Clear Channel Outdoor Holdings, Inc. (CCO) Q1 2023 Earnings Call Transcript

Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) Q1 2023 Results Earnings Conference Call May 14, 2023 8:30 AM ET

Company Participants

Eileen McLaughlin - Vice President of Investor Relations

Scott Wells - Chief Executive Officer

Brian Coleman - Executive Vice President and Chief Financial Officer

Justin Cochrane - Chief Executive Officer, UK and Europe

Conference Call Participants

Avi Steiner - J.P. Morgan

Daniel Osley - Wells Fargo

Cameron McVeigh - Morgan Stanley

Aaron Watts - Deutsche Bank

James Goss - Barrington Research

Lance Vitanza - TD Cowen

Eileen McLaughlin

Good morning, and thank you for joining our call. On the call today are Scott Wells, our CEO, and Brian Coleman, our CFO. Scott and Brian will provide an overview of the 2023 first quarter operating performance of Clear Channel Outdoor Holdings, Inc. and Clear Channel International BV.

We recommend you download the earnings conference call investor presentation located in the financial section in our investor website and review the presentation during this call.

After an introduction and a review of our results, we'll open the line for questions. And Justin Cochrane, CEO of Clear Channel UK and Europe, will participate in the Q&A portion of the call.

Before we begin, I'd like to remind everyone that, during this call, we may make forward-looking statements regarding the company, including statements about its future financial performance and its strategic goals. All forward-looking statements involve risks and uncertainties, and there can be no assurance that management's expectations, beliefs, or projections, will be achieved or that actual results will not differ from expectations. Please review the statements of risk contained in our earnings press release and our filings with the SEC.

During today's call, we will also refer to certain performance measures that do not conform to Generally Accepted Accounting Principles. We provide schedules that reconcile these non-GAAP measures with our reported results on a GAAP basis as part of our earnings release and the earnings conference call investor presentation.

Also, please note that the information provided on this call speaks only to management’s views as of today, May 9, 2023, and may no longer be accurate at the time of a replay.

Please turn to slide 4 in the earnings presentation, and I will now turn the call over to Scott.

Scott Wells

Good morning, everyone. And thank you for taking the time to join today's call. Our solid first quarter consolidated results reflect continued strong execution by our team, combined with overall healthy demand from advertisers, particularly for our digital assets.

We delivered consolidated revenue of $561 million, excluding movements in foreign exchange rates, in line with our guidance and up approximately 6.6% as compared to the prior year period. The trends we saw in the fourth quarter largely continued into the new year, with the out-of-home industry demonstrating resilience. Advertisers are looking to tap into our growing audiences, while recognizing the benefits stemming from our industry's embrace of digital technology.

I'd like to call out our team for their focus and contributions as we continue to progress in leveraging the scale of our platform and technology strategy to make our solutions more data driven, easier to buy and faster to launch. We believe these efforts, combined with the breadth of our footprint, have strengthened our ability to drive business even as parts of our business come under pressure as we engage with a greater and more diverse pool of advertisers.

During the quarter, we saw some weakness in revenue within the US due to a few specific issues impacting certain national accounts. These include accounts doing layoffs, select categories like crypto and emerging tech, and select markets like San Francisco and Chicago rather than broad macro events.

Regardless, we are dissatisfied with the results in the US and believe that we can improve as the year develops. Part of what gives us this belief is the good progress we've made in building our presence in the CPG arena, as well as in the pharma category where we have room to grow in the America segment. Business services, QSR and amusements are all categories that remain notably strong as well.

Further, in Europe North, we continue to experience healthy demand for our digital assets and our programmatic platform. Digital revenue accounted for 51% of Europe North's revenue and grew 16% compared to the first quarter of last year, excluding movements in foreign exchange rates.

So we believe we are benefiting from a more stable and attractive business platform as we integrate the right kinds of digital technologies into how we operate and serve our customers.

During the first quarter, digital accounted for 38% of our consolidated revenue and rose 9.7% compared to the first quarter of last year, excluding movements in foreign exchange rates.

As we execute our operating strategy, we are also continuing to evaluate paths that we believe will enable us to enhance our balance sheet and maximize the value inherent in our business.

We recently completed the divestiture of our business in Switzerland, generating $94 million in gross proceeds and we plan to use the net proceeds from this transaction to improve our liquidity position. Additionally, we continue to review our low margin and our low priority European businesses.

Turning to our outlook, as I mentioned, we are not seeing signs of broad macro-related pullback in our industry, and advertising demand remains healthy. However, at the country level, growth rates are expected to vary as the year develops.

