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OUTFRONT Media (OUT) Stock Rises on Q3 AFFO Beat, Revenues Up
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OUTFRONT Media Inc. (OUT - Free Report) reported adjusted funds from operations (AFFO) per share of 46 cents, surpassing the Zacks Consensus Estimate of 42 cents. Shares of the company have gained 11.4% in the Nov 3 normal trading session on the NYSE, reflecting positive broader market sentiments.
Higher billboard revenues in the quarter aided decent year-over-year top-line growth. However, higher interest expenses acted as a dampener.
Quarterly revenues came in at $454.8 million, lagging the Zacks Consensus Estimate of $458.9 million.
On a year-over-year basis, although revenues increased marginally, AFFO per share declined 13.2%.
According to Jeremy Male, chairman and CEO of OUTFRONT Media, "Third quarter revenues were up slightly as a result of higher billboard revenues and strength in our local business. We were also pleased to recently announce an agreement for the strategic sale of our Canadian business to Bell Media, which will provide us with additional financial flexibility as we move towards 2024.”
Quarter in Detail
During the reported quarter, billboard revenues were $363.6 million, reflecting year-over-year growth of 2.4%. 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 $91.2 million decreased 7.6% from the year-ago quarter. The fall was primarily due to the decrease in average revenues per display, partially offset by the impact of a new transit franchise contract.
OUTFRONT Media’s operating income totaled $58.6 million in the third quarter compared with an operating income of $74.3 million in the year-ago quarter.
Operating expenses were $239.8 million, which increased 3.1% 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 $40.2 million increased 19.6% from $33.6 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 Sep 30, 2023, was 5.5% compared with 4.9% in the prior-year period.
Cash Flow & Balance Sheet
Net cash flow provided by operating activities for the nine months ended Sep 30, 2023, was $149.2 million, which declined from $174.8 million in the prior-year period.
As of Sep 30, 2023, OUTFRONT Media’s liquidity position comprised unrestricted cash of $44.4 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 third-quarter earnings release, OUTFRONT Media announced its common stock quarterly cash dividend of 30 cents per share. The dividend will be paid out on Dec 29 to its shareholders of record as of Dec 1, 2023.
OUTFRONT Media Inc. Price, Consensus and EPS Surprise
Crown Castle Inc. (CCI - Free Report) reported a third-quarter 2023 AFFO per share of $1.77, which lagged the Zacks Consensus Estimate by a whisker. The reported figure declined 4.3% from the year-ago quarter.
Results reflect lower-than-anticipated revenues. Higher interest expense and lower contribution from adjusted EBITDA were undermining factors. While CCI maintained its outlook for 2023, it issued 2024 AFFO per share guidance below the consensus mark.
SBA Communications Corporation (SBAC - Free Report) reported third-quarter 2023 AFFO per share of $3.34, beating the Zacks Consensus Estimate of $3.23. The figure also reflects a rise of 7.4% 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 - Free Report) reported a third-quarter 2023 core funds from operations (FFO) per share of $1.62, in line with the Zacks Consensus Estimate.
Results reflected better-than-anticipated revenues, aided by strong enterprise leasing activity. The company registered operating revenues of $1.402 billion in the third quarter, surpassing the Zacks Consensus Estimate marginally. DLR also reported "same-capital" cash NOI growth of 9.4% in the third quarter.
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) Stock Rises on Q3 AFFO Beat, Revenues Up
OUTFRONT Media Inc. (OUT - Free Report) reported adjusted funds from operations (AFFO) per share of 46 cents, surpassing the Zacks Consensus Estimate of 42 cents. Shares of the company have gained 11.4% in the Nov 3 normal trading session on the NYSE, reflecting positive broader market sentiments.
Higher billboard revenues in the quarter aided decent year-over-year top-line growth. However, higher interest expenses acted as a dampener.
Quarterly revenues came in at $454.8 million, lagging the Zacks Consensus Estimate of $458.9 million.
On a year-over-year basis, although revenues increased marginally, AFFO per share declined 13.2%.
According to Jeremy Male, chairman and CEO of OUTFRONT Media, "Third quarter revenues were up slightly as a result of higher billboard revenues and strength in our local business. We were also pleased to recently announce an agreement for the strategic sale of our Canadian business to Bell Media, which will provide us with additional financial flexibility as we move towards 2024.”
Quarter in Detail
During the reported quarter, billboard revenues were $363.6 million, reflecting year-over-year growth of 2.4%. 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 $91.2 million decreased 7.6% from the year-ago quarter. The fall was primarily due to the decrease in average revenues per display, partially offset by the impact of a new transit franchise contract.
OUTFRONT Media’s operating income totaled $58.6 million in the third quarter compared with an operating income of $74.3 million in the year-ago quarter.
Operating expenses were $239.8 million, which increased 3.1% 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 $40.2 million increased 19.6% from $33.6 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 Sep 30, 2023, was 5.5% compared with 4.9% in the prior-year period.
Cash Flow & Balance Sheet
Net cash flow provided by operating activities for the nine months ended Sep 30, 2023, was $149.2 million, which declined from $174.8 million in the prior-year period.
As of Sep 30, 2023, OUTFRONT Media’s liquidity position comprised unrestricted cash of $44.4 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 third-quarter earnings release, OUTFRONT Media announced its common stock quarterly cash dividend of 30 cents per share. The dividend will be paid out on Dec 29 to its shareholders of record as of Dec 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 #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other REITs
Crown Castle Inc. (CCI - Free Report) reported a third-quarter 2023 AFFO per share of $1.77, which lagged the Zacks Consensus Estimate by a whisker. The reported figure declined 4.3% from the year-ago quarter.
Results reflect lower-than-anticipated revenues. Higher interest expense and lower contribution from adjusted EBITDA were undermining factors. While CCI maintained its outlook for 2023, it issued 2024 AFFO per share guidance below the consensus mark.
SBA Communications Corporation (SBAC - Free Report) reported third-quarter 2023 AFFO per share of $3.34, beating the Zacks Consensus Estimate of $3.23. The figure also reflects a rise of 7.4% 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 - Free Report) reported a third-quarter 2023 core funds from operations (FFO) per share of $1.62, in line with the Zacks Consensus Estimate.
Results reflected better-than-anticipated revenues, aided by strong enterprise leasing activity. The company registered operating revenues of $1.402 billion in the third quarter, surpassing the Zacks Consensus Estimate marginally. DLR also reported "same-capital" cash NOI growth of 9.4% in the third quarter.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.