Q3 2020 Clear Channel Outdoor Holdings Inc Earnings Call
Ladies and gentlemen, thank you for standing by.
Welcome to the 2023rd quarter earnings Conference call for clear Channel Outdoor Holdings, Inc.
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I'll now turn the conference over to your host Ali Mclaughlin, Vice President Investor Relations. Please go ahead.
Good morning, and thank you for joining clear channel outdoor holdings.
2023rd quarter earnings call on the call today are William Eccleshare, Chief Executive Officer of clear Channel Outdoor holdings, Inc., and Brian Coleman, Chief Financial Officer of clear Channel Outdoor holdings Inc. will provide an overview of the third quarter 2020 operating performance, that's clear channel outdoor holdings Inc. and.
Clear channel International BV after an introduction and a review of our results well open up the line for questions and Scott well Chief Executive Officer of clear channel outdoor Americas will participate in the Q and a portion of the call before we begin I'd like to remind everyone that this conference call includes forward looking statements. These statements include managed.
'cause 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 without results actual results will not different from expectations. Please review the statements of risk contained in our earnings press release and filings with the FCC.
During today's call, we will provide certain performance measures that do not conform to generally accepted accounting principles.
Provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press release and the earnings conference call presentation, which can be found in the financial section of our website investor dots clear channel Dot com.
Please note that our earnings release and the slide presentation are also available on our website 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 revenue and adjusted EBITDA. Among other important information that reason, we ask that you you each flight.
As Lehman Brian comment on them also please note that the information provided in this call speaks only to management's views as of today November 920 20.
And may no longer be accurate at the time ever be play with that please turn to page three in the presentation and I will now turn the call over 2 billion that culture.
Good morning, everyone and thank you for taking the time to join todays call.
This is our third quarter conducting the call remotely and once again, we all set you back with US okay. So any technical issues during the call.
But it's certainly been an unprecedented year for many of US and like you I'm sure you continue to feel the impact of the COVID-19 pandemic going out of business.
But in the past quarter, you've also seen how robust our businesses and how strongly at Republic, I think when some kind of normality returns.
We delivered better than expected consolidated revenue in the fourth quarter, we reported revenue down 32% compared to prior year, that's substantial improvement compared to 55% decline we reported in the second quarter.
Excluding China and FX the decline would have been 27% better than the low 30% decline guidance we provided in August.
Our performance in Europe was better than anticipated and well demonstrated the resilience of our medium as audience is returned to the street, our advertisers return to a medium.
You asked performance also showed sequential improvement and was in line with our expectations.
At the same time, we continue to implement initiatives to align our operating expense base with revenue.
Brian when expanded our cost saving accomplishments in more detail later in the presentation.
As a whole and in the context of the pandemic the results in the third quarter, especially in Europe, we certainly encouraging yeah.
We are continuing to leverage our investments in digital screen in technology, and you know footprint to manage through the crisis and ensure we have the flexibility to deal with the uncertainty governments across all our markets deal with the ongoing challenges could not see.
I'll focus on continued investment for long term growth. It was demonstrated by the recent announcement of our winning the contract for the rights to advertise in the New York, New Jersey Apple.
We're proud and excited to have won the significant tenda not congratulate Scott wells and his team in securing it I would too late to in more detail about the contract a competency inside each loved it.
Now as we look ahead based on the information we have as of today, we expect a slight sequential improvements in the Americas revenue and adjusted EBITDA margin in the fourth quarter.
However, we are not able to provide fourth quarter guidance for our European segment. The recent identity restrictions in our European market, most notably in the UK and France in the past 10 days have created volatility in customer booking activity significantly limiting public ability.
Before moving on I want to take this opportunity to highlight and thank our employees for the amazing resilience and tremendous discipline. They shine this quarter and since the pandemic started to impact sales in March I'm.
I'm proud of the incredible work our team has done and continues to do to reinforce our solid foundation and drive operational efficiencies in the face of rapidly changing business conditions.
Moving on I'll provide an overview of our business the current environment and views on where we see the I defend market going from here.
So please turn to page four.
In the Americas segment year over year revenue was down 32% in the quarter, which is an improvement compared to the second 9% decline reported in the second quarter.
Our Americas business is centered around the top 20 markets, which contributed to the significant write downs are delivering up to and including the first quarter. This year profit could be 19.
However, even though our audience levels ever setting to normal the largest markets in the top 20, although most impacted by advertisers pulling back on I depend spending.
Actually on the east and West Coast.
National advertisers are most likely to be focused.
Please turn to page five.
Europe's reported revenue was down 13% against prior year and excluding foreign exchange adjustment was down 18%, which as I noted at the beginning of my remarks is a substantial improvement compared to the 52% decline we saw in the second quarter.
The improvements in digital which accounts for approximately 30% all European revenue and declined 17%, excluding FX impact, but even larger due to the speed at which appetizers were able to launch campaign as business quickly returned wants it helped us with <unk>.
As I've stated in the past our investments in digital is the key components of our strategy. Our digital network is that dynamic medium, which enables our appetite to engage in real time tactical contextual and flexible advertising.
I called out the strength of our sales team across Europe has done an excellent job responding with agility as markets opened up our audiences with moving around again and advertiser interest with today.
We also benefited from our strategic focus on roadside location, which historically account for about two thirds about total European revenue I don't fall less affected by 'cause it 19, driven restriction than the transit environment, which accounted for approximately 10% about European revenue.
Our UK business was a great example of it for about 80% of revenue misses Starkey from roadside inventory.
Mid July up until the recent announcements of new restrictions or customer booking activity actually exceeded bookings made in the same period last year.
Moving on to page six and the Americas business.
The outlook in the Americas, improving we remain cautiously optimistic for the near term.
Longer term focus remains on returning to growth, which we believe we can achieve in 2021.
As we enter the fourth quarter, our visibility remains limited. However, we have shifted from playing defense to playing often leveraging the investments we've made and continuing to make and consider in technology.
Even with the uncertainty created by the recent public 19 spikes. We believe our organization is in a stronger position to manage through the instability in the market.
He likes it back and stability, we have expanded oxide direct selling initiative.
Oh focuses on selling creative ideas as opposed to specific Billboard locations.
Advertises worked to realign their advertising campaign, we have found that CMO the more willing to jump one is equal to hear a great idea.
Our ability to get a footing the dual improving all the time.
We continue to demonstrate the advertisers how a radar suite of solutions can help I'll help that.
The audience levels are returning to normal the travel patterns have changed or didn't seem to spending more time close to home and less time in 50 expenses, but that's still asking about it.
