Good day, and welcome to the OUTFRONT Media Third Quarter 2021 Earnings Conference Call. At this time, I would like to turn the conference over to Linda Murad, Vice President of Financial Planning and Analysis. Please go ahead.

Good afternoon, and thank you for joining our 2021 Third Quarter Earnings Call. With me on the call today are Jeremy Male, Chairman and Chief Executive Officer; and Matthew Siegel, Executive Vice President and Chief Financial Officer. After a discussion of our financial results, we'll open the lines up for a question-and-answer session. Our comments today will refer to the earnings release and the slide presentation that you can find in the Investor Relations section of our website, outfrontmedia.com. After today's call is concluded, an audio archive will be available there as well. This conference call may include forward-looking statements. Relevant factors that can cause actual results to differ materially from these forward-looking statements are listed in our earnings materials and in our SEC filings, including our 2020 Form 10-K, our second quarter 2021 Form 10-Q and our September 30, 2021 Form 10-Q, which should be filed tomorrow. We will refer to certain non-GAAP financial measures on this call. Any references to OIBDA made today will be on an adjusted basis. Reconciliations of OIBDA and other non-GAAP financial measures are in the appendix of the slide presentation, the earnings release and on our website, which also includes presentations with prior period reconciliations. Let me now turn the call over to Jeremy.

Thanks, Linda, and thanks to you all for joining us today. I'm excited to be on this call and sharing the results of our continued recovery and the positive outlook we have for our business. This quarter, we've had a key milestone with our billboard revenues surpassing our 2019 third quarter level and transit showing very steep quarterly growth. As you can see on Slide 3, total revenue grew 41%, which was again above our expectations. This impressive growth was across the board with U.S. billboard up 32% from last year and transit revenue up 95% from last year, markedly higher than our earlier expectations. Our recovery was initially led by our midsized markets, and we are now seeing acceleration across all of our regions with very few exceptions. While transit isn't yet back to 2019 levels, we are encouraged by ridership gains and national advertiser interest in reaching the millions of people who utilize our various franchises. It's good to see that our key transit markets revenue return is starting to over-index the gradual ridership recovery. This revenue improvement carries through our financial statements as OIBDA and AFFO posted growth rates well above our revenue growth percentage. With this performance and current Q4 visibility, we now feel confident we will outperform our previous full year guidance by a significant margin, and we expect this momentum to continue into next year. I'll leave Matt to give you more details on that good news in a few minutes. Let's turn to Slide 4 for a more detailed look at our U.S. Media revenues. As mentioned earlier, billboard revenues were up 32%, reaching 102% of third quarter 2019 level. Transit revenues were up 96%, almost double the third quarter of 2020, which was heavily impacted by the pandemic. Transit ridership in New York City and Boston has now passed 50% of equivalent 2019 levels with return to school and people starting to return to their offices again. This improvement in audience has driven a steady improvement in revenue. Turning to Slide 5 and to look at U.S. sources of revenue. You can see that national business growth has accelerated with a 55% gain. This is the first time since the start of our recovery that national grew faster than our local business. This is a great indicator for the future as our asset portfolio is strategically built to meet the growing demand of large advertisers and agencies. We expect this trend will continue over the next few quarters. Our local U.S. business also performed particularly well with a 33% increase this quarter. And more importantly, the billboard portion of our local business is 7% above the comparable 2019 third quarter level. This robust revenue recovery and shift in business mix towards national advertisers has driven yields higher across our billboard portfolio, as you can see on Slide 6. We were delighted to see a total yield of over $2,400, up 34% from last year, once again above our 2019 third quarter level. We anticipate further yield improvement for the remainder of the year. Our digital business continues its strong recovery, as you can see on Slide 7. Digital billboard grew 65% in the quarter, more than 2.5x the impressive static growth rate of 23%; and digital transit grew almost 200%, albeit from a very low base in 2020. These growth rates are eye-catching, and we firmly believe digital will be a key growth driver of our business in the future. To complete the revenue picture on Slide 8 is our Other segment, which is primarily Canada. Performance across the board almost matched our U.S. business with growth of nearly 40%, as Canada continues its rebound from tight government restrictions. Let me now hand it over to Matt to review the rest of our financials.

