Good morning, and welcome to Townsquare's Fourth Quarter and Year-End 2018 Conference Call. As a reminder, today's call is being recorded and your participation implies consent to such recording. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. With that, I would like to introduce the first speaker for today's call Claire Yenicay, Executive Vice President. Ma'am, you may proceed.

Thank you, operator and good morning to everyone. Thank you for joining us today for Townsquare’s year-end financial update. With me on the call today are Bill Wilson, our CEO and Stuart Rosenstein, our CFO and Executive Vice President. Please note that, during this call we may make statements that provide information other than historical information, including statements relating to the company's future prospects. These statements are considered forward-looking statements under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from those projections. These statements reflect the company's beliefs based on current conditions, but are subject to certain risks and uncertainties that are detailed in the company's annual report on Form 10-K filed with the SEC and we incorporate these by reference for this call. We may also discuss certain non-GAAP financial measures, including adjusted EBITDA and make certain pro forma adjustments. Such non-GAAP financial measures should be used in conjunction with all the information contained in the quarterly and year-end reports available on our website. At this time, I would like to turn the call over to Bill Wilson.

Thank you Claire. Good morning everyone and thank you for joining us today on our year-end call. Today, I'll discuss our strong financial performance in 2018 and our great start to 2019, as well as provide some operational highlights from the past year. But first I'd like to reiterate how proud I am to lead Townsquare as Chief Executive Officer, a role I stepped into solely in January after serving as Co-CEO with Dhruv Prasad for just over a year. 2018 was a period of significant transformation and reprioritization at Townsquare during which time we were able to drive strong local revenue growth particularly within our digital businesses and solidify our position as a premier local advertising and marketing solutions company. As we shared on our earnings call a year ago, over the course of 2018 we sought to achieve four main objectives. First reorient the company through our local business with the strategy of local first underlying all of our business decisions. Second, reduce the complexity, volatility, and seasonality in our business. Third, invest in our growing and profitable digital businesses and fourth, focus on the product innovation that has been a hallmark of Townsquare since our inception in 2010. We achieved all of these objectives and as a result we are better positioned today than we have been in the history of our company and I am extremely proud of the entire Townsquare team and their hard work each and every day. We ended the year on a very strong note with fourth quarter pro forma net revenue increasing 9.7% over the prior year and pro forma adjusted EBITDA increasing 6.4%. And although we had one of our strongest political years ever excluding political revenue our fourth quarter net revenue increased over 5% on a pro forma basis…

Thank you Bill and good morning everyone. As a reminder in late 2017 and over the course of 2018 we completed several divestitures and discontinued certain portions of our live event business. The results of these businesses have been reclassified to discontinued operations for the current historical period and the results can be found in our annual filing on Form 10-K. All of the financial results we will discuss today are related to continuing operations. In addition the fourth quarter and full year results of pro forma for the acquisition of three radio stations in Princeton, New Jersey as if they had occurred at the beginning of the reporting and comparison period. Please refer to the tables including our earnings release which provide GAAP results and pro forma results as well as our non-GAAP performance measures. Unless otherwise stated all of the financial results discussed will be pro forma for these completed acquisitions. The quarter ended December 31, 2018 net revenue increased 9.7% to $109 million as compared to the fourth quarter of 2017. For the year ended December 31, 2018 net revenue increased 3.7% to $434.2 million as compared to last year. This exceeded our previously issued guidance range of $427 million to $430 million. 2018 was the best non-presidential political year in our history. In 2018 political net revenue was $10 million as compared to $2.4 million in 2017. In the fourth quarter of 2018 political net revenue was $5.7 million as compared to $1.2 million in the fourth quarter of last year. Excluding political, net revenue increased 5.2% in the fourth quarter and nearly 2% in the full year as compared to the same period in 2017. However, that is partly muted by the intentional revenue decline and a live event business that we budgeted for and…

Thanks Stu and thank you to everyone who dialed in this morning. In summary we are extremely pleased with Townsquare's performance in 2018 particularly the fact that our advertising and digital marketing solutions revenue growth increased sequentially each quarter in 2018 as well as being positive about our outlook for 2019 given our Q1 pacing. I hope it comes across to everyone how excited we are about our business today and most importantly our future prospects particularly with respect to our digital businesses. Overall, I am very confident in our Townsquare team and thus the continued organic growth of our core multi-platform local advertising and marketing solutions. I look forward to connecting with our investors as the year progresses addressing any questions that you may have and sharing our story with all those who are interested. And with that we're now happy to open the call for questions. Operator will you please open the line.

Thank you. [Operator Instructions]. Our first question comes from the line Michael Kupinski with Noble Financial. Please proceed with your question.

Thank you and congratulations on a great quarter and the guidance looks great. I was wondering if you can break out the number of FTEs that you have in Townsquare Interactive at this point and how many you have companywide because obviously I would imagine that's a source of investment still?

