Hello, and welcome to the OUTFRONT Fourth Quarter 2023 Earnings Conference Call. My name is Harry, and I'll be coordinating your call today. I will now hand you over to Stephan Bisson, Vice President of Investor Relations at OUTFRONT to begin. Stephan, please go ahead.

Good afternoon, and thank you for joining our 2023 fourth 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 for a question-and-answer session. Our comments today will refer to the earnings release and slide presentation that you can find on the Investor Relations section of our website, outfront.com. After today's call has been concluded, an audio archive replay will be available there as well. This conference call may include forward-looking statements. Relevant factors that could cause actual results to differ materially from these forward-looking statements are listed in our earnings materials and in our SEC filings, including our 2022 Form 10-K as well as our 2023 Form 10-K, which we expect to file this week. We will refer to certain non-GAAP financial measures on this call. Any references made to OIBDA 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 of prior period reconciliation. Let me now turn the call over to Jeremy.

Thanks, Stephan, and good afternoon, everyone. We're pleased to be here sharing our fourth quarter results and 2024 outlook. Before digging into Q4, I'd like to quickly highlight some of our accomplishments from 2023. Revenues finished up 3% year-over-year on an organic basis with both U.S. Media and other, which is essentially our business in Canada, up by the same rate. Our U.S. billboard business, by far, our largest in terms of revenue, was up 4% for the year on an organic basis. As has been the case for the last couple of years, this growth was predominantly driven by higher rates resulting from robust demand for billboard advertising and our expanding digital revenue. Also contributing significantly to our billboard growth was the continued impressive performance of our automated sales platform, including programmatic. These channels comprised approximately 16% of our digital revenues in the fourth quarter, up from 10% in the first quarter and single-digits in 2022. In October, we announced the sale of our Canadian business to Bell for CAD410 million or around $300 million, subject to certain adjustments. We expect this transaction will close in the first half of this year. I'd also like to mention the achievements of our creative team, XLabs, which won two awards, one gold and one bronze at the International Festival of Creativity for our partnership with Google and Gorillas. The awards honored the team for transforming Times Square into a live stage for a revolution in music performance by the award-winning virtual band Gorillas. This event truly showcased the evolutionary potential of the out-of-home industry. So now let's turn to our fourth quarter results, and you can see the headline numbers on Slide 3. Consolidated revenues grew 1.3% towards the higher end of the guidance we provided in November, while OIBDA was $152 million and AFFO was $108 million. Slide 4 shows our segment results. Total U.S. Media revenue increasing 1.1% year-over-year. Other, which consists mostly of Canada, was up 5.9%. On Slide 5, you can see our U.S. media revenues in more detail. Billboard revenues were up 3% with growth in all four of our regions, but stronger performances in the East and South, and I'm pleased to call out our New York, Houston, Dallas, Orlando, Kansas City, and national teams as these markets displayed exemplary growth leading our billboard geographies. Transit revenue was down 4% versus the prior year. The entire decline in the quarter was due to weaker tech, financial, and entertainment. Though the media strike finally ended in early November, the fall Prime Time TV season was effectively pushed entirely over the quarter. On a consolidated basis, our best-performing categories in Q4 were CPG, legal services, education and retail. On the weaker side were technology, government political, financial services and, of course, entertainment. The breakdown of local and national revenues in our U.S. business can be seen on Slide 6. Local grew 4.5% during the quarter, while national, which was more heavily impacted by the weaker tech and entertainment verticals I noted earlier, declined by 3%. As a result, at 43%, 57%, national local split during the quarter was a bit more locally skewed than our more typical 45-50. Slide 7 shows our solid U.S. billboard yield growth up around 3% year-over-year and showing 3,000 a month for the first time. The largest drivers of this yield growth remain our digital conversions, rate and higher programmatic and other automated transaction revenue. Slide 8 highlights our strong digital performance with revenue growing 9% in the quarter total revenue representing nearly 36% of total digital revenues, up to 33% last year. Automotive Digital billboard was up a robust 10.6%, again fueled by our automated sales channels and new inventory, while transit was up 4.5%. Let me now hand over to Matt to review the rest of our financials.

