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Item 7. Management’s Discussion and Analysis

2021-02-26 compared with 2020-02-26 · 373 added, 224 removed, 378 unchanged (61% of the section changed)

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OUTFRONT Media is a real estate investment trust (“REIT”), which provides advertising space (“displays”) on out-of-home advertising structures and sites in the United States (the “U.S.”) and Canada.

We manage our operations through three operating segments—(1) U.S.

We currently manage our operations through two operating segments—U.S.

Billboard and Transit, which is included in our U.S.

Media reportable segment, (2) International and (3) Sports Marketing.

International and Sports Marketing do not meet the criteria to be a reportable segment and accordingly, are both included in Other (see Item 8., Note 20.

Media reportable segment, and International.

International does not meet the criteria to be a reportable segment and accordingly, is included in Other (see Item 8., Note 20.

Segment Information to the Consolidated Financial Statements).

In the third quarter of 2020, we sold all of our equity interests in certain of our subsidiaries (the “Sports Disposition”), which held all of the assets of our Sports Marketing operating segment, for a purchase price of approximately $34.6 million in cash, subject to closing and post-closing adjustments.

The Sports Marketing operating segment was the marketing and multimedia rights holder for a variety of colleges, universities and other educational institutions across the United States.

The operating results of our Sports Marketing operating segment through June 30, 2020, are included in our Consolidated Financial Statements and are included in Other in our segment reporting.

We are one of the largest providers of advertising space on out-of-home advertising structures and sites across the U.S.

Our inventory consists of billboard displays, which are primarily located on the most heavily traveled highways and roadways in top Nielsen Designated Market Areas (“DMAs”), and transit advertising displays operated under exclusive multi-year contracts with municipalities in large cities across the U.S.

We also have marketing and multimedia rights agreements with colleges, universities and other educational institutions, which entitle us to operate on-campus advertising displays, as well as manage marketing opportunities, media rights and experiential entertainment at sporting events.

In total, we have displays in all of the 25 largest markets in the U.S.

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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 23% of its revenues in the New York City metropolitan area in 2019 , 22% in 2018 and 23% in 2017 , and generated 16% in the Los Angeles metropolitan area in each of 2019 , 2018 and 2017 .

Media segment generated Revenues of $1,628.7 million in 2019 , $1,466.8 million in 2018 and $1,406.5 million in 2017 , and Operating income before Depreciation , Amortization , Net (gain) loss on dispositions , Stock-based compensation , Restructuring charges and an Impairment charge (“Adjusted OIBDA”) of $546.3 million in 2019 , $500.2 million in 2018 and $478.1 million in 2017 .

Media segment generated 16% of its revenues in the New York City metropolitan area in 2020 and 23% in 2019, and generated 15% in the Los Angeles metropolitan area in 2020 and 16% in 2019.

Media segment generated Revenues of $1,148.9 million in 2020 and $1,628.7 million in 2019, and Operating income before Depreciation , Amortization , Net gain on dispositions , Stock-based compensation and Restructuring charges (“Adjusted OIBDA”) of $268.9 million in 2020 and $501.6 million in 2019.

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

Other (includes International and Sports Marketing).

Other generated Revenues of $153.5 million in 2019 , $139.4 million in 2018 and $114.0 million in 2017 , and Adjusted OIBDA of $22.1 million in 2019 , $17.3 million in 2018 and $8.4 million in 2017 .

Other (includes International and through June 30, 2020, Sports Marketing).

Other generated Revenues of $87.4 million in 2020 and $153.5 million in 2019, and Adjusted OIBDA of $0.4 million in 2020 and $18.6 million in 2019.

COVID-19 Impact

The novel coronavirus (COVID-19) pandemic and the related preventative measures taken to help curb the spread, including shutdowns and slowdowns of, and restrictions on, businesses, public gatherings, social interactions and travel (including reductions in foot traffic, roadway traffic, commuting, transit ridership and overall target audiences) throughout the markets in which we do business have had, and may continue to have, a significant impact on the global economy and our business.

Though generally we remain able to continue to sell and service our displays, our business operates billboard and transit franchise agreements in the top DMAs, such as New York and Los Angeles, where the COVID-19 pandemic has had a particularly significant impact.

The COVID-19 pandemic has (i) delayed our ability to build and deploy certain advertising structures and sites, including digital displays;

(ii) reduced or curtailed our customers’ advertising expenditures and overall demand for our services through purchase cancellations or otherwise;

(iii) increased the volatility of our customers’ advertising expenditure patterns from period-to-period through short-notice purchases, purchase deferrals or otherwise;

and (iv) extended delays in the collection of certain 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 2021.

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 incrementally improve in 2021 as compared to 2020, but be materially lower in 2021 than pre-COVID-19 pandemic levels, particularly in our U.S.

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

We expect total expenses to increase in 2021 as compared to 2020, but be materially lower than pre-COVID-19 pandemic levels, particularly in our U.S.

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

Additionally, we expect billboard property lease expenses, such as rental expenses, and posting, maintenance and other expenses, as a percentage of revenues, to decrease in 2021 as compared to 2020, but be materially higher than pre-COVID-19 pandemic levels.

We expect transit franchise expenses, such as transit franchise payments, as a percentage of revenues, to increase in 2021 as compared to 2020, but be materially higher than pre-COVID-19 pandemic levels, primarily due to our guaranteed minimum annual payment amounts owed to the MTA resuming on January 1, 2021.

The impacts described above with respect to 2020 were greatest in the second quarter of 2020, with incremental improvement in the third and fourth quarters of 2020.

Accordingly, results for the years ended December 31, 2020 and 2019, are not indicative of the results that may be expected for the fiscal year ending December 31, 2021.

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 modified our business goals and undertook the following actions in 2020, which should be read in conjunction with the “—Analysis of Results of Operations” and “—Liquidity and Capital Resources” sections of this MD&A:

• Accessed the capital markets and raised $400.0 million, before expenses, by issuing Series A Preferred Stock (as defined below) in the Private Placement (as defined below) and issued $400.0 million aggregate principal amount of 6.250% Senior Unsecured Notes due 2025 (the “2025 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 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 (which may be satisfied by making distributions to our common stockholders, our preferred stockholders (including holders of Series A Preferred Stock) or a combination of our stockholders);

• Temporarily suspended or delayed our deployment of certain digital transit displays 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 growth capital expenditures for digital billboard display conversions;

• Reduced our posting, maintenance and other, and SG&A (as defined below) expenses through, among other things, restrictions on discretionary expenses, workforce reductions, employee furloughs and certain temporary compensation reductions, to offset decreases in revenues in 2020.

We have in 2020, and will continue in 2021 to, focus on managing costs and expenses, including capital expenditures, to offset any decreases in revenues in 2021 as compared to pre-COVID-19 pandemic levels.

However, we have resumed certain capital investments in a measured manner, including taking a highly selective approach to new acquisition activity, based on our current financial condition.

In addition, we have engaged, and will continue to engage, in constructive conversations with our billboard ground lease landlords and transit franchise partners to mitigate any 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 may experience delays as a result of the COVID-19 pandemic in receiving digital displays as we continue to 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.

When the COVID-19 pandemic subsides, there can be no assurances as to the time it may take to generate revenues at pre-COVID-19 pandemic levels.

Given the uncertainty around the severity and duration of the COVID-19 pandemic and the measures taken, or may be taken, in response to the COVID-19 pandemic, the Company cannot reasonably estimate the full impact of the COVID-19 pandemic on our business, financial condition and results of operations at this time, which may be material.

Economic Environment

Our revenues and operating results are sensitive to fluctuations in advertising expenditures, general economic conditions and other external events beyond our control.

Our revenues and operating results are sensitive to fluctuations in advertising expenditures, general economic conditions and other external events beyond our control such as the COVID-19 pandemic as described above.

Business Environment

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The majority of our digital billboard displays were converted from traditional static billboard displays.

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.

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 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.

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 107 new digital billboard displays in the United States and 13 in Canada in 2019 .

Additionally, in 2019 , we installed 14 small-format digital displays and entered into marketing arrangements to sell advertising on 50 third-party digital billboard displays in the U.S.

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 built or converted 60 new digital billboard displays in the United States and 3 in Canada in 2020.

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

and 31 in Canada.

In 2019 , we have built, converted or replaced 3,781 digital transit and other displays in the United States.

In 2020, we built, converted or replaced 2,893 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 temporarily suspended or delayed our deployment of certain digital transit displays.

The following table sets forth information regarding our digital displays.

Digital Revenues (in millions)

for the Year Ended December 31, 2019

Number of Digital Displays

for the Year Ended December 31, 2020 Number of Digital Displays

as of December 31, 2020 (a)

Digital Billboard

Digital Transit and Other

Total Digital Revenues

Digital Billboard Displays

Digital Transit and Other Displays

Total Digital Displays

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

United States $ 195.5 $ 53.9 $ 249.4 1,228 8,920 10,148

Digital display amounts (1) include 2,172 displays reserved for transit agency use and (2) exclude all displays under our multimedia rights agreements with colleges, universities and other educational institutions.

