What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-07 compared with 2023-05-08 · 338 added, 164 removed, 435 unchanged (54% of the section changed)

24 unchanged sentences

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 18% of its revenues in the New York City metropolitan area in the three months ended March 31, 2023, and 19% in the three months ended March 31, 2022, and generated 15% in the Los Angeles metropolitan area in the three months ended March 31, 2023 and 17% in the three months ended March 31, 2022.

In the three months ended March 31, 2023, our U.S.

Media segment generated $376.4 million of Revenues and $72.1 million of Operating income before Depreciation , Amortization , Net gain (loss) on dispositions and Stock-based compensation (“Adjusted OIBDA”).

In the three months ended March 31, 2022, our U.S.

Media segment generated $354.2 million of Revenues and $80.1 million of Adjusted OIBDA.

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

Other (includes International).

In the three months ended March 31, 2023, Other generated $19.4 million of Revenues and $1.1 million of Adjusted OIBDA.

In the three months ended March 31, 2022, Other generated $19.3 million of Revenues and $0.6 million of Adjusted OIBDA.

Economic Environment

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.

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, industry shutdowns like the current entertainment strikes, 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.

These sensitivities may adversely impact our revenues and operating results on a consolidated basis and/or may have a disproportionate adverse impact on one or more of our operating segments, especially our U.S.

Transit operating segment.

We rely on third parties to manufacture and transport our digital displays.

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As a result, digital billboard displays generate higher profits and cash flows than traditional static billboard displays.

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.

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, but at a slower pace than our historical deployments.

In the future, we expect revenues generated on digital transit displays will be higher than revenues generated on comparable static transit displays.

We intend to incur significant equipment deployment costs and capital expenditures in the coming years to continue increasing the number of digital displays in our portfolio.

However, we expect our annual deployment cost spending with respect to our transit franchise agreement with the New York Metropolitan Transportation Authority (the “MTA”) will decline beginning in 2024 as we near the end of our initial deployment phase.

We built or converted 35 new digital billboard displays in the U.S.

and 4 in Canada during the three months ended March 31, 2023.

Additionally, in the three months ended March 31, 2023, we entered into marketing arrangements to sell advertising on 15 third-party digital billboard displays in the U.S and 7 in Canada.

In the three months ended March 31, 2023, we built,

converted or replaced 1,075 digital transit and other displays in the U.S.

and 20 in Canada during the six months ended June 30, 2023.

Additionally, in the six months ended June 30, 2023, we entered into marketing arrangements to sell advertising on 25 third-party digital billboard displays in the U.S.

In the six months ended June 30, 2023, we built, converted or replaced 2,662

digital transit and other displays in the U.S.

and 22 in Canada.

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Digital Revenues (in millions)

for the Three Months Ended

March 31, 2023 (a)

for the Six Months Ended

June 30, 2023 (a)

Number of Digital Displays as of

March 31, 2023 (a)

June 30, 2023 (a)

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

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We have a diversified base of customers across various industries.

During the three months ended March 31, 2023, our largest categories of advertisers were entertainment, health/medical and retail, each of which represented approximately 21%, 11% and 10% of our total U.S.

During the three months ended June 30, 2023, our largest categories of advertisers were entertainment, retail and health/medical, each of which represented approximately 20%, 10% and 8% of our total U.S.

Media segment revenues, respectively.

During the three months ended March 31, 2022, our largest categories of advertisers were entertainment, health/medical and retail, each of which represented approximately 23%, 10% and 9% of our total U.S.

During the three months ended June 30, 2022, our largest categories of advertisers were entertainment, retail and health/medical, each of which represented approximately 20%, 11% and 9% of our total U.S.

Media segment revenues, respectively.

During the six months ended June 30, 2023, our largest categories of advertisers were entertainment, retail and health/medical, each of which represented approximately 20%, 10% and 9% of our total U.S.

Media segment revenues, respectively.

During the six months ended June 30, 2022, our largest categories of advertisers were entertainment, retail and health/medical, each of which represented approximately 21%, 10% and 9% of our total U.S.

Media segment revenues, respectively.

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

In the three months ended March 31, 2023, we generated approximately 40% of our U.S.

We generated approximately 42% of our U.S.

Media segment revenues from national advertising campaigns in each of the three months ended June 30, 2023 and 2022.

In the six months ended June 30, 2023, we generated approximately 41% of our U.S.

Media segment revenues from national advertising campaigns compared to approximately 42% in the same prior-year period.

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

Three Months Ended

(in millions, except percentages) 2023 2022 Change

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2023 2022 Change 2023 2022 Change

Revenues $ 468.8 $ 450.2 4 % $ 864.6 $ 823.7 5 %

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465.0 446.3 4 857.9 818.7 5

Operating income 10.2 28.5 (64)

Operating income (loss) (438.2) 79.9 * (428.0) 108.4 *

Adjusted OIBDA (b)

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Adjusted OIBDA (b) margin

Net loss attributable to OUTFRONT Media Inc.

26 % 28 % 21 % 24 %

Net income (loss) attributable to OUTFRONT Media Inc.

(478.9) 48.0 * (507.8) 47.9 *

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

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

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

(b) See the “Reconciliation of Non-GAAP Financial Measures” and “Revenues” sections of this MD&A for reconciliations of Operating income to Operating income before Depreciation , Amortization , Net gain (loss) on dispositions , Stock-based compensation and Impairment charges (“Adjusted OIBDA”) Net income (loss) attributable to OUTFRONT Media Inc.

to FFO attributable to OUTFRONT Media Inc.

and AFFO attributable to OUTFRONT Media Inc.

and Revenues to organic revenues.

and AFFO attributable to OUTFRONT Media Inc., and Revenues to organic revenues.

Analysis of Results of Operations

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Revenues to the Consolidated Financial Statements.)

Three Months Ended

(in millions, except percentages) 2023 2022 Change

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2023 2022 Change 2023 2022 Change

Billboard $ 371.6 $ 354.0 5 % $ 692.2 $ 652.2 6 %

Transit and other

97.2 96.2 1 172.4 171.5 1

Total revenues $ 468.8 $ 450.2 4 $ 864.6 $ 823.7 5

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Transit and other

97.2 96.0 1 172.4 171.1 1

Total organic revenues (a)

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Non-organic revenues:

3.8 3.7 3 6.7 4.6 46

Transit and other

— 0.2 * — 0.4 *

Total non-organic revenues

3.8 3.9 (3) 6.7 5.0 34

Total revenues $ 468.8 $ 450.2 4 $ 864.6 $ 823.7 5

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

Total revenues increased by $22.3 million, or 6%, and organic revenues increased $20.5 million, or 6%, in the three months ended March 31, 2023, compared to the same prior-year period.

In the three months ended March 31, 2023, non-organic revenues reflect the impact of a significant acquisition.

In the three months ended March 31, 2022, non-organic revenues reflect the impact of foreign currency exchange rates.

Total billboard revenues increased $22.4 million, or 8%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily due to the impact of new and lost billboards in the period, including acquisitions, higher proceeds from condemnations and an increase in average revenue per display (yield).

Organic billboard revenues increased $20.4 million, or 7%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily due to the impact of new and lost billboards in the period, including insignificant acquisitions, higher proceeds from condemnations and an increase in average revenue per display (yield).

Total transit and other revenues decreased $0.1 million in the three months ended March 31, 2023, compared to the same prior-year period, primarily due to a decrease in average revenue per display (yield), driven by weaker market conditions in national advertising, which primarily impacted advertising sales on certain above-ground advertising displays, and the impact of foreign currency exchange rates, partially offset by the impact of a new transit franchise contract.

Organic transit and other revenues increased $0.1 million in the three months ended March 31, 2023, compared to the same prior-year period, primarily driven by the impact of a new transit franchise contract, partially offset by a decrease in average revenue per display (yield), driven by weaker market conditions in national advertising, which primarily impacted advertising sales on certain above-ground advertising displays.

Transit ridership remains materially below pre-COVID-19 pandemic levels in our largest transit markets and while we expect ridership and revenue to grow, we do not expect to reach pre-COVID-19 pandemic levels in the remainder of 2023.

