OUTFRONT Media Inc. (OUT) Earnings Call Transcript & Summary

Welcome back, everyone. We are happy to have Outfront Media back with us again this year. Representing the company is Chief Financial Officer Matt Siegel. Matt, thank you for taking the time to go through this discussion with us today.

Pleasure to be here, virtually or otherwise.

Right. I wish it was in person, but we make the best of it. So Matt, the last time we were preparing for this conference, you were wrapping up the best year for the company in a long time, with healthy growth across both transit and billboards. Since then, I think I noticed a few more gray hairs, and the world certainly just got turned upside down for everyone, and forced the industry to pivot and make adjustments. Kick us off today by highlighting some of the major actions you've taken through the pandemic, and how you feel Outfront is positioned today to rebound from 2020 and return to growth in the year ahead.

Sure, Aaron. Thanks, that year ago seems so much longer than just 12 months. But we -- I think we recognized early that a pandemic lockdown would be troubling for the industry, for the company. And we acted, I would say, aggressively, rapidly, and I think ultimately prudently, in shoring up our liquidity and retaining our EBITDA as best we could. Right away, we got a bank amendment to make sure we had access to our revolver. We drew down our revolver, just to make sure we had ample cash in case there was any kind of delay or trouble in the banking system. We recapitalized the company. We went to the private market and did a PIPE transaction, took in $400 million from 2 private equity investors, one of which joined our Board. And that's a convertible preferred, convertible into equity. So that helped with our leverage metrics. Following that, we did a bond offering, if I recall, led by your firm, and we were quite pleased in June, again, to shore up our liquidity. You can see now we have the best liquidity position we've ever had, pandemic or no. But in addition, we did a lot of operating steps. We went to all our transit franchise partners and amended or asked for relief based on really huge unprecedented situation where people stopped riding transit, so the ridership wasn't there. [ None of ] the transit franchises themselves were counseling people away from their franchises. So again, no one's fault and this is all unforeseen times, but we were able to really turn 100% of our transit franchises for 2020 into revenue shares from MAGs, and that saved a fair amount of liquidity and EBITDA. So that was very good. Some continue into '21, some don't. Our real estate team went out to all of our landlords on a triage basis and size order, really, and saw if we can get some relief rent reduction. We were successful. Our scale is smaller, reducing costs there. We addressed some of our compensation costs. We had compensation step backs from management for executives, for the Board, for senior executives, for everybody. We, unfortunately let about 5% of our team, our employees go, just to better structure our cost structure, and we furloughed a few hundred people. Many of those in our operations, where obviously less activity. So we took our costs down dramatically, second, third and fourth quarter. We preserved our liquidity. We didn't -- a lot of unknowns. Fortunately, our collections performed much better than I had feared. So that was a great source of normal liquidity. And our business sequentially started recovering really right from -- the bottom was somewhere May, early June of second quarter. And while it doesn't feel like we're back to where we were, we're not back to where we were, sequentially we've been improving third, fourth and into this -- the first quarter. And so we sit now with great liquidity. Our leverage is peaking now, and as our EBITDA starts to recover, we'll grow back into our balance sheet and our leverage will come down over time. And we think that the cash liquidity we have is a great asset for returning to offense and using it to organically grow as we -- I'm sorry, inorganically grow as we organically grow internally.

Okay. Well, that's a very broad answer. You touched on a lot of things I want to ask more about now in the next hour. So let's start in terms of the operating conditions. At the trough of last year, which I know you don't want to even think back to. But in 2Q, your revenues were down almost 50%. In the third quarter, they were down a less steep 39%. And in the just reported fourth quarter, off an even lesser 31%. And a lot of that improvement is being driven by the billboards, which in the fourth quarter were down only 13%. So for first quarter of this year, you're calling for revenues to be down a similar degree as 4Q. And to be up more strongly as we move forward after that. So maybe you can just talk about kind of starting with the billboards, what's driving the top line improvement? And are you optimistic that recovery can continue to gain momentum this year despite a slower start to the year?

