Q2 2024 OUTFRONT Media Inc Earnings Call
[music].
Operator: Hello all and welcome to OutFRONT Media's second quarter 2024 earnings call.
Hello, and welcome to <unk> Media's second quarter 2024 earnings call.
Operator: My name is Lydia, and I'll be your operator today. After the prepared remarks, I've been an opportunity to ask questions. If you'd like to ask a question during the Q&A, you can do so by pressing "staff" followed by "one" on your telephone keypad.
Lydia: My name is Lydia and I'll be your operator today.
Lydia: After the prepared remarks, there will be an opportunity to ask questions if.
Speaker Change: If you'd like to ask a question during the Q&A you can do so by pressing star Phillip I wanted on your kind of thing he pads.
Stephan Bisson: On our hand, you over to Stephan Bisson, head of investor relations, to begin. Please go ahead.
Speaker Change: I'll now hand, you over to Stefan Basin.
Stefan Basin: Investor Relations to begin please go ahead.
Stephan Bisson: Good afternoon and thank you for joining our 2024 second 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 a discussion of 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 presentations that you can find on the Investor Relations section of our website, OutFRONT.com. After today's call is concluded, a replay will be available there as well.
Stefan Basin: Good afternoon, and thank you for joining our 2024 second quarter earnings call.
Operator: 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 a discussion of our financial results, we'll open the lines for a question and answer session.
Speaker Change: With me on the call today are Jeremy male Chairman and Chief Executive Officer, and Matthew Siegel Executive Vice President and Chief Financial Officer.
Speaker Change: After a discussion of our financial results, we will open the lines for a question and answer session.
Speaker Change: Our comments today will refer to the earnings release and a slide presentation that you can find on the Investor Relations section of our website upfront dot com.
Speaker Change: After today's call's concluded a replay will be available there as well.
Stephan 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 5, including our 2023 Form 10-K and our June 30th, 2024 10-Q, which we expect to file this week. We will refer to certain non-GAAP financial measures on this call. Any references made to Oive Day today will be on an adjusted basis. Reconciliation of Oive Day 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 with prior period reconciliation.
Speaker Change: 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 June 32024, 10-Q, 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 today will be on an adjusted basis.
Speaker Change: Reconciliations of OIBDA 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 with prior period reconciliations.
Stephan Bisson: Also, please note that given the inter-quarter sale of our Canadian business, our consolidated results include only 67 days of Canada results compared to 91 days and comparable prior year period. Detailed historical financial results of the divested Canadian business can be found on page 23 of our slide presentation, and detailed historical US media financial results can be found on slide 22. Given the recent sale of our Canadian business, our remarks today will focus primarily on the results of our US media thing.
Speaker Change: Also please note that given the intra quarter sale of our Canadian business. Our consolidated results include only six seven days of Canada results compared to 91 days in the comparable prior year period.
Speaker Change: Detailed historical financial results of the divested Canadian business can be found on page 23 of our slide presentation and detailed historical U S media financial results can be found on slide 22.
Speaker Change: Given the recent sale of our Canadian business. Our remarks today will focus primarily on the results of our U S media segment.
Jeremy Male: Let me now turn the call over to June. Thank you, Stefan, and thanks to everyone for joining us on our call this afternoon. We're pleased to be here today to discuss our second quarter, during which we successfully completed the seller Canadian business and, more importantly, proven proven results in our US media business. As Stefan mentioned, our remarks today will focus primarily on our US media segment, given this represents essentially the entire remaining company moving forward. As you can see on slide three, which summarizes our headline results, our US media business group revenues are solid 4%, driven by continued steady growth in billboard and impressive double to just growth in transit.
Speaker Change: Let me now turn the call over to Jerry.
Jerry: Thank you Stefan and thanks to everyone for joining us on our call. This afternoon.
Jerry: We're pleased to be here today to discuss our second quarter during which we successfully completed the sale of our Canadian business and more importantly drove improved results in our U S media business.
Speaker Change: Stefan mentioned our remarks today will focus primarily on our U S media segment. Given this represents essentially the entire remaining company moving forward.
Stefan Basin: As you can see on slide three which summarizes our headline results. Our U S media business grew revenues at a solid 4% driven by continued steady growth in Billboard and impressive double digit growth in transit.
Jeremy Male: US media adjusted over the through nearly 10% driven by the revenue growth that is described combined with the US media expense growth of under 2%. US media and corporate adjusted over the was up almost 8%. Consolidated AFF bone grew a strong 9% to 85 million and puts us one on our way to meeting the guidance we laid out earlier this year. This growth is even more impressive, given Canada contributors only 1.7 million, so our consolidated adjusted either in the second quarter compared to 6.5 million last year. On slide four, you can see our US media revenues in more detail.
Stefan Basin: U S media adjusted OIBDA.
Stefan Basin: Grew nearly 10% driven by the revenue growth I just described.
Speaker Change: Got it.
Speaker Change: U S media expense growth of under 2%.
Jeremy Male: U.S. media and corporate-adjusted OIBRA was up almost 8%. Local continues to be particularly strong, with our more locally skewed markets leading our performance.
Stefan Basin: U S media and corporate adjusted OIBDA was up almost 8%.
