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

Okay. I think we'll get started. I'm Aaron Watts, the media credit research analyst at Deutsche Bank. And next up, we have OUTFRONT Media, pleased to have them back with us again this year. On the stage with me is Chief Financial Officer, Matt Siegel. Matt, thank you as always for being here.

Aaron, thanks for having me. And I really enjoy the day. We had a great turnout today.

Great. So you just reported your 2022 results last week. You grew organic revenues 21% for the year, including 6% growth in the fourth quarter. Billboards have fully recovered and then some from pre-pandemic levels. Why have you in the out-of-home industry broadly been able to snap back faster than many of the other media outlets? And is this momentum sustainable for OUTFRONT going forward during a time of some uncertainty?

Sure. Great question. So we had a great year in 2022, a lot of revenue growth, transit growth. The industry has been growing. I think partially, it's a continuation of the trend from 2018, the out-of-home industry has been taking share. Obviously, it was a bit of a dislocation in 2020 with a pandemic, which was a challenge for us, but the other old line media companies are maybe challenged with their audience and some of the digital providers have some specific and digital-wide issues. So I think it's a good environment for us to continue that share gain. The digitization that we've seen throughout out-of-home makes us a lot more flexible, so we can take more business later. So it made us more attractive for certain advertisers. And I think there's no reason we can't keep it going.

Okay. Great. So the #1 concern that I hear now for the company and the industry is unsurprisingly around the risk of a further economic pullback and what that can mean for advertising spend. As I mentioned, you grew 6% in the fourth quarter and guided low single-digit growth for 1Q, a slight deceleration. Though for full year '23, you expect AFFO growth in the mid-single-digit percent range versus last year, and Jeremy mentioned seeing some pickup in the bookings real time. Given that macro backdrop, what level of caution is baked into your guidance both the first quarter and full year? And can you talk a little bit about what you're seeing and hearing across your footprint, both encouraging signs as well as more cautious tone?

We're aware of potential recession or economic slowdown. And I think we're all probably confused on what defines a recession these days. But we've been playing under the recession overhang since this time last year, and we grew revenue 20%. So there's no reason to think it's going to change our ability to gain share and keep going. Our guidance assumes there is some economic uncertainty, but that the GDP does not back up, then there's -- we think we can grow GDP plus.

Okay. And you mentioned the increasing digitalization of the group. Presumably, that comes with shorter booking cycles and some of your static boards may skew a little bit more national. Has that negatively impacted your visibility today or bring a bit more volatility than in the past?

We definitely have less visibility, especially in transit. Our billboard business booked some permanent full year business coming into the year so that's already laid down. Transit doesn't really have much permanent advertising. Like for instance, in the second quarter, we're about 1/3 of our revenue on books in transit sitting here now for the second quarter. In billboard, we're closer to 2/3. So there's a little more visibility there. Overall, less visibility as we digitize, as you mentioned, business comes in later. However, our FP&A team has done a great job of forecasting, and we think we've adjusted our algorithms or methods to accurately predict our business.

Okay. So let's focus a bit more on the billboard side first, which accounts for a majority of your revenue and cash flow. What markets have led the charge back for you? Which are less robust? And given you're waiting in New York and L.A., can you speak to what you're seeing in those markets specifically as well?

First, the charge back has really been led by the markets that were hit hardest for those who felt sharpest came back quickest, which not coincidentally, all our New York, L.A., kind of the larger markets, bigger national presence, more exposure to economic cycles, New York, L.A. have led the charge back both in digital and somewhat in transit. And 2022 was no different. Our 3 largest markets in billboard were New York, L.A. and Miami. Those all happen to be our biggest revenue share market. So when those markets outperform, the other more localized markets, our billboard margin has a bit of a headwind there.

Now you've returned to your traditional local national split, 55%, 45%. We've heard from many other ad outlets that national has been more choppy than local. Is that your experience at the moment and reflective of what you're seeing and you're talking about a strong snapback in New York, L.A., but have you noticed that variance?

National always has more volatility both on the downside and the upside. So far, we really haven't seen that in the fourth quarter, where maybe mid-quarter, we started to see some low or some -- a little bit of a slower growth. National and local grew about the same, local would drop faster than national, but nothing to call out that -- of any concern.

Why do you think it is that out-of-home has held up a little better than, let's say, TV, radio and some of the other kind of media marketplaces; social, digital?

