Hi. Thank you for coming to J.P. Morgan's fifty-first annual Global Technology, Media and Communications Conference. My name is Richard Choe. I'm part of the communications and media team here at J.P. Morgan. I wanna welcome Jeremy Male, CEO and Chairman of Outfront Media. Thank you for being with us today. Thanks, Richard. Good to be here. Good to see everyone. just wanted to start off, with the beginning of the year. It was a little bit of a slow start on the national advertising side. Can you walk through what you're seeing most recently and if you're seeing trends improve for the second quarter and the rest of the year? Yeah. Absolutely. You're right. Q1 started a little slower than we expected. In fact, we could see a bit of a deceleration from right at the back of 2022 that sort of carried on over. We ended up, I think, with national revenue growth of just over 1% in Q1, which is certainly a little bit behind where we would've expected to be. On the Q2 call, we called out that, you know, we were, our growth rate was likely to increase as we moved into Q2, and certainly national has been, you know, a big part of that. You know, we're often asked, "Hey, why don't you line up exactly with, say, Lamar's comments," which obviously, I read from yesterday. The simple answer is that, you know, we have very different businesses, very different platforms, and, you know, quarter by quarter, we're always gonna have disparities in, you know, in our relative growth rate, be it local or national. Yeah. I think that's something to, I guess, to highlight, is that while you're both in the billboard outdoor space, a lot of the properties are very different, and some of the dynamics are very different, in various ways. I think one of the things you mentioned, in the quarter was that New York and Miami were very strong. Can you talk a little bit about, maybe the different areas you are seeing strength on a regional basis? Yeah. We split into four regions, Northeast, South, Midwest, and West. We saw growth across all of those regions. In terms of, you know, markets that we called out as being difficult, San Francisco's difficult for us. You know, there are still some obvious issues in the city. On the strong side, certainly Northeast, and in particular New York, and then we had, you know, a great quarter down in Miami. Why that is relevant, I think we'll probably get into when we talk later. You know, the difference between a Times Square board where you pay, for sake of argument, $0.80 on the dollar, you know, rent to revenue versus a Kentucky board where you pay $0.20, that can obviously, you know, sway and, you know, has a big impact in terms of how your rents, you know, operate in a quarter. I did wanna circle back a little bit. In a normal year, do you generally see a pause coming out of the fourth quarter into first quarter as companies kind of plan advertising campaigns, or is it normally pretty steady and this year was just a little bit of an anomaly? I think this year was a bit of an anomaly. It is fair to say that Q1, just because the way, you know, clients think about their budgets and spend and everything else, Q1 is our latest booking quarter, just because everyone's still very much focused on the year that they're in. So, it does book late. As I said, there was just a little bit of softness that came through in Q1 this year. I think part of that is driven by worries that there might be a recession later this year or the kind of increase in rates. Are you seeing any signs that advertisers are worried or customers are worried about a recession later this year? Yeah. I think we need to put this into context, 'cause, I mean, we were up, you know, in the, in the kind of mid-single digit range in Q1, which is, you know, certainly. It's certainly not, you know, a long way from negative. When you drill into that, you know, we had some great categories, like travel up nearly, whatever it was, 70%, and auto for us up 27%. You know, I think there's a lot of, if you like. There was certainly nothing in our first quarter that suggested recession, I think. You know, with a, with a Q2 that's, you know, hardening relative to Q1, that would again say the same thing. It's quite interesting really, 'cause it's this conference last year where I think about the second question was about the recession we were likely to be seeing in the latter part of last year. You know, didn't come through then. Will it come through now? I guess, you know, we all read the same press, et cetera, so we can make our own judgments on that. But from where we're sat at the moment, there's nothing strange, you know, when we look at our numbers suggesting that we're gonna see a recession. Look, things change and, you know, we don't have perfect visibility, so we'll, you know, react accordingly as we, as we go through the year. We're certainly not, you know, we're not, you know, we don't have our head in the sand. You know, we're being cautious, we're being judicious with our cost base, et cetera, et cetera. I guess in the first quarter, static was up 4% and it still seems to be an attractive way to advertise for a lot of your clients. I guess, in terms of the book of business and the value that's providing, can you give us a little color on what customers are looking to do with static billboards? Yeah. I mean, static Still, in terms of, numbers of board, it's still 96% of our board is static. you know, we're hugely focused on static. Some of our, you know, larger