Clear Channel Outdoor Holdings, Inc.

Good morning, and thank you for joining our call. On the call today are Scott Wells, our CEO, and David Saylor, our CFO. They will provide an overview of the 2024 first 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, will open the line for questions, and Justin Cochran, CEO of Clear Channel UK and Europe, will join Scott and Dave 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 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 confirm 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, May 9, 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 delivered consolidated revenue of $478 million for the first quarter, excluding movements in foreign exchange rates, reflecting a 9.3% increase as compared to the prior year. Many of the trends we saw in the fourth quarter continued into the first quarter. These results, which were in line with our guidance, reflect record first quarter revenue for America, airports, and Europe North, excluding sold markets and movements in foreign exchange rates. We remain focused on delivering on our strategic plan, which is aimed at enhancing the profitability of our business, focusing on our higher margin U.S. assets, and integrating the right technology into our platform to strengthen our ability to serve a broader range of advertisers. In our America segment during the first quarter, digital continued to grow and print bounced back nicely, driven in large part by growth in our local sales channel, including secondary locations, which helped margins. Performance was broad-based across the majority of our markets. Verticals that delivered the most growth include business services, amusements, and media entertainment. We continue to develop ways we can proactively bring new national brands into the sector against a backdrop of mixed inbound demand. Our national sales team continues to generate incremental revenue in both pharma and CPG, and Programmatic is performing very well, delivering a double-digit increase in the first quarter with very strong growth in the current quarter. Supporting our efforts, we're continuing to enhance our sales teams, including attracting sales professionals directly from the key verticals we're targeting. We believe this will have a positive impact and drive incremental revenue. Overall, we believe we're effectively playing offense in pursuing business across a number of channels. For example, our radar data solutions continue to bring innovation into the out-of-home marketplace, opening doors to new advertisers and verticals by providing previously unavailable insights to customers on how their out-of-home campaigns are performing. We are piloting a new approach where customers are starting to get weekly updates on campaign performance, initially around how Clear Channel's media is driving visits into restaurants and stores that advertise in our markets. Regular delivery of campaign performance data is a critical step in moving us closer to the experience that advertisers expect from digital media. We also continue to innovate around out of home's impact on mobile app behaviors and how our media drives measurable performance. For example, we completed a study in Q1 for a mobile audio entertainment platform that demonstrated that cut consumers exposed to one brand's ads in our airports we're more likely to try the app and we're more deeply engaged with the app's content. It's encouraging progress that reinforces the importance of leveraging data as a way of working with more digital marketers and accessing incremental budgets. Turning to airports, our business remains robust, driven by continued strength across multiple verticals. We're leveraging the premium nature of our inventory to drive campaigns for major brands looking to connect with millions of travelers. We continue to invest in digital displays across our airports, including in the New York and New Jersey airports. We recently installed a mix of highly visible dynamic digital platforms that are providing us with additional premium inventory in these key high volume locations to sell, allowing us to take greater advantage of strong demand. Europe North is also continuing to deliver great results with the second quarter on track to continue the strong momentum seen in the first quarter as well as last year, with growth continuing in the largest markets, the UK, Sweden, and Belgium. The momentum in the second quarter has been buoyed by advertiser commitments around the European Football Championship. The continued strength in the business has been particularly impressive given the ongoing M&A efforts. Moving to our balance sheet, in March, We announced the refinancing of our term loan and the CCI BV notes that extended our 2025 and 2026 maturities and created flexibility supporting the M&A process in Europe. Dave will go through the details, but I do want to congratulate the team on successfully executing these transactions at what we consider favorable rates in a volatile market. With regard to our guidance, Dave will also expand on the details later But I want to highlight we are confirming our full-year revenue guidance, which is expected to increase mid-single digits over last year, excluding movements in foreign exchange rates. So overall, we're pleased with our performance. In addition to benefiting from the overall growth of the economy, we're seeing positive impacts on various levels from our investments in digital, in our sales teams, in our new website, and, of course, in programmatic and data analytics. These initiatives all bode well for our longer-term growth profile. On the M&A front, we are in negotiations on the sale of our Europe North segment, and we continue to engage with potential counterparties in LATAM. We will update the market as and when we're able. With that, let me hand the call over to Dave. As you may know, Dave was promoted to CFO on March 1st. He has made a seamless transition, and I look forward to a strong partnership with him as we move forward in executing our strategic plan.

