OUTFRONT Media’s Balanced Earnings Call: Growth Amid Challenges

Outfront Media Inc ((OUT)) has held its Q1 earnings call. Read on for the main highlights of the call.

OUTFRONT Media Inc.’s recent earnings call presented a balanced sentiment, reflecting both growth and challenges. The company reported positive trends in transit and digital revenues, alongside an improvement in billboard OIBDA margin. However, these were tempered by declines in billboard and local revenues, as well as increased SG&A and corporate expenses, resulting in an overall balanced outlook.

Transit Revenue Growth

Transit revenues experienced a 2.6% increase, with the New York MTA segment showing robust growth of about 10% during the quarter. This segment’s performance was a significant contributor to the overall positive sentiment in transit revenues.

Digital Revenue Surge

Digital billboard revenues rose by 5.4%, and combined digital revenue grew nearly 7% during the quarter. This growth now represents nearly 33% of total organic revenues, up from about 31% last year, highlighting the company’s successful digital strategy.

Improved Billboard OIBDA Margin

The company reported an improvement in billboard adjusted OIBDA, which increased by about $2 million or 2%. Margins also saw a year-over-year increase of 100 basis points, reaching 31.9%, indicating operational efficiency.

National Revenue Growth

National revenues grew by 4% in the first quarter, driven by enhanced creative efforts in advertising sales. This growth underscores the company’s ability to attract national advertisers despite broader market challenges.

Billboard Revenue Decline

Billboard revenues saw a decline of 1%, primarily due to a 2 percentage point headwind from the exit of a large, marginally profitable New York billboard contract. This exit impacted overall revenue performance.

Local Revenue Decrease

Local revenues decreased by 3% year-on-year, with growth in New York City transit being offset by weaknesses in billboard performance. This decline reflects challenges in maintaining local advertising momentum.

Increased SG&A Expenses

SG&A expenses rose by about $2 million or 3.2%, attributed to higher compensation-related expenses and a greater allowance for bad debt. This increase highlights the rising operational costs faced by the company.

Corporate Expense Increase

Corporate expenses increased by approximately $5 million, mainly due to management severance payments and executive search fees. These expenses indicate ongoing organizational restructuring efforts.

Forward-Looking Guidance

The company provided forward-looking guidance, maintaining its full-year AFFO growth expectation in the mid-single-digit range despite economic uncertainties. OUTFRONT expects second-quarter revenues to mirror those of the first quarter, with minimal impact on OIBDA and AFFO from recent contract exits. This cautious optimism reflects the company’s strategic focus on digital and transit revenue growth.

In conclusion, OUTFRONT Media Inc.’s earnings call painted a picture of cautious optimism. While the company faces challenges such as declining billboard and local revenues, it continues to see growth in transit and digital sectors. The forward-looking guidance suggests a steady path ahead, with expectations for consistent revenue performance in the coming quarters.