Eileen McLaughlin - Vice President of Investor Relations Rich Bressler - Chief Financial Officer Brian Coleman - Senior Vice President and Treasurer.

Avi Steiner - JPMorgan Lance Vitanza - Cowen.

Ladies and gentlemen, thank you for standing by. Welcome to the 2018 First Quarter Earnings Conference Call for Clear Channel Outdoor Holdings, Inc. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, today’s conference is being recorded. And I would now like to turn the conference over to your host, Ms.

Eileen McLaughlin, Vice President of Investor Relations. Please go ahead..

Good morning and thank you for joining Clear Channel Outdoor Holdings 2018 first quarter earnings call. On the call today are Rich Bressler, Chief Financial Officer; and Brian Coleman, Senior Vice President and Treasurer. We'll provide an overview of the 2018 first quarter financial and operating performance of Clear Channel Outdoor Holdings, Inc.

and Clear Channel International, B.V. After an instruction and a review of the quarter, we'll open up the line for questions. Please note that we will not be able to answer any questions on iHeartMedia's operations or its bankruptcy process. Before we begin, I'd like to remind everyone that this conference call includes forward-looking statements.

These statements include management's expectations, beliefs and projections about performance and represent management's current beliefs. There can be no assurance that management's expectations, beliefs or projections will be achieved or that actual results will not differ from expectations.

Please review the statements of risk contained in our earnings press releases and filings with the SEC. Pacing data will also be mentioned during the call.

For those of you not familiar with pacing data, it reflects orders booked at a specific date versus the comparable date in the prior period and may or may not reflect the actual revenue growth rate at the end of the period.

During today's call, we will provide certain performance measures that do not conform to Generally Accepted Accounting Principles.

We've provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases and the earnings conference call presentation, which can be found on the Investors section of our website, clearchanneloutdoor.com.

Please note that our earnings release and the slide presentation are available on our website, www.clearchanneloutdoor.com, and are integral to our earnings conference call.

They provide a detailed breakdown of foreign exchange and noncash compensation expense items, as well as segment revenues, operating income and OIBDAN among other important information. For that reason, we ask that you view each slide as Rich comments on it.

Also, please note that the information provided on this call speaks only to management's views as of today, May 22, and may no longer be accurate at the time of a replay. With that, I will now turn the call over to Rich Bressler..

Thank you, Eileen, and good morning everyone. Thanks for joining Clear Channel Outdoor's earnings conference call for the first quarter of 2018. Before I speak about Clear Channel Outdoor’s results, a few words on iHeartMedia.

We continue moving through the bankruptcy process as quickly as possible and look forward to exiting with the capital structure that matches iHeartMedia’s impressive operating business. As I mentioned in our Q4 earnings call, we will not host an earnings conference call for iHeartMedia during its bankruptcy process.

However, we did file iHeartMedia’s 10-Q this morning. Back to Clear Channel Outdoor. Our strategic initiatives continue to be expanding our digital network, enhancing our programmatic solutions, and data analytic capabilities and winning new contracts.

Given that I just reviewed these areas of focus with you three weeks ago on our fourth quarter earnings call, I will jump to our first quarter financial highlights on Slide 4. During our GAAP results discussion, I’ll also talk about our results adjusting for foreign exchange and exclude the impact of the businesses we sold in 2017.

We believe this improves the comparability of our results to the prior year. I’ll refer to these results as adjusted revenues and adjusted OIBDAN and I will refer to direct operating and SG&A expenses as adjusted expenses.

We are encouraged by our start in the first quarter with consolidated revenue increasing 9.9%, due in part to foreign exchange and adjusted consolidated revenue increasing 4.4%, primarily driven by the international business.

We incurred a consolidating operating loss of $8.4 million in the quarter as compared to consolidated operating income of $21.6 million in the first quarter of 2017. The decline is primarily due to a $29 million gain from the exchange of markets in Indianapolis and Atlanta in 2017.

Adjusted consolidated OIBDAN was up 10.1% with both Americas and international contributing to the increase. Moving on to Slide 5, I will discuss Americas financial results in more detail. During the first quarter, Americas revenue was down 1.7%, due to the sale of our business in Canada.

Adjusted revenue was up slightly with growth in digital, both new deployments and existing board, as well as print. This was partially offset by a decline in airport revenue attributed to a few large accounts. Local continues to drive growth while National was down.

Expenses were down 4% and adjusted expenses were down 1%, declining from $175.6 million in 2017 to $173.8 million in 2018, due to mix. As I noted, our airport revenues were down in the quarter and airports have a lower margin in digital and print displays, whose revenues increased. Operating income was up 2.8% and adjusted OIBDAN was up 2.4%.

Before we move on to pacing, I want to remind you that beginning January 1, 2018, our Latin American operations are included in our international segment and not our Americas segment. The second quarter pacing data has been adjusted to reflect this change. Our pacing for the second quarter was up 1.7% as of last week.

