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TRANSCRIPT
OUTInvestorPresentationMarch 2016
2
Safe Harbor DisclaimerForward-Looking StatementsWe have made statements in this document that are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “would,” “may,” “might,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “projects,” “predicts,” “estimates,” “forecast” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions related to our capital resources, portfolio performance and results of operations. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise and may not be able to be realized. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: declines in advertising and general economic conditions; competition; government regulation; our inability to increase the number of digital advertising displays in our portfolio; taxes, fees and registration requirements; our ability to obtain and renew key municipal concessions on favorable terms; decreased government compensation for the removal of lawful billboards; content-based restrictions on outdoor advertising; environmental, health and safety laws and regulations; seasonal variations; acquisitions and other strategic transactions that we may pursue could have a negative effect on our results of operations; the sale of all of our equity interests in certain of our subsidiaries, which hold all of the assets of our Latin America business, could be delayed, modified or terminated due to, among other things, the failure to satisfy closing conditions, including regulatory approval; dependence on our management team and advertising executives; the ability of our board of directors to cause us to issue additional shares of stock without stockholder approval; certain provisions of Maryland law may limit the ability of a third party to acquire control of us; our rights and the rights of our stockholders to take action against our directors and officers are limited; our substantial indebtedness; restrictions in the agreements governing our indebtedness; incurrence of additional debt; interest rate risk exposure from our variable-rate indebtedness; our ability to generate cash to service our indebtedness; hedging transactions; establishing an operating partnership; asset impairment charges for goodwill; diverse risks in our international business; a breach of our security measures; failure to comply with regulations regarding privacy and data protection; failing to establish in a timely manner “OUTFRONT” as an independently recognized brand name with a strong reputation; the financial information included in our filings with the Securities and Exchange Commission (the “SEC”) may not be a reliable indicator of our future results; cash available for distributions; legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the Internal Revenue Service (the “IRS”); our failure to remain qualified to be taxed as a real estate investment trusts (“REITs”); REIT ownership limits; REIT distribution requirements; availability of external sources of capital; we may face other tax liabilities even if we remain qualified to be taxed as a REIT; complying with REIT requirements may cause us to liquidate investments or forgo otherwise attractive opportunities; our ability to contribute certain contracts to a taxable REIT subsidiary (“TRS”); our planned use of TRSs may cause us to fail to remain qualified to be taxed as a REIT; complying with REIT requirements may limit our ability to hedge effectively; failure to meet the REIT income tests as a result of receiving non-qualifying income; even if we remain qualified to be taxed as a REIT, and we sell assets, we could be subject to tax on any unrealized net built-in gains in the assets held before electing to be treated as a REIT; the IRS may deem the gains from sales of our outdoor advertising assets to be subject to a 100% prohibited transaction tax; our lack of an operating history as a REIT; we may not be able to engage in desirable strategic or capital-raising transactions as a result of our separation from CBS Corporation, and we could be liable for adverse tax consequences resulting from engaging in significant strategic or capital-raising transactions; and other factors described in our filings with the SEC, including but not limited to the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 6, 2015. All forward-looking statements in this document apply as of the date of this document or as of the date they were made and, except as required by applicable law, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors of new information, data or methods, future events or other changes.
Non-GAAP Financial MeasuresThis presentation includes certain non‐GAAP financial measures intended to supplement, not substitute for, comparable GAAP financial measures. Reconciliations of non‐GAAP financial measures to GAAP financial measures are provided in the Appendix of this presentation.
Prior period presentation conforms to current period reporting classifications. Numbers in this presentation may not sum due to rounding.
All pages in this presentation: Copyright © 2016 OUTFRONT Media Inc. All rights reserved.
SummaryAssetsREIT StructureMarket & CompetitionGrowth StrategyFinancialsAppendix
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1418283745
3
Summary
4
5
Investment Summary
Assets
6
7
Primary Asset Types
Bulletin
Digital Bulletin
Poster
Wall
Urban Panel
Bus Shelter
Rail
Bus
Transit Station
8
Simple Business Model
Client / TenantRevenues generated by leasing space on displays to advertising tenants who enter into contracts ranging from four weeks or less to one year.
9
Billboard Asset Components
ExtensionPhysical creative that extends beyond a display
IDUnique location and inventory number for the specific asset
StructureColumn or other support for the display; generally steel monopole or vertical support beams
Site LeaseGround or rooftop lease specific to display. Display permit and structure is owned by OUT
Ad CreativeDesigned for the exact size and proper resolution, printed on vinyl and attached by ratchets and tension clips. A photo of each billboard campaign when up and running is shown to client as “proof of performance”
CatwalkSupport structure held by outriggers for crews to change campaign creative; also supports lighting. Electricity comes in up the column or from overhead
HeadPhysical structure creating the face that a vinyl ad is attached to. Comprised of torsion bars, uprights, and stringers made of steel, fiberglass, or wood. May contain section panels onto which the vinyl is attached, or a hurricane frame with no panels. Skirting at the bottom hides the torsion bars and is where the “OUTFRONT” shield tag is located
10
Display Permit Assets
OUT owns the permit for each location• Competitive barrier to
entry
• Approximately 75%1
legal non-conforming
2
Own less than 10% of site locations
Approximately 23,000 leases with 18,500 landlords1
8 year life average• Majority have abate
and/or termination clauses for market weakness
• Small % have escalators
Note: 1) As of 12/31/2015; 2) Meaning they were legally constructed under laws in effect at the time they were built, but could not be constructed under current laws.
