OUTFRONT Media Inc. 2026 Q2 Earnings Call

Thank you for joining our 2026 second quarter earnings call. With me on the call today are CEO Nick Brien and CFO Matthew Siegel. After a discussion of our financial results, we will open the lines for a question and answer session. Our comments today will refer to the earnings release and slide presentation that you can find on the investor relations section of our website, outfront.com. After today's call has concluded, an audio archive replay will be available there as well. This conference call may include forward-looking statements. Relevant factors that could cause actual results to differ materially from these forward-looking statements are listed in our earnings materials and in our SEC filings, including our 2025 Form 10-K, as well as our Q2 2026 Form 10-Q, which we expect to file tomorrow. We will refer to certain non-GAAP financial measures on this call.

Any references to OIBDA made today will be on an adjusted basis. Reconciliations of OIBDA and other non-GAAP financial measures are in the appendix of the slide presentation, the earnings release, and on our website, which also includes presentations with prior period reconciliations. With that, let me hand it over to Nick.

Thanks, Stefan. Thank you everyone for joining us today. We're excited to be here reporting our second quarter results, which came in better than we had anticipated when we last spoke in May, given continued strong demand, focused execution, and a successful World Cup, which generated over $35 million of revenue during the quarter and over $50 million overall. As you can see on slide three, which summarizes our headline numbers, consolidated revenues were up 14%, driven by 32% growth in transit and an 8% growth in billboard. Consolidated OIBDA was up 29% to $160 million, and AFFO grew 45% to $121 million. As I just mentioned, these results include about $35 million of FIFA revenues, of which we believe approximately half were incremental to our typical business. Slide four shows our more detailed revenue results. Billboard revenues were up 8%.

Included in our comparative billboard results for the final time is our previously announced exit of a large marginally possible billboard contract in L.A., as the revenues and expenses of this contract are still included in our reported 2025 financial statements. Excluding the billboard revenue generated by this contract, billboard revenue growth would have been up 9.4%. The strongest billboard categories in quarter two were tech, including the rapidly growing AI, legal, and medical. Transit grew a robust 32% and was again led by New York MTA, which was up an impressive 48% during the quarter. Our strongest transit categories were tech, entertainment, and financial. Slide five shows our detailed billboard revenue. On a reported basis, digital billboard revenues were up 17.6% and static and other billboard revenues were up 3.8% during the quarter.

Excluding the revenue generated by the exited contract, digital billboard revenues would have been up over 21%, and static and other billboard revenues would have been up 4.3%. We estimate that FIFA contributed approximately $19 million of revenue to our billboard results this quarter. Slide six shows our detailed transit revenue, which grew over 32% during the quarter, led by the MTA's strength. Our digital transit revenues were up nearly 36% to about $68 million, and static transit revenues were up over 29%. We estimate that FIFA contributed approximately $17 million to our transit revenues in the second quarter.

Three of the FIFA-related campaigns I would highlight from across our business are the New York-New Jersey host committee subway wraps of the tournament's local participants' flags within the New York subway system, Nike's complete takeover of the Bryant Park subway station, and the massive soccer player wall scape in Coca-Cola's hometown of Atlanta, which you can see on the cover of our slide presentation. Slide seven shows our combined digital revenue performance, which grew over 23% in the quarter and represented about 37% of total revenues, compared to 34% in the comparable period last year. Even more impressive, excluding the aforementioned L.A. contract, digital revenues would have grown by 26%. Programmatic and digital direct automated sales increased nearly 50% during the quarter, representing 20% of total digital revenue, up from about 17% a year ago.

Moving on, the breakdown of commercial and enterprise revenues can be seen on slide eight. Commercial revenues were up 15% during the quarter, driven by strength in technology, entertainment, and legal. Enterprise was up about 12% during the second quarter, with much of the strength being driven by tech, CPG, and health medical. Slide nine shows our billboard yield growth, which was up 12% year-over-year to $3,344 per month, principally driven by a focused effort to establish higher rates across our assets and boosted by FIFA. Summing up, we are very pleased with our Quarter 2 performance and confident that we will maintain this positive momentum into the second half, which I will discuss in greater detail later. With that, let me now hand it over to Matt to review the rest of our financials.

