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.

Europe.

Turning to our business in Europe, based on the information we have today, we expect third-quarter segment revenue to be between $245 million and $255 million today representing about 95% of Europe's top-line performance in the third quarter of 2019, excluding FX. We are very encouraged with the trends we're seeing. In Q2, all our significant markets showed strong improvement versus trading seen earlier in the year, and advertiser sentiment remains positive, reflecting pent-up demand and the return of large sporting events, supporting our optimism regarding the future of our business. Adding to our momentum, we are now actively in pursuit of contract tenders which have begun to open up again. In Belgium, we were awarded a 10-year outdoor advertising contract covering Belgium's train stations. With digital screens in more than 46 cities currently, we ultimately plan to grow our digital presence to 800 screens located in more than 100 stations across the country. In France, we were recently awarded the street furniture contract for Aix-en-Provence. In Barcelona, we renewed the outdoor advertising contract covering the bus stops across the city. Overall, we now operate 5,000 advertising spaces in the Barcelona metropolitan area and expect to surpass 150 digital street furniture units by the year end. Supporting our ability to take full advantage of the recovery, our digital footprint continues to expand in Europe. We added 68 digital displays in the second quarter for a total of over 16,600 screens now live. Building on the strength of our platform, our radar rollout has been well received in the UK and Spain and has now been introduced for audience proximity planning in all of our major European markets. The introduction of our programmatic offering in Europe, Clear Channel Launchpad, has also gone according to plan. Following recent launches in the UK, Switzerland, Spain, Finland, and the Netherlands, we launched in Belgium in June, and we are completing the launch in Italy. So in summary, revenue momentum is clearly building across our business as the recovery gains steam and our markets continue to open up. Advertisers are gaining confidence as vaccination rates increase, remaining restrictions are eased, and mobility builds. We are now seeing previously hard-hit categories begin to light up again, which is broadening our revenue base and strengthening our outlook. We are well positioned to maximize the performance of our portfolio given the investments we've made in our digital, data analytics, and programmatic resources, as well as our efforts to stay in front of advertisers throughout the pandemic. We are now seeing a very healthy rebound in our business. And with that, Let me turn it over to Brian to discuss our second course of 2021 financial results.

