Stroeer SE & Co KgaA

XETRA:SAX

Earnings Call Transcript 2021-Q3

[Christian Schmalzl, Co]

Dear ladies and gentlemen, thank you for joining our Q3 2021 results call today. Together with my colleague, Henning, our group CFO, we will present you a brief update on the developments of Q3 2021, our proceeds in converting the top locations of our portfolio from analogue to digital, the financials of the quarter, and what we expect for the remainder of the year. Following our presentation, the entire Executive Board with Udo and Christian will be available for Q&A to you.Before we go into the details of our performance in the first 9 months of this year, it's worth mentioning that we have gone through extremely different quarters. Until the beginning of June, our country has been under hard lockdown restrictions and the decline of public traffic was a real challenge for our core out-of-home business.Accordingly, the first quarter was earmarked by a rigid cost management, while our PLUS businesses showed strong momentum in the lockdown phase. The second quarter, however, marked the tipping point, with the beginning of a textbook type of V-shape recovery of out-of-home media over the quarter. The end of Q2 was characterized by an economic recovery on a broad basis and driven by a continuously rising vaccination rate, a significant revitalization of public life.Against this background, our out-of-home strategy again proved its strength and flexibility when switch gears in real-time from crisis to growth mode, bringing back group performance in the third quarter to and above pre-COVID level despite some minor aftereffects of the pandemic, like a muted ramp-up of contact center agents and door-to-door salespeople and tough comps in Dialog Media.The reported revenues in the first 9 months of 2021 for the group stand at EUR 1.1 billion, up 11% compared to the prior year period. Organic revenue was at a comparable level with 11.3% or 22 percentage points above the level of January to December 2021 -- sorry, 2020. The adjusted EBITDA increased by 10% to EUR 319 million, basically following the overall revenue development. It's worthwhile mentioning that our adjustments came down from EUR 20.5 million in 2020 to EUR 5.6 million in 2021, so earnings quality is continuously improving.Our adjusted EBIT benefited from the accelerated performance in the last 3 months of the reporting period versus the prior year and a slightly lower D&A volume. Due to the low comparative value of the previous year, adjusted EBIT improved overproportionally by 49% from EUR 84 million to EUR 125 million. Adjusted net income accelerated basically accordingly and was up by 54% from EUR 54 million to EUR 83 million.Operating cash flow in the 9 months was more or less flat with EUR 222 million despite a clearly better performance in Q1 to Q3 2021, which was compensated by a higher receivables level triggered by the overall higher business volume in the current reporting period. CapEx spend in the first 9 months of the year was at EUR 62 million or 16% below the spend of the same period 2020. In the fourth quarter, we accelerate the ramp-up of our digital footprint, especially for digital roadside screens and expect a full year CapEx spend at prior year level.Even if the pandemic isn't completely over yet, we see that COVID was a real stress test for our strategic setup, but ultimately only a bump in the road for the long-term targets within our out-of-home plus strategy for Germany. All key business drivers are still or again fully intact. We operate in a robust advertising market, which will and is already quickly recovering post-COVID and has massive potential for us.There are still some after effects of the pandemic. The automotive industry doesn't advertise as they have not enough chips for the production. The event business has still not recovered, and the energy sector has stopped new business and marketing due to the uncontrolled energy price developments, but the total ad market is really vital, and the demand for out-of-home is strong again. The out-of-home market is consolidated and has high market entry barriers, and few players control real premium inventory. That is unchanged.Our market