OUTFRONT Media (OUT) Misses Q4 FFO Mark on Higher Expenses
OUTFRONT Media Inc. OUT reported fourth-quarter adjusted funds from operations (AFFO) per share of 56 cents, missing the Zacks Consensus Estimate of 64 cents. The figure was also lower than the prior-year quarter’s tally of 65 cents. Results reflect higher operating expenses and interest expenses in the quarter.
However, quarterly revenues of $494.7 million matched the Zacks Consensus Estimate and climbed 6.5% year over year. Higher billboard revenues, and transit and other revenues attributed to this increase.
For the full-year 2022, the AFFO per share came in at $1.92, higher than the prior-year tally of $1.40 but missed the Zacks Consensus Estimate of $2.03. The year-over-year increase was backed by 21.1% growth in revenues to $1.77 billion.
Quarter in Detail
During the reported quarter, billboard revenues were $377.5 million, marking year-over-year growth of 6.6%. The upside resulted from higher average revenues per display (referred to as yield) compared with the prior-year quarter.
The company’s transit and other revenues of $117.2 million climbed 6.1% from the year-ago quarter. The upswing mainly resulted from the increase in yield compared with the prior-year period.
OUTFRONT Media’s operating income totaled $105.0 million in the fourth quarter, narrowly missing the year-ago quarter’s $105.2 million.
Operating expenses were $239.5 million, up 10.4% year over year. The rise was primarily due to higher variable costs related to higher billboard revenues and increased transit franchise expenses.
Net interest expenses of $35.9 million increased from $31.9 million in the same prior-year period, mainly due to higher interest rates compared to the same prior-year quarter. The weighted average cost of debt on Dec 31, 2022 was 5.2% compared to 4.3% in the prior-year period.
Cash Flow & Balance Sheet
Net cash flow provided by operating activities for the year ended Dec 31, 2022 was $254.1 million compared with $98.8 million during the same prior-year period, mainly because of higher net income.
As of Dec 31, 2022, OUTFRONT Media’s liquidity position comprised unrestricted cash of $40.4 million and $493.6 million of availability under its $500-million revolving credit facility, net of $6.4 million of issued letters of credit.
In the quarter under review, the company sold no shares of its common stock under its at-the-market (ATM) equity program. It had $232.5 million available under the ATM program at the quarter’s end.
Dividend Update
Concurrent with its fourth-quarter earnings release, OUTFRONT Media announced its common stock quarterly cash dividend of 30 cents per share. The dividend will be paid out on Mar 31 to its shareholders on record as of Mar 3, 2023.
Currently, OUTFRONT Media has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
OUTFRONT Media Inc. Price, Consensus and EPS Surprise
OUTFRONT Media Inc. price-consensus-eps-surprise-chart | OUTFRONT Media Inc. Quote
Performance of Other REITs
Public Storage PSA reported a fourth-quarter 2022 core FFO per share of $4.16, increasing 17.5% year over year. The figure surpassed the Zacks Consensus Estimate of $3.99. Results reflected better-than-anticipated top-line growth, aided by an improvement in the realized annual rent per occupied square foot. PSA also benefited from its expansion efforts through acquisitions, developments and extensions.
Prologis, Inc. PLD reported a fourth-quarter 2022 core FFO per share of $1.24, beating the Zacks Consensus Estimate of $1.21. The figure climbed 10.7% from the year-ago quarter. Prologis’ quarterly results reflected better-than-anticipated revenues, driven by healthy leasing activity and solid rent growth.
Alexandria Real Estate Equities, Inc. ARE reported a fourth-quarter 2022 adjusted FFO per share of $2.14, surpassing the Zacks Consensus Estimate by a cent. The reported figure also compared favorably with the year-ago quarter’s $1.97. Alexandria Real Estate Equities' results reflected decent leasing activity and rental rate growth during the quarter.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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