Q4 2021 Clear Channel Outdoor Holdings Inc Earnings Call
Year, Thanks for rising above the myriad challenges, we face to deliver these results.
Without the pandemic, we kept our eye on the ball and double down on our strategic plan as a result, we strengthened our presence in the advertising community. During this period and as our markets reopen we saw consistent improvement with each passing quarter, culminating in our very strong fourth quarter performance.
We have developed a dynamic smart addressable platform that we believe will grow it strengthen over time, allowing us to serve advertisers with ways that we could only imagine a few short years ago, we are meeting advertisers, where they need us most and demonstrating our ability to accurately reach their target audiences, even as consumers alter their mobility and <unk>.
<unk> patterns.
Outdoor industry overall has returned to growth and we believe we can grow revenue in excess real GDP and traditional media as a result of our business transformation efforts. The resilience our business has demonstrated throughout the pandemic certainly a strong and tangible data point.
This resilience is further supported by the macro environment, where advertisers are being overexposed to digital and challenged by non sports linear TV or.
Our continuing push to add intelligence addressable 80, an attribution will serve to strengthen <unk> role as the last mass visual media.
Our ability to drive cash conversion rounds out the reasons, we're excited for the future.
As you can see in our 2021 results incremental revenue leads to strong cash conversion, particularly in our Americas business and we believe we have a powerful engine for cash generation as we drive revenue growth, while continuing to operate efficiently.
Looking ahead, we believe our long term outlook remains very positive and we remain committed to our strategic roadmap, which includes accelerating our digital transformation, improving customer centricity and driving execution excellence.
Today, I'll unpack, our three primary digital transformation initiatives.
First we have continued to grow our digital footprint, which is central to our long term growth strategy for perspective digital led the rebound in 2021 and was up 66% in the fourth quarter and up 41% for the full year.
In the U S. We deployed 94 larger format digital billboards, giving us a total of more than 500 digital billboards in 2021 combined.
Combined with our smaller format digital displays in airports and on shelters, we have a total of more than 4000 digital displays across the United States and in Europe . We added 1361 digital displays in 2021 for a total of over 17500 digital displays in our lives.
In the year ahead, we are aiming to deploy a similar number of digital billboards in the U S and digital displays in Europe , which will further expand the addressable 80 of our portfolio and we are investing in the team and infrastructure to accelerate that process.
Second we are continuing to up level, our radar offering through a range of partnerships that are further elevated our analytics capabilities and our ability to measure the impact of our assets.
Radar is now well established in the U S and in the past year, we introduced radar for audience proximity planning in our major European markets. We believe this has been a contributor to the rebound of our business.
Radar offers advertisers an easier way to unlock the value of out of home advertising by applying approaches and strategies traditionally applied in the online world to the physical world largest screens.
Our ability to deliver a valuable set of actionable insights to advertisers is enabling our sales team to focus more on selling creative ideas that effectively reach the demographics that advertisers want to reach.
Overtime, we expect to continue to attract new advertisers and broadened our discussions with our customers beyond the locations of our outdoor assets to include as well the value of specific audiences and consumer behaviors, we are demonstrating our ability to influence purchasing decisions, even as consumer mobility patterns change. This is a key.
Key outcome driven by the investments we've made in our platform.
Third we're continuing to build on our programmatic presence.
Through our integration with multiple DSP and SSP or digital out of home platform is increasingly accessible to digital advertising buyers through the same buy side platforms that utilize spend their digital budgets. This is an example of our digital transformation and customer Centricity pillars, working in tandem using technology and partnerships to <unk>.
Open our assets to new buyers and budgets while.
While it's still a small component of our results revenue from programmatic increased substantially in the past year and we expect that will continue to advance in the year ahead. Our expectation is based on the strong evidence that advertisers value of the programmatic options from their behavior with digital display video and most recently CTV.
I'll address our other strategic pillars customer centricity at execution excellence in future calls, but if you refer to slide five you can see a few examples of successful campaigns driven by all three of our strategic pillars in summary, as we continue to execute on our initiatives. We believe we will strengthen our ability to attract more advertisers to our.
Platform and gain share from other media as we drive growth in the out of home media.
At the same time, we remain focused on further demonstrating the operating leverage in our model through profitable growth, while pursuing accretive opportunities and strengthening our balance sheet.
Finally, as we announced in December we've also commenced the process of evaluating strategic alternatives for our European business as part of our focus on optimizing our portfolio Euro.