So importantly, out-of-home, you're probably pointing more toward billboard. Our audience has returned from the pandemic. It took some effort in 2020 to demonstrate that people were out and about driving, walking, living their lives after the true bottom of the pandemic, maybe in June, July, and we were able to demonstrate that with some proprietary data. The other, radio, print, TV, I think, has -- coming into the pandemic and beyond have had audience challenges. So their CPMs go up. We've always had the lowest CPMs. That's made us on a competitive basis even more attractive. And I think that's helped mitigate some of the audience challenges that we've seen in transit still today.

Yes. So speaking about CPMs and thinking along those lines, your yield growth has been impressive over the past year. Can you break that down and discuss both occupancy, where that's at versus historical levels? And also pricing, which I think you've said has driven a lot of the increase in yield lately.

[ Residential ] pricing rate has been the driver, a primary driver of our yield improvement. Occupancy is around the same year-on-year as it's been. To your point, digital around 70% occupancy, static in the high 70s, and then no big changes there. We'd like to work a little bit on our occupancy this year, but not at the expense of yield. We were able to educate, train, manage our sales force to drive price last year. Inflation is a bit of a tailwind. And a lot of our sales world -- a lot of the advertising sales world, the people in their 20s and 30s, and they haven't seen inflation in their business environment, so kind of getting them comfortable and training and understanding the language was, I think, very important. They did a great job of pushing forward. And I think our management, sales management did a good job of kind of holding people in to higher pricing. And that started with our permanent laydowns earlier in the year and continued right through the year.

Yes. And I'm sure not many people are expecting you to experience the same rate increases this year as you were able to achieve last year. How are you thinking about upside for yield as you move through 2023?

I think still our yield is probably going to be led with rate. There's still inflation as we hear, and we think that's still modestly helpful. I agree, I don't think we're going to have double-digit rate increases like we experienced throughout '22, but I do think we can gain rate and use that to push yield.

Yes. Okay. And any particular advertising verticals that are in focus for the company this year. Opportunities or concerns, I know you called out, for instance, the movie space for being a little bit of a slow start to the year, but maybe more back half weighted. Any other categories you want to call out that are of particular focus?

For us, entertainment in general, is our largest and these days, the most volatile, whether it's people going back to movies or other activities. So doing some research and finding the first quarter movie slate was a little wider than in the past kind of, I think, explains part of our transit slowdown. Movies are typically advertised on buses, and our bus business in both New York and L.A., where we're movies open, are down year-over-year. So that's something we're focused on. We hope to enjoy as that recovers in the second and third quarter. If you -- anyone saw the Super Bowl, you saw there's a lot of movie advertisings for June and July, our advertisers will come a little later in those areas. But also in entertainment, streaming is a little softer. Apparently, they are a little more focused on profitability. So not turning off but pulling back on some spend on the pure positive side. Travel has been great and should continue to be great. The more digital we have, the more attractive it is for travel especially in transit underground where you can show video. So you can show someone skiing in the winter, "hey, come on out" and you can show a cruise line going across much more attractive, and that's something we can do now that we couldn't do 4 or 5 years ago. It's trying to [ eliminate ] the regular categories. Retail has still been great. Again, we would mean to I think there's no obvious recession because retail advertisers are still advertising. In the services; medical, legal, all very big on the local side.

We had a sports betting panel at lunch. I know that was a tailwind for a lot of folks last year. How big a lift did you get from that in 2022? And is that something that has disappeared somewhat as of this year?

Pretty good list, primarily in the first quarter in New York. So I think New York State opened up their sports betting in the first quarter. So we saw a tougher hurdle this quarter mostly in transit. So that's one of the headwinds for the MTA. But for the rest of the year, it wasn't particularly large. We were not as concerned after the first quarter.

And then last one I wanted to ask on insurance. I know that's been a bit of a headwind for some. Are those comps easing up a little bit going forward? Is that -- have you had that experience with?

It's a very big insurance advertising view in 2021, a couple of statewide initiatives, a couple of big advertisers competing with each other. So we saw a very down 2022. So it should be an attractive comp. We're not taking advantage of it yet. So I haven't seen the return to insurer, Michigan or insurer, California, but we wouldn't -- we shouldn't have the same negative performance in insurance that we had this year.

Okay. Got it. I wanted to go back to digital revenues, quickly. So you're now up to around 1/3 of your revenue pie coming from digital. That was obviously a key driver of your overall growth. You added 330 digital boards in 2022, up from 188 in 2021. What are you on track to add this year? And which areas or markets present the opportunity for you now?

