Clear Channel Outdoor Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Clear Channel Outdoor Holdings, Inc.' 's 2024 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to your host, 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 David Saylor, our CFO. They will provide an overview of the 2024 Third Quarter Operating Performance of Clear Channel Outdoor Holdings, Inc., and Clear Channel International, BV. We recommend you download the 2024 Third Quarter Earnings Presentation located in the financial information section of 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, 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 could 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 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's views as of today, October 31, 2024, and may no longer be accurate at the time of a replay. Please see side 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 $559 million during the third quarter, representing an increase of 6.1% or 5.7%, excluding movements in foreign exchange rates, in line with our guidance and with growth across all our business segments. Our America segment delivered growth across all regions, driven in part by an improvement in national advertising. Airports continues to benefit from strong demand across all channels, and Europe North delivered another robust quarter with gains across the majority of the portfolio. We continue to see the benefits from our initiatives aimed at leveraging our technology investments and expanded sales teams to maximize our performance in the U.S. Utilizing our digital expertise and our radar data analytics resources, we're making inroads into verticals that have traditionally not relied on out-of-home to reach their target audiences. For example, our recently announced partnership with Sercana further strengthens our radar platform and provides CPG advertisers, who under-index in our industry, with the ability to effectively deliver their message via out-of-home. while measuring the impact of their campaigns on household purchasing behavior. In the pharma vertical, we've now reached a point where we can share some really compelling results from past campaigns, which is helping to open doors for us. We recently served as a sponsor at Digital Pharma East, one of the largest pharma marketing conferences nationally. This was a first for us, and the reception was promising. We are now at the table with numerous pharmaceutical companies and their agencies, discussing potential campaigns in the year ahead. With regard to our domestic footprint, we're excited about the recent award of a large 15-year contract for roadside advertising assets controlled by the New York MTA. This contract substantially expands our footprint in the New York tri-state area and elevates our ability to deliver market-wide programs for national and local advertisers in a complementary way. So we're making notable progress in pursuing our plan as we further scale our platform in the U.S. and continue to focus on expanding our revenue sources, which sets us up well as we look to close out the year and build on our momentum going into 2025. In the current quarter, we are continuing to see revenue growth in America. Our airports business remains strong, although we're now up against tougher comps, so the rate of growth will naturally moderate. Similar to the airports, Europe North is also up against tough comps and could post roughly flat revenues in the quarter. As I noted on our last call, we believe we are turning the corner on cash generation. AFFO exceeded discretionary capex in the third quarter, and we expect the same in the fourth quarter with continued improvement into 2025. We believe this creates the option to start to organically reduce our debt, a central goal in our focus on enhancing shareholder value. On the M&A front, negotiations for the sale of Europe North are continuing, and we remain committed to exiting Europe at a price that reflects the value being delivered by this business. Additionally, you may have seen that JCDecaux terminated its agreement to acquire our Spanish business after deciding to withdraw its regulatory filing with the Spanish competition regulator. Our understanding is that the regulatory commitments exceeded what JCDecaux was willing to pursue. The good news is that our Spanish business continued to perform well throughout the process, and we are well positioned to bring it back to market in the relatively near future. Lastly, our LATAM sale process is ongoing, and we will provide further updates in due course. So overall, we're pleased with the progress we are making on multiple fronts, and I'd like to thank our company-wide team, especially in Europe and Latin America, for their continued commitment to executing on our strategic roadmap and pursuing our long-term vision. With that, let me hand the call over to Dave. Thanks, Scott.

