Clear Channel Outdoor Holdings, Inc. (NYSE: CCO) Third Quarter 2022 Results Conference Call November 8, 2022 8:30 AMm. ET
Participating companies
Eileen McLaughlin – Vice President, Investor Relations
Scott Wells – President and Chief Executive Officer
Brian Coleman – Chief Financial Officer
Conference Call Participants
Steven Cahall-Wells Fargo
Ben Swinburne – Morgan Stanley
Lance Vitanza – Cowen
Aaron Watts – Deutsche Bank
Richard Choe – JPMorgan
Jim Goss – Barrington Research
Operator
Ladies and gentlemen, thank you for being here. Welcome to Clear Channel Outdoor Holdings, Inc. ‘s Third Quarter 2022 Results Conference Call[Operator Instructions]
Now I would like the convention to call its host, Eileen McLaughlin, Vice President of Investor Relations. Continue.
Eileen Mc Laughlin
Hello and thank you for joining our call. On today’s call are Scott Wells, our CEO; and Brian Coleman, our Chief Financial Officer. Scott and Brian will provide a review of Clear Channel Outdoor Holdings, Inc. ‘s third quarter 2022 operating performance. and Clear Channel International BV. We suggest you download the earnings convention call investor presentation located in the monetary segment from our online investor page and review the presentation of this convention call. After an arrival and review of our results, we will open the line for questions. And Justin Cochrane, CEO of Clear Channel Europe, will participate in the Q&A portion of the call.
Before we begin, I would like to remind everyone that on this call, we would possibly make forward-looking statements related to the Company, adding statements about its long-term monetary functionality and strategic objectives. All forward-looking statements involve threats and uncertainties, and there can be no assurance that management’s expectations, ideals or projections will be known or that the actual effects will not differ from expectations. Please refer to the threat statements contained in our earnings press release and SEC filings.
In today’s call, we will also address certain measures of functionality that are not consistent with accepted accounting principles. We provide timelines that reconcile those non-GAAP measures with our reported effects on a GAAP basis as part of our earnings release and call for the Investor Earnings Convention. Please also note that the data provided in this call reflects only management’s perspectives as of today, November 8, 2022, and may no longer be accurate at the time of the repetition.
Move on to slide 4 of the investor presentation and now I’ll pass it on to Scott Wells.
Scott Wells
Good morning everyone and thank you for taking the time to participate in today’s call. Our strong third-quarter effects are at the high end of the consolidated earnings guidance we provided on our last call and reflect the resilience of our platform, the determination of our groups across the corporate and the continued execution of our strategic plan, as detailed at our Investor Day in September.
We generated consolidated revenue of $603 million in the third quarter, an increase of 8% due to exchange rate fluctuations. Continuing the trends we saw in the first half, our functionality was supported through broad demand from advertisers with significant strength in our virtual presence in the Americas. and Europe
We’re making progress and offering our advertisers the kind of delight they expect from virtual media, which contributes to our current and long-term growth. We’re making our responses faster to launch, less difficult to buy, and more data. Driven. In turn, we think we’re doing very well during a difficult time for many ad serving platforms.
As we highlighted on our Investor Day, we know that virtual isn’t just an engine of expansion, it’s a profit multiplier. At the end of the third quarter, virtual accounted for less than 5% of total inventory, but virtual earnings accounted for 40%. of our consolidated profit and grew 20% in the period, compared to the 3rd quarter of last year, excluding movements abroad. exchange rate.
As for our virtual footprint in the U. S. , we rolled out 34 large format virtual billboards in the third quarter, adding to our total of more than 1600 virtual billboards. Combined with our smaller virtual signage at airports and shelters, we have over 4700 virtual billboards across the country. And in Europe, we added 366 virtual displays in the third quarter for a total of 19,200 virtual displays now online.
As we expand our virtual footprint, we continue our knowledge analytics offerings and expand a more complicated operational back-end for the visitor experience. These investments allow us to attract a larger group of advertisers, which bodes well for our long-term prospects. . As an example of the dynamism of our platform, I would like to thank our airport team for their work in creating a multi-year, multi-million dollar partnership and sponsorship with PenFed’s credit union. This first brand acquisition of the Concourse C Connector in Washington Dulles includes the 4,000-square-foot virtual media tunnel. It’s really anything to see, and we’re working with PenFed on other occasions.
In the fourth quarter, our business remains healthy and we are on track to produce effects in line with the full-year direction we presented at our Investor Day in September. Brian will provide an update to our recommendation in his ready comments, but I need to take a moment for what we see. As indicated in those full-year forecasts, we expect expansion to slow in the fourth quarter compared to recent quarters, driven by tougher comparisons to last year’s strong fourth quarter. Since September, we haven’t noticed any significant substitutions in advertiser behavior.
