Earnings call transcript Q4 2022

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Operator

Good day, everyone, and welcome to the OUTFRONT Fourth Quarter 2022 Earnings Call. Today’s call is being recorded. And now at this time, I’d like to turn the call over to Stephan Bisson. Please go ahead.

Stephan Bisson

Good afternoon and thank you for joining our 2022 fourth quarter earnings call. call and Jeremy President Matthew Financial the Chief Chairman and on Officer. Officer; Executive Siegel, me today Male, are and Chief With Executive Vice

up results, discussion open our a question-and-answer financial After the of lines for a session. we’ll

the outfront.com. refer presentation can has archive an After the today’s Our on and section Relations will you release there audio to call today the earnings be as comments of find Investor will slide that our well. available website, concluded,

factors Relevant statements statements. can forward-looking to expect our Form include Form may call our quarterly materially week. SEC forward-looking this conference results file XX-K, actual these earnings our XXXX XXXX differ XX-K, XXXX reports are that which to including in This cause in our as we filings, and our materials well from and listed as

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

turn Let to call Jeremy. the over me now

Jeremy Male

good everyone. Thanks, and Stephan, afternoon,

up XX%; up up every retail, as our was up entertainment, most XX%; and XX%; led QX up year XX% into higher both full versus XXXX, On year, to results, higher category U.S. to digging auto, was static U.S. the by for double-digits up XX%; technology, like and growth led our up up great advertising predominantly transit, Nearly, results signs. year our prices by Before X, you’ll robust recap Revenues up XX%. metrics. we the finished quickly XXXX. in travel, XX%. our by had demand I’d out-of-home Slide and rates see key XX%; for Revenue driven billboard, digital financial for with key

transit expanded full from OIBDA last XXXX OIBDA margin year. rising million versus a XX.X% OIBDA margins $XX XXXX year inherent by nearly points, positive in to operating improved illustrating returned grew basis. consolidated the XXX business, to by XX.X% leverage XX% OIBDA while nearly on and territory basis Billboard with the

line to lease of payment. during details AFFO healthy still that structure our of and in up when the a payment million by related headwinds QX original later. payment our in the with XX% the guidance excluding XX% we’re when upfront interest proud suffice considering accounting the guidance, in have and ago. behind $XX describe tuck-in a But Matt grew were some since say, guidance, delivered the created a will to rates, we year rise very the especially rapid macro environment gave uncertainty to the on a including

XXXX. also million acquisitions, of since our entry of Outdoor had $XXX the on $XXX added the and an time. approximately Pacific into We the year Northwest Spending represents assets, Pacific our markets we build most largest will over new new first that billboard the on million XXXX, acquisitive acquisition since

at X from New to as Equity, partners displays larger square agreement, also a assets. provide purchased that a as strategic noticed view signs ad exclusively but market times Square are and event, These not XX-year you on press space important have While our the may into at and Times the we in City’s license are strategy. York recent and entered Providence who release advertising XXXX

November provided which numbers see X.X% the headline nearly in now quarter results, in the on let’s revenues grew can we our OIBDA to in you Slide guidance X%. line grew X. Consolidated that, and With with turn fourth

the an to was consists organic a versus year, Canadian prior X.X% Slide due X headwinds X.X% reported on segment with mostly down X% up shows but year-over-year. basis of media with which our primarily Canada, basis, U.S. on the increasing dollar. results revenue total foreign Other, exchange

markets call you X, with regions. see New strong in pleased our can in teams performances up our markets. to year, as and were up rail the as was continuing revenue Billboard very our slowly most within the media steady increased. subway, I’m its billboard X% U.S. large growth bus versus X.X% Slide detail. On out way leading Transit displayed these more improvement prior revenues York strong revenues ridership Miami and

auto, quarter categories Our best services. during performing legal the travel, were retail and

in seen of and grew X.X%. while national can business the in grew be The by revenues local X. on our by U.S. X.X% breakdown the Local Slide national quarter,

