OUTFRONT Media Inc. Announces Q4 2023 Earnings Call

OUTFRONT Media Inc. recently held its Q4 2023 earnings call, where it shared some notable achievements and developments. The company saw a 3% increase in revenues for the year, driven by a 4% growth in U.S. billboard business revenue. This growth was primarily attributed to higher rates and digital revenue. Additionally, OUTFRONT Media Inc. announced the sale of its Canadian business to Bell for CAD410 million. Although Q4 consolidated revenues grew by 1.3% and OIBDA reached $152 million, there were some fluctuations in revenue across different sectors. While U.S. media revenue experienced a 1.1% increase, transit revenue declined by 4% due to weaker performance in the tech, financial, and entertainment sectors. Despite these variations, the company remains optimistic about its future, with expectations of reported consolidated AFFO growth in the high single-digit range for 2024. Furthermore, OUTFRONT Media Inc. anticipates similar deal activity in 2024 as it had in the previous year.

Q4 2023 Earnings Call Highlights

OUTFRONT Media Inc. (OUT) recently held its Q4 2023 earnings call, where the company communicated its financial performance for the quarter. Several key highlights emerged from the call, showcasing the company’s growth and strategic initiatives.

Revenues increased 3% YoY on an organic basis

The company reported a 3% year-over-year increase in revenues on an organic basis. This growth is a testament to OUTFRONT Media’s ability to attract advertisers and generate strong returns. The upward trajectory of revenues reflects the robust demand for its outdoor advertising solutions.

U.S. billboard business revenue grew 4% driven by higher rates and digital revenue

OUTFRONT Media’s U.S. billboard business experienced impressive growth, with revenues increasing by 4% for the year. This growth can be attributed to the company’s success in raising rates and leveraging digital advertising opportunities. By offering innovative solutions to advertisers, OUTFRONT Media has positioned itself as a leading player in the outdoor advertising industry.

Sale of Canadian business to Bell for CAD410 million

In a strategic move to optimize its portfolio, OUTFRONT Media announced the sale of its Canadian business to Bell for CAD410 million. This decision allows the company to focus on its core operations and allocate resources to areas with maximum growth potential. The transaction not only brings in substantial capital but also strengthens OUTFRONT Media’s balance sheet.

Consolidated revenues grew 1.3%

Overall, OUTFRONT Media witnessed a consolidated revenue growth of 1.3% during the fourth quarter of 2023. This solid performance across its various business segments demonstrates the company’s ability to deliver consistent results and adapt to changing market dynamics.

OIBDA was $152 million

The earnings call revealed that OUTFRONT Media generated a robust operating income before depreciation and amortization (OIBDA) of $152 million. This metric reflects the company’s operational efficiency and its ability to generate profit from its core activities, setting a strong foundation for future growth.

U.S. media revenue increased 1.1% YoY

OUTFRONT Media’s U.S. media revenue experienced a year-over-year increase of 1.1%. This growth is indicative of the company’s ability to capture a larger share of the advertising market and effectively reach target audiences through its media platforms.

Billboard revenues up 3% with growth in all regions

The company’s billboard revenues witnessed a 3% increase, showcasing growth across all regions. This highlights OUTFRONT Media’s strong market presence across various geographical areas and its ability to leverage local market dynamics to drive revenue growth.

Transit revenue down 4% due to weaker tech, financial, and entertainment sectors

While OUTFRONT Media experienced growth in its billboard business, its transit revenue faced a decline of 4%. This setback can be attributed to weaker performance in sectors such as technology, finance, and entertainment. Despite this challenge, the company remains committed to identifying new opportunities for growth in the transit advertising space.

Local revenues grew 4.5%, national revenues declined by 3%

OUTFRONT Media achieved a significant growth of 4.5% in local revenues, emphasizing its strong connection with local advertisers and communities. However, national revenues experienced a decline of 3%, indicating a need for the company to further refine its national advertising strategies.

U.S. billboard yield growth was around 3%

The U.S. billboard business demonstrated solid yield growth of approximately 3%. This indicates the company’s success in attracting premium advertisers and maximizing returns on its advertising inventory.

Digital revenue grew 9% in the quarter, representing nearly 36% of total digital revenues

Digital advertising continues to play a pivotal role in OUTFRONT Media’s revenue stream. The company experienced a remarkable 9% growth in digital revenue during the quarter. Furthermore, digital advertising contributed to nearly 36% of total digital revenues, underscoring the increasing importance of digital platforms in the advertising ecosystem.

Total expenses increased 2.5% YoY

While OUTFRONT Media achieved revenue growth, total expenses also increased by 2.5% year-over-year. This highlights the company’s ongoing commitment to invest in its operations, technology, and talent to continue providing exceptional outdoor advertising solutions.

U.S. billboard OIBDA represented over 95% of consolidated OIBDA

The U.S. billboard business remains the primary contributor to OUTFRONT Media’s consolidated operating income before depreciation and amortization (OIBDA). This segment represented over 95% of the consolidated OIBDA, showcasing the company’s strong foothold in the U.S. billboard market.

Q4 CapEx spend was around $23 million

During the fourth quarter of 2023, OUTFRONT Media invested approximately $23 million in capital expenditures (CapEx). This investment signifies the company’s commitment to enhancing its infrastructure, technology, and advertising assets to drive future growth and maintain its competitive edge.

Q4 AFFO was $108 million

The company reported an Adjusted Funds From Operations (AFFO) of $108 million for the fourth quarter. This metric reflects the cash flow generated by OUTFRONT Media’s operations after accounting for sustaining capital expenditures and other adjustments.

Reported consolidated AFFO expected to grow in the high single-digit range for 2024

As the company moves into 2024, OUTFRONT Media projects reported consolidated AFFO growth in the high single-digit range. This forecast underscores the company’s positive outlook, driven by its strategic initiatives, revenue growth, and portfolio optimization efforts.

Completion of a new $450 million senior secured note offering

OUTFRONT Media successfully completed a new senior secured note offering, raising $450 million. This financing initiative strengthens the company’s balance sheet and provides additional liquidity to support its growth strategies and strategic investments.

Total NAV leverage was 5.4x as of December 31, 2023

The total Net Asset Value (NAV) leverage for OUTFRONT Media stood at 5.4 times as of December 31, 2023. This leverage ratio indicates the company’s prudent financial management and its ability to balance risk and growth to maximize shareholder value.

Agreement reached to sell Canadian business to Bell Canada

OUTFRONT Media reached an agreement to sell its Canadian business to Bell Canada. This strategic divestiture enables the company to unlock value and streamline its operations. By partnering with Bell Canada, OUTFRONT Media positions itself to focus on its core businesses and pursue new growth opportunities.

Maintained $0.30 cash dividend payable on March 28

The board of directors of OUTFRONT Media decided to maintain the $0.30 cash dividend, payable on March 28. This decision showcases the company’s commitment to delivering value for its shareholders and its confidence in its ability to generate sustainable cash flows.

Expectation of similar deal activity in 2024 as in 2023

Looking ahead, OUTFRONT Media expects similar deal activity in 2024 as witnessed in 2023. This outlook highlights the company’s commitment to pursuing strategic partnerships, acquisitions, and divestitures to optimize its portfolio and enhance shareholder value.

In summary, OUTFRONT Media’s Q4 2023 earnings call provided valuable insights into the company’s financial performance, growth strategies, and future outlook. With strong revenue growth in its U.S. billboard business, the completion of a new senior secured note offering, and the sale of its Canadian business, OUTFRONT Media is well-positioned to capitalize on emerging opportunities and continue delivering value to its stakeholders.