Thank you, William. Good morning, everyone. Thank you for joining our call. As William mentioned, we saw a substantial rebound in our business in the second quarter with June revenue for Americas and Europe combined about 90% of 2019 revenue, excluding FX and China. And we are optimistic about our growth through the balance of the year. However, we continue to manage our cost base, including negotiating rent abatements and some of the markets most affected by COVID-19, as well as strengthening our capital structure. Moving on to the results on slide four. In the second quarter, consolidated revenue increased 68.6% to $531 million. Adjusting for FX in China, revenue was up 63.4%. Consolidated net loss in the second quarter was $124 million, compared to a consolidated net loss of 143 million in Q2 of 2020. Consolidated adjusted EBITDA was 97 million in Q2 of 2021, a substantial improvement over Q2 2020, which was negative 63 million. Adjusting for FX, consolidated adjusted EBITDA was 99 million in Q2 of 2021. Please turn to slide five for a review of America's second quarter results. The Americas segment revenue was $272 million in the second quarter of 2021, up 36% compared to the prior year and at the high end of the guidance we provided in May. Digital revenue rebounded strongly and was up 73.8% to $85 million. Local continues to rebound faster than national and was up 39.7%, with national up 30.2%. Direct operating and SG&A expenses were down 5.7%. The decline is due in part to a 14.2% decline in site lease expense as a result of negotiated rent abatements. Additionally, credit loss expense was reduced due to improved collections and outlook. These were partially offset by higher compensation costs driven by improvements in operating performance. Segment adjusted EBITDA was 127 million up 170.6% compared to the second quarter of last year, with segment adjusted EBITDA margin well above average due in large part to non-recurring items, including the negotiated rent abatements. Please turn to slide six. This slide breaks out our billboard and transit revenue. The billboard and other was up 42.6% while transit was down 4.2%, with airport display revenue down 4.7% to $25 million. turning to slide seven for a bit more detail on billboard and others Q2 revenue performance. Digital revenue from billboards, street furniture and spectaculars rebounded strongly in Q2 and was up 97.6% to 75 million with non-digital up 27.1%. Next, please turn to slide eight and a review of our performance in Europe. Please note that as I comment on the percentage change from the prior year, all percentages are adjusted for foreign exchange. Europe revenue was $247 million. Adjusting for foreign exchange revenue was $224 million, up 108.8% compared to the second quarter of the prior year, ahead of guidance we provided in our Q1 earnings call. Revenue was up across all countries, most notably in France and the U.K. And digital revenue was up 159.6%, a strong performance driven in large part by the rebound in the U.K. Direct operating and SG&A expenses were up 33.2% compared to the second quarter of last year. The largest driver of the increase in direct operating expense was higher site lease expense, which increased 28.9% to $100 million after adjusting for FX due to lower negotiated rent abatements, higher revenue, and new contracts. SG&A expenses increased due to higher compensation expense as we cease the temporary operating cost savings initiatives implemented in the prior year, combined with lower government support and wage subsidies and higher commissions in the current year. Additionally, direct operating expense and SG&A expense increased due to $16 million of severance and related costs for the restructuring plan. These expenses are not included in segment-adjusted EBITDA. Segment-adjusted EBITDA was $2 million after adjusting for foreign exchange. This is compared to negative 69 million in Q2 of 2020. Moving on to CCIBV, our Europe segment consists of the businesses operated by CCIBV and its consolidated subsidiary. Accordingly, the revenue for our Europe segment is the same as the revenue for CCIBV. Europe segment adjusted EBITDA, the segment profitability metric reported in our financial statements, does not include an allocation of CCIBV's corporate expenses that are deducted from CCIVV's operating income and adjusted EBITDA. CCIVV revenue increased $140 million during the second quarter of 2021 compared to the same period of 2020 to $247 million. After adjusting for a $23 million impact for movements in foreign exchange rates, CCIVV revenue increased $117 million. CCIVV's operating loss was $40 million in the second quarter of 2021 compared to $99 million in the same period of 2020. Let's move to slide nine and a quick review of other, which includes Latin America. As a reminder, my prior year results include Clear Media, which was divested on April 28th of 2020. Latin American revenue was $12 million in the second quarter, up $9 million compared to the same period last year. Direct operating expense and SG&A from our Latin American business were $13 million, up $4 million compared to the second quarter in the prior year. Latin American EBITDA was a negative $1 million. Now moving to slide 10 and a review of capital expenditures. CapEx totaled $32 million in the second quarter, an increase of approximately $8 million compared to the prior year as we ramped up our investment in our America's business. On the slide 11, Clear Channel Outdoors consolidated cash and cash equivalents totaling $564 million as of June 30, 2021. Our debt was $5.7 billion, up $169 million, due in large part to the refinancing of the CCWH senior notes in February and June. Cash paid for interest on the debt was $67 million during the second quarter and $212 million year-to-date. Our weighted average cost of debt was 5.6%, as of June 30, 2021. Moving on to slide 12. As mentioned, we continue to focus on managing our cost base and strengthening our capital structure. This includes achieving $35 million in rent abatements in the second quarter on a consolidated basis as a result of successful fixed-site lease negotiations. The majority of the rent abatements in the quarter were in our America segment. we received European governmental support and wage subsidies in response of $2 million in the second quarter. In June, we successfully completed an offering of $1.05 billion of 7.5 CCWH Senior Notes through 2029. We used the net proceeds from the offering to redeem the remaining outstanding 9.25% CCWH Senior Notes through 2024. Additionally, as we previously announced in May, We entered into a second amendment to the Senior Secured Credit Agreement, extending the suspension of the spring financial covenant through December 31st of 2021 and further delaying the step-down until September 30th of 2022. Lastly, in June, one of our non-guarantor European subsidiaries entered into a state-guaranteed loan for approximately $36 million, the current exchange rate, which is guaranteed by the government of that country in response to COVID-19. And finishing with our guidance. As William mentioned, for the third quarter of 2021, America's segment revenue is expected to be in the range of between $315 and $325 million. This adjusted EBITDA margin expected to return to close to Q3 2019 levels. Our Europe segment revenue is expected to be in the range of between $245 and $255 million, adjusting for FX. Given our improved outlook, we are revising our second half revenue guidance from nearly 90% of 2019 levels to about 95%, excluding FX in China. The recovery is across the board, led primarily by our digital roadside businesses. Additionally, we expect cash interest payments of $175 million in the last six months of 2021 and $324 million in 2022. We expect consolidated capital expenditures to be in the $165 million to $175 million range in 2021. This increase reflects our optimism regarding our prospects and our ability to capture new prospects to drive growth. Lastly, we are increasing our guidance for our liquidity balance as of December 31st, 2021, including unrestricted cash and availability under the company's revolving credit facilities. We expect the balance to be approximately $475 to $525 million, a $50 million increase from the guidance provided in May. Please keep in mind that liquidity could vary based on timing of cash receipts and or payments at year end.