Please see slide five for an overview of our results. As a reminder, Europe South 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 a 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. And the amounts I referred to are for the third quarter of 2024, and the percent changes are third quarter 2024 compared to the third quarter of 2023, unless otherwise noted. Now on to the third quarter reported results. As Scott mentioned, Consolidated revenue for the quarter was $559 million, a 6.1% increase. Excluding movements in foreign exchange rates, consolidated revenue was up 5.7%. Loss from continuing operations and consolidated net loss, which includes the loss from discontinued operations, were both $32 million. Adjusted EBITDA for the quarter was $143 million, up 2.6%, and adjusted EBITDA excluding movements in foreign exchange rates was up 1.9% from the prior year. AFFO was $27 million in the third quarter, a 9.1% increase from the prior year. Excluding movements in foreign exchange rates, AFFO was up 5.5%. On to slide six for the America segment third quarter results. America revenue was $293 million, up 5%, with revenue up in all regions driven by increased demand for both digital and printed billboards and the deployment of new digital billboards. Digital revenue, which accounted for 36.1% of America revenue, was up 8.4% to $106 million. National sales, which accounted for 36.3% of America revenue, were up 8.4% on a comparable basis. Local sales accounted for 63.7% of America revenue and were up 3.2% on a comparable basis. Direct operating and SG&A expenses were up 4.5% to $165 million due in part to lower property taxes in the prior year related to a legal settlement, as well as higher compensation costs and production expenses related in part to increased revenue. Segment-adjusted EBITDA was $128 million, up 5.8%, with a segment-adjusted EBITDA margin of 43.8%, slight improvement from the prior year. Please see slide 7 for a review of the third quarter results for airports. Airports revenue was $82 million, up 9%, with strong advertising demand led by the Port Authority of New York and New Jersey airports. Digital revenue, which accounted for 51.1% of airports revenue, was up 0.8% to $42 million. National sales, which accounted for 58.6% of airports revenue, were up 8.7% on a comparable basis, and local sales accounted for 41.4% of airport's revenue and were up 9.3% on a comparable basis. Direct operating and SG&A expenses were up 8.9% to $65 million. The increase is primarily due to site lease expense driven in part by higher revenue. Segment adjusted EBITDA was $17 million, up 9%, with a segment-adjusted EBITDA margin of 20.6% in line with the prior year. On to slide 8, 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 8.6% to $162 million, with revenue up in most countries due to increased demand, most significantly in Sweden, partially offset by a loss of a transit contract in Norway. Digital accounted for 58.1% of Europe North total revenue and was up 12.4% to 94 million. Europe North direct operating and SG&A expenses were up 12% to 136 million due to higher site lease expense, property taxes, and compensation, as well as higher rental costs for additional digital displays. Europe North's segment-adjusted EBITDA was down 4.5% to $27 million, and the segment-adjusted EBITDA margin was 16.7%, a decline from the prior year. Moving on to CCI BV on slide 9. Clear Channel International BV, which I will refer to as CCI BV, is an indirect wholly-owned subsidiary of the company and the borrower under the CCI BV term loan facility. CCIBV includes the operations of our Europe North and Europe South segments, and prior to September 17, 2024, also included Singapore, which is included in other. The financial results of Singapore have historically been immaterial to the results of CCIBV, and revenue and expenses for the Singapore business were further reduced in the first quarter of 2024 due to the loss of a contract. On September 17, 2024, CCI BV sold its equity interest in the Singapore business to another indirect foreign wholly owned subsidiary of the company. As the current and former businesses in the Europe South segment are considered discontinued operations, results of these businesses are reported as a separate component of consolidated net income in the CCI BV consolidated statement of income for all periods presented and are excluded from the following results. CCI BV results from continuing operations for the third quarter of 2024 as compared to the same period of 2023 are as follows. CCIBV revenue increased 8.1% to $166 million from $154 million. Excluding the $4 million impact of movements in FX, CCIBV revenue increased 5.4% 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 income was $5 million compared to $9 million in the same period of 2023. Now moving to slide 10 in our review of capital expenditures. CapEx totaled $31 million in the third quarter, a decrease of $2 million over the prior year. Now on to slide 11. During the third quarter, cash and cash equivalents increased by $12 million to $201 million. Cash paid for interest during the third quarter decreased $2 million compared to the same period in the prior year. Our liquidity was 376 million as of September 30th, 2024, down 29 million compared to liquidity at the end of the second quarter due to the previously announced 34 million decrease in the borrowing limit of the revolving credit facility. Our debt was 5.7 billion as of September 30th, 2024, in line with the second quarter. Our weighted average Cost of debt was 7.4%, also in line with the second quarter. As of September 30, 2024, our first lien leverage ratio was 5.34 times. The credit agreement covenant threshold is 7.1 times. Now on to slide 12 and our guidance for the fourth quarter and the full year of 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 fourth quarter, we believe our consolidated revenue will be between $628 and $653 million, representing a decline of 1% to an increase of 3% over the same period of the prior year. We expect America revenue to be between $308 and $318 million, and airports revenue is expected to be between $111 and 116 million. Europe North revenue is expected to be between 185 and 195 million. Moving on to our full year guidance. We expect consolidated revenue to be between 2.222 and 2.247 billion, representing a 4% to 6% increase over the prior year. America's revenue is expected to be between 1.141 and 1.151 billion, Airports revenue is expected to be between 356 and 361 million. Europe North revenue is expected to be between 648 and 658 million. On a consolidated basis, we expect adjusted EBITDA to be between 560 and 580 million. AFFO guidance is 90 to 105 million. Capital expenditures are expected to be in the range of $130 to $140 million, with a continued focus on investing in our digital footprint in the U.S. Additionally, we anticipate having cash interest payment obligations of $137 million in the fourth quarter of 2024 and $420 million in 2025. This guidance assumes that we do not refinance or incur additional debt. And now, let me turn the call back to Scott.

