Q1 2020 Earnings Call
Good day bucket to the Outfront media first quarter earnings conference call. At this time I would like to turn the conference over to Mr., Greg Lumber Pease go.
Hey, good morning, everyone. Thank you for joining our 2021st quarter earnings call, we hope because you're all safe and well.
Given the New York stay at home order, we're hosting today's call remotely I'm trying to guess from their homes are Jeremy Mail, Chairman Chief Executive Officer.
Matthew Siegel Executive Vice President and Chief Financial Officer.
After a discussion of our financial results will open up the line for the usual question answer session.
Our comments today, we'll refer to the earnings release in a slide presentation that you can find in the Investor Relations section of website Outfront media Dot com.
After today's call is concluded in audio archive of this call will be there as well.
Today's call May include forward looking statements and relevant factors could cause actual results to differ materially from these forward looking statements are lifted in our earnings materials.
And in RCC filings, including our 2019 form 10-K, and our 10-Q, which will be filed later today.
Well, we will refer to certain non-GAAP financial measures today on this call any references to OIBDA will be on an adjusted basis and reconciliations boy that another non-GAAP measures in the appendix slide presentation. The earnings release and also on our website.
And with that I will now turn call over to Jeremy.
Okay great.
Thanks for joining this morning.
As you know we pursue great great for some time.
And the carried into the first school so.
But the historical results, what we're doing today already used to be less significant than usual.
What's more important right now.
Response to the pent up.
Where we stand today.
Well, we see things gallery.
Born free highlights for some of our important actions.
Getting lost trends.
<unk> office based employees who've done a great job.
Lets say shifted to work from home.
And we put to protect your safety measures in place Robert margin stuff, we're doing terrific work keeping up business going out in the field.
We've also enhanced agreement stretches across our offices.
Rich it not essential business travel and maintain frequent.
Communications with our employees.
The helping them well being the whole about people remains.
Important parts or.
World. So help me all communities by June 18th space, especially will help messaging.
Robert talked into that's helping businesses adapt to the current situation.
So let me just some financial measures.
We announced that we prudently grew nearly all the remaining them out the possible under 500 million dollar revolving credit facility.
On April towards your we closed the 400 million investment quite true, leading private equity funds Providence equity partners and batteries management restructured their system issuance of perpetual preferred stock, but this convertible into common stock.
Just gives his immediate liquidity.
Without adding to our debt leverage it also brings a new member to our board of directors to help create lasting probably for all stakeholders.
On April 20, yes.
And now the amendment to the maintenance covenants on our revolving credit facility could give us really on the ratio calculation as we never navigate through the coming quarters.
Since March we have taken numerous operational cash flow much just to enhance our liquidity.
Cost reductions had been focus on right sizing up business to the current environment.
Including restrictions on discretionary expenses.
Workforce reduction.
There's a hiring freeze and the temporary stuck in compensation for certain employees and our executive offices.
We're also addressing all fixed costs with focus on I loved your Billboard leases I'm not troms it guarantees.
Additionally, rest of spending.
Billboard and transit did this whole deployment, but your single deferring other areas of discretionary capital expenditure.
Okay.
Lastly, stockholder dividends foundation to reach business model.
We will continue to be a significant dividend payout.
For the moment however.
Hi, Paul just decided to pools quarterly distributions on our common stock.
We intend to pay at least I knew we requirement in Twentytwenty.
Well its first of all levels as the market improves.
Two goals guided all these actions firstly it was a proactive and prudent response to a situation be severity and you're right.
No.
Secondly, I told us to prepare off business for recovery with enhanced financial flexibility to pursue strategic options that we believe we'll certainly arrives.
Later on this call what kinds of disgust second quarter view as well if some of our really directional thoughts on the balance of the.
Before you do that lets proceed with business as usual.
Review, the first called the financial and operational results on slide four.
