Outfront Media - Earnings Call - Q3 2025

Executive Summary

• OUTFRONT delivered a solid beat on revenue and EPS: Q3 revenue $467.5M vs S&P Global consensus $458.3M* and diluted EPS $0.29 vs $0.25*; Adjusted OIBDA rose 17.2% to $137.2M, driven by a strong Transit recovery led by NYC MTA.
• Management raised FY 2025 AFFO growth guidance to high single digits (from mid-single digits), and guided Q4 consolidated revenue growth to low mid-single digits with mid-teens Transit and low single-digit Billboard; excluding two exited Billboard contracts, Q4 consolidated growth would be mid to high single digits.
• Transit segment revenue surged 23.7% YoY to $112.4M, swinging to $15.7M Adjusted OIBDA from a loss last year; Billboard revenue declined 2.2% YoY due to prior exits of two marginal contracts in NYC and L.A., though margins improved on cost actions.
• Balance sheet de-risked: term loan maturity extended to 2032 and revolver to 2030; committed liquidity >$700M and net leverage at 4.7x, supporting the maintained $0.30 quarterly dividend.
• Strategic catalysts: accelerating digital/programmatic sales and an AWS partnership to enable AI-native planning/buying/measurement of OOH inventory, reinforcing a tech-forward narrative.

What Went Well and What Went Wrong

What Went Well

• Transit outperformed: revenues +23.7% YoY to $112.4M, and Adjusted OIBDA turned positive to $15.7M (from $(2.9)M); NYC MTA up ~37% on large tech/financial/pharma campaigns.
• Margin expansion: Adjusted OIBDA up 17.2% to $137.2M and consolidated Adjusted OIBDA margin improved to 29.3% (from 25.9% YoY), reflecting cost discipline and high-margin Transit growth.
• Confident outlook and guidance raise: “We are raising our AFFO guidance for the full year… high single-digit range versus prior mid-single-digit expectation” (CFO), with Q4 revenue growth expected to improve slightly from Q3.

What Went Wrong

• Billboard revenue declined 2.2% YoY to $352.8M, largely from lost billboards and exited contracts; however, Billboard Adjusted OIBDA still rose to $139.3M on lower lease and SG&A costs.
• FFO fell 20.6% YoY to $99.7M driven by higher interest expense and cash taxes, despite stronger OIBDA; corporate expense rose $1.9M on consulting and refinancing costs.
• Transit expenses up 4.2% YoY (franchise, maintenance, utilities) and MAG inflation on the MTA contract remains a structural headwind to costs.

Transcript

Operator (participant)

Thank you for your patience, everyone. The OUTFRONT Media Third Quarter 2025 Earnings Call will begin in two minutes time. In the meantime, you can register questions by pressing star by one on your telephone keypad. Hello and welcome to the OUTFRONT Media Third Quarter 2025 Earnings Call. My name is Carla, and I will be coordinating your call today. During the presentation, you can register to ask questions by pressing star by one on your telephone keypad. If you change your mind, please press star by two. I will now hand you over to your host, Stephan Bisson, to begin. Please go ahead when you're ready.

Stephan Bisson (VP of Investor Relations)

Good afternoon, and thank you for joining our 2025 third-quarter earnings call. With me on the call today are OUTFRONT CEO Nick Brien and CFO Matthew Siegel. After a discussion of our financial results, we'll open the lines for a question-and-answer session. Our comments today will refer to the earnings release and slide presentation that you can find on the Investor Relations section of our website, outfront.com. After today's call has concluded, an audio archive replay will be available there as well. This conference call may include forward-looking statements. Relevant factors that could cause actual results to differ materially from these forward-looking statements are listed in our earnings materials and in our SEC filings, including our 2024 Form 10-K, as well as our Q3 2025 Form 10-Q, which we expect to file soon. We will refer to certain non-GAAP financial measures on this call.

Any references to OIBDA made today will be on an adjusted basis. Reconciliations of OIBDA and other non-GAAP financial measures are available in the appendix of the slide presentation, the earnings release, and our website, which also includes presentations with prior period reconciliations. With that, let me hand the call over to Nick.

Nick Brien (CEO)

Thanks, Stephan, and thank you, everyone, for joining us today. We're pleased to be here today reporting our third-quarter results, which came in ahead of where we had anticipated when we spoke three months ago, given a sizable increase in demand, particularly within our Transit business. As you can see on slide three, which summarizes our headline numbers, consolidated revenues were up 3.45%. Driven by 24% growth in Transit, while consolidated OIBDA was up 17% to $137 million, and AFFO was up 24% to $100 million. Slide four shows our more detailed revenue results. Billboard revenues were down 2.2%, primarily due to our previously announced exits of two large, marginally profitable Billboard contracts in New York and L.A., as the revenues and expenses of these contracts are still included in our reported 2024 financial statements.