Thanks, Jeremy, and good afternoon. For a deeper dive into our financial statements, please turn to Slide 9 for a detailed look at our expenses. Total expenses increased by approximately $8 million or 2.5% year-over-year. Billboard lease expenses decreased by 9% year-over-year in Q4. This increase reflects annual rent adjustments, acquired billboard sites, and higher variable costs related to billboards under revenue-sharing agreements. Transit franchise expenses declined by 3.5% due to lower revenue share payments for franchises, partially offset by a higher net contribution to the MTA. Posting, maintenance, and other expenses decreased by 2% compared to the prior year, as higher business activity was offset by reduced maintenance and utility costs. SG&A expenses rose by 1% to $4 million compared to last year, entirely due to higher professional fees, which were partially offset by lower compensation expenses. Corporate expenses remained flat in the quarter as lower compensation-related expenses countered the unfavorable impact of market fluctuations on an unfunded equity index rate repayment plan and higher professional fees. Slide 10 provides additional details on the sources of OIBDA. U.S. billboard OIBDA was just over $145 million, representing over 95% of our consolidated OIBDA. The U.S. billboard OIBDA margin was 39.5%, down from last year but improved compared to 2019. Transit OIBDA was $13.7 million, down from $16.6 million last year, primarily due to lower revenues as Jeremy mentioned earlier. Moving on, I would like to share some expectations for the New York MTA. Our meg payments to the MTA will increase by 1.3% this year to about $150 million, reflecting the CPI escalator in the contract. We will continue to account for New York MTA franchise expenses on a streamlined basis throughout the year. We are pleased to report that we are nearing the completion of our initial build for MTA deployment. Specifically, we plan to spend around $50 million on deployment in 2024, finishing our installation of advertising on our non-staff. The annual capital investment will decrease in 2025 as we shift to replacement projects where our capital commitment will be focused. Looking at capital expenditures on Slide 11, Q4 CapEx spending was just over $23 million, including about $6 million in maintenance spending, both of which are essentially flat compared to last year. For the full year, total CapEx was around $87 million, just below our historical benchmark of 5% of revenue, which included almost $9 million for relocating three of our offices in New York and San Francisco. In 2024, we anticipate spending approximately $75 million in total CapEx, with around $70 million allocated to our U.S. operations. Of this total, about $25 million will be for maintenance CapEx. On Slide 12, looking at AFFO, you can see the bridge to our Q4 AFFO of $108 million. This improvement is mainly driven by a non-cash effective streamlined rent AFFO line item, which experienced an $18 million change compared to last year. For 2024, we expect reported consolidated AFFO growth to be in the high single-digit range, with the 2023 AFFO projected at $271 million, primarily driven by OIBDA improvement. Notably, this guidance assumes a June 30th closure for the sale of our Canadian business. Please turn to Slide 13 for an update on our balance sheet. In November, we completed a new $450 million senior secured note offering and used the proceeds to repay our $400 million senior unsecured notes due in 2025, extending this maturity from six years to 2031. Our liquidity is slightly over $600 million, including around $20 million in cash, nearly $70 million available from our revolver, and $85 million from our accounts receivable securitization facility. As of December 31, our total NAV leverage was 5.4x, and we feel confident about our debt position, with our next maturity, excluding the AR Facility, not due until 2026 and less than 25% of total gas rigs. As Jeremy mentioned, we have reached an agreement to sell our PD business to Bell Canada for $110 billion, subject to certain adjustments, equating to approximately $300 million related to exchange rate changes. We anticipate this transaction will close in the first half of 2024 and plan to use the proceeds to reduce debt, lower leverage, and decrease annual interest expenses by about $20 million. Regarding our dividend, we announced today that our Board of Directors has maintained a $0.30 cash dividend payable on March 28 to shareholders of record as of March 1. Based on our operational expectations and the taxable gain from the sale of our Canadian business, we anticipate needing to issue a larger dividend as we close out the year. We spent $3 million on acquisitions during the quarter, bringing our total for 2023 to about $34 million. Looking ahead at our current acquisition pipeline, we expect our deal activity in 2024 to be similar to that of 2023. In conclusion, we achieved a lot this quarter and are fully focused on delivering growth in 2024. We are excited about our business and the future, and we look forward to seeing many of you at various conferences and events in the coming weeks. With that, let me turn the call back to Jeremy.