Canada 19.8 0.1 19.9 222 95 317

Total $ 215.3 $ 54.0 $ 269.3 1,450 9,015 10,465

(a) Digital display amounts include 3,144 displays reserved for transit agency use.

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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Typically, our revenues and profits are highest in the fourth quarter, during the holiday shopping season, and lowest in the first quarter, as advertisers adjust their spending following the holiday shopping season.

As described above, our revenues and profits may also fluctuate due to external events beyond our control, such as the COVID-19 pandemic.

We have a diversified base of customers across various industries.

During 2020, our largest categories of advertisers were professional services, healthcare/pharmaceuticals and retail, which represented 11%, 9%, and 9% of our total U.S.

Media segment revenues, respectively.

During 2019, our largest categories of advertisers were retail, professional services and computers/internet, which represented 9%, 8% and 8% of our total U.S.

Media segment

revenues, respectively.

During 2018 , our largest categories of advertisers were retail , computers/internet and healthcare/pharmaceuticals , which represented 9% , 8% and 8% of our total U.S.

Media segment revenues.

During 2017 , our largest categories of advertisers were retail , healthcare/pharmaceuticals and television , which represented 9% , 8% and 7% 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 2020, we generated approximately 40% of our U.S.

Media segment revenues from national advertising campaigns, compared to 44% in 2018 and 45% in 2017 .

Media segment revenues from national advertising campaigns, compared to approximately 44% in 2019.

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

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Year Ended December 31,

(in millions, except percentages)

(in millions, except percentages) 2020 2019 % Change

Revenues $ 1,236.3 $ 1,782.2 (31) %

Organic revenues (a)(b)

1,210.7 1,725.3 (30)

Operating income

Adjusted OIBDA (b)

Adjusted OIBDA (b) margin

72.5 309.1 (77)

Adjusted OIBDA (b)(c)

233.3 474.2 (51)

Adjusted OIBDA (b)(c) margin

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

82.6 295.3 (72)

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”).

96.3 334.1 (71)

Net income (loss) attributable to OUTFRONT Media Inc.

(61.0) 140.1 *

* Calculation is not meaningful.

(a) Organic revenues exclude revenues associated with a disposition and 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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and Revenues to organic revenues.

(c) Consistent with the current year’s presentation, we have reclassified amortization of direct lease acquisition costs of $48.2 million in 2019 from Amortization to Selling, general and administrative expenses, resulting in a corresponding decrease in Adjusted OIBDA.

Adjusted OIBDA

We calculate Adjusted OIBDA as operating income (loss) before depreciation, amortization, net (gain) loss on dispositions, stock-based compensation, restructuring charges and impairment charges.

We calculate Adjusted OIBDA as operating income (loss) before depreciation, amortization, net (gain) loss on dispositions, stock-based compensation and restructuring charges.

We calculate Adjusted OIBDA margin by dividing Adjusted OIBDA by total revenues.

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FFO reflects net income (loss) attributable to OUTFRONT Media Inc.

adjusted to exclude gains and losses from the sale of real estate assets, impairment charges, depreciation and amortization of real estate assets, amortization of direct lease acquisition costs and the same adjustments for our equity-based investments and non-controlling interests, as well as the related income tax effect of adjustments, as applicable.

adjusted to exclude gains and losses from the sale of real estate assets, depreciation and amortization of real estate assets amortization of direct lease acquisition costs and the same adjustments for our equity-based investments and non-controlling interests, as well as the related income tax effect of adjustments, as applicable.

We calculate AFFO as FFO adjusted to include cash paid for direct lease acquisition costs as such costs are generally amortized over a period ranging from four weeks to one year and therefore are incurred on a regular basis.

AFFO also includes cash paid for maintenance capital expenditures since these are routine uses of cash that are necessary for our operations.

In addition, AFFO excludes restructuring charges and losses on extinguishment of debt, as well as certain non-cash items, including non-real estate depreciation and amortization, stock-based compensation expense, accretion expense, the non-cash effect of straight-line rent, amortization of deferred financing costs and the same adjustments for our non-controlling interests, as well as the non-cash portion of income taxes, and the related income tax effect of adjustments, as applicable.

In addition, AFFO excludes restructuring charges and losses on extinguishment of debt, as well as certain non-cash items, including non-real estate depreciation and amortization, a gain on disposition of non-real estate assets, stock-based compensation expense, accretion expense, the non-cash effect of straight-line rent, amortization of deferred financing costs and the same adjustments for our non-controlling interests, as well as the non-cash portion of income taxes, and the related income tax effect of adjustments, as applicable.

We use FFO and AFFO measures for managing our business and for planning and forecasting future periods, and each is an important indicator of our operational strength and business performance, especially compared to other REITs.

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.

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.

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.

Since Adjusted OIBDA, Adjusted OIBDA margin, FFO and AFFO are not measures calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, operating income (loss), net income (loss) attributable to OUTFRONT Media Inc., net income (loss) before allocation of non-controlling interests, and revenues, the most directly comparable GAAP financial measures, as indicators of operating performance.

Since Adjusted OIBDA, Adjusted OIBDA margin, FFO and AFFO are not measures calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, operating income (loss), net income (loss) attributable to OUTFRONT Media Inc., and revenues, the most directly comparable GAAP financial measures, as indicators of operating performance.

These measures, as we calculate them, may not be comparable to similarly titled measures employed by other companies.

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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 to Adjusted OIBDA, and Net income (loss) attributable to OUTFRONT Media Inc.

to FFO attributable to OUTFRONT Media Inc.

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Net gain on dispositions (13.7) (3.8)

Impairment charge

Depreciation 84.5 87.3

Amortization (a)

Stock-based compensation 22.9 22.3

Adjusted OIBDA

Adjusted OIBDA margin

Adjusted OIBDA (a)

$ 233.3 $ 474.2

Adjusted OIBDA (a) margin

Year Ended December 31,

(in millions) 2020 2019

Net income attributable to OUTFRONT Media Inc.

Net income (loss) attributable to OUTFRONT Media Inc.

$ (61.0) $ 140.1

Depreciation of billboard advertising structures 61.6 66.0

Amortization of real estate-related intangible assets 48.8 45.0

Amortization of direct lease acquisition costs (a)

Amortization of direct lease acquisition costs (b)

Net gain on disposition of real estate assets (6.5) (3.8)

Impairment charge

Adjustment related to equity-based investments 0.1 0.1

Adjustment related to non-controlling interests (0.3) (0.3)

Income tax effect of adjustments (b)

Income tax effect of adjustments (c)

FFO attributable to OUTFRONT Media Inc.

Non-cash portion of income taxes (5.9) 0.4

Cash paid for direct lease acquisition costs (a)

Cash paid for direct lease acquisition costs (b)

(43.1) (47.1)

Maintenance capital expenditures (17.8) (18.1)

Restructuring charges

Restructuring charges - severance (d)

Other depreciation 22.9 21.3

Other amortization 12.5 14.0

Stock-based compensation

Gain on disposition of non-real estate assets (e)

Stock-based compensation (d)

Non-cash effect of straight-line rent 11.2 6.9

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Adjustment related to non-controlling interests (0.1) (0.1)

Income tax effect of adjustments (c)

Income tax effect of adjustments (f)

AFFO attributable to OUTFRONT Media Inc.

Variable commissions directly associated with billboard revenues.

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

Income tax effect related to Restructuring charges .

$ 96.3 $ 334.1

(a) Consistent with the current year’s presentation, we have reclassified amortization of direct lease acquisition costs of $48.2 million in 2019 from Amortization to Selling, general and administrative expenses, resulting in a corresponding decrease in Adjusted OIBDA.

(b) Variable commissions directly associated with billboard revenues.

(d) 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.

(e) Gain related to the Sports Disposition.

(See Item 8., Note 14.

Acquisitions and Dispositions :

Dispositions to the Consolidated Financial Statements.)

(f) Income tax effect related to Restructuring charges - severance and Gain on disposition of non-real estate assets.

FFO attributable to OUTFRONT Media Inc.

in 2019 of $295.3 million decreased $5.7 million , or 2% , compared to 2018 , primarily due an impairment charge recorded in 2018, partially offset by higher net income and higher amortization of direct lease acquisition costs.

in 2020 of $82.6 million decreased $212.7 million, or 72%, compared to 2019.

AFFO attributable to OUTFRONT Media Inc.

in 2019 of $334.1 million increased $34.4 million , or 11% , compared to 2018 , primarily due to higher operating income, including an impairment recorded in 2018, higher amortization and higher non-cash straight-line rent, partially offset by higher interest expense and higher cash paid for direct lease acquisition costs.

in 2020 of $96.3 million decreased $237.8 million, or 71%, compared to 2019.