Excluding the results of these contracts, Billboard revenues would have been up a little over 1%. Transit grew an impressive 24%. Led by the New York MTA, which was up a massive 37% during the quarter, given the launch of several large campaigns, particularly within the tech, finance, TPG, pharma, and health categories. Slide five shows our detailed Billboard revenue, which, as I mentioned earlier, was impacted by the two large Billboard contracts we have exited. On a reported basis, static and other Billboard revenues were down 2.5% during the quarter, and digital Billboard revenues were down 1.4%. However, I believe it is important to note that excluding the results of the two large Billboard contracts we exited from the comparable prior year period, digital revenues would have been up over 5%. Slide six shows our detailed Transit revenue, which grew nearly 24% during the quarter.

Our digital Transit revenues were up over 50% to $56 million, and static revenues were almost up 4%. Much of the strength of this quarter was driven by larger brands, with enterprise Transit revenues up over 30%. Commercial was also a significant contributor to Transit growth, up high single digits during the quarter. We are immensely proud of these results, which have been driven by the strengthening of our Transit growth team and a focus on distinct go-to-market sales solutions. On a consolidated revenue basis, our stronger categories during the quarter were legal, financial, tech, and travel. The weaker categories during the quarter were retail, alcohol, and government political. Slide seven shows our combined digital revenue performance, which grew over 12% in the quarter and represented 35.4% of our total revenues. Even more impressive, excluding the aforementioned New York and L.A. contracts, digital revenues would have grown by nearly 18%.

Programmatic and digital direct automated sales were up nearly 30% during the period and represented 19.4% of our total digital revenues, up from 16.8% in the same period last year. While on the topic of programmatic and digital, I'd like to highlight the strategic partnership that we announced with AWS last month, which we believe will usher in a new era for the out-of-home medium. In a first for the industry, this initiative will enable the planning, buying, and measurement of our inventory from end to end, creating new sales opportunities and advancing the way agencies and brands can access, interact, transact, and measure their media in smarter, more efficient ways. While we are in the early days of this partnership, we're very encouraged by the opportunities and are extremely excited about its future potential. Moving on, the breakdown of commercial and enterprise revenues can be seen on slide eight.

Enterprise grew by 7% during the third quarter, with a huge 30+ percentage point increase in Transit, I briefly mentioned, being offset by a mid-single-digit decline in Billboard. Commercial was essentially flat year-on-year during the quarter, with high single-digit Transit growth offset by slightly weaker Billboard revenues. Slide nine shows our Billboard yield growth, which was up about 1.4% year-over-year to over $3,000 per month, driven primarily by our new digital inventory. Summing up, we were pleased with our quarter three performance, and encouragingly, we are seeing these strong top-line trends continue into the fourth quarter. With that, let me now hand it over to Matt to review the rest of our financials.

Matthew Siegel (EVP and CFO)

Thanks, Nick, and good afternoon, everyone. Please turn to slide 10 for a more detailed look at our Billboard expenses. In total, Billboard expenses were down nearly $11 million, or almost 5% year-over-year. Zooming in on lease costs, these expenses were down almost $9 million, or about 7.5% year-over-year. This decline includes approximately $10 million related to the large Billboard contracts in New York and Los Angeles that we exited, which was partially offset by the contractual escalators on fixed leases. Excluding the impact of the portfolio exits, Billboard property lease expense would have been up less than 1%, which reflects our continued portfolio management efforts. Posting, maintenance, and other expenses were up just under $2 million, or 4.5%, due to higher production costs and compensation-related expenses from regular annual merit increases. SG&A expenses declined by about $3.6 million, or 5.3%. Due primarily to lower credit card usage by customers, lower compensation-related expenses following our June RIF, and a lower provision for doubtful accounts.

This nearly $11 million improvement in total Billboard expenses was partially offset by the modest decline in Billboard revenues Nick described earlier and led to Billboard-adjusted OIBDA increasing by about $3 million, or 2.1%. We are pleased to see Billboard-adjusted OIBDA margin increase again, this time by 170 basis points year-over-year to 39.5%. Helped by recent portfolio management decisions, as well as the geographic mix of revenue generated in the third quarter. We continue to expect Billboard margins will improve on a year-on-year basis for the remainder of 2025. Now turning to Transit on slide 11. In total, Transit expenses were up about $2.9 million, or a little over 3% year-over-year. Transit franchise expense was up 2% due primarily to the annual inflation adjustment to the MAG for the MTA contract.

