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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 150 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, 2019, filed with the SEC on February 26, 2020.

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, including the impact of extraordinary events such as the novel coronavirus (COVID-19) pandemic, 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 materially from these estimates under different assumptions or conditions, including the severity and duration of the COVID-19 pandemic.

The COVID-19 pandemic and the related preventative measures taken to help curb the spread, have had, and may continue to have, a significant impact on the global economy and our business. In order to preserve financial flexibility and increase liquidity in light of the current uncertainty in the global economy and our business resulting from the COVID-19 pandemic, we undertook the following actions, among others: borrowed nearly all of the remaining available amount under the Revolving Credit Facility (as defined below) and amended the Credit Agreement (as defined below) to modify the calculation of the Company’s financial maintenance covenant ratio (see Note 9. Debt to the Consolidated Financial Statements), completed the Private Placement (as defined below) (see Note 20. Subsequent Event to the Consolidated Financial Statements) and reduced or deferred capital expenditures and expenses through cost savings initiatives. Given the uncertainty around the severity and duration of the COVID-19 pandemic and the measures taken, or may be taken, in response to the COVID-19 pandemic, the Company cannot reasonably estimate the full impact of the COVID-19 pandemic on our business, financial condition and results of operations at this time, which may be material.

Adoption of New Accounting Standards

In the first quarter of 2020, we adopted the Financial Accounting Standards Board’s (the “FASB’s”) guidance for evaluating and determining when a cloud computing arrangement (hosting arrangement) includes a software license. The adoption of this guidance did not have a material effect on our consolidated financial statements.

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In the first quarter of 2020, we adopted the FASB’s guidance which requires a reporting entity to estimate credit losses on certain types of financial instruments, and present assets held at amortized cost and available-for-sale debt securities at the amount expected to be collected. The application of this guidance was limited to our receivables that are not related to rental income, which is accounted for under the lease accounting standard. The provision for doubtful accounts is estimated based on historical bad debt experience, the aging of accounts receivable, industry trends and economic indicators, recent payment history for specific customers and expected future trends.

We have recorded a Provision for doubtful accounts of $8.1 million for all receivables during the first quarter of 2020, which includes an impact from the COVID-19 pandemic on future collections.

Recent Pronouncements

In December 2019, the FASB issued guidance simplifying the accounting for income taxes by removing certain exceptions to the general principles of Accounting Standards Codification Topic 740, Income Taxes. The new guidance is effective for annual and interim periods beginning after December 15, 2020. We do not expect this guidance to have a material effect on our consolidated financial statements.

We have 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, 2020, we have $1.8 million of restricted cash deposited in the escrow account.

		As of
(in millions)		March 31, 2020				March 31, 2019				December 31, 2019
Cash and cash equivalents		$	487.8			$	52.7			$	59.1
Restricted cash		1.8				1.4				1.8
Cash, cash equivalents and restricted cash		$	489.6			$	54.1			$	60.9

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

				As of
(in millions)		Estimated Useful Lives		March 31, 2020				December 31, 2019
Land				$	98.6			$	98.8
Buildings		20 to 40 years		48.7				50.4
Advertising structures		5 to 20 years		1,852.4				1,866.1
Furniture, equipment and other		3 to 10 years		157.9				153.1
Construction in progress				30.2				25.4
				2,187.8				2,193.8
Less: Accumulated depreciation				1,522.0				1,527.6
Property and equipment, net				$	665.8			$	666.2

The assumptions and estimates used in our analyses below require significant judgment about future events, market conditions and financial performance. Given the uncertainty around the severity and duration of the COVID-19 pandemic and the

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measures taken, or may be taken, in response to the COVID-19 pandemic, actual results may differ materially from these assumptions and estimates, which may result in impairment charges of our long-lived assets in the future. 

Goodwill

In the first quarter of 2020, we performed a qualitative assessment to determine if there has been a triggering event and impairment of goodwill as a result of the COVID-19 pandemic. As a result of the analysis performed, we determined that it was not “more likely than not” that the carrying value of any of our reporting units exceeded their fair value and no further evaluation of goodwill was necessary.

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, 2020:
Permits and leasehold agreements		$	1,175.1			$	(744.8	)		$	430.3
Franchise agreements		501.5				(375.1		)		126.4
Other intangible assets		46.9				(40.9		)		6.0
Total intangible assets		$	1,723.5			$	(1,160.8	)		$	562.7
As of December 31, 2019:
Permits and leasehold agreements		$	1,153.3			$	(735.7	)		$	417.6
Franchise agreements		497.4				(371.1		)		126.3
Other intangible assets		47.1				(40.1		)		7.0
Total intangible assets		$	1,697.8			$	(1,146.9	)		$	550.9

All of our intangible assets, except goodwill, are subject to amortization. Amortization expense was $26.3 million in the three months ended March 31, 2020, and $24.7 million in the three months ended March 31, 2019, which includes the amortization of direct lease acquisition costs of $11.3 million in the three months ended March 31, 2020, and $10.3 million in the three months ended March 31, 2019. 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.

