Clear Channel Outdoor Holdings Inc

RESULTS OF OPERATIONS

The following discussion of our results of operations focuses on continuing operations and 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. Restructuring and other costs are defined as costs associated with cost-saving initiatives such as severance, consulting and termination costs and other special costs.

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

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

Consolidated Results of Continuing Operations

Consolidated Revenue

Our revenue is generated from selling advertising on out-of-home displays we own or operate, including roadside billboards, street furniture and airport displays. Our portfolio includes both printed and digital displays.

Consolidated revenue increased by $71.0 million, or 5.0%, in 2024 compared to 2023, driven by higher demand and our continued investment in digital infrastructure. Growth in both the Airports and America segments was partially offset by lower revenue in Singapore due to the loss of a contract.

In 2023, consolidated revenue increased by $52.6 million, or 3.8%, compared to 2022. Growth in the Airports segment, driven by higher demand and our investment in digital infrastructure, was partially offset by lower revenue in the America segment, which was impacted by weaknesses in the San Francisco/Bay Area market and the Media/Entertainment vertical.

The table below provides information on consolidated digital revenue:

Consolidated Direct Operating Expenses

The largest component of our direct operating expenses is site lease expense, which includes rent for both lease and non-lease contracts and consists of payments for land or space used by our advertising displays, including minimum guaranteed payments and revenue-sharing arrangements. Direct operating expenses also include production, installation and maintenance costs related to the printing, transporting, posting and maintaining of advertising copy, as well as costs to operate our out-of-home displays, such as electricity for digital displays, repair and maintenance costs, and employee-related costs for our real estate and operations functions.

Consolidated direct operating expenses increased by $20.2 million, or 3.1%, in 2024 compared to 2023. Site lease expense increased primarily due to higher revenue and lower rent abatements, but these increases were partially offset by the impact of the contract loss in Singapore and the renegotiation of a large contract in the America segment. The remaining increase in consolidated direct operating expenses was primarily due to higher production, installation and maintenance costs associated with revenue growth.

In 2023, consolidated direct operating expenses increased by $71.6 million, or 12.2%, compared to 2022, driven by higher site lease expense resulting from higher revenue, lower rent abatements, and new and amended contracts.

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

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

SG&A expenses primarily consist of employee-related costs for sales, marketing, segment leadership and support functions, as well as costs for marketing, facilities, information technology, and other general expenses.

Consolidated SG&A expenses increased by $17.4 million, or 7.4%, in 2024 compared to 2023, mainly due to higher employee compensation costs, driven by higher variable-incentive compensation, increased sales headcount and pay increases. Additionally, property tax expense was lower in the prior year due to a $4.7 million refund from a legal tax settlement.

In 2023, consolidated SG&A expenses increased by $4.2 million, or 1.8%, compared to 2022, largely driven by higher employee compensation, partially offset by the $4.7 million property tax refund.

The table below provides the restructuring and other costs included within consolidated SG&A expenses:

Corporate Expenses

Corporate expenses primarily consist of infrastructure and support costs related to our information technology, human resources, legal, finance, business services and administrative functions, as well as overall executive leadership.

Corporate expenses decreased by $2.3 million, or 1.8%, in 2024 compared to 2023, due to a $19.0 million legal liability recorded in 2023 for the resolution of the investigation of our former indirect, non-wholly-owned subsidiary, Clear Media Limited (“Clear Media”). This decrease was largely offset by higher employee compensation costs, including share-based compensation, insurance benefits, bonuses and pay increases, and certain legal costs related to property and casualty settlements. Excluding share-based compensation, these cost increases totaled $12.0 million for the year.

In 2023, corporate expenses increased by $10.5 million, or 8.8%, compared to 2022, primarily driven by legal liabilities recorded for the resolution of the investigation of Clear Media.

The table below 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)Restructuring and other costs during the years ended December 31, 2023 and 2022 include expenses of $19.0 million and $7.1 million, respectively, recorded for the resolution of the investigation of Clear Media.

Depreciation and Amortization

Depreciation and amortization expense includes the depreciation of our advertising structures and other property, plant and equipment and the amortization of our finite-lived intangible assets.

Depreciation and amortization decreased by $22.8 million, or 11.6%, in 2024 compared to 2023, due to certain structures becoming fully depreciated in the third quarter of 2023.

