Townsquare Media, Inc. (TSQ) Q4 2019 Earnings Report, Transcript and Summary

Good morning and welcome to Townsquare's Year-End 2019 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 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 of 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 fourth quarter and 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 that 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, adjusted EBITDA excluding political, and adjusted operating income, 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. We do not provide reconciliations on forward-looking statements due to the inability to estimate certain components of forward-looking statements that are not available without unreasonable efforts. At this time, I would like to turn the call over to Bill Wilson.

Thank you, Claire. And thank you all for joining us this morning. Before I begin discussing our company's performance, let me start by sharing that my thoughts and prayers go out to all who have been affected around the world by the coronavirus, and I want you to know that my number one priority is the safety, health, and wellbeing of our team members and employees, their families, our partners, and our local communities. Nothing is more important to me. First and foremost, we are doing what we can in order to ensure the safety and wellbeing of our employees. Over the past couple of weeks, we have adjusted our normal operating protocol regarding work from home policies as well as things like no longer having prize pickups at the radio stations as well as other prudent measures. As you are aware, the situation is evolving daily as is our response to it. The impact we have seen in the month of March has been significant in our Live Events segment as we canceled all remaining March live events earlier this month. We expect to have to cancel many Q2 events as well as we are continuing to monitor the situation day by day and market by market. The impact to our Advertising segment has been less severe to date, but starting last week, we had many clients who promote live events as well as sporting events and other related businesses cancel or pause their advertising campaigns for the month of March. Currently, we have seen no impact to our Townsquare Interactive business. This is an evolving situation which we know will have a negative impact to our business, and we will make the necessary plans and adjustments. The extent of that impact is uncertain at this time. What I can say with certainty and confidence is that, overall, we remain very confident and optimistic about the long-term demand for our products and marketing and advertising solutions. To that point, I will now turn to our performance in Q4 and overall in 2019, which will serve to help demonstrate my continued confidence in our strategy and our business. 2019 was a great year, as well as a transformative year for Townsquare, and I am proud this morning to report that a strong Q4 closed out an even stronger year delivering the strongest adjusted EBITDA growth in a non-political year in our company's history, the lowest net leverage in our company's history and record digital audience growth, which helped propel our digital products and solutions to grow approximately plus 27% to over $150 million in net revenue, representing approximately 35% of Townsquare's total net revenue. The fourth quarter marked the eighth consecutive quarter of net revenue growth for Townsquare, as our local digital solutions continue to drive our business to new heights. It is also worth noting that profit margins increased across all of our segments in 2019 on an ex-political basis as we carefully manage expenses across our business lines. As a result, both our Advertising and Townsquare Interactive segments operated at a strong 31% adjusted operating income margin, and we improved our Live Events margin to 19.5%. Operationally, we also had an outstanding year, thanks to our amazingly talented Townsquare team across the country. Our focus on Local First has defined our go-to-market strategy and our investment decisions all year, and has delivered what we believe is best-in-class revenue and adjusted EBITDA growth. We proudly focus on markets outside of the top 50 cities in the US, where we are very confident that our market leading brands and local marketing and advertising solutions, combined with our customer service, analytics, audience insights, and technology platforms differentiate us from our competition, and most importantly are very effective and powerful in helping local clients achieve their goals and grow their business. This enables us to aspire to be not only the number one radio broadcaster, but more importantly the number one local media company in every one of our markets. As we stated internally all year long, one of our mantras is, “how high is high,” and we continue to reach new heights throughout the year. We concluded 2019 on a very strong note, and I am very pleased to share with you that we beat our net revenue guidance and met our adjusted EBITDA guidance for Q4 and for the year, which Stu will discuss in more detail very shortly. We have now met or exceeded our revenue and EBITDA guidance in each quarter of 2018 and each quarter of 2019. As I noted earlier, the fourth quarter of 2019 also marked the eighth consecutive quarter of net revenue growth. In the fourth quarter, net revenue, excluding political, grew a very strong plus 7% and adjusted EBITDA excluding political increased a very strong plus 14% as compared to the fourth quarter of 2018. The Townsquare team and I are very proud of those results – plus 7% and plus 14%. Our performance in Q4 was a continuation of the very positive performance we achieved throughout 2019. Strong revenue growth in our Advertising and Townsquare Interactive segments, combined with disciplined expense management, which together more than offset the strategic decision to reduce unprofitable or low margin revenue in our smaller Live Events segment. For context, our Live Events revenue was down approximately 16% in both the fourth quarter and the full year, but our profit in Live Events was relatively flat as profit margins grew for both the fourth quarter and the full year. As a result, Townsquare overall delivered very strong financial