Clear Channel Outdoor Holdings, Inc. Price & Performance (CCO)

Please review the statements of risk contained in our earnings press release and our filings with the SEC. During today's call, we will also refer to certain measures that do not conform to Generally Accepted Accounting Principles, We provide schedules that reconcile these non GAAP measures with our reported results on a GAAP basis as part of the earnings presentation. When reviewing our earnings presentation, it's important to note as of 12/31/2024, we have classified our Europe North segment and Latin American businesses as discontinued operations for all periods presented. [indiscernible] Additionally, our Europe sales segment including the business in Spain, was classified as discontinued operations in 2023. The consolidated results include the Americas segment, airports segment and Singapore. Also, please note that the information provided on this call speaks only to management's as of today 02/24/2025, may no longer be accurate at the time of a replay. Please see see Slide four in the earnings presentation and I will now turn the call over to Scott. Good morning, everyone, and thank you for taking the time to join us Our recent agreement to sell our Europe North segment as well as the recent sale of most of our businesses in Latin America marks significant progress in the execution of our plan to optimize our portfolio and focus on our higher margin U. S. Business.

To date, we've closed deals amounting to approximately hundred and $20,000,000 and have agreed to sell our Europe North segment for $25,000,000 We are also optimistic about our ability to divest our businesses in Spain and Brazil given their strong performance. As we said all along, we believe these sales will increase optionality and reduce risk in the business and focus 100% of our efforts on driving growth in our most profitable and valuable segments. We anticipate prioritizing the use of sales proceeds after retiring the $375,000,000 in CCIBV term loans to retire the most advantageous debt in our stack as permitted in our agreements to reduce cash interest and increase AFFO. During the fourth quarter, our Americas segment delivered record revenue of $311,000,000 representing an increase of 4.1% driven by strength in digital and local sales, which was in line with our guidance. As we previously noted, throughout the year, National remained somewhat choppy, However, we continue to win new business as a result of the investments we've been making in our technology and sales force. Airports continued to perform well in the fourth quarter with revenue increasing 4.3% to a record level of $116,000,000 compared to a robust performance in the prior year and in line with guidance.

Our airports team delivered strong results throughout the year with consistent national demand for our premium assets and record travel activity. While the rate of growth normalized over the course of the year, we continue to see consistently strong demand. On a consolidated basis, we generated revenue of $427,000,000 during the fourth quarter. Revenue from the fourth quarter for our America and Airport segments was up 4.1%. For the full year, we generated consolidated revenue of 1 point $505,000,000 representing a 5% increase over the prior Clear. Excluding Singapore, revenue for our American Airport segments was up 6.6%. Turning to 2025, we expect strength in our business to build as the year develops with healthy revenue, adjusted EBITDA and AFFO growth. Fueling our optimism, we're benefiting from the more diverse revenue profile we've as we have more levers to grow our top line. Our roadmap for growth remains centered on expanding our digital footprint, strengthening our data and analytics capabilities, and strategically growing our sales force. Building on our radar platform, we recently launched our CCO In Flight Insights measurement solution enabling advertisers to assess the impact of their out of home campaigns on store visits, and gain insights into audience behaviors while campaigns are still live.

We believe these initiatives are elevating our ability to make inroads with brands that have not been utilizing out of home to connect with their target audiences. We're also seeing the benefits of our expanded sales force and verticalized focus we have added professionals with experience and relationships in our target verticals. Beyond building business in pharma, we're laying the groundwork to grow our presence in the auto and beverage categories as well. Finally, once we complete the Europe North divestiture, we will be in position to take steps to further address our cost structure through zero based budgeting. As we prioritize our spending to drive growth in our America and All of these efforts are aimed at strengthening our higher margin U. S. Businesses and enhancing our ability to organically grow adjusted EBITDA and AFFO, with a priority to reduce leverage and strengthen our balance sheet. A central goal and our focus on enhancing shareholder value. Turning to our forecast, full year consolidated revenue is expected to reach between $1,562,000,000 and $1,607,000,000 representing a 4% to 7% increase over the last Clear. Dave will provide a detailed overview of our guidance in a moment. The current quarter, we are continuing to see revenue growth in our American Airport segments.

