Earnings call transcript Q2 2023

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

Operator

Good afternoon. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the Outfront Second Quarter 2023 Earnings Conference Call. All lines have be placed on mute to prevent any background noise. After the speaker’s remarks there will be a questions and answer session. Instructions] [Operator

like President conference go of now Stephan to ahead. turn Vice Bisson, Investor to would over the Mr. I Relations. Please

Stephan Bisson

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

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

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

from call Relevant XXXX listed forward-looking file statements. are XX, in coming may and cause in we factors our conference XX-Q earnings actual and to our XX-K include XXXX our forward-looking differ including these Form SEC filings, which materials statements could This June materially our in Form that results days. to expect

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

Let me now turn the call over to Jeremy.

Jeremy Male

Thanks, again for today. Stephan you us thank and joining everyone

original budget. single-digit mid and out, a in our May, below provided reached guidance revenues our While expectations were little they

to quarters The start, late materialized much of we the in had not the revenue the same quarter business where did got June, to in end, off a good recent particularly towards but booking extent. softened experienced

while and over this the interest OIBDA growth expense. primarily was headline transit about X, due year-over-year, to consolidated Slide on acquisitions declined during and grew higher our growth around of to business lower total see Adjusted numbers, and XX-months. OIBDA slightly AFFO prior X% other, down core various the point revenue quarter, a can which summarizes X% you from due our reflecting in As

U.S. media stronger shows dollar which Slide X rate. down the basis, our other a on X% as consists revenue was by basis Canadian on X%, On Other, Canada an versus year nearly reported increased hurt basis, of U.S. reported was mostly exchange organic constant segment. Total by the X%. prior an results down year-over-year. dollar

Miami, of Breaking this be media by components revenues. down particularly of led further XX% can to which strong. good most in and markets our the our with is Billboard, Slide continue you revenues, grew see our on which X, of X% about performance York New U.S.

revenue was As we anticipated, had year. last our versus transit again flat essentially

seen and The details can Slide our U.S. be business behind our local on in revenues national X.

was X% you our nearly The national of split XX%, in advertising local split. more XX% was growth in almost markets, XX:XX outpaced largest As see, seen year-over-year in this can performances national quarter, up closer compared our to to typical X%. strength moving our us strong the and locals quarter, national the local

increased which illustrates year-over-year $XXXX. than number per improvement more primarily dollars of just This driven X% X Billboard an over faces, to U.S. generate was yield, by our Slide typically digital which grew average. over board

up during revenues Slide were XX% last almost and of approximately growing quarter, with representing digital X positive year. to to from the total new our also Digital additional Billboard total last nearly digital highlights primarily raising year. of inventory. the because digital XXXX. our our up added in compared primarily performance year, prior revenue boards due XX% inventory basis quarter, transit revenues up XXX X%, was Digital XX% We points XX to the versus

is growth notable, flat static by revenues, being boards results year-over-year, decline modest a transit. see were that of growth digital. which the continue static can X% offset in static given On best Billboard X% we to in The Slide X, to with convert our our revenues many essentially you of Billboard in

come want call I to back to Matt, transit. over the handing Before to

reporting in particularly charge assets. digital New we our see transit impairment will transit and our You release that, our unit the $XXX million buildup booked of approximately assets, York our on an MTA non-cash

non-cash This thus our expectations have will performance detail guidelines greater in here result statements. revised of this revised on lowered financial of future and reflects accounting far go model. Matt follows change This momentarily. into charge transit valuation our the franchises the and disappointing of our impact in the subsequently year we numbers financial our the seen

transit major in we anyone environment the transit our the recovery pace of And pandemic expected, was ridership ability The COVID-XX level, still some the in revenue cities our with public what absolutely will and ridership urban certainly advertising we adverse how contracts. on generate entered Clearly, in XXXX. disrupted turn, massively believe these new and coupled impacting to and adversely business assets. while not lower into stalled perception commute, work of people trends ongoing these continue recover, transit to has when

I in challenges are significant also will posed to we to with MTA address the transit in changes are MTA New engaged conversations of contracts and particular, since given in find signing that current XXXX. by the hoping mutually a the mention the York in approach the the City environment agreement currently agreeable

transit value advisable, In the in and of we to update We event, prudent, charge. leading investment today’s in coming you any the will update it considered these non-cash franchises our to on this months. timely

