OUT - Earnings call transcript Q2 2021

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Operator

Please stand-by. Good day and welcome to the Second Quarter 2021 Earnings Conference Call. At this time, I would like to turn the conference over to Mr. Greg Lundberg. Please go ahead, sir.

Greg Lundberg

everyone. afternoon, Good joining for second earnings quarter Thank our call. you XXXX Vice person With Officer; today Executive Financial on are in and and Officer. Jeremy Siegel, Executive call Chief the me Chief and Male, Matthew President Chairman a up lines open for results, the session. discussion of question-and-answer After financial we'll our a

statements concluded, refer today's relevant earnings Form XX-Q, as June XX statements our forward-looking audio the release are include filings, Investor This an section and the of and could call can which a may available comments forward-looking differ today, XX-K and well. should to you our in SEC and in Our XXXX slide materials cause to actual site, our find After outfrontmedia.com. Form Web is results tomorrow. usual, listed these XXXX will be as will earnings presentation in that archive Relations that filed from be materially there call our factors including conference

certain also on reconciliations of period refer today financial an site reconciliations. earnings the And basis. will slide to appendix this adjusted prior the also will and with Web and be presentation, financial other made presentations in references any to release measures OIBDA non-GAAP OIBDA We on of and our on call non-GAAP are which the measures includes

Let me now hand the call over to Jeremy.

Jeremy Male

back reach great thank Thanks, people are joining mode. on growth their get to homes. It's marketers earnings when all racing an is Greg, when all today. emerging about to you numbers in and us the And call the for from talk

optimistic about quarter. second for year. very certainly the feeling Our the out numbers prove we're the this rest of And

digital into moved expectations. the well of flowed we X, Slide second balance on our of and grew expected. transit, half, XX% black. you also fivefold, as than up especially top was for business this to we an have right and This OIBDA, And our The is organic of the see well in the was adjusted confidence stronger nearly across basis, line at As drivers the Billboard, growth which continuing. strength robust impressive year. increasing nicely revenue board which U.S. AFFO can our excess The look we the on of for

I'm common a Matt's here His that about will call. in he later and on afternoon. Matt little steal the guidance outlook going Board this fact, In on dividend, to positive of announced was will you thunder that talking our our this which raising resume also bit a tell call. be be to allowed later AFFO also confidence

to transit last our detailed revenues and ridership U.S. Let's possible level. in for X, from this more numbers is reaching a turn continue Slide percentage, a is the very lag. view and XXXX XX% XX% the Billboard low up up it's of were of XX%, from year while revenues variant. But our terms Media certainly does withstanding audience impact any large Transit of Delta recovering were to now remember not revenues.

Labor up We expect Day. a step after further

national. and nice Turning XX% growth local Slide in X, it's see both to to

may national that recall year. to last led You revenues decline a

recovery this to them year. expect We our lead

In national fact quarter. local business in our grew faster billboard than this

We quarter see up year. improvement We of last pleased yield were our XXXX for over our the anticipate is of surpassed naturally pushed pleased business seen this growth XX% to I'm yields second revenue level billboard and steady total revenues our And strong as been our level. that this X. a remainder This our yield expected, to say portfolio XXXX. local has As throughout. in further XX% of from the Slide quarter up local year, across on QX X,XXX

rates you Even levels. digital our the recovery in transit. we more on The is XXXX the both quarter recovered fact here business X. Slide came You back billboard see billboard strongly growth the second and than digital can see have on important that business more than

growth on in great business. picture year. recovery is shows will business continue the sale this in our was this Canada. basis for other To reported comprises It's driver complete fact, the which for growth organic In by Slide will next our a lap be the the also has was business quarter. billboard with two-year to The total noting X to XX%, of U.S. a primarily there sports very was marketing been up decline that see. great impacted XX%. and which our revenue And business, Digital strong last quarter. we revenues our worth our