Permit & Display = OUT owned
Ground Site = Landlord
11
Transit Franchise Assets
Strategically complementary to billboard business in urban/suburban markets
Multi-Year contracts with municipalities: • Exclusive right to rent
space to advertisers• Renewals are generally
a competitive bidding process
Typical financial terms: • Revenue share• Minimum annual
guarantee• Generally no capital
expenditures as physical asset is owned by municipality
12
Digital Displays
Digital brings numerous benefits to advertisers• Rich media, interactivity,
location, flexibility
Digital billboard inventory: • 604 US 2015
1
• 100 built US 20152
Expect increase in smaller-scale digital displays • Transit / Urban• Networked• Synchronized• Full-motion
Note: 1) As of December 31, 2015; 2) As of December 31, 2015; excludes 6 sold in Puerto Rico.
13
Top-Market Asset Locations
Notes: Numbers may not sum due to rounding. Source data from OUT 10-K, December 31, 2015. 1) Transit & Other
MarketBillboard Transit1 Total Billboard Transit1 Total Billboard Transit1 Total
New York, NY 466 179,127 179,593 14.2% 56.0% 26.7% 37.6% 62.4% 100.0%Los Angeles, CA 4,710 40,598 45,308 15.6% 11.2% 14.3% 76.7% 23.3% 100.0%State of NJ 3,991 - 3,991 5.4% 0.0% 3.8% 100.0% 0.0% 100.0%Miami, FL 1,057 14,760 15,817 5.2% 4.5% 5.0% 73.4% 26.6% 100.0%Houston, TX 1,161 - 1,161 4.2% 0.0% 3.0% 100.0% 0.0% 100.0%Detroit, MI 2,313 12,953 15,266 3.8% 0.9% 3.0% 90.9% 9.1% 100.0%Washington D.C. 25 34,694 34,719 0.6% 10.1% 3.4% 11.5% 88.5% 100.0%San Francisco, CA 1,441 768 2,209 4.0% 0.7% 3.0% 93.0% 7.0% 100.0%Atlanta, GA 2,324 16,549 18,873 2.8% 3.1% 2.9% 67.6% 32.4% 100.0%Chicago, IL 1,070 744 1,814 3.7% 0.7% 2.8% 92.4% 7.6% 100.0%Dallas, TX 727 294 1,021 3.3% 0.5% 2.5% 93.9% 6.1% 100.0%Tampa, FL 1,628 - 1,628 3.2% 0.0% 2.2% 100.0% 0.0% 100.0%Phoenix, AZ 1,824 3,191 5,015 2.5% 1.7% 2.3% 77.7% 22.3% 100.0%Orlando, FL 1,546 - 1,546 2.4% 0.0% 1.7% 100.0% 0.0% 100.0%St. Louis, MO 1,440 - 1,440 1.7% 0.0% 1.2% 100.0% 0.0% 100.0%All other states 19,245 3,411 22,656 27.2% 10.6% 22.3% 85.9% 14.1% 100.0%Total US 44,968 307,089 352,057 100.0% 100.0% 100.0% 70.3% 29.7% 100.0%
Canada 5,833 4,054 9,887 50.0% 70.6% 53.7% 76.5% 23.5% 100.0%Mexico 4,329 74 4,403 31.5% 7.5% 27.2% 95.1% 4.9% 100.0%South America 2,141 4,658 6,799 18.5% 21.9% 19.1% 79.5% 20.5% 100.0%Total International 12,303 8,786 21,089 100.0% 100.0% 100.0% 82.1% 17.9% 100.0%
Displays % of Total Revenue Market Revenue Mix
REIT Structure
14
Agreement to sell Latin
America
Rebrand & ticker change to OUT
Van Wagner
acquisition closed
15
Timeline
IPO on March 28, 20141
Complete split-off of CBS 81% ownership on July 16, 2014
Began operating as a REIT as of July 17, 2014
REIT low corporate taxes benefit shareholders via higher amounts paid as dividends
Split-off from CBS
FTSE NAREIT
index inclusion
Began operating as a REIT
PLR received from IRS
CBSOIPO
CBSO debt financing
Apr16
Jan31
Mar28
Jul17
Jan1
20152014
Jul16
Oct1
Nov20
Nov2
Notes: 1) IPO commenced trading March 28, 2014 and completed on April 2, 2014.
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REIT Assets
Qualified REIT Subsidiary “QRS”
Taxable REIT Subsidiary “TRS”
US billboards
US fixed transit assets
100% of taxable income to be distributed to shareholders
International operations
US mobile transit assets
Residual cash may be used for reinvestment or debt repayment
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OUT vs. Other REITs
Sources: Company reports; REIT.com; 1) FactSet for OUT and Wireless Towers; Evercore ISI for traditional REITs; priced as of 2/26/2016.
OUTWireless Towers
Self-Storage Office
Regional Malls
Shopping Centers
Residential Apartments Lodging
REIT's Business Model
Leasing space to advertisers and wireless carriers on
owned structures
Leasing space to wireless
operators and broadcasters on
owned structures
Leasing space to individual and
business tenants in
owned facilities
Leasing space to businesses in office buildings
Leasing space to retailers in
shopping malls
Leasing space to retailers in
shopping centers and strip malls
Leasing space to consumers in
residential apartments
Leasing space to consumers in
hotels
Tenant's Objective
Reach consumer with advertising to drive sales
Provide best signal coverage to mobile users
Find space to store excess
goods
Find attractive space for business location
Retail store in attractive
demographic location
Retail store in attractive
demographic location
Find attractive space for residence
Find attractive space for short-
term stay
Assets Billboards, site permits, transit
franchises, land, land leases
Towers, shelters, land,
land leases
Buildings, land Buildings, land Buildings, land Buildings, land Buildings, land Buildings, land
Barrier to Entry High High Low Low Low Low Low Low
Key Differentiator
Location Location Location Location Location Location Location Location
Tenant Type Business Business Business & Consumer
Business Business Business Consumer Consumer
Tenant Lease Length
< 1 month to 12 months
5-10 years Monthly 10-12 years city, 5-7 years
suburban
7-10 years 3-5 years 1 year 1 night to several nights
Capex % Revenue
Under 5% total including 2% maintenance
2-3% 3-6% 11-13% 9-11% 8-9% 6-8% 8-12%
AFFO Multiple (2016) 1
14.8x 18.0x 25.4x 29.3x 21.2x 23.1x 21.8x 23.3x
Net Leverage 1 5.4x 5.5x 3.0x 8.0x 6.2x 6.3x 5.8x 3.2x
Market & Competition
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19
Long Term U.S. Growth Trends
Long-run outperformance of Out-of-Home (OOH) advertising1990 – 2015• GDP +2.3%• Media +3.0%• OOH +4.1%
Brief economic downturns followed by strong rebounds
Source: OAAA.org; US Dept. of Commerce Bureau of Economic Analysis (www.bea.gov); MAGNA GLOBAL.