In the U. S. , advertising demand remains healthy and we remain on track to surpass our record profit in the fourth quarter of 2021. Airports and virtual services continue to drive this improvement. In Europe, our business also remains healthy and is on track to outperform the fourth quarter. 2019 and is in line with a very strong fourth quarter of 2021, exchange rate movements, as we continue to take advantage of the expansion of our virtual platform and recovery in transit.
Bookings and speed remain strong in Northern Europe, specifically in the UK and Scandinavia, compared to pre-COVID grades in 2019. However, there are still some markets, basically in parts of southern Europe, that have not fully recovered. In the long term, we follow very closely the commercial trends in our markets. And so far, our leadership in 2023 in the U. S. It’s going well and we continue to be positive about our business.
Finally, we continue to read about strategic opportunities for our European operations with the aim of optimizing our portfolio in the most productive interest of our shareholders, with greater participation in our core businesses in the Americas. We will talk about the most important points we can.
And with that, let me now turn Brian over to talk about our third-quarter monetary effects, as well as our guidance for the fourth quarter.
Brian Coleman
Thank you Scott. Hello everyone and thank you for joining our call. As Scott mentioned, we had another wonderful quarter and our company is on track to meet the year-long guidance we provided on our Investor Day, as you’ll see. on slide 14.
Let’s move on to the effects of the third quarter on slide five. Before discussing those effects, I must remind everyone that in our discussion of GAAP effects, I will also communicate about our effects, excluding movements in exchange rates, a non-GAAP measure. This provides a greater comparison when comparing our performance.
In addition, as a reminder, direct expenses and SG costs
Consolidated earnings were $603 million, an increase of 1. 1%. Excluding currency fluctuations, consolidated earnings increased 7. 8% to $643 million, at the upper end of our diversity of consolidated earnings guidance from $625 million to $645 million.
Net loss of $39 million, a slight improvement from last year’s $41 million. Adjusted EBITDA of $129 million, a minimum of 5%, compared to $136 million in the third quarter of 2021. Excluding currency variations, adjusted EBITDA of $131 million, a decrease of 3. 8%
Continue to slide 6 for a review of the third quarter results for the Americas. Sales in the Americas were $347 million, up 9% and in line with our third-class diversity from $340 million to $350 million. COVID earnings grades with gains of 6% through the third quarter of 2019. Higher revenue across all major product categories, adding airport screens.
Digital revenue, which accounted for 39% of revenue in the Americas, up 16. 6% to $134 million, driven through airports and billboards. Domestic sales, which accounted for 39. 7% of sales in the Americas, up 8%, with local sales representing 60. 3% of sales in the Americas and an accumulation of 9%.
Direct operating expenses and general and administrative expenses increased 12. 1%. The increase is primarily due to a 10. 2% increase in site rental expenses to $114 million, driven by an increase in revenue, primarily in our airport operations, partially offset by a slight accumulation in negotiated hiring reductions. Segment-adjusted EBITDA of $145 million, an increase of 4. 1% with a segment-adjusted EBITDA margin of 41. 8%, lower than in the third quarter of 2021, primarily due to the combination and as expected, in line with the third quarter of 2019.
Let’s move on to slide seven. This slide breaks down our usefulness for the Americas on billboards and others and in transit. Billboards and other billboards, which basically consist of earnings from newsletters, posters, street furniture displays, impressive functionalities and wall accessories, rose 2. 6% to $280 million. the functionality is basically due to the strength of our California, Southwest and Midwest regions. Public transportation grew 44. 7% on airport signage gains, up 45% to $62 million, driven by expansion across the portfolio, the Port Authority added.
Now on slide 8 to get a little more details about the billboard and others. Billboard and other virtual revenues continued to rebound in the third quarter, expanding 6. 8% to $98 million. The accounts now account for 34. 8% of total billboard and other revenue, a building increase from the current quarter. Non-virtual and other signage revenue increased slightly.
Next, skip to slide nine to see a review of our functionality in Europe in the third quarter. My comment relates to the effects that have been adjusted to exclude exchange rate fluctuations. The bottom line of third-class diversity from $270 million to $280 million. This accumulation is due to innovations in public transport and street furniture exhibitions, with emerging revenues in most countries, especially Sweden, offset by a decline in France.
Sales in Europe also increased compared to the comparable era of 2019, and the expansion rate higher than the accumulation noted in the current quarter of 2022 compared to the current quarter of 2019, taking into account exchange rate fluctuations. 40. 8% of Europe’s total profit and grew by 22. 4%, driven by an increase in the amount of virtual assets and a strong uptick in demand in Scandinavia, adding to our transit assets.
