OUTFRONT Media Reports Second Quarter 2021 Results
NEW YORK, Aug. 5, 2021 /PRNewswire/ –OUTFRONT Media Inc. (NYSE: OUT) today reported results for the quarter ended June 30, 2021.
“Our business is recovering more quickly than we expected, with organic revenues up 53%, Adjusted OIBDA up fivefold, and AFFO returning solidly to positive,” said Jeremy Male, Chairman and Chief Executive Officer of OUTFRONT Media. “All parts of our business are rallying, and we expect to see billboards surpass pre-pandemic levels in the third quarter. We are also pleased to be resuming a common dividend, reflecting our strong performance and future outlook.”
Three Months Ended
June 30,
Six Months Ended
June 30,
$ in Millions, except per share amounts
2021
2020
2021
2020
Revenues
$341.0
$232.9
$600.2
$618.2
Organic Revenues
341.0
222.5
600.2
594.6
Operating Income (loss)
29.1
(25.9)
(1.9)
7.9
Adjusted OIBDA
70.0
15.4
81.1
90.9
Net loss before allocation to non-controlling interests
(0.7)
(58.0)
(68.3)
(51.7)
Net loss2
(0.9)
(57.9)
(68.6)
(51.8)
Loss per share1,2,3
($0.05)
($0.44)
($0.57)
($0.40)
Funds From Operations (FFO)2
39.7
(27.9)
9.3
16.8
Adjusted FFO (AFFO)2
39.6
(21.3)
15.1
18.7
Shares Outstanding3
145.6
144.4
145.2
144.1
Notes: See exhibits for reconciliations of non-GAAP financial measures; 1) Per share for diluted earnings per share; 2) References to “Net income (loss)”, “Earnings (loss) per share”, “FFO” and “AFFO” mean “Net income (loss) attributable to OUTFRONT Media Inc.”, “Earnings (loss) attributable to OUTFRONT Media Inc. per share”, “FFO attributable to OUTFRONT Media Inc.” and “AFFO attributable to OUTFRONT Media Inc.,” respectively; 3) Diluted weighted average shares outstanding.
Second Quarter 2021 Results
Consolidated
Reported revenues of $341.0 million increased $108.1 million, or 46.4%, for the second quarter of 2021 as compared to the same prior-year period. Organic revenues increased $118.5 million, or 53.3%.
Reported billboard revenues of $287.3 million increased $98.8 million, or 52.4%, due to higher average revenue per display (yield) compared to the same prior-year period, which was affected by the impact of the COVID-19 pandemic on customer advertising expenditures and overall demand for our services. Organic billboard revenues increased $97.8 million, or 51.6%, for the same reasons.
Reported transit and other revenues of $53.7 million increased $9.3 million, or 20.9%, due primarily to an increase in yield compared to same prior-year period, which was affected by the impact of the COVID-19 pandemic on customer advertising expenditures and overall demand for our services, partially offset by the disposition of our Sports Marketing operating segment in the third quarter of 2020. Organic transit and other revenues of $53.7 million increased $20.7 million, or 62.7%.
Total Operating expenses of $189.6 million increased $35.6 million, or 23.1%, due primarily to guaranteed minimum annual payments to the New York Metropolitan Transportation Authority (the “MTA”) and higher transit franchise expense on higher transit revenues, higher billboard property lease expense, and higher posting, maintenance and other expenses, partially offset by the impact of the disposition of our Sports Marketing operating segment. Selling, General and Administrative expenses (“SG&A”) of $88.9 million increased $20.2 million, or 29.4%, due primarily to higher compensation-related costs, offset by a lower provision for doubtful allowances and the disposition of our Sports Marketing operating segment. Consistent with the current period’s presentation, we have reclassified amortization of direct lease acquisition costs from Amortization to SG&A expenses in 2020.
Adjusted OIBDA of $70.0 million increased $54.6 million, or 354.5%.
