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, 2019

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 every Interactive Data File required to be submitted 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	OUT	New York Stock Exchange

As of May 7, 2019, the number of shares outstanding of the registrant’s common stock was 141,634,725.

OUTFRONT MEDIA INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2019

TABLE OF CONTENTS

PART I	3
Item 1. Financial Statements (Unaudited)	3
Consolidated Statements of Financial Position as of March 31, 2019, and December 31, 2018	3
Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018	4
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018	5
Consolidated Statements of Equity for the three months ended March 31, 2019 and 2018	6
Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018	7
Notes to Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	50
Item 4. Controls and Procedures	51
PART II	53
Item 1. Legal Proceedings	53
Item 1A. Risk Factors	53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	53
Item 6. Exhibits	53
SIGNATURES	55

PART 1

Item 1.    Financial Statements.

OUTFRONT Media Inc.

Consolidated Statements of Financial Position

(Unaudited)

	As of
(in millions)	March 31, 2019			December 31, 2018
Assets:
Current assets:
Cash and cash equivalents	$	52.7		$	52.7
Restricted cash	1.4			1.4
Receivables, less allowance ($10.7 in 2019 and $10.7 in 2018)	229.1			264.9
Prepaid lease and transit franchise costs	13.4			69.3
Prepaid MTA equipment deployment costs (Note 18)	31.1			18.9
Other prepaid expenses	15.3			13.9
Other current assets	8.7			8.4
Total current assets	351.7			429.5
Property and equipment, net (Note 5)	654.7			652.9
Goodwill	2,080.7			2,079.7
Intangible assets (Note 6)	532.0			537.2
Operating lease assets (Note 4)	1,327.8			—
Prepaid MTA equipment deployment costs (Note 18)	71.1			60.6
Other assets	59.0			68.8
Total assets	$	5,077.0		$	3,828.7
Liabilities:
Current liabilities:
Accounts payable	$	53.3		$	56.5
Accrued compensation	24.4			47.1
Accrued interest	26.0			19.1
Accrued lease and transit franchise costs	40.7			44.2
Other accrued expenses	32.9			31.2
Deferred revenues	37.3			29.8
Short-term debt (Note 9)	155.0			160.0
Short-term operating lease liabilities (Note 4)	153.8			—
Other current liabilities	15.1			14.7
Total current liabilities	538.5			402.6
Long-term debt, net (Note 9)	2,185.7			2,149.6
Deferred income tax liabilities, net	17.5			17.0
Asset retirement obligation (Note 7)	34.4			34.2
Operating lease liabilities (Note 4)	1,166.5			—
Other liabilities	42.5			80.0
Total liabilities	3,985.1			2,683.4
Commitments and contingencies (Note 18)
Stockholders’ equity (Note 10):
Common stock (2019 - 450.0 shares authorized, and 141.6 shares issued
and outstanding; 2018 - 450.0 shares authorized, and 140.2 issued and outstanding)	1.4			1.4
Additional paid-in capital	2,012.0			1,995.0
Distribution in excess of earnings	(941.9		)	(871.6		)
Accumulated other comprehensive loss	(20.2		)	(22.0		)
Total stockholders’ equity	1,051.3			1,102.8
Non-controlling interests	40.6			42.5
Total equity	1,091.9			1,145.3
Total liabilities and equity	$	5,077.0		$	3,828.7

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)	2019			2018
Revenues:
Billboard	$	251.0		$	239.3
Transit and other	120.7			98.6
Total revenues	371.7			337.9
Expenses:
Operating	216.9			197.1
Selling, general and administrative	73.3			64.6
Restructuring charges	0.3			1.1
Net gain on dispositions	(1.5		)	(0.2		)
Depreciation	21.1			21.1
Amortization	24.7			22.5
Total expenses	334.8			306.2
Operating income	36.9			31.7
Interest expense, net	(32.7		)	(30.0		)
Other income (expense), net	0.1			(0.1		)
Income before benefit for income taxes and equity in earnings of investee companies	4.3			1.6
Benefit for income taxes	1.0			6.7
Equity in earnings of investee companies, net of tax	0.8			0.8
Net income	$	6.1		$	9.1
Net income per common share:
Basic	$	0.04		$	0.06
Diluted	$	0.04		$	0.06
Weighted average shares outstanding:
Basic	140.7			138.8
Diluted	141.1			139.1

