UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from	to

Commission File Number: 001-36367

OUTFRONT Media Inc.

(Exact name of registrant as specified in its charter)

Maryland	46-4494703
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
405 Lexington Avenue, 17th Floor New York, NY	10174
(Address of principal executive offices)	(Zip Code)

(212) 297-6400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     x Yes        o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).        x Yes     o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    o Yes    x No

As of May 2, 2018, the number of shares outstanding of the registrant’s common stock was 139,184,010.

OUTFRONT MEDIA INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2018

TABLE OF CONTENTS

PART I	3
Item 1. Financial Statements (Unaudited)	3
Consolidated Statements of Financial Position as of March 31, 2018, and December 31, 2017	3
Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017	4
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and 2017	5
Consolidated Statements of Equity for the three months ended March 31, 2018 and 2017	6
Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017	7
Notes to Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	48
Item 4. Controls and Procedures	49
PART II	51
Item 1. Legal Proceedings	51
Item 1A. Risk Factors	51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3. Defaults Upon Senior Securities	51
Item 4. Mine Safety Disclosures	51
Item 5. Other Information	51
Item 6. Exhibits	51
SIGNATURES	53

PART 1

Item 1.    Financial Statements.

OUTFRONT Media Inc.

Consolidated Statements of Financial Position

(Unaudited)

	As of
(in millions)	March 31, 2018			December 31, 2017
Assets:
Current assets:
Cash and cash equivalents	$	52.5		$	48.3
Receivables, less allowance ($10.3 in 2018 and $11.5 in 2017)	188.8			231.1
Prepaid lease and transit franchise costs	73.9			68.6
Prepaid MTA equipment deployment costs (Note 16)	11.9			4.7
Other prepaid expenses	16.5			13.5
Other current assets	10.8			9.8
Total current assets	354.4			376.0
Property and equipment, net (Note 3)	660.6			662.1
Goodwill (Note 4)	2,126.3			2,128.0
Intangible assets (Note 4)	568.5			580.9
Other assets	60.9			61.2
Total assets	$	3,770.7		$	3,808.2
Liabilities:
Current liabilities:
Accounts payable	$	51.2		$	56.1
Accrued compensation	17.0			34.6
Accrued interest	24.0			16.1
Accrued lease costs	26.5			30.5
Other accrued expenses	40.4			42.3
Deferred revenues	34.9			21.3
Short-term debt (Note 7)	92.0			80.0
Other current liabilities	18.7			18.7
Total current liabilities	304.7			299.6
Long-term debt, net (Note 7)	2,156.4			2,145.3
Deferred income tax liabilities, net	16.9			19.6
Asset retirement obligation (Note 5)	34.7			34.7
Other liabilities	80.6			82.4
Total liabilities	2,593.3			2,581.6
Commitments and contingencies (Note 16)
Stockholders’ equity (Note 8):
Common stock (2018 - 450.0 shares authorized, and 139.2 shares issued
and outstanding; 2017 - 450.0 shares authorized, and 138.6 issued and outstanding)	1.4			1.4
Additional paid-in capital	1,960.6			1,963.0
Distribution in excess of earnings	(817.4		)	(775.6		)
Accumulated other comprehensive loss	(12.8		)	(7.7		)
Total stockholders’ equity	1,131.8			1,181.1
Non-controlling interests	45.6			45.5
Total equity	1,177.4			1,226.6
Total liabilities and equity	$	3,770.7		$	3,808.2

See accompanying notes to unaudited consolidated financial statements.

3

OUTFRONT Media Inc.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended
	March 31,
(in millions, except per share amounts)	2018			2017
Revenues:
Billboard	$	239.3		$	236.0
Transit and other	98.6			94.6
Total revenues	337.9			330.6
Expenses:
Operating	197.1			191.9
Selling, general and administrative	64.6			63.9
Restructuring charges	1.1			1.8
Net (gain) loss on dispositions	(0.2		)	0.4
Depreciation	21.1			22.9
Amortization	22.5			23.7
Total expenses	306.2			304.6
Operating income	31.7			26.0
Interest expense, net	(30.0		)	(28.1		)
Other expense, net	(0.1		)	—
Income (loss) before benefit for income taxes and equity in earnings of investee companies	1.6			(2.1		)
Benefit for income taxes	6.7			3.7
Equity in earnings of investee companies, net of tax	0.8			0.9
Net income	$	9.1		$	2.5
Net income per common share:
Basic	$	0.06		$	0.02
Diluted	$	0.06		$	0.02
Weighted average shares outstanding:
Basic	138.8			138.3
Diluted	139.1			138.9
Dividends declared per common share	$	0.36		$	0.36

See accompanying notes to unaudited consolidated financial statements.

4

OUTFRONT Media Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended
	March 31,
(in millions)	2018			2017
Net income	$	9.1		$	2.5
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments	(5.4		)	1.1
Net actuarial gain	0.3			—
Total other comprehensive income (loss), net of tax	(5.1		)	1.1
Total comprehensive income	$	4.0		$	3.6

See accompanying notes to unaudited consolidated financial statements.

