Q2 Net Revenue Drives Net Income of $106 Million, Adjusted
EBITDA of $398 Million and
Adjusted Free Cash Flow of $78 Million
All-Time High Second Quarter Distribution Revenue
Reduced Year-over-Year Quarterly Losses at The CW by $33
Million
Quarterly Return of Capital to Shareholders of $190 Million,
Reducing Shares Outstanding by 1.7%
Nexstar Media Group, Inc. (NASDAQ: NXST) (“Nexstar” or the
“Company”) today reported financial results for the second quarter
ended June 30, 2024 as summarized below. Please visit Nexstar’s
website to view the full press release.
STATEMENT FROM PERRY A. SOOK, FOUNDER, CHAIRMAN AND
CEO
“Nexstar delivered another period of solid financial results,
building on our strong start to the year. Following a first
quarter in which Nexstar generated record first-quarter
distribution and total net revenue, we did it again, generating our
highest-ever second-quarter distribution and total net
revenue. During the quarter, we continued executing on our
plan at The CW, reducing operating losses by $33 million
year-over-year and $83 million year-to-date as our organizational
and programming changes are driving improved cash flows and the
third consecutive quarter of ratings growth in primetime
entertainment programming. Overall, our strong year-to-date
operating performance yielded $483 million of Adjusted Free Cash
Flow and we returned $358 million, or 74% of Adjusted Free Cash
Flow, to shareholders in the form of dividends and share
repurchases. Looking ahead, we expect to benefit from
anticipated record levels of political spending on broadcast
television in the second half of the year.”
2024 Second Quarter Financial
Summary
($ in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
% Change
2024
2023
% Change
Distribution
$734
$696
5.5
$1,495
$1,424
5.0
Advertising
522
511
2.2
1,034
1,028
0.6
Other
13
33
(60.6
)
24
45
(46.7
)
Net Revenue
$1,269
$1,240
2.3
$2,553
$2,497
2.2
Net Income
$106
$75
41.3
$273
$163
67.5
% Margin(1)
8.4%
6.0%
2.4
10.7%
6.5%
4.2
Adjusted EBITDA(2)
$398
$335
18.8
$941
$831
13.2
% Margin(1)
31.4%
27.0%
4.4
36.9%
33.3%
3.6
Adjusted Free Cash Flow(2)
$78
$74
5.4
$483
$451
7.1
(1) Net Income margin is Net Income as a percentage of Net Revenue.
Adjusted EBITDA margin is Adjusted EBITDA as a percentage of Net
Revenue.
(2)
Definitions and disclosures regarding non-GAAP financial
information including reconciliations are included at the end of
the press release.
In the first quarter of 2024, we
adjusted our definition of Adjusted EBITDA to add back stock-based
compensation expense and restructuring expenses and to subtract out
pension credits. We also adjusted our definition of Adjusted
Free Cash Flow (formerly referred to as Attributable Free Cash
Flow) to subtract out pension credits and payments for capitalized
software obligations and to adjust for actual cash contributions
from noncontrolling interests in lieu of adjusting for our
partners’ share of losses in The CW. The comparative prior
year disclosures were also recast to conform with the current
presentation.
Company and Business Highlights
- Successfully expanded NewsNation to a 24/7 cable news network
on June 1. According to Nielsen, NewsNation’s total viewership in
primetime is up over 200% since its launch in March 2021 (comparing
Q2 2024 to Q2 2021).
- Announced additional exclusive sports on The CW, with eleven
PAC-12 Football Games beginning this month and the final eight 2024
NASCAR Xfinity Series races, including all playoff races, beginning
in September.
- Announced Nexstar stations in Chicago, IL, Norfolk, VA, and
Lafayette, LA will become affiliates of The CW on September 1,
bringing the number of Company and partner-owned CW-affiliated
stations to 49, covering over 45% of U.S. TV households.
- Delivered sequential primetime entertainment ratings growth at
The CW in the first three quarters since the launch of the
2023/2024 broadcast season.
- Earned 35 Regional Edward R. Murrow Awards for outstanding
journalism and exceptionally produced news programming from the
Radio Television Digital News Association (RTDNA).
Financial Highlights
- Net Revenue. Record second quarter net revenue of $1.27
billion, increased by $29 million, or 2.3%, reflecting growth in
distribution and advertising revenue, which more than offset a
decline in other revenue. Approximately 58% of Nexstar’s second
quarter revenue was derived from distribution revenue.