Europe performed very well in the second half of 2021 and is positioned well for our strategic review, including a possible sale.
With that let me turn it over to Brian to discuss our financial results as well as our guidance. Thank you Scott Good morning, everyone and thank you for joining our call.
As Scott mentioned in the past year has been exceptional.
As we move from a very difficult first quarter to a fourth quarter with revenue and segment adjusted EBITDA for Americas, and Europe ahead of the fourth quarter of 2020 and 2019.
Moving on to the results on slide six.
Before discussing our results I want to remind everyone that during our GAAP results discussion I'll also talk about our results excluding movements in foreign exchange a non-GAAP measure.
We believe this provides greater comparability when evaluating our performance to.
Avoid repetition the amounts I referred to our fourth quarter 2021, and the percent changes of fourth quarter 2021, compared to fourth quarter of 2020, unless otherwise noted.
Consolidated revenue was $743 million 37, 2% increase excluding movements in foreign exchange revenue was 38, 8% and more importantly, four 9% compared to the fourth quarter of 2019.
<unk>, China, and excluding movements and foreign exchange.
Consolidated net income was $66 million compared to a net loss of $33 million in the prior year.
Consolidated adjusted EBITDA was $222 million up substantially compared to 101 billion in the fourth quarter of 2020.
Excluding movements and foreign exchange consolidated adjusted EBITDA was slightly higher at $223 million for the <unk>.
Full year consolidated revenue increased 28% to $2 2 billion excluding.
Excluding movements and foreign exchange consolidated revenue for 2021 increased 19% as compared to 2020.
Consolidated net loss for the full year was $433 million.
Compared to $600 million in 2020.
Consolidated adjusted EBITDA for 2021 with $423 million up substantially.
Actually compared to $120 million in 2020, excluding movements and foreign exchange adjusted EBITDA was $431 million for the full year.
Now please turn to slide seven quarters view of Americas fourth quarter results.
The Americas revenue was $371 million of.
44% and even more significant it was seven 6% higher than the $345 million revenue, we delivered in Q4 2019.
Revenue was up across all products, most notably airport digital displays digital billboards and principles.
Digital revenue, which accounted for 41% of Americas revenue was up 83, 7% to $153 million driven by both airports and billboards the rebound in digital is in large part due to the flexibility of <unk>.
<unk> digital.
As well as the New airport inventory in New York, and New Jersey and programmatic.
Advertisers want the ability to place at closer to the date of campaign and easily change the content Nash.
National was up 48, 6% and return to pre pandemic levels.
Earnings were 39% of revenue.
With local up 41, 1% and accounted for 61%.
Direct operating and SG&A expenses were up 21, 6% increase.
The increase is due in part to an 18, 2% increase in site lease expense to $112 million driven by higher revenue and higher compensation costs due to improved operating performance.
Segment, adjusted EBITDA was $170 million up 83% with segment adjusted.
Adjusted EBITDA margin of approximately 45, 8%.
EBITDA margins higher due to a few one time.
Vince benefit related to Covid.
Excluding these one time benefits segment adjusted EBITDA margin would be close to Q4 2019 margin of 42, 3%.
Turning to slide eight.
This slide breaks out our <unk> revenue to grow more than the other and transit.
Billboard in other which primarily includes revenues from bulletins posters Street furniture displays spectacular small scale. It was up 26, 7% to $294 million.
This performance was driven by improvements across all our regions with particular strength in the northeast.
Transit was up 290% with airport display revenue up 214, 9% to $73 million.
Reported revenue was helped by the rebound in airline passenger traffic and the new Port Authority of New York, and New Jersey advertising sponsorship contract.
Now on to slide nine for a bit more detail on Billboard.
Digital revenue rebounded strongly in Q4 and was up 45, 3% to $107 million and now accounts for 36, 4% of total Billboard in other revenue.
Non digital revenue was up 18, 1% net.
Next please turn to slide 10, and a review of our performance in Europe in the fourth quarter.
Commentaries on results that have been adjusted to exclude movements in foreign exchange.
Europe revenue increased 33, 1% driven by improvements across all products, most notably street furniture and in most countries led by France.
Digital accounted for 39% of total revenue and was up 52, 4%. In addition.
The strength of our digital footprint drove growth in overall revenue in a number of markets in the quarter compared to 2019, including the U K, Belgium, Sweden, Finland and Ireland.