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)	2019			2018
Net income	$	6.1		$	9.1
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments	2.6			(5.4		)
Net actuarial gain	—			0.3
Change in fair value of interest rate swap agreements	(0.8		)	—
Total other comprehensive income (loss), net of tax	1.8			(5.1		)
Total comprehensive income	$	7.9		$	4.0

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, 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
Balance as of December 31, 2018	140.2		$	1.4	$	1,995.0		$	(871.6	)	$	(22.0	)	$	1,102.8		$	42.5		$	1,145.3
Cumulative effect of a new accounting standard (Note 2)	—		—		—			(24.8		)	—			(24.8		)	—			(24.8		)
Net income	—		—		—			6.1			—			6.1			—			6.1
Other comprehensive income	—		—		—			—			1.8			1.8			—			1.8
Stock-based payments:
Vested	0.9		—		—			—			—			—			—			—
Amortization	—		—		5.3			—			—			5.3			—			5.3
Shares paid for tax withholding for stock-based payments	(0.4	)	—		(7.7		)	—			—			(7.7		)	—			(7.7		)
Class A equity interest redemptions	0.1		—		2.8			—			—			2.8			(2.8		)	—
Shares issued under the ATM Program	0.8		—		16.5			—			—			16.5			—			16.5
Dividends ($0.36 per share)	—		—		—			(51.6		)	—			(51.6		)	—			(51.6		)
Other	—		—		0.1			—			—			0.1			0.9			1.0
Balance as of March 31, 2019	141.6		$	1.4	$	2,012.0		$	(941.9	)	$	(20.2	)	$	1,051.3		$	40.6		$	1,091.9

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)	2019			2018
Operating activities:
Net income	$	6.1		$	9.1
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization	45.8			43.6
Deferred tax benefit	(0.1		)	(2.3		)
Stock-based compensation	5.3			5.0
Provision for doubtful accounts	1.0			(0.8		)
Accretion expense	0.6			0.6
Net gain on dispositions	(1.5		)	(0.2		)
Equity in earnings of investee companies, net of tax	(0.8		)	(0.8		)
Distributions from investee companies	0.7			0.2
Amortization of deferred financing costs and debt discount and premium	1.4			1.4
Cash paid for direct lease acquisition costs	(14.0		)	(12.5		)
Change in assets and liabilities, net of investing and financing activities:
Decrease in receivables	35.1			42.8
Increase in prepaid MTA equipment deployment costs	(22.7		)	(7.2		)
Increase in prepaid expenses and other current assets	(3.2		)	(7.4		)
Decrease in accounts payable and accrued expenses	(24.3		)	(18.9		)
Increase in deferred revenues	7.5			13.6
Decrease in income taxes	(1.7		)	(4.5		)
Other, net	6.2			0.4
Net cash flow provided by operating activities	41.4			62.1
Investing activities:
Capital expenditures	(18.1		)	(16.8		)
Acquisitions	(7.5		)	(4.1		)
MTA franchise rights	(5.4		)	(1.4		)
Net proceeds from dispositions	2.2			0.2
Return of investment in investee companies	0.1			—
Net cash flow used for investing activities	(28.7		)	(22.1		)
Financing activities:
Proceeds from long-term debt borrowings	35.0			10.0
Proceeds from borrowings under short-term debt facilities	15.0			57.0
Repayments of borrowings under short-term debt facilities	(20.0		)	(45.0		)
Proceeds from shares issued under the ATM Program	16.6			—
Taxes withheld for stock-based compensation	(7.6		)	(6.5		)
Dividends	(51.8		)	(51.1		)
Net cash flow used for financing activities	(12.8		)	(35.6		)

7

OUTFRONT Media Inc.

