Clear Channel Outdoor Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Clear Channel Outdoor Holdings, Inc. 2023 fourth quarter earnings conference call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Eileen McLaughlin, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining our call. On the call today are Scott Wells, our CEO, and Brian Coleman, our CFO. They will provide an overview of the 2023 fourth quarter operating performance of Clear Channel Outdoor Holdings, Inc. and Clear Channel International, BV. we recommend you download the earnings presentation located in the financial section in our investor website and review the presentation during this call. After an introduction and a review of our results, we'll open the line for questions, and Justin Cochran, CEO of Clear Channel UK and Europe, and David Saylor, CFO of Clear Channel Outdoor Americas, will join Scott and Brian during the Q&A portion of the call. Before we begin, I'd like to remind everyone that During this call, we may make forward-looking statements regarding the company, including statements about its future financial performance and its strategic goals. All forward-looking statements involve risks and uncertainties, and there can be no assurance that management's expectations, beliefs, or projections will be achieved or that the actual results will not differ from expectations. Please review the statements of risk contained in our earnings press release and our filings with the SEC. During today's call, we will also refer to certain measures that do not conform to generally accepted accounting principles. We provide schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of the earnings presentation. Also, please note that the information provided on this call speaks only to management views as of today, February 26, 2024, and may no longer be accurate at the time of a replay. Please turn to slide four in the earnings presentation, and I will now turn the call over to Scott.

Good morning, everyone, and thank you for taking the time to join us today. We generated consolidated revenue of $623 million for the fourth quarter, excluding movements in foreign exchange rates, reflecting a 10.8% increase as compared to the prior year and exceeding our fourth quarter guidance. Our results reflect a strong performance from airports in Europe North and improving business trends in the America segment with America returning to growth. Recapping the past year in our America segment, after a very encouraging upfront in the U.S., the theme for many of our clients was delayed decision-making as they waited for signs of clarity on the direction of the economy. We also saw softness in select markets, particularly in the San Francisco Bay Area, as well as in select categories led by media and entertainment, technology, and auto. These factors, combined with difficulty in fully staffing our local sales teams, made for a challenging year. The good news is that in the latter part of the year, business started to improve with demand picking up after Labor Day and continuing into the current quarter. We're seeing some demand improvement in California. We have shown strong growth in the verticals we've been targeting. and we've made progress in hiring and onboarding salespeople in our local markets. While there is still some level of uncertainty in the market, advertisers are becoming more comfortable in making decisions, and we're continuing to see improving trends in the current quarter across key verticals and markets. Our airports team delivered a record fourth quarter and an exceptional year after a slow start, driven by the investments we've made in digital, primarily related to the New York airports, but with strength across the portfolio. Advertisers are focused on premium inventory, which benefits our airport's business with the strength in travel and transportation, telco, and banking, among other categories. And the Europe North team continues to deliver with increased revenue across our products and most of the countries in which we operate, driven in part by increased demand, deployment of additional digital displays, and strong programmatic growth. We remain focused on delivering on our strategic roadmap, which is aimed at enhancing the profitability of our business, focusing on our higher margin U.S. markets, and transforming into a technology-fueled visual media powerhouse reaching a growing audience. Delivering a digital media experience remains central to our investment strategy, both in terms of expanding our footprint in the U.S. and strengthening our ability to serve a greater range of advertisers and drive revenue growth. we're progressing in delivering the kind of experience advertisers expect from digital media, coupled with the mass reach and creative impact of out-of-home. Additionally, our investments in data and analytics and programmatic are enabling us to engage with advertisers that haven't typically invested in out-of-home. We're also experimenting with using AI capabilities to develop creative, increasing productivity, and allowing us to help more customers imagine their brands on out-of-home than we could with traditional tools. We believe this could prove to be a growth driver over time. Drilling deeper into our America growth strategy, our national sales team continues to work on penetrating new verticals and developing our client direct sales approach, and we're continuing to see early success in both pharma and CPG. Revenue in our pharma vertical doubled last year and was a large contributor to America revenue growth in 2023 due in large part to our focus on developing the insights and campaign measurement tools the pharma industry requires. This is an excellent example of the power of applied data to out-of-home. Another excellent example is the progress we're making in programmatic, which had a record fourth quarter and has driven our recent success within the CPG vertical. We wouldn't have been able to make inroads into CPG, which has traditionally not been a big user of out-of-home in the U.S. and prefers data with its impressions if we hadn't invested in our programmatic infrastructure. We've also started generating meaningful revenue through our new website in the U.S., and we believe these enhanced revenue streams have good growth potential over time. We're also focused on fully staffing our sales teams where our staffing levels have stubbornly lagged our post-COVID business recovery. We've made significant progress in our onboarding capability and in strengthening our training, in line with the expansion of the solutions we offer. On the M&A front, We're continuing with the sales process of our businesses in Europe North segment, and we have commenced the process to sell our businesses in Latin America, as well as evaluating related paths to optimize our cost structure. The goal is to streamline our organization to focus on our U.S. markets, further strengthen the operating leverage in our business, and improve cash flow. It's worth giving our teams currently involved in these processes a shout out for their continued strong performance despite the distractions. Turning to our forecast, full-year consolidated revenue is expected to reach between $2.2 and $2.26 billion, representing a mid-single-digit increase over last year, excluding movements in foreign exchange rates. Brian will provide a detailed overview of our guidance in a moment. In the first quarter, we're off to a good start and our business is growing. In the America segment, we're seeing a better climate in the majority of our markets, including our largest markets in California with the San Francisco Bay Area showing signs of improvement. Our largest vertical, business services, remains strong, as well as amusements and retail. And the end of the strikes has been a welcome development and is having a positive impact in the entertainment vertical in California and beyond. Airports continues to deliver excellent results, and the business remains strong given the premium nature of our inventory. Europe North is also off to a good start with ongoing strength in the UK and Sweden, our largest Europe North markets, offsetting the impact of contract losses, including a contract in Norway. So we're encouraged with the trends we're seeing and the opportunities we're pursuing to drive growth in the year ahead. Finally, before turning the call over to Brian for the financial review, I would like to thank him for his many years of service to Clear Channel. He has been instrumental in charting our financial course through the often difficult process of managing the capital structure we inherited at separation from iHeartMedia. He has also contributed to our strategic plan and led our finance team through many transactions, refinancing efforts, and the like. I look forward to continuing to work with him in his role as a consultant, along with our board management team and financial advisors, in delivering on the next stage of our plan. David Saylor, who will succeed Brian as CFO of Clear Channel on March 1st, has been a proven leader overseeing the financial strategy and operations of our America and airport segments. He has also been central to our efforts to streamline our portfolio with the responsibilities he's had as head of corporate development. I believe his experience will be instrumental for us as we become a more focused U.S.-centric company. With that, let me hand the call over to Brian.