As you know, we'd originally guided Q1 revenue to be comfortably in the mid single digit range and that's why we would have ended up I'd tell you did not start to take you told you we're very much.
Given this and on top of a 10% comp last year.
Business performed in line with all our revised guidance.
Guidance with first quarter revenues up around 4%.
Oh, it was flat year over year.
Simply to because it slowed down in March and also juice is significantly higher bad debt provisions as we prepare after becoming coaches.
That's it's like roads to potentially mickelson, reflecting the benefit of lower interest expense.
Let's now look at off quarterly revenue in more detail beginning on slide five.
You must media was up almost 5% and with the growth driver in the call. So well I'll just segment, which is much smaller was down mostly because of equipment sales last year didn't recur.
Slide six shows that the U.S. media strength was driven by 9% <unk> gross but transaction and other was down 4%.
Well, it's reflecting the initial type it impacts I mentioned a moment ago.
Turning to our local and national revenues, that's on slide seven national came up with some.
I didn't catch up the same pace that's it showed in the fourth quarter.
While local was up 3%.
Local story reflect some good billboards football woman's upset by the decline in transit.
Slide eight shows that overall Billboard yields increased 10% during the quarter.
Reflecting a higher number of digital boards.
That much greater monthly revenue.
We grew digital billboards by 170 year over year.
41 in the culture.
Digital was 21% about U.S. Billboard revenues up three points from last year.
Turning to slide nine which was a other segments. It's worth noting the dark pool performance was actually somewhat faster than this job Fest implies.
Specifically Billboard revenues in Canada were down very marginally on an organic basis.
Like the U.S. began seeing covered impacts in March.
The transit another piece reflects 3 million Didnt digital equipment sells it didn't work out this year offset by good grows in sports marketing.
Turning to slide 10.
Total digital revenue growth continued to be robust.
40%.
This was driven by saying board yields on new units you Billboard that's what is the continued expansion about digital transit displays.
Even with the pandemic impacts beginning in March we still transit due to still grew 67%.
Fine digital was 23% about total company revenues up almost six points from last year. So very good progress in this important area.
In summary, very solid first quarter, even including some impact from the pandemic.
Let me hand off now to Matt to go through the remainder of our financials.
Thanks, Jeremy and good morning, everyone.
So you can see on slide 11, total expense levels increased 5%, which were driven overall by bad debt provisions and excluding this or overall levels were down a point.
Before I get into that would take a look at each of our expenses in more detail on slide 12.
Billboard lease expenses up due to his new locations in Los Angeles, Chicago, San Francisco in Miami.
Well, it's an annual step ups.
It also looks like it our strong sales levels, particularly in some of the larger markets with some of what we just had variable components.
Kansas and tried to expense selling wine the drop in revenues.
As you would expect we are engaged with our Billboard Wynnewoods. He transit franchise bloggers to mitigate these costs going forward.
Posting and maintenance expenses were up slightly.
<unk> expenses were up and maybe to a higher provisions for doubtful accounts as we look forward into the coming quarters, Judy Cobra impacts.
This represents about 70% to me increase and the rest of the present the employee hiring in the back half of last year.
And lastly, corporate expenses went down by yes, due to lower employee benefits expense.
This whole won't be preaching expenses was inline with our revenue growth, resulting in a flat year over year weighted Africans wide searching.
There's a slightly different picture you dig into components on slide 14.
After allocating bad debt provisions on the revenue weighted basis U.S. media Billboards upside there since the transit was down by yes.
This was offset by the significant drop in our corporate expenses I just mentioned.
Let's turn now to cash flow beginning this capital expenditures on slide 16.
They were flat at $18 million and the growth Capex was primarily for 20 digital conversions.
You mentioned fuel conversions as a source of liquidity for the remainder of the year.
There's some investments in process that will speak to that conclusion.
But in general it's big total Capex can now be below $50 million.
Yes represents lower maintenance expense.