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

	Three Months Ended
	March 31,
(in millions)	2019		2018
Effect of exchange rate changes on cash, cash equivalents and restricted cash	0.1		(0.2		)
Net increase in cash, cash equivalents and restricted cash	—		4.2
Cash, cash equivalents and restricted cash at beginning of period	54.1		48.3
Cash, cash equivalents and restricted cash at end of period	$	54.1	$	52.5
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	0.8	$	0.2
Cash paid for interest	24.5		20.8
Non-cash investing and financing activities:
Accrued purchases of property and equipment	$	9.4	$	11.0
Accrued MTA franchise rights	1.8		—
Taxes withheld for stock-based compensation	0.1		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, 2018, filed with the SEC on February 27, 2019.

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

Leases

In the first quarter of 2019, we adopted the Financial Accounting Standards Board’s (the “FASB’s”) guidance addressing the recognition, measurement, presentation and disclosure of leases for both lessees and lessors using the transition method to adopt the new lease standard. The transition method allows entities to apply the new lease standard at the adoption date rather than adjusting each period presented at the date of adoption. 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 determines 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 regardless of their classification.

We elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward our historical lease classification. We also elected the practical expedient related to land easements, which allowed us to carry forward our accounting treatment for land easements on existing leases. In addition we elected the hindsight practical expedient which resulted in increasing the length of our lease term for existing leases with cancellation provisions.

9

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

At adoption, we had approximately 23,600 lease agreements as lessee, all of which were classified as operating leases. On January 1, 2019, the adoption of this standard resulted in the recognition of an operating lease liability of $1.2 billion and a right-of-use operating lease asset of the same amount. Existing prepaid and accrued lease costs were reclassified to the right-of-use operating lease asset, resulting in a net asset of $1.3 billion on the Consolidated Statement of Financial Position. As a result of the adoption of this standard, we also recorded a cumulative-effect adjustment of $24.8 million to beginning Distribution in excess of earnings on the Consolidated Statement of Equity for lease costs which would have been recognized in prior periods as a result of the change in the lease term.

Under the new guidance, lessors account for leases using an approach that is substantially equivalent to previous guidance for sales-type leases, direct financing leases and operating leases. Our billboard lease revenues will continue to be recognized on a straight-line basis over their respective lease terms. Adoption of this guidance did not have a material effect on our consolidated financial statements.

Note 3. Restricted Cash

In the third quarter of 2018, we entered into an escrow agreement in connection with one of our transit franchise contracts, which requires us to deposit funds into an escrow account to fund capital expenditures over the term of the transit franchise contract. As of March 31, 2019, we have $1.4 million of restricted cash deposited in the escrow account.

	As of
(in millions)	March 31, 2019		March 31, 2018		December 31, 2018
Cash and cash equivalents	$	52.7	$	52.5	$	52.7
Restricted cash	1.4		—		1.4
Cash, cash equivalents and restricted cash	$	54.1	$	52.5	$	54.1

Note 4. Leases

Effective January 1, 2019, we adopted the FASB’s guidance addressing the recognition, measurement, presentation and disclosure of leases for both lessees and lessors using the transition method to adopt the new lease standard. See Note 2. New Accounting Standards: Adoption of New Accounting Standards.

Lessee

We generally lease the underlying sites upon which the physical billboard structures on which we display advertising copy for our customers are located. We also have leases for office and warehouse spaces. All leases are recorded on the Consolidated Statement of Financial Position and we recognize lease expense on a straight-line basis over the lease term. We do not separate lease and non-lease components from contracts.

Many of our leases include one or more options to renew, with renewal terms that can extend the lease term for varying lengths of time. These renewal provisions typically require consent of both parties. Many of our leases also contain termination provisions at our option, based on a variety of factors, including termination due to changing economic conditions of the related billboard location.

Certain of our lease agreements include rental payments based on a percentage of revenue over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

We rent or sublease certain real estate to third parties.

10

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

As of March 31, 2019, we have operating lease assets of $1.3 billion, short-term operating lease liabilities of $153.8 million and non-current operating lease liabilities of $1.2 billion.

