Q2 2020 OUTFRONT Media Inc Earnings Call
Please stand by.
Good day and welcome to the Outfront Media Inc. second quarter earnings Conference call.
At this time, Oh, let's turn the conference over to Gregory Lundberg. Please go ahead.
Hey, good afternoon, everyone. Thank you for joining our 2022nd quarter earnings call, we hope to hear all safe and well we are hosting today's call remotely with Jeremy Mail, Chairman and Chief Executive Officer.
Actually at our headquarters in New York City.
And Matthew Siegel Executive Vice President and Chief Financial Officer at his home, where I am as well.
After a discussion of our financial results will open up the lines for a question and answer session.
Our comments today.
Usual over well refer to the earnings release and a slide presentation that you can find in the Investor Relations section of our website Outfront media Dot com.
After today's call is concluded.
Audio archive will be there as well.
This conference call May include forward looking statements.
Relative factors that could cause actual results to differ materially from these forward looking statements are listed in our earnings materials and in our SEC filings, including our 2019 form 10-K.
Our first quarter 2020 10-Q.
And our second quarter 2020, 10-Q, two be filed tomorrow.
We will refer to certain non-GAAP financial measures on this call any references to avoid that I made today will be on an adjusted basis and reconciliations avoid it up.
And other non-GAAP financial measures are in the appendix at the slide presentation, the earnings release and on our website.
I'll now turn the call over the Jeremy.
Thanks, very much Greg and thanks to you all for joining us today.
Hi, I'm, Dave document professor at the moment and it's great to be here, particularly good today as I had a power outage from the storm yesterday, my Herman Greenwich and conductivity would've been a nightmare how about still been.
But you know that business is running well on eventual basis and many of our offices are happening now.
No actually really appreciate being back in the cross the building see people back on the streets, the number which is picking up every day.
Commuters in today, how much are not railroad walk through Grand Central So some of the buses on Lexington Avenue at every step of our journey I could see the advertising that our clients are running to drive consumer demand for that business is.
Obviously that demand softened considerably in the second quarter.
But that's what we expected to happen regardless proposed the Billboard and transit revenue you numbers you see here as well this expense levels.
Well, we were able to take significant cost south of the business. The dramatic written need to cartons termination, even larger impact on OIBDA and that's a fair.
Well, it's not exactly surface far into be accurate when forecasting numbers such as those that you see on slide free.
And well nothing is something in this world. We firmly believe that the second quarter was at Lakepointe for our business, resulting from occurred at 19 pandemic.
Its effects, that's still playing out across the country, but we're seeing sequential improvements in our business as we move forward in the second half the year.
And as usual I'll comment further on this later in the coal.
So lets now look at our quarterly revenue in more detail beginning on slide four.
But the U.S. media and our other segment were down the similar level. There's no particular area are about business dispensed in the pandemic.
How are the most divergence in results was in U.S. media.
But you can see on slide five.
Our transit was down 76% Billboard down 36%.
As we talked about previously.
This reflects the severe contraction in the transit commuting audience and larger cities, which are old primarily in the northeast.
Hi Motors went into effect.
But the same time people still needed to lead times for necessities as you would expect.
Well, then says we're much better aboveground them below.
Which mitigated billboards decline relative to transact.
It's worth noting that these cities where until recently growing the fastest and outpaced loan buckets within <unk> portfolio.
No no not lacking.
We expect them to come to ultimately outperform as we come out at the so real times.
Our biggest cities New York in Los Angeles, where the hardest hit.
When we saw equal pressure in local and national.
Slide six shows local and national for all of US media, where you can see the national was down 57% and local was down 43 person.
Proportionately this was pretty much what we saw back in 2009 turn.
With national coming out for Us, but also the first birthday first park in has to come to me that Karen accelerating.
Good example, if the dynamics at play here.
Oh, the media and entertainment industries, which use our portfolio extensively.
Especially in the top few markets.
When we put movies entertainment and TV together.
They were down 66% year over year.
Cool about 20% of our entire companies decline.
And just the movie category the decline was 84%.
And just to studios drugs, the vast majority of that.
[noise] look it's worth noting that this business hasn't gone.
It's just shifted to future periods as this specific movie releases have been moved out.
Turning to slide seven.
Billboard yields were down 36% in the quarter.