Sure. So billboards is a bunch of factors. Firstly, the economy is improving. People are more and more out of their homes. I think we even saw that in the second quarter, people were out of their homes more than the press gave the country credit for. [ We were ] different patterns have been moving around, grocery stores, doctors, essential workers. But I think all of those are improving. So lockdown restrictions have improved even in the tightest cities, businesses are returning. The local advertiser has mostly helped sustain us through the pandemic, and that was one of our big fears, that the local, the restaurants, the retail wouldn't survive. Whether it's with the government's support or ingenuity or creativity they have, and they've continued to advertise and pay their bills. The digital presence on billboard has helped us to lower price points for one flip to -- for an advertiser to enter or to remain. And it allows for a later or a shorter time period to make decisions on advertising. So I think as the uncertainty remains even today, I think our digital presence has been helpful in our recovery. So while we feel the billboard business is recovering, what's missing is certain categories. Not the categories who have left, we have home business. Their business is 0 or close to 0 and movies, entertainment, Broadway, and to a lesser degree, retail, travel, fitness. So they're not advertising on out-of-home. But they liked the medium before. Nothing has structurally changed. There will be movies and entertainment again. And we feel very good that they'll come back and further build up our recovering billboard business.

Matt, for those categories that are understandably still on the sidelines, but like the format, as you just said, can you put some goalposts around what percent of revenues those might have represented coming into the -- before the pandemic?

[ Yes ] seeing 2019, if you throw TV/entertainment, which is Broadway, concerts live music, movies, you didn't open a movie in this country for decades without billboards, principally in New York and Los Angeles where we're largest. So those 3 categories on their own are about 17% of our 2019 revenue. So that's a big hole. And while we have some new advertisers coming in, it's hard to recover all that in one fell swoop. But sales force is working hard and doing a great job in filling some of the hole. Some of the hole remains. And I was happy to see New York City is back to some percentage of theaters, and they're talking about preparing for live outdoor concerts. Even people talking about Broadway in the fall. So I think those are all part of the reopening trade, they may be a little later than some other categories, but we're very excited. I can point out, there's some big movies, James Bond, TopGun, I think everyone's anxiously awaiting those. We've rebooked that advertising for those and others 3 or 4x as reopening has come and gone and start and stopped. So the -- again, the advertisers like the medium, they use the medium. And we've had great relationships with all of the studios and others who participate. So I really expect them to come back and come back in big way.

Okay. That's helpful. And you mentioned digital a couple of times. So digital revenues are now up to, I think, around 25% of the total pie. And those revenues were only down slightly in the fourth quarter. Why is digital bouncing back faster than static? And do you think that outperformance can continue as the recovery gains momentum more broadly?

First, digital U.S. billboard was up for us in the fourth quarter. So we get so few bright green lines, I want to point it out. But digital is a shorter time decision. So with static, there's printing and logistics and planning and getting someone out and putting the static up. Digital, an advertiser can do it or an agency can take what they have from the Internet, translate it within minutes to the digital board. So it's an easier, shorter time. I think a lot of the advertisers are having a shorter time frame to decide to advertise, and where. So that's been helpful. A digital flip is a cheaper price point. So if you want to come in and take one flip to get your message out, that's generally, everything else being equal, cheaper access than a full static board. I'm not saying Louisville, Kentucky versus West Side of Manhattan, but on a like-for-like basis, 1 digital will be a little cheaper. So that's been helpful. And then, frankly, going back to the end of the first quarter, second quarter, maybe digital, the presence of digital helped accelerate our decline, in that people could use the same methods to cancel their advertising. So it's logical and we think positive that it's bouncing back just as quickly, and with a robust economy, even quicker hopefully.

Okay. And can you remind us on average, how do margins compare now for you on digital versus static? In the past, I had kind of thought about 4x revenue, 2x rent framework. Is that still holding true? Or has that changed at all?

Yes. That's still been holding. We convert actual less than usual. But somewhere in a normal year, 150 to 200 billboards from static to digital. And that's our expectation. And in our look backs to make sure we still have the right economics, that's been holding. I think early days, years ago, it was a little higher on revenue. We're doing our best boards, but there's still for us lots of runway. Lots of chances to add digital inventory and increase revenues. And the cost increase comes from a combination of extending our leases, so kind of a mark-to-market on a lease, taking a 2-year and making it a 10-year lease to make sure there's enough tenure to justify the CapEx. And the digital needs electricity for 24 hours, versus a static, which just needs evening lighting.

Okay. That makes sense. And you said your goal, give or take, is to be adding around 200 digital units a year, in a normalized environment?

