I would like to welcome everyone to the KP Tissue Fourth Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Mike Baldesarra, you may begin your conference.
Thank you, Operator, and good morning, ladies and gentlemen. My name is Mike Baldesarra. I'm the Director of Investor Relations at KP Tissue Inc. The purpose of the conference call today is to review the financial results of the fourth quarter of 2018 for Kruger Products LP, which I'll refer to as KP LP going forward. With me this morning is Dino Bianco, our Chief Executive Officer of KP Tissue and Kruger Products LP, and Mark Holbrook, our Chief Financial Officer of KP Tissue and Kruger Products LP. The following discussions and responses to questions contain forward-looking statements concerning the company's activities. Forward-looking statements involve known and unknown risks and uncertainties, which could cause the company's actual results to differ materially from those in the forward-looking statements. Investors are cautioned not to rely on these forward-looking statements.
The company does not undertake to update these forward-looking statements except as required by applicable laws. There's a page at the beginning of the written presentation which contains the usual legal cautions, including as to the forward-looking information, which you should be aware of. I would like to point out that all the figures expressed in today's call are in Canadian dollars unless otherwise stated. The press release reporting our Q4 2018 results were published this morning and will be accessible from our website at kptissueinc.com. Please be aware that the MD&A will be posted on our website and will also be available on SEDAR. Finally, I would ask that during the call, to refer to the presentation we have prepared to accompany these discussions, which is also available on our website. We would also appreciate, during the question and answer period, for you to limit your questions to two.
Thank you for your collaboration, ladies and gentlemen. Now I'll turn the call over to Dino Bianco, our CEO. Dino?
Thank you, Mike. Good morning, everyone, and thank you for joining us on our conference call today. Let's start with slide 5 of the presentation, which summarizes our key milestones for the year. In 2018, we reached another record in terms of revenues with $1.37 billion, an increase of 7% over last year as we continue to be Canada's leading tissue brands. However, as has been the story throughout the year, our results continue to be impacted by higher pulp and freight costs. Also, the increased level of sales has put pressure on our manufacturing network, which has resulted in higher outsourcing costs over the year. As a result, we have undertaken several key initiatives that will reduce our costs, strengthen our business, and reinforce our leadership position in the market, including the decision to proceed with our TAD2 project.
In December, we closed a $575 million financing deal that will allow us to proceed with our second TAD facility. We have taken several actions to offset higher input costs, such as the price increase in our consumer and Away-from-Home businesses, as well as various cost-saving programs. We also recently engaged a third-party consultant to help us increase capacity through operational efficiency, as well as waste reduction. I'll share more details with you later in this presentation. We are also very pleased to have signed a multi-year partnership with the NHL, a deal that will help promote our brand leadership in Canada and Away- from -Home. This partnership with a leading cultural icon shows our commitment to build our tissue brands and create news in the marketplace. We will start to introduce marketing programs in this year's playoffs to be followed by larger programs in the next NHL season.
We are honored to be part of a recognized brand such as the NHL. Let's turn to slide six of the presentation for our fourth quarter highlights. In Q4 2018, revenue increased by 5.7% to CAD 359.5 million. Revenue increased in Canada and Mexico, partially offset by a decrease in sales in the US. Although Mexico continued to be a solid revenue contributor for the quarter, due to the nature of our business model in Mexico, the profitability on that business is low. Adjusted EBITDA totaled CAD 20.3 million, a decrease of 39.8% over last year. This is primarily due to significantly higher pulp and freight costs, six fewer days of sales in Q4 2018 than Q4 2017, the cost of outsourced manufacturing, unfavorable sales mix, and unfavorable foreign exchange, which was partially offset by the Q4 2018 Canada consumer selling price increase.
Slide seven presents the market pulp prices in U.S. and Canadian dollars. Unfortunately, the picture is no different than previous quarters, with NBSK pulp prices in Canadian dollars and BEK, or eucalyptus, pulp prices on an upward trend since the end of 2016. Q4 pulp prices rose sequentially compared to Q3 and year-over-year in both U.S. and Canadian dollars, and pulp prices in Canadian dollars continue to be at historical highs. As a result, overall higher pulp prices have had an impact on our Q4 results. Pulp prices in U.S. dollars have moderated in Q1 2019, and based on industry forecasts, we expect that they'll remain in a similar range throughout the year. Let's turn to slide eight, which summarizes the market situation we are in on freight costs.
