Outfront Media Inc. Price & Performance (OUT)

Which we expect to file this We will refer to certain non GAAP financial measures on this call. Any references to OIBDA may today will be on an adjusted basis. Reconciliations of OIBDA and other non GAAP financial measures are in the appendix of the slide presentation the earnings release and on our website, which also includes presentations of prior period reconciliations. With that, let me now turn the call over to Jared.

Thanks, Stefan, and good afternoon, everyone. We're pleased to be here sharing our fourth quarter results and 2025 Before diving into the Q4 details, I'd like to quickly highlight some of our accomplishments during 2024. Organic revenues, which exclude the results of our Canadian business, in both 'twenty four and 'twenty three, finished up about 4% year over year. Our billboard revenues were up 3% for the year growth being driven by both higher static and digital. We continue to realize significant growth from our automated sales platforms, which grew from 14% of our digital billboard revenues in 2020% to 20% of our digital billboard revenues in 2024.

Our transit revenues rebounded nicely in 20 up nearly 9% for the year. The New York MTA led the charge here growing by nearly 12% during the year helping transit adjusted OIBDA to improve by nearly $20,000,000 and returning the segment to positive territory. 2024 AFFO grew 11.5% nicely ahead of the high single digit guidance we provided this time last year.

In June, we closed the sale of our Canadian business for US300 million dollars and utilized essentially all of the proceeds from the sale to reduce our leverage which ended the year at 4.7x down from 5.4x at the end of twenty twenty three. Turning now to our fourth quarter results. You can see the headline numbers on Slide four. Organic revenues grew 3.9% a little ahead of the guidance we provided in November, while OIBDA was $155,000,000 and AFFO was $119,000,000 Slide five shows our segment results. With billboard growing 2% transit growing just over 9%, and other which now principally consists of digital equipment sales, growing by $1,400,000 Slide six shows our detailed billboard revenue growth the 2% top line growth was driven primarily by higher rates the occupancy was up during the quarter as well. Digital billboard was up 4.7% while static was up slightly. Notably, these numbers include the impact of the marginally profitable contract that we exited in October which we estimate cost us over 100 basis points of growth. Slide seven shows our detailed The 9% top line growth was driven by 12% growth in our digital revenues, and 7% growth in our static revenues.

As has been the case for much of the year, the MTA continued to perform well up 13%. On a consolidated basis, our stronger categories during the quarter were technology, political, and financial. The weaker categories during the quarter were CPG, health and medical, and Alcohol, Slide eight shows our combined digital revenue performance with revenue growing almost 7% in the quarter and digital revenue representing nearly 36% of the total up from 34% last year. Total digital automated sales which include our programmatic and digital direct products across both billboard and transit the latter of which we launched in the first quarter of twenty twenty four, were up over 40% during the period. Represented nearly 17% of our total digital revenues up from just under 13% last year. The breakdown of local and national revenues in our U. S. Business can be seen on Slide nine. Local grew by just under 1% during the quarter while national grew a strong 7%. The strength in our national book of business was primarily driven by the tank and financial verticals. Slide 10 shows our solid billboard yield growth. Which was up about 5% year over year to nearly $3,150 per month.

The drivers of this was static yield growth, which was up about 4% and our continued digital conversions. With only 4.9% of our total billboard inventory digitized, we remain confident of continued digital growth. With that, let me now hand it over to Matt to review the rest of our financials.

Thanks, Jeremy, and good afternoon, everyone. Before getting to the detailed financials, I'd like to say a few words about my friends and colleagues. Jeremy Mayo. Towards the end of last year, you may have noticed he announced his retirement from Outfront Outfront. In his nearly eleven years as CEO, Jeremy navigated the company through its separation from CBS with its initial public offering the subsequent conversion to a REIT corporate structure a rapid digitization of assets and a pandemic that produced the most challenging operating environment the out of home industry has ever seen. Outfront would not be the industry leading company it is today, without his vision and leadership and all of us here wish him well in all his future endeavors. Now let's turn to our financial statements Please look at Slide 11 for a more detailed look at our billboard expenses. In total, go forward expenses were up a little under $2,000,000 or less than 1% year over year. Billboard lease costs were down almost $6,000,000 about 5% due primarily to the exit of the billboard portfolio in New York that Jeremy mentioned earlier and lower payments on revenue share leases. Posting maintenance and other expenses were up a little under $5,000,000 or 14% due to higher maintenance and utilities costs compensation expense and production costs.

Included in this increase was approximately $2,000,000 of storm related costs in the Southeast.

