OUTFRONT Media Inc

Previous wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our historical consolidated financial statements and the notes thereto appearing in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2024, and the unaudited consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q. This MD&A contains forward-looking statements that involve numerous risks and uncertainties. The forward-looking statements are subject to a number of important factors, including, but not limited to, those factors discussed in the sections entitled “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024, and the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q, that could cause our actual results to differ materially from the results described herein or implied by such forward-looking statements. Except as otherwise indicated or unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to (i) “OUTFRONT Media,” “the Company,” “we,” “our,” “us” and “our company” mean OUTFRONT Media Inc., a Maryland corporation, and unless the context requires otherwise, its consolidated subsidiaries, and (ii) the “25 largest markets in the U.S.,” “approximately 150 markets in the U.S. and Canada” and “Nielsen Designated Market Areas” are based, in whole or in part, on Nielsen Media Research’s 2024 Designated Market Area rankings.

Current wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our historical consolidated financial statements and the notes thereto appearing in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2024, and the unaudited consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q. This MD&A contains forward-looking statements that involve numerous risks and uncertainties. The forward-looking statements are subject to a number of important factors, including, but not limited to, those factors discussed in the sections entitled “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024, and the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q, that could cause our actual results to differ materially from the results described herein or implied by such forward-looking statements. Except as otherwise indicated or unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to (i) “OUTFRONT Media,” “the Company,” “we,” “our,” “us” and “our company” mean OUTFRONT Media Inc., a Maryland corporation, and unless the context requires otherwise, its consolidated subsidiaries, and (ii) the “25 largest markets in the U.S.,” “approximately 120 markets in the U.S.” and “Nielsen Designated Market Areas” are based, in whole or in part, on Nielsen Media Research’s 2024 Designated Market Area rankings.

Previous wording

OUTFRONT Media is a real estate investment trust (“REIT”), which provides advertising space (“displays”) on out-of-home advertising structures and sites in the United States (the “U.S.”) and Canada. We currently manage our operations through two operating segments—U.S. Billboard and Transit, which is included in our U.S. Media reportable segment, and International. International does not meet the criteria to be a reportable segment and accordingly, is included in Other (see Note 17. Segment Information to the Consolidated Financial Statements).

Current wording

OUTFRONT Media is a real estate investment trust (“REIT”), which provides advertising space (“displays”) on out-of-home advertising structures and sites in the United States (the “U.S.”). We currently manage our operations through one operating segment, U.S. Billboard and Transit, which is included in our U.S. Media reportable segment. Prior to its sale, our Canadian operations comprised our International operating segment, which did not meet the criteria to be a reportable segment and accordingly, was included in Other. Historical operating results of our Canadian operations are included in Other (see Note 17. Segment Information to the Consolidated Financial Statements) through the date of sale.

Previous wording

On October 22, 2023, the Company, Outfront Canada HoldCo 2 LLC, a wholly-owned subsidiary of the Company, and Outfront Canada Sub LLC, a wholly-owned subsidiary of the Company (together, the “Selling Subsidiaries”), entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Bell Media Inc. (the “Buyer”), relating to the sale of the Company’s outdoor advertising business in Canada (the “Canadian Business”). Pursuant to the Share Purchase Agreement, the Selling Subsidiaries agreed to sell all of its (and its affiliates) equity interests in Outdoor Systems Americas ULC and its subsidiaries (the “Transaction”), which hold all of the assets of the Canadian Business, to the Buyer, for C$410.0 million in cash, payable on the date of the consummation of the Transaction (the “Closing”). The purchase price is subject to (i) adjustments at and following the Closing for working capital, cash, indebtedness, capital expenditures and transaction expenses, and (ii) a holdback to be released at or following the Closing, in whole or in part, if certain third-party contracts are renewed or extended on certain terms. The consummation of the Transaction is expected to occur in the first half of 2024, subject to certain closing conditions, including, among others, (i) the absence of any enacted or pending law, order, judgment or litigation by a governmental authority prohibiting the consummation of the Transaction, and (ii) receipt of antitrust approval in Canada (the “Antitrust Approval”). (See Note 11. Acquisitions and Dispositions: Dispositions: Canadian Businessto the Consolidated Financial Statements.)

Current wording

On June 7, 2024, we sold all of our equity interests in Outdoor Systems Americas ULC and its subsidiaries (the “Transaction”), which hold all of the assets of the Company’s outdoor advertising business in Canada (the “Canadian Business”). (See Note 11. Acquisitions and Dispositions: Dispositions: Canadian Businessto the Consolidated Financial Statements.)

Previous wording

We are one of the largest providers of advertising space on out-of-home advertising structures and sites across the U.S. and Canada. Our inventory consists of billboard displays, which are primarily located on the most heavily traveled highways and roadways in top Nielsen Designated Market Areas (“DMAs”), and transit advertising displays operated under exclusive multi-year contracts with municipalities in large cities across the U.S. and Canada. In total, we have displays in all of the 25 largest markets in the U.S. and approximately 150 markets in the U.S. and Canada. Our top market, high profile location focused portfolio includes sites in and around both Grand Central Station and Times Square in New York, various locations along Sunset Boulevard in Los Angeles, and the Bay Bridge in San Francisco. The breadth and depth of our portfolio provides our customers with a range of options to address their marketing objectives, from national, brand-building campaigns to hyper-local campaigns that drive customers to the advertiser’s website or retail location “one mile down the road.”

