Okay, good afternoon. Please note that important disclosures, including personal holdings disclosures and Morgan Stanley disclosures appear as a handout available in the registration area and the Morgan Stanley public website. I am excited to welcome back to the conference Scott Wells, CEO of Clear Channel Outdoor. Thanks for coming. Thanks for having me, Ben. Good to see you, Scott. It's great to be here. Back-to-back weeks. Feel lucky. Yeah. Yeah. Yeah. Nice to see you again. Enjoy catching up. Yeah. I wanna start before we get into sort of the, you know, current trends in 2023 stuff. You guys had an investor event back in December. You spent a lot of time with us talking about your long-term vision for the business. I know it's a business you're passionate about. We only have 28 minutes, let's not go through the whole investor day, but maybe for this group, what would you highlight as kind of the key things that you think drive the growth for the business and sort of the strategy at Clear Channel to be successful? Sure. You're right. I think we were up on stage for, like, two and a half, three hours. Yeah, I'll try to give you the nickel tour here. Exactly. Look, I think first of all, we're in a great sector. Out-of-home just generally, set aside Clear Channel. We are in a situation where our audience is growing, you know, with more traffic, more people traveling, more people using airlines, et cetera. The audience is growing. Technology is our friend as a category in the sense that we're not being fragmented, we're not being blocked. And actually, the trends in data privacy are actually playing in a very positive direction for us because we have always been about anonymized and aggregated data, and now it appears that that is where the marketplace is going, as well. A lot of, a lot of good activity in the ad tech world in that space. I think it's a good, it's a good macro space we inhabit. Within Clear Channel, the exciting things for us, the digital transformation of the business, it's more than just the signs, it's data and analytics, it's programmatic trading, it's automating our connections with our advertisers. You know, that digital transformation is a big tailwind for the business. I look at what we're doing with segmentation and how we're approaching different parts of the marketplace with different sales offerings. We're getting better at climbing the stack with agencies. We're getting better at calling on advertisers directly. Those are important parts of our growth story. I think that we're doing a lot of really innovative things around how we market our assets. You know, I think particularly with airports, the way that we've approached the New York Port Authority with a combination of sponsorships, a very strong local sales outreach, along with the traditional kind of big brand, conventional outdoor advertising with an airport context has really hit the ball out of the park there. It's something we've been working on to develop for a number of years, and we're just really excited about where we're headed. Yeah. I get that sense. You know, I was talking to Sean Reilly I believe that was today. I think that was earlier today. You've had a busy day. It all blurs together. Just about how the expectation, I think you share this, is that, you know, growth as we look forward for the industry is gonna be better than what we saw, you know, maybe during the last cycle, and harder to see from your company 'cause you were, you know, in a different place. Why do you think, I guess, do you think out-of-home is better positioned today with advertisers than maybe it was pre-pandemic or in the years before the pandemic, after the financial crisis? When you're talking the last cycle, are you talking about COVID or are you talking about the Great Financial Crisis? I'm saying between 2010 and 2019. The kind of lost decade? You know. That's one way to put it, yeah. ... you know. I think it was that bad. It wasn't that bad. No, it wasn't that bad. I'm being harsh. Look, I think what happened with the great financial crisis, a lot of different factors, I was not in management, to your point. I was actually on the board of the company at that time. A lot of things happened that were one-offs. The most notable is the rise of digital media that happened on the other side of it because if you think about what happened to all the different media going into the great financial crisis, what came out on the other side is you had these formidable, both local and national, but particularly from our perspective, the local effectiveness of Facebook and Google. Mm ... you know, early run up, and then there have been, you know, lots of other platforms that have evolved. In terms of how we're positioned, though, I think the thing that's interesting is, we are positioned very well in terms of value. We are positioned very well in terms of audience, 'cause our audience is growing. We are positioned much, much better than five years ago, from a perspective of data and analytics. You know, when we first started doing RADAR, and I wanna say that was seven years ago at this point. It's hard to believe. When we first started doing RADAR, nobody in our industry was really talking about planning and attribution for out-of-home with rigorous data and the ability to integrate with first-party data. That's all stuff we're doing now, and I think that that puts us in a much better place. The fact that privacy has become such a thing, appropriately, is really gonna help us because we were always kind of coming to the