Clear Channel Outdoor Holdings, Inc. (CCO) on Q1 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Clear Channel Outdoor Holdings, Inc. First Quarter 2021 Earnings Conference Call. Please note this call may be recorded. And I'll now turn the conference over to your host, Eileen McLaughlin, Vice President of Investor Relations. Please go ahead.
Eileen McLaughlin: Good morning, and thank you for joining Clear Channel Outdoor Holdings 2021 first quarter earnings call. On the call today are William Eccleshare, Chief Executive Officer of Clear Channel Outdoor Holdings, Inc.; and Brian Coleman, Chief Financial Officer of Clear Channel Outdoor Holdings, Inc., who will provide an overview of the first quarter 2021 operating performance of Clear Channel Outdoor Holdings, Inc., and Clear Channel International B.V. After an introduction and a review of our results, we'll open up the line for questions and Scott Wells, Chief Executive Officer of Clear Channel Outdoor Americas, will participate in the Q&A portion of the call.
William Eccleshare: Good morning, everyone and thank you for taking the time to join today's call. During the first quarter, we continue to execute on our strategic plan with the goal of maximizing our near term performance, while strengthening our ability to capture an increasing amount of advertising dollars as the global recovery takes hold. Our first quarter revenue results were in line with the guidance we previously provided. And for our American segment reflected a tough comparison against our strong performance in the first three months of 2020, which was only minimally impacted by COVID-19. We delivered consolidated revenue of $371 million, down 32% compared to the prior year, excluding China and FX. Brian will walk you through the details of our first quarter performance following my remarks. Looking ahead, we remain encouraged by the progress being made with regard to vaccination process, and the increasing levels of mobility across many of our markets, as well as the positive sentiment we are hearing among advertisers. As expected, we are now seeing our business return to year-over-year revenue growth through the balance of the year, driven by the rebound in several markets.
Brian Coleman: Thank you, William. Good morning, everyone. And thank you for joining our call. As William mentioned, as expected, the quarter has been challenging to the impact of COVID-19 on our business, as well as tough comparisons against our strong Q1, 2020 performance in Americas. However, we are beginning to see a rebound in many of our key markets. We aren't back to 2019 levels, but it's certainly nice to see the improvement. We are also continuing to work on reducing costs and addressing our capital structure while investing in our business so that we are in a stronger position as our business begins to benefit from the improving economic environment. Before discussing our results, I want to remind everyone that during our GAAP results discussions. I'll also talk about results adjusted for foreign exchange, and non-GAAP measure. We believe this provides greater compatibility when evaluating our performance. Additionally, we have expanded our disclosure to include more detail on Americas’ revenue including breaking out transit revenue. We've also added disclosure on site lease expenses in both the Americas and Europe segments. Moving on to the results on Slide 4. In the first quarter consolidated revenue decreased to 32.7% to $371 million. Adjusting for foreign exchange revenue was down 34.8%. If you exclude China and adjust for foreign exchange, the decline in revenue was 31.7%. These results were in line with expectations. Consolidated net loss in the first quarter was $333 million compared to a consolidated net loss of $289 million in Q1 of 2020. Consolidated adjusted EBITDA was negative $33 million in Q1 of 2021 as compared to consolidated adjusted EBITDA of $51 million in Q1 of 2020. Excluding FX consolidated adjusted EBITDA was negative $27 million in Q1 of 2021. Please turn to Slide 5 for review of Americas’ first quarter results. The Americas segment revenue was $212 million in the first quarter of 2021 down 28.4% compared to the prior year, with a decline in revenue across all of our products, national was down approximately 33% and local down approximately 25%.
William Eccleshare: Thank you, Brian. Looking ahead, we are encouraged by the pace of the vaccination process and the increasing levels of mobility that we're seeing across the majority of our footprint. In turn interest among advertisers is returning and we are seeing booking activity exceeding 2019 in several U.S. and European markets which bodes well for the year ahead. We remain focused on strategically investing in our technology, including expanding our digital platform, and further strengthening our data analytics and programmatic resources with the aim of maximizing the potential of our digital board. As we elevate our ability to demonstrate the effectiveness of our assets in influencing consumer decision making, and continuing to make our inventory easier to buy particularly among digital ad buyers, we will look to expand our revenue growth potential. As we invest in our technology, we will also continue to take steps to carefully manage our costs and preserve our liquidity as we navigate the evolving macroeconomic climate and focus on driving profitable growth over the long-term. And now let me turn over the call to the operator for the Q&A session.
