Outfront Media Inc.

The stable outlook reflects our expectation that the company's revenue will increase about 4%-5% over the next 12 months, supported by a favorable outdoor advertising environment, increased ad revenue contributions from its MTA buildout, and ongoing conversions to digital billboards with higher yields, resulting in leverage between 5.2x-5.4x. We could lower the rating if Outfront's operating performance deteriorates because of economic pressure and national advertising revenue declines, raising leverage to 5.5x or higher on a sustained basis. Outfront's current leverage of 5.3x provides limited cushion relative to our downgrade trigger in the event of an economic downturn. We could also lower the rating if leverage increases due to execution missteps or delays in the rollout of its large MTA digital

...Revenue contribution from digital billboards is increasing, and they are more profitable than static billboards.Digital billboard conversions allow Outfront Media Inc. to sell to multiple advertisers per billboard and generate approximately 4x-6x more revenue than static billboards. The company's billboard concentration in large U.S. markets and its sizable transit segment contribute to lower margins than its closest peer in the U.S. We forecast transit contract revenue will increase to about 35% of Outfront's total revenue by the end of 2020. While transit contract growth presents an opportunity, we expect it will modestly pressure margins over time. Outfront's adjusted EBITDA margin of 51.5% (30.1% excluding S&P Global Ratings' lease adjustments) in 2018 was lower than U.S. peer Lamar Advertising Co. (58.5%; 44.7% excluding S&P Global Ratings' lease adjustments) because of its lower-margin rental arrangements in larger markets and exposure to lower-margin transit contract revenue (31%...

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