New York Metropolitan Transportation Authority (the “MTA”) Agreement

We have identified the COVID-19 pandemic as a trigger for an impairment review of our Prepaid MTA equipment deployment costs and related intangible assets. After updating our projections to reflect related declines in revenues in 2020 and delays in our anticipated deployment schedule as a result of the impact of the COVID-19 pandemic, among other things, no impairment was identified. However, since we may not recoup any costs in 2020, we have reclassified amounts previously included in current Prepaid MTA equipment deployment costs to non-current Prepaid MTA equipment deployment costs on the Consolidated Statement of Financial Position.

Lessee

As of March 31, 2020, we have operating lease assets of $1.5 billion, short-term operating lease liabilities of $180.8 million and non-current operating lease liabilities of $1.3 billion. As of December 31, 2019, we had operating lease assets of $1.5 billion,

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short-term operating lease liabilities of $168.3 million and non-current operating lease liabilities of $1.3 billion. As of March 31, 2020, the weighted-average remaining lease term was 10.3 years and the weighted-average discount rate was 5.7%.

For the three months ended March 31, 2020, we recorded operating lease costs of $102.5 million in Operating expenses and $2.2 million in Selling, general and administrative expenses. For the three months ended March 31, 2020, these costs include $22.1 million of variable operating lease costs. 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. For the three months ended March 31, 2019, these costs include $19.5 million of variable operating lease costs. For both the three months ended March 31, 2020 and 2019, sublease income was immaterial.

For the three months ended March 31, 2020, cash paid for operating leases was $108.6 million and leased assets obtained in exchange for new operating lease liabilities was $77.2 million. 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

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, 2019		$	35.1
Accretion expense		0.6
Liabilities settled		(0.6		)
Foreign currency translation adjustments		(0.3		)
As of March 31, 2020		$	34.8

We have a 50% ownership interest in two joint ventures that operate transit shelters in the greater Los Angeles area and Vancouver, and five 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 $13.8 million as of March 31, 2020, and $15.4 million as of December 31, 2019, 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 $1.5 million in the three months ended March 31, 2020 and $1.7 million in the three months ended March 31, 2019.

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Debt, net, consists of the following:

		As of
(in millions, except percentages)		March 31, 2020				December 31, 2019
Short-term debt:
AR Facility		$	120.0			$	105.0
Repurchase Facility		90.0				90.0
Total short-term debt		210.0				195.0
Long-term debt:
Revolving credit facility		495.0				—
Term loan, due 2026		597.5				597.5
Senior unsecured notes:
5.625% senior unsecured notes, due 2024		501.6				501.7
5.000% senior unsecured notes, due 2027		650.0				650.0
4.625% senior unsecured notes, due 2030		500.0				500.0
Total senior unsecured notes		1,651.6				1,651.7
Debt issuance costs		(26.1		)		(27.1		)
Total long-term debt, net		2,718.0				2,222.1
Total debt, net		$	2,928.0			$	2,417.1
Weighted average cost of debt		4.0		%		4.5		%

Term Loan

The interest rate on the term loan due in 2026 (the “Term Loan”) was 2.5% per annum as of March 31, 2020. As of March 31, 2020, a discount of $2.5 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 $500.0 million revolving credit facility, which matures in 2024 (the “Revolving Credit Facility,” together with the Term Loan, the “Senior Credit Facilities”).

On March 25, 2020, we borrowed $470.0 million on our revolving credit facility, which represents nearly all of the remaining available amount under the Revolving Credit Facility. As of March 31, 2020, there were $495.0 million of outstanding borrowings under the Revolving Credit Facility, at a borrowing rate of approximately 2.7%.

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, 2020, and $0.4 million in the three months ended March 31, 2019. As of March 31, 2020, we had issued letters of credit totaling approximately $1.5 million against the letter of credit facility sublimit under the Revolving Credit Facility.

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Standalone Letter of Credit Facilities

As of March 31, 2020, we had issued letters of credit totaling approximately $71.0 million under our aggregate $78.0 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, 2020 and 2019.

Accounts Receivable Securitization Facilities

As of March 31, 2020, we have a $125.0 million revolving accounts receivable securitization facility (the “AR Facility”), which terminates in June 2022, unless further extended, and a 364-day uncommitted $90.0 million structured repurchase facility (the “Repurchase Facility” and together with the AR Facility, the “AR Securitization Facilities”), which terminates in June 2020, unless further extended.

