Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) Q4 2022 Earnings Call Transcript

Scott Wells: Well, you’re right in that they’ve largely tapered off in Europe, and I think that same kind of tapering off should naturally occur in the Americas. The thing I’d point out is obviously, this is something that we want to do and we’ll vigorously pursue opportunities where we feel it’s appropriate, and there are still some out there in Americas that we’ll continue to pursue, but they will largely continue to diminish over time.

Unidentified Analyst: Okay. And my last one, just given the higher rate environment, does that necessarily trigger any change to strategic priorities, given that the eventual need for – to refinance at higher rates? Does that change the story at all, or no?

Scott Wells: Well, it’s a significant consideration. Our interest expense has gone up. But maybe even more importantly, the level at which you could assume refinancing to occur, is probably at a higher point than it would’ve been say a year ago. So, it’s definitely consideration in the things we look at. It is a headwind to free cash flow generation. That all being said, we do have a runway, and there are a lot of moving parts in the business right now. So, I wouldn’t say that it necessarily has led to a change in our strategic thinking, but it certainly is an important consideration and that we are certainly thinking about.

Brian Coleman: Yes, I mean, I think Jonathan, the only thing I’d add on that one is, a year ago, who would have forecast rates would be where they are right now? And we are still a couple years from where we’re going to need to engage. And so, this is a slow as smooth, smooth as fast sort of scenario, to borrow from my special operations friends. We will be watching the market very carefully on this, and we’ll do the appropriate action as our window approaches more closely.

Unidentified Analyst: Understood. Thank you.

Operator: Our next question comes from Avi Steiner from JPMorgan. Your line is open.

Avi Steiner: Thank you. Good morning, everyone. A couple of quick ones for me. One, on the company’s full-year guidance, it looks like, at least at the midpoint, margin is slightly lower year-over-year. And I just want to make sure I understand the puts and takes from €˜22. Obviously, some rent abatements being a part of the issue, or less of them. I assume airports growth. So, I’m curious if I’m missing anything else, then I’ve got a couple more. Thank you.

Scott Wells: Yes. I think we talk about the abatements falling away, as you pointed out, the mix as airports grows. And I think the other thing we’ve mentioned is, we have a major contract in the US that has gone through a renegotiation, and that’s been a little bit of a headwind. So, it’s really – it’s those three things that are headwinds on EBITDA margins. So, I think you’re thinking about the right way, Avi.

Avi Steiner: Okay. That’s terrific. And then one of your peers talked about, I guess the programmatic channel being a little bit softer. I know it’s not a massive part of the business, but curious what you guys are seeing there and how you see that playing out this year?

Scott Wells: So, yes, no question, 2022 did not have the kind of growth in programmatic that we might have anticipated for the year. But as you’ll see in our proxy, we actually delivered on our plans despite that. So, the point being, the second thing you said, which is it’s not that big a part of the mix. I actually would tell you, the programmatic market right now is pretty solid. It’s not – again, it’s hard to compare a Q1 to a Q4 ever, but it certainly is showing some decent growth right now. So, I don’t think that we’re counting on it to be a massive part of the guide that we gave, but there’s no indication that it’s in a bad place, I guess, is how I’d characterize it.