Matt would revised XXXX. additionally schedules the by actors caused more from and call. transit further on expectations guidance achieving period writers will our this changes will fall later present our the issued impacted provide I on mention strike television us previously weakness to the for by Again, detail of AFFO

hand let that, with to me Matt. And over now

Matthew Siegel

everyone. appreciate good joining call you afternoon, today. Thanks, Jeremy, We our and

we week, the much which expect XX-Q impairment about like I There expenses, what is our to detail would I lot and discussing in Before review. transit this early file do pick of to I’m recorded quarter to will we next that up ended, a my with Jeremy best to charge note where non cash explain. also business. our will

in and growth, of years After forecasted our strong transit of the the revenues two this Because seemingly recovery continued in in stalled back of half the slowdown of first weakness half XXXX. the model, base the of and year, deployment recoup on the franchise our the end term on amended MTA the revised financial in XXXX. spend made not we do before expect based to-date to

incentives we we economics MTA the are the costs assets action of some Therefore, does such many a to growth. the enhancing enhancing deployment available targeted data the taking reducing This balance all not our performance steps contract we demand are sheet the platforms, value as on reporting of system for currently will to contribute our revenue prepaid MTA the and audience change and to increasing intangible and sales operating anticipate of improve digital connecting transit, franchise.

to contract. growth have range and after to of revised throughout an We annual our term XXXX, now the remainder of XX% base expected the of X% the revenue amended

revenue recoup could opportunity this to an range investment base or continued term. perspective course, above this all provide possibly Of some of growth over the

are generation. reducing of also including is In franchises, Francisco, sheet balance transit [indiscernible] and which public reduction San addition, smaller amount also perception revenue and the in a we ridership experiencing

MTA contractual like to on, franchise I forward. for the commitments our would moving going discuss Before

next to the initial expect year. We finishing deployment do are committed to we currently which

in over After million To next $XX million complete and million we total of year. the $XX requirements half with to the next capital annum. million $XX $XX spend approximately $XX replacement XX-months XXXX, we to deal second the to a spent be million in million to million $XX of expect $XX XXXX, spent to per expect

extent of to case the We the based an in remainder quarterly term will we agreement. continue negative deployment aggregate amended throughout an the each costs equipment impairment of booking cash assess MTA our charge for the to project impairment flow

MTA As current with projections franchise I revenue behind investments will point predict build during XXXX. described, cash neutral agreement beginning some based of at our term the most along of of with remaining that and the today, the just become flow initial the amended over estimates us, MTA the

the based $XX an million. outflow remaining term Currently, of cumulative to cash of aggregate MTA is the approximately contract have entire expected amended

and we we based flow $XX million become XXXX. $XX the and on our the deployment expect Given expect on including we $XX $XX cash spend charges MTA incur neutral, to million million million or to current costs XXXX these in spend model, our in at until additional estimates to to impairment we expect remaining least

to X.X% the change revenue assumed imagine, can is assumptions growth weeks model and $XX CAGR point our in you As from sensitive and million to highly revenue between XXXX cash a a the flows contract. from XXXX hundred change basis about estimated

our more Now, lease year-over-year, to expenses. Total approximately XX or Slide of please up by year’s at comparable bill were expenses period. $XX X% last XX% versus driven expense look principally detailed growth million turn for

many are on over added with Also, under agreements. Much exceptional which operated large revenue inventory XX-months. of performance expense the is in our have this associated contributing markets, new lease the prior prime assets is growth we share frequently of

the owe and and expense inflation rate adjustment year-over-year from expense up expense the remainder Looking at Transit increased of related taxes growth MTA Partially from moderating compensation the higher contractually given here, than X%, other for New less year. required a York franchise was the we Billboard the lease due expenses. maintenance to XXXX. MEG primarily year, this also was to into continue growth X%, and higher to moderate expect

cost compensation last SG&A of versus ago was and initiatives year modest a incentive partially year, increase offset lower X.X% during versus impact expense the headcount undertaken up reflecting certain quarter. in just by the

growth expense lower that compared XXXX. SG&A half and the lower the to represent when of year methods comparable evaluate these of believe in percentage to continue will revenues periods the in second We expenses to

versus by unfunded XXX, of plan, impact opposite offset linked a compensation adverse last driven expense up was retirement Corporate the which This on reduced to expenses. dollars was S&P by under related in direction the market increase million equity entirely index fluctuations slightly just year. moves an

On franchise million higher Slide from the of increased primarily impacts of higher last has XX, $X year, from bid expense and see our expenses. quarter due declined Billboard to oil costs transit lease the you can

