“We want to grow EBIDTA, not just revenue growth” was how you could summarize OUTFRONT CFO Matt Siegel’s comments at the Morgan Stanley Technology, Media and Telecom Conference this week.  Here are Siegel’s comments summarized and sponsored by SignValue.

Why OUTFRONT exited the MTA billboard contract

This contract was a very high revenue share contract…that we’ve had for a long time…so we lowered the revenue share that we were willing to pay… we want to be a little more fluid with our inventory…focus a little more closely at EBITDA and growing EBITDA, not necessarily at revenue and retaining all our billboards, so we lowered our revenue share bid.  One of our competitors bid more than we were paying before and they won.  We wish them well and it was a very thin margin contract for us

Geopath has issues

It’s a challenge. I think more important is the industry finds a dynamic currency that we all can use publishers advertisers agencies. That’s probably holding back the out of home space right now.  Geopath is a little more static than I think we all would like, so maybe there’s a new a new product.. or something  better that can show audience measured attribution and become the currency as opposed to everyone looking at publishers proprietary systems…and then comparing it to a Geopath number that might be a little stale.

2025 capexp to include $10 million to replace digital billboards

So we started digitizing, I think, in 2007…we have hundreds of digital billboard signs that are over 10 years old…we’ll be spending some on replacement.   It’s not a 2025 event, it’s just from here forward.  The industry…probably just needs…to replace older digital screens….We’re calling it maintenance CapEx.  It’s going to help drive some revenue so as the new state-of-the-art shinier more pixels looks better every now and then we get a complaint from a manager that lost an RFP because their screens look poor.

The impact of Tariffs

If I have any concerns on tariffs…it’s what it does to our advertisers.  If the price of an automobile is going up by $5,000 maybe they have a little less to spend…so it remains to be seen what happens to the profitability of various industries

OUTFRONT wants to spend $30-50 million on acquisitions in 2025 

We’ve been focusing mostly on very small opportunistic tuck-ins…We figure we’re going to spend the same this year we’ve spent the last couple of years somewhere in the $30 to $50 million range.

SignValue’s Take:  A focus on EBITDA growth is overdue.  The problem with OUTFRONT for the past 10 years is that revenue and capexp have grown but cashflow hasn’t. If you have questions, contact one of our consultants for a confidential consultation at info@signvalue.com or (480) 657-8400.

To receive a free morning newsletter with each day’s Billboard insider articles email info@billboardinsider.com with the word “Subscribe” in the title.  Our newsletter is free and we don’t sell our subscriber list.

Paid Advertisement