Outfront 2.3% organic growth in third quarter 2016.

outfrontOutfront announced financials for the third quarter of 2006.   Here are the highlights from the earnings release and webcast.

  • Revenues declined 1% to $383 million during the third quarter of 2016 due to the disposition of the company’s Latin American operations.  Organic revenues (excluding the impact of acquisitions and divestitures) grew 2.3%. Insider notes that this growth trails Lamar’s third quarter (3.6% organic revenue growth) and US GDP  (up 2.9% growth).
  • Cashflow increased by 6% to $121 million due to lower professional fees and non-recurring legal costs.
  • Outfront made $60 million in debt prepayments during the first 9 months of 2016.  Leverage was a reasonable 4.6 times at September 2016.
  • CFO Donald Shassian expects fourth quarter SG&A expenses “to reflect around $4 million of one-time professional fees, an investment we are making to analyze and implement improvements in our cost base and our yield management strategies.”
  • During the third quarter the company converted 13 static boards to digital in the US and 5 in Canada.  The company has added 54 digital boards thus far this year and expects to add 80-85 during 2016.  This means lots of building in the fourth quarter but the full year figure will be less than the company’s previous target of 100  new digital signs for 2016.
  • An investment analyst asked the company to comment on how new digital billboards impact pricing in markets and here was CEO Jeremy Male’s response:

“When we look at a digital opportunity, I guess the first piece is actually what demand is like in the market relative to the digital build-out there. If you think that for the most part we’re selling between six and eight different advertisers on to each board, what that means is that if 15% of the inventory is converted in a particular market, you’ve almost doubled supply…Now the great thing about digital is it does draw new advertisers into the market, but you obviously have to be cautious in terms of where you’re building out to make sure that you don’t oversupply a market at a particular time…And for the most part, we’re still seeing IRRs of around about 25%… So it’s all, as we say, good.”

Insider’s take: Outfront’s revenue growth isn’t quite as strong as Lamar’s.  We’ll see if the $4 million strategic sales and expense initiative in the fourth quarter bears fruit.  A 25% ROI on digital signs is impressive.  Also nice to see that the company recognizes it needs to use discipline in where it installs digital signs.


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