conversation about data and analytics, not apologetic, 'cause we never really apologized for the fact that we were bringing a lot of insight to out-of-home that hadn't had it before, but never able to get down to the one-to-one targeting. Now that the one-to-one targeting is kind of beholden to first-party data, which we can still integrate with and share our insights with and do that in a privacy compliant way, that's something that now we're in a conversation that, you know, when you had really good point-to-point data, you know, individual data, it was just not a fair fight. It's a lot more of a fair fight now. Some of this improvement really is a reflection of a reduction in ROI among the digital platforms, particularly for your local small businesses. Well, it's gotten both a lot more expensive on a CPM basis, and it's gotten a lot less precise. Right. Those two things, yes, that. Not a good recipe. ... that would add up. Well let's come back now and talk a little bit about, you know, the fourth quarter results, which during which you also announced plans to re-segment the business, you know, for external reporting. Why'd you guys decide to change the segmentation, and how does the new segmentation sort of provide us with better clarity? This was very much a management-of-the-business, perspective change. When I came in, I've been CEO a little more than a year now, and when I came in, I made very clear to all of my team that we were a free cash flow-focused company. If you look at the characteristics of the four segments, I think that, you know, the most rudimentary of analysis would tell you that they have very different free cash flow- Yeah generating activity and potential. What we're doing with those businesses is, you know, at a rudimentary level, when you think about our business on an operating level, EBITDA less CapEx is your proxy for free cash flow. Obviously, there's a lot more that goes into it when you calculate free cash flow overall. EBITDA minus CapEx is a good way to look at those businesses. Mm-hmm. You can see the dynamics, and if you're underwater on EBITDA less CapEx, you need to be focused on, okay, I gotta either grow one or shrink the other, and that's, you know, kind of the regime we're under now. Okay. You've been managing the business this way, and now we're gonna. Yeah externally sort of the way that business is presented. It was important to us as well. There were a lot of perceptions about our European business. We've always talked a lot about the U.S. business, but there were a lot of perceptions about our European business that were not correct, part of this was trying to figure out a way to communicate. If you look at the two, some of the drivers in addition to the EBITDA less CapEx, you know, digital penetration is a big driver of difference among those markets. The product mix is a big driver of difference among those markets. There are meaningful things that are going underneath it, and hopefully it sheds just a little more light on actually what's going on in Europe. Yeah. This is the northern and southern- Yeah segmentation you provided. Got it. You did mention also during your earnings presentation that you're not really seeing any major changes from a macro point of view, which certainly puts you in the minority at this conference, so far over the first three days. How would you describe the current environment and sort of the conversations you're having with advertisers and your visibility into the rest of the year? Let me start with the visibility. Our business, and this is a U.S.-specific comment, but our U.S. business lays in about half of its revenue between October and February when we renew our upfront, but, you know, we don't have canapés and Beyoncé. These are a bunch of, you know, individual dialogues with people about re-upping the annual contract. We had as good of one of those as we've ever had. That is part of what is giving us confidence looking at the year. You know, from a dynamic perspective, Q4 was not great in how it ended. We didn't get the purging of budgets. You know, people were definitely not spending that last little push like they do most years. Programmatic was kind of flattish and, you know, that had been, you know, has been a growth engine for us. So there were some things that emerged in Q4 that weren't great. The good news is that programmatic seems to be turning the corner as we get into 2023. We're seeing some nice growth in that in Q1. But Q1 definitely has some softness to it. I'd be hard-pressed to call it macro, though, because our experience of macro, if you think about the great financial crisis, if you think about COVID, for our business, cancellations are the canary in the coal mine. Yeah ... on macro, and we're not seeing a ton of cancellations. In fact, we're seeing a lot of good dialogue about people looking to spend later in the year. Some of the companies that, you know, a lot of big companies have announced layoffs, a lot of big tech companies in particular, and part of why they're soft in Q1 is just they don't wanna be advertising while they're culling their ranks. That doesn't mean they're not thinking they're gonna have a good year. That's not thinking they're gonna invest in their businesses, introduce products, et cetera, et cetera. That's what we have visibility to that gives us, you know, some confidence that we're gonna see some, you know, steadiness as the year builds. Yeah. We talked about this last week, but you called out a few, I guess we'd call them idiosyncratic headwinds in the first