OUTFRONT Media Inc (OUT) 2015 Q2 法說會逐字稿

Good day, and welcome to the OUTFRONT Media second quarter 2015 earnings call. I would now like to turn the conference over to Mr. Greg Lundberg.

Good afternoon, everyone. Thank you for joining our 2015 second quarter earnings call. On the call today are Jeremy Male, Chairman and Chief Executive Officer, and Donald Shassian, Executive Vice President and Chief Financial Officer. After a discussion of our financial results at a strategic update, we'll open up the lines up for a question and answer session. A slide presentation to accompany today's call can be found in the investor relation section of our website along with the earnings release and an audio webcast of the call.

This conference may include forward looking statements. Relevant factors that could cause actual results to differ materially from before the consumers are listed in our earnings materials, in our SEC filings, including the 2014 Form 10-K. In addition, on this call we'll refer to certain non-GAAP financial measures. Any references to OIBDA and AFFO made today will be made on an adjusted and re-comparable basis respectively, both of which are reconciled along with all other non-GAAP financial measures on the appendix of the slide presentation, the earnings release, and on our website Outfrontmedia.com. With that, I will now turn the call over to Jeremy.

Thanks, Greg, and good afternoon, everyone. We're pleased that you take the time with us today. There are a lot of exciting things happening at OUTFRONT Media. First and foremost, our second quarter revenues came in as we that out for you in May, up 2.8% organically. Within this figure was once again very robust double-digit growth in our transit business, while our billboard results were slightly down. Transit is nearly one-third of our total Company revenues and is now a $400 million business annually. And I think you'd all agree that any media business growing over 10% in the current market is doing extremely well.

However, our billboard results, as we mentioned last quarter, and not performing as we like. We have certain markets that are hitting the ball well, but there are some other markets that are not performing to our expectation or what we see as their full potential. We've taken some proactive measures to address this. As usual, we'll give the third full quarter outlook at the end of this call. But the good news I want to share with you up front is that our billboard pacing is showing improvements into the second half of this year, and we're confident that this business is trending positively and will be back to growth in the third quarter.

I'm sure you all saw our release on July 23 regarding the MTA. Let me say that we're pleased to have extended our New York City subway advertising contract for up to an additional year. As we discussed, we always faced an either/or scenario. Either the MTA puts out an RFP this year that brings the 2016 bus and rail contract forward or the MTA pushes the 2015 subway contract out to the end of next year to co-terminate with the bus and rail contract. It's this latter scenario that has unfolded. Let me also say, we've been ready to bid this contract since Thanksgiving 2014 when we first thought we might receive an RFP. We feel very confident in our ability to renew this contract whenever it's bid.

As you can see, our transit results are spectacular right now, and this of course includes New York City. The MTA directly benefits from this success, and we've been doing a good job for them for nearly 75 years. Our success has been a combination of a fantastic sales force, strong client relationships, and operational know-how. We know how to sell to the MTA and when you add this to our transformational new technology platform, which I'm going to discuss very shortly, I'll say again, this puts us in an excellent position to win this bid.

You'll be able to see this technology for yourself at our initial deployment in the new 34th Street Hudson Yard subway station at 11th Avenue, which is expected to open early this fall. This deployment begins to demonstrate some of the features of our platform, such as radical new hardware and new software platforms, including cloud-based content delivery. This technology and the proprietary data management platform that we are building with new data analytics for our clients will better position us to share from the stream of advertising dollars currently flowing to online and mobile.

I'd also like to mention another recent announcement that highlights are constant focus on maximizing the value of our assets. We're entering the business of leasing physical space on our billboard structures to wireless carriers to locate transmission equipment to their cellular networks. We've announced the marketing and management agreement with Diamond Communications to market our portfolio with over 25,000 sites to the wireless carriers. This is not something that we should model for 2015, but we expect to see deployments in 2016 and we believe it will generate a nice lift to future shareholder returns.

Last but certainly not least, I'm pleased to report that our Board has declared third quarter 2015 dividends at $0.34 a share payable September 30. The Board increased the cash dividend level by 4.6% in the first quarter of this year, and you should take away from this increase that we view growing dividend income as a critical part of our investment thesis. Before I come back on and talk about our third quarter outlook, I'll now turn the call over to Don for a more in-depth look at our second quarter results.

