We'll get started. My name is David Karnofsky. I cover media, entertainment, and advertising at J.P. Morgan. Here with me from Clear Channel Outdoor, I have David Sailer, Executive VP and CFO, Bob McCuin, Executive VP and Chief Revenue Officer. Guys, thanks for being here.
Thank you.
Thank you.
Maybe to start, high level, where are you most focused in terms of growth drivers that, you know, are in your control as opposed to the overall ad market? And, you know, what are the key priorities for the balance of 2024?
Sure, I can take that. As we get into 2024, look, we're looking to vary, and we've been doing this for some time, to create our unique mass reach media platform that delivers our clients' messages through our unique assets of digital and printed signs. From a priority standpoint, you know, we're in the middle of our digital transformation, and when I say digital transformation, it's obviously our digital boards and converting our digital boards, but it's also, you know, behind the scenes and making our processes more efficient from a digital standpoint.
Increasing our customer centricity, which, you know, I would, I would explain as, you know, our direct-to-client and certain initiatives, you know, that we have, and also driving executional excellence, which it could be across a wide range of activities, could be our installations to our printed signs along those lines. You know, other priorities, but, you know, first, most and foremost would be, you know, driving EBITDA, driving our top line, which, you know, generates to the bottom line from, from a cash flow standpoint. We talk a lot about, you know, this year with... You know, we have the processes that are going on overseas in Europe, and as we mentioned on our earnings call, you know, we're, we're in negotiations right now, so obviously executing on, on that initiative.
In addition to that, in Latin America, we have the process going on down there, and we're having conversations with several counterparties about the assets that we have down in Latin America. And then just in general, when you're thinking about investing in the business, just the areas that we're looking at across our sales platform, you know, investing in driving certain verticals. You know, we talk about pharma. You have the programmatic, you know, sales channel that we're investing in. From that standpoint, I would say those are probably, like, on the higher end of our priorities as we look at in 2024.
Got it. Maybe circling back to the most recent trends, local was broadly strong in Q1. Was interested in Scott's commentary on demand at those kind of secondary locations where you earn higher margin. You know, is that just a function of marketers kind of being crowded out of that top tier? You know, and what can you do to drive ad demand to those locations where the rent structures are more favorable?
Sure. I'll, I'll start off on that question, and I'll, I'll pass it over to Bob. And really, what you're talking about is from a, from a margin standpoint, you know, our, our secondary assets. That may not be the sign on, on the major highway or, or that iconic location, but a lot of those secondary locations, you know, have a very good ratio of, of revenue to site lease, so they, they drive higher margins. And there's probably a, a few things. It's definitely probably being driven by the local channel. When you think about our local sales channel across, you know, either one market or maybe a couple markets, they're really looking for that reach, and you can get that reach of an audience through those secondary channels.
Initiative, and we've talked about this in the past, that it's probably helped drive that in the first quarter, is, you know, coming out of COVID, we were obviously, you know, very tough on expenses. You know, revenue was down, and from an AE standpoint, you know, we kind of lowered the amount of AEs we had. We've been hiring them back, and that is definitely an initiative we are pushing in 2023, was to get more AEs, you know, across our, our portfolio, and I think you saw that in the first quarter as we had a lot of hires last year, and I think that helped drive that local channel, which are filling some of those secondary assets that we have, which, you know, is good from a margin standpoint. From an ad sales standpoint, I mean, I'll hand it off to Bob-
Sure
... you know, to comment on that.
Sure. So, I would add, I would say in Q1, certainly a positive outcome, and on the local side, what we saw was we saw clients going deeper in our portfolio. What we're able to do is we're leveraging our RADAR suite of tools. If you think about what we've talked about in the past, RADAR allows us to understand. It's we have an attribution platform. We also have a planning model, and if you think about the data visualization tool we have, which is RADARView, it allows us to identify audiences beyond one location, so find them as they move about a location.
What that does for us is it allows us to scale an investment with a customer and then profile that inventory even deeper in, and I think that's one of the things we're seeing an uptick on, and we've been in market now with RADAR for about six years, and our local teams are really starting to lean in, and we're seeing some, some good things happen on that, within Q1.
Got it. On national, you've described more of a mixed environment, at least on billboard. Can you update us on there, in terms of what you're seeing on the verticals?
You wanna go for it, Mac?
