Clear Channel Outdoor Holdings Inc (CCO) Q4 2020 Earnings Call Transcript

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Clear Channel Outdoor Holdings Inc (CCO)
Q4 2020 Earnings Call
Feb 26, 2021, 8:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the 2020 Fourth Quarter and Full Year Earnings Conference Call for Clear Channel Outdoor Holdings, Inc. [Operator Instructions] I'll now turn the conference over to your host, Eileen McLaughlin, Vice President, Investor Relations. Please go ahead.

Eileen McLaughlin -- Vice President, Investor Relations

Good morning, and thank you for joining Clear Channel Outdoor Holdings 2020 Fourth-Quarter and Full Year 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., who will provide an overview of the fourth quarter and full year 2020 operating performance of Clear Channel Outdoor Holdings, Inc., and Clear Channel International BV. After an introduction and a review of our results, we'll open up the line for questions and Scott Wells, Chief Executive Officer of Clear Channel Outdoor Americans will participate in the Q&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 management's expectations, beliefs, and projections about performance and represents management's current beliefs, there could 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 release and filings with the SEC. 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 release and the earnings conference call presentation, which could be found in the financial section of our website. investor.clearchannel.com. Please note that our earnings release and a 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 non-cash compensation expense items, as well as segment revenue, adjusted EBITDA, among other important information. For that reason, we ask that you view each slide as William and Brian comments on them. Also, please note that the information provided on this call speaks only to management's views as of today February 25th, 2021 and may no longer be accurate at the time of a replay.

With that, please turn to Page 3 on the presentation and I will now turn the call over to William Eccleshare.

William Eccleshare -- Chief Executive Officer

Good morning everyone, and thank you for taking the time to join today's call. As with the past several quarterly calls, we are conducting this call remotely and respectfully ask that you bear with us in case there are any technical issues during the call.

Like all of you, we enthusiastically welcome the New year with an eagerness to begin moving past the many impacts COVID-19 as had on our personal lives, our industry, and our company. Despite the unprecedented challenges brought on by the pandemic and the sporadic nature of the global recovery, we are heartened by the progress being made with regards to development and distribution of vaccine, and we remain confident that our business will return to growth in 2021.

It's worth noting that the out-of-home industry has consistently accounted for 5% to 6% of global advertising spend, and was one of the only growing traditional mediums pre-COVID. Our industry has proven to be very resilient coming out a previous downturn, and we fully expect this will once again be the case as we emerge from the pandemic. Longer term, the digital out-of-home sector is projected to grow at 13% compound annual growth rate from 2022 to 2025, according to data published by MAGNA Global in December 2020. We hope to capture a significant share of this growth, and we believe the actions we've taken during the past 12 months from strengthening our liquidity and implementing cost restructuring efforts, to the adjustments we've made to our sales approaches, to the continued expansion of our digital platform and data analytics product, put us in a stronger position to return to revenue growth as the recovery ultimately takes hold.

As we previously noted, while we continue to focus on carefully managing our expenses, we have begun to play offence. Throughout the pandemic, we have focused on strengthening our relationships with our advertising partners, with an emphasis on collaborating more closely with them as they tap into the flexibility and immediacy of our platform. We have increasingly utilized our RADAR tweaked solutions to help our customers understand how that target customers have changed their movement patterns. In turn, we have still to demonstrate our ability to deliver real-time content changes depending on audience traffic, as well as weather, day-part and other relevant variables. Overall, we are united across our organization in executing a clear strategic plan, and fully capitalizing on the fundamental strength and growth drivers of our global asset base, in order to unlock shareholder value. There are four key components that will continue to define our success now and well into the future. And we have continued to deliver progress across all of them. These imperatives include, first and foremost, we are continuing to invest in our business, including secure in premier contracts and integrating the right technology to strengthen and expand the effectiveness of our assets.

We continue to grow our digital footprint and demonstrated effectiveness in dynamically targeting, influencing and delivering audiences on the move. Complementing our digital portfolio, we've added to our data analytics capabilities and further strengthened our RADAR tweak of tools through key partnerships in both the US and Europe, and we continue to expand our integration with programmatic buying platform. All of these investments around monetizing our portfolio by delivering the data, targeting and ease of ad placement that our customers increasingly appreciate. We also finalized our new contract with the Port Authority of New York and New Jersey during the fourth quarter. This venture is aimed at capturing the incredible potential of our platform and technology in a very big way as we emerged in the pandemic and audience travel begins to normalize.

Second, we are focused on maximizing revenues by doing what we do best, partnering politely with our customers to deliver compelling advertising solutions, strengthening long-term relationships and remaining agile and flexible. In the US, we're doubling down on our client direct selling initiatives and emphasizing selling creative ideas rather than specific billable locations. Similarly in Europe, we are working with advertisers and agencies to develop unique network solution, which exploit the flexibility of our medium. These approaches along with the integration of RADAR's broadening suite of related data analytics tool are supporting deeper conversations with brands, who are selling the unique strength of our platform.

Third, we have remained diligent in prudently managing our cost structure and cash flow. These initiatives have included negotiating reductions in site leases, temporary reductions in compensation and reductions in certain discretionary spending, as well as deferring capital expenditures. We've also moved forward with the restructuring plans to reduce headcount throughout our organization.

And fourth, we are committed to maintaining ample liquidity and continuingly -- continually reviewing parts to strengthen our balance sheet over the long term. This includes the recent refinancing of a portion of our debt through the issuance of $1 billion senior notes, which extended our maturity profile and reduced our cash interest expense going forward. And Brian will provide more details following my remarks. The strength of our assets and our focus on remaining agile in terms of maximizing our inventory in a difficult environment was evident in the fourth quarter as we continued to post sequential improvement in our performance. We delivered consolidated revenue of $541 million, down 27% compared to the prior year. Excluding China and FX, the decline would have been 25% in the fourth quarter, an improvement over the third quarter.

