Clear Channel Outdoor(CCO) - 2024 Q1 - Quarterly Results

Financial Highlights The company reported strong Q1 2024 financial performance with significant revenue and Adjusted EBITDA growth, reflecting improving market demand Q1 2024 Key Metrics Consolidated revenue grew 10.1% to $481.8 million, with Adjusted EBITDA up 53.6% to $96.7 million, reflecting strong demand - CEO Scott Wells noted that the positive trends from late last year continued into the first quarter, with improving demand from advertisers across all regions and key verticals in the America business segment[47] Q1 2024 Financial Highlights (vs. Q1 2023) | Metric | Q1 2024 (in millions) | % Change | % Change (ex-FX) | | :--- | :--- | :--- | :--- | | Consolidated Revenue | $481.8 | 10.1% | 9.3% | | America Revenue | $249.8 | 5.8% | 5.8% | | Airports Revenue | $76.9 | 43.0% | 43.0% | | Europe-North Revenue | $139.4 | 8.5% | 5.9% | | Loss from Continuing Operations | $(88.7) | (4.3)% | N/A | | Adjusted EBITDA | $96.7 | 53.6% | 53.0% | Business Performance The company's Q1 2024 performance was marked by strong revenue growth across key segments and disciplined expense management Revenue Analysis Consolidated revenue increased 10.1% to $481.8 million, driven by strong growth in Airports, America, and Europe-North segments Revenue by Segment (Q1 2024 vs Q1 2023) | Segment | Revenue (in thousands) | % Change | | :--- | :--- | :--- | | America | $249,777 | 5.8% | | Airports | $76,926 | 43.0% | | Europe-North | $139,393 | 8.5% | | Other | $15,656 | (17.9)% | | Consolidated Revenue | $481,752 | 10.1% | - Key revenue drivers included: - America: Increased demand, digital deployments, and growth in both print and digital revenue. Digital revenue grew 7.9% to $84.2 million[57][4] - Airports: Strong demand across the portfolio, with digital revenue up 44.1% to $42.6 million[57][4] - Europe-North: Higher demand and digital deployments in the U.K., Sweden, and Belgium. Digital revenue grew 12.5% to $73.5 million[57][4] Operating and SG&A Expenses Consolidated operating and SG&A expenses rose 3.2% to $353.5 million, with Airports seeing the largest increase due to revenue-linked costs Direct Operating and SG&A Expenses by Segment (Q1 2024 vs Q1 2023) | Segment | Expenses (in thousands) | % Change | | :--- | :--- | :--- | | America | $154,684 | 0.0% | | Airports | $57,940 | 21.9% | | Europe-North | $124,264 | 2.2% | | Other | $16,617 | (11.2)% | | Consolidated Expenses | $353,505 | 3.2% | - Key expense drivers included: - America: Higher compensation costs were offset by lower credit loss expense and a 0.2% decrease in site lease expense[65] - Airports: Site lease expense increased 21.4% to $44.0 million, driven by higher revenue[65] - Europe-North: Site lease expense decreased 4.1% (5.8% ex-FX) due to a contract loss in Norway, offset by higher compensation costs[65] Adjusted EBITDA and Corporate Expenses Adjusted EBITDA surged 53.6% to $96.7 million, driven by strong segment performance, despite a 10.9% rise in corporate expenses Segment Adjusted EBITDA (Q1 2024 vs Q1 2023) | Segment (in thousands) | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | America | $95,464 | $81,365 | 17.3% | | Airports | $19,082 | $6,264 | 204.6% | | Europe-North | $14,325 | $7,172 | 99.7% | | Total Segment Adjusted EBITDA | $129,071 | $95,170 | 35.6% | | Adjusted Corporate expenses | $(32,365) | $(32,204) | 0.5% | | Adjusted EBITDA | $96,706 | $62,966 | 53.6% | - Corporate expenses increased 10.9% to $40.1 million, driven by higher employee compensation (including share-based) and restructuring costs[72][66] Markets and Displays As of March 31, 2024, the company operated over 310,000 displays in 19 countries, with a net addition of 200 displays in Q1 - The company has a presence in 83 Designated Market Areas (DMAs) in the U.S., including 43 of the top 50 markets[75] Display Count as of March 31, 2024 | Segment | Net Change in Q1 | Digital Displays | Printed Displays | Total Displays | | :--- | :--- | :--- | :--- | :--- | | America | 28 | 2,465 | 47,079 | 49,544 | | Airports | (16) | 2,437 | 10,337 | 12,774 | | Europe-North | 348 | 15,604 | 227,370 | 242,974 | | Other | (160) | 1,063 | 3,851 | 4,914 | | Total | 200 | 21,569 | 288,637 | 310,206 | Financial Position and Liquidity The company undertook significant debt refinancing in Q1 2024, maintaining a substantial debt load while managing cash flow and capital expenditures Debt Activity The company executed significant debt refinancing in March 2024, issuing $865.0 million in new notes and a $375.0 million term loan, extending maturities - The company issued $865.0 million of 7.875% Senior Secured Notes Due 2030 and used proceeds to prepay $835.0 million of its Term Loan Facility, subsequently refinancing the remaining balance and extending the maturity to 2028[51][97] - Subsidiary CCIBV entered into a new $375.0 million Term Loan Facility due 2027 to redeem all of its outstanding 6.625% Senior Secured Notes due 2025[51][97] Total Debt Breakdown (in thousands) | Debt Instrument | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Term Loan Facility Due 2028 | $425,000 | $1,260,000 | | CCOH 5.125% Senior Secured Notes Due 2027 | $1,250,000 | $1,250,000 | | CCOH 9.000% Senior Secured Notes Due 2028 | $750,000 | $750,000 | | CCOH 7.875% Senior Secured Notes Due 2030 | $865,000 | — | | CCOH 7.750% Senior Notes Due 2028 | $995,000 | $995,000 | | CCOH 7.500% Senior Notes Due 2029 | $1,040,000 | $1,040,000 | | CCIBV 6.625% Senior Secured Notes Due 2025 | — | $375,000 | | CCIBV Term Loan Facility Due 2027 | $375,000 | — | | Total debt | $5,652,102 | $5,631,903 | | Less: Cash and cash equivalents | $(193,236) | $(251,652) | | Net debt | $5,458,866 | $5,380,251 | Liquidity and Cash Flow The company ended Q1 2024 with $193.2 million in cash, with net cash used in operations and investing, and reduced capital expenditures Consolidated Cash Flow Summary (Q1 2024, in thousands) | Cash Flow Item | Amount | | :--- | :--- | | Net cash used for operating activities | $(34,818) | | Net cash used for investing activities | $(27,331) | | Net cash provided by financing activities | $5,279 | | Net decrease in cash | $(57,630) | Capital Expenditures by Segment (Q1 2024 vs Q1 2023, in thousands) | Segment | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | America | $8,823 | $16,808 | (47.5)% | | Airports | $1,639 | $4,751 | (65.5)% | | Europe-North | $9,360 | $7,066 | 32.5% | | Consolidated | $24,035 | $33,376 | (28.0)% | Balance Sheet As of March 31, 2024, total assets were $4.56 billion, a decrease from year-end 2023, with total long-term debt at $5.65 billion Selected Balance Sheet Data (in thousands) | Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $193,236 | $251,652 | | Total current assets | $818,693 | $957,401 | | Total assets | $4,559,443 | $4,722,475 | | Long-term debt | $5,652,102 | $5,631,903 | | Stockholders' deficit | $(3,546,492) | $(3,450,743) | Future Outlook The company provided Q2 and full-year 2024 guidance, projecting continued revenue growth and updated profitability targets Q2 and Full Year 2024 Guidance The company forecasts Q2 2024 consolidated revenue of $547-$572 million and maintains full-year guidance for revenue and Adjusted EBITDA Q2 2024 Guidance (in millions, ex-FX) | Segment | Low | High | % Change (Low) | % Change (High) | | :--- | :--- | :--- | :--- | :--- | | Consolidated Revenue | $547 | $572 | 3% | 8% | | America | $290 | $300 | 1% | 4% | | Airports | $82 | $87 | 15% | 22% | | Europe-North | $155 | $165 | 3% | 10% | Full Year 2024 Guidance (in millions, ex-FX) | Metric | Low | High | % Change (Low) | % Change (High) | | :--- | :--- | :--- | :--- | :--- | | Consolidated Revenue | $2,200 | $2,260 | 3% | 6% | | Loss from Continuing Operations | $(150) | $(120) | (5)% | (24)% | | Adjusted EBITDA | $550 | $585 | 3% | 9% | | AFFO | $80 | $105 | (4)% | 26% | | Capital Expenditures | $130 | $150 | (10)% | 4% | Supplemental Disclosures This section details the company's use of non-GAAP financial measures and provides comprehensive reconciliations to GAAP results Non-GAAP Financial Measures The company utilizes non-GAAP measures like Adjusted EBITDA, FFO, and AFFO to provide a clearer view of operating performance and comparability - Adjusted EBITDA is defined as income from continuing operations, adjusted for taxes, non-operating expenses (like interest), depreciation, amortization, share-based