Yes, I'll jump on that for sure. Look, Q1, it was nice to have growth in national in Q1. It was good to see that, the strength across verticals. We had amusements. We had retail. We've talked about the work we're doing in pharma, and that, that is definitely one of the things that we're proud of and one of the things we can control in national, and that has absolutely driven growth for us, for Clear Channel, where we can look at at a vertical that is not spending in out-of-home nationally, and they're spending all their money or most of their money in television and in digital. And to go to them with sophisticated toolkits and solutions to allow us to transact with them, it's taken a couple of years, and it's really starting to drive growth.
And when they come into our markets, and we're able to execute on these campaigns, they are scaled campaigns, which is a big difference for how national advertisers sometimes think about out-of-home. We can go much deeper into our portfolio. So I do think that that's been a net positive for us. You know, we still feel very good about, you know, about the work we did in Q1 and optimistic about that carrying forward.
... On auto insurance, that was a category you've mentioned—was a drag at one point or has been a drag.
Yes.
Maybe just follow up there, what's been going on? What are the gating factors towards getting some of that coming back into the market?
Yeah. So auto insurance would be one of the examples on the national side of a customer that did buy scale. They went in, they went into markets, they identified inventory, and I would say this: if you think about auto insurers, and you think about our inventory kinda broadly, we have drivers. So if you think about it from this targeting standpoint, let's get to drivers are on the road. You know, there's a few things that worked against us during COVID. The auto insurers had some real challenges, regulatory challenges, and I think they're slowly recovering from that, and that was that affected all advertising. We expected to be a little bit farther along with auto insurance coming back. I think that one of the challenges is regulatory.
I think that's for them to handle. There's also one of the largest ones we work with, had an agency change, and they're working through how to plan out-of-home. I'm encouraged in the dialogue we're having right now. We definitely would really benefit by getting them back, but I think there's some good work being done. I think there's a pretty decent road ahead of us for auto insurance, so.
With media entertainment, you do have the benefit of easier comps, given the writers' and actors' strikes last year. At the same time, you know, we've seen major, major media firms speak to a need to pull back on marketing, or they're bundling their services with the stated goal of driving marketing efficiency. How do you think about that vertical as you come off sort of the peak of the streaming wars, given your kind of footprint, New York, L.A.?
Yeah, the streaming wars were interesting, and I think that what we're seeing now is, you know, we certainly have favorable comps, media entertainment going in, and we saw growth in Q1 for us. Obviously, Q4 was a tough quarter. You know, we think that the streamers continue to present an opportunity for out-of-home. They're probably gonna utilize the media a little bit differently, so we still feel good about the opportunity there, and I think as, you know, broadly, the movies, the slate of movies that we're seeing this year, I think, could still position us to do some good work in the category. And certainly, everyone's talking about what's gonna happen next year when they come back.
But it's good to not have the strike and that hangover going, and I think that we're poised for some growth with it.
Just to clarify, is more of the category driven by the theatrical side, by the streaming side? You know, we certainly agree with your view on the slate, you know, kind of ramping from here. Yep. Okay, great. Maybe looking longer term, how do you view the potential for billboard to kinda take share from traditional mediums like television, even radio, right? Or print, where there's still, you know, declining, but substantial ad dollars. We found it interesting, some of the prior commentary that, you know, outside the United States, that's a phenomenon. You're certainly seeing share shift hasn't necessarily translated over in the same way domestically.
So I'll take a start.
Sure.
I'll start on it. I think we have to parse that first on the local-national dynamic.
Sure.
If you look at what's going on in our local markets, I firmly believe, and we see that we are moving dollars, shifting dollars from TV and radio over to our assets, and it's, I think, part of that is the, you know, the marketers, the advertisers, they see the benefit of out-of-home. They see how out-of-home drives other occasions for them, search, social, and they get it, and they see the results. The national dynamic's a little more challenging, as we know, because you've got multiple parties and layers involved in an agency and modeling and so forth, that make it a little more challenging to make that transition. That is why we're, you know, we're going direct to client as much as we can. We're also lined up and working on key verticals.
As I mentioned, pharma, we're looking at others like beverage. We're bringing insiders and insights from people who understand the category to help us build that out, and I think the path is going to be certainly with our agency partners, but also with the clients direct. And the national growth plan is just gonna take a little bit longer, but it's absolutely necessary as we see, and I think the share shift will happen.
