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OUTFRONT Media (OUT) Misses Q1 AFFO Mark on Higher Expenses
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OUTFRONT Media Inc. (OUT - Free Report) reported first-quarter 2023 adjusted funds from operations (AFFO) per share of 5 cents, missing the Zacks Consensus Estimate of 16 cents. The figure was also lower than the prior-year quarter’s tally of 23 cents.
Results indicate higher operating expenses and interest expenses in the quarter. Reflecting the negative sentiments of investors, OUT shares lost 8.11% during the initial hours of today’s trading session.
Nonetheless, quarterly revenues of $395.8 million surpassed the Zacks Consensus Estimate of $383.8 million and climbed nearly 6% year over year. Higher billboard revenues contributed to this rise.
Quarter in Detail
During the reported quarter, billboard revenues were $320.6 million, reflecting year-over-year growth of 7.5%. The upside resulted mainly from the impact of new and lost billboards in the period, inclusive of acquisitions, higher proceeds from condemnations, and a rise in average revenues per display (referred to as yield).
The company’s transit and other revenues of $75.2 million decreased marginally from the year-ago quarter. This was primarily due to a fall in yield arising from weaker market conditions in national advertising and the impact of foreign currency exchange rates, partly offset by the impact of a new transit franchise contract.
OUTFRONT Media’s operating income totaled $10.2 million in the first quarter, plunging 64.2% from the year-ago quarter’s $28.5 million.
Operating expenses were $235.5 million, which increased 10.7% year over year. The rise was mostly due to an out-of-period adjustment of $5.2 million recorded in the first quarter, related to variable billboard property lease expenses and costs associated with higher billboard revenues. Also, greater guaranteed minimum annual payments to the New York Metropolitan Transportation Authority were a contributing factor.
Net interest expenses of $37.7 million increased from $30.7 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 Mar 31, 2023, was 5.4% compared with 4.3% in the prior-year period.
Cash Flow & Balance Sheet
Net cash flow provided by operating activities for the three months ended Mar 31, 2023, was $9.4 million, which declined from $20.5 million in the prior-year period.
As of Mar 31, 2023, OUTFRONT Media’s liquidity position comprised unrestricted cash of $42.8 million and $493.6 million of availability under its $500 million revolving credit facility, net of $6.4 million of issued letters of credit.
In the reported quarter, the company sold no shares of its common stock 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 first-quarter earnings release, OUTFRONT Media announced its common stock quarterly cash dividend of 30 cents per share. The dividend will be paid out on Jun 30 to its shareholders on record as of Jun 2, 2023.
Extra Space Storage Inc. (EXR - Free Report) reported first-quarter 2023 core FFO per share of $2.02, which missed the Zacks Consensus Estimate of $2.05.
EXR’s quarterly revenues of $503.1 million also lagged the Zacks Consensus Estimate of $513.7 million.
Results reflected lower-than-anticipated revenues on lower occupancy levels. Higher operating expenses acted as a dampener in the quarter. The company also maintained its 2023 outlook.
SBA Communications Corporation (SBAC - Free Report) reported first-quarter 2023 AFFO per share of $3.13, outpacing the Zacks Consensus Estimate of $3.11. Moreover, the figure reflects a rise of 5.7% 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.
Digital Realty Trust (DLR - Free Report) reported first-quarter 2023 core FFO per share of $1.66, beating the Zacks Consensus Estimate by a whisker. The figure, however, fell short of the year-ago quarter’s $1.67.
DLR experienced year-over-year growth in operating revenues during the quarter. However, rising rental property operating expenses acted as a dampener.
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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OUTFRONT Media (OUT) Misses Q1 AFFO Mark on Higher Expenses
OUTFRONT Media Inc. (OUT - Free Report) reported first-quarter 2023 adjusted funds from operations (AFFO) per share of 5 cents, missing the Zacks Consensus Estimate of 16 cents. The figure was also lower than the prior-year quarter’s tally of 23 cents.
Results indicate higher operating expenses and interest expenses in the quarter. Reflecting the negative sentiments of investors, OUT shares lost 8.11% during the initial hours of today’s trading session.
Nonetheless, quarterly revenues of $395.8 million surpassed the Zacks Consensus Estimate of $383.8 million and climbed nearly 6% year over year. Higher billboard revenues contributed to this rise.
Quarter in Detail
During the reported quarter, billboard revenues were $320.6 million, reflecting year-over-year growth of 7.5%. The upside resulted mainly from the impact of new and lost billboards in the period, inclusive of acquisitions, higher proceeds from condemnations, and a rise in average revenues per display (referred to as yield).
The company’s transit and other revenues of $75.2 million decreased marginally from the year-ago quarter. This was primarily due to a fall in yield arising from weaker market conditions in national advertising and the impact of foreign currency exchange rates, partly offset by the impact of a new transit franchise contract.
OUTFRONT Media’s operating income totaled $10.2 million in the first quarter, plunging 64.2% from the year-ago quarter’s $28.5 million.
Operating expenses were $235.5 million, which increased 10.7% year over year. The rise was mostly due to an out-of-period adjustment of $5.2 million recorded in the first quarter, related to variable billboard property lease expenses and costs associated with higher billboard revenues. Also, greater guaranteed minimum annual payments to the New York Metropolitan Transportation Authority were a contributing factor.
Net interest expenses of $37.7 million increased from $30.7 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 Mar 31, 2023, was 5.4% compared with 4.3% in the prior-year period.
Cash Flow & Balance Sheet
Net cash flow provided by operating activities for the three months ended Mar 31, 2023, was $9.4 million, which declined from $20.5 million in the prior-year period.
As of Mar 31, 2023, OUTFRONT Media’s liquidity position comprised unrestricted cash of $42.8 million and $493.6 million of availability under its $500 million revolving credit facility, net of $6.4 million of issued letters of credit.
In the reported quarter, the company sold no shares of its common stock 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 first-quarter earnings release, OUTFRONT Media announced its common stock quarterly cash dividend of 30 cents per share. The dividend will be paid out on Jun 30 to its shareholders on record as of Jun 2, 2023.
Currently, the company has a Zacks Rank #3 (Hold). 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-eps-surprise-chart | OUTFRONT Media Inc. Quote
Performance of Other REITs
Extra Space Storage Inc. (EXR - Free Report) reported first-quarter 2023 core FFO per share of $2.02, which missed the Zacks Consensus Estimate of $2.05.
EXR’s quarterly revenues of $503.1 million also lagged the Zacks Consensus Estimate of $513.7 million.
Results reflected lower-than-anticipated revenues on lower occupancy levels. Higher operating expenses acted as a dampener in the quarter. The company also maintained its 2023 outlook.
SBA Communications Corporation (SBAC - Free Report) reported first-quarter 2023 AFFO per share of $3.13, outpacing the Zacks Consensus Estimate of $3.11. Moreover, the figure reflects a rise of 5.7% 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.
Digital Realty Trust (DLR - Free Report) reported first-quarter 2023 core FFO per share of $1.66, beating the Zacks Consensus Estimate by a whisker. The figure, however, fell short of the year-ago quarter’s $1.67.
DLR experienced year-over-year growth in operating revenues during the quarter. However, rising rental property operating expenses acted as a dampener.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.