OUTFRONT interim CEO, Nick Brien and CFO Matt Siegel appeared at the JP Morgan conference this week. Here is a summary of their comments, sponsored and analyzed by Signvalue.
OUTFRONT interim CEO Nick Brien on OUTFRONT’s two big advertisers: Apple and Morgan and Morgan
Our biggest client is Apple. They love the medium. They have used it in a highly sophisticated way for 35 years all over the world. They use it extensively and it is part of their media mix whether it be…Why isn’t it used across more in the electronics category? Our other significant advertiser…is Morgan & Morgan. The lawyers use it. The legal profession loves the medium. It is nearly approaching 20% of the money they spent in pay media, so why is it it’s 20% of their category
CFO Matt Siegel says the company is exiting low margin transit contracts
We started…focusing on EBITDA or profit margin of the inventory not just revenue…We exited the MTA billboard contract in October…that was a single digit margin contract we knew if we had our sales people sell something else in the New York market or elsewhere we can make up the EBITBA…In Los Angeles we’ve had it for a number of years almost 10 years. We’ve doubled the revenue and the rental payment was giving us again a single digit margin…We didn’t want to pay any more the LA was looking for a little higher payment…We wish them well and again we think there’s a revenue headwind but really no impact on EBITDA going forward.
Matt Siegel says OUTFRONT is bullish on digital conversions
We’re targeting 100-150 per year…I’ve been here for 7 years. We’ve been targeting a 20% IRR for approval and we’re probably averaging as a portfolio somewhere in 25-27% range so very consistent…When it started we were probably getting a 12X revenue lift because the first shiny digital was fantastic and everyone wanted to be on it now we’re getting still about 4X new lift. We’re adding inventory flips…the price point’s a little lower but still it’s great return.
SignValue’s take:
Nice to see that the returns from converting static billboards to digital are holding up. It’s also welcome to hear OUTFRONT executives talk about focusing on cash flow as opposed to revenue. A focus on traditional assets with higher margins will create greater value for shareholders in the long run
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