Clear Channel Outdoor Holdings, Inc.

ladies and gentlemen thank you for standing by welcome to the clear channel outdoor holdings inc's second quarter 2021 earnings conference call at this time all participants are in a listen-only mode after the speaker's presentation there will be a question and answer session to ask a question during the session you'll need to press star 1 on your telephone if you require any further assistance press star 0. i'll now turn the conference over to your host eileen mclaughlin Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining Clear Channel Outdoor Holdings 2021 Second Quarter Earnings Call. On the call today are William Eccleshare, Chief Financial Officer of Clear Channel Outdoor Holdings, Inc., and Brian Coleman, Chief Financial Officer of Clear Channel Outdoor Holdings, Inc. We will provide an overview of the second quarter 2021 operating performance of Clear Channel Outdoor Holdings, Inc. and Clear Channel International, BV. 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. Before we begin, I'd like to remind everyone that this conference call includes forward-looking statements. These statements include management's expectations, beliefs, and projections about performance and represent management's current beliefs. There can be no assurance that management's expectations, beliefs, or projections will be achieved or that actual results will not differ from these expectations. Please review the statements of risk contained in our earnings press release and findings with the SEC. During today's call, we will provide certain performance measures that do not conform to generally accepted accounting principles. We provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP-based part of our earnings press release and the earnings conference call presentation, which can be found in the financial section of our website, investor.clearchannel.com. Please note that our earnings release and the slide presentation are also available on our website and are integral to our earnings conference call. They provide a detailed breakdown of foreign exchange, segment revenue, adjusted EBITDA, and adjusted corporate expenses, including the impact of share-based compensation and restructuring charges, among other important information. For that reason, we ask that you view each slide as William and Brian comment on them. Also, please note that the information provided on this call speaks only to management's views as of today, 29, 2021, and may no longer be accurate at the time of a replay. With that, please turn to page three in the presentation, and I will now turn the call over to William Eccleshare.

Good morning, everyone, and thank you for taking the time to join today's call. I'm pleased to report that we're seeing a substantial rebound in our business Not only in the second quarter, but into the balance of the year, we've strengthened the top line and improved profitability. With advertisers returning, we believe we're in a stronger position to capitalize on the growth potential of our out-of-home platform, including continued investments in technology to drive growth in our higher-margin markets, particularly in the Americas, while maintaining our financial flexibility and objective to delever the balance sheet and unlock shareholder values. With the business showing clear signs of recovery, I have decided that now is the right time to implement our succession plan and for me to transition from the operational leadership of the company. I'll be assuming the new role of Executive Vice Chairman starting January 1, 2022, and will be supporting the management transition and leading the strategic M&A activity in our ongoing efforts to optimize our portfolio. I'm also delighted to announce that Scott Wells will take over as CEO while continuing in his current role as CEO of Clear Channel Outdoor Americas, and he will join me on the CCO board. Scott and I have worked together in a variety of roles since the day I started at Clear Channel, when he was an operating partner at Bain Capital, our former PE sponsor. I know that many of you on this call have had the opportunity to speak to Scott in his role as CEO of Our America's Business, and are familiar with his deep knowledge of our business and the support he and his team have delivered in the America's Division over the past seven years. Scott has outstanding previous experience and a proven track record in leading the America's segment's technology and data-driven transformation strategy, resulting in strong growth prior to the onset of COVID. Furthermore, during the pandemic, Scott and his team have moved quickly to stabilize the business costs and position our America's business for the strong rebound that is now underway. I greatly admire all that Scott has achieved, and I look forward to continuing to collaborate with him as we focus on maximizing the performance of the company in this next chapter in our history. Justin Cochran, the current CEO of our Europe segment, will continue in his role and will join these calls in the future to share the results from the Europe segment. I would also like to take this time to thank the incredible Clear Channel team for their dedication and hard work. in managing through the most difficult business environment they've ever experienced. Their ability to adapt to the quickly changing marketplace has ensured that we are in the best possible position to accelerate our recovery by capitalizing on the increasing demand for our medium as consumers return to the streets. Moving back now to the review of our business. We delivered better than anticipated consolidated revenue of $531 million in the second quarter, up 63% compared to the prior year, excluding FX and China. America's revenue was $272 million, up 36% at the high end of our guidance, and Europe's revenue was $247 million, or $224 million, including FX, up 109%, which exceeded our guidance. Encouragingly, we saw a steady improvement in our top-line performance each month as the second quarter progressed. We achieved about 70% of 2019 revenue in April, 80% in May, and 90% in June for our Americas and Europe segments combined, excluding FX. Moreover, we're continuing to see positive momentum build in our business in the current quarter as the recovery takes shape across our footprint. All of our business segments are growing well ahead of last year, with some markets now beginning to either match or exceed 2019 levels. As a result of the continued strong rebound we're seeing in our business, we're now increasing the revenue guidance for the second half of the year that we previously provided in our Q1 earnings call from nearly 90% to about 95% of 2019 revenue, excluding FX and China. The recovery is across the board, led primarily by our digital roadside business. In short, business is back, and we are very excited about the trends we're seeing and our ability to capitalize on the recovery underway. During the COVID crisis, we continued to strategically invest in our business while aggressively addressing our cost structure. We believe we are emerging from the COVID crisis with a stronger and more dynamic platform better positioned to deliver a broader and more valuable mix of actionable insights to advertisers, combined with even greater flexibility in delivering highly targeted campaigns at the right time and in the right place. These investments have energized our organization and have given our sales teams even stronger resources to present to new and returning advertisers. Now let me provide a brief update on each of our business segments, beginning with the Americas. America. Based on the information we have for the third quarter, we expect America's revenue to be between $315 million and $325 million, with our segment-adjusted EBITDA margin expected to return close to 2019 levels. This would put our third quarter revenue performance for the Americas within a few percentage points of our top-line performance in the third quarter of 2019. In the third quarter, we are experiencing notable uptick in demand as momentum builds and advertisers recognize the breadth of the recovery underway and the need to rebuild their campaigns, refresh their brands, and connect with consumers. The majority of our markets are showing considerable improvement, driven in large part by our digital business. We're now seeing a strong rebound in airports and in big cities such as LA and New York. as well as in key verticals that had previously been negatively impacted by the pandemic, including theatrical, retail, and financial services. We're continuing to see some name brand advertisers return to the out-of-home market after having been gone for years. This renewed interest is due in part to their recognition of the advancements we've made in our technology, including our radar suite of solutions. With regard to our technology investments, we deployed 26 new digital billboards in the second quarter, giving us a total of more than 1,500 digital billboards across the United States. We also continue to strengthen our radar platform and programmatic solutions through the completion of multiple integrations with our strong base of partners. These partnerships further elevate our data analytics capabilities and our ability to measure the impact of our assets on consumer reach and decision-making. For example, Earlier this month, in a first for our industry, we entered into a partnership with Foursquare to provide brands with daily campaign performance metrics across our digital displays. Using this new solution, powered by Foursquare's attribution product, our customers can evaluate an ad's performance by geography, time of day, demographics, and historical visitations. They can then use this data to understand consumers' exposure to our displays and subsequent visits to retail locations and other points of interest. This is the kind of offering that is attracting new advertisers to out-of-home. We are not static billboards. We are a dynamic, addressable ecosystem.