5

OUTFRONT Media Inc.

Consolidated Statements of Equity

(Unaudited)

(in millions, except per share amounts)	Shares of Common Stock		Common Stock ($0.01 per share par value)		Additional Paid-In Capital			Distribution in Excess of Earnings			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity			Non-Controlling Interests		Total Equity
Balance as of December 31, 2016	138.0		$	1.4	$	1,949.5		$	(699.5	)	$	(18.5	)	$	1,232.9		$	0.1	$	1,233.0
Net income	—		—		—			2.5			—			2.5			—		2.5
Other comprehensive income	—		—		—			—			1.1			1.1			—		1.1
Stock-based payments:
Cumulative prior period adjustment to amortization of estimated forfeitures	—		—		0.5			(0.5		)	—			—			—		—
Vested	0.7		—		—			—			—			—			—		—
Exercise of stock options	0.2		—		1.2			—			—			1.2			—		1.2
Amortization	—		—		5.4			—			—			5.4			—		5.4
Shares paid for tax withholding for stock-based payments	(0.3	)	—		(8.0		)	—			—			(8.0		)	—		(8.0		)
Dividends ($0.36 per share)	—		—		—			(49.9		)	—			(49.9		)	—		(49.9		)
Balance as of March 31, 2017	138.6		$	1.4	$	1,948.6		$	(747.4	)	$	(17.4	)	$	1,185.2		$	0.1	$	1,185.3
Balance as of December 31, 2017	138.6		$	1.4	$	1,963.0		$	(775.6	)	$	(7.7	)	$	1,181.1		$	45.5	$	1,226.6
Net income	—		—		—			9.1			—			9.1			—		9.1
Other comprehensive loss	—		—		—			—			(5.1		)	(5.1		)	—		(5.1		)
Stock-based payments:
Vested	0.9		—		—			—			—			—			—		—
Amortization	—		—		5.0			—			—			5.0			—		5.0
Shares paid for tax withholding for stock-based payments	(0.3	)	—		(7.4		)	—			—			(7.4		)	—		(7.4		)
Dividends ($0.36 per share)	—		—		—			(50.9		)	—			(50.9		)	—		(50.9		)
Other	—		—		—			—			—			—			0.1		0.1
Balance as of March 31, 2018	139.2		$	1.4	$	1,960.6		$	(817.4	)	$	(12.8	)	$	1,131.8		$	45.6	$	1,177.4

See accompanying notes to unaudited consolidated financial statements.

6

OUTFRONT Media Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended
	March 31,
(in millions)	2018			2017
Operating activities:
Net income	$	9.1		$	2.5
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization	43.6			46.6
Deferred tax benefit	(2.3		)	(1.8		)
Stock-based compensation	5.0			5.4
Provision for doubtful accounts	(0.8		)	0.1
Accretion expense	0.6			0.6
Net (gain) loss on dispositions	(0.2		)	0.4
Equity in earnings of investee companies, net of tax	(0.8		)	(0.9		)
Distributions from investee companies	0.2			1.6
Amortization of deferred financing costs and debt discount and premium	1.4			1.9
Cash paid for direct lease acquisition costs	(12.5		)	(11.7		)
Change in assets and liabilities, net of investing and financing activities:
Decrease in receivables	42.8			40.2
Increase in prepaid MTA equipment deployment costs	(7.2		)	—
Increase in prepaid expenses and other current assets	(7.4		)	(9.5		)
Decrease in accounts payable and accrued expenses	(18.9		)	(54.3		)
Increase in deferred revenues	13.6			12.9
Decrease in income taxes	(4.5		)	(2.5		)
Other, net	0.4			0.7
Net cash flow provided by operating activities	62.1			32.2
Investing activities:
Capital expenditures	(16.8		)	(16.6		)
Acquisitions	(4.1		)	(0.9		)
MTA franchise rights	(1.4		)	—
Net proceeds from dispositions	0.2			0.1
Net cash flow used for investing activities	(22.1		)	(17.4		)
Financing activities:
Proceeds from long-term debt borrowings	10.0			8.3
Proceeds from borrowings under short-term debt facilities	57.0			—
Repayments of borrowings under short-term debt facilities	(45.0		)	—
Payments of deferred financing costs	—			(7.0		)
Proceeds from stock option exercises	—			1.2
Taxes withheld for stock-based compensation	(6.5		)	(6.0		)
Dividends	(51.1		)	(50.2		)
Other	—			(0.2		)
Net cash flow used for financing activities	(35.6		)	(53.9		)
Effect of exchange rate changes on cash and cash equivalents	(0.2		)	0.2
Net increase (decrease) in cash and cash equivalents	4.2			(38.9		)
Cash and cash equivalents at beginning of period	48.3			65.2
Cash and cash equivalents at end of period	$	52.5		$	26.3

7

OUTFRONT Media Inc.

