What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-06 compared with 2020-05-08 · 356 added, 203 removed, 396 unchanged (59% of the section changed)

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In addition to leasing displays, we provide other value-added services to our customers, such as pre-campaign category research, consumer insights, print production and post-campaign tracking and analytics.

Media segment generated 22% of its revenues in the New York City metropolitan area in the three months ended March 31, 2020 and 23% in the same prior-year period, and generated 15% in the Los Angeles metropolitan area in the three months ended March 31, 2020 and 16.0% in the same prior-year period.

In the three months ended March 31, 2020 , our U.S.

Media segment generated 11% of its revenues in the New York City metropolitan area in the three months ended June 30, 2020, 23% in the three months ended June 30, 2019, 18% in the six months ended June 30, 2020 and 23% in the six months ended June 30, 2019, and generated 15% in the Los Angeles metropolitan area in the three months ended June 30, 2020, 15% in the three months ended June 30, 2019, 15% in the six months ended June 30, 2020 and 16% in the six months ended June 30, 2019.

In the three months ended June 30, 2020, our U.S.

Media segment generated $213.5 million of Revenues and $37.4 million of Operating income before Depreciation , Amortization , Net gain on dispositions , Stock-based compensation and Restructuring charges (“Adjusted OIBDA”).

In the three months ended March 31, 2019 , our U.S.

In the three months ended June 30, 2019, our U.S.

Media segment generated $419.6 million of Revenues and $145.8 million of Adjusted OIBDA.

In the six months ended June 30, 2020, our U.S.

Media segment generated $568.2 million of Revenues and $128.2 million of Adjusted OIBDA.

In the six months ended June 30, 2019, our U.S.

Media segment generated $758.0 million of Revenues and $240.4 million of Adjusted OIBDA.

(See the “Segment Results of Operations” section of this MD&A.)

Other (includes International and Sports Marketing).

In the three months ended March 31, 2020 , Other generated $30.6 million of Revenues and $0.5 million of Adjusted OIBDA.

In the three months ended March 31, 2019 , Other generated $33.3 million of Revenues and $1.2 million of Adjusted OIBDA.

In the three months ended June 30, 2020, Other generated $19.4 million of Revenues and an Adjusted OIBDA loss of $5.4 million.

In the three months ended June 30, 2019, Other generated $40.3 million of Revenues and $8.8 million of Adjusted OIBDA.

In the six months ended June 30, 2020, Other generated $50.0 million of Revenues and an Adjusted OIBDA loss of $4.9 million.

In the six months ended June 30, 2019, Other generated $73.6 million of Revenues and $10.0 million of Adjusted OIBDA.

COVID-19 Impact

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and (iv) extended delays in the collection of earned advertising revenues from our customers, all of which could have a material adverse effect on our business, financial condition and results of operation in 2020.

As a result of the impact of the COVID-19 pandemic on our business and results of operations, we expect our key performance indicators and total revenues to be materially lower in 2020 than historical levels, particularly in our U.S.

As a result of the impact of the COVID-19 pandemic on our business and results of operations, we expect our key performance indicators, total revenues and total expenses to be materially lower in 2020 than historical levels, particularly in our U.S.

Media segment and with respect to our transit and other business.

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We expect the impacts described above to be greater in the second quarter of 2020 than in the third and fourth quarters of 2020.

Accordingly, results for the three months ended March 31, 2020, are not indicative of the results that may be expected for the fiscal year ending December 31, 2020.

In response to the COVID-19 pandemic, we have prioritized the health and safety of our employees and customers by shifting to a secure remote workforce for all personnel other than operations personnel who service our displays, enhancing cleaning practices across any offices or facilities that remain open, restricting non-essential business travel and communicating frequently with our employees and customers to address any concerns, none of which has caused any significant disruption in our ability to manage the continuity of our business or our internal controls.

Accordingly, results for the three and six months ended June 30, 2020, are not indicative of the results that may be expected for the fiscal year ending December 31, 2020.

In response to the COVID-19 pandemic, we have prioritized the health and safety of our employees and customers by (i) shifting to a secure remote workforce for all personnel other than operations personnel who service our displays and certain other personnel, (ii) implementing deep cleaning, social distancing and other protective policies and practices in accordance with federal, state and local regulations and guidance across all offices and facilities that are open or in the process of reopening, (iii) restricting non-essential business travel, and (iv) communicating frequently with our employees and customers to address any concerns.

None of these actions have caused a significant disruption in our ability to manage the continuity of our business or our internal controls.

In addition, in order to preserve financial flexibility, increase liquidity and reduce expenses in light of the current uncertainty in the global economy and our business, we have modified our business goals and undertaken the following actions, which should be read in conjunction with the “—Analysis of Results of Operations” and “—Liquidity and Capital Resources” sections of this MD&A:

Borrowed $470.0 million under the Revolving Credit Facility (as defined below), which represents nearly all of the remaining available amount under the Revolving Credit Facility;

Accessed the capital markets and raised $400.0 million, before expenses, in the Private Placement (as defined below);

• Borrowed $470.0 million under the Revolving Credit Facility (as defined below), which was repaid in full as of June 30, 2020, using the net proceeds from the offering of the Notes (as defined below) and cash on hand;

• Accessed the capital markets and raised $400.0 million, before expenses, in the Private Placement (as defined below) and issued $400.0 million aggregate principal amount of 6.250% Senior Unsecured Notes due 2025 (the “Notes”);

• Amended the Credit Agreement (as defined below) to modify the calculation of the Company’s financial maintenance covenant ratio under the Credit Agreement;

Amended one of the agreements governing the AR Securitization Facilities (as defined below) to adjust the ratios and collections timing relating to our accounts receivable assets until July 31, 2020, unless further amended and/or extended;

Suspended our quarterly dividend payments, subject to the minimum annual REIT distribution requirement;

Suspended our deployment of digital transit displays at this time to reduce costs that may or may not be recoverable from customer sales or transit franchise partners;

Reduced maintenance capital expenditures (other than for necessary safety-related projects) and deferred growth capital expenditures for digital billboard display conversions;

• Amended the agreements governing the AR Securitization Facilities (as defined below) to temporarily suspend the AR Facility (as defined below) and extend the Repurchase Facility (as defined below) to June 2021 with a borrowing capacity of $80.0 million, unless further amended and/or extended;

• Suspended our quarterly dividend payments on our common stock, subject to the minimum annual REIT distribution requirement;

• Suspended our deployment of digital transit displays to reduce costs that may or may not be recoverable from customer sales or transit franchise partners, except with respect to the New York Metropolitan Transportation Authority (the “MTA”), with which we recommenced deployment in the third quarter of 2020;

• Reduced maintenance capital expenditures (other than for necessary safety-related projects) and growth capital expenditures for digital billboard display conversions;

• Paused new acquisition activity;

Reduced our posting, maintenance and other, and SG&A (as defined below) expenses through restrictions on discretionary expenses, a hiring freeze, a workforce reduction, employee furloughs, temporary reductions to certain employee base salaries, and temporary reductions to our Chief Executive Officer and other executive officer base salaries by 50% and 20%, respectively, to offset expected decreases in revenues in 2020.

In addition, we have engaged in constructive conversations with our billboard ground lease landlords, transit franchise partners and multimedia rights partners to mitigate increases as a percentage of revenues in billboard property lease expenses, transit franchise expenses and posting, maintenance and other expenses.

Though we rely on third parties to manufacture and transport our digital displays, and have not experienced any significant supply chain or logistical disruptions, we do, however, expect delays as a result of the COVID-19 pandemic in receiving digital displays when we reinstate our digital billboard display conversions and deployment of digital transit displays.

• Reduced our posting, maintenance and other, and SG&A (as defined below) expenses through restrictions on discretionary expenses, a hiring freeze, workforce reductions, employee furloughs, temporary reductions to certain employee base salaries, and temporary reductions to the base salaries of our Chief Executive Officer and other executive officers by 50% and 20%, respectively, as well as to the cash compensation of our non-employee directors by 20%, to offset expected decreases in revenues in 2020.

In addition, we have engaged, and will continue to engage, in constructive conversations with our billboard ground lease landlords, transit franchise partners and multimedia rights partners to mitigate increases as a percentage of revenues in billboard property lease expenses, transit franchise expenses and posting, maintenance and other expenses.

Though we rely on third parties to manufacture and transport our digital displays, and have not experienced any significant supply chain or logistical disruptions, we do, however, expect delays as a result of the COVID-19 pandemic in receiving digital displays as we reinstate our digital billboard display conversions and deployment of digital transit displays.

We continue to monitor the rapidly evolving situation and guidance from federal, state and local public health authorities and may take additional actions based on their recommendations.

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Increasing the number of digital displays in our prime audience locations is an important element of our organic growth strategy, as digital displays have the potential to attract additional business from both new and existing customers.

We believe digital displays are attractive to our customers because they allow for the development of richer and more visually engaging messages, provide our customers with the flexibility both to target audiences by time of day and to quickly launch new advertising campaigns, and eliminate or greatly reduce print production and installation costs.

We believe digital displays are attractive to our customers because they allow for the development of richer and more visually engaging

messages, provide our customers with the flexibility both to target audiences by time of day and to quickly launch new advertising campaigns, and eliminate or greatly reduce print production and installation costs.

In addition, digital displays enable us to run multiple advertisements on each display.

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In 2017, we commenced deployment of state-of-the-art digital transit displays in connection with several transit franchises and are planning to increase deployments significantly over the coming years.

Once the digital transit displays have been deployed at scale, we expect that revenue generated on digital transit displays will be a multiple of the revenue generated on comparable

static transit displays.

Once the digital transit displays have been deployed at scale, we expect that revenue generated on digital transit displays will be a multiple of the revenue generated on comparable static transit displays.

Subject to the impact of the COVID-19 pandemic, we intend to incur significant equipment deployment costs and capital expenditures in the coming years to continue increasing the number of digital displays in our portfolio.

We have built or converted 18 new digital billboard displays in the United States and 2 in Canada during the three months ended March 31, 2020 .

Additionally, in the three months ended March 31, 2020 , we entered into marketing arrangements to sell advertising on 15 third-party digital billboard displays in the U.S.

We have built or converted 23 new digital billboard displays in the United States and 2 in Canada during the six months ended June 30, 2020.

Additionally, in the six months ended June 30, 2020, we entered into marketing arrangements to sell advertising on 20 third-party digital billboard displays in the U.S.

and 12 in Canada.