Thank you, Jeremy, and good afternoon, everyone. Please turn to slide 6 which shows a summary of the year-over-year performance of some of our key financial metrics for the quarter and year to date. This table is not a pro forma view. It presents the result of the acquired Van Wagner assets only from the date of acquisition on October 1, 2014. The primary difference between the two periods in addition to the acquired operations is that Q2 2015 reflects the addition of interest expense incurred on the acquisition debt and tack-on financing. And Q2 2014 as adjusted on the tax line to show the level we would have paid had we been operating as a REIT in the second quarter of last year. As you can see, while revenue and OIBDA are up, we experienced a decline in net income, FFO, and AFFO during the period. I would like to go to the drivers of this, beginning with revenues on slide 7.

Our revenue growth was 15% on a reported basis and 2.8% on an organic basis. As you can see on the slide, if you factor in non-organic items like the acquisition of Van Wagner's billboard and transit assets and the $5.6 million of foreign exchange headwind, our year over year growth was also low single digits. In the US, organic revenues, which remove, among other things, the impact of significant acquisitions and dispositions, were also up 2.8%. This reflects very strong 13.8% growth in transit and other where we continue to see very strong growth in both local and national revenues across the country in our various transit markets at advertisers increasingly sought to reach an urban audience.

Importantly, our asset base is very comparable to last year. Therefore, this increase is all about incremental yield. Strength in US transit was offset by a 1.7% decline in organic billboard revenues. Billboard yields were down in both static and digital during the quarter. While we had some markets in various geographies with very good growth, our overall revenues were impacted by some organizational changes in certain other markets.

This was a proactive decision on our part as we continue to recalibrate the business as a standalone company and position our sales resources to be best capable of driving future growth. While we are certainly not satisfied with this quarter's billboard results, we are confident that we are making the right decisions and we're already seeing improvements in billboard in Q3. Internationally, organic revenues were up 2.4%, driven by Latin America. I will note that this is a fifth quarter of positive growth at international since our IPO.

Now, let's turn to expenses on slide 8. I would like to start off by saying that our expenses are in a good place. As you know, since we have a high fixed costs level of over 70%, after a certain point revenues flow straight to cash flow. It is therefore very important to keep a lid on expense growth and even more importantly, drive expenses down whenever possible. By doing this, we are positioning ourselves for OIBDA expansion that we expect to come from future revenues driven by continued excellent performance in transit an improvement in our billboard business and revenues from new initiatives that you do not even see yet in our financial results.

As you can see on slide 8, the majority of the year-over-year increase in the quarter was driven by having added Van Wagner billboards to our business. While we don't break them out, if you were to look simply at our legacy operating costs, billboard lease costs were down low single digits and post and maintenance and other expenses were down mid-single digits.

Turning to slide 9, you can see a further breakdown of our operating expenses in the three categories at the bottom of the chart which include our billboard lease and franchise payments, as well as posting maintenance and other expenses. Billboard lease expense as a percentage of revenue was up slightly, reflecting the top market concentration of Van Wagner's billboards. But as I just mentioned, our US legacy billboard lease costs were down low single digits year-over-year.

Transit franchise expenses, which is a revenue share business, was up along with our very strong increase in transit revenues. We had very strong $14.4 million revenue growth in this business. Since these franchises are based on revenue share, our expenses went up, but only by $7.8 million so we were able to generate a profit exactly in line with how this business operates.

Posting maintenance and other expenses were down almost 2 points due to cost efficiencies and also by a lower billboard activity, and our US legacy posting and maintenance costs were down mid single digits year-over-year. We also saw a nice reduction in SG&A expenses from 14% of revenues to 12.9% due to operating improvements. Corporate expenses were up $3.8 million due specifically to two items, the incremental standalone costs of becoming a public company were up $1.5 million from last year. These costs are actually down sequentially and are at the run rate we communicated to you. The other item is $1.6 million of strategic business development expenses this quarter that did not occur last year. I'll note that $600,000 of additional strategic development expenses were booked in our US segment, which gets you to a $2.2 million in total business development expenses for the quarter.

So I feel good about where our cost structure is right now. There are a number of areas that we continue to work on for additional improvement. We are currently well-positioned to benefit from billboard growth and development of new revenue streams. You can see how these expenses in our revenues translate into OIBDA on slide 10. Our total OIBDA of $119.1 million was up $8.8 million over the last year. The OIBDA margin for the quarter was 31%. Our strategic spending of $2.2 million in the quarter represented 60 basis points of this margin.

