Yahoo Finance Outfront Media Inc (OUT) (Q1 2024) Earnings Call Transcript Highlights: Strong Growth and ...
Total Consolidated Revenue: Grew 3.2% during the quarter.
Adjusted EBITDA: Increased over 10% year-over-year.
AFFO: More than doubled to $23 million.
U.S. Media Revenue: Increased 3.5% year-over-year.
Canadian Revenue: Grew 5.7%.
Billboard Revenue: Up 2.5%.
Transit Revenue: Increased 7.7% versus the prior year.
Local Revenue: Up 7.5% during the quarter.
National Revenue: Declined by 2.3%.
US Billboard Yield: Grew 3.3% year-over-year.
Digital Performance: Revenue grew 8.3%, representing 31% of total revenues.
Total Expenses: Up about $6 million or just under 2% year-over-year.
EBITDA: Total EBITDA was up approximately 10% to $66.5 million.
Q1 CapEx Spend: $18.4 million, including just under $5 million of maintenance spend.
Dividend: $0.30 cash dividend payable on June 28.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Total consolidated revenue grew by 3.2% during the quarter, indicating steady growth in billboard and transit segments.
Adjusted EBITDA increased by more than 10% year-over-year, with significant contributions from both billboard and transit operations.
Digital performance was strong with digital revenue growing 8.3% in the quarter, representing 31% of total revenues.
Local advertising continued to perform exceptionally well, driving growth with a 7.5% increase during the quarter.
The company successfully added 35 digital billboards in the US, increasing the total to over 1,900, and over 2,500 digital displays in the US transit sector.
Negative Points
National revenues declined by 2.3%, primarily due to weaker billboard trends in some larger markets.
Other segment revenue was down 2.6% due to much lower digital equipment sales during the quarter.
Posting, maintenance, and other expenses were up 6% versus the prior year, primarily due to higher compensation related expenses and utilities costs.
Corporate expense increased by just over $3 million due to higher professional fees and the unfavorable impact of market fluctuations on an unfunded equity index-linked retirement plan.
Despite improvements, the transit segment reported a $15.3 million loss, although this was an improvement over the previous year's $20.5 million loss.
Q & A Highlights
Q: What is driving the divergence between local and national growth in advertising? A: Jeremy Male, CEO of OUTFRONT Media, explained that local advertising tends to be more stable and distributed across a larger number of smaller advertisers, which provides lower volatility compared to the national advertising that can fluctuate significantly based on the activity of a few large advertisers.
Q: What are the largest growth drivers for transit revenue going forward? A: Jeremy Male highlighted the digitization of advertising platforms in transit systems, such as subways and buses, as a major growth driver. This includes the integration of automated and programmatic advertising capabilities, which are expected to significantly boost revenue.
Q: How is the potential introduction of congestion pricing in New York City expected to impact public transit ridership and advertising? A: Jeremy Male suggested that while the exact impacts of congestion pricing are still being evaluated, it is likely to increase public transit ridership marginally, which could be slightly beneficial for transit advertising.
Q: Can you discuss the current state of advertising in San Francisco, particularly in relation to the tech sector? A: The CEO mentioned that there is a positive trend in San Francisco, particularly from local sales efforts, despite national advertising dollars not being as robust. The tech sector shows slight growth, contributing to this positive trend.
Q: What role does political advertising play in your revenue streams, especially considering the upcoming elections? A: Political and government advertising saw a significant increase, up 29% in Q1. Jeremy Male anticipates this will be a strong tailwind for revenue, especially during the election cycles, projecting significant increases in political advertising revenue in 2024 compared to previous years.
Q: How is automated advertising evolving, and what impact is it having on your business? A: Jeremy Male discussed the growth in programmatic advertising and the efficiency gains from their own automated platforms. These advancements are attracting new advertisers who previously might not have considered using OUTFRONT Media's services, thereby expanding their client base and enhancing revenue efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