Right now were able to quickly to adjust to these new travel patterns to help our customers understand the best inventory and roadways on which to reach that customers. We target those customers via mobile AD and measure the success of the campaign.
More specifically in the fourth quarter, we are seeing continued sequential improvements in our business.
For the first time since March Weve beaten comes in a number of weeks so far this quarter.
You know national business. The number of RF piece is improving and is close to 29 t. levels.
Local continues to improve and we're seeing continued strength in our pump inventory. We're currently in the renewal season and most the keeping that location that said, we are still waiting for more data to better understand the strength of the holiday season relative to previous years as advertisers continue to delay buying decisions.
Our largest category business services is holding up well and is performing at levels equal to last year with.
We're seeing increases in beverages with the continued weaknesses in amusements entertainment.
Additionally, our revenue generated by programmatic platform has rebounded faster than the rest of our business well that programmatic is still a small percentage of total revenue.
Moving on to page seven for a review of the Americas technology initiatives, a new contract.
During this past quarter, we continue to invest in technology and our digital footprint in America.
We added 19, new digital Billboards this quarter for a total of 57, new digital Billboards this year, giving us a total of more than 1400 digital billboards.
We also partnered with tremor videos to enhance our radar offering which now provides emphasizes a coordinated out of home and all screen video solution that seamlessly extend into TV digital social video campaign that reach consumers, when and where that ready to engage with brands.
This is just the latest of enhancements to the radar suite and we expect to continue to add customer friendly capabilities write off in the coming months.
In addition, our data analytics capabilities expanded without recently announced rollout for the new audience impressions methodology for airport advertising.
Developed in partnership with the industry measurement body Geo Paul This innovation provides advertisers a more precise understanding its consume is advertising journeys and babies as nature that Apple.
The new methodology knock the shift to measure in campaigns solely based on passenger count towards a more robust understanding of audience behavior and consume is the likelihood of being exposed to advertising methods using the same geopark data that is used to measure audiences in the traditional rightside out of heightened sector.
The day to have become available to advertisers through chip off as well as through rate though.
As I mentioned at the start we are also delighted that the Port Authority of New York, New Jersey Board has awarded US the largest I, but absolute advertising contract in U.S. to transform JFK Laguardia Newark on student apples into World class Digital media platform.
This is a landmark win for us and demonstrates our confidence in the underlying fundamentals of our business and our focus on long term profitable growth opportunities beyond the temporary impact of the pandemic.
The contract is the 12 years and is contingent upon execution by both policies, which we expect to occur in mid November.
I anticipate the contract would go into effect December the Cephea 2020.
We worked with the postal authorities to align our interests contracts.
The stage for both policies to achieve that goal under the current conditions I'm for years to come.
Has the potential to become the new industry model.
The deal contains a two year transition period to account for the impact because of my team and the traffic recovery important clarity apples.
The actual mag do each year as well as capex spend after the two year transition period will be dependent upon type who tried passenger traffic.
The Port Authority of you all can you judge the Apple as a gateway to the world and that's the region and travel recover we believe our team that's easy to meet its historic transformation.
With the addition of these high value Malki apples assets to our footprint brands will have a unique one stop shop ability to execute campaigns that reach consumers as they drive whoa Whoa fly throughout the New York, New Jersey Metro area.
Moving on to page eight in Europe, where we are seeing a range of performances within our markets due to the resurgence of COVID-19 cases.
As I noted earlier historically about two thirds of our revenue in the region is generated by our roadside displays.
You know Teva, we continue to see strength in our street furniture and Billboard inventory given the audience is still on the street.
In contrast to continued weakness in transit.
Our largest categories FMCG in retail improved sequentially. In addition, fashion and beauty of benefiting from the holiday season.
However, our visibility into November and December has been impacted by the spike in new cases.
New restrictions, we should let some advertising support their activity.
Of course, we are keenly aware of the recent developments around the second wave of COVID-19 in Europe, and we're monitoring these closely.
Well, the new restrictions and the uncertain environment will impact our business in the near term the inox expenses, because often long nor are they is limiting in terms of movement as those we feel back in March and April.
As a result, we believe the second wave well have a much smaller impact on revenue in the fourth quarter than it did in the second quarter.
More importantly, the resilience of the business, it's clear when audiences return out of home business come back strongly and as I said earlier in the UK and elsewhere, we've seen bookings equal or better than the prior year in many weeks during the past quarter.
Turning to our European technology investments on page nine.
In Europe, we continue to help Brian's navigate the audience and environmental impacts of changing COVID-19 restrictions through the application of smart data.
For example, the ukase return, Oregon hub, it's become a go to planning pool for advertising.
As I mentioned last quarter.
Hub bonuses, a huge anonymized mobile data set to learn and theyre going to be share how the portfolio is delivering audiences compared to pre built on levels.
Two channel radio is now operational in both Spain, and the UK and has further strengthened our ability to help brands engage audiences effectively as mobility.
Oh, yes.
We are seeing early benefits of my implementation of write off for example in Spain, we booked campaigns that pepsico using proximity to stores and more targeted audience demographic and behavioral data being able to respond to new audience behavior isn't ability you've gotten through the changes we are seeing as a result, the cobi 19.
We continue to expand our digital footprint. This year, adding 383 digital displays in the third quarter and 699 year to date for a total of over 15000 screens now like I.
As we continue to expand our digital reach across European cities, we are well positioned to deliver increased flexibility and enhance contextual relevant scale, improving our ability to meet friends need this.
This is evidenced by the improving digital revenue trend in the third quarter.
Oh digital transformation, we are committed to making clear channel inventory more accessible to both new and existing advertisers.
As in the U.S., we are developing a programmatic capabilities I see an increased pace, while securing and expanding partnerships with a number of leading supply side platform partners.
Most recently in Spain, we successfully ran off a fully programmatic campaigns to call Brent Kupres in partnership with SSP roadside reach broadside reach is already live across Holland and Switzerland.
In the UK, we just announced a new programmatic partnership with FSP, Hi, stack across clear channel outdoor we strive to create products and provide services that excite and engage our consumers community advertising and business partners.
As a result, we believe we are well positioned to return to growth in 2021.
At the same time, we recognized the pressures of the current environment and we will continue to take steps to preserve liquidity, including balancing the need to defer capital expenditures and reduce costs, while still investing in strengthening our platform.
Now I'd like to turn it over to Brian because it's got a third quarter 2025 actual results.
Thank you William Good morning, everyone and thank you for joining our call today, Please turn to page 10.