Direct operating and SG&A expenses were up 15, 6%. The increase was driven primarily by increased site lease expense, which was up 36, 1% driven by lower negotiated rent abatements and higher revenue. Additionally, compensation was higher due to improved operating performance these were slightly.
<unk> by declining cost for the restructuring plan to reduce that.
Segment, adjusted EBITDA was $86 million up 131, 8%.
This was driven by higher revenue in the period with segment adjusted EBITDA margin of approximately 24% substantially above the fourth quarter and 2020 due to high pull through as a result of the relatively fixed cost base.
Thats from cost reductions and onetime savings.
Moving on the CCI DB or.
Our Europe segment consists of the businesses operated by CIBC and its consolidated subsidiaries Accordingly, the revenue for our Europe segment is the same as the revenue per <unk>.
Europe segment adjusted EBITDA the segment profitability metric reported in our financial statements does not include an allocation ccitt's corporate expenses that are deducted from CCI between operating income and adjusted EBITDA.
As discussed above Europe , and <unk> revenue increased $81 million in the fourth quarter of 2021 compared to the same period of 2000 $20 million to $350 million.
After excluding 8 million impact from movements in foreign exchange rates, Europe , and <unk> revenue increased $89 million during the fourth quarter of 2021 compared to the same period of 2020.
<unk> operating income was $51 million in the fourth quarter of 2021 compared to operating income of $1 million in the same period of 2020.
Let's move to slide 11, and a quick review of other which consists of our Latin American operations.
Other revenue was 22 node up <unk>.
$7 million, excluding movements in FX revenue was up 59% driven by improvements in all countries.
Correct operating expense or SG&A or $18 million up $3 million in.
And segment adjusted EBITDA was $4 million up $3 million.
Now moving to slide 12, and our review of capital expenditures.
Capex totaled $66 million in the fourth quarter, an increase of $35 million compared to the prior year period, as we ramped up our spending particularly on digital.
Full year, Capex was $148 million up $24 million compared to full year 2020, the increased capex for the full year was also largely due to our investments in digital.
In addition to our capital expenditures I also wanted to highlight that during 2021, we made several asset acquisitions totaling $20 million primarily related to permitting easements in our Americas segment.
Now on slide 13.
<unk> consolidated cash and cash equivalents totaled $411 million as of December 31, 2021.
Our debt was $5 6 billion up slightly from the prior year.
As we previously announced in the first half of the year, we refinanced our 9% quarter senior notes and one of our non guarantor European subsidiaries entered into an unsecured loan at approximately $34 million through a state guaranteed loan program.
So in the fourth quarter, we repaid $130 million outstanding balance under our revolving credit facility.
Cash paid for interest on the debt was $123 million during the fourth quarter and $388 million. During the year ended December 31, 2021, the fourth quarter cash paid for interest was up approximately $100 million compared to the prior year, primarily due to the timing of interest payments.
Our weighted average cost of debt improved from six 1% at December 31, 2025, 6% as of December 31 2021.
Moving on to slide 14, and our outlook for the business.
At this point in time, we believe our consolidated revenue will be between $520 million and $550 million in Q1 of 2022, excluding movements in foreign exchange rates.
Americas revenue is expected to be between $290 million and $300 million in line with Q1 of 2020.
Which as you may recall was a really strong quarter up eight 5% over Q1 of 2019.
And Europe's revenue is expected to be between $220 million and $235 million excluding movements in foreign exchange rates.
We expect consolidated capital expenditures to be in $190 million to $210 million range in 2022.
Insistent with our plan to accelerate digital transformation, we anticipate around 60% of this amount will be spent on digital assets across our portfolio.
Additionally, we anticipate having approximately $324 million of cash interest payment obligations in 2022.
Now, let me turn the call back to Scott for his closing remarks.
Thanks, Brian .
In summary, we have entered 2022 in a strong position to continue executing on our plan.
As I noted, we're not just picking up where we left off prior to the pandemic rather we believe we can improve our performance as we leverage the investments we are making in our platform to fuel our digital transformation and expand the universe of advertisers we can serve.
Further as we continue to invest in technology, we remain committed to carefully managing our costs and further demonstrating our operating leverage through profitable growth, while evaluating strategic options for our European assets strengthening our balance sheet.
And now let me turn the call over to the operator for Q&A session. Adjusted Cochran, Our CEO for Europe will join us on this call.
Thank you.
Like to ask a question. Please press star one on your telephone keypad now.
Have you changed your mind and wish to withdraw your question. Please press star two.
