Ladies and gentlemen, thank you for standing by. Welcome to the 2018 Fourth Quarter and Full-Year Earnings Conference Call for Clear Channel Outdoor Holdings, Inc. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, instructions will be given at that time. [Operator Instructions] As a reminder, the conference is being recorded. I’ll now turn the conference over to your host, Eileen McLaughlin, Vice President, Investor Relations. Please go ahead.

Good afternoon, and thank you for joining Clear Channel Outdoor Holdings 2018 fourth quarter and full-year 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 fourth quarter and full-year 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 and full-year, we’ll 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 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 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 detailed 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, March 5, 2019 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 fourth quarter and full-year 2018 earnings conference call. Before I speak about Clear Channel Outdoor’s results, I want to provide a quick update on iHeartMedia. We are pleased to report that we’re in the final stages of the restructuring process. The court has confirmed, iHeartMedia’s plan of reorganization and we expect to emerge from the restructuring process in the second quarter of 2019. Under the terms of the plan, iHeartMedia will complete a comprehensive balance sheet restructuring that will reduce the debt from $16 billion to $5.75 billion and will separate Clear Channel Outdoor from iHeartMedia. Bob and I will remain in our current roles for iHeartMedia and we are confident in the company’s future. As in previous quarters, we will not host an earnings conference call for iHeartMedia until the restructuring process has been complete. However, this afternoon we did file our full-year 2018 10-K and an 8-K that includes the fourth quarter results for the iHeartMedia segment. I’m pleased to report that iHeartMedia generated growth in revenues, operating income and OIBDAN in the fourth quarter. We are also looking forward to Clear Channel Outdoor’s transition into a standalone public company. After the separation, Clear Channel will continue to have its strong leadership team in place. William Eccleshare, who currently serves as Chairman and CEO of Clear Channel International will stay in his role and become CEO of Clear Channel Outdoor. Scott Wells will also continue his successful leadership of our Americas business as CEO. As announced last week, Brian Coleman, after an extensive who we are in iHeartMedia, will become the CFO of Clear Channel Outdoor. And Lynn Feldman, who is now General Counsel of the Americas business will add on the responsibilities of General…

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

Good afternoon, and thank you for taking the questions. I would like to start here if I can. Was there anything, I guess, unique behind the strong Americas performance in the fourth quarter and the top line that you can call out? Can you talk about political? And relatedly, Clear Channel Outdoor seems to be outperforming its domestic peers in the fourth quarter and point in time pacings today. And I’m wondering is that the fruit of digital investments? Is that new contracts? Anything you can shed color on would be terrific? And then I have a few more. Thank you.

Yes. Hey, Avi, it’s Rich. Good afternoon. So just a couple of things, maybe I’ll just do in reverse order just for a second. Look, the U.S. Outdoor industry clearly had a great – very good great 2018 and fourth quarter. I’m not going to comment so much on anybody else individually. Our outperformance, I’d say, relative to something like Lamar, even with Lamar’s investment digitally is attributable really to strength of our top 20 markets, and – but they’ve done a great job executing. On Outfront, their business was up probably slightly under 10% for the fourth quarter. When you kind of normalize it, excluding the new bar contract plus the assets that Outdoor took over from Clear Channel in New York and Boston. So look, I think, everybody has had a good performance. Our reported revenues were at 7.6%, but that includes the headwinds, by the way, just a reminder for all of you from losing our inventory in New York and Boston. So excluding those losses, our revenues even would have been slightly higher. So – and I think the other overall comment I’d make about the Outdoor industry. And I think this is true whether it’s in the U.S. and to some extent, outside the U.S. is, I think, we’re also just benefiting from the general trends that are happening in media. You see – even if you look at some of our biggest advertisers, the recognition of the strength of the medium, some of our big advertisers like Apple and Amazon. And if you look at the overall medium and I think, we’re all well aware of this. There has been a loss in reach and effectiveness – cost effectiveness in the TV industry, as we all know and has been well documented. A lot of companies have taken a hard look at their direct targeting with digital. The one – the last one is being Procter & Gamble, which has been well publicized and they reallocated money out of their advertising budget and out of their digital budget and earmarked it towards radio, audio/audio and the Outdoor business, and because of the effectiveness of the overall medium. So, I like the trends behind this and I like the winds behind our back. It’s certainly a lot better than the other way around. And really proud of everybody, William and Scott and the rest of the team on execution, they’ve just done a brilliant job overall.

Okay, great. I’ll move on to the next one, and I know you don’t call out individual markets, but China was mentioned and I saw Clear Media’s full-year release. I’m wondering if you can talk about what you saw in that market in the fourth quarter, and maybe how China is doing in for the start of 2019?

