The best way to measure your out of home company’s efficiency is by its cash flow margin (e.g. EBIDTA/Revenues). EBIDTA is earnings before interest, depreciation, income taxes and amortization. It represents what you’ve generated in cash from operations before you pay the bank or shareholders. You add back non-cash charges like depreciation because they don’t reduce the cash your out of home company generates.
EBIDTA is a more effective measure of your company’s efficiency than Billboard Cashflow (revenues less lease costs and utilities) because EBIDTA includes all corporate cash expenses.
What should be a good EBITDA margin for your out of home company? 40%, if you use Billboard Insider’s rule of 20’s which says that lease costs should be no more than 20% of revenues, sales costs should be no more than 20% of revenues and everything else should be no more than 20% of revenue.
Here is the cashflow margin (EBIDTA/Revenues) for Lamar, OUTFRONT, Clear Channel Outdoor and Link Media Outdoor for 2022.
Lamar Advertising – 46%
Link Media Outdoor – 36%
OUTFRONT – 26%
Clear Channel Outdoor – 21%
What is your out of home company’s cashflow margin? Take Billboard Insider’s anonymous poll below. We’ll publish the results later this week. Email any comments to davewestburg@billboardinsider.com or use our comments form.
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