Clear Channel Outdoor CFO David Sailer and Treasurer Jason Menzel spoke at last week’s B of A Securities Leveraged finance conference. Here’s a selection of their comments curated and analyzed by SignValue.
The MTA contract – more revenues but lower margin
it’s probably a little over a 2% increase or 200 basis points to our America’s numbers on the top line…it is a lower margin contract that’s a municipal contract with a mag (SignValue note: MAG = minimum annual guarantee) and a pretty high revenue share…it will probably decrease margins by a half a percentage point.
Americas Revenue growth has been weak because there aren’t enough account execs
We’ve been trying to hire more AE’s as we came out of COVID…We did cost reductions. We probably didn’t fill our AE’s quick enough…
Target leverage
It’s lower than it is today I can tell you that…we’ve already set out for this plan since since we’ve separated in 2019 to eventually fix our capital structure eventually right size it possibly become like our competitors… I don’t want to put a target out there but I I would I would say that it’s it’s lower than it is today
The M&A market will pick up in 2025
During Covid, M&A kind of shut down and then as you came back I think there was just pent up demand there was a lot of activity… In 2024 that that kind of slowed down… I think valuations got really high which probably was the reason why it slowed down…seeing what’s out there and talking to folks I think we could see…more M&A in in the at home space…
SignValue’s take:
The Clear Channel Outdoor execs refuse to set a debt target so we will. Clear Channel needs to cut its debt to 4-5 times cashflow (EBIDTA). Clear Channel executives acknowledge that debt/cashflow needs to be 4-5 times to be a REIT. OUTFRONT’s debt target is 4-5 times cashflow. Lamar is under 3 times cashflow. If you have questions contact Paul Wright, CEO, SignValue, paul@signvalue.com, 480-657-8400.
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