CLEAR CHANNEL OUTDOOR HOLDINGS, INC. REPORTS RESULTS FOR THE FOURTH QUARTER AND FULL YEAR OF 2022
SAN ANTONIO, Feb. 28, 2023 /PRNewswire/ -- Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) (the "Company") today reported financial results for the quarter and year ended December 31, 2022.
"Our fourth quarter revenue results, excluding the impact of movements in foreign exchange rates, capped off a strong year for our company as we soundly rebounded coming out of the pandemic and benefited from healthy demand from advertisers," said Scott Wells, Chief Executive Officer of Clear Channel Outdoor Holdings, Inc. "These results were led by our digital assets in the Americas and Europe.
"We are progressing in our transformation into a technology-fueled, visual media powerhouse reaching a growing pool of advertisers as we expand our digital footprint, strengthen our data analytics offerings and continue to elevate the customer experience. As a result, we believe we are improving our revenue profile and gaining more levers in terms of business drivers.
"We are also continuing to review strategic alternatives for our European businesses with the goal of optimizing our portfolio in the best interests of our shareholders with our resulting greater focus on our core business in the U.S. Our recent agreement to divest our business in Switzerland marks a first step in this process.
"As we execute on our plan, we believe we can drive improved operating cash flow, and ultimately free cash flow, given the operating leverage and strong fundamentals inherent in our business, and we believe this will drive value creation for our shareholders. Going forward, we are expanding our financial reporting from two to four segments to reflect the changes in the way our business is managed and the way we allocate resources."
Financial Highlights1:
Financial highlights for the fourth quarter of 2022 as compared to the same period of 2021, including financial highlights excluding movements in foreign exchange rates ("FX")2:
(In millions) | Three Months Ended | % Change | |
Revenue: | |||
Consolidated Revenue | $ 709.2 | (4.5) % | |
Excluding movements in FX2 | 749.7 | 0.9 % | |
Americas Revenue | 374.2 | 0.8 % | |
Europe Revenue | 316.2 | (9.6) % | |
Excluding movements in FX2 | 357.2 | 2.1 % | |
Net Income | |||
Consolidated Net Income | 99.4 | 51.8 % | |
Adjusted EBITDA2: | |||
Adjusted EBITDA2 | 204.8 | (7.6) % | |
Excluding movements in FX2 | 213.9 | (3.5) % | |
Americas Segment Adjusted EBITDA3 | 156.4 | (7.9) % | |
Europe Segment Adjusted EBITDA3 | 75.8 | (10.5) % | |
Excluding movements in FX2 | 86.1 | 1.7 % |
1 | During the fourth quarter of 2022, we changed our segments. See "Supplemental Disclosures" section herein for more information. Financial Highlights have been presented under the prior segments for comparability. Results on the new segment basis are provided in Table 4 herein. |
2 | This is a non-GAAP financial measure. See "Supplemental Disclosures" section herein for more information. |
3 | Segment Adjusted EBITDA is a GAAP financial measure. See "Supplemental Disclosures" section herein for more information. |
Guidance:
Our expectations for the first quarter and full year of 2023 are as follows:
First Quarter of 2023 | |||
(in millions) | Low | High | |
Consolidated Revenue1 | $ 540 | $ 565 | |
1 Excludes movements in FX | |||
Full Year of 2023 | |||
(in millions) | Low | High | |
Consolidated Revenue1 | $ 2,575 | $ 2,700 | |
Consolidated Net Loss1 | (165) | (110) | |
Adjusted EBITDA1,2 | 540 | 600 | |
Adjusted Funds from Operations ("AFFO")1,2 | 75 | 125 | |
Capital Expenditures | 185 | 205 | |
1 | Excludes movements in FX |
2 | This is a non-GAAP financial measure. See "Supplemental Disclosures" section herein for more information. |
Expected results and estimates may be impacted by factors outside of the Company's control, and actual results may be materially different from this guidance. See "Cautionary Statement Concerning Forward-Looking Statements" herein.
Results:
During the fourth quarter of 2022, we changed our segments. See "Supplemental Disclosures" section herein for more details. Historical results have been presented under the prior segments for comparability. Results on the new segment basis are provided in Table 4 herein.
