Clear Channel Outdoor Holdings, Inc. Reports Results For 2021 Second Quarter And Announces CEO Succession Plan
SAN ANTONIO, July 29, 2021 /PRNewswire/ — Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) (the “Company”) today reported financial results for the quarter ended June 30, 2021, including better than anticipated revenue, and announced that William Eccleshare will assume the new role of Executive Vice Chairman on January 1, 2022 and Scott Wells will become Chief Executive Officer at that time.
“Our second quarter top line performance, which exceeded the combined guidance provided, improved with each month as the quarter progressed, and we are continuing to see positive momentum build in our business as the rebound takes shape across our footprint,” said William Eccleshare, Chief Executive Officer of Clear Channel Outdoor Holdings, Inc. “In the third quarter, all of our business segments are growing well ahead of last year with some markets now beginning to exceed 2019 levels, reflecting the easing of remaining mobility restrictions across the majority of our markets, pent-up advertising demand and the strength of our value proposition.
“With advertisers returning, we are in a stronger position to capitalize on the growth potential of our out-of-home platform and believe our top line growth will continue to improve. Our strategy remains focused on investing in technology to drive growth in our higher-margin markets, particularly in the Americas, maintaining our financial flexibility and taking the necessary steps to de-lever our balance sheet when we fully recover from the impact of the pandemic.
“With the business showing clear signs of recovery, I believe now is the right time to implement our succession plan and for me to transition from the operational leadership of the business and assume the new role of Executive Vice Chairman, as of January 1, 2022, supporting the management transition and leading strategic M&A activity.
“I am also delighted to announce that Scott Wells will take over as CEO of the Company at the same time, while continuing in his current role as CEO of Clear Channel Outdoor Americas and joining me on the CCO Board. Scott has outstanding previous experience and a proven track record leading the Americas segment’s technology and data-driven transformation strategy, resulting in strong growth. I look forward to our continued partnership and collaboration and seeing the Company thrive under his leadership in this next important chapter for the Company.”
Financial Highlights:
Financial highlights for the second quarter of 2021, as compared to the same period of 2020:
Americas:
- Revenue up 36.0% to $271.6 million.
- Segment Adjusted EBITDA1 up 170.6% to $127.2 million.
Europe:
- Revenue up 130.2% to $247.1 million. Revenue, excluding movements in foreign exchange rates (“FX”), up 108.8% to $224.2 million.
- Segment Adjusted EBITDA1 up 102.5% to $1.7 million. Segment Adjusted EBITDA1, excluding movements in FX, up 103.1% to $2.2 million.
1 | See “Supplemental Disclosure Regarding Non-GAAP Financial Information and Segment Adjusted EBITDA” section herein for an explanation of this financial measure. |
Second Quarter Activity:
During the second quarter of 2021, we saw positive trends in revenue for each of our segments as global reported daily COVID-19 cases declined and mobility levels continued to increase. Although revenues continue to remain below historic norms throughout much of our business, our quarterly results reflect both year-over-year and sequential quarter increases in revenue.
- In our Americas segment, we have seen significant increases in revenue across most products, primarily driven by strength in our billboard inventory, particularly digital. This was slightly offset by the performance of our airport display revenue, which has been the most significantly impacted by COVID-19.
- In our Europe segment, the relaxation of COVID-19 restrictions led to significant improvements in our revenue performance during the second quarter of 2021, with sequential improvements in each month. We saw the largest recovery in revenue from roadside structures while revenue from transit displays is recovering more slowly.
- In April, we revised the Europe portion of our international restructuring plan. We expect this portion of the plan to be substantially complete by the end of the first quarter of 2023 with total charges, including charges already incurred, in a range of approximately $51 million to $56 million. We expect the Europe portion of the plan to result in pre-tax annual cost savings in excess of $28 million.
- In May, we entered into a second amendment to the Senior Secured Credit Agreement to, among other things, extend the suspended springing financial covenant through December 31, 2021 and further delay the scheduled financial covenant step-down until September 30, 2022.
- In June, we issued $1.05 billion aggregate principal amount of 7.5% Senior Notes due 2029 (the “CCOH 7.5% Senior Notes”) and used the net proceeds to redeem the remaining outstanding 9.25% Senior Notes due 2024 (the “CCWH Senior Notes”). Additionally, a non-guarantor European subsidiary borrowed approximately $35.6 million through a state-guaranteed loan program established in response to COVID-19.
As of June 30, 2021, we had $564.0 million of cash on our balance sheet.
Current Activity and Guidance:
While we continue to experience customer advertising buying decisions later in the buying cycle, we are currently seeing a significant increase in bookings across all segments of the business. For the third quarter, we expect Americas revenue to be between $315 million and $325 million, with Segment Adjusted EBITDA margin percentage returning close to the Q3 2019 level of 41.6%. Excluding the impact of movements in foreign exchange rates, we expect Europe revenue to be between $245 million and $255 million.
The restructuring charges described above are preliminary estimates; actual amounts may be materially different from these estimates, and there is no guarantee that we will achieve the cost savings that we expect. As such, we will consider expanding or implementing further cost savings initiatives throughout 2021 as circumstances warrant. The third quarter expected results described above may be impacted by factors outside of the Company’s control, such as the continuing impacts from COVID-19, and actual results may be materially different from this guidance.
See “Cautionary Statement Concerning Forward-Looking Statements.”