Before I review, our third quarter results I want to remind you that during our GAAP results discussion I'll also talk about our results adjusting for foreign exchange, which is a non-GAAP financial measure. We believe this improves the compare ability of our results to the prior year.
Additionally, as you know, we tendered our shares and clear media on April 28, and therefore Q3 results and 2020 do not include clear media. However.
However, our results in Q3 of 2019 did include crew medias results.
Consolidated revenue for the quarter decreased 31.5% from last year to 448 million.
Adjusting for foreign exchange it was down 33.1%.
If you exclude China and adjust for foreign exchange the decline in revenue was 27%, which was better than the low 30% decline we had projected in early August.
Our better than expected results are due to a stronger than anticipated rebound in Europe.
Consolidated net loss declined 77 million to $136 million in the third quarter of 2020 as compared to 212 million in the third quarter of 2019.
Adjusted EBITDA was $31 million in the quarter down, 78.4% and excluding FX was down 78.9%.
Now on to page 11 to discuss the Americas results.
The Americas revenue was down 31.8% during the third quarter from 328 million 2090 to 224 million.
As William mentioned this is an improvement over the second quarter results, which were down 39%.
Revenue declines in national and local as well as digital improved relative to the second quarter, while the decline in airports increased.
In General our airport inventory is considered premium space. So while advertisers did not immediately reduced airport advertising campaigns and the beginning of the second quarter. He began pulling ads in the back half of the quarter and into the third quarter.
Local which accounted for 64% of revenue was down 27.6% and national which accounted for 36% of revenue was down 38.2%.
Digital accounted for 30% of revenue and was down 34.8%. This compares to a 53.7% decline in the second quarter.
Our long term contracts for large format Billboard which we refer to as palms continue to hold up well, even though total print AD revenue was down.
Both direct expenses and EPS DNA were down 19% in the quarter, primarily due to lower site lease expenses and lower compensation costs. As a result of the decline in revenue and cost reduction initiatives.
Adjusted EBITDA was 71 million down 48% from the prior year.
As we have stated in the past our business is a high fixed cost business and although we are working on reducing expenses throughout the organization. The decline in revenue resulted in a larger reduction in adjusted EBITDA.
Please move on to page 12 to review Europe.
Europe revenue was down 13.4%, excluding foreign exchange revenue was down 17.9% in the third quarter.
This is a substantial improvement from the 62% decline reported in the second quarter with all markets contributing to the improvement France.
France was up in the quarter due to the new Paris Street furniture contract. In addition to a partial rebound and the underlying market.
Digital revenue accounted for 30% of total revenue it was down 16.6%, excluding FX slightly less than the overall decline.
Adjusted direct operating expenses and SGN expenses were down 8.9% decline is due to lower site lease expense. In addition to lower compensation expenses, primarily related to the decline in revenue. In addition to cost reduction efforts.
Adjusted EBITDA was a loss of 8 million due to the decline in revenue and high fixed cost base.
In August we issued senior secured notes through our indirect wholly owned subsidiary clear channel International BV, which we refer to as Cc IDV now.
Net proceeds from the offering provides incremental liquidity core operations.
Our European segment consists of the businesses operated by C.C.I.D.V. and its consolidated subsidiaries Accordingly, the revenue for our Europe segment is the revenue for Cc I'd be.
Europe segment adjusted EBITDA does not include an allocation and cc I'd be these corporate expenses that are deducted from CCBI be operating income and adjusted EBITDA.
As I just discussed European CE CE IDV revenue decreased 34 million during the third quarter of 2020 compared to the same period of 2019 to 217 million.
After adjusting for an 11 million impact from movements in foreign exchange rates, Europe, and Cc IBT revenue decreased $45 million.
She I'd be the operating loss was $38 million in the third quarter of 2020 compared to operating loss of 16 million in the same period of 2019.
On the page 13 for a quick review of other.
Our other segment includes Latin America, and clear media 2019 results include clear media, which was sold in Q2 2020.
Latin America revenue 7 million in the third quarter.
Down 15 million from the prior year.
I can COVID-19 in Latin America started later in the year and it just taking longer to control the spread of the virus in Latin America.
Direct operating expenses and SGN eight were $13 million in the third quarter.
Selling 4 million from the prior year adjusted EBITDA was a loss in the quarter.
Now on to page 14 to discuss Capex.
Capital expenditures totaled 26 million in the third quarter down 34 million from the prior year as we proactively reduced our capital spend to preserve liquidity and sold our stake in clear media.
Even with the substantial reduction we did continue to invest in digital in key locations with 19, new digital Billboards in the U.S. and 330 383, new digital displays in Europe.
Please move to page 15.
Clear channel outdoor consolidated cash and cash equivalents as of September Thirtyth, 2020 totaled $845 million, including 417 million of cash held outside the U.S. spire subsidiaries.
During the third quarter, we transferred a portion of the proceeds from the sale of their media to the U.S.
Our debt was 5.6 billion an increase of just over $500 million during the year as a result of our drawing on our cash flow revolver at the end of March initially Mrcc IBT notes in August.
Cash paid for interest on the debt during the third quarter was 147 million up slightly from the prior year due to the timing of interest payments, partially offset by lower interest rates.
Company anticipates, having approximately 21 million of cash interest payments.
In the fourth quarter of 2020 and $350 million in 2021, including the interest on the new CCBT secured notes with the first interest payment in April 2021.
Moving on to page 16.
As William touched upon we continue to focus on managing our cost base and strengthening our liquidity and financial flexibility, while driving improvements in the topline trends that will return the business to its critical that trajectory.
This includes our proactive steps to rightsize the business.
In addition to the temporary cost saving plans, we enacted in the second quarter. We have also initiated restructuring plans throughout the company.
Plans are expected to generate generate annualized pre tax savings of approximately 32 million upon completion. The total charges for the plans in the range of 23 to 26 million to achieve these savings.
While we remain confident the business or returned to pre <unk> levels, we still don't have the visibility yet on timing.
Given the uncertainty we felt it was prudent to take the appropriate steps to work to align the cost base, but the current business environment.
Additionally, during the third quarter as previously discussed we issued $375 million in senior secured notes in August through our indirect always its wholly owned subsidiary.
Okay.
We continued our site lease contract negotiations with landlords and municipalities to better align six site lease expenses with reductions in revenue, we generated rent abatements of $24 million during the third quarter and $53 million year to date.
We continued to benefit from compensation cost reductions through actions enacted in the second quarter revenue.
40 of which are temporary.
We obtained European government support wage subsidies to 7 million in the third quarter and $15 million year to date.