Thanks, Dave. To recap, business trends remain positive across our portfolio and we remain on track to deliver our full year 2024 financial guidance. As we told you at the beginning of the year, 2024 results have been somewhat lumpy quarter to quarter based on 2023 comparatives. But as we look at the full year, we see real progress and we're encouraged by the early renewal and development efforts for 2025. This is because we are making inroads in our efforts to expand the range of advertisers we can serve, increase utilization across our platform, and maximize revenue. In addition, the expansion of our footprint in New York through the new roadside contract further increases the size of the audiences we can deliver. We are committed to executing our strategic plan, including continuing the sale processes related to our international businesses. Our ultimate goals include organically growing cash flow and reducing leverage on our balance sheet. Our progress is evident in our third quarter AFFO, which exceeded our discretionary capex. And, as noted, we expect the same in the fourth quarter as well as improvement in 2025. And now let me turn over the call to the operator, and Justin Cochran will join us on the call.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question is from Cameron McVeigh with Morgan Stanley. Please proceed.

Hi, good morning. I'd be curious, any more color in the New York MTA roadside contract? Maybe, you know, why now and any more economics behind the deal? And then secondly, could you talk a bit more about the drivers of the improved national ad spend? We've seen some pressure on national outdoor over the past few quarters. So curious, just in your view, what has changed and if that's structural. Thanks.

Hey, Cameron. Good morning. Thanks for the questions. I'm going to start actually with your second one first, and I'll come back to the MTA, and then I'm going to hand it to Dave to talk a little bit more about the contract itself. But just on national ad spend environment, so there are things that contributed that we drove this quarter, like our emphasis on Things like CPG, things like pharmaceuticals, things like telecom. And there are things that are just math. And I think, you know, both of them conspired to make the number, you know, at the kind of high single digits range. And I would just say that it's definitely better than it was a year ago But there is nothing linear about the way national ad spending is evolving. We continue to see a media and entertainment space that's going through a lot of turmoil and is not bouncing back to the kind of pre-strike kind of levels. I think everybody is aware of the competitive environment there and all of the different activities that are going on. And so that vertical hasn't really come back. And then we have, I mean, it's not terrible, but it's not great, and it is an important vertical within our portfolio. And then there are just puts and takes. Business Services continues to be a very strong performer at the local level. So anyway, you asked about national, so I'll pause there on the national. So it's partly things that we're consciously doing, and it's partly just math. And I'd say that the basic national market looks a lot like the basic national market we've been looking at the last several quarters. So it's lumpy. Things are a little episodic. Things are a little late to come in. but there's money out there to be had and the onus is on us to go get it. Which brings me to your first question, which I'll answer second, which is about the MTA, and you started off with why now. Just to be really clear, these are roadside bulletin assets. They're assets that kind of stretch around the tri-state area on property that the MTA controls. So this is all above ground stuff. And it's all kind of billboard and poster type inventory. It's not shelters. It's not transit assets per se. And this contract was consolidated back in 2017. And we actually had some of the properties prior to that. That's not really here nor there, other than just to emphasize this is our core business. This is not some different adjacency. something that is going to give us a better footprint as we negotiate national contracts that we think will have a knock-on effect in other markets. And it will certainly be good for our New York operations, both locally and nationally, because it's gonna give us the ability to be relevant to a whole bunch of advertisers that we didn't have great solutions for. Our core New York City assets prior to this contract coming online, which is actually happening tomorrow, the beginning of November, I guess effectively Monday is really the first operational date. But the effect of it will be to give us a much richer story in terms of the audience we can deliver in New York. And it's a mix of digital and printed assets. And I'm going to let Dave get into a little bit of the contract details, but that's sort of the strategic rationale.

