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Outfront Media's (OUT) Q4 FFO, Revenues Beat Estimates

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Outfront Media Inc.’s (OUT - Free Report) fourth-quarter 2016 adjusted funds from operations (“FFO”) per share of 56 cents exceeded the Zacks Consensus Estimate of 51 cents, as well as the prior-year quarter figure of 55 cents.

Revenues for the quarter came in at $397.4 million, beating the Zacks Consensus Estimate of $392 million. However, revenues declined 0.3% from the year-ago tally of $386.7 million.

For  full-year 2016, adjusted FFO per share came in at $2.13, higher than both the Zacks Consensus Estimate and the prior-year quarter tally of $2.07 and $1.95, respectively.

Revenues for the year came in at $1.51 billion, almost in line with both the Zacks Consensus Estimate and the prior-year figure.

Quarter in Detail

Billboard revenues of $276.5 million in the quarter denoted a decline of 0.9% year over year, reflecting the disposition of the company’s outdoor advertising business in Latin America. However, the negative was partly mitigated by an uptick in average revenue per display (yield) and increased revenues from the conversion of static billboards to digital.

On the other hand, transit and other revenues increased 1.2% from the prior-year quarter to 120.9 million. Results were mainly attributed to growth in transit advertising in the U.S. and robust results in the sports marketing operating segment.
 
Operating income during the reported quarter was $58.2 million, whereas operating loss was $47.5 million in fourth-quarter 2015. Operating expenses of $215.2 million declined 1.6% from a year ago, mainly due to the disposition of Latin America business.

Adjusted operating income before depreciation and amortization declined 0.3% year over year to $117.2 million. Net cash flow resulting from operating activities for the year ending Dec 31, 2016 came in at $287.1 million, down from $293.1 million in the comparable prior-year period.

As of Dec 31, 2016, Outfront’s liquidity position comprised cash of $65.2 million as well as $393.3 million of availability under its $425 million revolving credit facility, net of $31.7 million of issued letters of credit against the revolving credit facility.

Segment Performance

The company has three operating segments, namely U.S. Billboard and Transit, which is included in the U.S. Media reportable segment, International and Sports Marketing, which are included in Other.

During the quarter, revenues at the U.S. media came in at $1.4 billion, highlighting an increase of 3.7% from a year ago. Rise in local revenues, an increase in average revenue per display (yield) and conversion of static billboards to digital attributed to this increase.

On the other hand, revenues at the Other segment plummeted 29.1% year over year to $120.1 million as a result of disposition of Latin America. This was partly offset by solid results in the company’s sports marketing operating segment.

Excluding stock-based compensation, corporate costs during the quarter were $42.6 million, up $4.8 million from the prior-year quarter.

Our Take

Going forward, the company’s huge diversity, both industry-wise and geographical, efforts to convert from traditional static billboard displays to digital billboard displays and low cost out-of-home platform augur well. However, cutthroat competition, dependence on the prospects of advertisers and any rise in interest rates remain concerns.

Outfront currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy)stocks here.

OUTFRONT Media Inc. Price, Consensus and EPS Surprise
 

OUTFRONT Media Inc. Price, Consensus and EPS Surprise | OUTFRONT Media Inc. Quote

Some real estate companies which are expected to report results next week include Mack-Cali Realty Corporation , EPR Properties (EPR - Free Report) and The St. Joe Company (JOE - Free Report) .

Note: All EPS numbers presented in this write-up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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