Three Months Ended

(in millions, except percentages) 2023 2022 Change

Total revenues increased by $18.6 million, or 4%, and organic revenues increased $18.7 million, or 4%, in the three months ended June 30, 2023, compared to the same prior-year period.

Total revenues increased by $40.9 million, or 5%, and organic revenues increased $39.2 million, or 5%, in the six months ended June 30, 2023, compared to the same prior-year period.

In the three and six months ended June 30, 2023, non-organic revenues reflect the impact of a significant acquisition.

In the three and six months ended June 30, 2022, non-organic revenues reflect the impact of a significant acquisition and the impact of foreign currency exchange rates.

Total billboard revenues increased $17.6 million, or 5%, in the three months ended June 30, 2023, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield) and the impact of new and lost billboards in the period, including acquisitions.

Total billboard revenues increased $40.0 million, or 6%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), the impact of new and lost billboards in the period, including acquisitions, and higher proceeds from condemnations.

Organic billboard revenues increased $17.5 million, or 5%, in the three months ended June 30, 2023, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield) and the impact of new and lost billboards in the period, including insignificant acquisitions.

Organic billboard revenues increased $37.9 million, or 6%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), the impact of new and lost billboards in the period, including insignificant acquisitions, and higher proceeds from condemnations.

Total transit and other revenues increased $1.0 million, or 1%, in the three months ended June 30, 2023, compared to the same prior-year period, primarily due to the impact of a new transit franchise contract, partially offset by a decrease in average revenue per display (yield), driven by weaker market conditions in national advertising, which primarily impacted advertising sales on certain above-ground advertising displays.

Total transit and other revenues increased $0.9 million, or 1%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily due to the impact of a new transit franchise contract, partially offset by a decrease in average revenue per display (yield), driven by weaker market conditions in national advertising, which primarily impacted advertising sales on certain above-ground advertising displays.

Organic transit and other revenues increased $1.2 million, or 1%, in the three months ended June 30, 2023, compared to the same prior-year period, primarily driven by the impact of a new transit franchise contract, partially offset by a decrease in average revenue per display (yield), driven by weaker market conditions in national advertising, which primarily impacted advertising sales on certain above-ground advertising displays.

Organic transit and other revenues increased $1.3 million, or 1%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily driven by the impact of a new

transit franchise contract, partially offset by a decrease in average revenue per display (yield), driven by weaker market conditions in national advertising, which primarily impacted advertising sales on certain above-ground advertising displays.

Transit ridership remains materially below pre-COVID-19 pandemic levels in our largest transit markets and while we expect ridership to gradually grow over time, we do not expect ridership to reach pre-COVID-19 pandemic levels during the remaining terms of our current transit agreements.

While ridership has increased during 2023 as compared to 2022, the increase in ridership has not led to an increase in overall demand for transit displays.

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2023 2022 Change 2023 2022 Change

Operating $ 245.9 $ 226.5 9 % $ 481.4 $ 439.3 10 %

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Net (gain) loss on dispositions (0.1) 0.2 * 0.2 (0.1) *

Impairment charges 511.4 — * 511.4 — *

Depreciation 19.7 19.4 2 39.8 38.7 3

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Operating Expenses

Three Months Ended

(in millions, except percentages) 2023 2022 Change

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2023 2022 Change 2023 2022 Change

Operating expenses:

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Total operating expenses $ 245.9 $ 226.5 9 $ 481.4 $ 439.3 10

Billboard property lease expenses represented 38% of billboard revenues in the three months ended March 31, 2023, and 36% in the three months ended March 31, 2022.

The increase in billboard property lease expenses as a percentage of billboard revenues is primarily due to an increase in variable billboard property lease expenses (see Note 5.

Leases to the Consolidated Financial Statements), driven by an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease expenses (see Note 1.

Description of Business and Basis of Presentation to the Consolidated Financial Statements) and billboard revenue increases in large markets and high profile locations.

Transit franchise expenses represented 89% of transit display revenues in the three months ended March 31, 2023, and 80% in the three months ended March 31, 2022.

The increase in transit franchise expense, as a percentage of transit display revenues, is primarily driven by guaranteed minimum annual payments to the New York Metropolitan Transportation Authority (the “MTA”) in each of the three months ended March 31, 2023 and 2022.

We expect transit franchise expenses, as a percentage of transit display revenues, to decline in the remainder of 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 the remainder of 2023 as compared to 2022.

Billboard property lease and transit franchise expenses increased $19.8 million, or 12%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily due to an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease expenses (see Note 1.

Description of Business and Basis of Presentation to the Consolidated Financial Statements), higher billboard revenues and higher guaranteed minimum annual payments to the MTA.

Posting, maintenance and other expenses as a percentage of Revenues were 14% in each of the three months ended March 31, 2023 and 2022.

Posting, maintenance and other expenses increased $2.9 million, or 6%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily due to higher maintenance and utilities cost, driven by inflation-driven cost increases in 2023, higher compensation-related expenses and increased activity resulting in higher materials cost, partially offset by lower posting and rotation costs.

Billboard property lease expenses represented 35% of billboard revenues in the three months ended June 30, 2023, 32% in the three months ended June 30, 2022, 36% of billboard revenues in the six months ended June 30, 2023, and 34% in the six months ended June 30, 2022.

The increase in billboard property lease expenses as a percentage of billboard revenues in the three months ended June 30, 2023, is primarily due to an increase in variable billboard property lease expenses (see Note 5.

Leases to the Consolidated Financial Statements), which are primarily attributable to billboard revenue increases in large markets and high profile locations, and the impact of new locations, including through acquisitions.

The increase in billboard property lease expenses as a percentage of billboard revenues in the six months ended June 30, 2023, is primarily due to an increase in variable billboard property lease expenses (see Note 5.

Leases to the Consolidated Financial Statements), which are primarily attributable to billboard revenue increases in large markets and high profile locations, an out-of-period adjustment of $5.2 million recorded in the six months ended June 30, 2023, related to variable billboard property lease expenses (see Note 1.

Description of Business and Basis of Presentation to the Consolidated Financial Statements), and the impact of new locations, including through acquisitions.

Transit franchise expenses represented 70% of transit display revenues in the three months ended June 30, 2023, 68% in the three months ended June 30, 2022, 78% of transit display revenues in the six months ended June 30, 2023, and 73% in the six months ended June 30, 2022.

The increases in transit franchise expense, as a percentage of transit display revenues in each of the three and six months ended June 30, 2023, are primarily driven by higher guaranteed minimum annual payments to the MTA in each of the three and six months ended June 30, 2023.

We expect transit franchise expenses, as a percentage of transit display revenues, to decline in the remainder of 2023, but remain above pre-COVID-19 pandemic levels and above 2022 levels, as a result of our expectation that revenues generated under the MTA Agreement in the remainder of 2023 will not grow at a compound annual growth rate above the inflation-adjusted guaranteed minimum annual payments to the MTA.

Billboard property lease and transit franchise expenses increased $17.4 million, or 10%, in the three months ended June 30, 2023, compared to the same prior-year period, primarily due to higher variable billboard property lease expenses, the impact of new locations, including through acquisitions, and higher guaranteed minimum annual payments to the MTA.

Billboard property lease and transit franchise expenses increased $37.2 million, or 11%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily due to higher variable billboard property lease expenses, including an out-of-period adjustment of $5.2 million recorded in the six months ended June 30, 2023, (see Note 1.

Description of Business and Basis of Presentation to the Consolidated Financial Statements), the impact of new locations, including through acquisitions, and higher guaranteed minimum annual payments to the MTA.

Posting, maintenance and other expenses as a percentage of Revenues were 12% in each of the three months ended June 30, 2023 and 2022, and 13% in each of the six months ended June 30, 2023 and 2022.

Posting, maintenance and other expenses increased $2.0 million, or 4%, in the three months ended June 30, 2023, compared to the same prior-year period, primarily due to higher taxes and compensation-related expenses.

Posting, maintenance and other expenses increased $4.9 million, or 5%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily due to higher taxes, higher maintenance and utilities cost, driven by inflation-driven cost increases in 2023, higher compensation-related expenses and increased activity resulting in higher materials cost, partially offset by lower posting and rotation costs.