Thanks, Scott. Good morning, everyone. I've appreciated the support all the teams have provided me as I transitioned into this new role. Please see slide five for an overview of our results. As a reminder, EuropeSAL is included in discontinued operations. Additionally, during our discussion of GAAP results, I'll also talk about our results excluding movements in foreign exchange rates, a non-GAAP measure. We believe this provides greater comparability when evaluating our performance. Direct operating expenses and SG&A expenses include restructuring and other costs that are excluded from adjusted EBITDA and segment adjusted EBITDA. The amounts I referred to are for the first quarter of 2024, and the percent changes are first quarter 2024 compared to the first quarter of 2023, unless otherwise noted. Now on to the first quarter reported results. Consolidated revenue for the quarter was $482 million, a 10.1% increase. Excluding movements in foreign exchange rates, consolidated revenue for the quarter was $478 million, up 9.3%. Loss from continuing operations was $89 million, an improvement as compared to the prior year. Consolidated net loss, which includes the loss from discontinued operations, was also $89 million. Adjusted EBITDA was $97 million, up 53.6%. Excluding movements in foreign exchange rates, adjusted EBITDA was up 53%. The increase is largely driven by America and airports. AFFO was negative 16 million in the first quarter, an improvement of 62.6%. Excluding movements in foreign exchange rates, AFFO was up 61.6%. On to slide six for the America segment for first quarter results. American revenue was 250 million, up 5.8%, reflecting increased revenue in all regions. Billboard revenue was higher, driven by increased demand and digital deployments with growth both in print and digital bulletins. Digital revenue, which accounted for 33.7% of America revenue, was up 7.9% to $84 million. National sales, which accounted for 34.5% of America revenue, were up 5.5%, Local sales accounted for 65.5% of America revenue and were up 6%. Direct operating and SG&A expenses were flat, with 2023 at $155 million. Higher compensation costs largely driven by increased headcount and pay increases were offset by lower credit loss expense. Site lease expense was down slightly, driven by the renegotiation of an existing contract. Segment-adjusted EBITDA was $95 million, up 17.3%, with a segment-adjusted EBITDA margin of 38.2%, an improvement over the prior year. The improvement in segment-adjusted EBITDA margin was driven by the strong revenue performance in addition to the lower credit loss expense and favorable revenue mix. Please see Slide 7 for a review of the first quarter results for airports. Airports revenue was 77 million, up 43%, with strong demand across the portfolio. Digital revenue, which accounted for 55.4% of airports revenue, was up 44.1% to 43 million. National sales, which accounted for 55.2% of airports revenue, were up 25.5%. Local sales accounted for 44.8% of airports revenue, and were up 72.8%. Direct operating and SG&A expenses were up 21.9% to $58 million. The increase is primarily due to a 21.4% increase in site lease expense to $44 million, driven by higher revenue and an increase in compensation costs, largely driven by higher sales commissions. Segment adjusted EBITDA was $19 million, up 204.6%, with a segment-adjusted EBITDA margin of 24.8%. The improvement in the segment-adjusted EBITDA margin is driven in large part by the increase in revenue in the quarter. On to slide eight. For a review of our performance in Europe North, my commentary on Europe North is on results that have been adjusted to exclude movements in foreign exchange rates. Europe North revenue increased 5.9% to 136 million due to higher revenue in the UK, Sweden, and Belgium, driven by increased demand and digital deployments, partially offset by the loss of a transit contract in Norway. Digital accounted for 52.4% of Europe North's total revenue and was up 9.1% to 71 million. Europe North direct operating and SG&A expenses were down slightly to 121 million, due to a decrease in site lease expense, which was down 5.8% to 53 million, driven by the contract loss in Norway. This was partially offset by higher compensation costs. Europe North segment-adjusted EBITDA was up 92.5% to 14 million, and the segment-adjusted EBITDA margin was 10.1%, an improvement over the prior year. The first quarter historically had the lowest segment-adjusted EBITDA, resulting in margins being more sensitive to fluctuations in revenue and contract mix. Moving on to CCI BV on slide 9. Clear Channel International BV, or CCI BV, an indirect wholly owned subsidiary of the company and the borrower under the CCI BV term loan facility, includes the operations of our Europe North and Europe South segments, as well as Singapore, which is included in OTHER. the financial results of Singapore have historically been immaterial to the results of CCI BV, and revenue and expenses for this business were further reduced in the first quarter of 2024 due to the loss of a contract. As the current and former businesses in Europe's south segment are considered discontinued operations, the results of these businesses are reported as