Q1 2024 Outfront Media Inc Earnings Call

May 2, 2024

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Harry: Hello everyone, and welcome to the OUTFRONT Media first quarter 2024 earnings call. My name is Harry, and I will be your conference operator today. If you would like to enter the queue for questions, you may do so by pressing star 1 on your telephone keypad. It is now my pleasure to hand you over to Stephan Bisson to begin. Please go ahead.

Hello, everyone and welcome to the <unk> first quarter 'twenty 'twenty four earnings call. My name is Henry and I will be your conference operator today.

Stephan Edward Bisson: If you'd like to answer the question you may do so by pressing star one on your telephone keypad. It's now my pleasure to hand, you over to Stefan. Please wanted to begin. Please go ahead.

Stephan Edward Bisson: Good afternoon, and thank you for joining our 2024 first 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.

Stephan Edward Bisson: Good afternoon, and thank you for joining our 2024 first quarter earnings call.

Stephan Edward Bisson: With me on the call today are Jeremy male Chairman and Chief Executive Officer, and Matthew Siegel Executive Vice President and Chief Financial Officer.

Stephan Edward Bisson: 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 the slide presentation that you can find on the investor relations section of our website, OUTFRONT.com. After today's call has concluded, a replay will be available on that site as well.

Stephan Edward Bisson: After a discussion of our financial results well open the lines for a question and answer session.

Stephan Edward Bisson: Our comments today or to the earnings release and a slide presentation that you can find on the Investor Relations section of our website upfront dotcom.

Stephan Edward Bisson: After today's call. This concluded a replay will be available there as well.

Stephan Edward Bisson: This conference call may include forward-looking statements. Relevant 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 2023 Form 10-K and our March 31, 2024 Form 10-Q, which we expect to file tomorrow. We will refer to certain non-GAAP financial measures on the call. Therefore, any references to OIDMA today will be on an adjusted basis. Reconciliations with OIDA and any other non-GAAP financial measures are in the appendix of the slide presentation, the earnings release, and on our website, which also includes presentations with prior periods of reconciliation. I now turn the call over to...

Stephan Edward Bisson: This conference call May include forward looking statements relevant 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 2023 Form 10-K, and our March 31, 2020 for Form 10-Q, which we expect to file tomorrow.

Stephan Edward Bisson: We will refer to certain non-GAAP financial measures on the call.

Stephan Edward Bisson: Any references to OIBDA made today will be on an adjusted basis reconciliations of OIBDA and any other non-GAAP financial measures are in the appendix of the slide presentation. The earnings release and on our web site, which also includes presentations with prior periods reconciliations.

Stephan Edward Bisson: Turn the call over to Jerry.

Jeremy J. Male: Thank you, Stephan, and thank you, everyone, for joining us this afternoon. We're pleased to share our first quarter results today, which came in broadly as we expected when we last spoke in February. As you can see on slide 3, which summarises our headline numbers, the year is off to a solid start with total consolidated revenue growing 3.2% during the quarter, reflecting steady growth in Billboard and an impressive return to growth in transit. Adjusted OEBDA was up more than 10% year-over-year, driven by healthy improvements in both billboard and transfer. Much of this improved orbiter converted to AFFO, which more than doubled to 23 million in our seasonally smallest quarter.

Stephan Edward Bisson: Thank you Stephane and thank you everyone for joining us this afternoon.

Jeremy J. Male: Slide 4 shows our segment results, with total U.S. media revenue increasing 3.5% year-over-year, while other revenue was down 2.6% given much lower digital equipment sales during the quarter, which offset solid Canadian revenue growth of 5.7%. On slide five, you can see our U.S. media revenues in more detail. Billboard revenues were up 2.5%, but would have been higher if you took into account condemnation revenues from both periods that we highlighted on our last call in February.

Jeremy J. Male: We're pleased to share our first quarter results.

Jeremy J. Male: Which came in broadly as we expected when we last spoke in February.

Jeremy J. Male: As you can see on slide three which summarizes our headline numbers. The year is off to a solid start with total consolidated revenue grew three 2% during the quarter, reflecting steady growth in Billboard and impressive returned to growth in transit.

Jeremy J. Male: Adjusted OIBDA was up more than 10% year over year, driven by healthy improvements in both Billboard and transit.

Jeremy J. Male: Much of this improved OIBDA converted to <unk>, which more than doubled to $23 million and our seasonally.

Jeremy J. Male: Seasonally smallest quarter.

Jeremy J. Male: Slide four shows our segment results with total U S media revenue, increasing three 5% year over year.

Jeremy J. Male: Although it was down two 6% given much lower digital equipment sales during the quarter, which offset solid Canadian revenue growth of five 7%.

Jeremy J. Male: On slide five you can see our U S media revenues in more detail.

Jeremy J. Male: Billboard revenues were up two 5%, but would have been higher if you take into account condemnation revenues from both periods that we highlighted on our last call in February.

Jeremy J. Male: Local continues to perform exceptionally well, with particularly strong performances in Atlanta, Dallas, and signs of recovery in San Francisco. Further, I recently acquired assets in Portland that picked up a nice head of steam. Transit revenue is up 7.7% versus the prior year. The improved reviews in transit were led by the MTA and broad-based in nature, driven both by local and national, a wide array of ad categories spanning across all regions.