Recorders that suppressed digital conversions exhibiting watch that come from previously ordered gives you a billboard screens. So we can immediately deployment conditions are good.
Moving onto the I guess the whole bridge on slide 16.
We were up a couple of points driven mostly by low interest expense.
So you're already aware you'd be uncertainty board about they called me.
We would you weren't anyways I felt guidance on March 20 chest.
Slide 17 show that dividend coverage for both after so and adjusted free cash flow improve substantially from last year.
Obviously now given the pandemic any impact on our business. Our board has decided to poised to quarterly common dividend, which Jeremy mentioned earlier.
We believe that conserving cash is prudent as we watch the shape of the recovery.
I think it's important ticket second and expanding the tanks of a dividend.
All leads must distribute 90% of their read annual taxable income to remain in compliance with me requirements.
In 2019 that amount was around $150 million in dividends.
We actually paid just over $200 million.
The complaints test isn't annual one.
Even though most companies me quarterly distributions.
This march.
Peter $56 million distribution, and we appointed me in the remaining quarterly common dividend distributions.
I pausing.
You can assess the total amount.
Total annual 2020 payment to bring us to wish that we above the minimum requirements.
It's also worth noting that this requirement can be met by dividend payments on both common and preferred stock.
We've strengthened our liquidity, which you can see on the website.
Slide 18.
During the quarter.
Thank you all the remainder of our revolving credit facility, which you can you give me unrestricted cash balance.
The left chart.
Now in the 2024 maturity column on the right.
We felt it was prudent and what's the extra interest expense have this cash in her own accounts.
At this liquidity does not show the net proceeds of about 400 million dollar convertible preferred equity issuance they closed in April.
As of yesterday, our cash and equivalents on hand were approximately $850 million.
Also worth noting the preferred stock is not counted as debt you kept getting a leverage covenants on drug debt agreements.
The net proceeds been on hand as at March 31st net leverage ratio you see on the side would have been 3.9 times.
Another important step we took was in many of the financial maintenance covenants under revolving credit facility.
Until September 30 gets 2021.
We will be able to subject to our results from Q2, we choose to me at 29 team.
For our future results in Q2 Q3. This year you tend to be LPN denominator and the covenants.
So if it's certain limitations on making restricted payments.
To further enhance our balance sheet, we chose to raise capital in the form of equity not additional debt.
We wanted to emerged from a pandemic into stronger position and the financial flexibility for what we anticipate will be attractive strategic options.
The preferred security carried a competitive coupon.
And attractive conversion price closing and we believe it is very much aligned with the interest of all of our stakeholders.
I think our strong digital revenue growth since first quarter, there's a sort of grant you continued digitization of the New York M.T.A. did you can see on slide 19.
We installed just under 700 displays.
We are told deployment as or more so the first what was 5000 displays wouldn't have to which carry advertising.
Our total and see a project, where some quarter to $22 million.
We did not recoup any cost during the quarter, we may not be considering into a 2020.
Accumulated project cost for $270 million as of March 31st.
Well I must 25th we announced it we suspended display deployment give the impact of the cobot pandemic index, what we now expect that full year spending.
I would be significantly lower than our previously announced I'm, just saying $5 million.
We also previously said that we expected $160 million, a net incremental third party financing to fund the remaining equipping deployment.
However.
In the uncertainty around the cobot pandemic.
We will update you interest takes me deployment as we have more clarity.
Importantly.
But having constructive conversations with the empty I agree with you the situation.
In closing.
Yes, we certainly the most eventful period since I joined the company.
Enterprise. This planning help prepares for the quick and proactive operational and financial measures, we've taken and we'll continue to take to address the pandemic.
Some of them are more challenging than others, but collectively we believe they're going to get to compete where it needs to be and importantly, with financial and strategic flexibility.
Let me now turn the call back over to Jeremy.
Thanks mass and now, let's turn to our outlook on slide 20.
Maybe it'd be helpful to give a little bit of background.
