Onward and upward but don’t expect OUTFRONT to bid for Clear Channel Europe. Those were the highlights from OUTFRONT CEO Jeremy Male’s talk at the Deutsche Bank 30th Annual Media, Internet and Telecom Conference this week.
Positive momentum
If we look back to 2019, out of home in general grow by about 9% and we were up just under 12% in 2019…the fundamentals for out of home and OUTFRONT were absolutely in place…we took quite a steep V on the way down. Steeper than the rest of the industry…As we’ve come back out, national advertising has returned with a vengeance. We’re seeing growth in our digital portfolio. Transit is racing back, not quite back to 2019 levels until next year…and in general advertising demand for out of home is as it was going into the pandemic…
Limited Ukrainian impact
Right now we don’t see any fallout with regards to the geopolitical situation.
Sports betting is strong
We’ve seen some great new categories come in. Sports betting is one of them where we took in around $4 million in Q4 and it’s going to be north of that in Q1 this year…
Yields up
Yields were strongly up in the 4th quarter and will be strongly up in Q1…We saw a 5 point improvement in occupancy on our static assets and a 10 point improvement in occupancy on our digital assets…the balance is rate. We don’t spend a lot of time thinking about occupancy. We think more in terms of yield…There’s still some growth to be had in terms of occupancy but I believe the real growth for us and the industry is in terms of pricing. We’re still a low CPM business.
On Digital as a % of OUTFRONT’s total revenue
From the 31% of revenues that we were in Q4 I wouldn’t be surprised if we get to 35% of revenues by the end of this year…we will be north of 50% within…3 to 5 years.
Yearly digital billboard conversions
150-200 feels right in our wheelhouse. If we can add on incremental digital through acquisitions we can do more.
Acquisitions
We talk about us being top 25 markets…that doesn’t preclude us adding on…in smaller markets where we are strongly represented. We will continue to look for tuck-ins. The pipeline as we see it right now is healthy…We would expect to be making tuck-in announcements over the next 2-3 months…We’re seeing a lot of PE money and that is tending to push up pricing…As we look at asset we have the ability to take out costs and bring in our national sales force…with the growth in the industry that we will be seeing over the next 12-24 months I think that we will be seeing high multiples…
Leverage
We’re at just south of 6 times. We were at 4.4 as we went into the pandemic…We think that 6 is going to come down sharply…
OUTFRONT not interested in Clear Channel Europe
We are very much focused on North America. If assets are being shaken loose right now in Europe which they are it’s not something in which we wish to deploy capital. But we have happy to deploy capital in Canada. We’ve got 20% of the market. We’ve got a good management team.
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