In Americas, we delivered results ahead of our expectations in both sequential revenue and adjusted EBITDA margin. Our performance in Europe reflected the impact of the increased mobility restriction as government thought to contain the second wave of the virus. These results were also ahead of our expectations as we work diligently to adjust our selling approaches and maximize our asset in an unprecedented and volatile climate. Similar to the third quarter, we saw promising signs regarding the resilience of our platform in select markets, particularly in the UK where our business significantly outperformed the roadside market. We believe this reflects both the premium locations of our roadside inventory, as well as the success of our digital screens which generated close to 70% of our fourth quarter revenue in the UK. These results, as well as our progress in continuing to drive operating efficiencies are certainly encouraging given the pandemic related circumstances we have faced globally. I'd like to call out all of our employees for their outstanding commitment to our mission and their contributions to our business during this extraordinary operating period. We truly have a first rate talented team laying the groundwork to deliver improved results this year and beyond. Our people have adjusted brilliantly to new ways of working and their productivity and commitment through the crisis have been outstanding. There are many steps they are taking to further strengthen our operations while adjusting our approach to serving our clients during the pandemic will pay dividends well into the future.

Looking ahead, we will be facing a very tough comparable first quarter given our strong performance in the first three months of 2020, and the continued impact of COVID 19. This is also traditionally our smallest quarter in terms of revenue. Based on the information we have as of today, we expect Americas segment revenue to be down in the high 20 percentage range as compared to the prior year. The recent mobility restrictions in European countries, following mutations of the virus have continued to cause significant volatility in our European segment booking activity. Due to this, for the first quarter of 2021, with the Europe segment revenue to be down in the mid 30% range, as compared to prior year. Latin American bookings continue to be severely constrained as the pandemics' impact continues in all four of our markets in the region.

Turning to our fourth quarter performance. In the Americas segment, while year-over-year revenue was down 25%, we continue to show a sequential improvement, which was better than expected. Local continues to show recovery and we're seeing national rebounding, it is not only the number of sales RFPs increasing, but we're also seeing an increase in the size of those RFPs, which is certainly a good sign. As a reminder, in 2019 National revenue was up 9%. We've begun to gain traction with the large agencies and brands on the ability of the out-of-home medium to deliver results. They were however the first to pullback as the pandemic hit. So we're now beginning to rebuild interest with them, which bodes well as we exit the pandemic.

In the US, programmatic purchasing grew encouraging the year-over-year during the fourth quarter, although off a small base. And we believe programmatic could grow substantially over time. We've built a robust set of SSP partners and a rich network of more than 20 DSPs, providing avenues to sell our inventory alongside other digital media. Our early entry into programmatic relative to the rest of the out-of-home industry positions us well as we work to introduce our platform and capabilities to a greater number of brands across the larger media buying universe. Europe's fourth quarter revenue, adjusted for foreign exchange, was down 23%. While our performance was ahead of our internal expectations due to the second wave of COVID and associated travel restrictions, specifically in our largest market, France, we did not deliver sequential improvement. During the quarter, we continued to benefit from our strategic focus on roadside locations, which accounted for about two-thirds of our total European revenue and are far less affected by COVID-19 driven restriction than the transit environment which has historically accounted for just over 10% of our European revenues.

Similar to the Americas, one encouraging outcome of the pandemic is that in Europe, we have witnessed increased opportunities to demonstrate the flexibility, immediacy and creativity of our platform from multiple standpoint, including messaging context, contract flexibility and the ability to use mobile data to better target specific audiences.

Moving on now to our outlook for the Americas business. As I mentioned, we expect the Americas to be down in the high 20 percentage range as compared to the prior year. This is slightly weaker than the fourth quarter, due in part to the tough comps of 2020, as well as increased pressure on airports. As a reminder, in last year's first quarter, Americas segment revenue was up 8.5% on 2019. We are heartened by the increased audience movement with trends that we're seeing. Our data is showing that travel has actually remained close to normal with some weeks even exceeding the same week in the prior year. So audiences are back on the highways and we have no doubt advertisers will ultimately come back to the market. The encouraging news is that, similar to the fourth quarter, we are continuing to see an improvement in the volume and the size of RFPs, and it appears that advertisers are getting more confident and starting to plan for the future in a more structured manner. The beverage vertical continues to improve with the restaurant up versus prior year. But it's also clear that advertisers are continuing to delay decision making and booking campaign later reducing our visibility. We're continuing to leverage our RADAR platform, an expanded portfolio of partner tool to adjust to evolving travel patent to maximize our inventory for our customers, and this is helping to strengthen our relationships and demonstrate the unique attributes of our platform.

Turning to a review of the Americas technology initiatives and new contracts. During the quarter we continued to invest in the right technology, including increasing our digital footprint, strengthening our data analytic capabilities and expanding in the programmatic space. We added seventeen new digital billboards in the fourth quarter for a total of 74 new digital billboards in 2020, giving us a total of more than 1,400 digital billboards across the United States. We also continue to strengthen our RADAR platform through partnerships aimed at further improving our data analytics and directly addressing our customers' needs. We entered into a partnership with Bombora, a leading provider of B2B intent data. An out-of-home industry first, we are integrating Bombora data with RADAR viewed audience insights, demographics, and location targeting. So advertisers can now understand how each of our display impacts more than 100 B2B audience segment, making targeting the B2B customer more accessible and measurable.

Our partnership with Bambora followed the recent addition, the partnerships with Tremor Video and Geopath, which we've also added to the integrated suite of solutions we deliver through RADAR. As an example of the benefits of our technology investment, we leveraged our billable presence in Florida and our RADAR-Connect mobile retargeting capabilities to deliver a campaign for Game Day vodka. The brand reported that the campaign was responsible for 65% of website traffic and achieved a take through rate that was twice the industry average. As repeated case studies have shown, combining billboard ads with mobile is far more effective than just using one or the other. The success was such that Game Day Vodka was subsequently selected as an official committee sponsor by the Tampa Bay Super Bowl Host Committee. This relationship is a very powerful example of RADAR-Connect's ability to take our out-of-home footprint to another level through smart targeting of the right audiences at the right time.

As I noted, we are continuing to expand in the programmatic space. Our programmatic platform introduces ease and efficiency to the out-of-home sales process by enabling marketers to buy our out-of-home inventory in audience based packages, giving them a level of flexibility closest to the online platforms relative to other traditional ad medium. As I've noticed -- as I've noted on previous calls, it's my firm belief that if you make something easier to buy, you inevitably grow your business and our growth in programmatic presence would certainly ensure that we continue to capture advertising dollars from other media and grow our share of the pie.