Stefan Basin: Consolidated <unk> grew a strong 9% to $85 million and puts us well on our way to meeting the guidance, we laid out earlier this year.
Stefan Basin: This growth is even more impressive given Canada contribution is only $1 7 million to a consolidated adjusted OIBDA in the second quarter compared to $6 5 million last year.
Stefan Basin: On slide four you can see our U S media revenues in more detail.
Jeremy Male: Billboard revenues were up 2.3%. Local continues to be particularly strong with our more locally skewed markets leading up performance. Every region was up except the West, where LA was down due to soft media spending. Transit revenue was up nearly 11%, versus the prior year, driven by particularly impressive growth in the New York MTA. Similar to the first quarter, our improved transit revenues with the results of solid performances from both local and national teams. The breakdown of local and national revenues in our US media business can be seen on slide five. Local was the primary driver of our revenue growth, up almost 7% during the quarter, while national grew slightly.
Stefan Basin: Billboard revenues were up two 3%.
Stefan Basin: Local continues to be particularly strong with our more locally skewed markets leading outperformance.
Stefan Basin: Every region was up except the west La.
Stefan Basin: <unk> was down due to soft media spend.
Stefan Basin: Transient revenue was up nearly 11% versus the prior year, driven by particularly impressive growth in the New York MTA.
Stefan Basin: Similar to the first quarter.
Stefan Basin: Our improved transit revenues was a result of solid performances from both local and national chains.
Stefan Basin: The breakdown of local and national revenues in our U S media business can be seen on slide five.
Stefan Basin: <unk> was the primary driver of our revenue growth up almost 7% during the quarter, while national was slightly.
Jeremy Male: On a consolidated basis, our best performing categories in the second quarter, when legal services, financial, utilities, CPG, and retail. On the weaker side, where entertainment, alcohol, restaurants, employment, and auto. Slide six, so the streets are solid, US media billboard yield growth, up almost 4% year over year, reaching just under $3,000, which is a fresh second quarter record around from. The largest drivers of this yield growth remain our digital conversions, rate, occupancy, and higher automated transaction revenue. Slide seven highlights our strong US media digital performance, with revenue growing 10% in the quarter, representing over 34% of our total revenues, up from 32% last year.
Stefan Basin: On a consolidated basis, our best performing categories in the second quarter, when legal services financial utilities, CPG and resold.
Speaker Change: On the weaker side, Brian Entertainment alcohol restaurants employment and alter.
Speaker Change: Slide six so theres strikes a solid U S media Billboard yield growth.
Speaker Change: <unk>, 4% year over year, reaching just under $3000, which is a second quarter record for out from.
Speaker Change: The largest drivers of this yield growth.
Speaker Change: Our digital conversions rates occupancy and higher automated transaction revenue.
Speaker Change: Slide seven highlights our strong U S media digital performance with revenue growing 10% in the quarter, representing over 34% of our total revenues up from 32% last year.
Jeremy Male: US digital billboard was up nearly 6% while transit was up almost 24%, fueled predominantly by the MTA. Automated revenues and the quarter represented 16% of our digital revenues, up from 14% during the rest of course.
Speaker Change: U S digital Billboard was up nearly 6% while transit was up almost 24% fuelled predominantly by the MTA.
Speaker Change: Automated revenues in the quarter represented 16% of our digital revenues.
Speaker Change: From 14% during the first quarter.
Matthew Siegel: With that, let me now hand it over to Matt to review the rest of our financials. Thanks, Jeremy, and good afternoon, everyone. As with Jeremy's remarks, many of my comments will focus on our US media segment as these are the primary operations going forward. For a deeper dive into our financial statements, please turn to slide eight for a more detailed look at our US media expenses. Total US media expenses were up a little over $5 million, or less than 2% year over year. US media billboard lease expense declined by just over $5 million, or a little more than 4% year over year.
Speaker Change: With that let me now hand, it over to Matt to review the rest of our financials.
Matt: Thanks, Jeremy and good afternoon, everyone.
Matt: With Jeremy his remarks, many of my comments will focus on our U S Media segment. As these are the primary operations going forward.
Matt: For a deeper dive into our financial statements. Please turn to slide eight for more detailed look at our U S media expenses.
Speaker Change: Total U S media expenses were up a little over $5 million.
Speaker Change: Less than 2% year over year.
Speaker Change: U S media Billboard lease expense declined by just over $5 million or a little more than 4% year over year.
Matthew Siegel: This decline was driven primarily by lower revenues on the portion of our inventory, operated on leases with revenue share arrangements, which are principally located in our largest markets such as New York and Los Angeles.
Speaker Change: This decline was driven primarily by lower revenues on a portion of our inventory operated on leases with revenue share arrangements, which are principally located in our largest markets such as New York and Whats Angeles.
Matthew Siegel: U.S. media transfer franchise expense was flat first of prior year with the non-renewal of a law-making contract and a small benefit from amendments to existing transit agreements, offsetting the higher payments to the MTA related to the annual CPI adjustment.
Speaker Change: U S media transit franchise expense was flat versus the prior year with the non renewal of the loss, making contract and a small benefit from amendments to existing trade agreements offsetting the higher Meg payments to the MTA related to annual CPI adjustments.