Jeremy J. Male: Local continues to perform exceptionally well with particularly strong performances, Atlanta, Dallas and signs of recovery in San Francisco.

Jeremy J. Male: Further our recently acquired assets in Portland, the picks up a nice head of steam.

Jeremy J. Male: Transient revenue was up seven 7% versus the prior year.

Jeremy J. Male: The improved revenues in transit well led by the MTA and broad based in nature, driven both by local and national.

Jeremy J. Male: Wide array of AD categories spanning across all regions.

Jeremy J. Male: The breakdown of our local and national revenues in our U.S. business can be seen on slide 6. As in recent quarters, local was the primary driver of growth, up 7.5% during the quarter, while national declined by 2.3%, primarily due to weaker billboard trends in a couple of our larger markets. Given this, our local national split of 62% to 38% was more skewed towards local than the more typical 55-45. On a consolidated basis, our best performing categories in the first quarter were Legal Services, Retail, Service Providers, Government, and Entertainment. On the weaker side were auto, utilities, real estate, travel, and health and medical.

Jeremy J. Male: The breakdown of our local and national revenues in our U S business can be seen on slide six.

Jeremy J. Male: As in recent quarters local was the primary driver of growth.

Jeremy J. Male: Up seven 5% during the quarter, while national declined by two 3% primarily due to a weaker Billboard trends in a couple of our larger markets.

Jeremy J. Male: Given this our local national splits of 62% to 38% was more skewed towards local.

Jeremy J. Male: The more typical 50 545.

Jeremy J. Male: On a consolidated basis, our best performing categories in the first quarter were legal services.

Jeremy J. Male: Retail service providers government political.

Jeremy J. Male: At the time.

Jeremy J. Male: On the weaker side, we're also utilities real estate travel and how to medical.

Jeremy J. Male: Slide seven illustrates our solid U.S. billboard yield growth of up 3.3% year over year, reaching just under $2,600, a first quarter record. The largest drivers of this yield growth remain our digital conversions, rates, and Hire Automated Transaction Revenue. Slide 8 highlights our strong digital performance, with revenue growing 8.3% in the quarter, representing 31% of our total revenues, up from 30% last year. Digital billboard revenue was up 5.6%, while transit revenue was up 16.7%, obviously fuelled by the MTA.

Jeremy J. Male: Slide seven illustrates our solid U S. Billboard yield growth up three 3% year over year, reaching just under $2600 a first quarter record.

Jeremy J. Male: The largest drivers of this yield growth remained digital conversions right and.

Jeremy J. Male: And higher automated transaction revenue.

Jeremy J. Male: Slide eight highlights our strong digital performance with revenue growing eight 3% in the quarter, representing 31% of our total revenues up from 30% last year.

Jeremy J. Male: Digital Billboard was up five 6%, while transit was up 16, 7%, obviously fueled by the MTA.

Jeremy J. Male: Automated revenues in the quarter represented 14% of our digital revenues in the quarter, up from 8% in last year's comparable quarter. With that, I now hand it over to Matt to review the rest of our financials. Thanks, Jeremy.

Jeremy J. Male: Also makes it revenues.

Jeremy J. Male: The quarter represented 14% of our digital revenues in the quarter up from 8% in last year's comparable quarter.

Jeremy J. Male: With that let me now hand, it over to Matt to review the rest of our financials. Thanks, Jeremy and good afternoon, everyone for a deeper dive into our financial statements. Please turn to slide nine for more detailed look at our expenses.

Matthew Siegel: Thanks Jeremy, and good afternoon everyone. For a deeper dive into our financial statements, please turn to slide 9 for a more detailed look at our expenses. Total expenses were up about $6 million and just under 2% year over year. The opening week's expense was essentially flat in the quarter versus last year. Excluding the impact of a $5 million out-of-period adjustment in the first quarter of last year, billboard lease expense was up in the low to mid-single digits. This growth is driven by annual escalators included in our fixed rent leases and properties added to our portfolio in 2023.

Matthew Siegel: Total expenses were up about $6 million or just under 2% year over year.

Matthew Siegel: Billboard lease expense was essentially flat in the quarter versus last year <unk>.

Matthew Siegel: Excluding the impact of a $5 million out of period adjustments in the first quarter of last year.

Matthew Siegel: <unk> expense was up in the low to mid single digits.

Matthew Siegel: This growth was driven by annual escalators included in our fixed rent leases and properties added to our portfolio in 2023.

Matthew Siegel: Transit franchise expense was down slightly versus the prior year, given the non-renewal of a loss-making contract and a small benefit from amendments to existing transit Agreements, which combined more than offset the higher MAG payments to the MTA related to the annual CPI adjustment. Posting maintenance and other expenses was up 6% versus the prior year, primarily due to higher compensation-related expenses, utilities costs, maintenance expenses, which were impacted by some timing items, and other costs related to higher business activity. SGA expense was flat during the quarter as increases related to higher compensation-related expenses.