In connection with the AR Securitization Facilities, Outfront Media LLC and Outfront Media Outernet Inc., each a wholly-owned subsidiary of the Company, and certain of the Company’s taxable REIT subsidiaries (“TRSs”) (the “Originators”), will sell and/or contribute their respective existing and future accounts receivable and certain related assets to either Outfront Media Receivables LLC, a special purpose vehicle and wholly-owned subsidiary of the Company relating to the Company’s qualified REIT subsidiary accounts receivable assets (the “QRS SPV”) or Outfront Media Receivables TRS, LLC a special purpose vehicle and wholly-owned subsidiary of the Company relating to the Company’s TRS accounts receivable assets (the “TRS SPV” and together with the QRS SPV, the “SPVs”). The SPVs will transfer undivided interests in their respective accounts receivable assets to certain purchasers from time to time (the “Purchasers”). The SPVs are separate legal entities with their own separate creditors who will be entitled to access the SPVs’ assets before the assets become available to the Company. Accordingly, the SPVs’ 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 SPVs may be remitted to the Company. Outfront Media LLC will service the accounts receivables on behalf of the SPVs for a fee. The Company has agreed to guarantee the performance of the Originators and Outfront Media LLC, in its capacity as servicer, of their respective obligations under the agreements governing the AR Facility. Neither the Company, the Originators nor the SPVs guarantee the collectability of the receivables under the AR Facility. Further, the TRS SPV and the QRS SPV are jointly and severally liable for their respective obligations under the agreements governing the AR Facility.

In connection with the Repurchase Facility, the Originators may borrow funds collateralized by subordinated notes (the “Subordinated Notes”) issued by the SPVs in favor of their respective Originators and representing a portion of the outstanding balance of the accounts receivable assets sold by the Originators to the SPVs under the AR Facility. The Subordinated Notes will be transferred to MUFG Bank, Ltd. (“MUFG”), as repurchase buyer, on an uncommitted basis, and subject to repurchase by the applicable Originators on termination of the Repurchase Facility. The Originators have granted MUFG a security interest in the Subordinated Notes to secure their obligations under the agreements governing the Repurchase Facility, and the Company has agreed to guarantee the Originators’ obligations under the agreements governing the Repurchase Facility.

As of March 31, 2020, there were $120.0 million of outstanding borrowings under the AR Facility, at a borrowing rate of approximately 2.5%, and $90.0 million of outstanding borrowings under the Repurchase Facility, at a borrowing rate of approximately 2.0%. As of March 31, 2020, there was no borrowing capacity remaining under the AR Facility based on approximately $304.5 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, 2020 and 2019.

On April 17, 2020, MUFG required us to reduce our borrowing capacity under the Repurchase Facility to $80.0 million and repay $10.0 million of borrowings under the Repurchase Facility as a result of MUFG reducing its uncommitted repurchase facility credit exposure to companies with a similar issuer credit rating as the Company. As of May 7, 2020, there were $118.0 million of outstanding borrowings under the AR Facility, at a borrowing rate of approximately 2.0%, and $80.0 million of outstanding borrowings under the Repurchase Facility, at a borrowing rate of approximately 2.5%.

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Senior Unsecured Notes

As of March 31, 2020, a premium of $1.6 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 maintain our REIT status, subject to certain conditions and exceptions, 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 4.5 to 1.0. As of March 31, 2020, our Consolidated Net Secured Leverage Ratio was 2.0 to 1.0 in accordance with the Credit Agreement. The Credit Agreement also requires that, in connection with the incurrence of certain indebtedness, we maintain 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, 2020, our Consolidated Total Leverage Ratio was 5.4 to 1.0 in accordance with the Credit Agreement. As of March 31, 2020, we are in compliance with our debt covenants. 

On April 15, 2020, the Company, along with its wholly-owned subsidiaries, Finance LLC and Outfront Media Capital Corporation (together with Finance LLC, the “Borrowers”), and other guarantor subsidiaries party thereto, entered into an amendment (the “Amendment”) to the Credit Agreement. The Amendment provides that for the period from April 15, 2020 through September 30, 2021 (i) the Company’s Consolidated Net Secured Leverage Ratio shall be calculated by substituting the Company’s Consolidated EBITDA for each of the quarterly periods ended June 30, 2020 and September 30, 2020 included in any last twelve month compliance testing period, with the Company’s historical Consolidated EBITDA for each of the quarterly periods ended June 30, 2019 and September 30, 2019, respectively; and (ii) the Company will not make any Restricted Payments (as defined in the Credit Agreement) without the consent of the applicable lenders under the Credit Agreement, subject to certain exceptions such as payments necessary to maintain the Company’s REIT status, including any payments on any class of the Company’s capital stock that is required to be made prior to the payment of a dividend or distribution on the Company’s common stock and the Company’s existing payment obligations to holders of the Class A equity interests in Outfront Canada (as defined in Note 10. Equity to the Consolidated Financial Statements.