We eliminated and reduce certain discretionary expenses.
We deferred capital expenditures as I, just mentioned and.
And we deferred site lease expenses and other payments to optimize working capital levels.
From a liquidity standpoint, and given what we know today.
We believe that we have sufficient liquidity, including the 845 million of cash at quarter end the fund the needs of the business as the economy and our business recover.
Please move to page 17.
As William mentioned in the Americas, we expect to see a slight improvement on a sequential basis in revenue and adjusted EBITDA margin in Europe, we saw strong sequential improvement in the third quarter. However, our visibility in the fourth quarter has been impacted by the recent mobility restrictions put in place in some of our largest European markets, most notably in the UK.
In France.
These restrictions are created volatility in customer booking activity significantly limiting our visibility and ability to provide guidance.
Now please turn to page 18, and let me turn the call back over to William for his closing remarks.
Thank you Brian.
Mentioned, our team continues to work exceptionally hard through the challenging environment and we are seeing the results of our efforts.
We are encouraged by the way we've seen advertisers return to our inventory in that quarter, demonstrating the resilience of our medium and the value of our locations.
The benefiting from our continued investments in technology and the expansion of our digital footprint and a proud to securing new contract mix, especially winning the New York, New Jersey Port Authority apples.
We remain focused on the strong medium and long term opportunities within our sector and the comfort into China is well positioned to capitalize on these improving trends.
As I conclude my remarks, I want to reiterate a few things.
First as Brian mentioned the actions we took earlier in the year give us what we believe to be sufficient liquidity to manage through the pandemic, even with the spikes we've seen in the U.S. and Europe.
And we will continue to identify both temporary and permanent cost reduction to better align our expenses with the current economic environment and expand on our restructuring plan.
But in the third quarter, we delivered better than expected results with a strong rebound in Europe, demonstrating the underlying resilience of our business.
In recent weeks in but some European markets and the U.S., we have at times equal or better than prior year performance.
When infection rates decline and restrictions are lifted an audience with today our markets come back.
Looking ahead the cost of the pandemic is still unclear.
The second wave in Europe, and continued uncertainty in U.S. although.
Although we expect the next few quarters to remain challenging we believe the underlying fundamentals of our industry and our business.
As both Brian and I said, given the resilient about team investments in our business and strength of our platform, we expect to deliver a slight sequential improvement in Americas revenue and adjusted EBITDA margin in the fourth quarter we.
We are not providing fourth quarter guidance the Europe, given the recent ability restrictions, creating significant volatility in our booking activity.
However, we remain cautiously optimistic that we will return to growth in 2021.
Lastly, as we stated before we always remain open to dispositions and opportunities that accelerates our path to creating enhanced value for shareholders.
However, given the current economic environment, our focus remains on continuing to own operate and enhance the value of the current portfolio of assets in order to drive shareholder value as the economies rebound.
I look forward to providing updates regarding our progress.
And now Scott will join Brian and myself and taking your questions offer.
Operator.
Thank you the floor is now open for questions again to ask a question simply press Star then the number one on your telephone keypad if that.
At any point your question has been answered and you wish to remove yourself from the queue press the pound key.
Our first question comes from the line of Steven Cahall of Wells Fargo.
Thanks.
For me, maybe first just on the New York airports. When you know for those of US who kinda count JFK Laguardia as a second home was wondering if you could talk about that a little more detail what that rollout looks like and do you have any substantial capex increase in 2021 related to that contract.
Even though the discount for that Scott.
Thanks, William and morning, Steve.
Okay. So.
As a as William reference the contract has not yet been signed and it's it's therefore, it's not out in the public domain. So our ability to give you lots of details about it is is limited.
But let me tell you a couple of things to the spirit of your question as you know being a regular visitor to JFK Laguardia New York has invested in the Port Authority has invested enormously and all of the four airports.
Around New York City and.
And what we would expect is the new work is actually going to be our first priority.
Priority in building out in some of the the new terminals, there and it will go down a pace across the across the footprint over a number of years, it's not going to be something that the build out is completed in year one.
But we're very excited about the plans that we've got we're excited to be able to share more information on those plans of the contract gets finalized.
I do think that you will see an uptick in capex from us next year, but it's not going to be.
You know a shocking number would be sort of the the best I can give you on that I don't know, if william or Brian anything you'd add.
Okay, and then maybe on just some of the cost reductions, Brian would love to hear a little bit about that 32 million in cost savings do you think that's fixed and also I think your debt cost.
They're down even with the recent notes issuance and so I was just wondering how you're thinking about maybe what the cash runway looks like and if there's going to be an opportunity to do anything with the nine and a quarter note since those kind of jump out in terms of their cash interest cost at the moment and I just got one more after that thanks.
Sure. Thanks, Steve I'm, a <unk> on the cost side, you know I think the the recent plans that we've talked about.
Where we expect $32 million in expense saving is ultimately be taken out of the business.
Is the structural and permanent nature I mean, you know the business changes, we need to we need to be many degree address it but I think you know what we're doing right now is rightsizing the business for the current environment and these plans or across the company. Some have been in the works for a little while some will take a little longer.
Please but we're in that we're in and the effect of it.
Hopefully that answers the questions on the expense side, if not we can go back to it on the on the interest side.
I think you're thinking about it the right way the the unsecured notes, where it where the first notes that we refinanced actually prior to separation they carry a rate which is much higher than all the subsequent refinancings, but subsequent refinancings reflect a number of measures that we took post separation the.
The issuance of some equity the debt carrying cost as much lower we'd like to reprice. The the unsecured notes. The first call. I believe is in February of next year I don't know that's a refinancing rate right now is attractive, but you should assume the company well.
We continue to monitor that and as we start to see a recovery in the business a rebound in our trading levels.
We would hope there's an opportunity to read reprice that security is more in line with what we have in the rest of the portfolio and continue to benefit from the decreased interest expense.
I'll pause there and if you have any follow ups. Please please let me know.
All right. That's helpful. And then just last one for me William Thanks for that outlook for some sequential improvement in the Americas, and I get that Europe, and Latin am or a little tough to call should we similarly expect improve.
Improvement in free cash flow in the fourth quarter kind of as you think about the business to that are you kind of through the worst in free cash flow can start to improve from here or is it still too a little too volatile to make that call. Thanks.
Yes, it is still volatile it should improve from here I'll, let Brian give you a little more detail.
Yeah look I think I think on the Americas side, we're seeing improvement and given the guidance. We provided you should expect that to continue at a modest pace.