Operator: Your first question comes from the line of Steven Cahall with Wells Fargo.
Steven Cahall: So thanks a lot for the color. You talked about the pickup in RFPs and theatrical, could you maybe give us a little bit of color on the Americas division? How much revenue in this division these days is the large urban signage, large urban areas spectacular is that sort of thing? Because I imagine that's where you're seeing a lot of this resurgence. So if you could maybe help put some color context around those larger urban revenue areas? And what sort of trends you're seeing, and maybe the same question for Europe. And then Brian thanks for that financial detail. Maybe you could dive a little bit deeper into what the covenant holiday means if you're ending liquidity of 425 to 475, which I think I heard right. Does that put you in compliance with the covenant? And does that include maybe some of your bank debt reduction or like revolver payback by the end of the year? Thanks.
William Eccleshare: Brian, you want me to take the spectaculars one first?
Brian Coleman: So Steve, the question about theatricals are good one, and just to clarify, they do buy spectaculars. But that's not the majority of what they buy with. They actually are big users of our digital networks and buy relatively deep into the footprint. And so I don't think we disclose how big the spectaculars business is, but it's in that bulletin and other that was disclosed. It is definitely showing signs coming back, but it's not just the theatrical that's coming back. I hope that gives you a flavor for it.
Steven Cahall: Maybe just in that context is large city or a sort of large urban area X transit starting to come back. We've seen that from some of our local TV companies?
William Eccleshare: Yes, I mean, I think it's a mixed bag across the country, but it definitely is, and certainly, as we look Q2 and beyond, we're definitely seeing that, I think the more you go south than the more you go to somewhat smaller locales, the more robust things are. I mean, I think this will be a question we'll get so I'll just answer it right now. We have about a third of our markets, not a third of our revenue, but a third of our markets trending to be ahead of 2019 this year. And I think overall, we're expecting a very strong second half and really second quarter and second half, but particularly on the traditional side.
Brian Coleman: And, Steve, I think you asked about Europe as well. I hesitate to generalize about the recovery in Europe, because it really is very different country by country. If we were just talking about the U.K., I think we'd be presenting a very positive picture, as the bulk of the restrictions are being lifted almost by the day, and we're seeing the recovery follow that very closely. In other European markets, the pandemic has taken longer to be cured as it were. Restrictions have remained in place for longer. And so we haven't seen the speed of recovery that we're seeing in the U.K. so it is it is a very picture. What is consistent is that week by week lockdowns are being lifted, and week by week as those lockdowns are lifted, the revenue comes back pretty strongly. But it's going to be happening during the second quarter that that recovery is taking place. And so I think what I would say is if you average it out across Europe, April continued to be low. May is certainly moving more strongly, and by June, I think we're expecting to see in pretty much all of our markets that recovery taking hold. But I would think of the second quarter for Europe as a transitional quarter, and then looking to a strong sustained recovery into the second half as the vaccination rates increase. But an update is that there is no such thing as one Europe in this situation.
William Eccleshare: And, Steve, I'll jump in and answer the covenant question quickly. I think, first I'd like to say we're pleased to deliver another amendment and certainly reflects the continued support of our bank group, so happy with that. The second thing I noticed this is a springing covenant. So it only applies if there is outstandings under our cash flow revolver, which today there is. But really what the second amendment means is, there really is no financial covenant, which is a secured leverage test until the end of the year. And in return, we'll continue to maintain a minimum liquidity of $150 million. So it's a continuation of the first amendment with respect to the secured leverage test. That test when it's in effect is 7.6 times, there is a step down to 7.1 times and consistent with the delay and the application of the financial covenant, the step down has also been delayed, and delayed till September 30, 2022. So again, pleased to report the second amendment and I think it's kind of based on how we feel the recovery is going. And we feel that we do have sufficient means to meet that test. You asked a question about the liquidity guidance and whether or not that's sufficient and what that reflects is kind of the way I took it. When we provide the liquidity guidance includes cash and availability. So it doesn't really matter whether we pay down a revolver or not, it would be included whether it's availability in the revolver, cash on our balance sheet. We do believe it's sufficient, we've worked hard to build up that cash cushion. We have more visibility today than we did in the past. But we also are very mindful of our liquidity position. And we'll take additional measures if appropriate should we need to make any kind of changes on that front. So hopefully, I addressed your question, let me know if I didn't.
