Q4 2023 OUTFRONT Media Inc Earnings Call
Hello, and welcome to the out front fourth quarter 2023 earnings Conference call. My name is Harry now before taking your call today.
Operator: Hello, and welcome to the OUTFRONT fourth quarter 2023 earnings conference call. My name is Harry, and I'll be coordinating your call today.
Operator: If you'd like to ask a question today, you may do so by pressing star one on your telephone keypad. And I'll now hand you over to Stéphane Bisson, Vice President of Investor Relations at OUTFRONT. To begin, Stéphane, please go ahead. Good afternoon, and thank you for joining our 2023 fourth quarter earnings call. With me on the call today are Jeremy Male, Chairman and Chief Executive Officer, and Matthew Siegel, Executive Vice President and Chief Financial Officer. After discussing our financial results, we'll open the lines for a question and answer session. Our comments today will refer to the earnings release and slide presentation that you can find on the Investor Relations section of our website, outfront.com. After today's call has concluded, an audio archive replay will be available there as well.
If you'd like to ask a question today you may do so by pressing star one on your telephone keypad now.
I'll hand, you over to Steve Stefan Bessone, Vice President of Investor Relations at outcome to begin Stefan. Please go ahead.
Good afternoon, and thank you for joining our 2023 fourth quarter earnings call.
Speaker Change: With me on the call today are Jeremy male Chairman and Chief Executive Officer, and Matt Siegel Executive Vice President and Chief Financial Officer.
Speaker Change: After a discussion of our financial results well open the lines for a question and answer session.
Speaker Change: Our comments today will refer to the earnings release and slide presentation.
Speaker Change: Mr Relations section of our website.
Speaker Change: Dot com.
Speaker Change: After today's call.
Speaker Change: An audio archive replay will be available there as well.
Speaker Change: This conference call.
Stéphane Bisson: This conference call may include forward-looking statements. Relevant factors that could cause actual results to differ peculiarly from these scholarly statements are listed in our earnings materials and in our SEC file, including our 2022 Form 10-K, as well as our 2023 Form 10-K, which we expect to file. We will refer to certain non-GAAP financial measures on this call. Any references made to OIDA will be on an adjusted basis. Reconciliation de Puerta 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 reconciliation. Let me now turn the call over to you...
Speaker Change: Looking statements relevant factors that could cause actual results to differ materially from historical statements are listed in our earnings materials and in our SEC filings, including our 2022 Form 10-K as well as our 2023 form 8-K, which we expect to file this week.
Speaker Change: We will refer to certain non-GAAP financial measures on this call.
Speaker Change: Any references made to OIBDA will be on it.
Speaker Change: Adjusted basis.
Speaker Change: Reconciliations of OIBDA and other non-GAAP financial measures are in the appendix of the slide presentation the earnings release.
Speaker Change: On our website, which also includes presentations prior period reconciliation.
Speaker Change: Let me now turn the call over to Jeff.
Jeremy John Male: Thanks, Stephan, and good afternoon, everyone. We're pleased to be here sharing our full code results and 2024 outlook. Before digging into Q4, I'd like to quickly highlight some of our accomplishments in 2023. Revenues finished up 3% year-over-year on an organic basis with both U.S. media and other, which is essentially our business in Canada, up by the same rate. Our U.S. billboard business, by far our largest in terms of revenue, was up 4% for the year on an organic basis.
Jeff: Thanks, Stefan and good afternoon, everyone.
Jeff: We're pleased to be sharing our fourth quarter results and 2020 outlook.
Jeff: Before digging into Q4 I'd like to quickly highlight some of our accomplishments from 2023.
Jeff: Revenues finished up 3% year over year on an organic basis.
Jeff: U S media and other which is essentially a business in Canada up by the same right.
Jeff: Our U S. Billboard business by far our largest in terms of revenue was up 4% for the year on an organic basis.
Jeremy John Male: As has been the case for the last couple of years, this growth was predominantly driven by higher rates resulting from robust demand for billboard advertising and our expanding digital realm. Also contributing significantly to our billboard growth was the continued impressive performance of our automated sales platform, including Program S. These channels comprise approximately 16% of our digital revenues in the fourth quarter, up from 10% in the first quarter, and in single digits in 2022. In October, we announced the sale of our Canadian business to Bell for 410 million Canadian dollars, or around 300 million U.S., subject to certain adjustments. We expect this transaction will close in the first half of this year. I'd also like to mention the achievements of our creative team, X-Labs, which was awarded two Can Lions, one gold and one bronze, at the International Festival of Creativity for our partnership with Google and Gorilla. The awards honored the team for transforming Times Square into a live stage for a revolutionary music performance by the award-winning virtual band Guerrilla. This event truly showcased the potential of being out of home in the street.
Jeff: It's been the case for the last couple of years. This growth was predominantly driven by higher rates.
Jeff: Hosting.
Robust demand Billboard advertising.
Jeff: Our expanding digital revenues.
Jeff: Also contributing significantly to our throughput.
Great.
Jeff: It's the continued impressive performance.
Jeff: Our automated sales platforms, including programmatic.
These channels comprised approximately 16% of our tissue revenues in the fourth quarter.
Jeff: From 10% in the first quarter with single digits in 2022.
Jeff: In October we announced the sale of our Canadian business to belt.
Jeff: But $410 million Canadian dollars or.
Jeff: Around 300 million U S subjects.
Jeff: We expect this transaction will close in the first half of this year.
Jeff: I would also like to mention the achievements of our creative team X labs, which was we wanted to kind of alliance one Golden one broker.
Jeff: International Festival of creativity.
Jeff: Our partnership with Google and Gorilla.
Jeff: It was August the team for transport in times square, which will live stage, where a rep.
Jeff: Lucian re music performance by the <unk>.
Jeff: Ward, winning virtual band Rollouts.