results with our 2019 full-year net revenue growing approximately 8% ex political and adjusted EBITDA growing approximately 15% ex political compared to the prior year. Our Advertising segment, which includes revenue from our broadcast and digital advertising products and solutions, performed very well, and net revenue grew by approximately plus 6% excluding political in 2019 as compared to 2018, and our Advertising profit margins were approximately 31%. Our strength in Advertising was fueled by our heightened focus on local first, which took the form of investment in local content, sales tools, local management, and local sales talent. For example, in 2019, we developed a proprietary built-in-house technology sales platform called Blueprint, which is a mobile app that allows each of our salespeople to conduct a client needs assessment, show product demos, provide valuable consumer insights, put together a multi-platform advertising campaign with scheduling and pricing, and execute the contract, all in real time on their mobile phone or tablet. We also continued to invest in our data platform called DataSquared, and continued our partnership with Analytic Owl, so we can provide data attribution, measurement and insights of broadcast campaigns for our advertisers. We launched a new radio show for XXL, the number one hip hop website and brand that will be syndicated nationwide by Compass Media. And we recruited A level talent to many roles across our company, including local market presidents, director of sales, on air, online and sales talent, and a number of Townsquare Interactive team members, many of which we were able to recruit from bigger markets because of our culture, our resources, our commitment to the industry, and opportunities for growth. Because of these significant investments, we believe we are a stronger company today than we were a year ago. At Townsquare, we acknowledge and embrace that radio is our DNA. However, we are no longer a traditional radio company. In 2019, as I mentioned earlier, Townsquare generated over $150 million of digital revenue from our digital products and solutions, reflecting a growth rate of approximately plus 27% and contributing approximately 35% of total net revenue. In 2019, over 70% of our broadcast clients bought more than just radio. Our unique and proprietary data insights and sales tools are not typically available to much of our local media competition. And this truly sets our local account executives and marketing consultants apart in our local markets, further helping to establish Townsquare as a thought leader and top advertising and marketing solutions provider, not just a media vendor. At Townsquare, we thread data into our sales process, which provides a strong backbone for our campaigns and client relationships. We are able to give clients the why behind a partnership with Townsquare and support creative messaging and tactics using our first-party data initiative, DataSquared. DataSquared is our data management platform, through which we collect first-party data from our owned and operated portfolio of websites and apps, and analyze this audience, which leads to valuable insights about their behaviors, interests, as well as purchase intent. Our sellers across the country are then able to use this data for prospecting, to generate sales materials and to build effective, high impact advertising campaign proposals for clients. Just recently, a local seller won new business from a local hardware store in Texarkana by using data to demonstrate the propensity of our audience members to be hardware shoppers, DIYers and home DIY project planners, identifying three radio stations that fit the profile, as well as setting up a targeting at night advertising campaign. We also recently used our data insights and DataSquared to win $220,000 of PAC money in our Cedar Rapids market. Given our continued success and growth in digital audience and digital sales, it is worth noting that our core broadcast business has been performing quite well. Our first-party data initiative, our high quality, live and local on-air talent, the dynamic interplay of our broadcast and digital assets and solutions, our strong ratings and sales tools, and our ability to provide broadcast measurement, and quantitative attribution to our partnership with Analytic Owl have all been instrumental in improving our local broadcast performance. We believe the strength and breadth of our digital assets also helps bolster our broadcast performance. As I mentioned before, the majority of our broadcast clients also buy digital solutions from us. Being able to solve a wide range of local advertisers' marketing needs has helped us drive larger wallet share with our client base. According to metrics published by Miller Kaplan, in 2019, on average, Townsquare outperformed the industry in both local radio spot and total spot sales in our markets that they measure and track. In 2019, Townsquare's local spot broadcast revenue increased plus 1.2% compared to 2018, while the overall industry was down negative 2.1% according to Miller Kaplan. And our total spot revenue was flat versus the industry's decline of negative 2.6%. Additionally, on average, we also outperformed the industry in total revenue in these markets, which includes both total spot and total digital revenue. A big part of what drives our industry-beating broadcast performance in these markets is the strength of our brands and strong ratings position, which in turn is driven by our on-air talent, or as I like to refer to them as the original social influencers. In the fall 2019's rating period, as measured by Nielsen and Eastlan ratings agencies, 90 of our live and local morning shows were number one in their format, up from 80 number one morning shows in the spring of 2019 rating period. In 2019, our weekly cum, otherwise known as weekly total audience, was stable and our average time spent listening was strong at over six hours. Our stronger ratings position allowed us to drive higher market share and has allowed us to increase rates with our prime ex political AMR, otherwise known as average minute rate, up plus 2% in 2019. Our strong brands and talented teams also continue to drive very strong web traffic by creating approximately 30,000 pieces of original and