Thanks, Jeremy, and good afternoon, everyone. Thanks for joining our call today. Please turn to Slide 9, and I'll start with our expenses. Overall, our total expenses were up $68 million year-over-year. Similar story to our second quarter with the cost increases, primarily a result of the continued recovery in our sales performance. The largest cost bucket is billboard lease expense, and here, we see a modest 7% increase, which when compared to our revenue growth, highlights the operating leverage inherent in the largest portion of our business. Most of our real estate expense is subject to long-term leases with an average life of approximately 10 years, so we don't expect to see a material impact from inflationary pressure on this expense line anytime soon. Transit franchises likewise are subject to multiyear agreements, and margins are not likely to be materially impacted by inflation in the near term. Transit franchise expense continues to have the largest cost variance due to high increases in revenue and thus revenue share across most of our franchises around the country and from the MTA performance, which will remain beneath its guaranteed minimum annual payment level for all of 2021 as compared to 2020, when our amended contract permitted us to defer the MAG and paying only revenue share from the second quarter on. Our second-largest cost bucket is SG&A, which grew 34% in the quarter, largely as a result of higher compensation costs from the stellar performance of our teams. Our operating leverage is demonstrated by our OIBDA performance this quarter as total expenses increased 31%, 10 percentage points below our revenue growth, even with the headwind of the MTA minimum annual guarantee payments. You can graphically see this improvement in OIBDA on Slide 10 as our 41% revenue growth drove OIBDA up 82%. Of course, this is our highest quarterly OIBDA since the end of 2019, and our OIBDA margin of 27% is near our historical level. There are a number of contributing factors to our improved OIBDA margin. One is shift in business mix with transit forming a lower-than-historic portion of our revenue. Two, a higher relative growth in our smaller markets and faster growth from digital inventory and successful efforts from our real estate teams addressing some challenging leases. Looking at the breakdown of OIBDA on Slide 11. You can see 70% growth in U.S. Media billboard, which has also surpassed our 2019 third quarter level. We are enjoying the recovery in sales momentum. And as Jeremy said, these results not only show we've turned the corner, but have also paved the way for the future. Transit OIBDA is historically much smaller than billboard and has just turned positive, another pleasing hurdle in our recovery. The MTA performance remains below the minimum annual guarantee level but has the potential for extremely high incremental margin as performance recovers towards its MAG level in the future. The franchise costs remain fixed, and the variable costs are only those associated with selling. So we expect to see sequential improvement in transit gross margins again next quarter. Let's now turn to capital expenditures on Slide 12. Our maintenance CapEx is higher than last year as we catch up on some operations and IT spending that was postponed last year, and we spend on tech upgrades in various facilities. Growth CapEx was ahead of 2020, but far behind 2019 level, as the uncertain supply chain has held up our digital screen deliveries. We did add 34 new digital billboards this quarter through conversions, management agreements and acquisitions, and our pipeline of conversion locations remains robust. So we believe the supply chain delay is only a timing issue, and we will catch up to our multiyear target once the shipping backlog dissipates. We expect to spend more on capital projects in the fourth quarter, but because of the uncertainty in the supply chain and timing of deliveries, we now think our full year capital expenditure number will be in the range of $70 million to $75 million, lower than our previously estimated $85 million. Slide 13 shows $79 million in AFFO, which is up 185% from last year. Continued sequential recovery in billboard and transit revenues are flowing through to OIBDA and AFFO. Our revenue outperformance and the passage of another 3 months to evaluate any business impact from COVID variants in certain parts of the country has provided us enhanced visibility and confidence to again, increase our AFFO guidance. We now expect our AFFO growth for the full year will be around 80%. Slide 14 has our quarterly MTA deployment update. Subject to any supply chain delays, we have returned to a normalized pace of activity. Over the last 12 months, we prioritized the installation of digital urban panels, the screens at the top of steps heading into the subway to take advantage of active pedestrian traffic when other audience segments may have been less crowded. Now and into next year, we are finishing various stations and ramping up rolling stock efforts, subway ridership has been steadily increasing since Labor Day marked by back-to-school, and the recent average daily ridership is above 3 million, which is about 55% of 2019 levels. This steadily rising number has become polite cocktail conversation among advertising buyers and busy commuters, and we are excited to be seeing the expansion of revenue that is accompanying these eyeballs. Looking at our balance sheet on Slide 15. One can see our committed liquidity is still around $1 billion. We used a small amount of our cash this quarter as we resumed MTA deployment, restarted our quarterly common dividend and spent $12 million on billboard tuck-in acquisitions. This brings our year-to-date acquisition total to $55 million with an active pipeline of interesting local opportunities we are still working on. Our revolver remains undrawn, and our overall weighted average cost of debt is 4.3%. Our leverage peaked earlier this year and is continuing its descent as OIBDA steadily recovers with net total leverage at 6.6x at the end of the third quarter, down from 7.9x 3 months earlier. And I'm sure you noticed last week that our Board of Directors approved the $0.10 common dividend for the fourth quarter. We believe this amount for the third and fourth quarters, combined with the preferred dividend for all 4 quarters, will effectively cover our full year REIT requirement, and we look forward to growing our quarterly dividend as business performance continues to improve. Our financial outlook is very strong, and the business is performing better than we had hoped. We look forward to finishing the year on a high note and to an exciting 2022. Let me now turn the call back over to Jeremy.