clients, absolutely, Apple is one, you know, for their main Apple branding messages, they, you know, dominate our static inventory and, you know, the top markets across the U.S. 4.5% growth, if you like, is even more impressive given that every time we convert a digital board, we're losing a static board. you know, you're taking money, your best players, and putting it on the digital team, to put it like that. When we drill into it, the majority of the growth that we achieved in the first quarter, outside of some growth from acquisitions that tuck-ins that we accomplished last year was in yield. If you look into static yields, they're all at Q1 on Q1, which is really positive to see. No, that's great to see. I guess you touched on it, digital was very strong in the quarter, and it seems like there's some worries that it's a little bit more volatile because of a faster velocity. What digital trends are you seeing, and do you expect digital to kind of stay strong for the year? Look, I think the fact that digital has that velocity is undoubtedly a good thing rather than a bad thing. What it means is that as a medium, out-of-home is so much more flexible than it used to be, where you had to, you know, book it at least four weeks out. You had to go get the poster printed, you had to ship it out, you know, on a truck to the depot and get a guy with a ladder, you know, to go and put it up. Now, we can, you know, we can take money today for a 1-hour slot on a Times Square board, tomorrow, you know. You know, increasingly people are able to buy programmatically from us with, you know, real-time bid process, et cetera. I think on our call, we said that, in the month of March, we took more money in the month for the money than we've ever taken before. I think the velocity point is very much to our benefit. Yes, it does mean that, you know, I guess if we, you know, entered a recession, is that a piece that can get switched off more quickly than everything else, which is stickier? Yes, I think that's a fair point. The growth that we're seeing in digital, we, you know, expect that trend to continue. We're certainly looking to continue to convert boards, where we can. We can't convert everywhere. At the moment, the U.S. is round numbers, a third digitized. Many other markets across the world are between 50% and 60%. We expect that digital will continue to be a growth, you know, growth driver for us. Just in terms of numerically a number of units, and then in terms of how we communicate in a much more automated way with those units as we go forward. Yeah, very positive for us and the industry. Just to clarify, the revenue is about a third, but you still have a lot of boards that. Yeah. It's 4% of our boards generating a third of our revenues. Revenue. Right, round numbers. Which is amazing. Can you go over how many you plan on converting this year? Is there anything that you could do to increase that pace? Well, we had a very big year for us last year. We were over 300 boards. Typically, we're in the 150 to 200 range. Right now, you know, we're absorbing a lot of new inventory, you know, into our sales force and into our operations. I would expect that this year we're gonna be in the 150 to 200 range again, something like that. Great. I guess at the conference, we've had some more traditional, cable companies and other media, they're facing pressures with some secular declines with cord-cutting. What are you seeing in terms of being able to maybe pick up some share or regain share of the advertising budget, either from, I guess, internet digital players or even more traditional media? If you look back at out-of-home over the last, you know, 15 years or so, it's been maintaining or increasing its share pretty much throughout. Obviously, there was a blip with the pandemic two years, but, you know, very sharp, very sharp rebound. Out-of-home was managing to achieve that when, you know, digital in general was growing like a weed. It was going from kind of nothing to what, whatever it is, over 50% of the U.S. ad market. If you look at where digital growth came out of it, you know, apart from expanding the market, obviously, it sort of came out of other traditional media. I guess, network TV, radio, press, et cetera, et cetera. I think as we look forward, that while digital will still grow, it won't be growing at the same rate. With the continued challenges that some of the traditional, competitors face in terms of audience, I suspect that out-of-home will be well positioned to continue to, increase share and structurally grow. Something that you touched on earlier, is that some of your billboards are for branding, not necessarily kind of, I guess, more marketing related that I think maybe Lamar has more of a focus. Can you talk a little bit about, how important that book of business is for you and how it's maybe different than other kind of, I guess, more transactional type of contracts? you know, people use our boards for all sorts of different reasons, you know? you know, at the one end of the spectrum, you've got turn left for whatever it is off the highway for the local restaurant, and they just buy it year in, year out, and it's just essentially signage. Then you have other boards that are very much, you know, call to action. Then you have, you know, boards that are, you know, absolutely there because it's branding or it's a new launch or whatever it happens to be. One way or other, what we do know is that you get a lot of bang for your buck in terms