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Operator
Good morning and welcome to Town Square's year-end 2021 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. With that, I would like to introduce your first speaker for today's call, Claire Yenneke, Executive Vice President.
Claire Yenneke
Thank you, Operator, and good morning to everyone. Thank you for joining us today for Town Square's year-end 2021 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 filed with the SEC. We may also discuss certain non-GAAP financial measures, including adjusted EBITDA, adjusted net income, and adjusted operating income, which we may refer to as profit in our remarks. 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. I would also encourage all participants to go to our corporate website at www.townsquaremedia.com and download our investor presentation, as Bill will reference some of those slides during our discussion this morning. In addition, we also issued our annual shareholder letter today, also available on our website, which we encourage you all to read. At this time, I would like to turn the call over to Bill Wilson.
Bill Wilson
Good morning, and thank you for joining us. I'm proud to share some very important updates with you today. This morning, there are five key things that I'd like you to know. One, our strong conclusion to 2021. Two, our great start to this year and our 2022 full year guidance. Three, our new financial reporting segments. which provide more detail on our strong digital businesses. Four, that our board of directors has approved up to a $50 million stock buyback program. And five, that we have fully transformed to a digital first local media company. And that Town Square is the only local media company focused principally on markets outside the top 50 cities in the United States. As we sit here in March, 2022, I can truly say that Town Square has come a long way from where we began in 2010 as a pure radio broadcaster. If you would join me in turning to slide number five, you will see that the transformation we have executed is pretty remarkable. We started in 2010 with 60 local radio stations, less than 1 million unique visitors to our websites, no social or video platform to speak of, and nearly all of our revenue and all of our profit came from terrestrial radio spot sales. Fast forward to today. We now own a portfolio of over 340 local and national news and entertainment websites and mobile apps that generate over 60 million unique visitors on average per month. Our social platforms have over 40 million followers, and our YouTube platform has over 3.5 billion lifetime views. We have organically built a subscription digital marketing solutions business that now supports approximately 26,800 subscribers. We have also organically built a digital programmatic advertising platform that has access to more than 250 billion impressions per day. We have created a data management platform with rich and valuable first-party data for 15 million user profiles. And our 60 radio stations have grown to 322 local radio stations. Today, nearly 50% of our revenue and 50% of our profit comes from our digital solutions that did not exist a mere decade ago. You don't have to look closely to see that we are no longer the radio broadcaster of 2010, and that we have fully transformed to a digital-first local media company. However, many investors continue to perceive us as a radio company. And while it is true that we have many market-leading local radio stations, radio is only a component of our business. We view local radio as an extremely valuable asset with significant and attractive cash flow properties, unparalleled consumer reach, and an important and trusted local connection to our audience, and thus a component of our multi-platform diverse local media business. But radio is not our primary growth driver, nor has it been for some time. Our growth engine has been digital, and it will be digital for a long time. And as our company has evolved, so has our reporting structure. So you can see on slide seven, I'm very pleased to share that we have resegmented our business to provide much more greater clarity and information on our digital businesses to our existing and prospective investors. Importantly, this resegmentation will highlight the profit characteristics of our digital platform, which is essentially equal to our broadcast platform, each with profit margins of approximately 30%. It is our hope and our expectation that given this new more detailed information, Town Square will begin to get credit for being a digital first local media company and will be afforded a sum of the parts valuation that gives credit to our digital assets, credit which to date we have not yet received. Before I share our 2021 results with you, I do want to highlight an important fact. Town Square is the only local media company of scale focused principally on markets outside of the top 50 in the United States. Not just the only radio company, the only local media company of scale focused principally on markets outside the top 50. This is a vital differentiator for our company and our team, translating directly into our strong financial results. As outlined on slide eight, These markets outside the top 50 offer a more competitive landscape with very limited focus from larger media players, digital marketing solutions providers, and digital programmatic providers. These markets are all too often starved of high-quality local content. In many of our markets, we are one of the very few creators and suppliers of local news and information. As traditional news outlets like local television stations and local newspapers have shrunk, shut down, or never even existed. Since 2004, approximately 2,000 newspapers have closed in the United States, a majority in our size markets. Frequently, Town Square has filled that void by producing local original content at scale, and today we are one of the largest publishers of local content in the United States, and our digital audience has grown tremendously. This in turn provides us with an incredibly valuable first-party data that we not only use for advertising on our owned and operated brands, but we also leverage for our digital programmatic solutions. Being a publisher at scale provides a meaningful competitive advantage to our digital programmatic solution. These competitive dynamics combine with our investment in world-class technology and infrastructure to create best of breed products and services have contributed to our strong financial performance. I'm proud to announce that our year-end financial results exceeded our expectations and also set company records. Please turn to slide 18, which highlights that our 2021 net revenue increased a very strong plus 13% year over year to $418 million. And more importantly, is 99.8% of 2019's net revenue excluding live events. As a result, we exceeded and beat our previously issued revenue guidance. 