Earnings Call Transcript - OUT Q1 FY2026

Operator

Hello, everyone. Thank you for joining us, and welcome to the Outfront Media first quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now hand the call over to Stephen Bisson

Stephan Bisson, Head of Investor Relations

with Outfront. Please go ahead. Good afternoon, and thank you for joining our 2026 first quarter earnings call. With me on the call today are CEO Nick Bryan and CFO Matthew Siegel. 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 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 file including our 2025 Form 10-K as well as our Q1-2026 Form 10-Q which we expect to file 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 reconciliation. With that, let me hand the call over to Nick.

Nick Brien, CEO

Thanks, Stephan. And thank you, everyone, for joining us today. We're pleased to be here reporting our first quarter results, which came in better than we had anticipated when we spoke two months ago. given the strong demand for excellent execution from our entire organization. As you can see on slide three, which summarizes our headline numbers, consolidated revenues were up 10%, driven by 22% growth in transit and 7% growth in billboard, while consolidated OIBITAR was up 56% to about $100 million, and AFFO more than doubled to $61 million. Notably, these results include $13.5 million of condemnation billboard revenues and OIBIDAR that we highlighted when we provided our guidance in February. Slide four shows our more detailed revenue results. Billboard revenues were up 7.1%. Included in our comparative billboard results are two notable items this quarter. First, approximately $13.5 million of revenue in quarter one, 2026, related to billboard combinations I just mentioned. And second, our previously announced exit of a large, marginally profitable billboard contract in LA, as the revenues and expenses of this contract are still included in our reported 2025 financial statements. Excluding the billboard revenue generated by both of these items, billboard revenue growth would have been up over four percent the strongest billboard categories in the quarter were legal and tech transit grew by 22 percent again led by the new york mta which was up over 26 percent in quarter one our strongest transit categories in the quarter were tech and financial slide five shows our detailed billboard revenue which as i mentioned earlier was impacted by the outsized combination revenue and the large la billboard contract that we exited on a reported basis static and other billboard revenues were up 7.6 percent during the quarter and digital billboard revenues were up 6.1 percent however excluding the revenue generated by both of these items static and billboard revenues and other billboard revenues would have been up nearly two percent and digital billboard revenues would have been up over ten percent five six shows our detailed transit revenue which grew over 22 percent during the quarter our digital transit revenues were up over 26 percent to about 45 million and static transit revenues were up almost 20 percent the strength in our transit business was led by a commercial team this quarter, which grew their revenues at a clip of 35%. We remain immensely proud of the performance turnaround in this important line of business, continuing to be driven through smarter product marketing and innovative, focused sales approaches. While technically occurring in the second quarter, I'd like to highlight a recent activation with British Airways and the new MTA that you can see on the cover of our slide presentation. As part of this innovative campaign, we wrapped the shuttle to resemble an airliner and BA brought their flight attendants to Grand Central and Times Square to hand out English biscuits to hungry commuters. Slide 7 shows our combined digital revenue performance, which grew over 11% in the quarter and represented about a third of our total revenues. Even more impressive, excluding the aforementioned LA contract, digital revenues would have grown by nearly 15%. Programmatic and digital direct automated sales increased nearly 40% during the period, now representing 20% of total digital revenue, up from 16% a year ago. On the topic of programmatic growth, I'd like to also highlight the recent addition of a very senior digital sales leader from the top with deep expertise across programmatic advertising, data analytics, measurement, and omnichannel media activation. This strategic hire further advances our evolution into a modern media company built around digital expertise, audience intelligence, and measurable outcomes. Jeff Hackett's leadership will help us maximize the value of our unified ad tech stack, our data management platform, and trading partnerships, while strengthening our position with programmatic buyers who are increasingly extending audience-driven strategies into premium IRL media environments. In turn, we believe we are better positioned to capture this growing demand and demonstrate how IRL media enhances platform-based omnichannel campaigns through greater targeting precision, breakthrough creative, and measurable performance in the real world. Moving on, on the breakdown of commercial and enterprise revenues can be seen on slide eight. commercial revenues were up 19 during the quarter or 13 excluding the 13 and a half million dollar combination revenues that we realized during quarter one enterprise was down about two percent during the first quarter predominantly related to the exit of the large la contract slide 9 shows our billboard yield growth which was up 11 year on year to over 2 900 per month driven by higher rates as well as billboard condemnations. Excluding condemnation revenue from both periods, billboard yield would have been up about 6.5% given our strong revenue performance and continued practice to prudently optimize our billboard portfolio. Summing up, we are pleased with our quarter-one performance. I'm happy to report we're seeing these strong top-line trends continue into the spring and summer, which I will discuss in greater detail later. With that, let me now hand it over to Matt, who's going to review the rest of our financials.

