All right. Good afternoon, everybody. For those of you who don't know me, my name is Avi Steiner. I along with my associate, William O'Gorman, cover the high-yield media sector here at JPMorgan. It's my pleasure to have today in the fireside chat format, management from Clear Channel Outdoor. To my immediate right, Scott Wells, Chief Executive Officer. To Scott's right, Brian Coleman, Chief Financial Officer. They will allow me to ask some questions. At some point, we'll open it up to the floor for any questions. We do not have a mic in the room. I apologize. When you do ask questions when we get to the open part of the session, if you could speak loudly, I will repeat your question into the mic for the benefit of the webcast. With that, thank you everyone for being here. Scott, Brian, thank you for being here. Thanks for having us. Great. If it's okay, I'm just gonna launch right into it. We just finished up a fourth quarter earnings season that was not particularly easy for the advertising-dependent mediums. Television and radio names, in particular, were impacted by slowing advertising spend and tougher comps. Outdoor, while seeing some of the same factors, maybe more so at the margin, I would argue, has held in much better on a relative basis. Why does Clear Channel management think that is? Could the relative outperformance simply be a function of outdoor being a later cycle medium and that eventually some of these trends may catch up? It's a great question, Avi, and I do think, there are reasons that outdoor might be a little slower to deal with challenges than other media. I think the bigger thing, relative to the media you're talking about is that our audience continues to grow, and we are continuing to find more effective ways to communicate the impact of that audience to our advertisers. That, when I look at the parts of our business that are most responsive to macro impact, and I'm thinking particularly of our programmatic business and secondarily, you know, our digital signs, which tend to have shorter contracts than the printed assets. Those were actually signaling more challenges in Q4, and even really in kind of Q4 than what we're seeing now. We're actually seeing, you know, pretty good improvement in things as we. You know, we talked about in our earnings call, we talked about January not being a great month and there being a number of verticals that have been a little slow out of the blocks this year. When I look at some of the parts that are more responsive to the macro, they're actually responding pretty well. You get away from the emerging tech vertical, you get away from crypto, you get away from companies that have announced layoffs in the last few months. The advertiser base is pretty constructive, we did have our best upfront ever, sort of defined as the period between October and February when we lay in most of our long-term contracts. We feel good about the business. You know, February was better than January. March is looking like it's gonna be better than February. The upfront has given us a good lay in for the rest of the year. We think it's gonna be resilient. I think it's because fundamentally the audience piece and the fact that we're doing a better job of measuring that audience. Terrific. If I can dig a little deeper, I think everyone in this space, advertising dependent that is talking about some softness in the national channel at the end of last year and now to start the year. Your mix, if I'm not mistaken, you guys will correct me if I'm wrong, a little more national maybe than Lamar, a touch less than OUTFRONT. What do you see as the reasons behind the national slowdown? I think you may have touched on it already category-wise, but is it a function of macro, and is it likely to be temporary or prolonged in your view? You know, we'll just comment on what we can see, and I'll give you my prognostication, I suppose. There's no question national is more volatile than local, and local has frankly been a star, you know, really since the onset of COVID. It kinda held up better than national through COVID, and it continued steady, as national started to rebuild kinda post-COVID. You know, our national is a little bit different than what radio or TV talks about in terms of national. There's not really the syndicated buy across all different types of inventory that goes on. It's really not how the outdoor business works, so it is a little bit of a definitional difference. I think all of us talk about national in terms of the large media agencies and the business that goes through the large media agencies. Yeah, what we've seen coming out of the blocks in 2023 is it is definitely. I mean, we had a very, very strong Q1 2022. We have definitely seen, you know, pull back in the couple of verticals that I mentioned, particularly crypto and emerging tech. You know, we weren't exposed that much to sports betting. I know that is another vertical that has been a little bit softer. We, you know, I do think when I look at the conversations we're having right now, people are still planning to promote their brands, people are still planning on product releases. The movie release schedule gets better as we get later into the year. There's a lot of reasons to think that the demand profile will be, will be good. In our case, we also