As you can see, these costs are also at an all-time high, and although they have stabilized recently, we expect that they'll remain high in 2019. During this period, our primary focus has been to ensure that we secure carrier capacity to ensure that our products are delivered to our customers on time, while at the same time trying to mitigate costs. On slide 9, we explain the details of our price increase in response to these higher input costs. As indicated before, one of the major steps we have taken to offset the continuous rise in input costs was a price increase in our Canadian consumer business, which was announced in July 2018 and took effect in Q4. We expect the full impact to start materializing in the market in Q1 2019.
We will also benefit from price increases in the U.S. consumer business, which we announced in late Q4 2018. We also recently announced the price increase in our AFH business in Canada and the U.S., which will be effective on May 1st, 2019. This increase will help offset higher pulp and freight costs as well. Let's now turn to slide 10, which provides details of our ongoing value creation program, as well as two new projects aimed at cost savings. Our value creation program is an embedded cost reduction program that we undertake each annual planning cycle. The goal of the program is to drive down costs across the business system and to offset inflation and other cost increases. In 2018, with escalating pulp and freight, we initiated a 2-times program to partially offset the impact of those market costs.
Also, in Q4, we initiated an operational excellence project that will involve a comprehensive review of our operations by a third-party consultant. Our focus is to drive capacity expansion through operating efficiency improvements, waste reduction, and productivity. This project aims to optimize our assets within our plants and to drive more capacity, which will allow us to operate more efficiently and meet our growing sales needs. This initiative will also allow us to drive a sustained, standardized, and efficient Kruger Products manufacturing process across all our sites. In addition, we also hired another third-party consultant that will help implement a logistics project to drive down freight and warehousing costs across our North American network. We are expecting combined cost savings of $15-$20 million on a run rate basis by the end of 2020 for these two projects.
It is also important to note that these plans are not CapEx dependent and focus primarily on process standardization and improvement. We believe that these initiatives will allow us to expand our existing capacity and reduce costs across the network in advance of our TAD2 operation. On slide 11, I'd like to provide an update on our TAD2 project. In December, we announced the closing of a $575 million financing deal that allows us to proceed with the construction of our second TAD2 machine, which will significantly increase the competitiveness of our operations and our brands and will further reinforce our market strength in North America. We chose to build the plants in Sherbrooke, Quebec, as this location is well positioned for the North American market we serve and was the most financially attractive option.
TAD2 will be designed to allow our paper towels to be manufactured at very high speeds and is expected to produce an additional 70,000 metric tons per year. This project is central to our long-term North American growth strategy in the ultra-premium tissue segment. The project is on time and on budget, and we are progressing against our execution plan. A governance structure is now in place, and we anticipate breaking ground this spring. We also started the selling process with strong interest from existing and new North American customers. I will now turn the call over to Mark, who will review our quarterly results.
Thank you, Dino, and good morning, ladies and gentlemen. I'll now ask you to refer to slide 12, which summarizes our financial performance for the fourth quarter. Our revenues reached CAD 359.5 million, a 5.7% increase compared to last year. However, Adjusted EBITDA decreased from CAD 33.7 million in Q4 last year to CAD 20.3 million in Q4 of 2018. From a margin perspective, Adjusted EBITDA decreased to 5.6% from 9.9% last year and from 8.1% in Q3 2018. As Dino mentioned, higher pulp and freight costs continued to have a significant impact on our results, both sequentially and year-over-year. Net income increased to CAD 38 million in the fourth quarter compared to a net loss of CAD 18 million last year.
This was primarily due to an increase in the change in amortized cost of the partnership unit's liability, and also a change in income taxes, partially offset by lower Adjusted EBITDA and an increase in interest expense. In the quarterly segmented view on slide 13, consumer revenue increased by 7% year-over-year to reach $295.8 million, while Away-from-Home revenue decreased by 5.8% to $58.6 million. This was impacted by six less sales days in the quarter compared to Q4 2017. Adjusted EBITDA decreased by $5.8 million to $26.4 million for the consumer segment and decreased by $6.2 million to - $4.8 million for the Away-from-Home segment. At the same time, margins decreased year-over-year in the consumer segment from 11.6% to 8.9% and decreased in the Away-from-Home segment from 2.3% to - 8.2%.