Matthew Siegel, CFO

Thanks, Nick, and good afternoon, everyone. Please turn to slide 10 for a more detailed look at our billboard expenses. In total, billboard expenses were up about $5 million for approximately 2% year-over-year. year. Zooming in on lease costs, these expenses were up about $2 million or about 2% year over year. This increase was driven by higher variable lease costs and contractual escalators on fixed leases offset partially by $4 million of savings related to the large billboard contract in L.A. that we exited. Excluding the impact of the L.A. portfolio exit, billboard property lease expense we've been up about five percent. Posting maintenance and other expenses were up over a million dollars or about four percent due to higher maintenance and utilities, higher site related costs, and higher compensation related expenses. SGA expenses grew just over a million dollars or about two percent to primarily to higher professional fees including software and technology expenses and a higher allowance for bad debt, partially offset by lower credit card usage by customers and lower compensation-related expenses. This $5 million increase in total billboard expenses, combined with the growth in billboard revenues Nick described earlier, led to billboard-adjusted OIBDA increasing by about $17 million or 18%. Excluding the impact of the billboard condemnations in the quarter, billboard OIBDA would be up around 4%. Now turning to transit on slide 11, in total transit expenses were up four and a half million dollars or just under five percent year over year. Transit franchise expense was up three percent due primarily to the annual inflation adjustment to the MAG for the MTA contract. Posting maintenance and other expenses were up just over a million dollars or about eight percent due primarily to higher display production costs and higher posting and rotation costs. SG&A expenses were up one and a half million dollars or about nine percent due primarily to higher compensation-related expenses, higher professional fees including software and technology expenses, partially offset by lower credit card usage by customers. The five percent increase in total transit expenses combined with a 22 percent transit revenue growth described earlier led the transit adjusted OIBDA improving by about $13 million during the quarter to an adjusted OIBDA loss of a little over a million dollars. While on the topic of transit, I would like to quickly discuss some important developments regarding the New York MTA. Given our strong Q1 results and an improved outlook for the remainder of the year, we now believe that our 2026 New York MTA revenues will surpass the defined baseline revenue level, which we often describe as the MAG level. As a reminder, based on our prior expectations at the beginning of the year, we continued to record the MAG on a straight line basis rather than account for the contract on a revenue share basis. Due to the seasonally lower revenues in Q1, this resulted in approximately $7 million of additional expense than if we had recorded the contract on a revenue share basis. We expect to account for this benefit from the straight-line MAG in Q2 and Q3 when the revenue share expense would have exceeded the MAG. By the end of Q3, we will be caught up on a year-to-date basis. And then, for the fourth quarter, we will book the full calculated revenue share amount, which will show a substantial increase in transit franchise expense from the prior period when we're just recording the MAG. A benefit of being above the MAG level also means that we will return to recouping the digital investments we have made in the MTA since the inception of this contract in 2018. Let me remind you how this works as it has been a number of years since we last recouped. Any incremental transit franchise expenses due to the MTA above the MAG will not be paid in cash but rather utilized to reduce our significant recoupable investment balance with the MTA, meaning each incremental dollar of revenue will remain extremely accretive on a cash basis. Recoupment will positively impact our net working capital and cash balances, but will not impact adjusted OIBDA, AFFO, or net income. Given that recoupment will not flow through net income, the monies recouped will not be subject to the redistribution requirement. Slide 12 shows the company's adjusted EBITDA in the first quarter. Corporate expense declined by about $6 million, due primarily to lower compensation-weighted expenses, including last year's severance and lower professional fees. Combined with the billboard and transit EBITDA, which includes the benefit of the condemnation discussed earlier, adjusted EBITDA totaled about $100 million, up 56 percent compared to last year. Before moving on, I'd like to quickly discuss some important growth investments we are making out front during 2026 to support our ambitious revenue targets for this year and beyond. First, we are investing in our technology. We have modernized many of our systems in 2025 and early 2026, including a new CRM, training modules, and our partnership with AdQuick. While each of these improvements are more costly than the systems they are replacing, we expect that each will assist us in accelerating our top-line revenue growth. Second, we are investing to continue improving our workflow and