OEBITDA. but XX XXXX. versus sources flat versus Billboard and U.S. provides Billboard additional was down on in XX.X%, ago, the detail year was the margin X.X% and comparable up OEBITDA of a OEBITDA growth Slide period

inventory, new was ramping acquired The margin is our to driven declined and revenue verse inventory projected XXXX still acquired as levels. by

We levels in XXXX. margins will half XXXX again the in second of to expect those above Billboard return achieved

driver total of expectations. demonstrating to by OIBDA we consolidated Billboard driven as inventory versus trajectory prior due their solid $X on upward bit Looking will all in higher to increase Billboard a little New performance. expect value of MTA continue forward the U.S. will was XXXX, net. margins down our the revenues comes to continues the Billboard, ramp approximately from our million our to Substantially, year Transit acquired expenses, be York

in investments XX $X.X total million year $XX digital the The of expense. was primarily Insurance on due CapEx to QX million, spend fewer prior decline capital maintenance Slide versus expenditures new million $X in including CapEx Billboards. was

year, we the $XX to CapEx For of million our million to down forecast. $XX million prior $X $XX million expect total from

We maintenance million CapEx million. to expect $XX $XX be to approximately

Looking at AFFO XX. Slide on

see can down expense. QX AFFO million and primarily $XX is interest year-over-year, our given this higher approximately of lowered You OIBDA

Jeremy continued mentioned mid given primarily As we guidance, growth meet annual in are our earlier, we will seeing single-digit Transit. that previous we expect AFFO the weakness

believe XXXX. XXXX by We we provide on possibly might thought it the high some of versus decline may double-digits AFFO within Currently, guide. some to low the single-digits, AFFO additional helpful inputs information be

to First, full-year OIBDA Billboard be we expect million. around U.S. $XXX

million be adjusted $XX AFFO full-year unchanged. to a remain $XX our expect mostly we Second, expectations U.S. impact items for other loss that million to OIBDA Transit of and

$XXX balance of sheet. approximately turn $XXX $XX Please Slide our revolver. million liquidity Company’s for via to our on almost including available million is XX update cash, million an over

about We facility. securitization receivable million accounts $XX available via have

worth next of debt QX As June portfolio our our from mid We slightly net our our XXXX times, maturity X.X approximately total subject was level. XXth, a to rates. remain not of quarter total debt until being comfortable floating with with up in

facility number extended committed credit tuck-in It we last worth to the maturity of pushing the acquisitions during out quarter, year. amended deals in that, approximately million June quarter, XXXX. was $XX completing small and noting also we closed our a of to We the revolving

much a in pipeline both current the dollar in in in will have XXXX, continue terms. we our quantity XXXX. the deals Given volume in likely completed marketplace, XXXX of lower and than This we trend activity and will

business we a has Directors September we cash $X.XX $X.XX dividend of quarter at September close the payable Subject dividend the of through record year. of to on of to the a approval, shareholders on being Board another to Lastly, announced Xst. our $X.XX today fourth leading in expect that, Board XXth paid declared total

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

Jeremy Male

Matt. Thanks,

that especially business have pretty well, others the in call, ad have may on you noted of As current our uncertain from much mentioned. commentary climate our today’s is doing Billboard

National in sales strikes the is somewhat writers and challenged actors by Hollywood.

television hold put As either have postponed. winter been typical on many the or of and launches fall

disproportionately impacts and media. transit of While grow which we grow as visibility of decline. business, With QX to the parts both on this launch today, it revenues towards transit, will is our Billboard digits that are delay continuing total skewed single to in likely Based slightly. more impacts low estimate

are improve revenue touched We transit our many taking steps Matt upon earlier. within performance to which

connecting particularly and the beginning start digital direct New MTH selling improve will the hopeful that We programmatic are at of York XXXX. trends

also continue We XX% of a great of our be today, as focused of and which and essentially business, approximately hundred Billboard total on to revenues total growing percent represents EBITDA.

by around evidence despite posed compared out pandemic. Billboard both EBITDA to is of Billboard front the in first the had as revenue of the This XX% CAGR X% when XXXX. of the and the strength second quarter, industry. of of XX-month growth grown the nearly fact, In entire interruption half and This by represents both

of the and insight, mobility, in day, Billboard as automation, that data the today have value transit as they outdoor The ever the long-term outlined length success the and both end in have the At true past, at believe growth remain proposition we improving we digitization, our and been. at assets. of drivers

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

Operator

Your of Stanley. Morgan line question Instructions] Ben with first from Swinburne the [Operator is

