OUT - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to the OUTFRONT Media Third Quarter 2021 Earnings Conference Call. At this time, I would like to turn the conference over to Linda Murad, Vice President of Financial Planning and Analysis. Please go ahead.

Linda Murad

Good afternoon, and thank you for joining our 2021 Third Quarter Earnings Call. With me on the call today are Jeremy Male, Chairman and Chief Executive Officer; and Matthew Siegel, Executive Vice President and Chief Financial Officer. our question-and-answer we'll session. of up the discussion a for a financial open results, lines After

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

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

now over me call to Jeremy. Let the turn

Jeremy Male

thanks excited our call to for Thanks, Linda, for business. the have on our recovery today. and I'm positive all and and us to sharing joining continued the you of this be results outlook we

key and had with billboard our our a we've milestone very growth. showing transit level This steep third quarter, quarter revenues surpassing quarterly XXXX

U.S. XX% last higher X, revenue above our expectations. from our was year, As transit board across growth total up grew again billboard earlier from than last see was This you revenue up can expectations. markedly and XX% on with XX%, year Slide impressive which the

regions by led very we midsized with all initially few our of are now was and exceptions. seeing acceleration across recovery markets, Our our

rates over-index It's gains people improvement yet financial good to advertiser utilize our levels, reaching ridership and This of franchises. millions While various statements revenue we who that return gradual transit our carries are by OIBDA key transit we isn't current starting ridership the XXXX national in our confident as expect outperform markets the into AFFO to and recovery. leave a to in through see encouraged back year interest we feel is above revenue next guidance growth continue we performance visibility, a our few give more minutes. QX you on growth well significant percentage. news our margin, and I'll now previous this to that will With this posted full revenue good year. Matt to by details momentum and

at a to turn Slide our X Let's detailed more revenues. for look U.S. Media

mentioned earlier, City revenues billboard has of steady return their pandemic. of XXXX, York New up level. Transit in with third This XXXX levels a As and Transit in and driven offices reaching which XXXX return equivalent impacted were XX% XX%, now to starting school revenues by up improvement double to to the passed third audience Boston quarter almost ridership of has in revenue. heavily improvement again. XX%, the quarter XXX% was were people

sources U.S. revenue. at look of to and X Slide to Turning

the advertisers is indicator XX% agencies. is our than You grew and large business business. can to of time This portfolio with demand is the local national asset accelerated built see This that strategically national faster recovery growing our as a has a growth that of first the the start since great future our meet gain. for

will next this continue over few trend We expect quarters. the

and national robust yields importantly, portion business mix this in business U.S. with the level. driven revenue local shift And quarter advertisers XX% a XXXX third business above local more our well quarter. is Our X% towards of particularly billboard the performed This also recovery increase over has the of XX% improvement delighted of were can our yield level. for Slide as total quarter further portfolio, above to anticipate third across see on We yield year, X. once from We remainder up billboard see $X,XXX, year. XXXX our the last again you higher a comparable

Our see firmly the X. Slide digital and in billboard rates more impressive strong XX% quarter, XXX%, grew in than grew almost low rate from X.Xx a as XX%; are These business albeit on digital the recovery, Digital be you of our from static its To of key can restrictions. base the continues picture growth complete transit nearly in very growth government eye-catching, matched and XXXX. believe of driver digital almost a is which future. continues tight on primarily the Canada as Slide board Canada. is XX%, our the rebound its business with Performance Other our business growth revenue will segment, growth across X U.S. we

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

Matthew Siegel

primarily average cost lease here, when of subject so expense, see Thanks, highlights recovery in from and $XX share beneath we long-term The the revenue million year-over-year. the portion our our all the defer Most of agreements, expense expense business. Jeremy, the franchises annual this expect compared paying to permitted cost the the revenue share thus Similar to to increase, franchises of with are leverage modest the pressure XXXX, of have years, performance, of real for I'll will X% from our expenses. Transit Please our a high to for Slide our anytime the on Thanks our as XX compared turn impacted and to bucket second today. quarter largest to minimum see contract second the of which cost not estate across in afternoon, up we Transit don't our continued largest materially when total joining line to inflationary the and call most multiyear X, term. material our result around likely is due our and likewise country growth, and everyone. subject to good with XXXX to revenue operating life sales expenses variance is billboard inflation increases and to leases increases, soon. be margins a largest guaranteed Overall, remain us continues inherent a start revenue are payment approximately level were performance. with amended expense franchise MTA our on. story an quarter which MAG its from and impact in near only to by in