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

	Three Months Ended
	March 31,
(in millions)	2018		2017
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	0.2	$	0.6
Cash paid for interest	20.8		18.3
Non-cash investing and financing activities:
Accrued purchases of property and equipment	$	11.0	$	10.5
Taxes withheld for stock-based compensation	1.0		—

See accompanying notes to unaudited consolidated financial statements.

8

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business and Basis of Presentation

Description of Business

OUTFRONT Media Inc. (the “Company”) and its subsidiaries (collectively, “we,” “us” or “our”) is a real estate investment trust (“REIT”), which provides advertising space (“displays”) on out-of-home advertising structures and sites in the United States (the “U.S.”) and Canada. Our inventory consists of billboard displays, which are primarily located on the most heavily traveled highways and roadways in top Nielsen Designated Market Areas (“DMAs”), and transit advertising displays operated under exclusive multi-year contracts with municipalities in large cities across the U.S. and Canada. We also have marketing and multimedia rights agreements with colleges, universities and other educational institutions, which entitle us to operate on-campus advertising displays, as well as manage marketing opportunities, media rights and experiential entertainment at sports events. In total, we have displays in all of the 25 largest markets in the U.S. and approximately 140 markets across the U.S. and Canada. We manage our operations through three operating segments—(1) U.S. Billboard and Transit, which is included in our U.S. Media reportable segment, (2) International and (3) Sports Marketing.

Basis of Presentation and Use of Estimates

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the “SEC”). In the opinion of our management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. Certain reclassifications of prior year’s data have been made to conform to the current period’s presentation. These financial statements should be read in conjunction with the more detailed financial statements and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018.

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Note 2. New Accounting Standards

Adoption of New Accounting Standards

Revenue from Contracts with Customers

In the first quarter of 2018, we adopted the Financial Accounting Standards Board’s (the “FASB’s”) principles-based guidance addressing revenue recognition issues, applying the modified retrospective method of adoption. The guidance is being applied to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. The guidance requires that the amount of revenue a company should recognize reflect the consideration it expects to be entitled to in exchange for goods and services. The revenue recognition guidance is primarily applicable to our multi-year transit advertising contracts with municipalities in the U.S. and Canada, and marketing and multimedia rights agreements with colleges, universities and other educational institutions. Our billboard lease revenues are recognized under the lease accounting standard. The adoption of this guidance did not impact revenues from our multi-year transit advertising contracts, but resulted in the recognition of additional revenues of $1.8 million, additional operating expenses of $1.2 million and additional selling, general and administrative expenses of $0.6 million in our Sports Marketing operating segment in the three months ended March 31, 2018, related to revenues that would have been recognized on a net basis under the old standard. Adoption of this guidance did not have a material effect on our consolidated financial statements. (See Note 9. Revenues to the Consolidated Financial Statements.)

9

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Recent Pronouncements

Goodwill

In January 2017, the FASB issued guidance simplifying the test for goodwill impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The guidance is to be applied on a prospective basis and is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for interim and annual impairment tests performed on testing dates after January 1, 2017. We do not expect this guidance to have a material effect on our consolidated financial statements.

Leases

In February 2016, the FASB issued guidance addressing the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. Lessors will account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. This guidance is to be applied on a modified retrospective basis and is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted for financial statements that have not been previously issued.

As of March 31, 2018, we had approximately 21,300 lease agreements in the U.S. and approximately 3,200 lease agreements in Canada, the majority of which will be classified as operating leases under the new guidance. We are currently evaluating our lease contracts and planning for the implementation of this standard. This standard will require us to recognize a right-of-use asset and lease liability for the present value of minimum lease payments for operating leases with a term greater than 12 months and will have a significant impact on our consolidated financial statements. Our billboard lease revenues will continue to be recognized on a straight-line basis over their respective lease terms.

Note 3. Property and Equipment

The table below presents the balances of major classes of assets and accumulated depreciation.

		As of
(in millions)	Estimated Useful Lives	March 31, 2018		December 31, 2017
Land		$	96.9	$	94.4
Buildings	20 to 40 years	51.3		51.3
Advertising structures	5 to 20 years	1,759.7		1,750.8
Furniture, equipment and other	3 to 10 years	121.0		120.7
Construction in progress		26.4		27.4
		2,055.3		2,044.6
Less: accumulated depreciation		1,394.7		1,382.5
Property and equipment, net		$	660.6	$	662.1

Depreciation expense was $21.1 million in the three months ended March 31, 2018, and $22.9 million in the three months ended March 31, 2017.

10

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 4. Goodwill and Other Intangible Assets

For the three months ended March 31, 2018 and the year ended December 31, 2017, the changes in the book value of goodwill by segment were as follows:

(in millions)	U.S. Media		Other			Total
As of December 31, 2016	$	2,054.0	$	35.4		$	2,089.4
Currency translation adjustments	—		4.3			4.3
Additions(a)	—		34.3			34.3
As of December 31, 2017	2,054.0		74.0			2,128.0
Currency translation adjustments	—		(1.7		)	(1.7		)
As of March 31, 2018	$	2,054.0	$	72.3		$	2,126.3

(a) Non-tax deductible addition associated with the Transaction (as defined below, see Note 8. Equity and Note 11. Acquisitions to the Consolidated Financial Statements).