So overall, we're pleased with the progress we're making in executing on our plan. I'd like to thank our company wide team for their continued contributions to our success. I especially thank our colleagues in Europe, North And Latin America for their hard work and operating focus throughout the sales processes. With that, Thanks, Scott. Please see Slide five for an overview of our results. As Eileen just mentioned, of 12/31/2024, we have classified our Europe North segment and Latin American businesses as discontinued operations for all periods presented. Additionally, our Europe sales segment, including the business in Spain, classified as discontinued operations in 2023. Moving to our consolidated results, which include the America and Airport The amounts I refer to are for the fourth quarter of twenty twenty four and the percent changes are fourth quarter twenty twenty four compared to the fourth quarter of twenty twenty three unless otherwise noted. Now on to the fourth quarter reported results. Consolidated revenue for the quarter was $427,000,000 a 2.6% increase Loss from continuing operations was $1,000,000 Adjusted EBITDA for the quarter 145,000,000 up 2.5%. AFFO was 37,000,000 a 1% increase. On to Slide six for the Americas segment fourth quarter results.

Americas revenue was $311,000,000 up 4.1% with growth in both digital and print billboard revenue. Digital revenue, which accounted for 39.5% of America revenue, was up 7.6% to $123,000,000 Local sales accounted for 62.3% of America revenue and were up 6.9% on a comparable basis. This is the fifteenth consecutive quarter local has grown year over year. National sales accounted for 37.7% of America revenue and were flat with the prior year on a comparable basis. Direct operating and SG and A expenses were up 6.5% to $174,000,000 due in part to higher variable incentive compensation and a 3.6% increase in site lease expense to 93,000,000 mainly driven by the new roadside billboard contract with the New York MTA. Segment adjusted EBITDA was $137,000,000 up points for 7% with a segment adjusted EBITDA margin of 44.1% down from the prior year primarily due to the ramp up related to the New York MTA roadside billboard counter Please see Slide seven for review of the fourth quarter results for airports. Airport's revenue was $116,000,000 up 4.3% with strong advertising demand led by the Port Authority of New York, New Jersey San Francisco and Denver airports. Digital revenue, which accounted for 63.9% of airports revenue, was up 1.5% to $74,000,000 National sales, which accounted for 63.9% of airports revenue, were up 10.2% on a comparable basis.

Local sales accounted for 36.1% of airport's revenue and were down 4.7% on a comparable basis. Direct operating and SG and A expenses were up 2.6 percent $83,000,000 The increase is primarily due to a 3.2% increase in site lease expense to 67,000,000 driven by lower rent abatements and higher revenue. Segment adjusted EBITDA was 33,000,000 up 8.9% with a segment adjusted EBITDA margin of 28.2%. This elevated margin is related in part to renovatements Moving on to CCIBV on Slide eight. Clear Channel International BV which I will refer to as CCI BB, is an indirect wholly owned subsidiary of the company and the borrower under the CCIBV term loan facility. CCIBV includes the operations of our European businesses, [indiscernible] have been classified as discontinued operations. Until 09/17/2024, it also included operations in Singapore. Which were sold to another indirect foreign wholly owned subsidiary of the company. Historically, the financial results of the Singapore operations were immaterial to CCIBV's consolidated results. Previously, we reported results of the Europe South business as discontinued operations in the CCIBV consolidated statement of income. However, because all CCIBV businesses are now sold or held for sale, we have gone back to reporting CCIBV consolidated results.

Including businesses that are sold or held for sale, as follows: CCIBV results for the fourth quarter of twenty twenty four compared to the same period of 2023 are as follows: Revenue decreased 13.7% to $224,000,000 from $260,000,000 primarily due to the sale of the business in France on 10/31/2023. Operating income was 42,000,000 compared to $38,000,000 in the same period of 2023. Now moving to Slide nine and our review of capital expenditures.