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

SG&A expenses represented 27% of Revenues in the three months ended March 31, 2023, and 26% of Revenues in the same prior-year period.

SG&A expenses increased $9.5 million, or 10%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily due to higher professional fees, the impact of market fluctuations on an unfunded equity-linked retirement plan offered by the Company to certain employees, higher compensation-related expenses, including salaries and net of lower commissions, and increased post-COVID-19 pandemic travel resulting in higher travel and entertainment expenses.

SG&A expenses represented 23% of Revenues in the three months ended June 30, 2023, compared to 24% of Revenues in the same prior-year period, and 25% of Revenues in each of the six months ended June 30, 2023 and 2022.

SG&A expenses increased $1.7 million, or 2%, in the three months ended June 30, 2023, compared to the same prior-year period, 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 lower compensation-related expenses and the impact of certain cost initiatives undertaken during the quarter.

SG&A expenses increased $11.2 million, or 5%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily due to the impact of market fluctuations on an unfunded equity-linked retirement plan offered by the Company to certain employees, higher compensation-related expenses, higher professional fees and higher travel and entertainment expenses.

We continue to evaluate methods to lower SG&A expense growth and believe that these expenses will represent a lower percentage of revenues in the remainder of 2023 when compared to the same prior-year period.

Net (Gain) Loss on Dispositions

Net loss on dispositions was $0.3 million in the three months ended March 31, 2023, compared to a Net gain on dispositions of $0.3 million in the same prior-year period.

Depreciation increased $0.8 million, or 4%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily due to capital expenditures and acquisitions in 2022.

Amortization increased $7.0 million, or 47%, in the three months ended March 31, 2023, compared to the same prior-year period, due primarily to higher amortization of leasehold interest intangibles recorded related to asset acquisitions completed during each of the three months ended March 31, 2023 and in 2022.

Net gain on dispositions was $0.1 million in the three months ended June 30, 2023, compared to a Net loss on dispositions of $0.2 million the same prior-year period.

Net loss on dispositions was $0.2 million in the six months ended June 30, 2023, compared to a Net gain on dispositions of $0.1 million in the same prior-year period.

Impairment Charges

In the three months ended June 30, 2023, we recorded impairment charges of $511.4 million.

As a result of the impairment analysis performed during the second quarter of 2023, we determined that the carrying value of our U.S.

Transit and Other reporting unit exceeded its fair value and we recorded an impairment charge of $47.6 million in the Consolidated Statements of Operations, representing the entire goodwill balance associated with the reporting unit.

(See the “Critical Accounting Policies” section of this MD&A.)

We also performed an analysis of carrying value of our long-lived asset groups within our U.S.

Transit and Other reporting unit as a result of the triggering event noted above utilizing undiscounted cash flows compared to the carrying value of the asset groups.

As a result, we recorded an impairment charge of $463.5 million in the second quarter of 2023, primarily representing a $443.1 million impairment charge related to our MTA asset group.

Long-Lived Assets to the Consolidated Financial Statements.)

In addition, we recorded an impairment charge of $0.3 million related to an other-than-temporary decline in fair value of a cost-method investment.

Depreciation increased $0.3 million, or 2%, in the three months ended June 30, 2023, compared to the same prior-year period and increased $1.1 million, or 3%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily due to capital expenditures and acquisitions in 2022.

Amortization increased $4.2 million, or 24%, in the three months ended June 30, 2023, and increased $11.2 million, or 35%, in the six months ended June 30, 2023, compared to the same prior-year periods.

The increases were due primarily to higher amortization of leasehold interest intangibles recorded related to asset acquisitions.

Interest Expense, Net

Interest expense, net, was $37.7 million (including $1.6 million of deferred financing costs) in the three months ended March 31, 2023, and $30.7 million (including $1.6 million of deferred financing costs) in the same prior-year period, primarily due to higher interest rates and a higher average debt balance.

Interest expense, net, was $39.7 million (including $1.8 million of deferred financing costs) in the three months ended June 30, 2023, and $31.6 million (including $1.7 million of deferred financing costs) in the same prior-year period.

Interest expense, net, was $77.4 million (including $3.4 million of deferred financing costs) in the six months ended June 30, 2023, and $62.3 million (including $3.3 million of deferred financing costs) in the same prior-year period.

The increases were primarily due to higher interest rates and a higher average debt balance.

Benefit (Provision) for Income Taxes

Provision for income taxes was $0.4 million in the three months ended March 31, 2023, compared to a Benefit for income taxes of $2.1 million in the same prior-year period, due primarily to recording a valuation allowance against our U.S.

taxable REIT subsidiary (“TRS”) deferred tax assets.

Net Income (Loss)

Net loss before allocation to non-controlling interests was $28.7 million in the three months ended March 31, 2023, compared to Net income before allocation to non-controlling interests of $0.1 million in the same prior-year period, due primarily to lower operating income, due to an increase in billboard operating lease expenses, including an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease expenses (see Note 1.

Description of Business and Basis of Presentation to the Consolidated Financial Statements), increases in the MTA guaranteed minimum annual payments in 2023, higher compensation-related expenses and higher interest expense.

Provision for income taxes decreased $0.8 million, or 67%, in the three months ended June 30, 2023, compared to the same prior-year period, due primarily to changes in taxable income for our U.S.

taxable REIT subsidiary (“TRS”).

Provision for income taxes was $0.8 million in the six months ended June 30, 2023, compared to a Benefit for income taxes of $0.9 million in the same prior-year period, due primarily to changes in taxable income for our U.S.

TRS and recording a valuation allowance against our U.S.

TRS’s deferred tax assets.

Net income before allocation to non-controlling interests decreased $526.8 million in the three months ended June 30, 2023, and decreased $555.6 million in the six months ended June 30, 2023, compared to the same prior-year periods, driven by lower operating income, due primarily to impairment charges and higher interest expense.

Reconciliation of Non-GAAP Financial Measures

Adjusted OIBDA

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

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

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

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

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

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

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

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

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

In addition, AFFO excludes certain non-cash items, including non-real estate depreciation and amortization, impairment charges 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.

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.

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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.

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

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

to FFO attributable to OUTFRONT Media Inc.

and AFFO attributable to OUTFRONT Media Inc.

Three Months Ended

(in millions, except per share amounts) 2023 2022

Three Months Ended Six Months Ended

June 30, June 30,

(in millions, except percentages) 2023 2022 2023 2022

Total revenues $ 468.8 $ 450.2 $ 864.6 $ 823.7

Operating income $ 10.2 $ 28.5

Operating income (loss) $ (438.2) $ 79.9 $ (428.0) $ 108.4

Net (gain) loss on dispositions (0.1) 0.2 0.2 (0.1)

Impairment charges 511.4 — 511.4 —

Depreciation 19.7 19.4 39.8 38.7

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Adjusted OIBDA margin 26 % 28 % 21 % 24 %

Net loss attributable to OUTFRONT Media Inc.

Net income (loss) attributable to OUTFRONT Media Inc.

$ (478.9) $ 48.0 $ (507.8) $ 47.9

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Net (gain) loss on disposition of real estate assets (0.1) 0.2 0.2 (0.1)

Impairment charges (a)

371.1 — 371.1 —

Adjustment related to non-controlling interests (0.1) — (0.2) (0.1)

FFO attributable to OUTFRONT Media Inc.

(59.8) 92.4 (42.7) 134.2

Non-cash portion of income taxes (1.5) 0.4 (4.7) (3.8)

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Other amortization 3.4 2.8 6.9 4.2

Impairment charges on non-real estate assets (a) (b)

140.3 — 140.3 —

Stock-based compensation 7.9 8.5 15.7 16.4

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Amortization of deferred financing costs

1.8 1.7 3.4 3.3

AFFO attributable to OUTFRONT Media Inc.

$ 78.0 $ 93.2 $ 86.8 $ 128.7

(a) Impairment charges related to a decline in the long-term outlook of our U.S.

Transit and Other reporting unit (see Note 4.

Long-Lived Assets to the Consolidated Financial Statements).

(b) Impairment charge related to an other-than-temporary decline in fair value of a cost-method investment.

