12 unchanged sentences
Segment Information to the Consolidated Financial Statements).
−Removed: 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.
−Removed: The Sports Marketing operating segment was the marketing and multimedia rights holder for a variety of colleges, universities and other educational institutions across the U.S..
−Removed: 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.
7 unchanged sentences
As part of our technology platform, we are developing solutions for enhanced demographic and location targeting, and engaging ways to connect with consumers on-the-go.
−Removed: Additionally, our OUTFRONT Mobile Network products allow our customers to further leverage location targeting with interactive mobile advertising.
We believe out-of-home continues to be an attractive form of advertising, as our displays are always viewable and cannot be turned off, skipped, blocked or fast-forwarded.
1 unchanged sentence
We provide our customers with a differentiated advertising solution at an attractive price point relative to other forms of advertising.
−Removed: 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.
+Added: In addition to leasing displays, we provide other value-added services to our customers, such as pre-campaign category research, consumer insights, print production, creative services and post-campaign tracking and analytics.
Media segment generated 20% of its revenues in the New York City metropolitan area in 2022 and 17% in 2021, and generated 15% in the Los Angeles metropolitan area in each of 2022 and 2021.
−Removed: Media segment generated Revenues of $1,382.0 million in 2021 and $1,148.9 million in 2020, and Operating income before Depreciation , Amortization , Net gain on dispositions , Stock-based compensation , Restructuring charges and an Impairment charge (“Adjusted OIBDA”) of $382.9 million in 2021 and $268.9 million in 2020.
+Added: Media segment generated Revenues of $1,673.9 million in 2022 and $1,382.0 million in 2021, and Operating income before Depreciation , Amortization , Net gain on dispositions , Stock-based compensation and an Impairment charge (“Adjusted OIBDA”) of $501.2 million in 2022 and $382.9 million in 2021.
(See the “Segment Results of Operations” section of this MD&A.)
−Removed: Other (includes International and through June 30, 2020, Sports Marketing).
+Added: Other (includes International).
Other generated Revenues of $98.2 million in 2022 and $81.9 million in 2021, and Adjusted OIBDA of $20.6 million in 2022 and $10.4 million in 2021.
−Removed: COVID-19 Impact
−Removed: The ongoing 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.
−Removed: Though we remain able to continue to sell and service our displays, governmental restrictions have eased in most of our markets and most of our markets have commenced their economic recoveries, our billboard and transit businesses in many of the top DMAs, such as New York and Los Angeles, are still experiencing the significant impacts of the COVID-19 pandemic.
−Removed: In 2022, the COVID-19 pandemic may, among other things, (i) reduce or curtail our customers’ advertising expenditures and overall demand for our services through purchase cancellations or otherwise;
−Removed: (ii) increase the volatility of our customers’ advertising expenditure patterns from period-to-period through short-notice purchases, purchase deferrals or otherwise;
−Removed: and (iii) delay 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 2022.
−Removed: 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 2022 as compared to 2021, but some key performance indicators will continue to be materially lower in 2022 than pre-COVID-19 pandemic levels.
−Removed: We expect total revenues in 2022 to approach or potentially surpass pre-COVID-19 pandemic levels based on our current expectation of strong performance in total billboard revenues in our U.S.
−Removed: Media segment, which exceeded pre-COVID-19 pandemic levels during the second half of 2021.
−Removed: We expect total transit and other revenues in our U.S.
−Removed: Media segment to incrementally improve in 2022, but still remain materially below pre-COVID-19 pandemic levels.
−Removed: We also expect Adjusted OIBDA to incrementally improve in 2022, driven by improvements in our transit and other business, but remain below pre-COVID-19 pandemic levels.
−Removed: We expect total expenses to increase in 2022 as compared to 2021, and exceed pre-COVID-19 pandemic levels.
−Removed: In particular, we expect billboard property lease expenses, such as rental expenses, and posting, maintenance and other expenses, as a percentage of revenues, to be consistent with pre-COVID-19 pandemic levels.
−Removed: We expect transit franchise expenses, such as transit franchise payments, as a percentage of revenues, to decrease in 2022 as compared to 2021, but be higher in 2022 than pre-COVID-19 pandemic levels, primarily due to the guaranteed minimum annual payment amounts owed to the MTA and other transit franchise partners as total transit and other revenues incrementally improve in the future.
−Removed: In 2022, we will continue to focus on managing costs and expenses to offset any decreases in revenues in 2022 as compared to pre-COVID-19 pandemic levels, including engaging in constructive conversations with our transit franchise partners to mitigate any increases in transit franchise expenses, as a percentage of revenues.
−Removed: Results for the year ended December 31, 2021, are not indicative of the results that may be expected for the fiscal year ending December 31, 2022.
−Removed: Throughout the COVID-19 pandemic, we have prioritized the health and safety of our employees and customers by (i) utilizing a secure remote workforce as needed for 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, and (iii) communicating frequently with our employees and customers to address any concerns and updates to our policies.
−Removed: None of these actions have caused a significant disruption in our ability to manage the continuity of our business or our internal controls.
−Removed: We continue to monitor the evolving situation and guidance from federal, state and local public health authorities and may take additional actions based on their recommendations.
−Removed: When the COVID-19 pandemic subsides, there can be no assurances as to the time it may take to generate total revenues, particularly in our U.S.
−Removed: Media segment and with respect to our transit and other business, at pre-COVID-19 pandemic levels.
−Removed: There remains 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, which will depend on numerous factors, including, among others, the emergence of new cases of COVID-19 and its variants, hospitalization and mortality rates, and the availability and distribution of safe and effective treatments and vaccines.
−Removed: Accordingly, the Company cannot reasonably
−Removed: 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
−Removed: 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.
+Added: Our revenues and operating results are sensitive to fluctuations in advertising expenditures, general economic conditions and other external events beyond our control, such as supply chain disruptions, heightened levels of inflation, pandemics like the COVID-19 pandemic, and shifts in market demographics and transportation patterns (including reductions in foot traffic, roadway traffic, commuting, transit ridership and overall target audiences due to remote work, safety concerns or otherwise), as described in this MD&A.
We rely on third parties to manufacture and transport our digital displays.
−Removed: As a result of the current market-wide supply shortages and logistics disruptions as the economy recovers from the COVID-19 pandemic, we have experienced delays and price increases in 2021 with respect to certain of our digital displays, which will continue in 2022, and could have an adverse effect on our business, financial condition and results of operations.
+Added: As a result of the current market-wide supply shortages and logistics disruptions, we have experienced delays and price increases with respect to certain of our digital displays, which we expect to continue in 2023, and could have an adverse effect on our business, financial condition and results of operations.
+Added: Due to the current heightened levels of inflation and commodity prices in the U.S.
+Added: and abroad, which has resulted in rising interest rates, we have experienced increases with respect to our posting, maintenance and other expenses, our corporate expenses and our interest expense, which we expect to continue in 2023, and could have an adverse effect on our business, financial condition and results of operations.
+Added: Our billboard property lease expenses and transit franchise expenses have been less impacted by the current heightened levels of inflation due to the long-term nature of most of our operating leases and transit franchise agreements.
+Added: However, our transit franchise agreements that contain inflationary price adjustments may cause increases in our transit franchise expenses in the near-term if the current heightened levels of inflation continue.
+Added: Though the Company cannot reasonably estimate the full impact of the current heightened levels of inflation on our business, financial condition and results of operations at this time, a portion of these increases may be partially offset by increases in advertising rates on our displays and cost efficiencies.
Business Environment
9 unchanged sentences
As a result, digital billboard displays generate higher profits and cash flows than traditional static billboard displays.
−Removed: The majority of our digital billboard displays were converted from traditional static billboard displays.
−Removed: We have 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.
+Added: We have deployed state-of-the-art digital transit displays in connection with several transit franchises we operate and we expect to continue these deployments over the coming years.