In our America segment, dialogues with advertisers remain positive, and we are encouraged by the trends we're seeing which bodes well for the rest of the year. Thus far, the second quarter revenue is looking better than the first quarter in terms of year-over-year growth, and we anticipate the third and fourth quarters will perform better as well. We also believe airports revenue should rebound strongly from Q1 and perform well for the rest of the year and beyond.

In addition to the rebound in leisure travel, business travel continues to recover. And a recent study we conducted confirms that frequent fliers are highly engaged with our advertising platforms. We're providing brands with a very effective and efficient channel to influence these coveted audiences as they travel.

In Europe, we're also continuing to see healthy demand across the majority of our markets, with no indication of a slowdown due to macro concerns. Europe North, which turned in a strong revenue performance in Q1, reflecting continued strength in certain markets, as well as a post COVID rebound in our transit business is expected to have tougher comps and, therefore, a slower growth rate in Q2.

And Europe South, which also delivered a solid top line revenue performance in Q1, is expected to have tougher comps due in large part to the sale of Switzerland, as well as the business trends normalizing in the unrest in France.

Taken together, despite the slow start to the year in the US, overall, we're encouraged by what we're seeing at this point, particularly given the macro uncertainties. Our full year guidance remains within the range we provided in February, with the exception of adjusting for the sale of Switzerland and reducing capital expenditures. As we execute our plan, we're keeping a close eye on trends across our markets and remain optimistic about our business.

Brian will provide our guidance for both the second quarter and the full year. And with that, let me now turn it over to Brian.

Brian Coleman

Thank you, Scott. Good morning, everyone. And thank you for joining our call. Please turn to slide 5. As Scott mentioned, our first quarter results are in line with our guidance and we remain optimistic regarding our outlook for the balance of the year.

As a reminder, during our discussion of GAAP results, I'll also talk about our results excluding movements in foreign exchange rates, a non-GAAP measure. We believe this provides greater comparability when evaluating our performance. Direct operating expenses and SG&A expenses include restructuring and other costs that are excluded from adjusted EBITDA and segment adjusted EBITDA. And the amounts I refer to are for the first quarter of 2023 and the percent changes are first quarter 2023 compared to first quarter of 2022, unless otherwise noted.

Additionally, the sale of our Switzerland business was concluded on March 31, 2023, and is included in our first quarter operating results, but will not be included in our results going forward.

Lastly, as we mentioned during our fourth quarter earnings call, we expanded the segments and our reported results. We now have four reportable segments, America has been separated into America and Airports. Europe is now Europe North and Europe South, with Singapore included in Other, along with Latin America.

This is the first quarter we will provide the quarterly results with the new segment reporting. We have added a new feature to our investor website under the Financials tab, called the Interactive Analyst Center. You can find our reported results for fiscal years 2019 through 2022 and 2022 quarterly results based on the new reporting segments on this site, as well as in our filings with the SEC.

Now, on to the first quarter reported results. Consolidated revenue for the quarter was $545 million, a 3.8% increase. Excluding movements in foreign exchange rates, consolidated revenue was up 6.6% to $561 million, at the high end of our consolidated revenue guidance of $540 million to $565 million.

Net loss was $35 million, an improvement over the prior year's net loss of $90 million. Adjusted EBITDA was $52 million, down 20.6%. Excluding movements in foreign exchange rates, adjusted EBITDA was $51 million, down 22.3%. The decline reflects the impact of increases in fixed site lease expense due to various factors, including new contracts, lower abatements, and the renegotiation of a large existing site lease contract as well as revenue mix. AFFO was negative $57 million in the first quarter and negative $58 million excluding movements in foreign exchange rates.

On the slide 6 are America segment first quarter results. America revenue was $236 million, down 1.3%, reflecting a pullback in media and addition to telco and banking. However, as Scott mentioned, we continue to broaden our customer base as we leverage our investments in technology. And these efforts partially offset the overall impact of the aforementioned category-specific reductions on our overall America performance during the quarter.

Digital revenue, which accounted for 33.1% of America revenue, was up 3.6% to $78 million. However, this increase was more than offset by declines in printed formats. National sales, which accounted for 33.1% of America revenue, were down 8.7%, primarily due to tough comps. Local sales accounted for 66.9% of America revenue, and continued to deliver growth up 2.7%.

Direct operating and SG&A expenses were up 11.1% to $155 million. The increase is primarily due to a 13.3% increase in site lease expense to $83 million, driven by new and amended contracts and lower renovations.

Higher credit loss expense was driven by specific reserves for certain customers, and in our view is not an indication of a broader weakness. In addition, higher compensation costs were driven by increased headcount.

Segment adjusted EBITDA was $81 million, down 19%, with segment adjusted EBITDA margin of 34.5%, down from Q1 2022. Adjusting for the renegotiation of a large existing site lease contract we called out on our previous earnings call, margins would be close to pre-COVID levels.