So this year, we will target -- our usual target is 150 to 200 digital billboards, and we'll return to that target. The 330 was bit roughly equal between conversion and development and acquisitions. So we had a very heavy acquisition, also, we'll talk about in a bit. That drove a lot more digital. So we'll be targeting really the existing footprint. We have 40 or 50 markets and any -- any and -- how you cut them. So we continue to build pipeline, go to community boards and get approvals and permits and look to grow our existing digital base. Certain markets, L.A. is opening up a little more digital. Florida has been great for us. Always big in New Jersey and Phoenix. They both have great operators and continue to grow there. And certainly, in New York, but the digital conversion is still very attractive. And I want to make sure I'm not overemphasizing any one market to choke them on too much supply or at once.

Okay. And remind me, on average, where would you say your digital board margins are at now relative to where you've historically been with static boards?

Certainly north. I don't know if you break down digital versus static, I mean we are in a typical static conversion these days, we quadruple the revenue, so we're taking 1 flip turning into 8 flips, showing the price point. So getting a lot more revenue. We're doubling the cost. So the digital margin in general, the more, more revenue goes through digital, the more the better our digital billboard margins overall will be.

Okay. Perfect. And you alluded to this, but you expanded your footprint last year as part of that digital board increase with the acquisition of Pacific Outdoor, your first new market since 2014. Is there a further operating upside for you in the Pacific Northwest?

We hope so. So one of the attractions of adding a new market, and we're very excited to see it. There aren't too many. You want the young, demographic, growing, a place where we're not -- and for a long time in New York. Portland opens up 4 or 5 different states. So now we can -- that we added, I don't know, somewhere between 900 and 1,000 spaces but more importantly, maybe we have critical mass now in the Pacific Northwest, so we can push into other states. We can push into Idaho, push into Washington from there with a core operating base. So we think the growth, the attractiveness isn't just adding EBITDA and cash flow but adding the ability to compound that with further development.

Okay. Providence Equity recently purchased the advertising displays at Two Times Square and entered an agreement with you to manage or run those assets. Walk us through the fundamentals of that partnership and what it means from both a strategic standpoint maybe with Providence, but also from the P&L perspective for you?

Sure. So Providence is an investor now, a common shareholder, but they stepped in and what preferred back in 2020, when we had some concerns about where the environment was going. And they've been great partners and great shareholders for us since. We have a great relationship. They introduced just a few years ago to the former landlord at the Two Times Square. And we've been selling some of those signs, the advertising on some of those signs on a revenue share basis as they figure out what their strategic next step was going to be, ended up at Providence, step forward is buying the signage on the building there. They're paying -- they pay money up-front and has the vendor financing. We're paying off the vendor financing part through revenue share. So the financial return for us in the first few years, well [ positive ] will be pretty thin as typical Times Square inventory is attractive for us, two things. First is a call option starting at year 3. So if we do create value that we think we can and maybe it's outsized value. We have a call option to capture that, the remaining 40-plus years of that at least for ourselves and pick Providence out. But almost as important, having that high-profile asset, we think strategically allows us to negotiate better, tougher, more thoughtfully with some other Times Square landlords, not if you're -- in the out-of-home business, you need something in Time Square. This way, we have access to one very large, very high-profile sign. And if we need to, we can give up a couple of others to make sure the overall profitability of Times Square gets a little more attractive.

Okay. Great. Let me shift gears to the transit side of the business. Organic transit revenues were up 38% last year, including 6% in the fourth quarter. It sounds like transit is trending around flat to start out 2023. Talk to us about where both revenues and ridership are now relative to 2019. And if ridership really has plateaued and what that means for revenue upside from here?

So we focus, obviously, MTA is the elephant in every virtual and real room and being that we're in New York and a lot of people watch New York closely. I can talk more currently that ridership -- the MTA has been at 63%, 64% of its 2019 ridership level for a couple of months. Just a few weeks ago, it seemed to have stepped up to about 68%. So that's encouraging for us. I'm not sure it's more people going back to work and more people moving around, but more ridership is better. Through the end of 2022, our revenue as compared to 2019 has outperformed ridership, so even over indexing performance. So we've been pretty pleased with our sales effort. We still think we need more ridership. We've been continuing to increase the screens and the coverage and the attractiveness of the inventory. So we think it's a better product, and some improvement in perception in the MTA and really all transits on the ground, whether it's safety, cleanliness, convenience, we think, is going to help. What we still believe that with less than 100% of riderships, say it's 80% of ridership we can get back to that 100% and growth from their revenue baseline in 2019. But the issue was really about reach versus frequency. So if some of us are going to the office 3 times a week and not 5 times a week, that's 6 subway ride, not 10. You're getting the same people, you're showing them the same edge just 6 time instead of 10 times and we need to do a good and better and continuously better job explaining to the advertisers, You're reaching the people they're taking the subway, they're just not taking it as often. Similar, let me just -- other transit Boston, D.C., San Fran, ridership is lower than New York. D.C. hasn't kind of [ dragged] their people back. San Fran, everyone's heard the stories. We're having so far pretty good 2023s, and we're optimistic that at some point, transit gets a little closer towards 2019 level.