In the future, we expect revenues generated on digital transit displays will be a multiple of the revenues generated on comparable static transit displays.
−Removed: 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.
+Added: 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 110 new digital billboard displays in the U.S.
1 unchanged sentence
Additionally, in 2022, we entered into marketing arrangements to sell advertising on 85 third-party digital billboard displays in the U.S.
−Removed: and 4 in Canada.
In 2022, we built, converted or replaced 3,410 digital transit and other displays in the U.S.
−Removed: and 15 digital transit and other displays in Canada.
The following table sets forth information regarding our digital displays.
9 unchanged sentences
Our revenues and profits may fluctuate due to seasonal advertising patterns and influences on advertising markets.
−Removed: Typically, our revenues and profits are highest in the fourth quarter, during the holiday shopping season, and lowest in the first quarter, as
−Removed: advertisers adjust their spending following the holiday shopping season.
−Removed: As described above, our revenues and profits may also fluctuate due to external events beyond our control, such as the COVID-19 pandemic.
+Added: 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.
+Added: As described above, our revenues and profits may also fluctuate due to external events beyond our control.
We have a diversified base of customers across various industries.
−Removed: During 2021, our largest categories of advertisers were entertainment, health/medical and retail, which represented 18%, 10%, and 9% of our total U.S.
+Added: During 2022, our largest categories of advertisers were entertainment, retail and health/medical, which represented 20%, 11%, and 10% of our total U.S.
Media segment revenues, respectively.
20 unchanged sentences
Adjusted OIBDA (b) margin
+Added: Net income attributable to OUTFRONT Media Inc.
Funds from operations (“FFO”) (b) attributable to OUTFRONT Media Inc.
2 unchanged sentences
311.3 205.1 52
−Removed: Net income (loss) attributable to OUTFRONT Media Inc.
−Removed: 35.6 (61.0) *
* Calculation is not meaningful.
−Removed: (a) Organic revenues exclude revenues associated with a disposition and the impact of foreign currency exchange rates (“non-organic revenues”).
+Added: (a) Organic revenues exclude revenues associated with a significant acquisition 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.
6 unchanged sentences
and Revenues to organic revenues.
−Removed: Adjusted OIBDA
−Removed: We calculate Adjusted OIBDA as operating income (loss) before depreciation, amortization, net (gain) loss on dispositions, stock-based compensation, restructuring charges and an impairment charge.
−Removed: We calculate Adjusted OIBDA margin by dividing Adjusted OIBDA by total revenues.
−Removed: Adjusted OIBDA and Adjusted OIBDA margin are among the primary measures we use for managing our business, evaluating our operating performance and planning and forecasting future periods, as each is an important indicator of our operational strength and business performance.
−Removed: 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.
−Removed: Our management also believes that the presentations of Adjusted OIBDA and Adjusted OIBDA margin, as supplemental measures, are useful in evaluating our business because eliminating certain non-comparable items highlight operational trends
−Removed: in our business that may not otherwise be apparent when relying solely on GAAP financial measures.
−Removed: 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 for users of our financial data to compare our results with other companies that have different financing and capital structures or tax rates.
−Removed: When used herein, references to “FFO” and “AFFO” mean “FFO attributable to OUTFRONT Media Inc.” and “AFFO attributable to OUTFRONT Media Inc.,” respectively.
−Removed: We calculate FFO in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”).
−Removed: FFO reflects net income (loss) attributable to OUTFRONT Media Inc.
−Removed: 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.
−Removed: 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.
−Removed: AFFO also includes cash paid for maintenance capital expenditures since these are routine uses of cash that are necessary for our operations.
−Removed: 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, an impairment charge on 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: These measures, as we calculate them, may not be comparable to similarly titled measures employed by other companies.
−Removed: In addition, these measures do not necessarily represent funds available for discretionary use and are not necessarily a measure of our ability to fund our cash needs.
−Removed: Reconciliation of Non-GAAP Financial Measures
−Removed: The following table reconciles Operating income to Adjusted OIBDA, and Net income (loss) attributable to OUTFRONT Media Inc.
−Removed: to FFO attributable to OUTFRONT Media Inc.
−Removed: and AFFO attributable to OUTFRONT Media Inc.
−Removed: Year Ended December 31,
−Removed: (in millions) 2021 2020
−Removed: Total revenues $ 1,463.9 $ 1,236.3
−Removed: Operating income $ 168.3 $ 72.5
−Removed: Restructuring charges — 5.8
−Removed: Net gain on dispositions (4.5) (13.7)
−Removed: Impairment charge 2.5 —
−Removed: Depreciation 79.4 84.5
−Removed: Amortization 66.0 61.3
−Removed: Stock-based compensation 28.6 22.9
−Removed: Adjusted OIBDA $ 340.3 $ 233.3
−Removed: Adjusted OIBDA margin 23 % 19 %
−Removed: Net income (loss) attributable to OUTFRONT Media Inc.
−Removed: $ 35.6 $ (61.0)
−Removed: Depreciation of billboard advertising structures 56.0 61.6
−Removed: Amortization of real estate-related intangible assets 50.9 48.8
−Removed: Amortization of direct lease acquisition costs (a)
−Removed: Net gain on disposition of real estate assets (1.5) (6.5)
−Removed: Adjustment related to equity-based investments 0.1 0.1
−Removed: Adjustment related to non-controlling interests (0.3) (0.3)
−Removed: Income tax effect of adjustments (b)
−Removed: FFO attributable to OUTFRONT Media Inc.
−Removed: Non-cash portion of income taxes (5.9) (5.9)
−Removed: Cash paid for direct lease acquisition costs (a)
−Removed: (48.8) (43.1)
−Removed: Maintenance capital expenditures (25.3) (17.8)
−Removed: Restructuring charges - severance (c)
−Removed: Other depreciation 23.4 22.9
−Removed: Other amortization 15.1 12.5
−Removed: Gain on disposition of non-real estate assets (d)
−Removed: Impairment charge on non-real estate assets (e)
−Removed: Stock-based compensation (c)
−Removed: Non-cash effect of straight-line rent 6.5 11.2
−Removed: Accretion expense 2.7 2.6
−Removed: Amortization of deferred financing costs 7.1 6.6
−Removed: Loss on extinguishment of debt 6.3 —
−Removed: Adjustment related to non-controlling interests — (0.1)
−Removed: Income tax effect of adjustments (f)
−Removed: AFFO attributable to OUTFRONT Media Inc.
−Removed: $ 205.1 $ 96.3
−Removed: (a) Variable commissions directly associated with billboard revenues.
−Removed: (b) Income tax effect related to Net gain on disposition of real estate assets.
−Removed: (c) 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.
−Removed: (d) Gain related to the Sports Disposition.
−Removed: (See Item 8., Note 14.
−Removed: Acquisitions and Dispositions :
−Removed: Dispositions to the Consolidated Financial Statements.)
−Removed: (e) Impairment charge relates to an other-than-temporary decline in fair value of a cost-method investment.
−Removed: (f) Income tax effect related to Restructuring charges - severance and Gain on disposition of non-real estate assets.
−Removed: FFO attributable to OUTFRONT Media Inc.
−Removed: in 2021 of $195.1 million increased $112.5 million, or 136%, compared to 2020, due primarily to higher operating income, higher amortization of direct lease acquisition costs and lower income taxes.
−Removed: AFFO attributable to OUTFRONT Media Inc.
−Removed: in 2021 of $205.1 million increased $108.8 million, or 113%, compared to 2020, due primarily to higher operating income, higher amortization of, net of cash paid for, direct lease acquisition costs and lower gains on dispositions.
Analysis of Results of Operations
22 unchanged sentences
* Calculation is not meaningful.
