Clear Channel Outdoor announced first quarter 2020 financials yesterday.  Consolidated revenue was down 6% as increased revenues in the US were offset by declining revenues in Europe and China.  Cashflow declined 46% due to losses in Europe and China as well as increased corporate overhead.  Here’s a summary of the earnings release and and powerpoint presentation.

• Americas (US and Caribbean) revenues increased 9% to $296 million in the first quarter of 2020 due to  increased digital and billboard revenue.  International revenues declined 19% to $255 million in the first quarter of 2020  due to the impact of COVID-19 in France, Spain, Italy and Switzerland.  Other revenues (the now sold Clear Media Chinese subsidiary and Latin America) declined by 39% during the first quarter of 2020.

• The company has positive cashflow in the Americas and negative cashflow everywhere else.  Adjusted corporate expenses (e.g. overhead) are up 17% and Insider thinks the increase is understated because Clear Channel excludes $3.8 million of share based compensation and $5.2 million of restructuring and other costs from overhead for purposes of calculating adjusted EBIDTA.

• The company plans to reduce expenses by $100 million or 25% during the second quarter of  2020 by reducing lease costs, reducing employee compensation, hiring freezes and furloughs and reducing expenses.
• The company will reduce capital expenditures by $25 million or 65% during the second quarter of 2020.  CFO Brian Coleman says the company is deferring all discretionary capital expenditures.
• The company said it is in compliance with debt agreements.  Insider notes that total debt/cashflow is 26:1 based on $5 billion in debt and $50 million in first quarter revenue.  Cashflow for the quarter was $51 million versus $145 million in cash interest expense.

Insider’s take:  No acquisitions, no discretionary capital expenditures, a 25% reduction in expenses are in the works for the next quarter.  Insider expects Clear Channel Americas second quarter to look much like Europe (revenues down 18%) or China (revenues down 39%) as the impact of a full quarter of shelter in place restrictions is felt in the US.  Debt is not sustainable as long was interest expense is greater than cashflow.  The sale of Clear Media will pay 6 months worth of interest expense but more asset sales are necessary to get the firm’s leverage to sustainable levels.

Clear Channel Outdoor stock finished the day down 7% while the S&P 500 declined 1%, Lamar declined 1% and Outfront declined 3%.

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