(20%)
(18%)
(16%)
(14%)
(12%)
(10%)
(8%)
(6%)
(4%)
(2%)
–
2%
4%
6%
8%
10%
12%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
GDP vs. Media & OOH Revenue Growth
Real GDPAll MediaOOHPrint/Radio/TVOUT (US)
20
U.S. Ad Spending & Media Mix
Source: 1) MAGNA GLOBAL; 2) OAAA.org / Nielsen
Out-of-Home (OOH) continues to hold and grow share
Internet growth is fueled by mobile1
OOH is highly complementary to mobile• 70% of an adult’s day is
OOH2
• 69% of mobile usage is OOH
2
1994
1997
2000
2003
2006
2009
2012
2015
OOH
Internet
TV
Radio
$87B
$166B
4.3%
34.7%
14.1%
38.1%
8.8%
3.6%
53.5%
30.1%
12.7%
Share
Share
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U.S. Top 100 Advertiser Spending
Top 100 National advertisers spend differently than Local advertisers• OUT is 46% National,
54% Local1
Significant opportunity to increase OOH allocations. Top 10 by:• Total Ad $ = 2.7%• OOH $ = 5.6%• OOH % = 11.6%
6.0%
12.4%
19.7%
8.6%
53.3%
1.8%
4.3%
12.9%
6.0%
74.9%
OOH
Radio
Internet(Excl.
Search &Mobile)
TV
Media Allocation: Top 100 Advertisers vs. Market(excluding Search & Mobile)
Top 100
Total AdMarket
Note: This chart graphs two different data sets. The Top 100 is sourced from Kantar, which excludes Search and Mobile from its figures. The Total Ad Market is sourced from MAGNA GLOBAL estimates, which track the entire U.S. advertising market; Search and Mobile are subtracted from MAGNA GLOBAL’s Internet figures to make them more comparable to Kantar. 1) Twelve months ending December 31, 2015.
22
U.S. Top 20 Advertisers
Source: Kantar Media, Top 250 U.S. Advertisers, Year-to-Date (YTD) December 31, 2015.
Total Ad $ OOH $OOH
% ChgOOH %
Allocation Total Ad $ OOH $OOH
% ChgOOH %
Allocation
1 AT&T $1,261.0 $20.8 (6.2%) 1.6 1 McDonalds $802.8 $69.7 (1.1%) 8.72 Verizon $1,256.5 $47.7 39.1% 3.8 2 Apple $609.2 $59.2 (2.2%) 9.73 Geico $1,136.2 $25.1 (9.6%) 2.2 3 Verizon $1,256.5 $47.7 39.1% 3.84 Pfizer $1,069.4 $0.4 45.9% 0.0 4 Warner Bros. $826.0 $34.4 20.3% 4.25 Warner Bros. $826.0 $34.4 20.3% 4.2 5 Metro PCS $249.1 $33.7 (26.3%) 13.56 McDonalds $802.8 $69.7 (1.1%) 8.7 6 Coca-Cola $256.2 $28.7 30.2% 11.27 Ford $793.2 $13.8 927.6% 1.7 7 Universal Pictures $529.8 $25.2 48.5% 4.88 Chevrolet $779.5 $3.6 561.2% 0.5 8 Geico $1,136.2 $25.1 (9.6%) 2.29 T-Mobile $759.1 $21.0 43.7% 2.8 9 Chase $277.0 $24.5 (4.8%) 8.910 Sprint $736.8 $21.1 58.1% 2.9 10 Samsung $644.9 $21.3 0.4% 3.311 Nissan $714.0 $4.1 (65.3%) 0.6 11 Sprint $736.8 $21.1 58.1% 2.912 Macys $675.9 $3.6 (21.6%) 0.5 12 T-Mobile $759.1 $21.0 43.7% 2.813 Walmart $657.4 $1.1 (52.6%) 0.2 13 AT&T $1,261.0 $20.8 (6.2%) 1.614 Samsung $644.9 $21.3 0.4% 3.3 14 Citi $335.0 $20.6 (21.2%) 6.115 Apple $609.2 $59.2 (2.2%) 9.7 15 NBC $153.1 $19.7 (11.7%) 12.916 Microsoft $605.0 $19.5 158.3% 3.2 16 Microsoft $605.0 $19.5 158.3% 3.217 State Farm $585.2 $12.4 4.4% 2.1 17 Fox $120.4 $19.1 (9.0%) 15.918 Toyota $561.1 $3.8 (35.2%) 0.7 18 20th Century Fox $410.3 $17.8 (12.7%) 4.319 Progressive $546.4 $0.1 (91.9%) 0.0 19 HBO $84.1 $17.5 (4.7%) 20.820 Universal Pictures $529.8 $25.2 48.5% 4.8 20 Pepsi $171.1 $14.7 (7.8%) 8.6
Average 2.7% Average 7.5%
By Total Ad Spending Across All Media By Total OOH Spending
23
Where Some Brands Put Advertising
Source: Kantar Media, Top 250 U.S. Advertisers, Year-to-Date (YTD) December 31, 2015. Kantar data does not include Search or Mobile advertising expenditures.