Jeff: This has been a truly shake.
Jeff: Sure.
Jeff: Evolutionary potential let's see.
Jeff: Great.
Speaker Change: So now, let's turn to our fourth quarter results and you can see the headline numbers on slide three.
Jeremy John Male: So now let's turn to our fourth quarter results, and you can see the headline numbers on slide three. Consolidated revenues grew 1.3%, towards the higher end of the guidance we provided in November. BOL-OEFDA was $152 million, and AFFO was $180 million. Slide four shows our segment results, with total U.S. media revenue increasing 1.1% year over year, and other, which consists mostly of Canada, was up 5.9%
Speaker Change: Consolidated revenues grew one 3% towards the higher end of the guidance we provided in November.
Speaker Change: It was $152 million.
Speaker Change: <unk> was 109.
Speaker Change: Slide four shows our segment results total U S media revenue, increasing one 1% year over year.
Speaker Change: Which consist mostly of Canada was up five 9%.
Speaker Change: On slide five you can see our U S media revenue is a more T cell.
Jeremy John Male: On slide 5, you can see our U.S. media revenues in more detail. Billboard revenues are up 3%, with growth in all four of our regions but stronger performances in the east and south. And I'm pleased to call out our New York, Boston, Dallas, Orlando, Kansas City, and national teams as these markets displayed exemplary growth, leading our billboard geography. However, transit revenue is down 4% versus the prior year. The entire decline in the quarter was due to weaker tech, financial, and entertainment. Though the media strike finally ended in early November, the fall primetime TV season was effectively pushed entirely out of the quarter.
Speaker Change: Billboard revenues were up 3% with growth in all four of our regions, but stronger performances in the eastern SaaS.
Speaker Change: Pleased to call out unusual.
Speaker Change: Dallas Orlando, Kansas City National teams as these markets displayed exemplary growth leading up local geographies.
<unk> revenue was down 4% versus the prior year.
Speaker Change: The entire decline in the quarter it was due to weaker.
Speaker Change: Financial and entertainment.
Speaker Change: So the media strike finally ended in early November with all Prime time television season was effectively pushed its holiday quarter.
Speaker Change: On a consolidated basis, our best performing categories in Q4, with CPG legal services education and retail.
Jeremy John Male: On a consolidated basis, our best performing categories in Q4 were CPG, Legal Services, Education, and Retail. On the weaker side were technology, government politics, financial services, and, of course, entertainment. The breakdown of local and national revenues in our U.S. business can be seen on slide 6. Local revenues grew 4.5% during the quarter, while national, which was more heavily impacted by the weaker tech and entertainment verticals I noted earlier, declined by 3%. As a result, our 43%-57% national-local split during the quarter was a bit more locally skewed than our more typical 45-55.
Speaker Change: On the weakness on it with technology government political financial services.
Speaker Change: Of course.
Speaker Change: The breakdown of local and national revenues in our U S business can be seen on slide six.
Speaker Change: <unk> grew four 5% during the quarter, while national which was more heavily impacted by the weaker secondary entertainment vertical as I noted earlier declined by 3%.
Speaker Change: As a result.
Speaker Change: 43%, 57% Nashville local split during the quarter was a bit more likely skewed more typical $45 55.
Speaker Change: Slide seven shows a solid U S Billboard yield growth up around 3% year over year and topping 3000, a month for the first time.
Jeremy John Male: Slide 7 shows our solid US billboard yield growth, up around 3% year-over-year and topping $3,000 a month for the first time. The largest drivers of this yield growth remain our digital conversions, rates, and higher programmatic and other automated transaction revenues. Slide 8 highlights our strong digital performance, with revenue growing 9% in the quarter, digital revenue representing nearly 36% of total digital revenues, up from 33% last year. Digital billboard revenue was up a very fast 10.6%, again fuelled by our automated sales channels and new inventory, while transit was up 4.5%. Let me now hand over to Matt to review the rest of our financials. Thanks, Jeremy, and good afternoon.
Speaker Change: The largest drivers of this yield growth remained conversions rates and higher programmatic.
Speaker Change: Automates it transaction revenue.
Speaker Change: Slide eight highlights our strong digital performance with revenue growing 9% in the quarter digital revenue revenue, representing nearly 36%, but total digital revenues up 33% up from 33% last year.
Speaker Change: Digital Billboard was up a robust 10, 6% again fueled by our ultimate sales channels, our new inventory, while <unk> was up four 5%.
Speaker Change: Let me now hand over to Matt to review the rest of the financials.
Matthew Siegel: Thanks, Jeremy and good afternoon.
Matthew Siegel: For a deeper dive into our financial statements, please turn to slide 9 for a more detailed look at our expenses. Photo expenses were up about $8 million, or 2.5% year-over-year. Silver lease expense increased 9% year over year to $4.
Matthew Siegel: For a deeper dive into our financial statements. Please turn to slide nine for more detailed look at our expenses.
Matthew Siegel: Total expenses were up about $8 million or 25% year over year.
Matthew Siegel: Billboard lease expense decreased 9% year over year in Q4.
Matthew Siegel: As has been the case throughout the year, this increase reflects annual rent step-ups. For more information, visit www.outfrontmedia.com. Transit franchise expense was down 3.5%, with lower revenue share payments to franchises partially offset by the higher MED payments of the MTA. Posting maintenance and other expenses was down 2% versus the prior year. The piece pieces related to higher business activity were offset by reduced maintenance and utilities expenses, and G&A expense increased by 1% to $4 million versus last year. The entire increase was related to higher professional fees, partially offset by lower compensation expenses.
Matthew Siegel: As had been the case throughout the year. This increase reflects annual rent step ups, while Billboard sites and higher variable expense on a portion of our billboards.
Matthew Siegel: <unk> revenue share gains.