Europe, obviously, the volatility through the incremental restrictions is difficult to predict I would I would point you, though to the resilience that was shown in Q3 and really the closing of the gap with respect to becoming at least on an operating or segment segment operating basis.
You know close to to the free cash flow neutral.
So you know hopefully we'll continue to make progress there. We're certainly seeing on America side, Europe is a bit tough to call, but we're hearing good news out of the kind of the macro environment that said things may be improving so hopefully.
Hopefully that that will settle down but right now it's tough the tough to predict.
Just to be absolutely clear that one on Europe for Q4, just if I may for a second just because I think what we are saying, we don't want to call. It at the moment for obvious reasons and in UK went back into Lockdown last week on that front. So those are our two biggest market, but I do want to be very clear edge to underline that these lockdowns.
While not directly comparable to what we saw in the second quarter schools and universities remain open there is still significant traffic out there on the on the streets and then in the city centers in a way that they are absolutely walking back in.
April so well.
It's difficult to provide any real guidance for Q4, I do want to be clear that we expect or we don't expect to see anything like the impact from kind of it that we saw in Q2 in Europe.
Yep. Thank you.
Thanks, Steve.
Our next question comes from line of Lance Vitanza of Cowen.
Hi, guys. Thanks for taking the questions. Let me start with that I want to go back to the Port authority contract.
In the press release that came out there was a reference are references to a transition period and I'm wondering if you could and I know that you know this is public document yet, but could you talk a little bit about what exactly is contemplated to occur or not occurred during this transition period and then.
Is it possible to estimate when air travel if and when air travel eventually returns to its precluded levels [noise] how.
How how do we think about the possible size of this opportunity in terms of annual AD sales what percentage of your AD sales that means how meaningful should we think this could some day.
So I'll take that one.
Again morning, let's.
So a couple of things like that as I said the contract is not is not yet public it's not yet signed so we want to be very thoughtful in details we share, but you should think of the transition period as being akin to what we're doing with airport authorities.
That we worthy incumbent with so it's things to reduce risk.
Risk and exposure during the during the time that we think co, but it's going to be most prevalent and then as William referenced and as was referenced in our press release, the build back of the bag in the build back of the Capex schedule.
Is tied to recovery in in air traffic, which is a concept that we think would be very constructive to build into.
Future airports contracts, that's something that we're certainly considering as we as we proceed pursuing future ones just to minimize the uncertainty during.
Times like what's just happened I mean, certainly this has been has been pretty unprecedented.
In terms of the size I don't want to I don't want to anchor you on a on a particular number but these are public numbers that that result from these kind of contracts and if you look back in.
In the last couple of years that the current income with had the contract.
You know it was it was in the 60 $70 million range.
And.
I certainly think if you if you predicated on air traffic recovering you could see it getting back to that sort of level, but I don't even really want to speculate on that because we don't know the curve.
Of of how that recovery is going to happen, but we're certainly very excited about it because we are big believers in New York and we do believe that this will.
Also help us in cross selling other inventory that we have.
In the region. So we think this is going to be a real positive for the business.
Thank you great if I could just get one more question and just what about radar I mean, it actually looks really interesting now all the more so given.
Tumors changing travel patterns, but relative to your peers and really just some thinking about our funds and Dico does your radar platform differentiate yours and simply table states, including advertising.
Slowing you want me to take this one or yeah.
So.
I I've been pretty consistent about this since we started talking about radar that I believe that out of home is going to need to deliver the same kind of insight.
That marketers are able to achieve.
When.
When they do when they do business with digital partners.
It may not be in exactly the same way, but they're going to need to be able to do the same kind of analytics on ROI that that they make radar well.
We'll have elements to it that are differentiating just like you know creative would have elements that are differentiating or how you do operations would have elements that are differentiating, but the core of what it is and the ability to deliver insight.
About audiences is something that I do believe we'll be table Stakes in time and I think the market has been.
You know behaving in that way, we've seen more and more emphasis on this from a from the different players. So how we do it there are things that we can differentiate we can make the customer experience better we can be faster on certain things.
We can provide more granularity more functionality things like that but the core concept of providing data to do ROI analytics is something that I do believe we'll be table sticks.
Yeah, Let me let me just add a couple of thoughts on that non semi because I think thats right.
But I do think.
I don't think we should be on duty modest about the fact that it does give us an advantage in demonstrating to the market or what what our inventory can deliver and specifically if I can just for a moment on Europe.
Yeah, I would I would certainly want to congratulate Justin Cochrane then our team in Europe for delivering a very strong performance in Q3, but I would also say I didn't think we could have done that without radar in the UK, and Spain, which really helped us to demonstrate to advertisers that audiences were coming back.
It was part of our value proposition. So for the moment certainly it does give us an advantage medium to long term I agree with Scott This will become just table Stakes.
Got it thanks, guys appreciate it.
Our next question comes from line of Ben Swinburne Morgan Stanley.
Good morning, a couple of questions, maybe starting Scott if you could talk a little bit about what you're seeing in the U.S. business, you mentioned that national was down more than local when you look out over the next three to six months are you starting to see the national money come back faster I know that tends to be more tied to digital so shorter cycle just.
To get a flavor of kind of the local versus national outlooks, obviously national has pulled faster, but in theory could come back quicker.
And I also I was just curious if if I think William you described the Port Authority deal I was maybe a model.
Scott could you just talk about why are there other major transit opportunities into U.S. or abroad, if that you're looking at over the you know during this kind of cold period, which which may give you an opportunity to you know to reshape the model and take advantage of I mean, theres only so many port authorities out there, but even if they are smaller scale do you see other opportunities.
Like this out there to go after.
Sure. So Ben let me, let me touch on your first part first the national versus local you're.
You're right that national pulled back much more aggressively in much more quickly and local has been has been more steady and more stable and I think I've talked about this on other calls, but the diversity of performance across our portfolio is vast.
If you look at our smallest markets.
Some of the smaller cities in Florida, some of the smaller cities in Texas or in Arizona versus the new York's or San Francisco's a it is dramatic the differences and the the main driver of that is because of a.
The the national the National spending pullback, we did see in Q3, some really nice recovery in our digital space I'm, particularly our roadside digital space.
And.
We you know have.
I have been seeing I think the big challenge as you think about our business is that it does lay in overtime and advertisers are very uncomfortable, making future commitments on anything except the most iconic assets and so our visibility our visibility is much lower than what it even is.
And in typical times and as we get more and more digital the visibility gets somewhat lower as well, but the things that we're seeing right now you know in in quarter, we're beating comps again, which we have not been doing much of the year, we are seeing programmatic pick.