2021 adjusted EBITDA of $105.1 million increased plus 69% year-over-year and exceeded and beat our previously issued guidance and was an all-time company record. Importantly and impressively, 2021 adjusted EBITDA of $105 million was also 3% higher than 2019 EBITDA. TownSquare is one of a few select companies with radio assets that has returned to 2019 adjusted EBITDA levels, which we first achieved back in Q4 of 2020 and in each and every quarter of 2021. That is yet just another reason why we should not be valued as a radio company. In 2021, our total digital revenue increased plus 19% to $199 million, or 48% of our total company net revenue. And our total digital profit increased plus 29% to $61 million. That equates to a profit margin of 31%. which, as you can see on slide 7, is approximately equal to our 2021 broadcast advertising profit margin. I'm excited to share with you that we are raising our outlook for future growth of our digital business. If you turn to slide 9, you'll see a clear argument for why being a digital-first local media company is the obvious path. In 2021, radio advertising was less than 10% of all advertising spend in the United States. according to industry research, while digital advertising contributed over 50%. And by 2025, digital advertising is expected to make up close to 75% of all advertising dollars in the United States. Similarly, digital revenue will represent the majority of our company's revenue in the very near future. We had previously forecasted that we would reach $250 million of digital revenue by 2024. but we now believe we will easily eclipse that goal. In 2024, we are confident that our digital business will grow to $275 million from $199 million in 2021, representing an annual growth rate in the double digits. Our new subscription digital marketing solutions segment is the same as our previous TownSquare Interactive segment. TownSquare Interactive, presented on slide number 13, had a record-setting year, adding the most net subscribers in our history with approximately 4,050 net subscriber additions in 2021. Since we organically developed and launched Town Square Interactive in 2012, its revenue has grown double digits versus the prior year each and every quarter. even during the worst of COVID 2020. And since reaching profitability in 2014, profit has grown each and every quarter as well. In 2021, Town Square Interactive's net revenue increased plus 16% year over year to approximately $82 million. And profit also increased plus 16% year over year to $24 million, a 30% profit margin. This business is a significant differentiator versus other local media companies because it is a monthly recurring subscription-based model. What's most exciting about our Town Square Interactive business is that there is still so much upside to capture. On our previous calls, I walked you through the addressable market for Town Square Interactive, which is outlined again on slide number 14. I won't go into the details again, but it is worth noting that the total addressable market is $32 billion, which translates to just under 9 million customers. The takeaway is we are just getting started. With approximately 26,800 subscribers at the end of 2021, and with increasing net ads each year, we are still only capturing a small fraction of the addressable market today. As part of our growth plans for Town Square Interactive, we plan to open a second Town Square Interactive location in the Western United States in Q2 2022. We're actually in the final stages of negotiating a lease currently. This gives us a number of benefits. It will allow us to better serve our West Coast clients with sales and service operating in the same time zone. But most importantly, it will greatly expand our talent pool. One of our company's biggest investments every year is in our sales and service personnel, so being able to tap into West Coast employment market will be very, very beneficial. We're often asked about the expenses associated with opening this second location, and they are largely limited to additional personnel and the new lease. However, we are very well versed in profitability scaling of Town Square Interactive, as we have already done with our existing operations in Charlotte. starting from scratch and building to more than 650 employees, 26,800 subscribers, and $82 million of revenue while maintaining strong, profitable margins. Our new digital advertising segment, marketed externally as Town Square Ignite, is presented on slide 15. This segment includes our owned and operated digital properties, our proprietary digital programmatic advertising platform, and our in-house demand and data management platform collecting valuable first-party data. We have experienced very strong growth in this segment, supported both by general industry trends and our investment in digital personnel and product development, plus our commitment to creating original local content. For example, we believe one key to our success is that we have made significant investments in organically building our own digital platforms. including our in-house content management system and our in-house programmatic solution, which leads to better customer experiences and therefore higher client retention rates. In addition, the investment in our original content strategy has contributed to a larger and more engaged online audience that is spending more time consuming content on our websites and mobile apps, and a stable radio audience both total number of listeners and, importantly, time spent listening. In 2021, our online audience grew to an all-time high of 60 million unique visitors per month, driven by local relevant content created by our local DJs, who are also digital content creators and are truly the original social influencers. Our investment in our digital products and personnel have translated into strong financial results. In 2021, digital advertising revenue increased plus 20 percent to $117 million, and digital advertising profit increased plus 40 percent to $37 million, a 32 percent profit margin. Importantly, the success of our digital platform does not come at the expense of our broadcast platform. The opposite is actually true. The better we do digitally, the better we do in our local broadcast business because the digital solutions we provide to local SMBs encourages them to trust us with their broadcast marketing budget as well. You can see that clearly in our Miller Kaplan local broadcast advertising results on slide number 19 as we continue to gain market share in local radio advertising. In 2021, we outperformed the industry in local radio spot sales by 9.1 percentage points and total spot sales by 4.2 percentage points in our markets at Miller Kaplan Measures. Additionally, last year, Town Square also outperformed the industry in total revenue, which includes both total spot revenue and total digital revenue by 5.1 percentage points. In 2021, our broadcast advertising revenue increased year-over-year by plus 7%, and more importantly, plus 14%, excluding political revenue. And our broadcast advertising profit increased plus 64% year-over-year, as 2021 margins recovered to 31%. Our digital solutions benefit our radio solutions, and our radio platform and reach supercharge our digital solutions. In the long term, we view radio as an extremely valuable asset with significant cash flow properties, unparalleled reach, and an important local connection to our audience. But it is a mature cash cow business, and our growth will continue to be driven primarily by our digital platform and solutions for local businesses. I also wanted to point out that we generated $61 million of cash from operations in 2021 which we applied to significantly accretive share repurchase and refinancing of our debt, with the remainder of our cash held on our balance sheet. We ended the year with 4.7 times net leverage, a significant year-over-year improvement of 2.7 times. And we continue to make reducing net debt a priority. In fact, Stu will update you on a potentially advantageous refinancing opportunity that will be available to us shortly in February 2023. Our success is 100% tied to the effort, hard work, and passion of our incredible Town Square team, who have fully embraced our transformation to a digital-first local media company, and who super serve their local communities and their local businesses each and every day. In fact, at the start of the year, we launched an employee stock purchase plan so that every employee has the opportunity to have a stake in our company's success. In addition, I'm pleased to share that as of January 1st, 2022, we have reinstated the 401 company match, which was paused in 2020 in response to the pandemic. Now, I'll turn the call over to Stu, who will break down our strong results and our outlook for 2022 in much greater detail for everyone. Stu, take it away.
Miller Kaplan
Thank you, Bill, and good morning, everyone. As a co-founder of Town Square, and our Executive Vice President and Chief Financial Officer, I am so incredibly proud to share the company's financial results with you this morning. As Bill noted, over the past decade, we have successfully transformed the traditional heritage local broadcast business into a robust and strong digital-first local media company. I have to say it is so incredibly gratifying to see our initial vision come to fruition, and yet we know we are really just getting started. COVID clearly presented some challenges to our business in 2020, but it also served to accelerate our transformation into a digital first local media company. And I'm so proud that we set an all time company record high for adjusted EBITDA in 2021. More importantly, however, is where we are going over the next decade. And to that point, we're excited to resegment our financials to provide even more granularity and clarity on our digital business. We ended the year with strong fourth quarter financial results that exceeded our original expectations, driven by strong performances across our segments. In total, fourth quarter net revenue increased 1.9% over the prior year period to $110.6 million and increased 9.8% excluding political revenue, a more relevant comparison. 2021 net revenue increased 12.6% over the prior year, and plus 16.6% excluding political to $418 million, beating our guidance of $415 million. Fourth quarter adjusted EBITDA declined 5.4% year-over-year to $25.6 million due to the impact of not having the high margin political revenue in 2021. Excluding the impact of political revenue and its associated 85% margin, adjusted EBITDA increased 26.3% versus the prior year. 2021 adjusted EBITDA increased 69.2% to $105.1 million, which exceeded our guidance of $104 to $105 million and set an all-time company record. And as Bill mentioned, our 2021 adjusted EBITDA exceeded 2019 EBITDA by approximately 3%. We believe our new segmentation properly reflects our current business and strategic focus and has the benefit of providing investors with greater clarity to the growth and profitability of our digital business and the stability of our broadcast business. Our subscription digital marketing solution segment, TownSquare Interactive, delivered another strong quarter with strong net revenue, profit, and net subscriber growth. In 2021, net revenue increased 16.2% as compared to the prior year. This revenue growth was supported by an all-time high net subscriber additions of approximately 4,050 in 2021. This compares to approximately 3,750 net subscriber ads in 2020. Town Square Interactive's 2021 profit increased 15.7% as compared to 2020 to $24.4 million. Town Square Interactive's 2021 profit margin was approximately 30% in line with 2020 profit margins. In the year 2021, digital advertising net revenue increased 20.5% as compared to the prior year. Digital advertising profit, which is being broken out for the first time in our history, increased 40% year-over-year to $36.9 million in 2021. Importantly, our digital advertising margins are roughly equal to our broadcast advertising margins which were 31.6% in 2021. In total, digital revenue, composed of our subscription digital marketing solution segment and our digital advertising segment, increased year over year by 18.7% in the full year. At $199 million for 2021, digital represented 48% of our total net revenue. We are well on our way to our goal of generating $275 million of digital revenue in 2024. In 2021, broadcast advertising net revenue increased 6.6% versus the prior year and 13.9% excluding political revenue. For reference, in 2021, we generated $3.5 million of political revenue as compared to $16 million in 2020's record-setting political year. In 2021, broadcast advertising profit improved materially, increasing 63.6% to $67.5 million. This is due to our continued revenue recovery as well as the decline in 2021 broadcast advertising expenses of 8.1% year-over-year. 2021 broadcast advertising profit margins of 31.4% exceeded both 2020 and 2019's profit margins. We not only fully recovered our broadcast margins of 2019, but expanded upon them as well. In addition to our three reporting segments, which we just walked through, the remainder of our business, which is live events, is reported in the other category. In 2021, the other category had revenue of $4.5 million, which was an 80% increase from 2020 levels, but still only 26% of 2019's revenue. We had other profit of $801,000, which was an increase of 234% over 2020 levels, but still significantly below 2019 levels. However, our live events were operated at a collective profit margin of approximately 18%. As a reminder, live events are not a material part of our business, nor a growth vehicle for our company, but rather act as a profitable marketing arm of the company, providing another way for us to connect with our audience and communities, and allowing advertisers to do the same. In a normal operating year, live events revenue and profit is less than 5% of our total company revenue and profits. This is why we now report it in the other category. We are proud of our work in reducing corporate expenses, which in 2021 declined 8.7% year-over-year, which is 14%, below 2019 levels. The decline in corporate expense is primarily due to a decline in professional fees. Fourth quarter interest expense increased $2.4 million, or 30.6%, and 2021 interest expense increased $8.4 million, or 26.8% as compared to the prior year. This was due to the issuance of our $550 million, 6.875% secured bonds in January of 2021, which entirely replaced our previously outstanding debt. 2021 net income increased $99.3 million to $18.8 million, or 79 cents per diluted share, as compared to a loss of $80.6 million, or a loss of $4.46 per diluted share in 2020. We'd like to remind you that any benefit or provision for income taxes included in the face of the income statement is for GAAP financial statement purposes only. We maintain significant tax attributes including $172 million of federal NOL carry-forwards and other substantial tax shields related to the tax amortization of our intangible assets. We continue to believe that we will not be a material cash taxpayer until approximately the year 2026. In 2021, we generated positive cash flow from operations of approximately $61 million, a very strong $30 million increase from the prior year. We also used approximately $80 million during the first quarter to repurchase 100% of Oaktree Capital's equity interest in Town Square in a significantly accretive transaction, and we incurred approximately $14 million of fees associated with the issuance of our senior notes. We continue to carefully manage our capital expenditures, which declined 17% year over year to $12.4 million. In total, we generated $19 million of cash in the fourth quarter ending the year with $50.5 million on the balance sheet. Although this represents a $33 million decline from our December 31, 2020 cash balance of $83 million, if you adjust for the accretive Oaktree buyback and the fees paid in the refinancing, we would have generated approximately $63 million. With total debt of $550 million and a 2021 adjusted EBITDA of $105.1 million, our net leverage has declined to 4.75 times, a very significant and meaningful step down from the net leverage of 7.45 times one year ago. We are focused on continuing to reduce our net leverage with a target of four times, which we believe is readily achievable by the end of this year. As Bill mentioned, in February of next year, we will have the ability to refinance our $550 million, 6.875% senior secured notes, when the two-year no-call period expires. If market conditions permit, we believe it will be possible to replace our outstanding senior secured notes with a term loan facility. We believe this capital structure will greatly benefit our shareholders as it could result in a materially lower annual interest rate and afford us the ability to prepay the loan at any time. Aside from reducing net leverage so that we may successfully execute a refinancing next year, Our capital allocation priorities for 2022 will be to invest in our local businesses through organic, internal investments, and or compelling and prudent acquisitions that support our revenue and profit growth. Any potential acquisitions we would consider would complement our existing business and would likely be bite-sized so as not to interfere with our deleveraging plans, which is our primary balance sheet objective. In addition, we're pleased to announce that our board has approved a stock repurchase plan which authorizes the company to repurchase up to $50 million of stock over the next three years. We believe that it is prudent to have a stock repurchase plan in place so that we can advantageously buy a stock when it's trading below value, which we sincerely believe it is trading today. However, any amount that we spend on a stock repurchase would have to be balanced with our goal of deleveraging, as our first priority after internal investments is to set ourselves up for a successful refinancing next year which involves hitting our four times net leverage target. Turning to our first quarter outlook, we expect first quarter net revenue to increase to be between $97.5 million and $99.5 million, which is a 10% to 12% increase over prior year, and importantly, above 2019 levels by 4% to 6%. We expect first quarter adjusted EBITDA to be between $21 and $22 million, a year-over-year increase of 4% to 9%. For 2022's full year, we expect net revenue to be between $460 million and $475 million, representing a year-over-year increase of positive 10% to positive 14%. And again, this is above 2019 levels by 7% to 10%. We expect adjusted EBITDA to be between $115 million and $120 million for the full year. This is a year-over-year increase of 9% to 14%. We're extremely proud that we're back on track and lifting our company to new heights. And with that, I will now turn the call back over to Bill. Bill?
Bill Wilson
Thank you, Stu. As always, great job outlining our strong financial performance. And thank you to everyone who dialed in this morning. We greatly appreciate it. As a quick recap, we outperformed our net revenue and adjusted EBITDA expectations in 2021. And we set company records on many fronts, including the highest ever adjusted EBITDA, the most talent square interactive net subscriber ads, and an all time high digital audience. Our digital platform, now more evident to investors due to our new segment reporting, increased plus 19% to $199 million of revenue, contributing 48% of our company's total net revenue and 47% of our total profit. And our digital revenue is on track to grow to $275 million in three short years. Significantly, our 2021 adjusted EBITDA exceeded 2019 levels by plus 3%. And going forward, our revenue will be above 2019 levels as well. Our net leverage is now well below five times, and based on our current guidance, we will be at four times by the year's end, with an opportunity to refinance within 12 months that could lead to meaningful cash interest savings. As always, I'd like to thank and give all the credit of our strong performance to our Town Square team across the country. who fully embraced our mission and were instrumental in our transformation from a traditional broadcast operator to the digital-first local media company that we are today. As we say internally, how high is high? And with that, operator, please open the call for any questions.
Operator
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Jim
One moment, please, while we poll for your questions.
Operator
Our first questions come from the line of Michael Kupinski with Noble Capital Markets. Please proceed with your questions.
Michael Kupinski
Good morning, and first of all, congratulations on your results, and also thank you for your increased transparency on your enhanced segment reporting. A couple of questions. You gave a lot of information, so I'm sorry if I missed this. You gave the number of subscribers for town square interactive at 26,800 in the full year net ads of 4,050. What was the net subscriber ads in the last quarter? I suppose I could go back and do the math, but what, what do you have that number?
Bill Wilson
Yeah, it was roughly 850. Uh, Michael, good morning. It's Bill. Good to hear your voice. And that is consistent in essence. If you look at what we've done in Q4 in 2018, 19, 20, uh, that is roughly what we've done as well in those last, uh, four years in Q4. So the 850 and that, uh, as we noted on the call set an all time record of 4,050 net subscribers for the year, which we're very pleased that, you know, 16% year over year growth, 82 million in revenue, 24 million in profit. And as Stu said, we feel like we're just getting started and we're opening that second location in Q2.
Michael Kupinski
That's terrific. A number of media companies, including some newspapers appear to be, um, investing in their digital solutions in some smaller markets. Are you seeing any increased competition in some of your markets, or has the competitive landscape largely remained unchanged?
Bill Wilson
The competitive landscape in our size markets has remained unchanged. There's always been competition. There's been other local media companies, particularly on the TV side, as well as the legacy print size, as well as digital agencies. And that remains, but we're not seeing increased competition. And As we said, our goal at the end of the day is to be the number one local media company serving markets outside the top 50. And we feel with our national scale and in-house solutions, we are best positioned to be the number one local media company with digital leading the way. So there is competition, but there's always been competition. I think one of the clear differentiators for us is all of our solutions are in-house. So everything from Town Square Interactive, the code-based all of the tools and technology. We've built that from the ground up. And if you look at our O&O side of our digital advertising, it is such a competitive advantage. You know, we talked about it on previous earnings call, but I think we're going to do a more deliberate job of describing it moving forward because the first party data allows us to have such tremendous consumer insights on our audience that we not only apply our to our digital programmatic platform, but we also apply those insights when we're selling broadcasts. So it's really benefiting us all the way around. So when we talk about other competitors, it's very different because a lot of those competitors either are not publishers, so they don't have first party data, or if they are publishers of content, they're not at the scale that we are. As you know, Michael, from our digital platforms, we reach 70% of the adult population in our size markets. So there's no one who comes close to that. So it allows us really an outsized competitive advantage in that space.
Michael Kupinski
That's terrific. And obviously your guidance for the year is better than what I was looking for. And I was just wondering if maybe we can flesh out a little bit of what that guidance has in particular political advertising. I'm assuming that you're kind of keeping that nine to 10 million range. And if you can just kind of talk a little bit about maybe the revenue trajectory for your broadcast business, excluding political?
Bill Wilson
Sure. So you are spot on. In terms of the guidance that Stu outlined there, it is about $10 million in political. So you're right on the money there. As Stu said, our guide on revenue for the year is $460 million to $475 million, which is plus 10% to plus 14%. So a real nice clip up with our profit of $115 to $120 million. anywhere from 9.4 times to 14% growth. So we feel really good about our guidance. As you noted, I think it's probably significantly higher than what people expected, given we ended the year at 105.1 in profit. So as it relates to other assumptions outside of the political, we continue to see broadcast perform well. You could see what it did in 2021 versus 20. We broke that out now in the financials. You see that growing ex-political plus 14%. So for the year on broadcast in 2022, that will continue to grow off of 21's numbers. We're feeling really good about broadcast as we sit here today. I'd say the only headwind we see currently, I'd really say two headwinds. One is being auto, which is really, I think, driven by the supply chain challenges. And then the other half is really entertainment, food and retail, which I think is more tied to coming out of the pandemic and seeing that. So we see broadcast increasing nicely off of 21 levels. I would say on a Q1 basis, probably, you know, it's a little different because when you look at last year, you look at by quarter, we obviously increased throughout the year every quarter in terms of our broadcast recovery. So in Q1, I think we'll have a higher growth in broadcast versus Q1 probably I'd say high single digits in Q1, but for the year, I'd say broadcast ex-political is going to be up in the mid single digits. We expect TSI, you know, we obviously had a tremendous TSI year in 2021, growing 16%, but also growing 12 million in top line revenue at a 30% margin. So we expect to replicate that this coming year and grow in the mid teens, probably 15%, 16% for TSI. And our digital advertising, we've outlined it in the slide in terms of the industry. I think on our investor deck, I think it's at about 18%. And we think for the full year, we will match that, if not beat that, from a digital advertising standpoint. We don't expect live events to recover fully. Obviously, time will tell when that happens. But we'll have a nice uptick, I would say, probably in the zone of $10 million in live events in 2022-2022. And we did about 4.4 million last year. So Michael, happy to dive into any other guidance questions, but hopefully that gives you a good framework of how we're making up that top line revenue of plus 10 to plus 14.
Michael Kupinski
That's terrific. And I just have one final question. In the past, you gave us digital guidance. You thought that Ignite could do 100 million. You also thought that Town Square Interactive could do 100 million. So your past guidance was like 200 million in digital. So I'm looking at your 2024 guidance. I'm trying to reconcile your 275 million forecasts, recognizing that you put in there your own digital business. So, but just kind of like, can you kind of frame for me what your thoughts are in terms of your digital guidance relative to the past guidance you've given it with ignite and a town square interactive?
Bill Wilson
Yeah, a hundred percent. You know, as we noted on the call and you just noted previously, We had said that we would do $250 million in digital revenue in three years, and we've upped that materially to $275 this morning, just based on our strong performance last year, but also where we're sitting today. And we feel, quite honestly, we're at a peak performance. We really used the pandemic. We were one of the few companies, as you know, Michael, where we made a deliberate choice to be well-positioned for the recovery, which meant we didn't take uh, material cutbacks and personnel, and you have to thank the board of directors for their support. So we took the time to really accelerate our transformation. What I mean by that is we doubled down on trading and coaching and deliberate practice and really put the work in knowing the money may not have been there in 2020, but when everything opened back up, uh, we were going to be the best position company. And particularly when, uh, you know, as we outlined in the investor deck with digital advertising today being 50% of all local advertising, radio being 6% of all local advertising and digital growing to 75% by 2025. For us to capture the outside's growth and be the number one local media company focused on markets outside the top 50, we knew we had to be the number one digital provider. So to your point about TSI and Ignite at 100 million, we're going to, in essence, blow past both of those expectations. That's why we wanted to roll that up as part of the 275. You could see we ended TSI, Town Square Interactive, at 82 million So by the end of next year, on an annualized basis, uh, we will be at a hundred million, uh, in revenue. We won't, we won't achieve a hundred million next year, but on an annualized basis, uh, I believe we will be there. So, which would mean that we'll clearly crush that in 2023 and ignite again, uh, is our fastest growing revenue stream. Obviously digital programmatic is the fastest growing digital advertising in the United States. Things like connected TV and social are just exploding. We've doubled down on video creation so we can do great creative for our clients for connected TVs and things like Instagram video and TikTok video. So we're really benefiting from that. So that $100 million for TSI Ignite somewhat becomes irrelevant because we would achieve those milestones much earlier than we anticipated. So, Michael, hopefully that answers your question, but if it doesn't, happy to take a follow-up.
Michael Kupinski
No, it was perfect.
Jim
Thanks for the color bill, and congratulations again. I appreciate it very much.
Jim
Thank you. Our next question has come from the line of Jim Goss with Barrington Research.
Operator
Please proceed with your question.
Jim
Okay. Thank you, and good morning. The numbers you have been outlining in terms of ad sales recovery, I'm wondering if you feel in the core area you've sort of reached the equilibrium from the whatever downdraft you might have had from COVID. And now it's more of a, you know, not as much recovery growth, but true growth from the levels you think you can sustain. And in terms of the political dollars you just mentioned in response to Mike's question, do you think you punch above your weight effectively because of the your local influencer strategy? Does that sort of give you the sort of opportunity in radio that, say, Gray Television has in its local markets and television?
Bill Wilson
Good morning, Jim. Thank you for the question. So, yeah, you are correct. You know, in essence, our core has recovered. I would say the one piece that has not fully recovered is is auto. Auto is definitely still down, and I don't expect that to be fully recovered this calendar year. I think that's probably more likely sometime in 2023 with the chip shortages and supply chains. But otherwise, to your point, from here on out, it's really true growth from, as you described, at the core. So we're feeling really good there, and we have a lot of momentum on the advertising side. And you're exactly spot on as it relates to you know, why we quote unquote punch above our weight, you know, the, we have doubled down through the last two years, hiring local content contributors, which, which most people would describe as, as local, uh, DJs, which as you know, we call the original social influencers and having that on the ground connection, we think is, uh, one of our core assets. It's one of the reasons that, you know, our time spent listening to our, our, our broadcast medium, remain stable and that we continue to, uh, accelerate and grow our online audience and engagement so much. So you are spot on having that local social influencer, uh, allows us to do things with advertisers, be it, you know, core advertisers, or even as you noted, the political side of things that, uh, otherwise couldn't be done without having that local connection and the investment in our local DJs.
Jim
Okay. And you mentioned in your, uh, letter you published this morning that you don't want to be seen as a radio company because of this digital transformation. But I'm wondering when your ad sales people are out there, who do they attempt to compete with? Is it the local newspaper publishers that have declined in presence, as you pointed out, or are there some other sort of things? And in the digital area with the growth you're achieving, are you taking share of or are you keeping up with the fastest-growing segment, and that's really what's behind the digital growth projections you've outlined?
Bill Wilson
Yes, great questions. Let me parse that, and thank you for taking the time to read the shareholder letter. I encourage all of our investors, our prospective investors, to do so. So a couple things you noted here. The last piece is we're clearly taking share. We're taking share – from a pure broadcast perspective, we have that in our investor deck, you know, as measured by Miller Kaplan, we're gaining local spot share, total share, digital share, total revenue. Um, and in addition, there, there's so much digital dollars in the marketplace. And so, so from the competitive set there, it ranges from a local television company selling, uh, their connected TV product, uh, primarily really digital agencies in town, businesses that are doing self-serve, Google Display Network or Facebook advertising. So it's pretty disparate. And the great thing for us is, as I noted in the prepared remarks, we truly are the only local media company at scale focused on markets outside the top 50. And I think that's such a competitive advantage for us. I know some people think there's more dollars in larger markets, which is clear. But if there's $100 in a larger market with 100 competitors, and $20 in a smaller market and five competitors. I'd rather be in that smaller market, particularly when we believe we're the best competitor in those smaller markets. So, you know, back to your question, we are clearly taking share from a digital perspective. We're clearly taking share from a broadcast perspective. The other thing I would just note from a Town Square Interactive's perspective, which is our, you know, in essence, our SaaS subscription business, it's very little local competition. You know, most of the competition for Town Square Interactive, as we've outlined before on these calls, is self-serve platforms. There's really no feet on the street going in to call on these clients with any local connection. And we are really doing quite well with that business as a result. And the fact that, you know, we're charging $300 a month and the value proposition against that, there is very, very little competition against that. There's a little bit more competition in the digital advertising space, but we bring national scale and sophistication to small town America. So we're able to, uh, to your point, not only keep up with the advertising trends, but take share from others. So Jim, I'll turn it back to you. I don't know if I answered each part of your question. So if I, if I didn't, please let me know.
Jim
No, no, you did. Um, the last thing I, um, asked you about is, uh, live events. I know that they've diminished in importance, uh, recently. But in terms of music events, this might be the time to get more aggressive because the talent doesn't make very much in terms of physical or stream media sales, but they make their money on concerts. Do you have an opportunity here that this might be a time when you might step up your interest, even if it's temporary, or see where that goes? Because I know like Live Nation and some of the other larger ones have been on fire because of this sort of return to normalcy, if you will. Yeah, thank God.
Bill Wilson
You are correct. There is definitely pent-up demand. You know, the events that we are putting on for sale, we're seeing strong demand for, record demand for. I was actually just in Nashville last week presenting at a country music seminar and and meeting with artists and so forth, and they are eager to get back in front of their fans and their audience base. So, yes, but that said, Jim, I would still just particularly for our investors note that, you know, live events today and moving forward in a post-pandemic world will still be a very small part of our company, sub-5% of our revenue and even less than our profits. So, you know, as I noted when I was talking to Michael earlier, we expect about $10 million in live events revenue today. coming off of 4.4 million last year. Back in 2019, that was 16 million. So I think as we go into 2023, we'll be back to those 2019 levels. But I would frame it for our investors that our live events division will now be a profitable marketing arm for our brands that give our salespeople a really great solution for onsite activation for local clients so that we We really focus on full funnel solutions, so from the top of the funnel, top brand awareness, all the way down to conversion and live events activation fits in nicely in there, and it's a differentiator because a lot of local media companies don't put the investment in there, but it will still be a small part. But to your point, I think the events we do are going to be very well attended and have very strong profit margins, but they will be a small part of our company moving forward.
Jim
Okay. Well, thanks very much. Thank you, Jim. Be well.
Jim
Thank you. We have time for one last question. Our next question has come from the line of Aman Gulani with B. Riley.
Operator
Please proceed with your questions.
Alan
Hey, gentlemen. Congratulations on the strong quarter and full year results here. I guess my first question is how should we think about free cash flow generation headed into 2022? And then how do you balance your, you know, digital initiatives Do you have your balance sheet and then also share buyback given that your stock is trading at like six to seven times EBITDA?
Bill Wilson
Yes, I'll turn this over to Stu to hit your first part on free cash flow. And if there's anything that I will add at the end to your last question, I will. So, Stu, you want to take this one?
Miller Kaplan
Sure. Hi, Alan. Thanks for the question. So you should think about our free cash flow as us having about $55 million of fixed charges a year. You know, interest of 38, capex of 12. and kind of working capital and cash franchise taxes of another five. So you could just take our guidance for the year and subtract that, and that's our free cash flow generation.
Alan
Got it. And then as your digital business continues to grow, how should we think about the company's longer-term margin profile?
Bill Wilson
Yeah, so the good news for us, and we've outlined this on the deck, and quite honestly – This is one of the reasons we resegmented the business because having met with investors quite a bit over the last three years and having not done so prior, it became apparent there was a misconception that our digital business, particularly our digital advertising business, because it was part of our old advertising segment with broadcast, was much lower margins than our broadcast business. But the reality is our digital advertising business is roughly the same margin as our broadcast business. We've always said we're agnostic to what our salespeople sell. We commission them the same. We want our salespeople selling whatever works for the client. And we have a terminology analysis like treat your clients like your friends, which means, hey, any great salesperson can sell something great once, twice, three times, but it's got to work for the client. So let's make sure we're putting things in front of the clients that are going to help them grow their business and reach their goals. The good news for us is, you know, our digital margins from an advertising standpoint, as well as from a town square interactive standpoint, are roughly 30%. And on slide seven in the investor deck, if you get a chance to look at it later, you'll see in 2021, our broadcast advertising margins ex-political was 30.5%. Our total digital margins are actually higher at 30.9%. And our digital advertising is actually higher. So it's completely counter to what most people would think. So as we've outlined, and I think it's clear to you, digital advertising is the growth engine of the company. That's what's growing in the economy in general. And our broadcast business, we're very proud of it, but it's a mature cash cow business. We do treat it as one ecosystem. There's no way, in my view, we would have the results that we have with our digital advertising if it wasn't for our assets and the broadcast side. And as I talked to Jim about that local connection, the local DJs, the fact that we The reason we're able to hire so many DJs, even through the pandemic of 2020 and 2021, incremental DJs, is because we monetize them in multiple ways. Historically, the only way we could monetize a DJ going back to 2010 was spot sales for broadcast. Now we continue to do that, but now they create digital content and we do content advertising around that content. So when I hire a DJ today, I know I'm getting a return on in two avenues, a broadcast advertising and digital advertising, which a lot of other companies don't have that luxury. So can't make that investment that we can. So the way we look at it going forward is we're always going to do what's best for the customer. And thankfully for us, as outlined on slide seven, the margin profile of digital is actually stronger than the broadcast side.
Alan
Got it. Thank you. Last question for me. I guess, you know, I mean, it's really nice to see that you're focused on delivering your balance sheet. I guess, you know, what, net leverage ratio are you sort of comfortable with where you could be like, okay, yeah, we could go out there and maybe make a larger acquisition?
Bill Wilson
Stu, you could add on, but I would say right where, once we hit this four times, which as Stu said, we expect that to be at the end of the year, I think that's where, A, we're comfortable now, but I think as it relates to the second part of your question, as it relates when we would then look to do a large-scale operation, it would be we believe and we hope we'll be in a good position to refinance in a short time, which is February 2023, so not that far off from now. And we think it'll be very advantageous to be able to do that at four times. And then once we do that, I think the large-scale acquisition opportunities open up quite nicely for us, be that on the digital side or on a broadcast side. But Stu, anything that you would add or adjust to what I said?
Miller Kaplan
No, Bill, that's perfect. The only thing I would add is We're never going to do an acquisition that's going to jump leverage up that high. We're always going to buy stuff with cash flow.
Alan
Yeah, fair enough. Congratulations on the quarter, gentlemen.
Bill Wilson
I appreciate it very much. Nice to meet you. I don't think we've had you ask a question on this call, so I appreciate that.
Alan
Yeah, just getting up to speed with the story, it's very interesting, especially where the stock is trading. It's very, very interesting.
Bill Wilson
We agree. That's why the board authorized that $50 million stock buyback. So we hope with the resegmentation and people really understand the strength of our digital business, how our company is differentiated in our size markets and our prospects and growth profile moving forward, that people give us the benefit of a sum of the part valuation. And I'm sure over time, as we continue to execute, they will. So again, thank you for asking the question. Thanks.
Operator
Thank you. We have reached the end of our question and answer session. I would now like to turn the call back over to Bill Wilson for any closing comments.
Bill Wilson
Thank you so much, everybody, for dialing in this morning. I hope you took the opportunity, if you haven't already, to download the new investor deck, as well as the shareholder letter. And we look forward to regrouping and updating you on our Q1 results. The benefit of this is we report in about seven or eight weeks, so we'll be regrouping then. But just Thank you for taking the time this morning. We're incredibly proud of our results. We're more excited about where we're going over the next three to five years, and we really believe we have transformed into a digital-first local media company, and we're well-positioned to be the number one local media company serving markets outside the top 50 in the U.S. So be well and talk to you soon.
Operator
This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
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