Matthew Siegel: Transit franchise expense was down 5%.
Matthew Siegel: With lower revenue share payments to franchises, partially offset by the higher net payments to the MTA.
Matthew Siegel: Posting maintenance and other expenses was down 2% versus the prior year.
Matthew Siegel: Increases related to higher business activity.
Matthew Siegel: Set by reduced maintenance and utilities expenses.
Matthew Siegel: SG&A expense decreased by 1% to $4 million versus last year.
Matthew Siegel: The entire increase was related to higher professional fees.
Matthew Siegel: Actually offset by lower compensation expenses.
Corporate expense was essentially flat in the quarter as well.
Matthew Siegel: Corporate expense was essentially flagged in the quarter, as lower compensation-related expenses were upset by the unfavorable impact of market fluctuations on an unfunded equity index-linked retirement plan and higher professional fees. Slide 10 provides additional detail on the sources of oil and gas. U.S. Billboard OIBW is just over $145 million and represents over 95% of our consolidated OIBW.
Matthew Siegel: Lower compensation related expenses were offset by the unfavorable impact of market fluctuations on unfunded ingredient next fleet retirement plan and higher professional fees.
Matthew Siegel: Slide 10 provides additional detail on the sources of mortgage.
Matthew Siegel: U S. Billboard OIBDA was just over $145 million and represented over 95% of our consolidated OIBDA.
Matthew Siegel: You guys spoke with OIBDA margin was 39, 5% down versus a year ago, but up.
Matthew Siegel: Billboard Organic Margin was 39.5% down versus a year ago, but up again in the course of 2019. Credit Oil was $13.7 million compared to last year's $16.6 million. The decrease was primarily due to lower revenues than Jeremy described earlier.
Matthew Siegel: Can you bridge to 2019.
Matthew Siegel: Turning to the EBITDA was $13 7 million compared.
Matthew Siegel: Compared to last year's 6 million $16 6 million.
Matthew Siegel: The decrease was primarily due to lower revenue.
Matthew Siegel: We described earlier.
Matthew Siegel: One of our transit I'd like to take a moment to discuss some of our expectations for the New York MTA.
Matthew Siegel: While I'm on transit, I'd like to take a moment to discuss some of our expectations for the New York NTA. Our MAG payments to the NTA will step up by under 3% this year to about $150 million given the CPI escalator contained within the contract. We will continue to account for a New York MTA franchise expense on a straight-line basis throughout the year.
Matthew Siegel: Our Meg inventory.
Matthew Siegel: Step up right on the three.
Matthew Siegel: 8% this year.
Matthew Siegel: $160 million, giving a CPI escalator compete within the contract.
Matthew Siegel: We will continue to account for a New York MTA franchise expense on a straight line basis throughout the year.
Matthew Siegel: On the MTA deployment fronts.
Matthew Siegel: On the MTA Deployment Front, we are pleased to say we are very close to the completion of our initial build. Specifically, we expect to spend around $50 million on deployment in 2024, finishing our installation of advertising streams on rolling stock. The annual capital investment will step down in 2025, as we look forward to the replacement-only stage of our capital commitment. Turning to Capital Expenditures and Environmental Weapons Q4 CapEx spending was just over $23 million, including about $6 million of maintenance spending, both since we filed it last year. For the full year, total cutbacks were about $87 million, just below our historical 5% of revenue benchmark. Included in this total was almost $9 million in spending related to the moves of three large offices in New York, Los Angeles, and San Francisco.
Matthew Siegel: We used to say we are very close to the completion of our initial build.
Matthew Siegel: Specifically, we expect to spend around $50 million.
Matthew Siegel: In 2024.
Matthew Siegel: Finishing our installation and advertising spending our dorm style.
Matthew Siegel: The annual capital investments will step down in 2025, as we look forward to replacement communities, where our capital target.
Matthew Siegel: Turning to capital expenditures on slide 11.
Matthew Siegel: Q4, Capex spending was just over $23 million, including about $6 million of maintenance spend.
Matthew Siegel: Essentially flat with last year.
Matthew Siegel: For the full year.
Matthew Siegel: Hello, cutbacks was about $87 million just below our historical 5% of revenue benchmark.
Matthew Siegel: Included in this total was almost $9 million of spend relates removes the three large offices in New York, Los Angeles San Francisco.
Matthew Siegel: 2024, we expect to spend approximately $75 million of Capex with about $70 billion can be spent at our U S business.
Matthew Siegel: Of the total amount of $25 million will be maintenance capex.
Matthew Siegel: In 2024, we expect to spend approximately $75 million on ProFX, with about $70 million to be spent on our U.S. business. Of the total amount, around $25 million will be maintenance capex.
Matthew Siegel: Looking ahead on slide 12, you can see that.
Matthew Siegel: British towards Q4 of $108 million.
Matthew Siegel: The improvement is principally driven by the noncash effect of streamline grant.
Matthew Siegel: That's a line item, which was an $18 million swing versus last year.
Matthew Siegel: 2024.
Matthew Siegel: Currently expect reported consolidated <unk> growth.
Matthew Siegel: Looking at AFFO on slide 12, you can see the bridge to our Q4 AFFO of $108 million. The improvement is principally driven by the non-cash-effective straight-line rent AFSO line item, which was an $18 million swing versus last year. 2024.
Matthew Siegel: The high single digit range between <unk> $271 million driven.
Matthew Siegel: Driven principally by improvement in OIBDA.
Matthew Siegel: Notably this guidance assumes a pretty close.
Matthew Siegel: All of our Canadian business.
Matthew Siegel: Please turn to slide 13 for an update on our balance sheet.
Matthew Siegel: As you likely saw in November we completed a new $450 million.
Solar senior secured note offering and utilized the proceeds to repay our $40 million of senior unsecured notes due 2025.