That concludes my remarks, and now let me turn the call back over to William. Thanks, Brian.

The recovery is now well underway across our markets, and we are continuing to see solid revenue momentum in the second half of the year with several of our markets ahead of 2019. We remain focused on strategically investing in our technology, including expanding our digital platform, further strengthening our data analytics capabilities, and building our programmatic resources with the aim of broadening our presence among a greater number of advertisers and increasing our market share. Our business is soundly rebounding, our organization is energized, and we are very excited about the growth trends that are building across our market. As we invest in our platform, we will also continue to carefully manage our costs, supporting our efforts to drive profitable growth over the long term, as well as maintaining our financial flexibility and objective to deliver the balance sheet. As I mentioned earlier, I'm very excited about the future of the company, and look forward to speaking with many of you over the next few months as we prepare for the leadership transition with Scott taking over as CEO at the end of the year. And now let me turn over the call to the operator for the Q&A session.

At this time, if you would like to ask a question, please press star, then the number one on your telephone keypad. Again, that is star, then the number one to ask a question. Your first question comes from the line of Stephen Cahal with Wells Fargo.

Yeah, thanks. So maybe first for Scott, it looks like the Americas Q3 guide is pretty close to 2019, as you mentioned. It sounds like airport is better, but probably still down. And I'm wondering if street furniture probably is too in places like. So just wondering how you think about the recovery and sort of those bits of weakness. And if we do see those get back to prior levels, How do you think about the EBITDA power in the Americas business as that's done? And should we expect any lumpiness to expenses due to rent abatements in the back half of the year? And then, William, in Europe, maybe you could discuss a little bit of what sort of margins you start to expect as you get to full run rate revenues. I think of that as sort of a mid-teens margin business. So just wondering, given all the cost work that you've done, how you think about it? And then lastly, Scott, just maybe what's next in terms of financial management? Maybe you could discuss a little bit the covenant spring suspension and what you expect for a free cash flow in the back half of the year and liquidity. Thank you.

Hey, Steve.

Thanks for the questions. I think Brian will take that covenant one, though. So we'll let him get to that one. You know, on your question, I do think Q3 – is looking like it's going to be pretty close to its counterpart in 2019. The things you named, airports and street furniture, are the things that'll probably lag. We still do have the dynamic that some cities are recovering slower than other cities in the mix. New York is actually recovering quite nicely. We don't have much in the way of street furniture there, but the Times Square area is recovering nicely and the airports are recovering nicely along with the roadside that's done well. In terms of the margins, I think there's going to be some lumpiness in our margins for a bit. I mean, you witnessed it to the positive this quarter. We've kind of been consistent in talking about these negotiations are often for relatively big chunks of money and they are hard to predict. and, you know, we're never 100% sure how they're going to come in. You know, a couple things will happen over the next three or four quarters. One is we are still working on some relief, you know, on contracts that, you know, looking back even over last year. I think the other thing that will happen is you'll see some of the relief that we've gotten come out And so the margins will be, it'll take a bit of time for us to get to, you know, what we'd call steady state margins. But I don't think it's going to be wildly dramatic either. Hopefully that answers your question on the U.S. margin recovery. Yep. William.

Yeah, I'll take the European question. I'm not going to give you any kind of guidance on what may or may not happen to margin over the coming months and years, Steve, and I don't think you'd expect me to, we will continue to be very vigilant on costs across the European business. I think we've done some excellent work that we've talked about on previous calls in terms of the cost reduction program and the restructuring, and that will continue to have impact in the coming years. But obviously what we can't predict is the impact of some of the changes in inventory that we may see in the months and years ahead. So I think I'll just leave it at that on margin unless Brian wants to add anything before he takes on the covenant question as well.