The first question today comes from Cameron Mcknight from Morgan Stanley . Please go ahead.
Yes.
Hey, Thanks for taking my questions I had two.
First could you give some more color on the verticals that have yet to recover.
And second could you provide any update on the European strategic M&A. Thanks.
Thanks Cameron.
I'll take the second one first because we figured we would we would get this question, we actually have a little bit of a prepared remark for it.
We announced in December 2021 that we had commenced the process of evaluating strategic alternatives for Europe , including possible sale.
It's part of our portfolio optimization process, we know that there is lots of curiosity about this.
But we're really not in any position that we're going to be able to comment on it and so we really just need to refer you back to that in just assure you that as soon as our board.
<unk> takes action on it we'll be communicating that very promptly at that time.
So thats euro on verticals.
There really are not lagging verticals at this point.
Over the course of Q4, we saw most of the.
The big.
Verticals that had been lagging things like amusements and theatrical and retail to a degree.
Really get back to a healthy level of spend I think we're now in a much more.
Normal.
Vertical environment, where as things ebb and flow in the different verticals.
New competitors come into spaces people launch products advertising is taking place it's not it's not an environment right now.
Has any prominent laggards.
Good to hear thanks.
Our next question comes from Steven Cahall from Wells Fargo. Please go ahead.
Thanks, So maybe just first on the first quarter guidance I think over the last few years. When you have guided you've generally been on the conservative side certainly it looks like Q4 was even with the update you gave in December . So just curious how we should think about the Q1 guide in light of that trend do you feel like Youre being conservative is the market.
Moving pretty quick so it's just a little tough to call. So any color on there would be helpful. And then relatedly could you remind us of the operating leverage maybe the percentage of costs that are fixed in each Americas and Europe that will just kind of help us think about maybe what the EBITDA implications are.
For for the Q1 guide and then Scott sorry, if I missed this but with what you're seeing on Capex and cash interest do you think you'll be free cash flow positive. This year any comment on free cash flow. It would be helpful. Thank you.
Alright, Steve.
A lot there and I hope I can cover it but if I if I don't we can we can.
We can certainly circle back.
I didn't write these down and I thought it was going along separate one guidance, so Q1 guidance being conservative.
I'll take that one last but since Scott brought it up.
Look I think I think it's natural for us to be conservative and I'd rather be that.
And the other is that being said I think our guidance typically at the time, we get it is the best estimate of what we see going forward and I think that's the case for Q1 certainly both.
Both segments, but particularly Europe felt some softness with the army <unk> during the quarter. We think we're on the other side of that and I think the numbers.
<unk>, where we think we are coming out and.
On a consolidated basis aren't all that different from what we what we're seeing what we saw in Q1 2019, maybe America's a little stronger being less impacted Europe , a little weaker being more impacted by the variant.
But I think we feel pretty good about the guidance again, it's the best that we have.
At the time, we provided.
Sure.
I think the same.
Operating leverage yes.
<unk>.
We do have we do have <unk>.
Significant amount of.
Of costs that are fixed are our single largest.
Expenses as rent expense in both the Americas and the European segment, a majority of those expenses are fixed I don't know that we provided a whole lot more detail per segment on kind of what the fixed and variable is but I think it's roughly 75% fixed 25%.
Variable but.
It shifts around that those numbers.
<unk>, our second largest expenses comp expense.
And then I think it drops off pretty dramatically after that so hopefully that gives you some directional guidance on.
Our operating costs in our fixed and variable components therein.
And then the third piece was free cash flow guidance, if I if I recall.
No, we're not providing annualized free cash flow guidance, but I think it's a good proxy to take a look at our performance in Q3 Q4, and our guide for Q1 is that being kind of.
I'm going to knock on wood, but say post COVID-19 recovery period, and the business is back on its footing, it's still recovering, but if you if you kind of annualize the performance backed out the one timers the rent abatements.
That's kind of.
Credit write off reversals.
Different things and then you adjusted on the other side for the <unk>.
Covid impact in Q1, I think you're getting to a baseline thats looking pretty predictive and pretty representative.
2019 levels and we hope to progress from there so not exactly answering the question, but hopefully gives you some color around the way we're thinking about the business.
Got I don't know if you have anything to add on top of it no I think I think that covered it.
Great. Thank you.
Our next question is from Lance Vitanza from Cowen. Please go ahead.
Hey, Good morning. This is Jonathan in for Lance Congrats on the quarter.
Could you so I understand that and of course generating about $72 million during the quarter.
