Clear Channel Outdoor (CCO) The Citigroup Global TMT Conference 2024 summary

Strategic review and business transformation

• Initiated a strategic review in early 2022, pivoting from a full European sale to de-risking and exiting cash-depleting markets after the Ukraine war disrupted credit markets.

• Europe North business saw a 10% top-line increase and EBITDA growth in the low 20s over the last 12 months.

• Sale processes for Europe North and Latin America are ongoing, with multiple interested parties and potential for multi-transaction exits.

• Exiting international markets aims to streamline operations, reduce complexity, and focus on higher-margin U.S. assets.

• The REIT conversion is a long-term option, contingent on deleveraging and U.S.-centric operations.

Financial performance and outlook

• Europe North and airport segments have driven recent growth, with airport revenue up 21% and EBITDA up 17% in Q2.

• Focused on fewer, larger airports and long-term sponsorship deals, improving cross-selling between airport and roadside segments.

• Cash flow is expected to turn positive in the second half of the year, with a strong outlook for 2024.

• Interest expense increased by $100 million due to variable rate exposure, but management expects this to reverse over the next 24-36 months.

• Debt maturities are well-structured, with the next major maturity in 2027 and a favorable runway for organic growth.

Market dynamics and sales strategy

• National advertising faces challenges from agency economics, vertical shifts, and the rise of programmatic buying, which has fragmented inventory and shifted some direct buyers to programmatic channels.

• Programmatic business is growing, but quality concerns arise as inventory expands to smaller screens and new formats.

• Direct sales efforts have been refocused on vertical expertise, with notable traction in pharmaceuticals and ongoing efforts in auto insurance and consumer products.

• Cross-selling and tailored compensation structures have improved collaboration between sales teams.

• Local advertising remains strong, and management is not seeing significant cancellations or macro-driven pullbacks.