Steven Cahall: No, that’s great. Thank you.
Operator: Your next question comes from Ben Swinburne with Morgan Stanley.
Ben Swinburne: Brian, I think that was your comment about the second half of the year apologies if it was somebody else's reaching 90% of 2019 revenue adjusted for - I just wondered if you could go back to that and just explain that again, because it was a little bit quick. And also, if you could give us a little bit of color on how you guys are thinking about the different parts of your portfolio in the context of that second half. And then I was just curious maybe for Scott on the programmatic side, what are your plans as you move through this year into next year in terms of building that channel out further into technology investments, and whether you're seeing advertisers really pick up even further interest in that channel including kind of on the local side would be interesting. Thanks a lot.
Brian Coleman: Yes, so I'll talk a little bit about the revenue guidance comment. And then I'll flip it over to Scott and William to talk about what they're seeing in their various market. But the guidance provided was really to give some comfort based on the slope of the recovery that we're seeing in our business today, as to where we think the business can be at the end of the year with respect to revenue versus 2019, given what we see today and what we think will be happening over the second quarter and really the second half as we see recovery in the various parts of our business. So things could change, but given what we're seeing today, we feel a strong recovery is insight. And by the end of the year, we could be back up to 90% of pre-COVID levels, 2019 levels on the top line. So hopefully that gives some indication at a high level what we're seeing today, and hopefully, we'll see that recovery come to fruition. Scott, William color on the operating unit?
Scott Wells: Yes, the programmatic question. I'm happy to take the U.S. portion of it and then William to the degree you want to talk about the European, you know we can dive into that as well. So, first off programmatic is coming back very nicely. It is it is performing well and it is performing ahead of 2019 pretty materially. At this point, so it is, a channel that we see advertisers having interest in more broadly. In terms of our plans, I think you will see us add at least one more SSP, which are sort of the supply side platforms, they're sort of the large scale distribution platforms that give you access to different DSPs, which are the demand side platforms, that's what the advertisers actually use. We currently have a pretty robust mix, but we're always looking to enhance that and we're always looking to additional. I think you're also going to see us building more and more capability in terms of how we're actually handling the content side of things. So there are investments that we're making in our content management system, and other developments that we're that we're working with along those lines, in terms of making our toolset more robust, and able to continue to scale nicely. As to the question on local, we have had a few local customers, by programmatically. It has not been the primary angle on our business, but I think as you see the demand side, some of the more mainstream demand side platforms coming online, that do a lot of business at that level. I think you'll see us pick up more, but that has not been the focal point so far. William, I don't know if there's anything you'd add on Europe.
William Eccleshare: No, I'd only say - you know I think I said right at the start of this year that the programmatic was going to be a key part of our agenda right across the - across the company. And what Scott's been doing in the U.S., I think has been a model of growing our programmatic capabilities. As I said in the in the script earlier, we would have launched in five major European markets, our branded programmatic product, which is now as I say in those five key markets initially. We call it a Clear Channel LaunchPAD, which connects our premium digital inventory to SSPs. and to digital platforms. And it's a it's an important start Europe's a little bit behind the U.S. in adopting programmatic at scale. But I'm absolutely convinced that within the next two to three years, we'll see it taking a pretty significant share of our business. So it's an step forward.
Operator: Your next question comes from Lance Vitanza with Cowen.
Lance Vitanza: I have one for Brian and one for William maybe, William, we could start with I found the country-by-country commentary and you're very helpful. And I understand that the pace of the restrictions being lifted varies by country-to-country. But what about the lag between return of audience and return of ad dollars? And generally, if I'm hearing you right, it sounds like you're not really seeing the lag this time around that feels different than last fall, but did I get that right?