9.7%5.7%
10.7%
1.6% 0.6% 0.5%
24
Client/Tenant Advertising Choices
Client/Tenant Buy Media Audience
OOH
Internet
TV
Radio
NAT
ION
AL
LOC
AL Direct
Local client buys direct from OUT salesforce
Advertising AgencyNational client selects an
advertising agency to select the optimal media allocation to best achieve the client’s goals. Both
covered by OUT’s national salesforce
25
Choosing OOH vs. Other Media
OOHInternet / Mobile TV Print Radio
Viewability100%, no ad-
blocking54% display ads non-viewable
2
DVR, channelchange,
streaming
Page flip, jump to editorial
Station change, streaming,
library
Audience1-to-many;
growing1-to-1;
growing1-to-many;shrinking
1-to-many;shrinking
1-to-many;shrinking
Medium sight, motionsight, motion,
soundsight, motion,
soundsight sound
Measurement
Today: TABFuture: OUT’s real-time location-based audience/actions
audience/actions ratings survey circulation data ratings survey
Cost (CPM)1
$4 $5 $19 $23 $13
Source: 1) OAAA.org; 2) OAAA.org / comScore Inc.
26
OUT Stable & Diverse Tenants
% of OUT Total US Revenues
Over 20,000 U.S. customers, none of which represented more than 2.2% of 2015 U.S. revenue
Notes: Van Wagner assets acquired October 1, 2014. Numbers may not sum due to rounding. Reflects current category presentation.
2007 2008 2009 2010 2011 2012 2013 2014 2015 Chg '07-'15
Retail 9% 9% 9% 9% 9% 10% 10% 10% 10% 0
Television 5 6 5 7 7 7 8 8 8 2
Health/Pharma 5 5 6 6 7 7 7 8 7 3
Entertainment 7 6 6 6 6 7 7 7 7 (0)
Professional Services 4 4 5 5 6 5 6 6 6 2
Restaurants/Fast Food 5 6 7 7 7 7 7 6 6 0
Telecom/Utilities 9 8 8 7 7 7 6 5 6 (3)
Computers/Internet 1 1 1 2 2 3 3 4 5 4
Financial Services 7 7 7 7 7 6 5 5 5 (1)
Auto 8 7 6 5 5 5 5 5 5 (3)
Movies 4 5 4 5 5 5 4 4 5 1
Casinos/Lottery 4 5 5 5 5 5 5 5 4 (0)
Travel/Leisure 5 5 5 5 5 5 4 4 4 (1)
Education 2 3 4 4 5 4 5 4 4 1
Beer/Liquor 5 5 5 5 5 4 5 4 4 (1)
Food/Beverage 2 3 4 3 3 3 3 3 3 1
Real Estate 7 4 3 2 2 1 1 2 2 (5)
Govt/Political 1 1 1 2 1 2 2 2 2 1
Household Products 1 1 1 1 1 1 1 1 1 0
Other 8 8 9 8 8 7 7 7 6 (2)Total 100% 100% 100% 100% 100% 100% 100% 100% 100%
TV, Ent. & Movies 20% 19% 19% 19% 19% 19% 19% 18% 17% (3)
27
OUT Repeat Clients/Tenants
Longstanding relationship
Multiple markets & formats
Integral to launch strategy
2007
2009
2011
2013
2014
2015
iPod iPad 2 iPhone 6/Watch
Apple TViPhone 5CiPod Touch
Growth Strategy
28
29
Growth Drivers
30
Performance Improvement
Invest in key strategic locations:• High Traffic Areas
• Transit Centers
• Retail Districts
• Iconic Locations
Sales and operational incentives aligned to maximize yield and profitability
Ongoing cost optimization
Pyramid of Quality – Audience, DMA, Location
OUT21%
Other35%
JCD4%
CCO19%
LAMR21%
31
Acquisitions
2015 U.S. Revenues 1 U.S. market is
highly fragmented
Strategic acquisition opportunities:
• Complementary assets in Top 25 DMAs
• “Other” category includes approximately 125 smaller, independent U.S. companies
• International
Notes: 1) OAAA; Company reports.
32
Cell Site Leasing
Leasing empty space on OUT assets to wireless carriers• 25,000 potential sites
• 1-3 wireless carriers per site
• Recurring, monthly rent under long-term lease
• No capital expenditures
Small-scale equipment
Carriers responsible for providing backhaul
$63.3
$57.7
$23.4
$14.7 $7.1
(16%)
(14%)
(12%)
(10%)
(8%)
(6%)
(4%)
(2%)
–
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
– 5% 10% 15% 20% 25% 30% 35% 40% 45%
Gro
wth
Rat
e Y
r/Y
r
U.S. Advertising Market Share
US Media Mix1 ($Billions)
OOH
Radio
Print TV
Internet
33
Market Share Shift
Create unique new products and processes to drive media allocation to OUT
OUTFRONT’s ON Smart Media:• Mobile ad integration
• Introducing advanced hardware with high-resolution, full motion video
• Building data management platform (DMP) with location-based audience data and agency workflow automation
Notes: 1) MAGNA GLOBAL, 2015E.
