Clear Channel Outdoor Holdings Inc (CCO) 2017 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the 2017 Third Quarter Earnings Conference Call for iHeartMedia and Clear Channel Outdoor Holdings Incorporated. (Operator Instructions) As a reminder, this conference is being recorded.

I'll now turn the conference over to your host, Eileen Mclaughlin, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining our third quarter 2017 earnings call. On the call today are Rich Bressler, President, Chief Operating Officer and Chief Financial Officer; and Brian Coleman, Senior Vice President and Treasurer. We will provide an overview of the third quarter of 2017 financial and operating performances of iHeartMedia, Inc. and its subsidiaries iHeartMedia Capital I, LLC, iHeart Communications, Inc., Clear Channel Outdoor Holdings, Inc. and Clear Channel International, BV. For purposes of this call, when we describe the financial and operating performance of iHeartMedia Inc., that also describes the performance of its subsidiaries, iHeartMedia Capital I, LLC, iHeart Communications, Inc. and Clear Channel Outdoor Holdings, Inc. After an introduction and a review of the quarter, we will open up the line for questions.

Before we begin, I'd like to remind everyone that this conference call includes forward-looking statements. Those statements include management's expectations, beliefs and projections about performance and represents management's current beliefs. There can be no assurance that management's expectations, beliefs or projections will be achieved or that actual results will not differ from expectations. Please review the statements of risks contained in our earnings press releases and filings with the SEC. Pacing data will also be mentioned during the call. For those of you not familiar with pacing data, it reflects the orders booked at a specific date versus the comparable date in the prior period, and may or may not reflect the actual revenue growth rate at the end of the period. During today's call, we will provide certain performance measures that do not conform to generally accepted accounting principles. We provided schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings press releases and the earnings conference call presentation, which can be found on the Investors section of our website, iheartmedia.com and clearchanneloutdoor.com. Please note that our 2 earnings releases and the slide presentation are available on our website, iheartmedia.com and clearchanneloutdoor.com, and are integral to our earnings conference call. They provide a detailed breakdown of foreign exchange and non-cash compensation expense items as well as segment revenues, operating income and OIBDAN, among other important information. For that reason, we ask that you review each slide as Rich comments on it. Also, please note that the information provided on this call speaks only to management's views as of today, November 8, and may no longer be accurate at the time of replay.

With that, I will now turn the call over to Rich Bressler.

Thank you, Eileen, and good morning, everyone. Thanks for joining us for our third quarter earnings conference call. Our consolidated revenues declined in the third quarter. However, revenues were flat after adjusting for the sales of certain outdoor businesses and the impact of foreign exchange. We generated revenue growth at both the iHeartMedia and International Outdoor segments, offset by a decline at America's outdoor. To date, the iHeartMedia segment has delivered 18 consecutive quarters of year-over-year revenue growth. Consolidated operating income declined this quarter due in large part to a onetime expense benefit in 2016, as well as the impact of the sale of certain outdoor businesses. Before discussing our third quarter financial performance in detail, let me review with you the fundamentals that drive our businesses and highlight our newest initiatives. But first, the recent hurricanes in Texas, Florida and Puerto Rico, as well as the earthquake in Mexico and the wildfires in California affected the communities that we serve as well as our employees. We're enormously proud of the important work that our teams did in the impacted areas. When people desperately needed help, our people are very literally [the voices] for their communities. They slept in their studios and often put their own safety second to their mission of helping their listeners, providing vital information, encouragement and close personal connections and even coordinating life saving rescues, all they themselves and their families were personally dealing with the devastation. And now, they continue to do all they can to help those people and local businesses recover from these disasters. We expressed our appreciation at our most recent 10-fold event, the iHeartMedia Fiesta Latina, where we recognize the communities impacted by disaster and honored the first responders, who supported their communities in times of need.