Direct operating expenses and general and administrative expenses increased by 5. 6%. The increase is basically due to the site’s higher rental prices, which increased 22. 1% due to a $9 million relief in negotiated rent reliefs, as well as declining government rental subsidies. and higher incomes.
Segment-adjusted EBITDA was $18 million and segment-adjusted EBITDA margin was 6. 5%, down from prior year, in a component due to one-time relief in site rental expenses in the prior year. The segment’s adjusted EBITDA margin was higher than the segment-adjusted EBITDA margin for the third quarter of 2019.
Let’s move on to the CCIBV. Our Europe segment comes with activities operated through CCIBV and its consolidated subsidiaries. Therefore, the revenues of our Europe sector are the same as those of CCIBV. Europe segment adjusted EBITDA, the measure of segment profitability presented in our monetary statements, does not come with CCIBV’s corporate expense endowment that is deducted from CCIBV’s operating profit or loss and adjusted EBITDA.
Europe and CCIBV revenue decreased $23 million in Q3 2022, compared to the same era in 2021, to $239 million. After adjusting for a $39 million effect for exchange rate fluctuations, revenue in Europe and CCIBV increased to $16. 1 million. CCIBV’s operating loss was $14 million in Q3 2022, compared to an operating loss of $26 million in the same era of 2021.
Let’s move on to slide 10, and a brief look at the other, which includes our operations in Latin America. As with Europe, my comment relates to the effects that have been adjusted to exclude exchange rate movements. Other revenues increased 19. 1% thanks to innovations in the top countries. Direct operating expenses and SG expenses
Let’s now turn to slide 11 and a review of capital expenditures. Capital expenditures totaled $43 million, an increase of $11 million, compared to the third quarter of last year as we increased our expenses, i. e. on virtual displays in the Americas. In addition to our capital expenditures, I would also like to note that in the third quarter we made several asset acquisitions totaling $28 million in our Americas segment.
So far this year, money and money equivalents have decreased by $83 million to $327 million as of September 30, 2022. And in the third quarter, money and money equivalents increased by $13 million. Adjusted EBITDA of $129 million and adjustments to net current equity definitely contributed to our cash balance for the quarter and were offset through money interest bills and net investments in constant assets.
Our debt stood at $5. 6 billion as of September 30, 2022, a slight low since the end of fiscal 2021, primarily due to expected quarterly principal repayments on the term credit facility. accrual of $4 million during the same era last year, basically due to the top floating interest rate on our B Term Loan Line.
Our weighted average debt charge 6. 5%, an accrual since the end of the year due to higher LIBOR rates. Our liquidity $543 million as of September 30, 2022, below year-end money, basically due to money reduction. As of September As of October 30, 2022, our first lien leverage ratio was 4. 98 times, well below the settlement threshold of 7. 1 times.
Let’s move on to slide thirteen and our new metric, AFFO. As you may know, on our Investor Day, we introduced a new measure for the company, adjusted operating funds, AFFO. In the third quarter, we generated $24 million and $91 million so far this year, fluctuations in the exchange rate.
Let’s move on to slide 14 and our guidance for the fourth quarter and full year 2022. As Scott mentioned, we haven’t noticed a significant change in advertiser behavior, and we can verify that our fourth-quarter earnings guidance is expected to be within the third-class diversity we communicated on our Investor Day on September 8. Our only update to our third class for fiscal 2022 is consolidated net loss, which increased primarily due to currency fluctuations. Possibly I wouldn’t read all the cross-pieces on this page, I still need to highlight some updates to our tips.
We expect our consolidated revenue to be between $740 million and $765 million in the fourth quarter of 2022, excluding currency fluctuations. Sales in the Americas are expected to be between $370 million and $380 million. In addition, we adjusted EBITDA for the Americas segment will be at the lower end of the third-class range, primarily due to uncertainty around the timing of certain expected rental discounts, as well as weaker programmatic performance.
Europe’s profits are expected to be between $345 million and $360 million, exchange rate fluctuations. Based on monthly and October exchange rates, foreign currencies may generate a 15% headwind in the reported year-over-year earnings expansion in the fourth quarter in Europe. In addition, our monetary interest payment obligations for 2022 will remain at $341 million, adding $124 million for the remainder of this year.
However, monetary interest payment obligations for 2023 are expected to reach $404 million, driven through higher floating rate interest on our B Term Loan Facility. These forecasts assume that interest rates will remain at existing levels and that we will refinance or incur more debt.