34
OUTFRONT Mobile
Location-based mobile ad tied to OOH campaign• Within a geo-fenced
area, relevant mobile ads are served to consumers who pass an OUT display
Drives strong secondary action rates
Advertiser measurement & analytics
Launched 4Q15
35
Data Management Platform
Consumer travel patterns and
behavior in the physical world
OUT’s proprietary Data Management
Platform will associate the data
to make it relational and
contextual
Audience profiles created from data
attributes
Audiences will be mapped to OUT
assets by day and time
OUT’s Salesforce and Ad Agency
buying platform for workflow
automation
Common currency of Impressions by
Audience and CPM by Product
Attributes
$
36
Advanced Digital Displays
A new screen for digital advertisers
Smart media displays will offer:• Engaging, full-motion,
high-definition video
• App-enablement
• Synchronization
• Livestream feeds
• Remote advertiser content control
Financials
37
38
Revenue Type & Location
Strategic Locations in Top Markets
Canada Mexico South America
Total Revenues1
Notes: 1) Twelve months ended December 31, 2015; 2) Announced on November 2, 2015.
72%
28%
Billboard
Transit
64%
27%
8%
US BillboardUS TransitIntl BillboardIntl Transit
Sale Pending2
39
Revenues
US is 91% of total1
and is composed of: • Local 54%• National 46%
US is 70% billboard and 30% transit1
International is 86% billboard and 14% transit1
$921 $972 $1,084
$373 $382$430
$1,294 $1,354 $1,514
2013 2014 2015
BillboardTransit
Notes: $ in millions. 1) Twelve months ended December 31, 2015. Van Wagner assets acquired October 1, 2014.
20.6% 21.6% 24.4%
15.2% 15.1%15.0%
17.3% 17.0% 15.6%
13.3% 13.4% 13.6%
1.6% 2.0% 2.5%68.5%
70.2% 72.1%
2013 2014 2015
40
Expenses
Expense trend reflects:• Incremental stand-alone
public company costs• Van Wagner acquisition
Oct. 1, 2014 with higher urban lease costs
• Strategic business development expenses
Different margin profiles1:• Billboard lease expense
= 34% of billboard revenue
• Transit franchise expense = 63% of transit revenues
Approximately 70% of costs are fixed
Notes: Expenses as a percent of Total Revenues. SG&A excludes Corporate and Stock-Based Compensation, which are shown separately. Expenses reflect Van Wagner assets acquired on October 1, 2014. 2013 and 2014 figures reflect revenue and expense reclassification to conform with current reporting initiated in 1Q15; 1) For the twelve months ending December 30, 2015.
41
Adjusted OIBDA
Recent margin performance reflects:• Weakness in higher-
margin US billboard results
• Strategic business development expenses
Expect improved billboard revenue to drive margin expansion
Notes: $ in millions. See Appendix for Non-GAAP reconciliations. Van Wagner assets acquired October 1, 2014.
$415 $413 $438
32.1% 30.5% 28.9%
2013 2014 2015
Adj. OIBDAAdj. OIBDA Margin
42
Capital Expenditures
Low overall capital intensity
Maintenance is less than half of total capex1
Stringent ROI thresholds on digital & growth
Transit capex is generally nominal
Notes: $ in millions. 1) LTM December 31, 2015; total capital expenditures as a percentage of total revenues. Van Wagner assets acquired October 1, 2014. Previously reported amounts have been revised to conform to the current presentation.
1.7%
2.2%
3.9%3.4%
3.8%
4.7% 4.7%
3.9%
2010 2011 2012 2013 2014 2015
Capex as a % of Total RevenueMaintenance Growth Total
43
Cash Flow & Dividend
Flow-through from Adjusted OIBDA is largest cash flow driver
Dividend policy in line with REIT structure• 90% required payout of
QRS taxable income as dividend
• OUT expects a payout of 100%+
Solid dividend1
payout ratios:• 71% of LTM AFFO
2
• 80% of LTM FCF2
Notes: $ in millions. 1) Excludes “top-up” special dividend paid in March 2015; 2) LTM regular cash dividends divided by LTM Free Cash Flow (“FCF”) or Adjusted Funds From Operations (“AFFO”), as applicable; see Appendix for Non-GAAP reconciliations.
$267$234
$188
2015
AFFOFree Cash FlowRegular Cash Dividends
44
Balance Sheet & Liquidity
2015Cash $101.6
Total Cash & Equivalents $101.6Debt $425M Revolving Credit 2019 0.0 Sr. Secured Term Loan 2021 748.6 5.250% Sr. Notes 2022 549.4 5.625% Sr. Notes 2024 503.4 5.875% Sr. Notes 2025 450.0 Other 0.3Total Debt $2,251.7
Weighted Average Cost of Debt 4.7%Net Leverage Ratio 1 4.8x
$495.4M of liquidity2
• $101.6M cash• $393.8M availability on
$425.0M revolving credit facility, net of $31.2M letters of credit outstanding
Attractively priced debt structure• 4.7% WACD• 67% fixed, 33% floating
Leverage target range of 3.5x-4.0x net debt
Notes: $ Millions unless per share or otherwise stated. 1) Calculated as Total Debt less Total Cash & Equivalents divided by LTM “Consolidated EBITDA” as defined in the Credit Agreement governing the Company’s senior credit facilities; 2) As of December 31, 2015.
