Clear Channel Outdoor Revenue down 6% due to to asset sales.

Clear Channel Outdoor released financials for the fourth quarter of 2016 (3 months ended December 31, 2016).  For more details see the 2016 financials and Seeking Alpha Earnings call transcript.

  •  Consolidated Clear Channel Outdoor revenue excluding foreign exchange decreased by 6% to $746 million during the fourth quarter of 2016 due to outdoor plant sales earlier in the year.  Americas revenue was up 3.1% when adjusted for assets sales which tops Lamar’s acquisition adjusted growth of 2% and Outfront’s acquisition adjusted growth of 2.8%.   Here is Rich Bressler, President/CFO of iHeart Media, Inc. commenting on Clear Channel Outdoor Americas growth in the Seeking Alpha earnings call transcript:

Adjusted revenues were up 3.1% with our local businesses continuing to deliver strong performance. Our investments in digital boards continue to be significant contributor to our growth in the quarter as well as the new airport contracts in our Latin American operations, the categories that contributed the most to this growth included business services, travel and transportation, banking, and tech, some of the largest as well as emerging tech companies in using out of home illusive millennial audience.

  • Consolidated Clear Channel Outdoor operating income declined 2% to $215 million during the fourth quarter of 2016 due to lower revenue.  Americas cashflow, however, was up 2% to $140 million excluding the impact of foreign exchange and assets sales.
  • The company remains highly leveraged with Total Debt/Cashflow of 7.8 which is almost twice the level of Lamar and Outfront.  Clear Channel Outdoor has no significant debt maturities until 2020 which gives the company breathing room.  Not so at iHeart Communications as you can read below.  Insider notes that Clear Channel Outdoor’s Total Debt/Cashflow is 7.8, but the company’s 2016 outdoor sales occurred at a multiple of 12.5 times so there’s lots of equity value.
  • Clear Channel Outdoor installed 82 digital billboards in the North America during the fourth quarter of 2016, bringing the total number of digital billboards in North America to 1,113.
  • iHeart Communications financial statements included $55 million of assets held for resale at 12/31/16.  This was the Indianapolis plant which was swapped to Fairway for Atlanta and $41 million of cash in January 2016.
  • Clear Channel Outdoor’s parent iHeart Communications has $20 billion in debt, a Total Debt/Cashflow of 11.4 and looming debt maturities: 2017 –  $330 million; 2018 – $550 million; 2019 – $8 billion.  That’s not a typo.  $8 billion is due in 2019.  Insider thinks iHeart will put more pressure on Clear Channel Outdoor to sell assets to fund dividends such as the $200 million which was just paid.  On the Seeking Alpha transcript Clear Channel’s executives mentioned that the $200 million dividend was permitted under a basket covenant in Clear Channel Outdoor debt agreements.  Interesting to see if covenants will allow the proceeds from the Indianapolis sale to be distributed to iHeart Communications as well.
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