OUTFRONT Media Reports Third Quarter 2016 Results

NEW YORK, Nov. 7, 2016 /PRNewswire/ -- OUTFRONT Media Inc. (NYSE: OUT) today reported results for the quarter ended September 30, 2016.

"Improving yields helped deliver 2.3% organic revenue growth in the third quarter, which translated into significantly higher OIBDA and AFFO growth. We expect 2016 AFFO to come in at - or slightly above - the top end of our guidance, while we continue to invest in our business," said Jeremy Male, Chairman and Chief Executive Officer of OUTFRONT Media. "We see national advertising improving in the fourth quarter, and are encouraged by the productive conversations we are having with our clients regarding their out-of-home advertising campaigns in 2017."

Third Quarter 2016 Results

Consolidated
Reported revenues of $382.8 million decreased $3.9 million, or 1.0%, for the third quarter of 2016 as compared to the same prior-year period.  On an organic basis, revenues of $380.4 million for the third quarter of 2016 were up 2.3% compared to the same prior-year period.

Reported billboard revenues of $270.5 million decreased $7.8 million, or 2.8%, due primarily to the disposition of the Company's outdoor advertising business in Latin America, partially offset by an increase in average revenue per display (yield) and increased revenues from the conversion of static billboards to digital.  On an organic basis, billboard revenues were up 1.8% compared to the same prior-year period due to U.S. increases in average revenue per display (yield) and growth attributable to the conversion of static billboards to digital.

Reported transit and other revenues of $112.3 million increased $3.9 million, or 3.6%, due to stronger U.S. market conditions in local advertising, the impact of an acquisition, and the net effect of won and lost franchises, offset partially by the disposition of our outdoor business in Latin America and a reduction in national advertising revenues. On an organic basis, transit and other revenues increased 3.6% over the same prior-year period.

Total Operating expenses of $201.5 million decreased $7.8 million, or 3.7%, due primarily to the disposition of Latin America (a decrease of $10.5 million).  Selling, General and Administrative expenses ("SG&A") of $65.1 million fell $2.1 million, or 3.1%, over the same prior-year period, primarily as a result of the disposition of Latin America (a decrease of $3.6 million) and lower professional fees, including non-recurring legal costs in 2015, partially offset by increased sales and other compensation-related expenses.

Reported Adjusted OIBDA of $120.7 million increased $6.8 million, or 6.0%.

Segment Results

We currently manage our operations through three operating segments — (1) U.S. Billboard and Transit, which is included in our U.S. Media reportable segment, (2) International and (3) Sports Marketing, which are included in other.

U.S. Media
Reported revenues of $356.7 million increased $10.4 million, or 3.0%, for the third quarter of 2016 as compared to the same prior-year period, reflecting increased local revenues, an increase in average revenue per display (yield) and growth attributable to conversion of static billboards to digital. On an organic basis, revenues were $354.3 million for the third quarter of 2016, an increase of 2.3% from the same prior-year period.  On an organic basis, billboard revenues were up 2.1% due to an increase in average revenue per display (yield) and growth attributable to conversion of static billboards to digital.  On an organic basis, transit and other revenues were up 2.8% compared to the same prior-year period, driven by stronger market conditions in local advertising, an increase in average revenue per display (yield), and the net effect of won and lost franchises, partially offset by a reduction in national advertising revenues.  Reported Adjusted OIBDA of $129.3 million increased $8.3 million, or 6.9%, compared to the same prior-year period.

Other
Reported revenues of $26.1 million decreased $14.3 million, or 35.4%, in the third quarter of 2016 as compared to the same prior-year period due primarily to the disposition of Latin America (a decrease of $14.9 million) and lower performance in Canada, partially offset by stronger results in our sports marketing operating segment.  On an organic basis, revenues were up 2.4%. Reported Adjusted OIBDA was $2.2 million in the third quarter of 2016 compared to $4.5 million in the same prior-year period.

Corporate
Corporate costs, excluding stock-based compensation, decreased $0.8 million to $10.8 million in the third quarter of 2016 compared to the same prior-year period.

Loss on Real Estate Assets Held for Sale
On April 1, 2016, we completed the sale of our equity interests in certain of our subsidiaries, which held all of the assets of our outdoor advertising business in Latin America.  On the Consolidated Statement of Operations, we recorded a loss on real estate assets held for sale of approximately $1.3 million in the nine months ended September 30, 2016.

Interest Expense
Net Interest expense in the third quarter of 2016 was $28.3 million, including amortization of deferred financing costs of $1.6 million. Net interest expense in the third quarter of 2015 was $28.9 million, including amortization of deferred financing costs of $1.5 million. The weighted average cost of debt at September 30, 2016, was 4.8%.

Income Taxes
The benefit for income taxes was $1.5 million in the third quarter of 2016 compared to a provision of $3.9 million in the third quarter of 2015.  This benefit for income taxes relates primarily to a decrease in our estimated annual effective tax rate, resulting from a revision to our estimated 2016 taxable REIT subsidiaries' taxable income.  Cash paid for income taxes in the nine months ended September 30, 2016 was $0.8 million.

Net Income
Net income was $38.1 million in the third quarter of 2016 as compared to $21.2 million in the same prior-year period, including a $1.5 million net loss in Latin America. Diluted weighted average shares outstanding were 138.5 million for the third quarter of 2016 and 137.9 million for the same prior-year period.  Net income per common share for diluted earnings per share was $0.28 for the third quarter of 2016 as compared to $0.15 in the same prior-year period.