Our performance bucket is in which second-largest as compensation largely a SG&A, our cost grew from higher XX% stellar of teams. result the the quarter, costs of

percentage our the growth, this leverage operating headwind our is expenses MTA as demonstrated guarantee revenue quarter performance Our XX even below payments. XX%, with by of increased the annual total points minimum OIBDA

in OIBDA see on OIBDA XX%. graphically can XX% as XX this Slide growth our drove improvement You up revenue

digital quarterly our OIBDA our end of XXXX, with is level. shift and the of mix our forming from faster in growth challenging OIBDA and lower-than-historic efforts smaller real One is growth near of and business XX% in a some is historical from portion this a of highest leases. are transit OIBDA contributing relative our addressing course, our margin. to improved There estate markets since revenue. successful number factors higher margin our a inventory Of our Two, teams

Looking Slide at OIBDA XX. the on breakdown of

can level. XXXX also Media which has XX% quarter billboard, You growth U.S. third surpassed our see in

pleasing paved show And positive, are not level MAG and only said, the We we've than billboard annual also future. the remain the extremely momentum. results are OIBDA performance our incremental performance recovery. its The the in Jeremy recovers the potential but The way the sales hurdle below selling. have historically MTA costs has has costs as recovery minimum just turned remains another for those much Transit only turned the and in is guarantee enjoying variable the corner, in smaller margin fixed, high future. for as but towards level with associated franchise these

expect to again margins gross we quarter. see transit in So sequential improvement next

capital expenditures XX. Let's turn Slide now to on

XXXX and supply management behind the Growth chain quarter is conversions, robust. remains upgrades catch did digital level, billboards far some up than We conversion deliveries. spending acquisitions, IT up was spend this digital we has as last on Our we and through XXXX, our year various agreements on locations held rest but operations as in of postponed XX pipeline CapEx was tech new higher of maintenance our and ahead screen year, add and uncertain that facilities. CapEx

supply our catch shipping So will chain delay only is we timing to and we target dissipates. backlog the issue, the once up multiyear believe a

in of think our now expect We up year. projects XXX% range the AFFO, than quarter, because capital number million will lower in but we $XX the fourth year previously capital in uncertainty supply be Slide the deliveries, in is more the $XX XX on spend of full to million last of million. million, timing $XX expenditure to and which from $XX chain estimated shows our

recovery in OIBDA to are revenues sequential billboard through and and AFFO. transit flowing Continued

XX We the again, MTA now evaluate country provided passage AFFO growth Slide we full for Our of the to, Subject our expect has a XX%. delays, revenue and guidance. AFFO another variants our COVID to normalized business any our from of the to supply in enhanced impact confidence have us around certain will outperformance months pace parts and chain any quarterly X has increase deployment visibility to activity. of returned year update. be

digital the less of segments last the take months, at installation of XX been subway the the Over panels, we to audience heading prioritize urban may active steps other traffic advantage when into pedestrian of top crowded. the screens have

expansion about average which and seeing Day has among next various marked ramping subway excited the since and accompanying of back-to-school, up increasing rolling and is XXXX polite the these stations been has XX% above recent stock to finishing busy cocktail become and conversation million, eyeballs. daily ridership advertising year, we rising X that are is This buyers steadily number ridership Now we are is Labor commuters, efforts, be revenue of levels. and by into steadily

we with quarterly around active Slide our on our used our liquidity tuck-in Looking We total restarted $X resumed this interesting of opportunities amount spent at of balance $XX billboard quarter on. pipeline cash working as sheet is still our This acquisitions. see dividend acquisition to our can we One committed million million billion. XX. year-to-date $XX MTA are and still a local small an common deployment, on brings

and is cost remains revolver Our of undrawn, weighted our debt average overall X.X%.