Current wording

We are one of the largest providers of advertising space on out-of-home advertising structures and sites across the U.S. Our inventory consists of billboard displays, which are primarily located on the most heavily traveled highways and roadways in top Nielsen Designated Market Areas (“DMAs”), and transit advertising displays operated under exclusive multi-year contracts with municipalities in large cities across the U.S. In total, we have displays in all of the 25 largest markets in the U.S. and approximately 120 markets in the U.S. Our top market, high-profile, location-focused portfolio includes sites in and around both Grand Central Station and Times Square in New York, various locations along Sunset Boulevard in Los Angeles, and the Bay Bridge in San Francisco. The breadth and depth of our portfolio provides our customers with a range of options to address their marketing objectives, from national, brand-building campaigns to hyper-local campaigns that drive customers to the advertiser’s website or retail location “one mile down the road.”

Previous wording

Our revenues and operating results are sensitive to fluctuations in advertising expenditures, general economic conditions and other external events beyond our control, such as supply chain disruptions, heightened levels of inflation, pandemics like the COVID-19 pandemic, industry shutdowns or slowdowns (including due to labor strikes), and shifts in market demographics and transportation patterns (including reductions in foot traffic, roadway traffic, commuting, transit ridership and overall target audiences due to remote work, safety concerns or otherwise), as described in this MD&A. These sensitivities may adversely impact our revenues and operating results on a consolidated basis and/or may have a disproportionate adverse impact on one or more of our operating segments, especially our U.S. Transit operating segment.

Current wording

COVID-19 pandemic, industry shutdowns or slowdowns (including due to labor strikes), and shifts in market demographics and transportation patterns (including reductions in foot traffic, roadway traffic, commuting, transit ridership and overall target audiences due to remote work, safety concerns or otherwise), as described in this MD&A. These sensitivities may adversely impact our revenues and operating results on a consolidated basis and/or may have a disproportionate adverse impact on one or more of our operating segments, especially our U.S. Transit operating segment.

Previous wording

Due to the current heightened levels of inflation and commodity prices in the U.S. and abroad, which has resulted in rising interest rates, we have experienced increases with respect to some of our posting, maintenance and other expenses, some of our corporate expenses, and our interest expense, which could have an adverse effect on our business, financial condition and results of operations. Our billboard property lease expenses and transit franchise expenses have been less impacted by the current heightened levels of inflation due to the long-term nature of most of our operating leases and transit franchise agreements. However, our transit franchise agreements that contain inflationary price adjustments may cause increases in our transit franchise expenses in the near-term. Though the Company cannot reasonably estimate the full impact of the current heightened levels of inflation on our business, financial condition and results of operations at this time, a portion of these increases may be partially offset by increases in advertising rates on our displays and cost efficiencies.

Current wording

Due to the current levels of inflation and commodity prices in the U.S. and abroad, which has resulted in rising interest rates, we have experienced increases with respect to some of our posting, maintenance and other expenses, some of our corporate expenses, and our interest expense, which could have an adverse effect on our business, financial condition and results of operations. Our billboard property lease expenses and transit franchise expenses have been less impacted by the current levels of inflation due to the long-term nature of most of our operating leases and transit franchise agreements. However, our transit franchise agreements that contain inflationary price adjustments may cause increases in our transit franchise expenses in the near-term. Though the Company cannot reasonably estimate the full impact of the current levels of inflation on our business, financial condition and results of operations at this time, a portion of these increases may be partially offset by increases in advertising rates on our displays and cost efficiencies.

Previous wording

We built or converted 32 new digital billboard displays in the U.S. and seven in Canada during the three months ended March 31, 2024. Additionally, in the three months ended March 31, 2024, we entered into marketing arrangements to sell advertising on four third-party digital billboard displays in the U.S. In the three months ended March 31, 2024, we built, converted or replaced 2,523 digital transit and other displays in the U.S. The following table sets forth information regarding our digital displays.

Current wording

During the six months ended June 30, 2024, we built or converted 46 new digital billboard displays in the U.S. Additionally, in the six months ended June 30, 2024, we entered into marketing arrangements to sell advertising on 13 third-party digital billboard displays in the U.S. In the six months ended June 30, 2024, we built, converted or replaced 4,316 digital transit and other displays in the U.S. The following table sets forth information regarding our digital displays.

Previous wording

(a)Digital display amounts include 5,301 displays reserved for transit agency use. Our number of digital displays is impacted by acquisitions, dispositions, management agreements, the net effect of new and lost billboards, and the net effect of won and lost franchises in the period.