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.)

Year Ended December 31,

Year Ended December 31, % Change

(in millions, except percentages) 2020 2019

Billboard $ 978.6 $ 1,189.9 (18) %

Transit and other

257.7 592.3 (56)

Total revenues 1,236.3 1,782.2 (31)

Organic revenues (a) :

$ 978.6 $ 1,189.0 (18)

Transit and other

232.1 536.3 (57)

Total organic revenues (a)

1,210.7 1,725.3 (30)

Non-organic revenues:

Transit and other

25.6 56.0 (54)

Total non-organic revenues

25.6 56.9 (55)

Total revenues $ 1,236.3 $ 1,782.2 (31)

* Calculation is not meaningful.

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

Total revenues increased $176.0 million , or 11% , and organic revenues increased $177.7 million , or 11% , in 2019 compared to 2018 .

In 2018, non-organic revenues reflect the impact of foreign currency exchange rates.

Total billboard revenues increased $77.5 million , or 7% , in 2019 compared to 2018 , primarily 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 increased $98.5 million , or 20% , in 2019 compared to 2018 , primarily due to growth in digital displays, an increase in average revenue per display (yield), the net effect of won and lost franchises in the period (primarily the San Francisco Bay Area Rapid Transit (“BART”) transit franchise) and an increase in third-party digital equipment sales.

Year Ended December 31,

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

Total revenues decreased $545.9 million, or 31%, and organic revenues decreased $514.6 million, or 30%, in 2020 compared to 2019.

In 2020, non-organic revenues exclude the impact of the Sports Disposition.

In 2019, non-organic revenues exclude the impact of the Sports Disposition and reflect the impact of foreign currency exchange rates.

Total billboard revenues decreased $211.3 million, or 18%, in 2020 compared to 2019, primarily 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.

Organic billboard revenues in 2020 decreased $210.4 million, or 18%, in 2020 compared to 2019, 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.

Total transit and other revenues decreased $334.6 million, or 56%, in 2020 compared to 2019, primarily 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 impact of the Sports Disposition and a decrease in third-party digital equipment sales.

Organic transit and other revenues in 2020 decreased $304.2 million, or 57%, compared to 2019, primarily 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 and a decrease in third-party digital equipment sales.

Year Ended December 31, % Change

(in millions, except percentages) 2020 2019

Selling, general and administrative

Operating $ 710.8 $ 958.6 (26) %

Selling, general and administrative (a)

315.1 371.7 (15)

Restructuring charges 5.8 0.3 *

Net gain on dispositions (13.7) (3.8) *

Impairment charge

Depreciation 84.5 87.3 (3)

Amortization (a)

Total expenses $ 1,163.8 $ 1,473.1 (21)

* Calculation is not meaningful.

Operating Expenses

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These expenses reflect the cost of leasing the real property on which our billboards are mounted.

These lease agreements have terms varying between one month and multiple years, and usually provide renewal

These lease agreements have terms varying between one month and multiple years, and usually provide renewal options.

Rental expenses are comprised of a fixed rental amounts and under certain agreements, also include contingent rent, which varies based on the revenues we generate from the leased site.

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Transit franchise expenses .

These expenses reflect costs charged by municipalities and transit operators under transit advertising contracts and are generally calculated based on a percentage of the revenues we generate under the contract, with a minimum guarantee.

The costs that are determined based on a percentage of revenues are expensed as incurred when the related revenues are recognized, and the minimum guarantee is expensed over the contract term.

These expenses reflect costs charged by municipalities and transit operators under transit advertising contracts.

All of these contracts have fixed terms, are typically terminable for convenience at the option of the governmental entity (other than with respect to the New York Metropolitan Transportation Authority (the “MTA”)), and generally provide for payments to the governmental entity based on a percentage of the revenues generated under the contract and/or a guaranteed minimum annual payment.

The costs that are determined based on a percentage of revenues are expensed as incurred when the related revenues are recognized, and any guaranteed minimum annual payment is expensed over the contract term.

Posting, maintenance and other site-related expenses .

These expenses primarily reflect costs associated with posting and rotation, materials, repairs and maintenance, utilities, property taxes and direct costs associated with our Sports Marketing operating segment.

Year Ended December 31,

These expenses primarily reflect costs associated with posting and rotation, materials, repairs and maintenance, utilities, property taxes and, for periods prior to the Sports Disposition, direct costs associated with our Sports Marketing operating segment.

Year Ended December 31, % Change

(in millions, except percentages) 2020 2019

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Billboard property lease expenses represented 40% of billboard revenues in 2020 and 34% in 2019.

Transit franchise expenses represented 59% of transit display revenues in each of 2019 and 2018 .

Billboard property lease and transit franchise expenses increased by $75.1 million in 2019 compared to 2018 .

Posting, maintenance and other expenses as a percentage of Revenues were 15% in each of 2019 and 2018 .

Posting, maintenance and other expenses increased $23.6 million , or 10% , in 2019 compared to 2018 , primarily due to higher compensation and benefits-related costs, higher posting and rotation costs, higher costs related to third-party digital equipment sales and higher expenses related to our Sports Marketing operating segment.

The increase in billboard property lease expenses as a percentage of revenues is primarily due to a decline in billboard revenues.

Transit franchise expenses represented 61% of transit display revenues in 2020 and 59% in 2019.

The increase in transit franchise expense as a percentage of revenues is primarily driven by an amendment to our agreement with the MTA, which resulted in the payment of an increased revenue share percentage instead of guaranteed minimum annual payments for the second, third and fourth quarters of 2020.

Billboard property lease and transit franchise expenses decreased by $176.7 million in 2020 compared to 2019, primarily due to lower billboard and transit revenues resulting from the impact of the COVID-19 pandemic and the impact of agreements with certain landlords and transit franchise partners to modify our existing minimum lease payments and guaranteed minimum annual payments to revenue share percentages in the second, third and fourth quarters of 2020.

Posting, maintenance and other expenses as a percentage of Revenues were 16% in 2020 and 15% in 2019.

Posting, maintenance and other expenses decreased $71.1 million, or 27%, in 2020 compared to 2019, 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, the impact of the Sports Disposition and lower costs related to third-party digital equipment sales.

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

SG&A expenses represented 18% of Revenues in each of 2019 and 2018 .

SG&A expenses increased $36.5 million , or 13% , in 2019 compared to 2018 , primarily due to higher compensation and other employee-related costs, higher professional fees and higher bad debt expense.

SG&A expenses represented 25% of Revenues in 2020 and 21% in 2019.

SG&A expenses decreased $56.6 million, or 15%, in 2020 compared to 2019, primarily due to lower compensation-related costs and lower professional fees, primarily as a result of cost reduction measures taken in response to the COVID-19 pandemic, lower amortization of direct lease acquisition costs and lower expenses resulting from the Sports Disposition, partially offset by a higher provision for doubtful allowances.

Consistent with the current year’s presentation, we have reclassified amortization of direct lease acquisition costs of $48.2 million in 2019 from Amortization to Selling, general and administrative expenses.

Restructuring Charges

In 2020, we recorded restructuring charges of $5.8 million for severance charges associated with workforce reductions as a result of the COVID-19 pandemic, including $0.9 million for stock-based compensation.

In 2019, we recorded restructuring charges of $0.3 million for the elimination of a corporate management position.

In 2018 , we recorded restructuring charges of $2.1 million for severance charges associated with the reorganization of various departments, for severance charges associated with the reorganization of our Sports Marketing operating segment management team and the elimination of a corporate management position.

Net Gain on Dispositions

Net gain on dispositions was $3.8 million in 2019 and $5.5 million in 2018 , which primarily related to the sale of land, office and display locations.

Impairment Charge

As a result of an impairment analysis performed during the second quarter of 2018, we determined that the carrying value of our Canadian reporting unit exceeded its fair value and we recorded an impairment charge of $42.9 million in the Consolidated Statements of Operations.

Depreciation increased $1.4 million , or 2% , in 2019 compared to 2018 , primarily due to software and related equipment utilized for the operation of our digital displays.

Amortization increased $8.1 million , or 8% , in 2019 compared to 2018 , principally driven by higher direct lease acquisition costs and higher amortization of intangible assets.

Amortization expense includes the amortization of direct lease acquisition costs of $48.2 million in 2019 and $43.2 million in 2018 .

Capitalized direct lease acquisition costs were $48.2 million in 2019 and $43.2 million in 2018 .

Net gain on dispositions was $13.7 million in 2020 and $3.8 million in 2019.

The gain in 2020 was primarily related to a gain of $7.2 million related to the Sports Disposition and also included the sale of an office location in Canada.