Up and it's been quite robust.
You know for us.
In the last in the last stretching in it. It has a lot of features that advertisers really right like right now in terms of being able to decide the very last minute whether they are whether they are committing and we're seeing that you know here in Q4, I think we're going to have a similar dynamic as we head into Q1, the things are going to be booking will really late.
Hopefully as we see progress on things like.
The vaccine I thought the news out of Pfizer was really encouraging.
As that starts to build confidence starts to build and you start to get the the prerequisite it.
Conditions that you need for a full on AD recovery, but obviously, that's something that we're not in any position to to call.
As as to your question about other transit contracts a number of contracts that were anticipated to be coming out have actually been delayed I don't think that there are any big ones that are in process right now but that.
Any any major ones I mean, there's always there's always some smaller markets and things like that I think the next one in the Hopper is the the Chicago airports and the L.A.X. will be.
Some time not too far beyond that.
From the kind of transit that we follow and then you'd be better off with a sales front ticket to the perspective on on subway and rail I don't know William if there are any global ones that you'd want to speak to.
No I just said we learned all the time from every from every contract negotiation that we go through and certainly I think we've learned a few things and in this in this one which we would take forward into into future into future transport contracts, but there's nothing specific on the horizon at the moment.
William can I just ask one follow up I don't know if you'd really willing to give it to us, but I thought I'd take a shot how how is Europe in October or if you don't want to talk to a number was it an improvement from kind of the trends you saw through Q3, just trying to get a sense of the underlying trends before the lockdowns get back.
Yeah, I'm I can't look at my lawyers, because I'm not [laughter] on my own here in London say.
I would say we are optimistic that we were going to be able to show continued sequential improvement into Q4, we had good momentum and on table was looking looking very encouraging to enable us to be able to do that.
But the the the the new don't die and specifically those in in France, and the UK kind of make made US a latest pool is what I would say and so it continues to be very encouraging into October is that what I think I should say that.
Thank you.
Our next question comes from the line of Aaron Watts of Deutsche Bank.
Hi, everyone. Thanks for having me on two questions from me, let me start with one focused on the U.S. business as you look at this recovery and specifically Bob.
Volume versus price can you talk about the dynamic between those two and if you had to give some concessions on price you see a path.
For bringing the pricing back up knowing that historically, that's that's been more difficult. So the two to kind of push back to normalized levels.
Sure No I, let me.
Address that in a in a couple of ways I think.
You know for first off the nature of the the downturn that we have right now isn't.
Isn't fundamentally about price sensitivity the discomfort that people have.
In a lot of ways is more about appearing out of step with with what's going on in the markets and so think of that as something that is inhibiting people wanting to commit a you know, particularly the printed campaigns that are you know several weeks out.
When you have so much volatility and where the cases are springing up and how you know government.
Governments are reacting to it and things along those lines. So when you start thinking about volume versus price. The volume hit is really driven by not price elasticity or anything having to do with that it's much more about terms and it's much more about the ability to go up and down so as a result as were.
Working through things I mean, certainly during the times when traffic was down we were having dialogues about concessions and make goods and things along those lines as we look to the future and we look to traffic being back.
We are striving to to.
You know not before.
Be focused on on that element and I've talked.
On a number of other earnings calls about how what we really measure is yield and we measure it pretty.
In a pre segmented way looking at our assets in terms of our very most in demand assets.
Segmenting out into lots of other categories and so what you typically see happen in in soft periods is that the demand for the Super premium assets remains pretty stable and that even when people will step back. So William referenced this in his comments that were in the upfront period.
For our long term renewals since we call Perms.
Even with somebody steps back from a perm were almost always able to resell it to somebody else oftentimes that at an attractive rate.
Because it's just the nature of that of that type of inventory and what you. See then is that the the longer tail of our assets are where the the dynamic is tougher.
As it plays through so you know I'm not going to I'm not going to call how yield is going to evolve over the next year, because I don't really know how the virus is going to evolve and we've seen how much of an impact it's had on the business.
But I do believe that our ability to optimize yield and our ability to work constructively with our advertisers.
Create compelling value propositions remains admit that we are going to be able to talk to recover things pretty well hopefully that answers. Your question as best I can.
Now that's helpful context. Thank you for that and my second question is on the cost side and I'm, hoping you can frame up a little bit more how to think about the fourth quarter and maybe even the first quarter cost base levels given the cost actions you put in place, but also some of the ebbs and flows of the arrangements you.
Made with with landlords, whether it's in Europe or here in the U.S.
And how those costs may ebb and flow with with as time moves forward and the recovery moves on.
And it should fourth quarter costs look somewhat similar to third quarter costs I guess, that's another way to put it.
Yeah.
Well you know, it's it's I would break it into kind of two categories. One are the costs that are not really tied to revenue as they are the ones. We control. We have provided some information about what we expect to take out on an annualized basis and.
You should see some of that begin to occur we started Latin America very early there almost completed.
Europe and Americas are working on their plans now we'd expect Americas to be done over the next quarter or Europe or operating a lot of different countries and and you know cost reduction initiatives take a little longer we.
We expect to complete those and 2021 and and that's really costs out of the business.
With respect to.
You know other costs in particularly in our largest category or lease expense and the abatements and the deferrals that we negotiated with Counterparties.
That that is has had a big impact we've been very successful we've talked about the level of lease that we've gotten on our lease expense.
That we expect to get some of that continue some of that through to the end of the year and we'll continue to do.
Do what we can to negotiate a continued relief and deferrals as appropriate.
That being said that that is really going to come back as revenue starts to come back and so.
As we see improvement in the underlying business obviously both.
Both the relief that we've gotten in future release that we may get we'll we'll start to dissipate deferrals will start to come due and we'll start to see some of that likely in fourth quarter and it will continue as revenue comes back. So I don't have I don't have specific numbers on that and I think thats still to be deterred.
And what I would convey Aaron is.
Our our our operators are very very.
Very involved and in working with Counterparties.
On the on the on the leasing side to make sure that.
We're aligned at capturing all the benefit that that we can in the current environment, but as revenues return.
You should expect those costs to come back.
Very helpful guys. Thank you.
Our next question comes from the line of Kannan Venkateshwar of Barclays.
Thank you I guess following up on that comment.
You think about good golf coming back should we think about them as being proportionate to revenues in other words, because some of these are departments.
And Beakman's I wouldn't view on that.
<unk> revenues come back.
Some of the concessions you have given made basically come back on a larger scale as cost.
