Clear Channel Outdoor Holdings Inc

Liquidity Analysis

Short-Term Liquidity

Our main cash requirements are for working capital used to fund the operations of the business, capital expenditures and debt service. We typically meet these requirements with cash on hand, internally-generated cash flow from operations and, if necessary, borrowings under our credit facilities. We believe that our current sources of funds will be sufficient to meet our cash requirements for at least the next 12 months.

Long-Term Liquidity

Our long-term future cash requirements will depend on many factors, including the growth of our business, investments in digital conversions and new technologies, and the pursuit and outcome of strategic opportunities, including the ongoing processes to sell our businesses comprising our Europe-North segment and our businesses in Latin America. In addition, we have long-term cash requirements related to the repayment of our outstanding debt, which is scheduled to mature over the next six years. We believe that our sources of funds will be adequate to meet our cash requirements in the long-term.

However, our ability to meet these cash requirements through cash from operations will depend on our future operating results and financial performance, which are subject to significant uncertainty and may be affected by events beyond our control, including macro-economic events that may result in economic weakness globally or in certain specific markets, higher interest rates, currency fluctuations, and geopolitical events such as the ongoing conflicts in Ukraine and the Middle East. Additionally, our significant interest payment obligations reduce our financial flexibility, make us more vulnerable to changes in operating performance and economic downturns generally, and reduce our liquidity over time.

We regularly consider, and enter into discussions with our lenders and other parties related to, potential financing alternatives. In the future, we may need to obtain supplemental liquidity through additional financing from banks or other lenders; public offerings or private placements of debt, equity or equity-linked securities; strategic relationships or other arrangements; or from a combination of these sources. In addition, from time to time we have explored, and expect to continue to explore, a variety of transactions to improve our liquidity and/or to refinance our indebtedness. However, there can be no assurance that financing alternatives or liquidity-generating or debt-refinancing transactions will be available in sufficient amounts or on terms acceptable to us in the future due to market conditions, our financial condition, our liquidity constraints or other factors, many of which are beyond our control. Even if financing alternatives are available, we may not find them suitable or at reasonable interest rates, and the terms of our existing or future debt agreements may restrict us from securing financing on terms that are available to us at that time or at all.

If we are unable to generate sufficient cash through our operations or obtain sources of supplemental liquidity as needed, we could face substantial liquidity problems, which could have a material adverse effect on our financial condition and on our ability to meet our obligations.

Cash Requirements

Working Capital Needs

We utilize working capital to fund the operations of our business and have certain related contractual obligations, including commitments under site leases and other non-cancelable contracts.

One of our largest cash requirements is for site lease costs, which includes payments for land or space used by our advertising displays for both lease and non-lease contracts, including minimum guaranteed payments and revenue-sharing arrangements. During the nine months ended September 30, 2024 and 2023, we incurred site lease expense for our continuing operations of $596.9 million and $581.2 million, respectively, which is included within “Direct operating expenses” on our Consolidated Statements of Loss. During the nine months ended September 30, 2024 and 2023, we reduced our site lease expense for continuing operations by rent abatements of $5.9 million and $18.6 million, respectively.

As disclosed in our 2023 Annual Report on Form 10-K, in September 2023 we reached a settlement with the SEC regarding the resolution of the investigation of our former indirect, non-wholly-owned subsidiary, Clear Media Limited, in which we agreed to pay a total of approximately $26.1 million to the SEC in a series of installments. We paid $13.1 million in October 2023, and we made the remaining payments, totaling $13.1 million, in the third quarter of 2024.

Capital Expenditures and Acquisitions

We made the following capital expenditures during the nine months ended September 30, 2024 and 2023:

(1)Capital expenditures for discontinued operations have decreased as the businesses in Switzerland, Italy and France were sold in 2023.

(2)In addition to payments that occurred during the period for capital expenditures, we had $11.3 million and $8.7 million of accrued capital expenditures related to continuing operations that remained unpaid as of September 30, 2024 and 2023, respectively, and $1.3 million and $3.5 million of accrued capital expenditures related to discontinued operations that remained unpaid as of September 30, 2024 and 2023, respectively.

(3)Excludes asset acquisitions.

During the nine months ended September 30, 2024 and 2023, we completed certain acquisitions of out-of-home advertising assets in our America segment for total cash consideration of $8.8 million and $12.1 million, respectively. These asset acquisitions primarily consisted of permits, permanent easements and digital billboard structures.