Finally, I need to face 2023. Our visibility in 2023 is limited and we are well aware of the considerations about the macro environment next year. However, we have demonstrated our ability to pivot on past recession periods, adding in 2020 with the pandemic, and we can temporarily adjust our spending and maintain liquidity, if needed in the future.
And now, let me refer that appeal to Scott for his closing remarks.
Scott Wells
Thank you Brian. Our business remains healthy, we are confident in our strategy and we are positive about the expansion opportunities ahead. I need to thank our entire team for their determination to execute our strategic priorities, as well as accelerate our virtual transformation. , improving visitor centricity and driving excellence in execution. These efforts allow us to strengthen our competitive position and capture a larger percentage of advertising budgets in the future.
And now, let me pass the call to the operator for the question and answer session. And Justin Cochrane, our managing director for Europe, will sign up for us on the call.
Q&A session
Operator
Thank you. [Operator Instructions] The first query we have about phone lines comes from Steven Cahall of Wells Fargo. Continúe. Su line is open.
Steven Cahal
Good morning, everybody. Could you tell us about the overlap between virtual consumers and print consumers that you see in the Americas?It turns out that virtual spending is developing well at this point, almost 40%. Or do you have a concept if you see new consumers who are virtual, a type of virtual that only enters the market?And, based on this growth, do you plan to increase your virtual CapEx in 2023?And then I have a follow-up.
Scott Wells
OK thanks. Steve, thanks for the inquiry. Digital is interesting. And the answer to your query is all of the above. I mean, I mean, I think what attracted new buyers to the visitor category more than the virtual was programmatic. I think that’s where we get the most new visitors in the category. But the virtual, since we started doing it, has had an incremental component, but also an amplified component. So we have a lot of customers who will buy print campaigns and then use virtual to complement them, factor in calls to action, and do things that only virtual can do. And a lot of the good fortune you’re seeing right now with virtual is because in our fashionable airport constructions, virtual is a core component of what we’re doing, it’s taking off at this airport. sector. That’s right – the visitor base, it’s hard to say it’s one thing, however, it’s quite broad.
As for its component at the moment in CapEx, we do not, in the commercial aspect of the road, we have not limited it. This has been scored more or less through our ability to navigate regulations and gain the ability to convert. This is anything that’s a normal component of our conversations. And if you were to interview our regional managers and branch pre-lookers, they would tell you that the focus is on finding wonderful places to convert to digital, but it’s nothing more than what it has been.
But let’s continue with the next of your question.
Steven Cahal
Yes, thanks for that. The next component would be more or less on airport revenue. I wondered if I had any ancient knowledge about how airports tend to function in a recession. I think it’s still going back to pre-COVID levels, so travel is still pretty strong. In the event of a macroeconomic recession, do you think the airport will do better than the rest of the portfolio?Is that the case?Is it a bit more cyclical than the rest of the portfolio?Just to finish, I was wondering if I expected a lot of rental discounts for 2023. Thank you.
Scott Wells
So about airports, that’s a very smart question, because actually airports as we have them are quite different from any past cycle that isn’t maybe COVID. And what I mean by that, I referred earlier to how the virtual has become a central component of them, if we go back to the wonderful currency crisis or to September the 11th, which would have been the two great airport disruptions in recent history, printing was a much more important component of the business. the spectrum.
I think what came out of COVID was that advertisers, who came back early, really saw the impact of their campaigns at airports. And I think what I’d really like to emphasize is that not only are the assets different, but the way we sell them is structurally different. A significant portion of the airport’s profits come from our local sales team. This was not the case in past recessions.
And one of the questions I get while studying the country is that other people ask about airports and their communities, because it becomes a hot box for account managers to locate big customers who need to do ambitious things. Sell a lot through our local branches. Therefore, it is a more diversified sales base. And we also do a lot more like what I discussed in the opening comments, like with PenFed, where we actually do things that are more like sponsorships than advertising. So, I think there is: the degree to which it’s virtual would be anything. Just look and say, well, that’s going to be reactive in the event of a recession. He’s going to be reactionary in a recession.
On the other hand, the broader sales base, the wider visitor base, because we’ve done a smart job of expanding that. And the proliferation of sponsorships makes it a little stickier, so it gives it some flavor.
And as for reductions, we’re still working with them. I think we characterize it as: in Europe, we’re probably done with everything that’s going to happen with COVID. In the US, we have a tail of things that we are still running and yet it will be nothing as they were in terms of the magnitude they had in the 21st or even this year. So I hope that helps, Steve.
Steven Cahal
Thanks guys.
