Summary: Out-of-home advertising company Clear Channel Outdoor (CCO) reported 2Q24 results with healthy demand from advertisers across most markets with particular strength in the Airports and Europe-North segments. While reporting higher year-over-year (YoY) revenue in the America segment, 2Q24 came in at the low end of guidance due to softness in the national marketplace particularly in medical services and media and entertainment verticals. CCO remains committed to enhancing profitability, focusing on higher-margin US assets, strengthening its balance sheet, and continuing the Europe-North and Latin American sales process that when completed we believe will eventually lead to CCO converting to a REIT.

CCO’s securities trade at discounts to its peer group primarily due to its high leverage and the uncertainty of when the company will sell its international operations. Since the company put its European business up for sale in 2022, some assets have been sold, but the Europe-North and Other (Latin America and Singapore) assets remain for sale. While management highlights some of the headwinds it has faced while trying to sell these assets – Ukraine/Russia war, higher interest rates, and inflation, as well as the number of contracts that require due diligence – it successfully divested operations in several countries despite these issues. As the M&A process continues, Europe-North segment’s revenue and EBITDA, excluding changes in foreign exchange, rose 9.9% and 24.5%, respectively. The improvement in its Europe-North segment provides cautious optimism that these assets can be sold at a fair valuation.