Posting, maintenance, and other expenses were up about $2 million, or about 13%, due primarily to higher maintenance and utilities costs. SG&A expenses were down $300,000, or about 2%, primarily due to lower credit card usage by customers. The 3% increase in total Transit expenses, combined with the nearly 24% Transit revenue growth described earlier, led to a Transit-adjusted OIBDA improving by more than $18 million during the quarter to a profit of nearly $16 million. Slide 12 shows the company's combined Billboard, Transit, and corporate-adjusted OIBDA in the third quarter. Corporate expense rose by about $2 million, due primarily to higher professional fees, including a management consulting project that ended on August 31st and costs related to the refinancing of our senior credit facilities. Combined with the Billboard and Transit OIBDA I covered earlier, adjusted OIBDA totaled about $137 million, up nearly 17% compared to last year.

Much of this increase is attributable to our improved performance within the New York MTA, as incremental revenue growth within this important franchise is extremely high-margin. Turning to capital expenditures on slide 13. Q3 CAPEX spend was about $21 million, including about $6 million of maintenance spent. We converted 29 new boards to digital in Q3 2025. For the full year, we still expect to spend approximately $85 million of CAPEX, with $30 million-$35 million of this total expected for maintenance. Looking at AFFO on slide 14, you can see the bridge to our Q3 AFFO of $100 million. The improvement is principally driven by higher Billboard and Transit OIBDA, which was partially offset by higher corporate expense.

Also, I'm pleased to tell you we are raising our AFFO guidance for the full year and now expect that our reported 2025 consolidated AFFO will grow in the high single-digit range versus our prior mid-single-digit expectation. Included in this guidance is the previously noted maintenance CAPEX, interest expense of approximately $140 million-$145 million, and a small amount of cash taxes. Please turn to slide 15 for an update on our balance sheet. During the quarter, we refinanced our senior secured credit facilities, which pushed the maturity of our term loan from November 2026 to September 2032 and increased the size by $100 million-$500 million. We also extended the maturity of our revolving credit facility to 2030. Committed liquidity is over $700 million, including about $60 million of cash, around $500 million available via our revolver, and $150 million available via our accounts receivable securitization facility.

As of September 30th, our total net leverage dropped to 4.7x within our 4-5x target range. Turning to our dividend, we announced today that our board of directors maintained a $0.30 cash dividend payable on December 31st to shareholders of record at the close of business on December 5th. We spent just $2 million on acquisitions during the quarter. In looking at our current acquisition pipeline, we continue to expect our 2025 deal activity to be similar to levels reached in recent years. With that, let me turn the call back over to Nick.

Nick Brien (CEO)

Thank you, Matt. As I mentioned earlier, the top-line strength we saw in the third quarter has continued into the fourth. From where we sit today, we expect fourth quarter revenue growth to improve slightly from quarter three's result, with consolidated revenues up in the low mid-single digits, driven by mid-teens growth in Transit and low single-digit growth in Billboard. These figures include the headwind created by our strategic decision to exit the two large marginally profitable Billboard contracts in New York and Los Angeles. Excluding the $11 million of Billboard revenue generated by these two exited contracts in the fourth quarter of 2024, we believe quarter four Billboard revenues would be up mid-single digits and consolidated revenue would be in the mid to high single-digit range. Just as important as the numbers themselves is what lies behind them.

The media and marketing landscape continues to undergo a massive sea change, born of GenAI content capabilities and the rise of the media planning LLMs. We are witnessing major brand advertisers retrench from the bottom of the funnel of digital performance advertising, seeking to strengthen their brand equity while improving overall business performance. They know that creating emotional brand experiences that are remembered and shared are the most trusted forms of marketing activities. There is no better way to deliver these engaging and unskippable brand experiences than in real life. OUTFRONT is the premium out-of-home leader in the U.S., with excellent assets and IRL brand-building capabilities in the most important markets for our advertisers to participate in culture and create communities of loyal fans and advocates.

Our scale, coverage, and breadth of services enables us to build full-funnel marketing campaigns across the U.S., whether you're a Fortune 500 brand, a regional bank, or a local family-owned auto dealer. We're starting to break through with many of the largest brand marketers as they reconsider the power and value of out-of-home and IRL in today's AI-fueled digital advertising ecosystem. With that, operator, let's now open the lines for some questions.

Operator (participant)

Thank you. We will now begin the question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. And our first question comes from Danielle Odley with Wells Fargo.

Thanks. Question for Nick. You previously described 2025 as a year of transformation. As we exit this year and look towards 2026, how do you think the company's position compared to your strategic objectives? Thank you.

