Clear Channel Outdoor Holdings Inc

RESULTS OF OPERATIONS

The discussion of our results of operations is presented on both a consolidated and segment basis.

•Our operating segment profit measure is Segment Adjusted EBITDA, which is calculated as revenue less direct operating expenses and selling, general and administrative expenses, excluding restructuring and other costs, which are defined as costs associated with cost-saving initiatives such as severance, consulting and termination costs and other special costs. The material components of Segment Adjusted EBITDA from continuing operations are discussed below on both a consolidated and segment basis.

•Corporate expenses, depreciation and amortization, other operating income and expense, all non-operating income and expenses, and income taxes are managed on a total company basis and are therefore included only in our discussion of consolidated results of continuing operations.

•Results of discontinued operations are presented and discussed below separately from results of continuing operations.

Revenue and expenses “excluding the impact of movements in foreign exchange rates” are presented in this MD&A because Company management believes that viewing certain financial results without the impact of fluctuations in foreign currency rates facilitates period-to-period comparisons of business performance and provides useful information to investors. Revenue and expenses “excluding the impact of movements in foreign exchange rates” are calculated by converting the current period’s revenue and expenses in local currency to U.S. dollars using average monthly foreign exchange rates for the same period of the prior year.

Consolidated Results of Continuing Operations

Consolidated Revenue

Consolidated revenue increased $44.3 million, or 10.1%, during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the $3.7 million impact of movements in foreign exchange rates, consolidated revenue increased $40.6 million, or 9.3%, driven by increased demand and, to a lesser extent, the deployment of additional digital displays.

The following table provides information about consolidated digital revenue:

Consolidated Direct Operating Expenses

Consolidated direct operating expenses increased $8.2 million, or 3.3%, during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the $2.2 million impact of movements in foreign exchange rates, consolidated direct operating expenses increased $6.1 million, or 2.4%, most notably due to higher site lease expense driven by higher revenue, partially offset by the impact of certain contract losses and renegotiations.

The following table provides additional information about certain drivers of consolidated direct operating expenses:

Consolidated Selling, General and Administrative (“SG&A”) Expenses

Consolidated SG&A expenses increased $2.8 million, or 3.1%, during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the $0.8 million impact of movements in foreign exchange rates, consolidated SG&A expenses increased $2.0 million, or 2.2%, primarily driven by higher employee compensation costs. This increase was partially offset by lower credit loss expense.

The following table provides the restructuring and other costs included within SG&A expenses during the three months ended March 31, 2024 and 2023:

Corporate Expenses

Corporate expenses increased $3.9 million, or 10.9%, during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the $0.3 million impact of movements in foreign exchange rates, corporate expenses increased $3.6 million, or 10.0%, primarily driven by higher employee compensation costs, including share-based compensation, and higher restructuring and other costs.

The following table provides additional information about certain drivers of corporate expenses:

(1)Excludes share-based compensation expense for employees of discontinued operations for all periods presented.

(2)Percentage changes that are so large as to not be meaningful have been designated as “NM.”

Depreciation and Amortization

Depreciation and amortization decreased $9.9 million, or 15.4%, during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the $0.4 million impact of movements in foreign exchange rates, depreciation and amortization decreased $10.3 million, or 16.0%, as certain structures became fully depreciated in the third quarter of 2023.

Other Operating Expense, Net

Other operating expense, net, decreased $2.5 million during the three months ended March 31, 2024 compared to the same period of 2023, primarily driven by a gain on the disposition of certain assets in our America segment during the three months ended March 31, 2024. This decrease was partially offset by costs related to our international sales processes.

Interest Expense, Net

Interest expense, net, increased $5.2 million during the three months ended March 31, 2024 compared to the same period of 2023 driven by higher rates on our Term Loan Facility.

Loss on Extinguishment of Debt

During the three months ended March 31, 2024, we recognized a loss on extinguishment of debt of $4.8 million related to the March 2024 Debt Transactions, including $2.4 million related to the prepayment and amendment of the Term Loan Facility and $2.4 million related to the redemption of the CCIBV Senior Secured Notes.

Other Income (Expense), Net

During the three months ended March 31, 2024, we recognized other expense, net, of $8.3 million, compared to other income, net, of $8.8 million during the same period of 2023. The increase in expense was mainly driven by $11.8 million of debt modification expense related to the March 2024 Debt Transactions. Additionally, we recognized lower net foreign exchange gains in connection with intercompany notes denominated in a currency other than the functional currency.

Income Tax Benefit Attributable to Continuing Operations

The effective tax rates for continuing operations for the three months ended March 31, 2024 and 2023 were (0.3)% and 10.2%, respectively. These rates were primarily impacted by the valuation allowance recorded against current period deferred tax assets resulting from losses and interest expense carryforwards in the U.S. and certain foreign jurisdictions due to uncertainty regarding the Company’s ability to realize those assets in future periods.