- Distribution Revenue. Record second quarter distribution
revenue of $734 million, increased $38 million, or 5.5%, over the
comparable prior year quarter. Distribution revenue growth
primarily reflects the impact of distribution contract renewals in
2023 on terms favorable to the Company and annual rate escalators,
growth in vMVPD subscribers, the addition of CW affiliations on
certain of our stations, and the return of our partner stations on
one MVPD in January, which more than offset MVPD subscriber
attrition. Distribution revenue includes retransmission revenue,
carriage fees, affiliation fees, and spectrum leasing revenue.
- Advertising Revenue. Second quarter advertising revenue of $522
million increased $11 million, or 2.2%, compared to the prior year
quarter reflecting a $37 million year-over-year increase in
election-year political advertising to $45 million which more than
offset a $24 million year-over-year reduction in non-political
advertising revenue due to ongoing advertising market softness.
Advertising revenue includes television and digital revenue
primarily from businesses and political advertisers.
- Net Income. Second quarter net income of $106 million increased
$31 million, or 41.3%, compared to the prior year quarter,
reflecting increased revenue and lower operating expenses driven,
in part, by reduced amortization of broadcast rights at The CW,
offset, in part, by reduced income from equity method investments
related to the performance of the TV Food Network LLC (“TVFN”) in
which we have a 31.3% interest and increased income taxes. Net
Income margin increased to 8.4% from 6.0% in the comparable prior
year period.
- Adjusted EBITDA. Second quarter Adjusted EBITDA of $398 million
increased $63 million, or 18.8%, compared to the prior year quarter
primarily reflecting revenue growth and a $33 million
year-over-year reduction in losses at The CW, which more than
offset a reduction of cash distributions from equity method
investments from TVFN primarily related to lower advertising
revenue. Adjusted EBITDA margin grew to 31.4% from 27.0% in the
comparable prior year period.
Financial Highlights (continued)
- Adjusted Free Cash Flow. Second quarter Adjusted Free Cash Flow
of $78 million, increased $4 million, or 5.4%, due primarily to the
increase in Adjusted EBITDA offset, in part, primarily by higher
operating cash taxes related to increased taxable income and no
cash contributions from our partners in The CW.
Capital Allocation
- In the second quarter of 2024 the Company used cash on hand and
cash flow from operations to repay $31 million of debt, pay $55
million in dividends, and repurchase 847,904 shares of Nexstar’s
common stock at an average price of approximately $159.21 for a
total of $135 million.
($ in millions, shares in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Cash Used For
Debt repayment
$31
$31
$61
$62
Acquisitions
-
-
-
-
Stockholder return
190
189
358
413
Common stock dividends
55
48
112
98
Stock repurchases
135
141
246
315
Shares Outstanding
End of period
32,486
35,381
32,486
35,381
Less: Beginning of period
33,038
35,984
33,601
36,810
Change in shares outstanding
(552
)
(603
)
(1,115
)
(1,429
)
% Change
(1.7%
)
(1.7%
)
(3.3%
)
(3.9%
)
Debt, Cash and Leverage
- The consolidated debt of Nexstar and Mission Broadcasting, Inc.
(“Mission”), an independently owned variable interest entity, as of
June 30, 2024, was $6.78 billion, including senior secured debt of
$4.07 billion.
- The Company calculates its leverage ratios in accordance with
the terms of its credit agreements which exclude The CW Network’s
operations and cash balance. As of June 30, 2024, The CW Network
had $45 million of cash on its balance sheet.
- As of June 30, 2024, the Company’s first lien net leverage
ratio was 2.19x compared to a covenant of 4.25x and its total net
leverage ratio was 3.69x.
- The table below summarizes the Company’s unrestricted cash
balances and debt obligations (net of financing costs, discounts
and/or premiums) as of June 30, 2024 and as of December 31,
2023.
($ in millions)
June 30, 2024
December 31, 2023
Unrestricted Cash
$146
$135
Revolving Credit Facilities
$62
$62
First Lien Term Loans
4,008
4,064
5.625% Senior Unsecured Notes due 2027
1,717
1,717
4.75% Senior Unsecured Notes due 2028
994
994
Total Debt
$6,781
$6,837
Second Quarter Conference Call
Nexstar will host a conference call at 10:00 a.m. ET today.
Senior management will discuss the financial results and host a
question-and-answer session. The dial in number for the audio
conference call is +1 877-407-9208 or +1 201-493-6784, conference
ID 13747205 (domestic and international callers). Participants can
also listen to a live webcast of the call through the “Events and
Presentations” section under “Investor Relations” on Nexstar’s
website at nexstar.tv. A webcast replay will be available for 90
days following the live event at nexstar.tv.