Current wording

(a)Digital display amounts include 5,615 displays reserved for transit agency use. Our number of digital displays is impacted by acquisitions, dispositions, management agreements, the net effect of new and lost billboards, and the net effect of won and lost franchises in the period.

Previous wording

We have a diversified base of customers across various industries. During the three months ended March 31, 2024, our largest categories of advertisers were entertainment, retail and health/medical, each of which represented approximately 20%, 11% and 10% of our total U.S. Media segment revenues, respectively. During the three months ended March 31, 2023, our largest categories of advertisers were entertainment, health/medical and retail, each of which represented approximately 20%, 11% and 9% of our total U.S. Media segment revenues, respectively.

Current wording

We have a diversified base of customers across various industries. During the three months ended June 30, 2024, our largest categories of advertisers were entertainment, retail and health/medical, each of which represented approximately 18%, 11% and 8% of our total U.S. Media segment revenues, respectively. During the three months ended June 30, 2023, our largest categories of advertisers were entertainment, retail and health/medical, each of which represented approximately 21%, 10% and 8% of our total U.S. Media segment revenues, respectively. During the six months ended June 30, 2024, our largest categories of advertisers were entertainment, retail and health/medical, each of which represented approximately 19%, 11% and 9% of our total U.S. Media segment revenues, respectively. During the six months ended June 30, 2023, our largest categories of advertisers were entertainment, retail and health/medical, each of which represented approximately 20%, 10% and 9% of our total U.S. Media segment revenues, respectively.

Previous wording

Our large-scale portfolio allows our customers to reach a national audience and also provides the flexibility to tailor campaigns to specific regions or markets. We generated approximately 38% of our U.S. Media segment revenues from national advertising campaigns in the three months ended March 31, 2024, compared to approximately 41% in the same prior-year period.

Current wording

Our large-scale portfolio allows our customers to reach a national audience and also provides the flexibility to tailor campaigns to specific regions or markets. We generated approximately 42% of our U.S. Media segment revenues from national advertising campaigns in the three months ended June 30, 2024, compared to approximately 43% in the same prior-year period. We generated approximately 40% of our U.S. Media segment revenues from national advertising campaigns in the six months ended June 30, 2024, compared to approximately 42% in the same prior-year period.

Previous wording

(a)Organic revenues exclude revenues associated with 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. Since organic revenues are not calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, revenues as an indicator of operating performance. Organic revenues, as we calculate it, may not be comparable to similarly titled measures employed by other companies.

Current wording

(a)Organic revenues exclude revenues associated with the impact of the Transaction 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. Since organic revenues are not calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, revenues as an indicator of operating performance. Organic revenues, as we calculate it, may not be comparable to similarly titled measures employed by other companies.

Previous wording

(b)See the “Reconciliation of Non-GAAP Financial Measures” and “Revenues” sections of this MD&A for reconciliations of Operating income to Operating income before Depreciation, Amortization, Net loss on dispositions, Stock-based compensation and Impairment charges (“Adjusted OIBDA”)Net loss attributable to OUTFRONT Media Inc. to FFO attributable to OUTFRONT Media Inc. and AFFO attributable to OUTFRONT Media Inc., and Revenues to organic revenues.

Current wording

(b)See the “Reconciliation of Non-GAAP Financial Measures” and “Revenues” sections of this MD&A for reconciliations of Operating income (loss) to Operating income (loss) before Depreciation, Amortization, Net (gain) loss on dispositions, Stock-based compensation and Impairment charges (“Adjusted OIBDA”)Net income (loss) attributable to OUTFRONT Media Inc. to FFO attributable to OUTFRONT Media Inc. and AFFO attributable to OUTFRONT Media Inc., and Revenues to organic revenues.

Previous wording

(a)Organic revenues exclude revenues associated with the impact of foreign currency exchange rates (“non-organic revenues”).

Current wording

(a)Organic revenues exclude revenues associated with the impact of the Transaction and the impact of foreign currency exchange rates (“non-organic revenues”).

Previous wording

In the three months ended March 31, 2023, non-organic revenues reflect the impact of foreign currency exchange rates.

Current wording

In the three and six months ended June 30, 2024, non-organic revenues reflect the impact of the Transaction. In the three and six months ended June 30, 2023, non-organic revenues reflect the impact of the Transaction and the impact of foreign currency exchange rates.

Previous wording

Total billboard revenues increased $8.2 million, or 3%, in the three months ended March 31, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), driven by the impact of programmatic and direct sale advertising platforms on digital billboard revenues and the impact of new and lost billboards in the period, including insignificant acquisitions, partially offset by lower proceeds from condemnations.

Current wording

Total billboard revenues increased $1.8 million in the three months ended June 30, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), driven by the impact of programmatic and direct sale advertising platforms on digital billboard revenues and the impact of new and lost billboards in the period, including insignificant acquisitions, partially offset by the impact of the Transaction. Total billboard revenues increased $10.0 million, or 1%, in the six months ended June 30, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), driven by the impact of programmatic and direct sale advertising platforms on digital billboard revenues and the impact of new and lost billboards in the period, including insignificant acquisitions, partially offset by the impact of the Transaction and lower proceeds from condemnations.