of return on investment on your on out-of-home, and that we now have, you know, attribution measurement so people can see exactly what they do get. Importantly, you know, for a, for an advertiser, I mean, it's fine wanting to be at the bottom of the funnel in terms of that transactional piece, but you've got to get people there in the first place, and the way you're gonna do that is with some top of the funnel, you know, we feel very confident in the in the you know, the the the range of advertisers and reasons for advertising on out-of-home that we're seeing right now. Can you talk a little bit about, maybe what verticals have been strong? You mentioned two earlier. Which ones are, I guess, maybe strong right now versus others that might not be as strong right now, but you expect to come back maybe later on as maybe their financials get better or heal. I know auto insurance right now is going through a tough time, but at some point that should hopefully normalize. Can you mention any categories that- Yeah, for sure. I think we talked earlier about sort of strong categories in Q1. Travel was certainly, you know, right up there, as was legal, as was auto. Health was strong also in Q1. When you drill into it, I think we only really had two down categories of any significance. Yeah, insurance is, you know, still down. Sports betting, obviously there was a big land grab this time last year as sports betting was legalized in a couple of states. Yeah, we had that as a headwind comp in the first few months of this year. Will that kind of, I guess, lap itself at this point? It will lap itself. you know, I think that it was very strong at the beginning of the year. Pretty strong also for the third quarter, I think, because sports betting is very much associated with NFL. You know, there's no reason why we shouldn't get some NFL money— Yeah. In this quarter. Did you have much crypto exposure? I assume that— Look, yeah, we had a bit. You know, certainly, it was never that significant that we ever called it out as a category, but it was a nice tailwind when it was there. Obviously, that's not much of that around at the moment. Can you talk a little bit about your mix of business? I guess you're a little bit more even than like a Lamar. Is that 60% local, 40% national? How does that kind of play out for you in terms of balancing that load, and is that where you expect to continue to be longer term? Yeah. I mean, you're absolutely right. We were 60/40 in Q1. Actually, typically over the years, we've been 55 local and 45% national. We like that balance. National advertisers typically want to be in the top 25 DMAs for the most part, and we are. We have the best portfolio of assets in the top 25 DMAs here in the US. You know, there's a natural fit between us and national advertisers. I think the other interesting point is that if you look at out-of-home's market share in the US, it's between 4%-5%, but the majority of that is driven by local. If you look at the share of spend of the top 200 advertisers, it's 1.8%. 1.8% is really low, compared to just about every other out-of-home market in the world. We take the view that with, you know, better measurement, better attribution, metrics, and increasing automation, that piece of the pie is likely to grow faster over time. The fact that our assets are disposed to what we think will be the fastest-growing market, part of the market in the longer term, makes us feel very, very comfortable about our portfolio. That's not to say that we don't love the local advertising piece 'cause it's a massive part of our business and we, you know, feel absolutely sure that that will continue to grow nicely as well. I think it's just maybe relative growth will be higher in national, we think. That's a good thing to point out. It seems like there's a lot of room for growth there since it's even just low relative to, I guess, the current book of business you're seeing. Can you talk a little bit about what you think it will take to get the top 200 advertisers to embrace out-of-home more? You mentioned a little on the data and measurement side. What are you doing, I guess, more specifically to convince them, like, to get off the sideline and add more budget? Yeah. Well, you know, we've obviously talked about some of the, some of the pieces of it already, but, you know, we're, you know, we spend a lot of time, you know, directly trying to get higher up the food chain within the in the media agencies, and also getting face-to-face time with clients to, you know, really put forward our proposition. We have a, what we call a brand partnerships team, which we developed over the last couple of years, which is a team of guys that specifically go out to, if you like, to, essentially be, you know, client only resource for us. You know, it's, it, it's not gonna be flicking a light switch. You know, you've got agencies that have kind of vested interest in kind of keeping everything the same. You know, that client spent $30 million on network TV last year. You know, let's just ignore the fact that because the audience is down, you know, inflation's going through the damn roof, let's stick 'em down for $30 million again. The brand manager, you know, in the organization where you don't, you don't get fired for doing what you did last year, so I'll just do that. Getting people to shake the tree and say, "Hey, guys, take $5 million out of that budget, put it over here, and you're actually gonna get. It's gonna make your TV work