leader share is well above 60% in our core business, and you can do out-of-home only with Ströer, but you cannot do out-of-home without Ströer Germany. Our strong programmatic and data capabilities from the Digital media business, including our tech stack, help us to unlock the potential of programmatic digital out-of-home faster than any other competitor.Our scalable sales force is able to address the huge local SME market still dominated by declining print media. We constantly grow our share of wallet with large key accounts by embedding out-of-home with top-class Digital & Dialog Media. Our proprietary long-term secured portfolio has just started to convert step-by-step into a more digital infrastructure, and our unique DaaS & E-Commerce assets are on a strong growth track since [ meanwhile ] more than 5 years.On that basis, we have the confidence to clearly explain and communicate our midterm plans, and just as a recap from our Capital Markets Day 4 weeks ago where we have shared more details, there are 3 key strategic areas that we see as the core value drivers for our company. First of all, the accelerated digitization of our out-of-home infrastructure, especially with more digital roadside inventory to strengthen our highly profitable public video proposition. COVID has definitely accelerated the shift towards digital out-of-home, and we just enter a completely new phase here.Secondly, the continued optimization of the synergy potential of out-of-home and Digital & Dialog Media, i.e., the areas of content, tech, data and customer access. In combination with a fast-growing digital out-of-home business, this will drive the strong cash generation over the next years. And finally, there is the unlocked value crystallization potential of Asam and Statista, which will support us optimizing total shareholder return in the next 3 to 4 years.Let me close the group update with a couple of really illustrative examples that show how we have worked on converting top analogue out-of-home locations to digital in the first 9 months of this year. Düsseldorf, Dresden, Cologne are just 3 exemplary cities where we have focused on implementing a digital roadside network that reaches between 55% and 80% of the total local population, including the existing inventory.But we are also combining the high-traffic locations with large-format highlights and screens in city centers and pedestrian areas. The so-called Stachus in Munich is a good example. More than 300,000 people pass by this underground station every day, and we have implemented an outstanding screen at the strategically best spot. Bonn and Essen are 2 exemplary cities where 2 square meter screens are an integrated element of the shopping areas in the heart of the town since 2021.Besides the rollout of necessary standard formats, the beauty of out-of-home advertising is that we can offer really outstanding platforms for brand communication that are highly individualized and integrated in the physical context. The 500 square meter media facade in Hamburg is a really good example and new in our portfolio since this year and widely used by top brands.The so-called Media Stage in Hamburg -- in Hamburg's most exciting street in St. Pauli is another good showcase. The 138 square meter full motion screen delivers a completely new brand experience platform addressing especially young urban target group profiles. In contrast, the smart setting of many smaller screens in Sylt/Niebüll, when you enter the famous German holiday island via the car train, focuses on a completely different target group profile and another way of leveraging the potential of a location via digital out-of-home.So the various examples hopefully illustrate we massively invest in digitizing our infrastructure. The sum of the screens form a completely new level of digital out-of-home product. Advertisers benefit from the flexibility and scale of our network. Municipalities and landlords can generate incremental income, and the midterm unit economics are very favorable for us.With that impressions of what you can expect in the nearer future, let me hand over to Henning, who will guide you through the financial details and the results of the third quarter 2021.