Hi, good rolled the vast majority of this decrease was more a function of demand and pricing as we were largely successful in maintaining right.
You probably boards well have a possible.
Yields were down more in terms are sold and static reflecting the shorter nature of some to Israel contracts.
I'm. The fact that digital advertising this more closely linked to time to events and promotions all of which were curtailed in the quarter across the country.
Turning to slide eight our other segment similarly sorts revenues down by Hofh.
Billboards in Canada were very challenged by the Lenten severity of the locked down and that sports marketing business was impacted by the cancellation, but the spring athletic seasons.
Slide nine illustrates the points I made a moment ago on digital with Billboard revenues down, 53% and transit revenues down 77%.
As you know how digital product is extremely attractive to advertisers.
Recall that last year, our digital Billboard revenues were up 17% and digital transit.
9%.
Did you. So we'll continue to be Keith key growth driver for us.
The second quarter results on an aberration caused by the pandemic and as Matt will describe momentarily we are reengaging our to digital investment as we move forward.
Before I talk more about that what we're seeing in that regard.
Let me first turned off to map to go through the balance of our financials.
Thanks, Jeremy and good afternoon, everyone.
I'll start by talking about expenses on slide 10.
Well, we couldn't we use them as much as our revenues, we were able to deliver in excess of $100 million of cost savings we forecasted.
Some of this was giving something about the structure of our business on a significant piece was driven by numerous proactive measures. We took at the pandemic broke out in March.
Let's look at the key components on slide 11.
Well bore the week expense was down due to lower revenues on displays there's available we've component.
Through the proactive discussions and negotiations we've had we continue to have without wynnewood regarding depreciation in the advertising market.
Hi, good franchise expense fell in line with a lower revenues.
Yes, we were able to work with various transit partners to convert minimum annual guaranteed into revenue sharing arrangements.
Okay, well maintenance expenses were down driven largely by lower business activity.
At GE expenses.
<unk>, primarily due to restrictions on discretionary expenses, a highly likely workforce reductions employee furloughs temporary reduction for certain employee base salary and lower professional.
Partially offset by a higher provision for doubtful account.
Asian isn't impacts from Koby banking.
We took proactive steps to lower corporate costs, including temporary reduction to the base salaries of our executive officers.
Cash compensation, what non employee directors.
Partially offset by the impact of market fluctuations on an equity when the time and playing welcome to certain employees.
Let's turn towards on slide 12.
It's evident in this chart that the pandemic pulled the sudden downward shock to revenues.
Well to offset a good portion of it through the cost measures I just described.
Cost reduction, we couldn't buy all questions variable costs as well as a reduction in some fixed costs, primarily the minimum annual guarantees.
This chart clearly show you, how Q2 upticks revenue could benefit Linda.
Well, obviously there'll be an increase in certain variable expenses as our sales improved in some of our fixed cost base as we invest for growth.
The effective operating leverage will be substantial.
When you look at the components of old on slide 13.
Yeah that U.S. media, which is the vast majority of our business. So more of the was particular Billboard hotspots relative size.
Thank you what you typically a 20% margin business on surprisingly flunk, who was on the shop revenue decline.
Capital expenditures on slide 14 walk, but we do significantly.
We did have some maintenance commitments to complete we follow through in from digital Billboard projects that were in progress.
These included some attractive conversions in Dallas and Louis.
Annapolis and New Jersey.
As you progress.
And then go below book projects employees that will likely be getting back to.
It's worth reminding you that we reduced our topic stands at $50 million from $90 million anticipate being pretty close to that number.
Again video is very important what future growth and there's some good opportunities out there for both organic builds in acquisitions.
You can see on slide 15 that the movie with revenue and therefore, Olivia is a key it's a whole drugs.
Hi, just write offs that we picked up some benefit the other drivers yeah. It's a whole was negative for the quarter.
Well. It's also would you do a week metric was negative or free cash Hogan.
Okay. That's it typically to find it cash from operations minus capital expenditures.
Joining me to $22 million them accordingly.
Historically, presenting a joke, it's been here deployment costs generally steady coming out on a quarter of $47 million year to date.
This positive cash generation reflect some of our aggressive cost cutting and importantly, protect your strong liquidity position.
Slide 16 shows given published for both ample FFO and adjusted free cash flow.