Forward-Looking Statements
This communication includes forward-looking statements. We have
based these forward-looking statements on our current expectations
and projections about future events. Forward-looking statements
include information preceded by, followed by, or that includes the
words "guidance," "believes," "expects," "anticipates," "could," or
similar expressions. For these statements, Nexstar claims the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
The forward-looking statements contained in this communication,
concerning, among other things, future financial performance,
including changes in net revenue, operating expenses and cash flow,
involve risks and uncertainties, and are subject to change based on
various important factors, including the impact of changes in
national and regional economies, the ability to service and
refinance our outstanding debt, successful integration of business
acquisitions (including achievement of synergies and cost
reductions), pricing fluctuations in local and national
advertising, future regulatory actions and conditions in the
television stations' operating areas, competition from others in
the broadcast television markets, volatility in programming costs,
the effects of governmental regulation of broadcasting, industry
consolidation, technological developments and major world news
events. Nexstar undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this
communication might not occur. You should not place undue reliance
on these forward-looking statements, which speak only as of the
date of this release. For more details on factors that could affect
these expectations, please see Nexstar’s other filings with the
Securities and Exchange Commission.
Definitions and Disclosures Regarding Non-GAAP Financial
Information
Adjusted EBITDA is calculated as net income, plus or (minus):
transaction and other one-time expenses, stock-based compensation
expense, depreciation and amortization expense (excluding
amortization of broadcast rights for The CW), (payments) for
broadcast rights (excluding broadcast rights payments for The CW),
(gain) loss on asset disposal, impairment charges, interest
expense, net, (income) loss from equity method investments, cash
distributions from equity method investments, pension and other
postretirement plans costs (credit), income tax expense (benefit)
and other expense (income). We consider Adjusted EBITDA to be an
indicator of our assets’ operating performance and a measure of our
ability to service debt. It is also used by management to identify
the cash available for strategic acquisitions and investments,
maintain capital assets and fund ongoing operations and working
capital needs. We also believe that Adjusted EBITDA is useful to
investors and lenders as a measure of valuation.
Adjusted Free Cash Flow is calculated as net income, plus or
(minus) transaction and other one-time expenses, stock-based
compensation expense, depreciation and amortization expense
(excluding amortization of broadcast rights for The CW), (payments)
for broadcast rights (excluding broadcast rights payments for The
CW), (gain) loss on asset disposal, impairment charges, interest
expense, net, (income) loss from equity method investments, cash
distributions from equity method investments, pension and other
postretirement plans costs (credit), income tax expense (benefit)
and other expense (income) minus cash interest expense, capital
expenditures, payments for capitalized software obligations and
operating cash income tax payments, plus proceeds from disposal of
assets and insurance recoveries and cash contribution from
noncontrolling interests. We consider Adjusted Free Cash Flow to be
an indicator of our assets’ operating performance. In addition,
this measure is useful to investors because it is frequently used
by industry analysts, investors and lenders as a measure of
valuation for broadcast companies, although their definitions of
free cash flow may differ from our definition.
For a reconciliation of these non-GAAP financial measurements to
the GAAP financial results cited in this news announcement, please
see the supplemental tables at the end of this release.
With respect to our forward-looking guidance, no reconciliation
between a non-GAAP measure to the closest corresponding GAAP
measure is included in this release because we are unable to
quantify certain amounts that would be required to be included in
the GAAP measure without unreasonable efforts. We believe such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors. In particular, a
reconciliation of forward-looking Adjusted Free Cash Flow to the
closest corresponding GAAP measure is not available without
unreasonable efforts on a forward-looking basis due to the high
variability, complexity and low visibility with respect to the
charges excluded from these non-GAAP measures. For example, the
definition of Adjusted Free Cash Flow excludes stock-based
compensation expenses specific to equity compensation awards that
are directly impacted by unpredictable fluctuations in our stock
price. In addition, the definition of Adjusted Free Cash Flow
excludes the impact of non-recurring or unusual items such as
impairment charges, transaction-related costs and gains or losses
on sales of assets which are unpredictable. We expect the
variability of these items to have a significant, and potentially
unpredictable, impact on our future GAAP financial results.
About Nexstar Media Group, Inc.
Nexstar Media Group, Inc. (NASDAQ: NXST) is a leading
diversified media company that produces and distributes engaging
local and national news, sports and entertainment content across
its television and digital platforms, including more than 310,000
hours of programming produced annually by its business units.
Nexstar owns America’s largest local television broadcasting group
comprised of top network affiliates, with 200 owned or partner
stations in 116 U.S. markets reaching 220 million people. Nexstar’s
national television properties include The CW, America’s fifth
major broadcast network, NewsNation, our national news network
providing “News for All America,” popular entertainment multicast
networks Antenna TV and Rewind TV, and a 31.3% ownership stake in
TV Food Network. The Company’s portfolio of digital assets,
including its local TV station websites, The Hill and
NewsNationNow.com, are collectively a Top 10 U.S. digital news and
information property. For more information, please visit
nexstar.tv.