[Henning Gieseke, CFO & Member of Management Board]

Thank you, Christian, and hello to everyone. When looking into the [indiscernible] third quarter, we see a very strong operational development compared against both last year's Q3, but also in comparison to the pre-COVID Q3 of 2019.Group revenues were up by 17% on absolute terms from EUR 355 million to EUR 414 million. Organic growth developed accordingly and fully in line with our expectations shared with you in our Q2 conference call. This is also true for the adjusted EBITDA, which came in well above the levels of Q3 '20 and Q3 2019. EBITDA adjusted increased from EUR 119 million to EUR 139 million. The adjusted EBITDA margin was 33.5%, and thus, on the same level as in Q3 2020.Exceptionals have been more than halved from 5.2 million in '20 million to EUR 2.5 million in Q3 2021. This improving earnings quality is fully in line with the guidance we have given. However, as said before, this does not imply that there will be no adjustment effects on the future quarters, but the magnitude should be much lower than what we have seen in the last couple of years.Depreciation and amortization, including mainly the depreciation on IFRS 16 assets was minus EUR 75 million, EUR 8 million below the level of Q3 2020. The main driver behind that development are lower amortizations from PPA assets. Some assets, which have been recognized in the process of historical purchase price allocations, are fully written down in the meantime. Based on the strong EBITDA development and declining D&A, EBIT more than doubled to EUR 61 million. With minus EUR 7 million, the financial result was more or less flat compared to Q3 2020. The tax result came in with approximately minus EUR 13 million compared to minus EUR 3 million in Q3 '20 following the improvement of the tax base.Summing all this up, reported net income for the quarter increased to EUR 40 million. Driven by our healthy operational development, net income adjusted improved to EUR 56 million compared to EUR 36 million in Q3 2020, thereby adjustments remain on prior year level, including some non PPA-related impairments of assets.Moving over to cash flow. We see an operating cash flow, which went up from EUR 79 million to EUR 101 million, a development which underlines our strong cash conversion capabilities. Cash outflows on the change in working capital came in below the prior year period and reflected our strong business dynamics over the quarter, leading to a build-up in receivables.Cash out from non-M&A investments came in virtually flat at EUR 25 million. Free cash flow before M&A was EUR 77 million, after EUR 56 million in previous year's third quarter, and free cash flow including leasing payments went up to EUR 37 million from EUR 14 million in Q3 2020. With this development, financial net debt came in at EUR 706 million mainly due to our dividend payment of EUR 2 per share during the reporting period. Our leverage ratio moved up to 2.5x, in line with our expectations. Based on our expected development for the traditionally very cash-generative fourth quarter, we expect our leverage ratio to improve again.Let us now have a closer look at the operating business segments and where we stand. As expected, the third quarter 2021 performance of the out-of-home media segment was on pre-COVID level and significantly above the revenues of the prior year period. In numbers, revenue increased by 25% from EUR 156 million to EUR 194 million. This positive development was also reflected in adjusted EBITDA, which increased even stronger by 33% from EUR 72 million to EUR 95 million due to better leverage on our fixed cost structures. Accordingly, the margin went up from 46% to 49%, and with that, again back on pre-COVID profitability levels.Our Digital & Dialog Media segment delivered a sound performance, also considering stronger prior year comps. Revenues increased by around 4% from EUR 164 million in Q3 2020 to EUR 170 million in the reporting period 2021. Our online advertising and content publishing showed continuing growth as well as a stable margin development. Against the strong development seen in Q3 2020, our Dialog business performed robustly, however facing a slightly increased employee churn following a tightening post-corona labor market here in Germany as well as worsening market conditions for some of our utility customers following strongly increasing energy prices. All in all, adjusted EBITDA of the segment in Q3 '21 was with EUR 43 million, pretty much in line with the reporting period in 2020, and the adjusted EBITDA margin was at 25%. Our Data as a Service & E-Commerce segment added another quarter of strong growth and achieved the highest sequential Q3 sales in the reporting periods and accelerated revenue growth to 43%. In total, segment revenues increased from EUR 44 million to EUR 63 million. With organic sales growth of 39% Statista continued its success story. With revenues up 45%, Asam was the main growth contributor to the strong sales performance of the segment. Due to increasing investments and accelerated growth and the expansion of our international business, especially at Asam, adjusted EBITDA margin declined to 12%, and adjusted EBITDA was EUR 8 million in Q3 2021, and with that, on the same level as in the prior year reporting period.Let me now hand you over back to Christian for some closing remarks on our Q4 outlook and the confirmation of our full year guidance and our '22 financial calendar.

[Christian Schmalzl, Co]

Our expectations for the full year 2021 are unchanged. With regards to our targets, we remain confident to achieve group sales of around EUR 1.6 billion and an EBITDA in the range of EUR 490 million to EUR 510 million, assuming that the now again rising COVID numbers will not lead to any serious implication of public mobility towards the end of the year.For the fourth quarter, we see an out-of-home order book which is currently developing quite in line with the 2019 levels also characterized by different mix. From a product perspective, more digital, which is supportive for our margins. And from a customer perspective, less supported by industries, which are currently exposed to supply chain shortages. This, however, we are able to balance out given our well-diversified customer portfolio.Let me close the presentation by looking at our financial calendar for the coming months. The next presentation, the publication of our preliminary numbers, unaudited numbers for the full year 2021 will be due in the first half of March 2022. The effective date will be announced beginning of 2022. The release of our annual report 2021 is scheduled for March 30. Further dates can be found in our financial calendar on our newly-designed website.Thank you, everyone, and we are now happy to take your questions.

[Operator]

We have the first question. It's from Christopher Johnen, HSBC.