Ill note that this will include the preferred dividend in winds up about total dividend payments on the cash flow statement.
Although you see that he has a huge increase year over year on an LTM basis I want to pulling back of this trend will continue as we cycle into the weaker castle of 2020 relative to the stronger results in 2019.
Dividends, well common and preferred capital allocations for us to be making continuation of our liquidity I get it levels and our outlook for the core businesses and other potential investment areas.
We discussed last quarter enjoying tension to distribute at least a required minimum for fiscal year 2020.
Are you thinking on slide 17, our balance sheet has strengthened significantly since last quarter.
And a strong liquidity position combined cash and availability of $1.1 billion.
During the quarter roughly $1 million of gross proceeds from the convertible preferred stock investment, but Providence equity and everything.
We issued forms $1 of senior notes due in 2025.
I'm fully repaid the outstanding amounts in our $500 million revolving credit facility.
It's also important to note that with the anticipated situation and revenues due to the pandemic <unk>.
We paid down and temporarily suspended the accounts receivable portion of our a our securitization facilities.
And we do see asking borrowing capacity under the repurchase portion.
In $1.
Our next significant maturities in 2024 in on maturities are nicely rather than after with our longest maturity date at 23.
You may recall that we received an amendment to our senior secured credit facilities that allows us to substitute second and third quarter 2020, EBITDA as defined for covenant purposes.
With the vote for the same period in 2019.
This is only for the purpose of take one more maintenance covenant ratio.
As you can see on this slide a toll.
Women should increase this quarter on the won't be though.
Well said, partially by the net cash proceeds from the preferred issue.
On a net basis were 5.1 times compared to 4.7 times again to last quarter.
One of the considerations in terms of capital deployment liquidity balance sheet strength.
And create Digitization project, which you can see on slide 18.
As we mentioned Bakken earnings call in May we accept deployment as it endemic again as you can see here on display net adds for the quarter reflect this pause.
Our total integrate project personal quarter would just $12 million.
We do not be any cost during the quarter and not surprisingly, it's unlikely we will be Cooper domains of 2020.
Our cumulative project costs were $22 million at June 30.
Hi, just situation proved in New York Yanking out front the started to we commence display deployment in the third quarter.
Operationally, we believe that this would get them to be constructed.
However, the uncertainty of a pandemic flu I just to put in preserving our liquidity.
We would be included into plans again, given the circumstances, we did for makes an important modifications to our country.
First to have agreed to fund the majority of the deployment of capital this year.
It's about $140 million, we're spending incurred over the next 12 months MTS will pay 70%, we will pay 30% there won't be any recruitment.
Second the M.T. eliminated the minimum annual guaranteed for the rest of 2020.
Third we are paying a higher revenue share, 65% compared to the part of 55% level for the rest of 2020.
And finally, resulting delta between guarantee you would have paid and revenue should be we'll be paying we'll be able to provide a basis for future minimum guarantees for five years, beginning in 2020 I'm talking 2022.
So good outcome, that's good a partnership.
In closing, it's a difficult quarter for us is expected any prepared for it to the fourth that'd be label you.
You must remember the strong liquidity position, we are prepared to whether whatever may come into this environment improves you hope to be able to benefit from some of the strategic opportunities that may arise.
That when you turn the call back over to Jamie.
Thanks, Matt.
Now, let's turn to our outlook on slide 19.
That's the last few weeks, we've continued to write some great new business.
I've had to deal with significant cancellations as you might well imagine.
We're pleased to say that as we look forward despite the uncertainty and some of the fits and starts in states reopening.
We are seeing signs of improvement.
We believe that the low point in our business is now firmly behind us.
The third quarter as we look at it today.
We expect Billboard revenues to be down.
Around 25% and transit to be down around 65% both.
A bit better sequentially on a blended basis. This takes us to total revenues down in the 35% to 40% range, which is a positive step up from the second quarter.
A key factor driving the improvement isn't increasing audience around our Billboard and above ground transit assets as you can see on slide 20.
Well just as we shared with you last quarter. This is our proprietary smart scout data sharing audience impressions sourced from mobile data.
Well I, Los Angeles' in New York lagging, we think it's fair to say that up for a Billboard business in general the audience issues at least seem to be behind us, we're delivering 106% to pre crisis levels.