Yes. I think our range we said in earnings was 150 to 200. 2 years ago, 2019, we did, I don't know, 202, 203, 204, a little over 200. So we'd like to get back there. Our CapEx budget is primed to get back there again, and as I mentioned our liquidity. We think part of that is, and we feel comfortable spending on offense, which is including digitizing, digital conversions. So we think we can get back there with a robust pipeline in '21.

Okay. And as we think about pricing, not only for digital but broadly for billboards, do you feel good about being able to kind of raise rates as we come out of the pandemic impact and as the recovery takes hold?

I do. Some of my salespeople might be a little -- have a little softer view. It appears us, the industry, and I'm guessing a lot of finite advertising media -- finite in that they have a finite amount of inventory -- is going to be faced with a huge increase in demand where companies have new products and new services to sell or they want to communicate that they're opening alive, if they've survived or just some messaging and branding benefits. So I think as the world goes back-to-school, back to work, vaccinated, and gets closer. I'm not sure where normal goes but closer to a more normalized environment. I think advertising will be 1 of the ways people let everyone know that they're out there. And frankly, for us, demand, we do have finite inventory. So hopefully, there's a crowd and increasing pricing or managing pricing is going to -- one of the ways we allocate that finite resource.

Right. Okay. Last question on the billboard side for now. I think you alluded to this in your opening remarks about some of the rent concessions you might have been able to achieve. Can you talk about that in terms of your discussions with the landlords on the billboard side again? And whether that relief is temporary in nature or if there is some amount of permanency to those savings.

Generally, that relief is temporary. So basically, with most of our lease -- many of our lease contracts have rent abatement clauses. It doesn't say that if a pandemic happens, we cut your rent from a to b. It just says we'll have a conversation. So we go in and say, look, there's a change in environment, whether it's audience or economy or in second quarter's case, both. And what we have now isn't what we intended to have. And we try to maintain great relationships with all of our landlords and same thing on transit, but these are partners, and we have multi-decade relationships with many. And there's going to be some -- sometimes you gain something, sometimes you give something, but we think it's mutually beneficial. So we had no intention of taking down a lot of inventory. A lot of these rent abatement clauses, if we can't reach agreement we can take our Board down or stop using it. We like our portfolio. We like our assets. As you pointed out, we had a great 2019. We're looking forward to a great 2020. So we don't want to do anything dramatic, especially after we improved our liquidity in the second quarter. So we were able to reduce costs. So a lot of negotiation, a lot of small amendments touching a lot of different leases and landlords. We saved about $15 million to $20 million, maybe 2/3 of that is -- holdover to 2021 and maybe a couple of dollars in 2022, but nothing permanent really.

Okay. Great. I want to shift gears over to the transit side of the business. And also as a reminder to the audience, if you have questions, you can type them into the little box, and I will see them. So on the transit side, revenues have improved modestly from the deep trough in the second quarter of last year, but still remain depressed. Give us the latest on what you're seeing broadly from the transit business in terms of ridership and advertisers' response to any bounceback you have seen? And I appreciate that this is very fluid and each week is different, but really kind of your latest observations there.

Right. So the transit recovery is modest as we still consider it a headwind. On the glass half full, glass half empty, ridership business down 70%. So in the big markets in New York, DC, Boston, down about 70% from prepandemic, and BART a little more than that. So ridership hasn't recovered. And the glass half full, of course, it's in New York -- which I focus most because it's large and I live there -- ridership has quadrupled. So from the low of about 400,000 people, ridership recovered to about 1.7 million, and it's roughly plateaued there. Encouraging signs that New York City high schools are coming back-to-school soon, vaccinations, whatever your percent of your website, you see, growing. So I think with a vaccinated public, you'll see people returning to their offices over time, probably not all at once. But if you're not in midtown Manhattan, if you're -- for the East Side and the lower West Side, West Village, so wherever you are. There's -- I think people are anxious for the spring thaw to really hit and get back outside for restaurants and you have more indoor dining. I think those recoveries, those return to normalcy, we'll see greater ridership. Someone told me last week, they had taken a train from Westchester and there's standing room only and that people were standing on the trains. So that's maybe a sign to the MTA to put more trains back on. So that's new. So I think there is kind of demand for ridership to return, just not there yet. And I think advertisers will follow ridership. Still the New York subway or the T in Boston is the place where -- any mass transit is the place you reach a large audience. So if you want to reach 1 million-plus people in New York, you go to the subway. Do you want to reach 3 million, you wait, probably a period of time until people arrive back on there. We don't think we need to have the subways return to 5.5 million to get a material amount of revenue back. It's not going to be a linear recovery. It's going to be more step function. And so when the 1.7 million goes to -- we guess somewhere between 3 million and 4 million, we'll be comfortable that this is the same mass audience that used to buy. And we think advertisers will return in pretty good size there. And until then, they are creeping back in, but it's a slow recovery. And when we still consider ourselves to be a headwind for our overall recovery.