William Eccleshare: It really depends on how much digital inventory we have in each market. So in the U.K., where over 60% of our revenues now comes from digital screens, the recovery is pretty much instant in terms of our revenue once restrictions are lifted. So once audiences are back on the street, advertisers want to reach them and we can get those straight up onto digital screens. And then follow-on soon after on to traditional inventory. In France for instance, where we have significantly less digital inventory that recovery can take a little longer. Although I would say that if we look back into Q3 of last year, when restrictions were lifted in France, we did see revenue coming back pretty fast. I mean, not as fast as we would with a stronger digital footprint. But I think that is the main - that is the main variable. I think the other factor to look at is the clarity of the government’s signaling of what their plans are in terms of loosening up restrictions. So I think in the U.K., we've benefited from a very clear roadmap of five weekly stages of the opening up. In Spain, it's been much less clear what the process was going to be. An in France, I think we would say, they took a long time before they reacted, they have now reacted, and we're now seeing infection rates go down, vaccination rates go up, and restrictions being lifted. So as I say, I'm very optimistic about the direction of travel. I'm optimistic about the speed of recovery, once restrictions are lifted, but it does vary a little bit market-by-market. Does it help?
Lance Vitanza: Very much so thank you. And then Brian just for you, does somebody still have $40 million to $45 million of LCs outstanding and if so presumably, that is factored into the liquidity guide? In other words, that's a net against what you would otherwise be able to borrow on the revolver, is that right?
Brian Coleman: That's correct. And I actually think we disclosed what the availability which would be the size of the revolver, less any kind of commitments, which would include LCs. I don't remember the exact amount maybe a little higher than $45 million, but we are a big LC user that is backed out because it's not available for liquidity so it will not be included in the liquidity covenant.
Operator: Your next question is from Stephan Bisson with Wolfe Research.
Stephan Bisson: Thanks so much for the additional color today. Could you talk a bit about margins and how they trend throughout the year and perhaps over the longer term for both Americas and Europe will be targeting pre-pandemic levels or something change in the cost structure to push it one way or the other?
Brian Coleman: I can take a stab at that and then William and Scott if you want to William respectively. So I think margins are coming back. In Americas we talked about sequential improvement. We're a little, little early in the recovery in Europe to make that commitment for Q2, but you know as the economies start to rebound as Europe starts to kind of follow in and really get traction in the recovery. We would expect a margin improvement is there. I mean this is a large fixed cost business has a great deal of operating leverage. And we'll see that pull through as the recovery occurs. And if it's not in Q2 for Europe and we would expect it in the second half. The other part of your question about do we ever expect margins to hit pre-COVID levels? Well, the business does change over time. And I think that answer is dependent upon a number of things. We have some positives we've taken out some costs in the business. We continue to take out costs in Europe will take a little longer there. But we are being very diligent, and we don't expect all these costs to come back. On the other hand, the portfolio does change if in the future, we have more weight in transit and more weight in airports or more capital city contracts which have lower margins that could change the overall margin profile. And we do have some of that business mix, differential right now. And so, I wouldn't expect that when revenues get back to 2019 levels, you should assume margins would be at the same point, it's going to reflect some of the underlying changes in the business. But by and large, incremental dollars to this business will fall through. And we're encouraged that we're starting to see some of that. And again, I think through the rest of the year, we hope to deliver it. Scott, William I don't know if you have any further color, but that's where I'd start.
William Eccleshare: Scott do you want any comments to the U.S.?
Scott Wells: I mean, I think the only thing I’d just say is that the next several quarters are going to be lumpy. And that could go in both directions. And so what's driving that is we're still in negotiations and still in approval processes on different relief programs. And we will start to see some snap backs happen as relief that we got during the worst of the crisis played through. And so it's probably not going to be a neat linear path over the next couple of quarters, but I think medium to long-term, you will see a healthy margin profile that reemerge.
Stephan Bisson: Scott, I'm glad you mentioned that that's a very fair point, my comments on the longer term recovery was assuming all of this had unwound. I think you're right the next few quarters due to the lumpiness of some of the deferrals and abatements. It could be as you said - could be very lumpy. So thank you for that?
William Eccleshare: Yes, so I would only add, I was going to use the lumpy word as well, I'm afraid. It applies equally to Europe, it's pretty lumpy. The other point I would make for Europe to echo Brian's point is, we have made it clear, we are going through some pretty significant cost reduction programs in Europe and in some specific European markets. As you all know with some of those European markets, those cost reduction programs can take time as you go through extensive negotiations. So whilst we are very actively addressing some cost based challenges in Europe, the impact is not going to be instant it's going to take some quarters before we really see that impacting margin.