[Christopher Johnen, Equity Research Analyst]

First on the current trading book in the running quarter. I mean, you just talked about the outlook. You expect no material negative impact from the COVID cases in Germany. You also talked about the chip shortage and the ability to offset some weaker demand in some areas by stronger demand elsewhere.Is there any more color you can give on Q4 trading, given the guidance is unchanged? You should still see quite decent double-digit growth in the core out-of-home media segment, I would suppose. That's the first question.Second one on the seasonality of both Asam and Statista. Again, here for the full year consensus expects around 30% growth in both. That would, I think, imply quite significant deceleration in the fourth quarter. Is there anything on the seasonality front that we need to know? Maybe some pull forward effects at Asam in the third quarter as people are more worried about stocking up ahead of Christmas. Anything we need to know on that front?And then last question quickly. On the Digital businesses or the Digital part of the Digital & Dialog business in the third quarter. I would assume that where COVID was last year, you're also facing a bit more difficult comps in the running quarter on assets like T-Online. Is there any more color you can give on the performance of the Digital business in Q3 that would allow us to judge the current quarter a little bit better?

[Christian Schmalzl, Co]

Christopher, yes, indeed, I think, on the one hand, the business overall and especially out-of-home looks quite good for Q4 from what we see. So October was really -- was good. November so far looks quite nice. The order book for December is okay. So I think you said a good or robust double-digit growth for the core business. Yes, I think that's pretty much what we also see as a starting point.I think it's just fair to mention, and please don't see it as some kind of excuse or anything like that because we deliver what we guide and promise, but we see that the automotive industry has more or less stopped all out-of-home advertising since end of August. So we talk about a negative one-off in Q4 that is probably around EUR 7 million, EUR 8 million because there is almost no automotive trading.Some of you might know the energy prices explode everywhere, which leads energy companies into a situation that they try everything to avoid new business because that means no marketing, and that's what we also see in our Dialog business where the energy sector is probably 12%, 15% of the revenues. But I think despite that there are some unexpected aftereffects of the pandemic, I think the rest of the business is performing rather better than expected, so we feel quite comfortable.That's also true for especially the Digital business as part of Digital & Dialog Media. Even Q3, where, you're right, where the comps were quite tough, I think the Digital business was growing around 7%. So against really tough comps, both the third-party inventory as well as our own portal business with T-Online, we also expect the fourth quarter at least on that level versus prior year, although we've been also seeing strong comps there.So I would say the Digital business is performing really, really nicely, despite the fact that yes, already last year was quite strong. I think in that area, we just see some temporary effects in the Dialog marketing area where, on the one hand, I would say from June to September, the unemployment rate was really low in Germany and the demand around tourism and the restaurants and so on was quite high.So it was challenging to increase our agent base and salespeople base, or we had to work hard to manage the churn in parallel. We see the energy sector that it is a bit of a challenge. But we already see since October that the situation on the employment side is improving again. So I think that's temporary effects at the end of Q3 and within Q4. But in general, we are quite happy with the development there.

[Henning Gieseke, CFO & Member of Management Board]

Christopher, on your question with regard to the Data as a Service & E-commerce segment, by no means we are getting less, let's say, positive about the outlook of those 2 businesses. But it is true that -- I think we mentioned that Q3 performance was stellar with more than 40% growth. I think it's fair to assume that there will be a bit of normalization.Particularly at Asam, we had quite successful deliveries into German retailers, delivering our MAGIC FINISH product. So it's fair that we will see a bit of normalization here. We're very confident for the full year and also current trading is evolving quite nicely.

[Operator]

The next question is by Annick Maas, Exane BNP Paribas.

[Annick Tonie Maas, Analyst]

So my first question is how much is auto and energy advertising typically in a normal year? And then conversely, could you also speak about e-commerce advertising? Some other players that face the same enterprising issues have called out e-commerce advertising as being super, super strong, so keen to hear something about that.Then just on the Dialog margin going back again there. I guess at the Capital Markets Day, for me, what came across was that this division is definitely going to be benefiting from a margin uplift, and we really don't see that today. So how long will it take for this margin benefit to come through in Dialog?And then thirdly, just on Asam. Can you maybe give us a bit more indication of how much marketing cost Asam is spending?