Matthew Siegel: Transit franchise expense was down slightly versus the prior year, given the non renewal of the loss, making contract and a small benefit from amendments to existing trade agreements, which combined more than offset to the higher make payments to the MTA related to the annual CPI adjustments.

Matthew Siegel: Posting maintenance and other expenses was up 6% versus the prior year, primarily due to higher compensation related expenses utilities costs maintenance expenses, which were impacted by some timing items.

Matthew Siegel: Other costs related to higher business activity.

Matthew Siegel: SG&A expense was flat during the quarter as increases related to higher compensation related expenses.

Matthew Siegel: We're upset by lower expenses elsewhere in the business. Corporate expenses are up just over $3 million due to higher professional fees and the unfavorable impact of market fluctuations on an unfunded equity index-linked retirement plan. The higher professional fees are principally related to a management consulting project. So I tend to provide additional detail on the sources of Orbiter.

Matthew Siegel: Were offset by lower expenses elsewhere in the business.

Matthew Siegel: Corporate expense was up just over $3 million due to higher professional fees and the unfavorable impact of market fluctuations.

Matthew Siegel: <unk> equity index linked retirement plan.

Matthew Siegel: The higher professional fees are principally related to the management consulting project.

Matthew Siegel: Slide 10 provides additional detail on the sources of OIBDA.

Matthew Siegel: Total oil bid was up approximately 10% to $66.5 million. U.S. billboard orbiter revenue was just over $97 million, and U.S. billboard orbiter margin was 30.9%, up 60 basis points year over year. For the full year, we continue to believe that billboard margins will be slightly up on an annual basis. Transit Orbiter was a $15.3 million loss compared to last year's loss of $20.5 million.

Matthew Siegel: Total OIBDA was up approximately 10% to $66 $5 million.

Matthew Siegel: U S. Billboard OIBDA was just over $97 million and U S. Billboard OIBDA margin was 39% up 60 basis points year over year.

Matthew Siegel: For the full year, we continue to believe that Billboard margins will be slightly up on an annual basis.

Matthew Siegel: Transit OIBDA was a $15 $3 million loss compared to last year's loss of $25 million.

Matthew Siegel: The improvement was primarily due to the better revenue Jeremy described earlier in the call. Turning to capital expenditures on slide 11, Q1 CapEx spend was $18.4 million, including just under $5 million of maintenance spend, both lower than last year. The reduced CapEx was primarily due to the timing of our expected spend this year, and we continue to believe that we will spend approximately $75 million in total CapEx this year, with about $70 million of that on our U.S. business.

Matthew Siegel: Improvement was primarily due to the better revenue as Jeremy described earlier in the call.

Matthew Siegel: Turning to capital expenditures on Slide 11, Q1, Capex spend was $18 $4 million, including just under $5 million of maintenance spend both lower than last year.

Matthew Siegel: The reduced Capex was primarily due to the timing of our expected spend this year and we continue to believe that we will spend approximately $75 million of total capex. This year.

Matthew Siegel: $70 million of that on our U S business.

Matthew Siegel: We added 35 digital billboards in the U.S. this quarter, increasing our U.S. total to just over... 1900. We continue to target 150 to 200 total digital billboard editions for the full year. On the transit side, we added over 2,500 digital displays in the U.S. in Q1, mostly small-format screens on subway and train cars in the New York MTA.

Matthew Siegel: We added 35 digital billboards in the U S. This quarter, increasing our U S total to just over <unk>.

Matthew Siegel: <unk> thousand 500.

Matthew Siegel: We continue to target 150 to 200 total digital Billboard additions for the full year.

Matthew Siegel: On the transit side, we added over 2500 digital displays in the U S. In Q1, mostly small format screens and subway and train cars in the New York MTA.

Matthew Siegel: Looking forward, we are nearing the end of the deployment phase for New York and expect to substantially fulfill our initial build obligation this year, bringing us into the maintenance phase of the contract beginning in 2025. Now turning to AFFO, on slide 12, you can see the bridge to our Q1 AFFO of just over $23 million. The $14 million dollar year-over-year increase was due to improvements in OIBRA, maintenance capex, cash taxes, and other. Therefore, I will set a higher interest expense.

Matthew Siegel: Looking forward, we are nearing the end of the deployment phase for New York and expect to substantially fulfill our initial build obligation this year.

Matthew Siegel: Bringing us into the maintenance phase of the contract beginning in 2025.

Matthew Siegel: Now turning to <unk> on Slide 12, you can see the bridge to our Q1 <unk> of just over $23 million.

Matthew Siegel: The $14 million year over year increase was due to improvements in OIBDA maintenance capex cash taxes and other.

Matthew Siegel: So we offset by higher interest expense.

Matthew Siegel: For 2024, we continue to expect that reported consolidated AFFO growth will be in a high single-digit range from 2023's AFFO of $271 million. As we noted in February, this guidance assumes a June 30th close on the sale of our Canadian business. Please turn to slide 13 for an opinion on our balance sheet. Committed liquidity is approximately $570 million, including around $40 million of cash, and nearly $500 million available on our revolver. $30 million is available via our accounts receivable securitization facility.

