Who Cut What During the Second Quarter of 2020

How has COVID impacted the spending of the US public out of home companies?  Here’s Insider’s analysis.

Expenses Down 26%

Now is not a good time to ask for a raise.  The big three cut their expenses by a total of $284 million or 26% during the the second quarter of 2020.  Clear Channel cut the most in absolute terms.  OUTFRONT cut the most in percentage terms.  Lamar cut the least because it was less effected by covid than the other companies.  Lamar’s revenue was only down 22% in the second quarter of 2020 versus a 55% decline at Clear Channel Outdoor and a 49% decline at OUTFRONT.  Lamar was the only company of the big three to achieve positive cashflow in the second quarter of 2020.

Expense Cuts by Public US Out of Home Companies During the Second Quarter of 2020  (millions)

 

What was cut?

The out of home companies treat expenses as direct (e.g. posting vinyl and lease expense) SG&A (sales, general and administrative) and corporate (central office, company execs and stock based compensation). Direct expenses accounted for 70-80% of the expense savings by OUTFRONT and Clear Channel Outdoor due large cuts in lease and transit expenses. At OUTFRONT transit and lease expenses accounted for $62 million or nearly 60% of the company’s $106 million in expense cuts.  Transit franchise fees were down almost 74%.  Lamar spread the pain of cuts the widest.  Direct expenses accounted for a little more than half of all Lamar expense cuts.  Lamar cut SG&A expense and Corporate expenses more than OUTFRONT and Clear Channel Outdoor when you look at the cuts in percentage terms.

Expense Cuts During the Second Quarter of 2020 (millions)

 

Fewer capital projects

The big three US out of home companies cut their capital spending by 60% in the second quarter of 2020.  Lamar cut capital spending the most as you can see below.  We’ve included OUTFRONT’s MTA deployment outlays in OUTFRONT’s capital expenditures to provide a more accurate picture of OUTFRONT’s cash outlays.

Capital Expenditures by Lamar, OUTFRONT, and Clear Channel Outdoor (millions)

 

Here’s the data we used to do the analysis.  $$$ in millions.

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