FFO attributable to OUTFRONT Media Inc.

decreased $24.7 million, or 59%, in the three months ended March 31, 2023, compared to the same prior-year period, due primarily to lower operating income, lower amortization of direct lease acquisition costs and a provision for income taxes in the three months ended March 31, 2023, compared to a benefit for income taxes in the same prior-year period, partially offset by higher amortization of real estate-related intangible assets.

in the three months ended June 30, 2023, was a deficit of $59.8 million compared to FFO attributable to OUTFRONT Media Inc.

of $92.4 million in the same prior-year period, due primarily to impairment charges on non-real estate assets and higher interest expense.

FFO attributable to OUTFRONT Media Inc.

in the six months ended June 30, 2023, was a deficit of $42.7 million compared to FFO attributable to OUTFRONT Media Inc.

of $134.2 million in the same prior-year period, due primarily to impairment charges on non-real estate assets, higher interest expense and lower Adjusted OIBDA.

AFFO attributable to OUTFRONT Media Inc.

decreased $26.7 million, or 75%, in the three months ended March 31, 2023, compared to the same prior-year period, due primarily to lower operating income and higher maintenance capital expenditures.

decreased $15.2 million, or 16%, in the three months ended June 30, 2023, compared to the same prior-year period, due primarily to higher interest expense and lower Adjusted OIBDA.

AFFO attributable to OUTFRONT Media Inc.

decreased $41.9 million, or 33%, in the six months ended June 30, 2023, compared to the same prior-year period, due primarily to higher interest expense, lower Adjusted OIBDA, the impact of direct lease acquisition costs and higher maintenance capital expenditures.

Segment Results of Operations

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Media and Other .

The following table presents our Revenues , Adjusted OIBDA and Operating income by segment in the three months ended March 31, 2023 and 2022.

Three Months Ended

The following table presents our Revenues , Adjusted OIBDA and Operating income by segment in the three and six months ended June 30, 2023 and 2022.

Three Months Ended Six Months Ended

June 30, June 30,

(in millions) 2023 2022 2023 2022

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Total revenues $ 468.8 $ 450.2 $ 864.6 $ 823.7

Operating income $ 10.2 $ 28.5

Operating income (loss) $ (438.2) $ 79.9 $ (428.0) $ 108.4

Net (gain) loss on dispositions (0.1) 0.2 0.2 (0.1)

Impairment charges 511.4 — 511.4 —

Depreciation 19.7 19.4 39.8 38.7

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Stock-based compensation (a)

7.9 8.5 15.7 16.4

Total Adjusted OIBDA $ 122.2 $ 125.3 $ 182.4 $ 195.5

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Corporate (20.5) (20.2) (41.3) (38.6)

Total operating income $ 10.2 $ 28.5

Total operating income (loss) $ (438.2) $ 79.9 $ (428.0) $ 108.4

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

Three Months Ended

(in millions, except percentages) 2023 2022 Change

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2023 2022 Change 2023 2022 Change

Billboard $ 352.2 $ 332.1 6 % $ 658.3 $ 615.5 7 %

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Adjusted OIBDA margin 29 % 31 % 24 % 27 %

Operating income $ 33.3 $ 49.3 (32)

Operating income (loss) $ (420.9) $ 95.3 * $ (387.6) $ 144.6 *

Net (gain) loss on dispositions (0.1) 0.2 * 0.2 (0.1) *

Impairment charges 511.4 — * 511.4 — *

Depreciation and amortization 37.7 33.7 12 76.2 64.8 18

Adjusted OIBDA $ 128.1 $ 129.2 (1) $ 200.2 $ 209.3 (4)

New York metropolitan area revenues as a percentage of U.S.

Media segment revenues

18 % 19 % 18 % 19 %

Los Angeles metropolitan area revenues as a percentage of U.S.

Media segment revenues

16 % 16 % 15 % 16 %

* Calculation is not meaningful.

(a) Organic revenues exclude revenues associated with a significant acquisition (“non-organic revenues”).

Media segment revenues increased $22.2 million, or 6%, in the three months ended March 31, 2023, compared to the same prior-year period, due primarily to higher billboard revenues, partially offset by lower transit and other revenues.

We generated approximately 40% in the three months ended March 31, 2023, and 42% in the three months ended March 31, 2022, of our U.S.

Media segment revenues increased $20.5 million, or 5%, in the three months ended June 30, 2023, compared to the same prior-year period, due primarily to higher billboard revenues.

Media segment revenues increased $42.7 million, or 5%, in the six months ended June 30, 2023, compared to the same prior-year period, due primarily to higher billboard revenues.

We generated approximately 42% in each of the three months ended June 30, 2023 and 2022, 41% in the six months ended June 30, 2023, and 42% in the six months ended June 30, 2022, of our U.S.

Media segment revenues from national advertising campaigns.

In the three months ended March 31, 2023, non-organic revenues reflect the impact of a significant acquisition.

In the three and six months ended June 30, 2023, non-organic revenues reflect the impact of a significant acquisition.

Billboard revenues in the U.S.

Media segment increased $22.7 million, or 8%, in the three months ended March 31, 2023, compared to the same prior-year period, reflecting the impact of new and lost billboards in the period, including acquisitions, higher proceeds from condemnations and an increase in average revenue per display (yield).

Media segment increased $20.1 million, or 6%, in the three months ended June 30, 2023, compared to the same prior-year period, reflecting an increase in average revenue per display (yield) and the impact of new and lost billboards in the period, including acquisitions.

Billboard revenues in the U.S.

Media segment increased $42.8 million, or 7%, in the six months ended June 30, 2023, compared to the same prior-year period, reflecting an increase in average revenue per display (yield), the impact of new and lost billboards in the period, including acquisitions, and higher proceeds from condemnations.

Organic billboard revenues in the U.S.

Media segment increased $19.8 million, or 7%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily due to the impact of new and lost billboards in the period, including insignificant acquisitions, higher proceeds from condemnations and an increase in average revenue per display (yield).

Media segment increased $18.7 million, or 6%, in the three months ended June 30, 2023, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield) and the impact of new and lost billboards in the period, including insignificant acquisitions.

Organic billboard revenues in the U.S.

Media segment increased $38.5 million, or 6%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily due to an increase in average revenue per display (yield), the impact of new and lost billboards in the period, including insignificant acquisitions, and higher proceeds from condemnations.

Transit and other revenues in the U.S.

Media segment decreased $0.5 million, or 1%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily driven by a decrease in average revenue per display (yield), driven by weaker market conditions in national advertising, which primarily impacted advertising sales on certain above-ground advertising displays, partially offset by the impact of a new transit franchise contract.

Media segment increased $0.4 million in the three months ended June 30, 2023 compared to the same prior-year period, primarily driven by the impact of a new transit franchise contract.

Transit and other revenues in the U.S.

Media segment decreased $0.1 million in the six months ended June 30, 2023, compared to the same prior-year period, primarily driven by a decrease in average revenue per display (yield), driven by weaker market conditions in national advertising, which primarily impacted advertising sales on certain above-ground advertising displays, partially offset by the impact of a new transit franchise contract.

Organic transit and other revenues in the U.S.

by weaker market conditions in national advertising, which primarily impacted advertising sales on certain above-ground advertising displays, partially offset by the impact of a new transit franchise contract.

Media segment increased $0.4 million in the three months ended June 30, 2023, compared to the same prior-year period, primarily driven by the impact of a new transit franchise contract, partially offset by a decrease in average revenue per display (yield).

Organic transit and other revenues in the U.S.

While ridership has increased during 2023 as compared to 2022, the increase in ridership has not led to an increase in overall demand for transit displays.

Operating expenses in the U.S.

Media segment increased $23.2 million, or 12%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily driven by higher billboard property lease expenses, including an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease expenses (see Note 1.

Description of Business and Basis of Presentation to the Consolidated Financial Statements), higher guaranteed minimum annual payments to the MTA, higher maintenance and utilities cost, driven by inflation-driven utility cost increases in 2023, higher compensation-related expenses and increased activity resulting in higher materials cost, partially offset by lower posting and rotation costs.

Media segment increased $20.3 million, or 10%, in the three months ended June 30, 2023, compared to the same prior-year period, primarily driven by higher variable billboard property lease expenses, the impact of new locations, including through acquisitions, higher guaranteed minimum annual payments to the MTA, higher taxes and higher compensation-related expenses.