Yeah, thanks, Scott. From a financial standpoint, I guess the first thing I'd talk about is the contract starts, as Scott said, on November 1st. There's definitely going to be a little bit of a ramp period as we get into it. It's obviously two months of the fourth quarter. So at a high level, when I'm thinking about this contract, um as we get into into 2025 you know this will add probably a couple points of growth from a revenue standpoint so it's it's very strong from a top line standpoint very good assets digital and also printed assets and as scott mentioned we did have some of this inventory prior so we're very familiar with it but it is a municipal contract uh the mpa contract so it is going to be you know there's a mag attached to this contract um it's a very high rev share um there is some a little bit of capital recovery but you know you're going to have a A revenue share in the high 70s. So from a margin standpoint, you know, it's not the normal flow through, you know, the at-home space. But, you know, it's absolute, you know, increase in our margin dollars. So a contract we're absolutely looking forward to. As I think about it in the fourth quarter, you know, you're probably going to have a little bit of a margin impact just because you're ramping the contract. Obviously, the mag starts, you got to match that from a revenue standpoint. So there'll definitely be obviously some top line growth in the fourth quarter, a little bit of impact from a margin standpoint in the fourth quarter. As I said, as we get into the next year, you'll have that impact on the top line of a couple points. And there may be a little bit of a margin impact as we get into 2025, but it's definitely more from a top line standpoint in the business.

Yeah, and I think on that point, I appreciate Dave saying that there may be a margin impact on it. I know how important operating leverage is to everybody who follows our business. Operating leverage is definitely going to be impacted as we absorb this contract over the next year. Once we get it fully up and operational, you'll see operating leverage get back to a more normal state. But I just don't want anybody thinking that this is going to flow through, that 2025 is going to be a normal year from an operating leverage perspective, because this is a big contract and it will, again, just math, impact the margin percents. over the course of that, but we should see it, you know, as the year goes on, normalize and then, you know, future years will look more normal in operating leverage.

Our next question is from Daniel Osley with Wells Fargo. Please proceed.

Good morning. I just had two questions. The first, can you unpack any political benefit you had in Q3 and maybe your expectation for Q4, whether it be from crowd out or direct dollars? And then secondly, how should we think about airports growth moving forward? Seems like you fully lapped the ramp of the Port Authority contract and your Q4 guide implies a low single digit growth range. So is that something we should be extrapolating moving forward or is there anything that moves that one way or the other? Thank you.

Thanks, Daniel. First off on political, we definitely have seen some political money come in. We've seen it in our programmatic channels. We've also seen it in our direct channels. And it's come from the campaigns themselves as well as from PACs. The numbers are not enormous. You're talking about over the course of the year, a few million dollars. in terms of the impact. So I don't think you're going to see us, you know, see the boom up, the boom down that you see in other local-oriented media. It just is not a huge driver for us. But it is something we've had some success with this year. It's something that, you know, when the dust settles on Q4 and we finish, you know, we are in a bunch of swing states. When the dust settles on it, we should see, you know, the percentage growth in political beat will be big for us, but it'll be on a very, very small base. And, you know, I don't expect to be coming to you hat in hand using it as an excuse a year from now. So hopefully that dimensionalizes political for you reasonably well. On airports moving forward, I think we've been signaling for a while now, and Dave, keep me honest on this one, but I think we've been signaling for a while now that as the buildout matures in the port authority and we don't have any other major contract puts and takes, that that kind of GDP plus growth that normal out-of-home has over sustained periods is probably the right way to think about airports. There are definitely things we're working on to enhance our offer and to further innovate in terms of how we go to market. But this team has been on an absolute tear for the last probably six or seven quarters. And I think you're going to see a little bit of a pause there. And probably in the next two or three years, we'll have some puts and takes in terms of contracts. There's nothing like material coming up or anything like that. But you're seeing the airport business, you know, they were hit so hard by COVID, a lot of the airport authorities went to direct extensions as opposed to RFPs. So I think it's been a little bit of an unnaturally quiet period in terms of contract stability. Again, nothing like big that's in the immediate headlights, but I think you're going to start to see that crop up in the next couple of years.