Deferred Financing Costs

As of March 31, 2020, we had deferred $30.7 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 and hedge our interest rate risk related to such variable rate debt. The fair value of these swap positions was a net liability of approximately $8.9 million as of March 31, 2020, and $4.6 million as of December 31, 2019, and is included in Other liabilities on our Consolidated Statement of Financial Position.

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As of March 31, 2020, under the terms of the agreements, we will pay interest based on an aggregate notional amount of $200.0 million, under a weighted-average fixed interest rate of 2.7%, with a receive rate of one-month LIBOR and which mature at various dates until June 30, 2022. The one-month LIBOR rate was approximately 1.0% as of March 31, 2020.

Fair Value

As of March 31, 2020, 450,000,000 shares of our common stock, par value $0.01 per share, were authorized; 144,353,374 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.

In connection with the acquisition of outdoor advertising assets in Canada in June 2017, 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. The Company is also subject to limitations on its ability to sell or otherwise dispose of the assets acquired in Canada until June 2022, unless it pays holders of the Class A equity interests in Outfront Canada an amount intended to approximate their resulting tax liability, plus a tax gross-up.

During the three months ended March 31, 2020, we made distributions of $0.4 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, 2020, 1,026,727 Class A equity interests have been redeemed for shares of the Company’s common stock.

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The following table summarizes revenues by source:

		Three Months Ended
		March 31,
(in millions)		2020				2019
Billboard:
Static displays		$	201.1			$	194.3
Digital displays		60.4				47.0
Other		9.4				9.7
Billboard revenues		270.9				251.0
Transit:
Static displays		65.1				79.0
Digital displays		27.7				16.6
Other		7.4				8.8
Total transit revenues		100.2				104.4
Sports marketing and other		14.2				16.3
Transit and other revenues		114.4				120.7
Total revenues		$	385.3			$	371.7

Rental income was $262.3 million in the three months ended March 31, 2020, and $242.0 million in the three months ended March 31, 2019, 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)		2020				2019
United States:
Billboard		$	256.5			$	236.2
Transit and other		98.2				102.2
Sports marketing and other		14.2				16.3
Total United States revenues		368.9				354.7
Canada		16.4				17.0
Total revenues		$	385.3			$	371.7

We recognized substantially all of the Deferred revenues on the Consolidated Statement of Financial Position as of December 31, 2019, during the three months ended March 31, 2020.

As of March 31, 2020, $0.4 million in restructuring reserves remain outstanding and is included in Other current liabilities on the Consolidated Statement of Financial Position. 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.

In order to preserve financial flexibility, increase liquidity and reduce expenses in light of the current uncertainty in the global economy and our business as a result of the COVID-19 pandemic, on May 5, 2020, we announced a workforce reduction and notified approximately 70 employees of their termination and furloughed approximately 150 employees. We currently

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anticipate incurring severance-based restructuring charges of approximately $4.2 million, which will be recognized in the second quarter of 2020.

We completed several asset acquisitions for a total purchase price of approximately $6.6 million in the three months ended March 31, 2020, and $2.5 million in the three months ended March 31, 2019.

In the second quarter of 2018, we entered into an agreement to acquire 14 digital and seven static billboard displays in California for a total estimated purchase price of $35.4 million. As of March 31, 2020, we have completed this acquisition except with respect to four digital displays, which we expect to acquire in 2021 for an estimated purchase price of $9.2 million, subject to customary closing conditions and the timing of site development.

In the first quarter of 2019, we entered into an agreement to acquire eight digital billboard displays in Atlanta, Georgia, for an aggregate purchase price of $24.0 million. During 2019, we paid deposits totaling $19.0 million into an escrow account related to this transaction, which were included in Other assets on our Consolidated Statement of Financial Position as of December 31, 2019. We completed this transaction in the first quarter of 2020.

The following table summarizes our stock-based compensation expense for the three months ended March 31, 2020 and 2019.

		Three Months Ended
		March 31,
(in millions)		2020				2019
Stock-based compensation expenses (restricted share units (“RSUs”) and performance-based RSUs (“PRSUs”)), before income taxes		$	5.8			$	5.3
Tax benefit		(0.4		)		(0.3		)
Stock-based compensation expense, net of tax		$	5.4			$	5.0

As of March 31, 2020, total unrecognized compensation cost related to non-vested RSUs and PRSUs was $47.8 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, 2020, of RSUs and PRSUs issued to our employees.

