OUTFRONT Media(OUT) - 2025 Q2 - Quarterly Report

PART I - Financial Information Item 1. Financial Statements (Unaudited) This section presents OUTFRONT Media Inc.'s unaudited consolidated financial statements, revealing a decrease in total assets to $5.15 billion, a decline in quarterly revenues to $460.2 million, and a significant drop in net income to $19.5 million due to a prior-year gain and a $19.8 million restructuring charge, with stable operating cash flow at $100.7 million Consolidated Statements of Financial Position Consolidated Balance Sheet Summary (as of June 30, 2025 vs. Dec 31, 2024) | Account | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $355.1 | $385.8 | | Total Assets | $5,149.0 | $5,215.2 | | Total Current Liabilities | $580.5 | $520.8 | | Total Liabilities | $4,469.2 | $4,431.2 | | Total Stockholders' Equity | $539.1 | $649.0 | - Total assets decreased slightly from $5.22 billion at year-end 2024 to $5.15 billion as of June 30, 2025, with total liabilities increasing and stockholders' equity decreasing by over $100 million[9] Consolidated Statements of Operations Consolidated Statement of Operations Summary | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | YTD 2025 (in millions) | YTD 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $460.2 | $477.3 | $850.9 | $885.8 | | Operating Income | $56.2 | $229.1 | $70.1 | $243.1 | | Net Income (Loss) attributable to OUTFRONT | $19.5 | $176.8 | $(1.1) | $149.6 | | Diluted EPS | $0.10 | $1.04 | $(0.03) | $0.88 | - Q2 2025 revenues decreased to $460.2 million from $477.3 million in Q2 2024, with net income significantly declining to $19.5 million from $176.8 million due to a prior-year $155.2 million gain on disposition and a new $19.8 million restructuring charge[11] Consolidated Statements of Cash Flows Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net cash flow provided by operating activities | $100.7 | $101.6 | | Net cash flow provided by (used for) investing activities | $(61.5) | $259.5 | | Net cash flow used for financing activities | $(57.6) | $(347.1) | | Net increase (decrease) in cash | $(18.4) | $13.6 | - Cash from operations was stable at $100.7 million for the first six months of 2025[20] - Investing activities used $61.5 million, a sharp contrast to $259.5 million provided in the prior year, which included $309.4 million in proceeds from dispositions[20] - Financing activities used significantly less cash, $57.6 million compared to $347.1 million, due to lower debt repayments[20] Notes to Consolidated Financial Statements These notes detail accounting policies and financial statement items, disclosing the June 2024 Canadian business sale, a June 2025 restructuring plan with a $19.8 million charge, the $2.55 billion debt structure, segment performance showing slight Billboard revenue decline and Transit growth, and significant MTA commitments for equipment deployment - The company sold its Canadian outdoor advertising business on June 7, 2024, with historical results included in the 'Other' segment until the sale date[26] - An error in classifying and recognizing redeemable noncontrolling interests was corrected in Q3 2024, requiring a revision of prior financial information but not impacting net cash flows[29][118][119] - A restructuring plan announced on June 23, 2025, reduced the workforce by approximately 120 employees (6%), resulting in a Q2 2025 charge of $19.8 million for severance, benefits, and professional fees[79] - The company has a significant agreement with the New York MTA for deploying thousands of digital advertising screens, with 27,251 displays installed as of June 30, 2025, incurring $12.3 million in deployment costs during the first six months of 2025[99][102] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses performance, highlighting a 4% total revenue decrease (flat organic), a 2% Billboard segment decline, and 4-6% Transit growth; a June 2025 restructuring incurred a $19.8 million charge, while liquidity is supported by operating cash flow and credit facilities, with $2.55 billion total debt and covenant compliance Key Performance Indicators (Six Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Revenues | $850.9 | $885.8 | (4)% | | Organic Revenues | $850.9 | $850.9 | 0% | | Operating Income | $70.1 | $243.1 | (71)% | | Adjusted OIBDA | $188.3 | $192.5 | (2)% | | Net (Loss) Income | $(1.1) | $149.6 | (101)% | | Adjusted FFO (AFFO) | $109.2 | $108.0 | 1% | - A restructuring and workforce reduction plan initiated in June 2025 affected 120 employees (6%), resulting in a $19.8 million Q2 2025 charge and expected lower SG&A expenses through H1 2026[133][158] - Top advertiser categories for H1 2025 were entertainment (18%), retail (11%), and legal services/lawyers (10%)[142] Analysis of Results of Operations - Total revenues for the six months ended June 30, 2025, decreased 4% to $850.9 million, though organic revenues remained flat year-over-year after excluding the Canadian business sale[150] - Operating expenses decreased 5% in H1 2025, mainly due to a 9% reduction in billboard property lease expenses from lost billboards and the Canadian business sale[152][153] - A net loss of $1.1 million for H1 2025 contrasts sharply with $149.6 million net income in H1 2024, primarily due to a $155.1 million gain on disposition in 2024 and a $19.8 million restructuring charge in 2025[167] - Interest expense for H1 2025 decreased to $72.5 million from $82.5 million in the prior year, driven by a lower average debt balance and reduced interest rates[164] Segment Results of Operations Segment Adjusted OIBDA (Six Months Ended June 30) | Segment | 2025 (in millions) | 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Billboard | $233.4 | $233.1 | 0% | | Transit | $(7.0) | $(10.8) | 35% (improvement) | | Other | $1.0 | $2.5 | (60)% | | Corporate | $(39.1) | $(32.3) | (21)% | - Billboard segment revenues for H1 2025 decreased 2% to $662.0 million due to lost billboards, particularly in New York and Los Angeles, though Adjusted OIBDA remained flat at $233.4 million due to lower property lease expenses[183][184][185] - Transit segment revenues for H1 2025 increased 4% to $184.0 million, driven by higher average revenue per display, and its Adjusted OIBDA loss improved 35% to $(7.0) million from $(10.8) million[189][190][195] Liquidity and Capital Resources - As of June 30, 2025, total debt was $2.55 billion with a 5.4% weighted average cost, and the company was in compliance with debt covenants, maintaining a Consolidated Total Leverage Ratio of 4.8 to 1.0 (below the 6.0 to 1.0 limit)[216][224] - The company holds a $500.0 million revolving credit facility with no outstanding borrowings and a $150.0 million accounts receivable facility with $70.0 million drawn as of June 30, 2025[218][219][223] - Full-year 2025 capital expenditures are projected at approximately $85.0 million, mainly for digital displays, excluding $35.0 million in MTA agreement equipment deployment costs[236][210] - The board approved a quarterly cash dividend of $0.30 per share on August 5, 2025[214] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from commodity prices, interest rates, and credit, with electricity costs partially mitigated by fixed-rate contracts, and a 0.25% interest rate change on the $400.0 million Term Loan impacting annualized interest expense by $1.0 million, while credit risk is limited - Interest rate risk arises from the $400.0 million variable-rate Term Loan and $70.0 million AR Facility outstanding, where a 0.25% rate change on the Term Loan would alter annualized interest expense by approximately $1.0 million[249][250] - Commodity price risk primarily involves electricity costs for displays, partially mitigated by fixed-rate purchase agreements[246][247] Item 4. Controls and Procedures Management, including the Interim CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate SEC filing information, with no material changes to internal control over financial reporting identified during the quarter - The Interim CEO and CFO concluded that disclosure controls and procedures were effective as of quarter-end[253] - No material changes to internal control over financial reporting occurred during the quarter[254] PART II - Other Information Item 1. Legal Proceedings The company is involved in various ongoing lawsuits and governmental proceedings, none of which management expects to have a material adverse effect on its operations, financial position, or cash flows - Management believes no current litigation will materially adversely affect the company's financial condition or results[257] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, were reported - No material changes to risk factors were reported for the quarter[258] Other Part II Items This section reports 'None' for unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, and other material information requiring disclosure under Item 5 - The company reported 'None' for Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, Mine Safety Disclosures, and Other Information[259][260][261][262]