All right. So it sounds like you think you hit certain ridership benchmarks and that you think advertisers can react pretty quickly to that. Tying in a question also from the audience here: especially in New York, are you having conversations with advertising clients that want to launch campaigns perhaps in the summer months or thinking ahead to the fall, or are they still kind of more hesitant to even remark on those conversations until you see the ridership benchmarks being hit?

It's a great question. We're having those conversations, both transit and billboard, but specifically we're transit focused right now. Back in the second quarter of last year, we loosened up our terms. So we made it easier to do business with us. We've shortened our cancellation window, just so we can make sure we have these conversations early. The films that are going to be opening in the fall are going to be on billboard, they're going to be on transit. I think everyone expects when movie theaters are open, when you can go see a Broadway show, there'll be students on trains. There will be people running to their office before they go to a show at night. So I think the world is anticipating recovery. And so I -- my budget for 2021 is skewed to the second half of the year for transit. So kind of a slow start to the year, which is somewhat expected, isn't cause for alarm internally. And again, we continue to make sure the advertisers see creeping numbers in transit when they come. They all know about vaccinations and some of the ridership is beyond our control, but the enthusiasm and the appreciation of the subway is something we can help communicate. The agency is now -- it takes about 60 days, [ then ] it's a couple of months from revenue to follow ridership, although in this case, we think there's markers in the ground with forward bookings, but it should help the recovery go a little steeper.

Okay. That's helpful context. Let's talk about the New York MTA a little bit more. I know there's a lot of moving parts with the relationship. It would be very helpful for me, and I know from conversations I have with investors, to just -- if you could quickly give us a kind of MTA 101 overview on the modifications to that contract over the past year, and what if any further alterations could happen if ridership doesn't recover on the expected time line?

[ Right idea so about the time altercations ] might be appropriate in some conversations. But on the -- I think for the MTA, again, a great partnership with them. We really appreciate their support and pretty quick turnaround last year in the second quarter. We amended the deal we have. So we had revenue share only for 2020. And in lieu of MAG requirement, the delta between what the MAG would have been and that revenue share was put into '20 -- the period of 2022 to 2026. So it will be spread out over time. And I don't think anyone will notice it. So that was helpful to us. We increased the revenue share in exchange from 55% to 65%, so MTA got a little larger portion. And also to preserve our liquidity, the MTA agreed to spend -- to fund 70% of deployment costs versus our 30%. Prior to the amendment, we were funding all the deployment and that was all subject to recoupment -- or reimbursement from the MTA at a later dates as we hit certain revenue targets, which we would certainly hit -- we already started recouping. So that was the amendment for 2020. As we get into '21 and see the ridership still hasn't recovered, we reached out and we've started conversations early fourth quarter of last year, and they continue constructively. We do a ton of modeling and a ton of sharing. We've narrowed it down to 2 larger issues. They've told us directly in no uncertain terms they can't -- won't give us MAG relief for 2021, but we are discussing a scope change for the overall project. We think we can achieve the same revenue targets and the same benefits for all of us with fewer screens, especially in rolling stock, in subways and commuter rail. The contract is for 54,000 screens. I'm not sure you need 12 or 16 small screens on subway cars, you can get the same message with 4 or 6. I'll leave that to the creative types. But that's mutually beneficial. So if we don't have to fund the money upfront, they don't have to reimburse us later. You've probably read that they have some financials to address like other municipal agencies in many cities. So we think that's better. And that also returns them, the quicker we recover our money, recoup the funding, they return to a 70% revenue share. We think that's when that makes sense for everybody, and we're working out details. And if you've ever negotiated or discussed things with a municipal agency, things take time. So we're on it, and we're hopeful soon. And then the other key part is an extension. We'd like to pull forward an extension that's in the later years of the contract that was pondered in case ridership changes and clearly, ridership changed for a long enough period that an extension would be warranted. We think it would help our planning and help the [ Mayoral ] planning if we get the extension papers now. So those are all part of what we're talking about with them. But right now, we're still at 55% revenue share. We are paying the minimum guarantee. We think the impact would be lower in 2021, because revenue is growing. So it's not as important to us. But certainly we think it's the other things that we're looking at will be good mitigants for the economic impact of low ridership.