When the pandemic starts it impacting our business in March we put in place new financial tracking did include cancellations.
Which is something that we had never really I lost the ball because quite simply.
Infrequent and immaterial to our business.
This is something you know as long as the case I.
We now need to consider the combination of.
New business, we are rising.
Contracts, so that being deferred from Q2 until late two courses.
Contractual changes, reflecting some audience declines.
They outright cancellations.
Considering all these factors as we look at Q2 today, we expect talked total revenues to be down approximately 50%.
As you would expect this is playing out differently.
The two major talks about business.
<unk>.
Trends you know is northeast focused and then by definition.
It was impacted more quickly and to a much greater degree than Billboard.
Q2.
Currently expect transits be done around 75%.
Well up is Billboard business is expected to be down in the region of 35%.
Well get a bit further forward right now we see a trough.
In July and an improving trends from August numbers.
We believe the improvements were sitting in our Q3 numbers imply an expectation from our advertisers have some normalization in people's lifestyle, and what happens over the coming weeks.
As we all know the situation for everyone is very fluid.
Well, we thought it was important to share with you what was saying.
That's what we see right now every day to day.
One thing you should be encouraged by instead, we are writing new business. So the last few weeks, it's been one step forward in a few steps back.
But we expect this ratio to significantly improve in the second half of this yet but.
People are still going out about home like every one of you on this call well someone in your household someone decides to leave home with some frequency and necessities and it's in these movements there our advertising can be impactful I'm highly relevant.
You can see what has happened to the national U.S. audience across our assets on slide 21.
This is data from our proprietary smart scout platform.
We've been giving it to our clients by market I'm, probably location to help them in that planning and two shows that our media, it's still delivering significant impressions.
It shows that <unk> audiences that 80% of the prepayment levels.
And does a nice up tick in the seven day trends, which is now crossed the 30 day average.
Different cities the suddenly at different levels.
But the declines appear to have stocks, which is very encouraging I expect we'll continue to improve as an increasing number of states I come back up.
I think there's also enabled us to identify thousands of displays the being able to retain or exceed that pre covered impression levels because the people churn slipping problems.
This is also opened new sales opportunities as people journey to and from the Central business locations. There's also kept talks on conversations open and ongoing I.
And we noted that our longstanding relationships will continue to benefit wipe out from under advertising partners.
Oh, yeah, I'd like to thank our employees, who are working so hard and helping us through this difficult period.
We really believe we have the best people.
The best assets.
And we're looking forward to helping our clients reinvigorate that demand.
The economy improves.
So with that operator, I'd now like to open the lines for questions.
Thank you if he would like to ask a question. Please see no bypassing style won on your telephone keypad.
If you're using a speaker phone. Please make sure your mute function is turned off to allow your six not to recap.
Again that stay I want to ask a question.
Well now take our first question from Alexia Quadrani.
Please go ahead.
Thank you very much and I have great well I've two questions first if you could give us some color on the guidance in terms of what you're looking out for the second quarter in terms of advertising categories.
You bet you came in local versus National and then my second question, though.
Scott constructive conversations with the transit authority is an opposite to walk so to speak one if you can talk about pena unchanged.
Yes.
Yeah points, Alexia <unk>, Oh folks like I'll take both assays.
I guess, the first seems as though we felt it was really important to and give you color guidance on this call today.
That's you know as we look good I, probably should we continue to feel bullish for the sector as real lifestyle.
Front and advertising was really stronger as we came into this I'm. We absolutely believe that we can we could come out strong.
So but going back to your your questions.
As we look at it it's interesting I see where the Investor Conference.
In the early Mostra, we gave them what we thought categories would be difficult. Its the pandemic increased does it obviously did and we said at that stage entertainment movies and retail would be difficult and yeah. They are in dollar terms, what we're saying the the most significant pullback.
As we.
With two things, where do you want and the fact that we were big city.