If historic XX% continued split of trend quarter through XX% that you recall, QX. our to returned and we national, local last

billboard U.S. our to over year-over-year solid just X.X% Slide X yield growth, $X,XXX. up shows

yield the been rate. has As by driven growth case this primarily all was year,

the X highlights XX% in quarter, Slide representing double-digits. from and total XX% revenue, year. digital and grew XX% Both of growing with digital transit billboard revenue performance, our last revenue digital our up strong

growth of be should time highlighted static And year-over-year, X.X% given Importantly, XX, not forgotten. we notable convert one revenues billboard we the in is particularly This our billboard. typically that to top our X.X% assets from static are static growth growth portfolio. with on a were up each removing we Slide total digital; static

to With review rest of over now our of me Matt that, the to financials. let hand

Matthew Siegel

good Jeremy, and Thanks, everybody. afternoon,

for X% more deeper For at $XX up expenses. year-over-year. were look turn or Total million, our a Slide financial into detailed statements, dive expenses to please our XX

has billboards increased share robust we and related a XXXX, rent expense higher performance step-ups, billboards acquired our led on As XXXX our in revenue variable reflects annual growth year-over-year and increase experienced XX% contain This in increases of QX. variable lease to portion agreements. a through revenue Billboard costs. throughout expense that

in billboard in reflects increased are boards a our growth these our these major reminder, a significant expense markets. lease cities. And located primarily As

MTA in revenues and was in of to their to expense which XX% shares, as terms specialty for other the also higher campaigns. increases our contracts, XXXX franchise to year were decreases owed flat in contract, prior higher business for from production are the XXXX on essentially to and due increased expense our related our the of up accordance majority with activity Transit was maintenance MTA deferral higher inflation Posting, by due revenue offset MAG but expense the versus

and last professional related index-linked on versus fees favorable by These expense an unfunded This offset OIBDA the fluctuations SG&A plan. equity and impact costs. compensation revenue in partially higher year. reflects X% market of increases higher and retirement were increases corporate increased driving Combined,

XXX payments fourth York to by quarter. the OIBDA Slide margin, points On our transit in XX, nearly XX.X%, X% perhaps noting and you aforementioned was can see is versus relative XXX was points up a driven due OIBDA margin MAG to year, that margins New MTA. our basis mostly increased lower down It were worth the which to basis the XXXX consolidated higher last

consolidated Slide nearly sources U.S. U.S. growth points was XXXX. X% million provides the nearly additional XXX on XX% XX of detail to over $XXX XX down XX.X%, OIBDA. basis margin of but versus grew versus basis our and billboard represented up a points ago, billboard OIBDA. and year OIBDA

margin slight this the XXXX was QX, driven our in in As decline versus by outperformance markets. quarter largest

the expect acquisitions, geographic as expand That not given provided performance nature that leverage the fixed timing variances We move operating of linear, which will is expected given by improvement to revenues. and proportion cost said, largely into we margins numbers. billboard be of of the the an add leases, digital noise forward, can and increasing our

$XX.X million was franchise expense. was compared OIBDA decrease The year’s to transit to last primarily $XX.X Transit million. higher due

million franchise. discuss $XXX XXXX our a I’d minimum few will moments escalator under expectations revenue a MTA hurdle which to just annual transit, recoupment. to to given step MAG to to like discussing of The within the the $XXX the While for contract, take million, CPI guarantee up contained equates enter

we level, and for we $XX guarantee will and XXXX While to beneath the a expect we’ll pay expect in line be for deferral gap between the close on this MAG it do account the MTA minimum million our straight the basis to year. again throughout the almost we revenue and XXXX

revenues. As given impact you this OIBDA in wider will QX saw XXXX, seasonally

significantly However, year for versus transit last full each similar improve expect a year, the fashion OIBDA XXXX. expected to OIBDA quarter we to in with improve

are pleased primarily on front, investment around On step specifically XXXX, And beginning of deployment we advertising the we are in our we expect initial million annual XXXX. down completion to significantly $XXX rolling deployment installing stock. on the capital say spend in we expect approaching MTA screens to the to build,

