A Comparison of 2022 Q4 Financial Reports from Lamar, Outfront, and Clear Channel.

Mar 08 2023

Lamar reported a strong 2022 Q4 financial performance, with a total revenue of $535 million, an increase of 8% compared to 2021 Q4. Lamar’s operating income was $110 million, a decrease of 26% compared to the previous year’s Q4. The company’s net income was $439 million, a 13% increase compared to the previous year’s Q4.

Outfront Media also reported a strong 2022 Q4 financial performance, with a total revenue of $495 million, an increase of 6% compared to the previous year’s Q4. Outfront Media’s operating income was $105 million, nearly unchanged compared to the previous year’s Q4. The company’s net income was $59 million, a 16% decrease compared to the previous year’s Q4.

Clear Channel Outdoor reported a total revenue of $357 million for the 2022 Q4, a 2.1% increase compared to the previous year’s Q4. The company’s digital revenue was $157.5 million, an increase of 2% compared to the previous year’s Q4. Clear Channel Outdoor’s operating income was $27 million, a 51% decrease compared to the previous year’s Q4. The company’s net income was $99.4 million, an increase of 51% compared to the previous year’s Q4.

Lamar was the most successful of the three companies in Q4 2022, with higher total revenue, operating income, and net income compared to Outfront Media and Clear Channel Outdoor. Outfront Media’s performance was steady compared to the previous year, while Clear Channel Outdoor experienced significant decreases in operating income and net income. These results indicate that Lamar has been strategic and successful in their focus on digital transformation, while Outfront Media and Clear Channel Outdoor may need to adjust their strategies to remain competitive.

Billboard REITs: A Hedge Against Inflation

Feb 28 2023

Billboard REITs: A Hedge Against Inflation

Hoya Capital recently published an informative article in Seeking Alpha on billboard REITs, titled “Billboard REITs: We’re Paying Attention (Lamar Vs Outfront)“. It covers the basics of the out-of-home industry and it outlines both its benefits (such as the regulatory barriers to entry, the potential for digital billboards, and the low maintenance capex) and its risks (primarily advertising cyclicality).

A few points that SignValue would like to highlight is the major billboard companies’ performance, billboard REIT dividend, and billboard REITs serving as a hedge against inflation.

Investors have rewarded Lamar’s focus on its traditional billboard business (89% of their assets are billboards), paying back the company with an average yearly total return of 14.7%, in contrast to the average general REIT return of 6.7% in the same time frame. Outfront has had a much greater exposure to transit advertising and has only produced 3.0% in annual returns through the same duration. Both REITs have shown markedly better performance than Clear Channel, whose high debt burden and similar transit-focused portfolio have weighed it down.

The average dividend yield for Billboard REITs is 4.9% compared to the average for REITS at 3.6%. Analysis from Billboard Insider believes that this is due to the fact that billboard assets require lower maintenance costs compared to commercial buildings. Billboard companies are typically acquired at a 10-12 times multiple of billboard cashflow, which is equivalent to an 8-10% cap rate, whereas commercial real estate is usually purchased at a 5-7% cap rate, which translates to 14-20 times cashflow multiple. The higher the cashflow multiple to purchase an asset, the less the dividend will be naturally.

While the billboard industry is susceptible to economic downturns like everyone else, the OOH industry is remarkably resistant to inflationary pressures. Hoya Capital states Billboard REITs’, “growth profile […] is especially compelling for REITs trading with 4.5%-6% dividend yields and with a rather unique investment characteristics as one of the least-sensitive REIT sectors to interest rate movement and the single-best sector in our Inflation Hedge Factor metric”. Billboard land leases are usually long-term contracts (5-15 years), and ad contracts are short-term (1-12 months), leading to ad rates outpacing lease payments due to inflation. This dynamic serves are a reliable and unique hedge against inflation.

Learn more about OOH assets by emailing [email protected] or calling 480.657.8400!

Cookies Are a Thing of the Past: How DOOH Is the Solution

Feb 14 2023

Is Digital OOH advertising the answer to a future without cookies?

Digital Out of Home (DOOH) advertising is quickly becoming the answer to a future without third-party cookies. As more users become increasingly aware of their data privacy, they are more likely to delete cookies or use browser settings that block them. Without cookies, marketers would not be able to track user activity, which would mean less effective targeting and lower ROI from ad campaigns.

Google recently announced that it will discontinue third-party cookies in its Chrome web browser. This move is part of Google’s Privacy Sandbox initiative, which aims to develop technologies for more privacy-preserving online advertising. DOOH advertising can fill the gap left by third-party cookies by providing an alternative way for marketers to reach their target audiences.

DOOH advertising offers numerous advantages compared to traditional digital advertising. For instance, DOOH displays are not affected by browser settings, as they are seen on physical displays. Furthermore, they are often placed in high-traffic areas, providing greater visibility and reach. Additionally, they can be GEO-targeted, as advertisers can choose exactly where to place their ads in order to reach the right audiences.

Overall, DOOH advertising is emerging as the answer to a future without third-party cookies, as it provides an effective alternative way for marketers to reach their target audiences. With its unique advantages, DOOH is quickly becoming a popular choice for advertisers, and it is likely to remain a key part of the marketing landscape in the years to come.

A look at Historical US OOH Revenue

Feb 06 2023

Wait, Did You Say Recession? The OOH Industry Braces for an Economic Downturn

Based on the extreme volatility during the last three years, we wanted to zoom out and look back on the OOH market over a long period. OOH’s revenue in the United States has averaged 7.1% over the last 50 years. The steepest decline in revenue was in 2020 due to the pandemic, with a -29.1% drop. However, we have all watched the swift revenue growth in the two years that followed 2020.

The 1970s showed the strongest consistent revenue growth rates year-over-year coming in between 10% and 20% per year for several years. OOH experienced double-digit revenue growth rates for nearly a decade as a more nascent industry. As OOH has matured and adapted, growth has steadied. The takeaway is that OOH media is a steady and predictable industry that will continue to thrive despite any economic headwinds in the short term.

SignValue recently acted as the exclusive advisor for Sanctuary Sign Company LTD

Jan 20 2023

SignValue advises Sanctuary Sign Company, LTD on purchase from Outdoor Ads TB.

SignValue recently acted as the exclusive advisor for Sanctuary Sign Company, LTD, as they completed the selling of select assets to Outdoor Ads TB, in Georgia. For more information about our Sale Consulting services please click the button below.