For the three months ended March 31, 2019, we recorded operating lease costs of $94.4 million in Operating expenses and $2.1 million in Selling, general and administrative expenses. These costs include $19.5 million of variable operating lease costs. For the three months ended March 31, 2019, sublease income was immaterial.

As of March 31, 2019, minimum rental payments under operating leases are as follows:

(in millions)	Operating  Leases
2019	$	167.9
2020	231.2
2021	214.8
2022	197.4
2023	175.5
2024 and thereafter	854.9
Total operating lease payments	1,841.7
Less: Interest	521.4
Present value of lease liabilities	$	1,320.3

As of December 31, 2018, minimum rental payments under non-cancellable operating leases with original terms in excess of one year are as follows:

(in millions)	Non-Cancellable Operating Leases
2019	$	154.8
2020	151.8
2021	139.1
2022	126.2
2023	109.8
2024 and thereafter	574.6
Total minimum payments	$	1,256.3

As of March 31, 2019, the weighted-average remaining lease term was 10.0 years and the weighted-average discount rate was 6.3%.

For the three months ended March 31, 2019, cash paid for operating leases was $94.2 million and leased assets obtained in exchange for new operating lease liabilities was $147.6 million.

Lessor

Our agreements with customers to advertise on our billboards are considered operating leases. Substantially all of our advertising structures (see Note 5. Property and Equipment) are utilized in the sale of advertising to customers, for which the contracts are accounted for as rental income. Billboard display revenues are recognized as rental income on a straight-line basis over the customer lease term. We exclude from rental income all taxes assessed by a governmental authority that we collect from customers. These operating leases are short-term in duration, typically a term of 4 weeks to one year. Our leases do not include any variable lease provisions or options to extend the lease. Certain contracts may include provisions for the early termination of the lease after an agreed upon notice period. We account for non-lease installation services and the lease associated with providing advertising space on our billboards as a combined component under the lease standard.

For the three months ended March 31, 2019, we recorded rental income of $242.0 million in Revenues on our Consolidated Statement of Operations.

11

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

As of March 31, 2019, rental payments to be received under non-cancellable operating leases are as follows:

(in millions)	Rental Income
2019	$	386.3
2020	39.4
2021	9.7
2022	2.6
2023	1.6
2024 and thereafter	0.9
Total minimum payments	$	440.5

Note 5. 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, 2019		December 31, 2018
Land		$	97.2	$	97.5
Buildings	20 to 40 years	49.4		48.7
Advertising structures	5 to 20 years	1,806.1		1,789.4
Furniture, equipment and other	3 to 10 years	136.8		134.3
Construction in progress		24.6		19.3
		2,114.1		2,089.2
Less: accumulated depreciation		1,459.4		1,436.3
Property and equipment, net		$	654.7	$	652.9

Depreciation expense was $21.1 million in each of the three months ended March 31, 2019 and 2018.

Note 6. Intangible Assets

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, 2019:
Permits and leasehold agreements	$	1,110.2	$	(706.8	)	$	403.4
Franchise agreements	477.0		(360.4		)	116.6
Other intangible assets	47.0		(35.0		)	12.0
Total intangible assets	$	1,634.2	$	(1,102.2	)	$	532.0
As of December 31, 2018:
Permits and leasehold agreements	$	1,107.4	$	(697.6	)	$	409.8
Franchise agreements	470.7		(357.1		)	113.6
Other intangible assets	46.9		(33.1		)	13.8
Total intangible assets	$	1,625.0	$	(1,087.8	)	$	537.2

12

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

All of our intangible assets, except goodwill, are subject to amortization. Amortization expense was $24.7 million in the three months ended March 31, 2019, and $22.5 million in the three months ended March 31, 2018, which includes the amortization of direct lease acquisition costs of $10.3 million in the three months ended March 31, 2019, and $8.7 million in the three months ended March 31, 2018. 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.