Please turn to slide 7 for a review of the first quarter results for Airports. Airports revenue was $54 million, down 3.7%. The decline in revenue was driven primarily by the timing of specific campaign spending. Digital revenue, which accounted for 55% of Airport revenue, was down 3.3% to $30 million. National sales, which accounted for 60.1% of Airport revenue, were up 4.9%. Local sales accounted for 39.9% of Airports revenue and were down 14.4%.

Direct operating and SG&A expenses were up 3.4% to $48 million. The increase was primarily due to a 4.7% increase in site lease expense to $36 million, due in part to a normalization of airport payment terms.

Segment adjusted EBITDA was $6 million, down 36.9%, with segment adjusted EBITDA margin of 11.6%.

Next, please turn to slide 8 for a review of our performance in Europe North. My commentary on Europe North and Europe South is on results that have been adjusted to exclude movements in foreign exchange rates.

Europe North revenue increased 14.9% to $140 million. Revenue was up across all products and in all countries, most notably Belgium, Sweden, and the United Kingdom, driven by increased demand in new contracts. Digital accounted for 51.1% of Europe North total revenue and was up 16.1% to $71.6 million, driven by growth in most countries, with the largest increase in the UK.

Europe North direct operating and SG&A expenses were up 15% to $133 million. Site lease expense was up 13.6% to $62 million, mainly driven by higher revenue and new contracts. In addition, a mix of other operating expenses increased in the quarter due in part to higher prices and increased sales activity.

Europe North segment adjusted EBITDA was up 11.1% to $8 million and the segment adjusted EBITDA margin was 5.5%, in line with the prior year.

Now on to slide 9 for our performance in Europe South. Europe South segment revenue increased 25% to $112 million. As this segment has continued to recover from the adverse effects of COVID-19, we have seen increases in revenue, driven by increased demand across all of our products, most notably street furniture and in all of the countries in which we operate.

Digital accounted for 20.3% of Europe South total revenue and was up 35.3% to $23 million, driven by increases in all countries, with the largest growth in Spain. Europe South direct operating and SG&A expenses were up 12.8% to $125 million. Site lease expense was up 13.2% to $58 million, mainly driven by new contracts and higher revenue in addition to other operating costs.

Europe South segment adjusted EBITDA was a negative $13 million, an improvement over the prior year's negative $22 million.

Moving on to CCI B.V. on slide 10. Clear Channel International B.V., referred to as CCI B.V., is an indirect, wholly owned subsidiary of the company and the issuer of our 6.625% senior secured notes to 2025. It includes the operations of our Europe North and Europe South segments, as well as Singapore, which following the changes to our reporting segments in the fourth quarter of 2022, is included in Other.

CCI B.V. revenue increased 11.7% to $242 million from $217 million. Excluding movements in FX, CCI B.V. revenue increased 18.8%, driven by increased demand and, to a lesser extent, new contracts. Singapore represented less than 3% of CCI B.V. revenue for the three months ended March 31, 2023.

CCI B.V. operating income was $66 million compared to operating loss of $48 million in the same period of 2022, with the change primarily driven by a $96 million gain on the sale of our business in Switzerland.

Now moving to slide 11 and a review of capital expenditures. CapEx totaled $38 million in the first quarter, an increase of $3 million over the prior year. We increased spending in America, Airports and Europe North largely related to digital investments. CapEx spend in Europe South declined due to decreased investment in France and Spain, largely related to street furniture assets.

Now on to slide 12. During the first quarter, cash and cash equivalents increased $53 million. The improvement was in part due to the cash proceeds received from the sale of Switzerland, adjusted EBITDA contribution and lower working capital use, partially offset by higher cash interest and capital investments.

Our liquidity was $545 million as of March 31, 2023, up $44 million compared to liquidity at the end of the fourth quarter due to the increase in cash partially offset by the seasonality in our borrowing base.

Our debt was $5.6 billion as of March 31, 2023, basically flat with December 31. Cash paid for interest on the debt was $72 million during the first quarter, an increase compared to the same period in the prior year, primarily due to higher interest rates on our term loan facility.

Our weighted average cost of debt was 7.2%, a slight increase compared to the weighted average cost of debt as of December 31, 2022 due to the increase in floating rates.

As of March 31, 2023, our first lien leverage ratio was 5.25 times, a slight increase as compared to December 31, 2022. The credit agreement covenant threshold is 7.1 times.

Moving on to slide 13 and our guidance for the second quarter and the full year 2023. At this point in time, we believe our consolidated revenue will be between $635 million and $660 million in Q2 of 2023, excluding movements in foreign exchange rates.