Appendix
45
46
Non-GAAP ReconciliationsNon-GAAP Financial MeasuresIn addition to the results prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) provided throughout this document, this document and the accompanying tables include non-GAAP financial measures as described below. We calculate and define “Adjusted OIBDA” as operating income before depreciation, amortization, net (gains) losses on dispositions, stock-based compensation, restructuring charges and costs related to our acquisition of certain outdoor advertising businesses of Van Wagner Communications, LLC (the “Acquisition”). We calculate Adjusted OIBDA margin by dividing Adjusted OIBDA by total revenues. Adjusted OIBDA and Adjusted OIBDA margin are among the primary measures we use for managing our business, evaluating our operating performance and planning and forecasting future periods, as each is an important indicator of our operational strength and business performance. Our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing, planning and executing our business strategy. Our management also believes that the presentations of Adjusted OIBDA and Adjusted OIBDA margin, as supplemental measures, are useful in evaluating our business because eliminating certain non-comparable items highlight operational trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. It is management’s opinion that these supplemental measures provide users of our financial data with an important perspective on our operating performance and also make it easier for users of our financial data to compare our results with other companies that have different financing and capital structures or tax rates. We calculate Funds from Operations (“FFO”) in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO reflects net income adjusted to exclude gains and losses from the sale of real estate assets, depreciation and amortization of real estate assets and amortization of direct lease acquisition costs, as well as the same adjustments for our equity based investments, as applicable. We calculate Adjusted FFO (“AFFO”) as FFO adjusted to include cash paid for direct lease acquisition costs as such costs are generally amortized over a period ranging from four weeks to one year and therefore are incurred on a regular basis. AFFO also includes cash paid for maintenance capital expenditures since these are routine uses of cash that are necessary for our operations. In addition, AFFO excludes costs related to the Acquisition and restructuring charges, as well as certain non-cash items, including non-real estate depreciation and amortization, deferred income taxes, stock-based compensation expense, accretion expense, the non-cash effect of straight-line rent and amortization of deferred financing costs. We use FFO and AFFO measures for managing our business and for planning and forecasting future periods, and each is an important indicator of our operational strength and business performance, especially compared to other REITs. Our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing, planning and executing our business strategy. Our management also believes that the presentations of FFO, AFFO, and related dividend payout ratios, as supplemental measures, are useful in evaluating our business because adjusting results to reflect items that have more bearing on the operating performance of REITs highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. It is management’s opinion that these supplemental measures provide users of our financial data with an important perspective on our operating performance and also make it easier to compare our results to other companies in our industry, as well as to REITs. We calculate Free Cash Flow (“FCF”) as net cash flow provided by operating activities less capital expenditures plus cash taxes related to our REIT conversion. We use FCF for managing our business, including evaluating cash available for dividends, debt service and strategic investments and acquisitions. Our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing, planning and executing our business strategy. It is management’s opinion that this supplemental measure provides users of our financial data with an important perspective on our operating performance and also makes it easier to compare our results to other companies in our industry, as well as to REITs. Our management believes these adjusted presentations are useful in evaluating our business because they allow users of our financial data to compare our operating performance for the periods presented, taking into account certain significant costs arising as a result of our separation from CBS Corporation and the Acquisition, as well as the REIT tax treatment that would have applied had we been operating as a REIT for the periods presented. Since Adjusted OIBDA, Adjusted OIBDA margin, FFO, AFFO, FCF and related dividend payout ratios, are not measures calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, operating income, net income and net cash flow provided by operating activities, the most directly comparable GAAP financial measures, as indicators of operating performance. These measures, as we calculate them, may not be comparable to similarly titled measures employed by other companies. In addition, these measures do not necessarily represent funds available for discretionary use and are not necessarily a measure of our ability to fund our cash needs.
47
Reconciliations
($ in millions)December 31,
2013December 31,
2014December 31,
2015December 31,
2014March 31,
2015June 30,
2015September 30,
2015December 31,
2015
