Clear Channel Outdoor Performs Better Than Expected

clear channel outdoorClear Channel Outdoor Holdings released first quarter 2016 financials yesterday.  Here are the highlights.

  • Total Revenues increased by 1.8% excluding foreign exchange effects and non-strategic asset sales.
  •  North and South American revenues increased by 4%.   The company attributed the growth to higher revenue from digital billboards and higher occupancy rates.
  • International revenues increased by 0.3% after excluding foreign exchange and non-strategic asset sales.   International revenues were hurt by the loss of a London bus shelter contract.
  • Clear Channel installed 980 digital displays worldwide during the first quarter of 2016.
  • Cashflow increased by 4.8% excluding foreign exchange effects and non-strategic asset sales.
  • Clear Channel Outdoor received $596 million during the first quarter from the sale of the Cleveland, Columbus, Des Moines, Ft Smith, Memphis, Portland, Reno, Seattle and Wichita markets.  $540 of the proceeds were distributed to stockholders.
  • Clear Channel Outdoor remains over-leveraged.  Senior Debt/Cashflow and Total Debt/Cashflow totaled 4.0:1.0 and 7.6:1.0, respectively, at March 31, 2016.  I Clear Channel Outdoor Debt remained at $4.6 billion during the first quarter with the most of the proceeds of the asset sales going to shareholders in dividends.   Insider considers leverage in excess of 6.0 as excessive for the outdoor business.  Clear Channel’s leverage of 7.6 is well above Lamar’s 3.34 and Outfront’s 5.33.

Insider’s take: Revenues grew faster than we expected.  Clear Channel Outdoor Americas is growing as fast as the US outdoor market after underperforming the US outdoor market for several quarters.  Insider would be upset if he were a Clear Channel Outdoor creditor.  Most of the cash from the quarter’s  asset sales went to shareholders leaving the company overleveraged.  Whatever happened to the old fashioned idea that debt has a claim on assets which is prior to equity?


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