harder for you. It's gonna come in a much better CPM. It's gonna give your campaign extra legs. It's gonna be great for recovery. It's gonna be great for frequency." They say, "Yeah, we kinda hear that. Maybe next year." You know, as I say, it's not flicking a switch, but I do think that over time, we are gonna see a drift of money over. You know, we have what nobody or very few other media have. We have absolutely no audience issues, okay? The audience is still absolutely out there, and we have a much more, you know, effective and flexible way of communicating with that audience because of the digitization that we're going through. We have an amazing story to tell. Yeah, no, I feel like those conversations should be getting a lot easier as not only, I guess, more people returning to work and traveling around and seeing the advertisements, but a lot of your, like you said, linear TV is on the decline, and it's harder to get that reach, and I think the brand advertisers probably recognize that. One of the things, I guess, we talked about last year was the ability to push price and having some pricing power. Where are you today with that? Are those conversations, I assume with inflation coming down a little bit, not as, you're not trying to push it as much, but, how should we think about pricing? Yeah. Last year, we had, you know, double-digit increase in yield across pretty much all of our assets, static and digital. That was predominantly driven by price. You know, obviously yield is, you know, the combination of occupancy and price. When you drill into it, those double-digit increases were predominantly price. I think as we look forward to this year, obviously you've, you know, you've raised the comp, you've raised the bar. I think that's the first point. In order to continue to, you know, to have momentum in terms of rate, you know, we're gonna need to see some, you know, reasonable demand behind that. It's positive that in the first quarter of this year, you know, yields were up on our static boards and, you know, that came from rates. We're still getting some. Will it be double digit again this year? I suspect not. Margins were a little soft in the quarter. There was some out-of-period expense, you know, some moving parts. I think some of the revenue came in on some higher percentage of revenue share. Can you talk a little bit about, you know, what happened with margins in the first quarter and how we should think about that playing out for the rest of the year? When you drill into Q1, we touched on a piece of that a little bit earlier with regards to sort of where revenue falls as to how it can impact your rents. We also had in Q1 some apples to pears in that we made a bunch of acquisitions, you know, over the last 12 months. As the, you know, you're carrying some of those until they ramp up to absolute expectation. You know, within our fixed lease boards, typically, you know, they will have a, what we call it fixed, but there will be maybe every five years, there's 10% kicker or maybe there's 2% or 2.5% a year. All of that comes to pass. As we look forward, you know, we expect that, you know, margins for the year are likely to be around about in the ranges they were last year. You know, with the growth, you know, with the growth we're achieving, yeah, we would have liked to have seen some maybe some more operating leverage come through. We believe that, you know, that operating leverage argument will, you know, yield positively for us as we go into 2024 and 2025 for two reasons. Just natural leverage. The other reason that we feel positive about our margins drifting up over time is that as the proportion of our revenues become digitized, we actually make higher margins on our digital revenues than our static revenues. That's a nice positive for us. You know, it's also important to put current margins in the context of where we were pre-COVID and even in Q1, in a quarter that, you know, maybe was a little lighter than we would have hoped for. Still, you know, well ahead of 2019. Great. In moving to, I guess, the transit business, can you give us a kind of an update on how things are going? I'm sure you'll talk about the MTA a little bit more, but just why don't we start with the overall transit business, and then we can delve into the MTA a little bit more. The MTA has become a kind of proxy for transit. We'll get on to that. Interestingly, you know, if you go down here on the T or, you know, we have all the transit here in Boston and, you know, they had a really pretty good first quarter. Our key transit markets are Boston, New York, D.C., San Francisco and L.A. You know, pre-pandemic, the MTA used to make up around half of transit business, now actually it's greater than that. Let's dive in there. Having been down to, I think, in the pandemic, sort of 30%-35% of revenues, 2019 revenues in the second and third quarters of 2020. You know, transit rebounded very nicely. It was pretty much sort of straight line growth. It also, this is the MTA I'm talking about. Our revenue growth versus 2019 was outpacing passenger growth over that time. You know, we felt that, you know, we could see very clearly, see that path towards, you know, achieving the MAG. 