Operating expenses in the U.S.

Media segment increased $43.5 million, or 11%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily driven by higher variable billboard property lease expenses, including an out-of-period adjustment of $5.2 million recorded in the six months ended June 30, 2023, (see Note 1.

Description of Business and Basis of Presentation to the Consolidated Financial Statements), higher guaranteed minimum annual payments to the MTA, higher taxes, higher maintenance and utilities cost, higher taxes, higher maintenance and utilities cost, driven by inflation-driven cost increases in 2023, higher compensation-related expenses, and increased activity resulting in higher materials cost, partially offset by lower posting and rotation costs.

SG&A expenses in the U.S.

Media segment increased $7.0 million, or 9%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily driven by higher compensation-related expenses, higher professional fees and increased post-COVID-19 pandemic travel resulting in higher travel and entertainment expenses.

Media segment Adjusted OIBDA decreased $8.0 million, or 10%, in the three months ended March 31, 2023, compared to the same prior-year period.

Adjusted OIBDA margin was 19% in the three months ended March 31, 2023, and 23% in the same prior-year period.

The decrease in Adjusted OIBDA margins was due primarily to a higher increase in operating expenses, due to an increase in billboard property lease expenses, including an out-of-period adjustment of $5.2 million recorded in the three months ended March 31, 2023, related to variable billboard property lease expenses (see Note 1.

Media segment increased $1.3 million, or 2%, in the three months ended June 30, 2023, compared to the same prior-year period, primarily driven by higher compensation-related expenses, partially offset by a lower provision for doubtful accounts.

SG&A expenses in the U.S.

Media segment increased $8.3 million, or 5%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily driven by higher compensation-related expenses, higher professional fees and higher travel and entertainment expenses.

In the three months ended June 30, 2023, we recorded impairment charges of $511.4 million in the U.S.

Media segment, primarily related to impairment charges related to our MTA asset group and our U.S.

Transit and Other reporting unit (see the “Critical Accounting Policies” section of this MD&A and Note 4.

Long-Lived Assets to the Consolidated Financial Statements).

Media segment Adjusted OIBDA decreased $1.1 million, or 1%, in the three months ended June 30, 2023, and decreased $9.1 million, or 4%, in the six months ended June 30, 2023, compared to the same prior-year periods.

Adjusted OIBDA margin was 29% in the three months ended June 30, 2023, 31% in the three months ended June 30, 2022, 24% in the six months ended June 30, 2023, and 27% in the six months ended June 30, 2022.

The decreases in Adjusted OIBDA margins was due primarily to a higher increase in operating expenses, due to an increase in billboard property lease expenses, including an out-of-period adjustment of $5.2 million recorded in the six months ended June 30, 2023, related to variable billboard property lease expenses (see Note 1.

Description of Business and Basis of Presentation to the Consolidated Financial Statements), increases in the MTA guaranteed minimum annual payments in 2023 and an increase in SG&A expenses, compared to a lower increase in revenues.

Three Months Ended

(in millions, except percentages) 2023 2022 Change

Three Months Ended Six Months Ended

June 30, % June 30, %

(in millions, except percentages) 2023 2022 Change 2023 2022 Change

$ 19.4 $ 21.9 (11) % $ 33.9 $ 36.7 (8) %

Transit and other

6.4 5.8 10 11.3 10.3 10

Total revenues $ 25.8 $ 27.7 (7) $ 45.2 $ 47.0 (4)

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Transit and other

6.4 5.6 14 11.3 9.9 14

Total organic revenues (a)

25.8 26.2 (2) 45.2 44.4 2

Non-organic revenues:

— 1.3 * — 2.2 *

Transit and other

— 0.2 * — 0.4 *

Total non-organic revenues

— 1.5 * — 2.6 *

Total revenues 25.8 27.7 (7) 45.2 47.0 (4)

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Adjusted OIBDA margin 26 % 28 % 17 % 18 %

Operating loss $ (2.3) $ (2.4) (4)

Operating income $ 3.2 $ 4.8 (33) $ 0.9 $ 2.4 (63)

Depreciation and amortization 3.5 3.0 17 6.9 6.0 15

2 unchanged sentences

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

Total Other revenues increased $0.1 million, or 1%, in the three months ended March 31, 2023, compared to the same prior-year period, driven by an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services, partially offset by the impact of foreign currency exchange rates.

In the three months ended March 31, 2022, non-organic revenues reflect the impact of foreign currency exchange rates.

Organic Other revenues increased $1.2 million, or 7%, in the three months ended March 31, 2023, compared to the same prior-year period, driven by an increase in average revenue per display (yield) as we have experienced increases in overall demand for our services.

Other operating expenses decreased $0.5 million, or 4%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily driven by the impact of foreign currency exchange rates, partially offset by higher expenses in Canada.

Other SG&A expenses increased $0.1 million, or 2%, in the three months ended March 31, 2023, compared to the same prior-year periods primarily driven by higher expenses in Canada, partially offset by the impact of foreign currency exchange rates.

Other Adjusted OIBDA increased $0.5 million, or 83%, in the three months ended March 31, 2023, compared to the same prior-year period, due primarily to an increase in average revenue per display (yield).

Total Other revenues decreased $1.9 million, or 7%, in the three months ended June 30, 2023, compared to the same prior-year period, driven by the impact of foreign currency exchange rates and a decrease in average revenue per display (yield) as we have experienced decreases in overall demand for our services, partially offset by the impact of acquisitions.

Total Other revenues decreased $1.8 million, or 4%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily driven by the impact of foreign currency exchange rates, partially offset by the impact of acquisitions.

In the three and six months ended June 30, 2022, non-organic revenues reflect the impact of foreign currency exchange rates.

Organic Other revenues decreased $0.4 million, or 2%, in the three months ended June 30, 2023, compared to the same prior-year period, driven by a decrease in average revenue per display (yield) as we have experienced decreases in overall demand for our services during the quarter, partially offset by the impact of acquisitions.

Organic Other revenues increased $0.8 million, or 2%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily driven by the impact of acquisitions.

Other operating expenses decreased $0.9 million, or 6%, in the three months ended June 30, 2023, and decreased $1.4 million, or 5%, in the six months ended June 30, 2023, compared to the same prior-year periods, primarily driven by the impact of foreign currency exchange rates and lower expenses in Canada.

Other SG&A expenses increased $0.1 million, or 2%, in the three months ended June 30, 2023, and increased $0.2 million, or 2%, in the six months ended June 30, 2023, compared to the same prior-year periods, primarily driven by higher expenses in Canada, partially offset by the impact of foreign currency exchange rates.

Other Adjusted OIBDA decreased $1.1 million, or 14%, in the three months ended June 30, 2023, and decreased $0.6 million, or 7%, in the six months ended June 30, 2023, compared to the same prior-year periods.

The decreases were due primarily to

the impact of foreign currency exchange rates and a decrease in average revenue per display (yield), partially offset by higher expenses in Canada.

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

Corporate expenses, excluding stock-based compensation, were $13.0 million in the three months ended March 31, 2023, compared to $10.5 million in the same prior-year period, primarily due to the impact of market fluctuations on an unfunded equity-linked retirement plan offered by the Company to certain employees, higher compensation-related expenses, including salaries, and higher professional fees.

Corporate expenses, excluding stock-based compensation, were $12.6 million in the three months ended June 30, 2023, compared to $11.7 million in the same prior-year period.

Corporate expenses, excluding stock-based compensation, were $25.6 million in the six months ended June 30, 2023, compared to $22.2 million in the same prior-year period.

The increases were 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 lower compensation-related expenses.

Liquidity and Capital Resources

(in millions, except percentages) March 31,

(in millions, except percentages) June 30,

2023 December 31, 2022 % Change

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(See the “Overview” section of this MD&A.)

Working capital was a deficit of $254.4 million as of March 31, 2023, compared to a working capital deficit of $161.2 million as of December 31, 2022, primarily driven by lower receivable balances, increased borrowings under the AR Facility and increased short-term operating lease liabilities.