Thank you, Matt. While we are pleased with our billboard revenue performance and what ultimately proved to be a rather challenging 2023, we're happy to turn the page to 2024, which we expect will be a significantly improved year. We'll be starting off on the right foot in the first quarter as based on our trends of today, we estimate the reported Q1 total revenue growth will accelerate to the low to mid-single-digit range with billboard and transit growing at similar rates. Importantly, we expect this growth despite our first quarter 2023 billboard revenues benefiting from around $6 million of non-recurring condemnation revenue, which we highlighted last May. Further, as I just mentioned and implied by our full-year AFFO guidance, we are encouraged by the early signs we are seeing for the remainder of the year. We see numerous tailwinds for our company in 2024, including the continued ramping of our acquired inventory and additional recovery in our transit business. We also expect that we and in fact, the entire out-of-home industry will benefit from the crowd-out effects of the Olympics and the 2024 election as well as the return of a Prime Time TV season in the second half. I'd like to close our prepared comments today by reiterating how proud I am of the OUTFRONT team for their performance last year. And I want to thank them for their continued effort to position us for success in 2024. And with that, operator, let's now open the lines for any questions.

Our first question today is from Jason Bazinet of Citi.

I just had a question on the AFFO guidance. Do you guys mind just unpacking any of the details sort of below the headline EBITDA number just so we have the pieces right? And then also the impact of Canada, assuming that June 30 close occurs?

Sure. Thanks, Jason. We understand that there are a few more moving parts this year because of the timing of the sale of Canada. So the growth we are citing assumes that initial resale of Canada midyear, June 30, with some seasonality in the business. So given that we get the shorter hit from the Canada operation in 2024 compared to the full year of Canada in 2023, we probably think there are a couple more points of growth available on a full-year comparative basis of AFFO based on the timing. Otherwise, once we sell Canada, you probably clarify that a little better seasonally, a heavy fourth quarter AFFO from Canada that will not be felt in 2024, which will lead to our AFFO growth. Other points of AFFO growth include maintenance CapEx at about $25 million, cash taxes of about $5 million and interest expense somewhere in the $155 million to $160 million range, of course, with low interest rates.

Okay. Got it. So the growth, if I heard you right, would be a few points higher if you hung on to Canada for the full year. Did I hear that right?

Yes.

Our next question today is from the line of Cameron McVeigh of Morgan Stanley.

Just had a couple. I was hoping you could help us think through the impact of the media strikes on growth this year. In particular, what does the cadence of growth look like given the comps we faced last year? And should that have a greater impact on billboard or transit?

So when you look at it, it certainly impacted that business really quite more than others in the industry just because of our exposure to media revenues, particularly given our prominent positions in both New York and Los Angeles. So when we look into it, there was a reasonably significant impact in dollar terms in our billboard business, particularly in LA. But in percentage of revenue terms, the transit business was most impacted, and that's because transit is more exposed to national revenues, which have typically been very successful for us and our clients. So as we look to this year, we obviously expect that we'll see a full schedule this year. So we think that will have a positive impact on our numbers as we go through the year. Maybe we'll see a bit of benefit in those early months as well because there is some new content that we believe would have been promoted last year and will be promoted in the earlier part of this year. So generally, we feel positive on that. Interestingly, the other category that was difficult for us last year, not only for us but for just about every holding company, was obviously tech. And while we are still evaluating the impact of tech on our revenues, it is good to see that our tech revenue is actually pacing a bit ahead in Q1, so that's a positive sign.

Got it. And then just secondly, if you could just walk through an update of how you're thinking about how margins should trend through the year? Yes, if I think about what impacts margins, wage and ad commission inflation, you're lapping some M&A comps and there’s some further tech integration with the MTA Board. Curious from your view, just what's causing the most material impact and how you're thinking about that trend throughout '24.