On slide 14, we review Q4 2018 revenue over Q4 2017, which was up by CAD 19.5 million, or 5.7%. The increase was due to higher sales volume in Canada and Mexico, the Canadian consumer selling price increase implemented in Q4 2018, the favorable impact of foreign exchange fluctuations on U.S. sales, and partially offset by the six less days of sales and a slight decrease in sales in the U.S. Looking at regionally, the sales increased by CAD 14.3 million, or 7% in Canada, and decreased slightly by CAD 2.9 million, or 2.4% in the U.S. Sales also significantly increased in Mexico, which is a low-contribution business. On slide 15, we provide some insight into our Q4 2018 Adjusted EBITDA, which decreased by CAD 13.4 million, or 39.8%, to CAD 20.3 million. Q4 gross margin also decreased from 12.9% to 8.6%.
The decrease in Adjusted EBITDA was discussed by Dino earlier and included the impacts from higher pulp and freight costs, six less sales days, outsourced manufacturing costs, unfavorable sales mix and FX, and these were partially offset by the Canadian consumer selling price increase in Q4. On slide 16, we compare Q4 2018 and Q3 2018 revenue, which increased by $11.1 million, or 3.2%. Consumer segment increased by 3%, whereas Away-from-Home decreased by 1.3%. By region, revenue increased in Canada by $2.4 million, or 1.2%, and in the U.S. by $8 million, or 8%. Revenue also increased in Mexico. On slide 17, Q4 Adjusted EBITDA decreased by $8 million compared to Q3. Gross margin also decreased from 10.3% to 8.6%. The decrease in Adjusted EBITDA and gross margin is mainly due to fiber and freight costs, outsourced manufacturing costs, and seasonally higher maintenance costs.
I now ask you to refer to slide 18, which sets out our balance sheet. Our cash position was CAD 169.9 million at the end of Q4 2018, up from CAD 26.9 million at the end of Q3. The Q4 cash balance includes the TAD2 project initial financing proceeds net of spending at year-end. Overall net debt at the end of Q4 stood at CAD 408 million, down CAD 54.4 million from CAD 462.4 million at the end of Q3 2018. Our net debt to latest 12-month adjusted EBITDA ratio is now at four times, the same as in Q3 2018. Looking forward, the TAD2 project will result in total company leverage increasing as spending on the project occurs over the next two years. Finally, as we can see on slide 19, our fiscal 2018 CapEx was CAD 62 million, including CAD 27 million for our TAD2 project.
For fiscal 2019, we expect our CapEx, excluding TAD2, to be between CAD 30- CAD 35 million, similar to 2018, and our TAD2 CapEx to be between CAD 250-CAD 275 million. Thank you for your attention, and I'll now turn the call back to Dino.
Thank you, Mark. Let's turn to slides 20 and 21, where we provide a summary of our market share positions in the Canadian consumer segment. Despite a challenging Q4, our business remains healthy. As we continue to be the overall leading tissue company in Canada, we are the market leader in bathroom tissue and facial tissue and have a strong number two position in paper towels. The 2018 market share decreases in bathroom tissue and paper towels were driven by three main issues. One, we exited a nonprofitable customer early in 2018. Two, we discontinued a Cashmere sub-brand in late 2017. And three, the pricing actions last year created migration of higher price points, which temporarily dampened promotional activity and sell-through, which has disproportionately impacted us because we are the brand leader.
Nonetheless, we plan to rebuild our market share in 2019 through increased marketing investment, new products, strong customer support, and our new NHL partnership. Let's now turn to slide 22. Beyond TAD2, our other key focus is to strengthen our Away-from-Home business, where we hold a leading position in Canada with a market share of approximately 30% and a growing presence in the US across multiple segments. As I mentioned earlier, continued higher pulp and freight costs, combined with a competitive AFH environment and outsourcing costs, were the main reasons behind the ongoing weak performance of our AFH segment. The recent price increase announcement, which will take effect on May 1st, 2019, should help mitigate the impact of these higher costs. However, the market remains very, very price competitive. We expect continued market outsourcing costs to impact AFH in 2019.