We have updated our full year guidance to adjust for the sale of Switzerland. Excluding that change, our guidance remains within the range we provided in February, with the exception of a lower projection for CapEx spend.

We expect revenue to be between $2.5 billion and $2.625 billion, with adjusted EBITDA between $525 million and $585 million, both excluding movements in foreign exchange rates.

AFFO guidance to $65 million to $115 million excluding movements in foreign exchange rates, down from fiscal year 2022 due primarily to increased interest expense.

Capital expenditures are expected to be in the range of $165 million and $185 million, with the continued focus on investing in our digital footprint in the US. Additionally, our cash interest payment obligations for 2023 are expected to be approximately $414 million, an increase over the prior year as a result of higher floating rate interest on our Term Loan B facility. This guidance assumes that we do not refinance or incur additional debt.

And now let me turn the call back over to Scott for his closing remarks.

Scott Wells

Thanks, Brian. Looking ahead, we continue to expect a positive year for our business, and we remain well on track with regards to the annual guidance, as Brian noted.

On the operating side, we remain focused on improving execution, investing in our digital transformation and continuously improving the customer experience. At the same time, we remain committed to enhancing our balance sheet, including taking steps to support the cash generation of our business and ultimately reduce our debt.

Before going to Q&A, I want to highlight our new Clear Channel Outdoor website on slide 14. This site is designed to be a strong lead funnel for our sales teams. As well, the enhanced user experience makes it easy for visitors to find the valuable information they're looking for from CCOA.

The site highlights our new branding, visually shows the power of our medium, and tells users how they can get more by working with us versus other media companies. I encourage you to log on and experience the site.

And now, let me turn the call over to the operator for the Q&A session. And Justin Cochrane will join us on the call.

Question-and-Answer Session

Operator

[Operator Instructions]. First question today comes from Richard Choe from J.P. Morgan.

Richard Choe

I just wanted to talk a little bit about the revenue guidance that you gave for the segments a little bit. Just wanted a little bit more color on the Americas business and the Airport, if you could. Do you expect those categories to be up in [indiscernible] manner for the full year.

Brian Coleman

Yeah, I can take a stab at it, Scott, and you can you can come over the top. We don't provide segment guidance going forward. But I do think if you look at the Q1 performance for both of the businesses in the Americas, so America and airports, I think some of the headwinds that were experienced in each of those segments are likely to dissipate going forward. And I would expect growth in both the Americans business and the Airports business.

And we talk about airports, some of the headwinds impacting Airports is the timing of campaigns. We hope that that those campaigns will come back over the rest of the year that we're able to fill the pipeline with other things. So I think we do expect improvement in the Airport segment.

And I would say the same for the America segment. It's got some headwinds in the first quarter that we expect to dissipate. And we do expect top line improvement. The first quarter is not the strongest quarter for this business. It's very seasonal. And then we've got some quarterly impacts. But I think both of the segments in Americas, America and Airports, will continue to improve as the year rolls on.

Scott Wells

I think the thing I'd add, Richard is we are reiterating our guidance. And so, in order to be able to do that, the numbers that we put forth, certainly had growth pretty much across the board. And you wouldn't be able to get the EBITDA growth that we're talking about, in particular, if the US wasn't going to be performing. Without getting into the business of trying to guide every individual segment, hopefully, that gives you a sense of where we're coming from.

Richard Choe

I don't know how much you can comment on this, but with Europe North and South kind of, I guess, normalizing and doing better and the numbers being more tempered, to us at least, are you seeing more interest in those businesses? And do you think there is a better potential to sell more of the segments, either by country or more as a group?

Scott Wells

Richard, it's a great question. And I think as you think about Europe as a whole, when we announced that we were starting this process, we were still frankly in COVID. Omicron came after we announced it and COVID was very hard on a number of the European markets. And so, if you think about where we were when we started and when we pivoted to doing country level, we had basically one good quarter, Q4 of 2021, in our pocket and a plan. And what has happened subsequent to that is that the business has actually performed quite well and it's been inconsistent country to country, but overall, now we have a half dozen quarters under our belt, not quite a half dozen yet, but it will be soon. And I do think that that will help us when the time comes for us to market the part of Europe that we've articulated since the middle of last year that's going to be higher margin and cash generative and so forth.

I do think it helps. But you have to recognize these processes, as we've all witnessed, are slow. And when you're dealing at a country level, you get into an awful lot of minutia that there's an awful lot of back and forth on. And you may well have agreed a price a lot earlier in a process than when you actually get to the completion of it.