Finally, we are off to a good start with our Port Authority contracts. We have the inventory up and running on our platform and have begun selling at it. As we noted last quarter, the 12 year deal is the largest airport advertising contracts in the US, panning JFK, LaGuardia in Europe, and Stewart Airports. With the addition of these tremendous airport assets, brands will have the unique ability to execute campaigns that reach a vast array of consumers as they drive local site throughout a vast metro area. Despite the short-term challenges related to pandemic, we remain confident in the growth potential of these contracts.

Looking ahead in Europe where we're seeing a range of performances within our markets due to the resurgence of COVID 19 cases, new variants in the virus and related government restrictions, particularly in France and the UK. As I noted earlier, we expect Europe revenues to be down in the mid 30 percentage range as compared to 2020. Visibility into the remainder of the quarter continued to be impacted as some advertisers pause their activity pending greater clarity on the pace of the vaccination and timing of market reopening. In addition, advertisers are making buying decisions later in the buying cycle which can delay bookings and impact our visibility.

Having said that, it is important to note that the impact of current government restrictions remains well below impact that we saw in March and April of last year. And longer term, as we've continued to emphasize, the resilience of the business is clear and when audiences returned to the streets, our out-of-home business will rebound soundly. At this point, we believe restrictions across our European market will begin to lift the spring, and we're working closely with our advertisers to develop campaign targeting audiences as they return. For example, in the UK, where the roadmap to lifting lockdowns was reviewed earlier this week, the expected rebound is being marketed as a renaissance moment, highlighting why out-of-home is better positioned than ever to help brands reach and engage audiences as they emerge from their restrictive stay at home orders.

Turning now to our European technology investments, we continue to make progress in utilizing smart data to help advertisers plan and adjust their campaigns. Our sales team has integrated the RADAR technology in Spain and the UK, and advertiser interest has been very positive, particularly as we demonstrate the agility of our platform in using aggregated anonymous data to target audiences, as they return to the street. In Spain, we recently launched RADAR driven campaign, centered on driving consumer interest for Disney Plus and CaixaBank. The Disney Plus campaign is for the many theories one division and targeted in 18 to 45-year-old demographics with interest in comic, cinema and video games. And the CaixaBank campaign was for their Young ID products and targeted 14 to 30-year-old with interest in music, museums and other cultural locations in Barcelona. We're also rolling out a programmatic offering in Europe, similar to the Americas, our programmatic offering will build over time, simplifying the buying process, providing us with additional revenue stream and a growing avenue to leverage our scale and technology to target new advertising partners. Our digital footprint continues to expand in Europe. We added 545 digital displays in the fourth quarter and 1,244 in 2020 for a total of over 16,000 screens now live.

Overall, we have a broad asset base in Europe, which is enabling us to develop and market scale digital networks with a focus on road side, which can be sold flexibly by time of day and day of week. This aligns well with rising advertiser expectations regarding our scale and the strength of our technology in targeting the right audiences on the move. I should also note that we recently secured several key contracts in Europe, including winning the bid to renew the rain contract, covering bus shelters, pull banners and stopping points across the city and we've secured a renewal in Spain for the Madrid outskirts on January 1st of this year. As you would expect, the past year was not particularly active for big tenders given COVID and several were pushed out to this year. Nevertheless, we were successful in securing these major contracts.

So, in summary, we are intently focused on executing on our strategy, which is centered on strengthening our technology with the aim of fully monetizing our digital board and expanding our customer base. Notwithstanding the challenges we have faced, the pandemic has also presented us with a number of opportunities to demonstrate the flexibility and immediacy of our platform with a broad range of advertisers as we look to deepen our relationships and accelerate our digital conversion. It remains early in the recovery and as our market gradually open up, we will continue to take steps to preserve our liquidity, including balancing the need to defer capital expenditures, and reduce costs while still investing in strengthening our platform. Overall, we believe we remain in a strong position to capitalize as audience ability increases, given the steps we have taken and continue to take throughout the global crisis.

And now, I'd like to turn it over to Brian to discuss our fourth quarter 2020 financial results.

Brian Coleman -- Chief Financial Officer

Thank you, William. Good morning everyone and thank you for joining our call this morning. As William mentioned, the past year was challenging, but we moved quickly to address our cost base, strengthen our liquidity and improve our financial flexibility. As we look to build a stronger company, we have also continued to make strategic investments in critical areas aimed at strengthening and expanding the effectiveness of our assets, while also refining our sales approach. Taking together these initiatives and our improved cost structure place us in a solid position to benefit as the worldwide economy recovers.

Moving on to the results on Slide 4. Before discussing our results, I want to remind everyone that during our GAAP results discussions, I'll also talk about our results adjusted for foreign exchange, which is a non-GAAP measure. We believe this provides greater comparability when evaluating our performance. Additionally, as you know, we tendered our shares in Clear Media in April of last year, and therefore our Q4 results in 2020 do not include Clear Media. However, our results in Q4 and full year 2019 did include Clear Media's results. In the fourth quarter, consolidated revenue decreased 27.4% to $541 million. Adjusting for foreign exchange, revenue was down 29.3%. If you exclude China and adjust for currency, the decline in revenue was 24.5%. The finish was better than our internal expectations due to stronger-than-expected performance in United States and certain markets in Europe. As William mentioned, this was sequentially better than the third quarter. Consolidated net loss in the fourth quarter was $33 million compared to net income of $32 million in the fourth quarter of 2019.

Consolidated adjusted EBITDA was $101 million, down 51.1%. Excluding FX, consolidated adjusted EBITDA was down 52.1% compared to the fourth quarter of 2019. For the full year consolidated revenue decreased 30.9% to $1.9 billion, excluding foreign currency exchange impact, consolidated revenue for 2020 declined 31.4%. Consolidated net loss for the full year was $600 million compared to $362 million in 2019. And consolidated adjusted EBITDA for 2020 was $120 million, down 80.8% compared to 2019. Excluding FX, adjusted EBITDA was down 82% for the full year. These are certainly not the results we anticipated delivering when we started 2020. But we do believe the team did an exceptional job responding to the pandemic and taking the necessary steps to adapt to the dynamics in the marketplace. Normally during the fourth quarter earnings call I review both the fourth quarter and full year results for each of our business segments. But this year for efficiency, I will focus only on the fourth quarter. Additional details of the full-year results can be found in the 10-K which was filed this morning.

