Clear Channel Outdoor swings to Q3 net income of US$3.2M from loss of US$34.9M in year-ago quarter, reports revenues up 8% to US$748.5M, influenced by currency translation, solid growth in outdoor businesses
Kendall Sinclair
SAN ANTONIO
,
October 31, 2011
(press release)
–
Clear Channel Outdoor Holdings, Inc. today reported results for the third quarter ended September 30, 2011.
"We are pleased with the Company's performance this quarter, both in the Americas and Internationally," said Bob Pittman, Executive Chairman of the Clear Channel Outdoor Holdings Board of Directors. "Looking ahead, I am excited about this opportunity to work closely with Ron Cooper and William Eccleshare to learn more about what else we can do to realize the full potential of our outdoor advertising businesses globally -- especially in such innovative growth areas as digital displays."
"Our outdoor businesses delivered solid growth in both revenues and OIBDAN, reflecting the global economy's gradual recovery during the quarter," said Tom Casey, Executive Vice President and Chief Financial Officer. "We will continue to deploy digital displays in our U.S. and our international markets, as we see opportunities to grow our footprint. With this focus on innovation and industry leadership, we will be well positioned to capitalize fully when economies recover globally."
Third Quarter 2011 Results
The Company reported revenues of $748 million in the quarter, an 8% increase from the $695 million in the third quarter of 2010. Excluding the effects of movements in foreign exchange rates, the revenue rose 4%.(1)
-- Americas revenues grew $14 million, or 4%, compared to the third quarter of 2010, driven by bulletin, airport, poster and shelter displays, and particularly digital displays.
-- International outdoor revenues increased $39 million, or 11%, compared to the third quarter of 2010, resulting primarily from higher street furniture revenue across most of its markets, especially China. Excluding the effects of movements in foreign exchange rates(1), revenues were up 5%.
-- The Company's OIBDAN(1) improved 7% compared to the third quarter of 2010. OIBDAN(1) totaled $189 million for the quarter compared to $176 million for the third quarter of 2010. Excluding the effects of movements in foreign exchange rates(1), the increase in OIBDAN was 5%.
Clear Channel Outdoor Holdings' consolidated net income was $10 million, or $0.01 per diluted share, for the quarter. This compares to a consolidated net loss of $32 million, or $0.10 per diluted share, for the third quarter of 2010. See Table 1 (Financial Highlights) for an analysis of the change in consolidated net income (loss).
Revenues, Operating Expenses and OIBDAN
by Segment
---------------------------------------------------------------
(In thousands) Three Months Ended %
September 30,
--------------------------
2011 2010 Change
------------- ------------- ------
Revenues(1):
Americas $ 347,344 $ 333,269 4 %
International 401,106 361,817 11 %
------- -------
Consolidated revenues $ 748,450 $ 695,086 8 %
=== ======= === =======
Operating Expenses(1,2):
Americas $ 208,508 $ 193,483 8 %
International 328,844 299,495 10 %
------- -------
Consolidated operating expenses $ 537,352 $ 492,978 9 %
=== ======= === =======
OIBDAN(1):
Americas $ 138,836 $ 139,786 (1 %)
International 72,262 62,322 16 %
Corporate (22,267) (26,105)
------- --- ------- ---
Consolidated OIBDAN $ 188,831 $ 176,003 7 %
=== ======= === =======
Americas
Americas revenue increased $14 million, or 4%, compared to the third quarter of 2010, due to the Company's bulletin, airport, poster and shelter displays, and particularly digital displays. Bulletin revenues improved due to digital growth driven by the increased number of digital displays, in addition to increased rates. Airport, poster and shelter revenues were up due mainly to higher average rates.
Operating expenses(2) grew $15 million during the quarter compared to the same period of 2010, driven primarily by increased site lease expense associated with higher airport and bulletin revenue, particularly digital, and the expanded deployment of digital displays. Commission expenses associated with the increase in revenues were also up in the quarter.
Americas OIBDAN(1) for the quarter was $139 million, a decrease of 1% compared to $140 million for the same period of 2010.
As of September 30, 2011, the Company had deployed 768 digital displays in 37 U.S. markets. This includes 57 digital displays that were installed during the quarter.
International
International revenues increased $39 million, or 11%, during the quarter compared to the same period of 2010, resulting primarily from higher street furniture revenues across most of the Company's markets, particularly China, due to improved yields and additional displays. Billboard and street furniture revenues grew in France, reflecting mainly increased national and local sales, while improved rates on billboards led to higher revenues in Switzerland. In addition, foreign exchange movements resulted in a $23 million increase in revenue. Excluding the effects of movements in foreign exchange rates(1), revenues were up 5%.
Operating expenses(2) rose $29 million, attributable primarily to a $19 million increase from movements in foreign exchange rates(1). Higher site lease and selling and marketing expenses associated with the revenue increase also contributed to the expense growth.