		Activity			Weighted Average Per Share Grant Date Fair Market Value
Non-vested as of December 31, 2019		2,024,768			$	22.09
Granted:
RSUs		702,351			30.63
PRSUs		323,771			29.60
Vested:
RSUs		(594,541	)		22.64
PRSUs		(293,852	)		22.49
Forfeitures:
RSUs		(5,259	)		23.18
Non-vested as of March 31, 2020		2,157,238			25.79

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Stock Options

The following table summarizes activity for the three months ended March 31, 2020, of stock options issued to our employees.

		Activity			Weighted Average Exercise Price
Outstanding as of December 31, 2019		126,528			$	24.57
Exercised		(23,115	)		16.43
Outstanding as of March 31, 2020		103,413			26.39
Exercisable as of March 31, 2020		103,413			26.39

As of March 31, 2020, all exercisable stock options issued to our employees were out-of-the-money based on the closing stock price of our common stock of $13.48.

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)		2020				2019
Components of net periodic pension cost:
Service cost		$	0.4			$	0.5
Interest cost		0.7				0.5
Expected return on plan assets		(1.1		)		(0.7		)
Amortization of net actuarial losses(a)		0.3				0.2
Net periodic pension cost		$	0.3			$	0.5

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

In the three months ended March 31, 2020, we contributed $0.4 million to our pension plans. In 2020, we expect to contribute approximately $1.4 million to our pension plans.

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 TRSs. As such, we have provided for their federal, state and foreign income taxes.

Tax years 2016 to present are open for examination by the tax authorities.

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

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		Three Months Ended
		March 31,
(in millions)		2020				2019
Net income available for common stockholders		$	6.1			$	6.1
Less: Distributions to holders of Class A equity interests of a subsidiary		0.4				0.6
Net income available for common stockholders, basic and diluted		$	5.7			$	5.5
Weighted average shares for basic EPS		143.9				140.7
Dilutive potential shares from grants of RSUs, PRSUs and stock options(a)		0.8				0.4
Weighted average shares for diluted EPS		144.7				141.1

(a)	The potential impact of an aggregate 0.5 million granted RSUs, PRSUs and stock options in the three months ended March 31, 2020, and 0.1 million granted RSUs, PRSUs and stock options in the three months ended March 31, 2019, were antidilutive.

(b)	The potential impact of 1.1 million of Class A equity interests of Outfront Canada in the three months ended March 31, 2020, and 1.7 million of Class A equity interests of Outfront Canada in the three months ended March 31, 2019, was antidilutive. (See Note 10. Equity to the Consolidated Financial Statements.)

Off-Balance Sheet Arrangements

Our off-balance sheet commitments primarily consist of 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 agreements with municipalities and transit operators that 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.

Under the MTA agreement, we are obligated to deploy, over a number of years, (i) 8,565 digital advertising screens on subway and train platforms and entrances, (ii) 37,716 smaller-format digital advertising screens on rolling stock, and (iii) 7,829 MTA communications displays, with such deployment amounts being subject to modification as agreed-upon by us and the MTA. In addition, we are obligated to pay to the MTA 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 displays throughout the transit system. As presented in the table below, MTA equipment deployment costs are being recorded as Prepaid MTA equipment deployment costs and Intangible assets on our Consolidated Statement of Financial Position, and as these costs are recouped from incremental revenues that the MTA would otherwise be entitled to receive, Prepaid MTA equipment deployment costs will be reduced. If incremental revenues generated over the term of the agreement are not sufficient to cover all or a portion of the equipment deployment costs, the costs will not be recouped, which could have an adverse effect on our business, financial condition and results of operation. As a result of the impact of the COVID-19 pandemic, we suspended our deployment of advertising and communications displays throughout the transit system at this time. In addition, we did not recoup any equipment deployment costs in the three months ended March 31, 2020, and may not recoup equipment deployment costs in 2020. We have identified the COVID-19 pandemic as a trigger for impairment review of our Prepaid MTA equipment deployment costs and related intangible assets, and after performing an analysis, no impairment was identified. (See Note 5. Long-Lived Assets: MTA Agreement to the Consolidated Financial Statements.) As of

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March 31, 2020, 5,253 digital displays had been installed, of which 676 installations occurred in the three months ended March 31, 2020.