Turning to Slide 6 and our international financials. In the first quarter, reported revenue was up 20.6% and adjusted revenue was 8.3% with growth in the majority of our countries including China, Switzerland, Spain and Sweden, primarily from contracts we won in both 2016 and 2017 as well as the continued expansion of our digital displays.

Expenses were up 19.5%. And adjusted expenses were up 7%, primarily due to higher site lease expense, largely from new deployments. Operating income was down 17.1%. Adjusted OIBDAN was up 24.9%. This was driven in large part by Europe where we're receiving the benefit of contracts we won in 2016 and 2017.

Pacings for the second quarter were up 1.1% as of last week. Before we go on to the rest of the slides, I’d like to make a few comments on CCIBV's results. For the first quarter, CCIBV's consolidated revenue totaled $266.8 million, a $42.9 million increase from the prior year.

On an adjusted basis, CCIBV's revenue increased $12.8 million during the first quarter. CCIBV’s operating loss in the quarter was $13.7 million as compared to operating loss of $20.7 million in the same period in 2017. This is primarily due to growth across several markets, partially offset by an increase in direct operating expense.

Please turn to Slide 7. Capital expenditures in the first quarter totaled $28.7 million, a 20.9% decline from the prior year with $12.9 million in Americas Outdoor, primarily used to fund digital billboards and $15.3 million in international outdoor used to fund new street furniture displays and digital displays.

The decline this quarter is attributed to the successful completion of the installation of new displays in Spain. As I mentioned during the 2017 fiscal year earnings call, we expect capital expenditures in 2018 to be in the range of $200 million to $220 million.

The slight decline is due to the successful completion of our installations in Spain I just mentioned. Now on to Slide 8. Clear Channel's consolidated cash totaled $153.2 million as of March 31, 2018. Our debt was $5,271.3 million, a slight increase from the year end. The weighted average cost of debt was 7.1% as of March 31.

During the first quarter, cash interest expense was $86.1 million and cash dividends were $29.9 million. Our senior leverage ratio was 4.5 times with consolidated leverage at 8.8 times. We expect cash paid for interest in 2018 to be approximately the same as 2017. Before taking your questions, I want to thank you again for joining us this morning.

We are encouraged by our start in 2018. First quarter showed signs of growth in key areas of our businesses, especially in our international markets and we continue to make significant progress on the long-term investments crucial to our transformation into a technology fueled media company.

Winning new contracts and increasing our digital inventory are opening new pools of revenue across our business. And by expanding our programmatic ad buying platforms and enhancing our data analytics and attribution solutions, we can provide the technology and advertising solutions our advertising and marketing partners expect.

We believe that this cohesive strategy will show its benefits over the rest of the year and beyond. Before we open the line for questions on Clear Channel Outdoor's operations, I would like to remind you that I will not be able to answer any questions on iHeartMedia’s operations or its bankruptcy process. Operator, I can take the first question now..

[Operator Instructions] Our first question today comes from the line of Avi Steiner with JPMorgan. Please go ahead..

Good morning. Thank you for taking the questions. A couple here. First off, one of your Outdoor peers in the U.S. is talking about a more robust political ad environmental for Outdoor, curious what you are seeing and if you can maybe help us by telling us what these boards or this group of assets in the U.S.

generated politically in political revenue in the prior two elections, that would be helpful?.

Hi Avi, it’s Rich. Good morning. I appreciate the question.

Look, as you know and I think everybody on the call knows, we're looking for all revenue opportunities and we’re certainly going to look to capitalize on any incremental political spending, but just to be clear historically, it has been a small percentage of our revenues or I would say a very small percentage of our revenues.

It was a very small percentage of approximately $1 million in the first quarter of 2018. So, we're going to push hard, obviously you think in general it’s going to be a fairly robust political advertising environment, but historically the outdoor medium has -- it has been a small percent of our overall revenues..

Okay.

And maybe one more on the topline before I change direction here, I think you gave pacings and I know it’s a point-in-time, but I think you gave pacings in the international segment up a little over 1%, and I'm just trying to understand maybe what change, because Q1 looked robust at plus 8.3, I don't know if there’s some asset movement in there and anything else that you can help us with that would be helpful? Thank you..

No, nothing has changed. And you stole my thunder in terms being a point-in-time, which you always know I point that out. Look, we continue to be very optimistic about all our businesses, international had a terrific first quarter.

The team has really done a great job over there, William Eccleshare and his team, and at the same time, the reason why I continue to point out to everybody that pacings is a point-in-time because the nature of all of our businesses and the nature of the advertising businesses and U.S.

and international outdoor are no different is that the placement date has been closer to the execution date and the hearing date. So, I think it continues to be less and less of an indication of where the business winds -- could be less of an indication where the business winds up in the quarter..

Great.