Segment Results
U.S. Media
Reported and organic revenues of $321.8 million increased $108.3 million, or 50.7%, due primarily to an increase in yield compared to same prior-year period, which was affected by the impact of the COVID-19 pandemic on customer advertising expenditures and overall demand for our services. Billboard revenues increased 49.8% and Transit and other revenues increased 55.8% for the same reasons.
Operating expenses increased $41.8 million, or 31.0%, due primarily to guaranteed minimum annual payments to the MTA and higher transit franchise expense on higher transit revenues, higher posting, maintenance and other expenses, and higher billboard property lease expense. SG&A expenses increased $17.3 million, or 36.7%, due primarily to higher compensation-related costs, partially offset by lower provision for doubtful allowances.
Adjusted OIBDA of $80.6 million increased $49.2 million, or 156.7%.
Other
Reported revenues of $19.2 million decreased $0.2 million, or 1.0%, due to the disposition of our Sports Marketing operating segment, partially offset by an improvement in Canada relative to the impact of COVID-19 on customer advertising expenditures and overall demand for our services in the same prior-year period. Organic revenues increased $10.2 million, or 113.3%.
Operating expenses decreased $6.2 million, or 32.6%, driven by the disposition of our Sports Marketing operating segment, partially offset by an increase in billboard lease expense and transit franchise expense. SG&A expenses decreased $1.3 million, or 21.3%, driven primarily by the disposition of our Sports Marketing operating segment, partially offset by higher expenses in Canada.
Adjusted OIBDA was $1.6 million compared to a loss of $5.7 million in the same prior-year period.
Corporate
Corporate costs, excluding stock-based compensation, increased $1.9 million, or 18.4%, to $12.2 million, due primarily to the impact of higher compensation-related expenses, partially offset by lower expenses on an equity-linked retirement plan offered to certain employees.
Interest Expense
Net Interest expense was $32.1 million, including amortization of deferred financing costs of $1.9 million, as compared to $33.3 million in the same prior-year period, including amortization of deferred financing costs of $1.7 million. The decrease was primarily due to lower rates compared to the same prior-year period. The weighted average cost of debt at June 30, 2021 was 4.3% compared to 4.5% in the same prior-year period.
Income Taxes
The benefit for income taxes was $2.4 million compared to $1.5 million in the same prior-year period. Cash paid for income taxes in the six months ended June 30, 2021 was $1.4 million.
Net Loss Attributable to OUTFRONT Media Inc.
Net loss attributable to OUTFRONT Media Inc. was $0.9 million compared to $57.9 million in the same prior-year period. Diluted weighted average shares outstanding were 145.6 million compared to 144.4 million for the same prior-year period. Net loss attributable to OUTFRONT Media Inc. per common share for diluted earnings per weighted average share was $0.05 compared to $0.44 in the same prior-year period.
FFO & AFFO
FFO attributable to OUTFRONT Media Inc. was $39.7 million compared to a deficit of $27.9 million in the same prior-year period, driven primarily by a lower net loss. AFFO attributable to OUTFRONT Media Inc. was $39.6 million compared to a deficit of $21.3 million in the same prior-year period, due primarily to a lower net loss.
Cash Flow & Capital Expenditures
Net cash flow provided by operating activities was $13.6 million for the six months ended June 30, 2021, compared to $50.7 million during the same prior-year period. Total capital expenditures decreased $6.4 million, or 20.1%, to $25.5 million for the six months ended June 30, 2021, compared to the same prior-year period.
Dividends
In the six months ended June 30, 2021, we paid cash dividends of $14.3 million, including $14.0 million on our Series A Convertible Perpetual Preferred Stock (the “Series A Preferred Stock”) and $0.3 million for vested restricted share units granted to employees.
Balance Sheet and Liquidity
As of June 30, 2021, our liquidity position included unrestricted cash of $529.0 million and $497.9 million of availability under our $500.0 million revolving credit facility, net of $2.1 million of issued letters of credit against the letter of credit facility sublimit under the revolving credit facility. During the three months ended June 30, 2021, no shares of our common stock were sold under our at-the-market equity offering program, of which $232.5 million remains available. As of June 30, 2021, the maximum number of shares of our common stock that could be required to be issued on conversion of the outstanding shares of the Series A Preferred Stock was 25.0 million shares. Total indebtedness as of June 30, 2021 was $2.7 billion, excluding $30.1 million of debt issuance costs, and includes a $600.0 million term loan and $2.1 billion of senior unsecured notes.