a separate component of consolidated results in the CCI BV consolidated statement for all periods presented and are excluded from the discussion below. CCI BV results from continuing operations for the first quarter of 2024 as compared to the same period of 2023 are as follows. CCI BV revenue increased 3.8% to $140 million from $134 million. Excluding the $3 million impact of movements in FX, CCIBV revenue increased 1.4% as higher revenue from our Europe North segment, as I just mentioned, was partially offset by the loss of a contract in Singapore. CCIBV operating loss was $7 million compared to the operating loss of $18 million in the same period of 2023. Now moving to slide 10, and our review of capital expenditures. CapEx totaled $24 million in the first quarter, a decrease of $9 million over the prior year due to timing of CAPEX spend in both America and airports. Now on to slide 11. During the first quarter, cash and cash equivalents decreased by $58 million to $193 million, primarily as a result of $127 million in cash interest payments, which included an additional $48 million in payments due to timing. Specifically, The cash paid for interest during the first quarter increased $55 million compared to the same period in the prior year. Approximately $48 million of this increase is related to the timing of interest paid early as a result of the debt refinancing transactions in March 2024 and the payment of the first semiannual interest payment on the CCOH 9% Senior Secured Notes issued in August 2023. The remaining increase is due to higher interest rates on the term loan facility. Our liquidity was $389 million as of March 31, 2024, down $97 million compared to liquidity at the end of the fourth quarter due to the decline in cash and cash equivalents, as well as the decrease in the availability under the receivable-based credit facility due to lower net receivables at the end of the quarter. Our debt was $5.7 billion as of March 31, 2024, a slight increase compared to December 31, 2023, due to the refinancing in March. As Scott mentioned, we successfully executed debt transactions with favorable terms during the quarter that improved our balance sheet by deferring our near-term maturities and reducing our anticipated cash interest payments in 2024 by approximately $18 million as a result of the refinancings. On March 18, 2024, we issued $865 million aggregate principal amount of 7.875% senior secured notes due 2030 and used a portion of the proceeds therefrom to prepay $835 million of borrowings outstanding under our term loan facility. At the same time, we amended our senior secured credit agreement to, among other things, refinance the $425 million remaining principal balance on the term loan facility and to extend its maturity date from 2026 to 2028. On March 22, 2024, CCIBV entered into a credit agreement comprising two tranches of term loan totaling an aggregate principal amount of $375 million, which mature in 2027. and use the proceeds therefrom to redeem all of the outstanding CCI BV 6.625% senior security notes due 2025. Our weighted average cost of debt was 7.4%, a slight improvement over year end. As of March 31st, 2024, our first lien leverage ratio was 5.38 times, an improvement over year end. The credit agreement covenant threshold is 7.1 times. Now onto slide 12 and our guidance for the second quarter and the full year 2024. All consolidated guidance and Europe North guidance excludes movements in foreign exchange rates with the exception of capital expenditures and cash interest payments. For the second quarter, we believe our consolidated revenue will be between 547 and 572 million representing a 3% to 8% increase over the second quarter of 2023. We expect America revenue to be between $290 and $300 million, and airports revenue is expected to be between $82 and $87 million. Europe North revenue is expected to be between $155 and $165 million. Moving on to our full year guidance. We are confirming the full year guidance for revenue, adjusted EBITDA, and CapEx provided in February. Cash interest payments, loss from continuing operations, and AFFO have been revised to reflect the recent refinancings and other updated information. We expect consolidated revenue to be between 2.2 and 2.26 billion, representing a 3% to 6% increase over 2023. America revenue is expected to be between 1.135 and 1.165 million. Airports revenue is expected to be between 345 and 360 million. Europe North revenue is expected to be between 635 and 655 million. On a consolidated basis, we expect adjusted EBITDA to be between 550 and 585 million. AFFO guidance is 80 to 105 million. Capital expenditures are expected to be in the range of 130 and 150 million with a continued focus on investing in our digital footprint in the U.S. Additionally, we anticipate having cash interest payment obligations of 436 million in 2024 and 425 million in 2025. The expected increase in cash interest payments in 2024 compared to the prior year is largely due to differences in the timing of interest payments. We expect $93 million of cash interest to be paid in the second quarter. This guidance assumes that we do not refinance or incur additional debt. And now, let me turn the call back to Scott.