financials. hand the to over me now to review Matt our Let rest of

Matthew Siegel

pickup revenue shares a Jeremy. and do we which Thank see country turn up million the X total the the across thank expenses. growth our in for our our Slide The joining to franchise the MTA. to York driven is by expenses and guarantee all afternoon and Please the almost will increase on are minimum you were to Transit $XX payments you, you expense increase, largest our also today. slide on Good with New sales year-over-year. annual Overall, as this begin achieved activity. was call

margin. here with the on which working our in is revenue You million drive Slide margins to can less were is total that operating expanding apparent we the balance XX% our up be see than is revenue $XX OIBDA growing represented in the continued growth. year. And of on quarter and a which good second favor, growth back OIBDA transit It's for the This expenses healthy and to XX. business our improvement the XX%, very expect leverage in billboard

OIBDA of it breakdown XXXX And XX% recovered the second quarter level. tremendous Billboard. at has Media the U.S. of on growth see in the can you Slide XX, Looking

with this Transit, story. negative performance. first different the are quarter. expect you'd OIBDA certainly than we pleased a lesser but So is as remains And

and growth team digital is bit bit identifying conversions OIBDA As revenues follow. on also had into recovery a and maintenance and to strong converting signage. growth. we turn now new capital our less expenditures Relative The busy improved, Slide We’ve will billboard year, to digital going opportunities forward more approvals XX. last a new is

year-to-date. this and We have a XX of acquisitions. new Through combination XX digital conversions and quarter boards

You'll an CapEx in guidance AFFO a where our half unchanged total AFFO, $X clear probably as OIBDA increased was growth. XX of bridge see at for in that million. is key shows to it's the year the Slide CapEx pace contributor the second

that also notice the of we benefit key You'll picked and items. most some up other

the end. of to indicated likely exceed with quarter, we said that Jeremy up began at annual we XX%. raising the the XXXX are call, As for a We first guidance range beginning XX% we AFFO of after our year. And that top the

in raising our more to range specific So year. expected XX% for up around today, be our we the can

is progress As accordingly. year and throughout we'll revisit see the case, always guidance how this we the

update. amendment. once to we've again two It pleased We deployment MTA. the both I with Turning to are to and highlight for Slide MTA of to were a found items X-K us discussed yesterday want quarter. that signing XX MTA was light and beneficial you confirming an the previously the mutually

a for conditions. is a our the option contract three-year end initial term of this five of subject to XX additional extension First at for -year to years XX now extend an certain the is us years with

revenue displays will result number is into system. and deploying a do of we the not contract in significant will reduced the modification second in We reduction that be of The that scope the will the reduction reduce will will us stream our but quickly. to our revenue This MTA to significantly the the revenue spending our impact count allow outlay. reach share display capital expected XX% more recoup and believe

Now balance sheet to let's turn our on XX. Slide

the flow strong $X We during remained quarter. cash generated positive billion. over at a liquidity Our

cash-on-hand. also We principally on digital spend and $XX this tuck-ins, million billboards funded acquisitions, from on we

undrawn. remains revolver Our

next be X.XX% Looking forward called June maturity nodes due our XXXX that in of there are in XXXX. can

quarterly believe pandemic OIBDA noting has beginning expected? as leverage weighted debt of overall our the is X.X%. cost we that lower that Also to average Last ratio but dividend. Our expanding least, worth not the peaked as is the is

be the requirement. We our do offer And have in Outfront will advertising, than for the It's the to with over grow quarterly dividend of intention per shareholders. dividend Jeremy. our intend that sustainable turn $X.XX back paid closing, to return growth and share sheet, great a always excellent I cash in In to out the now healthy where by a it's business. prospects mode, forward. call Today's can balance for especially an back we announcement strong and going resumes of to operates. so liquidity attractive, markets backed more home