Yeah, no, no, I agree. I mean, we see it in our European business as TV audiences do decline, and obviously, you can see that in the numbers on the revenue for that category has declined. We see some of that share shifting to the out-of-home space overseas. We see in Latin America as well, but you don't see as pronounced in the U.S., you know, not yet. And I think what Bob was talking about on the beverage side, you know, we've talked a lot about pharma, and I, you know, I think that is definitely a vertical. Obviously, it's a gigantic vertical in the U.S., in the pharma advertising, and you see that on TV all the time.
We are starting to make those inroads, and I think it's really the result of the data and the insights that we have as a business on our RADAR platform that's kinda making it possible from a pharma standpoint. So I think that is an example where you'll see, you know, dollars flow from, you know, one side to out-of-home, and, you know, obviously, it's something that we can build on 'cause you can utilize the tools of RADAR that we're doing for, for, for pharma in other verticals. So, you know, I think you'll see more to come on that.
And on the local side, it sounds as though, right, there's a share shift going to digital, but a lot of times that's paired up with out-of-home, right? Maybe as a reach extender at a-
Yep
... cost-effective level.
Well, I think the other part of this, it's important, and this is something that is certainly gaining traction on a local level as well as national, is, you know, the tools we've built allow us to understand out-of-home's impact on other investments. So it's not just that out-of-home drives the impact and the branding, but what does out-of-home do for search? And what we've done with RADAR and our RADARProof is be able to understand the impact and talk to marketers in their terms about that and work with them, with their datasets in a way that's very interesting to them and really brings that conversation around to get us down to something that is not quite performance marketing, but definitely a lower funnel KPI. It's very positive, and that does translate at the local level.
They do understand that very well.
Just on the RADAR suite, you talked before about attribution. Can you talk about where you are in that process of closing the loop between, "I see a billboard, I go buy the product?
Right.
Right, and how much does that matter for kinda the agencies, right? Is that, you know, where this could really benefit, or is that more on the local level?
... I think it matters for both.
Okay.
It's a little bit different, I think, in the local and the national. And on the local side, it might be, you know, a data point to support something they believe in, really. It's like: "Hey, I know my out-of-home works. I'm vested with out-of-home. I feel it, I see it." But even in the local market, they're, you know, they're looking at data solutions. They're looking at ways to attribute an investment back as an ROI. So it could be just footfall. It could be just something as visitations, and that might be as sophisticated as we get with a local customer.
On the national side, it may require something a little more complicated or a little more complex, where we have to dig in with first-party data, and we may be tying out-of-home exposure back to app downloads or incremental usage.
Right.
And it does matter, and what has to happen is we have to then, you know, take the, the work we do with the client through the planning agency and go through it. It's just a little more complicated because there's a number of spots, a number of folks, but it definitely matters. You look at the results that out-of-home can do on many of these campaigns, and it is really, really impressive. And in many of them, you know, we're working with them and their data provider, and they're doing the measurement, and they're coming back with the results, and it's very, very impressive. We just need to get the story out there more, and we need to break through some of the silos that we encounter as we go through that on the national side.
Got it. Programmatic was strong in Q1, up double digits. Curious as you can maybe talk a little bit about, you know, what's driving that growth, and then is what you're seeing here mostly incremental? You're pulling in new marketers, or some of this kinda shift over from traditional buying?
Yeah. So we've been in market with programmatic solutions for, you know, over six years, so we were one of the first in market, and I think it's evolved quite a bit. But one of the things that has remained true is that and I look very closely at this, the vast majority of the money are coming in from new advertisers or new dollars from known advertisers. That still stands up today. You know, I think that you know, there are certain customers who like to buy their media through a dashboard and a platform, and that's how they wanna transact with us today. It doesn't mean that's the only way we'll do it, but that's a way to get them into the business.
They may enter through programmatic, and then we may be able to sell them, you know, an activation around an event or something that's a printed or a static asset. But it's so I think it's very positive. I think what you're seeing also is the omnichannel DSP is playing a much bigger role. The Trade Desk really having an interest in out-of-home, Digital out-of-home, is very positive for us because that is, you know, very important to the agencies and the advertisers, and I think that's very positive. And the last thing I'll say is, we have examples of customers who have departed us during COVID, national advertisers who we got back, but then we got back through programmatic, which is okay. We're getting them back.