and peaked We full fourth year for $X.XX quarter. earlier. we and descent fourth and you dividend total to X steadily end from year is continuing the X.Xx for quarters, will third amount performance this quarter, combined down the for our growing continues net X.Xx effectively cover as I'm Directors third REIT noticed sure OIBDA the improve. week at dividend the all quarters, preferred months its X at of And this believe look with quarterly earlier to forward dividend of that the requirement, Our last recovers Board with leverage business as approved leverage our common our the

and to had business very the performing to a than is better forward exciting and on is note an strong, finishing look outlook financial year Our We we XXXX. high the hoped.

now Let over me Jeremy. turn call to the back

Jeremy Male

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

total the U.S. today, to sit in As prospects I call, strong days further revenue demand of revenues Advertiser these continued our the we percent in the quarter. expect we we start XXs direction. are and going ridership business excited said in we're growth right up outperformance our for as for here XXXX be at very this, forward. the improve and range transit. expect low moving our billboard the out-of-home, in the for subway all versus traffic, Within about the to fourth Therefore, relative industry our and

of by such cannabis advertisers, of our important overall, also and benefit of the categories, number as their services, still during X activities so such notable advertising return for see and nicely, outlook for growth. driven are are and well are Our steadier small movies entertainment. the and good We're the online theaters performance And times. categories our driven moving and growing release importantly, retail of solid perform continue the reduced professional by past date some like to Bond business XX movie was this our months, health as after a in care, gaming. and quarter enjoying be It that last categories certain the newer and to the their quarters that open but in many local showing

recreation for speak spirit seeing about quick the OUTFRONT. From This cities XXXX, enabling reopening year, diners industry. doorstep. for a of see new are to returning. more confidence performances I in lifting businesses true spend continued our category confidence. similar Broadway, it's equally more to and increasing of indeed here increasing of to to This entice returning The little is growth and we Midtown, numbers all their out-of-home other and right time they and country. This early a is for movies next customers commuters, and office that population forward of consumer While will is are pedestrians, and as my look workers of preview, we for increased across travel forms to a office know the the drive great tourism into can and the

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

Operator

our And Alexia Quadrani JPMorgan. question Instructions]. [Operator first from with comes

Alexia Quadrani

to in don't My first I have of you have still improvement get need to there, a order you're question approximate crystal probably might advertisers when it the they I get guess ridership, knowledge XX% time the we sort I did really medium we of transit when, in that think ball, back gauge levels? do in need run than return do, to business. of is to get seeing XXXX? sort is know to but you is advertising good on of way maybe a you sort that where frame, said past probably you to closer any only really more you in you And I normalized the in you see think XXXX sort the kind back to have XX%, of the be the to of to think, of just rate, see sense terms

Jeremy Male

that low that would We're as sort for forward, now a right some that of you we expect of be don't increases obviously will Thanks strong base. 'XX, XXXX year have question, we our rightly business, that albeit continued in ball, we sort XXXX And range. in look XX% to the without We've will versus a we before, levels. here we Yes. while, we but of quite revenue. recovery. transit it we of And our Alexia. say, And in to likely expect crystal as seeing off expectation be XXXX revenues our able to XXX% is terms be that been to audience. in certainly of saw ridership think will it's back that likely we never be in And that achieve XX% yes,

Alexia Quadrani

just I going mentioned potentially forward. boards I could issues Okay. have one supply the maybe Great. follow-up conversions your on chain on digital slightly And if some think you [indiscernible] to

to may sort I your it backlog by much year? of it peers of of start be how normalized vein. have get much may think the be, you like that back you to rate a half Do the have? have to to of one of slow get you behind year, think -- you any Or how you that sense maybe but might a of the back next kind also commented do