Nick Brien (CEO)

Thank you, Danielle. I appreciate that question. I appreciate you remembering that we were very clear in my first earnings call with the four strategic imperatives that we saw as absolutely critical to deliver the transformation velocity. I've been very impressed with the team, both some of the existing leaders in the organization as well as some of the new talented leaders we've attracted, to really focus on the most important things that matter. And the results, we're hoping to demonstrate they've shown themselves to you in quarter three. We've given you an increase in our guidance for quarter four, and the momentum continues.

So everything we put in place around our culture, our sales enablement, our technology underpinning, our basic operational excellence across the board sets us up to continue the momentum that the transformation velocity agenda, the strategy we set with the board, is being executed and executed with real focus and with impressive results starting to show.

That's helpful. A quick follow-up, if I may. On quarter three, Transit growth in the quarter was clearly very strong. Can you help to further unpack the drivers of the momentum you've seen there and maybe touch on expectations for how you think growth shapes up in the next year? Thanks.

Well we're extremely pleased with the Transit focus, and it was a combination of the three things we set. We mentioned earlier, one was the creation of the Transit velocity team led by a dedicated growth leader across both sales and marketing. A real focus on the product marketing details to do with all aspects of Transit, especially with the New York MTA. Then dedicated campaign focus with some of the most exciting brands to be able to say that the MTA is a platform for creating these brand experiences in real life as opposed to only running ads. Now, we have been focused on both, but we're starting to see that kind of momentum when I look at the work that's even existing right now today within the New York MTA between the Bath & Body Works, where they have the experience that they've created around smell.

I mean, the full takeover, the combination of advertising and the experiences, what we did with ESPN, with the E-train. We turned it into the ESPN train. We took the leadership all the way down to Wall Street. They rang the bell. It had their mascots. It had their fans. The MTA. And not just the MTA, but all of our Transit assets allow us to really talk to some of the biggest brands that have very high brand awareness. They may not want more brand awareness, but they certainly want the brand experiences that can be shared. They can be amplified, and they're certainly highly memorable with existing customers and with prospects. So I think the team are enjoying the success. They've worked extremely hard to deliver it. So again, that combination of focus, the combination of further research and capability setting for the sales teams.

And as importantly, demonstrating the results of these campaigns in terms of whatever the success metrics the clients had put in place at the beginning. We have nothing but confidence that the momentum will continue.

Thanks.

Operator (participant)

Thank you. The next question comes from Cameron McVeigh with Morgan Stanley.

Cameron McVeigh (VP of Equity Research)

Thanks. Good evening. Nick, I was hoping you could talk a little bit more about your decision to restructure the sales function, particularly in Transit, maybe what you've learned. Then secondly, is subway ridership still a factor in an advertiser's decision to utilize these MTA boards? If not, curious what the most important metric there is. Thank you.

Nick Brien (CEO)

Okay. Thank you, Cameron. Thank you for the question. Let's start with the first one. The restructuring of the sales organization was to recognize that between enterprise and commercial, that we knew we had a different level of sophistication in terms of the kind of conversations we were having with the different kind of clients. And we needed to have more specific, accustomed, and qualified sales conversations with the strategic accounts, with the enterprise accounts. We recognized in the commercial side, and do not forget, this was an industry that's always been called national to local, which I always felt coming in again from the outside, not a seller, somebody who's been a strategic buyer and agency leader with some of the biggest brand marketers in the world, it was too unsophisticated. And in commercial, we had regional, and we had the small and medium businesses.

And we recognized that we needed to create that focus and their unique capability sets because the way you engage with a Coca-Cola or McDonald's, a Procter & Gamble is very different to dealing with a tier four auto dealer or a regional bank that wants to extend to acquisition. That was the rationale between the restructuring of the sales organization, despite the fact that we were going to underpin from a cultural point of view, a technology point of view, a data point of view. The capabilities would be there to support both. Now, when it came to Transit, that's not a dedicated sales change. That's more recognizing that the product marketing and the dedicated focus of that sale required a different approach to just saying it's a mobile Billboard.

This is the fabric of major cities, whether it be San Francisco, whether it be Los Angeles, whether it be Boston, certainly New York City. And we basically gave more dedicated organization around the growth team that was a combination of sales, marketing, product marketing, and customer success. And that's why we have seen that kind of continued momentum. When I look at those clients, Capital One, Chase, the work we have done with Unilever, what is on the front cover you see there with Swiffer and what we did with them. I mean, these are major brands coming to the medium, and they are recognizing that the Transit medium is something that is exciting and more specific for them. It is really about focus and about capabilities, but it falls within the same structure between enterprise sales and commercial sales. And both have as relevant an opportunity to imagine how their respective brands and marketers would want to use our Transit media.