So the point being, this is not real time bidding. This is advanced negotiation on the things that are actually in market right now. So, hopefully, that gives you a little bit of color without me telling you anything more granular that would get me in trouble.

Operator

Our next question comes from Avi Steiner from J.P. Morgan.

Avi Steiner

A couple here. One, can we just dig into a little bit more into America. You called that national account weakness rather than broader macro? Can you put into context a little bit more, particularly as you guys remain confident for the year there.

Scott Wells

I think there's a couple things going on. We said this in our Q4 call, but maybe not everybody heard us. But the year started pretty rough. January and February were pretty rough years, particularly in the national account space, particularly in crypto and emerging tech. And what we have seen has been a steady progression of each month getting better. You heard us talk about in the Q4 call about how we have had had the best upfront since we started recording it. And that is how the upfront ramped up. And that's what's driving a lot of the confidence that we have, along with the dialogue that we're having. Outdoor does get planned a fair bit in advance. And so, we've got a pretty good idea what brands are planning to get after in the second part of the year. And so, you take all of those different data points together and you take what's on our book right now, that's what gives us the confidence to say what we're saying about how things are developing. So there's a lot of data points into it.

In terms of in terms of what actually happened, I think we tried to lay this out very granularly in the script. But we have a lot of exposure to San Francisco. And San Francisco was a very tough ad market in Q1. I think that, if you talk to any of the other players associated with it, that would resonate. And it's our second biggest market. So that has a real impact on us. And that's both at the national and the local level. In national, the emerging tech, again, overlap with the San Francisco thing was a big deal relative particularly to the year prior, where that had been a very vibrant category in Q1 of the prior year.

So, I think those are the factors that contribute to what happened in Q1. And as we look forward, we do have a number of data points. Like everybody else, we're aware of the economy being a little bit murky and it being a little unclear where the macro is headed. But I'm encouraged, as we've had the bumps over time with various financial services, institutions and whatnot in the headlines, we have continued to have good dialogue with advertisers and we continue to be booking business. So we feel good about how the year is going to develop.

Avi Steiner

It looks like free cash flow implied usage maybe a little bit better here and the CapEx production a little bit more than the EBITDA related. Is that all related to Switzerland? Is there something else within that?

Brian Coleman

Avi, I'm not sure I followed the question. I know it was cash flow and it kind of ended with the changes…

Avi Steiner

$20 million of CapEx reduction, $15 million of kind of midpoint EBITDA, if I'm thinking about it right, maybe my math is wrong. I just want to make sure I'm…

Brian Coleman

Are we talking about adjusted guidance? Still not tracking.

Scott Wells

I think that's what he's saying, your free cash flow…

Avi Steiner

Full-year guidance.

Brian Coleman

Oh, yes. Okay. Well, I think it does reflect Switzerland. With respect to the CapEx number, it also reflects reduced anticipated spend in CapEx.

Avi Steiner

Two very quick ones here. Site lease expense in the first quarter, at least in America, is that the right run rate for the year? And I apologize if you already said it.

Brian Coleman

I think our margins, EBITDA margins, adjusted for one-time items, are pretty similar to what we had in 2019. And I think that would be a decent run rate.

Scott Wells

Again, recognizing that there is a lot of seasonality in the business. Q1 is the softest quarter for us every year, so it's going to have the lowest margins because as you flow more dollars through, you get that operating leverage.

Avi Steiner

Very last one for me. You now have cash in the door from Switzerland. Any changes to your prior answers on how you think about liquidity?

Brian Coleman

No changes. We'll hold that cash on the balance sheet to help improve liquidity. And as you know, we'll need to reinvest it in the business pursuant to our debt documents, and that process continues. So no changes.

Operator

Our next question comes from Steven Cahall from Wells Fargo.

Daniel Osley

This is Dan Osley on for Steve. Maybe just one for Scott – or actually for Brian. The digital conversion has been added to the top line in America. But how should we be thinking about the margin impact of the growing mix shift? And how has your outlook for operating leverage in the business changed at all?

Scott Wells

We both can probably answer that one.

Brian Coleman

I think digital is – we do expect it to be margin accretive. We continue to invest in it. I kind of lost my train of thought on what the second part of the question was.

Scott Wells

I think as you think, over time, there's a lot that goes into the margin part of the question because the nature of – do you on the ground under the sign versus do you have a fixed lease versus do you have a variable lease, and all of those things, all those things come into play. But over time, we do think digital should be a tailwind to margins. But the impacted of that tailwind to the question we were answering with Avi is going to be a little different in Q4 where we're in our heaviest quarter versus a Q1 where we're in our lightest quarter. But when you look at it over time, it should be a tailwind, but probably not transformational, I guess, is how I would answer that.