−Removed: (a) Organic revenues exclude revenues associated with a disposition and the impact of foreign currency exchange rates (“non-organic revenues”).
−Removed: Total revenues increased $227.6 million, or 18%, and organic revenues increased $249.4 million, or 21%, in 2021 compared to 2020, driven by a 21% increase in billboard revenues, as the billboard market exceeded pre-COVID-19 pandemic levels in the second half of 2021, and a 9% increase in transit and other revenues, primarily due to stronger transit revenues.
−Removed: While transit revenues have increased, transit revenues remain materially below pre-COVID-19 pandemic levels, as ridership remains materially below pre-COVID-19 pandemic levels.
−Removed: In 2020, non-organic revenues exclude the impact of the Sports Disposition and reflect the impact of foreign currency exchange rates.
−Removed: Total billboard revenues increased $203.7 million, or 21%, in 2021 compared to 2020, primarily due to an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services from the COVID-19 pandemic lows in 2020.
−Removed: Organic billboard revenues in 2020 increased $200.4 million, or 20%, in 2021 compared to 2020, principally driven by an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services from the COVID-19 pandemic lows in 2020.
−Removed: Total transit and other revenues increased $23.9 million, or 9%, in 2021 compared to 2020, primarily driven by an increase in average revenue per display (yield), as we have experienced increases in overall demand for our services from the COVID-19 pandemic lows in 2020, partially offset by the impact of the Sports Disposition.
−Removed: Organic transit and other revenues in 2021 increased $49.0 million, or 21%, compared to 2020, primarily driven by an increase in average revenue per display (yield), as we have experienced increases in overall demand for our services from the COVID-19 pandemic lows in 2020.
+Added: (a) Organic revenues exclude revenues associated with a significant acquisition and the impact of foreign currency exchange rates (“non-organic revenues”).
+Added: Total revenues increased $308.2 million, or 21%, and organic revenues increased $300.6 million, or 21%, in 2022 compared to 2021.
+Added: In 2022, non-organic revenues reflect the impact of a significant acquisition.
+Added: In 2021, non-organic revenues reflect the impact of foreign currency exchange rates.
+Added: Total billboard revenues increased $202.4 million, or 17%, in 2022 compared to 2021, primarily due to an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services, and the impact of new and lost billboards in the period, including acquisitions.
+Added: Organic billboard revenues increased $194.3 million, or 16%, in 2022 compared to 2021, primarily due to an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services and the net effect of new and lost billboards in the period, including insignificant acquisitions.
+Added: Total transit and other revenues increased $105.8 million, or 38%, in 2022 compared to 2021, primarily driven by an increase in average revenue per display (yield), as we have experienced increases in overall demand for our services primarily due to an increase in transit ridership, partially offset by the loss of a transit franchise contract.
+Added: Organic transit and other revenues in 2022 increased $106.3 million, or 38%, compared to 2021, primarily driven by an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services primarily due to an increase in transit ridership, partially offset by the loss of a transit franchise contract.
+Added: Transit ridership remains materially below pre-COVID-19 pandemic levels in our largest transit markets and while we expect ridership and revenue to continue to grow, we do not expect to reach pre-COVID-19 pandemic levels in 2023.
Year Ended December 31, % Change
2 unchanged sentences
Selling, general and administrative 422.1 368.2 15
−Removed: Restructuring charges — 5.8 *
−Removed: Net gain on dispositions (4.5) (13.7) (67)
+Added: Net (gain) loss on dispositions 0.2 (4.5) *
Impairment charge — 2.5 *
8 unchanged sentences
These lease agreements have terms varying between one month and multiple years, and usually provide renewal options.
−Removed: 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.
+Added: Rental expenses are comprised of a fixed rental amount and under certain agreements, also include contingent rent, which varies based on the revenues we generate from the leased site.
The fixed portion of property leases are generally paid in advance for periods ranging from one to twelve months and expensed evenly over the contract term.
5 unchanged sentences
Posting, maintenance and other site-related expenses .
−Removed: 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.
+Added: These expenses primarily reflect costs associated with posting and rotation, materials, repairs and maintenance, utilities and property taxes.
Year Ended December 31, % Change
6 unchanged sentences
Billboard property lease expenses represented 33% of billboard revenues in 2022 and 34% in 2021.
−Removed: Billboard property lease expenses as a percentage of billboard revenues in 2021 were comparable to pre-COVID-19 pandemic levels.
−Removed: The decrease in billboard property lease expenses as a percentage of revenues in 2021 compared to 2020 is primarily due to an increase in billboard revenues and the impact of the COVID-19 pandemic in 2020.
+Added: Billboard property lease expenses as a percentage of billboard revenues in 2022 were slightly lower than pre-COVID-19 pandemic levels.
+Added: The decrease in billboard property lease expenses as a percentage of revenues in 2022 compared to 2021 is primarily due to an increase in billboard revenues and the fixed nature of certain billboard property lease expenses (see Item 8., Note 5.
+Added: Leases to the Consolidated Financial Statements).
Transit franchise expenses represented 67% of transit display revenues in 2022 and 73% in 2021.
−Removed: The increase in transit franchise expense as a percentage of revenues is primarily driven by guaranteed minimum annual payments to the MTA.
−Removed: As a result of the COVID-19 pandemic, in the second quarter of 2020, we amended agreements with substantially all of our transit franchise partners to pay based on a fixed percentage of revenue with no minimum annual guarantees.
−Removed: Substantially all of our franchise partners continued to be paid based on a fixed percentage of revenue throughout 2021, except for the MTA, for which minimum annual guarantee payments resumed at the beginning of 2021.
−Removed: Billboard property lease and transit franchise expenses increased by $71.7 million in 2021 compared to 2020, primarily due to higher guaranteed minimum annual payments to the MTA and higher billboard and transit revenues.
+Added: The decrease in transit franchise expense, as a percentage of revenues, is primarily driven by an increase in transit revenue, while the MTA was paid guaranteed minimum annual payments in both 2022 and 2021.
+Added: We expect transit franchise expenses, as a percentage of revenues, to decline in 2023, but remain above pre-COVID-19 pandemic levels, as a result of our expectation that revenues generated under the MTA agreement will be closer to a guaranteed minimum annual payment break-even level in 2023 than in 2022.
+Added: Billboard property lease and transit franchise expenses increased by $102.0 million in 2022 compared to 2021, primarily due to higher billboard and transit revenues, and higher guaranteed minimum annual payments to the MTA.
Posting, maintenance and other expenses, as a percentage of revenues, were 12% in 2022 and 13% in 2021.
−Removed: Posting, maintenance and other expenses increased $1.5 million, or 1%, in 2021 compared to 2020, primarily due to increased activity in 2021, resulting in higher compensation-related expenses, posting and rotation costs, maintenance costs and materials costs, as compared to the impact of cost-reduction measures taken in 2020 in response to the COVID-19 pandemic.
−Removed: These increases are partially offset by the impact of the Sports Disposition.
+Added: Posting, maintenance and other expenses increased $25.4 million, or 13%, in 2022 compared to 2021, primarily due to higher posting and rotation costs, higher maintenance and utilities cost, driven by economic recovery from the COVID-19 pandemic and inflation-driven cost increases in 2022, higher compensation-related expenses and increased activity resulting in higher production and materials cost.
Selling, General and Administrative Expenses (“SG&A”)
−Removed: SG&A expenses represented 25% of Revenues in each of 2021 and 2020.
−Removed: SG&A expenses increased $53.1 million, or 17%, in 2021 compared to 2020, primarily due to higher compensation-related expenses, including commissions, salaries and bonuses which were all significantly impacted in 2020 by the COVID-19 pandemic and actions taken in response to the decline in business activity.
−Removed: Professional fees were also higher in 2021 and these increases were partially offset by a lower provision for doubtful allowances in 2021 due to provisions recorded in 2020 as a result of the COVID-19 pandemic and the impact of the Sports Disposition.