America Results of Operations

America Revenue

America revenue increased $13.7 million, or 5.8%, during three months ended March 31, 2024 compared to the same period of 2023. Revenue increased in all regions driven by increased demand for print billboards and, to a lesser extent, the deployment of new digital billboards.

The following table provides information about America digital revenue:

Revenue generated from national sales comprised 34.5% and 33.1% of America revenue for the three months ended March 31, 2024 and 2023, respectively, while the remainder of revenue was generated from local sales.

America Direct Operating Expenses

America direct operating expenses increased $0.6 million, or 0.5%, during the three months ended March 31, 2024 compared to the same period of 2023 due to higher employee compensation costs, partially offset by a decrease in site lease expense driven by the renegotiation of an existing contract.

The following table provides information about America site lease expense and rent abatements:

America SG&A Expenses

America SG&A expenses decreased $0.6 million, or 1.2%, during the three months ended March 31, 2024 compared to the same period of 2023. Lower credit loss expense, driven by improved collections and specific reserves recorded in the prior year, was partially offset by higher employee compensation costs, most notably driven by increased sales headcount and pay increases.

Airports Results of Operations

Airports Revenue

Airports revenue increased $23.1 million, or 43.0%, during the three months ended March 31, 2024 compared to the same period of 2023 driven by strong demand across the portfolio. A portion of this increase was driven by the normalization of spend as certain customer campaigns were deferred in the first quarter of 2023.

The following table provides information about Airports digital revenue:

Revenue generated from national sales comprised 55.2% and 60.1% of Airports revenue for the three months ended March 31, 2024 and 2023, respectively, while the remainder of revenue was generated from local sales.

Airports Direct Operating Expenses

Airports direct operating expenses increased $9.4 million, or 23.7%, during the three months ended March 31, 2024 compared to the same period of 2023 primarily driven by higher site lease expense resulting from higher revenue.

The following table provides information about Airports site lease expense and rent abatements:

Airports SG&A Expenses

Airports SG&A expenses increased $1.0 million, or 12.7%, during the three months ended March 31, 2024 compared to the same period of 2023 due to higher employee compensation costs largely driven by higher sales commissions.

Europe-North Results of Operations

Europe-North Revenue

Europe-North revenue increased $10.9 million, or 8.5%, during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the $3.3 million impact of movements in foreign exchange rates, Europe-North revenue increased $7.6 million, or 5.9%, driven by higher revenue in the U.K., Sweden and Belgium, mainly due to increased demand and the deployment of additional digital displays. This increase was partially offset by the loss of a transit contract in Norway.

The following table provides information about Europe-North digital revenue:

Europe-North Direct Operating Expenses

Europe-North direct operating expenses increased $0.4 million, or 0.4%, during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the $2.1 million impact of movements in foreign exchange rates, Europe-North direct operating expenses decreased $1.7 million, or 1.8%, driven by lower site lease expense primarily due to the contract loss in Norway.

The following table provides information about Europe-North site lease expense and rent abatements:

Europe-North SG&A Expenses

Europe-North SG&A expenses increased $2.3 million, or 9.2%, during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the $0.7 million impact of movements in foreign exchange rates, Europe-North SG&A expenses increased $1.7 million, or 6.5%, driven by higher employee sales commissions and marketing spend.

Other Results of Operations

Other revenue decreased $3.4 million, or 17.9%, during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the impact of movements in foreign exchange rates, Other revenue decreased $3.8 million, or 20.0%, driven by the loss of a contract in Singapore. This decrease was partially offset by higher revenue from our businesses in Latin America.

Other direct operating expenses decreased $2.1 million, or 17.4%, during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the impact of movements in foreign exchange rates, Other direct operating expenses decreased $2.2 million, or 18.1%, driven by the loss of a contract in Singapore. This decrease was partially offset by higher site lease expense in Latin America.

Other SG&A expenses remained flat during the three months ended March 31, 2024 compared to the same period of 2023. Excluding the impact of movements in foreign exchange rates, Other SG&A expenses decreased $0.1 million, or 1.8%.

Income (Loss) from Discontinued Operations

Loss from discontinued operations of $0.4 million during the three months ended March 31, 2024 reflects the net loss generated during the period by operations in Spain.

Income from discontinued operations of $57.2 million during the three months ended March 31, 2023 was driven by a gain on sale of $96.4 million with respect to our former business in Switzerland, which was sold on March 31, 2023. This income was partially offset by the income tax expense related to such sale and net loss collectively generated during the period by operations in France, Italy, Spain and Switzerland.