That's exactly right Michael. First of all thank you thank you for your kind words and as it relates to FTEs in Townsquare Interactive we are just under 500 full-time employees in our Townsquare Interactive division. I know as you know it's based in Charlotte and we've added just over 100 personnel to Townsquare Interactive in the past year alone. The personnel is roughly 125 to 150 sales people, roughly about 150 to 175 support people in terms of client support, and the rest are category experts either design, SEO, reputation management, engineers, things along that nature. But if that gives you a sense of scale it's 500 in total and last year it grew a 100 net.

And what was the Ignite revenue in 2018, I'm sorry if I missed that?

Yeah, we didn't break that out. What we said was we expect 50 million in 2019 and we also said that it was the fastest growing segment of our business last year in absolute dollar terms as well as percentage terms. And since we break out Townsquare Interactive revenue you could get a sense of how much that increased and know that this increased more in 2018. But we didn't give a specific number for 2018.

Got you, and then in pro forma for the fourth quarter for the Princeton, New Jersey stations that were acquired, what was the pro forma revenue and adjusted EBITDA just adjusting for those?

Yeah, we didn't disclose that but it was roughly a 1.5 million of revenue in 2018, I believe. Is that right Claire, or is it a little lower, for Q4.

I don't have Q4 in front of me but Mike our pro forma numbers versus our GAAP numbers in Q4 if that's the only adjustment that you would see from the GAAP to the pro forma numbers.

Okay, got you. Okay, and then can you just kind of obviously your guidance is a little bit better than my expectations for the first quarter and for the full year, I was just wondering if you can just kind of frame for me in the fourth quarter it looks like the local advertising business was doing a little bit better than expected as well, I was just wondering if you can give us some thoughts on maybe the color between local versus your interactive businesses and so forth?

As you know we break it out in the schedule so to your point our local business as we discussed on the call actually improved throughout the year, sequentially throughout the year. Second half of the year was stronger than the first half excluding political and we're seeing that strength continue into Q1. So we are feeling quite confident about the year and therefore the guidance that we provided and then as you as you noted Townsquare Interactive also increased sequentially every quarter in revenue, had our best month in January as I noted. So we're feeling really good about the year, therefore our pacings are strong in Q1 and our guidance as you noted sounds like above what you had. The other piece I'll note is that with Ignite as I mentioned on the call we're benefiting from longer-term contracts so we're laying in a lot more money than we historically have earlier on. So we have better visibility into Q2 than we've had in the past and therefore our confidence in the year.

Great, thank you so much. Appreciate it.

You're welcome. Thank you Michael.

[Operator Instructions]. Our next question comes from line of James Goss with Barrington Research. Please proceed with your questions.

Hi, good morning. This is Pat on for Jim. I was wondering if you guys provided information on the Ignite and Interactive margins being roughly similar to broadcast. How do they compare to -- and how did they compare to broadcast in 2018?

Jim it was roughly the same. The margins are consistent in 2018 than what we expect in 2019.

And then what opportunity you think you guys have to sort of grow margins within those businesses?

I would expect those margins to be pretty consistent for the next couple of years because we're going to continue to invest. As we noted on the call both of those businesses on their own will be $100 million in revenue in three to five years so we need to continue to invest in sales and the support. So the margins that we're experiencing in 2018 and we'll experience in 2019, we expect in 2020 there may be greater margin expansion down the road but that's not what we're focused on right now. We're very pleased with the margins that we have today.

Okay, thank you.

You're welcome. Have a good day Pat.

[Operator Instructions]. Thank you our next question comes from the line of Rachel Arrowood with Macquarie Group. Please proceed with your question.

Hi, congratulation on the quarter. [Question Inaudible].

Yeah, hi Rachel this is Stu. As in the past our priorities for excess cash flow will start off with internal investments; first pay our dividend, service our debt. But internal investments, external investments that fit the criteria of the markets that we like. We're focused on local first in our markets, we've diverted our emphasis away from events outside of our markets. We do have 200 annual recurring events that are fantastic for our markets that we do like. Most of those we create ourselves so we find that it's more economical to build them than to buy them.

Yes Rachel, and this is Bill. I would just that as we noted on our call our current focus is reducing our net leverage and that's what we're focused on through this year. And if there's opportunities for M&A we always evaluate that but our primary focus right now is of reducing that leverage.

Okay, and are you still targeting low to mid four times?

Yes, medium term is mid four and long term closer to four.

Perfect, thank you.

Thank you Rachel.

Thank you. Ladies and gentlemen that concludes our question-and-answer session. I'll turn the floor back to Mr. Wilson for any final comment.

Thank you operator. Thank you everybody for dialing in. We are very proud of our Q4 results but more importantly we're very confident about 2019 and the start that we've had. Lastly, I want to make you aware we released our annual shareholder letter and that's available on our website. So I encourage you to review it. And if you have any questions about our results or anything we discussed on the call or the shareholder letter please reach out with any feedback or questions and again appreciate you for dialing in today. Have a great day.

Thank you, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.