CapEx totaled $35,000,000 in the fourth quarter, flat with the prior year.

The increase in America was due to timing and the decrease in airports was due to reduced spending at Port Authority of New York New Jersey airports as they are substantially built out at this point. Now on to Slide 10. During the fourth quarter, cash and cash equivalents were $164,000,000 including $55,000,000 held by discontinued operations. This represents a decline of $38,000,000 as compared to the end of the third quarter twenty twenty four, primarily due to cash interest payments. Cash paid for interest during the fourth quarter increased 17,000,000 compared to the same period in the prior year primarily due to the timing of interest payments in connection with the debt refinancing transaction that occurred in March of twenty twenty four. Liquidity was $346,000,000 as of 12/31/2024, down 31,000,000 compared to liquidity at the end of the third quarter. Our debt was $5,700,000,000 as of 12/31/2024, in line with the third quarter. Our weighted average cost of debt was 7.4%. Also in line with the third quarter. As of 12/31/2024, our first lien net leverage ratio was 6.6 times The credit agreement spring and covenant threshold is 7.1 times. Under the senior secured credit agreement, the calculation of the first lien net leverage ratio excludes the impact of all businesses classified as discontinued operations.

Whether the sale is closed or pending.

As a result, EBITDA from discontinued operations isn't included in the calculation. Additionally, the calculation doesn't give effect to the anticipated net cash proceeds or any intended uses therefrom. Consequently, our first lien net leverage ratio as of 12/31/2024 is higher than in previous periods and may not be directly comparable to such periods. However, all things being equal, after the pay down of the CCIBB term loan and the receipt of the Europe North proceeds, and the proceeds from the sale of our businesses in Mexico, Peru and Chile we expect our first lien net leverage ratio to be considerably lower. Now on to Slide 11 and our guidance for the first quarter and the full year of 2025. For the first quarter, we expect our consolidated revenue will be between $329,000,000 and $344,000,000 representing a 1% to 5% increase over the same period of the prior year. We expect America revenue to be between $252 and $262,000,000 and airports revenue is expected to be between $77,000,000 dollars Moving on to our full year guidance. We expect consolidated revenue to be between 1.562 and 1,607,000,000.000 representing a 4% to 7% increase over the prior year. Americas revenue is expected to be between $1,190,000,000 and $1,220,000,000 dollars Airport's revenue is expected to be between $372,000,000 and $387,000,000 On a consolidated basis, we expect that adjusted EBITDA to be between $490,000,000 and $5.00 $5,000,000 AFFO guidance is $73,000,000 to 83,000,000 representing an increase of 25% to 42% over the same period of the prior year.

And due to uncertain timing doesn't include the potential benefit of reduced interest expense. To be clear, this guidance does not include interest expense related to the CCIBV term loans. Capital expenditures are expected to be in the range of $75,000,000 to $85,000,000 with a continued focus on investing in our digital footprint. Additionally, we anticipate having cash interest payment obligations of 77,000,000 in the first quarter of twenty twenty five and four $22,000,000 in 2025. This guidance assumes that we do not repay refinance or incur additional debt. Upon the anticipated closing of the Europe North businesses, we will use the net proceeds after payment of transaction related fees and expenses to prepay the CCIBV term loan facility. Excluding interest on the CCIBV term loan facility, we expect annual cash interest payments of approximately $394,000,000 in 2025 and $393,000,000 in 2026. Again, assuming that we don't repay refinance or incur additional debt. And now, let me turn the call back to Scott.

Thanks, Dave.

To recap, we've made considerable progress in divesting our international businesses. While strengthening our product offering in The U. S. As we continue investing in our technology and strategically growing our sales force. We remain committed to selling our businesses in Spain and Brazil, will complete our plan to focus on our higher margin U. S. Business and generate cash for debt reduction. As we operate our simplified business, we off to a promising start and expect to deliver growth in consolidated revenue and adjusted EBITDA in the year ahead. Over the last few quarters, to highlight our focus on cash generation, we have emphasized AFFO less discretionary CapEx. We continue to expect growth in that metric but going forward with the simplification of our business, we will focus our comments on AFFO, for which we anticipate significant compound growth. We expect this growth to be driven by adjusted EBITDA growth and debt reduction. Now let me turn over the call to the operator.