−Removed: Restructuring Charges
−Removed: 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.
−Removed: Net Gain on Dispositions
−Removed: Net gain on dispositions decreased $9.2 million, or 67%, in 2021 compared to 2020.
−Removed: 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.
+Added: SG&A expenses represented 24% of Revenues in 2022 and 25% in 2021.
+Added: SG&A expenses increased $53.9 million, or 15%, in 2022 compared to 2021, primarily due to higher compensation-related expenses, including commissions and salaries, driven by both business performance improvements during the period and the impact of COVID-19 on 2021, a higher provision for doubtful accounts, increased post-COVID-19 pandemic travel resulting in higher travel and entertainment expenses, and higher professional fees, partially offset by the impact of market fluctuations on an unfunded equity-linked retirement plan offered by the Company to certain employees.
+Added: Net (Gain) Loss on Dispositions
+Added: Net loss on dispositions was $0.2 million in 2022 compared a Net gain on dispositions of $4.5 million in 2021.
Impairment Charge
In 2021, we recorded $2.5 million in impairment charges related to an other-than-temporary decline in fair value of a cost-method investment.
−Removed: Depreciation decreased $5.1 million, or 6%, in 2021 compared to 2020.
−Removed: Amortization increased $4.7 million, or 8%, in 2021 compared to 2020, principally driven by higher amortization of intangible assets related to the MTA agreement.
+Added: Depreciation decreased $2.0 million, or 3%, in 2022 compared to 2021, primarily due to an increase in fully-depreciated assets, partially offset by new capital expenditures and acquisitions.
+Added: Amortization increased $7.3 million, or 11%, in 2022 compared to 2021, principally driven by higher amortization of leasehold interest intangibles recorded related to asset acquisitions completed during 2021 and 2022.
Interest Expense
Interest expense, net, was $131.8 million (including $6.5 million of deferred financing costs) in 2022 and $130.4 million (including $7.1 million of deferred financing costs) in 2021.
−Removed: The decrease in Interest expense, net, in 2021 compared to 2020, was primarily due to lower interest rates, partially offset by a higher outstanding average debt balance and higher amortization of deferred financing costs.
−Removed: (See the “Liquidity and Capital Resources” section of this MD&A.)
+Added: The increase in Interest expense, net, in 2022 compared to 2021, was primarily due to higher interest rates, partially offset by the impact of interest rate swaps in 2021 and a lower average debt balance.
Loss on Extinguishment of Debt
−Removed: In 2021, we recorded a loss on extinguishment of debt of $6.3 million relating to the redemption of our 5.625% Senior Unsecured Notes due 2024.
+Added: In 2021, we recorded a loss on extinguishment of debt of $6.3 million relating to the redemption of our 5.625% Senior Unsecured Notes due 2024 in the first quarter of 2021.
Benefit (Provision) for Income Taxes
−Removed: The Benefit for income taxes was $3.4 million in 2021 compared to a Provision for income taxes of $1.1 million in 2020, due primarily to the gain related to the Sports Disposition in 2020.
+Added: Provision for income taxes was $9.4 million in 2022 compared to a Benefit for income taxes of $3.4 million in 2021, due primarily to the recording of a valuation allowance against our U.S.
+Added: taxable REIT subsidiary (“TRS”) deferred tax assets and increased profitability in Canada in 2022.
The effective income tax rate was 6.0% for 2022 and 10.8% for 2021.
−Removed: Net Income (Loss)
−Removed: Net income before allocation to non-controlling interests was $36.4 million in 2021 compared to a Net loss before allocation to non-controlling interest s of $60.2 million in 2020, due primarily to higher operating income, as we have experienced increases in customer advertising expenditures and overall demand for our services from the COVID-19 pandemic lows in 2020.
+Added: Net income before allocation to non-controlling interests increased $112.7 million in 2022 compared to 2021, due primarily to higher operating income, as we have experienced increases in customer advertising expenditures and overall demand for our services, and a loss on extinguishment of debt in 2021.
+Added: Reconciliation of Non-GAAP Financial Measures
+Added: Adjusted OIBDA
+Added: We calculate Adjusted OIBDA as operating income (loss) before depreciation, amortization, net (gain) loss on dispositions, stock-based compensation, restructuring charges and an impairment charge.
+Added: We calculate Adjusted OIBDA margin by dividing Adjusted OIBDA by total revenues.
+Added: Adjusted OIBDA and Adjusted OIBDA margin are among the primary measures we use for managing our business, evaluating our operating performance and planning and forecasting future periods, as each is an important indicator of our operational strength and business performance.
+Added: 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.
+Added: Our management also believes that the presentations of Adjusted OIBDA and Adjusted OIBDA margin, as supplemental measures, are useful in evaluating our business because eliminating certain non-comparable items highlight operational trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures.
+Added: 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 for users of our financial data to compare our results with other companies that have different financing and capital structures or tax rates.
+Added: When used herein, references to “FFO” and “AFFO” mean “FFO attributable to OUTFRONT Media Inc.” and “AFFO attributable to OUTFRONT Media Inc.,” respectively.
+Added: We calculate FFO in accordance with the definition established by the National Association of Real Estate Investment Trusts (“NAREIT”).
+Added: FFO reflects net income (loss) attributable to OUTFRONT Media Inc.
+Added: 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.
+Added: 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.
+Added: AFFO also includes cash paid for maintenance capital expenditures since these are routine uses of cash that are necessary for our operations.
+Added: 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, an impairment charge on 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, along with the non-cash portion of income taxes, and the related income tax effect of adjustments, as applicable.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: These measures, as we calculate them, may not be comparable to similarly titled measures employed by other companies.
+Added: In addition, these measures do not necessarily represent funds available for discretionary use and are not necessarily a measure of our ability to fund our cash needs.
+Added: The following table reconciles Operating income to Adjusted OIBDA, and Net income (loss) attributable to OUTFRONT Media Inc.
+Added: to FFO attributable to OUTFRONT Media Inc.
+Added: and AFFO attributable to OUTFRONT Media Inc.
+Added: Year Ended December 31,
+Added: (in millions) 2022 2021
+Added: Total revenues $ 1,772.1 $ 1,463.9
+Added: Operating income $ 287.7 $ 168.3
+Added: Net (gain) loss on dispositions 0.2 (4.5)
+Added: Impairment charge — 2.5
+Added: Depreciation 77.4 79.4
+Added: Amortization 73.3 66.0
+Added: Stock-based compensation 33.8 28.6
+Added: Adjusted OIBDA $ 472.4 $ 340.3
+Added: Adjusted OIBDA margin 27 % 23 %
+Added: Net income attributable to OUTFRONT Media Inc.
+Added: $ 147.9 $ 35.6
+Added: Depreciation of billboard advertising structures 56.1 56.0
+Added: Amortization of real estate-related intangible assets 62.8 50.9
+Added: Amortization of direct lease acquisition costs (a)
+Added: Net (gain) loss on disposition of real estate assets 0.2 (1.5)
+Added: Adjustment related to equity-based investments — 0.1
+Added: Adjustment related to non-controlling interests (0.3) (0.3)
+Added: FFO attributable to OUTFRONT Media Inc.
+Added: Non-cash portion of income taxes 6.1 (5.9)
+Added: Cash paid for direct lease acquisition costs (a)
+Added: (57.3) (48.8)
+Added: Maintenance capital expenditures (25.5) (25.3)
+Added: Other depreciation 21.3 23.4
+Added: Other amortization 10.5 15.1
+Added: Gain on disposition of non-real estate assets (b)
+Added: Impairment charge on non-real estate assets (c)
+Added: Stock-based compensation 33.8 28.6
+Added: Non-cash effect of straight-line rent (12.1) 6.5
+Added: Accretion expense 2.8 2.7
+Added: Amortization of deferred financing costs 6.5 7.1
+Added: Loss on extinguishment of debt — 6.3
+Added: Income tax effect of adjustments (d)
+Added: AFFO attributable to OUTFRONT Media Inc.
