Ladies and gentlemen, thank you for standing by. Welcome to the Clear Channel Outdoor Holdings, Inc.'s 2023 first quarter earnings conference call. If you would like to register a question during the presentation, please press star followed by one on your telephone keypad. I'll turn the conference over to your host, Eileen McLaughlin, Vice President, Investor Relations. Please go ahead.
Good morning. 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 B.V. We recommend you download the earnings presentation located in the financial section in our investor website and review the presentation during this call. After an introduction and review of our results, we'll open the line for questions, and Justin Cochrane, CEO of Clear Channel UK & 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 presentation. 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 four in the earnings presentation, and I will now turn the call over to Scott.
Good morning, everyone, 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 U.S. due to a few specific issues impacting certain national accounts. These included 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 U.S. 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. 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/or low priority European businesses. Turning to our outlook, as I mentioned, we are not seeing signs of a 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 are 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 flyers 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. 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 and the unrest in France. Taken together, despite the slow start of 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 are 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. With that, let me now turn it over to Brian.
Thank you, Scott. Good morning, everyone, thank you for joining our call. Please turn to slide five. As Scott mentioned, our first quarter results were 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. The amounts I refer to are for the first quarter of 2023, and the % changes are first quarter 2023 compared to first quarter of 2022, unless otherwise noted.
The sale of our Switzerland business was concluded on March 31st, 2023, and is included in our first quarter operating results, but will not be included in our results going forward. As we mentioned during our fourth quarter earnings call, we expanded the segments in 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. 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-$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 to slide six for America's segment first quarter results. America revenue was $236 million, down 1.3%, reflecting a pullback in media in 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.
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 rent abatements. Higher credit loss expense was driven by specific reserves for certain customers, and in our view is not an indication of a broader weakness. 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 pre-previous earnings call, margins would be close to pre-COVID levels. Please turn to slide seven 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 Airports revenue, was down 3.3% to $30 million. National sales, which accounted for 60.1% of Airports 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 is 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 eight 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 and 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 nine 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 CCIBV on slide 10. Clear Channel International B.V., referred to as CCIBV, is an indirect wholly owned subsidiary of the company and the issuer of our 6.625% Senior Secured Notes due 2025 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. CCIBV revenue increased 11.7% to $242 million from $217 million. Excluding movements in FX, CCIBV revenue increased 18.8%, driven by increased demand and to a lesser extent, new contracts.
Singapore represented less than 3% of CCIBV revenue for the three months ended March 31, 2023. CCIBV 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. 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. 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 31st, 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 31st, 2023, basically flat with December 31st. 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 31st, 2022, due to the increase in floating rates. As of March 31st, 2023, our first lien leverage ratio was 5.25x. A slight increase as compared to December 31st, 2022. The credit agreement covenant threshold is 7.1x. Moving on to slide 13 in 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 is $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. Now, let me turn this call back over to Scott for his closing remarks.
Thanks, Brian. Looking ahead, we continue to expect a positive year for our business, and we remain well on track with regard 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. Now, let me turn the call over to the operator for the Q&A session, and Justin Cochrane will join us on the call.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. First question today comes from Richard Choe from J.P. Morgan. Your line is open.
Hi, thank you. I just wanted to talk a little bit about the revenue guidance that you gave, for the segments a little bit. Just what a little bit more color on the America business and the Airports, if you could. Do you expect those categories to be up in a significant manner for the full year?
You wanna take this one, Brian, or you want-
Yeah, I mean, I can take a stab at it, Scott, and 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 America, so America, and airports, I think some of the headwinds that were experienced in each of those segments are likely to dissipate going forward. I would expect growth in both the America business and the airports business. You know, we talk about airports, some of the headwinds impacting airports, just the timing of campaigns. We hope that, you know, those campaigns will come back over the rest of the year or that we're able to fill the pipeline with other things.