processes. So far, we have started to improve how we approach inter-region revenue opportunities and our RFP response process. We have brought back the same consultant who assisted us last year, but importantly much of their potential fee is success based and as such will only be paid should we realize benefits from their efforts turning now to capital expenditures on slide 13 q1 capex spend was about 24 million dollars including about seven million dollars of maintenance spends we converted 14 new billboards to digital in q1 and expect to add a total of about 125 in the full year for 2026 we still expect to spend approximately 90 million dollars of capex with 30 to 35 million dollars of this total expected from maintenance looking at affo on slide 14 you can see the bridge to our q1 affo of 61 million dollars the improvement is principally driven by higher adjusted orbiter based on the first quarter results our expected revenue growth for the remainder of the year and our investment in our business we now expect that a reported 2026 consolidated AFFO will grow in the mid-teens relative to a reported 2025 AFFO of 338 million dollars included in this guidance is the previously noted maintenance capex interest expense of approximately 145 million dollars and a small amount of cash taxes please turn to slide 15 for an update on a balance sheet committed liquidity is over 700 million dollars including 70 million dollars of cash around 500 million dollars available via revolver and 150 million dollars available via accounts receivable securitization facility as of may as of march 31st our total net leverage dropped to 4.3 times well within our four to five times target range turning to our dividend we announced today that our board of directors maintain the 30 cent cash dividend payable on june 30th the shareholders of record at the close of business on June 5th. We spent just over $8 million in acquisitions during the quarter, and looking at our current acquisition pipeline, we continue to expect our 2026 full-year deal activity to be similar to levels reached in recent years. As Nick mentioned earlier, the top-line strength we saw in the first quarter has continued into the spring and summer, and from where we all sit today, we expect second quarter revenue growth to accelerate to over 10 percent year on year driven by about 30 percent growth in transit and mid single digit growth in billboard these figures include a benefit related to the u.s role as a world cup host in june and july as well as a headwind created by a strategic decision to exit a large marginally profitable billboard contract in los angeles which generated about 4.4 million dollars of billboard revenue in q2 2025. out front has gone through significant change over the past year based on executing the strategic imperatives i shared with you at that time uh at the same time we have reimagined out of home and our company's leading role within it an important part of this process has been refining how we communicate our value proposition to the world and just last week we launched our new brand platform as a declaration out front is the leader in irl media in a world of endless scrolling muted ads and algorithmic noise we exist in the one place no one can opt out of the real world our media doesn't just reach people it moves them irl media is where culture lives it's where brands stop interrupting and start belonging in the cities and communities that shape daily life for far too long our industry has defaulted to talking about inventory and impressions that's not our story our story is influence and impact the breakthrough experiences we create the cultural moments we amplify and the real outcomes we drive for partners looking to build trusted brands in the real world our clients know this and are increasingly choosing irl media to drive the results they seek To close, we are redefining what out-of-home means in the rapidly changing agentic advertising world. The physical world is the last uncluttered, brand-safe, fully viewable canvas in media, offering brands the ability to show up and interact with people where their attention is the highest. Our premium inventory is immersive and experiential with national scale, and in our view, the sky is the limit. and with that operator let's now open the lines for questions and we'll see if we can get uh

Operator

nick back on the line we will now begin the question and answer session please limit yourself to one question and one follow-up if you would like to ask a question please press star one on your telephone keypad to withdraw your question press star one again please pick up your handset when asking a question if you are muted locally please remember to unmute your device please stand by while we compile the Q&A roster. Your first question comes from the line of Daniel Osley with Wells Fargo. Daniel, your line is open. Please go ahead. Thanks. Maybe a bigger

Daniel Osley, Analyst — Wells Fargo

picture question. I wanted to get your industry outlook on measurement modernization. We saw the OAAA recently announced a new pilot program. So what's your view on the timing of all this and the potential benefits the industry could see on the other side? And then as a follow-up, how does the measurement partnerships that Outfront has recently announced tie in here? Thank you.