+Added: $ 311.3 $ 205.1
+Added: (a) Variable commissions directly associated with billboard revenues.
+Added: (b) Gain related to the sale of our equity interests in certain of our subsidiaries (the “Sports Disposition”), which held all of the assets of our Sports Marketing operating segment.
+Added: (See Item 8., Note 13.
+Added: Acqui sitions and Dispositions :
+Added: Dispositions to the Consolidated Financial Statements.)
+Added: (c) Impairment charge relates to an other-than-temporary decline in fair value of a cost-method investment.
+Added: (d) Income tax effect related to a Gain on disposition of non-real estate assets.
+Added: FFO attributable to OUTFRONT Media Inc.
+Added: in 2022 of $325.2 million increased $130.1 million, or 67%, compared to 2021, due primarily to higher operating income, a provision for income taxes in 2022 compared to a benefit for income taxes in 2021, a loss on extinguishment of debt in 2021 and higher amortization of both real estate-related intangible assets and direct lease acquisition costs.
+Added: AFFO attributable to OUTFRONT Media Inc.
+Added: in 2022 of $311.3 million increased $106.2 million, or 52%, compared to 2021, due primarily to higher operating income, partially offset by the impact of straight-line rent.
Segment Results of Operations
8 unchanged sentences
Media and Other .
−Removed: The following table presents our Revenues , Adjusted OIBDA and Operating income (loss) by segment in 2021 and 2020.
−Removed: In the third quarter of 2020, we completed the Sports Disposition.
−Removed: Historical operating results for our Sports Marketing operating segment through June 30, 2020, are included in Other .
+Added: The following table presents our Revenues , Adjusted OIBDA and Operating income by segment in 2022 and 2021.
Year Ended December 31,
4 unchanged sentences
Operating income $ 287.7 $ 168.3
−Removed: Restructuring charges — 5.8
−Removed: Net gain on dispositions (4.5) (13.7)
+Added: Net (gain) loss on dispositions 0.2 (4.5)
Impairment charge — 2.5
19 unchanged sentences
Total revenues $ 1,673.9 $ 1,382.0 21
+Added: Organic revenues (a) :
+Added: Billboard $ 1,297.8 $ 1,116.1 16
+Added: Transit and other 365.1 265.9 37
+Added: Total organic revenues (a)
+Added: 1,662.9 1,382.0 20
+Added: Non-organic revenues:
+Added: Billboard 11.0 — *
+Added: Transit and other — — *
+Added: Total non-organic revenues 11.0 — *
+Added: Total revenues 1,673.9 1,382.0 21
Operating expenses (856.4) (733.2) 17
4 unchanged sentences
Operating income $ 363.0 $ 248.5 46
−Removed: Restructuring charges — 3.9 *
−Removed: Net gain on dispositions (1.5) (1.4) 7
+Added: Net (gain) loss on dispositions 0.2 (1.5) *
Impairment charge — 2.5 *
2 unchanged sentences
* Calculation is not meaningful.
−Removed: Total revenues in the U.S.
−Removed: Media segment increased $233.1 million, or 20%, in 2021 compared to 2020, driven by a 20% increase in billboard revenues, as the billboard market exceeded pre-COVID-19 pandemic levels in the second half of 2021, and a 20% increase in transit and other revenues, primarily due to stronger transit revenues.
−Removed: While transit revenues have increased, transit revenues remain materially below pre-COVID-19 pandemic levels, as ridership remains materially below pre-COVID-19 pandemic levels.
−Removed: We generated approximately 42% in 2021 and 41% in 2020 of revenues in the U.S.
−Removed: Media segment from national advertising campaigns.
+Added: (a) Organic revenues exclude revenues associated with a significant acquisition (“non-organic revenues”).
+Added: Media segment revenues increased $291.9 million, or 21%, in 2022 compared to 2021, due primarily to stronger transit revenues and higher billboard revenues.
+Added: While transit revenues have increased, transit revenues remain below pre-COVID-19 pandemic levels, as overall ridership remains materially below pre-COVID-19 pandemic levels.
+Added: We generated approximately 44% in 2022 and 42% in 2021 of our U.S.
+Added: Media segment revenues from national advertising campaigns.
+Added: In 2022, non-organic revenues reflect the impact of a significant acquisition.
Billboard revenues in the U.S.
−Removed: Media segment increased $189.6 million, or 20%, in 2021 compared to 2020, reflecting an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services from the COVID-19 pandemic lows in 2020.
+Added: Media segment increased $192.7 million, or 17%, in 2022 compared to 2021, reflecting an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services and the impact of new and lost billboards in the period, including acquisitions.
+Added: Organic billboard revenues in the U.S.
+Added: Media segment increased $181.7 million, or 16%, in 2022 compared to 2021, primarily due to an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services and the net effect of new and lost billboards in the period, including insignificant acquisitions.
Transit and other revenues in the U.S.
−Removed: Media segment increased $43.5 million, or 20%, in 2021 compared to 2020, driven by an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services from the COVID-19 pandemic lows in 2020.
−Removed: Operating expenses in the U.S.
−Removed: Media segment increased $85.8 million, or 13%, in 2021 compared to 2020, primarily driven by higher guaranteed minimum annual payments to the MTA and higher revenues.
+Added: Media segment increased $99.2 million, or 37%, in 2022 compared to 2021, driven by an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services primarily due to an increase in transit ridership, partially offset by the loss of a transit franchise contract.
+Added: Organic transit and other revenues in the U.S.
+Added: Media segment increased $99.2 million, or 37%, in 2022, compared to 2021, primarily driven by an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services primarily due to an increase in transit ridership, partially offset by the loss of a transit franchise contract.
+Added: Transit ridership remains materially below pre-COVID-19 pandemic levels in our largest transit markets and while we expect ridership and revenue to continue to grow, we do not expect to reach pre-COVID-19 pandemic levels in 2023.
Billboard property lease expenses in the U.S.
Media segment represented 33% of billboard revenues in 2022 and 34% in 2021, and transit franchise expenses represented 68% of transit display revenues in 2022 and 74% in 2021.
+Added: We expect transit franchise expenses, as a percentage of revenues, to decline in 2023, but remain above pre-COVID-19 pandemic levels, as a result of our expectation that revenues generated under the MTA agreement will be closer to a guaranteed minimum annual payment break-even level in 2023 than in 2022.
+Added: Operating expenses in the U.S.
+Added: Media segment increased $123.2 million, or 17%, in 2022 compared to 2021, primarily driven by higher transit franchise expenses and billboard lease costs associated with the increase in revenue, higher guaranteed minimum annual payments to the MTA, higher compensation-related expenses, higher posting and rotation costs, higher maintenance and utilities cost, driven by economic recovery from the COVID-19 pandemic and inflation-driven utility cost increases in 2022, and increased activity resulting in higher production and materials cost.
SG&A expenses in the U.S.
−Removed: Media segment increased $33.3 million, or 14%, in 2021 compared to 2020, primarily due to higher compensation-related expenses, including commissions, salaries and bonuses which were all significantly impacted in 2020 by the COVID-19 pandemic and actions taken in response to the decline in business activity, partially offset by a lower provision for doubtful allowances in 2021 due to provisions recorded in 2020 as a result of the COVID-19 pandemic.
−Removed: Adjusted OIBDA in the U.S.
−Removed: Media segment increased $114.0 million, or 42%, in 2021 compared to 2020.