Just wondering how much of that came from the New York New Jersey.
Contract.
Hey, Jonathan.
So I think as we as we've said we don't typically comment on individual contracts, but I know the spirit of your question is kind of.
How are how airports how widespread is the recovery in airports and I think I can characterize that comfortably comfortably as it is it is widespread we are seeing.
Good strong recovery the patterns that we've referenced in past quarters.
The most.
Most heavy international airports being somewhat the slowest to.
To come back and have held up but but not terribly so and I mean the.
The airports it essentially triple year over year.
In Q4 and that was broad based that was not any one contract causing that.
Okay.
Just two more questions for me the first one.
So the guidance for the first quarter.
20% to 550, how does that compare to the first quarter of <unk> 19, excluding China.
Yes, I think it's in the same Zip code.
Maybe a little softer on a consolidated basis.
It's driven by.
Stronger performance anticipated in the U S in Q1, and a little weaker performance in Europe again.
A little more impacted.
By the.
The omicron variance with sprung up early in Q1.
But again I think we're on the other side of that and I think we will have a relatively comparable Q1 based on our guidance versus what we saw in 2019.
Ex China.
Got it and lastly for me.
What percent of the current debt is fixed versus floating and of the 324.
Cash interest expense guide.
Is that related to interest rate hedging.
So we try to maintain we're trying to maintain about a third.
A third two thirds floating fixed.
Again, I think having a large amount of pre payable bank debt in the current environment is a good thing.
Certainly benefited from low interest rates, although also recognize that.
That we are in a rising interest rate environment.
But also recognizing that our business at least historically.
<unk> has performed relatively well and those type of environments.
With respect to hedging.
Separation or the 12 months after separation, we basically recapitalize the company and so we were able to naturally establish our fixed floating mix. So.
So we don't have any interest rate hedges on the books at this time.
Is that does that answer your question Jonathan.
Thank you so much and congrats again.
Great. Thank you very much.
Our next question is from Avi Steiner from J P. Morgan. Please go ahead.
Thank you and good morning couple of questions here, maybe Scott if I could start in terms of one of the strategic initiatives priorities you talked about you talked about programmatic.
Some of the.
Initiatives, there, but can you size the opportunity and maybe.
What the timing may be to get to what you think the Tam ultimately is.
So.
The opportunity on programmatic.
<unk> substantial I mean, if you look at the digital space really across all the different kinds of digital.
Advertising.
Programmatic accounts for more than three quarters of the.
Revenue in.
In that space.
In our space, it's still single digits.
So.
I think as as marketers embrace it.
You have potential for some substantial growth on the flip side there are substantial parts of our assets that people buy for different reasons.
<unk>.
Aren't able to be converted so it's not it's not a one to one.
I'm talking about the printed type assets a lot of the iconic type assets.
People might not actually buy programmatically, because they're really trying to.
Really one location if you will so.
Look I think I think we are in the very early innings of it it's growing very very fast and.
Marketers have definitely shown that they like.
The experience of being able to buy flexibly with data so.
I am very bullish that this is a good opportunity for our space.
Great appreciate that and then if I could.
Flip it to the expense side.
Inflation is obviously impacting a number of sectors.
And outdoor seem to be a little more insulated I think Brian you talked about the fixed variable cost at $75 25, but maybe talk about.
Inflationary pressures, if any that youre seeing.
Inflationary pressures yes.
Yeah.
I think I think the key thing is we do have a relatively high percentage.
Fixed leases, that's our single biggest expense category and so that does.
<unk> provides excuse me Simon.
Some installation.
And certain contracts in Europe , and particularly you might have some escalators, but I think by and large that that is one of the advantages we have vis vis others in FY.
Inflationary environment, our second largest cost category comp is something we have to keep an eye on and we have.
So look I think that.
History, if it is a good indicator would indicate that the outdoor industry and ourselves.
Have reacted pretty well.
Inflationary times.
We hope that is the case going forward, but we don't want to be idle and we want to make sure that we position ourselves as best as possible.
And have done so, particularly on the compensation side.
Okay, Perfect and then lastly.
I know you can't comment much but it is the first call since you've announced the strategic review for Europe , So I'm going to throw two questions out there I think thats a great.
At least I tried.
But one.
I don't know if you can help us think about the tax base at all for those assets and then secondly, as it relates to Europe is there a way to size what percentage or otherwise think about $127 million of kind of adjusted corporate.
