Clear Channel Outdoor organic revenue up, cashflow down in 2Q 2017

Clear Channel Outdoor released second quarter 2017 financials yesterday.  Here are the highlights:

  • Consolidated revenue declined 5.1% to $672 million during the second quarter due to assets sales.  Consolidated organic revenues grew 2.3% for $687 million for the second quarter of 2017 after adjusting for foreign exchange and asset sales.   Organic revenue growth was entirely due to international operations.  Americas group revenues (which include the company’s North American outdoor operations) declined 0.6% for $323 million in the second quarter of 2017 due to a decrease in print display revenue and decreased revenues from the Fairway Indianapolis for Atlanta swap.  Here are the detailed results of the Americas operation:

  • Consolidated cashflow decreased 6.7% to $165 million during the second quarter after adjusting for foreign exchange and asset sales due to increased expenses.
  • The company installed 200 new digital displays during the second quarter for a total of 1,175 digital displays in the company’s Americas markets and 12,800 displays in the company’s international markets.
  • Clear Channel Outdoor leverage is a high 8.3 times.  See chart below.  The company’s leverage has been increasing because proceeds from assets sales have been upstreamed to Clear Channel Outdoor’s parent instead of being applied against debt.  Clear Channel executives said on the conference call that Clear Channel Outdoor has exhausted its ability to upstream dividends to iHeart under borrowing agreements.    Clear Channel Outdoor is not insolvent.  Debt is 8X cashflow and the company’s assets are conservatively worth 12 times cashflow based on the company’s last round of assets sales.  Parent iHeart Communications is in much worse shape and can’t continue to rely on dividends from Clear Channel Outdoor.

Here are links to the company’s Q2 Presentation Deck, Q2 2017 earnings release and audio webcast of the earnings release.

Insider’s take: The market wasn’t impressed with the results. Cashflow is down.  Leverage is increasing.  Lots of questions on the conference call about liquidity.  Clear Channel Outdoor closed the day down 9% to $4.60.  The Americas group is underperforming the US Outdoor market.  Lamar closed down 1%.  Outfront stock closed down 1%.


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