[Henning Gieseke, CFO & Member of Management Board]

Annick, thanks for your questions. Let me start with maybe the first 2 questions that you had, and then I hand over to Christian. So auto is around 4.5% to 5% of our out-of-home business, for instance, and a comparable number in the Digital media business as well.So again, if you look at the normal second half of the year, auto would probably do EUR 20 million revenue in out-of-home advertising in a normalized second half of the year. So I think we've seen less than 1/3 of that in the summer -- predominantly July and August and then pretty much nothing, just to give you a feeling for what the temporary effect is.I think energy in total is roughly, in out-of-home and online advertising, 1.5 percentage points. So it's not that big, but in Dialog, it's probably 10%, 12%, maybe 13%. So it's more important. It's the second biggest category besides telco. But as you said, in parallel or in contrast, there are other industries that are currently doing better than expected. We see that the whole FMCG industry is advertising overproportionately more than in the past, especially on digital out-of-home. We see that the traditional retail is coming back nicely again. And as you said, e-commerce, even if they also have some supply chain challenges, I think they are also continuing to advertise on significantly higher levels.So that's a little bit the situation and dynamics at the moment. I would say that's the key point. So auto and energy clearly below what you would normally expect due to pandemic, and energy prices and FMCG, retail and e-commerce clearly beyond normal levels and slightly above what we had expected.On your question around Dialog marketing, maybe just one comment. I think what we showed at the Capital Markets Day is that if you compare our second segment, Digital & Dialog marketing, with comparable companies that are publicly listed and that have similar businesses, I think our Digital business, the combination of third-party sales as well as own publishing is operating roughly on a 30% margin.With normal quarterly deviations, I think that's exactly where we are at the moment. I would say that's really top-class performance. Dialog marketing, I think at the moment, again, when I take the quarterly deviations aside, I think it's operating at around 18%, up to 18.5% margin. If you compare that to any other publicly-listed company in that area, that's really top notch.But nevertheless, and you're right, we try to increase and optimize margin profile there. But I think just given the -- what is possible, if you look at the toughest comparables in that segment, I think maybe there is another 1.5 percentage points possible. Yes, it would be nice to have 20% there, but that's something where we need probably the next 2, 2.5 years to optimize again both door-to-door sales with also internal processes and optimize also overheads by ramping up more people.And I think it's also driven by bringing in more non-telco customers into the contact center business, what we've done in the last 2 or 3 years already with new categories where maybe the volume per client is smaller, but the price that they are willing to pay per agent is higher. So I think that's what we hopefully will see over the next 2, 2.5 years. But just, again, I think, 18%, 18.5% EBITDA margin for Dialog business is nothing that where we feel like we need to excuse for.And maybe, Annick, just to build on what Christian said, I mean, recollecting the Capital Markets Day, I think our midterm guidance for the segment, Digital & Dialog, was like the major driver will be sales growth at a more or less, let's say, constant margin, which is made up by different businesses. So there will always be a mix effect. Out-of-home is where we see also acquired a big margin opportunity.

[Christian Schmalzl, Co]

And Annick, on your question regarding the P&L structure for Asam, or more specifically, the marketing spend. Overall, for the entire company, it's more or less in the mid-range of 20% to 30% of top line. If you go into a bit more detail, obviously, we need to separate more brand marketing spend versus performance marketing spend.And that also outlines that basically, you need to look at that channel by channel for the B2B channels, retail, but for example, also telesales. There's rather limited marketing spend and also, obviously, only on the brand marketing side. On the e-commerce, obviously performance marketing is key to the entire business, where you would see slightly higher percentages than overall.

[Operator]

The next question is by Julien Roch, Barclays.

[Julien Roch, MD & European Media Analyst]

As I have 4 results today and as I am selfish, rather than ask complicated questions to get a simple answer, I will ask a simple question. Can we have a Q4 organic guidance, like a range, give or take, 5%? That's the first question.The second one is on selling Asam and Statista. Do you have any idea of the taxes you would have to pay either as an absolute amount? Or explain the mechanism of paying the taxes?And third question is again on Asam and Statista. Have you decided how you would distribute the proceeds, buyback per dividend because if dividend, can you give us a sense of how much is coming out of reserve because shareholders could have to pay some taxes, which was a big issue for Vivendi when they distributed UMG? So I think people should put that [indiscernible].