All right. Great. So that puts it all into perspective. Thank you for walking through that. If I think about your other segment for a moment, particularly your Canadian business, can you talk about what trends you're seeing up there? They seem to be mirroring the U.S. rebound to a certain degree. How would you describe the environment north of the border?

So they're billboard -- for us, they're a billboard market primarily. We have some bus shelters and other things. But they probably look like East Coast or California, are locked down a little tighter than the U.S. in average, so their pullback was a little steeper. [ Somewhat would ] expect probably a little steeper recovery, but the business is very healthy. Has a lot of digital, we've acquired some digital portfolios. We continue to do aural digital conversion. It's a well-managed aggressive real estate team. So we like the market and we like the asset and the team we have. We sometimes use it as a -- hope no Canadians will be offended by this -- a 51st state, and we can test some things there. Some of our programmatic initiatives, we've done in Canada before the U.S. So I think for us, it's been a great market, and we enjoy having them.

So maybe that's a good segue to this next question. You recently sold the sports marketing unit, which was part of this other segment as well. How do you think about the Canadian business longer term? Is it a core operation that you'll seek to grow organically or via acquisition? Or is it more you just run the platform as it is? Or could it potentially be a business that you think can be monetized and create better value for shareholders that way?

I'm saying for now it's a core asset. It's an out-of-home billboard North American asset. We don't have aspirations to be global. But as I mentioned, Canada is very similar to the U.S. We do have a little bit of cross agency work and some common customers who are on both sides of the border. Sports are a little different, even though it's out-of-home, it's a different sales force, a different medium, kind of different economics, probably took a disproportionate amount of mind share. It's a well run business, and we just didn't -- it couldn't fit with us. Canada kind of fits into the longer strategic question. We have no plans to do anything different. We have no need for additional funds that we need to rationalize. But I think we can drive more shareholder value by growing that business both with growth, digital conversion and the occasional tuck-in or regional acquisition.

All right. Great. So Matt, next, I do want to spend some time on costs, and you gave some highlights on the work you've done over the past year there in your opening remarks. But in a business that many of us think of as fixed in nature, you were able to kind of quickly act to reduce your expenses last year. Three out of the last -- 3 out of the 4 quarters of 2020 saw $100 million of costs leave the system compared to the prior year, transit was obviously a big driver of that. Can you walk us through the key areas where you were able to attack costs? And how should we think about the degree and timing of them cycling back as the revenues recover?

So as you pointed out, the big chunk was transit and by turning -- in some of our transit deals are revenue share, like Boston already revenue share -- but turning the ones that weren't into revenue share for 2020. A [ town off ] car, most of the -- more than half the of the 50 -- of the $100 million was from that. Then once you're in revenue share and your revenue goes down, I wouldn't even put it in the good news-bad news category, but the risk mitigation is supposed to act that way. So the costs came out there. Real estate was small, but a lot of activity. We took some costs out there. So that was helpful. We kind of ran up the usual suspects, whether it's consultants, contractors, programmers, nonessential spend over time, pulled all that back, and then we took a lot of steps with people. We let go permanently about 5% of our staff, unfortunately. Again, we thought we have a great team doing great work in 2019, but we had to make some tough decisions and let some people go to save costs. We furloughed a few hundred people, primarily in operations and those activities, those are based on business activity. So if billboard posting and some other activity is down, we don't need all the people. So we furloughed, and it gives me a pleasure to say we're bringing some back almost in every market as activity picks up. So that's good for the people and good for the business. And then we took a salary reduction in management, executive, senior executive, board level. As you can imagine, I'm sure in other industries as well, bonuses are a fraction of what they were and a lot of other of the employee costs were down. So we think we did in hindsight the right things for the business, for liquidity and for EBITDA. But most of those will return to where they were. So I think the fixed cost nature, what was true before, will be true again. But in 2021, outside New York, I think most -- I think all, except for New York, of our transit have some portion of revenue share into 2021. Some dependent on ridership, so as ridership recovers that will automatically go back to revenues -- to the MAG contract situation, but most have some degree in revenue share as well.