(in millions)		Beginning Balance				Deployment Costs Incurred				Recoupment				Amortization				Ending Balance
Three months ended March 31, 2020:
Prepaid MTA equipment deployment costs		$	171.5			$	18.2			$	—			$	—			$	189.7
Intangible assets (franchise agreements)		38.3				3.8				—				(1.3		)		40.8
Total		$	209.8			$	22.0			$	—			$	(1.3	)		$	230.5
Year ended December 31, 2019:
Prepaid MTA equipment deployment costs		$	79.5			$	124.2			$	(32.2	)		$	—			$	171.5
Intangible assets (franchise agreements)		14.8				26.6				—				(3.1		)		38.3
Total		$	94.3			$	150.8			$	(32.2	)		$	(3.1	)		$	209.8

Letters of Credit

We have indemnification obligations with respect to letters of credit and surety bonds primarily used as security against non-performance in the normal course of business. As of March 31, 2020, the outstanding letters of credit were approximately $72.5 million and outstanding surety bonds were approximately $162.1 million, and were not recorded on the Consolidated Statements of Financial Position.

Legal Matters

On an ongoing basis, we are engaged in lawsuits and governmental proceedings and respond to various investigations, inquiries, notices and claims from national, state and local governmental and other authorities (collectively, “litigation”). Litigation is inherently uncertain and always difficult to predict. Although it is not possible to predict with certainty the eventual outcome of any litigation, in our opinion, none of our current litigation is expected to have a material adverse effect on our results of operations, financial position or cash flows.

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. International and Sports Marketing do not meet the criteria to be a reportable segment and accordingly, are both included in Other.

The following tables set forth our financial performance by segment.

		Three Months Ended
		March 31,
(in millions)		2020				2019
Revenues:
U.S. Media		$	354.7			$	338.4
Other		30.6				33.3
Total revenues		$	385.3			$	371.7

We present Operating income before Depreciation, Amortization, Net gain on dispositions, Stock-based compensation and Restructuring charges (“Adjusted OIBDA”) as the primary measure of profit and loss for our operating segments.

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		Three Months Ended
		March 31,
(in millions)		2020				2019
Net income before allocation to non-controlling interests		$	6.3			$	6.1
Benefit for income taxes		(1.7		)		(1.0		)
Equity in earnings of investee companies, net of tax		(0.4		)		(0.8		)
Interest expense, net		29.8				32.7
Other income, net		(0.2		)		(0.1		)
Operating income		33.8				36.9
Restructuring charges		—				0.3
Net gain on dispositions		(0.1		)		(1.5		)
Depreciation and amortization		47.3				45.8
Stock-based compensation		5.8				5.3
Total Adjusted OIBDA		$	86.8			$	86.8
Adjusted OIBDA:
U.S. Media		$	90.8			$	94.6
Other		0.5				1.2
Corporate		(4.5		)		(9.0		)
Total Adjusted OIBDA		$	86.8			$	86.8

		Three Months Ended
		March 31,
(in millions)		2020				2019
Operating income (loss):
U.S. Media		$	47.4			$	55.5
Other		(3.3		)		(4.0		)
Corporate		(10.3		)		(14.6		)
Total operating income		$	33.8			$	36.9
Net gain on dispositions:
U.S. Media		$	(0.1	)		$	(1.5	)
Total gain on dispositions		$	(0.1	)		$	(1.5	)
Depreciation and amortization:
U.S. Media		$	43.5			$	40.6
Other		3.8				5.2
Total depreciation and amortization		$	47.3			$	45.8
Capital expenditures:
U.S. Media		$	17.3			$	17.3
Other		0.9				0.8
Total capital expenditures		$	18.2			$	18.1

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		As of
(in millions)		March 31, 2020				December 31, 2019
Assets:
U.S. Media		$	5,114.6			$	5,077.1
Other		255.6				284.0
Corporate		434.1				21.2
Total assets		$	5,804.3			$	5,382.3

On April 20 2020 (the “Closing Date”), the Company issued and sold an aggregate of 400,000 shares of the Company’s newly created Series A Convertible Perpetual Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”) at a purchase price of $1,000 per share, for an aggregate purchase price of $400.0 million (the “Private Placement”) to certain affiliates of Providence Equity Partners LLC (collectively, the “Providence Purchasers”) and ASOF Holdings L.L.P. and Ares Capital Corporation (collectively, the “Ares Purchasers” and, together with the Providence Purchasers, the “Purchasers”).