Our first question is from Cameron McVeigh with Morgan Stanley. Please proceed. Hey, good morning. You guys You provided a relatively wide guidance range for the first quarter. Is this conservatism or is there more uncertainty out there now? Just curious any color you could provide there and maybe the macro expectations that are baked into the guide?

Would be helpful. And then secondly, if you could just walk through an update of how you're thinking margins should trend this year now that you've exited a few territories?

You want to take both those, Dave? Sure. From a guidance range, I mean, it's usually our normal range that we kind of put out for the first quarter, but when I'm thinking about the first quarter, there's a couple of uncertainties when you think about not in LA. But I feel pretty comfortable kind of where we are from an airport standpoint and the guide is actually I think pretty tight in the first quarter. When you think about it for the year, obviously, there's a lot that can go on between now and the end of the year. I mentioned what's going on in LA. Just from an economic standpoint, we have a new contract with the MTA. So that's going to ramp as the year goes on. Little bit slower of a ramp as that contract ramps in the first part of the year as we get to towards the back half of the year. So I think that that contract is going to ramp I think overall, when I look at the year, I think it's going to be up we're off to a little bit of a slower start. In the first part of the year, we're going to have growth across both segments.

But I do expect that to pick up as we get back into the third third and fourth quarter. So from a guidance standpoint, And what was the second question?

Margin From a margin standpoint, I mean we've talked about this Many times, when I think about the margins of our business, what's what we've talked about before as that MTA contract ramps that will have an impact on our margins from an America standpoint. And again, the first quarter and this is apparent for both The Americas and airport standpoint, in media businesses in general. You're going to book more revenue as you get into the back half of the year and and your margins will build throughout the Clear. We'll see a little bit of a margin declines on the MTA contract. We've talked about airports and we've had a lot of rental abatements and because of COVID in 2023 and into 2024, And I think we've been pretty clear those will go away in 2025. So from a margin standpoint, we were definitely elevated, especially in the fourth quarter for airports and that will come back down to more normal levels. I think we've talked about in the past on airports, we were in the high teens. We'll probably be in the 20% range as we get into into 2025. Some quarters will be a little bit higher, probably ramp as you get later into the year.

And probably a little bit tighter or smaller margins in the early parts of the year.

Makes sense. Thank you.

Our next question is from Daniel Alsley with Wells Fargo. Please proceed.

Thank you. Good morning. You mentioned national ads were flat Good morning.

You mentioned national ads were flat year over year in Q4. So I was wondering what you're expecting expectation for national is in 25% and what categories are seeing strength or weakness? Than add a follow-up?

Sure. So yes, I mean, I think the word we keep using on national is choppy and that's really specific to the America business. National was quite good in airports all year long. It was up double digits in airports all year long. So the choppiness is more in the roadside business I think what we have seen is just some relatively big campaigns coming in and out over the last last couple of years. There were COVID related campaigns, that were strong toward the end of twenty twenty three that didn't recur Telecom came back in a pretty strong way over the course of the course of 2024. It just has been a little bit choppy. We're seeing those advertisers We're having to do a lot more work to reliably get that money get that money in. And that's why we've been focused on on doing category development, doing the things we've talked around with data and so forth. So I think as we as we look to the year, think there's a couple of things that we think are tailwinds national spending for this year. I think California in general Coming out of the fires, of course, in Southern California, but particularly looking at San Francisco, Northern California, I think we're going to see some real strength in California this year.