In 2023, depreciation and amortization increased by $23.1 million, or 13.3%, compared to 2022, primarily driven by a change in the classification of billboard permit intangible assets in our America segment from indefinite-lived to finite-lived in the fourth quarter of 2022, which resulted in a $48.2 million increase in amortization expense. This increase was partially offset by certain structures becoming fully depreciated in the third quarter of 2023. For additional details regarding the change in permit classification, please refer to Note 2 in Item 8 of this Annual Report on Form 10-K.

Impairment Charges

We did not recognize any impairment charges related to our continuing operations in 2024 or 2023. In 2022, we recognized impairment charges of $22.7 million in our America segment, including $21.8 million on indefinite-lived permits due to rising interest rates and inflation, and $0.9 million on permanent easements as a result of our annual impairment test.

Other Operating Income, Net

Other operating income, net, of $8.3 million, $4.5 million and $9.5 million in 2024,2023 and 2022, respectively, primarily reflects net gains from the disposition of operating assets. In 2024, we recognized gains in our America segment from the sale of certain operating assets in the first quarter and an asset exchange in the fourth quarter. In 2023 and 2022, we received compensation from local governments for the condemnation and removal of billboards in certain markets, partially offset by a reduction in the underlying value of the condemned assets.

In 2024 and 2023, these net gains were partially offset by transaction costs related to structural initiatives of $5.2 million and $2.4 million, respectively.

Interest Expense, Net

Interest expense, net, increased by $3.5 million in 2024 compared to 2023, and by $64.0 million in 2023 compared to 2022, due to higher average interest rates on our Term Loan Facility. The impact of these rate increases was partially offset by refinancing a portion of our Term Loan Facility through the issuance of the CCOH 9.000% Senior Secured Notes in August 2023 and the CCOH 7.875% Senior Secured Notes in March 2024.

Gain (Loss) on Extinguishment of Debt

In 2024, we recognized a loss of $2.4 million on extinguishment of debt related to the prepayment and amendment of the Term Loan Facility.

In 2023, we recognized a gain of $3.8 million on extinguishment of debt, primarily from the open market repurchase of $15.0 million principal amount of CCOH Senior Notes at a discount.

Other Expense, Net

Other expense, net, was $8.4 million, $5.7 million and $0.8 million in 2024,2023 and 2022, respectively. In 2024, we incurred $10.0 million of debt modification expense related to the issuance of the CCOH 7.875% Senior Secured Notes and associated prepayment and refinancing of the Term Loan Facility. In 2023, we incurred $4.4 million of debt modification expense related to the issuance of the CCOH 9.000% Senior Secured Notes and associated prepayment of the Term Loan Facility.

Income Tax Benefit Attributable to Continuing Operations

The effective tax rates for continuing operations were 7.0%, 12.9% and 113.8% in 2024, 2023 and 2022, respectively. In each of these years, the income tax benefit from reported losses was partially offset by valuation allowances against current-period deferred tax assets, primarily related to interest expense carryforwards, due to uncertainty about our ability to realize those assets in future periods. In 2022, we recognized an additional tax benefit from a reduction in the valuation allowance resulting from the change in classification of permit intangible assets from indefinite-lived to finite-lived for financial reporting purposes. For a full reconciliation of our effective tax rate to statutory rates and further details on our provision for taxes, please refer to Note 9 to our Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

America Results of Operations

America Revenue

America revenue increased by $42.7 million, or 3.9%, in 2024 compared to 2023. Revenue increased in all regions primarily driven by increased demand for both printed and digital billboards and the deployment of new digital billboards. Digital revenue increased by 7.0% from 2023, as shown in the table below.

In 2023, America revenue decreased by $4.7 million, or 0.4%, compared to 2022, primarily due to weakness in the San Francisco/Bay Area market and reduced sales in the Media/Entertainment vertical, which was impacted by the Hollywood labor union strikes. These declines were largely offset by higher revenue from other markets and verticals. The net decrease in America revenue was driven by lower revenue from street furniture and transit displays, partially offset by higher revenue from billboards. Digital revenue increased by 2.0% from 2022, as shown in the table below.

The table below provides information about America digital revenue:

National sales accounted for 36.0%, 34.7% and 36.2% of America revenue in 2024, 2023 and 2022, respectively, with the remainder coming from local sales.