Maybe tied to that region and thank you all for taking the questions.
I think those are two for you Brian .
Youre creative.
Good for European information, so well, yeah. So first I'll refer back to the statement that Scott made there isn't a whole lot that we want to we want to talk about with respect to Europe , if anything happens.
With respect to something that the board decides if they ever decide if there is a decision to be made and we will report at that time.
And.
Just.
I guess I'll conclude with.
It would be speculative to talk about tax basis.
Hypothetical disposition, because you don't know what it looks like.
Just the state that.
We have a tax department they are experienced in international activity in it we obviously understand.
The importance of minimizing tax leakage, if any and maximizing net proceeds from any potential sale. So I think.
I think we'd be on top of that and then havent really talked about.
The division of corporate expenses.
I think we report on a consolidated basis I think in the past, we have said that roughly proportional to.
Revenue percentage, we have taken out some cost in Europe , so it might be a little less than that but I think that's the only the guidance and that's the only guidance. We've given historically, we would not want to expand upon that.
Hopefully, it's better than nothing Avi.
I'll take it thank you everyone.
Thanks Avi.
Yes.
Sure.
Our next question is from David Joyce from Barclays. Please go ahead.
Thank you.
Just provide some more color on the digital business.
<unk> added.
A lot of digital faces in Europe , but your digital revenue wasn't up as <unk>.
Strongly so it was in the U S.
Typically speaking so is it.
Is it more of a factor of you have more digital assets in place in the U S and we were able to.
And you can drive the revenue growth already or is it the U S. Marketers are allocating more to the digital outdoor space. Thank you.
Thanks, David.
I'll give you the answer on this one and it's a couple of factors, but the biggest factor is actually the size of the signs and the kind of impact of assigned so when we talk about the large format billboards.
It's really not a fair comparison to look at.
One of those relative to one screen because the majority of what we're deploying.
In Europe would be.
A bus shelter sized screen, so maybe one of our.
Big roadside billboards.
It's like six or seven equivalent in terms of in terms of the size and impact of it and also therefore the money I mean, you can kind of see it in the U S relationship where you see how much more revenue we report on the billboards digitally than we do on the transit assets, where we have multiple of the screen.
And the transit assets relative to the Billboards.
That's the biggest single factor I think the other things that youre talking about in terms of.
U S advertisers being further along the digital path or marketers being willing to allocate more spend it's really country specific.
Heard us talk about before the fact that our UK businesses, 70% digital which is our biggest.
A portion of digital anywhere in the world.
Roughly twice the proportion of digital in the U S. So.
U S marketers and market or certainly not ahead of the U K in that regard.
But some of the other markets.
Europe are slower to evolve and Youre right the installed base effect.
<unk> had the digital presence.
Digital playbook somewhat longer.
Here in the U S. So all of those things contribute put the big underlying one is just the raw value of those really big signs that that comes into play hopefully that answers your question.
I appreciate it thank you thank.
Thanks, David.
Our next question is from Jim Goss of Barrington Research.
Please go ahead.
Yes.
Alright, thank you.
What's the discussion we've had about the 70 525 fixed variable expense. Obviously, there is some limited flexibility and cutting back on costs, but you didn't have improved margins both in.
The domestic and European operations. So I was wondering if you could talk a little about what some of the key constant expense categories.
That contributed to sort of lagging the expense growth with the revenue growth you have been able to achieve and how much of that.
<unk>.
Sustainable.
Because I guess the concept with some of the Covid issue where.
You might be able to rebound the revenues and maybe some longer term savings on the expense side and improve the profitability.
So maybe discuss that a little bit.
You want me to take a first pass at.
We can.
Yes, either way yes.
Thanks, Jim I mean, I think it's it's a little bit of a different story.
Across the portfolio and things that we've been talking about in these questions definitely definitely come into play.
First I think as you anticipate and as we've mentioned on prior calls our expenses during and through the early recovery from Covid are lumpy the relief that we got.
Did not come in a linear way it didn't come in a timely way necessarily but comment bid and so we had some pretty strong.
<unk>.
Relief during during Q4, I'll, let Brian talk a little bit some of the other factors that came in on Q4, but particularly in the U S. We had we had very strong relief.
I think when you look at.
The European business you had.
Very strong operating leverage.
We were talking about is while there was some relief in there as well but.
You really had in Europe .
The business firing on all cylinders.
From a revenue perspective, and if you just look at the pattern in our in our margins in Europe , you see that Q4 is normally the kind of high point I think.