However, the operational excellence project I talked about earlier will also benefit our AFH facilities. Turning to slide 23, as we introduced earlier this year, here's our strategic plan that shows our vision, mission, and key strategies that will drive our actions and investments to deliver long-term shareholder value. I am pleased to say all our actions are aligned to our strategic plan, and we are making good progress across the key elements. Finally, I will conclude the call with slide 24. Despite a difficult operating environment in 2018, we are undertaking several key actions to drive sustained growth and shareholder value. Specifically, we continue to grow the top line across all key geographies and segments. We have priced all of our businesses to offset fiber costs and restore margins. We are creating a more efficient and capable supply chain network. We are building ultra-premium capacity with TAD2.
We continue to invest to build our brands, and we are building organizational capability and culture to meet the needs of today and of tomorrow. Looking forward, KPLP continues to have strong long-term business fundamentals. However, due to continued pressure from high input costs, Q1 2019 Adjusted EBITDA is expected to be lower than Q1 2018, which was CAD 27 million. In conclusion, we are confident that we have the right vision and strategies to move the company forward as a North American tissue leader. Thank you for your time and attention. At this point, Mark and I will be pleased to answer any questions you may have.
At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile a Q&A roster. Our first question comes from the line of Roshni Luthra from CIBC Capital Markets. Your line is open.
Yeah, hi, good morning.
Good morning, Roshni.
Dino, question for you first. So we've been seeing prices for the lower end grades of pulp, and more, whether it's SBSK trading at a larger discount, NBSK, or North American BHK, prices falling more than eucalyptus. Have you been able to take advantage of that by shifting your furnish to use more of those grades?
Your question was a little muffled, so I'm not sure I understood the total. So let me try to answer what I think you said, and if I missed it, please correct me. Yeah, there's been a lot of changes going on in pulp, obviously the difference between BEK and NBSK. One of the things we continually do as an organization is we have flex formulas where we will model our input costs to get lowest possible costs. And that includes both those, plus obviously we use recycled fiber and other versions of softwood and hardwood. So we have a fairly sophisticated model that allows us to take advantage of any arbitrage differences that exist in the marketplace to ultimately create the same product quality at the end. So I don't know if I've answered your question because I missed some of it at the beginning.
Yeah, no, that was it. And then just a question for Mark. What's the impact of IFRS 16, if any, on your EBITDA and net debt?
Yes, in our financial statement notes, we have disclosed that between CAD 15 million and CAD 18 million impact, which would be an increase to our Adjusted EBITDA in 2019. That's an estimated figure.
Okay, great. Thanks. That's all I had. I'll turn it over.
Thank you.
Thank you.
Our next question comes from the line of Sean Steuart from TD Securities. Your line is open.
Thanks, good morning. A couple of questions. The broader margin improvement initiatives that you have underway, I just want to understand how it works with the various consultants you're using, because it sounds like they're still doing their work. So I guess I want to understand when do you expect they'll be finished with their assessment, and you guys have already determined a CAD 15 million-CAD 20 million savings target. Do you say, "This is what we need to achieve to offset the headwinds and have the consultants work to meet those sorts of numbers?" I'm just curious on the process, I suppose, of how that process will play out.
Yeah, so let me give you a little bit of color, Sean. We engage the consultant. I mentioned at the call when we talked about Q3, we engage the consultants late in Q4. They did an initial assessment through December and early January. We have the scope and the dig sites and savings pacing over time. We have those all identified. We have engaged them now on the ground. We have boots on the ground that are working with a couple of our key facilities, both in converting and papermaking, where we have, quite frankly, the greatest cost benefit and bottleneck. They are helping us de-bottleneck some of our assets and increase the operating efficiency, or the OEE, which will get us more capacity. At the same time, as I mentioned, we're also looking to reduce waste and drive productivity.
Within those two sites that we're looking at, we are bringing in leaders from our other sites so that we can learn from the process. We don't want this to be a one-and-done. As I mentioned in my call, in my prepared remarks, this is about a sustained way of how we manufacture across our network, incorporating, quite frankly, lean principles. So we are taking that, and then we'll continue to evolve that through 2019 into 2020. As far as where the cost number came, obviously, I want to be conservative in how we look at that number because I want to make sure it's a number we can deliver and/or beat. There's still a lot of unknowns. It was not driven on what we need. It was driven on what's available.
We have many other cost initiatives besides this project that are in place that will continue to be in place, such as the value creation program. We're doing a network study. We're doing other things that are part of our normal business. So there's more there than just the 15-20 I talked about.