Additionally, in August 2024, we paid cash consideration of $9.3 million, net of cash acquired, to acquire the UIP group, a business that develops and operates urban infrastructure in Norway, including bike-sharing programs and bus shelters.

Debt Activity and Service Obligations

In accordance with the terms of the Senior Secured Credit Agreement, we were historically required to make principal payments on the Term Loan Facility of $5.0 million quarterly and, accordingly, made $10.0 million of such principal payments during the six months ended June 30, 2023.

In August 2023, we issued $750.0 million aggregate principal amount of CCOH 9.000% Senior Secured Notes, which mature in September 2028, and used a portion of the net proceeds to prepay $665.0 million of outstanding principal on the Term Loan Facility, which we repurchased at a 1% discount, satisfying the remaining quarterly payment obligations under the Senior Secured Credit Agreement. We paid debt issuance costs of $12.3 million related to these transactions.

In September 2023, we repurchased in the open market $5.0 million principal amount of the CCOH 7.750% Senior Notes and $10.0 million principal amount of the CCOH 7.500% Senior Notes for a total cash payment of $11.8 million, excluding accrued interest. The repurchased notes are held by a subsidiary of the Company and have not been cancelled.

In March 2024, we issued $865.0 million aggregate principal amount of CCOH 7.875% Senior Secured Notes, which mature in April 2030, and used a portion of the proceeds therefrom to prepay $835.0 million of the borrowings outstanding under the Term Loan Facility. At the same time, we entered into an amendment to the Senior Secured Credit Agreement to, among other things, refinance the $425.0 million remaining principal balance on the Term Loan Facility and to extend its maturity date from August 2026 to August 2028, subject to certain conditions. The new refinanced term loans were issued at a 1% discount, and we used the proceeds therefrom, along with the remaining proceeds from the CCOH 7.875% Senior Secured Notes issuance and cash on hand, to pay off the original term loans, to pay $14.9 million of accrued interest on the prepaid and refinanced Term Loan principal, and to pay $15.4 million of fees and expenses related to these transactions.

In March 2024, CCIBV entered into the CCIBV Term Loan Facility totaling an aggregate principal amount of $375.0 million, which matures in April 2027. The CCIBV Term Loan Facility, which was issued at 1% discount, is comprised of two tranches of term loans: fixed rate term loans in an aggregate principal amount of $300.0 million that bear interest at 7.5% per annum, and floating rate term loans in an aggregate principal amount of $75.0 million that bear interest equal to Term SOFR plus 2.25% per annum (subject to a floor rate of 5.25% per annum). We used the proceeds from the CCIBV Term Loan Facility, along with cash on hand, to redeem all of the outstanding $375.0 million aggregate principal amount of CCIBV Senior Secured Notes, which were scheduled to mature in August 2025, and to pay $11.8 million of accrued interest related thereto and $5.1 million of related transaction fees and expenses. At September 30, 2024, we had an accrual of $0.8 million for unpaid fees and expenses related to these transactions.

During the nine months ended September 30, 2024 and 2023, we paid interest of $297.1 million and $283.7 million, respectively, with the increase primarily due to the timing of interest payments in connection with the issuance of the CCOH 9.000% Senior Secured Notes in August 2023 and the March 2024 Debt Transactions. We anticipate having cash interest payment obligations of approximately $137 million during the remainder of the year, including the first semi-annual interest payment on the CCOH 7.875% Senior Secured Notes, which was paid in October, and $420 million in 2025, assuming that we do not refinance or incur additional debt.

Our next debt maturities are in 2027 when the $1.25 billion aggregate principal amount of CCOH 5.125% Senior Secured Notes and the $375.0 million principal amount outstanding under the CCIBV Term Loan Facility become due.

Please refer to Note 5 to our Condensed Consolidated Financial Statements located in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details on our outstanding long-term debt. As of September 30, 2024, we were in compliance with all of the covenants contained in our debt agreements.

Sources of Capital and Liquidity

Cash On Hand

As of September 30, 2024, we had $201.1 million of cash on our balance sheet, including $56.0 million of cash held outside the U.S. by our subsidiaries (excluding cash held by our business in Spain, which is a discontinued operation). Excess cash from our foreign operations may generally be transferred to our operations in the U.S. if needed, subject to the foreseeable cash needs of our foreign operations and restrictions in the credit agreement governing the CCIBV Term Loan Facility. We could presently repatriate excess cash with minimal U.S. tax consequences, as calculated for tax law purposes, and dividend distributions from our international subsidiaries may not result in a U.S. federal income tax liability.