Turning to slide 11. Capital expenditures were $14.6 million in the quarter, including $6.6 million of maintenance CapEx and $8 million in growth CapEx. During the quarter we added 30 digital billboards in total, including eight internationally in Canada. Our 2015 guidance for total capital expenditures remain $70 million, including $30 million of maintenance and $40 million of growth. This includes an assumption of approximately 100 new digital billboards. We have done 53 to date, so we are on track as well as investments of smaller scale digital displays, office upgrades, and information technology enhancements.

Please turn now to slide 12 for our cash flow for the quarter. This slide shows AFFO on a REIT comparable basis to equalize the number of items that you can see in the schedule in our press release, the largest of which are REIT taxes and interest expense on our information borrowings. Please note that Q2 and Q3 of 2014 AFFO is not pro forma for the Van Wagner acquisition. The target may include Van Wagner as well as the interest expense related to the acquisition of that tack-on financing as of Q4 2014. AFFO declined $6.3 million year over year.

As stated earlier, OIBDA was up $8.8 million year-over-year due to the addition of Van Wagner, which is performing as planned, and also due to our strong transit results. This was offset by weaker US billboard results. Despite this overall lift in OIBDA, AFFO was negatively impacted, due primarily to three things, $10.2 million of incremental expense on the Van Wagner initial acquisition financing and our tackle in financing this past March, $3.7 million of incremental taxes due to higher pretax earnings in the transit [PRS] side of the business, $1.9 million up higher maintenance capital expenditures in the quarter.

In this quarter, AFFO was 60% of OIBDA compared to 70% in Q2 2014. Based of many of the factors I discussed today, we expect future flow-through of revenue into OIBDA to also increase AFFO levels. That said, our AFFO levels provides good support of our dividends, which you can see on slide 13.

Dividends were 66% of AFFO in the quarter and 68% using the current dividend at an annualized rate and comparing it to a trailing 12-month reported AFFO. This level is in line with our plan we laid out in the IPO process. Our Board recently declared another $0.34 per share dividend for Q3.

Lastly, on slide 14 that's an overview of our balance sheet. At quarter end, the weighted average cost of debt was 4.7%. Our liquidity position was approximately $463 million at the end of the quarter, including $68 million of cash and an undrawn $394 million revolving credit facility that is net of $31 million of credit outstanding.

Our net leverage was 4.9 times as of June 30. Our target range for net leverage is unchanged, and we are committed to drive our capital structure to 3.5 to 4 times, which is we believe the appropriate leverage for this business. Overall, we're very comfortable with our balance sheet, strength, and liquidity and expect to further de-lever into our target range through a combination of growth in OIBDA and debt pay down while maintaining a competitive dividend. I'll now turn his back over to Jeremy.

Thanks very much, Don, and please now turn out to slide 16. Before we talk about our third quarter outlook, let me make some comments about the border market. Once again, we and the other large US (inaudible) companies reported positive organic revenue growth and we are all, we know from their reporting, collectively tracking positively in the third quarter. Based on public company reporting to date and looking at published industry models, only two sections are growing in the US media market, the digital mobile online piece and [out of home]. The other home industry is clearly healthy and providing tangible benefits to our advertising clients.

Our industry has grown our share as the online segment has taken nearly one-third of total advertising dollars in the market. Advances in our industry and in our Company in particular are positioning us to potentially take an even greater share going forward. Now, let's turn to the coming fiscal quarter.

At this point, our total revenue growth expectation is that Q3 will be in the low single-digit range with continued outperformance in transit relative to billboard, but with billboard showing positive growth. As usual, this outlook only represents our view at this point in time in is on a constant dollar basis. Please note that it also includes revenues attributable to the Van Wagner billboard in transit assets for both periods.

A broad portfolio of transit and billboard for the top 25 market focus have always been the key strengths and differentiators of our Company. As was certainly obvious this quarter, advertising dollars float heavily to transit, which posted outstanding growth. And we're not standing still. Firstly, we're actually deploying our transformative digital platform to bring mobile and online advertising dollars to our Company. Secondly, we're exporting new ways to generate cash flow from our assets, such as the example I gave you earlier, leasing space to cellular carriers for transmitting equipment. And thirdly, we will continue to drive growth in our core business, which remains incredibly effective in the current media landscape and which we continue to believe has room for significant growth. So with that, operator, let's open the line for questions.

(Operator Instructions)

Marci Ryvicker with Wells Fargo.

Thanks. I have a couple.

In the first with the billboards you had mentioned that you are down in specific markets. It sounds very much like this is a company-specific issue in those markets and therefore the growth you are seeing in Q3 is more in your control and something that you have a lot more visibility into for now and the future?