Matthew Siegel: U.S. media posting maintenance and other expenses were up 7% first of prior year, primarily due to higher compensation rate of expenses, higher posting of rotation costs driven by higher business activity, and higher maintenance and utilities costs.
Speaker Change: U S media posting maintenance and other expenses were up 7% versus the prior year, primarily due to higher compensation related expenses higher posting a rotation costs driven by higher business activity and higher maintenance and utility costs.
Matthew Siegel: U.S. media SGNA expense was up 9%, or just over $70 million during the quarter due to higher compensation rate of expenses, provisioned for doubtful accounts, one-time seventh costs, and rent-related to transitions to new offices, partially offset by lower professional fees.
Speaker Change: U S media SG&A expense was up 9% or just over $7 million during the quarter due to higher compensation related expenses provision for doubtful accounts onetime severance cost and rent related to transitions to new offices.
Speaker Change: Partially offset by lower professional fees.
Matthew Siegel: So I'd nine provide additional detail on the sources of U.S. media orbit. Total U.S. media orbit was up nearly 10% to over $140 million.
Speaker Change: Slide nine provides additional detail on the sources of U S media OIBDA.
Speaker Change: Total U S media OIBDA was up nearly 10% to over $140 million.
Matthew Siegel: U.S. Billboard orbit was up 3.5% to $136 million, representing a margin of 37.8% of 50 basis points year-over-year. For the full year, we continue to believe that billboard margins will be up on an annual basis. Transit orbit approved by nearly $8 million to just under $5 million. The improvement was primarily due to the better revenue Jeremy described earlier in the call, particularly at the New York MTA. And so I tend, you can see our combined U.S. media and corporate orbit, which was up 7.7% to $124 million. Q2 corporate expense was up over $3.5 million, almost entirely due to higher consulting fees.
Speaker Change: U S Global OIBDA was up three 5% to $136 million.
Speaker Change: Representing a margin of 37, 8% up 50 basis points year over year.
Speaker Change: For the full year, we continue to believe that <unk> margins will be up on an annual basis.
Matthew Siegel: Transit OEBDA improved by nearly $8 million to just under $5 million. This maintenance spend was flat with last year, while growth was a little higher due to spending that was committed as part of the agreement to start Canadian business. There were no large or notable acquisitions made during the quarter, and looking at our current acquisition pipeline, we continue to expect our 2024 deal activity will look like that of 2023. In closing, we accomplished a lot in the quarter, and we continue to be enthusiastic about the remainder of the year ahead.
Speaker Change: Transit OIBDA improved by nearly $8 million to just under $5 million.
Speaker Change: The improvement was primarily due to better revenue as Jeremy described earlier in the call, particularly at the New York MTA.
Speaker Change: On Slide 10, you can see our combined U S media incorporate OIBDA, which was up seven 7% to $124 million.
Speaker Change: Q2, corporate expense was up over $3 5 million almost entirely due to higher consulting fees.
Matthew Siegel: Total costs of this project year-to-date were approximately $5 million. And we expect another $3 million to be spent through the third quarter. Turning the capital expenditures on 4 out of 11, Q2 consolidated CapEx spend was just under $24 million, including about $8 million of maintenance spend. This maintenance spend was flat with last year, while growth was a little higher due to spend that was committed as part of the agreement to solve Canadian business.
Speaker Change: Total cost of this project year to date of approximately $5 million and we expect another $3 million to be spent through the third quarter.
Speaker Change: Turning to capital expenditures on slide 11.
Speaker Change: Q2, consolidated Capex spend was just under $24 million, including about $8 million of maintenance spend.
Speaker Change: This maintenance spend was flat with last year, while growth was a little higher due to spend that was committed as part of the agreement to sell our Canadian business.
Matthew Siegel: Q2 U.S. media CapEx spend was $18.5 million, including just under $70 million of maintenance spend, each down about $1 million. For the full year, we believe we will spend approximately $75 to $85 million of total CapEx. Over 300 of our digital billboards were the best that is part of the Canadian transaction. And we ended the quarter with around 1,900 digital billboards, which represents just under 5% of our inventory. For the year, we continued to target 150 to 200 total digital billboard additions. In transit, we added nearly 1,800 digital displays in the U.S. in the second quarter.
Speaker Change: Q2 U S media Capex spend was $18 $5 million, including just under $7 million of maintenance spend.
Speaker Change: Each down about $1 million.
Speaker Change: For the full year, we believe we will spend approximately $75 million to $85 million of total capex.
Speaker Change: Over 300 removed over 300 of our digital Billboards were divested as part of the Canadian transaction and we ended the quarter with around 90 to 100 digital Billboards, which represents just under 5% of our inventory.
Speaker Change: For the year, we continue to target a 150 to 200 total digital Billboard additions.
Speaker Change: In transit we added nearly 100 digital displays in the U S in the second quarter.
Matthew Siegel: As the first quarter of installations were mostly small format screens on subway and train cars in the New York MTA, and we continue to expect the substantially complete our initial deployment commitment in 2024. We impaired the $8.8 million of MTA deployment spend in the second quarter. Looking forward, our MTA transit performance through the first half of the year was slightly better than the expectations and assumptions included in our year-end 2023 financial model. We now expect to be at least cash flow neutral on an undiscounted basis from the third quarter of 2024 through to the end of the amended base term of the agreement.