The early look there is that advertisers are looking at that region and coming back to that region in a pretty meaningful way, again, particularly in Northern California, there's a little more uncertainty in Southern California. I think from a vertical perspective, we think that the media entertainment slate is better than 2024. And that should be something that is a positive for us We continue to see pharmaceuticals ramp We think that will be good for us over the course of this year. And we do have efforts going into a number of other categories that we're looking to drive. And I am encouraged by what I've seeing in telecom and I actually think the T Mobile acquisition of Vistar is a a positive data point within that broader category that it's an endorsement of the importance of out home for telecom. So I think those are some of the puts and takes. But until we get to the point where our pipeline is what's driving national as opposed to to the varied in and out campaigns. It's going to remain a little choppy in that segment. We need to get sort of similar momentum as we've enjoyed in the airport segment.

That's helpful. Thank you.

Our next question is from Jonathan Navarretti with TD Cowen. Please proceed.

Hey, good morning. Just want to touch on the MTA billable contract.

Should we still be expecting 2% growth [indiscernible] Americas segment. And can we talk a little bit about the CapEx and EBITDA ramp related to the contract?

Sure. I mean from an NTA I'm looking at it from a full Clear, from a revenue standpoint, yes, you're going to get a couple of points of growth on top of the Americas the Americas segment. Obviously, that's going to ramp a little slower in the first quarter, but I'll ramp [indiscernible] in November From a CapEx standpoint, And that's we're going to that's going to run through our normal CapEx you're not going to see a spike in the overall business from a spending standpoint on CapEx. Will be part of our our digital upgrades and our normal kind of maintenance CapEx. Maybe it will be higher obviously in the first several years of the contract. But I don't think you're going to see a spike as far as from our overall CapEx and it's included in our guidance that we're thinking about. But that will help the contract as you're spending CapEx on that on that property as you get into the second, third and fourth year because it will take those new boards a little bit of time to ramp. Got it. Thanks. And just the last one is on airports local revenue during the fourth quarter.

I think I calculated there was a decrease [indiscernible] is there a trend that we should be aware of Thank you.

No, if you look at it for the full year, I mean it's up double digit [indiscernible] just kind of the ebbs and flows. There were a few direct deals, just some comps that we had year over year. That roll up into the local number, but if you think about that local number for the full year, I mean, it's up pretty substantial, it's actually in the high double digits. Probably closer to 20%. So really no concerns from our standpoint on that fourth quarter number. And national was up. So overall, I think this segment performed really well and it was when you think about that fourth quarter and where we were three or four years ago, I mean that segment is up $30,000,000 $40,000,000 So it's performing quite nicely. Our next question is from Avi Steiner with JPMorgan. I have two here if I can. One curious what the implied guide for corporate is and 'twenty five. I apologize if I missed it, I hopped on a couple of minutes late. And then relatedly, I guess, as more assets get sold here and you get down to your core U. S. Focus, I'm curious if there's upside to that corporate number?

And I have one follow-up. Thank you. Look, from a corporate expense standpoint, I'm assuming you're talking about, how's it going, We have sent and said in the past that our corporate expenses roughly $31,000,000 of expenses. I'd say that number is probably closer to mid-30s at this point in time. We're continuing to work on that. I think you'll see savings we get into this Clear, obviously, as the divestitures are made, but really I think you'll see more of an impact as we get into 2026. [indiscernible] we'll still have all the reporting, we still have the companies that are signed but not closed. So a lot of that work is still ongoing. At this point in time, I see a line of sight Clear to the mid-30s, And I think that number will grow as we get later into the year and as we're working on it into 2026, you'll see more expenses come out.

That is very helpful. Thank you. And then my last one and thank you for the time. Scott, you've been talking about getting down to a core U. S. Focused business for a long time and while it took a little longer than expected to your credit, really right on the doorstep here. So I guess the question is, how do you tackle the balance sheet or how do you think about tackling the balance sheet from here while investing as you want in The U. S. Business?

Are they mutually exclusive Can you do both? And thank you again for the time.

