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

Avi Steiner - JPMorgan Stephan Bisson - Wolfe Research.

Ladies and gentlemen, thank you for standing by. Welcome to the 2018 Third Quarter Earnings Conference Call for Clear Channel Outdoor Holdings, Inc. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Eileen McLaughlin, Vice President, Investor Relations. Please go ahead..

Good morning and thank you for joining Clear Channel Outdoor Holdings 2018 third quarter earnings call. On the call today are Rich Bressler, Chief Financial Officer and Brian Coleman, Senior Vice President and Treasurer. They will provide an overview of the 2018 third quarter financial and operating performances of Clear Channel Outdoor Holdings, Inc.

and Clear Channel International, B.V. After an introduction and a review of the quarter, we will open up the lines 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 would like to remind everyone that this conference call includes forward-looking statement. 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, 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 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 have 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 breakdown of foreign exchange and non-cash compensation expense items as well as segment revenues, operating income and OIBDAN, among other important information.

For that reason, we ask that you review 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, November 8, 2018 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 third quarter of 2018. Before I speak about Clear Channel Outdoor’s results, a few words on iHeartMedia. We are now entering into the final stages of the Chapter 11 process.

We look forward to exiting bankruptcy in the first quarter of 2019 as planned. However, as I’ve mentioned previously, we will not host an earnings conference call for iHeartMedia during bankruptcy process, although we did file our third quarter 10-Q this morning.

Back to Clear Channel Outdoor, I am pleased report another quarter of growth, with both the Americas and International businesses contributing to the increases in revenue, operating income and OIBDAN in the third quarter.

Our success in the quarter as well as our success year-to-date is first and foremost driven by sales execution under the great leadership of William Eccleshare at Clear Channel International and Scott Wells at Clear Channel Outdoor Americas.

And by enhancing our out-of-home advertising solutions with new technologies, we are positioning Clear Channel Outdoor to be more competitive in today’s digital-centric advertising world.

In addition to making investments in new digital displays, we are also a leader in developing data analytics and programmatic platforms that are delivering results for our advertising partners.

In fact, many of the world’s most influential companies are taking notice of the value of out-of-home advertising, including several high-growth technology companies. A recent Bloomberg article cites that Apple, Google and Amazon are ranked among the top 6 spenders on out-of-home advertising last year.

Our proficiency in using technology to create innovative campaigns was acknowledged for the second year in a row with a Bronze Smartie Award from the Mobile Marketing Association in the location-based services or targeting category.

In the winning campaign, our team worked with Northern California Honda dealers to use RADAR, our industry-leading data analytics suite of products to combine targeted print posters with mobile ads sent to consumers. This campaign resulted in 80% lift in visitors to participating deals.

Turning to our international markets, we continue to expand our ability to reach consumers for the benefit of our advertising partners. In France, we are now the leader in bus advertising on regional bus routes, delivering high-profile exposure to specific local audiences in targeted geographic locations.

And in Spain, we are strengthening our digital street furniture offering from Barcelona and Madrid to Seville, where we will install the first digital displays in the city.

Across all our global markets, we believe it is imperative that we continue to deliver innovative advertising solutions in order to meet the needs of our advertising partners in today’s digital-centric advertising environment.

Now on to the financial highlights for the third quarter, during our GAAP results discussion, I will also talk about our results adjusting for foreign exchange and excluding the impact of our Canadian business, which we sold in August last year. We believe this improves the comparability of our results to the prior year.

In addition, as I mentioned at the beginning of this year, we have moved the Latin American operations to our International segment. The prior year results have been adjusted to reflect the new reporting. I will refer to these results as adjusted revenues and adjusted OIBDAN, and I will refer to direct operating and SG&A expenses as adjusted expenses.

During the third quarter, consolidated revenue increased 3% to $663.7 million. Adjusted revenue was up 4.9%, with both the International and Americas businesses contributing to this growth. Consolidated operating income increased 81.9% to $51.2 million, and adjusted consolidated OIBDAN was up 12%.

Moving on to Slide 5, I will discuss Americas financial results in more detail. During the third quarter, Americas revenue increased 3.3%. Adjusted revenue increased 4.2%, with continued growth in both digital and print driven by locally placed advertising in addition to the improvement in the airports business.