America Direct Operating Expenses

America direct operating expenses increased by $6.0 million, or 1.4%, in 2024 compared to 2023, driven by higher production, installation and maintenance costs largely due to revenue growth. These increases were partially offset by lower site lease expense driven by the renegotiation of an existing contract and a decrease in estimated lessor property taxes in certain lease arrangements.

In 2023, America direct operating expenses increased by $25.6 million, or 6.2%, compared to 2022. This increase was primarily due to higher site lease expense driven by lease renewals and amendments, including the renegotiation of a large existing site lease contract, and lower rent abatements.

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

America SG&A Expenses

America SG&A expenses increased by $17.1 million, or 8.7%, in 2024 compared to 2023, largely due to higher employee compensation costs, driven by higher variable-incentive compensation, increased sales headcount and pay increases. Additionally, property tax expense was lower in the prior year due to a $4.7 million refund from a legal tax settlement.

In 2023, America SG&A expenses decreased by $0.2 million, or 0.1%, compared to 2022, driven by the $4.7 million property tax refund. This decrease was offset by higher employee compensation, marketing and information technology costs.

Airports Results of Operations

Airports Revenue

Airports revenue increased by $49.9 million, or 16.0%, in 2024 compared to 2023, driven by strong local and national advertising demand. Our continued investment in digital media infrastructure and premium inventory at high-traffic locations enabled us to capitalize on this demand, most significantly at the Port Authority of New York and New Jersey airports and San Francisco International Airport.

In 2023, Airports revenue increased by $55.2 million, or 21.5%, compared to 2022, when the business was still recovering from the pandemic’s impact on travel. As U.S. airport traffic returned to pre-pandemic levels, demand for airport advertising increased, further fueled by our investments in digital media infrastructure.

The table below provides information about Airports digital revenue:

National sales accounted for 59.4%, 58.8% and 53.7% of Airports revenue in 2024, 2023 and 2022, respectively, with the remainder coming from local sales.

Airports Direct Operating Expenses

Airports direct operating expenses increased by $27.3 million, or 13.1%, in 2024 compared to 2023, and by $44.8 million, or 27.4%, in 2023 compared to 2022. These increases were primarily driven by higher site lease expense resulting from higher revenue and, to a lesser extent, lower rent abatements. The table below provides additional information about Airports site lease expense and rent abatements:

Airports SG&A Expenses

Airports SG&A expenses increased by $3.0 million, or 8.6%, in 2024 compared to 2023, and by $3.0 million, or 9.5%, in 2023 compared to 2022, largely due to higher employee compensation costs, driven by higher sales commissions and increased sales headcount.

Other Results of Operations

“Other” represents the Company’s operations in Singapore. In 2024, results were impacted by the termination of a contract on December 31, 2023, resulting in decreases in revenue, direct operating expenses and SG&A expenses.

In 2023, Other revenue, direct operating and SG&A expenses increased by $2.1 million, $1.2 million and $1.4 million, respectively, compared to 2022, driven by growth of the Singapore business.

Loss from Discontinued Operations

In 2023 and 2024, certain businesses were classified as discontinued operations, including those in the former Europe-South and Europe-North segments, as well as in Latin America. Loss from discontinued operations was $52.1 million in 2024, $149.4 million in 2023, and $105.3 million in 2022.

The results of discontinued operations reflected reductions in revenue and operating expenses in 2023 and 2024, primarily due to the sales of the businesses in France, Italy and Switzerland in 2023. Revenue from discontinued operations was $843.2 million in 2024, $1,054.8 million in 2023, and $1,099.6 million in 2022. The declines in revenue were driven by the absence of contributions from the sold businesses, partially offset by higher revenue from other European businesses and, to a lesser extent, Latin America.

Loss from discontinued operations also included certain gains, losses and impairments, which further impacted overall performance, as follows:

•2024 included a loss of $44.4 million related to the classification of the Brazil business as held for sale and impairment charges of $18.1 million related to long-lived assets in Latin America.

•2023 included a net loss on disposal of $104.5 million, driven by the disposal of the business in France, partially offset by gains from the sales of the businesses in Switzerland and Italy.

•2022 included an impairment charge of $16.9 million related to the goodwill allocated to the Europe-South segment.

For additional details on the major components of the loss from discontinued operations, please refer to Note 3 to our Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.