Earnings Buzz: Outfront Media Inc. (NYSE: OUT)

On Friday, Shares of Outfront Media Inc. (NYSE: OUT) showed the bullish trend with a higher momentum of 0.96% to $24.16. The company traded total volume of 879,236 shares as contrast to its average volume of 991.37K shares. The company has a market value of $3.42B and about 141.71M shares outstanding.

OUTFRONT Media Inc. (OUT) recently stated results for the quarter and full year ended December 31, 2018.

Fourth Quarter 2018 Results

Consolidated:

Stated revenues of $452.40M increased $51.10M, or 12.7%, for the fourth quarter of 2018 as contrast to the same prior-year period.  On an organic basis, revenues of $451.00M increased $50.60M, or 12.6%.

Stated billboard revenues of $302.10M increased $25.70M, or 9.3%. On an organic basis, billboard revenues increased 9.6% due mainly to a boost in yield and the growth in revenues from digital billboard conversions.

Stated transit and other revenues of $150.30M increased $25.40M, or 20.3%, due mainly to a boost in yield and the net effect of won and lost franchises in the period. On an organic basis, transit and other revenues increased 19.4% because of a boost in yield and the net effect of won and lost franchises in the period.

Total Operating expenses of $235.50M increased $18.10M, or 8.3%, due mainly to transit franchise expenses related to the addition of our Bay Area Rapid Transit (“BART”) transit franchise agreement, higher transit franchise expenses because of higher transit revenues, higher posting, maintenance and other expenses, and higher billboard lease expense.  Selling, General and Administrative expenses (“SG&A”) of $77.90M increased $10.70M, or 15.9%, due mainly to higher compensation and other employee-related costs and higher planned business development costs.

Adjusted OIBDA of $143.80M increased $22.70M, or 18.7%.

Corporate:

Corporate costs, excluding stock-based compensation and restructuring charges, reduced $0.90M to $9.80M, due mainly to lower professional fees.  Stock-based compensation increased $0.40M, or 9.1%, because of changes in headcount.

Full Year 2018 Results

Consolidated:

Stated revenues of $1,606.20M increased $85.70M or 5.6% for the year December 31, 2018 as contrast to the same prior-year period.  On an organic basis, revenues of $1,586.50M increased 4.8%.

Stated billboard revenues of $1,112.40M increased $53.40M, or 5.0%, due mainly to a boost in average revenue per display (yield), growth in revenues from digital billboard conversions and the acquisition of digital billboards in Canada, partially offset by lower proceeds from condemnations. On an organic basis, billboard revenues increased 4.6% due mainly to a boost in average revenue per display (yield) and the growth in revenues from digital billboard conversions, partially offset by lower proceeds from condemnations.

Stated transit and other revenues of $493.80M increased $32.30M, or 7.0%, because of the net effect of won and lost franchises in the period, a boost in yield, and the impact of a new accounting standard on our Sports Marketing operating segment.  On an organic basis, transit and other revenues increased 5.5% because of a boost in yield and the net effect of won and lost franchises in the period.

Total Operating expenses of $859.90M increased $24.70M, or 3.0%, due mainly to higher posting, maintenance and other expenses from increased digital operations, higher billboard property lease expense from the new New York Metropolitan Transportation Authority (“MTA”) billboard agreement and higher variable rent related to the increase in revenue, the acquisition of digital billboards in Canada, and the impact of a new accounting standard in our Sports Marketing operating segment, partially offset by a net reduction in transit franchise expenses mainly driven by the terms of the new MTA transit franchise agreement.  SG&A expenses of $287.00M increased $25.30M, or 9.7%, due mainly to higher compensation and other employee-related costs and higher planned business development costs, partially offset by lower bad debt expense.

Adjusted OIBDA of $479.50M reduced $35.40M, or 8.0%.

Other
Stated revenues of $139.40M increased $25.40M, or 22.3%, due mainly to the acquisition of digital billboards in Canada, the impact of a new accounting standard in our Sports Marketing operating segment and increased third-party digital equipment sales.  Organic revenues increased $13.00M, or 12.2%, due mainly to improved performance in Canada and increased third-party digital equipment sales.