Results: | |||||||||||||||||||||
Revenue: | |||||||||||||||||||||
(In thousands) | Three Months Ended June 30, | % Change | Six Months Ended June 30, | % Change | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||
Revenue: | |||||||||||||||||||||
Americas | $ | 271,620 | $ | 199,700 | 36.0 | % | $ | 483,504 | $ | 495,487 | (2.4) | % | |||||||||
Europe | 247,124 | 107,346 | 130.2 | % | 396,648 | 319,036 | 24.3 | % | |||||||||||||
Other | 12,338 | 7,860 | 57.0 | % | 21,838 | 51,192 | (57.3) | % | |||||||||||||
Consolidated Revenue | $ | 531,082 | $ | 314,906 | 68.6 | % | $ | 901,990 | $ | 865,715 | 4.2 | % | |||||||||
Revenue excluding movements in FX1: | |||||||||||||||||||||
Americas | $ | 271,620 | $ | 199,700 | 36.0 | % | $ | 483,504 | $ | 495,487 | (2.4) | % | |||||||||
Europe | 224,160 | 107,346 | 108.8 | % | 361,270 | 319,036 | 13.2 | % | |||||||||||||
Other | 11,431 | 7,860 | 45.4 | % | 21,453 | 51,192 | (58.1) | % | |||||||||||||
Consolidated Revenue excluding | $ | 507,211 | $ | 314,906 | 61.1 | % | $ | 866,227 | $ | 865,715 | 0.1 | % | |||||||||
1 | See “Supplemental Disclosure Regarding Non-GAAP Financial Information and Segment Adjusted EBITDA” section herein for explanations of these financial measures. |
Revenue for the second quarter of 2021, as compared to the same period of 2020:
Americas: Revenue up 36.0%:
- Revenue up across all products, with the exception of airport displays
- Airport display revenue down 4.7% to $24.6 million from $25.8 million
- Total digital revenue up 73.8% to $85.2 million from $49.0 million; digital revenue from billboards, street furniture and spectaculars up 97.6% to $74.8 million from $37.8 million
- National sales comprised 37.1% and 37.3% of total revenue for the three months ended June 30, 2021 and 2020, respectively.
Europe: Revenue up 130.2%; excluding movements in FX, up 108.8%:
- Revenue up in all countries, most notably France and the U.K.
- Digital revenue up 188.6% to $80.3 million from $27.8 million; digital revenue, excluding movements in FX, up 159.6% to $72.2 million from $27.8 million
Other: Revenue up 57.0%; excluding movements in FX, up 45.4%:
- We sold our Clear Media business on April 28, 2020.
- Revenue from our Latin America business was $12.3 million and $3.4 million for the three months ended June 30, 2021 and 2020, respectively, and $21.8 million and $21.9 million for the six months ended June 30, 2021 and 2020, respectively.
Direct Operating and SG&A Expenses: | |||||||||||||||||||||
(In thousands) | Three Months Ended June 30, | % Change | Six Months Ended June 30, | % Change | |||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||
Direct operating & SG&A expenses1: | |||||||||||||||||||||
Americas | $ | 144,896 | $ | 153,729 | (5.7) | % | $ | 293,582 | $ | 342,281 | (14.2) | % | |||||||||
Europe | 261,054 | 177,322 | 47.2 | % | 479,903 | 404,049 | 18.8 | % | |||||||||||||
Other | 13,139 | 23,190 | (43.3) | % | 26,464 | 81,884 | (67.7) | % | |||||||||||||
Consolidated Direct operating & | $ | 419,089 | $ | 354,241 | 18.3 | % | $ | 799,949 | $ | 828,214 | (3.4) | % | |||||||||
Direct operating & SG&A expenses excluding movements in FX3: | |||||||||||||||||||||
Americas | $ | 144,896 | $ | 153,729 | (5.7) | % | $ | 293,582 | $ | 342,281 | (14.2) | % | |||||||||
Europe | 236,210 | 177,322 | 33.2 | % | 436,622 | 404,049 | 8.1 | % | |||||||||||||
Other | 12,283 | 23,190 | (47.0) | % | 26,332 | 81,884 | (67.8) | % | |||||||||||||
Consolidated Direct operating & | $ | 393,389 | $ | 354,241 | 11.1 | % | $ | 756,536 | $ | 828,214 | (8.7) | % | |||||||||
1 | Direct operating and SG&A expenses as included throughout this earnings release refers to the sum of direct operating expenses (excluding depreciation and amortization) and selling, general and administrative expenses (excluding depreciation and amortization). |
2 | Restructuring and other costs included within Direct operating and SG&A expenses were $16.1 million and $2.3 million during the three months ended June 30, 2021 and 2020, respectively, and $18.8 million and $4.1 million during the six months ended June 30, 2021 and 2020, respectively. Included within restructuring and other costs for the three and six months ended June 30, 2021 were severance costs of $15.5 million and $17.2 million, respectively, related to the restructuring plans to reduce headcount. |
3 | See “Supplemental Disclosure Regarding Non-GAAP Financial Information and Segment Adjusted EBITDA” section herein for explanations of these financial measures. |
Direct operating and SG&A expenses for the second quarter of 2021, as compared to the same period of 2020:
Americas: Direct operating and SG&A expenses down 5.7%:
- Site lease expense down 14.2% to $76.6 million from $89.3 million due to negotiated rent abatements
- Lower credit loss expense
- Partially offset by higher compensation costs driven by improvements in operating performance
Europe: Direct operating and SG&A expenses up 47.2%; excluding movements in FX, up 33.2%:
- Site lease expense up 42.6% to $111.0 million from $77.8 million; site lease expense, excluding movements in FX, up 28.9% to $100.3 million from $77.8 million due to lower negotiated rent abatements, higher revenue and new contracts
- Compensation expense increased as we ceased temporary operating cost savings initiatives implemented in the prior year, experienced a reduction in governmental support and wage subsidies, and incurred higher commissions
- Incurred severance and related costs of $15.5 million for the restructuring plan to reduce headcount
Other: Direct operating and SG&A expenses down 43.3%; excluding movements in FX, down 47.0%:
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