Good morning and welcome to Townsquare’s First Quarter 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.

Thank you, operator and good morning to everyone. Thank you for joining us today for Townsquare’s first quarter 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 expectations, plans and 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 these statements. These statements reflect the company’s beliefs based on current conditions that are subject to certain risks and uncertainties including those that are detailed in the company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC. We may also discuss certain non-GAAP financial measures, including adjusted EBITDA 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, year end and current reports available on our website. We have not provided reconciliations for projected non-GAAP financial measures to the most directly comparable GAAP financial measures because we are unable to estimate certain components of such non-GAAP financial measures 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. I’d like to start this call by sharing that our thoughts and prayers go out to all who have been affected around our country and the world in these unprecedented and challenging times that we are all living in. And then I could not be more proud of how our Townsquare team has adapted and adjusted and as a result grown stronger. Our commitment and our obligation has never been greater to do our job to do our best and to fulfill our responsibility to super serve our listeners, our clients and our local communities. Starting in late March, the majority of our team has been working remotely with the exception of much of our on-air staff, who have been in our studios working hard to keep their local communities informed, entertained and comforted. Beginning last month, we began opening our offices to the rest of our teams when restrictions were lifted in each of the states and counties we operated. Our first and foremost concern continues to be the safety and well-being of our employees and their families and we have implemented numerous improved and safety precautions in each of our offices to ensure this. Any team member returning to their office is doing so 100% voluntarily as it is the employees option to return to the office and any team member who is not comfortable returning is working remotely. Market by market, our goal is to find the intersection of safety and productivity. Our next focus in priority is to keep our communities well informed and entertained. Time and again, radio has proven how vital it is in emergency or at crisis. Listeners tune into the radio either on a traditional broadcast radio or via their…

Thank you, Bill and good morning everyone. As a reminder in 2019, we sold our Bridal Exposition Live Events. Our 2019 results and 2020 growth rates have presented on a pro forma basis for the sale of these events unless otherwise stated. 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. I would like to start by mentioning that we filed for the 45-day 10-Q filing extension related to COVID-19. We expect to file before next week’s deadline and do not anticipate any changes to the results that we are reporting today. In addition, I would like to briefly discuss our annual Form 10-K filing as we filed last week. As you are likely aware, 2019 was the first year that our current auditors, BDO, audited the company. During this review, BDO advised us that we should consider whether the impairment of intangible assets related to FCC licenses as recorded during previously audit periods needed to be restated. BDO determined that not all of our revenue streams are to be included when downing these intangible assets. Only broadcast revenue should be included to support the value of the FCC licenses. Thus TSI revenue, our Ignite revenue and all Live Events revenue were not available to split the value of the FCC broadcast license. This is significantly different from how we valued our intangible licenses and our goodwill and testing for the related impairments since the inception of Townsquare going back to 2010. And after numerous discussions with our current and previous auditing firms, we completed the restatements to our prior year financials and adjusted for additional non-cash impairment expense. In 2019, you will also note that we took a non-cash impairment charge to our…

Thanks, Stu and thank you everyone who dialed in this morning. We want to ensure all of our stakeholders that we are carefully managing through this crisis: first and foremost, by considering the health and well-being of our employees and local communities above all and secondly, by taking well thought out cost reductions to our business that will help mitigate the near-term pain that we expect in 2020. As I stated earlier, our goal is to balance cost reductions with our opportunity for long-term growth. We want to be positioned to emerge from this downturn more quickly and more efficiently than our competitors and we believe that this strategy together with our diversified and differentiated product offering ensures that we will be. To that point, our Townsquare Interactive and Townsquare Ignite teams were not impacted by the 6% reduction in workforce tied to the pandemic. As a large number of those reductions were in corporate roles or support functions, we wanted to ensure that as we come through the other end of this crisis we are well-positioned for continued revenue and profit growth as we demonstrated in 2019. We strongly believe that our liquidity position today is sufficient to sustain our business at the current advertising levels for the better part of the next 3 years even if our revenue does not improve. However, we are prepared for and in fact, we are doing the work necessary to influence for business to recover more quickly. In closing, I also want to again highlight that I could not be more proud of how our Townsquare team has adapted and adjusted and as a result grown stronger during this crisis. Our commitment and our obligation has never been greater to do our job, to do our best and to fulfill our responsibility to super serve our listeners, our clients and our local communities. As we say internally, stay Townsquare strong. Our future remains bright and together we will emerge from this challenge stronger than ever before. Together, we stand. As always, please to not hesitate to call or reach out as I always look forward to speaking to investors at every opportunity. And with that, we will now open the call for questions. Operator, please open the lines.