Yep.
But their path back, because they want flexibility, they want a biddable environment, is to buy our digital inventory that way, and that's something that, that we're keeping a close eye on.
Yep. And just for some color, like the flexibility, different... You know, they can buy it that afternoon, it's up, as opposed to, right-
That's right.
in the static world, just a certain amount of planning commitment.
That's right, and it's a biddable environment. We talk, you know, look, if you need to buy that location, if you know that location at that time is critical to you, you should be doing a direct buy.
Right.
But if you choose to go programmatic, you want the flexibility of pulsing in, pulsing out, moving your investment from, you know, let's say it's the NBA playoffs, and you one team wins, and the others are eliminated, and I wanna move that to another city. Programmatic allows you that flexibility in out-of-home-
Yeah
... and that's something that's relatively new to the industry, but it's something that's catching on, and I do think it'll be a growth driver for us. It's still a very small part of our business, but it's necessary, and I do think that the conversations we're having with programmatic partners help elevate our industry in that consideration set at agencies and marketers.
Got it. You noted success in pulling in certain verticals, pharma, for instance, that's been, you know, nascent in outdoor prior. I know you touched a little bit on the execution, but any other kinda under-indexing categories that, you know, maybe you see the potential to kinda get over?
So there, there's a number. Look, I think that for us-
Mm
... you know, we prioritize pharma because it is the one of the biggest ones that's at most of the national agencies and on television. I think they're vulnerable, and I think we have a great solution. But that's taken a couple of years, and we're moving forward. But to David's point, the capabilities and the way we execute a pharma campaign can be applied to auto, right? So auto, for our book, is not a big part of it. You might have some Tier three, but the Tier two and the Tier ones are not our biggest customers. If you apply the same approach that we're talking about with pharma to IHS Polk, right? To understand exposure to out-of-home and then actually conversion, that does change the conversation. So I do think auto is one.
Right now, we're prioritizing food and beverage, and it's a very, very big opportunity for us. We've got somebody that is running that vertical for us and understanding it, and I think that's gonna pay off well, so.
Got it. Political election dollar is relatively smaller category for you, but, if we look at the kind of very large pricing growth that you see on television, certainly Q3, Q4, and does that create a situation ever where some of that money spills over into billboard, and what's the gating factor? Is it just that, like, there's so much message you can kinda push across in a billboard or so much negative message about your, your opponent?
Do you want to jump in on this, or-
I can't, I couldn't hear that.
Yeah. The question on political. So I'd say that the opportunity for us in political there really is two paths, and I'll kind of... I think I'll get the second part of the creative bit. We don't do a tremendous amount of-
Yeah
... you know, candidate or issue business in our book. It's very, very small. We do think there's a bigger opportunity this year, so it'll be an ad, but I don't think it's gonna be enough. We do have people deployed against it. I do think the opportunity, there's a real opportunity in a number of our markets where,
... traditional local advertisers are going to be displaced, and I do think out-of-home offers that visual solution they're looking for. And we're right now we've got our teams deployed against the largest customers that buy both out-of-home and TV, having conversations now about what likely will happen when these things kind of get going, and the money gets dropped in. We've looked back at the midterms. We looked in some of our markets where 50% of the ad spend on a TV station is political.
Yeah.
And what that does for us, again, if we get in front of it like we are now, we have a conversation with the marketer, and we talk about, "Look, if you want to see the light of day in the fall, and you want to be in the right environment where it's not going to follow something that's may or may not be positive, let's lock you in." And those conversations are very positive, and that is actionable. Again, while we run down both of the paths. You had a question about the creative? Is that part of it, too?
No, I was just saying, like, what is there a limiting factor in the sense that there's only so much of a message that a politician can maybe get across, right, about himself-
Yeah, but I-
in the frame of a billboard?
If you keep it simple, I think that's for our medium or any other medium, if you keep it simple, people are gonna remember that.
Yeah.
The more complicated you make it, the more complicated it will be.
Fair enough, yeah.
You can do a lot in seven words-
Yeah.
seven words or less in a video. Look, we have to remember where our inventory is in the public space.
Yeah.