Matthew Siegel

Alexia, Matt. it's

most I ocean. fourth the finish think going to screens of it's in be a slow our somewhere to quarter, and we think are

in, screens chain. year a can So depends up, we supply should over-indexed guessing in boats we be caught But for they come expect we quickly. think months. normal a when same year the do than really be would get installed oceans. on the on our just midyear, by bigger next it And and I'm them competitor XX same we And might

Operator

Barrington from our Research. next with Jim comes Goss question And

James Goss

terms increase of any systems, ridership? return basically greater return utilization? from benefit in of you the ratably pricing of you do with in in wondering traffic, transit the the into terms uplift was get I Or of traffic capacity

Jeremy Male

will Thanks have the to Jim. fabulous be for thing to that forward say transit actually actually product to to first question, digitize XXXX, business we guess appealing as think to that about the in a continue going our we compared is advertisers. and we're really move I increasingly

go going differentiated as So digital will the to -- XXXX that fact growth beyond have saw that, of in I allow product level we we're the think forward. that this which we sort

before, cost range. something then also And we Now XX% terms dependent levels dependent towards based those the and getting on various to things. of saw in X about be also ridership will like talked will revenues opportunities XX% in that returning of we It and that to pricing earlier back that do on is to per thousand on back be utilization. sort

XXXX will to those levels. of those things it So be that back drive us both

James Goss

an And market taking up history maybe back point, were of sort acquisitions appetite it you I'm forward, installations? digital further capable be in seems. But look have, terms Difficulty] that's are for a any some [Technical of might at and and and you'll there come also that be in move that have you'll as bid what of interest contracts that at? wondering, and billboard will now it related ancient for

Jeremy Male

Jim. Thanks, Yes.

of question The But first regarding little part your went bit a quiet. transit sort opportunities I was of wins. it the think further franchise for

to actually the had bed put quite we franchises as key forward, look long of for a been actually most time. So are

billboard franchises to said, markets $XX this So keen very we million there in That's Matt We've pipeline. With got of far significant we've our as a weight country. months. around don't active add for the year. anticipate coming change that number a so regards we're the to acquisitions, significant be in will sure. spent over And

with those like positivity, it to pursuing put we're So that.

James Goss

It a have Okay. you And one one. was see last encouraging common to dividend.

a to investment are REIT-based, But know preferred some that's think -- for if reason frame the pressure are component stock. I the how be. you the the terms recently, I own that to it's there might I wondering requirements. under there Board that in know component? going I been also look and long and that out requirements was of of extent but look valuable we that account forward can, And the at you rationale, been I common may with to might dividend know is the as how an

Matthew Siegel

and we is quarters And ways. to looks this the And growing. first plus a Thanks different The that preferred said X Obviously, and think it's Matt. number it recovering our covers year, Jim, requirement Board expect foremost, $X.XX requirement. the business at of we for the of think question. in thought is we've that as dividend. the aggressive we benefit the -- business the signaling, Also importantly, grower saw of billboard communication is and summer, what more dividend our transit and recently, that grower and an the business. about this recovery primarily the we I of growth our midyear, common a be REIT of

to wanted we sure knew before did make on we out calculations the any that REIT. of felt confident dividend So people bringing we year-end

periods. good really next and about growing where over starting and feel we Board comfortable that are, So in the looking few at the dividend we very is

Jeremy Male

And just briefly. Jim, adding to Matt's comment,

back range of to a looking remember excess in into the past tended a absolute that as And the kind to in of we we're requirement. REIT company, dividend as getting You'll where dividend that pay forward quite for as grow from are we said, now. Matt opportunity we there's us just look to And forward. the But from aggressively on we move as that here.

Operator

our next Ian And comes Zaffino from question Oppenheimer. with

Ian Zaffino

Good quarter, great outlook.