Our identifiable intangible assets primarily consist of acquired permits and leasehold agreements and franchise agreements which grant us the right to operate out-of-home structures in specified locations and the right to provide advertising space on railroad and municipal transit properties. Identifiable intangible assets are amortized on a straight-line basis over their estimated useful life, which is the respective life of the agreement that in some cases includes historical experience of renewals.

Our identifiable intangible assets consist of the following:

(in millions)	Gross		Accumulated Amortization			Net
As of March 31, 2018:
Permits and leasehold agreements	$	1,110.4	$	(670.7	)	$	439.7
Franchise agreements(a)	457.6		(348.8		)	108.8
Other intangible assets	47.1		(27.1		)	20.0
Total intangible assets	$	1,615.1	$	(1,046.6	)	$	568.5
As of December 31, 2017:
Permits and leasehold agreements	$	1,111.3	$	(661.6	)	$	449.7
Franchise agreements(a)	455.4		(346.2		)	109.2
Other intangible assets	47.1		(25.1		)	22.0
Total intangible assets	$	1,613.8	$	(1,032.9	)	$	580.9

(a) As of March 31, 2018, includes $2.3 million and as of December 31, 2017, includes $0.9 million related to MTA equipment deployment costs. (See Note 16. Commitments and Contingencies to the Consolidated Financial Statements.)

All of our intangible assets, except goodwill, are subject to amortization. Amortization expense was $22.5 million in the three months ended March 31, 2018, and $23.7 million in the three months ended March 31, 2017, which includes the amortization of direct lease acquisition costs of $8.7 million in each of the three months ended March 31, 2018 and 2017. Direct lease acquisition costs are amortized on a straight-line basis over the related customer lease term, which generally ranges from four weeks to one year.

11

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 5. Asset Retirement Obligation

The following table sets forth the change in the asset retirement obligations associated with our advertising structures located on leased properties. The obligation is calculated based on the assumption that all of our advertising structures will be removed within the next 50 years. The estimated annual costs to dismantle and remove the structures upon the termination or non-renewal of our leases are consistent with our historical experience.

(in millions)
As of December 31, 2017	$	34.7
Accretion expense	0.6
Liabilities settled	(0.5		)
Foreign currency translation adjustments	(0.1		)
As of March 31, 2018	$	34.7

Note 6. Related Party Transactions

We have a 50% ownership interest in two joint ventures that operate transit shelters in the greater Los Angeles area and Vancouver, and four joint ventures which currently operate a total of 15 billboard displays in New York and Boston. All of these joint ventures are accounted for as equity investments. These investments totaled $20.1 million as of March 31, 2018, and $19.5 million as of December 31, 2017, and are included in Other assets on the Consolidated Statements of Financial Position. We provided sales and management services to these joint ventures and recorded management fees in Revenues on the Consolidated Statement of Operations of $1.6 million in the three months ended March 31, 2018, and $1.5 million in the three months ended March 31, 2017.

Note 7. Debt

Debt, net, consists of the following:

	As of
(in millions, except percentages)	March 31, 2018			December 31, 2017
Short-term debt:
AR Facility	$	92.0		$	80.0
Total short-term debt	92.0			80.0
Long-term debt:
Revolving credit facility	10.0			—
Term loan, due 2024	667.9			667.8
Senior unsecured notes:
5.250% senior unsecured notes, due 2022	549.6			549.6
5.625% senior unsecured notes, due 2024	502.5			502.6
5.875% senior unsecured notes, due 2025	450.0			450.0
Total senior unsecured notes	1,502.1			1,502.2
Debt issuance costs	(23.6		)	(24.7		)
Total long-term debt, net	2,156.4			2,145.3
Total debt, net	$	2,248.4		$	2,225.3
Weighted average cost of debt	4.9		%	4.8		%

12

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Term Loan

The interest rate on the term loan due in 2024 (the “Term Loan”) was 3.9% per annum as of March 31, 2018. As of March 31, 2018, a discount of $2.1 million on the Term Loan remains unamortized. The discount is being amortized through Interest expense, net, on the Consolidated Statement of Operations.

Revolving Credit Facility

We also have a $430.0 million revolving credit facility, which matures in 2022 (the “Revolving Credit Facility,” together with the Term Loan, the “Senior Credit Facilities”).

As of March 31, 2018, there were $10.0 million of outstanding borrowings under the Revolving Credit Facility. As of May 2, 2018, there were $24.0 million of outstanding borrowings under the Revolving Credit Facility.

The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $0.3 million in the three months ended March 31, 2018, and $0.2 million in the three months ended March 31, 2017. As of March 31, 2018, we had issued letters of credit totaling approximately $88.5 million against the letter of credit facility sublimit under the Revolving Credit Facility.

Standalone Letter of Credit Facilities

As of March 31, 2018, we had issued letters of credit totaling approximately $119.6 million under our aggregate $150.0 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, 2018 and 2017.