Now, onto our iHeartMedia segment. iHeartMedia is a national leader, not only in radio and audio, but in media overall. We continue to be the undisputed leader in audience reach, for example, even with a heavy focus on the top 50 markets by Entercom following their CBS Radio acquisition, in those top 50 markets, we still reached 93% of listeners 12 plus, and they reach only 67% according to Nielsen. In addition, we are 7x their size in digital reach. iHeartMedia is built on the scale and strength of our more than 850 broadcast radio stations and our additional platforms built off that base, creating a powerful national network with unparalleled local reach. Last week, we announced our plans to exchange our Richmond and Chattanooga markets for Entercom and CBS Radio stations in Boston and Seattle, 2 of the few markets where we did not have a full complement stations. The exchange will allow us to expand our presence in these strategic markets, further strengthening our position in Boston and Seattle. Our broadcast radio assets alone reach over 0.25 billion consumers monthly, more than Google and Facebook in the U.S. One of the key to our overall success is our industry best personale, who are our listeners loyal and trusted companions. As evidenced by the commitment and support they provided to their audiences during the recent disaster. Highlighting their continuing bond with their listeners, the quarter's ratings for Bobby Bones, Breakfast Club, Big Boy, Steve Harvey, Sean Hannity and Rush Limbaugh were all up double digits compared to the prior year. In addition Sean Hannity, Bobby Bones and Bill Handel were inducted into the National Radio Hall of Fame last week and iHeartMedia's The Bobby Bones Show recently won the CMA Award in the National Broadcast Personality of the Year category. With their connections to their listeners, our talent is a powerful influential network that connects to audiences and build strong, engaged relationships that our advertisers and marketing partners could use. We are also continue our transformation into a company fueled by data. The recent earnings reports from the big digital players illustrates very clearly, while we're moving as fast as we can to transform our advertising in the data web, so our offerings more closely resemble both the what and how of traditional digital offerings. With the industry leading data and analytic capabilities of SmartAudio, a product of our groundbreaking SoundPoint programmatic platform, we're able to combine the massive scale of our broadcast radio reach with the power of digital data and informed audience target. With SmartAudio, we can create the advertising solutions that advertisers expect today and with SoundPoint, we are changing how our ad inventories [bought and sold]. By continually reinventing how we do business with our partners, we are becoming more integral to today's digital centric advertising world, offering data rich ad buying solutions, including attribution that were once available only from digital-only products. That said, we believe radio is still undermonetized, especially since radio provides a superior ROI for advertisers, all is measured by Nielsen, with whom we recently signed a multi-year renewal deal of audience measurement and key analytics. However, many advertisers in the market are still view radio as traditional media. So we're continuing to educate them about broadcast radio leadership as America's #1 mass market reach medium reaching 93% of people over [18] years old every week. By comparison, the weekly reach of TV and Smartphones is 89% and 83% respectively. Millennials are the toughest demographic group for advertisers and marketers to engage and radio reaches 92% of Millennials age 18 to 34 every week. This reach is greater than Smartphones at 90% and TV at 80%. And for teens ages 12 to 17, a leading indicator for the future of any product, radio's reach is even higher at 95% monthly, basically unchanged over the past 40 years with [LiveTV] trailing 86%. Radio also continues to be the most mobile of mass reach media. About 2/3 of broadcast radio uses out-of-home, while 60% of Smartphone use is in the home. With people spending more and more time out-of-home, broadcast radios unmatched out-of-home reach enhances it's value as a last point of contact before shop. In addition to radios during engagement reach, new technologies and devices that driven the decline in traditional media have instead delivered positive benefits for radio. Simply put, instead of being hurt by these new platforms, we've been helped by them, and they provide yet more listening to our [account]. And don't forget that there are 1 billion AM/FM radios in the United States today, compared to just about 240 million smartphones. So broadcast radio still an amazingly strong device platform. Beyond our presence across AM/FM, HD digital and satellite radio, television, online, live events, mobile, social media and the iHeartRadio mobile app, we continue to seek out emerging platforms to deliver our content across multiple platforms, including podcast, voice control devices, enhanced audio dashes, wearables, smartphones and gaming consoles. That's why we continue to actively look for partners that can help us extend the iHeartMedia brand in multiple channels. Just last month, we announced that iHeartMedia and Fox TV are teaming up for a new music competition series called The Four: Battle for Stardom. As part of the Grand Prize, the winner will join iHeartMedia's coveted on the Verge artist development program, providing airplay for the new talent, of course, iHeartMedia radio stations nationwide. In the past, on the Verge helped launch the careers of Sam Smith, Fifth Harmony, Nick Jonas and many other artists. Our iHeartRadio app continues to reach huge milestones at a rate faster than any other digital music service, now totaling more than 100 million registered users, up double digits over the prior year quarter. Cumulative downloads and upgrades of the iHeartRadio app are nearly 1.6 billion in the quarter. We also continue building out our podcast in platform, a new area of growth and innovation. A year into our podcast strategy, iHeartMedia has already become one of the largest podcast networks in this space and is the standalone podcast leader among commercial broadcast radio companies. As you may have read recently, Nielsen reports that 50% of U.S. households totaling about [60] million people are fans of podcast. Although the listening to podcast in general is still small. We like them because they extend the close relationships between our talent and fans, as well as our advertising and marketing partners. Podcast also offers a way to (inaudible) depth of passion with the mass reach of radio, something only iHeartMedia can do it. In the quarter, iHeartRadio launched Bobby Bones Nashville Podcast Network of portfolio of 7 separate podcast focused on the Nashville music and lifestyle [scene]. Bobby's own podcast [Bobbycast] kicked off the network launch with behind the scenes interview with Blake Shelton and a first look at his new video I'll Name The Dogs presented by (inaudible). And in September, we had NPR's biggest podcast iHeartRadio, including Fresh Air, How I Built This, Up First, Planet Money and Radio Web, and partnering on podcast with Disney and [indisernible] an influential parenting site from Millennial dash. Altogether, we have increased the catalog of podcast available on iHeartRadio almost 10,000 across 18 different categories, including virtually all of the top 200 podcast by audience songs. And listening is also increasing for our established podcast. With significant quarter-over-quarter growth in listening for the Breakfast Club, Sean Hannity and Fox Sports Radio. Also in the quarter, we continue to expand our presence on voice control systems with [additional] integration with Amazon's Alexa and Google Assistant, something we started nearly 2 years ago to further expand the reach of iHeartRadio. Our strong positioning within the Alexa enabled device family already integration's with Amazon Echo, Amazon Fire Tablet and Amazon Fire TV. In the third quarter, iHeartRadio launched on additional Alexa enabled devices, such as Amazon's new Echo Plus, Spot and Show, as well as on various third-party OEM devices. iHeartRadio firstly we support the Google assistant in the beginning of 2017 through Google Home. And in the third quarter, iHeartRadio became available on Google Home Mini, Google Home Max and Google Pixel Buds. And iHeartRadio, which was one of the first partners on the Apple watch is now integrated on the Android smartphone. Another exciting example of how our personalities reached their listeners across a variety of platforms is iHeartRadio app [Elvis] with our own Elvis Duran, the nationally syndicated radio and digital personality to host the top rated Elvis Duran in the morning show on Z100 here in New York. It's a new entertainment show reaching Elvis every afternoon on [watch], Facebook's new video hub ecosystem that provides exclusive video content from major partners like iHeartMedia. Every day Elvis leads or pick up conversations will popular celebrities in iHeartRadio town from around the country, about the [western] pop culture, entertainment news and the hottest trends.