Speaker Change: As the first quarter of installations were mostly small format screens on subway and train cars and the New York MTA and we continue to expect to substantially complete our initial deployment commitment in 2024.
Speaker Change: We impaired the $8 $8 million of MTA deployment spending in the second quarter looking.
Speaker Change: Looking forward, our MTA transit performance through the first half of the year was slightly better than the expectations and assumptions included in our year end 2023 financial model.
Speaker Change: We now expect to be at least cash flow neutral on an undiscovered basis from the third quarter of 2024 through to the end of the amended base term of the agreement.
Matthew Siegel: If our MTA cash flow performance continues to be in line with, or better than our current model, we would not expect to incur additional impairments related to this contract in the future.
Speaker Change: If our MTA cash flow performance continues to be in line with or better than our current model.
Speaker Change: We would not expect to incur additional impairments related to this contract in the future.
Matthew Siegel: Now, turning to FFO on July 12th, you can see the bridge to our Q2AFO of really $85 million. The almost $7 million year of year increase was due to improvements in orbit, cash taxes, and other items, slightly offset by higher interest expenses due to last year's fourth quarter senior note refinancing. For 2024, we continue to expect that reported consolidated AFFO growth will be in the high single-digit range from 2023's AFFO of $271 million. This guide considers the five months we operated the Canadian business prior to its sale compared to 12 months last year.
Speaker Change: Now turning to <unk> on Slide 12, you can see the bridge to our Q2 <unk> of nearly $85 million.
Speaker Change: The almost $7 million year over year increase was due to improvements in OIBDA cash taxes, and other items slightly offset by higher interest expense due to last year's fourth quarter Senior note refinancing.
Speaker Change: For 2024, we continue to expect that reported consolidated <unk> growth will be in the high single digit range from 2020, threes <unk> of $271 million.
Speaker Change: This guide considers the five months, we operated the Canadian business prior to its sale compared to 12 months last year.
Matthew Siegel: Please turn to slide 13 for an update on our balance sheet. Commitability is nearly $665 million, including around $50 million of cash, almost $500 million available via our revolver, and $120 million available via accounts for civil securization facility, which now matures in June of 2027. As of June 30th, our total net leverage was five times flat, down from 5.4 times as of March 31st, primarily due to the sale of our Canadian business. We continue to target a net leverage range of 4.4 to 5 times, and we plan to continue dewebring through growth and adjusted the orbit up.
Speaker Change: Please turn to slide 13 for an update on our balance sheet.
Kim: Kim minimum liquidity is nearly $665 million, including around $50 million of cash.
Speaker Change: $500 million available by our revolver and $120 million available by our accounts receivable securitization facility, which now matures in June 2027.
Speaker Change: As of June 30, our total net leverage was five times flat down from five four times as of March 31.
Speaker Change: Primarily due to the sale of our Canadian business.
Speaker Change: We continue to target a net leverage range of $4 four to five times and we plan to continue de levering through growth in adjusted OIBDA.
Matthew Siegel: As of June 30th, we pay down $200 million of our term loan using Canadian proceeds in $90 million on our accounts for civil facility using freed up capital.
Speaker Change: As of June 30, we paid down $200 million of our term loan using Canadian proceeds and $90 million on our accounts receivable facility using freed up capital.
Matthew Siegel: Turning to our dividend, we announce today that our board of directors approved another 30-cent cash dividend payable on September 27th to shareholders of record at the close of business on September 6th. As a reminder, based on our current operational expectations and the taxable gain created with the sale of our Canadian business, which closed on June 7th, we believe we will need to pay a larger dividend waiting in the year for recompliance. To maximize the dewebring goal of the sale of our Canadian business, the board has the optionality to pay a portion of the larger dividend in common stock, which would be issued on a provided basis to current shareholders.
Speaker Change: Turning to our dividend, we announced today that our board of directors approved another <unk> <unk> cash dividend payable on September 27 to shareholders of record at the close of business on September six.
Speaker Change: As a reminder.
Speaker Change: Our current operational expectations and the taxable gain created with the sale of our Canadian business, which closed on June seven.
Speaker Change: We believe we will need to pay a larger dividend later in the year for REIT compliance.
Speaker Change: To maximize the Delevering goal of the sale of our Canadian business.
Speaker Change: <unk> has the optionality to pay a portion of the larger dividend and common stock, which will be issued on a pro rata basis to current shareholders.
Matthew Siegel: There were no larger notable acquisitions made during the quarter, and looking at our current acquisition pipeline, we continue to expect our 2024 DO activity will look like that of 2023.
Speaker Change: There were no larger notable acquisitions made during the quarter.
Speaker Change: And looking at our current acquisition pipeline, we continue to expect our 2020 for deal activity will look like that of 2023.
Matthew Siegel: In closing, we accomplished a lot in the quarter, and we continue to be enthusiastic about the remainder of the year to come.
Speaker Change: In closing, we accomplished a lot in the quarter and we continue to be enthusiastic about the remainder of the year to come.