I think we do expect improvement in the airport segment, and I would say the same for the America segment. You know, it's got some headwinds in the year in the first quarter that, you know, we expect to dissipate, and we do expect top line improvement. You know, the first quarter's not the strongest quarter for this business. It's very seasonal. Then we've got some quarterly impacts, but I think both of the segments in America and Airports will continue to improve as the year rolls on.
Yeah, I think the thing I'd add, Richard, is, you know, we are reiterating our guidance. In order to be able to do that, you know, the numbers that we put forth certainly had growth pretty much across the board. You wouldn't be able to get the EBITDA growth that we're talking about in particular if the U.S. wasn't going to be performing. Hopefully that, you know, without getting into the business of trying to guide every individual segment, hopefully, that gives you a sense of where we're coming from.
Got it. I don't know how much you can comment on this, but with Europe North and South, kind of, you know, I guess, normalizing and doing better and the numbers being, you know, more transferred to us at least, are you seeing more interest in those businesses, and do you think there is, you know, a better potential to, you know, sell more of the segments either by country or in more as a group?
I mean, Richard Choe, it's a great question. 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. I mean, Omicron came after we announced it. COVID was very hard on a number of the European markets. If you think about where we were when we started and when we pivoted to doing country level, we had, you know, basically one good quarter, Q4 of 2021, in our, you know, pocket and a plan. What has happened subsequent to that is that the business has actually performed quite well and it's been inconsistent country to country.
Overall, you know, now we have a half dozen quarters under our belt, not quite a half dozen yet, but it will be soon. I do think 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 margined and cash generative and so forth. I do think it helps, but you know, you have to recognize these processes, as we've all witnessed, are slow. When you're dealing at a country level, you get into an awful lot of minutiae that there's an awful lot of back and forth on.
You may well have agreed a price a lot earlier in a process than when you actually get to the completion of it. The point being, this is not real-time bidding. This is, you know, advanced negotiation on the things that are actually in market right now. Hopefully that gives you a little bit of color without me telling you anything, you know, more granular that would get me in trouble.
No, thank you.
Our next question comes from Avi Steiner from J.P. Morgan. Your line is open.
Thank you. Good morning. A couple here. One, can we just dig a little bit more into America? You called out national account weakness rather than broader macro. Just could you put a little context a little bit more, particularly as you guys remain confident for the year there. Thank you.
Thanks, Avi. You know, I think there's a couple things going on. I mean, we said this in our Q4 call, but maybe not everybody heard us. The year started pretty rough. January and February were pretty rough years, particularly in the national account space, particularly in crypto and emerging tech. 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 had the best upfront since we started recording it. That is how the upfront wrapped up. That's what's driving a lot of the confidence that we have, along with the dialogue that we're having.
I mean, outdoor does get planned a fair bit in advance, we've got a pretty good idea what brands are planning to get after in the second part of the year. 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. There's a lot of data points into it. You know, 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. That's, you know, it's our second biggest market, so that has a real impact on us. That's both at the national and the local level. You know, 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. I mean, I think those are the factors that contribute to what happened in Q1. As we look forward, we do have a number of data points.
You know, like everybody else, we're aware of the economy being a little bit murky and it being a little unclear, you know, where the macro is headed. 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. We feel good about how the year's gonna develop.
Terrific. Okay. It looks like free cash flow implied usage may be a little bit better here, the CapEx reduction a little bit more than the EBITDA related. Is that all related to Switzerland? Is there something else within that?
Avi, I'm not sure I follow the question. I know it was cash flow, and then it kind of ended with the changes related to-
$20 million of CapEx, $20 million of CapEx reduction. $15 million of kind of mid-point EBITDA, if I'm thinking about it right, maybe my math is wrong. I just wanna make sure I'm not missing.
Are we talking about adjusted guidance? I'm still not tracking. I think that's what he's saying.
Full year guidance.
Oh, yes. Well, I think it does reflect Switzerland. With respect to the CapEx number, it also reflects reduced anticipated spend in CapEx.