Right? We don't support attack ads. We have to attribute everything, so we have to be very mindful of that. I would say getting the message out in out-of-home, even for political, is not the challenge. It's what is that message, and how does that feel with our community standards and things like that?
Got it. In terms of, digital conversions, I think the target's 90-120 per year. What kind of governs the, the growth rate there? Kind of factors like, regulatory supply factor into it, and kind of stepping back, where are you on that digital conversion journey?
Sure. I mean, I'll talk to kind of the growth rate, and when you're looking at our digitals, a lot of it. I mean, I compare it almost to sales. Like, everyone understands from sales is there's a pipeline of your sales activity. We do the same thing from a real estate standpoint. We're looking at our digitals across our portfolio and across our markets. And you're seeing, you know, what is that pipeline? And it's. When you're converting a digital asset, it's not, you know, you start, and you're gonna get that in the ground in three months. It's a couple of years, so it's a long process, you know, finding the right locations. There's also the regulatory aspect of the permitting, and the regulatory is definitely different across, you know, across the country.
So that is definitely a gating factor on how many digitals you're gonna put in. But I think the run rate we had, we did a, you know, a little over 100 last year. We're probably in the 90-100, and that's the right range. Then the second part of your question, when you're talking about, you know, where are we in the journey, and where are we from a digital standpoint? I'll talk to the Americas segment first. Right now, roughly 35% of our revenue is digital. It's only 5% of our assets. So I think there is a lot of runway, you know, for future growth, either on conversions or organic builds. And when you look at it from a specific... Every market's a little bit different.
You know, we're at 35%, so obviously you have some markets that are higher. So you take a market like Atlanta, you know, you know, we're probably in the you know 50% of revenue in Atlanta or somewhere around there. We got 200 plus digital boards, but you know, there's more than double that in the market, so... That is a market where digital is still growing, so there's still runway there. I can compare it to you know overseas. We have markets overseas that are at 70%, so I feel like there is definitely room when you look at it's only 5% of our assets, we're at 35%. I think there's still a long runway from an Americas standpoint to continue that digital pathway. Airports is a little bit different.
When you think about our airport segment, from the numbers, they're roughly, like, 55% of digital revenue. It's a little bit less than than 20% of our assets, and really how that number is gonna grow over time is, every time you re-up a contract with an airport, with the authority, they're usually 10 year-15 year contracts, so they cycle in over time. When you re-up for a, you know, for either a new airport or you're getting a renewal on a current airport, you're coming in, and you're gonna upgrade that inventory, and, you know, the preference is to put in more digital. You know, as a company, we like the digital, and so does the airports. And that, over time, will increase the percentage of digital in airports. You know, is there a specific number?
I don't have that in my head today, but I still know from an airports and Americas, I can say it for both segments, you know, there's still a lot of runway left from a digital standpoint.
Okay, good segue to airports. National demand there, Q1 was outsized relative to billboard. I think you said 5x. Might have been some comp issues, but any other factors to kind of explain that divergence? What's driving that demand at airports?
I mean, I'll start, and, you know, Bob will probably go into the specifics. You know, the first quarter of 2023 for airports, you know, it was a tough quarter. We had a lot of clients actually push dollars out into Q2 through Q4 last year, and, you know, we grew double digits in each of those quarters. The first quarter was definitely depressed in 2023, but that momentum has continued to build, and it goes to the fact that the inventory that we're putting in, we were talking about digital before, we're kind of lapping in the New York airport some inventory that went in, you know, after the first quarter. So there was definitely a help from an inventory standpoint, but right now, the airports business, it's a high-premium buy.
It is definitely in a good position. You know, from an Americas standpoint, it's obviously there is more inventory when you're looking at comparing, you know, Americas and airports, but it's definitely a different buy. And from a national standpoint, yes, airports was higher, but I would still look at the growth that we had on Americas, which was up 6%. I think they both did well in the first quarter. You know, airports was just a little stronger.
Look, I'd say, just to add a couple things. One is the reception from marketers to airport advertising is as strong as we've ever seen, and they recognize that business travel is back, personal travel is business, and just the airports, as we all know, as travelers, are very, very busy. So marketers are prioritizing that experience. It is an exclusive environment, so what we're doing, one thing I'd add to what David has said, is we are thinking about how we bring those assets to market, how we sell that space differently, thinking about it more like a sponsorship model. If we have that environment exclusive to Clear Channel, what can we do there that allows that kind of immersive experience to come to life for the marketers?