Matthew Siegel: For 2024, we continue to expect our reported consolidated <unk> growth will be in the high single digit range from 2023, <unk> with $271 million.

Matthew Siegel: As we noted in February this guidance assumes a June 30 have closed on the sale of our Canadian business.

Matthew Siegel: Please turn to slide 13 for an update on our balance sheet.

Matthew Siegel: Committed liquidity of approximately $570 million, including around $40 million of cash.

Matthew Siegel: $500 million available on our revolver and $30 million available via our accounts receivable securitization facility.

Matthew Siegel: As of March 31st, our total net leverage was 5.4 times flat compared to December 31st. We expect our leverage to move down meaningfully as the year progresses given the seasonality of our business and upon the close of the sale of our Canadian business. Turning to our dividends, we announce today that our Board of Directors has approved a 30-cent cash dividend payable on June 28 to shareholders of record at the close of business on June 7.

Matthew Siegel: As of March 31, our total net leverage was five four times flat compared to December 31.

Matthew Siegel: We expect our leverage to move down meaningfully as the year progresses, given the seasonality of our business and upon the close of the sale of our Canadian business.

Matthew Siegel: Turning to our dividend.

Matthew Siegel: We announced today that our board of directors approved a <unk> <unk> cash dividend payable on June 28 to shareholders shareholders of record at the close of business on June 7th.

Matthew Siegel: As a reminder, based on our current operational expectations and the taxable gain created with the sale of our Canadian business, we believe we will need to pay a larger dividend later in the year for weak compliance. We spent $6 million on token acquisitions during the quarter. Looking at our current acquisition pipeline, we continue to expect our 2024 deal activity to look similar to that of 2023. In closing... 2024 is still challenging, as we expected, and we remain enthusiastic about the remainder of the year to come. With that, let me turn the call back to Jeremy.

Matthew Siegel: As a reminder.

Matthew Siegel: Based on our current operational expectations in the taxable gain created with the sale of our Canadian business.

Jeremy: We believe we will need to pay a larger dividend later in the year for wheat from clients.

Jeremy: We spent $6 million on tuck in acquisitions during the quarter looking at our current acquisition pipeline. We continue to expect our 2020 for deal activity to look similar to that of 2023.

Jeremy: In closing <unk>.

Jeremy: 24 has started off as we expected and we remain enthusiastic about the remainder of the year to come.

Matthew Siegel: With that let me turn the call back to Jeremy.

Jeremy: Thanks, Matt.

Jeremy J. Male: We were pleased with our first quarter performance, particularly out of transit, which returned to solid growth after what proved to be a rather difficult 2023. Looking forward to the second quarter, and based on our trends of today, we estimate that Q revenue growth will be broadly in line with Q1s, both in terms of scale and also shape between billboard and transit. Before ending the call today, I'd quickly like to discuss our high-level transit strategy as there were a couple of events during the quarter that exemplify our current approach to this important business. First, Matt mentioned that transit franchise expense was down during the quarter due to the non-renewal of an unprofitable transit franchise, as well as a small benefit related to a transit contract amendment.

Jeremy: We were pleased with our first quarter performance, particularly without a transit which returned to solid growth after what proved to be a rather difficult 2023.

Jeremy J. Male: Moving forward to the second quarter and based upon the trends are today, we estimate the key revenue growth will be broadly in line with Q1s. Both in terms of scale and also shape between Billboard and transit.

Jeremy J. Male: While both of these are relatively small on a gross dollar basis, they illustrate our commitment to improving these business partnerships and growing them profitably for both parties or exiting if such an agreement cannot be struck. Another example of our transit Strategy that I would like to highlight is our new long-term contract with WMATA in Washington, D.C., which was selected by the agency through an open RFP process and includes terms that better reflect the current state of the transit advertising market.

Jeremy J. Male: Before ending the call today I'd quickly like to discuss our high level of transient strategy is there were a couple of events during the quarter that exemplify our current approach to this important business.

Jeremy J. Male: Matt mentioned that transit franchise expense was down during the quarter due to the non renewal of an unprofitable transit franchise as well as small benefit related to a transit contracts amendment.

Jeremy J. Male: Both of these were relatively small on a gross dollar basis.

Jeremy J. Male: Illustrate our commitment to improving these business partnerships, we're growing profitably. So both parties for exiting this such agreement cannot be struck.

Jeremy J. Male: Another example of our Trumpf as transitory that I would like to highlight is our new long term contracts.

Jeremy J. Male: While March in Washington D C.

Jeremy J. Male: Which was selected by the agency through an open RFP process.

Jeremy J. Male: They include terms with special reflect the current state of the transit advertising market.

Jeremy J. Male: It has improved financial metrics relative to the prior long-term contract, signed back in 2014, with a lower revenue share taking nests of certain expenses. Floating Minimum Annual Guarantee and No Capital Obligations, We believe this new contract provides the appropriate framework for what we're calling Sustainable Transit Advertising Partnership. The additional flexibility provided by the structure of this type of contract allows its terms to adapt to advertising trends as they change. This enables us and our partners to minimize franchise financial risk while capitalizing on future revenue opportunities as transit continues to rebound. And with that, Operator, let's now open the lines for questions.