Operator

Our next question comes from Cameron McVeigh from Morgan Stanley.

Cameron McVeigh

Did you discuss the geographic mix, large market versus small market, and how that's driving growth? Maybe the visibility so far into the second quarter?

Scott Wells

I'm going to take from that that you're interested principally in the US. Is that a true statement? Or should I be trying to give you a global answer?

Cameron McVeigh

Interested in both, but I'll take the US.

Scott Wells

We are we are predominantly a top 20 market company. We probably get 80% of our revenue from the top 20 DMAs in the in the US. And as you look internationally, most of our countries are going to be capital city oriented. It's not only. Certainly, when you get to bigger countries like France. France would be a little more like the US where you would have some concentration in the biggest cities, but you have presence in a lot more cities.

But I'm going to focus on the US because I think that's where the most useful way to talk about it is. When you think about the out-of-home market in the US, there are kind of the top two, which are Los Angeles and New York, and we have a very, very strong presence in Los Angeles. And we have a pretty strong presence in New York, principally on Times Square and in the airports. So we don't have a lot of street level in New York. But those two markets are the ones that are most impacted by national advertisers.

The next 18 of the top 20 DMAs are going to be a little bit more idiosyncratic of what an advertiser is trying to do, as to whether they come in. And this is one of the things that is quite different about out-of-home versus television is that you don't have people that buy truly nationally, where they're buying 200 DMAs and running their campaign everywhere. With out-of-home, it's a lot more – they're trying to be targeted around which markets they're going to go into. And depending on what the product is and the campaign, it varies.

So, in Q1, where national was soft were impacted by that more than, say, Lamar, which is more focused on small markets and more on low or local sales. And we're kind of impacted similarly, as OUTFRONT and maybe even a little bit harder than OUTFRONT because we don't have as good a footprint in New York, potentially. So that's kind of how it plays out.

But this is a business that you need to be developing those national accounts. But you also need to be developing regional and local accounts. You can't just kind of rely on one part of the mix to drive the business. So, hopefully, that gives you some color.

Cameron McVeigh

One other follow-up. So you mentioned developing the CPG in pharma categories, curious if you could go a little more into that approach and the value offering and why one of these advertisers would choose Clear Channel over another out-of-home operator.

Scott Wells

When you think about advertising with out-of-home, I think the first thing you want to think about is why somebody would choose out-of-home over other media as opposed to – the driver of selecting one media owner versus another within out-of-home is going to be more driven by, do they have assets in a place that a person wants to advertise. So, like, if you want to advertise in the New York airports, you're going to need to work with Clear Channel. If you want to advertise in the New York subway, you're going to have to work with OUTFRONT. That's how the business works. And that's the most stark differentiator.

When we talk about building those categories, though, what we're getting at is we are working on bringing the insights and the data that those categories need in order to be confident that their marketing is working. And so, in CPG, that might be looking at sales, in particular retail channels, it might be looking at case sales from IRI and comparing that to the places that they ran campaigns. With pharmaceuticals, that would be looking at script generation. This is the cutting edge of where out-of-home is going in terms of being able to provide the same insight and confidence in marketing spend that has made digital so successful over the last decade. So that's what we're getting at.

It's less that we're necessarily trying to take out other out-of-home players, it's more that we're trying to pull money in from the digital channels and the TV channels. I mean, we care about all of it. But in the end, the amount spent on out-of-home, if we spend a lot of time knocking the brains out of the other out-of-home players, that would not really be that helpful because it's not that big a part of ad spending.

Operator

Our next question comes from Aaron Watts with Deutsche Bank.

Aaron Watts

Scott, any themes you'd call out on pricing and/or occupancy across your US footprint, any greater pushback on pricing than you might have experienced over the last couple of years given the macro backdrop?

Scott Wells

It's interesting. We talked about this dynamic a little bit on recent earnings calls, but we continue to be in a very premium market, in the sense that the most premium locations, there's more demand for them than there's supply. And that's not just us, that's across all media owners. I hear this complaint frequently from agencies that they just can't lay their hands on the kind of iconic locations in key cities. And so, that dynamic is very strong. It's a very strong occupancy dynamic and it's a very strong pricing dynamic.

As you get down into the next year, which would be a lot of your major highway, arterial signage, that's a nice and healthy marketplace. We're not seeing a lot of pushback, per se. It's less about the pricing and it's more about, is the brand investing. The place where we're seeing dialogue with people is, I'm not sure if I'm going to launch my campaign this month because I'm not sure what's happening in the demand profile, but I want to be ready to launch it next month in case I feel like things are better. And that was really the state-of-the-art of the conversation in January and February. That's part of why January and February were so rough, was you had a lot of people kind of waiting for the go signal. And I think as we got into March, and particularly April, and as we look out toward the rest of the year, we're feeling better that people are going to be placing those. So our yields are up. They're up more on price than on occupancy. But it does vary by the product. And it does vary by where you are geographically in a market. Hopefully that gives you some color.