Okay. 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? I apologize if you already said that.
I think our margins, EBITDA margins are adjusted for one-time items, you know, are pretty similar to what we had in 2019, and I think that would be a decent run rate. Again, recognizing that there is a lot of seasonality in the business. Q1 is the softest quarter for us, you know, every year, so it's gonna have the lowest margins because as you flow more dollars through, you know, you get that operating leverage.
Perfect. Thank you. Very, very last one for me. You now have the cash in the door from Switzerland. Any changes to kind of your prior answers on how you think about liquidity? Appreciate the time. Thank you.
No changes. We'll hold that cash on the balance sheet to help improve liquidity. As you know, we will need to reinvest it in the business pursuant to our debt documents and that process continues. No changes.
Thank you, everyone.
Thanks, Avi.
Our next question comes from Steven Cahall from Wells Fargo. Your line is open.
Good morning, this is Daniel Osley on for Steve. Maybe just one for Scott or actually for Brian. The digital conversion has been additive to the top line in America, but how should we be thinking about the margin impact of the growing mix shift, and has your outlook for operating leverage in the business changed at all?
We both can probably answer that one. Yeah, look, I think digital is, we do expect it to be margin accretive. We continue to invest in it. I kinda lost my train of thought on what the second part of the question was. I mean, I think as you think over time, you know, there's a lot that goes into the margin part of the question because the nature of, you know, do you own the ground under the sign versus do you have a fixed lease versus do you have a variable lease, and all of those things come into play. Over time, we do think digital should be a tailwind to margins.
You know, the impact of that tailwind to the question we were answering with Avi is gonna be a little different in a Q4 where we're in our heaviest quarter versus a Q1 where we're in our lightest quarter. When you look at it over time, it should be a tailwind, but probably not, you know, transformational, I guess is how I would answer that.
Great. That was all for us. Thank you.
Thanks, Dan.
Our next question comes from Cameron McVeigh from Morgan Stanley. Your line is open.
Go ahead.
Thanks. Good morning. Could you discuss the geographic mix, large market versus small market, and how that's driving growth and maybe the visibility so far into the second quarter?
I'm gonna take from that you're interested principally in the U.S. Is that a true statement or should I be trying to give you a global answer?
Interested in both, but I'll take the US.
So we are predominantly a top 20 market company. We probably get 80% of our revenue from the top 20 DMAs in the US. As you look internationally, most of our countries are gonna be capital city oriented. It's not only. You know, certainly when you get to bigger countries like France, you know, 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. I'm gonna 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 cities, which are Los Angeles and New York.
We have a very strong presence in Los Angeles, we have a pretty strong presence in New York, principally on Times Square and in the airports. We don't have a lot of street level in New York. Those two markets are the ones that are most impacted by national advertisers. The next, you know, 18 of the top 20 DMAs are gonna be a little bit more idiosyncratic of what an advertiser's trying to do as to whether they come in. 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, you know, 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 gonna go into. Depending what the product is and the campaign, it varies. In Q1, where national was You know, we're impacted by that more than, you know, say, Lamar, which is more focused on small markets and more on low, or local, excuse me, local sales. 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. That's kinda how it plays out. 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. Hopefully that gives you some color.
Got it. Yeah, that's helpful. One other follow-up. You mentioned developing the CPG and 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. Thanks.
When you think about advertising with out-of-home, I think the first thing you wanna 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 gonna be more driven by do they have assets in a place that a person wants to advertise. Like if you wanna advertise in the New York airports, you're gonna need to work with Clear Channel. If you wanna advertise in the New York subway, you're gonna 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 their, that their marketing is working. In CPG, that might be looking at sales in particular retail channels. It might be looking at, you know, 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.
That's what we're getting at, and it's less, it's less that we're necessarily trying to, you know, 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 in out-of-home, if we spent all our 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. Hopefully that makes sense.
Yeah, got it. Thank you.