have, you know, I mean, we gave a pretty robust guide for the year. We do have inventory coming online that's gonna help with that as we go. You know, the Newark airport terminal that we announced, we're gonna get full year effect on some of the other New York airports, so that's gonna be a, a bit of a tailwind. We've had some contractual puts and takes in Europe that should help there as well. In addition to them having countries that are still recovering from COVID. Those are all the things that are contributing to us, you know, having the guide like we did. Terrific. If I could flip it around a little bit and just focus on some of the positive categories, what you're seeing on the plus side of the column, and then we often ask about automotive. How big is that? I know you smile and laugh, but how big is it? I know it's more relevant maybe for other sectors and do your assets potentially lend itself to some good growth there this year if production comes back. I do think we could help automotive out quite a lot. If any of the automotive CEOs are listening, I'll give you my phone number offline. Automotive is not a big vertical for us. I do think that Most of what we see in that sector is at the dealer level. As dealers restock on inventory and start to have challenges moving inventory, that probably will be an opportunity for us, but it's not a big vertical. That's the automotive part. In terms of what's going well, really business services, which is our biggest vertical, and it's a very local, driven vertical. There's national within business services too, but it's very local oriented. That's probably our strongest dollar grower that we're seeing right now. Travel, entertainment, lodging, you know, things associated with people getting out and taking vacations are all doing really well right now. Fashion is doing well right now. That's been a trend for a number of quarters at this point. Those are probably the verticals that are doing best. Did I miss anything in your question? No, that's fantastic. All right, you teased us with the New York airports contract. I will admit I've already been in the new terminal one several times. It looks fantastic. Can you walk us through how we should think about the evolution of that contract? I think you touched on more inventory coming online as we get through the year. I know you don't wanna go into specifics, but anything you can help us with from the nerd perspective of modeling, anything along those lines would be great. Yeah, I mean, the contract is performing really well. We initiated that contract in Q1 of 2021, and, you know, in the time since, you've had the new terminals come online at LaGuardia. Both terminal B and C are new in LaGuardia, and we'll get some full year effect from that. I forget exactly when terminal C came online. Terminal B was on most of last year. We've got some new build in JFK that has gone on. You mentioned the Newark terminal A or terminal 1, I'm not a hundred. I think it's terminal A. You're right, it's terminal A. Um- My apologies to the travelers. No, that's okay. For the airport enthusiasts, you know, it is, and it's a great-looking terminal. I just flew through there last week myself. That just came online in January. 2023 will be the last sort of big year in terms of CapEx. We will be, because we're kind of beholden to how the development and redevelopment of some of the terminals goes, there'll be a little bit of CapEx in the years subsequent to that. By and large, the main initial investment will be done this year. I would expect. I mean, the team is nicely ahead of pro forma right now, which is great. We always love it when we're conservative in our bid preparation. I think both we and the Port Authority feel really good about the progress that we've made. You know, probably it's a, it's a tailwind in terms of% growth for us, you know, at least into the first half of next year, I would think. Terrific. Before I go to maybe some expense questions, so far our focus has been largely domestic. I think when people think about your other markets, particularly Europe, they think of asset sales, which we'll get into later. Maybe talk about what you're seeing in the European market from a advertising health, et cetera, perspective. That'd be great. Yeah. I mean, it The European market has held up better than I think anybody expected it was going to, with all of the turmoil last year between war and inflation and energy prices. There were certainly a lot of things that had people concerned about Europe. As you saw in our Q4 report, you know, the business came in very much in line, you know, ex-currency with the guidance that we've been giving. Coming out of the gates this year, it has been strong. We're seeing some of the countries that were still lagging 2019. Well, more than half of the European portfolio is ahead of 2019. The half that's not is coming out very strong and we see things building back. I think one of the interesting things, looking at where the money's coming from, we are definitely getting more money from TV, you know, people stepping back from TV in Europe than we are in the U.S., and that's a little bit of a function of the fast-moving consumer goods. CMOs seem to like street furniture a lot more than they like billboards, and that's what the inventory