Within digital, both new and existing boards contributed to the growth. Expenses were up 0.7%. Adjusted expenses were up 2.1%, primarily due to higher site lease expenses, including direct operating expenses. The increase in site lease expenses is primarily due to revenue growth. SG&A was up slightly. Operating income increased 18.7%.

Adjusted OIBDAN was up 7.5% due to the increase in revenues and expense control. Our pacing for the fourth quarter was up 6.6% as of last week. Turning to Slide 6 and our International financials, in the third quarter, reported revenue was up 2.8%.

Adjusted revenue increased 5.4%, driven by growth in China and Europe due in large part to new contracts and digital expansion. Most of our European markets delivered growth, including Sweden, which continues to generate strong double-digit growth as well as the UK and Italy. Expenses were up 0.9%.

Adjusted expenses were up 3.4%, with both direct operating expenses and SG&A contributing to the increase. The increase in direct expenses is related to higher lease expenses in countries experiencing revenue growth. The SG&A increase is primarily due to non-cash pension settlement expense in the UK. Operating income was up 72% to $13.7 million.

Adjusted OIBDAN was up 19.8% due in large part to increased revenue and improved margins in countries delivering revenue growth. Pacing for the fourth quarter was up 0.8% 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 third quarter, CCIBV’s consolidated revenue totaled $265.7 million, a $9.2 million increase from the prior year. On an adjusted basis, CCIBV’s revenue increased $15 million during the third quarter. CCIBV’s operating loss was $13.7 million in the third quarter compared to an operating loss of $25.1 million in the same period in 2017.

Please turn to Slide 7. Capital expenditures totaled $110 million for the 9 months ended September 30 with $49 million occurring in the third quarter. The decline is due in part to higher spending in Spain in 2017 related to the Madrid contract.

The year-to-date CapEx is primarily due to the conversion of digital boards in Americas and deployment of street furniture and transit, including digital displays in International. We expect CapEx in 2018 to be in the range of $200 million to $220 million, as I stated last quarter.

The slight decline from the prior year is due in part to the increased spending in Spain in 2017 that I just mentioned. Now on to Slide 8, Clear Channel Outdoor’s consolidated cash and equivalents totaled $191 million as of September 30, 2018. This balance includes $175.5 million of cash held outside the U.S. by our subsidiaries.

Our total debt was $5.3 billion, a slight increase from year end. The weighted average cost of debt was 7.1% for the 9 months ended September 30. During the first 9 months of the year, cash interest payments were $272.4 million and cash dividends were $30.7 million. Our senior leverage ratio was 4.5x, with consolidated leverage at 8.7x.

We expect cash paid for interest in 2018 to be approximately the same as in 2017. Before taking your questions, I want to thank you again for joining us this morning.

In the quarter and so far this year, our growth in revenue, operating income and OIBDAN across both Americas and International businesses is a testament to both Scott and William and their team’s ability to deliver top and bottom line results while implementing our strategic initiatives.

Specifically, these digital displays and data initiatives create the solutions advertisers expect, such as increased flexibility through digital displays and data-rich ad buying that was once available only through Internet-based digital products.

We will continue to build the reach of our out-of-home inventory and look for opportunities to evolve how we do business with our partners in order to become more integral to them in today’s digital-centric advertising world.

Before we open up 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..

Thank you. And we will go to the line of Avi Steiner with JPMorgan. Please go ahead..

Thank you and good morning. Couple of questions here. First off and if you said this in the prepared remarks and I missed it, I apologize.

Did you get the benefit at all of political in domestic in the third quarter and maybe how much is political benefiting from that, I know it’s a point in time, but the 6.6% pacing number you gave?.

Hey, Avi, it’s Rich. Good morning. Thanks for the question. Historically, political, just as a reminder, has been very, very small on the outdoor side of the business and we got very slight benefit, but quite frankly, it’s not significant in terms of the overall percentage of revenue..

That’s great. And maybe looking at your billboard stack in the U.S., I think you would mentioned the company exhibited growth kind of on a static and the digital side in the Americas. Is digital outpacing static? Can you give us any more color? Some of your peers have started to give digital-only results and it would be very helpful. Thank you..

Yes. Avi, I am not at least at this point going to breakout digital separately just to say that we did have a great quarter, quite frankly with respect to digital maybe to take it a level down little bit deep, but digital, outboards and the print business, our local business performed exceedingly well, national was down slightly.