Note 7. 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, 2018	$	34.2
Accretion expense	0.6
Additions	0.1
Liabilities settled	(0.6		)
Foreign currency translation adjustments	0.1
As of March 31, 2019	$	34.4

Note 8. 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 11 billboard displays in New York and Boston. All of these joint ventures are accounted for as equity investments. These investments totaled $15.5 million as of March 31, 2019, and $16.1 million as of December 31, 2018, 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 $1.7 million in the three months ended March 31, 2019 and $1.6 million in the three months ended March 31, 2018.

13

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 9. Debt

Debt, net, consists of the following:

	As of
(in millions, except percentages)	March 31, 2019			December 31, 2018
Short-term debt:
AR Facility	$	80.0		$	85.0
Repurchase Facility	75.0			75.0
Total short-term debt	155.0			160.0
Long-term debt:
Revolving credit facility	35.0			—
Term loan, due 2024	668.2			668.1
Senior unsecured notes:
5.250% senior unsecured notes, due 2022	549.7			549.7
5.625% senior unsecured notes, due 2024	502.1			502.2
5.875% senior unsecured notes, due 2025	450.0			450.0
Total senior unsecured notes	1,501.8			1,501.9
Debt issuance costs	(19.3		)	(20.4		)
Total long-term debt, net	2,185.7			2,149.6
Total debt, net	$	2,340.7		$	2,309.6
Weighted average cost of debt	5.1		%	5.1		%

Term Loan

The interest rate on the term loan due in 2024 (the “Term Loan”) was 4.5% per annum as of March 31, 2019. As of March 31, 2019, a discount of $1.8 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, 2019, there were $35.0 million of outstanding borrowings under the Revolving Credit Facility, at a borrowing rate of approximately 4.5%.

The commitment fee based on the amount of unused commitments under the Revolving Credit Facility was $0.4 million in the three months ended March 31, 2019, and $0.3 million in the three months ended March 31, 2018. As of March 31, 2019, we had issued letters of credit totaling approximately $66.1 million against the letter of credit facility sublimit under the Revolving Credit Facility.

14

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Standalone Letter of Credit Facilities

As of March 31, 2019, we had issued letters of credit totaling approximately $143.0 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, 2019 and 2018.

Accounts Receivable Securitization Facilities

We have a $100.0 million revolving accounts receivable securitization facility (the “AR Facility”) which terminates in June 2021, unless extended, and a 364-day uncommitted $75.0 million structured repurchase facility (the “Repurchase Facility” and together with the AR Facility, the “AR Securitization Facilities”).

In connection with the AR Securitization Facilities, Outfront Media LLC, a wholly-owned subsidiary of the Company (the “Originator”), 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 will transfer an undivided interest in the accounts receivable assets to certain purchasers from time to time (the “Purchasers”). 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.

In connection with the Repurchase Facility, the Originator may borrow up to $75.0 million, collateralized by a subordinated note (the “Subordinated Note”) issued by the SPV in favor of the Originator and representing a portion of the outstanding balance of the accounts receivable assets sold by the Originator to the SPV under the AR Facility. The Subordinated Note will be transferred to MUFG, as repurchase buyer, on an uncommitted basis, and subject to repurchase by the Originator on termination of the Repurchase Facility. The Originator has granted MUFG a security interest in the Subordinated Note to secure its obligations under the agreements governing the Repurchase Facility, and the Company has agreed to guarantee the Originator’s obligations under the agreements governing the Repurchase Facility.

As of March 31, 2019, there were $80.0 million of outstanding borrowings under the AR Facility, at a borrowing rate of approximately 3.5%, and $75.0 million of outstanding borrowings under the Repurchase Facility, at a borrowing rate of approximately 3.7%. As of March 31, 2019, borrowing capacity remaining under the AR Facility was approximately $20.0 million based on approximately $192.4 million of accounts receivable used as collateral for the AR Securitization Facilities, and there was no borrowing capacity remaining under the Repurchase Facility, in accordance with the agreements governing the AR Securitization Facilities. The commitment fee based on the amount of unused commitments under the AR Facility was immaterial for each of the three months ended March 31, 2019 and 2018.