[Christian Schmalzl, Co]

Maybe on your last question, I think a colleague of mine has said some time ago, "Cross the bridge when you come to the water." So I think we still have some way to go to get to the water. By means of value [indiscernible], I think in case that we sell or IPO something and generate cash. I think the acquisitions have not been made yet. But realistically, I think what we always said, we look at total shareholder return, so our share buyback program wouldn't really support the share price because it reduces liquidity of the stock and makes it maybe more challenging for investors to get in.But realistically, we would probably always talk either about a special dividend or if we IPO a business, we keep the shares or give the shares for [indiscernible] and publicly-listed company, pass them on to the shareholders. I think that would be realistic. So ultimately, we would give back whatever we make on those assets. I think that's realistic, but decisions haven't been made yet. And I think at the moment, we try to make sure that we -- that the business is doing well, that we deliver as what we have planned, and we work also on the profiles of the company and on the sustainable values in those area. I think that the [ job ] here is still a challenging one quarter-by-quarter given the growth rates that we are working on.

[Henning Gieseke, CFO & Member of Management Board]

And Julien, to be very clear on the tax situation, tax situation is very comfortable because actually, what -- if you take the selling price minus the carrying amount, minus the spending costs, actually 95% of the proceeds, which we tax free, so it would generate quite some room for distribution. I think I haven't been that clear in the past, but very clear -- the exact situation is very favorable for potential disposal.

[Julien Roch, MD & European Media Analyst]

And on my first question on organic guidance for Q4.

[Henning Gieseke, CFO & Member of Management Board]

I think -- I mean we have confirmed, I would say, the guidance for the year, and you have now the 9 months. So I would leave it with you. It's pretty clear what the internal expectations are.

[Christian Schmalzl, Co]

There are no M&A effects, or almost none. So we think around [ 1.6% ] minus first 9 months, I think, takes us to something like less mid and more high single-digit for the group. I think that's realistic. And I think it was one of the questions before, out-of-home should be clearly in the double digit range. Statista Asam should be 25% or whatever extra we are able to deliver in the last quarters. And I think online, we said it's probably rather mid- to high single-digit as in Q3, but I think we will struggle to show growth in the Dialog business so forth.But it's fair to say we are still in that pandemic phase, and I think we are quite confident what we see in October, November, it all looks quite nice. We also don't see at the moment that December, should lose any momentum, but we are still in a pandemic event. I think we just want to make that disclaimer and be rather a little bit more realistic than overambitious by setting out targets, even if there's not that many weeks to go until the end of the year. Hopefully that explains a little bit our current guidance.

[Operator]

Your next question is by Nizla Naizer, Deutsche Bank.

[Fathima-Nizla Naizer]

Two questions from my end. Firstly, Christian, again, what is the split between your local, regional and national sales in Q3? And how fast did each of these subsegments grow? If you can give us some color there would be great.And secondly, something that previously held back out-of-home margins have been your investments into the local sales force. Is this still continuing? Or are you at a happy sort of state of affairs when it comes to your local sales force? So from nothing here on, [indiscernible] continue to see improvement. [indiscernible] would be good.

[Christian Schmalzl, Co]

We have some interference within the line -- sounds like some other family members.

[Henning Gieseke, CFO & Member of Management Board]

Okay, but I think that the question 1 was about how the difference [indiscernible] in Q3 and out-of-home developed, right? [indiscernible] drive regional, local [indiscernible]? That's one for you, Christian.

[Christian Schmalzl, Co]

Exactly. So I think out-of-home was like around 25% versus prior year. What we've seen is that the split in general was pretty much in line with the normal split that we have. So local was a little bit above 20% of the mix in Q3. Regional was a little bit below 40%, around 38%, 39%. And I think national is slightly above 40%.And if you look at the dynamics, I think local sales was pretty much on the plus 25 percentage level. I think there, we've been already operating in an almost normal mode last year in Q3, yes. So we are just in the normal historic growth rate of ideally 20% or even more in line with generating more new business.If you look at the split between regional and national, the regional business has been rather around 20%. The national business rather close to 30%. But also, again, because the national business was on a lower level in Q3 last year. And I think everything has more or less normalized against where we've been in a quarter or in a Q3 without pandemic, apart from the fact that I would say, the local business is, given the year-over-year growth that they had also throughout the crisis, meanwhile, above 20% share of the total mix. So quite nice, consistent performance across all channels.