Accounts Receivable Securitization Facility

As of March 31, 2018, there were $92.0 million of outstanding borrowings under our three-year $100.0 million revolving accounts receivable securitization facility (the “AR Facility”) at a borrowing rate of approximately 2.7%. As of March 31, 2018, we had no borrowing capacity remaining under the AR Facility, based on approximately $173.9 million of eligible accounts receivables used as collateral for the AR Facility, in accordance with the agreement 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 March 31, 2018. As of May 2, 2018, there were $86.5 million of outstanding borrowings under the AR Facility at a borrowing rate of approximately 2.9%.

In connection with the AR Facility, Outfront Media LLC, a wholly-owned subsidiary of the Company, will sell and/or contribute its existing and future accounts receivable and certain related assets to Outfront Media Receivables LLC, a special purpose vehicle and wholly-owned subsidiary of the Company (the “SPV”). The SPV is a separate legal entity with its own separate creditors who will be entitled to access the SPV’s assets before the assets become available to the Company. Accordingly, the SPV’s assets are not available to pay creditors of the Company or any of its subsidiaries, although collections from the receivables in excess of amounts required to repay the Purchasers and other creditors of the SPV may be remitted to the Company.

Senior Unsecured Notes

As of March 31, 2018, a discount of $0.4 million on $150.0 million aggregate principal amount of the 5.250% Senior Unsecured Notes due 2022, remains unamortized. The discount is being amortized through Interest expense, net, on the Consolidated Statement of Operations.

As of March 31, 2018, a premium of $2.5 million on $100.0 million aggregate principal amount of the 5.625% Senior Unsecured Notes due 2024, remains unamortized. The premium is being amortized through Interest expense, net, on the Consolidated Statement of Operations.

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

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 limit the Company’s and our subsidiaries’ abilities to (i) pay dividends on, repurchase or make distributions in respect to the Company’s or its wholly-owned subsidiary, Outfront Media Capital LLC’s (“Finance LLC’s”) capital stock or make other restricted payments other than dividends or distributions necessary for us to maintain our REIT status, subject to certain conditions, and (ii) enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany third party transfers.

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 4.0 to 1.0. As of March 31, 2018, our Consolidated Net Secured Leverage Ratio was 1.4 to 1.0, as adjusted to give pro forma effect to an acquisition, in accordance with the Credit Agreement. The Credit Agreement also requires that, in connection with the incurrence of certain indebtedness, we satisfy a Consolidated Total Leverage Ratio, which is the ratio of our consolidated total debt to our Consolidated EBITDA for the trailing four consecutive quarters, of no greater than 6.0 to 1.0. As of March 31, 2018, our Consolidated Total Leverage Ratio was 4.8 to 1.0, as adjusted to give pro forma effect to an acquisition, in accordance with the Credit Agreement. As of March 31, 2018, we are in compliance with our debt covenants.

Deferred Financing Costs

As of March 31, 2018, we had deferred $28.1 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 the Consolidated Statement of Operations over the respective terms of the Term Loan, Revolving Credit Facility, AR Facility and our senior unsecured notes.

Fair Value

Under the fair value hierarchy, observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities are defined as Level 1; observable inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability are defined as Level 2; and unobservable inputs for the asset or liability are defined as Level 3. The aggregate fair value of our debt, which is estimated based on quoted market prices of similar liabilities, was approximately $2.3 billion as of both March 31, 2018, and December 31, 2017. The fair value of our debt as of both March 31, 2018, and December 31, 2017, is classified as Level 2.

Note 8. Equity

On June 13, 2017, certain subsidiaries of OUTFRONT Media Inc. acquired the equity interests of certain subsidiaries of All Vision LLC (“All Vision”), which hold substantially all of All Vision’s existing outdoor advertising assets in Canada, and effectuated an amalgamation of All Vision’s Canadian business with our Canadian business (the “Transaction”) (see Note 11. Acquisitions). In connection with the Transaction, the Company issued 1,953,407 shares of Class A equity interests of a subsidiary of the Company that controls its Canadian business (“Outfront Canada”).

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

The Class A equity interests are entitled to receive priority cash distributions from Outfront Canada at the same time and in the same per share amount as the dividends paid on shares of the Company’s common stock. The Class A equity interests may be redeemed by the holders in exchange for shares of the Company’s common stock on a one-for-one basis (subject to anti-dilution adjustments) or, at the Company’s option, cash equal to the then fair market value of the shares of the Company’s common stock commencing (i) one year after closing, with respect to 55% of the Class A equity interests, and (ii) 18 months after closing, with respect to the remaining 45% of the Class A equity interests. In connection with the Transaction, the Company has agreed to limitations on its ability to sell or otherwise dispose of the assets acquired from All Vision for a period of five years, unless it pays holders of the Class A equity interests in Outfront Canada an amount intended to approximate their resulting tax liability. During the three months ended March 31, 2018, we made distributions of $0.7 million to holders of the Class A equity interests, which are recorded in Dividends on our Consolidated Statements of Equity and Consolidated Statements of Cash Flows.