Revenue: | |||||||||||
(In thousands) | Three Months Ended December 31, | % Change | Year Ended December 31, | % Change | |||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Revenue: | |||||||||||
Americas | $ 374,164 | $ 371,096 | 0.8 % | $ 1,361,954 | $ 1,173,620 | 16.0 % | |||||
Europe | 316,197 | 349,689 | (9.6) % | 1,052,813 | 1,008,905 | 4.4 % | |||||
Other | 18,798 | 21,927 | (14.3) % | 66,367 | 58,593 | 13.3 % | |||||
Consolidated Revenue | $ 709,159 | $ 742,712 | (4.5) % | $ 2,481,134 | $ 2,241,118 | 10.7 % | |||||
Revenue excluding movements in FX1: | |||||||||||
Americas | $ 374,164 | $ 371,096 | 0.8 % | $ 1,361,954 | $ 1,173,620 | 16.0 % | |||||
Europe | 357,156 | 349,689 | 2.1 % | 1,181,837 | 1,008,905 | 17.1 % | |||||
Other | 18,386 | 21,927 | (16.1) % | 66,710 | 58,593 | 13.9 % | |||||
Consolidated Revenue excluding | $ 749,706 | $ 742,712 | 0.9 % | $ 2,610,501 | $ 2,241,118 | 16.5 % | |||||
1 | This is a non-GAAP financial measure. See "Supplemental Disclosures" section herein for more information. |
Revenue for the fourth quarter of 2022, as compared to the same period of 2021:
Americas: Revenue up 0.8%:
Airport and digital revenue up; partially offset by lower revenue from printed formats
Digital revenue up 2.8% to $157.5 million from $153.2 million
National sales comprised 40.6% and 39.2% of total revenue for the three months ended December 31, 2022 and 2021, respectively
Europe: Revenue down 9.6%; excluding movements in FX, up 2.1%:
Increase in revenue driven by Europe-North businesses, most notably due to new transit contracts in Denmark, as well as growth in other Nordic countries, U.K. and the Netherlands
Europe-South businesses had higher revenue in Spain and Italy and lower revenue in France and Switzerland, with the latter driven by the loss of certain contracts
Digital revenue down 5.1% to $131.2 million from $138.3 million; digital revenue, excluding movements in FX, up 7.4% to $148.5 million
Other: Revenue down 14.3%; excluding movements in FX, down 16.1%:
Revenue down in Brazil and Mexico
Direct Operating and SG&A Expenses1: | |||||||||||
(In thousands) | Three Months Ended December 31, | % Change | Year Ended December 31, | % Change | |||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Direct operating and SG&A expenses: | |||||||||||
Americas | $ 218,216 | $ 201,946 | 8.1 % | $ 803,156 | $ 675,870 | 18.8 % | |||||
Europe | 243,027 | 266,955 | (9.0) % | 935,982 | 994,978 | (5.9) % | |||||
Other | 12,922 | 17,940 | (28.0) % | 56,801 | 58,807 | (3.4) % | |||||
Consolidated Direct operating and | $ 474,165 | $ 486,841 | (2.6) % | $ 1,795,939 | $ 1,729,655 | 3.8 % | |||||
Direct operating and SG&A expenses excluding movements in FX3: | |||||||||||
Americas | $ 218,216 | $ 201,946 | 8.1 % | 803,156 | $ 675,870 | 18.8 % | |||||
Europe | 273,860 | 266,955 | 2.6 % | 1,047,641 | 994,978 | 5.3 % | |||||
Other | 12,703 | 17,940 | (29.2) % | 57,453 | 58,807 | (2.3) % | |||||
Consolidated Direct operating and | $ 504,779 | $ 486,841 | 3.7 % | $ 1,908,250 | $ 1,729,655 | 10.3 % | |||||
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 | Consolidated direct operating and SG&A expenses during the three months ended December 31, 2022 and 2021 include restructuring and other costs of $3.1 million and $2.5 million, respectively, including a net reversal of severance and related costs associated with our restructuring plan to reduce headcount in Europe of $(2.7) million during the three months ended December 31, 2021. Consolidated direct operating and SG&A expenses during the years ended December 31, 2022 and 2021 include restructuring and other costs of $6.2 million and $38.5 million, respectively, including severance and related costs associated with our restructuring plan to reduce headcount in Europe of $1.3 million and $30.8 million, respectively. |
3 | This is a non-GAAP financial measure. See "Supplemental Disclosures" section herein for more information. |
Direct operating and SG&A expenses for the fourth quarter of 2022, as compared to the same period of 2021:
Americas: Direct operating and SG&A expenses up 8.1%:
Site lease expense up 18.2% to $132.0 million from $111.7 million driven by higher airports revenue, new contracts and lower rent abatements
Partially offset by lower compensation costs driven by lower variable incentive compensation
Europe: Direct operating and SG&A expenses down 9.0%; excluding movements in FX, up 2.6%:
Site lease expense down 9.8% to $111.3 million from $123.4 million; site lease expense, excluding movements in FX, up 1.8% to $125.6 million
Higher maintenance costs
Other: Direct operating and SG&A expenses down 28.0%; excluding movements in FX, down 29.2%:
Lower site lease expense driven by higher rent abatements and lower revenue