Now, please turn to Slide 5 for a review of Americas fourth quarter results. The Americas segment revenue was $258 million in the fourth quarter, down 25.3% compared to $345 million last year. As William noted, this marked further sequential improvement compared to the previous two quarters. Total digital revenue which accounted for 32% of total revenue was down 29.6%. Digital revenue from billboards and street furniture was down 15.4%. Digital revenue as compared to the prior year improved sequentially over the third quarter, which was down 34.8% and print continues to perform a bit better than digital due to our [indecipherable] inventory. National was down 27% and accounted for 37% of total revenue, with local down slightly less at 24%, accounting for 63% of revenue. Both national and local improved over the third quarter. Our top-performing categories in the quarter included business services, our largest category, as well as beverages. Regionally, we are still seeing strength in our small markets and weakness in the largest cities. Direct operating and SG&A expenses were down 16.8%, due in part to lower site lease expenses related to lower revenue and renegotiated fixed-site lease expense, as well as lower compensation costs from lower revenue and operating cost savings initiatives. Adjusted EBITDA was $94 million, down 34 -- 35.4% compared to the fourth quarter of last year with an adjusted EBITDA margin of 36.5%.

Next, please turn to Slide 6 and a review of our performance in Europe in the fourth quarter. Europe revenue of $268 million was down 17.9% and excluded -- excluding foreign exchange, revenue was down 23% in the fourth quarter. This was a bit weaker than the performance in the third quarter as the stricter lockdowns in key European countries, including France impacted our results. However, our results for the quarter finished ahead of our expectations, which speaks to the execution of our team, as well as the strength of our assets. The level of restrictions varied by country, with seven of our top 10 European markets posting sequential revenue improvements in the quarter, with the majority showing topline declines, less than half of what we saw at the outset of the pandemic and last year's second quarter. Digital accounted for 34% of total revenue and was down 18.8% excluding the impact of foreign exchange. Adjusted direct operating and SG&A expenses were down 17% compared to the fourth quarter of last year, excluding the impact of foreign exchange. The decline was driven primarily by lower direct operating expenses in large part due to our success in renegotiating fixed lease expenses. Additionally, SG&A expense was down slightly due to lower compensation due to lower revenue, operating cost savings initiatives and government support and wage subsidies. And adjusted EBITDA was $35 million, down 46.9% from $65 million in the year ago period, excluding the impact of foreign exchange. This was driven by lower revenues in the period.

In August, as you know, we issued senior secured notes through our indirect wholly owned subsidiary, Clear Channel International BV, which we refer to as CCIBV. Net proceeds from the note offering provides incremental liquidity for our operations. Our European segment consists of the business is operated by CCIBV and its consolidated subsidiaries. Accordingly, the revenue for our Europe segment is the revenue for CCIBV. Europe segment adjusted EBITDA does not include an allocation of CCIBV's corporate expenses, are deducted from CCIBV's operating income and adjusted EBITDA. As discussed above, Europe and CCIBV revenue decreased $59 million during the fourth quarter of 2020 compared to the same period of 2019 of $268 million. After adjusting for $16.5 million impact from movements in foreign exchange rates, Europe and CCIBV revenue decreased $75 million during the fourth quarter of 2020 compared to the same period of 2019. CCIBV operating income was $0.8 million in the fourth quarter of 2020 compared to operating income of $38 million in the same period of 2019.

Now let's move to Slide 7 and a quick review of other, which includes Latin America. As a reminder, the prior year results include Clear Media, which was divested in April of 2020. Latin American revenue was $15 million in the fourth quarter, down $11 million compared to the same period last year. Revenue was down due to widespread impact of COVID 19. Direct operating expense and SG&A from our Latin American business were $15 million, down $4 million compared to the fourth quarter in the prior year due in part to lower revenue, as well as cost savings initiatives. Latin America adjusted EBITDA was $1 million, down $6 million compared to the fourth quarter in the prior year due to the impact on revenue from COVID 19, partially offset by cost savings initiatives.

Now moving to Slide 8, and review of capital expenditures. CapEx totaled $31 million in the fourth quarter, a decline of $62 million compared to the prior year period as we continued to focus on preserving liquidity, given the current operating conditions. CapEx was also lower due to the sale of Clear Media, which as I mentioned, occurred in April of 2020, although fourth quarter CapEx did include a small amount related to the port authority contract. For the full year, total CapEx was $124 million, down $108 million compared to the full year 2019. Again the reduced CapEx for the full year was primarily due to our liquidity preservation measures and the divestiture of Clear Media.

Now on to Slide 9. Clear Channel Outdoor's consolidated cash and cash equivalents totaled $785 million as of December 31st, 2020. Our debt was $5.6 billion, an increase of just over $500 million during the year as a result of our drawing on the cash flow revolver at the end of March and issuing the CCIBV notes in August. Cash paid for interest on debt was $22 million during the fourth quarter and $324 million during the full year ended December 31st, 2020. This was in line with our expectation and up slightly compared to the prior year due to the timing of interest payments, which was partially offset by lower interest rates. Our weighted average cost of debt was reduced from 6.8% in 2019 to 6.1% in 2020.

Moving on to Slide 10. As mentioned, we continue to focus on managing our cost base and strengthening our liquidity and financial flexibility. In September we announced restructuring plans throughout our organizations. In our Americas segments we completed our restructuring plans in the fourth quarter and we expect annualized pre-tax cost savings of approximately $7 million to begin in 2021. However, our plans for Europe have been delayed due to the evolving nature of COVID 19 impacts and the complexity of executing the plans. We now expect to substantially complete the plan by the first half of 2022. In conjunction with and in addition to these plans, we expect an additional annualized pre-tax cost savings of approximately $5 million in our corporate operations. Additionally, as I mentioned in my remarks on both the Americas and Europe segments, we continue to work on negotiating fixed-site lease savings and have achieved $28 million in rent abatements in the fourth quarter for a total of $78 million year-to-date. Also, we received European government support in wage subsidies in response to COVID 19 of $1 million in the fourth quarter and $16 million year-to-date. The duration and severity of COVID 19's impacts continue to evolve and remain unknown, as such, we will consider expanding, refining or implementing further changes to our existing restructuring plans and short-term cost savings initiatives as circumstances warrant.