Thanks, Sami. Yes, no, I appreciate the question and it however long it felt to you, I assure you it felt longer to us. So we're very pleased to be at a point that we're making the good progress that we've made. I've said it in a few settings as we shift from from divesting the European businesses, which has been a pretty substantial effort of corporate development, finance, just human resources. I mean, the amount of diligence done across all these businesses is just kind of staggering. As we get past that, been focused in that area and focus it on things we can do. And there are a few things that make me feel good about our odds. I think thing one is that we are a very innovative bunch here and we have some very creative ideas that we're looking forward to testing in the marketplace that we think, all of our stakeholders will will value if we're successful. Can't promise that they will succeed, but can promise to show similar doggedness in trying to drive those innovative solutions that are kind of win win wins. I think the other part that makes me optimistic is not a week goes by that somebody's not trying to get me to opine on the out of home sector to some investor.

And I don't do any of those routinely, particularly not in our quiet periods, of course. But I know there is a ton of research going on in this sector And I think we're a really interesting and really credible partner for people who want to invest in this space and that there might be some creative things we can do along those lines to create opportunities for growth, maybe not using our capital, but maybe with us benefiting from the activity. Again, can't promise anything. We haven't started working on that yet.

But I think of those as kind of the more innovative and creative things And then I think the other thing you got to factor in we're going to have excess proceeds over the BB And I think there are some creative things we can do to accelerate that AFFO growth that is going to allow us to bring down the interest expense and bring up AFFO, bring up cash flow and start to get into the functioning, high functioning public LBO position that we aspire to be as opposed to the stuck in place public LBO that we've kind of felt like the last couple of years. So I'm pretty upbeat on our prospects as we start to get these things done. So hopefully that gives you enough flavor without me giving away too much of the store here.

Heck of a teaser. Thank you very much for the time, safe travels. Thank you. Thanks Avi. Now with the greater focus on The U. S, do you anticipate accelerating the the pace of digital board installations and was also curious on how I guess trade uncertainty has kind of impacted those investment plans. Sure. So we've kept a pretty steady pace of of adding signs to our portfolio And I don't think we're going to particularly accelerate it. And that's at least partly driven by where our footprint is. There are three or four of our cities that are underpenetrated in digital that we're working very diligently to get opportunities to expand in digital. And should those opportunities break, accelerate at that point. Much of the rest of our footprint we're doing a really good job of just kind of expanding around the perimeter and expanding the core, of already robust digital offerings. We have We have everything from markets that are in low single digits percent revenue all way to markets that are 60% digital revenue. And this is in roadside and airports. It's advanced of that. In terms of the sort of spread. So I don't think we think that principally converting our own digital signs Setting aside the three or four cities where there's ordinance changes that could help us, is going to be our principal thing.

We'll continue to do that at a steady rate but we're not going to there's not a lot of upside in us just accelerating that. And then I think beyond that, what I was referring to with Avi may be a place that we creatively deploy some capital maybe in conjunction with partners and things along those lines, but I'm speculating as that develops.

Okay. And then just within the digital revenues that you generate on notebook, billboards and airports, is there sort of a breakdown that you could provide on like the mix of local versus national within that?

No, I mean, I would look at it, it's very similar to just kind of the overall business when we kind of break out local, national. I don't think it's going to be widely different from those numbers when you look at it from a digital or a printed sign. From a client standpoint, international clients, like digital, they like printed, it's the same on the local side. So I don't think it would be widely different.

With no further questions in the queue, I would like to turn the conference back over to management for closing remarks.

Great. Thank you, operator. Thank you everyone for joining us today. We appreciate the interest and the time. I think the main thing I want to mention as we wrap up is that we understand we have a lot of moving parts in our financials and that it can be somewhat confusing as things go into disc ops and as we work the tail on transition services and bring down corporate expense, We appreciate that and we we have a plan to get an Investor Day together for the end of the summer where we will be able to shed some further light and do some more unpacking of the kind of questions areas that people have had here. Just wanted to put that placemark out there and we'll certainly be talking with you between now and then. But appreciate everyone's interest and wish you a good balance of the week.

Thank you. This will conclude today's