Iheart Media and Clear Channel Outdoor announced financial results for the 3 months ended June 2016.   You can read the financials here ,  a power point summary of the financials here and the Seeking Alpha earnings call transcript  here.

• Clear Channel Outdoor revenue declined by 2% to $712 million during the second quarter of 2016.  Americas revenue declined 5% to $326 million due to the large sale of outdoor assets in early 2016.   International revenue increased by 1% to $387 million.  Insider notes that in the absence of asset sales Clear Channel Outdoor Americas would have growth by a reasonable 4.6%.

• Clear Channel needs to continue to cut expenses.  An analyst asked the company if Clear Channel America’s cashflow margins are down from the mid-40% range to a current level in the high-30’s and here’s what Iheart Media’s CFO said in the Seeking Alpha earnings transcript:

First and foremost, we’ve talked about this before, with Scott Wells, Bob McCuin, the rest of the outdoor team… we have the continuing challenge working with the outdoor America team on streamlining this organization. And like I said, I think they’ve done an outstanding job in the last six months and you see it starting to manifest itself in the numbers….Remember that we lost – we still are down on the L.A. digital boards. So although we’ve got 50 digital boards around the L.A. market and we’ve been able to convert about 80 digital boards back to print temporarily. So, we’re trying again to get the best out of that asset mix that we can right now, but we’re still down in digital boards and we’re not up to where we need to be…

• Cashflow (earnings before interest, depreciation and amortization)  declined by 5% from $188 million during the first quarter of 2016 to $182 during the second quarter of 2016 due to reduced revenues.

• Clear Channel Outdoor recorded a $56 million loss during the second quarter of 2016 on the sale of an outdoor plant in Turkey.  Insider has excluded this loss from his analysis because it is a one time event.

• Clear Channel Outdoor Americas spent $28 million on capital expentures in the first half of 2016 versus $32 million during the first half of 2015.  The company installed an additional 546 digital signs during the second quarter of 2016 for a total of 1,074 digital signs in the US and 8,100 internationally.  Clear Channel Outdoor International spent $68 million on capital expenditures during the first 6 months of 2016 on street furniture and billboards.

• Clear Channel Outdoor had $5.1 billion of total debt at June 2016, unchanged from December 2015.  Clear Channel Outdoor remains overleveraged with senior debt/cashflow of 4.0:1.0 and total debt/cashflow of 7.6.

Insider’s take:  The good news is that Clear Channel Outdoor is financially solvent.  Debt is 7.6 times cashflow and the assets are worth at least 12 times cashflow.    The company’s total/cashflow of 7.6, however, is almost twice as high as Lamar’s total debt/cashflow of 4.47.   Insider understands why Clear Channel Outdoor creditors are furious.   The company sent $540 million of $594 million in asset sales in early 2016 upstream to Iheart Media leaving debt unchanged, cashflow down and leverage up.

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