Operator
Now we have Ben Swinburne with Morgan Stanley. Your line is now open, Ben.
Ben Swinburne
Thank you. Hello everyone. Scott, I wonder, you said you programmed a key tailwind for virtual adoption, virtual growth. But I think you also mentioned it as a source of weakness among your channels this quarter, which we heard from various media players.
Is there anything more to that in your brain than just where it’s simple to compose it, to compose it?Or do you think there are other things that are, that tell us where the business is headed in general?Or are there things you think you can do with your programmatic channels to perhaps improve your market share or the viscosity of money?I would like to have your opinion on it, we all take a look to read the tea leaves.
Scott Wells
Oui. Et Ben, that is precisely the correct characterization. It is still very much at the level of tea leaves with programmatic. I don’t think we’re close, we’re not close to a stable state. Once again this year, Trade Desk and DV360 were particularly concerned about out-of-home advertising. programming. And like some of the larger omnichannel DSPs, I think its effect in this area is still very unknown.
When I look at what’s going on this year, I think there are some things that have happened in out-of-home programming. I mean, I think the first and most apparent thing is what you said, which is the super easy channel to turn on and off and where other people are making more promotional expenses, that’s all they could have remembered faster. And he noticed this at some of the first virtual advertising parties that noticed this impact.
On the other hand, it has a lot: the programmatic area in outdoor advertising has expanded considerably this year in terms of the number of screens. So if you were looking for the displays available for virtual signage in January of this year and were looking for it now, you’d see a lot of displays available. And a lot of those screens are in places that have been incredibly affected by COVID. And so part of the explanation of why I think What happened is that the programming on the road came back first.
And then that year, you’ve had malls, elevators and gyms, all other types of places outside the home have worked better. And that was especially true in the first half. I’m not sure, I don’t have my finger on the pulse of what exactly they see. But this proliferation of screens is something that I think wants to be normalized and the market wants to sort through the way it thinks about other types of programming outside the home. And we are still, once again, in the early rounds where others understand.
And then I think the last thing I would call, but still, the roadside was the first to take off from COVID programmatically, the fourth quarter of last year was just a monster quarter. It’s hard to synthesize it or not forget it right now with the year we’ve had from a macro attitude and all the other considerations that have come up, whether it’s war inflation or recession or interest rates, I mean you pick your list.
But in the fourth quarter of last year, programmatic is definitely on fire. And it’s probably, you know, I’m sure we’re going to communicate a little bit about our relative velocity before the fourth quarter, but that’s one of the main drivers of why we don’t see. It’s not that I’m cutting back, or that I’m not cutting a lot. The jury doesn’t know if it’s going to build a lot or not, but in fact it doesn’t. Have the kind of tailwind you had last year. So I hope this gives you an idea of what’s happening in programmatic.
Ben Swinburne
Yes Sí. No, it is actually useful. And then, I don’t know if, Brian, I don’t think you discussed it in your ready comments. But now that we’re in the 3 quarters of the year, any update on some kind of loose money expectation for the total year, which I guess is essentially current capital with 3 months remaining, or whatever else you think we want to think about.
Brian Coleman
Oui. Je, I mean, I have nothing more to carry with the kind of recommendation and data we’ve published. I mean, I think we continue to show innovations operationally. We have a bit of a headwind with interest rate hikes because we have some exposure to variable rates. And therefore, it can delay the moment when the positivity of loose money comes into play. But we’re looking to continue to grow the business even with the headwinds that exist, and I think 2023 will be a big year for us.
Ben Swinburne
Thanks.
Scott Wells
Thanks Ben
Operator
Now we have Lance Vitanza from Cowen. Come on, when you’re ready.
Lanza Vitanza
Hi, thank you for answering the questions. Nice paintings in the neighborhood. Would you say that across the industry, advertising has returned faster or slower than the actual airport speed?And really, what I mean here is simply, do you think you have a lot of tailwind left?Recession, do you think you still have a lot of tailwind as foreign business continues to recover?
Scott Wells
Thanks Lance. No, that’s a smart question. And I think you’ve heard of all the carrier-oriented out-of-home transportation: the public doesn’t have to go back one hundred percent to where you were to get advertising money back. And it’s a little different for other types of transit, however, I’d say it’s true. Our effects would in fact say that this is true at airports. We returned to 2019 degrees at several of our airports. But ad revenue is likely back. He came back a little faster than the passengers. I think airport advertisers are pretty smart in terms of looking for expected passengers and trends.