The Series A Preferred Stock ranks senior to the shares of the Company’s common stock, par value $0.01 per share, with respect to dividend and distribution rights. Holders of the Series A Preferred Stock are entitled to a cumulative dividend accruing at the initial rate of 7.0% per year, payable quarterly in arrears. The dividend rate will increase by an additional 0.75% annually following the eighth anniversary of the Closing Date and is subject to increases under certain other circumstances as set forth in the Articles Supplementary, effective as of April 20, 2020 (the “Articles”). Dividends may, at the option of the Company, be paid in cash, in-kind, through the issuance of additional shares of Series A Preferred Stock or a combination of cash and in-kind, until the eighth anniversary of the Closing Date, after which time dividends will be payable solely in cash. So long as any shares of Series A Preferred Stock remain outstanding, the Company may not declare a dividend on, or make any distributions relating to, capital stock that ranks junior to, or on a parity basis with, the Series A Preferred Stock, subject to certain exceptions, including but not limited to (i) any dividend or distribution in cash or capital stock of the Company on or in respect of the capital stock of the Company to the extent that such dividend or distribution is necessary to maintain the Company’s status as a REIT; and (ii) any dividend or distribution in cash in respect of our common stock that, together with the dividends or distributions during the 12-month period immediately preceding such dividend or distribution, is not in excess of 5% of the aggregate dividends or distributions paid by the Company necessary to maintain its REIT status during such 12-month period. Following the one-year anniversary of the Closing Date, if all or any portion of the dividends or distributions is paid in respect of the shares of our common stock in cash, the shares of Series A Preferred Stock will participate in such dividends or distributions on an as-converted basis up to the amount of their accrued dividend on the Series A Preferred Stock for such quarter, which amounts will reduce the dividends payable on the shares of Series A Preferred Stock dollar-for-dollar for such quarter.

The Series A Preferred Stock is convertible at the option of any holder at any time into shares of our common stock at an initial conversion price of $16.00 per share and an initial conversion rate of 62.50 shares of our common stock per share of Series A Preferred Stock, subject to certain anti-dilution adjustments. The issuance of shares of our common stock upon the conversion of Series A Preferred Stock is subject to a cap equal to 28,856,239 shares of our common stock (the “Share Cap”), unless and until the Company obtains stockholder approval to the extent required for the issuance of additional shares. Any amounts owed above the Share Cap must be paid in cash.

Subject to certain conditions, at the Company’s option, (i) after the third anniversary of the Closing Date, all of the Series A Preferred Stock may be converted into shares of our common stock, and (ii) after the seventh anniversary of the Closing Date, all of the Series A Preferred Stock may be redeemed for cash at a redemption price equal to 100% of the liquidation preference of the Series A Preferred Stock, plus any accrued and unpaid dividends. Subject to certain conditions, each holder of the Series A Preferred Stock, after a Change of Control (as defined in the Articles) may (i) require the Company to purchase any or all of their shares of Series A Preferred Stock at a redemption price payable in cash equal to 105% of the liquidation preference of the Series A Preferred Stock, plus any accrued and unpaid dividends, or (ii) convert any or all of their shares of Series A Preferred Stock into the number of shares of our common stock equal to the liquidation preference (including accrued and unpaid dividends) divided by the then-applicable conversion price.

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The holders of the Series A Preferred Stock have the right to vote on matters submitted to a vote of the holders of our common stock on an as-converted basis, except as otherwise prohibited by the terms of the Articles. Further, certain matters will require the approval of the holders of at least a majority of the shares of Series A Preferred Stock outstanding, including, among others, the issuance of any class or series of senior or parity equity securities by the Company and the incurrence of any additional indebtedness by the Company not otherwise permitted under the Company’s indebtedness agreements. Changes to any provision of the Company’s Charter (including the Articles) that adversely changes the rights of the holders of the Series A Preferred Stock requires the approval of holders of at least 75% of the shares of Series A Preferred Stock outstanding so long as the Ares Purchasers, together with their affiliates, own 90% of the number of shares of our common stock (on an as-converted basis or otherwise) owned by the Ares Purchasers on the Closing Date, with a majority of the outstanding shares of Series A Preferred Stock required at all other times. Subject to certain conditions, the Company has also agreed to increase the size of its board of directors in order to elect one individual designated by the Providence Purchasers to the board of directors.

Subject to certain conditions and exceptions, the Providence Purchasers and the Ares Purchasers are each entitled to preemptive rights with respect to a new issue of our common stock or securities with rights to acquire our common stock. The Providence Purchasers and the Ares Purchasers are restricted from acquiring additional securities of the Company, subject to certain exceptions and conditions provided that the Providence Purchasers and the Ares Purchasers may acquire a number of additional shares of our common stock that does not exceed 3.44% and 1.56%, respectively, of our outstanding shares of common stock as of April 16, 2020.