Operator: Your next question comes from David Joyce with Barclays.
David Joyce: I was wondering if you could provide some more color on the proportion of your advertisers and revenue that are coming from RADAR at this point. What portion of your footprint is enabled and also, are you linking with other, to what degree are you linking with other media companies with that holistic omni-channel buy program for your advertisers? Thanks.
Scott Wells: William, do you want me to take a run at this first?
William Eccleshare: Yes, yes.
Scott Wells: Sure. So in the U.S. a 100% of our footprint is, is RADAR enabled. And it's very hard to actually answer your question because RADAR is not. It's not something that the client buys it's a service that that goes alongside what they're buying. And so a client might use RADAR and many of our clients at this point are using RADAR to do their planning. But they might not do an attribution study, they might not sell any other media through our RADAR connect tool, I mean if not embed our data. On the other hand, advertisers might, do all four of our RADAR products here in the U.S. So we don't really measure it by what percent of our revenue goes through it. And let me let me speak to the omni-channel because I think, there could be two ways to answer that question. I think one, would be that we do – when we do RADAR studies, we do include analytics for all the out-of-home that's being used, not just ours. But I don't think that's necessarily what you meant by omni-channel, I think you're thinking of omni-channel DSPs. So a programmatic thought process and you can clarify for me when I give you this blurb as well. But omni-channel DSPs are relatively recent to out-of-home programmatic. They are absolutely a growth channel. And we are definitely seeing advertisers including out-of-home in their digital campaigns where they might be buying other digital advertising products along with digital out-of-home. The work space for these omni channel DSPs includes quick boxes where they can add digital out-of-home alongside play ads or search or other things like that. But that is still the minority of our programmatic revenue at this point. It's something that we think has huge promise, but it is it's an emerging channel. So, hopefully that addressed your questions.
David Joyce: Yes, those comments, were all just for the U.S. correct?
Scott Wells: Yes, that was all U.S. focused.
William Eccleshare: And if you take Europe, RADAR we launched RADAR in just the U.K. and Spain just last year, we are looking to rollout the product into other European markets later this year. But again, to Scott's point, we use it as a as a market indicator of audience and as the audience travel patterns. And so use it to demonstrate to our advertisers the audiences that they can reach through a collection or a network of boards or screens, but it doesn't relate to a specific advertiser campaign in general.
David Joyce: Okay, thanks. And second question, if you could please clarify, when things normalize in 2022 or 2023 will the margins be higher due to your various cost cuts or will the revenue mix shifts differential make the margin comparisons were difficult from pre-COVID?
Brian Coleman: Yes, I don't think we know the answer to that. I think we are achieving cost savings and everything, some of those will stay. And obviously as the business grows, we'll have to reevaluate it and that is tailwind. At the same time, we're made up of a portfolio of contracts. And we'll continue to go after profitable contracts, and that can shift over time. If we get into more transit, that could change the business mix. So I don't know that we know the answer, but I think we'll continue to focus on improving margins, the best we can. But at the end of the day, we want to generate positive and incremental positive free cash flow. And we'll manage the portfolio, as we think is accretive most accretive to shareholder value.
David Joyce: And if I could just understand better the renegotiated – lease contracts, were those in temporary abatements, you have temporary changes? Like do they come back with prior levels of revenue, like, how should we think about that cadence?
Brian Coleman: Well, it's a mix and I think you start with, when COVID impact was the greatest you started with deferring payments on everything, and trigger negotiations, it's unprecedented times, our counterparties largely realized that as well. And sometimes those referrals, turn into abatement, sometimes there's government support behind it, sometimes you're dealing with private landlords, and it's more of a discussion and maybe it is a deferral and ultimately will have to be paid out. But there's a wide spectrum of discussions, and these are ongoing. So I think that once we, confirm that something as a permanent abatement, we disclose that, and everything else is a deferral, if it hasn't been paid. Some of those deferrals could slip into abatement, some of those will be deferred and ultimately unwind as the recovery continues. So it's a mixed bag. And we do disclose separately, the site lease abatements that we've gotten in the quarter and all of last year. And so hopefully, that gives you some color on the site lease negotiations. It's a big initiative. The operators have done a great job. And they'll continue to do what they can as long as the business is negatively impacted by COVID.