quarter, some particular categories that are weak. Just talk a little bit about what those are and sort of why they're maybe down year-on-year in Q1. Yeah. you know, we didn't have a lot of crypto, but we did have crypto, and crypto was big in Q1 of 2022, particularly in our airports business. Mm-hmm ... and I think we all know the story of what's going on and continues to go on there. You know, emerging tech, San Francisco is one of our biggest markets, and emerging tech is an important vertical within San Francisco. You know, they kind of flipped partway through last year and got focused on profit instead of, you know, adding customers. Their marketing, you know, slowed down accordingly and we've seen that. That impacts us, you know, pretty meaningfully because of our footprint here. The layoff dynamic I talked about. You know, those are probably principally the things that we've seen slow. Okay. How about sports betting? Is another area where you've seen- We never had much of that. Okay. It just wasn't a big part of our book. I mean, we had a little here and there, but we still have a little here and there. It's just not that different. It is interesting. I can't remember a time when we've seen national underperform local so much. I guess during sort of the depths of the pandemic maybe. What do you attribute that dynamic to right now in terms of the national versus local? Local seems steady. I mean. Local is steady, and local has been steady, you know, really through COVID. I mean, local is what really made this business work for all of the participants. Kind of the more local you had in your book, the better you did through COVID. On your specific question on national, I don't. There's not kinda one thing I'd put my finger on from our perspective. I mean, probably the layoffs are honestly the biggest thing in our specific activity right now. That money is always the most fickle. It's always the first to kind of pull back. We did, you know, kind of see that generally. I mean, we were down in national in Q4, but that was against a monster comp. There's a little bit of us growing into our comps. But I think the dynamic with it is that those are the folks who are most sensitive to what the Fed is saying. They're the ones that are the most sensitive to the dynamic around layoffs. That's where I mean, our local advertisers are not laying people off. They're having a hard time finding people. Interesting. It's a very strange world we're living in. Yeah. right now in that regard. Yeah, interesting. I wanna ask you two technology questions about your business. You mentioned RADAR earlier, but maybe just talk a little bit about what that is offering to advertisers today, and is it allowing you guys to gain share when you think about, you know, out-of-home or more broadly looking ahead? RADAR, what RADAR is for the folks not familiar with it's our suite of planning, measurement, attribution tools. Think of it as you've got a target market you're trying to reach. We can go in and pull you a visualization of our markets. Let's say you're trying to advertise in Minneapolis-Saint Paul. It'll pull up the whole set of inventory we have there. You start clicking boxes on, you know, I want this age group, this sexual demographic, this kind of behavioral activity, and that starts to sort of narrow the funnel and focus you on where it is. That's free. That's something that all of our customers can use, and we have very high take-up on it at this point. Use that for planning. Then with attribution, you actually look at specific activities that the customers do, and this is something that I think most media at this point are striving to do. Whether it's showing up in a store, downloading an app, buying a script, there's an awful lot of things we can do. The way that it helps us, that part of it in particular and the real cherry on top of that, we call that part RADARProof. RADARView is the kind of planning tool. Then we have a thing called RADARSync, which the big trend in marketing right now is building big bodies of first-party data. With RADARSync, we can go in a privacy compliant way, match your first-party data to our exposure data, so that you're then able to both plan based on your segments and do attribution based on your specific data. That's how those three things interact. We principally use it as an acquisition tool, and it's a pitch that we can make. I mean, one of my personal quests is to get pharma into out-of-home in a meaningful way. We've got a couple of nice pharma advertisers that we're in, we've had a couple renewal cycles with. They really like what they're seeing on the return on ad spending. You know, we're working to develop them. That's ultimately how we bring more money into the category. It's not just pharma, but you can do this, you know, with food delivery. You can do it with different kinds of apps. I mean, we really have attribution on almost any kind of activity. We integrate with IRI, so you can get-. Mm. you know, case uplift, all sorts of stuff. That's interesting. I think digital on the display front is now over 40% of your revenue, I believe, generated off digital displays. Yeah, in the consolidated. Yep. On a consolidated basis. I know it varies a lot by geography, pretty dramatically. Maybe let's focus this question on the U.S. market. Where do you think that goes over time? Is there some optimal number for revenue maximization? Are there things we should be thinking about that are more locally driven that will impact how that trends? Sure. The, the bottleneck, and I think we've been very consistent communicating this, but the bottleneck on us converting is a regulatory bottleneck, principally. The U.S. is a couple thousand municipalities. They all have different sign ordinances, and our job is to get those sign ordinances set up in a way that we can convert signs. We're regulated federally, state level, city level, and municipality. There's a lot of hoops to jump through. That's what prevents us from just saying, "We're gonna turn everything digital." It's not just a question of capital. In terms of where that could go, our farthest penetrated markets are north of 60%. In the U.S.? Well, that would be in Europe. In the U.S., it would be in the 50s. Okay. We do have markets that are in the 50s on digital. I do think that I mean the, the dance you're trying to do is we have a lot of inventory that is very premium that the customer wants to own, those things probably will never be digital. Right. You know, Apple is the prototype advertiser that actually really likes what they're able to do with printed inventory, and they like owning a location as one that I think people can relate to as you travel around the country. I don't think, I don't think from a customer perspective that you're ever gonna see it become. Never is a long time, so it's a long way off that you're not gonna have those kind of iconic printed locations. I could imagine, you know, from an operating perspective, there are a lot of advantages ultimately of getting the flexibility of digital, and a lot of customers really like that. Seeing the revenue get up into the 60s, even the 70s, is not crazy to me. I mean, we're doing in the U.S., I wanna say on the billboard side, it's less than 10% of our assets that are driving almost 40% of the revenue. Yeah There's definitely room to do more conversions. Interesting. All right, let's talk about Europe. You guys announced a sale of your Swiss business. I think it's expected to close in the second or third quarter. That whole portfolio is sort of in a strategic review, I believe. What message do you want us all to take in terms of the process and sort of where we should have our expectations around the European, you know, assets and monetization there? I mean, it's interesting how that one's evolved because when we first embarked on it, we had elements of our investor base who were basically of the mind that we need to just be out of Europe from a risk profile, having seen what happened with it during COVID. Yeah. Because just given how some of the contracts were, we burned some cash, and we actually had to ship some cash to Europe. It's really the first time in my affiliation with the business that that money has gone in a sustained way, you know, across the pond, as it were. Usually, Europe has been sort of on its own. What we embarked on at the beginning of last year was a sale process of a cash flow break-even business that had one good quarter behind it, Q4 of 2021. What's happened since is the Ukraine war, energy inflation, all sorts of other uncertainty, and we communicated that we had pivoted to a country-level dialogue kind of midway through last year. Switzerland is the first of what I think will be, you know, a number of transactions over time. The target of those transactions is actually, it's kind of funny because Switzerland's like not a low-margin business. It's kind of like right on average within our European mix, and we're getting a reasonable multiple for it. We feel good about how that played out, but it's maybe not the prototype of what people were expecting as we got into the dialogue. It's just the nature of the deal-making and how we've managed the funnel. I think what we're aiming for is to have a European business that is clearly self-sustaining, cash flow positive, you know, free cash flow positive, you know, covering its own debt, and then hopefully contributing, you know, to the parent. Our plan has not changed. In the medium term, we are going to exit Europe. We can talk about the reasons why. I would expect that we will exit it. That's something that we think is important for other elements of our story. We find ourselves now in a situation where if we're able to be successful doing what I've described on the lower margin, lower priority, we'll have this business that is not cash flow break even. It will be positive cash flow generative. We're gonna have more options with what we can do with it. Yeah ...relative to what we had before. You know, the people who looked at that business and were enthusiastic about it early last year have just seen us, despite all of the things that caused them to get alligator arms in March, April last year, we delivered. If there's one message for you to take away is despite a process, despite Putin, despite energy, despite, despite, we delivered against the SIP that we put out. That should position us well when the time comes for us to remarket those assets. Right. The time is sort of on your side here. I'm never gonna say that. To quote the Stones. Um- Yeah. But I like the spirit of it. You didn't hear those words from me. Right. You mentioned the benefits of exiting Europe, so let's talk about that. You know, obviously there's a lot of focus on deleveraging. You know, we can run math around that, but I think you guys see broader, a broader impact on the positive side to Clear Channel and the story from exiting Europe. Maybe just walk us through the key points there. Yeah. I mean, I think, I think we've been very clear the actual sale of Europe is highly unlikely to be