Q4 2019 Earnings Call
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Good morning, and welcome to Townsquares, you're in 2019 conference call.
As a reminder, today's call is being recorded and your participation implies consecutive such recorded.
At this time all participants are in listen only mode. A brief question and answers section will follow the formal presentation.
If anyone should require upgrader assistance during the conference. Please press star zero on your telephone keypad with that I would like to introduce the first speaker of today's call Claire Yenicay executive.
Vice President. Please go ahead.
Thank you operator, and good morning, everyone. Thank you for joining us today for cats, Chris fourth quarter and year end financial update with me on the call today, our billable fund, our CEO and start 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.
Mr 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 FCC. We incorporate these by reference for this call.
He 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 report 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 effort.
At this time I would like to turn the call over to Bill Wilson.
Thank you Claire 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 had been affected around the world by the kroner virus 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 in short the safety and well being of our employees.
Over the past couple of weeks, we've adjusted our normal operating protocol regarding work from home policies as well as things like no longer having price pick upset 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 life events segment.
As we cancelled 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 to promote live events as well a sporting events and other related businesses cancel or pause there 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 well have a negative impact to our business and we will make the necessary plans and adjustments.
The extensive 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 town square.
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 at 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 a net revenue representing approximately 35% of Townsquares 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 to find 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 probably focus on markets outside of the top 50 cities in the U.S., where we're 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, our very effective and powerful and 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.
And every one of our markets.
As we stated internally all year long whatever mattresses, how high is high.
And we continue to reached new heights throughout the year.
We concluded 2019 on a very strong note.
I'm 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 Steve 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%.
Right.
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 campaigns.
Scheduling and pricing and execute the contract all in real time on their mobile phone or tablet.
We also continue to invest in our data platform called data squared and continued our partnership with analytic out. So we can provide data attribution measurement and insights a broadcast campaigns for advertisers, we launched a new radio show for double XL. The number one a hip hop website and brand that will be syndicated nationwide by compas.
Media.
And we recruited a level talent to many roles across our company, including local market Presidents director of sales.
Air online and sales talent at 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 stronger company today than we were a year ago.
I 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 tell square generated over 150 million digital revenue from our digital products and solutions, reflecting a growth rate of approximately play.
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 consultant apart in our local markets further helping to establish tell square as a thought leader and top advertising and marketing solution.
Provider not just the media vendor.
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 would tell square and supported creative messaging and tactics using our first party data initiative data squared data squared is our data management platform through which we collect first party data from our owned and operated portfolio websites and apps and analyze this all.
I'd Ids, which leads to valuable insights about their behaviors interest 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 and won new business from a local hardware store and texarkana by using data to demonstrate the propensity of our audience members to be hardware shoppers DIY wires and home DIY project Planers identifying three radio stations that fit the profile as well as setting up a target ignite advertising campaign.
We also recently used our data insights and data squared to win $220000 of Pac money and 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 are strong ratings in sales tools and our ability to provide broadcast measurement and quantitative attribution to our partnership with analytic al.
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 by 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 tell square outperform the industry in both local radio spot and total spot sales in our markets that they measure and track.
In 2019, Townsquares local spot broadcast revenue increase 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 is 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. It is the strength of our brands and strong ratings position, which in turn is driven by our on air talent.
Whereas I'd like to refer to them as the original social Influencers.
In the fall 2019 rating period as measured by Nielsen and Eastland ratings agencies 90 of our live in local morning shows we're number one in their format up from 80 number one morning shows in the spring of 2019 rating period.
In 2019, our weekly Cume or otherwise known as weekly total audience was stable at 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 am or 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 30000 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 loud wire Ultimate classic rock and double XL. 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 double XL with almost 9 million you visa 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.
Were 14.5 million Facebook fans over 6 million Instagram followers, nearly 5 million Twitter followers and over 6 million you tube 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 ignites robust growth was a significant force behind our advertising segment 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 as 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, where the entire AD tech and offering is in house and we owned and controlled the customer relationship from end to end from the activation and optimization of CLI campaigns to the detailed in depth client reporting and insights leads to a better customer experience and there for a 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 3650 net subscribers ending the year with approximately 19000 subscribers overall.