Operator: Your next question comes from Avi Steiner with JPMorgan.
Avi Steiner: Thank you and good morning. And thanks for squeezing me in, quick few here. Domestic travel seems to be coming back based on TSA numbers. I'm curious how important is it for the company that business travel returns versus what seems like personal? And then if you can just remind us on the lag time on the airports business between a higher level of travel and revenue coming back to historical levels, then I've got a couple more? Thank you.
William Eccleshare: Sure, thanks Avi. You're absolutely right travel is coming back nicely. The business travel is what historically, the majority of airport advertising is anchored on. But as we've gone through the crisis, we've actually engaged a lot of advertisers who are not, sort of B2B oriented. And so, we're going through a bit of a portfolio mix shift. I think the way I'd answer your question is that it will definitely be important for us to have international travel in particular, start to reemerge because the international terminals tend to be some of your most premium inventory, whether for business or for consumer oriented products. Business travel as a whole I don't think needs to get back to the same level that we had before COVID in order for it to be still a very robust audience and a robust opportunity. As far as the question on the lag, I think when you go back and look at last year, and now that we're disclosing the information, you might see this a little bit more clearly on transit. We didn't see a precipitous fall off immediately. And it's because a lot of the airport contracts are a little bit longer term in orientation. And so you had a little bit of an unwind that happened. And that works in the other direction, too, that you need to get advertisers to decide that they believe that the return of the audience is robust. And then they need to commit in order to secure locations and secure their positions. We've never gone through anything like this or at least not in recent history, I think 9/11 is probably the closest analogy, and it was pretty different in terms of the speed and how traffic rebounded and how things work there. So we really don't know what the lag is going to be, but we expect that it will probably be multiple months, we definitely are seeing advertisers, some of the strategic advertisers that really prioritize airports come back for the second half of this year. So I think our news is going to get a lot better as the year builds. But in terms of the calling the ball on exactly when we're back to run rate, I do think it will lag the roadside business by multiple months.
Avi Steiner: Appreciate that color. Thank you. And then, Brian, just on the liquidity comments, which were very helpful, just from me beyond interest and CapEx, how do we think about working capital, some of these deferrals come back, and any other movements in there? And then restructuring cash restructuring please?
Brian Coleman: Yes, that's one of the reasons why we kind of went out and gave a year in liquidity position, I do think we have some swings particularly in the deferrals. We've got our operators working very hard and defer those payments, convert those payments to permanent abatements. And then for liquidity purposes, in between now and kind of normalization, we have to pick periods when they will hit. And so, we thought it was important to kind of go out to the end of the year and provide some liquidity guidance. And I think we feel given what we see today, we feel pretty good about that range. Restructuring charges, yes, look I think we have a number of things going on. If I look at some of the cost savings initiatives, largely we have spent, and we are benefiting from the restructuring initiatives that we've taken in the U.S., Latin America, and a significant amount of the corporate, what will take a little longer is the European side and we've provided some data points on that. And it really is a function of the countries that we operate in Europe going through the process there. But we do - and we've actually revised the program to make it larger and more substantial. That will take a little bit longer. But I do think from a cash outflow perspective since a lot of that cost is really severance related, that they should be largely in line, put another way, you won't have a huge amount go out day one and not receive that until first quarter of 2023. They should be kind of matched funding from here on out that we have some upfront costs, but for the most part, they should kind of match going forward. So hopefully, that's helpful on the working capital and restructuring side. Let me know if you have further questions.
Avi Steiner: That's great. And maybe last one. I haven't heard in a while but I may have just missed it any update on the Los Angeles billboard market. I thought earlier in the year there were some new rules potentially coming out there so any comments here and thank you for the time?
William Eccleshare: I'll take that one as well. The thing you might have read about was the City Planning Commission had put forth their response to some of the ordinance language that the city council had drafted. It's now back in the city council's land use committee. And they are working on it. I would not hazard a guess as to when that political process will yield. But I do know that they're working on it. It definitely got deprioritized during COVID. We had felt pretty bullish the early part of last year that things were going to move through, and I do think that the city council is engaged and is very serious about getting an ordinance out that will work for the industry there, but we don't have a timeline that's concrete.