The second question I have is [Lamar] reported this morning also digital yields were down, they suggested there is just too much capacity. So just wanted to know your thoughts on that comment as it relates to OUTFRONT.

And then the third question I know you said not to incorporate anything in our models in 2015 for leasing space for wireless. But can you frame up what the potential market could be or any type of financials could be for you in 2016 or eventually going forward? Thanks.

I'll take those, Marci.

In terms of the first question in it company specific. Yes, I think it is. We've got a number of markets that have been doing incredibly well. East and West coast have been great for us.

There have been three or four markets that really didn't perform for us over the last few months and it's those markets that are specific to ours I think where we've taken now some measures to improve our performance. We're starting to see some improvements and that's why one of the reasons certainly that we can be more positive in our pacing indications for the billboard in the third quarter.

With regard to digital, I guess the first point is that our digital business in terms of number of boards is smaller than our competitors, so they are not directly comparable. When we look at how we're deploying billboards right now, we're very comfortable putting out 100 boards a year. We're still getting that sort of forex increase that we would expect. Digital yields in general in our billboard business were impacted a little bit by some of the issues that I mentioned just previously, but overall we continue to feel good about digital. It was nicely up for us in total for our business during the second quarter.

And then your third point in terms of thinking about incremental income from carriers. I guess the first point is that it is a little bit early for us to give guidance and, as it starts to become more material, we're going to be very happy to quantify that for you. What I would like to say is that we really like the economics and returns in this model. It's a new cash flow stream, no CapEx, and we expect the revenues to be QRS.

We've got a universe of 25,000 locations and it's possible that you can have up to potentially three carriers per location. But I would stress that it's very early days. We've got to go out and market these locations and that's why we've signed up with Diamond. We will need then to sort of look at any zoning that may be associated with those locations. We then have got to deploy -- we then have to sort of work out a revenue model with the landlord in terms of how we cut the piece of the pie.

But in general, as I say, I think it's an interesting development for us and as soon as we can we will give more color on that, Marci.

Great. Thank you so much.

Ben Swinburne with Morgan Stanley.

Thank you. Good afternoon. A couple of questions.

First on the MTA, Jeremy. Do you have any insights that you could share with us as to why the bids haven't been put out and the MTA seems to be extending this all to next year? Do you think they're waiting for the JCDecaux/CEMUSA situation to get more clear? Or anything you've learned that you could help us think about sort of what the thought processes there would be great is my first question.

Okay. It's always a little bit hard when we're being asked to speak on behalf of transit authorities because, ultimately, obviously it's entirely within their scope to make these decisions. As we said, they had two options and they chose one of those.

And I would suggest that -- actually, it's in my opinion, I don't think it has a lot to do with the JCDecaux/CEMUSA situation. I think it has more to do with the fact that they are interested in thinking about more broadly how media and the general communications could come closer together, particularly given that we're all fairly clear. While we haven't obviously seen the document yet, or the [RFP] document, there is likely to be quite a significant sort of digital piece to this.

So I think they're just trying to figure that out. That's certainly really more the feedback that we've been given then rather than it being anything to do with competitive landscape right now.

Okay. That's helpful.

And if you said it and I missed and I apologize, been a long week as I'm sure you can imagine. But any color on national versus local trends on your business in the quarter?

In terms of color, if you think about the overall organic growth rate of 2.8%, national was ahead of that and local was behind that. Our national local split at the moment is around about 45 national and 55 local. So that gives you an indication.

So national north of the 2.8 and local south.

Okay. And one last one just for Don on cost.

The strategic business development expenses in the quarter of $1.6 million, is that something we should expect that to continue to be in the business in the back half? Does that grow from here? Any color you can give us on that would be helpful.

First, it's 1.6% that was reflected in the corporate segment, another $600,000 in the US segment. In total actually it's $2.2 million.

I would anticipate that we're going to continue to have those. We are continuing to make investments in people and in other resources to continue to go after new revenue streams. We're trying to manage it very tightly and not make any big bets here, but I do think you should anticipate that there will be some continued spending in that regard into the second half of the year. But I would not go much farther north of that until we make some commitments and statement of things we really going to be ramping up.

Okay. Thanks a lot everybody.

Alexia Quadrani.

Hi, this is [Julia] on for Alexia. I just have two questions.

