Clear Channel Outdoor announced better than expected third quarter 2020 results due to a rebound in Europe.  Here are the results of the earnings release, earnings presentation and conference call.

• Revenue declined 32% to $448 million in the third quarter of 2020 versus a decline of 55% during the second quarter of 2020.   Revenue was down only 27% when you exclude the results of the company’s Clear Media operation in China which was sold earlier this year.  Americas revenue was down 31%.  European revenue was down only 12%.  CEO William Eccleshare expressed some concerns about the impact of new lockdowns on Europe but doesn’t expect the second wave of covid to have as much impact as the first wave.
• Adjusted cashflow declined by 78% to $31 million due to reduced revenue.  Americas achieved postive cashflow.  Europe and South America had negative cashflow.
• Capital expenditures totaled $26 million during the third quarter of 2020 down from $60 million for the third quarter of 2019.  Clear Channel added 19 digital billboards in the Americas and 383 digital displays in Europe during the quarter.
• The company had $5.6 billion of debt at September 30, 2020 at a weighted average cost of 6.1%.  Cash balances totaled $845 million at September 2020.

CEO William Eccleshare commented on how the company is selling differently

“We have expanded our client direct selling initiatives.  Our focus is on selling creative ideas as opposed to specific billboard locations.  As advertisers work to realign their advertising campaigns we have found that CMO’s are more willing to jump on a zoom call to hear a great idea…The audience levels have returned to normal but travel times have changed.  Audiences are spending more time close to home and less time in city centers.  But they’re still out and about.”

Eccleshare suggested the company is not pursuing asset sales in this environment.

We always remain open to dispositions…however, given the current economic environment our focus remains on continuing to own, operate and enhance the value of the current portfolio.

CFO William Coleman on additional expense cuts:

In addition to the temporary cost saving plan we enacted in the second quarter we have also initiated restructuring plans throughout the company.  Plans are expected to generate annualized pretax savings of approximately $32 million…We generated rent abatements of $24 million during the third quarter and $53 million year to date.

Insider’s take: Improvement but Clear Channel is not out of the woods.  Adjusted cashflow of $31 million in the third quarter failed to cover interest expense of $91 million.  The company’s $845 million cash balance, however, is sufficient to cover the deficit until audiences and cashflow recover later this year.  The market was pleased.  Clear Channel Outdoor increased 15% on a day when OUTFRONT increased 18%, Lamar increased 7% and the S&P 500 increased 1%.

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