All right. Great. And on capital spending, historically, you've run at around 5% of revenue, of which I believe 1% to 2% is maintenance spend. In 2020, understandably, that spending was down around 41% versus 2019. So you talked earlier about your goals in terms of digital board rollouts, but how are you budgeting CapEx for 2021? And is that a good level to use in modeling the business going forward?

We're bringing CapEx budget and give guidance back to our 2019 level. I think our budget and guidance for 2020 had been a little higher. So then we gave, I don't know, $80 million, $85 million in our revenue and so we take it up maybe to $90 million in 2019. So we think the $85 million split roughly 50, 55 growth 25 maintenance. Those are the right numbers to drive our digital conversion and deployment. So that's probably a good number going forward. There might be years we've taken up a drop if there's something we know. Last year, most of our decline was in growth, which is mostly discretionary. There are some things that are committed so you can't turn them off like a faucet. But we I think halved our growth CapEx. Got a return. We continue to spend on maintenance. Again, the value of the assets warrants it. And then this year, '21, we'll probably spend a little more on some of our technology build. As the world goes more programmatic and more direct connection, we want to make sure our systems, our internal systems and our digital, our operating systems keep up.

Okay. That makes sense. So if I try to tie together your comments around the business and what you're expecting from it in the coming years, along with the costs and the actions you've done there. This is a tough one, I appreciate that. But when do you see the business getting back to 2019 levels from a revenue perspective? And when it does, how should we think about the margins compared to the, give or take, kind of high 20s percent area level you were at pre-pandemic.?

So let me answer it in a bifurcated fashion. Billboard, I think, will get back to where billboard was in 2019 by the end of '21. So I think we're catching up and we budgeted this year as the fifth sixth, seventh and eighth quarter of 2020, just to continue the improvement comparison versus 2019. That seemed to be a football field full of different comparators. We thought that was the best way to do it. So I think that, that progress will continue, and by the end of the fourth quarter, we'll be where we were. Transit, we probably need another year, so that's probably more of a end of '22 to return to where it was in 2019, again dependent on ridership. And eventually, following ridership brands are getting more comfortable again. So we feel that, that's a year out. As far as EBITDA, we had said in our earnings a couple of weeks ago, we'll be within the MAG for the MTA. And as I mentioned today, we're not going to have relief on that. That will impact, that will negatively impact the EBITDA for the MTA. So we'll have higher costs than we've had in the past -- in '22, we expect to be back in revenue share. So I think we should return to roughly our same margin by the end of '22 when transit revenue is back to where it was. So I think we'll kind of end of '22 into '23 we'll be the same growing [ wellco ] company we were back in 2019.

Okay. Great. Let me ask you a couple of questions about your capital structure. You made some proactive moves last year to push out your debt maturities, improve your cost of capital, boost your liquidity position. Walk us through some of those actions, including, as you mentioned earlier, your preferred stock raise and how that leaves you positioned from a capital structure perspective.

So with -- in second quarter, early -- end of the first quarter, with very little visibility, we went to the preferred market and had conversations with a lot of interesting smart people and raised $400 million of preferred to bolster our balance sheet, improve our metrics and add liquidity. We didn't want to hold our breath and skate through and hope the markets would recover. You never know. And frankly, like I said, we really liked the position we were in before. We didn't want to impair that and come out with some crazy leverage or the need to sell assets when things weren't going our way. So we thought that was the best move. Again, we were early aggressive, and we like the new partners and stakeholders we've added. So that's been great. We added liquidity, flexible liquidity with a 5 noncall 2 bond. So before the end of the second quarter, we wanted to top that up, and I like the shorter tenor to make sure if we didn't have need for that cash, we'd have a way to repay it. And we wouldn't have a negative drag on that forever. We amended our bank facility to make sure that full access to our revolver. And then just this past January, we had started thinking about refinancing our 2024 maturity last February, February of 2020 that obviously didn't get done. So with patience and maybe holding our breath a little bit, early January, we were able to refinance that and push that maturity out with our lowest coupon ever of 4.25%. So that was great to see. And now our next maturity isn't until 2025. So really a long runway, strong liquidity. And we are, I think, well positioned, even though the leverage number might look a little funny, little curvier number than usual. But again, I think our EBITDA over time will grow back into that in a very predictable fashion. And our balance sheet is a comfortable one for us to do business, be on offense and have some strategic flexibility.

Okay. And just to check the box, no debt covenants that you see tripping things up over the nearer term?