And I think one of the things, especially for airports, that resonated with other people is that even though they’re not business travelers on a business trip, the audience at an airport has a lot of people making business decisions. And so for B2B, especially the audience, it’s been a strength, so I don’t know what it would characterize, I mean, if you look at it mechanically, our compositions about airports overlap now. Really in the fourth quarter, it’s kind of a complete overlap of a kind of full quarter in terms of airport performance.
So where we even had a triple-digit expansion at airports earlier this year, that may not be seen in the future. And that will be one component of our overall expansion percentage that will slow down a bit as things go along. It doesn’t mean we’re taking a step back. It simply means that the relative expansion rate is lower.
Lanza Vitanza
It is ok. And then, just one last one for me, if I could, which is in the Americas on the static side, a little higher than the quarter. And I wonder if there was anything special about slowing the expansion there. Or is some kind of new popular for static electricity?I mean, is there any kind of low or no expansion in the future?Or was the third quarter an anomaly?Or does it only moderate demand from advertisers, the world’s top headlines?
Scott Wells
In fact, it is not the last. What I would say is we’ve been talking all year, I think I’ve talked to you a few times about insurance. One of the. . . Well, some of the insurance players who have been very, very, very depressed this year. , adding the third quarter compared to 2021: large-print advertising, the advertiser. Therefore, it has been a headwind for this type of action throughout the year. We are satisfied with what we do with our printed resources. We believe there is smart call from advertisers. We have the opportunity to fill some of that. We probably wouldn’t have had as many in the third quarter as we would have liked.
When I look through the system, we are in one more scenario. I hate to use the word general, because there’s not much general right now, but it’s a little bit more of a general dynamic in the sense that what you have is a great dynamic. village instead of small town instead of medium-sized town. You have East Coast instead of West Coast instead of Southwest Dynamics.
And in settings, when you take a look at the print, it’s a very different story in the Northeast, where it’s not a smart story compared to, say, California, where it’s a pretty smart story. So, I would say that the fact that it’s a type of floor is just an artifact of a moment and probably not something to read in a trend.
Lanza Vitanza
Very useful. Thank you.
Scott Wells
Thank you Lanza.
Operator
Now we have the following query from Aaron Watts of Deutsche Bank. Go ahead when you’re ready, Aaron.
Aaron Watts
Hello World. Thank you for having me. Brian, just a follow-up to his comfortable liquidity point for 2023, given macroeconomic concerns, the accumulation in debt service that stood out. And perhaps you can also comment if you see that current capital returns to a more standardized trend at 23. And in the same vein, his revolver loans are gone, he talked about his 7. 1 alliance. Remind us, what are the restrictions on those facilities?
Brian Coleman
Of course. Listen, I think about liquidity, we still feel good. Of course, we will be attentive to liquidity levels. We talked a little bit about EM interest rates and emerging interest expenses. Headwind on which we are going to have to stay in the brain. But operationally, things feel good, all things considered. So, I think we are satisfied with our liquidity position. capital towards, at times, pre-COVID levels.
Please note that we have significant seasonal fluctuations in current capital. Based on a previous question, the fourth quarter is a strong quarter for us, but we don’t get much of that profit in the first quarter, which is a weaker quarter for us. Therefore, you will see a significant movement of current capital. So, I think, overall, we feel pretty good, but it’s a volatile environment. Availability under our revolvers. Lately they are not taken out. We will use them for letter of credit purposes, but we have significant unused liquidity capacity.
And we only have one monetary commitment, and that’s what you talked about. So this first-privilege leverage ratio, we’re a little less than five times the restrictive covenants, I think, 7. 1 times currently. And then there’s a lot of space there. Therefore, we have liquidity capacity in the form of liquidity. We have received liquidity capacity in the form of availability as a component of our money and revolver ABL. And I think we feel pretty smart where we are, considering all things.
Aaron Watts
Alright, that’s helpful, Brian. Thanks for that. And Scott, I don’t know if I can get anything out of it. But as far as the strategic review is concerned, does the focus continue on certain geographical areas in Europe rather than, so to speak, on the total pie?And having complex conversations at a complex level despite apparent headwinds in capital markets and the macroeconomic context?
Scott Wells
Yes, you are right. I can’t say much about that. I mean, I would just say that the message that we gave on our investor day and that we referred to in the verbal exchange at the beginning of the comments, the ready comments, is that we’re in a subset of corporations where our goal is to maximize shareholder value. And the truth of trading environments, yes, is difficult, however, when you have attractive assets and have motivated counterparts, anything is possible. We don’t talk about the details, but we’re committed to providing updates to Street as we have something to say.
Aaron Watts
Fine thank you. Appreciate time.
Scott Wells
Thanks.
Operator
Now we have Richard Choe from JPMorgan. Please, when you’re ready.