compelling content each and every month. In 2019, we averaged 19 million unique visitors per month across our local radio station websites. Adding in our national music websites, including industry leaders like Taste of Country, Loudwire, Ultimate Classic Rock and XXL, our total digital reach averaged approximately 41 million unique visitors per month in 2019. We closed 2019 reaching a company high of over 52 million unique visitors in December, led by hip hop brand XXL, with almost 9 million UVs alone. And in January of this year, we again grew to over 60 million unique visitors to our total digital portfolio in the month. Our programming team, including our on-air personalities, continue to build audience across all platforms since we want to be able to reach audience however they choose to consume local content, whether it be on air online via social platforms, mobile apps, or voice activated speakers. At year-end, we had over 14.5 million Facebook fans, over 6 million Instagram followers, nearly 5 million Twitter followers, and over 6 million YouTube subscribers and over 5 million downloads of our mobile apps across our portfolio. One of the key differentiated digital offerings that we have today and also the fastest growing local client advertising solution in our company is Townsquare Ignite. In 2019, Townsquare Ignite's robust growth was a significant force behind our Advertising segment's strong performance as it approached $50 million of revenue in 2019. We believe that Townsquare Ignite, which as a reminder is our proprietary in-house digital programmatic tech platform, is well on the path to generating $100 million of annual revenue within two to four years. We are confident in Ignite and we believe we have a distinct competitive advantage because our solution, with the entire ad tech and offering, is in-house and we own and control the customer relationship from end to end, from the activation and optimization of client campaigns to the detailed in-depth client reporting and insights leads to a better customer experience and therefore higher client retention rates. Importantly, Townsquare Ignite operates at a similar profit margin to our other products and solutions in our Advertising segment at approximately 30%. Another key digital asset in our portfolio today, and a significant contributor to our strong performance in 2019, is our subscription-based digital marketing and solutions segment Townsquare Interactive. In 2019, Townsquare Interactive added roughly 3,650 net subscribers, ending the year with approximately 19,000 subscribers overall. This surpassed our initial estimate of 3,000 net adds for the year, as well as surpassing prior years, where, in 2018, we added 2,950 net adds and in 2017 added 1,700 net adds. We believe that we will continue to deliver strong growth at Townsquare Interactive due to our high quality product offering, our growing sales force, greater productivity per seller, and most importantly, our focus on customer service and client retention. In the first quarter of 2020, even with the current situation with the coronavirus, we still expect to add approximately 900 subscribers for Townsquare Interactive. We continue to have great success selling Townsquare Interactive outside of our local market footprint, with now approximately 55% of our current subscribers not residing within our 67 local radio market footprint. At the same time, we believe that we are still underpenetrated within our local market footprint as well as within other local markets of similar size and demographics. To illustrate the runway we have in our local markets, on average, we estimate that there are approximately 7,500 SMBs in each one of our radio markets, and thus across our 67 radio markets that totals approximately 500,000 SMBs. Yet, we only have 19,000 Townsquare Interactive subscribers as of the end of the year, with just under half or less than 9,500 in our local markets. Outside of our local radio markets, we estimate our market for Townsquare Interactive as well over 5 million SMBs. Therefore, we believe that our future runway for Townsquare Interactive is significant in our local radio markets, as well as in like-sized markets across the United States. Townsquare Interactive's net revenue increased nearly plus 27% in 2019 to $61.5 million, and we believe we are on pace to achieve our projection of $100 million of revenue within two to four years. And important to note that Townsquare Interactive operated at a 31% profit margin in 2019. As I mentioned earlier, we further streamlined our Live Events business over the course of 2019 with the divestiture of several non-core assets, including our portfolio of music festivals and bridal expos, and we further finetuned our local live event offering to focus on events that are meaningful to our local communities and also have a healthy profit margin. As a result of these decisions and the healthy performance of our core 200 local live events across our 67 local markets, the profit margins of our Live Events segment improved 250 basis points in 2019, from approximately 17% in 2018 to 19.5% in 2019, despite a 16% decline in net revenue, primarily due to streamlining and portfolio. Although it represents a small percentage of our total revenue, our local live events business remains a core part of our local first strategy, continuing to solidify our position as the "town square" in our markets, by delivering high quality and recurring local events to our audience and providing our advertisers with a unique opportunity to connect with their consumers and activate through these events. As I noted earlier, given the coronavirus, I do expect our Live Events net revenue and profit to be materially down in Q1. I am so proud of our talented Townsquare team and the focus and passion in which they are executing our local first strategy and super serving their communities. Because of their dedication and performance, 2019 was a transformative year for Townsquare as we outperform many of our local competitors from a broadcast perspective, grew market share, and achieved very strong digital growth, leading to a strong revenue and adjusted EBITDA growth overall. With that, I'll turn the call over to Stu who's going to discuss our 2019 financial results in much greater detail.