+Added: Media segment increased $50.4 million, or 19%, in 2022 compared to 2021, primarily driven by higher compensation-related expenses, including commissions and salaries, driven by both business performance improvements during the period and the impact of the COVID-19 pandemic on 2021, a higher provision for doubtful accounts, increased post-COVID-19 pandemic travel resulting in higher travel and entertainment expenses, and higher professional fees, partially offset by the impact of market fluctuations on an equity-linked retirement plan offered by the Company to certain employees.
+Added: Media segment Adjusted OIBDA increased $118.3 million, or 31%, in 2022 compared to 2021.
Adjusted OIBDA margin was 30% in 2022 and 28% in 2021.
+Added: The increase in Adjusted OIBDA margins was due primarily to a higher increase in revenues compared to the increase in operating expenses, due to the fixed nature of certain billboard property lease expenses and the MTA being paid guaranteed minimum annual payments in both 2022 and 2021.
Year Ended December 31, % Change
2 unchanged sentences
Transit and other
−Removed: 15.7 35.3 (56)
Total revenues $ 98.2 $ 81.9 20
12 unchanged sentences
Adjusted OIBDA margin 21 % 13 %
−Removed: Operating income (loss)
−Removed: $ 1.4 $ (0.4) *
−Removed: Restructuring charges
−Removed: Net (gain) loss on dispositions
−Removed: (3.0) (12.3) (76)
+Added: Operating income $ 7.9 $ 1.4 *
+Added: Net gain on dispositions — (3.0) *
Depreciation and amortization 12.7 12.0 6
1 unchanged sentence
* Calculation is not meaningful.
−Removed: (a) Organic revenues exclude revenues associated with a disposition and the impact of foreign currency exchange rates (“non-organic revenues”).
−Removed: In the third quarter of 2020, we completed the Sports Disposition.
−Removed: The operating results of our Sports Marketing operating segment through June 30, 2020, are included in our Consolidated Financial Statements.
−Removed: Total Other revenues decreased $5.5 million, or 6%, in 2021 compared to 2020, reflecting the Sports Disposition, partially offset by an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services from the COVID-19 pandemic lows in 2020.
−Removed: In 2020, non-organic revenues exclude the impact of the Sports Disposition and reflect the impact of foreign currency exchange rates.
−Removed: Organic Other revenues increased $16.3 million, or 25%, in 2021, compared to 2020, driven by an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services from the COVID-19 pandemic lows in 2020.
−Removed: Other operating expenses decreased $12.6 million, or 20%, in 2021 compared to 2020, driven by the impact of the Sports Disposition, partially offset by higher expenses in Canada.
−Removed: Other SG&A expenses decreased $2.9 million, or 12%, in 2021 compared to 2020, primarily driven by the impact of the Sports Disposition, partially offset by higher expenses in Canada.
−Removed: Other Adjusted OIBDA increased $10.0 million in 2021 compared to 2020, primarily driven by an increase in average revenue per display (yield) compared to 2020 as a result of the impact of the COVID-19 pandemic on overall demand for our services.
+Added: (a) Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”).
+Added: Total Other revenues increased $16.3 million, or 20%, in 2022 compared to 2021, reflecting an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services.
+Added: In 2021, non-organic revenues reflect the impact of foreign currency exchange rates.
+Added: Organic Other revenues increased $19.7 million, or 25%, in 2022, compared to 2021, driven by an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services.
+Added: Other operating expenses increased $4.2 million, or 8%, in 2022 compared to 2021, driven by higher expenses in Canada.
+Added: Other SG&A expenses increased $1.9 million, or 9%, in 2022 compared to 2021, primarily driven by higher expenses in Canada.
+Added: Other Adjusted OIBDA increased $10.2 million, or 98%, in 2022 compared to 2021, primarily driven by an increase in average revenue per display (yield).
Corporate expenses primarily include expenses associated with employees who provide centralized services.
−Removed: Corporate expenses, excluding stock-based compensation and restructuring charges, were $53.0 million in 2021 and $36.0 million in 2020.
−Removed: Corporate expenses increased $17.0 million in 2021 compared to 2020, primarily due to higher compensation-related expenses, including salaries and bonuses which were all significantly impacted in 2020 by the COVID-19 pandemic and actions taken in response to the decline in business activity.
+Added: Corporate expenses, excluding stock-based compensation, were $49.4 million in 2022 and $53.0 million in 2021.
+Added: Corporate expenses decreased $3.6 million in 2022 compared to 2021, primarily due to the impact of market fluctuations on an unfunded equity-linked retirement plan offered by the Company to certain employees, partially offset by higher compensation-related expenses, including salaries, and higher professional fees.
Liquidity and Capital Resources
2 unchanged sentences
Cash and cash equivalents $ 40.4 $ 424.8 (90) %
−Removed: Restricted cash — 1.6 (100)
Receivables, less allowances of $20.2 in 2022 and $18.5 in 2021 315.5 310.5 2
14 unchanged sentences
Working capital $ (161.2) $ 269.6 *
+Added: * Calculation is not meaningful.
We continually project anticipated cash requirements for our operating, investing and financing needs as well as cash flows generated from operating activities available to meet these needs.
6 unchanged sentences
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.
−Removed: Funding for long-term cash needs will come from our cash on hand, operating cash flows, our ability to issue debt and
−Removed: equity securities, and borrowings under the Revolving Credit Facility or other credit facilities that we may establish, to the extent available.
−Removed: Although we have taken several actions to date to preserve our financial flexibility and increase our liquidity, 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 2022, 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.
−Removed: (See the “Overview—COVID-19 Impact” section of this MD&A.)
−Removed: The decrease in working capital as of December 31, 2021, compared to as of December 31, 2020 is primarily driven by lower cash and other current assets and higher short-term operating lease liabilities, partially offset by higher accounts receivables and lower short-term debt.
+Added: 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.
+Added: Although we have taken several actions to date to preserve our financial flexibility and increase our liquidity, our short-term and long-term cash needs and related funding capability may be adversely affected by the current heightened levels of inflation and related economic environment if cash on hand and operating cash flows decrease in 2023, 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.
+Added: (See the “Overview” section of this MD&A.)
+Added: Working capital was a deficit of $161.2 million as of December 31, 2022, compared to working capital of $269.6 million as of December 31, 2021, primarily driven by lower cash due to acquisitions (see Item 8., Note 13.
+Added: Acquisitions and Dispositions :
+Added: Acquisitions to the Consolidated Financial Statements).
Under the MTA agreement, which was amended in June 2020 and July 2021 (as amended, the “MTA Agreement”):
2 unchanged sentences
We are also obligated to deploy certain additional digital advertising screens and MTA communications displays in subway and train stations and rolling stock that the MTA may build or acquire in the future (collectively, the “New Inventory”).
−Removed: After temporarily suspending deployment beginning in the first quarter of 2021, we have resumed deployment.
• Recoupment of Equipment Deployment Costs.
5 unchanged sentences
For any deployment costs deemed authorized after December 31, 2020, the MTA and the Company will no longer be obligated to directly pay 70% and 30% of the costs, respectively, and these costs will be subject to recoupment in accordance with the MTA Agreement.
−Removed: We did not recoup any equipment deployment costs in 2021 and it is unlikely we will recoup equipment deployment costs in 2022.
−Removed: For 2022, we expect our MTA equipment deployment costs to be approximately $150.0 million.
+Added: We did not recoup any equipment deployment costs in 2022 and we do not expect to recoup any equipment deployment costs in 2023.
+Added: For 2023, we expect our MTA equipment deployment costs to be approximately $100.0 million and between 2023 and 2024, an aggregate of approximately $140.0 million.
We must pay to the MTA the greater of a percentage of revenues or a guaranteed minimum annual payment.
4 unchanged sentences
We may utilize cash on hand and/or incremental third-party financing to fund equipment deployment costs over the next couple of years.
−Removed: 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.
+Added: However, given the current heightened levels of inflation and related economic environment, we cannot reasonably estimate the aggregate financing amount, if any, at this time.