Sure. And so maybe for the benefit of everybody on the call, just as a reminder, Clear Media is a separate public company. So I can only comment in China. So I can only comment on a limited basis about it. And just they laid the groundwork on March 1. They announced that 2018 revenues were really at 5.7%. Now, if you look at that for the first nine months of 2018, Clear Media delivered exceptionally strong results with the first-half was up – first-half of 2018, to be clear, was up 12.4%. The third quarter was up – it was up 9.5%. And then as we all know and probably many of you on this call know better than I do the uncertainties surrounding the external environment, the slower economic growth and the PRC, Clear Media’s trading business started to deteriorate in October, particularly with the number of last-minute cancellations by number of customers. So the month of October was actually down over 25%, and for the month of November and December, there is no significant variations in revenue versus the same period last year. So that really came upon, I think, Clear Media, therefore, the company pretty suddenly, as I said in mid-October. And I think just what we’re seeing is in light of the overall market conditions, Clear Media’s customers remain somewhat cautious with their advertising spending in the near-term. So – and really can’t anything – add anything more to that, Avi, for 2019, again, since they are a standalone public company.

Fair enough. Two more here.

Yes.

Number one, I know the separation process is ongoing. But I’m wondering if you can provide any color around taxes? What cash taxes may look like as a standalone entity? How we should think about your NOL balance? And whether the basis in any of your Outdoor assets geographically will change up or down as a result of the separation?

Well, let me start and then I’ll let Brian want to add anything in his current role, as well as the incoming CFO. So December 31, 2018, deferred assets – sorry, deferred assets to net operating loss carryforward to a federal and state income tax purposes was $236 million in the U.S. and $363 million, including International. I think, as probably many of you are well aware, the tax impact from our bankruptcy and the separation of Clear Channel has not yet been finalized. But it is anticipated that the U.S. NOLs be utilized with the emergence from bankruptcy of iHeart. Then upon separation to the second part of your question, Clear Channel also expects to be a cash taxpayer. Given the limitations of deductible in interest expense in the U.S., which as you all know, is limited to 30% of EBITDA and the expected utilization of the NOLs that I just talked about attributed to CCO by iHeart related to the restructuring process and will continue to be [indiscernible] in U.S. piece and then will continue to be cash taxpayer internationally of about $25 million to $35 million a year. Brian, anything else you want to add?

Yes. I mean, I think, that’s all right. I think the only other piece of Avi’s question was about is there anything around the separation that would effect the tax basis at Outdoor? And we’re not anticipating any kind of accounting changes that, that would lead to revaluation or a change in the basis.

Terrific. And before I get to my last question, a premature congratulations, Brian, well-deserved. Well, ahead of time, congratulations. My last question, if I can, with respect to the balance sheet, I think management is very clear on the road about its desire to reduce leverage. And I’m wondering if you can talk about it, how you think of the menu options available to the company outside of continued operational execution, whether that be asset sales and equity raise, convertible and/or something else? An do you think you would need or want to pull one of those levers before potentially addressing your two senior note issues and thank you all for the time?

Yes, Avi, I’m going to let Brian answer. But just one thing to maybe give Brian a little bit of a framework here. And just as a reminder, we have a – and we’ve announced it publicly, we have an incoming new Board of Directors at Clear Channel Outdoor, world-class led by Ben Moreland. And I think that Board is really going to be a strategic asset to William and to Brian and to Scott. And so I just say, it’s a subject that the new Board is discussing all the options for us. I just want to make sure that as we discussed this, one of the things we don’t want to get ahead of us or I’m sure Brian doesn’t want William is the new Board process.

Yes, that’s absolutely right. The incoming Board did make a public statement. They are focused on the leverage of Outdoor and that’s out in the public. I think, the key thing that I’d want to say here is, I’ve talked to those guys much like the management. Right now, we remain committed to the core operations of Outdoor. So that’s fundamentals and that’s what we’re focused. We are aware and the incoming Board is aware of the leverage at Outdoor, they’re focused on it. But as Rich said, I think, it would be premature to talk too much about any of the plans that we have in the mix. And after refinancing the subordinated notes, we’ve created the runway between now and when we have to address senior notes to address the leverage at Outdoor. But again, the focus coming out of gate is on the core operations, investing in the business and we’ll look at options with respect to leverage at the same time.

Thanks for the time.

Thanks.

Thank you.

Our next question from Aaron Watts with Deutsche Bank. Please go ahead.