Thank you, Bill, and good morning, everyone. As a reminder, over the past several years, we have completed several divestitures and discontinued certain portions of our Live Events business as we reoriented the business to our local media platform. The results of these live events businesses have been reclassified to discontinued operations for the current and historical periods. All of the financial results that we'll discuss today are related to continuing operations. Please refer to the tables included in our earnings release, which provide GAAP results and pro forma results as well as our non-GAAP performance measures. On a pro forma basis, total net revenue in 2019 increased 4.7% over the prior-year period of $431.4 million, exceeding our previously issued guidance range of $428 million to $430 million. Excluding political revenue, which declined $6.9 million from $10 million in 2018 to $3.1 million in 2019, pro forma net revenue increased 6.6%. Political came in at $1.7 million in the fourth quarter to $3.1 million for the full year, outperforming previous non-election years. Q1 2020 political revenue is off to a good start and we are beginning to see PAC spending heat up. Our revenue growth was driven primarily by both Advertising and Townsquare Interactive segments and was partially offset by a deliberate decline in our Live Events business. In 2019, Advertising net revenue increased 2.9% on a pro forma basis as compared to 2018 and 5.1% excluding political revenue. The increase in Advertising revenue was driven primarily by our Townsquare Ignite advertising solutions, which was the largest contributor to our revenue growth in 2019 across the company and generated nearly $50 million of net revenue. Townsquare Interactive net revenue increased by 26.6% to $61.5 million as compared to 2018 as our subscriber base grew to approximately 19,000 by year-end. This growth was partially offset by a 16% decline in Live Events net revenue, due primarily to the deliberate reduction of the number of live events we produced in 2019. Direct operating expenses in 2019 increased by 4.1% on a pro forma basis compared to 2018. This was driven by an increase in advertising direct operating expense of 2.9% and an increase in Townsquare Interactive direct operating expenses of 23.5%, partially offset by a decline in Live Events business operating expenses of 19%. Profit margins increased across all of our segments in 2019 on an ex political basis as we carefully managed expenses across our business lines. Both our Advertising and Townsquare Interactive segments operated at a strong 31% adjusted operating income margin. Our Live Events segment, which had a small profit decline in 2019, had the greatest increase in margin as adjusted operating income margins for that segment increased by approximately 250 basis points to 19.5%. For 2019, our adjusted EBITDA of $102.4 million net of previously issued guidance of $102 million to 104 million and topped the guidance we issued at the start of 2019, which was $94 million to $98 million. In total, adjusted EBITDA increased 6.7% over the prior year and 14% excluding political both on a pro forma basis. Our adjusted EBITDA outperformance was driven by strong net revenue growth coupled with our disciplined expense management, which resulted in adjusted EBITDA margins expanding approximately 40 basis points to 23.7% in 2019. Turning to the fourth quarter, net revenue increased 2.9% and 6.9% excluding political as compared to the fourth quarter of 2018. The drivers of growth in the fourth quarter were the same themes as the full year – growth in our Advertising and Townsquare Interactive, partially offset by declines in Live Events. Fourth quarter adjusted EBITDA declined 2.8% to $24.1 million compared to the fourth quarter of 2018. Excluding political, fourth quarter adjusted EBITDA increased 13.5% over the prior-year period. At year-end, our total debt balance was $560.5 million. Our total cash balance was $84.7 million and we had revolver capacity of $50 million. Our net leverage as of year-end was 4.65 times based on 2019 EBITDA of $102.4 million. As Bill stated earlier, our current net leverage level is the lowest in the company's history. Absent other accretive opportunities, we remain focused on reducing our net leverage over the course of the next 12 to 24 months. Last week, the board approved our ninth quarterly dividend distribution, which will be payable on May 15, 2020 to shareholders of record as of April 2. The declared dividend is $0.075 per share, which would equate to $0.30 per share on an annualized basis. This represents a dividend yield of over 6% at our current share price. I would also like to mention our annual Form 10-K filing. As you're likely aware, this is the first year that our auditors will test and report on assessment of internal controls. We're still in the process of completing the annual audit of our financial statements for 2019 and we'll be filing for an extension of time in which we have to file our Form 10-K. We expect that we'll be able to complete our audit within the 15-day extension period. Upon completion of our audit, we may recognize a non-cash impairment charge to our intangible assets and any such non-cash impairment charge could be material. Turning now to our 2020 outlook. Due to the uncertainty surrounding the economic impact of the coronavirus, we're now providing full-year 2020 guidance at this time. As the situation develops, we will evaluate if and when it makes sense to reinstate our practice of issuing full-year guidance. As Bill mentioned earlier, we experienced significant cancellations of our March events. And as of last week, we saw cancellations occur in our Advertising business, and therefore, we know and expect our 2020 results to be negatively impacted as a result of the coronavirus. That being said, the first quarter is nearly complete, and thankfully it started off on quite a strong note. But, obviously, since March began, we have experienced a slowdown. For the first quarter, we expect both net revenue and adjusted EBITDA to increase by 1% to 2% on a pro forma basis to net revenues of $93.9 million to $94.8 million and adjusted EBITDA of $19.3 million to $19.5 million. The growth rates mentioned are pro forma for last year's sales of bridal expos, which generated $726,000 of revenue and $354,000 of profit in Q1 of 2019. With that, I will now turn the call back over to Bill.