Under the MTA agreement, which was amended in June 2020 and July 2021 (as amended, the “MTA Agreement”):

Working capital was a deficit of $269.8 million as of June 30, 2023, compared to a deficit of $161.2 million as of December 31, 2022, primarily driven by increased borrowings under the AR Facility, lower receivable balances, and increased short-term operating lease liabilities.

Under the current MTA agreement, which was amended in June 2020 and July 2021 and is subject to modification as agreed-upon by us and the MTA (as amended, the “MTA Agreement”):

• Deployments .

We must deploy, over a number of years, (i) 5,433 digital advertising screens on subway and train platforms and entrances, (ii) 15,896 smaller-format digital advertising screens on rolling stock, and (iii) 9,283 MTA communications displays, subject to modification as agreed-upon by us and the MTA.

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”).

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

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

Long-Lived Assets to the Consolidated Financial Statements).

If we do not recoup all costs of deploying advertising and communications screens with respect to the New Inventory by the end of the term of the MTA Agreement, the MTA will be obligated to reimburse us for these costs.

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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.

We did not recoup any equipment deployment costs in the three months ended March 31, 2023, and we do not expect to recoup any equipment deployment costs in the remainder of 2023.

For the full year of 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 did not recoup any equipment deployment costs in the six months ended June 30, 2023, and we do not expect to recoup any equipment deployment costs in the remainder of 2023.

In addition, we currently do not expect to recoup any equipment deployment costs throughout the remainder of the Amended Term (as defined below) of the MTA Agreement.

For the full year of 2023, we expect our MTA equipment deployment costs to be approximately $50.0 million to $60.0 million.

We expect our MTA equipment deployment costs to be approximately $95.00 million in the aggregate over the next 18 months, with approximately $30.0 million to $40.0 million to be spent in the remainder of 2023 and approximately $50.0 million to $60.0 million to be spent in 2024.

After 2024, we expect MTA equipment deployment costs to be approximately $30.0 million to $40.0 million annually throughout the remainder of the Amended Term (as defined below) of the MTA Agreement and encompass replacement costs.

Accordingly, we expect annual MTA equipment deployment costs after 2024 to be significantly below 2023 levels as we expect to substantially complete our initial deployment during 2024.

We must pay to the MTA the greater of a percentage of revenues or a guaranteed minimum annual payment.

Our payment obligations with respect to guaranteed minimum annual payment amounts owed to the MTA resumed on January 1, 2021, in accordance with the terms of the MTA Agreement, and any guaranteed minimum annual payment amounts that would have been paid for the period from April 1, 2020 through December 31, 2020 (less any revenue share amounts actually paid during this period using an increased revenue share percentage of 65%) will instead be added in equal increments to the guaranteed minimum annual payment amounts owed for the period from January 1, 2022, through December 31, 2026.

The MTA Agreement also provides that if prior to April 1, 2028 the balance of unrecovered costs of deploying advertising and communications screens throughout the transit system is equal to or less than zero, then in any year following the year in which such recoupment occurs (the “Recoupment Year”), the MTA is entitled to receive an additional payment equal to 2.5% of the annual base revenue amount for such year calculated in accordance with the MTA Agreement, provided that gross revenues in such year (i) were at least equal to the gross revenues generated in the Recoupment Year, and (ii) did not decline by more than 5% from the prior year.

In July 2021, we extended the initial 10-year term of the MTA Agreement to a 13-year initial term.

We have the option to extend this initial 13-year term for an additional five-year period at the end of the 13-year initial term, subject to satisfying certain quantitative and qualitative conditions.

Year”), the MTA is entitled to receive an additional payment equal to 2.5% of the annual base revenue amount for such year calculated in accordance with the MTA Agreement, provided that gross revenues in such year (i) were at least equal to the gross revenues generated in the Recoupment Year, and (ii) did not decline by more than 5% from the prior year.

In July 2021, we extended the initial 10-year term of the MTA Agreement to a 13-year base term (the “Amended Term”).

We have the option to extend the Amended Term for an additional five-year period at the end of the Amended Term, subject to satisfying certain quantitative and qualitative conditions.

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

However, given the current heightened levels of inflation and related economic environment, we cannot reasonably estimate the aggregate financing amount, if any, at this time.

As of March 31, 2023, 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.

We expect transit franchise expenses, as a percentage of transit display revenues, to decline in 2023, but

remain above pre-COVID-19 pandemic levels.

As indicated in the table below, we incurred $18.8 million related to MTA equipment deployment costs in the three months ended March 31, 2023 (which includes equipment deployment costs related to future deployments), for a total of $554.7 million to date, of which $33.9 million had been recouped from incremental revenues to date.

As of March 31, 2023, 15,200 digital displays had been installed, composed of 5,002 digital advertising screens on subway and train platforms and entrances, 5,658 smaller-format digital advertising screens on rolling stock and 4,540 MTA communications displays.

In the three months ended March 31, 2023, 1,047 installations occurred.

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

Three months ended March 31, 2023:

As of June 30, 2023, 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.

As indicated in the table below, we incurred $20.6 million related to MTA equipment deployment costs in the six months ended June 30, 2023 (which includes equipment deployment costs related to future deployments), for a total of $556.5 million to date, of which $33.9 million had been recouped from incremental revenues to date.

As of June 30, 2023, 16,758 digital displays had been installed, composed of 5,135 digital advertising screens on subway and train platforms and entrances, 6,952 smaller-format digital advertising screens on rolling stock and 4,671 MTA communications displays.

In the three months ended June 30, 2023, 1,558 installations occurred, for a total of 2,605 installations occurring in the six months ended June 30, 2023.

We performed an analysis of carrying value of our long-lived asset groups within our U.S.

Transit and Other reporting unit as a result of the triggering event noted above utilizing undiscounted cash flows compared to the carrying value of the asset groups.

As a result, we recorded an impairment charge of $463.5 million in the second quarter of 2023, primarily representing a $443.1 million impairment charge related to our MTA asset group.

(See the “Critical Accounting Policies” section of this MD&A and Note 4.

Long-Lived Assets to the Consolidated Financial Statements.)

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

Six months ended June 30, 2023:

Prepaid MTA equipment deployment costs $ 363.2 $ 21.8 $ — $ — $ (385.0) $ —

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Total $ 348.0 $ 88.9 $ (3.7) $ (6.4) $ — $ 426.8

On May 3, 2023, we announced that our board of directors approved a quarterly cash dividend of $0.30 per share on our common stock, payable on June 30, 2023, to stockholders of record at the close of business on June 2, 2023.

On August 3, 2023, we announced that our board of directors approved a quarterly cash dividend of $0.30 per share on our common stock, payable on September 29, 2023, to stockholders of record at the close of business on September 1, 2023.

Debt, net, consists of the following:

(in millions, except percentages) March 31,

(in millions, except percentages) June 30,

2023 December 31,

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Total $ 3,407.6 $ 155.6 $ 677.5 $ 1,484.8 $ 1,089.7

The interest rate on the term loan due in 2026 (the “Term Loan”) was 6.6% per annum as of March 31, 2023.

As of March 31, 2023, a discount of $1.3 million on the Term Loan remains unamortized.

The interest rate on the term loan due in 2026 (the “Term Loan”) was 6.9% per annum as of June 30, 2023.

As of June 30, 2023, a discount of $1.2 million on the Term Loan remains unamortized.

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

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We also have a $500.0 million revolving credit facility, which matures in 2028 (the “Revolving Credit Facility,” together with the Term Loan, the “Senior Credit Facilities”).

As of March 31, 2023, there were no outstanding borrowings under the Revolving Credit Facility.

The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $0.4 million in each of the three months ended March 31, 2023 and 2022.

As of March 31, 2023, we had issued letters of credit totaling approximately $6.4 million against the letter of credit facility sublimit under the Revolving Credit Facility.

During the second quarter of 2023, the Company, along with its wholly-owned subsidiaries, Outfront Media Capital LLC (“Finance LLC”) and Outfront Media Capital Corporation (together with Finance LLC, the “Borrowers”), and the other guarantors party thereto, entered into two amendments (the “Amendments”) to the Credit Agreement (as defined below).