in Europe is. That's contributing to the, the growth there. It's, it's doing well. Great. I'm going to go to the margin side. Maybe we hear from Brian here, maybe not, I don't know. Don't worry, Brian, I'll get you eventually. Margins are set to decline in 2023, if I'm think about it correctly, some of that is mix given airport ramp. Some of it is lower abatements as the industry and the economies recover, more importantly. I think the company also called out a contract renegotiation. Am I right about the causal factors broadly, number one, and number two, whatever context you can give us around that contract renegotiation would be great? Thanks, Avi. The answer is yes. You know, those are three things that we cited on our earnings calls as potential headwinds heading into 2023. None of them were a surprise, right? We talked about this a little bit last year. With the recovery, abatements are cycling through. We will continue to pursue every opportunity we have to get fair treatment under the contracts we have, but the reality is, time has passed, and we've either gotten the majority of the abatements that we've sought, or, you know, it's there's maybe a few with a long tail, but they're pretty small that we'll have to, you know, have to continue to pursue. I think, you know, you cited mix. Our airports business has grown. That recovery is in, you know, is fully here. The Port Authority contract has helped grown that along with the recovery, that being airports as a percentage of the business. It's a lower margin business. In terms of margins, that's a bit of a headwind. Then the third thing, which we don't talk a lot about because we don't wanna, like, call out any particular contract, but we do have a large landlord that had been under contract for, you know, 25 years. That contract expired, now it's kinda at market terms. It is currently in negotiation, so again, don't wanna talk a lot about it. We don't have a lot of contracts like this. We have landlords who have multiple sites, but this is a particularly large one that has our sites as well as others. You know, we'll have a bit of a headwind, I think $3+ million, you know, a quarter that began to impact us in fourth quarter last year. We think we have room for improvement, and we should be able to then finalize negotiation on a long-term contract at or better terms. What you're seeing is probably the worst case, and it should cycle through in terms of comparability after the third quarter this year. Thank you. Maybe this is you, but beginning this quarter, the company's re-segmenting how it reports on its business obviously led to a lot of questions. Just tipping your hand to what may be for sale, what may not, what may not be for sale. My own view is it's auditor accounting, how you manage the business driven. Perhaps talk about that, talk about what drove the split, and if it portends anything at all to what you may be looking at. I'll respond first, and then Scott can obviously come over the top. I want to be clear, we changed our segments because of the way management views the way we manage the business, the way we allocate capital. We had discussions with our auditors. It's not auditor-driven as much as it is this is a management decision. The auditors looked at how we manage the business, agreed, we changed segmentation. It wasn't just the division of Europe-North and Europe-South. We also separated in the Americas. We separated the airports business out of what is now America. It's America, which is the domestic U.S. Operations, less airports, and then airports, which is our U.S. and Caribbean airport operations. We do have some airports in Europe, but those are parts of those markets, not part of our airports division. We also have an other non-reportable segment that now has Singapore, which previously used to be in Europe, the way it is managed, it also made sense to move it into other. Those were the changes. What does that mean? Does that signal anything? I think it means kind of what we've talked about, but you can draw kind of a corollary to if we manage the business differently, allocate capital differently, what does that mean in terms of what disclosures we've made? You can clearly look at Northern Europe and Southern Europe disclosures and see that there's one segment that has, you know, strong performance, historically strong performance, EBITDA minus CapEx strength, free cash flow generation, stability. Then you have another part of Europe that, you know, has more opportunity to recover and room for improvement in terms of free cash flow generation. So I think a lot of people read into that. That's the separation when we talk about the focus on sales. It is not directly. We've made the segment change for the reasons I talked about. You know, the rest is, you know, I don't wanna say speculation, but it's just, you know, it's people being thoughtful, but may not be exactly right. Yeah. I think the only thing I'd just add there is that, you know, we're long term not gonna be in Europe. We remain committed to simplifying the portfolio. This is truly indicative of how we're managing the business, though, in terms of the real emphasis of free cash flow generation and in the operating world that really is looking at EBITDA minus CapEx. That's the proxy for how we're