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…

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…

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.