No, as I said, we amended our maintenance covenant. We have a incurrence covenant, which our leverage is currently over. But as you know, we can -- we have a lot of cash, and a lot of access to capital that we could put to work for smart, good decisions.

Okay. Great. I was going to ask you about your liquidity and the various levers, but I think you touched on that. It sounds like you're very comfortable with your liquidity position and having flexibility even to take advantage of opportunistic things that come your way. How are you approaching -- given that liquidity backdrop, what you've done with the capital structure -- how are you approaching your REIT distribution requirements this year?

So a great question, complicated answer. So we suspended our common dividend after the first quarter, and just pointing out the genius of the finance team, we increased it before we suspended it, that's a rare pair of activities. But again, aggressive, we think prudent, and it turns out the preferred that we added, the preferred dividends and the common dividend we paid in the first quarter were adequate to meet our REIT requirement for 2020. So our dividend remains suspended. As you point out, we remain a REIT. So we have the obligation to pay out 90% of our net taxable income and that payout would include the preferred. So that's a $28 million annual payment. So there's one degree there's math of what the rate requirement would be, and then there's looking at where in addition to being a REIT, we're obviously a media company. There's signaling benefit we'd like to get back to being a dividend payer. So our Board is going to evaluate that on a quarterly basis based on what the REIT math says and what the prospects for revenue and EBITDA and taxable income are. And that's [ a ripe ] point. We don't want to wait until December 31 and have a purging dividend just to make sure we're in REIT compliance. We would start a modest dividend that we were comfortable we can grow along with our business. I think our last dividend maybe when we separated from CBS was a little aggressive, a little high, so we couldn't grow it as nicely as we would have liked. I think this time when we do bring the dividend back, we would anticipate a steeper growth curve.

Okay. And as you consider all these moving parts, you're holding $710 million of cash on the balance sheet, at least you were as of 12/31. Over time, what is the amount of cash you'd target to keep on hand, assuming your revolver was fully available to you?

Pre-pandemic, we had -- we seek to end the quarter with $40 million to $50 million, mostly because there's a heavy collection element at the end of each month, especially at the end of the quarter, and our dividend payment is the last day of the quarter. So we basically over-balance our cash to make sure we make the dividend payment and didn't overdraft. So I would say, we're very comfortable with $50 million, a little less on -- in accounts on hand. So over time, we'd bring that $700 million down. It was mostly designed to help us sleep better earlier. Now we'd like to find good uses to spend it. If not, we'll bring it down over time organically.

Okay. The last area I wanted to touch on was M&A. And hoping you could talk to us about the current backdrop, how the pipeline looks right now, are mid- large-scale attractive assets out there that you see and that could fit your requirements? Or should we think more about tuck-in opportunities? Really just a broad scope of what you see in the pipeline.

Right. So we always do tuck-ins. We put them on hold when the pandemic hit. We just closed a few 1s, 2s, 5s in the first quarter, and we always budget for unnamed, unknown tuck-ins that don't really move the needle, though they improve the business of each market. And over time, we think there's consolidation there, but they're pretty small. A little surprised because we rang the bell and knocked on doors and rang doorbells after we recapitalized, said hey, we have capital for offense, and we're ready to buy things. There were no distressed sellers. People weren't in financial distress, weren't in need of new capital. We let people know we're interested. So we've had a couple of very casual conversations, nothing [ material or ] pending. Probably the more likely area would be some larger, I'd still say tuck-ins, but something in the $20 million and $30 million range. But none of the big ones or regional guys or the usual suspects are for sale. And frankly, when listening to the replays of our peers' earnings, they all kind of said the same thing. So the good news is we don't think we've missed anything. We're out, we have the right contacts. We have the right profile. So far, things aren't changing hands.

All right. Great. So Matt, we're about out of time. Thank you again for carving out the time to spend with us today. I know you've got plenty going on in your day-to-day. But are there any closing thoughts you'd like to kind of leave us with before we say goodbye here?

Firstly, Aaron, thank you for having me. I would tell you, we feel good about the state of our business. Transit's a headwind, but something we think look, you can't run New York City without it. And we look forward to getting back in the office, seeing people back on subways and cars and trains and seeing all of you in midtown Manhattan, hopefully for a drink and a meal. But again, thanks for having me, and we look forward to better days ahead.

All right. Well said. Thank you, Matt.