Thanks, Matt. And now let's turn to our fourth quarter outlook on Slide 16. As I said at the start of the call, we're very excited about our industry these days and the prospects for our business going forward. Advertiser demand for out-of-home, traffic, subway ridership and revenue are all moving in the right direction. Therefore, as we sit here today, we expect our total revenues to be up in the low 30s percent range in the fourth quarter. Within this, we expect to further improve our relative outperformance for U.S. billboard versus 2019 and the continued strong growth in transit. Our notable performance in the past 2 quarters and our outlook for this quarter are driven by the return of certain categories that reduced their activities and their advertising during the last 18 months, such as movies and entertainment. It was good to see the Bond movie open in theaters and perform so well after moving the release date a number of times. We're also enjoying the benefit of some newer categories that are still small overall, but growing nicely, like cannabis and online gaming. And importantly, many of our steadier categories, driven by local advertisers, such as professional services, retail and health care, continue to be important for our business and are showing solid growth. While it's a little early to speak about 2022, for a quick preview, we are seeing similar category performances into next year, as we all look forward to more movies and other forms of recreation returning. The reopening of Broadway, increased tourism and travel are lifting the spirit of the population and increasing consumer confidence. This confidence is enabling businesses to spend more to entice new and returning customers to their doorstep. From my office here in Midtown, I can see increasing numbers of commuters, pedestrians, office workers and diners and know that they will drive the continued growth of our industry. This is equally true for cities right across the country. This is a great time for out-of-home and indeed for OUTFRONT. So with that, operator, let's now open the line for questions.

Our first question comes from Alexia Quadrani with JPMorgan.

My first question really is on the improvement you're seeing in the transit business. I guess do you have any sense of when, maybe approximate time frame, I know you don't have a crystal ball, but you probably have more knowledge than we do, when we might see it kind of get back to closer to 2019 levels? And is the 80% to 85%, I think, ridership, I think in the past you said that probably you only need to be there, just to sort of get back to sort of normalized advertising run rate, is that still sort of a good gauge in terms of where you think you need to get in order to see advertisers sort of really return to the medium the way they did in 2019?