Okay. That helps. Thanks for that. Second question, the Away-from-Home hikes on deck. You referenced the ongoing competitive environment in that end of the market. Should we assume partial implementation in Q3 and then an expectation of full implementation in Q4 this year? Is that a safe assumption?
Yeah. I mean, you will see it start to the Away-from-Home business, as you know, is somewhat different than the consumer branded business. They're contract-based, so you have to either have flexibility in the contract. You have to wait till contracts come due before you move the pricing. So it moves at a different pace. And it'll start making its way into our P&L starting in Q3 and then escalate through Q4 and as we exit the year in terms of the benefit from that pricing.
Okay. Thanks for that. I'll get back in the queue.
Okay, thanks.
Our next question comes from the line of Zachary Evershed from National Bank Financial. Your line is open.
Good morning, everyone.
Good morning, Zachary.
You've mentioned in the past that Away-from-Home is an important fixed cost absorber. With the Away-from-Home price increases, we're hoping to see a return to positive margins. With the information you've given on the partial implementation in Q3 accelerating and escalating into Q4, are you seeing negative margins for Away-from-Home throughout the year then?
I'm not going to provide that guidance other than say that we would expect to see profit and margin improvement as we move through the year, partially driven by pricing, partially driven by this network study that we're doing. Our Away-from-Home business will benefit from that. We do have some bottleneck in our Away-from-Home facilities that will also benefit from the ability to have greater capacity. Then because our Away-from-Home business relies on our overall paper production, as we improve paper production across our network, our Away-from-Home business will be able to utilize more internal paper and less outsourcing as well. That'll play its way through the year and into 2020.
That's good color. Thank you. In terms of past price hike announcements, how much traction did you get on those in a percentage term or in an absolute value?
So here's what I would say to you. I'll break down the three different businesses because there's a lot of pricing that happened at different times, and they're in different competitive positions. On the consumer Canada one, which is the large one and the pricing we led in Q4 of last year, that is moving its way through the market. I will tell you, based on consumption data, this is syndicated data. It's available to everybody. We're seeing about a 5-point difference between unit sales and dollar sales. So that tells me there's a bit of mix in there, but that tells me generally the pricing is moving through the market. And that's market data, not our unique specific data. So we're seeing that, and it probably will continue to evolve over the next few quarters because it's still early. So feel good about that.
Obviously, I think customers understand the market dynamics and the pulp costs and recognize nobody likes a price increase, but I think everybody recognizes the impact it has had on the business. We see the market moving because everybody's incurring the same common cost structure. On the U.S. business, we haven't talked a lot about, but we did announce Q4 late last year pricing to our customers, more of a private label business there. So similar to AFH, they're contract-based. Those contracts start to take effect in Q1 of this year. So you're seeing that to start moving through in Q1. Away-from-Home, we did do some pricing last year. We, quite frankly, did not get a lot of realization on that pricing. I think with the new pricing that we're going out with, we're seeing competitors. I think some have announced publicly that they're moving.
We announced our price increase. We're all facing the same cost inputs. We anticipate that we will get traction on the May 1.
That's great. Thank you so much. I'll turn it over.
Again, if you'd like to ask a question, that's star one on your telephone keypad. Our next question comes from the line of Keith Howlett from Desjardins. Your line is open.
Yes, I wanted to ask about the U.S. business where the revenue was down year-over-year. Can you speak to the volume? And I guess you just spoke to the pricing trends, but perhaps the volume trends or the mixed trends in that market?
Yeah, I would say our U.S. business, as was the case all year, and if you look at the full year, is very strong. It has been a growth driver for us. What you're seeing in Q4 is you've got 6 less days. So you've got 6%-7% less selling days in play, which is impacting our U.S. business. And the U.S. did not have pricing in Q4, unlike Canada. So the U.S. number is not an anomaly. It is just a pure fact of 6 less days. We did have some mixed issues with White Cloud having softened given some distribution losses, but offset by stronger private label sales. The Canada number is strong, even though it has 6 less days, because we had pricing. And quite frankly, we had a softer Q4 last year that we're comparing against given the pricing last year.
Then I'm wondering, could you speak maybe broadly to your branding strategy in Canada, whether you're altering your advertising total spend or whether it's just a matter of mix and sort of how you're going forward, where the NHL fits in with the Brier and your other sort of events?