looking at it. That's driving the dialogue with who's gonna get the investment capital, because we're looking for places that are gonna generate return and return in timely ways. Okay, perfect. Before I get to the European process that I know everyone wants to ask about, a couple of questions maybe around domestic M&A and use of capital. The company noted it was gonna be a little more selective on the M&A front this year. I think you completed $60 million worth in 2023. You'll correct me if I'm wrong. Given that you're being more selective, and it sounds like your peers as well are dialing it back a little bit, I'm wondering, you know, are you seeing any signs of seller expectations resetting lower because everybody's a little less involved in the market? If there was something that you thought was very accretive, any reason you wouldn't pursue it despite looking to be a little more selective this year? I think it's probably premature to note any real changes in the dynamic. You know, a lot of these transactions are very, very small, and you're talking about three, four signs. You're talking about somebody who maybe is looking to retire. It is not a bunch of large transactions. I think our competitors maybe had some that were a little bit bigger, you know, maybe as big as a market sort of thing. Our acquisitions are all tuck-in. They're all places that we currently have footprint. We have not seen a big shift in expectations, but I think it's probably a little premature on that one. A lot of times these are deals where you have a relationship with the seller, where maybe you've been marketing the asset, you know, for them beforehand. In terms of our willingness to pursue something, if an opportunity arose, if we saw something that we thought was a great fit with what we're doing, I think we'd be able to figure out a way to finance it. I'm not saying that we're going out and chasing that, but I'm also not gonna say that, "No, we're not gonna do any deal under any circumstance." I think we're very bullish on the U.S. roadside business, and if something were to avail itself, that was an important part of the puzzle for us, we'd wanna figure that out. I'm not gonna speculate as to how we might figure that out, but I think there's a lot of different ways to fund things if you need to. Perfect. Just dovetailing off of that, incremental investment dollars, how do you think about the opportunity or the preference perhaps between converting existing static boards to digital and what that return provides you versus maybe an adjacency four-board tuck-in type acquisition that we talked about earlier? Which is, if you had your preference, that you'd do all day? There's no question that the highest return things we do are board conversions or even organic. If you're building in market and you have the permit, an organic structure might not be that much more incremental capital versus a conversion 'cause the header is, you know, the most expensive thing, followed by the pole, which oftentimes you have to reinforce if you're putting digital on, depending on where you are and what the dynamic is. Those are always gonna pay out better than an acquisition from a, you know, a payback period or anything along those lines. Europe. On the process, it was great to see Switzerland, the announcement at the end of last year. Maybe a little delayed reaction, but I think everybody agreed it was certainly a positive and welcome sign. To the extent possible, can you talk about how the process is going, what barriers you may or may not be seeing to disposing of some of these smaller, lower margin European markets? I mean, I think it's just slow, and some of you who've been in group sessions with us or at dinner last night have heard me talk about how long Switzerland actually took. That we kinda had the outline of the deal done in July of last year, and it took us till December to paper it. Each transaction, this is the perverse thing about having to go to the individual country level dialogue is that the amount of work required, whether it's diligence, regulatory, tax, et cetera, is kind of almost the same as if you were doing the whole platform. It's just not a terribly fast process. We've been very clear about the process being ongoing. We will absolutely tell you when the process is over, and that time has not arisen. I think with the dynamics that there are in Europe right now. I mean, look, the people who looked at the whole platform in January of last year, in January of 2022, have seen us exceed the number that we had in our memorandum at that time with the results that we actually just published last week. I think we have a lot of credibility. You know, at the time we started that transaction, we had one good quarter. Now we've had five. As time passes and you see the businesses recover and you see the businesses grow, I think the ability to actually get these things done is there. It remains true that you have to navigate all of the different elements of a contract to get the deals done and get them signed. Just like a follow-up on that one. Now that you've had five quarters of pretty solid performance and you've proven out what you had in the memorandum, as you put it, or exceeded, I'm just trying to think if from a prospective buyer's point of view, the numbers are