Aaron Watts

And just one other one, if I could. Just circle back on some of your earlier comments around expenses and margin, bridging the first quarter margin to those implied in your full year guide, the biggest driver of that is that the layering on of revenue growth that you expect to see on the bit more elevated expense base? Or are there other kind of big levers maybe more on the expense side that would move within that as well?

Brian Coleman

I think it does reflect top line growth for the remainder of the year. And I think it also reflects, as you roll forward through the quarters, some improvement in expense comparison. As the abatements started to trail off, that will be less of a headwind. It was a headwind in Q1. So I think those are probably some of the biggest drivers when we talk about comps, as we roll through 2023 quarters versus 2022 quarters.

Aaron Watts

Brian, just remind me, were there any other larger lease renewals coming up similar to the one that you've called out or that was really a bit of a one-off?

Brian Coleman

I would say that's a one-off in terms of magnitude. Obviously, lots of leases that come up and are renegotiated. But I really do, rest of them as a portfolio, not materially impacting the business as they come up for renegotiation.

Now, that all being said, we still have certain leases that reflect some COVID relief. It wasn't an abatement. But the terms of the lease were based on perhaps things that were impacted by COVID. And as we get out of COVID and have these comparative periods, that will continue to be an expense item that we'll have to face.

But to answer your question directly, none of that rises to the magnitude of the one lease renegotiation that we've identified last quarter.

Operator

Our next question comes from Jim Goss with Barrington Research.

James Goss

I was wondering, first, were the gains in Europe, do you think more ex-FX, more recovery from the COVID era or are they underlying growth?

Brian Coleman

I think it's a two pronged story. I'll hit it and maybe Scott or Justin wants to circle back up. I think in Southern Europe, it is largely a COVID story and the winning of some contracts. But in Europe South, that business had not reached pre-COVID 2019 levels. But I think they are climbing back and approaching that in some markets at or better. So I think a lot of it is a COVID recovery story, but I don't want to set aside some of the victories that we had in those countries, particularly in Spain in terms of new contracts. So, I think it's a mix of both.

Northern Europe, on the other hand, I think largely have recovered from COVID. The exception would be some of our transit agreements. So it's kind of Scandinavian heavy. That has been a recovery, particularly in Q1. But there, I think, you see growth in the northern European markets. In places like Belgium and Denmark, these contract wins have helped drive the growth. In the UK, just continued use of the digital network that we have there.

I don't know Scott or Justin, if you had something more you wanted to add?

Scott Wells

Nothing for me. Justin, anything for you to add?

Justin Cochrane

I think that's a very good summary, Brian. I think that's exactly what it is, is a bit of COVID recovery coming back in the South and in transit. There is underlying growth in other markets. But I think Brian got it spot on.

James Goss

Sort of on an unrelated basis, I was interested in the discussion you just had about those last four to six quarters' gain sort of information about each of the markets. And I'm wondering if some of the good results in Europe are causing you to either slow down the process of seeking buyers or does it wind up getting you more aggressive in price expectations? Or maybe you've chosen which markets you want to keep versus which markets you might want to sell and maybe that shifted around a little bit?

Scott Wells

I think, Jim, the thing about it is, I think we've been real clear and real consistent that in the long term, we see ourselves as a US focused business. But that doesn't mean that – as we make that transition, our number one, two, and three goal is delivering value to our shareholders. And so, you're absolutely right, as we get more data and as the businesses perform, it will give the counterparties more confidence in buying, it'll give us more confidence in selling. And so, we'll work our way through that. But the results that we're achieving there, they're not really a surprise to us. And we feel good about the assets we have, we feel good about the teams running them.

The issue is just one of how do you manage your path through the process that we work through that in an environment where there's a lot of complexity. And so, we're working it, we remain committed to that vision of being a US focused business. But we're not going to be foolish in doing transactions that are unattractive.

James Goss

And one final one, your assessment of the recession potential from your bottoms up bottoms up approach appears a little more encouraging than some of the macro observers, is that a fair take?

Scott Wells

I really can't get in the heads of other macro observers. I think I would characterize our view as data driven. And based on what we can see, we've been told, Jim, since March of 2022 that the apocalypse was nigh. And we've continued to run our business and bring in as much revenue and EBITDA as we can. And I think that's the mindset that I characterize that we have. We're looking to drive our business and bring in as much revenue and EBITDA as we can. In the end, that's what our shareholders care about, not about our macro forecasting, in particular. Obviously, people want us to be forthright on what we see, which is what we're striving to do with the information that we share today. But I can't really comment on our viewpoint relative to other macro forecasters.