Moving forward to '24, we expect some improvement in our transit business given our fixed franchises in New York and the benefits they provide. Movement to net revenue will help margin. We expect to see that on the transit side. On billboard, we had, again, acquisitions in mid-'22 and early '23, which created a drag on billboard margins, with higher lease costs outstripping revenue growth. We think that catches up during 2024. Even though there will be internal inflationary pressure in certain areas, we think margins will be similar to or a little better this year than last year.

Our next question today is from Jim Goss of Barrington Research.

All right. I was wondering with regard to billboard, your dominant category. What the mix of digital versus static was this year versus last year? Whether that trend has had an impact on those gains you've made.

Thanks, Jim. Yes, when we look back to Q4, the numbers indicate that digital was 36% of our revenues, which is very much weighted towards billboard rather than transit. So 36% of our revenues versus 30% in the previous Q4. So you can see that's a big step up. We think that that number is only going to keep rising. We continue to opportunistically convert boards, and this year we would expect to be in the 150 to 200 new board range. So you have essentially more assets in the field and then we also have this shift towards automation. That's an exciting trend with our automated revenues representing 16% of the size of the digital business. This is starting to become a significant factor, and as time goes on, we believe that digitally in general will enhance margins for our billboard business. It’s not necessarily a linear effect, but if we look over time, we think it's certainly going to be positive for the overall business.

Are you generally feeling that it's a plus because now things are improving in terms of ad revenue trends? Because I think in a slower period, it could be a disadvantage, but it is being helped by the rebounding ad market in terms of price?

Yes, obviously. Whenever you digitize your state, you are adding on supply. It's always helpful when you're adding on supply until you have a tailwind in the ad market. However, last year, actually there were a bunch of headwinds, and those digital revenues still grew significantly. So, net-net, we're still very confident in the investments that we're making in our business to further digitize. One of the big factors last year was the late revenue that we were able to bring in as a company that we wouldn't have been able to secure in previous years. If someone wants to get an ad up today, we can have that done within an hour. This is in an industry where previously, flexibility was quite limited. So, to have that flexibility, we think there's a real benefit for both our company and the industry as a whole.

All right. And just one other question. You called out a number of markets where you thought there was particularly notable strength in your billboard business. Is there any commonality among the markets you called out that you can draw any conclusions from and what might those be?

Look, a number of the markets were in the south. Obviously, Texas has been strong as a state, and Florida generally performs well. Included in that were locations like Dallas and Nashville, with Tennessee showcasing strong performance as well. The only markets that were particularly difficult for us were some of the West Coast markets. We noted that San Francisco was challenging for us last year, and I think some of the reasons for those challenges are evident from the trends we observed.

Our next question today is from the line of Richard Choe of JPMorgan.

I just wanted to follow up on the 1Q revenue guidance of low single digits. In terms of the strength that you're seeing between billboard and transit, where is the strength coming from? And how much is programmatic potentially contributing to that?

Going back to the guidance, Richard, thanks for the question. We guided to low to mid-single digits and mentioned that both parts of the business would be up, which is a positive sign. Part of that is due to automated revenues, which will continue to grow this year. We expect that there will be gradual increases, which is great. It’s also encouraging to see that both our local and national businesses are pacing up right now. So that’s good to see strength overall. It feels very broad-based, and it's nice to see that acceleration from the growth rate that we achieved in the back half of last year amidst the challenges we've discussed.

Given that, do you see that there's been a change in your customers wanting to do more out of home at this point, and do they feel more comfortable with the environment versus last year where there was a lot of uncertainty?

On the face of it, yes. Last year, it was primarily two or three categories that really struggled. We believe this is a bit of a turnaround, and that will be very positive for us. The return of media that have supported us in previous years will undoubtedly help us, and we expect that these clients will continue to show their support in 2024.

We have no further questions in the queue today. So I'd like to hand back to Jeremy Male for any further remarks.

Thanks, and everyone, thank you for joining us today. I'm sure we'll be seeing many of you at conferences and events over the coming weeks. Thank you again.

This concludes today's call. Thank you all for joining. You may now disconnect your lines.