Just follow-up rapidly. on the What like pretty capital. of right market use sort question, be of does M&A one Things one, maybe are the last a recovering would look now?

just bid-ask And spread now versus So curious way what are pre-COVID? many be? maybe how sellers there might it the the was

Jeremy Male

it's Ian, private for the right question. that thanks to to the fair there institutions equity and There's number other thanks a a lot assets now. be think chasing Look, say in for seems comments, activity out-of-home. of I at the out-of-home of moment, in

think forward. come to sellers I some is that driving

acknowledged a pricing we yes, likely there's the reasonable good our be when which -- on. now a move doing at feel pipeline So right in we -- competitor there we're to is just And sellers the to pricing they may assets wish market out good have their pipeline. that commented yesterday,

Ian Zaffino

do you to have going you're on meaning you issues. you side, you're that into to not board be on digital something Will 'XX have next more, make Or no you from the miss to chain to departments this this make and the do year? that up Okay. in backlog with supply might in And year going year? what continue out then this planned is that up able the to

Matthew Siegel

Yes.

in the really pipeline's it's think I place.

still estate waiting screens. permits. real developing, getting for team It Our is is

permitting we And have we I the year, million, CapEx up So annually a just to target growth assuming would catch little up. be a fall think can than if that, million year usual and $XXX we and for will we'll target more there. to development, we next $XXX the more short this screens, the little get make

on takes an base have those installed X,XXX. it digital ramp revenue, billboards. X to we up or as X months And to far the X,XXX of As revenue

don't And So term, going going -- the not we're it few revenue. missed. to I won't think impact install the that it longer materially year to be are this should

Operator

Instructions]. [Operator

with Swinburne Next, we'll Stanley. go to Morgan Ben

Benjamin Swinburne

were this of I two have Matt, 'XX. kind quarter than margins. of points of it like couple even higher hundred a the both questions, on margins basis quarter looked third billboard

highlight wanted as That's mentioned and You of geographic any from one. years, business curious there the sort different a then I about if is over view than few And whether the was point ask recovers. it were was any first I think you margin look just you'd transit. mix. out we other my billboard next once everything of drivers to

Matthew Siegel

-- and 'XX, comparison has impact. you you an question, over over digitization we've couple Great couple look a I from to been years that of appreciate Really year the the XXXX noticing. doing of

So almost of is percentage you see margins. in digital every the helping revenue market, digital and inventory higher

has this non-LA, mix the issue, high On very as margin helped non-New but the of growth, weight isn't well. plan, the overall York,

businesses So operating favor. working portfolio our and in we think are

Benjamin Swinburne

Okay.

So sounds digital mouth with growing over Don't be want kind margin put time? there equal that in else of to your growth words all but... in might it like billboard

Matthew Siegel

-- the of I numbers. billboard than digital business the increase see higher, and of think, of directionally, the think we margin of increase both the the the in moving the leverage beauties revenue leverage eventually, the If difference one we This higher inventory. operating we is, the Yes, we is digitization. cost,

Benjamin Swinburne

the then on And kind transit. of of questioning line same

So inside as se 'XX, transit of see we the your can't about we think business. MTA per

go an from of Although a to 'XX, and at kind us recovery one know think standard for period what leverage we're that of pre-COVID be obviously, it how time get But scaled a we economics? as by the thing? share to time MG back Or I is. a have of big sort way the of if profitable then back rev sense of going the because you've don't of transit there's is kind about sort you we any margins maybe to think of to you're back you about can transit will incremental rough unusually the help the way exit

Matthew Siegel

lining of MTA Yes. is being the probably the the under This MAG. silver

as we're we're So is XX%, to commission. and a already no more, paying OIBDA goes fact that every paying back of just of get XX% fixed the and line, dollar we to revenue, that that cost

best it's everyone's to our and So back in up transit interest former New to interest best York drive level. its revenue

So we're the by there. excited once it and excited return, the about we're future gets

Operator

And time, question-and-answer that I'll the turn conference closing concludes session. or At additional to back this today's remarks. Jeremy Male any for

Jeremy Male

Thanks, call. the in operator, in meantime, look developments in have much, and investor day. a thanks business. to to weeks. very speaking of everyone Thanks and quarter good events for next many speaking positive you with to We coming the at forward attending this you further the I'm about our And

Operator

concludes this And participation. Thank your you call. today's for all

disconnect. now may You

Outfront Media (OUT) 5 Nov 212021 Q3 Earnings call transcript