Operator

Our next question comes from Lance Vitanza with TD Cowen.

Lance Vitanza

A quick one on costs and then I'd like to talk about the domestic M&A environment. But on the cost side, just to confirm, you don't provide quarterly guidance on costs or EBITDA. So, how did costs and EBITDA in the first quarter fall relative to your internal expectations?

Brian Coleman

Well, I think if I take Europe first, I think that there was some outperformance. That's good. And the recovery in Southern Europe versus the COVID quarter, the reflection of some new contract wins exceeded expectations. Now we were expecting COVID recovery. So maybe it's the pace of the recovery.

But when you're talking about Europe, you also got to remember, Q1 is really small relative to the business. And so, you've got a log with small numbers or large numbers that you have to put it in the right context.

We talked about Europe North. That business is just really performing strongly. And so, it's not surprising, but it was good to see the recovery in the transit business in Scandinavia. We don't have a lot of underground transit. But that's where our exposure is. And it's coming back. But a lot of that growth is really, again, new contracts and the use of our digital networks, particularly in the United Kingdom. So I think exceeded expectations in both Europe North and Europe South.

We were disappointed in the Americas. I can't say it was completely unexpected. We've known that we have some tough comps. Scott may want to weigh in on the top line, but I think on the cost side, the abatement is rolling off, we have some credit charges that we don't think are reflective of the larger environment there, two or three unique situations that we do not expect to recur. That was a headwind. We have some contracts that are adjusting for the post COVID environment. So I think I would say that the headwinds in Americas and Airports, not unexpected, but we're disappointed. So I'll leave it at that. Scott, I don't know if you have more to say.

Scott Wells

I think we talked about it. We tried to be very explicit in the script that this was not the expectation that we had, that we are dissatisfied with what America and Airports did in Q1, and that we believe we're going to see improvement as the year builds. And when we worked to put our finger on the bottom line driver, that revenue aspect of it – operating leverage, we talk about it all the time because it is a really big thing. And so, when your most attractive market doesn't deliver the revenue that you're aiming for, that's going to be a big driver. And again, we tried to be very explicit in the discussion of where those differences were.

Scott Wells

On the domestic M&A, it looks like you're continuing to make some smallish acquisitions, presumably in the US. I see you spent another $6 million or so in the first quarter. Could you talk about the type of assets? And maybe even, if you could just sort of remind me rough numbers, how much you spent on US assets in 2022 and then just sort of talk about where or what type national versus local or rural versus big city, airport versus billboard, just anything with respect to the strategy of kind of like what you're looking for as you continue to tweak the portfolio.

Scott Wells

I'm going to let Brian take the quantity question in terms of spend and whatnot. I'm going to give him a minute to pull that up. But just in terms of philosophy, it is entirely US roadside. When we talk about acquisitions, it's entirely US roadside that we're doing. It's entirely US roadside. And we are doing acquisitions – these are not companies that we're buying for the most part, these are a few signs here and there. We're not picking up a lot of staff or a lot of – it's generally – if it goes really well, you pick up some easements where you have the ground underneath the sign. But we're looking for things that are accretive to our footprint and accretive to our P&L overall.

Brian, you want to take the quantity question?

Brian Coleman

Sure. Well, we're going to report CapEx and acquisitions of about $38 million for the quarter and 2023. We've given guidance on capital expenditures, the range $165 million to $185 million for the full year.

In terms of just pure acquisitions, in the quarter, we had about $6 million mostly in America. There was some in Northern Europe and then a reduction in Southern Europe, and so largely digital. In both Northern Europe and Americas, we've spent the CapEx in acquisition – sorry, of acquisitions largely in the US and largely digital.

I think on the acquisition side, that's not included in the CapEx guidance that we gave. That will remain small. I think we've got some in the pipeline we're likely to close. I think in the current business environment, we'll preserve liquidity. And it'll have to be particularly accretive if we continue to pursue it, but I think it will largely be in this smallish tuck-in category, unless the environment changes, and then we can become more aggressive.

Operator

This concludes our Q&A. I'll now hand back to Scott Wells, CEO, for any final remarks.

Scott Wells

All right. Thank you very much. And thank you all for the questions. Look, as we look out at the year, we feel good about where our business is headed. We feel good about our ability to bring in revenue and to drive growth over the course of the year. And as we look forward, we're hoping that we will be in a position to provide some updates on our European process in the coming quarters, and we appreciate everyone's engagement, but the bottom line is that we look forward and we feel good about our business. Have a great day, everyone.