Moving onto our financial flexibility initiatives, earlier this month we successfully completed an offering of $1 billion of 7.75% senior notes due 2028. Proceeds from the offering will be used to redeem $940 million of our 9.25% senior notes due 2024, as well as to pay transaction fees and expenses including associated call premium and accrued interest. The timing was right for this offering, giving the strength in the high-yield credit market, as well as our improving outlook. In addition, we've de-risked our maturity profile by refinancing approximately half of our 9.25% notes which were unsecured and represent our next nearest material maturity. Our weighted average maturity is now 5.6 years, up from 4.9 years with a run rate cash interest savings of approximately $10 million per year, due to lower coupon rate. All-in-all, the offering speaks to the continued support the financial markets half for Clear Channel Outdoor and reflect our improving outlook, strong global assets and leading market position.

Turning to Slide 11 and our outlook for the first quarter of 2021. As William mentioned, Americas first quarter 2021 segment revenue is expected to be down in the high 20% range as compared to the prior year. This is slightly weaker than the fourth quarter, due in part to the tough comps. With the first quarter of 2020 when revenue increased 8.5% over the prior year, as well as the continued impact of COVID 19. In our Europe segment we expect revenue to be down in the mid 30% range in the first quarter, historically the first quarter of the year is the smallest quarter for revenue. The weakness is due to the resurgence of COVID 19 cases, new variants of the virus and related government restrictions, particularly in France and the UK. Latin America bookings continued to be severely constrained. Additionally, we expect cash interest payments in 2021 of $362 million and $335 million in 2022. The increase in 2021 is primarily due to the interest payments on the CCIBV notes issued in 2020, as well as various timing differences.

And now, let me turn the call back to William for his closing remarks.

William Eccleshare -- Chief Executive Officer

Thank you, Brian. So, to reiterate, despite the near-term challenges we continue to face and the uncertainty regarding the pace of the worldwide recovery, we are encouraged by the resilience of our business and the fact that infection rates are in decline in the majority of our markets, which together with the vaccination programs gathered pace is leading to a real sense of optimism.

Our national and local businesses in the US continue to recover. And in Europe we are confident that the restrictions of starting to lift and our pipeline is strengthening. As we exit the first quarter and the environment continues to improve, we remain committed to executing against our growth strategy and delivering year-on-year growth in 2021. We believe are focused on working closely with our customers to give them real time audience insight they need, including our effort to expand our technology initiatives spanning our digital platform, data analytics capabilities and programmatic capability put us in an even stronger position to return to revenue growth and benefit from our operating leverage as the recovery takes hold in the second quarter and beyond.

We are now a stronger and more efficient company in the way that we operate, both in terms of the unique value proposition we deliver and the manner in which we run our business. Our people have shown that creativity and commitment and we are poised to maximize the opportunities ahead. I look forward to providing updates regarding our progress in the months ahead.

And now, Scott will join Brian and myself in taking your questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Steven Cahall of Wells Fargo.

Steven Cahall -- Wells Fargo -- Analyst

Thanks. Maybe first William, you talked a lot about digital sales and programmatic, we've seen digital pricing bounce back in a couple of other advertising mediums. I was wondering if you're seeing any of that yet, digital revenue was down in the quarter, but any canaries in the coal mine yet on that side of the business?

William Eccleshare -- Chief Executive Officer

Yes. Thanks, Steve. I mean it depends as always where you look, in Europe, we've seen a very strong performance, by digital and pricing certainly remaining strong. In the UK, as I said on earlier Q4, we saw 70% of our revenues coming from digital. In the US it's a slightly different picture because as you know it's a very different format for digital and I'll just ask Scott to kind of touch on what we're seeing in Digital in the US to be a comprehensive answer there.

Scott Wells -- Chief Executive Officer, Americas

Yes, thanks, William. I think, Steve, if you look in our notes as we break out some of our numbers on digital, you'll see that digital performance improved 1.500 basis points Q4 over Q3. And I think I can comfortably say we had our best programmatic quarter ever in Q4. So we do see it recovering. I think Q1 we have a really tough comp and that will probably -- will probably be flattish to a little worse off than the performance that you see for Q4, but there is definitely recovery coming in that area and we're definitely seeing improved demand. But the drag overall on our digital does come from our airport segment, which has had a tougher run of it. I'm sure we'll get into that as we talk about segments later on.

Steven Cahall -- Wells Fargo -- Analyst

Yes. And then maybe just turning to margins, incremental margins were really strong in the quarter. How do we think about the fixed-site lease savings, will those continue as revenue returns? Are those structural or are those variable?

Brian Coleman -- Chief Financial Officer

Well, there is -- hey Steve, this is Brian. There is a little bit of both. I think to the extent that we've achieved abatements and concessions or altered the underlying contracts, then those should be expected to continue. But there is a significant amount of what I'd call deferred rent, and as revenues start to return those deferred rent expense will start to be paid. And you can see that as you look at our recruiting expense line, rent expense has gone up. The accrued expense has gone up associated with those deferred rents. I think the best way to answer your question is as follows, the team continues to work very diligently on getting rent abatements, we continue to defer payments during this challenging times. We had a lot of success throughout the year in the quarter, fourth quarter we had $28 million of rent abatements and had brought the year-to-date total as of December 30th to $78 million. So, a lot of success on that front, both in the Europe and the Americas divisions. But there is also kind of a whole deferred rent side, that's important from a liquidity management standpoint to reflect it in our working capital, but as revenues start to return, we do expect to make those rent payments and it will start to reverse kind of in the working capital plan.

Steven Cahall -- Wells Fargo -- Analyst

Yes. And then last one from me, Brian. What would make you comfortable enough to start paying down the revolver?