Jeremy Male: With that, let me turn the call back to Jeremy. Thanks, math. We look pleased with our second quarter performance, which we believe is set us up for a successful 2024. Looking forward to the third quarter, and based on what we are seeing in the business as of today, we estimate that Q3 US media revenue growth will be comfortably in the mid-single digit range, with billboard accelerating from its Q level to two level and transit growing in the high single digit range. This is the reflection of national trends picking up and local continuing to display solid growth.
Speaker Change: That let me turn the call back to Jeremy.
Jeremy: Thanks Mark.
Jeremy: We were pleased with our second quarter performance, which we believe has set us up for a successful 2024.
Jeremy: Looking forward to the third quarter and based on what we're seeing in the business as of today.
Speaker Change: We estimate that Q3 U S media revenue growth will be comfortably in the mid single digit range with Billboard accelerates increments to level two.
Jeremy: Two level and transit growing in the high single digit range.
Speaker Change: This is the reflection of national trends picking up.
Speaker Change: Local continued continuing to display solid growth.
Jeremy Male: OUTFRONT is entering the third quarter with a strictly domestic operation for the very first time, and we remain incredibly excited about the many opportunities that lie ahead. US out of home is poised to continue its organic growth as it remains one of the few sources of unassailable viewership, as other mediums continue to see audience declines. This organic growth will continue to be enhanced by further digitization, which will remain a key driver as we expand our digital footprint and continue to benefit from growth in automated revenues. And last but not least, we expect that our transit business will continue to recover very quickly, and we'll seek to improve the economics of each of these agreements as they come up for renewal.
Jeremy: Upfront is entering the third quarter was a strictly domestic operation for the very first time and we remain incredibly excited about the many opportunities that lie ahead.
Speaker Change: U S out of home is poised to continue its organic growth as it remains one of the few sources of other saleable viewership as other mediums continued audience declines.
Jeremy: This organic growth will continue to be enhanced by further digitization, which will remain a key driver as we expand our digital footprint and continued to benefit from growth in automated revenues.
Jeremy: Last but not least we expect that our transit business will continue to recover very quickly.
Jeremy Male: will continue to recover very quickly, and we'll seek to improve the economics of each of these agreements as they come up for renewal.
Operator: And with that operator, let's now open the lines for questions. Thank you. Please press staff followed by the number one if you'd like to ask a question, and ensure your device is unmuted locally when it's your turn to speak.
David Karnovsky: Our first question today comes from David Karnovsky with JP Morgan. Please go ahead. Your line is open. Hi, thank you.
Jeremy Male: Sarah, just go back to your comments on the guide before you said to three media groups. I think comfortably a bit single. Does that mean you think there's room to potentially do better should maybe macro trends break more favorably. And then digital transit looks like accelerated a bit in a quarter. I think maybe you had turned on programmatic and automated buying in New York and FDA. I just want to see with the reception to market or just into that so far. Thanks.
Cameron McVeigh: Yeah, thanks for a question, David.
Jeremy Male: Let's just hit the NTA point for first. Yeah, we did we did switch on programmatic to our life boards in the NTA. There was still some boards on train, for example, that still need to be connected, but certainly will connect on life boards. And, you know, we're starting to see some pickup, and it'll take a bit of time, but we're excited at what automated revenues will do for digital on the NTA. Yeah, the guy we said we said that we would be company in the middle of your range. And, you know, we pointed to two things really.
Speaker Change: Blackboards and.
Speaker Change: MTI there was still some thoughts.
Speaker Change: I'm trying to for example that still need to be connected but certainly well connects on LIBOR and we're starting to see some pick up and it will take time, but we're excited.
Speaker Change: At <unk> revenues rose, 2% for digital.
Speaker Change: On.
Jeremy: On the MTA.
Speaker Change: Looking at the guys here, we said, we said that we would be comfortably in the mid single digit range and we pointed to two things really one was the improving trend in Billboard and secondly, if this improving trend.
Jeremy Male: One was the improving trend in Billboard, and secondly was the improving trend in National. So from that point in, you know, from that point of view, you know, we'd expect numbers to be a little bit ahead of what we were in queue to.
Jeremy: In national.
Jeremy: From.
Jeremy: So from that point of from that point of view.
Jeremy: Expect numbers to be a little bit ahead of where we were in Q2.
Cameron McVeigh: Thank you.
Speaker Change: Thank you.
Ian DeCino: Our next question today comes from Cameron, that they with Morgan Stanley. Please go ahead. Thanks. I was just curious.
Speaker Change: Our next question today comes from Kevin Mcveigh with Morgan Stanley. Please go ahead.
Kevin Mcveigh: Thanks, and I was just curious.
Jeremy Male: If you could discuss your view of the city of the current macro environment and how advertiser demand has been trending, when you think about local versus national advertising. You know, why do you think you're continuing to see this divergence? It has continued to be the case in the third quarter. Thanks. Thanks for the question. I don't think the divergence we are seeing is particularly down to the macro trends that we've been saying over the last few weeks. When you drill into it, actually the main down within our national business has really been entertainment. And that's been sort of, you know, a combination of movies and streaming, you know, a number of factors that still haven't, you know, quite repaired and recovered from the disruption to, you know, the whole sort of media slate and TV slate driven by actors and writers trying at the back end of the year.