Thanks, Stu. And thank you to everyone who dialed in this morning. I also want to take the opportunity to again thank the amazing and talented Townsquare team across the country. Our success and best-in-class results are 100% driven by their hard work, effort and accomplishments by the team members in each and every office we operate in. I'd also like to thank each of our stakeholders for their continued support of Townsquare. Our goals in 2020 are straightforward. Be the best-in-class entertaining and informing our audiences and communities and super serving our clients with world class marketing and advertising solutions to grow their business, which in turn will allow us to grow our shareholder value. We hope that you agree that Townsquare is not a traditional media company, but has evolved to be a premier local media and digital marketing solutions company with digital products and solutions that grew over 25% in 2019 and now contribute 35% of our total net revenue with profit margins of 30%. In closing, I want to reiterate that our thoughts and prayers go out to all who have been affected around the world by the coronavirus. Having worked and been in lower Manhattan on 9/11 and the weeks after, I witnessed our country come together like never before and rise to the challenge. I am already today seeing Americans rally around each other and I am confident together we will remain strong and overcome this current challenge. As a preeminent local media company in each of our local markets, Townsquare has the additional responsibility, obligation and civic duty to lead from the front, continue to inform accurately and provide comfort at a time that our communities clearly need and will benefit from comfort. I could not be more proud of our Townsquare team and how each day they are serving their listeners, their clients and their local communities during this time. Our commitment and our obligation has never been greater nor more important to do our job and our part to serve our communities in this great country. As we say internally, stay Townsquare strong. Our future remains bright and together we will emerge from this challenge stronger than ever before. As always, please do not hesitate to call us as I look forward to speaking with our investors at every opportunity. And with that, I'll now open the call for any questions. Operator, please open the lines.