As of March 31, 2018, 450,000,000 shares of our common stock, par value $0.01 per share, were authorized; 139,183,587 shares were issued and outstanding; and 50,000,000 shares of our preferred stock, par value $0.01 per share, were authorized with no shares issued and outstanding.

On November 21, 2017, we entered into a sales agreement in connection with an “at-the-market” equity offering program (the “ATM Program”), under which we may, from time to time, issue and sell shares of our common stock up to an aggregate offering price of $300.0 million. 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. As of May 2, 2018, no shares of our common stock have been sold under the ATM Program, and accordingly, as of May 2, 2018, $300.0 million remained available to be sold under the sales agreement.

On April 25, 2018, we announced that our board of directors approved a quarterly cash dividend of $0.36 per share on our common stock, payable on June 29, 2018, to stockholders of record at the close of business on June 8, 2018.

Note 9. Revenues

Effective January 1, 2018, we adopted the FASB’s principles-based guidance addressing revenue recognition issues, applying the modified retrospective method of adoption. Accordingly, historical financial information has not been affected (see Note 2. New Accounting Standards to the Consolidated Financial Statements).

We derive Revenues from the following sources: (i) billboard displays, (ii) transit displays, and (iii) other.

Billboard display revenues are derived from providing advertising space to customers on our physical billboards or other outdoor structures. We generally (i) own the physical structures on which we display advertising copy for our customers, (ii) hold the legal permits to display advertising thereon, and (iii) lease the underlying sites. Billboard display revenues are recognized under the lease accounting standard as rental income on a straight-line basis over the customer lease term.

Transit display revenues are derived from agreements with municipalities and transit operators, which entitle us to operate advertising displays within their transit systems, including on the interior and exterior of rail and subway cars and buses, as well as on benches, transit shelters, street kiosks and transit platforms. Transit display contracts typically require the installation and delivery of multiple advertising displays, for which locations are not specifically identified. Installation services are highly interdependent with the provision of advertising space, and therefore the installation and display of advertising is recognized as a single performance obligation. Transit display revenues are recognized based on the level of units displayed in proportion to the total units to be displayed over the contract period.

Other revenues are derived primarily from (i) the production of advertisements to be displayed on our billboards or other outdoor sites, or on displays that we operate within transit systems, and (ii) revenues from marketing and multimedia rights agreements with colleges, universities and other educational institutions, which entitle us to operate on-campus advertising displays, as well as manage marketing opportunities, media rights and experiential entertainment at sports events. Production services are not interrelated with the provision of advertising space and are considered a distinct performance obligation. Production revenue is recognized over the production period, which is typically very short in duration. Revenues from our Sports Marketing operating segment are principally derived from advertising and marketing arrangements and are recognized over the contract period.

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Our billboard display and transit display contracts with customers range from four weeks to one year and billing commences at the beginning of the contract term, with payment generally due within 30 days of billing. For the majority of our contracts, transaction prices are explicitly stated. Any contracts with transaction prices that contain multiple performance obligations, are allocated primarily based on the residual approach, as we sell our services at a broad range of amounts depending on seasonality, the packaging of various advertising displays within a contract, and other economic factors.

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected term of one year or less, which primarily represent the transaction price allocated to the remaining display period for unsatisfied transit franchise contracts. Unsatisfied performance obligations with an original expected term of over one year relate to multi-year marketing and multimedia rights agreements with customers of our Sports Marketing operating segment, the value of which is $55.9 million as of March 31, 2018, are expected to be satisfied over the next 5 years.

For all revenue sources, we evaluate whether we should be considered the principal (i.e., report revenues on a gross basis) or an agent (i.e., report revenues on a net basis). Except for an insignificant number of smaller sports marketing contracts, we are considered the principal in our arrangements and report revenues on a gross basis, wherein the amounts billed to customers are recorded as revenues, and amounts paid to municipalities, transit operators, educational institutions and suppliers are recorded as expenses. We are considered the principal because we control the advertising space and multi-media rights before and after the contract term, are primarily responsible to our customers, have discretion in pricing and typically, have inventory risk.

For space provided to advertisers through the use of an advertising agency whose commission is calculated based on a stated percentage of gross advertising spending, our Revenues are reported net of agency commissions.

The following table summarizes revenues by source:

	Three Months Ended
	March 31,
(in millions)	2018		2017
Billboard:
Static displays	$	189.5	$	189.1
Digital displays	41.9		33.3
Other	7.9		13.6
Billboard revenues	239.3		236.0
Transit:
Static displays	67.8		69.2
Digital displays	10.7		8.4
Other	7.3		6.6
Total transit revenues	85.8		84.2
Sports marketing and other	12.8		10.4
Transit and other revenues	98.6		94.6
Total revenues	$	337.9	$	330.6

Rental income was $231.4 million in the three months ended March 31, 2018, and $222.4 million in the three months ended March 31, 2017, and is recorded in Billboard revenues on the Consolidated Statement of Operations.