Brian Coleman -- Chief Financial Officer

Yes, it's a good question, it's almost emotional and that you'd rather have the cash, than not. I think the right answer on that one is, as we see the recovery start to emerge and its upward sloping trajectory is one where we don't think there'll be a setback. That's probably the right answer from a holistic perspective. I mean from a liquidity management perspective, our ability to have the outstanding is conditioned upon a $150 million liquidity covenant. So, we're somewhat indifferent just from a liquidity position. But I think from an optical and just a good cash management perspective, we'll probably keep it on our balance sheet until we see the recovery that doesn't look like it's going to reverse.

Steven Cahall -- Wells Fargo -- Analyst

Yes. Thank you.

Operator

Your next question comes from the line of Ben Swinburne of Morgan Stanley.

Benjamin Swinburne -- Morgan Stanley -- Analyst

Thanks, good morning. When you guys look into Q1, I'm just wondering if you could give us, especially in the US, a little more color on sort of the trends you're seeing through the quarter. I would imagine that comps gets easier as you look in the March, and I'm wondering if you give us any more specifics around billboard transit, national, local etcetera? And then back to cash flow. Can you just remind us on the term loan or actually across the cap structure, to what extent you've got floating rate debt. I just, you gave some helpful guidance on cash interest in 2022. I'm just trying to figure out how kind of locked and loaded that is? Thanks guys.

Scott Wells -- Chief Executive Officer, Americas

Hey, Ben, it's Scott here. I'll take the first part and then hand it to Brian to take your second part. So you guys remember, in the US last year, we didn't actually see a lot of softness from COVID in Q1, we had a very strong Q1, we are up 8.5% and actually airports had a very strong quarter that quarter, they've had a very strong Q1 in 2019. And so when you think about the dynamic of what's going on with our numbers, it was against a relatively COVID free comp for us in Q1 in the US. And so, I think-- I think what you're going to see is you're going to see that we had a couple of big deals last year that didn't come back census was out in the marketplace, there are couple of other commercial advertisers that were hitting the ground hard beginning of last year that have not come back this year, and that would be the primary reason in the traditional roadside business, why -- why we'd be a bit softer sequentially. The airports business, I don't think we've hit the trough yet in it. I think we're getting close in terms of where that's going to bottom out, but it is doing substantially less well than the rest of the business. I mean, I think one way to look at that, if you look at our percentage of airports last year, we went from about 17% in 2019, which is something we've disclosed in terms of our revenue mix. Airports last year was about 13% and it didn't really start degrading until kind of May, June, so that degradation is something that cost them about 300 bps in our mix for 2020. And I do think we'll see that bottom out, but it has not bottomed out yet.

Benjamin Swinburne -- Morgan Stanley -- Analyst

Got it. And just to quickly follow-up if I could. I mean, I think Williams started the call talking about 2021 being a year of growth. I guess that really kicks in as you get into Q2, Q3 and the comps start to get substantially easier. Is that the right way to think about it?

Scott Wells -- Chief Executive Officer, Americas

Yes, I would definitely be comfortable saying we're going to see growth return in Q2.

Benjamin Swinburne -- Morgan Stanley -- Analyst

Got it.

William Eccleshare -- Chief Executive Officer

Ben, I would just add from a European perspective as well, to your Q1 point. I mean, in Europe we did start to see some COVID impact in March of last year, but it's also right to note, as I did it earlier that we have seen pretty significant strength on movement in -- from right at the start of January this year with the second or third wave of the infections hitting the UK, France particularly. So it's probably been a tougher quarter than we expected, but I would say the -- there are very positive indications this week and beyond as we start to see a clear route out of those lockdown announced by governments across Europe and pipelines starting to grow into Q2. So again, obviously significantly softer comps in Q2, but also a real sign of that, that the market coming back for us in the second quarter both in the US and Europe.

Brian Coleman -- Chief Financial Officer

And then Ben on the kind of the floating rate exposure question. Our balance sheet is actually pretty straightforward, we don't have any material interest rate derivatives. So you can take the little over $2 billion of bank facilities as floating, it would put you a little over a third of our total debt floating interest rate. I would point out though that's somewhat by design as we've kicked out our maturities on our bonds, our prepayable debt becomes an important feature for us and so we have maintained a certain amount of pre-payable floating rate interest debt and that's about a little over a third of the total balance.

Benjamin Swinburne -- Morgan Stanley -- Analyst

Got you. Thank you.

Operator

Your next question comes from the line of Lance Vitanza of Cowen.

Lance Vitanza -- Cowen -- Analyst

Hi guys. Thanks very much for taking the questions. Maybe just to start as a quick follow-up to the last question about returning to growth in the second quarter. It sounded like, Scott, EU, you are pretty confident than the US, if that would be the case? And then, William, I heard your comments, but was that obviously sort of expectation that you -- in Europe, you will also return to growth in the second quarter, and I presume you're talking about year-over-year growth with the discussion about the easier comps, but how about on a sequential basis? Do we -- would we expect, I would assume we expect that in both Europe and the US as well as we think about the second quarter?

William Eccleshare -- Chief Executive Officer

Thanks, Lance. Yes, that's right. We would, I think, we would expect to see sequential improvement and we would expect to see, as you say, again the softer comp of 2020 growth coming back in the second quarter. And then what we're seeing in Europe to elaborate a little is that I think governments just toward the end of December in the major markets that we operate in got too precautious as the virus mutated and as they saw infection rates rise and we've either had significant restrictions or further restrictions imposed. And I think now as the vaccines are distributed and in my own country, the UK, when our more than 25% of the adult population vaccinated, we're starting to see levels of confidence returning in terms of the government restraints. And we know from what we saw back in Q3 that as those restraints are lifted, as our audiences return to the street, so our advertisers come back. And just this week anecdotally in the UK, the announcements were made by the government on Monday and Tuesday, the volume of calls from advertisers and the sense of a pipeline filling up was pretty palpable. So, you find us in a reasonably optimistic mood I would say for the second quarter, but there's no question that Q1 has being tough with those government lockdowns.

Lance Vitanza -- Cowen -- Analyst

Okay. And then I just wanted to ask you about the cash position. We had actually been thinking -- and it sounds like the first quarter is kind of the trough from an operational standpoint, but from a cash balance perspective, we at least have been thinking that that would come a couple of quarters later in part because of the timing of interest payments, but also in part because of those rent deferrals unwinding that you talked about earlier. Could you talk about -- what are your expectations in terms of the timing? And again, I know no one has a crystal ball, but based on at least what you're seeing now, should we still be thinking about sort of like a 3Q cash trough or is that harder to tell at this stage?