Everyone, thanks for taking the questions. Rich, maybe I could start out with one on digital. It looks like you added little over 94 in the U.S. during 2018. Can you talk about a little more about how your digital boards are performing and maybe how many boards you’re targeting to add in 2019? And are you still seeing healthy ROIs on that digital investment you’re making?

Yes. So a couple of things. So Aaron, thanks for the question. The digital business was up in the quarter just on both new and existing Boards, so that’s obviously positive statement from an ROI standpoint. Digital boards account for the largest component, I’m sorry, digital revenue and accounted for about 21% of our revenue. Digital is going to continue to be a core element of the card allocation strategy. And I think, I could probably speak for Brian as we go forward. It allows high frequency, 24-hour advertising in large numbers of displays. And key to that, it offers our clients and our partners optimum flexibility distribution, circulation and visibility, and it allows last-minute bookings. And again, I made a general overall comment about the advertising industry before. I probably should have mentioned in general, I think, all mediums are seeing more and more last-minute bookings, whether you’re here in the U.S. and whatever medium you have, or you’re outside the U.S. like in the UK. The business is becoming more and more last-minute, which is why we point out about pacings being a point in time. And I think everyday that goes by is less and less an indicator of what’s happening in the business. So if you look forward to 2019, again, I’m going to make the statement I made before. Brian with William, Scott is going to be working with the new incoming Outdoor board, as they start to get up to speed. And we moved toward separation in terms of exactly what the right number should be and the right capital expense number should be. But I think, directionally, you can think about it is probably somewhere between 70 and 90 boards for 2019.

That’s really helpful. And then maybe just one more if I could. Any kind of latest thoughts on how investors and I should think about corporate costs of running the business post separation versus maybe what we saw in 2018?

Well, we’re not budgeting or not anticipating our – any increases over the store cost. The way that we visualize the separation is, the work that’s been done by iHeart or on behalf of Outdoor will be charged to that one of the transition services agreement and we will eventually Outdoor post separation. We’ll pick up those responsibilities and our targets are to do that on a flat basis. In essence, having a group that operates as – at the same level as what iHeart had operated and charged us now. There’s a lot that goes into that mix. There’s a number of shared services. So where ultimately you end up, who knows, but we’re trying very hard in budgeting for no increase under that. Now, there will be some standup costs. We haven’t really talked about what those would be. But on an ongoing basis, run rate, we’re anticipating very similar costs, so we’re not looking at cost increases at this point in time.

Okay, great. Thanks, Brian. Thanks, Rich.

Thanks, Aaron.

And we have a question from Ms. Stephan Bisson with Wolfe Research. Please go ahead.

Hi. Good afternoon. So you’re talking about the contracts coming in closer and closer to booking. How much visibility do you have into 2019 now? Some peers have mentioned about having half of their bookings done? And how has that changed over the last three years or so?

Well, obviously, we’re significantly the way through the first quarter as we sit here today. So I’m not going to comment specifically. The percentages were substantial. Substantial amount of bookings have been placed for the first quarter. I would also say, again, I’ll go back to the comment I made a little bit earlier stuff on. I – having gone back to look at it exactly over the last three years probably something might think about doing. But I think the general trend has been significant acceleration of bookings being close to the hearing date. There’s no doubt about that. But I think that’s not just a trend for us, it’s a trend for the entire advertising industry.

Great. And then I know that we aren’t finalizing on the bankruptcy plan. But are there any restrictions regarding asset sales or a company sale CCO after the separation is done?

Well, that’s a kind of an opening question. I think, things that come to the top of my mind or restrictions on the credit agreements, regulatory issues with respect to potential combinations, you may be looking for something more specific than that. I’m not aware of anything that’s related to the separation and that type of regulatory basis. But certainly, how a sale of the whole business or a significant part of the business would be effectuated. We have to consider the debt agreements and then, of course, any potential acquirer of any of these businesses will have to be compliant with the regulatory regimes at hand. Is that helpful?

Yes, great. And then lastly, the separation timeline, the exit is kind of scheduled for Q2. Could you remind us of how long – or the bankruptcy emergences of Q2. Could you remind us how long the separation would be – take after that?

We are anticipating it to happen at the same time. The separation will occur contemporaneous with emergence.

Great. Thanks so much.

I’ll turn it back to our speakers for any closing comments.

None for me. Just want to thank everybody for taking the time to participate. And I know Eileen and Brian will be around and available for follow-up questions, but thank you, all.

Thank you. Ladies and gentlemen, this concludes our teleconference. Thank you for using AT&T teleconferencing. You may now disconnect.