Matthew Siegel: We currently expect reported consolidated ASFO growth in the high single-digit range from 2023 to an ASFO of $271 million, driven principally by improvement in oil production. Notably, this guidance assumes that June 30th closed the sale of RPA- Please turn to slide 13 for an update on our balance sheet. For the last show in November, we completed a new $250 million... Senior Secured Note Offering and utilized the proceeds to repay our $40 million of senior unsecured notes through 2025, pushing this maturity out about six years to 2031. Committal liquidity is slightly over $600 million dollars, including around $40 million dollars in cash, nearly $500 million dollars available by every involver, and nearly $5 million dollars available by every counsel and civil securitization steward.
Matthew Siegel: This maturity out about six years to 2031.
Matthew Siegel: Liquidity is slightly over $600 million.
Matthew Siegel: We moved out of the cash.
Matthew Siegel: $100 million available on our revolver.
Matthew Siegel: $5 million available by our accounts receivable securitization facility.
Matthew Siegel: As of December 31st our total net revenue was five four times and we remain comfortable with our guests back with our next maturity other than <unk>.
Matthew Siegel: That being due until 2026.
Matthew Siegel: And with less than 25% of total gas subject to floating rates.
Matthew Siegel: As Jeremy mentioned, we reached.
Matthew Siegel: We need to start PD business the Bell Canada.
Speaker Change: It is.
Speaker Change: Subject to certain adjustments, which equates to about $3 million U S salaries today's exchange rate.
Speaker Change: Continue to expect this transaction to close in the first half of 2024 and intend to use the proceeds to pay down debt delever and reduce interest expense by approximately $20 million.
Matthew Siegel: As of December 31st, our total net worth is 5.4 times, and we remain comfortable with our debt stack, with our next maturity, other than the AR facility, not being due until 2026, with less than 25% of total deaths subject to floating rates. As Jeremy mentioned... for reaching me to start the bidding business for Belle Canada for $1,010,080, which certainly just equates to about $300 million, $300 million U.S. dollars at today's exchange rate. We continue to expect this transaction to close in the first half of 2024 and intend to use the proceeds to pay down debt, pay for labor, and reduce annual interest expense by approximately $20 million. Turning to our dividends, we announced today that our board of directors has maintained a 30 cent cash dividend payable on March 28th. The shareholders are recommending closing the business on March 1st.
Speaker Change: Turning to our dividend.
Speaker Change: Announced today that our board of directors has maintained its <unk> 10 cash dividend payable on March 28 to shareholders of record at the close of business on March 1st.
Speaker Change: Based on our current operational expectation.
Speaker Change: Tactical game created with the sale of our Canadian business. We believe we will need to pay a large dividend later in the year for clients.
Speaker Change: We spent $3 million of acquisitions during the quarter.
Speaker Change: Our total 2023 to about $34 million and.
Speaker Change: Looking at our current acquisition pipeline, we expect our 2020 for deal activity. So it's.
Speaker Change: Similar to that of 2023.
Speaker Change: In closing we are.
Speaker Change: Commercial launch quarter, and we are fully focused on delivering growth in 2024.
Speaker Change: We remain excited about our business future and we look forward to see many of you at various conferences and events the coming weeks.
Speaker Change: Now, let me turn the call back again.
Speaker Change: Thank you Bob.
Speaker Change: Although we were pleased with our Billboard revenue performance will ultimately prove to be rather challenging 2000, Twenty's right. We're happy to turn the page to 2024, which we expect will be a significantly improved.
Matthew Siegel: Based on our current operational expectations and the tax we'll gain with the sale of our community business, we believe we will need to pay a large dividend later in the year for REITs. We spent $3 million in acquisitions during the quarter, bringing our total for 2023 to about $34 million, and looking at our current application pipeline, we expect our 2024 deal activity to look similar to that of 2023. In closing, We accomplished a lot in the quarter, and we are fully focused on delivering growth in 2024. We remain excited about our business' future, and we look forward to seeing many of you at various conferences and events in the coming weeks. With that, we're going to turn the call back to Jeremy.
Speaker Change: We'll be starting off on the right person in the first quarter as based on trends to date we.
Speaker Change: Estimate the reported Q1 total revenue growth will accelerate to the low to mid single digit range.
Speaker Change: With Billboard and transit growing at similar rates.
Speaker Change: Importantly.
Speaker Change: We expect this growth despite our first quarter 2023, Billboard revenues benefiting from around $6 million of nonrecurring condemnation revenue, which we've highlighted last month.
Speaker Change: Further as I, just mentioned and implied by our full year guidance. We are encouraged by the early signs we are seeing for the remainder of the year.
Speaker Change: We see numerous titled wins for our company in 2020, including the continued ramping of our acquired inventory and additional recovery in our transit business.
Speaker Change: We also expect that we are in fact, the entire <unk> industry.
Speaker Change: Benefit from the crowd out effect of the Olympics and the 2020 for election.
Jeremy John Male: Thank you very much. While we were pleased with our Billboard Review performance in what ultimately proved to be a rather challenging 2023, we're happy to turn the page to 2024, which we expect will be a significantly improved year. We'll be starting off on the right foot in the first quarter, as based on our trends of today, we estimate that reported Q1 total revenue growth will accelerate to the low to mid single-digit range, with Billboard and Transit growing at a similar rate. Importantly, we expect this growth despite our first quarter 2023 billboard revenues benefiting from around $6 million of non-recurring condemnation revenue, which we highlighted last May.
Speaker Change: As well as the return of our Prime time TB season in the second half.
I'd like to close our prepared comments today by reiterating a product of the upfront fee that points last year, and then does that continue that positioned us for success in 2024.
Speaker Change: Operator, let's now open the lines for any questions.
Speaker Change: Certainly thank you if you would like to ask a question. Please press star followed by one on your telephone keypad now if you change your mind. Please press star followed by two and when comparing to ask a question. Please ensure that you will find us on mute locally.