Yes. Thanks for the question, Alexia. We're obviously seeing some strong increases right now in our transit business, albeit off that low base. And as we look forward, we expect that 2022 will be a sort of continued year of recovery. And while, as you rightly say, we don't have a crystal ball, we would expect that in '23, we will likely be back to our sort of 2019 levels. And in terms of that ridership versus revenue. We've never quite been here before, but it is certainly our expectation that we will be able to achieve revenues that we saw in 2019 without 100% of audience. And yes, we think it's likely to be in that 80% to 85% range.

Okay, great. I have a follow-up regarding the potential supply chain issues that might slightly impact your transitions to digital boards moving forward. One of your peers also mentioned similar concerns. Do you have an idea of how much delay you might be experiencing, or how significant the backlog could be? Do you anticipate a slow start to the year, but believe you'll get back to a normalized rate by the second half of next year?

Alexia, it's Matt. I think it's going to be a slow finish to the fourth quarter, and we think most of our screens are somewhere in the ocean. So we think when they do come in, we can get them installed quickly. And by midyear, we should be caught up, and we would expect a bigger year next year than normal just for an over-indexed 12 months. But it really depends on supply chain. And I'm guessing our competitor screens might be on the same boats in the same oceans.

And our next question comes from Jim Goss with Barrington Research.

I was wondering in terms of the return of traffic into the transit systems, do you benefit basically ratably in terms of increase in ridership? Or with the return of traffic, do you get any pricing uplift from greater capacity utilization?

Thanks for the question, Jim. The first thing to mention about our transit business is that compared to 2019, as we continue to digitize, we expect to have a really impressive product that will be increasingly attractive to advertisers. This differentiated digital product will facilitate growth beyond the levels we experienced in 2019. This will also depend on ridership returning to levels similar to what we saw before, and we previously discussed that being in the 80% to 85% range. Achieving those revenue figures will rely on two factors: pricing related to cost per thousand and various utilization opportunities. Both of these will contribute to getting us back to those 2019 levels.

Contracts that were up for bid seem to be a thing of the past now. As you look ahead, are there any that might return which you would be interested in and able to consider? Additionally, how does this relate to any interest you might have for billboard market acquisitions and possibly more digital installations?

Yes. Thanks, Jim. The first part of your question went a little bit quiet. But I think it was regarding sort of the opportunities for further transit franchise wins. So as we look forward, most of the key franchises are actually had actually been put to bed for quite a long time. So we don't anticipate that there will be significant change in significant franchises over the coming months. That's for sure. With regards to billboard acquisitions, as Matt said, we've spent $55 million so far this year. We've got a very active pipeline. And we're keen to add weight in a number of our markets around the country. So we're pursuing those with positivity, to put it like that.

It was encouraging to see the common dividend, as it has long been a reason to own the stock. I understand there are requirements for REITs and preferred shares that influence this situation. Could you explain the rationale the Board might consider regarding the value of the common dividend? I know it has faced some pressure recently, but how should we view it moving forward as part of our investment strategy?

Jim, it's Matt. Thank you for your question. The Board considers this from various perspectives. First and foremost, there is the REIT requirement. We believe that this year, with two quarters of $0.10 plus the preferred dividends, we meet that requirement as our business continues to recover and expand. We've indicated our expectation to aggressively grow the common dividend. Additionally, we believe, as we reflected during the summer, that the signaling and communication benefits of increasing the dividend, which we noted around midyear, align with the growth and recovery of primarily our billboard business and, more recently, our transit business. We wanted to ensure that stakeholders understood our confidence in issuing a dividend before finalizing year-end calculations concerning the REIT. We feel very positive about our current position, and the Board is quite supportive of beginning to evaluate the growth of that dividend in the upcoming periods.

And just adding to Matt's comment, Jim, briefly. You'll remember in the past that as a company, we tended to pay a dividend in excess of the absolute REIT requirement. And we're looking forward to getting back into that kind of range as we look forward. But from where we are now. And as Matt just said, there's the opportunity for us quite aggressively to grow that dividend as we move on from here.