Moving to our signature live events, they are the key to our sales strategy, giving us tremendous promotion, brand building and activation opportunities for our advertising and marketing partners as well as many of our most critical audience promotions with our broadcast stations in iHeartRadio. In fact, we are the leading creator of live events of all the audio players with 20,000 events annually an unparalleled national events. In September, we hosted our 7 Annual 2 day iHeartRadio Music Festival, celebrating the best in music with today's top artistes from all genres sharing the same stage hosted by Ryan Seacrest. This year's lineup featured Coldplay, PINK, The Weeknd, Miley Cyrus, Lorde, Kings of Leon, Chris Stapleton, DJ Khaled, Thirty Seconds to Mars and more. The event also included the iHeartRadio Daytime Village presented by Capital One with featured performances by new and emerging artists like Migos, Halsey, French Montana and Bleachers. The CW network exclusively live streamed both days of performances and will air it as a 2-night TV special later this month. Just last week, the fourth annual iHeartRadio Fiesta Latina celebrated the best in Latin music in Miami. The 4-hour event co-hosted by our own Enrique Santos and live on iHeartMedia Spanish Pop, tropical, regional, Mexican and Spanish [Deltic] radio stations nationwide and on Telemundo's event. Both events highlight our extensive footprint on social media, given listeners the opportunity to fully engage with this experiences. The iHeartRadio music festival delivered 16% more social impressions than last year with all the 12 billion social impressions throughout the weekend and it was trending on Twitter both in the U.S. and worldwide. And the iHeartRadio Fiesta Latina generate 32% more social impressions than last year's event with almost 5 billion social impressions. The value of our live event as sponsorship vehicle is further underscored by the return of the iHeartRadio Jingle Ball tour presented by Capital One, which is turned out to be the holiday seasons most anticipated special event. For the third straight year, Capital One will be the national presenting sponsor for the multi-city iHeartRadio Jingle Ball tour headlined by some of the year's biggest recording artists, in addition to the sponsorship role they played at the iHeartRadio Music Festival Daytime Village. In another example of our multiplatform collaborations with advertising partners, iHeartRadio amazed these partner for the 6 straight year with the Macy's iHeartRadio Rising Star context with the winner performing at the iHeartRadio Music Festival. This year's Rising Star winner James Maslow, wowed the crowd at the iHeartRadio Music Festival, and will be part of the lineup at Jingle Ball free events. Macy's iHeartRadio Rising Star campaign was featured on hundreds of iHeartRadio broadcast radio stations, as well as its digital, social and events platform. The newest addition to our lineup of [Rock Fest] iHeartRadio event is iHeartRadio ALTer EGO celebrating the best of alternative rock with many of the genres biggest superstars. The show will take place on January 19 at The Forum in Los Angeles and features Mumford & Sons, Cage the Elephant, and Beck among others. And the concert will be add live across 60 alternative and rock broadcast radio stations, as well as on iHeartRadio nationwide.