16

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

The following table summarizes revenues by geography.

	Three Months Ended
	March 31,
(in millions)	2018		2017
United States:
Billboard	$	226.3	$	225.1
Transit and other	83.6		82.0
Sports marketing and other	12.8		10.4
Total United States revenues	322.7		317.5
Canada	15.2		13.1
Total revenues	$	337.9	$	330.6

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

Contract Costs and Balances

Variable sales commission costs directly associated with billboard display revenues are considered direct lease acquisition costs in accordance with the lease accounting standard and are capitalized and amortized on a straight-line basis over the related customer lease term (see Note 4. Goodwill and Other Intangible Assets to the Consolidated Financial Statements). Amortization of direct lease acquisition costs is presented within Amortization expense in the accompanying Consolidated Statements of Operations.

Variable sales commission costs which are directly associated with transit display and other revenues are included in Selling, general, and administrative expenses on the Consolidated Statement of Operations, and are expensed as incurred since the amortization period of the asset would have been less than one year.

Amounts to be collected from customers for revenues recognized in previous periods are included in Receivables, less allowance, on the Consolidated Statement of Financial Position. Amounts collected from customers for revenues to be recognized in future periods are included in Deferred revenues on the Consolidated Statement of Financial Position. We recognized substantially all of the Deferred revenues on the Consolidated Statement of Financial Position as of December 31, 2017, during the three months ended March 31, 2018.

Note 10. Restructuring Charges

For the three months ended March 31, 2018, we recorded restructuring charges of $1.1 million, of which $0.6 million was recorded in Other for severance charges associated with the reorganization of our Sports Marketing operating segment management team and $0.5 million was recorded in our U.S. Media segment for severance charges associated with the reorganization of various departments. For the three months ended March 31, 2017, we recorded restructuring charges of $1.8 million in our U.S. Media segment for severance charges associated with the reorganization of our sales management functions. As of March 31, 2018, $4.3 million in restructuring reserves remain outstanding and is included in Other current liabilities on the Consolidated Statement of Financial Position.

Note 11. Acquisitions

In connection with the Transaction, the Company paid approximately $94.4 million for the assets, comprised of $50.0 million in cash and $44.4 million, or 1,953,407 shares, of Class A equity interests of Outfront Canada, subject to post-closing adjustments (upward or downward) for closing date working capital and indebtedness, and for the achievement of certain operating income before depreciation and amortization targets relating to the acquired assets in 2017 and 2018. The issued Class A equity interests of Outfront Canada are redeemable non-controlling interests and are included in Non-controlling interests on our Consolidated Statement of Financial Position based on actual foreign currency exchange rates on the closing date of the Transaction compared to the negotiated foreign currency exchange rate used in the valuation described above.

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

The preliminary allocation of the purchase price of approximately $94.4 million is based on management’s estimate of the fair value of the assets acquired and liabilities assumed on the closing date of the Transaction, which was $68.0 million of identified intangible assets, $34.3 million of goodwill, $17.0 million of deferred tax liabilities and $9.1 million of other assets and liabilities (primarily property and equipment). These preliminary estimates may be revised in future periods as we obtain additional information regarding fixed assets, intangible assets and certain liabilities. Any changes to the initial estimates of the fair value of the assets and liabilities will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill.

We completed several acquisitions for a total purchase price of approximately $4.1 million in the three months ended March 31, 2018, and $0.9 million in the three months ended March 31, 2017.

Note 12. Stock-Based Compensation

The following table summarizes our stock-based compensation expense for the three months ended March 31, 2018 and 2017.

	Three Months Ended
	March 31,
(in millions)	2018			2017
Restricted share units (“RSUs”) and performance-based RSUs (“PRSUs”)	$	5.0		$	5.3
Stock options	—			0.1
Stock-based compensation expense, before income taxes	5.0			5.4
Tax benefit	(0.3		)	(0.5		)
Stock-based compensation expense, net of tax	$	4.7		$	4.9

As of March 31, 2018, total unrecognized compensation cost related to non-vested RSUs and PRSUs was $38.3 million, which is expected to be recognized over a weighted average period of 2.4 years.

RSUs and PRSUs

The following table summarizes activity for the three months ended March 31, 2018, of RSUs and PRSUs issued to our employees.

	Activity		Weighted Average Per Share Grant Date Fair Market Value
Non-vested as of December 31, 2017	1,632,120		$	24.43
Granted:
RSUs	785,691		21.52
PRSUs	383,913		21.52
Vested:
RSUs	(521,058	)	24.59
PRSUs	(259,819	)	24.97
Forfeitures:
RSUs	(7,158	)	24.63
PRSUs	(45,849	)	27.17
Non-vested as of March 31, 2018	1,967,840		22.52

18

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Stock Options

The following table summarizes activity for the three months ended March 31, 2018, of stock options issued to our employees.