Q4, 'twenty, one was a particularly.
Strong example of that because of the pent up demand.
Let me hand, it to Brian to add other because there were there were other contributors.
I agree with a lot of us.
As Scott said I mean in Europe , you do have kind of a seasonality component, but I think the Q4 really showed the recovery and the operating leverage in the business.
And I think across the board, but particularly in the U S. You saw that lumpiness in the fourth quarter it reflected rent abatements.
In both the U S and across Europe , you had the reversal of some credit loss reserves, a hangover from kind of the.
The Covid days and then you had some temporary cost savings initiatives that we're starting to wind off and so you had those kind of three buckets of activity, which supported margins. If you were to remove those those.
Buckets of activity that are kind of temporary in nature or nonrecurring.
Have margins that are very close to 2019 levels and so I do think the relationship between revenue and margins when you adjust for those for those one timers so to speak.
It does hold it.
It's just a.
Each quarter of last year was lumpy.
When when these abatements came through and why we continue to.
Work as hard as possible and the teams have done a great job over the past year, and a year and a half to get those abatements.
We will start to wind down and that Lumpiness will be less going forward and I think you really have the.
The revenue margin relationship that you'll have going back to 2019 with some headwinds from some tailwind doesn't mean 2019 revenue automatically to 2019 margins.
The revenue margin relationship that you'll have going back to 2019 with some headwinds from some tailwind doesn't mean 2019 revenue automatically to 2019 margins.
Business mix has changed.
Cost take outs.
Our tailwind.
But by and large that general relationship should come back to a state of normalcy.
Okay.
The other question area I wanted to discuss.
Well.
Maybe a theme you put at the beginning of your slideshow transfer transforming the world loose advertising mediums.
Digital media powerhouse.
That's been the same for a number of years with the digital transformation, but also with radar and I think there were some comments with.
And one of the slides about greater linked to millennials.
Might be able to take advantage of maybe some of the.
Cellphone information to to adjust the display and I wondered.
Yes.
You discussed a little bit how that sort of thing might work and how.
How it might impact say airport displays where you might know waterflood is with the demographics that are in flight and whether you would take programmatic advertising.
Or other types of advertising and specifically adjust those display ads to match up with the market, you're serving and get more sophisticated in that way.
Sure. So a lot a lot in that question, Jim and I guess the thing I'd start with is that marketers are not yet ready.
Sure.
In a kind of creative availability and in terms of a.
<unk>.
Spending ability to like be adjusting the signs in real time.
Our infrastructure and frankly, the the cell phone data infrastructure doesn't it doesn't support so we are not in.
The minority report World.
And hopefully we won't actually get to that world, that's pretty scary world.
A lot of dimensions, but what we are able to do is we're able to look at data over time.
We're able to do a variety of things using radar and so.
Advertisers use it for planning.
And the kind of thing you are talking about.
Let's say that they want to be at south by southwest and we have the Austin Airport.
They might actually do pretty aggressive things to get there including.
In real life presence.
Car on the on the floor.
Do do things with the signage in support of that and Thats something Thats something that we don't frankly.
<unk> need radar for but where we do need radar is when we have an advertiser that lets say theyre trying to find coffee enthusiasts and thats a demographic that we're able to access data on pretty readily we're able to line up people to our signs whether in airports or roadside that over.
Next to coffee enthusiasts and can shape the.
The campaigns accordingly, the other thing is that we're able to do with radar. So that's the planning part of it. The other thing is we're able to do is we're able to go back and look at.
The behavior of exposed audiences again, tying a factor the cell phone data infrastructure, we're able to go back and look at.
Did people go to retail sites, we're able to connect.
Into other other data sources, a lot of advertisers have done a lot to build their first party data.
Tap it to there.
Loyalty programs and through privacy compliant ways connect back and look at did you move the needle with with your audience on your campaign.
That's the attribution piece of it.
<unk>.
Extreme version of that as well.
We'll actually integrate our data with their first party data again in a privacy compliant way using a live ramp or similar service.
Where they'll actually do the analysis one of the examples that we had.
We did just that with Twitch Twitch used.
The data on exposure that we that we provide to radar to go back and assess the impact of the campaign. That's in that's in the presentation. So when we talk about digital transformation. The sign is just the first piece of it.
The signs of the data the buying experience the fulfillment.
All of that is being digitally transformed and it's.
It's a big driver for this business in the coming years.
Okay, well, thanks, very much I think that's very helpful.