Matthew Siegel, CFO

Obviously, measurement is a key factor for the industry overall. It's been something the industry has been shying behind on. Nick and the other leaders of the industry are working with OAAA and GeoPath bringing consultants and really trying to move the measurement uh dialogue and capabilities forward um some of the partnerships uh we've signed up uh like aws and adquick in particular uh we think will help us uh adquick has some some great measurement capabilities uh demonstrating uh really a viable currency and hopefully uh over time maybe a proof of concept for uh greater industry adoption well let's see how it works

Operator

to us first. Thanks, Matt. Your next question comes from the line of Cameron McVeigh with Morgan Stanley. Cameron, your line is open. Please go ahead. Great. Thank you. First,

Cameron McVeigh, Analyst — Morgan Stanley

I was curious of your view on one of your peers potentially being taken private and maybe implications on asset sales and your acquisition pipeline as you think through the remainder of a year, and is this a potential opportunity for you going forward? And then secondly, you mentioned this in the prepared remarks, but I was curious if you could help size the potential impact of the World Cup over the next couple quarters, the midterm elections, in the back half of the year, just as we think through the cadence of growth. Thank you.

Matthew Siegel, CFO

Sure. So first, peers. Obviously, we love all our peers. They're fine people. You know, with one of the large peers of competitors going private, interesting, I think a capital infusion will likely make them healthier, which I think is great for the industry. They can be more nimble and invest in the business, invest in the industry overall. We have not heard that there's any asset sales coming out of that, but to the extent there are asset sales from them or really from anyone else material kind of in our footprint or something that would make strategic sense. We think our balance sheet is in a much better place than it's been in the last few years. Our capabilities are strong and we would expect to participate in something that's interesting. As far as size impact for the World Cup, we're not prepared to share numbers there. As far as names, we have about 70 customers overall. And I think the numbers that we've heard in media seem to be in the right neighborhood. But we're still calculating. We still think we still have business to book in the second quarter and certainly in the third quarter. And we will give you a much, much greater in-depth explanation in August.

Nick Brien, CEO

Yeah, no, I just wanted to add on the World Cup thing. I mean, I think, as Matt said, you know, we've got over 40 percent of the FIFA sponsors. We've got road there ahead, as Matt said. What's exciting is that a lot of those significant brands and the big sponsors, they actively use our medium but they don't use it um as much as we'd like so we see fifa and the world cup as a way of really attracting some of the biggest brands to really uh demonstrate how they're building their brands in real life so it's an exciting time for us great thank you both

Operator

thanks game operator next question your next question comes from the line of kalexi philipov

Kalexi Philipov, Analyst — JP Morgan

with JP Morgan. Your line is open. Please go ahead. Yes, thank you very much. Transit grew 22% in the quarter well above your hiking guide that you gave in February. Can you help us understand what drove that upside relative to your preliminary expectations in February? And you mentioned 26% for New York MTA specifically. It looks like our transit contracts are also doing rather well. Is there an unexpected turnaround there too um and if i may follow up related to transit um thinking about fee for benefit is it primarily around billboards or do you expect this to be a meaningful thing for new york mta i wonder how your clients think about that transit officials in new york already in us to work from home because of the traffic inflow so just qualitatively how to think about benefit for new york mta thank you sure i see thanks for the question i'll start