Our next question is from Avi Steiner with JP Morgan. Please proceed.

Thank you and good morning. I've got three here if I can. One, I'll start on the balance sheet. Free cash flow, as we look at it positive in Q3, the commentary pointed to further improvements broadly. In the context of those comments and organically reducing debt with free cash flow, I'm just wondering how you think about balancing Some discount available on some of your debt versus some earlier maturities, and I've got two more. Thank you very much. You want to take that one, Dave?

Yeah, sure. No, look, thanks for the question, Avi. From the free cash flow standpoint, I feel pretty good where we are right now. I mean, we signaled in the call last quarter about being our AFFO, covering our discretionary or slash growth capex. to be positive in the second half. And we were positive in the third quarter, and we're going to be positive in the fourth quarter. And I can see that progressing as we get into 2025. So I think that's a good milestone for the business. You know, as far as when you're talking about the pay down of debt, yeah, as we start, you know, producing, you know, free cash for the business, absolutely, that's a definite, you know, opportunity or outcome with that cash. And yeah, we would look at our The pricing for bonds right now, the prices are actually pretty strong if you look across our portfolio of assets. But I think that's something we're going to get into as we get into the strategic initiatives and as those progress. I think that's the conversation where we're looking at debt pay down from that standpoint first, and then as we're obviously generating free cash flow. you know, that is just another positive outcome, you know, from that cash flow. You know, do you invest in the business or is there certain ways that we can go after our debt to pay that down? So that's definitely top of mind.

Great. And my second question, I just want to dig into the full year guide a little bit more and what it implies for you, but that which I think is slightly down in the fourth quarter. And if you mentioned this already, I apologize, but anything to call out in the expense side or otherwise that, you know, by segment, that might account for that. And then I have one last one to thank you very much.

I mean, when I'm thinking about the guide for the fourth quarter, when I'm thinking about it from a top-line standpoint, I mean, for the full year, you know, America had roughly 4% to 5%, 3% to 7% in the fourth quarter. And, you know, right now for airports and American, I can say this for Europe as well, In the third quarter, we've had record revenue, you know, for airports. We're going to continue that in the fourth quarter. The fourth quarter of last year was the biggest revenue quarter we've ever had in airports at $111 million. You know, we're looking to exceed that. So when you look at the percentages, yeah, they're probably not the golden numbers that we've been seeing over the last, you know, six to seven quarters. But when we've talked about that, you know, as we come across those comps, that will have an effect from a growth rate standpoint. And then Europe North, they're coming off of, you know, 13%, 14% growth in the fourth quarter of last year. Again, record, made a record quarter last year in the fourth quarter. We're coming up against those comps and seeing a little bit of softness, I'd say, in the UK. And I think as, you know, the government's kind of rolling out, you know, their budget and the conversations there, I think that's kind of spurred growth a little bit in the fourth quarter for Europe. So that's probably when you think about the weakness of the guys in the fourth quarter, that's probably where I'd point you to.

Yeah, and on the cost side, there have been some tax increases in Europe in particular, in the UK in particular, that have had impact.

You have that. And there's also a couple of new contracts ramping overseas. And as you're deploying costs, as releasing certain assets, that's driving a little bit there as well. But you always see that when you're ramping new contracts.

That's right.

Definitely helpful.