Thank you. [Operator Instructions]. Your first question comes from the line of Michael Kupinski with NOBLE Capital Markets. Please proceed with your question.

Thank you. Congratulations on your solid 2019 results. It's great that you recognized the opportunity in your digital businesses. It really paid off. You can tell from those numbers. Unfortunately, I dropped off the call and missed a portion of it, but I was wondering, can you quantify the impact from the virus in the first quarter guide? Have you identified that bit, the amount?

Hey, Michael. It's Bill. First of all, thank you for the acknowledgement. The guide we gave was revenue up roughly 1% to 2% and the same for adjusted EBITDA, up 1% to 2%. As we said on the call, last – earlier this month, we cancelled all of our March live events, so that obviously had a significant impact on our live event revenue and profit in Q1. And then, as it relates to the Advertising segment, it's been very different by market and we haven't really seen as much of an impact vis-à-vis the live events as we have in advertising, but we did start to see cancellations and pauses at the end of last week, particularly around concerts and events as well as sporting events and other related businesses like gambling given the cancellation of the March madness and other events like that. So, the guide, in essence takes into account where we believe we'll end up based on the current conditions.

Got you. But have you identified what the dollar amount of – what the guide would have been if we didn't see these cancellations and so forth?

No, we haven't.

Okay. Does the company have insurance to cover lost business related to the virus? Is that something that insurance would cover?

Hi, Michael. No. It's Stuart. No, the company doesn't. Specifically, our business cancellation insurance excludes health pandemics like the coronavirus.

Got you. And then in terms of political, how much political is embedded in your first quarter guidance?

About 1.4 [ph], Michael, which is equal to the 2016 cycle.

Got you. And then what was the key driver for the increase to 60 million unique visitors in the month. Was that the virus or were there other content-driven factors that accounted for such a significant increase in the visitors in the first quarter?

Yeah, completely unrelated to the coronavirus, actually was witnessing those trends before that transpired. So, really, it's just the content, particularly the local content that we're creating across our 67 markets as well as our national music-oriented websites, but particularly local. I know, Michael, you and I have talked about this. With the cutback in resources to newspapers and television stations in our size markets over the last number of years, we've at Townsquare become more and more the place that community turns for news and information about their community, and we've seen steady and consistent increase in traffic, but we saw that really accelerate at the end of 2019 as well as the beginning of this year.

Got you. And in the Interactive business, what are you hearing from your customers regarding the issues around the virus? Are you hearing that – because I would assume that it would be pretty sticky, but what are you hearing from them in terms of their outlook and the prospect of them – are you seeing much cancellations there or just suspensions or anything like that?

So, you may have missed it when you dropped off, but we said on the call that as of this morning, our Townsquare Interactive business, to your point, remains quite sticky. We have seen no change in sales velocity on a daily basis nor have we seen a change in cancellations. So, we're talking to our customers every day, and part of the theory and the logic and the strategic decision to start this business back in 2012 is it is very sticky. It's obviously somebody's storefront on the web. So, we have seen nothing change. And we also did mention on the call that we expect, as of today, still to have roughly 900 net adds in Q1, so that business really has not yet to see any impact from the coronavirus.

Okay. And final question, in terms of the impairment charge, which of the businesses are you looking at in terms of the prospect of an impairment charge?

I'm sorry, Michael. I missed that. Say it again.

On the impairment charge, the prospect that you might have in your results, where's that related and which business is that related to?

So, it's not related to any particular business. It's going to be related to our intangible assets that are on the balance sheet that were put on during purchase accounting years ago when we acquired all of our markets. And as you know, kind of gap testing for impairment charges is this long, calculated, esoteric calculation that has nothing to do with our actual ongoing business. The charge is completely a non-cash charge. We have to do a greenfield evaluation that doesn't let us take into – doesn't let any company take into consideration brand loyalty or customer relationships. And as you know, we acquired a lot of our markets in a loan to own fashion. So, they were kind of pooling of interest. So, these things were acquired in a carryover basis back from 2007 and 2008 when people were paying 18 and 19 times for marketplaces. The fact that when we took them over and we only paid actual cash equivalents of five and six times, it made no difference. So, this is going to be – if there is a charge and we're not sure yet, maybe – this is the first year that we have new auditors and they have a different philosophy and a different approach. So, we're kind of going through it, but it has no reflection on our actual business or revenues or cash flow.

Got you. Thanks for that added color. And thanks for taking all the questions.

Thank you, Michael.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Mr. Bill Wilson for closing remarks.

Thank you, operator, and thank you all for joining us this morning. I will just note that we also released our annual shareholder letter which you could find on our website at townsquaremedia.com. Thank you again if you have any questions or follow-ups. Don't hesitate to reach out. Stay safe. Take care.

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