Clear Channel Outdoor Holdings Exec Insights: America’s Outdoor, Expenses

On Friday, Clear Channel Outdoor Holdings Inc (NYSE:CCO) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.

America’s Outdoor

Marci Ryvicker – Wells Fargo: Two questions. I am trying to get my hands around America’s Outdoor both with revenue and expenses. You are up 4% revenue for Q1, now you’ve decelerated to up 1% in Q2 with slightly easier comps. So can you give us color is it you are taking boards down in New York city I believe, is that having an impact, is it a category issue, is demand going to (indiscernible) anything you can talk about on the revenue side.

Thomas W. Casey – CFO and EVP: Couple of things we did a pretty good quarter about 4%, we did see some deceleration throughout the quarter, and so as we’ve said our outlook is difficult to see at this time. But right now we are looking at 1%. As far as where we see it happening. I think when we look across our businesses for 2Q nothing really sticks out as a key driver. We continue to see a retail auto and health care continuing to do pretty well. Media and financial service is little bit weaker including telecom. But nothing specifically comes out as a key driver. It’s just overall slowdown throughout the quarter.

Marci Ryvicker – Wells Fargo: Both the national and local?

Thomas W. Casey – CFO and EVP: No, national and local are actually up slightly, but again, I think we’ll continue to see some slowdown, but right now we are trending just at about 1%.

Marci Ryvicker – Wells Fargo: Then, just expenses, it would just be helpful if you can at least outline what you anticipate for the year if you have a budget for both the Americas and international just so we can get a hand on where OIBDAN is going.

Thomas W. Casey – CFO and EVP: Yeah. We don’t give obviously outlook on our expenses, but couple of things I want to comment for the quarter, and this is for giving you some perspective. We did have a series of integration restructuring activities going on throughout the quarter that total was about $16 million, $6 million of that related CCOH. So we did have some special items in the quarter. We don’t outlook for the year. We did take down some boards in the quarter, about 300 boards. Obviously, with slower economic environment, you’ll continue to see us working on our expenses to keep them in line. Keep in mind that we are reflecting the significant investments we did last year. I would call your attention to the fact that we had about $144 million of CapEx deployed in the fourth quarter versus about $73 million in the first quarter, so you can see pretty significant investments and that’s really what you are seeing in the first quarter, a pretty dramatic ramp up.


Bishop Cheen – Wachovia: Let me follow up on Marci’s question. When we look at expenses going forward, I understand you said this was choppy and this had to do with a lot of different things including enhancements. But when we look out to the back half of the year, should we be thinking that, these expenses are going to flow through the P&L for the whole year or will this spike in volatility tear down a bit?

Thomas W. Casey – CFO and EVP: Like to think that we can continue to maintain our margins this year, clearly for the first quarter we are seeing some acceleration from the investments we made in the U.S. as well as in international. We continue to see significant growth in Belgium for example, a very large tender we did. So there is some of that investment that’s flowing in and as the buildup of our revenue from the new boards catches up as I think I’ve told you before, that’s usually in the three to six months time frame, we would expect that revenue to start kick in and keep our margins at the levels we’ve been performing at. Obviously it’s something that we are going to continue to watch, the economic environment is slower than we expected and so we’ll continue to monitor that.

Bishop Cheen – Wachovia: And then two quick house keepings. The 2% pacing for CCM, did you say that’s apples-to-apples with traffic or core without traffic?

Thomas W. Casey – CFO and EVP: That’s without traffic.

Bishop Cheen – Wachovia: Remind us again, you made the traffic acquisition in which quarter of 2011?

Thomas W. Casey – CFO and EVP: I believe it was the end of the first quarter. Actually it was just the beginning of second quarter like April. Keep in mind that we were delayed with the review that the DOJ was doing on that business and so, our integration is a little bit beyond where we normally would be accustomed to doing, but we are well on our way to integrating that business.

Bishop Cheen – Wachovia: Last housekeeping. The point you were making about taking down some 300 boards in Q1 are you implying that if that is going to help cut the expenses going forward?

Brian Coleman – SVP and Treasurer: Well there is clearly a benefit on the expense side we see reducing cycle issues but by taking down 300 displays what we are doing is we continually monitor the profitability of certain boards and continue to trim the portfolio as needed. As the economy continues to evolve we will continue to look at that and take those actions for profitability as well as reduction in costs.