Jeremy J. Male: It has improved financial metrics relative to the prior long term contract signed back in 2014 with a lower revenue share take a net of certain expenses.

Jeremy J. Male: <unk> minimum annual guarantee and no capital obligations.

Jeremy J. Male: We believe this new contract provides the appropriate framework for what we're calling sustainable transit advertising partnerships.

Jeremy J. Male: The additional flexibility provided by the structure of this type of contract allows us terms to adapt to advertising trends as they change.

Jeremy J. Male: This enables us and our partners to minimize franchise financial risk, while capitalizing on future revenue opportunities as transit continues to rebound.

Jeremy J. Male: And with that operator, let's now open the lines for questions.

Harry: Certainly, if you would like to ask a question, please dial star followed by 1 on your telephone keypad now. If you change your mind, please dial star followed by 2 to exit the queue. And, finally, when preparing to ask a question, please ensure that your phone is unmuted locally. Our first question today is from the line of Cameron McVeigh of Morgan Stanley. Please go ahead; your line is open.

Speaker Change: Certainly if you would like to ask a question. Please dial star followed by one on your telephone keypad now.

Harry: If you change your mind. Please I will start followed by two to exit the Q.

Harry: And finally, when preparing to ask a question. Please ensure that youll phone is on mute locally.

Harry: Our first question today is from the line of Kevin Mcveigh of Morgan Stanley.

Cameron Alan McVeigh: Please go ahead your line is open.

Cameron Alan McVeigh: Hey, thanks for taking my questions. I just had a couple. Firstly, what, in your view, is driving the divergence between local and national growth? Is this idiosyncratic to certain clients, or do you see this as more broad-based?

Cameron Alan McVeigh: Hi, Thanks for taking my question just had a couple.

Cameron Alan McVeigh: Firstly, when you or what in your view is driving the divergence between local and national growth.

Cameron Alan McVeigh: How do you think <unk> certain clients or do you see this as more broad based.

Jeremy J. Male: Thanks. Thanks very much for the question, Cameron. I think, you know, if you look back, if you look back over time, it's fair to say that the local part of our business has always had a much slower, lower beta than our national business. You know, national tends to be far more lumpy based on just one or two advertisers in a particular quarter, either being there or not. You can see quite, you know, significant adjustments. You remember at the back end of last year, for example, when we had TV was difficult, obviously, with the actions and rider strikes, etc.

Cameron Alan McVeigh: Thanks, Thanks very much for the question I think if you look back if you look back over time, it's fair to say that the local.

Jeremy J. Male: Part of our business has always had a much slower lower pacer done a national business.

Jeremy J. Male: National tends to be far more lumpy based on just one or two advertisers at a particular quarter either being there or not we can we can see quite significant adjustments you'll remember at the backend of last year for example, when we had.

Jeremy J. Male: <unk> TV was difficult ups with the.

Jeremy J. Male: You know, that one sector can have, you know, meaningful impacts on our business. Our local business is much more broadly spread across, you know, a much larger number of smaller advertisers. And from that point of view, it has that lower beta. And I think it's fair to say that, and it's worth calling out, actually, the performance of our local teams, which have actually been really, really strong over the last 18 months.

Jeremy J. Male: With access in light of the strikes et cetera.

Jeremy J. Male: One sector can have.

Jeremy J. Male: <unk> impacts on our business.

Jeremy J. Male: Our local business is much more broadly.

Jeremy J. Male: Spread across a much larger number of smaller advertisers and.

Jeremy J. Male: From that point of view is that has a lower beta and I think it's fair to say that some and is worth calling out actually the performance of our.

Jeremy J. Male: <unk>.

Jeremy J. Male: Our local teams, which has actually been really really strong over the last.

Jeremy J. Male: Last 18 months.

Jeremy J. Male: Great, thank you. And secondly, you know, what do you see as the largest growth driver for transit revenue going forward? Our ridership level. Yeah, I think there's,

Speaker Change: Great. Thank you.

Jeremy J. Male: Secondly.

Jeremy J. Male: What do you see the largest growth driver for transit revenue going forward.

Jeremy J. Male: Im a ridership levels.

Jeremy J. Male: Bill is impactful and how how about that.

Jeremy J. Male: And tech recovery do you see that spill fueling growth going forward.

Jeremy J. Male: Yeah, I think there are a couple of things. Look, at the end of the day, you know, to some extent or another, we are selling eyeballs, but we're increasingly getting, you know, getting away from that. And we're getting away from the comparison back in 2019.

Speaker Change: Yes, I think there is.

Jeremy J. Male: I think there's a couple of things looked at the end of the day.

Jeremy J. Male: Extending our other we are selling eyeballs, but we're increasingly getting they're getting away from that and were going away.

Jeremy J. Male: Comparison back in 2019, I think it's.

Jeremy J. Male: I think it's, you know, it's almost, we are still seeing some increase in passenger numbers. And I believe we'll continue to see those increases as we move forward. But I think one of the big drivers for us has actually been the digitization that we've accomplished over the last two or three years. You know, I don't know how many of you have spent a lot of time in the subway or on Metro North or Long Island Railroad lately, but what you will see are some fabulous advertising displays that we are now just at the point where we are connecting with those in an automated way.