Previous wording

Organic billboard revenues increased $8.1 million, or 3%, in the three months ended March 31, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), driven by the impact of programmatic and direct sale advertising platforms on digital billboard revenues and the impact of new and lost billboards in the period, including insignificant acquisitions, partially offset by lower proceeds from condemnations.

Current wording

Organic billboard revenues increased $8.0 million, or 2%, in the three months ended June 30, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), driven by the impact of programmatic and direct sale advertising platforms on digital billboard revenues and the impact of new and lost billboards in the period, including insignificant acquisition. Organic billboard revenues increased $15.8 million, or 2%, in the six months ended June 30, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), driven by the impact of programmatic and direct sale advertising platforms on digital billboard revenues and the impact of new and lost billboards in the period, including insignificant acquisitions, partially offset by lower proceeds from condemnations.

Previous wording

Total transit and other revenues increased $4.5 million, or 6%, in the three months ended March 31, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), partially offset by the impact of new and lost transit franchise contracts in the period.

Current wording

Total transit and other revenues increased $6.7 million, or 7%, in the three months ended June 30, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), partially offset by the impact of new and lost transit franchise contracts in the period and the impact of the Transaction. Total transit and other revenues increased $11.2 million, or 6%, in the six months ended June 30, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), partially offset by the impact of new and lost transit franchise contracts in the period and the impact of the Transaction.

Previous wording

Organic transit and other revenues increased $4.5 million, or 6%, in the three months ended March 31, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), partially offset by the impact of new and lost transit franchise contracts in the period.

Current wording

Organic transit and other revenues increased $8.1 million, or 9%, in the three months ended June 30, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), partially offset by the impact of new and lost transit franchise contracts in the period. Organic transit and other revenues increased $12.0 million, or 7%, in the six months ended June 30, 2024, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), partially offset by the impact of new and lost transit franchise contracts in the period.

Previous wording

Billboard property lease expenses represented 37% of billboard revenues in the three months ended March 31, 2024, and 38% in the three months ended March 31, 2023. The decrease in billboard property lease expenses as a percentage of billboard revenues in the three months ended March 31, 2024, is primarily due to higher billboard revenues and the impact of new locations, including through acquisitions, and lower variable billboard property lease expenses (see Note 5. Leases to the Consolidated Financial Statements), which includes an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease expenses (see Note 1. Description of Business and Basis of Presentationto the Consolidated Financial Statements).

Current wording

Billboard property lease expenses represented 33% of billboard revenues in the three months ended June 30, 2024, and 35% in the three months ended June 30, 2023. The decrease in billboard property lease expenses as a percentage of billboard revenues in the three months ended June 30, 2024, is primarily due to lower variable billboard property lease costs driven by higher revenue performance in advertising markets that have lower variable billboard property lease costs and lower revenue performance in advertising markets that have higher variable billboard property lease costs, partially offset by the impact of new locations, including through acquisitions. Billboard property lease expenses represented 35% of billboard revenues in the six months ended June 30, 2024, and 36% in the six months ended June 30, 2023. The decrease in billboard property lease expenses as a percentage of billboard revenues in the six months ended June 30, 2024, is primarily due lower variable billboard property lease costs driven by higher revenue performance in advertising markets that have lower variable billboard property lease costs and lower revenue performance in advertising markets that have higher variable billboard property lease costs (see Note 5. Leases to the Consolidated Financial Statements), which includes an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease costs (see Note 1. Description of Business and Basis of Presentationto the Consolidated Financial Statements) and the impact of new locations, including through acquisitions.

Previous wording

Transit franchise expenses represented 83% of transit display revenues in the three months ended March 31, 2024, and 89% in the three months ended March 31, 2023. The decrease in transit franchise expenses, as a percentage of transit display revenues in the three months ended March 31, 2024, compared to the same prior year period, are primarily driven by the net impact of new and lost transit franchise contracts, partially offset by higher guaranteed minimum annual payments to the MTA. We expect transit franchise expenses, as a percentage of transit display revenues, to continue to decline in 2024 compared to 2023 as a result of our expectation that revenues generated under the MTA Agreement (as defined below) in 2024 will grow at a compound annual growth rate above the inflation-adjusted guaranteed minimum annual payments to the MTA.

Current wording

Transit franchise expenses represented 64% of transit display revenues in the three months ended June 30, 2024, 70% in the three months ended June 30, 2023, 72% of transit display revenues in the six months ended June 30, 2024, and 78% in the six months ended June 30, 2023. The decreases in transit franchise expenses, as a percentage of transit display revenues in the three and six months ended June 30, 2024, compared to the same prior-year periods, are primarily driven by MTA revenues growing at a faster pace than the inflationary increase to the guaranteed minimum annual payments to the MTA under the MTA Agreement (as defined below), partially offset by the net impact of new and lost transit franchise contracts. We expect transit franchise expenses, as a percentage of transit display revenues, to decline in the remainder of 2024 compared to 2023, but remain above pre-COVID-19 pandemic levels, as a result of our expectation that revenues generated under the MTA Agreement in 2024 will grow at a compound annual growth rate above the inflation-adjusted guaranteed minimum annual payments to the MTA.