And to transmit business, obviously right now in this particular few weights big city enough and isn't necessarily the place to be and you know transit is a difficult now you know talk a little bit about that.
In a minute [noise], so lots of cute geographical change northeast you know difficult.
The west coast, certainly easier than the east and right in the middle and particularly but we have smaller local mafia is actually much less that much less impacted.
So maybe just you know a couple of comments on transit and then I'll come to your question on.
The M.C.I.
But we <unk> fundamental believers in public transit, we we absolutely they believe that it's gonna be cheap part.
The American commute for many years to come that being said, it's going to have it's going to have a just a typical a few weeks you know right now Rogers ship is down and you know, reflecting that obviously services down pretty much in in all of our key markets.
And you can have a C.C., but you know determine the impacts of that in our guidance for the second culture and you know as <unk> as we say next you wait is gonna be difficult as much as was things start putting up we really hopeful that we're gonna stop saying some positive movement that.
Specifically in terms of guarantees yeah, we have relationships with <unk>.
<unk> a number of important <unk> authorities across the U.S., we've been talking to the mole with regards to the structure of those relationships and where a pickup guarantees.
And I can come from the in agreement with the M.C.I., we haven't been paying wow currency to the M.T.I. from April.
Thank you very much.
Thank you for one now cake and next question <unk> fine.
<unk> marketing found me. Please go ahead, saying yeah in line that's okay.
[noise] Thanks, good morning.
Jeremy could you talk about what you expect.
In terms or.
Return to gross as you think about national versus local and it I think historically nashville's been sort of the higher data part of the outdoor business.
That's maybe what you're saying right now, but it it feels like part of the story of outdoors Carosi. The last few years, it's been.
The national advertising, which are the embrace of the media national advertising that I'm just wondering if you think.
So we come out of this back half of this year and the 21 at whatever level, it's gonna be if national if you expect national to grow faster their local right now I know, there's no crystal ball, but I'd love your thoughts on that.
Then.
You are or for matter for either any way to help us qualify the second quarter expense gross or I guess decline since you gave us the rather outlook can you help us think about costs. So that was just wondering on the preferred equity. If you guys expect that to be a cash or.
[laughter] dividend at least in the near term.
X. slot.
Oh, thanks, Thanks to the questions Ben I'll pick the first one and maybe make it you comments on expenses, and then hand, though that too but for more expense color and picking up on the I'm. The preferred question I guess the the first thing is yeah. If you look back to the last time when we saw it down so that was done.
Thirdly high beta national and that was in local national can switch off bell is quicker than local that tends to be more flighted, rather than you know permanent long some ads and for that reason and that's where you you know that's led to pay to come from comes from as good looking.
Forward to me, we were actually to you know from our track that you know, there's some sort of you know good new business coming in from both local and how national advertisers.
There's no particular reason, we think why national shouldn't you know maintain that kind of hype sites and actually <unk> local as we've got as we get through this sort of difficult cycle as it has been doing for the last couple of couple of ideas.
Right now so you know the fundamentals about I find that's still that they're still valid. That's the reason that we but outpacing or media growth and then the reason why we will continue to outpace all media growth in the future.
Then just before I sort of and ended up not maybe just a couple of.
Comments and sends that the rule shape of the you know expense initiatives would mean second we we expect.
Around about $100 million to fold out of our expense phase in Q2, this year compared to 29 say yeah. A good portion of out of a c. relates to you know the variable expenses <unk> you know we've talked a lot about you know transit benefiting from from that variable expense.
I'm, particularly where minimum minimum guaranteed though suppressed.
Well good piece of it'll come from we've been working hard on on a Billboard at least in some of that <unk>. Some of that is also variable as you know as some of our variable. These costs will come down and then the balance is through other other <unk> other costa initiatives that we've <unk>.
<unk>.
But more color.
Yeah been on on the expense each hour you can figure or.
Billboard we are at least expense could go down maybe 10% Jeremy said, we're working hard without <unk> plus some of our larger markets have.