SG And A expenses rose under $3,000,000 or 4.3% due to higher commissions and network costs. These expenses combined with the 2% billboard revenue growth Jeremy described earlier with the billboard adjusted OIBDA rising nearly $6,000,000 or almost 4%. We are pleased to see billboard adjusted OIBDA margin increased by 80 basis points year over year to 40.3% Turning to Transit on Slide 12, In total, transit expenses were up $1,400,000 year over year.

Transit franchise expense was up under $500,000 or less than 1% as contractually obligated increases to the MTA were partially offset by lower payments to other franchises. Posting, maintenance and other expenses were up just under $2,000,000 due primarily to maintenance and utilities costs and higher compensation. SG and A expenses fell by approximately $1,000,000 or 5% primarily due to lower professional fees. Combined with the 9% transit revenue growth described earlier, With the $22,000,000 of adjusted OIBDA generated in the quarter, it is nice to see this segment return to profitability for the full year. [indiscernible] I'd like to take a moment to update some of our expectations for the New York MTA in 2025.

Our mag payments at the MTA will step up by about 4% this year approximately $156,000,000 given the New York City CPI escalator contained within the contract. We will continue to account for our MTA franchise expense on a straight line basis throughout the year.

As we mentioned on our last call, our initial build out of the MTA digital network is substantially complete. We expect to spend around $35,000,000 this year.

Principally to replace aged and broken screens. Looking forward, we currently expect that this spend will be in the same range annually through the end of the contract 02/1930. Per our quarterly analyses, remain confident the contract will be both OIBDA and cash flow positive the end of this period. Slide 13 shows the company's combined billboard transit and corporate adjusted OIBDA in the fourth quarter. We consider this an important measure given these represent essentially the entire company moving forward. Corporate expense rose by about $2,000,000 primarily due to higher compensation and professional fees combined with the billboard and transit orbit I covered earlier, adjusted OIBDA totaled about $155,000,000 up 8.5% from the comparable measure in the prior year period. Turning to capital expenditures on Slide 14. Q4 CapEx spend was $18,000,000 including about $4,000,000 of maintenance spend. For the full year, total CapEx was about $78,000,000 including $6,000,000 related to our domestic Canadian business. For 2025, we expect to spend approximately $85,000,000 of CapEx. About $35,000,000 of this total will be for maintenance, which includes $10,000,000 to replace aging digital billboards. We commenced our installation of digital boards in 02/2007 And while many of our earliest installations still look great, we will be replacing some of these older screens with new state of the art technology will help drive revenue growth.

Looking at AFFO on Slide 15, you can see the bridge to our Q4 AFFO of $119,000,000 The improvement is principally driven by higher billboard and transit and lower interest expense partially offset by lower other OIBDA all of which was related to our now domestic Canadian subsidiary. As Jeremy mentioned earlier, we ended 2024 with $3.00 $8,000,000 of AFFO, nicely ahead of the guidance we provided at the start of the year. For 2025, we currently expect reported consolidated AFFO growth the mid single digit range driven principally by improvement in OIBDA. Please turn to Slide 16, an update on our balance sheet. Committed liquidity is nearly $700,000,000 including almost $50,000,000 of cash about $500,000,000 available via our revolver, and $140,000,000 available via our accounts receivable securitization facility. As of December 31, our total net leverage was 4.7 times down from 5.4x at the end of twenty twenty three, and well within our four to five times target range. We remain comfortable with our debt stack with our next maturity not until late twenty twenty six. Turning now to our dividend. We announced today that our Board of Directors maintained a $0.3 cash dividend payable on March 31 to shareholders of record at the close of business on March 7.

We spent approximately $8,000,000 on acquisitions during the quarter, bringing our total for 2024 to just under $20,000,000 We also spent around $24,000,000 in cash and non cash consideration to buy the outstanding 49% non controlling interest in one of our consolidated subsidiary joint ventures, increasing our total spend on adding assets over $40,000,000 Looking at our current acquisition pipeline, we expect our 2025 deal activity to remain at a similar level to those seen in the last couple of years. In closing, we accomplished a lot last year are fully focused on delivering a great 2024. With that, let me turn the call over to our Interim CEO, Nick Bryant.

Thank you, Matt. Before sharing some of my thoughts, I know this is where we traditionally provide quarterly guidance. So I'll share our current thinking on the first quarter which is that we expect quarter one revenues to be slightly up relative to last year with billboard flattish and transit up in the mid single digits. This guidance excludes Canada, but includes the headwind created by the of the New York MTA billboard contract in the fourth quarter of last year. It creates about a two point headwind to our billboard growth and about 1.5 headwind to our total growth.