Cash Flow from Operations

During the nine months ended September 30, 2024, net cash provided by operating activities was $50.5 million, a significant improvement from the net cash used for operating activities of $1.5 million during the nine months ended September 30, 2023. The return to positive operating cash flow was driven by the improvement of our underlying business performance and the disposal of certain of our former Europe-South businesses in 2023, which generated negative operating cash flow during the nine months ended September 30, 2023.

This increased cash flow was partially offset by higher cash paid for interest, which increased $13.4 million during the nine months ended September 30, 2024 compared to the same period of the prior year primarily due to the timing of interest payments, and $13.1 million of payments to the SEC related to the resolution of the Clear Media Limited matter, as previously described.

Dispositions

During the nine months ended September 30, 2024, we received net cash proceeds from the disposition of assets of $12.2 million. During the nine months ended September 30, 2023, we received net cash proceeds from the disposition of businesses and assets of $103.1 million, primarily related to the sales of our former businesses in Switzerland and Italy.

Credit Facilities

We have access to a Revolving Credit Facility and Receivables-Based Credit Facility, both of which include sub-facilities for letters of credit and short-term borrowings and are scheduled to mature on August 23, 2026. The table below presents our borrowings and excess availability under these credit facilities as of September 30, 2024:

(1)Effective August 23, 2024, the amount of revolving credit commitments available under the Revolving Credit Facility decreased from $150.0 million to $115.8 million, in accordance with the terms of the Senior Secured Credit Agreement. The borrowing limit of the Receivables-Based Credit Facility is equal to the lesser of $175.0 million and the borrowing base, which is calculated based on our accounts receivable balance each period in accordance with our Receivables-Based Credit Agreement.

(2)Letters of credit outstanding under the Revolving Credit Facility at September 30, 2024 included a $20.2 million letter of credit related to our former business in France. In connection with the sale of this business, and pursuant to the related share purchase agreement, our former French business and/or the buyer will either replace, or procure a counter-guarantee of, our payment obligation under the letter of credit. Letters of credit outstanding under the Receivables-Based Credit Facility at September 30, 2024 included a $6.6 million letter of credit related to our business in Spain.

(3)Due to rounding, the total may not equal the sum of the columns or the difference of the line items in the table above.

Senior Secured Credit Agreement Financial Covenant

The Senior Secured Credit Agreement contains a springing financial covenant, applicable solely to the Revolving Credit Facility if its balance is greater than $0 and undrawn letters of credit exceed $10 million, that requires compliance with a first lien leverage ratio of less than 7.10 to 1.00. Our first lien leverage ratio, which is calculated by dividing first lien debt by EBITDA (as defined by the Senior Secured Credit Agreement) for the preceding four quarters, was 5.34 to 1.00 as of September 30, 2024. First lien debt and EBITDA, which both exclude discontinued operations, are presented herein because they are material components of the calculation of the first lien leverage ratio.

First Lien Debt

The following table presents a calculation of our first lien debt as of September 30, 2024:

(1)Due to rounding, the total may not equal the sum of the line items in the table above.

EBITDA

As required by the definition of “EBITDA” in the Senior Secured Credit Agreement, our EBITDA for the preceding four quarters of $579.5 million is calculated as operating income from continuing operations before depreciation and amortization, impairment charges and share-based compensation; further adjusted for unusual or nonrecurring gains, losses, charges or expenses and any charges, expenses or reserves in respect of any restructuring, relocation, redundancy or severance expense or one-time compensation charges; and various other items.

The following table reconciles EBITDA to operating income from continuing operations and consolidated net cash provided by operating activities for the four quarters ended September 30, 2024:

(1)Primarily comprised of interest income and costs related to strategic transactions and reviews.

(2)Due to rounding, the total may not equal the sum of the line items in the table above.

(3)Includes non-cash operating lease expense; depreciation, amortization and impairment charges; share-based compensation; deferred taxes; loss or gain on extinguishment of debt and debt modification expense, net; amortization of deferred financing charges and note discounts; foreign exchange transaction gain; credit loss expense; loss on disposition of businesses and/or operating assets, net; and other reconciling items.