COVID-19 Pandemic
The ongoing COVID-19 pandemic and the related preventative measures taken to help curb the spread, have had, and may continue to have, a significant impact on the global economy and our business. In 2021, the COVID-19 pandemic may, among other things, (i) reduce or curtail our customers’ advertising expenditures and overall demand for our services through purchase cancellations or otherwise; (ii) increase the volatility of our customers’ advertising expenditure patterns from period-to-period through short-notice purchases, purchase deferrals or otherwise; and (iii) delay the collection of certain earned advertising revenues from our customers, all of which could have a material adverse effect on our business, financial condition and results of operation in 2021. As a result of the impact of the ongoing COVID-19 pandemic on our business and results of operations, we expect our key performance indicators and total revenues to incrementally improve throughout the remainder of 2021 as compared to 2020, but be materially lower in 2021 than pre-COVID-19 pandemic levels, particularly in our U.S. Media segment and with respect to our transit and other business. We expect total expenses to increase throughout the remainder of 2021 as compared to 2020, but be materially lower than pre-COVID-19 pandemic levels, particularly in our U.S. Media segment and with respect to our transit and other business. Additionally, we expect billboard property lease expenses, such as rental expenses, and posting, maintenance and other expenses, as a percentage of revenues, to decrease throughout the remainder of 2021 as compared to 2020. We expect transit franchise expenses, such as transit franchise payments, as a percentage of revenues, to increase throughout the remainder of 2021 as compared to 2020, and be materially higher than pre-COVID-19 pandemic levels, primarily due to our guaranteed minimum annual payment amounts owed to the MTA, which resumed on January 1, 2021. The impacts described above with respect to 2020 were greatest in the second quarter of 2020, with incremental improvement in the third and fourth quarters of 2020. Accordingly, results for the three and six months ended June 30, 2021, are not indicative of the results that may be expected for the fiscal year ending December 31, 2021. In addition, in order to preserve financial flexibility, increase liquidity and reduce expenses in light of the uncertainty in the global economy and our business, we modified our business goals and undertook several actions to date, including, among other things, issuing the Series A Preferred Stock and certain senior unsecured notes, amending the credit agreement governing the revolving credit facility to modify the calculation of our financial maintenance covenant ratio, suspending our quarterly dividend payments on our common stock for a period of time as described above, and reducing SG&A and posting, maintenance and other expenses. There remains uncertainty around the severity and duration of the COVID-19 pandemic and the measures taken, or may be taken, in response to the COVID-19 pandemic, which will depend on numerous factors, including, among others, the emergence of new cases of COVID-19 or its variants, hospitalization and mortality rates, and the availability and distribution of safe and effective treatments and vaccines. Accordingly, we cannot reasonably estimate the full impact of the COVID-19 pandemic on our business, financial condition and results of operations at this time, which may be material.
Conference Call
We will host a conference call to discuss the results on August 5, 2021 at 4:30 p.m. Eastern Time. The conference call numbers are 800-458-4121 (U.S. callers) and 323-794-2093 (International callers) and the passcode for both is 5283729. Live and replay versions of the conference call will be webcast in the Investor Relations section of our website, www.OUTFRONTmedia.com.
Supplemental Materials
In addition to this press release, we have provided a supplemental investor presentation which can be viewed on our website, www.OUTFRONTmedia.com.
About OUTFRONT Media Inc.
OUTFRONT leverages the power of technology, location and creativity to connect brands with consumers outside of their homes through one of the largest and most diverse sets of billboard, transit, and mobile assets in North America. Through its technology platform, OUTFRONT will fundamentally change the ways advertisers engage audiences on-the-go.