This surpassed our initial estimate of 3000 net adds for the year.
As well as surpassing prior years, where in 2018, we added 2950 net ads and in 2017 added 1700 net ads.
We believed that we will continue to deliver strong growth townsquare interactive due to our high quality product offering our growing salesforce 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 Corona virus, 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 believed 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 7500, smbs and each one of our radio markets and thus across our 67 radio markets that totals approximately 500000 smbs.
Yes, we only have 19000 townsquare interactive subscribers as of the ended the year.
With just under half or less than 9500 in our local markets.
Outside of our local radio markets, we estimate our market for Townsquare interactive is 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 unlike sized markets across the United States.
Townsquare interactive net revenue increased nearly plus 27% in 2000 $19 million 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.
It's 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 fine tuned our local live event offering to focus on events that are meaningful to our local communities.
And also how the 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 that.
Revenue, primarily due to streamlining of 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 quote 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 krona virus I do expect our live events net revenue and profit to be materially down in Q1.
I'm, 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 town square as we outperformed many of our local competitors from a broadcast perspective grew market share.
Chair 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 Sue who's going to discuss our 2019 financial results in much greater detail.
Thank you Bill good morning, everyone. As a reminder, over the past several years, we've completed several divestitures and discontinued certain portions of a 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.
Although the financial results that will discuss today are related to continuing operations.
Please refer to 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.
$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 $3.1 million for the full year outperforming previous nine election years.
Q1, Twentytwenty political revenue is off to a good start and we're beginning to see pack 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 a life events business.
In 2019 advertising net revenue increased 2.9% on a pro forma basis as compared to 2000, 85.1% excluding political revenue.
The increase in advertising revenue was driven primarily by our Townsquare ignite advertising solution, which was the largest contributed to our revenue growth in 2019 across the company generated nearly $50 million of net revenue.
Downswing through active net revenue increased by 26.6%.
To $61.5 million as compared to 2018 as our subscriber base grew to approximately 19000 by year end.
This growth was partially offset by 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.
A lighter then segment, which had a small profit decline in 2018 at the greatest increase in margin as adjusted operating income margins for that segment increased by approximately 250 basis points to 19.5%.
For 2019, or adjusted EBITDA of $102.4 million met our previously issued guidance of one or two to one of 4 million and top the guidance. We issued at the start of 2019, which was $94 million to $98 million.
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 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 2018.
The drivers of growth in the fourth quarter, the same themes as the full year.
Growth in our advertising Townsquare interactive, partially offset by declines in life 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.
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 apparent net leverage level is the lowest in the company's history.
Absent other creative opportunities, we remain focused on reducing our net leverage over the course at the next 12 to 24 months.
Last week, the board approved our night quarterly dividend distribution, which would be payable on may 15th 2022 shareholders of record as of April 2nd.
The declared dividend is seven and a half cents per share, which would equate to 30 cents per share on an annualized basis. This represents a dividend yield of over 6%.
Our current share price.
I'd also like dimension.
And you will form 10-K fine as you likely aware. This is the first year that orders will test the report our assessment of internal controls.
Just on 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'd be able to complete or what it within a 50 day extension period.
Upon completion of or what we may recognize a noncash impairment charge for intangible assets and any such non cash impairment charge could be material.
Turning now to where 2020 outlook.
Due to the uncertainties surrounding the economic impact of the kroner virus, we're not providing full year 2020 guidance at this time.
As the situation develops we will evaluate if and when it makes sense to reinstate a 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 a cancellations occur in our advertising business and therefore, we know and expect our 2020 results be negatively impacted.
As a result of the kroner virus 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've experienced this slowdown.
The first quarter, we expect both net revenue and adjusted EBITDA increased by 1% to 2% on a pro forma basis.
The net revenues of 93.9 million to $94.8 million and adjusted EBITDA of 19.3 million and $19.5 million.
The growth rates mentioned, a pro forma for last year's sale of bridal Expos, which generated 726000, a revenue and 354000 of profit in Q1 of 19.