Previous wording

Billboard property lease and transit franchise expenses decreased $0.1 million in the three months ended March 31, 2024, compared to the same prior-year period, primarily due to the net impact of new and lost transit franchise contracts and lower variable billboard property lease expenses, which includes an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease expenses (see Note 1. Description of Business and Basis of Presentation to the Consolidated Financial Statements), partially offset by higher guaranteed minimum annual payments to the MTA and the impact of new locations, including through acquisitions.

Current wording

Billboard property lease and transit franchise expenses decreased $6.6 million, or 3%, in the three months ended June 30, 2024, compared to the same prior-year period, primarily due to lower variable property lease expenses, the impact of the Transaction and the net impact of new and lost transit franchise contracts, partially offset by higher guaranteed minimum annual payments to the MTA and the impact of new locations, including through acquisitions. Billboard property lease and transit franchise expenses decreased $6.7 million, or 2%, in the six months ended June 30, 2024, compared to the same prior-year period, primarily due to lower variable property lease expenses, which includes an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease costs (see Note 1. Description of Business and Basis of Presentation to the Consolidated Financial Statements), the impact of the Transaction and the net impact of new and lost transit franchise contracts, partially offset by higher guaranteed minimum annual payments to the MTA and the impact of new locations, including through acquisitions.

Previous wording

Posting, maintenance and other expenses as a percentage of revenues were 14% in each of the three months ended March 31, 2024 and 2023. Posting, maintenance and other expenses increased $3.3 million, or 6%, in the three months ended March 31, 2024, compared to the same prior-year period, primarily due to higher compensation-related expenses, higher posting and rotation costs, driven by higher business activity, and higher maintenance and utilities cost, driven by inflationary cost increases, partially offset by lower materials costs driven by lower third-party equipment sales.

Current wording

Posting, maintenance and other expenses as a percentage of revenues were 12% in each of the three months ended June 30, 2024 and 2023, and 13% in each of the six months ended June 30, 2024, and 2023. Posting, maintenance and other expenses increased $0.5 million, or 1%, in the three months ended June 30, 2024, compared to the same prior-year period, primarily due to higher compensation-related expenses, higher posting and rotation costs, driven by higher business activity, and higher maintenance and utilities cost, driven by inflationary cost increases, partially offset by the impact of the Transaction and lower materials costs driven by lower third-party equipment sales. Posting, maintenance and other expenses increased $3.8 million, or 3%, in the six months ended June 30, 2024, compared to the same prior-year period, primarily due to higher compensation-related expenses, higher posting and rotation costs, driven by higher business activity, and higher maintenance and utilities cost, driven by inflationary cost increases, partially offset by the impact of the Transaction and lower materials costs driven by lower third-party equipment sales.

Previous wording

SG&A expenses represented 27% of Revenues in each of the three months ended March 31, 2024 and 2023. SG&A expenses increased $2.6 million, or 2%, in the three months ended March 31, 2024, compared to the same prior-year period, primarily due to higher professional fees, as a result of a management consulting project, higher compensation-related expenses, including salaries and net of higher commissions, and higher rent related to new offices, partially offset by lower travel and entertainment expenses. We continue to evaluate methods to lower SG&A expense growth.

Current wording

SG&A expenses represented 25% of Revenues in the three months ended June 30, 2024, 23% of Revenues in the three months ended June 30, 2023, 26% of Revenues in the six months ended June 30, 2024 and 25% of Revenues in the six months ended June 30, 2023. SG&A expenses increased $10.5 million, or 10%, in the three months ended June 30, 2024, compared to the same prior-year period, primarily due to higher compensation-related expenses, including salaries and commissions, higher professional fees, as a result of a management consulting project, a higher provision for doubtful accounts and higher rent related to new offices. SG&A expenses increased $13.1 million, or 6%, in the six months ended June 30, 2024, compared to the same prior-year period, primarily due to higher compensation-related expenses, including salaries and commissions, higher professional fees, as a result of a management consulting project, higher rent related to new offices and a higher provision for doubtful accounts. We continue to evaluate methods to lower SG&A expense growth.

Previous wording

As a result of our continued expectation of negative aggregate cash flows related to our MTA asset group, we recorded an additional impairment charge of $9.1 million in the three months ended March 31, 2024, representing additional MTA equipment deployment cost spending during the quarter. (See Note 4. Intangible Assetsto the Consolidated Financial Statements.)

Current wording

As a result of negative aggregate cash flows related to our MTA asset group, we performed quarterly impairment analyses on the MTA asset group and recorded impairment charges of $8.8 million in the three months ended June 30, 2024, and $17.9 million in the six months ended June 30, 2024, representing additional MTA equipment deployment cost spending during the periods. In the three and six months ended June 30, 2023, we recorded impairment charges of $511.4 million, primarily representing a $443.1 million impairment charge related to our MTA asset group (see Note 4. Intangible Assetsto the Consolidated Financial Statements) and an impairment charge of $47.6 million representing the entire goodwill balance associated with our U.S. Transit and Other reporting unit.