Ben Swinburne

kind then clarification and of I on guess, one question. bigger the picture maybe question MTA a

free also during you then flow Matt, a free you to loss cumulative expect I XXXX. sure I of positive the you sure but I think understood million turn just right, want contract heard that on cash of beyond make growing sort that to is of mentioned, MG the want to and than flow cash XX I faster mentioned make think just I you I pieces if think I that there. sort revenue. sometime moving just XXXX,

quite I then, Jeremy, And think the point clearly. you made

the your know, EBITDA You company all Billboard. is now,

to And thinking you really can for guys the transit? as what have to about are terms so, contract, to it relates it what you on is of options the given you not but the cash table what - are the that a other material navigate in business Obviously is flow you trying of situation the anymore.

Jeremy Male

the take to can second and first back Maybe then I will piece first your Matt question. go

decades market. world piece of fundamentally, So transit there out-of-home fast for I and and think part a the is of advertising important been has growing many out-of-home of the

What we that we transit, now than in in the in New XX% were of a down is for a is absolutely contracts have couple part effectively were around valid, is market. unfortunately number they by And pre and transit of pandemic. that particularly time York set have audience, at while they our higher which were led typically most written,

MTA. a we reset we operators. are with number of what expectations need the partners transit is and now Essentially, transit discussions we with in to the do can of look our And to how those particular, that having the advertising right are

not and is - the is business it there with wrong transit nothing actually advertising. So is that

that, very And majority we the extremely and need are clients is, expectations. transit some, those Billboards remains more information hard we vast, our do, transit have buy But hope we forward to go vast company effective. positive to of what us. we on and on, as both that remember from resetting It and working

Matthew Siegel

your of a of question, clarify the start of flow Ben, quarter, XXXX. first XX the third in cash from negative the the second will to from I part quarter like would end numbers just be the

burn think by XXXX, XX term, So in of sometime we big the that now, the the we will end off through base XXXX.

we forward, be neutral. there cash from So will flow

Ben Swinburne

X% is top-line to That XX% assumption? with the see. I

Matthew Siegel

Yes.

Operator

ahead. JPMorgan. Please go line next the question of is Richard Choe Your with from

Richard Choe

Hi. the them. are to the to right be I bit follow-up company you MTA. that, done little can just I outlook? is that on re-discussing the appreciate business contract given the a size something with kind new wanted But the of there within

Ben Swinburne

both wide of highlight of they variety as just a things There come and nothing other and always detail or just But, on we considering up. MGA within we are within transit to a the report think efforts. yet. business, is series to nothing pretty the And I the can, now. conversations there portfolio, things success into renewals are do, go But, not and

Jeremy Male

I transit in as back we XXXX, had think, If XXXX that. were the $XXX recouping and just in on a exactly look part advertising contract we MTA we to assumed, business, Richard, million maybe million had working XXXX. $XXX round investment was our a up we of following actually numbers, in making And OIBDA. in of particular

have between operate mean, that We have the now. revenues still So and way when it. our to manage are look need essentially is or we sell a this, time still our big at key putting to will We is the be it right still We are to today. is to and transit we I still What That to we it. where business. we the up is us business effort it. and modify split partners. where putting have

Richard Choe

Great. maybe the And there the strike? of and were color follow-up I you concern that mean, static on Hollywood doing then national guess both the the kind soft. advertising give some a excluding bit even some I little any and is well. and side, you Billboard what might regional advertising digital Can writer local, expect entertainment of out comments maybe on national be

Jeremy Male

is it TV have what as actors is is, So, the and mentioned remarks, that launches the the our really really four that back. I sort really in of of been pushed writers is been main strike prepared impact really

how on eye movies, impact. some be we is not are long concern, but particular on is at obviously - a there that how could movement this we it in further continues because that an moment long the There depending keeping but

growth Billboard just We are the national our in transit our in business reflecting at I in strikes about will and the think range. likely business up modest as look business national expecting will local down business we digit we in that believe our we QX, low our talked single that QX. be be

Operator

Jim line with from Your Research. next Barrington question Goss the of

James Goss

later Billboard are pushed year. In movies - your right have been have terms in be be of there is of assume tend strike I the the be Just a is there a - to only now. been there presence will There that the I the that promotion and going impacted? to mean, couple off out when

the a or it is the issues is pretty some will or the much in across So duration are of certain and there be other areas, are and same matter you strike, facing timing are of it it localized the your markets. they

Jeremy Male

their Actually on more movies where issue, I be good full really at fine an we likely where not have that we that from TV actually think I been the in September impacted, typically as QX. mentioned movies schedules. are It actually to the moment, is promote is to dollars networks in take

movies. So an not issue on

As movement, LA a impact towards the general I that New said, in bit of terms of so York skewed media is right they notice but very for little and where may be is where not markets there huge would now that that in be much the a not concern we is us would most.

