OUTFRONT Media's (OUT) Q2 AFFO & Revenues Miss Estimates
OUTFRONT Media Inc. OUT reported second-quarter 2023 adjusted funds from operations (AFFO) per share of 47 cents, missing the Zacks Consensus Estimate of 51 cents. The figure was also lower than the prior-year quarter’s tally of 57 cents.
Results reflect higher operating expenses and interest expenses in the quarter.
Nonetheless, quarterly revenues of $468.8 million lagged the Zacks Consensus Estimate of $472.8 million. However, revenues climbed 4.1% year over year. Higher billboard and transit & other revenues contributed to this rise.
According to Jeremy Male, chairman and CEO of OUTFRONT Media, "Second quarter revenues grew 4%, driven by higher billboard yields and growth from both our local and national businesses. Though we expect modest growth in the third quarter, we are seeing some impact from the ongoing strikes within the media industry in the second half, particularly in our transit business."
Quarter in Detail
During the reported quarter, billboard revenues were $371.6 million, reflecting year-over-year growth of 5%. The upside resulted mainly from a rise in average revenues per display (referred to as yield) and the impact of new and lost billboards in the period, inclusive of acquisitions.
The company’s transit and other revenues of $97.2 million increased 1% from the year-ago quarter. The rise was primarily due to the impact of a new transit franchise contract.
OUTFRONT Media’s operating loss totaled $438.2 million in the second quarter against an operating income of $79.9 million in the year-ago quarter. The loss was attributable to a significant rise in impairment charges.
Operating expenses were $245.9 million, which increased 8.6% year over year. The rise was mostly due to higher billboard property lease expenses. Also, greater guaranteed minimum annual payments to the New York Metropolitan Transportation Authority were contributing factors.
Net interest expenses of $39.7 million increased from $31.6 million in the prior-year period, mainly due to higher interest rates compared with the year-ago quarter and a greater average debt balance. The weighted average cost of debt, as of Jun 30, 2023, was 5.4% compared with 4.6% in the prior-year period.
Cash Flow & Balance Sheet
Net cash flow provided by operating activities for the six months ended Jun 30, 2023, was $87.7 million, which declined from $101.1 million in the prior-year period.
As of Jun 30, 2023, OUTFRONT Media’s liquidity position comprised unrestricted cash of $42.2 million and $493.5 million of availability under its $500 million revolving credit facility, net of $6.5 million of issued letters of credit.
In the reported quarter, no shares of the company's common stock were sold under its at-the-market (ATM) equity program. It had $232.5 million available under the ATM program at the quarter’s end.
Dividend Update
Concurrent with its second-quarter earnings release, OUTFRONT Media announced its common stock quarterly cash dividend of 30 cents per share. The dividend will be paid out on Sep 29 to its shareholders of record as of Sep 1, 2023.
OUTFRONT Media Inc. Price, Consensus and EPS Surprise
OUTFRONT Media Inc. price-consensus-eps-surprise-chart | OUTFRONT Media Inc. Quote
Currently, the company has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other REITs
Crown Castle Inc. CCI reported second-quarter 2023 AFFO per share of $2.05, outpacing the Zacks Consensus Estimate of $1.99. The reported figure climbed 13.9% from the year-ago quarter’s tally of $1.80.
Results reflect better-than-anticipated revenues, aided by robust site-rental revenue growth. However, CCI lowered its outlook for 2023, citing that it expects a decline in tower activity for the remainder of the year due to reduced network spending by wireless carriers.
SBA Communications Corporation SBAC reported second-quarter 2023 AFFO per share of $3.24, beating the Zacks Consensus Estimate of $3.14. However, the figure reflects a rise of 5.5% from the prior-year quarter.
SBAC’s site-leasing revenues improved year over year on healthy leasing activity amid elevated tower space demand. Moreover, it has continued to benefit from the addition of sites to its portfolio. The company also raised its 2023 outlook.
Digital Realty Trust DLR reported second-quarter 2023 Core funds from operations (FFO) per share of $1.68, beating the Zacks Consensus Estimate of $1.65.
DLR's results reflect better-than-anticipated revenues, aided by strong enterprise leasing activity, robust renewal spreads and healthy organic growth.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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