Previous wording

Amortization decreased $4.2 million, or 19%, in the three months ended March 31, 2024, compared to the same prior-year periods, due primarily to intangible assets reclassified as Assets held for sale on the Consolidated Statement of Financial Position. (See Note 11. Acquisitions and Dispositions: Dispositions: Canadian Business.).

Current wording

Amortization decreased $4.2 million, or 20%, in the three months ended June 30, 2024, and decreased $8.4 million, or 19%, in the six months ended June 30, 2024, compared to the same prior-year periods, due primarily to the Transaction. (See Note 11. Acquisitions and Dispositions: Dispositions: Canadian Business.)

Previous wording

Interest expense, net, was $41.4 million (including $1.6 million of deferred financing costs) in the three months ended March 31, 2024, and $37.7 million (including $1.6 million of deferred financing costs) in the same prior-year period. The increase was primarily due to higher interest rates and a higher average debt balance.

Current wording

Interest expense, net, was $41.1 million (including $1.5 million of deferred financing costs) in the three months ended June 30, 2024, and $39.7 million (including $1.8 million of deferred financing costs) in the same prior-year period. Interest expense, net, was $82.5 million (including $3.1 million of deferred financing costs) in the six months ended June 30, 2024, and $77.4 million (including $3.4 million of deferred financing costs) in the same prior-year period. The increases were primarily due to higher interest rates and a higher average debt balance.

Previous wording

When used herein, references to “FFO” and “AFFO” mean “FFO attributable to OUTFRONT Media Inc.” and “AFFO attributable to OUTFRONT Media Inc.,” respectively. We calculate FFO in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO reflects net income (loss) attributable to OUTFRONT Media Inc. adjusted to exclude gains and losses from the sale of real estate assets, impairment charges, depreciation and amortization of real estate assets, amortization of direct lease acquisition costs and the same adjustments for our equity-based investments and non-controlling interests, as well as the related income tax effect of adjustments, as applicable. We calculate 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 certain non-cash items, including non-real estate depreciation and amortization, impairment charges on non-real estate assets, stock-based compensation expense, accretion expense, the non-cash effect of straight-line rent, amortization of deferred financing costs and the same adjustments for our non-controlling interests, along with the non-cash portion of income taxes, and the related income tax effect of adjustments, as applicable. We use FFO and AFFO measures for managing our business and for planning and forecasting future periods, and each is an important indicator of our operational strength and business performance, especially compared to other REITs. Our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing, planning and executing our business strategy. Our management also believes that the presentations of FFO and AFFO, 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.

Current wording

When used herein, references to “FFO” and “AFFO” mean “FFO attributable to OUTFRONT Media Inc.” and “AFFO attributable to OUTFRONT Media Inc.,” respectively. We calculate FFO in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO reflects net income (loss) attributable to OUTFRONT Media Inc. adjusted to exclude gains and losses from the sale of real estate assets, impairment charges, depreciation and amortization of real estate assets, amortization of direct lease acquisition costs and the same adjustments for our equity-based investments and non-controlling interests, as well as the related income tax effect of adjustments, as applicable. We calculate 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 losses on extinguishment of debt, as well as certain non-cash items, including non-real estate depreciation and amortization, impairment charges on non-real estate assets, stock-based compensation expense, accretion expense, the non-cash effect of straight-line rent, amortization of deferred financing costs and the same adjustments for our non-controlling interests, along with the non-cash portion of income taxes, and the related income tax effect of adjustments, as applicable. We use FFO and AFFO measures for managing our business and for planning and forecasting future periods, and each is an important indicator of our operational strength and business performance, especially compared to other REITs. Our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing, planning and executing our business strategy. Our management also believes that the presentations of FFO and AFFO, 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.

Previous wording

The following table reconciles Operating income to Adjusted OIBDA, and Net loss attributable to OUTFRONT Media Inc. to FFO attributable to OUTFRONT Media Inc. and AFFO attributable to OUTFRONT Media Inc.

Current wording

The following table reconciles Operating income (loss) to Adjusted OIBDA, and Net loss attributable to OUTFRONT Media Inc. to FFO attributable to OUTFRONT Media Inc. and AFFO attributable to OUTFRONT Media Inc.

Previous wording

FFO attributable to OUTFRONT Media Inc. increased $5.2 million, or 30%, in the three months ended March 31, 2024, compared to the same prior-year period, due primarily to higher Adjusted OIBDA, partially offset by impairment charges on non-real estate assets and higher interest expense. AFFO attributable to OUTFRONT Media Inc. increased $14.4 million, or 164%, in the three months ended March 31, 2024, compared to the same prior-year period, due primarily to higher Adjusted OIBDA, lower maintenance capital expenditures and lower cash paid for income taxes.