Senior Unsecured Notes

As of March 31, 2019, a discount of $0.3 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, 2019, a premium of $2.1 million on $100.0 million aggregate principal amount of the 5.625% Senior Unsecured Notes due 2024, remains unamortized. The premium is being amortized through Interest expense, net, on the Consolidated Statement of Operations.

Debt Covenants

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

15

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

maintain our REIT status, subject to certain conditions, and (ii) enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany or third-party transfers.

The terms of the Credit Agreement (and under certain circumstances, the agreements governing the AR Securitization Facilities) require that we maintain a Consolidated Net Secured Leverage Ratio, which is the ratio of (i) our consolidated secured debt (less up to $150.0 million of unrestricted cash) to (ii) our Consolidated EBITDA (as defined in the Credit Agreement) for the trailing four consecutive quarters, of no greater than 4.0 to 1.0. As of March 31, 2019, our Consolidated Net Secured Leverage Ratio was 1.5 to 1.0 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, 2019, our Consolidated Total Leverage Ratio was 4.6 to 1.0 in accordance with the Credit Agreement. As of March 31, 2019, we are in compliance with our debt covenants.

Deferred Financing Costs

As of March 31, 2019, we had deferred $22.8 million in fees and expenses associated with the Term Loan, Revolving Credit Facility, AR Securitization Facilities and our senior unsecured notes. We are amortizing the deferred fees through Interest expense, net, on our Consolidated Statement of Operations over the respective terms of the Term Loan, Revolving Credit Facility, AR Securitization Facilities and our senior unsecured notes.

Interest Rate Swap Agreements

We have several interest rate cash flow swap agreements to effectively convert a portion of our LIBOR-based variable rate debt to a fixed rate. The fair value of these swap positions was a net liability of approximately $3.2 million as of March 31, 2019, and $2.4 million as of December 31, 2018, and is included in Other liabilities on our Consolidated Statement of Financial Position.

As of March 31, 2019, under the terms of the agreements, we will pay interest based on an aggregate notional amount of $150.0 million, under a weighted-average fixed interest rate of 3.0%, with a receive rate of one-month LIBOR and maturing on December 29, 2021. The one-month LIBOR rate was approximately 2.5% as of March 31, 2019.

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 $2.4 billion as of March 31, 2019, and $2.3 billion as of December 31, 2018. The fair value of our debt as of both March 31, 2019, and December 31, 2018, is classified as Level 2. The aggregate fair value loss associated with our interest rate cash flow swap agreements was approximately $3.2 million as of March 31, 2019, and $2.4 million as of December 31, 2018. The aggregate fair value of our interest rate cash flow swap agreements as of both March 31, 2019 and December 31, 2018, is classified as Level 2.

Note 10. Equity

As of March 31, 2019, 450,000,000 shares of our common stock, par value $0.01 per share, were authorized; 141,634,024 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.

16

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

In June 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 outdoor advertising assets in Canada, and effectuated an amalgamation of All Vision’s Canadian business with our Canadian business (the “Transaction”). 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”). 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. 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, 2019, we made distributions of $0.6 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, 2019, 330,151 Class A equity interests have been redeemed for shares of the Company’s common stock.

In the three months ended March 31, 2019, we issued 5,512 shares of our common stock under the OUTFRONT Media Inc. Amended and Restated Omnibus Stock Incentive Plan, valued at $0.1 million, to a consultant for services rendered.

We have 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. During the three months ended March 31, 2019, 750,000 shares of our common stock were sold under the ATM Program for gross proceeds of $17.0 million with commissions of $0.3 million, for total net proceeds of $16.7 million. As of March 31, 2019, we had approximately $267.5 million of capacity remaining under the ATM Program.

On April 26, 2019, we announced that our board of directors approved a quarterly cash dividend of $0.36 per share on our common stock, payable on June 28, 2019, to stockholders of record at the close of business on June 7, 2019.

