OUTFRONT Media's (OUT) Q4 FFO & Revenues Beat Estimates

OUTFRONT Media, Inc. (NYSE:OUT) reported fourth-quarter 2018 funds from operations (FFO) per share of 68.8 cents, marginally surpassing the Zacks Consensus Estimate of 67 cents. Further, the figure comes in higher than the year-ago tally of 54.3 cents.

The company witnessed growth in billboard and transit revenues in its U.S. Media segment. However, operating expenses flared up on a year-over-year basis.

Revenues in the reported quarter came in at $452.4 million, comfortably beating the Zacks Consensus Estimate of $445.2 million. The top line also climbed 12.7% from the year-ago figure.

For full-year 2018, FFO per share of $2.16 improved 8% year over year. This was backed by 5.6% year-over-year growth in revenues to $1,606.2 million.

Quarter in Detail

Billboard revenues of $302.1 million in the quarter under review indicate a year-over-year increase of $25.7 million.

Transit and other revenues of $150.3 million were up $25.4 million from the prior-year quarter. The upside resulted from improvement in yield as well as the net effect of won and lost franchises during the quarter.

Operating expenses of $235.5 million increased 8.3% year over year, primarily on account of higher transit franchise expenses related to the addition of the Bay Area Rapid Transit franchise agreement, escalating posting, maintenance and other expenses, and billboard lease expense.

Operating income improved 30% year over year to $91.3 million.

Net cash flow, resulting from operating activities for the year ending Dec 31, 2018, came in at $214.3 million, down from the $249.3 million recorded in the comparable period last year. Results were affected primarily due to pre-paid equipment deployment costs under the MTA agreement.

As of Dec 31, 2018, OUTFRONT Media’s liquidity position comprised unrestricted cash of $52.7 million and $364 million of availability under its $430 million revolving credit facility, net of $66 million of issued letters of credit.

Dividend Update

On Feb 26, OUTFRONT Media announced quarterly common stock dividend of 36 cents per share. The dividend will be paid on Mar 29, to shareholders of record as of Mar 8, 2019.

Our Take

OUTFRONT Media has been solidifying its digital-billboard portfolio over the past few years through higher investments. For this, the company has resorted to acquisitions, swaps and conversion of traditional static-billboard displays to digital-billboard displays to focus on low-cost out-of-home (OOH) platform. These strategic moves will stoke the company’s growth.

Nonetheless, it faces intense competition from other outdoor advertisers. Interest-rate hikes add to its woes.

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.

Performance of Stocks in the Same Space

Extra Space Storage, Inc.’s (NYSE:EXR) fourth-quarter 2018 core FFO per share of $1.22 outpaced the Zacks Consensus Estimate of $1.20. The figure also came in 8.9% higher than the prior-year quarter.

PS Business Parks, Inc. (NYSE:PSB) reported fourth-quarter 2018 core FFO of $1.65 per share, beating the Zacks Consensus Estimate of $1.63. Also, the figure came in 8.6% higher than the prior year’s $1.52.

Lamar Advertising Company (NASDAQ:LAMR) posted fourth-quarter 2018 adjusted funds from operations (AFFO) of $1.48 per share, handily outpacing the Zacks Consensus Estimate of $1.41. This also marked a 7.2% increase from the year-ago tally of $1.38 per share.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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