So let me harp a little bit more on New York. Your agreement with the MTA has evolved over the last couple of years. Remind us where you're at in that rollout? Where ad bookings are compared to the minimum guarantees for this year and whether EBITDA can continue to grow this year despite the recovery is taking a little longer than you may have expected?

The MTA is complicated. It's got a lot of features to it. We've amended it twice in '20 and '21. We reduced the number of screens that are required to be installed, which we think is mutually beneficial for us. And the MTA, we were going to put in 50,000-plus screens. We took that number down to north of 30,000. Most of that reduction is in the smaller, on car screens. So it might sound like a huge number, but just trimming back some of those high-volume screens. That saves us money upfront, and we think saves the MTA money over time as they repay us for recoupment. We are currently under the minimum annual guarantee, which actually was at a $126 million. This year from a CPI adjustment in the contract goes to $135 million, which equates to about $245 million revenue breakeven. We've ended 2022 at $200 million revenue. So there's a little room to grow if you grow 20% revenue. For example, that would still be under our revenue breakeven. So therefore, last week, we highlighted that we don't expect to get above that $245 million. We'll be accounting for the franchise expense of the minimum annual guarantee there, the MAG on a straight-line basis. So with the seasonality in the business, we expect first quarter to be underwater, having -- plus you have the negative EBITDA over the course of the year, as we move into the seasonally stronger fourth quarter, and we do expect revenue to grow and grow closer to the MAG breakeven that the EBITDA of the MTA will grow. And MAG, look, as you increased revenue under the MAG level. Most of that 90%, 95% is EBITDA. We're taking revenue. We're paying a commission Otherwise, the fee is fixed. So the improvement should show up in EBITDA, but strong -- you pointed out and I agree, not as strong as we'd like, but we are finding a good fight.

And maybe this is obvious, but is the main driver of getting above that minimum guarantee going to be, you need to see increased ridership. Is that what it's going to come down to or...

We think so. So ridership but also perception. We have the concept of brand security. Less now than maybe 6 months ago when there was a lot of yellow tape and other precautions or if any of you read the New York Post or at least have heard of the New York Post, they don't seem to like the MTA. So there's a negative article weekly about something. But if whether it's PR or public opinion or something can improve the feel of the MTA, you can bring certain categories back. So high fashion is hopefully on its way back. It was very big in 2019. It's sometimes being associated with a certain negative compensation, could be a negative for an advertiser. But again, as the subways and other things look better, feel better and have more riders, we expect all the advertisers to come back. And this is the largest pool of audience in the country when I come where the people are.

Yes. I'm writing the LIRR and the MTA myself, [indiscernible]. Okay. So last one on the MTA, what further spend or cash going out, should we expect for screen deployment going forward? I think you mentioned on the call last week that this year, maybe $100 million flows out, but then it steps down significantly. Is that the right cadence? And...

We're pretty close to the end. The stations and platforms are mostly deployed. So most of this $100 million, which we think will be our number this year will be for [ on car ] which will leave us pretty close to the end for next year that we'll have some tailwind. There could be some supply chain issues. So if the $100 million turns out to be $80 million, maybe next year would be $50 million or $60 million. But importantly, once we finish this initial deployment, the annual comes down to probably $30 million a year with screen replacements, some continued maintenance. And some of the train lines are pretty far down and maybe in a hospital environment, there's some certain electronics. So over time, over -- this is a 13-year contract with a 5-year extension. So over time, there will be some replacement screens. But I think importantly, once the deployment costs stepped down from $100 million to $40 million or lower, the MTA experience will be a net cash flow positive every year even without big recruitment. As revenue grows, EBITDA positive money comes in and get in comps up the [indiscernible] big ticket once you're above the bank level recoupment starts again and our balance sheet gets much healthier.