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

Thank you for taking the questions and I hope you are all well. A couple of questions here. The small to medium size markets seem to weather the pandemic somewhat better than the larger markets. And I was wondering if you can just talk a little bit about what you have seen from your smaller markets versus some of your larger markets if there is a variance in the decline in advertising and as you are coming out in these states reopening, are you seeing better performance?

Good morning, Michael. It’s Bill Wilson. Hope you are well and safe and healthy as well. So on your first question yes, we are definitely seeing differences in terms of size of markets as well as location and how many cases were present in different locations. So as I have said on the call earlier in the New York Tri-State area, for example, so our New Jersey markets in Albany and Buffalo, we were down roughly 53% in total revenue in April and that looks like where we are going be for the quarter roughly. When you look at something like New England, we were down roughly 50% in April. And as we are sitting here in June and states started reopening up over the past 2 to 4 weeks, our pacing improved from negative 50% in April to negative 30% in June, similar in Michigan where we were down almost 50% in April, we are down 48% in Michigan and in June, we are now pacing high about negative 38% in June, so clearly differences by region and what’s most encouraging to us and what we are seeing across the board is as states reopen we are seeing a impact in our advertising business pretty much as soon as they have some finality about when they were reopening as you probably know in the news, some of that information took a long time coming depending on the state, but one small businesses are business in general had an understanding from their state government what the restrictions were going to be for different phases of when they would be lifted. We saw an immediate uptick in business. And then some markets as I alluded to, like Iowa and Dakotas really never saw the depths of what we saw in the…

I appreciate that. And can you talk about the level you mentioned the level of audience and engagement on your website how are you getting CPMs the economy reopens I mean can you just kind of give us a sense of it’s a shame that while your level of the audiences significantly increased and engagement is significantly increased you are not getting that CPMs but as the economies are opening how what are you seeing in terms of level of audience in engagement in those metrics that you mentioned earlier how are you what are you seeing as state stay-at-home orders are now being lifted and are you starting to see CPMs increase there?

Yes, great question. So to your point we are getting the benefit of an increase audience size and I mentioned on the call we are also getting the benefit of increased engagements so people who are coming they are coming more often and they are also consuming more content more articles which is natural in this time but particularly all of our markets they actually don’t even have local television. So people in St. Cloud Minnesota are happy to tune into television station in hour and half away and that could be quite different than what they’re seeing in their local community so we really benefited remarkably in our digital platform from that perspective to your point CPMs definitely declined particularly starting in late March but really evident throughout the month of April and then we have seen that rebound really from about middle of May almost 4 weeks ago and that continues to rebound week over week. I actually track it on a day-to-day basis, but on a week over week basis, we see CPMs increasing continuing. It’s still not yet at the point of where it was prior to, but again that is also changing by location. In Iowa and Dakotas, we are seeing CPMs much greater and as you may have seen, some other digital companies, maybe not broadcasters. We also saw in certain areas like CPAs and form fills for recruitment and other things increase. So CPMs overall decreased CPAs increased. The benefit we had is with the increased number of impressions, because of our page who is increasing that digital decline in advertising as I noted on the call was much less than our broadcast, which obviously I think differentiates us as a company and also positions us well for the rebound.

And Bill, did the company receive any political revenue in the second quarter as political affected by just kind of the lower audience engagement maybe on radio? I was just curious about the how political shaping up for the rest of the year? Are you still pretty optimistic about how that will look for 2020?