Operator (participant)

Thank you. So the next question comes from David Karnovsky with JPMorgan.

David Karnovsky (Senior Research Analyst)

Thank you. Nick, maybe as you look ahead to 2026, I just wanted to get your view on an outlier event like the World Cup, given your footprint and how you're kind of viewing also just the entertainment vertical and the prospect for more recovery there.

Nick Brien (CEO)

Okay. Well thank you, David. Thank you for the question. Let me start with the second one first. I think the entertainment category is clearly one that has been discussed a lot and very publicly. Discussed in terms of the implications, and there's certainly the highlights. There's highs and lows. I mean, the lows that we've recognized in 2024 have really more to do with the network. When we think about entertainment, we're thinking about ABC, NBC, Fox, these kind of network full launches. They're not disappearing, but they're certainly not as extensive as they were. When we look at quarter four entertainment, in summary, there is less content. There are shorter media spend windows, and the budgets are smaller. However, even though we recognize that TV has been suffering in entertainment, we've got highs for 2026 that we're pretty excited about.

In the sense that the strike, when we think about 2022, 2023, a lot of that production got moved to 2024. I've personally had a number of conversations with some of the most significant studios here in L.A. with our head of our entertainment practice, and the general feeling is really that it's going to be a healthy 2026 for both film and streaming. There's a good slate on the docket, so we're feeling positive about that. And I think when we talk about when we talk about entertainment, we're talking about those are the brands that we really want to be focusing on and making sure that our strength of relationship means we're extending share, obviously, from our competitors as well. So hopefully, that provides you the perspective on the entertainment sector.

David Karnovsky (Senior Research Analyst)

And on the first part of the question about the World Cup?

Nick Brien (CEO)

We're very excited about the World Cup. I mean, we've got a number of significant conversations going on with some very significant enterprise brands who have committed significantly to World Cup, to Olympics, to generally a lot more sports sponsorship that they want to activate. We asked one of our most progressive real estate leaders who had advanced some very good conversations during the Super Bowl in New Orleans to extend the opportunity with temporary permitting to allow some of the biggest NFL sponsors to really get behind extending what they could do beyond in stadium. That was a huge success for us. I think we generated between $7 million-$8 million incremental revenue. We're extending that practice. We've now turned that into a line of business. And when we're talking about brand experiences, and this is the thing that.

Is one of the biggest opportunities this medium has, and certainly we're seizing on, which is there will always be those advertisers who want to run ads and they want to build their brand exposure. There are many of the more sophisticated, well-known global brands that have all the awareness in the world. They're not interested in more exposure. They're interested in these brand experiences that enhance their brand equity in a really dramatic way. This team, we've got to get a dedicated team to really focus on those brand experiences from a real estate point of view, from a strategic point of view, from a creative point of view, and from a measurement point of view.

We're having conversations with a number of the experiential agencies, the biggest ones that are out there, independent and owned by the whole coast, about how they could look at our medium and imagine that we can help co-create these IRL experiences. We feel bullish about it. Too early to talk about the conversations we're having, but they're extensive. We're feeling good about World Cup specifically.

David Karnovsky (Senior Research Analyst)

Thank you, Nick.

Operator (participant)

Thank you. Just as a reminder, to ask a question is star one on your telephone keypad. And our next question comes from Patrick Sholl with Barrington Research.

Patrick Sholl (Research Analyst)

Hi. Thank you. I was just wondering if the government shutdown has had any impact on ad trends, whether across Billboard or static, and just the general, if that's affected any of the planning decisions on the part of your advertisers?

Matthew Siegel (EVP and CFO)

Pat, it's Matt. I'll take that one. We really haven't seen any material impact from the government shutdown. Obviously, the population in D.C. isn't fully in the office at this point, but we're not seeing the impact on our Transit properties there.

Patrick Sholl (Research Analyst)

Okay. Thank you.

Matthew Siegel (EVP and CFO)

Thanks, Pat.

Operator (participant)

Just as a final reminder, it is star one on your telephone keypad to ask a question. As we have no further questions in the queue, I will hand back over to Nick for any final comments.

Nick Brien (CEO)

Thank you, everybody. And we really always appreciate you joining us today. We certainly hope to see and meet many of you at the various conferences and events this winter. For those that we do not, we look forward to presenting our quarter four results to you in February.

Operator (participant)

Thank you all very much. Thank you, everyone. This does conclude today's call. Thank you for joining. You may now disconnect. Have a great rest of your day.