And you'll come through some of our airports, you'll see brands that own tunnels, so think about kinda concept exclusivity. We have category exclusivities and things we've done and worked through with partners. So really, how we bring the assets to market, I think, has changed pretty dramatically in a very positive way. The other part of it is, we have our dedicated airports team, and they do a tremendous job on the sales side. But we've also opened up our entire team to sell these assets. So if you think about a local seller, who has a very strong relationship in a market, leveraging that relationship to sell more products has been very, very positive, and that's had a pretty material impact on our business, so we're encouraged with where it's going with airports for sure.
Got it. David, you are in an active process to sell your Europe North business. I wanted to check if there's any update you could provide there, any update on timing. And then you talked about Latin America briefly. Just refresh where you are with that.
Sure. Absolutely. You know, from a Europe process, you know, we mentioned on our earnings call, we are in negotiations, you know, for our Europe North segment. And at this point in time, you know, as we have more information, you know, we will definitely come to the table with it, but that's kinda where we are with that process, which I think is a good development. From a Latin American standpoint, we are in talks with several counterparties for those assets, and we're still looking at that. Is that gonna be... You know, we have counterparties that are interested in that platform from a in the entire platform, you know, all four countries, or there are also counterparties that are looking at it, you know, in chunks or in countries.
That's definitely a little bit further behind. That process started after the European process, but that's kinda where we are at the moment.
Got it. I think in the past, you spoke to a potential $30 million-ish of costs, corporate cost savings coming out of the sale of these businesses. You did say you would sharpen your pencil as you got closer. You're closer. Any update to provide there?
No, I mean, those plans that, you know, we're... I, you know, I still look at it as when we're a smaller, more U.S. centric company, and, you know, we do the transaction in Europe and Latin America, you have $30 million of corporate, you know, costs that are mostly attributable to those segments, well, obviously, will come out. But there are other things that will probably take a little bit longer. It's gonna take time, 'cause when you think about it from a corporate standpoint, you know, we're still gonna be doing taxes on those transactions. There's still, you know, reporting that's gonna be filed. So yeah, the $30 million will come out, but when I say sharpen your pencil, there will be other areas that we're gonna look at.
That's gonna take a little bit of time. I mean, if you think about when you sell those businesses, there will be transition services agreement, and, and granted, we'll, we'll probably get paid for that, but there is still work that's gonna get done. So it, it will take time to get those expenses out, but I still think that's a good range at this point in time.
Got it. With the recent refinancing of the company's front-end debt, Clear Channel Outdoor has no maturities until 2027, arguably 2028, assuming the successful completion of the Europe North assets. Can you discuss what sort of flexibility this provides the company with respect to any subsequent strategic actions you might take?
Sure. Sure. No, I mean, this is, this was great. In March, you know, we went to the capital markets. They were strong, and we were able to refinance our term loan, which was, you know, $1.2 billion, and we pushed out roughly $800 million to 2030 in notes, and the remaining came in the term loan, which is due in 2028. And while we were doing that, in roughly almost in that same week, you know, the interest in the notes and the term loan was strong. That investors were asking us about the BV Notes. At that same time, we then, you know, refinanced the BV Notes, and we pushed those out to 2027.
Obviously, that's something that will get tied to the sale of the European business, you know, from a proceeds standpoint. But to me, pushing out those maturities, our first near-term maturity is in 2027. That just really gives us the flexibility and the runway to really do what we need to do from a business standpoint, and that really is to grow the top line of the business, to grow EBITDA, to grow cash flow. In the meantime, we will be focusing on, you know, the transactions we're talking about, and obviously, those proceeds, as I said before, a certain amount will go to the BV Notes. And then after that, we do have investment baskets as far as in CapEx and potentially acquisitions to kinda shelter the proceeds that come in.
And then from there, you know, we'll figure out, are there investments that we'll be looking at from an EBITDA standpoint? Will they all be liability management on the paydown of the debt? So I think pushing out those maturities just really gave us kinda the flexibility of growing the business and really looking at the leverage as we get through the transactions, you know, that we talked about earlier. But really happy though. I mean, extremely happy with the outcome of those transactions. You know, definitely would wanna thank the teams that worked on them to do, you know, those back-to-back transactions of the term loan and then the BV Notes, and we also refinanced some of the term loan back in August 2023, so really good execution.
