This ten year chart is depressing if you are an OUTFRONT investor.  OUTFRONT closed at $12.37 today down from $26.84 almost 10 years ago on December 31, 2014.   Billboard Insider reviewed 9 years of of OUTFRONT financials to answer the question why a company with such polished people and iconic assets has been such a poor investment.  The answer is that four things went up but the most important thing thing stayed constant.  Revenues up.  Expenses up. Assets up.  Debt up.  Cashflow constant.

Revenues up.

OUTFRONT revenues increased from $1.4 billion in 2014 to $1.8 billion in 2022.  That’s 3.4%/year growth or barely in excess of inflation of 2.95%/year for the same time period.

Expenses up

An out of home company should get scale economies.   Expenses should grow slower than revenues, especially with tuckin acquisitions and organic growth.  OUTFRONT’s expenses have grown faster than revenue in 5 of the past 8 years.     This means OUTFRONT’s cashflow margin is stuck at below 30%.  The number of employees dropped by 15% in 2022 but has been growing rapidly since then.  We suspect OUTFRONT may be returning to it’s overspending ways after tightening up post covid.

Assets and Debt Up

OUTFRONT’s assets increased by 50% from 2014 to 2022.  The number of displays increased by 33% due to new transit displays.  But cashflow is pretty much unchanged.  The growth in assets has been largely funded with debt which has increased from $2.5 billion in 2014 to $4.6 billion in 2022.  Creditors have an increased claim on the company’s cashflow which hasn’t budged much in 8 years.  The company has also issued new equity.  More shareholders are at the table asking for an unchanged slice of cashflow.

Cashflow constant

Cashflow (EBIDTA)  totaled $439 in 2022 only slightly better than the $403 in 2014.  We are using EDITDA because it includes all corporate overhead.  You may be thinking that the analysis is unfair because it doesn’t give OUTFRONT the benefit of recovering results in 2023.  We’ll recompute the table when full year 2023 figures are available. Here’s the raw data.

OUTFRONT Financial Summary 2014-2022 (millions)

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