I appreciate it. And if I can end up on the Europe side, and thank you again. So the Spain sale sidelined for now. I'm just wondering if it changes your thoughts around the process of Europe overall. Scott, you mentioned you want to price or flex the value of the business. I think everyone can get behind that. But given just how long this has gone on, I wonder if instead of a sale, the company might be considering perhaps a spinoff for the business, which may not give you the same amount of

media cash but maybe allows you to kind of focus on the us and put all those assets in one business i'm curious how you think about that and thank you hey avi uh you always ask the easy ones thank you thank you for that so um i know i know spain is on uh just reading the notes that people wrote this week i think spain is on people's minds in different ways and i think You know, data point one on it is it's just an example of the regulatory state that we live in and that we have to take seriously, you know, the regulatory hurdle that we have. We and JCD believed when we inked the deal 17 months ago that this would be able to be done, and it is once that deal is inked. It is on the onus of the buyer to work with the regulatory commission, and for whatever reason, it didn't get across the hurdle. I think some of you recall that we announced Italy and Spain at the same time, and Italy was the same scenario where we're competitors in that market, but for whatever reason, the dynamics of it, the size of the deltas, whatever, the nature of the regulatory commission, Italy went right through and Spain obviously didn't end up working. So we just can't ever take lightly the regulatory piece. I think the second thing on this that I've heard people ask about is, does this mean that you can't contemplate a strategic buyer in Northern Europe? And I just urge everybody to think about the fact that strategic is in the eye of the beholder. And it doesn't necessarily mean that the person operates roadside assets or outdoor assets, I should say. It might be that they're a media company. So I wouldn't rule out the idea that there are strategic entities that would be interested in the business beyond just the names that you know in out-of-home advertising. And on your question about structuring, Avi, you know, we... We appreciate that this has taken some time, but we also will push back on the fact that interest rates went through the roof and we had a war launch and a lot of different turmoil in the different markets. And I give our European team just a ton of credit for the performance that Europe North has put in, which we've called attention to the last couple earnings calls. And the Spanish team, despite having had a sale inked and having a lot of uncertainty about exactly what the form of the new business was going to be, just put their heads down and crushed it. And that is, I think, what speaks to the character and capability of our company and that I'm not going to get over my skis on speculating about how I'd structure this differently than a sale process. until such point as I believe a sale process is not practically possible. And I am not anywhere close to that point. So hopefully that gives you an answer without getting into all of the, I mean, you and I could spitball for hours on all the different cool things that we could do to extract money from this and manage it differently. But while we're on the stated strategy of selling the markets working a process, I'm not going to indulge in that on our public earnings call. So hopefully that gives you what you need.

I appreciate it as always. Thank you very much, everyone.

Our next question is from Lance Fintanza with TD Cowan. Please proceed.

Hi, guys. Thanks for taking the question. Sticking with the Europe North, I was surprised given the strength in revenues on the one hand, but costs obviously grew more quickly. And could you sort of break that down in terms of what in that cost side is recurring versus non-recurring and really what it means for margins in Europe North going forward? You mentioned higher site lease expense, and I'm wondering, you know, was that unfavorable renewals or were there perhaps some COVID abatements that rolled off and then related to that, you know, the impact of Norway, which you call out, but could you sort of put some numbers around that? Is it possible to talk about what the revenue and EBITDA growth would have been X that Norway contract going away? Thanks.

Yeah, I'll start Lance and then I'll pass it off to Justin to fill in more of the details. Um, but look, we have a few, a few contracts that are ramping, um, that obviously are an increase in cost and you get that in the beginning. We have property taxes, which is not a one-timer that have increased in the UK, but I'd say more on the rental side that will normalize over time. But from a margin standpoint, I don't expect there to be major changes going forward as we're looking at history and kind of where we are today. And like the business grew quite nicely from the top line. And the expenses, I'd say, as I'm going through the details, site lease is kind of like your normal increases that you're going to have. And it can be a little bit lumpy, you know, quarter to quarter. I'd probably point to some of the rental costs. There's a little bit on production. That'll probably be a little bit higher than normal. And then you have the business is actually performing pretty well. So you add in bonus, you know, from an incentive comp standpoint, that's kind of driving a little bit of that from a margin standpoint. But Justin, I don't know if you want to go into more details even from a contract standpoint.