Yes, very optimistic. So specifically, I know you asked about Q2, but I will just let you know about Q1 too, Q1, we had $1.3 million roughly in political revenue and to comparing it to 2016 last Presidential, it was $1.4 million, so right there. And then in Q2, we are currently broadcasting about $950,000 in revenue and in Q2, 2016 we did $961,000, so right there. So, we are definitely seeing a donor spend up and we are seeing strength in political. As you know, a lot of the races moved in terms of our time periods, but we are still very confident and optimistic for the back half of the year. As you know Michael, in general, on political years, we will do $10 million in revenue and non-political years, we will do roughly $3 million and we still expect the same here in 2020.

And on your expense reductions, my last question – on your expense reductions, can you talk about a little bit about how much those reductions affect corporate expenses versus your direct operating expenses?

Yes, Stu, I will pass that over to you in terms of the specific questions on the corporate reductions. As I noted, we really tried to limit our workforce reductions, but we only did a workforce reduction of roughly 6%. And that as I also noted on the call, lot of that was focused on corporate and support functions versus local markets or TSI or Ignite so that as we rebound, we believe and continue to be proven out with the data that we are rebounding nicely. And when that will continue, we want to make sure we have world class team in place, although it’s slightly smaller to take advantage of that. Stu, do you want to take the specific question on corporate reduction?

Sure. So, hi, Mike, how are you doing?

Great.

So, we have three basic buckets of expense reductions, headcount related, non-headcount related and then kind of financial and CapEx related. So, we are basically saving about annually $4 million in dividends and about $3 million to $4 million in cap expenditures and so that’s like you said. So that’s not either, the CapEx pertains mostly to markets. Dividends is I don’t know if you call it corporate or just general financing. The headcount reductions on an annual basis of $11 million, I would say, three quarters away is markets versus corporate just based upon the number of people in the markets versus corporate although corporate salaries are a little bit higher. And then the non-head roll and the non-kind of headcount reductions are the elimination of the 401(k) match and travel, digital subscriptions, programming being used by both but most of that is probably markets as well. Hope that answers your question.

Thanks, Stuart. I appreciate that. I will let others ask questions. Thank you.

Thank you, Michael. Stay well.

Thank you, Michael.

[Operator Instructions] The next question comes from the line of Jim Goss with Barrington Research. Please proceed with your question.

Thanks. I would like to pursue a little bit more on what Mike was just asking about the smaller markets that are your province, one of the issues in general with some of the media was the listenership and viewership was up but either availability of – or interest in spending on advertising was down on the part of advertisers because of the businesses being closed down I’m wondering if you have unique issues, say, restaurants, for example, maybe you could look at as an example where do the smaller restaurants that might actually advertise on your stations still feel somewhat constrained or less interested in advertising their reopening and how do you play that issue in terms of their potential demand versus the pricing attraction you might offer to them.

Hey, Jim, it’s Bill Wilson. Good morning. Hope you are well —the questions so I think you asked a couple of different things in there which I will just answer and if I don’t hit on it at all, just let me know and I will follow-up. So as you pointed out with increased audience doesn’t necessarily equate to the advertising demand given things like restaurants and casinos and health clubs and doctors and dentists and furniture stores places that in essence were not open for business for quite some time and then pivoted few things like curbside pickup and some of those businesses didn’t reopen until state government restrictions were lifted for Phase 3 or Phase 4 which as I noted earlier were still waiting for uncertain New York market so we are not – our markets are not all fully open, they’re still phasing in. But we saw really different things as it relates to your specific category around restaurants from an advertising standpoint there was a clear pause in mid end of March and April and that really depended on location so if you are in the New York tri state area beginning of mid March end of March, we started to see cancellations in advertising particularly around broadcast which also hit our digital as it relates to streaming because a lot of times both goes hand in hand because and advertisers agnostic if it’s streaming over a car radio or an app or a computer so we did see that the flipside is when we saw a decrease from restaurants for your example in advertising even though obviously audiences were growing in terms of radio listenership in our digital properties. We did see no decrease really in our TSI or Townsquare Interactive, our digital marketing services, subscription business because if you are a restaurant even though you may be closed you recognize that would be a temporary situation. You may not have recognized how long that would be but you were, in essence wanted a web presence you wanted your website so that you continually update your consumers and it worked out quite well because they were able to communicate and Hey we can do curbside pick up or we can do these things a lot of restaurants in different areas that we saw do deliveries before particularly on our smaller markets that was not necessarily something that was of great value where they did start to do deliveries because people necessarily didn’t want to travel throughout different areas. So, we have definitely seen different scenarios based on location and size and then what we are seeing now is increasing business as states reopen we actually going to plot it day by day and it’s quite consistent and we are able to model that quite nicely so Jim hopefully I answered your question but if you want to follow up just let me know.