You know, the only thing I would add is, you know, as the recovery continues and incremental revenue is added, that's obviously going to be beneficial. And I think we're seeing that in Europe. So hopefully that's helpful, Steve. I think we feel pretty good about the direction we're headed. On the covenant question, you know, I think the two key things to think about are, one, the relief that we got with respect to the springing covenant itself goes through the end of the year. And so we'll report our first, you know, covenant calculation at our March 31st kind of compliance date. And, you know, the second piece of the... was a pushback of the step down in the measurement. And that push down was out to September of 2022. So I think those are the two things to think about. And in exchange for that, we do have to maintain $150 million minimum liquidity. But I think you can see from our liquidity guidance, we feel very comfortable about that. The trajectory of the business, we've actually upped our liquidity guidance to $475 to $525 million by the end of the year. So I think we feel pretty good with, you know, where we are with respect to the covenant relief. And, you know, I would add it's a springing covenant. So we always pay off the drawn amounts under the facility. And, you know, we are looking like we have the liquidity to do that should we choose that path as well.

Thanks, and congrats, Scott and William.

Your next question comes from the line of Vicenza with Cowan.

Hi. Thanks, guys, for taking the questions and great job on the quarter. William, thanks for your leadership. Obviously, it's been a difficult time. My question for you is it sounds like your new role, I think you mentioned it, would include evaluation of strategic considerations, i.e., M&A, So I'm wondering, can you give us an update on what the M&A environment looks like today with the COVID recovery so well developed and imagine it's possible to sell assets again? Am I right about that? I mean, away from Clear Channel, are you seeing deals get done? And then if you could comment perhaps on whether you've ruled out any types of transactions or perhaps you could help us focus on what types of transactions we would be most likely to see, either sell region versus region, size, core versus non-core, that kind of thing.

Right. How much detail do you really want me to give you? Let me say first, away from Clear Channel, as you say, I think the M&A environment is certainly getting more active. People are undoubtedly seeing markets return, valuation gaps are narrowing, and there's a lot more going on right now than there was this time last year for very obvious reasons. So, So yes, it's more active. And yes, my new role certainly will involve me in looking at strategic opportunities for the business across our footprint. I don't really think you would expect me to give any kind of indication of where we might be looking to transact or what kinds of transactions we might look at. We're very conscious that In February of last year, we said on our earnings call then that we would look to focus the business more on the higher margin asset, and that remains our strategy. So that can lead you to some fairly obvious conclusions, I would think, about the geographies that we would be looking at. But as to timing, I don't think we would want to say anything more at the moment other than that Things are certainly getting more active, and we will continue to evaluate all opportunities as they appear and as we would consider that they would deliver shareholder value. I think I should just leave it at that, but thanks.

No, that's great. That's great. And my other question is just, and not to be the pepper in the punch bowl here, but what about the Delta variant? I mean, it doesn't sound like you're worried about it, but why doesn't that risk derailing the recovery in your view?

Yeah, I mean, I think I'm, what I would say, appropriately worried about it. Any variant of this virus is concerning to us, and we've all seen too much over the last 15, 16 months to be in any way complacent. What I would say is what I've observed, and we've had more experience of it in Europe than in the U.S. so far, What I've observed and what I think is confirmed by all of the analysis, although the Delta variant is highly infectious, it does appear that the vaccines do offer some significant resistance and are resulting in significantly lower hospitalizations as a result of infection. As a result of that, I think it is highly probable that governments will continue to resist imposing any further restrictions. And as you'll know, in the UK, which has been the most affected by the Delta variant so far, in the UK, our government has taken a very conscious decision to unlock the economy and remove restrictions at the very time that infections from the Delta variant were increasing. And they've done that because they feel confident around the hospitalization rates. So look, I'm not an epidemiologist. I'm not an expert on the topic. But I would say based on what we know today, our views about the second half of the year stand as stated and reflect a confidence in the recovery. If something changes in the way in which the vaccines protect against the Delta variant, then all bets are off. But that's how I see it at the moment.

Thanks so much, guys.

Again, if you would like to ask a question, please press star, then the number one on your telephone keypad. That's star one. Your next question comes from the line of Jim Goss with Barrington Research.

Thank you. I've got a couple also. First, going back to the margin question, would you say the domestic margins should have a sustainable target level north of 40% as recover in all areas and you've got the benefit of digital and you also have potentially some costs and expenses that may have been cut during the pandemic that you might be able to keep under control in the future?

That would be the first question. Brian, do you want me to speak to that, or do you want to take that one?

I think Brian is going to take it.