And our next question comes from Ian Zaffino with Oppenheimer.

Good quarter, great outlook. Just sort of one question, maybe a follow-up on the last one, would be use of capital. What does the M&A market look like right now? Things are recovering pretty rapidly. So just curious what the bid-ask spread might be? And how many sellers there are now versus the way it was maybe pre-COVID?

Thank you for your comments and your question, Ian. Currently, there appears to be significant activity in the out-of-home sector, with several private equity firms actively pursuing opportunities. This is encouraging some sellers to come forward. Our competitors have mentioned having a solid pipeline, and we feel optimistic about our pipeline as well. We believe that the current market pricing could prompt sellers to consider moving their assets.

Okay. And then on the digital board side, with the supply chain issues. Will you be able to make up in departments that you miss out on this year into next year? Or is this something that you're going to continue to do what you have planned to do in '22 and no more, meaning you're not going to make up the backlog that you might have from this year?

Yes, I believe our pipeline is established. Our real estate team is still in the process of developing and obtaining permits. We're currently waiting for screens. If we aim for an annual target of $150 million to $200 million and don't reach that this year, we will adjust our target slightly higher for next year to compensate. The development and permitting will proceed as planned. If we can get the screens, we will have more growth capital expenditure than usual and will be able to catch up. Regarding revenue, it typically takes 3 to 6 months to see an increase in revenue from those digital billboards. We have approximately 1,300 to 1,400 already installed, so the few that we won't install this year are unlikely to significantly affect overall revenue. In the long run, these will not be a loss.

Next, we'll go to Ben Swinburne with Morgan Stanley.

I have two questions, both on kind of margins. Matt, it looked like billboard margins were a couple of hundred basis points higher this quarter than even the third quarter of '19. You mentioned geographic mix. I just was curious if there were any other drivers you'd highlight and whether you think the billboard business as we look out over the next few years, is any different than it was from a margin point of view once everything sort of recovers. That's my first one. And then I wanted to ask about transit.

Great question, and I appreciate you noticing. If you compare a couple of years from 2019 to 2021, the digitization we've implemented has made an impact. You can see that in almost every market, a higher percentage of digital inventory and digital revenue is benefiting our margins. Regarding the mix, although this wasn't the plan, the significant growth outside of New York and Los Angeles has also positively influenced our overall margins. We believe that our portfolio and operating businesses are working in our favor.

Okay. So it sounds like with digital growing that there might be margin growth in billboard kind of all else equal over time? Don't want to put words in your mouth but...

Yes, we think directionally, billboard margin is moving higher, both the leverage of the business and the digitization. This is, I think, one of the beauties of the digital inventory. If we increase revenue higher than we increase cost, eventually, we see the difference in the numbers.

And then kind of the same line of questioning on transit. So as we think about '22, we can't see the MTA per se inside of your transit business. Although obviously, we have a rough sense of how big it is. But is one way to think about the incremental leverage you're going to get as you go from the MG back to a rev share that maybe by the time we exit '22, we're back at kind of the transit margins of pre-COVID because you've sort of scaled the thing? Or I don't know if there's any way you can help us think about what will be sort of an unusually profitable recovery for a period of time and then back to kind of standard transit economics?

Yes. This is probably the silver lining of the MTA being under the MAG. So as we get back to that line, every dollar of revenue, 90%, 95% of that goes to OIBDA is the fact that we're already paying a fixed cost and no more, and we're just paying commission. So it's in our best interest and everyone's best interest to drive New York transit revenue back up to its former level. So we're excited by the return, and we're excited about the future once it gets there.

And that concludes today's question-and-answer session. At this time, I'll turn the conference back to Jeremy Male for any additional or closing remarks.

Thanks, operator, and thanks to everyone for attending this call. We look forward to speaking to you next quarter about the further positive developments in our business. And in the meantime, I'm speaking with many of you at investor events in the coming weeks. Thanks very much, and have a good day.

And this concludes today's call. Thank you all for your participation. You may now disconnect.