Jeremy J. Male: And so we are still seeing some increase in passenger numbers and I believe we will continue to see those increases as we move forward, but I think one of the big drivers for us essentially been the digitization that we have.

Jeremy J. Male: Accomplish that last 50 years.

Jeremy J. Male: I don't know how many of your spend much time in the subway or a metro North long Island Railroad lately, but what you will see some fabulous.

Jeremy J. Male: Advertising displays.

Jeremy J. Male: But we are now just at the point, where we are connecting with those in an automated way.

Jeremy J. Male: So the video panels that we have at subway registrations in New York and our live boards are now able to take programmatic feeds. And over the coming months, we're also going to open up our pipes so that they can take our own automated platform feeds, which is DDA. So we think that, you know, digitization plus automation will be a significant growth driver for us as we go forward.

Jeremy J. Male: The video panels that we have at subway and constructions and New York in a live sports are now able to take programmatic trade and over the coming months, but we're also going to open up our pipe so that they can take our own.

Jeremy J. Male: Automated platform feeds which is DDA, so we think that <unk>.

Jeremy J. Male: Digitization plus automation will be a significant growth driver for us as we go forward.

Speaker Change: Great. Thank you.

Ian Alton Zaffino: The next question today is from the line of Ian Zaffino of Oppenheimer. Ian, please go ahead; your line is open.

Jeremy J. Male: Our next question today is from the lineup in Safina of Oppenheimer. Please go ahead. Your line is open.

Jeremy J. Male: All right, great. Thank you very much. One question would also be on the transit side, you know. In the past, you've expressed concerns about there being a stigma around advertising on the subway. Is that kind of done now, or are advertisers now returning from that, or is that still kind of an impediment, and then how do you square kind of the growth maybe with kind of that stigma?

Ian Alton Zaffino: Okay, great. Thank you very much.

Jeremy J. Male: Question also be on the.

Jeremy J. Male: The transit side.

Jeremy J. Male: I know in the past.

Jeremy J. Male: Like.

Jeremy J. Male: Concerns about the stigma around advertising on the subway.

Jeremy J. Male: Is that kind of gone now.

Jeremy J. Male: Advertisers now returning.

Jeremy J. Male: From that or is that still kind of an impediment.

Jeremy J. Male: And then how do you square kind of the growth maybe with kind of that that statement. Thanks.

Jeremy J. Male: Yeah, I think stigma is probably a strong word. Look, you know, there are occasions when, you know, some of the publicity, maybe particularly here in New York, that might be negative with regard to the subway or whatever, you know, not helpful. But on balance, I think we can sell our way through that. And don't forget, it's not all about subway advertising, we have bus advertising, we have a lot of above-ground product, we have shelters, and we have some great national advertisers that are making fabulous use of those environments very, very effectively.

Speaker Change: Yes, I think its stigma is probably probably a strong word.

Jeremy J. Male: There are occasions, when some of the publicity maybe particularly here in New York.

Jeremy J. Male: Negative with regards to.

Jeremy J. Male: The subway or whatever.

Jeremy J. Male: Yes.

Jeremy J. Male: Not helpful, but on balance I think we can sell our way through that and don't forget it's not all about.

Jeremy J. Male: It's not all about subway Burger that we have plus advertising, you'll have a lot of above ground product.

Jeremy J. Male: Have shelters and we have some great national advertisers, making fabulous use of those environments.

Jeremy J. Male: So, you know, maybe at the margin a little unhelpful, but, you know, I think we can sell our way through it. I think the other point is that, you know, we're just generally, you know, just increasing focus on the trumps of business with advertisers. I think we've got some very smart, you know, marketing out there right now. And, you know, we're very, you know, as I say, it's very good to see that there's back some nice growth, which looks to us continuing into, you know, the second quarter. And, you know, onwards from here.

Jeremy J. Male: Very very effectively so.

Jeremy J. Male: Okay.

Jeremy J. Male: Maybe at the margin a little unhelpful, but some I think I think we can sell our way through it I think the other point is that we're just generally.

Jeremy J. Male: Just increasing focus on.

Jeremy J. Male: On the trauma business with advertisers.

Jeremy J. Male: Some very smart marketing out there right now.

Speaker Change: Got it.

Jeremy J. Male: So it's very good say that.

Jeremy J. Male: Some nice growth.

Jeremy J. Male: Which.

Jeremy J. Male: Continuing into.

Jeremy J. Male: And to the second quarter and.

Jeremy J. Male: And then onwards from here.

Jeremy J. Male: Okay, thanks. And then, you know, I know you mentioned politics as a big category. Is this just like standard election year advertising you're seeing? And maybe what should we expect kind of going forward throughout the year? Because we have the presidential election, there's a bunch of referendums. Does that impact on how you think about maybe this year versus, like, what should happen in the other presidential elections? Because I know Outdoor is not like the massive recipient of it, but I wonder if anything might change there or how we should be thinking about that.

Speaker Change: Okay. Thanks, and then.