In the three months ended March 31, 2020 , we have built, converted or replaced 739 digital transit and other displays in the United States.

As described above, as a result of the COVID-19 pandemic, we deferred our digital billboard display conversions and suspended our deployment of digital transit displays at this time.

In the six months ended June 30, 2020, we have built, converted or replaced 884 digital transit and other displays in the United States.

As described above, as a result of the COVID-19 pandemic, we reduced our digital billboard display conversions and suspended our deployment of digital transit displays (except with respect to the MTA, with which we recommenced deployment in the third quarter of 2020).

The following table sets forth information regarding our digital displays.

Digital Revenues (in millions)

for the Three Months Ended

March 31, 2020 (a)

for the Six Months Ended

June 30, 2020 (a)

Number of Digital Displays as of

March 31, 2020 (a)

Digital Billboard

Digital Transit and Other

Total Digital Revenues

Digital Billboard Displays

Digital Transit and Other Displays

Total Digital Displays

June 30, 2020 (a)

Location Digital Billboard Digital Transit and Other Total Digital Revenues Digital Billboard Displays Digital Transit and Other Displays Total Digital Displays

United States $ 83.9 $ 34.2 $ 118.1 1,176 7,005 8,181

Digital display amounts (1) include 2,490 displays reserved for transit agency use and (2) exclude all displays under our multimedia rights agreements with colleges, universities and other educational institutions.

Canada 7.8 0.1 7.9 202 93 295

Total $ 91.7 $ 34.3 $ 126.0 1,378 7,098 8,476

(a) Digital display amounts (1) include 2,581 displays reserved for transit agency use and (2) exclude all displays under our multimedia rights agreements with colleges, universities and other educational institutions.

Our number of digital displays is impacted by acquisitions, dispositions, management agreements, the net effect of new and lost billboards, and the net effect of won and lost franchises in the period.

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We have a diversified base of customers across various industries.

During the three months ended March 31, 2020 , our largest categories of advertisers were professional services , computers/internet and retail , which represented approximately 9% , 9% and 8% of our total U.S.

During the three months ended June 30, 2020, our largest categories of advertisers were professional services, healthcare/pharmaceuticals and retail, which represented approximately 11%, 10% and 8% of our total U.S.

Media segment revenues, respectively.

During the three months ended March 31, 2019 , our largest categories of advertisers were professional services , healthcare/pharmaceuticals and retail , each of which represented approximately 9% , 8% and 8% of our total U.S.

During the three months ended June 30, 2019, our largest categories of advertisers were retail, computers/internet and professional services, each of which represented approximately 9%, 8% and 8% of our total U.S.

Media segment revenues, respectively.

During the six months ended June 30, 2020, our largest categories of advertisers were professional services, healthcare/pharmaceuticals and retail, which represented approximately 10%, 9% and 8% of our total U.S.

Media segment revenues, respectively.

During the six months ended June 30, 2019, our largest categories of advertisers were retail, professional services and computers/internet, each of which represented approximately 9%, 8% and 8% of our total U.S.

Media segment revenues, respectively.

Our large-scale portfolio allows our customers to reach a national audience and also provides the flexibility to tailor campaigns to specific regions or markets.

In the three months ended March 31, 2020 , we generated approximately 42% of our U.S.

In the three months ended June 30, 2020, we generated approximately 39% of our U.S.

Media segment revenues from national advertising campaigns compared to approximately 46% in the same prior-year period.

In the six months ended June 30, 2020, we generated approximately 41% of our U.S.

Media segment revenues from national advertising campaigns compared to approximately 43% in the same prior-year period.

Our transit businesses requires us to periodically obtain and renew contracts with municipalities and other governmental entities.

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We believe these non-GAAP performance indicators are meaningful supplemental measures of our operating performance and should not be considered in isolation of, or as a substitute for, their most directly comparable GAAP financial measures.

Three Months Ended

(in millions, except percentages)

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2020 2019 Change 2020 2019 Change

Revenues $ 232.9 $ 459.9 (49) % $ 618.2 $ 831.6 (26) %

Organic revenues (a)(b)

Operating income

232.9 459.1 (49) 618.2 830.6 (26)

Operating income (loss)

(25.9) 88.7 * 7.9 125.6 (94)

Adjusted OIBDA (b)

21.7 143.6 (85) 108.5 230.4 (53)

Adjusted OIBDA (b) margin

9 % 31 % 18 % 28 %

Funds from operations (“FFO”) (b) attributable to OUTFRONT Media Inc.

(27.9) 90.6 * 16.8 132.7 (87)

Adjusted FFO (“AFFO”) (b) attributable to OUTFRONT Media Inc.

Net income attributable to OUTFRONT Media Inc.

Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”).

(21.3) 96.3 * 18.7 135.5 (86)

Net income (loss) attributable to OUTFRONT Media Inc.

(57.9) 50.3 * (51.8) 56.4 *

• Calculation is not meaningful.

(a) Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”).

We provide organic revenues to understand the underlying growth rate of revenue excluding the impact of non-organic revenue items.

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Organic revenues, as we calculate it, may not be comparable to similarly titled measures employed by other companies.

See the “Reconciliation of Non-GAAP Financial Measures” and “Revenues” sections of this MD&A for reconciliations of Operating income to Adjusted OIBDA, Net income attributable to OUTFRONT Media Inc.

(b) See the “Reconciliation of Non-GAAP Financial Measures” and “Revenues” sections of this MD&A for reconciliations of Operating income to Adjusted OIBDA, Net income attributable to OUTFRONT Media Inc.

to FFO attributable to OUTFRONT Media Inc.

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Our management believes users of our financial data are best served if the information that is made available to them allows them to align their analysis and evaluation of our operating results along the same lines that our management uses in managing, planning and executing our business strategy.

Our management also believes that the presentations of FFO and AFFO, as supplemental measures, are useful in evaluating our business because adjusting results to reflect items that have more

bearing on the operating performance of REITs highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures.

Our management also believes that the presentations of FFO and AFFO, as supplemental measures, are useful in evaluating our business because adjusting results to reflect items that have more bearing on the operating performance of REITs highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures.

It is management’s opinion that these supplemental measures provide users of our financial data with an important perspective on our operating performance and also make it easier to compare our results to other companies in our industry, as well as to REITs.

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Reconciliation of Non-GAAP Financial Measures

The following table reconciles Operating income to Adjusted OIBDA, and Net income attributable to OUTFRONT Media Inc.

The following table reconciles Operating income (loss) to Adjusted OIBDA, and Net income (loss) attributable to OUTFRONT Media Inc.

to FFO attributable to OUTFRONT Media Inc.

and AFFO attributable to OUTFRONT Media Inc.

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in millions, except per share amounts) 2020 2019 2020 2019

Total revenues $ 232.9 $ 459.9 $ 618.2 $ 831.6

Operating income

Restructuring charges

Net gain on dispositions

Operating income (loss) $ (25.9) $ 88.7 $ 7.9 $ 125.6

Restructuring charges (a)

4.7 — 4.7 0.3

Net (gain) loss on dispositions (5.2) 0.4 (5.3) (1.1)

Depreciation 21.2 21.4 42.2 42.5

Amortization 21.7 27.6 48.0 52.3

Stock-based compensation 5.2 5.5 11.0 10.8

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Adjusted OIBDA margin 9 % 31 % 18 % 28 %

Net income attributable to OUTFRONT Media Inc.

Net income (loss) attributable to OUTFRONT

$ (57.9) $ 50.3 $ (51.8) $ 56.4

Depreciation of billboard advertising structures 15.4 15.9 30.9 32.2

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Amortization of direct lease acquisition costs 6.3 13.0 17.6 23.3

Net gain on disposition of real estate assets

Net (gain) loss on disposition of real estate assets

(5.2) 0.4 (5.3) (1.1)

Adjustment related to non-controlling interests

(0.1) — (0.2) —

Adjustment related to equity-based investments — 0.1 — 0.1

Income tax effect of adjustments (b)

FFO attributable to OUTFRONT Media Inc.

(27.9) 90.6 16.8 132.7

Non-cash portion of income taxes (2.8) 1.7 (5.3) (0.1)

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Maintenance capital expenditures (6.3) (4.5) (11.1) (8.6)

Restructuring charges

Restructuring charges - severance (a)

3.8 — 3.8 0.3

Other depreciation 5.8 5.5 11.3 10.3

Other amortization 3.2 3.7 6.2 7.2

Stock-based compensation

Stock-based compensation (a)

6.1 5.5 11.9 10.8

Non-cash effect of straight-line rent 3.6 1.5 4.9 2.6

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Amortization of deferred financing costs

1.7 1.6 3.0 3.0

Adjustment related to non-controlling interests

(0.1) — (0.1) —

Income tax effect of adjustments (c)

(0.4) — (0.4) —

AFFO attributable to OUTFRONT Media Inc.

FFO in the three months ended March 31, 2020 , of $44.7 million increased $2.6 million , or 6% , compared to the same prior-year period, primarily due to higher amortization.

AFFO in the three months ended March 31, 2020 , of $40.0 million increased $0.8 million , or 2% , compared to the same prior-year period, due to lower interest expense and higher amortization, partially offset by lower operating income and higher cash paid for direct lease acquisition costs.

$ (21.3) $ 96.3 $ 18.7 $ 135.5

(a) In 2020, Restructuring charges relate to severance associated with workforce reductions made in response to the COVID-19 pandemic and includes stock-based compensation expenses of $0.9 million.

(b) Income tax effect related to Net gain on disposition of real estate assets.

FFO in the three months ended June 30, 2020, was a deficit of $27.9 million compared to FFO of $90.6 million in the same prior-year period.

AFFO in the three months ended June 30, 2020, was a deficit of $21.3 million compared to AFFO of $96.3 million in the same prior-year period.

FFO in the six months ended June 30, 2020, of $16.8 million decreased $115.9 million, or

87%, compared to the same prior-year period.

AFFO in the six months ended June 30, 2020, of $18.7 million decreased $116.8 million, or 86%, compared to the same prior-year period.

The decreases were primarily due to the impact of the COVID-19 pandemic on revenues, partially offset by cost reduction measures taken in response to the COVID-19 pandemic.

Analysis of Results of Operations

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Revenues to the Consolidated Financial Statements.)