I think that just sounds very well. With Live Events with the variable expense and no large gathering type approach, should we view that as essentially a break-even business going forward and basically supportive of the ongoing radio business?

I would say for 2020 that’s what we’re currently modeling. We are being conservative in that we are projecting from a modeling perspective no live events for the rest of this year of any mass gatherings of people so our revenue in Q1 Claire can update me or Stuart can if I am incorrect but I think it was roughly $2.5 million that we had on the books prior to shutting everything down in actually $2.4 million specifically before we shut everything down in March based on just having no incremental revenue moving forward because we are planning on no live events from a modeling standpoint we will be break even on an EBITDA as well as the cash flow basis for the year so that’s really due to our prudent expense management as well as we had the foresight obviously to exit our carnival business and a multi day music festival. So to your point everything is tied to the local brands. They are one ecosystem and we’re able to manage that even with no events moving forward for the rest of the year at a breakeven basis and then my expectation is that we will go into 2021, there will be Live Events again.

Okay. And one last thing as we are speaking the markets are sinking on second wave here and I am just wondering how you think about the risk that some of these issues that have faced us might recur, even if it’s not to the same extreme and the same unfamiliar terrain, as has happened to this point this year?

Yes, we obviously plan for a second wave. Hopefully, that doesn’t happen for the sake of all of us in terms of citizens here as well as businesses, but to be prudent we are obviously planning for all scenarios, including downside scenarios, including a second wave, I feel very good about the playbook and our execution throughout this quarter as I mentioned, we are going to – we are not giving guidance, but we will be EBITDA positive in Q2 even with our advertising business as I noted on the call in April. We are down over 50% in broadcast. So to be able to execute and manage our expenses appropriately as well as I noted I couldn’t be more proud of what the team has done, not only from a financial perspective, but what they did for their local clients and educating them on the stimulus that the government was providing in our size markets, there was not a lot of sources of information or quite honestly, there was a lot of confusion and putting aside what our local account executives were doing in consulting our clients as it relates to how best to maneuver in this time period as it relates to their marketing and advertising budget, what was forefront for our account executives and local leadership was to educate and be a source of information about how to get through the pandemic for that business, including government stimulus. So, I couldn’t be more proud of the team. And I believed as I said on the call and it’s not just throwing out some words, we have really adapted and become better at things that we have talked about for a couple of years and our AEs as well as our on-air talent has superseded all of my expectations. So if a second wave does come, we are prepared to continue to execute like we have over the past 12 weeks. And I think we will maneuver just as well if not better if that were to occur.

Alright. Thanks so much. Hope you are all well.

Thank you, Jim. Appreciate you too.

Thank you. We have reached the end of the question-and-answer session. And I will now turn the call over to Bill Wilson for closing remarks.

Thank you and thank you everybody for taking the interest and the time this morning to hear our commentary not only our Q1 results, but we know as stakeholders and investors you really wanted to get a perspective on what we are seeing in Q2 and then that’s why we gave a lot more detail than we otherwise normally do and we wanted to give you the confidence that we are handling this pandemic, I think deftly and we are rebounding quite nicely as states reopened and we are prepared to continue to do so. And I do want to take the opportunity to just thank the Townsquare team for everything they are doing. And with that, stay well, stay healthy and have a great day.

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