- Consolidated Revenue: $559 million, a 5.2% increase (5.4% excluding FX).
- Loss from Continuing Operations: $48 million, higher due to impairment charges in Latin America.
- Consolidated Net Loss: $39 million.
- Adjusted EBITDA: $143 million, roughly flat with the prior year.
- AFFO: $25 million, a 12.2% decline (12.3% excluding FX).
- America Revenue: $290 million, up 0.9%.
- Digital Revenue (America): $102 million, up 4.1%.
- National Sales (America): Down 3.3%.
- Local Sales (America): Up 3.4%.
- Segment-Adjusted EBITDA (America): $127 million, down 2%.
- Airports Revenue: $86 million, up 21.4%.
- Digital Revenue (Airports): $48 million, up 14.6%.
- National Sales (Airports): Up 12%.
- Local Sales (Airports): Up 37%.
- Segment-Adjusted EBITDA (Airports): $19 million, up 16.8%.
- Europe-North Revenue: $165 million, up 10.1% (excluding FX).
- Digital Revenue (Europe-North): $94 million, up 17.9%.
- Segment-Adjusted EBITDA (Europe-North): $33 million, up 24.7%.
- CCIBV Revenue: $165 million, up 6.4% (6.6% excluding FX).
- CCIBV Operating Income: $10 million, up from $3 million.
- Capital Expenditures: $23 million, a decrease of $8 million.
- Cash and Cash Equivalents: $189 million, a decrease of $4 million.
- Liquidity: $404 million, up $15 million.
- Debt: $5.7 billion.
- Weighted Average Cost of Debt: 7.4%.
- First Lien Leverage Ratio: 5.39 times.
- Q3 Consolidated Revenue Guidance: $542 million to $567 million.
- Q3 America Revenue Guidance: $287 million to $297 million.
- Q3 Airports Revenue Guidance: $79 million to $84 million.
- Q3 Europe-North Revenue Guidance: $157 million to $167 million.
- Full-Year Consolidated Revenue Guidance: $2.215 billion to $2.275 billion.
- Full-Year America Revenue Guidance: $1.135 billion to $1.165 billion.
- Full-Year Airports Revenue Guidance: $350 million to $365 million.
- Full-Year Europe-North Revenue Guidance: $653 million to $668 million.
- Full-Year Adjusted EBITDA Guidance: $560 million to $590 million.
- Full-Year AFFO Guidance: $90 million to $110 million.
- Full-Year Capital Expenditures Guidance: $130 million to $150 million.
- Full-Year Cash Interest Payment Obligations: $435 million in 2024 and $422 million in 2025.
Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Clear Channel Outdoor Holdings Inc (CCO, Financial) reported a 5.2% increase in consolidated revenue for Q2 2024, reaching $559 million.
- The company's digital billboard platform now reaches over 70% of US adults monthly in served markets, enhancing its value proposition to advertisers.
- The airports segment saw a 21.4% increase in revenue, driven by strong demand and new advertising customers.
- Europe-North delivered a 10.1% increase in revenue, with notable strength in Sweden and the UK.
- Clear Channel Outdoor Holdings Inc (CCO) has modestly increased its full-year consolidated revenue, adjusted EBITDA, and AFFO guidance due to strong performance in airports and Europe-North.
Negative Points
- The company's Q2 results came in at the low end of guidance due to softness in the national marketplace, particularly in the medical services and media entertainment verticals.
- Loss from continuing operations was $48 million, higher than the prior year due to impairment charges related to the company's Latin America businesses.
- Adjusted EBITDA was roughly flat with the prior year, indicating limited growth in profitability.
- AFFO declined by 12.2% from the prior year, reflecting challenges in cash flow generation.
- Direct operating and SG&A expenses increased by 3.4% in the America segment, driven by higher compensation costs and credit loss expenses.
Q & A Highlights
Q: Can you provide more color on the national versus local ad trends in the US market and the trends into the third quarter? Also, how should we think about AFFO growth beyond 2024?
A: National advertising is very competitive, requiring tailored solutions for advertisers. Local markets vary significantly, with competition among different sectors. The key is understanding local market needs and having adequate sales coverage. AFFO growth is expected to be positive in the second half of 2024, driven by revenue and EBITDA growth, which will flow through to AFFO.
Q: Have you been able to use airports to pull in new advertisers for your billboard inventory in America?
A: While there has been some success in cross-selling, the proposition in airports is different from roadside. Airport advertisers are often focused on the airport audience, making it easier to sell roadside to airport advertisers rather than the other way around.
Q: Have you seen an uptick in commitment cancellations, and how have recent conversations with advertisers trended?
A: We have not seen a significant uptick in cancellations. Conversations with advertisers and agencies suggest a decent ad market in the second half of the year. The upcoming election may crowd out some TV advertisers, creating opportunities for us.
Q: Can you clarify if the improving trends in the Americas are specific to national or the segment overall? Also, what might political advertising mean for your boards in the Americas?
A: The comment on improving trends applies to advertising in general. Political campaign spending is expected to be a positive factor due to the crowd-out effect, potentially benefiting local races and some national money.
Q: Can you provide more details on the credit losses and specific reserves for certain customers in the Americas?
A: Credit losses are a normal part of the business. While we had a specific reserve pop up in Q2, it is not indicative of a concerning trend. The team does a good job of collecting cash overall.
Q: How is the strategic review for Europe-North progressing, and is the segment's healthy performance a complicating factor?
A: The healthy performance of Europe-North is not a complicating factor; it reinforces the need for fair value. The complexity of the business and the need for buyers to get comfortable with all moving parts are the main reasons for the extended timeline.
Q: Are the new advertisers in airports from existing verticals or new ones, and how do they feel about the efficacy of their spend?
A: The growth has been a mix of deeper engagement within existing verticals and new verticals. The team has targeted verticals that fit well with the airport environment, and feedback has been positive, though advertisers' needs can be ephemeral.
Q: How should we think about the improvement in national advertising in Q3 and the second half, considering political and other factors? Also, can you update us on San Francisco's performance?
A: The softer comp in Q3 should be a mitigating factor. Media entertainment may not be a significant tailwind, but the overall trend is positive. San Francisco continues to improve but has not yet reached full potential.
Q: What risks do you see in terms of categories and verticals in the event of a recession?
A: While not an economist, the lack of significant cancellations suggests a stable market. Political campaigns and global events like the Middle East and Ukraine conflicts are potential risks, but advertiser P&Ls appear sound.
Q: Have shifts in work-from-home and remote access affected your business in larger and smaller markets?
A: Traffic has increased globally, enhancing the value of roadside assets. Airports have also rebounded strongly. Work-from-home has not significantly impacted our audience, which remains robust.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