Led by the revenue growth from the Company's street furniture business, International OIBDAN(1) for the quarter increased 16% to $72 million from $62 million for the same of period of 2010. Excluding the effects of movements in foreign exchange rates(1), OIBDAN rose 10%.
Conference Call
The Company, along with its parent company CC Media Holdings, Inc., will host a teleconference to discuss results today at 4:30 p.m. Eastern Time. The conference call number is 800-260-0702 and the passcode is 221011. The teleconference will also be available via a live audiocast on the investor section of the Clear Channel Outdoor website, located at http://www.clearchanneloutdoor.com/corporate/investor-relations/ . A replay of the call will be available after the live conference call, beginning at 6:30 p.m. Eastern Time, for a period of thirty days. The replay numbers are 800-475-6701 (U.S. callers) and 320-365-3844 (International callers) and the passcode is 221011. The audiocast will also be archived on the website and will be available beginning 24 hours after the call for a period of thirty days.
TABLE 1 - Financial Highlights of Clear
Channel Outdoor Holdings, Inc. and Subsidiaries
---------------------------------------------------------------------------------------------
(In thousands, except per share data) Three Months Ended
September 30,
--------------------------
2011 2010
------------- -------------
Revenues $ 748,450 $ 695,086
Direct operating expenses (excludes depreciation and amortization) 408,132 380,619
Selling, general and administrative expenses (excludes depreciation 131,915 115,224
and amortization)
Corporate expenses (excludes depreciation and amortization) 22,303 26,197
Depreciation and amortization 114,934 103,833
Other operating income (expenses) - net 37 (27,672)
------- ------- -
Operating income 71,203 41,541
Interest expenses 61,809 60,276
Interest income on Due from Clear Channel Communications 12,215 4,800
Equity in earnings (loss) of nonconsolidated affiliates 1,038 (663)
Other income (expenses) - net (1,859) 1,545
------- - -------
Income (loss) before income taxes 20,788 (13,053)
Income tax expenses (11,002) (18,829)
------- - ------- -
Consolidated net income (loss) 9,786 (31,882)
6,573 3,012
Less: amount attributable to noncontrolling interest
------- -------
Net income (loss) attributable to the Company $ 3,213 $ (34,894)
===== ======= ===== ======= =
Diluted net income (loss) per share $ 0.01 $ (0.10)
===== ======= ===== ======= =
Weighted average shares outstanding - Diluted 356,428 355,585
Foreign exchange movements increased the Company's quarterly revenues and direct operating and SG&A expenses by approximately $24 million and $21 million, respectively, compared to the same period of 2010.
The current portion of long-term debt, which is included in Other Debt, was $48 million as of September 30, 2011.
Liquidity and Financial Position
For the nine months ended September 30, 2011, cash flow provided by operating activities was $352 million, cash flow used for investing activities was $166 million, cash flow used for financing activities was $177 million, and the effect of exchange rate changes on cash was $1 million, for a net increase in cash of $8 million.
Capital expenditures for the quarter ended September 30, 2011 were approximately $60 million compared to $53 million for the quarter ended September 30, 2010.
The Clear Channel Worldwide Holdings, Inc. Notes indentures restrict the Company's ability to incur additional indebtedness but permit the Company to incur additional indebtedness based on an incurrence test. In order to incur additional indebtedness under this test, the Company's debt to adjusted EBITDA ratios (as defined by the indentures) must be lower than 6.5:1 and 3.25:1 for total debt and senior debt, respectively. The Clear Channel Worldwide Holdings, Inc. Series B Notes indenture permits the Company to pay dividends from the proceeds of indebtedness or the proceeds from asset sales if the Company's debt to adjusted EBITDA ratios (as defined by the indenture) are lower than 6.0:1 and 3.0:1 for total debt and senior debt, respectively. If these ratios are not met, the Company has certain exceptions that allow the Company to pay dividends, including a $500 million exception for the payment of dividends.
Consolidated leverage ratio, defined as total debt divided by EBITDA for the preceding four quarters, was 3.3:1 at September 30, 2011, and senior leverage ratio, defined as senior debt divided by EBITDA for the preceding four quarters, was also 3.3:1 at September 30, 2011. The Company's adjusted EBITDA of $785.5 million is calculated as operating income (loss) before depreciation, amortization, impairment charges and other operating income (expense) -- net, plus non-cash compensation, and is further adjusted for the following items: (i) an increase of $37.6 million for non-cash items; (ii) an increase of $14.3 million related to expenses incurred associated with the Company's cost savings program; and (iii) an increase of $10.4 million for various other items.
About Clear Channel Outdoor Holdings
Clear Channel Outdoor Holdings, headquartered in San Antonio, Texas, is a global leader in the outdoor advertising industry providing clients with advertising opportunities through billboards, street furniture displays, transit displays, and other out-of-home advertising displays.
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