Our next question comes from Aaron Watts with Deutsche Bank. Your line is open.
Hi, everyone. Thanks for having me on. Scott, any themes you'd call out on pricing and/or occupancy across your U.S. footprint? Any greater pushback on pricing than you might have experienced over the last two years given the macro backdrop?
Thanks, Aaron. You know, it's interesting. We've 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. 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, you know, the next tier, which would be a lot of your major highway, arterial signage, you know, 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, you know, is the brand investing. The place where we're seeing dialogue with people is, "I'm not sure if I'm gonna launch my campaign this month because I'm not sure, you know, what's happening in the demand profile, but I wanna be ready to launch it next month in case, you know, I feel like things are better." 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.
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 gonna be placing those. You know, 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, you know, where you are geographically in a market. Hopefully that gives you some color.
No, that's helpful. Just one other one, if I could, to circle back on some of your earlier comments around expenses and margins. Bridging the first quarter margins 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 a 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?
Yeah. I think it does reflect top line growth through the remainder of the year. I think it also reflects as you roll forward through the quarters, some improvement in expense comparison. You know, as the abatements started to trail off, that will be less of a headwind. It was a headwind in Q1. I think those are probably some of the biggest drivers when we talk about comps as we roll through 23 quarters versus 22 quarters.
All right. 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?
I would say that's a, that's a one-off in terms of magnitude. We obviously have lots of leases that come up and are renegotiated, but I really view the rest of them as a portfolio not materially impacting the business as they come up for renegotiation. That all being said, you know, we still have, you know, certain leases that reflect some COVID relief. It wasn't an abatement, but, you know, the terms of the lease were based on perhaps things that were impacted by COVID. As we get out of COVID and have these comparative periods, that will, you know, that will continue to be, you know, an expense item that we'll have to face.
To answer your question kind of directly, none of that rises to the magnitude of the 1 lease renegotiation that we've identified last quarter.
Okay. Appreciate the time. Thanks, guys.
Thanks, Aaron.
Our next question comes from Jim Goss with Barrington Research. Your line is open.
All right, thank you. 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?
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. You know, in Europe South, that business had not, you know, had not reached, you know, pre-COVID 2019 levels. I think they are climbing back and approaching that in some markets, you know, at or better. I think a lot of it is a COVID recovery story, but I don't wanna, you know, set aside some of the victories that we've had in those countries, particularly in Spain, in terms of new contracts. 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. There, I think you see growth in the Northern European markets, in places like Belgium and Denmark, it's contract wins that help drive the growth. In the UK, it's 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?
Nothing from me. Justin, anything you'd add?
I think that was a very good summary, Brian. That's exactly what it is. There's a bit of COVID recovery coming back in Europe South and in transit. There is underlying growth in other markets. I think Brian got it spot on.
Okay. sort of on a related basis, I was interested in the discussion you just had about, sort of the last, 4 to 6 quarters gaining sort of information about each of the markets. 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? Maybe you've chosen which markets you want to keep versus which markets you might want to sell, and maybe that's shifted around a little bit.
Yeah. 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 U.S.-focused business. But that doesn't mean that, you know, as we make that transition, our number one, two, and three goal is delivering value to our shareholders. You're absolutely right. As we get more data and as the businesses perform, it will give the counterparties more confidence in buying, and it'll give us more confidence in selling. You know, we'll work our way through that. The results that we're achieving there, they're not really a surprise to us. We feel good about the assets we have. We feel good about the teams running them.
The issue is just one of, you know, how do you manage your path through the process that we work through that in an environment where there's a lot of complexity. We're working it. We remain committed to that vision of being a U.S.-focused business. We're not gonna be foolish in, you know, doing transactions that are unattractive.
Okay. One final one. Your assessment of the recession potential from your bottoms up approach appears a little more encouraging than some of the macro observers. Is that a fair take?
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. You know, we've been told, James, since March of 2022 that the apocalypse was n't high, and we've continued to run our business and bring in as much revenue and EBITDA as we can. 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, you know, 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 shared today.