No yeah, there, although audience doesn't align exactly with our historical revenue your revenues and it doesn't serve as a proxy for future revenues. It is somewhat of a leading indicator.
It's good to see the Dalai a new York, Carla solid pop to pre crisis levels.
But as I mentioned earlier the approach significant markets for us and.
It will be an important piece so about a recovery.
Transit on the other hundreds lagging.
There's a view on this call is well placed to New York, probably isn't commute into your Manhattan office today.
In New York City pretty pandemic daily subway ridership.
It's probably between five and 6 million just went down to around half a million and much but it's been rising slowly and steadily since then and is now well above 1 million.
Now that's still a long way from the five to 6 million, but it's improving it will continue to do so.
Even if the subway ridership takes a while we're still going to be delivering huge attractive audiences with remarkable digital presentation for both our local and national customers.
In closing I'd like to once again, thank our employees for making sacrifices to take half.
But this challenging time.
But I really want make our industry gray.
And our company truly outfront.
Well I'm not just change in the economy in our business much has not.
We still have great assets reached an increasingly mobile population.
Weve reached the more immediately reliably and directly than many other media in these distracting times.
And technology and data.
We remain huge tailwinds for our business.
So with that operator, let's now open the line for questions.
Of course.
And if you would like to ask a question. Please signal by pressing star one on your telephone keypad.
If you are using a speakerphone. Please make sure immune function is turned off to a liar signal to reach our equipment.
As a reminder, <unk> star one.
I'd like to ask a question and we'll pause just for a moment to allow everyone an opportunity to signal for questions.
Well take our first question from Ben Sunbird from Morgan Stanley. Please go ahead.
Thanks, Good afternoon.
Jeremy when you look at the kind of month to month trends and forward pacings in your business do you get a sense. It you know the fourth quarter should be better in the third quarter. If you have any color on that but obviously were.
We're focused on sort of the rate of improvement managing through the back half of this year.
And then maybe for Matt I'm. Thank you for the detail on the M.T.A.
I was a little bit confused if you could just go back and talk about the point you are making on the delta.
Being added a actually starting at 22 for five years I think you were talking about the cultivating and what you would have paid and what you will pay I don't know if you could help us just think about that and if there's any way to kinda now.
Roughly quantify what that might look like that would be helpful.
Okay. Thanks, Thanks spend so I'll take the first piece of that question, you'll remember from.
Many of our calls that we typically don't guide beyond beyond the quarter. That's a good wherein but let's just see if I can at least provide some color. It's it's fair to say that.
Theres still you know many I'm going to implement rolls out. The you know that's still a lot of uncertain to a we have obviously there was already sort of second why you know what happens with schools, you and I want to the film slate et cetera et cetera. So there's still uncertainty out there, but you know from what we can see.
The right now its certainly our anticipation that the fourth quarter will show for the sequential improvement in both parts of our business.
Thank you.
Yeah, Ben <unk> for the second part of me on the M.T.A.
Thankfully, we're going to be paying them a revenue share from the second quarter on the rest of year traffic back nine months of year.
Michelle these 65%, which was up from the 55% that we've been paying and.
And we won't be a painting on minimum guaranteed to be the extent.
The revenue sharing below the minimum guarantee.
We had up that difference over the course of they have a year and add that you aggregate amount into the five years of minimum guaranteed between 2020 to 2026.
I see it and not just as a follow up you know as you move into next year or Jeremy.
Can you help us think about the ranges of outcome with all of your transit partners actually.
Looking at rider shift, obviously, well below <unk> normal is just going to be an ongoing process and sort of discussions and negotiations and adjustments as we look into 2021.
Yes, thanks Bye.
Like that but we have you're in total we have over 60 pounds or franchises and.
30, 35, if if you like of the if those are going to have significance with regards to that question and you know what over the last few months as we've been in discussion with them. We've had you know.
Great responses, we've had a terrific spirit of partnership and you can see that really from how we you know how weve suppress the what would've been fixed costs were then Oh transit business.
Okay. It's very early to say you know what next year will necessarily look hard because inside of them and they're still got quite a few variables, but I see no particular reason.
Why we wouldn't be able to maintain that spirits of cooperation and partnership as we go forward.
Thank you guys.
Well now take our next question from Alexia Quadrani from JP Morgan. Please go ahead.
Hi, Thank you for one month.
Give a little color.