Yeah, sorry. Scott, I'll take it, and then obviously you can have some color and add in if you'd like. Look, 40% sounds like pre-COVID level margins in the U.S., and I think that that's certainly something we'll strive for. We do have some tailwinds from cost-saving initiatives that we've put in place and other things, but we also have headwinds from such things as portfolio mix. So I think the first thing that has to happen is we have to get back to the revenue level. But even once we get back to the revenue level, we will really need to – work on keeping the cost savings in place to get back to that 40% level because we do have to make up for some portfolio mix changes. And that's just the nature of the business, that even if revenues go back to 2019, it doesn't mean your business makeup is the same. And so those are kind of the pushes and pulls. We likely will need to continue to work at it to get back to the 40% level, but we won't be far off as we continue to recover from COVID. Scott, do you have any additional color you'd like to add?

I mean, I think the only other thing I'd call out is that seasonality does matter in this business, and so it may not be 40% every quarter. as we think about that as things play out. But I think your answer is right on.

Okay, thanks. And one other thing maybe I'll touch on. The increase for digital was significantly greater than the increase for billboards and more than would be accounted for by platform changes. And I'm wondering if there are certain advertisers who are considering both formats in various areas And what are the factors behind your decision-making and, you know, as to which is appropriate for them? And is this starting to create a little better pricing power on the digital side as you're seeing that utilization improve?

So I'll take a run at this from the U.S., and then, William, if you want to add anything internationally, we can touch on that as well. So I guess first and foremost, as you look at the recovery, you've got to remember how things fell, too, because our printed assets did not fall nearly as far as digital did. And so part of why you're seeing the big growth in digital now is because it's comping against significantly worse numbers if you go back and look at our Q2 of last year. digital was hit much harder than printed. In terms of your question about advertisers making decisions, I think there's a variety of things going on. First and foremost, digital has an immediacy to it, and so with advertisers reacting to things rolling out across the country, digital has given them a very convenient way to activate in markets as markets get more secure, more stable, and people get out on the streets more and things like that. I think we're developing different use cases for digital, whether it's in the programmatic use case or roadblocks or something that we're doing more and more of. There are just different use cases for it that advertisers use. whether it's for a film release or for a new product launch or trying to sustain momentum in a place like a CPG-type product where they're looking to heavy up, digital gives them the ability to do it. So I do think digital, you know, it has been a premium product since we developed it. It remains a premium product. It's on some of our best locations that we've converted to digital. And so, you know, I do think it's something that we receive very attractive economics for. And in this business, whenever you have demand strong, you see that dynamic. William, I don't know if you'd add anything incremental to that as well.

No, I think you've nailed it, Scott. Thank you.

Okay, and lastly, are there any broad categories showing greater resilience? You've mentioned a couple, but say consumer technology, media, are there some that are really driving the recovery right now for you?

Again, sort of from a U.S.

perspective, we went out and got a number of new categories active. during COVID and what we're seeing now as, uh, as things build back is some of the, um, industries that were hit really hard during COVID are, are coming back. So, you know, theatrical is probably the most obvious, uh, in terms of film releases. Uh, we've had a number of good, strong film releases this year and a really good pipeline, um, of film releases, uh, coming. So they've, they've come back. Amusements have come back. Um, You know, you've seen travel and leisure come back. Those are all categories that were hit really hard. And that's building on top of, you know, some things like in-home improvement, real estate categories that we actually were able to develop pretty successfully during COVID. So it's a good time in the business right now having traditional advertisers coming back. building on top of some new categories that we've done a lot to develop during COVID.

Okay, thanks, and congratulations, Scott.

Thanks, Jeff. That's it. Thanks.

Thank you. There are no additional questions at this time. I would like to turn it back over to Mr. Eccleshire for closing remarks.

Thank you, and thank you, everyone, for joining our call today. I just wanted to end by just making a few comments as we announced the CEO transition today. I don't step down until the end of the year, and I will continue to serve the company, as you know, as Executive Vice Chairman into 2022. But I would just like to say it has truly been a great honor for me to lead this business over the last few years, to lead the digital transformation of the greatest technology mass reach medium of them all. To take this company into full public ownership with a full NYSE listing was a fantastic step for this business. To lead this business through the pandemic and see the resilience of our people, and I have enormous pride in the way that our people stepped up and continued to drive and develop the business in really tough circumstances. And finally, to say that the pride I have in handing over to Scott as my successor, who I know will continue to build the business, to grow the business, and to develop it and build on all of the things that we've done over the last years. So just thank you to everybody. You will continue to hear my voice on this call, certainly for the next earnings call. And thanks, everybody, for joining us.

Thank you. This concludes today's conference call. You may now disconnect.