Jeremy Male

Matt. our now turn And third XX. Thanks, to let's quarter on Slide outlook

our recent headlines heard You've some remainder Delta that in variant. the tone about on probably of known good feeling year. very the the of today Notwithstanding we're

third quarter revenues this at expected. quicker we originally As quarter. the mid in which revenues that a recovery total our or is high third Billboard we in than our U.S. expect to guidance range be today, be is the XXXX expectation the the possibly above up will Within XX% much sit levels, here we

that transit, will recovery quarter significant come. currently more growth ridership be third to believe of some a we tailwind time Regarding expect for XX% than and

As second by is of the factors results. that being our strong quarter drove many guidance driven

If virtually you by every sector that QX economy. driven turn XX, in to can Slide was see our you the

as financial others, beer but shows quarter healthy world bar and growth, services And more strength bar negative. Marketers moving is encouraging that's for the in some every are It's broad that to chart is you retail, And see it in and mix top more obviously advertising a positive. were and define first right of The returning every shifting based national. up we in We bigger in landscape direction. purple everything this when Well, our numbers. showed purple the seeing see growth of solutions especially is and Outfront this Some on categories I drivers so than towards was in all local to and is a business about. has followed quarter sizable marketers last the medium. top context changes true services, the now by believe can out We're marketers. Still here, runway liquor, also our what privacy location. and and are where entertainment, particularly putting technology. both great here professional you

Greg friendship moment like his side Before for and years what I now being for counsel we questions, Lundberg of take on is calls. just to take for and quarterly to support, my earnings dedicated a XX thank

head of is quarterly season. earnings exciting break, role And you For following Investor Omnicom. Relations Greg and don't this new as Outfront a a after know starting we'll at be those leaving who short of

tenure strategic our events as During company, he industry. has some for atOutfront, the guidance, the and Greg's communication excellent insights provided and exciting for PLR

to certainly We running him you the him but occasional of on all very best and future. lunch. wish miss and all sure often I'm to will him events the conferences, very, at expect for sure We I'm

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

Operator

our And take question Alexia Instructions] from will first we [Operator you Thank Quadrani.

Unidentified Analyst

strong guidance on demand for Anna QX the side trending, on is on this if And Hi, can wondering and particularly you've on you very with for was thank billboards? much I the you Thanks. so is for given back. digital transit question. pricing Jeremy, coming comment and how Alexia,

Jeremy Male

to at we as so, year. still you the can price some of Yes, fully look rest And future the that growth interesting absolutely. our made see, currently obviously, that's through in occupancy I our and we that this we Low-to-mid China. will of way look in expect go XX%. billboard there terms we're five, the both as rate it's our mean, XXs, peak, we occupancy. at And, When our opportunities. from of business, business there's go around hardens, of which year get specifically, at a up benefit down is good

Unidentified Analyst

you. thank Great,

Operator

next with And our take Swinburne you. from Stanley. Thank we'll question Morgan Ben

Ben Swinburne

in Lundberg rebound afternoon, Broadway, One, guys I and exposure you York And Max, of like spending. lot huge to have entertainment think sort that at curious, seen is your starting markets show tailwind stuff the two vertical, you plans wasn't know we're didn't chain would to save Delta if of or sure movie supply you look heads ‘XX, which think good year. this LA. and I'm if pacing’s the variant moment? for was on hanging you Jeremy you all up? even XXXX. then talk by the so additions the your forward noted constraints And encouraging, showing that Thank you're you. in had board over with some digital an being up just a New a back for like You've if numbers the of our Great, if And stuff update for to I book plans business I at about questions. ‘XX your anticipating guys us in I those? and impacted for large a and

Jeremy Male

Ben. thanks, piece take So first then I'll second. And of And Matt the that. the

actually terms guess, entertainment actually, I QX is right in now, our we anyone services think Delta who So, much when very also. are I sort there will and we both lockdown. about in that in that, look guess, likely of into that second think don't growth variant, the and part we pacing’s movies driving our tech can completely soon, talked of professional is their opinion, less of

masking, maybe go entertainment one be the expected, we into we some have of fully be and movies us for and might will year. But So half back growth we of there may expect as that. the as part think that