Revenues Billboard 920.9$ 971.5$ 1,084.3$ 282.5$ 246.9$ 280.1$ 278.3$ 279.0$ Transit & Other 373.1 382.3 429.5 112.5 97.0 104.6 108.4 119.5Total revenues 1,294.0$ 1,353.8$ 1,513.8$ 395.0$ 395.0$ 395.0$ 395.0$ 395.0$
US Billboard 780.0 838.4 969.8 249.2 221.1 246.9 250.3 251.5 US Transit & Other 350.1 360.4 410.5 107.2 92.8 99.2 103.6 114.9 US Total Revenues 1,130.1 1,198.8 1,380.3 356.4 313.9 346.1 353.9 366.4
INTL Billboard 140.9 133.1 114.5 33.3 25.8 33.2 28.0 27.5 INTL Transit & Other 23.0 21.9 19.0 5.3 4.2 5.4 4.8 4.6 INTL Total Revenues 163.9 155.0 133.5 38.6 30.0 38.6 32.8 32.1
Operating income 238.8$ 183.1$ 86.4$ 50.5$ 26.6$ 54.6$ 52.7$ (47.5)$ Restructuring charges — 9.8 2.6 3.6 0.6 2. — —Acquisitions costs — 10.4 — 9.0 — — — —Loss on real estate assets held for sale — — 103.6 — — — — 103.6Net (gain) loss on dispositions (27.3) (2.5) 0.7 (1.1) (0.3) 0.9 — 0.1Depreciation & Amortization 195.8 202.2 229.1 55.6 56.5 57.2 57.5 57.9Stock-based compensation 7.5 10.4 15.2 3.0 3.6 4.4 3.7 3.5Adjusted OIBDA 414.8$ 413.4$ 437.6$ 120.6$ 87.0$ 119.1$ 113.9$ 117.6$
Adjusted OIBDA margin 32.1% 30.5% 28.9% 30.5% 22.0% 30.2% 28.8% 29.8%
Net income 143.5$ 306.9$ (29.4)$ 27.8$ 1.1$ 22.2$ 21.2$ (73.9)$ Depreciation of billboard advertising structures 97.5 99.6 104.9 26.0 26.8 25.8 26.1 26.2Amortization of real estate related intangible assets 43.2 44.9 55.8 12.7 14.4 14.2 13.9 13.3Amortization of direct lease acquisition costs 30.9 33.8 36.3 9.6 7.5 9.2 9.4 10.2Loss on real estate assets held for sale — — 103.6 — — — — —Net (gain) loss on disposition of billboard advertising structures, net of tax (16.4) (2.1) 0.3 (1.7) (0.3) 0.5 — 103.7Adjustment related to equity-based investments 0.8 0.8 0.7 0.2 0.4 — 0.2 0.1FFO 299.5$ 483.9$ 272.2$ 74.6$ 49.9$ 71.9$ 70.8$ 79.6$
Three Months EndedTwelve Months Ended
48
Reconciliations
Year Ended December 31, 2015 (in millions, except percentages) U.S. International Corporate Consolidated Revenues:
Billboard $ 969.8 $ 114.5 $ — $ 1,084.3 Transit and other 410.5 19.0 — 429.5
Total revenues $ 1,380.3 $ 133.5 $ — $ 1,513.8 Organic revenues(b)
Billboard $ 790.5 $ 114.5 $ — $ 905.0 Transit and other 391.3 19.0 — 410.3
Total organic revenues(b) $ 1,181.8 $ 133.5 $ — $ 1,315.3 Non-organic revenues(c):
Billboard $ 179.3 $ — $ — $ 179.3 Transit and other 19.2 — — 19.2 Total non-organic revenues(c) $ 198.5 $ — $ — $ 198.5
Operating income (loss) $ 251.3 $ (111.9 ) $ (53.0 ) $ 86.4 Restructuring charges 2.6 — — 2.6 Loss on real estate assets held for sale — 103.6 — 103.6 Net loss on dispositions 0.6 0.1 — 0.7 Depreciation and amortization 205.1 24.0 — 229.1 Stock-based compensation — — 15.2 15.2
Adjusted OIBDA $ 459.6 $ 15.8 $ (37.8 ) $ 437.6 Adjusted OIBDA margin 33.3 % 11.8 % * 28.9 % Capital expenditures $ 53.3 $ 5.9 $ — $ 59.2
49
Reconciliations
Notes: a) Adjustment to reflect costs related to the Acquisition.
($ in millions)December 31,
2013December 31,
2014December 31,
2015December 31,
2014March 31,
2015June 30,
2015September 30,
2015December 31,
2015
Adjusted OIBDA 414.8$ 413.4$ 437.6$ 120.6$ 87.0$ 119.1$ 113.9$ 117.6$ Interest expenses, net of deferred financing fees — (72.7) (108.5) (26.1) (26.3) (27.5) (27.4) (27.3)Current taxes (g) (116.) (44.9) (8.) (2.) 1. (5.9) (3.1) —REIT Tax Adjustment (h) — 40.8 — — — — — —Cash paid for direct lease acquisition costs (31.6) (32.8) (35.9) (8.5) (7.9) (9.2) (9.4) (9.4)Maintenance capital expenditures (23.7) (23.3) (25.6) (7.9) (6.5) (6.6) (7.4) (5.1)Incremental stand-alone costs, net of tax (i) — (6) — — — — — —Equity earnings of investee companies, net of tax 2.5 2.9 4.8 1.5 0.8 1.1 1.7 1.2Adjustment related to equity-based investments 0.8 0.8 0.7 0.2 0.4 — 0.2 0.1Non-cash effect of straight-line rent 1.2 (0.2) (0.3) 0.5 0.4 (0.1) 0.4 (1.0)Accretion expense 2.2 2.3 2.5 0.6 0.6 0.6 0.7 0.6Other income (expense) 9.7 (6.1) (0.5) (0.1) — (0.1) (0.4) —AFFO on a REIT-comparable basis 259.9$ 274.5$ 266.8$ 78.8$ 49.5$ 71.4$ 69.2$ 76.7$
Three Months EndedTwelve Months Ended
50
Reconciliations Three Months Ended Year Ended December 31, December 31, (in millions, except per share amounts) 2015 2014 2015 2014 Net income (loss) $ (73.9 ) $ 27.8 $ (29.4 ) $ 306.9
Depreciation of billboard advertising structures 26.2 26.0 104.9 99.6 Amortization of real estate related intangible assets 13.3 12.7 55.8 44.9 Amortization of direct lease acquisition costs 10.2 9.6 36.3 33.8 Loss on real estate assets held for sale 103.6 — 103.6 — Net (gain) loss on disposition of billboard advertising
structures, net of tax 0.1 (1.7 ) 0.3
(2.1 )
Adjustment related to equity-based investments 0.1 0.2 0.7 0.8 FFO 79.6 74.6 272.2 483.9
Restructuring charges, net of tax — 3.0 2.0 8.6 Acquisition costs, net of tax(i) — 7.8 — 9.1 Income tax benefit from reversal of deferred tax
liabilities due to REIT conversion(k) — (3.3 ) —
(235.6 )
Incremental stand-alone costs, net of tax(h) — (0.3 ) — (5.7 ) Adjustment to interest expense, net of tax(j) — — — 1.4 REIT tax adjustment(k) — — — 25.3
FFO on a REIT-comparable basis $ 79.6 $ 81.8 $ 274.2 $ 287.0 FFO per weighted average share outstanding(l):
Basic $ 0.58 $ 0.62 $ 1.98 $ 4.23 Diluted $ 0.58 $ 0.62 $ 1.98 $ 4.22
FFO on a REIT-comparable basis, per adjusted weighted average share(a)(m)(n): Basic $ 0.58 $ 0.60 $ 2.00 $ 2.10 Diluted $ 0.58 $ 0.60 $ 2.00 $ 2.09
FFO $ 79.6 $ 74.6 $ 272.2 $ 483.9 Adjustment for deferred income taxes (1.6 ) (3.1 ) (1.7 ) (249.5 ) Cash paid for direct lease acquisition costs (9.4 ) (8.5 ) (35.9 ) (32.8 ) Maintenance capital expenditures (5.1 ) (7.9 ) (25.6 ) (23.3 ) Restructuring charges - severance, net of tax — 1.3 2.0 3.7 Acquisition costs, net of tax(i) — 7.8 — 9.1 Other depreciation 2.4 1.9 8.8 7.6 Other amortization 5.8 5.4 23.3 16.3 Stock-based compensation 3.5 5.1 15.2 16.0 Non-cash effect of straight-line rent (1.0 ) 0.5 (0.3 ) (0.2 ) Accretion expense 0.6 0.6 2.5 2.3 Amortization of deferred financing costs 1.9 1.4 6.3 12.1
