• Consolidated Revenue: $559 million, a 6.1% increase (5.7% excluding foreign exchange rates).
• Adjusted EBITDA: $143 million, up 2.6% (1.9% excluding foreign exchange rates).
• Americas Revenue: $293 million, up 5%.
• Digital Revenue (Americas): $106 million, up 8.4%.
• Airports Revenue: $82 million, up 9%.
• Europe North Revenue: $162 million, up 8.6% (12.4% increase in digital revenue).
• Loss from Continuing Operations: $32 million.
• Adjusted EBITDA Margin (Americas): 43.8%.
• Adjusted EBITDA Margin (Airports): 20.6%.
• Cash and Cash Equivalents: Increased by $12 million to $201 million.
• Debt: $5.7 billion as of September 30, 2024.
• Capital Expenditures: $31 million in the third quarter.
• Liquidity: $376 million as of September 30, 2024.

• Warning! GuruFocus has detected 4 Warning Signs with CCO.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Clear Channel Outdoor Holdings Inc (NYSE:CCO) reported consolidated revenue of $559 million for the third quarter, marking a 6.1% increase, with growth across all business segments.
• The Americas segment experienced growth in all regions, driven by increased demand for both digital and printed billboards.
• The company secured a significant 15-year contract for roadside advertising assets with the New York MTA, expanding its footprint in the New York tri-state area.
• Clear Channel Outdoor Holdings Inc (NYSE:CCO) is making progress in leveraging technology investments and expanded sales teams, particularly in the US, to enhance performance.
• The company is seeing benefits from its initiatives in new verticals, such as pharmaceuticals and consumer packaged goods, with promising results from recent campaigns.

Negative Points

• Europe North's segment adjusted EBITA was down 4.5% due to higher site lease expenses, property taxes, and compensation costs.
• The company's Spanish business sale was terminated by JCDecaux due to regulatory challenges, impacting the strategic sale process.
• Clear Channel Outdoor Holdings Inc (NYSE:CCO) faces tough comparisons in its airports and Europe North segments, which could lead to flat revenues in the upcoming quarter.
• The new MTA contract, while beneficial, is expected to impact operating leverage and margins in the short term due to high revenue share and ramp-up costs.
• The company is experiencing some softness in the UK market, attributed to government budget constraints and economic conditions.

Q & A Highlights

Q: Can you provide more details on the New York MTA roadside contract and the improved national ad spend? A: Scott Wells, CEO, explained that the New York MTA contract involves roadside bulletin assets, enhancing their footprint in the tri-state area. This contract will help negotiate national contracts and improve local and national operations. Regarding national ad spend, Wells noted improvements driven by sectors like CPG, pharmaceuticals, and telecom, though the market remains episodic and competitive.

Q: What political benefits did you see in Q3, and what are your expectations for Q4? Also, how should we think about airports' growth moving forward? A: Scott Wells, CEO, stated that political spending contributed a few million dollars, but it's not a major driver. For airports, growth is expected to moderate as they lap the ramp of the Port Authority contract, with future growth aligning more with GDP plus trends.

Q: How do you plan to balance free cash flow improvements with debt reduction, considering some discounts on your debt? A: David Sailer, CFO, mentioned that as they generate free cash flow, they will consider debt reduction opportunities. They will evaluate the pricing of bonds and strategic initiatives to determine the best approach for debt paydown.

Q: Can you discuss the cost dynamics in Europe North, given the strong revenue but higher costs? A: David Sailer, CFO, explained that costs increased due to ramping contracts, property taxes, and rental costs. However, these are expected to normalize, and the margin profile should remain stable. The Norway contract loss was a low-margin contract, so it didn't significantly impact margins.

Q: Are you seeing any cancellations as a precursor to downturns, and how is the national business performing amid streaming ad inventory growth? A: Scott Wells, CEO, reported no significant uptick in cancellations and noted encouraging early 2025 renewal conversations. While streaming ad inventory may impact national spending, the focus is on leveraging relationships and creativity to capture available budgets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.