there, the assets still look like they're delivering, obviously. Is there a financing issue? Is there anything along those lines that may be a hindrance to those buyers in those markets prospectively? I think if we were working on the platform as a whole, that would probably still be an issue. When you're working on individual countries, you're not talking about huge checks, and you're talking with entities that have their own financing mechanisms and other things available to them. I do not think. You know, I think everyone we've talked to, and we've gotten this question in every one of our group sessions, is looking for us to say something like, "Yeah, we're just holding out for too high of a multiple, and if we just would relax our multiple expectations, this would all go faster." That actually is the least of our problems. The thing is that you have to address all those elements in the contract in order to get to a place where you're able to, you know, consummate a deal. It's just not particularly fast. We are moving as fast as we can. We do have a great deal of urgency on it, but it does require the other party to have similar urgency, and they're just inherently are not, they're not fast processes. We'll keep waiting. Excellent. Okay. Excuse me. One more from me before I open it up to the floor. Brian, I'm gonna pick on you a little bit again. In the last earnings call, you noted the company is, and now I'm quoting you, "evaluating all options to reduce its debt." I know you don't wanna discuss specifics per se, but at a high level, does the company think of actions beyond non-core European asset sales? To the extent you wanna discuss those, please feel free. Yeah, you know, it's probably not constructive to get into anything specific. To answer your question, yes, I think everything's on the table, and we should be open-minded. I think there's a sequence that needs to occur. Part of that. Excuse me while I take a sip of water. Part of that is visibility into European strategic review, because what you may or may not do can be informed by the progress you're making and ultimately, the level of success. I think that's important. But, you know, in no case is it likely that the European strategic review will result in a material deleveraging event. It all kinda ultimately depends on the price that you get, the net proceeds, how you apply those net proceeds. We're not counting on material deleveraging from that event. It will simplify the business, clarify the business. It will be U.S.-centric. You may be able to cut back, and you should be able to cut back on corporate expense. Your capital commitments change, but those are largely self-funded by Europe in a normalized environment anyway. I do think you need to see how that process plays out. In the meantime, you know that you still have a leverage issue, that if you wanna preserve the option to convert to a REIT over time, because in the future, we do anticipate becoming a federal income taxpayer. We are not today, and we won't be over the next few years. If we continue to grow and execute on the European strategic plan, we envision that we will be. We at least wanna be in a position to have the option to convert to a REIT over that time period. The two barriers, really, to doing that is, one, the proportion of non-REITable assets, which is solved by the European strategic review. We wouldn't have to sell everything, but the more you sell, the greater proportion of REITable assets you have, the easier it is to convert because you have less to put in a TRS. The big issue is that of leverage. We've provided some long-term guidance at our investor day and confirmed that at our last earnings call. You can figure out organically what we how we feel about leverage reducing over time. If we wanna be, let's call it between 4x and 5 x using those leverage multiples of the REITable domestic peers who are REITs. We wanna be in that range. We've still got a turn and a half, two turns, whatever it is, to solve for. Something will need to happen. It doesn't have to be today. And in fact, I wouldn't rush into anything prematurely. It does give us time to take a look at, you know, what options are out there. And I think there's a whole toolbox, a whole array of options. We are approached all the time by people who are interested in the business. There's a great deal of interest in the outdoor business in general, and us specifically, whether that be from the M&A standpoint, whether that be from financial sponsors who have a lot of money and looking to put that money to work. I don't wanna triangulate on anything today. In fact, I think it would be premature to do so. We are wide open and would look at all kinds of different options. I think we have time, both in terms of, you know, we're not gonna be a taxpayer in the near term, and we have runway. You know, there's no catalyst, no significant material debt maturity that we have to worry about in the near term. We have the CCIBV notes, which is $375 million, likely also gets resolved as part of the strategic review. I'll pause there. That was a mouthful. Scott, I don't know if you had anything you wanted to add. I think you covered it. It would actually be a great place to stop, we're gonna take a couple questions from the audience because that was fantastic. Does