Three Months Ended

(in millions, except percentages)

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2020 2019 Change 2020 2019 Change

Billboard $ 188.5 $ 305.8 (38) % $ 459.4 $ 556.8 (17) %

Transit and other

44.4 154.1 (71) 158.8 $ 274.8 (42)

Total revenues $ 232.9 $ 459.9 (49) $ 618.2 $ 831.6 (26)

Organic revenues (a) :

$ 188.5 $ 305.2 (38) $ 459.4 $ 556.0 (17)

Transit and other

44.4 153.9 (71) 158.8 274.6 (42)

Total organic revenues (a)

232.9 459.1 (49) 618.2 830.6 (26)

Non-organic revenues:

— 0.6 * — 0.8 *

Transit and other

— 0.2 * — 0.2 *

Total non-organic revenues

— 0.8 * — 1.0 *

Total revenues $ 232.9 $ 459.9 (49) $ 618.2 $ 831.6 (26)

• Calculation is not meaningful.

Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”).

Total revenues increased by $13.6 million , or 4% , and organic revenues increased $13.8 million , or 4% , in the three months ended March 31, 2020 , compared to the same prior-year period.

In the three months ended March 31, 2019 , non-organic revenues reflect the impact of foreign currency exchange rates.

Total billboard revenues increased $19.9 million , or 8% , in the three months ended March 31, 2020 , compared to the same prior-year period, principally driven by an increase in average revenue per display (yield) and the conversion of traditional static billboard displays to digital billboard displays.

Organic billboard revenues in the three months ended March 31, 2020 , increased $20.1 million , or 8% , compared to the same prior-year period, due to an increase in average revenue per display (yield) and the conversion of traditional static billboard displays to digital billboard displays.

Total transit and other revenues decreased $6.3 million , or 5% , in the three months ended March 31, 2020 , compared to the same prior-year period, driven by a decrease in third-party digital equipment sales and a decline in average revenue per display (yield) as a result of the impact of the COVID-19 pandemic, partially offset by growth in digital displays.

The decrease in organic transit and other revenues in the three months ended March 31, 2020 , compared to the same prior-year period, is due to a decrease in third-party digital equipment sales and a decline in average revenue per display (yield) as a result of the impact of the COVID-19 pandemic, partially offset by growth in digital displays.

Three Months Ended

(in millions, except percentages)

(a) Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”).

Total revenues decreased $227.0 million, or 49%, and organic revenues decreased $226.2 million, or 49%, in the three months ended June 30, 2020, compared to the same prior-year period.

Total revenues decreased by $213.4 million, or 26%, and organic revenues decreased $212.4 million, or 26%, in the six months ended June 30, 2020, compared to the same prior-year period.

In each of the three and six months ended June 30, 2019, non-organic revenues reflect the impact of foreign currency exchange rates.

Total billboard revenues decreased $117.3 million, or 38%, in the three months ended June 30, 2020, compared to the same prior-year period and decreased $97.4 million, or 17%, in the six months ended June 30, 2020, compared to the same prior-year period.

The decreases were principally driven by a decline in average revenue per display (yield) as a result of the impact of the COVID-19 pandemic on customer advertising expenditures and overall demand for our services through purchase cancellations or otherwise.

Organic billboard revenues in the three months ended June 30, 2020, decreased $116.7 million, or 38%, compared to the same prior-year period and decreased $96.6 million, or 17%, in the six months ended June 30, 2020, compared to the same prior-year period.

Total transit and other revenues decreased $109.7 million, or 71%, in the three months ended June 30, 2020, compared to the same prior-year period and decreased $116.0 million, or 42%, in the six months ended June 30, 2020, compared to the same

prior-year period.

The decreases were driven by a decline in average revenue per display (yield) as a result of the impact of the COVID-19 pandemic on customer advertising expenditures and overall demand for our services through purchase cancellations or otherwise.

The decrease in organic transit and other revenues in each of the three and six months ended June 30, 2020, compared to the same prior-year period, is due to a decline in average revenue per display (yield) as a result of the impact of the COVID-19 pandemic on customer advertising expenditures and overall demand for our services through purchase cancellations or otherwise.

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2020 2019 Change 2020 2019 Change

Operating $ 154.0 $ 240.3 (36) % $ 378.8 $ 457.2 (17) %

Selling, general and administrative

62.4 81.5 (23) 141.9 154.8 (8)

Restructuring charges 4.7 — * 4.7 0.3 *

Net gain on dispositions

Net (gain) loss on dispositions (5.2) 0.4 * (5.3) (1.1) *

Depreciation 21.2 21.4 (1) 42.2 42.5 (1)

Amortization 21.7 27.6 (21) 48.0 52.3 (8)

Total expenses $ 258.8 $ 371.2 (30) $ 610.3 $ 706.0 (14)

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Operating Expenses

Three Months Ended

(in millions, except percentages)

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2020 2019 Change 2020 2019 Change

Operating expenses:

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Total operating expenses $ 154.0 $ 240.3 (36) $ 378.8 $ 457.2 (17)

Billboard property lease expenses represented 38% of billboard revenues in each of the three months ended March 31, 2020 and 2019.

Transit franchise expenses represented 62% of transit display revenues in the three months ended March 31, 2020 and 61% in the same prior-year period.

Billboard property lease and transit franchise expenses increased by $6.5 million in the three months ended March 31, 2020 , compared to the same prior-year period.

Posting, maintenance and other expenses increased $1.4 million , or 2% , in the three months ended March 31, 2020 , compared to the same prior-year period, primarily due to higher maintenance costs, higher compensation and benefits-related costs, higher posting and rotation costs, and higher expenses related to our Sports Marketing operating segment, partially offset by lower costs related to third-party equipment sales.

Billboard property lease expenses represented 50% of billboard revenues in the three months ended June 30, 2020, 33% in the three months ended June 30, 2019, 43% in the six months ended June 30, 2020, and 36% in the six months ended June 30, 2019.

Transit franchise expenses represented 63% of transit display revenues in the three months ended June 30, 2020, 59% in the three months ended June 30, 2019, 62% in the six months ended June 30, 2020 and 60% in the six months ended June 30, 2019.

The increase in transit franchise expense as a percentage of revenues is primarily driven by an amendment to the MTA agreement, which resulted in the payment of an increased revenue share percentage instead of guaranteed minimum annual payments for the three months ended June 30, 2020.

Billboard property lease and transit franchise expenses decreased $62.7 million in the three months ended June 30, 2020, compared to the same prior-year period.

Billboard property lease and transit franchise expenses decreased $56.2 million in the six months ended June 30, 2020, compared to the same prior-year period.

The decreases were due primarily to lower billboard and transit revenues resulting from the impact of the COVID-19 pandemic and lower transit franchise expenses paid to the MTA in the three months ended June 30, 2020.

Posting, maintenance and other expenses decreased $23.6 million, or 36%, in the three months ended June 30, 2020, compared to the same prior-year period and decreased $22.2 million, or 17%, in the six months ended June 30, 2020, compared to the same prior-year period.

The decreases were primarily due to the impact of the COVID-19 pandemic and the related restrictions

in the top DMAs reducing or curtailing customer advertising expenditures and overall demand for our services through purchase cancellations or otherwise.

Selling, General and Administrative Expenses (“SG&A”)

SG&A expenses represented 21% of Revenues in the three months ended March 31, 2020 and 20% in the same prior-year period.

SG&A expenses increased $6.2 million , or 8% , in the three months ended March 31, 2020 , compared to the same prior-year period, primarily due to a higher provision for doubtful allowances.

Net Gain on Dispositions

Net gain on dispositions was $0.1 million for the three months ended March 31, 2020 , compared to $1.5 million for the same prior-year period.

The gain for the three months ended March 31, 2019, primarily related to the sale of an office location.

Depreciation was essentially flat in the three months ended March 31, 2020 , compared to the same prior-year period.

Amortization increased $1.6 million , or 6% , in the three months ended March 31, 2020 , compared to the same prior-year period, principally driven by higher direct lease acquisition costs and higher amortization of intangible assets.

Amortization of direct lease acquisition costs was $11.3 million in the three months ended March 31, 2020 and $10.3 million in the same prior-year period.

SG&A expenses represented 27% of Revenues in the three months ended June 30, 2020, and 18% in the same prior-year period.

SG&A expenses decreased $19.1 million, or 23%, in the three months ended June 30, 2020, compared to the same prior-year period.

SG&A expenses represented 23% of Revenues in the six months ended June 30, 2020 and 19% in the same prior-year period.

SG&A expenses decreased $12.9 million, or 8%, in the six months ended June 30, 2020, compared to the same prior-year period.

The decreases were primarily driven by lower compensation-related costs and lower professional fees, primarily as a result of cost reduction measures taken in response to the COVID-19 pandemic, partially offset by a higher provision for doubtful allowances.

Net (Gain) Loss on Dispositions

Net gain on dispositions was $5.2 million for the three months ended June 30, 2020, compared to a Net loss on dispositions of $0.4 million for the same prior-year period.

Net gain on dispositions was $5.3 million for the six months ended June 30, 2020, compared to $1.1 million for the same prior-year period.

The gain for the three and six months ended June 30, 2020, was primarily related to the sale of an office location in Canada.

The gain for the six months ended June 30, 2019, primarily related to the sale of an office location in the U.S.

Depreciation decreased $0.2 million, or 1% in the three months ended June 30, 2020, compared to the same prior-year period and decreased $0.3 million, or 1%, in the six months ended June 30, 2020, compared to the same prior-year period.

Amortization decreased $5.9 million, or 21%, in the three months ended June 30, 2020, compared to the same prior-year period, principally driven by lower direct lease acquisition costs, partially offset by higher amortization of intangible assets.

Amortization of direct lease acquisition costs was $6.3 million in the three months ended June 30, 2020 and $13.0 million in the same prior-year period.

Amortization decreased $4.3 million, or 8%, in the six months ended June 30, 2020, compared to the same prior-year period, principally driven by lower direct lease acquisition costs, partially offset by higher amortization of intangible assets.

Amortization of direct lease acquisition costs was $17.6 million in the six months ended June 30, 2020 and $23.3 million in the same prior-year period.

Interest Expense, Net

Interest expense, net, was $29.8 million (including $1.3 million of deferred financing costs) in the three months ended March 31, 2020 , and $32.7 million (including $1.4 million of deferred financing costs) in the same prior-year period.