'Cause once you achieve the MAG, we then start paying ourselves back from the capital that we invested in that contract. Last couple of quarters, you know, the growth has flattened off. We don't think that there's anything particularly going on there that, you know, that will have long-term impact. It sort of pushes out the curve somewhat. We still believe that, you know, at around about 80% of ridership, you know, we still believe that achieving pre-pandemic revenues of 100% is, you know, is absolutely possible. At the moment, it's about 70%. We still love the transit business. Remember that 90% odd of our top 100 clients buy both from us, so it's a great product. You know, if you go down on the subway now, you know, you look at the digital we have in. They've been still building out digital in the car carriages now. I mean, it's a fabulous product, and we think will be, you know, a real growth driver for our business in the future. You know, obviously, there's a lot of focus on it right now because with the step up in the MAG and, you know, flattish revenue growth, you know, that you obviously get a step back in margin. We expect to see some growth in the second half of this year. We certainly hope to see some growth in the second part of this year. You know, if we take one step back and think about, think about the MTA contract, which we obviously spend a, you know, a bunch of time talking to investors about, it's gonna be OIBDA positive this year. Next year, we expect it to be kind of cash flow positive because we're decreasing substantively the amount of investment that we need to put in. The following year it's likely to be cash flow positive and importantly, as I say, being able to sort of pay off some of the CapEx or the investments that we put into the MTA before, which is not treated as REIT income, you know, it will be, you know, great for the business in terms of whatever we wanna do, be it, de-levering or M&A or whatever else. Gives you a lot more financial flexibility then. I guess we are seeing, I guess, people returning to the office more in the city. It seems like there were some maybe safety issues early in the year, but every time I ride it now, there's a lot more of a police presence, and you feel more comfortable. How long will it take? Maybe increases in ridership to translate into, I guess potential revenue? Is there? Like, well, yeah. As I say, we were ahead of that curve— Yeah. Do you know what I mean? For like a couple of years. Now we're kind of in line with the curve. Yeah. We need to get ahead of that curve again. As I say, I, you know, I would hope that we can do that as we go through, you know, the coming months. Got it. Are those conversations with advertisers getting easier because the ridership is getting better? Yeah. Do stuff or— Yeah. Is it too granular to? It does get very granular. I mean, what was interesting, I also made the comment on our first quarter call that actually the subway, we were, you know, we were up year-on-year. Where we were down was in, you know, a different part of our transit business. Yeah. Advertising business that was for the most part driven by a film slate because films are a big user of bus advertising and the slate was down. You know, it does get very granular when you go into it. You mentioned earlier, circling back to a little bit on M&A, there's a lot of, I guess, billboard business to acquire here and there. Yep. What level of M&A are you expecting for this year, and what type of properties are you looking for? Are you looking for smaller deals or once in a while, like, does something become available that's a little bit more than just the one-off? Last year was our biggest year of M&A since 2014 at $300+ million, and with one, you know, relatively significant purchase at the, you know, $180 million range, which was a completely new market for us in Portland, which we love, and that's gonna be a great investment for years to come. We think, just based on what's in the pipe at the moment, there's gonna be lower than that this year. There's some deals that was from last year that we're still wrapping up. There's a couple of smaller ones out out there, but we think it's. Interestingly, you know, other market commentators have said the same thing. We think there's probably a little bit of less deal activity this year in terms of tuck-ins. That's not to say that generally in the space, there's not a lot. You know, there's a lot of interest from the PEs right now. You know, there's, you know, a bunch of rumors about some of the, you know, larger independent players going through processes. We'll see. It's, as I say, it's an exciting space right now. Yeah. In terms of your leverage, it's about five times. Are you comfortable with that, and just kinda, I guess you can wait a little bit for the MTA contract to kind of flip on a cash flow basis and the EBITDA growth there, or do you feel like you have to be a little bit more aggressive in bringing leverage down right now? You know, when we, when we look at, the leverage in the business, we typically, you know, we said that, look, we'd prefer to be around four times. We're a ton over that. That doesn't make us feel in any way nervous. You know, we have a, we've got, you know, great liquidity right now. We don't have any bond refis in till 2025. We have, you know, levers within the business if we, you know, in terms of, you know, in terms of how we deploy our capital. Yeah. Look, we'd like it to naturally come down. It will do over the next 18 months, two years. It seems like you have enough flexibility to do the investments that you want to help grow the business at this point. Absolutely. Great. I think with that, we'll end it. Thank you. Thank you, Richard. Thanks everyone for listening.