Clear Channel Outdoor Holdings Inc at Deutsche Bank Leveraged Finance Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Aaron Watts - Deutsche Bank AG - Analyst : So it has been an active year since we last sat on this stage, and certainly one notable occurrence during that time is you taking the reins as CFO of the company. For our time today, I'd like to cover three main areas of discussion, the strategic realignment of the company, the fundamental themes of the underlying business, and the capital structure. So Dave, before we dive into those, perhaps kick us off with what has been accomplished over the past 12 months and what's at the top of your to-do list for the next year?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. Great. That really sets the stage well. So let's jump into kind of first area of discussion, which is the strategic review. I've been asking you questions about the strategic review for going on 2.5 years now. For the benefit of the audience, and you already did a little bit of this, but remind us, kind of tick the boxes, what have you done so far? And you mentioned France. What's still in process? And when do you envision wrapping things up and allowing me to cross this topic off the list?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. Your sale announcements thus far have brought you closer to your desired goal to focus on the US business but haven't led to much material deleveraging. Would you expect any remaining assets sold that are left in the strategic review, mainly Europe North and LatAm, to have any discernible impact on leverage?

Question: Aaron Watts - Deutsche Bank AG - Analyst : All right. And Jason since Dave mentioned it, maybe you can talk about as proceeds do come in from these sales, what the priorities are for that cash?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. And one other potential saving that you've discussed is around the corporate expense side as you refocus the business. Remind us any framework around what those savings might be and when they start to flow through?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. The last question in this area. I often get the inquiry of why wouldn't the company sell some high-margin, high-multiple US assets to accelerate the deleveraging process? I believe taxes are a big factor there, but I'm sure there's other forces as well. Maybe you can talk to that.

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. Let's move on to my second area I wanted to cover, which was the core business performance. We'll start with airports, not because it's the largest contributor to the business, but rather because it has really rode the wave of the travel bounce back and performed solidly year to date. First half revenues were up 31%. EBITDA was up even more than that. Can you unpack the strength there? And are the driving forces of that one-time in nature? Or is that momentum more sustainable?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. Yeah, my experience walking through at least the New York airports, it's a really impressive visual experience for sure. You did a good job.

Question: Aaron Watts - Deutsche Bank AG - Analyst : So local sales account for around 42% of revenue in the airports unit. They were up 37% in your last quarter. So very healthy. But what I wanted to ask you on is national sales. Those were up 12% year on year. Why has the airports business been able to buck a theme of softer national performance that we've seen across media?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. One last question on airports. Your margins were over 23% for the first half of the year. But I know you and Scott have managed those margin expectations to more of the high-teens area. What is elevated margins year to date? And should we expect that to trend a little lower going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 24, 2024 / 3:20PM, CCO.N - Clear Channel Outdoor Holdings Inc at Deutsche Bank Leveraged Finance Conference

Question: Aaron Watts - Deutsche Bank AG - Analyst : All right. So let's move over to your largest segment, the Americas Roadside business. Following a fast start out of the gates that you mentioned earlier, 2Q growth slowed down a little bit. I think, on a combined basis, the first half was up 3% year over year. Local doing better than national. I asked you about national on the airport side, but now for the roadside business, it has been a little soft for you. Do you view those headwinds as more cyclical and temporary in nature? Or is there other longer-term secular issues at play?

Question: Aaron Watts - Deutsche Bank AG - Analyst : On the topic of concerns around the macro backdrop, cancellations have historically been a precursor to downturns in your business. As of the 2Q call, you hadn't seen any notable cancellation activity. Is that still true as we sit here today?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. One last question on the Americas. Digital has clearly been a driver of growth for the platform. How much more room is there to run there? And will that be driven more by continued expansion of phases or more organically via price and/or taking share?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. I wanted to ask you one question about your overall cost base and how we should be thinking about that? Where it lives today, where it might go in the future, any further levers to be pulled? And anything you would call out as far as comparisons go in the back half of this year from an abatement standpoint or otherwise that could affect the cost? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 24, 2024 / 3:20PM, CCO.N - Clear Channel Outdoor Holdings Inc at Deutsche Bank Leveraged Finance Conference

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. You mentioned this at the start of our chat today, and I want to go back to highlight, and it was about turning the corner on free cash flow. Is that something you envision happening over the next 12 months? And touch on some of the variables that go into that. Anything you'd highlight in terms of cash taxes or capital expenditures, working capital swings that might play into it?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. Great. And now the final area of discussion, let's talk about the capital structure. You spoke earlier about what you've accomplished over the past 12 months. So what's next? And how do you think about the timing of those next steps?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Right. And as you think about where your leverage is today, you mentioned the 9 times area. How do you think about the trajectory of that coming down over the next few years? And a common question I get asked is how does this company grow into its balance sheet over a reasonable amount of time? Are there any other levers you can pull to help accelerate that effort?

Question: Aaron Watts - Deutsche Bank AG - Analyst : Okay. Let me finish on one last question, and appreciating where your leverage position is at today, but I wanted to ask about M&A. It feels like it has been a little slower pace here in the US over the past year for larger transactions at least. What are you seeing in the pipeline going forward? Lamar hinted that they expect an acceleration of deal activity next year. Are you on that same page? And how should we expect Clear Channel to be a part of that?

Question: Aaron Watts - Deutsche Bank AG - Analyst : All right. We'll wrap it up there. Thank you very much, guys. This is helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 24, 2024 / 3:20PM, CCO.N - Clear Channel Outdoor Holdings Inc at Deutsche Bank Leveraged Finance Conference