Outfront Media Inc ((OUT)) has held its Q4 earnings call. Read on for the main highlights of the call.
In the latest earnings call, Outfront Media Inc. presented a generally positive outlook, marked by strong revenue growth in key areas such as organic revenues, digital sales, and AFFO. The company highlighted significant progress in reducing leverage and expanding automated sales platforms. However, challenges in local ad growth and the impact of contract exits slightly dampened the overall sentiment. Nonetheless, the positive developments were more pronounced, indicating a favorable trajectory for the company.
Organic Revenue Growth
Outfront Media reported a commendable 4% year-over-year growth in organic revenues, excluding Canadian business results. Billboard revenues increased by 3%, while transit revenues surged by nearly 9% for the year. This growth underscores the company’s robust performance in its core revenue streams.
Automated Sales Platforms
The company experienced significant growth in its automated sales platforms, which increased from 14% of digital billboard revenues in 2023 to 20% in 2024. This expansion highlights Outfront Media’s strategic focus on enhancing digital sales capabilities.
AFFO Growth
Outfront Media’s AFFO grew by an impressive 11.5% in 2024, surpassing the high single-digit guidance provided the previous year. This growth reflects the company’s effective financial management and operational efficiency.
Leverage Reduction
The company successfully reduced its leverage to 4.7 times from 5.4 times at the end of 2023, primarily through proceeds from the sale of its Canadian business. This reduction demonstrates Outfront Media’s commitment to strengthening its financial position.
Digital Revenue Performance
Digital revenue grew by almost 7% in the quarter, with digital revenue accounting for nearly 36% of total revenues, up from 34% the previous year. This growth signifies the increasing importance of digital channels in the company’s revenue mix.
Marginally Profitable Contract Exit
The exit of a marginally profitable contract in October impacted billboard growth by over 100 basis points. This decision reflects the company’s strategic focus on optimizing its contract portfolio for better profitability.
Soft Local Ad Growth
Local ad growth was softer than expected, growing just under 1% during the quarter. This was attributed to strong prior year comparisons and macroeconomic uncertainty, highlighting challenges in the local advertising market.
Transit Franchise Expenses
Transit franchise expenses saw a slight increase due to contractually obligated rises and ongoing maintenance costs, which are expected to continue through the end of the contract in 2030. This indicates a long-term commitment to maintaining transit infrastructure.
Forward-Looking Guidance
For 2025, Outfront Media anticipates mid-single-digit AFFO growth, driven by improvements in OIBDA. The company expects slightly up revenues for the first quarter, with flat billboard revenues and mid-single-digit growth in transit revenues. The reduced leverage ratio and announced dividend of $0.30 per share further highlight the company’s positive outlook.
In conclusion, Outfront Media’s earnings call conveyed a predominantly positive sentiment, with strong growth in key revenue areas and successful leverage reduction. While challenges in local ad growth and contract exits were noted, the company’s strategic initiatives and forward-looking guidance suggest a promising future trajectory.