Lower expenses related to contract loss
Corporate Expenses: | |||||||||||
(In thousands) | Three Months Ended December 31, | % Change | Year Ended December 31, | % Change | |||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Corporate expenses1 | $ 37,756 | $ 42,605 | (11.4) % | $ 157,915 | $ 156,181 | 1.1 % | |||||
Corporate expenses excluding movements in FX2 | 38,712 | 42,605 | (9.1) % | 160,552 | 156,181 | 2.8 % | |||||
1 | Corporate expenses include restructuring and other costs of $0.3 million and $0.7 million during the three months ended December 31, 2022 and 2021, respectively, and $10.0 million and $9.3 million during the years ended December 31, 2022 and 2021, respectively. Included within restructuring and other costs were severance and related costs (reversals) associated with our restructuring plan to reduce headcount in Europe of $(0.5) million and $1.1 million during the years ended December 31, 2022 and 2021, respectively. |
2 | This is a non-GAAP financial measure. See "Supplemental Disclosures" section herein for more information. |
Corporate expenses for the fourth quarter of 2022, as compared to the same period of 2021:
Corporate expenses down 11.4%; excluding movements in FX, down 9.1%:
Lower compensation costs driven by lower variable incentive compensation
Net Income (Loss): | |||||||||||
(In thousands) | Three Months Ended December 31, | % Change | Year Ended December 31, | % Change | |||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Consolidated net income (loss) | $ 99,438 | $ 65,525 | 51.8 % | $ (94,388) | $ (433,120) | (78.2) % | |||||
Adjusted EBITDA1: | |||||||||||
(In thousands) | Three Months Ended December 31, | % Change | Year Ended December 31, | % Change | |||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Segment Adjusted EBITDA2: | |||||||||||
Americas | $ 156,425 | $ 169,777 | (7.9) % | $ 560,254 | $ 500,304 | 12.0 % | |||||
Europe | 75,756 | 84,607 | (10.5) % | 121,619 | 49,993 | 143.3 % | |||||
Other | 5,877 | 3,988 | 47.4 % | 9,566 | (333) | N/A | |||||
Total Segment Adjusted EBITDA | 238,058 | 258,372 | (7.9) % | 691,439 | 549,964 | 25.7 % | |||||
Adjusted Corporate expenses1 | (33,230) | (36,811) | (9.7) % | (126,767) | (127,444) | (0.5) % | |||||
Adjusted EBITDA1 | $ 204,828 | $ 221,561 | (7.6) % | $ 564,672 | $ 422,520 | 33.6 % | |||||
Segment Adjusted EBITDA excluding movements in FX1: | |||||||||||
Americas | $ 156,425 | $ 169,777 | (7.9) % | $ 560,254 | $ 500,304 | 12.0 % | |||||
Europe | 86,080 | 84,607 | 1.7 % | 139,477 | 49,993 | 179.0 % | |||||
Other | 5,684 | 3,988 | 42.5 % | 9,257 | (333) | N/A | |||||
Total Segment Adjusted EBITDA | 248,189 | 258,372 | (3.9) % | 708,988 | 549,964 | 28.9 % | |||||
Adjusted Corporate expenses excluding | (34,293) | (36,811) | (6.8) % | (129,758) | (127,444) | 1.8 % | |||||
Adjusted EBITDA excluding | $ 213,896 | $ 221,561 | (3.5) % | $ 579,230 | $ 422,520 | 37.1 % | |||||
1 | This is a non-GAAP financial measure. See "Supplemental Disclosures" section herein for more information. |
2 | Segment Adjusted EBITDA is a GAAP financial measure. See "Supplemental Disclosures" section herein for more information. |
AFFO1: | |||
(In thousands) | Three Months Ended December 31, | Year Ended December 31, | |
2022 | 2022 | ||
AFFO1 | $ 84,215 | $ 172,642 | |
AFFO excluding movements in FX1 | 92,809 | 184,269 | |
1 | This is a non-GAAP financial measure. See "Supplemental Disclosures" section herein for more information. The Company is not a Real Estate Investment Trust ("REIT"). However, the Company competes directly with REITs that present the non-GAAP measure of AFFO and, accordingly, believes that presenting such measure will be helpful to investors in evaluating the Company's operations with the same terms used by the Company's direct competitors. |
Capital Expenditures: | |||||||||||
(In thousands) | Three Months Ended December 31, | % Change | Year Ended December 31, | % Change | |||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Capital expenditures: | |||||||||||
Americas | $ 35,207 | $ 28,510 | 23.5 % | $ 104,827 | $ 68,498 | 53.0 % | |||||
Europe | 19,716 | 32,461 | (39.3) % | 63,306 | 62,759 | 0.9 % | |||||
Other | 2,089 | 1,319 | 58.4 % | 4,301 | 4,401 | (2.3) % | |||||
Corporate | 3,249 | 3,278 | (0.9) % | 12,245 | 12,348 | (0.8) % | |||||
Consolidated capital expenditures | $ 60,261 | $ 65,568 | (8.1) % | $ 184,679 | $ 148,006 | 24.8 % | |||||
Digital displays:
Americas markets deployed 33 new digital billboards in the fourth quarter, adding to a total of more than 1,600 digital billboards as of December 31, 2022. Combined with our smaller format digital displays in airports and on shelters, we had a total of more than 4,700 digital displays across the United States as of December 31, 2022.