Speaker Change: Our first question today is from the line of Jason Bazinet of Citi. Jason Your line is now open.
Operator: Further, as I just mentioned, and implied by our four-year FFO guidance, we are encouraged by the early signs we are seeing for the remainder of the year. We've seen numerous tailwinds for our company in 2024, including the continued ramping of our acquired inventory and additional recovery on our transit. We also expect that we, and in fact, the entire out-of-home industry, will benefit from the crowd-out effects of the Olympics and the 2024 election, as well as the return of a primetime TV season in the second half. I'd like to close our prepared comments today by reiterating how proud I am of the OUTFRONT team for their performance last year, and it is their continued efforts that will position us for success in And with that, Operator, let's now open the lines for any questions. Certainly, thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two, and when preparing to ask your question, please ensure that your phone is unmuted.
Jason B. Bazinet: Thanks, How's it going.
Jason B. Bazinet: I just had a question on the <unk> Guide do you guys.
Jason B. Bazinet: Mine just unpacking.
Jason B. Bazinet: The details sort of below.
Jason B. Bazinet: The headline for the EBITDA number just so we have.
Speaker Change: Right and then also the impact of Canada, assuming that June 30 close.
Speaker Change: Of course.
Speaker Change: Sure Thanks, Jason Adrian.
Speaker Change: Great.
Speaker Change: We understand.
Speaker Change: No.
Speaker Change: There's a few more moving parts this year.
Speaker Change: Because of the timing of the sale of Canada.
Speaker Change: Yes.
Speaker Change: Okay.
Jay: Hey, Jay.
Jay: Got it.
Jay: We saw growth deciding assumes as you mentioned the sale of Canada.
Jay: June 30.
Jay: Tom.
Jay: There is some seasonality of the business so given that we get.
Sure.
Jay: <unk> operation in 2024 compared to the full year of Canada.
Jay: 2023.
No.
Speaker Change: Well, we think there's a couple of more points of growth.
Speaker Change: Billable.
Speaker Change: All year comparative basis.
Speaker Change: Based on the timing.
Speaker Change: Otherwise once.
Speaker Change: Once we sell candidly probably yet.
Speaker Change: Clarify that a little better.
Speaker Change: Seasonality.
Speaker Change: Heavy fourth quarter.
Speaker Change: So from cabinets at the South in 2023 won't be felt in 2024.
Jason B. Bazinet: Our first question today is from the line of Jason Bazinet of City. Jason, your line is now open. Oh, thanks. How's it going?
Speaker Change: Got it.
Speaker Change: <unk> growth on the parts of the SFO growth I mentioned maintenance Capex is about $25 million.
Matthew Siegel: Um, I just had a question on the AFFO guide. Do you guys mind just unpacking any of the details below? The headline, sort of EBITDA number, just so we have the pieces right, and then also the impact of Canada, assuming that June 30th. Oh sure, thanks Jason. How are you doing?
Speaker Change: Cash taxes of about $5 million in.
Speaker Change: Interest expense somewhere in the $155 60 range.
Speaker Change: Of course, depending on what.
Speaker Change: Interest rates.
Speaker Change: Okay got it so the growth if I heard you right would be a few points higher if you hung on to Canada for the full year.
Speaker Change: Did I hear that right.
Speaker Change: Yes, thanks for clarifying is that okay gotcha.
Matthew Siegel: Page PAGE of NUMPAGES http://officialwebsites.com.au There are a few more moving parts this year. Because of the timing of this panel, I cannot... Yeah. You're okay; it's all growth. I'll be citing as soon as I can mention the sale of Canada, mid-year June 30th. Bye-bye. There's some seasonality in the business. So given that we get the shorter half of the Canada operation in 2024 compared to the full year of Canada in 2023, Yo. I probably think there's a couple more points of growth available on a full-year basis on AFFO, based on the timing. Otherwise, you know, once we sell Canada, we can probably clarify that a little better. Seasonality, you know, a heavy fourth-quarter AFFO from Canada that was felt in 2023 won't be felt in 2024, www.outfrontmedia.com, Of course, depending on where interest rates will go. Okay, I got it.
Speaker Change: <unk>.
Speaker Change: Okay, great. Thank you.
Speaker Change: Our next question today is from the line of Kevin Mcveigh of Morgan Stanley Kevin. Your line is now open.
Kevin Mcveigh: Great. Thank you just.
Kevin Mcveigh: Just had a couple I was hoping you could help us think through the impact of the media strikes on growth this year.
Kevin Mcveigh: In particular, what is the cadence of growth look like given the comps we faced last year.
Kevin Mcveigh: And should that have a greater impact on Billboard transit.
Kevin Mcveigh: So.
Kevin Mcveigh: When you look at it it is certainly it.
Kevin Mcveigh: It impacted our business really far more another shortly but the industry just because our exposure to.
Kevin Mcveigh: Media revenues in particular that given a permanent positions.
Kevin Mcveigh: Well site, so when we look into it.
Kevin Mcveigh: <unk> got a reasonably significant impact in dollar terms on our global business, particularly.
Kevin Mcveigh: But in percentage of revenues tons.
Kevin Mcveigh: The transit business was most impacted.
Kevin Mcveigh: Yes.
Kevin Mcveigh: It's Charles it is more disposed towards Nashville being transferred.
Kevin Mcveigh: It's been certainly been somewhat.
Matthew Siegel: So the growth, if I heard you right, would be a few points higher if you hung on to Canada for the full term. Uh, yes. Thank you for clarifying that, Alex.
Kevin Mcveigh: They.
Kevin Mcveigh: All television schedule rules.
Kevin Mcveigh: Typically it's very successful.
Kevin Mcveigh: A successful.
Kevin Mcveigh: For us.