Yeah. Thanks, Dave. I've got a couple of things to add. I guess the Norway thing is a bit of a red herring. It was a big revenue contract, but it was a low margin contract, so there's really no material difference from that. As Dave said, the underlying business margin year on year is actually about the same. There are a few small one-offs here and there, but it's nothing material and nothing I'd expect to change the overall margin profile going forward. If we hadn't had those in the quarter, we'd have had a similar margin to prior year, so So I don't think there's anything structural that shifted. I think it's a few small things that made the margin come down slightly just in this quarter.

Thanks so much. Thanks, Lance.

Our next question is from Aaron Watts with Deutsche Bank. Please proceed.

Hey, everyone. Thanks for having me on. Just two questions for me. You've indicated in the past that cancellations have been a precursor to downturns in your business. I think as of the last call, you hadn't seen any notable activity on that front. Is that still true today? And any early indications from your ag clients on commitments for early 2025? And then secondly, on the national business here in the U.S. and turning the corner into 2020, and fourth quarter and turning the corner into 2025, are you feeling any headwinds from all the streaming ad inventory that has come online this year? Do you think that's part of the reason for sustained choppiness on national throughout the last 12 months and something you might expect to continue going forward?

Thanks, Aaron. Yeah, no, good couple of questions. So on the cancellation front, no, we have not seen an uptick in cancellation activity. And yes, the early 2025 conversations are pretty encouraging. We are very early into that renewal season, but we are encouraged by the number of parties that are looking to renew and that are looking to renew potentially with expanded commitments. you know, it's way, way, way too early to be guiding on 2025. So please don't any of you ask me to give you, you know, what percent are we going to call for 2025? But I do think that, you know, we are positioned well heading into 2025. On national, you know, the money is there. I think that is the critical thing. And so the onus is on us to figure out how to tap that money. And whether that's bringing an advertiser to an agency, bringing an idea to an advertiser and getting the advertiser to advocate that to an agency, which is something we're doing increasingly, or whether that's being particularly creative in how we're packaging solutions when we get RFPs, which is kind of the core way a lot of the national gets done. But you have heard us talk about The efforts that we've gone on in things like pharma and CPG and beer, we are getting very close to bringing somebody in to help us focus on automotive. So that's an area that I think you'll hear us talking more about as we go. We have existing relationships in telecom and in auto insurance that are important categories. Media and entertainment is an important category where we have relationships at the advertiser level. So we are looking to leverage those advertiser level conversations and help them all see how out of home can amplify what they're doing in other places. I can't really comment on, you know, cross pressure from all of the different streaming inventory that's come online. I do think that when I look across our global portfolio, I see us getting more TV budgets in every country other than the US. And so I would attribute at least some of that to the number of video options that there are in the US. That would be more than just the streaming folks, but certainly the streaming folks are probably having some impact there. But I really don't think we should, as an industry, accept that as an excuse The fact that we don't have video, it's a challenge. But the reality is that our assets amplify video and that smart advertisers use a mix of different types of advertising to land their campaigns in the most cost-effective way. The onus is on us to prove to them that that's the case and get that done. So that's what we're doing. That's what we're focused on on national. I don't think it's going to become less choppy anytime soon, just given the general degree to which there's very regular CMO changes. There's a lot of CEO changes going on in the world right now, too. So there's no shortage of things that cause people to change strategy and change direction. The critical thing for us is to be at the table with the right people so that when those changes come down, we're part of that conversation.

Very helpful. Thanks, Scott.

Thanks, Eric.

Our next question is from David Kamowski with JP Morgan. Please proceed.

Hey, this is Scott Hastings on for David Kamowski. Just had a question on local. It's continued to be an outperformer for you in the industry. The macro has been supportive, but Could you talk about if there are any other secular dynamics to consider and how some of the major categories like maybe legal or services are approaching billboards? I'm trying to get a sense of the sustainability here beyond economic consideration. Thank you.