The Amendments provide for (i) the replacement of the London Interbank Offered Rate with the Secured Overnight Financing Rate as the interest rate benchmark , (ii) the extension of the maturity date of the Revolving Credit Facility from its previous maturity date of November 18, 2024 to June 15, 2028, and (iii) an increase in the interest rate margins applicable to the Borrowers under the Revolving Credit Facility from a range of 1.25% to 1.75% to a range of 1.75% to 2.25%, in the case of Secured Overnight Financing Rate borrowings, based on the Borrowers’ leverage ratio.

The Amendments also include springing maturity refinancing provisions with respect to the Borrowers’ outstanding term loan indebtedness and certain series of senior notes

issued by the Borrowers, in each case, which have maturity dates prior to June 15, 2028, as well as other clarifying, conforming and ministerial changes to the Credit Agreement.

As of June 30, 2023, there were no outstanding borrowings under the Revolving Credit Facility.

The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $0.4 million in each of the three months ended June 30, 2023 and 2022, $0.8 million in each of the six months ended June 30, 2023 and 2022.

As of June 30, 2023, we had issued letters of credit totaling approximately $6.5 million against the letter of credit facility sublimit under the Revolving Credit Facility.

Standalone Letter of Credit Facilities

As of March 31, 2023, we had issued letters of credit totaling approximately $77.0 million under our aggregate $81.0 million standalone letter of credit facilities.

The total fees under the letter of credit facilities were immaterial in each of the three months ended March 31, 2023 and 2022.

As of June 30, 2023, we had issued letters of credit totaling approximately $77.1 million under our aggregate $81.0 million standalone letter of credit facilities.

The total fees under the letter of credit facilities were immaterial in each of the three and six months ended June 30, 2023 and 2022.

Accounts Receivable Securitization Facility

As of March 31, 2023, we have a $150.0 million revolving accounts receivable securitization facility (the “AR Facility”), which terminates in May 2025, unless further extended.

As of June 30, 2023, we have a $150.0 million revolving accounts receivable securitization facility (the “AR Facility”), which terminates in May 2025, unless further extended.

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”).

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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.

As of March 31, 2023, there were $115.0 million outstanding borrowings under the AR Facility, at a borrowing rate of 5.7%.

As of March 31, 2023, borrowing capacity remaining under the AR Facility was $21.5 million based on approximately $293.1 million of accounts receivable that could be used as collateral for the AR Facility in accordance with the agreements governing the AR Facility.

The commitment fee based on the amount of unused commitments under the AR Facility was $0.1 million for the three months ended March 31, 2023, and immaterial for the three months ended March 31, 2022.

As of June 30, 2023, there were $135.0 million outstanding borrowings under the AR Facility, at a borrowing rate of 6.2%.

As of June 30, 2023, borrowing capacity remaining under the AR Facility was $15.0 million based on approximately $320.0 million of accounts receivable that could be used as collateral for the AR Facility in accordance with the agreements governing the AR Facility.

The commitment fee based on the amount of unused commitments under the AR Facility was immaterial for the three months ended June 30, 2023, $0.1 million for the six months ended June 30, 2023, and immaterial for each of the three and six months ended June 30, 2022.

Debt Covenants

Our credit agreement, dated as of January 31, 2014 (as amended, supplemented or otherwise modified, the “Credit Agreement”), governing the Senior Credit Facilities, the agreements governing the AR 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.

Our credit agreement, dated as of January 31, 2014 (as amended, restated, amended and restated, 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.

As of March 31, 2023, our Consolidated Total Leverage Ratio was 5.1 to 1.0 in accordance with the Credit Agreement.

As of June 30, 2023, our Consolidated Total Leverage Ratio was 5.1 to 1.0 in accordance with the Credit Agreement.

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

As of March 31, 2023, our Consolidated Net Secured Leverage Ratio was 1.1 to 1.0 in accordance with the Credit Agreement.

As of March 31, 2023, we are in compliance with our debt covenants.

As of June 30, 2023, our Consolidated Net Secured Leverage Ratio was 1.1 to 1.0 in accordance with the Credit Agreement.

As of June 30, 2023, we are in compliance with our debt covenants.

Deferred Financing Costs

As of March 31, 2023, we had deferred $23.1 million in fees and expenses associated with the Term Loan, Revolving Credit Facility, AR Facility and our senior unsecured notes.

As of June 30, 2023, we had deferred $25.7 million in fees and expenses associated with the Term Loan, Revolving Credit Facility, AR Facility and our senior unsecured notes.

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

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

No shares were sold under the ATM Program during the three months ended March 31, 2023.

As of March 31, 2023, we had approximately $232.5 million of capacity remaining under the ATM Program.

No shares were sold under the ATM Program during the six months ended June 30, 2023.

As of June 30, 2023, we had approximately $232.5 million of capacity remaining under the ATM Program.

Series A Preferred Stock Issuance

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Subject to certain conditions set forth in the Articles (including a change of control), each of the Company and the holders of the Series A Preferred Stock may convert or redeem the Series A Preferred Stock at the prices set forth in the Articles, plus any accrued and unpaid dividends.

The following table presents our cash flows in the three months ended March 31, 2023 and 2022.

Three Months Ended

The following table presents our cash flows in the six months ended June 30, 2023 and 2022.

Six Months Ended

(in millions, except percentages) 2023 2022 Change

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Net cash flow used for investing activities (71.5) (294.4) (76)

Net cash flow provided by (used for) financing activities 20.7 (62.4) *

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

Net cash flow used for financing activities (14.7) (114.2) (87)

Effect of exchange rate changes on cash, cash equivalents 0.3 (0.3) *

Net increase (decrease) in cash and cash equivalents

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* Calculation is not meaningful.

Cash provided by operating activities decreased $11.1 million, or 54%, in the three months ended March 31, 2023, compared to the same prior-year period, due primarily to a higher net loss in 2023 compared to 2022, due to increased operating and SG&A expenses, the timing of payments and an increase in prepaid MTA equipment deployment costs, partially offset by improved cash collections.

In the three months ended March 31, 2023, we paid net cash of $18.8 million related to MTA equipment deployment costs and installed 1,047 digital displays.

In the three months ended March 31, 2022, we paid net cash of $12.4 million related to MTA equipment deployment costs and installed 1,387 digital displays.

Cash used for investing activities decreased $0.1 million in the three months ended March 31, 2023, compared to the same prior-year period, due primarily to lower cash paid for acquisitions and lower cash paid for MTA franchise rights, partially offset by higher cash paid for capital expenditures.

The following table presents our capital expenditures in the three months ended March 31, 2023 and 2022.

Three Months Ended

Cash provided by operating activities decreased $13.4 million, or 13%, in the six months ended June 30, 2023, compared to the same prior-year period, due primarily to lower net income in 2023 compared to 2022, due to increased operating and SG&A expenses, and higher interest expense, as well as the timing of payments, partially offset by a decrease in prepaid MTA equipment deployment costs.

In the six months ended June 30, 2023, we paid net cash of $21.3 million related to MTA equipment deployment costs and installed 2,605 digital displays.

In the six months ended June 30, 2022, we paid net cash of $44.5 million related to MTA equipment deployment costs and installed 2,069 digital displays.

Cash used for investing activities decreased $222.9 million, or 76%, in the six months ended June 30, 2023, compared to the same prior-year period, due primarily to lower cash paid for acquisitions.

The following table presents our capital expenditures in the six months ended June 30, 2023 and 2022.

Six Months Ended

(in millions, except percentages) 2023 2022 Change

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Total capital expenditures $ 44.9 $ 41.8 7

Capital expenditures increased $5.7 million, or 34%, in the three months ended March 31, 2023, compared to the same prior-year period, primarily due to higher spending on software and technology, and vehicles, partially offset by decreased growth in digital displays and decreased maintenance spending for billboard display upgrades.

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, the renovation of certain office facilities, software and technology, maintenance, and safety-related projects.

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

Cash provided by financing activities was $20.7 million in the three months ended March 31, 2023, compared to Cash used for financing activities of $62.4 million in the same prior-year period.

In the three months ended March 31, 2023, we drew $85.0 million of borrowings on the AR Facility and paid total cash dividends of $52.0 million on our common stock, the Series A Preferred Stock and vested restricted share units granted to employees.