Turning The to was $X the $X just spend year was prior million QX primarily of spend. of Slide the CapEx on including over decrease nearly of million, to maintenance throughout due CapEx $XX XX. XXXX. timing capital million investments versus expenditures in total our

total year, CapEx of approximately full the historic For X% our million revenue. around of benchmark was $XX

higher was record. growth and in Virtually, year a these driving Through of we CapEx, developments, new increase new digital acquisitions conversions, the billboards digital XXX number added are approximately new management conversions. versus agreements, entire annual XXXX full

expenditures. $XX million we XXXX, to For spend on capital again total expect

to our bridge can Looking million. on Slide you AFFO at XX, see $XX the AFFO of QX

the to lease the As rent and one completed expense the upfront Jeremy In and tuck-in structure million AFFO non-cash effective signed approximately XX leases over for of of lease in was with we QX. mentioned which we an the almost in $XX payment earlier, upfront relate landlord all a the as transaction, of late prepayment contained the next straight-line a there’s years. accounted AFFO payments item,

are transaction flow unchanged. The of economics cash the

maintenance the we For CapEx also growth Included heightened about and offsetting rate OIBDA the cash this is environment. with $X AFFO expect of expect million increased a guidance XXXX’s interest range more in $XX given currently of growth million taxes. expense, mid-single-digit $XXX XXXX, significantly from than of a we million interest AFFO in

via balance via is $XX million cash, Please available million, accounts turn an update to $XXX on our million revolver nearly receivable including Committed available Slide approximately liquidity million securitization sheet. and facility. of $XXX XX for over $XXX our

than with stack next net XX, December XX% until less times. very rates. debt and with We of remain mid-XXXX As of to being not floating comfortable was total maturity our leverage our total subject X debt our

to X. ultimately record Lastly, the business a later of that Directors it increase current in our the has on of today to our expectations, may REIT of close dividend we declared prove an insufficient possible March required year. Based and XXXX, XX be is meet for on March dividend $X.XX shareholders payable to be Board level announced may requirements on cash our this at

total $XX of spent million during We new quarter. on displays the a

our expect securitization with as and draws necessary. a more qX, few deals tuck-ins to facility close We accounts funding on cash from receivable these hand

most on last As acquisitive our Jeremy year mentioned XXXX, assets we new years million XXXX. at making year, since looking spent earlier, full $XXX the

acquisition moderate Looking pipeline, current to at in expect our deal we XXXX. our activity

capstone year. We In seeing and in coming you businesses’ I our and the at solid quarter closing, great weeks. many a a about excited conferences to future look forward and events QX was various a remain to of

turn that, With to Jeremy. back the let me call

Jeremy Male

Matt. Thanks,

QX be And looking total markets. flattish. revenues trends pleased financial with in than QX, economy that as slightly what performance transit, range extremely on and today, our and and an billboards that with grow forward proved We’re uncertain low-single-digit our will to XXXX we for towards higher the the of year estimate based range;

hoped quarter by year. the slower got we QX tough have movie in off later While comp than skewing slightly to for slight a given the start created year, a in and a betting sports last might

Bookings in activity has the as quarter the last weeks. and up have picked progressed, over has marketplace few improved the definitely

by XXXX. the year the in of remainder share As we our to signs full by industry implied of that the and our the we are market early poised guidance, advertising further many forecasters, are out-of-home view, broader year. ad encouraged industry remains In AFFO of seeing take for

in becoming We’ve digitized more our provides to smartSCOUT position, hard truly Our find. a an reach continues tool, displays, better and advertising especially location initiatives increasingly demographic enhanced in the which considering a to ubiquitous, think world uncertainty are grow are on of to when strides by solutions audience targeting, go. and with insights the our data that in an which highlighted made scaled audiences medium and ad where It’s difficult also to are digital marketplace. audiences for recent becoming connecting

our comments such and am our how today team positioning in I for proud close reiterating great OUTFRONT’s to a had us having by like success year XXXX. I’d of for

open let’s the questions. operator, for with And now line that,

Operator

Instructions] first hear from we Stanley. [Operator Swinburne And Morgan Thank you. Ben will of

Benjamin Swinburne

afternoon, Good you. guys. Thank

Jeremy Male

Hi, Ben.

Benjamin Swinburne

to the more bit QX the and explains AFFO. think about guidance the growth maybe could know around lot then improve for know might wondering is particular entertainment you you’re if but you expense categories? year us. rates. Matt, the Thank the willing was you I movie to I share given I through slates estimate be, for year Jeremy, And going an don’t you’re had how moving expecting any specific a little with I a you be in to talk mentioned implicit revenue interest you. whether deceleration,

Jeremy Male

mentioned well. a LA, in little Interesting, take particularly to question, one. business bit actually Thanks impacts York New as our Yeah, happy that as be of remarks, transit prepared a Ben. I’ll move supportive my Yeah. little bit and certainly of sort for slates the the because Yeah, in later. I first they’re yeah,

into And is you’re our certainly the New guidance – York us comes an was for So this through in – it as sports that year, has licensed we that obviously. increasing last play guidance we time And go right, forward betting we AFFO there. year. as as look implicit within trend became as massive

pickup We’re definitively in speak. saying some bookings we our as

year. We have that about as we think some a through to going visibility us the gives forward confidence increases go

that acquired number of assets. a and of Also year, built we remembering a worth last assets number

as be the up they will additive on picture the to progresses. revenues as build to also we those revenue As that come fourth the year

Matthew Siegel

floating. have interest term $XXX expense, loan, is which the on And, Ben, million we

securitization use up program, and which the interest rates year-on-year up of about have And last that. a inching of up obviously, about at $XX We’ll tops probably from $XXX year, million XXXX. this most year, million. expense probably gone probably We interest keep have XXXX

Benjamin Swinburne

Okay. Got you it. Thank both.

Matthew Siegel

Sure.

Operator

Choe we’ll hear from of Next, JPMorgan. Richard

Richard Choe

ask – inflation at national seeing and strength environment. pricing the on I that, you you’re talked end of picked as wanted getting in side any increases about pushback up in guess, the the Are had last of about there? what terms the to on you I or weakness year kind of pricing

Jeremy Male

the question, And percentage we fair, of a same year rates. Richard. of expect to the achieve growth had achieved we terms this significant for would year-on-year mean, thanks So as last year, I increase be last won’t that we rate year. in I year

our think this can right in obviously on moving we focused occupancy I yields our the very we’re year, seeing keeping forward well, direction. those and be how as to combine

other, much In forward we potentially as terms is we norm. go bit, wouldn’t you we at forward revenue when or – historic the And business the from weakness may pockets we we’d they back have said, now, with the a our flip around pretty to of away XX% look national-local sort in as of year. as much be too one split thought of maybe XX%, the but I skewed go the in

Richard Choe

the are getting it And seems bookings to clarify, like stronger.

have now? any or seeing economy, in not kind people So of weakness about will the terms is something worry overall or right that advertising of you’re that

Jeremy Male

slowdown, lay we bit end environment, environment, little as year, think national I particularly we we the know, of and – in have there. got back think, I to I as you the last a we more the in longer think deducted downs of a term local have much

you’re notice So it’s a national. if to going anything,

we’re trajectory I think not some that January. I I media December, confident move as seeing. we generally that growth increasing a think speaking, peers And to forward. felt appear breeze through a and little into feeling our in bit cooler we’re certainly anything of But as carried be other we seeing say, that about of as

Richard Choe

to reach grow see you you this And can one ability didn’t you ridership you much revenue expect year? here? Did as the – increasing that from the the MTA say contract last do to MAG for earlier And without me. on

Matthew Siegel

of the Richard, up higher. do Yeah, get the expect increase steps We the closer CPI so in MTA MAG. because to revenue level the MAG MAG the to XXXX, adjustment, is and

the that’s So, to big we year. lift going be in through OIBDA think a

So, keep again, we going. going to it’s think

going think, our XXXX. was think has revenue I last can our expand we widen over-indexing highest that our increases seen and the hopefully yet. performance been since we’ve But ridership, seeing are and we keep some recovery XXXX small And We in XX-day that ridership that. metric versus

Richard Choe

you. Great. Thank

Operator

hear we’ll from Zaffino Ian Oppenheimer. Next, of

Jeremy Male

Ian?