So that's a broad question. And there's no question that legal has been an important vertical for us. And the dialogue that we have with the legal entities. I talked a minute ago about some of the verticals that we're focusing on nationally. Legal is one we've been focused on at the local level for some time, and we have individuals in our markets who are very fluent in the strategies the different legal service providers are pursuing and how we can complement them. You know, we strive to do that also with things like auto dealers and restaurants, retail, those kind of areas and are working in different degrees to get after it. But I think the core thing is that local advertising market continues to very much be in play among other local media. possibly including things like search as a local media because it can present as an intensely local thing as can social. And so the local market scrum is lively and vibrant and we are expanding our teams locally, we're expanding capabilities locally, we're training people up on how to sell in conjunction with digital and how to amplify digital campaigns. There's a lot of things we're doing to strive to keep that part of things going. I think the other element of local is the local agencies behave in a somewhat different fashion than the national large holding company agencies do, and that creates some opportunities at the local level. The good news is we are a intensely local medium. We're a medium where people like to see their products supported at that local level and feel good that we've got a good runway of growth opportunity there when you just think about the amount of advertising expended at the local level and our relative share of it.

Awesome. Thanks so much.

Our final question is from Patrick Scholl with Barrington Research. Please proceed.

Thank you. Good morning. I was wondering if you could talk on the airport side with the kind of slower growth in digital from that segment, and then also circling back to the MTA. I guess in sort of adding and ramping up a contract of that size, I guess, How do you go about limiting some of the cannibalization from other assets in the market?

Great. So, Pat, let me start on the digital growth in airports. You know, I think Dave referenced this a minute ago, but our comp, We have been setting quarterly records in airports for a number of quarters now, probably going back to the early part of 2023. So we have been growing that space pretty substantially. When you think about the split between digital and printed in airports, What you've really seen, if you go back and you look at our digital growth during those periods, it was the main driver for much of that time. And I think partly what you're seeing is just a little bit of rebalancing. And it can be only a couple of deals can swing you one direction or another on this in terms of If people are going for domination on printed assets, it can cause the printed number to spike up. And I don't have kind of a campaign by campaign play. But if you think about just what the advertiser is trying to accomplish, a lot of times they're trying to dominate the share of voice in a particular location. And a great way to do that is on the printed assets. I mean, we see that. You know, I think people have expected for years that we were going to see the printed roadside assets shrink while the digital assets grew. And the digital assets have grown, but the printed have held their own and in most quarters have shown some growth. And this quarter was pretty healthy growth that we had the roadside printed. So I think it's a little bit of advertiser preference and a little bit of, you know, how the campaigns are laying in. I certainly am not hearing anything that suggests there's any issue in digital sales in the airports. I think it was probably just a couple of print heavy, share a voice heavy campaigns that came in, Pat. So that's on the airport's digital growth and hopefully that clarifies it for you. On the New York inventory, the reality for us is that our presence in New York is disproportionately in Times Square and on large assets at choke points like tunnels and bridges. We don't have, prior to this contract activating tomorrow, we didn't have a particularly robust sort of run of market kind of distribution. This gives us a really healthy distribution along and around the kind of I-95 and LIE corridors that we really shouldn't expect that there's going to be a whole lot of cannibalization for it. I mentioned briefly at the outset, you know, we operated... a portion of these assets, nothing like the whole portfolio we just picked up, but maybe 20% of the portfolio we picked up prior to 2017 when MTA consolidated and bid out that group of assets the first time. So it's areas we're familiar with and it's areas that we know well, but there's not a lot of other assets of ours to take things off of. So this should be very largely incremental for us. Hopefully that answers your questions.

Yes, thank you.

This will conclude our question and answer session. I would like to turn the conference back over to Scott Wells for closing remarks.

Great. Well, we appreciate the questions and the engagement. You know, I think the thing I'd just end on is that in this season of uncertainty around the election and in the ongoing uncertainty around macro direction of the country and what lies ahead, When I look at our business, we are looking at records across all of our principal lines of business in Q3. And a healthy business should be setting records regularly. So there's nothing particularly that I want to thump my chest on on that. But I just want to call out that there has been this sustained concern about what was around the corner and where things were. And I'm certainly not going to say that there is an uncertainty in this world and that there isn't a chance that we see a recession or things like that come up. But I think when you look at the performance of this business with a lot of uncertainty in parts of the business where we've been selling them, that should give us a lot of credibility for our ability to execute. And I just want to end with thanking the teams for all of the work that they've done on those points to be able to be in a position where we have records across the portfolio and wish everyone a happy Halloween and a good start to the holiday season because everything kind of picks up in velocity from here. Thanks, everyone.

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.