And that's what we need to think about cash flow and last did I get the Unlevered number was roughly about $300 million, if I'm not wrong, but that improves China.
So what you should expect that number to come back over is it two years three years, because my guess is.
The operating leverage is probably going to kind of the opposite way for some time.
As revenue has come back and so it may not be a mini it back and back to the same level of cash will sort of some color around that would be useful. Thank you.
Well I'll I'll I'll address it at a high level and then if William R., Scott want to dig in a little deeper on on what they're seeing from the operating side I'll turn it over to them.
I think I think that.
The way you're thinking about it is the way we're thinking about it and what I mean by that is you know as revenues come back certainly some other leaf we've gotten that lease expenses a big category.
I'll come back it will be it will be difficult to predict what form that takes how long that will take how that is proportionately tied to revenue, but I think we should anticipate that go into the body lennar linear recovery on the cost side because these could come back you know rapidly, but that's a good thing that means.
That our underlying business is coming back our revenues are increasing and ultimately we'll get to the point, where you know this this.
This this will.
Approach pre coded levels or overtime exceeds who told the bubbles when that will occur you know who knows I I think that we've got large I think that we are we are anticipating.
Being back to free cash flow neutral during 2021 with with large interest payments in Q1, and Q3 that is likely you know toward the end of 2021, but you know that that's based on you know a recovery curve that may or may not come.
Come to fruition. So I think it's I think it's a challenge really to predict how all this one fold to what we saw in Q3 was.
Resiliency in the business as the audience came back we saw the advertisers come back that was particularly acute in Europe of course, Europe had a lot more to come back from we saw post positive momentum, but you know in at least in Europe. We were we paused because of the new restrictions it real.
Really it really depends I think on on how the recovery plays out, but I do think we're well positioned in terms of liquidity.
That we have a runway and we see a path to recovery.
In 2021, so I don't know William or Scott, if you have anything to add but that's kind of that's kind of at a high level. The way that I would I would think about this question.
Scott joined it I don't think from the U.S. on the cost side.
I mean, I think the only other thing I'd emphasize and we've said this before is that.
These these dialogs are ongoing dialogue their dialogue that.
Just because we got a concession in Q2 doesn't mean, we won't get a concession in Q3 or Q4 Q1, and some of these things because particularly the municipal oriented or the the ones that are related with a governmental agency take a long time to work through the approval process and so you will probably see some.
Lumpiness and savings that flow through over the next couple of quarters, which may actually relate back to prior quarters, it's not going to be a huge number but the point for you to take on this is that these conversations are ongoing and they.
They are lumpy as you get.
Agreements.
Yeah, and just to finish on this I mean.
I Echo Scott's point about the Lumpiness.
Certainly see that in the European piece as well in terms of some of the renegotiations on contract, but I think in terms of your kind of broader question. It does all of the cost kind of come come back when the market comes back I think the ounces that is some of it does but a lot of it doesn't I think one of the things about a.
A major disruption like like cobalt has obviously been is it does force everybody to look very hard at that business and that's the way they operate and looking for efficiencies in the way they are operating.
And some of the restructuring some of the headcount reduction that we would absolutely expect that to remain a once revenues were 10. So I didn't know whether that helps with with anybody model, but I do think that's an important point to land.
Got it. Thank you and then if I could just follow up on the border had put a vote to be contract.
Given the structure is linked to yeah cool bed and the back of revenue is going forward.
What does the breakeven period look like relative to maybe other compatible contracts or does the cash flow breakeven also take longer.
Let us go other contracts or is it comfortable but when you think about this particular contract. Thanks.
So it's it's different it's different in some ways, but but the the outcome will likely not be wildly different if.
If you think about our typical deployment in a in a typical environment.
We are actually very focused on deploying the capital as fast as we possibly can because that's how you drive growth in the revenue base of the of the contract in this case, we're going to be a little bit more methodical, we're going to partner very closely with the port.
On our joint priorities for the build out, but we're not going to be going flat out because of the nature of of the environment that we're in right now and so that probably will add a little bit of time to the cash flow breakeven.
But it's really hard to give you an answer on that not knowing exactly how long.
You know the the travel level stay depressed, but we do feel very good about the protections that we've got built in and the partnership that we've got lined up here to to manage things.
Got it.
Thank you so much.
Our next question comes from the line of Jason Bazinet of Citi.
Oh, Thanks, I hate to go back to the cost question, but maybe I can try to ask it this way.
Maybe in simple terms can you just give us a sense of the.
Fixed portion of your cost basis, let's say in 19, and where you think that will be in 20 as a percentage of total expenses.
And then if a dollar of incremental revenue comes in.
How much will flow to EBITDA.
You know based on whatever Axis, you think is most useful whether it's a geographic split or whether its Billboard versus transit Street furniture, just some simple rules of thumb I think would be.
Would be quite helpful. Thanks.
William did you want me to try to respond I agree Brian Yeah. Okay. Thank you yeah. It's a let me let me hit the cost question first I think I think you know we we've given some.
Commentary pre code and then maybe post covered about what our cost structure looks like the <unk>. The amount that's fixed you know at the end of the day the.
The largest portion of our expenses site lease and I think we've talked about around half of that you know.
The site is being half of our our.
Operating expenses, and you know close to half of that being fixed and so.
Post code that you're in this environment, where you're you're attacking that.
Because of the revenue decline.
And I do think that we've talked about the success, we've had but also that that coming back you know potentially as revenue comes back.
There could be timing as Scott mentioned, there's lumpiness.
But our largest expenses is largely fixed we have a large fixed base.
And so that that kind of leads to the next part of your question and it's in that as revenues come back what is the incremental drop to the bottom line and you know in the past we've talked about the operating leverage in business and I think in a normalized environment you know, there's a significant them.
Out of each incremental ball or that that falls to the bottom line and so we worked very hard to drive revenue I.
I think I think between where we are today.
And where we will be say to get to normalized level.
We've got we've got some.
Interesting things going on and that is that that rule of thumb, where you know the revenue. The additional dollar revenue you know proportionately from.
The more you bring in the greater amount falls to the bottom line because your fixed space.
Doesn't really play out in this interim time the incremental dollar revenue is great. But then you'll still have some of these fixed costs come back as the the abatements that we previously had.
Roll off I don't think there is a rule of thumb in this time period I think you know from a from an operating perspective, we will continue to negotiate with our counterparties to to make sure that our lease costs are aligned.
From a business perspective, we'll look for opportunities to continue to right size the business and when we talk about that at some point.