And with that I will now turn the call back over to Bill.
Thanks to and thank you, 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 town square.
Our goals in 2020 are straightforward.
Maybe 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 that has evolved to be a premier local media and digital marketing solutions company.
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 had been affected around the world by the Cronto virus, having worked and bid in lower Manhattan on 911, and the weeks after I witnessed our country come together like never before I'm rise to the challenge.
I'm 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 tell square 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 that every opportunity and with that I'll now open the call for any questions. Operator, Please open the lines.
Thank you at this time, we will be conducting a question answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question Q you May press start to if you'd like to remove your question from the Q for participant using speed.
Your equipment and may be necessary to pick up your handset before pressing star Keith one moment, please while we pull for questions.
Okay.
Okay.
Okay.
Your first question comes online.
Michael Kupinski with noble capital markets. Please proceed with your question.
Thank you congratulations on your solid 2019 result.
It's great that you recognize the opportunity in your digital businesses. It really paid off you can tell them those numbers.
Unfortunately, I dropped off the call I missed a portion of it but I was wondering can you quantify the impact from.
In the first quarter guide.
Have you identified that 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 sit on the call.
Less 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 viz, a viz a live events as we have an 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.
So the guide in essence takes into account, where we believe will end up based on the current conditions.
Gotcha, so but have you identified what the dollar amount.
What would the guide what it did.
If we didnt see these cancellations and so forth.
No we havent.
Okay.
The company have insurance to cover lost business related to the buyers is that something that.
Sure it's recovered.
Hi, Michael Knott Stewart no the company doesn't.
Typically our business cancellation insurance excludes health endemic like the corner buyers.
Gotcha, and then in terms of.
Political how much political is embedded in your first quarter guidance.
About one for Michael which is equal to the 26.
Oh.
Gotcha and then what was the key driver for the increased to 60 million unique visitors in the month with that.
Chris 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 Corona virus actually it was.
Missing 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 web sites, but particularly local I know, Michael you and I've talked about this with the cutback in resources to newspapers.
Yes, and television stations and our size markets over the last number of years Weve townsquare become more and more the place the community turns for news and information about their community and we've seen steady and consistent increase in traffic, but we saw that inc. really accelerate at the end of 2019 as well as the beginning of this year.
Okay and in the interactive business what are you hearing from your customers regarding you know the issues around the violence or are you hearing that.
You know because I would assume that would be pretty sticky, but what are you hearing from them in terms of.
Your outlook in the prospect of them.
We are using much cancellations, there or just suspensions or anything like that yes. So he made you may have missed the 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 and.
Cancellations, so we're talking to our customers every day and part of the theory in the logic and the strategic decision to start this business back in 2012 as it is very sticky, it's obviously somebody's.
Store front on the web.
So we have seen nothing change and we also did mentioned 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 Corona virus.
Okay and part of 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 on the on the impairment charge the prospect that you might have.
And your results, which which where where's that related you know, which business is that related to that so it's not related to any particular business, it's going to be related to our intangible assets down and balance sheet that were put on during purchase accounting years ago. When we acquired all of our markets.
As you know kind of GAAP testing for impairment charges is this long calculated esoteric calculation has nothing to do with our actual ongoing business the charges completely a noncash charge.
We have to do it greenfield evaluation that doesn't let us take it to consider doesn't let any company take into consideration brand loyalty customer relationships.
As you know we took we we acquired a lot of our markets.
No to own fashions. So they were kind of pooling of interests. So these things were acquired and carry over basis back from.
2007 in 2008 when people were paying.
18, and 19 times from marketplaces.
Factor when we took them over and we only paid actual cash equivalents of unified 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.
The first year do we have new waters and they have a different philosophy in a different approach so what kind of going through it but it has no reflection on our actual business revenues are cash.
Gotcha, 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 out our website. It sounds great media dotcom. Thank you again, if you have any questions or follow ups don't hesitate to reach out.
Safe take care.
This concludes today's conference you may disconnect you lines at the time. Thank you for your participation.
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