Thanks, Nick, and good afternoon, everyone. Please turn to slide 10 for a more detailed look at our billboard expenses. In total, billboard expenses were up nearly $15 million, or approximately 7% year-over-year. Zooming in on lease costs, these expenses were up $6 million, or about 5% year-over-year. This increase was driven by higher variable lease costs and contractual escalators on fixed leases, partially offset by $4 million of savings related to the exited large billboard contract in Los Angeles. Excluding the impact of the L.A. portfolio exit, billboard property lease expense would have been up about 9%. Posting maintenance and other, or PMO expenses, were up about $3 million, or almost 8%, due to the higher production expenses and higher compensation-related expenses, partially offset by lower site-related costs.

SG&A expenses grew over $5 million, or about 8%, due to higher professional fees, including software and technology expenses, and an increase in the allowance for bad debt from higher sales activity, partially offset by lower credit card usage by customers and lower compensation-related expenses. The $15 million increase in total billboard expenses were more than covered by the strong growth in billboard revenues Nick described earlier, leading to billboard adjusted OIBDA increasing by over $13 million or 10%. Now turning to transit on slide 11. In total, transit expenses were up $8 million to just over 8% year-over-year. Transit franchise expense was up 6% to $66 million, due primarily to higher variable transit franchise expenses driven by higher transit revenues outside New York, and the annual inflation adjustment and the minimum annual guarantee for the MTA contract.

Let me take a minute before discussing the rest of the transit segment to clarify the accounting treatment regarding the New York MTA. We will continue to book annual transit franchise expenses at the minimum annual guarantee, which in 2026 is $161 million, including the final year of the 2020 amendment. We will record this expense on a straight line basis evenly each quarter. This approach will continue until we expect to recoup the entire cost of the digital investments we have made since the commencement of deployment in 2018, and reflects the financial statement impact of our 2023 transit impairment. Please refer to our earnings press release and 10-Q for additional details on the MTA.

Returning to our discussion of transit operating expenses, PMO costs were up just over $2 million or about 12% due to higher display production costs driven by higher profile creative initiatives during the FIFA World Cup and higher posting and rotation costs. SG&A expenses were up $2.5 million, or about 14%, due to higher professional fees, including software and technology expenses, higher compensation-related expenses, including commissions, and higher allowance for bad debt, partially offset by lower credit card usage by customers. The $8 million increase in total transit expenses was far eclipsed by our exceptional 32% transit revenue growth described earlier, leading to transit-adjusted OIBDA improving by about $26 million during the quarter to $33 million. Slide 12 shows the company's adjusted OIBDA in the second quarter.

Corporate about $3 million due to higher compensation-related expenses, including severance and the impact of market fluctuations on an unfunded equity link retirement plan offered by the company to certain employees. Combined with the billboard and transit OIBDA, total consolidated adjusted OIBDA totaled about $160 million, up 29% compared to last year. Before moving on, given our robust revenue performance and strong outlook for this year, I'd like to mention some important growth investments we have accelerated into 2026 to support our ambitious revenue targets for this year and beyond. We are investing even more in digital growth. We are reinforcing our programmatic sales team and the experienced sales leaders to ensure that we capture as much of this growing revenue stream as possible.

We have also expanded our data analytics function, hiring a Chief Data Officer late in the second quarter to partner with our research and insights team to advance our audience intelligence and measurement solutions in order to meet industry expectations. We are investing in our people. We have expanded the platform tools and training available to our workforce to improve both efficiency and effectiveness. Tools such as Salesforce, our proprietary IRL Nav, and an integrated marketing cloud will minimize time spent on repetitive administrative tasks and maximize time spent engaging with clients. We will continue investing in our HR function to ensure we attract, retain, and develop the best possible talent to be a world-class media organization.