A a terrible component posting maintenance and other N.S.G.N.A. both means taking some steps.
On personnel issues with hiring freezes I can't reduction I can do you reduction I think both of those pin could go down dollar wise somewhere.
15 to 20 million dollar range each.
Can you should change it franchise would be a big big savings is <unk>.
Did you know entirely shifted into it to variable.
Okay, maybe not just still I understand like are you going to be accruing.
And he's having transit like the N.T.A. or are you because you're not paying it's essentially you get a fee purely variable.
The case minimum guarantees right now, we're not going to do occur and so it is completed the variable.
Thank you might not take our next question from David Milan, and Paris capital.
Yeah.
Hey, guys [laughter]. The first two analyst Cook all of my question to say you guys can move on to the next question. Thank you very much.
Thanks.
Thank you.
And now take hang next question from two blocks from Coleman facts. Please go ahead.
Thank you.
I want to ask about.
Ask about the August I improvement that you're seeing as alright, if you might be able to provide a little bit more color on you know just or the the overall trends like where are you seeing some of the improvement.
Translator was a billboard or is there any particular geography, that's recovering quickly either static or digital but just looking for some additional color on that please.
Oh sure <unk>, so as we look at it right now you know obviously the Billboard businesses.
Much less impact you then you raised them them transit.
Let me web was to the most obvious sounds recovery, but <unk> you know phones that is also certainly starting to paste considerably better in that second closer than than it is in in in that sort of cool from sorry than it is in the second colds huh.
And you know we're starting to see you know those those pockets and strength as some states are you put up.
When we think about Toronto generally I think quite a bit of that's gonna be dependent on just how quickly. This other stuff. Some service stops improving how you know <unk> <unk> picking up I stay in in improve that improves that service.
So <unk> it certainly values, but you know from what we can see from our trackers.
That really is something of an inflection points in but.
Great. Thank you.
And then maybe just one format on again going back to the the Outback thinking for all the details you've already provided.
Yeah, you mention the Billboard niece expenses might might be able to to be reduced by 10%. Okay. Sir help us out to think about some of the other expense buckets and in terms of like how much of a reduction you might be able to see over that once a year.
A balance of V. I I hope I'm, not seeing as big a reduction because a lot of the reduction is based in variable Carsick chore, our fan Jimmy transit franchise reduction, which we expect to it.
<unk> revenue shouldn't be as big so.
To see hundred million dollar savings that Jeremy mentioned to the quarter, probably a little less third quarter in fourth quarter of the 10% reduction in Billboard say.
Did he has to that it's going to be recurring it's work, we doing with the wind noise directly.
Hopefully give revenue increases so and orbit or increases and then the same thing on posting maintenance and <unk>, maybe for loading number of our stance. Unfortunately, the activity level just gone down.
Yeah to be level picks up some of those costs will come back but.
Say again that same thing that have each quarter stays away.
That's great. Thank you very much.
Yeah.
10, Q. <unk> Stephane <unk> <unk> <unk> <unk> <unk>.
Oh good morning, Thanks, so much for color just for me.
Discuss a little bit about drinking versus.
I know coming out of the recession pricing.
Cover and that was kind of to drag are you.
The thing to do a little bit more vigorously.
Younger and then you mentioned you can acquisition.
Flexibility is there anything specific that you're kind of seeing out there that you'd want in working and what kind of markets, but the the billboards friends.
Mid market like nothing.
Oh, yeah. Thanks, thanks to the.
Question Christians to huh.
Look back to.
So that the the last time time, it was interesting ready because what you're actually had was up to.
A macro decline, but audiences remains you know I decided that there was no effectively many changes audiences over that for what we've had to cope with this this time is some sort of you know you're not macro decline and actually an audience decline. So it's fair to say the you know we've we've.