In the three months ended March 31, 2022, we paid total cash dividends of $51.5 million on our common stock, the Series A Preferred Stock and vested restricted share units granted to employees.

Cash paid for income taxes was $3.6 million for in the three months ended March 31, 2023 and $2.1 million in the three months ended March 31, 2022.

The increase was primarily due to improved profitability in Canada.

Capital expenditures increased $3.1 million, or 7%, in the six months ended June 30, 2023, compared to the same prior-year period, primarily due to the timing of payments related to growth in digital displays and maintenance spending for billboard display upgrades, and higher spending related to the renovation of certain office facilities.

For the full year of 2023, we expect our capital expenditures to be approximately $80.0 million to $85.0 million, which will be used primarily for growth in digital displays, the renovation of certain office facilities, software and technology, maintenance, and safety-related projects.

This estimate does not include equipment deployment costs that will be incurred in connection with the MTA Agreement (as described above).

Cash used for financing activities decreased $99.5 million, or 87%, in the six months ended June 30, 2023, compared to the same prior-year period.

In the six months ended June 30, 2023, we drew $105.0 million of borrowings on the AR Facility and paid total cash dividends of $103.7 million on our common stock, the Series A Preferred Stock and vested restricted share units granted to employees.

In the six months ended June 30, 2022, we paid total cash dividends of $102.9 million on our common stock, the Series A Preferred Stock and vested restricted share units granted to employees.

Cash paid for income taxes was $5.5 million in the six months ended June 30, 2023 and $2.9 million in the six months ended June 30, 2022.

The increase was primarily due to the timing of payments related to Canada.

Off-Balance Sheet Arrangements

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Actual results may differ from these estimates under different assumptions.

For accounting policies we consider 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, see “Item 7.

MTA Agreement

Under the current MTA Agreement, which is subject to modification as agreed-upon by us and the MTA, we are obligated to deploy, over a number of years, (i) 5,433 digital advertising screens on subway and train platforms and entrances, (ii) 15,896 smaller-format digital advertising screens on rolling stock, and (iii) 9,283 MTA communications displays.

In addition, we are entitled to generate revenue through the sale of advertising on transit advertising displays and incur transit franchise expenses, which are calculated based on contractually stipulated percentages of revenue generated under the contract, subject to a minimum guarantee.

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

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

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

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

We assess the recoverability of the MTA contract on an as-needed basis and apply significant judgment in assessing factors to determine if there is an indication that the revenues 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, product demand, industry trends, and events specific to the Company, including monitoring the Company’s actual installation of digital displays against the deployment schedule.

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

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

Management assesses the prepaid MTA equipment deployment costs for recoverability on a quarterly basis.

This assessment requires evaluating qualitative and quantitative factors to determine if there is an indication that the carrying amount may not be recoverable.

Management applies significant judgment in assessing these factors, including evaluating macroeconomic conditions, product demand, industry trends, and events specific to the Company, including monitoring the Company’s actual installation of digital displays against the initial deployment schedule.

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

In 2022, we updated our projections and did not identify a triggering event for an impairment review of our Prepaid MTA equipment deployment costs .

The projections utilized for 2022 assumed the continued recovery of transit ridership and revenues towards pre-COVID-19 levels and expected growth in revenue generation from our significant digital deployment throughout the MTA transit system as required by the MTA Agreement.

By the end of the first half of 2023, it was determined that our MTA transit revenue recovery had stalled since our MTA transit revenue did not meet our revenue expectations, and as of June 30, 2023, our revenue pacing and outlook for the remainder of 2023 reflects a continued decline in MTA transit revenues as compared to our 2023 forecast due to the underperformance across the MTA transit system.

Accordingly, we updated our revenue projections to reflect no growth in 2023 followed by 5% to 10% growth throughout the remainder of the Amended Term of the MTA Agreement.

As a result of the reduced revenue forecast and reduced time remaining on the Amended Term of the MTA Agreement, we currently do not expect to recoup any Prepaid MTA equipment deployment costs throughout the remainder of the Amended Term of the MTA Agreement.

As a result, we reclassified $385.0 million of Prepaid MTA equipment deployment costs to Intangible Assets.

We then reviewed our MTA long-lived asset group to determine if there was a triggering event for impairment, noting that we currently project negative aggregate cash flows of approximately $50.0 million through the remainder of the Amended Term of the MTA Agreement.

Consequently, we have recorded an impairment charge of $443.1 million, representing all of our MTA long-lived asset group.

All future deployment costs spending will be recorded as Intangible assets until such time as we project to recoup spending from transit franchise fees that would otherwise be payable to the MTA, which we currently do not expect throughout the remainder of the Amended Term of the MTA Agreement.

Even if we do not recoup our spending from transit franchise fees that would otherwise be payable to the MTA, our current projections are that the MTA Agreement will be cash flow neutral (i.e., Adjusted OIBDA related to the MTA Agreement will equal MTA equipment deployment costs) over the remaining Amended Term of the MTA Agreement beginning during 2024.

We will assess these equipment deployment costs for impairment each period.

Currently, future impairment charges (i) are expected to be required during the remainder of 2023 with respect to all or a portion of the up to approximately $30.0 million to $40.0 million of MTA equipment deployment costs we expect to spend in the remainder of 2023, (ii) may be required during 2024 with respect to all or a portion of the up to approximately $50.0 million to $60.0 million of MTA equipment deployment costs we expect to spend in 2024, and (iii) may be required beyond 2024 with respect to all or a portion of the additional MTA equipment deployment costs we will be required to incur under the MTA Agreement, in each case, to the extent we continue to project cash flow losses throughout the remainder of the Amended Term of the MTA Agreement based on the assumptions and estimates described in this section and/or other factors that may arise.

We performed a sensitivity analysis on our MTA transit revenue assumptions, noting that a change in our annual revenue growth rate of 1% between 2024 and 2030, holding all other assumptions constant except for variable sales compensation, would result in an approximately $70.0 million aggregate change in estimated cash flows.

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

Actual results may differ from our assumptions.

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 our cash flows, which could result in additional impairment charges in the future.

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

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.

If after the qualitative assessment, we determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative assessment.

We may also choose to only perform a quantitative assessment.

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

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

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

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

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

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

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

The estimated fair value of the U.S.

Transit and Other reporting unit exceeded its carrying value by 28% as of December 31, 2022, based on our goodwill impairment assessment in the prior year.

The projections utilized for 2022 assumed the continued recovery of transit ridership and revenues towards pre-COVID-19 levels and expected revenue generation from our significant digital deployment in the MTA and other transit systems.

By the end of the first half of 2023, it was determined that our transit revenue recovery had stalled since our U.S.

Transit and Other reporting unit did not meet revenue expectations, and as of June 30, 2023, our pacing and outlook for the remainder of 2023 reflects a continued decline in transit revenues as compared to our 2023 forecast due to the underperformance across our transit business, including the MTA transit system.

As a result, we determined that there was a triggering event requiring an interim goodwill impairment analysis of our U.S.

Transit and Other reporting unit.

Our current discounted cash flow model assumptions and estimates with respect to revenues in our U.S.

Transit and Other reporting unit is currently projected to slightly decline in 2023 before growing in the mid-single digits in 2024, high single digits in 2025-2026 and then trending back to a mid-single digit growth rate thereafter.

We believe this growth will be driven by expected revenue generation from increased demand for transit digital displays due to additional rolling stock digital deployment in the MTA transit system and additional digital deployment in other transit systems, product enhancements to our transit digital display and related assets, and a gradual increase in transit ridership over the remaining terms of our transit franchise agreements.

Additionally, we are currently no longer assuming that we will exercise the five-year extension to the

Amended Term of the MTA Agreement due to our lowered revenue growth assumptions and currently contractually required increase to the minimum annual guarantee payments to the MTA during the extension period.

Other than with respect to the MTA Agreement, we are assuming that we will be able to renew our significant transit franchise agreements.

As a result of the impairment analysis performed during the second quarter of 2023, we determined that the carrying value of our U.S.

As of June 30, 2023, the goodwill balances associated with the U.S.

Billboard reporting unit was $2,006.4 million and the Canada reporting unit was $22.9 million.

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

Actual results may differ from our assumptions.

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.

For further information regarding accounting policies we consider 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, see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis