend we and feeling increase somewhat all us the at the it's our very call, pretty the be budget we were and given more overall that we’re as advertising. didn’t are driver of political case, we so in positive, the that de it’s our QX, larger in look in focused driven market, local look portfolio much we portfolio. we’re far we actually we operators and across was look by up, more advertising our When seeing forward country political, always the not minimis for markets from the for part saying for of QX same worth to

Donald Shassian

this this -- with Francisco be some contracts awarded start rev and really up Coast, are pretty will system, on contract old is up the York, important to great On it’s two yet, about us, West a the extensions, great been audience we XX.XX is bid we’ve screens, but for contract business a is is that approximately the transit XX%. XXX got on quarter that about XX% a for incumbent a San we Structure once MTA share, done have the is investments, have and on with things to recouped and already and the San is the and excited one one-year rev [indiscernible] out, contract commit jump the but Chicago this, market we’re is got coming Francisco a a we to we’ve in we’ve not build then XX% got was XXXX. XX% New the got to LA, worked obviously negotiate share, to the Boston, similar great years

about excited very So it.

Our about out. CapEx is the Cs we $XX been negotiated estimate and over have to Ts of worked that million Does help? that approximately still again, be contract years. four and But a has lot

Operator

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

Marci Ryvicker

I have am so million in San in not gave number, not revenue but an to of you EBITDA you XX sure a first questions, if give couple revenue? Francisco a us I can number that the addition for

Jeremy Male

if the is range So, transit you XX% about sort business of typically EBITDA that of think we order.

Marci Ryvicker

happened condemnation out And excluding things this, the is quarter? that time were can first said this the then better is the lower in called it’s first meaningfully for us because first Don you and has proceeds, this this time the you quantify

Donald Shassian

bit years, drove than for significantly X%, growth usually was million that, quarter been several has first the of ’XX to were ’XX if quarter less Condemnation we of could a number a percent than of quarter and change bit $X million Marci growth little a about was first higher a nothing, meaningful higher. really us have for and higher revenue $X billboard like for almost quarter had been little so we

Marci Ryvicker

QX going as now, to And is is in continue that well? this impacting

Donald Shassian

levels for levels right we’re we’re through not now next low -- right sort works the combinations of the but seeing that think seeing of of way conversion, for the -- billboard like in stuff I of any seeing condemnations We’re little couple its now quarters.

Marci Ryvicker

the actually or on second QX still any quarter Jeremy make then comment can slightly you in national, is national is pace, And down? it on positive

Jeremy Male

down QX, that. and thing lumpy One to points a national And QX are revenues our back were are two up the around lot. as we revenues look we think we light. bounced I that if they national like ended something typifies So,

we number we as on want as of national got go to booking that still us might as look don't it think about this weeks call talked of billboard we it of late. I much be I now say that pretty just don’t you right ahead it forward So, we X would we prudent a think in also because right And overall now. guidance. SKUs to right looks noticed May now, as

towards the much transit Our to -- is revenues why want now. call that out very reason that’s really transit are we national right actually skewed which also

So, and billboard as are see it as Local say can we we it. as we I remains tell telling is strong improving.

Marci Ryvicker

was first first you to is thought last looking the have for quarter? just it quarter two in million the per then expenses. I I -- sure question And we I think initiative Is three want the X at have it that so our we to spend, were the quarter. make weighted in everything

Jeremy Male

couple The was first above were in of say over an increase QX. fair X offs But to thing it there is X one last and the year. to is

So, it's look to rate as QX. at at quite we that be unlikely

Operator

Our with comes Citi. Jason Bazinet next from question

Jason Bazinet

You outgrowth more just in good period briskly of unusual and would I job expenses the aggregate just but year-over-year. helpful? it or digital that was guys the did is almost the property a color natural growing ago wondering expenses be lease any year X% up billboard something was in there goes managing a

Donald Shassian

really that on Canada. not you those. up at think items the think two on had are looking in we we has And of of billboards been was U.S. share are talking contract sure is economics, rev last year. last whole it contract, of would about went and that at because of that. MTA also consolidated York you I’m that’s the -- was of talking had consolidated looking billboard also impact that There is I also an have and a acquisition all impact drive I Those up renewed lot And it of will lot an the end year transit the a New which both

Jeremy Male

develop the with of we to York regards the to the digital What New actually already in really our to significant York and a that in that enviable And portfolio very contract the with DMA. from said contract. and in with puts the of thinking it boards what product Adding have, was came with number opportunity strong Don length billboard forward new about New position out digital a on area. looking that

Donald Shassian

I was up the add thinking you Jason as about just that going do property how revenue are ballpark. model if I going to a billboard of lease cost you that percentage forward, are think in same pretty much

the if little there looking So, quarter most a think to going from grow there, an I well. be be you increase part year-over-year revenue of as is going it's to will so next if bit are

Operator

come from Our will from Borst next Goldman Sachs. question Drew

Drew Borst

had hoping be elaborate more was digital couple your able I might of in the you boards, little bit growth. a questions about U.S. to on I particular a

X% year? I acceleration was so U.S. that XX% only think up understand the it's up have and I better driving if the to if year what’s numbers digital I the understand last through of think balance sustainable and correct, trying business your was also really you is billboard

Donald Shassian

of those digital I basis you digital got but and those both digital, digital very digital on yields the is you board growth. driving think side Not both conversions on the same growth, billboard we’re the billboard healthy got sure transit, billboard on improvements in about got you digital numbers, seeing --

in Washington thing Boston, seeing well. same as substantially in made that’s we’re the also Canada also and the in we On deployment the these acquisition have Liveboards digital elsewhere transit and of and all as boards side change new you driving this of

our of So, QX you’re us all I continue as are look -- same. continue the those its it's digital, driving more those think to static revenue investments to seeing from we and make of factors I do sorts to think to and

Drew Borst

then that risk next it do the there and that of U.S. And at just that you business, Maybe in we offline U.S. the couple the about inventory take think take single-digit, is in digital a that or the in years just to kind continue of I’ll mean the growth you the think this low static boards but can decline, I static the appendix it over pace to but it accelerate? slide continues might as -- disclosed you some of you continues offline.