Nexstar Media Group,
Inc.
Condensed Consolidated
Statements of Operations
(in millions, except for share
and per share amounts, unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net revenue
$1,269
$1,240
$2,553
$2,497
Operating expenses:
Direct operating
552
537
1,100
1,075
Selling, general and administrative
215
213
431
431
Corporate
54
49
108
97
Depreciation and amortization
208
262
398
511
Total operating expenses
1,029
1,061
2,037
2,114
Income from operations
240
179
516
383
Income from equity method investments,
net
16
32
35
57
Interest expense, net
(113
)
(111
)
(227
)
(218
)
Pension and other postretirement plans
credit, net
7
10
14
19
Gain on disposal of an investment
-
-
40
-
Other expenses, net
(1
)
-
-
(1
)
Income before income taxes
149
110
378
240
Income tax expense
(43
)
(35
)
(105
)
(77
)
Net income
106
75
273
163
Net loss attributable to noncontrolling
interests
12
21
20
44
Net income attributable to Nexstar Media
Group, Inc.
$118
$96
$293
$207
Net income per common share attributable
to Nexstar Media Group, Inc.:
Basic
$3.59
$2.68
$8.85
$5.71
Diluted
$3.54
$2.64
$8.71
$5.61
Weighted average number of common shares
outstanding:
Basic (in thousands)
32,816
35,788
33,133
36,250
Diluted (in thousands)
33,287
36,314
33,656
36,878
Nexstar Media Group,
Inc.
Reconciliation of Adjusted
EBITDA and Adjusted Free Cash Flow (Non-GAAP Measure)
($ in millions, unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Net income
$106
$75
$273
$163
Add (Less):
Transaction and other one-time
expenses(1)
-
4
1
11
Stock-based compensation expense
20
13
38
27
Depreciation and amortization
expense(2)
137
142
275
284
Gain on asset disposal
(1
)
(7
)
(1
)
(7
)
(Payments) for broadcast rights(2)
(17
)
(23
)
(36
)
(50
)
Interest expense, net
113
111
227
218
Income from equity method investments,
net
(16
)
(32
)
(35
)
(57
)
Cash distributions from equity method
investments(3)
19
26
148
183
Pension and other postretirement plans
(credit), net
(7
)
(10
)
(14
)
(19
)
Income tax expense
43
35
105
77
Gain on disposal of an investment
-
-
(40
)
-
Other
1
1
-
1
Adjusted EBITDA
$398
$335
$941
$831
Add (Less):
Cash interest expense, net
(110
)
(109
)
(221
)
(213
)
Capital expenditures
(37
)
(41
)
(81
)
(77
)
Payments for capitalized software
obligations
(10
)
(10
)
(11
)
(12
)
Proceeds from disposal of assets and
insurance recoveries
1
6
2
7
Operating cash income tax payments,
net(4)
(164
)
(119
)
(166
)
(121
)
Cash contribution from noncontrolling
interests
-
12
19
36
Adjusted Free Cash Flow
$78
$74
$483
$451
(1)
Primarily includes severance, legal and other direct expenses
associated with our completed or proposed strategic transactions
and/or acquisitions, any fees or other direct expenses associated
with financing transactions, and severance and other direct
expenses associated with restructuring activities.
(2)
Depreciation and amortization expense excludes amounts related to
amortization of broadcast rights for The CW (already deducted from
Net Income (loss)). Payments for broadcast rights also excludes
amounts related to The CW. By using The CW’s reported amortization
of broadcast rights in our definition of Adjusted EBITDA, we match
timing of revenues with the expense of the programming.
(3)
Distribution received from our investment in TV Food Network LLC
during Q1 2023 excludes $69 million, the portion that is related to
its accounts receivable securitization program. As our investee
stops or reduces the amount of accounts receivable it sells into
the program and our distribution is reduced, we amortize that
amount back into our Adjusted EBITDA and Adjusted Free Cash Flow.
During the six months ended June 30, 2024, the amount related to
the distribution received from TV Food Network LLC includes $9
million of such amortization.
(4)
Excludes $11 million income tax paid during the three and six
months ended June 30, 2024 related to the $40 million gain from the
disposal of an investment. The proceeds from such disposal were
also excluded from our definition of Adjusted Free Cash Flow.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240808320848/en/
Investor Contacts: Lee Ann Gliha EVP and Chief Financial
Officer Nexstar Media Group, Inc. 972/373-8800 Joe Jaffoni,
Jennifer Neuman JCIR 212/835-8500 or nxst@jcir.com Media
Contact: Gary Weitman EVP and Chief Communications Officer
Nexstar Media Group, Inc. 972/373-8800 or gweitman@nexstar.tv
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