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OUTFRONT Media (OUT) Q4 FFO Misses Estimates on Higher Expenses

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Shares of OUTFRONT Media Inc. (OUT - Free Report) witnessed an 11.3% rise in the after-hours trading session on Feb 21 after it reported fourth-quarter 2023 adjusted funds from operations (AFFO) per share of 62 cents, missing the Zacks Consensus Estimate of 64 cents.

Results were affected by a rise in interest expenses. However, higher billboard revenues in the quarter aided year-over-year top-line growth.

Quarterly revenues came in at $501.2 million, lagging the Zacks Consensus Estimate of $496.2 million.

On a year-over-year basis, revenues and AFFO per share increased 1.3% and 10.7%, respectively.

According to Jeremy Male, chairman and CEO of OUTFRONT Media, "We were pleased to finish the year with our fourth quarter revenues at the higher end of guidance as a result of strength in our local business and automated sales channels, which offset the headwind created by the media strikes. While it is still early in 2024, our business is accelerating and we expect that OUTFRONT, and the entire out-of-home industry, will benefit from a strong media market this year.”

For the full-year 2023, AFFO per share came in at $1.64, lower than the prior-year tally of $1.92 but beating the Zacks Consensus Estimate of $1.63. However, the revenues increased 2.7% to $1.82 billion, which was in line with the consensus mark.

Quarter in Detail

During the reported quarter, billboard revenues were $389.1 million, reflecting year-over-year growth of 3.1%. The upside resulted mainly from the impact of programmatic and direct sale advertising platforms on digital billboard revenues and the impact of new and lost billboards in the period, inclusive of acquisitions and higher proceeds from condemnations.

The company’s transit and other revenues of $112.1 million decreased 4.4% from the year-ago quarter. The fall was primarily due to the decrease in average revenues per display (referred to as yield), partially offset by the impact of a new transit franchise contract.

OUTFRONT Media’s operating income totaled $111 million in the fourth quarter compared with an operating income of $105 million in the year-ago quarter.

Operating expenses were $247.1 million, which increased 3.2% year over year. The rise was mostly due to higher billboard property lease expenses.

Net interest expenses of $40.8 million increased 13.6% from $35.9 million in the prior-year period, mainly due to higher interest rates compared with the year-ago quarter and a greater debt balance. The weighted average cost of debt, as of Dec 31, 2023, was 5.7% compared with 5.2% in the prior-year period.

Cash Flow & Balance Sheet

Net cash flow provided by operating activities for the year ended Dec 31, 2023, was $254.2 million, which increased from $254.1 million in the prior-year period.

As of Dec 31, 2023, OUTFRONT Media’s liquidity position comprised unrestricted cash of $36 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 fourth-quarter earnings release, OUTFRONT Media announced its common stock quarterly cash dividend of 30 cents per share. The dividend will be paid out on Mar 28 to its shareholders of record as of Mar 1, 2024.

OUTFRONT Media Inc. Price, Consensus and EPS Surprise

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 #4 (Sell).

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

Performance of Other REITs

Healthpeak Properties, Inc. reported fourth-quarter 2023 FFO as adjusted per share of 46 cents, beating the Zacks Consensus Estimate by a whisker. The reported figure rose 4.5% from the prior-year quarter.

Results reflect better-than-anticipated revenues. Moreover, growth in same-store portfolio cash (adjusted) NOI was witnessed across the portfolio. PEAK also issued its 2024 outlook.

Highwoods Properties Inc. (HIW - Free Report) reported fourth-quarter 2023 funds from operations (FFO) per share of 99 cents, outpacing the Zacks Consensus Estimate of 91 cents. The figure was also above the prior-year quarter’s 96 cents.

HIW’s quarterly results reflect rent growth. However, a fall in occupancy and higher operating expenses acted as dampeners. It also issued its outlook for 2024.

Cousins Properties’ (CUZ - Free Report) fourth-quarter 2023 FFO per share of 65 cents was in line with the Zacks Consensus Estimate.

Results reflect year-over-year growth in the top line, aided by healthy leasing activity, a rise in occupancy levels, and a decent improvement in second-generation net rent per square foot. However, higher same-property rental property operating expenses are a headwind in the quarter. CUZ also issued its 2024 outlook for FFO per share.

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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