And if I could turn to the balance sheet, I just want to make sure I understand the decline in the intercompany no balance, and I am excluding the write-down for this question, but I think we’re at 212 and change, we are now 155 million rounding, I think that it is reflective of funding from parent down to CCO, but I want to make sure I understand the puts and takes please, I think there is a 3.4 million balance owing now up to parent, but if you can just help me out with the dollars in and out, that would be helpful..

Sure. And you’re right.

The 57 million, a large portion of that is related to net funding or repayment depending on which side of the note you're looking at, but from Outdoors perspective it will payment from the parent, but also keep in mind consistent with the disclosure in the 10-Q, there is a $21 million interest reserve backing up the interest that would have accumulated on the note since the beginning of the year through the filing date of March 15 or 14.

So, it is really those two components that make up that $57 million change..

Thank you for that incremental clarification.

I may come back on that issue later, but if I can squeeze one more in here, balance sheet-wise, I think, I know you don't want to talk about iHeart, but they recently requested authorization for DIP, and I'm curious any changes you would look to make maybe down at Outdoor with respect to its debt capacity in some of the smaller facilities it has in place, and then relatively, any updated thoughts on your relatively short dated maturity profile from a bond perspective, particularly with respect to the sub notes? And with that, I’ll turn it over.

Thank you for the time folks..

Sure, Avi. The application for a DIP facility at the parent really doesn't change our thinking with respect to what needs to be done at Outdoor. In a very near-term, we have a revolver that matures in August.

I think we last said that we were in advanced negotiations, so we are in even more advanced negotiations and hopefully can do something with that facility in the relative near-term. We do have a large portion of our capital structure of the sub notes due in 2020, early 2020.

It is something we need to be thinking about, but we have to think about that and how to address that maturity in conjunction with everything else that’s going on with Outdoor, including the potential separation of the business and the capitalization at that point in time.

So, yes, it is on our radar screen, but if we did anything, we would have to make sure that it made sense and didn’t disrupt anything else you were thinking about, and while they are relatively near term, the subs being due in 2020, the seniors in 2022, the company feels like we have plenty of time to address those maturities..

Appreciate the time. Thank you..

You bet..

And we do have a question from the line of Lance Vitanza with Cowen. Please go ahead..

Hi, thanks for taking the questions.

On the CapEx side, could you talk a little bit about the composition of the CapEx budget in terms of maintenance versus new board's digital versus nondigital and so forth, any more granularity you can provide there?.

Thanks Lance. We don't breakout a lot more granularity. I pointed out in my remarks why we were slightly lower than in recent years.

In 2017, what I would say is our CapEx was up due in large part due to several new contracts we entered into in Spain, and we’re seeing the benefit of that as you’ve seen in the international results, but that would allow us complete CapEx is down and I would just come out from an overview standpoint that most of our CapEx is primarily international outdoor and primarily for new and renewed contracts..

Thank you. And then could you just touch briefly on plans if any for digital boards in the U.S. and I heard you, I now understand that most of the CapEx is for international, but do you have any plans for domestic U.S.

digital board rollouts?.

Sure.

I mean digital, overall digital development expansion continues to be an important part, it is part of our strategy, it is important part of our strategy and I think as you are aware, it enables us to create really exciting advertising options and enable us to capitalize on what I referred to earlier even about pacing that the nature of the business moves more and more towards late placing and this enables us to capture last minute booking.

We would expect to see steady deployment in-line with what you’ve seen for us during the past couple of quarters. This quarter, we had 36 boards additional, which included 22 boards that we got in Philadelphia as part of the management agreement and that brings us to 1,200 boards, of course the U.S.

and we continue to selectively convert boards as appropriate and where the IRR supports conversion of the board. So, we do a careful IRR analysis and to make sure it is wanted. And the last thing, I would just point out as a reminder in digital, well it is a small percentage of our post both in inventory but does reach almost 90% of our audience.

And so, we tend to convert and build digital boards in most strategic high traffic locations, but that just gives you an overall flavor of how we are thinking about it..

It is great and if I could just get to follow ups on that. First, are you still seeing, sort of three to four-year paybacks on those conversations and then have you seen any easing or I guess tightening for that matter of the regulatory climate around the digital side? Thanks..

I don't want to comment specifically on the payback, but I would say it is a significantly less than what your assumption is in the four-year to five-year payout that you pointed out last time to be specifically on that, but clearly as you would imagine, this is the range and therefore the ultimate payback that is determined by on a location by location basis and in terms of the environment, again that is really a local that continues very much to be a local issue in terms of the regulatory environment.

I don't want to make general statements about it, but we continue to tackle it, municipality by municipality, and I think work with the local municipalities on partnerships that works for us that makes economic sense along the terms I just mentioned, and also bring some benefits to the local municipalities..

Thanks..

And for closing remarks, I would now like to turn the conference over to your host. Please go ahead..

Thank you. And thank everyone for joining our call this morning. And as in the past, we’re available to take any more questions you have during the day. Have a good day. Thank you..

And ladies and gentlemen, it does conclude your conference for today. Thank you for your participation and for using the AT&T executive teleconference service. You may now disconnect..