FFO & AFFO
FFO was $81.9 million in the third quarter of 2016, an increase of $11.1 million from the same prior-year period, driven primarily by higher net income.  AFFO was $87.2 million in the third quarter of 2016, an increase of $18.0 million over the same prior-year period, due primarily to lower current income taxes, higher net income, decreased direct lease acquisition costs, lower maintenance capital expenditures and higher stock-based compensation. AFFO per diluted weighted average share was $0.63 in the third quarter of 2016 and $0.50 in the third quarter of 2015.

Cash Flow & Capital Expenditures
Net cash flow provided by operating activities of $200.7 million for the nine months ended September 30, 2016, increased $24.3 million compared to $176.4 million during the same prior-year period, primarily due to higher net income as adjusted for non-cash items. Total capital expenditures increased $2.6 million to $45.6 million for the nine months ended September 30, 2016.

Dividends
In the nine months ended September 30, 2016, the Company paid cash dividends of $141.7 million.  The Company announced on October 27, 2016 that its board of directors has approved a quarterly cash dividend on the Company's common stock of $0.34 per share payable on December 30, 2016, to shareholders of record at the close of business on December 9, 2016.

Balance Sheet and Liquidity
As of September 30, 2016, the Company's liquidity position included cash of $73.1 million and $393.3 million of availability under its $425.0 million revolving credit facility, net of $31.7 million of issued letters of credit against the revolving credit facility.  Total debt outstanding at September 30, 2016 was $2.2 billion, primarily consisting of a $688.9 million term loan and $1.5 billion of senior unsecured notes, net of discounts and premiums.  During the nine months ended September 30, 2016, the Company made aggregate discretionary payments of $60.0 million on its term loan. On October 31, 2016, the Company made an additional discretionary payment of $10.0 million on its term loan.

Conference Call
The Company will host a conference call to discuss the results on November 7, 2016 at 4:30 p.m. Eastern Time. The conference call numbers are 877-718-5107 (U.S. callers) and 719-325-4786 (International callers) and the passcode for both is 6639728.  Live and replay versions of the conference call will be webcast in the Investor Relations section of the Company's website, www.OUTFRONTmedia.com.

Supplemental Materials
In addition to this press release, the Company has provided a supplemental investor presentation which can be viewed on the Company's website, www.OUTFRONTmedia.com.

About OUTFRONT Media Inc.
OUTFRONT Media is one of the largest out-of-home media companies in North America with a leading presence in top markets throughout the United States and Canada. We have a diverse portfolio of billboard, transit and digital displays reaching mass audiences, as well as a distinct offering of prime assets impacting select markets. As part of our recently launched ON Smart Media platform, we are developing hardware and software solutions for enhanced demographic and location targeting, and engaging ways to connect with consumers on-the-go.

Non-GAAP Financial Measures
In 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 revenues on a constant dollar basis as reported revenues excluding the impact of foreign currency exchange rates between periods. We provide constant dollar revenues to understand the underlying growth rate of revenue excluding the impact of changes in foreign currency exchange rates between periods, which are not under management's direct control. Our management believes constant dollar revenues are useful to users of our financial data because it enables them to better understand the level of growth of our business period to period.  We calculate organic revenues as reported revenues excluding 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"). We provide organic revenues to understand the underlying growth rate of revenue excluding the impact of non-organic revenue items. Our management believes organic revenues are useful to users of our financial data because it enables them to better understand the level of growth of our business period to period.  We calculate and define "Adjusted OIBDA" as operating income (loss) before depreciation, amortization, net (gain) loss on dispositions, stock-based compensation, restructuring charges and loss on real estate assets held for sale. 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 (loss) adjusted to exclude gains and losses from the sale of real estate assets, depreciation and amortization of real estate assets, amortization of direct lease acquisition costs, the non-cash effect of loss on real estate assets held for sale and the same adjustments for our equity-based investments, as well as the related income tax effect of adjustments, as applicable. We calculate Adjusted AFFO ("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 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, as well as the related income tax effect of adjustments. 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 real estate investment trusts ("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 per weighted average share amounts, 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. Since constant dollar revenues, organic revenues, Adjusted OIBDA, Adjusted OIBDA margin, FFO and AFFO and, as applicable, related per weighted average share amounts, are not measures calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, revenues, operating income (loss), net income (loss) and net income (loss) per common share for basic and diluted earnings per share ("EPS"), 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.

Please see Exhibits 4-7 of this release for a reconciliation of the above non-GAAP financial measures to the most directly comparable GAAP financial measures.

Cautionary Statement Regarding Forward-Looking Statements
We 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 contracts 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; 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; cash available for distributions; hedging transactions; diverse risks in our international business; a breach of our security measures; failure to comply with regulations regarding privacy and data protection; 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; asset impairment charges for goodwill; our failure to remain qualified to be taxed as a REIT; 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; REIT ownership limits; 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 Internal Revenue Service (the "IRS") may deem the gains from sales of our outdoor advertising assets to be subject to a 100% prohibited transaction tax; establishing an operating partnership as part of our REIT structure; our limited operating history as a REIT; 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, 2015, filed with the SEC on February 29, 2016. 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.

EXHIBITS