Operator: At this time, there are no additional questions. I will turn it back over to William Eccleshare for his closing remarks.
William Eccleshare: Thank you, and thank you everybody for joining the call and for supporting us during this period. I mean I just want to end by saying I think we will look back on the second quarter of 2021 as the quarter where the business turned a corner, the pivot quarter if you like where we went back into growth and we are starting to see the real recovery from COVID-19. It's clearly dependent upon some factors out of our control as whether there are going to further COVID variants and how vaccine programs run out in different markets around the world. But all of the signs that we are seeing are truly encouraging around our business's ability to bounce back from COVID. And just picking up on some of the questions that we've had today, as those restrictions are lifted, and as audiences come back into the streets, we do see that recovery coming the lag varies market by market dependent a bit on levels of digital inventory and based on specific circumstances. But as I say, Q2 is the key quarter for us as we turn that corner and look to the second half of the year to really demonstrate the business back into full growth. So thank you for your support. Thanks for the great questions, and we look forward to talking in the coming weeks and months. Thanks very much.
Operator: Thank you. This concludes today's conference call. You may now disconnect.
Related Analysis
Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) Surpasses Q1 Financial Expectations
- Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) reported Q1 EPS of -$0.17, surpassing analysts' expectations and indicating improved profitability amid industry challenges.
- Q1 revenue of approximately $481.75 million exceeded estimates, showcasing CCO's sales generation capabilities and financial resilience.
- Despite a year-over-year revenue decline, CCO's strategic focus on high-margin markets, technological investments, and financial stability positions it for sustainable growth and success in the advertising industry.
On Thursday, May 9, 2024, Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) reported its financial results before the market opened, revealing earnings per share (EPS) of -$0.17, which was better than the anticipated EPS of -$0.18 by analysts. This performance indicates a notable improvement in the company's profitability, despite the challenges it faces in the outdoor advertising industry.
Additionally, CCO reported revenue of approximately $481.75 million for the first quarter ended March 2024, surpassing the estimated revenue of roughly $478.55 million. This achievement demonstrates the company's ability to generate higher sales than expected, contributing positively to its financial health.
The reported revenue of $481.75 million, although representing an 11.7% decrease from the same period last year, still exceeded Wall Street expectations. The Zacks Consensus Estimate had pegged the revenue at $480.69 million, making CCO's actual revenue 0.22% higher.
This slight beat in revenue expectations, coupled with the EPS outperforming the consensus estimate of -$0.18 by 5.56%, highlights Clear Channel Outdoor's resilience in navigating the market's challenges. The company's ability to surpass analyst expectations in terms of both revenue and earnings per share underscores its operational efficiency and strategic planning.
Despite the year-over-year decline in revenue, CCO's management has been focusing on areas that promise higher profitability and growth. CEO Scott Wells pointed out the record first-quarter results, especially in the America, Airports, and Europe-North segments, attributing this success to an improvement in demand among advertisers across all regions.
This strategic focus on enhancing profitability through prioritizing higher-margin U.S. markets and investing in technology and sales resources is pivotal for the company's future growth. It reflects a deliberate effort to expand its advertising capabilities and adapt to evolving market demands.
Financial metrics such as the price-to-sales ratio (P/S) of approximately 0.34 and the enterprise value-to-sales ratio (EV/Sales) of 3.41 provide insights into how the market values CCO in relation to its sales. While the P/S ratio suggests that investors are paying $0.34 for every dollar of sales, indicating a potentially undervalued stock, the higher EV/Sales ratio points to a more substantial valuation when considering the company's debt and equity structure.
Despite the negative earnings yield of -0.46%, which signals that the company is not generating positive earnings relative to its share price, CCO's current ratio of 1.03 indicates its capability to cover short-term liabilities with its short-term assets, showcasing its financial stability.
In summary, Clear Channel Outdoor's first-quarter financial results for 2024 reflect a company that is strategically navigating its way through the challenges of the outdoor advertising industry. By exceeding analyst expectations for both revenue and EPS, focusing on high-margin markets, and maintaining financial stability, CCO is positioning itself for sustainable growth. The company's strategic investments and operational efficiency are key factors that could contribute to its continued success in the competitive landscape.