William Eccleshare -- Chief Executive Officer

I think it's still a challenge. We are seeing positive signs of recovery and we're optimistic and we also feel very comfortable that our assets are quite resilient and we saw some of that in Q3 and the first part of Q4, but it's tough to really to predict where things will be further out in the year. I think directionally you're thinking about it the right way, it's been -- it's consistent with the way we think about. As we start to pick up particularly in the second half of the year, I think on an operating basis, free cash flow will definitely improve and should be neutral to positive. I think on a fully levered basis because of our significant debt service that will take a little longer and we'll need to get back to Pre-COVID type levels, but there's a lot of things in that mix and so it's really tough to put a stake in the ground on timing, but I think directionally, it sounds like we're thinking about it the right way or the same way.

Lance Vitanza -- Cowen -- Analyst

Is there a minimum cash level at which you would feel the need to take steps to raise additional capital?

William Eccleshare -- Chief Executive Officer

There is, we think of the $150 million to $200 million on a consolidated base cash levels as one where, as we would have forecast that point to being around that level, we would likely start to plan for additional activities. Right now we're comfortable where we are, but we always want to continue to update our forecast every week and day and month that goes by, we will get more information and we want to be dynamic on that front.

Lance Vitanza -- Cowen -- Analyst

Got it. Thanks, guys.

William Eccleshare -- Chief Executive Officer

Thanks, Lance.

Operator

Your next question comes from the line of David Joyce of Barclays.

David Joyce -- Barclays -- Analyst

Thank you. Just a little bit more on the site lease renegotiations that helped the expense base there in the fourth quarter. Is there room for more of that or have you basically done all of the renegotiating you can. And I appreciate that you talked about the site leases being related to the revenue coming back later, but there kind of like a deadline on when that cadence might turn into it sort of a headwind on working capital or is it going to be pretty smooth?

Brian Coleman -- Chief Financial Officer

Sure, I'll take a shot at that, David, and then William and Scott can come over the top if they have anything else to add. I think the first part of your question is, the lease negotiations that the operators continue to have, are we done. The answer is no. I think as long as we have COVID impacted contracts, there is a conversation to be had. And then it takes time and the negotiations conclude and thus the relief is lumpy, for lack of a better word. So, you saw quite a bit of success in Q4, particularly in the European Group, but that was efforts since Q2, dialogs with counter parties, negotiations, type of thing. Those conversations continue and you're having conversations about Q3 and Q4 impact, and again, I think those will continue, maybe, to a lesser extent as time goes by. And certainly as revenue starts to come back and these contracts start performing closer to their kind of intended terms then I think it will be challenging. And so I think the natural answer to your question is, these will continue, the negotiations will continue and they will start to kind of funnel off as revenues start to return to normality.

David Joyce -- Barclays -- Analyst

And on the revenue front, I'm sorry, go ahead.

Brian Coleman -- Chief Financial Officer

No, no, no. Go ahead.

David Joyce -- Barclays -- Analyst

I was just going to ask on the revenue side of the equation, have the contracts with the advertisers changed as a result of this, meaning have they become more fixed in nature or are they still as variable as they have been, just trying to think of how the revenue has been holding up sort of better than some of our traffic data would suggest.

Brian Coleman -- Chief Financial Officer

I'll let Scott or William address that question since it is advertising contract facing.

William Eccleshare -- Chief Executive Officer

Yes, I think overall I don't think the nature of our contracts have changed significantly. I think what had changed is the, the booking curve has changed and that bookings are coming in later than they were and advertisers were perhaps demand and greater flexibility than they were pre-COVID, but I don't think there has been a fundamental shift in terms of our contractual relationship with advertisers, no. Scott, have you seen anything in the US to comment on?

Scott Wells -- Chief Executive Officer, Americas

No, it's the later contracts, shorter commitments later buying. I mean that's really what's happened.

William Eccleshare -- Chief Executive Officer

Yes.

David Joyce -- Barclays -- Analyst

Alright, great, thank you very much.

Operator

Your next question comes from the line of Stephan Bisson of Wolfe Research.

Stephan Bisson -- Wolfe Research -- Analyst

Good morning. In the past, you've indicated an openness to asset dispositions. I was wondering if that is still the case and if so, what are you currently seeing in the M&A market and where are I guess some of the hold-ups?

William Eccleshare -- Chief Executive Officer

Okay, So, I'll take that and then Brian can add any follow-up commentary. I mean, I would say, I would repeat, I think what I said when answering a similar question last quarter which is that, we certainly remain open, the strategy that we talked about exactly a year ago on our earnings call around taking on the higher margin US business remains that case. But I still believe that right now the valuation gap remains pretty significant and that now would not be the time to look at any significant M&A activity. I think we would want to see a more sustained recovery over a period of time before that became really a likely scenario for us. But the strategy remains the same, it's just that execution right now I think remains challenging. Brian, do you want o add anything to that?

Brian Coleman -- Chief Financial Officer

I agree with that William. I mean I do think that there is an increase in, maybe level of interest generally in the marketplace. But the valuation gap is going to be too wide until we start to see signs of a sustained recovery. So I think I totally agree with everything you said.

Stephan Bisson -- Wolfe Research -- Analyst

Great. And I guess just one follow-up. On that valuation gap, is it more just the base year and needing to kind of rebuild what the assets can do in terms of financials, or is it a multiple problem in terms of what multiple people are running today?

William Eccleshare -- Chief Executive Officer

Frankly it is both.

Brian Coleman -- Chief Financial Officer

Talking about this, say, I think it's probably a little bit of both, but I think it may be weighted toward who takes the recovery risk and until you have a sustained level of EBITDA, people are going to discount that. And I think until that recovers, it's going to be a tough conversation.

Stephan Bisson -- Wolfe Research -- Analyst

Great, thanks so much.