That all makes sense. Are there any meaningful transit opportunities away from New York coming up for bid to the extent Outfront still has interest in expanding its transit platform. And -- or do you have any existing contracts that are getting close to end of term that you may or may not decide to renew?

It's interesting, even though from our experience in transit and others. So at a price or at the right price, these are still attractive ways to reach audience and communicate and deliver advertiser's messages. So we're always looking at things right now. The most current one, MARTA in Atlanta bus shelters, probably something where we're not going to keep -- to take in. They're looking for more capital. And frankly, capital and revenue share have become that combination a little less attractive. Over time, the industry has advanced and for us taking a leadership position. We want to make sure we're spending the right price for the right structure on the right deals. What we have, WMATA, the D.C. subway, we're in a short-term extension that expires in mid-'24. There will be a renewal RFP. I mean I'm sure by the end of the year, we'll see what their capital needs and requests are in the revenue share. But certainly, we'd like to keep it. We like the franchise. But at the appropriate price, it's attractive at a different price that [indiscernible].

Okay. I wanted to ask you a couple of quick questions on margins for the business. You saw consolidated margin improvement for the full year last year but a slight decline in the fourth quarter. What's driving these fluctuations? And what should we expect from the business over the near-term horizon, perhaps touching on both the billboard and the transit unit.

So transit is simpler, so I'll start there. As the MTA is large, it's under the MAG level. So there's a fixed cost component. So transit is below its historical 20% operating margin, which is mostly a revenue share business. Once the MTA gets back above its MAG level, we said it won't be this year, but we're optimistic or not even optimistic. But certainly, we expect 2024 to be above there. That should return to its historic 20% margin. Billboard, a little more complicated, primarily a fixed rent business. So as revenue grows, there's operating leverage in the business, that's a benefit as we digitize more and more and more revenue goes through our digital screens, those are both reasons for margin to improve. Two slight headwinds there. One is geographic mix. The more growth we have out of New York, Miami, Los Angeles, great markets, our 3 biggest in this past year, 3 best-performing markets. That's a bit of a headwind. Those are lower-margin markets because they have a heavier revenue share portfolios than many other markets that we have. But again, those are big revenue markets. And then in high acquisition years, the timing of cost of lease and the revenue ramp is a little skewed. We start paying rent day 1, and the revenue takes 6 months to ramp up to where we expect it to be. So the timing of that will be a headwind for margins as well. But generally, I think over a wide period of time, global margins will continue to improve, not necessarily linear as geographic and acquisition activity will impact various quarters.

Okay. Great. Let's take a look at your liquidity position, capital structure a little bit. You entered this year with committed liquidity of around $650 million. That includes $40 million of cash and $500 million on your cash flow revolver, as well as $120 million on an [ AR ] facility. What's the minimum amount of cash liquidity you'd like to have on hand to run the business generally? And then you see the current dry powder is ample during the current uncertain times we're in and sufficient should the economy take a turn for the worse.

So we think our current liquidity is ample. And certainly, more is always better. It makes you feel a little better. Pretty well, but you can only sleep better. Again, with the MTA, we think pretty close to the end of its deployment that's going to help our liquidity, at least not take away from it. We feel, the revolver is still untouched we have joined it years ago and we [indiscernible], we would. So that's available. We have pretty good access to the bond market. I did hear from many investors today. We said we think about refinancing a mid-25% maturity. I thought we had 3 eyes or 2 heads, but that's what make us lost races. So again, we'll see where that goes. Securitization facility is a great source of liquidity. So we'll probably use that this year. But again, business is pretty close to turning what the MTA spend will give our balance sheet great comfort. If there are opportunities in the acquisition market, there will be reason to augment our liquidity further.

Right. And I'm just confirming that 2025 bonds, that is your next maturity that you'll have to focus on. So you have a couple of years on that. Okay. And then in terms of fixed versus floating within the capital structure, how are you balanced there?

We're a little under 25% floating. So we have a $600 million term loan, which is large in the securitization program as we use that is floating. So that's -- so rates have gone up. They went up very quickly, quicker than most people expected, but I'm not sure they're going to go up much further. They go up probably a little higher, so we feel comfortable with that mix. I'm not looking to term any of that, any of that out. And frankly, we're not looking to add any more [indiscernible] to be on that as well.

Sure. Okay. And the reported net leverage today is around 5x. Has a higher rate environment, economic uncertainty change your comfort zone for leverage at all? And would you like to see leverage? Where would you like to see leverage live? And any thoughts around realistic timing to get there?