Interest expense, net, was $33.3 million (including $1.7 million of deferred financing costs) in the three months ended June 30, 2020, and $33.9 million (including $1.6 million of deferred financing costs) in the same prior-year period.

Interest expense, net, was $63.1 million (including $3.0 million of deferred financing costs) in the six months ended June 30, 2020, and $66.6 million (including $3.0 million of deferred financing costs) in the same prior-year period.

The decrease in Interest expense, net, was primarily due to lower interest rates, partially offset by a higher outstanding average debt balance.

Benefit for Income Taxes

Benefit for income taxes increased $0.7 million , or 70% in the three months ended March 31, 2020 , compared to the same prior-year period, due primarily to a higher taxable REIT subsidiary loss compared to the same prior-year period.

Net income before allocation to non-controlling interests was $6.3 million in the three months ended March 31, 2020 , an increase of $0.2 million compared to the same prior-year period, due primarily to a higher benefit for income taxes, partially offset by lower operating income and lower interest expense.

Benefit (Provision) for Income Taxes

Benefit for income taxes was $1.5 million in the three months ended June 30, 2020, compared to a Provision for income taxes of $6.2 million in the same prior-year period, due primarily to a taxable REIT subsidiary loss in the three months ended June 30, 2020, due to the impact of the COVID-19 pandemic.

Benefit for income taxes was $3.2 million in the six months ended June 30, 2020, compared to a Provision for income taxes of $5.2 million in the same prior-year period, due primarily to a taxable REIT subsidiary loss in the six months ended June 30, 2020.

Net Income (Loss)

Net loss before allocation to non-controlling interests was $58.0 million in the three months ended June 30, 2020, compared to Net income before allocation to non-controlling interests of $50.3 million in the same prior-year period, due primarily to a the impact of the COVID-19 pandemic, partially offset by the impact of cost reduction measures taken in response to the COVID-19 pandemic.

Net loss before allocation to non-controlling interests was $51.7 million in the six months ended June

30, 2020, compared Net income before allocation to non-controlling interests of $56.4 million in the same prior-year period, due primarily to the impact of the COVID-19 pandemic, partially offset by the impact of cost reduction measures taken in response and lower interest expense.

Segment Results of Operations

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Media and Other .

The following table presents our Revenues , Adjusted OIBDA and Operating income (loss) by segment in the three months ended March 31, 2020 and 2019 .

Three Months Ended

The following table presents our Revenues , Adjusted OIBDA and Operating income (loss) by segment in the three and six months ended June 30, 2020 and 2019.

Three Months Ended Six Months Ended

June 30, June 30,

(in millions) 2020 2019 2020 2019

Media $ 213.5 $ 419.6 $ 568.2 $ 758.0

Other 19.4 40.3 50.0 73.6

Total revenues $ 232.9 $ 459.9 $ 618.2 $ 831.6

Operating income

Operating income (loss) $ (25.9) $ 88.7 $ 7.9 $ 125.6

Restructuring charges 4.7 — 4.7 0.3

Net gain on dispositions

Net (gain) loss on dispositions (5.2) 0.4 (5.3) (1.1)

Depreciation 21.2 21.4 42.2 42.5

Amortization 21.7 27.6 48.0 52.3

Stock-based compensation 5.2 5.5 11.0 10.8

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Adjusted OIBDA:

Media $ 37.4 $ 145.8 $ 128.2 $ 240.4

Other (5.4) 8.8 (4.9) 10.0

Corporate (10.3) (11.0) (14.8) (20.0)

Total Adjusted OIBDA $ 21.7 $ 143.6 $ 108.5 $ 230.4

Operating income (loss):

Total operating income

Three Months Ended

(in millions, except percentages)

Media $ (3.9) $ 101.9 $ 43.5 $ 157.4

Other (5.5) 3.3 (8.8) (0.7)

Corporate (16.5) (16.5) (26.8) (31.1)

Total operating income (loss) $ (25.9) $ 88.7 $ 7.9 $ 125.6

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2020 2019 Change 2020 2019 Change

Billboard $ 181.4 $ 285.1 (36) % $ 437.9 $ 521.3 (16) %

Transit and other 32.1 134.5 (76) 130.3 236.7 (45)

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SG&A expenses

(41.1) (56.5) (27) (102.3) (106.9) (4)

Adjusted OIBDA $ 37.4 $ 145.8 (74) $ 128.2 $ 240.4 (47)

Adjusted OIBDA margin 18 % 35 % 23 % 32 %

Operating income

Net gain on dispositions

Operating income (loss) $ (3.9) $ 101.9 * $ 43.5 $ 157.4 (72)

Restructuring charges 3.0 — * 3.0 — *

Net (gain) loss on dispositions (1.1) 0.2 * (1.2) (1.3) (8)

Depreciation and amortization 39.4 43.7 (10) 82.9 84.3 (2)

Adjusted OIBDA $ 37.4 $ 145.8 (74) $ 128.2 $ 240.4 (47)

Media segment revenues increased $16.3 million , or 5% , in the three months ended March 31, 2020 , compared to the same prior-year period.

Media segment revenue increased 5% in the three months ended March 31, 2020 , reflecting an increase in billboard average revenue per display (yield), growth in transit digital displays and the conversion of traditional static billboard displays to digital billboard displays, partially offset by a decrease in transit average revenue per display (yield).

In the three months ended March 31, 2020 , we generated approximately 42% of our U.S.

* Calculation is not meaningful.

Media segment revenues decreased $206.1 million, or 49%, in the three months ended June 30, 2020, compared to the same prior-year period.

In the three months ended June 30, 2020, we generated approximately 39% of our U.S.

Media segment revenues from national advertising campaigns and 46% in the same prior-year period.

Media segment revenues decreased $189.8 million, or 25%, in the six months ended June 30, 2020, compared to the same prior-year period.

In the six months ended June 30, 2020, we generated approximately 41% of our U.S.

Media segment revenues from national advertising campaigns and 43% in the same prior-year period.

The decreases in U.S.

Media segment revenues were due primarily to a decline in average revenue per display (yield) as a result of the impact of the COVID-19 pandemic on customer advertising expenditures and overall demand for our services through purchase cancellations or otherwise.

Revenues from U.S.

Media segment billboards increased $20.3 million , or 9% , in the three months ended March 31, 2020 , compared to the same prior-year period, reflecting an increase in average revenue per display (yield) and the conversion of traditional static billboard displays to digital billboard displays.

Media segment billboards decreased $103.7 million, or 36%, in the three months ended June 30, 2020, compared to the same prior-year period.

Revenues from U.S.

Media segment billboards decreased $83.4 million, or 16%, in the six months ended June 30, 2020, compared to the same prior-year period.

The decreases reflect a decline in average revenue per display (yield) as a result of the impact of the COVID-19 pandemic on customer advertising expenditures and overall demand for our services through purchase cancellations or otherwise.

Transit and other revenues in the U.S.

Media segment decreased $4.0 million , or 4% , in the three months ended March 31, 2020 , compared to the same prior-year period, driven by a decrease in average revenue per display (yield) as a result of the impact of the COVID-19 pandemic, partially offset by growth in digital displays.

Media segment operating expenses increased $9.3 million , or 5% , in the three months ended March 31, 2020 , compared to the same prior-year period, primarily due to an increase in billboard lease costs as a result of new leases, lease modifications and increased variable billboard lease costs driven by higher billboard revenues.

The increase in U.S.

Media operating expenses was also due to higher maintenance, higher compensation and benefits-related costs, and higher posting and rotation costs.

Media segment SG&A expenses increased $10.8 million , or 21% , in the three months ended March 31, 2020 , compared to the same prior-year period, primarily due to a higher provision for doubtful accounts as a result of the COVID-19 pandemic and higher compensation and other employee-related costs.

Media segment Adjusted OIBDA decreased $3.8 million , or 4% , in the three months ended March 31, 2020 , compared to the same prior-year period.

Adjusted OIBDA margin was 26% in the three months ended March 31, 2020 , and 28% in the same prior-year period.

Three Months Ended

(in millions, except percentages)

Media segment decreased $102.4 million, or 76%, in the three months ended June 30, 2020, compared to the same prior-year period and decreased $106.4 million, or 45%, in the six months ended June 30, 2020, compared to the same prior-year period.

Media segment operating expenses decreased $82.3 million, or 38%, in the three months ended June 30, 2020, compared to the same prior-year period.

Media segment SG&A expenses decreased $15.4 million, or 27%, in the three months ended June 30, 2020, compared to the same prior-year period.

Media segment operating expenses decreased $73.0 million, or 18%, in the six months ended June 30, 2020, compared to the same prior-year period.

Media segment SG&A expenses decreased $4.6 million, or 4%, in the six months ended June 30, 2020, compared to the same prior-year period.

The decreases in U.S.

Media segment operating expenses were primarily driven by lower billboard and transit revenues resulting from the impact of the COVID-19 pandemic and lower transit franchise expenses paid to the MTA in the three months ended June 30, 2020.

The decreases in U.S.

Media segment SG&A expenses were primarily driven by lower compensation-related costs and lower professional fees, primarily resulting from cost reduction measures taken in response to the COVID-19 pandemic, partially offset by a higher provision for doubtful allowances.

Media segment Adjusted OIBDA decreased $108.4 million, or 74%, in the three months ended June 30, 2020, compared to the same prior-year period.

Adjusted OIBDA margin was 18% in the three months ended June 30, 2020, and 35% in the same prior-year period.

Media segment Adjusted OIBDA decreased $112.2 million, or 47%, in the six months ended June 30, 2020, compared to the same prior-year period.

Adjusted OIBDA margin was 23% in the six months ended June 30, 2020, and 32% in the same prior-year period.