As of December 31, 2022, 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.
−Removed: We expect transit franchise expenses, as a percentage of revenues, to decrease in 2022
−Removed: as compared to 2021, but be higher than pre-COVID-19 pandemic levels.
−Removed: (See the “Overview—COVID-19 Impact” section of this MD&A.) As indicated in the table below, we incurred $95.9 million related to MTA equipment deployment costs in 2021 (which includes equipment deployment costs related to future deployments), for a total of $447.0 million to date, of which $33.9 million had been recouped from incremental revenues to date and as of December 31, 2021, $45.4 million has been funded by the MTA.
−Removed: As of December 31, 2021, 11,092 digital displays had been installed, of which 1,912 installations occurred in the fourth quarter of 2021, for a total of 3,712 installations in 2021.
+Added: We expect transit franchise expenses, as a percentage of revenues, to decline in 2023 but remain above pre-COVID-19 pandemic levels.
+Added: As indicated in the table below, we incurred $88.9 million related to MTA equipment deployment costs in 2022 (which includes equipment deployment costs related to future deployments), for a total of $535.9 million to date, of which $33.9 million had been recouped from incremental revenues to date and as of December 31, 2022, $49.1 million has been funded by the MTA.
+Added: As of December 31, 2022, 14,153 digital displays had been installed, composed of 4,835 digital advertising screens on subway and train platforms and entrances, 5,022 smaller-format digital advertising screens on rolling stock and 4,296 MTA communications displays.
+Added: In the fourth quarter of 2022, 496 installations occurred, for a total of 3,061 installations occurring in 2022.
(in millions) Beginning Balance Deployment Costs Incurred Recoupment/MTA Funding Amortization Ending Balance
18 unchanged sentences
Short-term debt:
−Removed: Repurchase Facility $ — $ 80.0
+Added: AR Facility $ 30.0 $ —
Total short-term debt 30.0 —
6 unchanged sentences
4.625% senior unsecured notes, due 2030
−Removed: 4.625% senior unsecured notes, due 2030
Total senior unsecured notes 2,050.0 2,050.0
14 unchanged sentences
As of December 31, 2022, there were no outstanding borrowings under the Revolving Credit Facility.
−Removed: The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $1.8 million in 2021 and $1.4 million in 2020.
+Added: The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $1.6 million in 2022, $1.8 million in 2021 and $1.4 million in 2020.
As of December 31, 2022, we had issued letters of credit totaling approximately $6.4 million against the letter of credit facility sublimit under the Revolving Credit Facility.
3 unchanged sentences
Accounts Receivable Securitization Facilities
−Removed: As of December 31, 2021, we have a revolving accounts receivable securitization facility (the “AR Facility”), which terminates in June 2022, unless further extended.
−Removed: Our 364-day uncommitted structured repurchase facility (the “Repurchase Facility”) expired on June 29, 2021, and we chose not to extend it.
−Removed: In connection with the AR Facility, 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”).
+Added: As of December 31, 2022, we have a $150.0 million revolving accounts receivable securitization facility (the “AR Facility”), which terminates in May 2025, unless further extended.
+Added: On June 1, 2022, the Company, certain subsidiaries of the Company and MUFG Bank, Ltd.
+Added: (“MUFG”) entered into an amendment to the agreements governing the AR Facility, pursuant to which the Company (i) increased the borrowing capacity under the AR Facility from $125.0 million to $150.0 million;
+Added: (ii) extended the term of the AR Facility so that it now terminates on May 30, 2025, unless further extended;
+Added: and (iii) increased the delinquency and termination ratios under the AR Facility for the tenure of the agreements to provide additional flexibility to the Company.
+Added: The amendment to the agreements governing the AR Facility do not change how we account for the AR Facility as a collateralized financing activity.
+Added: In connection with the AR Facility, 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 may transfer undivided interests in their respective accounts receivable assets to certain purchasers from time to time (the “Purchasers”).
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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.
−Removed: As of December 31, 2021, there were no outstanding borrowings under the AR Facility.
−Removed: As of December 31, 2021, there was no borrowing capacity under the AR Facility due to a voluntary temporary suspension of the AR Facility in accordance with the agreements governing the AR Facility;
−Removed: however, as of December 31, 2021, we had approximately $332.4 million of accounts receivable that could be used as collateral for the AR Facility.
−Removed: The commitment fee based on the amount of unused commitments under the AR Facility was immaterial in 2021 and 2020.
−Removed: Senior Unsecured Notes
−Removed: On January 19, 2021, 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 $500.0 million aggregate principal amount of 4.250% Senior Unsecured Notes due 2029 (the “2029 Notes”) in a private placement.
−Removed: 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.
−Removed: Interest on the 2029 Notes is payable on January 15 and July 15 of each year, beginning on July 15, 2021.
−Removed: 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.
−Removed: 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.
−Removed: 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 5.625% Senior Unsecured Notes due 2024 (the “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.
−Removed: 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.
+Added: As of December 31, 2022, there were $30.0 million of outstanding borrowings under the AR Facility, at a borrowing rate of 5.4%.
+Added: As of December 31, 2022, borrowing capacity remaining under the AR Facility was $120.0 million based on approximately $332.2 million of accounts receivable that could be used as collateral for the AR Facility in accordance with the agreements governing the AR Facility.
+Added: The commitment fee based on the amount of unused commitments under the AR Facility was $0.3 million in 2022, and immaterial in each of 2021 and 2020.
Debt Covenants
−Removed: 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 Facility, 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, 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.
+Added: 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 Facility, 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 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.
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Interest Rate Swap Agreements
−Removed: We had 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 and as of December 31, 2021, only one interest rate cash flow swap agreement remains outstanding.
−Removed: The fair value of the swap positions was a net liability of approximately $0.4 million as of December 31, 2021, which is included in Other current liabilities on our Consolidated Statement of Financial Position, and $5.6 million as of December 31, 2020, which is included in Other liabilities on our Consolidated Statement of Financial Position.
−Removed: As of December 31, 2021, under the terms of the remaining agreement, we will pay interest based on an aggregate notional amount of $50.0 million, under a weighted-average fixed interest rate of 1.8%, with a receive rate of one-month LIBOR and which matures on June 30, 2022.
−Removed: The one-month LIBOR rate was approximately 0.1% as of December 31, 2021.
+Added: We had an interest rate cash flow swap agreement 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, which matured in June 2022.
+Added: The fair value of this swap position was a net liability of approximately $0.4 million as of December 31, 2021, and is included in Other current liabilities on our Consolidated Statement of Financial Position.
At-the-Market Equity Offering Program
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Cash used for investing activities (449.5) (224.0) 101
−Removed: Cash provided by (used for) financing activities (162.2) 573.0 *
+Added: Cash used for financing activities (188.0) (162.2) 16
Effect of exchange rate changes on cash, cash equivalents and restricted cash
−Removed: Net increase (decrease) to cash, cash equivalents and restricted cash $ (287.2) $ 651.1 *
+Added: Net decrease to cash, cash equivalents and restricted cash $ (384.4) $ (287.2) 34
* Calculation is not meaningful.
−Removed: Cash provided by operating activities decreased $31.8 million, or 24%, in 2021 compared to 2020, due primarily to an increase in accounts receivables and prepaid MTA equipment deployment costs, partially offset by an increase in accrued expenses, a decrease in prepaid expenses and net income in 2021 compared to a net loss in 2020 due to increases in overall demand for our services.
+Added: Cash provided by operating activities increased $155.3 million, or 157%, in 2022 compared to 2021, due primarily to higher net income in 2022 compared to 2021 due to increases in overall demand for our services and improved cash collections, partially offset by the timing of payments and an increase in prepaid MTA equipment deployment costs.