deleveraging. I mean, you just look at the multiple on Switzerland, which is a good multiple. It's in spitting distance of our debt multiple. Right. It's unlikely we're gonna sell the rest of it for better than that, but I don't wanna undershoot on that either for all our counterparties out there. In terms of the benefits, simplifying the business is really important because this is a highly regulated business, and so every country that you're in, you gotta have compliance, you gotta have internal audit, you gotta have tax. You've gotta have special legal, you've got a special HR. Simplification and bringing it to a narrower should help us to bring our corporate costs down once we're out of the transition period. That's gonna be true, you know, to a degree with our other geographies as well, because those are also gonna drive some complexity. I think the other thing that it does is it makes. You know, right now in our optics, many of your peers, I won't critique your own analyses of us 'cause that doesn't feel sporting, but many of your peers will put a graph out that sorta says, more U.S., more international, you know, and we're like smack in the middle of that, and our margin structure, you know, doesn't look great because we've got a big exposure to relatively low margin businesses. As you clarify that and simplify that, our margin structure. Now, it's not gonna change the debt multiple, but I think it is gonna cause many investors who maybe don't do deep analysis to think differently about this business if they see us with a, you know, aggregate margin in the thirties as opposed to something in the twenties. I think there's some... You know, I'm not gonna, I'm not gonna sit here and call for re-rating 'cause that's every CEO's, you know, black hole. I think there's an opportunity for people to understand us more. I think the other thing that it does is that it eliminates a point of contention for lots of big strategic conversation. I'm not gonna say that any of those big strategic conversations go anywhere, but with us having what we have as a portfolio, it makes us difficult for international companies to think about us as a partner, and it makes it difficult for domestic companies to think about us as a partner. Mm. Again, I am not putting my company in play, but it is on. I've had a lot of investors ask me about it, so I figure. Yeah ... I I need to at least acknowledge that simplifying the business addresses that too. Got it. Makes sense. I've got some more questions. We only have a few minutes left, so I wanna make sure I give the audience an opportunity. If you have any questions, please raise your hand and please wait for a microphone. Scott, you guys talked about CapEx for 2023 of, I think, $185 million-$205 million. Just talk about where you guys are investing, where you are leaning in and see the highest return opportunities for the capital. I mean, digital conversion pretty much everywhere is our number 1 opportunity, and that's where a good portion of that money's gonna go. You know, we are still in the build-out stage at the New York Port Authority, and we're seeing real nice growth off of that. That'll be where a good chunk of it goes. This is a business that is in deep technology transformation, so there is a fair bit of technology that we need to be building out, as we, as we go in terms of how we serve our ads, in terms of how we provide data back to our customers, so there's some tech that goes into it. That's a pretty good number for where I think we're gonna be, at least as long as we have the perimeter that we have. Yeah. Obviously, that'll come down, you know, should we succeed in divestiture processes. Last year you guys did pull the trigger on some acquisitions, I believe, in the U.S. Is that still something you're looking at this year, or has the interest rate environment just made that, you know, more challenging for a variety of reasons? Yeah, I mean, I think we have to be very prudent about liquidity. We're not at all concerned about liquidity, but I think that, you know, there's a life cycle on deals. Deals get done faster in the U.S. than they do in Europe, but it's not that much faster. You still, you know, we're gonna have a tail of some investments, some deals that we did in 2022 that will fund in 2023 'cause they didn't close before the end of the calendar year. We're a little bit, I won't say hitting the pause button because if something compelling were to come available, I wouldn't want you all to hang me if we went and did it. We are being less aggressive on it while we get a little more clarity on what, you know, the macro actually is gonna be. Makes sense. Makes sense. All right, any last comments, Scott, before we wrap up? No, I mean, I think outdoor is a terrific business. We're headed in the right direction. I think this is a great year for us to prove our resilience. Just for the people that follow us, I would urge you to listen carefully to all the talk we've had about the different margin puts and takes in the business, because this is gonna be our kind of new baseline year as we get away from having all of the abatements flowing in, and as the mix sort of normalizes across the portfolio. It won't be perfect because we are in the midst of divestitures, so there's gonna be, you know, some puts and takes as that goes. You know, don't overread in our guide that there's something fundamental changing in the business. There's just a number of dynamics in play. Okay. Thanks, Ben. Thank you very much. Thanks for coming. Thanks, everybody. Pleasure.