Kevin Mcveigh: If you could discuss your view of the state of the car.
Kevin Mcveigh: Current macro environment and how advertiser demand has been trending when you think about local versus national advertising.
Speaker Change: Why do you think you're continuing to see this divergence and has that continued to be the case in the third quarter.
Speaker Change: Yeah. Thanks for the question I must admit I don't think the divergence, we're saying is particularly down.
Speaker Change: The macro trends that we've been saying.
Speaker Change: Yeah.
Speaker Change: Over the last few weeks when you drill into it.
Speaker Change: Actually the main.
Speaker Change: <unk>.
Jeremy Male: I think the other thing I point you is that, you know, in total, it's not as own nationals, not growing, it's just not growing, you know, as fast as local is.
Cameron McVeigh: So, I think that would be my comments there. Great. Thanks.
Jeremy Male: And then just secondly, it's strong growth in the digital transit segment. Curious, you know, how much of that is comp related versus maybe specific vertical recovery or, you know, more supply coming in with the programmatic ad tech integration you spoke to earlier. Thanks. Thanks, Cameron. I mean, the answer is, you know, we have seen, you know, a definitive increase across the levels, but we also do have, in total, more screens in the transit environment in the NTA as we built out, as we built out last year. And, you know, we're really looking forward to, you know, benefiting from that, you know, digital as we go forward.
Jeremy Male: I'm not how much time, you know, you guys have, you know, spend down on the subway right now. But I mean, the product is never has never looked better. And the fact that we can, you know, have, you know, the opportunity to start really creative and now also, you know, that's, you know, the delivery of programmatic, which means that it can be incredibly, incredibly timely. I think we're going to, you know, really benefit from those investments that we've made, you know, over the last couple of years, as we go forward from here. Great. Thank you.
Speaker Change: The opportunity to create.
Speaker Change: Creative and now also.
Speaker Change: That sum.
Speaker Change: The delivery of programmatic, which means that it can be incredibly incredibly timely.
Speaker Change: I think we're going to really benefit from those investments that we've made.
Speaker Change: The last couple of years as we go forward from here.
Speaker Change: Great. Thank you.
Ian DeCino: And the next question comes from Ian DeCino with Oppenheimer. Please go ahead. Hi, great. Thank you very much. You know, I just wanted to ask a little bit more on the transit side, because it looks like ridership is not really moved a whole lot over the past year or so. If you need help us understand, you know, are you at a kind of a ridership level that you, you know, are happy with. I mean, you're growing 10% or so. But, you know, what else can you potentially do to, you know, maybe maybe get raised higher, you know, in the absence of some ridership growth.
Speaker Change: Our next question comes from Ian Zaffino with Oppenheimer. Please go ahead.
Ian Zaffino: Hi, great. Thank.
Ian Zaffino: Thank you very much just wanted to ask a little bit more on the transit side because it looks like ridership has not really moved a whole lot over the past year or so.
Speaker Change: Can you maybe help us understand.
Speaker Change: Or are you at a kind of a ridership level that you.
Speaker Change: Our happy with any new or growing 10% or so.
Speaker Change: But you know what else can you potentially do to.
Speaker Change: Maybe get rid of these higher.
Speaker Change: In the absence of some ridership growth and if you do see ridership growth is that kind of like a one to one in that if we get back to what you say, 80% of pre Covid that'd be 15% higher revenues is that the way to think about it or.
Jeremy Male: And if you do see ridership growth, is that kind of like a one-to-one. And that if we get back to, let's say, 80% of pre-COVID, you know, that would be 15% higher rapidly. Is that the way to think about it, or maybe a little more of a deeper. discussion here, thanks.
Speaker Change: Maybe a little more of a deeper discussion there. Thanks.
Jeremy Male: Okay, so thanks for questioner. I guess first thing is that actually, you know, NGA revenues were well ahead of that, you know, that double digit growth rate that we gave in total. And also over indexing on ridership, so that's very good news. I think we said right the way along from, you know, we go back to the dark days of 2020 that we expected that, you know, at 80 to 85% of ridership that we would be able to generate 100% of revenue. But we continue to believe that that to be the case. And what's great is that actually, you know, ridership's been bumping along at similar levels for the last few months.
Jeremy Male: Okay, so thanks for asking. I guess the first thing is that, actually, you know, MTA revenues were well ahead of that double-digit growth rate that we gave in total and also overindexed on ridership. So that's very good news. I think we said right along from, you know, if we go back to the dark days of early 2020, that we expected that, you know, at 80 to 85% of ridership, that we would be able to generate 100% of revenue.
Speaker Change: Okay. So sorry.
Jeremy Male: But we continue to believe that to be the case, and what's great is that, actually, you know, ridership has been bumping along at somewhat similar levels for the last few months. And this expansion has really come from, as you say, it's come from just having a great product there. And also, I think, an acceptance by advertisers are really starting to, once again, see the huge benefits of advertising in the transit medium. OUTFRONT Media
Jeremy Male: And this expansion has really come from, as I say, it's come from just having a great product there. And also I think an acceptance advertisers are really starting to once again see the huge benefits of advertising in the transit medium.
