Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Outfront Media Inc (OUT, Financial) reported a 5% revenue growth in its US media segment, driven by strong performance in billboard and transit sectors.
- Adjusted OBIDA for the US media segment grew over 11%, indicating effective cost management and operational efficiency.
- Digital revenue represented over 32% of total revenues, with digital billboard revenue up over 11%, showcasing successful digital transformation efforts.
- The company completed its initial deployment commitments for digital displays in the New York MTA, enhancing its digital footprint.
- Outfront Media Inc (OUT) announced a special dividend, reflecting strong financial health and commitment to returning value to shareholders.
Negative Points
- The exit from a New York MTA billboard contract will create a revenue headwind for Q4 and into 2025.
- Weakness in key markets like Los Angeles and New York affected overall performance, particularly in the national segment.
- The company faced increased corporate expenses due to consulting fees and market fluctuations impacting an unfunded equity-linked retirement plan.
- Storms in the Southeast caused operational disruptions, presenting a small revenue headwind.
- The media and entertainment vertical did not rebound as strongly as expected, impacting national revenue growth.
Q & A Highlights
Q: Can you size the impact of the New York MTA contract exit and the storms in the Southeast on Q4 guidance?
A: Jeremy Male, CEO: The MTA contract exit and the storms collectively create a revenue headwind of about 1.5 percentage points. The MTA contract exit is expected to have a de minimis impact on our O&O this year and will be margin enhancing in 2025.
Q: How is the integration of programmatic ad tech capabilities at the MTA progressing, and what impact might it have on transit results?
A: Jeremy Male, CEO: We've connected our liveboards and urban panels to automated channels, generating 7% of Q3 revenue from these channels. We expect further benefits as we connect mobile panels and expand to other cities like Boston and DC, enhancing our transit business growth in 2025.
Q: What is the impact of political ad spending on your results, and how does it compare to previous years?
A: Matthew Siegel, CFO: In 2024, we received about $15 million from political ads, compared to $10 million in 2020. Approximately half of this amount is expected in Q4, primarily in October.
Q: Can you provide more detail on the increased corporate spend and its recurring nature?
A: Matthew Siegel, CFO: The increased spend includes a management consulting project aimed at enhancing revenue and EBITDA, which will benefit future performance. The unfunded deferred comp plan is tied to equity indices, causing expense volatility. Compensation expenses are higher due to improved performance metrics.
Q: How is the media and entertainment vertical performing, and what are your expectations for Q4?
A: Jeremy Male, CEO: The media and entertainment category has been slower to recover than expected, but we anticipate improvement in Q4, particularly in the movie category. Other entertainment areas are performing well, and we expect tech to be strong in Q4.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