First, could you talk about some of the digital initiatives that you're working on for the MTA transit system? And if you were to win the contract what the longer term revenue and profitability upside could be with the market in particular and then transit advertising in general as it shifts more to digital?

We made an announcement going back to December last year, Julia, with regards to our new platform which is based around low-cost hardware, based around new software cloud content delivery and the ability for these screens, if you like to behave more like smartphones rather than dumb termini as we go forward. Speaking more generally, I think that digital does have the ability to keep transit revenues growing nicely. And if you look at our transit business it's gone particularly well in the first half of this year. I think part of that is about the fact that it's a very urban medium. I think we've seen in a lot of support from national advertising on our transit media who are looking to sort of target that millennial audience, urban audience.

So, yes, look, we feel good about our platform and we feel good about its ability to drive revenue right away across our transit business rather than just the MTA. And the final piece of our digital program, if you like, is we're working hard at the moment to build a data management platform. So significantly enhanced data so that media planners will be able to make decisions about how they deploy their dollars towards our medium in a much more equivalent way to that which they are currently thinking about how they apply dollars to the online mobile piece. And that's quite exciting.

We're spending -- and going back to the sort of strategic development costs that Don was talking about, those sorts of areas where we're putting our focus.

Great. That's helpful.

And then along the same lines, given the increasingly digital transit and billboard businesses that you have in the drastically shortened time required to change the ads, I'm wondering if you're trying to sell more advertising buys across those transit and billboard assets and if you're seeing any advertiser demand for that?

When you drill down into our advertiser base there is a number of significant advertisers buying across both of our platforms. And I think as time goes forward the way that we're going to be sort of thinking about ourselves and I believe that the outdoor medium is going to be positioning itself is that a screen is a screen is a screen. So, depending on your audience why wouldn't an advertiser deploy their ad on in the subway station against above ground, if you like, on a digital screen. So I do think that we will be seeing more of that, Julia, as we go forward.

Great. Thank you.

Bryan Goldberg with Bank of America Merrill Lynch.

Thanks. I had two quick ones.

First, with respect to the color on the third quarter. How would you characterize your level of visibility right now on the low single-digit performance playing out as we kind of move towards fall. What are the bigger swing factors we should be thinking about from here on out? And what expectation is embedded for the international business in that comment?

We tended not to split out international when we give guidance color at this stage, Bryan, so I'll avoid that one for now. I'll just say potentially no great surprises there maybe would be how I might characterize that.

And then the only thing you do need to bear in mind obviously is [forex] because we're always talking about this in constant dollars. So, that's something worth keeping an eye on.

In terms of sort of incremental color in Q3, we do stress that it is at a particular point in time. We don't have absolute clarity, but we've got a significant percentage of those dollars already laid down. So from that point of view, as I said, we feel comfortable with the words that we've given but I wouldn't really want to give anything more than that right now.

Okay. Fair enough.

And then on the US -- the legacy billboard lease costs being down, is this -- how much of a trend is this? How much of this should we expect to continue as we look out the next couple of quarters, particularly with the billboard business it sounds like it's accelerating a little bit on the top line.

I think our folks have done a really nice job in renegotiating leases. Our people have done a nice job in swapping out underperforming leases. We have still more to go, and I think we've seen some of the benefit of that.

We have very little rev share in our billboard business in legacy. I'm not sure -- I'm anticipating too much continued reduction, but we can hold this to a flat and a minor increase I'd be very happy. Our people continue to make good progress. I don't think there's a lots of great low-hanging fruit to continue reducing those billboard costs, but they keep going after or they can and where it makes some sense and, most importantly, getting rid of the lease is really underperforming.

Great. Thank you very much.

Jason Bazinet with Citi.

Thanks. I have two.

One I think is easier, one may be more difficult. The easy one is in the past I never remember seeing as much of a dichotomy in the growth rate regarding transit versus the billboard.

And I was just wondering, would you characterize this as sort of there's just one particular client that sort of came in and sort of caused the revenue to grow up to increase more than normal or do you see this really at the beginning of something that has legs in terms of reaching millennials or whatever other dynamics are going on?

I think it's fair to say that the transit growth that we're seeing has been right away across the US which is obviously very positive. We had a couple of advertisers that had their own sort of business reasons this year switched out of billboard and into transit, but really that was very, very small.

If I sort of look around and think back to sort of some of my prior years, transit generally has been growing nicely across the world. So I think that's we're probably seeing some of those similar trends.