Moving to outdoor. As more people are spending an increasing amount of time out-of-home around the world, we are seeing growing advantages for our Americas' outdoor and international outdoor businesses, as well as the iHeartMedia segment we just discussed. And Magna has now projected that digital out-of-home be the fastest growing medium over the next 5 years. To make sure we make the most of this opportunity, we are continuing to build out our digital footprint, providing the flexibility and creativity to our advertising and marketing partners. During the quarter, we installed more than 450 new digital displays in our North American and International outdoor markets. As of September 30, that gives us a total of 1,180 digital billboards in Americas' outdoor markets and more than 13,300 digital displays across international outdoor market. At the same time, we're transforming our [volume] process to better monetize our out-of-home inventory in both the U.S. and international. Building on our experience of iHeartMedia, we are continuing to enhance our innovative data analytics and programmatic automated [air buying] offerings, extending our leadership to maximize the value of our inventory worldwide. An Americas outdoor, for example, we continue to expand and enhance RADAR's out-of-home advanced advertising platform. RADAR's research high quality audience driven data and newly upgraded attribution analytics tools enable brands and agencies to more accurately plan and buy our inventory to both reach that target audiences and measure the impact of their campaigns.

By leveraging our aggregate and an [automized] mobile location data, we can identify audiences that can see our printed and digital billboards more precisely than ever, providing our advertising and marketing partners with the insights that they want.

Since we launched RADAR more than a year ago, a growing number of national local brands in verticals like retail, entertainment, [Tauck] and travel have used the tool to generate double and triple-digit increases in their business campaigns including increased visits among the audience target. In fact, Americas outdoor won a North American Smarties award for location-based services we're targeting for it's campaign called 24-Hour Fitness, out-of-home advertising and mobile work better together, which is mobile location capabilities to enhance out-of-home consumer attribution for our 24-Hour Fitness partner.

During the quarter, we continued to enhance our nationwide programmatic platform doing partnership with Adelphic and Vistar to further integrate buying our inventory into broader programmatic media marketplaces, providing markets with the same dashboards that brands used by other media programmatic.

And signaling the next level of innovation, we joined [Adelphic] ways to launch informational campaign in September about a joint study showing brands and agencies how out-of-home and mobile advertising could work together to amplify each other's impact on the road to purchase. At International Outdoor, digital technology are totally transplant our business model and strategic focus. Now we've launched automated buying in the U.K. and Belgium, it's now simpler than ever for brands and agencies to plan, buy, and optimize their out-of-home media [partners]. For example, we are now able to place ads for the exact days and times they want to reach their targeted audiences. I'm pleased to report that more and more advertising partners are capitalizing on the flexibility as automated ad buying offering. Also in the quarter, we are very focused on building out on our digital presence in a number of key markets including the U.K., France and Spain among others.

We recently announced a new deal with Amscreen to extend their digital displays into 16 of our international outdoor country markets including France, Spain and the Nordic nations. This will be in addition to the 2,500 plus Amscreen displays in the U.K. with total digital out-of-home revenue now represent over 50% of all of our Clear Channel U.K. revenues.

In Spain, our new digital street furniture network in Madrid, is attracting both existing customers, such as Coca-Cola and Samsung, as well as new advertisers including Amazon and Netflix. And we expand our reach in the Nordic countries with the installation in [Finland] of the region's largest LCD digital out-of-home screen.

Over time, we believe that our technology driven strategy reinforces our industry leadership and will offer the flexibility, creativity and measurability, our advertising marketing partners need to make our out-of-home inventory integral to their campaigns. And now it will enable us to compete more broadly, of course the evolving media landscape.

In other outdoor business during the quarter, Americas outdoor finalize the sale of its interest in the Clear Channel Canada joint venture to it's partner Branded Cities Network. We believe that we're continuing to position both our iHeartMedia and Clear Channel outdoor businesses for sustainable success into the future.

Now let's turn to slide 4, and review our key financial results. Before we begin, I'd like to remind you that as part of our GAAP results discussion, I'll also talk about our results after adjusting from foreign exchange and excluding the impact of the outdoor businesses we saw. In 2016, we sold our International Outdoor business in Australia, as I just noted, this quarter we sold our Americas Outdoor business in Canada. We believe these adjustments improve the comparability of our results to the prior year. I'll refer to these results as adjusted revenues and adjusted OIBDAN, and I'll talk about both direct operating and SG&A expenses as expense. As I mentioned in my introductory remarks, consolidated revenues decreased 1.9%. However, adjusted consolidated revenue was flat in the quarter with increase at iHeartMedia and International Outdoor, offset by the decline in Americas Outdoor. Operating income decreased 23.7%, due primarily to $33.8 million prior year benefit resulting from the renegotiation of certain contracts and the $12.1 million loss on the sale of our Canadian Outdoor market this quarter. Adjusted OIBDAN declined 12.9%, excluding the onetime benefit of $33.8 million in 2016, adjusted OIBDAN is down 5.6%. I'll provide some additional detail on these results in the following review of our business segment results.