anyone have questions? Please don't be shy. Just have to speak loudly so I can repeat it. Go ahead, sir. It seems like the options, like, in Europe, a European sale wouldn't immediately deleverage the company to the extent you mentioned maybe 4x or 5 x leverage. If you look at your peers like Lamar and OUTFRONT, I mean, the trading is pretty heavy. To get to that number, there's something else that has to happen. The thing I can think of is maybe an equity component to substitute the debt for equity, maybe some sort of preferred or something of that nature where you're just substituting one tranche for an equity-like tranche as we, as you kind of seek a restructure so that everybody's a winner on that front. Can you comment on that? I think. Are you able to repeat it? Oh. Short repeat it. Well, that's a, and it's a great follow-on question from what we were talking about. The question, I think in summary is, if Europe isn't gonna be material deleveraging like you talked about, there still is a big gap between, you know, where you are today in terms of leverage and where the domestic peers OUTFRONT and Lamar are. We've talked about that. Before the gentleman asked this question, we talked about organically, we thought we could recover some of that, but not all of it. How do you solve for that difference? The, it was mentioned in the question, equity-like, preferred, you know, some, a array of financial solutions issuing equity. I think those are all in the toolkit. I don't think that's all that's in the toolkit, but when we talk about, you know, financial assistance to get there, I think those are all reasonable things to look at. There's precedent in our environment. I know, I think OUTFRONT had done a PIPE 2 years ago. I think those are things to look at. I think, you know, there are other things to look at. Yes, we would consider those at the appropriate time if it made sense and if it was the best solution. Some of those when you're issuing equity, I think you're right. You need to solve for a win-win. That was embedded in the question. That may lend itself to something closer to the actual conversion of the REIT, where you can talk about, if I'm gonna issue equity and potentially dilute indirectly or directly the equity holders, I know that I'm gonna be a REIT on the other side, and that has this kind of impact. maybe a little more challenging to do something now with our equity price. I think we wanna be there very thoughtful about it, and I think we have time. I think, you know, like I said in, previously, I think, you know, all options are on the table. We're not ruling anything out at this point. I just think we need to be flexible because there are still some things that we don't know about. What is the ultimate resolution of Europe? What is the macro environment over the next 12 - 18 months? I think we'll, whatever direction we go, we'll be informed by these things. I don't know, Scott, if you wanted to add anything. Yeah. I mean, I think the. It's a very rich question because there's probably 50 different streams of things that could close that gap. The good news is that the gap, you know, presuming that we're in the ballpark of the guidance that we've given, the gap isn't something where we have to double EBITDA to be a plausible player in this whole thing. We need to add, you know, $100-$150-ish to the pot when you get to the time that you're starting to talk about refinancing. There are a lot of people very interested in this business. One of the win-wins that might be out there is maybe you take a partner who buys something in conjunction with you, and you have a earn-out concept, and you take it on over time. You get to consolidate it at the beginning. Maybe you don't actually get out of Europe entirely in the short term. Maybe you bring in a partner there and bring in some liquidity, whether through more leverage or through equity from the new partner coming in. You use that to pay down debt in the holding company, and you take the cash flow that's being generated out of that business to help de-lever and then ultimately deconsolidate it and have somebody take the rest of it. Like, there's so many structuring things. We have an enormous number of options. What we're doing and what we're striving to communicate is we're having a lot of discipline on the sequencing 'cause the sequencing is what's gonna create the value here. The first thing in the sequence is getting clarity on Europe. The next thing on the sequence we'll talk about when we're in that shoot. Hopefully, that helps. Yes. I mean, one thing we know is CCO is worth more post all of this stuff. We have publicly traded comps. Yeah. We know where those trade, CCO is performing well. Sequencing would probably be Europe first, focus on the U.S. and maybe some other of those things that you've mentioned. One thing that's clear is that we're in the equity and the debt markets. Both those instruments are hindered by the amount of leverage that this company has. If we had a choice about it, we would love to have less, but we don't, and so we're working with it in the sequence that we can. All right. I think we're out of time. I wanna thank you, Scott. I wanna thank you, Brian, the Clear Channel Outdoor Management team. This was terrific. Thank you very much. Thank you.