To reflect some of those audience changes in our in our pricing, but as audiences come back. We would expect you know by definition pricing to recover in line with that that will do its recovery. So it's not it's not a fundamental changes trying to do at home. It's just too I mean, reflecting a pure.
The research in numbers that have been out on the streets over the but then you know last last few weeks and you know.
The the you know there's some looks couldn't see <unk> has has gone down and.
Segments, we start segment backup we we believe that we'll get back to more normalized occupancy levels.
Two year old second person intensive acquisitions, we've we've we've kind of of what it said.
But the principally interested in acquiring <unk> rather than transit.
But principally interested in acquiring in top 25, D.M. <unk> already have a presence and why we can <unk> our national sales falls on some operating expense benefit and we don't really see that changing.
You know in in in the near at.
Going back to the first part of your question stuff on you know I'm thinking about that part so.
The the comments that we made earlier wrong with regards to audience recovery, it's already happening I'm a feeling you know very good. So there's no reason my parents and you can't go back to pre covered levels as federal against comes back.
Great. Thank you so much.
Thank you for my now take on next question <unk>.
<unk> open Jaime.
Go ahead.
Hi, great. Thank you here.
Yeah, maybe you guys can look into your crystal ball and maybe help us.
Understand.
Arms room again.
The fall I'm, starting to seem to recover you're talking down to get past the drop you're talking about it.
<unk> go in this world of social get something where did the audience level and look like what you're saying fall and maybe the economy, <unk>, so I'm thinking or something or something and how you think about audience levels and they're ready to get back from the sanctions on to have coping. Thanks.
Okay, I guess the audience. So they pulled into two Hobbs really that the first as you know the vehicular audience that we you know that <unk> and you know there's no reason asshole why you know as you know as people you know effectively come.
Out of that homes with our religions shouldn't directly benefit from that when you you know.
That obviously.
Yeah, it's not something that <unk> modes of travel is not there's something that is particularly impacted by social distancing.
And then when we look about transit business I mean that there's two puffs doctrines that business. The first is the above ground page. So we have bus shelters, we have buses and you know there's absolutely no reason why that business shouldn't a rebound in line with with and in line that are the roadside assets.
When we look.
Typically you know business that sort of <unk>, so that shouldn't even call. So for example, New York subway right now it's unclear how those social distancing measures, they're going to continue to impact audience that I'm doing it and that's one of the things we're talking to the M.T.I. about because yeah. We have we have.
With the M.T.I. a terrific longtime partnership you know set to go 15 years and there are various different pieces to it you know the does audience does the investment piece and <unk> to benefit.
That communications with the audience and also to drive advertising revenues as we've been doing you know over the last couple of last couple of years. So as we look at all the different pieces of of you know the relationship with U.M.T.I. you can understand that is quite yeah. It's it's a complex discussion but.
Placed inside the very open to I've been so those discussions and find they you know solution that's gonna <unk> policies.
Okay. Thank you very much.
10, Q. why not take our next question. Some frying goes back from Bank of America. Please go ahead.
Thank you I.
Like a few addressing your remarks enjoyed a little late but on the Billboard leaps expense [noise].
Remind us.
Approximately how many landlords you have in total.
Roughly what percentage of those are you actually actively engaged with right now in terms of.
<unk>.
And then just generally speaking you know what is the tone.
Profit.
You know stake holder and you're taking minutes I'll hopefully they constructed one and you know over how long a period should we expect these negotiation.
No on poor and then.
Secondarily I was just hoping on advertising I think he mentioned.
You are you know writings on business and I think you called out some of the categories of softness but are there any categories.
That had sort of remained.
Thier or resilient feel into current environment. Thanks.
Well I don't take the first one.
<unk>.
We have more than 20000 leases animal 23000, or so leases.
I think about.
15, or 17000 different landlords. So we we need to like country eyes, we talked to the larger ones.
First and most often you know 10 keep it very active dialog with them.
You know say he has slowly sometimes.