On a little more color I mean like ours team.
Got it.
Good luck.
Q2, you know what second front Garden July one.
I think more nationally driven and local so I guess, that's my first question and then any improvement in transit you mentioned above ground on seeking better than in some places. It's all above ground are you seeing some bumps Richardson exactly at all and then lastly, any any transit.
Advertisers.
Words in the interim thank you.
Good so.
Let me try and take that and I guess, it's the first point is that actually in some of 'em al smell, a smaller markets local advertising as really held up held up pretty well.
Considering what.
Local economies have also been through.
But as we look into.
It was we look into Q3.
We think it's likely that there will be.
Small piece of recovery.
In.
And on National advertising base, when we look into the categories. It's very early to stop talking about categories, but what it appears to be for the most part is that the categories that with difficult for as in Q.
Q2 will be less difficult for us in Q3.
And then you know there are two or three points.
Passive up as its two or three categories that are looking good legal is currently pacing ahead on politically as you know your likes there's not a it's not a big category for us, but it's nice to see that pacing up for Q3, and maybe you need to be expected given where we are in terms of state.
Election cycle and public services public service is also.
And just just generally I think that's.
I personally think but we're going to see.
Quite a shift as we go through you Gonna toss Labor day, I really to say troms that audience as you know picking up they're off to the fact of them out or is that.
New York City, really you know what weight, but keep as a city unless people start taking.
Troms, it again and I feel confident that some older they advertisers that.
I've been here supporters of trends in the past Yeah, we'll continue to we'll continue to be in the future.
Is that helpful.
Yeah, that's very helpful.
<unk>.
Okay.
We'll now take our next question from Jason.
That's a name from Citi. Please go ahead.
Hi, Thanks, so much.
I may have my numbers wrong. So please don't be bashful about correct me.
Thank you guys had minimum.
Transit payments for 2020 on the order of like 230 million here and the emptying was maybe 120 million of that something like that when I look at the quantum of decline in the transit franchise expense.
It seems to strongly suggests that you've been successfully renegotiated other contracts some of those 34, others. Other than MTV is that that proper interpretation or gladly numbers were interpretation of the numbers correct.
Hey.
Jason Thanks, a question whenever possible and but when it comes as the your members or are you had a pretty much right on the button.
Which does it indeed imply that we you know we had very constructive discussions with you know the transit partners. It's worth remembering that these transit contracts in general you know that pretty long the pretty long term and you know we've worked with you know diligently on.
On their behalf and continue to work diligently on their behalf to generate whatever revenues, we time, I'm, not saying I'm not saying that's understood and you know there's been but definitely a.
A desire to give.
Some less it's too.
Okay. That's great. Thank you.
Well now take our next question from even.
Ian Zaffino from Oppenheimer. Please go ahead.
Great. Thank you no.
Well go through maybe some of your your lease agreements. The terms against every mine got Scott I'm, just looking at this and it looks like a 7.5% reduction loose expense.
Is there more opportunity to reduce that further.
So how much.
And then also.
The question working you know in your discussions with.
The transit authorities when you think about year round specifically.
Not worked at home or in other sort of.
Developments on that that my.
Currently or at least.
For the medium term reduce ridership in those and then.
You know are there any adjustments for accountability for that as well when you bring in negotiating both orland disgusting.
[music].
Okay. So you one I'm going to Handoffs. The that's the first question on leases to Maddox you'd like to talk about Mountain then I'll come back come commuter rail.
Sure So a lease expenses down.
A couple of reasons, we we have been negotiating with at Wynnewood says I mentioned.
Also we have some variable components and some of our.
Leases in the water markets.
In New York in L.A., and a couple of others says that contribute.
To that some of our success in negotiations and then leads reduction is going to appear not in a either dine expenses, it's going to be an asset. So that's a lease accounting they get that you get smoothed out over a longer period of time, she you're not going to see the full affected me and expense.
The second half your question is there more opportunity. We continue we have a roughly 100.
People when our real estate, who continue to work with.
With our landlord you talk to them as partners, we do we like our portfolio so we'd like to maintain.
You know NASA, if we have been working diligently to.
Mitigate the cost impact of this whole a whole situation.
Thanks, Matt and a into the second part is part of your question. There's some of this comes down to.