Now I'd like to share some of my thoughts about Outfront.

In the two weeks since starting in the CEO role, we've had a smooth leadership transition I've met a lot of talented people. And I've learned much about the company on a more detailed and operational level. What I see is a differentiated organization that is distinct from the pack and has significant additional potential to unlock. Our focus on amplifying the impact of out of home expanding our share of U. S. Ad spend and accelerating our digital capabilities. I'm just getting started but see a very promising load ahead. Building upon the strong foundations that Germany has created over the last eleven years. And with that operator, let's now open the line for questions.

Thank you. We will now begin the question and answer session. The first question is from the line of Jason Bazinet with Citi. You may proceed.

I just had a quick question. Given congestion tax in New York City and this work from home push or work back to work pushed by some of the financial institutions.

Are you seeing any sort of incremental interest among advertisers for the New York MTA would you say that The tone is very similar to what it was last year. Hi, Jason. It's Matt. Thanks for the question. First, the congestion pricing, obviously, controversial. We'll see where that goes. For us, the MTA was one of our drivers last year of revenue growth. And EBITDA. I think revenue grew about [indiscernible] so far it's off to a pretty good start in the first quarter of twenty twenty five. So I'm not sure it's caused by congestion pricing or back to work. Or just the good work from our sales force and greater focus, but we're pleased with the last year and a half or so of That's great. Thank you.

Thanks.

The next question comes from the line of Cameron McVeigh with Morgan Stanley.

Hi, thanks. I guess just first, when you're What in your view is driving the softer than expected local ad growth fourth quarter. Was that vertical specific at all? Any color there would be helpful. And then second, for Nick, curious as you've joined recently, what you're most excited about and what you see as the biggest opportunity Outfront front in the near Your future.

Sure, Ken. I'll get to the shock air growth. Local, we had very solid comps back in 2023. So we're lapping that [indiscernible] [indiscernible] getting more focus and picking up plus there's some macro uncertainty in the environment around post election and things and probably impacting some of our midsized business customers but we see better pacing in the second half of this year. Obviously, numbers are smaller still, but we do see a pickup. You can see that from our AFFO guide. [indiscernible] pass it to Nick for what he's excited about.

Yes, I think that it's It's a great question because there is, as I've now, as I said, sort of got more involved in the depth of the confidence that While our portfolio has always been focused and is built around the top 25 DMAs, our portfolio strength is very much supported by strength of our internal credit resources, we discovered an excellent credit agency that's available and active across so many of our most significant brands. Supported by a digital innovation lab that's really offering those significant brand advertisers who really are seeking to find a way to be very progressive in their digital marketing, offer them to integrate the digital out of home within the overall campaigns. And I started to see which are data sets that enables us to really be active on a full funnel basis. I mean, out of home industry has always been famous and recognized with brand building prowess, the ability to really build fame. Familiarity for some of the biggest brands in the world and We have Apple and Netflix and HBO and Louis Vuitton and those brands They care about brand. They also care about performance. And ensuring that now we're leveraging our our richer data sets and especially in the digital out of home space and in those [indiscernible] It just gives me greater confidence that we can be that full funnel performance capability from awareness and consideration the transaction how we continue to build on that.

And that excites me greatly because it's obviously extremely necessary for those to maintain the strength of brand and deliver performance results.

I hope that answers your question.

The next question comes from the line of Daniel Ossley with Wells Fargo. You may proceed.

Hi, thanks.

So your peers have reported seeing some choppiness in national ads growth. But your results would suggest that you aren't seeing the same So can you speak in more detail on what's driving the strength that you're seeing in national and what your expectation is moving forward?

And then you gave us your expectations for Q1, but should we think about revenue growth for the remainder of the year? And what are some of the major puts and takes that we should that we should consider?

Thanks, Daniel. Obviously, [indiscernible] peers are seeing. We're seeing we think pretty good national performance and picking up we go through the quarter. We have We give guidance for [indiscernible] Outfront DMAs in our markets. We have a strong strong Super Bowl. In New Orleans, helps our national business. Nashville performing well in transit and in the MTAs. That's, I think, well contributing to us that may not be helping our competitors or our peers as much As far as the rest of the year, Ken mentioned, we see better pacing as we go through the year. Obviously, the back half of the year is still lower numbers, but we see better visibility. We don't like to give full year revenue guidance. But you can take from our our AFFO guide that we do think we have better quarters than the first quarter in front of us. Thank you.

The next question comes from the line of Lance Witt Cohen. You may proceed.

Thanks for taking the question. And Nick, I guess this one's for you. I'm just wondering the timing of your sort of stepping in as Interim CEO is a little bit unexpected. I know that obviously the Jeremy's retirement was announced earlier and it seemed like there was going to be a process that was going to run I'm just wondering if you could update us on if there is a process ongoing, I believe you're still the interim CEO, if I got that right. So could you update us on where things stand in terms of that process? And how we should think about the transition period Yes. Well, to confirm, I mean, we did say the Board of Directors said there would be a process underway. There's been a subcommittee of the Board formed and that formal search process is underway. With the company on the board for a considerable period of time. I'm an an industry veteran more on the buy side than the sell side haven't run-in many significant agency groups at the global level.

And Jeremy and I we discussed the process it can take some time. We can't always predict exactly the nature of that and the opportunity was to ensure that the company has the sort of broadest level of expertise, let's say, resource and experience that if we were doing that together during period of the time that the search was ongoing. So that's my responsibility and that's my involvement while the subcommittee of the Board continues working with one of the world's leading recruitment funds to follow the search. So it's going on and we just felt for a number of different reasons with the rapidly changing industry and you can see the consolidation of the holding companies [indiscernible] And the continued dominance of the tech giants that why wouldn't I, if I had some time and availability and excitement and enthusiasm for the business, which I've always had.

To work together with Germany during this period. That's what we're doing.

Very good. Thank you so much.

Okay.

Thank you.

The next question comes from the line of the Ian Zaffino with Oppenheimer. You may proceed.

Hey, good afternoon. This is Isaac Salasen on for Ian. Thanks for taking the question. Just a few questions on the transit business.

You could provide some color on what drove the strength in transit OIBDA in the quarter Is part of that strength because of the non renewal of the loss making contract previously? And then secondly, I know you mentioned expectations for growth in transit in Q1. So just wanted to better understand what you anticipate for growth more generally at the MTA or other transit markets this year? Thanks. [indiscernible] transit goes, the MTA drives strength in the fourth quarter. It came from the MTA.

Strong. National has been performing very well and [indiscernible] Remember in the fourth quarter, MTA always turns profitability because we straight line the expenses. Throughout the year. In the fourth quarter, it's the biggest revenue [indiscernible] just a good performance MTA very large in that, as I mentioned, that's continuing in the first quarter. We haven't washed any material contracts. We haven't added anything material with portfolio is performing better than throughout 2024 and into 2025. Than it did in 2023, certainly.

Okay, understood. Thank you. Thanks, Isaac.

The next question comes from the line of Patrick Scholl with Berenberg Research. You may proceed.

Hi, good afternoon.

Was just wondering if you could provide a little bit more detail on the pricing the strength in pricing that you mentioned earlier, And then just on another question on the transit side. If you could provide an update on like like where audience I guess where ridership is across the portfolio of of contracts and how that stands with the various adjustments to like minimum guarantees on some of the contracts and any sort of [indiscernible] on the minimum guarantees and the potential pressure on triggering some of those?

Okay. First on pricing, most of our yield Growth was driven from pricing [indiscernible] good sign for us. And in the current environment. Transit, ridership, throughout 2024, the MTA ridership was around 70% of where it was and in 2019. It seems to be melting up maybe it's from congestion from back to work, maybe it's just people are tired of taking Ubers or taxis. I think in January it was about 73% So the not back to where it was certainly, but directionally good Then just transit as a better product than it's had in the past. It's more and more digital. All of our big franchises are Our digital I think that's benefiting transit as well. Other things on ridership, MTA, I mentioned it's our biggest It's our closest recovering ridership to 2019 Some of the other franchises, DC, Boston, San Francisco, are behind New York in their ridership recovery Obviously, we watch them closely. But we're very pleased with the New York performance.

Okay. Thank you.

Thanks, Ben.

There are no additional questions waiting at this time. I would like to pass the conference back any closing remarks.

So, Jeremy speaking. Thanks very much for joining us today. Before signing off what Stefan has informed me is my forty third public earnings call for Outfront. I wanted to quickly thank all of you for your interest in Outfront and indeed the out of home industry over the years. I've thoroughly enjoyed the engagement with the investment community over that [indiscernible] and I look forward to our paths potentially crossing again in the future. With that said, I know that Matt Nick and Stephan look forward to presenting Q1 results to you in May. And I'm extremely excited for the future trajectory [indiscernible] Thank you very much.

That concludes today's call.