Outfront Organic Revenue Down 2% in First Quarter 2017

NEW YORK, May 3, 2017 /PRNewswire/ — OUTFRONT Media Inc. (NYSE: OUT) today reported results for the quarter ended March 31, 2017.

OUTFRONT Media Logo. (PRNewsFoto/OUTFRONT Media Inc.)

“As anticipated, first quarter revenues came in down 2.2% as a result of a challenging national advertising market, particularly in the automotive category,” said Jeremy Male, Chairman and Chief Executive Officer of OUTFRONT Media. “While we are seeing some continued national softness in the second quarter, our local business is solid, our expense control is good, and we’re investing strategically in the right areas for future growth.  These are all key ingredients for leveraging an improvement in national advertising, which we are seeing in the second half of the year.”

First Quarter Results

Three Months Ended
March 31,

$ in Millions, except per share amounts

2017

2016

Revenues

$330.6

$348.4

Organic Revenues

328.5

335.8

Operating Income

26.0

24.2

Adjusted OIBDA

80.2

88.1

Net Income (Loss)

2.5

(2.3)

Earnings per Share1

$0.02

($0.02)

Funds From Operations (FFO)

43.9

48.5

Adjusted FFO (AFFO)

38.5

46.2

AFFO per Share1

$0.28

$0.34

Note: Reflects disposition of Latin America business on April 1, 2016.  See exhibits for reconciliations of non-GAAP financial measures; 1) Per share for diluted earnings per share

 

First Quarter 2017 Results

Consolidated
Reported revenues of $330.6 million decreased $17.8 million, or 5.1%, for the first quarter of 2017 as compared to the same prior-year period.  On an organic basis, revenues of $328.5 million for the first quarter of 2017 were down 2.2% compared to the same prior-year period.

Reported billboard revenues of $236.0 million decreased $14.4 million, or 5.8%, due primarily to the disposition of the Company’s outdoor advertising business in Latin America, a decrease in average revenue per display (yield) primarily from a reduction in U.S. national advertising, the net effect of new and lost billboards in the period, and lower performance in Canada, partially offset by higher proceeds from condemnations and the conversion of static billboards to digital.  On an organic basis, billboard revenues were down 2.0% compared to the same prior-year period due to decreases in average revenue per display (yield), offset partially by growth attributable to the conversion of static billboards to digital.

Reported transit and other revenues of $94.6 million decreased $3.4 million, or 3.5%, due to a reduction in U.S. national advertising revenues and the disposition of our outdoor business in Latin America, partially offset by the net effect of won and lost franchises. On an organic basis, transit and other revenues decreased 2.7% over the same prior-year period.

Total Operating expenses of $191.9 million decreased $7.9 million, or 4.0%, due primarily to the disposition of Latin America (a decrease of $8.8 million), partially offset by higher expenses related to our sports marketing operating segment.  Selling, General and Administrative expenses (“SG&A”) of $63.9 million fell $1.4 million, or 2.1%, over the same prior-year period, primarily as a result of the disposition of Latin America (a decrease of $3.1 million), partially offset by higher compensation-related expenses and an increase in corporate expenses.

Adjusted OIBDA of $80.2 million decreased $7.9 million, or 9.0%.

Segment Results

U.S. Media
Reported revenues of $307.1 million decreased $5.5 million, or 1.8%, for the first quarter of 2017 as compared to the same prior-year period, reflecting a decrease in average revenue per display (yield) primarily from a reduction in national advertising and the net effect of new and lost billboards, partially offset by higher proceeds from condemnations, the net effect of won and lost franchises in the period and growth attributable to conversion of static billboards to digital. On an organic basis, revenues were $305.0 million for the first quarter of 2017, a decrease of 1.9% from the same prior-year period.  On an organic basis, billboard revenues were down 1.4% due to a decrease in average revenue per display (yield) primarily from a reduction in national advertising and the net effect of new and lost billboards, partially offset by higher proceeds from condemnations and growth attributable to conversion of static billboards to digital.  On an organic basis, transit and other revenues were down 3.2% compared to the same prior-year period driven by lower national advertising revenues, partially offset by an increase in local advertising revenues.  Organic transit and other revenues were also partially offset by the net effect of won and lost franchises. Adjusted OIBDA of $92.4 million decreased $2.5 million, or 2.6%, in the first quarter compared to the same prior-year period.