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2020 2019 Change 2020 2019 Change

$ 7.1 $ 20.7 (66) % $ 21.5 $ 35.5 (39) %

Transit and other

12.3 19.6 (37) 28.5 38.1 (25)

Total revenues $ 19.4 $ 40.3 (52) $ 50.0 $ 73.6 (32)

Organic revenues (a) :

$ 7.1 $ 20.1 (65) $ 21.5 $ 34.7 (38)

Transit and other

12.3 19.4 (37) 28.5 37.9 (25)

Total organic revenues (a)

19.4 39.5 (51) 50.0 72.6 (31)

Non-organic revenues:

— 0.6 * — 0.8 *

Transit and other

— 0.2 * — 0.2 *

Total non-organic revenues

— 0.8 * — 1.0 *

Total revenues 19.4 40.3 (52) 50.0 73.6 (32)

Operating expenses

(19.0) (23.0) (17) (41.1) (46.5) (12)

SG&A expenses

(5.8) (8.5) (32) (13.8) (17.1) (19)

Adjusted OIBDA

$ (5.4) $ 8.8 * $ (4.9) $ 10.0 *

Adjusted OIBDA margin

Operating loss

(28) % 22 % (10) % 14 %

Operating income (loss)

$ (5.5) $ 3.3 * $ (8.8) $ (0.7) *

Restructuring charges

0.7 — * 0.7 — *

Net (gain) loss on dispositions

(4.1) 0.2 * (4.1) 0.2 *

Depreciation and amortization

3.5 5.3 (34) 7.3 10.5 (30)

Adjusted OIBDA

$ (5.4) $ 8.8 * $ (4.9) $ 10.0 *

* Calculation is not meaningful.

Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”).

Total Other revenues decreased $2.7 million , or 8% , in the three months ended March 31, 2020 , compared to the same prior-year period, reflecting a decrease in third-party digital equipment sales and a decline in Canada, which was impacted by the COVID-19 pandemic, partially offset by improved performance in our Sports Marketing operating segment.

Other operating expenses decreased $1.4 million , or 6% , in the three months ended March 31, 2020 , compared to the same prior-year period, driven by lower costs related to third-party digital equipment sales, partially offset by higher costs related to our Sports Marketing operating segment and higher costs in Canada.

Other SG&A expenses decreased $0.6 million , or 7% , in the three months ended March 31, 2020 , compared to the prior-year period, primarily driven by lower expenses related to our Sports Marketing operating segment and Canada.

Other Adjusted OIBDA decreased $0.7 million , or 58% , in the three months ended March 31, 2020 , compared to the same prior-year period, primarily driven by lower performance in Canada, which was impacted by the COVID-19 pandemic, and a decrease in third-party equipment sales, partially offset by higher performance in our Sports Marketing operating segment.

(a) Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”).

Total Other revenues decreased $20.9 million, or 52%, in the three months ended June 30, 2020, and decreased $23.6 million, or 32%, in the six months ended June 30, 2020, compared to the same prior-year periods, reflecting a decline in average revenue per display (yield) as a result of the impact of the COVID-19 pandemic on customer advertising expenditures and overall demand for our services through purchase cancellations or otherwise, as well as the cancellation of spring sports at colleges and universities.

Other operating expenses decreased $4.0, or 17%, in the three months ended June 30, 2020, compared to the same prior-year period.

Other SG&A expenses decreased $2.7 million, or 32%, in the three months ended June 30, 2020, compared to the prior-year period.

Other operating expenses decreased $5.4 million, or 12%, in the six months ended June 30, 2020, compared to the same prior-year period.

Other SG&A expenses decreased $3.3 million, or 19%, in the six months ended June 30, 2020, compared to the prior-year period.

The decreases in Other operating expenses were primarily driven by lower billboard and transit revenues, and lower expenses related to our Sports Marketing operating segment.

The decreases in Other SG&A expenses were primarily driven by cost reduction measures taken in response to the COVID-19 pandemic.

Other incurred an Adjusted OIBDA loss of $5.4 million in the three months ended June 30, 2020, compared to Adjusted OIBDA of $8.8 million in the same prior-year period and incurred an Adjusted OIBDA loss of $4.9 million in the six months ended June 30, 2020, compared to Adjusted OIBDA of $10.0 million in the same prior-year period.

The decreases were due primarily to a decline in average revenue per display (yield) as a result of the impact of the COVID-19 pandemic on customer advertising expenditures and overall demand for our services through purchase cancellations or otherwise, as well as the cancellation of spring sports at colleges and universities, partially offset by cost reduction measures taken in response to the COVID-19 pandemic.

Corporate expenses primarily include expenses associated with employees who provide centralized services.

Corporate expenses, excluding stock-based compensation, were $4.5 million in the three months ended March 31, 2020 , compared to $9.0 million in the same prior-year period, primarily due to lower compensation-related expenses, primarily related to the impact of market fluctuations on an equity-linked retirement plan offered by the Company to certain employees.

Corporate expenses, excluding stock-based compensation, were $10.3 million in the three months ended June 30, 2020, compared to $11.0 million in the same prior-year period, primarily due to lower compensation-related expenses, partially offset by the impact of market fluctuations on an equity-linked retirement plan offered by the Company to certain employees, and lower costs resulting from cost reduction measures taken in response to the COVID-19 pandemic.

Corporate expenses, excluding stock-based compensation, were $14.8 million in the six months ended June 30, 2020, compared to $20.0 million in the same prior-year period, primarily due to lower compensation-related expenses, primarily related to the impact of market fluctuations on an equity-linked retirement plan offered by the Company to certain employees and resulting from cost reduction measures taken in response to the COVID-19 pandemic.

Liquidity and Capital Resources

(in millions, except percentages)

December 31, 2019

(in millions, except percentages) June 30,

2020 December 31, 2019 % Change

Cash and cash equivalents $ 647.8 $ 59.1 *%

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We expect our short-term and long-term cash needs and related funding capability to be adversely affected by the impact of the COVID-19 pandemic as cash on hand and operating cash flows decrease in 2020, and our ability to issue debt and equity securities and/borrow under our existing or new credit facilities on reasonable pricing terms, or at all, may become uncertain.

order to preserve financial flexibility and increase liquidity in light of the current uncertainty in the global economy and our business resulting from the COVID-19 pandemic, we borrowed $470.0 million under the Revolving Credit Facility, which represents nearly all of the remaining available amount under the Revolving Credit Facility, raised $400.0 million in the Private Placement (as defined below), before expenses, and amended the Credit Agreement (as defined below) to modify the calculation of the Company’s financial maintenance covenant ratio under the Credit Agreement.

In order to preserve financial flexibility and increase liquidity in light of the current uncertainty in the global economy and our business resulting from the COVID-19 pandemic, we borrowed $470.0 million under the Revolving Credit Facility, which was repaid in full as of June 30, 2020, using the net proceeds from the offering of the Notes and cash on hand, raised $400.0 million in the Private Placement, before expenses, issued $400.0 million aggregate principal amount of the Notes and amended the Credit Agreement to modify the calculation of the Company’s financial maintenance covenant ratio under the Credit Agreement, among other things.

(See the “Overview—COVID-19 Impact” section of this MD&A.)

The increase in working capital as of March 31, 2020 , compared to a working capital deficit as of December 31, 2019 , is primarily driven by the increase in cash as a result of the borrowings under the Revolving Credit Facility in the first quarter of 2020.

The increase in working capital as of June 30, 2020, compared to a working capital deficit as of December 31, 2019, is primarily driven by the increase in cash as a result of the Private Placement.

The increase in cash is partially offset by a decline in Prepaid MTA deployment costs .

As a result of the impact of the COVID-19 pandemic on our business and our expectations with respect to future revenues under the New York Metropolitan Transportation Authority (the “MTA”) agreement into the future, we reclassified the majority of Prepaid MTA deployment costs to long-term assets.

As a result of the impact of the COVID-19 pandemic on our business and our expectations with respect to future revenues under the MTA agreement into the future, we reclassified the majority of Prepaid MTA deployment costs to long-term assets.

Under the MTA agreement, we are obligated to deploy, over a number of years, (i) 8,565 digital advertising screens on subway and train platforms and entrances, (ii) 37,716 smaller-format digital advertising screens on rolling stock, and (iii) 7,829 MTA communications displays, with such deployment amounts being subject to modification as agreed-upon by us and the MTA.

1 unchanged sentence

Incremental revenues that exceed an annual base revenue amount will be retained by us for the cost of deploying advertising and communications displays throughout the transit system.

As presented in the table below, MTA equipment deployment costs are being recorded as Prepaid MTA equipment deployment costs and Intangible assets on our Consolidated Statement of Financial Position, and as these costs are recouped from incremental revenues that the MTA would otherwise be entitled to receive, Prepaid MTA equipment deployment costs will be reduced.

As presented in the table below, recoupable MTA equipment deployment costs are being recorded as Prepaid MTA equipment deployment costs and Intangible assets on our Consolidated Statement of Financial Position, and as these costs are recouped from incremental revenues that the MTA would otherwise be entitled to receive, Prepaid MTA equipment deployment costs will be reduced.

If incremental revenues generated over the term of the agreement are not sufficient to cover all or a portion of the equipment deployment costs, the costs will not be recouped, which could have an adverse effect on our business, financial condition and results of operation.

We may utilize cash on hand and/or incremental third-party financing to fund equipment deployment costs over the next couple of years.

We did not recoup any equipment deployment costs in the six months ended June 30, 2020, and it’s unlikely we will recoup equipment deployment costs in 2020.

In June 2020, we entered into an amendment to the MTA agreement, pursuant to which (i) for up to $143.0 million of MTA equipment deployment costs to be incurred under the MTA agreement after June 2020, the MTA and the Company will directly pay 70% and 30% of the costs, respectively, instead of the costs being recoupable from incremental revenues generated under the agreement, and (ii) any guaranteed minimum annual payment amounts that would have been paid for the period from April 1, 2020 through December 31, 2020 (less any revenue share amounts actually paid during this period using an increased revenue share percentage of 65%) will instead be added in equal increments to the guaranteed minimum annual payment amounts owed for the period from January 1, 2022, through December 31, 2026.

In connection with the amendment to the MTA Agreement and in coordination with the MTA, after suspending our deployment of advertising and communications displays throughout the transit system in March 2020 as a result of the impact of the COVID-19 pandemic, we recommenced deployment in the third quarter of 2020.

Accordingly, for the full year of 2020, we currently expect our MTA equipment deployment costs to be significantly lower than our previously disclosed amount of approximately $175.0 million as we recommence deployment in 2020.

We may utilize cash on hand and/or incremental third-party financing to fund equipment

deployment costs over the next couple of years.

However, given the uncertainty in the market around the severity and duration of the COVID-19 pandemic, we cannot reasonably estimate the aggregate financing amount, if any, at this time.

As of March 31, 2020 , we have issued surety bonds (in place of letters of credit) in favor of the MTA totaling approximately $136.0 million , which amount is subject to change as equipment installations are completed and revenues are generated.