	Activity		Weighted Average Exercise Price
Outstanding as of December 31, 2017	165,293		$	20.69
Exercised	(23,446	)	6.25
Outstanding as of March 31, 2018	141,847		23.08
Exercisable as of March 31, 2018	141,847		23.08

Note 13. Retirement Benefits

The following table presents the components of net periodic pension cost and amounts recognized in other comprehensive income (loss) for our pension plans:

	Three Months Ended
	March 31,
(in millions)	2018			2017
Components of net periodic pension cost:
Service cost	$	0.4		$	0.3
Interest cost	0.5			0.5
Expected return on plan assets	(0.6		)	(0.5		)
Amortization of net actuarial losses(a)	0.1			0.1
Net periodic pension cost	$	0.4		$	0.4

(a) Reflects amounts reclassified from accumulated other comprehensive income to net income.

In the three months ended March 31, 2018, we contributed $0.4 million to our pension plans. In 2018, we expect to contribute approximately $2.5 million to our pension plans.

Note 14. Income Taxes

We are organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”) and, accordingly, we have not provided for U.S. federal income tax on our REIT taxable income that we distribute to our stockholders. We have elected to treat our subsidiaries that participate in certain non-REIT qualifying activities, and our foreign subsidiaries, as taxable REIT subsidiaries (“TRSs”). As such, we have provided for their federal, state and foreign income taxes.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act amends the Code to reduce tax rates and modify policies, credits and deductions. The Tax Act reduced the federal tax rate from a maximum of 35% to a flat 21% rate, as well as added many new provisions including changes to bonus depreciation, the deduction for executive compensation and interest expense. From an international tax perspective, a tax on global intangible low-taxed income and a base erosion anti-abuse tax were added.

Our effective income tax rate represents a combined annual effective tax rate for federal, state, local and foreign taxes applied to interim operating results.

In the three months ended March 31, 2018 and 2017, our effective tax rate differed from the U.S. federal statutory income tax rate primarily due to our REIT status, including the dividends paid deduction, the impact of state and local taxes, and the effect of foreign operations.

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OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 15. Earnings Per Share (“EPS”)

	Three Months Ended
	March 31,
(in millions)	2018		2017
Net income available for common stockholders	$	9.1	$	2.5
Less: Distributions to holders of Class A equity interests of a subsidiary	0.7		—
Net income available for common stockholders, basic and diluted	$	8.4	$	2.5
Weighted average shares for basic EPS	138.8		138.3
Dilutive potential shares from grants of RSUs, PRSUs and stock options(a)	0.3		0.6
Weighted average shares for diluted EPS	139.1		138.9

(a) The potential impact of an aggregate 0.8 million granted RSUs, PRSUs and stock options in the three months ended March 31, 2018, and 0.3 million granted RSUs, PRSUs and stock options in the three months ended March 31, 2017, were antidilutive.

(b) The potential impact of 2.0 million shares of Class A equity interests of Outfront Canada in the three months ended March 31, 2018, was antidilutive. (See Note 8. Equity to the Consolidated Financial Statements.)

Note 16. Commitments and Contingencies

Off-Balance Sheet Arrangements

Our off-balance sheet commitments primarily consist of operating lease arrangements and guaranteed minimum annual payments. These arrangements result from our normal course of business and represent obligations that are payable over several years.

Contractual Obligations

We have long-term operating leases for office space, billboard sites and equipment, which expire at various dates. Certain leases contain renewal and escalation clauses.

We have agreements with municipalities and transit operators which entitle us to operate advertising displays within their transit systems, including on the interior and exterior of rail and subway cars and buses, as well as on benches, transit shelters, street kiosks, and transit platforms. Under most of these franchise agreements, the franchisor is entitled to receive the greater of a percentage of the relevant revenues, net of agency fees, or a specified guaranteed minimum annual payment.

We also have marketing and multimedia rights agreements with colleges, universities and other educational institutions, which entitle us to operate on-campus advertising displays, as well as manage marketing opportunities, media rights and experiential entertainment at sports events. Under most of these agreements, the school is entitled to receive the greater of a percentage of the relevant revenue, net of agency commissions, or a specified guaranteed minimum annual payment.

On December 8, 2017, we entered into a transit advertising and communications concession agreement with the New York Metropolitan Transportation Authority (the “MTA”) for subway, commuter rail and buses for a 10-year term, with an additional 5-year extension at our option. Under the agreement, we are obligated to deploy over 50,000 digital displays for advertising and MTA communications across the transit system over a number of years and the MTA is entitled to receive the greater of a percentage of revenues or a guaranteed minimum annual payment. Incremental revenues that exceed an annual base revenue amount will be retained by us for the cost of deploying advertising and communications screens throughout the transit system. Our currently estimated deployment cost is approximately $800 million for the full 15-year term and approximately $600 million for the first eight years of the term, and these deployment costs will be recorded as Prepaid MTA equipment deployment costs and Intangible assets on our Consolidated Statement of Financial Position. We expect to utilize third party financing to fund deployment costs, and have increased our letters of credit for the benefit of the MTA from approximately $30.0 million to $136.0 million, which is subject to change as equipment installations are completed and revenues are generated.

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OUTFRONT Media Inc.