Outfront Media announced first quarter 2016 earnings yesterday.  You can find the financials here , review the earnings all powerpoint here and read the Seeking Alpha conference call transcript here.  Lots of things to note.

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  Revenues grew 3% to $346 million when adjusted for acquisitions, divestitures and currency fluctuations.  US billboard revenues increased by 3.6% but international billboard revenues were flat.  CFO Don Shassian attributed the improved revenue to increases in rates and the conversion of static boards to digital.

• Cashflow increased by 1% to $88 million when adjusted for acquisitions, divestitures and currency fluctuations.  Cashflow grew slower than revenue due to increased compensation expenses for new hires and $800,000 in legal costs.

• Capital expenditures totaled $14 million for the first quarter of 2016.

• The company’s Debt/Cashflow ratio is 4.8 and CFO Don Shassian said that Outfront intends to reduce Debt/Cashflow to 3.5-4.0.

• Outfront is pursuing additional revenue from allowing wireless operators to attach their equipment to billboards.  25,000 Outfront billboards are ready for new wireless equipment tenants.

• Outfront has an inventory of 604 US digital sign and intends to convert approximately 100 static billboards to digital billboard each year.

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  Jeremy Male commented that Outfront will look at complementary acquisitions in the top 25 markets but that seller price expectations right now are “a little unrealistic.”

• 75% of Outfront’s boards are legal non-conforming.

• Outfront owns land under 10% of its boards.

• Lamar’s leases have an 8 year average remaining life.  The leases are expensive.  Billboard lease expenses average 34% of billboard revenues.  Transit franchise expenses average 63% of transit revenues.

Insider’s take:  Insider is surprised that Outfront’s lease costs are so high but it must reflect a focus on urban markets.  Interesting that Outfront wants to reduce Debt/Cashflow from 4.8 to a more stable 3.5-4.0.  Outfront’s existing leverage is low compared to Clear Channel Outdoor’s 7.6 Debt/Cashflow.  Clear Channel Outdoor are you listening?  Insider wishes one of the analysts had asked about the litigation Outfront is in with a Denver publisher over the use of the Outfront trademark.

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