The gain in 2019 was primarily related to the sales of office locations in the U.S.

Depreciation decreased $2.8 million, or 3%, in 2020 compared to 2019.

Amortization increased $2.3 million, or 4%, in 2020 compared to 2019.

Interest Expense

Interest expense, net, was $131.1 million (including $6.6 million of deferred financing costs) in 2020 and $134.9 million (including $7.9 million of deferred financing costs) in 2019.

The increase in Interest expense, net, in 2019 compared to 2018 , was primarily due to the timing of new debt issuances and redemptions of senior unsecured notes, a higher outstanding average debt balance, higher amortization of deferred financing costs and higher interest rates.

The decrease in Interest expense, net, in 2020 compared to 2019, was primarily due to lower interest rates, partially offset by a higher outstanding average debt balance.

(See the “Liquidity and Capital Resources” section of this MD&A.)

Loss on Extinguishment of Debt

In 2019, we recorded a loss on extinguishment of debt of $28.5 million relating to the redemption of our 5.250% Senior Unsecured Notes due 2022 (the “2022 Notes”) and our 5.875% Senior Unsecured Notes due 2025 (the “2025 Notes” and together with the 2022 Notes, the “Old Notes”).

In 2019, we recorded a loss on extinguishment of debt of $28.5 million relating to the redemption of our 5.250% Senior Unsecured Notes due 2022 and our 5.875% Senior Unsecured Notes due 2025.

Provision for Income Taxes

The Provision for income taxes was $10.9 million in 2019 , an increase of $6.0 million , due primarily to improved performance of our taxable REIT subsidiaries (“TRSs”) and a $3.0 million settlement of a 2016 IRS audit, including the related state income taxes and interest.

The Provision for income taxes was $1.1 million in 2020, decreased $9.8 million, or 90%, due primarily to lower taxable REIT subsidiary (“TRS”) income in 2020, including the gain related to the Sports Disposition.

The effective income tax rate was 1.9% for 2020 and 7.5% for 2019.

Net income before allocation to non-controlling interest s was $140.6 million in 2019 , an increase of $32.7 million compared to 2018 , due primarily to higher operating income, including the impact of an impairment charge recorded in 2018, partially offset by a loss on extinguishment of debt and higher interest expense.

Net Income (Loss)

Net loss before allocation to non-controlling interest s was $60.2 million in 2020, compared to Net income before allocation to non-controlling interests of $140.6 million in 2019, due primarily to the impact of the COVID-19 pandemic, partially offset by the impact of cost reduction measures taken in response, the gain related to the Sports Disposition and lower interest expense.

Segment Results of Operations

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Segment Information to the Consolidated Financial Statements.)

We manage our operations through three operating segments—(1) U.S.

We currently manage our operations through two operating segments—U.S.

Billboard and Transit, which is included in our U.S.

Media reportable segment, (2) International and (3) Sports Marketing.

International and Sports Marketing do not meet the criteria to be a reportable segment and accordingly, are both included in Other .

Media reportable segment, and International.

International does not meet the criteria to be a reportable segment and accordingly, is included in Other .

Our segment reporting therefore includes U.S.

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The following table presents our Revenues , Adjusted OIBDA and Operating income (loss) by segment in 2020 and 2019.

In the third quarter of 2020, we completed the Sports Disposition.

Historical operating results for our Sports Marketing operating segment through June 30, 2020, are included in Other .

Year Ended December 31,

(in millions) 2020 2019

Media $ 1,148.9 $ 1,628.7

Other 87.4 153.5

Total revenues $ 1,236.3 $ 1,782.2

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Net gain on dispositions (13.7) (3.8)

Impairment charge

Stock-based compensation ( a)

Total Adjusted OIBDA

Depreciation 84.5 87.3

Amortization (a)

Stock-based compensation ( b)

Total Adjusted OIBDA (a)

$ 233.3 $ 474.2

Adjusted OIBDA:

Total Adjusted OIBDA

$ 268.9 $ 501.6

Corporate (36.0) (46.0)

Total Adjusted OIBDA (a)

$ 233.3 $ 474.2

Operating income (loss):

Media $ 132.8 $ 376.3

Other (0.4) 1.4

Corporate (59.9) (68.6)

Total operating income $ 72.5 $ 309.1

Stock-based compensation is classified as Corporate expense.

Year Ended December 31,

(a) Consistent with the current year’s presentation, we have reclassified amortization of direct lease acquisition costs of $48.2 million in 2019, of which $44.7 million was recorded in our U.S.

Media segment and $3.5 million was recorded in Othe r, from Amortization to SG&A expenses, resulting in a corresponding decrease in Adjusted OIBDA.

(b) Stock-based compensation is classified as Corporate expense.

Year Ended December 31, % Change

(in millions, except percentages) 2020 2019

Billboard $ 926.5 $ 1,114.9 (17) %

Transit and other 222.4 513.8 (57)

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SG&A expenses

Adjusted OIBDA

Adjusted OIBDA margin

(232.6) (266.4) (13)

Adjusted OIBDA (a)

$ 268.9 $ 501.6 (46)

Adjusted OIBDA (a) margin

Operating income $ 132.8 $ 376.3 (65)

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Net gain on dispositions (1.4) (3.9) (64)

Depreciation and amortization

Adjusted OIBDA

Depreciation and amortization (a)

133.6 129.2 3

Adjusted OIBDA (a)

$ 268.9 $ 501.6 (46)

* Calculation is not meaningful.

(a) Consistent with the current year’s presentation, we have reclassified amortization of direct lease acquisition costs of $44.7 million in 2019 in our U.S.

Media segment from Amortization to Selling, general and administrative expenses, resulting in a corresponding decrease in Adjusted OIBDA.

Total revenues in the U.S.

Media segment increased $161.9 million , or 11% , in 2019 compared to 2018 , reflecting an increase in average revenue per display (yield), growth in transit digital displays and the conversion of traditional static billboard displays to digital billboard displays.

We generated approximately 44% in each of 2019 and 2018 of revenues in the U.S.

Media segment decreased $479.8 million, or 29%, in 2020 compared to 2019, 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.

We generated approximately 40% in 2020 and 44% in 2019 of revenues in the U.S.

Media segment from national advertising campaigns.

Billboard revenues in the U.S.

Media segment increased $74.1 million , or 7% , in 2019 compared to 2018 , reflecting an increase in average revenue per display (yield) and the conversion of traditional static billboard displays to digital billboard displays.

Media segment decreased $188.4 million, or 17%, in 2020 compared to 2019, 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.

Transit and other revenues in the U.S.

Media segment increased $87.8 million , or 21% , in 2019 compared to 2018 , reflecting growth in digital displays, an increase in average revenue per display (yield) and the net effect of won and lost franchises in the period (primarily the BART transit franchise).

Media segment decreased $291.4 million, or 57%, in 2020 compared to 2019, 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.

Operating expenses in the U.S.

Media segment increased $92.8 million , or 12% , in 2019 compared to 2018 , primarily due to increased costs related to the New York Metropolitan Transportation Authority (the “MTA”) agreement as a result of increased transit revenues and increased costs related to the BART agreement, and an increase in billboard lease costs.

Media segment decreased $213.3 million, or 25%, in 2020 compared to 2019, primarily driven by lower billboard and transit revenues resulting from the impact of the COVID-19 pandemic and the impact of agreements with certain landlords and transit franchise partners to modify our existing minimum lease payments and guaranteed minimum annual payments to revenue share percentages in the second, third and fourth quarters of 2020.

Billboard property lease expenses in the U.S.

Media segment represented 34% of billboard revenues in each of 2019 and 2018 , and transit franchise expenses represented 59% of transit revenues in each of 2019 and 2018 .

Media segment represented 40% of billboard revenues in 2020 and 34% in 2019, and transit franchise expenses represented 62% of transit display revenues in 2020 and 59% in 2019.

SG&A expenses in the U.S.

Media segment increased $23.0 million , or 12% , in 2019 compared to 2018 , primarily due to higher compensation and other employee-related costs, higher professional fees and higher bad debt expense.

Media segment decreased $33.8 million, or 13%, in 2020 compared to 2019, 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, and lower amortization of direct lease acquisition costs, partially offset by a higher provision for doubtful allowances.

Adjusted OIBDA in the U.S.

Media segment increased $46.1 million , or 9% , in 2019 compared to 2018 .

Year Ended December 31,

Media segment decreased $232.7 million, or 46%, in 2020 compared to 2019.

Adjusted OIBDA margin was 23% in 2020 and 31% in 2019.