[Fathima-Nizla Naizer]

Great. And just on the investments required for out-of-home media. Previously, you were investing in your local sales force, and that sort of held margins back. Would that continue going into 2022? Or would margins see nice operating leverage from this point on?

[Henning Gieseke, CFO & Member of Management Board]

Well, I think if the product mix doesn't change, I would say that the investment into the local sales force can be compensated by other leverage that we have, scale effects working more efficiently in all other areas. At the same time, we feel like there is a beneficial aspect of a product mix towards digital out-of-home. I mean, that's all of our digitization strategy.And what we already see in Q4 is probably -- I mean, we mentioned before quite robust double-digit growth in out-of-home expected for Q4. I think digital out-of-home business, especially in the national area short term, if the December goes the way we want, will probably grow definitely in the 30s, mid-30s, maybe even a bit better.So I think the product mix going forward within the out-of-home segment should enable us to improve the margin a little bit. I think the investments that are necessary still on top for the local service force should be compensated within the out-of-home segment just by a growing overall business and some scale effects there.And I think that's in line with what we said at the Capital Markets Day, yes. We expect EBITDA growing faster than top line. And with a relatively stable or only slightly growing CapEx and IFRS effects, we expect overproportional cash generation in that segment. And that's a little bit what we see. And yes, local sales force hold maybe a little bit back, but at the same time, I think we have enough areas where we can compensate that and improve the overall performance of the segment.

[Operator]

The next question is by Craig Abbott, Kepler Cheuvreux.

[Craig Abbott, Head of Mid and Small Cap Research, Germany]

Just 2 final follow-ups from my side. On the out-of-home media, you've made it pretty clear that you're expecting a pretty robust double-digit growth in the fourth quarter. I just want to clarify whether I understood that correctly in your initial outlook statement on out-of-home media that you're pretty confident in getting back to 2019 levels in the fourth quarter?And the other question is just a technical -- let's call it technical question. You mentioned in terms of your exceptional items at the net level that it also included non-PPA impairments. I just wondered if you could clarify and quantify these and what it related to? And if you expect further impairments in the coming quarters?

[Henning Gieseke, CFO & Member of Management Board]

The answer to your first question is easy. Yes. Yes. I think still December year-end business, so there's always plus, minus EUR 5 million that are a little bit difficult to [ do ]. But in general, what we've seen until beginning of December is exactly what you've mentioned. So we are quite confident and happy with the development there.

[Christian Schmalzl, Co]

On your question on the exceptions sort of within the net earnings, your observation is right. I mean the trend until the half year was also here a decline. And this is -- the underlying driver behind that is that PPA depreciations are coming down year by year. I think we had a level of more than EUR 60 million in 2019. It was like 40-something million in 2020, we'll be probably in the range of EUR 35 million in the current fiscal year.But in this single quarter, there were some, let's say, extraordinary impairments on some minor assets, say, in the mid single-digit million range. So in that sense, I wouldn't see the Q3 as an indication for the full year or the future. That was rather an exceptional situation on some asset write downs. I think the general trend is also what we explained at the CMD. You see that there is no more M&A since more or less 2 years now. You see exceptional items, post-merger integrations are going down, depreciations are going down. We've [indiscernible] the business in the segments that allow them to benchmark us against peers, and we see that with declining exceptionals and better scale effects, cash generation across the group and the earnings quality is increasing.I think that's what we see overall already in Q3. I think for the first time, we have a little bit like-for-like opportunities. I think we will also see that in Q4, despite the fact that we continue to invest in Statista and Asam, which is rather maybe margin dilutive in the third segment, but the others are clearly doing better and better. So that's a little bit the midterm plan and story going forward for us.

[Operator]

There are no further questions, so I hand back to you.

[Christian Schmalzl, Co]

Thank you very much to all of you for your time and questions. Have a good rest of the year. Stay safe, and hope to see you soon at the beginning of next year. So many thanks. Take care. Bye-bye.

[Henning Gieseke, CFO & Member of Management Board]

Bye-bye. Thank you. Bye-bye.