Current wording

FFO attributable to OUTFRONT Media Inc. was $83.8 million in the three months ended June 30, 2024, compared to a deficit of $59.8 million in the same prior-year period, due primarily to lower impairment charges on non-real estate assets. AFFO attributable to OUTFRONT Media Inc. increased $6.8 million, or 9%, in the three months ended June 30, 2024, compared to the same prior-year period, due primarily to higher Adjusted OIBDA and lower cash paid for income taxes. FFO attributable to OUTFRONT Media Inc. was $106.1 million in the six months ended June 30, 2024, compared to a deficit of $42.7 million in the same prior-year period, due primarily to lower impairment charges on non-real estate assets. AFFO attributable to OUTFRONT Media Inc. increased $21.2 million, or 24%, in the six months ended June 30, 2024, compared to the same prior- year period, due primarily to higher Adjusted OIBDA, lower maintenance capital expenditures and lower cash paid for income taxes.

Previous wording

We currently manage our operations through two operating segments—U.S. Billboard and Transit, which is included in our U.S. Media reportable segment, and International. International does not meet the criteria to be a reportable segment and accordingly, is included in Other. Our segment reporting therefore includes U.S. Media and Other.

Current wording

We currently manage our operations through one operating segment, U.S. Billboard and Transit, which is included in our U.S. Media reportable segment. Prior to its sale, our Canadian operations comprised our International operating segment, which did not meet the criteria to be a reportable segment and accordingly, was included in Other. Historical operating results of our Canadian operations are included in Other through the date of sale (see Note 17. Segment Information to the Consolidated Financial Statements). Our segment reporting therefore includes U.S. Media and Other.

Previous wording

The following table presents our Revenues, Adjusted OIBDA and Operating incomeby segment in the three months ended March 31, 2024 and 2023.

Current wording

The following table presents our Revenues, Adjusted OIBDA and Operating income (loss)by segment in the three and six months ended June 30, 2024 and 2023.

Previous wording

Total U.S. Media segment revenues increased $13.2 million, or 4%, in the three months ended March 31, 2024, compared to the same prior-year period, due primarily to higher billboard revenues. We generated approximately 38% in the three months ended March 31, 2024, and 41% in the three months ended March 31, 2023, of our U.S. Media segment revenues from national advertising campaigns.

Current wording

Total U.S. Media segment revenues increased $17.9 million, or 4%, in the three months ended June 30, 2024, compared to the same prior-year period, due primarily to higher transit and other revenues, as well as higher billboard revenues. Total U.S. Media segment revenues increased $31.1 million, or 4%, in the six months ended June 30, 2024, compared to the same prior-year period, due primarily to higher transit and other revenues, as well as higher billboard revenues. We generated approximately 42% in the three months ended June 30, 2024, 43% in the three months ended June 30, 2023, 40% in the six months ended June 30, 2024, and 42% in the six months ended June 30, 2023, of our U.S. Media segment revenues from national advertising campaigns.

Previous wording

Billboard revenues in the U.S. Media segment increased $7.8 million, or 3%, in the three months ended March 31, 2024, compared to the same prior-year period, reflecting an increase in average revenue per display (yield), driven by the impact of programmatic and direct sale advertising platforms on digital billboard revenues and the impact of new and lost billboards in the period, including insignificant acquisitions, partially offset by lower proceeds from condemnations.

Current wording

Billboard revenues in the U.S. Media segment increased $8.0 million, or 2%, in the three months ended June 30, 2024, compared to the same prior-year period, reflecting an increase in average revenue per display (yield), driven by the impact of programmatic and direct sale advertising platforms on digital billboard revenues and the impact of new and lost billboards in the period, including insignificant acquisitions. Billboard revenues in the U.S. Media segment increased $15.8 million, or 2%, in the six months ended June 30, 2024, compared to the same prior-year period, reflecting an increase in average revenue per display (yield), driven by the impact of programmatic and direct sale advertising platforms on digital billboard revenues and the impact of new and lost billboards in the period, including insignificant acquisitions, partially offset by lower proceeds from condemnations.

Previous wording

Operating expenses in the U.S. Media segment increased $3.6 million, or 2%, in the three months ended March 31, 2024, compared to the same prior-year period, primarily driven by higher billboard revenues, higher guaranteed minimum annual payments to the MTA, higher compensation-related expenses, higher posting and rotation costs, driven by higher business activity, and higher maintenance and utilities cost, driven by inflationary cost increases, partially offset by an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease expenses (see Note 1. Description of Business and Basis of Presentationto the Consolidated Financial Statements) and the net impact of new and lost transit franchise contracts.