Year Ended December 31, % Change

(in millions, except percentages) 2020 2019

Billboard $ 52.1 $ 75.0 (31) %

Transit and other

35.3 78.5 (55)

Total revenues $ 87.4 $ 153.5 (43)

Organic revenues (a) :

$ 52.1 $ 74.1 (30)

Transit and other

9.7 22.5 (57)

Total organic revenues (a)

61.8 96.6 (36)

Non-organic revenues:

Transit and other

25.6 56.0 (54)

Total non-organic revenues

25.6 56.9 (55)

Total revenues 87.4 153.5 (43)

Operating expenses

SG&A expenses

Adjusted OIBDA

Adjusted OIBDA margin

(63.4) (97.9) (35)

SG&A expenses (b)

(23.6) (37.0) (36)

Adjusted OIBDA (b)

$ 0.4 $ 18.6 (98)

Adjusted OIBDA (b) margin

Operating income (loss)

$ (0.4) $ 1.4 *

Restructuring charges

Net (gain) loss on dispositions

Impairment charge

Depreciation and amortization

Adjusted OIBDA

Depreciation and amortization (b)

12.2 17.1 (29)

Adjusted OIBDA (b)

$ 0.4 $ 18.6 (98)

* Calculation is not meaningful.

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

Total Other revenues increased $14.1 million , or 10% , in 2019 compared to 2018 , reflecting improved performance in our Sports Marketing operating segment, an increase in third-party digital equipment sales and improved performance in Canada.

Other operating expenses increased $5.9 million , or 6% , in 2019 compared to 2018 , driven by higher costs related to third-party digital equipment sales and higher costs related to our Sports Marketing operating segment, partially offset by lower costs in Canada.

Other SG&A expenses increased $3.4 million , or 11% , in 2019 compared to 2018 , primarily driven by higher expenses related to our Sports Marketing operating segment and Canada.

Other Adjusted OIBDA increased $4.8 million , or 28% , in 2019 compared to 2018 , primarily driven by improved performance in Canada.

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

(b) Consistent with the current year’s presentation, we have reclassified amortization of direct lease acquisition costs of $3.5 million in 2019 in Other from Amortization to Selling, general and administrative expenses, resulting in a corresponding decrease in Adjusted OIBDA.

In the third quarter of 2020, we completed the Sports Disposition.

The operating results of our Sports Marketing operating segment through June 30, 2020, are included in our Consolidated Financial Statements.

Total Other revenues decreased $66.1 million, or 43%, in 2020 compared to 2019, reflecting the Sports Disposition, 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 prior to the Sports Disposition and a decrease in third-party digital equipment sales.

In 2020, non-organic revenues exclude the impact of the Sports Disposition.

In 2019, non-organic revenues exclude the impact of the Sports Disposition and reflect the impact of foreign currency exchange rates.

Organic Other revenues decreased $34.8 million, or 36%, in 2020, compared to 2019, 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, and a decrease in third-party digital equipment sales.

Other operating expenses decreased $34.5 million, or 35%, in 2020 compared to 2019, driven by the impact of the Sports Disposition and lower expenses related to our Sports Marketing operating segment prior to the Sports Disposition, lower costs related to third-party digital equipment sales and lower billboard and transit revenues.

Other SG&A expenses decreased $13.4 million, or 36%, in 2020 compared to 2019, primarily driven by the impact of the Sports Disposition and cost reduction measures taken in response to the COVID-19 pandemic.

Other Adjusted OIBDA decreased $18.2 million, or 98%, in 2020 compared to 2019, primarily driven by the Sports Disposition, 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 prior to the Sports Disposition, 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 and restructuring charges, were $36.0 million in 2020 and $46.0 million in 2019.

Corporate expenses increased $8.0 million in 2019 compared to 2018 , primarily due to higher compensation-related expenses.

Corporate expenses decreased $10.0 million in 2020 compared to 2019, primarily due to lower compensation-related expenses, including lower costs resulting from cost reduction measures taken in response to the COVID-19 pandemic and the impact of market fluctuations on an equity-linked retirement plan offered by the Company to certain employees.

Liquidity and Capital Resources

As of December 31, %

(in millions, except percentages)

(in millions, except percentages) 2020 2019 Change

Cash and cash equivalents $ 710.4 $ 59.1 *

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Due to seasonal advertising patterns and influences on advertising markets, our revenues and operating income are typically highest in the fourth quarter, during the holiday shopping season, and lowest in the first quarter, as advertisers adjust their spending following the holiday shopping season.

Further, certain of our municipal transit contracts, as well as our marketing and multimedia rights agreements with colleges and universities, require guaranteed minimum annual payments to be paid at the beginning of the year.

Our short-term cash requirements primarily include payments for operating leases, guaranteed minimum annual payments, equipment deployment costs, capital expenditures, interest and dividends.

Funding for short-term cash needs will come primarily from our cash on hand, operating cash flows, our ability to issue debt and equity securities, and borrowing capacity under the Revolving Credit Facility (as defined below), the AR Securitization Facilities (as defined below) or other credit facilities that we may establish.

Further, certain of our municipal transit contracts require guaranteed minimum annual payments to be paid on a monthly or quarterly basis, as applicable.

Our short-term cash requirements primarily include payments for operating leases, guaranteed minimum annual payments, interest, capital expenditures, equipment deployment costs and dividends.

Funding for short-term cash needs will come primarily from our cash on hand, operating cash flows, our ability to issue debt and equity securities, and borrowings under the Revolving Credit Facility (as defined below), the AR Securitization Facilities (as defined below) or other credit facilities that we may establish, to the extent available.

In addition, as part of our growth strategy, we frequently evaluate strategic opportunities to acquire new businesses, assets or digital technology.

Consistent with this strategy, we regularly evaluate potential acquisitions, ranging from small transactions to larger acquisitions, which transactions could be funded through cash on hand, additional borrowings, equity or other securities, or some combination thereof.

In response to the COVID-19 pandemic, we have taken a highly selective approach to new acquisition activity.

Our long-term cash needs include principal payments on outstanding indebtedness and commitments related to operating leases and franchise and other agreements, including any related guaranteed minimum annual payments, and equipment deployment costs.

Funding for long-term cash needs will come from our cash on hand, operating cash flows, our ability to issue debt and equity securities, and borrowing capacity under the Revolving Credit Facility or other credit facilities that we may establish.

The working capital deficit as of December 31, 2019 , is primarily due to the impact of the adoption of the new lease accounting standard (see Item 8., Note 2.

Summary of Significant Accounting Policies :

Adoption of New Accounting Standards to the Consolidated Financial Statements), which resulted in the recognition of short-term operating lease liabilities and a decline in Prepaid lease and transit franchise costs on our Consolidated Statement of Financial Position, partially offset by an increase in Prepaid MTA equipment deployment costs .

Funding for long-term cash needs will come from our cash on hand, operating cash flows, our ability to issue debt and equity securities, and borrowings under the Revolving Credit Facility or other credit facilities that we may establish, to the extent available.

Our short-term and long-term cash needs and related funding capability may be adversely affected by the impact of the COVID-19 pandemic if cash on hand and operating cash flows decrease in 2021, and our ability to issue debt and equity securities and/or borrow under our existing or new credit facilities on reasonable pricing terms, or at all, may become uncertain.

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 raised $400.0 million in the Private Placement (as defined below), before expenses, issued $400.0 million aggregate principal amount of the 2025 Notes and amended the Credit Agreement (as defined below) 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 December 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 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 MTA agreement into the future, we reclassified Prepaid MTA equipment 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.

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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 expect to utilize incremental third-party financing of approximately $300.0 million within the original four-year time frame to fund equipment deployment costs, of which approximately $140.0 million has been incurred as of December 31, 2019.

As of December 31, 2019 , 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 $150.8 million related to MTA equipment deployment costs in 2019 (which includes equipment deployment costs related to future deployments), for a total of $247.6 million to date, of which $33.9 million had been recouped from incremental revenues to date.

We did not recoup any equipment deployment costs in 2020 and it is unlikely we will recoup equipment deployment costs in 2021.

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.

Our payment obligations with respect to guaranteed minimum annual payment amounts owed to the MTA resumed on January 1, 2021, in accordance with the terms of the MTA agreement, as amended.

We have engaged, and will continue to engage, in constructive conversations with the MTA regarding possible modifications to the overall scope and term under the MTA agreement.

In connection with the amendment to the MTA Agreement and in coordination with the MTA, after temporarily 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 2021, we expect our MTA equipment deployment costs to be approximately $125.0 to $150.0 million.

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 December 31, 2020, we have issued surety bonds 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, third and fourth quarters of 2020, we updated our projections 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, as a percentage of revenues, to increase in 2021 as compared to 2020, and be materially higher than pre-COVID-19 pandemic levels.

(See the “Overview—COVID-19 Impact” section of this MD&A.) As indicated in the table below, we incurred $103.5 million related to MTA equipment deployment costs in 2020 (which includes equipment deployment costs related to future deployments), for a total of $351.1 million to date, of which $33.9 million had been recouped from incremental revenues to date and as of December 31, 2020, $44.4 million is to be funded by the MTA.