Starting with iHeartMedia on slide 5. In the third quarter, iHeartMedia's reported revenues were up slightly. As I mentioned earlier, iHeartMedia's reported revenues have increased in each of the last 18 consecutive quarters. The growth in revenues is attributed to increases in national and digital revenue, partially offset by lower local and political revenue. National revenue was up, due to an increase in national trade and barter, largely from the iHeartRadio Music Festival, as well as higher spot revenues including programmatic buying. This growth was partially offset by lower national traffic and weather revenue. Local revenue declined, as a result of lower spot revenue, partially offset by an increase in local trade and barter. And once again, we outperformed the radio industry in revenue as measured by Miller Kaplan. We believe our continued outperformance is driven by the scale and strength of our broadcast radio stations and our industry leading on-air personalities, combined with the investments we have made in developing our data and analytics capabilities that deliver the kind of advertising solutions that our advertising and marketing partners expect today.

Expenses were up 11.1% in the quarter, as compared to last year's third quarter, primarily driven by $33.8 million prior year benefit resulting from the renegotiation of certain contracts. Additionally, trade and barter increase in the quarter. Due to these higher expenses, operating income declined 16.8% and adjusted OIBDAN was down 14.7%. As we said earlier this year, we had anticipated a more robust advertising market in 2017, and made investments in future growth in line with how we thought the ad market and our revenue will be growing. Given the slower than expected advertising market, we've been actively managing our cost base this year. Excluding the onetime benefit in 2016, I covered earlier, OIBDAN is down 5.8% this quarter, an improvement of the 10.5% decline in the first half of the year.

Now let's review our third quarter pacings for 2017, which include all of our markets. As you've heard me say before, these pacing is just a snapshot in time and certainly don't include everything we do as a company. iHeartMedia's fourth quarter pacing through the end of last week are up 0.2%, excluding [political].

Now onto slide 6. Americas Outdoor financials. Americas Outdoor reported revenues declined 2% in the third quarter, due in large part to the sale of our Canadian Outdoor business. Adjusted revenues were down 1% due to the prior year's revenues in Brazil, benefiting from the Summer Olympics. This was partially offset by increased digital revenue from new and existing airport contracts. Reported expenses decrease 0.6%, and adjusted expenses increased 1.4% in the quarter. The increase in expenses is due to higher site lease expenses, partially offset by lower variable expenses due to the Olympics in Brazil in 2016. Operating income was down 6.4% and adjusted OIBDAN declined 4.6%. Our fourth quarter pacings, which have been adjusted for foreign exchange in the sale of our outdoor business in Canada are down 1.1%. Again, as a reminder, pacing data reflects a point in time.

Turning to slide 7, on our International Outdoor financials. In the quarter, our reported revenues were down 5.1% as a result of selling our businesses in Australia. Excluding the impact of the sale of the businesses and foreign exchange rate fluctuations, adjusted revenues grew 2.6%. The increase in adjusted revenues is due primarily to growth across several markets, including China, Spain, Switzerland and U.K., mainly from new contracts and digital expansion. Expenses during the quarter were down just under 1% on a reported basis and up 5.7% on adjusted basis. The increase in expenses is due primarily to higher site lease expenses in countries experience in revenue growth, as well as an increase in bad debt expense and employee related expenses.

Operating income decreased 59.4% in the quarter, while adjusted OIBDAN declined 14.6%. Our fourth quarter pacings for International Outdoor were down 3.8% from last week. Once again, pacings are point-in-time metric. The pacing data has been adjusted to exclude the impact of the 2016 sale of our businesses in Australia, as well as the foreign exchange rate fluctuations. Before we go onto the rest of the slides, I would like to make a few comments on CCIBV's results. For the third quarter, CCIBV's consolidated revenues totaled $257.2 million, a $23.6 million decline from the prior year. Excluding the impact of movements in foreign exchange rates of $9.3 million, and $35.2 million decline resulting from the sale of our Australian business in 2016, CCIBV revenues increased $2.3 million during the third quarter. CCIBV's operating loss in the quarter was $22.6 million as compared to $13.5 million in the prior year's quarter.