As indicated in the table below, we incurred $22.0 million related to MTA equipment deployment costs in the three months ended March 31, 2020 (which includes equipment deployment costs related to future deployments), for a total of $269.6 million to date, of which $33.9 million had been recouped from incremental revenues to date.

As of March 31, 2020 , 5,253 digital displays had been installed, of which 676 installations occurred in the three months ended March 31, 2020 .

As a result of the impact of the COVID-19 pandemic, we suspended our deployment of advertising and communications displays throughout the transit system at this time.

In addition, we did not recoup any equipment deployment costs in the three months ended March 31, 2020, and may not recoup equipment deployment costs in 2020.

Further, we expect transit franchise expenses to materially increase as a percentage of revenues as revenues decline in 2020 as a result of the impact of the COVID-19 pandemic.

However, we are engaged in constructive conversations with our transit franchise partners to mitigate increases in transit franchise expenses in 2020.

(See the “Overview—COVID-19 Impact” section of this MD&A.) We have identified the COVID-19 pandemic as a trigger for impairment review of our Prepaid MTA equipment deployment costs and related intangible assets, and after performing an analysis, no impairment was identified.

(See the “Critical Accounting Polices—MTA Agreement” section of this MD&A.)

(in millions)

Beginning Balance

Deployment Costs Incurred

Ending Balance

Three months ended March 31, 2020:

As of June 30, 2020, we have issued surety bonds (in place of letters of credit) in favor of the MTA totaling approximately $136.0 million, which amount is subject to change as equipment installations are completed and revenues are generated.

In addition, in the first quarter of 2020, we identified the COVID-19 pandemic as a trigger for impairment review of our Prepaid MTA equipment deployment costs and related intangible assets, and after performing an analysis, no impairment was identified.

In the second quarter of 2020, we updated our projections in connection with the amendment to the MTA agreement and did not identify a triggering event for an impairment review of our Prepaid MTA equipment deployment costs.

(See the “Critical Accounting Polices—MTA Agreement” section of this MD&A.) Further, we expect transit franchise expenses to materially increase as a percentage of revenues as revenues decline in 2020 as a result of the impact of the COVID-19 pandemic.

(See the “Overview—COVID-19 Impact” section of this MD&A.) As indicated in the table below, we incurred $34.3 million related to MTA equipment deployment costs in the six months ended June 30, 2020 (which includes equipment deployment costs related to future deployments), for a total of $281.9 million to date, of which $33.9 million had been recouped from incremental revenues to date.

As of June 30, 2020, 5,350 digital displays had been installed, of which 97 installations occurred in the three months ended June 30, 2020, for a total of 773 installations in the six months ended June 30, 2020.

(in millions) Beginning Balance Deployment Costs Incurred Recoupment Amortization Ending Balance

Six months ended June 30, 2020:

Prepaid MTA equipment deployment costs

$ 171.5 $ 28.3 $ — $ — $ 199.8

Intangible assets (franchise agreements)

38.3 6.0 — (2.7) 41.6

Total $ 209.8 $ 34.3 $ — $ (2.7) $ 241.4

Year ended December 31, 2019:

Prepaid MTA equipment deployment costs

$ 79.5 $ 124.2 $ (32.2) $ — $ 171.5

Intangible assets (franchise agreements)

As of March 31, 2020 , we had total indebtedness of approximately $3.0 billion , which excluding debt issuance costs of $26.1 million and net unamortized discount and premium of $0.9 million , resulted in Total debt, net, of approximately $2.9 billion .

14.8 26.6 — (3.1) 38.3

Total $ 94.3 $ 150.8 $ (32.2) $ (3.1) $ 209.8

As of June 30, 2020, we had total indebtedness of approximately $2.7 billion, which excluding debt issuance costs of $30.8 million and net unamortized discount and premium of $0.8 million, resulted in Total debt, net, of approximately $2.7 billion.

Debt, net, consists of the following:

(in millions, except percentages)

(in millions, except percentages) June 30,

2020 December 31,

Short-term debt:

AR Facility $ — $ 105.0

Repurchase Facility 80.0 90.0

1 unchanged sentence

Long-term debt:

Revolving credit facility

Term loan, due 2026 597.7 597.5

3 unchanged sentences

5.000% senior unsecured notes, due 2027 650.0 650.0

4.625% senior unsecured notes, due 2030 500.0 500.0

Total senior unsecured notes 2,051.5 1,651.7

4 unchanged sentences

Payments Due by Period

(in millions)

2025 and thereafter

(in millions) Total 2020 2021-2022 2023-2024 2025 and thereafter

Long-term debt $ 2,650.0 $ — $ — $ 500.0 $ 2,150.0

The interest rate on the term loan due in 2026 (the “Term Loan”) was 2.5% per annum as of March 31, 2020 .

As of March 31, 2020 , a discount of $2.5 million on the Term Loan remains unamortized.

Interest 850.2 124.6 246.4 219.9 259.3

Total $ 3,500.2 $ 124.6 $ 246.4 $ 719.9 $ 2,409.3

The interest rate on the term loan due in 2026 (the “Term Loan”) was 1.9% per annum as of June 30, 2020.

As of June 30, 2020, a discount of $2.3 million on the Term Loan remains unamortized.

The discount is being amortized through Interest expense, net , on the Consolidated Statement of Operations.

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We also have a $500.0 million revolving credit facility, which matures in 2024 (the “Revolving Credit Facility,” together with the Term Loan, the “Senior Credit Facilities”).

On March 25, 2020, we borrowed $470.0 million on our revolving credit facility, which represents nearly all of the remaining available amount under the Revolving Credit Facility.

As of March 31, 2020 , there were $495.0 million of outstanding borrowings under the Revolving Credit Facility, at a borrowing rate of approximately 2.7% .

The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $0.3 million in the three months ended March 31, 2020 , and $0.4 million in the three months ended March 31, 2019 .

As of March 31, 2020 , we had issued letters of credit totaling approximately $1.5 million against the letter of credit facility sublimit under the Revolving Credit Facility.

As of June 30, 2020, there were no outstanding borrowings under the Revolving Credit Facility.

The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $0.3 million in the three months ended June 30, 2020, $0.3 million in the three months ended June 30, 2019, $0.6 million in the six months ended June 30, 2020, and $0.7 million in the six months ended June 30, 2019.

As of June 30, 2020, we had issued letters of credit totaling approximately $1.6 million against the letter of credit facility sublimit under the Revolving Credit Facility.

Standalone Letter of Credit Facilities

As of March 31, 2020 , we had issued letters of credit totaling approximately $71.0 million under our aggregate $78.0 million standalone letter of credit facilities.

The total fees under the letter of credit facilities were immaterial in each of the three months ended March 31, 2020 and 2019 .

As of June 30, 2020, we had issued letters of credit totaling approximately $71.0 million under our aggregate $78.0 million standalone letter of credit facilities.

The total fees under the letter of credit facilities were immaterial in each of the three and six months ended June 30, 2020 and 2019.

Accounts Receivable Securitization Facilities

As of March 31, 2020 , we have a $125.0 million revolving accounts receivable securitization facility (the “AR Facility”), which terminates in June 2022, unless further extended, and a 364-day uncommitted $90.0 million structured repurchase facility (the “Repurchase Facility” and together with the AR Facility, the “AR Securitization Facilities”), which terminates in June 2020, unless further extended.

In connection with the AR Securitization Facilities, Outfront Media LLC and Outfront Media Outernet Inc., each a wholly-owned subsidiary of the Company, and certain of the Company’s TRSs (the “Originators”), will sell and/or contribute their respective existing and future accounts receivable and certain related assets to either Outfront Media Receivables LLC, a special purpose vehicle and wholly-owned subsidiary of the Company relating to the Company’s qualified REIT subsidiary accounts receivable assets (the “QRS SPV”) or Outfront Media Receivables TRS, LLC a special purpose vehicle and wholly-owned subsidiary of the Company relating to the Company’s TRS accounts receivable assets (the “TRS SPV” and together with the QRS SPV, the “SPVs”).

The SPVs will transfer undivided interests in their respective accounts receivable assets to certain purchasers from time to time (the “Purchasers”).

As of June 30, 2020, we have a revolving accounts receivable securitization facility (the “AR Facility”), which terminates in June 2022, unless further extended, and a 364-day uncommitted structured repurchase facility (the “Repurchase Facility” and together with the AR Facility, the “AR Securitization Facilities”), which now terminates in June 2021, as described below, unless further extended.

On June 18, 2020, the Company, certain subsidiaries of the Company and MUFG Bank, Ltd.

(“MUFG”) entered into amendments to certain of the agreements governing the Repurchase Facility, pursuant to which the Company, among other things, (i) decreased the maximum borrowing capacity under the Repurchase Facility from $90.0 million to $80.0 million;

and (ii) extended the term of the Repurchase Facility so that it will terminate on June 29, 2021, unless further extended.

In connection with the AR Securitization Facilities, Outfront Media LLC and Outfront Media Outernet Inc., each a wholly-owned subsidiary of the Company, and certain of the Company’s taxable REIT subsidiaries (“TRSs”) (the “Originators”), will sell and/or contribute their respective existing and future accounts receivable and certain related assets to either Outfront Media Receivables LLC, a special purpose vehicle and wholly-owned subsidiary of the Company relating to the Company’s qualified REIT subsidiary accounts receivable assets (the “QRS SPV”) or Outfront Media Receivables TRS, LLC a special purpose vehicle and wholly-owned subsidiary of the Company relating to the Company’s TRS accounts receivable assets (the “TRS SPV” and together with the QRS SPV, the “SPVs”).

The SPVs may transfer undivided interests in their respective accounts receivable assets to certain purchasers from time to time (the “Purchasers”).

The SPVs are separate legal entities with their own separate creditors who will be entitled to access the SPVs’ assets before the assets become available to the Company.

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In connection with the Repurchase Facility, the Originators may borrow funds collateralized by subordinated notes (the “Subordinated Notes”) issued by the SPVs in favor of their respective Originators and representing a portion of the outstanding balance of the accounts receivable assets sold by the Originators to the SPVs under the AR Facility.

The Subordinated Notes will be transferred to MUFG Bank, Ltd.

(“MUFG”), as repurchase buyer, on an uncommitted basis, and subject to repurchase by the applicable Originators on termination of the Repurchase Facility.