As of December 31, 2020, 7,380 digital displays had been installed, of which 1,203 installations occurred in the fourth quarter of 2020, for a total of 2,803 installations in 2020.

For the full year of 2020 , we expect our MTA equipment deployment costs to be approximately $175.0 million .

In addition, due to the change in the MTA’s revenue share percentage under the agreement, we expect transit franchise operating expenses to gradually increase if our revenues increase over an annual base revenue amount.

(in millions)

Beginning Balance

Deployment Costs Incurred

Ending Balance

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

Year Ended December 31, 2020:

Prepaid MTA equipment deployment costs

$ 171.5 $ 33.1 $ — $ — $ 204.6

Other current assets — 44.4 (16.4) — 28.0

Intangible assets (franchise agreements)

38.3 26.0 — (5.9) 58.4

Total $ 209.8 $ 103.5 $ (16.4) $ (5.9) $ 291.0

Year Ended December 31, 2019:

Prepaid MTA equipment deployment costs

$ 79.5 $ 124.2 $ (32.2) $ — $ 171.5

Intangible assets (franchise agreements)

As of December 31, 2019 , we had total indebtedness of approximately $2.4 billion .

On February 25, 2020 , we announced that our board of directors approved a quarterly cash dividend of $0.38 per share on our common stock, payable on March 31, 2020 , to stockholders of record at the close of business on March 6, 2020 .

14.8 26.6 — (3.1) 38.3

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

Debt, net, consists of the following:

As of December 31,

(in millions, except percentages) 2020 2019

December 31, 2019

Short-term debt:

AR Facility $ — $ 105.0

Repurchase Facility 80.0 90.0

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Long-term debt:

Term loan, due 2026 597.8 597.5

Senior unsecured notes:

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4.625% senior unsecured notes, due 2030

Total senior unsecured notes 2,051.3 1,651.7

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Payments Due by Period

(in millions)

2025 and thereafter

(in millions) Total 2021 2022-2023 2024-2025 2026 and thereafter

Long-term debt $ 2,650.0 $ — $ — $ 900.0 $ 1,750.0

On November 18, 2019, the Company, along with its wholly-owned subsidiaries, Outfront Media Capital LLC (“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 its credit agreement and its related security agreement, each dated January 31, 2014 (together, and as amended, restated, amended and restated, supplemented or otherwise modified, the “Credit Agreement”).

The Amendment provides for, among other things, (i) the extension of the maturity date of the Borrowers’ existing revolving credit facility (the “Revolving Credit Facility”) from March 16, 2022, to November 18, 2024, (ii) the extension of the maturity date of the Borrowers’ existing term loan (the “Term Loan”) from March 16, 2024, to November 18, 2026, (iii) an increase to the borrowing capacity under the Revolving Credit Facility by $70.0 million to $500.0 million , (iv) a decrease to the outstanding principal balance of the Term Loan, using cash on hand, to $600.0 million, (v) a reduction in the interest rate margins applicable to the Borrowers under the Term Loan from 1.00% to 0.75% , in the case of base rate borrowings, and from 2.00% to 1.75% , in the case of London Interbank Offered Rate (“LIBOR”) borrowings, (vi) a reduction in the interest rate margins applicable to the Borrowers under the Revolving Credit Facility from a range of 1.25% to 1.00% to a range of 0.75% to 0.25% , in the case of base rate borrowings, and from a range of 2.25% to 2.00% to 1.75% to 1.25% , in the case of LIBOR borrowings, in each case, based on the Borrowers’ leverage ratio, and (vii) revisions to certain provisions of the Credit Agreement to, among other things, update covenants for greater operational and financial flexibility to the Company (including incurrence of additional indebtedness and liens).

The interest rate on the Term Loan was 3.5% per annum as of December 31, 2019 .

Interest 726.2 127.0 241.1 178.9 $ 179.2

Total $ 3,376.2 $ 127.0 $ 241.1 $ 1,078.9 $ 1,929.2

The interest rate on the term loan due in 2026 (the “Term Loan”) was 1.9% per annum as of December 31, 2020.

As of December 31, 2020, a discount of $2.2 million on the Term Loan remains unamortized.

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Revolving Credit Facility

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”).

As of December 31, 2020, there were no outstanding borrowings under the Revolving Credit Facility.

As of February 25, 2020 , there were $25.0 million of outstanding borrowings under the Revolving Credit Facility at a borrowing rate of approximately 3.4% .

The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $1.6 million in 2019 , $1.4 million in 2018 and $1.5 million in 2017 .

The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $1.4 million in 2020 and $1.6 million in 2019.

As of December 31, 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

In the fourth quarter of 2019, we decreased our letter of credit facilities from $150.0 million to $78.0 million .

As of December 31, 2020, we had issued letters of credit totaling approximately $71.7 million under our aggregate $78.0 million standalone letter of credit facilities.

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Accounts Receivable Securitization Facilities

As of December 31, 2019, we have $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.

On July 19, 2019, the Company, certain subsidiaries of the Company and MUFG Bank, Ltd.

(“MUFG”) entered into amendments to the agreements governing the AR Securitization Facilities, along with other agreements with MUFG, pursuant to which the Company (i) granted the Purchasers (as defined below) a security interest in the existing and future accounts receivable and certain related assets of the Company’s taxable REIT subsidiaries (“TRSs”) as additional collateral under the AR Facility, (ii) increased the borrowing capacity under the AR Facility from $100.0 million to its current capacity of $125.0 million , (ii) increased the borrowing capacity under the Repurchase Facility from $75.0 million to its current capacity of $90.0 million , (iii) extended the term of the AR Facility so that it now terminates on June 30, 2022, unless further extended, and (iv) extended the term of the Repurchase Facility so that it now terminates on June 30, 2020, unless further extended.

The amendments to the agreements governing the AR Securitization Facilities do not change how we account for the AR Securitization Facilities as a collateralized financing activity.

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 December 31, 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 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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Further, the TRS SPV and the QRS SPV are jointly and severally liable for their respective obligations under the agreements governing the AR Facility.

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, 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 December 31, 2019 , there were $105.0 million of outstanding borrowings under the AR Facility at a borrowing rate of approximately 2.7% , and $90.0 million of outstanding borrowings under the Repurchase Facility, at a borrowing of approximately 2.9% .

As of December 31, 2019 , borrowing capacity remaining under the AR Facility was $20.0 million , based on approximately $304.7 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.

As of December 31, 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 December 31, 2020, there was no borrowing capacity remaining under the AR Facility based on approximately $239.8 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 in 2020 and 2019.

As of February 25, 2021, there were no outstanding borrowings under the Repurchase Facility.

Senior Unsecured Notes

On July 15, 2019 , we used the net proceeds from our June 14, 2019, issuance of $650.0 million aggregate principal amount of 5.000% Senior Unsecured Notes due 2027 (the “2027 Notes”) to, among other things, redeem all of our outstanding 2022 Notes, pay accrued and unpaid interest on the 2022 Notes, and pay fees and expenses in connection with the 2022 Notes redemption.

In the third quarter of 2019, we recorded a Loss on extinguishment of debt of $11.0 million relating to the 2022 Notes on the Consolidated Statement of Operations.

On November 18, 2019, the Borrowers issued $500.0 million aggregate principal amount of 4.625% Senior Unsecured Notes due 2030 (the “2030 Notes”) in a private placement.

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 $400.0 million aggregate principal amount of the 2025 Notes in a private placement.

The 2025 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 2030 Notes is payable on March 15 and September 15 of each year, commencing on March 15, 2020.

On or after March 15, 2025, the Borrowers may redeem at any time, or from time to time, some or all of the 2030 Notes.

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

On December 18, 2019, we used the net proceeds from the issuance of the 2030 Notes to, among other things, redeem all of our outstanding 2025 Notes, pay accrued and unpaid interest on the 2025 Notes, and pay fees and expenses in connection with the 2025 Notes redemption.

In the fourth quarter of 2019, we recorded a Loss on extinguishment of debt of $17.5 million relating to the 2025 Notes on the Consolidated Statement of Operations.

As of December 31, 2019 , a premium of $1.7 million on $100.0 million aggregate principal amount of the 5.625% Senior Unsecured Notes, due 2024 , remains unamortized.

Interest on the 2025 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 2025 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 2025 Notes remain outstanding after the redemption.

In May 2020, we used the net proceeds from the 2025 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 2025 Notes.

As of December 31, 2020, a premium of $1.3 million on $100.0 million aggregate principal amount of the 5.625% Senior Unsecured Notes due 2024 (the “2024 Notes”), remains unamortized.

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

On January 19, 2021, the Borrowers issued $500.0 million aggregate principal amount of 4.250% Senior Unsecured Notes due 2029 (the “2029 Notes”) in a private placement.