... Could I push you a little bit on, you know, paths you can take for the company to reduce leverage further?
Yeah, I mean, just building on what I said before, I mean, when you think about, you know, the leverage of our company, the process that are going on overseas, and when we transact on that, it's not, it's less of a de-leveraging event-
Yeah
From where we are today from a leverage standpoint, but it will be the pay down of absolute debt, which I think is, you know, very important. But I think what it does do, as we simplify the business, we become a U.S.-centric business, higher margin business. I think it will give us the currency. It's probably, you know, a higher multiple when you think about, you know, multiples of out-of-home businesses in the U.S. versus multiples of out-of-home businesses overseas. I think it'll increase the value of our company, maybe on the equity side as well. That might give us flexibility on using that as a currency to go after debt. Obviously, there's always, as we grow the business, there's organic. You know, every $25 million of EBITDA is half a turn.
But I think even above and beyond organically growing the business and, you know, all the things that Bob is talking about, when we get through these transactions, it's also gonna free up. And we have a lot of resources right now that are focused on selling those businesses. When, you know, our entire corporate development team, when we kinda get through those transactions, that team, along with, you know, we're also looking at it today, will be focusing on, you know, on that leverage equation. Like I said before, will our equity be worth a little bit more? Are there things to do there? Maybe there's some kind of JV-type arrangement, some kind of financing. I think there are tools in the tool shed that we can utilize once we do get past the transactions that are on the table to really work on the debt.
I mean, it's a key, obviously, initiative for the business from a non-operating standpoint.
As you become more U.S.-focused, is there any evaluation of the domestic portfolio? Does it make sense at certain, you know, prices to think about, you know, possible asset divestitures, or is that on, not on the table?
Yeah, I mean, look, we'll always entertain anything, and when we talk to our shareholders all the time and our investors, but when you think about the U.S. business, the one thing that I think that we've talked about, yes, we have high leverage, but also, you know, we have low basis on a lot of our assets in the U.S. So, you know, depending on the situation, but selling a U.S. asset, it's almost like you're descaling the business. It's probably not the best course of action, but look, we'll see how things progress. But right now, that's probably not something we're thinking about. But as I said before, you know, as we're looking at our leverage, we, you know, we'll entertain all ideas. We're always thinking, but the low tax bas is, that is a gating issue there.
Got it. Maybe, just one more on margins. You know, how do you think about both billboard and airport factors to think about in terms of mix of revenue?
Sure
... versus the costs that are in your control?
Yeah, no, absolutely. From a margin standpoint, the first quarter was great from a margin standpoint when you think about our airports business and also from Americas in the first quarter. You know, where we were in the first quarter of last year, we had COVID relief, and I'll talk to the airport segment, I guess, first. We had COVID relief in the first quarter of last year. We're continuing to get that into this year. I think that will slow down into 2025, but that's definitely a push on margins from a COVID standpoint. But the real margin driver, I would say, in the airports business, when you put that COVID relief on the side, is really just revenue growth. It is the expenses from the airport standpoint, a lot of it is tied to revenue.
So as your revenue grows, your expenses grow with it, and then your next highest expense is really salaries. But the margin expansion we got in the first quarter was really based on revenue. We were, you know, roughly in the $50 million range of revenue in the first quarter of last year. That went into the high $70s. You know, slightly, COVID relief was roughly the same. That margin flew through to the bottom line. So as we get forward, as revenue grows on the airports segment, you will get some margin expansion. From an Americas standpoint, a little bit different. We did have margin expansion in the first quarter, and that was kind of a result of, you know, higher revenue in the first quarter of 2024, and also just savings from an expense standpoint.
We had some credit loss savings in the first quarter of this year, which so you have expense saving, you know, revenue growth, that was really driving margins. The pronouncement in the growth of the margins in Americas will be slightly less than what you're gonna have on airports, just 'cause it's more EBITDA. So from a margin expansion, you'll get it, but a little bit, little bit, little bit, I would say, less from an airport standpoint, if that makes sense.
That's great.
Got a little tongue-tied there at the end.
No, no, no.
Said margin too many times.
Yeah, I can relate. With that, we're out of time. Bob, David, thank you.
Great, thank you.