Donald Shassian

that think I we if important to at think analog one that’s yields say point actually QX in So, look same it’s board were up, I to so make.

a so going a digital signs, well, taking board also analog on, worth that convert expansion remembering one, of XX our case analog key board, was we other an in top our on down car every of that are it’s couple the out quite losing a of digitizing are point will think which analog number lock, you’re or think car a -- and significant so yield that of areas impact total so count, for in analog a great right QX in that number that the typically but boards, in business. these we a going time to the of XX that that there that our is lock often of things the is and are sort board of you storey most actually I on and up, boards, up, a digital classic we’re in going other of through building tend you’re boards be sort board some taking is and urban renewal, think now, is if analog down DMAs part I so point

Drew Borst

in getting is losing units So, and and revenue mix. the of decline rate guess I conversions you’re function the but

you I don't loss was you XXXX later one know something the as down York and but get I’m on York starting we to often that we you was wondering asked loss question from do back in you very The billboard in it get like that geographic New in in to or other expect boards XQ was New it see the is billboards lap about are revenue the I due other I growth some when K, things and we and you to now these quite the guys, question a K noticed bit in understand guess boards?

Donald Shassian

first previous half the back of you We impacted have when certainly some last loss the boards look that year. to year

think a sorry. weighted and SKU, and the go. when company national national advertising LA New that’s our of you revenues the dollars And York also look New as for advertising York and York, I’m significant our extremely amounts we SKU I MTA, where are New at and LA carried to

going is in at up York, as little other if York local year If to on impact we national business. weaker this that’s a compared our advertising look our were in which a have New know markets. year our last New disproportionate we bit was it example So, then revenues billboard to for

Operator

question Our Barrington will come from Goss from next Jim Research.

Jim Goss

of was made of curious the can are environment. up these, a a with from generally country on wondering clients in and these new impact into pricing comment is sort in the of if I’m type you're something digital of new you about Boston and what more coming other aside little you about having I and and sorts they clients an of this demand conversions? are seeing areas the go

Jeremy Male

a department, of not from static replacing The is comment our Boston lot it boards. is emanating actually

static we that been boards we that on over static essentially the had revenue in And is place. up. when boards have took Our those contract static

and and was bringing growing advertisers in that’s XXX and seeing several that obviously brings are deployed what more We and have that bigger more it now revenue buys and digital we is that’s great. more obviously just and

Jim Goss

different you picture. you that are the with characterize broader a same categories are have may they additional you some can if just clients there dealing type as been into or are you have And getting or of think

Jeremy Male

can at a now we So, the we look way creative it can that if they give when advertisers we of form displaying. fact

taking buying. are people way more that of seeing are We creative

and either going and buying that's on. the some for up sort And earlier was with Also, as incremental buyers other generally coming upgrades in to very are Boston why what look the So, about picture clients we that analog making people that about are the comments look we to and digital bought digital drove first assets talked as MTA XX% was of some like new being obviously assets. good a forward we that forward quarter. we to

in be New effectively York time for is on you month. forward future, business if the single buy as arguably we of right And transit a to go we will buy there that locations the now, couple a a our per buy As believe about think example way you you able XX goes for hours. location in -- minimum

us, significantly advertiser, become suddenly as built type to expand when available us we today where base programs be look these the at to we think wouldn’t to will simply of breadth advertiser So, out. available you the budgets going of is

Jim Goss

different product to made that or And one or it opportunities a thing, boards generally tending variety digital of all is services that be of board one seven and client are to going space? say categories final advertisers the the in sharing on use by find you that different

Jeremy Male

occasions do advertisers most space, on most part board advertisers get the on that it’s Jeremy mostly that the for but about the advertisers. For part we to sharing it’s want dominate

Donald Shassian

the business, a the all If business, retiring I say, the may, the I the as call. been me, of we’re Jeremy with that just remarks closing and a and working thank institutional age the been debt creating calling it’s our business this we pleasure your and is digital I team, and made a here, think some years. been in sort much prepared working I and to very the appreciate support equity you and from I progress, it’s for of Jeremy’s leaving think in it’s this analysts pleasure with appreciate analysts positioned in am we’ve enjoyed I out transforming want about very I Marci I for past investors, well value of very much, number have the all over lot -- comments

Jeremy? much. very you thank So,

Jeremy Male

Well it’s call. conference public your thanks for company XXth I quarterly Don that. understand

congratulations to your and we today. And Investor coming time at everyone seeing events look many for Thank you thank you on questions you that the milestone else your forward to of So, call, and much. the weeks. very on in

Operator

for participation. does That our you your Thank today. conclude for conference

Outfront Media (OUT) 2 May 182018 Q1 Earnings call transcript