In 2022, we paid net cash of $79.8 million related to MTA equipment deployment costs and installed 3,061 digital displays.
In 2021, we paid $52.4 million related to MTA equipment deployment costs and installed 3,712 digital displays.
−Removed: Cash used for investing activities increased $170.8 million in 2021 compared to 2020, due primarily to higher cash paid for acquisitions and MTA franchise rights and lower proceeds from dispositions.
+Added: Cash used for investing activities increased $225.5 million, or 101%, in 2022 compared to 2021, due primarily to higher cash paid for acquisitions, primarily related to an acquisition in the second quarter of 2022 (see Item 8., Note 13.
+Added: Acquisitions and Dispositions :
+Added: Acquisitions to the Consolidated Financial Statements) and higher cash paid for capital expenses, partially offset by lower cash paid for MTA franchise rights.
The following table presents our capital expenditures in 2022 and 2021.
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Total capital expenditures $ 89.8 $ 73.8 22
−Removed: Capital expenditures increased $20.3 million, or 38%, in 2021 compared to 2020, primarily due to growth in digital displays and increased spending on software and technology, partially offset by lower spending on vehicles, office remodel projects and the installation of the most current LED lighting technology.
+Added: Capital expenditures increased $16.0 million, or 22%, in 2022 compared to 2021, primarily due to growth in digital displays, increased maintenance spending for billboard display and safety upgrades, and office remodel projects, partially offset by lower spending on software and technology, and vehicles.
For the full year of 2023, we expect our capital expenditures to be approximately $90.0 million, which will be used primarily for growth in digital displays, software and technology, the renovation of certain office facilities, safety-related projects and maintenance.
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.
−Removed: Cash used by financing activities was $162.2 million in 2021 compared to Cash provided by financing activities of $573.0 million in 2020.
−Removed: In 2021, we made a repayment of $80.0 million under the Repurchase Facility and paid total cash dividends of $57.5 million on the Series A Preferred Stock, our common stock and vested restricted share units granted to employees.
−Removed: In 2020, we received net proceeds of $400.0 million related to the offering of our 6.250% Senior Unsecured Notes due 2025, 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, made net total repayments of $115.0 million on the AR Facility and the Repurchase Facility, and paid total cash dividends on the Series A Preferred Stock and on our common stock of $75.1 million.
+Added: Cash used by financing activities increased $25.8 million, or 16%, in 2022 compared to 2021.
+Added: In 2022, we drew $30.0 million of borrowings on the AR Facility and paid total cash dividends of $205.8 million on our common stock, the Series A Preferred Stock and vested restricted share units granted to employees.
+Added: In 2021, we made a repayment of $80.0 million under a 364-day structured repurchase facility, which was not extended, and paid total cash dividends of $57.5 million on the Series A Preferred Stock, our common stock and vested restricted share units granted to employees.
Cash paid for income taxes was $3.3 million in 2022 and $1.7 million in 2021.
−Removed: The decrease was due primarily to the taxable gain related to the Sports Disposition in 2020.
+Added: The increase was due primarily to improved results in Canada.
Contractual Obligations
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Debt to the Consolidated Financial Statements.)
−Removed: In 2022, we expect to contribute $0.1 million to our defined benefit pension plans.
−Removed: Contributions to our defined benefit pension plans were $0.2 million in 2021 and $0.7 million in 2020.
+Added: In 2023, we do not expect to contribute to our defined benefit pension plans.
+Added: Contributions to our defined benefit pension plans were $0.2 million in 2021.
(See Item 8., Note 15.
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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.
−Removed: 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.
+Added: 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.
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.
−Removed: Actual results may differ from these estimates under different assumptions, including the severity and duration of the COVID-19 pandemic.
+Added: 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 our financial condition and results of operations, and require significant judgment and estimates on the part of management in their application.
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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.
−Removed: 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 expected to be 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.
+Added: 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 expected to be 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, 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.
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The assumptions and estimates included in our analysis require significant judgment about future events, market conditions and financial performance.
−Removed: 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.
−Removed: 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.
+Added: Actual results may differ from our assumptions.
+Added: We currently expect to recoup all equipment deployment costs spent to date and projected to be spent by the end of the base term of our agreement with the MTA.
+Added: If projected incremental revenues generated over the term of the MTA agreement are not achieved to cover all or a portion of the equipment deployment costs, the costs will not be recouped, which could result in impairment charges and/or future deployment costs being expensed as incurred.
+Added: 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
+Added: below its carrying amount.
A qualitative test assesses macroeconomic conditions, industry and market conditions, cost factors, overall financial performance and other relevant entity specific events, as well as events affecting a reporting unit.
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The discount rates represent the weighted average cost of capital derived using known and estimated market metrics.
+Added: In the fourth quarter of 2022, we performed a qualitative assessment on our U.S.
+Added: Billboard and Canadian reporting units as the estimated fair value of those reporting units substantially exceeded carrying value and there were no factors indicating that it was more likely than not that those reporting units were impaired.
+Added: We performed a quantitative assessment on our U.S.
+Added: Transit and Other reporting unit, for which the fair value exceeded carrying value by approximately 28%.
+Added: As of December 31, 2022, goodwill associated with our U.S.
+Added: Transit and Other reporting unit was $47.6 million.
+Added: In our discounted cash flow model assumptions and estimates, revenue in our U.S.
+Added: Transit and Other reporting unit after growing by 37% in 2022 is projected to grow at a compound annual growth rate in the high teens through 2026 before leveling off to a normalized growth rate in the mid-single digits over the remaining forecast period, driven by continued recovery of the transit market as ridership climbs toward pre-COVID-19 levels and expected revenue generation from our significant digital deployment in the MTA and other transit systems.
+Added: We are also assuming that we will be able to renew significant transit franchise agreements.
+Added: Regarding the MTA agreement, we are assuming that the five-year extension to the base term will be exercised by us.
+Added: However, we are not assuming any extension or renewal beyond that time.
+Added: We utilized a discount rate of 11%.
+Added: We performed a sensitivity analysis to determine how our assumptions impact the goodwill impairment assessment.
+Added: Our plan to grow revenues is highly dependent on the recovery of transit ridership to pre-COVID-19 levels and the success of our digital deployment strategy.
+Added: Failure of transit ridership to recover and/or our inability to fully execute on our digital deployment strategy could result in impairment charges.
+Added: In addition, the loss of significant transit franchise agreements or our inability to qualify for the five-year extension to the MTA agreement could result in impairment charges.
+Added: Holding all other assumptions constant, a change in the discount rate of 1% would result in a change in value of $50.6 million.
+Added: While our current projections supported no impairment of goodwill in our U.S.
+Added: Transit and Other reporting unit in the fourth quarter of 2022, given the sensitivities around the assumptions used in the calculation of the U.S.
+Added: Transit and Other reporting unit’s projected cash flows, it is possible that impairment charges could be incurred in the future.
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.
−Removed: In the fourth quarter of 2021, we performed a qualitative assessment of two of our reporting units and a quantitative assessment of our other reporting unit for possible goodwill impairment.
−Removed: No impairment was identified for any of our reporting units.
−Removed: Based on our most recent impairment analysis, the fair value of our reporting units exceeded their respective carrying values by 20% or more.
Long-Lived Assets
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The significant assumptions we use to determine the useful lives and fair values of long-lived assets include contractual commitments, regulatory requirements, future expected cash flows and industry growth rates, as well as future salvage values.
−Removed: We test for long-lived asset impairment whenever there is an indication that the carrying amount of the asset may not be recoverable.
+Added: We test for long-lived asset impairment whenever there is an indication that the carrying amount of the asset group may not be recoverable.
Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows generated by those assets to the respective asset’s carrying value, excluding any impacts from foreign currency translation adjustments reflected in Accumulated other comprehensive loss on the Consolidated Statement Financial Position in conformity with GAAP.
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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.