Matthew Siegel: Okay, thank you. And then I think you guys mentioned something about paying some of the given ended in stock. You know, how would that work as far as the mechanics of that, the timing of that, and just maybe a little bit deeper discussion. Thanks.
Matthew Siegel: Thank you, Matt. I'll take that one. As a REAP, we have some flexibility as to how and what forms we pay our dividend. Obviously, also as a REAP, we're required to distribute most of capital gain and most of our income.
Matthew Siegel: Thanks Ian. Matt, I'll take that one.
Matthew Siegel: As a REIT, we have some flexibility as to how and in what form we pay our dividend. Obviously, also as a REIT, we're required to distribute most of the capital gain on most of our income. So we're able to pay up to 85%, sorry, 80%.
Speaker Change: Of our income so were able to pay up to 85% Im sorry, 88 zero percent.
Matthew Siegel: So we're able to pay up to 85%, I'm sorry, 80, 80, 0% of a declared dividend in stock. If the board so chose, we would like any split currency opportunity. She orders to get the choice of, you know, if they want cash or stock. And then after those choices are made, the excess will be allocated. So you could picture it's possibly something similar to a, you know, a right flight offering. So no one gets diluted. Everyone gets kind of the same terms of shares. I know it's been done by other reads in the orphan company by a reverse word to standardize the number of shares.
Speaker Change: Of.
Ian Zaffino: Declared dividend in stock.
Speaker Change: Our board so chose we would.
Speaker Change: Like any split.
Ian Zaffino: Sure.
Ian Zaffino: Currency opportunity.
Ian Zaffino: Shareholders will get the choices.
Ian Zaffino: If they want in cash or stock and then after those choices are made the excess will be allocated pro rata. So you could picture, it's possibly something similar to a.
Ian Zaffino: Right flight offerings. So no one gets diluted and everyone gets kind of the same percentage of shares.
Speaker Change: I know, it's been done by other Reits and often accompanied by.
Ian Zaffino: The reverse split to standardize the number of shares but again those decisions haven't been.
Matthew Siegel: But again, those decisions haven't been, haven't been major at this time. Okay, thank you very much.
Ian Zaffino: Haven't been major at this time.
Speaker Change: Okay. Thank you very much.
Matthew Siegel: Thanks.
Speaker Change: Thanks.
Ian Zaffino: Yeah.
Jason Bazinet: The next question comes from Jason. Please go ahead. Your line is open. Thanks.
Ian Zaffino: Our next question comes from Jason Bazinet with Citi.
Speaker Change: Please go ahead your line is open.
Ian Zaffino: Thanks.
Matthew Siegel: I just had a quick question on the Canadian disposition. I think we were all modeling it as a June 30 closed, and since it closed on the seventh of June. Is the right math to take this slide 23 in your presentation. And just do the proportional math of the 23 days that we're missing. In other words, the column that you're showing is at a full quarter. June 30 or this that column. Represent. The. the 60-some-odd days, 67 days that you owned it. Does that make sense? It's it's it the full quarter, but it's also 67 days that we owned it.
Jason Bazinet: I just had a quick question on the Canadian disposition.
Speaker Change: I think we were all modeling it as of June 30, close and since it closed on the seventh.
Speaker Change: Of June is the right math to take the slide 23 in your presentation.
Matthew Siegel: So obviously, as we were preparing for sale, not not causal, but maybe coincidental. You can see performance over the first 67 days. There's probably less than one last year, and then just, you know, short a number of days, so the candidate is at top. Okay, that's great. I understand. Thank you. Thanks.
Operator: Okay, that's great. I understand. Thank you.
Lance Vitanza: The next question today comes from Lance Vitanza with TD Cowan. Please go ahead. Your line is open. Hi, thanks, guys, and nice quarter. Back on the West Coast, Southern California, Los Angeles, I was a bit surprised to see LA or to hear that LA is still struggling given the end of the writer's strike. And I know that there's a ramp, but how is that region trending into the third quarter in the back half? And when do you expect to see us in that region, a back above kind of pre-writer's strike levels? Is that possible in the back half, or is that at 2025 event?
Jeremy Male: Thanks. Yeah, it's a little bit hard to say exactly. What we can see as we look into Q3 is that some of the, you know, TV money has come back, so you know, that's looking positive. But actually, the movie slate, if you look at it, there are just fewer movies and fewer real, where we'll see the Delta.
Jeremy Male: And in terms of a movie slate, I think we're going to really start, you know, it doesn't look like that completely repairs itself in 2024. But as, you know, but, you know, hopefully as I say, the TV coming back in and maybe, you know, in improvement coming through from some of the streamers, maybe we'll see entertainment not being, you know, quite the drag in a lot of hope of the year as it was for the last few months.
Speaker Change: We're coming through from some of the streamers, maybe we will see entertainment not bank.
Speaker Change: Quite that drive.
Speaker Change: In the latter.
Ian Zaffino: Half of the year.
Ian Zaffino: As it was for the last few months.
Jeremy Male: Well, that's super helpful. And then just sort of a follow up on that. So is it the case that, as we think about the, the kind of, you know, media spend in LA? Is it, is it sort of heavily weighted? Is it like 80% of that movie's 20% television? Or is it something closer to 50-50? Or if you look at it for, you know, for the second quarter and we sort of look at the numbers there, and I'm not sort of thinking, L.A. specifically. But there was reasonable weight in between TV, and it was reasonable weight in between TV and film.