The 2029 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 2029 Notes is payable on January 15 and July 15 of each year, beginning on July 15, 2021.

On or after January 15, 2024, the Borrowers may redeem at any time, or from time to time, some or all of the 2029 Notes.

Prior to such date the Borrowers may redeem up to 40% 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 2029 Notes will remain outstanding after the redemption.

On February 16, 2021, we used the net proceeds from the issuance of the 2029 Notes, together with cash on hand, to redeem all of our outstanding 2024 Notes and to pay accrued and unpaid interest on the 2024 Notes, if any, to, but excluding, the redemption date, and to pay fees and expenses in connection with the 2029 Notes offering and the 2024 Notes redemption.

In the first quarter of 2021, we recorded a Loss on extinguishment of debt of $6.3 million relating to the 2024 Notes on the Consolidated Statement of Operations.

Debt Covenants

The Credit Agreement, 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 (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 December 31, 2020, our Consolidated Total Leverage Ratio was 9.9 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 December 31, 2020, our Consolidated Net Secured Leverage Ratio was 1.1 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 December 31, 2019 , our Consolidated Total Leverage Ratio was 4.4 to 1.0 in accordance with the Credit Agreement.

As of December 31, 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;

and (ii) the Company will not make any Restricted Payments (as defined in the Credit Agreement) without the consent of the applicable lenders under the Credit Agreement, subject to certain exceptions such as payments necessary to maintain the Company’s REIT status, including any payments on any class of the Company’s capital stock that is required to be made prior to the payment of a dividend or distribution on the Company’s common stock and the Company’s existing payment obligations to holders of the Class A equity interests in Outfront Canada (as defined in Item 8., Note 11.

Equity to the Consolidated Financial Statements).

Deferred Financing Costs

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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 $4.6 million as of December 31, 2019 , and $2.4 million as of December 31, 2018 , and is included in Other liabilities on our Consolidated Statement of Financial Position.

The fair value of these swap positions was a net liability of $5.6 million as of December 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 December 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.

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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.

In 2019 , 2,150,000 shares of our common stock were sold under the ATM Program for gross proceeds of $52.0 million with commissions of $0.8 million , for total net proceeds of $51.2 million .

As of December 31, 2019 , we had $232.5 million of capacity remaining under the ATM Program.

In 2020, no shares of our common stock were sold under the ATM Program.

As of December 31, 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 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.

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

The Series A Preferred Stock ranks senior to the shares of the Company’s common stock, par value $0.01 per share, with respect to dividend and distribution rights.

Holders of the Series A Preferred Stock are entitled to a cumulative dividend accruing at the initial rate of 7.0% per year, payable quarterly in arrears.

The dividend rate will increase by an additional 0.75% annually following the eighth anniversary of the Closing Date and is subject to increases under certain other circumstances as set forth in the Articles Supplementary, effective as of the Closing Date (the “Articles”).

Dividends may, at the option of the Company, be paid in cash, in-kind, through the issuance of additional shares of Series A Preferred Stock or a combination of cash and in-kind, until the eighth anniversary of the Closing Date, after which time dividends will be payable solely in cash.

So long as any shares of Series A Preferred Stock remain outstanding, the Company may not declare a dividend on, or make any distributions relating to, capital stock that ranks junior to, or on a parity basis with, the Series A Preferred Stock, subject to certain exceptions, including but not limited to (i) any dividend or distribution in cash or capital stock of the Company on or in respect of the capital stock of the Company to the extent that such dividend or distribution is necessary to maintain the Company’s status as a REIT;

and (ii) any dividend or distribution in cash in respect of our common stock that, together with the dividends or distributions during the 12-month period immediately preceding such dividend or distribution, is not in excess of 5% of the aggregate dividends or distributions paid by the Company necessary to maintain its REIT status during such 12-month period.

Following the one-year anniversary of the Closing Date, if all or any portion of the dividends or distributions is paid in respect of the shares of our common stock in cash, the shares of Series A Preferred Stock will participate in such dividends or distributions on an as-converted basis up to the amount of their accrued dividend on the Series A Preferred Stock for such quarter, which amounts will reduce the dividends payable on the shares of Series A Preferred Stock dollar-for-dollar for such quarter.

The Series A Preferred Stock is convertible at the option of any holder at any time into shares of our common stock at an initial conversion price of $16.00 per share and an initial conversion rate of 62.50 shares of our common stock per share of Series A Preferred Stock, subject to certain anti-dilution adjustments.

The issuance of shares of our common stock upon the conversion of Series A Preferred Stock is subject to a cap equal to 28,856,239 shares of our common stock (the “Share Cap”), unless and until the Company obtains stockholder approval to the extent required for the issuance of additional shares.

Any amounts owed above the Share Cap must be paid in cash.

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.

In 2020, we paid cash dividends of $19.5 million on the Series A Preferred Stock.

As of December 31, 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 sets forth our cash flows in 2020 and 2019.

Year Ended December 31, %

(in millions, except percentages)

(in millions, except percentages) 2020 2019 Change

Cash provided by operating activities $ 130.6 $ 276.9 (53) %

Cash used for investing activities (53.2) (176.3) (70)

Cash used for financing activities

Cash provided by (used for) financing activities 573.0 (94.3) *

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

Net increase to cash, cash equivalents and restricted cash

$ 651.1 $ 6.8 *

* Calculation is not meaningful.

Cash provided by operating activities increased $62.6 million in 2019 compared to 2018 , principally as a result of higher net income, as adjusted for non-cash items, and an increase in accounts payable and accrued expenses, and prepaid transit franchise and sports marketing contract costs in 2018, partially offset by an increase in prepaid MTA equipment deployment costs.

Cash provided by operating activities decreased $146.3 million, or 53%, in 2020 compared to 2019, 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 2020, we paid $61.1 million related to MTA equipment deployment costs and installed 2,803 digital displays.

In 2019 , we recouped $32.2 million of MTA equipment deployment costs from incremental revenues.

In 2019, we paid $150.8 million related to MTA equipment deployment costs and installed 3,348 digital displays.

In 2019, we recouped $32.2 million of MTA equipment deployment costs from incremental revenues.

Cash used for investing activities increased $85.9 million in 2019 compared to 2018 .

In 2019 , we incurred $89.9 million in capital expenditures and completed several acquisitions for total cash payments of approximately $69.7 million .

In 2018 , we incurred $82.3 million in capital expenditures and completed several acquisitions for a total cash payments of approximately $7.0 million .

Cash used for investing activities decreased $123.1 million, or 70%, in 2020 compared to 2019, due primarily to lower cash paid for acquisitions, higher proceeds from dispositions, including proceeds from the Sports Disposition, and lower capital expenditures and MTA franchise rights.

The following table presents our capital expenditures in 2020 and 2019.

Year Ended December 31, %

(in millions, except percentages)

(in millions, except percentages) 2020 2019 Change

Growth $ 35.7 $ 71.8 (50) %

17.8 18.1 (2)

Total capital expenditures $ 53.5 $ 89.9 (40)

Capital expenditures increased $7.6 million , or 9% , in 2019 compared to 2018 , due to spending on digital billboard and transit display projects, and higher spending on safety, office remodel projects and vehicles, partially offset by lower spending on improvements to our static displays.

For the full year of 2020 , we expect our capital expenditures to be approximately $90.0 million , which will be used primarily for growth in digital displays, maintenance, to renovate certain office facilities, and for installation of the most current LED lighting technology to improve the quality and extend the life of our static billboards.

Capital expenditures decreased $36.4 million, or 40%, in 2020 compared to 2019, primarily due to lower spending on digital billboard and transit display projects in response to the impact of the COVID-19 pandemic, and lower spending on installation of the most current LED lighting technology.

For the full year of 2021, we expect our capital expenditures to be approximately $85.0 million, which will be used primarily for growth in digital displays, maintenance and safety, software and technology, and to renovate certain office facilities.

This estimate does not include equipment deployment costs that will be incurred in connection with the MTA agreement (as described above), which will be recorded as Prepaid MTA equipment deployment costs and Intangible assets on our Consolidated Statement of Financial Position, as applicable.

Cash used for financing activities decreased $23.4 million in 2019 compared to 2018 .

In 2019 , we received net proceeds of $150.0 million from refinancing our senior unsecured notes as described above, received net proceeds of $50.9 million related to the sale of our common stock under the ATM Program, drew net borrowings of $35.0 million on the AR Securitization Facilities, paid cash dividends of $208.1 million , made a discretionary payment of $50.0 million on the Term Loan and reduced the principal balance of the Term Loan by $20.0 million .

In 2018 , we drew net borrowings of $80.0 million on the AR Securitization Facilities, received net proceeds of $15.3 million related to the sale of our common stock under the ATM Program and paid cash dividends of $203.9 million .