Richard Choe
Hello, I tried to keep abreast of the programmatic. You said it’s kind of a busy back-end in previous quarters. Was the quarter smoother compared to the busy backend?
Scott Wells
So programmatic: each quarter has a slightly different seasonality. There are certain months of the year that are a bit thorny as, for example, May can be a heavier month than June in a profile call. Certainly, in the fourth quarter, December is the barometer of the quarter’s seasonality, so to speak. But we are at a point where we cannot perceive anything that the environment call is based on our daily sales. I mean, it’s a corporate quarter. that’s literally different from the rest of the outdoor industry. It’s more of a retail business in volume, so to speak, where you can take a look at your weekly sales and get a concept of, okay, this week is like well below what it deserves to be or this week it’s way above what it deserves to be and discern trends from that.
So, and we have the load visibility that we get by having a sales force that talks to other people about the campaigns that we’re getting a minimum of channeling. But it is, it is regularly heaviest at the end of trimesters. It’s been more moderate, however, we’ve had months that exceed 2021 and we’ve had months that are ahead of 2021 which, so far this year, goes up to an overall flat kind of experience for us. I mean, that’s all the detail I think I can give, probably a little more than I deserve.
Richard Choe
Super. Thanks for the color. In terms of the static billboard market, can you tell us a little bit about what you would possibly see in your core markets, tier 1 cities rather than possibly some of the smaller?Is there a difference between demand and prices?
Scott Wells
So I mean it’s attractive. You think of Tier 1 cities and you start going through DMAs and you think it’s just going through to climb stairs depending on their length and development. This is not the market environment at all. So the appeal of the surroundings is that it’s not an unprecedented exterior. You have a kind of New York L. A. et, which is his thing. And they have a higher penetration of outdoor advertising and media mix than other cities. that drive the economy of at least some of the big players in space, and behave very strongly.
However, as it reaches the next wave of big cities, many of those big cities are just as strong. social influencers and entertainment in those two great genuine markets. And then you stop by and look at the back of the market length within our portfolio, we’re not going that small. But our most productive performance, especially in print, is in small, small and medium markets. It is, and it’s a service of origin and demand, and it’s a service of the fact that those economies are pretty healthy and continue to function.
So they saw in our numbers, a very balanced local national performance. And it’s likely that at some point it’s just because we don’t have as much stock on national megasites, that is, New York, that we’d rather do to gain advantage. of the strength of the two primary markets. But it’s an attractive market. I think one of the other players talked about it, the average length is greater than the smallest of the small ones. The sweet spot is simply. . . It is moving. -elongated city, which just had a smart call for the environment.
Richard Choe
Super. Et the last one for me. On Analyst’s Day, long-term guidance from 4% to 6%. Is there any explanation for thinking that next year you would not be in this range?
Brian Coleman
Sí. No made any changes to the recommendation beyond what we said, Richard, so. . .
Scott Wells
But we also don’t give an estimate for 2023. I think it’s vital for us not to lock ourselves in too much because we still have a lot to learn. We are in the first rounds of our lead. It’s going well, as I said in the ready comments. But during the time we communicate in February, we will be able to give you a much more complete picture of what the year looks like.
Brian Coleman
That’s right. I didn’t know 2023.
Scott Wells
I think he asks for 2023, that’s true. I think you’re right. Yes, my apologies. So we talk about 2022. We will only publish 2023 in the future.
Richard Choe
Yes, that in 2023. Thank you. That’s all from me.
Operator
Now we have Jim Goss of Barrington Research. Come forward, when you’re in a position, Jim.
Jim Goss
Very bien. Gracias. De fact, I wanted to communicate about the progress. I wonder if you can describe some aspects and how you handle it. In terms of the percentage of the profit base involved, the timing, the variety of securities you would sell, and the price. . And if to the extent that they do this exposure, if they do, how are they going to satisfy that?
Scott Wells
So full of knowledge problems there, Jim. That’s a great question. And I think I’ll start by saying that we call them upfronts for lack of a bigger word. But just for all media analysts, it doesn’t remotely resemble TV upfronts. We don’t have a week where everyone is in town and there are big events and a lot of announcements about new content. That is, what it is, this is the season when we go through our permanent renovations. I think you can just perceive it from — and it’s an American phenomenon.
Let me be very transparent about that as well. So it’s an American thing and it’s nothing like television. And we never gave too much importance to that. But raw justice is part of the business, and it’s the kind of thing that has contracts of more than six months. It’s not something we’re going to start revealing much more about, however, I don’t think there’s much harm in giving you such a rough concept of that.