What do you feel about cities you had a how is how a city is going to look in the future I continue to believe that cities are gonna be hugely relevant and that overtime that will continue to take a bigger share of you know.
GDP I'm looking forward than Ah Ah looking forward in into the future.
As I mentioned earlier on I live in a I live in Greenwich, and the fact to them out or is it really is there any credible way as me getting into the city of knowing how long. It's gonna time is to take a is to take metro North that's what I do a nice absolutely believed that that is walk you know I you know a significant percentage.
People will be doing a in the future now will it take a little bit of time to build yes. It could do are we gonna be back to those levels theater immediately no probably not I think you need I think right now forecasting when we got back soon as a little hard because as we said earlier on the cool you know that says that there's a bunch of variable.
Yes, alpha but it was interesting I was I was trying to somebody who come round about half the other day and you know there's it took 20 to 23 over 90. So graduated last year, who works for widening kind of the one of the big AD agencies.
And you know well she's working for her and what did you want to be working she just wants to be Bakken or office and the city, how she's going to get that she's gonna be she's going to be taking commuter rail. So it it may take a little bit of time, but so you know what we're confident that audiences will be back and you know they forgot also.
That what we what we're doing with the commuter rail in particular will actually be going through this.
Travelers digitalization projects. So as we've done you know you know and on the subway Yeah. We've created huge value you know digital revenues were up 89%, while she or our transit revenues were through the roof last year. So theres does an amazing incremental added value.
Through that Digitization, which we believe.
Okay, and the shorter term it could make up for some of that.
Advertise a deficit.
Okay that that the people that is it.
Well thank you.
Well now take our next question from Stefan.
Vsan from Wolfe Research. Please go ahead.
After being good afternoon, just a couple from me first on the New York City in P.A. and you just digging in annual guaranteed it's being added on the other years, that's just to than Maggie not necessarily cash in on top of the deal just curious correct.
Hi, This is definitely trends were going to increase the Meg.
The monetize basis on the.
The deficit we create this year.
It's likely to.
Result in a higher cash payment.
Just based on how the recruitment calculation works.
Okay got it and then just a little bit on trends how is July I guess relative to gene and then as we think about.
Moderate side, Mark moderate size markets versus larger markets, it's still.
Outperformance in the moderate markets given you have to tell that seem to be less severe than ever second yeah, that's really taking effect.
So.
Good.
As we as we sort of look yeah for the most.
We've seen incremental improvement month by month. So that's you know that's a positive sign and that's why we feel that confidence in guiding a north of Q2 for for.
For Q3, when we look into geographies.
The geographies that are most difficult for us in Q2, and you know what are likely to be keeping the brakes on those also in Q3.
Oh, the northeast, Okay, which obviously very exposed to to transit, which will take longer to come back so when it Boston, New York and Washington.
But you know simply would have a big Billboard business here in a in New York also and then on the West Coast. So I'm San Fran you know has been has been difficult and obviously Allied you know just between New York in L.A. in total revenues, that's 40% of our revenues so units.
They do weigh more heavily in that mix than a number of other of our geographies, particularly you know when we look time to the southeast in the Midwest.
Got it and then lastly, I know, it's one of the Big picture there isn't a lot of clarity.
So much.
Larger picture.
Prior especially in 2000 18009.
It's in the structural differences business that composition better.
Every process.
Well you if you if you look back over the.
Over the years since I always I know I guess that the first thing is that it well it took two or three years to to get back to ISO nine revenues.
Since then how to food.
The structurally growing from that time. So we can you know we would take it increased share obviously of the.
Advertising advertising pie.
Interestingly, what sort of truth to growth.
You, there, particularly the uptick coming out of that the recession as I mentioned in my prepared comments was the fact that actually national went down fast, but it came back frost as well I think other structural differences from where we are then is that actually right now we have as much most signal.
Terrific and portion of our revenues.
Coming from digital and the other big piece of churn should we Gotta love to digital screens out that but we've also got audience data that is unparalleled.
Garlock sort of compared to then we have.
So we have to data we have to inside and rural So I think good to see a big uptake from.
That automation and how we tradeoff train our inventory I think part of that will actually be driven by this change that we've seen in our business you know everything digital just speeded up and I'm sure that will be the case.
Interesting I was talking to a.
Yeah, the someone who works for you or one of the major operations in Germany. The other day and he said that three years ago, 2% of his of his digital revenues were traded in animals somebody said sosh programmatic why.
