Here’s a summary of Outfront Media CFO Donald Shassian’s November 7 presentation at at the 2017 Wells Fargo Securities Media and Telecom Conference.
On third quarter revenue growth of 2.5%
It was an ok quarter. Local was very strong. Transit was very strong. But national..was not great…It was down 9% in Q1. It was down 4% in Q2. It was down 2% in Q3…We’ve been seeing advertisers laying down dollars later and later…We’re 55% local, 45% national.
On weak national sales.
A number of categories have been down…Auto has certainly been down…Health and pharmaceuticals has been down and food and beverage is down…On the flip side technology is up significantly.
On why Outfront has the best local sales momentum of any of the public out of home companies.
Local is up 5-6%… Our folks are holding on price and pushing on price…They are doing a nice job on the pricing side and taking advantage of the occupancy opportunities.
On the MTA contract.
The contract is $225 million in revenue and $45 million in EBIDTA…It’s a 15 year contract…It’s important for a variety of reasons. It gives us leverage to sell transit throughout the rest of the country. They selected us because of our technology solution…They have an interest in trying to transform the rider experience. Out solution is to transform all those static signs into digital… The contract is a revenue share contracts. It was 67% of revenues and what we’re doing here is the base revenue of $209 million is at 55%…any revenue north of $209 million is at 70%…Once we’re recovered our capital costs the base revenue percentage goes from 55% to 65%…The revenue lift from the digital screens will not occur until the end of 2018 and early 2019…The deployment we’re doing is first stations and then cars.
On Outfront emphasizing organic growth and internally developed signs.
In the states we’ve picked up in a couple areas but we are smart and selective. We don’t think we need scale for the sake of scale…Having to let someone else build boards and then buying them at 10, 11 or 12 times multiple we have to ask why can’t we do that ourselves. And so we’ve been putting an emphasis on more organic development, both digital conversions and new development…Around the country there are lots of opportunities with expanding communities and changing regulations and communities that are looking for tax dollars in different ways…We’ve got a lot of real estate people around the country and they’ve been doing a nice job.
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