Note 11. Revenues

The following table summarizes revenues by source:

	Three Months Ended
	March 31,
(in millions)	2019		2018
Billboard:
Static displays	$	194.3	$	189.5
Digital displays	47.0		41.9
Other	9.7		7.9
Billboard revenues	251.0		239.3
Transit:
Static displays	79.0		67.8
Digital displays	16.6		10.7
Other	8.8		7.3
Total transit revenues	104.4		85.8
Sports marketing and other	16.3		12.8
Transit and other revenues	120.7		98.6
Total revenues	$	371.7	$	337.9

17

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Rental income was $242.0 million in the three months ended March 31, 2019, and $231.9 million in the three months ended March 31, 2018, and is recorded in Billboard revenues on the Consolidated Statement of Operations.

The following table summarizes revenues by geography:

	Three Months Ended
	March 31,
(in millions)	2019		2018
United States:
Billboard	$	236.2	$	226.3
Transit and other	102.2		83.6
Sports marketing and other	16.3		12.8
Total United States revenues	354.7		322.7
Canada	17.0		15.2
Total revenues	$	371.7	$	337.9

We recognized substantially all of the Deferred revenues on the Consolidated Statement of Financial Position as of December 31, 2018, during the three months ended March 31, 2019.

Note 12. Restructuring Charges

For the three months ended March 31, 2019, we recorded restructuring charges of $0.3 million associated with the elimination of a corporate management position. 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 primarily associated with the reorganization of our Sports Marketing operating segment and $0.5 million was recorded in our U.S. Media segment for severance charges associated with the reorganization of various departments. As of March 31, 2019, $1.2 million in restructuring reserves remain outstanding and is included in Other current liabilities on the Consolidated Statement of Financial Position.

Note 13. Acquisitions

We completed several asset acquisitions for a total purchase price of approximately $2.5 million in the three months ended March 31, 2019, and $4.1 million in the three months ended March 31, 2018.

In the first quarter of 2019, we entered into an agreement to acquire four digital billboard displays in Atlanta, Georgia, for an aggregate purchase price of $24.0 million. In connection with the execution of the agreement, we paid a deposit of $5.0 million to an escrow agent, which is included in Other assets on our Consolidated Statement of Financial Position. The transaction is expected to close in 2019, subject to customary closing conditions.

In the second quarter of 2018, we entered into an agreement to acquire 14 digital and 7 static billboard displays in California for a total estimated purchase price of $35.4 million, subject to post-closing adjustments for the achievement of operating income before depreciation and amortization targets relating to the acquired displays. The transaction is expected to close in 2019, subject to customary closing conditions and the timing of site development.

18

OUTFRONT Media Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 14. Stock-Based Compensation

The following table summarizes our stock-based compensation expense for the three months ended March 31, 2019 and 2018.

	Three Months Ended
	March 31,
(in millions)	2019			2018
Stock-based compensation expenses (restricted share units (“RSUs”) and performance-based RSUs (“PRSUs”)), before income taxes	$	5.3		$	5.0
Tax benefit	(0.3		)	(0.3		)
Stock-based compensation expense, net of tax	$	5.0		$	4.7

As of March 31, 2019, total unrecognized compensation cost related to non-vested RSUs and PRSUs was $39.8 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, 2019, of RSUs and PRSUs issued to our employees.

	Activity		Weighted Average Per Share Grant Date Fair Market Value
Non-vested as of December 31, 2018	1,723,980		$	22.39
Granted:
RSUs	797,745		21.41
PRSUs	376,418		21.41
Vested:
RSUs	(542,935	)	22.14
PRSUs	(246,542	)	21.99
Forfeitures:
RSUs	(18,215	)	22.45
PRSUs	(5,250	)	22.17
Non-vested as of March 31, 2019	2,085,201		21.95

Stock Options

The following table summarizes activity for the three months ended March 31, 2019, of stock options issued to our employees.

	Activity		Weighted Average Exercise Price
Outstanding as of December 31, 2018	141,847		$	23.08
Exercised	(15,319	)	10.78
Outstanding as of March 31, 2019