AFFO 76.7 79.1 266.8 245.2 Incremental stand-alone costs, net of tax(h) — (0.3 ) — (5.7 ) Adjustment to interest expense, net of tax(j) — — — 1.4 Incremental amortization of deferred financing costs — — — (7.2 ) REIT tax adjustment(k) — — — 40.8
AFFO on a REIT-comparable basis $ 76.7 $ 78.8 $ 266.8 $ 274.5 AFFO per weighted average share outstanding(l):
Basic $ 0.56 $ 0.66 $ 1.94 $ 2.15 Diluted $ 0.56 $ 0.66 $ 1.94 $ 2.14
AFFO on a REIT-comparable basis, per adjusted weighted average share(a)(m)(n): Basic $ 0.56 $ 0.58 $ 1.94 $ 2.01 Diluted $ 0.56 $ 0.57 $ 1.94 $ 2.00
51
Reconciliations
Net cash flow provided by operating activities $ 293.1
Capital expenditures (59.2)
Free Cash Flow $ 233.9
2015($ in millions)
December 31,
Twelve Months Ended
52
ReconciliationsPRIOR PERIOD PRESENTATION CONFORMS TO CURRENT REPORTING CLASSIFICATIONS. (a) Adjusted weighted average shares include the 23.0 million shares issued in connection with the IPO, the 97.0 million shares
outstanding after our stock split, and the 16.5 million shares issued as a special dividend in connection with our conversion to a REIT for basic EPS. Adjusted weighted average shares for diluted EPS also include dilutive potential shares from grants of RSUs, PRSUs, and stock options.
(b) Organic revenues exclude revenues associated with significant acquisitions and divestitures, revenues associated with business lines we no longer operate, and the impact of foreign currency exchange rates ("non-organic revenues"). For the three months ended December 31, 2015 and 2014 only, organic revenues includes revenues generated by the outdoor advertising businesses of Van Wagner Communications, LLC, which we acquired on October 1, 2014, and therefore owned in both periods.
(c) Includes $0.8 million for the three months ended December 31, 2015, and $198.5 million for the year ended December 31, 2015, primarily related to acquisitions. Includes $13.8 million for the three months ended December 31, 2014, and $86.5 million for the year ended December 31, 2014, primarily related to the impact of foreign currency exchange rates.
(d) Revenues on a constant dollar basis are calculated as reported revenues excluding the impact of foreign currency exchange rates between periods.
(e) Adjustment to exclude net (gain) loss on dispositions. (f) Adjustment to exclude restructuring charges. (g) Adjustment to exclude loss on real estate assets held for sale. (h) Adjustment to reflect incremental costs to operate as a stand-alone company at the same level as 2015. (i) Adjustment to reflect costs related to the Acquisition. (j) Adjustment to reflect interest expense, net of tax, to include one month of amortization of deferred financing costs incurred in 2015
relating to our entry into the Term Loan, the $425.0 million revolving credit facility and the issuance of $800.0 million of senior unsecured notes on January 31, 2014, and amortization of deferred financing costs incurred in 2014, related to an unused lender commitment to provide a senior unsecured bridge term loan facility associated with the Acquisition.
(k) Adjustment to reflect tax balances as if we had been operating as a REIT for all respective periods. (l) Weighted average shares outstanding for basic and diluted EPS was 137.6 million shares for the three months ended December 31,
2015. Weighted average shares outstanding for basic EPS was 120.2 million shares and was 120.7 million shares for diluted EPS for the three months ended December 31, 2014. Weighted average shares outstanding for basic and diluted EPS was 137.3 million shares for the year ended December 31, 2015. Weighted average shares outstanding for basic EPS was 114.3 million shares and was 114.8 million shares for diluted EPS for the year ended December 31, 2014.
(m) Adjusted weighted average shares for basic EPS reflects 137.6 million shares and for diluted EPS, reflects 137.6 million shares for the three months ended December 31, 2015. Adjusted weighted average shares for basic EPS reflects 136.6 million shares and for diluted EPS, reflects 137.1 million shares for the three months ended December 31, 2014. Adjusted weighted average shares for basic EPS reflects 137.3 million shares and for diluted EPS, reflects 137.3 million shares for the year ended December 31, 2015. Adjusted weighted average shares for basic EPS reflects 136.5 million shares and for diluted EPS, reflects 137.0 million shares for the year ended December 31, 2014. Dilutive EPS includes dilutive potential shares from grants of RSUs, PRSUs, and stock options, as applicable.
(n) On March 14, 2014, our board of directors declared a 970,000 to 1 stock split. As a result of the stock split, the 100 shares of our common stock then outstanding were converted into 97,000,000 shares of our common stock. The effects of the stock split have been applied retroactively for EPS purposes.
* Calculation not meaningful
About OUTFRONT Media Inc.
OUTFRONT Media Inc. (NYSE: OUT)is one of the largest out-of-homemedia companies in the United Statesand Canada. With a diverse assetportfolio of billboard, transit, anddigital properties in prime, iconiclocations, OUTFRONT Media deliversselect audiences and location-basedtargeting for advertisers, as well asengaging ways to connect withincreasingly mobile consumers.www.OUTFRONTmedia.com