The Subordinated Notes will be transferred to MUFG, as repurchase buyer, on an uncommitted basis, and subject to repurchase by the applicable Originators on termination of the Repurchase Facility.

The Originators have granted MUFG a security interest in the Subordinated Notes to secure their obligations under the agreements governing the Repurchase Facility, and the Company has agreed to guarantee the Originators’ obligations under the agreements governing the Repurchase Facility.

As of March 31, 2020 , there were $120.0 million of outstanding borrowings under the AR Facility, at a borrowing rate of approximately 2.5% , and $90.0 million of outstanding borrowings under the Repurchase Facility, at a borrowing rate of approximately 2.0% .

As of March 31, 2020 , there was no borrowing capacity remaining under the AR Facility based on approximately $304.5 million of accounts receivable used as collateral for the AR Securitization Facilities, and there was no borrowing capacity remaining under the Repurchase Facility, in accordance with the agreements governing the AR Securitization Facilities.

The commitment fee based on the amount of unused commitments under the AR Facility was immaterial for each of the three months ended March 31, 2020 and 2019 .

On April 17, 2020, MUFG required us to reduce our borrowing capacity under the Repurchase Facility to $80.0 million and repay $10.0 million of borrowings under the Repurchase Facility as a result of MUFG reducing its uncommitted repurchase facility credit exposure to companies with a similar issuer credit rating as the Company.

As of May 7, 2020 , there were $118.0 million of outstanding borrowings under the AR Facility, at a borrowing rate of approximately 2.0% , and $80.0 million of outstanding borrowings under the Repurchase Facility, at a borrowing rate of approximately 2.5% .

As of June 30, 2020, there were no outstanding borrowings under the AR Facility and $80.0 million of outstanding borrowings under the Repurchase Facility, at a borrowing rate of approximately 1.9%.

As of June 30, 2020, there was no borrowing capacity remaining under the AR Facility based on approximately $237.9 million of accounts receivable used as collateral for the AR Securitization Facilities and a related voluntary temporary suspension of the AR Facility, and there was no borrowing capacity remaining under the Repurchase Facility, in accordance with the agreements governing the AR Securitization Facilities.

The commitment fee based on the amount of unused commitments under the AR Facility was immaterial for each of the three and six months ended June 30, 2020 and 2019.

Senior Unsecured Notes

As of March 31, 2020 , a premium of $1.6 million on $100.0 million aggregate principal amount of the 5.625% Senior Unsecured Notes due 2024, remains unamortized.

On May 15, 2020, two of our wholly-owned subsidiaries, Outfront Media Capital LLC (“Finance LLC”) and Outfront Media Capital Corporation (“Finance Corp” and, together with Finance LLC, the “Borrowers”), issued the Notes in a private placement.

The Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company and each of its direct and indirect domestic subsidiaries that guarantee the Senior Credit Facilities.

Interest on the Notes is payable on June 15 and December 15 of each year, beginning on December 15, 2020.

On or after June 15, 2022, the Borrowers may redeem at any

time, or from time to time, some or all of the Notes.

Prior to such date, the Borrowers may redeem up to 40% of the aggregate principal amount of the aggregate principal amount with the net proceeds of certain equity offerings, provided that at least 50% of the aggregate principal amount of the Notes remain outstanding after the redemption.

In May 2020, we used the net proceeds from the Notes, together with cash on hand, to repay $400.0 million of outstanding borrowings under our Revolving Credit Facility and to pay fees and expenses in connection with the offering of the Notes.

As of June 30, 2020, a premium of $1.5 million on $100.0 million aggregate principal amount of the 5.625% Senior Unsecured Notes due 2024, remains unamortized.

The premium is being amortized through Interest expense, net , on the Consolidated Statement of Operations.

Debt Covenants

Our credit agreement, dated as of January 31, 2014 (as amended, supplemented or otherwise modified, the “Credit Agreement”), governing the Senior Credit Facilities, the agreements governing the AR Securitization Facilities, and the indentures governing our senior unsecured notes contain customary affirmative and negative covenants, subject to certain exceptions, including but not limited to those that limit the Company’s and our subsidiaries’ abilities to (i) pay dividends on, repurchase or make distributions in respect to the Company’s or its wholly-owned subsidiary, Outfront Media Capital LLC’s (“Finance LLC’s”) capital stock or make other restricted payments other than dividends or distributions necessary for us to maintain our REIT status, subject to certain conditions and exceptions, and (ii) enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany or third-party transfers.

Our credit agreement, dated as of January 31, 2014 (as amended, supplemented or otherwise modified, the “Credit Agreement”), governing the Senior Credit Facilities, the agreements governing the AR Securitization Facilities, and the indentures governing our senior unsecured notes contain customary affirmative and negative covenants, subject to certain exceptions, including but not limited to those that restrict the Company’s and its subsidiaries’ abilities to (i) pay dividends on, repurchase or make distributions in respect to the Company’s or its wholly-owned subsidiary, Outfront Media Capital LLC’s (“Finance LLC’s”) capital stock or make other restricted payments other than dividends or distributions necessary for us to maintain our REIT status, subject to certain conditions and exceptions, (ii) enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany or third-party transfers, and (iii) incur additional indebtedness.

One of the exceptions to the restriction on our ability to incur additional indebtedness is satisfaction of a Consolidated Total Leverage Ratio, which is the ratio of our consolidated total debt to our Consolidated EBITDA (as defined in the Credit Agreement) for the trailing four consecutive quarters, of no greater than 6.0 to 1.0 .

As of June 30, 2020, our Consolidated Total Leverage Ratio was 6.7 to 1.0 in accordance with the Credit Agreement.

The terms of the Credit Agreement (and under certain circumstances, the agreements governing the AR Securitization Facilities) require that we maintain a Consolidated Net Secured Leverage Ratio, which is the ratio of (i) our consolidated secured debt (less up to $150.0 million of unrestricted cash) to (ii) our Consolidated EBITDA (as defined in the Credit Agreement) for the trailing four consecutive quarters, of no greater than 4.5 to 1.0.

As of March 31, 2020 , our Consolidated Net Secured Leverage Ratio was 2.0 to 1.0 in accordance with the Credit Agreement.

The Credit Agreement also requires that, in connection with the incurrence of certain indebtedness, we maintain a Consolidated Total Leverage Ratio, which is the ratio of our consolidated total debt to our Consolidated EBITDA for the trailing four consecutive quarters, of no greater than 6.0 to 1.0.

As of March 31, 2020 , our Consolidated Total Leverage Ratio was 5.4 to 1.0 in accordance with the Credit Agreement.

As of March 31, 2020 , we are in compliance with our debt covenants.

On April 15, 2020, the Company, along with its wholly-owned subsidiaries, Finance LLC and Outfront Media Capital Corporation (together with Finance LLC, the “Borrowers”), and other guarantor subsidiaries party thereto, entered into an amendment (the “Amendment”) to the Credit Agreement.

As of June 30, 2020, our Consolidated Net Secured Leverage Ratio was 1.0 to 1.0 in accordance with the Credit Agreement.

As of June 30, 2020, we are in compliance with our debt covenants.

On April 15, 2020, the Company, along with the Borrowers, and other guarantor subsidiaries party thereto, entered into an amendment (the “Amendment”) to the Credit Agreement.

The Amendment provides that for the period from April 15, 2020 through September 30, 2021 (i) the Company’s Consolidated Net Secured Leverage Ratio shall be calculated by substituting the Company’s Consolidated EBITDA for each of the quarterly periods ended June 30, 2020 and September 30, 2020, included in any last twelve month compliance testing period, with the Company’s historical Consolidated EBITDA for each of the quarterly periods ended June 30, 2019 and September 30, 2019, respectively;

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Deferred Financing Costs

As of March 31, 2020 , we had deferred $30.7 million in fees and expenses associated with the Term Loan, Revolving Credit Facility, AR Securitization Facilities and our senior unsecured notes.

As of June 30, 2020, we had deferred $36.1 million in fees and expenses associated with the Term Loan, Revolving Credit Facility, AR Securitization Facilities and our senior unsecured notes.

We are amortizing the deferred fees through Interest expense, net, on our Consolidated Statement of Operations over the respective terms of the Term Loan, Revolving Credit Facility, AR Securitization Facilities and our senior unsecured notes.

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We have several interest rate cash flow swap agreements to effectively convert a portion of our LIBOR-based variable rate debt to a fixed rate and hedge our interest rate risk related to such variable rate debt.

The fair value of these swap positions was a net liability of approximately $8.9 million as of March 31, 2020 , and $4.6 million as of December 31, 2019 , and is included in Other liabilities on our Consolidated Statement of Financial Position.

As of March 31, 2020 , under the terms of the agreements, we will pay interest based on an aggregate notional amount of $200.0 million , under a weighted-average fixed interest rate of 2.7% , with a receive rate of one-month LIBOR and which mature at various dates until June 30, 2022 .

The one-month LIBOR rate was approximately 1.0% as of March 31, 2020 .

The fair value of these swap positions was a net liability of approximately $8.3 million as of June 30, 2020, and $4.6 million as of December 31, 2019, and is included in Other liabilities on our Consolidated Statement of Financial Position.

As of June 30, 2020, under the terms of the agreements, we will pay interest based on an aggregate notional amount of $200.0 million, under a weighted-average fixed interest rate of 2.7%, with a receive rate of one-month LIBOR and which mature at various dates until June 30, 2022.

The one-month LIBOR rate was approximately 0.2% as of June 30, 2020.

At-the-Market Equity Offering Program

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We have no obligation to sell any of our common stock under the sales agreement and may at any time suspend solicitations and offers under the sales agreement.

No shares were sold under the ATM Program during the three months ended March 31, 2020 .

As of March 31, 2020 , we had approximately $232.5 million of capacity remaining under the ATM Program.

No shares were sold under the ATM Program during the three and six months ended June 30, 2020.

As of June 30, 2020, we had approximately $232.5 million of capacity remaining under the ATM Program.

Series A Preferred Stock Issuance

On April 20 2020 (the “Closing Date”), the Company issued and sold an aggregate of 400,000 shares of the Company’s newly created Series A Convertible Perpetual Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”) at a purchase price of $1,000 per share, for an aggregate purchase price of $400.0 million (the “Private Placement”) to certain affiliates of Providence Equity Partners LLC (collectively, the “Providence Purchasers”) and ASOF Holdings L.L.P.