Cash provided by financing activities was $573.0 million in 2020 compared to Cash used for financing activities of $94.3 million in 2019.

In 2020, we received net proceeds of $400.0 million related to the 2025 Notes offering and received net proceeds of $383.4 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 $75.1 million.

In 2019, we received net proceeds of $150.0 million in connection with refinancing our senior unsecured notes, received net proceeds of $50.9 million related to the sale of our common stock under the ATM Program, drew net borrowings of $35.0 million on the AR Securitization Facilities, paid cash dividends on our common stock of $208.1 million, made a discretionary payment of $50.0 million on the Term Loan and reduced the principal balance of the Term Loan by $20.0 million.

Cash paid for income taxes was $3.4 million in 2020 and $10.5 million in 2019.

The increase was due primarily to improved performance from our TRSs and a $3.0 million settlement of a 2016 IRS audit, including the related state income taxes and interest.

The decrease was due primarily to lower performance from our TRSs driven by the impact of the COVID-19 pandemic and a $3.0 million settlement in 2019 of a 2016 IRS audit, including the related state income taxes and interest.

Contractual Obligations

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Payments Due by Period

(in millions)

2025 and thereafter

Guaranteed minimum annual payments (a)(b)

Operating leases (c)

Long-term debt (d)

We have agreements with municipalities and transit operators which entitle us to operate advertising displays within their transit systems, including on the interior and exterior of rail and subway cars and buses, as well as on benches, transit shelters, street kiosks, and transit platforms.

(in millions) Total 2021 2022-2023 2024-2025 2026 and thereafter

Guaranteed minimum annual payments (a)

$ 1,356.0 $ 195.5 $ 398.4 $ 372.6 $ 389.5

Operating leases (b)

1,966.8 250.7 476.6 350.4 889.1

Long-term debt (c)

2,650.0 — — 900.0 1,750.0

726.2 127.0 241.1 178.9 179.2

Total $ 6,699.0 $ 573.2 $ 1,116.1 $ 1,801.9 $ 3,207.8

(a) We have agreements with municipalities and transit operators which entitle us to operate advertising displays within their transit systems, including on the interior and exterior of rail and subway cars and buses, as well as on benches, transit shelters, street kiosks, and transit platforms.

Under most of these franchise agreements, the franchisor is entitled to receive the greater of a percentage of the relevant revenues, net of agency fees, or a specified guaranteed minimum annual payment.

Franchise rights are generally paid monthly, or in some cases upfront at the beginning of the year.

Under most of these agreements, the school is entitled to receive the greater of a percentage of the relevant revenue, net of agency commissions, or a specified guaranteed minimum annual payment.

Consists of rental payments under operating leases for billboard sites, office space and equipment.

Guaranteed minimum annual payments are generally paid monthly.

(b) Consists of rental payments under operating leases for billboard sites, office space and equipment.

Total future minimum payments of $1,966.8 million include $1,883.7 million for our billboard sites.

As of December 31, 2019 , we had long-term debt of approximately $2.2 billion .

Interest on the Term Loan is variable.

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The preparation of our financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.

On an ongoing basis, we evaluate these estimates, which are based on historical experience and on various assumptions that we believe are reasonable under the circumstances.

On an ongoing basis, we evaluate these estimates, which are based on historical experience and on various assumptions that we believe are reasonable under the circumstances, including the impact of extraordinary events such as the COVID-19 pandemic.

The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenues and expenses that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions.

We consider the following accounting policies to be the most critical as they are significant to its financial condition and results of operations, and require significant judgment and estimates on the part of management in their application.

Actual results may differ from these estimates under different assumptions, including the severity and duration of the COVID-19 pandemic.

We consider the following accounting policies to be the most critical as they are significant to our financial condition and results of operations, and require significant judgment and estimates on the part of management in their application.

For a summary of our significant accounting policies, see Item 8., Note 2.

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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.

The portion of deployment costs expected to be reimbursed from advertising revenues that would otherwise be retained by us under the contract are recorded as Intangible assets on the Consolidated Statement of Financial Position and charged to amortization expense on a straight line basis over the contract period.

We assess the recoverability of the MTA contract on an as-needed basis and apply significant judgment in assessing factors to determine if there is an indication that the revenues generated over the term of the agreement will be sufficient to cover all or a portion of the equipment deployment costs, including evaluating macroeconomic conditions (such as the impact of the COVID-19 pandemic), industry trends, and events specific to the Company, including monitoring the Company’s actual installation of digital displays against the deployment schedule.

Additionally, we assess these factors by comparing revenue projections of the deployed digital displays to actual financial results.

If we do not generate sufficient advertising revenues from the MTA contract, there is a risk that the related Prepaid MTA equipment deployment costs and Intangible assets may not be recoverable.

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

Based on our latest revenue projections, no impairment triggers were identified.

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, third and fourth quarters of 2020, we updated our projections 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.

Given the uncertainty around the severity and duration of the COVID-19 pandemic and the measures taken, or may be taken, in response to the COVID-19 pandemic, actual results may differ from our assumptions and estimates, which may result in impairment charges in the future.

We test goodwill qualitatively and/or quantitatively at the reporting-unit level annually for impairment as of October 31 of each year and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value below its carrying amount.

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We may also choose to only perform a quantitative assessment.

We compute the estimated fair value of each reporting unit for which we perform a quantitative assessment by adding the present value of the estimated annual cash flows over a discrete projection period to the residual value of the business at the end of the projection period.

This technique requires us to use significant estimates and assumptions such as growth rates, operating margins, capital expenditures and discount rates.

We compute the estimated fair value of each reporting unit for which we perform a quantitative assessment by using an income approach.

Under the income approach, the fair value is determined using a discounted cash flow model.

Our discounted cash flow value is calculated by adding the present value of the estimated annual cash flows over a discrete projection period to the terminal value, which represents the value of the projected cash flows beyond the discrete projection period.

Our discounted cash flow model requires us to use significant estimates and assumptions such as revenue growth rates, terminal growth rates, projected billboard lease and transit franchise expenses, projected other operating and selling, general and administrative expenses, capital expenditures and discount rates.

The estimated growth rates, operating margins and capital expenditures for the projection period are based on our internal forecasts of future performance as well as historical trends.

The residual value is estimated based on a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections.

The discount rates are determined based on the weighted average cost of capital of comparable entities.

There can be no assurance that these estimates and assumptions will prove to be an accurate prediction of the future, and a downward revision of these estimates and/or assumptions would decrease the fair values of our reporting units, which could result in additional impairment charges in the future.

In the fourth quarter of 2019, we performed a qualitative assessment of our reporting units for possible goodwill impairment.

The terminal value is estimated based on a perpetual nominal growth rate, which is based on projected long-range inflation and long-term industry projections.

The discount rates represent the weighted average cost of capital derived using known and estimated market metrics.

be no assurance that these estimates and assumptions will prove to be an accurate prediction of the future, and a downward revision of these estimates and/or assumptions would decrease the fair values of our reporting units, which could result in additional impairment charges in the future.

In the fourth quarter of 2020, we performed a quantitative assessment of our reporting units for possible goodwill impairment.

No impairment was identified for any of our reporting units.

Based on our most recent impairment analysis, the fair value of our reporting units exceeded their respective carrying values by 20% or more.

In the second quarter of 2018, our Canadian reporting unit did not meet revenue expectations and pacing reflected a decline as compared to the 2018 forecast due to the underperformance of our static poster assets and digital displays.

As a result, we determined that there was a decline in the outlook for our Canadian reporting unit.

This determination constituted a triggering event, requiring an interim goodwill impairment analysis of our Canadian reporting unit.

As a result of the impairment analysis performed during the second quarter of 2018, we determined that the carrying value of our Canadian reporting unit exceeded its fair value and we recorded an impairment charge of $42.9 million on the Consolidated Statements of Operations.

Long-Lived Assets

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Long-lived assets held for sale are required to be measured at the lower of their carrying value (including unrecognized foreign currency translation adjustment losses) or fair value less cost to sell.

Asset Retirement Obligation

We record an asset retirement obligation for our estimated future legal obligation, upon termination or nonrenewal of a lease, associated with removing structures from the leased property and, when required by the contract, the cost to return the leased property to its original condition.

These obligations are recorded at their present value in the period in which the liability is incurred and are capitalized as part of the related assets’ carrying value.

Accretion of the liability is recognized in selling, general and administrative expenses and the capitalized cost is depreciated over the expected useful life of the related asset.

The obligation is calculated based on the assumption that all of our advertising structures will be removed within the next 50 years.

The significant assumptions used in estimating the asset retirement obligation include the cost of removing the asset, the cost of remediating the leased property to its original condition where required and the timing and number of lease renewals, all of which are estimated based on historical experience.

Accounting Standards

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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-K

Item 7. Management’s Discussion and Analysis