Matthew Siegel

issues. And that Ben We reach and in had said we new to year, on enough conversions we of think order recognize and can we digital have on We chain, digital's XXX we numbers. supply supply this inventory, acquisition. chain expect XXX signage combination those and still

good feel and container now. our are there We other are right recognizing pretty getting we from and space, situation delays things But overseas. about that

Ben Swinburne

spending to if Did up. want on just number missed follow MTA update I it? And Matt. I you the the call. give Thanks, apologize

Matthew Siegel

not at MTA the we're after signed…and back ahead much speed early agreed the that pretty third we we amendment but did with MTA. quarter just full starting deploying for We the

as that we've panels. we And screens expect we are to in annualized the have down rate I Our but, the inventory, around done inventory mentioned, same past. putting run we're and spend overall,

full So million. I for year XX about €XXX think we the our spent for or million million this XX year, guidance was

next half the we'll XX the during So second year. spend of XX or the

Ben Swinburne

Thank you so much.

Operator

take Zaffino our from we'll Oppenheimer. with And question Instructions]. [Operator next Ian

Ian Zaffino

to offset economics that be down, on the board this better is Maybe as again. Or same some contribution there going up amount? far want is maybe MTA so better by follow you. just as does rata displays Thank down to revenue the are pro locations, mean or

Jeremy Male

screens, going call the demand we we primarily in covered screens still decline lower to brand various with what on going be subways. can commuter lines, these we of We but money screens, is find we're think coverage stock, overall, same the in hit get trends. think still you'll reducing numbers the we're reducing lines, revenue rolling non-brand to the digital that commuter trends, those we're on And the and have and the all on the some screens to going

maintain better both think of revenue. for is And we the So still we this outcome us. a can

Matthew Siegel

understanding can maximize years where location. three of going a of better location just And have we're the we be a that number to these of add locations, for that, to in, understanding to yields better much by actually achieving, we value

So could outside. reduce it just we minimal impact all the having because putting made together, that on Springtown sense, revenue

Ian Zaffino

on to reinstated more. how payment, think Okay. the or And you then much to you're just other back but question is, would really dividend go cut comes pay dividend? I Typically, look becomes to, your question really when don't that's to you good see thinking well, at dividend. minimum you're the the be going going more the about it's the over it

versus matter then you're minimum, you're it the looking what go? So if dividend the just basing you're initially, maybe Why competitively just looking some how it may type level? being you give trading us at not on logic of sort Are think to thinking actually peers? your on? bring of it are really up basing you you Is to and your of behind? the a Thanks? it peers eventually And conservative

Jeremy Male

It's it. a lot a factors to both question art and as good of science

a grower, I with want grow space. to grows, do watch be then down. of peers business than a of be the more should the it, than high a before, much over payer, that probably I As some think had want we as get very And do we grow above of But, expect to we can the peers. we, so to have to think we you as as to minimum, mentioned, us along dividend leverage our And this we you'll some a higher our weak closer others, back now. allow or see some little time, have competitive quicker dividend we you pre-pandemics, we come

really of factors, our it good of to all good lot And with restarting we you. sharing dividend. feel news board and, about the talk but a So continuing about with

Ian Zaffino

very Okay. you Thank much.

Operator

we questions. And further have you. no Thank

back to company an the turn So I over the like closing for additional or would remarks. conference

Jeremy Male

Thank attending and we the Great. Thank much. call of you today. you over Well, many the to coming you all weeks. for seeing you thank for the forward at investor questions, look very events

Operator

do does today's participation. That you. Thank conclude teleconference. your appreciate We

now may disconnect. You

Outfront Media (OUT) 6 Aug 212021 Q2 Earnings call transcript