James Goss

declaring another make that be more confidence a next for general to that dividend, regard a dictated terms it that, now be down you year, the through hopefully it quarter, and paying would and would that agreement the though imply dividend, with reasonable the this AFFO to be one REIT. even despite with an fourth interpretation to expectations and is to than fact a will the opportunity it your want you would that is and the there a you And have you you non-cash in are of projecting for by charge lower $X.XX statement as the give

Matthew Siegel

we end had Yes, We our more of up forward last than I a think forecast, some based carry are recalculations were on from I paying slightly complicated. mean, we could the to. required year.

$X.XX to sometime think we with, is quarters each. that longer increase our we close So of to We dividend. we necessary. no But feel four our a are had XXXX, need going anticipated be to pretty in requirement

James Goss

Okay.

for you earlier basically, were on, being is you somewhat to conservative that. and do So, it

Matthew Siegel

seem settled. be Yes. to It

James Goss

going finally, extent? any some there a are Yes. down, And written things great implications terms at down? of write to with have since been the paying down aside of up wind for that in forward, Are the regard in to are projects future, look will million the also think these that recorded there how we written should $XX being these from you accounting be extra you assets things will

Matthew Siegel

No.

Our have activity, accounting same plan using the is been use the for the from to we MTA inception.

that our advisors, experts. will outside obviously review We with

with We will continue that.

of heads really now. probably part expect to fourth that up, We just we last first impairment, doing a quarter, impairment into the the we little of is give the are will a this in third continuation which XXXX. a continue and bit And

Operator

from Your line Ian next with Zaffino question Oppenheimer. is the of

Ian Zaffino

have know maybe seeing I you any TV kind color would there of notable you can And talked notable being but least give little about, at weak. us Thanks. already maybe give then of you in - the each strengths? you you other But helpful. a what category, bit think I weakness, can be mentioned world the are around the

Jeremy Male

it saw and in was growth So, and terms, alcohol looking QX, was, entertainment actually at up dollar travel, category legal, in I mean, million. and $X largest up strength our I QX. strong mean, was in XX% it we over

financial quarter. were and real weak second second weaker and us cannabis categories estate, kind down, was were quarter, health that they the of medical, for weak, actually was in insurance Categories in absolutely

Ian Zaffino

call to color consider one et was? what digital, is cetera. then, us may the and in. breakdown digital, maybe I to answer, of the you added. us maybe grow maybe not it the static of any Billboards I you direction? And business Is the the mean, out Billboard just any give give just is some action Thanks. Okay. if have could between directionally, can there static apples-to-apples conversions conversions, on there and if that see performing, Let’s of say of to net squeeze some way it but, backing you the the be what more just the it its could Would you how actually static tell exact kind

Matthew Siegel

very is are static Alright. the had notable prepared we try, is basis fluid the hard most because of I players putting Yes, converting a in his on an since and calculate taking way are but annual their Jeremy to basis that Matt, it what numbers we can them are a good very up give on onto digital team. X% relatively remarks and

So much much, they are Same to players performing not likely - a higher, basis know if on very their it static. hard growth store I same notably X% comparable. are higher calculation. but would those since back look get we we in But kept is store all

Jeremy Male

I think one. the other

a Just of through that, All XX,XXX way portfolio mean. adding have outs, a the when know do onto obviously that, is across that. Ian, of you and you there what Billboards, ins is lot I

of way So, about you think, slightly we we selling performing X%. ahead probably believe businesses just like have I as say, feel the described the for I gives it the best how

Operator

no further Jeremy this closing are time at call I to will remarks. there the questions. for back And turn

Jeremy Male

operator. thanks November. conferences I the of today. months, results look you those presenting And with we enjoy who of you again. summer to our I meeting various at QX call our don’t the over to coming the Thanks rest you Thank and look many forward in forward but everyone for to for joining

Operator

XXXX quarter second Outfront the concludes you conference call. Thank for earnings participation. your This

now may disconnect. You

Outfront Media (OUT) 3 Aug 232023 Q2 Earnings call transcript