You know more than half, maybe I'd ignition clauses, which give us a an opportunity to discuss with them. If it's in negotiation. So it takes time.
And we can't get to everybody right away.
So.
He says the larger the benefit than are good but at least I'd be doing a transit side so far.
But we have over 100 people in a real estate group and incredibly focused on.
I'm doing this.
We'll see benefits.
In 2020, and probably into 2021 22 as well.
So.
Brought and let me let me take from the the the second piece of that so in in terms of categories that.
You know as we looked at all pasting in huge.
Huge soon.
Illegal is probably see well for local services is placing pretty well for US you know health care, we expect to.
To be you know one of the least impact to them and showing turned growth in the in in in the near term.
And you know just when we think about tech as well, we think that tech is going to combine pretty quick from suddenly like some of their conversations that won't have any with our advertisers Martin maps.
Thank you very much.
And I'll take half final question.
Please go ahead came and got some time 10 V. touch.
Alright, well thanks for schools in one.
Regarding the dividend are you thinking of it the or final payment we're likely be in one.
Farm and it would be at the end of this year or would it go to move on to the new year.
Is it fair to think that.
Since preferred dividends are preferred that that would also reduce the dividend payments available to your current shareholders and should there be anything to be concerned rest on that score.
And then a couple of hours.
Yeah, Yeah, Jim <unk> dividend requirements is a a full year.
Look back so we could make mad.
They flew up or or rationalize dividend payment end of December or early January I think we have some flexibility.
I'm going to a couple of weeks into January.
We've had some visibility by the end of what are requiring being what we should be paying and the calculation over the weekend. Then does include.
The preferred given and so the extent they were paying.
Something around our lead requirement.
Preferred to pay me to take into account as they calculate that.
Okay.
Hey, you've seen also in.
[noise] varying the demand between the digital over some static displays.
Environments.
<unk>.
Down I'm going back up.
Yeah. It's just thing you know one of the when the great things about it so, but but [laughter] <unk>, but generally I one other reasons that it's enjoyed such.
<unk> growth over the last last few years events, you've been it's flexibility.
You know relative to a relative to staffing and say and this situation where people are making swift decisions about about changing changes and requirements. So that advertising program digital you would expect to decline that a foster writes on <unk>, because you can and that those decisions much.
<unk> much more swiftly and by the same so can we expect it to actually come back more quickly than the staffing when it comes back.
Okay.
And lastly, it's.
Good to hear the ongoing discussions in terms of the m. today, but.
Also wondering.
Social spacing on on a subway, which some pretty challenging type.
Especially.
<unk> or whatever it was with an opera.
Are there are some issues are being developed.
I don't know ideas that had been advance so far to address that sort of issue.
<unk>, Yeah me too New York's I don't imagine well, sir exposure and or several systems and they're talking to them as well.
I guess this year olds answer is Jim, but we don't know exactly.
How the stage of New York, and and do the others right now what kind of life on up or not when we don't know right now <unk> measures will be taken fall you know even call transit with regards to social distancing et cetera. So <unk> that's not becomes.
Yeah. It's obviously you know one of the inputs into the discussions that we'll have to having with the M.C.M.T.A. and it. It's also one of the inputs into the discussions will be having with our advertisers because you know while.
While it's fair to say that you know audiences may not quite the where they were they off.
You know for the for the near town there remains a hugely attractive audience and the fact that you know the fact is that you know if you think about the subway <unk> <unk> previously carrying <unk> 6 million passengers a day right, there's no way to the criminal jumping that counts.
Survive so it's going to come back we're just not exactly son.
Right now how.
Alright, thanks very much.
[noise] Pancancer I'd now like to pass the call it back on the class <unk> any additional Kelly thing I Max.
Yeah. So thanks pretty much all price. Thank you will tell you for your questions and your time.
We look forward to speaking with many of your.
Events and the coming weeks. Thank you again.
Hey, do you think <unk> today's call Hanky, Yeah participation you mean.
[music].