Jeremy J. Male: I know you mentioned political is a big category is this just like standard election year.

Jeremy J. Male: Advertising Youre seeing and maybe what should we expect kind of going forward throughout the year because we have.

Jeremy J. Male: Presidential election is a bunch of referendums.

Jeremy J. Male: Does that impact how you think maybe this year versus other.

Jeremy J. Male: Other presidential elections.

Jeremy J. Male: Outdoors not massive recipient of it but wondering if anything might change there or how we should be thinking about that going forward. Thanks.

Jeremy J. Male: Yeah, maybe just answer that with a couple of numbers really. We have government and politics which is one category, so we don't sort of split those out.

Speaker Change: Yes, maybe.

Speaker Change: Just to answer that with a cup with a couple of numbers really.

Jeremy J. Male: We have government and political which is one category.

Jeremy J. Male: But in percentage terms, in Q1, that was up 29%, just over a couple of million bucks, something like that. So if you sort of map that out and assume that politics in particular will obviously increase a bit in the second and third quarters, it's going to be a nice tailwind. Back in 2020, we did around $10 million for politics. We think in 2024, we could be somewhere in the region of $15 to $20 million.

Jeremy J. Male: So the split those out.

Jeremy J. Male: But in percentage terms in Q1 that was up 29% just over a couple of million Bucks something like that so if you sort of map that out and assume the political in particular will have to.

Jeremy J. Male: <unk> increased a bit.

Jeremy J. Male: In the second.

Jeremy J. Male: And the second and third quarters, it's going to be.

Jeremy J. Male: Yes.

Jeremy J. Male: Nice tailwind.

Jeremy J. Male: Back in 2020, we did around $10 million.

Jeremy J. Male: Political we think in 'twenty four and it could.

Jeremy J. Male: Could be somewhere in the region of 15% to 20 $20 million.

Jeremy J. Male: Okay, thank you very much. I appreciate that.

Speaker Change: Okay. Thank you very much I appreciate that.

David Karnofsky: The next question today is from the line of David Karnofsky of J.P. Morgan. Please go ahead. Your line is open.

Jeremy J. Male: Our next question today is from the line of David Karnofsky JP Morgan. Please go ahead. Your line is open.

Jeremy J. Male: Hey, thank you for the question. Maybe going back to transit for a second, just given congestion pricing in New York City could start on June 30, wanted to see if you had any view on what that could mean for public ridership, are there counter-factors to consider as well, like less vehicle traffic on highways, and then separately, you mentioned some early strengths in San Francisco. Wanted to see if you could expand on that, how much of that is potentially related to tech. Thanks. So,

David Karnofsky: Hey, Thank you for the question, maybe coming back to transit for a second and just given the congestion pricing in New York City could start on June 30 wanted to see if you had any view on what that could mean for public ridership Arthur counter factors to consider as well like let's vehicle traffic on highways and then separately you mentioned some early strength in.

Jeremy J. Male: San Francisco I wanted to see if you could expand on that how much of that is potentially related to.

Jeremy J. Male: Thanks.

Jeremy J. Male: So, yeah, I mean, just thinking about the congestion charge, I think people are still trying to map out exactly what it's going to mean. But I think we can certainly say that there is likely going to be some increase in ridership on public transit. What's interesting is that when you look at other cities that have introduced a congestion charge, what you tend to find is that while it may have some impact on general traffic, that seems to come, it goes down, and then it starts coming back up.

Jeremy J. Male: So yes, I mean, just thinking about the congestion congestion charts I think people are still trying to map out exactly what it's going to mean I think we can certainly say that there is likely going to be some.

Jeremy J. Male: The increase in ridership.

Jeremy J. Male: On public transit.

Jeremy J. Male: What's interesting when you look at other cities that are institution introduced congestion, Josh what you've tended to find is that.

Jeremy J. Male: While it might have some impact on.

Jeremy J. Male: General General traffic.

Jeremy J. Male: That seems to come it goes down and then it starts coming back up.

Jeremy J. Male: I mean, in my humble opinion, the congestion charge is just about, it's just a tax. So that's, I guess, my view on that. So I think it could be potentially marginally beneficial to transit. And frankly, I suspect that it won't have that much impact, particularly when you look at the areas we're talking about, which are also highly pedestrianized anyway. So, you know, I think we feel that, yeah, we feel that that is likely to be neutral to marginally beneficial.

Jeremy J. Male: Yes.

Jeremy J. Male: <unk> opinion on the congestion charges just about just attacks.

Jeremy J. Male: So that's as we said.

Jeremy J. Male: I guess my view on that so I think look I think potentially marginally beneficial to transit and frankly.

Jeremy J. Male: I suspect that it won't have that much impact, particularly when you look at the areas.

Jeremy J. Male: Okay about wave, which also highly pedestrianize anyway. So.

Jeremy J. Male: I think we.

Jeremy J. Male: We feel yes, we feel that that has to be neutral to mildly beneficial.

Jeremy J. Male: Check was up slightly.

Jeremy J. Male: But tech was up slightly in San Francisco. Going to your second question, I think as we look forward, there will be far more positive stories coming out of San Francisco right now. And actually, quite a bit of our growth that we achieved in San Francisco was from our local sales force, who did a great job to fill in some of the national dollars that maybe still aren't there as we would like.

