Clear Channel Outdoor Americas organic revenue up 1.1% in 3Q 2016

clear channel outdoorHere are the highlights from Clear Channel Outdoor’s third quarter 2016 financials and webcast.  You can also read a Seeking Alpha transcript of the webcast here.

  • Clear Channel Outdoor consolidated revenue declined by 3.3% to $673 million due to asset sales and the impact of foreign exchange fluctuations.  Organic revenue growth was 2.3% when adjusting for asset sales and foreign exchange fluctuations.
  • Clear Channel Outdoor consolidated cashflow increased by 2% to $154 million due to strong performance by the company’s international division.
  • Clear Channel Outdoor Americas revenue decreased 7% due to assets sales.  Clear Channel Outdoor Americas revenue was up 1.1% when adjusted for the impact of asset sales.  Insider notes that Clear Channel Outdoor Americas 1.1% organic growth for the quarter trailed Outfront’s 2.3% and Lamar’s 3.6%.  President and CFO Richard Bressler was asked to explain the weak quarter’s revenue and here’s what he said.

“I’ll tell you just in general for advertising for Q3, the Olympics clearly had an impact for us. Quite frankly probably a bigger impact than we thought particularly in the month of July. And if you looked at a result of a monthly basis July was the weakest month for the quarter and August is strengthened significantly from July and then perform nicely also.

But it was a combination of the Olympics and as we couple that with the uncertainty which I commented on and I think you probably heard from a lot of other company commenting this week on the election outcome and clearly advertisers at least our belief is that advertisers were holding back. And then we return specifically to your question on U.S. Outdoor, we continue to be pleased with the progress we are making on U.S. Outdoor particularly on the local business.”

  • Clear Channel Outdoor Americas Cashflow was down 10% to $125 million due to asset sales.  Clear Channel Outdoor Americas cashflow was up 0.3% when adjusted for the impact of asset sales.
  • During the quarter Clear Channel Outdoor installed 911 new digital displays in North American and international markets.  The company ended the quarter with 1,082 digital displays in the US and 9,000 digital displays internationally.
  • The company has rolled out the Radar initiative to 31 markets.
  • Clear Channel Outdoor remains leveraged with Senior Debt/Cashflow of 4.0 and Total Debt/Cashflow of 7.5.  The company hasn’t decided whether to use the $25 million from the sale of its Australian outdoor business to reduce debt or to dividend to parent iHeart Media which needs the cash.

Insider’s take:   Clear Channel Americas has work to do.  Organic revenue growth is below Lamar and Outfront. When one of your competitors buys some of your systems and tells the analysts “we’re operating at better margins than we inherited” you need to ask hard questions.

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