Other
Reported revenues of $23.5 million decreased $12.3 million, or 34.4%, in the first quarter of 2017 as compared to the same prior-year period due primarily to the disposition of Latin America (a decrease of $11.4 million) and lower performance in Canada, partially offset by a slight increase in our sports marketing operating segment.  Organic revenues decreased $1.3 million, or 5.2%, in the first quarter of 2017 as compared to the same prior-year period due primarily to lower performance in Canada, partially offset by a slight increase in our sports marketing operating segment. Adjusted OIBDA was a loss of $1.1 million in the first quarter of 2017 as compared to income of $2.2 million in the same prior-year period.

Corporate
Corporate costs, excluding stock-based compensation, increased $2.1 million to $11.1 million in the first quarter of 2017 as compared to the same prior-year period, primarily due to increased compensation expense and costs incurred in connection with amending and extending our senior credit facilities.

Interest Expense
Net Interest expense in the first quarter of 2017 was $28.1 million, including amortization of deferred financing costs of $1.9 million, as compared to $28.6 million in the same prior-year period, including amortization of deferred financing costs of $1.4 million. The weighted average cost of debt at March 31, 2017, was 4.8%.

Income Taxes
The benefit for income taxes was $3.7 million in the first quarter of 2017 compared to $1.3 million in the first quarter of 2016.  Cash paid for income taxes in the three months ended March 31, 2017 was $0.6 million.

Net Income (Loss)
Net income was $2.5 million in the first quarter of 2017 as compared to a net loss of $2.3 million in the same prior-year period, which included a $3.2 million net loss in Latin America. Diluted weighted average shares outstanding were 138.9 million for the first quarter of 2017 and 137.6 million for the same prior-year period.  Net income per common share for diluted earnings per share was $0.02 for the first quarter of 2017 as compared to a net loss per common share of $0.02 in the same prior-year period.

FFO & AFFO
FFO was $43.9 million in the first quarter of 2017, a decrease of $4.6 million, or 9.5%, from the same prior-year period, driven primarily by lower depreciation and amortization, partially offset by the disposition of Latin America.  AFFO was $38.5 million in the first quarter of 2017, a decrease of $7.7 million, or 16.7%, over the same prior-year period, due primarily to lower FFO, higher lease acquisition costs, higher maintenance capital expenditures and higher stock-based compensation.  AFFO per diluted weighted average share was $0.28 in the first quarter of 2017 and $0.34 in the first quarter of 2016.

Cash Flow & Capital Expenditures
Net cash flow provided by operating activities of $32.2 million for the three months ended March 31, 2017 decreased $1.6 million compared to $33.8 million during the same prior-year period, primarily due to lower net income and lower depreciation and amortization, partially offset by improvements in working capital. Total capital expenditures increased $2.2 million to $16.6 million for the three months ended March 31, 2017.

Dividends
In the three months ended March 31, 2017, the Company paid cash dividends of $50.2 million.  The Company announced on April 25, 2017 that its board of directors has approved a quarterly cash dividend on the Company’s common stock of $0.36 per share payable on June 30, 2017, to shareholders of record at the close of business on June 9, 2017.

Balance Sheet and Liquidity
As of March 31, 2017, the Company’s liquidity position included cash of $26.3 million and $398.3 million of availability under its $430.0 million revolving credit facility, net of $31.7 million of issued letters of credit against the revolving credit facility.  Total debt outstanding at March 31, 2017 was $2.2 billion, excluding $27.4 million of deferred financing costs.  Total debt outstanding includes a $670.0 million term loan and $1.5 billion of senior unsecured notes, net of discounts and premiums.


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