William Eccleshare -- Chief Executive Officer

I would just add. I think everyone we talk to is very confident about the recovery in our sector and remain very full of belief for our sector. Remember the sector was the fastest growing medium of all traditional media for the preceding five, six years pre-COVID. But I think what nobody can answer right now is what exactly -- what the exact timing or shape of that recovery will be. So, until that becomes a little clearer until our crystal balls improve a little, I think that it's unlikely to see significant transaction, that's my view.

Stephan Bisson -- Wolfe Research -- Analyst

Great, thanks so much for the color.

Operator

We have time for one more question. Your last question comes from the line of Jim Goss of Barrington Research.

Jim Goss -- Barrington Research -- Analyst

Thank you. A couple of questions, first, as you alluded to, advertising is a market share game and we follow a lot of broadcasters that have had a less severe or maybe a less severe reaction or a better recovery to this point than the outdoor sector has and in terms of domestic advertising. And I'm wondering what do you think might account for that. Is it that your airport exposure or do you think it's the urban versus non-urban exposure? What are the factors that are building into the lesser degree of recovery you've experienced at this point?

Scott Wells -- Chief Executive Officer, Americas

William, you want me to take that one from a --

William Eccleshare -- Chief Executive Officer

Well, do you want to take it, yes.

Scott Wells -- Chief Executive Officer, Americas

Yes. Okay. So I think there is a -- I think there's a few things going on. I mean, first off in any reporting from broadcasters, your 2020 numbers are distorted by political, which was a pretty big contributor for that vertical, particularly in the latter part of the year. So, I --

Jim Goss -- Barrington Research -- Analyst

That's clearly besides political.

Scott Wells -- Chief Executive Officer, Americas

So besides political, but the point I'd just start with is that, I think we are not a like-for-like buy with TV. It's not a primary comparison. So it's a little bit of a tough bridge to build you exactly how the advertisers think about it. But I think that a big thing you should keep in mind is that most of the agencies, many of the agencies are based in the biggest cities that have had the most advanced lockdowns in the US. And so, I know from our conversations with agencies and with advertisers, there is a perception gap around how mobile the country actually is versus how -- and this was particularly true earlier in the year, I think it has been less and less of an issue as time has passed. But the agency folks are working from home in Los Angeles, they're working from home in New York, they're working from home in Chicago, and they say, well, since I'm working from home that must mean everybody is working from home and so I'm not thinking about buying out-of-home, but I'll buy TV because everybody is watching more TV albeit they're not watching linear TV, they're watching streaming. But that's a whole other ball of wax to get into.

But I think you'll see as those folks start to come back to offices, or start to see -- we're certainly spending a lot of time educating people on how much mobility there actually is, in the marketplace right now, I think you'll see things come back, but it really -- it's a hard one to give you a like-for-like decision, because I don't think that there are a lot of advertisers who are making a binary decision of do I buy out-of-home or do I buy TV, it's usually, am I going to add out-of-home to a campaign that maybe has TV in it already, you are something along those lines with the perceived mobility, I think that's been a drag on us. And there is no question that you asked embedded in there. You asked about transit, I mean I referenced before that transit was down 300 bps in our percentage mix of revenue for 2020 and that it had not troughed as we reach that point. So that's definitely contributing to it, and that's a --

William Eccleshare -- Chief Executive Officer

-- that's a perception plus a reality thing to a degree, although we did see pretty robust travel over the holidays, we saw pretty robust travel over President's Day weekend, and certainly the average weekly volume is trending in the right direction. And I think that'll be a conversation as recovery gets more firm that we're going to see in the other direction. So hopefully that helps.

Jim Goss -- Barrington Research -- Analyst

Okay. And one other thing, you made a very interesting point in your press release, talking about in the digital platform delivering real-time content changes depending on audience traffic patterns whether daypart and other relevant variables, that seems obviously a digital can enable that sort of flexibility. I'm wondering how much you'd intend to implement that and what are the constraints in terms of parties owning specific placement rates, if somebody wants certain displays down a certain road, and does that -- that factory against your ability to do what you're saying or are you shortening the time frames for digital versus the static board, so that you can introduce this flexibility.

William Eccleshare -- Chief Executive Officer

Yes, I mean, it's something that we're managing all the time is probably how I would answer that, to maximize the value that we get from our inventory, and so you'll become advertiser if you take a -- an exclusive right on a particular board, but the majority don't, and the majority on digital, the majority enables us to run the flexibility that we talked about. And I think one of the few upsides of COVID is it has given us the opportunity to demonstrate to advertisers, the greater flexibility that digital -- digital out-of-home deliveries both in the US and internationally for us as well to become a very important part of our value proposition. And I think it be really appreciated during the pandemic to be able to take particular daypart or particular days of week and exploit that flexibility, so yes, we obviously have to consider what you want -- other advertisers might want, those advertisers we don't want that flexibility, but we're making those judgments and balancing that to maximize the value of our inventory wherever we operate.

So, I think I should. -- I think I should probably close it there and thanks everybody for your questions and for your attention. As I hope I've managed to convey with Brian and Scott's help, we recognize that this is a tough start for the year, but we also recognize that as of today, 25th February, I think starting in terms of the net pricing for the world and for our business as well. I think the execution of our team has been remarkable. I think we demonstrated the phenomenal strength of our asset and so far as one can, I do feel optimistic that not only will we return a business to year-on-year growth in the second quarter and beyond, but that we are resiliently focused on getting back to pre-COVID levels and that is the united objective for this business across the world. And the sooner government lift restrictions, roll out the vaccines and people get back on the highways and back into cities, the sooner our business will return to those pre-COVID levels. So thanks again, everybody, for your to your interest and for your support and we look forward to continuing the dialog. Thank you.

Operator

[Operator Closing Remarks]

Duration: 70 minutes

Call participants:

Eileen McLaughlin -- Vice President, Investor Relations

William Eccleshare -- Chief Executive Officer

Brian Coleman -- Chief Financial Officer

Scott Wells -- Chief Executive Officer, Americas

Steven Cahall -- Wells Fargo -- Analyst

Benjamin Swinburne -- Morgan Stanley -- Analyst

Lance Vitanza -- Cowen -- Analyst

David Joyce -- Barclays -- Analyst

Stephan Bisson -- Wolfe Research -- Analyst

Jim Goss -- Barrington Research -- Analyst

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