On to slide 8. This slide highlights the items affecting comparability of our results. I won't read through all the numbers on this slide, but as you can see our International Outdoor operations were affected by foreign exchange rate fluctuations of about 3% from both revenues and expenses in the quarter. And the outdoor results were impacted by the sale of the business in Australia in 2016, and the sale of our business in Canada this quarter. Lastly, as expected, political revenues were down in the quarter at both iHeartMedia and Katz Media.

Turning to slide 9, capital expenditures totaled $184.9 million in the 9 months ended September 30, including $48.3 million in the third quarter. The iHeartMedia segment capital expenditures were primarily for IT infrastructure, reflecting our focus on data, programmatic and digital. At America's Outdoor, the majority of capital expenditures related to the construction of new advertising structures, such as digital displays. And International's Outdoor capital expenditures were mainly for street furniture and the transit advertising structures, including digital displays. For the full year, we expect capital expenditures to be in the range of $275 million to $300 million.

Moving to debt on slide 10. As of September 30, iHeartMedia's debt was $20.6 billion, basically flat with year-end 2016. iHeartMedia's consolidated weighted average cost of debt was 8.7% as of September 30. Cash interest expense into the first 9 months of the year was $1.4 billion and we expect cash interest expense totaled $1.8 billion in 2017, including $344.6 million in the fourth quarter.

Now, we'll turn to our balance sheet information and the debt ratios on slide 11. iHeartMedia's consolidated cash flow was approximately $286.4 million as of September 30. Our secured leverage ratio was 7.8x with total leverage of 12.7x. Clear Channel Outdoor ended the quarter with $222.4 million in cash with the senior leverage ratio of 4.6x and its consolidated leverage ratio at 9.0x. The largest use of cash for iHeartMedia in the 9 months ended September 30 was for interest payments, which totaled $1.4 billion. During the 9 months ended September 30, Clear Channel Outdoor used $270.1 million in cash for interest and paid dividends totaling $282.5 million including $254 million received by iHeartMedia.

Before taking your questions, I want to thank you again for joining us this morning. We are building a true 21 century multiplatform media entertainment company that we believe will continue to compete successfully in a world increasingly driven by data. In our iHeartMedia segment, we are investing to widen the gap between us and our traditional competitors across multiple platforms and devices and to better compete against very strong digital players, and we continue to work to bring new advertising revenue into our sector benefiting the entire radio industry. Our assets are significantly on the (inaudible), especially in light of radios and during reach strong engagement with all audiences, significant ROI and the new platforms we're building at iHeartMedia. As I said, we are continuing to educate our advertising and marketing partners about everything we can offer them. As we do, we'll keep expanding the platforms and devices of which we deliver our industry leading content to be where ever people want to find us including AM/FM, HP digital and satellite radio, television, online, live events, mobile, social media and the iHeartRadio mobile app, as well as podcasts, voice control devices, enhanced audio dashes, tablets, wearable, smartphone and gaming consoles. That's how we'll continue to be everywhere our consumers and our advertising and marketing partners want us to be. At our outdoor businesses, we're both expanding our digital reach with its flexibility and creativity, as well as developing programmatic solutions fueled by the best available data for our partner. At our iHeartMedia and Outdoor businesses, we continue to build for the future, while maximizing our media opportunities.

Before we open the line for questions, I would like to remind you that as we have disclosed in our SEC filings, the notes exchange offers and term loan offers that iHeart comment in March of 2017, continue to be open and as has also been disclosed, iHeart has engaged in discussions with certain lenders regarding potential global restructuring of its debt and such discussions remain ongoing. For SEC regulations, we are unable to comment on these transactions and therefore, we'll not be able to answer any questions relating to our capital structure and ask that you limit your questions during the Q&A portion of this call, the questions about our operations. If you have any questions regarding our capital structure, please refer to the disclosure made in our filings with the SEC.

Now, let's open the line for questions.

(Operator Instructions) Your first question comes from the line of David Farber from Credit Suisse. Please go ahead.

I had a couple of questions. Just first on the top line. It continues to outperform some of the competitors. We heard you talk about that in the prepared remarks. I guess, I'd be curious where you're seeing that improvement, perhaps you can talk about the digital revenues in the year-over-year performance there, that would be helpful and then I'd some follow-ups? Thanks

Sure. Appreciate that. I'm not going to talk about digitally specifically, because again, that's not (inaudible) before, that's not the way we think about our company. And just to take a step back and maybe reiterate some of the things I said in the prepared remarks, what the [current] market continues to be very competitive, could be softer than we like, this is just a backdrop and also advertising continues to be placed closer and closer and closer to the airing days. I think we are doing and the team is doing here really a great job. We continue to outperform. I think if you look year-to-date, the industry is flat forecast. Again, I'm sorry, over 2% and we'll be there about a couple of hundred basis point, so that's great.

From our standpoint, and this also gets through the investments that we're making as a company and we use this word 21 century capabilities multiplatform, and that's really what sets us apart and if you look at all the earnings of the big digital players, they've been out recently. I think it just reinforces while we've got to move as fast as we can and continue to transform what we've started doing, which is why you're seeing us outperformed the industry and have our 18 consecutive revenue growth quarter, transform our advertising via data web and automated, so we are often more closely resembles both what and how traditional offerings are out there, and also the way advertisers and advertising agencies and all of our partners expect us to operate.

You've heard me talk a little bit about this in the past. We have industry leading capabilities with SmartAudio, we've got groundbreaking SoundPoint programmatic platform and we're able to provide the massive scale that we have over 271 million users that we reach on a monthly basis, able to provide that massive scale of broadcast radio with the power of digital and informed audio targeting. And that's -- we've talked about SmartAudio that we can create ad solution that advertisers expect today and with SoundPoint we're changing the way advertising inventories bought and sold. So a lot of words, but it just says we have to continue to reinvent ourselves, and I think all the data point [assets] both in terms of our results and a reporting results from a lot of digital players reinforce and confirm that the direction that will take in this company. And that's given us the outperformance in the top line growth.

On the cost side, excluding the contract adjustment, OpEx continues to move higher. I guess, I'd be curious to hear what's driving that and what your expectations are for OpEx for the balance of the year, and then I had one follow-up question for Brian, and that's it? Thanks.

So look, I'll tell you a couple of things. If you exclude the onetime benefit we had in 2016, the expenses were up slightly due to our spending on everything I just [articulated] really our digital initiatives. And again, I'll point you back, if you go back to 4, 5 years ago when we spent and we had also period of time the number of quarters where earnings were down, and then I think that spending and the return on that investment bought through, and again, that's why I pointed back where we've done historically, Bob, myself and the rest of the management team from a credibility standpoint and pointing today, not just about reference point, but again to what the big digital players are doing and I think confirming we're in the right direction, I think it's evidenced by our revenue.

But the one comment I would make on the margin to that, what I did say in the beginning of the year is we did expect the advertising volume to pick up, we expected a more robust environment that has still not happened and still continues to be more sluggish than we'd like. And what I've said is that we're going to continue to make margin improvement since the first quarter, and I think if you look at the margin to the first quarter '17 versus second quarter of '17 versus the third quarter of '17, our margins in terms of compared to where they were last year, quarter-over-quarter, quarter-over-quarter, quarter-on-quarter, we've made a very significant improvement, and we will continue to make that improvement as we go into the fourth quarter of this year. So Brian, maybe, you said you had a question for Brian.

Yes. I just wanted to know, what the current liquidity position is sitting here in November and then that's it for me? Thanks.

Yes. I'm not sure we can comment beyond the third quarter, David. So I think we've got the third quarter information in front of us. There hasn't been any material things that -- it wouldn't be public, but I don't think I can give you cash balances as of the current time. So unfortunately, I can't be (inaudible) to that question.

Could you just talk about the end of the third quarter then perhaps, and then that's it?

In the end of the third quarter? It's all in our disclosures. Is there something specific that you're asking about?

Just between the ABL and the cash, I guess I was trying to make sure I understood the ABL line in particular, as well as what kind of cash you want to keep in the system? Thanks.

Yes. We had cash of about $286.4 million for our financial statements at the end of the quarter, it had $224 million of that was at outdoor and $64 million of that was at iHeart. The ABL was -- I think had [$365] million drawn, so it has some availability remaining under that.

And I think that's all disclosed in the filings.

Your next question comes from the line of Stephan Bisson from Wells Fargo. Please go ahead.

I had a couple of questions on Outdoor. First, Americas seem to decelerate during the quarter. Could you give us a little bit of color as to what happen as the quarter went on, maybe local versus national?

So -- if you're -- Stephan, thanks for the question. And so that decelerating, I'm not sure what you're comparing it to. Again [multiple speakers] time in terms of your pacing, so at a given point in time, I probably said it's 3x in my prep remarks, and I'll repeat it again. It's something that -- we've continue to give out, because we've historically give it out, but if you go back to the comment, just a question I just answered in the previous question about advertising being placed closer and closer, that was a statement that went both for our audio business at iHeartRadio business along with our outdoor business. So again, there is no -- so that's frame of reference it's hard to really comment on.

In terms of the business, overall the local business was a bit softer with the national business is strengthening this quarter. We feel great about the underlying fundamentals, which are promising, we're doing more and more with advertisers on audio insights, we've done a great job for continuing to improve our speed of execution, here in the U.S. with Scott Wells and Bob McCuin, and (inaudible) has really done an outstanding job of picking up the pace there. So Americas outdoor remain encourage by all of the stuff, our strategic ongoing investment, speed to market, emerging technologies, taking more advantage of mobile data and analytics. So feel very good about that. And I commented again on my opening remarks, about RADAR, our data analytics tool that we launched in 2016 early and this fall we launched with industry first private marketplace programmatic out-of-home buying solution, and we also expanded RADAR in the second quarter of this year, we did this in Cuebiq's location intelligence and attribution solutions. So again, a lot of fancy words, but what it really means is that we continue [Bob] and change not just the iHeart part of the business, but the U.S. and International part of the outdoor business to keep up with what our advertising and marketing partners demand and expect of us.

And then was there any impact from any of the storms or a fires out in California, regarding [Boards] revenue EBITDA or possibly repairs?

No significant impact, I mean, I do want to reiterate again, just how proud Bob and myself in the massive management team are that the important work that all our teams did across the company in the impacted areas including coordinating, life saving, rescues, probably worth noting again that, we had our Fiesta Latina this last weekend in Miami at the American Airlines Arena, and we paid tribute to the first responders and those of you that have got a chance to see it -- really in between the chat, thanked the people that really made the difference in the first responders, in addition to our employees. But no real loss of anything significant, we have a small part of our business in several airports in the Caribbean on the outdoor side, there were substantial devastation's in (inaudible) where like in St Thomas and St Martin and (inaudible) and so given the folks on the grounds to recover from the extensive damage, just a little bit dead or alive, our business in those locations won't be back to normal, clearly for sometime next year, but from a financial standpoint, it's not material to the company.

Your next question comes from the line of Avi Steiner from JPMorgan. Please go ahead.

Operator. This will be the last person will be able to ask -- answer question at this time.

Okay. Avi Steiner, your line is open. Please go ahead.

Just a quick follow-up to the last question. On the radio side, any impact in either Houston and/or Miami in lost ad dollars?

No. Nothing significant, Avi. Obviously, again reiterate about our teams, which I want to continue emphasizing, and the great job they did and how proud of them. From a financial standpoint, we saw some pick up in Houston, quite frankly because of the devastation just in terms of number of cars, people lost in that market and obviously -- replaced cars and homes and home improvement and things like Southern Florida they had enough time to evacuate, so there was really no material impact at there, and we all know what happened with the storm where it hit and it did not hit, but no overall, no real significant impact to the company financially.

And then on the liquidity front. Working capital has been negative, the mix of that -- look at it really first 9 months a year. Any reason that won't reverse on the fourth quarter and help you generate positive free cash flow on that quarter?

Well. Look, I don't think we want to provide guidance to any operating metrics in the fourth quarter. I mean, historically, you can see what is happening with respect to working capital and it has been a generator, but we don't want to make any speculative assumption from fourth quarter at this year, Avi.

And then sticking on the liquidity theme. If I assume that the ABL gets extended or otherwise turned out and you continue to chip away to 10's. Would -- in your estimation, with the company still have to raise incremental liquidity to make it through the first quarter of next year?

I don't know, Avi. That sounds a whole lot like a cash flow forecast for the first quarter. But look, I do think, and as we disclosed or anything else negotiations on the ABL. So I think, we will continue to work through that. You understand historically how cash flow works in the fourth quarter, you have chipped a way a lot of 10's, there is only a little more than 50 [left] in January. So I don't want to get into the backlog forecast of free cash flow between now and then looks like, I'll let you to make those assumptions on your model based on the information that's out there.

Maybe another one on liquidity, and I'll try to avoid forecast, but I think the company want an appeal with respect to the move of volume to broader media. Has there been any consideration given to trying -- and trying to unlock that value, maybe to help liquidity in the near-term or is it fair your to say you maybe focus elsewhere and not on that?

Yes. I think we're going to be 3 for 3, here Avi, because I don't want to speculate on potential transactions using our unrestricted subsidiaries [you've seen us] she is the 11.25% [PZN] actually exchange transactions. But forward looking, what we may or may not do is not something I want to speculate on the call. So apologies, if I haven't been all that responsive, but given the answer that I can.

And maybe I'll try this of [holding] capital structure per se, would it be possible, I'm guessing, no, but I'll try to update us on sponsors, current debt holdings in iHeart?

That's provided publicly when required, it's provided and we have to obtain that from the sponsors themselves, so I don't think we provide interim updates, because we don't have them.

Yes, I mean, I'm Richard, that's really a question for the sponsors, but, I really thank everybody. Appreciate everybody's time, appreciate the questions, and our team with Eileen and Brian will answer any follow-ups. Thank you, everybody.

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