And you know, we'll we'll continue to drive revenue because it will benefit the business and and when we get back to that normalized environment, where we have strong positive operating leverage.
That would be a good place to be I don't know I can't predict when it will be but we've seen positive signs in Q3, I think fundamentally what I'd, what I'd want to say.
Jason is is that.
The underlying assets have proven themselves to be very resilient.
We wouldn't expect that to continue as a as as audience has come back as advertisers.
Okay. Thank you bye yeah.
Our next question comes from <unk>, Steven This is of Wolfe research.
Good morning, I was hoping you might be able to give us a little bit of color on how audience trends and revenue trends seem to correlate and what types of conditions when certain markets to actually outperform their 29 chemo.
Yeah, I mean, it's not it thanks, Dave and it's not an exact correlation but clearly.
Clearly if advertise a sense, there's nobody at that looking at our boards than they are less likely to to support the medium and once they see traffic returning we have seen a very strong sense that advertisers have come back.
And with the increasing flexibility of medium we've seen that I'll be able to exploit the benefits of digital and so on as we've said so yeah. There is there is clearly a relationship but there are other factors too and I would say that the other yeah. The biggest factor is going to be the kind of macroeconomic.
Dominic environment consumer confidence in relating in relation to that consumer confidence confidence tends to lead to advertise the confidence.
And we've seen we see markets respond to that as well. So I think those are they are the main drivers that we see full full for revenue and as I said in answer to an earlier question I think what what's encouraging is that we have seen a pretty a pretty sharp snap back as they do it in terms of return.
We're clearly cautious at the moment, because we've seen since the restriction, but we would obviously be monitoring that closely in the U.S. and in Europe and in the coming weeks and.
Yeah. So I think that's what I would say at the moment.
Great and then on the second part of the question.
Did you see any kinds of conditions that permeated in those markets that did outperform 2019 levels during the third quarter.
I think they would that they tended to be the in the markets, where the restrictions have been well observed and wed governments were clearly responding quickly to the the pandemic.
So.
Switzerland, when Europe was the first market that we saw the the recovery come back I think I spoke about this even on our last quarterly call.
And they that was a country, where the restrictions are quick to imposed.
They would then well have the EPS and then they were lifted and spending came back very quickly I think where we've seen perhaps slower recovery is whether it'd be less compliance with the restriction and and a high a prolonged.
Per loan grade of infection.
Other things you know one thing the other thing I I think might be interesting to think about is our our asset base. The countries that we performed well in.
We have a low transit exposure.
Exposure, particularly in Europe, I think it's around 10%.
In the Americas, it's around 17% largely airport. So in places you know, where we have street level assets proportionately larger than the competitors. We performed very well also I think where we've had digitization of the street level assets, it's been very beneficial.
So I think those are two of the things I'd point out yeah, I mean, you're absolutely right, Brian that certainly the hype the high proportion of digital they've made a big big difference in some of those European markets to the quick snap back in Europe, We sold digital reach maybe close to 70% in the third quarter and that is because it was.
Its flexibility and able to advertise its come back very very quickly into the medium term.
Certainly true.
Great. Thanks, so much.
Ladies and gentlemen, we have time for one last question. Our final question will come from Jim Goss with Barrington Research.
Thank you Jim.
I wanted to ask a little bit more about the New York Airport installations could you talk about the blend of information advertising and entertainment that might be used over the systems and whether the airports with interconnect say would you have information on slots at Laguardia and Kennedy.
Displays in case there were.
Tie ups or something of that nature, and if this might set a template for other areas.
Airport installations, you either have or intend to make bids, including say Chicago in L.A.X.
Scott sure so.
The the exact architecture of of how we're going to handle information I mean every airport contract has an element of that and this one has a robust.
Other things in terms of communicating within airport about dynamics that are that are going on I don't actually know off the top of my head. If the plan is to show.
White information from different airports, you know across across the field. So that's one.
I actually have to look into but there will definitely be way finding information there'll be information about the things that are happening within the airports you know different different information that the port is looking to share with the people passing through the Port authority airports will be part of it.
When I think about this as a template for for future airports, the digitization and the the ability to integrate the digitization across the airport is something that I think we'll continue to see I think some of the contract elemer.
And in terms of anticipating movements in the in the audience levels is something that you know we'll be looking to we'll be looking to add in in future contracts, but I don't actually that was a good. It's a good question I hadn't hadn't thought about the the cross airport communication.
Okay, maybe one last one.
If you get too much into it but you seem to or the commentary about the.
Pfizer announcement of the vaccine was somewhat muted in terms of you know I guess more of a wait and see how it would affect your business do you think.
Should we should we be cautious about how we think it will flow back into their ability to.
You know develop an audience sell ads that sort of thing or do you are you are you optimistic that the.
ER turnaround could be.
You know very quick and therefore benefit from the constraint cost structure you have described.
Yeah, I'm, usually optimistic do you want me to take its gotten in general because I think that's it.
Across the world a I'm hugely optimistic if it gets the vaccine proves to be as effective as the claims are coming out than I am absolutely optimistic that our audiences will enthusiastic they return to the street and advertisers will enthusiastically returns while medium and I think we have.
Real evidence that.
They they do come back, but I'm not an epidemiologist I'm not an expert on vaccines I haven't I.
I haven't seen the detail of the clinical trials and I believe there's more there's at least another month of trials needed before you got widespread use of the vaccine, but I am I am positively disposed I'm highly optimistic and and you're seeing some good with it then.
Even before we could see December coming back because competence will return so quickly.
And certainly we would see that going into Q1, I mean, I think the one thing I would take seriously and importantly on this development is that I think things will move very quickly one once the evidence is that I think take up will be very quick and I think reaction from.
The confidence and enthusiasm will will similarly did the very fast but as of this moment on this day on the night of November I think it's too early to call that frankly.
All right well I'm not an opinion appear PDL just either but they said the efficacy rate was over 90%, which was an upper Wolfcamp mall tux and measles. So you know I think that definitely few flu, having at 40% to 60% so the sounds pretty good.
Yeah, I mean, if thing we we yes.
Yeah, absolutely so.
Thank you and thank you everybody for joining our call and I'm I'm delighted to end on on such an optimistic and positive note I would just end by by saying you know I think we were very proud of what we delivered in Q3.
We have some some some bumps in some lumpiness ahead of us in the next few weeks, but we are absolutely optimistic about.
About 2021 and.
We look forward to keeping you updated with developments in the business in the in the coming months and thanks, everybody for your support and your interest. Thank you.
Thank you ladies and gentlemen, this does conclude today's conference call you may now disconnect.
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