On April 20 2020 (the “Closing Date”), the Company issued and sold an aggregate of 400,000 shares of Series A Preferred Stock, par value $0.01 per share, at a purchase price of $1,000 per share, for an aggregate purchase price of $400.0 million (the “Private Placement”) to certain affiliates of Providence Equity Partners LLC (collectively, the “Providence Purchasers”) and ASOF Holdings L.L.P.

and Ares Capital Corporation (collectively, the “Ares Purchasers” and, together with the Providence Purchasers, the “Purchasers”).

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Subject to certain conditions, at the Company’s option, (i) after the third anniversary of the Closing Date, all of the Series A Preferred Stock may be converted into shares of our common stock, and (ii) after the seventh anniversary of the Closing Date, all of the Series A Preferred Stock may be redeemed for cash at a redemption price equal to 100% of the liquidation preference of the Series A Preferred Stock, plus any accrued and unpaid dividends.

Subject to certain conditions, each holder of the Series A Preferred Stock, after a Change of Control (as defined in the Articles) may (i) require the Company to purchase any or all of their shares of Series A Preferred Stock at a redemption price payable in cash equal to 105% of the liquidation preference of the Series A Preferred Stock, plus any accrued and unpaid dividends, or (ii) convert any or all of their shares of Series A Preferred Stock into the number of shares of our common stock equal to the liquidation preference (including accrued and unpaid dividends) divided by the then-applicable conversion price.

The holders of the Series A Preferred Stock have the right to vote on matters submitted to a vote of the holders of our common stock on an as-converted basis, except as otherwise prohibited by the terms of the Articles.

Further, certain matters will require the approval of the holders of at least a majority of the shares of Series A Preferred Stock outstanding, including, among others, the issuance of any class or series of senior or parity equity securities by the Company and the incurrence of any additional

indebtedness by the Company not otherwise permitted under the Company’s indebtedness agreements.

Changes to any provision of the Company’s Charter (including the Articles) that adversely changes the rights of the holders of the Series A Preferred Stock requires the approval of holders of at least 75% of the shares of Series A Preferred Stock outstanding so long as the Ares Purchasers, together with their affiliates, own 90% of the number of shares of our common stock (on an as-converted basis or otherwise) owned by the Ares Purchasers on the Closing Date, with a majority of the outstanding shares of Series A Preferred Stock required at all other times.

Subject to certain conditions, the Company has also agreed to increase the size of its board of directors in order to elect one individual designated by the Providence Purchasers to the board of directors.

Subject to certain conditions and exceptions, the Providence Purchasers and the Ares Purchasers are each entitled to preemptive rights with respect to a new issue of our common stock or securities with rights to acquire our common stock.

The Providence Purchasers and the Ares Purchasers are restricted from acquiring additional securities of the Company, subject to certain exceptions and conditions provided that the Providence Purchasers and the Ares Purchasers may acquire a number of additional shares of our common stock that does not exceed 3.44% and 1.56% , respectively, of our outstanding shares of common stock as of April 16, 2020.

The following table presents our cash flows in the three months ended March 31, 2020 and 2019 .

Three Months Ended

(in millions, except percentages)

Stock into the number of shares of our common stock equal to the liquidation preference (including accrued and unpaid dividends) divided by the then-applicable conversion price.

During the three months ended June 30, 2020, we paid cash dividends of $5.5 million on the Series A Preferred Stock.

As of June 30, 2020, the maximum number of shares of common stock that could be required to be issued on conversion of the outstanding shares of Series A Preferred Stock was 25.0 million shares.

The following table presents our cash flows in the six months ended June 30, 2020 and 2019.

Six Months Ended

(in millions, except percentages) 2020 2019 Change

Cash provided by operating activities $ 50.7 $ 83.5 (39) %

Cash used for investing activities (49.3) (82.5) (40)

Cash provided by (used for) financing activities

Cash provided by financing activities 588.3 420.7 40

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

$ 588.7 $ 422.1 39

* Calculation is not meaningful.

Cash provided by operating activities decreased $26.5 million in the three months ended March 31, 2020 , compared to the same prior-year period, principally as a result of a larger decrease in accounts payable and accrued expenses, as well as a smaller decrease in accounts receivables as a result of the impact of COVID-19, partially offset by higher net income, as adjusted for non-cash items, and a decrease in prepaid MTA equipment deployment costs.

In the three months ended March 31, 2020 , we paid $18.2 million related to MTA equipment deployment costs and installed 676 digital displays.

In the three months ended March 31, 2019 , we paid $27.1 million related to MTA equipment deployment costs.

Cash used for investing activities decreased $2.0 million in the three months ended March 31, 2020 , compared to the same prior-year period, due primarily to lower cash paid for MTA franchise rights.

The following table presents our capital expenditures in the three months ended March 31, 2020 and 2019 .

Three Months Ended

(in millions, except percentages)

Cash provided by operating activities decreased $32.8 million, or 39%, in the six months ended June 30, 2020, compared to the same prior-year period, driven by the impact of the COVID-19 pandemic, partially offset by the impact of cost reduction measures taken in response to the COVID-19 pandemic.

In the six months ended June 30, 2020, we paid $28.3 million related to MTA equipment deployment costs and installed 773 digital displays.

In the six months ended June 30, 2019, we paid $58.6 million related to MTA equipment deployment costs.

Cash used for investing activities decreased $33.2 million, or 40%, in the six months ended June 30, 2020, compared to the same prior-year period, due primarily to lower cash paid for acquisitions, capital expenditures and MTA franchise rights.

The following table presents our capital expenditures in the six months ended June 30, 2020 and 2019.

Six Months Ended

(in millions, except percentages) 2020 2019 Change

Growth $ 20.8 $ 31.0 (33) %

Total capital expenditures $ 31.9 $ 39.6 (19)

Capital expenditures increased $0.1 million , or 1% , in the three months ended March 31, 2020 , compared to the same prior-year period, due to lower spending on installation of the most current LED lighting technology, partially offset by higher spending on information technology, vehicles, and safety.

In response to the impact of the COVID-19 pandemic, we reduced maintenance capital expenditures (other than for necessary safety-related projects) and deferred growth capital expenditures for digital billboard display conversions.

For the full year of 2020 , we expect our capital expenditures to be approximately $50.0 million , which will be used primarily for necessary safety-related maintenance projects and growth in digital displays for which screens have already been ordered and received.

Cash provided by financing activities were $442.2 million in the three months ended March 31, 2020 , compared to Cash used by financing activities of $12.8 million in the same prior-year period.

In the three months ended March 31, 2020 , we drew net borrowings of $495.0 million on our Revolving Credit Facility to enhance our liquidity position in response to the impact of the COVID-19 pandemic, drew net borrowings of $15.0 million on our AR Securitization Facilities, and paid cash dividends of $55.6 million .

In the three months ended March 31, 2019 , we drew net borrowings of $35.0 million under the Revolving Credit Facility, received net proceeds of $16.6 million related to the sale of our common stock under the ATM Program, drew net borrowings of $5.0 million on the AR Securitization Facilities and paid cash dividends of $51.8 million .

Cash paid for income taxes was $0.8 million for each of the three months ended March 31, 2020 and 2019.

Capital expenditures decreased $7.7 million, or 19%, in the six months ended June 30, 2020, compared to the same prior-year period, due to lower spending on installation of the most current LED lighting technology and lower spending on digital billboard and transit display projects.

In response to the impact of the COVID-19 pandemic, we reduced maintenance capital expenditures (other than for necessary safety-related projects) and growth capital expenditures for digital billboard display conversions.

For the full year of 2020, we expect our capital expenditures to be approximately $50.0 million, which will be used primarily for necessary safety-related maintenance projects and growth in digital displays for which screens have already been ordered or received.

Cash provided by financing activities increased $167.6 million, or 40%, in the six months ended June 30, 2020, compared to the same prior-year period.

In the six months ended June 30, 2020, we received net proceeds of $400.0 million related to the Notes offering and received net proceeds of $383.9 million related to the issuance of the Series A Preferred Stock to enhance our liquidity position in response to the COVID-19 pandemic and made net repayments under the AR Securitization Facilities of $115.0 million and paid total cash dividends on the Series A Preferred Stock and on our common stock of $61.1 million.

In the six months ended June 30, 2019, we received net proceeds of $650.0 million related to our 2027 senior unsecured notes offering, received net proceeds of $50.9 million related to the sale of our common stock under the ATM Program, made net

repayments of $160.0 million on the AR Securitization Facilities and paid cash dividends on our common stock of $103.9 million.

Cash paid for income taxes was $2.1 million for in the six months ended June 30, 2020 and $5.3 million in the six months ended June 30, 2019.

Off-Balance Sheet Arrangements

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Title of the various digital displays transfers to the MTA on installation, therefore the cost of deploying these screens throughout the transit system does not represent our property and equipment.

The portion of deployment costs expected to be reimbursed from transit franchise fees that would otherwise be payable to the MTA are recorded as Prepaid MTA equipment deployment costs on the Consolidated Statement of Financial Position and charged to operating expenses as advertising revenue is generated.

The portion of recoupable MTA equipment deployment costs expected to be reimbursed from transit franchise fees that would otherwise be payable to the MTA are recorded as Prepaid MTA equipment deployment costs on the Consolidated Statement of Financial Position and charged to operating expenses as advertising revenue is generated.

The short-term portion of Prepaid MTA equipment deployment costs represents the costs that we expect to recover from the MTA in the next twelve months.

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Additionally, management assesses quantitative factors by comparing revenue projections of the deployed digital displays to actual financial results.

We have identified the COVID-19 pandemic as a trigger for an impairment review of our Prepaid MTA

equipment deployment costs and related intangible assets.

In the first quarter of 2020, we identified the COVID-19 pandemic as a trigger for an impairment review of our Prepaid MTA equipment deployment costs and related intangible assets.

After updating our projections to reflect related declines in revenues in 2020 and delays in our anticipated deployment schedule as a result of the impact of the COVID-19 pandemic, among other things, no impairment was identified.

In the second quarter of 2020, we updated our projections in

connection with the amendment to the MTA agreement and did not identify a triggering event for an impairment review of our P repaid MTA equipment deployment costs .

The assumptions and estimates included in our analysis require significant judgment about future events, market conditions and financial performance.

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• Declines in advertising and general economic conditions, including declines caused by the COVID-19 pandemic;

• Competition;

• Government regulation;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis