New Media Investment Group Inc. (NYSE:NEWM) Q1 2018 Earnings Conference Call - Final Transcript 2018-05-03T14:00:00+0000 Executives Ashley Higgins - New Media Investment Group Inc., Michael E. Reed - New Media Investment Group Inc., Greg Freiberg - New Media Investment Group Inc., Kirk A. Davis - New Media Investment Group Inc., Analysts Kyle Evans - Stephens, Jason Bazinet - Citi, Operator - Good morning. My name is Essia, and I will be the conference operator today. At this time, I'd like to welcome everyone to the New Media First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions) Thank you. At this time, I would like to turn the conference over to Ashley Higgins. Please go ahead ma'am. Ashley Higgins - New Media Investment Group Inc. Great. Thank you, and good morning, everyone. I'd like to welcome you to New Media's first quarter 2018 earnings call. Joining us today are Mike Reed, New Media's CEO and President; Greg Freiberg, our CFO; Kirk Davis, COO of New Media; and Peter Newton, Chief Revenue Officer of GateHouse Media. I would like to call your attention to the earnings supplement that was posted to New Media's Web site this morning. If you have not already done so, I would suggest that you download it now. Before we begin, please let me remind you that statements made today are not historical facts and may be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. We encourage you to read the forward-looking statements disclaimer in the presentation, as well as the risk factors described in New Media's filings made with the SEC. In addition, we will be discussing some non-GAAP financial measures during the call today and the reconciliations of those measures to the most directly comparable GAAP measures can be found in the earnings supplement. Lastly, I would like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in New Media. The webcast and audiocast is copyrighted material of New Media, and may not be duplicated, reproduced, or rebroadcasted without our consent. With that, I'd like to turn the call over to Mike. Michael E. Reed - New Media Investment Group Inc. Thanks, Ashley. Good morning everyone. Thanks for joining our call this morning. We are pleased to share our first quarter results with you this morning which show strong progress on our organic growth initiatives and M&A activities so far this year. 2018 is off to a great start. I'm going to begin on Slide 2 of the supplement that Ashley referenced a few minutes ago. The highlights I would like to share today also reflect a continuation of the strong progress we reported recently for the fourth quarter. And let's start with one of the most important financial metrics for us and that's organic same-store revenue trends. We continue to see nice improvement in this number. At the beginning of 2018, there was an accounting rule change ASC Topic 606 that went into effect. This impacted how we recognized a portion of our IT services revenue earned through UpCurve cloud. The accounting change has no impact on profit, it's simply net some pass through expenses against revenue. Excluding this change New Media Q1 revenue was down 4.5% to prior year. And that's improved from down 6.4% in Q3 last year and down 5.6% in Q4 last year. So this progress marks our second consecutive quarter of significant improvement in this trend. Our digital revenue in the first quarter was up 23.3% the prior year, we're up 27.8% over the prior year when excluding this accounting change. Also importantly 57% of New Media's total LTM revenue was generated from our stable or growing revenue categories. We continue to see this important percentage grow for us which is a key contributor to our future stability. The main drivers for our organic revenue trend improvement continue to be UpCurve in GateHouse Live and we'll talk about both of those today. UpCurve revenue in the first quarter was $19.4 million and that was up 27% to the prior year. And when excluding the impact of ASC Topics 606 was up 36.3% prior year. For the LTM period revenues for UpCurve have now surpassed $75 million and represent 5.5% of total New Media revenue. We also continue to see very strong growth in our UpCurve cloud business, which was up over 66% in the first quarter when excluding the impact of the accounting change. Beyond our quarterly revenue performance, we also had nice growth in both as adjusted EBITDA and free cash flow this quarter reflecting our focus on expense discipline, successful integration of our acquisitions and investment in new and profitable revenue initiatives. Since our last earnings call, we have remained very busy on the acquisition front. Through May 1, we have closed five deals this year for $112.5 million and we announced the acquisition of the Akron Beacon Journal with a purchase price of $16 million. After we closed this deal expected in the second quarter, our total deals since the start of the year will be about $130 million. Given the strength of our deal pipeline, we completed an equity offering in early April that raised a $110.6 million in net proceeds. Combining the equity raise with the additional $50 million in term loan debt we took on back in February, we positioned ourselves very well to execute on our acquisition strategy. Our net leverage at the end of the quarter was 2.0 times, EBITDA and our liquidity adjusting for the capital raise and our close transactions is $120 million. Pro forma for the closing of our deals this year, we expect our gross leverage to be below our historical target level of 2.0 times. We are also pleased to announce this morning that our Board has approved the first quarter dividend of $0.37 per share which annualizes to $1.48 per year. So 2018 is off to a great start almost all fronts. What I'd like to do now is take a moment to review the New Media portfolio and investment thesis over the next few slides. And turning to Slide 3, New Media operates in a very large number of small to midsize communities across the country. We are the largest owner of daily newspapers in the country and our portfolio is focused on operating in small to mid-sized communities where we have a more robust business opportunity in a less competitive environment. Our newspapers are longstanding and dominant local news sources for their communities, which often leads to our brands being the most recognized in their local markets. We operate both the B2C and the B2B business in each of our markets. The focus of our B2C business is to provide unique hyper local news and information to each of our respective communities. Because of the value of this non-commoditized and comprehensive content, consumers are willing to pay for. This gives our content business long-term viability and sustainability. At the end of the first quarter, we have nearly 2 million paid print subscribers to our daily newspapers and 84,000 paid digital only subscribers. Our reach is now over 23 million people per week and we have over 42 million unique visitors to our website each month. We continue to be recognized for award-winning journalism across the portfolio with two especially noteworthy mentions in the first quarter of this year. We have been named a finalist in the Hillman Prize Newspaper Journalism category for the Sarasota Herald-Tribune's One War Two Races piece. We also had three newsrooms win Sigma, Delta, Chi awards from the Society for Professional Journalists. Congratulations to Corina Curry of the Rockford Register Star who won in Non-Deadline Reporting for Race in the Rock River Valley. Josh Salman, Dak Le and Michael Braga of the Sarasota Herald-Tribune who won in investigative reporting for One War Two Races. And Ken Willis of the Daytona Beach News-Journal who won in the feature reporting category for Lightning a survivor's tale. We are very proud of all of our journalists across the country and we are 100% committed to our local journalism efforts. The strength of our reach into audience driven by our local content create our B2B business opportunity that allows us to provide a variety of advertising and service oriented products to small and medium sized businesses or SMBs. Historically, we have served SMBs via advertising products, but our UpCurve business now offers them premier technology based services to help them grow and sell for their common pain points. With over 5 million SMBs in our markets today we have a very large opportunity to meaningfully grow this side of our business leveraging our unique in-market footprint. And these SMBs have repeatedly told us that they prefer to do business with a local trusted partner. Now turning to Slide 4, let's review our investment thesis which thus far has produced good results for our shareholders. New Media's investment thesis has three primary drivers. One, we own assets that produce strong cash flows. Two, we are able to put that cash flow to work to grow the business organically and inorganically. And three, we aim to consistently return capital to shareholders. The strength, longevity and scale of our portfolio is the backbone to this thesis. Over 80% of our media brands have been published for more than 100 years. Our LTM as adjusted EBITDA is now about $172 million with over 76% converting to free cash flow. With a significant number of acquisitions we have completed dating back to Q4 last year, we believe the LTM EBITDA is currently far below where it will be as we realize the full year EBITDA potential from these newly acquired properties. And I'll touch on this a little more in my remarks later this morning. We also have pretty minor CapEx requirements generally only 1% of revenues and we do not expect to be a significant cash tax payer in the near term due to over $220 million in NOLs shielding our future cash flows. We are committed to growing organically and inorganically as can be seen from our track record of developing new revenue streams such as UpCurve and GateHouse Live as well as through our roughly 1 billion in highly accretive acquisitions. We also continue to leverage our local and regional printing and distribution capabilities to grow our commercial print contracts from third parties realizing extra revenue from our local assets. Lastly, we are committed to having a balanced capital allocation strategy accessing the debt and equity markets when and where it makes sense for growth, while remaining committed to delivering a meaningful portion of our organically generated free cash flow back to shareholders via our dividend. We also maintain a share buyback plan in the event that at any given time if that is the most prudent use of cash we can use it. Executing on these three guiding principles has led to the shareholder returns we have been able to create since our inception in February of 2014. Total returns for shareholders since inception have been 68.8% further total returns for shareholders over the last 12 months were 37.4%. Moving to Slide 5, on our last earnings call, we laid out five facets of our business that are keys to leading us on the path to achieving organic top-line revenue growth. The traditional print revenue declines are not something we are expecting to reverse. Therefore, we are putting our primary investment and focus into these areas in order to continue to diversify our revenue streams moving away from print advertising and positioning ourselves in the future for steady growth. GateHouse Live is our community focused events business, which we have targeted to grow 35% to 45% in 2018 as compared to the prior year. The first quarter is our smallest seasonal quarter for this business and we saw 28.1% growth over the prior year quarter. We hosted 86 events in Q1 with Expo's making up the largest portion of the revenue for the quarter. Our largest Expo was in Columbus, Ohio, a Home & Garden Show held in mid-February, which brought together craftsmen, experts and professionals from more than 350 companies to cover every area of the home. It featured 10 spectacular gardens designed from central Ohio landscapers as well as live programming and do-it-yourself topics and celebrity home renovators like Tom Silva of This Old House and PJ and Thomas McKay from HDTV's Down to the Studs. Our UpCurve, the second line on Slide 5, we are targeting 30% to 40% growth in 2018. The business performed strongly in Q1 of 36.3% to the prior year when excluding the impact of the accounting change. We are very pleased with our continued growth in both the ThriveHive and UpCurve cloud business lines which are the primary drivers of UpCurve today. We are also excited to bring UpCurve and GateHouse Live to our newly acquired properties where we feel we have very strong opportunities for growth. We'll talk more about UpCurve in just a few slides. Promotions saw continued strong growth this quarter increasing 42.3% over the prior year quarter. These are contests and quizzes that we promote in print online and via social media that can be sponsored by several advertisers or customized for a specific advertiser. They generate both brand recognition for sponsors as well as provide access for them to the consumer data of those who engage with the promotion, which can serve as leads for further business engagement. We often run promotions in conjunction with GateHouse Live events, which brings sponsors additional opportunities over the life cycle of the event. We are excited about the growth that we expect from these combined efforts as well as our expansion plans for promotions across our footprint throughout this year. In commercial printing, the first quarter brought us growth of 7.7% on an organic same-store basis to the prior quarter, which was due to a new printing contracts that were closed throughout 2017. We also closed $3.5 million in new annualized printing contracts in the first quarter of this year and currently have a pipeline of over $10 million in additional opportunities that we are hoping to close in 2018. Consumer revenue remains our largest single revenue category which is why keeping it stable is crucial to our overall organic growth goals. The first quarter had modestly weaker performance than we experienced in Q4. However, we remain confident in our ability to hit our 2018 full year target based on investment and initiatives we have in place for this revenue category. As we had mentioned when showing this slide last earnings call, we do not expect for the individual quarters to necessarily match the full year target due to seasonality as well as ramp time from investments, we are making into these revenue categories. We feel very good about how the first quarter turned out relative to our targets for the year. Let's turn to Slide 6 to delve deeper into UpCurves performance. As a reminder, UpCurve is our SMB Solutions business that was previously known as Propel Business Services. As I mentioned earlier, first quarter revenue was $19.4 million up 36.3% prior year if you exclude the impact of the accounting change. UpCurve offers a suite of products and services that bring technology and automation to our SMB customers to support their growth productivity and company wide efficiency. These products can be tailored to the needs of each SMB and integrated a la carte or in various bundles. We have two primary business segments today within UpCurve and those are ThriveHive and UpCurve cloud. Starting with ThriveHive, we had a strong first quarter bringing in revenue of $16.3 million, an increase of 30.4% to prior year. Active customers grew over 21% and our top customer verticals remain the professional services in automotive categories. ThriveHive offers guided marketing services to businesses that help them create an online presence reach consumers via digital marketing avenues and bring marketing automation to the local businesses. We offer a range of products from a SaaS portal for those who want to do-it-yourself to those looking for a complete marketing agency to handle their needs. Turning to UpCurve cloud revenue grew to $3.2 million in the quarter and when excluding the accounting change increased 66.4% to prior year. UpCurve cloud offers technology-related products that help SMBs grow faster, smarter and more efficiently. With our two largest products being Sugar CRM and Google G suite. We are recognized as a top product partner by both Sugar and Google. We experienced over 12% growth sequentially from Q4 in the number of licenses that we are fulfilling and continue to see churn below 10% annually in this category with over 65% recurring revenue. We have a large opportunity to grow UpCurve given our small penetration rate within our markets today relative to the 5 million SMBs that reside there. That gives us great excitement about the prospects of the future and we anticipate UpCurve will remain a key driver of organic revenue performance for many years to come. Turning to Slide 7, let's review our recent acquisition activity which many of you know has been very robust. The start of the year has been a busy one having closed five deals to-date for $112.5 million at an average multiple within our stated range of 3.5 times to 4.5 times to sellers LTM as adjusted EBITDA, so that's before synergies. We also announced two additional deals, an acquisition of the Akron Beacon Journal for $16 million and the sale of our GateHouse Media Alaska properties both of which we are anticipating to close in the second quarter. These deals have all been very attractive ones that we believe will strengthen our overall portfolio and be highly accretive for our shareholders. Our two largest deals this year are the acquisitions from Cox Media Group, the Austin Texas American Statesman and the Palm Beach Florida based Pulse and Daily News for $47.5 million and $49.25 million respectively. Both deals bring us to attractive -- bring us into attractive markets that present great opportunities for both UpCurve and GateHouse Live. We continue to evaluate other acquisition opportunities in the pipeline, but also expect to be very focused on successfully integrating all these new acquisitions as quickly as possible onto our platform. Moving on to Slide 8, you can see the full track record of our acquisitions since our spin. We have now completed over $1 billion worth of transactions. Across these 28 local media acquisitions, we have paid an average multiple of 4.1 times the sellers LTM as adjusted EBITDA. As I mentioned earlier pro forma for our current equity raise and the closed acquisition subsequent to the first quarter, our liquidity stands at approximately $120 million. So we are well positioned to close further acquisitions in 2018. Before I turn things over to Greg, let me touch on Slide 9. Our total returns for shareholders over the last 12 months have been pretty good at about 37%. We believe our business plan is working and that there is plenty of upside ahead. A few facts I'd like to run through with you. LTM EBITDA is $172 million, however, going back to October last year we have completed $250 million in acquisitions at a 4 multiple that is over $60 million in EBITDA before synergies. The decent sized portion of this acquired EBITDA is not yet reflected in this LTM EBITDA number of $172 million. Our current debt level is $417 million and assuming no other impacts we expect that full year impact of EBITDA from our recent acquisitions will result in a reduction of gross leverage below our stated top-end level 2 times EBITDA. So we feel good about our leverage position. We declared a dividend of $0.37 this morning which annualizes to a $1.48 per year. We have increased the dividend four consecutive years. 2018 is off to a strong start from an operational standpoint revenue trends continue to improve Q2 looks good one month into the quarter. Our liquidity is good and our deal pipeline is strong. Given the set of facts, we are very optimistic about the future returns we can create for our shareholders and we thank you for your continued support. Now I'll turn it over to Greg to walk you through the financial performance of the quarter. Greg? Greg Freiberg - New Media Investment Group Inc. Thank you, Mike, and good morning everyone. I'll now be speaking to Page 11 of the supplement. And before I begin, I want to speak about the adoption of ASC Topic 606 revenue for contracts with customers. This standard impacted the revenue treatment of certain UpCurve cloud services to net versus previously being at gross. The prior year results do not reflect this adoption thus a comparison is not on an apples-to-apples basis. So in comparisons to the prior year when speaking about UpCurve cloud, UpCurve digital and total revenue performance, we will exclude the impact of ASC Topic 606. First quarter revenue was $340.8 million up 10.8% to the prior year on a reported basis and a decrease of 4.5% on an organic same-store basis excluding the impact of ASC topic 606. Traditional print revenues were $138.6 million and decreased 12.3% on an organic same-store basis. Within this category, pre-print were down 17%, classified print was down 11% and local print advertising was down 10.4%, all of those metrics are in an organic same-store basis. Digital are consistently growing revenue category increased to $38.6 million or 27.8% excluding the impact of ASC 606. UpCurve is our largest component of digital and generated $19.4 million in the quarter up 36.3% to the prior year excluding the impact of ASC 606. Circulation which comprises over 38% of New Media's total revenues in the quarter was $130 million down 1.6% to the prior year on an organic same-store basis. Digital-only subscribers were up 43.5% to over 84,000 in the quarter. Turning to commercial print distribution and events, revenue in the quarter was $33.6 million up 5.8% on an organic same-store basis. Within this category, commercial printing which by far is the largest component grew 7.7%, while GateHouse Live grew by 28.1%. As adjusted EBITDA was $32.5 million, an increase of $5.8 million or 21.9% to the prior year and free cash flow was $22.5 million, up $5.4 million or 31.2% to the prior year. That $22.5 million represents a 69% conversion rate into free cash flow for the quarter. Continuing to demonstrate that strong and consistent cash flow generation that we produce. Net loss for the quarter was $0.7 million. That's an improvement of $3 million or 81% to the prior year. So this was a very strong operational quarter for us as you can see in the numbers I just shared. On a reported basis, revenue, EBITDA, free cash flow and net income are all up by strong double digits to the prior year. The strong Q1 results are on the back of our strong fourth quarter results we shared just two months ago and we continue to feel good about 2018. We ended the quarter with $67 million of cash on the balance sheet and $39.5 million of available undrawn revolver. Subsequent to the end of the quarter, we raised approximately $110.6 million net proceeds from our equity raise in April. And we have dispersed about $97 million on the acquisitions of Gartner, Austin and Palm Beach. Putting this altogether that leaves us with pro forma liquidity of $120.1 million. We anticipate $20 million to $25 million of additional acquisitions that will close during the second quarter. So we still have substantial liquidity available to continue our pursuit of highly accretive acquisitions. Debt outstanding at the end of the quarter was $417.3 million at an average blended rate of 8.13%. Net leverage against our LTM as adjusted EBITDA is 2.0 times. We continue to find and execute on highly accretive acquisitions. We have net leverage right at our target of 2.0 times and we have significant liquidity and debt capacity available to continue executing on these highly accretive acquisitions. We've reported four consecutive quarters with as adjusted EBITDA on free cash flow ahead of the prior year and this is our second consecutive quarter of improving top-line trends as shown in our organic same-store performance. Operator, we'd like to open the call up for questions. Q & A Operator - (Operator Instructions) The first question will come from Kyle Evans with Stephens. Kyle Evans - Stephens Hi, good morning. Thanks for taking my questions. Michael E. Reed - New Media Investment Group Inc. Hey, Kyle. Kyle Evans - Stephens You guys have made pretty good progress on the consolidation front and as one of your analysts, I have to make a lot of assumptions kind of on that bucket of M&A as we model quarters. Can you talk about some of the fundamental differences between Palm Beach or Austin size deal and the smaller markets like Eugene and Akron and maybe there are material differences there and the seller multiple, buyer multiple, top-line margins. What print ads look like in circulation? And I've got some follow-ups. Michael E. Reed - New Media Investment Group Inc. Kyle, there really aren't any material differences. I mean all the deals we've done this year fall within our guidelines of 3.5 times to 4.5 times the sellers EBITDA. Synergies remain pretty consistent with past performance as well. These are essentially family owned businesses whether it's Eugene or the Cox family. So there's there really isn't. I mean the past performance of our deals is a good indicator of these deals and how they will perform. Kyle Evans - Stephens Okay. Circulation was off a little bit more versus hit the brackets that you guys laid out a plus or minus 1, your release is referring to the potential for growth in circulation this year and next. You mentioned some promotion in marketing that you're doing. Can you give us a little bit more tactical detail on that, how you think that'll phase across the quarters of the year and give us some specifics on unit pricing and unit volume in that segment? Michael E. Reed - New Media Investment Group Inc. Look, it's hard to -- I mean Kyle, it's hard to give specifics because -- we're not going to guide specifically other than the range we have on the spreadsheet here on page 5, which is kind of down one to up one that's our guidance for the category for the year. It's hard to give specifics because we have almost 150 daily newspapers and a couple of hundred paid weekly newspapers. So the revenue trend is the best specific metric you can use to look at it all at down 1.6%. It's a little bit worse than the fourth quarter. We're not worried about the year which I stated on my remarks today because of all the initiatives we have in place. I will tell you the one thing we're doing that that is a little bit different is, we're not as aggressive on pricing right now as maybe we've been in the past and we've always been less aggressive than most all of our peers across the country in terms of pricing and circulation. And that's because we are actually more focused on volume than we are on pricing. And so I would say right now in 2018, we're even less aggressive on pricing because we're more focused on protecting current volumes and figuring out ways to grow new volumes. And that's a major focus for us and it hurt the trend a little bit in the first quarter. Also from a seasonality perspective, we do less special additions which are paid additions in the fourth quarter with all of the holiday activity going on. There are a lot more special additions done across the country and that helps the trend away from just peer pricing and peer volume. And so there's just less of that in the first quarter. We will see more of that pick up as the year goes on especially in Q2 and Q4. And then, the final thing and Kirk Davis is here with me and he's our Chief Operating Officer. I'm going to let him talk about this, but we've hired a great executive that is running a consumer marketing for us and we have some new initiatives in place that we hinted to in the press release around an agency mentality that will help us grow both our print and digital business and Kirk can talk a little bit more just about what we're doing on the agency side. But before I do that the final thing, Kyle is we haven't seen any change in volume trends we're still down in that mid-to-high single digit range in terms of volumes. Kirk? Kirk A. Davis - New Media Investment Group Inc. Good morning. Yes, I would just add to Mike's comment Kyle. We're basically building an internal agency to serve all of our newspapers it's somewhat similar to what we did in Austin, Texas to support our news operations. Digital marketing requires different levels of sophistication. It's a massive opportunity for us. We brought Denise Robbins on Board. She previously worked at the New York Times. And we've developed a plan, we're very excited about to shift resources into serve all of our papers centrally and invest more in digital marketing. So very excited about that and expect to have the first phase of the agency up and running by the end of the quarter. Michael E. Reed - New Media Investment Group Inc. So we're pretty optimistic about our -- being able to achieve our targets for the year Kyle. Kyle Evans - Stephens Got it. One last one now and I will hop back in queue. You mentioned that you were happy with pacing. Can you talk a little bit maybe specifically about maybe segments of the business print ad or other as it relates to the pacing? Michael E. Reed - New Media Investment Group Inc. No. I think it's too early to -- in the quarter to get specific by revenue line or revenue category. What I would say is that, on page 5 when you look at all of the different initiatives we have that are our growth areas. We feel good about Q2 being as good or better than Q1. And then, overall revenue performance in the company where based on the first month looks a little bit better than Q1 as well. So we're continuing to see great momentum. We're continuing to see the initiatives that we're investing in take hold. And it gives us optimism for another good quarter in the second quarter. Kyle Evans - Stephens How much pre-print is left in the business as a percent of total rev? Michael E. Reed - New Media Investment Group Inc. It's about -- yes, it's about $32 million in the first quarter on $340 million of revenue, 9.5%. Kyle Evans - Stephens Great. Thank you. Michael E. Reed - New Media Investment Group Inc. Roughly 10%. Operator - The next question will come from Jason Bazinet with Citi. Jason Bazinet - Citi Thanks. When I think about your firm it seems like you pay out a large portion of your cash flow on the dividend, you command a public valuation that's higher than the private valuation. And then, you often issue equity to give yourself more cash to do the next deal. As I look out at this sort of long economic expansion and the yield curve sort of flattening. I was wondering if you could just in broad terms sort of outlined how you would handle a recession. Specifically is the dividend due to sacrosanct and you would use some of that $120 million of liquidity you talked about to support it. Would you issue equity even if you're multiple was below or at the private market values of 4 times to 4.5 times. Would you stop doing M&A, if we went into a recession. I'm just trying to understand how you would handle the business if the free cash flow generation was less than that dividend? Thanks. Michael E. Reed - New Media Investment Group Inc. Well, a lot of questions there Jason. Long-term we feel like we've positioned ourselves with a capital structure today that will prevent us from having to reduce the dividend during the next recession which we know will come. That's the purpose for the much lower leverage number than some people feel we could have on the balance sheet and some of our peers have on the balance sheet. We have a very comfortable payout ratio. We think that's sustainable through the next recession with a payout ratio more in the 40% to low 40% range. And so, no, you don't know, we wouldn't issue equity to add lower multiples than we're buying newspapers at. We feel like we have adequate liquidity from a revolver perspective to manage through the next recession. And frankly, the acquisitions that we do will get cheaper during the next recession. So it will behoove us to have liquidity available to take advantage of great deals that might show themselves to us during the next kind of financial crisis. So, while we don't see in the near term based on everything we see in the business, the recession on the horizon, we do know it's coming and we think we have the right capital structure, the right liquidity profile and the right capital allocation strategy to sustain the dividend during that recession. Jason Bazinet - Citi Interesting. And when you say think the assets will be cheaper if we go through a period of economic weakness you're using the dollars that you'd have to pay for business. You're saying the multiple you think the multiple will actually good. I don't think the multiple would go up. Michael E. Reed - New Media Investment Group Inc. I don't I think the multiple go up no. Jason Bazinet - Citi Interesting. Michael E. Reed - New Media Investment Group Inc. I think that the multiple would stay where it is or potentially even go down a little bit because if there are no other buyers then the sellers will be price takers. Jason Bazinet - Citi Interesting. Okay. Thank you. Greg Freiberg - New Media Investment Group Inc. Hey, Jason. Sorry, its Greg. Little bit toward Mike said the one real difference between us and the private market value that he cited. We've really done and intend to focus around investing in the growth. And you see that every time we have an earnings call and the level of detail that we give for the initiatives and the performance of how we're doing. And I do think that's a big driver for that valuation difference, but I also think that's a big driver for the confidence we have that our business is going to generate hit that inflection point and not experience some of that stress that I think the other in our peer group would is performing in that manner. Jason Bazinet - Citi Very interesting. Thank you. Operator - There are no further questions at this time. Are there any closing remarks? Ashley Higgins - New Media Investment Group Inc. No. Not today. Thank you very much for your help. Hope everybody has a nice day. Operator - Ladies and gentlemen thank you for participating in today's conference call. You may now disconnect.