I can't really comment on, you know, our viewpoint relative to other macro forecasters.
All right, thanks. That's helpful.
Our next question comes from Lance Vitanza with TD Cowen. Your line is open.
Hi. Thanks, guys. A quick one on costs, and then I'd like to talk about the domestic M&A environment. On the cost side, just to confirm, I mean, you don't provide quarterly guidance on costs or EBITDA. How did costs and EBITDA in the first quarter fall relative to your internal expectations?
Well, I think, if I take Europe first, I think that there was some outperformance. You know, that's good. You know, the recovery in Southern Europe versus the COVID quarter, the reflection of some new contract wins, exceeded expectations. We were expecting COVID recovery, so maybe it's the pace of the recovery. When you're talking about Europe, you also got to remember Q1 is really small relative to their business. You've got the law of 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, 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, you know, it's coming back. A lot of that growth is really, again, new contracts and the use of our digital networks, particularly in the United Kingdom. I think exceeded expectations in both Europe North and Europe South. We were disappointed in the America. I, I can't say it was completely unexpected. We've known that we had some tough comps. Scott may wanna weigh in on the top line, but I think on the cost side, you know, the abatements rolling off, we knew about. We had some credit charges that we don't think are reflective of the larger environment.
They're, you know, two or three unique situations that, you know, we do not expect to recur. That was a headwind. We have some contracts that are adjusting for the post-COVID environment. I think I would say that, you know, the headwinds in America and airports not unexpected, but, you know, we're disappointed. I'll leave it at that. Scott, I don't know if you have more to say. I mean, I think we talked about. I mean, 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 gonna see improvement as the year builds.
You know, when we worked to put our finger on, the bottom line, driver, that revenue aspect of it, you know, operating leverage, we talk about it all the time because it is a really big thing.
Mm.
most attractive market doesn't deliver the revenue that you're aiming for, you know, that's gonna be a big driver. Again, we tried to be very explicit in the discussion of where those differences were.
Okay. No, thanks. I appreciate the follow-up there. Then 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? Maybe even if you could just sort of remind me rough numbers, how much you spent on US assets in 2022. Then just sort of talk about where or what type, you know, national versus local or rural versus big city, airport versus billboard, just anything with respect to the strategy of kinda like what you're looking for as you continue to tweak the portfolio.
I'm gonna let Brian take the quantity question in terms of spend and whatnot. I'm gonna give him a minute to pull that up. Just in terms of philosophy, it is entirely US roadside. When we talk about acquisitions, it's entirely US roadside that we're doing. That's 2022. 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, you know, a lot of staff. It's generally, you know, if it goes really well, you pick up some easements where you have the ground underneath the sign.
We're looking for things that are accretive to our footprint and accretive to our P&L overall. Brian, you wanna take the quantity question?
Sure. Well, we're gonna report CapEx and acquisitions of about $38 million for the quarter in 2023. We've given guidance on capital expenditures, the range $165 million-$185 million for the full year. In terms of just pure acquisitions, you know, in the quarter we had about $6 million, mostly in America. There was some in Northern Europe and there's been a reduction in Southern Europe. Largely digital in both Northern Europe and America, we've spent the CapEx in the acquisitions, sorry. The acquisitions and they're largely in the U.S. 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 I'll have to be particularly accretive if we continue to pursue it. I think it'll largely be in this smallish tuck-in category, unless the environment changes, and then we can become more aggressive.
Great. Thanks, guys.
Thanks, Lance.
This concludes our Q&A. I'll now hand back to Scott Wells, CEO, for any final remarks.
All right. Thank you very much, and thank you all for the questions. I mean, 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. As we look forward, you know, we're hoping that we will be in a position to provide some updates on our European process in the coming quarters. We appreciate everyone's engagement, the bottom line is that we look forward and we feel good about our business. Have a great day, everyone.
Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.