And then within digital, both new and existing boards contributed to the overall growth. Also, we had both increases in rates and occupancy.

And quite frankly, I think I mentioned in the opening remarks and said it again at the end, I think the execution by Scott Wells and his team really has been outstanding and similar with [indiscernible] in both sides of the house..

And on that same point and I hate to stick to the Americas, but we have seen results from you and your peers and it seems to me that growth is accelerating in the Americas.

And so you have a slightly differentiated portfolio, I guess everybody has a slightly different portfolio of assets, but is there something you can point to that’s maybe driving your growth and driving the industry acceleration we are seeing here?.

I don’t know if there is anything specific that I can point to. I will point out one, is we have been making investments and I also saw to your point, the announcement the other day by Outfront, the announcement this morning from Lamar in terms of their earnings, so it’s good to see the entire industry doing well.

We have made investments over the last number of years in emerging technologies. And as we have talked about in mobile data analytics, we have dramatically improved quite frankly our response and speed-to-market in our new assets. So one is I think we have all of those initiatives. And two, I mentioned this in the remarks, it is worth repeating.

Our advertising revenue, some of it and the increases have been driven by some very high growth companies in terms of people out there, growth technology companies, the Apples of the world and a number of other companies out there, which is really satisfying to see their endorsements, both Apple, Google and Amazon..

Great.

If I could shift gears here, is there any update you can give us on China and maybe that expense is coming to an end and getting further clarity?.

Are you talking about, just to be clear, about the Clear Media?.

Yes..

No, I mean, look, there is really not an update I can give you and quite frankly, in any level of detail.

We are also bound by – just to remind that you have Clear Media is listed on the Hong Kong Stock Exchange, but just to level set several employees of Clear Media Limited, which is an indirect non-wholly owned sub as a reminder of the company were under investigation for misappropriation of funds. The investigation continues to be ongoing.

The team continues to work with the Chinese authorities on that and we are making progress and the business continues to do well. But beyond that, unfortunately, I am really bound by the agreement we have with Clear Media to what I can say since they are a separate public company..

Fair enough. And maybe I will end it on this and I don’t know, Brian, if you are on the call as well, but we had talked last quarter about thoughts on your maturity stack and the 7 5/8%, I think go current in the first quarter of ‘19.

So any updated thoughts you have there and could it be that there is just because of the bankruptcy process going in parallel, maybe there is some sort of wait and see until that’s done before you proceed in dealing with the cap stack of Outdoor?.

Yes, hey, Avi, I am still here and that was my gong actually. You almost answered the question, but I will go ahead and say the words as well. I mean, we talked about last quarter that we have the $2.2 billion of senior subordinated notes that roll current in Q1 of ‘19. They are due in 2020 and that they are on our radar screen.

But I do think it’s fair to say that while we are looking at market options with respect to potential refinancing of those notes that it is tied to the separation discussions that iHeart and Outdoor are having that Outdoor is considering. And ultimately, those separation discussions are integrally linked to the emergence process.

I think it’s fair to say the financing, I won’t say it’s wrapped up in all that. It’s certainly part of the overall consideration and we will consider to – we will continue to consider refinancing alternatives kind of in the greater context of those discussions in that timeline..

Appreciate the answer and all the time today. I will turn it over. Thank you..

Great. Thanks, Avi..

Thank you. [Operator Instructions] And we will go to the line of Stephan Bisson with Wolfe Research. Please go ahead..

Good morning. I had a quick question on the option that CCO has to purchase the Clear Channel trademark.

We know from the bankruptcy documents that it will be determined by an independent appraisal, but do you have either a timeline or any early estimate on what that might be?.

No. Stephan, it’s Rich. No, at this point, we are still in the process of evaluating that..

Okay.

And then do you have any other past processes that were similar, clearly not within Clear Channel, but just it seems like a very unique type of situation?.

No. I mean, not to – I will agree with you that it’s probably a unique situation, honestly, but no, I am not aware of any past processes that are exactly like the process that we are going through..

Alright, great. Thanks so much..

Thanks very much..

[Operator Instructions].

Operator if there are no other questions, we would like to thank everyone for attending our call this morning. And as we are available on every earnings call, Brian and I are certainly welcome to take all your questions..

Thank you. And ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect..