Clear Channel Expands Margin as Revenue Growth Slows
Second-quarter revenue rose 8.7% to $438.0 million as both operating segments posted gains.
Clear Channel Outdoor Holdings (CCO), the out-of-home advertising company, expanded its adjusted EBITDA margin to 32.7% from 31.9% a year earlier as expenses grew more slowly than sales.
The margin gain accompanied a moderation in growth from the first quarter. Revenue growth slowed from 11.9%, while adjusted EBITDA growth eased to 11.6% from 31.0%; sequentially, the measures rose 17.2% and 38.1%, respectively.
Adjusted EBITDA reached $143.4 million. Clear Channel recorded a $10.0 million loss from continuing operations, compared with income of $6.3 million a year earlier, even as operating income rose 15.0% to $89.1 million. The loss narrowed from $49.4 million in the first quarter, while AFFO increased 61.6% from a year earlier to $44.9 million.
America revenue increased 7.0% to $324.3 million, decelerating from 9.6% growth in the prior quarter. Airports remained the faster-growing segment, with revenue rising 14.0% to $113.6 million, though that pace slowed from 19.1%. Digital revenue grew 7.2% in America and 15.6% in Airports.
Profit growth outpaced sales in both businesses. America segment adjusted EBITDA rose 11.6% to $142.4 million, while Airports adjusted EBITDA increased 22.8% to $29.9 million. Direct operating and selling, general and administrative expenses grew 5.9% companywide, below the revenue increase, though adjusted corporate expenses climbed 24.1% because of higher compensation, bonuses and insurance-benefit costs.
Clear Channel continued to add digital inventory, installing a net 36 displays during the quarter and ending June with 5,145 digital displays. Capital expenditures rose 33.9% to $17.2 million as higher spending in America offset a decline at Airports.
The company again withheld financial guidance because of its pending take-private merger. Stockholders approved the $2.43-a-share transaction, which remains expected to close by the end of the third quarter.
Clear Channel also completed the sale of its Spain business for about $132.3 million and intends to direct the net proceeds toward debt reduction, subject to the merger outcome. Merger-related transaction costs reached $4.4 million in the quarter and $20.2 million for the first half.