Matthew Siegel, CFO

and uh nick you can jump in uh for transit transit's going well it's because of the mta and frankly for the last few years when transit wasn't at the mta uh mta is more than half of our transit revenue it's uh about seven or eight times the next largest transit franchise so we uh we have a great focus there so the 26 growth in the mca is obviously what's leading to transit other transit franchises like barton san francisco uh doing pretty well is also you know san francisco is one of uh our best performing markets in the first quarter i think one of our peers probably We also had a very strong San Francisco growth led by, you know, certainly by tech and the repopulation of the city. As far as FIFA, we're taking business in both billboard and transit. Frankly, the influx in all the big cities of tourists, it's not just near the stadiums, but the influx of tourists, attractive demographic tourists and the ability for them to move around cities and move underground above ground are hitting our inventory uh again above and below ground that we're very happy to have it nick do you want to add something on on fee for transit no i think on the lexi thank you

Nick Brien, CEO

for your question i think that as i mentioned earlier on the new mta this has been uh significantly strengthened by a dedicated focus on the product marketing the unique attributes of our you know the transit within the context of the cities that they serve as well as the innovation and the opportunity for creating the brand experiences so as opposed we've got you know and we're demonstrating that as i said you see on the front cover the ba wrap so this is becoming more exciting because they're now starting to understand transit is a is a really exciting platform for irl media activation so the experiences can be created and we're celebrating those and pricing them accordingly so that's made a big contribution great thank you

Operator

your next question comes from the line of patrick shoal with barrington research patrick your line is open please go ahead hi uh thank you um congratulations on

Patrick Shoal, Analyst — Barrington Research

the milestone on the MTA. Could you remind us how the revenue share on the MTA works when

Matthew Siegel, CFO

revenue generation is above the MAG? Sure. It's been a while, so it's good to refresh everybody. So the MTA is a 70% revenue share contract. The gap between 70 and 55 was intended not to be a cash payment, but to allow out front to recoup the investment that we made in the screens up front. We would qualify for that recoupment if we got above that baseline revenue line, which is commonly referred to as the MAG line. So while we will be expensing 70% revenue share cost to the MTA, we won't be sending the MTA a check for the gap between the MAG and the revenue share. We'll be using that to pay down some of our debt and offset some working capital. Obviously, there's a big number there. It's not going to pay it all down uh this year but it's it's good to get uh back to that recruitment uh plan and start to uh uh you know get paid back for some of the screens we invested in okay thank you um you had mentioned

Patrick Shoal, Analyst — Barrington Research

uh san francisco doing a little bit better and so is one of your peers um i was just curious like post events if that has been sustained and you know the extent that you know if there's a benefit from the World Cup on some of the, I think you said, depopulated cities to say that that could

Nick Brien, CEO

benefit those markets as well. Thank you. Yeah, Patrick, I'll grab that. I think we've definitely seen that early start success as well as having a very strong team. And also, obviously, the strength in San Francisco of the AI developments. When I look at the size of not just the big the open ai and the anthropic but also the pure play native uh ai companies we've got gen spark code rabbit nebius arise ai dot ai and they um really are shifting towards a physical reality these are pure play technology companies that have a huge uh interest in the in the trust and the physical nature of our medium and those campaigns are extending now outside of san francisco But that is providing a very solid revenue stream for us in that important market.

Patrick Shoal, Analyst — Barrington Research

Okay. Thank you.

Operator

There are no further questions at this time. I will now turn the call over to Nick Bryan.

Nick Brien, CEO

Well, thank you. I don't think I could have actually articulated my closing, you know, my summary for the earnings better than Matt did. So thank you for jumping in on that. I apologize again for the technology mishap here. I think the one thing that I want to close with is the fact that we've got various conferences and events across the spring and the summer, and I'm going to continue to be with the team articulating just how I see and feel this remarkable shift that we're experiencing now that in the agentic advertising world, the power of this medium that I've always believed has been undervalued through when we think about its tremendous scale is tremendous value and really proven trust and therefore the influence it has for consumers and people as i said at the close that matt shared you know the sky's the limit and i'm just excited that the organization has really stepped up to follow all those initiatives We set out for Transformation Velocity in March of 2025, and here we are, you know, not far a year after that, and seeing the fruits start to appear. And it's really testament to the remarkable focus and hard work of the entire organization. So I look forward to sharing more of that on the road, and look forward to presenting our Quarter 2 results to you in August. Thank you so much for your time.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.