Ian Zaffino

the I have expectations tuck-ins additionally, in an currently eye the of first some I towards sort I in will in mentioned does for quarter. additional And larger then, the performing assets And Oregon, markets specifically, there other compared Northwest are markets? M&A activity, expansion? and you’ve like? look know the XXXX. Thanks. your how guess, year, moderate all What any you of guess, to environment those that in are the During

Jeremy Male

I’m sorry.

the early of Can our was and it. missed part about it ask to we there. something the Northwest success I I think first repeat you that? to you question. know the I repeat hate

Ian Zaffino

I new Oregon, how well? guess, Yeah, the as investments compared problem. and, to I no performing Northwest assets compared larger Yeah. to the are guess, Sure. On inventory those your expectations? and are markets And,

Jeremy Male

Yeah, absolutely.

take assets, you me like sales national XX if period local our a Let of a prior set strength you of revenues, look own you assets our Whenever of develop acquire the that one. being them overlaying based those we sales achieved leveraging team. on then owner. acquire on that And and the were those revenues over by to methodology, also by the months

I with So the expectation, to in line was still our direction. but out piece, that the as acquisition of halfway bridgehead in the – say, sort it’s from expand us national of that provides particular the broadly to through real for of sales see And think, it year, I’d benefit is say great a thing the our fair it Pacific. I Portland, local gate, ramp, about the the say, to going and yet in Northwest with broadly more we’re say right

going to piece be for fabulous OUTFRONT’s many, a many of years that’s So come. business to

Ian Zaffino

activity then, guess, expand to I quarter? And areas And in you the are this Great. how sort further year? of what would Thank like first Okay. and on of sort expect looking M&A guess, is M&A, deal environments you. I

Jeremy Male

plenty a in in we that generally, that would into. demographic, traffic] lower few and up, mentioned and looking a markets certainly as hopefully existing last in find growing our opportunity is our we interested little between than from really up attractive actively investigate and we We come opportunities. regional occurrence, good when we be footprint would things a [A there’s [ph], certainly market stick run were I otherwise, anything they year, to Portland, some remain really tuck-ins we’re focus, far our came just pipeline that’s But if interesting to and natural interested. in and young, large opportunities are of that players

Ian Zaffino

Thank Okay. very Great. much. you

Jeremy Male

Thanks.

Operator

Next, Barrington hear Jim Instructions] Goss from we’ll of [Operator Research.

Unidentified Analyst

this on getting are there I kind anything… evening. maybe – guess, – Like the, point? billboards. for variability to still just significant Jim. you question Is at Good levels is like about I Pat above of or, XXXX This [ph] I of a talk in market. guess, some any on laggers had by there back Can

Jeremy Male

Hi, Pat. the recover. north business XXXX, end much since to firing our part – XXXX the of regions the quickest of Again, pretty has billboard of been billboard business all are

If you fall remember, and far. break are we into it Midwest, and South, outperforming East, was which as didn’t all the XXXX now. Midwest, West four But regions

Unidentified Analyst

Okay. Thank you.

Jeremy Male

Thanks.

Operator

And back turn are Jeremy, over Instructions] call I’ll for there appears further it at comments. or any [Operator the questions no closing additional time. this to

Jeremy Male

Thank many everyone you And thank you, your and coming we events for you attending seeing operator, weeks. Thank you of at forward look and call to questions. to much very over the Investor the for indeed.

Operator

conclude all today’s That participation. call. Thank for does you your

disconnect. You may now

Outfront Media (OUT) 22 Feb 232022 Q4 Earnings call transcript