Europe markets added 673 new digital displays in the fourth quarter, adding to a total of more than 19,800 digital displays as of December 31, 2022.
Our Latin American markets had more than 800 digital displays as of December 31, 2022.
Clear Channel International B.V.
Our Europe segment consists of the businesses operated by Clear Channel International B.V. ("CCIBV") and its consolidated subsidiaries. Accordingly, the revenue for our Europe segment is the same as the revenue for CCIBV. Europe Segment Adjusted EBITDA, the segment profitability metric historically reported in our financial statements, does not include an allocation of CCIBV's corporate expenses that are deducted from CCIBV's operating income (loss) and Adjusted EBITDA.
As discussed above, Europe and CCIBV revenue decreased $33.5 million during the fourth quarter of 2022 compared to the same period of 2021 to $316.2 million. After adjusting for a $41.0 million impact from movements in FX, Europe and CCIBV revenue increased $7.5 million.
CCIBV operating income was $26.5 million in the fourth quarter of 2022 compared to $56.2 million in the same period in 2021.
For a discussion of revenue and direct operating and SG&A expenses driving CCIBV's Adjusted EBITDA, see the discussion of our Europe Segment Adjusted EBITDA in this earnings release.
Liquidity and Financial Position:
Cash and Cash Equivalents:
As of December 31, 2022, we had $286.8 million of cash on our balance sheet, including $102.8 million of cash held outside the U.S. (excludes cash held by our business in Switzerland, which is held for sale).
(In thousands) | Year Ended December 31, |
2022 | |
Net cash provided by operating activities | $ 139,992 |
Net cash used for investing activities | (221,696) |
Net cash used for financing activities | (32,718) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (6,867) |
Net decrease in cash, cash equivalents and restricted cash | $ (121,289) |
Cash paid for interest | $ 341,444 |
Cash paid for income taxes, net of refunds | $ 4,956 |
Debt:
Principal payments on our Term Loan Facility are due quarterly, and during 2022, we made principal payments on our Term Loan Facility totaling $20.0 million. Our next material debt maturity is in 2025 when the $375.0 million aggregate principal amount of CCIBV 6.625% Senior Secured Notes is due. However, at our option, we may redeem or repay a portion of our outstanding debt prior to maturity in accordance with the terms of our debt agreements.
We anticipate having approximately $413.0 million and $398.5 million of cash interest payment obligations in 2023 and 2024, respectively, assuming that we do not refinance or incur additional debt.
Please refer to Table 3 in this earnings release for additional detail regarding our outstanding debt balance.
TABLE 1 - Financial Highlights of Clear Channel Outdoor Holdings, Inc. and its Subsidiaries: | |||||||
(In thousands) | Three Months Ended December 31, | Year Ended December 31, | |||||
2022 | 2021 | 2022 | 2021 | ||||
Revenue | $ 709,159 | $ 742,712 | $ 2,481,134 | $ 2,241,118 | |||
Operating expenses: | |||||||
Direct operating expenses1 | 351,909 | 356,037 | 1,327,979 | 1,270,258 | |||
Selling, general and administrative expenses1 | 122,256 | 130,804 | 467,960 | 459,397 | |||
Corporate expenses1 | 37,756 | 42,605 | 157,915 | 156,181 | |||
Depreciation and amortization | 74,979 | 63,136 | 253,809 | 253,155 | |||
Impairment charges | 16,870 | — | 39,546 | 118,950 | |||
Other operating expense (income), net | 2,166 | 3,418 | 2,386 | (627) | |||
Operating income (loss) | 103,223 | 146,712 | 231,539 | (16,196) | |||
Interest expense, net | (100,410) | (83,246) | (362,680) | (350,457) | |||
Loss on extinguishment of debt | — | — | — | (102,757) | |||
Other income (expense), net | 25,012 | 3,550 | (35,079) | 1,762 | |||
Income (loss) before income taxes | 27,825 | 67,016 | (166,220) | ||||