Jeremy J. Male: In San Francisco going to your second question.

Jeremy J. Male: I think as we look forward.

Jeremy J. Male: That is far more positive stores come out of San Francisco right now and it was actually.

Jeremy J. Male: Quite a bit of outgrowth that we achieved in San Francisco was from our local sales force did a great job too.

Jeremy J. Male: Some of the national dollars, but maybe it's still out there as we would like.

Speaker Change: Thank you.

James Charles Goss: As a reminder, if you would like to ask a question, please dial star followed by one on your telephone keypad now. The next question today is from the line of James Goss of Barrington Research. Please go ahead. Your line is open.

Jeremy J. Male: As a reminder, if you would like to ask a question. Please dial star followed by one on your telephone keypad now.

James Charles Goss: The next question today is from the line of James Goss with Barrington Research. Please go ahead. Your line is open.

Jeremy J. Male: Hi, this is Pat on 4GEM. I just had a question about the automated advertising that you guys talked about earlier. I was wondering if the increase in that was a function of advertisers putting a greater percentage of their spend through that channel or an increase in the number of advertisers using that and just creating more success and awareness of that opportunity for advertisers, just or a combination of the two. Thank you. So there's two pieces to this.

James Charles Goss: Hi, This is Pat on for Ken.

Jeremy J. Male: I just had a question on the automated advertising that you guys touched on that earlier I was just wondering if the increase in debt.

Jeremy J. Male: As a function of.

Jeremy J. Male: Advertisers, putting a greater percentage of their spend through that channel or an increase in the number of advertisers using that and just more succession.

Jeremy J. Male: Turning to that opportunity for advertisers.

Speaker Change: A combination of the two thank you.

Jeremy J. Male: So there are two pieces to our automated platform. One is programmatic, and that is, you know, nicely up year over year.

Jeremy J. Male: So theres two pieces too.

Jeremy J. Male: Automated automd.

Jeremy J. Male: Automotive plants, one is programmatic.

Jeremy J. Male: It has been a nicely up year over year, and that's driven by and there's some advertisers who might have come to us through normal channels, but also and there's undoubtedly advertisers that there is no way we would have.

Jeremy J. Male: And that's driven by, you know, some advertisers who might have come to us through normal channels, but also, there are undoubtedly advertisers that there's no way we would have reached them, do you know what I mean, through our normal dedicated sales force. So that's really the answer to that piece. The second piece is on our own automated platform, and there are two pieces there. One, we're going out and essentially selling, rather than location-specific boards, in the case of billboards, where they're selling baskets of eyeballs.

Jeremy J. Male: We would have reached some generated through our normal dedicated sales force. So that's that's that's really the answer on that pace.

Jeremy J. Male: Pieces on our own automated platform and there's two pieces that one we're going out and essentially selling rather than location specific.

Jeremy J. Male: <unk>.

Jeremy J. Male: Forbes.

Jeremy J. Male: The case.

Jeremy J. Male: Because to build those with us selling basket survivals now people, who are very keen to buy.

Jeremy J. Male: Now, people are very keen to buy eyeballs on a CPM basis. It's the way the rest of media trades, and it's certainly generating enthusiasm for advertisers that would not have used our channel otherwise, we believe. I think the only final point to make on DDA is that it's actually very efficient for us in terms of how we can allocate those revenues across our boards, you know, in terms of board utilization. So actually, there are some buys that we would prefer to go through DDA, so they're not necessarily additive in terms of total ad dollars, but they are very efficient dollars.

Jeremy J. Male: <unk> on a CPM basis, it's the way the rest of media trades and it's certainly generating enthusiasm for advertisers would not believe would not have used our channel and we believe I think the only final point on <unk>.

Jeremy J. Male: Essentially very efficient for us in terms of how we can allocate those revenues across our boards.

Jeremy J. Male: In terms of broad utilization. So actually there are some buyers that we would prefer to go through that so they're not necessarily additive in terms of total $8, but they are very efficient.

Speaker Change: Okay. Thank you.

Jeremy J. Male: Thank you. And, with no further questions in the queue, I would like to turn the call back over to Jeremy Male for any closing remarks.

Jeremy J. Male: Thank you and with no further questions in the queue I would like to turn the call back over to Jeremy Mento for any closing remarks.

Jeremy J. Male: Thanks, Harry, and thanks everyone for tuning in today. Thank you for your questions, and we look forward to seeing you at various investor events over the coming weeks. Thank you again. This concludes today's conference.

Jeremy J. Male: Hi, Thanks, sorry.

Jeremy J. Male: Thanks, everyone for tuning in today. Thanks for your questions and we look forward to seeing you at various investor events over the coming years. Thank you again.

Harry: This concludes today's conference call. Thank you all for joining us. You may now disconnect your lines.

Jeremy J. Male: This concludes today's conference call. Thank you all for joining you may now disconnect your lines.

Harry: [music].

Harry: Yeah.

Harry: This concludes today's conference call. Thank you all for joining you may now disconnect your lines.

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