And now that is so him 25% of as revenues being tried to them that way and I look I don't necessarily unit the list, but they but absolutely going to follow that line, but I do think that as we as we start to the open up pipes to take digital AD dollars.
We're gonna be taking what's gonna be taking dollars not just from not just from dollars that we're going well destined to go out of time that will be coming out with the digital power. So I think yeah bouncers I think that's because it has a number of things that you know a different.
And you know I thing you know, we really can look forward to.
Recovery.
As it comes.
Great. Thanks, so much.
Well now take our next question from Jim Goss from Barrington Research. Please go ahead.
Hi, Thanks.
You mentioned, you're able to maintain pricing integrity, and Billboard grapes, and what monitored for like or two that a little bit more.
I'd also err on the transit side I wondered if you could characterize the current ridership demo as some numbers have come back the demographic fairly good or at a more senior level and well that protects the price so rather than being Uh huh.
Volume the level of ridership or type of issue, but also have a scarcity value aspect sort of like the TV networks have as being the biggest factory in a smaller environmental still being able to get a better pricing than might have otherwise.
This is the pricing this year, a little more complex because of those terms.
Yes, I mean, hi, Jim. Thanks, a question and it is a little bit more complex I mean, when ridership either went down to half million on the subway.
It's fair to say that that the dip the absolute skews towards you know for frankly workers that that have to be out and you know it's a good time too and I. Thank all those people isn't it for.
You know looking after is over that time, unless there's still yeah, there's still a bit of a skew now when you look into that 20% as probably less of the that's probably less of that.
More is white color to that.
City type work has similar before but that will that will come back so that will come back.
Over time and.
When we look to the other part of your question. When we look at you talked about up Billboard pricing. So what we've tried to do is just make smart use of on space that is available. So I prefer to keep to keep the price for boarded 100 and gifts and someone there little bit of I wish I.
By utilizing some.
Inventory that you know it wasn't Muslim sold so another was available rather than taking a 100009 too and I think that just makes small common sense and we don't want people getting there.
Comfortable with Reits that are lower than we've been a utilizing in the past.
Okay.
And there you were just talking about.
Your view that cities would come back stronger at the moment that trend that seems to be favoring suburban markets server cities with this does that kind of here too.
Potentially rethink any of your business orientation from when you may get into M&A again or.
You know tried to expand your position in two or to have somewhat less of an urban you. Then you may inclined to right now.
Well, Yeah interesting question, Jim I'm actually is fascinating to see that some earlier this week Facebook leased the entire Oh, probably stuff is bye bye Penn station.
And.
That's a massive office space and I think that's actually very.
Very bullish indicates a full for big cities, let's set other on Nicole I continue to believe that big cities.
Well that may be that may be a blip I believed that big cities will absolutely come back and I think dinner. When you. When you look at the people that are in the those big cities, which is that young urban audience. The one that advertisers reach that's where they're gonna be thank gonna be out in wherever.
In Westchester, whether it happens to be they're going to want to be wants to be here in the city now to next part of your question is in terms of.
Yeah, but would you would we particularly look too we are insights our Billboard business on the weak we have.
20000 leases that sort of gone forever. So they get a date that style with us for a while I'm would we comes in place acquisitions that are not within the top 25. The answer is you know we might inventory, we've actually undertaken some acquisitions.
The Pos tuck in acquisitions, when nodal lazy assets have been within that sort of top top tier microphone, but I I would suspect that it's not going to be an absolute strategy change at all that it might just be a yeah. Okay naturally.
Through opportunities that might arise from you know that fit the crisis situation that we've seen now you know we have alluded to it a couple of times, we do think that the strength of our balance sheet.
We have now will be put us in it in a good position to be an opportune opportunistic should any.
Opportunities arise for us.
Over the coming weeks and months.
All right I appreciate your thoughts.
Thanks Ray.
And we have no further questions that concludes our question and answer session for today I would now like to turn it back over to our presenters for any additional or closing remarks.
Thanks, a highly and thanks to everyone on the call today and for your questions and time that Youve given us.
We look forward to speaking in many of you at the investor events that are coming up.
The next few years.
Thanks, Thanks, very much and it.
And that does conclude today's call. Thank you for your participation you may now disconnect.
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