Current wording

Operating expenses in the U.S. Media segment decreased $1.9 million, or 1%, in the three months ended June 30, 2024, compared to the same prior-year period, primarily driven by lower variable property lease expenses and the net impact of new and lost transit franchise contracts, partially offset by higher guaranteed minimum annual payments to the MTA, higher compensation-related expenses, higher posting and rotation costs, driven by higher business activity, and higher maintenance and utilities cost, driven by inflationary cost increases. Operating expenses in the U.S. Media segment increased $1.7 million in the six months ended June 30, 2024, compared to the same prior-year period, primarily driven by higher billboard revenues, higher guaranteed minimum annual payments to the MTA, higher compensation-related expenses, higher posting and rotation costs, driven by higher business activity, and higher maintenance and utilities cost, driven by inflationary cost increases, partially offset by an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease costs (see Note 1. Description of Business and Basis of Presentationto the Consolidated Financial Statements) and the net impact of new and lost transit franchise contracts.

Previous wording

SG&A expenses in the U.S. Media segment decreased $0.1 million in the three months ended March 31, 2024, compared to the same prior-year period, primarily driven by a lower provision for doubtful accounts and lower professional fees, partially offset by higher compensation-related expenses, higher rent related to new offices and higher insurance costs.

Current wording

SG&A expenses in the U.S. Media segment increased $7.4 million, or 9%, in the three months ended June 30, 2024, compared to the same prior-year period, primarily driven by higher compensation-related expenses, a higher provision for doubtful accounts, higher rent related to new offices and higher insurance costs, partially offset by lower professional fees. SG&A expenses in the U.S. Media segment increased $7.3 million, or 4%, in the six months ended June 30, 2024, compared to the same prior-year period, primarily driven by higher compensation-related expenses, a higher provision for doubtful accounts and higher rent related to new offices, partially offset by lower professional fees.

Previous wording

In the three months ended March 31, 2024, we recorded impairment charges of $9.1 million in the U.S. Media segment, primarily related to impairment charges related to our MTA asset group and our U.S. Transit and Other reporting unit (see Note 4. Intangible Assets to the Consolidated Financial Statements).

Current wording

In the three months ended June 30, 2024, we recorded impairment charges of $8.8 million and in the six months ended June 30, 2024, we recorded impairment charges of $17.9 million in the U.S. Media segment, primarily related to impairment charges with respect to our MTA asset group and our U.S. Transit and Other reporting unit. In the three and six months ended June 30, 2023, we recorded impairment charges of $511.4 million in the U.S. Media segment, primarily related to impairment charges with respect to our MTA asset group and our U.S. Transit and Other reporting unit. (See Note 4. Intangible Assets to the Consolidated Financial Statements.)

Previous wording

U.S. Media segment Adjusted OIBDA increased $9.7 million, or 13%, in the three months ended March 31, 2024, compared to the same prior-year period. Adjusted OIBDA margin was 21% in the three months ended March 31, 2024, and 19% in the three months ended March 31, 2023. The increase in Adjusted OIBDA margin was due primarily to a higher increase in Adjusted OIBDA, driven primarily by an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease expenses (see Note 1. Description of Business and Basis of Presentationto the Consolidated Financial Statements), compared to a lower increase in revenues.

Current wording

U.S. Media segment Adjusted OIBDA increased $12.4 million, or 10%, in the three months ended June 30, 2024, and increased $22.1 million, or 11%, in the six months ended June 30, 2024, compared to the same prior-year period. Adjusted OIBDA margin was 30% in the three months ended June 30, 2024, 29% in the three months ended June 30, 2023, 26% in the six months ended June 30, 2024, and 24% in the six months ended June 30, 2023. The increases in Adjusted OIBDA margin were due primarily to a higher increases in Adjusted OIBDA compared to lower increases in revenues. The increase for the six months ended June 30, 2024, was also driven by an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease costs (see Note 1. Description of Business and Basis of Presentationto the Consolidated Financial Statements).

Previous wording

(a)Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”).

Current wording

(a)Organic revenues exclude the impact of the Transaction and the impact of foreign currency exchange rates (“non-organic revenues”).

Previous wording

Total Other revenues decreased $0.5 million, or 3%, in the three months ended March 31, 2024, compared to the same prior-year period, primarily driven by a decline in third-party digital equipment sales, partially offset by an increase in average revenue per display (yield).

Current wording

Total Other revenues decreased $9.4 million, or 36%, in the three months ended June 30, 2024, compared to the same prior-year period, primarily driven by the impact of the Transaction and a decline in third-party digital equipment sales, partially offset by an increase in average revenue per display (yield). Total Other revenues decreased $9.9 million, or 22%, in the six months ended June 30, 2024, compared to the same prior-year period, primarily driven by the impact of the Transaction and a decline in third-party digital equipment sales, partially offset by an increase in average revenue per display (yield).

Previous wording

Organic Other revenues decreased $0.6 million, or 3%, in the three months ended March 31, 2024, compared to the same prior-year period, primarily driven by a decline in third-party digital equipment sales, partially offset by an increase in average revenue per display (yield).

Current wording

Organic Other revenues decreased $1.8 million, or 95%, in the three months ended June 30, 2024, and decreased $3.3 million, or 89%, in the six months ended June 30, 2024, compared to the same prior-year periods, primarily driven by a decline in third-party digital equipment sales.