compensation, and restructuring costs[18] - FFO is calculated per the Nareit definition (net income excluding real estate depreciation and gains/losses on sale). AFFO further adjusts FFO for items like maintenance capex, straight-line rent, non-real estate depreciation, and share-based compensation[18] - The company believes these non-GAAP measures are useful for investors as they align with management's performance view and are common in the out-of-home advertising industry, allowing for better comparability[18][40] Non-GAAP Reconciliations This section provides detailed reconciliations of GAAP measures to non-GAAP counterparts for historical results and future guidance Reconciliation of Loss from Continuing Operations to Adjusted EBITDA Q1 2024 loss from continuing operations of ($88.7) million was reconciled to Adjusted EBITDA of $96.7 million through various adjustments Reconciliation to Adjusted EBITDA (Q1 2024 vs Q1 2023, in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Loss from continuing operations | $(88,663) | $(92,605) | | Income tax (benefit) expense | $267 | $(10,501) | | Other (income) expense, net | $8,346 | $(8,780) | | Loss on extinguishment of debt | $4,787 | — | | Interest expense, net | $107,655 | $102,500 | | Depreciation and amortization | $54,290 | $64,208 | | Share-based compensation | $5,277 | $4,031 | | Restructuring and other costs | $3,308 | $193 | | Other operating expense, net | $1,439 | $3,920 | | Adjusted EBITDA | $96,706 | $62,966 | Reconciliation of Consolidated Net Loss to FFO and AFFO Q1 2024 consolidated net loss of ($89.1) million was reconciled to FFO of ($48.7) million and AFFO of ($16.3) million Reconciliation to FFO and AFFO (Q1 2024 vs Q1 2023, in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Consolidated net loss | $(89,083) | $(35,422) | | Real estate depreciation & amortization | $46,806 | $64,754 | | Gain on disposition of real estate | $(5,588) | $(94,231) | | FFO | $(49,063) | $(64,770) | | FFO from discontinued operations | $(335) | $(34,204) | | FFO from continuing operations | $(48,728) | $(30,566) | | Multiple adjustments... | ... | ... | | AFFO | $(16,324) | $(43,660) | Reconciliation of Full Year 2024 Guidance The company provides reconciliation for its full-year 2024 guidance, translating forecasted loss to Adjusted EBITDA and AFFO Reconciliation of FY2024 Guidance: Loss to Adjusted EBITDA (in millions) | Line Item | Low | High | | :--- | :--- | :--- | | Loss from continuing operations | $(150) | $(120) | | Interest expense, net | $424 | $429 | | Depreciation and amortization | $215 | $215 | | Share-based compensation | $24 | $24 | | Other adjustments... | ... | ... | | Adjusted EBITDA | $550 | $585 | Reconciliation of FY2024 Guidance: Loss to AFFO (in millions) | Line Item | Low | High | | :--- | :--- | :--- | | Loss from continuing operations | $(150) | $(120) | | FFO from continuing operations | $27 | $57 | | Maintenance capital expenditures | $(42) | $(47) | | Other adjustments... | ... | ... | | Adjusted Funds From Operations (AFFO) | $80 | $105 | Other Information This section provides a company overview, contact details, and important disclosures regarding forward-looking statements and associated risks Company Overview and Contacts Clear Channel Outdoor is a leading out-of-home advertising company, with contact information and conference call details provided - The company's strategy focuses on driving innovation through the expansion of digital billboards, data analytics, and programmatic capabilities to deliver measurable campaigns[3] - A conference call to discuss the results was scheduled for May 9, 2024, at 8:30 a.m. Eastern Time[23] Forward-Looking Statements This section provides a cautionary statement on forward-looking statements, outlining risks that could impact actual results - Forward-looking statements are identified by words like "guidance," "believe," "expect," and refer to future events, business plans, and financial targets[46] - Major risks include continued economic uncertainty, ability to service debt, competition, regulations regarding privacy and data protection, and risks related to the sale of international businesses[46]