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Outfront Media (OUT) Q1 FFO Matches Estimates, Down Y/Y

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Outfront Media Inc.’s (OUT - Free Report) first-quarter 2017 adjusted funds from operations (“FFO”) per share of 28 cents came in line with the Zacks Consensus Estimate. The figure, however, came lower than the year-ago quarter tally of 34 cents. Results reflected a weakness in national advertising market, mainly in the automotive category.

Revenues for the quarter came in at $330.6 million, marginally above the Zacks Consensus Estimate of $330.3 million. However, revenues declined 5.1% from the year-ago tally of $348.4 million.

Quarter in Detail

Billboard revenues of $236.0 million in the quarter indicated a decline of 5.8% year over year. Results reflect the disposition of the company's outdoor advertising business in Latin America, decline in average revenue per display (yield) mainly from a reduction in U.S. national advertising, the net effect of new and lost billboards in the period, and dismal performance in Canada. However, the negatives were partly offset by increased proceeds from condemnations and the conversion of static billboards to digital.

Transit and other revenues also decreased 3.5% from the prior-year quarter to $94.6 million. The decline was due to a reduction in U.S. national advertising revenues and the disposition of outdoor business in Latin America, partly mitigated by the net effect of won and lost franchises.

Operating expenses of $191.9 million contracted 4.0% year over year, mainly due to the disposition of Latin America business. However, it was partly offset by elevated expenses related to the company’s sports marketing operating segment.

Operating income during the reported quarter was $26.0 million, up 7.4% from the year-earlier quarter. Adjusted operating income before depreciation and amortization declined 9.0% year over year to $80.2 million.

Net cash flow resulting from operating activities for the three-month period ending Mar 31, 2017 came in at $32.2 million, down from $33.8 million recorded in the comparable period last year.

As of Mar 31, 2017, Outfront Media’s liquidity position comprised cash of $26.3 million, as well as $398.3 million of availability under its $430.0 million revolving credit facility, net of $31.7 million of issued letters of credit against the revolving credit facility.   

Our Take

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, challenging national advertising market, cut-throat competition and any rise in interest rates remain concerns.

Currently, Outfront Media carries 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 and EPS Surprise | OUTFRONT Media Inc. Quote

We are now looking forward to the earnings releases of Welltower Inc. , Mack-Cali Realty Corporation and Regency Centers Corporation (REG - Free Report) , all of which are expected to report their quarterly figures in the upcoming days.

Note: 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. All EPS numbers presented in this write up represent FFO per share.


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