For sure. I mean, I think they're all complementary. We recognize the responsibility we have as the brand leader in Canada to continue to build the category, the tissue category. We have very strong brands that consumers want across the three major segments. We are continuing to increase investment as we look at 2019 and through the Strat plan versus where we have been. We want to get our investment up. The mix continues to change. It continues to change, obviously, more from traditional media to social media. We're driving more with ethnic consumers. So as the marketplace is changing, we're changing our mix to make sure that our brands remain relevant to our consumers. I think one of the places, and I talk about this in our strategic plan, you'll see more of is you'll see more innovation from us in this category. Probably not in 2019.
Those things take a while, but you'll start seeing more as we work through the Strat plan. Then the NHL is a perfect fit. I'm sure you know that we do a lot of work with our brands, whether it be Scotties Tournament of Hearts, which is a long-standing relationship, whether it's what we do with the Cashmere and breast cancer, Toronto Film Festival, Rogers Cup. I mean, there's lots of work that we've already done with our brands. We see the NHL as a perfect fit from a timing and brand fit perspective. It is the leading icon in Canada. It is overdeveloped with moms and female consumers. It is obviously an attraction for new Canadians as they enculturate with Canada and hockey and the NHL. Millennials are overdeveloped.
We really view it as, A, a great fit, and then, B, a great opportunity to innovate our products and drive promotion across our retailers.
Thank you.
Our next question comes from the line of Zachary Evershed from National Bank Financial. Your line is open.
Thank you. One more from me. In terms of the Mexico strategy, we've been seeing some pretty substantial growth on revenues there. Is there a possibility of increasing profit over the long term, or structurally is it just different from the rest of the business?
Yeah. I mean, that's a great question, Zachary. I think, as you know, we talk about the strong revenue growth, but we're essentially on a commission basis there. We work with a partner that we have. We don't really have hard assets on the ground. We have working capital, but not hard assets on the ground. And we're continuing to drive the top line and then receive what essentially is a payout on the sales. We're looking at a couple of. We don't think that's a sustainable model. So we're looking at a couple of different options of how do we work in Mexico and with our partner to make sure we're aligned to common interests. So I don't have any further update for you there. I think I've explained where we are and that we will likely modify that relationship.
I hope to give you a further update once we have more clarity.
Thank you very much.
Our next question comes from the line of Keith Howlett from Desjardins. Your line is open.
Yes. Maybe just if you, on Mexico, is it, I've never quite understood what it is down there. Do you have a relationship with a customer and you acquire the tissue from a manufacturer in Mexico? Is that roughly it, or?
Yeah. I wouldn't simplify it that much, but we have an operation in Mexico that is primarily a selling operation for us. We partner with a couple of large customers that are growing very rapidly in the Mexico market. And then we don't have any physical production capacity in Mexico. We rely on our partner to satisfy the supply chain side of that.
I see. And I just wanted to ask on the financing for the TAD in terms of at the TAD level, the convertible debenture and the two-term loan facilities. Is there any recourse to the assets of the KTG in the U.S. or to KPLP?
Hi, Keith. Yeah. In terms of recourse, so the TAD2 financing is really non-recourse to the KPLP business in Canada. It is, however, combined in with the KTG business. So you would see the assets within the Memphis facility included in that.
Great. Thank you.
You're welcome.
Our next question comes from the line of Sean Stewart from TD Securities. Your line is open.
Thanks. Just one follow-up on the NHL deal. I appreciate longer-term brand awareness and those benefits. Should we expect a substantial near-term pickup in SG&A costs associated with campaigns around that new deal?
I would say that the deal was part of our marketing budget ahead of time. So there's no incremental cost here. It's just we looked to increase our investment as we came into this year. This is one of the mechanisms we used to do that. So I don't think you're going to see a substantial increase in those lines that you talked about. And then as far as market activation, we are going to have, we're targeting an activation for the playoffs this year. It'll be smaller than we'd like, but just given the compressed timelines, we're trying to get what we can out and then come back in the fall with the start of the NHL season. So you will start to see benefit and in-market activity and activation in 2019.
Okay. That helps. That's all I had. Thanks.
I would now like to turn the call back over to Mr. Baldesarra for closing remarks.
Okay. Thank you for joining us on this conference call this morning. We look forward to speaking with you again in May 2019 following the release of our first quarter results. Thank you, everybody, and have a great day.
Thank you. Thank you.
This concludes today's conference call. You may now disconnect.