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•	Borrowed $470.0 million under the Revolving Credit Facility (as defined below), which represents nearly all of the remaining available amount under the Revolving Credit Facility;

•	Accessed the capital markets and raised $400.0 million, before expenses, in the Private Placement (as defined below);

•	Amended the Credit Agreement (as defined below) to modify the calculation of the Company’s financial maintenance covenant ratio under the Credit Agreement;

•	Amended one of the agreements governing the AR Securitization Facilities (as defined below) to adjust the ratios and collections timing relating to our accounts receivable assets until July 31, 2020, unless further amended and/or extended;

•	Suspended our quarterly dividend payments, subject to the minimum annual REIT distribution requirement;

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•	Suspended our deployment of digital transit displays at this time to reduce costs that may or may not be recoverable from customer sales or transit franchise partners;

•	Reduced maintenance capital expenditures (other than for necessary safety-related projects) and deferred growth capital expenditures for digital billboard display conversions;

•	Paused new acquisition activity; and

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Reduced our posting, maintenance and other, and SG&A (as defined below) expenses through restrictions on discretionary expenses, a hiring freeze, a workforce reduction, employee furloughs, temporary reductions to certain employee base salaries, and temporary reductions to our Chief Executive Officer and other executive officer base salaries by 50% and 20%, respectively, to offset expected decreases in revenues in 2020.

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(a)

Digital display amounts (1) include 2,490 displays reserved for transit agency use and (2) exclude all displays under our multimedia rights agreements with colleges, universities and other educational institutions. Our number of digital displays is impacted by acquisitions, dispositions, management agreements, the net effect of new and lost billboards, and the net effect of won and lost franchises in the period.

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(a)

Organic revenues exclude the impact of foreign currency exchange rates (“non-organic revenues”). We provide organic revenues to understand the underlying growth rate of revenue excluding the impact of non-organic revenue items. Our management believes organic revenues are useful to users of our financial data because it enables them to better understand the level of growth of our business period to period. Since organic revenues are not calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, revenues as an indicator of operating performance. Organic revenues, as we calculate it, may not be comparable to similarly titled measures employed by other companies.

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

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•	Calculation is not meaningful.

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

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*	Calculation is not meaningful.

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*	Calculation is not meaningful.

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

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•	Calculation is not meaningful.

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*	Calculation is not meaningful.

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•	The severity and duration of the novel coronavirus (COVID-19) and any other pandemics, and the impact on our business, financial condition and results of operations;

•	Declines in advertising and general economic conditions, including declines caused by the COVID-19 pandemic;

•	Competition;

•	Government regulation;

•	Our ability to implement our digital display platform and deploy digital advertising displays to our transit franchise partners, including the impact of the COVID-19 pandemic;

•	Taxes, fees and registration requirements;

•	Our ability to obtain and renew key municipal contracts on favorable terms;

•	Decreased government compensation for the removal of lawful billboards;

•	Content-based restrictions on outdoor advertising;

•	Environmental, health and safety laws and regulations;

•	Seasonal variations;

•	Acquisitions and other strategic transactions that we may pursue could have a negative effect on our results of operations;

•	Dependence on our management team and other key employees;

•	The ability of our board of directors to cause us to issue additional shares of stock without stockholder approval;

•	Certain provisions of Maryland law may limit the ability of a third party to acquire control of us;

•	Our rights and the rights of our stockholders to take action against our directors and officers are limited;

•	Our substantial indebtedness;

•	Restrictions in the agreements governing our indebtedness;

•	Incurrence of additional debt;

•	Interest rate risk exposure from our variable-rate indebtedness;

•	Our ability to generate cash to service our indebtedness;

•	Cash available for distributions;

•	Hedging transactions;

•	Diverse risks in our Canadian business;

•	Experiencing a cybersecurity incident;

•	Changes in regulations and consumer concerns regarding privacy, information security and data, or any failure or perceived failure to comply with these regulations or our internal policies;

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•	Asset impairment charges for our long-lived assets and goodwill;

•	Our failure to remain qualified to be taxed as a real estate investment trust (“REIT”);

•	REIT distribution requirements;

•	Availability of external sources of capital;

•	We may face other tax liabilities even if we remain qualified to be taxed as a REIT;

•	Complying with REIT requirements may cause us to liquidate investments or forgo otherwise attractive opportunities;

•	Our ability to contribute certain contracts to a taxable REIT subsidiary (“TRS”);

•	Our planned use of TRSs may cause us to fail to remain qualified to be taxed as a REIT;

•	REIT ownership limits;

•	Complying with REIT requirements may limit our ability to hedge effectively;

•	Failure to meet the REIT income tests as a result of receiving non-qualifying income;

•	The Internal Revenue Service (the “IRS”) may deem the gains from sales of our outdoor advertising assets to be subject to a 100% prohibited transaction tax; and

•	Establishing operating partnerships as part of our REIT structure.

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(a)	The one-month LIBOR rate was approximately 1.0% as of March 31, 2020.

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(a)	Reflects shares deemed to be surrendered by the Company in connection with tax withholding payments upon exercise of employee stock options at the related exercise prices.

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