Speaker Change: No. That's super helpful. And then just sort of a follow up on that so is it the case that as we think about the kind of.
Speaker Change: Media spend in L. A is it is it sort of heavily weighted is it like 80% of that movies, 20% TV or is it something closer to 50 50 or.
Matthew Siegel: Yeah, I mean, if you look at it for, you know, for the second quarter, and we sort of look at the numbers there, and I'm not sort of thinking LA specifically, but there was a reasonable weighting between TV and
Speaker Change: Yes, I mean, if you look at it.
Speaker Change: For the second quarter.
Speaker Change: Look at the numbers.
Speaker Change: So the thinking.
Speaker Change: Hello.
Speaker Change: Pacific time.
Speaker Change: Yes.
Speaker Change: There was a reasonable way is having good trading.
Ian Zaffino: And.
Ian Zaffino:
Ian Zaffino: There's reasonable waiting between.
Ian Zaffino: Television and film so, yes, there'll still nice as we go into Q3 as I said, it's just likely to not be quite as obvious.
Jeremy Male: So, you know, well, there's still no setters. We're going to Q3 as I say. It's just like me too. I'm not being quite as obvious. Thanks.
Ian Zaffino: Thanks.
James Goss: The next question comes from Jim Goss with Barrington Research. Please go ahead. All right, thank you. A couple of things. One, I was wondering, we talked a lot about the impact on transit and the reduced ridership, that sort of thing. I was wondering, are there any lingering impacts from the ships to greater share of work at home in terms of at exposure or pricing or anything? Any other metrics we ought to be thinking about in a between-year city and suburban areas, especially the urban locations? Thanks for the question, Jim. The answer is not so much so.
Ian Zaffino: The next question comes from James Goss with Barrington Research. Please go ahead.
Jeremy Male: The answer you think about work from home, as we said to the riders, that obviously it impacts absolute total number of eyeballs, but it doesn't actually, it still has very, very similar reach to that which we had pre-coded. Typically, people have been doing seven or eight journeys rather than 10, but it's set the same number of individual people in the same reach. I don't think we're going to...
Jeremy Male: We look forward to any benefit, but that might bring as well, as we look into the future, going to combine with the two different investments that we've been making. Okay. You've always talked about the reach versus impressions issue regarding transit ridership. Has it been borne out to be true that maybe fewer impressions, but the same reach has really been to your benefit in terms of coming back more quickly? Well, if you look at the gradual improvement we've continued to over index pretty much throughout against ridership. That I think shows the value, if you like the incremental value, we're getting out of that delta of reach versus frequency.
Operator: Okay, and you know, you've always talked about the reach versus impressions issue regarding transit ridership. Has it been borne out to be true that
Jeremy Male: Well, you know, if you look at the gradual improvement that we've had, we've continued to over-index pretty much throughout against ridership. So, you know, that I think shows the value, if you like, the incremental value we're getting out of that delta, if you like, of reach versus frequency. So, you know, I think it all points in a very positive direction.
Jeremy Male: So, I think all points are a very positive direction. Okay.
James Goss: Last thing with the seal of Canada, bring in the considerable cash. Well, it's having the implications in terms of any of your other capital plans. Perhaps a more intense M&A focus or anything of that nature? Jim, it's not probably nothing immediate, but it certainly gets us back in a more comfortable leverage range. And as we continue to dewever, it would probably bring us back to material M&A opportunities quicker than we would have done without the sale of Canada. So, we think it gives us a lot more flexibility and a lot more balance sheet strength. All right, thanks very much.
Operator: any of your other capital plans
Speaker Change: Things of that nature.
Ian Zaffino: Jim It's Matt probably nothing immediate digitally gets us back in a more comfortable leverage range and as we continue to delever it would probably bring us back to material.
Ian Zaffino: M&A opportunities quicker than.
Ian Zaffino: And then we would have done without the sale of Canada. So we think it gives us a lot more flexibility and a lot more back.
Speaker Change: Balance sheet strength.
Speaker Change: Alright, thanks very much appreciate it.
James Goss: Appreciate it.
Operator: Thank you.
Jim: Thanks, Jim.
Jeremy Male: We have no further questions in the queue, so I'll turn the call back over to Jeremy Male for any closing comments. Thanks, Lydia, and thanks to everyone joining us today. I look forward to seeing many of you at various conferences and events as we move through some of it.
Jeremy Male: We have no further questions in the queue. So I'll turn the call back over to Jeremy male for any closing comments.
Jeremy Male: Thanks, Linda and thanks to everyone joining.
Speaker Change: Joining us today.
Jeremy Male: I look forward to seeing many of you at various conferences and events.
Speaker Change: As we move through some of that space. So I tend to look forward to presenting our Q3 results to you in November Thank you Brian.
Jeremy Male: So I don't look forward to presenting a few free results to you in November. Thank you very much.
Operator: This concludes today's call. Thank you for joining. You may now disconnect your line.
Speaker Change: This concludes today's call. Thank you for joining you may now disconnect your line.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.