Kevin Mcveigh: Clients so.
Matthew Siegel: Okay. Trust me with my work. Okay, great.
Kevin Mcveigh: And as we look to this year.
Cameron McVeigh: Thank you. Our next question today is from the line of Cameron McVeigh of Morgan Stanley. Cameron, your line is now open. OUTFRONT Media Inc. Great, thank you. I just had a couple.
Kevin Mcveigh: We obviously expect that we will see a full schedule. This year. So we think that will be totally moved to our numbers as we go through the year, maybe we will see the benefits.
Kevin Mcveigh: Benefits.
Kevin Mcveigh: In those early months as well because.
Jeremy John Male: I was hoping you could help us think through the impact of the media strikes on growth this year. In particular, what will the cadence of growth look like given the comps we faced last year? And should that have a greater impact on billboards or transit?
Kevin Mcveigh: New content.
Kevin Mcveigh: We believe that would've been promoted last year and we will be promoted in the earlier part of this year. So generally we feel.
Speaker Change: Positive positive on that.
Speaker Change: It's interesting the other category that some.
Speaker Change: It's difficult for us last year.
Jeremy John Male: So when we look into it, it certainly impacted our business really far more than others, generally within the industry, just because of our exposure to media revenues, in particular, given our prominent positions in both New York and Los Angeles. So when we look into it, you know, reasonably significant impact in dollar terms on our billboard business, particularly in LA, but in percentage of revenue terms, the transit business was most impacted. And that's because transit is more disposed towards national and international routes.
For us I mean difficult for just about everything.
Speaker Change: At holding company.
Speaker Change: Reported so far it was obviously a tab.
Speaker Change: While one swallow doesn't make a summer it's good to see that.
Speaker Change: Our check revenues, it's actually pricing that ahead in Q1.
Speaker Change: That's a positive sign.
Speaker Change: Got it thank you.
Speaker Change: And then just secondly.
Speaker Change: You could just walk through an update of how you're thinking about how margins should trend through the year.
Speaker Change: Yes, if I think about.
Speaker Change: What impacts margin.
Speaker Change: <unk> AD Commission inflation Youre lapping some M&A comp.
Jeremy John Male: It's certainly been somewhere where the All TV schedules have typically been very, very successful for us and our clients. So, you know, as we look to this year, we always obviously expect that we'll see a full schedule this year, so we think that'll be telling of our numbers as we go through the year. You know, maybe we'll see a bit of benefit in those early months as well because there's some new content out there that we believe would have been promoted last year that may well be promoted in the earlier part of this year. So, generally, we feel, you know, positive about that. It's interesting, the other category that was difficult for us last year, not only difficult for us, I mean, difficult for just about every ad-holding company, I think, that's reported so far, was obviously tech. And while one swallow doesn't make the summer, it's good to see that our tech revenue is actually a bit ahead in Q1. So that's a positive sign. I got it.
Speaker Change: And then further tech integration with the MTA Board curious from your view, just what's causing the most material impact.
Speaker Change: And how youre thinking about that trend throughout 'twenty four.
Speaker Change: But again.
Speaker Change: Thanks, Ken a lot of moving parts in 'twenty for me breaks down.
Speaker Change: Transit, we expect some improvements in our transit business and given a big franchises.
Speaker Change: Mark.
Speaker Change: Underneath their minimum guarantees.
Speaker Change: Moving to net revenue will help margin, we expect to see that the transit side on Billboard.
Speaker Change: Okay.
Speaker Change: Acquisitions.
Speaker Change: Two in early 'twenty three.
Speaker Change: Rich.
Speaker Change: A drag in two weeks behind.
Speaker Change: Billboard margins, because the iron east cost.
Speaker Change: Outstripping revenue growth, we think that catches up during 2024.
Speaker Change: Even though there will be rent increases.
Speaker Change: I think our.
Cameron McVeigh: And then, secondly, if you could just walk through an update of how you're thinking about how margin should trend through the year. Yeah, if I think about what impacts margin, you know, wage and ad commission inflation, you're lapping some M&A comms. And then there's some further tech integration with the MTA boards. Curious from your view just what's causing the most material impact and how you're thinking about that trend throughout 24. Thanks. Again, thanks, Cam.
Speaker Change: These costs as a percentage of revenue.
We will improve.
Speaker Change: Of course this.
Speaker Change: Other cost some inflationary pressure in certain areas and some.
Speaker Change: X span.
Speaker Change: Okay.
Speaker Change: To say quarter to quarter I think.
Speaker Change: To video.
Speaker Change: Similar to a little better this year last year.
Speaker Change: Got it thank you.
Speaker Change: Thank you as a reminder, if you would like to ask a question. Please dial star one on your telephone keypad.
Speaker Change: Question today is from the line of Jim Goss of Barrington Research Jim Your line is now live.
Alright, thank you.
Matthew Siegel: A lot of moving parts in 2040 break them down. Transit, we expect some improvements in our transit business, and given our big franchises in New York and LA are underneath their minimum guarantees, improvements in their revenue will help margin. We expect to see that on the transit side. On the billboard side, we had, again, acquisitions in 22 and early 23, which is a bit of a drag in 23 on billboard margins. There is a higher lease cost outstripping revenue growth, but we think that catches up during 2024, even though there will be rent increases. I think our, OUTFRONT Media Inc., is similar to a little better this year than last year. I got it.
James Charles Goss: I was wondering.
With regard to Bill Barger.
James Charles Goss: Dominant category.
James Charles Goss: What's the mix of digital versus static was this year versus last year, whether that trend has had an impact.
James Charles Goss: Those gains they've made.
Speaker Change: Thanks, Jim.
Speaker Change: When we look back to.
Speaker Change: Q4.
Speaker Change: The numbers are digital was 36%.
Speaker Change: Revenues.
