Outfront goal: convert 100 statics to digital each year.

outfront square logoOutfront 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.

 

  • Leadership-Donald-R-Shassian
    Outfront CFO Donald Shassian

    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.
  • Leadership-Jeremy-Male
    Outfront CEO Jeremy Male

    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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