And what’s going down is that we’re in a cycle, the maximum of our flagship assets, which would be the applicable maximum things for permanent ones, we have backup customers covered and we have multiple lanes to fill them. So when. . . – let’s say the renewal is a December 1st renewal, we’re going to start running that December 1st renewal over the summer and check if the existing incumbent advertiser is active for next year, see what they think about the construction value that we’re going to propose, which tends to be whatever we’re looking for relative to what’s happening in the economy. as well as traffic expansion rates, which only move in a positive direction.
And so you will go through a procedure with them. And, infrequently, they move on to withdraw and then move on to their backup advertisers and essentially reprice the asset, which is normally advantageous to us compared to demand with the existing client. But we try to make sure that the existing visitor takes ownership of the elements that support the growth of the load. Therefore, it is such a varied range. I mean, you’re talking about things that can have a constant value on anything that’s six figures of profit consistent with a constant value for a location at a constant value on anything that’s 4 figures. So, negotiation is. . . It’s other sales forces, it’s other parts of the team, it’s other degrees of control involvement that come into play.
But that’s something that’s happening with our progress, and we’re very vigilant, especially at 15%, 20% of our inventory. And we take a look at the trends to see if we’re getting smart rate increases, if we’re getting smart renewals. fees, etc. And when I characterize that it’s going well, about a month later, that’s really what. . . That’s what I mean, we’re seeing healthy increases. We’re seeing healthy demand, and you’ll be tracking that and running very hard for the next few months.
James Gos
It is ok. This is very useful because it is actually helping the confidence they have in the projections they give us all.
Scott Wells
That’s why we have to wait until February to take a look at the whole year, because then we will have already booked a part of our activity.
James Gos
It is ok. Maybe some other question, without going too far about how you will potentially divide assets. Therefore, I wondered if there would be an organizational design that could differ. For example, if you have fewer foreign markets, could each of them be a separate market since there is probably rarely much interdependence, given the nature of your business?And would that be a point of control and charge that I could leverage as savings?Whatever design you propose, does it have an effect on the debt you owe abroad?
Scott Wells
Of course. So, with all the warnings I gave Aaron, there’s a lot we can say. In fact, it’s untimely to communicate too much about design until we have divestments. But I guarantee you we have a plan. If we are able to make the divestments we are doing, we will surely have structural savings. It probably wouldn’t work the way you recommend because the way it is. . . it makes sense to have a CEO in the region for the asset base we have. They’re gone. Possibly not a bit. It’s going to be a significant component of the business and a meaning. Should we succeed in our efforts?
So, I think there would be savings, but it is definitely inopportune to speculate on the structure. And there is some other component to your question. I think I lost it while trying to think about how I’m going to respond to that first component without having too many problems, maybe even in relation to that.
Brian Coleman
The BV?
Scott Wells
Yes, yes. Want to communicate about that?
Brian Coleman
Oui. Je I think everything we do will agree with acceptance as truth with Scripture, so I don’t foresee any significant structural change, because that would probably be limited by intent as long as there is a remarkable debt. And I think the only thing I would add is that if things continue, and when things continue, they can create differences in the relationship. But until that happens, I won’t either.
James Gos
It is ok. And the latest, mergers and acquisitions haven’t been addressed yet, it shouldn’t be the most sensible thing on your list right now. But how do you see the availability of goods at this level of the business cycle?And feel your ability to take advantage of the opportunities you see.
Scott Wells
So I guess it’s in the United States.
James Gos
Yes, yes.
Scott Wells
Therefore, there are willing traders and buyers. I think you’ve noticed that all U. S. -based outage corporations are not in the U. S. The U. S. has had a fairly active M&A program. For us, we want to be attentive to this liquidity factor that has emerged in other tactics as we have advanced. Obviously, everything similar to balance comes into play.
I think it’s still a smart environment for transacting. But, obviously, with the credit markets as they are, and with what they are, we are going to be very attentive to them. And from the words he said, that’s not the smartest thing on our list of things we want to do. But at the same time, we want to make sure that we don’t run out of resources that would be best to have compatibility with our platform.
Jim Goss
Okay, thank you very much.
Scott Wells
Thanks Jim
Operator
Gracias. No we have more questions on the line. I would like to give it to the control team for any final comments.
Scott Wells
Great, thank you very much. We welcome questions. We appreciate everyone’s interest. We feel in the company and are excited to end the year strong and make 2023 a year of expansion for us. Therefore, we are very positive about where things are headed and appreciate everyone’s time. Have a wonderful day. Thank you all for participating.
Operator
That concludes today’s call. Thank you. You can now disconnect your lines.