Speaker Change: That's very much weighted towards Billboard.
Speaker Change: Profit was 36% of our new starts.
Speaker Change: Thanks.
Speaker Change: The previous.
Speaker Change: Q4, so you can say.
Speaker Change: The big step up that's two.
James Charles Goss: As a reminder, if you would like to ask a question, please dial star 1 on your telephone keypad. And our next question today is from the line of Jim Goss of Barrington Research. Jim, your line. All right, thank you.
Speaker Change: <unk>.
Speaker Change: And.
Speaker Change: We think that that numbers I mean, you kind of go one way we continue to.
Speaker Change: Opportunistically.
Speaker Change: This year, we would expect to be.
Speaker Change: The 150 to 200.
Newport range.
Jeremy John Male: With regard to Billboard, you're... dominant category, what the mix of digital versus static was this year versus last year, whether that trend has had an impact. Those are the gains we've made. When we look back to Q4, the numbers are, digital was 36% of our revenues, and that's very much weighted towards billboards rather than transit, so 36% of our revenues versus 30% the previous quarter. So you can see that's a big step up. That's 20% of the population.
Speaker Change: So you have.
Speaker Change: Essentially more assets.
Speaker Change: Phil.
Speaker Change: And then we'd also have the swing to towards.
Speaker Change: Automation.
Speaker Change: And.
That's an exciting that's an exciting trend.
Speaker Change: Our automated revenues grew 16% in the funnel, Florida.
Speaker Change: But the size of the digital business.
Speaker Change: Yes.
Speaker Change: Starting to become.
Speaker Change: Needle move everything.
Speaker Change: Time get it solved.
Speaker Change: Set before.
Speaker Change: We believe that digital in general will be margin enhancing for us.
Jeremy John Male: And, you know, we think that that number is only going to go one way. We continue to opportunistically convert boards. And, you know, this year, we would expect to be in that 150 to 200 new board range. So you have essentially more assets in the field.
Speaker Change: So it's not let's say.
Speaker Change: But if we.
Speaker Change: We'd look over time.
Speaker Change: Okay.
Speaker Change: The global business.
Speaker Change: Are you generally feeling that it's.
Jeremy John Male: And then we also have this swing towards automation. And that's, you know, that's an exciting trend. For our automated revenues to be 16% in the final quarter, that's the size of the digital business. And that's, you know, starting to become a needle-moving thing. And as time goes on, as we said before, we believe that digital, in general, will be a margin and a stop for our billable business. So it's not necessarily a linear thing.
Speaker Change: Okay.
Speaker Change: Plus because now things are improving in terms of AD revenue trends.
Speaker Change: Because I think.
Speaker Change: Lower period, it could be a disadvantage.
Speaker Change: But it is it is being helped by the rebounding at market.
Speaker Change: In terms of pricing.
Speaker Change: Obviously, yes, thanks, Jim.
Speaker Change: Obviously.
Speaker Change: Yes.
Speaker Change: Whenever you talk to your state.
Speaker Change: Yes.
Jeremy John Male: But if we look over time, we think it's certainly going to be. Are you generally feeling that it's a plus because now things are improving in terms of ad revenue trends? Because I think in a slower period, it could be a disadvantage, but it is being helped by the rebounding ad market. Thanks, Jim.
Speaker Change: Adding on I think on supply and it's always helpful. When you are having on supply.
Speaker Change: Tailwind.
Speaker Change: And the AD market, but last year actually there were a bunch of headwinds.
Speaker Change: Digital revenue, we still managed to grow significantly so.
Jeremy John Male: Obviously, whenever you digitize your estate, you are adding on supply, and it's always helpful when you're adding on supply to have a tailwind in the ad market. But as I said last year, actually, there were a bunch of headwinds, and this digital revenue still managed to grow significantly. So net-net, we were still very confident in the investments that we're making in our business to further digitize. One of the big factors last year that we started seeing was just the late money that we were able to take as a company that we wouldn't have been able to take in years before. If someone wants to get an add-up today, if we had... www.outfrontmedia.com. All right, and just one other one. You called out a number of markets where you thought there was particularly notable strength in your billboard business. Is there any commonality among the markets you called out that you can draw any conclusions from? And what might those be?
Speaker Change: Net net.
Speaker Change: But still very comfortable and investments.
Making our business too.
Speaker Change: One of the big.
Speaker Change: <unk>.
Speaker Change: Last year that we started seeing just the money that we were able to take us.
Speaker Change: As a company that we wouldn't look.
Speaker Change: And you asked before.
Speaker Change: Some of them wants together add up.
Today.
Speaker Change: We had.
Speaker Change: Pull through in the next hour.
Speaker Change: We can have we can have that up and see.
Speaker Change: This was.
Speaker Change: This is in an industry where it previously.
Speaker Change: And flexibility.
Speaker Change: So to have that flexibility.
Speaker Change: It's a real bonus for the industry.
Speaker Change: And then just one other one.
Speaker Change: You called out a number of markets, where you thought they were particularly notable strength in your Billboard business.
Speaker Change: Are there any commonality among the markets you called out that you can draw any conclusions from what the what might those be.
Jeremy John Male: Um, so, you know, in a number of the markets, uh, In the south, so, you know, east of Dallas, you know, obviously Texas has been strong, you know, as a, As a state, um... All right, it generally is good. So I was included in that was. Orlando, and you know, Nashville, goes without saying, I think that Tennessee, you know, also maybe speaks for itself, you know, that the only, you know, markets that were so difficult for us, really, particularly, you know, with some of the West Coast markets, and we talked about San Francisco being difficult for us last year, and I think, you know, some of the reasons for that are maybe self-evident from what we will read in the press, and then LA in particular, as noted, was actually fired by the media strikes.
Speaker Change: The.
Speaker Change: A number of the markets.
Speaker Change: <unk>.