Thanks, Jon Thank you Jim.
Our next question is from Aaron Watts at Deutsche Bank. Please go ahead.
Hi, everyone. Thanks for having me on a couple of questions. Scott can you talk about how yield is recovering relative to pre pandemic here in the U S and overall and if there's any notable themes and differences between digital and non digital on that front, if you could highlight those as well.
Thanks Darren.
A couple of things.
First of all I would say that yields are coming back really really well and are probably generally ahead of where we were pre pandemic and that will.
It will vary somewhat by geography, and asset types, but but in aggregate.
Yield is comeback has come back well and advertisers are valuing.
Our media quite extensively and as you've heard us comment before and our competitors comment on as well our Cps are very reasonable compared to a lot of other media.
That that supports.
A value based discussion on what we're what we're delivering and so so yields have come back have come back nicely.
In terms of digital versus non digital.
We do come out a substantial part of our printed inventory and so your yield conversation on that.
Less dynamic conversation because.
Youre putting.
Deals in place for six months 12 months multiple years.
And.
Those might have fixed escalators built in it just doesn't tend to be a very dynamic pricing environment contrast that with digital where.
People are coming in and out of the market quickly and in programmatic. The most extreme version of that.
You you see people.
Coming in and actually bidding.
Competitively for the space and so that tends to be where.
Your aggregate yields at the highest.
<unk>.
But digital digital overall is a premium product and that programmatic is a premium product within digital and so.
That's a big underlying factor in.
And it is that way because of the value that it delivers for the advertiser it's not.
Anything anything other than that.
That drives it so.
As we become more digital as we add more data and more insight to our campaigns. We would expect that yields will continue to improve.
Okay.
Helpful. Thank you.
And Brian I think I heard you say that the north east part of the country was particularly strong for you.
Any other color you can give on just big market relative to some of your markets.
And how the recovery is taking shape.
Here of late.
Yes, actually I'll turn it over to Scott, who is probably closer to the operating performance in the Americas.
Yes, I mean, the country as a whole.
Has has done well.
When you look at it through a kind of percent growth perspective.
You have the dynamic of Covid that came into play and so we.
Had.
A bunch of markets that didn't get crushed by COVID-19 that badly, particularly our small markets.
Those are mostly in the south.
West.
Those markets on a percentage basis or not are not growing that much but they're they're not growing as fast, but they're ahead of 2019 and for the most part have been had 2019 throughout <unk>.
Throughout COVID-19 , whereas we have some of the big cities, where we took really big hits.
Some of the airports business, where we took a big hit in the aggregate.
We really saw a recovery in the second half of last year pretty pretty universally so it's not there's not really a big.
Story other than the places that were hit the hardest are recovering the fastest.
But if you look at it if you normalize it relative to 2019 things are coming back roughly in line with where we were we entered into Covid and again.
Yes.
Any of the markets are ahead of us.
Where we were in 2019 and hopefully that gives you that gives you a feel for it on the Brian presented that.
No.
Alright.
That's great Scott.
Last one for me more of a housekeeping question I think pointed towards Brian .
Helpful on the Capex and interest guidance for this year anything.
On the cash tax side, we should be thinking about for this year or will it be relatively consistent with what we've been seeing.
I would expect it to be relatively consistent I think the company's decision to make the election that we did.
Minimizes our U S taxes really eliminates fed taxes in the U S at least.
And at least under current.
Construct and so what we've had in the past has some <unk>.
State and local in the U S and our international taxes, and I think that will be relatively consistent I mean, as we have recovery as we generate more income.
It could elevate a little bit, but I think largely it will be consistent.
With with with historical levels wouldn't expect any major changes over the next year.
And I guess Relatedly anything you can share on the size of any Nols built up over the past kind of 18 months two years.
Nothing beyond what we disclosed in the 10-K, so I don't think Theres anything.
Anything new or dramatic.
Okay, alright, thanks, so much for the time.
You bet. Thank you.
Sure.
As a reminder for any further questions. Please press star one on your telephone keypad.
Alright, it sounds like.
We are out of questions. We very much appreciate the questions and the engagement and everybody taking time to join with us.
This morning, I'd just leave it on the note that we are very enthusiastic about this business. We think we're very well positioned to be successful and to drive some.
Some significant growth.
Thank you for your time and attention and have a great day. Thank you.
This concludes today's conference call. Thank you very much for joining you may now disconnect your lines.
Okay.
Okay.