If I was looking forward I wouldn't expect the same rate of diversions on a going-forward basis, but if you do look to the last few is actually our transit business had been growing at a slightly higher rate than our billboard business when we first talked to you when we were back on the IPO ratio last March.

And maybe the other one that's a little bit out of scope. On the leasing capacity to wireless carriers is it fair to assume that any wireless carrier that uses your space for wireless equipment has to also get fiber backhaul to that site as well? And the only reason I ask is that I'm just trying to get a sense of if this works how quickly it could potentially bring up.

Jason, it really depends on the occasion and what they have. I believe they need to have big pipes for what they are going to do, but this is primarily getting to small cell technology. I am going to leave that technology solution to them, but we do expect that there may be more pipes that are going to have to be deployed to these structures. And obviously to the extent we can take advantage of the use of some of those pipes for the data analytics information we want together would be good for us as well.

Okay. Thank you.

Your question though does lead to this is something that they take a lot of time to analyze their network and their propagation and they continue to need more sites to get to. I think it ends up being a very interesting solution for them which can be very helpful.

Conduits do exist to just about all of our structures we think that we're going to go to, so helpfully there's a somewhat easier way for them to get bigger pipes there, but a big part of that process is making all of that happened. You're absolutely correct.

Thank you very much.

Tracy Young with Evercore ISI.

Hi. Two questions if I could. The MTA contract with the extension are you extending that as the same terms as your prior contract or as the contract before the extension.

And then just as a case study maybe it would be helpful to the extent you can to talk about the rollout in the Atlantic yards and sort of who pays for what as far as that rollout is concerned? That would be great.

The first point in terms of the MTA extension I don't want to talk specifically, but no huge change to the way the current shape of the contract. With regards to Hudson Yard, it's a relatively small amount.

In terms of who is paying or the shape of that investment and returns all I would say is when we deploy CapEx we look for a return on that investment and we are confident that we're going to be able to achieve that.

This is actually a really unique opportunity for us as they were looking to open up this station, the technology that we have been developing with our partner was really looking for a good example to be able to deploy. So it was a really a nice confluence of events. A nice coincidence to really try to take advantage of that this.

Okay. Thank you.

Drew Borst with Goldman Sachs.

Thank you. Dovetailing off of one of the earlier questions about the performance of transit versus billboard, I was wondering if you guys had offhand how your billboards performed in the quarter in the markets where you own transit and I guess like New York and LA.

I guess I was just trying to understand if there's some sort of kind of shift going on in those markets or maybe all those markets are just very vibrant in total, but I didn't know if you had any of that data in hand.

Well, what I can say just because it's kind of very much top of mind, but we have very big transit businesses in New York and LA and both of those billboard markets are performing very well, so I think part of that is the vibrancy just generally in those two markets. As I say, it's certainly not the case that where transit is strong billboard is weak to put it like that.

Okay. And then one other question. I was looking at the Van Wagner results and even adjusting for the kiosk business that has been jetisend, it looked like the growth had slowed quite a bit. It looks like it was down about 1% year-on-year in the second quarter. In the first quarter the core business was up 10. I was wondering what's kind of going on there.

I think as we said on the last call, Drew, frankly it's already -- we're already viewed by the market as one business. We're branded out front on all of our assets. We traded out front on all of those assets, and clients and agencies aren't thinking I'll spend this on an OUTFRONT legacy billboard, they really think of it as one business. So frankly the billboard business was more reflective as a whole. For what it's worth right now, included in the positive pacing for Q3 billboard is a positive pricing in the BW business.

The decline, Drew, that you alluded to in terms of the growth rate in Q2 is not indicative of what we think those boards are going to be doing in Q3 and going forward. We feel very good about what we're seeing from those (inaudible).

Sure. The organic numbers that you present to us, those headline numbers, are you putting into the base period year the Van Wagner numbers and then calculating the pro forma growth?

No. That organic revenue number excludes Van Wagner in both periods. So we've excluded significant acquisitions and dispositions, so 2.8% is addressed on a legacy only.

When we look at the forward-looking numbers that Jeremy alluded to of the low single-digit, that is including Van Wagner in both periods. Historical, when we report organic is just legacy, Jeremy's comments forward-looking on low single-digit is Van Wagner in both periods.

Okay. Thank you for that I appreciate it.

I'd now like to turn the call back to the Company.

Thanks very much. Thank you for all of your questions today. We hope you have an enjoyable rest of the summer and look forward to seeing many of you at the investor conference in September in New York City if not beforehand. Many thanks again.

This concludes today's call. Have a wonderful day.