Speaker Change: And.
Speaker Change: In the south so.
Speaker Change: Dallas.
Speaker Change: So Texas has been strong.
Speaker Change: As us.
Speaker Change: At the state.
Speaker Change: Florida generally is good so it was included in that.
Speaker Change: Orlando.
Speaker Change: In Nashville.
Speaker Change: Okay.
Speaker Change: I think that it's up.
Speaker Change: Tennessee.
Speaker Change: Got it.
Speaker Change: Speaks for itself.
Speaker Change: The other markets.
Speaker Change: Difficult for us really.
Speaker Change: Particularly I guess with some of the West Coast market Chip you talked about San Francisco.
Speaker Change: Typical for us last year.
Speaker Change: Some of the regions Latin America self evident from what.
Speaker Change: And then.
As noted it was.
Speaker Change: Bye.
Speaker Change: But we get this right.
Speaker Change: Alright, Thank you very much.
Jeremy John Male: All right, thank you very much. Thank you. Our next question today is from the line of Richard Choe of J.P. Morgan. Richard, your line is now open.
Speaker Change: Thanks Sharon.
Speaker Change: Our next question today is from the line of Richard Choe of Jpmorgan. Richard Your line is now open.
Richard Choe: Thank you I just wanted to follow up on the <unk> revenue guide of low single digits.
Richard Choe: Thank you. I just wanted to follow up on the 1Q revenue guide of, "Where is the strength coming from?" www.outfrontmedia.com. Okay, so, yeah, going back to the guidance. Richard, thanks for the question.
Richard Choe: Terms of the strength.
Richard Choe: Youre seeing between Billboard and transit.
Richard Choe: Where is the strength coming from and how.
Richard Choe: How much is programmatic potentially contributing to that.
Richard Choe: Okay.
Speaker Change: Yes going back to the guidance raise so thanks for the question.
Jeremy John Male: So, you know, we guided to low to mid single digits. And we said that both parts of the business were going to be up, which is obviously a great sign. Part of that is going to be, you know, automated revenues, which will continue to grow this year. We expect there's no reason why that graph should immediately take it out, and that will keep creeping up.
Speaker Change: So we guided to low to mid single digits.
Speaker Change: <unk>.
Speaker Change: We we said.
Speaker Change: Both parts of the business, we're going to be we're going to be out which is which is great.
Speaker Change: Part of that is.
Speaker Change: It's going to be automated revenues, which will continue to grow this year, we expect deliveries and why that graph showed images and check it out.
Speaker Change: Keeping up and that'll be a good thing.
Jeremy John Male: And that'll be a good thing. What is also, you know, good to see right now is that, you know, both our local and national businesses, while, you know, there's still, whatever it is, a few weeks to go in the quarter, both businesses are, you know, pacing up right now. So that's good to see. Strength feels very broad-based, and it's, you know, nice to see that acceleration from the growth rate that we achieved in the back half of last year with some of the challenges that we've already talked about and given that more out of home. Well, you know, on the face of it, yes.
Speaker Change: What is also good to see right now.
Speaker Change: Both our local and national businesses.
Speaker Change: Well theres still whatever it is.
Speaker Change: As we reach to go into the quarter.
Speaker Change: Both businesses.
Speaker Change: So thats good to see strength.
Speaker Change: Sorry, sorry.
Speaker Change: Broad based and it's nice to see that acceleration from the growth rate.
Speaker Change: Sure.
Speaker Change: Back half of <unk>.
Speaker Change: Backlog last year with.
Speaker Change: Some of the challenges that we've already talked about.
Speaker Change: And given that do you see that there's been a change in your customers and wanting to.
Speaker Change: Do more out of home at this point and they feel more comfortable with that environment versus last year, where theres a lot of uncertainty.
Jeremy John Male: I mean, last year, actually, it was all about really two or three categories that really didn't show up. So we think that, you know, if tech gets just a bit of a bounce, that will be very positive for us. They say the media coming back will undoubtedly be positive. And, you know, we expect that, you know, the clients that you've given us support over the last years will certainly be showing their support again in 2024. As a final reminder, if you would like to ask a question, please press star followed by one on your telephone keypad now. It appears we have no further questions in the queue today, so I'd like to hand you back to Jeremy Male for any further remarks. And everyone, thank you for joining us today. I'm sure we'll be seeing many of you at conferences and events over the coming weeks, but for this event, I'm, of course, presenting our Q1 results to you. Thank you very much again. This concludes today's call. Thank you all for joining us. You may now disconnect your lines. www.outfrontmedia.com
Speaker Change: Well.
Speaker Change: On the face of it yes, I mean last year actually it is all about really.
Speaker Change: Sure.
Kathy grids.
Speaker Change: The.
Speaker Change: Does it show up.
Speaker Change: So we think that's it.
Speaker Change: That's just a bit of a bounce.
Speaker Change: That will be very positive for us we saw immediate coming back.
Should it be positive.
Speaker Change: We expect that.
Speaker Change: The clients that have given us.
Speaker Change: Support over.
Speaker Change: Yes, certainly.
Speaker Change: Showing the support.
Speaker Change: Paul.
Paul: Great. Thank you.
Paul: As a final reminder, if you would like to ask a question. Please press star followed by one on your telephone keypad now.
Paul: Okay. Thanks, we have no further questions Nikki today, so I'd like to hand back to you chairman now for any further remarks.
Nikki: Thanks Ryan.
Chairman: Everyone. Thank you for joining us today.
Chairman: I'm sure we'll be seeing many of you.
Chairman: Mrs.
Sure.
Chairman: In the coming weeks.
Chairman: Thanks.
Chairman: Presenting our Q1 results too.
Thanks, very much Jay.
Speaker Change: This concludes today's call. Thank you all for joining you may now disconnect your lines.
Speaker Change: [music].