I'd like to see it closer to 4x than 5x. We've been between 4x and 5x. Last time, the pandemic took us up much, much higher. We've come down to the higher end of our range. So we're comfortable here, but bringing it lower would enhance our financial flexibility, take a little bit of risk out of our balance sheet and give us a very little dry powder. We think we'll delever a little bit this year and then next year with the MTA's deployment spend coming down and continued growth in our OIBDA. We think we can get much closer to that 4x level by the end of '24.

Okay. So on a related note, capital allocation, how are you thinking broadly about your dividend policy going forward and capital allocation more broadly? And maybe you can include some thoughts. You made comments on the call about where the dividend might land vis-a-vis your REIT requirements. So maybe you can touch on that, too.

Right. So as for REIT, we're required to pay out 90% of our REIT income and we are at $0.30 a share at the end of -- at $0.30 a share per quarter at the end of last year. We're right at that level. So any sort of increase in our REIT income, and we do expect from our guidance to grow our -- grow revenue and grow income to have a requirement to raise our dividend. We do want to -- we want to wait really as long as we're comfortable to get a better visibility into our business, into the economy before doing that, but we think it's likely we'll be increasing our dividend this year to carry into next year. Some of our photos, we want to avoid in REIT world, if you haven't paid enough dividend, if you pay an excise tax, which is unattractive, or you pay a special dividend at the end of the year. And for us as a media company, we don't really like the idea of special dividends. Again, some people brought up some thoughtful feedback today and I appreciate that. But right now, our theory is we want to increase the dividend at some time during the year carried into 2024.

Okay. And as we think about the cash you're generating, focusing on free cash flow, CapEx, I think, is going to be steady this year, year-over-year. Interest burden rising a little bit. You mentioned your floating rate debt. So how are you thinking about those offsets in terms of growing free cash flow?

So the challenge, we are an AFFO measured company. So they get a challenge this year. We think our EBITDA or OIBDA will grow a little faster than our interest expense, which has been a headwind to our guidance for full year, AFFO growth is modest and maybe unimpressive. But we think you break down the parts, interest expense is what it is, but the EBITDA growth with a little tailwind from maybe some outperformance in the MTA or others will be a little better, but we think this is a slower year than last year, and we're comfortable that going beyond this interest expense won't continue this outsized growth. EBITDA will pick it up and next year will be a little more attractive.

Okay. Let me end on the topic of consolidation and M&A. You completed $370 million of total acquisitions last year, including the $185 million Portland purchase. Can you talk about the current pipeline? And do you foresee more opportunities to expand the footprint like you did with Portland?

So Portland kind of, it wasn't planned, came out, I wouldn't say of nowhere, but someone called and said, "Hey, this is an opportunity". And we thought, look, they don't come up cross off, and we probably have 4 or 5 other top 30 DMAs that are young, growing and attractive that if someone called we trying to figure out how to do something similar with critical mass there. So that's nothing we can plan on. The M&A pipeline, probably a little lighter than last year. Change in valuation there's always a bid-ask spread. We continue to look for tuck-ins in our existing footprint, and there's a very long tail of independently owned or independent developers who are constantly developing. And we like to have a pipeline not just of our own development but from developers around the country to keep a diversified opportunity if we get stuck or not successful, we don't want to put all our eggs in our own basket or any one developer. So we keep that pipeline going. Again, our placeholder is usually somewhere between 50 or 100. Last year was an attractive year and I'm glad we can act on that. But I think we'll probably do a little more digestion and a little less acquiring this year.

Okay. And how are you finding the bid-ask spread right now as you're speaking with maybe more regional or smaller owners? And then relatedly, whether it's smaller assets or larger properties, are you bumping up against financial buyers still fairly often.

Yes. So the bid-ask is maybe a little wider. The private market sellers don't adjust as often as the public markets, do what the public market management does. So that takes some time. And internally, we preach patience and discipline. Let's not chase things. There's enough inventory. Eventually, people do get motivated to sell for various reasons. And hopefully, we can buy, again, small tuck-ins at very attractive prices. Again, long tail some years bigger than others. We do bump into a fair amount of private equity, whether they're banking other buyers, whether they -- my bigger concern is the ones that are buying so they can sell to us later. That's where we try to step out of those auctions early just to make sure, hey, we're not the next bid, markets happen.

They'll come to a small but reasonable mark up a few years...

Always reasonable.

All right. Well, Matt, we're about out of time. Thank you again for being here. Great comments.

Thanks for your time. Thanks for coming, everybody.