Operating expenses increased $11.30M, or 14.0%, driven by the impact of a new accounting standard in our Sports Marketing operating segment, the acquisition of digital billboards in Canada, and higher costs related to third-party digital equipment sales. SG&A expenses increased $5.20M, or 20.9%, driven mainly by the impact of a new accounting standard in our Sports Marketing operating segment and the acquisition of digital billboards in Canada.

Adjusted OIBDA was $17.30M as contrast to $8.40M in the same prior-year period.

Corporate:

Corporate costs, excluding stock-based compensation and restructuring charges, reduced $4.40M to $38.00M due mainly to lower compensation-related expenses in 2018 and one-time expenses in 2017, counting higher professional fees and costs incurred in connection with amending the agreements governing our senior secured credit facilities.  Stock-based compensation reduced $0.30M to $20.20M because of changes in headcount.

Interest Expense:

Net Interest expense in the fourth quarter of 2018 was $32.70M, counting amortization of deferred financing costs of $1.50M, contrast to $31.00M in the same prior-year period, counting amortization of deferred financing costs of $1.50M.  The increase was due mainly to a higher weighted average cost of debt at December 31, 2018 of 5.1% contrast to 4.8% in the prior-year period, a higher outstanding debt balance and letter of credit facility fees associated with our new MTA transit agreement in 2018.

Income Taxes:

The income tax provision was $2.50M in the fourth quarter of 2018 as contrast to $4.90M in the fourth quarter of 2017.  Cash paid for income taxes in the year ended December 31, 2018 was $8.40M, counting payments made during 2018 related to 2017 income taxes and the payment of taxes on built-in gains on properties sold.

Net Income:

Net income was $57.20M in the fourth quarter of 2018 as contrast to net income of $35.50M in the same prior-year period. Diluted weighted average shares outstanding were 140.10M for the fourth quarter of 2018 and 139.10M for the same prior-year period. Net income per common share for diluted earnings per weighted average share was $0.40 for the fourth quarter of 2018 as contrast to $0.25 in the same prior-year period.

FFO & AFFO:

FFO was $96.40M in the fourth quarter of 2018, a boost of $20.90M, or 27.7%, from the same prior-year period, driven mainly by higher net income.  AFFO was $98.00M in the fourth quarter of 2018, a boost of $15.20M, or 18.4%, from the same prior-year period due mainly to higher net income adjusted for non-cash items, partially offset by higher maintenance capital expenditures and higher cash paid for lease acquisition costs.

Cash Flow & Capital Expenditures:

Net cash flow offered by operating activities of $214.30M for the year ended December 31, 2018 reduced $35.00M, or 14.0%, contrast to $249.30M during the same prior-year period, principally as a result of prepaid MTA equipment deployment costs, partially offset by higher net income, as adjusted for non-cash items. Total capital expenditures increased 16.2% to $82.30M for the year ended December 31, 2018.

Balance Sheet and Liquidity:

As of December 31, 2018, our liquidity position included unrestricted cash of $52.70M and $364.00M of availability under our $430.00M revolving credit facility, net of $66.00M of issued letters of credit against the letter of credit facility sublimit under the revolving credit facility, and $15.00M of additional availability under our accounts receivable securitization facility, net of $85.00M in borrowings outstanding as of December 31, 2018.  We received net proceeds of $15.30M related to the sale of 750.0K shares of our common stock under our $300.0M at-the-market equity offering program during the three months ended December 31, 2018.  Total debt outstanding at December 31, 2018 was $2.30B; excluding $20.40M of deferred financing costs.  Total debt outstanding includes a $670.00M term loan and $1.50B of senior unsecured notes, net of discounts and premiums, $85.00M of borrowings under our accounts receivable securitization facility and $75.00M of borrowings under our repurchase facility.

The Company offered net profit margin of 6.70% while its gross profit margin was 46.50%. ROE was recorded as 9.80% while beta factor was 1.32. The stock, as of recent close, has shown the weekly upbeat performance of 2.16% which was maintained at 33.33% in this year.

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